Completion Report
Project Number: 37559 Loan Numbers: 2210 and 2231 December 2011
Pakistan: National Highway Development Sector Investment Program—Project 1
CURRENCY EQUIVALENTS
Currency Unit – Pakistan rupee/s (PRe/PRs)
At Appraisal At Project Completion (25 July 2005) (31 December 2010) PRe1.00 = $0.0168 $0.0116 $1.00 = PRs59.52 PRs85.76
ABBREVIATIONS
ADB – Asian Development Bank DMF – design and monitoring framework EIRR – economic internal rate of return GDP – gross domestic product HDM – highway development and management km – kilometer LARP – land acquisition and resettlement plan LIBOR – London interbank-offered rate MFF – multitranche financing facility NHA – National Highway Authority NHDP – National Highway Development Plan NHDSIP – National Highway Development Sector Investment Program NHMP – National Highway and Motorway Police NTP – national transport policy PIU – project implementation unit PPP – public–private partnership RRP – report and recommendation of the President TA – technical assistance VOC – vehicle operating cost VOT – vehicle operating time
NOTES
(i) The fiscal year (FY) of the Government ends on 30 June. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2010 ends on 30 June 2010.
(ii) In this report, "$" refers to US dollars.
Vice-President X. Zhao, Operations 1 Director General J. Miranda, Central and West Asia Department (CWRD) Director H. Wang, Transport and Communications Division, CWRD
Team leader N. Singru, Senior Transport Specialist, CWRD Team members Z. Naqvi, Project Officer (Transport), CWRD L. Protacio, Associate Project Analyst, CWRD
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 judgment as to the legal or other status of any territory or area.
CONTENTS
Page
BASIC DATA i I. PROJECT DESCRIPTION 1 II. EVALUATION OF DESIGN AND IMPLEMENTATION 2 A. Relevance of Design and Formulation 2 B. Project Outputs 2 C. Project Costs 4 D. Disbursements 5 E. Project Schedule 5 F. Implementation Arrangements 5 G. Conditions and Covenants 6 H. Related Technical Assistance 6 I. Consultant Recruitment and Procurement 6 J. Performance of Consultants, Contractors, and Suppliers 7 K. Performance of the Borrower and the Executing Agency 7 L. Performance of the Asian Development Bank 8 III. EVALUATION OF PERFORMANCE 8 A. Relevance 8 B. Effectiveness in Achieving Outcome 9 C. Efficiency in Achieving Outcome and Outputs 10 D. Preliminary Assessment of Sustainability 11 E. Impact 12 IV. OVERALL ASSESSMENT AND RECOMENDATIONS 14
Appendix 1 Appendix A. Overall Assessment 14 B. Lessons 14 C. Recommendations 15
1 APPENDIXES 1. Design and Monitoring Framework: Performance Assessment 16 2. Projected Outputs and Actual Results 21 3. Projected and Actual Contract Awards and Disbursement and Contract Awards and Disbursement Performance 22 4. Implementation Schedule 24 5. Chronology of Major Events 25 6. Loan Covenants Compliance Status for Loan 2231 and Loan 2210 28 7. Consultant Recruitment and Procurement 35 8. Land Acquisition and Resettlement for the National Highway 70 Multan–Muzaffargarh Subproject 36 9. Economic Reevaluation 41
BASIC DATA A. Loan Identification
1. Country Pakistan 2. Loan Numbers 2210 and 2231 3. Project Title National Highway Development Sector Investment Program, Project 1 4. Borrower Islamic Republic of Pakistan 5. Executing Agency National Highway Authority 6. Amount of Loans 2210: SDR2,080,000 (equivalent to $3 million) 2231: $180 million
7. Project Completion Report PCR:PAK 1286 Number
B. Loan Data
1. Appraisal – Date Started 25 July 2005 – Date Completed 12 August 2005
2. Loan Negotiations – Date Started 28 October 2005 – Date Completed 29 October 2005
3. Dates of Board Approval – Loan 2210 13 December 2005 – Loan 2231 15 February 2006
4. Date of Loan Agreement 14 June 2006
5. Date of Loan Effectiveness
– In Loan Agreement 14 September 2006 1 Appendix – Actual 27 July 2006 – Number of Extensions 0
6. Loan Closing Date – In Loan Agreement 31 December 2010 for both loans – Actual 31 March 2011 for Loan 2210;
i 19 April 2011 for Loan 2231 – Number of Extensions 0
7. Terms of Loan
Ordinary Capital Resources Loan 2231 – Interest Rate London interbank-offered rate – Maturity (number of years) 25 – Grace Period (number of years) 5
Special Fund Resources Loan 2210 – Interest Rate 1% during grace period, 1.5% thereafter – Maturity (number of years) 32 – Grace Period (number of years) 8
ii
8. Disbursements
a. Dates Initial Disbursement Final Disbursement Time Interval Loan 2210 46 months, 21 days 10 May 2007 31 March 2011 Loan 2231 15 December 2006 19 April 2011 52 months, 4 days
Effective Date Original Closing Date Time Interval 27 July 2006 31 December 2010 53 months, 4 days Note: Loans 2210 and 2231 have the same effectivity and original closing dates.
b. Amounts
(i) Loan 2210 (SDR)
Original Net Amount Amount Undisbursed Category Allocation Available Disbursed Balance 1. Capacity Building a. Consulting Services 1,421,000 431,970 431,970 0 b. Computerized Traffic Management System 243,000 0 0 0 c. Governance Website 69,000 0 0 0 2. Interest Charge 208,000 3,455 3,455 0 3. Unallocated 139,000 0 0 0 Total 2,080,000 435,425 435,425 0 Source: Loan Agreement and Asian Development bank loan financial information system.
(ii) Loan 2231 ($ million)
Original Net Amount Undisbursed Allocation Amount Disbursed Balance Category Available 1. National Highway Improvement a. Civil Works 128.00 110.71 110.71 0.00 b. Consulting Services— Construction Supervision 9.30 6.74 6.74 0.00 c. Consulting Services—Project Management 1.20 0.00 0.00 0.00 2. Incremental Administration Cost 3.90 0.00 0.00 0.00 3. Interest and Commitment Charge 7.80 5.67 5.67 0.00 4. Unallocated 29.80 0.00 0.00 0.00 Total 180.00 123.12 123.12 0.00 Source: Loan Agreement and Asian Development Bank loan financial information system.
iii
C. Project Data
1. Project Cost
Loan 2210 (SDR) Cost Appraisal Estimate Actual Foreign Exchange Cost 2,080,000 435,425 Local Currency Cost 0 0 Total 2,080,000 435,425
Loan 2231 ($ million) Cost Appraisal Estimate Actual Foreign Exchange Cost 121.7 123.0 Local Currency Cost 98.6 36.5 Total 220.3 159.5
2. Financing Plan
Loan 2210 (SDR) Cost Appraisal Estimate Actual Implementation Costs Borrower Financed 0 0 ADB Financed 1,872,000 431,970 Subtotal 1,872,000 431,970 IDC Cost Borrower Financed 0 0 ADB Financed 208,000 3,455 Subtotal 208,000 3,455 Total 2,080,000 435,425 ADB = Asian Development Bank, IDC = interest during construction.
Loan 2231 ($ million) Cost Appraisal Estimate Actual Implementation Costs Borrower Financed 98.6 36.5 ADB Financed 113.9 117.3 Subtotal 212.5 153.8 IDC Costs Borrower Financed 0 0 ADB Financed 7.8 5.7 Subtotal 7.8 5.7 Total 220.3 159.5 ADB = Asian Development Bank, IDC = interest during construction.
iv
3. Cost Breakdown by Project Component ($ million)
Loan 2210 Component Appraisal Estimate Actual 1. Capacity Building a. Consulting Services 1.685 0.672 b. Training 0.364 0.000 c. Computerized Traffic Management System 0.350 0.000 d. Governance Website 0.099 0.000 2. Interest Charge 0.300 0.005 3. Unallocated 0.200 0.000 Total 3.000 0.677 Source: Asian Development Bank loan financial information system.
Loan 2231 Component Appraisal Estimate Actual 1. National Highway Improvement a. Civil Works 120.00 147.10 b. Consulting Services—Construction 11.08 6.67 Supervision c. Consulting Services—Project Management 20.00 0.00 2. Incremental Administration Cost 20.00 0.00 3. Interest and Commitment Charge 6.90 5.7 Total 180.00 159.50 Note: $40 million cancelled on 11 September 2009 and 30 June 2010 ($20.0 million on each occasion) and $16.7 million cancelled in April 2011 at loan closing. Source: Asian Development Bank loan financial information system.
4. Project Schedule
Item Appraisal Estimate Actual Advance Procurement Actions Design Updates and Preparation of Bid Documents Jul 2001–Dec 2001 Aug 2001–Jan 2004 Prequalification of Contractors Jan 2002–Mar 2002 Aug 2001–Sep 2004 Civil Works Construction Jan 2009–Jun 2010 Jan 2007–Jun 2010 Hub–Uthal Jan 2007–Jan 2010 Multan–Muzaffargarh Feb 2007–Jun 2010 Muslim Bagh–Qila Saifullah Apr 2007–Sep 2009
5. Project Performance Report Ratings
Ratings Implementation Period Development Objectives Implementation Progress Loan 2210 27 Jul 2006–31 Dec 2010 Satisfactory Satisfactory
Loan 2231 27 Jul 2006–31 Dec 2006 Satisfactory Satisfactory 1 Jan 2007–28 Feb 2007 Unsatisfactory Unsatisfactory 1 Mar 2007–31 Dec 2010 Satisfactory Satisfactory
v
D. Data on Asian Development Bank Missions
Loan 2210 No. of Person- Specialization of Name of Mission Dates Persons Days Members Inception (upgraded from Consultation) 16–19 Jan 2006 3 9 a, b, c Review 13 Jul 2007 1 1 d Consultation 18 Dec 2007 4 4 a, e, f, g Consultation 6–9 Mar 2008 8 24 a, d, e, f, g, h, i, j Review 24 Apr 2008 3 3 b, e, g Review 26 Jun 2008 4 4 b, g, k, l Review 7–8 Sep 2008 5 10 b, e, g, h, i Review 3–4 Feb 2009 10 20 b, b, e, g, i, j, m, m, n, o Review 6–7 May 2009 7 14 b, f, j, n, o, p, q Review 5–6 Oct 2009 6 12 a, f, j, o, p, q Review 15–16 Mar 2010 7 14 a, b, f, j, p, q, r Review 29 Jul 2010 4 4 a, b, f, q Project Completion Review 12–15 Sep 2011 2 6 g, l a = senior transport specialist, b= transport specialist, c = associate project analyst, d = transport economist, e = senior investment specialist, f = project officer, g = transport officer, h = senior portfolio management specialist, i = safeguards officer, j = assistant project analyst, k = senior project implementation specialist, l = staff consultant, m = senior project management specialist, n = senior transport economist, o = senior resettlement specialist, p = head of project management unit, q = social safeguard officer, r = principal resettlement specialist.
Loan 2231 No. of Person- Specialization of Name of Mission Dates Persons Days Members Inception (upgraded from Consultation) 20–27 Jan 2006 3 15 a, b, c Consultation 16–27 Jan 2006 2 22 a, d Consultation 28 Mar–5 Apr 2006 2 16 a, e Special Project Administration Review 29 Jan–3 Feb 2007 2 10 b, f Review 12–31 Mar 2007 2 28 f, g Consultation 19–20 Dec 2007 4 8 a, h, i, j Consultation 10–14 Mar 2008 8 32 a, f, h, i, j k, l, m Review 25–26 Apr 2008 3 6 b, h, j Review 27–30 Jun 2008 4 12 b, j, n, o Review 9–13 Sep 2008 5 20 b, h, j, k, l Review 14–18 Jul 2007 1 4 f Review 5–6 Feb 2009 10 20 b, b, h, j, l, m, p, q, r, r Review 8–11 May 2009 7 21 b, I, m, p, q, s, t Review 7–11 Oct 2009 6 24 a, i, m, q, s, t Review 17–20 Mar 2010 7 21 a, b, i, m, s, t, u Review 30 Jul–2 Aug 2010 4 12 a, b, i, t Project Completion Review 15–21 Sep 2011 2 12 j, o a = senior transport specialist, b = transport specialist, c = associate project analyst, d = project analyst, e = project implementation officer, f = transport economist, g = social development and resettlement specialist, h = senior investment specialist, i = project officer, j = transport officer, k = senior portfolio management specialist, l = safeguards officer, m = assistant project analyst, n = senior project implementation specialist, o = staff consultant, p = senior transport economist, q = senior resettlement specialist, r = senior project management specialist, s = head of project management unit, t = social safeguard officer, u = principal resettlement specialist.
I. PROJECT DESCRIPTION 1. The Asian Development Bank (ADB) approved a multitranche financing facility (MFF) for loans of up to $770 million to Pakistan for the National Highway Development Sector Investment Program (NHDSIP)1 in December 2005. Project 1 of the NHDSIP was financed by a loan of $180 million (loan 2231) from ordinary capital resources for capital investments approved in February 2006. ADB also approved a loan of SDR2,080,000 (equivalent to $3 million) in December 2005 (loan 2210) for institutional strengthening of the National Highway Authority (NHA). 2. This project completion report considers the investment project and the institutional strengthening project together because they were covered by a single loan agreement and a single design and monitoring framework. Moreover, both were part of the NHDSIP and were implemented in parallel because they had interrelated components—including, for example, safeguards capacity development. 3. The NHDSIP had two objectives. The first was to improve transport efficiency by (i) adopting a national transport policy, (ii) strengthening NHA performance in managing the national highway network, (iii) improving road safety, and (iv) improving road maintenance and funding. The second was to increase private sector participation in road subsector investments by (i) increasing outsourcing of road works, and (ii) exploring opportunities for private operation of NHA assets and activities along its right-of-way. The investment project aimed to reduce the transport costs on the selected project roads (para 4). The institutional strengthening project aimed to improve institutional capacity of the NHA. Appendix 1 provides the updated design and monitoring framework and compares the anticipated project outputs with the actual results. 4. Highway improvement project (loan 2231). Three highway subprojects had been originally identified involving the construction and improvement of four stretches of three national highways. They covered a total of 376 kilometers (km): (i) National Highway 25 (N25): Hub–Uthal (84.5 km) in Baluchistan Province, (ii) N50: Khanozai–Zhob (255 km) in Baluchistan Province, and (iii) N70: Multan–Muzaffargarh (36.5 km) in Punjab Province. The Qila Saifullah–
Appendix 1 Appendix Zhob subproject on N50 was later dropped from Project 1 after bid evaluation owing to inconsistencies in the bids submitted and limited competition. This reduced coverage of the project works under loan 2231 to 166 km of highway.
5. Institutional strengthening project (loan 2210). This project envisaged action on policy reform and institutional development to (i) formulate a national transport policy (NTP); (ii)
1 enhance public–private partnership (PPP) in road infrastructure development; (iii) build capacity in the NHA, including network and business planning and strengthening of transparency and accountability policies; (iv) improve national highway road safety; and (v) upgrade road maintenance. This project also aimed to implement a computerized management information system for daily traffic flow analysis. Both projects became effective on 27 July 2006. The final disbursed amount under loan 2231 was $123,117,439 while that under loan 2210 was SDR435,425. Neither loan was extended beyond the envisaged project completion date of December 2010 but payments to contractors were completed in April 2011.
1 ADB. 2005. Report and Recommendation of the President to the Board of Directors: Proposed Multitranche Financing Facility and Loan to the Islamic Republic of Pakistan for the National Highway Development Sector Investment Program. Manila.
2
II. EVALUATION OF DESIGN AND IMPLEMENTATION A. Relevance of Design and Formulation 6. Highway improvement project (loan 2231). The investment project was drawn from the government‘s National Highway Development Plan (NHDP), which was based on its Medium-Term Development Framework 2005–2010. The NHDP sought to develop and improve the country‘s road network to facilitate transport and trade with neighboring countries and also aimed at enhancing the capacity of road sector agencies. The NHDP‘s 10-year implementation plan, ending in 2015 identified public sector projects totaling PRs138.50 billion ($42.30 billion) and private sector investment projects totaling PRs30.8 billion ($0.51 billion). The roads selected for improvement under the MFF continue to have local, provincial, national, and subregional importance. The subprojects included in Project 1 were focus areas identified in the NHDP. The project was formulated along regional cooperation lines since it was designed as part of ADB‘s country strategy and program update for Pakistan for 2004–2006, which aimed to support subregional cooperation, improve cross-border facilities and agreements, improve trade facilitation, and improve transport efficiency on the main transport corridors in the country.2 7. The project was designed to reduce transport costs and travel times. An additional objective was to relieve congestion in urban and industrial areas on N25 and N70. These were relevant aims and the designs were appropriate to their realization. Most of the design modifications before and during construction were minor, including changes to improve drainage and provide underpasses to benefit local communities, but a significant alteration involved the addition of a major carriageway on N25 to substitute for the originally planned improvement of the existing road. ADB and the NHA agreed that the change enhanced the relevance of the subproject by increasing capacity to meet projected traffic growth. ADB approved the second tranche of the MFF in 2009. This loan was to finance Project 2, which involved road construction and improvements on two highway sections: Sukkur–Jacobabad (65 km) and Qila Saifullah– Zhob (155 km).3 Project 2 is expected to be completed by December 2012. 8. Institutional strengthening project (loan 2210). The institutional strengthening project was designed to meet the NHA‘s needs, as reflected in the Medium-Term Development Framework. ADB had been engaged in policy dialogue and institutional reform initiatives in Pakistan and with the NHA since 2001. When the NHDSIP was approved, several areas remained to be addressed and these were included in a road sector development framework that was based on dialogue between ADB and the NHA. The framework was to be implemented in two phases and the institutional strengthening project under loan 2210 constituted the first phase. The scope of the interventions under this project was relevant to the NHA‘s needs. This was particularly true of those related to development of national transport policy, PPP projects, road maintenance planning, and road safety. Although the overall framework was agreed between ADB and the NHA, the project components were designed without strong buy-in from the NHA, which subsequently amended the areas of focus. B. Project Outputs 9. Highway improvement project. Three highway sections have been constructed or improved over a combined length of 166 km. At loan closing, all the three subprojects were completed according to the designed specifications:
2 ADB. 2003. Country Strategy and Program Update for Pakistan for 2004–2006. Manila. 3 ADB. 2009. Periodic Financing Request Report: National Highway Development Sector Investment Program,Tranche 2. Manila. 3
(i) Hub–Uthal on N25. This subproject‘s outputs were achieved. The actual length of the road improved was 79.5 km.4 The road was not only improved but also widened to a two-lane road with 7.3 meter-wide pavement and 3 meter-wide shoulders. Improvements included 17 bridges and 208 box culverts. The civil works started in January 2007. A design change from the original plan to merely improve and widen the existing road led to the construction of an additional carriageway within the right-of-way (para 13). This additional work increased costs by 28.9% of the contract price and added 12 months to the contract duration. The subproject was completed in January 2010 after an extension of 12 months due to the NHA‘s decision to add the carriageway. Nonetheless, after allowing for (i) the cost of changing the scope of works for N25 to include an additional carriageway, (ii) price escalation, and (iii) depreciation of the Pakistan rupee against the US dollar, total costs remained within the original loan amounts for the project. (ii) Multan–Muzaffargarh on N70. The outputs were achieved as planned, with the targeted total of 36.5 km of road improved. This included expanding 20 km of road from the original two lanes to a four-lane road with shoulders. The subproject also constructed a 16.5-km four-lane bypass to avoid the Muzaffargarh urban area, as well as 8 bridges and 102 culverts along the four- lane road. (iii) Muslim Bagh–Qila Saifullah on N50. The intended outputs were delivered and 50.1 km of road between Muslim Bagh and Qila Saifullah were improved to the national highway standard for a two-lane road. The report and recommendation of the President had envisaged improving 255 km on N50 between Khanozai and Zhob. However, since the 155-km Zhob–Qila Saifullah subproject faced procurement difficulties, it was excluded from the scope of Project 1 but later included in Project 2 of the NHDSIP (footnote 3). 10. Institutional strengthening project. Some of the deliverables planned under this project were achieved but other outputs were not: (i) Development of a national transport policy. This was achieved as planned although the NTP is still awaiting adoption by the government. Reports and papers on transport policy, performance indicators, the strengthening and restructuring of the NHA, and development of the national highway network were completed. The draft NTP was submitted to the Ministry of Communication. (ii) A road maintenance plan for 2007–2011. This plan was prepared and is now updated yearly by the NHA, as planned. It was intended to provide funding modalities to finance the maintenance of roads. However, the NHA has yet to receive adequate financing for maintenance. (iii) NHA investment plan for 2007–2011. This was partially achieved. A comprehensive business plan for 2000-2020 was prepared for the NHA but has not yet been endorsed by the Federal Government. (iv) Identification and implementation of PPP projects. This output was achieved as planned and initial implementation is underway. Reviews of the PPP policy framework and actual concession agreements were completed. Guidelines for negotiating PPP projects were prepared. A draft toll policy was prepared. The NHA identified PPP projects estimated at PRs197 billion. Of the 22 projects identified, 8 are operational or under procurement. Concerted efforts are being
4 The distance between Hub and Uthal on N25 is 84.5 km. The road improvement did not include two sections of 2.225 km (from km 10+100 to km 12+325) and 2.775 km (from km 26+950 to km 29+725), which were excluded from the scope.
4
made to attract private investment into the sector. However, the deteriorating security situation in the country deters this effort. (v) Social safeguards. The project completed capacity needs assessments, a capacity building program, and the formulation of standard operating procedures and guidelines. It also conducted training workshops for more than 85 NHA staff. (vi) Grievance website. A grievance website was established on trial basis and is being updated to a fully functional online complaint tracking system. (vii) Intelligent highway systems. The project piloted intelligent highways systems on sections of N5 and a motorway (M-3). It also reviewed alternative traffic management systems, and developed traffic simulations. (viii) Bridge design. The envisaged lectures and workshops, design reviews for more than 20 bridges, and a feasibility study for a bridge at Syed Wala were completed. (ix) Financial management system. Although the project included implementing a financial management system within the NHA, this was not completed because NHA revised the consultant‘s terms of reference and reduced the duration of the assignment to avoid duplication with a World Bank financed technical assistance. The revised scope of work could not be completed due to non-availability of suitable experts. (x) Road safety component. The component was dropped because a suitable consultant could not be recruited. 11. Owing to delay in procurement and mobilization of consultants, a consulting input of only 23 person-months could be achieved, compared with the budgeted 50 person-months. This reduced the extent of interaction between consultants and NHA staff and the associated transfer of skills—and, therefore, the beneficial impact of the technical assistance. Moreover, because the project start was delayed by 3 years, its ability to improve the NHA‘s capacity and skills for implementing the investment project was greatly reduced (para 29). C. Project Costs 12. Highway improvement project. At appraisal, the cost of Project 1 (loan 2231) was estimated at $220.30 million (for 376 km of road improvement), with a foreign exchange cost of $121.70 million (55.2%) and a local currency cost equivalent to $98.6 million (44.75%). The actual project cost at loan closing was $159.5 million (for 166 km of road improvement), with a foreign exchange cost of $123.0 million (77.1%) and a local currency cost equivalent to $36.5 million (22.9%). The project costs at appraisal and loan closing are compared in Appendix 2. Table 1 provides a breakdown of the civil works costs. Table 1: Civil Works Costs for Highway Subprojects ICB-1 ICB-2 Multan– ICB-3 Hub–Uthal, Muzaffargarh, Muslim Bagh–Qila Item N25 N70 Saifullah, N50 Initial civil works contract price (PRs billion) 2.35 3.59 1.66 Final civil works contract price (PRs billion) 2.77 4.12 1.64 Increase/decrease in contract price (%) 18.0 14.7 (1) Cost per km (PRs million/km) 34.84 112.88 32.8 Cost per km ($ million/km) 0.40 1.40 0.40 ICB = international competitive bidding, km = kilometer, N = national highway. Note: The final civil works contract price excludes price escalations averaging 30% over and above the civil works costs. The final contract price has been adjusted for savings accrued at completion. Source: Pakistan National Highway Authority project completion report.
13. The increase in the civil works costs can be attributed to the additions to the project scope after the contract awards. In case of the Hub–Uthal road, the increase was due to 5 construction of an additional carriageway rather than the originally planned rehabilitation and improvement of the existing road. Other cost rises for this subproject resulted from an increase in drainage structures because of the construction of additional bridges and culverts; provision of guide banks; elevating the road profile by 3.5 meters in problematic areas (km 30–32) due to high levels of water and mudflow; slope protection; and elevating the profile of new road to accommodate the culverts for passing high flood discharges. In case of the Multan– Muzzaffargarh subproject, the costs increased due to items added to bill of quantities, such as construction of loops, u-turns, bus bays, slope protection works, retaining walls at the bridges, and pipe culverts. 14. Institutional strengthening project. At appraisal, the project cost for loan 2210 was estimated at $3 million for consulting services. The actual project cost at completion was $0.6 million due to the reduced inputs. D. Disbursements 15. Detailed estimates for loan disbursements were not prepared at appraisal. However, the implementation schedule provides a timeline for expenditures during 2006–2010. Appendix 3 compares projected contract awards and disbursements against actual contract awards and disbursements. The disbursement delays were mainly attributed to (i) delays in procurement; (ii) late deployment of project staff, contractors, and consultants; (iii) long delays during construction; and (iv) extra time consumed in processing withdrawal applications, sometimes due to incomplete or incorrect details. E. Project Schedule 16. At appraisal, the project implementation period was to be 5.5 years, including pre- construction beginning in mid-2005 and ending in 2010. The award of civil works contracts was planned through the third quarter of 2006. The completion of major activities was targeted for 30 June 2010. Loan closure was scheduled for 31 December 2010. 17. Although planning and design activities proceeded as scheduled, limited progress was made on implementation in the first 2 years. The key contributing factors included (i) late mobilization of the contractors and consultants, (ii) insufficient staffing at the consultant and contractor offices, and (iii) prolonged implementation of the land acquisition and resettlement plan. Appendix 4 shows the projected and actual implementation schedule. 18. Procurement for the Hub–Uthal and Multan–Muzaffargarh subprojects was completed on 22 December 2006, while the contract for the Muslim Bagh–Qila Saifullah highway section was signed on 22 January 2007. All three civil works contracts were substantially completed by the 30 June 2010 target date and the loan closed in April 2011. Appendix 5 provides the chronology of events. The institutional strengthening project loan also closed in April 2011, albeit with reduced disbursements. F. Implementation Arrangements 19. The NHA was the executing agency for both the investment project and the institutional strengthening project. An investment program coordinating committee chaired by NHA chairperson was responsible for monitoring the use of loan funds and overall implementation performance. A project implementation unit (PIU) under a project director was set up for each of the Project 1 subprojects. The three PIUs operated within the framework of the NHA‘s provincial offices, each of which is under the authority of a general manager. The PIUs were coordinated by NHA‘s headquarters where a general manager and a director supervised the ADB-funded projects. The NHA provided expertise in matters related to the subprojects involving land
6 acquisition and resettlement activities, grievances, and environmental impacts, either through the construction supervision consultant or from its own staff resources. Although this implementation arrangement provided sufficient project supervision and ensured project completion, it lacked capacity in areas of safeguards monitoring and contract management. 20. The NHA managed the institutional strengthening project directly through a policy formulation and coordination office, and recruited a national policy coordinator to monitor the activities of the consultants. G. Conditions and Covenants 21. Of the 38 covenants in the combined loan agreement for the two loans, the borrower complied with 28. Eight covenants were partially complied with and two covenants were not complied with. Appendix 6 provides the compliance details. The cases of partial compliance arose from a number of issues: (i) A PIU required for the institutional strengthening project was not created. (ii) Although a road maintenance plan was developed, it has yet to be endorsed by the government for mainstreaming. (iii) Resettlement compensation payments related to the Muslim Bagh–Qila Saifullah subproject have yet to be completed. The NHA has assured ADB this will be completed soon. (iv) The government has yet to promulgate the NTP. (v) A road safety cell within the NHA is not fully functional. (vi) The NHA investment plan was prepared but has not been endorsed by the government. (vii) Professional posts have not been completely filled due to a shortage of available candidates in the country with the necessary technical skills. (viii) The restructuring of the NHA has been approved by the National Highway Council under a phased program and implementation of the required reforms is ongoing. 22. The borrower failed to comply with the covenants pledging that (i) the NHA would establish a financial management system for monitoring and reporting key financial performance indicators under the institutional strengthening project, and (ii) the NHA would establish adequate capability to monitor project performance. H. Related Technical Assistance 23. No technical assistance was associated with the investment project other than that provided through the parallel institutional strengthening project. I. Consultant Recruitment and Procurement 24. The consultant selection process was done in accordance with ADB's Guidelines on the Use of Consultants (2006, as amended from time to time) while goods, services, and civil work contracts were procured as planned at appraisal, in accordance with ADB's Procurement Guidelines. For details, see Appendix 7. 25. Recruitment of consultants for the institutional strengthening project was delayed due to NHA‘s reservations on the perceived project benefits. In addition, the procurement yielded only one bid, from Sheladia Associates of the United States in association with IDC Pakistan, which was awarded the consulting contract on 17 June 2009. 7
J. Performance of Consultants, Contractors, and Suppliers 26. Highway improvement project. Both the supervision consultants and their national associates performed satisfactorily. The actual cost of supervision was less than envisaged because bids came in lower than expected. The consultants were familiar with ADB procedures, supervised the contractors appropriately, and ensured improvement in contractor performance. 27. The performance of the civil works contractor, Limak Insaat Sanayi Ve Ticaret A.S. in joint venture with Zahir Khan and Brothers (for N25: Hub–Uthal and N50: Muslim Bagh–Qila Saifullah) is rated partly satisfactory. The contractors had limited skills in (i) planning and execution of works; (ii) managing working capital; (iii) managing a consistent supply of construction materials; (iv) maintaining equipment and machinery; (v) making proper traffic management, safety, and environmental impact mitigation arrangements during construction; and (vi) contract management. For example, progress reports and payment claims were delayed due their initial unfamiliarity with ADB procedures. 28. The performance of the contractor for the Multan–Muzaffargarh subprojects, for Husnain Cotex, is rated unsatisfactory. The contractor was consistently slow in implementing the project and, despite repeated notices from the supervision consultant and NHA, failed to improve its performance. The work was completed only after an extension of 11 months. The contractor also abandoned the construction site in some instances. The Balochistan High Court issued legal proceedings against the contractor for incomplete construction works. The contractor‘s performance on World Bank-funded projects in Pakistan has also been poor. 29. Institutional strengthening project. The performance of the consultant for the institutional strengthening project is rated partly satisfactory because not all outputs were achieved (para 10). The consultant procurement was delayed owing to the NHA‘s reservations on the perceived project benefits. This set back the project start, which in turn required the consultancy firm to find replacements for members of the originally nominated team who were no longer available. This problem also reflected deficient management by the consultant firm. The firm‘s performance was plagued by problems, including (i) the unavailability of the originally nominated team members; (ii) the NHA‘s unacceptability of replacements; (iii) a refusal by the government to issue visas; (iv) the refusal by some consultants to come to Pakistan because of security concerns; (v) the death after elective surgery of the PPP specialist, who was also the acting team leader; (vi) a lack of resources that made it difficult to field suitable staff profitably and arose from the consultant firm‘s low financial proposal; and (vii) changes in the consultant‘s terms of reference by the NHA. K. Performance of the Borrower and the Executing Agency 30. The performance of the borrower is rated satisfactory. Counterpart funding was provided, although it was delayed in some cases due to the difficult fiscal situation in Pakistan. The government made the loan proceeds available to the executing agency—the NHA—through budget allocation. The performance of the NHA is rated satisfactory but with room for improvement due to its institutional capacity challenges. The NHA acknowledged its own lack of expertise in implementing ADB‘s resettlement policy. The NHA‘s ability to carry out the necessary land acquisition and resettlement activities was hampered by (i) the need to work through provincial governments, which have the legal responsibility for land matters; and (ii) the difficulties in complying harmoniously with both national laws and ADB procedures for social safeguards. 31. Inadequate NHA capacity led to poor planning for implementation of the land acquisition and resettlement plans (see Appendix 8), which in turn delayed the start of construction and forced the government to pay commitment fees to ADB for unused funds and penalties to
8 contractors. Specific implementation issues, such as environmental mitigation measures, also contributed to delays that resulted from inadequate coordination among the NHA, consultants, contractors, and other relevant government agencies. 32. Despite these shortcomings, the NHA was able to implement the two projects within the given time frame and within budget. The NHA‘s capacity needs to be improved in these specific areas: (i) application of ADB‘s land acquisition and resettlement policy, which NHA identified as an area of weakness and which was flagged as a problem area in a report written by an independent consultant engaged under the institutional strengthening project in 2007; and (ii) contract management.5 L. Performance of the Asian Development Bank 33. ADB‘s performance is rated satisfactory. ADB staff regularly reviewed progress, recommended actions, and helped NHA address institutional weaknesses and resolve implementation issues. ADB fielded several consultation and review missions, a pre-project completion mission, and a project completion mission. ADB also shared critical analyses, made recommendations for improvement, and advised on project planning, procurement, construction management, contract administration, resolution of issues, compliance with covenants, social safeguards, environmental mitigation measures, the road asset management system, training, and PPPs. ADB‘s Pakistan Resident Mission helped improve supervision of the implementation of the land acquisition and resettlement plans. 34. However, ADB‘s performance during project implementation needs improvements in two areas. First, ADB needed to recognize the NHA‘s capacity constraints and ensure that adequate support was provided in the critical areas (e.g., safeguards planning and implementation, procurement, and project management). Second, frequent changes in ADB project officers affected project administration. Day-to-day interaction between the NHA and the responsible ADB officers could have enhanced the project performance. 35. ADB and the government are now addressing these shortfalls through discussions. The current country partnership strategy 2009–2013 for Pakistan6 confirms that ADB operations will combine physical and nonphysical investments, including bringing about further policy and operational reforms, strengthening the way the institutions function, and improving financial resource management and planning in the NHA. In addition, the resident mission has two transport specialists (one international and one national) based in Islamabad to interact daily with the NHA. This will ensure better continuity in loan administration and supervision. III. EVALUATION OF PERFORMANCE A. Relevance 36. Highway improvement project. The investment project is rated relevant. Paras 6–7 summarize the relevance of the project‘s design and formulation. The project‘s outcomes were consistent with the country‘s development priorities and with ADB‘s country strategies at appraisal and at completion. The project design was an appropriate response to the development needs. The reduction in the project‘s scope was unavoidable because of delays in project preparation. 37. Institutional strengthening project. The institutional strengthening project is rated relevant. Para 8 provides details of its intended contribution to the development needs of the country and especially to the NHA. The project could have been better designed, however,
5 Takahashi, K. 2007. Policy and Institutional Strengthening of National Highway Authority. Islamabad. 6 ADB. 2009. Country Partnership Strategy (2009–2013): Pakistan. Manila. 9 through closer consultations with the NHA before loan approval. The NHA changed the terms of reference of the project after the consultants were appointed by excluding the financial management component (and the transport economist‘s inputs) and including safeguards components. This indicates that the project design could have been better. B. Effectiveness in Achieving Outcome 38. Highway improvement project. This project is rated highly effective. The outputs were broadly achieved as planned (para 9). The main outcome of improving road efficiency along the project roads has been significantly achieved by a distinct reduction in the road user costs. An increase in traffic on all roads is linked to growth in economic activities. A traffic count on the three subproject road sections of the national roads in September 2011 indicated the following: (i) N25: At project completion, a traffic count indicated that traffic had grown at an average annual rate of 38.1% since 2007. (ii) N50: The average annual growth from 2007 was 23.9%. (iii) N70: The traffic count in 2011 showed an average annual growth of 11.1% since 2007. 39. The project benefits envisaged at appraisal were achieved. Table 2 shows the vehicle operating cost (VOC) savings and vehicle operating time savings, speed improvements, and reductions in travel time that have been achieved by the subprojects at project completion.7 In the case of the N70 subproject, the findings are confirmed by drivers‘ reports of time savings of at least 20 minutes and up to an hour at peak times. The figures below provide an estimate of the average change attributed to road improvement using the HDM-VOC model. Table 2: Summary Table for Key Outcomes Subproject Roads Outcomes N25 N50 N70A N70B Average VOC savings (%) 12 14 6 14 Average increase in speed (%) 33 34 25 173 Average VOT savings (%) 22 24 21 63 Average travel time saved (minutes/passenger) 17 14 4 25 km/h = kilometer per hour, N = national highway, VOC = vehicle operating cost, VOT = vehicle operating time. Note: N25 = Hub–Uthal, N50 = Muslim Bagh–Qila Saifullah, N70A = Multan–Muzaffargarh bypass, N70B = Muzaffargarh bypass. Source: Asian Development Bank estimates.
40. The results for the N70 subproject underestimate the benefits since they exclude the reduction in congestion in urban traffic in Muzaffargarh due to the construction of the bypass road. All traffic now using the new bypass would have previously had to pass through the town. Current data are not sufficient to estimate the extent of this benefit reliably. 41. Institution strengthening project. The institutional strengthening project is rated less effective because of the lower than envisaged outcomes that resulted from a delayed start and reduced inputs. The project did deliver some outputs, however (para 10) and has led to increased awareness of the need to (i) adopt the new NTP, (ii) mainstream the PPP, (iii) build capacity in safeguards assessment and implementation, and (iv) improve intelligent highway systems. Two notable outcomes were (i) the PPP project currently under implementation, and (ii) the pilot implementation of a road maintenance plan. The other envisaged outcomes were not achieved. The road safety component and financial management systems were ineffective
7 These calculations are based on Highway Development and Management software–IV (HDM-IV) modeling. The HDM is a tool for the analysis, planning, management and appraisal of road maintenance, improvements and investment decisions. The HDM-VOC is the model for assessing vehicle operating costs.
10 because they did not go forward—the first because consultancy was unavailable, the second because the NHA removed it from the terms of reference. Had the project been implemented on schedule and had the original areas of focus been maintained, the project could have been more effective in improving NHA‘s institutional capacity. C. Efficiency in Achieving Outcome and Outputs 42. Highway improvement project. The investment project is rated efficient. An economic reevaluation of the three highway construction and improvement subprojects was undertaken based on a traffic count conducted in September 2011. The project‘s overall economic internal rate of rate (EIRR) was computed at 20%. The efficiency of the implementation process is lower because of cost overruns for the outputs delivered, although the project did not require additional funding due to the reduction in scope (para 9). Appendix 9 provides details of the economic analysis. 43. Through reevaluation, the difference between the with- and without-project cases gave the net costs and benefits of each subproject.8 They were projected to the year 2030, creating a stream of net benefits over at least 20 years following project completion. Vehicle traffic growth rates were estimated to average 4.3%–5.7% per annum, depending on the type of vehicle. Personal time values were assumed to grow at 3% annually, reflecting the expected growth of real per capita incomes. Table 3 shows the key economic indicators for the project. Each of the subprojects had an EIRR higher than the benchmark 12%. The overall project EIRR of 20% indicated a high economic efficiency. Table 3: Summary of Economic Performance Indicators Subproject Roads Base Case N25 N50 N70 Total Economic internal rate of return (%pa) 29.6 13.7 16.3 20.0 Net present value (PRs million) 5,251 304 1,809 7,364 Benefit–cost ratio 2.74 1.14 1.39 1.76 Switching value:a costs (%) 173 14 39 75 N = national highway, pa = per annum. Note: N25 = Hub–Uthal, N50 = Muslim Bagh–Qila Saifullah, N70 = Multan–Muzaffargarh. a Switching value is the percentage by which costs can change before the EIRR falls below the benchmark discount rate of 12% per annum. Source: Asian Development Bank estimates.
44. Although the project was completed on time, the cost overruns lower the investment project‘s implementation efficiency. The N25 Hub–Uthal subproject was due to have been completed by January 2009 but was extended by 12 months owing to the NHA‘s decision to construct an additional carriageway in lieu of improvement and rehabilitation of the existing road. Nonetheless, the project was substantially completed by June 2010 within the original schedule and the loan was closed by April 2011. The project was physically completed within the original timeframe agreed at appraisal. The delay in loan closure beyond December 2010 was to allow for payment of the contractor dues. Table 1 shows the cost overruns incurred on each subproject actually undertaken. Because the fourth originally planned subproject was dropped due to preparation delays, only 166 km of the appraisal target of 376 km of highway were improved, which meant that the overruns did not lead to a need for additional financing. 45. Institutional strengthening project. This project is rated less efficient although the overall cost was lower than the contract price. The project did not deliver the required inputs of 50 person-months of consultant services because the terms of reference were curtailed by the
8 The road users costs with and without the project were computed using HDM-VOC. All costs were adjusted to 2011 price levels. 11
NHA after the consultant firm was appointed (para 29). Taking into account the compressed timescales and reduced inputs, the savings in contract price was actually a disbenefit for the executing agency because it did not lead to sustainable outcomes and the project did not provide full value for money for the NHA. D. Preliminary Assessment of Sustainability 46. Highway improvement project. The investment project is likely to be sustainable. Recent improvements in the NHA‘s technical capacity and the implementation of the road maintenance plan have helped enhance the sustainability of road improvement projects in the country. However, the government has not been allocating adequate funds for proper maintenance. It has resorted to tolling the highways to raise the needed revenues but the proceeds fall short of the amounts necessary to ensure the optimum level of maintenance. Table 4 shows that toll revenue of $128 million flowed into the account dedicated to national highway maintenance in FY2010–11. Although this is supplemented by a government budgetary grant, the shortfall for the year was 27% of the NHA‘s estimate of the $230 million required. The shortfall has been decreasing over the years, which is a major improvement in the performance of the NHA and a positive sign that future requirements could eventually be met. Table 4: Road Maintenance in Pakistan ($ million) Fiscal Year Item 2006–07 2007–08 2008–09 2009–10 2010–11 2011–12a Toll revenueb 101.43 116.04 95.00 107.90 128.67 127.87 Overall size of road maintenance accountc 130.94 141.22 108.74 130.71 155.78 186.76 Allocation for periodic road maintenance & rehabilitation 53.04 77.63 75.59 92.83 120.47 565.43 Unconstrained budget requirements as per HDM analysis 229.85 234.92 200.18 225.30 292.57 564.84 AMP as per envisaged resources at the time of preparation of AMP 112.29 138.06 135.09 154.47 230.40 186.76 Shortfall in meeting maintenance requirements 105% 70% 48% 46% 27% AMP = annual maintenance plan, HDM = highway development and management. Note: Exchange rates used in calculating dollar amounts were $1 = : PRs60.91 (2006); PRs 60.94 (2007); PRs 78.84 (2008); PRs 84.16 (2009); PRs 85.76 (2010); and PRs 86.75 (24 Oct 2011). Rates are from ADB‘s loan financial information system. a Estimated. b Gross toll revenue. c Net revenue from all sources, including maintenance grant. Source: Pakistan National Highway Authority estimates.
47. Vehicle overloading has been a perennial problem in Pakistan. The NHA is in the process of installing 102 weigh stations at strategic locations on the highway network—50 on motorways and 52 on national highways. However, effective enforcement of weigh limits remains an issue. A separate load management section within the NHA needs to work in conjunction with the traffic police to enforce vehicle loading regulations effectively. 48. Institutional strengthening project. The institutional strengthening project is less likely to be sustainable unless the NHA takes measures to mainstream the project‘s outcomes.
12
Several outputs have the potential to become long-term capacity benefits and make a sustainable positive impact on the NHA‘s policies, processes, and skills learned through training. The shortened interactions with the consultants and the low efficiency of the project have increased the risk of these outputs not being utilized in the long term. However, the NHA has indicated that it is willing to introduce specific measures to retain the project benefits and, if these are put in place, the project‘s sustainability could improve. E. Impact 1. Highway Improvement Project 49. The impact of the investment project is likely to be significant due to its contribution to an increase in economic activities in the project area. The investment project did not have a separate design and monitoring framework (DMF) and hence is measured against the broader DMF of the overall MFF program, i.e., the NHDSIP. The impact indicators in the NHDSIP DMF are rather broad—an increase in Pakistan‘s GDP and a reduction in costs of goods and passenger transport in the country. GDP growth was 1.7% in 2009 and 3.8% in 2010, but the project‘s possible contribution to these increases is difficult to establish. These DMF indicators were not appropriately linked to the envisaged project results. The nature of the project‘s impact is likely to become more evident in the longer term as a contribution to the much wider program of highway network improvement. 50. Socioeconomic impacts. The N70 Multan–Muzaffargarh subproject has had the most visible impact of the three at the local level. An increase in economic activities along the project road led to a rise in property prices. The bypass road around Muzaffargarh was intended to avoid the traffic congestion within the city and provide an alternative route for intercity traffic but the road has attracted more residential and commercial development, which has resulted in an increase in local traffic. The creation of this peri-urban area would be difficult to attribute entirely to the project road since factors such as urban sprawl and improved access to other infrastructure, including water supply, could also have played a part. Growth of economic activities is also visible on the project section of N50 in Baluchistan Province. For example, Nasai town on the N50 was a small, sparsely populated habitat before the road improvement but now has nine hotels, more than 50 commercial shops, and several workshops. 51. Institutional impacts. The investment project had positive institutional impacts by providing on-the-job training for NHA staff. This improved the project management capabilities of staff members and raised their awareness of safeguards issues. 52. Safeguards impacts. The construction of the bypass at Muzaffargarh on the N70 Multan–Muzaffargarh road required land acquisition and resettlement. The total number of affected persons identified by the land acquisition and resettlement plans was 758. This increased to 874 due to the division of a single land holding between multiple heirs on the death of the owner. Although a resettlement plan was prepared and implemented, a case was registered with the Office of Special Project Facilitator in September 2006 in relation to 53 affected persons who were not paid full compensation for their losses by the government. The resettlement issue was resolved in consultation with the stakeholders by (i) disclosure of the updated list of affected persons; (ii) construction of two underpasses; (iii) communication of preliminary compensation rates, methods of calculation, explanations, and collection of applications for higher rates, and (iv) disclosure of the revised resettlement plan. The disbursement of the compensation was completed in July 2008. An Office of Special Project Facilitator mission in October 2009 confirmed the construction of the underpasses and certified the satisfaction of the affected persons through a household survey. A report by an external monitoring consultant confirmed full implementation of the resettlement plans and stated that no 13 issues were pending. Appendix 8 provides details of the implementation of the social safeguards on N70. 53. No land acquisition or resettlement was needed for the N25 Hub–Uthal subproject because the land involved was government-owned. The N50 Muslim Bagh–Qila Saifullah subproject involved acquisition of 278 acres of land and affected 475 persons. The government has compensated 355 of these individuals and is processing payments to the remaining affected persons. 54. The N70 Multan–Muzaffargarh subproject was classified environment Category A for impacts assessed under ADB‘s Safeguard Policy Statement (2009). The other two subprojects were classified Category B for environment. An environmental management plan was prepared for the N70 Multan–Muzaffargarh subproject and implemented by the contractor under supervision of an external independent consultant, Pacific Consultants International, in association with National Engineering Services Pakistan. The environmental safeguards for the N25 Hub–Uthal and N50 Muslim Bagh–Qila Saifullah subprojects were supervised and monitored by the supervision consultants, based on an initial environment examination report and the environment impact assessment report. 55. The N70 Multan–Muzaffargarh subproject was classified as Category A due to the impacts of the construction activities, such as increased dust and noise, the presence of volatile gas from hot-mix plants, disruption of traffic, loss of roadside trees, and an increase in suspended solids in water bodies. Based on samples collected periodically from the project site, the external monitor‘s report at completion confirmed the satisfactory implementation of the environmental management plan (EMP) and concluded that the construction work complied with the EMP. A separate ADB mission confirmed the findings of this report. 56. Gender impacts. The project did not envisage any substantial impacts on gender. The PCR mission did not find any specific gender impacts that could be attributed to the project. 2. Institutional Strengthening Project 57. The impact of the institutional strengthening project is likely to be modest in view of its low outcome achievements and the risks to sustainability. The project helped the government develop a draft NTP, which will assist in long-term planning. The road maintenance planning and the PPP policy framework could provide a long-term impact if the NHA put the necessary measures in place to sustain the benefits. The experience gained in social safeguards assessment and other project training has built capacity within the NHA, although further assistance is necessary. Although road safety is an important issue in Pakistan, with a high and growing road accident rate, the project‘s envisaged road safety component was not implemented. The NHA does not have reliable statistics on road safety and has yet to develop a strategy for monitoring and reducing road accidents. This requires better coordination between the NHA and the local traffic police.
14
IV. OVERALL ASSESSMENT AND RECOMENDATIONS A. Overall Assessment 58. The overall assessment of the combined projects is successful based on the relevance, effectiveness, efficiency, and sustainability of the highway improvement project and the institutional strengthening project.9 B. Lessons 59. Implementation issues. The highway improvement project had a realistic time frame that took the implementation issues in Pakistan into account. These include governance, security, and institutional capacity constraints. Although one of the subprojects was delayed by 12 months and project implementation was affected by floods, this did not affect the overall project schedule. All these issues are likely to continue to impact current and future projects. Advance planning and adequate contingencies are essential for efficient project implementation. 60. Social safeguards. The N70 subproject faced several delays due to land acquisition and resettlement issues. The important lessons from this include the need (i) to raise awareness of the importance of social safeguards within the government at central and local levels, (ii) to delay contractor mobilization in future until social safeguards have been complied with, and (iii) for ADB to apply its Safeguards Policy Statement (2009) in cognizance of national laws. 61. Improve project implementation performance. The project shows that implementation can be improved by (i) ensuring that the executing agency has sufficient capacity in safeguards monitoring, and project management; (ii) enabling continuity of staff working on project implementation within the executing agency and at ADB; (iii) raising awareness of ADB‘s procedures within the executing agency at the appraisal stage; (iv) making ADB expertise available within the country for project monitoring and day-to-day interactions with the executing agency, consultants, and contractors; and (v) close supervision by the executing agency, ADB, and the supervising engineer, which improved contractor performance. 62. Quality at entry. The institutional strengthening project could have been better designed in more consultation with the executing agency. The lack of understanding within the NHA on the benefits of project, the delays in procuring the consultants, and the change in their terms of reference indicate the lack of ownership for policy reforms and institutional strengthening within the NHA. This contributed to the poor performance of the project. Had ADB engaged in a more rigorous policy dialogue at project planning stage, the project could have been designed better and more acceptable to the NHA. 63. This poor performance illustrates the need for the government to adopt a clear strategy on developing the transport sector in general and the sector‘s institutions in particular. It has also helped identify areas for future technical assistance—project planning, safeguards monitoring, and project management. 64. The private sector in Pakistan also faces capacity constraints that prevent efficient and effective project implementation. This could be addressed by technical assistance programs to transfer good practices from other countries as well as to improve national educational institutions.
9 The highway improvement project is rated successful since it is assessed to be relevant, highly effective, efficient and likely to be sustainable. The institutional strengthening project is rated partly successful since it is assessed as relevant, less effective, less efficient, and less likely to be sustainable. 15
C. Recommendations 1. Project Related 65. Because 120 of the 475 persons affected by the N50 Muslim Bagh–Qila Saifullah subproject of the highway improvement project have not received compensation, ADB should follow up with the government to ensure that these payments are made within a schedule to be agreed upon with the local authorities. 66. Although several land acquisition issues connected with the N70 Multan–Muzaffargarh subproject have been mitigated and complete compensation has been paid, the NHA should ensure that there is no encroachment on the right-of-way. This is essential to restrict road accidents and will require continued engagement by local authorities and the raising of road safety awareness in the relatively heavily congested sections of the N70. 67. Lack of adequate skills in social safeguards mitigation and monitoring have consistently impeded the implementation of road projects in Pakistan. Future projects under the NHDSIP could incorporate components to strengthen the NHA‘s safeguards monitoring, and contract management. ADB should also work with the NHA to find ways to recruit professionals who can provide the technical skills it now lacks. The NHA should set up a project performance monitoring system that includes key indicators and targets outlined in a project design and monitoring framework. Specific terms of reference and deliverables will need to be discussed with the NHA to ensure its strong buy-in and ownership. 68. ADB‘s Independent Evaluation Department should carry out a performance evaluation report 2 years after the completion of all the tranches of the NHDSIP. 2. General 69. The originally envisaged institutional reforms needed at the NHA should be completed. ADB should engage with the NHA to develop an implementation schedule for these reforms. 70. Vehicle overloading tends to intensify with increased economic activity and the NHA has made efforts to control it by using weigh stations. The regulations have not been well enforced, however, and ADB should engage in a policy dialogue with the NHA and support institutional strengthening to set up a new load management section within the NHA to work with the traffic police to effectively enforce vehicle loading regulations. 71. Road safety is recognized as an important objective of road sector policy. The NHA should set up a rigorous road safety improvement exercise covering public awareness and education; improved procedures for vehicle and driver licensing; and better coordination with the local traffic police. 72. As part of the maintenance planning across the country, the NHA conducts comprehensive network condition survey every year. However, the roads subsector can be sustainable only when the government allocates sufficient funding for routine and periodic maintenance. ADB should engage in a policy dialogue with the government to enable an increase in the level of budgetary allocations for road maintenance.
16
DESIGN AND MONITORING FRAMEWORK: PERFORMANCE ASSESSMENT
Design Summary Performance Indicators/Targets Project Achievements Monitoring Mechanisms Assumptions Appen and Risks A. Impact 1. Improved and 1.1 Gross domestic product Likely to be achieved. Government economic Assumption dix 1 sustainable economic increases maintained on a Pakistan‘s GDP grew at 1.7% in 2009 and statistics and reports Continued growth sustainable basis 3.8% in 2010. However, it is difficult to Government draw a clear link between project impacts Transport surveys undertaken commitment for and national GDP growth. With full by NHA upgrading of implementation of the MFF program as part national highway of a wider government effort to improve ADB project completion network and properly maintain the highway network, mission (Assumption) enhanced economic growth is likely. Risk 1.2 Transport cost for goods and Likely to be achieved. Continued passenger reduced, thus Substantial vehicle operating cost savings political stability increasing the efficiency of and travel time savings have been economic activities in Pakistan achieved on the three sections of national highway improved in the first batch.
B. Outcome 1. National Highway 1.1 Average travel time on the Achieved. NHA traffic surveys on the Assumptions Network: project highway sections for Average travel time savings are estimated project sections Continued normal freight traffic reduced by 10% to exceed 10%. economic growth Improve road sector Road network maintenance efficiency on the main 1.2 Systematic road network Achieved. monitoring surveys conducted Continued transport corridors in operation and maintenance IRI is below 4.0, approximately. by NHA provision of Pakistan sustained (i.e., IRI<4 ―good counterpart standard‖) from: 5.4 to 4.4 ADB project completion funding (per World Bank National missions Highway Investment Project) EA project completion reports 1.3 Average unit transport cost on Achieved. the project highway sections Average RUC savings are estimated to reduced by 10% exceed 10%.
1.4 Average unit fares/prices on Partly achieved. the project highway sections No data is available on fares and freight reduced by 5%. rates but the market is competitive so cost reductions are expected to be reflected in prices.
Design Summary Performance Indicators/Targets Project Achievements Monitoring Mechanisms Assumptions and Risks 2. Institutional capacity 2.1 Improvement of transport Partly achieved. Consultant‘s final report Risk building of NHA efficiency by The project improved awareness in road Continuing maintenance and safeguards. ADB review missions political will to NHA Policy Reform Office undertake policy - Strengthening NHA to perform Partly achieved. reports and institutional its core role of strategic A road maintenance plan was prepared but reforms management and planning of has not yet been endorsed by the the national highway network government.
- Enhancing public–private Achieved. partnership (PPP) in provision PPP projects were identified and 8 projects of road transport infrastructure are in operation or procurement.
- Investing in priority sections of Achieved. the network with focus on All 3 investment subprojects are subregional connectivity strategically important to development of interprovincial and international trade.
C. Outputs 1. National Highway 1.1 Construction supervision Achieved. Consultant‘s final report Assumption road network consultants mobilized as Consultants were mobilized on Sufficient number infrastructure and follows: Batch I: by 30 Jun N25: 13 Nov 2011 ADB review mission of experienced operations improved. 2006 N50: 2 Jan 2007 and skilled N70: 11 Nov 2006 ADB project completion contractors report available and 1.2 By 30 Jun 2010, batch 1, Achieved. willing to work in three sample subprojects With the N50 section reduced in scope, the Resettlement monitoring project areas (N25, N50, and N70) totaling three subprojects, with a total length of 166 reports 376 kilometers (km) are km, were substantially completed by 30 substantially completed. Jun 2010.
2. National Highway 2.1 By 30 Jun 2007, adoption of Partly achieved. National transport policy Risk Authority Institutional national transport policy by A draft NTP was submitted to the document Sustained Strengthening Cabinet (milestone: M1) government but has not yet been adopted. Government and
NHA commitment Appen 2.2 By 31 Jul 2006, complete Achieved. PPP projects pipeline and to policy reforms identification of PPP projects PPP projects were identified. Eight PPP financing plan. NHA and financing plan 2007–2011 projects are in operation or procurement. completion report. dix 1 (milestone: M2-1)
17
18 Design Summary Performance Indicators/Targets Project Achievements Monitoring Mechanisms Assumptions and Risks 2.3 By 31 Jul 2008, prepare Not achieved PPP projects pipeline projects to the value of PRs60 Appen billion for bidding (milestone:
M2-2) dix 1
2.4 By 31 Jan 2007, prepare NHA Not achieved NHA consultant reports investment plan 2007–2011 (milestone: M3-1)
2.5 By 30 Jun 2007, federal Not achieved Government endorsement of NHA investment plan 2007– 2001 (milestone: M3-2)
2.6 By 30 Jun 2007, establish Partly achieved. Transparency and grievances website A trial version of the complaint-tracking accountability policy (milestone: M3-3) website has been created but has yet to be document put online.
2.7 By 30 Jun 2007, establish Not achieved. NHA communication reports road safety cell in NHA Road safety component was not (milestone: M4-1) implemented.
2.8 By 30 Jun 2007, Not achieved National highway safety pilot implementation of pilot study study plan on road safety recommendations for national highway (milestone: M4-2)
2.9 By 30 Jun 2006, complete Achieved. NHA communication reports road maintenance plan (2007– A road maintenance plan was prepared. 2011) and funding modality (milestone: M5-1)
2.10 By 30 Jun 2007, Federal Partially achieved. The road maintenance Government endorses road plan has not received sufficient financing maintenance plan and funding from Federal Government. requirements (milestone: M5- 2)
Design Summary Performance Indicators/Targets Project Achievements Monitoring Mechanisms Assumptions and Risks 2.11 By 30 June 2010, complete Achieved NHA project completion assessment of Intelligent report Highway Systems and review proposals.
2.12 By 30 June 2010, develop and Not achieved NHA project completion implement financial report management systems
2.13 By 30 June 2010, provide Achieved. NHA consultants‘ project training to NHA staff on 85 NHA staff were trained in social completion report safeguards, and bridge safeguards practices. 5 lectures and planning and design workshops were conducted on bridge planning and design.
2.14 By 30 Jun 2010, second Not achieved Updated policy reform generation reforms for position paper including implementation during recommendations remaining period of the Investment Program are Continued monitoring during agreed to by ADB and reviews of periodic financing NHA/Government requests
D. Activities/Inputs 1. Investment Project (Loan 2231)
1.1. Civil works Contracts procured by 30 Jun Civil works were procured on 22 Dec 2006 procurement 2006 for ICB-1 (Hub–Uthal) and ICB-2 (Multan– Muzaffargarh) and on 22 Jan 2007 for ICB- 3A (Muslim Bagh–Qila Saifullah).
1.2. Recruitment of Consultant contracts procured by Supervision consultants were recruited on consultants 31 Mar 2006 5 Nov 2006 for CSP-1 (Muslim Bagh–Qila
Saifullah, Qila Saifullah–Zhob, Zhob– Appen Mughal Kot, and Qila Saifullah–Waigum Rud), and on 19 Oct 2006 for CSP-2 (Hub– Uthal, Multan–Muzaffargarh, and Sukkur– dix 1 Jacobabad)
1.3. Completion of Civil works competed by 30 Sep Civil works for the three subprojects were
civil works 2009 substantially completed by 30 Jun 2010. 19
20 Design Summary Performance Indicators/Targets Project Achievements Monitoring Mechanisms Assumptions and Risks 2. Institutional Strengthening Project Appen (Loan 2210)
dix 1 2.1 Recruitment of Recruitment completed by 30 Jun Contract for the institutional strengthening
consultants 2006 consultant was signed on 17 Jun 2009.
2.2 Consulting Completion of consulting services Consulting services for institutional services by 30 Sep 2009 strengthening were completed on 31 Dec completion 2010.
Of 50 person-months of consulting services budgeted under Loan 2210, only 23 were provided.
ADB = Asian Development Bank, CSP = consulting service package, EA = executing agency, GDP = gross domestic product, ICB = international competitive bidding, IRI = international roughness index, km = kilometer, MFF = multitranche financing facility, NHA = National Highway Authority, NTP = national transport plan, PPP = public–private partnership, RUC = road user cost.
Appendix 2 21
PROJECTED OUTPUTS AND ACTUAL RESULTS Table A2.1: Appraised Versus Implemented Project Scope
Appraisal Completed Contract Length Length Package No. Road Section (km) (km) ICB-1 Hub–Uthal, N25 84.5 79.5 ICB-2 Multan–Muzaffargarh, N70 36.5 36.5 ICB-3A Muslim Bagh–Qila Saifullah, N50 50.0 50.0 ICB-3B Qila Saifullah–Zhob, N50 155.0 Moved to Project 2 ICB-3C Zhob–Mughal Kot, N50 50.0 Not implemented
Total 376.0 166.0 ICB = international competitive bidding, km = kilometer, N = national highway. Sources: Asian Development Bank; Pakistan National Highway Authority.
Table A2.2: Project Cost for Highway Improvement Project ($ million) Appraisal Actual Foreign Local Total Foreign Local Total Item Exchange Currency Cost Exchange Currency Cost A. Base Cost 1. National Highway Improvement—Project 1 a. Batch 1 subprojects i. Land acquisition and 0.0 6.3 6.3 0.0 8.3 8.3 resettlement ii. Civil works 96.8 64.5 161.3 110.6 28.2 138.8 iii. Environmental 0.5 0.3 0.8 0.0 0.0 0.0 management and monitoring iv. Consulting services 4.5 4.8 9.3 6.7 0.0 6.7 v. Physical contingency 9.2 10.1 19.3 0.0 0.0 0.0
Appen vi. Price contingency 2.7 7.7 10.4 0.0 0.0 0.0 Subtotal (a) 113.7 93.7 207.4 117.3 36.5 153.8
b. Project management 0.2 1.0 1.2 0.0 0.0 0.0 dix 1 consulting services
c. Incremental cost 0.0 3.9 3.9 0.0 0.0 0.0 Subtotal (A) 113.9 98.6 212.5 117.3 36.5 153.8
B. Interest During Construction 7.8 0.0 7.8 5.7 0.0 5.7 21 Total (A + B) 121.7 98.6 220.3 123.0 36.5 159.5
Note: A total of $40.0 million was cancelled in two instances prior to loan closing. Sources: Asian Development Bank loan financial information system (2 October 2011); Pakistan National Highway Authority.
Table A2.3: Project Cost for Institutional Strengthening Project (SDR million) Item Appraisal Actual A. Capacity Building 1. Consulting services 1,168,000 431,970 2. Training 253,000 0 3. Computerized traffic management system 243,000 0 4. Governance website 69,000 0 Subtotal (A) 1,733,000 431,970 B. Interest Charge 208,000 3,455 C. Unallocated 139,000 0 Total (A + B + C) 2,080,000 435,425 Source: Asian Development Bank loan financial information system (17 October 2011).
22 Appendix 3
PROJECTED AND ACTUAL CONTRACT AWARDS AND DISBURSEMENT
Table A3.1: Institutional Strengthening Project ($ million) Contract Award Disbursement Year Projected Actual Projected Actual 2006 0.000 0.000 0.000 0.000 2007 0.100 0.190 0.160 0.076 2008 1.000 0.000 1.000 0.050 2009 1.500 0.483 0.750 0.035 2010 0.000 0.000 0.300 0.278 2011 0.000 0.000 0.000 0.238 Total 2.600 0.673 2.210 0.677 Source: Asian Development Bank loan financial information system.
Table A3.2: Highway Improvement Project ($ million) Contract Award Disbursement Year Projected Actual Projected Actual 2005 0.000 0.000 0.000 0.000 2006 13.000 91.032 2.700 0.069 2007 36.600 18.783 17.300 21.363 2008 55.000 0.000 25.000 38.140 2009 18.000 7.634 27.000 34.589 2010 0.000 0.000 19.000 24.507 2011 0.000 0.000 0.000 4.450 Total 122.600 117.449 91.000 123.118 Source: Asian Development Bank loan financial information system.
Appendix 3 23
CONTRACT AWARDS AND DISBURSEMENT PERFORMANCE
Figure A3.1: Institutional Strengthening Project
3 Approval: 13 Dec 2005 Signing: 14 Jun 2006 Effective: 27 Jul 2006
2 Closing:2010 Dec
1 SDR million SDR
0 Dec 2005 Dec 2006 Dec 2007 Dec 2008 Dec 2009 Dec 2010 Mar 2011
Contract Awards Disbursements
Source: Asian Development Bank loan financial information system.
Figure A3.2: Highway Improvement Project
180 170 Approval: 15 Feb 2006 160 Signing: 14 Jun 2006
150 Appen Effective: 27 Jul 2006 140 130 120 dix 1 110
100
90
80 23 $ million $ 70 60 50 40 30 20 Closing:2010 Dec 10 0 Dec 2005 Dec 2006 Dec 2007 Dec 2008 Dec 2009 Dec 2010 Mar 2011
Contract Awards Disbursements
Source: Asian Development Bank loan financial information system.
24
IMPLEMENTATION SCHEDULE
2005 2006 2007 2008 2009 2010 Appen Project Component H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2
1. Loan 2231-PAK: National dix 4 Highway Improvement
Batch 1 Subprojects
Detailed design
Land acquisition and resettlement
Supervision consultant selection
Civil works procurement
Construction
2. Loan 2210-PAK NHA Policy Reform and Institutional Strengthening
Consultant selection
Implementation
H1 = first half calendar year, H2 = second half calendar year, NHA = National Highway Authority. = planned = actual Source: Pakistan National Highway Authority project completion report.
Appendix 5 25
CHRONOLOGY OF MAJOR EVENTS Loan 2210/2231-PAK: National Highway Development Sector Investment Program, Project 1
Date Event 2005 19 July ADB approval of advance action for civil works and consultant recruitment 25 July Appraisal started 12 Aug Appraisal completed 14 Oct Management review meeting 28 Oct Loan negotiations started 29 Oct Loan negotiations completed and signing framework financing agreement 2 Nov ADB approved shortlist and draft RFP 7 Nov CSP-1 issuance of request for proposal 22 Nov Circulation of RRP to the Board 28 Nov ADB approved draft prequalification documents 13 Dec Board approval for loan 2210 14 Dec Government PC-1 approval 15 Dec Issuance of prequalification of civil works contractors
2006 17 Feb Deadline for prequalification of civil works contractors (subsequently extended to 17 March 2006) 15 Feb Board approval for loan 2231 6 Mar ADB‘s approval given to NHA for the contractor to start civil works in section B2 19 Apr CSC Meeting held and discussed executing agency‘s revised technical bid evaluation report, which was subsequently approved 30 Apr ADB approved executing agency‘s request for proposal and shortlist for institutional strengthening of NHA 19 May ADB approved executing agency‘s financial evaluation report and final ranking 14 Jun Signing of loan agreement 3 July ADB approved draft consultancy contract 26 Jun ADB approved draft bidding documents for ICB-1, ICB-3A, and 3B 20 Jul ADB approved prequalification of contractors for ICB packages 1–7 27 Jul ADB declared the loan effective 13 Oct ADB approved engagement of domestic policy coordination advisor 16 Nov ADB approved awards of three ICB civil works contracts
24 Nov Contract signed for policy and institutional strengthening expert Appendix 18 Oct ADB rejected executing agency‘s recommendation to engage A. Mughal as IT expert for developing online complaints tracking system
23 Dec Civil works contract with Husnain Cotex for ICB -2 signed 5
25
26 Appendix 5
Date Event 2007 17 May Consultative meeting held between affected people, NHA, and CWID where the complaints of affected people were discussed and the problem sorted out 30 May ADB approved minor change in implementation arrangement to allow section-wise commencement of construction to facilitate implementation 4 Jun ADB approved the short land acquisition and resettlement plan for section A and no objection to NHA‘s proposal to compensate the affected people 7 Jun ADB approved executing agency‘s shortlist for policy reforms and institutional strengthening of NHA 4 Jul ADB received executing agency‘s letter advising they have rejected the bids received and invited prequalified bidders to submit fresh bids. ADB requested the executing agency to submit documents to support re-bidding exercise. 5 Jul ADB gave approval for the initiation of civil works for Section A. 19 Nov ADB approved executing agency‘s request for annulment of bids for ICB-3B and re- bidding for the same. 3 Dec ADB approved design change for Hub-Uthal subproject based on final due- diligence report submitted on 1 December
2008 7 Jan ADB received executing agency‘s technical bid evaluation report for PRISNHA; ADB‘s comments to revise it were relayed to the executing agency on 11 January 2008. 13 Mar Executing agency‘s revised technical evaluation report received and subsequently approved on 2 April 2008 & as well as approval to proceed with opening of financial proposal 21 Apr ADB approved executing agency‘s prequalification report for ICB-3B package. 11 Jun Invitation for bids for N50 Qila Saifullah–Zhob issued to prequalified bidders— deadline for submission was set for 11 August 2008 18 Jul ADB received a complaint from one of the bidders to reject the rebidding of the above package and accept their bid. 25 Jul ADB rejected request from one of the bidders for cancellation of the bidding of the above package. (Lowest bid received was significantly higher than the estimate thus ADB agreed to cancel and to rebid). 2 Jun ADB sent fax expressing concern about the delay of civil works at Multan– Muzaffargarh caused by delayed implementation of land acquisition and resettlement plan. 28 Nov ADB approved VO No.1 for Hub–Uthal (ICB-1). Civil works contract increased by $8.55 million equivalent and construction period extended by 12 months
2009 6 Mar ADB‗s approved compliance report on the implementation of land acquisition & resettlement plan, allowing civil works to start in section B2. 19 Aug Executing agency submitted its due diligence report for section B-3 of Multan– Muzaffargarh.
Appendix 5 27
Date Event 17 Jun Consultancy contract for policy reforms & institutional strengthening of the NHA signed (loan 2210) 16 Aug PPP specialist appointed as acting team leader (loan 2210), mobilized in the absence of qualified team leader since the original candidate was no longer available 15 Sep ADB approved the borrower‘s request for deleting Qila Saifullah–Zhob from tranche 1 and corresponding cancellation of $20.0 million submitted 7 September 16 Oct Executing agency submitted safeguard compliance matrix 20 Apr ADB approved major change in scope, reducing the output from 326 km to 166 km 27 Sep Sheladia‘s home office coordinator & senior associate (loan 2210) arrived to assist the acting team leader in project start-up and finalization of the inception report.
2010 19 Jan Acting team leader (loan 2210) was hospitalized and died shortly after an elective operation. 22 Feb Team leader mobilized. 12 Apr Final report of special project facilitator on N70 complaint received 6 May ADB waived fielding of midterm review by NHA 2 July ADB approved the borrower‘s request of 30 June to cancel another $20.0 million, which will not be used 17 Sep ADB approved engagement of a bridge expert for capacity building of NHA‘s design section 30 Jun Physical completion date ADB = Asian Development Bank, CSC = construction supervision consultant, CSP = consulting service package, CWID = Central and West Asia Infrastructure Division, ICB = international competitive bidding, IT = information technology, km = kilometer, NHA = National Highway Authority, PPP = public–private partnership, RFP = request for proposal, RRP = report and recommendation of the President, PC = Planning Commission, VO = variation order. Source: Asian Development Bank.
Appendix Appendix
5
27
28 Appendix 6
LOAN COVENANTS COMPLIANCE STATUS FOR LOAN 2231 AND LOAN 2210
Reference in Loan Status of Covenant Agreement Compliance Project Executing Agency NHA shall be the Project Executing Agency. An Investment LA Schedule 6, Complied with Program Coordinating Committee (IPCC) chaired by the Chairman para 1 of NHA, shall be responsible for monitoring the use of the Loan proceeds and overall implementation performance. The IPCC shall meet at least once every quarter. The minutes of all IPCC meetings shall be promptly forwarded to ADB for review and records.
Two separate Investment Program Management Offices shall be LA Schedule 6, Partially set up by NHA – one for each Component. PIU shall be para 2 complied. A PIU responsible for implementation of each subproject. was not set up for institutional strengthening project (Loan 2210). However, the NHA did establish a Policy Formulation and Coordination Office. It recruited a national policy coordinator to monitor the activities of the consultants for Loan 2210.
A Policy Formulation & Coordination Office shall be established LA Schedule 6, Complied with. under the chairmanship of Member (Planning) of NHA. para 3
Implementation of Subprojects under Component A Three sample subprojects have been identified and selected by LA Schedule 6, Complied with. NHA for implementation under Component A and each such para 4 subproject satisfies each of the criteria listed in Schedule 2 to FFA.
Subproject Selection Criteria The Borrower and NHA shall ensure that the subprojects follow the LA Schedule 6, Complied with. selection criteria and are promptly processed for approval by ADB para 5 as described in detail in Schedule 2 to FFA.
Organizational Arrangements The Borrower and NHA shall ensure that the subprojects are LA Schedule 6, Complied with appraised in accordance with organizational arrangements para 6 described in detail in Schedule 2 to FFA.
Road Maintenance The Borrower shall cause NHA to develop in consultation with LA Schedule 6, Partially ADB and have its Executive Board approve a road maintenance para 7 complied. A road plan for the year Fiscal Year 2007-2011 by March 31, 2007, which maintenance plan
Appendix 6 29
Reference in Loan Status of Covenant Agreement Compliance shall, among other things, provide funding modalities to finance was developed the maintenance of relevant roads acceptable to ADB. but is yet to be endorsed by the federal government for mainstreaming.
Land Acquisition and Resettlement The Borrower shall cause NHA to ensure that all land acquisition LA Schedule 6, Complied with. and resettlement proceed in accordance with applicable laws, and para 8 ADB‘s Policy on Involuntary Resettlement, as well as in accordance with the framework set out in the agreed upon resettlement plan.
The Borrower shall cause NHA to (i) prepare and implement LA Schedule 6, Complied with. resettlement plans (RPs) for additional subprojects, in accordance para 9 with ADB's Policy on Involuntary Resettlement, and the principles and procedures laid out in the resettlement framework and agreed between the Borrower and ADB, (ii) disclose subproject RPs to affected persons (APs) in a form and language easily comprehensible to APs prior to submission to ADB for review and approval before award of the related civil works contracts or a similar milestone, (iii) monitor and submit the quarterly progress and completion reports on land acquisition and resettlement, (iv) appoint an independent monitoring expert prior to commencement of land acquisition and resettlement activities and ensure that reports are simultaneously submitted to NHA and ADB.
The Borrower acknowledges that resettlement budget shall be LA Schedule 6, Complied with. revised based on any new data collected, and any additional land para 10 acquisition and resettlement cost that may be required shall be borne by the Borrower. If there is any change in the scope of the Project, the Borrower shall cause NHA to revise the relevant resettlement plans and submit them to ADB for approval prior to award of civil work contracts.
The Borrower shall ensure that (i) NHA shall provide LA Schedule 6, Partially compensation for land and structures to APs at full at replacement para 11 complied. The value including financial assistance/grants, if any, prior to taking compensation possession of their assets; (ii) essential public infrastructure payments on affected by land acquisition and resettlement are replaced N50: Muslim appropriately and expeditiously; (iii) NHA shall acquire or make Bagh–Qila available on a timely basis (i.e., strictly in accordance with the Saifullah have yet schedule as agreed under the related civil works contract) the land to be completed.
and rights in land, free from any encumbrances; and (iv) NHA The NHA has Appendix clear the utilities, trees and any other obstruction from such land, assured this will on a timely basis (i.e., strictly in accordance with the schedule as be completed agreed under the related civil works contracts), as required for soon.
5
construction activities relating to each section of the related civil works contract under the Project.
29
30 Appendix 6
Reference in Loan Status of Covenant Agreement Compliance Environment The Borrower shall cause NHA to implement mitigation measures LA Schedule 6, Complied with. and Environmental Management Plan (EMP) for the sample para 12 subprojects as described in the Initial Environmental Examination (IEE), Environmental Impact Assessment (EIA) and Summary EIA (SEIA) reports in accordance with the Borrower‘s and ADB‘s environmental policies. The Borrower shall further cause NHA to implement the Environmental Assessment and Review Framework for the follow up subprojects.
The Borrower shall cause NHA to obtain all necessary LA Schedule 6, Complied with. environmental statutory clearances such as environmental para 13 clearance, forest clearance, and non-objection certificates both at the Provincial and Central levels prior to commencing any civil work. NHA shall ensure that all conditions attached to these clearances shall be implemented and monitored.
The Borrower shall cause NHA to undertake environmental LA Schedule 6, Complied with. monitoring plan and submit semiannual report to ADB and relevant para 14 agencies on the implementation of EMP and conditions of clearance for ―A‖ category subprojects and annual report for ―B‖ category sub-projects as part of the progress report on Project implementation.
The Borrower shall cause NHA to report to ADB any change of LA Schedule 6, Complied with. road alignment or any change in Project component that occurs para 15 after the environmental impact assessment report has been approved by the ADB. ADB‘s prior approval shall be required before putting into effect any such changes and where in the opinion of the ADB, additional environmental assessment is required, such assessment shall be promptly undertaken.
The Borrower shall cause NHA to prepare a semi-annual report on LA Schedule 6, Complied with. implementation of the EMP as part of the progress report on para 16 Project implementation.
The Borrower shall cause NHA to provide the contractors with the LA Schedule 6, Complied with. environmental assessment study reports, including the EMP, and para 17 ensure that the contractors implement the prescribed mitigation measures.
The Borrower shall ensure that NHA shall update the EMP for LA Schedule 6, Complied with. Muzaffargarh Bypass as part of the detail engineering work and para 18 submit it to ADB for review prior to commencing civil works.
HIV/AIDS and Human Trafficking The Borrower shall cause NHA to ensure that all civil works LA Schedule 6, Complied with. contracts under every subproject incorporates provisions requiring para 19 contractors to (i) carry out HIV/AIDS and women/children trafficking awareness and prevention programs for labor; (ii) not employ or use children as labor; and (iii) follow and implement legally mandated provisions on labor (including equal pay for equal
Appendix 6 31
Reference in Loan Status of Covenant Agreement Compliance work), health, safety, sanitation, and working conditions.
The Borrower shall cause NHA to engage qualified locally based LA Schedule 6, Complied with. consultants under construction supervision to carry out the para 20 HIV/AIDS prevention and anti-trafficking component as agreed on with ADB. PIUs shall supervise the consultants and work closely with the Pakistan‘s National AIDS Control Program (NACP) and other networks dedicated to preventing sexually transmitted infections, HIV/AIDS, women/children trafficking, and to the empowerment of women and children.
Policy Development The Borrower shall ensure that by June 30, 2007, a National LA Schedule 6, Partially Transport Policy, as endorsed by ADB, shall have been para 21 complied. The promulgated by the Federal government. National Transport Policy has not yet been promulgated by the Federal Government.
The Borrower shall ensure that by June 30, 2007, NHA shall have LA Schedule 6, Partially established a fully functional road safety cell within it with a para 22 complied. The mandate, among other things, (i) to analyze road safety risks and road safety cell is their consequences; (ii) develop recommendations for reduction of not fully functional risks in existing and to be constructed roads; and (iii) develop a yet. program for awareness raising of the risk factors. For avoidance of doubt, the phrase ―fully functional‖ in the preceding sentence shall mean that all core staff for the road safety cell shall have been appointed and activities shall have been launched. The road safety cell shall also have the capacity to undertake safety audits of road designs as well as prepare work zone safety plans.
The Borrower shall cause NHA to establish a Policy Formulation LA Schedule 6, Complied with. and Coordination Office as soon as possible but no later then 90 para 23 days after the Effective Date to provide guidance and monitor the overall implementation of the agreed upon policy reforms.
The Borrower shall ensure that by June 30, 2007, the Borrower‘s LA Schedule 6, Partially government shall have approved or endorsed, as required, to give para 24 complied. The effect to the NHA Investment Plan for Fiscal Year 2007-2011 to be NHA Investment prepared in consultation with ADB. Plan has been prepared but has not yet been
endorsed by the Appendix Federal Government.
5
Project Management The Borrower, in order to ensure continuity, transparency, LA Schedule 6, Complied with. efficiency and good management in the conduct of the Project, para 25 shall cause NHA to consult with ADB on all significant matters 31
32 Appendix 6
Reference in Loan Status of Covenant Agreement Compliance relating to management and implementation of the Project. All matters relating to selection or appointment, or any changes to such selection or appointment, of any Project Director or Deputy Project Director, shall be duly notified to ADB along with the qualifications of the incumbents and the departing officers and reasoning for such changes.
The appointment of any Project Director or Deputy Project Director LA Schedule 6, Complied with. shall not be terminated or terms of such appointment shall not be para 26 altered in any material way within three years of such appointment unless a determination of gross dereliction of duty or such other serious misconduct is made through due process.
To provide an open channel for registering grievances of any type LA Schedule 6, Complied with. regarding NHA‘s management of the Project, a dedicated website para 27 shall be established by June 30, 2006. Such a dedicated website shall be available in English and in Urdu. The website shall post information on all subprojects approved. It shall detail the Borrower‘s and ADB‘s policies on anti-corruption. The website shall be designed to provide an easy method for seeking redress of grievances. The website shall be hosted and managed by the Vigilance Committee. The Vigilance Committee shall keep an accurate record of all grievances filed and responses and other actions taken. The establishment of the website shall be widely publicized through all English and Urdu media. Each office of NHA and all offices of the NHA contractors shall be required to prominently display information on the website and ways to use it. The Vigilance Committee shall report to the NHA Executive Board and to ADB every quarter on progress towards resolution of grievances filed through the website and any other means. The website shall be maintained properly and in the event of any failure to keep it functional for more than seven consecutive days, ADB shall be promptly informed.
Anticorruption The Borrower and NHA acknowledge that consistent with its LA Schedule 6, Complied with. commitment to good governance, accountability and transparency, para 28 ADB reserves the right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive or coercive practices relating to the Project. To support these efforts, the Borrower shall cause NHA to ensure that the bidding documents for the Project, and all contracts financed by ADB in connection with the Project, shall include provisions specifying the right of ADB to audit and examine the records and accounts of NHA and all contractors, suppliers, consultants and other service providers as they relate to the Project.
Capacity Development The Borrower shall cause NHA to accelerate recruitment of LA Schedule 6, Partially professional staff and reduce vacancies of approved posts as they para 29 complied. stand on the Effective Date to no more than 10% of such approved Professional posts for each department within two months of the Effective Date. posts not
Appendix 6 33
Reference in Loan Status of Covenant Agreement Compliance For the avoidance of doubt, all posts of grade 16 and above shall completely filled be considered professional posts for the purpose of this provision. owing to difficulties in availability of technical skills in the country.
The Borrower shall cause NHA to design, develop and adopt a LA Schedule 6, Complied with. comprehensive training program, including management training, para 30 for enhancement of skills of all newly recruited and other staff so that they meet at least the minimum levels of competencies required for their positions. The Human Resources Department of NHA shall be entrusted to undertake the requisite training needs analysis and based on such analysis a two-year-long training calendar shall be prepared by June 30, 2006 by the department showing the scope, length and location of each training to be offered. An annual external evaluation of the training program will be carried out within 45 days of the training program of the calendar year.
Institutional Reform and Development The Borrower shall cause NHA to complete an institutional reform LA Schedule 6, Partially program in consultation with ADB and begin execution of key para 31 complied. The steps of the plan by June 30, 2007. ADB shall be periodically restructuring of consulted on progress and direction of all reforms initiated under NHA has been the aegis of this program. approved by the National Highway Council under a phased program. Implementation of the reforms is ongoing.
The Borrower shall cause NHA to prepare and install in LA Schedule 6, Not complied. consultation with ADB a financial management system by June 30, para 32 This component 2007. Such financial management system shall include key was not performance indicators and monitoring and reporting mechanisms. implemented by Within nine months of the implementation of such financial the NHA. management system, an external evaluation of its robustness shall be carried out. The report and recommendations of the external evaluation shall be shared with ADB and the recommendation shall be duly adopted as promptly and possible but no later than 90 days following the submission of the final report of the evaluators.
Appendix Appendix Labor Laws The Borrower shall cause NHA to ensure that contractors comply LA Schedule 6, Complied with. with all applicable labor laws and regulations of the Borrower‘s para 33
5
government. The Borrower shall further cause NHA to ensure that the civil works do not employ child labor in the construction activities. The Borrower shall cause NHA to encourage civil works contractors to hire women and minorities, including "gypsies," 33
34 Appendix 6
Reference in Loan Status of Covenant Agreement Compliance wherever possible. The Borrower shall ensure that NHA provides equal opportunity for women for road construction activities, as well as require contractors not to differentiate wages between men and women for work of equal value. The Borrower, through NHA, shall ensure that a specific clause to this effect is included in all relevant bidding documents, and compliance is strictly monitored and documented during Project implementation. Recognizing the challenges in recruitment of women for such employment, a reputable private organization shall be appointed within 90 days of the Effective Date to independently monitor, develop suggestions and guidelines for improvement of performance in each of these areas and prepare quarterly report on all such matters to ADB through the NHA throughout the duration of civil works construction under the Project.
Mid-Term Review The Borrower acknowledges that in two years following the LA Schedule 6, Complied with. Effective Date, a comprehensive midterm review shall be para 34 undertaken jointly by ADB and NHA to review all aspects of the Project implementation, including procurement financing and scheduling matters. All reviews, including the mid-term review, shall be conducted as described in Schedule 1 to FFA.
Performance Audit The Borrower shall cause an annual performance audit for each of LA Schedule 6, Being complied. the components of the Project to be completed pursuant to the para 35 terms of reference to be developed by ADB. All costs incurred in connection with such performance audits shall be paid out of the Project funds.
Performance Monitoring and Progress Reports The Borrower shall cause NHA to establish a capability for LA Schedule 6, Not complied. systematic Project performance monitoring as described in detail para 36 NHA has yet to in Schedule 1 to FFA. establish adequate capability to monitor project performance.
Accounts The Borrower shall cause NHA and PIUs to maintain records and LA Schedule 6, Complied with. accounts as described in detail in Schedule 1 to FFA. para 37
Appendix 7 35
CONSULTANT RECRUITMENT AND PROCUREMENT A. Consultant Recruitment 1. The NHA engaged consulting firms for supervision engineering for each of the three subprojects under the investment project. They were (i) Oriental Consultants Company for the Hub–Uthal and Multan–Muzaffargarh subprojects and Minconsult International Ltd for the Muslim Bagh–Qila Saifullah subproject. In addition, the NHA engaged two firms for design review: National Engineering Services Pakistan for the Hub–Uthal and Multan–Muzaffargarh highway sections and Infra-D-Consultants and Sheladia Associates for the Muslim Bagh–Qila Saifullah road.1 B. Procurement 2. Three civil work contracts for the investment project were awarded following international competitive bidding procedures among prequalified bidders. The following firms were awarded the contracts and they completed the civil works: (i) N25: Hub–Uthal: Limak Insaat Sanayi Ve Ticaret A.S. in joint venture with Zahir Khan Brothers; (ii) N70: Multan–Muzaffargarh: Husnain Cotex; and (iii) N50: Muslim Bagh–Qila Saifullah: Limak Insaat Sanayi Ve Ticaret A.S. in joint venture with Zahir Khan Brothers. The contract packaging was appropriate although the Pakistani contractor Husnain Cotex (Pvt) Ltd performed poorly (main text, para 28).
Appendix Appendix
5
35 1 This was the Pakistan arm of Sheladia Associates, operating independently of the United States arm that was contracted to provide institutional strengthening services under loan 2210.
36 Appendix 8
LAND ACQUISITION AND RESETTLEMENT FOR THE NATIONAL HIGHWAY 70 MULTAN–MUZAFFARGARH SUBPROJECT 1. The summary below was prepared by the project completion report (PCR) mission of the Asian Development Bank (ADB) to Pakistan in September 2011. It is based on the mission‘s own observations; reports from the executing agency, supervision engineers, and external monitors; meetings with officers of the executing agency at the National Highway Authority‘s headquarters and in the field; the PCR mission‘s discussions with the community of affected persons; meetings with the external monitors; and a report by the ADB Office of the Special Project Facilitator (OSPF).
A. Introduction
2. As part of the improvement 36.5-kilometer (km) stretch of National Highway 70 (N70) between Multan and Muzaffargarh, the subproject included construction of a new bypass road to avoid the crowded town of Muzaffargarh. This required land acquisition. A total of 758 affected persons were identified by the land acquisition and resettlement plans (LARPs). The actual number of affected persons at implementation increased to 874 owing to the division of a single land holding between multiple heirs on the death of the owner. The PCR mission reviewed the LARPs and discussed the final outcome of the resettlement with various stakeholders, including the local government officials, affected persons along the road, and the external monitor engaged by the ADB for this project. No evidence was found that any affected person was dissatisfied with his or her terms of compensation. The mission concluded that there were no pending resettlement issues related to the N70 subproject. This has been confirmed by the Pakistan Resident Mission. The mission is reviewing the safeguards issues on other subprojects based on the information provided by National Highway Authority (NHA), the project‘s executing agency.
3. During implementation, ADB‘s Office of the Special Project Facilitator (OSPF) received a complaint concerning 53 affected persons who had not been paid compensation. This was resolved and all the affected persons have been paid compensation.
B. Implementation of the Land Acquisition and Resettlement Plans
4. The project road was sectionalized for land acquisition and resettlement purposes because the process was holding up the contractor‘s work. Dividing the project by road sections allowed work to begin on the stretches of road where no land acquisition or resettlement was required and for the progressive release of other stretches as land acquisition or resettlement procedures were completed. The five sections were identified as A, B1, B2, B3, and C:
(i) In section A (15.9 km), the right-of-way was already owned by the NHA so no land acquisition was required. However, squatters and encroachers had occupied parts of the project land with 71 movable structures. A total of 11 structures had to be relocated. (ii) Section B1 (50 meters) is a short stretch in a built-up commercial area where the NHA was obliged to acquire land for road widening and reconstruction of a roundabout. (iii) Section B2 (3.8 km) contained both commercial and agricultural properties. During construction, it was found that a small area of land that had been thought
Appendix 8 37
to be owned by the NHA‘s had yet to be acquired. This resulted in creation of a subsection known as B2 additional. (iv) Section B3 (10.9 km) was new construction through privately owned land that had to be acquired, affecting 398 families. During construction, it was found that an additional 4 hectares of land would be needed for bridge approaches, resulting in creation of a subsection known as B3 additional. (v) Section C (5.6 km) was new construction through state-owned barren land, where no land acquisition or resettlement was required. 5. Table A8.1 shows the external monitor‘s assessment of LARP implementation, together with the PCR mission‘s assessment made after completion of civil works.
Table A8.1: Summary and Assessment by Section of N70 Subproject LARP Implementation Sections for External Monitor’s Assessment Planning Plan ADB PCR Mission’s Purposes Milestones Approvals Plan Implementation Assessment Section A Submitted SRP Approved 8 100% implemented. Compliance Civil works completed; on 23 Apr 2007 Jun 2007 report submitted on 14 Jun 2007. NOL no outstanding issues issued in 5 July 2007 Section B1 RAP prepared Approved 3 100% implemented. Compliance Civil works completed; and Submitted Jun 2009 report submitted on 15 Sep 2009 no outstanding issues on 1 Jun 2009 Section B2 Submitted in Jul Approved 21 100% completed on Feb 2009. NOL Civil works completed; 2008, again Aug 2008 for civil work issued by ADB on 6 Mar no outstanding issues revised and re- 2009. submitted in Dec 2008 NOL for civil works issued with conditions that RAP will be prepared and implemented for additional land B2 additional Submitted in Approved 3 100% implemented. Compliance Civil works completed; last week of Jun 2009 submitted on 11 Jul 2009. NOL issued no outstanding issues May 2009 by ADB on 30 Jul 2009. Section B3 Submitted in Approved 100% completed on 17 Jul 2008. Civil works completed; Feb 2008 May 2008 Compliance report submitted on 15 no outstanding issues Aug 2008 and NOL issued on 21 Aug 2008. Civil works started in last week of Aug 2008. Need for additional land explored in Sep. It was decided that NHA will prepare RAP for required land. B3 additional Submitted on 1 Approved 3 100% implemented. Internal report Civil works completed; Jun 2009 Jun 2009 submitted on 28 Aug 2009 no outstanding issues Section C Due Diligence Approved DDR approved by ADB on 13 Apr Civil works completed; report prepared Apr 2007 2007 and NOL issued. no outstanding issues Appendix and submitted in Apr 2007
5
ADB = Asian Development Bank, DDR = due diligence report, NHA = National Highway Authority, NOL = no objection letter, RAP = resettlement action plan, SRP = short resettlement plan. Source: ADB. 2009. Multan–Muzaffargarh N70 Project. Independent monitoring report. Islamabad (Loan 2231-PAK).
37
38 Appendix 8
6. Tables A8.2 and A8.3 are derived directly from the external monitor‘s report.1 They show (i) the extent of private land acquisition and the extent to which public land was utilized, and (ii) the extent to which the various crops were affected and the compensation rate for each. Combined cropping of wheat and fodder represents 70% of the total, for which compensation of PRs32,000 per acre was paid (equivalent to about $1,100 per hectare) at the average exchange rate prevailing at the time of acquisition.
Table A8.2: Permanent Loss of Private Land by Category Acquired Land Land Category Acres Hectares Remarks Section B1 Commercial land 0.12 0.05 Only commercial areas Section B2 (including B2 Additional) Commercial land 23.92 9.68 Only commercial areas Section B3 (including B3 Additional) Ordinary agriculture land (away from road) 143.43 58.07 Section B3 lies entirely Prime agriculture land (on provincial roads) 6.17 2.50 within a rural area with Prime agriculture land (on local government roads) 1.29 0.52 agricultural and Residential land 13.58 5.50 residential land Subtotal (B3) 164.47 66.59 Total (B1+B2+B3): Private Land 188.51 76.32 Provincial government land in section B3 7.66 3.10 State land in section C 125.90 50.97 Total Land Required for N70 Project 322.07 130.39 Source: ADB. 2009. Multan–Muzaffargarh N70 Project. Independent monitoring report. Islamabad (Loan 2231-PAK).
Table A8.3: Crop Assessment Compensation Rate per Acre Total Crop Area Cropping Pattern (PRs) Acres Hectares Sugarcane 45,000 4.59 1.86 Cotton + wheat 29,000+16,000 = 45,000 7.62 3.09 Fodder + wheat 16,000+16,000 = 32,000 123.57 50.03 Rice + wheat 16,000+16,000 = 32,000 22.09 8.94 Vegetables + wheat 34,000+16,000 = 50,000 10.74 4.34 Fallow (empty) + wheat 0 + 16,000 = 16,000 6.24 2.53 Total 174.85 70.79 Source: ADB. 2009. Multan–Muzaffargarh N70 Project. Independent monitoring report. Islamabad (Loan 2231-PAK).
7. The actual number of affected persons was 15% more than estimated when the LARPs were drawn up but this was due in large part to the division of a single land holding among multiple heirs on the death of the owner. The total amount of compensation paid was slightly less. For details, see Tables A8.4 and A8.5, which are also derived directly from the external monitor‘s report. The dollar equivalent of the actual disbursement at the average exchange prevailing at the time was about $300,000.
1 ADB. 2009. Multan–Muzaffargarh N70 Project. Independent Monitoring Report. Islamabad (Loan 2231-PAK).
Appendix 8 39
Table A8.4: Affected Persons by N70 Subproject Section Number of Affected Actual Affected Persons at Name of Sectiona Persons as per LARP Time of Implementation Section B1, RamKali Mutlan 108 132b Section B2, Sher Shah Multan 175 147 Subsection B2 additional, Sher Shah Multan 08 17 Section B3, bypass area, Muzaffargarh 295 398 Subsection B3 additional, bypass area, Muzaffargarh 91 99 Section A, Ram Kali Multan 81 81 Section C, Muzaffargarh Desert areac 0 0 Total 758 874 N = national highway, LARP = land acquisition and resettlement plan. a Description of Sections given at page 8, para 2.4. b The number of affected persons increased due to settlement of land rights among the legal heirs of a deceased affected person, and splitting of affected families into individuals. c State land no resettlement required. Source: ADB. 2009. Multan–Muzaffargarh N70 Project. Independent monitoring report. Islamabad (Loan 2231-PAK).
Table A8.5: Summary of Planned Budget Versus Actual Disbursement, by N70 Subproject Section Planned Actual Disbursement Balance Budget Amount % of Amount % of (PRs (PRs planned (PRs planned Section million) million) budget million) budget Remarks Section: A 2.62 2.49 95.04 0.13 4.96 Resettlement plan fully implemented Section: B 1 13.10 11.63 88.78 1.47 11.22 Resettlement plan fully implemented Section: B 2 104.07 104.96 100.86 (0.89) 0.86 Resettlement plan fully (Exceeded) implemented. Compensation amount from planned budget exceeded and extra amount was sanctioned by NHA headquarters for completion of disbursement Subsection: 2.23 1.75 78.48 0.48 21.52 Balance amount corresponds to B2 Additional 13 marlaa land, which is de- notified as per project design. This land is not needed. Section: B 3 333.50 286.48 85.90 47.02 14.10 Balance amount includes 10% contingencies and 60 kanalb of state land, which is mistakenly included in the LARP. Subsection 22.90 22.25 97.16 0.65 2.84 Resettlement plan fully B3 Additional implemented ( ) = negative, N = national highway, LARP = land acquisition and resettlement plan, NHA = National Highway Authority. a 1 marla = 0.003 hectare. Appendix b 1 kanal = 0.051 hectare. Source: ADB. 2009. Multan–Muzaffargarh N70 Project. Independent monitoring report. Islamabad (Loan 2231-PAK).
5
8. There were 117 complaints and grievances filed, 84% of which were resolved. Table A8.6 shows how they were distributed among the road sections and how they were dealt with.
39
40 Appendix 8
Table A8.6: Complaints and Grievances Subproject Road Section Complaints Filed Resolved Section A 0 0 Section B1 33 25 Section B2 15 14 Subsection B2 additional 0 0 Section B3 47 41 Subsection B3 additional 22 18 Total 117 98 Source: ADB. 2009. Multan–Muzaffargarh N70 Project. Independent monitoring report. Islamabad (Loan 2231-PAK).
9. The external monitor carried out a satisfaction survey of affected families after the completion of land acquisition and resettlement activities in each section of the road. Interviews were conducted with a sample of 117 affected families from nine villages, seven from Muzaffargarh District and two from Multan District. The results of the survey may be summarized as follows:
(i) The great majority of respondents said that they knew the resettlement policy and the grievance procedures. (ii) Of the 117 respondents, 11 had filed grievances. (iii) When asked about their level of satisfaction with procedures, compensation amounts, and timeliness of payment, the great majority expressed themselves ―fully satisfied,‖ and almost all the others expressed themselves ―partially satisfied‖ or ―basically satisfied.‖ (iv) In response to three of the 13 questions, there were two expressions of dissatisfaction or unhappiness. These may have been from the same two respondents. 10. One of the grievances was referred to the OSPF on behalf of 53 affected persons in the village of Gujja Basti. It concerned the payment of compensation for their land and a lack of information about the project and their concerns about being able to cross the road safely for economic and social purposes. In its annual report for 2009,2 the OSPF stated:
In September 2006, OSPF received a complaint on behalf of 53 affected persons relating to access to information from the National Highway Authority concerning the National Highway Development Plan, assisted by ADB loans, and about potential displacement due to road alignment, for which they requested compensation. Most actions to resolve this complaint were taken in 2008, including announcement and payment of compensation to affected persons whose land was required for road construction. What remained was the building of two underpasses, which were intended to ensure the safety of local people in crossing the road. In September 2009, OSPF‘s consultant verified that the underpasses had been completed and were in use. The complainants confirmed that they were satisfied with their compensation and the underpasses. This complaint was thus resolved.
2 ADB. 2009. Consultation Phase of the ADB Accountability Mechanism, Annual Report. Manila.
Appendix 9 41
ECONOMIC REEVALUATION A. Scope 1. This appendix concerns the economic reevaluation of the highway construction and improvement project financed by the first tranche of the multitranche financing facility (MFF) approved by the Asian Development Bank in 2005 for the National Highway Development Sector Investment Program in Pakistan. The project comprised three improvement and construction subprojects, which were completed in 2009 and 2010 on three stretches of national highway: Hub–Uthal on N25, (ii) Muslim Bagh–Qila Saifullah on N50, and (iii) Multan– Muzaffargarh on N70. 2. The subprojects were appraised in 2005 and the results appeared in the report and recommendation (RRP) of the President for National Highway Development Sector Investment Program (main text, footnote 1). Two components were significantly changed in scope before or during construction: (i) N25. This was originally to be a rehabilitation project of the existing carriageway but, with ADB concurrence, the executing agency decided after works began to widen the project road over most of its length by adding a carriageway. This added to the cost and the time needed for implementation, resulting in an extension. (ii) N50. The original subproject was for a 255-kilometer (km) length of road from Khanozai to Zhob. Before execution, it was decided to reduce its scope to the 50 km section between Muslim Bagh and Qila Saifullah. 3. The subproject on N70 differed from the others because it included construction of a new stretch of road as well as the widening and improvement of an existing route. The new section constructed was a bypass around the town of Muzaffargarh to relieve urban congestion due to through traffic. B. Methodology 4. Appraisal period. For each subproject, the same 25-year appraisal period was used: 2006–2030. This allows for a minimum 20-year flow of full benefits. The model allows for a shorter appraisal period for sensitivity purposes. 5. Currency and inflation. All project costs were incurred in Pakistani rupees. The unit costs applicable to road users, from which project benefits are derived, have all been provided by the National Highway Authority (NHA) in rupee terms and the reevaluation has been carried out in this currency. The rupee has declined in value against the US dollar as inflation has eroded its purchasing power at an average of 10.4% per annum since 2003. This has been allowed for to express all costs and benefits at constant 2011 prices. 6. Definition of with- and without-project cases. According to photographs and roughness estimates by the supervision engineers, the existing roads were all in poor condition Appendix at the start of project implementation. The supervision engineers estimated roughness to be at international roughness index values that were all significantly higher, indicating poor quality of roads. This suggests that a rational decision was taken by the NHA not to maintain the roads 5
pending reconstruction. It is assumed that if the project had not been conceived or undertaken, sufficient routine maintenance would have been undertaken to sustain the international roughness index value at the same level as was estimated at the time of project appraisal. 41
42 Appendix 9
7. In the with-project case, it is assumed that sufficient routine and periodic maintenance will be undertaken to maintain an average IRI value of 3. This is considered to be an achievable long-term average value if the improvement works are sound and maintenance interventions are adequate and timely. Any value below 4 is classified by the NHA, which was the executing agency, as ―good.‖ 8. Traffic. Classified traffic counts were undertaken at the time of appraisal and again in September 2011 when all three subprojects had been completed for at least 9 months. The later counts were used as the basis for project traffic throughout the appraisal period. Traffic growth rates for the various vehicle classes were projected uniformly throughout the appraisal period. The rates were determined after consultation with the NHA transport economist. They differentiate between roads and between vehicle classes. Only a low level of precision is claimed for the traffic data used here because (i) standard classification of vehicles is absent; (ii) traffic counts took place over periods as short as 1 day; and (iii) there is no accepted basis for adjusting traffic counts for daily or seasonal variations; (iv) traffic counts were not carried out on a regular basis, so no empirical basis exists for estimating historical trends as a basis for projection; and (v) traffic volumes and patterns have in been affected in recent years by natural disasters (especially floods and consequent wash-outs and bridge damage) as well as a volatile security situation. 9. Modeling. The NHA uses the World Bank Highway Development and Management— Vehicle Operating Costs Model (HDM-VOC) for project appraisal. This is a part of the broader Highway Development and Management Model (known as HDM-4) and computes road user costs, comprising vehicle operating costs (VOC) and travel time. The project completion report mission chose to use the same model, with NHA‘s recently updated unit costs, for consistency and to enable the NHA to use the analysis in future appraisals. Input data to the HDM-VOC software comprise (i) road characteristics; (ii) vehicle characteristics; (iii) vehicle utilization data; and (iv) unit costs, adjusted from financial to economic values. 10. HDM-VOC output takes the form of physical and economic performance figures for each vehicle class including (i) average speed; (ii) fuel consumption per 1,000 vehicle-km; (iii) passenger-hours per 1,000 vehicle-km; (iv) total road user cost per 1,000 vehicle-km; (vi) the value of passenger time per 1,000 vehicle-km; and (vii) the value of cargo holding time per 1,000 vehicle-km. 11. These output data were entered into a custom-made reevaluation Excel model to compute project benefits, project them alongside costs for the duration of the appraisal period, and compute the following economic performance indicators: (i) economic internal rate of return (EIRR); (ii) net present value, using ADB‘s preferred social discount rate of 12% per annum; (iii) benefit–cost ratio; and (iv) switching values for costs and benefits—i.e., the percentage by which either may change before the EIRR falls below the social discount rate.
12. The custom-made model was then used to test the sensitivity of the results to (i) increased capital costs, (ii) reduced VOC savings, (iii) reduced passenger time savings, (iv) reduced cargo time savings, (v) reduced traffic growth rates, and (vi) reduced appraisal period. The general parameters are presented in Table A9.1.
Appendix 9 43
Table A9.1: General Parameters Item Value Appraisal period 2006–2030 Residual capital value (%) 20 Social discount rate (% pa) 12 Personal time value growth (% pa) 3 Adjustments to contract prices for works Design, supervision, land etc. (%) 10 Price escalation to 2011 (% in rupee terms) 40 Economic conversion factora 0.86 Sensitivity test factors 0 Base case Most likely input values 1 Capital costs 1.20 2 VOC benefits 0.80 3 Personal time benefits 0.80 4 Cargo time benefits 0.80 5 Traffic growth rates 0.70 Selected case (base case) 0 VOC = vehicle operating cost. a From the economic analysis in the report and recommendation of the President, 2005: 0.70 for unskilled labor, 0.87 for all other item. Assumption: unskilled labor represents 3%–7% of total cost. Source: Asian Development Bank. C. Project Costs: Capital 13. The capital costs of each subproject have several components: (i) payments made to contractors, converted from financial to economic values; (ii) land acquisition and resettlement costs; (iii) design and supervision costs; and (iv) the NHA‘s own administrative overhead costs. 14. Payments to contractors were reported by the supervision engineers and by the NHA. The reports included variations for changes in scope and application in the contractual price escalation clause. A standard factor was applied to convert these to economic values. The economic analysis appendix to the (RRP) reported the use of 0.87 for all costs except unskilled labor for which a factor of 0.70 was used. Here an overall factor of 0.86 has been applied. 15. The price escalation clause allowed for inflation to be taken into account up to the time that each relevant expenditure was incurred. Most of the expenditure was incurred during FY2008–2009. Therefore, a further factor had to be applied to bring the price level to that of 2011. General inflation was about 37% during that time, but prices in the construction sector are believed to have been affected rather more than other prices. A factor of 1.40 has been applied. A further adjustment of 1.10 was applied to take account of design, supervision, land acquisition, resettlement, and administrative costs. 16. The period of project implementation was 4 years. The records of ADB and the NHA show the timing of payments to contractors and the timing of ADB loan drawdowns. But what matters in economic terms is the timing of the construction activities themselves. Therefore, the supervision engineers‘ reports on monthly progress have been used as the basis for estimating the profile of capital cost incidence. The capital cost of each subproject, its derivation, and its Appendix time profile are shown in Table A9.2.
5
43
44 Appendix 9
Table A9.2: Road Specific Parameter – Capital Cost Capital Cost Road (PRs million)a Length Percent of Capital Cost Section Contractb Adjustedc km 2006 2007 2008 2009 2010 2011 N25 3,416 4,525 79.5 0 12 37 43 8 0 N50 2,046 2,709 50.2 20 30 30 20 0 0 N70 5,359 7,098 36.5 0 13 24 30 33 0 Percent of Full Benefits 2006 2007 2008 2009 2010 2011 N25 0 0 10 30 70 100 onward N50 0 20 40 70 100 100 onward N70 0 0 10 20 50 100 onward N = national highway. Note: N25 = Hub–Uthal, N50 = Muslim Bagh–Qila Saifullah, N70 = Multan–Muzaffargarh. a At 2011 prices. b Financial payment to contractor, including variations for scope of work and price escalation during implementation. b Adjusted to include costs of design, supervision, land acquisition, resettlement and National Highway Authority overheads; and to convert financial to economic values. Source: Asian Development Bank. D. Project Costs: Maintenance 17. The cost and timing of maintenance interventions has been simplified as follows: (i) With-project case. This case assumes a uniform annual expenditure on routine maintenance and periodic maintenance at 7-year intervals. Periodic maintenance mainly consists of overlay. (ii) Without-project case. The case assumes a uniform annual expenditure on routine maintenance (such as patching, crack sealing, and edge repairs) sufficient to prevent deterioration. 18. Advice was taken from the NHA about the appropriate unit maintenance costs, which appear in Table A9.3. The cost of routine maintenance in the without-project case is assumed to be double the cost in the with-project case because of the poor starting condition of the road and the assumed absence of periodic maintenance. This cost is offset against with-project maintenance, producing negative costs in years when no periodic maintenance occurs. Table A9.3: Road Specific Parameter – Maintenance Regime and Costs Cost Interval (PRs million First Event in Year Item (years) per km) N25 N50 N70 Without project maintenance 1 0.80 2006 2006 2006 With project: Routine 1 0.40 2013 2012 2013 Periodic 7 13.60 2017 2016 2018 N = national highway. Note: N25 = Hub–Uthal, N50 = Muslim Bagh–Qila Saifullah, N70 = Multan–Muzaffargarh. Source: Asian Development Bank. E. Traffic 19. An acknowledged weakness of this analysis arises from the necessity of basing the traffic projection on traffic counts that are limited in scope. Given the security constraints in Pakistan, the NHA was able to conduct traffic counts for 48 hours at two locations on one of the project roads and over only 24 hours at a single location on each of the other two. The results appear in Table A9.4.
Appendix 9 45
Table A9.4: Daily Traffic, September 2011 Subproject Roads Item N25 N50 N70 Section length (km) 79.5 50.2 36.5 Passenger Vehicles Total traffic 5,917 5,435 15,883 Motorcycles 739 1,279 2,171 Cars and/or jeeps 1,559 1,519 6,310 Buses 445 49 379 Goods Vehicles Wagons and/or pick ups 942 1,259 2,524 Coasters and/or mini trucks 146 0 552 Rigid 2-axle trucks 755 972 2,109 Rigid 3-axle trucks 647 346 1,386 Articulated trucks 684 11 451 km = kilometer, N = national highway. Note: N25 = Hub–Uthal, N50 = Muslim Bagh–Qila Saifullah, N70 = Multan–Muzaffargarh. Source: Asian Development Bank estimates. 20. The N50 traffic volume is a distance-weighted average of two counts at two locations. The N70 traffic volume is a weighted average of one count and an estimate, the latter being based on information from the NHA that between 80% and 85% of traffic on the improved section of the project road also travels on the newly built bypass. 21. In discussion with the NHA officers, the mission was told that in some cases annual growth rates of national highway traffic as high as 14% per annum had been observed. But a medium and/or long-term average rate of 6%–7% was considered normal in most of the country. Rather lower rates of growth were expected in Balochistan Province where the subprojects were implemented. The mission translated this guidance into the set of projected growth rates shown in Table A9.5. The two general assumptions made were that (i) as per capita incomes grow, cars will gradually replace motorcycles as a means of personal transport; and (ii) articulated trucks will grow as a proportion of the goods vehicle fleet. A corollary of these assumptions is that traffic measured in terms of passengers and freight volume will grow slightly faster than traffic measured simply in terms of vehicles. Table A9.5: Road and Vehicle Specific Parameter – Traffic Growth Ratesa Cars Wagons Rigid Trucks Road and/or and/or Mini Articulated Section Motorcycles Jeeps Buses Pickups Trucks 2-Axle 3-Axle Trucks N25 4 7 5 5 5 5 5 6 N50 3 6 4 4 4 4 4 5 N70 4 7 5 5 5 5 5 6 N = national highway. Note: N25 = Hub–Uthal, N50 = Muslim Bagh–Qila Saifullah, N70 = Multan–Muzaffargarh. a Projected + % per annum. Source: Asian Development Bank.
22. In terms of total vehicle numbers, the average annual rates of growth are 5.5% (N25), Appendix 4.3% (N50), and 5.7% (N70). These rates are compatible with a return to the average annual rate of gross domestic product growth that Pakistan enjoyed from 2000 to the onset of the global economic crisis in 2008: 5.1%. In sensitivity testing, all traffic growth rates are factored by
5 0.70—for example, a projected rate of 5% per annum would be reduced to 3.5% per annum.
45
46 Appendix 9
F. Road Condition 23. As stated above, the without-project roughness of each project road was taken to be as reported in the RRP in 2005. They are shown here in terms of IRI value, with the supervision engineers‘ estimates of actual condition immediately before project implementation in parentheses: (i) N25, 6.7 (10–11); (ii) N50, 6.5; and (iii) N70, 4.5 (9–10). 24. A general assumption was made that due to the project horizontal curvature had been slightly reduced from 35 to 25 degrees per kilometer. Actual altitude estimates are also entered into the model: 50 meters (N25), 1,750 meters (N50), and 120 meters (N70). G. Project Benefits 25. This analysis is limited to benefits that accrue to road users and are in principle quantifiable. They comprise reductions in VOC because of smoother, faster travel and the value of time saved by passengers and the owners of goods in transit. 26. Following NHA practice, data were entered into HDM-VOC for only five basic vehicle classes: (i) car and/or jeeps, (ii) buses, (iii) rigid 2-axle trucks; (iv) rigid 3-axle trucks; and (v) articulated trucks. Road user costs for the other three vehicle classes were derived from those computed for the basic five. These classes represent 18%–23% of total traffic, so this represents a significant addition to the imprecision implicit in the narrowly based traffic estimates: (i) Motorcycle costs = car costs x 0.20. Speed = car x 0.75. Passenger time value = car x 0.67. (ii) Wagon costs = 2-axle truck costs x 0.33. (iii) Coater and/or pickup costs = 2-axle truck costs x 0.50. 27. In proportional terms, road user savings are modest. For the N25 and N50 subprojects, which had rather high IRI values at the time of original appraisal, the savings in each vehicle class ranged from 5% to 18%. For N70, the savings ranged from 4% to 7%. 28. But the principal source of benefits from the N70 subproject was the bypass built to allow traffic to pass around rather than through Muzaffargarh. For the purpose of estimating benefits, the road was divided into two sections: N70A and N70B, the latter being the bypass. 29. HDM-VOC does not have a module to calculate the effects of congestion and side friction that a road user encounters when forced to go through a busy urban centre. The mission mimicked these effects by entering very low desired speeds into the model: 32 kilometers per hour for cars and 27 kilometers per hour for buses and trucks. This was based on the information from the NHA confirming that, under normal circumstances, a time saving of 20 to 30 minutes is achieved by using the bypass rather than travelling through the city. The results obtained from running HDM-VOC with these low desired speeds indicate vehicle class specific time savings of between 21 and 26 minutes, in addition to 4 minutes saved by all vehicle classes on the improved section of road. 30. Urban traffic has also benefitted from the diversion of through traffic to the bypass but the mission had no basis on which to estimate this effect so it has been explicitly excluded from the reevaluation. In view of this, the EIRR estimated is on the conservative side.
Appendix 9 47
H. Results 31. A summary of economic performance indicators appears in Table A9.6. This table also shows the effect of applying the sensitivity tests. Table A9.6: Summary of Economic Performance Indicators Road Section Item N25 N50 N70 Total Base Case Capital costa (PRs million) 1 3,416 2,046 5,359 10,821 2 4,525 2,709 7,098 14,331 Economic internal rate of return (%pa) 29.6 13.7 16.3 20.0 Net present value (PRs million) 5,251 304 1,809 7,364 Benefit–cost ratio 2.74 1.14 1.39 1.76 Switching value:b costs (%) 173 14 39 75 Switching value: benefits (%) (63) (12) (28) (43) EIRR under Sensitivity Tests Capital costs x 1.20 (%pa) 25.2 11.5 13.9 17.1 VOC benefits x 0.80 (%pa) 25.2 11.3 14.5 17.4 Passenger time benefits x 0.80 (%pa) 29.3 13.4 15.4 19.5 Cargo time benefits x 0.80 (%pa) 29.4 13.6 16.1 19.9 Traffic growth rates x 0.70 (%pa) 28.5 12.7 14.9 18.8 Appraisal period ending in 2025 (%pa) 29.0 12.3 14.7 16.1 ( ) = negative, BCR = benefit–cost ratio, EIRR = economic internal rate of return, NPV = net present value, pa= per annum, SV = switching value, VOC = vehicle operating cost. Note: N25 = Hub–Uthal, N50 = Muslim Bagh–Qila Saifullah, N70 = Multan–Muzaffargarh. a The cost figures labeled 1 in second column are actual payments to contractors, including variations for changed scope of works and price escalation. Those labeled 2 in second column are factored by 1.10 to include the costs of design, supervision, land acquisition, resettlement, and the executing agency‘s overheads; by 1.40 to include price escalation to base year 2011; and by 0.86 to convert financial to economic costs. b Switching value is the percentage by which either costs or benefits can change before the EIRR falls below the social discount rate of 12% per annum. Source: Asian Development Bank estimates. I. Conclusions 32. According to this reevaluation, the economic performance of one subproject is very robust while the other two are marginally acceptable with a threshold EIRR of 12%pa. 33. The reasons for the N25 subproject‘s robustness are (i) the high IRI value in the without- project case, and (ii) the large number of heavy goods vehicles using the road, especially articulated trucks, each of which is estimated to enjoy project benefits of PRs22 per vehicle-km. The N50 subproject has an IRI value that is only slightly lower, a similar capital cost per kilometer, and a traffic count only 8% lower than that on N25. However, motorcycles and wagons and/or pickups, with respective benefits of only PRs0.55 and PRs1.24 per vehicle-km, account for 47% of vehicles using this road. 34. The N70 subproject has large benefits because of the time savings provided by the
Muzaffargarh Bypass. But the capital cost of the bypass is correspondingly high because it is a Appendix new construction with considerable earthworks and land acquisition. 35. Aggregated, the three subprojects are estimated to produce a comfortable EIRR of
5
20.0% per annum. Even with capital costs factored by 1.20 and 10 years cut from the appraisal period, the overall project EIRR is 12.6% per annum.
47