Document of The World Bank FOR OFFICIAL USE ONLY
Report No: ICR00004845 Public Disclosure Authorized
IMPLEMENTATION COMPLETION AND RESULTS REPORT
ON A
LOAN 7792-IN
IN THE AMOUNT OF US$320 MILLION Public Disclosure Authorized TO THE
REPUBLIC OF INDIA
FOR THE
ANDHRA PRADESH AND TELANGANA ROAD SECTOR PROJECT (P096021)
October 30, 2019
Public Disclosure Authorized Transport Global Practice South Asia Region
Public Disclosure Authorized
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective March 31, 2019)
Currency Unit = Indian Rupee (INR) INR 69.55 = US$1
FISCAL YEAR April 1 - March 31
ABBREVIATIONS AND ACRONYMS
AADT Annual Average Daily Traffic AP Andhra Pradesh APRDC Andhra Pradesh Road Development Corporation APSHP AP State Highway Project APTRSP Andhra Pradesh and Telangana Road Sector Project CAS Country Assistance Strategy CCC Command and Control Center CPF Country Partnership Framework CRN Core Road Network EIRR Economic Internal Rate of Return ENPV Economic Net Present Value EOCC Economic Opportunity Cost of Capital FM Financial Management GAAP Governance and Accountability Action Plan GOAP Government of Andhra Pradesh GoI Government of India GOT Government of Telangana GRM Grievance Redress Mechanism HDM Highway Development and Management HR Human Resource(s) ICR Implementation Completion and Results Report IRI International Roughness Index ISAP Institutional Strengthening Action Plan ISR Implementation Status and Results Report LA Land Acquisition LCV Light Commercial Vehicle LTPBMC Long-term Performance-based Maintenance Contract M&E Monitoring and Evaluation MIS Management Information System NPV Net Present Value OPRC Output-and Performance-Based Road Contract PAD Project Appraisal Document PAP Project-affected Person PDO Project Development Objective PPP Public-Private Partnership RAMS Road Asset Management System RBD Roads and Buildings Department RDC Road Development Corporation RF Results Framework RMS Road Management System RPF Resettlement Policy Framework R&R Resettlement and Rehabilitation TOC Theory of Change TRDC Telangana Road Development Corporation VKT Vehicle Kilometer Travelled VOC Vehicle Operating Cost
Regional Vice President: Hart Schafer
Country Director: Junaid Kamal Ahmad Senior Global Practice Director: Guangzhe Chen Practice Manager: Shomik Raj Mehndiratta Task Team Leader(s): Nupur Gupta ICR Main Contributor: Hisham Fouad
TABLE OF CONTENTS
DATA SHEET ...... ERROR! BOOKMARK NOT DEFINED. I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ...... 7 A. CONTEXT AT APPRAISAL ...... 7 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) ...... 9 II. OUTCOME ...... 11 A. RELEVANCE OF PDOs ...... 11 B. ACHIEVEMENT OF PDO (EFFICACY) ...... 12 D. JUSTIFICATION OF OVERALL OUTCOME RATING ...... 15 E. OTHER OUTCOMES AND IMPACTS (IF ANY) ...... 16 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ...... 17 A. KEY FACTORS DURING PREPARATION ...... 17 B. KEY FACTORS DURING IMPLEMENTATION ...... 18 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 20 A. QUALITY OF MONITORING AND EVALUATION (M&E) ...... 20 C. BANK PERFORMANCE ...... 23 D. RISK TO DEVELOPMENT OUTCOME ...... 23 V. LESSONS AND RECOMMENDATIONS ...... 24 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ...... 27 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ...... 44 ANNEX 3. PROJECT COST BY COMPONENT ...... 46 ANNEX 4. EFFICIENCY ANALYSIS ...... 47 ANNEX 5. EXAMPLES OF LAND ACQUISITION DELAYS ...... 65 ANNEX 6. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ... 67 ANNEX 7. SUPPORTING DOCUMENTS (IF ANY) ...... 80 ANNEX 8. COMPERATIVE ASSESSSMENT OF STATE’S INITIATIVES: CASE OF ANDHRA PRADESH & TELANGANA, KARNATAKA, AND RAJASTHAN ...... 81
The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021)
DATA SHEET
BASIC INFORMATION
Product Information Project ID Project Name
P096021 Andhra Pradesh & Telangana Road Sector Project
Country Financing Instrument
India Investment Project Financing
Original EA Category Revised EA Category
Full Assessment (A) Full Assessment (A)
Organizations
Borrower Implementing Agency
Republic of India, APRDC
Project Development Objective (PDO)
Original PDO The development objective of the project is to provide better quality, capacity and safe roads to users in a sustainable manner through enhanced institutional capacity of the Andhra Pradesh government in the road sector.
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The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021)
FINANCING
Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing
320,000,000 191,534,538 191,534,538 IBRD-77920 Total 320,000,000 191,534,538 191,534,538
Non-World Bank Financing 0 0 0 Borrower/Recipient 325,860,000 244,292,000 181,808,700 Total 325,860,000 244,292,000 181,808,700 Total Project Cost 645,860,000 435,826,538 373,343,238
KEY DATES
Approval Effectiveness MTR Review Original Closing Actual Closing 15-Oct-2009 23-Mar-2010 08-Oct-2012 30-Jun-2015 31-Mar-2019
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The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021)
RESTRUCTURING AND/OR ADDITIONAL FINANCING
Date(s) Amount Disbursed (US$M) Key Revisions 03-Mar-2014 97.68 Reallocation between Disbursement Categories 26-Feb-2015 117.90 Change in Implementing Agency Change in Results Framework Change in Components and Cost Change in Loan Closing Date(s) Reallocation between Disbursement Categories Change in Legal Covenants Change in Institutional Arrangements Change in Financial Management Change in Procurement Change in Implementation Schedule Other Change(s) 07-Apr-2017 159.86 Change in Results Framework Change in Components and Cost Cancellation of Financing Reallocation between Disbursement Categories 25-May-2017 159.86 Change in Loan Closing Date(s) Change in Implementation Schedule 28-Jul-2017 162.78 Change in Results Framework Change in Loan Closing Date(s) Change in Implementation Schedule 29-Nov-2018 174.83 Change in Loan Closing Date(s) Reallocation between Disbursement Categories Change in Implementation Schedule
KEY RATINGS
Outcome Bank Performance M&E Quality Satisfactory Satisfactory Substantial
RATINGS OF PROJECT PERFORMANCE IN ISRs
Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 28-May-2010 Satisfactory Satisfactory 15.00
02 11-Dec-2010 Satisfactory Satisfactory 15.00
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The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021)
03 01-Jun-2011 Satisfactory Satisfactory 22.91
04 31-Dec-2011 Satisfactory Satisfactory 28.49
05 02-Jun-2012 Satisfactory Moderately Satisfactory 37.72
06 27-Oct-2012 Satisfactory Moderately Unsatisfactory 51.03
07 18-Mar-2013 Moderately Satisfactory Moderately Unsatisfactory 61.81
08 20-Aug-2013 Moderately Satisfactory Moderately Unsatisfactory 88.33 Moderately 09 23-Oct-2013 Unsatisfactory 93.33 Unsatisfactory 10 22-Feb-2014 Moderately Satisfactory Moderately Unsatisfactory 97.68
11 25-Mar-2014 Moderately Satisfactory Moderately Unsatisfactory 107.41
12 24-May-2014 Moderately Satisfactory Moderately Satisfactory 113.18
13 01-Oct-2014 Moderately Satisfactory Moderately Satisfactory 114.45
14 28-Apr-2015 Moderately Satisfactory Moderately Satisfactory 126.25
15 16-Sep-2015 Moderately Satisfactory Moderately Satisfactory 136.30 Moderately 16 31-Dec-2015 Moderately Unsatisfactory 141.01 Unsatisfactory Moderately 17 17-Jun-2016 Unsatisfactory 148.47 Unsatisfactory 18 27-Dec-2016 Moderately Satisfactory Moderately Unsatisfactory 155.36
19 21-Jun-2017 Moderately Satisfactory Moderately Unsatisfactory 162.73
20 22-Sep-2017 Satisfactory Moderately Unsatisfactory 162.78
21 27-Mar-2018 Satisfactory Moderately Satisfactory 170.17
22 27-Dec-2018 Satisfactory Moderately Satisfactory 175.77
23 21-Mar-2019 Moderately Satisfactory Moderately Satisfactory 177.07
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The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021)
SECTORS AND THEMES
Sectors Major Sector/Sector (%)
Transportation 100 Urban Transport 5 Rural and Inter-Urban Roads 95
Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%)
Economic Policy 25
Trade 25
Trade Facilitation 25
Private Sector Development 27
Jobs 17
Job Creation 17
Public Private Partnerships 10
Public Sector Management 26
Public Finance Management 13
Public Expenditure Management 13
Public Administration 13
Transparency, Accountability and Good 13 Governance
Urban and Rural Development 34
Urban Development 17
Urban Infrastructure and Service Delivery 17
Rural Development 17
Rural Infrastructure and service delivery 17
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The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021)
ADM STAFF
Role At Approval At ICR
Regional Vice President: Isabel M. Guerrero Hartwig Schafer
Country Director: N. Roberto Zagha Junaid Kamal Ahmad
Director: John Henry Stein Guangzhe Chen
Practice Manager: Michel Audige Shomik Raj Mehndiratta
Task Team Leader(s): Binyam Reja Nupur Gupta
ICR Contributing Author: Hisham Mahmoud Fouad
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The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021)
I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES
A. CONTEXT AT APPRAISAL
Context
1. Andhra Pradesh (AP) displays economic, social, health, and education indicators that are better than the national averages.1 It pioneers significant administrative and fiscal reforms, for example, e- procurement where AP is a leading state, and Development Policy Lending. While most of AP’s population relies on agriculture, the mining sector is a major economic driver with key inputs such as coal and limestone for power generation and construction. Transport, telecommunication, IT, and tourism (that is, tertiary sector) are on the rise and currently contribute up to 50 percent of the state’s gross domestic product.2
2. Of AP’s approximately 188,568 km of roads, only 68,510 km are managed by the Roads and Buildings Department (RBD), while the rest are managed by the respective municipalities. Of RBD’s managed roads, roughly 60 percent are state highways and major district roads. In 1997, and according to traffic and strategic significance, AP designated 10,000 km of state highways and major district roads (MDR) as core road network (CRN), to be managed by the Road Development Corporation (RDC).
3. The Government of Andhra Pradesh (GOAP) recognized the need for an efficient transport system to achieve its goals for economic growth and poverty reduction. Accordingly, the GOAP has been investing in the capital improvement of its road infrastructure. Funding sources for such investments include GOAP own funds, the Central Road Fund of the Government of India (GoI), domestic borrowing, and international organizations such as the World Bank, for example, AP Economic Restructuring Project (APERP - Report No: 17710-IN) and the AP State Highway Project (APSHP - Report No.: 19173-IN).
4. Despite these investments, the capacity of AP’s network remained limited; maintenance activities were lagging, as the funding gap continued to grow; RBD and RDC technical and administrative expertise were restricted; and a robust road asset management system (RAMS), needed for the proper planning and budgeting of maintenance work, did not exist.
5. With a persisting funding gap, which led to a deficit in transport infrastructure,3 the GOAP was keen on exploring different funding mechanisms including public-private partnerships (PPPs). AP ratified the Infrastructure Act (2001) thus defining areas for PPP, outlining competitive bidding procedures, and identifying step-in rights for lenders.
6. On the institutional front, RDC was not fully operational as it lacks the internal capacities needed to develop and manage capital improvement, maintenance, and PPP projects in an effective manner.
1 Country Strategy for the Republic of India (CAS 2009–2012), World Bank, November 14, 2008. 2 “Andhra Pradesh Emerges as the Preferred IT Hub in India.” The Financial Express, March 26, 2008. 3 Grants-in-aid to the states, Twelfth Finance Commission, p. 182.
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The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021)
While steps were taken to overcome these limitations, budgetary and personnel constraints have hampered these efforts.4
7. Finally, a deteriorating road safety was fueled by growing motorization, higher speeds, and a lack of coordination between the multiple agencies responsible for road safety. According to the Andhra Pradesh Road Safety Authority, while the 2006 data indicated 117 accidents per day, with 34 fatalities and 164 injuries, in 2007 these numbers have jumped to 131 accidents, with 36 fatalities and 179 injuries.5
Theory of Change (Results Chain)
8. Theory of Change (TOC) is illustrated in table 1. Key assumptions of the TOC include the following: (a) state and pertinent authorities provide contractors with the support needed, for example, access to project sites, land acquisition (LA) and resettlement and rehabilitation (R&R) plans; (b) the GOAP has the political will to operationalize RDC, including the ratification of needed decrees and the implementation of institutional and fiscal reforms needed to improve RDC’s efficiency; and (c) state and pertinent authorities (for example, traffic police, emergency response) collaborate in the successful delivery of the road safety demonstration projects.
Project Development Objective (PDO)
9. As stated in the Legal Agreement dated January 22, 2010, the PDO is to provide better quality, capacity and safe roads to users in a sustainable manner through enhanced institutional capacity of the Andhra Pradesh government in the road sector.
Key Expected Outcomes and Outcome Indicators
10. The achievement of the PDO was monitored through the following indicators: improvement in the share of the Core Road Network (CRN) in good condition, ability to launch PPP projects, full operationalization of RDC with adequate financial and human resources to manage the CRN, and reduction in fatality rates per vehicle km travelled (see Results Framework [RF] in annex 1).
Components
11. The original project’s total cost was US$645.86 million, financed by an IBRD loan of US$320 million and counterpart funds of US$325.86 million. It comprised four components:
• Component 1 - Road Improvement. This component comprises two activities designed to upgrade and maintain the CRN: (a) upgrading about 429 km of priority state highways (284 km in Phase I and 145 km in Phase II) under public sector financing and (b) maintenance of 6,241 km of the CRN under Long-term Performance-based Maintenance Contract (LTPBMC).
• Component 2 - PPP Facilitation Support. This component will strengthen the capacity of Andhra Pradesh Road Development Corporation (APRDC) to attract private sector participation in financing, development, and management of selected high traffic density
4 Project Appraisal Document (PAD), September 19, 2009. 5 “Accidents, More Accidents Every Day. “The Hindu”, May 3, 2007.
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The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021)
corridors. The loan financed the costs of (a) transaction advisers to assist APRDC to carry out feasibility studies and to develop and transact selected PPP roads and (b) capacity building of APRDC to be able to better identify, structure, award, and monitor PPP projects.
• Component 3 - Institutional Strengthening. This component provided targeted technical assistance, training, and advisory services for (a) operationalization of APRDC with requisite capacity to manage the CRN and PPP projects and (b) various aspects of project implementation including the Asset Management Program, GAAP, and ISAP.
• Component 4 - Road Safety. This component was designed to help the GOAP provide safer road corridors by assisting the concerned agencies to initiate road accidents reduction measures, including the following: (a) implement institutional and policy action plans for improving responsibility and capacities, and (b) undertake demonstration projects on selected CRN corridors including the implementation of a black spot improvement program.
B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE)
Revised PDOs and Outcome Targets
12. While the PDO remained unchanged throughout the project, outcome targets changed in view of the bifurcation of AP’s administrative boundaries into AP and Telangana (AP Reorganization/Bifurcation Act).6
Revised PDO Indicators
13. Indicators were revised to reflect AP’s Bifurcation Act. While indicators for Components 1 and 2 (that is, infrastructure) were spread between both states, indicators for Components 3 and 4 (that is, institutional strengthening) were replicated to mirror the creation of two states. In addition, indicators for Component 1 were reduced to 427km of CRN and 6,018km of LTPBMC due to land acquisition complexities, where civil works, lane widening, and intersection improvements were part of maintenance activities.7
Revised Components
14. Components were revised in response to AP’s Reorganization/Bifurcation Act (see revised PDO indicators).
Other Changes
15. March 3, 2014 and February 26, 2015.8 The changes were (a) reallocations between disbursement categories and (b) cancellation of US$56 million as savings due to exchange rate variations.
6 Gazette of India, March 1, 2014. 7 AP Implementation Support Missions, July 28–August 9, 2014 and August 19–29, 2018, p. 5 and 2, respectively. 8 World Bank letter to GOAP, January 21, 2015.
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The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021)
Table 1. Theory of Change Activities Output Indicators Outcomes PDO Component 1: The subject activities are 1. Share of CRN in good condition 1. Vehicle operating cost declines relative The PDO is to Road designed to upgrade and increased to without project situation in upgraded provide better Improvement maintain the CRN. 1.1. 429 km upgraded efficiently in roads. quality, capacity (US$290.55 an environmental and socially 2. Travel time for bus passengers declines and safe roads to million) sustainable way relative to without project situation in users in a 1.2. 6,241 km of roads under upgraded roads. sustainable LTPBMC manner through Component 2: Technical assistance to 2.1 RDC manages concession of RDC ability to engage the private sector to enhanced PPP Facilitation strengthen the capacity of three roads of those selected for finance, develop, and manage road institutional Support the GOAP to attract private PPP transactions. concessions. capacity of Andhra (US$2.46 million) sector participation. Pradesh Component 3: Technical assistance, 3.1. ISAP milestones are met. RDC is fully operational with adequate government in the Institutional training, and advisory 3.2. GAAP milestones are met. financial, technical and administrative road sector, which Strengthening services to support the 3.3. Annual maintenance plans resources needed to manage the CRN. should support in (US$11.27 implementation of both the are developed through the RMS achieving its goals million) Institutional Strengthening system. for economic Action Plan (ISAP) and the growth and Governance and poverty reduction. Accountability Action Plan (GAAP), which have been prepared by RDC and endorsed by the GOAP during project preparation. Component 4: Support the GOAP to 4.1. Demonstration projects Number of road accidents fatalities per Road Safety provide safer road corridors carried out in at least two road vehicle km reduced on demonstration (US$14.92 by initiating measures to corridors. corridors. million) reduce road accidents on 4.2 Comprehensive GOAP road major corridors. safety functions, capacity and action plan(s) put in place. 4.3 Black spot improvements initiated.
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The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021)
16. April 7, 2017.9 The project was observed to be adversely affected by (a) political uncertainties of the Bifurcation Act, (b) adoption of a new Land Acquisition and Resettlement Act, (c) inferior performance of some road upgrading packages leading to the termination and/or rebidding of three—out of the nine— packages, and (d) lagging progress for Components 3 and 4.10 These factors had led to project restructuring that included (a) inclusion of an additional implementation agency for the new state (that is, Telangana) as an additional implementing agency; (b) deletion of the Kakinada-Rajahmundry upgrading package (KR-07) from the scope of the project (62 km) in view of prolonged land acquisition processes; (c) cancellation of a corresponding US$25 million; and (d) extension of the project closing date by 1 year and 11 months, from June 30, 2015 to May 31, 2017. The preceding restructuring led to changes in the RF and legal covenants, including (a) the revision of intermediate outcome and core indicators for Component 1 and (b) the reduction of the target indicator number of PPP roads from three to two as one of the roads was reclassified from a state to a national highway.
17. May 25 and July 28, 2017.11 At the request of the GOAP and the Government of Telangana (GOT)—and following the satisfactory fulfillment of long outstanding environmental and safeguard issues—the World Bank granted the subject project an additional extension to December 31, 2018, which was needed to allow for the completion of project activities.
18. November 29, 2018.12 At the request of the GOAP and the GOT, the World Bank granted the project a final extension to March 31, 2019, to allow for the completion of project activities under Components 1, 3, and 4.
Rationale for Changes and Their Implication on the Original TOC
19. In a letter dated December 16, 2014, the borrower informed the World Bank of the enactment of AP’s Reorganization Act 2014, thus carving out Telangana State (Telangana) from AP. Consequently, the borrower intimated the need to restructure the project to reflect the GOT’s commitment to carry out the project and to signify the impact of the Reorganization Act on the advancement of project components.13 While the activities and the outcomes remained unchanged, indicators had to be either split (Components 1 and 2) or duplicated (Components 3 and 4) to reflect the creation of two states.
II. OUTCOME
A. RELEVANCE OF PDOs
Assessment of Relevance of PDOs and Rating
20. The World Bank Group’s Country Assistance Strategy for India (CAS 2009–12) emphasized rapid and inclusive growth, sustainable development, and improving government’s effectiveness for service
9 World Bank letters to Dept. of Economic Affairs, Ministry of Finance, April 12, 2017, and July 31, 2017. 10 World Bank letter to Government of Andhra Pradesh, February 27, 2015. 11 World Bank letter to Dept. of Economic Affairs, Ministry of Finance, July 31, 2017. 12 World Bank letter to Dept. of Economic Affairs, Ministry of Finance, December 28, 2018. 13 Aide memoire transmitted to the borrower, Andhra Pradesh, and Telangana through the World Bank’s letter dated September 1, 2014.
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The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021)
delivery. The proposed project was well aligned with the CAS as following: the road improvement component was designed to help ease bottlenecks in the state’s road infrastructure; the PPP component was designed to emphasize private sector engagement thus promoting innovation and management efficiencies; the institutional and policy development component was designed to help reform RDC to better plan, administer, and maintain the CRN in a sustainable manner; and the road safety component was designed to address cross-cutting issues of traffic incidents.
21. At the state level, with AP’s commitment and robust appetite for allowing innovative approaches to improve service delivery,14 the proposed project would improve the performance of existing road authorities and support building a strong performance and result culture.15
22. At the sector level, the proposed project built on the World Bank’s commitment to sustainable connectivity,16 including the successful implementation of the APSHP, which helped establish the GOAP Road Policy (2005–2015), a framework for a toll policy, use of e-procurement, a state-level R&R policy, and the National Academy of Construction Training. This project was designed to deepen the World Bank’s engagement in the sector and promote sustainability by focusing on issues such as transport financing, private sector participation, preservation of road assets, and road safety.
23. The project was also supporting the implementation of Governance and Accountability Action Plan (GAAP) and Institutional Strengthening Action Plan (ISAP), which was designed to enhance systems, procedures, and processes before, during, and after project implementation; help RDC improve information disclosure and transparency in project implementation; provide for better quality control measures and third-party monitoring system; and incorporate citizens’ inputs and complaints through mandatory user satisfaction surveys.
24. The project remains relevant to India’s economy nearly a decade following its inception. The 2018–22 Country Partnership Framework (CPF)17 stipulates that the Government continues to pursue policies aimed at strengthening public sector institutions, improve implementation capabilities, target connectivity constraints by supporting road development and maintenance, and strengthen private sector participation.
25. Based on the above, the rating for relevance is Substantial.
B. ACHIEVEMENT OF PDO (EFFICACY)
Assessment of Achievement of Each Objective/Outcome
26. As per the Loan Agreement, the PDO is to “[p]rovide better quality, capacity and safe roads to users in a sustainable manner through enhanced institutional capacity of the Andhra Pradesh government in the road sector.” For this analysis, the Implementation Completion and Results Report (ICR) will focus
14 Country Strategy for the Republic of India (CAS 2009–12), The World Bank, November 14, 2008. 15 Country Partnership Framework for India (CPF 2018–22), The World Bank, July 25, 2018. 16 India: Systematic Country Diagnostic, The World Bank, 2018. 17 Country Partnership Framework for India for the Period FY18–FY22, Report No. 126667-IN, July 25, 2018.
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The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021)
on (a) quality, (b) capacity, (c) safety, (d) sustainability, and (e) institutional capacity of the provincial government.
Outcome 1: Share of CRN in good condition increased resulting in VOC and travel time enhancements
27. The outcome of improving CRN quality is to enhance both vehicle operating cost (VOC) and travel time. The subject outcome has two indicators: (a) 429 km of roads upgraded efficiently in an environmental and socially sustainable way and (b) 6,241 km of roads under LTPBMC. With respect to the road upgrading activity, the deletion of the KR-07 package (62.2 km), and the reductions of both KD-02 (AP) by 8 km18 and of KS-05 (Telangana) by 16 km19, see April 7, 2017 restructuring documents,20 yielded a revised length of 340 km (that is 230 km for AP and 110 km for Telangana). The LTPBMC activity was successfully concluded by the closing date and has proven to be very effective in improving the quality of the CRN.21 Combining both activities, that is roads’ upgrades and LTPBMC, resulted in an increase in the percentage of CRN in good condition from 40 percent to 85 percent, thus exceeding the targeted 80 percent. The below table indicates the improved CRN, VOC, and travel time. Table 2. Summary of Indicators Indicators Unit Appraisal Target Final Indicator (ICR (without project) (with project) mission, June 2019) Share of CRN in good condition increased Percent 40 80 85 Vehicle operating oost declines INR per Cars: 5.41 Cars: 4.76 Cars: 4.88 veh.Km Trucks: 11.85 Trucks: 10.9 Trucks: 9.59 Travel time for passenger buses declines hrs. 10.6 7.8 8.3
Outcome 2: RDC ability to engage the private sector to finance, develop, and manage road concessions
28. With respect to the three PPP concessions (that is, indicator for Outcome 2), the government did award two roads, one for each state, as toll-based PPP concessions for a total length of 420 km and a total project cost of INR 2,694 crore (US$385 million), which have been completed and are currently in service. The third road was reclassified as a national highway and, therefore, eliminated from the scope.
Outcome 3: RDC is fully operational with adequate finance, technical, and administrative resources
29. The subject outcome has three indicators: (a) ISAP milestones are met, (b) GAAP milestones are met, and (c) Annual maintenance plans are developed through the RMS system. These institutional strengthening and reform activities were ambitious since no state in India has either a functional road corporation or RAMS and MIS to justify and prioritize maintenance budgets. For AP, the following items were sanctioned by the Chief Minister at completion: organizational structure, human resource (HR) manual, training plans and state network master plan, and a Road Fund Bill that was presented for ratification on November 11, 2016 but is still pending.22 In addition, the RAMS and MIS are operational, with data compiled and uploaded, and with the RMS output used to develop multiyear rolling programs
18 AP Implementation Support Mission, November 20-30, 2016, p. 5. 19 Telangana Implementation Support Mission, July 13–25, 2017, p. 3. 20 World Bank letters to Dept. of Economic Affairs, Ministry of Finance, April 12, 2017 and July 31, 2017. 21 AP Implementation Support Mission, March 3–20, 2015, p. 6. 22 AP Implementation Support Mission, August 19–29, 2018, p. 7.
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for maintenance. For Telangana, while the ‘Telangana State Road Development Corporation’ was established in February 2017 to oversee flagship road development programs (for example, Telangana- Rahadarula-Abhivruddhi-Karyakramam), the development of RAMS and MIS was not achieved, and the formal endorsement of the Road Fund is yet to take place.23 Overall, a ‘Disclosure and Complaint Handling’ mechanism was operational through the RDC website, where 341 grievances were received, of which 184 (that is, 54 percent) were related to discrepancies in R&R entitlements, eligibility for R&R benefits, changes in eligibility lists, and demands for higher compensation. Out of these grievances, 166 (that is, 48 percent) were rendered favorable decisions. While the Grievance and Redress Mechanism (GRM) dealt with land acquisition and resettlement related complaints, the Labor Commissioner dealt with labor related complaints. The Labor Association filed one of the cases in High Court. The Contractor was instructed to pay outstanding labor payments before pending bills are approved.
Outcome 4: Improved road safety along demonstration corridors
30. There are three subcomponents for the subject outcome: (a) implement institutional and policy action plans for improving responsibility and capacities (b) undertake demonstration projects on selected CRN corridors including the implementation of a black spot improvement program. Concerning the institutional subcomponent, AP approved the developed road safety policy, and it also established a road safety lead agency with 30 staffers from transport, police, and highway agencies. For Telangana, a road safety lead agency was formed, including the appointment of a chairman and trained staff, and the road safety policy and bill are awaiting approval. Demonstration projects were expected to result in a reduction in the number of accidents for AP’s Renigunta-Rayalacheruvu Corridor from 0.60 to 0.47 fatalities per km and for Telangana’s Hyderabad-Bijapur Corridor from 1.48 to 0.36 fatalities per km. At project closure, AP’s reduction was measured at 0.57 fatalities per km and Telangana’s at 0.99 fatalities per km.24 As will be further explained under ‘M&E Design’, a more representative indicator would be fatalities per 100 vehicle kilometers travelled (VKT) as it takes traffic growth into consideration. Fatalities per 100 VKT on the AP demo corridor were dramatically improved from 19 in 2009 to 11.3 in 2017.
Justification of Overall Efficacy Rating
31. Despite major challenges for Component 1, the project was able to achieve substantial completion of the road upgrade subcomponent and full completion of the LTPBMC subcomponent, resulting in substantial achievement of CRN in good condition from its base share of 40 percent to a combined (that is, for both AP and Telangana) 85 percent. RDC’s ability to engage the private sector to finance, develop, and manage road concessions (that is, Component 2) was fully completed for both states as well. Regarding the operationalization of the road departments (that is, Component 3), while AP was able to substantially meet the identified indicators, Telangana was not, thus resulting in modest completion. The road safety (that is, Component 4) was manifested through substantial reductions in fatalities, improvements of pursued black spots, development of road safety policy, and establishment of lead agencies with dedicated and trained staffers for both states.
32. Based on the above, the overall efficacy is Substantial.
23 Telangana Implementation Support Mission, August 19–29, 2018, p. 5. 24 Technical Note on Demo Corridor, Implementation and M&E, Eptisa, September 2018.
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C. EFFICIENCY
Assessment of Efficiency and Rating
33. Economic analysis. Details of the economic analysis are presented in annex 4. At appraisal, economic cost-benefit analyses were carried out for both the road upgrading package and the LTPBMC works. It indicated the net present value (NPV) and economic internal rate of return (EIRR) of each road upgrading package using the Highway Development and Management (HDM 4) model and of each periodic maintenance package using the Road Economic Design model. Net benefits were discounted over the life of the investments at 12 percent as the minimum required economic opportunity cost of capital (EOCC).
34. The ex-post economic analysis for the roads’ upgrade and the LTPBMC subcomponent indicates that road upgrading and LTPBMC works achieved favorable EIRRs and NPVs (see table 2). Economic indicators at completion were lower than at appraisal because of the following: (a) schedule overruns that ranged between 6 months and 4 years, (b) corresponding increase in the construction costs at an average of 24 percent,25 and (c) lower-than-anticipated traffic growth. However, the at-completion EIRR is more than the project discounted rate of 12 percent, thus confirming the viability of the subject component.
Table 3. Summary of Economic Indicators Road Upgrade LTPBMC (AP onlya) Appraisal Completion Appraisal Completion EIRR (%) 21.4 17.6 58.5 32.7 NPV (US$ million) 412 76 277 42 Note: a. Economic analysis was not done for Telangana.
35. Overall efficiency. Cost and time overruns resulted in a reduction in its overall efficiency. In addition, some institutional development and road safety activities under Components 3 and 4 were not achieved by Telangana. Based on these considerations, project’s overall efficiency is rated modest.26
D. JUSTIFICATION OF OVERALL OUTCOME RATING
36. The rating is Moderately Satisfactory.
37. With the scope of the project reduced following project restructuring on April 7, 2017,27 resources were geographically realigned between AP and Telangana to accommodate the Bifurcation Act with multiple adverse impacts on the progress of all project components (that is, 1 to 4); therefore, a split rating is due28 (see table 4).
25 Annex 4 - Economic and Financial Analysis. 26 Implementation Completion and Results (ICR) Report for Investment Project Financing (IPF) Operations, September 2017. 27 World Bank letters to Dept. of Economic Affairs, Ministry of Finance, April 12, 2017 and July 31, 2017. 28 Implementation Completion and Results (ICR) Report for Investment Project Financing (IPF) Operations, September 2017.
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38. Based on Substantial relevance, Substantial efficacy, and modest efficiency, the overall outcome is rated Moderately Satisfactory, according to the World Bank’s guidelines.29 The determining factor for this rating is the Substantial efficacy and the Modest efficiency.
Table 4. Overall Outcome Rating Using Split Evaluation Before Restructuring After Restructuring - March Restructuring Activities Mar-2014 2014 to March-2019 Relevance of PDO Substantial Substantial(Closing) Achievement of PDO (Efficacy) Objective 1: Share of good CRN increased S AP H T H Average 3 4 Objective 2: RDC ability to engage private S AP H T M Average 3 3 Objective 3: RDC is fully operational S AP S T M Average 3 2.5 Objective 4: Number of road fatalities reduced S AP S T M Average 3 2.5 Overall Efficacy 3 3 Overall Efficacy Substantial Substantial Efficiency of the PDO Modest Modest Outcome Rating Moderately Satisfactory Moderately Satisfactory Outcome Rating Value 4 4 Overall PDO Rating Available funding $320,000,000.00 $239,000,000.00 $239,000,000.00 Disbursement w/in period $110,767,980.82 $80,601,631.16 $191,369,611.98 % Period disbursed 58% 42% 100% Value of Weights 2.32 1.68 4.00 Overall Outcome Rating Moderately Satisfactory
E. OTHER OUTCOMES AND IMPACTS (IF ANY)
Institutional Strengthening
39. Strengthening the institutional capacity of the road departments at the state level was evidenced by the introduction of sound asset management systems rooted in scientific principles of data gathering, life cycle approach, and training of staff, contractors and consultants on the use of modern technologies thus replacing manual operations and guess work when it comes to budgeting and prioritization of maintenance activities. More specifically, AP’s RAMS has nine modules, namely; Pavement Management, Bridge Management, Traffic Data Management, Transport Modelling Tool, Traffic Incident Management, Monitoring & Evaluation, Environment and Social Information System, Cross Asset Prioritization System. These significant technical reforms have considerably reduced the politicization of roadwork activities through fact-based prioritization of maintenance projects.
29 ICR Guidelines, Appendix H, Deriving the Overall Outcome Rating.
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Employment Opportunities
40. The project provided opportunities for engaging local unskilled labor force in roadwork activities. At closure, the project created 2.5 million person-days of employment, which represented 69 percent of the total unskilled employment person-days in all road upgrading packages. The proportion of women among local labor force employed was approximately 30 percent. LTPBMC of the upgraded roads is expected to make use of this—now—experienced labor force, thus reducing maintenance cost.
Poverty Reduction and Shared Prosperity
41. The project made a concerted effort to restore the income of project-affected persons (PAPs) to their pre-displacement status through payment of R&R assistance and site allowances, thus enabling PAPs to continue with their livelihood in relocated sites. In addition, the improvement of the road network promoted safe movement of people and trade, especially for farmers.
Gender
42. Among the affected families, there are a substantial number of women PAPs. Women constituted 20 percent of the 2,200 landowners receiving LA compensation. Furthermore, the project provided additional cash grants of INR 60,000 (approximately US$850) as part of R&R assistance to those who are identified as widows, women-headed families, or physically challenged persons. Women constituted 18 percent (that is, 374 out of 2,058) of those receiving R&R support and 26 percent (that is, 211 out of 8,125) of vulnerable landowners receiving assistance.
Other Unintended Outcomes and Impacts
43. None.
III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME
A. KEY FACTORS DURING PREPARATION
44. Prior experience. The project followed the successful World Bank engagement in the APSHP.30 The implementation of a second (that is, this project) road project shortly after the APSHP not only provided continuity of key sector reforms but also allowed the World Bank to benefit from important lessons learned, including (a) early, sustained, and substantive client ownership to advance institutional initiatives and (b) concluding LA before the commencement of site activities to avoid project delays. For the former, the World Bank conducted excessive discussions with government officials during appraisal to ensure common understanding, ownership, and commitment. For the latter, one of the implementation readiness filters was that at least 50 percent of LA, utility relocation, and forest permits needed for Phase 1 should be completed before contract award.
45. Project design. The scope of the design is straightforward with a distinctive combination of fieldwork, institutional reform, and capacity building. While output indicators are clear and easy to follow,
30 Outcome was rated as Satisfactory and Sustainability was rated as Likely, ICR dated November 29, 2004.
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some project components straddled indicators and vice versa, resulting in redundancies and overlapping of direct cause-and-effect relationships. For example, Component 1 (that is, Road Improvement) can have an impact on output indicators for Component 4 (that is, Road Safety). On the other hand, output indicator 3 (that is, operationalization of RDC) can benefit from Component 2. Finally, the commendable approach to include 6,100 km of Output-and Performance-Based Road Contract OPRC as a new contracting modality, with 80 percent public funding, resulted in building in-house capacity and promoting ownership.
46. Forecasted versus materialized risks. During appraisal, the World Bank proposed consultancy services to complement RDC’s capacities during implementation. Concerning contractors’ capacities, the World Bank proposed to package work to mitigate low-quality performers and increase potential for assigning highly qualified contractors. While some consultancies and contracting services were adequate, others failed to provide the needed competencies and resources leading to significant delays and budget overruns. An additional mitigation measure could have been the use of prequalification criteria to ensure only competent consultants and contractors have access to work packages. Finally, despite the World Bank’s clear concerns regarding LA delays, work packages were released before confirming LA requirements, thus causing, as anticipated, major delays for project components requiring access to project sites.
47. Readiness for implementation. During the period leading to appraisal, the World Bank was concerned about the slow progress on the preparation of policy and institutional reform (for example, PPP and safeguard documents, ISAP, and GAAP31); the lack of coordination with the Revenue Department for LA purposes; and capacity limitations of personnel (that is, staff, consultants, and contractors).32 These issues, successfully identified early on, have proven to be formidable enough to adversely influence project performance throughout the whole implementation process.
B. KEY FACTORS DURING IMPLEMENTATION
Factors Subject to Government’s or Implementing Agency’s Control
48. Land acquisition. Issues pertaining to LA had quickly manifested into project delays. Issues included lack of timely and effective coordination with the Revenue Department; the Bifurcation Act and the corresponding release of a new Land Acquisition and Resettlement Act; inordinate delays in payment of compensation; and prolonged litigation by landowners even—at times—after government payments of compensation. Examples of these hindrances are listed under annex 5.
49. Coordination with other agencies. Site work packages (that is, road upgrade, road maintenance, and civil works for road safety) require close coordination and strong interaction with multiple agencies (for example, Irrigation Department, Forest Department, Revenue Department). These types of governmental coordination are notoriously challenging and time-consuming, which is not an exception for this project. This coordination was exacerbated by the Bifurcation Act, which led to lack of administrative clarity and subsequent delays. Similar interagency coordination, which has also proven to be as challenging, is the undertaking of road safety improvement demo corridors. Complexities were manifested while addressing coordination issues between Transport, Police, and Health departments
31 World Bank Preparation Mission, January 22–27, 2007. 32 World Bank Preparation Mission, March 10–15, 2008.
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related to, for example, location selection for civil works (for example, checkpoints, medical emergency response, weighbridge); procurement (for example, monitoring and enforcing equipment, vehicles, emergency gear); and staffing.
50. Contractors’ performance. Since project inception, procurement for the 429 km of road upgrade has proven to be challenging, including poor contractors’ response, higher-than-estimated bids, and allegations of obstruction by bidders.33 In response, the World Bank team emphasized repackaging, rebidding, and training workshops for contractors, which were very effective. Moving forward, work progress on these packages was chronically slow. Suboptimal contractors’ performance was attributed to several reasons, including aggressive bidding/pricing that led to cashflow problems and failure to meet contractual agreements, lack of access to sites due to LA complexities, delays in clearing forest trees, contractors’ poor planning and mobilization, unavailability of construction material—especially gravel,34 disregard to instructions by monitoring consultants to improve work (for example, quality of implementation, mobilizing the requisite level of resources),35 lack of clarity and/or apparent differences between contractors and RDC, contractors’ lack of ability and/or willingness to ensure adequate cash flow and sustained mobilization of personnel and equipment,36 and some documented delays in payments to contractors.37 Consequently, under the 429 km road upgrade activity—a total of eight work packages were released: CP-01, KD-02, MJ, KR-07, PNV-08, and PNV-09 (AP) and JP-06 and KS-05 (Telangana)—four packages were terminated and rebid (KD-02, MJ-04, PNV-08, and KS-05), thus leading to significant delays and cost overruns.
51. Complexities of local procurement arrangements. There were several instances where a quicker termination and rebidding was warranted, especially where several roadwork packages were showing extreme delays and creating an enormous backlog as early as project commencement.38 However, it took the agency a considerable amount of time—up to three to four years in the case of MJ-04, PNV-08 and KS-05—to terminate and rebid. This is reflective of (a) the complexities of local procurement arrangements, which is making termination-for-cause challenging to pursue and prove, and (b) the inherent delays in rebidding and subsequent contractors’ litigation, which are significant.
52. Bifurcation Act. Despite World Bank’s efforts in identifying project risks during appraisal, it was very difficult to foresee the political risk stemming from the bifurcation of Andhra Pradesh into two states: Andhra Pradesh and Telangana. This major political occurrence, which took place in 2014 (that is, approximately four years from project effectiveness date), had a major impact on project progress, including administrative uncertainty and agitation, sluggish progress across all project components, engaging unfamiliar cadres of the new (that is, Telangana) state cabinet to explain the project and gain buy-in, the need for additional support and hand-holding during implementation as the new cabinet gain project familiarity and populate its organization, and so on. This political perplexity was prominent enough to cause an unavoidable adverse impact on the project.
33 First Implementation Support Mission, April 26–May 6, 2010. 34 Telangana Implementation Support Mission, August 19–29, 2018, p. 4. 35 AP Implementation Support Mission, July 13–25, 2017, p. 5. 36 AP Implementation Support Mission, November 20–30, 2016, p. 7. 37 AP Implementation Support Mission, July 28–August 9, 2014, p. 5. 38 5th Implementation Support Mission, June 19–29, 2012.
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53. New Land Acquisition Act. One of the consequences of the Bifurcation Act is the issue of a new Land Acquisition and Resettlement Act in January 2014. This disrupted the completion of the remaining LA activities because it imposed retroactive provisions if compensation payments are not dispensed by its due date.39
Factors Subject to World Bank’s Control
54. Responsiveness to project developments. The frequency and thoroughness of the World Bank’s implementation support and implementation support missions—and associated documentation—were a positive factor during project implementation. It reflected the World Bank’s commitment to provide the needed support as evidenced by numerous meetings with (a) the GOAP and RDC to identify reasons for delays and agree to remedial plans, (b) contractors to emphasize the importance of improved progress and identify areas of disagreements with the client, (c) consultants to highlight the need for better-quality monitoring and stronger enforcement of contractual and safeguard provisions, and (d) citizenry to gauge project acceptance and ensure compliance with safeguards.
IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME
A. QUALITY OF MONITORING AND EVALUATION (M&E)
M&E Design
55. The design of the M&E framework was satisfactory. It included clear and robust indicators, including length of upgraded and maintained roads and savings in VOC and travel time. Conversely, the indicator for road safety, that is, Number of fatalities per veh.km, needs to be revisited as it does not consider the expected increase in traffic due to enhanced design, controlled access, and improved intersections. A more expressive indicator is number of fatalities per 100 VKT.
56. With respect to the PDO element referring “[S]ustainability through enhancing institutional capacity,” the identified indicators for the operationalization of RDC needed to be adjusted to reflect the new institutional challenges created by the Bifurcation Act. For example, the establishment of the new (that is, Telangana) state road authority required strategy, policies, bylaws, staffing, funding, established relations with other governmental entities (for example, Irrigation, Forestry, Finance); effective channels for the citizenry to convey concerns and submit grievances; and so on. However, the subject road authority was finally formed in July 2017.40 The complexities of setting up a new road authority would have required project restructuring to revisit the target indicators for Telangana to ensure relevance to current political and institutional conditions and the sustainability of the targeted outcome.
M&E Implementation
57. While RDC contracted third-party consultancies for M&E data collection, reporting, and analysis, it also developed its in-house M&E capacities through the development of RAMS and MIS. Other M&E
39 AP Implementation Support Mission, December 21, 2013–January 3, 2014, p. 7. 40 Telangana Implementation Support Mission, July 13–25, 2017, p. 5.
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measurements were introduced at a later stage of the project, including percentage of LA41 and percentage of R&R42 to address the World Bank’s concern over the progress of both items and its negative impact on the project. Key and intermediate indicators were closely tracked during Implementation Status and Results Report (ISR) missions. Three indicators—VOC, time savings, and accident reduction—were justifiably deferred until the end of the project.
M&E Utilization
58. M&E data on performance and results progress were used for the World Bank’s supervision missions, to inform the project restructuring process and to adjust activities throughout implementation, including identifying slow-moving road upgrading packages for termination and rebidding, adjusting road lengths to reflect LA difficulties and site access issues, and revising the number of PPP indicators, and so on.
Justification of Overall Rating of Quality of M&E
59. As indicated earlier, the design of the M&E framework is effective but with minor shortcomings, including the impact of the Bifurcation Act on project progress. M&E results were attentively tracked— with some exceptions—and were essentially used to inform and steer the project. Accordingly, the quality of M&E is rated Substantial.
B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE
Environmental and Social
60. The major social development outcome of the project has been the inclusion of about 2,000 untitled holders for resettlement assistance and, in the process, helped them reestablish their livelihoods and housing. Cash payments and R&R assistance to both titled and untitled PAPs helped maintain their pre-displacement conditions. The resettlement of untitled PAPs facilitated their relocation and the process of income restoration. This means they are no longer encroached upon and are, instead, titleholders and owners of their structures, homesteads as well as commercial structures, thus achieving a more stable place within the society.
61. During appraisal, both OP 4.12 Involuntary Resettlement and OP 4.10 Indigenous Peoples policies were triggered. However, during implementation, OP 4.10 was never applied because none of the upgraded roads passed through tribal areas. However, OP 4.12 remained Unsatisfactory or Moderately Unsatisfactory up until project closure in March 2019. This is despite the development of the Resettlement Policy Framework (RPF), revised in 2015 to reflect the new Land Acquisition Act, to be the basis for payment of LA compensation and resettlement assistance to PAPs.
62. Conscious efforts were made to integrate environmental and social safeguards during engineering design to ensure incorporation during implementation. These measures were retained by RDC and are being mainstreamed as part of its contract documents and project processes. In addition, the implementing agency engaged seven local nongovernment organizations, a sociologist, and a Deputy
41 ISR No. 14, April 28, 2015. 42 ISR No. 17, June 17, 2016.
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Collector to provide LA and resettlement support and to coordinate implementation with the state government. Monitoring committees, which were headed by joint collectors, were set up at the district level to oversee grievances related to individual complaints. Besides few outstanding land acquisition and resettlement activities described in Annex-5, there is another outstanding action related to non-payment of wages to 70 unskilled workers in Kurnool-Devananda road in Andhra Pradesh (INR 2.50 Million). The Bank will continue to follow-up with the implementing agency until these outstanding actions are implemented.
63. Post-resettlement changes in living standards could not be ascertained for AP as it failed to commission independent resettlement impact studies to evaluate the effect of resettlement activities despite the World Bank’s request and support, including the provision of a draft terms of refence a year ahead of the project closing date.43 Telangana initiated the subject study in August 2019 and preliminary findings indicated that land acquisition took an average of two years and that the project is aligned with the land acquisition and resettlement act that came into effect in 2014. Preliminary results indicate that for a portion of those affected families in non-agricultural occupations, housing conditions and household assets have shown improvement over baseline situation. The study points out that there exist long- pending compensations for; (i) land acquisition payments due to 11 land owners, and (ii) resettlement support payments due to 33 vulnerable farmers who became landless or marginal due to land acquisition.
Fiduciary
64. Financial management (FM). FM (for example, creation of budget codes, preparation of interim unaudited financial report, timeliness of payments, internal audit, submission of audit reports) was generally rated Moderately Satisfactory during most of the life of the project. Reports were submitted on time or with modest delays and provided information on project progress and expenditure patterns. Availability of funds for project payment was generally adequate, with one exception for Telangana in August 2018, which was eventually resolved, and adequate funds were provided to RDC.44
65. Internal audits were not given enough attention as reports were delayed, and when received, observations were identical to past reports, signifying no action on findings on internal audits.45 With respect to external audits, reports revealed large volumes of disallowances,46 which reached nearly INR 1,020 million (approximately US$14.8 million) by December 2015.47 Disallowances were related to mobilization advances and technical aspects indicating that the audit process and the team of auditors were not given adequate attention and the required documentation at the time of the visit. The project team met with the Accountant General to discuss past disallowances and future audits to ensure that auditors are provided the needed information and that the cycle of disallowance does not continue to take place.48 In addition, a workshop was conducted in July 2016 to clear the disallowances backlog.49 A significant part of the disallowances was settled in subsequent years, however certain disallowances
43 ICR Mission, June 2019. 44 Telangana Implementation Support Mission, August 19–29, 2017, p. 2. 45 ICR Mission, June 2019. 46 AP Implementation Support Mission, March 3–20, 2015, p. 12. 47 AP Implementation Support Mission, November 22–December 5, 2015, p. 12. 48 Telangana Implementation Support Mission, July 13–25, 2017, p. 11. 49 Telangana Implementation Support Mission, November 20–30, 2016, p. 13.
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remained till project closure. This is evidenced by the May 2019 Certification Audit of Expenditure report citing unresolved disallowances.50
66. Procurement. Procurement functions (that is, preparation of Procurement Plans, selection of procurement method, procurement process, award of contracts) were generally satisfactory. An area of concern, which was brought to the attention of the client with promises to resolve, has been the recurring delays in ensuring that contract modifications, such as extension of time, are sent to the World Bank before contract execution.51 In addition, delays in payments to contractors were observed during post- procurement reviews and were attributed to administrative delays in approving and clearing payments.52
C. BANK PERFORMANCE
Quality at Entry
67. The appraisal team had a clear understanding of the sector, a robust justification of the project’s rationale, and a sound integration and packaging of project components. While there was a reasonable assessment of project risks, the World Bank team underestimated two elements that have proven to adversely affect road improvement work: LA and capacities for contractors and consultants. This was evidenced by changing risk categories for both elements from Moderate to Substantial as mitigation measures proposed for both have proven to be overly simplified and not in keeping with local administrative complexities and local landscape of the road construction industry.53
Quality of Supervision
68. World Bank supervision was thorough and timely, as evidenced by 23 well-staffed supervision missions. World Bank teams consistently made field visits to obtain firsthand information and provide advice on roadworks and associated issues. The World Bank’s Aide Memoires accurately described project progress, areas where the project was performing well, and parts where the project was lagging, including reasons, responsibilities for the sluggish performance, and action plans needed to rectify those problem areas. Additionally, it observed the sector’s inherent complexities (for example, poor interagency coordination, aggressive bidding, dubious joint ventures, high personnel attrition rates).
Justification of Overall Rating of Bank Performance
69. Considering the project’s overall good quality at entry and the World Bank’s diligent supervision, together with the shortcomings mentioned earlier, the World Bank’s overall performance is assessed as Moderately Satisfactory.
D. RISK TO DEVELOPMENT OUTCOME
70. Characteristically, the main risk to the subject PDO would be inadequate funding and lack of institutional capacity needed to properly maintain the assets created. Nevertheless, and to overcome that
50 Certification Audit for FY18–19, May 22, 2019. 51 AP Implementation Support Mission, July 28–August 9, 2014, p. 14, and March 3–20, 2015, p. 11. 52 ICR Mission, June 2019. 53 AP Implementation Support Mission, December 21–January 3, 2014, p. 66.
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risk, the project was designed to include the creation of a funding mechanism (that is, Road Fund) and institutional strengthening of the road authority. AP was able to issue the decrees and ratify the bills needed to ensure the referenced sustainability.54
71. There was an apparent lack in maintaining the two road safety pilot corridors as evidenced by the deterioration of pavement conditions attributed to overloading of freight trucks.55 Absence of proper maintenance constitutes a major risk to sustaining road safety activities conducted under the project. A long-term contract for road maintenance, including the upkeep of roads’ safety features (for example, guardrails, jersey barrier, marking, signs), should be in place to ensure sustainability.
72. The established road safety agencies will require a sustainable funding source to ensure the delivery of its integrated road safety activities (that is, transport, health, and police). While AP has already created an initial fund, Telangana is in advanced stages of enacting the legislation ensuring the needed fund.
V. LESSONS AND RECOMMENDATIONS
73. The success of AP’s roads asset management system (RAMS) and management information system (MIS) designed to transform the manner through which the state prioritizes its maintenance activities and allocates needed funds and multi-year rolling plans for investment and maintenance are being prepared through the RAMS. AP has shown high level of ownership where it has mandated that investment and maintenance including budget planning and allocation decisions are based on the outputs of the RAMS replacing the old ad hoc systems. At the roots of AP’s success is the forward and backward integration with other state systems, which other states were not successful in implementing. Building on the success of the RAMS and MIS, AP initiated the development of a command and control center (CCC) that integrated the RAMS and MIS with web- and GIS56-based maps. The CCC, which is currently operational, is used as a contract administration and decision support tool for APRDC and RBD. The Bank requested AP to share its experience with other states in the country and assist in the adoption of similar systems.
74. The LTPBMC subcomponent proved to be very effective in improving the GOAP’s capacity to plan and budget road maintenance work. This was evidenced by RDB’s eagerness to carry out LTPBMC as part of its strategic maintenance plan for 4,600 km of SH at INR 3000 Million (approximately US$42 million).57 Bidding and contract documents for this new maintenance model, which was pioneered under this project, became the basis for revising the state’s maintenance contracts. The state is also integrating this model with MIS system for close monitoring of physical and financial progress.
75. The adopted incremental approach towards road safety management centered around developing; policy framework, road safety strategy and actions plans, road safety engineering measures, and finally, pilot demonstration corridors with multi-stakeholder interventions based on globally accepted safe system approach. This comprehensive and holistic approach was highly successful in AP where the
54 AP Implementation Support Mission, August 19–29, 2018, p. 7. 55 AP and Telangana Implementation Support Mission, July 13–25, 2017, p. 12 and 7. 56 Geographic information system. 57 ICR Mission, June 2019.
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road safety cell created within the transport department proved to be an effective approach for planning and tracking impacts of road safety initiatives, managing data for road safety indicators, and fostering the needed coordination between the various stakeholders.
76. As successfully rolled out in this project, the implementation of environmental measures is likely to be more effective if they are identified and integrated early on as part of the construction contracts. Also, an inclusive approach in consulting and educating local communities about the project could help harness opportunities to generate positive response and good will.
77. There is a pressing need to explore with national and local authorities (for example, road, irrigation, forestry, finance) a more efficient process to undertake LA and R&R activities. This has been a major cause for schedule delays and cost overruns not just for this project but also for other World Bank projects, for example, the APSHP, India Orissa State Roads Project, and Tamil Nadu Road Sector Project. The World Bank identified this problem during the appraisal phase and, consequently, prescribed a filter of at least 50 percent of LA being cleared before undertaking road contracts. Even with that filter, extreme delays for all road upgrading packages were endured. Some of the recommendations offered to overcome this prevailing bottleneck include the following:
(a) Establish a dedicated LA cell within RBD with deputed staff from the Revenue Department. The subject cell shall be responsible for coordinating and facilitating LA work. This practice has been successfully adopted in the states of Karnataka and Tamil Nadu.
(b) Increase the implementation readiness filter from 50 percent to 80 percent: 80 percent of LA, utility relocation and forest permits to be completed before contract award. Where 80 percent is not available, the sites not ready for handing over to the contractor should be removed from the scope.
(c) Employ robust consultations and consensus building process among the local citizenry, which is very important. Without it, there is the likelihood of court litigations that will jeopardize project implementation.
78. Contractors’ performance was an issue that affected project progress since its inception with termination and rebidding of several contracts and deletion of a road improvement package that was too far behind to finish. While this is a sector phenomenon, recommendations to overcome this problem include (a) ensuring a stricter qualification process for contractors (that is, technical, financial, past work experience, personnel, equipment) to ensure adequate performance and acceptable quality; (b) using weighted criteria and combined technical and financial scores to mitigate aggressive bidding;58 (c) revisiting current procurement guidelines and contract documents for a stricter enforcement of punitive provisions in case of contractors’ underperformance, including if needed, the exclusion from opportunities to bid on future projects; and (d) moving away from the traditional contracting process and opting for Engineering, procurement, and Construction/PPP type modalities that have been successfully implemented in other states.
58 Use of evaluation criteria for procurement of Goods, Works, and Non-consulting Services, July 2016, the World Bank.
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79. Resettlement costs should be inflation-adjusted as resettlement is bound to be delayed. Therefore, there should be a provision for annual adjustment of resettlement payments for inflation to ensure fair compensations. Furthermore, the World Bank should carefully consider providing extensions to closing date and cost extensions to work contracts without full payment of land and resettlement costs, where such payments are involved. .
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ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS
A. RESULTS INDICATORS
A.1 PDO Indicators
Objective/Outcome: Provide better quality, capacity & safe roads to users in a sustainable manner. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Full operationalization of RDC Text RDC still not fully RDC has own staffing RDC has own staffing Andhra Pradesh : with adequate financial & operational; and adequate sources and adequate sources Substantially human resources to manage outstanding audits; of revenue for CRN of revenue for CRN achieved, Telangana: the CRN Act to be reviewed; no Partially achieved independent financial and operational procedures; many staff deputed from RBD.
31-Mar-2010 30-Jun-2015 30-Jun-2017 30-Jun-2019
Comments (achievements against targets): Andhra Pradesh - Keeping in view of the bifurcation of the State (June 2017), the proposals for full operationalization have been revised. The Initial Organizational Structure submitted and the government approval is awaited.
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Telangana - TSRDC is formed vide G.O. Ms. No.15, T (R&B) (R.I) Dept., Dt.17.02.2017. Formulation of organization structure and financing arrangements are under examination at Government level.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Vehicle Operating Costs Number 5.41 4.76 4.76 4.88 decline relative to the without project scenario in 31-Mar-2010 30-Jun-2015 30-Jun-2017 28-Jun-2019 upgrading roads
Comments (achievements against targets): There was no change in the formally revised target for both sub indicators, cars and trucks.
For trucks the baseline was INR 11.85 per vehicle km while original target: INR 10.9 per vehicle km. There was no change in the target indicator at restructuring.
Actual achieved for trucks: INR 9.59 per vehicle km (ICR Mission dated June 2019)
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Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Travel time for bus Hours 10.60 7.80 7.80 8.30 passengers declines relative to without project situation 31-Mar-2010 30-Jun-2015 30-Jun-2017 30-Jun-2019 in upgraded roads
Comments (achievements against targets): Actual achieved at completion (ICR mission dated June 2019) 8.3 hours, i.e 23% reduction.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Number of road accident Number 2.08 0.83 0.83 1.56 fatalities per vehicle km travelled reduced on 31-Mar-2010 30-Jun-2015 30-Jun-2017 30-Jun-2019 demonstration corridors
Comments (achievements against targets): The baseline: AP: 0.60 fatalities per km, Telangana: 1.48 fatalities per km (March 31, 2010)
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Original Target June 2015 ; AP less than 0.47 fatalities per km, Telangana: less than 0.36 fatalities per km
Actual achieved as per June 2019, AP: 0.57 fatalities per km, Telangana: 0.99 fatalities per km
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Roads in good and fair Percentage 40.00 80.00 80.00 88.00 condition as a share of total classified roads 31-Mar-2010 30-Jun-2015 30-Jun-2017 30-Jun-2019
Size of the total classified Kilometers 10820.00 10820.00 10820.00 10820.00 network 01-Mar-2018
Share of total classified Kilometers 6800.00 6800.00 6800.00 6800.00 network - Andhra Pradesh 31-Mar-2010 30-Jun-2015 30-Jun-2017 30-Jun-2019
Share of total classified Kilometers 4020.00 4020.00 4020.00 4020.00 network - Telangana 31-Mar-2010 30-Jun-2015 30-Jun-2017 30-Jun-2019
Comments (achievements against targets):
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Formally revised Target as of June 2017: 80.
Actual achieved percentaged has been calculated on the basis of weighted averaged of the actual value for AP (92%), and Telangana (80%) (June 2019)
A.2 Intermediate Results Indicators
Component: Road Improvement
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 427 km upgraded efficiently Kilometers 0.00 429.00 340.00 328.00 and environmental and socially sustainable way 31-Mar-2010 30-Jun-2015 30-Jun-2017 30-Jun-2019
Comments (achievements against targets): Following the restructuring in 2017 the target indicator was bifurcated into AP 232 km and Telangana 110 km.
All results are now being report as per the bifurcated indicator.
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Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 6018 km of roads under Kilometers 0.00 0.00 6018.00 6018.00 Long-term performance based maintenance contract 31-Mar-2010 30-Jun-2015 30-Jun-2017 30-Jun-2019
Comments (achievements against targets): Formally revised target after bifurcation restructuring in June 2017, AP : 4300, Telangana: 1718.
Actual achieved at completion (ICR Mission June 2019), AP: 4300, Telangana 1718
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Land Acquisition Percentage 0.00 0.00 0.00 95.00
31-Mar-2010 30-Jun-2015 30-Jun-2017 30-Jun-2019
Comments (achievements against targets):
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Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion R and R Percentage 1.00 0.00 0.00 59.00
31-Mar-2010 30-Jun-2015 30-Jun-2017 30-Jun-2019
Comments (achievements against targets):
Component: PPP Facilitation
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Roads selected for PPP Number 0.00 0.00 2.00 2.00 transactions. 31-Mar-2010 30-Jun-2015 30-Jun-2017 30-Jun-2019
Comments (achievements against targets): Formally revised target bifurcation restructuring in June 2017,AP: 1, Telangana:1
Actual achieved at completion AP:1, Telangana:1
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Component: Institutional Strengthening
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion ISAP milestones met Yes/No N Y Y Y
31-Mar-2010 30-Jun-2015 30-Jun-2017 30-Jun-2019
Comments (achievements against targets): Revised target: IT-MIS, HR plan, environmental and social management, fully operational. (For both AP and Telangana) June 30, 2015.
Actual achieved (ICR mission June 2019) AP: fully achieved, Telangana: not achieved.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion GAAP milestones met Yes/No N Y Y Y
31-Mar-2010 30-Jun-2015 30-Jun-2017 30-Jun-2019
Comments (achievements against targets): Revised Target: Disclosure and complaints handling operational (for both AP and Telangana) (June 30, 2015)
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Actual achieved (ICR mission in June 2019) AP: Fully achieved, Telangana: Not achieved.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Annual maintenance plans Yes/No N Y Y Y developed through RMS system in Andhra Pradesh 31-Mar-2010 30-Jun-2015 30-Jun-2017 30-Jun-2019
Comments (achievements against targets): Annual maintenance plans developed (for both AP and Telangana) (June 30, 2015)
Actual achieved (ICR mission June 2019) AP; Fully achieved, Telangana: Not achieved.
Component: Road Safety
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion
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Demonstration project Yes/No Y Y Y Y carried out in at least two road corridors 31-Mar-2010 30-Jun-2015 30-Jun-2017 30-Jun-2019
Comments (achievements against targets): Baseline March 2010 demonstration pilot initiated (2 corridors)
Revised target: Demonstration pilot concluded and lessons learned, documented for both AP and Telangana.(June 2015)
Formally revised target bifurcation restructuring in June 2017, AP: 1, Telangana: 1
Actual achieved at completion: AP: 1, Telangana: 1 (June 2019)
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Comprehensive GoAP road Yes/No N Y Y Y
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safety functions, capacity 31-Mar-2010 30-Jun-2015 30-Jun-2017 30-Jun-2019 and action plan(s) put in place
Comments (achievements against targets): Baseline March 2010 Road safety lead agency established
Formally revised Target: New safety policy approved, institutional arrangement put in place and action plan implementation (June 2017)
Actual achieved, AP: Fully achieved, Telangana: Substantially achieved (June 2019)
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Black spot improvement of Yes/No N Y Y Y CRN 31-Mar-2010 30-Jun-2015 30-Jun-2017 30-Jun-2019
Comments (achievements against targets): Baseline March 2010 - identification of black spots and collection of baseline data
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Revised Target June 2015: phase II implementation and evalutation
Bifurcation restructuring in June 2017, AP: 36 black spots, Telangana: 10 black spots.
Actual achieved (ICR Mission June 2019) AP 36 Block spots, Telangana 8 black spots.
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B. KEY OUTPUTS BY COMPONENT
Objective/Outcome 1: Increased share of CRN in good condition Outcome Indicators Upgrade and maintain the CRN to 80% 1. 274 km upgraded efficiently Intermediate Results Indicators 2. 2,000 km of roads under LTPBMC Key Outputs by Component 1. 429 km upgraded efficiently (linked to the achievement of the Objective/Outcome 1) 2. 6,241 km of roads under LTPBMC Objective/Outcome 2: RDC fully operational with adequate resources to manage the CRN Outcome Indicators RDC has own staffing and adequate sources of revenue for CRN 1. RDC to concession 1 PPP road 2. ISAP studies completed; training needs assessment completed Intermediate Results Indicators 3. GAAP studies completed 4. RMS studies completed 1. RDC to concession 3 PPP roads 2. IT-MIS, HR plan, and Environmental and Social Management plan Key Outputs by Component fully operational (linked to the achievement of the Objective/Outcome 2) 3. Disclosure and complaints handling operational 4. Annual maintenance plans developed through the RMS system Objective/Outcome 3: Vehicle Operating Cost declines Outcome Indicators VOC declines relative to without project situation in upgraded roads Intermediate Results Indicators None Key Outputs by Component 1. Cars: 12% reduction with project (linked to the achievement of the Objective/Outcome 2) 2. Trucks: 8% reduction with project
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Objective/Outcome 4: Travel time for passenger buses declines Travel time for bus passengers declines relative to without project Outcome Indicators situation in upgraded roads Intermediate Results Indicators None Key Outputs by Component 1. Travel time is 7.8 hours on upgrading component (that is, 26% (linked to the achievement of the Objective/Outcome 4) reduction) Objective/Outcome 5: Improved road safety Number of accident fatalities reduced on two demonstration Outcome Indicators corridors 1. Demonstration pilot initiated 2. New safety policy, institutional arrangement, and action plan are Intermediate Results Indicators initiated 3. Identification of black spots & collection of baseline data 1. Demonstration projects carried out and lessons learned and documented Key Outputs by Component 2. Comprehensive road safety functions, capacity, and action plan(s) (linked to the achievement of the Objective/Outcome 4) are put in place 2. Black spots implementation and evaluation is concluded
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C. KEY OUTPUTS BY COMPONENT AT THE DATE OF THE ICR MISSION
Target Indicator Indicator Indicator Final Target Outcome Baseline Intermediate (Bifurcation (ISR (ICR Mission Unit June 2015 Component March 2010 October 2012 Restructuring in dated March dated June (Original Date) 2017) 2019) 2019) Component 1: % 40 60 80 No change 79 AP: 92 Share of CRN in T: 80 good condition increased Subcomponents and indicators 1.1 429 km km 0 274 429 AP: 230 AP: 190 AP: 218 upgraded T: 110 T: 110 T: 110 efficiently 1.2 6,241 km of km 0 2,000 6,241 AP: 4,300 AP: 4,300 AP: 4,300 roads under T: 1,718 T: 1,718 T: 1,718 LTPBMC Vehicle INR per Cars: INR 5.41 per Cars: INR 4.76 per No change n.a. Cars: INR 4.88 Operating Cost) veh.km veh.km (without veh.km (that is, per veh.km (that declines project) 12% reduction is, 8% reduction) (upgraded roads) with project Trucks: INR 10.9 Trucks: 9.59 per Trucks: INR 11.85 per veh.km (that veh.km (that is, per veh.km (without is, 8% reduction 8% reduction) project) with project) Travel time for min. 10.6 hours to travel 7.8 hours. to No change n.a. 8.3 hours (that is, bus passengers all 429 km of travel all 429 km 23% reduction) declines upgrading of upgrading (upgraded roads) component component (that is, 26% reduction) Component 2: Number 0 1 3 AP: One AP: One AP: One RDC to T: One T: One T: One concession 3 PPP roads
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Target Indicator Indicator Indicator Final Target Outcome Baseline Intermediate (Bifurcation (ISR (ICR Mission Unit June 2015 Component March 2010 October 2012 Restructuring in dated March dated June (Original Date) 2017) 2019) 2019) Component 3: n.a. Outstanding audits GOAP provides RDC has own No change AP: Not AP: Substantially RDC fully completed RDC with financial, staffing and achieved achieved operational with administrative and adequate sources T: Not T: Partially adequate operations power; of revenue for achieved achieved resources to rules and process CRN manage the CRN; adopted Subcomponents and indicators 3.1 Institutional n.a. 0 ISAP studies IT-MIS, HR plan, No change AP: Fully AP: Fully Strengthening completed; environment and achieved achieved Action Plan (ISAP) training needs social T: Not achieved T: Not achieved assessment management, fully completed operational 3.2 Governance n.a. Third-party Disclosure and No change AP: Fully AP: Fully and monitoring; complaints achieved achieved Accountability procurement handling T: Not achieved T: Not achieved Action Plan monitoring operational (GAAP) 3.3 Annual n.a. Annual No change AP: Fully AP: Fully maintenance maintenance achieved achieved plans developed plans developed T: Not achieved T: Not achieved through the RMS system Component 4: Number AP: 0.60 AP: Less than 0.47 No change n.a. AP: 0.57 Number of fatalities/km fatalities/km fatalities/km accident fatalities (Renigunta- per veh.km Rayalacheruvu reduced on Corridor; 263.4 km) T: Less than 0.36 n.a. T: 0.99 demonstration T: 1.48 fatalities/km fatalities/km fatalities/km corridors (Hyderabad-Bijapur Corridor; 83 km)
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Target Indicator Indicator Indicator Final Target Outcome Baseline Intermediate (Bifurcation (ISR (ICR Mission Unit June 2015 Component March 2010 October 2012 Restructuring in dated March dated June (Original Date) 2017) 2019) 2019) Subcomponents and indicators 4.1 Number Demonstration pilot Demonstration AP: One pilot n.a. AP: One pilot Demonstration initiated (two pilot concluded T: One pilot T: One pilot projects carried corridors) and lessons out in at least learned two road documented corridors 4.2 n.a. Road safety lead New safety policy No change AP: Fully AP: Fully Comprehensive agency established approved, achieved achieved road safety institutional T: Substantially T: Substantially functions, arrangement put achieved achieved capacity and in place, and action plan(s) put action plan in place implementation 4.3 Black spot n.a. Identification of Phase 1 Phase 2 AP: 36 Black AP: 36 Black AP: 36 Black improvement of black spots and implementation implementation spots spots spots CRN59 collection of baseline and evaluation and evaluation T: 10 Black spots T: 5 Black spots T: 8 Black spots data
59 Black spots were identified during project restructuring. World Bank letter to Dept. of Economic Affairs, MoF, February 27, 2015.
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ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION
A. TASK TEAM MEMBERS
Name Role Preparation Supervision/ICR Nupur Gupta Task Team Leader(s) Heenaben Yatin Doshi Procurement Specialist(s) Tanuj Mathur FM Specialist Aruna Aysha Das Team Member I. U. B. Reddy Social Specialist Anantha Krishna Karur Team Member Sita Ramakrishna Addepalli Environmental Specialist Sri Kumar Tadimalla Team Member Pratap Tvgssshrk Team Member Tema Alawari Kio-Michael Team Member
A. STAFF TIME AND COST
Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY06 16.762 63,770.98 FY07 22.302 63,906.28 FY08 36.251 178,564.47 FY09 51.542 200,783.36 FY10 15.111 76,234.20
Total 141.97 583,259.29
Supervision/ICR
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FY10 15.920 58,593.93 FY11 37.145 108,919.95 FY12 38.350 118,534.07 FY13 44.729 156,417.64 FY14 37.544 109,823.61 FY15 39.874 133,539.26 FY16 38.475 132,125.41 FY17 29.881 162,871.87 FY18 28.739 139,976.05 FY19 31.141 159,888.85 FY20 2.494 15,298.53 Total 344.29 1,295,989.17
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ANNEX 3. PROJECT COST BY COMPONENT
Actual at Project Amount at Approval Percentage of Components Closing (US$, (US$, millions)a Approval) millions) Road Improvement 606.79 526.20 86.72 PPP Facilitation 3.07 1.20 39.09 Institutional Strengthening 16.54 9.60 58.04 Road Safety 18.65 12.00 64.34 Total 645.06 549.00 85.11 Note: PAD Report No. 48235-IN, September 19, 2009.
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ANNEX 4. EFFICIENCY ANALYSIS
1. Summary of Results and Conclusions from the Economic Analysis
Roads’ Upgrade
1. Economic evaluation was carried out for the complete Andhra Pradesh and Telangana Road Sector Project (APTRSP) with eight upgraded roads totalling 350 km length.60 In the analysis, the ‘with project’ improvement alternative was compared with the ‘without project’ alternative of minimum maintenance of the existing road: ‘do minimum’, that is, (a) base case (without improvements and with annual ‘do minimum’ maintenance) and (b) improvement alternative (with improvement/rehabilitation and annual ‘routine maintenance’ supplemented by a periodic maintenance at five-year intervals). The results of the economic analysis conducted, considering (a) completion costs, (b) actual implementation period, and (c) achieved traffic on completion of project packages and their sensitivity analysis after 20 percent reduction in benefits, are summarized in table 4.1.
Table 4.1. Results of the Economic Analysis
20% Reduction in Benefit Base Case Length Scenario Package (km) ENPV ENPV EIRR (%) EIRR (%) (INR m illion) (INR m illion) A. Telangana Jagityal-Peddapalli Road JP-06 56.200 16.0 125 14.2 62 Kandi-Shadnagar Road KS-05 53.806 14.2 1,208 11.8 -95 Subtotal Telangana 110.006 14.3 1,333 11.9 -33
B. APb Chittoor-Puttur CP-01 59.20 13.9 138 8.1 -27 Kurnool-Devanakonda KD-02 60.90 24.0 846 21.0 578 Mydukur-J'madugu MJ-03 18.00 30.8 817 27.3 596 Mydukur-J'madugu MJ-04 16.49 16.9 149 14.7 73 Pedana-Nuzvid-V'Peta PNV-08a 51.92 19.3 843 16.6 485 Pedana-Nuzvid-V'Peta PNV-09 33.21 33.8 1,324 30.2 988 Subtotal AP 239.72 22.2 4,117 16.2 2,692 APTRSP Total Program 349.72 17.6 5,449 15.0 2,659 Note: a. Regarding package PNV-08, the work was initially entrusted to M/s Ramky Infra with contract value of INR 165.35 crore, and after expenditure of INR 55.11 crore, the contract was terminated. The estimates for the balance work were revised and the balance work was divided into three packages, that is, PNV-08A, PNV-08B, and PNV- 08C. The packages PNV-08A and PNV-08B are completed and PNV-08C is not completed. However, the payments on the above three packages are yet to be finalized. b. Kakinada-Rajahmundry (KR-07) work was terminated and the road was delinked from the scope of the project.
60 Of the seven roads considered for upgrading improvement in the processing stage, Kakinada-Rajahmundry road (61.6 km length) was dropped and delinked from the program.
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2. The end-of-project EIRRs of the above upgrading of road stretches of the APTRSP are in the range of 13.9 percent to 33.8 percent, which indicates that the project is economically viable even with increased construction cost and time overrun. In all eight road stretches, the NPV discounted at 12 percent is positive. The overall APTRSP upgrading project has 17.6 percent EIRR and INR 5,449 million as economic net present value (ENPV), confirming the economic justification of the project. All the road stretches together have mixed change in EIRR than at the appraisal stage. However, the combined EIRR for upgrading roads (17.6 percent) is found to be lesser than the EIRR at the appraisal stage, which was 21.4 percent. Even in the sensitivity analysis, considering 20 percent reduction of yearly benefits for the analysis period, the EIRRs obtained for road packages at the completion stage are in the range of 8.1 percent to 30.2 percent.
3. For the APTRSP, package PNV-09 has higher EIRR than all other stretches due to comparatively higher traffic volumes with more commercial vehicles supported with lesser cost along with lesser cost overrun achieved during the implementation period (2009–2018).
4. The first reason for the differences in the EIRR is the considerable increase in construction contract costs (24.0 percent).61 The second reason is increase in project implementation period with time overrun of 7–49 months. The third reason is the changed traffic growth pattern in the project road sections achieved during the project implementation period (2009–2018). These together have resulted in lesser savings of VOCs than estimated at appraisal. The completion-stage EIRR of 16.9 percent, above the EOCC of 12 percent, confirms that the upgrading of the roads was justified.
5. Conclusions. The above results show the robustness of the economic feasibility indicators under normal and adverse sensitivity scenarios including significant decrease in benefits, for many project roads and for the full program. The end-of-project EIRR for all the above packages combined justifies the project investment with more risk absorption capacity. However, this sensitivity is unlikely to happen as (a) traffic is expected to grow to accompany the current economic growth; (b) there is no uncertainty on the cost of the works as all the contracts are completed; and (c) VOCs are unlikely to be reduced in view of the past trend for the price of inputs such as fuel, lubricants, tires, and salaries. Also, the estimated economic feasibility results are on the conservative side as the qualitative project benefits such as tourism development, increased road safety, and better highway environment are not considered in this analysis.
OPRC Roads
6. Economic evaluation was carried out for the OPRC Roads of the APTRSP in AP consisting of seven packages of 1,291 km length covering seven districts.62 In the analysis, the ‘with project’ improvement alternative was compared with the ‘without project’ alternative of minimum maintenance of the existing road: ‘do minimum’, that is, (a) base case (without improvements and with annual ‘do minimum’ maintenance) and (b) improvement alternative (with the identified maintenance activities consisting of (i) ordinary maintenance, (ii) initial rectification works, (iii) periodic maintenance, (iv) minor improvement works, and (v) emergency works). The results of the economic analysis conducted, considering (a)
61 Maximum cost overrun of 100 percent was observed for PNV-08 package and the reason for this is explained in the footnote of table 4.1. The cost overrun for other packages is between (−) 6 percent (package KD-02) and 12.3 percent (package CP-01). 62 Of the 1,997 km length of roads under Phase 1 of OPRC roads with 11 packages, seven packages with 1,291 km length are in AP and the rest are in Telangana.
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completion costs, (b) actual implementation period, and (c) achieved traffic on completion of project packages and their sensitivity analysis after 20 percent reduction in benefits, are summarized in table 4.2.
Table 4.2. OPRC Program - Economic Evaluation Results
20% Reduction in Base Case Total Benefit Scenario Switching Package Package Name Length Value to No. (km) ENPV (INR EIRR ENPV (INR EIRR EIRR (%) million) (%) million) (%) Visakhapatnam 186.1 212 28.49 136 23.65 55.69 1 District 2 Kakinada District 151.2 744 49.19 556 40.27 79.47 3 Guntur District 208.3 1,047 49.50 801 42.74 85.24 4 Eluru District 124.1 1,070 54.29 824 46.47 87.24 5 Kadapa District 274.3 590 22.08 403 19.62 63.23 6 Kurnool District 165.2 278 20.44 180 18.01 56.86 7 Chittoor District 181.5 236 18.81 144 16.56 51.02 Total AP 1,290.7 4,176 32.70 3,045 28.15 73.84
7. EIRRs for all packages (18.81 percent to 54.29 percent) and combined for AP (32.7 percent) are above the minimum required 12 percent and hence found feasible for investment. However, when compared to the economic feasibility results of the processing stage, the economic results of the ICR stage for OPRC roads in AP have reduced. This reduction in EIRRs can be attributed to the following: on an average the project cost has increased by 15.8 percent, and the overall annual traffic growth rate during 2007–2016 has reduced considerably, from 4.2 percent to 2.2 percent.
2. Summary of Previous Rounds of Economic Analysis
8. At the time of appraisal of the project, economic analysis was carried out for 422 km of nine road packages of upgrading roads. Also, 1,997 km length of OPRC road sections (Phase 1 of the 6,500 km length of CRN) under performance-based maintenance contract were considered for economic analysis. The existing carriageway configuration of all packages was generally single lane to intermediate lane. Few sections had narrow two lanes. Under the APTRSP, all the upgrading project roads were proposed for upgrade to two-lane configurations and one full road package (KD-02) and few sections in other upgrade packages for four-lane configurations. The economic viability of project sections due to upgrading was obtained considering reduction in VOC and saving in travel time cost of passengers with respect to without improved project sections. The overall EIRR for the upgrade roads was 21.4 percent with NPV, discounted at 12 percent, of INR 20,188 million, and the EIRR for OPRC roads was 58.5 percent with NPV of INR 13,573 million.
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Table 4.3. Results of the Revised Economic Feasibility (2009) for Selected Completed Sections of the APTRSP Upgrading program 611.0 Benefits OPRC maintenance program 335.0 (US$ million) Total 946.0 Upgrading program 199.0 Costs OPRC maintenance program 58.0 (US$ million) Total 257.0 Upgrading program 412.0 Net Benefits OPRC maintenance program 277.0 (US$ million) Total 689.0 Upgrading program 21.4 EIRR (%) OPRC maintenance program 58.5 Total 29.6 Note: US$1 = INR 49 (March 2009)
3. Approach and Methodology for the Economic Analysis for ICR
Roads Upgrade
9. The economic analysis carried out in 2008, at the project appraisal stage, was revised and updated for the ICR with actual data as on completion of works. For this, completed APTRSP upgrade roads totalling 350 km length and OPRC maintenance program road sections totalling 1,997 km length only are considered and analysed using the HDM model. Completion cost at current price was converted to the base price of 2008, using wholesale price index for all commodities (Source: Ministry of Commerce and Industries, GOI, https://eaindustry.nic.in/download_data_0405.asp). The details of packages of APTRSP upgrade roads and their improvement proposals are presented in table 4.4.
Table 4.4. Details of Upgrade Road Sections for ICR Analysis
Length Initial Road Road Configuration after Package (km) Configuration Upgrading
A. Telangana Jagityal-Peddapalli Road JP-06 56.200 Single to two lanes Widening to two lanes Kandi-Shadnagar Road KS-05 53.806 Narrow two lanes Widening to two lane/four lanes Subtotal Telangana 110.006 B. AP Chittoor-Puttur CP-01 59.20 Single to two lanes Widening to two lane/four lanes Kurnool-Devanakonda KD-02 60.90 Intermediate to two Widening to two lanes lanes Mydukur-J'madugu MJ-03 18.00 Narrow two lanes Widening to four lanes Mydukur-J'madugu MJ-04 16.49 Narrow two lanes Widening to four lanes Pedana-Nuzvid-V'Peta PNV-08a 51.92 Intermediate to two Widening to two lanes lanes Pedana-Nuzvid-V'Peta PNV-09 33.21 single lane Widening to two lanes Subtotal AP 239.72 APTRSP Total Program 349.72
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Note: a. Regarding package PNV-08, the work was initially entrusted to M/s Ramky Infra with contract value as INR 165.35 crore, and after expenditure of INR 55.11 crore, the contract was terminated. The estimates for the balance work were revised and the balance work was divided into three packages, that is, PNV-08A, PNV-08B, and PNV-08C. The packages PNV-08A and PNV-08B are completed and PNV-08C is not completed. However, the payments on the above three packages are yet to be finalized.
10. A revised economic analysis was carried out for the upgrade roads because there were cost overruns in these works. Tables 4.5 and 4.6 present the variation in costs in the upgrading contracts from processing (2008) to project completion (2018).
11. Approach. The economic evaluation has been carried out within the broad framework of social cost-benefit analysis assuming the analysis period of 24 years including the achieved construction period. There will be reduction in road user costs of motorized traffic upon the improvement of the existing road. The economic savings at significant levels in the following areas are expected to occur due to improvement of the existing roads: savings in VOCs and savings in journey time of passengers and goods.
12. The economic analysis has been based on comparison of costs and benefits under two scenarios: ‘without the upgrading project’ and ‘with the upgrading project’. All costs and benefits are valued in monetary terms and expressed in economic prices to obtain the analysis on resource-based framework. The analysis is made package-wise and the results are expressed in terms of EIRR and ENPV.
13. Construction program. The analysis period of the project has been taken as 24 years, including construction time. The completed construction program for APTRSP upgrade road network is summarized in table 4.7, in which the actual construction period is only considered in the analysis by leaving the spill over works in the beginning and end. For the analysis, it is assumed that traffic is opened on completion of all construction activities.
14. Procedure for estimation of benefits. The following procedure has been employed to estimate the aforesaid benefits: • Estimation of present traffic volume on the completed road sections/packages from field surveys. • Estimation of traffic growth rate—adopted from the ‘initial base analysis of 2009’. • The time values are used in the VOC estimation. • Usual maintenance provisions and costs in ‘with’ and ‘without’ conditions have been considered. • Except the changed variables during implantation (construction cost, construction phasing, and traffic growth rate achieved during implementation period of 2008–2018), all other variables used during the processing stage were retained. • Base year used in processing stage analysis (2008) is retained for the present ICR analysis and all completed costs were converted to the base year (2008). • The model used for analysis is HDM 4. • EIRRs of the sections have been estimated with HDM but the EIRR of the packages and subsequently for the entire project has been obtained also taking together all the sections. • EIRR and NPV estimation with the sum of benefits from VOC savings and time savings.
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The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021)
Table 4.5. Comparison of Initial Cost (2008) and Completed Cost (2018)
Phasing of Cost INR in Crores Total Length Payment Package F.Y F.Y F.Y F.Y F.Y F.Y F.Y F.Y F.Y F.Y F.Y Total Km s (US$ 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 Payments Mn) A. Telungana State Civil 9.60 3.72 24.98 22.12 3.12 1.54 1.70 - - 66.78 13.63 Jagityal- Others 1.20 1.20 0.24 Peddapalli 56.20 Total - 9.60 4.92 24.98 22.12 3.12 1.54 1.70 - - - 67.98 13.87 Road - JP-06 Total - - 8.44 3.97 18.78 15.70 2.17 1.10 1.17 - - - 51.32 10.47 2008 Price Phasing % 0.0% 16.4% 7.7% 36.6% 30.6% 4.2% 2.1% 2.3% 0.0% 0.0% 0.0% 100.0% Civil - - 24.45 23.53 28.44 12.09 17.76 15.49 53.57 175.34 35.78 Kandi- Others 3.22 2.00 5.22 1.07 Shadnagar 53.81 Total - 3.22 - 26.45 23.53 28.44 12.09 17.76 15.49 53.57 - 180.56 36.85 Road - KS-05 Total - - 2.83 - 19.89 16.70 19.78 8.62 12.22 10.28 34.27 - 124.58 25.42 2008 Price Phasing % 0.0% 2.3% 0.0% 16.0% 13.4% 15.9% 6.9% 9.8% 8.2% 27.5% 0.0% 100.0% Civil 0.00 9.60 3.72 49.43 45.66 31.57 13.63 19.46 15.49 53.57 0.00 242.12 49.41 Others 0.00 3.22 1.20 2.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 6.42 1.31 Sub Total 110.01 Total 0.00 12.82 4.92 51.43 45.66 31.57 13.63 19.46 15.49 53.57 0.00 248.54 50.72 Total - - 11.27 3.97 38.67 32.39 21.95 9.72 13.39 10.28 34.27 - 175.91 35.90 2008 Price B. Andhra Pradesh State Civil 16.87 15.29 23.62 40.11 16.23 11.92 2.06 - - 0.89 - 126.99 25.92 Others 3.45 4.29 0.30 3.27 4.64 - 13.82 1.24 3.73 4.91 - 39.64 8.09 Chittoor - Puttur 59.20 CP-01 Total 20.32 19.58 23.92 43.39 20.88 11.92 15.87 1.24 3.73 5.79 - 166.63 34.01 Total - 19.57 17.22 19.31 32.62 14.81 8.29 11.32 0.85 2.48 3.71 - 130.17 26.56 2008 Price Phasing % 15.0% 13.2% 14.8% 25.1% 11.4% 6.4% 8.7% 0.7% 1.9% 2.8% 0.0% 100.0% Civil - - 1.82 9.57 - 20.03 45.94 22.69 11.71 13.83 - 125.58 25.63 Kurnool - Others 3.54 4.41 0.30 3.37 4.78 - 14.21 1.27 3.84 5.05 - 40.78 8.32 Devanakonda 60.90 Total 3.54 4.41 2.12 12.94 4.78 20.03 60.15 23.96 15.55 18.88 - 166.36 33.95 KD-02 Total - 3.41 3.88 1.71 9.73 3.39 13.93 42.90 16.48 10.31 12.08 - 117.83 24.05 2008 Price Phasing % 2.9% 3.3% 1.5% 8.3% 2.9% 11.8% 36.4% 14.0% 8.8% 10.2% 0.0% 100.0% Civil - - 4.89 13.06 15.56 14.94 5.29 6.59 2.50 8.67 - 71.50 14.59 Mydukur - Others 1.05 1.30 0.09 1.00 1.41 - 4.20 0.38 1.13 1.49 - 12.05 2.46 J'madugu MJ- 18.00 Total 1.05 1.30 4.98 14.06 16.98 14.94 9.49 6.97 3.63 10.16 - 83.56 17.05 03 Total - 1.01 1.15 4.02 10.57 12.04 10.39 6.77 4.79 2.41 6.50 - 59.65 12.17 2008 Price Phasing % 1.7% 1.9% 6.7% 17.7% 20.2% 17.4% 11.3% 8.0% 4.0% 10.9% 0.0% 100.0% Civil - - - 12.45 17.16 6.17 - 7.50 8.85 5.71 - 57.84 11.80 Mydukur - Others 0.96 1.19 0.08 0.91 1.29 - 3.85 0.34 1.04 1.37 - 11.04 2.25 J'madugu MJ- 16.49 Total 0.96 1.19 0.08 13.36 18.46 6.17 3.85 7.84 9.89 7.07 - 68.88 14.06 04 Total - 0.92 1.05 0.07 10.05 13.09 4.29 2.75 5.39 6.56 4.52 - 48.70 9.94 2008 Price Phasing % 1.9% 2.2% 0.1% 20.6% 26.9% 8.8% 5.6% 11.1% 13.5% 9.3% 0.0% 100.0% Civil - - - 24.80 17.41 9.41 3.49 - 14.41 79.70 181.51 330.74 67.50 Pedana - Others 3.02 3.76 0.26 2.87 4.07 - 12.12 1.09 3.27 4.30 - 34.77 7.10 Nuzvid - V'Peta 51.92 Total 3.02 3.76 0.26 27.67 21.48 9.41 15.61 1.09 17.69 84.01 181.51 365.50 74.59 1 PNV -08 Total - 2.91 3.31 0.21 20.80 15.24 6.54 11.13 0.75 11.73 53.74 111.97 238.35 48.64 2008 Price Phasing % 1.2% 1.4% 0.1% 8.7% 6.4% 2.7% 4.7% 0.3% 4.9% 22.5% 47.0% 100.0% Civil - - - 14.49 18.66 12.41 2.94 13.42 16.89 8.40 - 87.22 17.80 Pedana - Others 1.93 2.41 0.17 1.84 2.60 - 7.75 0.69 2.09 2.75 - 22.24 4.54 Nuzvid - V'Peta 33.21 Total 1.93 2.41 0.17 16.33 21.26 12.41 10.69 14.11 18.98 11.16 - 109.46 22.34 PNV -09 Total - 1.86 2.12 0.13 12.28 15.08 8.63 7.63 9.71 12.59 7.14 - 77.17 15.75 2008 Price Phasing % 2.4% 2.7% 0.2% 15.9% 19.5% 11.2% 9.9% 12.6% 16.3% 9.2% 0.0% 100.0% Civil 16.87 15.29 30.33 114.49 85.03 74.88 59.72 50.20 54.37 117.20 181.51 799.87 163.24 Others 13.95 17.37 1.20 13.26 18.80 - 55.94 5.01 15.11 19.88 - 160.52 32.76 Sub Total 239.72 Total 30.82 32.66 31.53 127.74 103.83 74.88 115.66 55.21 69.48 137.07 181.51 960.39 196.00 Total - 29.69 28.72 25.45 96.04 73.66 52.08 82.50 37.98 46.09 87.69 111.97 671.87 137.12 2008 Price Civil 16.87 24.89 34.05 163.92 130.69 106.45 73.35 69.66 69.86 170.77 181.51 1,041.99 212.65 Others 13.95 20.59 2.40 15.26 18.80 - 55.94 5.01 15.11 19.88 - 166.94 34.07 Total 349.72 Total 30.82 45.48 36.45 179.17 149.49 106.45 129.29 74.67 84.97 190.64 181.51 1,208.93 246.72 Total - 29.69 39.99 29.42 134.71 106.05 74.04 92.22 51.36 56.36 121.96 111.97 847.77 173.02 2008 Price Note: (1) INR 1 crore = INR 10 Million; (2) FY = Financial Year; (3) Mn = Million
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The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021)
Table 4.6. Analysis of Time and Cost Overruns (2009–2018)
Contract Implementation Contract value (INR Cr)3 Contract Target Actual Target Implem Implem Cost on Cost Cost Package Length Km award complet complet Implem entation entation Contrac complet overrun overrun date ion date ion date entation Delay Delay t value ion in Rs. (Rs Cr) (%) (Months) (Months) (%) in Rs. Cr Cr A. Telungana State Jagityal- Peddapalli Road - JP-06 56.200 26.03.2010 13.12.201231.12.2013 32 13 41% 64.0 66.78 2.78 4.3% Kandi- Shadnagar Road - KS-05 53.806 09.08.2012 13.03.201515.03.2019 32 48 150% 163.0 175.34 12.31 7.5% Total 110.006 64 61 95% 227.0 242.1 15.1 6.6% B. Andhra Pradesh State 2 Chittoor - Puttur CP-01 59.20 09.09.2009 26.02.201214.08.2015 30 42 140% 113.10 126.99 13.89 12.3% Kurnool - Devanakonda KD-02 60.90 01.11.2014 31.10.201625.03.2019 24 29 121% 133.54 125.58 -7.96 -6.0% Mydukur - J'madugu MJ-03 18.00 20.03.2012 19.03.201430.09.2016 24 30 125% 65.22 71.50 6.28 9.6% Mydukur - J'madugu MJ-04 16.49 19.06.2012 18.06.201430.06.2018 24 48 200% 53.56 57.84 4.27 8.0% Pedana - Nuzvid - V'Peta PNV -08 1 51.92 10.05.2017 14.08.201825.03.2019 15 7 47% 165.34 330.74 165.40 100.0% Pedana - Nuzvid - V'Peta PNV -09 33.21 02.05.2012 01.08.201431.08.2018 27 49 181% 82.48 87.22 4.74 5.7% Total 239.72 144 205 142% 613.24 799.87 186.63 30.4% Sub Total 349.72 208 266 128% 840.3 1,042.0 201.7 24.0% Note: 1. Regarding package PNV-08, the work was initially entrusted to M/s Ramky Infra with contract value of INR 165.35 crore, and after expenditure of INR 55.11 crore, the contract was terminated. The estimates for the balance work were revised and the balance work was divided into three packages, that is PNV-08A, PNV-08B, and PNV-08C. The packages PNV-08A and PNV-08B are completed and PNV-08C is not completed. However, the payments on the above three packages are yet to be finalized. 2. Kakinada-Rajahmundry (KR-07) work was terminated and the road was delinked from the scope of the project. 3. INR 1 Crore = INR 10 Million.
Table 4.7. Construction Program (project phasing on completion) Upgrade Road Packages (%) Jagityal- Kandi- Kurnool- Pedana- Pedana- Chittoor- Mydukur- Mydukur- Year Peddap Shadnagar Devana Nuzvid- Nuzvid- Puttur J'madugu J'madugu alli Road Road KS- konda V'Peta V'Peta CP-01 MJ-03 MJ-04 JP-06 05 KD-02 PNV-08 PNV-09 FY2009–10 0.0 0.0 15.0 2.9 1.7 1.9 1.2 2.4 FY2010–11 16.4 2.3 13.2 3.3 1.9 2.2 1.4 2.7 FY2011–12 7.7 0.0 14.8 1.5 6.7 0.1 0.1 0.2 FY2012–13 36.6 16.0 25.1 8.3 17.7 20.6 8.7 15.9 FY2013–14 30.6 13.4 11.4 2.9 20.2 26.9 6.4 19.5 FY2014–15 4.2 15.9 6.4 11.8 17.4 8.8 2.7 11.2 FY2015–16 2.1 6.9 8.7 36.4 11.3 5.6 4.7 9.9 FY2016–17 2.3 9.8 0.7 14.0 8.0 11.1 0.3 12.6 FY2017–18 0.0 8.2 1.9 8.8 4.0 13.5 4.9 16.3 FY2018–19 0.0 27.5 2.8 10.2 10.9 9.3 22.5 9.2 FY2019–20 0.0 0.0 0.0 0.0 0.0 0.0 47.0 0.0 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: APRDC and Telangana Road Development Corporation.
15. Components of cost. From the financial costs of completed packages of the APTRSP, the economic cost has been worked out by multiplying the financial cost by a factor of 0.9 and is presented in table 4.8.
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The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021)
Table 4.8. Financial Costs for Proposed Upgrading of Different Packages Financial Cost at Financial Cost/km (INR) Completion Cost at Length (2018) at 2008 Completion Package Financial Economic (km) Price INR in Crore (2018) at Cost Cost (INR 1 crore = INR 2008 Price 10 million) (US$ million) A. Telangana Jagityal-Peddapalli Road JP-06 56.200 51.32 10.47 91,32,536 82,19,282 Kandi-Shadnagar Road KS-05 53.806 124.58 25.42 2,31,53,814 2,08,38,432 Subtotal Telangana 110.006 175.91 35.90 1,59,90,606 1,43,91,545
B. AP Chittoor-Puttur CP-01 59.200 130.17 26.56 2,19,87,704 1,97,88,934 Kurnool-Devanakonda KD-02 60.900 117.83 24.05 1,93,48,482 1,74,13,634 Mydukur-J'madugu MJ-03 18.000 59.65 12.17 3,31,39,775 2,98,25,797 Mydukur-J'madugu MJ-04 16.490 48.70 9.94 2,95,31,289 2,65,78,160 Pedana-Nuzvid-V'Peta PNV-08a 51.920 238.35 48.64 4,59,06,385 4,13,15,747 Pedana-Nuzvid-V'Peta PNV-09 33.210 77.17 15.75 2,32,39,397 2,09,15,457 Subtotal AP 239.720 671.87 137.12 2,80,27,411 2,52,24,670 APTRSP Total Program 349.720 847.77 173.02 2,42,41,223 2,18,17,101 Note: a. Regarding package PNV-08, the work was initially entrusted to M/s Ramky Infra with contract value as INR 165.35 crore, and after expenditure of INR 55.11 crore, the contract was terminated. The estimates for the balance work were revised and the balance work was divided into three packages, that is PNV-08A, PNV-08B, and PNV-08C. The packages PNV-08A and PNV-08B are completed and PNV-08C is not completed. However, the payments on the above three packages are yet to be finalized.
16. Maintenance cost. The maintenance works considered in the analysis include annual and routine maintenance.
17. The financial costs pertaining to maintenance operations have been converted into economic costs by applying the conversion factor of 0.90. The details of the maintenance program have been adopted from base analysis (2008) and presented in table 4.9. The periodic maintenance cost for base case as well as for the upgrading project alternatives would be applicable after a five-year interval.
Table 4.9. Maintenance Cost Adopted
Maintenance Activity Without Project (INR million/km) With Project (INR million/km)
Intermediate Lane Two Lane Four Lane Annual Maintenance 0.05 0.08 0.13 Periodical Maintenance 1.03 1.72 2.86 Overlay 2.06 3.43 5.72
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The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021)
18. Traffic specific parametric values. The economic unit costs (year 2008) parametric values for motorized vehicles have been taken from the base analysis (2008) during the processing stage and are used in HDM model inputs, as shown in table 4.10.
Table 4.10. Vehicle Economics at Economic Prices Light Two- Two Three Multi-Axle Commerci Item Car Bus Axle Tractor Wheel Wheel Truck al Vehicle Truck (LCV) Vehicle 3,18,500 39,200 1,08,780 9,35,557 8,27,120 10,42,720 6,35,040 3,62,600 price (INR) No. of 4 2 3 6 6 10 4 7 wheels No. of axles 2 2 2 2 2 3 2 3 Passengers 4 1 3 25 — — — — Tyre (INR) 3,038 735 931 8,575 8,575 8,575 5,488 8,575 Fuel per 30.38 30.38 30.38 28.91 28.91 28.91 28.91 28.91 liter (INR) Lubricating 2.94 2.94 2.94 2.94 2.94 2.94 2.94 2.94 oil (INR) Maintenanc 98 98 98 176.4 176.4 176.4 147 147 e labor (per hour) (INR) Crew wages 15.68 0 13.72 87.22 40.18 40.18 26.46 147 (per hour) (INR) Annual 29,400 0 9,800 9,800 9,800 9,800 29,400 29,400 overhead (INR) Interest rate 12 8 8 12 12 12 12 12 (%) Passenger 37.24 29.89 29.89 24.99 2.94 3.43 2.45 2.45 work time value (per hour) (INR) Cargo time — — — — 2.94 3.43 2.45 2.45 value (per hour) (INR)
PCSE 1 1 1 2 2 2 2 Working 1,000 220 800 2,400 2,600 2,800 1,700 1,500 hours Annual km 40,000 10,000 20,000 80,000 80,000 90,000 60,000 6,000 Average life 10 10 8 10 10 10 10 10
19. The residual value. Considering the remaining life of the construction items, the residual value (salvage value) has been assessed at the end of the analysis period. For structures, the life is assumed to
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The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021)
be 50 years. Values of the selected construction items such as LA, structures, sub-base, and social displacement cost are included in the economic analysis as residual values at the end of the analysis period. These residual values are considered as benefits to the project in the analysis. The value has been taken as 10 percent for the present analysis.
20. Volume of traffic and growth rates. The annual average daily traffic (AADT) on different road sections during 2007 to 2016 is given in table 4.11. For this analysis, the AADT adopted during the initial analysis (2007) is used. However, based on the AADT from the post-completion surveys (2016), the actual growth rate achieved during the implementation period (2007–2016) for different vehicle categories has been adopted for the present analysis. Accordingly, the AADT and the periodical growth rates adopted for the analysis are presented in tables 4.11 and 412.
Table 4.11. Growth Pattern of Vehicular Traffic on the AP Project Roads (2007–2016) AADT on Different Road Section Adopted for Analysis AADT (Number of Vehicles) Two Project Car, Three Autori Two Year axle Tracto Roads Jeep, Bus LCV axle cksha Wheele Total Truck rs Van Trucks w rs s A. AP Chittoor- 2007 746 529 262 546 8 328 2,720 118 5,257 Puttur Road 2016 1,207 762 318 891 206 411 4,648 266 8,709 CAGR 5.5 4.1 2.2 5.6 43.5 2.5 6.1 9.5 5.8 (%) Kurnool- 2007 586 420 104 501 53 635 1,019 145 3,463 Devanakonda 2016 540 680 280 811 273 393 2,115 735 5,827 Road CAGR -0.9 5.5 11.6 5.5 20.0 −5.2 8.5 19.8 6.0 (%) Mydukur- 2007 671 650 130 736 76 1,714 2,964 648 7,589 Jammalamad 2016 1,580 893 744 1,397 378 3,189 9,291 66 17,538 ugu Road CAGR 10.0 3.6 21.4 7.4 19.5 7.1 13.5 -22.4 9.8 (%) Pedana- 2007 728 222 243 817 79 1,232 2,195 273 5,789 Nuzvid- 2016 1,340 342 406 1,384 358 1,463 3,627 735 9,655 V'Peta Road CAGR 7.0 4.9 5.9 6.0 18.3 1.9 5.7 11.6 5.8 (%) Total 2007 2,731 1,821 739 2,600 216 3,909 8,898 1,184 22,098 1,74 2016 4,667 2,677 4,483 1,215 5,456 19,681 1,802 41,729 8 CAGR 6.1 4.4 10.0 6.2 21.2 3.8 9.2 4.8 7.3 (%) B. Telangana Jagityal- 2007 216 135 62 236 0 936 1,939 82 3,606 Peddapalli 2019 423 469 276 246 250 1,713 3,436 138 6,951 Road CAGR 5.8 10.9 13.3 0.3 02 5.2 4.9 4.5 5.6
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The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021)
AADT (Number of Vehicles) Two Project Car, Three Autori Two Year axle Tracto Roads Jeep, Bus LCV axle cksha Wheele Total Truck rs Van Trucks w rs s (%) Kandi- 2007 495 127 241 1,678 353 697 1,089 286 4,966 Shadnagar 2019 928 392 826 2,436 3,282 1,310 1,999 575 11,748 Road CAGR 5.4 9.8 10.8 3.2 20.4 5.4 5.2 6.0 7.4 (%) Total 2007 711 262 303 1,914 353 1,633 3,028 368 8,572 1,10 2019 1,351 861 2,682 3,531 3,023 5,436 713 18,699 2 CAGR 5.5 10.4 11.4 2.9 21.2 5.3 5.0 5.7 6.7 (%) Source: (a) PAD of APRSP, 2009. 'Annex 9: Economic and Financial Analysis'; (b) APRDC. Note: CAGR = Compound annual growth rate. Comparing the completion-stage traffic data (2016) with the processing stage traffic (2007), observed traffic growth rates were estimated. Table 4.12. Annual Vehicular Traffic Growth Rates (%)
2007–2016 2016– After Vehicle Type Processing Completion Stage Completion Stage 2021 2021 Stage (AP)a (%) (Telangana)a(%) Car 7.73 6.1 5.5 6.41 5.34 Two wheelers 8.10 9.2 5.0 7.07 5.30 Three wheelers 9.38 3.8 5.3 7.79 5.84 Bus 6.31 4.4 10.4 5.24 3.93 Mini Bus 6.31 4.4 10.4 5.24 3.93 Tractor 6.34 4.8 5.7 6.44 5.90 Two-axle truck 6.34 6.2 2.9 6.44 5.90 Multi-axle truck 6.34 21.2 21.2 6.44 5.90 LCV 6.34 10.0 11.4 6.44 5.90 Source: PAD of APRSP, 2009. 'Annex 9: Economic and Financial Analysis'. Note: a. Comparing the completion stage traffic data (2016 for AP roads and 2019 for Telangana roads) with the processing stage traffic (2007), observed traffic growth rates were estimated. b. For the roads completed after 2016, the implementation period traffic growth rates are considered up to their actual completion period.
21. Model inputs. Post-completion review has shown considerable improvement in road surface for the APTRSP road sections, as shown in table 4.13.
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The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021)
Table 4.13. Comparison of Road Roughness Existing Length Roughness IRI - Roughness IRI Project Road (km) 2008a (2018)b A. AP Chittoor-Puttur 60.0 3.6 2.4 Kurnool-Devanakonda 60.9 5.4 2.4 Mydukur-Jammalamadugu 35.0 4.8 2.2 Pedana-Nuzvid-Vissannapeta 81.9 3.4 2.3 B. Telangana Jagityal-Peddapalli Road 56.2 5.4 2.3 Kandi-Shadnagar Road 53.8 3.9 2.3 Note: IRI = International Roughness Index. a. Roughness during Loan Processing Stage (2008). Source: PAD b. Post completion data collection (2018). Source: AP and Telangana.
22. VOC savings. HDM 4 has been used to estimate the VOC for traffic in each vehicle category on each selected road with and without improvement. The model estimates VOC in both the with- and without-project situations considering the speed and travel time including surface quality and road congestion. The model comprehensively predicts the performance and operating costs of motorized vehicles in the selected fleet. Motorized vehicle performance predictions include speeds (free flow and congested conditions) and consumptions. Predictions for VOCs include fuel, oil, tire and parts costs, crew and maintenance labour costs, capital depreciation, borrowing costs, and overhead costs.
23. Travel time saving. The model estimates the value of travel time for passengers and goods in transit in both the with- and without-project scenarios considering speed and travel time including surface quality and road congestion.
24. Accident cost savings. There can be some anticipated reduction of accidents due to improved signage and engineering intervention; however, the benefits deriving from this rehabilitation project are deemed to be moderate.
OPRC Roads
25. The economic evaluation of the long-term output and performance-based road maintenance contracts (OPRC Roads) was done considering the estimated maintenance and periodic maintenance needs of seven packages, totalling 1,291 km length, in AP. For want of adequate data, the economic evaluation of four OPRC packages in Telangana could not be carried out. Table 4.14 provides the basic characteristics including the planned maintenance activities.
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The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021)
Table 4.14. OPRC Packages on Completion in AP
Maintenance Works Completion Cost Completion Cost during 5-year during 5-year Package Implementation Implementation Package Name Reseal Overlay Other No. Total including including Works Works Maintenance (km) Variations (INR Variations (US$ (km) (km) Works (km) million) million) 1 Visakhapatnam 186.1 48.0 14.0 124.1 299.6 6.1 2 Kakinada 151.2 81.0 37.0 33.2 357.6 7.3 3 Guntur 208.3 55.0 19.0 134.3 301.6 6.2 4 Eluru 124.1 58.0 29.0 37.1 280.7 5.7 5 Kadapa 274.3 94.0 55.0 125.3 355.9 7.3 6 Kurnool 165.2 67.0 32.0 66.2 316.2 6.5 7 Chittoor 181.5 67.0 34.0 80.5 374.2 7.6 Total 1,290.7 470.0 220.0 600.7 2285.8 46.6
26. The average length of each contract is 184.4 km, of which 17 percent is treated with structural overlay (typically bituminous macadam and 40 mm semi-dense bituminous concrete), 36.4 percent with resealing (typically 25 mm semi-dense bituminous concrete), and the balance 46.5 percent with other maintenance activities (ordinary routine maintenance, initial rectification works, minor improvements, and emergency works). The average completed cost spent during the five-year maintenance contract is US$6.7 million per package (INR 326.5 million).
Table 4.15. Details of Project Cost - AP Packages PAD cost (INR million) 1,974.7 Contract cost (INR million) 2,016.3 Completed cost (INR million) 2,285.8 Increase in completed cost (%) 15.8 Table 4.16. Details of Maintenance Cost on Completion Financial Financial Economic Cost Cost - 2009 Cost - 2009 Cost - 2009 Maintenance Activities Unit Overrun Processing Completion Completion (%) Stage Stage Stage Annual routine maintenance INR/km/year 78,400 1,49,323 1,34,391 90 40 mm overlay INR/m2 490 536.1 482.5 9 25 mm reseal INR/m2 245 268.0 241.2 9
27. Table 4.17 presents the AADT of each package, both during the processing stage (2007) and completion stage (2016). The average total motorized traffic (AADT) at the processing stage in 2007 was 6,793 vehicles (4,018 vehicles excluding two wheelers). Considering the traffic data collected at the completion stage (2016) against the traffic data available for the processing stage (2007), the overall annual traffic growth rate has reduced from 4.2 percent to 2.2 percent, though there is much fluctuation among the vehicle types.
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The World Bank Andhra Pradesh & Telangana Road Sector Project (P096021)
Table 4.17. Details of AADT during 2007–2016 on OPRC Roads - Number of Vehicles
OPRC Multi Two New Old Auto Total Animal Total Traffic Mini Truck - Truck - Packag Bus Axles LCV Wheele Tech Tech ricksha Fast Drawn Cycle Slow Year Bus 3 Axle 2 axles e No. Truck rs Car Car w Vehicle Vehicle Vehicle 2007 261 17 14 188 1060 182 2120 688 69 1462 6060 34 1026 1061 1 2016 284 1037 245 572 1007 1002 6454 1738 174 1887 14399 7 14 21 2007 517 24 1 104 400 136 6355 796 80 4414 12825 26 3502 3527 2 2016 168 503 124 3 85 341 4791 2039 204 3534 11790 0 333 333 2007 828 47 22 307 1112 245 3466 1402 140 2104 9672 63 2547 2611 3 2016 424 106 387 219 404 364 4055 1331 133 1272 8695 6 27 33 2007 356 5 11 367 757 248 5469 684 68 2843 10809 35 3912 3946 4 2016 178 183 168 408 312 583 3956 1078 108 1237 8211 4 13 17 2007 299 32 104 118 295 220 958 365 36 512 2938 52 801 852 5 2016 197 241 408 115 128 218 2818 642 64 512 5343 12 21 33 2007 54 13 13 242 93 105 414 115 12 1861 2920 44 542 585 6 2016 109 86 220 206 207 309 1915 685 69 853 4659 17 41 58 2007 252 17 54 148 429 116 640 337 34 298 2324 90 356 446 7 2016 185 56 422 175 140 172 2375 620 62 438 4643 0 38 39 2007 367 22 31 211 592 179 2775 627 63 1928 6793 49 1812 1861 Average 2016 221 316 282 242 326 427 3766 1162 116 1390 8249 7 70 76 CGR% -5.5% 34.5% 27.8% 1.6% -6.4% 10.2% 3.5% 7.1% 7.1% -3.6% 2.2% -20.1% -30.4% -29.9%
Table 4.18. Average Annual Growth Rate Achieved during 2007–2016 on OPRC Roads Annual Growth Rate Vehicle Type Proposed from 2008 Achieved during 2008–2016 (%)a (%) Bus 3.5 −5.5 Minibus 3.5 34.5 Multi-axle truck 6.0 27.8 Truck - three axle 6.0 1.6 Truck - two axle 6.0 −6.4 LCV 5.0 10.2 Two wheelers 4.0 3.5 New tech car 4.0 7.1 Old tech car 4.0 7.1 Autorickshaw 4.0 −3.6 Overall 4.2 2.2 Note: a. Achieved growth rate is estimated from the traffic data collected in 2007 and 2016 on project road sections.
4. Economic Viability
Roads Upgrade
28. The EIRR is calculated by the model applying a project discount rate of 12 percent to the annual undiscounted net differences of the economic elements considered in the analysis. The sum of these discounted values gives the ENPV of the project which is generated and presented together with the associated EIRR from the HDM output. Major inputs used for the HDM 4 model pertaining to the road conditions before and after improvements are presented in tables 4.22 and 4.23.
29. Economic evaluations were carried out for discrete sections of the project road and for the scenarios described in table 4.19. In the analysis, the ‘with-project’ improvement alternative was
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compared with the base option of ‘without-project’ alternative of maintaining the existing road and minimum maintenance ‘do minimum’, that is , base case (without improvements and with annual ‘do minimum’ maintenance) and improvement alternative (with improvement/rehabilitation and annual ‘routine maintenance’ supplemented by a Structural Overlay at 4.5 IRI).
30. The results of the section-wise economic analysis conducted considering modified cost of project packages and their sensitivity analysis after 20 percent reduction in benefits are summarized in table 4.19.
Table 4.19. Results of the Economic Analysis
20% Reduction in Benefit Base Case Length Scenario Package (km) ENPV ENPV EIRR (%) EIRR (%) (INR million) (INR million) A. Telangana Jagityal-Peddapalli Road JP-06 56.200 16.0 125 14.2 62 Kandi-Shadnagar Road KS-05 53.806 14.2 1,208 11.8 −95 Subtotal Telangana 110.006 14.3 1,333 11.9 −33
B. APb Chittoor-Puttur CP-01 59.20 13.9 138 8.1 −27 Kurnool-Devanakonda KD-02 60.90 24.0 846 21.0 578 Mydukur-J'madugu MJ-03 18.00 30.8 817 27.3 596 Mydukur-J'madugu MJ-04 16.49 16.9 149 14.7 73 Pedana-Nuzvid-V'Peta PNV 08a 51.92 19.3 843 16.6 485 Pedana-Nuzvid-V'Peta PNV-09 33.21 33.8 1,324 30.2 988 Subtotal AP 239.72 22.2 4,117 16.2 2,692 APTRSP Total Program 349.72 17.6 5,449 15.0 2,659 Note: a. Regarding package PNV-08, the work was initially entrusted to M/s Ramky Infra with contract value as INR 165.35 crore, and after expenditure of INR 55.11 crore, the contract was terminated. The estimates for the balance work were revised and the balance work was divided into three packages, that is , PNV-08A, PNV-08B, and PNV-08C. The packages PNV-08A and PNV-08B are completed and PNV-08C is not completed. However, the payments on the above three packages are yet to be finalized. b. Kakinada-Rajahmundry (KR-07) work was terminated and the road was delinked from the scope of the project
31. The EIRRs obtained for road stretches of Telangana and AP are in the range of 13.9 percent to 33.8 percent. EIRRs for all eight roads are more than required at 12 percent. The overall project result is found to be at 17.6 percent EIRR. Hence, it can be concluded that the project is economically viable with increased construction cost and experienced time delays. These results show some changes with respect to earlier study. The EIRR is decreased because of reduced benefits obtained due to VOC and travel time cost saving during the analysis period. This reduction in benefit is mainly attributed to the increased construction cost, increased implementation period, and change in the traffic growth rates observed during the implementation period.
32. The sensitivity analysis is conducted after 20 percent reduction of yearly benefits for the analysis period and EIRRs obtained for road stretches are in the range of 8.1 percent to 30.2 percent, which are
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more than required at 12 percent, except for the packages KS-05 and CP-01. This decrease in benefit sensitivity is unlikely to happen due to following: • Traffic is expected to grow to accompany the current economic growth. • There is little uncertainty on the cost of the works as all the contracts are nearing completion and the costs have been updated to consider the price escalation as well as variations. • VOCs are unlikely to be reduced in view of the past trend for the price of inputs such as fuel, lubricants, tires, and salaries.
OPRC Roads
33. The economic evaluation considered without project alternative includes routine maintenance, patching, and overlay when road roughness reaches 4.5 IRI (m/km) and with project alternative includes proposed maintenance works executed during the initial five years maintenance contract period (evaluation period) followed by routine maintenance, patching, and overlay when the roughness reaches 4.5 IRI. Analysis period of 20 years followed during the processing stage analysis is retained for the present ICR.
34. The results of package-wise economic analysis conducted considering modified cost of project packages and their sensitivity analysis after 20 percent reduction in benefits are summarized in table 4.20. The overall EIRR for AP OPRC packages is estimated at 32.7 percent with the NPV of INR 4176 million (US$85.2 million). In the sensitivity analysis, considering scenario of 20 percent reduction in benefits, the EIRR is estimated to reduce to 28.2 percent (NPV INR 3,045 million). In both ‘base case’ and ‘20 percent benefit reduction’ sensitivity scenarios, the EIRRs are estimated to be more than the minimum required EOCC at 12 percent. Hence, the completed OPRC program can be treated as economically viable.
35. However, when compared to the economic feasibility results of the processing stage, the economic results of the ICR stage for OPRC roads in AP have reduced, as seen in table 4.20. This reduction in EIRRs can be attributed to the following: (a) on an average the project cost has increased by 15.8 percent and (b) the overall annual traffic growth rate during 2007–2016 has reduced considerably, from 4.2 percent to 2.2 percent.
Table 4.20. OPRC Program - Economic Evaluation Results
20% Reduction in Base Case Total Benefit Scenario Switching Package Package Name Length Value to No. ENPV (INR ENPV (INR EIRR (km) EIRR (%) EIRR million) million) (%) 1 Visakhapatnam 186.1 212 28.49 136 23.65 55.69 District 2 Kakinada District 151.2 744 49.19 556 40.27 79.47 3 Guntur District 208.3 1,047 49.50 801 42.74 85.24 4 Eluru District 124.1 1,070 54.29 824 46.47 87.24 5 Kadapa District 274.3 590 22.08 403 19.62 63.23 6 Kurnool District 165.2 278 20.44 180 18.01 56.86 7 Chittoor District 181.5 236 18.81 144 16.56 51.02 Total AP 1,290.7 4,176 32.70 3,045 28.15 73.84
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Table 4.21. Comparison of Economic Analysis Results - OPRC Roads EIRR (%) Package Total Length Package Name Processing Stage Completion Stage No. (km) (2009) (2019) 1 Visakhapatnam District 186.1 52.8 28.5 2 Kakinada District 151.2 106.1 49.2 3 Guntur District 208.3 89.2 49.5 4 Eluru District 124.1 88.4 54.3 5 Kadapa District 274.3 22.5 22.1 6 Kurnool District 165.2 22.3 20.4 7 Chittoor District 181.5 19.6 18.8
Total AP 1,290.7 58.5a 32.7 Note: a. Processing stage EIRR is combined for 11 packages of both AP and Telangana. Table 4.22. Existing Characteristics of Upgrading Roads
Road Condition before Improvement (2008) Average Length Average Cracking + Speed - Package No. of Existing Deflections (km) Roughness Ravelling Bus Lanes Width (m) (mm) (km/hour) (IRI) (%) A. Telangana Jagityal- 56.2 SL to 2L n.a. 5.4 18.4 1.09 n.a. Peddapalli Road JP-06 Kandi-Shadnagar 53.8 2L n.a. 3.9 53.0 0.87 n.a. Road KS-05 B. AP Chittoor-Puttur 59.2 SL to 2L 40.70 3.6 15.4 1.09 40.70 CP-01 Kurnool- 60.9 IL to 2L 46.80 5.4 5.0 1.09 46.80 Devanakonda KD-02 Mydukur- 18.0 2L 37.30 4.7 10.0 1.09 37.30 J'madugu MJ-03 Mydukur- 16.5 2L 46.80 5.0 5.0 1.09 46.80 J'madugu MJ-04 Pedana-Nuzvid- 51.9 2L 46.10 4.8 20.0 0.69 46.10 V'Peta PNV-08 Pedana-Nuzvid- 33.2 IL to 2L 36.30 4.8 12.0 0.69 36.30 V'Peta PNV-09 Note: SL = Single lane; IL = Intermediate lane; 2L = Two lane.
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Table 4.23. Characteristics of Upgrading Roads on Completion (2018) Completed Improvements (2018) Average Length Completed Completed Average Travel Package Shoulder (km) Roadwork Cost (US$, Cost Roughness Speed - Type million) (US$/km) (IRI) Bus (km/hour) A. Telangana Jagityal- 56.2 Widen to Unpaved 10.47 1,86,378 2.3 44.96 Peddapalli Road 2L JP-06 Kandi-Shadnagar 53.8 Widen to Unpaved/pav 25.42 4,72,527 2.3 50.15 Road KS-05 2L/4L ed B. APb Chittoor-Puttur 59.2 Widen to Unpaved/pav 26.56 4,48,729 2.4 54.65 CP-01 2L/4L ed Kurnool- 60.9 Widen to Unpaved/pav 24.05 3,94,867 2.4 52.20 Devanakonda 2L ed KD-02 Mydukur- 18.0 Widen to Unpaved 12.17 6,76,322 2.2 58.38 J'madugu MJ-03 4L Mydukur- 16.5 Widen to Unpaved 9.94 6,02,679 2.2 59.96 J'madugu MJ-04 4L Pedana-Nuzvid- 51.9 Widen to Paved 48.64 9,36,865 2.3 51.92 V'Peta PNV-08a 2L Pedana-Nuzvid- 33.2 Widen to Paved 15.75 4,74,273 2.3 49.82 V'Peta PNV-09 2L Note: SL = Single lane; IL = Intermediate lane; 2L = Two lane; 4L = Four Lane; NA = Not available; US$1 = INR 49. a. Regarding package PNV-08, the work was initially entrusted to M/s Ramky Infra with contract value of INR 165.35 crore, and after expenditure of INR 55.11 crore the contract was terminated. The estimates for the balance work were revised and the balance work was divided into three packages, that is PNV-08A, PNV-08B, and PNV-08C. The packages PNV-08A and PNV-08B are completed and PNV-08C is not completed. However, the payments on the above three packages are yet to be finalized. b. Kakinada-Rajahmundry (KR-07) work was terminated and the road was delinked from the scope of the project.
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ANNEX 5. EXAMPLES OF LAND ACQUISITION DELAYS
1. LA included 420 acres of private land affecting 2,200 landowners. In addition, 1,400 families were physically displaced, of which 1,100 were informal settlers who lost their livelihoods in the form of loss of small shops and businesses.
2. The cost of implementation of LA and resettlement activities was about INR 1,300 million (approximately US$19 million), which represented about 5 percent of the total project cost. Issues pertaining to LA had quickly manifested into project delays, including lack of timely and effective coordination with the Revenue Department; the Bifurcation Act and the corresponding release of a new Land Acquisition and Resettlement Act; inordinate delays in payment of compensation; and prolonged litigation by landowners even—at times—after government payments of compensation.
3. Examples of these hindrances include the following:
• During the first implementation year, and with respect to the 74 villages within the vicinity of the five roads in Phase 1, LA processes and payment for compensation were finalized for only 11 villages (that is, 15 percent). At the same time, the first notification, as mandated by law under section 4(1) of the Land Acquisition Act, was yet to be issued for 32 villages (that is, 45 percent), thus constituting a substantial delay in initiating LA processes.
• As of June, 201263 (that is, two-and-a-half years from effectiveness date), for Phase I, 56 percent of LA processes have been concluded and none for Phase II.64 This prevented contractors from gaining access to packages CP-01 and JP-06. Other delays (for example, forest clearing permits) have resulted in project disbursement of only 15 percent—at 45 percent of project duration.
• As of January 2014 (that is, four years from effectiveness date), only 55 percent of LA was completed, and 24 percent of affected families received R&R assistance.
• As of March 2015 (that is, almost nine months following the bifurcation), the position of Deputy Collector (LA) was vacant and thus coordination on LA matters with the state’s district administration was adversely affected. Also, a three-year delay in payment to vulnerable land users was observed.
• As of July 2017 (that is seven years from effectiveness date), the two long outstanding issues related to approval and disclosure of RPF and payment of cash assistance to vulnerable families were still outstanding.65
• As of June 2019, outstanding LA issues for AP include compensation payment to 65 landowners, partial resettlement assistance to 363 PAPs, and additional compensation to
63 Fifth Implementation Support Mission, June 19–29, 2012. 64 As per January 2012 agreement between World Bank and GOAP, these should be 100 percent and 50 percent for Phases I and II, respectively. 65 Telangana Implementation Support Mission, July 13–25, 2017, p. 2.
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542 landowners who became landless. For Telangana, the pending action include partial LA compensation to 10 landowners and additional compensation to 33 landowners who became landless.66
4. As regards remedy, the change in government resulted in all outstanding payments requiring specific approval processes. While APRDC is in the process of approving all payments, Telangana is yet to undertake the subject process.
66 ICR Mission, June 2019.
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ANNEX 6. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS
IMPLEMENTATION COMPLETION AND RESULTS (ICR) REPORT - BORROWER’s REPORT ANDHRA PRADESH ROAD SECTOR PROJECT (APRSP) Loan No.7792-IN
I. INTRODUCTION
The Govt. of A.P. through Government of India (GoI) has obtained loan (signed on 22nd January 2010) from the World Bank for Andhra Pradesh Road Sector Project (APRSP) as financial assistance towards the APRDC. Key references of the loan are tabulated below.
Table 1: Key References of the Loan Financing Agency World Bank Loan Number 7792-IN Project Number P096021 Loan Signing Date 22nd January, 2010 Loan Effective Date 23rd March, 2010 Loan closing Date 30th June, 2015 Extended date of loan closing 31st March, 2019 Total Loan Amount US $ 320 million
The financing plan amounts to US$ 646 million comprising US$ 326 million by GoAP and US$320 million by World Bank. The World Bank assistance project covers the following four components.
• Component A: Road Improvement Component • Component B: PPP Facilitation Component • Component C: Institutional Strengthening Component • Component D: Road Safety Component
The details of the four components of the Project are mentioned in the following sub-sections.
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• Component A: Road Improvement Component This component comprises two activities designed to upgrade and maintain the identified high traffic roads.
i) Up-gradation Component: Under this sub-component, upgrading of 429 Km of priority State Highways under Public sector financing was planned. After bifurcation of State, 223 Km of SHs are taken up in residuary Andhra Pradesh. Capacity augmentation by widening to Two Lane/Two Lane + Paved Shoulders/Four Lane was taken up. Repair/Rehabilitation/New Construction of Cross Drainage Structures including Minor/Major Bridges en-route was also part of this sub-component. The mode of Procurement was International Competitive Bidding (ICB)/National Competitive Bidding (NCB) and execution was Item rate basis. Bidding process involved post-qualification of bidders for Item rate type contracts. Bidding Documents, mostly in line with the latest WB standard documents with some changes as agreed between the World Bank and PIU were followed. Specifications of Ministry of Road Transport and Highways (MoRTH – 4th revision), GoI and other guidelines given in various publications of Indian Road Congress/ Indian Standards of Bureau were followed. The civil works were planned to take up in two phases and construction period varies from 12 months to 30 months depending upon size and complexity of package with Defect Notification Period (DPN) of 12 months. ii) Long Term Performance Based Maintenance Contracts (LTPBMC)/Output and Performance based Road Contracts (OPRC) Under this sub-component, it was planned to take up Long-Term Maintenance Contracts on Output and performance based for a length of 6241Km of State Highways. After re-organization of the State, 4301 Km length of SHs are taken up in Residual Andhra Pradesh. 5-year maintenance of existing road network is included in this component. All the works were procured under National Competitive Bidding (NCB) with item-rate basis. A new bidding document has been evolved with the help of World Bank to suit the output-based contract. The final version of Document was well appreciated by the Bank. Many states have followed or being followed this document. Five types of maintenance, i.e., (i) Ordinary Maintenance, (ii) Initial Rectification, (iii) Periodic Maintenance, (iv) Minor Rehabilitation works and (v) Emergency works are included in these works. The Contract period was 5 years. Payment under Ordinary Maintenance is based on the Contractor’s performance in achieving pre-defined service levels in 27 standard job items. World Bank financed 20% under this sub-component.
• Component B: PPP Facilitation Component This component was proposed to support strengthening the capacity of APRDC to develop selected high-density traffic corridors under PPP. The loan finance is limited to (i) Transaction Advisory services to carry out feasibility studies and to develop and transact as PPPs and (ii) capacity building of APRDC to be able to better identify, structure, award and monitor PPP Projects. Under this component, two Projects were successfully completed in accordance with the guidelines of Planning Commission of India.
• Component C: Institutional Strengthening Component Under this component, it was planned to take up necessary studies to make APRDC to
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operationalization with requisite capacity for its responsibilities in managing the CRN and new PPP Projects, Institutional Strengthening Action Plan and establishment of Road Management System. All the studies were completed, and necessary proposals are under examination by GoAP. RMS is in place and operation.
• Component D: Road Safety Component Undertaking “demonstration projects” on selected corridor, black-spot improvement program and institutional & policy for improving the State’s road safety responsibility framework and capacities are part of this component. One Road corridor in Residual AP was taken up as Demo Project and 41 No. of Black-spots were rectified. Road Safety policy has been finalized.
II. ASSESSMENT OF OUTCOMES:
Key Achievements and Success stories:
The key achievements components wise are detailed below; 1.a. Up-gradation Component: Under this component, identified State Highways of 35.28 Km have been upgraded to 4 lane, 159.718 Km upgraded to two lane paved shoulders and 29.65 Km upgraded to two lanes (total length 224.648 Km). 1.b Long Term Performance Based Road Contracts Component: Under this component, 26 packages were taken up for 5-year maintenance at a cost of Rs.891.00 Cr covering 4301 Km. All the packages are completed.
2. PPP facilitation component: This component is to support GoAP in implementation of PPP projects via toll revenues and viability gap support. Under this component, one project, i.e., Narketpally – Addanki – Medarametla road was taken up and the same is in operation stage.
3. Institutional Strengthening Component: The component is proposed to strengthen the APRDC for self-sustainability and to enhance the functional, organizational, staffing, financial, administrative and legal capacities. Necessary studies were conducted, and proposals were submitted to the Government of Andhra Pradesh for approval. In addition, Road Management System and Management Information System were established under this component and the same are under operational.
4. Road Safety Component: Under this component Demonstration Corridor, i.e., Renigunta – Kadapa Road was taken up with multi-sector (Engineering, Transport, Police and Medical) approach. Improvements to identified black-spots and Finalization of Road Safety Policy were also taken up under this component.
Success stories are detailed below; 1. Long Term Performance Based contracts: The implementation of Long Term Performance Based contracts in the State was found to be highly successful as the concept adopted was not only to maintain the road pavement in a pothole free manner, but also to improve the riding quality, correction of
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substandard geometrics, effective maintenance of road berms, slopes, etc., up to the Right of Way, Road Safety, Vent Clearance of cross drainage works, Repairs to damaged cross drainage works, removal of jungle growth, etc. The Long-Term Performance Based contracts resulted in better maintenance of roads compared to maintenance under traditional annual O&M contract method. Long term performance-based road contracts have made good impression amongst all the stakeholders. The road users have been happy with the condition of the roads including non-pavement items & there is a feeling that the maintenance of the roads under LTPBMC has been much better and appreciated. The Government of Andhra Pradesh is considering adopting Long Term Performance Based Maintenance Contracts with own budget, duly prioritizing the road stretches that immediate attention by using Road Asset Management System. The Government of Andhra Pradesh proposed to implement Long Term Performance Based Maintenance Contracts for 1800 Km of State highway, at a cost of Rs.500.00 Crores during next five years, i.e., 2019-20 to 2024-25.
2. Road Management System: Road Management System is established in APRDC. Road Data Collection (Asset and Road Condition), is done for 47,000 Km (i.e., State Highways, Major District Roads and Other District Roads) using Network Survey Vehicle (NSV) and Falling Weight Deflectometer (FWD). Data captured through NSV is entire Road Asset details like road width, length, curves, road profile, the location of bridges, culverts and road condition details such as Roughness, rutting, raveling, edge breaks, cracks, depressions, pothole area etc. FWD value indicates the Strength of Road. Manual surveys were conducted for traffic intensity, bridge/culverts inventory, soil type, road crust details are also done. Based on above data multiyear maintenance plans (rolling out plans) using HDM4 software, were prepared for maintenance and up-gradation of roads. The maintenance and up-gradation work with the State Government funds are being prioritized and taken up based on Roll-out plans.
III. KEY CHALLENGES:
1. During Project Design/Preparation: • Identification of roads/packages to be taken up under Project duly considering Regional balances as well political issues. • The differences in the guidelines of Govt. of India and World Bank pertaining to implementation of PPP Projects lead to dropping of gap funding by the World Bank. • Not having enough staff at field for verification of Detailed Project Reports prepared by the Consultants. This resulted in some unwarranted variations. • Identification of utilities below ground is another challenge due to non-availability of records with the utility departments.
2. During Project Implementation: • The Contractors for up-gradation packages were awarded to the Joint Venture companies. In most of the works awarded to the Joint Ventures, the entire work was being executed by only one partner, i.e., other than lead partner. As such the Joint
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Venture companies are formed between less experienced contractor and major contractors, to satisfy the eligibility criteria while bidding. • In some up-gradation packages, the Contractors have quoted rates for various items abnormally less, which lead to negative cash flow and this affected the progress of project. • Tenders finalized in the month of May’ 2017 for the PNV 08 packages. Immediately after the tender rainy season started which has led to delayed mobilization of plants & machinery by the contractor. • In up-gradation packages, various pockets of road stretch are affected by LA & R&R issues. LA procedures consumed considerable time. Works got stopped at these locations and there would be no continuity of Works. ✓ CP-01: Bypass for a length of 2 Kms has been removed from scope as LA not been done due to the court case. - Existing road has been improved. ✓ MJ-04: Bypass to a length of 1.10 Km has been removed from scope as LA was not completed due to court case. -Existing road has been improved. ✓ PNV-08 A: Kowthawarambypass (3.100 Kms) not handed over- Issue is in court. Existing road has been improved. ✓ PNV-08 B: Bommaluru realignment portion LA issue (120 ms.) is not resolved yet. Existing road has been improved. ✓ PNV-08 C: Perikedu village from Ch 66+860 to 67+010 (150 ms.) is in court and yet to be resolved. ✓ PNV-09: To compensate the contractor on delays because of delayed LA new rates were given to cover increase in cost for all the balance works executed from original scheduled date of completion. • Time consumed to vacate & clear the structures within ROW. Some structures are still existing though acquisition done. • Abnormal delay in estimating the costs for shifting of utilities by the concerned departments. • Land Acquisition and Shifting of Utilities are to be done in coordination with the Revenue authorities and concerned utility department. Due to lack of coordination of the concerned departments, the same are delayed, which in turn affected the progress of up-gradation packages. • During the execution of up-gradation packages it is observed that the Contractors lagging in planning for completing the project as per the schedule. The works affected due to shortage of resources in good working seasons. • Due to lack of Experienced Engineers with the Contractor, the project suffered at every stage of execution of works and billing. • Frequent change of the contractor’s staff& Consultant’s staff affected the project. • In some up-gradation packages, taking up & completion of culverts and bridges was entirely depends upon the water flow in the drains. The water released in the irrigation canals/drains during the period between June and December every year. Moreover, Irrigation department demanded to keep the vent way of the proposed bridges to cater the maximum flood discharge which was occurred in the year 1964 and to construct the additional box culverts in between two bridges - necessitated design changes.
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✓ PNV-08 C: As per the contract provisions a bridge shall be constructed on the Eluru canal (57+330) for single span of 21.50Mts. But, IWAI department demanded for bridge to a span of 40 m with a vertical clearance of 6.50 ms. above Full Supply Level. ✓ Km.44+388 - 3vents of 19mts span and Km.45+020 - 4vents of 19mts span have been redesigned with 6vents of 10.4mts span and 14 vents of 10.4mts span respectively based on the request by the irrigation department.
IV. LESSONS LEARNT AND POSSIBLE IMPROVEMENTS:
• Tenders finalized before rainy seasons led to delayed mobilization of plants & machinery by the contractor. Hence, allowance for rainy season shall be considered in the short-term contracts. • Land Acquisition and Rehabilitation &Resettlement: Acquiring Land to the requirement of ROW to be made at the time of Land Acquisition with proper demarcation to avoid future complications. • Most of the up-gradation projects are delayed due to land acquisition. Hence, at least 80% of hindrance free land shall be ensured before calling for tender. • Litigation by the land owners even after completion of Land Acquisition needs to be avoided. • Shifting of utilities: All utilities needs to be identified at the time of DPR and shifting shall be completed prior to award of Civil Works Contract, to avoid delay in completion of projects after award. • Sectional Milestones: Sections may be divided up with continuity in stretches or milestones may be alienated in form of financial progress of works as being practiced in EPC mode of contracts. • In case of aggressive bidding: Employer to analyze the rates quoted and ascertains the workability. Specialized short-term milestones may be fixed to detect the workability and sustainability of the rates. • Multiple extension of times is being allowed in cases where land acquisition is pending due to litigation, Court case etc. To avoid this, a clause may be included in bidding document for deletion of the stretches from scope of contract where land acquisition is pending even after completion of six months after award of the contract. • There shall be a threshold of less tender percentages in the bid document, to avoid negative cash flow to the contractor while performing the contract. • Eligibility criteria for awarding Contract shall be revised/modified. • Joint ventures conditions may be revised in bidding document, duly defining the role of each partner during the execution of work, to avoid only one partner executing the whole work. • Deployment of experienced and efficient Project Managers with support staff shall be ensured. • Stringent educational & experience qualification criteria shall be included in the bid document. • The bank shall consider modifying the bid document clauses on the above discussed issues.
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IMPLEMENTATION COMPLETION AND RESULTS (ICR) REPORT - BORROWER’s REPORT TELANGANA ROAD SECTOR PROJECT (TRSP) Loan No.7792-IN
I. INTRODUCTION
Roads are the life-line of nation providing transportation facility over the length and breadth of country. Systematic development of road is one of the important pre-requisites for development and acceleration of Socio-economic growth of the Country. The productivity and efficiency of Road transport is directly linked with the availability and quality of Road network.
Roads and Buildings Department, Telangana State, came into existence on 02-06-2014, on formation of Telangana State. The Department strives to provide efficient, affordable, user-focused, environmentally sustainable integrated transportation solutions, connecting villages, towns, cities and centers of industry, commerce, tourism and pilgrimage across the State. The department constructs and maintains roads and bridges on all roads under its control.
In Telangana State, the road assets of R&B Dept. comprise of 24,245 kms of road length with 3,152 kms of State Highways, 12,079 kms of Major District Roads, and 9,014 kms of Other District Roads. 16 National Highways are passing through the State of Telangana covering a length of 2,690 kms, out of which 868 kms are with National Highways Authority of India (NHAI). Ministry of Road Transport and Highways, Government of India provides complete financial support for the development and maintenance of National Highways under the control of the department.
R&B Department, Telangana is also responsible for construction and maintenance of Government Buildings of various State Government Departments aggregating to 54.50 lakhs square feet area (Non- Residential Buildings – 13.13 lakhs Sq.fts and Residential Buildings – 41.37 lakhs Sq.fts) and acts as the custodian of State Government Buildings and the appurtenant lands.
Background The Government of Andhra Pradesh (GOAP), before the State’s bifurcation, recognized the need for an efficient transport system in achieving its goals for economic growth and poverty reduction. Accordingly, the Government has been investing in the capital improvement of its road infrastructure.
The Project Development Objective is to provide better quality, capacity and safe roads to users in a sustainable manner, through enhanced institutional capacity of GOAP concerning the road sector; which should support in achieving its goals for economic growth and poverty reduction. As stated in the Legal
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Agreement dated January 22, 2010, the Project Development Objective (PDO) is to provide better quality, capacity and safe roads to users in a sustainable manner, through enhanced institutional capacity of the Andhra Pradesh Government in the road sector.
The original project’s total cost was US$645.86 million, financed by an IBRD loan of US$320 million and counterpart funds of US$325.86 million. It comprised four components;
o Component 1 - Road Improvement. o Component 2 - Public Private Partnership (PPP) Facilitation. o Component 3 - Institutional Strengthening. o Component 4 - Road Safety.
While the PDO remained unchanged throughout the project, outcome targets changed in view of the bifurcation of AP’s administrative boundaries into AP and Telangana (AP Reorganization Act, 2014). Indicators were revised to reflect AP’s Bifurcation Act. While indicators for Components 1, 2 (i.e. infrastructure) were spread between both states, indicators for Components 3 and 4 (i.e. institutional strengthening) were replicated to mirror the creation of two States.
Table 1. Revised Targets Target Indicator (Bifurcation Restructuring in 2017) S. No. Outcome Component Unit Component Andhra Telangana Pradesh 1. Share of CRN in good condition increased % 80 80 1.1. 429 km upgraded efficiently km 110 230 1.2. 6,241 km of roads under LTPBMC km 1,718 4,300 2. RDC to Concession 3 PPP roads no. One One 3. RDC fully operational with adequate N/A RDC has own staffing and adequate sources resources to manage the CRN of revenue for CRN 3.1. Institutional Strengthening Action Plan N/A IT-MIS, HR plan Environment and Social (ISAP) Management, fully operational 3.2. Governance and Accountability Action N/A Disclosure & complaints handling operational Plan (GAAP) 3.3. Annual maintenance plans developed N/A Annual maintenance plans developed through the RMS system 4. No. of accident fatalities per vehicle.km no. Less than 0.36 fatalities/km Less than 0.47 reduced on demonstration corridors on Hyderabad–Bijapur fatalities/km Corridor on Renigunta- Rayalacheruvu Corridor 4.1. Demonstration projects carried out in at no. One Pilot One Pilot least two road corridors, 4.2. Comprehensive road safety functions, capacity and action plan(s) put in place 4.3. Black Spot improvement of CRN
Project Description
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Telangana is one of the progressive states of India – its economic, social, health and education indicators are better than the national average and on par with its neighboring states of Karnataka, Maharashtra and Chhattisgarh. As per the latest census information the population of Telangana is about 3.52 Crores Road safety problem has become a significant public health issue. The combination of rapidly growing motorization levels and higher speeds, because of better quality of highways, has led to a growing incidence of accidents, and unless strict measures are taken by the relevant agencies the situation is likely to deteriorate further. The lack of coordination between the multiple agencies involved in road safety is a major constraint for developing and enforcing road safety regulations.
World Bank involvement in the project is in line with the importance accorded by State government and nationally to transport infrastructure in boosting economic development. This road sector project in the state has deepened the Bank’s engagement in the sector and creates conditions for sustainability by focusing on issues of road sector financing, private sector participation, preservation of road assets, road safety and HIV/AIDS. More specifically the project aims at:
(i) creating a sustainable framework for road infrastructure development and asset preservation to reduce transport costs and ensure reduction in fuel consumption and emissions through better quality roads; (ii) creating ‘safe’ roads and an institutional and policy framework conducive to the achievement of this agenda; and (iii) developing public sector capacity for improved service delivery in line with the Transport Sector Strategy of the Bank.
The Bank can also contribute significantly through sharing of global best practices and innovations in road sector management. The development objective of the project is to provide better quality, capacity and safe roads to users in a sustainable manner through enhanced institutional capacity of the Telangana government in the road sector.
II. Project Components and Benefits
Component 1 - Road Improvement To provide better quality, capacity and safe roads to users in a sustainable manner through enhanced institutional capacity of the Telangana government in the road sector, this component is implemented in two modes: − Two Upgradation Packages (110km) − Output and Performance-based Road Contracts (OPRC) (1,400km) − Upgradation Scope: Package Length Km Initial Road Road configuration after Configuration upgrading Jagityal- Peddapalli Road - JP-06 56.200 Single to Two Lane Widening to Two Lane Kandi- Shadnagar Road - KS-05 53.806 Narrow Two Lane Widening to Two Lane / Four Lane Total Telangana State 110.006 Upgradation Benefits:
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− These two upgradation projects significantly resulted in Vehicle Operation Costs (VOC) and travel time enhancements. − Increased connectivity between villages, between villages & markets, between villages & towns. − Impacted on reduction in road accidents, fatalities and injuries − Completion of Land Acquisition and R&R − The Land Acquisition R&R for agricultural affected families are identified along 29 villages, along 2 roads namely Jagityal-Peddapalli and Kandi-Shadnagar as 2 packages with a total length of 112Kms. LA involved in 29 villages with total of 99.17 Acres and involving 458 famers. − The Rehabilitation and Resettlement (R&R) involved in 2 roads namely Jagityal-Peddapalli and Kandi-Shadnagar as 2 packages. There are 27 villages along the roads where the R&R has been implemented and there are 308 families identified as “Project Affected Families” in these villages. 185 families are identified as “Project Displaced Families” in which 22 house sites (on 22 house sites) on JP road.
OPRC Scope: Scope: As part of this component, 1,421 km were to be maintained through ten Output and Performance- based Road Contracts (OPRC) each of 5-year duration. Of these, for the 4 packages awarded in the first phase, the contract value, including variation orders, worked out to Rs. 136 crore and the expenditure on them up to July 2017 was Rs. 127 crores.
In the second phase, works through 6 packages are in various stages of progress in 747 km. The current contract value of works in the second phase, including variation orders, is working out to Rs. 216 crore and the expenditure on them up to July 2017, is Rs. 184 crores. In each of the OPRC package, 20% of the lengths are resurfaced annually as required and this resulted in a span of 5 years, the entire stretch has been maintained in very good condition.
OPRC Benefits: − Share of CRN in good condition increased resulting in Vehicle Operation Costs (VOC) and travel time enhancements. − OPRC contracts have made good impression amongst all the stake holders. The road users have been happy with the condition of the roads. There is a general feeling that the maintenance of the roads under such contracts has been much better and appreciated. − Generally, the pavement surface has been maintained speedily & satisfactorily by most of the contractors. The maintenance of shoulders, CD works, tree banding, signages, pot-hole filling and other emergency works as and when arise during rains, floods and other natural calamities etc. are conducted using Pavement Management Vehicle, which houses necessary equipment and crew, there has been a marked improvement in these items as well. This is made part of all packages. Increasing importance to shoulder maintenance and traffic safety installations would enhance the value of road. Hard shoulders should be strengthened to accommodate traffic during maintenance period.
Component 2 - Public Private Partnership (PPP) Facilitation Scope: As against the target of awarding one road as PPP (in the third year), the government has awarded one road as Toll-based PPP concession (Hyderabad-Karimnagar-Ramagundam road, 207 km, INR 1,458 Cr) and
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construction of the same has also been completed. World Bank has technical support only, as such the feedback is provided.
Benefits: − RDC ability to engage the private sector to finance, develop, and manage road concessions − Such PPP projects; ✓ ensure the necessary investments into public sector and more effective public resources management; ✓ ensure higher quality and timely provision of public services; − Mostly investment projects are implemented in due terms and do not impose unforeseen public sectors extra expenditures; − Private sector expertise and experience are utilized in PPP projects implementation; − Appropriate PPP project risks allocation enables to reduce the risk management expenditures.
Component 3 – Institutional Strengthening The “Telangana State Road Development Corporation” was established in Feb. 2017 to oversee flagship road development programs (e.g. Telangana Rahadarula Abhivruddhi Karyakramam – TRAK). Institutional Strengthening Action Plan (ISAP) is resulted in following: − Finalization of Bifurcated Road Network Master Plan and Firm up CRN Plan for Telangana − Strategic Options Study for Select Core Roads of Telangana for 4,000 km of Core Roads. Proposal submitted to the Govt. for external funding. − Assess Road Financing Needs and Establish Telangana CRN Focused Road Fund − Comprehensive TSRDC Bill 2018 including separately proposed and Road fund bill is under preparation. − Recommending an appropriate organizational structure for managing the CRN, including the option of establishing a separate institution such as, for example, TSRDC or a dedicated CRN- focused unit within the Telangana R&B Department. − Assisting in operationalizing that organizational unit – and implementation of the overall ISAP – including through preparation of a medium-term business plan covering likely sources and uses of funds, organizational structure and staffing needs − HR Planning and Training for the dedicated institutions/organization for managing the CRN. − Study tour to Maharashtra and Gujarat were completed. − Study tour to developed countries like USA and Canada were completed.
Component 4 – Road Safety The Government has decided to set up one demo corridor to test and implement a new road safety program with multi sectoral road safety interventions. The corridor selected for this program is a 118 Km long Hyderabad – Bijapur State Highway no.-4. The Hyderabad – Bijapur Road of SH-04 is in Rangareddy and Vikarabad Districts. The Project Corridor starts from APPA Junction at Km 14/0 on SH - 04, which is intersection with Outer Ring Road. The road passes through the several Constituencies, Mandals and villages viz. Moinabad, Chevella, Manneguda, Parigi, and ends at km 132/269 at the Karnataka border.
Table 2. Multisectoral Road safety Interventions
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Sector Department Proposed Interventions under RSP ENGINEERING R&B Department a. Improvement of Curves – 20 Nos b. Widening – 1 No c. Junction Improvements – 3 Nos d. Road furniture upgradation e. Street Lighting for Junctions ENFORCEMENT Police Department a. HOPs at Manneguda and Kodangal b. Enforcement Equipment and vehicles Transport Department a. Electronic Weigh Bridges – 2 Nos. b. Enforcement Equipment EMERGENCY CARE Health Department a. Fully equipped Level-III Trauma Care Centre at Tandur b. Ambulance – 1 No.
As part of the project Junction & Curve Improvements, Road Widening, Tree Translocation and Road furniture upgradation were taken-up by the R&B Department. Most of the civil works were completed by December 2015.
Police are equipped with Patrolling and Interceptor vehicles, which are tooled with − Breath Analyzer with Printers − Laser Speed Gun − Cones Fluorescent − Body Worn Cameras − Video Still Camera (Digital) − Fluorescent Painted Jackets − Mobile Barriers − Helmets
Overloading is one of the leading causes of road accidents, involving trucks. To check the overloading violations, electronic weigh bridges are proposed on the corridor. Trauma Care Center at Tandur: Conversion/ Alteration to the existing ground floor building of the WCH Block of District Hospital, Tandur to accommodate Trauma Care Centre. Construction works of Trauma Care Centre (TCC) are completed. Medical Equipment: 35 equipment are procured and delivered to TCC.
It is vital for decision makers to compare road accident patterns pre and post implementation road safety interventions on the demo corridor, to analyze, learn from experience and to impart corrective actions on decisions taken towards road safety.
Review of the accident pattern on the Demo Corridor after completion of engineering road safety interventions (Dec-2015) clearly indicates the importance and necessity of the same on the demo corridor specifically and the whole state’s road network in general.
The Government taking measures to review standards pertaining to safety in the design of rural and urban roads and bring them in consonance with international best practices keeping in view the local traffic conditions.
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Lessons learned during planning, execution/ implementation and monitoring & evaluation of the Demo Corridor, are being adopted in development of the Telangana State’s Action Plan for Road Safety. Continuous identification and rectification of accident-prone spots and road safety audit shall be a regular feature on all the roads.
Other Benefits − Employment Opportunities: The project provided opportunities for engaging the local unskilled labor force in road work activities. At closure, the project created 2.5 person-days of employment, which represented 69 percent out of the total unskilled employment person days in all road upgrading packages. The proportion of women among local labor force employed was approx. 30 percent. − The impact of Road Safety awareness activities at the schools created the general awareness. The school children are following the road safety precautions while using the roads. The occurrences of road accidents at school zones have been reduced. The villagers are also having the common road sense, when to cross, how to cross the roads and where to cross the roads etc. The magnitudes of accidents have been reduced in the villages. − Regarding orientation on HIV/ AIDS at the road side villages, the persons at Dhabas, at Junctions imparted with the basic knowledge on HIV/ AIDS, use of preventive measures, increase in preventive and periodic medical checkups to prevent STDs. − Poverty Reduction and Shared Prosperity: The project made a concerted effort to restore the income of Project Affected People (PAP) to their pre-displacement status through payment of R&R assistance and site allowances, thus enabling PAPs to continue with their livelihood in relocated sites. In addition, the improvement of the road network promoted safe movement of people and trade, especially for farmers.
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ANNEX 7. SUPPORTING DOCUMENTS (IF ANY)
1. Project Appraisal Document
2. Legal Agreements
3. Restructuring Papers
4. Aide Memoires and Management Letters (December 2005 through August 2018)
5. Implementation Status and Results (ISR) Reports (November 2010 through March 2019)
6. Quarterly Progress Reports (September 2010 through September 2018)
7. Monthly Progress Reports (January 2010 through September 2018)
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ANNEX 8. COMPERATIVE ASSESSSMENT OF STATE’S INITIATIVES: CASE OF ANDHRA PRADESH & TELANGANA, KARNATAKA, AND RAJASTHAN
Background and Objective:
1. The World Bank (“the Bank”) has been extensively involved in the Indian transport sector over the past 70 years. By the end of 2018, it had closed 62 projects (loans and credits) totalling $11.1 billion to the sector, or about 15 percent of the Bank portfolios of loans and credits closed this far in the country. Roads and highways accounted for 63% (active and closed projects combined) of the total investments in the transport sector. The Bank has successfully implemented and closed 29 road projects including National Highways, State Highways and rural roads in India worth US$ 8.77 billion and has an active portfolio of 11 projects (one NH, 7 SHs and 3 rural roads) worth US$3.2 billion across nine states of India including two centrally funded projects of national highways and rural roads where civil works are also being implemented in additional nine states. In addition, four projects worth US$989 million in the state of Meghalaya, Himachal Pradesh, Tamil Nadu and including one National Highways project are under preparation and scheduled to be delivered in the current fiscal year i.e. FY20.
2. In view of the above, it is worthwhile to take stock of the performance of the portfolio and assess the impact of Bank support in the sector. As part of that effort this note presents a comparative review of three state roads projects that have closed at about the same time: Second Karnataka State Highway Improvement Project (KSHIP II), Andhra Pradesh & Telangana Road Sector Project (APTRSP) and Rajasthan Road Sector Modernization (RRSMP). This note focuses particularly on elements of project design and impact related to institutional development in the three projects.
Strategic Framework:
3. Project Designs consistent with the Strategic Framework. Three key reports frame the Bank’s intervention in the state roads sector in India. The 1995 India: Transport Sector- Long Term Issues67 report examined the ways to respond to the national economic reforms initiatives and proposed policy and institutional reforms to improve regulation of private transport operations, as well as the provision and maintenance of physical infrastructure. This was updated in year 2001-0268 with the objective to provide policy dialogue between the Bank and the Government of India and laid the Bank’s sector assistance strategy for Transport. This was followed by a review69 of highway agencies in the South Asia Region to help governments and policy makers identify reforms required to modernize and strengthen the capacity and performance of their road agencies to deliver large investment programs through performance monitoring as a tool. These studies have laid the foundation for the sector assistance strategy for road sector modernisation and highlighted the essential elements of the strategic framework which are shown in the figure 1 below with the objective to transform road agencies from the role of “provider” to
67 India: Transport Sector – Long Term Issues, The World Bank Group 68 India: Transport Sector – The Challenges Ahead, 2002, Report No. 24457, The World Bank Group 69 A Review of the Highway Agencies in South Asia Region, 2002, Transport Research Support, DFID and the World Bank
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“manager” of road infrastructure. The project designs of the three projects was consistent with this approach and strategic framework.
4. This framework is broadly consistent with the engagement framework recommended by the IEG Report on “A Decade of Action in Transport”70 of supporting private sector development and improving governance and institutional capacity. Though the approach of improving institutional capacity in procurement, financial management and asset management etc. are all in line with that strategy, there is one key difference – in terms of the focus on corporatisation and creating bankable institutions. Although Bank support has seen some success in encouraging the establishment of commercially run road agencies and the creation of road funds to bring greater stability into financing recurrent road expenditures, especially in Africa. The judgment was that in Indian states, an initial focus on strengthening existing institutions was more politically feasible with only incremental steps towards corporatisation and bankable institutions till date. The private sector development in the South Asia region has been encouraged mainly through road construction and maintenance management. Figure 1: Strategic Framework
70 Independent Evaluation Group: A Decade of Action in Transport - An Evaluation of World Bank Assistance to the Transport Sector: 1995-2005, IEG (2007), The World Bank.
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Project Design:
5. All three projects were designed as investment project finance (IPF) operations with institutional strengthening components complementing primarily infrastructure projects. The civil works focused on the investment and maintenance requirements of the state’s core road network. The investment support was combined with strengthening institutional capacity of the road departments at the state level through introduction of sound strategic and regulatory framework, organisational reforms, modernisation of business and engineering practices and human resource development through training of staff, contractors and consultants. The engagement also provided support to reduce maintenance backlog by funding periodic maintenance in the state of Andhra Pradesh and Karnataka with introduction of modern maintenance equipments replacing manual operations and piloting alternative contracting methods based on performance. Further, the investment components were also designed to aid institutional strengthening: the Karnataka and Andhra Pradesh projects included important pilots/demonstrations for private sector participation for infrastructure development and innovations in contractual arrangements to increase operational efficiency and the implementation capacity of state institutions.
6. Focusing on Institutional Strengthening through Road Sector Modernisation. In case of Rajasthan, though the civil works were mainly on rural roads, however, the road sector modernisation agenda including road safety was designed to focus on transformation of the entire Public Works Department into a modern road agency by adopting best practices and strengthen institutional effectiveness. The key elements of this road sector modernization approach were like the Institutional Development Action Plan prepared in KSHIP II and APTRSP.
Project Interventions:
7. The civil works in all three projects focused on improving the quality of core road network through upgradation, widening and maintenance of priority roads in Andhra Pradesh, Telangana as well as in Karnataka whereas in Rajasthan, the works were focusing on providing all-weather road connectivity to the rural population of the state. In Andhra Pradesh & Telangana, the focus was to improve riding quality and capacity of the network by reducing the maintenance backlog through adoption of long-term output and performance based maintenance contracts on a significant part of the core road network and pilot transactions to increase states capacity to engage private sector to finance, develop and manage two road concessions on public-private partnership (PPP) basis. In Karnataka, project activities mainly focused towards highway financing modernization and strengthen the capacity of the government to attract private sector financing through adoption of PPP– Design, Build, Finance, Operate, Maintain and Transfer (DBFOMT) contracts and commercial financing through domestic financial institutions. In addition, the project interventions were focusing on enhancing the institutional effectiveness in all states through structured institutional strengthening and development action plans in Andhra Pradesh, Telangana and Karnataka and road sector modernisation plan in Rajasthan. The road safety demonstration corridor approach was adopted in all four states. A snapshot of project interventions in provided in the table one below and a detailed comparison of the design and interventions is at Appendix-1.
Table 1: Summary of Project Interventions AP Telangana Karnataka Rajasthan
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Civil Works – Upgradation/ Widening/ Maintenance/ connectivity ⚫ ⚫ ⚫ ⚫ Highway Financing Modernisation ⚫ ⚫ ⚫ Institutional Strengthening & Road Sector Modernization ⚫ ⚫ ⚫ ⚫ Road Safety Management – Demo Corridor ⚫ ⚫ ⚫ ⚫ Road Safety Management – Policy & Institutional Actions ⚫ ⚫ ⚫ Note: ⚫ - substantially done; - partly done; - yet to be done Results Achieved: 8. Element 1. Policy & Planning. Defined policy & planning framework for effective road sector management: The first key element of the sector modernization agenda is for the road agencies to clearly define a road sector policy with the comprehensive vision/mission statement, backed by a legal and regulatory framework, covering development, asset management and safety. The international experience suggests that creating a policy framework ensures adequate flow of resources to the sector. Additionally, in order to effectively prioritize expenditures (both capital and maintenance) and channel them for most impact – it is important for road agencies to put in place a masterplan/core road network. A systematic effort was made in Karnataka, Andhra Pradesh and Telangana with reasonable success to adopt a road sector policy framework; develop network level master plans and finalize a core road network to replace the ad hoc systems of planning, budgeting and investment. However, in Rajasthan, the experience was less successful. While a comprehensive road sector policy was developed it has not been formally adopted by state government. Though the state government has identified the core road network and finalise the strategic road network which led to development of State Highway Development Program, currently being supported by the Bank through ongoing engagement.
Table 2: Policy & Planning Framework
AP Telangana Karnataka Rajasthan Road Sector Policy ⚫ ⚫ ⚫ Network Level Master Plans & Finalised Core Road Network ⚫ ⚫ ⚫ Note: ⚫ - substantially done; - partly done; - yet to be done
9. Element 2. Adequacy of Funds. Framework to ensure adequacy of funds and stabilise road financing: The second key element of sector modernization is to ensure an adequate and stable financing base for managing the asset base and finance new expansion. Adoption of a comprehensive and structured framework would ensure adequacy of funds for cost-effective, efficient and sustainable asset management including capital works as well as maintenance. The fundamental need here is to identify an adequate funding base via a combination of road user charges and stable transfers from the general revenue base. A sound funding base facilitates the development of a range of financing options including: private financing for projects, domestic borrowing and multilateral financing, ring-fencing and securitization of revenue proceeds. The state of Karnataka has shown high level of ownership in successfully implementing reforms to improve highway financing by endorsing a new road sector policy with appropriate financing strategy71. The state of Andhra Pradesh and Karnataka have strengthened the budgetary discipline through multi-year planning based on asset management data, however, the current
71 Financing Strategy included adoption of user-pay principle approach, amending Highway Act to allow tolling on state highway, increasing PPP transactions in the road sector, ring-fencing and securitization of toll proceeds for annuity payments and framework for domestic borrowings.
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financial system and governing mechanism does not allow for multi-year budgeting. The draft road fund bills in Andhra Pradesh and Telangana and road sector policy including the financing plan in Rajasthan are still under the consideration of the Government. However, the fundamental issues such as prioritizing maintenance over capital works, appropriate balance between capital and recurrent expenditure; adequate and appropriate cost sharing between central and state governments; and multi-year budgeting remain unaddressed due to political economy and constraints of existing systems.
Table 3: Financing Framework AP Telangana Karnataka Rajasthan Financing Strategy ⚫ Road Fund ⚫ Multi-Year Budget Planning ⚫ ⚫ Note: ⚫ - substantially done; - partly done; - yet to be done
10. Element 3. Efficiency of expenditures: Strengthening network management approaches. A comprehensive and integrated road asset management system (RAMS)72 ensures systematic management of the network in a sustainable and cost-effective way using scientific life-cycle based approach. This approach affects the full range of activities including planning, engineering, finance, programming, and actual works. It supports preparation of both annual and multi-year investment plans for maintaining the road network considering the condition, function, available funding, resources and prioritization. The state of Andhra Pradesh and Karnataka have achieved considerable success in institutionalising this system and are currently using Multi-year rolling plans including annual investment and maintenance plans prepared through the RAMS. The use of RAMS has increased credibility of budget requests from the PWD and resulted in significantly higher outlays for maintenance. The budget planning & allocation decisions are based on the outputs of the RAMS replacing the old ad hoc systems. Many other states have also attempted for similar network level system for asset management such as Tamil Nadu, Assam, Orissa, however, the key achievement in Andhra Pradesh and Karnataka that they have adopted a strategic and holistic approach through the backward and forward integration of the system for planning, investment, maintenance, financial allocation and monitoring and supervision. These states have established Asset Management cell with dedicated staff for operations and close monitoring of these systems. The state of Andhra Pradesh has also pioneered in developing an IT-Command and Control Centre which is a comprehensive console (web and GIS map platform) utilising RAMS and MIS for decision support. On the other hand, Rajasthan has not been able to complete the development of the system and it is still at the nascent stage due to lack of support and ownership of the relevant stakeholder department including the finance department. Though after bifurcation, it has been non-starter in case of state of Telangana also.
Table 4: Asset Management System AP Telangana Karnataka Rajasthan Road Asset Management System ⚫ ⚫ Note: ⚫ - substantially done; - partly done; - yet to be done
72 A comprehensive and integrated road assets management system includes – Pavement Management, Bridge Management, Traffic Data Management, Transport Modelling Tool, Traffic Incident Management, Monitoring & Evaluation, Environment and Social Information System, Road Safety Management, Cross Asset Prioritization System.
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11. Element 4. Implementation Capacity. Enhancing the implementation Capacity through innovative contracting approaches, use of digital tools for program management and institutional strengthening:
a. Adoption of innovative contracting approaches: The implementation of innovative contracting models to boost private sector investment in construction and maintenance of road assets resulted in improving efficiency, economies of scale and implementation capacity by shifting focus from traditional input and process-based to output and performance-based approach. It involved adoption of toll based Public private partnership contracts, long-term performance-based maintenance (LTPBM) contracts in Andhra Pradesh and Telangana; and annuity-based Design, built, finance, operate and Transfer (DBFOMT) model and co-financing framework from domestic financial institutions in Karnataka. This approach of long-term concessions resulted in substantial reduction and/or elimination of time and cost over runs due to inbuilt incentive mechanism of concession stake in capital expenditure.73 This output and performance-based approach resulted in securing good operation and maintenance of assets financially and legally and payment is linked to service standards. The framework is now being replicated by the government for infrastructure development including expressways, corridor development, highways, water supply and renewable energy at national as well as sub-national level.
Table 5: Implementation Capacity AP Telangana Karnataka Rajasthan PPP-Toll Based BOT/ DBFOMT ⚫ ⚫ ⚫ Long Term Output & Performance Based ⚫ ⚫ ⚫ Maintenance Contracts Note: ⚫ - substantially done; - partly done; - yet to be done
b. Enhanced implementation Capacity through use of digital tools for program management: These projects have been successful in adopting digital project management systems which are currently being mainstreamed for monitoring and supervision of all construction and maintenance works based on work life cycle approach (irrespective of funding sources) at the Department level. These systems have been further integrated with the GIS based IT command and control centre in the state of Andhra Pradesh. One of the notable initiatives undertaken in Rajasthan was the adoption of innovative Performance Assessment Tool (PAT) with relevant training for staff was beneficial in getting management’s attention towards better quality of works and creating performance competition among divisions and PIUs. The PAT also helped in ensuring better management of environmental and social safeguards, and health and safety of workers on site.
c. Improved sector governance through institutional strengthening: A strategic and holistic approach of institutional strengthening was adopted under these projects based on five broad common themes: Strategic & Regulatory Framework; Organisational Reforms, Business & Management
73 See https://blogs.worldbank.org/transport/our-infrastructure-projects-can-help-build-many-things- including-stronger-institutions
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Processes; Asset Sustainability; Performance & Accountability; and Human Resource Development. Structured and streamlined institutional development and strengthening Action Plans (IDSAP) based on institutional development assessments and strategies were drawn in the state of Karnataka and Andhra Pradesh. These actions plans for institutional strengthening focused on organisational functional realignments from a provider to manager role; restructuring of field offices; support for operationalisation of Road Development Corporations, core business process including planning, programming works, effective procurement and contract management, strengthening program monitoring through online project management systems, revision of department codes and systemize quality control; financial mechanism by modernising planning and budgeting function through use of financial management systems; establishing road information systems and strengthening of state’s environment and social management capabilities. The state of Andhra Pradesh and Karnataka have shown a high level of ownership in implementation of these actions plans and the dedicated staff have champions to lead the initiatives towards successful implementation and mainstreaming such as ISO certifications for quality management and environmental management, E-learning management system and project management system are being scaled up at the departmental level. However, the institutional mechanism of the road sector modernisation working group has been unsuccessful in delivering the reform agenda in case of Rajasthan. A comparison of the detailed outputs achieved under these action plans in the three projects is at Appendix-2.
Table 6: Institutional Strengthening AP Telangana Karnataka Rajasthan Strategic & Regulatory Framework ⚫ ⚫ ⚫ Business Process Reengineering ⚫ ⚫ Asset Sustainability ⚫ ⚫ Performance & Accountability ⚫ ⚫ Human Resource Development ⚫ ⚫ ⚫ ⚫ Note: ⚫ - substantially done; - partly done; - yet to be done
12. Element 5. Safety: Result focused approach to road safety management. An incremental approach to road safety management was adopted in all the three projects to reduce the road accidents and fatalities in a sustainable manner through policy and institutional reforms and multi-sectoral demonstration corridor pilots. The interventions were centred around developing the policy framework, road safety strategy and actions plans, incorporation of road safety engineering measures in design, construction and maintenance of investment programs, and pilot safety demonstration corridors with multi-stakeholder interventions based on globally accepted safe system approach. This comprehensive and holistic approach of road safety demonstration corridors was highly successful in the state of Karnataka which validates that physical/ engineering improvements are not enough to bring reduction in road fatalities in the face of rising traffic volume, however, engineering measures necessarily be accompanied by robust programs for enforcement, education and awareness and post-crash management. It requires coordinated effort from different stakeholder departments with proper institutional structure and synergies can be achieved if designed and integrated well with other programs
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being implemented by the respective departments.74 This approach resulted in reasonable success in in Andhra Pradesh75 and Telangana where creation of the road safety cell within the Transport Department in Andhra Pradesh has proven effective for planning and tracking impacts of road safety initiatives and managing data for road safety indicators. On the other hand, it was unsuccessful in the state of Rajasthan where the road safety interventions on the selected corridor could not be undertaken during the project period due to lack of ownership and proper institutional arrangement for implementation. Table 7 summarises the project interventions in the Bank funded road projects.
Table 7: Road Safety Interventions Themes Andhra Telangana Karnataka Rajasthan Pradesh Safe Corridor Demonstration Program - Multi-sectoral ⚫ ⚫ ⚫ interventions based on iRAP surveys Institutional Structure ⚫ ⚫ ⚫ Policy & Strategy ⚫ ⚫ ⚫ ⚫ Capacity Building ⚫ ⚫ ⚫ ⚫ Black Spot improvement program ⚫ ⚫ ⚫ Note: ⚫ - substantially done; - partly done; - yet to be done
13. Success Factors: The analysis of the three ICRs suggest the four key factors contributed to the achievement/ success in these states including: Ownership, Strategic & Holistic Approach and Constant learning and Innovation approach. The state government of Karnataka and Andhra Pradesh have shown greater level of ownership leading to successful implementation of the reform agenda in both states. The projects have used a strategic and comprehensive approach to road sector management which is also consistent with the strategic framework in these states including planning, financing, efficiency, implementation capacity and safety. The assessment also showed that the support to system planning, institutional strengthening, private sector participation and road safety was highly successful in Karnataka and achieved reasonable success in case of Andhra Pradesh with constant learning and innovative approach adopted in these states. The performance was average in case of Telangana and Rajasthan where road sector modernisation could not be achieved as planned and designed reflecting lower level of ownership.
Table 8: Analysis of Key Success Factors
74 See https://blogs.worldbank.org/transport/human-lives-need-not-be-lost-road-crashes-much-less- current-levels-0 75 See https://blogs.worldbank.org/transport/road-safety-action-pays-and-demonstration-corridors-are- here-prove-it
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Andhra Pradesh Telangana Karnataka Rajasthan Ownership Strategic Constant Ownership Strategic Constant Ownership Strategic Constant Ownership Strategic Constant & Holistic Learning & & Holistic Learning & & Holistic Learning & & Holistic Learning & Approach Innovation Approach Innovation Approach Innovation Approach Innovation Policy & Planning Framework ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ Financing Framework ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ Asset Management ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ Institutional Capacity ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ Road Safety Management ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ ⚫ Note: ⚫ - substantially done; - partly done; - yet to be done
Key Takeaways and Recommendations:
14. State Highway engagement remain relevant today: The state highways and major district roads (MDRs) constitute the secondary system of road transportation in the country carrying about 40 percent of the total road traffic. Neglect of this strategic secondary network, serving as the bridge between the National Highways and rural roads, could result in the ‘missing middle’ in the increasingly integrated overall road network and could seriously impact the overall road transport cost and logistic efficiency of the country. Traditionally, the development of national highways and rural road network has been boosted by centrally sponsored schemes like National Highway Development Program (now rebranded as Bharatmala) and Pradhan Mantri Gram Sadak Yojana. The vital feeder/ collector network of state highways and MDRs, however, have been neglected due to chronic underfunding, in absence of any comprehensive National program and/or individual state-run programs. The inadequate and unstable funding has also made systematic planning and improvement of the state highways difficult in most of the states, resulting in deteriorating condition and lower level of services, even compared to rural roads at times. Except financing from MDBs such as World Bank and ADBs, the states have not been able to attract or mobilize enough private/ commercial financing for state highways and MDRs in comparison to national highways or even rural roads. Therefore, as recommended by the Working Group of Twelfth Five Year Plan of the Planning Commission, resource mobilization for the sector needs to be enhanced, adequately supplemented with adequate external financing sources from MDBs and suitably leveraged with private sector financing.
15. State Highway Sector Agenda is evolving. Keeping in line with the evolving agenda in highway sector in India encompassing improved transport and logistic efficiency, safety and services, as enshrined in the flagship Bharatmala program, the state highway agenda need to also evolve towards improved logistic efficiency, safety and services, resource efficiency and climate resilience. The state highway institutions also need to consolidate the gains from reform initiatives undertaken during the last decade to emerge as independent, bankable institutions running on commercial principles to attract private sector financing and manage assets and services more efficiently.
16. The Bank’s contribution to this institutional and sector evolution has been significant and effective – though not universally successful. IEG’s seminal report for the transport sector, ‘A Decade of Action in Transport’ 2007, highlights the importance of creating public sector capacity for attracting private sector financing. The report has also highlighted in several emerging middle income countries how
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the Bank has played a significant role in strengthening the institutional capacity of the public sector in procurement, financial management, asset management and project management as well as improving the investment climate which has played a critical role in attracting private investments and bringing private sector efficiency in asset management and services. India has not been an exception. The aforementioned analysis clearly indicates that Bank engagement has resulted in significant success in Karnataka and Andhra Pradesh and has contributed to encouraging private sector development in financing, construction and maintenance, sustainable management of the sector through adoption of network level master plans, core road network and asset management system, scientific planning, financing framework, innovative contracting approaches, improving institutional strengthening and providing safer network. Relatively modest success was seen in Rajasthan and Telangana though, reflecting low level of ownership and willingness to change. The Bank experience in the sector suggest that pace of institutional reform has been incremental and slow with significant variance across states based on their capacity, public sector governance structure and reform commitment. Notwithstanding significant sector reform in quite a few states, major institutional reform and transition of the public sector road agencies towards commercial autonomous roads authorities remains a work in progress and yet to commence in some states.
17. The Bank’s engagement strategy in the state road sector is evolving: To support the much needed transformation in the state highway agenda, Bank’s approach towards engaging with the state road sector is also rapidly evolving with the ongoing new generation of state road projects such as Rajasthan State Highway projects targeting towards operationalising a corporatized autonomous highway authority with a mandate to mobilize commercial financing by leveraging public resources at its disposal. In the current pipeline projects, the direction now is moving towards stronger focus, though in an incremental manner, on corporatized institutions, logistics and transport services, and developing an integrated multimodal transport framework. A more cohesive and results-focused road safety management approach has been adopted in Uttar Pradesh State Road Project.
18. Delivery instruments are also evolving: From conventional investment project financing (IPF), most projects are increasingly adopting result-based financing approach through Disbursement linked Indicators with IPF such as Rajasthan State Highways Project. Some pipeline projects are also exploring the possibility of Development Policy loan combined with IPF to support reform on logistics, transports services and corporatized institutions.
19. Time to redefine engagement strategy through national platforms: Moving forward, to respond to the menacing impacts of transport expansion, the strategic approach towards engaging in the state highway sector needs to be redefined by considering this evaluation and the ongoing assessment of the Bank’s contribution to this sector in India. The focus of the Bank’s transport operations needs to move beyond intercity highways and give more attention to issues of growing urgency including congestion, logistics efficiency, bankable institutions, transport services, safety, affordability and sustainability. The future strategy also needs to explore possibilities of developing National Platform for creating benchmarking among states for strategic investment and distinguished support for advanced states versus lagging states. A Road Transport Community of Practise need to be developed under the lighthouse
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India approach for enhancing knowledge and experience sharing among states with stronger role of institutions such as NITI Aayog, Indian Roads Congress and Central Road Research Institute.
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Appendix-1 Key Interventions under the Projects
Core Areas APTRSP KSHIP II RRSMP Civil Works upgrade and maintain the Core Improvement & maintenance Increasing share of Road Network (CRN): works of selected priority rural population with • 429 km upgraded core road network access to an all-season efficiently in an environmental • 269 km upgraded through road and socially sustainable way. traditional item-rate contracts • Construction of • 6,241 km of roads under • 562 km to be upgraded & 2500 km of rural roads Long-term performance- O&M through PPP- DBFOMT based maintenance contract concession Highway Technical assistance to • KRDCL to generate --- Financing strengthen the capacity of the additional road user revenue Modernisation/ GOAP to attract private sector and commit them for PPP facilitation participation: mobilising debt financing • RDC manages concession of and/or making payments for three roads of those selected PPP transactions for PPP transactions • Upgrading and O&M of 400 km through co-financing arrangements Road Safety • Multi-sectoral • Multi-sectoral • Multi-sectoral Demonstration projects Demonstration projects on Demonstration carried out in at least two two road corridors projects on two road road corridors • Lead Agency established corridors • Comprehensive GOAP road • Policy and Institutional • Star rating for safety functions, capacity Actions Model Corridor and action plan(s) put in • Road Safety Policy place and Action Plan • Black-spot improvements • Road Safety initiated Awareness Campaign Institutional Institutional Strengthening Institutional Development Implementation of a Development Action Plan and Strengthening Action Road Sector and Road Plan Modernisation Plan: Sector • Strategic & Regulatory • Sector Policy & Modernisation Framework • Business Process financing framework • Organisation, Effectiveness • Engineering Management & Systems • Performance and practices and key • Human Resources Accountability procedures Development • Asset Sustainability modernized • Human Resources • Road Asset Management System & innovative forms of contracting
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• Training Plan and HR policy & Procedures developed
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Appendix-2 Comparison of Institutional Development/Strengthening/ Road Sector Modernization Plan
Themes APTRSP KSHIP II RRSMP Strategic & Regulatory • AP Road Act • Road Sector Policy • Road Sector Policy Framework (Policy & • State Level Road • Karnataka State • Financing financing) Network Master Plan Highway Act -tolling Framework for the • Core Road Network powers for both public Network – • Road Fund and PPP roads construction and • Encouraging PPP & • New Road Asset maintenance performance-based Maintenance Policy • Encouraging private CRN maintenance • Establishing Core Road participation contracts Network • Road Safety Action • Financing Strategy & Program Institutional Measures • Black spot for CRN rectification program • Road Fund • Increase private sector participation • Finalise and roll out of State Level Road Master Plan Modernisation of Key • Revised • Revised Departmental • Modern Project Organisation, Business Departmental Code Code & its cyclical Preparation and Process Effectiveness • IT-ICT-MIS Strategy review and updating management (Business and • Financial Powers & including E&SM, Safety practices Engineering Practices, FM tools • IT-ICT-MIS Strategy • Design & Processes) • MIS • Financial Management construction • Staffing powers & Information System standards defined • ISO Certification for • Cost-effective new • Dedicated HRM & Environmental technologies for HRD functions & Management road construction capacity • IT Based Project • PWD-wide • PPP roles & capacity Management System procurement and contract management manual • Computerisation of PWD offices Performance and • GAAP • GAAP • E-procurement Accountability • Road User • Road User Satisfaction • Improved public (including Satisfaction Surveys Surveys disclosure & Governance) • ISO Certification • Quality Management information sharing Quality Management System -ISO Certification
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Themes APTRSP KSHIP II RRSMP • Quality control- Laboratory/Equipments • E-procurement • E-billing &E-contract management Asset Sustainability • Planning & • Road Asset • Asset Management (Road Asset Budgeting based on Maintenance and System Management) Road Asset Management System • Prioritised Annual Management System integrated with RIS & Plans for GIS construction & • Planning & Road Asset maintenance based Management Centre on RAMS • Asset Maintenance • Area-wide Plan maintenance contract system Human Resources • Training Needs • Training Needs • Training & Capacity Development Assessment Assessment Building (Training & Capacity • Multi-Year Staff • Multi-Year Staff Building) Training Program Training Program • New Staff Appraisal • New Staff Appraisal Policy & Process Policy & Process Implementation Implementation • Specific PPP Training • Separate Budget Head Program for Staff Training • High Impact Training Plan
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