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Uzbekistan: CAREC Corridor 2 Road Investment Program

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Technical Assistance Consultant’s Report Project Number: 42107 September 2010 Uzbekistan: CAREC Corridor 2 Road Investment Program Prepared by IKS Group of Companies Tashkent, Uzbekistan For The Republican Road Fund under the Ministry of Finance This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design. ASIAN DEVELOPMENT BANK GOVERNMENT OF THE REPUBLIC OF UZBEKISTAN THE REPUBLICAN ROAD FUND UNDER THE MINISTRY OF FINANCE CAREC Corridor 2 Road Investment Program FF ADB PPTA No. 7375-UZB II PROJECTS II & III NN VOLUME 1 AA LL RR EE PP OO Submitted by: RR TT Tashkent, September 2010 TA 7375-UZB: CAREC CORRIDOR 2ROAD INVESTMENT PROGRAM FINAL REPORT LIST OF ABBREVIATIONS AND ACRONYMS USED ADB Asian Development Bank AIFU Association of International Freight Forwarders of Uzbekistan AADT Average Annual Daily Traffic AOI Area of Influence CACOM Common Market in Central Asia CAREC Central Asia Regional Economic Cooperation CARs Central Asian Republics CIS Commonwealth of Independent States CSATTF Central and South Asia Transport and Trade Forum CSP Country Strategy and Programme EA Executing Agency EBRD European Bank for Reconstruction and Development EC European Commission ECO Economic Cooperation Organization ECOTA ECO Trade Agreement ESCAP Economic and Social Commission for Asia and the Pacific EU European Union EurAsEC Eurasian Economic Community GDP Gross Domestic Product GOU Government of Uzbekistan JSC Joint Stock Company IKS IKS Croup of Companies IMF International Monetary Fund JBIC Japan Bank for International Cooperation KfW Kreditanstalt für Wiederaufbau km kilometers mm millimeters MFF Multitranche Financing Facility MOF Ministry of Finance MOFER Ministry of Foreign Economic Relations, Investments and Trade MOI Ministry of Interior m Metre m3 Cubic metres m3/hr Cubic metres per hour mm Millimetres MPa Megapascal MV motor vehicle PCEs Passenger Car Equivalents PIA Project Impact Area pkm passenger kilometres PPTA Project Preparation Technical Assistance PFR Periodic Financing Request SJSC State Joint Stock Company SOE State Owned Enterprise sq. square IKS GROUP OF COMPANIES i TASHKENT,SEPTEMBER 2010 TA 7375-UZB: CAREC CORRIDOR 2ROAD INVESTMENT PROGRAM FINAL REPORT SSC State Stock Company SWOT Strengths–Weaknesses–Opportunities – Threats TA Technical Assistance TACIS Technical Assistance for CIS Countries t.km tonne kilometers TIR Transports Internationaux Routiers TOR Terms of Reference TRACECA Transport Corridor Europe-Caucasus-Asia UARRT Uzbek Agency for Road and River Transport UNECE United National Economic Commission for Europe US$ United States dollars USSR Union of Soviet Socialist Republics FSU Former Soviet Union UTY Uzbekistan Temir Yullari (Uzbek Railways) UZB Uzbekistan hp Horsepower ICB International competitive bidding JICA Japan International Cooperation Agency kg Kilogram SJSC State joint stock company tonnes/hr Tonnes per hour VAT Value added tax IKS GROUP OF COMPANIES ii TASHKENT,SEPTEMBER 2010 TA 7375-UZB: CAREC CORRIDOR 2ROAD INVESTMENT PROGRAM FINAL REPORT TABLE OF CONTENTS SECTION 1: INTRODUCTION 1.1 General 1 1.2 Background 1 1.3 Project Rationale and Financing Modality 3 1.4 The Investment Program 4 1.4.1 Impact and Outcomes 4 1.4.2 Output 4 1.5 Other Administrative Matters 4 SECTION 2: A BRIEF OVERVIEW OF THE ECONOMY OF UZBEKISTAN AND THE PROJECT ROAD HINTERLAND, TRAFFIC COUNTS AND FINAL TRAFFIC FORECASTS 2.1 Introduction 5 2.2 General Background 5 2.3 Highlights of Recent Performance of Transport Sector of Uzbekistan 5 2.4 Assumptions as to Progress on Main Economic Indicators 6 2.5 Highlights of Accident Spots in A380 Corridor 6 2.6 Domestic Transport Demand 7 2.7 Factors Influencing International Trade along the Project Road 7 2.8 Domestic and Total Traffic 7 2.8.1 Background 7 2.8.2 Traffic Counts 8 2.9 International Traffic 8 2.10 Traffic Forecast over the Forecast Horizon 8 SECTION 3: ROAD DEVELOPMENT COMPONENT AND ROAD SUSTAINABILITY COMPONENT 3.1 Road Development Component 11 3.2 Road Sustainability Component of Projects 2 and 3 13 3.3 Transport Logistics Component, Project 3 13 SECTION 4: PRELIMINARY DESIGN AND COST OF ROAD RECONSTRUCTION FOR PROJECT 2 AND 3 4.1 Characteristics of the selected Sections of the Road 14 4.1.1 International Importance of Project Road A-380 14 4.2 Current Condition of the Road 16 4.3 Condition of the Road Bed 17 4.4 Condition of Pavement 18 4.5 Engineering Structures 18 4.6 Road Facilities Construction 19 4.7 Road Service 19 4.8 Alighnment 20 4.8.1. Main Parameters of the Designed Road 20 4.8.2 Roadbed 20 4.8.2.1 Type-1 (with the separated road bed) 20 4.8.2.2 Type-2 (with the single road bed) 20 4.8.3 Road Pavement 21 4.9 Bridges and pipes 22 4.9.1 Intersections & Junctions 22 4.9.2 Traffic Management and Road Facilities 22 4.9.3 Road Building Materials 23 IKS GROUP OF COMPANIES iii TASHKENT,SEPTEMBER 2010 TA 7375-UZB: CAREC CORRIDOR 2ROAD INVESTMENT PROGRAM FINAL REPORT 4.9.4 Engineering Utilities 24 4.10 Principle approach and methodology for approval of design options at the stage of feasibility study preparation 24 4.10.1 Category of Road, Number of Lanes and Pavement type 24 4.10.2 Road Alignment 24 4.10.3 Geological and Topographical Survey 25 4.10.4 Climate, Ground and Surface Waters, Soil Covering 26 4.10.5 Existing and Prospective Density and Composition of Traffic 26 4.10.6 Alignment 27 4.10.7 Vertical Alignment of the Road 27 4.10.8 Roadbed 27 4.10.9 Cross-Sections of the Road 27 4.10.10 Road pavement 28 4.10.11 Road Construction Materials 30 4.11 Methodology for determination of construction cost 30 4.12 Method for determination of work scope 32 SECTION 5: ECONOMIC ANALYSIS FOR PROJECT 2 AND 3 5.1 Economic Analysis of Road Works 39 5.2 Findings 40 5.3 Sensitivity Analyses 40 5.4 Set of pile-boring equipment 41 5.3 Customs inspection-screening equipment complex 41 SECTION 6: FINANCIAL MANAGEMENT ISSUES AND FINANING PLAN FOR PROJECT 2 AND 3 6.1 Financial management Assessment 43 6.1.1 Executive Summary 43 A. Introduction 44 B Project Description 44 C Country Issues 44 D Risk Analysis 45 E Executing Agency and Implementing Entities 47 F Funds Flow Arrangements 49 G Staffing 50 H Accounting Policies and Procedures 51 I Internal Audit 52 J External Audit 53 K Financial Reporting and Monitoring 53 L Information Systems 54 M Conclusions 54 N Financial and Other Covenants and Recommendations 54 O Financing Plan 55 SECTION 7: PRELIMINARY PROJECT IMPLEMENTATION ARRANGEMENTS FOR PROJECT 2 AND 3 7.1 The Executing Agency 57 7.2 Program Management Unit (PMU) 57 7.3 Main responsibilities of PMU 57 7.4 Consulting Services 58 7.5 Advance Contracting and Retroactive Financing 58 7.6 Implementation period 59 IKS GROUP OF COMPANIES iv TASHKENT,SEPTEMBER 2010 TA 7375-UZB: CAREC CORRIDOR 2ROAD INVESTMENT PROGRAM FINAL REPORT SECTION 8: PROCUREMENT PLAN FOR PROJECT 2 AND 3 60 SECTION 9: PROJECT DESIGN AND MONITORING FRAMEWORK DESIGN AND MONITORING FRAMEWORK 61 LIST OF APPENDIXES APPENDIX 1: OVERALL ROAD INVESTMENT PLAN (CONSTRUCTION AND RECONSTRUCTION) APPENDIX 2: TRAFFIC COUNT AND OD ANALYSIS METHODOLOGY APPENDIX 3(A): VARIOUS CROSS SECTIONS APPENDIX 3(B): HORIZONTAL ALIGHNMENT APPENDIX 4: HDM IV INPUTS AND OPUTPUTS, EIRR AND NPV TABLES FOR ALL SECTIONS OF THE ROAD APPENDIX 5: FINANCIAL MANAGEMENT ASSESSMENT QUESTIONNAIRE APPENDIX 6: BUDGET FORMULATION AND APPROVAL PROCEDURES APPENDIX 7: RATES OF CONTRIBUTIONS TO THE REPUBLICAN ROAD FUND UNDER THE MINISTRY OF FINANCE APPENDIX 8: CHART OF ACCOUNTS (NATIONAL ACCOUNTING STANDARDS NO.21) APPENDIX 9: INVESTMENT PROGRAM IMPLEMENTATION STRUCTURE APPENDIX 10: DRAFT PREIODIC FINANCING REQUESTS APPENDIX 11: IMPLEMENTATION PLAN APPENDIX 12: PROCUREMENT PLAN AND TENTATIVE CONTRACT PACKAGES FOR PROJECT 2 & 3 FIGURES FIGURE 1.1 – UZBEKISTAN ROAD CORRIDORS FIGURE 2.1 – ALTERNATIVE ROUTE THROUGH CHIMKENT FIGURE 3.1 – PROJECT SECTIONS FIGURE 6.1 – THE ORGANIZATIONAL STRUCTURE OF THE REPUBLICAN ROAD FUND IKS GROUP OF COMPANIES v TASHKENT,SEPTEMBER 2010 TA 7375-UZB: CAREC CORRIDOR 2ROAD INVESTMENT PROGRAM FINAL REPORT SECTION 1: INTRODUCTION 1.1 General 1. Under a Contract signed between IKS Ltd. (the Consultant) and the Asian Development Bank (the Bank), IKS Ltd. undertook the Technical Assistance (TA) assessing the feasibility of rehabilitation and upgrading of Road A380 Guzar-Bukhara-Nukus-Beyneu. Out of about 1,200 km A380 highway, 300 km is being constructed and 900 km will be reconstructed during 2010–2014. ADB’s investment for reconstructing of A-380 highway will help the Government accelerate completion of the overall program. The Investment Program will cover about 222 km of A380 highway in the Karakalpakstan Republic and the Khorezm and Bukhara provinces. ADB’s Multitranche Financing Facility (MFF) with 3 tranches will be applied for the Investment Program. 2. In February, 2010 Consultant submitted the appraisal report of Tranche 1 and current appraisal report is for subsequent Tranches 2 and 3 that includes technical, economic, financial, environmental, and social assessments and PFRs for Tranches II and III. 3. The road A 380 links the area southeast of Karshi in Kashkadarya Oblast with Beyneu on the border of Kazakhstan. The route forms part of the Asian Highway being promoted by the Economic and Social Commission for Asia and the Pacific of the United Nations. (ESCAP). Should the feasibility of the proposed rehabilitation and upgrading works be confirmed, it is anticipated that a Loan Proposal for the foreign component of Project inputs would be presented to the Board of the ADB in the first quarter of 2011.
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