Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: ICR00005191
IMPLEMENTATION COMPLETION AND RESULTS REPORT IDA-52450; IBRD-82630
ON A
CREDIT Public Disclosure Authorized IN THE AMOUNT OF SDR 24.5 MILLION
(US$ 37.0 MILLION EQUIVALENT)
AND A LOAN IN THE AMOUNT OF US$ 38.0 MILLION
TO
GEORGIA Public Disclosure Authorized
FOR THE FOURTH EAST WEST HIGHWAY IMPROVEMENT PROEJCT
30 September 2020
Transport Global Practice Europe and Central Asia Region Public Disclosure Authorized The World Bank Fourth East West Highway Improvement Project (P130413)
CURRENCY EQUIVALENTS
Exchange Rate Effective Sep. 15, 2020
Currency Unit = Georgian Lari (GEL) GEL 2.84 = US$1 US$ 1.41 = SDR 1
FISCAL YEAR July 1 - June 30
Regional Vice President: Anna Bjerde Country Director: Sebastian-A Molineus Regional Director: Lucio Monari Practice Manager: Karla Gonzalez Carvajal Task Team Leader(s): Aymen Ahmed Osman Ali ICR Main Contributor: Aymen Ahmed Osman Ali The World Bank Fourth East West Highway Improvement Project (P130413)
ABBREVIATIONS AND ACRONYMS
Average Annual Daily Traffic Ministry of Economy and Sustainable AADT MESD Development Asian Development Bank Ministry of Regional Development and ADB MRDI Infrastructure CPS Country Partnership Strategy NBG National Bank of Georgia EA Environmental Assessment NCB National Competitive Bidding EIB European Investment Bank Net Present Value NPV EIRR Economic Internal Rate of Return Environmental Management Plan Output and Performance-Based Road EMP OPRC Contracting Environmental and Social Operational Risk Assessment ESMF ORAF Management Framework Framework Eurasian Transport Corridor ETCIC / Investment Centre, previously the PAD Project Appraisal Document TRRC Transport Reform and Rehabilitation Center FA Financing Agreement PDO Project Development Objective PIP Project Implementation Plan FM Financial Management POM Project Operational Manual Financial Management Assessment Road Asset Management System FMAR RAMS Report FMM Financial Management Manual RAP Resettlement Action Plan GEL Georgian Lari (currency unit) RD Roads Department Highway Design and Maintenance HDM 4 RPF Resettlement Policy Framework model International Bank for IBRD SDR Special Drawing Rights Reconstruction and Development ICB International Competitive Bidding SIL Specific Investment Loan International Development IDA Association IFI International Financing Institution MENR Ministry of Environment and Natural Resources The World Bank Fourth East West Highway Improvement Project (P130413)
TABLE OF CONTENTS
DATA SHEET ...... 1 I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ...... 5 A. CONTEXT AT APPRAISAL ...... 5 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) ...... 10 II. OUTCOME ...... 12 A. RELEVANCE OF PDOs ...... 12 B. ACHIEVEMENT OF PDOs (EFFICACY) ...... 13 C. EFFICIENCY ...... 16 D. JUSTIFICATION OF OVERALL OUTCOME RATING ...... 16 E. OTHER OUTCOMES AND IMPACTS (IF ANY) ...... 17 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ...... 18 A. KEY FACTORS DURING PREPARATION ...... 18 B. KEY FACTORS DURING IMPLEMENTATION ...... 19 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 19 A. QUALITY OF MONITORING AND EVALUATION (M&E) ...... 19 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ...... 20 C. BANK PERFORMANCE ...... 23 D. RISK TO DEVELOPMENT OUTCOME ...... 25 V. LESSONS AND RECOMMENDATIONS ...... 26 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ...... 28 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ...... 37 ANNEX 3. PROJECT COST BY COMPONENT ...... 39 ANNEX 4. EFFICIENCY ANALYSIS ...... 40 ANNEX 5. SUPPORTING INFORMATION………………………………………………………………………………..42 ANNEX 6. BORROWER’S COMMENTS AND ICR ………………………………………………………………….…46 The World Bank Fourth East West Highway Improvement Project (P130413)
DATA SHEET
BASIC INFORMATION
Product Information Project ID Project Name
P130413 Fourth East West Highway Improvement Project
Country Financing Instrument
Georgia Investment Project Financing
Original EA Category Revised EA Category
Full Assessment (A) Full Assessment (A)
Organizations
Borrower Implementing Agency
Roads Department of the Ministry of Regional Ministry of Finance of Georgia Development and Infrastructure (RDMRDI)
Project Development Objective (PDO) Original PDO The PDOs are: (i) to contribute to the gradual reduction of road transport costs and to improve road safety along the section upgraded under the project; and (ii) to strengthen the capacity of the Roads Department (RD) and Ministry of Regional Development and Infrastructure (MRDI) to plan and manage the road network and improve road traffic safety.
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FINANCING
Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing 37,000,000 37,000,000 35,738,583 IDA-52450 38,000,000 35,023,065 35,023,065 IBRD-82630 Total 75,000,000 72,023,065 70,761,648 Non-World Bank Financing
0 0 0 Borrower/Recipient 18,750,000 21,549,436 21,549,436 Total 18,750,000 21,549,436 21,549,436 Total Project Cost 93,750,000 93,572,501 92,311,083
KEY DATES
ApprovalFIN_TABLE_DAT Effectiveness MTR Review Original Closing Actual Closing 09-May-2013 05-Aug-2013 20-Apr-2016 28-Feb-2018 31-Dec-2019
RESTRUCTURING AND/OR ADDITIONAL FINANCING
Date(s) Amount Disbursed (US$M) Key Revisions 07-Dec-2017 61.00 Change in Loan Closing Date(s) 27-Feb-2019 66.00 Change in Loan Closing Date(s)
KEY RATINGS
Outcome Bank Performance M&E Quality Satisfactory Moderately Satisfactory Substantial
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RATINGS OF PROJECT PERFORMANCE IN ISRs
Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 19-Oct-2013 Satisfactory Satisfactory 0
02 14-May-2014 Satisfactory Satisfactory 5.02
03 03-Dec-2014 Satisfactory Satisfactory 16.15
04 24-Jun-2015 Satisfactory Satisfactory 16.73
05 19-Jan-2016 Satisfactory Satisfactory 25.48
06 24-Aug-2016 Satisfactory Moderately Satisfactory 35.74
07 21-Jun-2017 Satisfactory Moderately Satisfactory 53.04
08 19-Jan-2018 Satisfactory Satisfactory 61.00
09 26-Nov-2018 Satisfactory Moderately Satisfactory 66.00
10 30-May-2019 Satisfactory Moderately Satisfactory 70.29
SECTORS AND THEMES
Sectors Major Sector/Sector (%)
Transportation 100 Public Administration - Transportation 4 Rural and Inter-Urban Roads 96
Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Economic Policy 49 Trade 49 Trade Facilitation 49
Private Sector Development 48 Regional Integration 48
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Public Sector Management 3 Public Administration 3 Transparency, Accountability and Good 3 Governance
ADM STAFF Role At Approval At ICR
Regional Vice President: Philippe H. Le Houerou Anna M. Bjerde
Country Director: Henry G. R. Kerali Sebastian-A Molineus
Director: Laszlo Lovei Lucio Monari
Practice Manager: Juan Gaviria Karla Gonzalez Carvajal
Task Team Leader(s): Mustapha Benmaamar Aymen Ahmed Osman Ali
ICR Contributing Author: Aymen Ahmed Osman Ali
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I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES
A. CONTEXT AT APPRAISAL
Context
1. Georgia's economy has recovered strongly since the double shocks of the financial crisis and conflict of 2008. The steep decline in economic growth from 12.4 percent in 2007 to 2.3 percent in 2008, led to a reduction in employment and a rise in poverty, which reached 21 per cent in 2010. However, the country's economic growth rebounded strongly to 7.2 percent in 2011 and 6.4 per cent in 2012. The growth was mainly due to an increase in exports and tourism and the continued high levels of public investment. The public investment of the government of Georgia was mainly focused on infrastructure, with emphasis on improving main road corridors and local connections. The rebound in the growth of the service sector was supported heavily by revenues from transit-related transport (particularly to and from Turkey, Armenia, Azerbaijan, and Central Asia).
2. The government aimed and still aims to create a favorable environment for regional socioeconomic development and improve living standards. These objectives are planned to be achieved through balanced socio-economic development policy, increased competitiveness, and greater socio-economic equality among the regions. Initiated regional development strategies in the country, including the World Bank support to the Kakheti and Imereti Regions, are aimed at job creation by reducing imbalances among and within regions, improving public services, and attracting an increased volume of private sector investments, especially in tourism.
3. Transport sector development is essential for the achievement of sustainable economic growth, alleviation of poverty, achievement of the government's regional development strategy objectives and promotion of tourism. Georgia's geographical location positions the country at the center of East-West (Black Sea and Caspian Sea) and North-South (between Russia and Turkey) transit routes, and places it well to become a transit hub. Within this context the Georgian Government embarked on the development of the East-West Highway which can be described as a transformational initiative for the Georgian economy. The Highway is part of the Caucasus Transit Corridor (CTC) which is a key transit route between Western Europe and Central Asia for transportation of oil and gas as well as dry cargo. CTC is part of the international and regional corridor TRACECA1. The TRACECA corridor is the shortest route between Europe and the Caucasus and Central Asian countries through the Black sea ports.
4. The East-West Highway corridor is one of the largest transport infrastructure programs in the country. The corridor stretches some 410 km connecting East to West across the country and cost over US$ 2.0 billion to develop. It carries over 60 percent of the total Georgia foreign trade and is seen as a central piece in the Government's strategy of transforming Georgia into a transport and logistics hub for trade between Central Asia and the Far East on the one hand and Turkey and Europe on the other. In Georgia, the East-West Highway Corridor comprises: (i) the E-602 which runs from the border with Azerbaijan to Poti (East) and (ii) the E-70 which runs from Poti to Sarpi (border with Turkey).3 It represents a quarter of Georgia’s international road network and accounts for 23 percent of vehicle utilization of Georgian roads. The improvement of the East West Highway Corridor will improve connectivity between
1 Transport Corridor Europe-Caucasus-Asia 2 The European route E-60 is the second longest E-road running from Brest, France (on the Atlantic coast), to Irkeshtam, Kyrgyzstan (on the border with People's Republic of China). 3 The E-60 and E-70 highways are defined in the European Agreement on Main International Traffic Arteries (AGR) done at Geneva on November 15, 1975.
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The World Bank Fourth East West Highway Improvement Project (P130413)
the Caspian and Black Sea, lower the cost of transport and logistics and improve Georgia’s ranking and connection to global markets. The Fourth East-West Highway Improvement Project (EWHIP-4) was the fourth Bank-financed project along this key corridor, which continues to be developed in phases. Refer to Annex 5 for additional details.
Theory of Change (Results Chain)
5. The Theory of Change was not included in the Project Appraisal Document (PAD), as it was not a requirement. However, the Theory of Change illustrated below was developed consistent with the project description, and results framework in the PAD.
Project Development Objectives (PDOs)
6. The Project Development Objectives (PDOs) were to: (i) contribute to the gradual reduction of road transport costs and to improve road safety along the section upgraded under the Project; and (ii) to strengthen the capacity of the Roads Department (RD) and the Ministry of Regional Development and Infrastructure (MRDI) to plan and manage the road network and improve road traffic safety.
7. The PDOs are similar to those used in the earlier East West Highway projects supporting the improvements to the E60 highway since they contribute to the achievement of the overall objective of improving the E60 East West Highway Corridor westward from Tbilisi. There is a slight disconnect, however, between the PDO and the project sub-component on Road Safety. While the PDO refers to improved road safety along the section to be upgraded under the project, the actual measures extend beyond the upgraded section.
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The World Bank Fourth East West Highway Improvement Project (P130413)
Key Expected Outcomes and Outcome Indicators
8. The key expected outcomes of the project are split into two sub-objectives: (i) “contribute to the gradual reduction of road transport costs and [to] improve road safety along the section upgraded under the Project,” and (ii) “strengthening the capacity of the Roads Department (RD) and the Ministry of Regional Development and Infrastructure (MRDI) to plan and manage the road network and improve road traffic safety.” The first sub-objective included indicators for reduction in travel time, travel cost and road fatalities, as well as an increase in the EWH asset value. The second sub-objective had one indicator consisting of the development of a road strategy and its adoption by RD and MRDI .
Indicators
9. The table below shows the key indicators of the project as shown in the PAD.
Table 1: Project Indicators by Sub-objective
Indicator Unit First Sub-objective 1 Transit time from Agara to Zemo Osiauri4 in minutes 2 Vehicle Operating Cost (VoC)5 from Agara to Zemo Osiauri - cars US$/km 3 Vehicle Operating Costs (VOC) from Agara to Zemo Osiauri - trucks US$/km 4 Reduction in road fatalities on the East West E60 corridor from Tbilisi to Senaki 100 mill. vehicle-km 5 Increase in asset value of the East West Highway corridor from Tbilisi to Sarpi GEL Million Second Sub-objective 6 Road sector strategy incorporating social and gender dimensions developed and N/A adopted by RD and MRDI. Core Indicators 7 Population living in the area of influence of the Agara to Zemo Osiauri road section No. and proportion that are female 8 Roads constructed, non-rural km
Main Beneficiaries
10. The primary target group included road users who were expected to benefit from (i) reduced transport costs, (ii) reduced travel time, and (iii) safer travelling on the improved road sections through the provision of road safety measures. The secondary target group included government institutions that were expected to benefit from strengthened operational effectiveness of the Roads Department (RD, the Implementing Agency) and from the road safety improvements.
Original Components (as approved)
11. The original Project was approved by the Board on May 9, 2013 and became effective on August 5, 2013. The project consisted of four components: (i) improvement and management of the East-West Highway (EWH), (ii)
4 The target Highway section connects the areas of Agari and Zemo Osiauri along the E60 road (the East-West Highway). 5 Vehicle Operating Costs (VoC) are the costs associated with vehicle usage, including fuel, tires, maintenance, repairs, and mileage-dependent depreciation costs.
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The World Bank Fourth East West Highway Improvement Project (P130413) institutional strengthening, (iii), preparation of studies for future projects, (iv) project management and implementation. These are detailed below.
Component 1: Improvement and asset management of the East-West Highway (Estimated Cost: US$74.5 million, actual cost US$ 70.8 million).
(a) Upgrading of existing East-West Highway through the construction of a 2-lane dual carriageway from Agara to Zemo Osiauri (12 km of concrete pavement). The section contains two interchanges, two bridges, several overpasses and underpasses and riverbank protection. (Estimated Cost: US$55.0 million including contingencies, actual cost US$ 53.2 million).
(b) Maintenance of the E60 2-lane dual carriageway between Natakhtari and Ruisi (67 km). This sub-component aimed at financing a multi-year maintenance contract. The maintenance modality was to be determined based on the outcomes of a preparatory study financed under Component 3. (Estimated Cost: US$ 8.0 million including contingencies, actual cost US$ 0.0 million).
(c) Civil works to improve road safety and access roads on the existing East-West Highway between Natakhtari and Ruisi (67km) and between Ruisi and Chumateleti (44km) (estimated cost: US$ 6.0 million including contingencies, actual cost US$ million). The identification and design of the road safety measures and access roads were carried out under Component 3. Note that the measures covered under this sub-component extend over a longer length of the EWH compared to the upgrading sub-component.
(d) Environmental improvement measures along completed sections of the E60 highway between Natakhtari and Ruisi (67km). This included measures to address adverse environmental impacts of construction activities during the upgrading of these sections. Identification and design of the measures were to be based on an environmental audit of the sections to be carried out under Component 3. (Estimated Cost: US$ 1.5 million, actual cost US$ 0.0 million).
(e) Construction supervision and quality assurance services. (Estimated Cost: US$ 4.0 million, actual cost US$ 3.7 million).
Component 2: Institutional strengthening (Estimated Cost: US$2.5 million, actual cost US$ 0.66 million)
(a) Review and updating of road sector strategy (Estimated Cost: US$ 0.5 million, actual cost US$ 0.10 million). Updating of a road sector strategy with two key areas of focus: (i) institutional arrangements; and (ii) financing.
(b) Support to the MRDI to improve road safety management capacity (Estimated Cost: US$ 0.2 million, actual cost US$ 0.0 million). Technical assistance for capacity building in road safety policy issues and management and coordination including: (i) assessment of the existing national traffic safety strategy and action plan for 2010- 2013; and (ii) development of a new strategy and plan for 2014-2017.
(c) Support improvement the operating environment for the local construction industry (Estimated Cost: US$ 0.2 million, actual cost US$ 0.0 million). Measures to promote improved professional practices within the industry including training needs assessment and manpower development.
(d) Improvement to manpower planning and development in MRDI (Estimated Cost: US$ 0.2 million, actual cost US$
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0.0 million). This will include; (i) training needs assessment and preparation of manpower development plan; (ii) development and implementation of a training plan; and (iii) regular learning events to promote knowledge of best practices in the road sector.
(e) Organizational efficiency improvement and manpower planning and development measures (Estimated Cost: US$ 0.9 million, actual cost US$ 0.4 million). This was aimed at improving: (i) RD’s internal business processes, and national design standards; (ii) multiannual planning and development; (iii) development and implementation of a communication strategy; and (iv) various other studies to be determined. For manpower planning and development, the activities were to include training needs assessment and preparation of manpower development plan; implementation of strategic incremental training with particular focus on FIDIC Rules, and regular learning events to promote knowledge of best practices in road management and promote their adoption.
(f) Development of a strategic roadmap for the development and implementation of Intelligent Transport Systems (ITS) along the East West Highway corridor, from Tbilisi to Turkish Border (Estimated Cost: US$0.5 million, actual cost US$ 0.2 million). This includes the development of a long-term vision and a comprehensive action plan for the deployment of ITS along the E60. The study will also include exploration of possible roles for the private sector in the implementation of the proposed ITS and some training activities.
Component 3: Preparation of designs and supporting studies for future projects for the development of the East- West Highway (Estimated Cost: US$ 10.8 million, actual cost US$ 21.65 million)
(a) Study to define the scope of the maintenance interventions along some upgraded sections of the E60 2 lane dual carriageway e.g. Natakhtari to Ruisi (67 kilometers). In addition, this subcomponent would include the review and update of maintenance guidelines used by the RD.
(b) Road safety improvement studies and designs. The studies would identify needed road safety interventions and access improvements to be implemented along the existing road between Natakhtari and Chumateleti (111 kilometers). It would include: (i) road safety audits along the road section; and (ii) detailed designs of the proposed measures.
(c) Update of feasibility studies and undertaking of preliminary engineering design of a new Rikoti Tunnel and 60km of highway between Chumateleti and Argveta. The study would adopt a 'corridor improvement approach' and thus include identification of physical measures aimed at improving connectivity between the E60 and adjacent local road network. The studies would also support subsequent phases of the East-West Highway program, including the East- West Highway Corridor Improvement Project which would be financed by the World Bank.
(d) Detailed design of the new tunnel at Rikoti, preparation of bidding documents and independent review of all technical and safety provisions. The design would also include the design of related access roads to nearby population centers. This activity was separated from 3 (c) above to allow flexibility in the possible financing arrangements for the tunnel (e.g. public private partnership).
Component 4: Project Management (Estimated Cost: US$ 1.4 million, actual cost US$ 1.7 million)
(a) Implementation support to RD; including provision of goods and services.
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The World Bank Fourth East West Highway Improvement Project (P130413)
(d) Financial audits and project monitoring and evaluation services. Services were to be provided by the Transport Reform and Rehabilitation Centre (TRRC).
B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE)
Revised PDOs and Outcome Targets
12. No changes were introduced to the PDO.
Changes to Outcomes:
13. No changes were introduced to the original project outcomes.
Revised PDO Indicators
14. There were no changes to the project indicators throughout its implementation, except target dates.
Revised Components
15. Cancelled/ replaced activities: Sub-components 1-b, and 3-a: The maintenance contract and the study on maintenance interventions along the E60 carriageway were both cancelled (see clarifications in the next section), and the savings were allocated to carry out studies for future projects, under component 3 (see paragraph 19 below). Component 2-(d): ‘undertaking a training needs assessment and preparation of manpower development plan for the MRDI’ was replaced with a similar activity, which is a "Capacity Gap Analysis" study. The proposed Construction Industry Review Update, was cancelled by the Borrower (see clarifications in the next sections). The sub-component of “environmental improvement measures” was dropped as a stand-alone item and was merged into the key civil works contract.
16. Additional activities: The savings resulting from the cancellation of the maintenance study were utilized to introduce additional studies under component 3. These included feasibility studies and a detailed engineering design for a set of priority road sections which connect the East-west Highway corridor to the main border crossing points with Azerbaijan, Armenia and Turkey. (Details of these studies are included in Annex 5 to this report). In addition, new contracts were introduced for the installation of lighting columns along the E60 (Ruisi-Agara-Agara Bypass km95+km114) and (Tbilisi-Senaki-Leselidze km 115+km 121.3).
Other Changes
17. There were two restructurings carried out during the project. These are summarized in the table below, and were aimed at extending project closing dates, as well as introducing some of the minor modifications mentioned above.
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The World Bank Fourth East West Highway Improvement Project (P130413)
Table 2. Summary of Project Restructurings
No. Date Level6 Description Cause December * Extending closing date to February 28, 2019. To enable the implementation of newly 1 2 2017 * Introducing additional studies introduced studies February * Extend the Project closing date for the second time To allow for the successful completion of 2 2 2019 from February 28, 2019 to December 31, 2019. ongoing technical studies and other activities.
18. Two components could not be completed by the time of project closing date; i) the Gap Analysis study; and ii) the Feasibility Study (FS) for Tbilisi – Bakurtsikhe and Tsnori – Lagodekhi and the Detailed Design (DD) for the Tbilisi – Bakurtsikhe. The financing of these activities were transferred to the ongoing East-West Highway Corridor Improvement Project (EWHCIP).
Rationale for Changes and Their Implication on the Original Theory of Change
19. In 2016 the Bank succeeded in securing Grant funding (of US$ 500,000) to undertake a technical assistance (TA) on Private Sector Participation and Sustainability Options for the East-West Highway (P161225). The objective of the Technical Assistance was to identify and assess a range of different business models for engaging with the private sector to operate and sustainably maintain the East-West Highway Corridor. Following this approval, the study on maintenance interventions, as well as the sub-component for putting in place a maintenance contract along Natakhtari - Ruisi section were both cancelled, as the former became a sub-topic of the new T.A., while the latter would potentially become obsolete depending on the recommendations of the T.A. The DPO was not affected by the subject cancellation. Separate maintenance contracts were introduced parallel to the project (see the Efficacy section of this report).
20. The new studies (feasibility studies and detailed engineering design for a set of priority road sections) were introduced to contribute to the ultimate goal of improving regional connectivity through the development of the key East-West Highway corridor, and the wider network of roads connecting the highway to the main border crossing points with Azerbaijan, Armenia and Russia.
21. The two restructurings were both necessitated by the need to extend the closing dates to enable the completion of ongoing activities. The first extension was required to carry out feasibility studies and prepare detailed engineering designs for a set of priority road sections, which were introduced during implementation of the project. The second extension of closing date was approved to accommodate the completion of all ongoing small-scale road safety improvement works, feasibility and design studies, and the capacity building activities.
22. To utilize some of potential savings under the project, the RD requested the financing of contracts for the installation of lighting columns along the E60, to compliment the previous sections of the Highways, where such facilities were introduced. These measures were not part of the original civil works contract. The activities were introduced through two separate small contracts.
6 Extending the project closing date without changes in the Project Development Objective.
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23. Regarding the two remaining deliverables under the Gap Analysis study, and the Detailed Design (DD) for the Tbilisi – Bakurtsikhe road section, a decision by the Bank was made to transfer the financing of these activities to the EWHCIP. Considering that i) the project was already extended twice, ii) the major activities (the civil works contract) were completed in July 2017, and iii) only minor activities were incomplete, it was decided that the project would be closed and the deliverables would continue to be implemented while being financed under the EWHCIP. This arrangement was enabled by the fact that the ongoing East-West Highway Corridor Improvement Project had a component for conducting studies.
24. The proposed Construction Industry Review Update was cancelled due to i) internal challenges with the Contractors Association who was intended to be a key stakeholder in the activity; and ii) a study with similar objectives examining the industry was delivered under another project (Secondary & Local Roads Project-II) as a priority activity to enable introduction of Output-&-Performance-Based-Road-Contracts (OPRC).
II. OUTCOME
A. RELEVANCE OF PDOs Assessment of Relevance of PDOs and Rating
25. The relevance of the objectives is rated High. At the project closing date, the Project remained highly relevant to the country’s current development priorities and Bank’s engagement. The Bank has been involved in the Georgian road sector since the early 1990s. In 2004, the Bank started to support the upgrade of the East-West Highway, as improving road infrastructure has since been the Government’s priority.
26. The previous 2014-2017 Country Partnership Strategy (CPS) identifies two strategic pillars: (i) strengthening public service delivery to promote inclusive growth; and (ii) enabling private sector led job creation through improved competitiveness. The current 2018-2022 CPF includes three Focus Areas, the first of which is “to enhance inclusive growth and competitiveness” with one objective (out of four) being to “improve connectivity and integration”. This Project approved in 2009 is still fully in line with the strategic directions, as it contributes to both strategic pillars of the 2014-2017 CPF and the 2018-2022 Focus Area, by providing infrastructure to facilitate transit and growth and strengthening the capacity and accountability of RD in road infrastructure management, as well as supporting regional integration.
27. A policy-based, efficient, and long-term strategic investment was the main priority of the government. To lay out infrastructure investment plans, the Ministry of Regional Development and Infrastructure (MRDI) has developed several Action Plans over the years that allocated considerable resources to improvement of roads. The funding for the East-West Highway corridor continued to be a key priority in all the Action Plans. In addition, the government has also placed maintenance of the road infrastructure amongst the highest priorities. Also, and to enable this planned growth in infrastructure spending, the MRDI pays close attention to building institutional capacity within the ministry and within the Roads Department (RD).
28. The relevance of the design is rated High. Component A supporting the upgrading of the Agara-Zemo Osiauri highway section contributed to the first five sub-objectives of the PDOs (reduction in transit time (cars + trucks), VOC, and fatalities and increase in EHW asset value). Component B financing the implementation of institutional strengthening activities contributed to the fourth, fifth and sixth sub-objectives of the PDOs (reduction in fatalities,
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increasing asset value of EWH and development of road sector strategy). Component C contributed indirectly to both sub-objectives.
B. ACHIEVEMENT OF PDOs (EFFICACY)
Assessment of Achievement of Each Objective/Outcome
29. The Project Development Objectives were to (i) to contribute to the gradual reduction of road transport costs, and to improve road safety along the section upgraded under the project; and (ii) strengthen the capacity of the Roads Department (RD) and Ministry of Regional Development and Infrastructure (MRDI) to plan and manage the road network and improve road traffic safety. As described below, the indicators and outcomes of each sub-objective were substantially achieved.
30. The achievement of the first sub-objective (to contribute to the gradual reduction of road transport costs and to improve road safety along the section upgraded under the project) was mainly covered by the first component (Improvement and asset management of the East-West Highway). Key project results included a reduction of 30% in travel time from Agara to Zemo Osiaur (Kashuri), a reduction of 5-10% in vehicle operating costs (due to improved road International Roughness Index IRI), and 74% reduction in fatality rates along the Tbilisi-Senaki sectipn of the E60. The achievement of these targets (overachievement in the case of road fatalities) was the direct result of the completed Highway section Agara to Zemo Osiaur (12km) under component 1, for which the main civil works were completed in July 31, 2017. It was also the result of the implementation of road safety improvement works along the E60 Tbilisi-Senaki section. Accordingly, all targets for the first sub-objective were achieved, except the increase in asset value of the EWH (see the table below). The asset value indicator was underachieved due to the delay in completion of Samtredia-Grigoleti section and upgrading of Zemo Osiauri-Chumateleti Lot 2 section, which was terminated in December 2018 and is currently under bidding under a different project (EWHCIP).
Table 3: Achievement of Project Outcome Indicators
Outcome Indicators Baseline Target Final Result First Sub-objective: contribute to the gradual reduction of road transport costs and to improve road safety 1 Transit time from Agara to Zemo Osiaur (Kashuri) (minutes) 10 7 7 2 VoC7 from Agara to Zemo Osiauri (Kashuri) – cars (US$/km) 0.2 0.18 0.18 3 VOC from Agara to Zemo Osiauri – trucks (US$/km) 0.76 0.72 0.72 Reduction in road fatalities on Tbilisi-Senaki section (per 100 mil. 4 11.6 8.5 3.0 vehicle-km) Second Sub-objective: strengthen capacity of RD & MRDI to plan, manage the road network and improve road safety 5 Increase in asset value of the EWH from Tbilisi to Sarpi (GEL Million) - 2,300.0 1,599.0 6 Road sector strategy developed and adopted No Yes Yes
31. More globally, the project constituted the completion of an important link on the East-West Highway, bringing closer the realization of its overarching goal of connecting the Eastern border of Georgia to the Western border`. The completed 12 km of dual carriageway (Agara-Zemo Osiauri), together with the subsequent sections of the corridor from Zemo Osiauri to Chuemateleti (financed by EIB, and by WB under the ongoing EWHCIP), form what is known as
7 Vehicle Operating Cost
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the Khashuri Bypass (a greenfield section of the EWH corridor). Along this section, the East-West Highway will diverge from the existing E60 alignment and bypass the town of Kashuri before rejoining the existing alignment again. Works financed by the EIB were completed in 2020, and 1.9 km of single carriageway were completed in the same year under World Bank financing. This enabled traffic to bypass the extremely busy Khashuri and part of Surami section of E-60 highway, bringing notable benefits for road users. The rest of the Bypass is being implemented under the ongoing EWHCIP, financed by the World Bank.
32. Regarding reduction of fatalities along the section from Tbilisi to Senaki, the first component contributed (through sub-component 1-(c), Civil Works to Improve Road Safety. However, the achievement of the reduction of fatalities indicator may not be attributed fully to the activities under the project (namely the road safety measures and the development of a road safety strategy). Other factors, outside the control of the project, may have also contribute, e.g., improved police enforcement, and increased awareness that were achieved under previous Bank-financed projects. This attribution issue may be considered more of a shortfall in the design of the indicators rather than the implementation of the relevant activities. Various activities under the Project helped achieve good results with regards to the road safety agenda, including the development of the National Road Safety strategy, the implementation of safety measures along section for the E60, training RD staff, and supporting RD with road safety technical experts. These measures complimented other activities delivered under the previous Third East-West Highway Improvement project which included institutionalization of road safety audits, developing collaboration with the Ministry of Internal Affairs (MIA), improvements to the road crash database used by the Police and RD; training to government entities and a road safety awareness campaign along the highway. These measures and activities are helping achieve good results in reducing accident rates overall and reducing fatalities in Georgia.
33. The project achieved the results of the first sub-objective, i.e., sustaining users’ benefits, by having a highway maintenance arrangement in place, guided by a detailed study. The two activities were to be financed under component 1 (sub-component 1-(b); Maintenance of the E60 2-lane dual carriageway between Natakhtari and Ruisi) and component 3 (sub-component 3-(a); Study to define the scope of the maintenance interventions along some upgraded sections). However, these components were cancelled as the TA,8 Private Sector Participation and Sustainability Options for the East-West Highway, financed by GIF and administered by the World Bank, covered the intended objectives. The TA covered even a wider scope, by examining options for operational modality of the Highway. The key reports delivered under the TA concluded that tolling for the EWH would be a financially viable option for operating and maintaining the Highway. It further presented modalities and options to implement such arrangements. The Government of Georgia is still reviewing the options and scenarios presented by the TA, which was concluded in 2018. In the meantime, a 3-year maintenance contract was signed in 2016 for the maintenance of the Natakhtari - Ruisi sections and another one of 2-years period was signed in 2019 using Government budget.
34. The second sub-objective (strengthen capacity of RD & MRDI to plan and manage the road network and improve road safety) was captured by the second and third components (Institutional strengthening and Preparation of designs and supporting studies for future projects, respectively). This sub-objective was achieved. Almost all activities under components 2 and 3 were successfully implemented. These contributed towards strengthening the capacities of both RD and MRDI through the development of strategic documents to guide the planning and governance in the sector. Through the project, MRDI developed a national road sector strategy providing strategic guidance at the sectoral level, and a national road safety strategy that sets the strategic directions for this important agenda and clearly defined the roles of different government entities. At a more specific and technical level, RD developed a strategic roadmap for deployment of ITS along the EWH. The needs assessment study (now renamed Gap Analysis,
8 See revised components section of this report.
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with the last deliverables being financed under the EWHCIP) will define the specific institutional deficiencies in the sector and provide a list of recommendations for improvement. Once implemented these recommendations will help develop stronger national entities in the sector, including RD and MRDI, leading overall to improved planning, implementation and sector management capacities. Other activities were also delivered at a more technical level and these are listed in table 4 below.
Table 4: List of activities delivered under the Institutional Strengthening Component
Activity Outcome Component 2A - Institutional Strengthening of the MRDI Review and update of road sector strategy (financing strategy) Completed Development of National Road Safety Strategy & Action Plan for 2014-2019 Completed Provision of Experts (in Road Safety, Tunnel safety, etc) Completed Support to improve operating environment for the local construction industry Cancelled Measures to improve manpower planning and development Cancelled Component 2B - Institutional Strengthening of Roads Department Training/Study Tours Undertaken Needs Assessment and development of Capacity Strengthening Program for RD Replaced FIDIC-ACEG European Regional Infrastructure Conference Completed Developing a strategy for communication with the public Completed Presentation of RD’s Short to Medium Term Program Done Development of a strategic roadmap for Intelligent Transport Systems (ITS) Completed
35.The project intermediate indicators have been mostly achieved as shown in the tables below.
Table 5: Achievement of Project Intermediate Indicators
Intermediate Indicators Baseline Target Final Result First Sub-objective: contribute to the gradual reduction of road transport costs and to improve road safety 1 Roads constructed, non-rural (km) - 12 12 Second Sub-objective: strengthen capacity of RD & MRDI to plan and manage the road network and improve road safety 2 Multi-year maintenance contract for section Natakhtari-Ruisi completed No Yes Yes 3 Length of East West Highway corridor from Tbilisi to Sarpi with IRI9 >6 - 12.4 16.2 Length of E60 (Natakhtari-Ruisi & Agara-Chumateleti) with road safety 4 0 100.0 100.0 improvement measures (km) 5 Training needs assessment & manpower development plan for RD No Yes Yes Partial 6 ITS strategic roadmap for East West Highway corridor developed No Yes Yes 7 Training needs assessment & manpower development plan for MRDI No Yes Yes 8 Updated road safety strategy and action plan developed & adopted No Yes Yes 9 Feasibility Studies & Detailed Design: other EWH sections & other roads No Yes Yes 90%
36. The preparation of studies for future roads projects under component 3 were completed successfully with all activities under the component delivered, except one study (study for the Tbilisi-Bakurtsikhe road) that is still being
9 IRI = International Roughness Index is used internationally as a standard to quantify road surface roughness.
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implemented with the final deliverables being financed by the EWHCIP project. The studies (listed in Annex 5) included Feasibility Studies and Detailed Designs for other sections of the EWH and 5 national priority roads/ corridors. These activities contributed directly to the achievement of the second project sub-objective, equipping RD planning efforts with essential analysis for optimum decision-making on some of the country’s key corridors.
Justification of Overall Efficacy Rating
37. The project mostly achieved all its objectives (intended outcomes) so overall efficacy is rated as Substantial.
C. EFFICIENCY
Assessment of Efficiency and Rating
38. The economic analysis done at appraisal covered the upgrading to dual carriageway of the 12 kilometer Agara – Didi Sative project road. The cost-benefit analysis was based on: (i) actual traffic volumes and forecasts; (ii) vehicle operating costs, travel time savings and road accident costs; and (iii) maintenance cost savings. The evaluation was done using the Highway Development and Management Model (HDM-4) that computes annual road agency and road user’s costs for each project alternative over an evaluation period. The ex-post economic analysis for the ICR was done also using the HDM-4 model, adopting the same main inputs and assumptions used at the ex-ante economic analysis done at appraisal (e.g. road and vehicle fleet characteristics, evaluation period, discount rate, etc.), but considering the actual project costs, actual duration and completion of the road works, and the actual traffic and roughness of the road measured from 2013 to 2019.
39. The ex-post economic analysis done for the ICR yielded an Economic Internal Rate of Return (EIRR) of 19.9 percent and a Net Present Value (NPV) of US$37.7 million, which confirms that the economic justification for the investment is satisfactory. The ex-ante economic analysis done at appraisal yielded and EIRR of 17.5 percent and NPV of US$ 26.7. The table below shows the results of the ex-post economic analysis. The higher ex-post economic benefits are due to the higher traffic measured on the project road compared with the appraisal estimates. The higher EIRR results are due primarily to reduced project costs. The time extension of the loan closing date did not have an impact on the results as the civil works contract was completed on time. No emission analyses were conducted in the PAD. See Annex 4 for further details.
Table 6: Ex-Post Economic Evaluation
PAD Estimate ICR Actual Actual/Estimate Economic Internal Rate of Return (%) 17.5 19.9 1.14 Net Present Value at 12% (US$ Million) 26.7 37.3 1.32
40. Based on the outcomes of the ex-post economic evaluation, the efficiency of the project has exceeded expectations, and is therefore rated High.
D. JUSTIFICATION OF OVERALL OUTCOME RATING
41. Overall, there were minor shortcomings in the operation’s achievement of its objectives, but no shortcomings in its efficiency or relevance. Therefore, the overall Outcome of the project is rated Satisfactory.
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E. OTHER OUTCOMES AND IMPACTS (IF ANY)
Gender
42. While the project design did not have a distinct activity targeted at improving gender mainstreaming, some of the activities included gender-sensitive analyses and assessment. For example, the updating of the road sector strategy (with two key areas of focus: (i) institutional arrangements; and (ii) financing) was intended to include analysis of the social and gender impact of the proposed strategy. However, the RD and the Bank agreed at a later stage to remove these analyses from the activity as these were deemed irrelevant for the purpose of study.
Institutional Strengthening
43. RD ‘s capacity evolved over the project implementation period and continues to do so. One of the key challenges faced by RD also continues, namely, the pace of growth in new projects and maintenance requirements that impedes the growth in capacity of the institution. The Fourth East West Highway Improvement Project acknowledged this risk and provided mitigatory measures in the form of dedicated training activities and provision of consultants to support the RD.
44. The project included a fully dedicated component for institutional strengthening. It included various activities for building the capacities of RD in various areas, including planning, road safety, ITS, FIDIC contracts, technical aspects (e.g. engineering, bridges, etc). The activities also included the undertaking of a Gap Analysis, which helps define areas of weaknesses and proposed measures for institutional improvements within RD. The recommendations will be financed under Bank and other IFIs-funded projects.
Mobilizing Private Sector Financing
45. Once completed, the East West Highway will provide the country with sizable socio-economic benefits. However, it will also present a new major challenge, which is the sustainability of the key infrastructure asset. To this effect the Bank has worked with the Government, through the T.A. on East-West Highway O&M to assess the options available to the Government for maintaining the highway in a sustainable manner. The T.A. presented major recommendations, including on the engagement of the private sector and the introduction of tolling/ e-tolling. Similarly, the ITS strategy analyzed possible private sector engagement in delivering ITS services on the highway. These benefits of these studies are anticipated to shape up once the full East-West Highway corridor is completed.
Other Unintended Outcomes and Impacts
46. The key civil works contract involved a local contractor from Georgia (the Blacksea Group) who engaged as a sub- contractor to the key contractor (COPRI). The engagement of the local contractor (one of the largest in Georgia) presented an opportunity for the local construction industry to develop expertise and experience in developing major highways. This will, in the long run, together with other factors, contribute to building the resilience and the competitiveness of the local firms in the field of Highway construction. Ultimately this should assist in generating more sustainable jobs in construction and also help in producing incremental reduction in highway construction cost.
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III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME
A. KEY FACTORS DURING PREPARATION
47. The project design had an integrated view that matched the strategic objective not only of the project but that of the wider mobility needs of Georgia. It provided activities/ objectives at 4 distinct levels (though this was not described as such in the PAD), including; i) the project level, ii) the institutional level; iii) the sector level; iv) the long- term connectivity level. The project components included development of physical infrastructure, measures for institutional development of RD (beyond the needs for implementing the subject project), sectoral aspects such as road safety, ITS strategy, and highway maintenance.
48. The preparation of the Fourth East-West Highway Improvement Project (EWHIP-4) aimed at continuing the Bank’s support of the Government’s priority of improving its major East-West transit corridor: the E60 Highway, which spans a distance of approximately 410 km. The project is a continuation of the previous Bank-financed Third East West Highway Improvement Project (TEWHIP), which stretched 34 km from Sveneti to Ruisi to Agara bypass. The Government and the Bank followed a flexible and agile approach to developing the corridor, where the project phases were rolled out based on the level of readiness as indicated in the corresponding studies. This approach enabled the Government to advance faster with the implementation of this strategic infrastructure. In the case of the subject project, major the civil works contract were awarded only one year after Board Approval, due to the fact that most of the studies were in advance stages (prepared under the Third East-West Highway Improvement Project).
49. The selected financing instrument did produce satisfactory results. Nonetheless, the use of a programmatic approach would have enabled the Bank to engage deeper, and over longer period, in the institutional and governance aspects in the sector. It would have also offered the desired continuity in implementing the physical infrastructure.
50. The Project design was appropriate and straightforward in terms of components, geographic dispersion, involved organizations, and safeguard policies. There was an adequate number of components (three). However, the total number of activities under each component has proven to be a challenge to RD’s implementation capacity (see next section on Implementation). The PDO was consistent with the PDOs for the entire series of previous East- West Highway Improvement Projects. The PAD’s results framework reflects properly the objectives and content of the Project components.
51. the PAD included an assessment of RD’s capacities and acknowledged the deficiencies that existed. The project, accordingly, included measures to improves the capacities of RD, through conducting of assessments and availing of technical experts (consultants). However, the wider RD workload, beyond the subject project, presented a challenge as elaborated in the implementation section below. The design of capacity building activities would have benefited from a more wholistic assessment. This was the objective of the sub-component on assessment of RD’s capacities, but during design stage emphasis should have been placed on this sub-component being an urgent prioritized activity in the project as opposed to a assessment for medium-to-long terms needs.
52. While the project design may be commended for having an integrated view into areas beyond the physical infrastructure, the list of activities introduced became too many to be implemented in a timely manner. The Procurement Plan included a list of more than 50 contracts. The project design could have streamlined the activities better in line with RD’s capacity. Refer to the implementation section below on the challenges that arose as a result.
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B. KEY FACTORS DURING IMPLEMENTATION
53. The implementation of the key civil works contract was implemented satisfactorily and in a relatively reasonable timeline. Slippage occurred mainly at mobilization which led to a delay of about 6 months. The contractor managed to make up for this delay. Construction was satisfactory. This is with exception to some aspects that needed improvements, for example road safety arrangement at a roundabout (junction 2). These were rectified and improved by the contractor before site hand-over.
54. The project was characterized by a large number of activities which produced a long list of activities that needed to be procured and managed. This led to RD’s capacity being stretched at a time when other projects were being prepared, with a number of these being subjected to resource intensive IFI requirements (technical, safeguards, and fiduciary). These included projects being financed by the EIB, ADB, and AIIB. This affected in many cases the timeliness of delivering the components of the project.
55. The study on the assessment of RD’s capacity to this effect was a very well-planned activity. However, its implementation should have been prioritized in the course of implementation of the project. The implementation this activity, and other similarly sized sub-components, was affected, amongst other factors, by the focus on the larger components.
56. The Procurement Plan included a list of more than 50 contracts, ranging from large civil works contracts to individual consultants’ simple contracts. While these contracts varied in size and price, the effort required to address and administer these did not vary as much. This presented workload challenges to RD.
IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME
A. QUALITY OF MONITORING AND EVALUATION (M&E)
M&E Design
57. The project had well defined PDO indicators, which encompassed most of the project activities. The first five satisfactorily captured the PDO’s first sub-objective, while the sixth captured both the first and second sub- objectives. The PDOs were well designed, linking the output to impact and outcome levels. The project activities under component 1 (Improvement & asset management of EWH) were well linked to the intermediate indicators and the outcome indicators. However, the activities under components 2 (Institutional strengthening) and 3 (Preparation of studies for future projects) were not as well linked to the Intermediate indicators and hence to the second sub-objectives.
58. Generally, the indicators used are typical indicators for road projects, and don’t reflect the wider impact of this transformational project. This is, however, understandable taking into consideration that the corridor is implemented in segments, and that the achievement of the ultimate goals of the corridor will be subject to variables beyond the control of this project.
59. The M&E arrangements were clearly defined with the RD responsible for preparing progress reports. The indicators identified for assessing progress toward achieving the project outcome and PDO were suitable and easily measurable. All indicators were retained unchanged over the entire duration of the project, although some target
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dates were modified.
M&E Implementation
60. On the Implementing Agency side, the RD was responsible for the collection of project’s performance indicator data and analysis of the results. A specific Monitoring Unit were established within RD. Progress towards the achievement of the final targets was monitored through regular project progress reports by RD and Bank’s ISRs. Most indicators were regularly updated without major issues. In early 2016, as the capacity of RD, including the Monitoring Unit, were strengthened by filling vacant positions which in turn improved the data collection and reporting process. Hence, the project's Monitoring and Evaluation was rated Satisfactory in the last ISR.
M&E Utilization
61. The M&E indicators were used by both RD and the Bank during supervision activities to gauge and assess performance and to prepare response measures to ensure the project was on track towards achieving its development objectives.
Justification of Overall Rating of Quality of M&E
62. There were moderate shortcomings in the M&E system’s design and utilization. The M&E system as designed and implemented was generally sufficient to assess the achievement of the objectives and test the links in the results chain, but there were moderate weaknesses in a few areas. Accordingly, the overall rating for M&E is Substantial.
B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE
63. Environmental: EWHIP-4, like other projects in the series to upgrade EHW, was classified as environmental category A due to the complexity of the expected environmental and social impacts. Three safeguard policies were triggered including: OP4.01 Environmental Assessment, OP4.11 Physical Cultural Resources and OP 4.12 Involuntary Resettlement. The Borrower carried out a full-scale Environmental Impact Assessment (EIA) of upgrading EHW between the settlements of Agara and Zemo Osiauri. Environmental performance was satisfactory throughout the project life due to experience gained by the RD over the years of undertaking previous EWHIPs as well as decent corporate environmental standards of works provider and strong implementation support by the Bank team. RD’s in-house institutional capacity for environmental management had a few deficiencies, such as shortage of dedicated core staff and insufficient integration of environmental and social inputs into procurement, contract management and reporting lines. However, supplementing environmental and social team of RD with external individual consultants and using services of a technical supervision company allowed to minimize the existing gaps.
64. One challenge for ensuring good environmental performance during works on the EWH has been the enforcement of good practice in extraction of the natural construction materials, especially quarrying from the riverbed. The issue was contextual, coming from the weakness of the national legislation which allows to excavate from a watercourse and does not explicitly obligate operator to reinstate used up quarrying areas till expiry of the extraction license. Because open mining in an individual area less than 25 hectares is not subject to EIA and environmental permitting, and because terms of mining licenses carry pretty general language on environmental requirements, RD experienced difficulty in enforcing mitigation measures beyond the scope of the national regulatory framework despite these measures being prescribed by the environmental management plan of the EIA.
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65. The ‘future studies’ component of the EWHIP-4 included development of feasibility studies and designs for future road investments by financiers other than the World Bank. This component did not include preparation of of EIAs although EIA inputs were essential for completing detailed designs. Such arrangements have proven to carry several inconveniences. First, timing of EIA delivery and quality of EIA documents depended on external factors and interfered with the delivery of design documents under EWHIP-4. Second, if construction does not commence shortly upon delivery of a design package, EIA may get revised upon request of financiers while the design can no longer be adjusted accordingly. Also, the design documents may be revised due to emerging new circumstances and priorities also outside the scope of EWHIP-4. All of this takes control over the quality of design documentation away from the Bank-financed project while attribution to EWHIP-4 remains, causing corporate risk to the Bank.
66. The risk associated with this complex arrangements materialized to some extent when a private agro-producing company submitted several complaints to the Bank on inadequacy of information-sharing and consulting on the expected negative impacts of pollution from road construction (a different corridor to EWH) and operation on their business. The complaints came to World Bank only, while environmental and social assessment had been financed by EIB and the referenced shortfalls in stakeholder consultation came from poor performance of the EIA consultant. The Bank team and Georgia Country Office adequately handled the complaint advising RD on the corrective action and copying EIB on all correspondence. The Bank’s reaction to this case was logical because impacts on the farm located long the road corridor, while being primarily subject to EIA, had implications for the Bank-financed design of the road alignment. However, this case illustrated confusion of external audience over the roles of various financiers and showed the importance of vigilance in case the Bank’s participation in multi-donor programs where attribution to various players cannot be effectively controlled. In the subject component and though the Environmental and Social Impact Assessment (ESIA) document was funded by European Investment Bank (EIB), the Bank underlined its support for undertaking a thorough ESIA review to assess all potential impacts that could have resulted.
67. Social: The Bank’s OP 4.12 on Involuntary Resettlement was triggered as the construction works on the 12km long section from the settlement of Agara to Zemo Osiauri required land acquisition causing both physical and economic displacement. Social safeguard compliance was mainly rated as satisfactory and social impact and risk related to land acquisition and resettlement was assessed as moderate. Resettlement Policy Framework (RPF) was disclosed in February 2012 and Resettlement Action Plan (RAP) in March 2013. The Project required the acquisition of some 110 ha of land (571 land parcels) of which 60 per cent was state land and 40 per cent private land. Resettlement process was completed in February 2018.
68. A total of 1162 persons in 272 households were affected. In total, five households were resettled; four businesses stopped their operation; one construction material processing plant and 20 reservoars were rellocated (within the existing area of the company); and 20 ancillary and 45 minor structures were impacted. Amount of GEL 8.2 million was paid as compensation for loss of land/crops; loss of buildings/structures; and for livelihood restoration activities. No complaints related to land acquisition and resettlement were reported. However, some 50 complaints related to indirect negative impact caused by highway civil works were filed by the residents of the Agarebi village. These were mainly verbal complaints registered by both the RD and the contractor. The Agarebi village case took exceptionally long time to be resolved and the complaint was extensively covered and reported in the missions’ Aide Memoires starting in May 2017. Agarebi village is located in the area of the 2nd interchange the design of which saw several modifications aimed at minimizing resettlement impact, inter alia.
69. Several public consultation meetings were held with affected locals and local officials to agree on appropriate
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corrective and compensation measures to resolve the complaints. Majority of complaints were adequately addressed relatively quickly as the contractor, at its own expense, asphalted local road; built an access road to the bus station; did clean-up works on the clogged irrigation channel and replaced damaged fences with new ones. However, the resolution of complaints related to alleged damages (cracks) on several houses and loss of grazing land (due to loss of access) which led to reduction and eventually loss of cattle for a number of affected households took long time. After lengthy discussions on options to resolve the issue, finally, and in close consultation and agreement with affected households (total of 44), a livelihood restoration plan (providing monetary compensation to restore the livelihood of the affected and empower them economically) was developed and approved in June 2020 (more details on the plan are provided in Borrower’s ICR).
70. Procurement. The overall procurement risk was moderate throughout the life of the project. Most contracts were subject to the Bank’s prior review Procurement of civil works was carried out without major issues. In 2015, the Head of procurement unit within the Foreign projects’ Division (FPU) has been promoted to the deputy head of FPU and the position became vacant. In response, the RD appointed a new Head of procurement division in December 2015 as well as hiring an additional procurement specialist in January 2016 (as per the recommendations stipulated in Mid- Term Review report of December 2015). Therefore, RD has mitigated staff departure in a timely manner.
71. Procurement was carried out in accordance with the World Bank’s “Guidelines: Procurement of Goods, Works, and Non-Consulting Services under IBRD Loans and IDA Credits & Grants” published in January 2011, revised in July 2014; the “Guidelines: Selection and Employment of Consultants under IBRD Loans & IDA Credits & Grants by World Bank Borrowers” published in January 2011, revised in July 2014; and also in accordance with provisions stipulated in the Loan Agreement. Procurement of works was carried out through ICB for most civil works contracts and through NCB for smaller civil works contracts. Various methods were used for procurement of consultant services (QCBS, SS, CQS, etc.) depending on the scope of services.
72. Following the reallocation of savings in June 2016, four additional Quality and Cost-Based Selection (QCBS) procurement items have been added to EWHIP-4 Procurement Plan (Feasibility Studies and Detailed Designs). These assignments have been procured in parallel within the planned timeframes (7 months on average starting in Q2 2016 through Q1 2017) with the involvement of qualified procurement staff/consultants of RD. The average period needed for these selections was less than those for similar assignments financed by the Bank in Georgia. As of the closing date of the project, there were no unresolved procurement issues.
73. Financial Management (FM). The FM performance under the Project was Satisfactory throughout the project implementation. All project related interim unaudited project financial statements were submitted on time and found to be acceptable. Similarly audited annual project financial statements were submitted on time and found to be acceptable. Audit of project financial statements did not reveal major weaknesses and/or errors. Throughout the project implementation, the implementing agency has maintained adequate financial management arrangements including staffing, project planning and budgeting, accounting, funds flow, reporting, internal controls and external audits. The project closing date was on December 31, 2019 and application deadline on June 30, 2020, as of the date of ICR report all expenditures incurred under the project were duly documented and any unused funds refunded back to the Bank.”.
74. Disbursements. The final project amount is US$75.0 million equivalent as of December 31, 2019 (including IBRD loan of US$ 38.0 million equivalent and IDA credit of US$ 37.0 million). At project close, the total disbursed amount of the IDA credit was US$ 35.8 million, and of the IBRD loan was US$ 35.02 million. Therefore, 96% of the total project
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costs were disbursed. US$ 2.98 million equivalent, or 4% of the total project costs, were cancelled as these funds were not committed.
C. BANK PERFORMANCE
Quality at Entry
75. The Bank teams prepared the project meeting all Bank requirements, while maintaining close attention at the same time to the strategic context of the project and its relevance to the Government development plans. This was particularly evident in the design of the project components and activities, which contained a good balance between measures designed to ensure timely delivery of quality infrastructure and technical assistance measures that aimed at developing the sector and future connectivity plans of the country. The Bank has also supported the Government in adopting the phased approach for the development of the East-West Highway, with projects targeting specific segments of the Highway and in parallel containing components for preparation of studies of the subsequent phases/ segments. The detailed design for the EWHIP-4 was prepared under the Third East-West Highway Improvement project (WB-financed) and was subject to Bank review.
76. The World Bank enlisted adequate expertise and staffing at the preparation stages of the project. The PAD was well articulated regarding the background analysis and rationale behind the project. Project design benefitted from lessons learnt under the Third East-West Highway Project. Extensive consultations were conducted with relevant partners (within and outside the Government) to present the proposed project and to make sure it was aligned with other ongoing initiatives at that time. The economic and technical analysis and assessment were detailed and well presented.
77. Environmental, social, and fiduciary aspects were adequately assessed at preparation stages. Extensive public consultations were held during RAP preparation. Grievance Redress Mechanism (GRM) was established already under previous East-West Highway projects and has been maintained for the project.
78. The implementation arrangements were well detailed, including the role of the different entities (RD, and MRDI) in the supervision of different activities. However, one of the activities (support to improve the local construction industry) would rely by design on the engagement of the Contractors Association, yet no sufficient assessment was included on the Association in the PAD. The institutional weakness of the Association led to delays in kickstarting this component and ultimately cancelling it.
79. All risks were properly identified, and mitigation measures were adequately developed during project preparation. With the development and consideration of the mitigation measures, the overall risk of project implementation was rated as moderate. These measures included the development of RD’s capacities in various areas including, but not limited to, project management, safeguards, procurement, and road safety. It also included commitment by the Government to increase spending on maintenance in the medium term, and to continue to allow RD to exercise due diligence in the execution of all civil works under the project.
80. As discussed earlier the project indicators were well defined. The intermediate indicators for the second and third components (Institutional strengthening, and Preparation of studies for future projects) could have been better defined with clearer measurable expected results. This would have enabled better assessment of the value addition of these components and gauging their attribution to the sectoral development objectives.
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81. Based on all of the above, the Bank performance in ensuring quality at entry is rated Satisfactory.
Quality of Supervision
82. The project was managed by three different Bank Task Team Leaders (TTLs) over its implementation lifetime. This is considered a reasonable number for the duration of the project. The transition between TTLs was handled smoothly, with each incoming TTL first assuming the role of co-TTL prior to taking leadership of the project.
83. Close support from the Bank team helped facilitate and support the RD in addressing challenges that emerged on the procurement, safeguards and technical sides. The Bank teams exercised flexibility in adjusting and modifying activities of the project in a manner that best served the Government of Georgia in achieving its development objective. One of the examples was the replacement of some components with the grant funding through the GIF Trust Fund, coupled with a wider scope of advisory.
84. The expertise offered by the Bank produced notable advisory advantages, where in carrying out the studies for the 5 priority road projects, the Bank team has worked closely with RD to review and scrutinize the quality of the studies. This resulted in several iterations of improvements to these documents. This level of support also helped other development partners such as EIB, and ADB develop increased trust in the quality of produced products, particularly for projects where studies were being supervised by the Bank (under the EWHIP-4), but to be financed by these partners. Similarly, RD and MRDI continued to value the Bank’s role as an advisor on the strategic aspects such as maintenance, and institutional development.
85. The project was closely supervised by the World Bank team and sufficient budget and staff resources were allocated. Regular supervision missions and technical visits, including site visits, were conducted throughout the project implementation. Team composition reflected the project supervision needs, including transport experts, engineers, financial, and procurement and safeguards specialists, both from Washington, D.C. and from the field. Mission aide memoires and implementation status and results reports (ISRs) were well-written, reflecting progress, delays, and challenges and including honest ratings on the project implementation objectives and implementation progress. However, the last Bank ISR should have been ideally delivered closer to project close. The Bank supervision was proactive in raising implementation red flags to RD’s management.
86. On the other hand, the introduction of the studies for the 5 priority road links during the project implementation, did not benefit from detailed guidance by the Bank on the order of documents’ review and clearances. This led to the earlier discussed challenges in terms of documents review, leading to delays in providing Bank clearances and hence delayed delivery of these studies. This negatively affected the overall timeline for implementation of the civil works of these projects, which were to be financed by other IFIs.
87. The decision made by the Bank to extend the closing date (second time) to ensure the successful completion of the 5 key studies was merited by the importance of these studies and the Bank’s advisory role. By the closing date only one of these studies was missing a deliverable to be completed (together with two deliverables under the Gap Analysis assignment), and hence a decision was made not to extend the closing date any further and transfer the remaining activities to another project. This could not have been achieved at the earlier stage due to the large number of studies that were being implemented then.
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88. Based on all the above, the Bank performance in supervising the project is rated Moderately Satisfactory. While the various aspects of performance were generally satisfactory, the lack of early guidance by the Bank on the review process of the 5 key studies impacts the performance rating.
Justification of Overall Rating of Bank Performance
89. Overall, the Bank performance was adequate both at entry and during supervision. Nonetheless, there were still some moderate shortcomings during design (number of activities, intermediate indicators, assessment of readiness of some stakeholders) and implementation (lack of early guidance on review process for studies). Accordingly, the Bank performance is rated as Moderately Satisfactory.
D. RISK TO DEVELOPMENT OUTCOME
90. While the development objectives of the project have been conceptualized to fit the scope of the project as one phase of the East West Highway corridor, the suitability of these objectives are nonetheless reliant on the corridor being eventually completed. Without the completion of the corridor the future traffic volumes along the sections developed will remain low, jeopardizing the benefits of the project. At the time of publishing the ICR, the Government of Georgia has secured financing (from EIB, ADB, and AIIB), through various International Financial Institutions (IFIs), to complete the full corridor, with more than 4 major contracts being currently under implementation.
91. At a more localized level, the utilization of the highway section constructed as part of this project would not be possible before the subsequent sections (F0, Lots 1 and 2, and F1 are completed), since these sections collectively make up the Khashuri Bypass. To address the issue the Bank has provided its no objection to an introduction of design modifications to the F0 section, where a new interchange will provide temporary access from the completed highway back to the existing E60. This interchange which was launched in August 2020 facilitated the flow of traffic over the Agara – Zemi Osiauri section. Once the F0 and F1 sections are completed, traffic will then be able to continue using the new Khashuri Bypass all the way from Agari to Chumateleti.
92. In terms of the various studies and strategies prepared under component 2 and as part of parallel T.A.s, the impact of these will depend on the adoption of recommendations of these instruments by the Government, through its specialized organs (e.g. RD, and MRDI). Of particular importance the T.A. for developing modalities for the M&O of the EWH. The Bank is working with the RD, through other projects to ensure that this discussion is brought closer to realization. Regarding the institutional strengthening measures, these are expected to continue to achieve their objectives, with no foreseeable risks, particularly in light of continued and progressive T.A. support from World Bank through other operations and other partners such as EIB. The support in the road safety field for instance is growing gradually the capacity of the RD form an individual expert in this field to a dedicated unit with better defined processes.
93. The Government of Georgia has already managed to facilitate financing (including by the World Bank, EIB and ADB) for three out of the five priority road projects that were the subject of the feasibility studies and detailed design under component 3. This brings these particular activities closer to achieving their ultimate development impacts.
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V. LESSONS AND RECOMMENDATIONS
While the project has achieved its objectives, the adoption of a programmatic approach could have deepened the level of the Bank’s engagement. This is particularly the case with sector governance interventions such as Road Safety and institutional capacity development, where a number of stakeholders are involved, and interventions are usually required over a long period of time. The programmatic approach would also be suitable for the phased approach followed in developing the highway (earlier phases include construction of specific sections, while preparing studies for the subsequent sections). Having a long-term perspective to the sector development ensures more sustainable Government commitment and can also lead to savings in preparation time and costs.
Close and structured coordination with other development partners has helped yield high-impact programs. The Bank’s engagement through the wider East-West Highway program and the close coordination with the Government and other development partners, namely the European Investment Bank (EIB) and subsequently the Asian Development Bank (ADB), helped generate strong momentum to support the Government with this large infrastructure initiative. While coordination at the strategic level has shown good results, there is more space for improvement at the implementation level, including coordination on the review of studies that are financed by an IFI with civil works financed by another.
The strategic orientation awarded by the Bank to the development of the East-West Highway maximized the benefits for Georgia, illustrating the importance of long-term engagement. The Bank’s lead role in supporting the early phases of the East-West Highway program generated interest from other development partners, who stepped in to financed sizable shares of the highway, enabling the Bank to engage more actively in strategic aspects such as sector governance and supporting the wider eco-system of the highway network. This complementarities in engagement offered Georgia the opportunity to maximize the benefits at the sectoral level.
The Bank had a clear value addition through its review and advisory on the implementation of the different studies and technical assistances in the project. The Bank should aim in its operations to strike a good balance between the financial support and the technical advisory it offers in a manner that optimizes the Bank’s value addition. Also, a more strategic approach, underpinned by detailed assessments, in identifying technical assistance will yield better results than a fragmented one.
Complimenting physical investments with parallel Technical Assistances financed through Trust Funds can inform aspects that are critical for the project objectives. The Bank-delivered and GIF-funded T.A. looking at M&O of the East-West Highway enabled the Bank to engage more widely in policy dialogue with the Government on the options of sustainable maintenance arrangements for the East West Highway.
The wide range of components and responsible government agencies reduced the level of diligence at preparations stages. The readiness of the Contractors Association to support the delivery of the component on improving the local construction industry was not assessed as adequately as aspects related to the larger components of the project. Also, the large number of activities in the project placed pressure on RD’s teams, particularly at a time when several new projects were being prepared. Projects should be prepared with as much of a streamlined implementation arrangement as possible. In addition, project should be designed paying more attention to executing agencies’ capacities not only to implement the subject project but also future pipeline of projects that will be prepared/ implemented in parallel. To this effect the study on assessing the capacity of RD should have been advanced during project implementation.
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The implementation of the civil works contracts was successful on various fronts including time and quality. Key to this success was the early preparation of the project studies and design, close monitoring by RD’s responsible department, the capabilities of the contractors, and quality of supervision services. These aspects shall be warranted careful attention when conceptualizing projects and when assessing projects’ level of readiness.
Almost all complaints in the project were addressed successfully, despite some delays in closing one of these cases. The close monitoring and advisory offered by the Bank played a good role in successfully handling these complaints, coupled with the high level of engagement and proactiveness by RD. Strong cooperation by the different parties, and the establishment of a results-driven culture in addressing complaints (as opposed to a blame-approach) produces satisfactory results to all stakeholders involved, and should be advocated at the outset of project implementation.
The lack of clear approach and guidelines by the Bank on how to mitigate against risks arising from financing studies for projects that will be eventually financed by other financiers poses a reputational risk to the Bank. This is the case if the produced studies (whether detailed design, ESIAs, Resettlement Action Plans, or other) are not complied with. The Bank needs to develop clear guidance on such arrangements.
.
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ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS
A. RESULTS INDICATORS
A.1 PDO Indicators
Objective/Outcome: Benefits (time savings, reduced accidents and vehicle operating costs) to road users Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Transit time from Agara to Minutes 10.00 7.00 7.00 Kashuri 09-May-2013 30-Dec-2016 31-Jul-2017
Comments (achievements against targets):
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Vehicle Operating Costs from Amount(USD) 0.20 0.18 0.18 Agara to Kashuri (Cars) 09-May-2013 30-Dec-2016 31-Jul-2017
Comments (achievements against targets):
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Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Vehicle Operating Costs from Amount(USD) 0.76 0.72 0.72 Agara to Kashuri (trucks) 09-May-2013 09-May-2016 31-Jul-2017
Comments (achievements against targets):
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Reduction in road fatality Number 11.60 8.50 3.03 rate on East West E60 corridor from Tbilisi to Senaki 09-May-2013 28-Feb-2018 31-Dec-2019 per 100 million vehicle-km
Comments (achievements against targets):
Objective/Outcome: Road development and Asset Management of the infrastructure Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Increase in asset value of the Number 0.00 2200.00 1599.00 East West Highway corridor from Tbilisi to Sarpi. (GEL 09-May-2013 30-Dec-2016 31-Jul-2017 Million)
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Comments (achievements against targets):
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Road sector strategy Text No Yes Yes incorporating social and gender dimensions 09-May-2013 30-Dec-2015 05-Nov-2018 developed and adopted by RD and MRDI
Comments (achievements against targets):
A.2 Intermediate Results Indicators
Component: Improvement and Asset Management of the East-West Highway
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Roads constructed, non-rural Kilometers 0.00 12.00 12.00
09-May-2013 30-Dec-2016 31-Jul-2017
Comments (achievements against targets):
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Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Multi-year maintenance Text No Yes Yes contract for section of E60 between Natakhtari and 09-May-2013 29-Dec-2017 30-Dec-2016 Ruisi completed
Comments (achievements against targets):
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Length of East West Highway Kilometers 12.40 12.40 12.40 corridor from Tbilisi to Sarpi with IRI >6 09-May-2013 30-Dec-2016 31-Jul-2017
Comments (achievements against targets):
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Length of E60 between Kilometers 0.00 100.00 100.00 Natakhtari and Ruisi and between Agara and 09-May-2013 29-Dec-2017 16-May-2019 Chumateleti with road safety improvement measures
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Comments (achievements against targets):
Component: Institutional Capacity strengthening-1
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Training needs assessment Text No Yes No and manpower development plan for RD completed 09-May-2013 31-Dec-2015 31-Dec-2018
Comments (achievements against targets): The activity was replaced with "Gap Analysis" assignment. Only one deliverable was completed under the EWHIP-4 financing, with the remaining deliverables being transferred to the EWHCIP.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion ITS strategic roadmap for Text No Yes Yes East West Highway corridor developed 09-May-2013 30-Dec-2016 31-Jul-2017
Comments (achievements against targets):
Indicator Name Unit of Measure Baseline Original Target Formally Revised Actual Achieved at
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Target Completion Training needs assessment Text No Yes No and manpower development plan for MRDI completed 09-May-2013 31-Dec-2015 31-Dec-2018
Comments (achievements against targets): The activity was replaced with "Gap Analysis" assignment. Only one deliverable was completed under the EWHIP-4 financing, with the remaining deliverables being transferred to the EWHCIP.
Component: Institutional Capacity Strengthen - 2
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Updated road safety strategy Text No Yes Yes and action plan developed and adopted by MRDI 09-May-2013 31-Dec-2015 30-Oct-2015
Comments (achievements against targets):
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Feasibility Study (Zemo to Text No Yes Yes Argveta) and Detailed Engineering Design (Zemo to 09-May-2013 05-Nov-2018 05-Nov-2018
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Chumateleti) completed
Comments (achievements against targets):
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B. KEY OUTPUTS BY COMPONENT
Objective 1: Improvement and Asset Management of the East-West Highway 1. Transit time from Agara to Zemo Osiauri 2. Vehicle Operating Cost (VoC)10 from Agara to Zemo Osiauri Outcome Indicators 3. Reduction in road fatalities on the East West E60 corridor from Tbilisi to Senaki 4. Increase in asset value of the East West Highway corridor from Tbilisi to Sarpi
1. Roads constructed, non-rural 2. Multi-year maintenance contract for section of E60 between Natakhtari and Ruisi completed. Intermediate Results Indicators 3. Length of East West Highway RD corridor from Tbilisi to Sarpi with IRI > 6. 4. Length of E60 between Natakhtari and Ruisi and Semi -annual between Agara and Chumateleti with road safety improvement measures.
1. Upgrading EWH - construction of 2-lane dual carriageway from Agara to Zemo Osiauri (12 km). 2. Maintenance of E60 carriageway between Natakhtari and Ruisi (67 km). Key Outputs by Component 3. Road safety & construction of access roads on EWH between Natakhtari and (linked to the achievement of the Objective/Outcome 1) Ruisi (67km) and between Ruisi and Chumateleti (44km). 4. Environmental improvement measures along E60 highway between Natakhtari and Ruisi (67km).
10 Vehicle Operating Costs (VoC) are the costs associated with vehicle usage, including fuel, tires, maintenance, repairs, and mileage-dependent depreciation costs.
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Objective 2: Institutional Capacity strengthening
1. Road sector strategy incorporating social and gender dimensions developed and Outcome Indicators adopted by RD and MRDI. 1. Road sector strategy 2. Improve road safety management capacity 3. Support to improve operating environment for local construction industry Intermediate Results Indicators 4. Needs assessment 5. Number of trained staff 6. ITS strategic roadmap 7. Feasibility Study and Detailed Design of 5 priority roads 1. Updating of road sector strategy 2. Improve road safety management capacity 3. Support to improve operating environment for local construction industry Key Outputs by Component 4. Improve manpower planning and development in MRDI (linked to the achievement of the Objective/Outcome 2) 5. Improve organizational efficiency & manpower planning 6. Development of an ITS strategic roadmap 7. Study of the maintenance along sections of E60. 8. Road safety improvement studies and designs.
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ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION
A. TASK TEAM MEMBERS
Name Role Preparation
George A. Banjo Task Team Leader
Deepal Fernando Procurement Specialist(s)
Galina Alagardova Financial Management Specialist
Darejan Kapanadze Environmental Specialist
Vera Dugandzic Social Specialist
Supervision/ICR Mustapha Benmaamar/ Robert Mutyaba/ Aymen Ahmed Task Team Leaders Osman Ali Nino Ramishvili, Sandro Nozadze Procurement Specialists Luis M. Schwarz Financial Management Specialist Djamshid Iriskulov Financial Management Specialist Graciela A. Tejeda Team Member Darejan Kapanadze Environmental Specialist Vera Dugandzic Social Specialist Vusala Mamed Asadova Procurement Team Tanvir Hossain Team Member
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B. STAFF TIME AND COST
Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY13 50.948 318,460.36 FY14 0 0.00
Total 50.95 318,460.36
Supervision/ICR FY14 14.979 109,168.09 FY15 17.854 77,224.53 FY16 22.709 84,382.02 FY17 25.551 109,492.51 FY18 16.862 77,654.72 FY19 23.360 89,027.72 FY20 21.592 144,047.33 Total 142.91 690,996.92
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ANNEX 3. PROJECT COST BY COMPONENT
Description Project Cost (US$ million) IDA share (US$ million) IBRD share (US$ million)
Component 1: Improvement and Asset Management of the E-60 Highway
Total for component 1 74.5 33.63 19.67
Component 2: Institutional Strengthening
Total for component 2 2.5 0.24 0.33
Component 3: Preparation of supporting studies and future projects
Total for component 3 10.8 1.57 14.33
Component 4: Project Management
Total for component 4 1.4 0.3 0.6
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ANNEX 4. EFFICIENCY ANALYSIS
Ex-Post Economic Analysis
1. The economic analysis done at appraisal covered the upgrading to dual carriageway of the 12 kilometer Agara – Didi Sative project road. The cost-benefit analysis was based on: (i) actual traffic volumes and forecasts; (ii) vehicle operating costs, travel time savings and road accident costs; and (iii) maintenance cost savings. The evaluation was done using the Highway Development and Management Model (HDM-4) that computes annual road agency and road user’s costs for each project alternative over an evaluation period. The ex-post economic analysis for the ICR was done also using the HDM-4 model, adopting the same main inputs and assumptions used at the ex-ante economic analysis done at appraisal (e.g. road and vehicle fleet characteristics, evaluation period, discount rate, etc.), but considering the actual project costs, actual duration and completion of the road works, and the actual traffic and roughness of the road measured from 2013 to 2019.
2. The estimated financial project cost used for the ex-ante economic analysis was US$51.4 million and the actual cost is US$ 52.1. The Without Project scenario considers maintaining the existing road with proper routine maintenance and rehabilitating the road when it reaches 10 IRI, m/km. The project alternative consists of widening the road to four lane highway standard and maintaining the road with proper routine and periodic maintenance. The table below show the PAD estimated cost, the contract cost, and the actual cost. The actual cost is 1 percent higher than the estimated cost.
Table 1: Project Financial Cost PAD Estimate Actual Road Financial Cost Financial Cost Estimate/ Section (US$ Million) (US$ Million) Actual Agara-Zemo Oseauri 51.35 52.12 1.01
3. The 2012 average annual daily traffic (AADT) on the project road was estimated at appraisal to be 11,632 vehicles per day and was estimated to reach 19,204 vehicles per day in 2019. The actual traffic measured in 2019 is 21,481 vehicles per day. The table below shows the PAD estimated traffic and the actual traffic measured from 2013 to 2019. From 2013 to 2019, on average the actual traffic was 26 percent higher than the one estimated at appraisal.
Table 2: Average Annual Daily Traffic (AADT) Traffic (vehicles per day) PAD ICR Actual/ Year Estimate Actual Estimate 2013 12,563 18,366 1.46 2014 13,568 17,946 1.32 2015 14,653 17,049 1.16 2016 15,825 18,470 1.17 2017 17,091 22,558 1.32 2018 18,117 23,410 1.29 2019 19,204 21,481 1.12 Average 1.26
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4. The project road was a two lane (Class 2) bituminous road in fair condition with an average roughness of 3.1 IRI, m/km, and it was estimated at appraisal that the roughness of the road was going to reduce to 2.2 IRI, m/km. The table below presents the roughness of the road estimated at appraisal and the actual measured roughness from 2013 to 2019. The measured roughness values confirm that the road works reduced the roughness to 2.2 IRI, m/km. Due to the delay on the construction works, on average, from 2013 to 2019, the actual roughness of the road was 15 percent higher than the appraisal estimates.
Table 3: Average Roughness (IRI) Roughness (m/km) PAD ICR Actual/ Year Estimate Actual Estimate 2013 3.2 3.1 0.97 2014 3.2 3.7 1.15 2015 3.2 NA 2016 2.2 2.8 1.27 2017 2.2 3.0 1.36 2018 2.2 2.2 1.00 2019 2.2 2.5 1.12 Average 1.15
5. The ex-ante economic evaluation was done with a capital investment period from 2013-2015 and an evaluation of benefits period of 25 years, however there were delays on the project implementation. The project road is parallel to the existing highway. Its use by traffic is dependent on the completion of the improvement of subsequent sections of the highway, as a result the completed civil works on the project road (completed at end of 2017) remained unused (closed to traffic) until 2020, i.e. 2.5 years since completion. It is expected that the traffic will start flowing on the project road in 2021. The ex-post economic evaluation considered the delays on the project implementation and the opening of the road to traffic in 2021.
6. The ex-post economic analysis done for the ICR yielded an Economic Internal Rate of Return (EIRR) of 19.9 percent and a Net Present Value (NPV) of US$37.7 million, which confirms that the economic justification for the investment is satisfactory. The ex-ante economic analysis done at appraisal yielded and EIRR of 17.5 percent and NPV of US$ 26.7. The table below shows the results of the ex-post economic analysis. The higher ex-post economic benefits are due to the higher traffic measured on the project road compared with the appraisal estimates.
Table 4: Ex-Post Economic Evaluation PAD ICR Actual/ Estimate Actual Estimate Economic Internal Rate of Return (%) 17.5 19.9 1.14 Net Present Value at 12% (US$ Million) 26.7 37.3 1.32
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ANNEX 5. Supporting Information
The Different Phases of the EWH:
External Item Section (km) Planned upgrading Status Partner
1 Natakhtari to Aghaiani (16) 2-lane dual Carriageway None Completed
2 Aghaiani to Ruisi (50) 2-lane dual carriageway WB Completed
3 Ruisi to Agara (19) 2-lane dual carriageway WB Completed WB (Subject 4 Completed Agara to Zemo Osiauri (12) 2-lane dual carriageway project)
Zemo Osiauri to Zemo Osiauri- 5 EIB Completed KM5.8 (6) 2-lane dual Carriageway
Zemo Osiauri- KM5.8 to Under 6 2-lane dual carriageway WB Chumateleti/Rikoti (8) construction Under 7 WB + EIB New Rikoti Tunnel (2) Provide two additional lanes construction
Under 8 WB + EIB Chumateleti to Argveta (54) 2-lane dual carriageway construction
2-lane dual carriageway Argveta to Samtredia inc. Under 9 to Kutaisi bypass then 2-lane ADB Kutaisi bypass (57) construction c/w to Samtredia 2-lane dual carriageway new construction and Under 10 Samtredia to Grigoleti (51) EIB rehabilitation of 2-lane dual construction carriageway Under 11 ADB Choloki to Kobuleti bypass (33) 2-lane single carriageway construction
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Selected photos of the completed works
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Additional Studies Introduced Under Component 3
• Preparation of Pre-Feasibility and Feasibility Study for Samtredia-Zugdidi Bypass Road (91km) (including access road to Anaklia Deep Sea Port).
• Preparation of Feasibility Study and Detailed Design for Upgrading of Rustavi-Red Bridge and Rustavi-Sadakhlo Roads (61km).
• Preparation of Feasibility Study for Upgrading of Tbilisi-Bakurtsikhe, Tsnori- Lagodekhi Road (127km) and Detailed Design for the Upgrading of Tbilisi-Sagarejo (30km) and Sagarejo- Bakurtsikhe Road (57km).
• Preparation of Pre - Feasibility Study and Feasibility Study for Jinvali - Larsi Road (110km) and Detailed Design for the Construction of Kvesheti -Kobi Road Section (30km).
• Preparation of Detailed Design for the Construction of Chumateleti-Khevi Section (12km).
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ANNEX 6. Borrower’s Comments and ICR
91. On August 4, 2020, the Borrower submitted to the Bank their Project Completion Report for the Fourth East West Highway Improvement Project. This report is attached without any editing or modifications in Annex 7 of this ICR.
92. The Borrower also submitted on September 28th their comments to the Bank’s ICR. The main comments provided by the Borrower on the Bank ICR included corrections to some of the achieved results indicators (namely reduction in fatalities, Length of E60 between Natakhtari and Ruisi and between Agara and Chumateleti with road safety improvement measures. Asset Value of the EWH), corrections to factual data concerning RD procurement information (staffing, dates, etc.), update to numbers of households affected, and other minor comments. The final ICR incorporates the relevant corrections and modifications suggested by the Borrower.
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