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Implementation Review and Support Mission September 1-22, 2016 AIDE-MEMOIRE I

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Implementation Review and Support Mission September 1-22, 2016 AIDE-MEMOIRE I ROAD SECTOR DEVELOPMENT PROJECT Additional Financing (IDA Credit No. 5002-NP) Implementation Review and Support Mission September 1-22, 2016 AIDE-MEMOIRE I. Introduction and Acknowledgment 1. A World Bank review team1 (see Annex-1a provides the team members’ list) led by Farhad Ahmed carried out an implementation review from September 1-22, 2016 on the Road Sector Development Project (RSDP). The review had following objectives: (i) assessing the project status and identify the key implementation issues, especially identify measures required to conclude few remaining activities; (ii) identifying and agreeing with the Government of Nepal (GON) on the future course of actions that will be necessary for achieving satisfactory results as envisaged in this project; (iii) assessing the readiness of the activities that will be undertaken under the forthcoming second additional financing of the project; and (iv) discussing and agreeing on the various activities linked to the preparation of an Implementation Completion and Results Report (ICR) of the Project. 2. The Team would like to thank GON for the hospitality extended to it, especially by counterpart agencies and officials (Annex-1b provides the list of persons met). This Aide-Memoire (AM) summarizes main review findings, agreements reached, and recommendations made. It also reflects discussions held in a wrap-up meeting chaired by Mr. Dhana Bahadur Tamang, Secretary, Ministry of Physical Infrastructure and Transport (MoPIT) on September 22, 2016. The Team has debriefed the Ministry of Finance on review findings on September 10, 2016. As per the Bank's Access to Information policy and the wrap-up meeting decision, this AM will be classified as a public document. II. Key Project Data 3. The following table provides the summary project data and the summary performance ratings: Project Data Project Performance Ratings Board Approval (original) December 6, 2007 Summary Ratings Last Now Trend Board Approval (AF) June 2, 2011 Review Effectiveness Date (original) February 21, 2008 Achievement of PDO MS MS ▲ Effectiveness Date (AF) July 8, 2011 Implementation Progress S S ◄► Closing Date (original) December 31, 2013 Project Management S S ◄► Closing Date (AF) June 30, 2017 Procurement S S ▲ Credit/Grant Amount SDR 76.1 million2 Financial Management MS MS ◄► Amount Disbursed (as of SDR 64.71 million Safeguards S S ▲ September 30, 2016)3 ($99.10 million; M&E S S ▲ approx. 90%) Counterpart Funding S S ◄► Notes: AF-Additional Financing; S-Satisfactory; MS-Moderately Satisfactory; MU –Moderately Unsatisfactory; U-Unsatisfactory; ▲Improving Trends; ▼ Deteriorating Trends; ◄► Static. III. Achievement of Project Development Objective Status 4. RSDP is highly likely to achieve its Project Development Objective (PDO). The impact study report encompassing the five roads is now finalized. The studies assessed one of the outcome indicators: reduction in travel time. An analysis, that used the Geographic Information Systems (GIS), has already assessed another outcome indicator-increase in population to all-season roads. The final figures are now confirmed. Department of Roads (DOR) will assess the third outcome indicator-condition of strategic network roads-as part of its normal network monitoring activities. As reported earlier, a road condition survey carried out in November, 2012 showed that 11.27% of black-topped SRN roads were in poor condition (i.e. the end-project target is 15% has been achieved). The next report is expected soon. The 1Hereinafter referred as “The Team” 2 Excludes an amount of SDR 4.5m (US$ 6.75m) cancelled in January, 2015 through a restructuring process. 3 Credit 5002-NP Amount: SDR 13.0million; Amount Disbursed (as of September 30, 2016): SDR 6.28million (48%) Team has advised DOR to submit the latest road condition report as soon as it is finalized. Annex -2 provides the progress details on the achievement of results. The Team has retained the PDO achievement rating as “Moderately Satisfactory”. IV. Current Implementation Status 5. The overall implementation progress rating is retained as “Satisfactory”. Summary details are provided described below. Road Development Component 6. RSDP has achieved all its physical targets under this component. Therefore, the performance of this component has been rated as “satisfactory”. The table below provides the summary progress. All contracts under this component are now complete. DOR plans to take up further road safety related activities on RSDP roads to enhance road safety on these roads. The activities are being planned to be taken up from RSDP savings, owing to depreciation of Nepalese Rupees (NPR) against A completed Surkhet-Jumla road 4 United States Dollar (US$). These activities section would be undertaken as per recommendations of the road safety audit conducted on these roads in December 2013. These proposed activities will complement activities undertaken under the Road Safety Support Project (RSSP). However, DOR is yet to submit a detailed estimate of the savings and the full road safety proposal. It is understood that the savings could be in the region of US$11.0m and the proposed activities would cost roughly US$5.0m. Therefore, there could still be a saving of $6.0m. The Team has advised the DOR to urgently submit savings details and activities it plans to take up with the savings along with costs. Based on the merit of the proposal a decision will be taken. However, DOR was reminded that any potential activities require to be completed by end-June, 2017. It is expected that the project will require a restructuring in order to surrender the excess credit amount. Annex-3 provides the summary progress of the component. Item Rating and Key Points Trend - Accomplishments X- Concerns ☼- Information ☼ RSDP completed all upgrading contracts and upgrading target is Upgrading Satisfactory largely achieved (target -700km; achievement-690 km) Works ◄► ☼ No outstanding issues Overachieved the periodic maintenance target (target-2,550 km; Periodic Satisfactory achievement-2,595km) Maintenance ◄► No outstanding issues All road safety related contracts completed No outstanding issues Satisfactory Road Safety ☼ The Project is planning to take up more road safety works on ◄► project roads that will complement road safety activities undertaken under RSSP Institutional Strengthening and Policy Reform Component 7. All activities barring one under this component are now complete. The implementation progress under this component is rated as “Moderately Satisfactory” (following table provides key points and Annex-4 assessment details). The design of the road inventory software and collection of 4 Since 2012, NPR depreciated almost a third against the US$. A loan amount of Special Drawing Rights 4.5 million (approximately US$7.0m) was cancelled in early 2015 through a restructuring process. 2 basic road inventory data along the selected road corridor have been completed. However, some activities under a bridge design consultancy contract still remain incomplete (design of 14 bridges on Mugling– Narayanghat Highway section out of total 18). This is as DOR and the consultants could not agree on technical approaches to the design/capacity expansion of those bridges. DOR has agreed to close the bridge consultancy contract by end-October, 2016. It has been agreed that two bridge experts (one expert on bridge design and another expert on concrete prefabrication) will be hired by the DOR to support Bridge Branch in the implementation of Bridges Improvement and Maintenance Program (BIMP) and in the preparation of follow-up project activities. These consultants should possess specialized skills and they need to be hired quickly. Therefore, they could be hired using a Single Source Selection method. While Annex-5 provides status of the agreed actions from last review, Annex-6 presents agreed actions from this review. Item Rating and Key Points Trend -Accomplishments X- Concerns ☼- Information All component activities are now complete barring one contract Road inventory software developed and basic road inventory data Institutional Moderately on a sample road corridor collected Strengthening Satisfactory x Design of 14 road bridges on Mugling-Narayanghat road could not and Policy ◄► be completed under a consultancy contract Reform ☼ DOR intends to hire two bridge experts for supporting Bridge Branch Safeguards Performance 8. RSDP's safeguard implementation achievements have been good. The table below summarizes the safeguard performance while the subsequent sections discuss the social and environmental safeguard measures separately. Annex-7 provides details of the safeguard assessment. Item Rating and Key Points Trend - Accomplishments X- Concerns ☼- Information Excellent overall achievements in social safeguards Social implementation Satisfactory Safeguards ☼ DOR/division road offices to continue completion of few ▲ remaining works on deed transfer Bio-engineering works completed in all roads including monsoon damaged roads Compliance check in Khidkijyula-Manma-Jumla (KMJ) road Environmental Satisfactory completed as well as in Sitalpati-Musikot (SM) road Safeguards ▲ ☼ Mortality rate of plantation was roughly 20%. Necessary re- plantation will be done through contractors or through DOR division offices. Social Safeguards 9. RSDP has made outstanding achievements in implementation of social safeguard measures. It has been rated as ‘Satisfactory’. The project completed almost all of previous review’s agreed actions including those agreed
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