PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: AB5947 National Road Rehabilitation (Osh--) - Additional Project Name Financing Region EUROPE AND Sector Roads and highways (100%) Project ID P123291 Borrower(s) KYRGYZ REPUBLIC Implementing Agency Ministry of Transport and Communications of the Kyrgyz Republic Environment Category [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared August 26, 2010 Date of Appraisal August 10, 2010 Authorization Date of Board Approval September 30, 2010

1. Country and Sector Background

The Kyrgyz Republic experienced social unrest during April - June 2010 that led to the assumption to power of a group of opposition and civic leaders. A Joint Economic Assessment (JEA) reported that the recent events decimated livelihoods for numerous households in the cities of Osh and Jalal-Abad. Both cities are located in the southwestern part of the Kyrgyz Republic. The Kyrgyz Government Commission for Assessment of Damages estimated a loss of employment of about 4,000 persons, mostly in the services and trade sectors. In addition, there is significant disruption of markets and economic activities. Recommendations for the short- term include the development of employment opportunities, such as cash for work initiatives and labor-intensive public works targeted towards households whose livelihoods were lost or damaged as well as for others economically vulnerable groups.

The civil unrests in Osh and Jalal-Abad have had significant impacts on the local economy and are expected to lead to a significant contraction in the economy compared to the pre-crisis growth estimate, and to significant household income losses. In addition, foreign investment may slow down substantially. Reconstruction and development needs are expected to extend into 2011, when the economy is expected to begin recovery. The current fiscal balance of the Government is expected to expand significantly and is estimated to require external financing in the amount of US$335 million in 2010 and US$225 million in 2011. Additional non- governmental support would also be critical in the reconstruction, recovery and rehabilitation effort.

Roads in the Kyrgyz Republic carry most of the passenger and freight traffic (92 percent and 59 percent respectively). While the country has relatively good road network coverage,1 preserving the existing network through proper maintenance and rehabilitation is the primary focus of current road sector policies as roads are deteriorating. Over 60 percent of the road network

1 The total road network in the country is about 34,000 km, including 18,810 kilometers under the jurisdiction of the MoTC and 15,910 kilometers of urban, rural, agricultural industrial and other roads. requires either periodic maintenance or rehabilitation. The Government, with the assistance of donors, has been focusing on rehabilitating key links of the road network that are of regional and national importance and carry the majority of the road-based traffic. It is in this context that the Project is financing the rehabilitation of about 32 kilometers (kms) of the Osh-Batken-Isfana road, one of the key regional corridors. Through the rehabilitation of this road section traffic will be able to bypass foreign territories ( and Tajikistan) and their enclaves within the Kyrgyz Republic, which is at present a serious impediment to travel. The EBRD and EC are also contributing about US$45 million through parallel financing of other road sections along the same corridor.

The road network of the city of Osh is managed by its Urban Roads Department, which is in charge of maintenance and construction of paved and unpaved streets and associated drainage structures, including bridges and side drains. This department consists of eight staff, including five engineers. The urban network of roads is about 520 km long, out of which 320 km of roads are paved and about 200 km are earth or gravel roads. Except for a few central main streets, the network is in poor condition. This is mainly due to the lack of maintenance funding over many years. The municipal budget for roads (including capital repair and maintenance costs) in Osh was KGS 29 million (about US$ 630,000) and KGS 18 million (about US$173,900) in 2008 and 2009 respectively. This remains inadequate for a city which has a population of 260,000 according to the 2009 census. Therefore, there is a need to undertake basic road maintenance activities, including repairs to potholes or area wide patching works, repair of old and poorly performing patched areas, restoration and repairs of storm water drains along streets, (re) graveling, edge repairs, repairs to concrete sidewalks, repairs to bridge railings, sealing of cracks, removal of crocodile cracking, and some limited replacement of base courses. A limited number of road sections may be beyond repair and may have to be reconstructed. It is estimated that to implement routine maintenance and repairs for the sections of the road network in the city of Osh for which repairs are justifiable should take no more than three years and could cost up to US$4.5 million.

In contrast, the city of Jalal-Abad has been providing more resources for its Urban Roads Department and the road network under its management is noticeably in better condition than that of its neighboring city, Osh. The AF will therefore focus on funding works related to the repair of roads in the city of Osh. A short road section in the greater Jalal-Abad vicinity (administrated by MoTC) is on the list of roads planned to be repaired under the proposed AF.

Some of the urban arteries and main roads within the city boundaries of Osh and Jalal-Abad are national roads that are owned, managed and maintained by the MoTC. The Regional Road Agency (RRA) of the respective oblast (region) is responsible for maintaining roads under the administrative responsibility of MoTC. RRAs have equipment to carry out resealing of paved roads with bituminous surface treatment. Timely intervention by RRAs has extended the life of some of the national roads, while others are too old to be improved by resealing only, and require strengthening by asphalt overlay. The RRA in Osh Oblast appears to be doing a reasonably good job with the limited funding available.

The activities of the RRA in Osh oblast has somewhat limited further development of the local construction industry in the region; there are nonetheless small contractors in Osh Oblast that are capable of undertaking asphalt overlay and other road works like the ones that would be needed to rehabilitate sections of the national road network managed by MoTC. Due to budget constraints the size of civil works contracts have been small in the past; the AF is therefore designed to accommodate the capacity constraint by adjusting the contract size to fit the financial capacity of the local contractors and by providing adequate technical supervision.2

2. Objectives

To reflect the scaled-up project activities, the Project Development Objective and the Results Framework of the ongoing project and the proposed Additional Financing are described below. The revised objectives of the Project are to: (i) contribute to the reduction of transport costs and travel time along the Osh-Batken-Isfana road corridor, (ii) improve road safety planning, and (iii) repair and rehabilitate road infrastructure in and around Osh and Jalal-Abad cities thereby creating temporary jobs.

Project Outcome Indicators: • Reduction in transport costs for road users by car along the project road section of the Osh-Batken-Isfana Road corridor (revised) • Reduction in travel time for road users by car along the project road section of the Osh- Batken-Isfana Road corridor and along the entire Osh-Batken-Isfana Road corridor (revised) • Proportional increase in traffic one year after project road section of the Osh-Batken- Isfana Road corridor has been improved or rehabilitated (revised) • Proportional increase in the number of rural people along the Osh-Batken-Isfana Road corridor who live within 2 kilometers of an all-season road (revised) • Increased effectiveness of road safety planning (no change) • Number of person-months of employment created (new)

Intermediate Results Indicators • Number of kilometers of roads rehabilitated along the Osh-Batken-Isfana Road corridor (revised)

• Number of kilometers of urban roads repaired in within the city of Osh (new)

• Number of kilometers of roads repaired in and around the greater Osh and Jalal-Abad city vicinities (new)

• Percentage of total classified road network in the project are in good and fair condition (percent) (no change)

• National Road Safety Program developed and launched ( number) (no change)

• Pilot demonstration projects on road safety along the corridor developed (number) (no change)

2 Some headquartered construction companies have Osh offices and might be interested, depending on the size of the civil works contracts. • Pilot demonstration projects on road safety along the corridor developed (number) (no change)

3. Rationale for Bank Involvement

The proposed AF is based on the findings of the Joint Economic Assessment published in July 2010, which confirmed the widespread damages and extensive economic dislocation. The country faces severe deficiencies in infrastructure: energy insecurity, poor road connectivity, and lack of basic infrastructure services at the local level. The current crisis has highlighted the need to improve infrastructure as a prerequisite for economic development of the country, promoting peace, security and social cohesion. While direct damage to transport infrastructure has been limited, the proposed AF would enhance the economic development of this relatively depressed region by providing an improved transport link for trade and temporary employment.

The Project in the amount of US$ 25 million equivalent was approved by the Board on November 3, 2009, and became effective on February 26, 2010. The project, aiming at rehabilitating about 32 kms of the Osh-Batken-Isfana road corridor and improving road safety planning at the national level, is being implemented satisfactorily.

On August 21, 2010 the Government of the Kyrgyz Republic requested the World Bank to provide additional financing to expand the implementation of the Project. The activities proposed under the AF would allow the Government to quickly implement road maintenance and repairs that would generate employment within a short time horizon. The proposed AF would be a very visible demonstration of the assistance that the international community could deploy in a rapid response to the recent events. Based on an assumption that about half of the road works to be supported would be relatively labor-intensive road maintenance, the additional financing would create an estimated 6,200 person-months of paid labor in an area where job markets are impacted by the recent events. Much of the employment to be generated would be for unskilled laborers, which would particularly benefit the poor and vulnerable, and about US$1.5 million in contracts could be put under implementation in the coming winter months, providing employment at a time when it would be most urgently needed.

4. Description

Project Activities The proposed AF would finance road repair and rehabilitation activities within and around the city of Osh and Jalal-Abad thereby creating employment in a region where substantial economic dislocation has recently occurred. The AF has the following three activities:

Activity 1: Repair and rehabilitation of road infrastructure (US$9.5 million equivalent) This will finance two types of civil works: (i) the repair of urban roads within the city of Osh; and (ii) rehabilitation of urban roads in and around the greater Osh and Jalal-Abad cities. This activity will also finance consultants’ services for the design and supervision of related civil works.

Repair of urban roads within the city of Osh. This activity will finance routine repairs of urban roads which are under the administrative responsibility of the city of Osh. The works would include pothole patching, crack sealing, edge repairs, sidewalk repairs and other minor rehabilitation. These works would also include rehabilitation of open canal urban storm water drains on a wide network of primary and secondary streets. These drains are located between the pavement and sidewalks and function as irrigation channels in some areas. These works would help preserve and/or slow the deterioration of the pavements until funds for periodic maintenance are available. These repair works would be carried out by small local contractors selected through competitive tenders under Term Maintenance Contracts. In the first phase, about three contracts are expected to be awarded by November 2010. This type of routine repair work could take place in the winter months and will involve low skill tasks, which would provide temporary supplemental income for many local residents. A second batch of contracts would be awarded in early 2011 with adjustments made based on experience from the first batch.

Since the proposed AF is processed on an emergency basis, there will be a phased approach to implementation. The Mid-Term Review of the Project (planned for no later than June 30, 2011) will be used to review the proposed activities, implementation status and associated costs. If funds are available, the resurfacing or rehabilitation of some Osh city roads might be possible. In order to do this equitably and with due consideration of the local sensitivities, a social assessment would have to be completed to identify roads for more extensive repair works.

In addition, the activity will finance technical assistance to assess the financing options for road maintenance activities by municipalities and the benchmarking of several different practices by different cities in the country in order to identify best practice and guidance for future financing of municipal road maintenance.

Rehabilitation of urban roads in and around the greater Osh and Jalal-Abad cities. This activity will finance the provision of works for the rehabilitation of urban roads that are in and around the greater cities and their immediate vicinity (including proposed rehabilitation of a road section in the city of Jalal-Abad). These roads are under the administrative responsibility of MoTC. There is a priority list of road sections with very poor riding quality that the Government has requested urgent resurfacing with asphalt concrete; seven road sections in and around the city of Osh and one around Jalal-Abad. Kyrgyzdortransproject, the local Design Institute, is currently preparing technical designs of some of these sections (financed from the general budget of the Kyrgyz Republic). These are expected to be ready for tendering in early 2011. Priority road sections include a section of the Osh-Batken-Isfana road corridor that enters the city of Osh and two adjoining sections of the Osh Ring Road that would reduce the traffic flow into the city.

Consultants’ services related to Road Works (US$0.5 million equivalent). This activity includes consultants’ services for the design, review of design, preparation of bidding documentation, technical support in bid evaluation, consultants’ services for construction supervision and social assessment.

Activity 2 will finance the provision of road safety goods and equipment, such as traffic cones, mobile traffic signs, reflective jackets, thermal plastic paint, illuminated medium strip (i.e. “cat’s eyes”). It will build on the Government’s Road Sector Development Strategy and build on the recent launch of the program of regular road safety audits, and finalization of a National Road Safety Program. These small-scale activities are seen to be a pilot project for the MoTC with the aim to expose them to international best practice.

Activity 3: Project Management and Implementation (US$ 0.3 million equivalent). Activity 3 will finance consultants’ services to assist the Project Implementation Unit (PIU) to develop and implement a communication strategy for the Project activities and incremental PIU project management costs. It will also include provision of goods, consultants’ services and incremental operating costs to support project management.

5. Financing Source: ($m.) RECIPIENT 0 International Development Association (IDA) 10 Total 10

6. Implementation

No changes are foreseen with respect to the institutional arrangements for the implementation of the Project as the Project Implementation Unit (PIU) within the Ministry of Transport and Communications (MoTC), the implementing agency of the Project, has been highly effective in managing projects financed not only by the World Bank, but also by the European Bank for Reconstruction and Development (EBRD), the Asian Development Bank (ADB), the European Commission (EC) and bilateral donors. The MoTC and the municipality of Osh will enter into an agreement to specify the implementation arrangements for the maintenance of the road network for which the city of Osh is responsible. There would be no co-financing from the Government or other donors. The closing date is being extended by six months, from June 30, 2013 to December 31, 2013.

7. Sustainability

There are several on-going technical assistance activities such as by Asian Development Bank which will help MoTC modernize its road asset planning and management systems so the Ministry could better prioritize its activities. In addition, there will be a technical assistance under the Additional Financing to explore the financing of road maintenance activities by municipalities and the benchmarking of several different practices by different cities in the country in order to identify best practice and guidance for future financing of municipal road maintenance.

8. Lessons Learned from Past Operations in the Country/Sector

Capacity of local contractors - to ensure active participation from local companies for the tendering of works to be financed under the Additional Financing, the size of the civil works packages will be sized to be within the local companies’ capabilities and that they will more easily meet the technical qualifications for tendering.

Difficulties for the local firms to obtain bank guarantees - The need for performance bond requirement may be omitted by the deduction of retention money of 5 percent from each payment certificate. The level of advance payment maybe adjusted so the need for advance payment guarantees is reduced.

9. Safeguard Policies (including public consultation)

The proposed AF does not raise the environmental category of the Project nor trigger any new safeguard policies. Activities proposed for the AF would likely have relatively minor environmental impacts that could be readily addressed through known technologies and managed by local agencies with adequate capacity. Proposed civil works include primarily resurfacing of existing roads without widening or change of alignment, as well as providing routine maintenance (e.g., filling potholes, sealing cracks, clearing drainage). Such activities are unlikely to induce significant environmental change, but do require measures to control adverse environmental impacts associated with the work phase itself (e.g., noise, dust, runoff, and disposal of waste).

An Environmental Impact Assessment (EIA) was prepared in the parent project, containing an Environmental Management Plan (EMP) which pertains to the entire Osh-Isfana road corridor, has become part of the works contracts and is implemented for the existing road improvement project. While the existing EIA and EMP fully cover all potential impacts which may be caused by the activities planned under the additional financing, site specific EMPs will be prepared and included in the bidding documents and works contracts. Due to the simplicity of the works the use of simplified EMP formats for low impact type roads works has been agreed on.

OP 4.12 is not triggered for Additional Financing. Selection criteria for road improvement works will eliminate new construction, road widening or changes of alignment from project support under the Additional Financing. Screening will be undertaken to ensure that no loss of land or access to resources will occur as a result of the project.

Safeguard policies triggered: Environmental Assessment (OP/BP 4.01) [X]Yes [ ] Yes Natural Habitats (OP/BP 4.04) [ ]Yes [X] No Forests (OP/BP 4.36) [ ]Yes [X] No Pest Management (OP 4.09) [ ]Yes [X] No Physical Cultural Resources (OP/BP 4.11) [ ]Yes [X] No Indigenous Peoples (OP/BP 4.10) [ ]Yes [X] No Involuntary Resettlement (OP/BP 4.12) [ ]Yes [X] No Safety of Dams (OP/BP 4.37) [ ]Yes [X] No Projects on International Waters (OP/BP 7.50) [ ]Yes [X] No Projects in Disputed Areas (OP/BP 7.60) [ ]Yes [X] No

10. List of Factual Technical Documents

• Joint Economic Assessment Report, July 2010 • United Nations Flesh Appeal, July 2010 • Report of the Kyrgyz Government Commission on Assessment of Damaged, July 2010 11. Contact point Contact: Elizabeth C. Wang Title: Senior Financial Officer Tel: (202) 473-1346 Fax: Email: [email protected]

12. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-4500 Fax: (202) 522-1500 Email: [email protected] Web: http://www.worldbank.org/infoshop