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ASIAN DEVELOPMENT BANK PCR: BAN 22237
PROJECT COMPLETION REPORT
ON THE
JAMUNA BRIDGE PROJECT (Loan 1298-BAN[SF])
IN
BANGLADESH
December 2000 CURRENCY EQUIVALENTS
Currency Unit – Taka (Tk)
At Appraisal (31 January 1994)
Tk1.00 = $0.0249 $1.00 = Tk40.07
At Project Completion (30 June 2000)
Tk1.00 = $0.0197 $1.00 = Tk50.85
ABBREVIATIONS
AADT – annual average daily traffic ADB – Asian Development Bank EFAP – erosion and flood action plan EIRR – economic internal rate of return EMAP – environmental management action plan ICB – international competitive bidding IRP – independent review panel JMBA – Jamuna Multipurpose Bridge Authority NGO – nongovernment organization O&M – operation and maintenance OECF – Overseas Economic Cooperation Fund PAPs – project-affected persons PCRM – Project Completion Review Mission POE – panel of experts RRAP – revised resettlement action plan TA – technical assistance
NOTES
(i) The fiscal year (FY) of the Government ends on 30 June. (ii) In this report, “$” refers to US dollars.
CONTENTS
Page
BASIC DATA ii
MAP vi
I. PROJECT DESCRIPTION 1
II. EVALUATION OF IMPLEMENTATION 2
A. Project Components 2 8. Implementation Arrangements 3 C. Project Costs and Financing Plan 3 D. Project Schedule 4 E. Engagement of Consultants and Procurement of Goods and ~ervlces 4 F. Performanceof Consultants,Contractors, and Suppliers 5 G. Conditionsand Covenants 5 H. Disbursements 5 I. Environmentaland Social Impacts 5 J. Performanceof the Borrowerand the Executing,A.gency 6 K. Performanceof the Asian DevelopmentBank 7
III. EVALUATION OF INITIAL PERFORMANCE AND BENEFITS 7
A. Financial Analysis 7 B. Economic Performance 7 C. Attainment of Benefits 8
IV. CONCLUSIONS AND RECOMMENDATIONS
A. Conclusions 8 B. Lessons Learned 9 C. Recommendations 9
APPENDIXES 11 BASIC DATA
A. Loan Identification
1. Country - Bangladesh 2. Loan Number - 1298 3. Project Title Jamuna Bridge Project 4. Borrower - People's Republic of Bangladesh 5. Execuitng Agency - The equivalent in various currencies of SDR145.607 million ($200.0 million equivalent) from the Asian Development Bank's (ADB's) Special Funds resources. 6. PCR Number - PCR: BAN 597
B. Loan Data
1. Appraisal - Date Started - 06 September 1993 - Date Completed - 20 September 1993
2. Loan Negotiations - Date Started - 12 January 1994 - Date Completed - 13 January 1994
3. Date of Board Approval - 08 March 1994
4. Date of Loan Agreement - 18 March 1994
5. Date of Loan Effectiveness - In Loan Agreement - 16 June 1994 - Actual Number of - 12 August 1994 Extensions 6. Closing Date - In Loan Agreement - 30 June 1999 - Actual - 30 June 2000 - Number of Extensions one 7. Terms of Loan - Maturity (no. of years) - 40 - Grace Period (no. of years) - 10 (service charge of one percent per annum)
8. Disbursements a. Dates
Initial Disbursement Final Disbursement Time Interval 05 October 1994 30 September 2000 (est.) 6 years and 1 month
Effective Date Original Closing Date Time Interval 12 August 1994 30 June 1999 5 years and 9 months iii b. Amount ($)
Original Latest Amount Undisbursed Component Category Allocation Allocation Disbur$ed Loa" Bala"ce
Civil Works 0301 167,315,067 168,302,975 191,353,844 -23,050.869 Consulting 2101 9,193,703 10,367,758 10,366,021 -1,123,896 Services Service Charge 6901 5,272,543 0 5,272,543 0 Unallocated 9301 27,621,610 0 0 26,390,105 Totala 209,402,922 209,207,747 206,992,408 2,215,339
a Disbursements as of 22 November 2000.
Local Costs (ADS-Financed) Amount ($ million) = 17.11 Percentage of Local Costs - 9.9 Percentage of Total Costs 2.3 c. Project Data ($ million
1. Project Cost
Appraisal
Civil Works 517.35 555.07 Consulting Services 27.00 29.70 Others 52.50 60.49 Contingencies 99.15 108.47 Total Cost 696.00 753.73
2. Financing Plan
Appraisal Actual
ADB 200.00 206.99 World Bank 200.00 199.11 OECF 200.00 200.00 The 96.00 147.63
ADS = Asian Development Bank, OECF = Overseas Economic Cooperation Fund. iv
3. Cost Breakdown by Project Component ($ million)
Appraisal Estimate Actual FX LC Total FX LC Total
ADB 1. Civil Works 159.52 25.83 185.35 175.43 15.92 191.35 2. Consulting Services 8.15 1.27 9.42 9.15 1.19 10.34 3. Service Charge 5.23 5.23 5.30 5.30 Subtotal (A) 172.90 27.10 200.00 189.88 17.11 206.99 World Bank 1. Civil Works 190.30 189.10 2. Consulting Services 9.70 10.01 Subtotal (B) 200.00 199.11 OECF 1. Civil Works 190.30 190.30 2. Consulting Services 9.70 9.70
Subtotal (C) 200.00 200.00
. FX = foreign currency, LC = local currency.
4. Project Schedule
Appraisal Estimate Actual
Civil Works Contracts - Date of Award Feb 1994 14 May 1994 - Completion of Work June 1998 20 June 1998
D. Data on Bank Missions No. of No. of Specialization Name of Mission Date Persons Persondays of Membersa Fact-Finding 14-26 June 1988 6 13 a,c,d,e Inception 23-25 August 1988 2 3 a,c Supplementary Study 21-25 October 1988 2 5 a,c .' Follow-up Fact-Finding 27-31 March 1989 3 5 a,c,e Review 9-16 November 1989 5 7 a,c,e Review 10-12 December 1989 4 3 a,c,e Review 14-17 May 1990 5 4 a,c,d,e Fact-Finding and Pre- 30 July-1"7August 1990 6 19 a,b,c,d,e Appraisal Consultation 6-10 September 1990 2 5 a,e Cofinanciers' Meeting 27-29 April 1992 1 3 a Cofinanciers' Meeting 5-7 August 1992 2 3 a,e
~ v
Cofinanciers' Meeting 18-19 August 1992 1 2 a Appraisal 6-20 September 1993 7 14 a,b,c,d,f,h Loan Negotiations (WB) 29 November 1993 1 1 a Loan Negotiations (ADB) 12-13 January 1994 3 2 a,b,e Project Launch Workshop 16-19 April 1994 3 4 a,b,d First Milestone Meeting 24-26 January 1995 1 3 a Review 08-14 March 1995 1 7 a Cofinanciers' Meeting 11-14 March 1995 1 4 a Second Milestone Meeting 27-29 April 1995 1 3 a Third Milestone Meeting 20-22 June 1995 1 3 a Cofinanciers' Meeting 28 June 1995 2 1 a Cofinancers' Meeting 22 August 1995 2 1 a Fourth Milestone Meeting and Cofinanciers' Meeting 5-9 October 1995 1 5 a Fifth Milestone Meeting and Cofinancers' Meeting 24-25 March 1996 2 2 a, C Sixth Milestone Meeting 10-12 July 1996 3 3 a,c Seventh Milestone Meeting 8-10 December 1996 6 3 a,c,h Review 30 Nov - 5 Dec 1996 1 6 a Midterm Review 3-10 March 1997 3 7 a,c,h Eighth Milestone Meeting 7-9 October 1997 4 3 a,h Ninth Milestone Meeting 22-24 March 1998 1 3 a Inauguration 28 June 1998 2 1 a,c PCR Mission 3-11 May 2000 3 9 a,9
ADB = Asian Development Bank, PCR = Project Completion Report, WB = World Bank.
a a = engineer, b = counsel, c = economist, d = procurement specialist/consultant, e = programs officer, f = control officer, 9 = project assistant, h = social development specialist. .
. I. PROJECT DESCRIPTION
1. The Jamuna River, which is one of the world's largest rivers, physically divides Bangladesh into two halves, the east and the west. The eastern half of the country is more developed than the western half, partly because of its access to the capital Dhaka and to international markets through Chittagong port. The western half, which has fertile agricultural land with higher average yields for major crops than the rest of the country, is dependent on agriculture as the dominant sector of the economy. A higher proportion of poor people live in the western half; particularly in northwestern of Bangladesh, which has a population of about 30 million.
2. Until the project bridge was constructed,the Jamuna River was crossab/emainly by ferries and to a lesser extent by launchesand manuallyoperated boats. The ferries for road and railwaytransport were both grossly inadequatein terms of capacity and service levels. The use of outdated, costly, and unreliableferry serviceshad led to frequent and extensive delays at ferry crossings, resulting in high transport costs for passenger and freight movements.1These problems were compoundedby increased risk during the monsoon periodfrom May to October. Becauseof these limitationsand prevailingtransport constraints, the economic potential of the areas on both sides of the Jamuna River had not been fully utilized. The absence of a permanentJamuna River crossinghad constrainedeconomic and social development in Bangladesh,particularly on the western side, and had exacerbated regional disparities.Although the Governmenthad for sometimeaccorded a high priority to establishinga permanentcrossing, it had not built a bridge, mainly becauseof its high cost, related to the width of the river, its flow volume,depth, uncertaintyof its course, and other technical issues.
3. The main objective of the Project was to connect the eastern and western halves of the country, separated by the Jamuna River, and thus help stimulate economic growth by facilitating the transport of passengers and freight and the transmission of electricity, natural gas, and telecommunications across the Jamuna River more economically and efficiently. In addition, the Project was to establish a railway connection between the east and the west in a cost-effective manner.
4. Because of its expected major developmentimpact, the Project was accorded high priority by the Governmentof Bangladesh.The Project was also consistentwith the Asian DevelopmentBank's (ADB's) Country OperationalStrategy and transport sector strategy. It provided essential infrastructureand emphasizedthe strong links betweenpoverty reduction, good governance,and privatesector development.Due to the large size, complexity,and the large funding requirementsfor the Project, the Governmentsought assistance from ADB, OverseasEconomic Cooperation Fund (OECF)2,and World Bank.
5. The Project envisaged the construction of a bridge over the Jamuna River, about 7 kilometers (km) south of Sirajganj, with provision for road lanes, and capable of supporting an electric power interconnector, telecommunications cables, a gas pipeline, and a meter gauge railway. The Project comprised
(i) construction of a bridge 4.8 km long and 18.5 meter (m) wide to carry initially four road lanes with sidewalks and capable of supporting an electric interconnector, a gas pipeline, telecommunication facilities, and a meter gauge railway;
1 At times, 600 freight wagons waited up to 30 days at the railway ferry crossing. 2 OECF assistance has since been replaced by that from the Japan Bank for International Cooperation (JBIC). 2
(ii) construction of two viaducts,3 each about 128 m in length, connecting the bridge to the approach roads; (iii) construction of two guide bunds, each about 2.2 km long, and a flood protection bund on the east bank to regulate the river at the selected site; (iv) construction of two approach roads, one 16 km long to the east and the other 14 km to the west, with two-lane single carriageways with paved shoulders and provision for widening to dual carriageway; (v) measures to mitigate adverse project impacts on the environment; (vi) implementation of the resettlement action plan for project-affected persons (PAPs); and (vii) consulting services for project management, construction supervision and training of Government staff in the operation and maintenance (O&M) of the bridge.
6. The Jamuna bridge is the most expensive and technically one of the most challenging transport infrastructure projects ever attempted in Bangladesh. To implement the Project, the Government created the Jamuna Bridge Multipurpose Authority (JMBA) in 1985 and assigned it the responsibility of preparing and implementing the Project (para. 10). As an integral part of the Project, ADS also financed complementary follow-on investment projects4 to expand the road network on the east side of the Jamuna River and connect the separate rail networks on either side of the river.
II. EVALUATION OF IMPLEMENTATION
A. Project Components
7. The physical project components were generally implemented as envisaged at appraisal. The 4.8 km long bridge was constructed with four lanes for vehicles and included a dual gauge rail track.5 Dual gauge track was selected instead of the envisaged meter gauge track following indepth analysis under technical assistance (TA)6 provided by ADB. It was found to be the optimal solution for rail network development, thereby integrating the railway network in Bangladesh with the dominant broad gauge7 network in India. To protect the bridge, two guide bunds were constructed as envisaged at appraisal. The two constructed approach roads were connected with viaducts to the bridge. The bridge was also provided with an electric power transmission interconnector, a gas pipeline (separately funded), and telecommunications facilities.
8. The Project required the acquisition of almost 3,000 hectares of land in a country where land is scarce, affecting about 100,000 people. Due to the large scale and complexity of the Project, comprehensive social and environmental studies were carried out to mitigate its adverse environmental and social impacts, leading to the preparation of an environment management action plan (EMAP) and a revised resettlement action plan (RRAP). This was the first time that such plans were prepared for a large infrastructure project in Bangladesh.
3 Viaducts, guide bunds, and long approach roads were required because of the braided nature of the Jamuna River. It has a width of about 4 km in winter and as much as 30 km in summer and a depth difference of as much as 8 m between low and high water. While continuous shifting of channels takes place in the Jamuna River, its width and location will change unless forced to stay in channels established through river training works. 4 Loan 1478-BAN(SF): Jamuna BridgeAccess Roads Project, for SDR49,856,OOO($72 million), approved on 5 November 1996; and Loan 1561-BAN(SF): Jamuna Bridge RailwayUnk Project, for SDR80,670,OOO($110 million), approved on 2 October 1997. 5 Dual gauge involves the installation of a third rail, allowing both broad and meter gauge operations over the same set of tracks. 8 TA 2235: Fourth Railways,for $594,000, approved on 13 December 1994. 7 Broad gauge has a 1,676 milimeter distance between the rails. 3 Despite these efforts, a local nongovernment organization (NGO) submitted a complaint to the World Bank's inspection panel for alleged violations of the World Bank's operational procedures in the resettlement of PAPs living downstream and on upstream chars (temporary islands that are formed and submerged by changes in river direction and flow). Subsequent investigations showed that char PAPs had not been fully provided for in the RRAP. The Govemment then decided to compensate all those affected by erosion in the project impact area. In addition, a comprehensive char-specific erosion and flood action plan (EFAP) was prepared under the Project to supplement the existing EMAP and RRAP (paras. 23-24).
9. The consulting services for project management, construction supervision, and training of Govemment staff in the O&M of the bridge were implemented as envisaged at appraisal. Consultants were engaged to supervise the four civil works contracts and an internationally experienced management consultant was selected to provide project management support to JMBA in implementing all aspects of the Project. In addition, a panel of experts (POE) was formed, comprising leading domestic and international experts, to advise JMBA on all technical matters related to the Project. A chronology of the main events of project implementation is in Appendix 1.
B. Implementation Arrangements
10. The implementation arrangements followed those envisaged at appraisal. JMBA was designated as the Executing Agency headed by a secretary to the Government. It was staffed with senior professionals who worked with the consultants engaged for construction supervision and project management (para. 19). With the assistance of the consultants, JMBA established a monitoring system acceptable to ADB. The POE provided expertise and guidance on a range of technical matters to JMBA. In addition, a committee was established with representatives from ADB, OECF, and World Bank, which held regular meetings throughout the implementation of the Project. These implementation arrangements worked well and the regular meetings facilitated critical discussions, exchange of information, and decisions on key implementation matters. Appendix 2 shows the organization of JMBA.
11. The need for efficient day-to-day project administration called for the nomination of one of the Project's three funding agencies as the lead agency. The World Bank was assigned this role and it appointed one senior engineer who supervised the Project on a regular basis. ADB was consulted on major issues during the implementation of the Project and was actively involved in project administration (para. 28). c. Project Costs and Financing Plan
12. The total project cost at appraisal was estimated at $696 million equivalent, which was based on actual bid prices obtained under international competitive bidding (1GB). The estimated foreign exchange cost was $509 million (73 percent) and the estimated local currency cost was $187 million (27 percent). The estimate included 9.4 percent of the total base cost of the Project for physical contingencies. It provided for an annual price escalation of 3.1 percent for foreign exchange costs and 6 percent for local currency costs. The actual costs estimated by the Project Completion Review Mission (PCRM) were $753.7 million, with foreign exchange costs of $581.2 million (77 percent of total cost) and local currency costs of $172.5 million (23 percent of total cost)8. A summary of the project costs estimated at appraisal and the actual costs is shown in Table 1 (with further details in the Basic Data). - 4 Table 1: Summary of Project Cost Estimates at Appraisal and Actual Expenditures ($ million)
Foreign Local Total Local Total Component Exchange Cost Exchange Cost
A. Base Cost 1. Contract1 Main Bridge 178.97 41.43 220.40 183.70 39.00 222.70 2. Contract 2 River Training 207.20 36.85 244.05 231.61 38.00 269.61 3. Contract 3 & 4 Approach Roads 26.18 26.72 52.90 28.90 33.86 62.76 4. Consulting Services 22.68 4.32 27.00 27.30 2.40 29.70 25.00 a 5. Others 52.50 52.50 35.49 60.49 Subtotal (A) 435.03 161.82 596.85 496.51 148.15 645.26 B. Contingencies 1. Physical 45.33 10.87 56.20 2. Price 28.64 14.31 42.95 Subtotal (B) 73.97 25.18 99.15 84.67 23.80 108.47
13. The actual project cost was close to the cost estimated at appraisal. This was largely due to the extensive work carried out during the project preparation phase (paras. 37-38), including advance procurement actions with bids received at appraisal. In addition, JMBA, with the support of the consultants, POE, and three funding agencies, resolved a number of complex technical issues, such as the final location of the bridge, the need for extensive river training, and the risk of the guide bunds being washed away. The PCRM noted the unresolved contractual claims for which a provision of $25 million was included.
14. The financing arrangements were as envisaged at appraisal. ADS, OECF, and World Bank each provided a loan of about $200 million equivalent. The Govemment financed the balance of $147.6 million equivalent, which includes $25 million as allocation for pending contractual claims and $57.7 million more than expected at appraisal largely because of the increased costs of the river training and the approach roads.
Project Schedule ~
15. Project implementation was completed in June 1998 as envisaged at appraisal. This was a major achievement considering the large size and complex nature of the Project and the difficult environment, including severe hydrological conditions and short working seasons. A comparison of actual and appraisal implementation schedules is in Appendix 3.
E. Engagement of Consultants and Procurement of Goods and Services
16. The consultants for construction supervision and project management were recruited in accordance with ADS's Guidelines on the Use of Consultants. For reasons of efficiency and economy, the design consultants were retained for construction supervision, as provided for in the ADS guidelines.
~ 5 17. The four civil works contracts (for the bridge, river training, and the two approach roads) were awarded following Ice procedures in accordance with ADB's Guidelines for Procurement. The thorough project preparation phase, which included extensive technical and other studies, appropriate bid packaging, and preparation of high-quality bidding documents, contributed to the timely award of all contracts.
18. JMBA also decided to contract out toll collection and O&M for the bridge, awarding a five-year contract (1998 to 2002) in 1998. JMBA followed ICB procedures in awarding this contract. The selection process was not funded under the Project.
F. Performance of Consultants, Contractors, and Suppliers
19. The consultants engaged for both construction supervision and project management performed satisfactorily. The consultants to supervise construction played a critical role in coordinating the three civil works contracts, and ensuring appropriate quality in accordance with specifications and completion of works within the stipulated contractual time period. The management consultants provided day-to-day support to JMBA in the management of contractual matters and implementation of the RRAP, EMAP, and EFAP. The POE provided the requireq technical guidance as well as specific expertise on critical and complex technical matters.
20. The contractors performed satisfactorily. The bridge as constructed generally met specified performance requirements. The overall construction quality of all the works was in line with international standards and superior to similar projects in South Asia. The riding quality of the approach roads is excellent although that of the bridge itself is not as good because of the need to reduce the cost and the weight of the bridge. Construction problems encountered during project implementation included (i) cracks on the bridge deck and its pre- cast units, (ii) underwater subsoil problems that led to slope failures in the river training works, (iii) a need to redesign the east guide bund, (iv) delayed handover of the east bridge end area, and (v) slow progress in embankment construction. However, all these construction problems were resolved in a cooperative manner with the contractors and the consultants.
G. Conditions and Loan Covenants
21. Loan conditions and covenants were fully complied with (Appendix 4). The PCRM observed that more covenants targeting institutional development of JMBA would have been justified to sustain the developmental impact of the Project and JMBA's capacity to handle large infrastructure projects.
Disbursements
22. As a result of speedy project implementation, disbursements of the loan proceeds were somewhat quicker than the projections made at appraisal. Details of the annual disbursements of the loan are in Appendix 5. The original loan closing data was 30 June 1999, which was extended to 30 June 2000. While the Project was substantially completed in June 1998, the extension was necessary to accommodate, to the extent possible, the contractual claims for contract number 2 for river training works, which were settled through arbitration.
Environmental and Social Impacts
23. The Project was expected to have significant environmental and social impacts (para. 8), but the Government successfully implemented major measures to mitigate all adverse impacts. The EMAP was developed for implementation during the life of the Project. The identified measures included (i) mitigation of impact during construction, (ii) agricultural 6 development, (iii) mitigation of adverse impact on fisheries, (iv) wildlife protection, (v) social afforestation, (vi) water resources management, and (vii) improvements in health and sanitation. One major environmental issue that arose during construction of the bridge was the closing of the upstream Dhaleswari river channel. However, another channel was developed just south of the bridge to offset the impact of the Dhaleswari's closing.
24. To mitigate adverse social impacts of the Project, a comprehensive RRAP and an EFAP were implemented under the Project. These addressed the social concerns identified at the project formulation stage and the complaints raised by an NGO with respect to PAPs on chars (para. 8). It was the first time in Bangladesh that such a broad-based and comprehensive approach had been followed to mitigate adverse environmental and social impacts and it became a benchmark for future projects. : 25. In terms of social impact, the PCRM noted increased market and social activities on both sides of the bridge. In addition, new commercial and residential developments were identified along and beyond the approach roads to the bridge. The new bridge had also led to the introduction of new direct bus services linking northwestern Bangladesh to Dhaka and the Indian city of Calcutta. These bus links in turn contributed to new food services, local markets, and the development of new establishments along the highway leading to the northwestern side of the Jamuna River. The PCRM conducted a small survey (para. 36) on the social profile of bus passengers and people living near the bridge on both sides of the Jamuna River. The results from the survey indicate that (i) poor travelers appreciate the new bus services, which are perceived as more convenient and faster than the old ones; and (ii) local markets have developed on both sides of the bridge. More people and goods move across the Jamuna River now than before the bridge was in place.
J. Performance of the Borrower and the Executing Agency
26. The performance of the Government was highly satisfactory. On-lending the loan proceeds to JMBA and assigning JMBA the status of a Government department contributed to the good performance of both the Government and JMBA. The Government adopted a flexible approach, waiving some laws and regulations, and took a proactive approach in raising funds for the Project. In 1986, the Government introduced the Jamuna Bridge Surcharge and Levy Ordinance to fund project preparation and the subsequent construction. As part of project preparation efforts, in 1986 JMBA conducted a feasibility study with financing from the United Nations Development Programme (UNDP), followed by further technical and economic feasibility studies and subsequent recommendations on appropriate technical and engineering configurations. With the support of the three funding agencies, the Government ensured full implementation readiness by the time the loan became effective and supported advance actions for procurement and other preparatory work.
27. JMBA's performance was satisfactory. JMBA willingly accepted responsibility for , project implementation. JMBA played a key role in project preparation and implementation, providing the necessary focus and continuity within the Government. As the focal point, it also gave confidence to the three funding agencies to implement the Project. Staff turnover at JMBA was reasonable considering the usual high turnover of staff in Government offices. However, while JMBA was reasonably staffed, it had to rely on loan-financed TA to implement the RRAP, EMAP, and EFAP, and to handle contractual issues and disputes. Thus, the planned transfer of knowledge and skills did not occur fully because of the focus by the consultants on project implementation rather than training. Although the Project was completed largely on schedule in June 1998, there were still some contractual claims pending. This is not unusual given the complexity of the Project and the Government has taken actions to resolve these claims.
~ 7 Performance of the Asian Development Bank
28. ADB actively monitored the implementation of the Project. ADB staff followed a proactive approach. From 1994 to 1998, ADB fielded 4 review, 13 special loan administration, and 2 special consultation missions. ADB also took active part in a joint ADB- World Bank midterm review mission in March 1997. ADB pursued several important project issues, including the provision of dual gauge rail track on the bridge, and paid due attention to social development issues.
III. EVALUATION OF INITIAL PERFORMANCE AND BENEFITS
Financial Analysis
29. At appraisal, it was agreed that the Government would pursue a policy of cost recovery for the project, setting tolls that would not discourage bridge users.9 Based on a study on the structure and level of tolls, completed in mid-June 1997, the Government set tolls that were higher than envisaged at appraisal and more than sufficient to meet future debt-service obligations.1OSo far the revenues being generated from the bridge are in line with the toll study. The PCRM observed that the tolls had not had a negatively impact on traffic, which was higher than estimated at appraisal and should be able to generate an adequate level of revenue to cover operations and maintenance and debt servicing costs and have a surplus to create a reserve fund for emergency repairs for the bridge. A summary of the projected cash flow for the next 35 year-period is provided in Appendix 6.
B. Economic Performance
30. The PCRM recalculated the economic internal rate of return (EIRR) following the same methodology that was used at appraisal.11 The estimated EIRR was 16.8 percent, which is higher than the appraisal estimate of 14.5 percent, confirming the positive effects of the higher-than-estimated traffic on the bridge despite the higher tolls set by the Government. While this confirms the economic viability of the Project, it is also an important achievement in light of the controversy on this matter at the early stage of project formulation, which led to extensive economic analysis. An additional $25 million has been added as the projected cost increase based on an assessment of the outstanding claims. The economic benefits are expected to increase further when ADB-financed road and rail links (footnote 4) to the bridge are completed in 2002, and when impediments to cross-border road and rail traffic between India and Bangladesh are reduced and eventually removed. A summary of the results of the economic reevaluation is in Appendix 7.
31. The Project was generally implemented as envisaged at appraisal, achieving all its major physical and non-physical objectives. Substantial development impact is expected with the Project, providing improved connection is established to the Northwest of Bangladesh with over 30 million people, most of whom are poor. The PCRM noted that the Project is already generating increased economic development through reduced transport cost and improved access. Market developments were observed both on the east side of the Jamuna River toward Dhaka, and on the west side, near the bridge site and along the access road to
9 No financial internal rate of return was calculated at appraisal, reflecting the focus on economic benefits rather than financial returns, and because toll rates were to be determined during project implementation. 10 During initial operations from July 1998 to March 2000, actual toll revenue was Tk1, 063 billion which is higher than the Tk1,037 billion estimated at appraisal. The one-way total toll rates are: trucks, Tk1,OOO ($19.7); buses, Tk800 ($15.7); light vehicles, Tk400 ($79). In comparison the ferry rates in 1998 were: truck, Tk700; buses, Tk700; light vehicles, Tk270. 11 The recalculated EIRR followed the same methodology and led to the same results as in a similar project completion report prepared by the World Bank. 8 the bridge. The positive impact of the Project is evidenced in the higher-than-expected use of the bridge during the initial operations from June 1998 to December 1999. As observed, the bridge had 41 percent more traffic during the initial operations compared to the appraisal estimate. This is despite the relatively high tolls adopted by the Government to maximize financial return rather than economic benefits.
C. Attainment of Benefits
32. The Project achieved its objectives on time and largely within budget. The most important objective met by the Project was to connect the eastern and western halves of Bangladesh to foster economic development. Traffic on the project bridge is higher than anticipated, indicating the attainment of benefits beyond the expectation at the time of project appraisal. The Project was generally implemented as envisaged at appraisal. : 33. The Project is having a substantial development impact by providing improved connections to northwestern Bangladesh, with its more than 30 million people, most of them poor. The PCRM noted that the Project is already promoting economic development by reducing transport costs and improving market access. The positive impact of the Project is evident from the higher-than-expected use of the bridge from June 1998 to December 1999.
34. With the completion of ongoing ADB-financed road and rail links (footnote 4) to the bridge in 2002, and the expected improvement in border arrangements between Bangladesh and India, the bridge will fulfill its role as a critical transport link on the still incomplete Trans- Asian Highway and the Trans-Asian Railway. This will facilitate trade between Bangladesh, Bhutan, India, and Nepal and promote Indian transit traffic through Bangladesh.
35. With continued economic growth in Bangladesh and growing subregional cooperation, cross-Jamuna traffic is expected to increase further, bringing economic benefits and make subregional cooperation easier and more attractive. The Project will strengthen trade opportunities and support the development of improved transport networks for the efficient flows of services and goods, including improved access to the northwestern region of Bangladesh.
36. The small survey conducted by the PCRM confirmed increased travel and perceived benefits for the poorer groups of people traveling by bus and living on both sides of the bridge. Some of these perceived benefits are improved services, greater access, and reduced travel times. The PCRM also noted increased commercial activities along and near the access roads to the bridge on both sides of the river. These include new restaurants, food stalls, shops, car service centers, and gas stations.
IV. CONCLUSIONS AND RECOMMENDATIONS , A. Conclusions
37. The Project has been satisfactorily implemented and is rated highly successful. The main objective of the Project has been met, connecting the eastern and western parts of the country, separated by the Jamuna River, through a fixed link. The Project will stimulate economic growth by facilitating the transport of passengers and freight and the transmission of electricity, natural gas, and telecommunications across the Jamuna River more economically and efficiently. In addition, a dual gauge rail track has been provided on the bridge in a cost-effective manner. Without the Project, Bangladesh would have continued its ferry operations with high O&M costs and loss of lives due to frequent floods and overloaded boats. In addition, 30 million people living in the northwestern part of Bangladesh would not have enjoyed easy access to the eastern side of Bangladesh. There would also had been
~ 9 less passenger and freight traffic across the Jamuna River resulting in lower induced benefits. Given the large size and complexity of the Project, involving three funding agencies, the project performance demonstrates the importance of preparatory work. For the Project, this included project planning, design, procurement, early attention to environmental and social measures, detailed implementation arrangements, and a strong Government commitment demonstrated by advance actions. The Project also shows the general capability of the Government to implement large and complex projects with many stakeholders, given the strong support of the three project financiers.
B. Lessons Learned
38. The good project implementation performance confirms that ADB, to the extent possible, should insist on commitments, advance approvals, and actions by the Government before loan negotiations. Project preparatory and advance actions were crucial for speedy implementation of the Project. It is also critical to have a capable executing agency with strong project management skills supported by good consultants for the successful implementation of large and complex projects of this nature. Proactive ADB involvement with frequent missions is necessary to resolve implementation issues, that may arise during project implementation. To maximize and sustain development impact, more attention and resources should be invested in the capacity building and institutional development of the executing agency.
39. The major factors that contributed to the successful implementation of the Project were (i) good quality at entry with sufficient preparatory work (advance actions for design, prequalification of contractors, procurement of civil works, recruitment of consultants, and Government approvals); (ii) clear development objectives with well-defined project components; (iii) the Government's strong sense of ownership and commitment to the Project and its provision of adequate counterpart funding and resources; (iv) good partnerships and clear roles among the Project's three funding agencies; (v) good implementation arrangements and an executing agency which was strengthened with consultants' inputs; (vi) strong supervision and project management with adequate resources (ADB, OECF, World Bank, the Government, and consultants); (vii) early identification of social and environmental measures, preparation of suitable project components, albeit slightly delayed; and (viii) engagement of NGOs in implementing the RRAP, EMAP, and EFAP.
C. Recommendations
1. Project-related
40. During project preparation, a participatory approach should be adopted involving all stakeholders. Preparation of environmental and social mitigating measures should be given high priority and be part of the project.
41. To expand the Project's development impact and ensure medium-term sustainability, further ADB involvement in the transport sector is warranted, subject to a strong continued commitment to reforms by the Government.
42. The preparation of a project performance audit report should await the completion and the initial operation of ADB-financed road and railway links (footnote 4); it could be prepared in 2003. 10 2. General
43. To expedite the implementation of projects, ADS should insist that the Government establish project implementation arrangements before loan negotiations. Projects should be designed with sufficient attention and resources for project preparation to ensure the project preparedness. A single project management and coordination unit and a monthly progress monitoring system should be established.
44. Projects of a similar nature should be designed with a separate component for the capacity building of the executing agency with sufficient training and institutional development, including social and environmental aspects.
45. Project design should further address expected impacts on poverty and contain a : methodology and procedure for collecting and analyzing data required for the evaluation of such impacts and benefits, particularly on the poor. As part of this work, interviews, surveys, and other types of activities should be included.
~ 11
APPENDIXES
1 Chronologyof Main Events 12 3,9
2 JMBA Organization and Project Supervision Arrangements 17 3,10
3 Implementation Schedules 18 4,15
4 Status of Compliance with Loan Covenants 19 5,21
5 Disbursement Schedule 21 5,22
6 Cash Flow Projection for the Jamuna Bridge 22 7,29
7 Economic Reevaluation 23 7,30 12 Appendix 1, page 1
CHRONOLOGY OF MAIN EVENTS Loan 1298-BAN(SF): Jamuna Bridge Project
DATE MAIN EVENTS
14-26 June 1988 Reconnaissance Mission. 23-25 August Inception Mission. 28 September Draft prequalification report received. 15 October General procurement notice published in Development Business. 06 October Advance procurement action approved. 21 October Supplementary Mission fielded. .. 31 October Specific notice published in Development Business.
29 January 1989 Draft tender documents received by the Asian Development Bank (ADB) for Contract 1 - bridge and approach viaduct; contract 2 - river training works and reclamation; contract 3 - east road approach and contract 4 - west road approach received. 30 January Draft bidding documents for contract I submitted for review to ADB. 15 February Draft design report for river training works - vol. II submitted for review to ADB. 3 March Environmental impact assessment report and draft final feasibility report, phase II study, received by ADB. 27-31 March Follow-up Fact Finding Mission fielded. 28 April Prequalification evaluation report for the four contracts received and reviewed by ADB. 10May Procurement committee meeting approved the prequalification of civil works contracts. 29 August The final feasibility study report recommended the construction of a road-cum-rail bridge including a east-west power interconnector. 9-16 November Review Mission fielded. 7 November Draft Letter of Invitation to Project Management and Construction Supervision Consultant received. 10-12 December Review Mission fielded. 31 January 1990 Notice to proceed with the final design. . 1 March Draft terms of reference and letters of invitation for construction supervision firm and management consultants received. 13 March List of prequalified contractors for Contracts 1, 2, 3, and 4 received by ADB. - 14-17 May Cofinanciers' meeting in Washington, DC to discuss costing and implementation arrangements. It was also agreed that RPT/Nedeco/BCL would be retained as consultants for technical supervision of the Project. 14 May Submission of final design reports and tender documents for Contract 3: East Road Approach. 18May Submission of final design reports and tender documents for Contracts 1, 2, 3, and 4.
~ 13 Appendix 1, page 2
22 May Shortlistedfirms for the management consultants received by ADB. 19 July Draft letter of invitation and terms of reference for construction supervision and project management consultants received by ADB. 19 July Strategy Report on the Resettlement Study completed. 30 July-17 August Fact-Finding/Pre-Appraisal Mission fielded. 31 July Advance action on the recruitment of consultants and retroactive financing approved by ADB Management. 31 August Consultants' selection committee meeting approved the shortlist and draft invitation documents for the construction supervision and project management consultants. 6-10 September ADB held discussions with the World Bank on the rail link on the bridge. 11 December ADB approved the list of prequalified contractors for Contracts 1, 2, 3, and 4.
06 February 1992 ADB and the World Bank approved a new re-prequalification for contractors. 26 February Draft prequalification of contractors received by ADB. 16 March General Procurement Notice as well as the Specific Notice published in the Development Business for the re- prequalification of contractors. 27-29 April Cofinanciers' meeting in held in Washington, DC. 30 June Bid opening for Contracts 1 and 2. 26 July Executing Agency approved the prequalification shortlists and evaluation prepared by consultants for the four civil works contracts. 30 July ADB received the report on evaluation of renewed prequalification for Contracts 1-4. 5-7 August Cofinanciers' Meeting in held in Washington DC. 18-19 August Cofinanciers' Meeting held in Tokyo. 28 August ADB Board Paper on Advance Procurement Action and Flexibility in Tender Documents to Permit Joint Financing with World Bank. 3 September Management review meeting. 6 -20 September Appraisal Mission fielded. 13 September ADB Management approved circulation of summary environmental impact assessment (SEIA). 15 September ADB received tender documents for Contracts 1, 2, 3 and 4. 13-15 October Pre-bid conference for Contracts 1, 2, 3, and 4. 29 November Loan negotiations between the World Bank and the Government.
7 January 1994 Loan and technical assistance coordination committee meeting. 12-13 January Loan negotiations held in Dhaka. 28 February Procurement committee meeting approved award of contracts 1 - Hyundai Engineering and Construction Co. JV Korea, 2 - Ham-VOA Joint Venture The Netherlands, 3 - Samwhan Corp, and 4 - Samwhan Corp. 8 March Loan approval. 14 Appendix 1, page 3
18 March Loan signing. 16-19 April Project launch workshop held in Dhaka. 10May ADB approved direct negotiations with construction supervision consultants, RPT-Nedeco-BCL. 10 August Appointment of management consultants, finalized and signed. 12 August Loan declared effective. 18-29 September Joint supervision mission held in Dhaka. 21 December Cofinanciers' monitoring committee meeting held in Dhaka.
24-26 January 1995 First Milestone Meeting held in San Francisco, USA. 7 March Retroactive financing from $20.0 million to $31.5 million approved by ADB. 11-14 March Cofinanciers' monitoring committee meeting held in Dhaka. 15 April ADB received a copy of the position paper on the Fisheries Mitigation Plan. 19 April Cofinancier's Monitoring Committee Meeting held in Dhaka. 24 April ADB received a copy of the terms of reference for Fisheries Mitigation Plan - Fish Culture Development, from World Bank. 27-29 April Second Milestone Meeting held in Nijmegen, Netherlands. 5-25 May World Bank Resettlement Mission. 20-22 June Third Milestone Meeting held in Washington DC, USA. 21 June ADB received a copy of Jamuna Multipurpose Bridge Project (Land Acquisition) Ordinance of 1995, which was approved by the Government of Bangladesh. 31 July World Bank Environmental Management Action Plan (EMAP) Mission. 22 August Cofinanciers' monitoring committee meeting held in Dhaka. 5-9 October Fourth Milestone Meeting and Cofinanciers Review Mission meeting held in Dhaka. 30 December Signing of the contract for Plantation and Social Afforestation (Group 1- Plantation along Flood Embankment, East Side), a subcomponent of Environment Managemnt Action Plan.
03 January 1996 ADS had no objection to the constitution of an independent review panel (IRP) and sharing the funding with Overseas Economic Cooperation Fund (OECF). 15 January Polli Unnayon Andolon (ROM) was awarded contract as nongovernment organization (NGO) for the implementation of the Revised Resettlement Action Plan (RRAP). . 16 January Signing of Minutes of Understanding (MOU) between Jamuna Multipurpose Bridge Authority (JMBA) and Department of Fisheries (DOF) for the fisheries survey and monitoring of EMAP. 24-25 March Fifth Milestone Meeting held in Bangkok. 15May ADB approved processing of a small-scale technical assistance (SSTA) project in the amount of $50,000 to finance a midterm review to be carried out by an independent panel of experts (more particularly on the EMAP and RRAP components), the cost of which was to be equally shared by the cofinanciers of the Project.
~ 15 Appendix 1, page 4
6 June Amended terms of reference of the IRP presented by the World Bank to be funded by ADB, OECF, and World Bank. 10-23 June World Bank Resettlement Mission fielded to supervise the implementation of the RRAP. 8-14 July Review Mission fielded. 10-12 July Sixth Milestone Meeting held at the bridge site. 16-26 August IRP for EMAP and RRAP's mission set up. 15 September ADB received a copy of Guidelines for Compensating Erosion and Flood Affected Persons (EFAP). 20 September ADB received the final draft of Management Response to Inspection Panel. 15 October ADB received the draft final report of the IRP on EMAP and RRAP. 30 Nov-5 Dec Review Mission fielded. 8-10 December Seventh Milestone Meeting held at the Project Site.
24 February 1997 Final report of the IRP received by the ADB. 03-10 March Midterm Review fielded. 8 March Workshop for the implementation of RRAP and Erosion and Flood Affected Persons Policy (EFAP). 13 March ADB received the procurement notice for the operation and maintenance (O&M) and tolling contracts. 2 April ADB approved the extension of the management consultant's environmental advisor from 30 June 1997 to the end of the project. 8 April Specific Notice for publication in the Development Business and ADB Business Opportunities (ADBBO) for O&M and tolling contracts approved by ADB. 16 April ADB approved a change in the loan financing percentage for the civil works contract from 30.10 to 26.21 percent (foreign currency) and reduction of the local currency financing to zero effective 30 April 1997. 15 July Draft final report on Jamuna Bridge Project, Meter Gauge and Broad Gauge Loading received by ADB to determine whether the bridge can accommodate broad gauge operations. 22 June OECF has no objection to the draft prequalification documents for the O&M. 7-9 October Eighth Milestone Meeting held at Bhuapur Site, Dhaka. 23 October ADB received request for approval of revised contract amount for contracts 1, 2, 3 and 4 (civil works). 12 November ADB received request for publication of a notice in the ADBBO and United Nations Development Business for the Bangabandhu Bridge Tourism Development Project. 19 December TA 2725-BAN: Jamuna Bridge Train Configurations, for $100,000, approved by ADB.
22 February 1998 The toll rate was announced effective from the date of inauguration of the Bangabandhu Bridge. 22-24 March Ninth and last Milestone Meeting was held at the project site. 6 April ADB received a request from the Government on the increase of ADB financing percentage along with the other cofinanciers 16 Appendix 1, page 5
from 26.21 to 36.50 percentfor all the civil works contracts effective from the work certified for March 1998. 29 May ADB approved the Borrower's request to increase the loan financing percentage from 26.21 to 36.50 percent for all civil works contracts effective from 1 March 1998 (foreign currency 36.50%, local currency cost zero percent). 08 June OECF advised JMBA of some unresolved claims by the contractors. 23 June Inauguration of the Bangabandhu Bridge. 28 July JMBA advised that negotiated settlement of claims should be discussed at a mini-milestone meeting. , 4 August World Bank advised that cofinanciers are willing to provide funding for appointment of expert to reach a fair settlement of claims. 4 August Samwhan Corporation was successful for Contracts 3 and 4 in an arbitration award dated 10 July 1998 rendered by the Arbitral Tribunal of International Chamber of Commerce. 12 August JMBA advised that it would not be possible for them to prepare all position papers by end August 1998. 3 September ADB received Inspection Panel report on the progress of implementation of EFAP.
02 February 1999 JMBA requested ADB's approval of payments of fees and other related expenses of the Facilitators and Queen's Counsel proposed to be appointed to settle the disputed claims under different contracts of the Project. 09 March ADB received copy of the Agreement for Facilitation Services for the forthcoming negotiations on settlement of outstanding financial claims of Contract 1. 27 April ADB approved funding for the facilitator and Queen's Counsel out of the undisbursed portion of the loan. 31 May Ministry of Finance requested for an extension of loan closing dated from 30 June 1999 to 30 June 2000. ADB approved the request for extension of loan closing date 23 July from 30 June 1999 to 30 June 2000.
3-11 May 2000 Project Completion Review Mission .
~ Appendix 2 17
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~ 19 Appendix 4, page 1
STATUS OF COMPLIANCE WITH LOAN COVENANTS
Covenant Status of Compliance
Covenant related to effectiveness of the Loan Agreement:
1. The Government will ensure the effectivenessof IDA and Complied with. The loan became OECF loan agreements. To accomplishthese (i) a subsidiary effective on 12 August 1994. agreementfor relendingmust be finalized; (ii) contractsrelating to construction supervision, project management, and monitoring of implementationof the RRAP and EAP must be signed; (iii) substantialprogress must be made in the purchase of replacement land for resettlement; and (iv) all necessary government action required to implement the RAP and EAP must be taken.
2. The Government's approval of Project Proformas for the Project as a whole, includingthe RAP and EAP.
Covenants related to Project Administration:
3. The Government will ensure that the Project is carried out Complied with. with due diligence and in conformity with sound administrative, financial, engineering, environmental, and road construction practices.
4. Make available funds, facilities, services, land, and other Complied with. resources required in addition to loan proceeds.
5. Maintain records and accounts adequate to identify the Complied with. goods and services and other items of expenditure financed from the loan proceeds.
6. JMBA will maintain separate accounts for the Project that Complied with. Audited Financial will have to be audited annually in accordance with sound Statement for FY99 submitted auditing standards by independent auditors acceptable to ADB on 11 May 2000. and should be furnished to ADB six months after the close of the fiscal year all in the English language.
7. Within one year of loan effectiveness, the Government will Complied with. Bridge Manage- take necessary action for the enactment of legislation to ment contractor appointed. empower JMBA to operate and maintain the bridge, implement the Bridge End Facilities Land Use Plan and collect tolls.
8. The Borrower will provide adequate initial working capital to Complied with. enable JMBA effectively to assume the operation and maintenance of the Jamuna Bridge upon its completion. ~
20 Appendix 4, page 2
9. Within one year of loan effectiveness, JMBA will control Complied with. and monitor construction activities and other land uses in the vicinity of the Bridge that might interfere with its construction, operation and maintenance and ensure safety of persons employed in the Project or using the project facilities.
10. Open and maintain in a commercial bank a bridge Complied with. Fund established emergency fund of at least $10 million equivalent and in in 1995. consultation with ADB replenish the said fund as and when required to meet the required expenditures.
11. Carry out midterm review of the Project. Complied with. Midterm Review Mission carried out on 3-9 March 1997.
12. Implement and monitor resettlement rehabilitation in Complied with. accordance with the Resettlement Action Plan including establishment and operation of a management information system.
13. Implement and monitor the Environmental Action Plan Complied with. Jncluding implementation of mitigation measures for the effects and closure of the northern intake of the Dhalashwari river.
14. Maintain with responsible insurers for insurance of the Instead of insuring the facilities project facilities to such extent and against such risks and in an an emergency fund has been amount consistent with sound practice. created out of the tolls collected from the bridge.
15. Take all necessary action required for preparing the Complied with. project proformas including the implementation of the RRAP and EMAP.
~ 21 Appendix 5
DISBURSEMENT SCHEDULE (Projected and Actual)
~ Projected Actual
1994 10.580 25.643 1995 58.700 78.905 1996 110.500 132.533 1997 155.680 179.373 1998 178.890 198.850 1999 200.000 201.870 2000 206.992 22
Appendix 6
CASH FLOW PROJECTION FOR THE JAM UNA BRIDGE (Tk million)
Total Return Year Total Costs Revenue Net Income (%) Cost Cover 1998 535.5 539 3.7 0.7 1.01 1999 389.8 632 242.0 38.3 1.62 2000 395.3 768 372.7 48.5 1.94 2001 481.7 836 354.4 42.4 1.74 2002 607.9 906 297.9 32.9 1.49 I 2003 731.6 1,069 337.8 31.6 1.46 2004 1,103.1 1,153 50.3 4.4 1.05 2005 1,333.8 1,244 (90.3) (7.3) 0.93 2006 1,368.0 1,314 (54.2) (4.1) 0.96 2007 1,463.9 1,390 (73.5) (5.3) 0.95 2008 1,348.4 1,611 262.4 16.3 1.19 2009 1,306.1 1,707 400.6 23.5 1.31 2010 1,323.3 1,807 484.0 26.8 1.37 2011 1,427.2 1,914 487.1 25.4 1.34 2012 1,574.0 2,029 454.9 22.4 1.29 2013 1,558.5 2,356 797.7 33.9 1.51 2014 1,701.8 2,498 796.0 31.9 1.47 2015 1,913.7 2,647 733.3 27.7 1.38 2016 2,020.2 2,807 786.9 28.0 1.39 2017 2,131.8 2,977 845.1 28.4 1.40 2018 2,058.8 3,464 1,404.7 40.6 1.68 2019 1,979.3 3,674 1,694.2 46.1 1.86 2020 2,006.5 3,897 1,890.1 48.5 1.94 2021 2,127.4 4,133 2,006.0 48.5 1.94 2022 2,294.9 4,384 2,089.2 47.4 1.91 2023 2,231.2 5,109 2,877.4 56.3 2.29 2024 1,893.9 5,420 3,526.6 65.1 2.86 2025 1,606.9 5,749 4,142.4 72.1 3.58 2026 1,650.9 6,046 4,395.3 72.7 3.66 2027 1,767.0 6,356 4,589.1 72.2 3.60 2028 1,682.7 7,346 5,662.9 77.1 4.37 2029 1,591.3 7,720 6,128.6 79.4 4.85 2030 1,615.8 8,118 6,502.0 80.1 5.02 2031 1,742.3 8,476 6,733.8 79.4 4.86 2032 1,920.0 8,974 7,053.7 78.6 4.67 2033 1,645.7 9.436 7,789.8 82.6 5.73
Additional details:
Total Costs: Operation & maintenance plus debt service (principal plus interest). Total Revenue: Road tolls plus other revenue streams. Net Income: Total revenue minus total costs. Return: Net income over total revenue. Cost Cover: Total revenue over total costs. Assumptions: Taka depreciates by about 2 percent a year against the US dollar; toll revenues are increased by about 10 percent every 5 years; and nontoll rates are as per negotiated rates.
Source: Mission estimates.
~ 23 Appendix 7 f page 1
ECONOMIC REEVALUATION
General
1. The methodology of the economic reevaluation was similar to that used at appraisal. The Project Completion Review Mission (PCRM) used the latest project data available.1The actual project implementation period followed the estimated one at appraisal.
B. Economic Costs
2. The capital costs were expressed in 1993 prices. All transfer items, such as local taxes and import duties, have been excluded. Price contingency provisions and interest and other charges during construction have also been excluded.
3. There is still some uncertainty regarding the final capital cost of the Project becauseof the large amountof outstandingclaims from the four major civil works contractors. To determine a reasonable estimate of the final cost of the Project, the reevaluation assumed an additional amount of $25 million equivalent for additional contractual claims. With this assumption, the financial cost of the Project reaches $754 million.
4. The local currency cost was converted to economic cost by applying a standard conversion factor of 0.89, as at appraisal, and the foreign exchange financial costs were converted to economic costs by using border prices. After adjusting the financial costs into economic costs, the final economic cost of the Project was estimated at $660 million, a 5.3 percent increase over the $627 million estimated at appraisal.
5. To reflect the increase in capital costs, the operation and maintenance (O&M) costs of the bridge and river training works were adjusted proportionally to the increase in capital costs and the expected increase in O&M requirements from the O&M contract. Thus, the resulting annual average O&M costs have been increased by 41 percent to $3.8 million, compared with the figures used at appraisal. c. Economic Benefits
6. Actual traffic data was obtained from the JMBA as well as from the Aricha- Nagabari Ferry crossing from the Bangladesh Inland Water Transport Corporation for the period June 1998 to December 1999. From the actual bridge-crossing traffic data, actual annualized average daily traffic (AADT) volumes were calculated using the same methodology applied at appraisal. The traffic data was also related to traffic growth rates from 1993 to 1997. These results are summarized in Table A7.1.
1 The data used by the PCRM was the same as used by World Bank staff when preparing a similar project completion report. 24 Appendix 7 I page 2
Table A7o1: Summary- of Traffic Development°Li9ht Total-
Appraisal Estimates Trucks Buses Vehicles Vehicles--000_'_- AADT in openingyear (1998) 1,093 340 196 1,629 Annual Growth rate (1993-1997) 6.6 % 6.6 % 8.2 % 7.5 % Actual at Project Completion AADT in opening year (1998) 920 799 575 2,294 Annual Growth rate (1993-1997) 3.6 % 24.1 % 32.7 % 18.1 %
Change in AADT (16 %) 135 % 193 % 41 % .. - - - .. ~. 'v
AADT = annual average daily traffic.
Source: World Bank estimates
7. The PCRM confirmed that the actual traffic volume at project completion was substantially higher than the estimate at appraisal despite somewhat lower truck traffic. In addition, the actual growth rate of truck traffic during 1993 to 1998 was lower than the appraisal estimates. The higher-than-expected traffic volumes of light traffic may be explained by (i) conservative estimates at appraisal of induced traffic, (ii) the relatively low toll for buses compared with the ferry tariff, (iii) more recreational visits to the bridge during the first year, (iv) time savings for passengers, and (v) reduced rates for crossings. The lower-than-expected truck traffic could be explained by (i) the relatively high toll level on trucks (Tk1,OOOper truck [one-way]) per bridge crossing as compared to Tk700 per ferry crossing), (ii) various incentive schemes to attract drivers to the ferry crossing, (iii) the reduced waiting time for truck traffic at the ferry crossing as a result of the large traffic diversion to the Jamuna Bridge, and (iv) the ongoing improvement of the Tangail-Dhaka road which is scheduled for completion in 2002.
8. The actual growth rates between 1993 and 1998 have been adopted as the growth rates up to mid-1998 in the revised economic analysis. Keeping in mind the conservative assumptions made at appraisal, the traffic forecast for 1998-2025 has remained the same as at appraisal at 5 percent. After 2025, traffic benefits were assumed constant, as was done at appraisal. As a result of the revised traffic volumes, the Project's economic internal rate of return (EIRR) was affected. The higher volume of passenger traffic was offset by the reduction in freight benefits because of lower truck traffic volumes.
9. At appraisal, benefits were also expected from the power transmission pylons on the bridge (for about $6 million) compared with a stand-alone power connector (for about $114 million). The saving was taken at appraisal for the net difference in economic costs for the power transmission across the river with and without the bridge scenario. This saving remained unchanged at project completion.
10. A gas pipeline was also fitted to the bridge to convey natural gas from the west to the east and for potential export. This followed the Government's decision to bring gas across the Jamuna River using the Jamuna Bridge for producing power on the western side in Siranganj until gas in commercial quantities is discovered and developed on the west side. As such, this energy benefit was quantified in terms of savings of consuming gas at the power plants instead of more costly imported oil as the alternative and 25 Appendix 7 I page 3 savings in power transmission lines from the power plant in the east to the Siranganj power plant in the west. The net economic cost savings were estimated at about $20 million from 1998 to 2000. However, since this component was not included in the original economic analysis, the economic reevaluation of the EIRR was also made without this benefit.
11. Following a similar methodology adopted at appraisal and using the revised data discussed above, it was estimated that the EIRR has improved to 16.8 percent (Table A 7 .2) compared with 14.5 percent estimated at appraisal. The PCRM analyzed changes in costs and estimated benefits. If the final cost increase (based on an increase of the final costs resulting from increased acceptance of claims to 50 percent instead of 33 percent), then the EIRR would be reduced from 16.8 to 16.2 percent. Without the gas pipeline benefit, the EIRR would be 15.3 percent. In the worst case scenario, where project costs increase by 20 percent and traffic benefits decrease by 20 percent, the EIRR would fall to 13 percent, but the Project would still remain viable.
D. Nonquantifiable Benefits 12. At appraisal, many substantial potential benefits to Bangladesh were not included because of the difficulties in quantifying those benefits. The high cost of freight traffic crossing the Jamuna River had created a physical barrier to trade across the river incurring heavy losses on both sides of the river. The elimination of this barrier by the bridge will lead to more efficient flow of services and goods within the country and stimulate economic development in the northwest of the country, which is relatively undeveloped and has 30 million people, many of whom are poor. Another benefit will come from expected increases in subregional traffic (road and railway), including transit from India through Bangladesh to eastern Indian states, which may reach 2-3 million tons per year. It is, however, uncertain when transit traffic may materialize and its benefits have not been included in the EIRR, following the methodology adopted at appraisal.
13. The multipurpose bridge with road and rail links and facilities for telecommunications, and power and gas transmission, will assist in bringing about a structural change in the economy, but this will take time. To address these development issues and maximize the impact of the bridge, there are a number of ongoing and planned initiatives supported by the Asian Development Bank. These include (i) preparing an area development plan for the northwest, (ii) developing an agricultural development master plan, (iii) financing key investments aimed at agricultural development, (iv) constructing the east access road to the Jamuna Bridge for traffic to and beyond Dhaka, and (v) constructing railway links to connect the country's two separate rail networks. The Japan Bank for International Cooperation and the World Bank are also supporting various initiatives and financing a number of projects in the transport sector on both sides of the Jamuna River. Appendix 7, page 4 26
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