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RRP: Tajikistan: Central Asia Regional Economic Cooperation Report and Recommendation of the President to the Board of Directors Project Number: 46543 August 2013 Proposed Grant Republic of Tajikistan: Central Asia Regional Economic Cooperation Corridors 3 and 5 Enhancement Project This document is being disclosed to the public prior to Board consideration in accordance with ADB’s Public Communications Policy (PCP) 2011 after excluding information that is subject to exceptions to disclosure set forth in the PCP. Subject to any revisions required following Board consideration, this document is deemed final. CURRENCY EQUIVALENTS (as of 15 July 2013) Currency unit – somoni (TJS) TJS1.00 = $0.2098 $1.00 = TJS4.7669 ABBREVIATIONS ADB – Asian Development Bank AH – Asian Highway CAREC – Central Asia Regional Economic Cooperation EIRR – economic internal rate of return IEE – initial environmental examination km – kilometer MOT – Ministry of Transport PIU – project implementation unit NOTE In this report, “$” refers to US dollars. Vice-President X. Zhao, Operations 1 Director General K. Gerhaeusser, Central and West Asia Department (CWRD) Director X. Yang, Transport and Communications Division, CWRD Team leader Z. Wu, Transport Specialist, CWRD Team members N. Djenchuraev, Environment Specialist, CWRD D. Hill, Senior Transport Specialist, CWRD G. Jurado, Operations Assistant, CWRD M. Mamayson, Associate Project Analyst, CWRD V. Medina, Social Development Specialist (Safeguards), CWRD F. Nuriddinov, Project Officer, CWRD D. Perkins, Counsel, Office of the General Counsel S. Soetantri, Transport Specialist, Regional and Sustainable Development Department J. Stickings, Senior Social and Gender Development Specialist, CWRD C. Tiangco, Energy Specialist, CWRD Peer reviewer J. Procak, Regional Cooperation Specialist, East Asia Department In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area. CONTENTS Page PROJECT AT A GLANCE MAP I. THE PROPOSAL 1 II. THE PROJECT 1 A. Rationale 1 B. Impact and Outcome 3 C. Outputs 3 D. Investment and Financing Plans 4 E. Implementation Arrangements 5 III. DUE DILIGENCE 6 A. Technical 6 B. Economic and Financial 7 C. Governance 7 D. Poverty and Social 8 E. Safeguards 8 F. Risks and Mitigating Measures 9 IV. ASSURANCES AND CONDITIONS 10 V. RECOMMENDATION 10 APPENDIXES 1. Design and Monitoring Framework 11 2. List of Linked Documents 13 PROJECT AT A GLANCE 1. Project Name: Central Asia Regional Economic Cooperation Corridors 3 and 5 2. Project Number: 46543-002 Enhancement Project 3. Country: Tajikistan 4. Department/Division: Central and West Asia Department/Transport and Communications Division 5. Sector Classification: Sectors Primary Subsectors Transport, and information and √ Road transport communication technology 6. Thematic Classification: Themes Primary Subthemes Capacity development Institutional development Economic growth Widening access to markets and economic opportunities Regional cooperation √ Cross-border infrastructure Social Development Other vulnerable groups 6a. Climate Change Impact 6b. Gender Mainstreaming Gender equity theme (GEN) Adaptation Low Effective gender mainstreaming (EGM) √ Mitigation Some gender elements (SGE) No gender elements (NGE) 7. Targeting Classification: 8. Location Impact: Targeted Intervention National Medium Geographic Income General Millennium Regional High dimensions poverty at Intervention development Rural Medium of inclusive household goals Urban Low growth level √ 9. Project Risk Categorization: Low 10. Safeguards Categorization: Environment B Involuntary resettlement B Indigenous peoples C 11. ADB Financing: Sovereign/Nonsovereign Modality Source Amount ($ million) Sovereign Project grant Asian Development Fund 70.0 Total 70.0 12. Cofinancing: No Cofinancing available 13. Counterpart Financing: Source Amount ($ million) Government 19.0 Total 19.0 14. Aid Effectiveness: Parallel project implementation unit No Program-based approach No o 69 o 00'E 73 00'E TAJIKISTAN CENTRAL ASIA REGIONAL ECONOMIC COOPERATION Shaydon CORRIDORS 3 AND 5 ENHANCEMENT PROJECT Taboshar Buston UZBEKISTAN Kayrokkum Reservoir Khujand N Kayrokkum Konibodom Zafarobod Chkalovsk Gafurov o Nov Isfara o 40 00'N Gonchi Proletar 0 50 100 40 00'N Vorukh Istaravshan Kilometers KYRGYZ REPUBLIC Shakhriston Panjakent SUGD Shakhristan Pass REGION Karamyk Ayni Mehron Jirgatol Kizil-Art Sayron Pass Anzob Pass Garm Tojikobod REGIONS UNDER DIRECT Darband Lake Karakul REPUBLICAN Varzob JURISDICTION Tavildara Shahrinav DUSHANBE Rogun Tursunzoda Akbaytal Pass Fayzobod Hissor Vakhdat Kalaikhumb Khovaling Somoniyon Norak GORNO-BADAKHSHAN PEOPLE'S Baljuvon Vanch AUTONOMOUS REGION REPUBLIC OF Yovon Nulvand Murgob CHINA UZBEKISTAN KHATLON REGION Lake Sarez Kulma Pass Obikiik Dangara Muminobod Kuybishev Sovet Kulob Rushon Kurgonteppa Sarband Vose Shuroobod Ismoili Somoni Moskva Vakhsh Isoev Farkhor Jilikul Khorug o Kubodiyon 37 00'N Dusti 37 o 00'N Panj Shakhrituz Roshtkala Panji Poyon A F G H A N I S T A N National Capital CAREC Corridor 5 Regional Center CAREC Corridor 6 Ishkoshim Autonomous Regional Center Asian Highway 66 This map was produced by the cartography unit of the Asian Development Bank. District Center/Town Proposed Road The boundaries, colors, denominations, and any other information shown on this Railway Planned Road 13-0046b map do not imply, on the part of the Asian Development Bank, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries, River Existing Road colors, denominations, or information. CAREC Corridor 3 International Boundary o o Boundaries are not necessarily authoritative. A 73 00'E V 69 00'E I. THE PROPOSAL 1. I submit for your approval the following report and recommendation on a proposed grant to the Republic of Tajikistan for the Central Asia Regional Economic Cooperation (CAREC) Corridors 3 and 5 Enhancement Project.1 2. The project is located in the Regions under Direct Republican Jurisdiction and the Khatlon region. To support regional cooperation and inclusive growth in the country, the project will finance (i) the rehabilitation and reconstruction of approximately 175 kilometers (km) of the Sayron–Karamyk road section of CAREC corridors 3 and 5 and the subnetwork (the Vose– Khovaling road); (ii) the enhancement of road safety and maintenance; and (iii) local community development including improving rural feeder roads and public facilities, and training local communities.2 II. THE PROJECT A. Rationale 3. Tajikistan is landlocked and depends on transport corridors for investment, job creation, trade, and ultimately economic growth and poverty reduction. High transport costs, because of ailing transport infrastructure and low network connectivity coupled with geographic isolation and mountainous terrain, pose a significant barrier to the country’s economic and social development.3 The backbone of Tajikistan’s national road network, comprising three CAREC corridors and three Asian Highway (AH) routes, has been largely improved with assistance from the Asian Development Bank (ADB) and other development partners.4 The improved network enables Tajikistan to serve as an important transit route in Central Asia. With continued transport and trade facilitation support from ADB5 and other development partners, and the planned Turkmenistan-Afghanistan-Tajikistan railway construction that will connect southern Tajikistan with Turkmenistan through planned Afghanistan railway network, the synergistic effect will offer new opportunities to intensify regional cooperation and trade, particularly with Tajikistan’s accession to the World Trade Organization on 2 March 2013. 4. The overlapping portion of CAREC corridors 3 and 5—from the capital Dushanbe to the Karamyk border with the Kyrgyz Republic—is a largely two-lane highway of about 340 km. Around 160 km of the road passes along deep riverbanks and is difficult to widen because it is constrained by mountainous topography. Because of the government’s limited budget for 1 The design and monitoring framework is in Appendix 1. 2 The Asian Development Bank (ADB) provided project preparatory technical assistance. ADB. 2013. Technical Assistance to the Republic of Tajikistan for the CAREC Corridors 3 and 5 Enhancement Project. Manila. 3 For example, the domestic freight rate between Dushanbe and Khujand (approximately 300 km apart) exceeds that between Moldova and the United States, according to the World Bank’s latest Country Economic Memorandum on Tajikistan (Report No. 54677-TJ) released in 2011. The cost to export (US$ per container) that includes inland transport is 8,450 in Tajikistan, around four times of those in Eastern Europe and Central Asia, as per the World Bank’s Doing Business 2013 data for Tajikistan. 4 CAREC corridor 3 (concurrently AH65) runs east–west from the border with Uzbekistan through Dushanbe to the border with the Kyrgyz Republic; CAREC corridor 6 (concurrently AH7) runs north–south from the border with Uzbekistan through Dushanbe to the border with Afghanistan; CAREC corridor 5 overlaps with corridor 3 from the border with the Kyrgyz Republic up to Dushanbe, and with corridor 6 from Dushanbe to the border with Afghanistan; AH66 starts at Dushanbe and passes through Vakhdat, Dangara, Vose, Kulob, Khorug, and Murgob before reaching the Kulma Pass (to the People’s Republic of China). 5
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