Documentof TheWorld Bank Public Disclosure Authorized ReportNo: 21735-YEM

PROJECT APPRAISAL DOCUMENT

ONA

PROPOSED CREDIT Public Disclosure Authorized IN THE AMOUNT OF US$45 MILLION EQUIVALENT

TO THE

REPUBLIC OF YEMEN

IN SUPPORT OF THE FIRST PHASE OF AN ADAPTABLE PROGRAM CREDIT FOR THE

RURAL ACCESS PROGRAM

Public Disclosure Authorized May 11, 2001 Public Disclosure Authorized

Finance,Private Sector Development and Infrastructure MiddleEast and North AfricaRegion CURRENCY EQUIVALENTS (Exchange Rate Effective December 2000) Currency Unit = YR I YR = US$ 0.00625 US$ I = YR 163 FISCAL YEAR January 1 - December 31

ABBREVIATIONS AND ACRONYMS ADT Average Daily Traffic CAS Country Assistance Strategy CMO Central Management Office for Rural Roads CPAR Country Procurement Assessment Report EIA Environmental Impact Assessment EMP Environmental Management Plan FMS Financial Management System GCRB General Corporation for Roads and Bridges GOY Government of Yemen GOPP Goal Oriented Project Planning GTZ German Agency for Technical Cooperation HDM The Highway Design and Maintenance Standard Model HTB High Tender Board ICR Implementation Completion Report IDA International Development Association IRR Internal Rate of Return M & E Monitoring and Evaluation MPWUD Ministry of Public Works and Urban Development MOF Ministry of Finance MOLA Ministry of Local Administration MOPD Ministry of Planning and Development MOT Ministry of Transport PAD Project Appraisal Document PCD Project Concept Document PIP Project Implementation Plan PIU Project Implementation Unit PMR Project Management Report PMS Pavement Management System PWP Public Works Project RAMP Rural Access Master Plan RAP Rural Access Program RED Roads Economic Decision Model RMF Road Maintenance Fund ROY Republic of Yemen SAR Staff Appraisal Report SDR Standard Drawing Rights SFD Social Fund for Development TA Technical Assistance TOR Terms of Reference TRP Transport Rehabilitation Project UNDP United Nations Development Program VOC Vehicle Operating Cost YAR Yemen Arab Republic YRFB Yemen Road Maintenance Fund, Board of Directors

Vice President: Jean-Louis Sarbib Country Director: Mahmood A. Ayub Sector Manager: George Tharakan Team Leader: Terje Wolden Republic of Yemen Rural Access Program Phase I

CONTENTS

A. Program Purpose and Project Development Objective...... 2

1. Program purpose and program phasing ...... ,.2 2. Project development objective...... 4 3. Key performance indicators...... 4 4. Triggers for subsequent loans ...... 5

B. Strategic Context...... 6

1. Sector-related Country Assistance Strategy goal supported by the project ...... 6 2. Main sector issues and Government strategy ...... 6 3. Sector issues to be addressed by the project ...... 10 4. Strategic Choices ...... I I

C. Project Description Summary ...... 12

1. Project components...... 12 2. Key policy and institutional reforms supported by the project...... 12 3. Benefits and target population...... 13 4. Institutional and implementation arrangements...... 16

D. Project Rationale ...... 19

1. Project altematives considered and reasons for rejection ...... 19 2. Major related projects financed by the Bank and/or other development agencies ...... 20 3. Lessons learned and reflected in the project design ...... 20 4. Indications of borrower commitment and ownership...... 21 5. Value added of Bank support in this project ...... 22

E. Summary Project Analysis...... 22

1. Economic...... 22 2. Financial...... 25 3. Technical...... 27 4. Institutional...... 27 5. Environmental...... 28 6. Social...... 32 7. Safeguard Policies ...... 35

F. Sustainability and Risks ...... 36

1. Sustainability...... 36 2. Critical Risks ...... 37 3. Possible Controversial Aspects ...... 38 G. Main Loan Conditions ...... 38

1. Effectiveness Conditions...... 38 2. Other...... 38

H. Readiness for Implementation ...... 38

L. Compliance with Bank Policies...... 39

Annexes

Annex 1 Project Design Summary ...... 40 Annex 2 Detailed Project Description...... 44 Annex 3 Estimated Project Costs ...... 51 Annex 4 Cost-Benefit Analysis Summary...... 52 Annex 5 Financial Management Summary...... 57 Annex 6 Procurement and Disbursement Arrangements...... 65 Annex 7 Project Processing and Schedule...... 77 Annex 8 Documents in Project File...... 78 Annex 9 Statement of Loans and Credits ...... 79 Annex 10 Country at a Glance ...... 81 Annex 11 Letter of Development Program from the Government of Yemen ...... 83 Annex 12 The Road Sector...... 87 Annex 13 Environmental Management Plan Summary ...... 3]02 Annex 14 Village Access and Poverty Surveys...... ]24 Annex 15 Rural Accessibility Planning Methodology and Draft Terms of Reference ...... 129 Annex 16 Sectoral Environmental Assessment, Draft Terms of Reference ...... 139

Maps IBRD No. 31405 REPUBLIC OF YEMEN RY-RURAL ACCESS PROGRAM Project Appraisal Document Middle East and North Africa Region Finance, Private Sector Development and Infrastructure

Date: May 11,2001 Team Leader: Terje Wolden Country Manager/Director: Mahmood A. Ayub Sector Manager: George Tharakan Project ID: 70391 Sector: TR - Rural Roads Lending Instrument: APL Theme(s): Transport/Poverty Poverty Targeted Intervention: I xl Yes [ ] No

i~~~~~~~~ , gEEE=

IDA Others Total Commitment Closing US$ m % US$m US$rm Date Date APL 1 45.00 85.5 7.61 52.61 07/01/2001 12/31/2004 Governmentof Yemen

C redit I______APL 2 50.00 50 50.00 100.00 06/15/2003 12/31/2007 Governmentof Yemen Credit APL 3 50.00 50 50.00 100.00 12/15/2006 12/31/2011 Governmentof Yemen Credit

Project FinancingData [ ] Loan [ X Credit [] Grant [] Guarantee [] Other [Specify] For Loans/CreditslOthers: Amount (US$ m): 45.00 Proposed terms: [ To be defined [] Multi-currency [] Single currency [X] StandardVariable [] Fixed [] LIBOR-based Grace period (years): 10 Years to maturity: 40 Commitmentfee: 0.50 % Service charge: 0.75% Front-end fee on Bank loan. N/A

Government 7.61 0.00 7.61 IBRD IDA 22.55 22.45 45.00 Total: 30.16 22.45 52.61 Borrower:Republic of Yemen Guarantor: N/A Responsibleagency(ies): Ministry of PublicWorks and Urban Development,MPWUD

Estimateddisbursements (CYIUS$M): .

Annual 2.40 16.30 15.00 11.30 Cumulative 2.40 18.70 33.70 45.00 Project implementationperiod: 2001 - 2004 Expectedeffectiveness date: October 31, 2001 Expectedclosing date: December 31, 2004 Implementingagency: The Central ManagementOffice for Rural Roads Contactperson: H.E. Abdullah H. Al Dafei, Minister,MPWUD, Chairmanof the SteeringCommittee Address: Sana'a, Republic of Yemen Tel: +967-1-264144 Fax: +967-1-264070 E-mail: 2

A: Program Purpose and Project Development Objective 1. Program purpose and program phasing: (see Annex 1) The overall purpose and long-term development objective of the Yemen - Rural Access Program (the Program) is an improved livelihood and reduced isolation for the rural population. To achie' e that objective, year-round access to markets and services (both social and administrative) would have to improve, especially in the rural areas where the large majority of the country's poor live. The Program is designed to support the Government's decentralization process, which has recently been initiated, and it would complement and enhance several community-based programs in Yemen, such as the Socia Fund Project and the Public Works Project.

The Program would reduce isolation by ensuring that rural people have reliable access through the local, regional and national road networks. This will be done by financing improvements to a "cluster" or "sub- network" of rural roads. The centerpiece of this approach will be to improve rural access roads which link larger centers in districts to the main road network, here referred to as "intermediary rural ,oads". These rural roads carry a substantial level of traffic in Yemen, are generally in very poor condition and are excluded from village-level infrastructure programs. These investments would be complemented on a limited scale by improvements to smaller access roads that link isolated villages to the improved intermediary roads, thereby promoting a continuous flow of goods and people to markets and services, and strengthening the poverty reduction impact. In subsequent stages the Program focus would gradually expand the cluster approach with improvements of intermediary and tertiary roads', while continLing to connect adjacent villages with improved village access roads. The non-physical parts of the Piogram would focus on capacity-building for better decision-making and project monitoring at the local level in support of the government's policies of decentralization.

The Program will address poverty by improving overall mobility in rural Yemen and reducing the isolation of villages and communities. Between 1992 and 1998, Yemen's rate of poverty almost doubled, growing from 19% to about 33%, with about half that in absolute poverty. The Interim Poverty Recuction Strategy Paper of February 2001 identified a number of key factors contributing to poverty conditions, including high population growth, low labor force participation, scarcity of cultivable land and water, insufficient infrastructure and inadequate access to main social services. Isolation aggravates and s istains these poverty conditions in the rural areas, which manifest themselves in illiteracy, poor health and low employment and income. In 1994, the combined basic and secondary enrollment rate was just 55 percent, with the overall rate of female enrollment at 24 percent. Due to isolation, only 50 percent of the population had direct access to health services. The country's purchasing power parity (PPP) per capita of income is half the average for all low income countries. In a 1997 study, 43 percent of mothers stated that the reason they did not deliver their babies at a health clinic was due to reasons of access. A s-udy in rural Taiz showed that transportation comprised 32% of the total cost of a health visit.

The critical constraint of poor access will be addressed based on knowledge about where the poor are located and how well they are served by existing roads. Identification and selection of mobility and access improvements under the Program will be carried out through improved planning and implementation processes based on an agreed rural access policy framework to be developed as part of the program activities. To this end, a methodology for rural accessibility planning has been formulated, and is summarized in Annex 15. The Program will increase the efficiency of resource allocation tirough improved planning, and enhance the performance of markets, thereby reducing the major obstacle to rural economic growth caused by poor access. Poverty and gender issues will be taken into account, to the extent possible, in the identification and prioritization process of individual rural road projects. The sustainability of this process will be ensured through institutionalizing participatory activities engaging

' The terms 'rural access roads' and 'rural roads' used in this document include the intermediary (secondary) road network, the tertiary road network and the village access roads, also termed quaternary road network. See Annex 12, Attachment IV, for a figure describing the functional classification terms used in this document. 3 communities and districts in accessibility planning at the central and decentralized levels.

The Program would be implemented in three phases: (i) Phase I of a relatively short duration will set up the institutional and technical foundation for an efficient rural road improvement program and test this approach through at least five pilot projects of rural road "sub-networks," or "clusters," which consist of intennediary rural roads, combined with key adjacent village access roads. It will also prepare designs and bid documents for projects to be financed in Phase II; (ii) Phase 11will tackle access problems mainly at the intermediary road level but also covering related village access roads, while setting up an organizational and policy framework for gradually moving to the tertiary road network; and (iii) Phase III will tackle access problems associated with tertiary road network (at the district level), while continuing to support improvements and management of the intertnediate road network. The three phases are briefly described below.

Phase I: Institutional strengthening and definition of appropriate standards. Phase I of the Program (the Project) would focus on creating an adequate institutional, technical and participatory framework for planning, prioritizing and implementing rural access improvements. With the purpose of testing the new framework, Phase I would include the pilot implementation of physical access improvements of (i) five or more highly justified intermediate rural roads located in several rural Govemorates, and (ii) key village access roads located adjacent to those intermediate roads, using appropriate technical and environmental/social standards. The selection of additional pilot roads and village access roads will be made based on a combined assessment of access constraints, degree of poverty in the area of influence and economic development potential. All Phase I roads, which have been or will be selected, will avoid any resettlement or land acquisition. At the beginning of Phase I, baseline data on poverty and gender in Yemen will be gathered, which will then be used in a detailed rural accessibility analysis and planning exercise, the latter being an important element of this phase. Phase I will include the preparation of a Sectoral Environmental Assessment and the development of framework agreements for land acquisition and resettlement. Phase I would also include the preparation of the designs and bid documents for the next phase of the Program and concludes with the adoption of a rural access strategy and a participatory planning process for Yemen's rural Governorates, which will be poverty oriented and address gender issues.

The Project will also serve as a vehicle to finance the rehabilitation of the Al Ahmer - Al Naqabah road section of the Aden - Mukalla road. This road project was part of the Road component of the ongoing Transport Rehabilitation Project (TRP - Cr. 2819-Yem) and already appraised as part of the TR-P.The road project had to be dropped from the credit to make room for a much needed reallocation of funds to cover the costs of quickly addressing emergency repairs to the runway and taxiway of the Aden airport, which had shown accelerated deterioration after suffering war damages during the 1994 civil unrest in Yemen. A supplemental credit for the TRP to finance the 114 km long Al Ahmer - Al Naqabab road was requested by the Government. It was agreed to include such financing in a follow-up operation in the sector. The first phase of the Rural Access Program provides the first opportunity to make available the necessary financing, and this road rehabilitation project is included as a separate Part B of this Project. Part B of the Project is independent and unconnected to Phase I of the Program. It will be implemented by the unit in the Ministry of Public Works and Urban Development (MPWUD) responsible for the implementation of the road component of TRP.

Phase Il: Access improvement and decentralized network management. Phase II of the Program would focus on (i) physical rural access improvements to areas with widespread poverty, poor accessibility and latent rural development potential, utilizing the planning (identification and selection) process to be developed in Phase I; and, (ii) capacity-building at appropriate levels for the management and maintenance of the intermediary rural road network, the monitoring of key indicators, the implementation of environmental management plans, and the management of local participatory processes, with an emphasis on local poverty and gender issues. This phase would also include the financing of some village access roads adjacent to the intermediary project roads, the preparation of the third phase and a detailed review and assessment of the first two phases. 4

Phase III: Expanding the coverage of access improvement and consolidation of gains. Phase II [ would expand rural access improvements and capacity building to tertiary roads at the district level and critical intermediary access roads not yet covered under Phase II. It would continue to support village access road development. Capacity building to achieve sustainable management and maintenance of rural roads, using the demand-driven and poverty-based approach for identification and prioritization 3f rural road subprojects as initiated in Phases I and II (rural accessibility planning) would also continue under Phase III.

2. Project development objective: (see Annex 1) The development objective of Phase I of the Program is to establish a sustainablefoundation for large- scale improvements to rural accessibility in areas severely affected by poverty which at the sarne time have good prospects for rural development. The project would put in place effective institutional arrangements and more appropriate technical standards and implementation procedures for these large- scale improvements to be achieved during subsequent phases of the Program.

The Project development objectiye relates mainly to the rural road networks. However, these cannot be looked at in isolation; they must necessarily be seen in the context of the overall functioning of Yemen's road sector. The Project must, therefore, to a certain extent also address issues of overall road sector organization, management, maintenance and financing. These issues are discussed further below and in Annex 12, The Road Sector.

3. Key performance indicators: (see Annex 1) End of Program Indicators * Transport rates for goods and passengers reduced on average by 30%. * Price of essential commodities transported over improved roads (gas cylinder, diesel, kerosene, cement, flour and sugar) reduced in average by 15%. * Access time from the village to the closest market and key services reduced by 30%. * Other poverty and gender indicators to be developed during Phase I.

OutcomelImpact Indicators: * Adequate institutional arrangements are put in place at the center and decentralized levels. * Appropriate low-cost standards and procedures are adopted and applied. * Rural accessibility improvements have been achieved for at least four poverty affected areas.

Output Indicators: The output indicators for the end of Phase I of the Program (the Project) are given below. Pilot Application ofAppropriate Standards: a manual for the design and implementationof rural roads has been adopted; appropriate technical/environmental/social standards and implementation approaches have been tested on the pilot rural roads and village access roads, and an evaluation of those standards has been completed; and * improvements have been effected for at least 115 km of rural access roads.

Rural Accessibility Planning and Road Feasibility/Design Studies: rural accessibility assessments for at least 4 rural Governorates have been completed; an objective and participatory methodology for planning and prioritizing investments in rural access improvements has been adopted by the Government and tested in at least 4 Governorates; this methodology must also address local poverty and gender issues; and * the preparations for at least 25 percent of Phase II physical works and related maintenance contracting has been completed, including feasibility studies, environmentalJsocial assessments, detailed design and bidding documents. 5

Institutional Strengthening and Management: * roles and responsibilities in the road sector have been reviewed and assigned by the Government involving a more decentralized management structure and a reclassification of the road network; * road maintenance funding has improved: New user charges introduced in 2001 mobilizing at least YR 2.5 billion in 2002 for the Road Maintenance Fund; * an impact monitoring system for rural access improvements is in place and fully functional; * an early implementation assessment of the project is carried out about one year after project effectiveness; * Sector Environmental Assessment carried out including environmental and social framework agreements; and * Restructuring of the present Budget for Rural Roads and rationalization of the budget process.

Supplemental Operating Costs and Eguipment: * Sufficient funding has been available for program management, and properly accounted for and audited.

4. Triggers for Subsequent Loans:

The agreed triggers for the initiation of Phase II of the Program are:

(a) Proposed technical and environmental standards for rural roads have been tested, verified and adopted for Phase II through the completion of at least four pilot road projects;

(b) Rational methodology for planning, prioritizing and budgeting of rural road investments has been adopted. This will include a provision that the amountinvested in any village accessroad may not be higherthan a thresholdlevel set in US$ per inhabitantserved by the same road. The thresholdis to be determinedduring Phase I based on experience,and the agreementon a thresholdbetween IDA and GOY will formpart of the rationalmethodology;

(c) An assessment completed for the current (2001) rural road project portfolio in the MPWUD and a plan adopted for a reduction of the number of projects under construction, so as to allow their completion within 4-5 years with the allocated budget funds.

(d) Budgeting in the central management office (CMO) for rural road investments is based on a rolling three-year plan to be updated annually;

(e) Technical preparation and bidding documents completed for the first year (25%) of the Phase II program of roads;

(f) A legal reclassification of the road network enacted, and a long term strategy adopted by the Government on the management and financing of secondary (rural) roads and roads under the ownership of the Governorates and Districts;

(g) Sector Environmental Assessment completed, and Category A environmental assessments for roads in Phase II first year program completed; and

The Government expects these Phase II triggers to be achieved approximately 24 months after Phase I of the Program is initiated.

Before initiating Phase III of the Program, the following triggers will have to be met:

(a) Phase I of the Program completed satisfactorily; 6

(b) At least two thirds of the civil works planned under Phase II of the Program completed; (c) Technical preparation and bidding documents completed for the first year (25%) of the Phase III program of roads; and (d) Environmental Assessments for Category A roads or Environmental Management Plans for Category B roads in Phase III first year programncompleted.

B: Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Anne4x1) Document number: 19073-YEM Date of latest CAS discussion: 05/25/1999 Yemen suffers from a land transportation challenge identified in the CAS: "Road infrastructure is difficult to provide for a large proportion of the society living in tiny settlements in rough terrain relatively far from trunk roads, holding back development of markets and suppressing business opportunities." The CAS also emphasizes that currently "less than 10% of the road network is paved, the network does not reach a large share of the population and most of it is in poor or very poor condition, such that an alarming share of the rural population is cut offfrom participation in the market economy and access to vital services."

The priority of IDA assistance to Yemen is to address, in a sustainable manner, the most binding constraints to development and poverty alleviation. Towards this aim, the CAS focuses assistance on four interdependent objectives, which are the pillars of TDA assistance. One of these pillars is: "To create an early stream of social benefits, in education, health, and other most-valued services, which indirectly address poverty and gender-gap, and fortify the benefits of the other objectives". It is this CAS objective which will be supported through improved rural access to be provided through the Project and the Program.

In addition, the Program will also contribute to address another pillar which deals with (i) improving public administration; --in this case in the road transport infrastructure sector, and (ii) encouraging private enterprise, --in this case in road management, by piloting multi year network wide road upgrading and maintenance contracting to replace public provision of maintenance services, and in formal and informal land transport services in rural areas by encouraging private provision of these services. Beyond improving rural access, the Program would also take into account the recent passing of the Local Authority Law and help elected councils at Governorate (and eventually District) level play an aclive and positive role in fostering rural access. The Law provides for direct responsibility for planning, development, finance, services, and social affairs by locally elected councils. Although the CAS cloesnot specifically mention Bank support to the implementation of the Local Authority Law, there is an understanding in principle that all new operations financed through the IDA would take into account the new Law and support its implementation.

Among the fifteen strategic elements in the Interim Poverty Reduction Strategy Paper (IPRSP) (November 2000) is: "improve and upgrade infrastructure, in order to raise productivity, promote investments, break isolation of rural areas, and expand markets and job opportunities, alonig with improving human development. "

2. Main sector issues and Government strategy: Overview of sector. The road sector suffers from institutional weaknesses and an inefficient budget allocation process. This has led to a situation where too many projects are started with small annual allocations, and very few projects get completed, hampering achievement of access to basic servizes and market opportunities for the poor, especially the rural poor. At the heart of the problem is the system of making politically driven annual commitments for local road projects that are not fully funded. T'his is a highly inefficient and wasteful process, since these budget allocations are insufficient to complete the works and achieve the sought-after mobility improvements for the rural poor. Solutions for those sector 7

issues must be linked to a process of building institutional capacity at central and local levels, providing management training and creating local ownership for rural access improvements, with broad support from various donors including the Bank.

The Decentralization Context. The new Local Authorities Law (Law No. 4 of 2000) is the centerpiece of the ongoing decentralization effort and the culmination of a political process which started after Yemen's unification in 1990. Decentralization became a political priority in the face of a declining financial situation and internal divisions. In 1995, a series of public sector reforms began, including the initiation of decentralization as a pilot initiative in the Ibb Governorate. In spite of the presently high degree of centralization, Yemen has a strong, historical tradition for local self-governance through the system of local cooperatives in the North and elected local councils in the South. This tradition includes community contributions to local development projects and service schemes, a practice which is maintained in part because of the often-insufficient transfers from central govermmentto the local sector ministries. The broad political acceptance of the principle of decentralization can, in part, be attributed to this tradition.

With the passage of the Local Authorities Law in early 2000, Yemen made a major step towards political, fiscal, and administrative decentralization to the local level. When the Law, Financial Bylaws and Executive regulations are implemented, they will eventually provide local authorities direct responsibility for planning, development, finance, services and social affairs, all within a limited budget envelope. Locally elected councils will get responsibilities for budget preparation and accounting, preparation of their own physical and economic plans, raising local revenues and executing local public works. For this to work well, it requires strong local management capacity, sufficient financial resources and transparent accounting and auditing arrangements. Whether a more decentralized government will help to bring to an end the present practice, under which tribal and other local groups exert very strong pressures on central Government, without any concern for budget constraints, is difficult to predict. It could even work the other way, reinforcing present undesirable patterns of uneven development. Implementation of the new Law has been postponed for two years until the present trial period is over. The Parliamentary approval of regulations for its implementation is underway. However, even after the Regulations will have been put in place, the practical implementation of the Law is expected to be slow and tedious, given the reluctance of some officials to give up central Government control, and also because of limited capacity at the local level.

Institutional weaknesses. Before 1997, the responsibility for road infrastructure (except municipal roads, village internal roads and local roads under the Ministry of Local Administration-MOLA) was with a semi-autonomous Highway Authority, which included decentralized offices in most Governorates. The Highway Authority was also a Government force account contractor for road construction and maintenance. In January 1998, a new law transformed the Highway Authority into a Government-owned, commercially oriented contractor (GCRB - General Corporation for Roads and Bridges). The road management responsibility and functions were transferred to a relatively new ministry, the Ministry of Public Works and Urban Development (MPWUD). However, most of the staff of the former Highway Authority working on road management functions was retained by GCRB, and MPWUD experienced some difficulties capacity-wise in taking on this important function and in fulfilling its responsibility adequately. This caused a disruption in the key tasks related to the management of the road sector, such as planning, programming and budgeting. Later MPWUD also took over responsibility for other roads in Yemen, in particular intermediary rural access roads and feeder/district roads, without getting much additional resources for their management and maintenance. Recently, there has been some changes in key positions (Director of Roads, Director of Maintenance) within the ministry, pointing towards a problem of retaining qualified technical and managerial staff under present civil service constraints. This was not a problem before when the Highway Authority was responsible, and judging from the last 2-3 years it seems unlikely that, under present conditions, MPW1D will be able to attract and retain sufficient qualified staff to effectively manage all of Yemen's roads.

Government Strategy to address institutional weakness: In the general context, a Bank-supported Civil Service Reform Project would help to create the basic conditions which would enable the Government to 8 hire and retain a limited number of qualified professionals. For the road sector, an institutional study will shortly be undertaken, financed by the IDA supported Transport Rehabilitation Project (TRP). This study will provide guidance on the appropriate roles for the Ministries in charge of roads and road traftic, and how the day-to-day administration of the road sector should be organized to better perform those roles. However, no funding is presently available under the ongoing Transport Rehabilitation Project to support the implementation of the recommendations of the study, which will likely include instilutional restructuring, and capacity building. Therefore, this Project, and Phase II of the Program, would iave to provide the necessary support for a better and more decentralized management of at least the intermediary rural road networks in all of the 18 rural Governorates and possibly later also support to the management of tertiary roads.

Under-funding of road maintenance. To remedy the under-funding of road maintenance, a Road Maintenance Fund (RMF) was established in 1996 with dedicated, off-budget funding for maintenance, mobilized through an increase in the price of gasoline. Experience has shown that for road maintenance funds to serve the access needs of the poor and the road users, they need to have an independent so urce of finance through a road user fee attached to the price of fuel, as well as meaningful participation by the private sector on the RMF Board. The road use levy was originally set at YR 0.5 (UScentsO.30)per liter of gasoline, with no levy on diesel fuel. This arrangement has been maintained and mobilized about YR 700 million per year in 1999 and in 2000 (US$4.2 million). This now corresponds to only a small part of the funding needs for maintaining the main road network in a stable condition. The need for funding of maintenance of all roads including municipal roads has been estimated by a consultant (see Annex 12) and is in the order of YR 4.2 billion per year (US$ 25 million). However, due to the backlog of maintenance which has accumulated during the past years, the estimated funding need for the next 7-10 years is considerably larger. Despite this alarming situation, the Government has allocated little budget resources to road maintenance, in spite of a large overall size of the road sector budget, which is on the order of YR 12 billion (US$ 72 million). This policy has been causing: (i) a very significant loss of road assets, (ii) large needs for the rehabilitation of roads which have not been maintained; and, (iii) an avoidable increase in vehicle operating costs which is far in excess of the funding gap.

In September 2000, the parliament adopted a new law which, when made effective, would allocate YR 1.75 (US cents 1.10) to the RMIFfor every liter of gasoline sold, and YR 0.6 (US cents 0.36) per liter on diesel fuel sold. In addition, the law introduces a new 2 percent "tax" on new road investments..to be allocated to the RMF. Once the law is made effective, it is expected to raise the annual RMF revenue to an amount between YR 2.5 and 3.1 billion/year (US$ 15 to 19.3 million/year), depending on the consumption of fuel. This is a large step in the right direction, but still insufficient to fully cover all needs, especially when the backlog in road maintenance and the needs of the rural road networks are considered. Budget resources will be needed to cover the cost of addressing past maintenance neglect, which now is manifesting itself as a road rehabilitation backlog.

Government Strateg to address under-funding: As part of the Public Expenditure Review of the road sector in 1998, and subsequent agreements with IDA as part of the preparation and implementation of the Public Sector Management Adjustment Credit (PSMAC), the Government agreed to a series of actions which should increase funding for the maintenance of the road network to the necessary level. Unti I now, compliance with the agreed measures is partial, and strict follow-up and monitoring of the agreements are needed in order to improve the utilization of funds for the sector. The recent significant increase of the resources to be managed by the RMF (described in the previous paragraph), which are included in the price of fuel, is an important step forward (Annex 12 has details).

Road Budget Issues: In addition to the above problems, the Road Maintenance Fund has been lotally controlled by the Government and overly dependent on budget allocations. Important deficiencies are apparent in the MPWUD road sector budgets for the last 2-3 years:

* Lack of budget discipline: new road projects are started (works contract signed with local contractors without bidding) irrespective of whether or not they are in the approved budget; also, 9

the Government has overspent the 1999 road investment budget by YR 6.8 billion (about 60 percent). There was a large backlog of payments due to contractors for works carried out in 1999, however, payments were gradually made out of the 2000 road investment budget, which was increased for that purpose.

* Lack of prioritization and budget focus: far too many projects with far too little budget allocations, in particular rural roads projects; many projects therefore do not show much progress and stay in the budget for up to 10 years or more. Allocations for preparation and supervision of new projects are inadequate, and quality of the works executed is suffering.

* Lack of inter-ministerial cooperation and coordination in the budget process.

This situation can be remedied with a budget restructuring to stop the most wasteful projects with little potential, many of which are highways in remote areas with little traffic, and concentrate funding on the best rural access road projects in the budget. A more transparent system of awarding contracts could potentially reduce costs and better prioritize road investments, based on accessibility needs assessments. This would provide a stronger basis for results-based budgeting and poverty-targeting of rural access improvements.

Government Stratev to improve road sector budgeting: The Government intends to address the general budget issues in the road sector in the following manner: (i) contracts are only signed for new projects for which financing is assured in the approved budget; (ii) existing investment programs are rationalized as agreed with IDA in the latest Public Expenditure Review (PER); (iii) a rolling multi-year investment program is created with no new projects entering the first year program; (iv) in the first-year program, funding is included for pre-feasibility studies for new projects which are to be implemented in the third- year program, and for detailed design studies for projects starting in the second-year; and (v) funding is concentrated on the highest priority projects to reduce implementation periods to between 2 and 4 years, instead of more than 10 years as observed now. The Government has already started to follow this strategy except that there is not yet a reduction in the number of projects (rationalization) due to difficulties in cancellation of ongoing works contracts, and there is no increase in funding for studies and design in the latest budget.

Procurement Management. Upon request by the Government, IDA has carried out a Country Procurement Assessment. The overall outcome is that procedures commonly used for public procurement in Yemen, and particularly in the public works sector, are often not in accordance with internationally recognized standards of transparency and competition. While the 1993 Procurement Law is a significant improvement over the previous 1991 law, it still has numerous gaps, and several aspects of it conflict with international practice and the procurement rules of external donors. The result is that for IDA-financed projects, the MPWUD, the High Tender Board (HTB) and its Technical Committee sometimes have difficulties in following IDA guidelines in procurement of works, goods and consulting services, particularly where they differ from local laws and practices. This has led to long delays in project implementation, as experienced in the ongoing Transport Rehabilitation Project and the Multi-Modal Transport Project. Under current practice, MPWUD is for the most part not bidding local road works contracts that are fully financed from the regular budget, and instead uses a system of direct negotiations with local contractors, based on predefined unit prices for all major items in the Bills of Quantities of road contracts. This procurement system has weaknesses and may not give every contractor equal opportunity for government work, as well as potentially increasing costs.

In the Country Procurement Assessment Report (CPAR, September 2000) IDA proposed a series of measures to improve the situation. The most important one is the publication of a comprehensive National Procurement Manual, which should be prepared in simple language and give guidance and step- by-step instructions. It was also recommended that the Government should also prepare national Standard Bidding Documents, which do not exist today. 10

During negotiation of the Credit it was agreed between the Bank and the Government that for al; IDA- financed contracts under the RAP, World Bank/IDA procurement guidelines will be applied and st;mdard bidding documents and competitive bidding procedures will have to be used. It was also agreed to include in this project a small technical assistance component to strengthen the High Tender 3oard. Annex 6 provides the details of the procurement arrangements.

3. Sector issues to be addressed by the project: Institutional Weakness: It is clear that the Program will need to make a significant contribution to institutional capacity building and support the decentralization process, initially centrally and at the level of the Governorates, and eventually also at the level of the Districts. The Program can provide a nmeansto mitigate the uncertain nature and implementation pace of the decentralization process in the road sector. Except for a central rural roads administration office, the proposed Program will work initially at the level of selected Governorates (regionally), then later expand to other if not all of the 18 rural Governorates, and finally (in Phase III) to the level of Districts (tertiary roads). It will build capacity for a more decentralized management and maintenance of rural road networks, through a TA component. Moreover, it will provide a practical framework for decentralized management to be applied via the physical improvement of rural road networks, which local authorities must regularly maintain and repair. With this strategy, IDA will attempt to establish a linkage between the (relatively straight forward) civil works component and the more difficult and less predictable local government strengthening component v-ithout being fully dependent on progress in the decentralization process. This linkage between th- two components, and their relative financing amounts, will permit IDA to: (i) help the Government achieve the maximum impact in implementing decentralization (by working at the localUregionallevel); anid (ii) work on issues of local capacity-building within the framework of a "real" and physical project (the improvement and maintenance of rural road networks).

While some Governorates and even Districts will be well able to set up their own capacity in the area of rural access planning and management, others will not. It should not be forgotten that there are significant socio-economic differences between the 18 rural Govemorates, and even more so betwe n the approximately 300 districts in Yemen. All of them will not have the human and financial resources to create the technical capacity for rural road management; and it may in some cases not be the best ise of resources, either. One should also not forget that rural roads networks that are often crossing distric,tand Governorate boundaries, may better be managed in larger decentralized units to avoid a too fragnented rural road management and problems of network continuity in border areas. One option to be explored in this project includes the creation of regional management offices which could combine two or more Governorates. These regional rural road administrations would fall under the control of a local representatives from the relevant Govemorates for roads under the authority of the Governorates. They could have the "critical mass" necessary to be able to hire and retain qualified staff. This option is not affected if decentralization does not advance as originally envisioned.

Funding of rural road maintenance would be addressed by the Program through a close follow-up on the measures which have been agreed with the Government. Besides the gradual increase of the funding for road maintenance, which has already been addressed recently through an amendment of the Road Maintenance Fund Law, the Government has also agreed in principle to the introduction of a weight- distance charge on truck transport. This is under the Ministry of Transport, and therefore cannot easily be part of the framework of conditionalities for this Program. By the end of Phase 11 of the Program, the level of dedicated funding for upkeep of the road network managed by RMF shall have reached a level sufficient to: (i) fully fund maintenance of the main highway network; and (ii) contribute to funding the maintenance of the rural road network. It is thus clear that the Road Maintenance Fund will have a significant role to play in rural road maintenance. It is therefore proposed that the Road Maintenance Fund will participate in the Steering Committee for the Program and in the Central Management Office for Rural Road. The project also includes a small TA component to support a strengthening and reorientation of the RMF to take on this role. I1

The Programnwould also pilot area-wide performance-based rural access road maintenance concessions in Yemen. It is proposed that these multi-year contracts will be introduced in Phase II and initially funded jointly between the RMF and the Program. This will expand the role of the private sector, which until now only carried out construction works for the Government, to include maintenance of rural road networks to pre-defined performance standards.

MPWUD as well as other road agencies seem to have adopted road standards that are too high for the existing and expected traffic levels, particularly in respect of the width of rural roads. Paved rural roads have a width of 10 meters irrespective of traffic levels. Unpaved (gravel) rural roads are normnally8.5 meters wide. Also, the criteria applied when deciding if a rural road should be of gravel or paved standard may need revision. Further, the MPWUD has no policy for the use of one-lane roads in remote areas with little traffic. The Ministry has also been reluctant in the past to use low-cost single or double bituminous surface treatment (chip seals, slurry seals, Otta seals, etc.) to pave rural roads, and has instead used the more costly asphalt concrete as a standard solution. There is also too little attention paid to environmental considerations during road design and construction, in particular for cut and fill slopes that are often left unstable, causing erosion and damage to adjacent farm-land in some cases. Narrow cement concrete road pavements can also be justified on short and steep road sections of an otherwise unpaved road, this would reduce the costs of drainage structures and road maintenance by allowing water to cross over the road. The Project would review and pilot a range of options and establish more appropriate and economic standards and criteria for the design and implementation of rural roads. These standards or guidelines will be based on the classification of the rural access roads (its function) and traffic volumes, and take the terrain factor, climate and available materials into consideration. The type of road surfacing to use, use of natural rather than crushed materials in the base, and geometric standards for cross sections (lane widths) and alignment under different conditions will be part of the guidelines. Under the Project some highly justified intermediary roads (about 200 kin) and village access roads (about 100 kmn) would be improved/upgraded within their right-of-way. This would demonstrate and fine-tune more appropriate technical standards to be used under the subsequent phases of the Program, while providing the areas of influence of the Phase I rural access roads with the benefits of better accessibility.

The Project and Program would also support: (i) a rationalization of the present MPWUD rural road budget by concentration of funding on fewer ongoing contracts which would be completed quickly; (ii) better environmental and social assessments of rural road projects; and (iii) technical assistance to the High Tender Board to improve procurement management.

4. Strategic Choices:

The initial concept was that the Program would focus on various types of village infrastructure improvements, small local feeder roads and access tracks to small settlements. Under this concept, the Program would have pursued a "multi-purpose" approach, with rural road improvements being only one element within an array of several types of non-transport accessibility-enhancing interventions, such as the relocation of facilities and services. However, currently there are already several large projects ongoing in Yemen which follow that same concept, such as the IDA-supported Social Fund Project and the Public Works Project.

Moreover, further discussions between the IDA identification mission, the Government and other donors revealed that due to funding ceilings for individual investments, none of those projects is able to intervene on longer rural roads, which connect several Districts with each other and to the main highway network. The lengths of those intermediary rural roads are between 10 and 60 km. Many of them are today only partially completed without pavement structure, receive insufficient maintenance and are therefore in a very bad condition. When access on those roads is interrupted during the rainy season, large areas with dozens of villages are often left in temporary isolation. Therefore, during the first two phases of the Program, physical interventions will focus on establishing reliable sub-networks, or clusters of rural roads, which consist, in the first instance of intermediary rural roads linking District centers with each other and to Govemorate capitals, and connecting rural roads with the main highway network. These will 12 then be complemented by key tertiary and village access roads, with the aim of establishing a contiguous network of reliable access from isolated villages to the rest of the economy. Once the intermediary network is well established, towards the end of Phase II and in particular during the last (third) phase of the Program, the main focus would shift towards providing support for key internal district roads (tertiary road networks). A draft rural access planning methodology has been formulated for this purpose lAnnex 15), which will be tested and adapted during the first phase.

The Program would foster the use of private contractors in undertaking routine and periodic maintenance of the road network through multi-year, area-wide andperformance-based contracts, instead of limiting itself to the traditional force account maintenance approaches now being used through GCRB. These contracts would be administered by the regional rural road management offices at the Governorate level, with technical and financial support from the Road Maintenance Fund.

C: Project Description Summary

1. Project Components: (see Annex 2 for a detailed description and Annex 3 for a cost breakdown)

Bank- % of Costs %of finan. Bank- Project Component Sector (US$M) Total (US$M) finan.

Part A: 1 Pilot Rural Access Roads Rural Roads 31.60 60.07 26.81 59.58 2 Village Access Roads Rural Roads 4.70 8.93 3.98 8.66 3 Rural Accessibility Planning & Design Studies Rural Roads 2.00 3.80 2.00 4.44 4 Institutional Strengthening Inst. Dev. 1.17 2.21 1.03 2.29 5 Supplemental operating costs and Equipment Inst. Dev. 0.70 1.33 0.59 1.31 Part B: 6 Al Ahmar - An Naqabah Road Rehabilitation Transport 12.24 23.27 10.38 23.08 7 TA to the Road Maintenance Fund Transport 0.20 0.38 0.20 0.44

Total Project Cost 52.61 100.00 45.00 100.00

2. Key policy and institutional reforms supported by the project: (a) The Program would seek to improve the funding of the road sector tc) finance, through the Road Maintenance Fund, the full cost of maintaining the main highway network and the intermediary and tertiary rural roads. The exact arrangements for sharing the cost of maintenance for other rural roads between the RMF, and the decentralized Government units (Governorates and Districts) are impossible to determine at present, since they involve the decentralized Government units and the budgets allocated to them. It is expected that about 30 percent of the funds available through the RMF eventually will be allocated for the maintenance of other rural access roads, and that this should provide adequate co-financing for the Govemorates and Districts for rural road maintenance. Because of the significant future role of the RMF in rural road maintenance, the Road Maintenance Fund will participate, among other interested parties, in the Steering Committee for the Project and the Program, and will receive support through the technical assistance components of the Program.

(b) As for the institutional arrangements, the Program will seek to support the practical implementation of a more decentralized planning, prioritization, implementation, monitoring and maintenance of rural road investments. The Project will finance the establishment, at the central 13

level, of a rural access road administrative unit to coordinate and implement the program. At the Governorate or regional level, the Program will finance a few technical units responsible for rural access planning, targeting local poverty and gender-sensitive issues and the day-to-day management and maintenance of rural access roads with its area of responsibility. These regional offices will also supervise the implementation of the performance-based contracting of road maintenance works which is expected to be introduced with support from the project.

(c) The Program would seek to further strengthen the Road Maintenance Fund and increase its autonomy; this would include a possible restructuring of the RMF Board of Directors to include representatives from the private sector and road users.

(d) Based on the Road Sector Management Study to be completed by June 2001, efforts will be made to include the implementation of the agreed recommendations of that study in the various components of the Project.

3. Benefits and target population: Program benefits: The Project and the Program will contribute to the reduction of poverty in rural areas throughout Yemen by reducing rural isolation, a key dimension of poverty. Though poverty is widespread, with as much as 33 percent of the rural population classified as being under the official poverty line, it is primarily a rural phenomenon. Over half of Yemen's poor live in three Governorates (Sana'a, Taiz, and Lbb),and an additional 28 percent live in Dhamar, Hodeida and Hadramout. Although available data is yet limited, poverty appears also to be concentrated in areas with the highest concentration of small farms. Improving accessibility and rural infrastructure in these areas would likely diminish unproductive time wasted on gaining access or traveling, and reduce the cost of agricultural inputs and consumer products, while assuring higher farn-gate prices for local production. Moreover, a broader definition of poverty is now being accepted, which would include not only a family's expenditure levels for food and non-food items, but also its deprivation of health, literacy, mobility and productive assets. Surveys are showing that poor people with inadequate access to a range of essential supplies, services and facilities feel much poorer than poor people with good access, even when the available income and expenditures on food are the same. In Yemen, preliminary data on the links between poverty and access to facilities indicate that the rural poor are more likely to lack reasonable access to health centers and schools than the rural elite. The poor are more often required to walk to reach such facilities. This particularly impacts girls from poor rural households because their parents are not willing to allow them to walk long distances to get health care or attend school. Annex 14 presents the results of an access survey which was carried out for a random sample of 345 settlements of different sizes throughout Yemen as part of the preparation of the Program in order to demonstrate the magnitude of the accessibility constraints in Yemen.

In Yemen there are numerous signs that inaccessibility - the difficulty in gaining access - is the key constraint to rural development. Improvements to access for rural communities to reduce isolation should therefore be looked upon as the facilitator for development, rather than as individual sector interventions in transport, water, energy, etc. Thus, provision of better access becomes a key element in a strategy to alleviate poverty. In particular, the benefits from the Rural Access Program would be:

(a) substantial improvement of access for the rural population, to markets and services (both administrative and social), in terms of reduced transport time and cost, and increased reliability of access;

(b) improved access for seriously isolated areas of the country, enabling the implementation of various types of poverty reduction programs and of sector programs in agriculture, health and education, all of which require reliable transport services and all-year access;

(c) improved administrative and economic integration of the country and facilitation of 14

decentralization,through the linking of rural communities, District centers and Governorates with the larger national economy;

(d) support to the decentralization process and strengthened public institutions, through more decentralized decision-making, implementation and monitoring; and

(e) more efficient use of public resources through the introduction of transparent contacting procedures, performance-based road network management and maintenance arrangemene:s,and the introduction of transparent prioritization and selection procedures for rural access investments at the Governorate level.

Target population: The Project and the Program would target the rural population as main beneficiaries, a large proportion of which is poor. The Program would be based on the concept of 'efficient' poverty targeting. This rests on the principle that sustainable poverty alleviation is likely if interventions iead to the creation of economic growth, as well as appropriate institutional reform. Thus, within large poor areas emphasis would be given to those places that are potentially productive or contain exploitable resources, as well as building local capabilities to sustainably plan and maintain the infrastructure. Within this context, the Program also recognizes that the impact of improved access can vary among men and women within different regions and cultures. For this reason, it will specifically address gender-related dimensions of poverty reduction and incorporate gender-related factors into the design of individual road projects. The Terms of Reference for the consultancy on Rural Accessibility Planning in Annex 15 is providing details on the methodology.

The Project will therefore target:

(a) rural poor populations, a disproportionately large fraction of whom are women living in areas which currently suffer from a lack of access to facilities (social and administrative) and economic developmental options;

(b) women and children in rural areas, through reductions in time and effort needed to meel basic human needs, such as supplying water and accessing education and health facilities; moreover, improved roads will facilitate the distribution of gas cylinders to remote areas, thereby reducing the time spent on, and demand for, environment-damagingcollection of firewood;

(c) rural shopkeepers and traders, through improved access to wholesalers, through more reliable transport and lower transport costs;

(d) road users and small transporters serving the rural areas, through improved travel conditions, time savings and reduced vehicle operating costs. It is noted that these short-haul carriers are already highly competitive; this makes it likely that transport savings will actually be passed on to the consumer;

(e) Public Administration agencies at the central and local levels;

(f) private sector contractors and consultants, who will benefit from business opportunities provided by the Program, more efficient and transparent contract management and Project-sponsored capacity-building activities; and

(g) the rural population at large, through better access to markets and services and lower transport costs.

Improved Poverty Targeting. The definition and location of poverty are fundamental questions when formulating a poverty targeting strategy for the Program. This is because the identification and ranking of rural access interventions are essentially 'spatial', and require knowledge of where the poor are located 15 and what their accessibility constraints are. At the same time one seeks to know where economic development potential lies among poorer areas, and to what extent road improvements will play an effective complementary role in the provision of basic social services or facilities, and how to optimize these benefits to poor women. A rural access survey in 345 randomly chosen rural settlement conducted in 1999 by the Road Maintenance Fund for the Yemeni Government and funded by the IDA supported Transport Rehabilitation Project indicated that access to transport, health and education facilities is worse in the smaller settlements (less than 1000 population) where the majority of poor Yemenis live. Selected results of the survey include: (i) the average vehicle per capita of about 0.05, i.e., one vehicle for every 19 people; (ii) the average distance to primary schools for boys varies from 0.6-5 km and for girls from 0.8-5 km; for secondary schools, the average distance for boys varies from 8-125 km (presumably includes boarding) and for girls from 3-10 km; in both cases over 90% of transport is by walking. (iii) the average distance to health and medical services range between 6- 18 km; and (iv) the average distance to daily and weekly markets range between 9-11 km; (v) 33% of settlements are within 5 km from a two lane highway; (vi) 36% of settlements are within 5 km of a public transport route; (vii) only 6% have direct access to paved roads, 13% to gravel roads and 82% to earth tracks which are generally in extremely poor condition and susceptible to regular disruptions. See Annex 14.

The Program will address these issues through the development of the rural accessibility planning methodology, first at the Governorate level, and eventually moving down to the Districts. The methodology will incorporate gender-related factors identified in a Gender Issues Study currently underway. This methodology will be further supported by a comprehensive socio-economic data base residing at the Bureau of Statistics in the Ministry of Planning and Development. This data base, which includes spatially-based poverty profiles disaggregate to the Governorate and District levels, and which is currently being completed through the UNDP-sponsored household survey and poverty monitoring program.

The following table summarizes the target population and poverty status of the five intermediary roads and cluster areas initially identified: 16

Summaryof the populationand povertystatus for the five pilotroad projects

Thula 31,430 15-19% 15-19% Amran Amran 25.6 56,856 15-19% 15-19% lyal Surayh 39,757 15-19% 15-19%

2 Hajah Kuhlan Affar 15.8 50,849 15-19% 15-19% Al Maghrabah 32,774 25-29% 30-39%

3 Al Beyda At Taffah 42.3 30,267 50+%10 504% __~ P _ ota _V A = ______7 4 Taiz Ashamaiatien 8.8 138,866 20-24% 20-24% LSahi Towr al Bahah 38,974 15-19% 15-19%

5 Al Mahwit Al Mahwit 21.3 56,468 25-29% 25-29% Bani Sa'd 47,375 20-24% 20-24%

f ______I ______

Source: Central StatisticsOffice; averagerates are weightedby population.

4. Institutional and implementation arrangements: Project and Program implementationperiod: The Project (equivalent to the first phase of the Program) would be implemented between the beginning of the third quarter of 2001 and the end of the se',ond quarter of 2004, equivalent to 36 months. The second phase of the Program would start as soon as the triggers indicated in section A.3 are complied with; this could be as early as 18-24 months after credit effectiveness. The second and third phases of the Program are expected to have a duration of 3 to 5 years each.

Executing Agencies: The overall Program with its three phases will, over roughly a 10-year pe:^iod, implement a relatively large number of works contracts to improve rural access throughout Yemen. A central rural roads administration called the Central Management Office for Rural Roads (CMO), will manage the overall Program, coordinate between the Govemorates, safeguard full compliance with IDA fiduciary obligations and other required functions, such as financial management, keeping of records, and provide overall coordination of all activities within the Program. The CMO is being staffed with qual fied personnel recruited through an open and competitive process. Sufficient experienced candidates are available in Yemen, mainly from the existing staff of MPWUD, the Road Maintenance Fund and GCRB. Starting from the second phase of the Program, the implementation of individual contracts will be managed primarily at the regional level, through specialized staff located there, dealing exclusively with rural roads. The detailed institutional arrangements will be addressed in the Road Sector Management Study awarded in early 2001.

The CMO, which is being established before Board presentation of the IDA credit for Phase I, will h ave four units: Administration/Accounts; Procurement; Planning, Design and Supervision (monitoring); and Environmental and Social Management. The function of the Environmental and Social Management lJnit will be: (i) review and approve Environmental Impact Assessments (E1A) and Environmental Management Plans (EMP) for all rural roads to be improved under the Program, (ii) monitor the compliance with the ETAand EMP by the various entities involved in the implementation of the Program, and (iii) collect data to document that the agreed performance criteria related to environmental and social aspects of the Program are met. This unit will be staffed with qualified personnel (2 professionals) before 17

Project effectiveness. The staff of this unit will receive training during Phase I of the Program as part of the TA provided to the CMO.

Program Coordination and Oversight: Oversight of the CMO and the overall Program will be assured by the establishment of a Steering Committee. The Minister of Public Works and Urban Development will chair the Steering Committee meetings initially. The Steering Committee would be composed of high- level representatives of MPWUD, Ministry of Planning and Development (MOPD), Ministry of Finance, Ministry of Local Administration (MOLA), the Ministry of Agriculture, and the Road Maintenance Fund. The Steering Committee would further include the General Manager of the CMO and from time to time representatives of the Social Fund Project and the Public Works Project, because of the linkage between these and the proposed Project, as explained earlier in this document.

The duties and functions of the Steering Committee would include: (a) approval of rural road planning and design criteria, staff service rules and manual of procedures; (b) sanction and termninationof contracts for high level CMO staff, including the GM; (c) approval of annual budgets for operation of the RAP and RAP investments; (d) review of quarterly and annual progress reports and the performance of the CMO; (e) final approval of contracts below a value of US$1,000,000 and for contracts above US$1,000,000 make final approval in consultation with the High Tender Board; and (f) appointment of auditors and review of auditor's reports.

Decentralization and Capacity Building: Presently there are no laws giving the Governorates and the Districts ownership and authorities for specific classes of roads, all roads in Yemen except municipal roads and private roads are under the MPWUD. Clearly, the secondary (intermediary) road network linking Govemorates and Districts, may not lend itself to a too fragmented decentralized management. Given that the next two years will be a trial period for the new decentralized governments at the Governorate and Districts level, and that there will be new local elections in two years, there is considerable uncertainty as to the future authorities for road management at the Governorate and the District level. The Local Authorities Act and the Executive and Financial Bylaws also do not address specific sectors such as the road sector. The Financial Bylaw is still to be passed. There is thus considerable uncertainty surrounding the future management of secondary, tertiary and village access roads. Given also that in the past there has been no experience in road management at the Governorate and District level except for follow-up of road construction works by a local representative of the Ministry of Public Works and Urban Development, it is understood that it may take many years before rural road management can be effectively decentralized. With this background, it has been agreed to establish a few (not less than 3 and no more than 6) regional rural road administrations headed by a Provincial Engineer during Phase I. In this way the Government will gain experience in more decentralized management, and this could pave the way for these units to possibly be integrated with the Govemorate organizations once these are fully functional towards the end of Phase II of the Program.

Within the decentralization process now underway, there is a need to also strengthen the procurement process in Yemen towards decentralized management of the tendering process. This includes strengthening the capacity of the central High Tender Board to monitor and oversee decentralized tendering, as well as building local/regional tendering capacity. Given the regional nature of road network management and the nascent capabilities of the Govemorates, the RAP in Phase I will also assist in establishing a limited number of regional tendering offices, which would cover several Governorates. These regional tendering offices could be housed in the office of the Provincial Engineer initially. Accordingly, a small component of the Project will include institutional support for establishing regional tendering entities, as well as technical assistance to the central High Tender Board for assuming its revised functions.

Monitoring and evaluation arrangements: Project Monitoring and Evaluation (M&E) would be the responsibility of CMO, which will monitor progress against agreed-upon performance monitoring indicators (Annex 1). Monitoring and Evaluation would be guided by the Project Implementation Plan (PIP). The outcome/impact indicators will be collected by the CMO at several locations along each of the 18 five pilot roads. Baseline information has been collected for five locations corresponding to tie five identified pilot roads. The same information will then be collected once every six months after the road improvements, to monitor changes. Three types of indicators are being monitored at each location: (i) transport rates for goods and passengers, for various types of transport available at the location; (ii) price of essential commodities; and (iii) access time from the village to the closest market and services. The commodities being monitored are:

* gas cylinder * diesel * kerosene * cement * flour * sugar

The monitoring of these prices will be adjusted for changes in the prices of fuel, as well as the general inflation rate. The methodology and terms of reference for conducting accessibility assessments in Phase I will propose indicators that will be used to prioritize road investments at the govemorate and the district levels. These indicators will be tested during the first phase and will provide an additional basis for monitoring accessibility improvements in subsequent phases. In addition to the above, during Pilase I purpose specific surveys will be developed and tested for use in Phase II and III to measure the poverty effects and impacts associated with employment-intensiverural road projects. Cooperation with ILO will be sought in this respect in order to modify their rapid assessment approaches to suite the investments proposed in Yemen under the RAP.

The CMO would consolidate the M&E reports and include them in the semi-annual (January and July each year) progress reports. The format for the reports would be finalized during the Project's Launch Workshop. They would cover the status of project implementation, any problems that may have arisen and the corrective actions being taken. They would also provide an updated procurement program, disbursement and commitment tables. In addition to annual progress reports, M&E would be conducted through (a) IDA supervision missions, and (b) an early implementation assessment review. CMO would prepare a detailed report to serve as the initial basis for this early implementation assessment, which is planned for one year after effectiveness. At completion the CMO will submit to the IDA a final project evaluation report by December 31, 2004. The project will provide technical assistance for strengthening M&E and the FMSIMIS System.

Reporting: (i) Semi-annual progress reports will be established by the CMO on the basis of the poject implementation plan, which was agreed during Credit negotiations; (ii) Bank's supervision missions will take place twice a year, with an Early Implementation Assessment 12 months after effectiveness; and (iii) an Implementation Completion Report (ICR) will be prepared at the end of the Project and presented within six months of the credit closing date. Baseline and annual monitoring studies will assess the impacts of the entire Program. The monitoring activities will verify if program and project objectives are being achieved. In particular, advances towards the objective of improved livelihood of the rural population and less rural isolation will be evaluated through regular (at least annual) data collection and evaluation of both market rates for the transport of goods and passengers, and of market prices for selected goods of basic consumption in both rural and urban markets. Of interest are both absolute price levels and the fluctuation of prices between dry and rainy seasons. Accessibility indicators and profiles piloted during the initial implementation of the pilot roads, will be further refined, developed and used in the planning stage. The same indicators can provide a basis for further monitoring of a3cess improvements.

Procurement arrangements: The Government will assure that the new CMO is staffed with at least one senior professional with in-depth knowledge and practical experience in procurement according to Bank/IDA procurement rules. If the Government is unable to find and retain adequate staff for this function, it will as an alternative recruit the services of an external procurement expert or a specialized 19

firm for a period of time until the right person has been trained. During the entire length of the Program, the CMO will have the overall responsibility for the compliance with IDA procurement guidelines. The CMO will arrange for procurement training for MPWUD and other staff involved in procurement. A detailed Procurement Plan for the Project covering all procurement which is planned for the first half of the project period has been prepared. The Procurement Plan will have to be updated regularly by the CMO and will be the basis for scheduling and monitoring all procurement activities under the Project. Details of the procurement arrangements including the Procurement Plan are presented in Annex 6.

D: Project Rationale 1. Project alternatives considered and reasons for rejection: During the project identification and design process, several concepts and strategies were considered, as discussed under B.3, Strategic Choices.

(a) The concept of another multi-purpose village-level project, was rejected by local stakeholders and Government officials participating in the project identification workshop (June 4/5, 2000), strongly indicating that the new program should focus on those intermediary rural roads which:

* are needed as a complement to small village access roads, and therefore to assure the overall functioning of the rural road network; e carry more traffic than small village roads and therefore have a higher economic rate of return; * are essential for evacuating rural production to provincial markets and bringing basic manufactured goods to rural areas; and * receive little public funding and are not covered by any other project.

(b) Another option considered was to immediately emlbarkon a large-scale rural roads improvement program in Phase 1. However, considering the present absence of: (i) adequate institutional arrangements and capacities; (ii) technical and environmental standards; (iii) sustainable mechanisms for maintenance funding and execution; and (iv) adequate planning tools and selection criteria for investments, it became clear that that option would carry a very high risk of resource wastage and serious implementation difficulties. It was therefore decided to address these concerns in an initial phase, which would lay the foundation for the subsequent large-scale rural access road improvements.

(c) The option of using a large stand-alone 5-6 year project supported by an IDA credit was also considered and rejected, on the grounds that: (i) the sheer size of the needs and the limited implementation capacity requires a much longer implementationperiod; (ii) high up-front cost of preparing such a project and the time required; and (iii) flexibility needs to be maintained so as to adjust the Program to the gradual decentralization process, the speed of which is difficult to forecast at this time. Given these conditions, a programmatic approach seems to provide the most appropriate instrument to achieve the objectives.

(d) An initial option was to focus exclusively on the intermediary network. However, there is growing evidence that isolated investments do not achieve their full impact unless incorporated into a "sub-network" approach. Accordingly it was decided to introduce this network, or "cluster" development model by including village access roads within the areas of influence of the pilot internediary roads. This approach will be tested and developed further during Phase I as a framework for assisting local governments to prioritize investments so as to assure minimum access within their jurisdictions, as well as to the economy at large. 20

2. Major related projects financed by the Bank and/or other development agencies: (completed, ongoing and planned)

X-2.

Implementation Development Progress(lP) Objective(DO) Bank-financed Poor access, institutional Multi-Modal Transport Project S S weaknesses Inadequate funding for Transport Rehabilitation Project S S Maintenance, low cost recovery, and institutional weaknesses Rural development Social Fund for Development S S Employment generation Public Works Project S S Otherdevelopment agencies EuropeanUnion - Rural Roads Program - Al

Mahwit (completed 199-5) _~.::x~ Food Security Program M. Kreditanstalt fuer Wiederaufbau Shibam-Mahwit asphalt road (KfW) construction (completed)

GermanDevelopment Ass. GTZ RuralDevelopment Studies udgi c

Kreditanstalt fiuerWiederaufbau Sanaa-Taiz asphalt road resurfacing as (KfW) (cmltd

UNDPPrograms - Environmentand Eco-Tourism .f d a - GmiovetmmentCapacity and proect. T A l Institutional Reformn - Poverty Alleviation and . Employment Generation UN Capital Development Fund Dhamar feeder roads (75 k,n, (UNCDF)I completed)

Government of China Jihana-Mareb asphalt road construction (suspended before

completion) *.<. . FAO - IFAD Mahra Rural Development Project, < ~ feeder roads construction (planned)

Arab Fund ± OPEC AI-Beidah-Mukeiras-LowdarRoad .. Omani Government Roads in Mabra Govemnorate lP/D0 Ratings: HS (HighlySatisfactory), S (Satisfactory),U (Unsatisfactory),H-U (Highly Unsatisfactory)

3. Lessons learned and reflected in the project design: Implementation arrangements. Yemen's civil service is undergoing considerable reform and strengthening, but its capacity to efficiently manage rural roads has been a constant challenge in the past when rural access roads were under the Ministry of Local Administration. After the responsibility for rural roads shifted to the Ministry of Public Works and Urban Development, the situation ha-s not improved as explained in Annex 12 on the road sector. Past practice for IDA financed projects in Ytemen has been to set up a project/program management team within the Ministry of dedicated and capable individuals recruited from outside civil service to implement IDA financed projects. The RAP would not follow this approach. Instead, the project assists in establishing a permanent institutional structure to be responsible for rural roads at the central level in Yemen (the Central Management Office for Rural Roads - CMO). Tnitially,only IDA funds and a part of the govemrnmentbudget funds for rural access roads will 21 be managed by this office. But gradually, as the program expands, the CMO is expected to be responsible for administering the central government responsibilities for all rural roads. The future role of this office and its administrative linkages would be determined during Phase I when it becomes more clear which Ministry will have the central responsibility for rural road programs in the future. The established capacity should not collapse once the Project is completed, but continue to manage the future phases of the Program, possibly as an external directorate to the Ministry in charge of rural roads and regional development.

Difflculty in establishing sustainable institutions in the sector. One example is the former Highway Authority which had the dual function of road network manager and force-account contractor for road works. When the force-account functions were separated as a government-owned commercial contractor (GCRB), the entire Highway Authority was dissolved and the capacity which had existed for road network management and planning was largely lost because key staff did not want to transfer to MPWUD. MPWUD was never able to fill these positions adequately. Another example is the GCRB which is now struggling to survive as a commercial contractor. GCRB's problems are partly due to its status of a Government-owned contractor, which makes it difficult to maintain purely commercial relations with its clients, who are other Government institutions. The matter is complicated by the fact that the Minister of Public Works and Urban Development is also Chairman of GCRB, raising questions on the managerial autonomy of GCRB and conflict of interest when contracts are awarded to GCRB. The Government also had initial cooperation difficulties between the former Highway Authority and the Road Maintenance Fund when the RMF was established, resulting in a formal relocation (by law) of the RMF to the Prime Minister's office. The design of the Project includes strengthening of the RMF to take an active role in the financing of rural road maintenance. The Program will also introduce private sector involvement in road network maintenance, through multi-year and area-wide maintenance contracts. The introduction of these contracts in Yemen will: (i) help to fill the present vacuum in rural road maintenance; (ii) strengthen the private sector by providing business opportunities, especially in rural areas; and (iii) reduce the need to rely on GCRB and force account equipment owned by the MOLA.

Inadequate procurement procedures. Procurement of goods, works and services has caused long delays to the implementation of donor-financed projects in Yemen in the past and even to the cancellation of some IDA-financed project components. To avoid this, it was agreed that the Government will staff the new CMO as early as possible with at least one professional with in-depth knowledge and practical experience in procurement according to Bank/JDA procurement rules. If the Government is unable to find and retain adequate staff for this function, it will as an alternative recruit the services of an external procurement expert or a specialized firm to support the CMO.

Tribal conflicts affect project implementation. Conflicts among tribes, and also between tribes and the central Government, have caused implementation delays to projects in some areas of Yemen. The decentralized planning and implementation approach to be used in the Program, and the participatory methods to be applied in the identification of specific interventions, should make it possible to reduce this type of problems to a minimum.

4. Indications of borrower commitment and ownership: There is a very strong support for better rural access roads not only among Government officials in various Ministries, but also among the rural population in general. There is also overwhelming evidence through the annual budget discussions that better rural roads are probably the single most important issue for the vast majority of members of Parliament from rural areas. It is worthwhile mentioning that a member of the Yemen Parliamentary Committee on Services took part very actively in the 2-day workshop organized during project identification to discuss and plan the Project. Further indications of borrower commitment are: the willingness in principle by the Government to increase their share (counterpart) of the financing of the Project beyond the typical five percent and the fact that the MOPD and MPWUD have provided written comments to the Identification Mission's Aide-memoire and draft PCD as well as to the Aide-memoire of the Appraisal Mission. The MOPD and MPWUD have also 22 carried out a selection process to identify 7-8 potential pilot project roads, and in a letter to IDA signed by the two ministers, these roads are identified. Finally, the Government has indicated its intention to mobilize substantial co-financing from other donors for the second and third phases of this Program. 5. Value added of Bank support in this project: Continued Bank support to the Program and the sector would catalyze important external investment resources by other donors for rural access improvement; here other donors can count on IDA to provide the policy support to the Government; assist the overall institutional strengthening of the road sector, support and attract private sector development by helping the Government to create an appropriate environment to attract the private sector to become engaged in road network managemen: and maintenance; provide a lead for the donor community to follow a coherent sector approach when deciding on sector investments; and improve the country's growth and poverty-reduction prospects by providing needed infrastructure. Furthermore, the financing and technical support by IDA to introduce multi-year, area-wide performance-based road maintenance contracts will give comfort to potential bidders with respect to the payment and other sovereign risks that they may otherwise not be prepa-ed to take under the present circumstances. The Project would also integrate well with the larger miacro- economic approach to Yemen's development as described in the CAS.

Furthermore, IDA has a wide range of experts (among its own staff and as consultants) upon which it can call to help the Government as issues come up and problems need to be addressed. The World Bank's Sana'a office provides a location for quick consultation and to facilitate accessing the Bank's extensive knowledge base. Finally, IDA resources available for supervision of the proposed Project also often assists with the supervision of other donor's funds which are provided as part of overall sector initiatives. Regular supervision, as well as the preparation of project completion reports, will help to ensure the Project's successful implementation and provide valuable lessons of experience for future efforts.

IDA is in a unique position to assist the Government in the implementation of its decentralization strategy. As a donor, IDA is involved in virtually every key sector in the country, and an active participant in assisting the Government to reform its governance structure. IDA assists the Government with civil service reform, public expenditure reviews, macro-economic policy formulation, improving line ministry efficiency, reform of the legal sector, providing urban strategies, planning and financing infrastructure of various types, and assisting with donor coordination. All of these activities are afiected by decentralization and this puts IDA in a position to act as the Government's partner during p-oject implementation.

E: Summary Project Analysis: (detailed assessments are in the project file, see Annex 8 for details) 1. Economic: (see Annex 4) [X] Cost-Benefit Analysis: Overall IRR 41 %, Total NPV US$40.9 million [X] Cost Effectiveness Analysis

The use of economic analysis for the program as a whole: Over the expected 10-year period of the RAP, the program is expected to finance a large number of rural roads to improve access of rural populations to markets and services (social and administrative). With the exception of the Pilot Roads to be improved under Phase I, the identification of individual road clusters and sub-networks to be improved will be carried out during the Program and will be based on a participatory screening process takingrinto consideration a variety of factors: poverty impact, social, economic, political, strategic, etc. It is, however, clear that the inclusion of economic factors in the screening process is not equivalent to a full and detailed economic evaluation of each road investment considered. During Phase I of the Program, the methods and procedures to be used for the screening and identification of individual investments will be defined.

Nevertheless, existing methods and tools of economic analysis, the Highway Design and Maintenance Standards Model and (HDM4) and the Roads Economic Decision Model (RED), will be used to "test" all 23 intermediary roads proposed for improvement, as a result of the participatory process of rural accessibility planning and screening. These tools utilize expected reductions in vehicle operating costs as the principal economic benefits. It must be mentioned that it is now accepted that the traditional VOC-based economic analysis is inadequate to capture the full benefits of low-volume rural road investments, in particular in the context of poverty-targeted projects. On the other hand, a reliable quantification of all benefits of rural roads, in particular social benefits, requires a large amount of data, which is rather expensive to collect and to monitor. In poverty-targeted projects, the concept of "least-cost provision of basic needs" is often applied, and may also be used for some of the "low-end" rural roads, such as access roads to small villages in poor areas.

Given the overall country conditions and the relatively high traffic volumes on the intermediary rural roads in most parts of Yemen, it is, however, reasonable to demand that all individual investments in intermediate rural roads to be financed under the Program should have an IRR above a threshold of 12 percent. In the rural accessibility planning process and the identification and ranking of potential projects, cost effectiveness analyses will be used as a tool to support decision-making and prioritization. This type of analysis provides indicators allowing to compare alternative investments under a given budget constraint. This is particularly useful for village access roads, where cost effectiveness indicators may be used to prioritize and select the "best projects" among a large number of candidates. Indicators are: (i) the cost per capita for access improvement, (ii) the reduction of access time between the village to the next intermediate road, and (iii) threshold access times to specific markets and social services.

In exceptional cases, for areas with extreme poverty and low productive potential, where both the traditional economic analysis and access indicators show results below the set thresholds, other evaluation methods such as least-cost analysis may be used. Given the poverty focus of the Project and Program, it is important to make sure that the limited resources to be made available shall actually target the poor. However, as pointed out elsewhere in this document, the individual physical measures to be implemented should be targeted to those geographical areas which present high poverty rates, but also a high economic development potential, and extremely poor accessibility.

Approach to economic analysis of village access roads. Village access road improvements will mostly be identified and improved during the second phase of the program, with the exception of a limited number of village access roads linked to the pilot roads of Phase I. Because they will generally have low traffic volumes, the application of strict economic rate of return criteria is unlikely to be appropriate. Rather, they will be selected within the context of establishing a "cluster" or "sub-network" of roads that complements and strengthens the impact of improvements to the intermediary roads. Under this framework, the objective is not to achieve a certain minimum rate of return, but to provide minimum access levels to isolated populations, with a focus on the most cost-effective ways of achieving those minimum access levels. Consequently, the rural accessibility methodology will focus on developing a participatory identification and prioritizing framework based on degree of poverty, isolation, traffic and cost-effectiveness. This would involve the definition of appropriate road improvement levels (standards) for different classes of roads and traffic. This will be developed and tested at the beginning of the first phase, and based on this experience, used and refined in subsequent phases.

Criteria for Selection of Additional Intermediary Rural Roads and Village Access Roads. The following criteria were agreed upon at Negotiations and are included in the legal documents:

For Village Access Roads: - Must be adjacent to any of the Intermediary Rural Roads included in Phase I of the RAP. - Final selection of the roads would include a cost effectiveness criteria and be subject to a public consultation process.

For Intermediarv Rural Roads: - Investments in the improvement of intermediary rural roads must have a rate of return of at least 12 percent, based on an economic analysis carried out using the HDM model or the RED model. 24

For both Village Access Roads and Intermediary Rural Roads: - The road improvements must not require any resettlement or land acquisition. - An Environmental Management Plan must be prepared, based on the generic outline agreed at Negotiations.

In addition, the selected roads shall be located in different Governorates with high incidence of poverty, provide access to areas with significant economic potential, and there can be nIo works contract in effect for the selected road between the Government and a local contractor.

Economic analysis of investments in Pilot Roads under Phase I: Five intermediate-level Pilot Roads have been selected for improvement under Phase I, to be complemented by a limited number of adjacent village access roads. The main objective of the pilot improvement works is to test in practice the-new technical, environmental and implementation standards for rural roads which will be utilized for all other investments during the second and third phases of the Program.

The five Pilot Roads have been selected based on the degree to which they are representative of the different types of physical and also social conditions which exist in Yemen. Although one could argue that the economic rate of return is of a secondary importance in the case of the Pilot Roads, they nevertheless need to be submitted to the same "test" in terms of threshold IRR. This "test" was carried out during project appraisal, and the results are presented in Annex 4. Provision is also made, in terms of financing, for additional roads to be selected, should they meet the basic criteria that: (i) they provide representative access on the "intermediary road network"; (ii) they show an economic internal rate of return of at least 12%; and (iii) they do not involve resettlement or land acquisition.

The appraisal mission carried out an economic analysis on the initially identified five pilot intermtodiary rural roads using the RED model, based on the preliminary cost estimates and other data which was collected before and during the appraisal mission, and complemented later by data provid; d by consultants. The table below shows a summary of the results.

Economic Analysis Summary Table for Pilot Rural Roads

Thula - Amran IRR 53% 43% 40% 32% _ 3.8 NPV 5.820 5.307 3.852 3.338 _ _ Kuhlan-AI IRR 17% 13% 12% 8% 1.3 Maghrabah NPV 1.442 0.258 -0.102 -1.286 _ Ad Taffah - IRR 30% 23% 22% 17% _ 2.1 Awwin NPV 3.710 2.880 1.953 1.123 At Turbah - IRR 69% 56% 53% 43% 5.09 Towr al Bahah NPV 12.259 11.511 8.446 7.697 _ Khamis Bani Sa'd IRR 46% 37% 35% 28% 3.3 - Al Mahwit NPV 17.673 15.748 11.330 9.404

NPV in US$ million, at a 12 percent Discount Rate

There are clearly two different groups of Pilot Roads. The first group consists of three roads ,vhich besides their rural access function will also have the function of links between parts of the main road network. Their economic rate of return is between 46 percent and 69 percent in the base case. The second group consists of two roads which after their completion will provide rural access only, and which will not play a "link" role, at least not until they are continued in Phase ITof the Program to points beyond 25 the present project length. Their economic rate of return is between 17 percent and 30 percent. In the sensitivity analysis, only one of the five Pilot Roads falls under the typical 12 percent IRR threshold in the worst case scenario. It is therefore clear that all five Pilot Roads are economically feasible.

Economic Analysis of Part B of the project (Al Ahmar - Al Naqabah road rehabilitation). The ongoing Transport Rehabilitation Project originally included the Am Ayn - Naqabah road section of about 100 km length, and this sub-project was appraised and is included in the SAR for that earlier project. HDM III was used for the 1995 economic evaluation. The RAP appraisal mission carried out a revision of the basic parameters of this road and its economic evaluation, with the purpose to verify if the satisfactory rate of return (IRR of 41.5%) which was calculated in 1995 is still valid.

In conclusion one can say that (i) the expected increase in the estimated rehabilitation cost is moderate, and will in the economic analysis most likely be compensated for by increases in unit VOC savings, and (ii) actual observed traffic growth rates between 1995 and 2000 are much higher than anticipated in the original economic evaluation. These two factors make it certain that the economic rate of return of the project (without widening) is significantly higher than calculated in 1995. The high traffic growth rates also ensure that widening of the road to 7 meters pavement width is economically viable and justifiable.

2. Financial: (see Annex 5)

Fiscal Impact: The total Project costs will be US$ 52.61 million, with IDA providing US$ 45 million and the Government of Yemen the remaining US$ 7.61 million, equivalent to approximately 14.5 percent of the total project amount. Assuming an even distribution of project costs over the three-year project period, the US$ 2.5 million needed annually as counterpart funds would represent less than 4 percent of current budget allocations to the road sector, which are in the order of US$ 72 million. This phase of the Program is thus not expected to have major implications for the national budget. The longer-term fiscal impact of the Program will be assessed during Phase I.

Other financial issues relating to the project are the: (i) current unsatisfactory system for allocating road sector funds to individual road projects, many of which receive few funds and therefore stay in the budget for many years; (ii) medium- and long-term sustainability of the Program, which depends on the availability of resources at the Govemorate and District levels, which in turn depends on the approval and actual implementation of relevant provisions of the new decentralization legislation (Financial Bylaw); and (iii) financial sustainability of the sector determined by the level of cost recovery from the road users and road network maintenance financing. These issues are addressed elsewhere in this document.

Accounting and Financial Reporting: The financial management function of the Phase I of the RAP (Part A) will be the responsibility of the newly established CMO under the supervision of a Steering Committee. An action plan is set-up and agreed between IDA and the borrower for the establishment of a full financial management system. Part B of the Project will be implemented by the Project Imple- mentation Unit (PIJU)for the Transport Rehabilitation Project under the Ministry of Public Works and Urban Development as if it were a supplemental credit under that project. The PIU has an established financial management system and is in compliance in the submission of audit reports under the TRP. An action plan has been agreed upon with the borrower for the PIU to establish separate project accounting records and auditing arrangements. To meet the Bank's financial management requirements, both action plans need to be fully implemented prior to credit effectiveness.

In order to ensure an adequate financial management capacity of the new CMO, the Government will retain at a very early stage the services of a reputable financial management consulting firm. The services will comprise mainly the setting up of the accounting and financial management system and the provision of regular backup support to the CMO as necessary, for at least the first two years of the Program. The financial management assessments and arrangements for the project are detailed in Annex 5 and are summarized below. To ensure that an appropriate financial management system is in place prior to 26 effectiveness, a consulting firm will be engaged based on terms of reference agreed with IDA (included in the PIP). This will ensure that an accounting system capable of accounting for all possible expenses related to the operation of a rural road administration with regional offices will be operational once the first expenses are to be recorded. The action plans will be implemented in a timely manner, in paticular the consulting firm will ensure that:

assistance is given to the CMO in the recruitment of its Finance and Accounting Staff (provide TORs and establish minimum qualifications, and assist in the selection process);

accounting records are developed and will be maintained according to generally a. cepted accounting standards, including the Chart of Accounts, Project Management and Financial Reports, and accounting records consistent with the needs of a rural road administration and the Development Credit Agreement's components and expenditure categories;

a Financial Management and Accounting Manual (FMAM - included in overall Project Implementation Manual) is prepared, which covers the financial policies and procedures and internal control systems compliant with IDA's financial policies and guidelines.

The FMAM will describe the details of resource flow to the CMO, both of budget resources prov'ded by the Government and of IDA resources. It would also cover the opening of the Special Accounts for IDA funds and a Project Account for counterpart project funds, the processing of withdrawal application, submission of Project Management Reports (PMR's) to the Bank, auditing arrangemen:s and management reporting of project funds. A project implementation plan will be prepared prior to Board presentation of the project; this will later be expanded (prior to effectiveness) to include the project's financial management and accounting manual, staff rules, and administration and procurement guic.elines. The Project is expected to build up the capacity which would enable it to adopt a PMR-based disbursement system 18 months after project effectiveness. The CMO with assistance from the conisultant would ensure that the appropriate computer software and hardware required for the PMB-based disbursements system are operational within the first 12 months of project implementation.

The detailed Action Plan (shown in Annex 5) agreed upon between IDA and the borrower is a cor-dition of credit effectiveness. IDA will undertake an assessment of the financial management system upon full implementationof the action plan to evaluate its readiness for disbursement.

Auditing Arrangements. The project financial statements shall be audited by an independent auditor. The CMO will appoint an auditor acceptable to IDA to carry out an annual audit which should comply with the project implementationmanual including the financial management and accounting manuals ar d with generally accepted auditing principles, i.e., the International Standards on Auditing, as issued by the International Federation of Accountants, the IDA's Guidelines [e.g., Financial, Accounting, Reporting and Auditing Handbook ("FARAH')] and specific Terms of Reference (TORs) acceptable to the IDA. The auditor will express a professional opinion on the annual project financial statements and Special Account as well as submit to IDA an annual audit report within six months after the end of the fiscal year. In addition technical and financial audits will be carried out quarterly during the first 12 months of the Project, for the internal control purposes, and will be submitted to IDA within 45 days from the quarter end. Costs for all auditing services will be financed through the Project. The selection of private auditors would be in accordance with the Bank's guidelines (the TOR is filed in the PII').

For Part B of the Project, the auditing arrangements will be the same as those agreed between IDA and the borrower for the ongoing Transport Rehabilitation Project. There are no audit issues on this project. The Part B component will maintain the traditional disbursement system until the TRP credit is closed (closing date June 30, 2002).

Disbursements. Disbursements from the IDA credit would be initially made using the traditional system (reimbursements with full documentation and against Statements of Expenditure (SOEs) and direct 27 payments). The CMO would convert to the PMR-based disbursement system within 12 months and based on a request by the Government. Before this can happen, IDA would carry out a financial and procurement assessment with the objective of evaluating the readiness of CMO to adopt PMR-based disbursement system, and issue a certification ensuring that a PMR-based disbursement system would operate satisfactorily. The target date for this conversion is March 31, 2003.

Special Account: Two special accounts would be established under the project, one to be managed by the CMO and another for the TRP PIU in charge of Part B component. These special accounts would be held at the Central Bank of Yemen. For Part A of the Project (RAP- Phase I) the authorized allocation for the Special Account would be $2.5 million. The authorized allocation would be US$ 600,000 for the Special Account for Part B of the Project. However, the initial allocation for the Special Account for Part A of the Project shall be limited to an amount equivalent to $1.5 million until the aggregate amount of withdrawals from Part A of the credit exceeds SDR 7 million. The initial allocation for the Special Account for Part B of the Project shall be limited to an amount equivalent to $300,000 until the aggregate amount of withdrawals from Part B of the credit exceeds SDR 2 million. When withdrawals are made on the basis of PMRs, the amount deposited in the Special Account should not exceed $4 million in respect of Special Account for Part A of the Project and SI million in respect of Part B of the Project. The special account would be audited annually by an independent private auditor acceptable to IDA. 3. Technical: The main technical issue related to the Program is the establishment of appropriate technicalleconomic standards for rural roads. The Project is addressing this by defining new standards for rural roads and suitable criteria for the selection and planning of individual sub-projects. The standards to be revised include road widths, type of surfacing/seal, pavement types, materials, and construction and maintenance methods as a function of road type and traffic. These issues are treated in more detail in section B of this document. 4. Institutional: Institutional development and capacity-building are the central elements of the first phase of the Program, and the related issues are treated in sections A, B and C of this document. There is, however, a specific institutional issue which requires particular attention. The abolishing of the Highway Authority in 1998 and the refusal of managerial staff to transfer to the Ministry resulted in an institutional vacuum for overall road network planning and management, both for main highways and rural roads. The MPWUD, which is now formally responsible for those functions, is unable to attract and retain sufficiently qualified staff to effectively carry out these tasks. This is mainly because of the constraints imposed by the civil service employment conditions but also because of a general shortage of qualified engineers. For the approximately 60,000 km of rural roads there is an absence of a formal organization at the central and local levels to effectively manage these roads. It can, however, be safely assumed that the Local Authority Law 2000, when implemented, will result in the transfer of some responsibility for management of a reclassified road network to the Govemorates and possibly Districts. It could be envisaged, that, when this happens, the new CMO to be created under the Program, would be transformed into a Central Rural Road Administration and assist in establishing, in at least some Govemorates, formal and permanent regional units not only responsible for the practical implementation of the Program, but also for the general task of Rural Access Master Planning (RAMP) and Rural Road Management. This, together with the introduction of maintenance by contracts for private firms to execute, would fill the current vacuum for rural road management at the central and Governorate level.

The Road Sector Management Study, which is in progress, will address this issue, and also propose ways and means to strengthen the capacity of the Govemment to manage the main road network. Once agreement is reached on the recommendations of the consultant undertaking the study, the managerial arrangements for rural roads under this program will be adapted.

A number of donors are assisting in the decentralization process. Under UNDP assistance, six new regional planning institutions, consisting of one single local expert in each Governorate with limited 28 expertise and practically no funds, were to be set up in pilot Governorates, in the period 1997-2000 as the existing offices had only rudimentary capacities [UNDP 1997a]. At the time of the appraisal mission the process has progressed as far as having set up and equipped three offices. Implementation of the program's objectives has not yet really commenced. Apart from planning, reforms have been initiated in some other sectors, but even the most advanced - those in the health sector - are estimated to cover only some 12% (40) of the current 333 Districts [Ministry of Local Administration/UNCDF/Worlc!Bank 20001 2

It seems clear that currently few if any of the Districts have the capacity to play a significant role in the RAMP process. There are real doubts, in this respect, even about many of the Governorates. In this situation building on the residual capacity that may have resulted from the various efforts to create regional institutions, comprising groups of Governorates, seems the most sensible way forward. This does not totally rule out a role for the Districts as and when it can be established that they have the necessary capabilities. In this respect, the proposed rural accessibility planning approach (Annex 15) is Firstto define the steps of the RAMP process, and then to indicate how, and ideally with whom, they m ght be implemented. Actual implementation will have to be depend on a closer examination, on a case-by-case basis, of conditions in the field at the time of execution.

5. Environmental assessment: Environmental Category []A [X]B [] C

5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including consultation and disclosure) and significant issues and their treatment emerging from this analysis.

Environmental category and justificationlrationale for category rating: This Project Appraisal Document primarily concems Phase I of a three-phased program to improve rural access in Yemen. The 2roject (Phase I) has been placed in environmental screening category "B" consistent with the provisions of Operational Policy 4.01 of the World Bank/IDA. The environmental category is justified for the P'roject, since civil works will be limited to the improvement of existing roads in rural areas, and possibly some periodic maintenance activities. The pilot roads in Phase I have been deliberately selected to minimize adverse environmental and social impacts. In particular, resettlement and land acquisition will be avoided altogether. The same selection criteria will be applied to any additional pilot roads, as well as the village access roads to be improved during the first phase. The pilot and village access roads will be designed with the specific objective of introducing in Yemen design standards for rural roads which are much more environmentally-friendlyand also cheaper than those which are currently practiced.

However, the potential for certain environmental and social issues, such as for resettlement and land acquisition, indicate that Phases II and III of the Program should be placed in environmental category "A". Accordingly, a sectoral environmental assessment (Road Sector EA) will be carried out during Phase I. This Sectoral EA will lay out procedures for systematically determining whether candidate roads would involve resettlement, land acquisition or other environmental issues, thus requiring full EIA treatment and resettlement or other plans in accordance with Bank Safeguard Policies. The Sectoral EA and Social Framework Agreement to be completed in Phase I will specify the requirements lor the development and implementation of such plans during Phases II and Ill. Roads without such requirements will still undergo an Environmental Management Plan, also as specified in the Secto:al EA. The satisfactory completion of EMP's and/or respective detailed EIA's will be triggers (or conditionalities) for the approval of IDA financing for Phases II and III of the program. See Annex 16 for Terms of Reference for the Sectoral EA.

The Environmental Management Plan for five of the roads to be improved under the first phase of the Program has been prepared. Also, a Social and Environmental Unit will be established in the CMO

2 This numberhas increasedfrom 286 at the time of the 1994 census,and is expectedto grow to about360 due to the splitting of some of the larger districts and those in cities [Central Statistical Organization 2000, Mintstry of Local AdministrationfUNCDF/WorldBank 20003. 29 before construction contracts are awarded to ensure that implementation of contracts are consistent with the EMP.

Specific environmental issues related to the Program are described in the following paragraphs:

Environmentally sound design standards. Rural Roads designs in Yemen presently feature a generous horizontal and vertical alignment and a roadbed of 10 meter width, with a road surface 7 meters wide and shoulders of 1.5 meters on each side. These standards are too high and expensive for secondary roads and cannot be justified by traffic volumes and also causes avoidable environmental damage. Specifically in the case of mountain roads, this design requires deep cuts into the mountainside to achieve the design width of the roadbed, leading to the erosion of exposed slope surfaces and often to slides of cut slopes onto the road. It is also common practice to simply take the cut material from the hillside and dump it on the valley side of the road, often destroying terraces and leading to erosion problems on both sides of the road. Built during several centuries to provide arable land on the slopes of mountains, terraces have proven to be a very effective soil and water conservation measure. Rural road improvements should not lead to the destruction of terraces, and the traditional terrace-building technology can be formally incorporated in the standard design of mountain roads.

Water harvesting and mountain roads. Roads built on mountain slopes accumulate rainwater runoffs. In Yemen, it is common practice that farmers construct simple water harvesting structures on the road surface, similar to speed-bumps, to channel runoff water to their terraced fields below the roads. This action also tends to protect the road by slowing down runoffs and draining water off the road, thereby reducing road surface degradations and maintenance requirements. This important function, which has positive environmental and technical benefits, will need to be formally incorporated into the revised standard design for rural roads in mountainous areas. The specific use of this feature will have to be defined for each road during the consultations with the population living along the roads; these consultations will have to be standard practice during the detailed road design. Procedures for such consultations will be applied for the pilot projects during the first phase, and based on this experience, specified in the Environmental Management Plan for Phases II and III.

Embankment design and wadi hydrology. For those roads passing through wadis, the construction of an embankment for the road could alter seasonal water flow patterns within the wadi. This could bring about: (i) additional erosion within the wadi; and/or (ii) a disruption of the traditional water harvesting practices of the farms on the surrounding hillsides. This risk will be addressed through hydrological assessments and appropriate engineering design measures and through local consultation to avoid potential disruption to water harvesting practices.

During the first phase, the Project will address these and other technical issues such as use of marginal materials and different surface treatments (seals) by assisting the Government to revise the standard designs for rural roads, so that they are environmentally sound and more adapted to the actual needs of roads with low traffic volumes.

Involuntary resettlement and land acquisition. This issue is discussed in detail in the previous section on social issues. As noted below, the Phase I pilot roads will be consciously selected to avoid this problem. For the Program as a whole, systematic procedures, including public consultation and compensation, will be included in the Environmental and Social Framework Agreements, which are being developed as part of the Sectoral EA during the first phase.

Archeological, burial and historical sites. For the roads identified, this issue has been dealt with through field identification and "chance find" procedures in the Environmental Management Plan (EMP) for the pilot projects. For roads to be financed in subsequent phases of the Program the Sector Environmental Assessment and a Social Framework Agreement for the Program as a whole will apply and address this adequately. 30

Institutional capacity. In general, national institutional capacity in environmental planning and management in Yemen is considered weak. Although the Environmental Protection Law of 1995 establishes the principle of environmental assessments, there is no further regulation on the practical implementation of the Law. For this project, the EMP for the first phase has laid out a set of procedures and institutional strengthening measures that will ensure the systematic identification and mitigation of potential environmental impacts by the Central Management Office of the project. Based on this experience, the Sectoral EA will more clearly define future roles and responsibilities related to the environment, in the context of the decentralization process.

5.2 What are the main features of the EMP and are they adequate?

The EMP for Phase I roads specifies mitigation and monitoring plan for each pilot road during the construction and operational phases. These are deemed adequate and are summarized below:

Improved and environmentally-sound technical designs. The road widths for the pilot intermediary roads will be 6 meters, and for the village access roads a 4.5 m width will be incorporated. There will be occasional widening of these road width standards in sharp turns to allow vehicles to pass safely. Other road standards will be specified for each road to be financed, according to its particular conditions 'traffic load, road type, available materials, etc). In addition there will be test sections incorporated on tle pilot roads and village access roads. Six main design issues have been identified so far: (i) water harvesting on mountain roads; (ii) narrower platforms, and related to this a reduced need for cutting into slopes and negotiate earth movements; (iii) more durable road surfacing on steep slopes to avoid erosion; (iv) slope stabilization on sections of the roads where slopes are unstable; (v) controlled disposal at designated sites of excess material cut from the hillside slopes; and (vi) embankment design and wadi hydrology. During the first phase, the Project will address these issues by assisting the Government to revise the design standards for rural roads and try out new standards, so that they are environmentally sound and more adapted to the actual needs of low-volume traffic.

Reduction of potential impacts of physical works. Impact Reduction Measures. Specific measures to reduce potential impacts of physical works will be taken; regarding the detailed design, construction tenders, construction process and contractor performance monitoring. Contracts will contain requirements for proper management of construction waste; control measures for waste fuel, oil and lubricants; reduction of noise and dust levels; safety in blasting; and rehabilitation of areas used for construction detours, and sites used to temporarily store construction materials. Contractors will be required to provide and maintain equipment with proper noise abatement controls.

Contract Provisions. Specific provisions will be included in construction contracts to mandate the use of formal health and safety measures to minimize accidents and avoid fatalities during the construction process.

Pre-Tender Conference. To ensure full understanding of the above clauses by the contractors, all pre- qualified contractors will attend a Pre-Tender Conference, where they will be briefed concerning their responsibilities to address environmental, health and safety issues. These briefings will outline specific provisions of the construction tender documents and contracts, as laid out in the Part II, Conditions of Particular Application (COPA).

Management of Operational Impacts. The Project will address operational impacts identified ear[ier for each road. These may be implemented through maintenance contracts with financial support from the Road Maintenance Fund to avoid deterioration of the rehabilitated road and associated dust and safety problems. Maintenance contractors will be required to follow procedures similar to those ior the construction contractors concerning proper disposal of construction waste, control measures for waste fuel, oil and lubricants and adoption of health and safety measures for personnel. Expected increases in traffic levels are not expected to be so high as to bring about a significant increase in air pollution, and 31 this may in fact decrease due to smoother and less dusty roads and improved vehicle standards. Suspended dust caused by vehicles will be reduced by the rehabilitation of the roads, due to the large number of road subprojects which include resurfacing and sealing operations.

Reduction/Enhancementof Social and Cultural Impacts. As part of the final design of each pilot road to be financed the following mitigation measures have been incorporated, and will be carried out during implementationof Phase I:

Negotiations to Minimize Tribal Tensions. Where appropriate, a specific plan for local consultations and negotiations during construction will be drawn up to ensure consensus among the tribes living along the roads on the organization and achievement of the road improvement. This plan will follow general procedures to be included in the standard design manual.

Safety and movement patterns in the wadis. The siting of the works passing through wadis should minimize disruptions to local movement patterns for fetching water and water harvesting activities.

Use of Archeological "Chance Find" Procedures. The construction contracts will contain procedures for archeological "chance finds," should they be encountered during the course of construction activities. These procedures have been developed in consultation with the MPWUD and the CMO. The provisions of these "chance find" procedures are normally included in Part II (COPA) to the bidding documents for construction contractors and the Terms of Reference for the supervising engineer. The Pre-Tender Conference will include provisions for a session on environmental and social issues during which "chance find" procedures will be reviewed with potential construction contractors.

Archeological Field Support. The government will make available (on demand) a qualified archaeologist to conduct field investigations when important search work and new materials sites are opened. The archaeologist would be paid by the CMO and be attached temporarily to the construction manager's team and provided with logistical support when necessary.

Involuntary resettlement and land acquisition. As noted above, the Phase I pilot roads have been deliberately selected to avoid this problem altogether. For Phases II and III of the Program, systematic procedures, including public consultation and compensation in accordance with the legislation, will be included in the Sector Environmental Assessment and the related Social Framework Agreement to be finalized during Phase I of the Program.

Graveyards and Burials. If unrecorded graveyards and/or burials are found during the course of construction activities, the CMO will contact and work with local religious authorities within the Project area to allow for possible identification of the remains and when appropriate properly undertake relocation and reburial.

Local employment. The mechanisms for maximizing local employment benefits will be specified for each pilot road as part of the bidding documents. Normally, the labor component of rural access roads are quite high, 30-40% depending on the need for drainage protection works and type of road surfacing used. Consultations indicate that local populations are keen to participate particularly in security arrangements for equipment and in stonework and drainage protection works.

Gender-sensitive planning. A Gender Issues Study is being carried out, which involves direct and separate consultations with Yemeni women along the pilot roads. This will provide a basis for defining during Phase I future involvement of women and voicing of their concerns in the planning and implementation process of the rural road improvements. This approach has been taken within the particular cultural context on Yemen.

Framework agreements. Within the context of this Program, it is intended that the Government during Phase I will sign with IDA Environmental and Social Framework Agreements, in which the Government 32 of Yemen affirms its agreement to carry out all future project activities in accordance wilth IDA environmental standards and relevant safeguard policies. Prior to the first phase, the Gender Issues Study will be completed, and will provide guidance on how to incorporate gender-related factors into the social framework agreements. Compliance with the framework agreements and completion of a full Category A Environmental Assessment for Category A rural roads to be improved during the first year of Phases II and III would be a trigger for approval of IDA funding to support those phases.

Environmental Monitoring Plan. The Environmental Monitoring Plan will be implemented by Environmental Unit within the CMO. The function of this Unit will be: (i) review and approve Environmental Impact Assessments (EIA) and Environmental Management Plans (EMP) for all rural roads to be improved under the Program, (ii) monitor the compliance with the EIA and EMP by the various entities involved in the implementation of the Program, and (iii) collect data to document that the agreed performance criteria related to environmental and social aspects of the Program are met. This unit will be staffed with qualified personnel (2 professionals) before project effectiveness. The staff of this unit will receive training during Phase I of the Program as part of the TA provided to the CMO.

5.3 For Category A and B projects, timeline and status of EA:

Date and receipt of final draft: Completed during appraisal and received March 2001.

5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EA report on environmental impacts and proposed environmental management plan? Describe mechanisms of consultation that were used and which groups were consulted?

During project identification a two-day workshop was held, which served as a scoping session. Participants included representatives of: Parliament, the Agricultural Co-operative Union, the Yemen Environmental Association, the Social Fund for Development, the Road Maintenance Fund, Sana'a University, Ministry of Public Works and Urban Development, Ministry of Local Administration, GCRB, UNDP, the European Union and the World Bank. Participants are listed in Annex lB.

During project appraisal and the environmental review process, consultation meetings with local stakeholders were held at each of the five Phase I pilot roads. Participants included local officials, citizens, teachers, doctors, etc. They are listed for each road in the project EMP. Annex 13 has a summary of this document, which is in the Project File.

6. Social: 6.1 Summarize key social issues relevant to the project objectives, and specify the project's social development outcomes.

The project will address numerous social issues which are described below:

Local consultations and participation in planning process. The standard design manual for rural roads (which is under preparation with IDA support) will include general procedures for local consultations with, and participation of beneficiaries and local community leaders. For each rural access road lfinanced under the Program, a specific plan for local consultations and negotiations will be drawn up to ensure consensus on the organization and achievement of the road improvement, both between the Government and community leaders (tribal and others), as well as among different local tribes living along the road.

Poverty targeting and gender-sensitive planning The project will introduce an accessibility planning methodology (Annex 15) that will provide a transparent and systematic framework for identifying priority rural road investments at the decentralized levels. This participatory methodology will include criteria that focus on providing basic access to the poorer areas, as well as gender-related access concerns. A scoping of these latter concerns is being carried out through a Gender Issues Study. 33

Tribal tensions. The social order in most parts of rural Yemen is still organized according to the tribal system. This includes a social hierarchy, which gives commanding positions to local tribal leaders who in some cases do not hesitate to stop by force the implementation of a larger Government project if they feel that it does not seem to benefit them directly. Overall competition for scarce Government resources involves competition between tribes to obtain basic services from the Government or from donors. This often results in tensions and occasional armed clashes about the location of infrastructure improvements, such as the alignment of a rural road going through the territories of various tribes. Changing relations between leading individuals and tribal groups may result in a sudden deterioration of social relations in a particular region and affect implementationof projects. As a consequence for the Program, it is necessary that prior to any physical intervention in a rural road, an agreement must be reached among the tribes involved, and between the Government and the tribes, on the characteristics of the intervention. It must be clear to tribal leaders that resources of the Rural Access Program will not be allocated to local projects unless such agreements are concluded successfully. Government authorities at the District and Governorate levels have an important role to play in this context. Each road section envisaged for improvement under the project will be assessed in terms of actual and/or potential tribal tensions, and the result of that analysis included in the planning process.

Land Ownership. Land ownership and sometimes aggressive requests for compensation for lost property assets as a result of infrastructure projects are another social issue that must be addressed at an early stage for any new road project in Yemen, with the active participation of District Councils and local/tribal leaders. Written commitments are a useful tool, though their binding nature should not be overrated.

Land acquisition. Road improvements during the first phase of the Program will occur within existing right-of-ways only. In addition, the road design standards to be applied will feature a reduction of the typical width of rural roads, as compared to the standards presently applied. During Phase I of the program, involuntary resettlement or land acquisition is therefore considered unlikely, but resettlement actions as a consequence of road improvements are likely to come during subsequent phases. Rural roads financed under the Program may at times pass through densely populated areas or require curve reductions for safety purposes. In such cases, small parcels of land would have to be donated by their owners, because of the existing Government policy which allow compensation only for assets located on the land (trees, structures, etc.) but not for the land as such. This important issue will be clarified as part of the Project through the development of a Social Framework Agreement, which will require prior consultations at the local level, so as to identify and resolve any potential land acquisition questions, in conformance with Safeguard Policy OP 4.3 (Involuntary Resettlement).

Archeological, burial and historical sites. This issue will be dealt with through the formalization of field identification and "chance find" procedures in the manual, as well as in the Environmental and Social Framework Agreement and the Sector Environmental Assessment for the Program as a whole. Graveyards and Burials. The assessment of each road under the Program will identify any potential graveyards and burial grounds. In addition, the Social Framework Agreement will include procedures to manage situations when and if unrecorded graveyards and/or burial sites are found during the course of road works. During Phase I of the Program, archaeological and historical sites as well as grave yards and burials area unlikely to be affected because road works are expected to take place within existing right-of- way and mostly use existing material sites and quarries.

Local employment. Employment benefits are expected from the road improvement works. However, mechanisms to ensure that local populations are the beneficiaries need to be defined as much as possible and realistic, within the social and tribal context of each road.

The issue of Qat. During their field work in Yemen, the project identification team perceived a very wide range of opinions and positions on this question. It has been noted by some individuals that the improvement of roads in certain areas could contribute to increased production and marketing of this product, and that roads should not be improved under this Program in areas that are high Qat producers. 34

However, the practical implementation of such a policy would exclude large, highly productive, areas of the country from the program. Therefore, it is not recommended that the rural access improvement program be made an instrument of the Government's policy to discourage the growing and use of Qat.

6.2. Participatory approach: How are key stakeholders participating in the project? a. Primary beneficiaries and other affected groups: The primary beneficiaries of the project would be the rural population in those areas which have poorer- than-average access to markets and basic services. These areas generally coincide with areas with a high concentration of rural poor of which women constitute a disproportionate fraction. The primary beneficiaries will participate both directly and indirectly. Direct participation will occur during the design phase of individual roads, where local consultations will take place and mitigation measures will be coordinated between design consultants and the landowners adjacent to the road. Indirect participation will be through elected District Councils, which will be involved in the decision-making process related to accessibility planning and prioritization of individual interventions. The design of the Program includes continuous and broad beneficiary participation:

• The ongoing preparation of the first phase of the program has featured a two-day participatory workshop (see section 6.2 b. below). In addition, direct participation of beneficiaries will occur during the design of the roads for the pilot application of new rural road standards.

* An Environmental and Social Assessment Framework (detailing safeguards for land acquisition, archaeological field support and procedures for "chance finds") will be developed and put in place before and during implementation of the first phase.

* During the first phase of the program, the country-wide accessibility assessment and planning process for the Govemorates will involve processing of existing data (poverty-mapping, social indicators, census data, road network information, etc.) and the use of standard sociological survey instbuments (focus-groups, questionnaires). A methodology for accessibility planning has been prepared and will be used in ten Governorates during Phase I (see Annex 15 for more details). This will involve establishing a functional classification of the road network, as well as a participatory met.:Iod for identifying priority investments based on socio-economic and poverty criteria. It will also include procedures for assessing accessibility constraints and identifying priorities at the District level, which will be tested in four Districts during Phase I. The methodology aims for eventual implementation by the Governorate and District level staff who will work with local communities in determining access constraints and investment priorities.

* Procedures to ensure that communities and community leaders are involved in specific road projects will be developed and tested to avoid the reoccurrence of present constraints such as disagreement among tribes, or between tribal leaders and the Government, on road alignment, issues of land ownership, requests for compensation, destruction of productive assets (terraces) and ignorance of environmental issues. The private sector will also be offered specific capacity-building activilies that would be designed to fit their own felt needs but also to assist them to adjust to the new procedures to implement the new rural access policy.

* During the second and third phases of the program, community participation will become a routine feature of the rural accessibility planning mentioned above, as elected Councils will gradually develop capacity to assume an active role in improving rural access roads and their management and maintenance. In particular, local road users will be able to participate in the supervision of performance-based road maintenance contracts for rural roads.

The project would draw as much as possible on the wide and successful experience of both the Social Fund for Development (SFD) and the Public Works Project (PWP) to ensure that adequate instruments are used to solicit the views and inputs of various segments of rural communities. 35

b. Other key stakeholders:

A two-day participatory workshop using the Goal Oriented Project Planning (GOPP) technique was held during the identification mission, with the assistance of a professional workshop moderator made available by the German Agency for Technical Cooperation (GTZ). The outcome of that workshop is the Logical Framework presented in Annex I a, and the list of stakeholders who participated in the workshop is given in Annex lb. The participants collaborated very actively in the project planning exercise and expressed satisfaction not only about the workshop itself, but also appreciation for the fact that actual beneficiary participation started very early during the program design, and about the involvement of IDA in a long term rural road program.

Specific gender issues were treated in the workshop, in particular the important burden on rural women and girls for the provision of water, firewood and other services for the family. There is ample evidence that better rural roads alleviate the workload of women and girls. If a road is available, small trucks equipped with water tanks are often used to fetch water from the river beds (wadis), and women do not have to spend several hours every day to carry water themselves or by donkey. Also, the use of natural gas in cylinders becomes commonplace if a village has an access road or track. Villages with road access generally have higher school enrollment rates, especially for girls. In general, most rural roads benefit women at least to the same degree as men, and in some cases more. However, women's participation in the decision-makingprocess on roads may be affected in those areas of the country where the tribal social organization dominates. Here the involvement of tribal community-leaders often reduce the scope for broad community-participation,and women may often be excluded.

Other stakeholders are from the private sector, such as local contractors, design engineers, consultants, transport service providers and traders. All those would benefit directly from the implementation of the overall program, which will provide significant business opportunities during a 10-year period.

6.3 How does the project involve consultations or collaboration with NGOs or other civil society organizations.

The rural accessibility planning methodology will involve direct consultations with local beneficiaries, which may include NGOs and other civil society organizations.

6.4 What institutional arrangements have been provided to ensure the project achieves its social development outcomes?

The CMO will have a specialized unit to monitor the environmental and social management plans.

6.5 How will the project monitor performance in terms of social development outcomes?

The CMO will assign specialized personnel to carry out the monitoring and evaluation survey concerning changes in prices of transport and essential commodities as a result of the improvements in access.

7. Safeguard Policies:

7.1 Do any of the following safeguard policies apply to the project? 36

S _ P~1y______Environmental Assessment (OP 4.01 BP 4.01, GP 4.01) Yes Natural habitats (OP 4.04, BP 4.04, GP 4.04) No Forestry (OP 4.36, GP 4.36) No I Pest Management (OP 4.09) No Cultural Property (OPN 11.03) No Indigenous Peoples (OD 4.20) No Involuntary Resettlement (OD 4.30) No Safety of Dams (OP 4.37, BP 4.37) No Projects in International Waters (OP 7.50, BP 7.50, GP 7.50) No Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60) No

7.2 Describe provisions made by the project to ensure compliance with applicable safeguard polici -s.

An individualized EMP has been developed for each pilot road, which will be implemen1ed and monitored by the CMO Environmental Unit. For any additional intermediary or village access ioads in Phase 1, an EMP will be carried out utilizing the general framework spelled out in the overall EM1' and in accordance with OP 4.01, BP 4.01 and GP 4.01. Although no cultural property issues were identified on the pilot roads, chance find procedures will be applied, in accordance with OPN 11.03.

F: Sustainability and Risks 1. Sustainability: Long-term Program benefits are dependent upon the sustainability of the rural access improvements over time, especially after the completion of the Program. The two most critical factors here are: (i) the ability to mobilize stable and dependable funding for rural road maintenance; and (ii) the necessity to build lasting technical and managerial capacity and institutions to manage and maintain rural road networks (institutionalization). Both funding and managerial capacity depend on the following key factors:

First, there must be considerable political will to implement a more decentralized management of rural roads. Many centralized line ministries, including the MPWUD, will experience a loss of power and influence under the Local Authorities Law and the accompanying bylaws and regulations and, therefore, may resist reforms such as delegation of powers, outsourcing of road maintenance works, decentralization and introduction of participatory planning activities at village level. The degree to which there is sustained overall political support for a more decentralized process and better management of rural roads will in large part determine how well the long-term program objectives are achieved over time.

Next, the degree to which more decentralized management of rural roads works will depend on how well local governments are allowed to establish their financial foundation. In this context, the way that central budget transfers work (e.g., the amounts, the degree to which they are earmarked, etc.) is critical :o local government sustainability. Similarly, the success that Govemorates and local councils achieve in generating their own revenues will also play an important part in whether or not rural access improvements are sustainable. Specifically, rural road networks will require regular maintenance, implying a locally raised revenue stream of sufficient amount to finance the local component of this task. These local resources are in addition to funding to be provided by the Road Maintenance Fund, w.hich at present only funds maintenance of the national highway network. Maintenance of rural roads would require involvement of the decentralized administrations and local communities under some cost sharing arrangements between the central level (mainly RMF) and the Governorates and local councils.

The success and sustainability of local governments depend on the capacity and incentive of its human resources. The civil service in Yemen suffers from both low pay and a low skill base, a legacy of the turbulent 1990s. Reform of this sector is underway, with IDA's assistance and a determined effort at the center of Government. However, in many ways sustainability of both civil service reform and decentralization are interdependent, and one cannot proceed much without simultaneous progress being 37

made by the other. A particular problem here is the lack of experienced engineers and planners in Yemen, which is likely to put a limit to the extent and speed of decentralization of the administration of rural roads.

2. Critical Risks: (reflecting assumptions in the fourth column of Annex I)

.~~~~~~~~...... ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~......

FromObjective to Purpose . LocalAuthority Law is not S Use a flexibleapproach which allows for differenttypes of decentralized actuallyimplemented. solutions,depending on the willand capacitywhich may differfrom one Govemorateto the other. If the LocalAuthority Law is not implementedas intended,Phases II and III of the Programcan still be redesignedin orderto reachthe overallProgram objective of improvedrural accessunder the changed circumstances.

RoadMaintenance Funding M The2000 law on the RMFpassed by parliamentwill go a longway to ensuring throughRoad user fee is not that road maintenancefunding through a fuel levy which is independentof the sufficientto secureroad asset budgetaryprocess. Furtherincreases will be addressedin the followup conservation. operationunder the ministryof transport. FromOutputs to Objective Localleaders and decision-makers M Involvingthe localleaders and decision-makersclosely in the planningand do notrecognize the value and prioritizationprocess. This shouldensure that the results of that processis thereforedo not acceptoutcome of supportedby them. planningand prioritizationprocess introducedthrough the Program.

Decentralizationprocess does not S Theproject will supportthe implementationof the DecentralizationLaw 2000, advanceas planned. but withoutbeing overly dependent on it, in order to be ableto implementthe projectas planned.

Politicalresistance to the M Duringnegotiations, agreement will be soughton a targetdate for introductionof fuel surchargesto implementationof the roadmaintenance fund law and the correspondingroad mobilizeroad maintenancefunds. user charges. This datewould become a loan covenant.

Suitablestaff are not availablefor S The recruitmentand continuedemployment of suitableCMO staff, satisfactory CMOs to IDA,is a legalcovenant of the project,included in the creditagreement. FromComponents to Outputs Counterpartfunds and co- N Strictmonitoring of counterpartfunding by Bankstaff. financingare not availableas planned.

Procurementproblems causing S The CMOincludes an experiencedprocurement specialist among its permanent Implementationdelays and staff. cancellationof Components. OverallRisk Rating S RiskRating - H (HighRisk), S (SubstantialRisk), M (ModestRisk), N (Negligibleor Low Risk) 38

3. Possible Controversial Aspects: There are no significant factors foreseen that might become controversial during implementation of the Project.

G: Main Credit Conditions

1. Effectiveness Conditions:

(a) Standard conditions. (b) Bids received for first two packages of civil works. (c) Completion of actions set forth in the FMS action plan (Annex 5) with due dates preceding the credit effectiveness date.

2. Other:

(a) The Borrower shall maintain the central CMO with adequate numbers of professionals with skills and experience and on TOR satisfactory to the Association including: (i) General Manager of the Program; (ii) a minimum of two senior Road Engineers, one of which is a professional with knowledge and experience in IDA procurement guidelines; (iii) Finance and Accounting Officer and one accountant; (iv) an Environmental Engineer; (v) a Social Planner; and (vi) two Assistant Engineers. (b) CMO shall produce quarterly reports on implementationand progress indicators. (c) No civil works to be undertaken on intermediary roads not included in the Program Implementation Plan Manual unless and until the Borrower has submitted to IDA documentation satisfactory to justify the implementation including, but not limited to, a feasibility study report showing an internal rate of return of no less than 12%, and an EMP where appropriate. (d) No civil works to be undertaken on village access roads unless and until the Borrower has submitted to IDA documentation satisfactory to justify the implementation. (e) No civil works to be undertaken on intermediary rural roads and village access roads unless the Borrower has submitted to IDA an EMP, where appropriate, satisfactory to IDA and evidence that the works to be financed will not result in the involuntary resettlement of local population. (f) The Steering Committee will ensure that a technical audit is carried out annually on project roads.

H: Readiness for Implementation

[x] 1. a) The engineering design documents for the first year's activities are complete and ready for the start of project implementation. [] 1. b) Not applicable.

[x] 2. The procurement documents for the first year's activities are complete and ready for the ,tart of project implementation. [x] 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. [] 4. The following items are lacking and are discussed under loan conditions (Section G): 39

I: Compliancewith Bank Policies

[x] 1. Thisproject complies with all applicableBank policies. [] 2. The followingexceptions to Bankpolicies are recommendedfor approval. The projectcomplies with all other applicableBank policies.

TeamLeader: Terje Wolden

SectorManager: GeorgeTharakan

CSitutryDirector: MahmoodA. Ayub 40

Annex la: Project Design Summary Yemen: RuralAccess Program

I'lMINN. . Sector-related CAS Goal: Sector Indicators: Sector/ Country (from Goal to Bank * Various indicators of socioeconomic Reports: Mission) To create an early stream of well-being indicated in the CAS The impact of specific - There is sustained social benefits, in education, * Reduced unit costs of infrastructure policies and programs political support for health, and other most-valued * Quality of local services will be analyzed on a implementation 3f public services, which indirectly case-by-case basis by sector reforms address poverty and gender- (Annex B. I of CAS, pages 5-7) the Government, IDA - There is no domestic gap, and fortify the benefits of or a designated third conflict, diverting the other objectives. party. attention and fur ds from (Page i of CAS summary) (Page 20 of CAS) the development strategy (Page 22 of CA') Program Purpose: End-of program indicators: Program Reports: (from Purpose to Goal) Improved livelihood and a Transport rates for goods and reduced isolation for the rural passengers reduced by 30%. Annual monitoring There are no ext, rnal and population through improved * Price of essential commodities reports and quarterly intemal price shocks. year-round access to markets transported over improved roads (gas progress reports will and services. cylinder, diesel, kerosene, cement, follow-up on the Improvements ir Phase 1- flour and sugar) reduced on average agreed indicators physical rural ac *ess are Institutional Strengthening and by 15%. during the entire accompanied by definition of appropriate * Access time from the village to the Program. complementary technical and environmental closest market and services reduced interventions in other standards by 30%. sectors. Phase 11 * Other poverty and gender indicators Access improvement and to be developed during Phase I strengthened road network management Phase IHI. Expanding the coverage of access improvements and consolidation of gains Project Development Outcome / Impact Indicators: Project Reports: (from Objective to Objective: assessment report one Purpose) * Adequate central institutional year after Dedicated funding for Establish sustainable arrangements are put in place. effectiveness. road maintenance under foundation for large-scale RMF control is s ifficient improvementsto rural * Appropriate low-cost standards and Supervision Aide- to secure road asset accessibility in areas severely procedures are adopted and applied. Memoires and ICR. conservation. affected by poverty and with good prospects for rural * Rural accessibility improvements Assessment of the development. have been provided to at least four effectiveness of the poverty affected areas. selection process used for the five pilot access roads included in the Project. I Continued on next page 41

Output from each Output Indicators: Project Reports: (from Outputs to component: Objective) PART A A. 1 Manual for planning, design and * Quarterly I .Rural Access Roads implementationof rural roads has been progress reports Local leaders and 2. Village Access Roads adopted * Bank supervision decisions-makers 3. Rural Accessibility and A.2 Design and implementation standards reports recognize the value and Design Studies have been tested, and an evaluation has * Early accept outcome of 4. Support for been completed. implementation planning and Decentralized A.3 Improvement of at least 114 km of assessment report prioritization Management of Rural intermediary rural roads and 50 km of (12 months after methodologies Roads village access roads completed. effectiveness) introduced through the 5. Supplemental Operating A.4 Rural accessibility assessments for * ICR for first Program. Costs five of Yemen's rural Governorates have phase been completed. There is political will to PART B A.5 An objective and participatory fully fund road 6. Al Ahmar - An methodology for planning and prioritizing maintenance through a Naqabah Road investments, and addressing local poverty dedicated road fund . Rehabilitation and gender issues in rural access 7. Institutional Support to improvements has been adopted by the Decentralization process RMF Government and has been applied in each does not create obstacles. of the five Govemorates. A.6 The preparation of at least 25 percent Sufficient and timely (first year program) of Phase II physical resources are assured for works and maintenance concessions has program management been completed, including feasibility studies, design, environmental! social assessment and bidding documents. A 7 Clear roles and responsibilities in the road sector have been assigned through a reclassification of the road network. A 8 An impact monitoring system for rural access improvements is in place, including the poverty focused baseline data and quarterly impact reports are produced. A.9 The CMO is in place and fully functional. A.10 At least one regional rural road management unit is fully functional in one of the Governorates. A. 11 An early implementation assessment of the Project, carried out one year after project effectiveness, has been overall positive and has not revealed major weaknesses.

B.l Rehabilitation of 114 km of primary rural roads.

B.2. Road Maintenance funding improved by making the new RMF law effective and at least YR 2.5 billion mobilized per year.

E. I At least US$ I million has actually been available for program management at central and regional level, and properly accounted for. 42

Project Inputs: (budget for each component) Project Rteports, (from Components io Components/Sub- Outputs) components: PART A 1. Rural Access Roads 1 $ 31.60 million Project Progress Counterpart funds anil

2. Village Access Roads 2: $ 4.70 million reports (including pilot co-financing are poverty and gender available as planned. 3. Rural Accessibility and 3: $ 2.00 million conscious baseline Design Studies data development) Procurement problems do not cause 4. Inst. Support for 4: $ 1.17 million implementation delays. Decentralized Management of Rural Roads CMO adequately staf.ed.

5. Supplemental Operating 5: $ 0.70 million Disbursement reports Costs and Equipment

PART B 6. Al Ahmar - An Naqbah 6: $ 12 24 million Road Rehabilitation

7. Institutional Support to 7: $ 0.20 million RMF

Note: As described in the document, this Project Design Summary was the outcome of a participatory workshop held during the identification mission, utilizing the GOPP methodology (Goal-oriented Proj ect Planning). Minor additions were made afierwards during project preparation, in particular relating tc quantifiableperformance indicator and the costs of components. 43

Annex lb: Logical Framework, GOPP 2-Day Workshop Participants

Yemen: Rural Access Program

1. Mr. Ahmed M. Member of Parliament Al-Kohlani 2. Mr. Gianni Brizzi Country Manager / World Bank 01-418 731 Yemen 3. Mr. Rainer Freund European Commission Technical 01 248 495 Assistance Office 4. Ms. PaiiviNikander ProgramnOfficer / UNDP 01 415 505

5. Mr. Bob Fishbein Consultant / World Bank 1 (202) 477 1234

6. Mr. Renaud Detalle Consultant/ World Bank 01 275 417

7. Mr. Mohammed Ali Agricultural Co-operative Union Al-Adrahi 8. Mr. Andreas Schliessler Staff / World Bank 1 (202) 477 1234

9. Mr. Ali Alshami Social Fund for Development 01 240 417 (SDF) 10. Ms. Raja'a A. Yemen Enviromnent Association 01 268435, 7961057 Al-Masabi 11. Mr. Ezzi Al-Mansoob Director of Contracting Dept. 01 250112 Ministry of Planning and Development 12. Mr. Yahya Al-Ashwal General Co-operation for Roads 01 241758, 01 260420 and Bridges 13. Mr. Hakim Aghbari Road Maintenance Fund (RMF) 7912203 , 01 500871

14. Mr. Abdulkadus Road Maintenance Fund (RMF) 01 262009, 01 500843 Alsharafi 15. Mr. Abdulla Al-Falahi GD Technical Affairs, Ministry 01 227242, 01 279286 of LocalAdministration 16. Mr. Terje Wolden StafflWorld Bank 1 (202) 477 1234

17. Mr. Radman Al-Qubati Deputy Dir. of International 01 262613 Financed Projects Dept. MCHUP 18. Ms. Khadiga Al-Haisani Sana'a University 01 219339 (Office), 01 208070 (Home) 19. Mr. Abbas Abu -Taleb Manager of Foreign Funded Projects Dept., MPWUD 44 Annex2: Projectand ProgramDescription

Yemen: RuralAccess Program

Summary Description of the Program:

The Yemen Rural Access Program (RAP) will be co-financed by IDA through an Adaptable Program Credit and consist of three phases, which are briefly described below.

Phase I (the Project) will create the necessary base conditions for the Program. It will set ujp the institutional and technical foundation of an efficient rural access improvement program, and test r ,ewly- defined approaches through civil works. Initially, five or more pilot roads on the intermediate rural road network and some adjacent village access roads located in eight Governorates will be upgraded. Five roads have initially been identified and provision is made for other projects meeting the same selection criteria to be included during Phase 1. The process to be put in place will assimilate environmental and social (poverty and gender) policies, and internalize participatory planning aspects into its operations. The achievement of those base conditions is expected after 18 to 24 months and will trigger a new and larger IDA credit for Phase II of the Program, and hopefully other donor co-financing for that phase.

Phase 11 will then implement rural access improvements in most, if not all, the Govemorates, building their capacity for sustainable management and maintenance, and fostering cooperation among beneficiaries, decentralized Govemment agencies and decision-makers. Toward the end of the second phase, or after 5 years of practical implementation of the Program, a mid-term review of the Prograin will be carried out. This review will detect conceptual and implementation weaknesses and pre ;cribe necessary adjustments for the subsequent third (and last) phase of the Program. Depending on the results of the review, and the progress in decentralized capacity-building, the Program will expand its cox erage of rural road improvements to include District level (village access) roads as well as Govenrorate (intermediate) level roads.

Phase III will then continue with the: (i) practical implementation of rural access improvementi; (ii) further strengthening of decentralized management and maintenance arrangements; and (iii) continued and sustained institutionalization of poverty and gender issues in overall road planning and implementation. The third phase would also begin to implement access road projects that are classifed as District level roads. The overall Government program would be supported by IDA credits, as well as through co-financing from other donors during the second and third phases.

Summary of the Project Description

The Project is divided into two parts: a) Part A includes all activities in Phase I of the Rural Access Program, and comprises five components, namely: (i) Pilot Rural Access Roads; (ii) Village Access Roads; (iii) Preparation of Phase [I of the Program (Rural Accessibility Planning and Road Feasibility/Design Studies); (iv) Institutional Strengthening and Support for Decentralization; and (v) Supplemental operating costs and equipment. b) Part B includes all activities necessary to implement the Al Ahmer - Naqabah road rehabilitation, and comprises two components: (i) Rehabilitation of Al Ahmer - An Naqabah road; and (ii) Technical Assistance to the RMF to reorient its focus and strengthen its institutional capacity. This part of the Project is unrelated to Part A and the Rural Access Program.

A short description of each component is given below. 45 PART A: Phase I of the Rural Access Program

Implementing Agency for the Program: A Central Management Office for Rural Roads (CMO) will be the central responsible agency for all three phases of the Rural Access Program. The CMO will operate under a Board of Directors which will be chaired by the Minister of Public Works and Urban Development. Other members of the Board would be higher-level representatives of MPWUD, MOPD, Ministry of Local Administration, Ministry of Agriculture, Ministry of Transport and the RMF. The CMO will have a General Manager and five small departments: Administration/Accounts;Procurement; Planning, Design and Supervision; Environmental and Social Management; and Decentralization Support/Regional Offices. During Phase I a few (not less than 3 and no more than 6) regional rural road administrations will be established to gain experience in a more decentralized management of rural roads, and pave the way for these units to possibly be integrated with Governorate organizations once these are fully functional, which is expected near the end of Phase II of the Program.

Proiect Component 1: Pilot Rural Access Roads (US$ 31.60 million)

Objective. The objective of this component is to test and demonstrate in Yemen new technical standards and implementation procedures for rural access roads, which are technically adequate, environmentally sound, socially accepted, equitable and cost-effective. For this purpose, five intermediary rural roads have been initially selected as pilot projects, which are representative of the different types of terrain and social environments present in Yemen. Allowance has been made for the selection of some additional roads yet to be identified, which must meet the same criteria as those roads already identified. The Pilot Rural Roads were selected based on the following criteria:

(i) they are located in areas which are representative of the different types of terrain and social environment in Yemen; (ii) they are located in different Govemorates with high incidence of poverty; (iii) they provide access to areas with significant economic potential; (iv) they have an economic internal rate of return of at least 12%; (v) no land acquisition and involuntary resettlement is required; and (vi) no ongoing works contract between the Government and a local contractor.

Project roads. The project roads which have already been selected are summarized below:

.~~~~~~~ ~...... erook00: _ 7: . Thula-Amran Sana'a- Amran 25.6 2. Kuhlan Affar-Al Maghrabah HaJjab 15.8 3. At Taffiah-Awwin-Beyhan Al Beyda 42.3 4. At Turbah-Towr al Bahah _Taizz-Lahj 8.8 5. KhamisBani Sa'd-Alquetta'aAlMahwit Al Mahwit 21.3 Total 113.8

Thula-Amran: This road is located in the northern Yemeni H4ighlands,52 km northwest of Sana'a. At its southern point, the road starts from Thula at an elevation of 3,000 meters. For the first several km it passes north over a rolling plateau, then descends through a rocky, mountainous and winding area. At about km 12, the alignment passes through a rocky canyon and opens onto a wadi and an open plain, on which Amran town is situated at an elevation of about 900 meters. The project will involve the completion of works already begun, but which were terminated due to contractor non-performance. Completed work includes earthworks and several partially constructed culverts. The project will consist mainly of completing earthworks, drainage structures and protection works. It will also provide road pavement layers, including bituminous surfacing.

Kuhlan Affar- Al Maahrabah - Aliamimah: The proposed road is located in the northern Yemeni Highlands, 115 km northwest of Sana'a, about 12 km east of Hajiah. From Kuhlan Affar, it extends 46 northward from the main road between Sana'a and Hajjah. It first passes through the Kuhlan mart-et area, then continues through rocky terrain and several villages with terraced farms. The road has been partially constructed through an earthworks contract. The road is barely passable with four wheel drive vehicles. The earthworks contract involves cross-drainage structures. The project will consist of completing the earthworks, providing additional drainage structures, slope protection measures and provision of pavement layers, including bituminous surfacing.

Al Taffah - Awwin - Beyhan: The project road is located in the Yemeni High Plateaux, some :230km south of Sana'a. At Al Taffah, the road extends northward from the main road between Dhamar and Al Beyda, about 30 km north of Al Beyda. The road passes over rocky, rolling terrain, then proceeds along the eastern side of a wide wadi. The roadbed has been opened up with an earthwoTkscontract, ihat has been terminated. The project will consist mainly of additional earthworks in the road alignment and drainage structures, followed by the provision of pavement layers, including bituminous surfacing.

At Turbab - Towr Al Bahah: The road is located in the southern Yemeni Highlands, 78 km south of Taiz. Starting from At Turbah, it begins at the edge of a broad and fertile high plateau which gives way to a steep escarpment. The road immediately and sharply descends southward along the escarpment from an elevation of 2,100 meters. The first nine kilometers are extremely narrow, steep and rocky, and characterized by numerous hairpin turns. This section was selected as a pilot for implementation in Phase I. The remainder of the road continues to a more gradual descent through a broad wadi leading up to Towr El Bahah. The project will consist mainly of earthworks, including some rock blasting, drainage structures and road pavement, including a wearing course that can withstand turning movements of small trucks and reduce maintenance costs on the steep slopes.

Khamis Bani Sa'd - Alquetta'a - Al Mahwit: The project road is located about 150 km west of Sana'a. The project road extends from Al Hahwit to the south down relatively steep and rocky mountainside. It reaches a wadi with fairly dense farms at km 21. The continuation of the project runs southwards to Khamis Bani Sa'd at the Sana'a - Houdaydah Road. The project will consist mainly of installation of a regulating gravel layer under a sub-base and base course, followed by biturninous surfacing.

Sub-components. There are two sub-components:Civil Works and Construction Supervision. Civil Works. The technical standards and implementation procedures to be tested and demonstrated in Yemen through the pilot projects will include the following features:

* Road width and slope stabilization; * Different types of bituminous surfacing; * Embankment design and wadi hydrology; * Measures to prevent terrace destruction and erosion; * Mountain hydrology and water harvesting; * Reduction of potential impacts of physical works; * Planning and Implementation Procedures; and * Local consultations and participation in planning processes.

Works Supervision: The project will finance two contracts for the supervision of the civil works included in this component. The supervision contract(s) for the Pilot Works should include the production of a demonstration video for television broadcasting and other purposes. Most of the civil works w-ill be carried out by contractors established in Yemen including local contractors.

Implementation arrangements. The implementing agency for the pilot rural roads component will be the Rural Roads Central Management office (CMO) which is described in section C.4 of this document. The responsibility of the CMO includes the design, planning and execution of works, and the administration of financial resources. All physical works will be executed through private contractors which will be retained under competitive bidding procedures according to World Bank / IDA procurement guidelines. 47

Budget

1. Pilot Rural Access Roads 1.1. Civil Works 30.50 1.2. Supervision 1.10 Total 31.60

Project Component 2: Village Access Roads (US$ 4.70 million)

Objective. At least 50 km of village access roads adjacent to the pilot roads will also be identified and included, to test standards for very low-volume roads and tracks (unpaved) and to enhance the poverty- reduction impact of the investments in pilot roads. These would enhance the accessibility improvements and poverty impact of the pilot rural roads. As far as possible in the short time frame, the village access roads to be financed in Phase 1 will be identified using the rural accessibility planning methodology that will be tested during the first phase (see Component 3 below). This will provide an objective selection process within the limited budget resources available.

Sub-components. This component is also composed of two sub-components: civil works and construction supervision. The standards and implementation procedures to be demonstrated through the pilot projects will include the following features: (i) consultations with beneficiaries and community leaders for planning, implementation and monitoring; and (ii) technical designs with narrower platforms and less expensive surfacing, (iii) the inclusion of water harvesting techniques in the road structure, to benefit adjacent farms; (iv) slope stabilization; and (v) disposal at designated sites of material that is cut from the hillside slopes, instead of the uncontrolled dumping of those materials as it is practiced today.

Implementation arrangements. This component will also be implemented by the CMO, which will collaborate closely with the Govemorates and district councils in the identification of pilot roads and in the participatoryplanning and implementation process.

Budget

2. Pilot Village Access Rtoads 2.1. Civil Works 4.50 2.2. Supervision 0.20 Total 4.70

Proiect Component 3: Preparation of Phase n of RAP (US$ 2.0 million)

Objective. The objectives of this component are two fold: (i) to carry out a participatory process of rural access planning for Yemen. The aim is to establish a solid basis for the selection and evaluation of individual rural access improvements to be carried out during the subsequent second and third phases of the program; and (ii) to support the very substantial amount of technical preparation work for the civil works to be executed during Phase II, including design studies and bidding documents.

Sub-components. Rural Accessibility Planning (Annex 15). The initial step in this sub-component will be the preparation of Rural Accessibility Master Plans for at least ten of the rural Governorates, which will be used as a basis for implementation during Phases II and III. The methodology to be applied will seek to establish a participatory selection process, which is shaped by a rational framework for road network planning and management at the Governorate level. This will involve the direct participation of beneficiaries, and the participation of both the elected Governorate and District councils in the selection of priority intermediate 48 road investments and the assignment of maintenance responsibilities. Although this involves a 'higher level" of network management than the district- and village-level feeder roads, the methodology will also draw from approaches in rural accessibility planning. The ensuing establishment of the Governorate-level network management process will lay the foundation for eventually applying lower level planning tools in the Districts during Phase III.

Design and Feasibilityfor Phase 1I. The second output of this component will be the design, feasibility studies and bidding documents for the numerous rural roads to be improved under Phase II, as wvellas preparation of contract documents for piloting area-wide multi-year performance based road maintenance contracting in Phase II of the RAP.

Implementation arrangements. The component will be implemented under the responsibility of the CMO. Qualified consultants will be selected under ICB procedures to carry out the tasks. There are likely to be two larger contracts, one for the Rural Accessibility Planning exercise, and a second cne for the technical preparation of physical works, including the participatory stakeholder consultations for each individual rural road to be improved. Smaller contracts with individual consultants may be used for specific other tasks.

Budget

3. Rural Accessibility and Design Studies - Rural Accessibility Planning 0.40 - Design / Feasibility Studies for Phase II 1.50 - Training_ 0.10 Total 2.00

Project Component 4: SUPPort for Decentralized Manaeement of Rural Roads (US$ 1.17 million)

Objective. The objective of this component is to support the establishment of institutional frameworks and capacity to carry out decentralized management of rural access improvements. It will involxe two sub-components: (i) institutional strengthening; and (ii) support for decentralization.

Sub-components. 4a) Institutional Strengthening: The objective of this component is to define and put in place the institutional arrangements for decentralized implementation of rural access improvements. rhese institutional arrangements, together with revised technical and environmental standards and procedures, will lay the foundation for the efficient identification and implementation of expanded rural road improvements, which address poverty and gender-sensitive issues across Yemen during the subsequent phases. The component will support the new institutional setup in numerous ways. Initially, ir will involve the definition of adequate institutional arrangements for rural road management at the Regional and Govemorate level to be implemented in Phase II of the Program. It will also provide support 10 the MPWUD to analyze the national budget for rural roads (about 300 projects) in order to rationalize and consolidate the national budget and transfer most slow-moving rural roads contract to the CMO for financing under the RAP.

The component will also finance a mix of training, studies, workshops/seminars, and other tec nical support. It would further include capacity-building for the private sector, specifically for contractor, and local consultants, on the new design and implementation standards for rural roads, and to assure the fuill understanding of procurement procedures used under the Program. The fuiture role and financing arrangements for the Central Management Office (CMO) for Rural Roads) would also be addressed. The component will also finance some limited technical support to establish regional tender boards and develop procedures and guidelines for the interaction between the regional and the central tender boards. Finally, technical and fimancialaudits will be financed under this component. 49

4b) Support for Decentralization. The objective of this component is to support establishment of (initially) a few regional offices or departments to be responsible for rural access planning and prioritization and later oversee implementation of Phase II and Phase III roads. In addition, the project will support the High Tender Board in establishing regional tender boards. Depending on the progress and success in the decentralization process, these regional units may be transferred under the authority of the Govemorates.

The component would assist the CMO in the definition of the work programs of these planning offices, recruiting staff and financing logistical, personnel, administrative and equipment costs during the initial phase, in order to ensure that qualified professionals for rural road management and maintenance are working effectively in between three and six Regional Management Units (RMU) for rural roads.

Implementation arrangements. The CMO will be responsible for the overall execution of this component. For the definition of institutional arrangements, the CMO will work closely with the MOLA and other Govemment Ministries.

Budget

4a. Institutional Strengthening and Management Financial audits of RAle 0.03 Technical audits of RAP 0.06 TA for CMO 0.25 TA for High Tender Board 0.10 Subtotal 4a. 0.44 4b. Support for Decentralization

Furniture & Equipment for decentralized offices 0.10 IT equipment for decentralized offices 0.04 Consultant support 0.20 Trainig _0.06 Pr CmoehiVcStaff salaries te5:r Sucntrliedmental ( vehai~colts4andE) net( 0.200.0 milin Subtotal 4b. 0.73 Grand Total 1.17

~~~~~~~~~~~~~~~~0.125 Proiect Component S: Supiplemental Overatinii Costs and Equipment (US$ 0.70 million)

Objective. This component will finance the operations of the Central and the Regional Management Offices for Rural Roads for two years (Phase I,), including staff salaries, office equipment, vehicles and operating costs.

5. Supplemental Operatingy Costs and Equipment Furniture & Equipment for CMO 0.1l25 Vehicles (3 vehicles 4x4) _0.065 Management/legal support 0.05 Staff salaries 0.35 Operation & Maintenance Cost 0.1 l Total ~~~~~~~~~~~~~0.70 50

PART B: Rehabilitation of Al Ahmar - An Naqabah road.

Project Component 6: Rehabilitation of the Al Ahmar - An Nagbah Road (US$ 12.24 million)

Background: The rehabilitation of the Al Ahmar - An Naqbah road was a component of the ongoing Transport Rehabilitation Project (TRP), but taken out in a restructuring of this Credit to make room for a much needed rehabilitation of the Aden airport runway and taxiways. The understanding at the lime of the restructuring as reflected in Aide-Memoires, was that IDA would subsequently finance the Al Ahmar - An Naqbah road rehabilitation either through a supplemental credit to the TRP or as part of a fol ow-up operation in the transport sector. It appears that IDA guidelines do not allow supplemental credit to be used for the TRP in this case; moreover a follow-on highway operation to finance this road would IIow be contrary to the agreed new IDA Country Assistance Strategy for Yemen. Therefore, it was agreed with the Government that financing would be provided for this rural main road under the Project as a separate Part B. To avoid any confusion on the role and the responsibilities for rural access improvements, the Part B of the Project would be implemented by the PIU in MPWTUDin charge of implementingthe TRP

Objective. The project constitutes a section of the inland Aden- Mukhalla highway. It starts at the town of Al Ahmar and traversing a length of 114 kin, terminates at the intersection with the other asphalt road to Ataq at An Naqabah. The rehabilitation works will consist of repair works, including short sections of reconstruction, drainage improvements and protection works. The overlay on the existing pavement will not be widened outside of existing shoulders. No widening is envisaged.

Sub-components. There are two sub-components:Civil Works and Construction Supervision.

Implementation arrangements. This part of the project, will be implemented by the IProject Implementation Unit (PUJ) for the ongoing two credits (TRP and MMTP) until these two projects are completed (mid-2002). This would include consulting arrangements, pre-qualification of contractors, the bidding process for the works, and monitoring and supervision of the works in collaboration with the supervision consultant. It has also been agreed that after the TRP and MMTP credits are fully disbursed, the PIU for those projects will be dismantled and the RAP CMO will take over the management of any remaining activities of Part B of the Project until it is fully disbursed.

Budget

6. Al Ahmar - An Naqbah Road 6.1 Civil Works 11.65 6.2 Supervision 0.59 Total 12.24

Proiect Component 7: Technical Assistance to the Road Maintenance Fund (US$ 0.2 million)

Objective. Technical assistance will be provided to strengthen the RMF and reinforce its ability to act as an independent caretaker of the road network.

7. Technical Assistance to RMF TA to RMF 0.20 Total 0.20 51

Annex 3: Estimated Project Cost Yemen: Rural Access Program,Phase I

Part A, Rural Access 1. Pilot Rural Access Roads 16.56 12.24 28.80 2. Village Access Roads 2.80 1.90 4.70 3. Rural Accessibility Planning & Design Studies 1.00 1.00 2.00 4. Institutional Strengthening 0.44 0.73 1.17 5. Supplemental operating costs and Equipment 0.52 0.18 0.70 Part B, Road Maintenance 6. Al Ahmar - Al Naqabah Road Rehabilitation 4.03 6.33 10.36 7. TA to Road Maintenance Fund 0.04 0.16 0.20

Total BaselineCost 27.83 20.89 48.72 PhysicalContingencies 1.14 0.76 1.90 PriceContingencies 1.20 0.80 1.99 Total Project Costs 30.16 22.45 52.61 Interestduring construction Total Financing Required 30.16 22.45 52.61

Goods 0.18 0.28 0.46 Works 27.81 18.54 46.35 Services 1.51 3.48 4.99 Training 0.05 0.11 0.16 Other 0.62 0.04 0.66

Total Project Costs 30.16 22.45 52.61 Interestduring construction Total Financing Required 30.16 22.45 52.61 52 Annex4: Cost BenefitAnalysis Summary Yemen: RuralAccess Program

1. General aspects. The Appraisal Mission Team carried out the economic evaluation of the physical investments to be financed under the RAP, in particular of the improvement of the fivy Pilot Rural Roads. The team also reviewed the economic analysis of the rehabilitation and widening of the Al Ahmar - An Naqbah road; this analysis was carried out earlier as part of the appraisal of the ongoing Transport Rehabilitation Project.

Economic evaluation of Pilot Rural Roads

2. Methodologies applied and evaluation tools used. For the economic evaluation of the Pilot Rural Roads, the team used the RED (Roads Economic Decision Model), which was developed by the World Bank specifically for very-low-volume roads. The advantage of the RED model is that it wanbe used for the analysis of road projects where relatively little exact information is available. It is able to substitute actual information on road roughness by estimating present road roughness as a function of observed vehicle speeds. Although the RED model allows for the introduction of exogenous benefits (such as social and other benefits), this feature was not used during the analysis. The economic benefits taken into consideration are exclusively Vehicle Operation Costs (VOC) benefits from normal traffic, generated traffic, and in some cases also diverted traffic. No savings are assumed in maintenance costs. In the absence of any reliable information on accidents, road safety benefits were also excluded from the analysis.

3. Factors determining the economic role of the Pilot Roads. The mission team visited the Pilot Rural Roads in order to gain a first-hand impression and to collect some basic data. It was confirmed that the five Pilot Rural Roads are intermediate rural roads (as defined in the PAD), which link several districts to each other, and to the paved main road network. They provide access to areas with very significant populations and with economic potential, mainly in agriculture and fisheries. All of the Pilot Roads are within one or two hours of major cities (Sana'a, Hajjah, Al Mahwit and Marib) where many people from the project areas work during the week. Most of those workers try to travel back to their home villages for the weekends and holidays. These cities are at the same time the outlet markets for products from the areas of the Pilot Roads, and the source markets for manufactured goods used in the areas of the Pilot Roads.

4. Present traffic levels. On four of the five Pilot Rural Roads, traffic counts were carried out during a five-day period (January 27 - February 1, 2001) by the staff of the Road Maintenance Fund. The results are shown in the table below.

Project Saturd., 27 Jan. Sunday,28 Jan. Monday,29 Jan. Tuesday,30 Jan. Wed.31 Jan. Thursday, 01 Feb. Name 2001 2001 2001 2001 2001 2001 Mix Pick Truck Mix Pick Trucks Mix Pick Trucks Mix Pick TruckMix Pick TruckMix Pick Truck UPUP UP I - UPSI] iU VP lpS At Turbab- 60 20 0 50 35 1 55 28 ] 18 22 301 23 0 TorAl Balia Thulla- 10 25 1 14 45 0 15 37253 1 25 7 Arnran Kohlan-A 23 50 1 J0 45 0 4 f 21 55 0 25 48 0 22 __45 Magrabah ___ Kham5is 10 75 0 1885 0 12 144 0 16 18 2 17 247 s . E Bani Waad ~~& -AlMahwit Note: Daysmarked (shaded) are Marketdays with higher-than-typicaltraffic volumes The locations of the traffic counts for the Pilot Roads were at the beginning of each road, close to the paved road where the Pilot Road originates. Traffic levels at those points are, however, much higher than 53 the average traffic levels on the entire road. In order to avoid distorted results of the economic evaluation, it was therefore necessary to adjust traffic volumes significantly downwards. The traffic volumes used for the economic evaluation are only between 30 and 50 percent of the traffic actually counted. It was further observed during the field visits that almost all traffic on the road are utility vehicles, such as four- wheel drive passenger vehicles and pick-up trucks (Toyota Landcruiser). Therefore, the traffic categorized as "mixed" and "pickup" during the traffic counts were combined and categorized as "pickup utility" vehicles for the purpose of the economic analysis. The vehicles categorized as "trucks" during the counts are almost exclusively light trucks (Mitsubishi Canter or similar) and were therefore categorized as "light trucks" in the economic analysis.

In summary, the "normal traffic" (or "baseline traffic") used in the RED analysis, in the "without project" scenario, is as shown on the following table:

Pilot Road Pickuputility Lighttrucks TotalTraffic (No. of vehiclesper (No. of vehiclesper (No. of vehiclesper day) day) day) Thulla- Amran 28 3 31 Kuhlan-AlMaghrabah 21 0 21 Ad Taffah- Awwin 29 3 32 At Turbah-Towral Bahah 51 4 55 KbamisBani Sad - Al Mahwit 40 1 41

5. Vehicle fleet characteristics. The vehicle fleet characteristics used in the VOC analysis are those used in the 1995 11DM III analysis which was carried out in the context of the Transport Rehabilitation Project. Some data was updated, such as the economic cost of vehicles, tire prices, labor and crew costs, and vehicle service life. For fuel cost, the international border price of fuel (US$ 0.51 per liter for both gasoline and diesel) was used as economic cost of fuel, in light of the heavy subsidies for fuel in Yemen.

6. Traffic composition on Pilot Roads. Due to the very bad condition of the Pilot Roads, present traffic is restricted to mostly smaller four-wheel-drive vehicles (Toyota Landcruiser passenger vehicles and pickup trucks) and a few small trucks. The improvement of the roads, mostly to paved standard, will bring about a significant change in traffic composition. Future traffic will include a wider variety of vehicles. Many of the present 4-wheel drive vehicles will be replaced by passenger cars, small and medium-size buses, and medium-size trucks. In particular, the generated and diverted traffic in the "with project" scenario will be composed of all types of vehicles, except for very large trucks and buses. Nevertheless, in the absence of a reliable basis for estimating the change in traffic composition, and to simplify the analysis, traffic growth was applied to existing vehicle types, which adds to the conservative nature of the analysis. This also means that the quantitative relationship between the two vehicle types remains constant in the model during the 15-year evaluation period.

7. Future traffic growth rates. In the RED analysis, future traffic is composed of: (i) normal traffic, which is the existing traffic today; (ii) generated traffic, which is traffic that is suppressed today because of the bad road conditions and the high VOC's; and (iii) in some cases diverted traffic, the latter being traffic which today is using an alternative road, but which will switch to the new road because it is shorter and/or better. For all of the above types of traffic, an overall growth rate is applied during the 15- year period of analysis. Based on historical traffic growth data in Yemen, a 5 % growth rate has been used in the analysis for the initial five years, while for the remaining period of analysis, a 2 % growth rate was applied. This reduction after five years is based on the assumption that (i) a gradual reduction of fuel subsidies will increase pump prices of fuel and somewhat discourage vehicle use, and (iii) increasing problems of water availability in Yemen will cause an overall slowdown of economic development.

8. Generated traffic. As mentioned above, generated traffic is defined as traffic which is presently suppressed because of the very bad road conditions and the high Vehicle Operation Costs (VOC). Recent studies carried out by consultants in Yemen show that generated traffic is very important and has 54 normally been underestimated in the past. Once roads are upgraded from unpaved to paved standard, traffic growth rates of some 20 % per year are achieved over a 15-year period. For the pilot roads, generated traffic is expected to materialize rather quickly after the completion of the road improvement. The volume of generated traffic was calculated within the RED model as a function of the elalsticity between transport cost (vehicle operating costs) and transport demand. Based on previous studies in developing countries, the range of price elasticity is between 0.6 and 2.0. For the case of Yemen, and based on the experience of earlier projects, the team assumed an elasticity of 1.5 . It should be noled that that the resulting level of generated traffic is on the conservative side, especially when considering the enormous improvement brought about by the upgrading of the Pilot Roads to a paved condition. Actual generated traffic may be far greater than the value used in the analysis.

9. Diverted traffic. Three of the five pilot road projects to be imnplementedunder Phase I of the RAP will link two paved roads of the main road network to each other. The importance of those Pilot Roads therefore goes much beyond providing access to rural areas, since after their improvement they will also have the important function of a link within the main road network. These are the following three roads: * Thula - Amran: This road will link the highly populated areas of Hajjah and Amran (north of the Pilot Road) with the areas of Shibam and Al Mahwit (south of the Pilot Road). Connection is presently provided by going through the Sana'a area. The estimated saving in travel distance is 60 km on average. * Al Mahwit - Khamis Bani Sa'd: This road will link the highly populated areas of Shibam and Al Mahwit (north of the Pilot Road) with the main road between Sana'a and Hudaydah (south of the Pilot Road). The road will divert almost all traffic between the Al Mahwit area and the coastal lowlands of Yemen around Al Hudaydah. Connection between these areas is presently provided by going through the Sana'a area. The estimated saving in travel distance is 120 km on average. * At Turbah - Tawr al Bahah. This road will link the highly populated area along the Taizz - At Turbah road (north of the Pilot Road) with the cities of Aden and Lahj (south of the Pilot Road). The road will divert almost all traffic between the At Turbah area and the coastal lowlands around Aden. Connection between these areas is presently provided by going through Taizz. The estimated saving in travel distance is 130 km on average.

For those roads, it is certain that some traffic will be diverted from other parts of the main road network to the newly improved Pilot Road. An Origin-Destination survey was carried out in order to determ ine the likely volume of diverted traffic for each of those three roads. Traffic was intercepted on the alternative road, and drivers were asked if they would use the upgraded road if it existed. The results were as follows: (i) for the Thula-Amran road, 9 passenger cars and 10 pick-up trucks per day would switch to this road instead of the alternative road now being used; (ii) for the Al Mahwit - Khanis Bani Sa'di road, 7 passenger cars and 25 pick-up trucks per day would switch to this road; (iii) for the At Turbah - Tawr al Bahah road, 6 passenger cars and 13 pick-up trucks per day would switch to this road. The traffic volumes for the "with-project scenario" are summarized below:

< d ,~~~~~~~0L- W.

Road Road F--...... f..--- 77#a -. 5r yer~i** - -~r t5y Thula-Arnran 33 39 48 40 48 58 19 23 28 Kuhlan-Al 22 26 32 22 27 33 - - -

Magrabah _. At Taffah- 34 41 50 7 8 10 - - - Awwin _____ At Turbah-Towr 58 70 85 67 81 99 19 23 28 al Bahah Al Mahwit- 43 52 63 50 60 73 32 39 47 Khamis Bani Sa'd _ - 55

It should further be noted that even the other two Pilot Roads are part of longer connections between paved sections of the main road network, but it will take a number of years before those connections can be actually completed. It is clear that their economic rate of return will be much enhanced once the entire connection is completed, which is likely to happen during Phases II and III of the RAP.

10. Costs of Pilot Road improvements. The estimated cost for the five pilot roads is as follows:

Unit Cost Road Length Total Cost (US$/km) (km) (US$ million) * Thula-Amran Road: 111.000 25.6 2.842 * Kuhlan Affar - Al Maghrabah 134.000 15.8 2.117 * At Taffah - Awwin 85.000 42.3 3.596 * At Turbah - Towr al Bahah 161.000 8.8 1.416 * Al Mahwit - Khamis Bani Sa'd 138.000 21.3 2.939

These values have been used in the economic analysis. The investment phase (construction time) was assumed to be one year, based on the experience made in earlier road construction projects in Yemen.

11. Sensitivity analysis and switching value. The overall economic analysis included a sensitivity analysis. The scenarios analyzed included: (i) costs increase by 25 percent; (ii) benefits decrease by 25 percent; and (iii) there is a simultaneous cost increase of 25 percent and a benefit reduction of also 25 percent. A switching value was calculated for the construction cost at which the NPV is zero. It is expressed as a factor of the base construction cost.

12. Summary of results for Pilot Roads. The table below summarizes the results of the economic analysis of the Pilot Rural Roads. There are clearly two different groups of Pilot Roads. The first group consists of three roads which besides their rural access function will also have the function of links between parts of the main road network. Their economic rate of return is between 64 percent and 124 percent in the base case. The second group consists of two roads which after their completion will provide rural access only, and which will not play a "link" role, at least not until they are continued to points much beyond the project length. Their economic rate of return is between 25 percent and 41 percent. In the sensitivity analysis, none of the five Pilot Roads falls under the typical 12 percent IRR threshold in the worst scenario.

YEMEN - Rural Access Improvement Program (Phase 1) Economic Analysis Summary Table for Pilot Rural Roads

Thula- Amran IRR 53% 43% 40% 32% 3.8 ______NPV 5.820 5.307 3.852 3.338 Kuhlan-AI IRR 1 7% 13% 12% 8% 1.3 Maghrabah NPV 1.442 0.258 -0.102 -1.286 Ad Taffah- IRR 30% 23% 22% 17% 2.1 Awwin NPV 3.710 2.880 1.953 1.123 At Turbah- IRA 69% 56% 53% 43% 5.09 Towr al Bahah NPV 12.259 11.511 8.446 7.697 KbamisBani Sa'd IRR 46% 37% 35% 28% 3.3 - Al Mahwit NPV 17.673 15.748 11.330 9.404 NPV in US$ million,at a 12 percentDiscount Rate 56

Economic analysis for Rehabilitation of Al Ahmar - Al Nagbah road.

13. Summary of original economic evaluation. The ongoing Transport Rehabilitation 'roject originally included the Am Ayn - Naqabah road section of about 100 km length, and the project was appraised and is included in the SAR for that project. HDM 1II was used for the economic evaluation, and the results were as shown below:

Am Ayn - Nagabah Road Rehabilitation IRR (%) NPV (US$ million - Base Case 41.5 31.51 - Cost increase of 20 % 36.4 30.0 - Benefit decrease of 20 % 35.3 23.7 - Combined: CotFincrease of 20 % and 30.7 22.3 Benefit decrease of 20 % Note: NPV at discount rate of 10 percent

The switching value analysis revealed that if the costs increases by a factor of between 3.2 and 4.5 (depending on road section), the NPV would tum negative.

The RAP appraisal mission team carried out a revision of the basic parameters of this road and its economic evaluation, with the purpose to verify if the satisfactory rate of return which was calculated in 1995 is still valid.

14. Project characteristics and costs. The detailed technical studies carried out after 1995 showed that the road section to be rehabilitated would need to be extended beyond Am Ayn and include an additional section of 14 km length, of almost identical characteristics in terms of costs and traffic. The road section for which rehabilitation is to be financed under the RAP is thus identified as Al A imar - Naqabah, of a total length of 114 km. The unit cost which was used for the original economic analysis in 1995 was US$ 51,720 per km and did not include widening of the road from six meters to seven neters. Present cost estimates are in the order of US$ 60,000 per km without widening, and US$ 75,001)if the road is widened to 7 meter pavement width.

15. Traffic volume. The 1995 economic evaluation was based on traffic counts carried oul at that time, which indicated an average daily traffic of 1200 vehicles. The growth projection was six percent per year, resulting in a projected traffic volume of around 2000 vehicles per day in the yeai 2003. However, actual traffic growth has outperformed the projections by a wide margin. The 1999 traffic count showed an actual traffic volume of which was already close to 2000 vehicles per day. This strong growth is caused in part by a strong overall economic development during the recent years, in area between Habban, Azzan and Mayfa'ah, and also in Al Mukalla.

16. Overall conclusion. In conclusion one can say that: (i) the increase in the estimated project cost is moderate, and will in the economic analysis most likely be compensated for by increases in un t VOC savings; and (ii) traffic growth rates are much higher than anticipated in the original economic evaluation. These two factors make it certain that the economic rate of return of the project (without widening) is significantly higher than calculated in 1995. The high traffic growth rates also ensure that wide ling of the road to seven meters pavement width is economically viable and justifiable. 57

Annex 5: Financial Management Summary

Yemen: Rural Access Program

A. Organization Structure

1. The overall responsibility for financial management and accounting of the Part A of the project is with the Central Management Office (CMO) for Rural Road. A Rural Roads Steering Committee, chaired by the Minister of the Ministry of Public Works and Urban Development, would provide the necessary oversight, control and guidance to the CMO. The RAP organization structure for Phase I is presented below:

Organization Chart Rural Access Program

...... OtherSteering Comnmte Steering ...... Members: Representativesfomnr Steering - Ministty of PublicWorks and Committee UrbanDevelopment Ministerof PublicWorks and - Ministryof Planningand Urban Development - Chairman Development - Minist,yof Finanoo - Ministryof Local Adninistration - Ministryof Ag,iacltute Central - Road MAintenanceFund Managemin MnGentera ManagerCMO Office (CMIO) (General Manager)

|AdministrtoPocemetPlang Evionmn an Reioa and Accounts Design | Social Offices l Supervision Managemen

B. Assessment of Financial Management System

2. Part A. For Part A components of the Project, the CMO would maintain books of accounts for the project, prepare and disseminate financial statements and financial management reports, and ensure timely audit of the financial statements. The CMO is already established by a Prime Minister Decree, and is headed by a General Manager appointed by a Ministerial Decree. A Finance and Accounting Officer has been selected and appointed following IDA no-objection, and additional accounting staff will be recruited as required before effectiveness and during project implementation. A detailed description of the project's financial management arrangements, including the project's flow of funds, are found in the Project Inplementation Plan (PIP) manual.

3. The FMS to be developed for the CMO would be based on principles and procedures defined by the legal framework applicable to the public sector, and more specifically to governmental institutions. The main characteristics of the CMO's system are outlined below:

4. Accounting system. Books of accounts for the project would be maintained on double-entry bookkeeping principles. Project accounts would be maintained using the computerized accounting system, which would be developed and operational in the CMO. The accounting system, based on the cash basis and the outline of budget components would be operational and reflected on official books maintained manually within the first three months, until the computerized system is in place. The accounting book would reflect the government contribution; the balances related to the amounts disbursed, reflecting the transactions of the special accounts and the remaining balance at the end of each 58 period.

5. Budgeting system. An annual approved budget for procurement and disbursement wculd be issued by CMO based on the needs and actions to be undertaken. The annual budget would be submitted to the Rural Roads Steering Committee, which would be in-charge of controlling the budget. 6. CMO Disbursements. Payments to contractors and supplier would be authorized by the General Manager and the Financial Accounting Officer of the CMO. Their budget would be prepared at the central level and would be processed by the accounting staff who would be responsible for the issumce of all the transactions according to the DCA. The CMO would also be responsible for the reconciliaiion for all IDA transactions.

7. Internal Controls. A fiduciary responsibility of control of the budget exe,cutionand monLitoring would rest with the Rural Roads Steering Committee. The Central Organization for Control and Audit (COCA) will conduct an annual audit of the Government contribution to the Project. In accordmnceto IDA requirements, appointment of an independent auditor acceptable to the IDA would be completed by July 30, 2001, to allow the CMO to benefit from the added value of the external auditors' opinion during the annual mandatory review of the adequacy of the financial management arrangements and its internal control system. In addition to the issuance of an opinion on the project financial statements, the external auditor would be required to submit an annual management letter highlighting its observations on the internal control system as well as recommendations to improve the monitoring and execution of the Project. The Terms of Reference (TOR) of such assignment would be submitted to IDA for no-objection prior to inviting proposals from interested private auditors.

8. ProjectMonitoring. The CMO will be responsible for project monitoring and reporting. T-uisunit consists of several high level staff (General Manager, Finance and Accounting Officer, Proclurement Officer, Environmental and Social Officer, Planning and Design Officer and Supervision Officer), and will manage all rural access road projects with international financing. The CMO would issue the quarterly monitoring reports based on information received from regional representatives. These reports would combine physical implementation data, as well as financial information related to commitments, disbursements and available balances from the credit. There is a need to explain in the PIP manual (i) the roles of the Steering Committee, CMO, and the Regional representatives involved in the implementation of projects; and (ii) examine whether it would be possible to integrate the MIS and accounting sy stem to ensure the issuance of an efficient and comprehensive project management reporting system.

C. General Assessment and Scope for Improvement

9. General Assessment. The FMS assessment of the CMO including its accountability would be undertaken as soon as the Financial Management System (FMS) is in place. It should be noted that the Government agreed to recruit a Consultant [(Consulting Firm) (agreed TOR for Computerized Accounting and Management Information Systems is filed in the PIP)] to assist in the development of the financial accounting and management information systems, to be financed from the Project.

10. Scope for improvement. The initial assessment indicates that several actions would have to be undertaken to finalize the whole process in order for the CMO to implement a comprehensive management information and accounting systems. Except for the recruitment of the Finance and Accounting Officer and the engagement of a finance consultant/consulting firm, these actions are mainly related to: (i) the staffing of the CMO in order to operate according to its mandate; (ii) the purchas- of the needed hardware; and (iii) strengthening of the CMO through training.

11. Financial Management Svstem for the Project. Since the CMO will not be operating fully until July 2001, there is a need during the transition period to set up special arrangements for the management and monitoring of the proposed Project. a Identiflcation of the CMO FMS staff headed by the General Manager, and assisted by the Finance 59

and Accounting Manager. Job descriptions and responsibilities should be issued in writing and included in the Financial Management and Accounting Manual of Procedures (FMAM). • Hiring of a specialized consultant in accounting, finance, and information system in order to issue an FMAM for the project according to TORs acceptable to the IDA. This FMAM will define the flows of funds, the internal control rules, the finance and disbursement procedures, the relationship between all the internal and external entities involved in the project implementation, the chart of accounts, and the reporting procedures and rules. * Acquisition of the needed hardware for the CMO. This action will launch the training program and improvement of the staffs skills on the hardware/software application. * Hiring of a short-term consultant to assist the CMO during the first 12 months. This highly qualified accounting and finance consultant will review on a weekly basis the financial accounting, and banking records related to the project and address the insufficiencies. This consultant would also play a role of trainer for the CMO staff involved in project implementation. Specific TORs must be issued and submitted to the IDA. • Development of training program. This action would comprise specific training sessions for procurement, disbursement, accounting, project and financial management, and generation of PMRs. The program would include all staff involved in project implementation, as well as their backups. The capacity, knowledge, background, and experience of each would be taken into account to meet the needs.

D. Financial Management System Setup

12. Organization Finance and Accounting. The CMO General Manager (GM) has been designated officially as overall coordinator of the project. The GM is responsible for monitoring and evaluation as well as procurement, finance, budgeting, and accounting functions. He is responsible for recruiting an adequate number of qualified staff for the CMO. To establish a sound financial management system, the GM and FAM will be assisted during a period of 12 months, by a qualified financial management and accounting specialist (TOR for Computerized Accounting and Management Systems is filed in the PIP) working part time on a weekly basis. The Consultant would install the computerized financial management accounting system in the CMO. This short-term consultant is expected to demonstrate a reasonable knowledge and understanding of World Bank procurement, disbursement, project accounting, financial reporting and auditing guidelines and procedures.

13. Selection of the Financial and Accounting staff will be based on the following criteria: (i) University degree in accounting or finance; (ii) at least ten years experience, with preference given to consultant whose qualifications include several combinations of the following: both public and private sector accounting, banking, planning and budgeting, procurement and contract management, and previous or current assignments with agency managing international financing; and (iii) knowledge of international accounting standards and internal control procedures.

14. Financial accounting and management information policies for the project have to be developed. These policies are crucial for ensuring transparency, providing clarity regarding financial aspects to the various stakeholders and finance staff, ensuring uniformity, and enforcing accountability. These policies inter-alia cover the following aspects: (i) expenditures that would be treated as project expenditures including their classification; (ii) expenditures, which would be eligible for reimbursement from IDA credit; and (iii) project accounting policies. These policies would be gradually expanded and refined to include aspects such as efficient management and deployment of funds, internal control policies, etc. Sub- area managers would comply with the financial and accounting policies of the project by signing a memorandum of understanding.

15. Project Accounting Svstem. The regional offices involved in the project implementation would be coordinating with the CMO for any project planning and procurement at the regional level. The CMO 60 would maintain the books of accounts for the Part A components managed under their responsibility, prepare and disseminate financial management reports, and ensure timely transmission cf these documents to the Steering Committee. The Finance and Accounting Manager would be in charge of the consolidation process and issuance of the annual project financial statements and the quarterly Project Management Reports (PMRs), as well as the submission of these documents on a timely basis to t.heIDA and to the auditors.

16. The overall principles for project accounting are outlined below:

(i) Books of accounts for the project would be maintained on double-entry bookkeeping principles. Project accounts would be maintained using a computerized accounting system, which would be developed. For the future, the computerized accounting system v'ould be developed as a networked system, which would eventually connect also the CMO r-egional offices with the central office.

(ii) Project accounting would cover all sources and utilization of project funds. This would include payments made to and expenditures incurred. All project-related tran,3actions (whether involving cash or not) would be taken into account in the reporting system. Disbursements made by the World Bank and the Special Account maintained by GOY would also be included in the project accounting system. Funds received from c ifferent sources would be identified separately and reflected in the project accounts.

(iii) Project-related transactions and activities would be distinguished from other CMO activities. This distinction would be reflected at the data-capture stage. An identifiable Trial Balance for the project capturing all projects receipts, expenditures, and other payments under the project would be prepared. A Chart of Accounts for the project has to be developed. The Chart of Accounts should conform to the classification of expenditures and sources of funds as indicated in the project documents (Project Implementation Plan, Project Aopraisal Document). The Chart of Accounts should allow data to be captured in a manner to facilitate financial reporting of project expenditures by: (i) project components; (ii) expenditure categories; and (iii) disbursement categories.

(iv) A system of reconciliation between the Project Financial Statements/financial reports and the legal books of accounts must be defined.

(v) Physical information on key performance indicators that can be readily linked to f.nancial costs would be identified and maintained as part of the project financial management system. Initially, this would be maintained for some high cost items that represent a significant portion of the project cost, and items for which data on physical activitie. can be easily captured. These items have to be identified and indicated in the Internal Control Guidelines under the FMAM. This list would be gradually expanded during implementation.

17. Issuance of the accounting procedures manual for the project which will outline at a minlimum: (a) job responsibilities within the CMO; (b) monthly and annually accounting ledger closing and reconciliation procedures including the consolidation of data; (c) accounting policies; and (d) banking and cash procedures. It is important that the writing of this manual of procedures be completed by September 1, 2001, for distribution to all CMO staff.

18. Information Flow for AccountingPurposes. The information flow will be as follows:

(i) The CMO would generate and maintain vouchers and supporting documentation for expenditures on activities directly managed at their level. Project accounts will be issued on a monthly basis as well as the project financial statements; 61

(ii) Expenditures incurred by each regional office would be reviewed by the project auditors following the International Standards on Auditing and the World Bank guidelines; and

(iii) This system would be reviewed in the light of implementation experience, and modified as necessary.

19. Internal Controls. The project financial management system should include the following internal control mechanisms:

(i) Operation of a budgeting system, and regular monitoring of actual financial performance with budgets and targets;

(ii) Adoption and operation of simple, clear and transparent financial and accounting policies which would govern financial management of and accounting for the project. These policies and procedures would have to be included in the Financial Management and Accounting Procedures Manual;

(iii) Establishment at the transaction level of policies, procedures and systems for ensuring acceptable internal controls mechanism, such as checking of expenditures, appropriate documentation, levels of authorization, segregation of duties, periodic reconciliation, physical verification, easy access to supporting documents etc. These policies and procedures would have to be reviewed and updated periodically; and

(iv) Implementation of a comprehensive system aiming at: (i) the consolidation of data at the central level; and (ii) the issuance of the project financial statements and the PMR.

20. Guidelines for Internal Control Procedures. Internal control has traditionally been defined as all the policies and procedures used by management to protect an organization's assets and to ensure the accuracy and reliability of the accounting records. Its also includes controls that deal with efficiency and adherence to management policies. The principles of an internal control system are as follows:

* Authorization - All transactions and activities should properly be authorized by management; • Recording transactions - All transactions should be recorded to facilitate preparation of the financial statements and to establish accountability of the assets; * Documents and records - The design, use and maintenance of adequate document should help to ensure the proper recording of transactions; * Limited access - Access to assets should be permitted only with the management's authorization; * Periodic independent verification- Accounting records should be checked against the assets by someone other than staff responsible for the records and assets; * Separation of duties - The organizational plan should separate functional responsibilities (authorization, operating, handling assets and keeping the records ); and * Sound personnel procedures - Sound practices should be followed in managing the people who carry out the duties and functions.

21. This document should reflect the CMO's activity including a description of: (a) staff positions and responsibilities; (b) transaction flows; and (c) relation with regional offices, as well as external authorities/administrations such as MPWUD, MOPD and MOF. This system would be reviewed in the light of implementing experience and modified as necessary. 62

E. Financial Management Reports

22. Quarterly Project Management Report (PMR) for the project would be generated from the computerized financial management system. These reports would be management-orientedi (i.e., summaries rather than transactional details) and would be used for project monitoring and implementation by each sub-area unit and at the central level. The PMRs should include the three following parts:

(i) Financial Statements include:

* Summary of sources and uses of funds • Uses of funds by project activity * Project balance statement of affairs * Cash withdrawal * Cash forecast * Special account statement

(ii) Project progress statements include:

* Output monitoring report using contract management information, or * Output monitoring report using unit variance as monitoring indicator

(iii) Procurement management report includes:

* Contract expenditure report - Goods and works • Contract expenditure report - Consultant * Procurement management report - Goods and works * Procurement management report - Consultant

Formats of the reports should be part of the Financial Management and Accounting Manual.

23. Annual Reports. Audited Project Financial Statements (PFS) would be submitted to the IDA. PFS would include: (i) a statement of sources and uses of funds or Balance Sheet, indicating funds received from various sources, project expenditures, and assets and liabilities of the project; (ii) sc[ edules classifying project expenditures by pilot road (cluster of roads), components and expenditure categories; (iii) a Special Account Reconciliation Statement; and (iv) a Statement of Withdrawals made on th- basis of Statements of Expenditure (SOEs). Audited PFS would be submitted to the IDA not later than six months after the end of each fiscal year.

24. Part B Component. The Project Implementing Unit (PIU) of the TRP in the Ministry of Public Works and Urban Development would manage the Project's Part B. This unit is headed by a l'roject Director and has two accountants. The only road project in Part B is the Al Ahmar-An Naqbah Road Rehabilitation. The PIU would maintain the books of accounts for Part B in the same manner as for other TRP expenditures, except that separate accounts will be kept and a separate SA will be set up for Part B as discussed above. An assessment of the PIJ's current financial management system indicates that this meets the minimum requirement of IDA.

F. Audit Arrangements

25. Two separate annual project financial statements for Part A and Part B accounts will be audited by independent private auditors acceptable to IDA and will be submitted within six months after the end of each fiscal year. There will also be two separate audits of the Special Accounts managed by the CMO and the PIU. The quarterly technical and financial audit would be submitted within 45 days from end of the quarter for the first 18 months. The Terms of Reference are filed in the PIP. 63

26. The audit would be comprehensive and would cover all aspects of the project (i.e., all sources and uses of funds, and expenditures incurred). The audit will be carried out in accordance with International Standards on Auditing. Terms of Reference (TORs) for this assignment should cover an audit of financial transaction, the SOEs, SAs, PMRs, and an assessment of the accounting financial management system, including review of internal control mechanisms. The CMO and the PIU would provide the auditor with access to project-related documents and records, and information required for the purposes of the audit. The Auditor would carry out a concurrent audit during the fiscal year, to bring to management's attention any issues, which need to be addressed. This would strengthen internal controls, and would also facilitate early completion of the annual audit.

G. Financial Management Risks - Financial Management Capacity

27. The financial management capacity within Yemen is still evolving and has been mitigated for this project by the use of the CMO for project implementation, including financial management, drawing upon its experience of projects of this nature, and of international auditors for the audit of the project. The specific weaknesses of the CMO in respect of its financial management capacity are currently being addressed by the engagement of financial management consultants. However, these weaknesses neither compromise the fiduciary responsibilities of the Borrower nor the Association. The training of staff is part of the terms of reference of the Consultant that would ensure a strong FM capacity.

G. Timetable

28. Assuming Board presentation on June 7, 2001, the CMO and PIU will be committed to the following schedule for implementing the financial management action plan over the next 12 months. 64

ACTION OUTPUT RESPONSIBILrY EFFECTrIE DATE (TENTATIVE)

Preparation of TOR for the consultants Detailed program for the Chairman, GM and April 2001 and job position descriptions implementation of the action Consultant (Complied with) plan, TOR

Organization of the project Organization Chart and job GM and Consultant July 2001 (consulting services - 2 SW) description

Appointment of Auditor Signed contract GM and SC October 2001

Appointment of Procurement Officer Signed Contract GM and SC July 2001

Program of Training of the CMO's staff Program: contents and GM September 2001 timetable

Implementation of the MIS and PFS Set-up of the system and GM and Consultant October 2001 testing

Training program Report on the training GM and Consultant October 2 001 to (consulting services - 10 SW) June 2002

Accounting System for the project Chart of account and GM and Consultant August 24)01 (consulting services - 4 SW) accounting manual

Internal control guidelines AFM Manual GM and Consultant September 2001 (consulting services -2 SW)

Reporting System Format and content of the GM and IDA December 2001 (consulting services - 2 SW) PMR

Implementation of the PMR and training Set up of the out put and GM and Consultant January 2002 of the staff testing_

Evaluation of Financial Management Financial management GM and Consultant January 2002 System assessment report

Staff training Training performance report GM and Consultant January 2002

Issuance of the first PMR Integrated Management GM April 2003 report

Issuance of the second PMR, and review PMR and assessment report GM and IDA September 2003 of the system 65 Annex6: Procurementand DisbursementsArrangements

Yemen:Rural Access Program

A. Country Procurement Assessment Report (CPAR) A Country Procurement Assessment Report (CPAR) for Yemen was carried out in 2000. It showed that the present legislation (Law No. 3 of 1997 concerning Government Tenders, Auctions and Stores, and corresponding Regulations introduced by Decree No. 234 of 1997) is a significant improvement over the previous legislation of 1991, but is not up to international standards, notably in the following areas: (i) gaps in the Legislation; (ii) absence of Standard Bidding Documents (SBD's); and (iii) conflicts with procurement guidelines of donors, including IDA. Even where rules exist, they are not necessarily followed. It is not clear whether the inconsistent application of the Legislation stems from a lack of understanding of these national rules, or from a lack of discipline in the civil service in charge of enforcing the rules, or perhaps both.

The CPAR recommends that to fill the gaps in the legal framework and to clarify those points which seem to conflict with donor's guidelines, or which are ambiguous, national SBD's for goods, works and services should be prepared, together with a comprehensive National Procurement Manual. The manual should encompass the Law, the Regulations, the new SBD's and a plain language commentary. Where the Legislation shows gaps or is open to different interpretation, and practice seems to be inconsistent, the Manual should provide guidance with step-by-step instructions. Where the Legislation is in conflict with donor's rules, the Manual would have to distinguish between provisions which are binding according to national law, and which are yet unacceptable under the guidelines. In the latter case, the Manual would have to provide acceptable step-by-step solutions to satisfy the Guidelines of donors, including IDA.

B. General For the Rural Access Program (RAP), Civil Works and Goods financed by IDA will be procured in accordance with Bank's Guidelines under IBRD Loans and IDA Credits (January 1995 revised in January and August 1996, September 1997, and January 1999). For procurement under International Competitive Bidding (ICB), Bank Standard Bidding Documents and Standard Evaluation Report will be used. For National Competitive Bidding (NCB), in the absence of national SBD's the Bank's SBD's will be used, with modifications acceptable to IDA, in English or Arabic language. For small works (under US$ 500.000), National Competitive Bidding (NCB) advertised locally would be carried out. Consultant Services contracts financed by IDA will be procured in accordance with the Bank's Guidelines for the Selection of Consultants by World Bank Borrowers (January 1997 revised in September 1997, and January 1999). The standard Request for Proposal, as developed by the Bank, will be used for appointment of consultants. Simplified standard contracts will be used for short-term assignments, i.e. those not exceeding six months, carried out by firms or individual consultants. A General Procurement Notice (GPN) will be issued in the United Nations Development Business, to advertise for major consulting assignments and to obtain expressions of interest, and for any ICB for works and goods. It will be updated annually for all outstanding procurement. A GPN will also be published in the national press or official gazette for contracts under NCB and to obtain expression of interest from national consultants. The program elements by disbursement category, their estimated costs, and procurement methods are summarized in the attached tables. Also attached is the Procurement Plan which includes all envisaged procurement for the first half of the project. The Procurement Plan will be updated regularly during the project period. Consultant selection methods and thresholds for procurement methods and prior review are described below. 66

C. Civil Works

Civil Works contracts financed by IDA are estimated at US$ 46.35 million including taxes, duties and contingencies. They will cover: (i) the improvement of Pilot Intermediate Rural Roads; and (ii) the improvement of village access roads. It is expected that some works contracts will be below US$3 million, and it was agreed during preparation that these would be advertised only locally, but olherwise applying Bank Procurement Guidelines for ICB and using the Bank's Standard Bidding Documents. Works contracts valued under US$ 500,000 may be procured using simplified Bidding documents acceptable to IDA. The bidding processes for civil works contracts for the Pilot Rural Roads will be managed by the CMO. The bidding process for the rehabilitation of the Al Ahmar - An Naqbah road will be managed by MPWUD, in particular by the PIU in charge of the ongoing Transport Rehabilitation Project. Prequalification of contractors will be carried out for all works contracts (both NCB a.id ICB) under the Program, using the IDA prequalification procedures. All responsive bids will be evaluated and the qualification of the lowest evaluated bidder will be reconfirmed during bid evaluation and before deciding on the contract award.

D. Goods

Contracts for Goods financed by IDA (totaling US$ 0.46 million) relate mainly to furniture, office equipment, computers, and vehicles. ICB procedures would apply to grouped vehicles purchases above US$ 300,000. The remaining contracts for goods, costing less than US$200,000 per contract, up to an aggregate of US$0.5 million -- which are not likely to be suitable for ICB because of their small size, and correspond to goods available locally at economical prices to be delivered over a period of three or four years -- would be procured through NCB. Small items, which cannot be grouped into contracts of at least US$50,000 equivalent per contract, up to an aggregate of US$0.2 million, may be procured through prudent national or intemational shopping, on the basis of quotations obtained from at least three reputable suppliers.

E. Consultant Services. Consulting services financed by IDA would be for: (i) studies, technical design, civil work supervision, preparation of bidding documents, establishment of accounting systems, financial management support, technical audits, and financial audits; and (ii) consultancies on technical matters and training. Consultants financed by IDA, would be hired in accordance with the Bank's Guidelines for the Selecr:ion and Employment of Consultants (January 1997 revised in September 1997, and January 1999). Selection would be based on competition among qualified short-listed firms through Quality-and Cost-Based Selection (QCBS) by evaluating the technical quality of the proposals before combining quality and cost evaluation, by weighting and adding the quality and cost scores. The CMO would issue widely publicized procurement notices to get candidacies from consultants (firms and individuals). lBased on agreed upon criteria, the CMO will maintain and update a list of consultants which will be used to establish short-lists. Other methods would also apply. For services of a standard nature such as land surveys, the Least-Cost Selection (LCS) would be the most appropriate method -- the firm with the lowest price being selected, provided its technical proposal received the minimum qualifying mark. Consultants services for institutional support (estimated to cost less than US$100,000 per contract) would be based on Consultants' Qualifications (CQ), based on the consultants' experience and cornpetence relevant to the assigmnent. Services for lectures, advisory services and small studies would be selected through comparison of qualifications among Individual Consultants (IC) expressing interest in the assignment, or approached directly. This would represent up to an aggregate amount of US$ 200,000. 67

F. IDA Reviews. The review process would cover about 90 percent of the contract amounts for works, goods, and consultants. Contracts for works financed by IDA, above the threshold value of US$500,000 equivalent, will be subject to IDA's prior review procedures. Contracts for goods financed by IDA, above the threshold value of US$200,000 equivalent, will also be subject to IDA's prior review procedures. Selective post-review of contracts awarded below the threshold level will apply to about one in three contracts and will be carried out by Bank staff-- using audits, and other consultants, as necessary. Bank staff will also review the selection process for the hiring of consultants. Prior IDA review for the selection of consultants will include the review of budgets, terms of reference, short-lists, selection procedures, requests for proposals, evaluation reports, proposals for contract awards, and negotiated contracts. Prior IDA review will not apply to contracts for the recruitmnentof consulting firms and individuals estimated to cost less than US$100,000 and US$50,000 equivalent, respectively. However, the exception to prior IDA review will not apply, regardless of the contract value, to: (i) the Terms of Reference of such contracts; (ii) to single-source hiring; (iii) to assignments of a critical nature as determined by IDA; or (iv) to amendments of contracts raising the contract value above the above- mentioned prior review thresholds. For all consultant contracts subject to prior review (initial cost estimate above US$100,000), opening the financial envelopes will not take place prior to receiving the Bank's no-objection to the technical evaluation. Documents related to procurement below the prior review thresholds will be maintained by the borrower for ex-post reviews by auditors (technical and financial audits) and by IDA supervision missions at least two years after the Project's closing date. For training abroad and in-country, the training program -- containing names of candidates, costs estimates, content of courses, periods of training and selection of training institutions -- will be reviewed by IDA annually. Frequency of procurement supervision. One supervision mission every six months will include a procurement specialist to carry out procurement post-reviews. It will also review the technical audit reports carried out by an independent consultant financed under the project. Those reports would have to be issued at least twice a year. Modification or waiver of the scope and conditions of contracts. Before agreeing to any material extension, or any modification or waiver of the conditions of contracts that would increase aggregate cost by more than 15% of the original price, the Borrower should specify the reasons thereof and seek IDA's prior no-objection for the proposed modification.

G. Procedures Manuals and Agreements. As part of the Project Implementation Plan, there will be a Procedures Manual on administrative procedures and internal organization. This would include: (i) eligibility criteria for selecting sub-projects for implementation under the proposed project; (ii) procedures for calling for bids, selecting contractors, consultants, and vendors, and awarding contracts; (iii) internal organization for supervision and control of works; (iv) financial management, budgeting, accounting, and disbursement procedures; and (v) procedures for handing over completed works. The draft Project Implementation Plan will be reviewed by IDA before it is formally adopted by the borrower. The formal adoption of the Procedures Manual will be a condition of effectiveness of the credit.

During negotiations, the Government will also give assurance that it will: (a) use and apply the Procedures Manual; (b) use the Bank's Standard Bidding Documents for ICB, the Standard Request for Proposals for the selection of consultants, and the Standard Bid Evaluation reports; (c) update the procurement plan on a regular basis before IDA supervision missions, or more frequently if needed, in order to compare target times and actual completion, and transmit it to IDA; and (d) carry out, during supervision missions, an assessment of the effectiveness of bidding procedures and performance, as they relate to the program's 68 procurement experience, and propose for IDA and other donors' consideration any modification to the current procedures to the extent that would accelerate procurement, while still maintaining corapliance with the Bank's Procurement Guidelines and adequate control over contract awards and payments. The Government will also give assurance at negotiations that it will take the necessary measures to ensure that procurement phases do not exceed the following target time periods:

7777.77.7-.7 .-jf - '' .' by '..W.. Pr~~urenm~~tTh~~trn Maxim,ar iber.o ek Preparation of bidding documents for goods 4 (6 for large contracts) and consultant services Time given to bidders for preparation of bids 4 (6-10 for ICB) Bid evaluation 2 (4 for large contracts) Signature of contracts 2 (after IDA non-objection) Payments 3 (after submission of invoice) 69

Procurement

Procurement Methods (Table A)

Table A: Project Costs by Procurement Arrangements (US$ million equivalent)

Procuremenxt Methofl J)

CivilWorks 31.58 14.77 46.35 (26.56) (12.42) (38.98)

Goods 0.13 0.22 0.12 0.46 (0.12) (0.20) (0.11) (0.43)

Consultinn Services 4.70 4.70 (4.70) (4.70)

Project Management 1.11 1.11 (0.89) (0.89)

Total 31.70 14.98 4.70 0.12 1.11 52.61 (26.67) (12.62) (4.70) (0.11) (0.89) (45.00)

1/ Figuresin parenthesisare the amountsto be financedby IDA. All costs includecontingencies. 2/ Includescivil worksand goodsto be procuredthrough national shopping, consulting services, services of contractedstaff of the projectmanagement office, training, technical assistance services, and incrementaloperating costs relatedto (i) managingthe project,and (ii) re-lendingproject funds to local govermnentunits. 70

Table Al: Consultant Selection Arrangements (US$ million equivalent)

A. Firms 3.44 0.20 0.00 0.86 4.50 (3.44) (0.20) (0.00) (0.86) (4.50)

B. Individuals 0.00 0.20 0.00 0.00 0.20 (0.00) (0.20) (0.00) (0.00) (0.20)

Totals 3.44 0.40 0.00 0.86 4.70 (3.44) (0.40) (0.00) (0.86) (4.70)

1\ Includingcontingencies

Note: QCBS= Quality-and Cost-BasedSelection OBS= Quality-basedSelection SFB= Selectionunder a Fixed Budget LCS= Least-CostSelection CQ = SelectionBased on Consultants'Qualifications Other= Selectionof individualconsultants (per SectionV of ConsultantsGuidelines), CommercialPractices, etc.

N.B.F.= Not Bank-financed Figuresin parenthesisare the amountsto be financedby IDA. 71

Prior Review Thresholds (Table B) Table B: Threshold for Procurement Methods and Prior Review

1.Works Above500,000 ICB All contracts above 500,000and below NCB 500,000

2. Goods Above200,000 ICB All contractsabove 200,000and below NCB 200,000 50,000and below NSor IS 3. Servicesfor Firms Above100,000 QCBS Contractsabove 100,000 100,000and below LCS/SingleSource/CQ Contractsabove 50,000 IndividualConsultants 20,000and above SingleSource Contractsabove 50,000 Below20,000 SingleSource ) Termsof Referencefor all consultantscontracts, as wellas singlesource appointments, irrespective of dollar amount,are subjectto prior review. 72

Disbursement

Table C: Allocation of Credit Proceeds

Civil Works -Five Pilot Roads 12.40 84 - Unidentified Intermediary Roads 11.50 84 - Village Access Roads __ 4.50 84 Part B road (Al Ahmer - Nagabah) 8.90 84 Goods 100% of foreign, and Under Part A of the Project 0.40 90 % of local costs 100% of foreign, and Under Part B of the Project 0.05 90 % of local costs Consulting Services - Under Part A of the Project 4.25 100 - Under Part B of the Project 100

Project Management Costs 0.80 80

Unallocated 2 20

Total _ 45.00

Allocation of loan proceeds (Table C): Allocation of loan proceeds by disbursement categories and percentages financed by the loan are presented in Table C.

Use of Statements of Expenses (SOEs). Full documentation for expenditures under contracts requiring the Bank's prior review would be submitted with the corresponding application. Disbursements for contracts valued at less than US$500,000 for works, US$100,000 for the services of consulting firms and US$50,000 for the services of individual consultants, and training, as well as disbursements for all goods contracts costing less than US$200,000, would be made on the basis of Statements of Expenditures (SOE). Documentation to support these expenditures would be maintained by the CMO. These documents would be made available for review by visiting Bank missions and for project auditing.

Special Account and Funds Flow. The Borrower would establish two special foreign currency accounts (Special Accounts) with the Central Bank, where IDA funds would be deposited - one to be managed by the CMO for Part A of the project and another by the PIU in-charge Part B of the project. For Part A of the Project (RAP- Phase I) the authorized allocation for the Special Account would be $2.5 million. The authorized allocation would be US$ 600,000 for the Special Account for Part B of the Project. However, the initial allocation for the Special Account for Part A of the Project shall be limited to an amount equivalent to $1.5 million until the aggregate amount of withdrawals from Part A of the credit exceeds SDR 7 million. The initial allocation for the Special Account for Part B of the Project shall be limited to an amount equivalent to $300,000 until the aggregate amount of withdrawals from Part B of the credit exceeds SDR 2 million. When withdrawals are made on the basis of PMRs, the amount deposited in the Special Account should not exceed $4 million in respect of Special Account for Part A of the Project and S1 million in respect of Part B of the Project. The special account would be audited annually by an 73 independent private auditor acceptable to IDA.

In parallel with the Special Account, the Borrower would also open a special local currency account (Project Account), to which the Government counterpart funds would be transferred. Both the Special Account and the Project Account would be audited by independent auditors acceptable to IDA.

Initially, the Project will adopt the traditional disbursement system. However, as soon as the Project adopts the PMR-based disbursement system, the CMO would prepare and submit its cash-flow projections for the first two quarters of the first year (of PMR-based disbursement). These PMRs, together with the withdrawal applications, would be sent to IDA to request payments of advances to the Special Account at the Central Bank. The CMO would be authorized to issue payments to the beneficiaries from the Special Account, in accordance with the policies and procedures specified in the Accounting and Financial Management Manual.

Disbursement Forecast (by Calendar Year)

Implementation Period 2001 2002 2003 2004 Total

Investment Costs 2.91 20.22 17.41 11.55 52.06 Recurrent Costs 0.05 0.23 0.21 0.06 0.55 Total 2.93 20.45 17.62 11.61 52.61

Financing IDA 2.40 16.30 15.00 11.30 45.00 Government 0.53 4.15 2.62 0.31 7.61 Total 2.93 20.45 17.62 11.61 52.61 :ProcurementPlan PageI (of3) WOK Dae.Upae

'Project: .- YemenRural Access Prjct .

Contract Ardrevert. F W ~ an at.atCotat ok e.c.....n.. . m. ot Amount Qualifi- Reviewby Unit Actual Pols. complete Non-Objank Non-Obj. Amourp Sinaur ~ ]n Method (Us$) cation Bank7d (d)t(date (datea). (d

2 KuinlM~rbh tB u Prqual. jPnor Rev. Plan IlJl-l2-Ot605-Nov-01 1-o-13De01 23Jn-20-Fb0 18-Feb-01l28-Feb-63 Road~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~tVActual -

3 .Atlaffah - ICB o Prequal. PriorRev Plan 15-May-Cl23-Aug-Cl 05-Sep-6115-Sen-Cl 31-Oct-01 23-anNosv-01Aug00-Dec-01 18-Dec-01e31-Dec-62 iAvwwn Road Acua 4~~~~~~~~~~~~~~~~~~~~~~~~~~~-

06 OtherPilot Rpoads IB u Prqo Pror Rev PlIan 15M 123-Au 1 05 Sep-01 15-Sep-0131 -Oct-61 23-Nov-0104 Dec601____18-ec01 31 Dec6 (tobo defined MMNFActual

lPlan I4-~ lActual j PARTi

-. i i z~~~~~~~~~~~~~~~~~~~~~~~~~~~~- - ~~~~~~~~~~~~~~~~~------. -- .- -- - ...... ---

I ~Thula-AmranRoad 25 6 e ontirera4 f2. m _ 2JKuhlanAfMar-AllMaghrabah 15 ... o u15.8km sectionoffutur -roadtJA y hrabahand Al J2rnimah _.___ -.. G35Eff 23 o x42.3 :r km sectionef futurethrough road to Oayhan ------4'At Turbah-Towral8ahah 88 x u .8ksectinnruffutuTethsro roa cnnectinaAtTurbahwith Towrer l Bahah 6larios8amSa'd-Aytta a -_!AlMahwt 21.3 ...... X2x1 .3 km sectionoftfuture th-rough road connecting Al Mawith KhsrmisBarn So'd

65there (tobe defined) . .x !estimate .-

.-.-. 1138 -.. -. -~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.----...... - ----

otwl-uch.RAlPP~~~~~~~~~~~~~otRaade_l~~~~~~~~~~~. ~ ~...... - ~- ____,.-. ~...... ~ .....- --.. ICEPackac ...... -~~~~~~~~~~~...... - ...... ------.-...... -......

-- =- y~~~~~~~1reen, 'Rouds to heiderrtitiadrjooeI ~--. -- grey...... ProcurementPlan Page2 (of3) GOODS ;Date/ Update: |-May-01

...... -...... I...... Project: Yemen RuralAccess Pro.ject _.._...... _...... )..._. .. - -...... _._..._...... _...... ~...... _... ~~~~~~~~~~~~~~~~...... ~...... 70-39,1 ...... *...... - ...... ~~~~~~~~~~~.._:...... _...... _ ...... I...... _ .... ._...... ,,_.__...... ~~~~~~~..._..__....._...... _.._ _ _ _ ...... _ :.._ ...... 5di ouet...... Sn3i...: ...... dEvlaon_ _.._...... ~. . . 5..~.. ______BidinqDocument Send Bid BidEvaluation Contract Ptocure-Allcated PPDt os Prcr Po P! urn Pla vs Advert Poumnent_5ank invitatin oeine r erto Bnk C tat Corct Dlvy ...... Po .u.t,LMRYtg] IP!t 2psf?!..- - . - I Description m- nentAmount Qualifi- Revyewby Unt Act Pubi completeNon-Obj. to bid Bank Non-Ob.Amount Sianaur o e ... l ~Method(US$) fcation I Bank2 . (date) (date) (date) (date) (date) (date) (date) (US$) ff (date) (date)

1 jlTEquipmentforlNationa! |see PAD |None fPostRev. Plan 1-Apr-Ol15-Ap r-Dr0- N/A VNA 20-May-013D-Mav-l Cmo Shopp. { . Actual I L Vehicles fo r _ICB seePAD PNoneno Plan 1-Jun-0120-Jun-01 30-Jun-01 I -Jul-01 - -Au-Dl 1

.CMO iNono Actualat 3 IOffiCeFUrnitUre Natinal see PAD None PostRev. plan 1-Apr-D115-Apr-l N/A 18-Ar-0110-May-Dl N/A VNA 20-Ma0 Ma -01 iiforCo iShopp. I A AIctual J

.4_4 IOfficeSulpies .___.___._ .... INNational__ t!R _I see. PAD PA INntNonie iPostRev.Pst Ra. @ .i Y PlaXan l-Ar-D1- 15-Ar-01 l N/AA 118-Apr-0l101Ma-01r NAN/A N/A I 0Ap-Ma-D1020-May' I 30-Ma-1130M andEquipment Shopp. . Actual 5 Vehic'esfor NC |seaPAD None |PostRev. Pan | -Apr115-Aprl MIA 18-Apr-OlI0-May-01 N/A N/A 20MayOD|30-May-Dl IRegionaloffices Atal i1 11

t t | l l | 0~~~~~~~~~~~~~Atual| f I 7 Others .7. ___.__._P.a _._ _.__.__.__.__._.__.__. __. __

ibeto defned l *-l gkul lEE o l I I I I I IPlan

1 I l| l 'l E l lActuallII - I 'ProcurementPlan Page3 (of 3) CONSULTINGSERVICES DateIUpdate: |______

...... ~~~~~~~~~~~~~~~~~ ...... -...... Project: ';YemenRural AccessPrjeqct . : : : RequestPeqee: ; : ¢ __ __ . ._...... -.- 5 I .~~~~~~i Expr. TenmsofReleence . -_: - - - - ofInterest andShort Uit Qeuest Tor Pro sal Opening.*Enalatftn Tfchnicai (11and Finajl . Aloiatd _ ProcrurinoPrano Arkme toBook Bank toBank Bank Sendout of T Bank TBank FtoBank ContractContra Descriplion miert ortime- PsoouotReaiew by Unlit Arin PubbTffin N-Oh . Non-3bj. furN-Obj. Non Ohi Rw Proposalst.,rN-0b Noe-Obi fbr N-Oh) Non-Otq Am.u.n.t. Srgn!atso Delner 0 M..- liethodbased? IllSS) Benit |date) = (date)...... (dte)g (date) (date) (dote) (ete)(dated (date29) t( [doted Lt)(date) (date)!|

1,______S_____ 7f~U |Pie RPen 123Ma-4 fiJul-41j- MW1122-Aufi+1 o.Bl| NOrIl| '! l9Ntl|1@0cfX1 Occ 4t i 2-Nv2|1fl Fe£

! 2 QCBS oe- 700! PnoriRev.jRRMU IPan1 1-Ma-01 8Jull 23-JulOfI-AuOlI 22-Aul 21-Aui 10Oct-012-Oct-01 9No01 1-Nov-01 28NoOl 18-Dec-1 15Fe {PfletRoads p Iboed INo . I1 1 1I !!-IIba! 1 Id

_1551 antd eneroma) based Iktual 4 Fofai RlAdlboFAP u3 10-,N PloARr- WCeS -AMa-0 22-Mav-01294Ma-01 10-Jul-029-Jl - 2-Au

I Tune- 23)YJ)PoatRe.S Plan NI/A 8- n-O 23-ir-Ol B-MN-01 22-OMac-01 j2Ma -0I 10-dFit9 9-Au28-Jeai>0 19-FAu¶W4l 28SAu lS_ 1

Board based AntualL ! 7 DeSin8l In D for CS ime- Ij PrRev Pn I -21IFeMaymi 1rjMani021 1-Jun.02) 15-Jun-02i 22-Jur0i lD-!g-0 31Aug-02110-Sep02 20-Sep022-Sep0421 It - Pfha-sei wrade I basesd a ! ! --. -! ReralA.cceSbllllyPlan.-I -085!am Iour4W~DJ PentPen. 0-Ma-01 23-Iota -018-J,1 22-JuI-0 -J - A I 1I 9-Se¶ 19-Se1 2 SeOc.- I I I 15-May-02

. TAfor# Roa rdenance 0089 rie- j 200alOPror Rev. Plan 1 i 8Oct-0I123O-Ol- 8-No-011 22-0ct.Z1 28-Nqov01 10-Feb-02 12 9-Mar-0219-Mar-2; t| ri- FIf lFund_ g asa l dd ; l l l -f 28Mr0!based

roi~ir; j. -- Rf - ~ : ------: _ . ... , ,:,, ,,,. , .. ... ,., ,_W ,,, *, ...... ,,,,.,,,.,,_,___...... ,_,,,,,"...... ,_'...... 1 .... _.... ._ ...... _ ..-. __...... __ 77

Annex7: ProjectProcessing Budget and Schedule Yemen: RuralAccess Program m8~~~~~~~~~~~0

Timetaken to preparethe project (months) 9 12 First Bank mission (identification) 05/28/2000 05/28/2001 Appraisalmission departure 02/15/2001 02/08/2001 Negotiations 11/07/2000 05/07/2001 Planned Dateof Effectiveness 10/3112001

Prepared by: Ministry of Public Works and Urban Development

Preparation assistance: Dutch Trust Fund

Bank staff who worked on the project included:

Terje Wolden, MNSIF Senior Transport Engineer, Task Team Leader Josephine Masanque, MNSIF Senior Financial Management Specialist Andreas Schliessler, AFTTR Senior Transport Economist Hadi Abushakra, LEGOP Senior Counsel Thao Le Nguyen, LOAGI DisbursementOfficer Ramiz Al Assar, INFTD Senior Transport Specialist Robert Fishbein, Consultant Environmental Specialist Renaud Detalle, Consultant Political Scientist Eugenia Dennis, MNSIF Program Assistant

Qualit Control George Tharakan, MNSIF Sector Manager Claude Archambault, MNSIF Senior Transport Specialist Stephen Lintner, ENV Senior Adviser Moctar Thiam, AFTTR Senior Transport Specialist Anil Bhandari, INFTD Highways Adviser Dieter Schelling, AFTTR Lead Rural Transport Specialist 78

Annex 8: Documents in the Project File*

Yemen: Rural Access Program

A. ProjectImplementation Plan

- Project Implementation Plan, May 2001

B. Bank Staff Assessments - Identification Mission Aide Memoire, May 30 to June 11, 2000 - Preparation Mission Aide Memoire, September 29 to October 12, 2000 - Pre-appraisalMission Aide Memoire, December 3 to 14, 2000 - Appraisal Mission Aide Memoire, February 12 to March 1, 2001

C. Other Road Fund Law no. 22, 1995 as amended Nov 2000. Rural Access Improvement Project, Studies for the Five Pilot Roads - Dar Al Handasah Transport Rehabilitation Project - SAR (Report No. 14403-YEM) Rehabilitation of An Naqbah - Al Ahmar Road - Detail Project Report - Louis Berger International, INC., USA - January 1998 COCA's Report on Auditing the Financial Statements of Road Maintenance Fund (MCHUJP); December 31, 1999 Evaluating the Gender Impact of Bank Assistance - OED Public Expenditure Review - Road Sector Annex Country Assistance Strategy (CAS) - May 25, 1999; Report No. 19073-YEM Summary of the Household Expenditures, 1998; Ministry of Planning and Development - Central Statistical Department (Arabic) Poverty Information System-National Poverty Survey 1999; Two parts I and II - Ministry of Planning and Development (in cooperation with the UNDP) - Central Statistical Department (Arabic) National Food Security Strategy-Final Report: Volume 1: Main Report and Volume II: Annexes January 1998; ADE consultants (English) Gender Issues in Transport in Yemen - Basma Al-Qubati/Renaud Detalle expectedMay 2001. Colburn,Marta, A Situational Analysis of Gender Development in Yemen, Oxfam GB Yemen,July 2001. Dingen,Rob and John Howe,Rural Accessibility Improvement Program - Yemen - Formulation of a Methodology and Work Plan, April2001. EnvironmentalManagement Plans - RuralAccess Program Phase I -Parts A&B,March 2001. Governmentof Yemen,National Environmental Action Plan. Universityof Manchester,Evaluation of Future Development of the EIA System in Yemen, Mediterranean EnvironmentalTechnical Assistance Programme, February 2001.

*Including electronic files. 79 Annex9: Statementof Loansand Credits

REPUBLICOF YEMEN: RURALACCESS PROGRAM Jan-2001 Difference between expected and actual Original Amount in USS Millions disbursementsA

Project ID FY Purpose IBRD IDA Cancel Undisb Orig Frm Rev'd

P043255 2001 BASICEDUCATION EXPANSION PROJECT 0.00 5600 0.00 54.72 0.00 0 00 P062714 2001 RY - IRRIGATIONIMPROVEMENT 0.00 21 30 0.00 20.66 0 00 0.00 P049735 2000 RY-PRIVATIZATIONSUPP. 0,00 1090 0.00 10.34 3 50 0.00 P050483 2000 RY-CHILDDEVELOPMENT 0 00 28.90 0.00 27.26 1.72 0.00 P050706 2000 RY-CIVILSERVICE MODERN 000 30.00 0.00 28.77 2.48 000 P068830 2000 RY-SecondSocial Fund for Development 0.00 75.D0 0.00 74.34 1071 D.00 P050530 1999 RY-SANAAEMERG POWER 0.00 5400 000 33A6 2266 0.00 P057915 1999 RY-LEGAL& JUDICIALDEV 0.00 2 50 0 00 1 66 0.33 0.00 P060132 1999 RY-PUBLICWORKS 11 0.00 50 00 0 00 33.16 13.31 0.00 P005907 1999 RY-SANA'AWSISANITATION 0.00 25.00 0.00 12.75 0.63 0.00 P;039171 1998 SEEDS &AG. SERVICES 0.00 12.50 0.00 5.89 2 26 0.00 P005902 1998 RY-S.GOVAGRI PRIVATIZA 0.00 24.70 0.00 1956 1049 0.00 P041199 1997 SOCIALFUNDDEVPT 0.00 3000 000 2.23 -9.35 000 P048522 1997 FLOODEMERGENCY 0.00 30.00 0.00 4 10 6 21 0.00 P043367 1997 RY-TAIZWATER SUPPLYPILOT 0.00 1020 000 3.59 4.36 426 P041267 1996 RY-TRANSPORTREHABILITATION 0 00 37.00 0 00 13.91 17.81 13.86 P005912 1996 VOC TRAINING 0.00 24.30 0.00 13.12 12.98 2.96 P005911 1994 EDUCATIONSECTOR 000 33.00 0.00 17.46 16.48 10.50 P005904 1993 BASICEDUCATION 0 00 19.70 0.00 2.48 2 34 2.14 P005836 1992 LAND & WATERCONSERV 0.D0 32.80 5.55 0.41 4 47 -0.45 P005806 1991 RY-MULTI-MODETRANSPORT 0.00 30 00 0.00 4 07 4.03 1.37

Total: 0.00 637.80 5.55 383.93 11935 34.65 80

REPUBLIC OF YEMEN STATEMENT OF IFC's Held and Disbursed Portfolio Jan-2001 In Millions US Dollars

Committed Disbursed IFC IFC

FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1999 ACSM 12.00 0.00 0.00 0.00 8.00 0.00 0 00 0.00 1998 Radfan 3.80 0.00 0.00 0.00 3.80 0.00 0 00 0.00

TotalPortfolio: 15.80 0.00 0.00 0.00 11.80 0.00 000 0.00

ApprovalsPending Commitment

FY Approval Company Loan Equity Quasi Partic

TotalPending Commitment: 0.00 0.00 0.00 0.00 81 Annex 10: Country at a Glance REPUBLICOF YEMEN: RURALACCESS PROGRAM

M East POVERTY and SOCIAL & North Low- Yemen Africa income Development dlamond- 1999 Population, mid-year (millions) 17 0 291 2,417 Life expectancy GNP per capita (Atlas method, US$) 350 2,060 410 GNP (Atlas method, USS billions) 5 9 599 988 T Average annual growth, 1993-99 Population f%) 2 9 21 19 Laborforce(%) 34 30 23 GNP Gross per ' primary Most recent estimate (latest year available, 1993-S9) capita enrollment Poverty (X of population below nahional poverty line) Urban population (X of total population) 24 58 31 Life expectancy at birth (years) 56 68 60 Infant mortality (per 1,000 live births) 82 45 77 Child malnutrition (% of children under S) 46 1t 43 Access to safe water Access to improved water source (% of population) 39 71 64 Illiteracy (% of population age 15+) 55 36 39 Gross primary enrollment (% of school-age population) 70 95 96 - Yemen, Rep Male 100 102 102 Low-income group Female 40 88 86

KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1979 1989 1998 1999 GDP (US$ billions) 6 0 6 6 Gross domestic investmentUGDP 287 209 Exports of goods and serviceslGDP 28 8 36 9 Trade Gross domnesticsavingslGDP 14 3 12 8 Gross national savingstGOP 29 1 22 9 Current account balancelGOP -4 3 1 5 Domnstic Interest paymentslGDP 07 1 0 Investment Total debt)GDP 691 Savings Total debt servicelexports 4 2 Present value of debtUGDP 52 4 Present value of debtlexports 104 9 Indebtedness 1979-8S 1989-99 1998 1999 1999-03 (average annual growth) GDP 3 0 4 8 2 2 5 0 - Yemen, Rep GNP per capita -1 6 5 0 -3 9 2 2 - Low-income group Exports of goods and services 10 2 -5 2 21 1 0 6

STRUCTURE of the ECONOMY 1979 1989 1998 1999 Growth of Investment and GDP I%) (f t SOfGP) Y Agriculture 20 2 161 , Industry 35 4 46 2 is Manufacturing 122 1014 Services 44 4 37 7 a Is0s Private consumption 70 4 71 9 _15 General govemment consumption 15 3 15 3 -GOI - w-GDP Imports of goods and services 43 2 45 0

1979.89 1989-99 1999 1999 Growth of exports and Imports (%) (averageannual growth7)1 Agriculture S0 137 00 ea A Industry 7 8 1 8 2 9 40 Manufacturing 4 2 0 a 1 0 20 Services -1 8 1 0 3 4 Private consumption 06 36 2 S 1-20 j w9 97 De 99 2 General government consumption -1 4 8 3 0 3 F Y Gross domestic investment 7 7 10 9 -4 4 i-4 Imports of goods and services 1 7 -1 6 14 5 -Exports I- Imports Gross national product 2 0 8 0 -1 3

Note: 1999 data are preliminary estimates The diamonds show four key indicators in the counTry (in bold) compared with its income-group average If data are missing, the diamond will be incomplete 82

Yemen, Rep.

PRICES and GOVERNMENTFINANCE 1979 1989 1998 1999 Finflatin-- Domestic pricesInito % (% change) 30 Consumer prices 12 2 9 6 so Implicit GDP deflator -9 3 26 8 40

Governmentfinance 20 (% of GDP, includes current grants) o Current revenue 28 0 32 4 -209 Current budget balance 00 577CP GDPdeflator Overall surplus/deficit -6 4 0 1

TRADE

(US$ millions) 1979 1989 1998 1999 Exportand Importlevels (USS mill.)- Total exports (fob) 1,501 2,467 3.000 Crude oil (governmentshare) 471 993 1 Crude oil (company share) 758 1,139 0 _._ Manufactures 87 144 Total imports (ci) 2,201 2,442 Food 787 807 1,000 Fuel and energy 117 176 0 _11_ Capital goods 479 521 o

Export price index (1995=100) 79 102 93 94 95 96 97 98 99 Import price index (1995=100) 76 105 * Exports *lmports Terms of trade (1995= 100) 103 97

BALANCEof PAYMENTS 1979 1989 1998 1999 (UJSSmillions) Currentaccount balance to GDP(%) Exports of goods and services 1,724 2,640 20 Imports of goods and services 2,818 3,103 Resource balance -,094 463 l Net income -412 -747 Net current transfers 1,250 1,314 .10 Current account balance -256 104 I Financing items (net) -61 355 Changes in net reserves 317 -459 -30 Memo: Reserves including gold (US$ millions) 995 1,504 Conversion rate (DEC, local/US$) 135 9 155 8

EXTERNAL DEBT and RESOURCE FLOWS 1979 1989 1998 1999 C (US$ millions) ComposltIonof 1998 debt (USS mill.) Total debt outstandingand disbursed 1.174 5,593 4,138 IBRD G:213 IDA 109 546 1,075 1,216 F:178 Total debt service 58 262 125 075 IBRD IDA 1 6 18 21 Composition of net resource flows 4 Official grants 186 136 125 __ Official creditors 138 143 91 E: 1,891 Private creditors 142 228 Foreign direct investment 23 -210 Portfolio equity World Bank program Commitments 47 31 60 138 AA-IBRD E-Bilateral Disbursements 20 44 122 173 B - IDA D - Other multilateral F - Private Principal repayments 0 2 11 12 C- IMF G - Short-teim Net flows 20 41 111 161 Interest payments 1 4 7 8 Net transfers 19 38 104 153

DevelopmentEconomics 9112/00 83

Annex 11: Letter of Development Program

Yemen: Rural Access Program

REPUBUCOF YEMEN Ministryof PublicWorks fh\Wf:l & UrbanDevelopment Minister's

Date: S ° No.: Jf .

To: Mr.Mahmood A. Ayub CountryDirector for Yemen TheWorld Bank

Re: The RuralAccess Program Basisfor an AdaptableLending Approach

DearMr. Ayub,

This is to confirm the Governmentof Yemen's intention to canryout a long-term programnto address accessibilityconstraints in rural areas.We believe such a progran is essential in a strategyto reduce isolation and poverty as well as in reducing transportcosts and spurringrural development.Below we set out the strategiccontext and objectives for a proposed 10-yearRural Access Program, (the program) for Yemen,the meansby whichthey will be attained,how the programwill be monitored and our commitmentto undertakecertain policy and institutionalactions to enhance the efficiencyof theroad sector. The overall purpose and long-termdevelopment objective of the program is an improvedlivelihood and reduce isolationfor the rural population.To achieve that objective,year -round accessto marketsand services(both social and administrative) wouldhave to improve,especially in the rural areaswhere 80%of the populationlive. Theprogram is designedto supportthe Government'sdecentralization process, which is in the processof beingimplemented. The programwould be implementedin three phases Phase I is expectedto have a relativelyshort duration and will set up the institutional and technicalfoundations for an efficientrural access improvementprogram. It will test this approach througha numberof pilot projects on secondaryrural roads and villageaccess roads. As such,the objectiveof phaseI of the programis to establisha sustainablefoundation for large-scaleimprovements to rural accessibilityin isolated areas which are severely affectedby poverty and have good prospects for rural developments.Phase I will establisheffective institutionalarrangements and more appropriatepolicies on technicaland implementationstandards and proceduresfor ese large-scaleimprovernents to be achieved during subsequentphases of the Al am. ./^. i i haseII objectivesare to addressaccess problems mainly on the secondaryroad d viflageaccess roads in the area of influenceof the secondaryroad network, 84

REPUBUCOF YEMEN .4 Ministry of Public Works & UrbanDevelopment Minister's

Date: It Y-os_/v -F-P.Y. No.: Yf -

and adjust the organizationaland policy fraiework to consolidateand gradually moveinto financingof tertiary,or districtroad network. Phase Ill objectivesare to address access problemsrelated to district level road network,while continuingto support improvementsand managementof secondary road network and villageaccess roads. The main institutionalachievement in this phase will be the increasedcapacity in the district administrationto better plan and implementaccess improvements. The key performanceindicators for the programis the reductionin access time from villageaffected by improvedroad conditionsto markets,services and facilities. This togetherwith improvedaccess road conditionwill leadto reductionin transportrates for goods and passengers,and a reductionin the price of essentialcommodities, The program will monitor accesstime from villagewith improvedaccess to the closest markets and services,key transportrates and price of the followingcommodities in key villagesto track the effectsof the program:gas cylinders,diesel, kerosene,flour and sugar.During phase I of the program,the collectionof data to track progressand the preparatorynature of this phase will assist the governmentin developinglessons from experienceand adjust the detailed scopeand institutionalanrangements for the remainingof the program. Beforethe govermmentinitiates phase 11of theprogram, the followingkey actionsand milestoneswill haveto be accomplished: Appropriatetechnical and environmentalstandards for rural access roads have been adoptedfor phaseU; A methodologyfor planningand prioritizingrural roadinvestments is adopted; Budgetingfor rural road investrnentis based on this methodology,and a rollingthree- yearbudget program for rural roadsis established Technicalpreparation and bidding docwnentscompleted for the first of the phase 11 programof accessroads; A legal classificationof the roadnetwork enacted and a long term strategyadopted by the government on the managementand financing of secondaryroads and roads '/l er the ownershipof the Governmentand Districts;and

w ?¶A'~fd SectorEnvironmental Assessment is completed.

2 85

REPUBLICOF YEMEN Ministryof PublicWorks & Urban Development

Minister's WI

Date: f f-a4°/ P Y_O*C FLI No.: I/ f p

The Governmentexpects these phase 11triggers to be achieved approximately24 month after phase I of the program is initiated.The overall cost of the program is expectedto be on the orderof US$ 250 million,with about US$5 0 millionfor phaseI and about US$ 100 for the subsequentphases of about 4 years duration each. Eventually,the Government'sentire budgetfor rural roadswill be channeledthrough this programas it expandsto coverall rural govemorates.In phase I relativelylarge technicalassistance and goods componentswill help in planning subsequentphases and in establishingthe institutionalinfrastructure needed to managethe rural road sector.In phase nIand III the investmentswill mainly be civil works and technical assistancecosts plan and implementthe program.Overall, the Governnentintends to request IDA to supportPhase II and III with 50 percentof the financingneeds, and is planningto direct co-financingprovided on concessionaryterns from key donorsto coverthe remaining30 percentof the financingfor the program. Giventhe transitionaland experimentalnature of the decentralizationprocess over the next two-three years and the fact that phase I of the program will develop national standards and proceduresfor subsequentphases, the Governmenthas decidedthat small but effectivecentral rural roads administrationwill have to be establishedwith Board of Directorsresponsible for the overall programin phase I. To prepare for a more decentralizedmanagement of rural access roads in phase II and III, phase I of the programwill also establishseveral regional rural road units to be locatedin key govemorates. The decree establishingthe Board of Directors and the central managementunit has been passedand is attachedto this letter.Attached is also a list of appointedboard membersand the listof key staffof the unit. To increaseeffectiveness of resourcesprovided by IDA and other donorsto the rural road sub-sector,the Governmentwill address the following key issues affecting a successfuloutcome of this program:

A. Planning and budgeting of rural roads a) The past practice of awarding constructioncontracts for which there is insufficientfunding in the Nationalbudget is under reviewwith the Ministry of Financeand Ministryof Planning.A decisionon this is expectedshortly. ) Phase i of the Rural Access Program will identify all priority rural road {i,AJ>L4I Eprojects of national importance. In case some of these are among the about . 300 rural roads in the NationalBudget, the Governnentwill explore if these contracts can be terminatedan accordance with Yemeni legislation.Any ..~ project terminatedwill be includcdin the RuralAccess Program.

3 86

REPUBUCOF YEMEN Ministry of PublicWorks & UrbanDevelopment Minister's

Date: (o4 / - - hS-4 / No.: - f /! , j

c) The governmentintends to employa consultantto evaluateall rural roads in the nationalbudget, in orderto get an updateon the likely final constrmction cost, the completionrate, contractorperformance in relation to the contract requirements, and estimated final completion date. The purpose of this exerciseis also to eliminateun-viable or lowpriority projects from the budget and concentratethe limited budget resources on roads nearing completion and/orof strategicimportance. d) New rural road contractswill only be awardedafter a competitivebidding process so as to give an equal and fair chance to all qualified Yemeni contractors, and obtain the lowest possible prices for adequate quality wheneverfeasible. e) All contracts to be awarded under this program will be supervised by consultantsto improvequality of worksand trainlocal contractors. B. Road MaintenanceFunding The issue of inadequatefunding for road maintenancehas been addressedby the Governnent, and a new law has been passed effectivelyincreasing the dedicated resources for road maintenance to sustainable level. The law will now be implementedand the increasedlevel of fundingwill partlybe used for maintenanceof rural roads. Under the Road SectorReview Study, there will be a reviewof the RMF operations, and based on the recommendationsof the review,the governnent will considerthe outcome.

AbduliahH. Al dafei,4

The Minister, Ministryof PublicWorks and Urban Development.

4 87

Annex 12: The RoadSector

Yemen: RuralAccess Program

A. Road Network and Traffic.

1. Over the decade 1980-90,the paved road network in Yemen grew rapidly from about 2,900 kms to 4,900 kms, and in early 1993, the length of the paved network, including projects under construction stood at 5,734 kms. This growth has continued, albeit in a slower pace, and as of 2001 the paved road network totaled 6,631 kms. The official gravel road network is only about 950 kms. However, another 1,826 kms of gravel roads are in the budget and under construction. Most of these gravel roads are in a rudimentary state with little or no gravel surfacing. In addition, there are about 60,000 kms of tracks and trails, some of which are motorable most of the year with four-wheel drive vehicles. Average daily traffic (ADT) volumes on asphalt roads range from around 14,000 ADT (near Sana'a) to just under 1,000 ADT on most of the network. Traffic volumes in the north generally exceed 2,000 ADT, while in the south most roads cany less than 2,000 ADT, with a few exceptions. Traffic volumes on the gravel roads are much less, typically between 30 and 150 ADT. For the first few years after unification in 1990, traffic grew rapidly, at around 8 percent per annum, and is now about 4-5 percent, reflecting continued increase in trade and transport among various parts of the newly unified country, and including oil exploration/productionrelated traffic. Rapid expansion of the road network however, has not been accompanied by a corresponding increase in allocations for road maintenance. This has caused economic losses through increased vehicle operating costs, as well as reconstruction costs of roads which have deteriorated beyond economic repair. Rehabilitation and maintenance of the road network has, therefore, become an urgent priority in the road sector.

B. InstitutionalArrangements

2. Within GOY, the Ministryof Public Worksand UrbanDevelopment (MPWUD) (formerly the Ministry of Construction, Housing and Urban Planning) has overall responsibility for planning, construction and maintenance of all roads in Yemen. Prior to 1998, this function was performed by the General Corporation for Roads and Bridges (GCRB), a public sector authority under MIPWUD.In January 1998 a Presidential Decree (PD Nr. S of 1998) redefined the mandate of GCRB to exclusively act as GoY- owned contractor and to perform work under contract for public or private sector agencies. The road authority function of GCRB was moved to the MPWUD. However, none of the GCRB staff involved in road managementwas transferred to MIPWUD,and this has left the Ministry with a much bigger work load without much additional staff with the right kind of experience. To date, MPWUD has not managed to build the institutional capacity to effectively manage the road network the way it was managed under GCRB. The Ministry fuillyrealizes this and has mobilized an international consulting firm to carry out a road sector management study in Yemen, financed under the Transport Rehabilitation Project (Cr. 2819- YEM).

3. The ministry is also responsiblefor the administration of government tenders, which is carried out by a High Tender Board for all Government procurement above US$ I million, whether foreign assisted or not. The organizationalstructure of MPWUD is not yet clear since the Ministry's name and responsibilities were changed at the beginning of April 2001. In the old Ministry of Construction, Housing and Urban Planning, there was a Vice Minister in overall charge under the Minister, and under him there were four departments headed each by a Deputy Minister. These were for Construction, Housing, Urban Planning and Government Tenders. The Director of Roads reported to the Deputy Minister for Construction, and under him there was a traditional departmental structure with directions for road planning/design, road constructionand road maintenance.There available information on the total staffing of the Ministry is given in the below table. In 1996 the Ministry had a total staff of 750 based in Sana'a, and the increase in employment has been considerableover the last 5 years. The budget for the Ministry for wages and salaries and other administrative costs is steadily increasing, and was about YR 1.75 billion a year (US$ 10.5 88 million) in 1999.

Table 1: Staffing in the Road Sector (2001)

Sana'a Offices All other offices Total No. of Engineers MPWUD 1,763 12,356 369 GCRB 450 3,320 _ 101 RMF 97 21 Source:MPWUD.

4. The General Corporationfor Roads and Bridges (GCRB) used to be the Highway Auth Jrity in Yemen until three years ago. At that time it was transformed into an autonomous entity as a general road contractor, under MPWUD, to implement construction and maintenance activities for central ard local governments. In 1997, GCRB had about 3,200 employees, of which more than 2,000 employees worked on new construction projects. GCRB staff increased after that, in spite of a reduced workload. but no details are available on staffing by department. The staff are not part of the civil service, and are aldlowed more competitive remuneration. Though GCRB depends on the government's budget for the contracts which fund all its activities, no salaries or overhead costs are funded directly by the Government, thereby seeking to ensure that GCRB operates like a corporate entity. GCRB operates with full financial autonomy, and their accounts are audited annually. GCRB is not managerial autonomous, s nce its Chairman is also the Minister of Public Works and Urban Development.

5. Routine Maintenance of paved and gravel roads is undertaken by the Directorate General of Maintenance located within GCRB, and the cost of this (YR 200 million a years) is funded by the RMF on an annual basis. The General Manager for Maintenance is in charge of an organization of about 750 permanent staff and on average 200-250 laborers on daily wages (1998). The organization contains 9 regular Maintenance Divisions each headed by a Director. The decentralized divisions are responsible for one or more govemorates, and are located at district centers. Maintenance teams within each division are responsiblefor geographical sections of the road network. There are also specialized groups at headqjuarters for road safety, traffic survey and road sign/markingworks. All periodic maintenance work and pavement strengthening and rehabilitation, is contracted out to GCRB and the private sector. The department, while employingaround a third of GCRB staff, is only managing a budget of about US$150,000. Further, most of the funds are used for salaries, and as a result, little is actually spent on routine maintenance of paveil roads. Consequently, very little regular maintenance activity is observable on the paved road network, and many older paved roads, many of which are in the south of Yemen, show potholing over long sections thai are not promptly repaired.

6. A Road Maintenance Fund (RMF) was established (Law No. 22 of 1995) under IDA advocated refonn to improve the maintenanceof roads and to enhance cost recovery in the road sector. An additional surcharge on the sale of petrol was introduced to provide on an annual basis about YR 700 million. After some start-up problems the RMF was operating as planned towards the end of 1996 with an indeiendent Board that reported to the Prime Minister. With technical assistance funded by IDA, the RMF has gradually developed the technical and institutional capacity to plan and administer an effective annual maintenance program. The technical and administrative staff of the RMF is now about 90, and they administer anLannual budget of about US$ 4.5 million. The RMF originally was funding maintenance force account wcrks and contracts through GCRB, but that changed in 1998 when the road authority finction was transferrid from GCRB to the MPWUD. Since then, the RMF has not contracted out any work directly, all the contracting necessary to implement their annual budgets is carried out by the ministry, and the RMF has reniained a planning, budgeting and funding agency only.

7. A significant amendment to the RMF law was passed by the Parliament in September 2000 and signed by the President shortly thereafter. The revised law introduces new road user charges and takes a large step towards putting the road network on a fee-for-service basis by recovering almost all maintenance and operation funding needs directly from the road users. The new charges for road use are 89 set at 5 percent of the pump price of both diesel and gasoline, equivalent to YR 1.75 per liter for gasoline and YR 0.6 for diesel. The new user charges have not yet been activated by the Ministry of Finance since they were supposed to be followed by a corresponding increase in the price of fuel. The introduction of a general fuel price increase is now expected before end June 2001, in which case the law amendment is expected to be made effective. When this happens, the new charges are expected to generate about YR3 billion, depending on the consumption of fuel. This would go a long way towards full financing (for O&M cost) for the road sector. See Attachment I for an overview of the estimated maintenance funding needs for the next 5 years.

8. While there are numerous improvements from the old law, there are significant weaknesses as well:

(i) The RMF has been moved from being under the Prime Minister's office to be under the MPWUD, whose Minister appoints both the Chairman and the Deputy Chairman. This reduces the autonomy and independence of the RMF.

(ii) The Board is made up wholly of civil servants. A better arrangement would be to have 3- 4 additional members, representing the road users, appointed to the board as well.

(iii) The Chairman and Deputy Chairman of the RMF are also deeply involved in the day-to- day operation of the road fund. This dilutes the independence of the Board and the accountability of the RMF General Director. The Chairman of the Board should not oversee his own perfornance.

(iv) Annual financial audits carried out by a private auditing firm have been undertaken in the past, a practice that should continue. The law should include a reference to this. Technical audits should also be introduced in the RMF law to allow regular verifications on how the budgeted funds were spent.

9. There are three budget issues: (i) the proposed allocations for routine maintenance is small and should be considerably increased to arrest the ongoing potholing of strategic roads; (ii) the maintenance priorities are based on visual inspection of roads and not on objective surveys and testing of the residual strength of existing road pavements; and, (iii) although the RMF is undertaking axle load controls, there is no enforcement yet by the police, and overloaded trucks are allowed to pass control stations with a warning only. To address the above, the RMF is introducing a new unit in their organization for Pavement Maintenance Management, to be set up and trained by a consulting firm, starting shortly. Through purchase of specialized axle load control equipmentjust completed, the RMF is also introducing more effective axle load controls and enforcement of axle load limits at 8 key points of origin of truck transport (ports, cement factories, etc). By controlling at the points of origin of large truck loads, off- loading of excessive loads is expected be become less problematic.

C. Public Expenditure in the Road Sector

10. Over the two decades 1980-2000,the road network in Yemen grew from about 2,900 kms to more than 6,600 kms. This expansion of the network has caused public expenditures in the sector to stay heavily concentrated on construction of new roads, and maintenance expenditures have come under increasing pressure. During the last three years more than 80% of the total expenditures have been used for construction of new roads, while less than 10 % have been used for rehabilitation and strengthening of paved roads, and even less for ordinary maintenance. When converted to constant prices, maintenance expenditures have shown a declining trend. Of the total maintenance allocation, about 30 % is spent on routine maintenance (mainly carried out by GCRB), 15% for road safety and emergencies, and the rest on periodic maintenance(re-graveling, resealing of paved roads).

11. As part of the Public Expenditure review carried out recently for the Road Sector, a number of 90 deficiencies and constraints were reported, mainly affecting the last 3-4 road investment budgets:

(i) a lack of budget focus: the high number of projects in the budget with small annual allocations is not creating assets quickly, and projects stay in the budget for many years; (ii) there are too many small projects which are difficult to manage appropriately; (iii) projects are deliberately made difficult to terminate, by making them very L)ng and signing contracts for the whole road, thereby committing future governments to ;,ontinue to finance these contracts; (iv) a lack of adherence to agreed budgets; new projects are started irrespective of wftether or not they are in the budget; the budget process is not used as the mechanism for introducing and approving new projects; (v) the allocations for planning, feasibility studies, and detailed engineering of new projects are grossly inadequate, and these important activities are, therefore, not carried outtbefore construction starts; the cost estimates in the budget are therefore only indicative; (vi) funding for supervision is also grossly inadequate; this leads to inadequate ccntrol of spending and quality of works problems, which results in delays and extra costs; and (vii) ability to undertake a budget rationalization is limited.

If one looks at the budgeting process, there are a couple of additional issues:

(viii) MOF never requires the Ministry to frame its budget proposals in the context of a pre- determined budget envelope. Therefore, the draft road budget proposals are mostly unrealistic, with a proposed investment budget total that is often more than twice what is available; (ix) There is no willingness by MPWUD to cooperate with the MOPD and the MOF in setting priorities under budget envelope constraints. This is causing the MOF to make arbitrary cuts themselves through a very secretive process, before the budget is forwarded to the Parliament (and then cannot be changed by the Ministers);

12. Road Budget 2001. The MPWUD proposed 2001 road investment budget clearly shows that there are no improvements in the situation this year compared to previous years. The number of projects keeps increasing, and is now 325 compared to 281 in last years' budget, and 225 in 1998. None of the new projects in the 2001 budget are "new" in the sense that there is a choice for the Parliament wliether to accept or reject them; the ministry has already signed contracts for these roads and committed the government to undertake them, irrespective of funding availability and Parliamentary decisions. This is in stark contrast to the budget arrangements for the Road Maintenance Fund, whose task is to preserve and maintain the existing road network.

13. Table 2 reports on the MPWUD budgets for 1999-2001. The budget is grouped as follows: (i) Strategic road projects (27); (ii) Asphalt road projects (76); (iii) Gravel road projects (212); and (iv) Foreign funded projects (10). The budgets for FY 2000 and 2001 show increases from 1999 due to acceleration of projects during 1999 (additional costs of about YR6.8 billion, for which there were no funds available in 1999). These additional expenditures in 1999 have caused the budgets for 2000 and 2001 to increase.

Table2: MPWUD ProposedRoad Budget for FY 2001 (YR million) Road Sector Local Foreign Total 2001 Maint.lRehah. RMF 2,931 1,280 4,211 Strategic/ Asphalt R. 8,505 0,823 9,328 Gravel Roads 1,940 - 1,940 Foreign Funded R. 0.455 3,238 3,693 Eng. Studies 0.135 0,070 0,205 Totals Road Sector 13,966 5,411 19,377 91

Table 3: MPWUDRoad Budget for FY 2000 (YR million) Road Sector Local Foreign Total 2000 Maint./Rehab. RMF 1,700 - 1,700 Strategic/Asphalt R. 5,577 1,900 7,477 Gravel Roads 1,755 - 1,755 ForeignFunded R. 0,430 1,180 1,610 Eng. Studies 0,030 - 0,030 TotalsRoad Sector 9,492 3,080 12,572

Table 4: MPWUDExpenditures for FY 1999 (YR million) RoadSector Local Foreign Total 1999 Maint.lRehab.(RMF) 760 760 AsphaltRoads 4,584 2,153 6,737 GravelRoads 1,932 1,932 ForeignFunded Roads Incl. above Eng. Studies 40 40 TotalsRoad Sector 7,316 2,153 9,469

14. With these low allocations for maintenance, paved roads are allowed to deteriorate until strengthening by thick asphalt concrete (AC) overlays or reconstruction is required. As a result, about one third of the paved road network is rated as being in poor or worse condition, and only half the paved network is rated "good" or better. The poor condition of the network imposes very significant costs both due to increased vehicle operating costs, and the need for expensive reconstruction of large sections of the network. Past neglect of maintenance has created an immediate need to both increase funding of normal (routine and periodic) maintenance, and to undertake a stabilization program over the next five years to address the maintenance backlog. It is estimated that maintenance expendituresneed to be increased to YR 4,200 million per annum over the next years in order to adequately provide for timely routine and periodic maintenance,and additional funding is necessary for stabilization of the existing network (See Attachment I for the detailed maintenancefunding needs for the sector).

D. Axle Load Control

15. Law No.23/95 on Axle Load Control and its Regulation are designed to limit the damaging effect of excessive axle loading to the road network in the Republic of Yemen. The legislation limits axle loads to 13 tons for single axles and 21 tons for tandem axles. The recent amendment to the RMF Law assigned the responsibility of operating, supervising and financing the operating expenses of the weighbridges in the Republic of Yemen to the RMF.

16. However, it has proven very difficult to control axle loads in Yemen, due to the tariff controls on trucking operations, which is under the responsibility of another ministry, the Ministry of Transport. The RMF has made several attempts to issue fines, leading to protests by the truckers, who have blocked the main entrance roads to cities such as Hodeidah and Harad, where RMF has rehabilitated axle load control stations to enforce axle load limits. Unless truckers are paid adequately to make a small profit on every load, overloading is likely to continue. However, recent axle load surveys undertaken by RMF indicate that the overloading at present is moderate and not excessive, possibly because of the old age of the trucking fleet. Even so, a number of accidents are due to large truckloads that are inadequately secured and large, leaving many trucks on the roads unstable and dangerous, and causing road crashes and loss of lives, a common related problem in Yemen. 92

E. Road Sector Strategy:

17. The strategy outlined below for the road sector was earlier discussed and agreed with the Government as part of the Public Sector Management Adjustment Credit (PSMAC). The underlined proposed actions have largely been undertaken. The two first sets of actions (items (a) and (b) relates to cost recovery, maintenance budget and the Road Maintenance Fund. The last two relate to MPN lUD and the investment budget. The list of actions show that the Government has made considerable progress in improving cost recovery, including passing new legislation to allow stepping up the furding of maintenance and significant restoration of roads.

18. In addition, the roles and responsibilities in the road sector, including the future role- of the Ministry of Public Works and Urban Development, will be subject for detailed analysis in tVieRoad Sector Management Study recently awarded to the consultant Dar Al Handasah. Options will be prepared for restructuring of road sector management including rural roads within the context of the decentralization process. The options will address: (i) deficiencies and constraints identified with the present managerial, technical, and operational arrangements; (ii) adequacy of the current organizational structure, legislation and regulations; (iii) advantages of a dedicated Road Authority for the total management of road sector activities to complement the Road Fund; and (iv) identify the role of private and public contractors and their role in the road maintenance including rural roads.

(a) Improve sustainability of the road network by increasing the O&M allocation from all sources to YR 1.7 billion in FY 2000 and by another YR 0.7 billion for every year thereafter until the funding level is adequate to prevent further erosion of road assets (estimated at about YR 4.20 billion annually). Funds to be managed by an autonomous Road Maintenance Fund Board with road user representation;

(b) Improve efficiency of road transport by implementing a phased program to achieve full cost recovery from road users within 5 years by identifying non-budgetar financial resources: (i) For FY 2000 and thereafter increase the surcharge on gasoline from Y RO.5 to YR1 .0/litre yielding YR 1.4 billion for the Road Maintenance Fund; (ii) YR 0.3 billion to be allocated for the Road Maintenance Fund from the general budget for FY2000; (iii) Establish the General Land Transport Authority (GLTA) to replace the freight folwarding monopoly Ferzah; (iv) Introduce a weight/distance tariff on trucks to be collected by GLTA yielding no less than YR 1 billion for FY 2001 for the Road Maintenance Fund; and (v) For 2002, the amount from truckers should be increased annually by increasing the weight/distance tariff and/or introducing a diesel fuel surcharge until full cost recovery from the trucking fleet is achieved;

(c) Improve road budget focus and use of financial resources by the MPWUD; (a) Sign contracts only for projects already in the approved budget; (b) Rationalize existing investment program as agreed with IDA in 1998 as part of ihe Road Sector PER; (c) Establish a rolling, three-year investment program with no new projects entering the first year program; (d) The first-year program will fund pre-feasibility studies for new projects in the tllird-year program, and detailed design studies for projects starting in the second-year program; and (e) Concentrate funding on the highest priority projects to reduce implementation periods to between 2 and 4 years;

(d) Increase financial resources for the road sector through borrowing to address the funding shortage. 93

19. The lack of actionby the responsibleministries (MOF, MOPD and MPWUD)on item (c) above and the fact that new regional/ruralroad projects are still initiatedand contractssigned outside of the budgetaryapproval process, is a cause for serious concem.This issue will be addressedin the proposed Rural Access Programby establishinga smallagency (the CMO for Rural roads) outsidethe ministry, which will graduallytake over planning,programming and budgetingfor rural roads. Agreedup front policy actions related to rural roads are includedin the Letter of DevelopmentProgram (Annex 11). Other issues not adequatelydealt with wouldbe subject for furtherdiscussions and addressedin another transportoperation (such as the Ferzahmonopoly and the truckingindustry). 94

Annex 12, AttachmeantI The Road Sector Expenditure RequirementI

A. Introduction

This report considers road maintenance expenditure as part of a network stabilization program. This will in.-lude all rehabilitation and catch-up maintenance works necessary to bring the road network infrastructure up to a fair condition and then preserve it at that level. Road network stabilization requires three primary activities to take place:

* Increase in routine and periodic maintenance activities to preserve the current condition of the existing road network. * Catch-up of the backlog of road maintenance works that have accumulated as a result of the deferment of general maintenance for expenditure on new construction. * Carry out rapid response and emergency works as needed (Note: regular implementation of roiutine and periodic maintenance works will reduce the amount of emergency works needed)

This section describes the various expenditure options and reports on the estimated cost associated with each for the five-year period 1998 to 2002.

B. Maintenance Cost Identification

For the purpose of cost identification, road maintenance activities have been estimated for both rural and urban road networks. Although both networks comprise both primary and secondary road sub-networks, they can and do incur different unit costs for some of the same activities. For each network, activities have been costed and presented separately for both bituminous and gravel roads. Additional to these two major road networks is a network of other roads that is considered to take a lower funding priority to both highways and main roads. Other roads have been included in the calculation of routine maintenance works only and not as part of either periodic or stabilization works.

To meet the objectives of the study, the Consultant developed an indicative five-year, routine and periodic maintenance program. This program has been based on indicative costs, and the Consultant's international experience in road maintenance, planning, costing, and operations.

Routine Maintenance

Routine maintenance activities are undertaken to preserve the road and maintain the safety of the road network. The basic routine maintenance activities include:

* Drain clearance * Maintenance and minor repair of culverts * Repair of roadside furniture * Pavement patching * Crack sealing and edge repairs * Repair and replacement of signs, guard fences * Line painting.

Figure 1 and Table 1 below summarizes the Consultant's expenditure estimates for routine maintenance for the five- year period ending 2004.

l Source: Yemen - Road MaintenanceFinancing, Funding into the new Millennium, Report dated December 1999, By SMEC consultants for the RMF. 95

2,400.0 2,100.0 1,800.0 . RuralRoads: 2 1,500.0

1,200.0 K Urban Roads:

600.0 0~~~~~~~~~rOtherRoads 300.0 OTotal Routine - - ~~~~~~7W!~~ain'tenance 2000 2001 2002 2003 2004 Year

Figure I - Estimated Annual Network Routine Maintenance Expenditure (YR million) Source:Consultant's estimates.

Table 1 - Estimated Annual Routine Maintenance Expenditure (YR million)

Annual Expenditure (YR million)

Category 2000 2001 2002 2003 2004

Inter-urban roads 976.0 1 073.6 1 181.0 1 299.1 1 429.0

Urbanroads 289.2 318.1 350.0 384.9 423.4

Otherroads 275.7 303.3 333.6 367.0 403.7

Total: 1 540.9 1 695.0 1 864.5 2 051.0 2 256.1

Source:Consultant's estimates

The Consultant has estimated that the average unit costs for the years 2000 to 2004 would increase at 10% per annum. It has been assumed that the rural and urban road network lengths would remain constant, since new construction or road upgrading would be limited until the desired road maintenance standard for the existing road network has been achieved; and future funding is sustainable under efficient cost recovery programs.

Periodic Maintenance

Periodic maintenance includes all those recurrent activities that need to be undertaken at intervals of several or more years. Basic works include the grading and re-sheeting of gravel roads or the surface dressing or asphalt overlay of bituminous roads and road pavement marking.

Periodic maintenance requirements have been computed on the basis of the Consultant's best estimates. It was assumed that a surface dressing treatment would be applied at an average of seven yearly intervals, and an asphalt overlay treattnent at an average of twelve yearly intervals. These intervals are average estimates generated across the entire network. The actual intervals may vary between road sections depending on volume and mix of traffic, terrain, climate conditions, and previous treatments. Table 2 summarizes the expenditure estimates for periodic maintenance for the period 2000 to 2004. 96

Table 2 - Periodic Maintenance Expenditure Requirements, 2000-2004

Annual Expendi ure (YR million) =.

Category 2000 2001 2002 2003 2004

Inter-urban roads 2 065.1 2 271.6 2 498.8 2 748.7 3 023.5

Urban roads 620.0 682.0 750.2 825.2 907.7

Total: 2 685.1 2 935.6 3 248.9 3 573.8 3 931.2 Source: Consultant's estimates

Backlon Maintenance

Catch-up of backlog includes additional works required to bring the condition of the road network up to a point where it is manageable, and sustainable, over the long term. These works are defined as those being over and above the works required to maintain the road in an effective and efficient manner to meet the needs of road users and society.

All roads in less than fair condition were included in the five year road maintenance catch-up program. Tables 5 and 6 show that the catch up program can be achieved by completing 706 km (558 km bituminous road and 14F km of gravel road) per year over the five-year program.

The estimated yearly backlog results (Table 3) reveal that YR 2.4 billion will be required for rural roads in the first year of the five-year program increasing to YR3.5 billion in the fmal year. For urban roads, YRI.2 billion will be required in 2000 increasing to YR 1.7 billion in 2004. If the government does not carry out the suggested routine miscellaneous and periodic maintenance, then the backlog of works will increase. The calculations presented in this report form a basic figure only for the development of program budgets.

Table 3 - Estimated Annual Network Backlog Expenditure 2000-2004

Annual Expendi ure(YR millio

Category 2000 2001 2002 2003 2004

Inter-urban roads 2 404.7 2 645.2 2 909.7 3 200.7 3 520.8

Urban roads 1 182.8 1 301.1 1 431.2 1 574.4 1731.8

Total: 3 587.6 3 946.3 4 341.0 4 775.1 5 252.6 Source: Consultant's estimates

EmernencvMaintenance

Emergency maintenance works include rapid response and emergency activities necessary to keep the road open and safe for traffic. Emergency works are also designed to prevent or minimize further damage to the road network. These are non-programmed activities, but are estimated based on current road inspections and previous in country experience.

The need to give absolute priority to emergency work is self-evident, and sufficient funds and materials must be made available for this activity. Emergency work should be carried out inmmediatelyit is necessary and will not be planned in advance. The Consultant recommends that an upper limit of 10% of total routine maintenance costs be used in the calculation of this figure. The estimated costs for emergency maintenance are shown below in Table 4 97

(calculated at 3% of routine maintenance).

Table 4 - Estimated Emergency Maintenance Expenditure 2000-2004

Annual Expenditure (YR million)

Category 2000 | 2001 | 2002 | 2003 | 2004

Emergency works 32.2 35.4 38.9 42.8 47.1

Source: Consultant's estimates 98

Annex 12, Attachment II The Road Sector Road and Transport Statistics by Governorate

Road Length (km) Registered Vehicles Governorate Asphalted Gravel Trucks Taxi Cars (Priv.) Al-Baidha 163 329 12,665 1,275 5,975 Al-Dhaleh 8 28 142 8 109 Al-Mahweet III 51 353 1,124 1,144 Amran 2 125 956 226 227 Dhamar 184 278 24,100 2,698 8,147 Ibb 261 419 29,686 5,579 18,806 Sanaa 851 781 136,152 42,445 107,039 Sanaa City na na na na na Hajiah 251 242 22,661 914 8,458 Sadah 202 258 18,367 915 4,316 Taez 384 562 55,315 19,905 45,039 Abyan 520 33 8,697 962 3,715 Aden 65 0 18,777 7,531 36,457 Al-Hodeidah 524 227 27,644 6,341 15,643 Lahej 350 46 12,806 1,522 4,539 Al-Jowf 14 79 3,491 155 150 Al-Mahara 243 10 6,350 31 1,624 Hadramout 860 259 30,510 5,785 32,374 Marib 477 212 16,224 348 3,917 Shabwa 486 69 10,267 1,111 3,544 TOTAL 5,956 4,008 435,163 98,875 301,223

Sources: "Rural Access Program-Yemen, Fornulation of a Methodology and Work Plan" by Rob Dingen and John Hcwe, April 2000, and Yemen, Statistical Yearbook 1999. 99

The Road Sector Annex 12, AttachmentIII Road Inventory for Yemen

A: Asphalt Roads B: Gravel Roads C: Gravel Roads, Under Construction Sr. Length Sr. Length Sr. Length No. Road Name (km) No. Road name (km) No. Road name (kn) I Sana'a - Hodiedah 226 1 Tarim -Kasim 32 1 AmnranAs Sudah- Al Ahnoom 101 2 Sana'a - Taiz 256 2 Asidrah-Baeet 50 2 Al Udayn - Al Jarahee 120 3 Sana'a- Sadaah 242 3 Ash shiher-Hays-GhaylBawazeer 55 3 Mitnah- Shibam -Bani Salam 83 4 Sanaa - Marib 173 4 Asayerah-Maqnabah 24 4 Raydah-Theefan 30 5 Sanaa Jihana-Marib 157 lbb -Qatabha 85 5 Hajah-Ash Shiraqi 26 6 Sana'a-Shibam -Al Mahweet 108 5 Al Mansureyah-AI sukhnah 20 6 Tarqi Al Bayda -Az Zaher-Laboos 52 7 Sana'a-Arhab-Aljawf 156 6 Tariq Alaweeyah 12 7 Dhatnar-Almaghrabah-Dhubah 47 8 wadi Al ajbar- Sud Shahiq 22 7 Al Kaedah-Dhi Sufal 10 8 Dhmar -Al Hussaineyah 234 9 Mafraq Jihana-Biet Al ahmer 18 8 Bajil -Al Kaden-Ad Dahi 50 9 Al Jarf-Bani qais 23 10 Shibam -Thulla-Hababah 13 9 Hidran-Ar Rawnah 26 10 Jabal saber Ad Dimnah 15 11 Shibam -Kawkaban 6 Asahul -Hubaish 14 11 tarqi Al Mash had -Al Madan 30 12 Rusabah-Hamam Ali 28 10 Anashamah-Kaduss 35 12 Al Ma'mar-bayt Ad dafif 3 13 Ma'bar -Zirajah 30 11 Tariq Gabal Habashi 26 13 Weilan-Hamam Jaref 22 14 Ma'bar-Bajil 155 12 Tariq Al Jabeen 42 14 Mitnah Jihamah 35 15 Madinat Ashaarq -Ad Dalil 112 13 Suq Ar Rabuoo -Al Qabyath 19 15 HarfSufyan-Barat -Al Buqh 145 16 Dhamar-Rada'a- ALBaydah 167 14 Mabar -An Ness 85 16 Ash Shizrah-AIQibs 15 17 Yarim Eryan-Rehab 38 15 Al Barh - Al Wazecyah 38 17 Al Shmoor-BayDa'eq 24 18 Ibb- jiblah 6 16 Tariq Bayt Ar Rwaishan 9 18 Masswar - Thilla 22 19 Ibb-Al Udayn 31 17 Thimnan-AtTafah 10 19 MaribAl bayda 175 20 Kitab As'adah -An Nadirah 40 18 Harad Sadah 205 20 As'Sawady -Al Juriab N Bayhan 78 Yarim Katabah- Ad dale- Nawbat 21 Dukaim 140 19 Harad -Midi 30 21 Tariq Yafros 4 22 Al Janad- Mawecyah 36 20 Toruq Al Qabaytah 57 22 Shafar -Al Mahbishah 40 23 Al Mafraq - Al Makha 44 21 Shaybarah -Al Kalbayn 12 23 Zabid -At Tuhaytah 10 24 Hays- Al Khwkhah 29 22 At Tafah- Hunrah 10 24 Taiz Shar ab - Arawnah 39 25 Taiz At Turbah Al Jaheeli 78 Total 956 25 Ibb -Badan 18 26 Ar Rahidah-Hayfan 13 26 AlUdayn-Alhazm 18 27 Taiz-Ar Rahidah-Nawbat Dukaim 101 27 Al Qaeddah-Al Ja' ashen 37 Al Jubah-AI Jabal-Alsumairah- 28 Tiaz - Al Hudaidah 256 28 Alrahbah 60 29 Al Hudaidah -Harad 206 29 Al Jalialh-Ashu aib 25 Al Hudaidah - As salif- Rass 30 Essa 67 5 30 Al wdaie -Musafsaf-Alkhubar 52 31 Al Hudaidah- Al Kateeb 14 31 TariqFarRudm 12 Al Murass - Az Zuhrah- Al 32 Luhayah 60 32 Ataq - Al Alalm 52 33 Harad -Huth 137 33 Bawan- bayt Ar Raziqi 37 34 Hajah - Al Khushm 62 34 Tariq Bani Basheer 3 35 Ammran -Hajah 74 35 Amran Bayt Ad Duli 23 36 Raydah - Theybeen 27 36 Ad Dufair-Ain Ali 14 37 Sadah- Dhahran - Al Junoob 84 37 Asalbajah- Al Er 22 38 SadahKitaff-AlBukh 155 38 Al Mahweet- Al Qanawes s0 39 Al Fardah- Hazm - Al Jawf 56 Total 1826 40 Al Baydah-Am Ayn 62 41 Rada'a - Juban -Damth 84 42 Marib -Harib 74 43 Harib - An Nuqoob 45 44 An Nuqoob- Markiz-Usialan 17 45 Ataq -Wasit-Bayhan 197 46 Al Habilain - Laboos 88 47 Nawbat Dukaim- Dar Sa'ad 52 100

Annex 12, Attachment 1I1 Road Inventory for Yemen (Cont.)

A: Asphalt Roads B: Gravel Roads C: Gravel Roads, Under Construction Sr. Length Sr. Length Sr. Length No. Road Name (km) No. Road name (km) No. Road name 48 Aden Fuqoom- Ras Essa 46 49 Aden -Al Mukalla 620 50 Al Mukalla - Sayhut 264 51 Ash Shiher- Ghail Bawazeer 12 52 Ar Rayan-Sayun- Tarim 332 53 Al Ghuraf-Sa'ah 60 54 Nashtoon- Al Ghaydha 54 55 Marib - Safer- Hadramut 371 56 Saber- Al whaht-Tor Al Baha'a 83 57 Shuqrah- Ah war 116 58 Zinjubar- Batays 31 59 An Nuqabah - Ataq 34 60 Al Qutai -Wadi Sihan -Bajil 37 61 Al Ghaydah - Shuhen 299 62 Kihazah Sanhan 18 63 Tariq Asa eed 12

Total 6631.5 Source: MPWUD 101

Annex 12, AttachmentIV The Road Sector Functional Classification of the Road Network

A Capital and major cities

*- - GovernorateCentres

B, ^ District Centres

c Sub-Districts Villages D AMB:Piiiary~ Road Ndwork C: kftenadiayRoad Ni*wnK zso called E &cOndaryPd NiwFk D: TerdliaRPad?NAlk E: VfillageAcAe Roads iSoocaled QU*tenwy Roa NI~ANk

Adapted from the Report by Dingen/lowe: "Rural AccessProgram - Yemen,Formulation of a Methodology and Work Plan. 102

Annex13: EnvironmentalManagement Plan Summary Yemen: RuralAccess ProgramPhase I

1. INTRODUCTION

Environmental Management Plans were completed for both Part A (Pilot Rural Access Roads) and Part B (Al Ahmar - An Naqaba Road) of the Project. Below are presented a summary of the EMP for each Part. The fu.l EMP is in the project files.

PART A PHASE 1 PILOT ROADS

1.1 Context and Environmental Category

This Enviromnental Management Plan (EMP) concerns Phase I of a three-phased Adaptable Lending Program (APL) to improve rural access in Yemen. The Project (Phase 1) has been placed in environmental screening category "B" consistent with the provisions of Operational Policy 4.01 of the World Bank/IDA. The environmental category is justified for the first phase of the program, since civil works will be limited to the improvement of existing roads in rural areas, and possibly some periodic maintenance activities. The pilot roads in Phase I have been purposefully selected to niinimize adverse environmental and social impacts. In particular, resettlement and land acquisition will be avoided altogether. The pilot roads will be designed with the specific objective of introducing in Yemen design standards for rural roads which are much more environmentally-friendly and also cheaper than those which are currently practiced.

Certain environmental and social issues, such as the potential for resettlement and land acquisition, indicate that the longer term Program should be placed in environmental screening category "A". Accordingly, a sectoral environmental assessment will be carried out during Phase 1, in addition to specific category "A" EIAs for roads to be carried out in Phase II. This Sectoral EA will take into consideration the results of the Environmental Management Plan for the pilot roads in the first phase. Similarly, EIAs will be completed during Phase II for roads to be improved in Phase III, in confortnance with the Sectoral EA.

The main text of this EMP provides an overall environmental assessment of the Phase I project, includ ng the environmental and social review process, policy, legal and administrative framework, baseline conditions and environmental issues pertaining to the pilot roads. The text also summarizes the RAP plans for mitigation, institutional strengthening and supervision and reporting. Attachment 1 of the full EMP provides road-specific enviromnental management plans, based on field-based reviews and consultations, while Attachment 2 presents a summary of recommended measures for future development of the EIA system in Yemen.

1.2 Environmental and Social Review Process

Field-Based Reviews

As part of project preparation, the Government identified a list of candidate roads for the pilot period. These roads were reviewed and visited by the Bank preparation team to ensure that they were suitable for the pilot activities and conformed to the environmental criteria noted above. This review led to some alterations in the final list of pilot road projects, presented in section 3.2.

Also during the preparation period, consultants have carried out a critical evaluation of the current environmental regulations and procedures in Yemen, with respect to their conformance with World Bank requirements, a.nd this work is incorporated in this EMP. A summary of their recommendations are presented in Attachment 2. Finally, the preparation process has established the Terms of Reference for forrnulating an accessibility planning methodology involving community participation that will be tested during the first phase.

Meetings and Site Visits

As part of the preparation process, the Bank preparation team and consultants have held meetings with the Ministry of Public Works and Urban Development and the Environmental Protection Council to discuss the environmental assessment process and requirements. As noted above, site visits were carried to the pilot road locations, to verify their conformance with environmental criteria, as set out for Phase 1. 103

Public Consultation

Preparationof the project EMP includedpublic consultationsat each of the selectedpilot road sites. A record of theseconsultations is presentedin Attachment1 with eachroad-specific EMP.

2. POLICY, LEGAL AND ADMINSTRATIVEFRAMEWORK

2.1 Administrativeand Legal Framework

The Republicof Yemen has establishedinstitutions and responsibilitiesfor environmentalmanagement. It has joined a number of international conventions and is in the process of developing environmental legislation and procedures. These are summarized below:

Environmental Management

Overallresponsibility for environmentalmanagement rests withthe EnvironmentalProtection Council (EPC), which was createdby decree in 1990. The EPC is an inter-ministerialcouncil with broad responsibilitiesto managethe nation's enviromnent.Its tasks include:(i) proposinggeneral policies to protectthe environment;(ii) coordinating national, regional and international agencies involved with environmental protection; (iii) setting up standards for control of air and water pollution and land degradation; (iv) formulate national regulations and legislation; (v) monitor the nation's environment and report to the Cabinet; and (vi) promote environmental education. In addition to its Financial and Administrative Directorate, the EPC is composed of a General Directorate of Environmental Protection (including Environmental Protection and Environmental Training and Information Departments), and a General Directorate of Planning and Data (including Planning and Studies, and Statistics and Data Departments). Its chairman is appointed on a permanent basis and its members, representing various ministries, are appointed on an ad hoc basis. While the EPC has the overall responsibility for implementing and monitoring the EP law, the line ministries are responsible for conducting enviromnental assessment studies. The role of the EPC is to focus on screening, scoping and final approval of the EIA study, as well as monitoring during the construction and operations phases.

Strategies and Legislation

In 1995, Parliament enacted a comprehensive Environment Protection Law No. 26. The law is designed to safeguard sustained use of the natural resource base, and provides a comprehensive framework for environmental management and the establishment of sectoral legislation. It outlines the basic objectives and the roles of concerned authorities in the protection of air, water and soil, and establishes controls on pesticide use, environmentally damagingactivities, transportation and disposalof hazardousmaterials and wastes,environmental monitoring and marine pollution. The law and regulations require EIA for new projects and extensions to existing ones. An annex to the regulations gives a screening list of project types subject to EIA.

There is as yet no comprehensive regulatory framework for environmental management to support the Environment Protection Law. Several new laws related to environmental management are in various stages in development. Of particular relevance is the Land Use Law, which will address the environmental effects of automobiles and roads. An assessment of the EIA system carried out during project preparation has resulted in a number of recommendations to improve the current system and make it more compatible with international norms. These are summarized in Attachment 2.

2.2 Participation in Conventions

Yemen has ratified numerous global and regional conventions. Among the most relevant to this project are:

Convention Date Ratified Framework Convention on Climate Change (New York 1992) 3/12/95 Convention on Biological Diversity (Rio de Janeiro, 1992) 3/12/95 Convention on the Control of Trans-boundary Movements of Hazardous 1992 Wastesand theirDisposal ( Basel, 1989) Protocolon Substancesthat Depletethe OzoneLayer (Montreal, 1987) Approvedby Parliament Convention for the Protection of the Ozone Layer (Vienna, 1985) 3/12/95 104

Convention Concerning of World Cultural and Natural Heritage (Paris, 1972) 7/1/81 Agreement on Civil Responsibility Concerning Damage from Oil Pollution 4/6/79 (Bnimis, 1969)

A number of global conventions have until now not been ratified by Yemen. These include: (i) Convention on the Conservation of Migratory Species of Wild Animals (Bonn, 1979); (ii) Convention on international TrTde in Endangered Species of Wild Fauna and Flora - CITES, Washington, D.C. 1973); and (iii) Convention on Wtetlands of InternationalImportance Especially as Waterfowl Habitat (Ramsar, 1971).

3. PROJECT OBJECTIVES AND DESCRIPTION

3.1 Background

The lack of overall mobility and isolation in rural Yemen has aggravated and sustained poverty conditions. S.-rvices do not reach those that are isolated, keeping them illiterate (in 1994 the combined basic and secondary enrolment rate was just 37), in poor health (in 1994, only 25 percent of the rural population had direct access to health services) and out of contact with income-generating activities. The long-term assurance of access in Yemen is constraiiied by the lack of an adequate institutional and planning framework for managing the nation's road network, of which the rural road network is a part. The current framework involves little participation by the beneficiaries in the identification of the road investments, nor does it involve any process to assess access priorities or technical options. Current technical standards are expensive, given the levels of traffic, and seem to have some serious enviromnental impacts.

The current movement towards decentralization provides an opportunity to bring the planning process closer to the beneficiaries. This will involve developing institutional arrangements and methods for decentralized management of the intermediate, Governorate-level, road network and the district level road network, while ensuring linkages and coherence with the nation's overall road network.

3.2 Proposed IDA-Supported Program and Project

The Program will address poverty by improving overall mobility in rural Yemen and reducing the isolation of villages and communities. The program will emphasize rural access roads that link district centers to each other and to the main road network, here referred to as "intermediary roads" and related village access roads in the area of influence of the intermediary roads. This intermediary type of road and the adjoining village access roads carry a substantial level of traffic, are generally in very poor condition and are excluded from communit -level infrastructure programs. On the non-physical side of the program, the emphasis will be on decentralized capacity- building for decision-making and project monitoring.

Phase I (the Project) will finance pilot implementation of physical interventions and create an adequate institutional and participatory framework for planning, prioritizing and managing rural access improvements. Phase II will focus on the improvement and maintenance of the intermediary road network as well as village access roads and expand continue capacity-building at the Governorate level. Phase III will expand the physical rural access improvements to cover areas not yet covered under the second phase. During the final phase, the program will continue to support the Governorates in achieving sustainable management and maintenance of rural roads, and will extend the E,ccess improvement program to the District level roads.

Phase I will include a pilot implementation of physical access improvements (intermediary and village access roads) using appropriate technical and environmental standards. The objective is to develop and demonstrate in Yemen appropriate standards and implementation procedures for rural roads which are environmentally sound and it the same time cost-effective. The key pilot roads have been identified as:

1. Thula-Amran Sana'a - Amran 25.6 2. Kuhlan Affar-Al Maghrabah Hajjah 15.8 3. At Taffah-Awwin-Beyhan Al Beyda 42.3 4. At Turbah -Towr al Bahah Taizz-Lahj 8.8 5. Khamis Bani Sa'd-Alauetta'a-Al Mahwit Al Mahwit 21.3 Total 113.8 105

In addition about 100 km of yet unidentified existing village access roads (motorable tracks) in the areas of influence of these 5 roads will be upgraded under Phase I on a pilot basis. The standards and implementation procedures to be demonstrated through the pilot projects will include the following features: (i) consultations with beneficiaries and community leaders for planning, implementation and monitoring; (ii) technical designs with narrower platforms and less expensive surfacing; (iii) the inclusion of water harvesting techniques in the road structure, to benefit adjacent farms; (iv) slope stabilization; and (v) disposal at designated sites of material that is cut from the hillside slopes, instead of the uncontrolled dumping of those materials as it is practiced today.

4. BASELINE DATA

4.1 National Project Setting

The Republic of Yemen is located on the southern coast of the Arabian Peninsula. It has a total land area of 55.5 million hectares and a population of about 16 million (1997). The country is characterized by five major land systems: (i) a hot and humid coastal Tihama plain, 30-60 kn wide along the Red Sea; (ii) the Yemen Highlands, with elevations from 1,000 to 3,600 m. parallel to the Red Sea coast; (iii) the dissected region of Yemen High Plateau and the Hadramawt-Mahra Uplands, with uplands up to 1,000 m.; (iv) the Al-Rub Al-Khali desert interior, with a hot and dry climate; and (v) the islands, including Socotra in the Arabian Sea and more than 112 small islands in the Red Sea. Yemen's coastal and marine eco-system, which includes extensive mangroves, coral reefs and seagrass areas, are of major economic importance for fisheries and tourism.

Fifty-seven percent of the land is desert and 40 percent is rangeland and forest. About 3 percent of the land can be used for agriculture, of which 75 percent is actually cultivated at present. Renewable fresh water is very scarce. The availability per capita is only 130 cubic meters per year, compared to 7,500 cubic meters for the world and 1,250 cubic meters for MENA.

The differing topographic and climatic conditions provide a variety of challenges for providing affordable and environmentally sound access to the rural communities. The project (equivalent to Phase I of the program) will apply and test appropriate technical solutions under these various conditions, which will be expanded throughout the country in future phases of the program.

Attachment I provides a summary of the current conditions for each pilot road, in terms of the biological, topographic, hydrologic, climatic and humanlsocial milieu, and whether the road is in, or can affect, environmentally sensitive or protected areas.

5. POTENTIAL IMPACTS

For each of the selected pilot roads, potential impacts resulting from the improvement works and the operation of the roads are broken down as follows:

* Land resources * Hydrology * Water quality * Biological * Socio-economic and cultural * Air quality

These are summarized in Attachment 1. During the preparation of the project, the following initial issues have been identified, which will be addressed for each road, along with the other issues mentioned above.

5.1 Land Resources

Road width and slope stabilization. Rural roads designs in Yemen presently feature a roadbed of 10 meter width, with a road surface 7 meters wide, and shoulders of 1.5 meters on each side. The Bank team considers that this standard is far too high and expensive in most cases; it cannot be justified by traffic volumes and also causes avoidable environmental damages. In the case of mountain roads, this design requires rather deep cuts into the mountainside to achieve the design width of the roadbed, leading to the erosion of exposed slope surfaces and often to slides of slopes onto the road. 106

Terrace destruction and erosion. It was also observed that it is common practice to simply take the cut material taken from the hillside and dump it on the valley side of the road, often destroying terraces and leading to erosion problems on that side, too. Built during several centuries to provide arable land on the slopes of mountains, these terraces have proven to be a very effective soil and water conservation measure. Rural Road improvements should not lead to the destruction of terraces, and the traditional terrace-building technology can probably be incorpcrated in the design of mountain roads to be financed under the Program.

5.2 Hydrology

Mountain hydrology and water harvesting. Roads built on mountain slopes accumulate rainwater runoff<. In Yemen, it is common practice that farmers construct simple water harvesting structures on the road surface, similar to speed-bumps, to channel runoff water to their terraced fields below the roads. This action also tends to proten,tthe road by slowing down runoffs and draining water off the road, thereby reducing road surface degradations and maintenance requirements. This infornal practice should formally be incorporated into technical design standards for rural roads in Yemen, and such standards will be developed and refined during Phase I of the Program.

Embankment design and wadi hydrology. For those roads passing through wadis, the construction of an embankment for the road could alter seasonal water flow patterns within the wadi. This could bring about: (i) additional erosion within the wadi; and/or (ii) a disruption of the traditional water harvesting practices of the farms on the surrounding hillsides. This risk will be addressed through hydrological assessments and appropriate engineering d -sign measures and through local consultation to avoid potential disruption to water harvesting practices.

5.3 Social and Cultural

Tribal tensions. Each road section to be financed under the Programnwill be assessed in terms of potential iribal tensions. The social order in most parts of rural Yemen is still organized according to the tribal system. This includes a social hierarchy, which gives a commanding positions to local tribal leaders who, in some cases, do not hesitate to stop by force the implementation of a larger Government project if they feel that it does not seem to benefit them directly. Overall, competition for scarce Govemment resources involves competition between tribes to obtain basic services from the Government or from donors. This often results in tensions and occasional a-med clashes about the location of infrastructure improvements, such as the alignment of a rural road going througli the territories of various tribes. Changing relations between leading individuals and tribal groups may result in a sudden deterioration of social relations in a particular region and affect implementation of projects. As a consequence for the Program, it is necessary that previous to any physical intervention in a rural road, an agreement must be reached among the tribes involved, and between the Government and the tribes, on the characteristics of the intervention. It must be clear to tribal leaders that resources of the Rural Access Improvement Program will not be allocated to local projects unless such agreements are concluded successfully. Government authorities at the District and Governorate levels have an important role to play in this context under the Program.

Safety and travel patterns within the wadis. For those roads passing through wadis, the construction cf an embankment for the road could disrupt regular patterns or introduce safety concerns for activities such as water fetching by women and children. In these cases, local consultations with women should identify such concernmand design measures, such as marked crossings, will be introduced.

Land Ownership. Land ownership and sometimes aggressive requests for compensation for lost property assets as a result of infrastructure projects are another social issue that must be addressed at an early stage for any road prcject, with the active participation of District Councils and local/tribal leaders. Written commitments are a useful tool, though their binding nature should not be overrated.

Land acquisition. Road improvements during the first phase of the Program will occur on existing right-of-way only. In addition, the road designs to be applied will feature a reduction of the typical width of rural roads as part of the upgrading, as compared to the standards originally applied to the project road. During Phase I of the program, the risk of involuntary resettlement or land acquisition is therefore considered to be extremely low. Nevertheless, project roads may at times (Phases II & III) pass through densely populated areas or require curve reductions for safety purposes. In such cases, very small parcels of land would have to be donated by their owners, because of the existing Government policy which allow compensation for assets located on the land (trees, structures, etc.) but not for the land as such. This important issue will be clarified through the development of a Social Framework Agreement during project implementation, which will require prior consultations at the local level, so as to identify 107 and resolve any potential land acquisition questions, in conformance with Safeguard Policy OP 4.3 (Involuntary Resettlement).

Archeological and historical sites. Field reviews revealed no direct impact of the roads on archeological, burial or historical sites. However, the project will institute "chance find' procedures to ensure protection of such sites during the construction and operational periods.

Graveyards and Burials. The assessment of each road has identified potential graveyards and burial grounds. One such site was identified adjacent to the At Taffah - Awwin - Beyhan road, although it will not be disturbed by the road improvement. The project will institute chance find procedures to manage situations when and if unrecorded graveyards and/or burial sites are found during the course of road works.

The issue of Qat. During their field work in Yemen, the project identification team perceived a very wide range of opinions and positions on this question. It has been noted by some individuals that the improvement of roads in certain areas could contribute to increased production and marketing of this product, and that roads should not be improved under this Program in areas that are high Qat producers. However, the practical implementation of such a policy would exclude large areas of the country from the program. On the other hand, there is no consensus on the long-term health effects of Qat. Although it is acknowledged that spending on Qat can represent a large expenditure for the average household, improved access could bring the cost down. It may also be argued that improved access could facilitate improved communication on the potential ill effects of Qat, and promote competing economic activities in the Qat-producing areas of Yemen.

Local employment. Employment benefits are expected from the road improvement works. Consultations revealed that local communities will not insist on employment, yet they are keen to participate for certain activities, such as security arrangements for equipment and stonework. Mechanisms to ensure that local populations are the beneficiaries will to be defined as much as possible and realistic, within the social and tribal context of each road.

6. ANALYSIS OF ALTERNATIVES

Attachment I summarizes for each pilot road to be financed under Phase f, an analysis of alternatives, including the "no action" alternative, is carried out, in terins of: (i) avoiding resettlement and/or land acquisition; (ii) means for meeting local access needs; (iii) reduced standards adopted; and (iv) technical solutions (use of sub-standard materials and different types of surface treatment). For each of these categories, the solution adopted is justified and explained.

7. MITIGATIONPLAN

For each pilot road, Attachment I describes specific measures to mitigate its potential negative effects and enhance its positive impacts, both during initial physical works and during the normal operation of the road. They are summarized in tables attached and will include, but not be limited to, the following:

7.1 Improved and environmentally-sound technical designs

These will be specified for each road to be financed, according to its particular conditions. Six main design issues have been identified so far: (i) water harvesting on mountain roads; (ii) narrower platforms, and related to this no need for cutting into slopes and negotiate earth movements; (iii) road surfacing to be stabilized on steep slopes to avoid erosion; (iv) slope stabilization on sections of the roads where slopes are unstable; and (v) controlled disposal at designated sites of material cut from the hillside slopes; and embankment design and wadi hydrology. During the first phase, the Project will address these issues by assisting the Government to revise the design standards for rural roads and try out new standards, so that they are environmentally sound and more adapted to the actual needs of low-volume traffic.

7.2 Reduction of potential impacts of physical works.

Impact Reduction Measures. Specific measures to reduce potential impacts of physical works will be taken; regarding the detailed design, construction tenders, construction process and contractor performance monitoring. 108

Contracts will contain requirements for proper management of construction waste; control measures for waste fuel, oil and lubricants; reduction of noise and dust levels; and rehabilitation of areas used for construction detours, and sites used to temporarily store construction materials. Contractors will be required to provide and maintain equipment with proper noise abatement controls.

Contract Provisions. Specific provisions will be included in construction contracts to mandate the use of formal health and safety measures to minimize accidents and avoid fatalities during the construction process. The following table summarizes the relevant clauses in the standard construction contracts.

C-s ir n X -S--:'t''-'' - '-S-- '' 8.2 Site Operation and Methods of Construction 19.1 Safety, security and Protection of the Enviromnent 27.1 Fossils 42.1 Possession of Site and Access Thereto 42.3 Rights-of-Way and facilities Part IT Conditions of Particular Application (COPA)

Pre-Tender Conference. To ensure full understanding of the above clauses by the contractors, all pre-qualified contractors will attend a Pre-Tender Conference, where they will be briefed concerning their responsibilities to address environmental,health and safety issues. These briefings will outline specific provisions of the constluction tender documents and contracts, as laid out in the Part II, Conditions of Particular Application (COPA).

7.3 Management of Operational Impacts.

The Project will address operational impacts identified earlier for each road. These may be implemented through financial support from the Road Maintenance Fund to avoid deterioration of the rehabilitated road and associated dust and safety problems. Maintenance contractors will be required to follow procedures similar to those tborthe construction contractors concerning proper disposal of construction waste, control measures for waste fuel, oil and lubricants and adoption of health and safety measures for personnel. Expected increases in traffic levels are not anticipated to be so high as to bring about a significant increase in air pollution, and this may in fact decrease due to smoother and less dusty roads and use of smaller and lighter vehicles. Suspended dust caused by vehicles will be reduced by the rehabilitation of the roads, due to the large number of road subprojects which include resurfacing and sealing operations.

7.4 ReductionlEnhancementof Social and Cultural Impacts

As part of the final design, a Social Framework Agreement will be worked out. Within this context, the following mitigation measures will be carried out during implementation of phase one:

Negotiations to Minimize Tribal Tensions. Where appropriate, a specific plan for local consultations and negotiations during construction will be drawn up to ensure consensus among the tribes living along the roads on the organization and achievement of the road improvement. This plan will follow general procedures to be included in the standard design manual.

Safety and movement patterns in the wadis. The siting of the works passing through wadis should minimize disruptions to local movement patterns for fetching water and water harvesting activities.

Use of Archeological "Chance Find" Procedures. The construction contracts (COPA) will contain procedures for archeological "chance finds," should they be encountered during the course of construction activities. These procedures have been developed in consultation with MOCHUP and the CMO. The provisions of these "chance find" procedures are normally included in Part II (COPA) to the bidding documents for construction contractors and the Terms of Reference for the supervising engineer. The Pre-Tender Conference will include provisions for a session on environmental and social issues during which "chance find" procedures will be reviewed with poi:ential construction contractors.

Archeological Field Support. The governnent will make available (on demand) a qualified archaeologist to conduct field investigations when important search work and new materials sites are opened. The archaeologist would be paid by the CMO and be attached temporarily to the construction manager's team and provided with logistical support when necessary. 109

Involuntary resettlement and land acquisition. As noted above, the Phase I pilot roads have been purposefully selected to avoid this problem altogether. For Phases 11 and III of the Program, systematic procedures, including public consultation and compensation in accordance with the legislation, will be included in the Sector Environmental Assessment and the related Social Framework Agreement to be finalized during Phase I of the Program.

Graveyards and Burials If unrecorded graveyards and/or burials are found during the course of construction activities, the CMO will contact and work with local religious authorities within the Project area to allow for possible identification of the remains and when appropriate properly undertake relocation and reburial.

Local employment. The mechanisms for maximizing local employment benefits will be specified for each pilot road as part of the bidding documents. Normally, the labor component of rural access roads are quite high, 30 40% depending on the need for drainage protection works and type of road surfacing used. Consultations indicate that local populations are keen to participate particularly in security arrangements for equipment and stonework.

8. ENVIRONMENTALMONITORING PLAN

The Environmental Monitoring Plan will be implemented by Environmental Unit within the Central Management Office (CMO) for Rural Roads. This unit will monitor application of environmental measures for detailed design, construction and bidding for rehabilitation contracts for each pilot road. The results of the monitoring activities will be included as routine elements of reports prepared by the supervising engineer and the CMO. Key activities of the Unit will include, but not be limited to:

8.1 Reduction of Potential Construction Impacts

The CMO, with support of the supervising engineer, will regularly monitor implementation of the mitigation measures adopted for each pilot road to address impacts during the construction period.

8.2 Management of Operational Impacts

The CMO, with support of the supervising engineer as appropriate, will regularly monitor implementation of the mitigation measures adopted for each pilot road. These will be implemented in coordination with the Road Maintenance Fund and those institutions responsible for road safety.

8.3 Management of Social and Cultural Impacts

Consultations and trihal negotiations. The CMO will oversee the implementation of these procedures, to be specified in the Social Framework Agreement, for each pilot road.

Use of Archeological "Chance Find" Procedures. Application of the archaeological "chance find" procedures, if required during the course of road rehabilitation, will be monitored by the supervising engineer, the CMO and the Department of Antiquities in the Ministry of Tourism.

Archeological Field Support. The on-site work of the archaeologist from DOA will be monitored by the CMO and the supervising engineer. A record will be maintained of the archaeologist's activities and information compiled on sites located and/or materials found during this fieldwork.

Graveyards and Burials, The implementation of any actions to address issues related to unrecorded graveyards and/or burials will be undertaken by the CMO in conjunction with the local authorities.

9. SUMMARY TABLES OF ENVIRONMENTALMANAGEMENT PLAN

The following tables summarize the environmental management plan, for each road, during both the construction and operational periods. This will provide a "checklist" for those responsible for implementation and monitoring of the EMP. Although the EMP systematically considers all six categories of impact during both phases, the level and nature of impact, and hence implementation and monitoring activities, will vary between phases. The impacts shown below are illustrative and the final Environmental AssessmentlEMP will confirm the applicability of the 110 impacts for each proposed road.

ENVIRONMENTALMANAGEMENT PLAN FOR ROADS TO BE FINANCED UNDER THE PROJECT

A. Construction Period Impact Mitigation Responsi ility (e.g. contract clause) Implementation Monitoring 1. Air Quality Clause 8.2 and COPA 1.1 Dust & potential pollutants Using water-spraying during Supervision Consultant, CMO- from construction machinery operation Resident Engineer (RE) Environmental Unit ______(EU )

2. Land Resources 2.1 Road width & slope Contract Document, Drawings Design Engineer (DE), CMO-EU stabilization and RE 2.2 Terrace destruction Controlled disposal of cut RE CMO-EU material (Clause 19.1 and 8.2) 2.3 Erosion of Ditches, fill- and Labor intensive protection DE and RE CMO-EU cut-slopes work

3. Hydrology 3.1 Mountain hydrology and Appropriate Road Design DE & RE CMO-EU water harvesting Requirements 3.2 Cross Drainage Inlet and Outlet Design DE & RE CMO-EU Appropriate 3.3 Flood protection in the Appropriate Road Design DE & RE CMO-EU wadis Requirements _ 4. Water quality 4.1 Diesel spill from Clause 8.2, Special DE & RE CMO-EU construction machinery impacts arrangements for storage and groundwater protectionin COPA .=

5. Socio-economic and cultural issues Clauses 19.1/27.1/42.1/42.3 CMO-EU 5.1 Tribal tensions. Clauses Regular meetings 5.2 Land ownership 42.1 & with Project 5.3 Land acquisition 42.3 Affected People _ 5.4 Archeological & historical Archaeological Rescue RE & DoA CMO-EU sites Surveys up front and 'Chance Clause 27.1 Find' procedures 5.5 Graveyards & burials Relocation of Road/Chance RE CMO-EU find procedures 5.6 Road Safety at construction Proper temporary signs and RE CMO-EU sites marking, and manual Clause 19.1 regulation of traffic _ 111

B. Operational Period Impact Mitigation Responsibility (e.g. regulations) Implementation Monitoring Generally Through network wide Generally the Road Generally, the road maintenance concessions the Maintenance Fund and users, local project will attempt to involve MOCHUP are communities and the private sector in providing responsible for roads NGO's will be better maintenance services, during operational mobilized to make according to easily period. sure that monitorable performance undesirable effects specs. are addressed 1. Air Quality I. I Pollution from increased Low volume roads, no Not under the control of NGO's vehicles mitigationrequired this project.

2. LandResources . 2.1 Slope stabilization Regular maintenance Contractor with local CMO-EU labor 2.2 Terrace destruction during Regulated through the Contractor with local CMO-EU maintenance maintenance concession labor 2.3 Erosion. Ditches Cleaning work by contract Contractor with local CMO-EU blocked with materials from according to performance labor unstable slopes based contract.

3. Hydrology 3.1 Mountain hydrology and Road Facilities are maintained Maintenance Contractor CMO-EU water harvesting regularly. 3.2 Blockage of cross Road Facilities are maintained Maintenance Contractor CMO-EU drains/culverts regularly.

5. Socio-economic and cultural Issues 5.1 Tribal tensions Problems here during oper. Maint.Contractor, CMO-EU, 5.2 Land ownership period addressed through Road Maintenance NGOs 5.3 Land acquisition Amicable settlements Fund, RRMU Governor 5.4 Archeological & historical Fence of protected sites Maintenance contractor CMO-EU and Dep. sites (rescue work) to be Of Antiq. maintained as part of road maintenance contract. 5.5 Graveyards & burials Not a problem during operation. 112

CONFORMANCE INDICATORS AND MONITORING RESPONSIBILITY ROAD_

(The following tables will be used as a tool for monitoring the implementation of the EMP.) A. ConstructionPeriod Impact Mitigation Monitoring (e.g. contract clause) Indicator Date of Signatu re of verification verifier 1. Air Quality Clause 8.2 and COPA 1.1 Dust & potential pollutants Using water-spraying during from construction machinery operation

2. Land Resources 2.1 Road width & slope Contract Document, Drawings stabilization 2.2 Terrace destruction Controlled disposal of cut material (Clause 19.1 and 8.2) 2.3 Erosion of Ditches, fill- Labor intensive protection and cut-slopes work

3. Hydroloxy 3.1 Mountain hydrology and Appropriate Road Design water harvesting Requirements 3.2 Cross Drainage Inlet and Outlet Design Appropriate 3.3 Flood protection in the Appropriate Road Design wadis Requirements _ 4. Water quality 4.1 Diesel spill from Clause 8.2, Special construction machinery impacts arrangements for storage and ground water protection in COPA

5. Socio-economic and cultural issues Clauses 19.1/27.1/42.1/42.3 5.1 Tribal tensions. Clauses Regular meetings 5.2 Land ownership 42.1 & with Project 5.3 Land acquisition 42.3 Affected People 5.4 Archeological & historical Archaeological Rescue sites Surveys up front and 'Chance Clause 27.1 Find' procedures 5.5 Graveyards & burials Relocation of Road 5.6 Road Safety at construction Proper temporary signs and sites marking, and manual Clause 19.1 regulation of traffic _ ___ 113

B. Operational Period Impact Mitigation Monitorin (e.g. regulations) Indicator Date of Signature of verification verifier Generally Through network wide maintenance concessions the project will attempt to involve the private sector in providing better maintenance services, according to easily monitorable performance specs. 1. Air Quality 1. I Pollution from increased Low volume roads, no vehicles mitigation required

2. Land Resources _ 2.1 Slope stabilization Regular maintenance 2.2 Terrace destruction during Regulated through the maintenance maintenance concession 2.3 Erosion. Ditches blocked Cleaning work by contract with materials from unstable according to performance slopes based contract.

3. Hydrology 3.1 Mountain hydrology and Road Facilities are maintained water harvesting regularly. 3.2 Blockage of cross Road Facilities are maintained drains/culverts regularly.

5. Socio-economic and cultural issues 5.1 Tribal tensions Problems here during oper. 5.2 Land ownership period addressed through 5.3 Land acquisition amicable settlements 5.4 Archeological & historical Fence of protected sites sites (rescue work) to be maintained as part of road maintenance contract. 5.5 Graveyards & burials Not a problem during operation. 114

10. INSTITUTIONAL STRENGTHENING

Consistent with IDA environmental procedures, institutional strengthening activities will be necessary. These will involve the creation of an environmental unit within CMO to implement and monitor the environmental mitigation measures. The function of this Unit will be: (i) review and approve Environmental Impact Assessments (EIA) and Environmental Management Plans (EMP) for all rural roads to be improved under the Program; (ii) monito- the compliance with the EIA and EMP by the various entities involved in the implementation of the Program; and (iii) collect data to document that the agreed performance criteria related to environmental and social aspects of the Program are met. This unit will be staffed with qualified personnel (2 professionals) before project effectiveness. The staff of this unit will receive training during Phase I of the Program as part of the TA provided to the CMO.

11. ESTIMATED COST AND IMPLEMENTATION SCHEDULE

Costs associated with the implementation of the physical mitigation measures in this EMP will be part ol the construction cost of the rural road projects. Most of the proposed EMP mitigation activities will be assured under provisions in the construction contracts, engineering supervision contract and for Phase II and III in the Social Framework Agreement. In addition, the Project will include an implementation schedule that integrates the activities of the EMP into the overall schedule. The cost of the institutional strengthening activity is included in the technical assistance package to the CMO.

12. REPORTING AND SUPERVISION

12.1 Reporting

As an element of Project reporting requirements, the CMO will include into their routine reports the status in the implementation of the activities related to the EMP. These reports should note any contractor non-compliance with the EMP and provide guiding remarks on the actions to be taken. The significance of the non-compliance should also be noted. As necessary, supplemental reports with greater detail than the routine reports should also be prepared.

12.2 Supervision

The Supervision Plan for the proposed Project will include provisions for the participation of World Bank environmnentalstaff in supervision missions, as appropriate and subject to available funding, to review progress in implementation of the EMP. The performance of the CMO in the implementation of these activities under the Project will be a standard element of supervision mission reports, including these from the Early Implementation Assessment, and the Implementation Completion Mission.

13. DISCLOSURE OF INFORMATION

As part of the environmental assessment process, on-site consultations will be undertaken with a range of agencies and stakeholders for each rural access road to be financed under the Program. Consistent with the procedures of IDA, the Government of Yemen has agreed to make the EMP for each pilot road available to the public througk the Info-Shop at the World Bank, in Sana'a and at selected locations relevant to each pilot road. The EMP will be available in Yemen in English and Arabic.

PART B AL AHMAR - AN NAOABA ROAD

1. INTRODUCTION

1.1 Context and Environmental Category

This Environmental Management Plan (EMP) concerns Part B of Phase I of the Rural Access Program (RAP). Part B concerns the Al Ahmar - An Naqbah road. The Project (Phase I) has been placed in environmental screening category "B" consistent with the provisions of Operational Policy 4.01 of the World Bank/IDA. The environmental category is justified, since civil works will be limited to an overlay of an existing and well-established inter-city road, where there will be no resettlement or land acquisition as a result of the project. 115

1.2 Environmental and Social Review Process

Field-Based Reviews and Consultation

During project appraisal, the existing road design study was reviewed and the road was visited to confirm the project category.

Meetings and Site Visits

As part of the preparation process, the Bank preparation team and consultants held meetings with the Ministry of Public Works and Urban Development and the Environmental Protection Council to discuss the environmental assessment process and requirements.

Public Consultation

The EMP will be disclosed for public comment and will be discussed through on-site meetings with national government agencies, local governments, beneficiaries and local non-governmental organizations. The Project Implementation Plan will also contain provisions for periodic consultations during the physical works phase with officials and residents along the road corridors to solicit their views concerning the environmental and social aspects of the rural road improvementworks.

2. POLICY, LEGAL AND ADMINSTRATIVE FRAMEWORK

Same as above.

3. PROJECT OBJECTIVES AND DESCRIPTION

3.1 Background

The rehabilitation of the Al Ahmar - An Naqbah road was a component of the ongoing Transport Rehabilitation Project (TRP) but taken out in a restructuring of this Credit to make room for a much needed rehabilitation of the Aden airport runway and taxiways. The basic understanding at the time of the restructuring as reflected in Aide- Memoires, was that IDA would subsequently finance the Al Ahmar - An Naqbah road rehabilitation either through a supplemental credit to the TRP or as part of a follow-up operation in the transport sector. It-was agreed to provide financing for this project as a separate part of the Rural Access Project. To avoid any confusion on the role and the responsibilities for rural access improvements, the rural access pilot program would form a separate Part A of the new Project to be implemented by the RAP Central Management Office, while Part B of the Project would be the rehabilitation and upgrading of the Al Ahmar - An Naqabah road

3.2 Proposed IDA-Supported Project

The project constitutes a section of the inland Aden-Mukhalla highway. It starts at the town of Al Ahmar and traversing a length of 114 km, terminates at the intersection with the other asphalt road to Ataq at An Naqabah. The rehabilitation works will consist of repair works, including short sections of reconstruction, drainage improvements and protection works. The overlay on the existing pavement will not be widened outside of existing shoulders. No widening is envisaged.

4. BASELINE DATA

National project setting. The Republic of Yemen is located on the southern coast of the Arabian Peninsula. It has a total land area of 55.5 million hectares and a population of about 16 million (1997). The country is characterized by five major land systems: (i) a hot and humid coastal Tihama plain, 30-60 km wide along the Red Sea; (ii) the Yemen Highlands, with elevations from 1,000 to 3,600 m. parallel to the Red Sea coast; (iii) the dissected region of Yemen High Plateau and the Hadramawt-Mahra Uplands, with uplands up to 1,000 m.; (iv) the Al-Rub Al-Khali desert interior, with a hot and dry climate; and (v) the islands, including Socotra in the Arabian Sea and more than 112 small islands in the Red Sea. Yemen's coastal and marine eco-system, which includes extensive mangroves, coral reefs and seagrass areas, are of major economic importance for fisheries and tourism.

Land resources. The project is located in the Yemen High Plateau, characterized by rolling and rocky volcanic 116 terrain, with extraordinary sandstone fonnations in the distance. Land use consists mainly of terraced crop production. At km 60, the road passes through a lush wadi.

Biological resources: The project area is characterized by sparse vegetation on the rocky hillsides, consisting mainly of grasses, euphorbia plants and acacia trees. There is little wildlife in evidence. The project road is not located in a designated sensitive or specially protected area.

Socio-economic and culturaL The road passes about 8-10 villages, which are set back from the road. The road also passes by several towns of historical interest, notably, Azzan and Mayfa'at. Along the road there is much evidence of housing construction, which is apparently a result of former residents who fled during the socialist era and are returning to their homes. This suggests a growing population and economy. The following summarizes the population and poverty situation of the districts through which the road passes.

Abyan Al Mahfad 25,583 20-29% 20-29% Shabwah Habban 23,309 10-19% 20-29% Total 48,892 Source: Central Statistics Office

5. POTENTIAL IMPACTS

Because the road has been well established for twenty years, the improvements brought on by the project will have little additional effect on environmental issues, such as land use and drainage, in the project area. Environmental issues identified during the site visit were:

• Health and safety hazards of workers and population during construction period. * Environmental damage from cut material, borrow areas, detours and construction waste. - Additional dust and noise levels during construction • Traffic safety and safe access points of villagers to the road during operational period.

6. ANALYSIS OF ALTERNATIVES

This road currently provides the only main highway connecting Aden and Taizz with Al Mukalla and Ha6ramout. In this corridor, there are no alternative alignments, that could provide equivalent access and facilitate thru-traffic due to difficult terrain.

The no-action alternative would entail a gradual transformation of this highway to a gravel road and a complete loss of road assets, thus incurring considerable road user costs.

The appraisal mission team visited the road in order to verify whether the technical solution, which was proposed by the consultant, is still adequate. The team concluded that the proposed design, which involves a substantial widening of the road, is difficult to justify given that there are insufficient budget funds, and the fact that the remaining sections towards Mukalla will remain with the present cross section. Therefore, the proposed project will involve no widening beyond the limits of the existing shoulders.

7. MITIGATION PLAN

Principal measures to address the potential impacts will involve:

7.1 Improved and environmentally-sound technical designs

These will particularly relate to: (i) adjusting the design to limit the pavement within the existing shoulder width; and (ii) incorporating traffic safety designs and improved access points for villagers living along the road.

7.2 Reduction of potential impacts of physical works

Impact reduction measures Specific measures to reduce potential impacts of physical works will be taken. Contracts will contain requirements for proper management of construction waste, control measures for waste fuel, 117 oil and lubricants; reduction of noise and dust levels, and rehabilitation of areas used for construction detours and sites used to temporarily store construction materials. Contractors will be required to provide and maintain equipment with proper noise abatement controls.

Contract Provisions. Specific provisions will be included in construction contracts to mandate the use of formal health and safety measures to minimize accidents and avoid fatalities during the construction process. The following table summarizes the relevant clauses in the standard construction contracts.

Cla~~ Hu{iie Wiita I5:>: <.. 8.2 Site Operation and Methods of Construction 19.1 Safety, security and Protection of the Environment 27.1 Fosils 42.1 Possession of Site and Access Thereto 42.3 Rights-of-Way and facilities Part II Conditions of Particular Application (COPA)

Pre-Tender Conference. To ensure full understanding of the above clauses by the contractors, all pre-qualified contractors will attend a Pre-Tender Conference, where they will be briefed concerning their responsibilities to address environmental, health and safety issues. These briefings will outline specific provisions of the construction tender documents and contracts, as laid out in the Part lI, Conditions of Particular Application (COPA).

7.3 Management of Operational Impacts.

The Project will address operational impacts identified earlier for each road. These may be implemented through financial support from the Road Maintenance Fund to avoid deterioration of the rehabilitated road and associated dust and safety problems. Maintenance contractors will be required to follow procedures similar to those for the construction contractors concerning proper disposal of construction waste, control measures for waste fuel, oil and lubricants and adoption of health and safety measures for personnel. Expected increases in traffic levels are not anticipated to be so high as to bring about a significant increase in air pollution, and this may in fact decrease due to smoother and less dusty roads. Improved road standards can induce more use of non-diesel fuel vehicles, which are in principle less polluting. Petrol in Yemen is unleaded. However, pollution is also caused by old and poorly- maintained vehicles. The EPC is in the process of trying to improve enforcement of vehicle standards.

7.4 Reduction/Enhancement of Social and Cultural Impacts

Use of Archeological "Chance Find" Procedures. The construction contracts (COPA) will contain procedures for archeological "chance finds," should they be encountered during the course of construction activities. These procedures have been developed in consultation with MOCHUP. The provisions of these "chance find" procedures are nornally included in Part II (COPA) to the bidding documents for construction contractors and the Terms of Reference for the supervising engineer. The Pre-Tender Conference will include provisions for a session on enviromnental and social issues during which "chance find" procedures will be reviewed with potential construction contractors.

Archeological Field Support. The government will make available (on demand) a qualified archaeologist to conduct field investigations when important search work and new materials sites are opened. The archaeologist would be paid by the PIU of the MOCHUP and be attached temporarily to the construction manager's team and provided with logistical support when necessary.

Graveyards and Burials. If unrecorded graveyards and/or burials are found during the course of construction activities, the PIU will contact and work with local religious authorities within the Project area to allow for possible identification of the remains, and when appropriate, properly undertake relocation and reburial.

Local employment. The mechanisms for maximizing local employment benefits will be specified as part of the bidding documents.

8. ENVIRONMENTALMONITORING PLAN

The Environmental Monitoring Plan will be implemented by Project inplementing Unit of MOCHUP. This Unit will monitor application of environmental measures for detailed design, construction and bidding for rehabilitation 118

contracts for the project road. The results of the monitoring activities will be included as routine elements of reports prepared by the supervising engineer and the PIU. Key activities of the Unit will include, but not be limited to:

8.1 Reduction of Potential Construction Impacts

The PIU, with support of the supervising engineer, will regularly monitor implementation of the mitigation measures adopted for each pilot road to address impacts during the construction period.

8.2 Managementof Operational Impacts

The PIU, with support of the supervising engineer as appropriate, will regularly monitor implementatior. of the mitigation measures adopted for each pilot road. These will be implemented in coordination with the Road Maintenance Fund and those institutions responsible for road safety.

8.3 Managementof Social and Cultural Impacts

Use of Archeological "Chance Find" Procedures. Application of the archaeological "chance find" procecures, if required during the course of road rehabilitation, will be monitored by the supervising engineer, the PIU and the Department of Antiquities in the Ministry of Tourism.

Archeological Field Support. The on-site work of the archaeologist from DOA will be monitored by the E'IU and the supervising engineer. A record will be maintained of the archaeologist's activities and information compiled on sites located and/or materials found during this fieldwork.

Graveyards and Burials. The implementation of any actions to address issues related to unrecorded graveyards and/or burials will be undertaken by the P1U in conjunction with the local authorities.

9. SUMMARY TABLES OF ENVIRONMENTAL MANAGEMENT PLAN

The following tables summarize the environmental management plan for the project road. 119

ENVIRONMENTALMANAGEMENT PLAN AL AHMAR - AN NAQABAHROAD PROJECT

A. Construction Period Impact Mitigation Responsi nsi (e.g contract clause) Implementation Monitoring 1. Air Quality Clause 8.2 and COPA 1.1 Dust & potential pollutants Using water-spraying during Supervision Consultant, PIU from construction machinery operation Resident Engineer (RE) 2. Land Resources 2.1 Road width Redesign; contract document, Design Engineer (DE), PIU Drawings and RE 3. Hydrology 3.1 Cross Drainage Inlet and Outlet Design DE & RE PIU Appropriate 4. Water quality 4.1 Diesel spill from Clause 8.2, Special DE & RE PIU construction machinery impacts arrangements for storage and ground water protection in COPA 5. Socio-economicand cultural issues Clauses 19.1/27.1/42.1/42.3 PIU 5.1 Archeological & historical Archaeological Rescue RE & DoA PIU sites Surveys up front and 'Chance Clause 27.1 Find' procedures 5.2 Graveyards& burials Relocation of Road RE PIU 5.3 Road Safety at construction Proper temporary signs and RE PIU sites marking, and manual Clause 19.1 regulation of traffic 120

B. Operational Period Impact Mitigation Respons ility (e.g. regulations) Implementation MonitorinP Generally Through network wide Generally the Road Generally, Ihe road maintenance concessions the Maintenance Fund and users, local project will attempt to involve MOCHUP are cornmunitiesand the private sector in providing responsible for roads NGO's will be better maintenance services, during operational mobilized to make according to easily period. sure that monitorable perfornance undesirable effects specs. are addressed 1. Air Quality 1.1 Pollution from increased Improved implementation of Not under the control of NGO's vehicles vehicle inspection. this project. 2. Land Resources N/A 3. Hydrology_ 3.1 Blockage of cross Road Facilities are maintained Maintenance Contractor PIU drains/culverts regularly. 5. Socio-economic and cultural issues 5.1 Archeological & historical Fence of protected sites Maintenance contractor PIU & Dep Of sites (rescue work) to be Antiquities maintained as part of road maintenance contract. 5.2 Graveyards & burials Not a problem during operation. 121

CONFORMANCE INDICATORS AND MONITORING RESPONSIBILITY AL AHMAR - AN NAQABA ROAD

(The following tables may be used as a tool for monitoring the implementation of the EMP.)

A. Construction Period Impact Mitigation Monitoring (e.g. contract clause) Indicator Date of Signature of veriflcation verifier 1.Air Quality Clause 8.2 and COPA 1.I Dust & potential pollutants Using water-spraying during from construction machinery operation 2. Land Resources 2.1 Erosion of Ditches, fill- and Labor intensive protection cut-slopes work 3. Hydrology 3.1 Cross Drainage Inlet and Outlet Design Appropriate 4. Water quality ___ 4.1 Diesel spill from Clause 8.2, Special construction machinery impacts arrangements for storage and ground water protection in COPA S. Socio-economic and cultural issues Clauses 19.1/27.1/42.1142.3 5.1 Archeological & historical ArchaeologicalRescue sites Surveys up front and 'Chance Clause 27.1 Find' procedures 5.2 Graveyards & burials Relocation of Road 5.3 Road Safety at construction Proper temporary signs and sites marking, and manual Clause 19.1 regulation of traffic 122

B. Operational Period Impact Mitigation Monitoring (e.g. regulations) Indicator Date of Signature of

_verification verifier Generally Through network wide maintenance concessions the project will attempt to involve the private sector in providing better maintenance services, according to easily monitorable performance specs. 1. Air Quality 1I.1Pollution from increased Low volume roads, no vehicles mitigation required

2. Land Resources 2.1 Erosion. Ditches blocked Cleaning work by contract with materials from unstable according to performance slopes based contract.

3. Hydrology 3.1 Blockage of cross Road Facilities are maintained drains/culverts regularly.

5. Socio-economic and cultural issues 5.1 Archeological & historical Fence of protected sites sites (rescue work) to be maintained as part of road maintenancecontract. 5.2 Graveyards & burials Not a problem during

______operation. 123

10. INSTITUTIONAL ARRANGEMENTS

Responsibility for implementing the EMP will rest with the PIU for the ongoing two Credits. This unit has successfully managed similar projects. Should the unit require special assistance, it can call on the Environmental and Social ManagementUnit, which will be created under the Rural Access Program Central Management Office.

11. ESTIMATED COST AND IMPLEMENTATION SCHEDULE

Costs associated with the implementation of the physical mitigation measures in this EMP will be part of the construction cost of the rural road projects. Most of the proposed EMP mitigation activities will be assured under provisions in the construction contracts and engineering supervision contract. In addition, the Project will include an implementation schedule that integrates the activities of the EMP into the overall schedule.

12. REPORTING AND SUPERVISION

12.1 Reporting

As an element of Project reporting requirements, the PIU will include into their routine reports the status in the implementation of the activities related to the EMP. These reports should note any contractor non-compliance with the EMP and provide guiding remarks on the actions to be taken. The significance of the non-compliance should also be noted. As necessary, supplemental reports with greater detail than the routine reports should also be prepared.

12.2 Supervision

The Supervision Plan for the proposed Project will include provisions for the participation of World Bank environmental staff in supervision missions, as appropriate and subject to available funding, to review progress in implementation of the EMP. The performance of the PIU in the implementation of these activities under the Project will be a standard element of supervision mission reports, including these from the Early Implementation Assessment, and the Implementation Completion Mission.

13. DISCLOSURE OF INFORMATION

As part of the environmental assessment process, on-site consultations will be undertaken with a range of agencies and stakeholders for each rural access road to be financed under the Program. Consistent with the procedures of IDA, the Government of Yemen has agreed to make the EMP for each pilot road available to the public through the World Bank Info-Shop, at the World Bank, in Sana'a and at selected locations relevant to each pilot road. The EMP will be available in Yemen in English and Arabic. 124

Annex14: VillageAccess and PovertySurveys

Yemen: RuralAccess Program

A rural access survey in 345 randomly chosen rural settlements conducted was conducted in 1999 by the Road Maintenance Fund for the Yemeni Government and funded by the IDA supported Transport Rehabilitation Project. The questions related to access, transport and public assets, available to the people in their settlements. Indicators included: distances and costs to different access needs like schools, health facilities, markets, transport services, and availability of public utilities (water, electricity, etc). The prevailing mode of transport was given, as well as the number of vehicles in the settlement, by type. The results are captured in an Excel spreadsheet. A preliminary review of this survey shows eleven questions directly related to household access to services in terms of time and distance. An initial review of the results show: (i) that the settlements are small in population; (ii) the predominant mode of transport used to access markets and health facilities is by "car" (respectively 75% and 65 % approximately) and the mode of transport to reach schools is walking (92%); and (iii) basic facilities are not present in many of the settlements. The table below illustrates some distances to the nearest facilities: Table 1: Some results from the village access survey Distancein sample To nearestfacility: Max(kmn) Mean(kmn) -Telephone 5 2.5 -Highway/ transportservice 5 3 -Primaryschool 5 0.5 -Secondaryschool 125 3 -Clinic 65 5 -Hospital 125 10 -Dailymarket 69 5

Other key selected results of the survey include: (i) the average vehicle per capita of about 0.05, i.e., one vehicle for every 19 people; (ii) 33% of settlements are within 5 km from a two lane highway; (iii) 36% of settlements are within 5 km of a public transport route; and (iv) only 6% have direct access to paved roads, 13% to gravel roads and 82% to earth tracks. See tables on the next pages for more detailed information from the survey.

In 1998, the Central Statistical Organization (CSO) under the Ministry of Planning and Development built a comprehensive GIS database and incorporated information they collected from a survey on household budgets from about 15,120 households constituting 0.7% of the total Yemeni households (2,162,847) of which 64% from the urban and 36% from the rural areas. Some of the key results indicated higher percentages of illiteracy among populations less than 10 years in age in rural areas (80% for women and 32% for men) as compared to urban areas (40% for women and 15% for men). The average household monthly expenditures in rural areas is about 30% less (US$170/month), as compared to urbar areas (US$233/month). Between 1992 and 1998, poverty has almost doubled with the number of household below the "food poverty line "rising from 9% to 19%. By factoring transport, food, clothes, housing, education, and health into an upper poverty line", the percentage of household in poverty further ircrease from 19% to 33%/62.

2 1998Household Budget Survey (HHBS). Access and Poverty Indicators

Access to Markets

..' x,-.* .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~ ~ ~ ~-. ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ......

~~tWMark~ta Thial Weeldyar~~t~Markets ~ ~~ *i~ 4 ~$ ...... Tr~~n~po....M... o..

0-1000 238 90,400 26.28 10,055 69,000 8,546 80,000 50 21.01 186 78.15 1000-2000 67 84,130 24.46 7,863 38,000 12,538 60,000 29 43.28 38 56.72 More than 2000 40 169,400 49.25 4,735 30,000 31,305 150,000 14 3500 26 65.00 Total 345 343,930 100.00 8,991 6 11,106 150,000 93 2696 250 72.46

Access to Health

0-1000 238 90,400 26.28 6,981 65,000 18,778 90,000 8,716 80,000 73 30.67 3 1000-2000 67 84,130 24.46 5,650 30,000 14,059 125,000 8,848 125,000 33 49.25 More than 2000 40 169,400 49.25 5,638 45,000 31,542 120,000 12,359 120,000 19 47.50 1 Total 345 343,930 100.00 6,547 65,000 18,304 125,000 9,100 125,000 125 36.23 4 126

Access to Education

0-1000 238 90,400 26.28 719 4,000 1,117 2,200 1,063 9,000 230 96.64 7 2.94 1000-2000 67 84,130 24.46 422 1,500 450 1,500 888 5,000 63 94.03 4 5.97 More than 2000 40 169,400 49.25 775 5,000 994 5,000 1,357 15,000 39 97.50 1 2.50 Total 345 343,930 100.00 663 5,000 878 5,000 1,058 15,000 332 96.23 12 3.48

0-1000 238 90,400 26.28 8,329 65,000 3,687 10,000 1,365 10,000 218 91.60 3.00 1.26 17 7.14 1000-2000 67 84,130 24.46 12,639 125,000 1,725 3,000 1,150 5,000 59 88.06 1.00 1.49 7 10.45 More than 2000 40 169,400 49.25 592 3,000 960 3,000 1,850 15,000 38 95.00. - - 2 5.00 Total 345 343,930 100.00 7,808 125,000 3,060 10,000 1,377 15,000 315 91.30 4.00 1.16 26 7.54 127

Social Indicators

0-1000 238 90,400 26.28 53 22.27 85 35.71 1000-2000 67 84,130 24.46 21 31.34 27 40.30 More than 2000 40 169,400 49.25 21 52.50 25 62.50 Total 345 343,930 100.00 95 27.54 137 39.71

0-1000 238 90,400 26.288234.45 88 36.97 3 6 15.1332 13.45 1000-2000 67 84,130 24.46 15 22.39 19 28.36 20 29.85 13 19.40 Mofrethan 2000 40 169,400 49.25 18 45.00 10 25.00 2 5.00 10 25.00 Total 345 343,930 100.00 115 33.33 117 33.91 58 16.81 55 15.94

0-1000238 90,400 26.2811 4.62 2610.92 20184.45 More1000-2000thanl 67 84,130 24.46 4 5.97 11 16.42 52 77.61 2000 40 169,400 49.25 4 10.00 7 17.50 29 72.50 Total 345 343,930 100.00 19 5.51 44 12.75 282 81.74

E.S.Electric supply, H.W.S. House Water Supply. 128

Summary of the population and poverty status for the six pilot road projects.

1 Thula 31,430 15-19% 15-19% Amran Amran 20 56,856 15-19% 15-19% ______39,757 1' 19% 1519%/

2 Hajjah KuhlanAffar 17 50,849 15- 19% 15-1 9%

3 Al Beda At Taiah 42 267 50+% 50+%

4 Taizz Ashamaiatien 10 138,866 20-24% 20-24% Lahj Towr al 38,974 15-19% 15-19%%

5 Al Mahwit Al Mahwit 21 _56,468 25-29% 25-29%

~~~~~~ai Sad4,7 20-24 1 204

6 Sbabwah Rodhoon 70 1610 15-l9% 15-l9%

source: Central statistics Office Annex 16: RURAL ACCESSIBILITY PLANNING METHODOLOGY AND DRAFT TERMS OF REFERENCE

Yemen: Rural Access Program

Introduction

As part of the preparation activities for the RAP, a consultant in rural accessibility planning was engaged to formulate a methodology and outline a work program for achieving Governorate level rural access master plans (RAMPs). Based on this program, the consultant drew up detailed terms of reference and a budget for a consulting firm to carry out assistance services during Phase I of the program. This annex summarizes the principal conclusions and proposed rural accessibility planning methodology to be tested during Phase I, as well as the terms of reference for the consultant. The consultant's full report is among the available project document files listed in Annex 8 ("Rural Accessibility Program - Yemen, Formulation of a Methodology and Work Plan, by Rob Dingen and John Howe).

Review of Current Situation

The. consultants' review of institutions, information, and relevant concept development in Yemen indicated that implementation of the RAMP process will necessarily have to proceed through the CMO's offices to be established in regional groupings of Governorates. Individual Governorates and Districts can be selectively involved in the data acquisition and participatory network validation aspects of the process, but greater involvement in the initial stages appears to be pre-empted by their present lack of capacity. However, measures to expand their contribution are elaborated in the detailing of the TOR for the consultants, who will provide technical assistance, with an emphasis on capacity building and training activities.

Currently it can be concluded that in Yemen, there is little experience with either network-based road management or access planning principles in the sense understood internationally. Poverty-focused planning is also comparatively recent. Thus, the targeting of road investments based on these considerations represents a significant innovation that needs to be reflected in information dissemination and capacity building activities.

Existing socio-economic and poverty data is adequate for investment prioritization between Districts, but, due to information limitations, within District conditions are more difficult to determine and likely to require field observations. This also appears to apply to road network data as well. Poverty indicators that are relevant to individual road schemes are most unlikely to exist, and their acquisition will have to be included in special baseline and other studies undertaken for impact-monitoring purposes. To adequately attribute poverty reduction changes to road investment requires statistically designed and executed surveys, and these have been detailed in the report. Indicators for the access changes, contingent upon road improvements, can be derived from baseline District-level accessibility surveys. The following tables provide some initial Governorate-level data. 130 Table I: Administration and Area by Governorate _ .S~rDrres) IS S '5 I 1 4 1 4 . Sub-Disit iczts - Cultivable Cultivated Total area Districts Quarters Villages Area Area Agro-Climatic Governorate (km2 ) (No) (No) (No) (ha) (ha) Zones 1) Al-Baidha 8,673 21 119 1426 75,895 27,152 A Al-Dhaleh 4,240 9 42 1631 na na A Al-Mahweet 2,357 9 123 1224 29,168 26,610 A Amran 7,484 20 127 1626 na na A Dhamar 7,634 12 313 3288 138,220 87,076 A lbb 5,340 20 253 2739 101,521 80,249 A Sanaa 13,705 22 240 2968 380,726 214,062 A Sanaa City 239 10 44 - na na A Hajjah 8,495 31 161 3776 124,594 57,113 B Sadah 12,794 15 124 1109 61,030 53,227 B Taez 9,994 23 236 1904 123,432 62,960 B Abyan 16,561 11 11 2582 38,474 29,288 C Aden 783 8 8 10 3,935 3,070 C Al-Hodeidah 13,173 26 138 2288 336,613 302,812 C Lahej 12,250 15 44 3841 32,017 19,898 C Al-Jowf 37,739 12 97 422 69,594 48,320 D Al-Mahara 65,723 9 12 306 1,449 984 D Hadramout 169,363 30 34 3625 39,785 21,473 D Marib 17,872 13 60 537 91,190 89,615 D Shabwa 39,930 17 24 2982 21,215 9,001 D TOTAL 454,000 333 2,210 38,284 1,668,858 1,132,910

Table II: Demography, Education and Health facilities Percentage of housebolds in Absolute Adult Illiteracy Enrolment Prim. Population (Food) ('99) Unemployment Sebool (6-14 yrs) ('98-99) ('98-99: (projection Poverty Poverty (>15yrs) Rate (%) Rite (%) Primary Health Governorate for 1999) Female Male Male Female Female Male Schools Facilities Al-Baidha 558,000 421% 351% 794% 40.1% 81% 33% 43.6% 704% 324 4 Al-Dhaleh 380,000 242 % 209 % 77 4 % 29.1 % 12 0% 80% 39 5 % 742 % 235 3 Al-Mahweet 428,000 28.P YAo23.2% 86.7% 428% 30% 40% 36.9% 714% 361 5 Amran 886,000 24.1% 19.1% 846% 340% 4.0% 10% 322% 77.6% 710 na Dhamar 1,106,000 28 3 % 214 % 861 % 41.9% 3.4 % 0.9% 28 8 % 68 8 % 835 1 Ibb 1,893,000 35 1% 28 1 % 79 2% 36.9 % 6 3 % 1.7 % 489 % 78 2 % 902 25 Sanaa 1,242,000 284% 238% 871% 402% 41% 08% 314% 716% 1,042 24 SanaaCity 1,373,000 20.8% 10.1% 42.1% 13.3% 11.8% 13.1% 82.9% 86.3% 134 6 Hajjah 1,409,000 37.5% 336% 87.8% 563% 106% 6.3% 26.7% 58.1% 982 22 Sadah 574,000 27.5 % 23 3 % 91.1 % 47 6 % 4 3 % 8 0 % 20.8 % 67.0 % 446 IS Taez 2,157,000 41.1 % 32.9% 68.3 % 28.3% 9.5 % 0.9% 59.3% 80.7% 682 4 Abyan 404,000 349% 301 % 65.9% 25.8% 179% 2.2 % 47.8% 73 4% 273 9 Aden 471,000 32 0 % 16 6% 34 3 % 13 7 % 28 3 % 19.6% 85.6 % 89.0 % 65 4 Al-Hodeidah 1,994,000 39.4% 33.6% 774% 48.1% 9.0% 38% 370% 595% 928 37 Lahej 616,000 30.2% 26.2% 72.9% 27.2% 14.1 % 1.7% 53.8% 79.5% 365 31 Al-Jowf 499,000 37 1 % 31.4% 89 2 % 61.9% 112 % 15.8% 27.2 % 59 5 % 209 6 Ai-Mahara 64,000 19.7 % 15.9 % 65 9% 45 2% 10.9% 6 7 % 57 5 % 62.1 % 52 8 Hadramnout 862,000 50.1% 38.7% 595% 232% 13.7% 23% 572% 707% 426 26 Marib 240,000 218 % 15 4% 81 5 % 361 % 16.5% 9.7 % 42 1% 67 6% 289 13 Shabwa 520,000 34.8% 25.2% 83.2% 29.1% 25.2% 3.7 % 41.5 % 74.2% 263 9 TOTAL 17,676,000 33% 26% 75% 36% 36% 36% 45% 72% 9,523 261

1 Agro-climatic Zones: A: High-altitude Mountains (1 800-3000 m); B3 Medium-altitude (1000-2000 m) mountain chain east of Tihama; C: Southern and Western Coastal Plains; D: The Eastern Plateau and Desert. ) Sources: 1: Statistical Yearbook 1999; 2: Economic Poverty Indicators by Governorate, UNDP/CSO, 2000; 3: Education Survey report, CSO, 98199; 4.: Agricultural Statistical Book for 1998; 5: CSO officials; 6: unofficial figures: measured from topographic maps; 131

Proposed RAMP Process

The situation confronting Yemen is unique. It needs, and is trying, to improve local level accessibility while simultaneously developing a new system of decentralized Government that has significant implications for the development of the main road system. New Districts cannot function if they remain unconnected to the Governorates and capital. The uniqueness of the present situation is that the necessary changes to the road system have to be superimposed on a network that seems to have an unclear hierarchy.

The initial focus of the proposed approach to developing a RAMP for each Governorate, will be the identification of a rationally-based road network hierarchy to complement the hierarchical pattern of cities, towns, markets, and other centers of economic and social activity that already exist. That is, the hierarchies in the road networks should be deliberately selected to complement the hierarchies in the places that are the centers of administrative, commercial and social activity.

It is, therefore, proposed that the initial phase of the RAMPs will be derived from a functional classification of the secondary road network and the improvement needs this reveals, as modified by poverty-targeting of poor districts to determine the corresponding investment prioritization. Subsequently, sample local-level access profiles will be determined as a means of identiffyinglonger-term intra-District road investment needs. This dual strategy combines the best aspects of a top-down approach necessary to respect the hierarchical manner in which rural communications networks function, with a bottom-upwards appreciation of access and poverty alleviation needs that allows use of decentralized and participatoryapproaches to decision-making.It also accords with the imperative created by the government policy on decentralization.

Implementation Stages

The proposed RAMP process has been divided into two parts of four stages each. The first part focuses on the secondary network and the second intra-District communications. They are deliberately separated into two parts because: (i) of the need to learn from the first part of the process and feed this experience into the second part; (ii) there are likely to be methodological differences in the approaches to the two parts; and (iii) the volume of work resulting from the first part may well preclude action on the second for the immediate future. Part II are also among the activities envisaged for Phase III of the RAP.

PARTII: SECONDARYNETWORKS Initial identification, by functional classification, of core secondary level networks. Validation and confirmation of core secondary level networks. Core secondary level network physical condition assessment. Core secondary level network improvement prioritization.

PARTII: TERTIRYAND QUATERNARYNETWORKS Initial identification of core tertiary and quaternary level networks. Validation and confirmation of core tertiary and quaternary level networks. Core tertiary and quaternary level networks physical condition assessment. Core tertiary and quaternary level networks improvement prioritization.

Governorate and District Involvement

Consideration of the proposed RAMP process shows that there is considerable scope for Govemorate and District level staff involvement in: (i) the planning and conduct of the secondary road network assessments, and subsequent analysis; (ii) the validation of network classification proposals; (iii) road condition assessments and improvement costing; (iv) district-level accessibility surveys and functional classifications; and (v) the short- and long-term monitoring of poverty and access changes. Their 132 involvement in these processes is indeed essential because of the need for local knowledge. However, the extent to which the Governorates and Districts can own and/or lead these processes is uncertain until an institutional analysis shows: (i) what level of responsibility for the road sector the Governora:es and Districts will be entrusted with under the GOY's decentralization policy; and (ii) how many are in a position to accept different levels of responsibility.

Contextualizing the RAMP Process

Because of the innovative nature of the proposed RAMP process it is vital at the earliest possible opportunity for the technical assistance consultants to establish the context in which it is taking place. A key issue is: 'how is this investment likely to be divided among the candidate Govemorates/Distriz,ts'?Is there a specific intention to: (i) treat them all equally; (ii) make the allocation roughly in proportion to population; or (iii) deliberately favor areas of high economic potential, or the most poor? etc. Special considerations may apply to some areas by virtue of their positive or negative state of developnient, or development potential. Even if there is no explicit policy on this issue, then one has to be elicited by discussions with the major stakeholders. These decisions are important since they will influence the initial selection of the 10 Governorates. They will also condition the prioritization of secondary road investments.

Implementation Arrangements

A consultancy firm is to be appointed to provide technical assistance services. These will be focused on the CMO of the RAP, Ministry of Planning and the Ministry of Public Works and Urban Development. However, it is proposed to facilitate the production of the 10 Governorate RAMPs through the Regional Rural Road Administrations, being the regional implementation offices of the CMO, which will be the focus for capacity building, training, and co-ordination of local participation inputs into the "AMP process. A minimum of 3 regional implementation offices should be established, each being the focus for the production of 3-4 Govemorate RAMPs. Four Districts will be selected - one each to represent the different agro-climatic zones - from the initial regional group of Governorates. These Districts will be used to pilot an access planning process appropriate to the level of data that exists and incorporating such participatory techniques as can be supported by the District structures.

The involvement of both Governorate and District staff, as available, is key to the process of functional classification of the secondary road networks, and especially their validation and acceptance. Apprcpriate participation arrangements will need to be evolved for this stage of the process, and subsequently for the evolution of a suitable methodology for the access assessments and functional classification of the intra- District road networks.

Allowing for mobilization, the main technical assistance (TA) inputs cover a period of 13 months. 133

Draft Terms of Reference for Consultancy Services

Background

The Government of Yemen (GOY) is seeking to improve access to its rural areas as a means of accelerating economic and social development, and combating poverty. The purpose of the corresponding Rural Access Improvement and Management Programn(RAIP) is an improved livelihood for the rural population and reduced rural isolation. The means to achieve that objective is through improved year- round access to markets and services (both social and administrative) especially in the rural areas, where the large majority of the poor live. The program is designed to support the Government's decentralization process.

The program will emphasize rural access roads that link District centers to each other and to the main road network, here referred to as "secondary roads" (intermediary roads). These types of road carry a substantial level of traffic, are generally in very poor condition, and are excluded from village-level infrastructure programs. On the non-physical side of the program, the emphasis will be on decentralized capacity-building for decision-making and project monitoring.

The program will be carried out in three phases: Phase I will create an adequate institutional and participatory framework for planning, prioritizing and managing rural access improvements; Phase II will focus on the improvement and maintenance of the secondary road network, as well as capacity-building at the Governorate level; and Phase III will expand the physical rural access improvements to cover areas not yet covered under the second phase. During the final phase, the program will continue to support the Govemorates in achieving sustainable management and maintenance of rural roads, and will extend the access improvement program to the District level.

A start has been made in the form of an outline methodology and work plan for the rural access improvement program, carried out by accessibility specialists. This forms the basis of the tasks and other proposals detailed in these TORs.

Objectives

The main objective of the technical assistance to be provided under this TOR, is to assist the GOY to initiate the development of Governorate-level rural access master plans. To attain this objective, it will be necessary to create an adequate institutional and participatory framework for planning, prioritizing and managing rural access improvements by appropriate capacity building and training activities. 134 Scope of work

To develop an appropriate methodology for road planning at different levels, the consultant is to provide technical assistance for the conduct of a study, to be executed in conjunction with the Central Rvral Road Management Office (CMO) of the MOPWUP, based on a staged work plan. The work plan will zomprise three stages. At the completion of each, an evaluation is to take place that will assess the outcome, and determine a detailed work plan for the next stage. The three stages will be: A) Inception B) Piloting and Execution C) Design and Completion

The Inception Stage will define the framework for the access planning (AP) methodology. It will consist of: (i) a contextual review of all Governorates, based on data collection and analysis of socio-economic, demographic, transport and poverty related data. The result will be a report that provides an initial quantification of access in relation to the general socio-economic situation of the Governorates; mnd(ii) a description of the present conditions and limitations of the current political and practical environment in which the RAIP is to operate.

The Pilot and Execution Stage is to establish best practice AP for rural Yemen. It will consisi of: (i) a review of the secondary road network in the 10 Governorates, chosen as the first batch (selected on the basis of the initial review); (ii) the conduct of an intra-District road pilot access planning exercise in four selected Districts; and (iii) the establishment of training needs for the local authorities.

The Design and Completion Stage will draw lessons from the two preceding stages and formulate implementation plans for incorporation of the AP-methodology in the Governorates and Districts. The main activities in this respect will be the design and drafting of planning guidelines, and training manuals for the local authorities at both Governorate and District level. Tasks

The Inception Stage will entail the following tasks: A-I Examining the functional classification of the road network, used in the 1984 Highway Master Plan study, and determniningif it is suitable as the basis of a fully national system -should t not be suitable, an alternative approach is to be proposed; A-2 Collating information from secondary sources -reports, maps, policies, statistical pubLications, etc. from Government, donors, NGO's- as the basis for assessing knowledge about Governorate-level access characteristics; A-3 Reviewing the policy framework, Government plans and strategies and donor initiatives focusing on experience with road infrastructure provision and poverty targeting -to determine prior precedents; A-4 Reviewing the studies conducted as part of the preparation for the RAIP, i.e. (i) the Road Sector Review Study, (ii) the Appropriate Design Standards Study, (iii) the Gender study, and the RAIP preparatory poverty and access base-line study conducted by the CMO, so as to coordinate acti- ities and avoid duplication; A-5 Assessing and agreeing with Government which 10 Governorates are to be chosen for the development of the RAMPs and the basis for that choice; A-6 Developing a strategy and detailed work plan for the conduct of the RAMPs in the 10 Governorates; based on the outline methodology of the accessibility specialists and the Inception stage review; A-7 Drafting an inception report; summarizing the outcome of this stage and giving the work plan for the Pilot and Execution stage; A-8 Organizing and facilitating a national level Initiation Workshop to present the inception report and propose and agree on the strategy for further development of the AP methodology;

The Pilot & Execution Stage will include tasks that relate to (I) the assessment of the secondary road network in the 10 Governorates; and (II) simultaneously conducting a local level access survey in 4 135 selected Districts. The tasks related to I and II are listed below.

Tasks related to I: B-I Reviewing the secondary road network in the 10 Governorates and proposing or confirming, as appropriate, a comprehensive functional classification such that each District center is provided with basic access to its corresponding Governorate HQ; B-2 Validating and obtaining agreement on the proposed functional classification with key stakeholders; B-3 Defining a network developmentprotocol suitable for conditions in the Yemen; B-4 Conducting rapid condition surveys of the secondary roads in the 10 Governorates for which satisfactory information is currently missing; B-5 Costing any improvements necessary to connect all District centers to their Govemorate HQ; B-6 Establishing relevant poverty targeting indicators for pre-selection of Districts; B-7 Drafting criteria for selection of priorities for basic District access; B-8 Preparing summary RAMPs for the 10 Govemorates. These will have to contain, but not be limited to: An assessment of the secondary core network: condition, and quantities; Access related data: maps by District with its associated poverty classification, showing the location of key socio-economic facilities; Priority Ranking: based on appropriate criteria; poverty, service delivery, deprivation, demographic, cost- effectiveness, and cost-benefit.

To undertake the foregoing tasks it will be necessary to conduct on-the-job and in-house training for Governorate- and District staff; some training topics are suggested in paragraph 6.13 of these TOR. However, the Inception stage review will determine the exact training needs.

Tasks related to Il B-9 Collecting District (4) maps and verify the locations of relevant access needs (facilities and services), to be used as the basis for further AP mapping; B-10 Collecting information from secondary sources on these facilities and services, in order to establish the actual area of influence and the population served for each facility; B-1 I Determining the routes of travel to these relevant facilities and services, and plot this information on District maps; B- 12 Collecting travel times, mode of transport, frequency of travel, at village or sub-District level during key-informant interviews; B-13 Establishing the perceived access problems and proposed interventions for each village or Sub- District in the key-informant interviews; B-14 Ranking Villages or Sub-Districts in terms of access problems by sector; B-15 Evaluating and recommending the following: The minimum (efficient) set of data required to effectively conduct AP at an intra-District level; The most effective level and method of participatorydata collection; A set of access indicators and the method of assessing the cost-effectiveness of interventions; B- 16 Preparing Access Profiles' at Sub-District or village level and aggregated Access Profiles at District level (for 4 Districts); B-17 Conducting stakeholder workshops to validate the Access Profiles at (Sub-) District and Governorate levels; B-18 Proposing the most appropriate and effective interventions;

IThe Access Profiles will contain: (i) information on all access needs: the location of basic socio-economic facilities and the catchments areas (maps); (ii) alignment, function and condition of the intra-District road network; (iii) information on travel and transport: routes, purpose, travel time, distance, frequency and mode of transport; (iv) ranking of Villages or Sub-Districts in terms of access deprivation, for instance expressed in Al; (v) perceived access problems and proposed access interventions, and (vi) an analysis of all information summarizing and concluding on the access issues identified.; See also Annex 3 of the "Methodology and work plan developmentreport"[2001, Dingen, Howe]. 136

B-19 Preparing the District level Rural Access Master Plans (RAMPs) for the pilot Districts; B-20 Concluding on the methods of all phases in the AP cycle at District and Governorate level; B-21 Conducting a training needs assessment for Govemorate (10) and District (4) staff; B-22 Producing a stage completion report, summarizing the outcome of this stage and outliring the work program for the next stage;

The Design and Completion Stage will include the following tasks: C-i Drawing lessons from the two preceding stages and fornulating implementation pLins for incorporation of the AP-methodology in the Governorates and Districts; C-2 Designing Planning Guidelines for the Governorate and District levels; C-3 Drafting training manuals for the local authorities at appropriate levels; C-4 Conducting Final Stakeholder Workshop, in close coordination with the CMO, to present and discuss the final draft proposals for the AP methodology for Governorate and District level planning;

Training

The following Training Inputs are foreseen, and will have to be fitted into the work program by the Consultant, as appropriate, and conducted in-house or on-the-job, during the three phases as described above:

Introductory workshops on the RAMP process (G) Functional Road Classification (G/D); Rapid Road Condition assessment (D/G) Key-informants Survey (GID) Access Data Processing and -Analyzing (DIG) Access Mapping (GIDNV) Stakeholder workshops (G/D)

All the necessary instructions, survey forms and workshop materials will need to be translated into good grammatical Arabic.

Outputs and Reports

The following reports are to be produced by the consultant:

Inception Stage Report on the contextual review, including the policy and institutional considerations; Inceptionreport, including a strategyand workplan for the next stage; Initiation workshop report;

Pilot and Execution Stage Functional classification review report, including agreed methodology; Network Development Protocol Report; Condition Surveys Summary Reports (for 10 Governorates); Cost estimates for road improvement interventions, based on the condition survey; Technical Report on poverty indicators; Technical Report on selection criteria for Basic District Access; Summary Rural Access Master Plans (RAMPs) for 10 Governorates; District level Access Profiles for 4 pilot Districts; Sub-District Access Profiles for all Sub-Districts of the four pilot Districts; RAMP for the four pilot Districts. Technical Report on the proposed methodology for intra-District level AP, including recommendations on the choice of indicators and selection and prioritization criteria; Training Needs Assessment Report; 137

Design and CompletionStage Summary Report on lessons learned on the methodology for access planning at Governorate and District level; Implementation plan for institutionalizingthe AP methodology; Guidelines for District and Governorate level access planning; Training Manuals on AP, as appropriate; Final Stakeholder Workshop Report

Timing schedule

The Inception Stage is envisaged to be completed 3 months after mobilization; the pilot stage will have to be completed by month 10 after the start of the project; and thee final completion is at 12 months after the starting date.

Monitoring and Evaluation

CMO, Governorate and District staff are to be trained in the monitoring and evaluation of poverty and access changes related to the proposed road improvements. Both aspects require appropriate baseline measurements to be made before -preferably a year - the intended improvements. Appropriate procedures have to be defined and staff trained in their implementation.

Measurements intended to provide indicators of changes in access could be incorporated into the general District-level accessibility surveys. However, due to the complexity of the poverty phenomenon special surveys will need to be devised to suit Yemeni conditions.

Although techniques have been developed by the International Labor Organization (ILO) for the rapid assessment of poverty impacts, these are still too extensive to be applied to all road improvements. By collating Yemeni experience with poverty monitoring it may be possible to simplify the ILO approach and reduce the number of indicators. Alternatively it will be necessary to select sample projects for comprehensive monitoring and evaluation using the ILO design. From the results of these studies it may then be possible to develop simpler procedures.

Competency and Expertise Requirements

The consultants team to undertake these TORs will need to include extensive experience of rural transport infrastructure and its management in developing countries. Professional skills will include (accessibility) planning, engineering, management, institutional, social development and economics. Experience should include the planning and management of labor-based road rehabilitation and maintenance, and of community and user participation in the selection and execution of works. The consultants should also be able to demonstrate experience in preparing and running policy and strategy level seminars and workshops for politicians and senior officials.

The team will also need to include people with good local knowledge and will need to include some appropriately qualified Arabic speakers. The consultants are strongly encouraged to associate with Yemen-based consultants.

Conduct of the Work

The consultants will be provided with copies of all official documentation of the RAIP and the Accessibility Consultants' report They should obtain relevant reports and background documentation, including the World Bank reports, on poverty alleviation and the transport sector.

Assistance will be provided by the CMO in Sana'a in making initial contacts with Government ministries 138 and departments and the consultants will remain to work in close collaboration with the CMO throughout the undertaking of the study.

The consultancy will be completed in 13 months including the mobilizationperiod. After three months, the consultants will organize with the CMO, an Initiation Workshop to present the Inception report and the initial findings of the first stage, and to discussing and agreeing on the direction of the work in the following stages.

Reporting Requirements

Twenty sets of study deliverables in Arabic and twenty sets in English, as described above, will be provided to the World Bank for distribution to the Yemen Government and other stakeholders. An electronic copy in Microsoft Word for Windows 95 files on diskette will also be provided to the World Bank. In addition, a brief study completion report will be provided, reporting activities undertaken and resources used in the study. 139

Annex 16: SECTORAL ENVIRONMENTAL ASSESSMENT DRAFTTERMS OF REFERENCE Yemen: RuralAccess Program

BACKGROUND

The purpose and long-term development objective of the Rural Access Program (Program) is an improved livelihood for the rural population and reduced rural isolation. The means to achieve that objective is through improved year-round access to markets and services (administrative, health and social) especially in the rural areas, where the large majority of the poor live. The program is designed to support the Government's decentralization process that has recently been initiated, and to complement and enhance several community-based programs in Yemen, such as the Social Fund Project and the Public Works Project.

The Program would reduce isolation by ensuring that rural people have reliable access through the local, regional and national road networks. This will be done by financing improvements on a "cluster" or "sub-network" of rural roads. The centerpiece of this approach will be to improve rural access roads which link larger centers in districts to the main road network, here referred to as "intermediary rural roads". These rural roads carry a substantial level of traffic in Yemen, are generally in very poor condition and are excluded from village-level infrastructure programs. These investments would be complemented on a limited scale by improvements to smaller access roads that link isolated villages to the improved intermediary roads, thereby promoting a continuous flow of goods and people to markets and services, and strengthening the poverty reduction impact. In subsequent stages, the Program focus would gradually expand the cluster approach with improvements of intermediary and tertiary roads, while continuing to connect adjacent villages with improved village access roads. The non-physical parts of the Program would focus on capacity-building for better decision-making and project monitoring in support of the government's policies of decentralization.

The Prograrmwould be implemented in three phases: (i) Phase I1 of a relatively short duration, will set up the institutional and technical foundation for an efficient rural road improvement program and test this approach through at least five pilot projects of rural road "sub-networks," or "clusters," which consist of intermediary rural roads, combined with key adjacent tertiary or village access roads. It will also prepare designs and bid documents for projects to be financed in Phase II; (ii) Phase II will tackle access problems mainly at the intermediary road level but also covering related tertiary/village access roads, while setting up an organizational and policy framework for gradually moving to the tertiary and feeder road network; and (iii) Phase III will tackle access problems associated with tertiary road network (at the district level), while continuing to support improvements and management of the intermediate road network.

The Republic of Yemen has established institutions and responsibilities for environmental management. This is embodied in the Environment Protection Law No. 26, enacted in 1995. The World Bank has ten Safeguard Policies, through which environmental and social concerns are addressed. Of particular relevance to this program are Environmental Impact Assessment (OP 4.01), Involuntary Resettlement (OD 4.30), Cultural Property (OPN 11.03) and potentially Natural Habitats (OP 4.04).

The Phase I pilot roads to be improved have been deliberately selected to avoid any major environmental issues. In particular, they have been screened so as not to include any resettlement or land acquisition. As a result, Phase I of the Program has been placed in World Bank Environmental Category B. However, Phases II and III will extend the Prograrn on a sector-wide basis throughout the country and may include roads that have significant environmental impacts, involve resettlement/land acquisition or other issues which would require a Category A Environmental Assessment. Therefore, a Sectoral Environmental Assessment for Phases 11and III will be prepared during Phase 1, to address the wider range of potential effects in the sectoral program.

An Environmental Management Plan has been completed for the Phase I pilot intermediary roads, which will serve as an initial reference for the completion of the Sectoral Environmental Assessment. For these roads, Social Framework Agreements have been developed to be tested and validated during the first phase. In addition, Phase I will include the testing of a Rural Accessibility Planning Methodology, which will be used for the selection of program sub-projects in Phases II and III. Further, the project preparation has included a Gender Issues Study, which will be used to clarify and incorporate gender-related social issues into the Program. Finally, an important output of the first phase, and trigger for proceeding to Phases II and III, will be the adoption of General Environmental and Social Framework Agreements, in which the Government and the Bank formally agree to 140 principles and procedures for ensuring the incorporation of environmental and social safeguards into th- program. Annex I provides an initial list of relevant documents and studies.

OBJECTIVE

The objective of this assignment is to implement a Sectoral Enviromnental Assessment (EA) for the Ru al Access Program in Yemen. This assessment will provide the Government of Yemen (GOY) and other stakeholdErs with an operational planning tool for broadly incorporating environmental and social considerations into the planning and implementation process of the rural road sector. This will include: (i) a review of environmental and social issues and potential impacts related to implementation of rural roads in general and in particular, those considered for support under the Program; (ii) an overview of environmental and social mitigation and monitoring measures related to significant impacts, both at the sub-project and programmatic level; (iii) standard methods and procedures for assessing environmental and social concerns as an input to the sub- project screening, program pla.ming and implementation process; (iv) standard approaches and procedures for developing appropriate sub-project mitigation and monitoring measures; and (v) Environmental and Social Framework Agreements, in which the Government and the Bank agree on safeguard principles and the Government commits to establishing and implementing the standard measures and procedures specified in the Sectoral EA.

SCOPE OF WORK

The Consultant will carry out the following tasks in close coordination with the responsible implementation agency, the Rural Access Project Central Management Office (CMO), as well as with the Environmental Protecticn Council (EPC) and other relevant agencies.

Task 1: Environmental Scoping and Preparation Process

Scoping Sessions. The Consultant will assist the Government, through a series of consultations and meetings, to verify the scope of issues to be addressed, and obtain the views of local communities, NGOs and affected groups (further described in Task 12). The Sectoral EA Report will include an Appendix providing a record of these meetings, with a list of participants and the proposals and requests for inforrnation made in the course of the meetings. This would include comments from Government agencies, affected parties and national/local nongovernmental organizations.

Interactive Review Process. To facilitate the draft versions of the Sectoral EA, an "interactive" review process will be used by holding a series of meetings in selected sites throughout the country, at which the Consultant will present the major findings and recommendations and planned next steps. The presentation would be followed by a discussion session to allow for local input into the review process. The Sectoral EA will contain an Annex providing a record of these meetings, which would include comments from Government agencies, citizens and nongovernmental organizations.

Views of women. Special measures will be taken to directly solicit the views and address the concerns cf women. It is anticipated that the Consultant would retain the services of a properly qualified female social scientist to conduct meetings with women to assess their views and concerns and provide recommendations to add-ess these issues. The work of this consultant will build upon the results of the Gender Issues Study, carried out c'uring the project preparation phase. A summary of the findings of all these endeavors will be integrated into the Main Report and summarized in an Annex.

Task 2: Description of Proposed Sector Program

Provide a brief overall description of the program, including its scope and phasing. The description of the program will be based on the Project Appraisal Document and other documents in the program files, complemented by additional information gathered by the Consultant through interviews and document review. Below is a brief description of the Program's three phases.

Phase I: Institutional strengthening and definition of appropriate standards. Phase I of the Program would focus on creating an adequate institutional, technical and participatory framework for planning, prioritizing and implementing rural access improvements. With the purpose of testing the new framework, Phase I would include the pilot implementation of physical access improvements of (i) five or more highly justified intermediate rural roads 141 located in about 9 rural Govemorates, and (ii) key village access roads located adjacent to those intermediate roads, using appropriate technical and environmental/social standards. The selection of the pilot intermediate and village access roads are made based on a combined assessment of access constraints, degree of poverty in the area of influence and economic development potential. All intermediary and village access roads, which have been or will be selected, will avoid any resettlement or land acquisition. At the beginning of Phase 1, baseline data on poverty and gender in Yemen will be gathered, which will then be used in a detailed rural accessibility analysis and planning exercise, the latter being an important element of this phase. Phase I will include the preparation of a Sectoral EA and the development framework agreements of land acquisition and resettlement. Phase I would also include the preparation of the designs and bid documents for the next phase of the Program and concludes with the adoption of a rural access strategy and a participatory planning process for Yemen's rural Governorates, which will be poverty oriented and address gender issues.

Phase II: Access improvement and decentralized network management Phase II of the Program would focus on (i) physical rural access irnprovements to areas with widespread poverty, poor accessibility and latent rural development potential, utilizing the planning (identification and selection) process to be developed in Phase I; and, (ii) capacity-building at appropriate levels for the management and maintenance of the intermediary rural road network, the monitoring of key indicators, the implementation of environmental management plans, and the management of local participatory processes, with an emphasis on local poverty and gender issues. This phase would also include the financing of some village access roads adjacent to the intermediary project roads, the preparation of the third phase and a detailed review and assessment of the first two phases.

Phase III: Expanding the coverage of access improvement and consolidation of gains. Phase III would expand rural access improvements and capacity building to tertiary roads at the district level and critical intermediary access roads not yet covered under Phase II. It would continue to support village access road development and capacity building in achieving sustainable management and maintenance of rural roads, using the demand-driven and poverty-based approach for identification and prioritization of rural road subprojects as initiated in Phases I and II (rural accessibility planning).

Task 3: Description of Baseline Environmental Conditions

Assemble, evaluate and present baseline data on environmental conditions relevant to the rural roads sector. The Consultant should particularly avoid compiling irrelevant data, and include only the environmental baseline data directly related to the significant anticipated impacts of the project. The following general categories of conditions should, at a minimum, be addressed:

- Land resources - Hydrology * Water quality * Biological * Air quality * Socio-economic and cultural

Task 4: Assessment of Policy, Legal and Administrative Framework

Describe the most pertinent regulations and standards governing environmental quality, health, safety, protection of endangered species, siting, land use control, resettlement, land acquisition, etc, as they relate to the rural road sector. International treaties to which the country is signatory will be mentioned. Describe the institutional responsibilities and capabilities within which the RAP will be carried out. Assess the adequacy of this institutional framework and develop recommendations for strengthening this framework to ensure that environmental protection is integrated into sector management. These recommendations should be embodied in the Environmental and Social Framework Agreements (as described in Task 10) The Consultant should also refer to a recent assessment of EIA systems and capacity in Yemen (Annex 1).

Task 5: Determination of Potential Impacts of Program

Identify and assess the major environmental issues of the rural road sector, with respect to the general categories mentioned in the baseline conditions. Assess these impacts as they are expected to occur during the design/construction and the operational periods. Also to be considered are potential cumulative effects, both direct and indirect. For the program as a whole, their significance should be assessed in terms of risk, that is their 142 likelihood and intensity. Emphasis should be placed on identifying potentially significant effects in various parts of the country which are distinguished by topographic, ecological, socio-economic, cultural resources or other characteristics. The methodology for this assessment will provide the framework for the detailed ass,ssment of subprojects, as described in Task 8.

Task 6: Analysis of Alternatives

The Sectoral EA will consider alternatives to the proposed Program for achieving program objectives. This will include a review of the "without project" or "no project" alternative. It will also assess alternative sector policies under consideration in the Program and if there are any environmental implications. This analysis will be displayed in a table that presents the principal altematives and a comparative analysis of these options, including a ,lescription of the proposed alternatives, their capital and operational costs and their potentials for effective implementation under Yemeni conditions.

Task 7: Development of Programmatic Environmental Management Plan to Mitigate and Monitor Potential Impacts

Recommend a set of generic mitigation measures for the significant impacts (including enhancement of positive impacts) identified in Task 5, to be implemented during both the design/construction and operational periods. Specify the responsibility for implementing and monitoring these measures, also during the two periocis. To the extent possible, these mitigation and monitoring measures should correspond to various parts of the country as distinguished by ecological or other criteria identified in Task 5. For mitigation related to design, construction and maintenance activities, cite the appropriate clauses to be incorporated in design and construction contracts. These specifications should be clear and concise and emphasize the responsibility of the performance output goals of the contractors. Particular attention will be paid to the process to be followed for compensation and/or donation where there is potential for resettlement or land acquisition. The development of generic mitigation measures will provide the framework for developing sub-project mitigationplans, as detailed in Task 8.

Task 8: Development of Guidelines for Subproject Screening, Selection and Management

Provide guidelines on the systematic procedures for the incorporation of environmental and social considerations for all sub-projects. This will include: (i) scoping and assessment of potential impacts and screening for enviromnental category (either A or B) of individual sub-projects; this will be an input to the sub-project selection and prioritization process, to be implemented through the rural accessibility planning methodology (see Annex 1); (ii) analyses required to establish baseline conditions and assess the types and significance of impacts commensurate with the environmental category; (iii) issues to consider in analysis of alternatives (including alignment, and rural accessibility alternatives); (iv) incorporation of mitigation and monitoring measures during the design/construction and operational phases; these would include standard formats, checklists and specifications; with regard to social issues, a standard community-based social framework agreement has been developed for the Phase I pilot roads, which will be validated by the Sectoral Environmental Assessment; (v) design of environmental management plans (mitigation and monitoring, as well as institutional arrangements); and (v) participatory, consultation and public disclosure processes.

Task 9: Development of Environmental Monitoring Plan

Prepare a detailed plan for monitoring the implementation of the Program. This will specify respomibility for ensuring that sub-projects conform with the sub-project guidelines (including means of verification and reporting), as well as monitoring overall or cumulative environmental issues at the sectoral level.

Task10: Formulationof Environmentaland SocialFramework Agreements

The standard procedures, methods and approaches for incorporation of environmental and social concerns into the selection, planning and implementation processes will provide the basis for the formulation of the Environmental and Social Framework Agreements, in which the GOY and the Bank agree to basic environmental and social safeguard principles and procedures, and the GOY affirms its agreement to carry out all future project activities in accordance with these procedures. These General Framework Agreements will specify, among others, the Community-based Social Framework Agreements that have been developed for Phase I roads and to be validated during the Sectoral EA. To this end, the Consultant work with the GOY and the Bank to achieve a consensus on the 143 content and format of these agreements and assist the GOY to draft the agreements.

Task 11: Development of Institutional Strengthening and Training Needs

Summarize organizational responsibilities for implementing the environmental mitigation and monitoring measures, both at the sectoral and sub-project levels. Based on this, assess capabilities and recomnmenda program to strengthen institutions at all levels, including the national government, local government and professional organizations involved in the roads sector.

Task 12: Consultation

Prepare and canry out a plan for public consultation and communications. The Consultant should describe the approach, frequency and substantive issues to be discussed with elected officials, NGOs and other community groups. The Consultant will also assist the Government in keeping recoTds of meetings and other activities, communications and comments and their disposition. The consultation process will be a means though which the Government will reinforce its commitment to environmental and social management and build public confidence in the anticipated program design and implementation. This needs to be done through a well designed communications and participation program. The consultation process will involve initial scoping sessions and an interactive review process, as described in Task 1. Also, as specified in Task 1, separate consultations with women will be carried out to permit their views to be heard. Allowance is made for supplemental scoping and interactive review sessions, should they be required.

Task 13: Disclosure

The Sectoral EA will be made available for public comment in the country and to the World Bank Info Shop.

Task 14: Reports

Progress Reports. Progress reports should be submitted in English to the Client every 30 days following contract signature. The progress report should present a very brief overview of progress in completion of tasks and issues in implementation. It is anticipated that the progress reports would be I to 3 pages. At the completion of the Assignment, a summary report will be submitted including an overview of expenditures for the study. In addition, the Consultant will submit the following technical reports:

Inception Report. The Consultant will submit within 30 days of starting work an Inception Report, providing a statement of its approach to the assignment and including a detailed work plan and schedule.

Draft Sectoral EA Study. This report will be prepared in English and Arabic. In addition to the text it would include drafts of all figures, tables and maps. It will be prepared in the number of copies suitable for its review.

Draft Final Sectoral EA Report. This report will be prepared in English and Arabic. In addition to the text it would include drafts of all figures, tables and maps. It will be prepared in the number of copies suitable for its review.

Final Sectoral EA Report. This report will be prepared in English and Arabic and will include both the Executive Summary and Main Report. The Executive Summary will be printed in 200 copies in English and 200 copies in Arabic. The Main Report, including annexes, would be printed in 100 copies in English and 100 copies in Arabic.

Executive Summary. The Consultant will develop a concise Executive Summary providing an overview of the findings and recommendations. It would include a set of tables that summarize potential impacts, mitigation measures and responsibilities, as well as the principal aspects of the Environmental and Social Framework Agreements.

Format for Sectoral EA Report. The Sectoral EA Report should be concise and limited to significant environmental issues as they relate to the rural road sector. The main text should focus on findings, conclusions and recommended actions, supported by summaries of the data collected and citations for any references used in interpreting the data. The Report should be in a format similar to the following: 144

Main Report

Executive Summary Environmental AssessmentProcess Policy, Legal and Administrative Framework Description of the Program Environmental Baseline Data Environmental Impacts Analysis of Alternatives Environmental Management Plan Environmental Mitigation EnvironmentalMonitoring Institutional Responsibilities and Strengthening Activities Public Disclosure and Record of Consultations Sub-project Guidelines

Appendices

List of EA Preparers Bibliography List of Persons Contacted Record of Scoping and Interactive Review Sessions Views of Women Other Appendices

SUPPORT FROM THE GOVERNMENT

The Government, through the CMO, will ensure that the consultant has access to all necessary project descriptions, data, drawings and other relevant documents. The Government will also ensure access to project areas an1 provide the Consultant with all necessary introductions and letters requesting cooperation with all stakeholders, including government agencies, NGOs and research organizations.

ESTIMATED TIME SCHEDULE

The following is a tentative time schedule for the Consultant services. The Consultant may propose their awn time schedule, if they do not agree with the proposal. The Consultant should propose a clear schedule with critical milestones. The following is an illustrative schedule.

* Submission of proposals: * Negotiation of contract: * Signature of contract: • Commencementof work: Day 1 * Initial field visits Month 1 * Initial scoping sessions Month I * Review inception report Month 2 * Continued field visits Months 2-3 * Continued scoping sessions Months 2-3 * Draft Sectoral EA Study Months 4-5 * Interactive Review Process Month 6 * Supplemental Field Visits Month 7 * Supplemental Interactive Review Month 7 * Draft Final Sectoral EA Report Months 8-9 * Interactive Review Period Month 10 * Distribution of Final Report Month 12 145

ESTIMATEDEXPERTISE REQUIRED AND LEVEL OF EFFORT

Specialist Approx.no. of weeks EnvironmentalSpecialist 20 Sr. SocialScientist 15 SocialScientist/Gender Specialist 15 Ecologist/Environmentalist 8 Legaland ResettlementSpecialist 4 Hydrogeology/Soils/RoadEngineering 8 CulturalResources Specialist 4 Total 74

The Consultantwill appointa TeamLeader and DeputyTeam Leader, one of which shouldbe Yemeni. The Team Leader/EnvironmentalSpecialist will have substantiveexperience in completingEnvironmental Assessments for road projects in conformancewith the World Bank directives. Preferencealso for experiencewith Sectoral EnvironmentalAssessments. Experience in Yemendesirable for all experts. 146

ANNEXI INITIAL LIST OF RELEVANT DOCUMENTS AND STUDIES

Dar El Handasah, Study for Phase I Pilot Roads (including environmental assessment and draft social framework agreements), May/June 2001.

Colburn, Marta, A Situational Analysis of Gender Development in Yemen, Oxfam GB Yemen, July 2001.

Dingen, Rob and John Howe, Rural Accessibility Improvement Program - Yemen - Formulation of a Methodology and Work Plan, April 2001.

Environmental Management Plans - Rural Access Program Phase I -Parts A&B, March 2001.

Gender Issues Study, expected May 2001.

Government of Yemen, National Environmental Action Plan.

University of Manchester, Evaluation of Future Development of the EIA System in Yemen, Mediterranean Environmental Technical Assistance Programme, February 2001.

World Bank, Environmental Sourcebook (Arabic and English), including updates.

World Bank, Road Maintenance and the Environment, August 1994.

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