Conce pt Paper

Project Number: 41076-045 December 2013

Proposed Loan and Technical Assistance Grant PHI: Improving National Roads for Inclusive Growth in Project

CURRENCY EQUIVALENTS (as of 30 November 2013)

Currency unit – peso (P)

P1.00 = $0.023 $1.00 = P43.88

ABBREVIATIONS

ADB – Asian Development Bank ADFD – Abu Dhabi Fund for Development AIF – ASEAN Infrastructure Fund CPS – country partnership strategy DPWH – Department of Public Works and Highways GAP – gender action plan OFID – OPEC Fund for International Development PPTAR – project preparatory technical assistance RP – resettlement plan

NOTES

(i) The fiscal year (FY) of the Government of the and its agencies ends on 31 December.

(ii) In this report, "$" refers to US dollars.

Vice-President S. Groff, Operations Group 2 Director General J. Nugent, Southeast Asia Department (SERD) Officer-In-Charge M. Alam, Transport and Communication Division, SERD

Team leader J. Miller, Principal Transport Specialist, SERD Team members M. Buendia, Senior Safeguards Specialist (Resettlement), SERD N. Farrofo, Senior Project Officer, SERD M. Javier, Senior Project Assistant, SERD J. Leather, Principal Transport Specialist, SERD A. Mabale, Associate Project Officer, SERD A. Velasquez, Safeguards Specialist (Environment), SERD Peer reviewers B. Bathula, Senior Transport Specialist, CWRD

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS

Page

I. THE PROJECT 1 A. Rationale 1 B. Impact, Outcome, and Outputs 2 C. Investment and Financing Plans 3 D. Indicative Implementation Arrangements 3

II. DUE DILIGENCE REQUIRED 3

III. PROCESSING PLAN 4 A. Risk Categorization 4 B. Resource Requirements 4 C. Processing Schedule 4

IV. KEY ISSUES 4

APPENDIXES 1. BASIC PROJECT INFORMATION 5 2. PROBLEM TREE 6 3. DESIGN AND MONITORING FRAMEWORK 7 4. PROJECT PREPARATORY TECHNICAL ASSISTANCE 9 5. INITIAL POVERTY AND SOCIAL ANALYSIS 13

o o o 118 00'E 126 00'E 126 00'E

PHILIPPINES Surigao o o IMPROVING NATIONAL ROADS FOR 16 00'N 16 00'N SURIGAO INCLUSIVE GROWTH IN MINDANAO PROJECT DEL NORTE Badas Manila PROOF ONLY

Butuan Nasipit o Bay o 9 00'N B o h o l S e a 9 00'N Balingoan SURIGAO REGION XIII DEL SUR CARAGA REGION X 8o 00'N 8o 00'N Northern Mindanao MINDANAO de Oro ZAMBOANGA DEL NORTE Tagoloan AGUSAN MISAMIS DEL SUR N o o Don Victoriano Bislig 118 00'E Project Location 126 00'E OCCIDENTAL Bonifacio o 122 00'E ZAMBOANGA Tubod 0 10 20 30 40 DEL SUR LANAO DEL NORTE Maramag Kilometers REGION IX LANAO Montevista Zamboanga Peninsula Ipil Agus DEL SUR Cateel Dumalinao Lumbayanague Pulangi Lumbatan DAVAO Tindalo San Pablo DEL NORTE ZAMBOANGA Marugong SIBUGAYMargosatubig Tabina A R M M Balabagan Kibawe Asuncion COMPOSTELA Pitogo Parang VALLEY S u l u S e a City NORTH COTABATO Midsayap DAVAO Sangali Davao City ORIENTAL o o 7 00'N Mati 7 00'N Zamboanga City REGION XI Shariff Aguak Datu Paglas ARMM Davao Region M o r o G u l f Tacurong Padada Davao National Capital Columbio Kiblawan Gulf Note : First Proof, 13 August 2013 Provincial Capital SULTAN Second Proof, 14 August 2013 KUDARAT DAVAO Third Proof, 15 August 2013 City/Town DEL SUR Malita Fourth Proof, 30 August 2013 Indicative Roads for Proposed Project Fifth Proof, 30 August 2013 REGION XII Sixth Proof, 22 November 2013 Mindanao Roads being Improved under Loan 2836-PHI Lake Sebu Seventh Proof, 25 November 2013 National Highway Gen. Santos Alabel Provincial Road Jose Abad Santos Kiamba This map was produced by the cartography unit of the Asian Provincial Boundary Development Bank. The boundaries, colors, denominations, and any other information shown on this map do not imply, on the part of the Regional Boundary Glan Asian Development Bank, any judgment on the legal status of any 13-2430 AV Boundaries are not necessarily authoritative. ARMM - Autonomous Region in Muslim Mindanao territory, or any endorsement or acceptance of such boundaries, colors, CARAGA - Agusan del Norte, , , denominations, or information. SOCCSKSARGEN - South Cotabato, North Cotabato, , o 122o 00'E Sarangani, 126 00'E

I. THE PROJECT

A. Rationale

1. The project supports increased economic growth in Mindanao by improving national roads on the island.1 The project supports the Government of the Philippines’ priorities for improvement of the country’s road network and development of Mindanao.2 It also supports the key objective of ADB’s strategy for the Philippines of helping the country achieve high, inclusive, and sustainable growth.3 The project is consistent with ADB’s Strategy 2020 through its focus on improving the delivery of infrastructure services as well as investing in physical assets.4 The project supports regional cooperation and integration by contributing to the implementation of the ASEAN Highway and BIMP-EAGA Priority Infrastructure Projects. It supports ADB’s Sustainable Transport Initiative5 by addressing climate change and road safety, and it is included in ADB’s Philippines Transport Sector Assessment, Strategy, and Road Map.

2. The Philippines road subsector is the most important transport subsector. The national road network comprises 29,630 kilometers (km), or 14% of the total road network and includes the main trunk roads, the national primary arterial roads, and national secondary roads. An efficient road subsector is crucial for the Philippines’ economic growth and poverty reduction. Despite its importance to the national economy, the road subsector has not received adequate funding. Expansion or improvement of the network has been limited in recent years, and many roads deteriorate prematurely due to inadequate maintenance. Government funding for the road network has been increasing in recent years; however, about 23% of the national road network is in poor condition and in need of rehabilitation. This contributes to the rising number of road accidents in the Philippines. The increasing impact of climate change, particularly flooding, is having a negative effect on the road network. The road network in Mindanao is less developed than the national network. While 82% and 89% of the national roads in Luzon and the Visayas are paved, only 70% of the national roads in Mindanao are paved.

3. ADB approved the Road Improvement and Institutional Development Project (RIIDP) in December 2011.6 The project includes periodic maintenance of about 340 km of national roads in Luzon, the Visayas, and in Mindanao; institutional capacity development for the Department of Public Works and Highways (DPWH); and consulting services for project supervision and preparation of detailed engineering design for future projects. The primary lesson learned from RIIDP is the risk of delays in procurement, which were caused by DPWH’s lack of familiarity with ADB procedures and weak capacity. This is being addressed through the ongoing TA 7434-PHI: Strengthening Transparency and Accountability in the Road Subsector7, under which a procurement advisory team is analyzing the DPWH procurement process and will recommend improvements. Training on procurement for DPWH staff will also be conducted. Since activities under the capacity development component have not yet begun, there are no lessons learned at this point; however, the need for further capacity development will be studied under the PPTA. A

1 The Government of the Philippines has requested the Asian Development Bank for a project preparatory technical assistance (PPTA) to prepare the project. The proposed PPTA is discussed in Appendix 4. 2 National Economic and Development Authority. 2011. Philippine Development Plan, 2011–2016. Manila. 3 ADB. 2011. Country Partnership Strategy: Philippines, 2011–2016. Manila. 4 ADB. 2008. Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank, 2008–2020. Manila. 5 ADB. 2010. Sustainable Transport Initiative: Operational Plan. Manila. 6 ADB. 2011. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the Republic of the Philippines for the Road Improvement and Institutional Development Project. Manila. (Loan 2836- PHI). 7 ADB. 2009. Technical Assistance to the Republic of the Philippines for Strengthening Transparency and Accountability in the Road Subsector. Manila. 2 key lesson from the Philippines Sixth Road Project8 was the importance of government understanding of and commitment to ADB’s Safeguards Policies. Since completion of the project, DPWH has gained experience with and training in safeguards policies of other development partners, and training in ADB’s Safeguards Policies will be provided during the PPTA. A primary lesson from the Philippines Infrastructure for Rural Productivity Enhancement Sector Project9 is the need to account for the highly variable capacity and roles and responsibilities of local agencies. The capacity of the DPWH regional and district offices involved in implementation will be strengthened under the project.

4. Mindanao is the second largest island in the Philippines, with a population of more than 20 million people. Despite being rich in natural resources, Mindanao has the highest poverty incidence of the Philippines’ three island groups (Luzon, Visayas, and Mindanao), with a rate of 39%,10 due in large part to civil conflict and low economic growth. Although significant development has occurred in recent years, a number of infrastructure targets in the government’s Mindanao 2000 plan have not been achieved, due to the lack of coherent plans, inadequate government financial resources, and underinvestment, especially by the private sector.11 The project will address these constraints by mobilizing resources to upgrade priority national roads, and updating the Mindanao Road Network Master Plan under the PPTA. By improving accessibility to areas with underdeveloped economic potential, the project will facilitate development of the private sector, particularly in the agriculture and tourism sectors. The potential for private-sector involvement in the maintenance of the project roads after project completion will be explored during the PPTA. The Japan International Cooperation Agency, the World Bank, and the Australian Agency for International Development have ongoing national or provincial road improvement projects in Mindanao. However, a large part of the road network in Mindanao remains in need of improvement. DPWH has proposed 10 roads in central, southern, and western Mindanao for improvement under the project. Some of the roads are located in and near the Autonomous Region, while other roads form part of the ASEAN Highway, including the Davao–General Santos road, which was endorsed by BIMP-EAGA leaders in the Implementation Blueprint 2012-2016. The potential for the project roads to form parts of the economic corridors will be examined under the TA.

B. Impact, Outcome, and Outputs

5. The impact of the project will be improved accessibility of transport infrastructure. The outcome of the project will be improved quality of the national road network in Mindanao. The outputs will be (i) improvement of about 400 km of 10 national roads; (ii) detailed engineering design for roads to be improved under future projects; and (iii) strengthened institutional capacity of DPWH. The road improvement works will include paving earth roads, replacing road sections washed out by floods, widening existing roads, adding surface overlays, and replacement and strengthening of bridges. The works will incorporate international best practice for road safety, climate change adaptation, and seismic resistance. The detailed design for the project roads will be carried out under RIIDP. The institutional capacity development component will be designed during the PPTA based on an assessment of DPWH’s capacity. It will likely focus on the capacity of the DPWH regional and district offices in the project area, particularly on project implementation and dealing with increasingly frequent natural disasters.

8 ADB. 2007. Completion Report: Philippines Sixth Road Project. Manila. 9 ADB. 2012. Completion Report: Philippines Infrastructure for Rural Productivity Enhancement Sector Project. Manila. 10 ADB. 2010. Making a Difference in Mindanao. Manila. 11 Mindanao Development Authority. 2011. Mindanao 2020 Peace and Development Framework Plan 2011-2030. Davao City. 3

C. Investment and Financing Plans

6. The estimated total investment cost is at least $360 million. ADB is expected to finance $220 million through an Ordinary Capital Resources loan. Cofinanciers have expressed interest in providing $140 million, but the government has not yet confirmed its interest in cofinancing. The amount of the government’s contribution will be determined during project processing.

Table 1: Tentative Financing Plana Source Amount ($ million) Share of Total (%) Asian Development Bank Ordinary Capital Resources (loan) 220.0 61.1 Cofinancing 140.0b 38.9 Total 360.0 100.0 a Government financing will be determined during project processing. b The Abu Dhabi Fund for Development, ASEAN Infrastructure Fund, and OPEC Fund for International Development have expressed interest in providing $40 million, $50 million, and $50 million in cofinancing, respectively. The government has not yet decided if it will request cofinancing. Source: Asian Development Bank estimates.

D. Indicative Implementation Arrangements

7. The Department of Public Works and Highways (DPWH) will be the executing agency for the Project. DPWH’s Unified Project Management Office, which was established in August 2013 as part of DPWH’s rationalization plan, will function as the project management unit and be responsible for project implementation. The Unified PMO has greater resources than did the ADB PMO, which prior to August 2013 was responsible for the ongoing project, and these are expected to be sufficient for project implementation. In addition, training will be conducted prior to project implementation. Institutional capacity building components will be assigned to the DPWH offices responsible for those activities, as necessary.

II. DUE DILIGENCE REQUIRED

8. A PPTA in the amount of $1.2 million equivalent, proposed for financing through TASF- other sources, has been programmed to prepare the project. The government will provide an in- kind contribution to the TA in the form of counterpart staff, office accommodation, communication facilities, and others.

9. Due diligence will be conducted in the following areas through the PPTA: (i) Technical. The technical viability of the roads proposed for improvement will be analyzed, with particular attention on road safety, drainage issues to address increased climate change impacts, seismic resilience, and pavement type. (ii) Economic and financial. The economic viability and financial and institutional sustainability of the project will be examined, including assessment of demand, alternative least cost analysis, and sensitivity and distribution analysis. A project performance monitoring system will also be designed. (iii) Institutional Capacity Development. Analysis of the institutional capacity of DPWH will be carried out and a program to strengthen it will be developed, focusing on the DPWH regional and district offices in Mindanao. (iv) Poverty, gender, and social. Poverty reduction and social impact assessments; gender analysis; and project-specific social and gender action plans, including assessment of gender classification, and other social impacts such as HIV/AIDS, human trafficking, and labor will be prepared.

4

(v) Safeguards. Environment, involuntary resettlement, and indigenous peoples’ impacts will be examined, including ancestral domain claims of indigenous peoples, and the need of DPWH for training in implementing safeguards policies. (vi) Climate Change. The increasing impact of climate change, particularly flooding, on roads in the project area will be analyzed, and measures to address the impact will be devised, taking advantage of international best practice in the field. (vii) Implementation Capacity. A financial management assessment and a procurement capacity assessment of DPWH will be carried out, as well as an examination of potential governance issues and training needs of the PMO to ensure effective implementation of the project.

III. PROCESSING PLAN

A. Risk Categorization

10. The project is classified as complex due to the loan amount exceeding $200 million and initial safeguard categorizations of A for environment, involuntary resettlement, and indigenous peoples.

B. Resource Requirements

11. The project team will comprise a principal transport specialist/mission leader, senior project officer, environmental and resettlement safeguards specialists, counsel, associate project officer, and operations assistant. About 24 person months will be required for due diligence and ADB loan processing. The PPTA will include consulting inputs from a firm.

C. Processing Schedule

12. Major milestones include the following expected dates:

Table 2: Proposed Processing Schedule Milestones Expected Completion Date Concept clearance December 2013 PPTA consultants mobilization May 2014 Loan fact finding February 2015 Management review meeting May 2015 Loan negotiations July 2015 Board consideration September 2015 Loan effectiveness December 2015

IV. KEY ISSUES

13. There are two key issues to be addressed during project preparation: (i) safeguards, and (ii) cofinancing. For safeguards, environment,12 involuntary resettlement, and indigenous peoples are currently classified as category A. The project team will involve the Regional and Sustainable Development Department in the due diligence for these safeguards issues. Funds have been proposed from three sources of cofinancing; however, these have not yet been confirmed by the government. The project team will involve the Office of Cofinancing Operations in finalizing arrangements with the government and cofinanciers.

12 While the project will involve improvement of existing roads, the environmental classification is currently category A since one of the roads passes through a watershed reserve forest. This classification will be reassessed during PPTA implementation, once the magnitude of anticipated impacts to the protected area is determined. Appendix 1 5

BASIC PROJECT INFORMATION Aspects Arrangements Modality Project Loan Financing ADB loan of $220 million from OCR, potentially $140 million of cofinancing and a government contribution yet to be determined COBP/ The project loan is included in the COBP for the Philippines 2014-2016 RCOBP Classification; Sector (subsectors): Transport and ICT (Road) Themes (subthemes): Economic growth (widening access to markets and economic opportunities); Capacity development; Climate change: adaptation, mitigation Targeting classification: General intervention Gender mainstreaming category: Some gender benefits (to be determined during project processing) Location impact: rural (high), national (high) Safeguards: Environment (A), Involuntary Resettlement (A), Indigenous Peoples (A) Risk Complex categorization

Partnership(s) To Be Determined Use of a PBA No Parallel PIU No

Department Southeast Asia Department / Transport and Communication Division and division Mission leader Mission Leader: J. Miller, Principal Transport Specialist and members Mission Members: J. Balbosa, Senior Country Specialist; M. Buendia, Senior Safeguards Specialist (Resettlement); N. Farrofo, Senior Project Officer; M. Javier, Senior Project Assistant; J. Leather, Principal Transport Specialist, A. Mabale, Associate Project Officer; A. Velasquez, Safeguards Specialist (Environment); B. Konysbaev, Counsel ADB = Asian Development Bank, COBP = country operations business plan, DMC = developing member country, OCR = ordinary capital resources, PBA = programmatic based approach, PIU = project implementation unit, TA = technical assistance.

6 Appendix 2

PROBLEM TREE

Insufficient accessibility of transport infrastructure in Mindanao

Quality of national road network in Mindanao

is not sufficient to support rapid development

Insufficient road Poor condition of Poor road safety Inefficient transport capacity roads conditions operations

Underinvestment Insufficient Low private sector Weak institutional Weak sector Low productivity in the road sector financing of road participation in capacity of road governance in road maintenance the road sector sector institutions administration

Appendix 3 7

DESIGN AND MONITORING FRAMEWORK

Performance Targets and Data Sources and Assumptions and Design Summary Indicators with Baselines Reporting Mechanisms Risks Impact Assumptions Accessibility of transport Average annual daily DPWH Planning Service No major negative infrastructure is traffic on project roads external economic improved increases by 40% from shocks 2014 to 2022a

Outcome Risks The quality of national Percentage of roads in DPWH Planning Service Insufficient budget road network in Mindanao in good allocations for Mindanao is improved condition increases from maintenance of project 65% in 2013 to 70% in roads 2020 Axle loads are not controlled on project roads

Outputs Assumptions 1. Selected national Improvement of 400 km DPWH road status Security situation in roads in Mindanao of national roads, with reports project area remains are improved climate resilience and peaceful road safety features, in Mindanao completed by TA7434-PHI: December 2020 Strengthening Transparency and Average vehicle Accountability in the operating costs for cars Road Subsector TA on project roads reduced implemented by 30% from 2013 to successfullyb 2020

Weighted average travel time on project roads reduced by 25% from 2013 to 2020 Risks 2. Detailed engineering Detailed design DPWH Planning Service design of selected drawings and bills of Departure of trained staff

roads to be improved quantities for from DPWH under future projects improvement of 400 km

is completed of national highways in Mindanao completed by December 2020

3. DPWH operations in DPWH staff in 2 regional DPWH Administrative the road sector are and 6 district offices in and Manpower strengthened Mindanao complete Management Service training by December 2019

8 Appendix 3

Activities with Milestones 1. Implementation of civil works Inputs 1.1 Civil works contracts awarded by June 2017 and completed . Asian Development Bank: by December 2020 $220 million 1.2 Project supervision consultants recruited by December . Cofinancing: $140 million 2016. . Government: tbd 1.3 Land acquisition and resettlement activities completed by June 2017. 2. Detailed engineering design 2.1 Detailed design consultants recruited by June 2017 and services completed by December 2020 3. Implementation of institutional capacity development program 3.1 Consultants recruited by June 2016 and services completed by June 2019

DPWH = Department of Public Works and Highways, km = kilometer, tbd = to be determined. a Baseline traffic data will be determined following final selection of roads to be improved under the project. b ADB. 2009. Technical Assistance to the Republic of the Philippines for Strengthening Transparency and Accountability in the Road Subsector. Manila. Source: Asian Development Bank.

Appendix 4 9

PROJECT PREPARATORY TECHNICAL ASSISTANCE

A. Justification

1. The Government of the Republic of the Philippines has requested the Asian Development Bank (ADB) to provide a project preparatory technical assistance (TA) to prepare the Improving National Roads for Inclusive Growth in Mindanao Project.1 This project supports the government’s agenda for Mindanao in the Philippines Development Plan (PDP) 2011-2016. The TA is included in ADB’s Country Operations Business Plan 2014-2016 for the Philippines.2

B. Major Outputs and Activities

2. The major activities of the TA are: (i) updating the Mindanao road network master plan; and (ii) preparing the feasibility study and project design for a project suitable for ADB financing. For the road network master plan, the consultants will consolidate plans and projects of responsible government agencies and update them for recent economic developments to update the overall roadmap for Mindanao’s road network, including the Autonomous Region of Muslim Mindanao. The feasibility study and project design will cover engineering, economic, social impact, and safeguards activities. The engineering study will include geological, topographical, and hydrological surveys; preliminary pavement design; detailed cost estimates; and implementation plan. The economic work will include traffic surveys and an assessment of the economic feasibility of the project. The financial work will include a financial management assessment of the executing agency and analysis of the financial sustainability of the project. The social tasks will cover poverty, social, and gender analysis; and preparation of a social/gender action plan, stakeholder communication strategy, consultation and disclosure plan, and community engagement plans. The safeguards activities will include capacity building for government staff; assessment of impacts on environment, involuntary resettlement, and indigenous peoples; and preparation of an assessment report and resettlement and indigenous peoples plans. The TA consultants will conduct an institutional capacity assessment to develop the capacity-building component of the project and a procurement capacity assessment. They will also assist DPWH in the preparation of the Project Design Proposal to be submitted to the National Economic Development Authority.

3. The major outputs and activities are summarized in Table A4.1.

Table A4.1: Summary of Major Outputs and Activities Expected Expected Completion Major Completion Major Activities Date Outputs Date 1. Road network master plan July 2014 Master plan July 2014 1.1 Consolidate and review existing plans 1.2 Update existing plans 1.3 Examine prospects for roads to form part of economic corridors 2. Feasibility study and project design January Inception May 2014 2.1 Prepare preliminary engineering design and detailed cost 2015 report estimate July 2014 2.2 Conduct traffic demand forecast and economic analysis Interim 2.3 Assess financial sustainability of project and conduct financial report December management assessment 2014 2.4 Conduct procurement capacity assessment and institutional Draft final development capacity assessment; prepare capacity report January development component 2015

1 The government has informed development partners that grant funding by a development partner for project preparation does not commit the government to avail of a loan from that partner for the ensuing project. 2 Listed under its former name of Second Road Improvement and Institutional Development Project. 10 Appendix 4

Expected Expected Completion Major Completion Major Activities Date Outputs Date 2.5 Conduct poverty, gender, and social analysis and prepare Final report social/gender action plan, stakeholder communication strategy, consultation and disclosure plan, and community engagement plans 2.6 Conduct environment and social safeguards assessment and prepare EIA/IEE, resettlement and indigenous peoples plans. Conduct capacity building in safeguards fields for government staff at all levels based on training needs assessment. ADB = Asian Development Bank, EIA = environment impact assessment IEE = initial environment examination; GAP = gender action plan; RP = resettlement plan; TA = technical assistance. Source: Asian Development Bank.

C. Cost Estimate and Proposed Financing Arrangement 4. The TA is estimated to cost $1.4 million equivalent, of which $1.2 million equivalent will be financed on a grant basis by ADB's Technical Assistance Special (TASF-other sources). The government will provide in-kind counterpart support. The detailed cost estimate is presented in Table A4.2. Disbursements under the TA will be made in accordance with the ADB’s Technical Assistance Disbursement Handbook (May 2010, as amended from time to time). The TA consultants will turn over the equipment to DPWH following TA completion.

Table A4.2: Cost Estimates and Financing Plan ($'000) Item Total Cost Asian Development Banka 1. Consultants a. Remuneration and per diem i. International consultants (24.0 person-months) 489.8 ii. National consultants (40.0 person-months) 339.4 b. International and local travel 60.0 c. Reports and communications 25.0 2. Equipmentb 15.0 3. Workshops, training, seminars, and conferences 20.0 4. Surveys 125.0 5. Local land transportc 10.5 6. Miscellaneous administration and support costs 18.0 7. Contingencies 97.3 Total 1,200.0 a Financed by the Asian Development Bank's Technical Assistance Special Fund (TASF-other sources). b Includes computers, printers, photocopier, etc., to be turned over to the Department of Public Works and Highways following completion of the TA. c Vehicle rental. Note: The cost of the TA amounts to an equivalent of $1,400,000, of which contributions from ADB are presented in the table above. The government will provide counterpart support in the form of counterpart staff, office accommodation, communication facilities, and other in-kind contributions, whose value is estimated to account for 14% of the total TA cost. Source: Asian Development Bank estimates.

D. Consulting Services

5. An international consulting firm will be engaged to implement the TA. The services will require a total of 24 person-months of international consultants and 40 person-months of national consultants. Quality and Cost-Based Selection (QCBS)3 will be used in accordance with ADB’s Guidelines on the Use of Consultants. A full technical proposal will be required.

3 Selection will be based on a 90% technical and 10% cost basis. Appendix 4 11

Table A4.3: Summary of Consulting Services Requirement Person- Person- Months Months International Positions Required National Positions Required Team Leader/Highway Engineer 6.50 Deputy Team Leader/Pavement Engineer 6.0 Bridge/Structural Engineer 2.00 Bridge/Structural engineer 4.0 Transport planner 1.75 Transport Planner 6.0 Resettlement Specialist 1.75 Resettlement Specialists 4.0 Indigenous Peoples Specialist 1.50 Indigenous Peoples Specialists 3.5 Social/Gender Specialist 1.50 Social/Gender Specialists 4.0 Environmental Specialist 1.75 Environmental Specialist 5.0 Climate Change Specialist 1.50 Biodiversity Expert/Specialist 2.0 Institutional Specialist 1.25 Institutional Specialist 1.5 Procurement Specialist 1.00 Transport Economist 1.0 Transport Economist/Financial Specialist 2.50 Financial Specialist 1.0 Road safety Engineer 1.00 Road Safety Engineer 1.0 Hydrologist/Drainage Engineer 1.0 Total 24.00 Total 40.0 Source: Asian Development Bank.

6. The outline terms of reference for the TA consultants is discussed below. The preferred qualifications for all candidates are a minimum of 10 years relevant experience on similar projects and at least a bachelor’s degree. (i) Team Leader/Highway Engineer. He/she will have the overall responsibility for the management of the consultant team; and will lead the preparation of the (a) preliminary design of the project roads to include climate resilience and road safety features; and (b) cost estimate for the civil works; and the total costs of the project including capacity-building programs for DPWH, and design review and supervision consultants for project implementation. He/she will also prepare the construction methods and construction sequence; investigation of market conditions including prices of materials, depreciation/operation cost of machines and equipment, wages, taxes, and duties. He/she will prepare the basic technical specifications and design criteria for the project roads, will examine the possibility of including the private sector in maintenance of project roads, and will also supervise the administration of surveys, workshops, training, and seminars. (ii) Deputy Team Leader/Pavement Engineer. He/she will support and represent the team leader, and carry out specific engineering tasks required. (iii) Bridge/Structural Engineers. They will review the existing and proposed structures and recommend improvements and innovative construction methods. (iv) Transport Planners. They will collect and review existing feasibility studies, master plans, and other relevant information on the development of Mindanao; analyze the present and future developments; update and validate the studies and plans; and consolidate them into an overall road network master plan. They will also assess the potential for the project roads to form parts of economic corridors in Mindanao, including links to regional cooperation initiatives such as the Brunei Indonesia Malaysia Philippines-East ASEAN Growth Area. (v) Transport Economists. They will prepare traffic forecasts and economic analysis, including alternative and least cost analysis and sensitivity and distribution analysis, and the project performance monitoring system. (vi) Financial Specialists. They will analyze the financial sustainability of the project; assess the financial management capacity of the executing agency; design the funds flow/disbursement mechanism of the project; and examine governance issues that may arise during project implementation.

12 Appendix 4

(vii) Institutional Specialists. They will undertake an assessment of the institutional capacity of DPWH, and prepare the capacity building program. (viii) Procurement Specialist. He/she will undertake a procurement capacity assessment, recommend improvements, and prepare the procurement plan. (ix) Social/Gender Specialists. They will undertake poverty, social, and gender analysis and prepare a social/gender action plan, stakeholder communication strategy, consultation and disclosure plan, and community engagement plans. (x) Resettlement and Indigenous Peoples Specialists. They, together with the executing agency and local authorities, will assess social impacts for involuntary resettlement and indigenous peoples and prepare the required resettlement and indigenous peoples plans in accordance with ADB’s Safeguard Policy Statement. They will carry out capacity building for DPWH and local authorities. They will also work closely with the social/gender specialists in the preparation of the stakeholder communication strategy, consultation and disclosure plan, and community engagement plans specific to social safeguards. (xi) Environmental Specialists. They will work as a team in the analysis of environmental issues, and in the preparation of a project environmental assessment report as well as due diligence for ongoing works along the project roads. A biodiversity expert will analyze any potential ecological impacts of the project on biodiversity in protected areas in the project area. (xii) Climate Change Specialist. He/she will undertake an assessment of the vulnerability of the project roads to climate change and develop a costed management plan to increase climate resilience for incorporation in the design. (xiii) Hydrologist/Drainage Engineer. He/she will assess available data on existing and proposed drainage structures along the project roads in terms of catchment areas and will coordinate with the highway and bridge engineers and the climate change specialist. He/she will conduct preliminary analysis on the technical feasibility of bridge sites and elevations. (xiv) Road Safety Specialist. He/she will review the designs for road safety aspects and prepare road safety measures for incorporation into the design.

E. Implementation Arrangements

7. DPWH will be the executing agency for the TA. DPWH’s Planning Service will be responsible for implementation of the TA. The TA will be implemented over 15 months, with commencement expected on 6 January 2014 and financial closing on 6 April 2015. The proposed TA implementation schedule is listed in Table A4.4.

Table A4.4: Technical Assistance Processing and Implementation Schedule Major Milestones Expected Completion Date TA approval December 2013 TA commencement January 2014 Shortlisting of consultants February 2014 Receipt of proposals March 2014 Mobilization of consultants May 2014 Submission of TA draft Final Report December 2014 Final review and submission of TA Final Report January 2015 TA physical closing date March 2015 TA financial closing date April 2015 TA = technical assistance Source: Asian Development Bank. Appendix 5 13

INITIAL POVERTY AND SOCIAL ANALYSIS

Country: Philippines Project Title: Improving National Roads for Inclusive Growth in Mindanao Project Lending/Financing modality: Project Loan Department/Division: SERD/SETC 1. POVERTY IMPACT AND SOCIAL DIMENSIONS A. Links to the National Poverty Reduction Strategy and Country Partnership Strategy The project will support the Philippines’ poverty reduction strategy. The project also supports the key objective of ADB’s strategy for the Philippines of helping the country achieve high, inclusive, and sustainable growth. B. Targeting Classification General Intervention Individual or Household (TI-H) Geographic (TI-G) Non-Income MDGs (TI-M1, M2, etc.) C. Poverty and Social Analysis 1. Key issues and potential beneficiaries. Of the five provinces initially identified by DPWH for possible funding, Saranggani (Region XII) has the highest poverty incidence at 52% in 2009, followed by Maguindanao (ARMM Region) at 50%. Sultan Kudarat has a poverty incidence of 45.5%, while South Cotabato and have incidences of 29.6% and 24.5%, respectively. In terms of human development index (HDI) ranking in 2009, Maguindanao is at the bottom (HDI Rank 78), while South Cotabato is the highest of the five provinces (HDI rank 22). 2. Impact channels and expected systemic changes. The communities from the rural and remote areas, especially the indigenous peoples, poor, and other vulnerable groups) will benefit from the improved roads — reduced travel time; improved trading of goods; and easier access to markets, schools, and health facilities within and outside their districts. Employment opportunities during construction are envisaged which will also supplement the incomes of local communities. 3. Focus of (and resources allocated in) the PPTA or due diligence. Social safeguards and gender and social development specialists will be part of the PPTA team to carry out due diligence and assessment of social safeguards impacts, and to prepare the required social and safeguards planning documents in cooperation with local government units, communities, and civil society organizations to ensure benefits are maximized by the potential beneficiaries and that adverse impacts are minimized.

4. Specific analysis for policy-based lending. N/A II. GENDER AND DEVELOPMENT 1. What are the key gender issues in the sector/subsector that are likely to be relevant to this project or program? Women’s participation in decision-making may be limited in the proposed project area and, therefore, a culturally- sensitive and participatory approach allowing women to be consulted will maximize benefits for women in terms of identifying potential livelihood opportunities and access to services.

2. Does the proposed project or program have the potential to make a contribution to the promotion of gender equity and/or empowerment of women by providing women’s access to and use of opportunities, services, resources, assets, and participation in decision making? Yes No TBD Please explain. To be determined during the PPTA stage.

3. Could the proposed project have an adverse impact on women and/or girls or widen gender inequality? Yes No Please explain. There are possible adverse impacts caused by land acquisition and resettlement. Impacts on houses, land, and sources of livelihood from farms will affect women’s livelihood/source of income and they may become more vulnerable if their landholdings are no longer sufficient to meet households’ needs.

4. Indicate the intended gender mainstreaming category: GEN (gender equity theme) EGM (effective gender mainstreaming) SGE (some gender elements) NGE (no gender elements) III. PARTICIPATION AND EMPOWERMENT 1. Who are the main stakeholders of the project, including beneficiaries and negatively affected people? Identify how they will participate in the project design. Local communities, local government units, businesses, commuters, women and children, indigenous peoples, and other vulnerable groups. A consultation and participation plan will be designed and implemented during the PPTA. 2. How can the project contribute (in a systemic way) to engaging and empowering stakeholders and beneficiaries, particularly, the poor, vulnerable and excluded groups? What issues in the project design require participation of the poor and excluded? The communities, including women and other vulnerable groups, will be involved in the consultation meetings and will be encouraged to participate actively in the project design. A consultation and participation plan will be developed in consultation with stakeholders.

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3. What are the key, active, and relevant civil society organizations in the project area? What is the level of civil society organization participation in the project design? Information generation and sharing Consultation Collaboration Partnership To be determined during the PPTA. CSOs, if found in the project area, will be involved in project preparation. 4. Are there issues during project design for which participation of the poor and excluded is important? What are they and how shall they be addressed? Yes No The PPTA will identify strategies to ensure that the poor and excluded are heard and that their needs and concerns are incorporated into the project design. The consultation and participation plan will be developed and implemented during the PPTA. IV. SOCIAL SAFEGUARDS A. Involuntary Resettlement Category A B C FI 1. Does the project have the potential to involve involuntary land acquisition resulting in physical and economic displacement? Yes No Road widening will result in physical and economic displacement as houses, crops, trees of affected households, and shops may be affected. The Davao-Digos-General Santos road section traverses a densely populated urban area and widening will require clearance of government land, and acquisition of private land, and will affect houses and business establishments. The Alabel–Little Baguio, Columbio–Datu Paglas, and Lake Sebu–Maitum road sections will affect houses and crops such as , banana trees, rubber and rice, within the proposed 20 meter right-of-way. Only the Jose Abad Santos–Glan road section seems to fall under Category B for Involuntary Resettlement. In addition to the proposed widening, there are ongoing road improvements on a number of sections of the proposed roads which will require due diligence. 2. What action plan is required to address involuntary resettlement as part of the PPTA or due diligence process? Resettlement plan Resettlement framework Social impact matrix Environmental and social management system arrangement None B. Indigenous Peoples Category A B C FI 1. Does the proposed project have the potential to directly or indirectly affect the dignity, human rights, livelihood systems, or culture of indigenous peoples? Yes No 2. Does it affect the territories or natural and cultural resources indigenous peoples own, use, occupy, or claim, as their ancestral domain? Yes No All proposed roads are existing (2-lanes, mostly asphalt roads). The Lake Sebu- Maitum road is part of the ancestral domain claim/title (CADC/CADT) of the T'boli's ethnic group, and B'laan and T'boli ethnic groups are found is the Columbio-Datu Paglas road. On Alabel-Little Baguio section, it was reported that land in the area is under the CADC of the B'laan ethnic group. 3. Will the project require broad community support of affected indigenous communities? Yes No Due to physical relocation from traditional or customary lands. Although the majority of the households found during the reconnaissance mission will be able to move back on remaining land, the PPTA will confirm if there are households which may need to relocate outside their traditional or customary lands. 4. What action plan is required to address risks to indigenous peoples as part of the PPTA or due diligence process? Indigenous peoples plan Indigenous peoples planning framework Social Impact matrix Environmental and social management system arrangement None V. OTHER SOCIAL ISSUES AND RISKS 1. What other social issues and risks should be considered in the project design? Creating decent jobs and employment M Adhering to core labor standards M Labor retrenchment Spread of communicable diseases, including HIV/AIDS TBD Increase in human trafficking TBD Affordability Increase in unplanned migration Increase in vulnerability to natural disasters Creating political instability Creating internal social conflicts Others, please specify ______2. How are these additional social issues and risks going to be addressed in the project design? Through the conduct of poverty and social analysis. VI. PPTA OR DUE DILIGENCE RESOURCE REQUIREMENT 1. Do the terms of reference for the PPTA (or other due diligence) contain key information needed to be gathered during PPTA or due diligence process to better analyze (i) poverty and social impact; (ii) gender impact, (iii) participation dimensions; (iv) social safeguards; and (vi) other social risks. Are the relevant specialists identified? Yes No 2. What resources (e.g., consultants, survey budget, and workshop) are allocated for conducting poverty, social and/or gender analysis, and participation plan during the PPTA or due diligence? Social safeguards and social development and gender consultants will be engaged during the PPTA; and the budget for workshops, capacity building, consultation and participation activities, surveys, and due diligence work will be properly allocated.