Azerbaijan: East–West Highway Improvement Project
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Completion Report Project Number: 35457-013 Loan Number: 2205/2206-AZE November 2011 Azerbaijan: East–West Highway Improvement Project CURRENCY EQUIVALENTS Currency Unit – new Azerbaijan manat (AZN) At Appraisal At Project Completion 1 November 2005 31 March 2010 AZN1.00 = $1.16 $1.25 $1.00 = AZN0.86 AZN0.80 At appraisal, the old Azerbaijan manat (AZM) was used in the report and recommendation of the President at the exchange rate of $1.00 = AZM4,597. On 1 January 2006, the new Azerbaijan manat (AZN) was introduced as the new national currency at the exchange rate of AZN1.00 = AZM5,000. The AZM continued as legal tender until 31 December 2006. ABBREVIATIONS ADB – Asian Development Bank ARS – Azer Road Service Open Joint-Stock Company EIRR – economic internal rate of return GDP – gross domestic product IEE – initial environmental examination IDB – Islamic Development Bank IRI – International roughness index km – kilometer M&E – monitoring and evaluation MFF – multitranche financing facility MOT – Ministry of Transport OCR – ordinary capital resources PIU – project implementation unit PMS – pavement management system SCC – State Customs Committee SDR – special drawing right SFD – Saudi Fund for Development VOC – vehicle operating cost NOTES (i) The fiscal year (FY) of the government and its agencies ends on 31 December. ―FY‖ before a calendar year denotes the year in which the fiscal year ends, e.g., FY2009 ends on 31 December 2009. (ii) In this report, ―$‖ refers to US dollars. Vice-President X. Zhao, Operations 1 Director General J. Miranda, Central and West Asia Department (CWRD) Director H. Wang, Transport and Communications Division, CWRD Team leader B. Reddy Bathula, Senior Transport Specialist, CWRD Team member C. Africa, Project Analyst, CWRD N. Bustamante, Senior Operations Assistant, 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 BASIC DATA i MAP I. PROJECT DESCRIPTION 1 II. EVALUATION OF DESIGN AND IMPLEMENTATION 2 A. Relevance of Design and Formulation 2 B. Project Outputs 2 C. Project Costs 4 D. Disbursements 5 E. Project Schedule 5 F. Implementation Arrangements 6 G. Conditions and Covenants 6 H. Consultant Recruitment and Procurement 7 I. Performance of Consultants and Contractors 7 J. Performance of the Borrower and the Executing Agency 8 K. Performance of the Asian Development Bank 8 III. EVALUATION OF PERFORMANCE 9 A. Relevance 9 B. Effectiveness in Achieving Outcome 9 C. Efficiency in Achieving Outcomes and Output 10 D. Preliminary Assessment of Sustainability 11 E. Environmental, Socioeconomic, and Other Impacts 11 IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 14 A. Overall Assessment 14 B. Lessons 14 C. Recommendations 15 APPENDIXES 1. Project Framework 16 2. Project Cost and Financing Plan 21 3. Disbursement of ADB Loan Proceeds 22 4. Appraisal and Actual Implementation Schedules Compared 23 5. Chronology of Major Events 24 6. Organizational Structure for Project Implementation 26 7. Status of Compliance with Major Loan Covenants 27 8. Summary of Contract Packages 31 9. Summary of Institutional Strengthening Component 32 10. Economic Reevaluation 36 11. Summary of Socioeconomic Impact 42 BASIC DATA A. Loan Identification 1. Country Republic of Azerbaijan 2. Loan Number 2205-AZE / 2206-AZE(SF) 3. Project Title East–West Highway Improvement Project 4. Borrower Republic of Azerbaijan 5. Executing Agency Ministry of Transport 6. Amount of Loan (i) $49 million from ordinary capital resources (ii) SDR2.075 million from the Asian Development Fund 7. Project Completion Report Number 1276 B. Loan Data 1. Appraisal – Date Started 1 June 2005 – Date Completed 15 June 2005 2. Loan Negotiations – Date Started 3 November 2005 – Date Completed 7 November 2005 3. Date of Board Approval 8 December 2005 4. Date of Loan Agreement 1 June 2006 5. Date of Loan Effectiveness – In Loan Agreement 90 days from the loan agreement – Actual 27 October 2006 – Number of Extensions None 6. Closing Date – In Loan Agreement 31 May 2010 – Actual 15 June 2010 – Number of Extensions None 7. Terms of Loan London interbank offered rate (LIBOR)– Ordinary capital resources based – Interest Rate 0.0% – Commitment Charges 0.75% – Maturity (number of years) 24 – Grace Period (number of years) 4 Asian Development Fund – Interest Rate 1.0% yearly during grace period; 1.5% yearly thereafter – Commitment Charges 0.0% – Maturity (number of years) 32 – Grace Period (number of years) 8 8. Terms of Relending (if any) None – Interest Rate – Maturity (number of years) – Grace Period (number of years) – Second-Step Borrower ii 9. Disbursements a. Dates Initial Disbursement Final Disbursement Time Interval Loan 2205-AZE: $591,964 (8 January 2007) $6,050,315 (7 June 2010) 39 months Loan 2206-AZE: $77,400 (21 May 2009) $12,375 (1 April 2010) 10 months Effective Date Original Closing Date Time Interval 27 October 2006 15 June 2010 44 months b. Loan 2205-AZE Amount ($) Last Amount Original Revised Increased/ Amount Undisbursed Category Allocation Allocation (Canceled) Disbursed Balance 1. Civil Works 34,100,000 40,000,000 5,900,000 34,657,418 5,342,582 a. Yevlakh–Ganja Section 14,400,000 (14,400,000) b. Gazakh–Georgian Border 14,200,000 37,000,000 22,800,000 34,657,418 2,342,582 Section c. Local Roads 3,000,000 3,000,000 3,000,000 d. Cross-Border Facilitation 2,500,000 (2,500,000) 2. Equipment for Cross-Border 1,200,000 (1,200,000) Facilitation 3. Consulting Services 3,800,000 4,500,000 700,000 3,650,777 849,223 a. Detailed Design and 3,000,000 4,500,000 1,500,000 3,650,777 849,223 Supervision b. Cross-Border Facilitation 800,000 (800,000) 4. Project Management 800,000 100,000 (700,000) 45,182 54,818 5. Environmental Management 100,000 100,000 100,000 6. Financial Charges 4,200,000 4,200,000 994,424 3,205,576 7. Unallocated 4,800,000 100,000 (4,700,000) 100,000 Total 49,000,000 49,000,000 39,347,801 9,652,199a a Canceled at loan closing on 15 June 2010. c. Loan 2206-AZE(SF) Amount (SDR) Last Amount Original Revised Increased/ Amount Undisbursed Category Allocation Allocation (Canceled) Disbursed Balance Equipment 1,245,000 1,245,000 1,245,000 Consulting Services 830,000 830,000 676,138 153,862 Total 2,075,000 2,075,000 676,138 1,398,862a $ Equivalent 3,000,000 1,048,381 a Canceled at loan closing on 15 June 2010. 10. Local Costs (Financed) – Amount ($) (not available) – Percentage of Local Costs (not available) – Percentage of Total Cost (not available) iii C. Project Data 1. Project Cost ($ million) Cost Appraisal Estimate Actual Foreign Exchange Cost (not available) (not available) Local Currency Cost (not available) (not available) Total (not available) (not available) 2. Financing Plan ($ million) Cost Appraisal Estimate Actual Implementation Costs Borrower-Financed 19.8 73.8 ADB-Financed 47.8 39.4 ordinary capital resources 44.8 38.3 Special Funds resources 3.0 1.1 Islamic Development Bank-Financed 10.4 10.4 Saudi Fund for Development-Financed 11.0 13.0 Implementation Total Financial Chargesa Borrower-Financed ADB-Financed 4.2 1.0 Islamic Development Bank–Financed Saudi Fund for Development–Financed Project Total 93.2 137.6 ADB = Asian Development Bank. a Including interest during construction and commitment fee. 3. Cost Breakdown, by Project Component ($ million) Component Appraisal Estimate Actual A. Base Cost 1. Road Improvement Component 64.6 135.1 a. Land Acquisition and Resettlement 0.5 b. Civil Works 59.7 129.1 i. Yevlakh–Ganja Section 39.1 84.1 ii. Gazakh–Georgian Border Section 16.8 45.0 iii. Local Roads 3.8 c. Consulting Services 4.2 6.0 d. Environmental Management 0.2 2. Road Subsector Institutional Strengthening 3.0 1.1 Component 3. Cross-Border Facilitation Component 4.9 4. Project Management 1.0 0.4 5. Local Taxes and Duties 7.8 B. Contingencies 7.7 C. Financial Charges 4.2 1.0 Total 93.2 137.6 iv 4. Project Schedule Item Appraisal Estimate Actual Civil Works Gazakh–Georgian Border Section Procurement Q2 2005–Q4 2006 Q1 2006–Q4 2007 Civil Works Q4 2006–Q4 2008 Q1 2008–Q1 2010 Yevlakh–Ganja Section Procurement Q2 2005–Q4 2006 Q3 2007–Q3 2008 Civil Works Q4 2006–Q4 2008 Q1 2008–Q1 2010 Consulting Services for Design and Supervision Gazakh–Georgian Border Section Q1 2006–Q4 2008 Q1 2008–Q1 2010 Yevlakh–Ganja Section Q1 2006–Q4 2008 Q1 2008–Q1 2010 Institutional Strengthening Component Recruitment Q2 2006–Q3 2006 Q1 2008–Q4 2008 Implementation Q4 2006–Q3 2008 Q1 2009–Q4 2009 5. Project Performance Report Ratings Ratings Implementation Implementation Period Development Objectives Progress 1 Jul 2006–31 Dec 2006 Satisfactory Satisfactory 1 Jan 2007–31 Dec 2007 Satisfactory Highly satisfactory 1 Jan 2008–30 Jun 2008 Satisfactory Partially satisfactory 1 Jul 2008–30 Jun 2010 Satisfactory Satisfactory D. Data on Asian Development Bank Missions No. of No. of Person- Specialization Name of Mission Date Persons Days of Membersa Fact-finding 24 Jan–4 Feb 2005 9 99 a, b, c, d, d, e, f, g Appraisal 1–15 Jun 2005 3 42 a, b, d Inception 8–11 Feb 2006 4 12 a, b, h, i Review 1 27 Nov–4 Dec 2007 2 14 a, j Review 2 24–27 Nov 2008 2 6 e, i Review 3 22–24 Apr 2009 1 3 e Review 4 13–15 Jul 2009 1 3 e Midterm Review 19–22 Oct 2009 3 9 b, e, i Review 5 28–30 Jan 2010 3 9 a, e, i Review 6 29 Apr–4 May 2010 3 15 d, e, i Completion Review 12–22 Sep 2011 3 27 b, g, j a a = environment specialist, b = transport specialist, c = program specialist, d = social specialist, e = financial management specialist, f = counsel, g = consultant, h = operations officer, i = project implementation officer, j = analyst.