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World Bank Document ROAD SECTOR DEVELOPMENT PROJECT (IDA Credit Nos.4832-NP, 5002-NP and IDA Grant Nos.H-339-NP, H-629-NP) Implementation Review and Support Mission: September 16-26, 2014 AIDE-MEMOIRE Public Disclosure Authorized I. Introduction and Acknowledgement 1. A World Bank review team1 (see Annex 1a for the team members’ list) carried out an implementation review from September 16-26, 2014 of the Road Sector Development Project (RSDP). The review had two objectives: (i) to review and assess the project status and identify the key implementation issues; and (ii) to identify and agree with the Government of Nepal (GON) on the future course of actions that will be necessary for achieving satisfactory results as envisaged in this project. This review was particularly important given the project is scheduled to be closed within approximately nine months’ time. The Team visited RSDP roadwork sites in order to summarily assess the roadwork quality and contract implementation progress status. 2. The Team would like to thank GON for the hospitality extended to it, especially by counterpart agencies and officials (Annex 1b provides the list of persons met). This Aide-Memoire summarizes Public Disclosure Authorized main review findings, agreements reached, and recommendations made. It also reflects discussions held in a wrap up meeting chaired by Mr. Bishnu Om Bade, Joint Secretary at the Ministry of Physical Infrastructure and Transport (MoPIT) on September 26, 2014 and comments received on the draft. As per the Bank's Access to Information policy and the wrap up meeting decision, this Aide- Memoire will be classified as a public document. II. Key Project Data 3. The following table provides the summary project data and the summary performance ratings: Project Data Project Performance Ratings Board Approval (original) December 6, 2007 Summary Ratings Last Now Trend Board Approval (AF) June 2, 2011 Review Effectiveness Date (original) February 21, 2008 Achievement of PDO MS MS ▲ Public Disclosure Authorized Effectiveness Date (AF) July 8, 2011 Implementation Progress MS MS ▲ Closing Date (original) December 31, 2013 Project Management MS MS ▲ Closing Date (AF) June 30, 2015 Procurement MS MS ▲ Credit/Grant Amount $117.54 million Financial Management MU MS ▲ Amount Disbursed (as of $89.32 million Safeguards MS MS ▲ September 30, 2014) (76%) M&E MS MS ▲ Counterpart Funding S S ◄► Notes: AF-Additional Financing; S-Satisfactory; MS-Moderately Satisfactory; MU -Moderately Unsatisfactory; U-Unsatisfactory; ▲Improving Trends; ▼ Deteriorating Trends; ◄► Static. III. Achievement of Development Objectives Status 4. RSDP is likely to achieve its objectives and the progress made towards the achievement of the Project Development Objective (PDO). It was reported earlier that RSDP had conducted a social impact study in October 2011 that dealt with two outcome indicators of roads developed under original project scopes. These indicators were linked to all weather access and travel time reductions. Public Disclosure Authorized Study results show that these indicators have surpassed targets. RSDP also completed the baseline studies for additional financing (AF) roads. Progress has been made with regard to impact studies. Piloting of questionnaires is now complete. As per the current plan, the impact studies will be completed by December 2014. One of the three outcome indicators (reduction of travel time) will be determined by these studies. The project has also completed a GIS-based preliminary accessibility study in order to assess another outcome indicator: the percentage increase in population to all season 1 Hereinafter referred as “The Team” road access. The results show that the project is expected to achieve more than the target result: 6% increase in population in project districts with all-season road access within 20 minutes walking distance. The third outcome indicator is related to Strategic Road Network (SRN) conditions. A road condition survey carried out in November, 20122 showed that 11.27% of black-topped SRN roads were in poor condition (the end-project target is 15%). This review has concluded that the achievement of the project’s objectives is now largely dependent on the pace of implementation of the ongoing upgrading and periodic maintenance (PM) contracts and the progress relation to asset management linked activities (see below). Annex 2 summarizes result achievement progress. IV. Current Implementation Status Road Development Component 5. RSDP has taken actions against the non-performing upgrading and PM contractors. The project has now forfeited Bank Guarantees against mobilization advances of five non-performing contractors. Also three non-performing PM contracts have been terminated and actions have been initiated against these contractors. RSDP is also conducting regular meetings with the contractors to expedite the pace of contract implementation. RSDP initiatives have been responsible for expediting progress of at least one contract (contract 4A of Sitalpati-Musikot (SM) Road). The Project has also warned the remaining contractors that similar action will be taken if their performances were not improved within the specific dates. Upgrading Works Sub-Component 6. Although the pace of implementation of contracts has improved, close monitoring of Surkhet-Jumla Road corridor contracts (10 nos.) is needed so that they are completed comfortably before the project closure. RSDP’s target is to upgrade 700km of earthen tracks to all- season low-cost motorable road standards. They will provide all-weather road connections to eight remote district headquarters in Mid and Far-Western regions. As of end-August, 2014, six district headquarters are connected3. Manma of Kalikot District and Jumla are the two remaining district headquarters. Completion of Khidkijyula-Manma-Jumla (KMJ) Road will connect these districts. A total of 586.5km of roads (520.5km-Otta-seal, 36km-DBST surface, 30km-gravel surface; 319km under original project scope plus 267.5km-under AF) has, so far, been upgraded by RSDP. 7. All but 11 upgrading contracts are now complete. The summary progress of implementation of 25 going upgrading contracts are given below (Annex 3 provides details). Apart from these contracts, RSDP has awarded (in early July, 2014) three additional contracts linked to 2013 flood damaged portion of two project roads: Khodpe-Chainpur (KC) and Gokuleshwor- Darchula (GD). Contractors have now mobilized at site. Progress Completed 80-95% 65-80% 50-65% <50% No. of contracts 14 1 1 7 2 8. Significant slow progress (progress ranging from 51% to 72%) has been observed in the case of eight KMJ Road corridor contracts against nearly 100% of the elapsed time. Many of these contracts have missed milestones. Contracts that are of particular concern are of all 6-series and 7C. The Team advises RSDP to closely monitor these contracts and to take further actions against these non-performing contractors in case they fail to make progress against targets sets in meeting with the project. 9. The supervision consultants Team Leader (TL) needs to relocate to Kohalpur to facilitate the implementation of ongoing contracts. The TL has earlier moved to Kathmandu to help the implementation of the Narayanghat-Mugling Road (under Nepal-India Regional Trade and Transport Project or NIRTTP) contracts. However, NIRTTP is experiencing a delay in the award of these contracts. Also the implementation of Surket-Jumla Road corridor contracts is in a critical stage. It is 2 Final Report (Volume II): traffic, surface distress and road roughness surveys on Strategic Road Network (SRN), FY 2012; Soil Test (P) Ltd. and Aviyaan Consulting (P) Ltd. 3Baitadi, Dailekh, Darchula, Chainpur of Bajhang district, Jajarkot and Musikot of Rukum District 2 also necessary for the Deputy Team Leader (DTL) to be stationed at Surkhet in order to provide close implementation support to Surket-Jumla Road corridor ongoing contracts. 10. Number of issues identified during the field visit need attention. The Team recommends the following: (i) timely finalization of contract variations; (ii) making codes available to field laboratories and ensuring appropriate setting up of mini-laboratories; (iii) gabion works quality improvement (including the use of appropriate binding wires); and (iv) ensuring appropriate control of over-sized gravel sub-base and Crusher-run Materials (CRM) before placing them. These issues were discussed and agreed with RSDP (see Annex 11 for details). Periodic Maintenance Works Sub-Component 11. Although DOR has cancelled three non-performing PM contracts (total length of roughly 82 km), more needs to be done to achieve the PM target under RSDP. Close monitoring of the periodic maintenance (PM) contracts is necessary. It has been agreed that the Director General will chair a meeting to be attended by the Deputy Director Generals (Foreign Cooperation Branch and Maintenance Branch) and Regional Directors in order to develop a strategy for the quick implementation of these contracts. Further actions against the slow-performing contracts might be needed. 12. Less than two-thirds of the RSDP’s PM target of 2,550km of black-topped strategic roads has been achieved. The total let out contract length under RSDP is 2,338km (92% of the target). Of them, 1,554km is already completed (450km under original financing), which is approximately 61% of the target (Annex 3 provides details). The following table summarizes the progress of PM contracts. The table shows that while 12 contracts (length 276km) have progress less than 50%, another 12 contracts (length 388km) have progress between 50% to 74%. The quick implementation of RSDP PM plus GON financed FY 2013/14 PM contracts will be crucial in the achievement of the RSDP PM targets. It is to be noted that GON is fully financing activities of roughly 291km length of PM works through the Roads Board Nepal (RBN) in FY 2013/14. The table below also identifies the non-performing contacts that require urgent action, including their cancellation. The failure to take actions against these contacts may result in the withdrawal of the Bank’s contribution against them.
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