PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: AB5947 National Road Rehabilitation (Osh-Batken-Isfana) - Additional Project Name Financing Region EUROPE AND CENTRAL ASIA Sector Roads and highways (100%) Project ID P123291 Borrower(s) KYRGYZ REPUBLIC Implementing Agency Ministry of Transport and Communications of the Kyrgyz Republic Environment Category [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared August 26, 2010 Date of Appraisal August 10, 2010 Authorization Date of Board Approval September 30, 2010 1. Country and Sector Background The Kyrgyz Republic experienced social unrest during April - June 2010 that led to the assumption to power of a group of opposition and civic leaders. A Joint Economic Assessment (JEA) reported that the recent events decimated livelihoods for numerous households in the cities of Osh and Jalal-Abad. Both cities are located in the southwestern part of the Kyrgyz Republic. The Kyrgyz Government Commission for Assessment of Damages estimated a loss of employment of about 4,000 persons, mostly in the services and trade sectors. In addition, there is significant disruption of markets and economic activities. Recommendations for the short- term include the development of employment opportunities, such as cash for work initiatives and labor-intensive public works targeted towards households whose livelihoods were lost or damaged as well as for others economically vulnerable groups. The civil unrests in Osh and Jalal-Abad have had significant impacts on the local economy and are expected to lead to a significant contraction in the economy compared to the pre-crisis growth estimate, and to significant household income losses. In addition, foreign investment may slow down substantially. Reconstruction and development needs are expected to extend into 2011, when the economy is expected to begin recovery. The current fiscal balance of the Government is expected to expand significantly and is estimated to require external financing in the amount of US$335 million in 2010 and US$225 million in 2011. Additional non- governmental support would also be critical in the reconstruction, recovery and rehabilitation effort. Roads in the Kyrgyz Republic carry most of the passenger and freight traffic (92 percent and 59 percent respectively). While the country has relatively good road network coverage,1 preserving the existing network through proper maintenance and rehabilitation is the primary focus of current road sector policies as roads are deteriorating. Over 60 percent of the road network 1 The total road network in the country is about 34,000 km, including 18,810 kilometers under the jurisdiction of the MoTC and 15,910 kilometers of urban, rural, agricultural industrial and other roads. requires either periodic maintenance or rehabilitation. The Government, with the assistance of donors, has been focusing on rehabilitating key links of the road network that are of regional and national importance and carry the majority of the road-based traffic. It is in this context that the Project is financing the rehabilitation of about 32 kilometers (kms) of the Osh-Batken-Isfana road, one of the key regional corridors. Through the rehabilitation of this road section traffic will be able to bypass foreign territories (Uzbekistan and Tajikistan) and their enclaves within the Kyrgyz Republic, which is at present a serious impediment to travel. The EBRD and EC are also contributing about US$45 million through parallel financing of other road sections along the same corridor. The road network of the city of Osh is managed by its Urban Roads Department, which is in charge of maintenance and construction of paved and unpaved streets and associated drainage structures, including bridges and side drains. This department consists of eight staff, including five engineers. The urban network of roads is about 520 km long, out of which 320 km of roads are paved and about 200 km are earth or gravel roads. Except for a few central main streets, the network is in poor condition. This is mainly due to the lack of maintenance funding over many years. The municipal budget for roads (including capital repair and maintenance costs) in Osh was KGS 29 million (about US$ 630,000) and KGS 18 million (about US$173,900) in 2008 and 2009 respectively. This remains inadequate for a city which has a population of 260,000 according to the 2009 census. Therefore, there is a need to undertake basic road maintenance activities, including repairs to potholes or area wide patching works, repair of old and poorly performing patched areas, restoration and repairs of storm water drains along streets, (re) graveling, edge repairs, repairs to concrete sidewalks, repairs to bridge railings, sealing of cracks, removal of crocodile cracking, and some limited replacement of base courses. A limited number of road sections may be beyond repair and may have to be reconstructed. It is estimated that to implement routine maintenance and repairs for the sections of the road network in the city of Osh for which repairs are justifiable should take no more than three years and could cost up to US$4.5 million. In contrast, the city of Jalal-Abad has been providing more resources for its Urban Roads Department and the road network under its management is noticeably in better condition than that of its neighboring city, Osh. The AF will therefore focus on funding works related to the repair of roads in the city of Osh. A short road section in the greater Jalal-Abad vicinity (administrated by MoTC) is on the list of roads planned to be repaired under the proposed AF. Some of the urban arteries and main roads within the city boundaries of Osh and Jalal-Abad are national roads that are owned, managed and maintained by the MoTC. The Regional Road Agency (RRA) of the respective oblast (region) is responsible for maintaining roads under the administrative responsibility of MoTC. RRAs have equipment to carry out resealing of paved roads with bituminous surface treatment. Timely intervention by RRAs has extended the life of some of the national roads, while others are too old to be improved by resealing only, and require strengthening by asphalt overlay. The RRA in Osh Oblast appears to be doing a reasonably good job with the limited funding available. The activities of the RRA in Osh oblast has somewhat limited further development of the local construction industry in the region; there are nonetheless small contractors in Osh Oblast that are capable of undertaking asphalt overlay and other road works like the ones that would be needed to rehabilitate sections of the national road network managed by MoTC. Due to budget constraints the size of civil works contracts have been small in the past; the AF is therefore designed to accommodate the capacity constraint by adjusting the contract size to fit the financial capacity of the local contractors and by providing adequate technical supervision.2 2. Objectives To reflect the scaled-up project activities, the Project Development Objective and the Results Framework of the ongoing project and the proposed Additional Financing are described below. The revised objectives of the Project are to: (i) contribute to the reduction of transport costs and travel time along the Osh-Batken-Isfana road corridor, (ii) improve road safety planning, and (iii) repair and rehabilitate road infrastructure in and around Osh and Jalal-Abad cities thereby creating temporary jobs. Project Outcome Indicators: • Reduction in transport costs for road users by car along the project road section of the Osh-Batken-Isfana Road corridor (revised) • Reduction in travel time for road users by car along the project road section of the Osh- Batken-Isfana Road corridor and along the entire Osh-Batken-Isfana Road corridor (revised) • Proportional increase in traffic one year after project road section of the Osh-Batken- Isfana Road corridor has been improved or rehabilitated (revised) • Proportional increase in the number of rural people along the Osh-Batken-Isfana Road corridor who live within 2 kilometers of an all-season road (revised) • Increased effectiveness of road safety planning (no change) • Number of person-months of employment created (new) Intermediate Results Indicators • Number of kilometers of roads rehabilitated along the Osh-Batken-Isfana Road corridor (revised) • Number of kilometers of urban roads repaired in within the city of Osh (new) • Number of kilometers of roads repaired in and around the greater Osh and Jalal-Abad city vicinities (new) • Percentage of total classified road network in the project are in good and fair condition (percent) (no change) • National Road Safety Program developed and launched ( number) (no change) • Pilot demonstration projects on road safety along the corridor developed (number) (no change) 2 Some Bishkek headquartered construction companies have Osh offices and might be interested, depending on the size of the civil works contracts. • Pilot demonstration projects on road safety along the corridor developed (number) (no change) 3. Rationale for Bank Involvement The proposed AF is based on the findings of the Joint Economic Assessment published in July 2010, which confirmed the widespread damages and extensive economic dislocation. The country faces severe deficiencies in infrastructure: energy insecurity, poor road connectivity, and lack of basic infrastructure services at the local level. The current crisis has highlighted the need to improve infrastructure as a prerequisite for economic development of the country, promoting peace, security and social cohesion. While direct damage to transport infrastructure has been limited, the proposed AF would enhance the economic development of this relatively depressed region by providing an improved transport link for trade and temporary employment. The Project in the amount of US$ 25 million equivalent was approved by the Board on November 3, 2009, and became effective on February 26, 2010. The project, aiming at rehabilitating about 32 kms of the Osh-Batken-Isfana road corridor and improving road safety planning at the national level, is being implemented satisfactorily.