ASIAN DEVELOPMENT BANK TAR:STU 37030 TECHNICAL ASSISTANCE FOR PREPARING THE SUBREGIONAL TRANSPORT CONNECTIVITY PROJECT (INDIA) December 2003 CURRENCY EQUIVALENTS (as of 30 October 2003) Currency Unit – Indian rupee/s (Re/Rs) Re1.00 = $0.022 $1.00 = Rs45.34 ABBREVIATIONS ADB – Asian Development Bank BRO – Border Roads Organization EA – executing agency EIA – environmental impact assessment IPDP – indigenous people’s development plan km – kilometer MORTH – Ministry of Road Transport and Highways RP – resettlement plan PSP – private sector participation SASEC – South Asia Subregional Economic Cooperation SAGQ – South Asia Growth Quadrilateral SGOS – State Government of Sikkim SGOWB – State Government of West Bengal TA – technical assistance NOTES (i) The fiscal year (FY) of the Government ends on 31 March. (ii) In this report, “$” refers to US dollars. This report was prepared by T. Duncan, South Asia Transport and Communications Division. 1 I. INTRODUCTION 1. The Government of India has requested the Asian Development Bank (ADB) for technical assistance (TA) to prepare the Subregional Transport Connectivity Project. The TA is included in the country strategy and program for India. Following the Reconnaissance Mission on 6–14 May 2003, a TA Fact-Finding Mission visited India on 25 July 2003 and held discussions with the Government on the goals, purpose, scope, implementation arrangements, costs, and terms of reference of the TA. 1 II. ISSUES 2. The West Bengal transport corridor is of strategic importance to the economic development of northeast India and the neighboring countries of Bangladesh, Bhutan, and Nepal. The corridor extends from Haldia port off the Bay of Bengal via Kolkata to Shiliguri in the north of West Bengal, and then east along the national east-west corridor as far as the state of Assam. The corridor is the transport backbone of West Bengal, the major trade route for India’s northeastern states and neighboring Bhutan and Nepal, and provides important links with Bangladesh. 3. For the West Bengal Corridor to realize its full economic potential, it must be upgraded to national highway standard; improved feeder links are needed to serve the main subregional users; and complementary economic and social infrastructure is needed to support growth in economic activities along the corridor, based on the improved competitiveness and locational synergies arising from improved transport efficiency. 4. ADB is assisting the Government to increase the capacity of the West Bengal Corridor. In 2000 an ADB TA prepared a strategy and investment plan for development of the corridor.2 The ADB-financed West Bengal Corridor Project is financing priority investments in that plan.3 The investments comprise improvement of (i) the national highway (NH34) from Barasat, on the northern outskirts of Kolkata, to Raiganj, about 370 kilometers (km) north; and (ii) two state highways providing connections with the Bangladesh border at Bangaon (SH1) and Hilli (SH10). Additionally, under the Government’s National Highways Development Project, the National Highways Authority of India (NHAI) is upgrading the part of the national east-west corridor in West Bengal (from Dalkhola to the state of Assam) to four lanes. Under the Government’s support for improving port connectivity, NHAI is also upgrading the national highways linking Haldia port with the west side of Kolkata (NH41 and NH6). With the construction of the second Vivekananda bridge and the Belgharia Expressway, this will extend high standard links from Haldia to within about 10 km of the upgraded NH34 at Barasat. 5. To complete the upgrading of the corridor, (i) a bypass is needed between Barasat and the Belgharia Expressway, in order to complete the high quality through route from NH34 to Haldia Port; (ii) NH34 should be upgraded between Raiganj and Dalkhola, to complete the link between NH34 and the east-west corridor; and (iii) bridges are needed on NH34 at Baharampur and Maldah, to bypass congestion. In view of high traffic levels, the Barasat bypass may offer scope for private sector participation. 6. Bhutan, Bangladesh, India, and Nepal have initiated a subregional economic cooperation program to establish the South Asian Growth Quadrangle. ADB has been facilitating this initiative 1 The TA first appeared in ADB Business Opportunities, Internet edition, on 18 July 2003. 2 ADB. 1998. Technical Assistance to India for the North-South Corridor Development Project in West Bengal. Manila. 3 ADB. 2001. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to India for the West Bengal Corridor Development Project. Manila. 2 since 2000, through the South Asia Subregional Economic Cooperation (SASEC) program. ADB has provided regional TAs to identify and prioritize subregional cooperation projects,4 and to establish and consolidate the institutional framework for regional economic cooperation.5 Because transport is fundamentally important to regional economic cooperation, the transport sector has featured prominently in the SASEC program. The initial approach has been to (i) establish a conceptual framework for subregional cooperation in the transport sector; (ii) assess the current performance of each key corridor, and identify specific impediments to transportation along these corridors; and (iii) develop project concepts for removing the impediments, both physical and institutional, so as to facilitate the future funding of those projects. Further regional TA has been provided to support these activities.6 As the subregional cooperation deepens, this may lead to design of improved transit arrangements, and simplification of documentation requirements for cross-border traffic. 7. Two of the high priority investment projects identified by the SASEC program are for feeder links into the West Bengal Corridor.7 These are improvement of (i) the state highway from the Bhutan border at Phuentsholing to the east-west corridor at Hasimara; and (ii) the state highway between the Bangladesh border at Fulbari and the Nepal border at Kakarbhitta, intersecting the north-south corridor. The Phuentsholing-Hasimara link is part of Bhutan’s main trade route between the capital, Thimpu, and Haldia Port. Under its proposed road sector loan to Bhutan in 2005,8 ADB is also expecting to finance upgrading of the road from Phuentsholing to the Thimpu. Another proposed ADB loan to Bhutan, in 2004, is expected to finance development a logistics terminal at Phuentsholing.9 The Fulbari-Kakarbhitta link serves transit traffic between Nepal and Bangladesh, and provides access to the West Bengal Corridor for trade serving eastern Nepal and northwest Bangladesh. ADB is currently financing improvement of Nepal’s east-west highway to Kakarbhitta,10 and expects to include support for development of an inland customs depot at Kakarbhitta under the proposed loan to Nepal in 2004.11 ADB’s road sector loan to Bangladesh in 200312 includes a component to upgrade the road from Fulbari to Banglabhandh, where it connects with the national highway (N5) to Dhaka via Jamuna Bridge. The Government has indicated that before committing to investment in improving the link to Fulbari it will require confirmation that the Government of Bangladesh intends to upgrade the link on the Bangladesh side of the border. 8. The corridor also provides the transport connection between the state of Sikkim and the rest of India, thereby underpinning Sikkim’s economy and sense of integration. The national highway between Sevok and Gangtok (NH31A) is narrow and congested, and needs to be upgraded.13 The state highway from Gangtok to Nathula Pass may also need improving. As a result of the decision of India and the People’s Republic of China (PRC) to resume cross-border trade via Nathula Pass,14 the link from Sevok to Nathula Pass via Gangtok could play an important 4 ADB. 2000. Regional Technical Assistance for Identification and Prioritization of Subregional Projects in South Asia. Manila. 5 ADB. 2001. Regional Technical Assistance for South Asia Subregional Economic Cooperation II. Manila. 6 ADB. 2003. Regional Technical Assistance for Subregional Corridor Operational Efficiency Study. Manila 7 Arnold, John. 2002. Report on Identification and Prioritization of Subregional Projects in South Asia. Manila: ADB. 8 Proposed Road Network Expansion Project. 9 ADB. 2002. Technical Assistance to Bhutan for Preparing the Industrial Estate and Dry Port Development Project. Manila. 10 ADB. 2000. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to Nepal for the Road Network Development Project. Manila. 11 Subregional Transport Facilitation Project, Nepal. 12 ADB. 2003. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to Bangladesh for the Road Network Improvement and Maintenance II Project. Manila. 13 In 2003, the Prime Minister announced that Sevok-Gangrok road is to be improved. 14 On 23 June 2003, India and the PRC signed a memorandum on opening border trade through Nathula Pass. 3 role in promoting regional cooperation with the PRC.15 This forms part of the traditional silk road, which is the shortest route between the PRC and Bangladesh, India, and Nepal. 9. In addition, complementary investments are needed in economic and social infrastructure to help realize the full economic development and trade potential of the West Bengal Corridor. (i) Private investment in productive activities should be facilitated. Under separate TA, ADB is preparing proposals