Document of The World Bank Public Disclosure Authorized Report No: 22169-IN Public Disclosure Authorized PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN IN THE AMOUNT OF US$589 MILLION EQUIVALENT TO THE GOVERNMENT OF INDIA Public Disclosure Authorized FOR THE GRAND TRUNK ROAD IMPROVEMENT PROJECT May 30, 2001 Infrastructure Sector Unit South Asia Regional Office Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective January 18, 2001) Currency Unit = Indian Rupees (INR) INR 1.00 = US$0.022 US$1 = INR 45.42 FISCAL YEAR April 1 -- March 31 ABBREVIATIONS AND ACRONYMS AADT - Annual Average Daily Traffic MOST - Ministry of Surface Transport ADB - Asian Development Bank NCB - National Competitive Bidding AIDS - AcquiredImmune Deficiency Syndrome NGO - Non governmental organization APL - AdaptableProgram Loan NHAI - National Highways Authorityof India BOT - Build-Operate-Transfer NHDP - National Highway Development C&AG - Controller& Auditor General of India Program CAS - Country Assistance Strategy NPV - Net Present Value CBO - CommunityBased Organization O&M - Operation and Maintenance CMU - Corridor ManagementUnit OD - Operational Directive EA - EnvironmentalAssessment PFMS - Project FinancialManagement EMP - EnvironmentalManagement Plan Systems ERR - EconomicRate of Retum PIC - Project Information Center ESMU - Environment& Social ManagementUnit PMR - Project ManagementReport GOI - Government of India PMU - Project ManagementUnit GTRIP - Grand Trunk Road ImprovementProject PPP - Public-PrivatePartnership HDM-III- Highway Design and Maintenance PSD - Private Sector Development Standards Model - Version III PWD - Public Works Departments HIV - Human ImmunodeficiencyVirus RAP - ResettlementAction Plan HO - Head Office R&R - Resettlementand Rehabilitation JBIC - Japanese Bank for International ROW - Right-of-Way Cooperation SC - SupervisionConsultants ICB - InternationalCompetitive Bidding SIL - Specific InvestmentLoan ICR - ImplementationCompletion Report SOE - Statement of Expenditure IL&FS - InfrastructureLeasing & Financial TN\HP- Third National Highway Project Services TTZ - The Taj Trapezium Zone MOEF - Ministry of Environment& Forestry UP - Uttar Pradesh MORTH- Ministry of Road Transport & Highways WTCP - Western Transport Corridor Project Vice President: Mieko Nishimizu Country Manager/Director: Edwin R. Lim Sector Manager/Director: Vincent Gouarne Task Team Leader/Task Manager: Zhi Liu INDIA GRANDTRUNK ROAD IMPROVEMENTPROJECT CONTENTS A. Project Development Objective Page 1. Project development objective 2 2. Key performance indicators 2 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 2 2. Main sector issues and Government strategy 2 3. Sector issues to be addressed by the project and strategic choices 5 C. Project Description Summary 1. Project components 6 2. Key policy and institutional reforms supported by the project 9 3. Benefits and target population 10 4. Institutional and implementation arrangements 10 D. Project Rationale 1. Project alternatives considered and reasons for rejection 11 2. Major related projects financed by the Bank and other development agencies 12 3. Lessons learned and reflected in proposed project design 14 4. Indications of borrower conmnitment and ownership 14 5. Value added of Bank support in this project 15 E. Summary Project Analysis 1. Economic 15 2. Financial 16 3. Technical 17 4. Institutional 17 5. Environmental I8 6. Social 22 7. Safeguard Policies 27 F. Sustainability and Risks 1. Sustainability 27 2. Critical risks 28 3. Possible controversial aspects 28 G. Main Loan Conditions 1. Effectiveness Condition 29 2. Other 29 H. Readiness for Implementation 29 I. Compliance with Bank Policies 30 Annexes Annex 1: Project Design Summary 31 Annex 2: Detailed Project Description 35 Annex 3: Estimated Project Costs 38 Annex 4: Cost Benefit Analysis Summary, or Cost-Effectiveness Analysis Summary 39 Annex 5: Financial Summary for Revenue-Eaming Project Entities, or 44 Financial Summary Annex 6: Procurement and Disbursement Arrangements 45 Annex 7: Project Processing Schedule 59 Annex 8: Documents in the Project File 60 Annex 9: Statement of Loans and Credits 62 Annex 10: Country at a Glance 66 Annex 11: Environment & Social Assessment, EMP, and RAP 68 MAP(S) IBRD 31387 INDIA Grand Trunk Road Improvement Project Project Appraisal Document South Asia Regional Office SASIN Date: May 30, 2001 Team Leader: Zhi Liu Country Manager/Director: Edwin Lim Sector Manager/Director: Vincent Gouame Project ID: P071244 Sector(s): BI - Institutional Development, DV - Privatization, TH - Highways Lending Instrument: Specific Investment Loan (SIL) Theme(s): Public Sector; Private Sector; Transport Poverty Targeted Intervention: N Program FinancingData [X] Loan [ ] Credit [ Grant [1 Guarantee [] Other: For Loans/Credits/Others: Amount (US$m): 589.00 ProposedTerms (IBRD):Variable Spread & Rate Single CurrencyLoan (VSCL) Grace period (years):5 Years to maturity:20 Commitmentfee: 0.75% Front end fee on Bank loan: 1.00% Financing Plan (US$m): Source Local Foreign Total BORROWER 161.20 5.80 167.00 IBRD 377.60 211.40 589.00 Total: 538.80 217.20 756.00 Borrower: GOVERNMENT OF INDIA Responsibleagency: NATIONAL HIGHWAYS AUTHORITY OF INDIA NHAI Address: National Highway Authority of India, 1, Eastem Avenue, Maharani Bagh, New Delhi, 110065 Contact Person: Subhash Patel, Chief General Manager (World Bank Projects) Tel: 91-11-682-4974 Fax: 91-11-692-4383 Email: [email protected] Estimateddisbursements ( Bank FY/US$m): FY 2002 2003 2004 2005 2006 2007 2008 Annual 88.00 147.00 177.00 118.00 59.00 Cumulative 88.00 235.00 412.00 530.00 589.00 Project implementationperiod: Five years Expectedeffectiveness date: 09/30/2001 Expectedclosing date: 12/31/2006 00SPAD FaV S Ma . 25 A. Project DevelopmentObjective 1. Project development objective: (see Annex 1) The Bank adopts a programmatic approach to support the Government of India's (GOI) National Highway Development Program (NHDP) through a series of loans. The Grand Trunk Road Improvement Project (GTRIP) is the second project in the series, following the Third National Highway Project (TNHP) which was approved by the Board in June 2000 and is under implementation. Thus the development objectives of the project are consistent with those of TNHP: (a) to reduce transport constraints on national economic activity; and (b) to improve institutional capabilities to manage road programs, assets, and services on a more commercial basis. 2. Key performanceindicators: (see Annex 1) (a) Vehicle travel time along the entire national highway corridor between Delhi and Calcutta reduced by 25-30% by end of project (EOP); (b) truck operating costs reduced by at least 10% by EOP; (c) incidence of road deaths reduced by 20% on project roads by EOP; and (d) about 1,200 km of national highways maintained under contract with private sector and managed by the Corridor Management Units (CMU) by EOP. B. StrategicContext 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: R2001-0037/1[IFC/R2001-0037/11 Date of latest CAS discussion: 4/5/2001 The CAS identifies highway infrastructure bottlenecks as one of the major constraints to poverty reduction and private sector-led growth. The GTRIP supports the CAS sector goal of reducing highway infrastructure bottlenecks. The project is also designed to contribute to the two important areas emphasized by the CAS: (a) improving government capability and effectiveness to deliver core public services that are vital for economic growth and poverty reduction; and (b) enabling the environment for private sector investments in infrastructure. The major project works will be implemented in the states of Bihar, Jharkhand, and Uttar Pradesh, which are among the less developed states in India. The project is expected to improve the ability of these states to participate in the economic development and trade which is taking place to a larger extent elsewhere in India. 2. Main sectorissues and Governmentstrategy: The national highway network has a total length of 57,700 km, which accounts for about 1.7 percent of the total road network of 3.3 million km but carries over 40% of the road traffic. Over 95% of the national highway network are two-lane roads or narrower, and a significant proportion is in poor surface condition. This results from years of inadequate allocation of resources to the core highway system and poor management of transport infrastructure by the public sector. During the market liberalization in the 1990s, steady economic growth has driven up the demand for improved road transport; and traffic on the national highways has been -2 - growing at about 8-10% per annum. As a result, the trunk national highways are increasingly congested. The level of service is further worsened by the mixed traffic of fast and slow vehicles, highly congested and unsafe urban crossings, and state border inspections/check points (for the purposes of tax collection and commodity permits) that often hold up truck traffic for many hours. It takes four to five days for a truck to go one way between Delhi and Calcutta (about 1,300 km). Moreover, the poor driving condition in mixed traffic on the two-lane national highways is a major contributing factor to road traffic accidents. India is among the nations with the highest road accident rate per vehicle, and 38% of the road accidents occur on national highways. Where both vehicle insurance system and health