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Report and Recommendation of the President
to the Board of Directors
Project Number: 41629
August 2010
Proposed Loan and Technical Assistance Grant
India: Bihar State Highways II Project
CURRENCY EQUIVALENTS
(as of 4 August 2010)
Currency Unit
–
Indian rupee/s (Re/Rs)
Re1.00
$1.00
=
=
$0.0217
Rs46.1500
ABBREVIATIONS
ADB
BSRDC
EIRR
EMP
GDP
km
LIBOR
TA
–
–
–
–
–
–
–
–
Asian Development Bank
Bihar State Road Development Corporation Limited
economic internal rate of return
environment management plan
gross domestic product
kilometer
London interbank offered rate
technical assistance
NOTES
(i)
The fiscal year (FY) of the Government of India begins on 1 April and ends on
31 March. “FY” before a calendar year denotes the year in which the fiscal year
begins, e.g., FY2010 begins on 1 April 2010.
(ii)
In this report, “$” refers to US dollars.
Vice-President
Director General
Director
X. Zhao, Operations 1
S. Rahman, South Asia Department (SARD)
S. Widowati, Transport and Communications Division, SARD
Team leader
Team members
M. Roesner, Transport Specialist, SARD
M. Ajmera, Social Development Specialist, SARD
K. Emzita, Senior Counsel, Office of the General Counsel
V. Lisack, Transport Specialist, SARD
C. San Miguel, Project Implementation Officer, SARD
L. Tai, Transport Specialist, SARD
H. Yamaguchi, Principal Transport Specialist, SARD
M. Alam, Head, Project Administration Unit, Transport and Urban
Development Division, Southeast Asia Department
Peer Reviewer
In preparing any country program or strategy, financing any project, or 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
PROJECT AT A GLANCE
MAP
I.
THE PROPOSAL
1
II.
THE PROJECT
A.
Rationale
B.
Impact and Outcome
C.
Outputs
D.
Investment and Financing Plans
E.
Implementation Arrangements
1
1
2
2
2
3
III.
TECHNICAL ASSISTANCE
4
IV.
DUE DILIGENCE
A.
Technical
B.
Economic
C.
Governance
D.
Poverty and Social
E.
Safeguards
F.
Risks and Mitigating Measures
5
5
5
5
6
7
8
V.
ASSURANCES
9
VI.
RECOMMENDATION
9
APPENDIXES
1
Design and Monitoring Framework
10
2
List of Linked Documents
12
Project at a Glance
1. Project Name:
3. Country:
Bihar State Highways II Project (formerly Bihar State Roads II)
India
4. Department/Division:
5. Sector Classification:
2. Project Number:
South Asia Department
Transport and Communications Division
Sectors
Primary Subsectors
Transport, and information and communication
technology
6. Thematic Classification:
Themes
1
Road transport
Primary
Subthemes
1
Economic growth
Widening access to markets and economic
opportunities
0
Capacity development
6a. Climate Change Impact:
Adaptation
Mitigation
Institutional development
6b. Gender Mainstreaming:
Gender equity theme
Effective gender mainstreaming
Some gender benefits
No gender elements
7. Targeting Classification:
Targeted Intervention
Geographic
Millennium
Income poverty
dimensions of
Development
at household
General Intervention inclusive growth
Goals
level
0
0
0
0
0
1
0
8. Location Impact:
Rural
Urban
National
Regional
High
Medium
Low
1
9. Project Risk Categorization:
Complex
10. Safeguard Categorization:
Environment
Involuntary resettlement
Indigenous peoples
B
A
C
11. ADB Financing:
Sovereign/Nonsovereign
Sovereign
41629-01-3
Modality
Source
Project loan
Ordinary capital resources
Amount ($ million)
300.0
Total
300.0
12. Cofinancing:
No Cofinancing available.
13. Counterpart Financing:
Source
Amount ($ million)
Government
124.0
14. Aid Effectiveness:
Parallel project implementation unit
Program-based approach
No
No
100
100
95
95
75
75
25
25
5
5
0
0
100
100
95
95
75
75
25
25
5
5
0
0
ind2158
Monday, 09 August, 2010 4:41:36 PM
I.
THE PROPOSAL
1.
I submit for your approval the following report and recommendation on a proposed loan
to India for the Bihar State Highways II Project. The report also describes proposed technical
assistance (TA) for the Capacity Building for Bihar State Road Sector. If the Board approves the
proposed loan, I, acting under the authority delegated to me by the Board, will approve the TA.
2.
The Bihar State Highways II Project 1 will build and upgrade about 356 kilometers (km) of
state highways identified under the State Highway Development Program in Bihar. It will involve
upgrading roads to two lanes, strengthening culverts and bridges, building new road sections
and bridges and cross-drainage structures, and building structures for resettlement and
rehabilitation. Consulting support will be provided to support implementation of civil works.
II.
A.
THE PROJECT
Rationale
3.
Under the India country partnership strategy (2009–2012), the Asian Development Bank
(ADB) supports all levels of the road sector development as a core infrastructure operation to
facilitate sustainable economic growth. The project is consistent with the strategic objective set
out in the country partnership strategy and included in the India country operations business
plan (2010).
4.
In India, road transport accounts for 68% of freight movement and 87% of passenger
traffic. The national highways and the secondary system are unable to cope with the rapid traffic
growth. In the road sector, freight traffic increased at about 12% per year and passenger traffic
at about 8% in the past decade. The rapid growth in traffic leads to congestion, deterioration of
roads and increase in the cost of transport. State highways, the secondary road system in India,
link national highways with district headquarters and important towns. The secondary system
comprises about 13% of the road network and carries about 40% of traffic. It is estimated that
about half of the roads in the secondary system are of poor riding quality.
5.
Bihar is one of the economically backward states of India. Judged by the per capita state
income of Rs9,765 in the FY2007, Bihar ranks far below the all India average of Rs33,299,
which is a measure of standard of living. The road network in Bihar is very poor in terms of
coverage and conditions while demand for road transport is increasing. The road density in
Bihar is only 861 km per million population, compared with the national average of 2,828 km.
About half of villages lack all-weather road connectivity. Insufficient funding for road
maintenance in the past has increased the number of roads beyond maintainable condition.
6.
The government of Bihar is undertaking the State Highway Development Program to
rehabilitate and upgrade state highways to at least two lanes and expand the state highway
network by upgrading major district roads to two lanes. The program covers upgrading 2,831 km
out of the 3,127 km of state highways during the 11th Five Year Plan period (2007–2012)
through various schemes, including government schemes, pilot projects such as the public–
private–partnership scheme with a build–operate–transfer contract for a major bridge and ADB
assistance. The ongoing Bihar State Highways Project 2 is providing financial assistance for
1
2
ADB provided project preparatory technical assistance (TA 7198-IND).
ADB. 2008. Report and Recommendation of the President to the Board of Directors: Proposed Loan to India for the
Bihar State Highways Project. Manila (Loan 2443-IND).
2
widening of 820 km of state highways to two lanes. The improvement of 356 km of state
highways to be financed under the proposed loan is part of the program to help meet increased
demands for road transport, and accelerate the process of sustainable economic growth.
7.
The Bihar State Highways Project is progressing well and is expected to be completed
before the loan closes on 31 July 2012. All civil works contracts were awarded in the first year
after loan approval, and the performance and disbursement targets have been achieved. ADB
TA supported the institutional strengthening of the Bihar State Road Development Corporation
Limited (BSRDC), which was established by the Bihar government in February 2009 to
implement the project. 3 BSRDC’s experience in the ongoing project and its institutional
strengthening has benefited the preparation of the proposed loan and boosted project
readiness.
8.
As lack of road maintenance and inability to spend the allocated budget for road
maintenance in the past were identified as key factors leading to the deteriorated status of many
project roads, the focus of institutional strengthening by the capacity development TA will be on
completion of a state wide roads asset registry and improving maintenance management.
B.
Impact and Outcome
9.
The project impact will be a more efficient state road transport system supporting
sustainable economic growth in Bihar by (i) improving the state highway network’s efficiency by
reducing the travel times, (ii) facilitating safe road transport by full implementation of the
recommendations from the road safety audit for the project roads, and (iii) enhancing the
government of Bihar’s capacity for road asset management and road maintenance. The project
outcome will be increased transport efficiency and safety on project roads.
C.
Outputs
10.
The project output will be (i) building and upgrading 356 km of state highways identified
under the State Highway Development Program (Table 1) and (ii) improved management of
road assets and maintenance of project roads by BSRDC.
Table 1: Project Roads
State Highway
Project Road
78
Bihta–Sarmera
81
Sakkadi–Nasrigunj
Mohammadpur–Chapra
90
Birpur–Udakishunganj
91
Total
Length (kilometer)
100
85
69
102
356
Source: Bihar State Road Development Corporation Limited.
D.
Investment and Financing Plans
11.
The project is estimated to cost $424 million including local taxes and duties estimated
at $30.5 million and financing charges (Table 2). ADB will finance the local taxes and duties
associated with project expenditures for works in the amount of about $27.7 million. This is in
line with the India country partnership strategy (2009–2012), which considers taxes and duties
not exceeding 10% of project costs reasonable, transparent, and nondiscriminatory.
3
Attached to ADB. 2008. Report and Recommendation of the President to the Board of Directors: Proposed Loan to
India for the Bihar State Highways Project. Manila (TA 7130-IND).
3
Table 2: Project Investment Plan
($ million)
Item
A.
B.
C.
a
Amounta
b
Base Cost
1. Investment component
2. Institutional development component
Subtotal (A)
Contingenciesc
Financing Charges during Implementationd
Total (A + B + C)
370.68
3.00
373.68
33.82
16.50
424.00
Includes taxes and duties of about $30.5 million. About $27.7 million of taxes and duties for works will be financed
from ADB loan resources.
b
In mid-2010 prices.
c
Physical contingencies computed at 5% for civil works; price contingencies at 0.8% of foreign exchange costs and
6% of local currency costs, including provision for fluctuations in the purchasing power parity exchange rate if this
rate is used.
d
Includes interest and commitment charges. Interest during construction for the ADB loan(s) is computed at the
5-year forward London interbank offered rate plus a spread of 0.3%. Commitment charges for an ADB loan are
0.15% per year on the undisbursed loan amount.
Source: Asian Development Bank estimates.
12.
The Government of India has requested a loan of $300.0 million from ADB’s ordinary
capital resources for the project. The loan will have a term of 25 years, including a grace period
of 5 years, an annual interest rate determined according to ADB’s London interbank offered rate
(LIBOR)-based lending facility, subject to a commitment charge of 0.15% per year, and other
terms and conditions set forth in the draft loan agreement. The government has provided ADB
with (i) the reasons for its decision to borrow under ADB’s LIBOR-based lending facility on the
basis of these terms and conditions, and (ii) an undertaking that these choices were its own
independent decision and not made in reliance on any communication or advice from ADB.
13.
The financing plan is in Table 3. The ADB loan will finance 70.75% of the project cost.
This is considered acceptable, taking into account that the government of Bihar has allocated its
counterpart financing for 29.25% of the cost. By including more roads in the loan, the benefits
will be spread into more areas of the state.
14.
The government will provide the loan proceeds in local currency to the government of
Bihar on the same terms and conditions as received from ADB. The government of Bihar will bear
the foreign exchange risk on the loan.
Table 3: Financing Plan
Source
Asian Development Bank
Government
Total
Amount
($ million)
300.00
124.00
424.00
Share of
Total (%)
70.75
29.25
100.00
Source: Asian Development Bank estimates.
E.
Implementation Arrangements
15.
The executing agency for the project will be the government of Bihar acting through
BSRDC. BSRDC is wholly owned by the government of Bihar and has been equipped with
adequate capacity to implement the project. The project will use project implementation units
that exist in the project area in Biharsharif, Ara, Hajipur, and Araria, and will place additional
4
staff to specifically work on the project. Each project team in a project implementation unit is
headed by a deputy general manager and will be responsible for implementation in the field.
One or two full-time project managers will be assigned for each contract package. The project
managers will be delegated adequate technical and administrative authority for expeditious
project implementation. BSRDC will engage construction supervision consultants to act as the
engineer for the construction contracts.
16.
The implementation arrangements are summarized in Table 4 and described in detail in
the project administration manual. 4
Table 4: Implementation Arrangements
Aspect
Implementation period
Estimated project completion date
Project management
(i) Executing agency
(ii) Project implementation units
Procurement
Consulting services
Retroactive financing and advance
contracting
Disbursement
Arrangements
4 years
31 December 2014
Government of Bihar, acting through the Bihar State Road
Development Corporation Limited
In Biharsharif, Ara, Hajipur, and Araria: 1 deputy general manager
(tech), 1 or 2 project managers, and supporting staff for each unit
International
4 civil works
$54,000,000–
competitive bidding
contracts
$88,000,000 each
National competitive Maximum 5
Maximum
bidding
contracts for supply
$3,000,000 (total)
of goods
Shopping
Maximum 5
Maximum $300,000
contracts for supply
(total)
of goods
Quality- and costAround 2,950
$10,500,000
based selection; full
person-months
technical proposal
Works and consulting services
The loan proceeds will be disbursed according to ADB’s Loan
Disbursement Handbook (2007, as amended from time to time) and
detailed arrangements agreed on between the Government of India
and ADB.
Source: Asian Development Bank.
III.
TECHNICAL ASSISTANCE
17.
Capacity development TA for $1,000,000 to build the capacity of the Bihar state road
sector will further support the institutional development initiatives of the government of Bihar.
The TA will assist and support the recently established BSRDC in improving project
implementation, designing future projects, and ensuring the future operation and maintenance
of the improved roads through the full consumption of the budget allocated for road asset
management. The consultants will conduct district and statewide training and workshops as
required.
4
Project Administration Manual (Appendix 2).
5
18.
The TA will be financed with a grant from ADB’s Technical Assistance Special Fund
(TASF–Others). An international consulting firm will be recruited by ADB according to its
Guidelines on the Use of Consultants (2010, as amended from time to time). Consultants will be
asked to submit simplified technical proposals, and the selection will be in accordance with
ADB’s quality- and cost-based selection method using a quality–cost ratio of 80:20.
IV.
A.
DUE DILIGENCE
Technical
19.
The project was prepared with the enhanced capacity of BSRDC, which has been
gained through the ongoing loan and ADB TA provided for capacity building of the Road
Construction Department and BSRDC. BSRDC engaged detailed design consultants with its
own funds to prepare detailed design documents for roads proposed for possible ADB financing,
incorporating ADB’s requirements of economic, social, and environmental studies into the
consultants’ terms of reference. The government of Bihar asked ADB for TA to conduct due
diligence to ensure that the detailed design consultants’ work fully complies with ADB
requirements. Engineering design is prepared to minimize land acquisition as well as social and
environmental impacts. A road safety audit was performed as part of the TA and the
recommendations were incorporated in the engineering design of the project. Advance actions
have been taken to ensure that the construction can commence early. All of these measures
have improved project readiness and will mitigate the risk of delay.
B.
Economic
20.
The economic evaluation of the project followed the standard practice of comparing
life-cycle road agency and user costs with and without the project, using net present value with
a 12% discount rate and economic internal rate of return (EIRR) as decision criteria. The
Highway Development and Management (HDM-4) system was used in the analysis, which
focused on transport cost savings.
21.
Value added from better transport links resulting in new industries and employment are
not quantified in this analysis but are captured through benefits to generated traffic.
22.
The EIRR for the four roads evaluated (Table 1) varies from 17.1% to 28.8%. Overall,
the project is very robust with a high EIRR, satisfying the economic efficiency criteria.
23.
The sensitivity of the EIRR for the project roads was analyzed with respect to changes in
the benefit and cost streams. The following sensitivity test cases were examined: (i)
construction costs increased by 15%, (ii) time benefits reduced by 50%, (iii) benefits decreased
by 15%, and (iv) a combination of (i) and (iii). The results show that the quantified economic
benefits are robust to various sensitivity tests. All selected roads have an EIRR above 12% in all
sensitivity tests. 5
C.
Governance
24.
Institutional capacity. A project preparatory TA consultant and a capacity development
TA consultant from the Bihar State Highways Project approved in 2008 supplemented BSRDC’s
capacity during project preparation. BSRDC’s capacity for implementation will be further
5
Economic Analysis (Appendix 2).
6
supported by the supervision consultant, who will assist with the supervision of civil works. For
long-term capacity strengthening, TA will be provided to make BSRDC more effective in
developing, operating, and maintaining the state highways.
25.
Financial management. BSRDC has ongoing experience with implementing an ADBfunded project (footnote 2). 6 It has satisfactory capacity for project financial accounting and
sufficient knowledge of ADB’s disbursement procedures.
26.
Procurement. Goods and works will be procured according to the ADB Procurement
Guidelines (2010, as amended from time to time), with prior reviews by ADB at key steps in the
process. BSRDC has successfully awarded the first works contract for the project as part of
advance procurement action. The e-tendering system of Bihar will be assessed and, if found to
meet ADB’s requirements, may be used for future procurement with prior approval from ADB.
27.
Anticorruption. ADB’s Anticorruption Policy (1998, as amended to date) has been
explained to and discussed with the government and BSRDC. The specific policy requirements
and supplementary measures are described in the project administration manual.
D.
Poverty and Social
28.
Poverty reduction and social impact. Bihar state is India’s 12th largest in geographic
size (99,200 km²) and third largest in population. Nearly 85% of the population is rural. Bihar
has the highest proportion of the population living below the poverty line, at 42.6%, according to
estimates of the state government and the Planning Commission of India. The human
development index (a composite of literacy, life expectancy, and per capita income) has
increased for Bihar, as it has for the rest of India. But Bihar still ranks 15th among the states, the
same rank it has held since 1981. In 2001 its human development index was 0.267, compared
with 0.472 for India.
29.
The population of Bihar in 2001 was 82,878,796, 28.43% more than in 1991. The overall
population density was 880 persons per square km. Nearly 20% of the population is in the 0–6
age group. There are 921 females for every 1,000 males. Bihar has the lowest literacy rate in
India, the average for the state being 47%. Close to 60% of males, but only 33.1% of females,
are literate. Life expectancy is 61 years, almost at par with the national life expectancy of
62.7 years.
30.
A poverty and social assessment made during project preparation showed that Bihar has
a largely service-oriented economy with a significant agriculture base and a small industrial
sector. In 2008 agriculture accounted for 35%, industry for 9%, and services for 55% of the
state’s economy. Agriculture, including crop cultivation and livestock production, is the source of
livelihood of the majority of the population. Bihar has the lowest gross domestic product (GDP)
per capita in India, although there are pockets of higher-than-average per capita income.
Between 1999 and 2008, GDP grew by 5.1% yearly, below the Indian average of 7.3%. More
recently, it grew by 18% from 2006 to 2007, making Bihar the fastest-growing major state.
31.
Bihar is among India’s economically backward states. Per capita income in the state in
FY2007 was Rs9,765, far below the national average of Rs33,299. The improvements in state
highways are expected to increase economic opportunities by (i) enabling villagers to shift from
6
Since its creation on 17 February 2009, under Resolution Sec 8/Misc/05-117/2006-1014 (s)we, BSRDC has taken
over project implementation work from the Road Construction Department.
7
subsistence farming to market-oriented agricultural surplus production; and (ii) helping local
people, particularly the rural youth, to find better-paying jobs in trading and other new jobs. The
project will contribute indirectly to better access to health, education, and social services. It will
also have a short-term impact on poverty reduction, as the rural poor will be hired for
construction, tree planting, and ensuing maintenance. These opportunities will increase the
earnings of the poor, who now depend largely on occasional and uncertain employment. 7
32.
Gender. There are 921 females for every 1,000 males in Bihar (2001 census). Although
the literate population is still disproportionately male (para. 29), substantial improvements have
been made of late. Almost all girls are now enrolled in school up to the secondary level, and the
state has launched innovative schemes such as integrated education development and the
provision of bicycles and school uniforms, scholarships, and hostel facilities for female students.
Focus group discussions with women from different socioeconomic groups in the project
influence areas revealed that the majority work in the home and outside and are consulted by
their spouse and other family members before any family decision. Better roads will promote
better transport services, and give everyone better access to social services, markets,
workplaces, higher education, health facilities, and employment opportunities.
33.
HIV and AIDS. India’s National AIDS Control Organization estimates the number of
persons living with HIV in India at 2.31 million in 2007, and adult HIV prevalence at 0.34%. The
HIV sentinel surveillance in 2007 did not include Bihar as a prevalent area for HIV or AIDS.
34.
According to India’s National AIDS Control Organization, HIV infection is typically
concentrated among the poor and marginalized groups (including such high-risk groups as sex
workers, drug users, migrant laborers, and truck drivers). These groups, particularly truckers,
propel the HIV epidemic, and studies indicate that the infection is spreading rapidly to the
general population. But Bihar is a low-prevalence state. The detailed study done during project
preparation did not anticipate any risks of a rise in HIV or AIDS as a result of the project. The
health department and the Bihar State AIDS Control Society are already carrying out state,
district, and block campaigns to increase awareness of the disease. In addition, BSRDC and
implementing nongovernment organizations will involve the Bihar State AIDS Control Society
and local health agencies in social awareness programs (on various subjects including HIV and
AIDS) in the project areas.
E.
Safeguards
35.
Environmental impact. The project is classified under category B in accordance with
ADBs Safeguard Policy Statement (2009) and therefore, initial environmental examinations
were prepared for the four project roads. The findings show that the project is unlikely to have
any site-related impact on the environment that is significant, adverse, or irreversible, since it
will not cross any forest area, wildlife sanctuary, national park, critical habitat, or other ecosensitive area for biodiversity ecosystems. Most of the impact is likely to occur during
construction, from earth movement, ground shaping, heavy equipment operation, and travel
over unpaved roads. This impact will be temporary, and mitigation measures can be easily
designed and implemented. No further environmental impact assessment is therefore necessary.
BSRDC will be responsible for the implementation of the environmental management plan
(EMP). The fully functional environment, social development, and resettlement cell, which was
actively involved in the implementation of the EMP for the Bihar State Highways Project, will
7
Summary Poverty Reduction and Social Strategy (Appendix 2).
8
also implement the EMP for this project. Some activities will be implemented by contractors,
particularly during construction.
36.
Land acquisition and resettlement impact. The project is classified under category A
for resettlement impacts. The project was developed with a view to avoiding or minimizing land
acquisition and involuntary resettlement by adopting the most feasible technical design. The
proposed widening of roads will occur within the existing right-of-way, except for State Highway
78, and bypasses, which will be provided for congested villages and marketplaces. A full census
based on the detailed designs for the four project roads was conducted. Resettlement plans
were prepared according to the government’s National Rehabilitation and Resettlement Policy
(2007), the Bihar Land Acquisition Resettlement and Rehabilitation Policy (2007), and ADB’s
Safeguard Policy Statement (2009). According to the project census, 19,797 land units and
7,730 structures (7,619 private, 3 community, 60 religious, and 48 government) will be affected
by the project. Among the 7,619 private structures, 5,954 belong to titleholders and 1,665 to
non-titleholders. The 138,624 persons to be displaced by the project will be compensated for
lost assets on the basis of replacement cost. Both titleholders and non-titleholders will be given
resettlement assistance to help make up for lost income and livelihoods. The resettlement plans
provide for special resettlement and rehabilitation measures for vulnerable displaced persons
and households. The specific compensation and resettlement assistance available for each type
of loss resulting from the project is spelled out in the entitlement matrix. The resettlement cost
for the four road subprojects is estimated at Rs3,425 million ($76.96 million equivalent).
37.
Impact on indigenous people. The project is classified under category C for impact on
indigenous people. According to the 2001 census, Bihar has an indigenous population of
758,351, or 0.9% of its population, versus 8.2% for all of India. Of the 38 districts in the state, six
have no indigenous people; in the rest, the indigenous population varies from 0.01% to 5.9%.
The highest proportion of indigenous people is found in Katihar district (5.9%), followed by
Jamui (4.8%), Banka (4.7%), and Purnia (4.4%); the lowest, in Darbhanga (0.03%), Khagaria
(0.03%), and Sheohar (0.01%). The project area has no demarcated indigenous people areas.
The social assessment revealed no impact on indigenous groups within the area of influence of
the road subprojects. Indigenous members in the project area have been assimilated into the
local population. The study done during project preparation did not show any difference in
impact between indigenous and non-indigenous groups in the project locations. Construction
will not adversely affect the socioeconomic conditions or the community life or culture of these
communities. On the other hand, the improved road network is expected to give both indigenous
groups and other parts of the project population easier access to socioeconomic facilities.
F.
Risks and Mitigating Measures
38.
Major risks and mitigating measures are summarized in Table 5.
9
Table 5: Summary Risks and Mitigating Measures
Risks
Initial delays in
project
implementation
Mitigating Measures
BSRDC prepared the detailed design for the roads well in advance. Advance actions
for procurement and ADB support ensure high project readiness, with the civil works
contract for the first road already awarded and procurement for other roads and
supervision consultants ongoing. BSRDC staff have been trained in safeguard and
procurement requirements to mitigate the potential risk of initial delays due to
procedural clearance. ADB has provided support for due diligence for all project roads.
Insufficient
maintenance
financing
The state government’s initiatives to implement road asset management systems in
BSRDC for better planning and budgeting will be supported by the proposed capacity
development TA. Bihar has increased the maintenance budget to substantially meet
requirements. BSRDC’s strict monitoring systems for project implementation will
minimize the risk of underutilizing the maintenance budget.
ADB = Asian Development Bank, BSRDC = Bihar State Roads Development Corporation Limited, TA = technical
assistance.
Source: Asian Development Bank.
V.
ASSURANCES
39.
The government and BSRDC have assured ADB that the implementation of the project
shall conform to all applicable ADB policies including those concerning anticorruption measures,
safeguards, gender, procurement, consulting services, and disbursement as described in detail
in the project administration manual and loan documents.
40.
The government and BSRDC have agreed with ADB on certain covenants for the
project, which are set forth in the loan agreement and project agreement.
VI.
RECOMMENDATION
41.
I am satisfied that the proposed loan would comply with the Articles of Agreement of the
Asian Development Bank (ADB) and recommend that the Board approve the loan of
$300,000,000 to India for the Bihar State Highways II Project from ADB’s ordinary capital
resources, with interest to be determined in accordance with ADB’s London interbank offered
rate (LIBOR)–based lending facility; for a term of 25 years, including a grace period of 5 years;
and other such terms and conditions as are substantially in accordance with those set forth in
the draft loan and project agreements presented to the Board.
Haruhiko Kuroda
President
23 August 2010
10
Appendix 1
DESIGN AND MONITORING FRAMEWORK
Design Summary
Impact
A more efficient
state road transport
system supporting
sustainable
economic growth in
Bihar
Outcome
Increased transport
efficiency and
safety on project
roads
Performance Targets and
Indicators with Baselines
Data Sources and
Reporting Mechanisms
Road traffic on project roads
increases by 90% until 2020
from current level (2009
baseline: between 1,858
vehicles per day on State
Highway 81 and 4,276
vehicles per day on State
Highway 91).
Post-implementation
measurement and traffic
survey
Per capita GDP in the project
districts increases to 28% of
India’s per capita GDP by
2020 (2007 baseline: 23%).
Government of Bihar’s
economic survey
Vehicle travel time on the
project roads is reduced
because of the improved
condition of the roads; travel
speed increases to an
average of 40 km/h for cars
(2009 baseline: 15–25 km/h).
Post-implementation
measurement and traffic
survey
Road signage meets the
requirements of the road
safety audit upon project
completion (2009 baseline:
road signage is basic).
Assumptions and Risks
Assumptions
Government development
activities are effectively
coordinated with road
sector investment and the
current economic growth
rate is maintained.
Risks
Post-implementation
survey
Small roadside businesses
could lose business
opportunities because of
increased efficiency and
speed of travel of vehicles.
Assumptions
The project is delivered on
time.
The state-allocated
maintenance budget
remains sufficient for the
maintenance of the entire
rehabilitated road network.
Strengthened management
and monitoring capacity
enables the full utilization
of funds allocated for
maintenance works.
A road asset inventory
database is established
and project management
tools are available and in
use.
Outputs
1. Built and
upgraded state
highways
About 356 km of state
highways are built or
upgraded by the end of 2014.
BSRDC/RCD annual
report on road assets
Assumptions
Civil works are
implemented on schedule.
Qualified civil works
contractors and consultants
participate in the project.
Procurement and
compliance with safeguard
policies are efficiently and
effectively handled,
following ADB’s procedures
and requirements.
Appendix 1
Design Summary
2. Improved
management of
road assets and
maintenance of
project roads by
BSRDC
Performance Targets and
Indicators with Baselines
One pilot performance-based
maintenance contract is
awarded by the end of 2014.
Data Sources and
Reporting Mechanisms
BSRDC/RCD annual
report on road assets
11
Assumptions and Risks
Assumptions
Qualified consultants
participate in the project.
Institutional strengthening
is implemented.
Road asset registry for state
highways set up by the end
of 2014
Risks
Changes in BSRDC
management may impact
momentum for reforms.
Activities with Milestones
1. Investment component
Inputs
1.1 Construction supervision consultants recruited by
July 2011
Loan
1.2 Procurement for all civil works completed by July
2011
Item
1.3 Construction of all civil works completed by
December 2014
2.
Institutional development (equipment)
2.1 Equipment procured by the end of 2013
3.
Institutional development (technical assistance)
3.1 Consultants recruited by July 2011
3.2 Consulting services completed by July 2012
3.3 BSRDC staff trained by July 2011
4.
Post-implementation traffic survey and
measurement conducted by the end of 2014
ADB: $300,000,000
Investment component
Institutional development
component
Amount ($ million)
255.45
3.00
Contingencies
31.05
Consulting services (about
2,936 person-months—85
international and 2,851
national)
10.50
Government: $124,000,000
Item
Amount ($ million)
Land acquisition, resettlement
and rehabilitation, utility shifting
78.93
Investment component
22.80
Project management
3.00
Contingencies
2.77
Financing charges during
implementation
16.50
ADB = Asian Development Bank, BSRDC = Bihar State Roads Development Corporation Limited, GDP = gross
domestic product, km = kilometer, RCD = Road Construction Department.
Source: Asian Development Bank.
12
Appendix 2
LIST OF LINKED DOCUMENTS
http://www.adb.org/Documents/RRPs/?id=41629-01-3
1.
Loan Agreement
2.
Project Agreement
3.
Sector Assessment (Summary): Roads
4.
Project Administration Manual
5.
Contribution to the ADB Results Framework
6.
Development Coordination
7.
Economic Analysis
8.
Country Economic Indicators: India
9.
Summary Poverty Reduction and Social Strategy
10.
Initial Environmental Examination: Bihta-Sarmera (SH78)
11.
Initial Environmental Examination: Sakkadi-Nasriganj (SH81)
12.
Initial Environmental Examination: Mohammadpur-Chhapra (SH90)
13.
Initial Environmental Examination: Birpur-Udakishanganj (SH91)
14.
Resettlement Plan: Bihta-Sarmera (SH78)
15.
Resettlement Plan: Sakkadi-Nasriganj (SH81)
16.
Resettlement Plan: Mohammadpur-Chhapra (SH90)
17.
Resettlement Plan: Birpur-Udakishanganj (SH91)
18.
Risk Assessment and Risk Management Plan