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Document of
The World Bank
Report No: 23448-IN
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED LOAN
IN THE AMOUNT OF US$255 MILLION
TO THE
GOVERNMENT OF INDIA
FOR
KERALA STATE TRANSPORT PROJECT
February 14, 2002
Energy and Infrastructure Sector UnitIndia Country Management UnitSouth Asia Region
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CURRENCY EQUIVALENTS
(Exchange Rate Effective January 28, 2002)
Currency Unit = Indian Rupee (NR)INR 1.00 = US$0.02US$1.00 INR 48.00
FISCAL YEARApril 1 -- March 31
ABBREVIATIONS AND ACRONYMS
ADB Asian Development Bank MTFP Medium-Term Fiscal PlanBPIP Borrowers' Project Implementation Plan MTR Mid-Term ReviewCAS Country Assistance Strategy NCB National Competitive BiddingBOT Built Operative Transfer NGO Non-Governmental OrganizationEA Environmental Assessment NH National HighwaysEMP Environmental Management Plan NHAI National Highways Authority of IndiaEIA Environmental Impact Assessments NPV Net Present ValueEOP End of Project O&M Operation and ManagementERR Economic Rate of Retum PAF Project-Affected FamilyESMP Environmental and Social Management Plan PAP Project-Affected PersonGIS Geographic Information System PCC Project Coordination ConsultantGOI Government of India PFMS Project Financial Management SystemGOK Government of Kerala PMR Project Management ReportICB Intemational Competitive Bidding PMT Project Management TeamICR Implementation Completion Report PWD Public Works DepartmentID Irrigation Department QCBS Quality- and Cost-Based SelectionIDS Institutional Development Strategy RAP Resettlement Action PlanIRI Intemational Roughness Index RIMMS Road Information and Maintenance ManagementISAP Institutional Strengthening Action Plan RBOCK Roads and Bridges Development Corporation of KeralaIWT Inland Water Transport R&R Resettlement and RehabilitationMDR Major District Road SA Social AssessmentMOEF Ministry of Environment and Forests SEA Sectoral Environment AssessmentMORTH Ministry of Road, Transport and Highways SH State Highways
Vice President: Mieko NishimizuCountry Director: Edwin R. Lim
Sector Director: Vincent GouarneTask Manager: Stein Lundebye
INDIAKERALA STATE TRANSPORT PROJECT
CONTENTS
A. Project Development Objective Page
1. Project development objective 22. Key performance indicators 2
B. Strategic Context
1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 22. Main sector issues and Government strategy 33. Sector issues to be addressed by the project and strategic choices 6
C. Project Description Summary
1. Project components 72. Key policy and institutional reforms supported by the project 83. Benefits and target population 84. Institutional and implementation arrangements 9
D. Project Rationale
1. Project altematives considered and reasons for rejection 102. Major related projects financed by the Bank and other development agencies 113. Lessons learned and reflected in the project design 124. Indications of borrower commitment and ownership 135. Value added of Bank support in this project 14
E. Summary Project Analysis
1. Economic 142. Financial 153. Technical 164. Institutional 165. Environmental 196. Social 227. Safeguard Policies 25
F. Sustainability and Risks
1. Sustainability 262. Critical risks 263. Possible controversial aspects 27
G. Main Loan Conditions
1. Effectiveness Condition 282. Other 28
H. Readiness for Implementation 29
I. Compliance with Bank Policies 29
Annexes
Annex 1: Project Design Summary 30Annex 2: Detailed Project Description 33Annex 3: Estimated Project Costs 36Annex 4: Cost-Benefit Analysis Summary 37Annex 5: Financial Summary 43Annex 6: Procurement and Disbursement Arrangements 44Annex 7: Project Processing Schedule 56Annex 8: Documents in the Project File 57Annex 9: Statement of Loans and Credits 59Annex 10: Country at a Glance 63Annex 11: Institutional Development Strategy 65Annex 12: Environmental and Social Assessment, Environmental Management Plan and 70
Resettlement Action PlanAnnex 13: Road Safety, Strategy and Action Plan 74
MAP(S)
INDIAKerala State Transport Project
Project Appraisal DocumentSouth Asia Regional Office
SASEI
Date: February 14, 2002 Team Leader: Stein LundebyeCountry Manager/Director: Edwin Lim Sector Manager/Director: Vincent GouarneProject ID: P072539 Sector(s): TH - Highways, TP - Ports & WaterwaysLending Instrument: Specific Investment Loan (SIL) Theme(s): Transport
Poverty Targeted Intervention: N
Program Financing Data[XI Loan [ I Credit [ ] Grant [ Guarantee [ Other:
For LoanslCredits/Others:Amount (US$m): 255.00
Proposed Terms (IBRD): Variable Spread & Rate Single Currency Loan (VSCL)Grace period (years): 5 Years to maturity: 20Commitment fee: 0.75% Front end fee on Bank loan: 1.00%Financing Plan (US$m): Source Local Foreign TotalBORROWER 81.00 0.00 81.00IBRD 158.50 96.50 255.00Total: 239.50 96.50 336.00
Borrower: GOVERNMENT OF INDIAResponsible agency: KERALA STATE PUBLIC WORKS DEPARTMENTThe Principal Secretary of the Public Works Department,Address: The Government of Kerala Secretariat, Trivandrum, Kerala, IndiaContact Person: Mr. Babu Jacob, Principal SecretaryTel: +91-471-327285 Fax: +91-471-327285 Email: [email protected]: Office of Chief Project Officer, Public Works Department, TrivandrumContact Person: Mr. N.D. Kumar, Project DirectorTel: +91-471-330787 Fax: +91-471-330787 Email: pdpiupwdgsatyam.net.inIrrigation DepartmentAddress: The Govenmient of Kerala Secretariat, Trivandrun, KeralaContact Person: Mr. Jaya Kumar, SecretaryTel: +91-471-327550 Fax: +91-471-327550 Email: [email protected]
Estimated disbursements ( Bank FY/US$m):FY 2003 2004 2005 2006 2007 2008
Annual 19.00 40.00 53.00 56.00 52.00 35.00Cumulative 19.00 59.00 112.00 168.00 220.00 255.00
Project implementation period: Five yearsExpected effectiveness date: 06/30/2002 Expected closing date: 12/31/2007
00$ PAD Fom: RIW M .
A. Project Development Objective
1. Project development objective: (see Annex 1)
The project's principal development objectives are to improve traffic flow and road safety on Kerala State'sprimary road network, and to strengthen the institutional and financial capacity of Kerala's key transportsector agencies. The Project will support the above development objectives by: (a) improving the capacityand quality of highly congested State highways and major district roads; (b) improving road maintenanceplanning and management practices; (c) reducing accidents on major roads; (d) piloting an inland watertransport (IWT) improvement component for selected canals: and (e) strengthening the technical, financialand management capacities of the Kerala Public Works Department (PWD) and the Kerala IrrigationDepartment (ID).
2. Key performance indicators: (see Annex 1)
The key performance indicators for measuring the overall success of the project will be as follows:
In the road sector: (a) reduction in vehicle operating costs and travel time by 20 percent on theapproximately 1,600 km of roads to be upgraded and receive periodic maintenance under the project; (b)reduction in the international roughness index (IRI) to 4.5 m/km on approximately 600 km of road to beupgraded by the end of project (EOP); (c) reduction in road accidents by up to 30 percent by improvingblack spots along project roads; (d) increase in the portion of State highways in good condition(IRI = <4.5 m/km) by at least 50 percent by end of project (EOP), and (e) implementation of a time-basedinstitutional strengthening action plan (ISAP).
In the IWT sector:
(a) a pilot program to improve about 100 km of navigable waterways by EOP; and (b) forrnulation of anIWT development program by EOP; based on an evaluation of lessons learned from the pilot component.
B. Strategic Context
1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1)Document number: 21852-N Date of latest CAS discussion: 04/05/01
The Project is consistent with the Country Assistance Strategy (CAS) for India. The Project willcontribute to the CAS's key strategic objective of reducing physical infrastructure constraints to achievethe overall goal of poverty reduction, and to facilitate India's potential for long-term economic growth andsocial development. In the road sector, this involves expanding road capacity and improving national andstate highways' serviceability, implementing institutional reform in national and State road agencies, andpromoting the sector's role of the private sector in developing and managing the road network.
The Project would be implemented in the context of a comprehensive program of fiscal reforms recentlylaunched by the Government of Kerala (GOK) to bring its finances under control and on to a sustainablemedium-term path, which would be essential to reverse the trend of deteriorating state finances in recentyears. The new Kerala government, which assumed office in May 2001 published a White Paper on theState's finances in June 2001, thereby bringing to public attention the unsustainable trends in the State'sfinances and the need to take urgent, corrective action. The draft Medium-Term Fiscal Reform Programsubmitted by GOK to the Government of India (GOI) highlights the fact that past State expenditure policieshave neglected physical infrastructure in the State's expenditure priorities, thereby lowering economicperformance below its potential. The report emphasizes the need to correct this policy weakness,
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particularly, the importance of removing transport bottlenecks to unleash economic growth. The GOK hasidentified the roads sector as a key area for priority investments and policy and institutional reforms.
The Project will contribute to on-going fiscal reforms by bringing greater development effectiveness topublic sector spending, developing medium-term fiscal plan for the road sector, and seeking alternatefunding mechanisms for the roads sector. The Project is also expected to contribute to State civil servicereforms by supporting PWD's reform agenda. Kerala has a strong history of social participation and aneffective system to make use of this practice. This history of participation is expected to facilitate anenlightened public discussion on road sector reforms, contributing to the reform agenda's long-termsustainability.
2. Main sector issues and Government strategy:
The State of Kerala has an area of 38,863 sq. km and a population of about 29 million. The State's totalroad length is about 142,343 km; some 88 percent of this is paved. About 23,125 km of this primary roadnetwork is under PWD responsibility. The roads under PWD management consist of about 1,350 km ofnational highways (NH - about 5.8 percent of the total length of primary roads; PWD manages these forthe Ministry of Road Transport and Highways [MORTH]), 3,330 km of state highways (SH - 14.4percent), 11,320 km of major district roads (MDR - 49 percent), 3,810 km of other district roads (ODR -16.4 percent), and 3,315 km of village roads (VR - 14.4 percent). The rest of the network is managed byPanchayath (rural local government), Irrigation and Forest Departments. These roads together constitutethe basic State road network, connecting places and people. Kerala was the first state in India to provide100 percent connectivity to all of its Panchayats.
Key Issues
Roads and Highways Sector
(a) Network deficiencies and inadequate financing of the roads sector: Since 1990 the number ofregistered motor vehicles has been increasing by 13 percent per year. The capacity of parts of Kerala'sroad network is insufficient to support this growth in traffic. Around 70 percent of the SHs are stillsingle-lane (3.75 m carriageway), and the rest are two-lane roads (7.0 m carriageway with shoulders onlyon some sections). The capacity of most SHs is inadequate to serve the growing traffic, which typically ishighly mixed, including fast and slow motor vehicles, non-motorized vehicles, and pedestrians. Roadsurface quality is very poor due to lack of maintenance of existing assets, resulting in excessive wear andtear on vehicles and contributing to high transport operating costs. Poor road conditions also contribute toroad traffic accidents and serious environmental pollution.
The NHs are funded by GOI through MORTH, while SHs and district roads are funded by the State PWDthrough plan allocations for development works and non-plan allocations for road maintenance.Historically, the State's level of fnancing for the roads sector has been inadequate. According to normsestablished by MORTH, the PWD requires about US$50 million per year to maintain its roads. However,typical allocations are much lower, sometimes falling below 50 percent of these requirements. As a resultthere is a large backlog of road maintenance work in Kerala, which has been estimated at more thanUS$ 100 million. The State also lacks of a rational road maintenance planning and proper resourceallocation system, based on objective economic and social criteria, and does not conduct systematic andregular surveys that could assess the condition of the road network in order to estimate the resource needsfor various maintenance programs. This has led to sub-optimal utilization of the limited funds availableand the deterioration of existing road assets.
(b) High road accident rates: The concerned authorities have not adequately addressed road safetyissues. Vehicle accident rates in India are very high compared to other developing countries (about six
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times as high as the fatality rate of OECD countries), and Kerala has one of the highest road accidentfatality rates in India. It has been estimated that about 40,000 road accidents, resulting in around 2,500deaths, happen each year in Kerala. The estimated loss of life, property, and productivity from suchaccidents are bound to be significant, perhaps I or 2 percent of the GSDP (as per sources such as the UK'sTransport Research Laboratory (TRL). The mixture of buses, trucks, cars, motorized rickshaws,motorcycles, bicycles, and pedestrians, traveling at vastly different speeds contribute to the extremelyunsafe road conditions. Road safety problems are further aggravated further by the many sub-standard orpoorly maintained roads, frequent encroachment onto the right-of-way, poor driving and lack of disciplineby many road users, lack of enforcement due to poorly trained and equipped traffic police, and insufficienttraffic education of road users. Some of these problems can be addressed through short-term actions;others will require long-term plans.
(c) Limited capacities of road sector agencies: PWD designs, implements and maintains all publicworks undertaken by the Government, including developing and maintaining major roads. PWD no longerdirectly executes projects, but provides technical information and advice to other government agencies andconsultants. In this role PWD's its primary resource is its staff. PWD's performance presently is onlymeasured in terms of its annual expenditure. A preliminary institutional audit of PWD highlighted gapsand deficiencies in several areas, including road development and maintenance planning, road safety,quality control, financial management planning (including delays in payments to contractors), and transportcoordination. The agency has also problems with its organizational structure, administration, delegation ofadministrative and financial powers, overstaffing, development, and staff training. The PWD staff skillmix concentrates on engineering skills, and the agency has limited capacity and knowledge in strategicplanning, contract management and financing, financial management, information systems, transporteconomics, road safety, social development, and environmental management. These issues and constraintslimits P'WD's capacity to respond to the road sector's increasing and evolving demands.
(d) Limited private sector involvement: PWD has a large number of in-house staff, who design andsupervise various road works, and appoints contractors to carry out construction works and most periodicmaintenance in the State. In general, these contractors rely on traditional, outdated management andconstruction practices. Presently, the number of large and well-equipped contractors in Kerala is few. Thecontract packages are typically small and contractor prequalification is inadequate, resulting in limitedincentive for private sector road contractors to develop their expertise and acquire modem equipment.Commercializing road sector operations has not yet received sufficient attention in Kerala. TheGovernment's inability to undertake large-scale road projects and programs warrants exploration of greaterprivate sector participation in all aspects of the road sector.
Inland Waterways Sector
Kerala is one of the few Indian states with a vast inland waterway network that could be developed as asignificant transport mode. Historically, inland waterways were a key part of the State's transport system,due to the lack of proper road transport to move goods and people to various inland destinations. Initially,the total length of navigable waterways in the State was around 1,700 km. However, in recent decades theinland waterways have fallen into disuse, and IWT's share of the State's total traffic has declined to about1-2 percent. Concurrently, traffic on parts of the road network has increased to saturation levels, leading togreater congestion, pollution, and accidents.
Studies suggest that rehabilitating of the IWT system, with participation by private sector and localcommunities, could relieve pressure on parts of the State road network. A more efficient IWT networkcould provide environmentally-friendly and cost-effective support or altematives to road transport. Also,intelligent use of water resources would help realize the full potential of the State's agriculture andtransport system, and support eco-tourism. The main problems faced by the State in the IWT sector are:
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(a) insufficient canal embankment protection; (b) lack of depth due to siltation and lack of maintenancedredging; (c) too few navigational aids and poor maintenance of existing ones; (d) massive growth of waterhyacinth; and (e) lack of modern inland aquatic transport, landing terminals, and cargo handling systems.
Govemment Strategy
Road Sector
The draft Road Development Policy for Kerala (1999) prepared by the GOK, underlines capacityexpansion of its primary road network as key priority and an integral element of the State's economicdevelopment strategy. The policy's overall objective is to promote "a sustainable road network providingconnection to all cities, towns and villages, and allowing safe and efficient travel between them." Thegovernment seeks to address the following key road sector issues:
(a) Addressing network deficiencies and improving road sector financing:The new road policy outlines GOK's strategic approach to improve network capacity. GOK aims torehabilitate existing roads in high- and medium-density corridors in a phased and timely manner, andupgrade the network to meet modem highway design standards. Greater emphasis will be placed on roadmaintenance. PWD will be encouraged to contract out all maintenance and operations to privatecontractors, and use more modem technology for road pavement and treatments. The Government aims toprovide adequate funds to meet the transport sector growth demand, subject to overall economicconstraints.
Since budget allocations alone are not expected to meet the road sector's growing requirements, the Stateintends to supplement its road sector resource allocation by instituting a wider base of road user charges.The Government recently legislated the establishment of a State Road Fund that will seek to generate usercharges through road tolls and dedicated fuel levies. The Roads and Bridges Development Corporation ofKerala (RBDCK), recently established by GOK, will seek to raise funds through loans, shares, andborrowings from financial institutions in order to construct and maintain selected roads and bridges.RBDCK recently awarded contracts to build 28 bridges over railway in the state. One major toll bridge inKerala was constructed as a BOT project and several NHs bypasses will be built as BOT schemes in thenear future. If RBDCK can demonstrate that they can undertake road works competitively, theGovernment would progressively shift road maintenance works from PWD to RBDCK in the future.
(b) Enhancing institutional capacities: The government has committed itself to improve theperformance of various road sector agencies. In particular, the governnent is taking steps to modernizeand improve PWD's performance, so that it keeps pace with new developments in the roads sector. Withthis in view, the government engaged a consultant to undertake an Institutional Development Strategy (IDS)study of PWD, to help establish a strategy for developing PWD's technical and financial capacity toeffectively manage the State road transport network and to be responsive to road users' demands. Based onthe study's recommendations, an empowered government committee headed by the PrincipalSecretary-PWD, including senior PWD staff, has developed an Institutional Strengthening Action Plan(ISAP) matrix, listing the institutional development activities that are expected to be implemented duringthe project period and beyond. The ISAP has been formally endorsed by the government. Based on theISAP, PWD is developing a human resource development strategy; improving its financial managementcapacities; building capacity for planning and policy functions, including a management informationsystem; strengthening environmental and social impact monitoring; improving its procurement procedures;and strengthening road safety engineering capacities.
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(c) Reducing accident rates and mitigating environmental and social impacts: Kerala's highaccident rates have prompted the government to address road safety problems by introducing road safetyaudits for new road projects and analyzing accident black spot locations. PWD has developed, as part ofproject preparations, a draft comprehensive and integrated State road safety action plan, which includesrecommendations for the following road safety sub-sectors: coordination and management of road safety;accident data systems; safety publicity campaign; safety engineering, safety education for children; trafficlegislation and enforcement; driver training and testing; vehicle safety standards; emergency aid to roadaccident victims; and safety research. The plan also recommends establishing a PWD Road Safety Unit.As for environmental and social impact issues, GOK' approach is to identify potential impacts early in theplanning process and plan how to avoid or mitigate these adverse effects. Government policy is to prepareand implement Environment Management Plans when required, and to develop codes for environmentalpractice related to State road construction and maintenance.
Inland Waterways Sector
The government sees expanding the IWT sector as a means to relieve pressure on the road network in theState's most populated areas. The pilot IWT component will provide the government with an opportunityto test approaches to correcting the current imbalance between roadways and IWT traffic in the State andto provide an environmentally-friendly and cost-effective alternative to road transport. GOK plans torehabilitate pilot feeder canals and to help integrate these with the National Waterway III (part of the WestCoast Canal, Kerala's main waterway) and help to further promote development of IWT in this part of theState. The Government also intends to announce a suitable IWT policy to eliminate current policy andinstitutional ambiguities, and ensure greater investor confidence.
3. Sector issues to be addressed by the project and strategic choices:
Roads Sector
(a) Capacity expansion of primary road network and improved financing for the road sector: Theproject will provide resources to improve about 1,600 km of SHs (600 km upgrading and 1,000 kmperiodic road maintenance) to increase their capacity and comply with Indian Roads Congress (IRC)standards. Strategies to increase capacity will include controlling encroachments, and footpaths will beprovided where pedestrian traffic is high. During project preparation, GOK promulgated the Kerala RoadFund Bill to create a Road Fund that will collect greater user charges through tolls and other levies. Thesefunds are to be bolstered by support from the Central Road Fund. GOK has also developed a medium-termfiscal plan for the road sector and seeks altemate funding mechanisms for road development andmaintenance.
(b) Strengthening capacity of road sector institutions: The Project will focus on reforming PWDand enhancing its institutional capacity and reforming the PWD, transforming it into an efficient, modemroad agency that can keep pace with new road sector developments, and ensure that staff can addressincreasing infrastructure requirements. The project will therefore support rightsizing and restructuring ofPWD, train road agency staff in modem project management techniques, quality control, and use ofmodem technical aids (e.g., computerization, surveying equipment), and upgrade PWD capacity in projectdesign and supervising construction and maintenance operations. These reforms are to be addressed bywide-ranging consultations within PWD, and with the assistance of external experts to be supported by theproject. PWD reforms in the PWD are expected to assist general civil service reform in Kerala.
(c) Enhancing the private sector role: The project preparation has sought out participation byprivate sector consulting finms and contractors in the design, construction, and maintenance of State roads.All feasibility studies, design, and documentation were done by private sector consulting firms recruited
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through a competitive bidding process. During project implementation, international consultants, supportedby local consultants, will supervise the work; international contractors are encouraged to establish jointventures with local contractors.
(d) Improving road maintenance management: The project seeks to develop an effective roadmaintenance management system in PWD and reduce the maintenance of backlog for high-priority roads byimplementing road rehabilitation component. The Project will also seeks to improve PWD's roadmaintenance planning capability and budget procedures. Following the recommendations of a RoadMaintenance Management Study, conducted during project preparation, PWD will conduct road, trafficand road user surveys throughout the State, and establish a modem Geographical Information System(GIS) based Road Information and Maintenance Management System (RIMMS). This is to lead to thedevelopment of multi-year maintenance plans, to be prioritized by economic criteria. The revised PWDroad maintenance policy is expected to include: planning, budgeting, procurement, contract administration,monitoring and financial accounting.
(e) Improving road safety and reducing accident risks: Reducing traffic accidents on roads to beimproved under the project is a major program component. The Project includes measures to address roadsafety through immediate actions and long-term plans. These include conducting safety audits, identifyingaccident black spots, improving road pavement conditions, providing new traffic signs and road markings,improving accident recording and analysis, and strengthening traffic law enforcement. The Project alsoseeks to establish greater interagency road safety coordination, better training of road safety professionals,and greater road safety awareness through the further development and implementation of an integratedroad safety strategic action plan. This was developed as part of project preparation.
Inland Waterways Sector
The pilot IWT component will rehabilitate three important canal links totalling about 100 km, by removingwater hyacinths, strengthening canal embanlcments, and installing navigation aids. Two studies will beconducted during implementation: (a) the Project's environmental and social impacts, and (b) constraintson private sector participation in the IWT sector. The pilot IWT component is anticipated to have apositive impact on social communication and transport costs, to protect large agricultural lands and otherproperties from flooding, to enhance agricultural production, to provide employment opportunities, and toassist poverty alleviation among low-income farmers in the affected areas. The ISAP will help improvepolicy and strategy development capacity, environmental and social impact monitoring, and procurementand public participation processes.
C. Project Description Summary
1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed costbreakdown):
The project will have four main components: (a) transport corridor improvement: upgrading of SHs,including related social and environmental mitigation measures; and rehabilitating IWT feeder canals; (b)periodic maintenance of SHs and MDRs; (c) road safety improvement; and (d) institutional developmentand technical a assistance.
Indicative Bank- % ofComponent Sector Costs % of financing Bank-
(US$M) Total (US$M) financing1. Transport corridor improvements: Highways 261.55 77.8 192.90 75.6(a) upgrading 600 km. of priority
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State highways, (b) rehabilitation of100 km IWT canals, and (c)resettlement and rehabilitationassistance.2. Periodic maintenance program for Highways 58.20 17.3 46.90 18.4about 1,000 km state highways.3. Road safety engineering program. Highways 4.20 1.3 3.45 1.44. Institutional strengthening of PWD Institutional 9.50 2.8 9.20 3.6and ID, TA to prepare follow-up Developmentstudies and implementation of a Stateroad safety action plan.
Total Project Costs 333.45 99.2 252.45 99.0
Interest during construction 0.0 0.0Front-end fee 2.55 0.8 2.55 1.0
Total Financing Required 336.00 100.0 255.00 100.0
2. Key policy and institutional reforms supported by the project:
The Project's key policy and institutional reforms are: (a) promulgating a comprehensive RoadDevelopment Policy for Kerala; (b) establishing sustainable road funding mechanisms to meetprojected financial requirements for medium- to long-term road sector development, throughincreased budgetary allocations and mobilized funds from other sources (such as the establishmentof a Road Fund); (c) reforming PWD to ensure greater accountability, restructure its existingservice delivery functions, introduce new functions, improve staff skill mix, and developing humanresource capacities; (d) revising outdated PWD codes and manuals; (e) developing a GIS-based,cost-effective RIMMS in PWD for better road inventory data collection, investment prioritization,and project management; (f) introducing computerized project management and financialmanagement systems in the PWD that will relate procurement, physical progress monitoring, andcontract management with financial flows; (g) introducing environmental and social impactmonitoring; and (h) promoting intemational good practices within PWD including feasibilitystudies, engineering design, road construction, quality control, contract management, road safety,and social and environment impact assessments.
3. Benefits and target population:
Benefits: The proposed roads component is expected to improve the State capacity and quality roadnetwork, enhance road safety, and facilitate greater attention to social and environmental issues associatedwith the road sector. The Project will also strengthen the policy environment, improve the road sector'sfinancial sustainability, reform PWD, and facilitate greater private sector participation and road userinvolvement.
The improved SHs and MDRs are expected to enhance the road network's capacity and condition, providebetter connectivity with NHs, and reduce vehicle operating costs and travel times within Kerala. This isexpected to result in better inter- and intra-state passenger movement and improved marketing anddistribution of agricultural and industrial products. The project will promote policy and regulatory reformsthat have been designed to facilitate greater private sector involvement in the road sector. The high-standard civil works contracts to be implemented over the five-year construction period will spur on
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development and modemization in the domestic construction industry, especially in mechanization andquality of work. The road safety activities are expected to reduce accidents and implement long-termstrategic measures to strengthening road safety in the entire State road network.
Preparing of IDS and implementing ISAP are expected to reform PWD, strengthen the road sector financialsustainability, improve institutional coordination among transport agencies, facilitate road userparticipation, and introduce efficient road maintenance management. Through improved road agency andfinancial effectiveness. The Project is expected to lead to a more optimal allocation of resources for roadinvestment and sustainable maintenance of the State's road assets through improved agency and financialeffectiveness. Road sector efficiency gains would free up scarce public resources that could be used byGovernment for other programs.
Target population: The roads identified for improvement (rehabilitation and periodic maintenance) underthe project pass through 405 villages and cover 14 districts. These improvements will provide better accessto schools and health centers, and the persons living along the project corridors are expected to deriveeconomic and social benefits from better access and enhanced mobility. The pilot IWT component isexpected to have a significant positive impact on communication and transport costs, protection ofagricultural lands and other properties from flooding, enhance agricultural production, provide employmentopportunities, and alleviate poverty in the affected areas. In particular, the coir industry in Alappuzha, andthe rubber, cement and paper industries in Kottayam will benefits under the IWT component. This shouldalso generate greater employment in the project influence area. Eco-tourism is another area expected tobenefit from improved IWT operations.
4. Institutional and implementation arrangements:
GOK has established three committees to monitor, coordinate, and expedite project activities: (a)State-level Empowered Committee, chaired by the Principal Secretary-PWD and comprising the Secretariesof Finance (Expenditure), Irrigation, Planning and Revenue, the Chief Engineers-PWD (R&B and DRIQ)and the Chief Engineer-ID, to guide and monitor project preparation, oversee policy implementation anddecisions on behalf of the Government, ensure improved inter-departmental, and inter-agency coordination,and expedite key decisions during project preparation and implementation; (b) a Project SteeringCommittee to periodically monitor the project and expedite procurement clearances; and (c) a TenderEvaluation Committee to evaluate all procurement under the project.
PWD has overall responsibility for project implementation. A project management team (PMT) wasestablished in PWD, headed by a Project Director (PD) and assisted by PWD and ID personnel skilled intechnical, financial, social, and environmental issues related to the project, to manage projectimplementation. This project team was considered necessary to coordinate and manage the planning,design, and implementation of a project of this size and complexity. Additionally, a Project CoordinationConsultant (PCC) was engaged to assist PWD in project preparation and management, introduce projectdesign international standards and introduce PWD staff to internationally accepted project preparationpractices. The PCC has helped PWD with project preparation and will continue to provide support duringimplementation. In addition to engineering inputs from within PWD, GOK has also assigned experiencedfinance, environment and social resettlement specialists from relevant departments, to coordinate theseaspects of project preparation. These staff have been provided with training to strengthen their capacities,and familiarize them with World Bank guidelines and procedures. PWD staff who received both on-the-joband targeted training from the PCC consultants during preparation will be fully deployed duringimplementation.
PWD will manage and supervise resettlement activities and compensation payments, while districtauthorities will facilitate these activities. PWD will manage procurement of works and services under the
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project. PMT will act as the contract management unit, with assistance by the PCC. PWD will engageconsultants to supervise civil works contracts under the upgrading and widening component. In the firstyear of periodic maintenance works, 50 percent of the work will be supervised by supervision consultantsand 50 percent by PWD, with periodic technical audits by consultants. In second and third yearmaintenance work will be supervised by PWD staff with assistance from consultants for technical audits.PWD will also engage specialists to carry out safety audits, other technical audits, and quality control ofthe rehabilitation works, and to develop an effective system to monitor maintenance performance. The roadsafety component will be implemented through coordinated arrangements between the concerned agencies.While PWD will be responsible for the implementing the road safety engineering activities, traffic policewill primarily be responsible for developing and installing of a new accident recording and analysis system.The pilot IWT component implementation will be monitored by an Executive Engineer and an AssistantExecutive Engineer from ID, who will be working with PMT at headquarters and other technical officers atthe field level.
Financial Management
The Project's finance wing will be headed by a Financial Controller (Joint Secretary on deputation from theDepartment of Finance) and will be assisted by a qualified accountant designated as the project's FinanceManager. They will be responsible for establishing the agreed financial management arrangements,including a computerized Project Financial Management System (PFMS), providing timely financialreports to the stakeholders (including the Bank), ensuring the smooth and timely flow of funds, andsupervising the project's financial management issues. The finance staff will be trained by the consultantson the computerized PFMS (currently under development) and on the Bank's disbursement procedures andreporting requirements.
D. Project Rationale
1. Project alternatives considered and reasons for rejection:
Roads sector
(a) Selection of State roads: The project will improve the capacity and safety of SHs and a few MDs.The project does not support the development of NHs; these are largely addressed by MORTH and theNational Highway Authority of India (NHAI) through a special PWD unit. The Bank has a separateprogram of ongoing and proposed projects to support the capacity expansion in the national highwaynetwork and MORTH and NHAI's institutional development.
(b) Capacity expansion through upgrading and periodic maintenance: To maximize economic returnsand minimize social and environmental impacts, the proposed project will mostly concentrate on expandingState roads network by upgrading and widening of 600 km of existing roads and maintaining 1,000 km ofexisting roads, rather than build any new roads. Specific road sections were selected through the StrategicOptions Study (SOS) undertaken by the government in 1997, with an initial assessment of 5,700 km of theexisting State road network. From this 2,800 km of roads were short-listed and analyzed for trafficvolumes and bottlenecks, current maintenance and funding levels, and expected traffic growth andinvestment needs. The SOS identified high-priority roads for further study, based on traffic congestion,expected economic returns, network connectivity, links to expected economic development, and projectpackaging.
(c) Need for government investment: Privatizing and commercializing of the project roads as a means ofcapacity expansion and improved maintenance were considered as an alternative to government investment.However, privatization potential was assessed as very limited at the time. Therefore,the study decided thatthe core upgrading and rehabilitating investments would come from the govermment. However, the study
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recognized the need to access greater non-budgetary resources, and therefore the project includes regulatoryand institutional initiatives to generate more user charges and to cultivate greater private sector involvementin the road sector.
IWT sector
Pilot project: This project component mainly focuses on rehabilitating three important canals.Large-scale capital investments are not sought at the pilot stage. The component will explore opportunitiesfor attracting potential shippers and transport agencies to make more use of the inland waterways. Afuture project could make greater improvements to the canal system if this is justified by increases indemand.
2. Major related projects financed by the Bank and/or other development agencies (completed,ongoing and planned).
l 1 Latest Supervision ]Sector Issue Project | (PSR) Ratings
I________________________________ I (Bank-financed projects only)Implementation Development
Bank-financed Progress (IP) Objective (DO)
COMPLETED/ONGOINGConstruction/rehabilitation of rural Bihar Rural Roads Project U Uroads. (Cr. 1072-IN).Construction/rehabilitation of rural Gujarat Rural Roads Project S Sroads. (Cr. 1757-IN).Capacity expansion of national First National Highways Project U Uhighway. Four-laning and strengthening (Ln.2534-IN).in four States.Capacity expansion of State roads and States' Road Project U Uinstitutional development of State road (Ln.2994-IN, Cr.1959-IN).agencies.Capacity expansion of national Second National Highways S Shighways and institutional Project (Ln.3470, Cr.2365-IN),strengthening of MOST and NHAI. Third National Highways
Project (Ln.4559-IN)Enhancement of institutional capacity State Roads Infrastructure S Sto prepare projects at the state-level. Development Technical
Assistance (Ln.4114-IN)Capacity expansion, maintenance and Andhra Pradesh State Highway S Sinstitutional development of state road Project (Ln.4192-IN).agency.Widening and strengthening of two ILFS Project (Ln 3992-IN; S Sstate roads in Gujarat in a commercial Cr.2838-IN).format: Vadodara-Halol SH;Ahmedabad-Mahesana SH.Capacity expansion, maintenance and Gujarat State Highway Project S Sinstitutional development of State road (Ln. 4577-IN).agency.
Capacity expansion, maintenance and Karnataka State Highways S Sinstitutional development of State road Improvement Project (Ln.agency 4146-IN).Capacity expansion of national Grand Trunk Road Project S Shighways and institutional strengthening Project (FY2002).of NHAI/MORTH.PLANNEDCapacity expansion and maintenance Proposed Tamil Nadu, Uttarof State roads and institutional Pradesh, Mizoram and Orissadevelopment of State road agencies. State Highways Projects
(FY2002-03).Capacity expansion of national Proposed Allahabad Bypasshighways and institutional strengthening Project (FY 2003).of NHAI.Other development agenciesADB: Capacity expansion of national First Highway Project, Secondhighways and institutional Highway Project, and Thirdstrengthening National Highway Project.of NHAI/MOSTOECF: Capacity expansion of Yamuna Bridge Project,national highways and institutional National Highway Project.strengthening of NHAI/MOST.ADB: TA for preparation of national Western National Highwayhighway project. Corridor Study 1998/99.ADB - TA for preparation of West Bengal, North-Southinvestment plan and strategy for the Corridor Development,north-south corridor development in 1998/99.West Bengal.OECF: National highway expansion. Proposed National Highway
Projects.DUTCH DEVELOPMENT AID.Study of Inland Water TransportSystem (IWT) in India.
IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)
3. Lessons learned and reflected in the project design:
Bank operations India's road sector have identified the following important markers of unsatisfactoryprojects: (a) poor quality at entry due to inadequate project preparation by PWD; (b) reluctance byindividual States to undertake fundamental sectoral reforms; (c) PWD's weak institutional capacities forproject management and contract administration; (d) weak State fiscal capacity, affecting fund flows; (e)poor interagency coordination; (f) lack in experience with Bank procurement procedures and insufficientprocurement preparation; (g) delays in procurement decisions and handing over project sites to contractors;(h) weak and inadequate capacities by domestic contractors and consultants; and (i) delays in landacquisition and implementation of Resettlement Action Plans (RAP).
Several actions were undertaken during project preparation to address these issues: (a) retainingexperienced international consultants for civil works design and preparing an IDS to ensure quality atentry; (b) agreement on a final ISAP, including an implementation timetable endorsed by the government toensure upfront commitment to sector reforms; (c) early implementation of institutional strengthening
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measures to enhance PWD's institutional project management capacity; (d) analysis of state finances andthe road sector MTFP, including risk mitigation measures to ensure adequate State counterpart financing;(e) prior to loan effectiveness, to ensure readiness for implementation, detailed engineering and contract biddocuments for 260 km (Phase I) upgrading civil works contracts and about 340 km of periodic maintenanceworks were completed before project appraisal, and 35 percent of the civil works contracts must beawarded; (f) upfront preparation of the RAP, and advance assessment and timely initiation of the landacquisition process to avoid delays in construction activities; (g) development of a financial managementsystem which must be operational prior to project effectiveness, and (h) upfront completion of a road safetyaudit for about 600 km upgrading works under the project, the preparation of a draft integrated RoadSafety Action Plan, and pilot road accident blackspot investigations, to ensure the prioritization of roadsafety engineering activities.
4. Indications of borrower commitment and ownership:
GOK has demonstrated its interest and commitment through several proactive advance actions:
(a) Establishing of a State-level Empowered Committee, headed by Principal Secretary-PWD, tooversee project implementation. A multi-disciplinary project management team has beenconstituted within PWD, with representation from ID, for day-to-day project preparation andimplementation.
(b) The PWD has completed a comprehensive IDS study, and prepared the final ISAP; the governmenthas endorsed these. The ISAP recommendations will be implemented in a time-bound manner.PWD has also constituted three dedicated working groups and a committee of Chief Engineers,from within the organization, to fine-tune and expedite ISAP implementation.
(c) The government has developed a draft Road Development Policy for Kerala. GOK is expected toformally endorse the final policy in the near future.
(d) The Kerala Tolls Act (1983) was studied with a view of facilitating greater private sectorparticipation in the road sector. This led to the Kerala Road Fund Act, November 2001,establishing a road fund facility, headed by a Road Board;
(e) GOK drafted a Medium-Term Fiscal Plan (MTFP) for the road sector projecting fundrequirements and financing sources. The MTFP includes (i) adequate and timely counterpartproject funding, (ii) rising road maintenance allocations to meet Finance Commission norms in thesecond year of the project and surpass those levels afterwards; and (iii) progressive clearing ofpending bills to contractors and reduction in payables position to within 4 months of expenditure,within the next two years.
(f) The Roads and Bridges Development Corporation of Kerala (RBDCK) was created to promoteprivate investment in the road sector and improve road infrastructure efficiency by corporatizingsome traditional PWD functions. RBDCK has already awarded 28 contracts to build railway overbridges.
(g) GOK has enacted the Kerala Highway Protection Act (1999) in order to protect highway corridorsfrom encroachments and undesirable land use developments;
(h) GOK recently completed one major bridge project on a BOT basis. Some other BOT schemes tobuild NHs bypass will begin soon.
(i) Several key road sector studies such as: Core Road Network study to identify road and bridgeprojects amenable for private financing, a study on road maintenance planning, and several road
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safety studies have been completed.
(j) The Resettlement and Rehabilitation (R&R) Policy Framework has been approved and ratified, andthe Sectoral Environmental Assessment (SEA), Environmental Impact Assessment (EIA),Environmental Management Plans (EMP) and Resettlement Action Plan (RAP) have beencompleted and made available to the World Bank's Public Information Center and in projectdistricts, for public review and comments. NGOs have been identified and trained for initial RAPimplementation. PWD engineers, delegations from project-affected persons, and concerned NGOshave met in orientation workshops.
(k) Contractors for civil works (Phase I road rehabilitation works, first year periodic road maintenanceworks) have been pre-qualified, bids have been received and evaluated for the first year periodicroad maintenance contracts, and the proposals for the supervision services of Phase I roadrehabilitation works have been evaluated. The contract for the supervision services will be awardedimmediately after the Bank's approval of the loan.
(1) An international road safety specialist has been appointed to carry out a safety audit, teach PWDstaff to analyze accident sites, and help PWD to develop a road safety strate-ic action plan.
5. Value added of Bank support in this project:
World Bank involvement in the general transport sector, and specific roads and highways sectors has beenextensive. The Bank has been in the forefront of key policy and institutional reforms in the roads andhighways sectors in several countries, including India. The Bank's expertise gained from previous andon-going transport operations in India, specifically national- and state-level road projects, is expected toprovide invaluable support to transport sector reforms in Kerala.
Bank involvement is expected to provide the transport sector agencies, PWD and ID, with improvedinternational knowledge and practices in project management, engineering design and construction,procurement, environrent, land acquisition, resettlement, safety, and construction supervision. The Bankwill also bring its extensive experience with other developing countries' experiences in institutional andmaintenance challenges at different stages of reforns and modernization. In particular, the Bank'sinvolvement will help ensure that road safety, social development, and environmental issues are fullyreflected and integrated in project design, preparation, and implementation. Implementing ISAP is expectedto help PWD to transform itself into an efficient, modern road agency. The Project features sector reformsdesigned to improve state road planning, financing, construction, and maintenance management. Bankproject preparation and implementation procedure will ensure greater transparency in the bidding processesand therefore, better use of the State's public resources, and greater participation by local and internationalprivate contractors.
E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8)
1. Economic (see Annex 4):* Cost benefit NPV=US$809 million; ERR = 26 % (see Annex 4)O Cost effectivenessO Other (specify)The project feasibility study included cost-benefit analysis of the individual state highways considered for(a) upgrading and widening and (b) periodic maintenance. The upgrading and widening component,including relevant environmental mitigation measures, land acquisition, resettlement and rehabilitation, andcontingencies, represents 62 percent of the total project cost; and the periodic maintenance component
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represents 18 percent of the total project cost. The cost-benefit analysis was based on the Highway Designand Maintenance Standards Model (HDM-III), developed by the Bank. The quantified benefits includesavings in vehicle operating costs and travel time, and reduced government/PWD road maintenance andrehabilitation cost.
The economic evaluation was carried out for 69 roads proposed for upgrading and widening. Theminimum economic rate of return (ERR), 12%, which corresponds to the opportunity cost of capital, wasused as the economic threshold for roads selected for upgrading and widening under the project. In additionto economic viability, better spatial equity among the districts in the state was also taken into considerationin the selection of roads for upgrading and widening. Under the budget consideration, 8 roads with a totallength of 255 km have been selected for upgrading and widening under Phase I, and 7 roads totalling 324km under Phase II. The ERR for these roads ranges from 13% to 63%, averaging 26%. The total NPV isUSS376 million.
Thirty-seven roads (a total of nearly 1,000 km) were selected for periodic maintenance under the project.They all have a benefit-cost ratio over 4. The total NPV for the component is USS433 million. Details ofthe analysis are provided in Annex 4.
Economic analysis was not performed for the road safety, inland waterway, or institutional strengtheningcomponents. Intemational experiences suggest that road safety works are highly beneficial to road users.Due to a lack of reliable methodology, the small pilot inland waterway component has not been formallyevaluated; it is justified on the ground that small investment is needed to gain experience before largeractions can be considered and implemented to revitalize this potentially viable sector.
2. Financial (see Annex 4 and Annex 5):NPV=US$ million; FRR = % (see Annex 4)
Fiscal Impact:
Recognizing the serious fiscal condition of the State, the Medium-Term Fiscal Reform Program, underpreparation, aims to reduce the State's fiscal deficit to no more than 1.5% of GSDP by 2004-05 (fromabout 4.5% in 2000-01), through a combination of revenue enhancement and expenditure rationalizationmeasures. The successful implementation of this reform program is expected to create, over the mediumterm, adequate fiscal space to fund the proposed roads project. The policy and institutional reformssupported by the project would, in turn, contribute to the overall fiscal correction, such as widening thebase of road user charges and improving the coimposition and effectiveness of public expenditures. Theproject would also contribute to State civil service reforms by reforming and restructuring PWD, one of itslargest departments.
The annual maintenance requirement for State roads in Kerala state as per MORTH norms, is US$50million. However, in recent years actual funding has been low and years of inadequate maintenancefunding has caused a backlog. The State budget allocation for road upgrading and development wasUS$33 million, US$25 rnillion, and US$40 million, in the previous fiscal years. Clearing the maintenancebacklog is a priority, and improving funding mechanisms was considered under the institutionalstrengthening component.
Road sector expenditure has been brought under greater discipline during the current fiscal year, comparedto the past. The highest priority is clearing past bills and maintaining existing assets; new investments arestrictly controlled. The State's tight fiscal situation and accumulated payments arrears presents a fiscalrisk in the short term, i.e., in the first two years of the project. To mitigate this risk, a special flow-of-funds
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mechanism will be established for this project in the first one or two years, until the fiscal situation showsclear signs of improvement. The fiscal risk also will be mitigated by developing a Roads Sector MTFP thatrecognizes the need to bring down the payables position, and at the same time, allocate the fresh resourcesthe sector needs, prioritizing maintenance of existing roads rather than making new investments (other thanthe proposed project).
3. Technical:The capacity and safety of the roads to be upgraded under the project will be substantially improved bystrengthening and widening the existing 3.75 m or 5.5 m pavements to 7.0 m. Reconstruction andimprovement under the project will adopt proven engineering design standards by employing intemationallyexperienced engineering consultants, working to design standards that will meet Indian and intemationalpavement standards. The Project's road upgrading and maintenance components aim at introducingsubstantially higher construction and quality control standards. Cost-effective and technically feasiblesolutions have been developed to improve project roads' capacity, geometry, road safety, and riding quality.Project preparation and implementation has focused on incorporating intemational experience in civilworks design and construction. This is expected to result in higher standards and improve localcontractors' capabilities. A comprehensive road safety audit was done before the upgrading works designwas finalized, to ensure that all safety aspects were addressed.
A road maintenance planning study system, completed with the assistance of IDS consultants, was done tocomplement the rehabilitation and institutional strengthening components. This study reviewed PWD'scurrent maintenance system and identified measures to improve this. Based on study findings, the Projectwill fund the development of detailed road maintenance design and contracts using innovative technologyand contracting arrangements. Study recommendations also include improved planning and budgetingmethods using a simple road maintenance management system.
4. Institutional:The institutional aspect of the project will be mainly addressed through the IDS and by implementing theISAP. The IDS was prepared in a fully participatory manner, through a series of workshops to maximizeinputs from relevant government departments and from the road transport users. Based on IDSrecommendations PWD and other concemed agencies prepared an ISAP. Following this, a high-levelgovemment committee, headed by the Principal Secretary, PWD, examined and finalized the ISAP forgovemment clearance and endorsement. Details of the final ISAP matrix are included in Annex 1 1.
The ISAP includes many activities to be undertaken by the govemment and PWD to reform the sector andto strengthen PWD's and other key agencies' institutional capacity. Proposed actions include: (a) roadplanning and investment based on user requirements, road transportation network factors, and soundeconomic considerations; (b) planning, implementation, and management of road construction programs;(c) development and management of cost-effective, rationally determined road maintenance programs; (d)generation of increased, dedicated, and sustained levels of funds for on-going road network maintenanceneeds and planned investment requirements; (e) effective use of private sector resources in the engineeringand execution of the road projects and programs; (f) installing a computerized modem financialmanagement system; (g) consultation with main road user stakeholders when planning road networkdevelopments and investments; and (h) the establishment of a PWD Road Safety Cell to undertake futuresafety audits and investigate accident sites. The full implementation of ISAP activities has been costed andwill be funded under the project. PWD staff will be trained as needed for the above activities. Inparticular, it will be necessary at an early stage to strengthen the PWD capacity in areas such asprocurement and resettlement, at an early stage, and to establish good coordination with other agenciesresponsible for utility relocation. Successfully implementing of the ISAP should ensure sustainable
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improvements to road sector planning, management and financing, and PWD's institutional framework andcapacities to the efficiently manage State road infrastructure development and maintenance.
4.1 Executing agencies:
The road component will be implemented by PWD, with technical assistance from ID for the IWTcomponent (as part of the project management team). The Project Steering Committee, headed by thePrincipal Secretary-PWD, will oversee and coordinate all aspects of project implementation, includingawarding contracts for civil works and consultancy services. Although PMT in PWD will manageimplementation activities, PWD will receive technical assistance in institutional strengthening, capacitybuilding, and road maintenance management. The project will help PWD to improve its internalcoordination, and its relations with other project implementation agencies and departments. Thegovernment has agreed in principle to pursue the recommendation to establish a technical twinningarrangement between PWD and an overseas road agency, for information exchange and capacity buildingpurposes. The ISAP will also benefit ID by building its capacity in policy and strategy development,environmental and social impact monitoring and, public consultation, as it implements the IWT component.
4.2 Project management:
The government has decided to entrust project implementation to a special project management team inPWD, in order to tap the experience and strength gained by this team during project preparation. PWDstaff will be progressively introduced to international technical standards. Strengthening PWD posesspecial challenges and requires steady and concerted efforts over time. To assist PWD implement theproject, specialized consultant services will be provided as and when required. To ensure capacity buildingand transfer of technology, some PWD staff will be seconded to work under the supervision consultants.
4.3 Procurement issues:
Project appraisal included, an in-depth assessment of PWD's capacity to manage procurement activities.PWD's procurement plan for road upgrading and periodic maintenance work and the IWT pilot componentwere reviewed and agreed with the Bank. The plan includes list of proposed civil works contracts,corresponding supervision and institutional development consultancy contracts, the institutionalstrengthening action plan matrix, information on goods and equipment to be procured under the project, andthe implementation timeline. The government has constituted a Tender Evaluation Committee forevaluating all procurement under the project, and a Project Steering Committee to evaluate all project, andto clear procurement related activities.
Most civil works contracts under the upgrading component will be procured by ICB procedures, while civilworks under the periodic maintenance component will be procured by NCB procedures. The contract sizeshave been designed to encourage bids by international contractors, who will then be invited to form jointventures with local contractors, helping to develop local industry. The supervision of the roadrehabilitation work component will solicit by ICB intemational consulting firms in partnership with localfirms.
To expedite procurement decision-making in accordance with Bank guidelines, the Government hasconstituted a Tender Evaluation Committee and a Project Steering Committee has been established. Thislatter Committee is authorized to take all decisions on procurement issues for contracts to ensuretransparency, competitiveness of procurement process and expeditious award of contracts.
4.4 Financial management issues:
Kerala PWD has been a participant in States Road Infrastructure Development Technical Assistance (Ln.
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4114-IN) since April 1999, and experienced the Bank's disbursement procedures and financial reportingrequirements. The entire project costs, including those for the IWT component, would be paid for andrecorded in the books of the PMT at PWD in accordance with procedures and policies prescribed in theFinance Manual. The Project's financial management arrangements are detailed in Annex 6. KSTP has afinancial management system that should be able to adequately account for project resources andexpenditures. A finance manual, detailing the financial policy and procedures and how to use thecomputerized Project Financial Management System (PFMS), is currently under preparation.
PWD's accounting policies and procedures are well laid out in the Kerala public works account code, theKerala Financial Code, and various accounting forms and formats. These policies and procedures areexhaustive and meet the financial information requirements of the Accountant General and otherstakeholders. The Project proposes to upgrade the current manual recording and reporting expendituressystem with a computerized FMS. Consultants are currently designing and implementing this. Theconsultants have completed inception analysis and the Project has received the System RequirementSpecification (SRS) report. The software development work has started and the program is expected to befinalized (including testing with live data and training project staff) by August 31, 2002. The computerizedFMS is expected to be operational before disbursement begins. The PFMS being developed by theconsultant will be based on PWD's existing accounting system and must meet the reporting requirementsof: (a) PWD's general financial rules and codes and accountant general's requirements; (b) the WorldBank guidelines; and (c) project management, for managerial decision-making. The FMS systemdeveloped for the project is scheduled to be rolled out,with required modifications, to divisions not involvedin the project by December 31, 2004, to strengthen PWD's overall financial management arrangements andas a part of the Project's Institutional development component.
GOI will open a special account with RBI to receive project disbursements from the Bank and then makethe funds available to GOK under the standard Additional Central Assistance (ACA) mechanism on a 70percent loan and 30 percent grant basis on a periodic basis, including the initial advance of USS 15 million.All project funds, including counterpart funds will be in budgeted in GOK's budget as an identifiable singlebudget item each year. Under the arrangement, as approved by the State Cabinet, the project will open ajoint bank account in the name of PWD and DOF's representative in a commercial Bank outside theGOK's treasury system. GOK will make funds available to the project in advance, on a quarterly basis, onthe basis of monthly cash forecasts based on project expenditure; quarterly reviews will see to it thatenough monies are available in the bank account to meet the project's forecasted expenditures. Divisionsparticipating in the project will submit certified bills to the Project Management Team, which will thenissue checks to the contractors and suppliers as per contractual terms.
Disbursements: Disbursements from the Bank loan wvould initially be made by the traditional system(reimbursement with full documentation and against statement of expenditure), then converted to ProjectManagement Report (PMR)-based disbursements at the option of GOK and GOI after computerized PFMSis successful implemented and the PMR successfully submits reports for one year. The expected date ofconversion to PMR-based disbursement is March 31, 2003. R&R assistance will be disbursed againsteligible assets (excluding land) and other enhancement costs incurred by the beneficiaries, within theapproved entitlement framework.
Retroactive Financing: Retroactive financing up to an amount of USS15 million will be available to covereligible project implementation expenditures after the project appraisal. Eligible expenses includeexpenditures on civil works, consultancy for maintenance contracts, training, R&R, EMP and otherexpenditures as detailed in BPIP. The retroactive financing will finance relevant project expendituresincurred before the date of signing but after November 1, 2001.
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Audit: The Project accounts will be audited by the Accountant General (Audit) of the State of Kerala onbehalf of the C&AG of India and must be submitted to the Bank within 6 months of the end of GOK'sfiscal year. The TOR of the proposed audit has been approved by the Bank and have been discussed withthe State AG and C&AG. The annual reports must be submitted within 6 months of the close of GOK'sfiscal year. The following audit reports will be monitored in Audit Reports Compliance System (ARCS):
Implementing Agency Audit Auditors
PMT/PWD SOE/Project Audit AG (Audit), Kerala on behalf of C&AG
DEA/GOI Special Account C&AG
The audit covenants of Loan 4114-IN, a project being implemented by PWD, have been met.
Internal Audit: In addition to the external audit, a firm of chartered accountants will conduct an internalaudit to assess the operation of the project financial management system, and will include reviews ofinternal control mechanisms, R&R implementation arrangements, and procurement processes. Any issuesarising from external or internal audits, including systemic issues, must be promptly and timely addressedby project authorities.
5. Environmental: Environmental Category: A (Full Assessment)5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (includingconsultation and disclosure) and the significant issues and their treatment emerging from this analysis.
(Refer Annex 12 for additional details on environmental and social aspects.)
Environmental Assessment Process for Roads and Waterways: The EA process to assess the potentialimpacts included a Sectoral EA (SEA) covering all proposed upgrading, widening, and maintenance workin both phases of the roads component. The EA process was first done for Phase I roads, and as projectimplementation progresses, will be done for Phase II roads. Subsequent to the SEA, an EA was carried outfor all nine corridors targeted for upgrading in Phase I and a consolidated EA report prepared, in additionto individual corridor-specific EMPs. A reconnaissance environment and social baseline survey wascarried out for the roads identified for maintenance work, and an Environment and Social ManagementPlan (ESMP) was prepared. As for the pilot IWT component, a draft Environment and Social AssessmentManagement Plan (ESAMP) was prepared for the three proposed waterway sections; this was found to beincomplete. A revised and finalized environmental mitigation plan, acceptable to the Bank, must besubmitted by GOK as a precondition for financing any activities under the IWT component. Since this is aCategory A project, and as the EA reports were prepared by the same engineering design consultant team,an independent review of the Environment and Social Assessments was carried out to ensure compliancewith the Bank's Safeguard Policies. Recommendations from the review were incorporated in all therelevant documents -- EAs, EMPs, RAP for roads, and ESAMP for waterways.
Statutory Clearances: These have been obtained as necessary for Phase I; see Annex 12 for details.
Consultation and Disclosure: The EA process was very consultative in nature, with systematic publicconsultations at various stages, including during screening when the scope of further consultation wasdetermined. The consultations included the semi-urban and urban populations along the project roads.Follow-up consultation took place in September 2001 and in December 2001. The reports were released inNovember 2001 to the Bank's Infoshop and affected districts in Kerala.
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Project Activities and Potential Impacts: The road corridors and waterways were selected to causeminimal direct adverse impacts on biodiversity and ecologically sensitive areas. Major issues emergingfrom the environment analysis include: (a) soil erosion; sedimentation; roadside flooding; slope instability(in hilly regions); drainage; and submergence problems due to heavy rainfall, requiring raised formationlevels in certain road sections, cross-drainage structures and embankment stabilization techniques; (b) highaccident rates due to poor traffic and road management practices and substandard design of curves;mitigating curve improvements, short realignments, and one bypass, have been considered. A separateRoad Safety Audit studied the engineering designs and its recommendations--including bus bays, parkingareas, pedestrian facilities, and landscaping activities have been incorporated into the final designs; (c) lossof roadside trees, and an extensive tree plantation plan has been prepared; (d) land use with respect tosensitivity of paddy field conversions for collection of borrow material and locating construction camps formitigation measures and guidelines have been integrated in the EMPs; (e) possible impacts on roadsidecultural properties enhancement plans have been proposed; and (f) monitoring plans have been provided inthe EMPs for air, water and noise pollution during construction and operation phases.
Construction-related impacts will be confined to the existing right-of-way (ROW) to the extent possible,except for realignments and the one bypass (proposed only in Phase 2). These mainly include: (a) air andnoise pollution during road construction and operation of the roads; (b) dust and smoke from materialtransport, crushers, and asphalt plants during construction; (c) the risk of oil fuel and lubricants spills; and(d) borrow pits, quarries, and construction camps. Mitigation measures are a part of the EMP forupgrading and maintaining roads and waterways.
Key environmental issues emerging from the waterways analysis include: (a) bank erosion; (b) removal anddisposal of water hyacinth; (c) transportation and disposal of dredge material; (d) noise disturbance; (e)impact on water quality due to sewage disposal from private residences and other sources; and (f) fuel andlubricant leaks from boats. Dredge and water hyacinth disposal plans have been prepared as part of theESAMP. Disposal sites have been located along the waterways to minimize transportation. As the pilotwaterways receive wastewater discharges from residences along the banks and other sources, measures toimprove sanitation practices have also been considered.
5.2 What are the main features of the EMP and are they adequate?
The SEA includes a EMP framework, while the consolidated Phase I EA includes detailed EMPs for allnine upgrading corridors, ESMP for the maintenance corridors and an ESAMP for the waterways. Thesecover impact identified by the EAs and issues raised during public consultations, and detail measures toavoid, mitigate and enhance impacts during all project stages. They include an implementation schedule,with links to the relevant contract clauses; Bills of Quantities and appropriate links to the biddingdocuments; a monitoring plan; and anticipated budget and institutional measures necessary to mitigate andmonitor the performance of the management plan. The loss of roadside trees, already minimized, will becompensated by an afforestation plan that includes the plantation of four grown-up saplings for the loss ofone tree. The ESMP addresses mitigation measures that are primarily related to construction and any otheradditional measures (such as traffic calming, signs, noise mitigation, no camps in sanctuary limits, noconstruction during night, etc.) that will be necessary in sensitive locations.
The EA recommendations have been incorporated in the analysis of altematives and detailed project designas far as reasonably practicable. This means that the comparison of altematives and widening options hasincluded environmental and social considerations and public opinion. Every effort has been taken to avoidor minimize negative impacts, including realignment to avoid cultural assets, minimizing tree felling, andminimizing land acquisition and the displacement of people.
Other measures will be taken during construction to mitigate impacts and optimize future environmental
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improvements. Mitigation measures include effective restoration of borrow pits, noise restrictions atsensitive sites, maintenance of irrigation and drainage channels, measures to prevent siltation, restrictionson the locations of crushers and asphalt plants, and slope protection. The project also envisagesenvironmental enhancements, such as improved aesthetics, increased safety, enhancement of sites andcultural properties important to local residents, improved local drainage, preservation and improvement ofwater bodies and the reuse of industrial waste-ash from thermal power plants, which is an environmentalhazard. The EMPs also specify responsibilities for implementing mitigation measures during the operationphase including, monitoring air, water and soil pollution, maintaining of roadside plantations, preventingundesirable roadside developments, and road safety management.
Implementation Responsibilities
An Environment and Social Management Cell has been created in the PWD to coordinate and oversee theimplementation of the Project's environmental and social components. This is headed by the ProjectDirector assisted by two Executive Engineers (EE), already in position. This cell will liaise with relevantgovernment departments, contract with NGOs for assistance with the RAP, and oversee the implementationof EMPs and the RAP and the preparation of EAISA for Phase II roads. Independent SupervisionConsultants (SC) will oversee and monitor all aspects of the Project's road rehabilitation component; theirteam will also include inputs from environmental specialists, as specified in their TORs. Majormaintenance supervision will be done by PWD staff with technical audits by independent consultants, andassistance from environment specialists. Contractors employed by PWD will implement construction andassociated environmental mitigation activities. PWD staff, the SC, NGOs providing RAP services, andcontractors' personnel will be trained as per the training modules and plan prepared as part of the EMPsand RAP. The Irrigation Departmnent has created a task force, headed by Secretary-ID, to facilitate thepreparation of the waterways component and has designated two Assistant Engineers to coordinate relatedactivities with ESMC (see section 6.4.).
The Environment and Social Management Cell has been fully staffed. During negotiations GOK wascommitted through covenants in the Project Agreement to: (a) adequately maintain the Environment andSocial Management Cell and District Grievance Redressal Committees; (b) acquire land in a timelyfashion; (c) obtain and comply with the provisions of any necessary government clearances; (d) furnish tothe Bank EAs, EMPs, and RAPs for any project corridors for which detailed designs have not beencompleted as of the date of project appraisal; (e) ensure the satisfactory implementation of theenvironmental protection measures stipulated in the EMPs, ESAMP, and ESMPs; (f) ensure thesatisfactory implementation of the tree plantation plan as stipulated in the EMPs and the tree plantationstrategy; (g) furnish to the Bank quarterly environmental supervision and monitoring reports; and (h)commission external evaluators to monitor the implementation of the RAP.
5.3 For Category A and B projects, tirneline and status of EA:Date of receipt of final draft: SEA for roads - Jan. 2002;
Project EA for waterways - Jan. 2002;EA for upgrading roads - Jan. 2002;Individual EMPs for upgrading roads -Jan. 2002;ESAMP for inland waterways - Jan.2002; andESMP for maintenance roads -Jan. 2002.
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5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EAreport on the environmental impacts and proposed environment management plan? Describe mechanismsof consultation that were used and which groups were consulted?
The public consultation strategy included integrating stakeholders concerns upstream and throughout theproject cycle. In parallel with environmental and social screening, PWD held three scoping workshops toidentify upstream project preparation environment and social issues and scope the EAs accordingly. Theseworkshops included a wide spectrum of people and organizations. The key issues that emerged includedroad safety, resettlement, protection of cultural assets, biodiversity conservation, air and noise pollution,flooding and water-logging along project roads, and sewage disposal and water quality degradation in thewaterways. The public consultations were common to both the social and environmental assessmentprocesses. A series of follow-on consultations have been planned; the first was done in September2001(see section 6.2.).
5.5 What mechanisms have been established to monitor and evaluate the impact of the project on theenvironment? Do the indicators reflect the objectives and results of the EMP?
The EMP for each route to be upgraded includes monitoring plans for the preconstruction and operationstages; and monitoring plans are part of the ESMP for major maintenance works and ESAMP forwaterways. The plan specifies the parameters to be monitored, location of monitoring sites, frequency,applicable standards, responsibilities, costs, and formats for monitoring and reporting. The contractor willreport to the SC (or PWD field staff, in the case of major maintenance roads), the SC will report throughPWD district officers to ESMC and PWD will report to the Bank on a quarterly basis. Duringconstruction, the contractor will report to the SC on compliance and implementation of the EMPs, ESMP,and ESAMP as per the determined frequency. Bank supervision teams will include an environmentspecialist. It has been proposed that during construction regular meetings be held with local stakeholdersat sensitive locations on upgradation corridors to ensure continued community participation in projectmonitoring. Operation-stage reports, as detailed in the EMPs, will be either annual or biennial, will beconducted by PWD, and will be made available to the Bank.
Environment performance indicators have been included as an integral part of the EMP and ESAMP inorder to reflect the EA's objectives and results. These include monitoring performance indicators such assapling survival rates testing, conditions of construction and worker camps, and air, noise, water, and soilpollution. Parameters and testing frequencies have been specified.
6. Social:6.1 Summarize key social issues relevant to the project objectives, and specify the project's socialdevelopment outcomes.
(Refer Annex 12 for additional details on environmental and social aspects.)Social Impact Assessment
A social impact assessment was done during project preparation, consisting of: (a) early screening as partof project feasibility studies; (b) census and baseline socioeconomic surveys of the potentially affectedpopulation; (c) consultations at village, district, and State levels; (d) finalization of entitlements andpreparation of the R&R policy; and (e) finalizing arrangements to implement and monitor the ResettlementAction Plan (RAP). A full census documented the status of the potentially affected population within thecorridor of impact, particularly their assets and sources of livelihood. This provided the basis forestablishing a cut-off date to determine who would be entitled to relocation assistance or other benefits. Adetailed socioeconomic survey of the affected population was also done; from this a database andmonitoring and evaluation parameters were created. The surveys provided a baseline against which
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mitigation measures and support will be measured and includes a comprehensive examination of people'sassets, incomes, important cultural or religious networks or sites, and other sources of income, such asdependence on common property resources. An analysis of survey results included a gender analysis. Asimilar process was followed for the inland waterways and an ESAMP was prepared.
R&R Policy and RAP: An appropriate R&R Policy was prepared in accordance with the Bank'sOperational Directive 4.30 - Involuntary Resettlement and O.D. 4.20-- Indigenous People to coversituations where the temporary or permanent relocation of people will be required or other losses will beincurred. The R&R policy recognizes the rights of squatters and vulnerable encroachers. The policy wasapproved by the government and endorsed by the Bank. The guidelines included in the policy require: (i) adocumentation of the resource base of all families affected by the project and the losses they will face; and(ii) the development of mitigation measures, institutional requirements for the implementation of thesemeasures (including a participatory strategy) and a budget. The RAP for state highways and ESAMP forwaterways is complete and consistent with the Project's approved R&R entitlement framework. The RAPand ESAMP have been endorsed by the government. The Environment and Social Management Planensures that should there be adverse impact on people along the maintenance roads, the provisions of theR&R policy and the RAP will be implemented in their full spirit. A separate IPDP has not been preparedas only one tribal family will be affected by the project.
Social Issues and Mitigation
Impact on People and Land: The project is designed to minimize land acquisition and avoid large-scalecommunity displacement by limiting the widening to the existing formation width of the existing roads. Asa result of this strategy, the proposed widening standard from 7.1 to 10.0 m of Phase I roads, will have alimited impact on people and common property resources.
Acquisition of agriculture, residential, and homestead land and commercial structures will be required toupgrade and widen the road; resettlement and relocation will be necessary for affected people. The Projectwill affect and displace a number of properties. For both phases I and 11 15,319 families will be affectedand 99.31 hectare's of land must be acquired by the project (Phase II estimates are based on initial socialscreening and extrapolation from the Phase I Census and other surveys). 6,607 project affected families(PAF) will lose residential or commercial properties and 565 PAFs will lose agriculture land to Phase-I ofthe project. Findings indicate that 6,556 of them are title holders. The number of squatters andencroachers is only 46 and 29, respectively. Only 859 families will be displaced; the remaining familieswill only lose their compound walls.
Of the total PAFs affected under Phase I, vulnerable families number 2,160 and 174 will be displaced. Thevulnerable people (including one tribal family) are dispersed along the total 257 km project length. Toensure women's security, all alternate plots for houses or shops will be jointly registered. The landacquisition process has started compensation and assistance to meet replacement costs must be completedby end of May 2002, prior to initiating the civil works.
Rehabilitating the inland waterways is not expected to lead to any adverse impacts. However, the ESAMPprovides for the enhancements of community resources along the canal network.
Loss of Property or Income: Resettlement is required where residential or commercial structures musteither be fully demolished or made uninhabitable. The owners of structures will be displaced. Displacedpeople and religious buildings and structures must be relocated. Rehabilitation is required whereresettlement, relocation, or other project impacts have resulted in lost livelihood or income (Annex 12).Efforts have been made to identify alternate sites for displaced shelters and commercial establishments.Families dependent on agriculture will lose a small strip of land and the remaining plot will be viable forcultivation. However, 41 families will become landless. Compensation and assistance will be provided to
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purchase alternate land for the displaced families and to develop the remaining land. In all cases, it will benecessary to restore the economic status of affected persons to at least pre-project level or improve theirliving standards. Additional support will be extended to all the vulnerable; alternate sites will be given freeof cost and will be registered under names of husband and wife.
Common and Cultural Property: Thirty-six religious structures will be affected by the project; in mostcases the project will claim only the boundary wall or part of the compound area. Mitigation plans as perOPN 11.03 have been prepared as part of the RAP, EMP, and ESAMP. If "chance archeological/culturalfinds" are found during construction, these will be handled under national laws, as covered by the civilworks contracts.
STDs: Studies on the human immune deficiency virus (HIV) and Acquired Immune Deficiency Syndrome(AIDS) indicate that truckers, are a significant vector of the virus. As traffic is expected to grow as aresult of the project, the rates of sexually transmitted infection may increase. This impact can beminimized through preventive awareness-building plans and facilitating National and State healthprograms, and this has been included in the RAP.
Road Safety: Another potentially negative social impact is the risk of road accidents associated withincreased traffic speeds. This impact has been minimized by undertaking a safety audit of the Project'sengineering design; the implementation of accident blackspot program to reduce road accidents at the SH'smost hazardous locations; and the implementation of a comprehensive Road Safety Action Plan.
Social Outcomes
The project is designed to improve road transport efficiency, inland waterways, and road safety onimportant sections of the State road network and therefore will bring about significant social benefits.Improved and better maintained roads will facilitate the movement of goods and enhance people's access tomarkets, services, and information. Better access to markets will increase economic opportunities, therebyincreasing the conmmunity's income and reducing of poverty. Another positive social impact is the projectedreduction of road accidents and fatalities, due to enhanced safety measures. However, the project maycause some marginal adverse impacts on communities residing within the corridor of impact as notedabove.
6.2 Participatory Approach: How are key stakeholders participating in the project?
In accordance with the framework developed in the R&R policy, the project authority organized variousdiscussions and consultations with different social groups and stakeholders at the district and State level.The stakeholders views have been incorporated to minimize negative impacts, and to enhance the benefitsthrough the design and preparation of the RAP. Moreover, focus group discussions with the villagers andPanchayats enabled the government to develop the R&R policy and the RAP and ESAMP according to thetrue needs of the affected PAPs. The public consultation process provided the necessary input to modifyengineering designs to minimize negative impacts and develop mitigation measures to address adverseimpacts.
Project infommation was shared in three scoping workshops. Nearly 200 NGOs, government agencies,university and Research organizations received detailed information. Extensive district and local-levelconsultation drew on different social groups, district administrators, NGOs, and other interested groups.The main concem of the people residing along the project roads was high road accident rates. In the caseof waterways, people indicated that waterway maintenance is not a State priority and that the Governmentshould provide adequate resources so that this transportation resource could be made viable. Thesuggestions and views facilitated changes and modifications in the project design. The R&R policy, EA,EMPs, RAP, ESMP, and ESAMP have been made public in November 2001 through Bank's Infoshop and
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in the districts that will be affected by the project.
To ensure continuous participation, the RAP and ESAMP provides a mechanism for consultation withaffected people and Panchayats while implementing and monitoring the work progress (ref. Annex 12 also).
6.3 How does the project involve consultations or collaboration with NGOs or other civil societyorganizations?
The scoping workshop and district-level consultations as mentioned in Section 6.2, invited NGOs toparticipate in project preparation and policy. R&R policy recognizes the importance of NGO involvementin project implementation, and their representatives will be members of the project committees.
6.4 What institutional arrangements have been provided to ensure the project achieves its socialdevelopment outcomes?
The RAP and ESAMP provide details on the institutional arrangements, roles, and responsibilities of thestaff implementing, monitoring, and evaluating of the project. The Environment and Social ManagementCell, in coordination with the field staff, is responsible for implementing the RAP and ESAMP. LandAcquisition Officers are also cell members. District-level committees will support the implementation ofthe RAP and the Grievance Redressal Committee will hear complaints or grievances by the affected people(see section 5.2 and annex 12).
6.5 How will the project monitor performance in terms of social development outcomes?
The RAP and the ESAMP contain monitoring and evaluation parameters and describe the institutionalarrangements, including Panchayati Raj institutions, to facilitate process and progress monitoring.Monitoring reports will be prepared monthly and will be included in the overall quarterly projectmonitoring report. An extemal agency will prepare independent evaluation quarterly and for end-term.
7. Safeguard Policies:7.1 Do any of the following safeguard policies apply to the project?
Policy ApplicabilityEnvironmental Assessment (OP 4.01, BP 4.01, GP 4.01) 0 Yes 0 NoNatural Habitats (OP 4.04, BP 4.04, GP 4.04) 0 Yes 0 NoForestry (OP 4.36, GP 4.36) 0 Yes 0 NoPest Management (OP 4.09) 0 Yes 0 No
Cultural Property (OPN 11.03) 0 Yes 0 NoIndigenous Peoples (OD 4.20) 0 Yes 0 NoInvoluntary Resettlement (OP/BP 4.12) * Yes 0 NoSafety of Dams (OP 4.37, BP 4.37) 0 Yes 0 NoProjects in International Waters (OP 7.50, BP 7.50, GP 7.50) 0 Yes 0 NoProjects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)* 0 Yes * No
7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies.
The Government has prepared SEA, EA, EMP, ESMP, RAP, R&R Policy, and ESAMP to manageproject-related environmental and social impacts, which are consistent with OP 4.01, OD 4.30, OD 4.20,OPN 11.03, and GOI's environmental assessment policies. Furthermore, in compliance with OP 4.01,since the project has been classified as category A project, GOK has done an independent review of theproject's environment and social assessment. As per BP 17.50, the Final Draft SEA, EIA, EMP, ESMP,RAP, ESAMP and the Executive Summary (translated in local language) were disclosed in public places ineffected districts. (see Annex 12).
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F. Sustainability and Risks
1. Sustainability:
The government's commnitment to increase road maintenance funding and gradually reduce the current gapis probably the most important factor affecting the long-term sustainability of the States road network. Theproject sustainability also depends on the government's ability to provide adequate project and counterpartfunding. In addition, the project's long-term sustainability depends largely on the government's commitmentto undertake major policy reforms in areas such as road financing mechanisms, institutional reforms, androad maintenance management arrangements. In this regard, Kerala's new Road Development Policy, theRoad Fund and the RBDCK are steps in the right direction. The endorsement or legislation of manycritical reforms before loan effectiveness is expected to ensure the project's greater sustainability.
The institutional strengthening component is expected to contribute to project sustainability through theimplementation of the ISAP, which will enhance PWD's operational efficiency. The ISAP focuses onintroducing improved planning, budgeting, financial, and management practices into PWD. The successfultransformation of PWD from a traditional road department to a perfornance-oriented and user-responsivemodem road agency will be the most critical factor in project sustainability.
The project's upgrading and maintenance component will help increase the State roads' carrying capacityand reduce PWD's maintenance backlog. The sustainability of the project's physical investments dependson the quality of design and construction supervision, and adequate funding from GOK for future routineand periodic maintenance after completion. The project team has applied international standards to thedesign, construction supervision, and technical audits to ensure the quality of initial construction.Intemationally-experienced consultants are expected introduce intemational good practices in roadengineering and contract management and provide technical on-the-job training to PWD staff.
In the IWT sector, sustainability will depend on the rehabilitated waterways ability to attract additionalcommercial and passenger traffic.
2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Annex 1):
Risk Risk Rating Risk Mitigation MeasureFrom Outputs to ObjectiveFiscal strain on GOK, leading to an S Final project scope and costs have beeninability to provide project and detemtined only after assessment of Statecounterpart funding, delaying finances. GOK has developed a medium-termimplementation and raising costs. financing plan for the road sector. Fund flow
risk will be mitigated by way of specificadministrative decisions (taken by the Statecabinet) to establish a separate Bank account forthe project, outside the government treasurysystem. The funds would be made available tothe project in advance, on a quarterly basis,from the State budget, on the basis of cashforecasts; the bank account must containsufficient funds to meet the forecasted projectexpenditures.
GOK does not implement key M GOK has endorsed the final recommendations ofrecommendations of the Institutional the Institutional Development Study; GOK andStrengthening Action Plan. several key corresponding actions must take
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place before project effectiveness.Road accidents not reduced at improved M Institutional strengthening of PWD road safetyblackspot sites and along priority SHs. staff will take place under the project, and
increased traffic police enforcement at theselocations, is part of the Road Safety ActionPlan.
Inland waterways and navigational aids M ID engineers will be actively involved in thenot adequately maintained. preparation and implementation of the contracts
to improve the inland waterways and installnavigational aids. Appropriate training of IDstaff is part of the institutional strengtheningcomponent.
From Components to OutputsDelays in the provision of counterpart S The project size and financing requirements arefunding for transport infrastructure based on the government capacity to fund theimprovements. project.Delays in clearance of construction sites S Early identification of project road corridors andand approval of project-related undertaking baseline socioeconomic surveys,government policies prior to award of civil approval of R&R policy and RAP for Phase Iworks contracts. roads completed by project appraisal, continued
monitoring of RAP implementation.Lack of coordination between S Integration of specialist teams from PWD, theirimplementation of Resettlement Action consultants, and Bank staff for engineering,Plan, Environmental Management Action social, and environmental aspects during projectPlan, and civil works. preparation and implementation.Delays in tender evaluations after award M The Tender Approval Committee, established byof contracts supervision consultants and the government, will be authorized to make allcivil works contractors. procurement decisions to expedite contract
awards.
Overall Risk Rating 5
Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk)
Based on an assessment of all major risk factors, the project's overall risk rating is judged as substantial.Risk mitigation measures have been identified and incorporated where required. Extensive consultationwith a wide range of stakeholders, civil society, and the government ensures that the project is founded on asustainable and transparent basis.
3. Possible Controversial Aspects:
None. All major adverse factors have been addressed fully in the above risk analysis. Extensiveconsultation with a wide range of stakeholders, civil society, and the government should ensure that theProject's physical components will be implemented in a transparent manner and in full compliance withWorld Bank policies, and applicable local laws.
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G. Main Loan Conditions
1. Effectiveness Condition
1. Standard legal conditions.
2. Other [classify according to covenant types used in the Legal Agreements.]
1. 1. Standard legal conditions.
2. Other [classify according to covenant types used in the Legal Agreements.]
(a) The government will maintain a state-level Empowered Committee, a Tender EvaluationCommittee and a Project Steering Committee with powers and functions satisfactory to the Bank;
(b) The government and PWD will undertake a comprehensive review and subsequent revision ofPWD manuals and codes, and operationalize the revised manuals and codes not later thanDecember 31, 2004 (before mid-term review);
(c) The government and PWD will complete an assessment of PWD's current organizational structure,prepare a revised organizational structure, and begin to implement this before December 31, 2004(i.e, before mid-term review). The government and PWD shall furnish to the Bank quarterlyreports indicating progress on this;
(d) PWD will conduct annual road condition and traffic surveys on State highways, with methodologyand content satisfactory to the Bank, and provide the Bank with annual survey reports;
(e) PWD will establish a modem Road Information and Maintenance Management System, for betterroad inventory data collection, investment prioritization, and project management, beforeDecember 31, 2004 (i.e., before mid-term review);
(f) The government will conduct Road User Surveys at least three times during project implementationto assess road users' satisfaction with the road infrastructure and PWD's performance. The firstsurvey must be completed before September 30, 2002; the second survey before December 31,2004 (i.e., before mid-term review), and the third survey by end of project (before June 30, 2007).PWD will furnish to the Bank a report with the results of the survey, within one month of thecompletion of each of these surveys;
(g) The government will provide to the Bank the following documents: (a) quarterly reports on theimplementation progress as specified in the BPIP, within 45 days after the end of each calendarquarter; (b) a Mid-Term Review (MTR) report 24 months after project effectiveness; and (c)continue annual monitoring of environmental impact of Project implementation, for a period of twoyears after the Closing Date;
(h) The government will maintain an Environmental and Social Management Cell to oversee theimplementation of the EMP and the RAP, in accordance with agreed objectives, policies, and timeschedules; and maintain a Grievance Redress Committee in each district where the project will becarried out, with composition, powers, functions, capacity, and resources satisfactory to the Bank;
(i) The government will increase, for the duration of the project, annual road maintenanceexpenditures by at least 10 percent in real terms, starting from the year 2002/2003 and transmit tothe Bank, for the duration of the project, its approved capital and maintenance allocations for theroad sector, within thirty (30) days of government approval;
(j) Before December 31, 2004, the government and the World Bank will undertake a Mid-TermReview of the project and, if necessary, take actions to modify the project scope as may be
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mutually agreed
(k) PWD will ensure that the computerized PFMS is developed and fully operational for the KSTPproject by August 31, 2002 and extend the computerized FMS to the entire PWD organization byDecember 31, 2004 (i.e., befome mid-term review);
(1) PWD shall mnaitain throughout the pmject period a senior finance professional as FinanceController and a cbartered accountant as a fimnae manager, with experience and qualificationsagreed with the Bank, and establish and maintin a separate bank account for the Project in acommercial bank throughout the period of project implementation; and
(m) PMT and PWD will (i) ensure that the R&R entitlement firnework and the implementationarrangemnent, as detailed in the RAP, is to execute the R&R component; and (ii) a joint bank
ccowunt to be opened with a nabonaized bank to be operated jointly by the beneficiary, R&Rproject manager and NGO representative, in order to make R & R payments.
H. Readiness for lmplementdlon
0 1. a) The engineering design documents for the first yeaes activities are complete and ready for the startof project implementation.
0 1. b) Not applicable.
0 2. The procurement documents for the first year's activities are complete and ready for the start ofproject implementation.
13. The Project Implementation Plan has been appraised and found to be realistic and of satisfactoryquality.
El 4. The following items are lacking and are discussed under loan conditions (Section G):
1. Compliance with Bank Pollcies
0 1. This project comphes with all applicable Bank policies.O 2. The following exceptions to Bank policies are recommended for approval. The project complies with
all other applicable Bank policies.
Stein Lundebye Vc LimTeam Leader Sector M nagerllxrector Country Manager/Director
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Annex 1: Project Design SummaryINDIA: Kerala State Transport Project
Key Performance Data Collection StrategyHierarchy of Objectives Indicators Critical Assumptions
Sector-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goal to Bank Mission)Provide adequate Increased State plan GOK Budget and public Central government maintainsinfrastructure and reduce allocations for improvement expenditure reports. its commitment to road sectorphysical infrastructure and maintenance of roads and reforms.constraints. inland waterways
infrastructure. The Country Assistance Enhanced infrastructureRoad user's satisfaction with Strategy Report. promotes investment andthe road system. sustainable growth that
Independent road user contribute to povertysatisfaction surveys. reduction in the State.
GOK complements enablinginvestments in roadinfrastructure with criticalpro-poor inventions and otheractions that encourageinvestment.
Project Development Outcome I Impact Project reports: (from Objective to Goal)Objective: Indicators:1. Improve traffic flow and 1.1 Reduction in travel time Comparison of Strategic GOK maintains commitmentroad safety on the State and vehicle operating costs by Options Study data, feasibility to project objectives andprimary road network. 20% on the 1,600 km of study data, and end of project increased funding for the road
roads to be improved under survey data, project evaluation sector for development andthe project. report, mid-term review maintenance requirements.
1.2 Reduction in the share of report,. PWD monthly GOK maintains commitmentcore SH network in poor quarterly reports, ICR. to State Road Safety Actioncondition from 90% to 50% Plan.by EOP.
1.3 Reduction in roadaccidents up to 30% ataccident blackspot sitesimproved under the project byEOP.
2. Strengthen the institutional 2.1 Implementation of PWD and ID annual reports, GOK maintains commitmentand financial capacity of key time-based ISAP by EOP. mid-term review report, ICR, to the recommendations of thetransport sector agencies. consultant progress reports. ISAP and PWD staff working
groups.
Output from each Output Indicators: Project reports: (from Outputs to Objective)Component:1. Upgrade transport 1.1 Upgradation of about 600 PWD and ID monthly and Increased road maintenancecorridors: (a) implement km of high priority SHs by quarterly progress reports, funding by GOK as per agreed
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prioritized upgrading road EOP. PMRs, Bank supervision medium-term road financingwork and (b) rehabilitate 1.2 Rehabilitation of about reports, ICR. plan.pilot IWT canals. 100 km of inland waterways Inland waterways
and installation of embankments andnavigational aids by EOP. navigational aids adequately
1.3 Completion of all maintained by GOK.environmental mitigation Ownership and commitmentmeasures and full delivery of of GOK to implement EMPsentitlements to PAPs. and RAP.
2. Cost effective road 2.1 Maintenance of about PWD monthly and quarterly Increased road maintenancemaintenance works. 1,000 km of SHs to a good progress reports, PMRs, Bank funding by GOK as per agreed
standard supervision reports, ICR. medium-term road financing(IRI < 4.5) by EOP. plan.
3. Road safety improvement: 3.1 Improvement of 50 PWD monthly and quarterly Enforcement of highwayaccident blackspot and safety accident blackspots by EOP. progress reports, PMRs, Bank safety regulations.audit programs. supervision reports, ICR.4. Institutional development: 4.1 Establishment of PWD monthly and quarterly Ownership and commitmentimproved capacity for following units within PWD progress reports, PMRs, Bank of GOK to implementplanning, design, construction by mid-term review: (a) social supervision reports, ICR. recommendations of ISAP andand maintenance of State road and environmental PWD staff working groups.network, and adoption of safeguards, and (b) financialmodernized road management management.practices. 4.2 Comprehensive revision
and operationalization ofPWD codes and manuals bymid-term review.
4.3 Development andoperationalization of roadmanagement informationsystem within PWD bymid-term review.
Project Components / Inputs: (budget for each Project reports: (from Components toSub-components: component) Outputs)1. Transport network 1. US$261.55 million. Monthly and quarterly project GOK to meet in a timelyimprovement: (a) upgrading progress reports, Bank manner counterpart funding600 km of SHs, (b) supervision mission reports, requirements of civil worksrehabilitating 100 km of pilot mid-term review report, ICR. contracts.IWT canals, providing minor Timely availability ofbridges and navigational construction sites beforeaids,and (c) R&R assistance. award of civil works contracts
GOK and PWD to carry out
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RAP satisfactorily.
2. Periodic maintenance of 2. US$58.20 million. Monthly and quarterly project GOK to meet in a timely1,000 km of SHs and MDRs. progress reports, Bank manner counterpart funding
supervision mission reports, requirements of civil worksmid-term review report, ICR. contracts.
3. Road safety improvement: 3. US$4.20 million. Monthly and quarterly project Full ownership and actual(a) accident blackspot progress reports, Bank implementation of road safetyprogram, and (b) installation supervision mission reports, engineering action plan.of road safety equipment. mid-term review report, ICR.
4. Institutional development: 4. US$9.50 million. Monthly and quarterly project Full ownership and actual(a) implementation of ISAP, progress reports, Bank implementation by GOK and(b) implementation of road supervision mission reports, PWD of ISAP.safety action plan, (c) mid-term review report, ICR.preparation of follow-upstudies, and (d) equipmentand software.
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Annex 2: Detailed Project DescriptionINDIA: Kerala State Transport Project
By Component:
Project Component I - US$261.55 million(including contingencies)
Transport Corridor Upgrading Component:
This component comprises civil works, supervision and quality control services, environmentalmanagement, and preconstruction activities such as land acquisition, resettlement and rehabilitation, utilityrelocation, and governnent's project mnanagement costs as described below:
(a) Civil works for strengthening and widening two lanes and strengthening of about 600 km of stateroads in six contract packages (US $191.1 million). The works include minor realignments,construction of one bypass and two rail over-bridges, reconstruction and strengthening ofcross-drainage structures, providing roadside appurtenances, and improving side drainage.
(b) Civil works for upgrading and rehabilitating State inland waterways, as a pilot component, in onecontract package (US $8.5 million). The work include desilting, deweeding, side bankstrengthening, and other minor canal rehabilitation work.
(c) Supervision consultant and project coordinating services for civil works mentioned above, in threepackages (US $14.5 million).
(d) Land acquisition, utility relocation, resettlement and rehabilitation, and environmental mitigationand management (US $40.3 million), as described below:
(i) Land acquisition and utility relocation (US $19.8 million). This item will be financedentirely by the Government;
(ii) R&R assistance (US $17.5 million) will be paid to beneficiaries for each package througha consultative process. Payments will be made from the project director's office, and theBank's share (US $15.1 million) will be reimbursed 100 percent net of taxes on the basisof Statements of Expenditure (SOE) supported by proof of usage of the funds by the PAPsand certified by the NGOs or the Government. The Bank will not finance any costsincurred towards purchasing or acquiring land. The procurement is usually undertaken bythe respective beneficiaries, in accordance with established local private sector andcommercial practices acceptable to the Bank;
(iii) Resettlement implementation support, training, and monitoring (US $0.70 million) will beprovided through: five or six NGO consultancy packages (US $350,000), two monitoringconsultancies (US $150,000); training of PWD and NGO staff, and other R&Rimplementation expenses by SOE (US $200,000);
(iv) Environment management and mitigation works (US $3.5 million) and services fortraining, monitoring, evaluation, and policy planning (US $1.0 million); and
(e) The government's project management costs, including tax liabilities in lieu of consultantservices and equipment procurement. (non-Bank financed, US $5.0 million).
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Table: 1. Brief Details Of Upgrading Works
Contract No. Section Length (km) Base Cost (US $millions)
Phase- I
KSTP- I NH47-Taikod-Kottaraka-Chenganur/ 127.1 36.3Alappuzha-Changanaseery
KSTP-3 Angamali-Muvattupuzha-Thodapuzha 49.2 15.6
KSTP-4 Palakkad-Shoranur/Thrissur-Kuttipura 78.4 23.7
IWT-I Pilot inland waterway upgrading 93.0 07.3
Total Phase 1 347.7 82.9
Phase - 2
KSTP-5 Pilathara-Pappinaserry/Kasargod- 102.9 27.1Kanhangad/Thalaser-Valavapura
KSTP-6 Chengannur-Ettumanoor-Muvattupuzha 90.0 24.9
KSTP-7 Punalur-Ponkunnam-Thodupuzha 131.3 37.8
Total Phase 2 324.2 89.8
Total (Phase I and Phase 2) 671.9 172.7
Project Component 2 - US$58.20 million(total cost including contingencies)2. Road Maintenance Component: A program of maintenance works through conventional contracts,through piloting alternative contracting methods based on performance. This component include:conventional maintenance works contracts for about 1,000 kmn of state roads in a three-year programme(US $55.4 million) and two pilot performance-based maintenance contracts for a fixed period (US $1.0million). Supervision, technical audit, and design advisory services will also form part of this component(US $1.8 million). This is expected to strengthen PWD's maintenance supervision and quality assurancepractices.
Table: 2Brief Details Of Maintenance Works
Year No. Details Length (km) Base Cost (US $______________________ m illion)
Year 1 13 packages 339.1 20.2RMC-KSTP-1 to 13
Year 2 About 13 packages 350.0 (approx) 16.9Year 3 About 11 packages 320.0 (approx) 14.4
_ Total (37 packages) 1009.1 (approx) 51.5
Project Component 3 - US$ 4.20 million(total cost including contingencies)
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Road Safety Component: Comprises consultant services for blackspot identification, and programmingand designing minor improvements works for State roads (US $500,000); minor mitigation measures andrecommendations identified through this study will be implemented through small contracts (US $3.2million); equipment and accessories for improving the road safety systems in the state (US $500,000)
Project Component 4 - US$9.50 million(total cost including contingencies)Institutional Strengthening: (a) This component includes services to implement the institutionalstrengthening action plan by appointing TA consultants in the areas of maintenance management and datacollection, developing and installing a road management system, road safety management, includingestablishing an accident recording and analysis system), information management, agency restructuring,and training the appropriate officials (US $4.7 million). This also includes some provision forpreinvestment studies for future capital and maintenance investments (US $2.5 million); and (b) equipmentand software for setting up a sustainable information management system, data collection for inventorymanagement, and accounting in a sustainable manner (US $2.3 million).
Project Component 5 - US$2.55 millionFront End Fee
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Annex 3: Estimated Project Costs
INDIA: Kerala State Transport Project
Local Foreign TotalProject Cost By Component US $million US $million US $million
1. Corridor upgrading 158.10 69.10 227.202. Road maintenance 46.20 7.90 54.103. Road safety engineering program. 2.85 1.25 4.104. Institutional strengthening of PWD and ID, TA for 4.50 3.90 8.40preparation of follow-up studies and implementation of Stateroad safety action plan.Total Baseline Cost 211.65 82.15 293.80
Physical Contingencies 15.20 6.00 21.20Price Contingencies 12.65 5.80 18.45
Total Project Costsl 239.50 93.95 333.45Interest during construction 0.00 0.00
Front-end fee 2.55 2.55Total Financing Required 239.50 96.50 336.00
Local Foreign TotalProject Cost By Category US $million US $million US $million
Civil Works 214.50 81.30 295.80Goods 6.90 1.95 8.85Services 18.10 10.70 28.80
0.00
Total Project Costs' 239.50 93.95 333.45Interest during construction 0.00 0.00
Front-end fee 2.55 2.55Total Financing Required 239.50 96.50 336.00
Identifiable taxes and duties are 3.9 (US$m) and the total project cost, net of taxes, is 332.1 (US$m). Therefore, the project cost sharing ratio is 76.78% oftotal project cost net of taxes.
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Annex 4: Cost Benefit Analysis SummaryINDIA: Kerala State Transport Project
Background
Cost-benefit analyses were carried out for the two road network improvement components: (a) upgradingand widening state highways, and (b) periodic maintenance of state highways. The highways consideredfor the two components were first identified by a Strategic Options Study done in 1997. Based on volumeand capacity ratio, traffic mix, and connectivity, the study analyzed 5,700 km of state highways and majordistrict roads (MDRs), and selected 3,000 km for further consideration of improvement. Subsequently, theProject Coordinating Consultant (PCC) feasibility study identified 69 roads (around 1,000 km in total) asneeding immediate improvement (mainly upgrading and widening); and the remainder, about 2,100 kin,were left for consideration under the periodic maintenance component. Details of the analyses aredescribed in the consultant feasibility study reports, which are included in the project file.
Methodology
The analyses of both components followed the conventional highway cost-benefit analysis methodology,and were based on the Highway Design and Maintenance Standards Model (HDM-Il) developed by theWorld Bank.
The 69 roads considered for upgrading and widening were divided into 156 links for economic evaluation.For each individual candidate road link, several improvement options were evaluated against the "donothing" scenario, using the HDM model. The evaluation results were expressed as Economic Rate ofReturn (ERR) and Net Present Value (NPV). NPVs were used to choose the best improvement option foreach link, and ERRs were used to rank the links for the selection for project financing. However, most ofthe highways with high ERR were found to be concentrated in a few locations. Therefore, in addition to theeconomic viability, social equity among the districts of the state was also considered in the selection ofhighways. This aims to achieve a more equitable geographic distribution of project benefits throughout thestate under the condition that all selected highways would have an ERR over 12%, which corresponds tothe opportunity cost of capital.
The 2,100 km network proposed for maintenance work was divided into homogenous sections forevaluation by HDM. For each section, three different treatment and maintenance strategies were evaluatedagainst the "do minimum" scenario. NPVs were then estimated. Expenditure Efficience Ratio (EER),defined as NPV over the present value of capital and maintenance cost, was used to select the preferablemaintenance option for each candidate road and to rank for project financing, subject to budget constraints.
Results
I . Upgrading and widening: Each of the 156 individual road links proposed for upgrading andwidening under the project was subjected to cost-benefit analysis. 71 links were found to be viable (ERRgreater than 12 percent) after land and R&R costs were included. In line with the budget and based on theabove analysis results, 8 roads with a total length of 255 km were selected for upgrading and wideningunder Phase I, and 7 roads totaling 324 km for Phase H.
2. Periodic maintenance: About 1,000 km state highways were selected for financing under thissubcomponent, as part of a 3-year maintenance program. All roads identified for the first, second, andthird year programs have an Expenditure Efficiency Ratio (EER) greater than 10 for the first year
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maintenance program, greater than 7.5 for the second year program, and greater than 5 for the third yearprogram. In terms of benefit-cost ratio, all road links selected for periodic road maintenance has a B/Cratio over 4.
[For projects with benefits that are measured in monetary terms]
Present Value of FlowEconomic Analysis Financial Analysis
Benefits: $1044 mn. $1160 mn.Savings in road user costs androad maintenance costs
Costs: $ 235.0 mn. $ 261 mn.Including road works, land &
resettlement, and futuremaintenanceNet Benefits: $ 809 mnn. $ 899 mnn.
IRR: 26%
Summary of Benefits and Costs:Direct benefits of road works: For both subcomponents these include: (1) road user cost savings, primarilyincluding vehicle operating cost (VOC) savings for traffic using the project road, and time savings forpassenger and goods carried in transit; and (2) reduced cost to the government and PWD in the form ofreduced road maintenance costs. The HDM-III model estimates the savings in VOCs and time costs, alongwith changes in maintenance costs. User cost savings depend mainly on changes in road roughness, trafficcongestion, and operating speeds.
Safety impacts: These were not evaluated in the analyses due to the uncertain effects of improved roadstandards and anticipated higher traffic speeds, and lack of refined data on accident rates and costs. Theupgrading and widening works included the benefits of widening and paving the shoulders throughspeed-flow equations based on lane and shoulder width, and the effects of narrow roads, non-motorizedtraffic, pedestrians, and roadside activities were reflected in a "friction" factor affecting traffic speed.
Costs of upgrading and widening works: The unit construction costs were based on items' unit rates. Basicmaterials, labor, and machinery rates were collected through field surveys. The rates were compared withthose given in the latest PWD rate schedule. Total costs include physical and price contingencies,supervision costs, and the costs of land acquisition, environmental mitigation measures, utility relocation,and resettlement action plans. Market prices were used to identify the cost of land acquisition and theR&R component. The component's total capital costs, including the 15 percent contingencies are presentedbelow for the six improvement options.
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Table A4-1. Capital cost of road works (financial costs)*
Cost per KmImprovement Option (Rs. Million)
Option 1: 7 m carriageway + 2 x 15.21.5 m sealed shoulders + 2 x I mgravel shoulders (ROW 12 m)
Option 2: 2 x 7 m carriageway 57.15with 3 m median + 2 x 1.5 m slowlanes + 2 x 1.5 m sealed shoulders+ 2 x 1 m gravel shoulders (ROW22 m)
Option 3: 7 m carriageway + 2 x 20.651.5 m slow lanes + 2 x 1.5 msealed shoulders + 2 x 1 m gravelshoulders (ROW 15 m)
Option 4: to the level of Option 1 18.02
Option 5: to the level of Option 2 21.62
Option 6: to the level of Option 3 58.24
*Economic costs are assumed to be 90 percent of the financial costs
Cost of periodic maintenance work: The unit rates for the proposed maintenance treatments are based on1998 Ministry of Surface Transport specifications. The unit costs of labor, materials, and machinery havebeen updated based on fresh market surveys.
Main Assumptions:The project life assuned of the upgrading and widening works, for economic analysis is 25 years. Theconstruction period varies from 3 years for 2-lane widening option to 5 years for 4-lane widening option.The project life of periodic maintenance work is assumed to be 10 years.
A discount rate of 12 percent was used for both subcomponents. A standard conversion factor of 0.9 wasused to convert financial cost to economic cost. A 20 percent salvage value of the capital cost at the end ofthe analysis period was used.
The vehicle characteristics data used, as HDM inputs, are shown below:
Table A4-2. Vehicle character tics parameters used in HDM modelC = Cost in Rs. 100 Car Pickup Bus LCV Medium truck Heavy truck
Basic Characteristics
Gross vehicle weight 1.65 3.93 13.5 4.5 16.2 25
ESAI Factor
Number of axles 2 2 2 2 2 3
Number of tires 4 4 6 4 6 10
Number of passengers 5 11 46 0 0 0
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Average pay load * 0 0 0 1.5 5.5 11
Vehicle UtilizationData
Service life (years) 10 8 10 10 10 10
Hours driven per year 1250 2400 3000 2400 2400 2400
KMS driven per year 22000 48000 90000 100000 95000 95000
Depreciation code
Utilization code
Annual interest rate 16 16 16 16 16 16
(%)
Economic Price
New vehicle price (C) 2450* 2550 6880 3400 5600 8180*.
New tire price (C/unit) 9.4 27.5 70.0 34.0 70.0 70.0
Maintenance labor 0.10 0.10 0.25 0.18 0.25 0.25(c/hr)
Crew cost (c/crew hr) 0.00 0.20 0.25 0.20 0.27 0.28
Passenger time (c-pass 0.30 0.09 0.09 0.00 0.00 0.00hr)
Cargo time (c/veh hr) 0.00 0.00 0.00 0.01 0.04 0.08
* Average payload including the empty truck.** Price of Ambassador car.
Value of time: The value of time for cargo vehicles, shown in Table A4-3, was computed based on theinventory cost method presuming 16 percent as the rate of interest on investment. The average economicprice for the basket of goods in medium and heavy trucks was estimated at Rs. 40,000 per ton, and for lightcommercial vehicles 25,000 per ton. Empty haulage was also included in the calculation of value of timefor cargo vehicles.
Table A4-3. Value of time for cargo vehicles
Vehicle type Average payload (tons) Value of time (Rs./veh.hr.)
Light commercial vehicle 1.5 1
Heavy goods vehicle 5.5 4
Multi-axle vehicle 10.5 8
The value of time for passengers was based on the income levels of passengers using different types ofvehicles (cars, pickups, and buses). Average occupancy was used to determine the value of passenger timeper vehicle, shown below:
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Table A4-4. Value of time for passengers
Vehicle type Average occupancy Value of time(Rs./veh.hr.)
Car 5.5 82.5
Pickup 11.0 99.0
Bus 46.0 414.0
Traffic surveys: Existing traffic volume data including traffic composition, were collected through countson the proposed road links. Most of the road links selected for upgrading and widening have a currenttraffic level of more than 5,000 AADT. Current traffic levels on the road links selected for the periodicmaintenance subcomponent range mostly between 1,500 and 5,000 AADT.
Traffic growth: Future traffic forecasts took into consideration normal and diverted traffic. Normal trafficgrowth was estimated based on the projected per capita income and population growth, using the estimatedelasticities shown in Table A4-5. Diverted traffic were estimated by an analysis of traffic demand patternand relative travel costs in corridors of competing routes.
Table A4-5. Traffic demand elasticity by vehicle type
Traffic demand elasticity with respect to Net
Vehicle type State Domestic Product
Car 1.7
Bus 1.5
3-Wheeler 1.8
Truck 1.4
2-Wheeler 2.0
Agricultural tractor 1.0
Roadside friction: This was computed for each project road section by assessing the proportionate share ofauto-rickshaws, agricultural vehicles, and non-motorized vehicles, and the proportion of built-up area inthat road section. Friction values on project roads vary from 0.56 to 0.97.
Sensitivity analysis / Switching values of critical items:Sensitivity analyses were conducted for the upgrading and widening component. The major risks thatwould affect the project economic viability are cost overruns, reduced benefits due to lower traffic growth,and a combination of both. These risks were assessed through the sensitivity testing, with results shownbelow:
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Table A4-6. Sensitivity analysis: upgrading and widening component
Scenario ERR1. Base case 25.8%2. 20% increase in capital cost 23.2%3. 20% decrease in benefits 22.6%4. 20% increase in capital cost and 20% 20.3%decrease in benefits
Scenario 4 assumes both the cost overrun and benefit reduction, and thus gives the worst situation. As theabove results show, even under this worst scenario, the component could still achieve an ERR of 20%, wellabove the minimum 12% requirement.
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Annex 5: Financial SummaryINDIA: Kerala State Transport Project
Years Ending
IMPLEMENTATION PERIOD| Year I Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7
Total FinancingRequiredProject CostsInvestment Costs 22.4 52.0 68.1 72.1 67.0 42.0 0.0RecurrentCosts 1.5 1.5 1.5 1.5 1.5 1.3 0.0
Total Project Costs 23.9 53.5 69.6 73.6 68.5 43.3 0.0Interest during 0.0 0.0 0.0 0.0 0.0 0.0 0.0
constructionFront-end fee 2.6 0.0 0.0 0.0 0.0 0.0 0.0
Total Financing 26.5 53.5 69.6 73.6 68.5 43.3 0.0
FinancingIBRD/IDA 19.0 40.0 52.0 56.0 52.0 35.0 0.0Government 7.5 13.5 17.6 17.6 16.5 8.3 0.0
Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0 0.0User Fees/Beneflclaries 0.0 0.0 0.0 0.0 0.0 0.0 0.0Others 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Total Project Financing 26.5 53.5 69.6 73.6 68.5 43.3 0.0Main assumptions:
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Annex 6: Procurement and Disbursement ArrangementsINDIA: Kerala State Transport Project
Procurement
A. Institutional Capacity
Project appraisal included an assessment to determine the institutional capacity of PWD's Roads andBridges Division, which will manage the project procurement activities. Until 1996, the engineers in theIrrigation, Highways, and Building departments came from a common cadre. Kerala has implementedsome Bank-financed projects including Kallada Irrigation and Drainage (Cr. 1269-IN/Ln.2186-IN), KeralaSocial Forestry (Cr. 1514-IN), Kerala Forestry (Cr.3053-IN), and Kerala Water Supply Project(Cr. 1622-IN). Kerala has also implemented other externally aided projects such as the four-laning ofCherthala-Alwaye NH-47. The engineers who worked on these projects were generally conversant with theprocurement system and procedures for Bank-financed projects. The PWD engineers who will be recruitedfor KSTP deal with procurement in their day-to-day work.
The Government has agreed that officers who are deputed to project procurement will be sent forprocurement training at first to the Administrative Staff College of India, Hyderabad or the NationalInstitute of Financial Management, Faridabad. Five officers have been already trained, and it is expectedthat more officers will be sent to training in future. The Government also agreed to train project officers inthe legal aspects of contract management.
The Government has constituted two committees to expedite project related decisions.
* A tender evaluation committee consisting of Principal Secretary-PWD, Chief Engineer-Roads andBridges, Chief Engineer-ID (for IWT contracts ), and PD-PMT, to evaluate all bids received under theproject and submit evaluation reports to the tender approval committee; and
* A steering committee (tender approval), consisting of Principal Secretary-PWD, PrincipalSecretary-Finance and Expenditure, Secretary-PWD, Secretary-Irrigation (for IWT tenders) and ChiefEngineer-Roads and Bridges, to approve all tenders solicited by ICB and NCB procedures, as per Bankguidelines.
The prior review thresholds were calculated after assessing the government's capacity to carry out projectprocurement, in accordance with Bank Procurement Guidelines.
B. Procurement Methods
All goods and works financed under the Loan shall be procured in accordance with the World Bank's"Guidelines for Procurement," January 1995, revised January 1999. Consulting services to be fundedthrough the Loan shall be procured in accordance with the World Bank's "Guidelines for the Selection andEmployment of Consultants by World Bank Borrowers," January 1997, revised January 1999. All civilworks, goods, and services will be procured using India-specific Bank's Model Standard Prequalificationand Bidding Documents. Specific procurement arrangements are summarized in Tables A and Al, and arebriefly described below.
B]. Works [US$284.21 million]
Intemational Competitive Bidding (ICB): US$199.58 million equivalent:
The works associated with strengthening and widening to two lanes 579 km of State highways, and onepilot project to improve inland waterways will be implemented in seven contract packages. The contractvalues range from US$ 18 million to US$44 million equivalent for upgradation work and US$8.48 million
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for the inland waterways package. Prequalification for all four Phase I contract packages was completed inNovember 2001. Bids for Phase I ICB works were invited in mid-December 2001, using Bank-approvedbid documents, and bids for Phase II works are to be invited in October 2002. To encourage participationby large firms and the use of modem equipment, bids are being invited for multiple packages, in order toencourage bidders to offer discounts for multiple awards. Under ICB, preference will be given to domesticcontractors, in accordance with Appendix 2 of the Bank's procurement guidelines.
National Competitive Bidding (NCB): US$56.41 Million Equivalent:
The works relating to the periodic maintenance of about 1,000 km of state highways (US$55.40 millionequivalent) in a 3-year program and two pilot performance-based maintenance contracts (US$1 million), inabout 37 packages, will be procured following NCB procedures. The cost of each maintenance contractpackage ranges from US$600,000 to US$4 million. Bids for 13 packages for 339 km, valuedapproximately at US$20.35 million, were invited and opened in November 2001. Bids for 14 packages ofmaintenance works, valued at US$19.49 million, will be invited by mid-2002 and the remaining 10packages, valued at US$15.56 million, will be invited by mid-2003.
Direct contracting/Shopping/Force account: US$8.29 million equivalent:
Minor works associated with shifting utilities (US$ 1.16 million equivalent), blackspot improvements(US$3.2 million), and EMP implementation works (US$3.93 million) are all scattered works of smallvalue, and not amenable to competitive bidding. Therefore, they will be procured in packages ofUS$50,000 or less, up to an aggregate of US$8.29 million, on the basis of: (i) lumpsum fixed-pricecontracts soliciting quotations from at least three qualified contractors (up to an aggregate ceiling ofUS$5.29 million); (ii) direct contracting from a qualified contractors (up to an aggregate ceiling of US$2million), or (iii) as a last resort, through force account departmentally (up to an aggregate ceiling of US$1million).
B2. Goods [US$2.78 million equivalent]
Goods and equipment, including computer hardware and software, and office and laboratory equipment,will be procured following ICB procedures for packages above US$200,000 equivalent (total US$1million); the majority will be procured using NCB procedures for packages below US$200,000 (totalUS$1.15 million). Small value off-the-shelf items, individually costing US$30,000 per contract or less(total US$450,000) would be procured following National/International Shopping procedures, inaccordance with World Bank Procurement Guidelines. Preference for domestically manufactured goodswill be given in accordance with Appendix 2 of the Guidelines for items procured following ICBprocedures. Remote sensing maps, valued at approximately US$200,000 will be procured directly from theNational Remote Sensing Agency in accordance with the guidelines.
B3. Services [US$28.97 million equivalent]
Consultancy services will be procured as follows:
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S. No Description of Services Estimated Cost Selection Method(US$ million)
1. Construction supervision- ICB worksPhase 1: One consultancy contract 5.75 QCBSPhase 2: One consultancy contract 6.22 QCBS
2 PCC Services - Phase 2 2.51 Continuing the existing contract3 R&R support services 0.69 QCBS4 EMP services for roads and IWT 0.58 QCBS5 Construction supervision - NCB works
Phase 1: Two consultancy contracts 0.70 SFBPhase 2: Two consultancy contracts 0.46 SFBPhase 3: Two consultancy contracts 0.46 SFB
6 Performance-based maintenance - advisory 0.10 Individualsservices - 2 contracts _
7 M&E consultants 0.10 Individuals8 Black spot identification and improvement 0.50 QCBS9 ISAP technical assistance consultancy 2.54 QCBS
a. IDS consultant action plan and trainingUS$700,000 ___
b. IDS - Technical assistance 2 contractsUS$120,000 _
c. -do- USS520,000 milliond. Road Maintenance Management Study
US$500,000e. Miscellaneous, including IWT, PSP
study/training US$500,000 10 Pre-investment study (2/3 contracts) 2.50 QCBS11 Road safety management system 1.41 QCBS12 Road networks condition and traffic study 0.60 SS/Individual13 Audit of procurement by R&R beneficiaries 0.10 SS/Individual14 Taxes (funded by GoK) 3.75 _
TOTAL 28.97
QCBS: Quality and cost based selectionSFB : Selection under a fixed budgetSS : Single source selection
The proposals for the Phase I supervision consultancy were invited in July 2001, while proposals for thePhase II supervision consultancy are expected to be invited in October 2002. The proposals for first yearperiodical maintenance, technical audit, and quality assurance consultancy were invited in December 2001.Contracts for supervision and technical audit consultants must be awarded about a month before the awardof the related civil works contracts.
B.4 Procurement by Beneficiaries of R&R Assistance [US$17.50 million]
R&R assistance to individual PAPs will not exceed US$5,000 equivalent per head and procurement willinclude landscaping, buildings for residences and stores, livestock, agricultural implements, seedlings,handtools and mopeds (small motorcycles). These will be procured individually by the beneficiaries as percommercial practices, following shopping or direct contracting procedures as appropriate. The governmentwill audit this procurement annually by hiring an audit consultant and furnish the annual audit reports tothe Bank.
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C. Procurement Planning
The government has prepared a procurement plan for all procurement identified works packages under theproject; this has been reviewed and approved by the Bank. All works package procurement will followarrangements outlined in accordance with the project's procurement plan.
D. Prior Review of Procurement Decisions by the Bank (Refer Table B]
* Contracts for civil works under ICB, and contracts for goods valued to US$200,000 equivalent andabove.
* All NCB civil works contracts (maintenance) valued at US$2 million and above.
* Consultant contracts with an estimated value of US$100,000 and above for firms, and US$50,000 andabove for individuals.
E. NCB Provisions
All NCB contracts shall be awarded in accordance with the provisions of Paragraphs 3.3 and 3.4 of the"Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank and revised inJanuary 1999 (the Guidelines). All NCB contracts to be financed from the proceeds of the Loan mustfollow these procedures:
(i) Only the model bidding documents for NCB agreed with the GOI Task Force (and as amendedfrom time to time), shall be used for bidding.
(ii) Invitations to bid shall be advertised in at least one widely circulated national daily newspaper, atleast 30 days prior to the deadline for the submission of bids.
(iii) No special preference will be accorded to any bidder either for price or for other terms andconditions, when competing with foreign bidders, State-owned enterprises, small-scale enterprisesor enterprises from any given State.
(iv) Except with the prior concurrence of the Bank, there shall be no negotiation of price with thebidders, even with the lowest evaluated bidder
(v) Extension of bid validity shall not be allowed without the prior concurrence of the Bank: (i) for thefirst request for extension if it is longer than eight weeks; and (ii) for all subsequent requests forextension irrespective of the period (such concurrence will be considered by Bank only in cases ofForce Majure and circumstances beyond the control of the Purchaser or Employer).
(vi) Rebidding shall not be carried out without the Bank's prior concurrence. The system of rejectingbids outside a predetermined margin or "bracket" of prices shall not be used in the project.
(vii) Rate contracts entered into by Directorate General of Supplies and Disposals, will not beacceptable as a substitute for NCB procedures. Such contracts will be acceptable however for anyprocurement under National Shopping procedures.
(viii) The two-or-three envelope system will not be used.
F. Procurement Information
Procurement information will be collected and recorded as follows:
(i) Prompt reporting of contract award information by the project management units.
(ii) Comprehensive quarterly reports prepared by PWD, indicating:
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* Revised cost estimates for individual contracts and total cost;
* Revised timings of procurement actions, including advertising, bidding, contract award, andcompletion time, for individual contracts; and
* A compliance report by the borrower within three months of the Loan signing date.
G. Proposed Procurement Arrangements - Thresholds and Frequency of Supervision
The project elements, their estimnated costs, and proposed methods of procurement are summarized in TableA. Thresholds are given in Table B. Figures in parenthesis are the respective arnounts to be financed bythe Bank.
Procurement methods (Table A)
Table A: Project Costs by Procurement Arrangements(US$ million equivalent)
Procurement Method2Expenditure Category ICB NCB Other N.B.F. Total Cost
1. Works 199.58 56.41 7.13 20.86 283.98(158.96) (45.11) (5.70) (0.00) (209.77)
2. Goods 1.00 1.15 0.65 0.27 3.07(0.90) (1.00) (0.50) (0.00) (2.40)
3. Services 0.00 0.00 25.25 3.63 28.88(0.00) (0.00) (25.11) (0.00) (25.11)
4. Miscellaneous 0.00 0.00 17.52 0.00 17.52R&R Assistance (0.00) (0.00) (15.17) (0.00) (15.17)5. Interest during 0.00 0.00 0.00 0.00 0.00construction
(0.00) (0.00) (0.00) (0.00) (0.00)6. Front-end fee 0.00 0.00 2.55 0.00 2.55
(0.00) (0.00) (2.55) (0.00) (2.55)Total 200.58 57.56 53.10 24.76 336.00
(159.86) (46.11) (49.03) (0.00) (255.00)
Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies.
2' Includes civil works, goods, and services to be procured out of Force Account and through nationalshopping, consulting services, training, technical assistance, incremental costs etc.
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Table Al: Consultant Selection Arrangements (optional)(US$ million equivalent)
Selection MethodConsultant- Services
Expenditure Category QCBS QBS SFB LCS CQ Other N.B.F. Total Cost
A. Firms 20.19 0.00 1.62 0.00 0.00 2.51 3.75 28.07(0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
B. Individuals 0.00 0.00 0.00 0.00 0.00 0.90 0.00 0.90(0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Total 20.19 0.00 1.62 0.00 0.00 3.41 3.75 28.97
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
1\ Including contingencies
Note: QCBS = Quality- and Cost-Based SelectionQBS = Quality-based SelectionSFB Selection under a Fixed BudgetLCS Least-Cost SelectionCQ = Selection Based on Consultants' QualificationsOther = Selection of individual consultants (per Section V of Consultants Guidelines),Commercial Practices, etc.N.B.F. = Not Bank-financedFigures in parenthesis are the amounts to be financed by the Bank Loan.
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Prior review thresholds (Table B)
Table B: Thresholds for Procurement Methods and Prior Review'
Contract Value Contracts Subject toThreshold Procurement Prior Review
Expenditure Category Method (US$ millions)1. Works- Civil Works for All ICB 7 packages valued atUpgrading and Widening US$199.58 million
- Major Maintenance All contracts of US$2 NCB 8 packages valued atmillion and above approx. US$22.42 million
2. Goods Total package valueComputer hardware and US$200,000 and above ICB US$1 nillionsoftware fore-governance. ._ _
3. Services For firns, Bank guidelinesConsulting Services US$100,000 and above and as per
For individuals, paragraph B3 aboveUS$50,000 and above
4. Miscellaneous5. Miscellaneous6. Miscellaneous
Total value of contracts subject to prior review: US$ 242 million
Overall Procurement Risk Assessment
Average
Frequency of procurement supervision missions proposed: One every 12 months (includes specialprocurement supervision for post-review/audits)
Thresholds generally differ by country and project. Consult OD 11.04 "Review of ProcurementDocumentation" and contact the Regional Procurement Adviser for guidance.
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Disbursement
Allocation of loan proceeds (Table C)
Table C: Allocation of Loan Proceeds
Expenditure Category Amount in US$million Financing Percentage(a) Civil Works for Part A.3 of the 10.56 90% of eligible expenditures excludingProject land acquisition(b) Civil Works for other than Part A.3 209.79 80% of eligible expendituresof the ProjectGoods 7.00 100% of foreign expenditures, 100% of
local expenditures (ex-factory costs); and80% of local expenditures for other items
procured locallyConsultant's service, training and 25.10 100% of total expenditure net of taxesstudies
Total Project Costs 252.45Interest during construction
Front-end fee 2.55
Total 255.00
Disbursements from the Loan would initially be made in the traditional system (replenishment andreimbursement with full documentation and against statement of expenditure), but could be converted to theFMR-based disbursements, at the option of GOK and GOI after the computerized PFMS has beensuccessfully implemented. The target conversion date is March 31, 2003. R&R assistance will bedisbursed against eligible assets (excluding land) and other enhancement costs incurred by the beneficiaries,within the approved entitlement framework.
Use of statements of expenditures (SOEs):
Disbursement will be made from the Loan on the basis of statement of expenditure for (a) civil works for(i) ICB contracts not exceeding US$200,000 equivalent and (ii) NCB contracts not exceeding US$2million; (b) contracts for goods not exceeding US$200,000; (c) contracts for consultants not exceedingUS$100,000 for firms and US$50,000 for individuals; and (d) R&R costs, training, and studies.
Special account:A Special Account will be maintained in the Reserve Bank of India, operated by the Department ofEconomic Affairs (DEA) of the Government of India (GOI). The authorized allocation of the SpecialAccount would be US$15 million, about 4 months worth of initial estimated disbursements from the IDACredit. The Special Account will be operated in accordance with the Bank's operational policies. Theproject will submit withdrawal applications to Controller of Aid, Accounts and Audit (CAA&A), DEA, foronward submission to the Bank for reimbursement or repleriishment of the Special Account.
Retroactive Financing: Retroactive financing, up to an amount of US$15 million equivalent will beavailable for eligible expenditures for implementing project activities. Eligible expenditures would includecivil works, maintenance contracts for consultancies, training, R&R, EMP, and other expenditures as
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detailed in BPIP. Financing will be available for relevant project expenditures incurred before the date ofsigning but after November 1, 2001.
Financial Management
Country Issues: The following country issues, identified as generic to India, will apply to the project: (a)the government's existing accounting system concentrates mainly on bookkeeping and transactional controlover expenditures, and there is little concept of financial management information being used fordecision-making. The development and implementation of a separate project financial management system,which will enable the generation of reliable financial reports and thus support timely managerialdecision-making has been made a part of this project; (b) will finds be available on a timely basis to theproject implementing entity? This is a State sector project, and thus somewhat vulnerable to this problem.The project has resolved this issue by a specific administrative decision (by the State cabinet) to establish aseparate bank account for the project, outside the government treasury system, to which funds would bemade available on the basis of quarterly cash forecasts, through the budgetary system, on an advance basis;and (c) KSTP will be audited by Accountant General (AG), Kerala: will these report's quality andtimeliness meet appropriate standards? During discussions the AG (Kerala) and C&AG's office agreedthat the project financial statements generated by the computerized system would be audited in accordancewith a TOR which has been agreed with the Bank.
Strengths and Weaknesses
Strengths: The project has the following financial management strengths: (a) Kerala PWD hasparticipated in the State Infrastructure Technical Assistance (Ln. 4114-IN) since April 1999, and thus hasbeen exposed to the Bank's disbursement procedures and financial reporting requirements; (b) a budgetingand accounting system has been established and is operational; (c) staff at all levels, including divisions,have been trained in basic accounting functions; (d) a system of periodic financial reports from thedivisions to the State is operational; and (e) a project finance manual that will detail accounting policies,procedures and processes, operating the project financial management system, and reporting arrangementsis under preparation.
Weaknesses:
Significant weaknesses Mitigation
Staffing: KSTP staffing for finance function Appointment and placement of Controller Finance andmust be strengthened. The divisions also Finance Manager at KSTP; identification of divisionalmust be adequately staffed with accounts accountants at participating divisions (condition ofpersonnel. negotiations)
The existing accounting system primarily A computerized and integrated FMS is being developedfocuses on bookkeeping, not financial under the project and is expected to be ready before the creditmanagement. effectiveness date. A finance manual focussing on financial
reporting and monitoring is also being developedfor the project. The manual will be completed prior tonegotiations.
Implementing Entity: Kerala PWD has participated in the Bank's State Infrastructure TechnicalAssistance (Ln 4114-IN) since April 1999, and has adequate experience in complying with Bank'sdisbursement procedures and financial reporting requirements.
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Funds Flow: Refer to PAD Section 4.4
Staffing: A detailed staffing plan, part of the BPIP, has been drawn up. The project's finance wing will beheaded by a Finance Controller (a person on deputation from State Department of Finance, of a rank notlower than Joint Secretary). He will be assisted by a chartered accountant (designated as FinanceManager) who will play a crucial role in helping develop and implement the project's computerized FMS.They would be jointly responsible for establishing the agreed financial management arrangements,providing timely financial reports to stakeholders including the Bank, ensuring smooth and timely flow offunds, and providing overall guidance of project financial management issues. The other finance teammembers will include an accounts supervisor (of a rank of divisional accountant) and three support-levelstaff from the Project Management Team (PMT) and an accounts supervisor and a support-level staff fromeach implementing divisions. It has been proposed that 4 divisions of PWD participate in the Phase I of theproject and another 3 divisions participate in Phase II. Consultants will train the finance staff on thecomputerized PFMS, currently under development, paying special attention to disbursement proceduresand reporting.
Accounting Policies and Procedures: PMT in PWD will be supported in project execution by fourdivisions during Phase I and by three divisions during Phase II. PWD's accounting policies andprocedures, and the formats for existing reports are reflected in the various accounting forms ("Books ofForms"), cash book, reports, public works account code, PWD manual, and the Kerala General FinancialCode. These policies and procedures are exhaustive and meet the requirements of the AG, Department ofFinance, and other stakeholders who require financial information. These guidelines also detail internalcontrol procedures and report and account book formats. A subsidiary chart of accounts is beingdeveloped for the project, as part of the Finance Manual, so that data can be captured and classified byexpenditure center, budget head, project component, activity and disbursement category. This closelymatches the expenditure classifications and fund sources indicated in the project documents (ProjectImplementation Plan and Project Cost Tables).
Information Systems: The current manual system of recording and reporting expenditures, althoughadequate to meet the reporting requirements during the project's initial stages, is being upgraded to acomputerized FMS; this is currently being designed and implemented by TCS (PCC sub-consultants). Thiscomputerized FMS will help accurately record and promptly report expenditures incurred and the project'sphysical and procurement-related progress. The FMS software development work has already started andthe software is expected to be finalized shortly. Agreement has been reached with PMT/PWD that thecomputerized FMS will be fully live with effect from July 31, 2002. The consultant is also preparing afinance manual that will detail the project's accounting policies, procedures and processes, operation of theproject financial management system (PFMS), and reporting arrangements. The PFMS will be based onPWD's existing accounting system and must meet the reporting requirements of: (a) PWD's generalfinancial rules and codes and accountant general's requirements; (b) the World Bank guidelines; and (c)managerial decision-making. Under the proposed PFMS, accounts will be maintained on a cash basis andon double-entry bookkeeping principles, and the standard books (including cash and bank books, journals,fixed assets register, ledgers, work registers, and contractor registers) will be maintained. PWD seeks toestablish an effective financial monitoring system and use financial reports as a decision-making tool.Therefore, PWD has decided to computerize its financial management system, on a State-wide basis, as apart of the Institutional Strengthening Action Plan, developed in accordance with IDS strategy. Under thisaction plan, the project PFMS (with required modifications) will be implemented throughout PWD, withassistance from the IDS strategy consultant and PFMS consultant, by December, 2004.
External Audit: The project's annual project financial statements will be audited by the A.G. (Audit) ofthe State of Kerala, on behalf of the C&AG. The proposed audit's TOR has been discussed with the StateAG (Audit) and C&AG and has been approved by the Bank. The annual project financial statement to
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Bank must include: (a) a summary of funds received (funds received from the IBRD through GOI and theGovernment), and a summnary of expenditures shown under the main project components and activities andby main categories of expenditures; and (b) a Balance Sheet showing the Project's accumulated funds, bankbalances, other assets, and liabilities (if any). The project accounts audit also must include an assessmentof: (a) the accounting and internal control systems' adequacy, (b) the ability to maintain adequatetransactions documentation; and (c) the incurred expenditures' eligibility for Bank financing. The annualproject financial statements, duly audited must be submitted within 6 months of the close of thegovernment's fiscal year. The following audit reports will be monitored in the Audit Reports ComplianceSystem (ARCS):
Implementing Agency Audit Auditors
PMT/PWD SOE/Project Audit AG (Audit)
DEA/GOI Special Account C&AG
The audit covenants of Loan No. 4114-IN, a project being implemented by PWD, have been complied withtodate.
Internal Audit: In addition to the external audit, a firm of chartered accountants will conduct an internalaudit to assess the operation of the project financial management system, including review of its internalcontrol mechanisms and procurement process. The internal auditors would report its findings on ahalf-yearly basis to the Project Steering Committee. Any issues arising in the external and internal audits,including systemic issues, promptly and timely addressed by project authorities. The Internal auditor'sreport must be supplied to the Bank on request. The TOR for the internal audit has been approved by theBank, and must assess whether the project's R&R arrangement has been adequately implemented. It wasagreed that PMT/PWD would appoint the auditors by negotiations. The audit would be conducted inaccordance with the International Standards of Auditing and the selection of auditors would follow theWorld Bank's "Guidelines for Selection of Consultants."
Reporting and Monitoring: PWD's implementing divisions will submit financial reports (SOEs, PMRsand other financial, physical, and procurement progress-related reports, as specified in the Finance Manual)on a monthly basis. The PMR formats are in the Finance Manual. PWD and PMT will prepare the PMRs(on a cash basis) in the prescribed format every quarter, after consolidating the information received fromthe participating divisions, and forward this to the Bank within 45 days of the end of the quarter. ThePMRs must show actual versus budgeted expenditures, cash requirement forecasts of physical andfinancial progress, procurement progress, and scheduled withdrawals from the Credit account. The firstPMR is expected to be submitted by the project within 45 days of the end of the first quarter from the dateof the Loan effectiveness.
Impact of Procurement Arrangements: As most project procurement will be done at PWD/PMT, theywill need a large trained staff.
Action Plan: Besides the conditions for Negotiations, following actions have been agreed in order toenhance PWD's FMS:
Action Responsible Person Completion Date
Develop a computerized financial management Project Director August 31, 2002system
Supervision Plan: The project will require intensive supervision in initial stages, especially if thecomputerized and integrated PFMS is to be successfully introduced into the project's implementing entities.
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Other important supervision issues are meeting the project finance personnel's training needs and rolling outthe FMS to other PWD divisions.
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Annex 7: Project Processing ScheduleINDIA: Kerala State Transport Project
Project Schedule Planned ActualTime taken to prepare the project (months)First Bank mission (identification) 03/10/2000
Appraisal mission departure 11/08/2001Negotiations 01/21/2002 02/04/2002
Planned Date of Effectiveness 06/30/2002 L
Prepared by:
Public Works Department and Irrigation Department, Government of Kerala.
Preparation assistance:
States Road Infrastructure Development Technical Assistance Project (Ln. 4114-IN).
Bank staff who worked on the project included:
Name SpecialityStein Lundebye Task Leader, Transport Engineering, Road SafetyA. K. Swaminathan Highway EngineerBalakrishna Menon Institutional IssuesJaswant Channe Consultant, Highway EngineerSonia Kapoor Environmental SpecialistMridula Singh Social and Resettlement SpecialistV. J. Ravishankar EconomistGuang Chen India Transport Team LeaderFabio Galli Financial AnalystAmab Bandyopadhyay Highway EngineerNatarajan Raman Procurement SpecialistDevesh Mishra Procurement SpecialistZhi Liu Transport EconomistManoj Jain Financial Management SpecialistHadi Abushakra Lead Counsel, LEGMSVikram Raghavan Legal CounselBinyam Reja Peer ReviewerGeorge Tharakan Peer Reviewer
Irene Christy Program AssistantGladys Stevens Program Assistant
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Annex 8: Documents in the Project File*
INDIA: Kerala State Transport Project
A. Project Implementation Plan
Kerala State Transport Project: Borrower's Project Implementation Plan, December 2001.
B. Bank Staff Assessments
Aide-memoire and Back-to-office reports of various project preparation missions, 2000-2001.Note on State Finances, August 2001.
C. Other
The PCC consultant has made the following studies: (a) Feasibility studies; (b) engineering studies,including preliminary and detailed engineering designs; (c) environmental; sociological, and road safetystudies; and (d) documents for the procurement process. The above studies (except road safety studies)also have been done for the IWT component. Other studies are:
Institutional development studies, through M/S Lea International, Canada.
Maintenance planning studies, through M/S Lea International, Canada.
Identification of co-road network in State PWD, through M/S RITES, New Delhi.
Financial advisory services, through MIS SBI CAPS, Mumbai.
Independent review on social and environmental preparations for the KSTP.
Fiscal reforrn program studies under ADB assistance, by the GOK.
Studies by PCC
Reports: Highways component
1) R&R: Principal and Policy Framework.2) Specifications for Economic and Financial Analysis.3) Feasibility Study Report, Vols. 1 and 2 (September 1999, April 2000).4) Preliminary Design Report (March 2000).5) Annex to the Designed Report (July 2000).6) Design Report Phase II (April 2001).7) Final Report Phase I (August 2000).8) Engineers Estimate for Phase I (April 2001).9) Environmental Management Plan (9 nos.) (September 2001) (Final Draft).10) Environmental Assessment (See Vol I and II) (September 2001) (Final Draft).11) EIA for 8 Phase I Roads (September 2001) (Final Draft).12) ESMP for Maintenance Roads (September 2001) (Final Draft).13) Executive Summary (Environmental) (September 2001) (Final Draft).14) Resettlement Action Plan (August 2000, February 2001, and September 2001).15) Executive Summary of RAP.16) Updated Road Safety Audit Report, June 2001.17) Road Safety Action Plan Draft (June 2001).18) Accident Investigation and Prevention Report, Black Spot Studies.19) Designs for Bridges in Phase I and Phase II.
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20) Detailed Alignment Plans.21) Strip Maps and Land Schedules.22) Bidding Documents for Phase I Roads, including specifications, standard conditions, and bill ofquantities.23) Final Soil and Material Reports, Vols. I and II.
IWT
1) Hydrographic Survey Report on Project Canals.2) Feasibility Report. (October 1999).3) Engineering Report, Vols I, II, and III (Main report, annex, and maps) (March 2000 and April2000).4) Social Impact Management Plan (November 2000).5) Final Report on the IWT Pilot Project.6) EA for Waterways Project, September 2001.7) EMP for Waterways, September 2001.8) Final Drawings and Reports.9) Bidding Documents.
IDS Reports
l) Institutional Development Strategy Reports.2) Maintenance Planning Report.3) Corridor Inspection Report.4) Reports on Workshops.5) Maintenance Manual for PWD.6) Detailed Engineering Designs for First Year Maintenance Program:
a) Main Report covering Corridor Studies (June, August and September 2001).b) Design Report Vols. I and II (June, August and September 2001).c) First Year Program Bidding Documents for 13 packages, including specifications, standard
conditions and BOQ.Core road network studies:
1) Report of Identification of Core Road Network for Kerala PWD.
Financial advisory services:
1) Structuring of Projects for Private Sector Participation, Identified in Core Road Network.2) Structuring of Projects for RBDCP, for Projects under Institutional Finance.3) Establishment of Road Fund and Road Board.4) Other Financial Advisory Services, in Issuing Bonds, etc.
Other:
ADB assistance studies by the Finance Department, on a fiscal reform program, have just been started.A White Paper on Kerala State Finances.
*Including electronic files
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Annex 9: Statement of Loans and CreditsINDIA: Kerala State Transport Project
06-Feb-2002Difference between expected
and actualOriginal Amount in US$ Millions disbursements'
Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'dP050653 2002 KARNATAKA RWSS II 0.00 151.60 0.00 0.00 151.22 0.00 0.00
P059242 2001 MP DPIP 0.00 110.10 0.00 0.00 102.79 -3.79 0.00
P055455 2001 RAJDOPEP It 0.00 74.40 0.00 0.00 70.72 -0.90 0.00
P055454 2001 KERALA RWSS 0.00 65.50 0.00 0.00 59.00 3.58 0.00
P050658 2001 TECHN EDUC III 0.00 64.90 0.00 0.00 58.63 5.12 0.00
P010568 2001 GUJARAT HWYS 381.00 0.00 0.00 0.00 331.89 45.89 0.00
P035173 2001 POWERGRID It 450.00 0.00 0.00 0.00 410.25 55.78 0.00
P038334 2001 RAJ POWER I 180.00 0.00 0.00 0.00 160.85 10.35 0.00
P087216 2001 KAR WSHD DEVELOPMENT 0.00 100.40 0.00 0.00 97.20 0.98 0.00
P067543 2001 LEPROSY It 0.00 20.00 0.00 0.00 25.57 -1.17 0.00
P071244 2001 Grand Trunk Road Imprmvement Project 589.00 0.00 0.00 0.00 583.11 32.11 0.00
P070421 2001 KARN HIWYS 360.00 0.00 0.00 0.00 343.18 8.18 0.00
P049770 2000 REN EGY 11 80.00 50.00 0.00 0.00 122.24 12.46 0.00
P035172 2000 UP POWER SECTOR RESTRUCTURING PROJECT 1 50.00 0.00 0.00 0.00 105.59 22.05 0.00
P010505 2000 RAJASTH-AN DPIP 0.00 100.48 0.00 0.00 90.94 1 3.48 0.00
P050657 2000 UP Health Systems Development Project 0.00 110.00 0.00 0.00 100.80 12.38 0.00
P067330 2000 IMMUNIZATION STRENGTHENING PROJECT 0.00 142.60 0.00 0.00 79.88 -2.87 0.00
P059501 2000 TA for Econ Reform Project 0.00 45.00 0.00 0.00 40.93 6.65 0.00
P045049 2000 AP DPIP 0.00 111.00 0.00 0.00 99.77 7.84 0.00
P055456 2000 Telecornmunlcat6ons Sector Reform TA 62.00 0.00 0.00 0.00 58.16 23.50 0.00
P009972 2000 NATIONAL HIGHWAYS III PROJECT 516.00 0.00 0.00 0.00 456.97 56.79 0.00
P050667 2000 UP DPEP III 0.00 182.40 0.00 0.00 111.62 29.88 0.00
P045050 1999 RAJASTHAN DPEP 0.00 85.70 0.00 0.00 66.65 53.90 0.00
P045051 1999 2ND NATL HIVIAIDS CO 0.00 191.00 0.00 0.00 117.86 21.50 0.00
P049537 1999 AP POWER APL I 210.00 0.00 0.00 0.00 89.36 89.36 0.00
P041264 1999 WTRSHD MGMT HILLS 11 85.00 50.00 0.00 0.00 95.91 27.57 0.00
P050651 1995 MAHARASH HEALTH SYS 0.00 134.00 0.00 0.00 113.28 50.49 0.00
P050846 1999 UP SODIC LANDS It 0.00 194.10 0.00 0.00 143.37 65.15 0.00
P050637 1999 TN URBAN DEVIl1 105.00 0.00 0.00 0.00 31.72 -6.75 0.00
P049385 1998 AP ECON RESTRUCTURIN 301.30 241.90 0.00 0.00 274.32 155.50 0.00
P049477 1998 KERALA FORESTRY 0.00 39.00 0.00 0.00 19.36 7.09 0.00
P038021 1998 DPEP III (BIHAR) 0.00 152.00 0.00 0.00 109.54 91.13 0.00
P035827 1998 WOMEN & CHILD DEVLPM 0.00 200.00 0.00 0.00 219.41 60.10 0.00
P010496 1998 ORISSA HEALTH SYS 0.00 76.40 0.00 0.00 62.01 32.02 0.00
P010561 1998 NATL AGR TECHNOLOGY 96.80 100.00 0.00 0.00 144.60 92.92 0.00
P035169 1996 UP FORESTRY 0.00 52.94 0.00 0.00 25.20 21.38 0.00
P035824 1998 UP DIV AGRC SUPPORT 79.80 50.00 0.00 0.00 95.32 67.20 0.00
P043728 1997 ENV CAPACITY BLDG TA 0.00 50.00 0.00 0.94 29.29 30.865 0.00
P035158 1997 AP IRRIGATION III 175.00 150.00 0.00 0.00 186.04 140.43 0.00
P010531 1997 REPRODUCTIVE HEALTHI 0.00 248.30 0.00 0.00 98.27 90.81 62.83
P010511 1997 MALARIA CONTROL 0.00 164.80 0.00 0.00 112.78 103.27 0.00
P036062 1997 ECODEVELOPMENT 0.00 28.00 20.00 0.00 14.32 15.74 0.00
P009584 1997 ECODEVELOPMENT 0.00 0.00 0.00 0.00 7.64 9.56 0.00
P044449 1997 RURAL WOMEN'S DEVELOPMENT 0.00 19.50 0.00 0.00 14.92 16.42 -0.98
P009995 1997 STATE HIGHWAYS l(AP) 350.00 0.00 0.00 0.00 178.68 105.35 0.00
P010473 1997 TUBERCULOSIS CONTROL 0.00 142.40 0.00 0.00 95.89 101.81 0.00
P049301 1997 A.P. EMERG. CYCLONE 50.00 100.00 0.00 19.00 32.12 55.78 -2.27
P010485 1996 HYDROLOGY PROJECT 0.00 142.00 0.00 19.84 32.84 76.20 28.49
P010484 1996 UP RURAL WATER 59.60 0.00 0.00 7.20 23.13 26.73 16.63
P010480 1906 BOMBAY SEW DISPOSAL 167.00 25.00 0.00 10.00 65.86 75.38 32.22
P035170 1996 ORISSA POWER SECTOR 350.00 0.00 0.00 60.00 155.16 198.49 0.00
P043310 1996 COAL ENV & SOCIAL MITIGATION 0.00 63.00 0.00 6.06 21.02 34.29 0.00
P010529 1998 ORISSA WRCP 0.00 290.90 0.00 0.00 83.01 77.01 0.00
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Difference between expectedand actual
Original Amount in US$ Millions disbursements'
Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'd
P035821 1996 DPEP II 0.00 425.20 0.00 0.00 95.46 45.33 0.00
P035825 1996 STATE HEALTH SYS II 0.00 350.00 0.00 0.00 113.05 158.53 0.00P010461 1995 MADRAS WAT SUP II 275.80 0.00 0.00 189.30 16.10 204.34 10.35P010463 1995 INDUS POLLUTION PREV 143.00 25.00 0.00 68.31 53.29 123.81 18.39P010464 1995 DISTRICT PRIMARY ED 0.00 260.30 0.00 0.00 63.72 77.72 0.00P010476 1995 TAMIL NADU WRCP 0.00 282.90 0.00 0.00 100.16 136.24 98.67P010489 1995 AP 1ST REF. HEALTH S 0.00 133.00 0.00 0.00 17.52 30.30 0.00P010522 1995 ASSAM RURAL INFRA 0.00 126.00 0.00 0.00 44.46 41.88 46.76P010455 1994 BLINDNESS CONTROL 0.00 117.80 0.00 10.00 26.39 41.25 0.00P009977 1993 ICDS It (BIHAR & MP) 0.00 194.00 0.00 0.00 17.74 24.54 24.55P009963 1992 POPULATION v\ll 0.00 79.00 0.00 0.00 17.76 20.84 0.00
P009946 1992 NAT. HIGHWAYS It 153.00 153.00 0.00 0.00 22.02 11.34 11.34P009869 1989 NATHPA JHAKRI HYDRO 485.00 0.00 0.00 0.00 53.10 53.10 42.56
Total: 5854.40 6575.52 20.00 390.48 7060.94 3294.43 389.53
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INDIASTATEMENT OF IFC's
Held and Disbursed PortfolioOCT-2001
In Millions US Dollars
Committed Disbursed
IFC IFC
FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic2001 Orchid 0.00 0.00 30.00 0.00 0.00 0.00 20.00 0.001997 Owens Coming 25.00 0.00 0.00 0.00 25.00 0.00 0.00 0.001981 Pennar Steel 0.00 0.07 0.00 0.00 0.00 0.07 0.00 0.001995 Prism Cement 13.13 5.02 0.00 9.00 13.13 5.02 0.00 9.002001 RCIHL 0.00 1.97 0.00 0.00 0.00 1.97 0.00 0.002001 RTL 0.00 0.45 0.00 0.00 0.00 0.45 0.00 0.001995 Rain Calcining 16.32 5.46 0.00 0.00 16.32 5.46 0.00 0.001997 SAPL 0.00 0.07 0.00 0.00 0.00 0.07 0.00 0.001997/00 SREI 10.00 0.00 5.00 0.00 5.00 0.00 5.00 0.001995 Sara Fund 0.00 5.94 0.00 0.00 0.00 5.94 0.00 0.002001 Spryance 0.00 2.00 0.00 0.00 0.00 2.00 0.00 0.001986/93/94/95 Sundaram Finance 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.002000 Sundaram Home 0.00 2.19 0.00 0.00 0.00 1.15 0.00 0.001998 TCW/ICICI 0.00 8.14 0.00 0.00 0.00 8.14 0.00 0.001990 TDICI-VECAUS II 0.00 0.54 0.00 0.00 0.00 0.54 0.00 0.001981/86/89/92/94 TISCO 0,00 0.00 0.00 0.00 0.00 0.00 0.00 0.002000 Tanflora Park 0.00 0.51 0.00 0.00 0.00 0.00 0.00 0.001989/90/94 Tata Electric 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001994 Taurus Starshare 0.00 1.17 0.00 0.00 0.00 1.17 0.00 0.001987/88/90/93 Titan Industries 0.00 0.52 0.00 0.00 0.00 0.52 0.00 0.001989 UCAL 0.00 0.54 0.00 0.00 0.00 0.54 0.00 0.001996 United Riceland 10.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001991/96/01 VARUN 0.00 0.00 0.36 0.00 0.00 0.00 0.36 0.002001 Vysya Bank 0.00 7.30 0.00 0.00 0.00 7.30 0.00 0.001997 WIV 0.00 5.00 0.00 0.00 0.00 2.40 0.00 0.001997 Walden-Mgt India 0.00 0.02 0.00 0.00 0.00 0.02 0.00 0.001989 AEC 3.95 0.00 0.00 0.00 3.95 0.00 0.00 0.001994 Ambuja Cement 0.47 4.94 0.00 0.00 0.47 4.94 0.00 0.001992/93 Arvind Mills 0.00 5.02 0.00 0.00 0.00 5.02 0.00 0.001997 Asian Electronic 0.00 5.50 0.00 0.00 0.00 5.50 0.00 0.002001 BTVL 0.00 20.00 0.00 0.00 0.00 20.00 0.00 0.002001 Basix Ltd. 0.00 1.00 0.00 0.00 0.00 0.00 0.00 0.001984/91 Bihar Sponge 0.00 0.05 0.00 0.00 0.00 0.05 0.00 0.002001 CCIL 9.00 0.00 0.00 11.50 0.00 0.00 0.00 0.001997 CEAT 19.60 0.00 0.00 0.00 19.60 0.00 0.00 0.001990/92 CESC 18.00 0.00 0.00 40.20 18.00 0.00 0.00 40.201995/97 Centurion Bank 5.50 0.00 0.00 0.00 5.50 0.00 0.00 0.002000 Chinai 1.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001994 Chowgule 10.51 4.58 0.00 16.12 10.51 4.58 0.00 16.121997 Duncan Hospital 7.00 0,00 0.00 0.00 7.00 0.00 0.00 0.001997 EEPL 0.00 0.03 0.00 0.00 0.00 0.03 0.00 0.001986 EXB-STG 0.31 0.00 0.00 0.00 0.31 0.00 0.00 0.001995 EXIMBANK 6.82 0.00 0.00 0.00 6.82 0.00 0.00 0.001995 GE Capital 3.75 4.39 0.00 0.00 3.75 4.39 0.00 0.00
Total Portfolio: 204.89 193.08 50.36 76.82 144.12 153.96 40.36 65.32
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Approvals Pending Commitment
FY Approval Company Loan Equity Quasi Partic
2000 APCL 7.10 0.00 1.90 0.002001 GI Wind Farms 9.79 0.98 0.00 0.002001 GTF Fact 10.00 0.00 0.00 0.002001 ICICI GF 40.00 0.00 0.00 0.002000 IL&FS-GF 40.00 0.00 0.00 0.002001 Internet Express 0.00 0.00 5.00 0.002000 Orissa NESCO 28.00 0.00 0.00 0.002000 Orissa WESCO 11.00 0.00 0.00 0.002001 Samtel 21.30 0.00 0.00 0.001999 Sarshatali Coal 4.00 0.00 0.00 0.002002 Webdunia 0.00 0.00 2.00 0.00
Total Pending Commitment: 171.19 0.98 8.90 0.00
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Annex 10: Country at a GlanceINDIA: Kerala State Transport Project
POVERTY and SOCIAL South Low-India Asia Income Development diamond-
2000Population, mid-year (millions) 1,015.9 1,355 2,459 Life expectancyGNI per capita (Atlas method, US$) 460 460 420GNI (Atlas method, USS billions) 468.1 617 1,030
Average annual growth. 1994-00
Population I%) 1.8 1.9 1.9Labor force (%) 2.3 2.4 2.4 GNI Gross
per primaryMost recent estimate (latest year available, 1994-00) capita enrollment
Poverty (% of population below national povertv line) 35Urban population (% of total population) 28 28 32Life exDectancv at birth (veers) 63 63 59Infant mortality toer 1,000 live births) 71 74 77Child malnutrition (% of children under 5) 45 47 ,, Access to improved water sourceAccess to an improved water source (I% of population) 88 87 76Illiteracy (% of population ase 15+) 43 45 38Gross primary enrollment (I% ofschool-ape population) 100 100 96 -India Low-income group
Male 109 110 102Female 90 90 86
KEY ECONOMIC RATIOS and LONG-TERM TRENDS
1980 1990 1999 2000Economic ratios'
GDP (US$ billions) 182.9 316.9 451.5 474.3Gross domestic investment/GDP 20.9 25.2 22.7 24.7Exports of ooods and services/GDP 6.1 7.3 11.8 13.4 TradeGross domestic savinas/GDP 17.3 22.5 19.7 22.2Gross national savinos/GDP 18.9 22.0 21.6 24.1
Current account balance/GDP -1.9 -3.2 -1.1 -0.6 DomesticnetnInterest oavments/GDP 0.3 1.2 0.8 0.8 savingsInvestmentTotal debt/GDP 11.3 26.4 21.7 21.1 sTotal debt service/exports 9.8 32.4 15.3 12.4Present value of debt/GDP .. .. 15.6Present value of debt/exPorts .. .. 106.4
Indebtedness1980-90 1990-00 1999 2000 2000-04
(averarte annual growth)GDP 5.8 6.0 7.2 5.2 6.0 - In0a Low-income groupGDP per capita 3.5 4.2 5.3 3.3 4.3 LExports of aoods and services 5.9 11.7 6.0 5.0
STRUCTURE of the ECONOMY
1980 1990 1999 2000 Growth of investment and GDP I%)(% of GDP) 30Agriculture 38.6 31.3 27.1 25.3Industrv 24.2 27.6 26.1 26.2 20
Manufacturinq 16.3 17.2 15.4 15.1 :l _ %_Services 37.2 41.1 46.8 48.5 o
Private consumption 72.7 65.9 67.5 65.4 -1x 95 sc 97 98 99 00
General povernment consumption 10.0 11.6 12.9 12.4 - GDI - oGDPImports of goods and services 9.7 9.9 14.8 16.0
1980-90 1990-00 1999 2000 Growth of exports and imports I%)(average annual growth)Aaricutture 3.1 3.1 0.7 0.2 40Industrv 6.9 6.4 6.4 5.3 30.
Manufacturina 7.4 7.1 6.8 5.6 20Services 7.0 8.1 9.6 7.7 I
Private consumption 2.7 5.8 4.8 4.8 o s sr 97:F9 0General aovernment consumPtion 7.7 6.9 15.0 6.4 -15 95 9 9 1 vs xx
Gross domestic investment 7.5 7.0 9.4 5.6 -Exports -oImportsImDorts of aoods and services 5.9 9.5 6.0 5.0
Note: 2000 data are preliminary estimates.
- The diamonds show four key indicators in the countrv (in bold) compared with its income-oroup averane. If data are missin. the diamond willbe incomplete.
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India
PRICES and GOVERNMENT FINANCE1980 1990 1999 2000 Inflation (%)
Domest7c prices(% change) TSConsumer prices .. 12.8 3.4 3.8 .ImplicitGDPdeflator 11.6 10.4 3.8 5.3
Govemment finance(% of GDP, includes current Mrants) oCurrent revenue .. .. 18.7 19.1 95 96 97 98 99 ooCurrent budget balance - GDP deflator - CPIOverall surplus/deficit .. .. -11.0 -10.6
TRADE
(USS millions) 1980 1990 1999 2000 Export and import levels (USS mill.)Total exports (fob) 8,501 18,477 37,542 44,894 7sooo
Marine products .. 535 1,183 1,394Ores and minerals .. 970 916 1,158 roc -,Manufactures 5,105 12,996 29,714 34,511 45,000
Total imports (cifl 15,862 27,914 55,383 59,264 30Food 1,348 557 2,417 1,432 . -_ * -
Fuel and energy 6.669 6,028 12,611 15,650 19.000Capital goods 2,416 5,836 8,965 8,785 o
Exportpriceindex(1995=100) 28 51 116 122 94 95 9s 97 98 99 00
Import price index (1995=100) 27 46 150 162 e0 Exports * ImportsTerms of trade (1995=100) 105 109 77 75
BALANCE of PAYMENTS
(US$ millions) 1980 1990 1999 2000 Current account balance to GDP (%)
Exports of goods and services 11,249 23,028 53,251 63,764 -_Imports of goods and services 17,821 31,485 67,028 75,656 4 s 94 9nResource balance -6,572 -8,457 -13,777 -11,892
Net income 325 -3,753 -3,559 -3,821 ' T N
Net current transfers 2,693 2,068 12,256 12,798 WCurrent account balance -3,554 -10,142 -5,080 -2,915
Financing items (net) 2,564 7,650 11,482 8,771Changes in net reserves 990 2,492 -6,402 -5,856 1 2
Memo:Reserves including gold (US$ millions) 6,823 5,834 38,036 42,281Conversion rate (DEC, local/USS) 7.9 17.9 43.3 45.7
EXTERNAL DEBT and RESOURCE FLOWS1980 1990 1999 2000
(US$ millions) Composition of 2000 debt (USS mill.)Total debt outstanding and disbursed 20,695 83,717 98,159 100,256
IBRD 827 7,685 7,816 7,063 G: 3,464 A: 7.063IDA 5,142 13,312 18,930 18,886
Total debt service 1,426 8,191 10,109 9,666IBRD 137 1,087 1,389 1,421IDA 50 211 469 505
Composition of net resource flows F: 39,285Official grants 649 512 382 300 \A7Ofricial creditors 908 2,334 1,068 775Private creditors 789 1,606 -1,658 4,440Foreign direct investment 8 97 2,155 2,346XPortfolio equity 0 6 3,036 2,756 E: 24,471
Worid Bank programCommitments 2,503 2,186 727 2,450 A -IBRD E -BilateralDisbursements 826 1,981 1,460 1,739 B -IDA D -Other multilateral F -PrivatePrincipal repayments 86 586 1,228 1,361 C-IMF G -Short-termNet flows 739 1,395 232 378Interest payments 101 712 630 566Net transfers 639 683 -398 -188
Development Economics 9/25/01
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AdditionalAnnex 11
Institutional Development StrategyINDIA: KERALA STATE TRANSPORT PROJECT
Introduction
Project preparation included an Institutional Development Strategy (IDS) study, in order to formulate astrategy to develop PWD's technical and financial capacity to effectively manage the State's core roadnetwork and to be responsive to road users' demands. Based on the IDS' recommendations a high-levelGOK committee developed an Institutional Strengthening Action Plan (ISAP) matrix, to serve as aroadmap for all institutional development activities to be implemented during the project period andbeyond. Based on the ISAP, PWD aims to restructure its intemal organization, develop human resourcecapacity, introduce modernized financial management practices, develop a road maintenance managementinformation system, revise outdated codes and manuals, improve contracting and procurement procedures,introduce environmental and social impact monitoring, and strengthen road safety engineering capacities.These measures are expected to reform PWD into a modem road agency, that will serve as a knowledgeprovider, while sourcing private sector capacities.
GOK has formally endorsed the ISAP. Implementing the ISAP is a key KSTP element. ISAPimplementation activities will be supported by IDS supervision consultants and three PWID staff workinggroups (WG). The institutional development consultants, who will serve as external experts to assist PWDin refining and implementing the ISAP, will work closely with the staff WGs that oversee: (a)organizational restructuring and institutional strengthening, (b) management and quality systems, and (c)information technology and management information systems, to seek institution-wide feedback on theISAP. The WGs will report to a committee consisting of Principal Secretary-PWD and PWD's ChiefEngineers. The process will be overseen by the State level Empowered Committee, headed by PrincipalSecretary-PWD.
Key elements of the IDS are outlined in the ISAP below:
Table 1. Institutional Strengthening Action Plan
Elements Responsibility for GOK Actions Tech. Assistance Key PerformanceComponent Actions Required Implementation Already Taken Requirements Indicator(s)
1. Regulatory &Strategic Context
1. I Definition of 1 I. I Clear GOK a. GOK resolution of "ownership and a. Public Works, a. Highways a. N/A. Clear framework ofresponsibilities for framework for road and funding" responsibilities for major, Rural Development, Protection Act, responsibility andKerala road and water transport roles and non-rural and rural road network and Finance 1999. b. Roads accountability for allwater transport functions. components-December 2001. Departments. management components of Kerala'smanagement. b. ID Study of specialist (2 road network.
1.1.2 GOK framework b. Development of realistic "partnership b. PWD, Local tmnsport sector, months).for ownership and agreements" between PWD and rural Administration GOK functions, PWD services to othermanagement of road road authorities-November 2002. Department. and institutions. GOK agencies in ruralnetwork components. roads management fuily
defined and Sanded.
1.2 Transport 1.2.1 Clear and Fommulation of cross-modal GOK a, b and c-PWD and Study to define core Roads management, Roads policy issued.sector policy comprehensive GOK transport policy-December 2003. GOK Empowered road network legal, finance andframework. policy for transport asset Finalization of draft GOK Roads Commitee. completed. safety specialists (3 Transport sector policy
development and Policy-Febmuajy 2002. months). determined.management. GOK confirmation of Kerala "core road d. GOK Road Safety
network" for PWD planning Action Council and Road safety planpurposes-December 2001. PWD. established.Development of GOK Road SafetyPlan-December 2002.
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1.3 Improve 1.3.1 Implementation a Finalize GOK Roads Policy (as a. PWD and GOK launched IT /MIS and media/ Efficient, viable andaccountability, of sustainable PWD above)-February 2002. RBDCK. RBDCK in 1999 PR specialists (4 publicly-accountabletransparency and "public information and b. Enhancement of Road Fund rules on for "private sector months). Road Fund managed byenhanced consultation" processes. public accountability and of Board b. PWD with Road participation" representative Board.stakeholder composition-December 2003. Fund Board. projects.participation in c. Implementation of roads Regular communicationroad sector infommation/communication services, c. PWD and PRD. ID Study 2000 of GOK roadsdevelopment, with stakeholders' annual Advisory identified roads, management
Workshop-June 2003. public information information andaims. performance data.
1.4 Effective 1.4.1 Effective GOK a Establish operational system for PWD. Highways Training, roads Efficient use of ROWstatutory powers "Highway Protection effective enforcement of new Protection Act, management, ESM, authority by PWD inand framework for Acet 1999 for PWD Act-December 2002. 1999, issued. and planning road planning,comprehensive "Right-of-Way" control specialists construction,road management. and asset management. b. Comprehensive review and update of PWD. (total 7 months). maintenance, and safety
PWD manual, codes, and financial and management.1.4.2 Enhanced PWD administrative delegations (including Review of PWDcapability for efficient post-IDS reforms) -June 2003. manual and codes Unplannedland acquisition in started. noncompliant ROWproject execution. c. Implement efficient liaison and ribbon development
follow-up processes between PWD and PWD and CTP. reduced by 75% by1.4.3 Effective PWD Land use board to resolve EOP.enviromnent and social non-confbrming developments along ID Study 2000impact management ROW on basis of GOK land use identified main Major reduction in(ESM) functions. plans-June 2002. PWD ROW ESM-related project
management delays.1.4.4 Enhanced PWD d. Integrate dedicated Revenue Dept. PWD and PIU. weaknesses andcapability to interact staff into PWD project management remedies. Coherent and realisticwith GOK land use functions-December 2002. PWD codes, rules, andplanning and support its standards.enforcement. e. Establish ongoing PWD access to
Land use board. records, and processes Revenue Dept.on GIK land use plans-December 2002. PWD and TPD. and ESM staffing
already included inf. Implement effective GOK niles on PWD-PIU.coordination between PWD) and otherutility depts. on roadway repairs andrestoration-December 2002.
2. CoreProcesses,Organization andManagement
2.1 Organizational 2.1.1 Ttramfer a. Transfer responsibitities for rural roads Govemment of PWD has alread Orgaization and Better organized,Reforms. responsibilities of to the district organizations by end 2002. Kerala. transferred approx. Managemnt empowered, and
village roads. b. Establish new organizational Local Administrati'on 15 percent of Specialists (6 efficient PWD2 H fE lo minis i village roads to the months). functioning.
2.1.2 Head Office structure-January 2003. and PWD.Loa
reorganization. c. Develop and implement realistic Administration
2.1.3 FIeld, Office prioritized measures to improve PWD Dept.morganizalionf efficiency, morale and working Reviewmof PWDreorganization.W environment-June 2004. manunl and code2anua UpdateCode d. Comprehensive assessment of PWD in progress sinceMancol and Code. staffing conditions and HR policies, 1997.
2.1.5 PWD corporate resulting in Action Plan forplanning for human and organizational development-June 2004.other administrative e. Development of ongoing PWDresources and intemal "staffcommunications"perfonm ce mechanisms-December 2002.managemnent.
2.2 Capacity 2.2.1 Comprehensive a. Establish PWD Project Preparation public Works IDS Study Road planningd Planning policybuilding for project preparation, Wing by reorganizing DRIQ-December Depatnment. Findings endorsed traffic, and/or formulated.planning and policy monitoring, and quality 2002. by GOK (9 months). Enhanced planning,
functions. control fiunctions. b. Strengthen research, planning, design research, and design
2.2.2 Long-and and cost estimation capabilities-June capability.short-term planning 2003.process for the mad c. Develop effective planning processesnetwork. and resources for road network
development, including HDMapplications-June 2003.
d. Implement Road Condition Surveyand Traffic Survey programs-June 2002.
e. Determine ongoing traffic data needsand suney strategies for all planning
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processes-June 2002.
2.3 Mainstream 2.3.1 PWD capability in a. Establish PWD guidelines for ESM PWD in consultation Environment- nonment, Environmental andenvironment and ESM assessments, functions (inc. R and R) -December with Pollution Social Unit sociological plannaig social managementsocial management action planning, 2002.ions(inc.RandR)-December ContrPoli n PDfunctioning in & survey specialists guidelines approved.(ESM) policy and monitoring, andprocesses in PWD. management b. Implement guidelines for public Environmental and
hearings on road project ESM social action plans2.3.2 Stakeholder issues-December 2002. prepared for allawareness and feasibility studies andparticipation. c. Implement ESM training materials considered in all
and programs in PWD-December 2002. highway designs.
d. Establish dedicated PWDEnvironment and Social ManagementUnit-June 2004.
2.4 Quality control 2.4.1 PWD Quality a. Establish quality management Public Works IDS findings Quality management, Quality control,of wo*s. Management Programn. approach for construction and Department. endorsed by GOK. construction and monitoning and
maintenance contracts with PWD maintenance management system2.4.2 Enhanced quality guidelines, training and perfomnance specialists operational across PWD.in construction and indicators-June 2003. (6 months).maintenance. b. Include new quality component in
revised PWD manual and Code-June2003.
c. Implement quality control system inPWD and enhance KHRI fnctions.
2.5 Standardized 2.5.1 Review a. Implement listing of PWD contract Public Works IDS findings Procurement and RationalizedPWD procurement procurement packages, categorized by type and Department, endorsed by GOK. IT/MIS specialists procurement procedures.and contracts requirements. size-December 2002. Law Department, and (5 months). Enhanced database of
Finance Departnent. Ehne aaaeoprocesses and 2.5.2 Develop standard b. Prepare database of standard contractors.capabilities. contract documents and contracts for each contract Database ofgenerl and
streamlined contract type-December 2002. special contractadministrafion c. Develop criteria for prequalification conditions.procedures. and selection-December 2002. Updated contract
d. Revised PWD contract administationadministration procedures-December procedures.2002.
e. Implement database of contractorfinancial capability, disposableresources and experience-December2002.
f Implement PWD procurement andcontracts training-December 2002
2.6 Human 2.6.1 PWD Core a. Conduct a PWD-wide Training Needs PWD. IDS study findings Human resources Comprehensive PWDResource Skills" development n Assessment (TNAaOctber 2002. endorsed by GOK. management training strategyDevelopment & general Staff Assessments,(TNAni-gceobarl2002.Manement. & gdevelopment program. b. Establish a PWD Staff Development specialists, taining established.
and Management unit and resources for ITaliand
2.6.2 PWD new HRD programs and services-November (12 months). trining programinducwo 2002. tann rga
employee iducton implemented.program.
a. Develop "Core Skills Development PWD Performance2.6.3 Comprehensive, Program" for PWD staff specialization Assessment andobjective PWD and development priorities-March 2003. Management Program"perfom-ance launched.assessment and b. Implement comprehensive, objectivemanagement" practices. Performance Assessment and New employee
Management Program (PAMP) for handbook distributed inPWD-August 2003 PWD.
c. Develop and distribute new employeehandbook-December 2003.
2.7 IT capabilities 2.7.1 Implementation of a. Identify and implement IT application PWD. Contract payments IT Specialists IT capabilitiesenhancement and IT applications and and asset requirements-December 2002. computerized in (7 months) implemented for all keyutilization. networking for more PWD divisions. PWD functions.
efficient PWD b. Formulate and implement IT skillsoperations. taining across PWD-December 2002. PIU computerized. Fully operational and
2.7.2 A PWD-specific c. Identify and implement appropriate integrated MIS in PWD.IT strategic plan. PWD networking solutions-June 2003. G0Kjoining GO].
Rural Connectivity2.7.3 Introduce GIS in d. Identify PWD MIS priorities and initiatives, 2001road planning and
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implement MIS tools-June 2003. onwards.management (Phase I)
e. Develop and install GIS in PWDroads management-July 2002.
3. Roads Finance& Maintenance
3.1 Dedicated Road 3.1.1 Enhancing a. Review the objectives, legal status, PWD. GOK established a Legal specialists, Provide a regular sourceFund, sustainable effectiveness of GOK and organizational structure of the Road Road Fund, 1999. road finance of increased revenuesfunds flow for road Road Fund. Fund and possible composition of Board specialists, and for road infrastructureneeds, with 3.1.2 Introduce a sector- of Management-December 2002. GOK IT/MIS specialist needs.
effective povate representative Board to b. Identify scope for improved revenue (5 months).represenatiBon, manage the Road Fund. collection and fund usage by the Roadrepresentation. 3.1.3 Examin. Fund with greater independence,
feasibility of addiional accountability, and transparency-June
Road Fund revenues. 2003.
3.2. Strengthen 3.3.1 Implement a Establish road maintenance planning PWD. IDS study Highway Installed androutine Maintenance unit for ongoing MMS findings endorsed maintenance operationally integratedmaintenance Management System. responsibilities-December 2001. by GOK engineer and IT/MIS RBMMS.management. b. Develop and implement a Roads & consultant (6
3.3.2 Develop annual Bridges MMS [RBMMS]-December months). Pilot "perfomnanceprogram for road 2002. based contracts'condition surveys. c. Develop and implement a pilot for Maintenance implemented.
Performance-Based Maintenance specialist (63.3.3 PWD trial of Contracting (PBMC) -August 2002. months).performance-based d. Evaluate PBMC pilot perfonmancecontract maintenance. and set future PBMC strategy-December
2003.4. ProjectManagement &FinancialManagement4.1 Program and 4.1.1 PWD Financial a. Finalize Project Financial PWD. Contract payments IT and financial PFMS operational inproject financial Management System for Management System (PFMS) for are computerized in management KSTP.management. budget, accounting, and KSTP-Manch 2002. divisions. specialists (6 Extension of PFMS to
consolidated b. Develop specifications and action PFMS being months). all finance mangementmanagement reporting. plans to extend PFMS to all PWD developed for in PWD initiated.
activities including training-June 2003. KSTP.c. Implement PFMS on PWD-March
.___________________ 2004.
4.2 Program and 4.2.1 Sound PWD a. Define and implement an effective PWD. IDS study findings Project management, Integrated Programproject physical and Program Management Program Management System for endorsed by GOK. training and IT/MIS ManagementProjectfinancial Systems, project PWD-wide needs-December 2003. specialists (6 Monitoring Systemmanagement. monitoring, and control months). operational in PWD.
procedures.
s. Public /PrivatePartnerships
5.1 Efficient road 5.1.1 Policy frmework a. Develop and implement plans and PWD, RBDCK, and RBDCK launched Infrastructure Faster road sectorinfrastructure and mechanisms for mechanisms for private sector road and PRD. in 1999. Finance specialist infrastructureservices via private private sector role in bridge investments-December2002. (2 months), development.sector participation, maids in ucture. b. Prepare infomiation campaign to Draft GOK Roads PR specialist (2 Positive public
educate the public-December 2002. Policy, months). atitudesppoli.
6. Road Safety
6.1 Road Safety 6.1.1 Road Safety (RS) a. Develop the Blackspot Program and PWD. Project Specific Road safety engineer Safer road locations andEngineering. the Safety Audit Policy and T Road Safety Audit designs.
6.1.2 Road Safety (RS) Program-July 2002. Commissonrt cardied out. (60ectivhsRSEquipmenad Safety (RS) b. Implement GOK Safety Program Cmisior. Dane oad Traffic engineer Effective RS
procurement needs June 2002 onwards. Traffic Police. Action Plan (24 months) enfoncement and
6.1.3 Road Safety (RS) c. Develop Road Safety Plan (RSP) & Education prpared ProcurementPlan. Action Program-December 2002. Departnment. specialist (3 Better RS data.
d. Implement RSP initiatives in months-) Effective educationManagement and Financing; Accident Health Department.Data System; Education and Publicity; Road safety progveams.Legislation and Enforcement; Driver PR Department. specialists [various) Impnovd dnver andtraining and testing; Vehicle Standards; (24 months-) vehicle standardsEmergency Aid; Accident Costs and Bener aid for victims.
7. IWTDevelopment
7.1 Inland Water 7.1.1 Institutional a. Establish specific IWT Team at Irrigation Department HQ irrigation IWT specialist GOK policy and stratetgy
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Transport resources for IWT PWD-PIU and Field sites-January 2002. and personnel in place (6 months). for IWT DevelopmentFacilitation policy and strategy b. Establish IWT-specific ESM PWD. in the PWD-PIU. established.
development. uidelines and IWT Team ID, PWD, and PRD Training and proje
7.12 IrT ilo prje trtaining-December 2002. management7..2n W pilostr prcec c. Establish IWT project monitoring and specialists (6o inproves tnc pure lc evaluation process-December 2002 months).
ipsponsem d. Implement IWT promotion campaign ESM specialistresponse. with consultative mechanisms-February (I month).
2003.
e. Develop GOK IWT Policy-June PR specialist2004. (4 months).
' These estimated inputs will be covered in the Road Safety component of this Project, and are not/NOT included in the Institutional Strengthening (ISAP, etc.) inputs of
the Project.
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AdditionalAnnex 12
Environmental and Social Assessment, Environmental Management Plan and ResettlementAction Plan
Environmental and Social Assessment Process
The EA and SA process began with a Sectoral EA (SEA) covering all proposed upgrading andmaintenance works in both phases of the roads component. An EA and SA was also done for the IWTcomponent. These included an assessment of baseline conditions, on analysis of altemative options, and anassessment of potential impacts, and community consultation throughout the preparation period.Mitigation and enhancement measures for all identified impacts of the EMP were incorporated into theRAP and the waterways ESAMP and all project designs. A census and socioeconomic surveys identifiedall irnpacted and helped establish a cut-off date to determine who would be entitled to relocation assistanceor other project benefits. PWD developed an entitlement framework in consultation with the people. GOKendorsed the project's R&R policy.
Environmental and Forestry Clearances
The Project's Phase 1 has secured all necessary State government (State Pollution Control Board)clearances. The corridors do not pass through any ecologically sensitive areas, so no environmental orforestry clearance from MOEF was required. For the Phase 2 corridors, GOl/MOEF clearance will berequired, as some road links pass through ecologically sensitive areas. This will be obtained as the projectprogresses. The Contractors must obtain clearances from the State Ministry of Forests for roadside treecutting before civil works can begin. GOK and PWD will ensure that the contractors obtain clearancesfrom the State Pollution Control Board prior to installing hot mix plants or tube wells or beginning relatedactivities.
Public Consultation and Disclosure
Consultation was used as a tool to establish a two-way process to share information, build awarenessamong stakeholders, and translate the outcomes into project design. Consultations began, parallel with thescreening and feasibility stage, with three scoping workshops held in January and February 2000. Thesewill continue throughout the project cycle, into implementation. Project designs, EMPs and the RAP willbe shared with the people through follow-up consultations.
The main issues raised during consultations included resettlement, road safety and accidents, culturalassets, bypasses, air pollution, noise, flora, roadside drainage, and amenities. Road safety was identified asthe most important issue, and a Road Safety Audit was initiated. The audit's recommendations wereincorporated in the design drawings through elements to address bad road geometry, traffic calmingmeasures, bus bays, parking areas, and pedestrian facilities. Landscaping activities, to enhance culturalassets, have also been included.
The EIA, EMP, RAP, ESAMP, and Executive Summary (translated into the local language), weredisclosed in September 2001, in project locations as indicated in Table 1.
Table 1: Public Disclosure Locations for EIA, EM?P and RAP reportsLink Route Description Locations
Taikkod-Kottarakkara Panchayat office at Vamanapuram,Valakam, and Kottarakkara
2 Kottarakkara-Adur Panchayat office, Kottarakkara;
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Municipal office Adur3 Adur-Chengannur Municipal office Adur; Municipal
office, Chengannur
72 Taikkod-Kazhakkuttam Village office Koliyakod73 Alappuzha-Changanassery Panchayat office, Nedumudi6 Muvattupuzha-Angamali Municipal office, Angamali and
Muvattupuzha70 Muvattupuzha-Thodupuzha Municipal office Thodupuzha and
_ _ __ ~~~~Muvattupuzha40 Thrissur-Kuttipuram Municipal office, Kunnamkulam50.1 Palakkad-Shomur Panchayat office, ShornurPilot KV 1, AK, and AC Canals Panchayat office, Nedumudiwaterways
Analysis of Alternatives
Alternatives were analyzed at the strategic and project levels; the criteria included environmental and socialissues. Analysis was done using "with" or "without project" scenario and alternative to engineering,alignment and widening, cross-section, bypass, realignment, junction, pavement and treatment options wereassessed for the maintenance roads. Enviromnent and social considerations including limited right of way,existing geometry, high population density and dense ribbon development, air and noise pollution, roadsidetrees, and ecological sensitive areas were integrated into the decision-making process, as were inputs fromthe stakeholder consultations. The proposed road upgrading follows the existing alignment in order tominimize land acquisition and social impacts. Some realignments, to improve road geometry and safetywere made. The IWT component also analyzed alternatives.
Highways Component-Baseline, Impacts, and Mitigation
Air quality was assessed at 14 locations by the Kerala State Pollution Control Board (KSPCB). In certainlocations (Kotarrakara and Edavanna), the suspended particulate matter levels were found to exceed SPCBlimits. High NOx values were found in Kazhakkootam (NH junction) and Muvattupuzha. This is due toindustrial air emissions in these locations. During construction activities, increased air pollution is likely,particularly from the hot-mix plants. To mitigate construction-related impacts, the asphalt plants andcrushers must be sited at least 1 km in the downwind direction from the nearest human settlements and thehotmix plant must be fitted with dust extraction units and a cyclone/scrubber. Water will be sprayed on thelime/cement, earth, and asphalt mixing sites and temporary service and access roads. Vehicles deliveringconstruction materials must be covered to minimize dust emissions likely to result from transportingcrushed rock and earth.
Water quality-related field investigations identified the need to test water quality parameters such as pH,dissolved oxygen, biological oxygen demand, and suspended solids. The results were within KSPCBlimits.
Soils along the alignments include forest loam and brown hydromorphic and lateritic soil, and are suitablefor use in the sub grade as construction materials. Areas suitable for borrow pits (sources of fill material)have been located. The project largely depends on the suitability of quarry sand and dust, meeting IndianRoad Congress Specifications. Material sources locations also have been identified.
Noise SPCB undertook noise monitoring in 34 locations along the project roads and highways. These were
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generally below the prescribed limits. A few locations had problems with active vehicular movement,commercial activities, and driver practices. Sensitive receptors have been identified plans to buildsound-insulating walls and green barriers have been considered.
None of the Phase I roads or highways pass through or near ecologically sensitive areas. A few Phase IIroads and highways pass through or near ecologically sensitive areas. These eco-sensitive areas are eitherpart of the Coastal Regulation Zone or classified as Reserved Forests/Sanctuary. These are tropicalevergreen forests, rich with flora (bamboo, sandalwood, pali, payini, cheru, and chorapali) and fauna(elephant, deer, sambar, wild boar, and panther). It has been estimated that 900 public trees and 300private trees will have to be cut down as a part of Phase I. Some road corridors in the maintenancecomponent pass through ecologically sensitive areas; additional mitigation measures have been identified inthe ESMP.
Project-Affected Persons, Land Acquisition, Resettlement
The project plans to widen roads at three types of locations, mainly: (a) congested market areas with denseplacement of structures, including legal titleholders of land plots and structures, and legal or illegalsquatters; (b) built-up residential areas along the road (some land, currently occupied by compounds,compound walls, or structures must be acquired for the project); and (c) roadside agricultural andplantation land. Minimization measures have substantially reduced adverse impacts on people and landacquisition; most people will only lose the boundary walls of their structures. The impact on the totalpopulation has been reduced by approximately 50 percent and the number of project displaced persons hasbeen reduced by approximately 75 percent. The impact on buildings has been considerably reduced, byapproximately 66 percent and 74 percent for residential and commercial structures, respectively. Althoughland acquisition is unavoidable, a number of measures have been taken to minimize the need to take landand displace people. The options to minimize negative social impacts included design considerations,public consultations, aggrieved people's representations, and analysis of altematives and bypasses. Landacquisition and community resources will be required to widen and upgrade the project roads, provideparking areas, and a plan to acquire the land has been prepared. The affected families will becompensated, resettled, and rehabilitated according to the R&R policy. Land for this has been identifiedand additional assistance for poor and vulnerable people will be provided.
Cultural Sites and Archaeology
Common property resources, such as schools, hospitals, roadside wells, taps, trees, and cultural properties(temples, churches, mosques, and shrines) will be affected (in most cases only the compound wall or landwill be impacted). In Phase I, 36 religious structures will be impacted. Only roadside hyundi (moneycollection boxes) will need to be moved, enhancement measures will be provided for other structures. TheEMP includes a provision for tree planting, and the project will rehabilitate roadside public wells and taps,in cooperation with the local Panchayats and municipalities and the Kerala Water Authority.
Coordination with Civil Works
RAP implementation will be closely coordinated with civil works implementation. Contractor mobilizationwill depend on the land being available and free from encumbrances. To meet this requirement, plans havebeen prepared to complete the relocation of affected people before land will be handed over for civil works.
Pilot Inland Waterways Component
An EA and SA was carried out and an ESAMP prepared in consultation with the people residing within theproject area and other stakeholders. The key issues that emerged was the water quality, which at present
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indicates very high fecal coliform levels due to prevailing unsanitary practices, and the presence of waterhyacinth, which reduces navigability. Key rehabilitiation activities include dredging and removing of waterhyacinth. Management plans for dredge disposal and hyacinth removal, and enhancing community assets(especially targeting lower-income groups, and women), are a part of the ESAMP. The canal rehabilitationprocess will involve dredging, leading to the disposal of large quantities of dredge (156,000 m3). Aquaticweeds, especially the water hyacinth, is a major threat to waterway development. The dredge disposallocations have been identified through public consultations and will be done along the waterways atmutually beneficial locations, to reduce transport hazards and costs. The ESAMP also takes into accountother impacts, such as using locally available coir material in place of geotextiles to prevent sidewallerosion; adequately sized drainage to accommodate 50-year flood levels in the case of culverts and smallbridges; and downstream slope stabilization with concrete, rock gabions, or retaining walls, to avoiderosion. Care has also been taken to provide side drainage in villages and towns where street levels arenear or above the ground level of adjacent houses. The bid documents include provisions to ensure thatconstruction camps and other potential sources of secondary impacts are properly sited and provided withdrainage and wastewater facilities. Cross-drainage structures will be replaced, in accordance with IndianRoad Congress standards.
Institutional Arrangements
Implementation arrangements at the PWD head office and all districts field offices are in place. PWD hasestablished three units for each package in the field to coordinate the implementation of Phase I roads.Each is headed by an Executive Engineer, and includes a team of Assistant Executive and AssistantEngineers. ID has established a task force to implement the ESAMP for the IWT component. The DistrictLevel Committee and the Grievance Redressal Committee will also include PAP and NGO representatives.Training modules and plans have been prepared to strengthen the existing skills of the PWD staff and theNGOs. This has also been mainstreamed in to PWD's overall institutional development process. Detailedmonitoring indicators will track the process and progress of the EMPs and RAP. Mechanism have beenestablished among the PWD, supervision consultants, ID, NGOs, and contractors, to ensure complianceand provide feedback.
Costs of the EMP and RAP
The EMP implementation budget has been internalized as part of the civil works contract. The total projectcosts include adequate provisions to implement RAP provisions. The EMP implementation budget isRs. 153.07 million for Phase I roads and Rs 20.77 million for the IWT component. This is apart from thecost of works that have been internalized in the civil works. The estimated environment mitigation cost forPhase II roads is Rs. 88.8 million. The estimated R&R budget (including land acquisition) for Phases I andII is Rs. 1,430.0 million.
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AdditionalAnnex 13
Road Safety: Strategy and Action PlanINDIA: KERALA STATE TRANSPORT PROJECT
India has a traffic fatality rate six times that of North America and Western Europe, and Kerala has anaccident rate significantly higher than that of other Indian States. Police records indicate that in the year2000 more than 49,000 people were injured and 2,711 killed in road traffic accidents. The mixture ofbuses, lorries, cars, motorized rickshaws, motorcycles, bicycles, and pedestrians, travelling at vastlydifferent speeds contributes to extremely unsafe road conditions. There is a growing awareness of Kerala'sroad safety problem in Kerala and a desire by GOK to tackle it. Evidence suggests that recent initiativesmay have helped stabilize the accident numbers, but the current totals are still unacceptably high and do notreflect the total picture.
The Kerala PWD is one of the first State highway authorities in India to initiate the development andimplementation of a comprehensive and integrated State Road Safety Action Plan. The Project willestablish in PWD a Road Safety Cell with trained local staff to implement a road safety audit policy. Acomputer-based road accident recording and analysis system for the Traffic Police and PWD is beingdeveloped and will be used to identify and analyze accident blackspots on the NHs and SH network. ThePCC has completed designs for about 600 km of SHs to be rehabilitated, and subsequently PWD auditedthe project road designs for safety. The PCC has also worked with PWD officials and other local agenciesto prepare a safety audit policy document; implement a pilot study of accident blackspots on a major NH;and develop a draft Road Safety Action Plan. Local staff from PWD, Traffic Police and NationalTransportation Planning and Research Center (NATPAC) received on-the-job training.
The draft Road Safety Action Plan lists recommendations for immediate and long-term measures in thefollowing sectors: coordination and management; accident data; publicity; road planning and design;hazardous locations; education; traffic legislation; enforcement; driver training and testing; vehicle safetystandards; emergency aid; road accident costs; and funding.
GOK plans to make the State road network safer for all road users by a planned, comprehensive, effective,and sustainable program of initiatives. Following the completion of designs for the improved highways andthe initial Road Safety inputs, GOK and the World Bank agreed to include in the Project three main roadsafety-related components given below. Consultants will assist PWD, the Highway Research Institute,National Highways Agency, State Police, the Kerala State Road Safety Council, the National TransportPlanning and Research Center (NATPAC), and other relevant agencies with these three main tasks:
Task 1: Blackspot Improvement Program
a) Draft a Accident Investigation and Prevention (AIP) Training Manual and carry out trainingcourses.
b) Draw up a priority list of hazardous locations for in-depth analysis, including: "Blackspots,""Routes," "Areas" and "Mass Action" programs:
* Prioritize these locations, to be addressed over a five-year period.
* Draft plans and contract documents for agreed measures.
* Undertake and evaluate (before and after studies).
* Develop a safety audit policy, and guidelines and carry out safety audits on National and State
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Highways.
c) Design an improved computer-based accident analysis system and draw up a program implementthis at PWD and Police.
Task 2: Road Safety Equipment and Materials
a) Review equipment needs of PWD, Traffic Police, Kerala State Road Safety Council, and transportresearch organizations and prepare draft technical specifications for road safety related-equipmentto be procured under the Project.
b) Review SHs and NHs not included in other KSTP components, to identify deficiencies in roadsigns, road markings, delineators, guard rails, and other street furniture. Prepare technicalspecifications, and bidding documents to procure road safety engineering equipment and materials.
c) Training PWD staff in traffic engineering, maintenance, and road safety in order to maintain thenew safety standards, not allow them to decline.
Task 3: Implementation of Road Safety Action Plan
a) Review the latest version of the Kerala Road Safety Action Plan with PWD and other interestedparties.
b) Draft GOK and agree program of priority and longer-term actions.
c) Retain short-term intemational and local specialists to assist with all recommended initiatives,including:
* Establishing and supporting a Road Safety Council Secretariat.
* Improving legislation to strengthen District Road Safety Committees.
* Promoting the State and local action plans.
* Promoting the monthly and annual Accident Reports
* Planning and implementing year-round, targeted publicity campaigns.
* Establishing a Road Safety Unit to support PWD.
* Reviewing and upgrading the children's road safety education program.
* Review current traffic legislation and recommend revisions.
* Training Traffic Police.
* Reviewing existing and preparing improved driver licensing, training, and testing standards;vehicle testing standards; emergency services; road safety research; and funding.
The Project's road safety component will be implemented through coordinated arrangements between PWDand the Traffic Police to be documented in a Memorandum of Understanding.
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MAP SECTION
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