Report and Recommendation of the President to the Board of DirectorsProject Number: 42254 April 2010 Proposed Loans and Technical Assistance Grant Democratic Socialist Republic of Sri Lanka: Northern Road Connectivity Project CURRENCY EQUIVALENTS (as of 31 March 2010) Currency Unit SLRe1.00 $1.00 – = = Sri Lanka rupee/s (SLRe/SLRs) $0.0087298121 SLRs114.550003 ABBREVIATIONS ADB CPS EIRR EMP ESD IEE MLGPC MOHRD NCP NPC NPRDD PAM RDA TA – – – – – – – – – – – – – – Asian Development Bank country partnership strategy economic internal rate of return environmental management plan Environment and Social Division initial environmental examination Ministry of Local Government and Provincial Councils Ministry of Highways and Road Development North Central Province Northern Provincial Council Northern Provincial Road Development Department project administration manual Road Development Authority technical assistance NOTES (i) (ii) The fiscal year (FY) of the government and its agencies ends on 31 December. In this report, "$" refers to US dollars. Vice-President Director General Director Team leader Team members X. Zhao, Operations 1 S. H. Rahman, South Asia Department (SARD) S. Widowati, Transport and Communications Division, SARD D. K. Lee, Transport Specialist, SARD N. M. Amerasinghe, Project Implementation Officer, Sri Lanka Resident Mission (SLRM), SARD K. M. Emzita, Senior Counsel, Office of the General Counsel C. Epa, Financial Management/Disbursement Officer, SLRM, SARD A. Gamaathige, Social Sector/Resettlement Officer, SLRM, SARD S. Muthugala, Procurement Officer, SLRM, SARD A. Nanayakara, Project Implementation Officer, SLRM, SARD J. Perera, Principal Safeguards Specialist, SARD Y. Tanaka, Senior Transport Specialist, Southeast Asia Department Peer reviewer In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area. CONTENTS Page MAP {To be inserted} I. II. THE PROPOSAL THE PROJECT A. Rationale B. Impact and Outcome C. Outputs D. Investment and Financing Plans E. Implementation Arrangements TECHNICAL ASSISTANCE DUE DILIGENCE Technical A. B. Economic C. Governance D. Poverty and Social E. Safeguards F. Risks and Mitigating Measures ASSURANCES RECOMMENDATION 1 1 1 2 2 2 4 5 6 6 6 7 8 9 10 10 10 11 13 III. IV. V. VI. APPENDIXES 1. Design and Monitoring Framework 2. List of Linked Documents I. THE PROPOSAL 1. I submit for your approval the following report and recommendation on proposed loans to the Democratic Socialist Republic of Sri Lanka for the Northern Road Connectivity Project. The report also describes proposed technical assistance (TA) for Capacity Development of the Northern Provincial Road Development Department, and if the Board approves the proposed loan, I, acting under the authority delegated to me by the Board, will approve the TA. 2. The project is to rehabilitate about 140 kilometers (km) of provincial roads in Northern Province and 170 km of national roads in Northern Province and North Central Province (NCP). The project is timely and targeted—to improve road connectivity in the country's conflict-affected area in the northern region, helping to restore access to basic social services and markets. It will facilitate economic growth and contribute to reducing disparities in Sri Lanka, consistent with one of the Government’s key goals, which emphasizes equitable growth1. II. A. Rationale THE PROJECT 3. Northern Province is one of the worst conflict-affected regions in the country, emerging from nearly three decades of civil war. The damage to physical infrastructure has been severe and extensive. In particular, the road network lies in a state of total disrepair due to prolonged neglect and underinvestment. People in this region no longer have access to markets or basic social services as they once had and the transport of goods has dramatically slowed. Mobility between Northern Province and the country's southern region is also poor due to the substantial travel time required because of the poor condition of the linking national arterial roads. This has hindered the spread of economic activities and development. Northern Province has the highest poverty rate in the country. 4. The 140 km of provincial roads to be rehabilitated are in Mannar and Vavuniya districts,2 and comprise minor feeder roads connecting settlements with markets, and major feeder roads connecting towns and villages. Ultimately, these roads connect to the main north–south national arterial road.3 The 170 km of national roads to be rehabilitated comprise 108 km connecting major provincial centers within Northern Province and 62 km in NCP. They will help link Northern Province with major city centers in the country's southern region. The roads in Northern Province will be rehabilitated to all-weather bituminous surfaces and will facilitate access to basic social services, such as schools, hospitals, and local markets. The national link roads in NCP will receive improved surfacing and marginal widening, which will reduce travel time and cost, helping to revitalize travel to and from the north. Consequently, the improved road connectivity will stimulate new economic opportunities. 5. To ensure development coordination, consultations were held with other developing partners to ensure equitable geographic coverage and avoid overlaps. The project's main outcome—improving road connectivity—complements the recently approved Asian Development Bank (ADB) supplementary loan for the North East Community Restoration and Development 1 2 3 Government of Sri Lanka. 10-Year Development Franmework (2007-2016). Sri Lanka. The project covers two of five districts in Northern Province. The World Bank is planning to cover Jaffna district. The two remaining districts (Mullaitivuu and Kilinochchi) will be covered under future projects after unexploded ordnance are cleared. Connects to A9 section (Galkulama–Jaffna), which is undergoing rehabilitation financed by China Exim Bank. 2 Project II4 and the proposed Conflict Affected Region Emergency Assistance Project,5 which focus on reconstructing Northern Province's essential infrastructure such as schools, hospitals, and administrative services and buildings. These, collectively, help ensure that ADB assistance is provided in an integrated fashion and will effectively help the government to build capacity for sustainable social and economic integration. 6. The project is consistent with the strategic objective set out in ADB's country strategy and program (2009–2011): To improve the transport system in Sri Lanka, and promote regionally balanced and socially inclusive economic growth. The project is included in the country operations business plan, Sri Lanka (2010–2012). 7. In conjunction with the project, an associated TA is proposed to develop the capacity of the Northern Provincial Road Development Department (NPRDD) to effectively manage Northern Province's provincial road network. B. Impact and Outcome 8. In support of the country strategy and program outcome, the project impact will be balanced and inclusive growth in Northern Province. The project's immediate outcome will be improved road connectivity within Northern Province and with the southern region of the country. C. Outputs 9. The project outputs are (i) approximately 170 km of national roads in Northern Province and NCP are rehabilitated; (ii) approximately 140 km of provincial roads in Northern Province are rehabilitated, and selected bridge links are rehabilitated or replaced; and (iii) NPRDD offices are rehabilitated. D. Investment and Financing Plans 10. The project is estimated to cost $173 million, including taxes and duties of about $18.6 million to be financed by the government. The total cost includes physical and price contingencies, and interest and other charges during implementation. The detailed cost estimates by expenditure category and detailed cost estimates by financier are in the project administration manual (PAM). The investment plan is summarized in Table 1. 11. The government has requested a loan of $130 million from ADB’s ordinary capital resources to help finance civil works for national roads and recurrent costs for project management and consulting services, and a loan of SDR {amount to be determined and inserted} ($24.4 million equivalent) from ADB’s Special Funds resources to help finance civil works for provincial roads, recurrent costs for project management, and capacity development equipment. 12. The loan from ADB’s ordinary capital resources will have a 25-year term, including a grace period of 5 years, an annual interest rate determined in accordance with ADB’s London interbank offered rate-based lending facility, a commitment charge of 0.15% per year, and other 4 5 ADB. 2010. Report and Recommendation of the President to the Board of Directors: Proposed Supplementary Loan to the Democratic Socialist Republic of Sri Lanka for the North East Community Restoration and Development Project II. Manila (Loan 2168-SRI, for $52.8 million, approved on 2 March). Under processing for consideration by the ADB Board of Directors in April 2010. 3 such terms and conditions set forth in the draft loan agreement. The interest and other charges during construction will be capitalized in the loan. The government has provided ADB with (i) the reasons for its decision to borrow under ADB’s London interbank offered rate-based lending facility based on these terms and conditions, and (ii) an undertaking that these choices were its own independent decision and not made in reliance on any communication or advice from ADB. 13. The loan from ADB’s Special Funds resources will have a term of 32 years, including a grace period of 8 years, with an interest rate of 1.0% per annum during the grace period and 1.5% per annum thereafter, and other such terms and conditions set forth in the draft loan agreement. Table 1: Project Investment Plan ($ million) Item Base Costb A. 1. National roads 2. Provincial roads 3. Equipment—vehicles 4. Consulting services 5. Project management Subtotal (A) Contingenciesc B. Financing Charges during Implementation d C. Total (A+B+C) a b Amounta 115.62 21.37 0.22 7.20 0.80 145.21 23.03 4.76 173.00 Includes taxes and duties of $18.6 million to be financed from government resources. In early 2010 prices. c Physical contingencies computed at 10.0% for civil works and equipment; and consulting services contract values. Price contingencies computed at 2.0% on foreign exchange costs and 7.0% on local currency costs; includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. d Includes interest and commitment charges. Interest, which will be capitalized during implementation, is computed at the 5-year forward London interbank offered rate plus an effective contractual spread of 0.2% per annum for the ordinary capital resources loan; and at 1.0% per annum for the loan from ADB’s Special Funds resources. Commitment charges for the ordinary capital resources loan are 0.15% per year to be charged on the undisbursed loan amount. Source: Asian Development Bank estimates. 14. ADB will finance 89%6 of the total project investment cost; the government will finance 11% (Table 2). The government's financing will cover taxes and duties only. This will ease the government's financial burden to provide counterpart funding and ensure adequate cash flow during implementation. It is also consistent with the country strategy and program approach, considering a difficult macroeconomic environment and supporting the government's high priority to develop Northern Province. Detailed cost estimates and a financing plan are provided in the PAM, including the magnitudes of physical contingencies as a percentage of the base costs and of the inflation factors used in estimating price contingencies. 15. ADB's Road Project Preparatory Facility7 was utilized to undertake project preparatory activities. 6 7 The current country limit for Sri Lanka is 90%. ADB. 2004. Report and Recommendation of the President to the Board of Directors: Proposed Technical Assistance Loan to the Democratic Socialist Republic of Sri Lanka for the Road Project Preparatory Facility. Manila (Loan 2080-SRI, for $15 million, approved on 13 April). 4 Table 2: Financing Plan Source ADB Ordinary Capital Resources Loan ADB Special Funds Resources Loan Government Total ADB = Asian Development Bank. Source: Asian Development Bank estimates. Amount ($ million) 130.00 24.40 18.60 173.00 Share of Total (%) 75.0 14.0 11.0 100.0 E. Implementation Arrangements 16. The implementation arrangements are summarized in Table 3 and described in detail in the PAM. Table 3: Implementation Arrangements Aspects Arrangements Implementation period 5 years Estimated project completion 30 June 2015 date Project management Overall oversight body National Steering Committee, cochairs: MOHRD and MLGPC; members: MOFP represented by DST, National Planning Department, Finance Commission, NPC, provincial MIDR, and NPRDD National Road Component Executing agency MOHRD Implementing agency RDA Project implementation unit Colombo with district offices in Northern Province and NCP, number of staff proposed: 18 Provincial Road Component Oversight body Provincial Coordinating Committee, chief secretary of Northern Province (chair), provincial MIDR, and NPRDD Executing agency MLGPC (utilizing the existing project coordinating unit for ADB Loan 2546)a Implementing agency NPC—NPRDD Project implementation unit Trincomalee (main office), number of staff proposed: 17 Procurement International competitive bidding 8 contracts About $103 million National competitive bidding 6 contracts About $19 million Shopping tbd tbd Consulting services PIC for national road (QCBS) 33 international About $2.7 million and 745 national PIC for provincial road (QCBS) 35 international About $2.7 million and 780 national Advance contracting Works and consulting services Disbursement The loan proceeds will be disbursed in accordance with ADB's Loan Disbursement Handbook (2007, as amended from time to time) and detailed arrangements agreed to by the government and ADB. ADB = Asian Development Bank, DST = Department of Secretary of Treasury, MIDR = Ministry of Infrastructure Development and Reconstruction, MLGPC = Ministry of Local Government and Provincial Councils, MOFP = Ministry of Finance and Planning, MOHRD = Ministry of Highways and Road Development, NPC = Northern Provincial Council, NPRDD = Northern Provincial Road Development Department, PIC = project implementation consultant, QCBS = quality- and cost-based selection, RDA = Road Development Authority. a ADB. 2009. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical Assistance Grant to the Democratic Socialist Republic of Sri Lanka for the Eastern and North Central Provincial Project. Manila (Loan 2546-SRI, for $70 million, approved on 16 September). Source: Government of Sri Lanka. 5 17. Domestic preference. Although Sri Lanka's current annual gross national income per capita (formerly gross national product) is above the eligible threshold8, the government has requested domestic preference to facilitate the country's post conflict recovery, in particular for the construction industry. Sri Lanka's construction industry has been impacted by a combination of adverse factors, including many years of an uncertain business climate during the conflict period, commodities price shock 2 years ago, and more recently, the global financial crisis. Many contractors have been unable to maintain capital expenditures on plants and machinery, and continue to suffer loss of permanent technical staff due to migration and to other industries. As the country is emerging from a prolonged conflict period and the reconstruction begins in the north, the government's priority is to ensure opportunities for the domestic contractors – to recover and strengthen. In support of the Government's request, the Project is to use a domestic preference of 7.5% when evaluating civil works under international competitive bidding9. The proposed relaxation of eligibility for domestic preference has been considered based on a recommended approach to engaging with Weakly Performing Countries (WPC)10. While Sri Lanka is no longer considered a WPC, the country does exhibit weak performance due to post conflict fragility, and supporting the Government's request is in keeping one of ADB's guiding principles of promoting domestic construction industries in the developing member countries. This will also contribute to a harmonized approach among donors, as the World Bank, which uses the identical eligibility threshold, is currently providing similar domestic preference for works in Sri Lanka for the road transport projects. III. TECHNICAL ASSISTANCE 18. The percentage of maintainable roads in Northern Province, although very small at present, will rise in time as more roads are rehabilitated to maintainable conditions. Therefore, in conjunction with the project, capacity development TA will be provided with the objective of strengthening the capacity of the Northern Provincial Council–Northern Provincial Road Development Department (NPC–NPRDD) to effectively manage and maintain the provincial road network. This is consistent with lessons from ADB's previous projects on the need to ensure that provincial road development departments or agencies strengthen their capacity and utilize a systematic approach for road asset management. To maximize effectiveness,11 the TA will focus on NPC–NPRDD, as ADB's other ongoing project12 is strengthening the capacity of the Road Development Authority (RDA). The TA will carry out the following activities: (i) (ii) Engage a TA consultant by June 2011. Prepare a capacity development plan by September 2011, which includes improved organizational arrangements, optimized staffing allocation and 8 9 Current limit set in the World Bank OM (OP3.10 – Annex D) is $975 and Sri Lanka's annual GNI is $1,780. Bidding for the national road packages, which will be procured under international competitive bidding, will not commence until the proposed domestic preference is approved by the ADB Board. 10 ADB. 30 May 2007. Management Paper on Achieving Development Effectiveness in Weakly Performing Countries (The Asian Development Bank's Approach to Engaging with Weakly Performing Countries) recommends flexibility and relaxation of eligibility rules for procurement when operating in weak performing countries or countries which exhibit evidence of weak performance such as in post conflict fragility. 11 Lessons from ADB. 2002. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical Assistance Grants to the Democratic Socialist Republic of Sri Lanka for the Road Sector Development Project. Manila (Loan 1986-SRI, TA 4074-SRI, and TA 4075-SRI; approved on 19 December). 12 Institutional strengthening for RDA is ongoing under ADB. 2005. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical Assistance Grant to the Democratic Socialist Republic of Sri Lanka for the National Highways Sector Project. Manila (Loan 2217-SRI and TA 4736-SRI, approved on 15 December). 6 assignments, needs-based training programs, and requirements for an upgraded office management information system. Implement the upgraded office management information by December 2011, which includes upgraded basic computers, networking, and updated financial and accounting software. Implement a basic road maintenance management system, including completing a database of a provincial road inventory with updated conditions by June 2012 and preparing a prioritized 3-year rolling road investment plan by December 2012, which includes an annual maintenance work program and draft annual road maintenance budget application for FY2013. Conduct needs-based in-house and out-of-country training programs by December 2010, in project management, contract administration, financial management, performance-based maintenance, and road safety. (iii) (iv) (v) 19. The TA is estimated to cost $560,000, of which ADB will finance $500,000 on a grant basis from ADB's Technical Assistance Special Fund (TASF–IV). The government and NPC– NPRDD will provide the remaining $60,000 equivalent in kind. The government will provide office space and NPC–NPRDD will provide counterpart staff. The TA falls under category B as implementation is expected to be relatively simple. The TA will provide required consultant inputs and necessary equipment and facilities. Renovation and upgrading of NPC–NPRDD's district offices in Vavuniya and Mannar will be financed under the loan. Individual consultants will be recruited in accordance with ADB's Guidelines on the Use of Consultants (2007, as amended from time to time). Disbursements will be in accordance with ADB's Technical Assistance Disbursement Handbook.13 International consulting inputs of 12 person-months and national consulting inputs of 16 person-months will be required. The TA will be implemented from January 2011 to December 2012. The details of the TA costs and activities, including the terms of reference, are in the PAM. IV. A. Technical DUE DILIGENCE 20. The engineering design has been carried out based on site condition surveys and field investigations, optimizing the required improvement works for economy and construction efficiency in accordance with applicable international design standards. The construction method will utilize proven technology with standard materials compatible with local conditions. B. Economic 21. The economic assessment was carried out in accordance with ADB's Guidelines for the Economic Analysis of Projects. The principal benefits expected are in terms of savings in vehicle operating costs and travel time. The highway design and maintenance model was utilized to calculate vehicle operating costs and time costs with appropriate input parameters for Sri Lanka. The estimated economic internal rates of return (EIRRs) range from 20.1% to 24.1% for national road sections. The sensitivity analysis with adverse variation in project costs and project benefits14 also indicates that the national road sections have an EIRR above 12% even with increased costs and reduced benefits. The EIRRs for provincial roads range from 12.8% to 13 14 ADB. 2008. Technical Assistance Disbursement Handbook. Manila. Sensitivity factors: 15% decrease in project benefits (vehicle operating cost and travel time savings), and 15% increase in project cost individually and in combination 7 49.9%. The overall estimated EIRR for the provincial road component is 21.3%. The sensitivity analysis of the provincial road component resulted in an EIRR above 12% in all sensitivity tests. A few of the provincial road sections, individually, may have an EIRR below 12% if there is an adverse variation in costs and benefits. However, these provincial road sections provide essential accessibility to the rural and poor population in the interior areas. Based on the findings of the economic assessment, the proposed improvements under the project are economically viable and sustainable, and are justified in social cost–benefit terms. C. Governance 22. Policy and legal. RDA, the implementing agency for the national road component, was established by the Road Development Authority Act in 1981. Under the Ministry of Highways and Road Development (MOHRD), RDA is responsible for the development and maintenance of the national highway network comprising the class A and class B trunk roads. RDA is headed by a chairperson who reports to the secretary of MOHRD. NPC, the implementing agency for the provincial road component, in accordance with the 13th Amendment to the Constitution,15 is responsible for the development and maintenance of Northern Province's provincial road network comprising class C and D roads. NPC–NPRDD carries out the functions for planning and executing rehabilitation and improvements. NPRDD is headed by a provincial director who reports to Northern Province's chief secretary through the secretary of MIDR. Northern Province was a conflict-affected region and still does not have an elected council, but elections are expected to be held very soon. This, however, is not anticipated to affect project implementation as the chief secretary of Northern Province, who is the chief executive officer with wide provincial administrative authority, will chair the project coordinating committee, which is responsible for monitoring provincial project implementation. This is similar to the arrangement adopted for ADB's ongoing project in neighboring Eastern Province16. 23. Institutional capacity. NPRDD's capacity has been supplemented through the project preparatory stage with support provided by the ongoing ADB Road Project Preparatory Facility (footnote 7), administered by the Ministry of Local Government and Provincial Councils (MLGPC), the executing agency for the provincial road component of the project. NPRDD's capacity for implementation will be supported by the provision of a project implementation consultant who will assist with the supervision of works. For long-term capacity strengthening, an associated TA will be provided to enhance organizational effectiveness with respect to developing and maintaining the provincial roads. RDA has sufficient capacity, past experience, and institutional strength to implement the project.17 24. Financial management. Financial management assessment was carried out for the implementing agencies—RDA for the national road component and NPC–NPRDD for the provincial road component. RDA has prior and ongoing experience with implementing ADBfunded projects and has satisfactory capacity in terms of project financial accounting and knowledge of ADB disbursement procedures. Within the project implementation unit for the 15 An important milestone in the long-term solution to the conflict, the 13th Amendment to the Constitution attempts to decentralize administration by devolution. It established nine provincial councils and granted them powers to plan, execute, and manage selected functions. 16 ADB. 2009. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical Assistance Grant to the Democratic Socialist Republic of Sri Lanka for the Eastern and North Central Provincial Project. Manila (Loan 2546-SRI, for $70 million, approved on 16 September). 17 RDA was established in 1981 and has been undergoing reform and institutional strengthening with assistance from ADB's Road Sector Development Project (Loan 1986-SRI), completed in December 2009, and the ongoing ADB National Highways Sector Project (Loan 2217-SRI). 8 national road component, RDA will establish a dedicated project accounting and finance team with suitably qualified accountants: a project accountant, an assistant accountant, and three account clerks. NPC–NPRDD does not have recent experience with externally funded projects and necessary capacity strengthening will be carried out before and during implementation. Within the project implementation unit for the provincial road component, NPC–NPRDD will establish a dedicated project accounting and finance team with suitably qualified accountants comprising a project accountant and two management accountants. This team will be provided with training and guidance by MLGPC staff who have practical knowledge of ADB disbursement guidelines and procedure. NPC–NPRDD's capacity will be strengthened during implementation under the capacity development TA, by implementing a financial management information system that includes accounting software, networked computers, and training. 25. Both RDA and NPC–NPRDD will establish and maintain separate project records and accounts to identify the financing resources received and expenditures made for the project, ensuring an adequate audit trail. The government's Office of Auditor General will annually audit the project accounts and related financial statements in accordance with international auditing standards. To further minimize any risks, ADB's direct payment procedure will be utilized for substantial disbursement of payments for works, goods, and consulting services. 26. Procurement and anticorruption. Procurement of goods and works will be carried out in terms of the relevant ADB guidelines, with strong and real time oversight by ADB at key steps in the procurement process. A country procurement assessment is needed and is under discussion with the government. The emphasis is on improving the procurement environment. The Bribery Act, No. 11 of 1954 (as amended), the Declaration of Asset and Liabilities Act, No. 1 of 1975, and Permanent Commission to Investigate Allegations of Bribery and Corruption Act, No 19 of 1994, provide a strong legal basis to deal with bribery and corruption. The Permanent Commission to Investigate Allegations of Bribery and Corruption is conducting decentralized bribery-related investigations in Northern and Eastern provinces to coincide with large amounts of post-conflict development assistance and investment. ADB’s Anticorruption Policy (1998, as amended to date) was explained to and discussed with the government, executing agencies (MOHRD and MLGPC), and implementing agencies (RDA and NPCNPRDD). The specific policy requirements and supplementary measures are described in the PAM. D. Poverty and Social 27. Improving road access within the project area and connectivity to other provinces in the country are expected to develop and expand agriculture, fishing, commercial activities, and other services. The beneficiary group includes subsistence farmers, poor fisherfolk, small traders, and other services providers. The project will have positive social and economic benefits for all ethnic groups in the project area. The project does not have substantive gender issues as impacts and benefits will apply equally to men and women. The project will provide equally positive benefits for both genders in terms of improved access to schools, health care institutions, and other services. The contract for civil works will include measure to ensure safe and healthy working environment for both men and women laborers. The civil works contractors will be required to implement appropriate measures with respect to compliance of equal pay for equal work for men and women, health and safety at construction sites and labor camps, and awareness program for workers on prevention of HIV. 9 E. Safeguards 1. Involuntary Resettlement and Indigenous Peoples 28. The project is categorized as category B in accordance with ADB's new Safeguard Policy Statement (2009). During the project preparatory studies and assessments, project strip plans, based on cross sections, were prepared and verified the project boundaries and limits of the new construction. Based on this, the improvement works are envisaged to be within the existing right-of-way boundaries. However, if a land acquisition requirement is identified during implementation, such as small strips of land adjacent to the road that could affect some properties, including boundary walls, business establishments, crops and trees, home gardens, or other resettlement impacts, the following steps will be taken; assess whether any type of permanent or temporary displacement—physical or economic or both—will take place because of the project, formulate a resettlement plan in consultation with affected peoples and other stakeholders for approval by ADB and disclosure, and implement the resettlement plan. The construction activities may proceed, after these requirements are met satisfactorily. 2. Environment 29. The project is classified as category B for the environment, and initial environmental examinations (IEEs), in accordance with ADB's new Safeguard Policy Statement, were conducted for each of the identified roads. Based on the findings of the IEEs, the project does not give rise to any significant adverse impacts that are irreversible, diverse, or unprecedented. All impacts can be managed through the adoption of suitable mitigation measures, which are described in the respective IEEs and environmental management plans (EMPs), which will be incorporated in the contract documents. Typical impacts associated with road construction work, such as dust generation, temporary disruption to traffic, temporary disruption of access to those living in areas adjoining work areas, and soil erosion from exposed surfaces, can be mitigated through measures described in the IEEs and EMPs. The main environmental concern with respect to this project is the availability of suitable borrow and quarry sites within the project area. Most of the suitable sites are located outside Northern Province. This results in long haulage distances. The implementing agencies will ensure that sites selected as borrow and quarry sites will have sufficient material to cater to the project needs, while not compromising the requirements of existing users within the area where the sites are located, and that haulage will be done along roads approved by respective local authorities to ensure that the roads have sufficient carrying capacity for such haulage. While the project envisages using borrow and quarry sites already in operation, if any new sites are to be opened the implementing agencies will ensure that measures described in the EMPs are adopted during selection and site closure, and relevant approvals from the respective authorities are obtained. The project road improvement proposals have been approved by the Central Environmental Authority, and its recommendations were incorporated in the EMPs and bidding documents. The public were consulted during project preparation and consultations will continue throughout implementation. 30. RDA is responsible for ensuring that EMPs are implemented in the national roads component. The Environmental and Social Division under RDA will monitor environmental compliance by the contractor on behalf of RDA. To ensure adequacy, the project implementation consultant team, including an environmental specialist, will supplement the Environmental and Social Division’s field monitoring. For the provincial roads, NPC, through NPRDD, will be responsible for ensuring implementation of the respective EMPs. Since NPRDD does not have adequately skilled staff, the project implementation consultant team for the 10 provincial component, including an environmental specialist, will help NPRDD monitor environmental compliance. F. 31. Risks and Mitigating Measures The integrated benefits and impacts are expected to outweigh the costs18. V. ASSURANCES 32. The government, MLGPC and MOHRD have assured ADB that implementation of the project shall conform to all applicable ADB policies including those concerning anticorruption measures, safeguards, gender, procurement, consulting services, and disbursement as described in detail in the PAM and loan documents. 33. The government, MOHRD, and MLGPC have agreed with ADB on certain covenants for the project, which are set forth in the loan agreements and project agreements. VI. RECOMMENDATION 34. I am satisfied that the proposed loans would comply with the Articles of Agreement of the Asian Development Bank (ADB) and recommend that the Board approve (i) the loan of $130,000,000 to the Democratic Socialist Republic of Sri Lanka for the Northern Road Connectivity Project from ADB’s ordinary capital resources, with interest to be determined in accordance with ADB’s London interbank offered rate (LIBOR)-based lending facility; for a term of 25 years, including a grace period of 5 years; and such other terms and conditions as are substantially in accordance with those set forth in the draft loan and project agreements presented to the Board; and (ii) the loan in various currencies equivalent to SDR {amount to be determined and inserted} to the Democratic Socialist Republic of Sri Lanka for the Northern Road Connectivity Project from ADB’s Special Funds resources with an interest charge at the rate of 1.0% per annum during the grace period and 1.5% per annum thereafter; for a term of 32 years, including a grace period of 8 years; and such other terms and conditions as are substantially in accordance with those set forth in the draft loan and project agreements presented to the Board. 35. {To Insert recommendation for waiver of eligibility requirement for domestic preference}. Haruhiko Kuroda President {Date19} 18 Major risks and mitigating measures are summarized in the Risk Assessment and Risk Management Plan (Appendix 2) 19 {Use date of the President's approval of the RRP for submission to the Board.} Appendix 1 11 DESIGN AND MONITORING FRAMEWORK Design Summary Impact Balanced and inclusive growth in Northern Province Performance Targets and Indicators with Baselines By 2018: Per capita annual income in Northern Province increases from $952 to $1,688 and percentage of national average from 50% to 80% Data Sources and Reporting Mechanisms Publications of the Ministry of Finance and Planning Publications of the Ministry of Local Government and Provincial Councils Assumptions and Risks Assumption Policy directions of the government's 10 Year Development Framework will remain valid. Risk Government investments are not adequate. Outcome Improved road connectivity within Northern Province and to the southern region of the country. By project completion (2015): Travel time on project roads reduced by an average of 20% in Northern Province and North Central Province. Travel time from Colombo (national capital) to Jaffna (Northern provincial capital) is reduced by 38% (from 13 hours to 8 hours). Accident rate (fatalities by vehiclekm) is reduced by 20% from 2010 rate. Outputs 1. National highways are rehabilitated. By project completion (2015): Approximately 170 km of national highways in North Central Province and Northern Province are rehabilitated. Approximately 140 km of provincial roads in Northern Province are rehabilitated, and selected bridges rehabilitated or replaced. Engineer's progress reports Audit reports RDA's and NPRDD's project progress and completion reports Assumption Qualified contractors are available. NPRDD's completion report Road Development Authority, Ministry of Highways and Road Development Project performance monitoring system Assumptions The government remains committed to restoring and sustaining vital infrastructure in Northern Province. 2. Provincial roads are rehabilitated and selected bridge links are rehabilitated and replaced. 3. NPRDD's offices are rehabilitated. NPRDD's district offices in Mannar and Vavuniya are rehabilitated. 12 Appendix 1 Activities 1. Rehabilitation and Improvement of National Roads 1.1 Contract award of civil works by October 2010 1.2 Completion of all construction and maintenance works by June 2015 2. Rehabilitation of Provincial Roads, Bridges, and NPRDD Offices 2.1 Contract award of civil works by July 2010 2.2 Completion of all construction and maintenance works by June 2015 3. Project Management 3.1 Engagement of project implementation consultant by July 2010 3.2 Project management on-the-job training completed by December 2012 Inputs ADB: $154.4 million Government: $18.6 million (taxes and duties) NCP = North Central Province, NPRDD = Northern Provincial Road Development Department, RDA = Road Development Authority. Source: Asian Development Bank Appendix 2 13 LIST OF LINKED DOCUMENTS 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Loan and Project Agreements Sector Analysis Project Administration Manual Project Classification Summary Contribution to the Output Aggregates of the ADB Results Framework Development Coordination Economic Analysis Country Economic Indicators Summary Poverty Reduction and Social Strategy Resettlement Framework Risk Assessment and Risk Management Plan SUBSECTOR ANALYSIS (Sri Lanka: Northern Road Connectivity Project) 1. For the road transport subsector in Sri Lanka, the end of nearly three decades of civil war in the country's northern and eastern provinces presents special challenges as well as opportunities. The prolonged neglect and underinvestment in the conflict-affected region have caused the roads to lie in a state of total disrepair requiring immediate and sustained investment. Particularly in Northern Province, the damage to physical infrastructure was severe and extensive due to the intensity of conflict toward the end of the war. As the Government of Sri Lanka is carrying out the resettlement of the displaced population in the region, reestablishment of linkages to social services and markets through a robust road network is essential for the return of normal socioeconomic activities and civil life. The Northern Road Connectivity Project will improve road connectivity in Northern Province—restoring mobility of people and goods, providing access to social services and markets, and enhancing nationwide connectivity to help integrate the country A. Performance Indicators and Analysis 2. Northern Province’s share of the national gross domestic product is about 2.9%. Per capita income is about $952 (as of 2008), which is approximately half of the national average with the lowest growth rate in the country1. At present, the majority of people living in Northern Province earn their livelihood as farmers, fisherfolk, or professionals in the civil and business sectors. Small-scale industries such as chemicals, light manufacturing, cement, and textiles, which were in operation prior to the conflict, have yet to resume operation. Table 1 summarizes Northern Province's key statistics. Table 1: Geographic and Demographic Details of Northern Province and the Country Feature Area (km2) Road density(km/km2) Population (million) Population density (people/km2) GDP (SLRs billion) in 2008 Per capita income (2008, SLRs/year) Per capita income (2008, $/year) Primary industries km = kilometer, km2 = square kilometer. Source: Central Bank, Sri Lanka. Northern Province 8,884 0.48 1.041 117.2 128 109,530 952 Agriculture (rice), livestock, fisheries Sri Lanka 65,610 1.50 18.750 296.0 4,411 218,161 1,897 Manufacturing, plantation (tea, rubber, coconut), tourism, garments 1. Road Network and Traffic Volumes 3. The road network in Sri Lanka is classified into national, provincial, and local authority roads according to functionality and management responsibility. National roads, comprising class A (trunk roads) and class B roads (main roads), are managed by the central government through the Road Development Authority (RDA). The provincial road network, comprising class C and D, is managed by the respective provincial councils. 4. An overview of the road network in Northern Province is provided in Table 2. 1 2007. Central Bank of Sri Lanka, Provincial GDP 2007. Sri Lanka. 2 Table 2: Road Network in Northern Province Item National roads (class A and B) Provincial roads (class C and D) Local government roads (class E) Total Northern Province (km) 1,271 1,960 5,600 8,831 Sri Lanka (km) 11,671 15,532 64,659 91,862 Northern Province/Sri Lanka (%) 10.9 12.6 8.7 9.6 Source: Road Development Department, Northern Province, 2008. 5. Northern Province is served by several important national roads, which facilitate connectivity within the province and to southern regions of the country. The most important arterial road is A009, which runs north–south from Kandy in Central Province to Jaffna in Northern Province (northernmost district of Northern Province). It provides connectivity for regional centers within the province such as Jaffna, Kilinochchi, Mankulam, Paranthan Vavuniya, and, and to several important regional centers outside Northern Province such as Anuradhapura, Dambulla, and Matale. Other important national roads in Northern Province include A032 (along the western provincial coast from Mannar to Jaffna), A034 (connecting Mullaitivu located on the eastern seaboard to A009 at Mankulam), and A035 (connecting Mullaitivu to A009 at Parantan). 6. Northern Province's provincial road network comprises 855.25 kilometers (km) of gravel roads and 1,104.75 km of metalled and tarred roads with approximately 60 bridges and 4,000 culverts. Due to neglect and underinvestment during the prolonged conflict in the region, about 90% of the national and provincial roads in Northern Province are reported to be in less than satisfactory condition. Table 3 summarizes the present condition of the road network by surfacing type and lane width. Table 3: Condition of Roads in Northern Province Category Type of Surface National (No updated records on surface types) Provincial Gravel, earth road (single lane 2–4 m) Metalled and tarred (single lane 2–4 m) Total Total Km 1,271.00 855.25 1,104.75 3,231.00 % of Length by Road Condition Good Fair Poor 10 20 70 10 15 75 10 15 75 10 17 73 km = kilometer, m = meter. Source: Road Development Department, Northern Province, 2008. 7. In 2007, the estimated fleet of motorized vehicles in Northern Province was 70,141 (3.2% of the fleet in the country). Overall traffic growth has fluctuated with the level of conflict, but the two-wheeler and three-wheeler fleets have grown steadily over the past 10 years. This indicates that the population is gradually becoming motorized by acquiring low-cost private modes of transport. 2. Road Asset Management 8. National road. RDA is a statutory body under the Ministry of Highways and Road Development incorporated under the RDA Act No. 73 of 1981. RDA is the premier highway authority in the country and is responsible for the maintenance and development of the national highway network. It is also responsible for the planning, design, and construction of new highways, expressways, and bridges. It is managed by a chairperson and board of members appointed by the minister of highways and road development. A general manager (the chief executive officer) 3 is assisted by six additional general managers and 14 directors to carry out RDA’s various functions. RDA has been undergoing reform and institutional strengthening under ADB's Road Sector Development Project2 and the ongoing National Highway Sector Project3. Table 4: Vehicle Fleet in Northern Province, 2007 Vehicle Type Omnibuses Private coaches Dual purpose vehicles Private cars Land vehicles Goods transport vehicles Motor cycles Three-wheelers Others Total Source: Central Bank, Sri Lanka Northern Province 538 398 1,255 1,418 4,177 1,916 57,258 2,864 317 70,141 % of Sri Lanka 3.4 1.6 0.7 0.6 4.5 1.1 5.1 0.8 5.5 3.2 9. Provincial road. NPC-NPRDD is responsible for the construction, maintenance, and administration of the provincial road network. It is headed by a provincial director who works directly under the authority of the secretary of the Provincial Ministry of Infrastructure Development and Reconstruction. Three of the five chief engineers in NPRDD are assigned for the execution of regional works in Jaffna, Killinochchi, and Vavuniya districts. Each chief engineer is supported by two executive engineers in the execution of road works in their respective districts. The chief engineer in Vavuniya supervises two districts through the respective executive engineers located in Vavuniya and Mannar. Due to the prolonged conflict, NPRDD is generally weak and has not been provided with any substantial capacity strengthening programs. 3. Maintenance Expenditure 10. National roads. Periodic and routine maintenance are funded through the Road Maintenance Trust Fund (RMTF), established in late 2005 with ADB assistance. Based on a schedule prepared by assessing the network condition, RDA releases a predefined allocation for each divisional office after assessing the value of the maintenance requirement. Annual allocation and expenditure for road maintenance in Northern Province during 2004–2009 is provided in Table 5. Table 5: Utilization of Road Sector Maintenance Funds by the Road Development Authority in Northern Province Source Road Maintenance Trust Fund Allocation Expenditure Utilization (%) 2005 179.0 154.1 86.1 2006 259.6 109.1 42.0 SLRs Million 2007 2008 228.6 211.8 102.7 108.8 44.9 51.4 2009 265.5 132.0 49.7 Source: Planning Division, Road Development Authority. 2 3 ADB. 2002. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical Assistance Grants to the Democratic Socialist Republic of Sri Lanka for the Road Sector Development Project. Manila (Loan 1986-SRI, TA 4074-SRI, and TA 4075-SRI; approved on 19 December). ADB. 2005. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical Assistance Grant to the Democratic Socialist Republic of Sri Lanka for the National Highways Sector Project. Manila (Loan 2217-SRI and TA 4736-SRI, approved on 15 December). 4 11. Provincial roads. NPRDD executes routine maintenance work on the provincial road network by utilizing the road maintenance component of recurrent expenses provided through the block grant received from the Treasury. Utilization of road sector maintenance funds during last 5 years is shown in Table 6. Table 6: Utilization of Road Sector Maintenance Funds, Northern Province Source Block Grant-Road Maintenance Component Allocation Expenditure Utilization (%) 2005 34.00 33.90 99.7 2006 50.00 49.70 99.4 SLRs Million 2007 2008 24.00 35.00 23.60 34.92 98.3 99.7 2009 40.0 31.2 78.0 Source: Provincial Road Development Department, Northern Province. 12. Annually, NPRDD prepares a work program for routine maintenance and improvements to the provincial road network, anticipating allocations of funds through the national and provincial budgets. However, NPRDD often does not receive the total recurrent or capital allocations made for the year and hence a significant part of the work program has to be continued over or be deferred to the following year. To keep programs in an active state, NPRDD has adopted a multiyear improvement program that can be completed in stages over a period of years depending on the availability of funds. B. Key Problems and Opportunities 1. Northern Road Connectivity 13. Poor road connectivity is a major constraint to achieving one of the Government's main development goals: inclusive socioeconomic development. As 80% of the population lives in rural areas, limited connectivity to economic opportunities and social services widens inequality among geographic regions. Particularly in Northern Province, neglect and underinvestment during the prolonged period of conflict have caused the roads to lie in a state of total disrepair. Also, the main arterial roads connecting the north and the south are inadequate due to insufficient investment in rehabilitation. This results in low travel speed and poor service, discouraging long distance travel to and from the north, and ultimately hindering the spread of economic activities and development. 14. The project is to rehabilitate about 140 km of provincial roads and 108 km of national highways within Northern Province, and improve about 62 km of link national highways in North Central Province including a section of A009 that serves as the main arterial highway connecting to south. The project is timely and targeted—to help restore accessibility to essential social services for rural residents of Northern Province and to improve its nationwide connectivity. It will facilitate economic growth and contribute to reducing disparities in Sri Lanka, consistent with the key goals of the government’s 10-Year Development Framework (2007–2016), which emphasizes equitable growth. 2. Provincial Road Management 15. As the entire inventory of provincial roads is freed of security restrictions, NPRDD's capacity needs to be strengthened for it to effectively carry out its main responsibility of managing and maintaining the provincial road network efficiently and economically. To request allocation of funds through the national and provincial budgets, NPRDD prepares a work program for routine maintenance and improvements, but the budget is estimated based on a 5 generalized scope of work for important roads only. In this regard, a road maintenance management system needs to be developed and implemented with a comprehensive road inventory and condition database—a prerequisite for preparing annual or rolling road rehabilitation and maintenance programs along with associated budgets. Also, NPRDD's office infrastructure, particularly the district offices, is in a state of disrepair without a functioning management information system. It lacks vehicles necessary to conduct supervision of large-scale works project. 16. In conjunction with the project, a capacity development technical assistance will be provided with the objective of strengthening the capacity of NPRDD—optimizing organizational arrangements; modernizing the financial and management information system; implementing a functional road maintenance management system; and providing training in project management, contract administration, financial management, performance-based maintenance, and road safety. For better and focused institutional strengthening, the capacity development technical assistance will concentrate on NPRDD. This approach is consistent with lessons from ADB's Road Sector Development Project completed in December 2009. Institutional strengthening for RDA is ongoing under the ADB's National Highways Sector Project. 3. Road Financing 17. In general, road expenditures are funded from central government funds, foreign or external funds, and provincial revenues. While rehabilitation of provincial roads has relied heavily on foreign-funded projects, existing domestic funding is insufficient for provincial road agencies to maintain their road networks. In Northern Province, during the last 5 years, the average annual maintenance allocation comprised SLRs101 million ($0.9 million) for national roads, facilitated through the RMTF, and SLRs35 million ($0.3 million) for the provincial roads from a portion of the government's block grant allocated by the Northern Provincial Council. Although these allocations appear substantially low, the actual requirement during the previous 5 years is difficult to assess as Northern Province experienced prolonged conflict and only a small percentage of roads were in maintainable condition. 18. However, as substantial portions of Northern Province's national and provincial roads are rehabilitated under the project as well as other projects funded by external sources, road budgets need to be increased and a greater amount of the budget assigned to road maintenance based on road conditions. Proper planning needs to be developed, and the government's commitment to provide adequate financing for maintenance secured. 19. The RMTF was established in late 2005 to finance routine and periodic road maintenance using proceeds from fuel levies. Although in its infancy, the RMTF's current funding is not sufficient to meet actual maintenance requirements for national roads and it does not cover provincial roads. Currently, with World Bank assistance, the RMTF’s effectiveness is being reviewed with respect to fund management, fuel levy, and coverage for provincial roads. ADB and the World Bank have conducted coordinated policy dialogue on this matter. 20. To overcome the inadequacy and inconsistency of road maintenance financing, performance-based maintenance has been practiced in several road projects in other provinces and results are reasonably satisfactory. Under the project, the civil works contracts for national and provincial roads will include provision for 3-year performance-based maintenance upon completion. This is intended to increase the quality of construction and efficiency of maintenance work, and lessen the initial maintenance burden. Project Administration Manual Project Number: 42254-01 Loan and/or Grant Number(s): {LXXXX (OCR); LXXXX (ADF) – to be determined} March 2010 Sri Lanka: Northern Road Connectivity Project 2 Contents ABBREVIATIONS I. PROJECT DESCRIPTION 4 5 A. B. C. II. Project Rational, Location and Beneficiaries Impact and Outcome Outputs Project Readiness Activities Overall Project Implementation Plan Project Stakeholders – Roles and Responsibilities Key Persons Involved in Implementation Project Organization Structure Cost Estimates by Expenditure Category Allocation and Withdrawal of Loan Proceeds Fund Flow Diagram Financial Management Assessment Disbursement Accounting Auditing Advance Contracting Procurement of Goods, Works and Consulting Services Procurement Plan Consultant's Terms of Reference 5 5 5 7 IMPLEMENTATION PLANS A. B. III. 7 8 9 PROJECT MANAGEMENT ARRANGEMENTS A. B. C. IV. 9 10 12 15 COSTS AND FINANCING A. B. C. V. 15 17 18 20 FINANCIAL MANAGEMENT A. B. C. D. VI. 20 20 21 22 23 PROCUREMENT AND CONSULTING SERVICES A. B. C. D. VII. VIII. 23 25 26 26 27 29 SAFEGUARDS PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION A. B. C. D. E. IX. X. XI. XII. Project Design and Monitoring Framework Monitoring Evaluation Reporting Stakeholder Communication Strategy 29 31 31 32 32 32 33 33 34 ANTICORRUPTION POLICY ACCOUNTABILITY MECHANISM RECORD OF PAM CHANGES ATTACHMENTS Attachment A: Attachment B: Attachment C: Attachment D: Procurement Plan Outline Terms of Reference for PIC (National Road) Outline Terms of Reference for PIC (Provincial Road) Outline Terms of Reference for Capacity TA Consultant 34 34 34 34 3 Project Administration Manual Purpose and Process The project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, and in accordance with Government and Asian Development Bank (ADB) policies and procedures. The PAM includes references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM. The executing and implementing agencies are wholly responsible for the implementation of ADB financed projects, as agreed jointly between the borrower and ADB, and in accordance with Government and ADB’s policies and procedures. ADB staff is responsible to support implementation including compliance by executing and implementing agencies of their obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures. At Loan Negotiations the borrower and ADB shall agree to the PAM and ensure consistency with the Loan Agreements. Such agreement shall be reflected in the minutes of the Loan Negotiations. In the event of any discrepancy or contradiction between the PAM and the Loan Agreements, the provisions of the Loan Agreements shall prevail. After ADB Board approval of the project's report and recommendations of the President changes in implementation arrangements are subject to agreement and approval pursuant to relevant Government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval they will be subsequently incorporated in the PAM. 4 Abbreviations ADB ADF EA EMP ESD FGIA IA MLGPC MOHRD NCP NH NP NPC NPRDD OCR PAM PIC PR RDA RP SGIA SOE SPS = = = = = = = = = = = = = = = = = = = = = = = Asian Development Bank Asian Development Fund executing agency environmental management plan Environmental and Social Division first generation imprest account implementing agency Ministry of Local Government and Provincial Councils Ministry of Highways and Roads Development north central province national highway northern province Northern Provincial Council Northern Provincial Road Development Department ordinary resource capital project administration manual project implementation consultant provincial road Road Development Authority resettlement plan second generation imprest accounts statement of expenditure Safeguard Policy Statement 5 I. A. PROJECT DESCRIPTION Project Rational, Location and Beneficiaries 1. NP is one of the worst conflict affected region, emerging from the nearly three decades of civil war. The damage to physical infrastructure has been severe and extensive, and particularly the road network lies in a state of total disrepair due to prolonged neglect and underinvestment. People in this region no longer have access to markets or basic social services as they once had and the transport of goods has dramatically slowed. The mobility between NP and the country's southern region is also poor due to the substantial travel time required as the linking national arterial roads are in inadequate condition, which has hindered the spread of economic activities and development. NP has the highest poverty level in the country. 2. The proposed Project is to rehabilitate about 140 km of provincial roads in Northern Province (NP) and 170 km of national roads in NP and North Central Province (NCP). The proposed Project is timely and targeted - to improve road connectivity in the country's conflict affected area in the northern region, helping to restore access to basic social services and markets. It will facilitate economic growth and contribute to reducing disparities in Sri Lanka, consistent with the key goals of the Government’s 10-Year Development Framework (20072016), which emphasizes equitable growth. 3. The Project supports the strategic objective established in ADB's Country Policy and Strategy (2009-2011): To improve transport system in Sri Lanka, promoting regionally balanced and socially inclusive economic growth. The Project is included in the Country Operations Business Plan, Sri Lanka (2010-2012). B. Impact and Outcome 4. In support of the CPS outcome, the Project impact will be balanced and inclusive growth in the NP. The Project's immediate outcome will be improved road connectivity within NP and to the southern region of the country. C. 5. Outputs The Project outputs are: (i) (ii) (iii) 6. approximately 170 km of national highways in NP and NCP rehabilitated; approximately 140 km of provincial roads in NP rehabilitated, and selected bridge links rehabilitated or replaced; and NPRDD offices are rehabilitated. Project roads and their location are described below: 6 Province / Road No. Road Section Name District Roads A009 Dambulla-Thonigala NCP A009 Thonigala -Galkulama NCP A020 Anuradhapura-Rembewa NCP Subtotal: NH-CP4 NH-CP5 NH-CP6 NH-CP7 NH-CP8 NP NP NP NP NP A032 B268 B437 A034 A034 Navatkuli-Keraitivu Manipai-Kaithady Vallai-Telippalai-Araly Subtotal: Mankulam-Mullaittivu (1/2) Mankulam-Mullaittivu (2/2) Total Length (km) 23.35 24.17 14.50 62.02 17.40 14.02 27.40 58.82 25.00 25.00 Package National NH-CP1 NH-CP2 NH-CP3 Subtotal for National Roads: 170.84 Provincial Roads PR-CP1 NP Mannar 15.45 NPMAC001 NPMAC005 NPMAC007 NPMAC010 NPMAC020 Thalimannar village Road Olaithoduvai Road Thoddavelli-Malupadi Road Pesalai-Vauadipanai Road Karisal Road PR-CP2 PR-CP3 NP Mannar NP Mannar 26.50 NPMAC029 Veppankulam-Periyamurippu Road 17.32 NPMAC002 NPMAC003 NPMAC004 NPMAC008 NPMAC012 NPMAC014 NPMAC017 NPMAC034 NPMAC044 Espalnde Road South Bar Road Mannar-Thaivupadu-Tharanpuram Vankalai-Sirrunavatkulam Road Pallimunai Beach Road Uyilankulam-Manadkulam-Nanaddan Puthukamam Road Murungan - Nanaddan Approach Road to Public Building PR-CP4 NP Vavuniya NPVAC027 Intperiyakulam- Puthoor Road NPVAC029 Cheddikulam-Thudarikulam NPVAC034 Pandichurichchan-Andiyapuliyankulam 26.00 PR-CP5 NP Vavuniya NPVAC007 Madhukandai- Iretperiyakulam Road NPVAC010 Mahiankulan-Pallamadu Road 28.80 PR-CP6 NP Vavuniya NPVAC014 Puthoor- Palamoddai Road NPVAC032 Mankulam-Maruthamadhu-Mingettigama 27.20 Subtotal for Provincial Roads: 141.27 Total: 312.11 7 II. A. 7. Mon Year IMPLEMENTATION PLANS Project Readiness Activities The project readiness activities, responsibilities, and estimated timeframe as follows: Date Project Processing Milestones Advanced Procurement Activities Project Provincial Road National Roads Implementation Components Components Consultant (PIC) RDA (National) NPC/NPRDD RDA MLGPC-PCU (Provincial) Responsible by: Dec 2009 ADB 18 Concept Paper Review Meeting approve advance contracting ►Advertise EOIs Jan 2010 29 0317 Consultant's preparatory outputs Fact-Finding Mission MOU and Preliminary PAM Feb ►Shortlist Report Mar ►Issue RFP 23 Apr 01 Management Review Meeting ►Invite bids May ►Send report & recommendation of the President & Loan Agreement to Government of Sri Lanka ►Proposal 26-27 ►Loan Negotiations Submission ►Technical Eval. ►Financial open 31 ►Board Consideration/Approval ►Bid submission ►Submit tech evaluation ►Financial open ►Invite bids Jun 14 30 Jul ►Loan Signing ►Loan Effective ►Contract Sign ►Commence ►Submit financial evaluation ►Bid submission ►Contract sign Aug ►Commence works Sep ►Submit tech evaluation ►Financial open ►Submit financial evaluation Oct ►Contract sign Nov ►Commence works ADB = Asian Development Bank, CSRN = consulting services recruitment notice, EOI = expression of interest, MLGPC = Ministry of Local Government and Provincial Councils, MOU = memorandum of understanding, NPC = Northern Provincial Council, NPRDD = Northern Provincial Road Development Department, PAM = project administration manual, PCU = project coordination unit, PIC = project implementation consultant, RDA = Road Development Authority 8 B. IMPLEMENTATION SCHEDULE 2010 Year 1 Year 2 Year 3 Year 4 Year 5 2011 2012 2013 2014 2015 J F MA M J J A S O N D J F MA M J J A S O N D J F MA M J J A S O N D J F MA M J J A S O N D J F MA M J J A S ON D J F MA M J J A S ON D Item A. Project Preparation Loan Processing and Approval by ADB Loan Signing and Effectiveness B. Project Management 1. Recruit Project Implementation Consultants 2. Consulting Services Execution C. Civil Works Overall Project Implementation Plan 1. Procurement (Advance Action) 2. Construction 3. Performance-Based Maintenance D. TA for Capacity Development for NPRDD 1. TA Consultant Recruitment 2. Consulting Services Defects & Liability Period ADB = Asian Development Bank, TA=technical assistance, NPRDD=Northern Provincial Road Development Department Source: Asian Development Bank 9 III. A. PROJECT MANAGEMENT ARRANGEMENTS Project Stakeholders – Roles and Responsibilities Project Stakeholders Executing agency (EA) (National Road Component) Management Roles and Responsibilities Ministry of Highway and Roads Development (MOHRD) overall coordination of project implementation interagency coordination Road Development Authority (RDA) Implementing agency (IA) (National Road Component) day-to-day project management consultant recruitment and procurement of works withdrawal applications project progress reports maintaining project accounts and complete loan financial records Executing agency Ministry of Local Government and Provincial Councils (Provincial Road Component) (MLGPC) overall coordination of project implementation interagency coordination consultant recruitment Implementing agency Northern Provincial Council (NPC) - NPRDD (Provincial Road Component) day-to-day project management procurement of works withdrawal applications project progress reports maintaining project accounts and complete loan financial records oversee and monitor project implementation as well National Steering Committee as the adequacy of overall project funding (co-chaired by MOHRD and hold meeting as required but at least quarterly to MLGPC with representation discuss overall status and project issues, and when from Ministry of Finance and and as necessary invite representatives from the Planning, External Resource Central Environmental Agency, Geological Survey Department, NPD, FC, NPC, and Mines Bureau, and utilities (electricity, NPRDD) telecommunications, water, and drainage) for coordination purposes monitoring project implementation at the provincial Provincial Project level Coordination Committee (chaired by the Chief Secretary of the Northern Province with representation from MIRD, NPRDD, Utilities) 10 Project Stakeholders ADB Management Roles and Responsibilities Monitor and review overall implementation of the project in consultation with the EAs/IAs including: the project implementation schedule; actions required in terms of poverty reduction, environmental impacts, and resettlement plans (RPs) if applicable; timeliness of budgetary allocations and counterpart funding; project expenditures; progress with procurement and disbursement; statement of expenditure when applicable; compliance with particular loan covenants; and the likelihood of attaining the project’s immediate development objectives. B. Key Persons Involved in Implementation Executing Agencies MOHRD Mr. Wasantha Karannagoda Secretary Ministry of Highways and Road Development Sethsiripaya Office Complex P.O. Box 53, Battaramulla Sri Lanka. Telephone: 94-11-2871821-30 Fax: 94-11-2862705 Mr. R.W.R. Pemasiri General Manager, Road Development Authority No. 756 B/1 Parliament Road, Pelawatta Battaramulla, Sri Lanka Mr. S. Chandrapalan Project Director, Road Development Authority Telephone: 941 1 278 7915 Email address:
[email protected] No. 756 B/1 Parliament Road, Pelawatta Battaramulla, Sri Lanka 11 MLGPC Mr. Cashian Herath Secretary No. 330, Union Place Colombo 02, Sri Lanka Mr. Eric Illayapparachchi Additional Secretary (Development) Telephone: 941 0 230 3723 Email address:
[email protected] No. 330, Union Place Colombo 02, Sri Lanka Mr. J.A. Jayarathne Project Coordinator No. 330, Union Place Colombo 2, Sri Lanka ADB Transport and Communications Division of South Asia Regional Department (SATC) Mission Leader Sri Widowati Director, SATC Telephone No.: (63) 2 632 6794 Email address:
[email protected] Dong-Kyu Lee Transport Specialist, SATC Telephone No.: (63) 2 632 5992 Email address:
[email protected] Note: Update as changes occur 12 C. Project Organization Structure 8. The flow chart below shows the reporting lines essential internal structures of key organizations involved in implementation, including the national steering committee, executing agencies, provincial coordinating committee, implementing agencies, and project implementation units. National Steering Committee MOHRD (Co-Chair) MOFP, ERD NPD, FC MLGPC (Co-Chair) NPC MIDR/NPRDD Utility agencies Asian Development Bank National Roads Component Ministry of Highways and Road Development Executing Agency Provincial Roads Component Ministry of Local Government and Provincial Councils Executing Agency Project Coordinating Unit Road Development Authority Northern Provincial Council - Provincial Road Development Department Provincial Coordinating Committee Chief Secretary MIRD/Secretary PRDD Utility agencies Implementing Agency Project Implementation Unit supported by Project Implementation Consultant Implementing Agency Project Implementation Unit supported by Project Implementation Consultant 9. The following flow charts show the reporting lines essential internal structures of the project implementation units and their staffing assignments. 13 Project Implementation Organization – National Roads Road Development Authority (RDA) Implementing Agency General Manager Environmental & Social Division (ESD) Social/Environmental Officer [3] Project Implementation Unit (PIU) Project Director [1] Accounting/Finance Project Accountant [4] Key positions: Assist. Accountant [4A] Accounts Clerk 1 [4B] Accounts Clerk 2 [4C] Accounts Clerk 3 [4D] Project Supervision Deputy Project Director [2-1] Deputy Project Director [2-2] Key positions: Assistant Engineer 1 [2A] Assistant Engineer 2 [2B] Assistant Engineer 3 [2C] Administration Admin Manager [5] Key positions: Admin Assistant 1 [5A ] Admin Assistant 2 [5B] Admin Assistant 3 [5C] Office Aid [5D] Office Aid [5E] Staffing Assignment and Recruitment Plan as of 16 February 2010: Serial No. Position Name Existing New Recruit [timeframe] 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 [1] [2-1] [2-2] [2A] [2B] [2C] [3] [4] [4A] [4B] [4C] [4D] [5] [5A] [5B] [5C] [5D] [5E] Project Director Deputy Project Director Deputy Project Director Assistant Engineer 1 Assistant Engineer 2 Assistant Engineer 3 Social/Environmental Officer Project Accountant Assistant Accountant Accounts Clerk 1 Accounts Clerk 2 Accounts Clerk 3 Admin Manager Admin Assistant 1 Admin Assistant 2 Admin Assistant 3 Office Aid 1 Office Aid 2 Mr. S. Chandrapalan tbd tbd Mr. U. A. Munasinghe tbd tbd Mr. S. Gajesinghe Mr. N. A. Wijeratne tbd Ms. K Chandrakanthi Ms. W. Kodagoda tbd tbd Ms. W.A.G. Priyanthika Mr. M.H.G. Jayasinghe tbd Mr. I Nihal Wasantha Ms. Y.S.D.Jayasundara appointed by May/2010 by May/2010 appointed by May/2010 by May/2010 appointed appointed by May/2010 appointed appointed by May/2010 by May/2010 appointed appointed by May/2010 appointed appointed 14 Project Implementation Organization – Provincial Roads Project Coordinating Committee NPC Chief Secretary (Chair) Northern Provincial Council - Northern Provincial Road Development Department Implementing Agency Provincial Project Coordinator [A] Secretary, Provincial Ministry of Infrastructure Development & Reconstruction (MIDR) Project Implementation Unit (PIU) Project Director [A1] (Provincial Director) Accounting/Finance Project Accountant [B] Key positions: Management Assistant (Accounts) [B1] Management Assistant (Accounts) [B2] Project Supervision Deputy Project Director [C] Key positions: Vavuniya District Project Engineer [C1] Technical Officer [C3] Mgmnt. Assistant [C5] Mannar District Project Engineer [C2] Technical Officer [C4] Mgmnt. Assistant [C6] Administration Deputy Project Director – PIU (ADB-PRP) [D] Key positions: Project Engineer [D1] Project Secretary [D2] Management Assistant (Administration) [D3] Management Assistant (contracts) [D4] Management Assistant (IT) [D5] Staffing Assignments and Recruitment Plan as of 16 February 2010: Sr. No. [A] [A1] [B] [B1] [B2] [C] [C1] [C2] [C3] [C4] [C5] [C6] [D] [D1] [D1] [D2] [D3] [D4] Position Secretary, MIDR Project Director Project Accountant Management Assistant (accounts) Management Assistant (accounts) Deputy Project Director Project Engineer - Vavuniya Project Engineer – Mannar Technical Officer – Vavuniya Technical Officer – Mannar Management Assist.- Vavuniya Management Assist.- Mannar Deputy Project Director - Admin Project Engineer - PIU Office Project Secretary Management Assistant (admini) Management Assistant (contracts) Management Assistant (IT) Name Eng.A.E.S. Rajendra Eng.T.Sivarajalingam Mr. N.Jeyaganesh Mr. S.Ravishangar tbd Eng.V.Jegananthan Eng.S.Sainthan Eng.C.Amirthaseelan Eng.C.Amirthaseelan Mr.S.Senkaialiyan Ms.S.Tharjana tbd Eng.N.Apiramy tbd Mr.J.Rajkulenson Ms.U.Hema tbd Existing appointed appointed appointed appointed by May/2010 appointed appointed appointed appointed appointed appointed by May/2010 by May/2010 by May/2010 appointed appointed by May/2010 New Recruit [timeframe] 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 15 IV. COSTS AND FINANCING 10. The project is estimated to cost $ 173 million, including taxes and duties of about $18.6 million to be financed by the Government. The total cost includes physical and price contingencies, and interest and other charges during implementation. The investment plan is summarized in Table 1. Table 1: Project Investment Plan ($ million) Amounta Item b Base Cost A. 1a. national roads 115.62 1b. provincial roads 21.37 2. equipment - vehicles 0.22 3. consulting services 7.20 4. project management 0.80 Subtotal (A) 145.21 Contingenciesc B. 23.03 Financing Charges During Implementation d C. 4.76 Total (A+B+C) 173.00 Includes taxes and duties of $18.6 million to be financed from government resources. In early 2010 prices. c Physical contingencies computed at 10.0% for civil works and equipment; and consulting services contract values. Price contingencies computed at 2.0% on foreign exchange costs and 7.0% on local currency costs; includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. d Includes interest and commitment charges. Interest which will be capitalized during implementation period has been computed at the 5-year forward London interbank offered rate plus an Effective Contractual Spread of 0.2% per annum for OCR loan; and at 1.0% per annum for ADF loan. Commitment charges for OCR loan are 0.15% to be charged on the undisbursed loan amount. Source: Staff Estimates b a 11. The Government has requested a loan of $130 million from ADB’s ordinary capital resources (OCR) to finance civil works for national roads, recurrent costs for project management, consulting services, and a loan of Special Drawing Right (SDR) {amount to be determined and inserted} ($24.4 million equivalent) from the ADB's Special Funds resources to finance civil works for provincial roads, recurrent costs for project management, and capacity development equipment. The Government will provide $ 18.6 million for local taxes and duties. The ADB and the Government will finance 89% and 11% of total project investment cost, respectively. The financing plan for the Project is in Table 2. Table 2: Financing Plan Amount ($ million) Source Asian Development Bank, OCR Loan 130.00 Asian Development Bank, ADF Loan 24.40 Government 18.60 Total 173.00 OCR = ordinary capital resource, ADF = Asian Development Fund Source: Staff estimate Share of Total (%) 75 14 11 100 A. Cost Estimates by Expenditure Category 12. The detailed cost estimates by expenditure category and detailed cost estimates by financier are presented below, including the magnitudes of physical contingencies as a percentage of the base costs and of the inflation factors used in estimating price contingencies. 16 DETAILED COST ESTIMATES AND FINANCING PLAN ($ million) Total Cost 136.99 115.62 21.37 0.22 0.22 7.20 3.89 3.31 144.41 0.80 0.20 0.20 0.40 0.80 15.88 7.15 23.03 4.44 0.32 0.00 4.76 173.00 3.56 0.32 0.00 3.88 130.00 80.18 100.00 0.00 81.51 75.14 0.88 0.00 0.00 0.88 24.40 19.82 0.00 0.00 18.49 14.10 11.47 5.42 16.89 72.22 75.85 73.34 2.68 0.96 3.64 16.87 13.43 15.81 14.15 6.38 20.53 4.44 0.32 0.00 4.76 154.40 0.20 0.20 0.00 0.00 0.20 25.00 100.00 0.00 0.00 25.00 0.60 0.00 0.20 0.40 0.60 75.00 0.00 100.00 100.00 75.00 0.80 0.20 0.20 0.40 0.80 0.00 0.00 0.00 0.00 0.00 1.73 0.77 2.50 0.00 0.00 0.00 0.00 18.60 100.00 100.00 100.00 100.00 100.00 89.09 89.29 89.15 100.00 100.00 0.00 100.00 89.25 103.23 103.23 0.00 0.00 0.00 5.80 3.10 2.70 109.03 75.36 89.28 0.00 0.00 0.00 80.56 79.69 81.57 75.50 19.08 0.00 19.08 0.20 0.20 0.00 0.00 0.00 19.28 13.93 0.00 89.28 89.29 89.29 0.00 0.00 0.00 13.35 122.31 103.23 19.08 0.20 0.20 5.80 3.10 2.70 128.31 14.68 12.39 2.29 0.02 0.02 1.40 0.79 0.61 16.10 89.28 89.28 89.28 89.29 89.29 80.56 79.69 81.57 88.85 10.72 10.72 10.72 10.71 10.71 19.44 20.31 18.43 11.15 0.00 0.00 0.00 0.00 0.00 10.91 10.71 10.85 0.00 0.00 0.00 0.00 10.75 ADB OCR % of Total OCR ADB ADF % of Total ADF ADB Total Government Total ADB (%) Government (%) % of Total Base Cost 79.2 66.8 12.4 0.1 0.1 4.2 2.2 1.9 83.5 0.5 0.1 0.1 0.2 0.5 9.2 4.1 13.3 2.6 0.2 0.0 2.8 100.0 Item A. Investment Costs [a] [b] 1. Civil Works a. National Roads b. Provincial Roads 2. Equipment a. Capacity Development Equipment 3. Consultants a. National Roads b. Provincial Roads Subtotal (A) B. Recurrent Costs 1. Project Management [c] a. Road Development Authority b. Project Corrdination Unit c. Northern Province Subtotal (B) C. Contingencies 1. Physical Contingency [d] 2. Price Contingency [e] Subtotal (C) D. Financing Charges During Implementation 1. Interest During Implementation [f] 2. Commitment Charges [g] 3. Front-end Fees [h] Subtotal (D) Total Project Cost (A+B+C+D) [a] In early 2010 prices based on detail design. [b] Inclusive of local taxes and duties computed at 12.0% for civil works contract values, consultant services, and equipment, and 25.0% for foreign consultant remuneration. ADB will pay 100% of consulting services excluding taxes. [c] Incremental administrative expenditures, including bank charges related to imprest accounts. [d] Computed at 10.0% for civil works and equipment, and consulting services contract values. [e] Computed at 2.0% for foreign currency costs, and 7.0% for local currency costs. [f] Capitalized during implementation period, consisting of OCR at ADB's London interbank rate (LIBOR) plus Effective Contractual Spread of 0.2% per annum; and ADF at 1.0% per annum. [g] Capitalized at 15 basis point on flat amounts of undisbursed loan balances (OCR portion only). [h] None. Source: Asian Development Bank 17 B. Allocation and Withdrawal of Loan Proceeds 13. Unless specifically stated otherwise, the following are applicable to both the Ordinary Operation and Special Operation loans. a. Percentages of ADB Financing: Except as ADB may otherwise agree, each item of expenditure shall be financed out of the proceeds of the Loan on the basis of the percentages set forth in the tables attached to Schedule 3 to the Ordinary Operation loan agreement and Schedule 2 to the Special Operation loan agreement. Interest and Commitment Charge (Ordinary Operation loan): The amount allocated to Category [to be determined] in the table attached to Schedule 3 to the Ordinary Operation loan agreement, is for financing interest and commitment charge on the loan during the implementation period of the Project. ADB is entitled to withdraw from the loan account and pay to itself, on behalf of the Government, the amounts required to meet payments, when due, of such interest and commitment charge. Interest Charge (Special Operation loan): The amount allocated to category [x] in the table attached to Schedule 2 to the Special Operation loan agreement, is for financing the interest charge on the Loan during the implementation period of the Project. Reallocation: Notwithstanding the allocation of Loan proceeds and the withdrawal percentages set forth in the tables, i. if the amount of the Loan allocated to any category appears to be insufficient to finance all agreed expenditures in that category, ADB may, in consultation with the Government, (i) reallocate to such category, to the extent required to meet the estimated shortfall, amounts of the loan which have been allocated to another category but, in the opinion of ADB, are not needed to meet other expenditures; and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the withdrawal percentage applicable to such expenditures in order that further withdrawals under such category may continue until all expenditures thereunder will have been made; and ii. if the amount of the loan allocated to any category appears to exceed all agreed expenditures in that category, ADB may, in consultation with the Borrower, reallocate such excess amount to any other Category. {allocation tables for the OCR and ADF loans will be inserted } b. c. d. 18 C. Fund Flow Diagram 14. The following diagrams, one for national road component and one for provincial road component, show how the funds will flow from ADB and the Borrower to implement project activities. [National Roads Component] First Generation Imprest Account ($) (OCR) @ Central Bank Road Development Authority Asian Development Bank Second Generation Imprest Account (SLRs) (OCR) @ state owned bank Road Development Authority Project Director Contractors (above $100,000) and Consultants Note: Cash flow Reports for reconciliation and replenishment (with copy to Ministry of Finance) Direct payment procedure – withdrawal application/payment Notes on funds flow: 1. From ADB to the Imprest Accounts. Loan proceeds will be channeled through FGIA opened at the Central Bank of Sri Lanka to SGIA at a state owned bank. ADB funds will be allocated based on the annual budget estimates prepared by the RDA. RDA will process all other disbursement requests to ADB, including direct payment to contractors (above $100,000) and consultant fee. The FGIA will be replenished according to the ADB's Loan Disbursement Handbook. 2. SGIA will be established at commercial banks acceptable to the Government and ADB. These will be short-term deposit accounts, with the RDA as authorized signatory. 3. From ADB to contractors as well as consultants. Dollar-denominated payments for contractors (above $100,000), and consultant fees contracted by RDA, will be paid directly by ADB, which requires RDA's submission of approved invoices and documentation to ADB in accordance with ADB's Loan Disbursement Handbook. 19 [Provincial Roads Component] First Generation Imprest Account ($) (ADF) @ Central Bank Ministry of Local Government and Provincial Councils Asian Development Bank Second Generation Imprest Accounts (SLRs) (ADF) @ state owned bank Project Coordination Unit Project Coordinator Project Account Second Generation Imprest Accounts (SLRs) (ADF) @ state owned bank Northern Province Chief Secretary Project Director Project Account Contractors (above $100,000), consultants, and vehicle suppliers Note: Cash flow Reports for reconciliation and replenishment Direct payment procedure – withdrawal application/payment NPRDD = Northern Provincial Road Development Department. Notes on funds flow: 1. From ADB to the Imprest Accounts. Loan proceeds will be channeled through FGIA opened at the Central Bank of Sri Lanka to two SGIAs – one SGIA to be managed by the PCU and one SGIA to be managed by NPRDD (under NPC Chief Secretary) at commercial banks acceptable to the Government and ADB. ADB funds will be allocated based on the annual budget estimates prepared by the MLGPC and NPRDD. MLGPC will process all other disbursement requests to ADB, including direct payment to contractors (above $100,000) and consultant fee. The FGIAs will be replenished according to the ADB's Loan Disbursement Handbook. 2. From ADB to contractors as well as consultants. Dollar-denominated payments for contractors (above $100,000), and consultant fees contracted by NPRDD will be paid directly by ADB, which requires NPRDD's submission, through MLGPC, of approved invoices and documentation to ADB in accordance with ADB's Loan Disbursement Handbook. 20 V. A. FINANCIAL MANAGEMENT Financial Management Assessment 15. Financial management risks should be considered and updated1 throughout the life of the project. Risk mitigation measures should also be updated accordingly. B. Disbursement 16. The Loan proceeds will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time),2 and detailed arrangements agreed upon between the Government and ADB. 17. Pursuant to ADB's Safeguard Policy Statement (2009) (SPS),3 ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5 of the SPS. All financial institutions will ensure that their investments are in compliance with applicable national laws and regulations and will apply the prohibited investment activities list (Appendix 5 of the SPS) to subprojects financed by ADB. 18. Direct payment procedure by ADB will be utilized for progress payments on civil works (above $100,000), consultant's fees, and equipment (vehicle) supplier. Reimbursement, imprest fund, liquidation and replenishment procedures will be utilized for progress payments on civil works (below $100,000), procurement of goods, recurrent costs (project management). Two separate first generation imprest accounts (FGIAs) and second generation imprest accounts (SGIAs), depending on its funding sources, will be established and maintained by RDA and MLGPC, respectively as follows: Funding Source OCR First Generation Imprest Account Second Generation Imprest Account (1) account ($) established at the Central Bank of Sri Lanka in the name of RDA (1) account (SLRs) established at the state owned bank in the name of RDA's Project Implementation Unit ADF (1) account ($) established at the Central Bank of Sri Lanka in the name of MLGPC (1) account (SLRs) established at the state owned bank in the name of MLGPC's Project Coordination Unit (1) account (SLRs) established at the state commercial bank in the name of NPRDD 19. The FGIA and SGIA (Imprest Accounts) will be established, managed, replenished and liquidated in accordance with the Loan Disbursement Handbook. The ceiling for the FGIAs will not exceed the lower of (i) the estimated expenditure to be financed from the FGIAs for the first 6 months of Project implementation, or (ii) the equivalent of 10% of the loan amount. The maximum ceiling of each SGIA will be equivalent to 6 months estimated expenditures to be funded from each SGIA or 10% of the respective loan amount, whichever is lower. The request Available at: http://www.adb.org/Documents/Others/FM-toolkit/Methodology-Note.pdf, and Financial Management. See also Analysis of Projects Guidelines (2005): http://www.adb.org/Documents/Guidelines/Financial/default.asp. 2 Available at: http://www.adb.org/Documents/Handbooks/Loan_Disbursement/loan-disbursement-final.pdf 3 Available at: http://www.adb.org/Documents/Policies/Safeguards/Safeguard-Policy-Statement-June2009.pdf 1 21 for initial advance to the FGIAs should be accompanied by an Estimate of Expenditure Sheet4 setting out the estimated expenditures for the first six (6) months of project implementation, and submission of evidence satisfactory to ADB that the Imprest Accounts have been duly opened. For every liquidation and replenishment request of the FGIA, the borrower will furnish to ADB (a) Statement of Account (Bank Statement) where the imprest accounts are maintained, and (b) the Imprest Account Reconciliation Statement reconciling the above mentioned bank statement against the EA’s records.5 20. ADB's statements of expenditure (SOE) will be utilized for reimbursement and liquidation and replenishment of the imprest accounts for any individual payments not exceeding the equivalent of $100,000. SOE records should be maintained and made readily available for review by ADB's disbursement and review mission or upon ADB's request for submission of supporting documents on a sampling basis, and for independent audit.6 21. Before the submission of the first withdrawal application, the borrower should submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on behalf of the borrower, together with the authenticated specimen signatures of each authorized person. The minimum value per withdrawal application is US$100,000, unless otherwise approved by ADB. The borrower is to consolidate claims to meet this limit for reimbursement and imprest account claims. Withdrawal applications and supporting documents will demonstrate, among other things that the goods, and/or services were produced in or from ADB members, and are eligible for ADB financing. 22. For the national road component, RDA will be responsible for (i) preparing disbursement projections, (ii) requesting budgetary allocations for counterpart funds, (iii) collecting supporting documents, and (iv) preparing and sending withdrawal applications to ADB. For the provincial road component, MLGPC will be responsible for (i) preparing disbursement projections, (ii) requesting budgetary allocations for counterpart funds, (iii) collecting supporting documents, (iv) receiving and sending withdrawal applications to ADB, and (v) processing funds for second generation impress account to ensure adequate cash flow for NPRDD with respect to recurrent costs and payments to contractors and suppliers. NPRDD will be responsible for (i) providing information for preparing disbursement projections, (ii) projection of necessary budgetary allocations for counterpart funds, (iii) preparing supporting documents, and (iv) prepare and send withdrawal applications to MLGPC. C. Accounting 23. The RDA and MLGPC will maintain separate project accounts and records by funding source for all expenditures incurred on the Project. Project accounts will follow international accounting principles and practices. 4 5 6 Available in Appendix 29 of the Loan Disbursement Handbook. Follow the format provided in Appendix 30 of the Loan Disbursement Handbook. Checklist for SOE procedures and formats are available at: http://www.adb.org/documents/handbooks/loan_disbursement/chap-09.pdf http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Contracts-100-Below.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Contracts-Over-100.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Operating-Costs.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Free-Format.xls 22 D. Auditing 24. The RDA and MLGPC will cause the detailed consolidated project accounts to be audited in accordance with International Standards on Auditing and in accordance with the Government's audit regulations by an auditor acceptable to ADB. The audited accounts will be submitted in the English language to ADB within 6 months of the end of the fiscal year by the executing agency. The annual audit report will include a separate audit opinion on the use of the Imprest Accounts, and the SOE procedures (as applicable). The Government, MOHRD and MLGPC have been made aware of ADB’s policy on delayed submission, and the requirements for satisfactory and acceptable quality of the audited accounts. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB’s financing is used in accordance with ADB’s policies and procedures. For revenue generating projects only, ADB requires audited financial statements for each executing and/or implementation agency associated with the project. 23 VI. A. PROCUREMENT AND CONSULTING SERVICES Advance Contracting 25. All advance contracting will be undertaken in conformity with ADB’s Procurement Guidelines (February 2007, as amended from time to time) (ADB’s Procurement Guidelines)7 and ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time) (ADB’s Guidelines on the Use of Consultants).8 The issuance of invitations to bid under advance contracting will be subject to ADB approval. The Government, MOHRD, MLGPC, RDA and NPRDD have been advised that approval of advance contracting does not commit ADB to finance the ensuing Project. 26. Advance contracting includes tendering and bid evaluation for civil works packages, and recruitment of consultants. The detailed advance action schedules, which will be updated on regular basis, are presented below in Table 4, 5, 6 and 7. Provincial Road Component: Project Implementation Consultant Recruitment (MLGPC) No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Activity Prepare Request for Expression of Interest (REOI) Advertise in the newspapers & ADBBO EOI Submission Submission (1) to ADB: Shortlisting/Draft RFP ADB's Review & No-Objection Issue Request For Proposal (RFP) Proposal Submission Submission (2) to ADB: Technical Evaluation ADB's Review & No-Objection Public Opening of the Financial Proposals Submission (3) to ADB: Financial Evaluation/Ranking ADB's Review & No-Objection Invite 1st Ranked Firm - Negotiate/Draft Contract Submission (4) to ADB: Draft Negotiated Contract ADB's Review & No-Objection Contract Signing & Issue Notice to Proceed Days Timeframe 01-Jan-10 5 06-Jan-10 30 05-Feb-10 14 19-Feb-10 19 2 45 17 10 3 14 8 8 5 5 4 10-Mar-10 12-Mar-10 26-Apr-10 13-May-10 23-May-10 26-May-10 09-Jun-10 17-Jun-10 25-Jun-10 30-Jun-10 05-Jul-10 09-Jul-10 Action By MLGPC MLGPC External MLGPC ADB MLGPC External MLGPC ADB MLGPC MLGPC ADB MLGPC MLGPC ADB MLGPC Status done done done done done done on going not yet due not yet due not yet due not yet due not yet due not yet due not yet due not yet due not yet due 7 8 Available at: http://www.adb.org/Documents/Guidelines/Procurement/Guidelines-Procurement.pdf Available at: http://www.adb.org/Documents/Guidelines/Consulting/Guidelines-Consultants.pdf 24 Procurement - Civil Works: NPRDD (Provincial Roads Component) No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Activity Days Finalize Bidding Document ADB Review 17 Final Revisions As Necessary 27 Advertise Invitation For Bids in Newspaper/ADBBO 1 Preparation of Bids 38 Submission of Bids/Public Opening 1 TEC Evaluate Technical Envelope (Qual./Technical) 14 Review by Procurement Committee 7 ADB Review 14 Public Opening of Financial Envelope 5 Evaluate Financial Bid 10 Bid Evaluation Report & Recommend Award 10 Review by Procurement Committee - appointed by BOM 7 ADB Review and No Objection 14 Issue Notice of Award 1 Timeframe 05-Feb-10 22-Feb-10 21-Mar-10 22-Mar-10 29-Apr-10 30-Apr-10 14-May-10 21-May-10 04-Jun-10 09-Jun-10 19-Jun-10 29-Jun-10 06-Jul-10 20-Jul-10 21-Jul-10 Action By NPRDD ADB NPRDD NPRDD External NPRDD NPRDD NPRDD ADB NPRDD NPRDD NPRDD NPRDD ADB NPRDD Status done done done ongoing not yet due not yet due not yet due not yet due not yet due not yet due not yet due not yet due not yet due not yet due not yet due National Road Component: Project Implementation Consultant Recruitment (RDA) No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Activity Prepare Request for Expression of Interest (REOI) Advertise in the newspapers & ADBBO EOI Submission Submission (1) to ADB: Shortlisting/Draft RFP ADB's Review & No-Objection Issue Request For Proposal (RFP) Proposal Submission Submission (2) to ADB: Technical Evaluation ADB's Review & No-Objection Public Opening of the Financial Proposals Submission (3) to ADB: Financial Evaluation/Ranking ADB's Review & No-Objection Invite 1st Ranked Firm - Negotiate/Draft Contract Submission (4) to ADB: Draft Negotiated Contract ADB's Review & No-Objection Contract Signing & Issue Notice to Proceed Days Timeframe Action By 01-Jan-10 RDA 5 06-Jan-10 RDA 30 05-Feb-10 External 50 27-Mar-10 RDA 19 15-Apr-10 ADB 2 17-Apr-10 RDA 45 01-Jun-10 External 17 18-Jun-10 RDA 10 28-Jun-10 ADB 3 01-Jul-10 RDA 14 15-Jul-10 RDA 8 23-Jul-10 ADB 8 31-Jul-10 RDA 5 05-Aug-10 RDA 5 10-Aug-10 ADB 4 14-Aug-10 RDA Status done done done on going not yet due not yet due not yet due not yet due not yet due not yet due not yet due not yet due not yet due not yet due not yet due not yet due 25 Procurement - Civil Works: RDA (National Roads Component) No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Activity Finalize Bidding Document ADB Review Final Revisions - pending domestic preference Advertise Invitation For Bids in Newspaper/ADBBO Preparation of Bids Submission of Bids/Public Opening TEC Evaluate Technical Envelope (Qual./Technical) Review by Procurement Committee ADB Review Public Opening of Financial Envelope Evaluate Financial Bid Bid Evaluation Report & Recommend Award Review by Procurement Committee ADB Review and No Objection Issue Notice of Award Days Timeframe Action By 31-Jan-10 RDA 47 19-Mar-10 ADB 80 07-Jun-10 RDA 1 08-Jun-10 RDA 45 23-Jul-10 External 1 24-Jul-10 RDA 14 07-Aug-10 RDA 7 14-Aug-10 RDA 14 28-Aug-10 ADB 5 02-Sep-10 RDA 10 12-Sep-10 RDA 10 22-Sep-10 RDA 7 29-Sep-10 RDA 14 13-Oct-10 ADB 1 14-Oct-10 RDA Status done done pendng not yet due not yet due not yet due not yet due not yet due not yet due not yet due not yet due not yet due not yet due not yet due not yet due B. Procurement of Goods, Works and Consulting Services 27. All procurement of goods and works will be undertaken in accordance with ADB’s Procurement Guidelines (2007, as amended from time to time). 28. The government will inform ADB on the changes made to the national procurement regulations if any and carry out a joint review of the NCB Annex if necessary. The procurement plan should be updated whenever change in the procurement arrangements and/or the NCB Annex is required and agreed. 29. An 18-month procurement plan indicating threshold and review procedures, goods, works, and consulting service contract packages and national competitive bidding guidelines is in Section C (Procurement Plan). 30. All consultants will be recruited according to ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time).9 The terms of reference for all consulting services are detailed in Section D. 31. To facilitate project management and implementation, two separate international firms, as project implementation consultants will be recruited, one for national highways component (PIC-NH) and one for provincial roads component (PIC-PR). PIC-NH and PIC-PR will assume the role of the "Employer's Representative" and will supervise respective civil works and provide on-the-job training to counterpart staff. An estimated 778 person-months (33 international, 745 national) of consulting services are required for PIC-NH. An estimated 815 person-months (35 international, 780 national) of consulting services are required for PIC-PR. Consulting firms will be engaged using the quality- and cost-based selection (QCBS) method with a weighting of 90% technical and 10% financial as the nature of the assignment requires priority consideration for quality. 9 Checklists for actions required to contract consultants by method available in e-Handbook on Project Implementation at: http://www.adb.org/documents/handbooks/project-implementation/ 26 C. Procurement Plan 32. The procurement plan is in Attachment A and describes all procurement of good and works to be undertaken for the Project. D. 33. Consultant's Terms of Reference The consultant's terms of reference are provided in the following: Project Implementation Consultant (national road): Project Implementation Consultant (provincial road): Capacity Development Technical Assistance Consultant: Attachment B Attachment C Attachment D 27 VII. (a) Environment SAFEGUARDS 34. The Project has been classified as Category B and Initial Environmental Examinations together with Environmental Monitoring Plans (EMPs) were prepared for all road sections as per ADB's Safeguard Policy Statement, 2009. The requirements of the EMPs and of the conditional clearance provided by the Central Environmental Authority are being incorporated in the bidding documents and included as part of the works contract documents. The RDA under the MOHRD is responsible for ensuring compliance by the contractors with requirements of the EMPs for national roads. The Environmental and Social Division (ESD) under the RDA, will monitor environmental compliance by the contractor on behalf of the RDA. The ESD, which has been established through an ADB funded TA, has been provided with necessary training and is very familiar with ADB's procedures. However, as ESD's activities required for other on going projects are expected to increase in short term, the environmental expert included in the PICNH's team, will provide extra on-the-field monitoring support for the ESD. With respect to provincial roads, the NPRDD will be responsible for ensuring the implementation of the respective EMPs. Since NPRDD does not have adequately skilled staff to monitor environmental compliance, the environmental expert in the PIC-PR's team will carry out the monitoring tasks while providing on-the-job training to the NPRDD's supervision staff. 35. The main environmental concern with respect to this Project is the shortage of suitable borrow and quarry sites within the Project area. Most of the suitable sites are located outside the NP. This means that there will be long haulage distances. The IAs will ensure that sites selected as borrow and quarry sites will have sufficient material to cater to the Project needs and that haulage will be done along roads approved by respective local authorities to ensure that the roads have sufficient carrying capacity for such haulage. (b) Social – Involuntary Resettlement 36. The Project is categorized as category B in accordance with ADB's new Safeguard Policy Statement (2009). During the project preparatory studies and assessments, project strip plans, based on cross sections, were prepared which verified the project boundaries and the limits of the new construction. Based on this, it is envisaged at this time that the improvement works will be within the existing right-of-way boundaries. However, if land acquisition requirement is identified during the implementation such as small strips of land adjacent to the road which could affect some properties, including boundary walls, business establishments, crops and trees, home gardens, or other resettlement impacts, the following steps will be taken: (i) assessment to find out whether any type of displacement – physical or economic or both – will take place because of the project permanently or temporality; (ii) formulation of RP in consultation with affected peoples and other stakeholders and approval of it by ADB and disclosure; and (iii) implementation of RP. The construction activities may proceed, after these requirements are met satisfactorily. 37. If necessary, the RDA under the MOHRD is responsible for the preparation and implementation of RPs for national highway roads component and the NPRDD for the provincial roads component. The RP will be required to establish and implement grievance redress mechanisms for handling complaints, identify categories of impacts, eligibility for compensation, payment of compensation at replacement cost, income/livelihood restoration measures, proper 28 consultation of the affected people, sufficient budget, monitoring framework and implementation schedule. 38. Before commencement of construction activities, a due diligence mission will be fielded to confirm that right-of-way to be handed over to contractors are free of encumbrances and ready for handover to the civil works contractors, and, as required, inform project authorities and affected persons of remedial actions if any; and to create awareness among the project authorities about ADB's social safeguard requirements pertaining to the Project. (c) Social – Gender 39. The Project does not have substantive gender issues as the impact and benefit will apply equally among men and women. The project will provide equally positive benefits for both genders in terms improved access to schools, healthcare institutions and other services. The contract for civil works will include measure to ensure safe and healthy working environment for both the mean and women laborers. The civil works contractors will be advised to take appropriate measures with respect to compliance of equal pay for men and women, health and safety at construction sites and labor camps and awareness program for the workers on prevention of HIV/AIDS. (d) Social – Indigenous People 40. The project has no adverse or significant impact on indigenous people and, therefore, no specific action is required under the Project. According to the findings of sample social surveys in the project impact area, there are no indigenous people. 29 VIII. A. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION Project Design and Monitoring Framework Performance Targets and/or Indicators By 2018: Per capital annual income in Northern Province increases from $952 to $1,688 and percentage of national average from 50% to 80% Data Sources and/or Reporting Mechanisms Publications of the Ministry of Finance and Planning Publications of the Minstry of Local Government and Provincial Councils NPRDD's completion report Road Development Authority, Ministry of Highways and Road Development Project performance monitoring system Assumptions and Risks Assumptions Policy directions of the Government's 10 Year Development Framework will remain valid. Assumptions The Government remains committed to restoring and sustaining vital infrastructure in the Northern Province. Conflict situation does not resume. Design Summary Impact Balanced and inclusive growth in the Northern Province Outcome Improved road connectivity within Northern Province and to the southern region of the country. By project completion (2015): Travel time on project roads reduced by an average of 20% in Northern Province and North Central Province. Travel time from Colombo (National Capital) to Jaffna (Northern Provincial Capital) is reduced by 38% (from 13 hours to 8 hours). Accident rate (fatalities by vehiclekm) reduced by 20% from 2010 rate. Outputs 1. National highways are rehabilitated. By project completion (2015): Approximately 170 km of national highways in North Central Province and Northern Province are rehabilitated. Approximately 140 km of provincial roads in Northern Province are rehabilitated, and selected bridges rehabilitated or replaced. NPRDD's district offices in Mannar and Vavuniya are rehabilitated. Engineer's progress reports Audit reports RDA's and NPRDD's project progress and completion reports Assumptions Qualified contractors are available. 2. Provincial roads are rehabilitated and selected bridges links are rehabilitated and replaced. 3. NPRDD's offices are rehabilitated. 30 Activities 1. National Roads Rehabilitation and Improvement 1.1 Contract award of civil works by October 2010 1.2 Completion of all construction and maintenance works by June 2015 2. Provincial Roads, Bridges, and NPRDD Offices Rehabilitation 2.1 Contract award of civil works by July 2010 2.2 Completion of all construction and maintenance works by June 2015 3. Project Management 3.1 Engagement of project implementation consultant by July 2010 3.2 Project management on-the-job training completed by December 2012 Inputs ADB: $154.4 million Government: $18.6 million (taxes/duties) For 3: ADB: $500,000 Government: $60,000 in-kind NCP = North Central Province, NP = Northern Province NPRDD = Northern Provincial Road Development Department, RDA = Road Development Authority 31 B. Monitoring 41. Project performance monitoring: The achievement of the project performance targets will be assessed following the design and monitoring framework. RDA and NPRDD, respectively, assisted by respective PICs, will establish a project performance management system. Indicators to be monitored include (i) traffic volume; (ii) bus and freight transport fares; (iii) travel time or riding speed; (iv) vehicle-operating costs; (v) surface roughness; and (vi) road accidents. In addition, socioeconomic secondary data will be obtained at the divisional secretary level, including (i) number of businesses; (ii) household income; (iii) vehicle ownership; (iv) unemployment rate; (v) land value, (vi) average travel time to schools, and (vii) average travel time to hospitals. These indicators will be monitored before and after construction, both on the project roads and on some control roads. In addition, every year during the project period, NPRDD will also monitor the (i) road maintenance budget; (ii) ratio of staff–km of provincial road; and (iii) road maintenance cost per km. Achievement of the institutional development program will also be monitored. For civil works, progress will be monitored and reported monthly by the project implementation consultants. The project beneficiaries' satisfaction will be surveyed during and after project implementation. Disaggregated baseline data for output and outcome indicators gathered during project processing will be updated and reported quarterly through the quarterly progress reports from RDA and NPRDD, and after each ADB review mission. These quarterly reports will provide information necessary to update ADB's project performance reporting system.10 42. Compliance monitoring: Compliance with covenants will be monitored through ADB's Project Administration Missions – including project inception mission to discuss and confirm the timetable for compliance with the loan covenants; project review missions to review the borrower's compliance with particular loan covenants and, where there is any noncompliance or delay, discuss proposed remedial measures with the Government; and mid-term review mission if necessary to review covenants to assess whether they are still relevant or need to be changed, or waived due to changing circumstances. 43. Safeguards monitoring: For the national road component, the ESD under the RDA, assisted by the PIC-NH, will monitor environmental compliance by the contractor on behalf of the RDA. With respect to provincial roads, the NPRDD, assisted by the PIC-PR, will be responsible for monitoring the implementation of the respective EMPs. The Project does not have social safeguards issues, which require actions for preparation or monitoring of RPs, indigenous people development framework, or Gender Action Plan. For any reason, if social safeguard action plans become necessary during implementation, RDA and NPRDD will prepare applicable plans for ADB's review and approval and the project implementation consultants will assist with implementation and monitoring. C. Evaluation 44. A project inception mission will be fielded soon after the legal agreements for the Project are declared effective; thereafter, regular reviews will follow at least annually. As necessary, special loan administration missions and a midterm review mission will be fielded, under which any changes in scope or implementation arrangement may be required to ensure achievement of project objectives. RDA and NPRDD will monitor project implementation in accordance with the schedule and time-bound milestones, and keep ADB informed of any significant deviations 10 ADB's project performance reporting system is available at: http://www.adb.org/Documents/Slideshows/PPMS/default.asp?p=evaltool 32 that may result in the milestones not being met. Within 6 months of physical completion of the Project, RDA and NPRDD will submit a project completion report to ADB.11 D. Reporting 45. The RDA and NPC-NPRDD, through MOHRD and MLGPC respectively, will provide ADB with (i) quarterly progress reports in a format consistent with ADB's project performance reporting system; (ii) consolidated annual reports including (a) progress achieved by output as measured through the indicator's performance targets, (b) key implementation issues and solutions; (c) updated procurement plan and (d) updated implementation plan for next 12 months; and (iii) a project completion report within 6 months of physical completion of the Project. To ensure projects continue to be both viable and sustainable, project accounts and the executing agency audited financial statements, together with the associated auditor's report, should be adequately reviewed. E. Stakeholder Communication Strategy 46. Once a year, RDA and NPRDD, respectively, will hold one-day workshop to share information on project progress, issues, lessons learned, and performance improvement measures if appropriate. Representation will include members of the national steering committee and provincial coordinating committee. 47. Various information regarding the Project, including scope, general progress status, beneficiaries, invitation for bid, and consultant recruitment notices, will be provided to the general public. The information will be made available and updated through the official websites of RDA and NPRDD. IX. ANTICORRUPTION POLICY 48. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the Project.12 All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of the executing agency and all Project contractors, suppliers, consultants and other service providers. Individuals/entities on ADB’s anticorruption debarment list are ineligible to participate in ADBfinanced activity and may not be awarded any contracts under the Project.13 To support these efforts, relevant provisions are included in the loan agreements, regulations and the bidding documents for the Project. 49. The Project incorporates other measures, in addition to the standard ADB requirements, to deter corruption and increase transparency. The Project will (i) build the EA’s capacity to comply with ADB and Government procedures; and (ii) establish a project website to disclose information about project implementation. The project website will provide updated, detailed information on project implementation. For example, it will include procurement-related information, such as the list of participating bidders, name of the winning bidder, basic details on bidding procedures adopted, amount of contract awarded, and the list of goods and/or services procured. The Project website will be established by MOHRD and MLGPC within 3 months of loan effectiveness, with the help of the PIC consultants. 11 Project completion report format available at: http://www.adb.org/Consulting/consultants-toolkits/PCR-PublicSector-Landscape.rar 12 Available at: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf 13 ADB's Integrity Office web site is available at: http://www.adb.org/integrity/unit.asp 33 X. ACCOUNTABILITY MECHANISM 50. People who are, or may in the future be, adversely affected by the project may address complaints to ADB, or request the review of ADB's compliance under the Accountability Mechanism.14 51. The Project will establish a grievance redress mechanism to ensure greater accountability. With the assistance of the PIC consultants, the MOHRD and MLGPC will set up the grievance redress mechanism within 6 months of the loan effectiveness, to receive and resolve complaints, as well as to act upon stakeholders’ reports of irregularities on project related matters, including grievances concerning resettlement. The executing agencies will widely publicize the existence of this mechanism to ensure that stakeholders are aware that a venue is available to address concerns or grievances relating to fraud, corruption, abuse, and any other aspects of project implementation. XI. RECORD OF PAM CHANGES 52. All revisions/updates during course of implementation should be recorded and retained under this Section to provide a chronological history of changes to implemented arrangements recorded in this PAM. 14 For further information see: http://compliance.adb.org/. 34 XII. Attachment A: Attachment B: Attachment C: Attachment D: ATTACHMENTS Procurement Plan Outline Terms of Reference for PIC (National Road) Outline Terms of Reference for PIC (Provincial Road) Outline Terms of Reference for Capacity TA Consultant Attachment A 1 PROCUREMENT PLAN Basic Data Northern Road Connectivity Project Sri Lanka Ministry of Highways and Road Development (for National Highways Component) and Ministry of Local Government & Provincial Councils (for Provincial Roads Component) $154.4 million loan (130 million OCR and 24.4 million ADF) 26 January 2010 09 March 2010 Project Name Country Executing Agencies Loan/Grant Amount Loan/Grant Number Date of First Procurement Plan Date of This Procurement Plan A. Process Thresholds, Review, and 18-Month Procurement Plan 1. Project Procurement Thresholds 1. Except as the Asian Development Bank (ADB) may otherwise agree, the following process thresholds shall apply to procurement of goods and works. Procurement of Goods and Works Method Threshold International Competitive Bidding (ICB) for Works Above $7,500,000 International Competitive Bidding (ICB) for Goods Above $500,000 National Competitive Bidding (NCB) for Works Beneath that stated for ICB, Works National Competitive Bidding (NCB) for Goods Beneath that stated for ICB, Goods Shopping for Works Below $100,000 Shopping for Goods Below $100,000 2. ADB Prior or Post Review 2. Except as ADB may otherwise agree, the following prior or post review requirements apply to the various procurement and consultant recruitment methods used for the Project. Procurement Method Procurement of Goods and Works ICB Works ICB Goods NCB Works and Good Prior or Post Prior Prior Post Comments Prior review for the bidding documents (for first package) and bid evaluation reports (for all). Shopping for Works Shopping for Goods Recruitment of Consulting Firms Quality- and Cost-Based Selection (QCBS) Post Post Prior 2 Attachment A 3. Goods and Works Contracts Estimated to Cost More Than $ 1 Million 3. The following table lists goods and works contracts for which procurement activity is either ongoing or expected to commence within the next 18 months. General Description Contract Value Procurement Method Prequalification Advertisement Comments of Bidders Date (Yes/No) (quarter/year) No Q1-Q2/2010 Civil Works for National Roads (8 packages): Individual Bids Civil Works for Provincial Roads (6 packages): Individual bids See detail International description Competitive below Bidding See detail National Competitive Bidding description below No Q1-Q2/2010 DETAIL DESCRIPTION OF WORK PACKAGES Province / Road No. Road Section Name Package District National Roads NCP A009 Dambulla-Thonigala NH-CP1 NCP A009 Thonigala -Galkulama NH-CP2 NCP A020 Anuradhapura-Rembewa NH-CP3 NH-CP4 NH-CP5 NH-CP6 NH-CP7 NH-CP8 NP NP NP NP NP A032 B268 B437 A034 A034 Navatkuli-Keraitivu Manipai-Kaithady Vallai-Telippalai-Araly Mankulam-Mullaittivu (1/2) Mankulam-Mullaittivu (2/2) Total Estimated Contract Value Contract Procurement Length SLRs million ($) Period Mode (km) (months) 23.35 24.17 14.50 Subtotal: 62.02 17.40 14.02 27.40 Subtotal: 58.82 25.00 25.00 1,714.59 1,841.38 950.26 4,506.23 1,640.11 914.44 1,709.30 4,263.85 1,551.14 1,551.14 11,872.37 256.92 14.91 16.01 8.26 39.18 14.26 7.95 14.86 37.07 13.49 13.49 103.23 2.23 18 NCB 18 18 15 20 18 24 18 18 ICB ICB ICB ICB ICB ICB ICB ICB Subtotal for National Roads: 170.84 Provincial Roads PR-CP1 NP Mannar 15.45 NPMAC001 NPMAC005 NPMAC007 NPMAC010 NPMAC020 Thalimannar village Road Olaithoduvai Road Thoddavelli-Malupadi Road Pesalai-Vauadipanai Road Karisal Road PR-CP2 PR-CP3 NP Mannar NP Mannar 26.50 NPMAC029 Veppankulam-Periyamurippu Road 374.19 298.42 3.25 2.59 24 18 NCB NCB 17.32 NPMAC002 NPMAC003 NPMAC004 NPMAC008 NPMAC012 NPMAC014 NPMAC017 NPMAC034 NPMAC044 Espalnde Road South Bar Road Mannar-Thaivupadu-Tharanpuram Vankalai-Sirrunavatkulam Road Pallimunai Beach Road Uyilankulam-Manadkulam-Nanaddan Puthukamam Road Murungan - Nanaddan Approach Road to Public Building PR-CP4 NP Vavuniya NPVAC027 Intperiyakulam- Puthoor Road NPVAC029 Cheddikulam-Thudarikulam NPVAC034 Pandichurichchan-Andiyapuliyankulam 26.00 426.69 3.71 24 NCB PR-CP5 NP Vavuniya NPVAC007 Madhukandai- Iretperiyakulam Road NPVAC010 Mahiankulan-Pallamadu Road 28.80 403.59 3.51 24 NCB PR-CP6 NP Vavuniya NPVAC014 Puthoor- Palamoddai Road NPVAC032 Mankulam-Maruthamadhu-Mingettigama 27.20 435.40 3.79 24 NCB Subtotal for Provincial Roads: 141.27 2,195.20 19.08 122.31 Total: 312.11 14,067.57 Attachment A 3 4. Consulting Services Contracts Estimated to Cost More Than $100,000 4. The following table lists consulting services contracts for which procurement activity is either ongoing or expected to commence within the next 18 months. General Description Contract Value Advertisement Date (quarter/year) About Quality and Cost Q1/2010 $2.7 million each Based Selection (90:10) Recruitment Method International Comments or National Assignment International firm Project Implementation Consultants (two packages) 5. Goods and Works Contracts Estimated to Cost Less than $ 1 Million and Consulting Services Contracts Less than $100,000 5. The following table groups smaller-value goods, works, and consulting services contracts for which procurement activity is either ongoing or expected to commence within the next 18 months. General Description Value of Contracts (cumulative) About $0.2 million Number of Contracts To be determined Procurement / Recruitment Method National Competitive Bidding or Shopping Comments Equipment (detailed specification and contract packaging will be finalized during project implementation by the TA consultants) B. Indicative List of Packages Required Under the Project 6. The following table provides an indicative list of all procurement (goods, works and consulting services) over the life of the project. Contracts financed by the Borrower and others should also be indicated, with an appropriate notation in the comments section. General Description Goods Works Estimated Value Estimated Number (cumulative) of Contracts $0.20 million $122 million To be determined 14 Domestic Preference Applicable NCB or Shopping Applicable ICB/NCB Yes for ICB Procurement Method Comments General Description Consulting Services Estimated Value Estimated Number (cumulative) of Contracts $5.40 million 2 Recruitment Method QCBS (90:10) International Type of Proposal Full For ICB, preference margin of 7.5% may be provided when comparing bids from eligible domestic contractors Comments 4 Attachment A C. National Competitive Bidding 1. General 7. National competitive bidding shall conform to the provisions for "National Competitive Bidding" as prescribed in the Procurement Guidelines 2006 for Goods and Works issued in January 2006 by the National Procurement Agency, and the specific procedures prescribed by the Procurement Manual issued on March 2006, with the clarifications and modifications described in the following paragraphs required for compliance with the provisions of the ADB Procurement Guidelines. 2. (i) Registration Bidding shall not be restricted to pre-registered firms under the national registration system of the Institute for Construction, Training and Development (ICTAD), and such registration shall not be a condition for the submission of bids in the bidding process. Where registration is required prior to award of contract, bidders: (i) shall be allowed a reasonable time to complete the ICTAD registration process; and (ii) shall not be denied registration for reasons unrelated to their capability and resources to successfully perform the contract, which shall be verified through post-qualification. National sanction lists or blacklists may be applied only with prior approval of ADB. Prequalification (ii) (iii) 3. 8. Post qualification shall be used unless prequalification is explicitly provided for in the loan agreement/procurement plan. When used for large or complex Works contracts, i.e. turnkey, design and build, or management contracts; or custom-designed equipment, industrial plants, and specialized services, prequalification evaluation shall not include the evaluation of equipment and personnel. This assessment shall be undertaken at the bid evaluation stage. Irrespective of the procedure applied (whether prequalification or postqualification), no domestic or foreign contractor shall be precluded from participation. 4. Advertising 9. Bidding of NCB contracts estimated at $500,000 or more for goods and related services or $1,000,000 or more for civil works shall be advertised on ADB’s website via the posting of the Procurement Plan. 5. Bidding Documents 10. Procuring entities shall use standard bidding documents acceptable to ADB for the Procurement of Goods, Works and Consulting Services, based ideally on the standard bidding documents issued by ADB. Attachment A 5 6. Packaging 11. Slicing or splitting of contracts within a package shall not be used to change the contract sizes and their corresponding methods of procurement as approved in the Procurement Plan. 7. Bid Security 12. Where required, bid security shall be in the form of a bank guarantee from a reputable bank. 8. (i) Preferences No preference of any kind shall be given to domestic bidders or for domestically manufactured goods1. Foreign suppliers and contractors from ADB member countries shall be allowed to bid, without registration, licensing, and other government authorizations, leaving compliance with these requirements for after award and before signing of contract. Procurement of Works Specifications for works may be based on specifications recommended by ICTAD to the extent possible, but ICTAD approval shall not be required for adoption of specifications in a particular procurement activity. The determination of the financial capacity of a bidder for award of the contract in postqualification evaluation shall take into account current contract commitments and shall not be confined, for domestic bidders, to the ICTAD registration. Bid Rejection For Unrealistic Rates (ii) 9. (i) (ii) 10. 13. Bids shall not be subjected to a test for unrealistic rates. No lowest evaluated and substantially responsive bid shall be rejected on the basis of comparison to rates, including but not limited to market, historical, or agency established rates, without prior approval of ADB. 11. 14. Rejection of All Bids and Rebidding Bids shall not be rejected and new bids solicited without the ADB’s prior concurrence. 12. Price Negotiations 15. Price negotiation shall be allowed only where the price offered by the lowest evaluated and substantially responsive bidder substantially exceeds costs estimates. Approval of ADB is required prior to any negotiation of prices. 1 Under international competitive bidding, a preference margin of 7.5% may be provided when comparing bids from eligible domestic contractors. 6 Attachment A 13. Participation by Government-Owned Enterprises 16. Government-owned enterprises in the Democratic Socialist Republic of Sri Lanka shall be eligible to participate only if they can establish that they are legally and financially autonomous, operate under commercial law, and are not a dependent agency of the procuring entity, or the Project Executing Agency or Implementing Agency. 14. Member Country Restrictions 17. Bidders must be nationals of member countries of ADB, and offered goods, works and services must be produced in and supplied from member countries of ADB. Terms of Reference for PIC-NH Attachment B 1-1 Terms of Reference Project Implementation Consultant for the National Road Component A. Objectives 1. The main objective is to assist the RDA (the Employer) in implementing the project by: carrying out the supervision/administration of the civil works contracts; conducting on-the-job training for the Employer's staff; preparing project performance management system, and reporting and documenting progress. B. Scope of Services 2. Construction Supervision and Contract Management. The project implementation consultant (PIC) shall perform the following tasks: Task (i) Task (ii) Task (iii) Task (iv) approving contractor's work program, method statements, material sources, etc.; approving and/or issuing working drawings, approving the setting out of the works, and giving instructions to the contractor; reviewing the quality control programs of the contractors; inspecting materials and works to ensure compliance with specifications and giving immediate notice to the contractor in the event that such materials and works fail to comply with the specifications; accepting or rejecting any part or parts of the completed works; making measurements and keeping measurement records; maintaining records, correspondence, and diaries; certifying work volume and interim certificates for progress payments; assisting the Employer's representative with the maintenance of consolidated project accounts, and with preparation of financial statements and withdrawal applications for submission to ADB; certifying completion of part or all of the works; assisting the Employer in preparing withdrawal applications for contractor payments; periodically checking the remaining quantities, and undertaking constant monitoring of each contract’s costs; reviewing and recommending to the Employer variation orders, extensions of time, claims, and other matters that may come from each contractor; negotiating with each contractor and recommending to the Employer the rates for any unscheduled items of work that may arise; advising the Employer's representative on all matters relating to the execution of the works; and assisting the representative with processing the contractor's possible claims; ensuring compliance with the environmental and social impact mitigation requirements of civil works contracts, and providing information to ADB on those Task (v) Task (vi) Task (vii) Task (viii) Task (ix) Task (x) Task (xi) Task (xii) Task (xiii) Task (xiv) Task (xv) Task (xvi) 1-2 Attachment B Terms of Reference for PIC-NH processes in the monthly progress reports.; Task (xvii) preparing, at the completion of the contracts, a consolidated project completion report in a format provided by ADB; inspecting the works at appropriate intervals during the defects liability period and certifying the defects liability certificate for issuance by the Employer's representative; providing the Employer with complete records, and inception, monthly, and completion reports; and assisting the Employer to provide on-site training where required for the Employer's field staff on quality assurance and contract administration. assisting and training the Employer's staff to monitor and administer the performance based maintenance portion of the civil works contract (immediately following the full or sectional transfer of completed works). Task (xviii) checking and certifying as-built drawings for the works prepared by the contractors; Task (xix) Task (xx) Task (xxi) Task (xxii) Task (xxiii) Supervise the implementation of the Environmental Management Plan (EMP) and prepare regular monitoring reports to be included in the consultant’s monthly progress reports. 3. Project Performance Management System. The PIC shall perform the following tasks: Task (xxiv) undertaking project performance management system in the format acceptable by the employer and ADB; Task (xxv) preparing in the initial stage a project performance management system, in accordance with the ADB's project design and monitoring framework, to monitor (i) the progress of the overall project implementation, and (ii) the development impact of the project; and Task (xxvi) collecting/updating the project performance indicator benchmarks, 4. Other Services. The PIC shall perform the following tasks: Task (xxvii) Project information on website. The consultant will assist MOHRD and RDA create a Project website to disclose information about various matters on the Project, including procurement. With regard to procurement, the website will include information on the list of participating bidders, name of the winning bidder, basic details on bidding procedures adopted amount of contract awarded, and the list of goods/services procured. These Project websites will have links to show both the national road and provincial road components of the Project. Task (xxviii) Grievance Redress Mechanism. Within 2 months of commencement of services, assist MOHRD to prepare a Grievance Redress Mechanism, acceptable to ADB, and assist establishing a task force at the RDA for MOHRD to receive and resolve complaints/grievances or act upon reports from stakeholders on misuse of funds and other irregularities, including grievances due to resettlement and environmental issues. The task force will (i) make public the existence of this Grievance Redress Mechanism, through a public awareness campaign, (ii) review and address grievances of stakeholders of the Project, in relation to either the Project, any of the service providers, or any person responsible for carrying out any Terms of Reference for PIC-NH Attachment B 1-3 aspect of the Project; and (iii) proactively and constructively respond to them. 5. The tentative list of packages and durations are shown below: Package CP1 CP2 CP3 CP4 CP5 CP6 CP7 CP8 Road Section A009: Dambulla-Thonigala A009: Thonigala -Galkulama A020: Anuradhapura-Rembewa A032: Navatkuli-Keraitivu B268: Manipai-Kaithady B437: Vallai-Telippalai-Araly A034: Mankulam-Mullaittivu (1/2) A034: Mankulam-Mullaittivu (2/2) Province NCP NCP NCP NP NP NP NP NP Length (km) 23.35 24.17 14.50 17.40 14.02 27.40 25 25 Duration (mon.) 18 18 15 20 18 24 18 18 C. Implementation Arrangements 6. The consulting services will be implemented by a firm of international consultants. An association with a suitable domestic consultant is encouraged to compliment consultant's local knowledge and experience. It is anticipated that the following international and local staff will be required: 1-4 Attachment B Terms of Reference for PIC-NH INTERNATIONAL PROFESSIONAL STAFF Position Team Leader/Chief Resident Engineer (CRE) Technical Specialists (As-Needed Basis) Subtotal LOCAL PROFESSIONAL STAFF Position Resident Engineer (CP 1/2/3) Resident Engineer (CP 4/5/6) Resident Engineer (CP 7/8) Assistant Resident Engineer (CP1) Assistant Resident Engineer (CP2) Assistant Resident Engineer (CP3) Assistant Resident Engineer (CP4) Assistant Resident Engineer (CP5) Assistant Resident Engineer (CP6) Assistant Resident Engineer (CP7) Assistant Resident Engineer (CP8) Highway Design Engineer (CP 1/2/3) Highway Design Engineer (CP 4/5/6) Highway Design Engineer (CP 7/8/) Pavement/Materials Engineer (CP 1/2/3) Pavement/Materials Engineer (CP 4/5/6) Pavement/Materials Engineer (CP 7/8) Structural (Bridge) Engineer (CP 1/2/3) Structural (Bridge) Engineer (CP 4/5/6) Structural (Bridge) Engineer (CP 7/8) Quantity Surveyor (CP 1/2/3) Quantity Surveyor (CP 4/5/6) Quantity Surveyor (CP 7/8) Topographic Surveyor (CP 1/2/3) Topographic Surveyor (CP 4/5/6) Topographic Surveyor (CP 7/8) Resettlement Specialist (CP 1/2/3/4/5/6) Environmental Specialist (CP 1/2/3/4/5/6) Technical Officer - CP1 (2 persons per package) Technical Officer - CP2 (2 persons per package) Technical Officer - CP3 (2 persons per package) Technical Officer - CP4 (2 persons per package) Technical Officer - CP5 (2 persons per package) Technical Officer - CP6 (2 persons per package) Technical Officer - CP7 (2 persons per package) Technical Officer - CP8 (2 persons per package) Subtotal Qty 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 44 Number of Total Person-Months Person-Months 18.00 18.00 24.00 24.00 18.00 18.00 18.00 18.00 18.00 18.00 15.00 15.00 20.00 20.00 18.00 18.00 24.00 24.00 18.00 18.00 18.00 18.00 16.00 16.00 16.00 16.00 16.00 16.00 12.00 12.00 12.00 12.00 12.00 12.00 15.00 15.00 15.00 15.00 15.00 15.00 19.00 19.00 24.00 24.00 24.00 24.00 6.00 6.00 6.00 6.00 6.00 6.00 12.00 12.00 12.00 12.00 18.00 36.00 18.00 36.00 15.00 30.00 20.00 40.00 18.00 36.00 24.00 48.00 18.00 36.00 18.00 36.00 745.00 Qty 1 1 2 Number of Total Person-Months Person-Months 25.00 25.00 4.00 8.00 33.00 Terms of Reference for PIC-NH Attachment B 1-5 Note: (i) Resident Engineers and Quantity Surveyors will provide intermittent service during the Defects and Liability Period. Technical Specialist (International) will be mobilized on as-needed basis and subject to the Client's approval of the CV. CVs are required for inclusion in the technical proposal. CVs of Topographical Surveyors and Technical Officers (Local Staff) are not required for inclusion in the proposal and will not be evaluated. However, CVs must be submitted to client for approval prior to mobilization. The estimated person-months are indicative, and the actual will vary based on actual duration of works and will be paid on actual time-basis. As common basis for financial proposal, the Consultants MUST use the staff person-months indicated above. (ii) (iii) (iv) D. Reports, Deliverables and Time Schedule 7. The consulting services will be implemented over 25 calendar months from the commencement date. During the defects liability period, the Consultant shall provide assistance at appropriate intermittent intervals, including reviewing the defects liability certificate. 8. The PIC shall prepare and submit the following reports in the English language (5 copies for Client and 2 copies for ADB). The final report shall be prepared in hardcopy and in CDROM. Report Inception Report Monthly Progress Reports Description/Technical Accomplishments Initial findings and, if appropriate, updated approach, methodology, and work plan. Brief details of the work carried out during the previous month, the problems encountered or anticipated, together with the steps taken or recommendations for their correction, and financial and physical progress to date. In accordance with ADB's format. Timeframe 1.00 month from the commencement date Monthly (by the 10th day of each month following the inception report) Within 3.00 months from the completion of the civil works. Project Completion Report E. 9. Data, Local Services, Personnel, and Facilities to be provided by the Government The RDA will provide the Consultant with the following: (i) Access to data, records, and other information required to perform the assigned tasks; and Counterpart staff and engineers to work with the consultant. (ii) 10. The civil works contracts will provide the consultant with the following: (i) Office space (including utilities, but excluding furnishings and furniture) for international and national experts, and other as-needed technical support staff; 1-6 Attachment B Terms of Reference for PIC-NH (ii) Housing accommodation for consultant's National expert: Resident Engineers, Assistant Resident Engineers, Highway Design Engineers, Pavement/Material Engineers, Structural (Bridge) Engineers, Quantity Surveyors, Topographic Surveyors, Resettlement Specialist, Environmental Specialists, and Technical Officers; Vehicles for site supervision: (iii) International: TL/CRE National: (iv) 11. Resident Engineers (1 each) Assistant Resident Engineers (1 each) Motorbikes - Technical Officers (1 each) The consultant will be responsible for the following: (i) Accommodation for international staff (TL/CRE and as-needed Technical Specialists); Office furnishings, communication, and various equipment required to carry out the assignment; Office stationery/supplies; and Any other items not provided by the RDA or Civil Works Contracts. (ii) (iii) (iv) Terms of Reference for PIC PR Attachment C 1-1 Terms of Reference Project Implementation Consultant for Provincial Roads Component A. Objectives 1. The main objective is to assist the NPRDD ("the Employer") in implementing the project by: carrying out the supervision/administration of the civil works contracts; conducting on-the-job training for the Employer's staff; preparing project performance management system, and reporting and documenting progress. B. Scope of Services The project implementation 2. Construction Supervision and Contract Management. consultant (PIC) shall perform the following tasks: Task (i) Task (ii) Task (iii) Task (iv) approving contractor's work program, method statements, material sources, etc.; approving and/or issuing working drawings, approving the setting out of the works, and giving instructions to the contractor; reviewing the quality control programs of the contractors; inspecting materials and works to ensure compliance with specifications and giving immediate notice to the contractor in the event that such materials and works fail to comply with the specifications; accepting or rejecting any part or parts of the completed works; making measurements and keeping measurement records; maintaining records, correspondence, and diaries; certifying work volume and interim certificates for progress payments; assisting the Employer's representative with the maintenance of consolidated project accounts, and with preparation of financial statements and withdrawal applications for submission to ADB; certifying completion of part or all of the works; assisting the Employer in preparing withdrawal applications for contractor payments; periodically checking the remaining quantities, and undertaking constant monitoring of each contract’s costs; reviewing and recommending to the Employer variation orders, extensions of time, claims, and other matters that may come from each contractor; negotiating with each contractor and recommending to the Employer the rates for any unscheduled items of work that may arise; advising the Employer's representative on all matters relating to the execution of the works; and assisting the representative with processing the contractor's possible claims; ensuring compliance with the environmental and social impact mitigation requirements of civil works contracts, and providing information to ADB on those Task (v) Task (vi) Task (vii) Task (viii) Task (ix) Task (x) Task (xi) Task (xii) Task (xiii) Task (xiv) Task (xv) Task (xvi) 1-2 Attachment C Terms of Reference for PIC-PR processes in the monthly progress reports.; Task (xvii) preparing, at the completion of the contracts, a consolidated project completion report in a format provided by ADB; inspecting the works at appropriate intervals during the defects liability period and certifying the defects liability certificate for issuance by the Employer's representative; providing the Employer with complete records, and inception, monthly, and completion reports; and assisting the Employer to provide on-site training where required for the Employer's field staff on quality assurance and contract administration. assisting and training the Employer's staff to monitor and administer the performance based maintenance portion of the civil works contract (immediately following the full or sectional transfer of completed works). Task (xviii) checking and certifying as-built drawings for the works prepared by the contractors; Task (xix) Task (xx) Task (xxi) Task (xxii) Task (xxiii) Supervise the implementation of the Environmental Management Plan (EMP) and prepare regular monitoring reports to be included in the consultant’s monthly progress reports. 3. Project Performance Management System. The PIC shall perform the following tasks: Task (xxiv) undertaking project performance management system in the format acceptable by the employer and ADB; Task (xxv) preparing in the initial stage a project performance management system, in accordance with the ADB's project design and monitoring framework, to monitor (i) the progress of the overall project implementation, and (ii) the development impact of the project; and Task (xxvi) collecting/updating the project performance indicator benchmarks. 4. Other Services. The PIC shall perform the following tasks: Task (xxvii) Project information on website. The consultant will assist MLGPC and NPC create a Project website to disclose information about various matters on the Project, including procurement. With regard to procurement, the website will include information on the list of participating bidders, name of the winning bidder, basic details on bidding procedures adopted amount of contract awarded, and the list of goods/services procured. These Project websites will have links to show both the national road and provincial road components of the Project; and Task (xxviii) Grievance Redress Mechanism. Within 2 months of commencement of services, assist MLGPC to prepare a Grievance Redress Mechanism, acceptable to ADB, and assist establishing a task force at the NPRDD for NPC to receive and resolve complaints/grievances or act upon reports from stakeholders on misuse of funds and other irregularities, including grievances due to resettlement and environmental issues. The task force will (i) make public the existence of this Grievance Redress Mechanism, through a public awareness campaign, (ii) review and address grievances of stakeholders of the Project, in relation to either the Project, any of the service providers, or any person responsible for carrying out any Terms of Reference for PIC PR Attachment C 1-3 aspect of the Project; and (iii) proactively and constructively respond to the C. Implementation Arrangements 4. The consulting services will be implemented by a firm of international consultants. An association with a suitable domestic consultant is encouraged to compliment consultant's local knowledge and experience. It is anticipated that the following international and local staff will be required: INTERNATIONAL PROFESSIONAL STAFF Position Team Leader/Chief Resident Engineer Technical Specialists (As-Needed Basis) Subtotal LOCAL PROFESSIONAL STAFF Position Resident Engineer Assistant RE (per package) Highway Design Engineer (per district) Pavement/Materials Engineer Structural (Bridge) Engineer Quantity Surveyor (per district) Resettlement Specialist Environmental Specialist Technical Officer - Road (3 persons per package) Subtotal Qty 1 6 2 1 1 2 1 1 18 33 Number of Total Person-Months Person-Months 29.00 29.00 24.00 144.00 18.00 36.00 27.00 27.00 18.00 18.00 29.00 58.00 24.00 24.00 12.00 12.00 24.00 432.00 780.00 Qty 1 1 2 Number of Total Person-Months Person-Months 27.00 27.00 8.00 8.00 35.00 Note: (i) Resident Engineer and Quantity Surveyors will provide intermittent service during the Defects and Liability Period. Technical Specialist (International) will be mobilized on as-needed basis and subject to the Client's approval of the CV. CVs are required for inclusion in the technical proposal. CVs of Technical Officers (Local Staff) are not required for inclusion in the proposal and will not be evaluated. However, CVs must be submitted to client for approval prior to mobilization. The estimated person-months are indicative, and the actual will vary based on actual duration of works and will be paid on actual time-basis. As common basis for financial proposal, the Consultants MUST use the staff person-months indicated above. (ii) (iii) (iv) 1-4 Attachment C Terms of Reference for PIC-PR D. Reports, Deliverables and Time Schedule 5. The consulting services will be implemented over 27 calendar months from the commencement date. During the defects liability period, the Consultant shall provide assistance at appropriate intermittent intervals, including reviewing the defects liability certificate. 6. The PIC shall prepare and submit the following reports in the English language (5 copies for Client and 2 copies for ADB). The final report shall be prepared in hardcopy and in CDROM. Report Inception Report Monthly Progress Reports Description/Technical Accomplishments Initial findings and, if appropriate, updated approach, methodology, and work plan. Brief details of the work carried out during the previous month, the problems encountered or anticipated, together with the steps taken or recommendations for their correction, and financial and physical progress to date. In accordance with ADB's format. Timeframe 1.00 month from the commencement date Monthly (by the 10th day of each month following the inception report) Within 3.00 months from the completion of the civil works. Project Completion Report E. 7. Data, Local Services, Personnel, and Facilities to be provided by the Government The NPRDD will provide the Consultant with the following: (i) Access to data, records, and other information required to perform the assigned tasks; and Counterpart staff and engineers to work with the consultant. (ii) 8. The civil works contracts will provide the consultant with the following: (i) Field office space (including furnishing, utilities, and stationary supplies) for following National Experts: Assistant Resident Engineers and Technical officers, and other as-needed technical support staff); Housing accommodation for consultant's National expert: Resident Engineer, Assistant Resident Engineers, Highway Design Engineer, Pavement/Material Engineer, Structural (Bridge) Engineer, Quantity Surveyor, Resettlement Specialist, Environmental Specialists, and Technical Officers; (ii) (iii) (iv) Office stationary/supplies; Vehicles for site supervision; International: TL/CRE (1 each) National: Resident Engineer (1 each) Assistant Resident Engineers (1 each) Consultant's core team (3 pool vehicles) Terms of Reference for PIC PR Attachment C 1-5 (v) 9. Motorbikes; Technical Officers (1 each). The consultant will be responsible for the following: (i) Project office spaces in Vavuniya, Northern Province (including furnishings, furniture, utilities, communication, stationary, and various office equipment required to carry out the assignment) for consultant's core team consisting of: International Team Leader/Chief Resident Engineer (TL/CRE) Technical Specialists (As-Needed) National Resident Engineer Highway Design Engineer Pavement Materials Engineer Structural (Bridge) Engineer Quantity Surveyor Resettlement Specialist Environmental Specialist Other Office Support Staff (ii) Accommodation for international staff (TL/CRE and as-needed Technical Specialists); and Any other items not provided by the NPRDD or Civil Works Contracts. (iii) Attachment D 1 TECHNICAL ASSISTANCE FOR CAPACITY DEVELOPMENT OF THE NORTHERN PROVINCIAL ROAD DEVELOPMENT DEPARTMENT: OUTLINE TERMS OF REFERENCE FOR CONSULTING SERVICES A. Objectives 1. The main objective is strengthening the capacity of NPRDD to effectively carryout its main responsibility of managing and maintaining the provincial road network efficiently and economically. The primary tasks are (i) Preparing capacity development plan for improved organizational arrangement, optimized staffing allocation and assignments, need-based training programs, and modernized financial and management information system; Implementing functional road maintenance management system, consisting of completing the road/structure inventory of existing conditions, preparing prioritized 3-year rolling work program including yearly maintenance program and budget; Carrying out need based in-house and oversea training programs in project management, contract administration, financial management, performancebased maintenance, and road safety; and Implementing functional management information system comprising peer-topeer computer network system, office equipment, office software, and basic financial and accounting software (ii) (iii) (iv) B. Scope of Services 2. The consulting services will be carried out by individual international and national consultants with the following terms of references. 1. Team Leader / Road Maintenance Planning and Operation Specialist (international, 12 person-months) 3. Organization and Management. Responsibilities of the consultant include the following: (i) Organization and management. Assess and propose necessary improvements for organizational effectiveness: clear functional responsibilities by department and district offices, efficient reporting structure and procedure, and staffing allocation with description of duties and responsibilities for each position. In consultation with NPRDD management, identify specific improvements to be implemented within an agreed time frame. Training. Conduct a diagnostic needs assessment of the current technical and management skills and capacity, identifying specific deficiencies and proposing targeted improvements with a time frame. Based on this, develop and implement practical training programs consisting of in-house workshops and international seminars. Recommend an effective setup for the on-the-job training, to be provided by the project implementation consultant, and monitor progress. (ii) 2 Attachment D (iii) Financial and Management information system. Provide functional parameters to the national consultant based on NPRDD's operating requirements (i.e., reporting, budgeting, financial management, accounting, and the new computerized road maintenance system). Review the national consultant's assessment and monitor and/or assist in procuring the recommended hardware and software. Capacity development plan. Based on the outputs of tasks (i), (ii), and (iii); prepare a capacity development plan for NPRDD, consisting of needs assessment, description of improvement programs with implementation time frame, and indicators and milestones for measuring progress and achievements. Office facilities. Assist NPRDD in designing and constructing a modern office facility to meet current and future requirements. (iv) (v) 4. Road Maintenance Management System (RMMS). Responsibilities of the consultant include the following: (i) Develop and implement a simple and practical road maintenance management system (RMMS) to effectively plan and program road maintenance and budget This includes (a) updating and completing the road and bridge inventory conditions by adapting simple visual logging and evaluation techniques using suitable road and bridge maintenance software; and (b) using commercially available (easy-to-use) software with local base map to store and analyze road and bridge conditions survey data. Prepare annual maintenance program based on expected budget allocation. Prepare road maintenance budget applications for all fiscal years during project implementation in accordance with the government budgeting cycle. Prepare 3-year rolling road maintenance plans. Based on tasks (i), (ii), (iii), and (iv), prepare an operations manual for RMMS, works programming, and budgeting; describing detailed steps and procedures. Train designated NPRDD staff on achieving proficiency in operating the RMMS and preparing work programs and budgets. Table 1: Reports, Deliverables, and Schedule Report Description/Technical Accomplishments Time Frame (number of months after commencement) 1.0 3.0 Every 3.0 months after preparing CDP 7.0 8.0 10.0 (ii) (iii) (iv) (v) (vi) Inception Report Needs assessment for tasks (3.i), (3.ii), and (3.iii). Proposes changes, if any, in the approach and methodology. Capacity Development Plan (CDP) Task (3.iv) CDP Implementation Progress Report Road Maintenance Management System (RMMS) Annual Works Program Road Maintenance Budget Applications Task (3.iv) – update CDP as appropriate and report implementation progress Task (4.i) Task (4.ii) Task (4.iii) Attachment D 3 Report Description/Technical Accomplishments Task (4.iv) Task (4.v) 3-Year Rolling Road Investment Plan Operation Manual for RMMS, Preparing Works Program and Budgeting Final Report Time Frame (number of months after commencement) 11.0 11.0 Summarize major achievements covering all tasks 12.0 2. 5. Pavement and Material Specialist (national, 10 person-months) Responsibilities of the consultant include the following: (i) (ii) Assist the team leader in developing and establishing an RMMS. Assist NPRDD in updating and completing the database of road inventory and pavement conditions in support of the RMMS. Provide updated database of road inventory and conditions survey (within 6 months from commencement date). Assist the team leader in analyzing the road conditions survey data and preparing annual works program, road maintenance budget allocation, and 3year rolling road investment plans (within 10-months from commencement date). Provide as-needed inputs for preparing the operation manual for the RMMS and preparing works programming and budgeting. Provide as-needed inputs and assistance for conducting in-house work shops and seminars for updating road inventory and condition surveys (intermittent within 12-months from commencement date). Management Information System Specialist (national, 6 person-months) (iii) (iv) (v) 3. 6. Responsibilities of the consultant include the following: (i) In support of the capacity development plan for NPRDD and based on function requirements provided by the team leader, develop and implement a simple and practical management information system consisting of peer-to-peer office local area network, basic office software, and designated website for NPRDD. Provide as-needed inputs and assistance for conducting in-house work shops and training related to the management information system (intermittent within 12 months from commencement date. Conduct needs assessment and prepare a list of required hardware and software for procurement (within 1-months from commencement date). Assist NPRDD in procuring related goods and services. (ii) (iii) 7. The consultant will assist in installing and running selected software for the RMMS. 4 Attachment D C. Cost Estimates and Financing Plan 8. The TA is estimated to cost $560,000 equivalent. ADB will finance $500,000 equivalent on a grant basis from ADB’s TA funding program (Technical Assistance Special Fund-IV). The Government's counterpart in-kind contribution will be $60,000 equivalent. A vehicle (a basic utility double-cap) is required to implement the TA in order to carryout road inventory and condition survey during the implementation by the Consultant and to update the survey after the completion by the Government. This vehicle will be purchased as ADB’s property and may be used only for the purposes of the TA. The Government will make sure that the registration fees and insurance premiums for vehicles are paid, which will facilitate transferring the vehicles to the Government when the TA is completed. Table 2: Cost Estimate ($'000) Total Cost Item A. Asian Development Bank Financing (a) 1. Consultants a. Remuneration and Per Diem i. International Consultants ii. National Consultants b. International and Local Travel c. Reports and Communications 2. Equipment (Vehicles, Portable weigh for axle load, IT hardware/software) (b) 3. Training, Seminars Abroad, and Workshops 4. Surveys 5. Miscellaneous Administration and Support Costs 6. Contingencies Subtotal (A) B. Government Financing 1. Equipment (Vehicles, IT hardware/software) (b) 2. Remuneration and Per Diem of Counterpart Staff 3. Others Subtotal (B) Total a 186.0 48.0 10.0 1.0 175.0 30.0 15.0 5.0 30.0 500.0 20.0 30.0 10.0 60.0 560.0 Financed by the Asian Development Bank’s technical assistance funding program (TASF-IV resources). b Equipment will be purchased, utilized for road condition surveys, and turned over to the Government upon completion of the technical assistance (to carryout surveys on regular basis). Source: Asian Development Bank Project Classification Summary - Concept clearance (operational department) Partner Country Project Name: Please indicate whether the project is identified as * SRI Subregion - Geographical Area Regional project (regional partnership strategy or regional business plan) National project (in CPS, COBP) TA Project development stage PPTA CDTA PATA RDTA Page 1 of 2 South Asia 2010 Asia Region For approval in year 2 Filename: grant ADF Concept clearance FALSE TRUE ##### Project Components (products): [Please ADB Project Number note that the whole project is classified; Department (Add product Finance prodcts of one project are then classified (million USD) numbers if applicable) automatically according to the pro-rated 154.40 Piggy-backed CDTA 0.50 42254-01-3 42254-01-2 SARD SARD Division SATC SATC Key project features [Please provide key information on projecrt background and design features]: The Project is proposed to rehabilitate about 140 km of provincial roads and 108 km of others ADF OCR others national highways within NP and improve about 62 km of link national highways in the FALSE TRUE TRUE ##### FALSE North Central Province (NCP) including a section of A009 which serves as the backbone arterial highway connecting to south. The Project is timely and targeted - to help restore accessibility to essential social services for rural people in NP and to improve its nation wide connectivity. It will facilitate economic growth and contribute to reducing disparities in Sri Lanka, consistent with the key goals of the Government’s 10-Year Development Mission Leader Framework (10YDF, 2007-2016), which emphasizes equitable growth. Investment loan/debt/equity guarant ee syndica tion V:\Project Classification\1-Operations\SARD\SRI\2010-SRITransport and ICT(Northern Road Connectivity Project)LOAN.xls Lee,Dong Kyu Lee,Dong Kyu Location Impact (%, total project) If the project is an MFF, provide below the MFF Number and MFF Financing Weight National Projects Regional rural urban national Project Financing Modalities and Partnerships (in million USD) Total project costs Government (including contributions of beneficiaries) and sponsors Partnerships Direct Value Added Cofinancing (DVA) under ADB adminisration and/or guarantee arrangement Other Partnerships 173.56 Please note that classification of MFF products require each subproject to be classified separately. The classification for the first project also comprises the classification for the road map. However, project cost is for the first subproject 18.66 only and not for the whole MFF cluster. 0.00 0.00 0.00 syndication guaran tee investment grant equity technical assistance TRUE loan grant CDTA RDTA PATA PPTA grants concessional commercial [Please show the impact as high, medium or low] For projects where the impact is on the country: High = 45%-100%, Medium = 25%-40%, Low = 5%-20% H L M L 50% $77.45 10% $15.49 30% $46.47 10% $15.49 identity of partner (name, amount million USD) ADB financial contribution (US$) targeting inclusiveness of growth and social development (more directly addressing) loan general intervention (GI) ADB financing modalities 154.90 ADF Country Allocation OCR ADF others MDG related addressing geographical social and income poverty dimensions of poverty (TI- environmental (TI-H) G) inclusiveness (TIM) 154.90 0.00 0.00 0.00 24.40 130.00 0.50 sovereign financing Regional Allocations Country Allocation non-sovereign financing Regional Allocations 1 If MDG, please identify (1 - 8) MDG 1a Income Poverty MDG 1b Hunger MDG 2 Education Targeting poverty reduction and inclusiveness of growth and social development [Please provide rationale for GI or TI-G or TI-M or TI-H classification] : Note: DVA = cofinancing under administrative or collaborative arrrangement with ADB. Guarantees and partner financing administered by ADB (trust funds, project grants, syndications) will be refle both under ADB as well as DVA cofinancing; however they will will be counted only once in the total financing volume, in order to avoid double counting. Only actual amounts in partynership financing shall be accepted, even if the figures and partners are indicative. The Project supports the strategic objective established in ADB's Country Strategy and Program (2009-2011): To improve transport system in Sri Lanka, promoting regionally balanced and socially inclusive economic growth. Weight and Quantification of Thematic Impact Contribution Contributions to Strategic Development Results (outcomes, %, based on total project) economic growth (GRO) social development environmental sustainability regional cooperation (REC) (ENV) (SOC) gender equity (GEN) private sector development (PSD) governance (GOV) capacity development (CAD) Strategy 2020 pillars (inclusive growth, environmental sustainable growth, regional cooperation and integration) Choose up to 4 themes (at least 1 of the 4 has to be GRO, SOC, ENV, RIC) Strategy 2020 drivers of change TRUE FALSE FALSE FALSE FALSE FALSE FALSE TRUE Indicate (1) one primary 1 impact contribution of the j t promoting macroec GRO (widening Please choose any promoting markets access to economi number of subthemes widening access to from the themes intially and economic knowledge, science opportunities) marked human development indigenous people other vulnerable groups involuntary resettlemen disaster risk manageme natural resources conservation urban environmental improvement eco-efficiency global and regional transboundary e environmental policy and legislation crossborder infrastructure trade and investments money and finance other regional public goods gender equity in (human) ca gender equity in (economic) gender equity in empowerm regional gender equity initiat promote gender equity policy reforms private sector investment public-private partnerships privatization economic and financial gov public administration (natio civil society participation anticorruption institutional development CAD (institutional development) organizational development client relations, network, and partner subthemes chosen for this project selected themes (and subthemes): GRO (widening access to markets and economic opportunities); CAD (institutional development); If the project addresses environmental impact or disaster risk mitigation, does it address climate change? Please quantify the climate change contribution as percent of total contribution of environment or inclusive social development field. Yes, through No adaptation H-High, MMedium, L-Low impact %(H=45-100, M=2540, L=5-20) mitigation 4 Project Classification Summary - Concept clearance (operational department) Partner Country Project Name: Please indicate whether the project is identified as * SRI Subregion - Geographical Area Regional project (regional partnership strategy or regional business plan) National project (in CPS, COBP) ADB Primary Sector: Transport and ICT Gov't./S Private ponsor Sector ODA Page 2 of 2 South Asia 2010 Asia Region For approval in year 2 Filename: Total Proj Cost: 173.56 Total ADB OCR ADF Loan/ Loan Equity/ Guarant ee ADF Grant Other Grant j tf Total (%/USD) NGO, Benef. Sub- K foun sector dation outputs (million USD) t [Pl V:\Project Classification\1-Operations\SARD\SRI\2010-SRITransport and ICT(Northern Road Connectivity Project)LOAN.xls id k i f ti j tb k d dd i Key Activity Areas of the project: Key Activity Areas: road transport Primary Subsector: road transport Total ADB Cost: 154.90 Subsectors Transport and ICT Key Activity Areas: road transport urban transport road transport transport management and policies 154.90 154.90 130.00 130.00 24.40 24.40 0.00 0.50 0.50 18.66 18.66 0.00 0.00 0.00 0.00 173.56 173.56 100% 100% Key Activity Areas of ADB finance components (Please choose from the list 0% above) road transport 0% 0.00 0.00 0.00 0% 0.00 0.00 0% 0% Location Classification (Please explain the impact chain) 0.00 0% 0.00 0% 0.00 0% 0.00 0% Total ADB Finance by 0.00 Sector Agriculture and Natural Resources Education Energy Finance Health and Social Protection Industry and Trade Water Supply and other Municipal Infrastructure and Services Public Sector Management Transport and ICT Department SARD Division SATC Total ADB 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 OCR Loan 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 ADF Loan 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 ADF Grant 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Other Sector classification (Please explain the impact chain) Grant 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Thematic Classification (Please explain the impact chain) User Departments Full Name Lee,Dong Kyu Tel. 4157 Date 8-Mar-2010 Division Custodian (RSDD) Full Name Tel. Date CONTRIBUTION TO THE ADB RESULTS FRAMEWORK (Sri Lanka: Northern Road Connectivity Project) No. Results Framework Indicators Transport 1. Expressways built or upgraded (km) 2. National highways, provincial, district, and rural roads built or upgraded (km) 3. Railways constructed and/or upgraded (km) 4. Beneficiaries from road projects (number) km = kilometer Source: Asian Development Bank Targets none 310 none 339,000 Methods Used Actual physical measurement of the output Population in the project influence area DEVELOPMENT COORDINATION (Sri Lanka: Northern Road Connectivity Project) A. Major Development Partners: Strategic Focus and Key Activities 1. In Sri Lanka, the major development partners of the Asian Development Bank (ADB) in the road transport subsector are the World Bank and Japan International Cooperation Agency (JICA). The three development partners closely coordinate their strategies and collaborate on key focus areas. Ongoing coordination includes the following: (i) Sector Level. The major development partners in the road transport sub sectors are ADB, WB, and JICA. With respect to institutional and capacity strengthening, there is a coordinated strategy to focus each partner's activities - institutional capacity strengthening by ADB, strengthening the capacity of domestic contractors by JICA, and road maintenance by WB. Project. Coordination includes the following: (a) Project preparation. The Government has utilized the ADB-funded Road Project Preparatory Facility1 to prepare projects to be funded by ADB as well as other development partners. Both the World Bank and JICA have used the Road Project Preparatory Facility to prepare their investment projects. The arrangement has helped the three development partners to harmonize project design and implementation arrangements. (b) Geographic coverage. ADB, the World Bank, and JICA conduct close consultations to ensure wide geographic coverage, avoid overlap, and help spread the benefits in an equitable manner. For the provincial roads under the Northern Road Connectivity Project, ADB closely coordinated the geographic coverage with the World Bank. The ADB project will cover two of the five districts in Northern Province (Mannar and Vavuniya); the World Bank's pipeline project in 2010 will cover one district (Jaffna). The two remaining districts, Mullaitivuu and Kilinochchi, are expected be covered under ADB's 2011 program. Implementation efficiency. ADB, the World Bank, and JICA coordinate implementation arrangements in line with resource capacity of the government's implementing agencies in order to maximize use of existing resources and avoid overloading. ADB and the World Bank also closely coordinate capacity strengthening programs to ensure adequate coverage. The associated capacity development technical assistance under the project will strengthen project management capacity of the Northern Provincial Road Development Department, which will help improve the implementation performance of the World Bank's pipeline project in the Jaffna district, expected in late 2010. (ii) (c) 2. While the project does not have any cofinancing arrangements, the World Bank, in parallel, is expected to finance rehabilitation of about 100 kilometers of provincial roads in the 1 ADB. 2004. Report and Recommendation of the President to the Board of Directors: Proposed Technical Assistance Loan to the Democratic Socialist Republic of Sri Lanka for the Road Project Preparatory Facility. Manila (Loan 2080-SRI, for $15 million, approved on 13 April). 2 Jaffna district of Northern Province; this is being prepared by the ADB-funded Road Project Preparatory Facility. 3. The following table presents the ongoing road transport subsector projects being funded by the major development partners: Major Development Partners Development Partner ADB Project Name Eastern and North Central Provincial Road Project National Highways Sector Project Road Project Preparatory Facility Southern Transport Development Project Duration Jun 2009– Dec 2013 Nov 2005– Dec 2010 Sep 2004– Dec 2010 Nov 1999– Dec 2010 Amount $70 million Sector and Theme Transport, and information and communication technology (road transport) Transport, and information and communication technology (road transport) Transport, and information and communication technology (road transport) Transport, and information and communication technology (road transport) ADB $150 million ADB $15 million ADB Transport, and information Japan Provincial/Rural Road and communication International Development Project technology (road transport) Cooperation (Eastern Province) Agency Transport, and information Japan Provincial/Rural Road and communication International Development Project technology (road transport) Cooperation (Central and Sabaragamuwa Agency Province) Transport, and information Japan Mannar Bridge and and communication International Causeway technology (road transport) Cooperation Agency Southern Transport Transport, and information Japan and communication International Development Project technology (road transport) Cooperation I and II Agency Transport, and information World Bank Provincial Roads Project and communication technology (road transport) Transport, and information World Bank Road Sector Assistance and communication Project technology (road transport) ADB = Asian Development Bank. Source: Asian Development Bank. Apr 2010– Mar 2013 $90 million (original) + $90 million (supplementary) ¥4.0 billion Apr 2010– Jan 2014 ¥9.0 billion Jun 2007– Mar 2010 ¥1.8 billion Expecting completion in 2011 Dec 2009– Mar 2015 Dec 2005– Sep 2011 ¥1.8 billion (original) + ¥1.6 billion (supplementary) $105 million $100 million (original) + $98.1 million (supplementary) B. Institutional Arrangements and Processes for Development Coordination 4. The monthly development partner coordination meetings facilitate the development coordination process for the major multilateral and bilateral development partners. Although 3 institutional arrangements have not been formalized, the government organizes periodic meetings to discuss priorities and provide a forum for discussion and coordination. C. Achievements and Issues 5. ADB has a track record of active development coordination with major development partners in the road transport subsector. Recent experiences and noteworthy achievements include (i) the Southern Transport Development Project2 with parallel financing from ADB and JICA; (ii) the Eastern and North Central Provincial Project3 with parallel financing from ADB, the World Bank, and JICA. 6. An issue that requires further and more robust coordination is harmonization in the area of procurement, such as the international competitive bidding threshold and domestic preference eligibility. The project team has coordinated to closely harmonize, to the extent possible, with recent and similar projects funded by the World Bank. In this regard, coordination needs to be continued on a regular basis to ensure a consistent approach by the major development partners. D. Summary and Recommendations 7. The project's scope, and implementation arrangement and strategy reflect constructive development coordination. This should be continued during the project's implementation and lessons could be utilized in the design of future projects. 2 3 ADB. 1997. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical Assistance Grant to the Democratic Socialist Republic of Sri Lanka for the Southern Provincial Roads Improvement Project. Manila (Loan 1567-SRI, for $30 million, approved on 30 October). ADB. 2009. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical Assistance Grant to the Democratic Socialist Republic of Sri Lanka for the Eastern and North Central Provincial Project. Manila (Loan 2546-SRI, for $70 million, approved on 16 September). ECONOMIC ANALYSIS (Sri Lanka: Northern Road Connectivity Project) 1. The economic analysis for the Northern Road Connectivity Project was carried out using the Highway Development Model 4 (HDM4) with input data on traffic, road geometry, condition, pavement structure and material characteristics of the existing road, maintenance and road improvement costs, and vehicle operating cost (VOC) parameters for representative vehicles in Sri Lanka. A. National Road Component 2. Base year traffic volume. Traffic volume was obtained from the classified traffic counts carried out on project road sections for road sections located in North Central Province (NCP) (A009 and A020) and traffic projections from 2005 (before the start of the escalated conflict) where available or estimated based on 2005 traffic data from similar road sections. The average daily traffic obtained as an average of 7 day counts was converted to annual average daily traffic using seasonal correction factors derived from fuel consumption data. The 2009 traffic estimates are based on the surveys and assessments are given in Table 1. Table 1: Base Year Traffic on National Highway Sections AADT (motorized vehicles) Share of Motorized Vehicles AADT Two- and Goods ThreeCars Buses Vehicles Wheelers 41.7 38.3 53.4 23.1 23.1 77.0 82.0 22.9 27.5 17.4 30.0 30.1 7.3 6.9 12.6 12.8 9.3 9.4 9.4 6.2 2.1 22.8 21.4 19.9 37.5 37.4 8.5 9.0 AADT (nonmotorized vehicles) 164 160 192 3,283 … 2,622 3,491 Road Section A009: (i) Dambulla and Thonigala 3,629 (ii) Thonigala and Galkulama 2,848 A020: Anuradhapura–Rambewa 3,170 A032: Navathkuli–Kerativu jetty 3,651 A034: Mankulam–Mullaittivu 2,662 B437: Vallai–Araly 4,740 B268: Manipay–Kaithady 3,504 AADT = annual average daily traffic. Sources: Road Development Authority 3. Traffic growth forecast. Socioeconomic data as well as vehicle and traffic growth data available from different sources were collated and analyzed to derive traffic growth rates for the traffic forecast. Both economic growth and population growth contribute to traffic growth. The population growth observed in Sri Lanka for 2002–2007 is estimated at 1.04% per annum. The overall Sri Lankan economy grew at an average 6.2% per annum between 2002 and 2007 in real terms and maintained a growth rate of 6.0% in 2008. The projected a gross domestic product growth rate in 2009 is 4.5%1 due to the global slowdown, and projected it to recover to 6.0% in 2010. No reliable traffic data are available for the project roads and hence no assessment could be made of past traffic growth on these roads. The average annual traffic growth rates reported for 1991–2006 for all national highways is 8.3%2 (Road Network Master Plan, 2005). 1 2 ADB. 2010. Asian Development Outlook. Manila. Road Development Authority. 2005. Road Network Master Plan. Sri Lanka. 2 4. Vehicle registration growth is another indicator of traffic growth. The total number of registered vehicles in Sri Lanka increased at an annual growth rate of 10.2% from 2003 to 2007. All registered vehicles excluding two- and three-wheelers show a growth rate of 6.7%. 5. Based on demographic and economic growth and vehicle registration growth, indicative transport elasticity was derived for various vehicles. Future traffic growth is given in Table 2. The underlying economic growth considered is 7.0% for 2010–2015, 8.0% for 2015–2020, 7.5% for 2020–2025, and 7.0% for beyond 2025. During the expected global recovery period of the next 2–3 years, the Sri Lankan economy as a whole is anticipated to grow at 6.0%. The economy of the northern provinces will grow at a higher pace of 7% with the accelerated development and consolidation after the conflict. Further reduced defence spending will help accelerate economic growth to 8.0% in the following 5 years. This will then moderate slowly to lower growth rates as the economy reaches a certain scale. An forecast is optimistic. The recent growth trends in two- and three-wheelers indicate a very high growth rate; this is expected to continue in the medium term. Table 2: Growth Rates for Motorized Traffic (%) Vehicle Category 2010–2015 Car 7.2 Three-wheelers 15.4 Motorcycle 11.8 Public bus 3.0 Goods vehicles 8.1 Agricultural tractors 8.4 Sources: Road Development Authority 2015–2020 8.5 13.0 12.4 2.9 8.8 9.2 2020–2025 7.9 12.0 11.3 2.4 8.0 8.3 Beyond 2025 7.2 10.8 9.6 2.2 7.4 7.6 6. Because all roads are in poor condition, the potential for traffic generation is great. With improved road and reduced VOC, traffic generation is considered in the range of 20% due to increased speed and reduced VOC. Further, accelerated development in Northern Province is expected to induce additional traffic, estimated at 10%. Generated and induced traffic together is taken as 30%. 7. The traffic forecast for the road sections located in NCP (A009 and A020) was determined using a similar methodology as that used for national roads. A modified approach was used for road sections located in Northern Province (A032, A034, B437, B268) to take into account the local situation. The Jaffna and Mullaittivu districts are still characterized by a clear lack of potential for physical and social (including confidence building) infrastructure for catchup, a lack of closeness to the mainstream economy of the nation, and the protracted civil war. Through government investment programs, the basic condition for sustained growth is to be realized. The return to normal traffic as projected for 2009 based on 2005 traffic and further growth in line with national growth trends is expected to take at least 5 years. Based on these considerations, traffic on Jaffna Peninsula roads is estimated to gradually reach the projections as per the growth forecast (Table 2). For the economic analysis, traffic is assumed to reach 60% of the projected volume by the opening year of 2012, and 100% by 2016. 8. Other input data. Information required to update the main VOC parameters—such as vehicle prices; crew and maintenance labour cost; and tire, oil, and fuel costs—were gathered and used for the feasibility study. Vehicle prices and prices of components and accessories are net of taxes and duties, while fuel prices are at border prices. Value of travel time for passengers and value of goods in transit were estimated and included in the economic analysis. The average value of working time was estimated by calculating the income and employment 3 cost per employed person. The value of time for passengers of various modes were calculated by assuming a higher value for car passengers as observed in previous and similar studies. Value of working time used is SLRs199 per hour for car passengers and SLRs124 per hour for bus passengers. For goods in transit, time value was calculated using the method suggested in the HDM manual—taking the value of cargo and the opportunity cost. The value of cargo delay was estimated at SLR107 per hour. Other parameters adopted are given in the Table 3. Table 3: Other Input Data Other Input Parameter Analysis period (years) Discount rate (%) Construction period (years) Construction start year Opening year for traffic Salvage value (%) Source: Asian Development Bank Value 20 12 2 2010 2012 10 9. Economic assessment. Based on the pavement condition and capacity analysis, an improvement option was defined, which forms the with-project scenario. The without-project scenario involves minimum maintenance to keep the road in operation, such as routine maintenance and pothole patching. An economic evaluation was undertaken for each of the road sections by comparing the with- and without-project scenarios and the output from the HDM4 analysis (summarized in Table 4) to estimate the economic internal rate of return (EIRR) and net present value (NPV in SLRs million) for the proposed project improvement option. Benefits considered include the VOC savings and value of time savings. 10. The results indicate that the proposed improvements of the project roads are economically viable yielding an EIRR of above 12% in all cases and in most cases it is significantly higher indicating the high economic rate of return. Table 4: Economic Analysis Results EIRR (%) Road No. Road Name 1 A009: Dambulla–Galkulama 21.8 2 A020: Anuradhapura–Rambewa 21.7 3 A032: Navathkuli–Kerativu jetty 20.4 4 A034: Mankulam–Mullaittivu 22.6 5 B437: Vallai–Araly 24.1 6 B268: Manipay–Kaithady 20.1 EIRR = economic internal rate of return, NPV = net present value. Source: Asian Development Bank NPV (SLRs million) 4,336.7 1,187.2 1,541.2 1,019.1 2,345.5 932.3 NPV/Capital Cost Ratio 0.98 1.00 0.84 0.97 1.10 0.85 11. Sensitivity analysis. Sensitivity analysis was carried out for the base case with respect to adverse changes in the costs and benefits: (i) base case, (ii) construction cost increased by 15%, (iii) benefits (VOC and travel time savings) reduced by 15%, and (iv) construction cost increased by 15% and benefits reduced by 15% (Table 5). All roads have EIRRs well above 12% for the base case and adverse variation of 15% in costs and benefits. Therefore, all six roads are recommended for implementation. 4 Table 5: Results of Sensitivity Analysis Case 1 2 Sensitivity Scenario A009 21.8 19.8 19.5 17.7 A020 21.7 19.8 19.5 17.7 EIRR (%) A032 A034 20.4 22.6 18.6 20.4 18.3 16.5 20.0 18.0 B437 24.1 21.8 21.4 19.3 B268 20.1 18.3 18.1 16.4 Base case Construction cost increased by 15% Benefits (VOC and travel time savings) 3 reduced by 15% Construction costs increased by 15% and 4 benefits reduced by 15% VOC = vehicle operating cost. Source: Asian Development Bank B. Provincial Road Component 13. Base year traffic volume. At present, traffic volume is low in the project area; on some roads the current traffic does not provide a good base for predicting future traffic volume. Classified traffic counts were carried out in late 2009 on three representative roads where conditions were considered to be normal. For the other roads, estimates were made, based on the density of population in the area served, assumed resettlement programs, and traffic volume and composition on similar roads in other provinces. 14. Traffic growth forecast. The traffic growth forecast described for national road sections in NCP (para. 7) can be applied to the traffic forecast for provincial road sections in neighboring Mannar and Vavuniya districts of Northern Province. It could be slightly lower in the first few years but is expected to catch up soon with neighbouring NCP. Projected traffic may not be realized for a few years. This is accounted for in the economic analysis by assuming 75% of projected traffic will be realized by the opening year and 100% by 2015. The potential for generating traffic is significant as all roads are in poor to very poor condition and many are not even sealed. With improved roads, traffic generation is considered in the range of 20% due to increases in speed and reduced VOC. Further, accelerated development in Northern Province is expected to induce additional traffic, estimated at 10%. Thus, the total generated and induced traffic is estimated at 30%. 15. Economic assessment. An economic evaluation was undertaken for each of the road sections as well as all road sections together by comparing the with- and without-project options using the HDM-4 model (Table 6). The EIRR and NPV (in SLRs million) were prepared for the proposed project improvement option, with benefits including VOC savings and time savings. 16. The results indicate that the proposed improvements of the project road sections individually are economically viable yielding an EIRR of above 12% in all cases and in most cases significantly higher, indicating the high economic rate of return. The overall provincial road component has a high EIRR indicating that the project is justified in social cost–benefit terms. 17. Sensitivity analysis. Sensitivity analysis was carried out for the base case with respect to adverse changes in costs and benefits. The following cases were analyzed: (i) base case, (ii) construction costs increased by 15%, (iii) benefits (VOC and travel time savings) reduced by 15%, and (iv) construction costs increased by 15% and benefits reduced by 15%. 5 Table 6: Economic Analysis Results EIRR (%) Road Name Thalimannar Village Road 16.5 Esplanade Road 13.9 South Bar Road 15.6 Mannar–Thaivupadu–Tharanpuram 18.2 Olaithoduvai Road 15.3 Thoddavelli–Malupadi Road 13.7 Vankalai–Sirrunavatkulam Road 13.6 Pesalai–Vauadipanai Road 12.8 Pallimunai Beach Road 26.5 Uyilankulam–Manadkulam 19.3 Puthukamam Road 13.8 Karisal Road 14.4 Veppankulam–Periyamurippu Road 16.8 Murungan–Nanaddan 28.9 Approach Road to Public Building 14.5 Madhukandai–Iretperiyakulam 16.8 Mahiankulan–Pallamadu Road 49.9 Puthoor–Palamoddai Road 15.9 Intperiyakulam–Puthoor Road 14.5 Cheddikulam–Thudarikulam 21.2 Mankulam–Maruthamadhu 17.8 Pandichurichchan 15.5 All road sections together 21.3 EIRR = economic internal rate of return, NPV = net present value. Source: Asian Development Bank Road No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NPV (SLRs million) 30.5 3.3 9.8 12.4 18.9 7.3 5.3 2.3 25.0 38.0 5.2 2.3 150.1 58.5 9.3 86.1 1,084.4 127.8 24.4 131.9 22.5 23.8 1,879.0 18. The sensitivity analysis was carried out for the provincial road component as a whole (Table 7). The EIRR is above 12% in all scenarios including the combination of increased costs and reduced benefits indicating the economic viability. Some of the individual provincial road sections, which have slightly above the acceptable EIRR of 12% (Table 5), when subjected to worse case sensitivity scenario of cost increase by 15% and benefit reduction by 15%, may have an EIRR less than 12%. However, these provincial road sections provide essential accessibility to the rural and poor population in interior areas. Based on the findings of the economic assessment, the proposed improvements under the project are economically viable and sustainable, and are justified in social cost–benefit terms. Table 7: Results of Sensitivity Analysis, Provincial Road Component EIRR (%) NPV (SLRs million) Case Sensitivity Scenario 1 Base case 21.3 1,879.0 2 Construction costs increased by 15% 19.1 1,578.5 3 Benefits (VOC and time savings) reduced by 15% 18.7 1,296.6 Construction costs increased by 15% and benefits 16.7 996.1 4 reduced by 15% EIRR = economic internal rate of return, NPV = net present value, VOC = vehicle operating cost. Source: Asian Development Bank COUNTRY ECONOMIC INDICATORS (Sri Lanka: Proposed Northern Road Connectivity Project) (as of 02 Feb 2010) Item A. Income and Growth 1. GDP per Capita ($, current) 2. GDP Growth (%, in constant prices) a. Agriculture b. Industry c. Services 2005 2006 Fiscal Year 2007 2008 2009 Latest 2,094 a 3.5 a 3.3 a 3.6 a 3.5 a 1,241 6.2 1.8 8.0 6.4 1,421 7.7 6.3 8.1 7.7 1,617 6.8 3.3 7.6 7.1 28.0 23.3 15.8 16.6 16.7 23.5 (7.7) (11.0) (4.3) 12.5 10.2 2,016 6.0 7.5 5.9 5.6 27.5 18.2 22.6 8.5 15.6 22.6 (7.7) (14.0) (9.3) 6.5 24.0 B. Saving and Investment (current and market prices, % of GDP) 1. Gross Domestic Investment 26.8 28.0 2. Gross National Saving 23.8 22.3 C. Money and Inflation (annual change) 1. Consumer Price Index 2. Total Liquidity (M2b) D. Government Finance (% of GDP) 1. Revenue and Grants 2. Expenditure and net lending 3. Overall Fiscal Surplus (deficit) E. Balance of Payments 1. Merchandise Trade Balance (% of GDP) 2. Current Account Balance (% of GDP) 3. Merchandise Export ($) Growth (annual % change) 4. Merchandise Import ($) Growth (annual % change) F. External Payments Indicators 1. Gross Official Reserves (including gold, $ million in weeks of current year’s imports of goods) 2. Gross Official Reserves ($ million) 3. External Debt Service (% of exports of goods and services) 4. Total External Debt (% of GDP) G. Memorandum Items 1. GDP (current prices, SLRs billion) 2. Exchange Rate (SLRs/$, average) 3. Population (million) 11.0 19.1 16.8 23.8 (8.4) (10.3) (2.7) 10.2 10.8 10.0 17.8 17.3 24.3 (8.0) (11.9) (5.3) 8.4 15.7 3.4 b 18.7 c 15.0 d 21.9 d (7.0) d (14.7) e (31.9) e 14.8 13.2 14.8 6.0 25.6 f 5,228 f 16.9 g 2,458 7.9 46.5 2,453 100.50 19.7 2,515 12.7 42.4 2,939 103.96 19.9 3,063 13.1 43.2 3,578 110.62 20.0 1,753 15.0 37.1 4,411 108.33 20.2 4,911 a 114.94 20.4 ( ) = negative, GDP = gross domestic product. SLR= Sri Lankan Rupees a CBSL Projected Figure for 2009 b Annual average change to December 2009. Year on year change to December 2009 was 4.8%. c Annual change to November 2009 d Based on the revised estimates by the Ministry of Finance and Planning in July 2009 e January –November 2008/2009 period f January – November 2009 g For the first half of 2009 Sources: Central Bank of Sri Lanka Recent Economic Developments: Highlights of 2009 and Prospects for 2010, Central Bank Website Weekly Economic Indicators 08 January 2010, Selected Economic Indicators November 2009 SUMMARY POVERTY REDUCTION AND SOCIAL STRATEGY (Sri Lanka: Northern Road Connectivity Project) Country and Project Title: Sri Lanka: Northern Road Connectivity Project Lending/Financing Modality: Project Loan Department/ Division: South Asia Department/ Transport and Communications Division I. POVERTY ANALYSIS AND STRATEGY A. Link to the National Poverty Reduction Strategy and Country Partnership Strategy The country was on a track to achieve the Millennium Development Goal by reducing the percentage of total population living in poverty to 15% in 2008. However, the incidence of poverty in conflict-affected regions in the northern and eastern areas is estimated at around 37% compared with the national average of 15%. About 300,000 people were internally displaced during 2008–2009. With the end of conflict in May 2009, the Government of Sri Lanka has given high priority to the resettlement of internally displaced people, and reconstruction and development of infrastructure in these two regions. The government prepared a development framework under Mahinda Chintanaya, a Vision for Sri Lanka in 2006, and a special development program, Wadakkin Wasantham or Northern Spring, from 2009 to 2012 to focus on infrastructure development, resettlement of internally displaced people, and livelihood restoration. The implementation of projects under these special development programs will strengthen the investment climate and achieve socially inclusive and regionally balanced economic growth. The development strategy of the government is aligned with ADB's country strategy and program1, which has a major objective of developing infrastructure in the northern and eastern provinces. One of the obstacles for reducing poverty is poor infrastructure, especially the present road network that does not provide adequate transport facilities and connectivity between the conflict-affected regions and the rest of the country.. The project will improve connectivity in the road transport networks of two conflict-affected provinces: Northern Province and North Central Province (NCP). The rehabilitation of about 62 kilometers (km) of national roads in Anuradhapura district of NCP, 108 km of national roads in Jaffna and Mullaitivu districts, and about 140 km of provincial roads in Mannar and Vavunia districts within Northern Province will improve transport facilities and contribute to expanding local and export markets. Road network improvements will also support increased agricultural production and productivity by improving the supply of seeds, fertilizer, and technical services. The improved road network will reduce local travel costs and travel times, and facilitate regular and timely attendance at schools, health centers, and other social services. The rehabilitation of national and provincial roads will stimulate the attraction of investors for establishing new economic enterprises. B. Poverty Analysis Targeting Classification: General intervention Key Issues. Sri Lanka ranks 104th of 179 countries according to the United Nations' human development index. The national poverty incidence in Sri Lanka has been reduced to 15%. Poverty reduction has been slow during the past decade in the rural and estate sectors. Poverty in rural areas is consistently higher compared with urban areas. The project will have positive impacts on economic and social development activities for the people as a result of improved transport networks and improved access to markets and other services. The total population living adjacent to the roads identified for rehabilitation can be considered direct beneficiaries. The study team estimates that the project influence area has a total population of about 339,614 that will benefit from the project (about 74,331 people in Mannar district; 95,608 people in Vavunia district; 15,500 settled people and about 112,000 people to be resettled in Mullaitivu district; about 110,000 people in Jaffna district; and about 44,168 people in Anuradhapura district). The majority of the total beneficiary population is rural. Their main economic activities, which will be improved, include agriculture, fishing, livestock, and trade. The causes of rural poverty are complex and reducing poverty is a challenge. The majority of the rural poor, identified by the field surveys, are subsistence farmers, agricultural laborers, poor fisherfolk, and small traders. Improved access to markets to obtain higher prices for products will increase incomes. Improved transport facilities are expected to promote market expansion, educational attainment, and the availability of basic infrastructure. The poverty head count index statistics in the project influenced areas of candidate roads are not readily available. However, based on social assessment studies, about 42% of the total number of families in Mannar district, 36% of total families in Vavunia district (Northern Province), 23% of total families in Anuradhapura district (NCP), and 34% of total families in Jaffna district (Northern Province) live below the poverty line. These people are samurdhi recipients under the poverty reduction program. Other indicators of poverty are the small extent of lands owned and cultivated 1 ADB. 2008. Country Strategy and Program: Sri Lanka, 2009–2011. Manila. 2 and the ability to cultivate one or two seasons. The road users of candidate roads believe that better transport facilities will enable them to get higher prices for their agricultural produce and fish production. The road rehabilitation of A34 (49 km) from Oddusudan to Mullaitivu town will largely benefit about 112,000 internally displaced people, now in welfare camps in Vavunia district. Generally, beneficiary groups are concerned with issues relating to poor road construction, possible damage to irrigation canals and drainage systems, and delays in completion of project activities. Design Features. The project's main pro-poor design feature is the delegation of management responsibilities to the provincial authorities and provision of assistance for effective project implementation to achieve sustainable and equitable human development through consultation and participation of beneficiary groups, particularly poor groups, and good governance and administration. II. SOCIAL ANALYSIS AND STRATEGY A. Findings of Social Analysis Key Issues. A significant number of people in farming and fishing communities in Northern Province and adjacent areas were economically displaced during conflict periods resulted in the loss of their livelihoods and basic agricultural and fishing equipment. According to a survey done in Jaffna district in 2002, the unemployment rate was 28%; the national figure is about 8%. Transport of both agricultural products and inputs, such as fertilizer and agrochemicals, to Northern Province was restricted during the last three decades. Tourism in NCP was also affected as indicated by the low number of tourists visiting the historic cities of Anuradhapura and Mihintale. Local visitors to places of religious significance were also reduced during this period. Northern Province roads are badly damaged. Because of the conflict situation, no road rehabilitation or regular maintenance was carried out until May 2009. However, with the political stability in the northern and eastern areas, quite a number of infrastructure development activities were started. The project will enhance development of three district capitals, Jaffna, Mannar, and Vavunia. These urban centers are trading and administrative centers with some industries. In addition, the project area includes small urban centers and commercial towns that will have social and economic benefits from the project. Project beneficiaries represent major ethnic groups in the country. Number and Percentage of Population in the Project Influence Area by Ethnicity Sinhalese Tamils Moor No. % No. % No. % Anuradhapura 39,205 88 996 2 4,426 10 Jaffna … … 110,000 100 … … Vavunia 15,974 16 72,887 76 6,511 7 Mannar 46 … 65,339 88 8926 12 Mullaitivu … … 15,507 100 … … District Population No. 44,168 110,000 95,608 74,331 15,507 339,614 Note: Total population figures include members of other ethnic groups. Sources: Estimated population in the project influence area of project roads extracted from the relevant divisional secretaries offices in 2009. B. Consultation and Participation 1. Provide a summary of the consultation and participation (C&P) process during project preparation. A sample of about 20% residents and other road users were selected from the immediate vicinity of each road for the social survey. This was followed by a series of community consultations with groups and interviews conducted with the grama niladharis (local village officers) and divisional secretaries during the design stage. The consultation process involved discussion of proposed project activities, benefits, and other impacts. This was also done to increase awareness of the project, to find out their needs and concerns, and to obtain suggestions for enhancing benefits and mitigating the negative impacts. All road users mentioned time savings as a potential benefit from the project. 2. What level of C&P is envisaged during the project implementation and monitoring? Information sharing Consultation Collaborative decision making Empowerment 3. Was a C&P plan prepared? Yes No The project implementation consultants will assist the respective provincial road departments and Road Development Authority offices to monitor project impacts through consultations with stakeholders and road users. C. Gender and Development Key Issues. The project will not provide any specific gender-related benefits. However, if negative impacts on vulnerable households headed by women are identified during road rehabilitation, special support will be provided. 3 Key Actions. Measures included in the design to promote gender equality and women’s empowerment—access to and use of relevant services, resources, assets, or opportunities and participation in decision-making process: Gender plan Other actions or measures No action or measure III. Issue Involuntary Resettlement SOCIAL SAFEGUARD ISSUES AND OTHER SOCIAL RISKS Significant/Limited/ Plan or Other Measures No Impact Included in Design Strategy to Address Issue Limited. No land A resettlement framework is Resettlement Plan acquisition is expected. included to address unanticipated Resettlement impacts during road rehabilitation. Framework Environment and Social Management System No Action No Imapct. Not Applicable. Indigenous Peoples Plan Indigenous Peoples Framework Environment and Social Management System No Action Ensure that all civil works Plan contractors comply with all Other Action applicable labor laws and No Action regulations of Sri Lanka to (i) not employ child labor for construction and maintenance activities; (ii) provide equal pay for men and women for similar work under the existing laws; and (ii) provide safe and healthy working conditions, including appropriate sanitation facilities for workers. The project will monitor the contractors' compliance with labor provision and facilities in the contract. Action No Action Sri Lanka has a low As a result of the priority given to Plan prevalence rate of HIV use local workers for civil works Other Action infection and no cases and possible influx of migrant No Action of human trafficking laborers is very low, the possible were reported during spread of sexually transmitted social surveys and the diseases and HIV is unlikely. interviews conducted. However, awareness and timely This is indicated by information to construction workers statistical data available on risks and preventive measures from Sri Lanka's will be made and contractor's National HIV Control compliance with the Agency's website. implementation of existing laws and labor regulations will be monitored. Indigenous Peoples Labor Employment opportunities Labor retrenchment Core labor standards Affordability Other Risks and/or Vulnerabilities HIV/AIDS Human trafficking Others (conflict, political instability, etc.) IV. MONITORING AND EVALUATION Are social indicators included in the design and monitoring framework to facilitate monitoring of social development activities and/or social impacts during project implementation? Yes No {Please place footnotes here.} Source: Asian Development Bank. RESETTLEMENT FRAMEWORK (Sri Lanka: Proposed Northern Road Connectivity Project) Note: It is envisaged at this time that the improvement works will be within the existing right-ofway boundaries. However, if land acquisition requirement is identified during the implementation, the resettlement framework will be utilized as guide for the preparation of resettlement plan. The framework, therefore, is subject to further refinement as mutually agreed by the ADB and the Government. A. Project Background 1. The Project consists of the rehabilitation of about 140 km of provincial roads (Vavuniya and Mannar districts) and about 108 km of national highways within Northern Province (NP), and improve about 62 km of link national highways in the North Central Province (NCP). The Project is designed to use only the existing right-of-way (ROW). All rehabilitation and improvement components related to roads and bridges such as the carriage way, pavement, and drainage facilities will be within the existing ROW. The consultant engineers and engineers of provincial road agencies of each province jointly conducted field assessments to determine road rehabilitation needs and possible permanent and temporary land acquisition and other resettlement impacts of selected roads. The assessment process involved measuring the existing ROW and pavement widths; identifying existing drainage deficiencies; taking photographs; and measuring bridge dimensions including span length, deck width, and water level at bridge sites. In the absence of recent land survey drawings and maps prepared by the provincial road agency or survey department indicating the existing ROW and road boundaries for each road, consultant engineers and the staff of provincial road agencies determined whether the existing road corridor of each road is adequate to meet rehabilitation requirements of selected roads and bridges. In the case of bridges, the Project will not increase the carriageway width. However, some bridges that are unsafe and cannot be repaired will be replaced with new bridges. Based on the information available from the engineers' assessments and using their guidance, resettlement specialists carried out sample surveys, rapid assessments based on field observations, walk-through surveys and discussions with local affected people. 2. Although the project feasibility study (October 2009) and detailed engineering study (January 2010) indicate that no land acquisition is required for the purposes of the Project, exact actual permanent and temporary impacts from the rehabilitation works will be known only during project implementation. The rehabilitation works could have some impacts on lands and buildings adjacent to the boundary walls, drainages, and canals. Moreover, some land acquisition might be required for the construction of new bridges. The common feature of rural roads is that pavements, shoulders, and side drains are very narrow or nonexistent in some road sections so that the implementing agencies may decide to acquire minimum land for proper rehabilitation works. Services relocation such as shifting of telephone and electricity transmission lines may require land acquisition. Some road sections in semi-urban and urban areas may require widening and realignment to ensure road safety and smooth traffic flow. In such cases, the project implementing agencies will formulate short resettlement plans (RPs) and submit them to the Asian Development Bank (ADB) for review and approval before any construction work in the road section is started. The potential number of households or the land area acquired in such a situation would be small based on field assessments 3. This resettlement framework (RF) was formulated to ensure that if land acquisition (permanent or temporary), physical relocation, and other impacts are identified during project 2 implementation, appropriate compensation and relocation programs will be prepared and implemented to meet Sri Lankan laws, National Involuntary Resettlement Policy (NIRP) (2001), and ADB's new Safeguard Policy Statement (2009) requirement. B. Scope, Policy Framework, and Entitlements 4. The RF is based on the Sri Lanka NIRP of 2001, involuntary resettlement policy component of the ADB's new Safeguard Policy Statement (2009) requirement, the Land Acquisition Act of Ceylon 1960 as amended in 1986. The RF distilled the relevant policy principles from these sources and they reflect the safeguards policy requirements of the Government and ADB. 5. The Scope of RF. The RF covers involuntary physical displacement and economic displacement arising from land acquisition and restrictions on land use. If the proposed project has to acquire private land for road widening or improvements it is necessary to formulate RPs to deal with such resettlement impacts following this RF. Any physical or economic displacement arising from the proposed project will require RPs, formulated by following the guidelines of the RF. 6. Policy Principle. Sri Lanka NIRP of 2001 lists several policy principles which are applicable to all development projects. They meet most of Safeguard Policy Statement requirements for involuntary resettlement. • • • • • Involuntary resettlement should be avoided or reduced as much as possible by reviewing alternatives to the project as well as alternatives within the project. Where involuntary resettlement is unavoidable, affected people should be assisted to reestablish themselves and improve their quality of life Gender equality and equity should be ensured and adhered to throughout the policy application Displaced persons should be fully involved in the selection of relocation sites, livelihood compensation and development options as early as possible Replacement land should be an option for compensation in the case of loss of land; in the absence of replacement land cash compensation should be an option for all displaced persons. Compensation for loss of land, structures, other assets and income should be based on full replacement cost and should be paid promptly. This should include transaction costs. Resettlement should be planned and implemented with full participation of the provincial and local authorities To assist those affected to be economically and socially integrated into the host communities, participatory measures should designed and implemented. Common property resources and community and public services should be provided to project-affected people. • • • • 3 • • • • Resettlement should be planned as a development activity for the benefit of the projectaffected people. Displaced persons who do not have documented title to land should receive fair and just compensation and assistance Vulnerable groups should be identified and be given appropriate assistance to substantially improve their income and living standards MOHRD/RDA for national component and NPC-NPRDD for provincial component should bear the full costs of compensation and resettlement 7. In addition to the above policy principles, the following ADB safeguards policy principles will also apply to the Project. • Develop procedures in a transparent, consistent, and equitable manner, if land acquisition is through negotiated settlement in order to ensure that those people who enter into negotiated settlements will maintain the same or better income and livelihood status. Pay compensation and provide other resettlement entitlements before physical or economic displacement. Prepare a RP elaborating on displaced persons' entitlements, the income and livelihood restoration strategy, institutional arrangements, monitoring and reporting framework, budget, and time-bound implementation schedule • • 8. Modes of Land Acquisition. The land will be acquired under the Land Acquisition Act. The entitlement matrix reflects Sri Lankan resettlement policy, land laws and regulations, and requirements of ADB Safeguard Policy Statement of 2009. 9. Entitlement Matrix. If any resettlement impact not listed in the matrix is identified during project implementation will be added to the entitlement matrix. Entitlement matrix outlines the categories of resettlement impacts and implementation issues that need special attention of the EA and implementing agencies (IAs). ENTITLEMENT MATRIX Type of Losses Permanent Loss of land Entitled Person Land owner/ Title holder Entitlements • Land-for-land or cash-for-land and other assets lost at replacement cost. • Shifting/moving allowance, if physically displaced. • Livelihood/income improvement/restoration grant/skills and vocational training. • Living allowance until livelihood or income sources are restored. Implementation Issues • Vulnerable persons have the priority for replacement land, based on needs. • Special attention to orphaned children and widows to ensure their inheritance rights. • Land titles may not be available. Provincial and District level land records and owner-identification processes such as 4 Type of Losses Entitled Person Entitlements • Land registration expenses and taxes, if any. Loss of agricultural Land and loss of income sources /livelihoods based on land Tenant/ Sharecropper • Cash payment for loss of standing crops at their market value • Cash payment for the remaining portion in agreement with the land owner. • Assistance in negotiating a new sharecropper agreement on another plot of land for • Subsistence allowance for six months or until an alternate employment is found or given. • Subsistence assistance until alternate employment is found. • Assistance in obtaining skill training and ‘seed’ money to restore income/livelihood. • Implementation Issues community consultations will be used in case of land title is lost. Entitlements apply equally to both registered and unregistered tenants/sharecroppers. At least 30-day notice of land clearance Department of Agriculture will determine market value of crops and trees. Subsistence paid in cash and assistance to find new employment. Special budget built into resettlement budget. Identification of daily wage workers is to done in consultation with local authorities and village leaders. Special budget is required Cut-off date to be publicized early. • • • Loss of livelihood/inco me Temporarily affected land (during construction) Daily wage worker in agriculture or in nonagricultural enterprises including those at business establishment s Land owner/title holder • • • • Land rent during the temporary use of land. • If displaced, shifting/moving assistance (as above) Business establishment Owner Business establishment Non-titled (squatter) owner • Replacement cost of land and commercial establishment without deduction for depreciation/salvageable materials. • Shifting/moving costs. • Replacement cost for structures without deduction for depreciation. • Salvageable materials • Moving/shifting allowance, if physically displaced. • If sown or standing crops are damaged or uprooted, the cultivator of the affected crops Loss of crops and trees (both temporary and Title owner and non-titled owner The land will be restored to its previous status or will be improved. Rent will be decided by MOHRD/RDA (in case of national road component) and NPCNPRDD (in case of provincial roads) in consultation with DS and displaced persons. • Estimated value of the business will be included in replacement cost. • Workers entitlements to be worked out separately (see above) • Support to find alternate land for business and settlement by EA/IAs. • Estimated value of the business affected will be included in replacement cost. • The value of trees or crops that will be affected by a subproject will decided by 5 Type of Losses permanent) Entitled Person Entitlements will be compensated in cash at the mature crop value to be assessed on the basis of current market rates. Compensation for loss of fruit trees at market value, based on the present income and crop bearing capacity. Compensation for structures/assets at replacement cost without deduction for depreciation/ salvageable materials. Moving/shifting allowance, if displaced. Replacement cost of structures they constructed, without deduction for depreciation. Salvageable materials belong to the establishment owner. Moving/shifting allowance, if displaced. Implementation Issues local agricultural offices in consultation with displaced persons. • Owners will be given at least 30 day notice before removal. • Loss of structures and immovable assets (including residential houses) Loss of structures and immovable assets (including residential houses) Owner – titled or registered • • Non-titled (squatters) • • Community structures and facilities Community EA/IA will rebuild community structures and facilities. • MOHRD/RDA (in case of national road component) and NPC-NPRDD (in case of provincial roads) will assist in finding alternate residential land, especially for vulnerable displaced persons. • Budget for replacement Building of structures will be done in consultation with the affected community. C. Screening and Assessing Impacts and Formulating RPs 10. The EA or IA for each subproject will conduct a socioeconomic survey and a census to identify all persons who will be physically and/or displaced by the project component or subproject and to assess its socioeconomic impacts on them1. The EA/IA will establish a cut-off date for eligibility as early as possible to avoid the arrival of speculators from outside to obtain resettlement assistance. 1 The EA/IA will use the following checklist to screen subprojects to identify their resettlement impacts in consultation with ADB: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) Will the subproject require land? What is the quantity of land required? Will the impact be permanent or temporary (during construction)? Who owns the land? How is land currently used? If private land, how many landowners/tenants/sharecroppers will be affected? If state land, is it subject to traditional claim? If state land, are there any squatters or informal settlers? Are there any houses, structures, trees and crops that will be affected (whether state or private land)? How many households will be physically displaced? Is there any public or community infrastructure? Will Veddah communities be affected? 6 11. Formulate a time-bound schedule for RP implementation, procedures for grievance redress, monitoring and evaluation (both internal and external). 12. The EA will endorse and disclose the draft RP to all displaced persons before submitting it to ADB for review and approval. Once ADB approves it, the EA will disclose it to displaced persons and other stakeholders. It will be posted on ADB Involuntary Resettlement Website, and in the EA/IA's website (if available). The RP, especially its entitlement matrix, budget and implementation plan and timeframe will be translated into Sinhala and Tamil, and copies of the translations will be widely distributed among all displaced persons and other stakeholders. Copies of the RP will be kept at Grama Seva Niladari Offices and public places for public perusal. 13. The payment of compensation and physical relocation, if required, will be completed before the award of any construction contracts of a project component or a subproject. D. 14. Implementation Arrangements The implementation arrangements are as follows: Arrangements Members: Ministry of Highways and Roads Development (MOHRD) (co-chair), Ministry of Local Government and Provincial Councils (MLGPC) (co-chair), Ministry of Finance and Planning, External Resources Department, National Planning Department, Finance Commission, Northern Provincial Council, Northern Provincial Road Development Department (NPRDD) Aspects 3 Project management 3.1 Overall Oversight body National Steering Committee 3.2 3.3 3.4 National Road Component: Executing agency Implementing agency 3.1 3.2 3.3 MOHRD Road Development Authority (RDA) Project implementation Colombo with district Number of staff proposed: 18 unit (existing PIU for offices in Northern and ADB L-2080 will be North Central utilized) Provinces Provincial Road Component: Oversight body Provincial Coordinating Members: Chief Secretary of Northern Province Committee (Chair), NPRDD, and Project Implementation Consultant Executing agency MLGPC (utilizing the existing Project Coordinating Unit for ADB Loan 2546) Implementing agency NPRDD under Northern Provincial 7 Aspects 3.4 Arrangements Council Project implementation Trincomalee (main Number of staff proposed: 17 unit office) with district offices in Vavuniya and Mannar Source: the Government 15. The IAs will utilize PIC's assistance to formulate RPs for subprojects with resettlement impacts and to help in implementing the RPs. D. Grievance Redress 16. A Grievance Redress Committee (GRC) at each Divisional Secretary level will be formed to deal with land and compensation disputes and grievances, and to facilitate timely implementation of the project. The GRC will meet as necessary and when grievances are referred to it for redress. The GRC will examine each complaint within a month and inform its findings and decisions within six weeks to all parties. E. Consultation with Displaced Persons 17. The RDA and NPRDD will conduct consultations with displaced persons identified as having involuntary resettlement impacts. Consultations will begin early in the project preparation stage and will be carried out on an on-going basis throughout the project life. Through consultation, the EA and IAs will disclose relevant project information and displaced persons entitlements and their delivery. Such information will be disseminated through their languages and such information will be made available for them at public places for easy reference. Consultation will be carried out in a manner commensurate with the impacts on affected communities. The RDA and NPRDD will pay particular attention to the need or disadvantaged and vulnerable groups, especially those who without legal title to land, the elderly, female headed households, women and children Consultation will be conducted through a stakeholder consultation process, assisted by nongovernment organizations. F. Income Restoration and Improvement 18. If the affected persons are vulnerable people or severely affected, specific and detailed income and livelihood restoration programs need to be included with adequate budgets and institutional framework. G. Monitoring and Evaluation 19. RDA and NPRDD will conduct its own internal monitoring of the subproject’s RP implementation and will submit quarterly reports to MOHRD and MLGPC, and to ADB for review and information. External monitoring reports will be submitted quarterly reports during the first year of project implementation and twice a year from the second year. H. Resettlement Budget 20. Detailed cost estimates for implementing a RP will be prepared by RDA and NPRDD, respectively, for each RP and will be included in subproject's cost estimates. The budget 8 includes (i) detailed costs of land acquisition, relocation, and livelihood and income restoration and improvement; (ii) sources of funding; (iii) arrangements for approval of RP cost estimates; and (iv) the flow of funds and contingency arrangements. All land acquisition, compensation, relocation and rehabilitation of income and livelihood will be considered as an integral component of project costs. RISK ASSESSMENT AND RISK MANAGEMENT PLAN (Sri Lanka: Northern Road Connectivity Project) Risks Governance Public financial management: government delay in releasing counterpart funds Procurement: Implementing agency for the provincial road component (NPRDD) lacks direct experience procuring works funded by ADB. Procurement: Transparency during procurement process Other Risks Safeguard compliance Assessment without Mitigation Medium Management Plan Assessment with Mitigation Low Medium Medium ADB will finance 89% of the total project investment cost, the Government of Sri Lanka will finance taxes and duties only. This will ease the government's financial burden to provide counterpart funding and ensure adequate cash flow during implementation. A procurement consultant has been engaged (timeline: started in January 2010 for about 12 months) under the Road Project Preparatory Facility,a providing assistance to NPC–NPRDD with bidding documents, bid evaluation, among others. The executing agency for the provincial road component (MLGPC) has adequate experience with ADB procurement guidelines and will also provide close advisory support to NPC–NPRDD (timeline: throughout project implementation). The executing agencies will disclose information about procurement-related information in their respective websites such as invitation for bids and basic details on bidding procedures adopted. The executing agencies will establish a project website (timeline: within 3 months of loan effectiveness). Before commencing construction, a due diligence mission will be fielded to confirm that rights-of-way to be handed over to contractors are free of encumbrances and ready for handover to the civil works contractors, and, as required, inform project authorities and those affected of remedial actions, if any; and to create awareness among the project authorities about ADB's social safeguard requirements pertaining to the project The Road Project Preparatory Facility is being utilized to ensure high implementation readiness. Advance actions are being taken with the objective of awarding contracts shortly following loan effectiveness subject to completing the resettlement activities if any (timeline: ongoing) Performance-based maintenance after completion will be included in the civil works contracts to secure maintenance of the project roads. Through the associated capacity development technical assistance project, NPC– NPRDD's road asset management systems will be strengthened. Low Low Medium Low Implementation delay High Low Inadequate postproject road maintenance Medium Low Overall Medium Low ADB = Asian Development Bank, MLGPC = Ministry of Local Government and Provincial Councils, NPC–NPRDD = Northern Provincial Council–Northern Provincial Road Development Department. a ADB. 2004. Report and Recommendation of the President to the Board of Directors: Proposed Technical Assistance Loan to the Democratic Socialist Republic of Sri Lanka for the Road Project Preparatory Facility. Manila (Loan 2080-SRI, for $15 million, approved on 13 April). Source: Asian Development Bank.