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Document of
The World Bank
Report No: ICR00003916
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(IDA-48320 IDA-50020 IDA-H3390 IDA-H6290)
ON A
CREDIT
IN THE AMOUNT OF SDR 65.9 MILLION
(US$ 96.3 MILLION EQUIVALENT)
AND
GRANT
IN THE AMOUNT OF SDR 44.8 MILLION
(US$69.4 MILLION EQUIVALENT)
TO THE
GOVERNMENT OF NEPAL
FOR A
ROAD SECTOR DEVELOPMENT PROJECT
December 22, 2016
Transport and ICT Global Practice
Nepal Country Unit
South Asia Region
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i
CURRENCY EQUIVALENTS
(Exchange Rate Effective October 24, 2016)
Currency Unit = Nepalese Rupee
US$ 1.0 = NPR 107
US$ 0.009346 = NPR 1.0
FISCAL YEAR
July 16 – July 15
ABBREVIATIONS AND ACRONYMS AADT Annual Average Daily Traffic MIS Management Information Systems
ADB Asian Development Bank MOF Ministry of Finance
AF Additional Financing MOPIT Ministry of Physical Infrastructure and
Transport
CMS Content Management System MPPW Ministry of Physical Planning and Works
CPA Comprehensive Peace Accord MTR Mid Term Review
CPI Consumer Price Index NPR Nepali Rupee
CPN-M Communist Part of Nepal – Maoists NPV Net Percent Value
DFID Department for International Development PAD Project Appraisal Document
DOR Department of Roads PAF Project Affected Families
EIRR Economic Internal Rate of Return PCU Program Coordination Unit
EMAP Environmental Monitoring and Assessment
Program
PDO Project Development Objective
EoP End of Project PIP Priority Investment Plan
ESMF Environmental and Social Management
Framework
RAIDP Rural Access Improvement
Decentralization Program
FMIS Financial Management Information System RAP Resettlement Action Plan
GESU Geo-environmental and Social Unit RBN Roads Board Nepal
GDP Gross Domestic Product RMDP Road Maintenance Development Project
GRM Grievance Redress Mechanism RSDP Road Sector Development Project
GoN Government of Nepal SDR Special Drawing Rights
HR Human Resources SFC Standard Conversion Factors
HRD Human Resources Development SRN Strategic Road Network
ICT Information and Communications
Technology
SWAP Sector Wide Approach
ICR Implementation Completion and Results
Report
UN United Nations
IDA International Development Association USD United States Dollar
ISN Interim Strategy Note VOC Vehicle Operating Cost
ISR Implementation Status Report VoT Time Saving Benefits
IT Information Technology WAN Wide Area Network
JICA Japanese International Cooperation Agency WP With Project
M&E Monitoring and Evaluation XDR Special Drawing Rights
Senior Global Practice Director: Jose Luis Irigoyen
Country Director:
Country Manager:
Practice Manager:
Qimiao Fan
Takuya Kamata
Karla Gonzalez Carvajal
Project Team Leader: A.K. Farhad Ahmed
ICR Team Leader: Justin Runji / Sri Kumar Tadimalla
ii
NEPAL
Road Sector Development Project (RSDP)
CONTENTS
Data Sheet
A. Basic Information
B. Key Dates
C. Ratings Summary
D. Sector and Theme Codes
E. Bank Staff
F. Results Framework Analysis
G. Ratings of Project Performance in ISRs
H. Restructuring
I. Disbursement Graph
1. Project Context, Development Objectives and Design ........................................................... 1
2. Key Factors Affecting Implementation and Outcomes ........................................................... 8
3. Assessment of Outcomes ...................................................................................................... 15
4. Assessment of Risk to Development Outcome ..................................................................... 22
5. Assessment of Bank and Borrower Performance .................................................................. 23
6. Lessons Learned .................................................................................................................... 25
7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ....................... 27
Annex 1. Project Costs and Financing by Component.............................................................. 29
Annex 2. Outcomes and Outputs by Component ...................................................................... 31
Annex 3. Economic and Financial Analysis ............................................................................. 36
Annex 4. Bank Lending and Implementation Support/Supervision Processes ......................... 42
Annex 5. Beneficiary Survey Results ....................................................................................... 44
Annex 6. Stakeholder Workshop Report and Results ............................................................... 45
Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ................................. 46
Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ................................... 51
Annex 9. List of Supporting Documents ................................................................................... 52
Annex 10. Notes on Accessibility, Time Savings, and Employment Impacts of the Project ... 53
MAP .......................................................................................................................................... 56
iii
Data Sheet
A. Basic Information
Country: Nepal Project Name: Road Sector
Development Project
Project ID: P095977 L/C/TF Number(s):
IDA-48320, IDA-
50020, IDA-58650,
IDA-H3390, IDA-
H6290
ICR Date: 10/21/2016 ICR Type: Core ICR
Lending Instrument: SIL Borrower: GOVERNMENT OF
NEPAL, MOF
Original Total
Commitment: XDR 27.80M Disbursed Amount: XDR 64.71M
Revised Amount: XDR 110.73M
Environmental Category: B
Implementing Agencies:
Department of Roads
Cofinanciers and Other External Partners:
B. Key Dates
Process Date Process Original Date Revised / Actual
Date(s)
Concept Review: 03/19/2007 Effectiveness: 02/21/2008 02/21/2008
Appraisal: 09/10/2007 Restructuring(s):
09/06/2010
06/30/2011
06/27/2012
01/21/2015
06/18/2015
02/03/2016
06/15/2016
Approval: 12/06/2007 Mid-term Review: 08/30/2010
Closing: 06/30/2012 07/15/2019
C. Ratings Summary
C.1 Performance Rating by ICR
Outcomes: Moderately Satisfactory
Risk to Development Outcome: Significant
Bank Performance: Moderately Satisfactory
Borrower Performance: Moderately Satisfactory
iv
C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)
Bank Ratings Borrower Ratings
Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory
Quality of Supervision: Moderately Satisfactory Implementing
Agency/Agencies: Moderately Satisfactory
Overall Bank
Performance: Moderately Satisfactory
Overall Borrower
Performance: Moderately Satisfactory
C.3 Quality at Entry and Implementation Performance Indicators
Implementation
Performance Indicators
QAG Assessments
(if any) Rating
Potential Problem
Project at any time
(Yes/No):
Yes Quality at Entry
(QEA): None
Problem Project at any
time (Yes/No): Yes
Quality of
Supervision (QSA): None
DO rating before
Closing/Inactive status:
Moderately
Satisfactory
D. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
Central government administration 10 10
Rural and Inter-Urban Roads and Highways 90 90
Theme Code (as % of total Bank financing)
Infrastructure services for private sector development 67 67
Rural services and infrastructure 33 33
E. Bank Staff
Positions At ICR At Approval
Vice President: Annette Dixon Praful C. Patel
Country Director: Qimiao Fan Susan G. Goldmark
Practice
Manager/Manager: Karla Gonzalez Carvajal Guang Zhe Chen
Project Team Leader: A.K. Farhad Ahmed Marianne Kilpatrick
ICR Team Leader: Justin Runji / Sri Kumar Tadimalla --
ICR Primary Author: Paul J. Kaiser --
v
F. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document)
The PDO is for the residents of beneficiary districts to have all-season road access
thereby reducing travel time. This will help improve access to economic centers and
social services. The project targets five hill districts which currently lack all-season road
access and will improve access to one other district. The achievement of the project will
be monitored by the following outcome indicators:
i. 6 percent increase in the number of people with all-season road access in the project
districts (20 minutes walking or 2 km);
ii. 35 percent decrease in travel time for target population to reach key economic centers
and social services;
iii. DoR to provide effective road infrastructure services to users (measured through user
satisfaction survey);
iv. Roads Board is fully functional and provides effective and sustainable funding for
road maintenance (undertaking at least 500 kms of periodic maintenance of the SRN
annually and over 1,000 km of backlog periodic maintenance within the project period).
Revised Project Development Objectives (as approved by original approving authority)
The PDO was not revised. However, for better reporting on the PDO, some indicators
and targets were revised. Other indicators were added to reflect the scaling up of the
operation. A summary of the changes made to the indicators and targets at the time of the
first Additional Financing (AF) is provided in Table 1 of the main text.
(a) PDO Indicator(s)
Indicator Baseline Value
Original Target
Values (from
approval
documents)
Formally
Revised
Target
Values
Actual Value
Achieved at
Completion or
Target Years
Indicator 1 : Percent increase in population in project districts with all season road
access within 20 minutes walking distance (Original).
Value
quantitative or
Qualitative)
8% 14% - 15%
Date achieved 06/25/2007 1/21/2015 06/30/2016
Comments
(incl. %
achievement)
The original target of 14% was achieved and marginally exceeded by 7%.
The original target was not revised and there is evidence that at the time of
the main restructuring in Sep. 2010, this indicator had progressed
satisfactorily.
Source: SRDP Accessibility Study Report of Sep. 2014, based on a GIS
analysis
Indicator 2 : Percent decrease in journey times in the project area (Original).
vi
Value
quantitative or
Qualitative)
n/a 35% -- 53%
Date achieved 06/25/2007 1/21/2015 06/30/2016
Comments
(incl. %
achievement)
The original target, which also remained unchanged, was exceeded
significantly – by 51%. The report makes reference to markets and district
headquarters as economic centers, whereas social services centers include
schools, colleges, and hospitals. Although the original target was not
revised, there is evidence that at the time of the main restructuring in Sep.
2010, this indicator had progressed satisfactorily well. Refer to more
details on journey times in Annex 10
Source: GoN 2016 Impact Study on Project Roads1.
Indicator 3 : Decrease in journey times in the project area to key economic centers.
Value
quantitative or
Qualitative)
4 hours -- 2.6 hours 1.9 hours
Date achieved 06/25/2007 11/30/2010 06/30/2016
Comments
(incl. %
achievement)
Target was exceeded by 56%. As against the original target of 35%
decrease, journey time to key economic centers decreased by 53%, to
below half of the baseline of 4 hours. Refer to more details in Annex 10
Source: GoN 2016 Impact Study on Project Roads.
Indicator 4 : Decrease in journey times in the project area to key social service centers.
Value
quantitative or
Qualitative)
4 hours -- 3 hours 1.2 hours
Date achieved 06/25/2007 1/21/2015 11/30/2010 06/30/2016
Comments
(incl. %
achievement)
Target was substantially exceeded, by 60%. As against the original target
of 25% decrease, journey time to social service centers decreased to below
one-third of the baseline duration of 4 hours. Refer to more details in
Annex 10 Source: GoN 2016 Impact Study on Project Roads.
Indicator 5 : Direct project beneficiaries within 4 hours walking distance.
Value
quantitative or
Qualitative)
200,000 -- 800,000 752,000
Date achieved 06/25/2007 11/30/2010 06/30/2016
Comments
(incl. %
achievement)
The target was underachieved, falling short marginally, by 6%. This
indicator was added during the first AF. The underachievement can be
explained by the slightly fewer-than-planned length of roads upgraded or
rehabilitated. The reason for the slightly fewer roads appears justified as
mentioned in the comment on Intermediate Indicator 4 below.
1 Summary of the document is filed
vii
Source: ISR of June 2, 2016 and GoN study based on GIS analysis.
Indicator 6 : Female beneficiaries
Value
quantitative or
Qualitative)
0 -- -- 53%
Date achieved 06/30/2016
Comments
(incl. %
achievement)
This indicator captures the disaggregation of data from PDO Indicator 5
above. It is based on the 2011 Population Census which reports the female
proportion in the project area as 53%.
Source: ISR of June 2, 2016 and GoN study based on GIS analysis
Indicator 7 : Employment generated
Value
quantitative or
Qualitative)
0 -- 2.5 million
person days
6.68 million
person days
Date achieved 06/25/2007 11/30/2010 06/30/2016
Comments
(incl. %
achievement)
Target was substantially exceeded by 170%. Employment as an indicator
was introduced during the AF. Against the target of 2.5 million person-
days, the project generated employment of 6.68 million person-days. This
employment refers to direct engagement of people on road sites by
contractors during the life of the project. The relevance or importance of
this indicator is not elaborated in the project paper. Additional details are
provided in Annex 10
Source: ISRs with inputs from GoN based on Contractors’ Reports.
Indicator 8 : Employment generated - male
Value
quantitative or
Qualitative)
0 -- -- 6,017,663
Date achieved 06/25/2007 06/30/2016
Comments
(incl. %
achievement)
This indicator primarily reports disaggregated information on employment
(Indicator 7 above). Additional details are provided in Annex 10
Source: ISRs with inputs from GoN based on Contractors’ Reports.
Indicator 9 : Employment generated - Female
Value
quantitative or
Qualitative)
0 -- -- 663,211 person
days
Date achieved 06/25/2007 06/30/2016
Comments
(incl. %
achievement)
This indicator primarily reports disaggregated information on employment
(Indicator 7 above). Additional details are provided in Annex 10
Source: ISRs with inputs from GoN based on Contractors’ Reports.
Indicator 10 : Employment generated - Dalit
Value
quantitative or
Qualitative)
0 -- -- 280,907 person
days
Date achieved 06/25/2007 06/30/2016
viii
Comments
(incl. %
achievement)
This indicator primarily reports disaggregated information on employment
(Indicator 7 above). Additional details are provided in Annex 10
Source: ISRs with inputs from GoN based on Contractors’ Reports.
Indicator 11 : Employment created - Janajatis
Value
quantitative or
Qualitative)
0 -- -- 3.28 million
person days
Date achieved 06/25/2007 06/30/2016
Comments
(incl. %
achievement)
This indicator primarily reports disaggregated information on employment
(Indicator 7 above). Additional details are provided in Annex 10
Source: ISRs with inputs from GoN based on Contractors’ Reports.
Indicator 12 : Reduced percentage of blacktop Strategic Road Network (SRN) in poor
condition to 15% (Original).
Value
quantitative or
Qualitative)
18% 10% 15% 11.27%
Date achieved 06/25/2007 11/30/2010 1/21/2015 06/30/2016
Comments
(incl. %
achievement)
The original target was underachieved by 12.7% but the revised target of
15% was overachieved by 25%. The revision of the original target at
restructuring (in effect downwards) was therefore based on realistic
projections.
Source: ISR of June 2, 2016
(b) Intermediate Outcome Indicator(s)
Indicator Baseline Value
Original Target
Values (from
approval
documents)
Formally
Revised
Target
Values
Actual Value
Achieved at
Completion or
Target Years
Indicator 1 : Roads Board Act amended and more training and logistics provided
(Original).
Value
(quantitative
or Qualitative)
RBN Act amendment
bill in the Parliament
RBN Act
amended and
more training
and logistics
provided;
Human resource
development
(HRD) plan.
Draft
amendment
to RBN Act
finalized and
submitted to
Parliament
for
consideration
The draft RBN
Act has been
submitted to
Parliament and is
under discussion.
Training
completed.
Date achieved 06/25/2007 11/30/2010 1/21/2015 06/30/2016
Comments
(incl. %
achievement)
The original target was partly achieved with regard to the training aspect
while the revised (downgraded) target was fully achieved. The draft Act is
still in Parliament. The restructuring of January 25, 2015 was a proactive
and commendable realization that the original target was overambitious.
Indicator 2 : Government decision to benchmark RBN staff salaries to market rates.
ix
Value
(quantitative
or Qualitative)
-- --
Government
decision to
benchmark
RBN staff
salaries to
market rates
RBN Staff
salaries are paid
on a competitive
basis
Date achieved 11/30/2010 06/30/2016
Comments
(incl. %
achievement)
The indicator and target (introduced in the AF) were partially met. While
RBN Staff salaries are reportedly being made comparable to other
autonomous bodies, it is not clear how they compare with market rates.
Also, the indicator was introduced disregarding attribution difficulties.
Indicator 3 : Human Resources Development Plan (Original).
Value
(quantitative
or Qualitative)
--
Human resource
development
(HRD) plan
RBN’s 5 year
business plan
(2012-2017)
incorporates
Human
Resource
Development
(HRD) Plan
RBN has prepared
5-year business
plan (2012-2017)
and submitted to
the Board. Board
is reviewing the
plan
Date achieved 11/30/2010 1/21/2015 06/30/2016
Comments
(incl. %
achievement)
The original target on the HRD plan was fully achieved. In addition, the
revised broader target, with a 5-year plan was also achieved.
Indicator 4 : Roads rehabilitated non-rural (km)
Value
(quantitative
or Qualitative)
297 705 680
Date achieved 11/30/2010 1/21/2015 06/30/2016
Comments
(incl. %
achievement)
The original target of 297 km was achieved and exceeded by nearly
130%, the revised target of 705 km was slightly underachieved by 4%.
The marginal underachievement was due to justifiable omission of road
sections with peculiar technical challenges. Specifically the road sections
had unstable slopes and would have required more resources to construct,
thus reducing the achievable road length with the same amount of funding
even further. These omitted sections have commendably been included as
part of Second AF. Source: ISR of June 2, 2016 and Aide memoirs
Indicator 5 : Share of rural population with access to an all-season road
Value
(quantitative
or Qualitative)
7.6%
--
14%
15%
Date achieved 06/25/2007 11/30/2010 06/30/2016
Comments
(incl. %
achievement)
The target was marginally overachieved, by 7%. This indicator is an
amplification of PDO Indicator 1 and was not appropriate as an
Intermediate Outcome Indicator
x
Indicator 6 : Number of rural people with access to an all-season road
Value
(quantitative
or Qualitative)
71,500 -- 131,000 328,144
Date achieved 06/25/2007 11/30/2010 06/30/2016
Comments
(incl. %
achievement)
The target was exceeded by 150%.
Source: ISR of June 2, 2016; SRDP’s Accessibility Paper of Sep. 2014
Indicator 7 : Roads in good and fair condition as a share of total classified roads
Value
(quantitative
or Qualitative)
82% 90% 85% 88.7%
Date achieved 06/25/2007 11/30/2010 1/21/2015 06/30/2016
Comments
(incl. %
achievement)
While the original target of 90% was marginally underachieved by 1%,
the revised target of 85% was marginally overachieved by 4% to 88.7%.
The downsized target commendably reflected the realization that the
original target was overambitious.
Indicator 8 : Size of total classified roads
Value
(quantitative
or Qualitative)
9,399 -- -- 10,835
Date achieved 06/25/2007 06/30/2016
Comments
(incl. %
achievement)
This indicator is supplemental to Indicator 7 above. It is also needed for
assessing the relative significance of other indicators (e.g., share of poor
roads). It was not to be affected by the project. As such it did not have any
pre-specified targets.
Indicator 9 : 700 km target roads received upgrading works (Original).
Value
(quantitative
or Qualitative)
0 297 705 680
Date achieved 06/25/2007 11/30/2010 1/21/2015 06/30/2016
Comments
(incl. %
achievement)
This indicator is similar to Indicator 4 above. It should have been deleted
Indicator 10 : 2,550 km of highways received periodic maintenance (Original).
Value
(quantitative
or Qualitative)
0
450
2,550 2,595
Date achieved 06/25/2007 11/30/2010 1/21/2015 06/30/2016
Comments
(incl. %
achievement)
The original target ws overachieved significantly, by 477%. The revised
target was also overachieved, albeit marginally by 2%. A total of 2,595
km road length (Out of which 450 km was funded from original
financing; 1,728km from AF and 417km by GoN) had been completed as
of end-June, 2015.
xi
Source: Aide Memoires and ISRs.
Indicator 11 : Road safety action plan and physical works (Original).
Value
(quantitative
or Qualitative)
No plan
--
Road Safety
Action Plan
implemented
and physical
works carried
out.
Road safety
action plan
developed and
approved and
physical works
carried out.
Date achieved 06/25/2007 11/30/2010 06/30/2016
Comments
(incl. %
achievement)
The target was achieved. Road safety action plan was developed and
approved, and is under implementation. All the physical works executed
through 9 contracts have been completed.
Indicator 12 : Periodic maintenance of targeted highways and feeder roads backlog
executed (Original).
Value
(quantitative
or Qualitative)
0 1,000 1,000 1,692
Date achieved 06/25/2007 11/30/2010 1/21/2015 06/30/2016
Comments
(incl. %
achievement)
The data is not well supported. Actual GoN funding dropped from
US$58.5 million as planned to US$24.5 million. It is therefore unclear
how the target would have been exceeded. Besides, the indicator seems to
partly measure outputs related to Indicator 10 above. Indeed government
did finance several periodic maintenance contracts (dubbed Year 1, Year
2, Year 3 etc.) but the monitoring thereof was not well documented. Based
on the annual work reports, a total of 690 km appear to have received
periodic maintenance: Year 1- 182 km; Year 2 and 3 - 268 km; and Year 4
– 244 km.
Indicator 13 : Capacity building in geotechnical, environmental and social aspects, and
awareness creation on HIV /AIDS
Value
(quantitative
or Qualitative)
0
--
Capacity
building in
geotechnical,
environmenta
l and social
aspects, and
awareness
creation on
HIV /AIDS
and planned
activities
carried out
a) Geotechnical
assessments
carried out
b) Site specific
EMAP and RAP
monitoring
being done
periodically
c) Creating
awareness among
project
construction
workers and road
users on
HIV/AIDS is
ongoing
xii
Date achieved 06/25/2007 11/30/2010 06/30/2016
Comments
(incl. %
achievement)
The target was fully achieved. All the listed sub-activities have been
completed.
Indicator 14 : DoR IT based Management Information Systems (MIS) operational
Value
(quantitative
or Qualitative)
WAN installed in DoR
offices in Kathmandu
Additional IT
inputs to enhance
IT based
management
system in DoR.
Web based
system
adopted for
FMIS, GRM,
CMS
Web based
system being
adopted for FMIS
GRM and CMS
Date achieved 11/30/2010 11/30/2010 01/21/2015 06/30/2016
Comments
(incl. %
achievement)
The original target (which was rather broad) was not achieved but the
revised narrower, and more specific target was achieved. The
implementation team also paid due attention to the emerging
technological changes and adopted appropriate changes to the strategy.
Indicator 15 :
Road asset management tools used for prioritization of road maintenance
and upgrading works
Value
(quantitative
or Qualitative)
-
HDM4 used for
bi annual road
condition asset
and preparation
of annual
maintenance plan
Annual
maintenance
plan prepared
using
objective
methods;
Road
inventory
prepared for
a portion of
the network
and data
model
developed in
order to roll
out the
methods to
the whole
network
Objective method
has been used in
the preparation of
the annual road
maintenance plan.
Design of a road
inventory
software and the
collection of basic
road inventory
data along a
selected road
corridor was
completed.
Date achieved 11/30/2010 01/21/2015 06/30/2016
Comments
(incl. %
achievement)
The original target to use HDM4 was too ambitious and was also not
achieved. The revised target, which aimed at more objective methods, was
achieved albeit partly. The extent to which road inventory for a portion of
the network was prepared, as part of the target, could not be ascertained.
Indicator 16 : Improved quality assurance
Value
(quantitative
-
--
Quarterly
monitoring
Central Road Lab
has been carrying
xiii
or Qualitative) plan prepared
each year and
quality audit
carried out
by Central
Road Lab
out internal
quality road
audits of the
selected roads.
Quality assurance
has been
monitored
Date achieved 11/30/2010 06/30/2016
Comments
(incl. %
achievement)
The target was achieved. The Central Road Lab is reportedly carrying out
quality audits and monitoring quality assurance. The scope and
periodicity of such activities, however, is not clear.
Indicator 17 : Third party technical audit
Value
(quantitative
or Qualitative)
-
Third party
technical
audit carried
out for 20%
of the project
works each
year
Third party
technical audit of
upgrading and
periodic
maintenance
works under
RSDP has been
carried out on
selected contracts
Date achieved 11/30/2010 06/30/2016
Comments
(incl. %
achievement)
The target was achieved. Third party technical audit of upgrading and
periodic maintenance works under RSDP has been carried out on 20% of
the project works.
Indicator 18 : Improve staff capacity within DoR
Value
(quantitative
or Qualitative)
-
--
HR policy
updated and
3-year
training plan
finalized
HR policy
updated and 3-
year training plan
finalized.
Domestic and
international
training provided
for DoR staff as
per policy and
plan
Date achieved 11/30/2010 06/30/2016
Comments
(incl. %
achievement)
The target was achieved. HR policy updated and 3-year training plan
finalized. Domestic and international training provided for DoR staff as
per policy and plan.
xiv
G. Ratings of Project Performance in ISRs
No. Date ISR
Archived DO IP
Actual
Disbursements
(USD millions)
1 06/03/2008 Satisfactory Satisfactory 3.00
2 12/31/2008 Satisfactory Satisfactory 11.46
3 05/27/2009 Satisfactory Satisfactory 21.45
4 08/04/2009 Satisfactory Satisfactory 21.45
5 02/08/2010 Satisfactory Satisfactory 21.45
6 12/12/2010 Satisfactory Satisfactory 32.25
7 07/13/2011 Satisfactory Satisfactory 53.32
8 01/25/2012 Moderately Satisfactory Moderately Satisfactory 53.32
9 10/17/2012 Moderately Satisfactory Satisfactory 71.94
10 06/01/2013 Moderately Satisfactory Moderately
Unsatisfactory 71.94
11 12/07/2013 Moderately Satisfactory Moderately
Unsatisfactory 89.32
12 05/18/2014 Moderately Satisfactory Moderately Satisfactory 89.32
13 12/19/2014 Moderately Satisfactory Moderately Satisfactory 98.01
14 05/14/2015 Moderately Satisfactory Moderately Satisfactory 98.01
15 11/10/2015 Moderately Satisfactory Moderately Satisfactory 98.46
16 06/02/2016 Moderately Satisfactory Satisfactory 98.23
H. Restructuring (if any)
Restructuring
Date(s)
Board
Approved
PDO Change
ISR Ratings at
Restructuring
Amount
Disbursed at
Restructuring
in USD
millions
Reason for Restructuring &
Key Changes Made DO IP
09/06/2010 S S 30.06
Extension of closing date
to December 31, 2013
Approval of first AF
Revision of Results
Monitoring Framework
06/30/2011 S S 53.32
Cancellation and
recommitment of
undisbursed grant amount of
SDR 17.5 million
(US$ 27.5 million) under
the AF
xv
Restructuring
Date(s)
Board
Approved
PDO Change
ISR Ratings at
Restructuring
Amount
Disbursed at
Restructuring
in USD
millions
Reason for Restructuring &
Key Changes Made DO IP
06/27/2012 MS MS 71.94
Extension for 18 months
mainly to utilize about US$7
million balance.
01/21/2015 MS MS 98.01
Marginal reallocation of
funds across categories;
Cancellation of savings
of about US$ 7million due
to NPR depreciation; and
Revision of targets for a
few intermediate result
indicators.
06/18/2015 MS MS 98.01
Extension of closing date
from June 30, 2015 to June
30, 2016 due to the
earthquake of April 2015
02/03/2016 MS S 98.46
Reallocation of funds
between components and
sub-components with more
funding for institutional
strengthening
06/15/2016 MS S 99.10
Second AF
Extension of closing date
of the project to June 30,
2017.
I. Disbursement Profile
xvi
1
1. Project Context, Development Objectives and Design
1.1 Context at Appraisal
Country Background
1. At the time of appraisal in 2007, Nepal was the poorest country in South Asia with
an average per capita Gross Domestic Product (GDP) of US$270 (2005) and also slowest
growing economy, with growth rates of around two percent, compared to the regional
average of eight percent. Recovering from a ten year insurgency, the government
prioritized increased access to basic public services for those impacted by and residing in
these security-affected areas. The project thus was prepared at a time of significant political
fluidity and unpredictability.
Sector Background
2. Severe slowdown in capacity expansion: In the 1990s, the road network in Nepal
expanded by about seven percent a year, mainly due to concerted efforts of donors and
government to fund rehabilitation works, with the objective of overcoming the effects of
inadequate and irregular maintenance exacerbated by the insurgency. This expansion
however significantly slowed down thereafter to less than one percent a year from 2001 to
the time of appraisal. Insecurity adversely impacted Government of Nepal’s (GoN) ability
to undertake road works but also created resource constraints (the allocation of resources
to the road sector declined from about ten percent of total GoN budget in the 1990s to five
percent in 2001). As a result, 55 percent of Nepal’s total road stock of 33,280 km still
remained as dry-season fair-weather-tracks.
3. Lack or inadequate access to all-season roads: Even within the Strategic Road
Network (SRN) – that is, 7,535 km out of the 17,280 km of the main road network
comprising highways and feeder roads connecting districts – the proportion of roads in
good and fair condition, which increased from less than 50 percent in 1992 to 90 percent
in 2001, declined to 82 percent in 2006. At the time of appraisal, 12 of the 75 administrative
districts in Nepal were not yet connected by road and another fourteen were linked with
seasonal tracks or dirt roads. Residents of Nepal’s hill districts, excluding the Kathmandu
Valley, walked an average five hours to reach an all-season road, and residents of the
mountain districts walked over fifteen hours. Access to all-season roads was identified as
a critical measure of development potential in Nepal, especially because monsoon rains
made - and continue to make - earthen roads impassable for many months at a time.
4. Inadequate funds for periodic maintenance: Toward the end of the insurgency, as
the donor programs shifted towards new construction and rural access infrastructure, GoN
established a Roads Board with the goal of linking road sector funding to road use and
improving the level of domestic funding for road maintenance. The Roads Board of Nepal
(RBN) was instrumental in generating partial maintenance resources through road user
charges, allocating timely resources to road agencies based on priority annual maintenance
2
plans, and monitoring effectiveness of maintenance works carried out by the road agencies.
Even so, at the time of appraisal, funding for maintenance remained at about half of the
requirement estimated at NRs. 2 billion per year (US$30,000,000), and the issue of backlog
for periodic maintenance continues to remain a challenge.
Rationale for Bank Assistance
5. The Bank had established strong working relationships with the GoN and donor
stakeholders in the transport sector in the years leading up to the appraisal. The successful
implementation of the World Bank-funded Road Maintenance and Development Project
(RMDP IDA Credit 3293 - NEP), which closed on June 30, 2007, supported the GoN’s
Priority Investment Plan (PIP-1997) for the transport sector and updating of the same for
2007-2016. The updated PIP highlighted the importance of improving accessibility to the
SRN, by specifically bringing the population within two hours walk in the Terai and four
hours walk in the hill districts,2 to an all-season road. It identified SRN roads for investment
on the basis of their social and economic benefits and was essentially a road master plan
that formed a basis for the selection of road projects for the 11th and 12th national plans.
The Road Sector Development Project (RSDP, P095977) directly responded to this priority.
1.2 Original Project Development Objectives (PDO) and Key Indicators
6. The original Project Development Objective was for the residents of beneficiary
districts to have all-season road access thereby reducing travel time. This, in turn, was
envisaged to improve access to economic centers and social services. The project targeted
five hill districts (Darchula, Baitadi, Dailekh Surkhet and Darchula) which lacked all-
season road access and one other district (Bajhang) for which linkage to the other districts
was critical. The achievement of the PDO was to be measured through the following key
outcome indicators:
i. 6 percent increase in the number of people with all-season road access in the
project districts (20 minutes walking or 2 km);
ii. 35 percent decrease in travel time to key economic centers and social services;
iii. DoR to provide effective road infrastructure services to users (measured
through user satisfaction survey)3;
iv. The Roads Board becoming fully functional and providing effective and
sustainable funding for road maintenance, as to be measured through (a)
undertaking at least 500 kms of periodic maintenance of SRN annually and over
2 The Terai is the southern plains that border India and the hill districts are to the north of the
Terai, just south of the Himalayan mountain range.
3 This indicator does not appear in the Results Framework and Monitoring. It was not directly
measured or reported on. It could however be argued that effective road infrastructure services
constituted road rehabilitation, maintenance and road safety interventions – all of which had
monitored targets
3
1,000 kms of backlog periodic maintenance within the project period; and (b)
reduction in percentage of black top SRN in poor condition to about 10 percent.
1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and
Reasons/Justification
7. Since its inception, the project was restructured seven times, which included two
AF credits. Through these changes, the PDO remained the same. However, some PDO and
Intermediate level indicators were revised or added at the time of the first AF. The notable
changes to the indicators are detailed below:
Table1: Modifications to the Indicators
PDO and Intermediate Indicators Before and After Additional Financing
PDO Indicators
Original Project Changes at AF
6 percent increase in population with all
season access to economic centers and
social services (in five project districts)
Revised: 6 percent increase in population in
project districts to have all season road access
within 20 minutes walking distance (in eight
project districts)
35 percent decrease in journey times to key
economic centers in the project area
Retained: 35 percent decrease in journey
times to key economic centers in the project
area
Added: 25 percent decrease in journey times
to key social services in the project area
Reduce the percentage of black top SRN in
poor condition to about 10 percent
Revised: Reduce the percentage of black top
SRN in poor condition to 15 percent
Intermediate Outcome Indicators
Original Project prior to AF4 Changes at AF
100 percent of 297 km of target roads
received upgrading works
Added: An additional 408 km of target
roads received upgrading works
100 percent of 100 km of highways and
350 km of targeted roads received
periodic maintenance
At least 500 km of SRN receives
periodic maintenance works annually
and over 1000 km of backlog periodic
maintenance addressed during the
project period
Added: An additional 2100 km of strategic
roads received periodic maintenance
Revised: No backlog periodic
maintenance within the project period.
Publication of Road Safety Action Plan
and implementation of actions
Retained: Same as in original project
4 Some changes to the original six Intermediate Outcome Indicators took place at other Level 2
restructuring before the AF. The original six are those in bold
4
HR policy updated and 3 year training
plan finalized. Domestic and
international training provided for DoR
staff as per policy and plan
Retained: Same as in original project
Completion of Geo-technical
assessments, EMAP and RAP
compliance monitoring and
performance in creating awareness
among project construction workers
and road users on HIV/AIDS
Added
Completion of pilot installation of
wide area network (WAN) in DoR
division offices in Kathmandu and
satisfactory operation and
maintenance of IT based management
system
Added: Additional IT inputs to enhance
IT based management system in DoR
including fully operational e-procurement
system
HDM4 used for bi annual road condition
assessment and preparation of annual
maintenance plan
Revised: Simple road asset management software
operationalized to use HDM4 for annual
road condition assessment and preparation of
annual maintenance plan
Quality monitoring plan prepared each year
and quality audit carried out by Central
Road Lab
Added
RBN Act amended and more training
and logistics provided Government
decision to benchmark salaries to
market rates
Retained: Same as in original project
Human resource development (HRD)
plan
Third party technical audit carried out for
20 percent of the project works each year Added
8. All the revisions to indicators and targets were essentially to: (i) reflect the scaling
up of the project scope (e.g., km of roads to upgraded, from 297 to 705); (ii) capture the
project’s impact in certain key areas (e.g., number of beneficiaries and employment
generated); and (iii) fine-tune monitoring data sets in line with the implementation
challenges and realities (e.g., moving IT systems from WAN-based to cloud-based
computing, avoiding HDM4 as an analytical option based on technical assessment of its
unsuitability for targeted network).
1.4 Main Beneficiaries
9. The main beneficiaries of the project included: (i) communities – in particular
women, and two historically disadvantaged groups, the Dalits, and Janajatis – living along
the roads upgraded and periodically maintained in the project districts; (ii) government
organizations and the staff involved in development and management of SRN – namely,
5
the Ministry of Physical Infrastructure and Transport (MOPIT), Roads Board of Nepal
(RBN) and the Department of Roads (DoR). The latter had its capacity enhanced through
experience acquired in implementation of various civil works, institutional strengthening
and policy reform component covering several key areas5; and (iii) local contractors who
were accorded ample opportunity to bid and work on road upgrading, thus building the
experience and capacity of Nepal’s nascent construction industry.
1.5 Original and Revised Components
10. The project had two components throughout its life: Road Development; and
Institutional Strengthening and Policy Reform. The main focus of the original project was
to improve connectivity in six hill districts6 (Darchula, Baitadi, and Bajhang in the Far
Western Region and Kalikot, Dailekh, and Surkhet in the Mid Western Region), by
upgrading and rehabilitating selected roads. Other infrastructure related interventions were
countrywide periodic road maintenance program, and road safety. These three categories
of road related activities constituted the first component.
11. The institutional strengthening and policy reform focused on providing support to
DoR, RBN, and MOPPW, by building on support provided under the previous project –
the Road Maintenance and Development Project. The areas of support included general
skills development, enhancement of selected specialized competencies (e.g. in geo-
environmental and related safeguards, financial management, quality assurance, and
technical audits). The support also covered strategic and reform activities such as the
revision of RBN legislation.
12. The first AF in 2010 scaled up the two components by supporting: (i) additional
length of roads for upgrading and rehabilitation in the original six project districts and
introduction of similar works in two new districts (Jajarkot and Rukum in the Mid Western
Region); (ii) additional length of periodic road maintenance; and (iii) introduction of
additional institutional strengthening under the second component. The same components
were maintained in the Second AF approved on August 25, 2016.
Component 1: Road Development (US$ 149 million, IDA: US$93.5 million).
13. Sub-Component A: Road Upgrading (USUS$ 84.1 million, IDA Financing: 100%):
This sub-component originally aimed at improving connectivity to six districts - Darchula,
Baitadi, Kalikot, Bajhang Dailekh, and Surkhet through upgrading of about 297 km of
5 These included Human Resource Development (HRD); Geo-technical, Environment and Social
Development; IT and MIS Development; Road Asset Management; Road Safety; Effective Quality
Assurance; Mechanical Training; Technical Audit; Equipment and Logistics; and preparation of a
follow up project.
6 To be read with the original Project Development Objective Statement (par. 6), which lists five
plus one districts
6
existing dry-season road-tracks that were selected from a pool of more than 1000 km of
prioritized roads, based on the feasibility studies under the 2007 Priority Investment Plan.
Specifically, these roads were to be upgraded to all-season standards with low cost sealed
gravel (Otta Seal) pavements, at an estimated cost of US$30.9 million.
14. As part of the first AF, the scope of this component was scaled up to include
upgrading of a further 227 km of roads within four of the original project districts in order
to provide connectivity to respective district headquarters and an additional 181 km to
improve all-weather connectivity in two new districts (Jajarkot and Rukum), at an
estimated cost of US$53.2 million. In effect the output of this subcomponent was scaled
up to nearly three times of the original plan, and the number of project districts rose to
eight.
15. Sub-Component B: Periodic Maintenance (US$ 63.7 million, IDA Financing:
US$8.7 million): This sub-component originally supported periodic maintenance of about
450 km of SRN prioritized in the 2007 PIP (from 5,300 km of black top surfaced highways
and feeder roads). Specifically, about 100 km of the two lane highways with high traffic
was targeted for premix asphalt overlay and 350 km of other single/two lane SRN was
targeted for surface seal coats, at an estimated cost of US$11.42 million, 30% of which
was to be supported through IDA financing.
16. As part of the AF, the scope of this component was expanded to support periodic
maintenance of an additional 2,100 km, based on maintenance priority established in the
PIP and annual road condition survey, at an estimated cost of US$47.5 million. To support
GoN’s efforts in coping with the damage caused by the 2009 monsoon floods, provisions
were made to finance emergency maintenance such as slope protection and pavement
works, at an estimated cost of US$4.75 million. In order to meet the costs of all the
maintenance works, the share of GoN financing was increased from 70% to 90%.
17. Sub-Component C: Road Safety (USUS$ 1.5 million, IDA Financing:US$0.7
million): This component was envisaged to support Road Safety Audit of SRN based on
accident prone sections, and physical works to improve the black spots identified through
the audit. Originally, an allocation of US$0.59 million was made with 100% IDA financing.
A further US$1 million was availed as part of the AF.
Component 2: Institutional Strengthening & Policy Reform (USUS$19.4 million, 100%
IDA Financing)
7
18. This component was to provide support to DoR,7 RBN, and MoPIT8 to sustain and
deepen previous institutional and policy development activities started in RMDP as well
as support new ones identified by the GoN. Based on the proposed plan, the project
envisaged to provide assistance for (a) Human Resource Development (HRD); (b) Geo-
technical, Environment and Social Development; (c) IT and MIS Development; (d) Road
Asset Management; (e) Preparation of a Road Safety Action Plan; (f) Effective Quality
Assurance; (g) A Mechanical Training Centre; (h) Strengthening of Roads Board
operations; (i) Technical Audit; (j) Equipment and Logistics; and (k) Preparation of a
follow up project.
19. When the project was restructured to include the AF, support for DoR and RBN
under this component was to be continued and deepened, with particular focus on training,
expansion of IT based MIS/Financial Management Information System (FMIS) and road
asset management system, technical assistance and equipment, and undertaking three
studies covering Construction Industry, Bridges and improvement of the Thankot-
Mugling-Birgunj Corridor. Assistance was also to be provided for the National Vigilance
Centre for the technical audit of RSDP roads. In keeping with the scaled scope of the
component, the original allocation of US$6.57 million IDA financing was augmented with
an additional US$12.8 million.
1.6 Other significant changes
20. On June 30, 2011, an undisbursed amount of SDR 17.5 million (US$ 27.5 million)
under the AF Grant (No. H629-NP) was cancelled and the same amount of funds were
recommitted as new credit (No. 5002-NP). This constituted the second restructuring.
21. In addition to the AF and the cancellation of undisbursed amounts mentioned above,
the other five restructurings were as follows:
On June 27, 2012, the closing date of the original IDA Grant was extended by 18
months from June 30, 2012 to December 31, 2013;
On January 21, 2015 a marginal reallocation of funds across categories was
effected. In addition there was a cancellation of “savings” amounting to US$ 6.98
million due to depreciation of the Nepalese Rupee and a revision of targets for
some intermediate result indicators;
7 Within DoR, the Institutional Strengthening Component directly supported the following Units:
Mechanical Training Center, Mechanical Branch, Road and Traffic Unit, Central Road Laboratory,
Geo-Environmental and Social Development Unit, Road Sector Skill Development Unit, and the
Management and Information Systems Unit.
8 Ministry of Physical Infrastructure and Transport (earlier known as Ministry of Physical
Planning and Works, MoPPW).
8
On June 18, 2015 the project closing date was extended to June 30, 2016. The
extension would enable GoN to cope with the disruptions and delays caused by
the devastating earthquake in April 2015, unofficial trade blockades at borders
with India, and also resolve technical challenge involving the design of arch
bridges on major highways;
On February 3, 2016 a reallocation of funds between components and sub-
components with more funding for institutional strengthening was effected; and
On June 15, 2016 the second AF of USUS$ 75 million was agreed to, together
with an extension of project closing date from June 30, 2016 to June 30, 2017.
2. Key Factors Affecting Implementation and Outcomes
2.1 Project Preparation, Design and Quality at Entry
22. Alignment with the Client Needs and Bank’s Strategy: Following the Road
Maintenance and Development Project (RMDP) that closed in 2007, the Bank prepared the
Road Sector Development Project (RSDP) on a “fast track” basis. The project design was
based on an appreciation of how the long period of insurgency had led to significant decline
in road funding, and how particular emphasis on maintenance in the previous years had
slowed down the capacity expansion. Accordingly, the project was pivoted on the objective
of improving all-season road access. This objective was in full alignment with Nepal’s
Poverty Reduction Strategy (PRD)/Tenth Plan (2002-07), which placed improving
transport access among the top priorities, and also the Bank’s Interim Strategy Note (ISN,
February 2007), which proposed that the emerging development agenda should focus on
public investment for the remote areas in order to increase inclusion.
23. Salient design features: The design placed emphasis on increased flow of funds
into the roads sector, and especially to districts with poor access to all-weather roads,
through the Road Development Component. The component singled out upgrading,
periodic maintenance, and road safety, each respectively accounting for 73%, 8% and 1%
of the IDA support to the project. The tracks/roads for upgrading and periodic maintenance
were selected: (a) based on the Priority Investment Plan (PIP, 2007-16), which was
prepared in alignment with the GoN’s goal of improving accessibility to the Strategic Road
Network (SRN); and (b) at locations and regions where the Bank had previously directed
its efforts. The project also sought to increase the flow of government’s own funds into the
periodic maintenance, by requiring GoN to share 70% of the corresponding costs, which
was further raised to 90% as part of the AF in 2011. The latter was intended to deepen the
institutionalization of road maintenance.
24. Institutional Strengthening: The project focused on ensuring implementation
capacity and future sustainability by providing support to key institutions in the road sector
and by deepening previous institutional and policy reforms. The design of this component
9
however seems to have been ambitious in the range of activities it sought to support
(Human Resources, IT, Road Asset Management, Road Safety, Road Board, Equipment,
etc.) but lacking a coherent strategy or prioritization, say, in terms of why these activities
were important and how they were going to impact the capacity and efficiency of the target
organizations. Lack of such analysis seems even more conspicuous given that about 15%
of the IDA Grant amount was allocated for this component.
25. Use of lessons learned and effective assessment and mitigation of risks: Drawing
upon the lessons from RMDP, the project design recognized that: (a) PDO needed to be
realistic in light of several external factors beyond the control of GoN in general and
implementation agencies in particular; and (b) due diligence and improved supervision
from both the Client and the Bank to ensure better performance by contractors and
consultants was essential. In terms of risks, the design accurately identified most key risks
(Technical Design, Implementation Capacity & Sustainability and Conflict in Project
Areas are rated as “Substantial”) and proposed reasonable measures to mitigate them, for
instance, through increased monitoring, enhanced support & dialogue with the client, and
keeping the technical designs flexible.
2.2 Implementation
26. While it is appreciated that the project was implemented within a fragile post-
conflict environment, some of the necessary implementation underpinnings do not appear
to have been sufficiently robust. The project commenced its operation in 2008, in the early
years after Nepal emerged from a decade-long ‘people’s war’ that formally ended
following a ceasefire agreement in 2006. Since then, the project operated against a
checkered backdrop comprising instability with frequent strikes (or “bandh”) called by
different political and ethnic groups, two major earthquakes, floods and an unofficial trade
blockade at the Indian border. For instance, during the 30 months from project
commencement to the time of Mid-Term Review (MTR), there were three changes in
government, which affected staff continuity and GoN decision-making.
27. Despite this, the project made notable progress, especially with regard to the Road
Development Component. By the time of MTR in October 2010, physical progress stood
at 82% of the planned activities, with 230 km of road upgrading completed (against the
EoP target of 297 km) and periodic maintenance of 322 km ongoing (against the MTR
target of 125 km). Spurred by this progress, GoN and the Bank sought to continue the
momentum by agreeing to an AF in order to improve accessibility within four of the
original districts and in an additional two. The civil works envisaged under the original and
the first AF were mostly completed within one year after their scheduled completion dates.
Yet another noteworthy aspect of implementation was the introduction of e-bidding system
and the application of contractual remedies against poorly performing contractors. The
implementation of the Road Development Component during the AF progressed smoothly,
except for a few instances of poor- or non-performance by some contractors which were
effectively dealt with by DoR in consultation with the Bank team.
28. The implementation of the Institutional Strengthening & Policy Reform component,
however, was uneven. The project made reasonably smooth progress in areas such as
10
Training, Geo-environmental and Social Studies, quality assurance and third-party
technical audits. It however lagged in the areas of road asset management, mainstreaming
of IT based systems and a technical study on bridges. The approach in dealing with the
shortcomings seems to have been progressive recalibration of the targets downwards
through various restructurings. The project made little headway in its aspirations for
strengthening the Road Board of Nepal (RBN), as the amendments to the RBN Act are still
under consideration and so is the target of benchmarking the salaries of RBN staff to market
rates. This is perhaps understandable given that the backdrop of political instability may
not have been conducive for expediting such major decisions. Even so, the overall progress
of various activities under this component suggest little proactive action to redefine the
strategy or goals for this strategically significant components with sizeable allocation
(about 15%) of the Bank support to the project. For these reason, the second aspect of the
project was a significant contributor to the final Moderately Satisfactory rating of the
project.
29. The reasons for the project performance are not well documented. It was however
understood that a combination of factors ranging from project design, capacity of
implementing agencies, Bank supervision, to country level circumstances affected the
delivery of the project. The design of the project had placed high emphasis on the
infrastructure component and this bias was reflected in the client’s project implementation
structures. The DoR, is a technical establishment that understood the various project
implementation aspects well. Technical designs and procurement of road construction and
supervision services were executed with relative ease. The decision to break contracts into
reasonably small sizes in order to attract local construction industry yielded dividends in
terms of competition and speed of execution of works. The Bank supervision team on its
part, recognized the project implementation challenges associated with post-conflict and
intensified supervision. In addition to regular consultations between the team and the client,
there were 17 formal missions over the eight year period (from June 2008 – September
2016). The team further supported the use of additional technical capacity through
engagement of individual consultants both on the client and on its side.
30. A few challenges affected the implementation of the roads component. Initially
only the DoR Regional offices were tasked with the overall project oversight function,
leaving out the DoR establishment in the District. This created operational tension between
the two layers and affected supervision and progress on the road sites. The arrangement
was however addressed by involving the Division Road offices. Other notable contributors
to low performance on the roads component were the disruptions and delays caused by the
devastating earthquake of April 2015, and unofficial trade blockades at borders with India.
31. Regarding the institutional capacity building component, the long list and diverse
assortment of activities to be supported, and the lack of a prior strategic assessment of the
key areas of support led to implementation difficulties. The project design appeared to have
been overambitious in terms of what was doable under the prevailing political environment.
The lack of amendment of the RBN Act was a good example of the policy level challenges.
In a way, this could have accounted for the inability to introduce more robust planning
11
tools such as HDM4. An internal environment that would demand and appreciate more
strategic investment processes was missing.
2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
32. M&E Design: M&E has emerged as a notable aspect of project weakness especially
in its design and implementation and a specific contributor toward the overall Moderately
Satisfactory rating of the project. The choice of the primary PDO indicators, which in turn
influenced the design of the monitoring framework, was essentially focused but had
elements of over-ambition, and was also partly disconnected from the PDO. Two of the
key outcome indicators – namely, percentage increase in population in project district with
all-season road access within 20 minutes walking distance and percent decrease in journey
times to key economic centers, were well linked to the PDO. The third key indicator – DoR
to provide effective road infrastructure services to users, measured through user
satisfaction, was however neither directly measured nor reported on. The fourth indicator,
envisaging a fully functional Roads Board, was the only allusion to institutional
strengthening, which was not a stated PDO.
33. The number of indicators is considered high, and some could have been avoided.
While the original results framework comprised three PDO indicators and six Intermediate
Outcome indicators (Ref. Project Appraisal Document) the revised framework arising from
the AF and other restructuring increased the number of indicators significantly. According
to the list in Section F of the Data Sheet (Results Framework analysis) above, at the end of
the ICR review period, the project was monitoring twelve PDO level indicators and
eighteen Intermediate Outcome indicators. The choice of these indictors does not seem to
have strictly focused on the PDO. Employment creation for instance, was not an explicit
objective yet four PDO indicators are dedicated to it.
34. Many of the Intermediate Outcome indicators were relevant but further
rationalization is considered to have been necessary. Indicator 5 for instance – Share of
rural population with access to all-season roads, belongs to PDO level category. Indicator
7 - Roads in good and fair condition as a share of the total classified road, would also be
viewed as a measure of project impact on institutional aspects. Furthermore, monitoring
and reporting on the periodic maintenance backlog (Indicator 12) appears to have been
complicated by the apparent lack of clarity on the target boundaries since Indicator 10 also
measures performance on periodic maintenance. Indicators for institutional capacity
building were particularly many, and some needed clarity to facilitate monitoring.
Indicators 13 on “Capacity building in geotechnical, environmental and social aspects and
awareness creation in HIV/AIDS”, as an example, was too broad.
35. M&E Implementation & Utilization: Internal efforts by DoR to implement an
effective M&E system were adversely affected by public service processes outside their
control. The DoR developed an annual M&E work plan that was approved by the National
Planning Commission. Project monitoring was carried out at different levels of government,
depending on the activity (Ministry, Department, Project Implementing Unit, DoR
Branches, Units, Project Offices, and Divisions). Supervision consultants assigned to
manage road upgrading and maintenance contracts were also to collect some data. However
12
a review of the data entry into the ISRs reveals lack of comprehensiveness and continuity
in the process. Except for the information found in the Aide Memoires, there is little
evidence of an organized data management system to enable regular updating of data for
each indicator. Not all indicators were reported on diligently and there were delays in
updating some data. As also stated in the Borrower’s completion report, this situation was
a manifestation of inadequacies in the DoR’s M&E system. But the aspect that aggravated
the situation was the high staff turnover. Frequent ministerial transfers of both junior and
senior staff out of the project and their replacement with new personnel, not conversant
with the M&E, introduced continuous weaknesses in the process.
36. It was reported that the National Vigilance Center, used the data collected as part
of the M&E to identify and carry out technical audits on civil works contracts. The data
was also used as a progress management tool, especially in making implementation
adjustments to some components. Other than this limited project-specific use of the M&E
outputs, there is no evidence that the project’s M&E framework or data itself would be of
used beyond the project life. 2.4 Safeguard and Fiduciary Compliance
37. There were no significant safeguard or fiduciary compliance issues that affected
project implementation. Compliance of social and environmental safeguards were
regularly monitored by DoR and Geo-Environmental and Social Development Unit
(GESU) and documented in project documents for response when needed. Environmental
and social safeguard experts were hired by GESU to ensure for proper monitoring and
reporting.
38. The following social safeguard issues were clearly documented in the Aide
Memoires, and brought to the attention of GoN from the early stages of implementation.
These issues were summarized in the MTR.
Delayed compensation payments to Project Affected Families (PAFs);
Limited knowledge of Environmental and Social Management Framework (ESMF)
social safeguard requirements among key project stakeholders;
Unclear understanding of child labor requirements;
Need to follow-up on land ownership to the DoR along select road upgrading sites
in close coordination with Land Revenue Offices; and
Coordination lapses between the Program Coordination Unit (PCU) and Geo-
environmental and Social Unit (GESU).
39. Good practices were noted, for example, where a simple Nepali language version
of the ESMF was prepared and posted on the DoR website so that project stakeholders
could easily access and better understand ESMF compliance requirements. RSDP also
organized 65 HIV/AIDS awareness training programs (25 in the Far-Western Region and
40 in the Mid-Western Region) which involved 4,247 participants, including
representatives from local businesses, contractors, civil servants, drivers, teachers, students,
and farmers. These efforts facilitated project implementation.
40. The environmental management system used in RSDP was defined in the ESMF
prepared by the GoN at the time of appraisal with support from the Bank. Based on project
13
documentation, including Aide Memoires and other project reporting, during the early
stages of implementation there were delays in carrying out some ESMF requirements,
including preparedness checks and other monitoring activities. This improved over time
as GESU staff, project staff, and the contractors were sensitized on Bank environmental
management expectations and compliance requirements. In addition, the project supported
the recruitment of additional GESU staff along with improved coordination among project
management, GESU staff, supervision consultants, on-site staff, and communities along
road sections being upgraded. Some of the initial challenges that were addressed included
the inappropriate disposal of spoil, poor labor-camp and occupational health and safety
facilities, and the location and operation of crusher plants as well as quarry sites. Project
staff effectively addressed these challenges to ensure for environmental safeguard
compliance.
41. Procurement: At the time of appraisal of original Grant, the team recognized
procurement as a notable risk especially in terms of staffing continuity, corruption and
collusion among the bidders. The project sought to mitigate these risks and ensure
compliance of procurement requirements during the implementation mainly through
adopting a disclosure policy and complaint redressal mechanisms and e-procurement. The
DoR successfully harnessed e-procurement and established itself as a leader in
implementing e-bidding in the GoN, which faced – and continues to face – intimidation
and collusion among bidders in public procurement in other parts of government.
42. During the course of the implementation, the project encountered some challenges
related to non-performing and slow-performing road upgrading and maintenance contracts
in 2012-13. The GoN and Bank worked together to effectively address these challenges.
GoN dealt with the non-performing and slow-moving contracts for upgrading and periodic
maintenance by applying suitable contractual remedies, including forfeiting of Bank
Guarantees against mobilization advances and/or termination. As of September 2016, all
contracts were successfully procured with no outstanding issues requiring resolution.
43. Financial Management: Financial management was the responsibility of the
Deputy Director General of the DoR’s Foreign Cooperation Branch, assisted by the RSDP
Project Coordinator, Senior Accountant and additional DoR staff as needed. At the time of
MTR, the Bank team recommended that DoR authorities: (i) review the Financial
Management Information System supported by the project in advance of AF; (ii) prioritize
monitoring of project outputs and expenditures to ensure that physical and financial
progress reconciled; and (iii) improve internal control systems to track eligible
expenditures and ensure that the GoN’s financial procedures were properly followed.
Since then, no other major issues were raised and the project maintained the required
ledgers and summaries of expenditures. In particular, the DoR recognized and addressed
the following financial management challenges during implementation, viz., slow
utilization of available resources, authorization delays in releasing expenditures, and the
timely submission of regular reporting. There is currently a Financial Management and
Information System (FMIS) in place, with all ledgers and accounts information included.
14
44. Throughout the life of the project, the GoN worked closely and effectively with the
Bank to resolve issues related to social and environmental safeguard, financial
management, and procurement compliance.
2.5 Post-completion Operation/Next Phase
Post Completion Operation and Maintenance Operations
45. Notable strides have been made linking the target districts, but renewed political
commitment to road maintenance is needed. During the field visits9 to some of the roads
upgraded with the project support, ICR Team noticed that quite a few of them had not
received maintenance attention that was commensurate with the harsh terrain and weather
conditions. Wash-aways, potholes, and unattended landslides were common. Accordingly,
the sustainability of this project, especially related to the works completed, will require
sufficient annual budget allocations, continued investment in maintaining and deepening
the institutional capacity of the DoR, and meaningful reform of the RBN.
46. Nepal’s transport needs have changed. The result is that many RSDP roads require
enhancements to keep pace with both greater traffic volumes and the development that road
access has brought to remote areas. The AF also mentions about supporting such
enhancements, the design and investments under its civil works oriented components
appears to be primarily focused on bridges. Accordingly, the roads supported under the
project seem to be quite vulnerable to the risk of inadequacy of funds for their regular and
periodic maintenance.
Sustainability of Institutional Reforms and Capacity
47. RSDP made notable and laudable progress in institutionalizing a variety of best
practices in the DoR, including the development and adoption of an e-bidding system that
serves as a model for other government departments. It also strengthened capacity of key
branches of the DoR, including the GESU, IT and MIS Department, Road Traffic Unit,
Central Road Lab, Mechanical Training Center and Human Resource Development. Even
so, the endeavor of capacity building of DoR and its staff appears to be far from over as it
finds prominent place in the recently approved Second AF.
48. The project supported the drafting of a Roads Board Act Amendment that would
strengthen the RBN’s operations and independence, but this Amendment is still awaiting
approval. Proactive GoN commitment to pass this Amendment and fully reform the RBN
remains a crucial element of a fully functioning and sustainable road maintenance regime.
9 ICR Team visited the Surket-Khidkijyula and Tallodhungeswor-Dailekh Roads (Parent
Project) and Chhinchu-Jajarkot Road (Additional Financing) on September 6-7, 2016.
15
49. Clearly, sustaining the institutional reforms and capacity is a major challenge
considering the context of frequent instability and various other challenges. Yet, it is
important to take note that both GoN and Bank recognize this challenge and attempting to
continue to place these among areas for continued support in future.
Proposed Follow-up Operation
50. The GoN requested a Second Additional Finance of USUS$ 55.0 million. The need
for the AF was triggered by the 2015 earthquakes that affected the road network adversely
and in particular compromised the integrity of some drainage structures. The Second AF
is intended to support the following:
Road and bridge works (including road safety enhancements);
Post-earthquake reconstruction and resilience enhancements to Nepal’s SRN; and
Technical assistance to improve investment planning and implementation capacity
within the institutions that manage the SRN.
51. The GoN would contribute US$10.0 million, thus bringing the total AF project size
to US$ 65.0 million. This scope of work for the proposed Second AF constitutes a scale-
up of the project activities and a restructuring of components to include the post-earthquake
needs, further capacity development, and resilience enhancements. In line with this, the
Second AF is aimed to achieving three key outcomes that support the PDO, viz., reduced
bridge vulnerability, enhanced resilience of RSDP roads, and enhanced access as reported
by beneficiaries. The results framework of the parent operation, too, has been modified,
reportedly to better reflect attributable outcomes from project interventions, employing
lessons learned from the results frameworks that guided the RSDP original PAD and AF.
3. Assessment of Outcomes
52. This ICR is prepared prior to the final completion of the project in accordance with
Bank Policy (BP) 10.00 because the second AF would extend the project implementation
by more than ten years. It therefore assesses the project performance over the period up to
August 31, 2016, a date after the approval of the Second AF10. The subsequent project
period would be covered in the next ICR. The still-ongoing project Credit (No. 5002-NP)
closes on June 30, 2017 while the Second AF Credit will close on July 15, 2019.
3.1 Relevance of Objectives, Design and Implementation
Rating: Substantial before and after restructuring11
53. Relevance of Objective - High before and after restructuring: The objective has
remained well aligned to the past and present focus of GoN, to increase road access,
promote economic growth, and reduce poverty in Nepal, particularly in rural and isolated
parts of the country. It is also still in sync with the Bank’s aim of increasing inclusion
10 The Second additional Financing was approved on August 25, 2016. 11 While the project underwent seven Level 2 restructurings, it is the changes at the AF of September 2010
that are considered most significant. Refer to Para. 71 for more details.
16
through facilitating public investment in the remote areas according to the Bank’s current
Country Partnership Strategy (2014-2018). Pillar 1 of this strategy, “Increasing Economic
Growth and Competitiveness” includes an outcome (1.2) that explicitly focuses on
improved transport connectivity by improving access to markets for the poor and
facilitating national and regional integration. This outcome also focuses on improving the
maintenance, safety and quality of transport infrastructure and services while helping to
strengthen key institutions in the transport sector hampered by overlapping institutional
roles and mandates.
54. Relevance of Design and Implementation - Modest before and after restructuring:
A follow-up operation would most likely comprise similar road infrastructure and apply
the same technical interventions, but some significant adjustments within the components,
M&E design and implementation, and the reporting lines affecting the project
implementation unit, would be necessary. According to the latest rural accessibility
review12 Nepal’s classified road density is relatively low by regional standards, at 9.3 km
per 100 km2 of land. Most roads lie along Nepal’s southern border with India. In the more
rugged northern sections, where the project resources were mainly directed, lack of road
infrastructure and poor quality of roads continue to greatly impede the delivery of goods
and services. Support to the country, aimed at improving accessibility would therefore first
focus on the northern hilly districts.
55. However, the project would be less complete without the inclusion of structural
resilience and stability interventions for the road infrastructure, especially in view of the
country circumstances. The case of the omitted road sections due to slope instability is
compelling and a project located in the northern hilly parts of Nepal cannot ignore the
technical vulnerabilities of the road infrastructure. Regarding periodic road maintenance,
RSDP activities were “sporadically” spread across the entire country, thus involving many
administrative divisions, some without the necessary capacity. It would be necessary to
focus periodic road maintenance on well selected regions for better management, impact,
and monitoring.
56. On the second component (Institutional capacity building), the choice of the aspects
to be supported under institutional capacity strengthening would require prior analytical
work. This would be particularly so in areas that are reliant on policy decisions outside of
the project influence.
57. The design of the M&E system would require modifications including better
linkage between the PDO and its indicators, as well as the number, clarity, and
measurability of indicators. A more robust data collection system would be required. A
sub-component to support the implementation agency specifically in the area of M&E
would also be necessary.
12 Measuring Rural Access Using new technologies: UKaid, ReCAP, World Bank 2016
17
58. Implementation would benefit to some extent from the experience gained through
RSDP, but significant changes especially at the level of the implementation agency would
be required. While the project has augmented DoR’s skills in the implementation of this
type of a project, DoR’s effectiveness was affected by the institutional linkage to the
ministry. Its inability to fully retain project staff was a major drawback. The frequent staff
transfers at the ministerial level would affect not just the M&E, as noted above, but also
other aspects of the project, including financial management, procurement, and safeguards.
Future success of a similar operation would therefore be predicated upon an undertaking
by the ministry to ensure continuity of project staff within the DoR. Also important would
be an undertaking by the ministry to facilitate policy level outputs of the project.
3.2 Achievement of Project Development Objectives
Rating: Substantial before and Modest after restructuring
59. The assessment is based on the combined pre- and post-restructuring achievements
of the project and the details are provided in Table 2 of Annex 2. Without the restructuring,
the PDO achievement is considered to have been Substantial. Two of the original three
PDO indicators (Indicator Nos. 1, 2, and 12, marked as such in Table 2 of Annex 2) were
overachieved. These were indicators No.1 - Percentage increase in population with all
season road access; and No. 2 - Decrease in journey times. However, one of the three
original PDO indictors (No. 12 - Reduction of blacktop roads in poor condition) was
underachieved. Similarly, without the restructuring, only one out of the six original
intermediate indicators (No.1-Roads Board Act Amended) was underachieved. Under-
achievement of one out of three original PDO indicators and one out of six original
intermediate indicators is considered as minor shortcoming in the operation’s achievement
of its objectives – before restructuring. Hence the Substantial pre-restructuring rating.
60. With the restructuring, performance is rated as Modest. There was only one revision
to the three original PDO indicator targets (Percentage of black top roads in poor condition),
and the revised target itself was exceeded. However, the number of PDO indicators was
increased from three to twelve, four of the new indicators having no clear targets. As a
result, only three out of the nine new PDO indicators could be assessed as having been
exceeded. Furthermore, restructuring resulted in an increase of intermediate indicators
from six to eighteen. Out of the twelve new intermediate indictors, eight were either
achieved or exceeded i.e. four of the twelve new intermediate indicators were
underachieved. In summary, two-thirds of the new PDO indictors were not achieved and
one third of the new intermediate indicators were also not achieved. This post-restructuring
performance is considered modest.
61. In addition to the above assessment, a detailed review of the project performance
towards realization of the PDO’s does reveal a counter-effect of the restructuring. The main
drivers of the restructuring included the need to reflect realism especially where original
targets were considered ambitious (e.g. on policy reforms) or due to availability of
additional resources, to highlight additional outcomes (e.g. employment generation), and
to amplify some of the outcomes (e.g. on time savings). However this resulted in a
multiplicity of indicators many of which were without targets and a few could not be
18
comprehensively monitored. Examples of poorly monitored or reported indictors include
RBN staff remuneration relative to market salaries, and the impact of periodic maintenance
efforts on the maintenance backlog (intermediate indicators Nos. 3 and 12).
62. Direct assessment of the institutional strengthening aspect of the PDO seems to
have been low keyed. The outcome on institutional strengthening was, surprisingly, only
monitored through one out of twelve indicators i.e. Reduction in the percentage of blacktop
SRN in poor condition (Indicator 12). This was an indirect assessment of changes towards
more institutionalization of road maintenance – the ability of the project to make positive
impact beyond the project, by promoting an increase in road maintenance resources.
Fortunately the revised target was overachieved by 25%. Without restructuring, this
particular indicator would have significantly lowered the PDO rating.
63. The Intermediate outcomes of the infrastructure component made significant
contribution towards the PDO before and after restructuring. This was not unexpected,
considering that over 70% of the credit, in both instances, was dedicated to infrastructure.
A total length of 680km of roads were upgraded resulting in a marginal underachievement
of 4% below the 705 km target. This was mainly due to a justifiable technical and financial
consideration i.e. the need to avoid unstable slope areas. These areas would have required
more funding which in turn would have reduced the eventual upgraded length. Furthermore
the unstable sections have been included as part of second AF. Roads in good and fair
condition went up slightly above the target. The length of highways under periodic
maintenance was also marginally overachieved. A concern though, on the road related
outputs was the lack of clarity on the extent to which periodic maintenance backlog was
addressed or forestalled. This is mainly due to the lack of initial clarity in the choice of the
indicator, its definition, and the absence of due diligence in its measurement and reporting.
This matter could have been addressed through restructuring.
64. It could be argued that any of the project’s impact in terms of institutional
strengthening and policy reforms was, in fact, an outcome outside of the stated project
objective and that it was a substantial bonus to the project. Deliberate omission of the
institutional aspects in the PDO, although not discussed as such in the project documents,
may have been to provide sharpness in the project focus i.e. the emphasis was going to be
on physical infrastructure. However institutional strengthening was always part of the
project and indeed one of the upfront indicators (Roads Board is fully functional and
provides effective and sustainable funding for road maintenance …) pointed to the capacity
enhancements. The PDO could have been reworked for clarity, to reflect the institutional
strengthening aspect of the outcomes that the operation already supported.
3.3 Efficiency
Rating: Substantial before and after restructuring
65. Economic analysis was performed to assess whether the economic benefits of the
investments in upgrading projects – which accounted for about 70% of the overall Bank
support and about 92% of the Bank support to civil works – were higher than their
respective economic costs and whether these benefits were similar to those estimated at the
appraisal stage. The economic benefits of improved roads are assumed to stem from four
19
sources: (1) time savings benefits (VoT), (2) reduction in vehicle operating costs (VOC),
(3) prevented road closures (only for AF), and (4) modal shift benefits.
66. Cost-benefit analysis indicates that the project achieved a favorable economic
internal rate of return (EIRR) at completion. The overall EIRR for the upgradation
contracts supported under the Original Grant is 41.1%, which is well above not only the
12% threshold but also the estimated EIRR of 29.4% at project appraisal. The EIRR for
the AF road sections is 29.4%, which is also well-above the 12% threshold and above the
estimated EIRR of 23.4% at project appraisal. The minimum EIRR for any of the road
section is 13.8% (see annex 3 for details). The NPV for parent project roads is estimated
to be USD 63.7 million in terms of 2011 prices and the NPV for the AF project is USD
49.3 million in terms of 2016 prices. These results were also tested for their robustness
with a sensitivity analysis comprising three scenarios: a 20% increase in cost, a 20%
reduction in benefits, and a 20% increase in costs plus a 20% reduction in benefits. In all
three scenarios, the EIRR stayed above the 12% threshold. For the Original Grant roads
the EIRR varies from 21.6% to 34.3% and for the AF roads varies from 15.7% to 24.8%.
Table 3: Upgrading Contracts
Net Present Value and Economic Internal Rate of Return
Road Sections
NPV at ICR
(in USD)
EIRR at
ICR
EIRR at
Appraisal
Original Grant 63.7 41.1% 29.4%
Additional Finance 49.3 29.4% 23.4%
67. Cost Estimates vs. Contract Prices and Forex Variations and Savings: An
analysis of the estimated costs and contract prices indicates that the prices of upgrading
contracts are, on an average, about 8% lower than the estimated costs. These figures,
coupled with the significant depreciation of Nepalese Rupee against the USUS$ (from 65.8
at the time of original Grant and 71.18 at AF, to 107 at present), suggest that the project
should have had substantial savings. Indeed, a comparison of actual expenditure to-date on
Roads Development Component (mainly comprising of upgradation and periodic
maintenance contracts) with the estimate/allocation at the time of appraisal suggests a
savings to the tune of 32% (see Project Component by Cost Table in Annex 1). It is also
noteworthy that these savings are not even across the upgrading and periodic maintenance
activities mainly because the actual expenditure by GoN on periodic maintenance under
the project was only US$28.3 million, that is, about 42% of the estimate at the time of
appraisal. While part of this is attributable to forex variations, it would still be interesting
to note that the variation of actual expenditure to costs estimated at the time of appraisal
are significantly different between the upgradation contracts (completely funded through
Bank-financing) and periodic maintenance contracts (envisaged to be funded with majority
contribution from GoN).
68. Two points are worth noting: (i) besides the physical works for which economic
benefits are readily quantifiable, the project did generate substantial non quantifiable
benefits including improved accessibility for beneficiary communities, employment
creation, better road safety environment; institutional capacity enhancement. The
20
Substantial assessment of the efficiency criteria has a direct impact on the overall
justification of the outcomes, but it’s influence on the disbursement-weighted split rating
is remote.
69. In summary, while the economic analysis clearly points out to some weaknesses in
capturing and reporting on: (a) the extent of savings on account of variation in foreign
exchange rates (which turned out to be rather significant); and (b) the variations in the
ratios of GoN:Bank cost-sharing envisaged vis-à-vis the actual in the case of the Periodic
Maintenance activity it strongly reveals that the project supported investments have yielded
positive NPV and EIRRs well-above the threshold levels. Accordingly, the Efficiency
aspect is rated as Substantial.
3.4 Justification of Overall Outcome Rating
Rating: Moderately Satisfactory
70. The project is overall evaluated as having achieved the PDO Moderately
Satisfactorily. The combined rating before restructuring for the primary criteria i.e.
Relevance, Efficacy, and Efficiency is Satisfactory. After restructuring, Efficacy is rated
as Modest while the other two are rated Substantial thus making the combined rating
Moderately Unsatisfactory (MS). After assigning the appropriate values13 (Ref. Appendix
B of the ICR Guidelines) to the before and after restructuring ratings, and applying the
disbursement-weighted split rating method discussed below, the overall outcome rating is
Moderately Satisfactory.
71. The project PDO remained unchanged but the assessment of the outcomes has taken
due cognizance of the significant scale-up of the scope of outcome targets arising from the
AF of September 2010. At the restructuring for the AF, physical scope increased, new
districts were added, and notable changes were made to the results framework. While there
were other six restructurings, the September 2010 restructuring is considered as the
project’s main point of inflexion. The PDO ratings have therefore been assessed separately
for the periods before and after the September 2010 restructuring. Table 2 of Annex 2 is
particularly relevant in this regard. Thereafter, the disbursement-weighted split rating
method has been used to combine the ratings. At the time of the AF, disbursement stood at
US$ 30.1 million while it was US$ 99.1 million on August 31, 2016. The ratio (or split) of
the disbursements that is applied to weight the ratings is therefore 3:7. In other words, the
Satisfactory performance prior to restructuring is effectively counterbalanced by the
Moderately Satisfactory performance after the restructuring.
3.5 Overarching Themes, Other Outcomes and Impacts
(a) Poverty Impacts, Gender Aspects, and Social Development
13 The assigned values for Satisfactory and Moderately Unsatisfactory ratings are 6 and 3 respectively. The
assigned value for Moderately Unsatisfactory rating is 4.
21
72. RSDP beneficiaries are based in Nepal’s Mid-Western and Far-Western Regions.
These regions have the highest overall rates of poverty in Nepal (32% and 46%,
respectively). The districts that benefitted from the project are home to approximately two
million people, roughly 8% of Nepal’s overall population. Just over half of the people
living in these districts were poor according to the Association’s Small Area Poverty
Assessment conducted in 2011. Three of RSDP’s original target districts (Kalikot, Bajhang,
and Jumla) were considered to be the second, third, and sixth poorest districts in Nepal,
with estimated poverty rates in 2011 of 58%, 56%, and 49%, respectively. Project
beneficiaries included women and members of two historically disadvantaged groups:
Dalits and Janajatis. The ICR Team had the opportunity to informally interview some
beneficiaries along project-supported roads; they emphasized how these roads had
improved access to government services and provided increased access to transport
services.
(b) Institutional Change/Strengthening
73. The Institutional Strengthening and Policy Reform Component focused on
improving processes and building the longer-capacity of key branches of the DoR, and in
the RBN. Both institutions are essential for maintaining RSDP upgraded roads and
ensuring continued maintenance of the SRN more generally. The DoR benefitted from
local and international training opportunities for senior staff and technical experts that built
capacity and expertise in information technology, environmental and social safeguards,
human resource development, road asset management, road safety, quality assurance of
upgraded works, auditing, and logistics. On the other hand, the project’s endeavor to
improve and mainstream the road asset management and IT-based systems, strengthening
RBN and further stepping up the capacity of DoR, remains an unfinished agenda, slated
for support under the Second AF.
(c) Other Unintended Outcomes and Impacts (positive or negative)
74. Development of New Construction Material: The upgrading of roads in remote
districts in the Mid-Western and Far-Western regions of the country was intended to
improve access to economic and social centers for isolated communities. The remoteness
of these regions, along with the difficult physical environments, presented engineering and
logistical challenges for the construction firms contracted to upgrade sections of non-
engineered roads. This influenced the choice of upgrading materials and technologies used.
Based on past pilot projects, RSDP roads utilized a unique, low-cost design comprised of
a particular river bed gravel size sourced from the immediate vicinities of project sites and
protected by thin coating of Otta Seal to prevent gravel erosion, run-off, and unhealthy dust
during the dry season.
75. Flexible Response: a present and ongoing engagement with GoN through RSDP
was found to be quite useful in mobilizing quick, relevant and just-in-time support to Nepal
especially when faced with emergency situations such as floods and earthquake. For
example, the first AF helped make funds quickly available for emergency maintenance to
mitigate the damage caused by floods. In a similar vein, the project could extend swift
support to DoR in undertaking a rapid assessment of the condition of 389 bridges in the
22
Central and Western Development Regions in the aftermath of the earthquake, and identify
the extent of damages and options for remediation.
3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshop
n/a
4. Assessment of Risk to Development Outcome Rating: Significant
76. The risk to the development outcome is considered significant, based on the
magnitude and likelihood of risks in the areas of Politics, Government Ownership,
Institutional Support, Technical and Governance, as explained below.
Maintenance of SRN (Government Ownership/Commitment Risk – Significant):
The sustainability of project assets – including roads that were upgraded and others
that benefitted from periodic maintenance – will be at risk if the GoN does not
proactively maintain them in accordance with routine and periodic maintenance
requirements based on local, regional, and, where appropriate, international,
lessons learned and best practices. The DoR currently has a bottom-up prioritization
process in place, but the continued efficacy of this process will be limited without
reforms to the RBN.
Institutional Strengthening at DoR (Institutional Support Risk – Significant): DoR
has established itself as a capable implementing institution, but capacity remains
limited due to multiple demands and a limited number of experienced engineers
who are able to plan and manage works effectively. The DoR also continues to
recover from the April/May 2015 earthquakes which forced its staff to relocate
different Kathmandu-based units in a dispersed fashion in response to safety
concerns at DoR's damaged headquarters building.
Reform of Roads Board (Political, Institutional Support Risk – Significant):
Although a majority of the road maintenance budget allocated directly by the
government is provided through the consolidated budget line of the RBN, the DoR
continues to get a separate maintenance budget from the government and local
bodies get separate unconditional grants that they may use for local maintenance.
This practice has diminished the role and effectiveness of RBN, and also provides
opportunities for non-prioritized ad hoc maintenance works.
Build and Maintain Bridges that Connect Upgraded Roads (Technical Risk –
Moderate): The DoR has initiated the construction of bridges that connect RSDP
upgraded roads. To ensure that these roads provide all season access to economic
centers and social services, especially during the annual monsoon season, the DoR
needs to build bridges where needed, and complete those currently under
construction. This risk is, however, considered to moderate considering the
emphasis being placed on bridges in the Second AF.
Fiduciary Transparency (Governance Risk – Moderate): Government programs in
Nepal remain vulnerable to fiduciary risks. Irregularities may still occur despite
financial controls, procurement oversight, regular financial auditing, regular
23
reporting, and other controls. While the introduction of e-bidding and general
improvements in DoR's fiduciary systems have resulted improvements in
procurement and contracting, residual risk remains.
5. Assessment of Bank and Borrower Performance
5.1 Bank Performance
(a) Bank Performance in Ensuring Quality at Entry
Rating: Moderately Satisfactory
77. At the time of preparation, the Bank team had taken good advantage of its earlier
engagement in the Nepal Road Sector – through the RMDP – to pinpoint the proximate
challenges facing the sector, namely, lack of access due to systemic decline in capacity
expansion investment owing both to insurgency and the particular focus of GoN and donors
on routine maintenance. This understanding has been harnessed well to (a) define a PDO
that is fully aligned with the sector needs, country priorities and the Bank’s engagement
strategy; (b) design components that respectively focused on enhancing access in the
targeted districts with acute deficiencies in access, through upgrading and periodic
maintenance investments and strengthening of policies and key institutions engaged in
planning and management of roads; and (c) prepare the project on “fast track” basis duly
taking advantage of the Environmental and Social Management Frameworks developed as
part of the earlier project.
78. The preparation also ensured that the design and quality at entry were robust with
respect to the Road Development Component, in terms of its alignment with the client
priorities and Bank strategy, logical and prioritized selection of investment interventions,
use of lessons from previous operations, identification & mitigation of risks and allocation
of adequate funds to meet the envisaged outputs and outcomes. In comparison, the design
of the Institutional Strengthening & Policy Reform Component, though appeared to have
been ambitious in terms of range of activities it sought to support, it lacked clear espousal
how and to what extent various activities under this component would strengthen the target
institutions. In particular, the team appears to have underestimated the challenges they are
likely to face in more complex areas such as mainstreaming of road asset management
system and strengthening of RBN. For example, the PAD explicitly identified the
“consolidation of road maintenance funding through RBN” as a Covenant applicable to
project implementation. While the RBN Act Amendment was developed and submitted to
the Constituent Assembly for action, this Covenant was yet to be met.
79. The aforementioned limitations in the design of the Institutional Strengthening and
Policy Reform component are considered as moderate as the team could not have envisaged
the prolonged period instability and other disturbances that ensued, and, accordingly, the
Bank’s performance in ensuring quality at entry is rated as Moderately Satisfactory.
(b) Quality of Supervision Rating: Moderately Satisfactory
24
80. As envisaged at the time of appraisal, the team relied on continuous supervision to
ensure smooth implementation of the project. The team conducted a total of 17 formal
missions over an eight year period (from June 2008 – September 2016). The ISRs, Aide
Memoires and Management Letters provided regular and appropriate oversight of the
project, with the later Aide Memoire’s providing more detailed data and analysis. The
generation of these documents also provided useful ways for the Bank to maintain regular
communication with the GoN on implementation challenges and successes. These efforts
have enabled the team to identify operational problems (e.g., poor- or non-performing
contracts) as well as need/scope for AFs, restructurings and cancellations, early on, and
initiate appropriate remedial actions. Overall, project oversight improved over time, with
the most noticeable and positive changes beginning in 2012, when the Aide-Memoires
became far more detailed and systematically presented. The Aide-Memoires identified
implementation challenges at the sub-component level, and described actionable, time-
bound responses to these challenges.
81. The team, however, seemed to have not been equally effective in its pursuit of
complex challenges on the Institutional Strengthening and Policy Reform agenda.
Admittedly, much of the lack of the traction on this front is perhaps attributable to the
prevailing environment of political uncertainty. Yet, the team seems to have responded to
this constraint mainly through progressive downward revision/recalibration of its
expectations rather than identifying and pursuing alternative avenues for furthering the
reform agenda. Also, a quick review of the Aide Memoires and ISRs suggests little or no
analysis as to how the substantial changes in exchange rate have been impacting project
funds and the likelihood of savings. Keeping in view these shortcomings, the performance
of the Bank on Quality of Supervision is rated as Moderately Satisfactory.
(c) Justification of Rating for Overall Bank Performance
Rating: Moderately Satisfactory
82. Considering that the Bank’s performance in ensuring quality at entry and in quality
of supervision are rated as Moderately Satisfactory and Satisfactory respectively the overall
rating for Overall Bank Performance is rated as Moderately Satisfactory.
5.2 Borrower Performance
(a) Government Performance
Rating: Moderately Satisfactory
83. The project received continuous support of the GoN, which helped it sustain the
project efforts and momentum, despite the highly challenging context in which the project
was conceived and implemented. Continuity of staff was a challenge, but not surprising
given the protracted political transition that resulted in multiple governments, and the two
earthquakes that required emergency response to damaged roads. The government met all
the covenants except four. Of these, three Covenants on continuity of staff, ensuring for
adequate funding for road maintenance of back-logged periodic maintenance, and human
resource development, were partially met, and the one related to consolidation of road
maintenance funding for both local and strategic roads through the RBN starting in
25
FY2008/09 was not met. The Roads Board Act Amendment, which would reform the RBN
structure, accounting systems, authority to collect and cause to collect Road User’s Charges,
and provide specific authorities for the Chairman and Executive Director – and thereby
significantly enhance the sustainability of funds flow to the critical area of maintenance –
is still under consideration of the Constituent Assembly. The Borrower Performance is
rated as Moderately Satisfactory.
(b) Implementing Agency or Agencies Performance Rating: Moderately Satisfactory
84. The DoR was the agency for implementing this project in fairly complex and
challenging environment. The international and local training for technical staff and
management, including capacity building in geo-technical, environmental, and social
aspects of road building, upgrading and maintenance, did contribute to the performance of
DoR in project implementation. However, frequent staff rotation affected implementation
continuity and delayed decision-making. In addition, operational issues at the outset slowed
implementation, especially related to road upgrading and addressing the road maintenance
backlog.
85. DoR, however, overcame these issues over time and eventually was able to
successfully meet upgrading and periodic maintenance targets. The agency also managed
to improve systems and process across its many administrative, operational and technical
branches. Continued commitment to institutional strengthening and managing
construction work in the immediate aftermath of the April/May earthquakes, when office
units were disbursed across Kathmandu due to safety concerns at DoR’s damaged
headquarters, is particularly noteworthy. Keeping these in view, performance of the
Implementing Agency is rated as Moderately Satisfactory.
(c) Justification of Rating for Overall Borrower Performance Rating: Moderately Satisfactory
86. Considering that the performance of the Borrower as well as the Implementing
Agency are rated as Moderately Satisfactory, the Overall Borrower Performance has been
rated as Moderately Satisfactory.
6. Lessons Learned
87. The development and implementation of RSDP during a period of political
transition and environmental challenge (including two earthquakes and devastating
flooding and mudslides due to a harsh monsoon season in 2013) provides the opportunity
to reflect on lessons learned that can inform future partnerships between the Bank and the
GoN, and also inform Bank work more generally in road transport.
88. Robust understanding of the needs and simple design to meet them: Perhaps the
most important lesson of the Bank’s engagement in RSDP is the way it analyzed the sector
context to understand how declining focus on capacity expansion has been progressively
26
hampering access especially in poor and remote districts, and then put together a project
that squarely targeted this need by channelizing investments towards upgradation and
periodic maintenance of prioritized roads in selected districts. The Institutional
Strengthening and Policy Reform, on the other hand, comprised many but mostly disparate
activities with no coherent strategy and, accordingly, achieved mixed results.
89. There are advantages in having an ongoing engagement…but. Clearly, the
present and active engagement of the Bank in the sector proved to be invaluable in quickly
mobilizing additional support in the aftermath of natural calamities including earthquakes
and floods. At the same time, prolonging an engagement over a period of more than 10
years, with little or no variation in design seems to suggest that the Bank might have missed
an opportunity to look at the sector challenges and structure solutions from a fresh
perspective. To its credit, the recent Second AF, with its focus on bridges, climate
resilience, etc., seems to be attempting to break new ground but the way forward envisaged
on the Institutional Strengthening & Policy Reform front suggests serious need for
reworking the approach.
90. Support for innovative approaches to the development and use of local materials
in road construction can be cost effective, environmentally friendly, and promote local
entrepreneurship. When upgrading or building new roads in geographically isolated areas
with challenging environmental terrain, the Bank can incentivize the creative use of local
materials to build or upgrade low traffic roads at a lower cost and with a minimal carbon
footprint.
91. “Soft” investments are harder to implement, monitor and evaluate. The mixed
results on the Institutional Strengthening & Policy Reform component underscore the need
to pay more attention to duly integrating/reflecting it in the PDOs, and the results
framework with a logical chain of attribution. Furthermore, the opportunities to
restructuring should be fully harnessed to seek alternative solutions rather than simply
revising the expectations downwards and aligning the targets to whatever was possible.
92. Important to nurture innovations, as they can yield big dividends, even beyond
the remit of project and sector. The e-bidding system that was developed and supported
by RSDP is currently being rolled out to other GoN entities. The Bank and Borrower
should explicitly identify activities that support project goals and that have the potential to
impact other sectors and more generally improve government performance.
93. Project opportunities in difficult environments are rare and hence, interventions
should be more comprehensive and also cater to future needs. As indicated by GoN in
their project completion report, road construction in high mountains is a challenging and
cumbersome job. Also, as recognizes in the recent AF Paper, the travel needs on the project
roads are already changing, signifying the importance of addressing aspects such as bridges,
slope stabilization, road safety, etc. This aspect may be given due attention in future
projects in similar challenging contexts/areas.
27
94. Road investments have the potential to contribute to post-conflict challenges.
Besides providing better living conditions and opportunities for post conflict communities,
road investments can contribute towards enhancement of cohesion and inclusion. This
would be particularly so if choice of interventions are guided by prior diagnostic work.
95. Institutional development component would have benefitted from prior
diagnostics. The institutional strengthening and reforms component was well funded and
continues to be part of the second AF. Its importance therefore cannot be overemphasized.
However, the wide scoped support for this component seems to have yielded mixed results
due the absence of prior in-depth sector needs assessment. In this regard, the 50 percent
increase in the original amount for capacity building (from US$8.0 million to US$12
million) required the backing of a robust situation analysis.
96. A technical department with a dedicated project implementation unit cab be
significantly advantageous. The performance of DoR with regard to the infrastructure
deliverables was notably effective. The department was in a position to mobilize a
dedicated project implementation unit as well as its regional and district units to deliver the
roads component. The department, based on its appreciation of national level challenges,
for instance, took the decision to package contracts into sizes that met the needs of the local
construction industry and advised the units accordingly. This improved competition, speed
of implementation and also contributed towards growth of the local construction industry.
DoR was able to implement this aspect of the project relatively well notwithstanding the
fragile country environment.
97. Overall project cost increase can yield corresponding outputs. For RSDP, the final
total expenditure of US$ 120 million was more than twice the original all-inclusive project
cost estimate of US$ 50 million. Similarly the 680 km of roads finally rehabilitated were
more than twice the initial estimate of 297 km. The main driver of the cost increase was
the need to scale-up the physical outputs and this was achieved. Of the US$ 120 million,
US$101 (83% of the project cost) was used to improve road accessibility. An analysis of
the road contract prices indicates that they were, on an average, about 8% lower than the
estimated costs. RSDP’s cost increase therefore translated directly into corresponding
physical outputs. This achievement was further augmented by the support towards the
Borrower’s institutional capacity.
7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners
(a) Borrower/implementing agencies
n/a
(b) Cofinanciers
n/a
(c) Other partners and stakeholders
28
n/a
29
Annex 1. Project Costs and Financing by Component
(a) Project Cost by Component (in USD Million equivalent)
Component
Original Estimate at the time
of Appraisal
Actual/Latest Estimate
of Expenditure* % of
Appraisal Origina
l Grant
Addl.
Fin. Total
Original
Grant
Addl.
Fin. Total
in USUS$ million
Component 1: Road
Development Component 42.9 101.3 144.2 40.8 60.2 104.4 72%
1.1 Road Upgrading 30.9 53.2 84.1 30.5 43.4 75.9 90%
1.2 Periodic Maintenance 12.0 48.1 60.1 10.3 16.8 28.5 47%
1.3 Road Safety (in 1.1
above)
Component 2:
Institutional
Strengthening and Policy
Reform 6.6 18.0 24.6 9.3 7.1 16.4 67%
PPF 1.0 0.0 1.0 0.5 0.0 0.5 52%
Operating Cost 0.1 6.3 6.4 1.2 1.2 2.3 36%
TOTAL 50.6 125.6 176.2 51.8 68.5 123.6 70%
in SDR million
Component 1: Road
Development Component 27.9 65.3 93.2 26.5 41.8 68.4 73%
1.1 Road Upgrading 20.2 34.3 54.4 19.7 30.5 49.8 92%
1.2 Periodic Maintenance 7.7 31.0 38.8 6.8 11.3 18.6 48%
1.3 Road Safety (in 1.1
above)
Component 2:
Institutional
Strengthening and Policy
Reform 4.3 11.6 15.9 6.1 4.7 10.8 68%
PPF 0.7 0.0 0.7 0.3 0.0 0.3 43%
Operating Cost 0.1 4.1 4.1 0.0 0.8 0.8 20%
TOTAL 33.0 80.9 113.9 32.9 47.3 80.3 71%
Source: Department of Roads, Government of Nepal
Notes: (i) In June 2011, an undisbursed amount of SDR 17.5 million under the AF Grant was cancelled
and the same amount of funds were recommitted as new credit; (ii) ~US$7 million cancelled in January
2015 restructuring; and (iii) As of October 22, 2016, under the Original Grant and the first AF: Net
commitment - US$110.62 million; Disbursed - US$99.1 million; and Undisbursed - US$9.37 million
30
(b) Project Costs and Financing by Source of Funding
Source of
Funds
Type of
Cofinancing
Appraisal Estimate Actual/Latest Estimate
of Expenditure* % of
Appraisal Original
Addl.
Fin. Total Original
Addl.
Fin. Total
in USUS$ million
Borrower - 8.0 50.5 58.5 9.0 15.5 24.5 42%
IDA Grant - 42.6 33.7 76.3 42.8 6.6 49.4 65%
IDA Credit - 0.0 41.3 41.3 0.0 49.8 49.8 120%
TOTAL - 50.6 125.5 176.1 51.8 68.5 123.6 70%
in SDR million
Borrower - 5.2 32.6 37.8 5.2 10.4 15.6 41%
IDA Grant - 27.8 21.7 49.5 27.8 4.4 32.2 65%
IDA Credit - 0.0 26.6 26.6 0.00 32.5 32.5 122%
TOTAL - 33.0 80.9 113.9 33.0 47.3 80.3 71%
Source: Department of Roads, Government of Nepal and Project P095977 Portal (IBRD)
Notes:
(i) Approval of the Second AF on August 25, 2016, committed an additional IDA amount of SDR 39.3
million (US$ 55.0 million). The credit is not yet effective.
(ii) Level 2 restructuring of January 21, 2015 resulted in the cancellation of SDR 4.67 million (US$6.98
million).
(iii) Total IDA funding is SDR 110.73 million (27.8+21.7+26.6+39.3-4.67)
(iv) The equivalent amount is US$ 165.62million (42.6+33.7+41.3+55.0-6.98)
(v) As at August 31, 2016: Net commitment - US$110.62 million; Disbursed – SDR 64.71 million (US$99.1
million); and Undisbursed - US$9.37 million, excluding Second AF.
31
Annex 2. Outcomes and Outputs by Component
The Project had two main components and the outputs of each are listed in Table 1 below.
The outcome ratings with and without restructuring are shown in Table 2.
Table 1: Output and their indicators
Component /
Activity
Description
Key Performance Indicators
End of Project Target Achievement/Remarks
Component 1: Road Development Component
Overall 6 percent increase in
population in project
districts to have all
season road access within
20 minutes walking
distance (in eight project
districts)
Target marginally exceeded.
The percentage of population with all season
road access within 20 minutes walking
distance increased from 8% to 15%, as against
the target of 14%. Source: GoN study based
on a GIS analysis.
35 percent decrease in
journey times to key
economic centers in the
project area
Target exceeded.
Journey time to economic centers decreased
by 53% (from 4 hours to 2.6 hours)
25 percent decrease in
journey times to social
services in the project
area
Target exceeded.
Journey time to social centers decreased by
70% (from 4 hours to 1.2 hours)
Reduce the percentage of
black-top SRN in poor
condition to 15 percent
Target exceeded.
The percentage of blacktop Strategic Road
Network (SRN) in poor condition reduced to
11.27% as against the revised target of 15%
(original: 10%).
Periodic maintenance of
targeted highways and
feeder roads backlog
executed
Not clear. The target of backlog periodic
maintenance of 1,000 km was eschewed in
AF. No data on the other part of the indicator,
that is, at least 500 km of periodic
maintenance works annually.
1.1: Road
Upgrading,
Resettlement &
Rehabilitation
100 percent of 705 km
(Original: 297 km; Addl.
Financing: 408 km) of
target roads receiving
upgrading works
Substantially achieved.
As against the target of rehabilitating 705 km,
the project completed upgradation of 680 km.
1.2: Periodic
Maintenance
100 percent of 2550 km
(Original: 450 km; Addl. Achieved A total of 2,595km road length (Out of which
450 km of original financing; 1,728km of AF
32
Financing: 2100 km) of
highways received
periodic maintenance
and 417km of GoN funding) has been
completed as of end-June, 2015.
1.3: Road Safety
Action Plan and
Physical Works
Road Safety Action Plan
implemented and
physical works carried
out.
Achieved.
Road safety action plan, developed and
approved, and is under implementation. All
the physical works spanning 9 contracts being
supported under the project have been
completed.
Component 2: Institutional Strengthening and Policy Reform
2.1 Improved
effectiveness of
Roads Board
Nepal
Draft RBN Act
(Amendment) finalized
and submitted to the
Parliament for
consideration
Revised target achieved.
The draft amendment to the Act finalized and
submitted to the Parliament.
Government decision to
benchmark RBN staff
salaries to market rates
Difficult to conclude.
While RBN Staff salaries are reportedly being
made comparable to other autonomous bodies
but not clear as to how they compare with
market rates. Also, the indicator was
eschewed in the recent AF citing difficult in
its attribution to project.
An RBN 5 year business
plan (2012-2017)
prepared that incorporates
Human Resource
Development (HRD) Plan
Revised target achieved.
5-year business plan prepared for RBN.
2.2 Improved
staff
capacity within
DOR
HR policy updated and 3-
year training plan
finalized
Achieved.
HR policy updated and 3-year training plan
finalized. Domestic and international training
provided for DoR staff as per policy and plan.
Capacity building in
Geotechnical,
Environmental and Social
Unit
Achieved.
Geotechnical assessments carried out and site
specific EMAP and RAP monitoring
being done periodically
Awareness creation on
HIV /AIDS and planned
activities carried out
Achieved.
Creating awareness among project
construction workers and road users on
HIV/AIDS is ongoing
2.3 DoR IT based
MIS operational
Web based system
adopted for FMIS, GRM,
CMS
Achieved. The implementation team also paid due
attention to the emerging technological
changes and adopted appropriate changes to
the strategy.
33
2.4 Road asset
management
tools used for
prioritization of
road
maintenance and
upgrading works
Annual maintenance plan
prepared using objective
methods;
Road inventory prepared
for a portion of the
network and data model
developed in order to roll
out the methods to the
whole network
Revised target achieved.
The ICR team has not ascertained the efficacy
of the reported Objective method being use in
the preparation of the annual road
maintenance plan.
2.5 Improved
quality assurance
Quality monitoring plan
prepared each year and
quality audit carried out
by Central Road Lab
Achieved.
The Central Road Lab is reportedly carrying
out quality audits and monitoring quality
assurance. The scope and periodicity of such
activities, however, is not clear.
2.6 Third party
technical audit
Third party technical
audit carried out for 20%
of the project works each
year
Achieved. Third party technical audit of upgrading and
periodic maintenance works under RSDP has
been carried out on 20% of the project works.
Table 2: Outcome ratings with and without restructuring
Baseline Revised Target % achieved of
revised target
Original Target % achieved of
original target
PDO INDICATORS
1. Percent increase in pop. in project districts with all season road access within 20 minutes
(Original).
8% n/a n/a 14% 107%
2. Percent decrease in journey times in the project area (Original).
4hrs n/a n/a 35% 151%
3. Decrease in journey times in the project area to key economic centers
n/a 2.6 hrs. 137% n/a n/a*
4. Decrease in journey times in the project area to key social service centers.
n/a 3.0 hrs. 250% n/a n/a*
5. Direct project beneficiaries within 4 hours walking distance.
200,000 800,000 94% n/a n/a
6. Female beneficiaries
n/a n/a n/a n/a n/a
7. Employment generated
n/a 2.5 million 267% n/a n/a
8. Employment generated – male
n/a n/a n/a n/a n/a
9. Employment generated – Female
n/a n/a n/a n/a n/a
10. Employment generated – Dalit
34
n/a n/a n/a n/a n/a
11. Employment created – Janajatis
n/a n/a n/a n/a n/a
12. Reduced % of blacktop Strategic Road Network in poor condition to 15% (Original).
18% 15% 133% 10% 75%
INTERMEDIATE OUTCOME INDICATORS
1. Roads Board Act amended and more training and logistics provided (Original).
0 Submission of
Act 100% Amend. of Act 50%
2. Government decision to benchmark RBN staff salaries to market rates.
n/a Market rates 50% n/a 50%
3. Human Resources Development Plan (Original).
n/a n/a n/a As indicator 100%
4. Roads rehabilitated non-rural (km)
0 705 96% 297 229%
5. Share of rural population with access to an all-season road
n/a 14% 107% n/a n/a
6. Number of rural people with access to an all-season road
n/a 131,000 250% n/a n/a
7. Roads in good and fair condition as a share of total classified roads
n/a 85% 104% 90% 99%
8. Size of total classified roads
n/a n/a n/a n/a n/a
9. 700 km target roads received upgrading works (Original).
0 705 96% 297 229%
10. 2,550 km of highways received periodic maintenance (Original).
2550 102% 450 577%
11. Road safety action plan and physical works (Original).
n/a n/a n/a As indicator 100%
12. Periodic maint. of targeted highways and feeder roads backlog executed (Original)**.
450 n/a n/a 1,000 Data unavailable
13. Capacity building in geot. env. and social aspects, and awareness creation on HIV /AIDS
0 As indicator 100% n/a n/a
14. DoR IT based Management Information Systems (MIS) operational
n/a Web based 100% IT based 50%
15. Road asset management tools used for prioritization of road maint. & upgrading works
n/a Annual plans 100% As indicator 50%
16. Improved quality assurance
n/a Annual reports 50% n/a n/a
17. Third party technical audit
n/a Audit 20% 100% n/a n/a
18. Improve staff capacity within DoR
n/a HR policy 100% n/a n/a
*The indicator was not part of the original three PDO indictors. It was introduced to amplify
the targets of the time-savings indicator
35
** The indicator was not well monitored or reported on
36
Annex 3. Economic and Financial Analysis
1. Economic analysis is performed to assess whether the economic benefits of the project
are higher than its economic cost and whether these benefits are similar to those
estimated at the appraisal stage. We accomplish this by first assessing whether the
economic internal rate of return (EIRR14) is greater than 12% and then comparing it to
the EIRR estimated at the appraisal stage. The same methodology as that used at project
appraisal is used to conduct the economic analysis at ICR stage.
Framework:
2. Assumptions: The following general assumptions are made when performing the
economic analysis:
The analysis is performed for a 16 year period – 1 year for civil works and 15 years
of benefits.
Project discount rate is assumed to be 12%. For the conversion rate it is assumed that 1 USD is equivalent to NPR 72 for the
parent project and NPR 106 for the AF. 15
A standard conversion factors (SCF) of 0.92 is used to convert financial (market)
prices to economic costs in road construction.
3. Costs: Actual costs, including supervision costs of implementation of the selected
roads are presented in the table below. In order to compare real costs, the estimated
costs at appraisal of the parent project (in terms of 2007 prices) are rescaled using CPI
to 2011 price level. Similarly, the estimated costs at appraisal of the AF (in terms of
2011 prices) are rescaled using CPI to 2016 price level. The currency conversion rates
provided above are used to convert costs to USD at implementation. A comparison of
the rescaled estimated cost and actual cost reveals that the actual costs of all but one
road section was lower than the estimated costs.
14 EIRR is the discount rate that equates the discounted stream of benefits and costs.
15 These are the currency conversion rates for January 2011 and January 2016, respectively.
37
Table 1: Cost Comparison
Estimated Cost/Km (in 1000s
NRP)
Actual Cost/Km of
Implementation
Road Section Original
At Adjusted
Price Level
(in 1000s
NRP)
(in 1000s
USD)
Parent Project:
Khodpe-Kalinga Bridge 7,030 9,210 8,850 123
Satbanjh-Gokuleshwar 7,660 10,040 9,500 132
Satbanjh-Tripurasundari 6,720 8,810 6,150 85
Surkhet-Khidkijhyula 3,620 4,750 5,750 80
Tallodungeshwar-
Dailekh 7,840 10,280 8,810 122
AF:
Khidkijyula-Manma 12,500 18,760 10,340 98
Thaktoli-Darchula 8,380 12,570 7,850 74
Kalangagad bridge-
Chainpur 7,790 11,690 8,930 84
Gokuleshwaor-Thaktholi 7,820 11,740 8,430 80
Chhinchu-Jajarkot 7,580 11,380 7,050 67
Sittalpati-Musikot 6,360 9,550 7,210 68
Manma-Jumla 11,440 17,170 15,000 142
4. The economic benefits of improved roads are assumed to stem from four sources: (1)
time savings benefits (VoT), (2) reduction in vehicle operating costs (VOC), (3)
prevented road closures (only for AF) 16, and (4) modal shift benefits. These benefits
are estimated based on updated traffic surveys.
5. Traffic Data: For road sections covered under the parent project, traffic estimates from
2007 (for each road section) are projected to 2011 levels using annual growth rates of
7% for passengers, 5% for freight, and 1.5% for non-motorized traffic. These
projections are compared with actual traffic levels collected from roads during 2011.
Similarly, for road sections covered under AF, traffic estimates from 2010-11 (for each
road section) are projected to 2016 levels using annual growth rates of 8% for
motorized traffic and 1.5% non-motorized traffic. These projections are compared with
actual traffic levels collected from roads during 2011. In both cases, the difference in
the traffic volumes of every type of vehicles are considered to be traffic generated as a
result of the project implementations. Average annual daily traffic (AADT) with and
without project are presented below.
16 This is because for the parent project discussions in 2007 with a number of local residents
established that the project roads were not closed during monsoon times.
38
Table 2: Average Annual Daily Traffic Without Project and Generated by Project
Road Section Scenario Mo
torc
ycl
e
Tra
cto
r
Bu
s la
rge
Bu
s m
ediu
m
Bu
s m
icro
Tru
ck h
eav
y
Tru
ck l
igh
t
Uti
lity
4 W
hee
l D
riv
e
Ca
r/T
ax
i/J
eep
Ped
estr
ian
s
Po
rter
Pa
ren
t P
roje
ct
Khodpe-Kalinga
Bridge
Without project 4 10 557 346
Generated 29 4 26 24 42 18 31 75
Satbanjh-
Gokuleshwar
Without project 3 1 3 390 673
Generated 10 5 19 10 30 7 17 29
Satbanjh-
Tripurasundari
Without project 3 1 3 168 290
Generated 8 4 14 8 22 5 13 22
Surkhet-
Khidkijhyula
Without project 11 6 8 5 10 5 7 8 3
Generated 1524 116 51 24 34 56 33 49 76 47
Tallodungeshwar-
Dailekh
Without project 8 4 16 2 5 527
Generated 23 2 3 5 6 6 1
AF
Khidkijyula-
Manma
Without project 13 113 3 18 12 15 9 3 830 16
Generated 23 10 4 30 7 4
Thaktoli-
Darchula
Without project 7 1 4 1 1 7 3 32 40 177 150
Generated 2 3
Kalangagad
bridge-Chainpur
Without project 7 15 24 4 4 3 510 25
Generated 40 4 10 9 6 8 10 39 1
Gokuleshwaor-
Thaktholi
Without project 7 1 0 15 3 7 15 435 161
Generated 13 2 4 8 3 2
Chhinchu-
Jajarkot
Without project 75 60 24 1 0 24 10 15 3 1045 22
Generated 238 2 27 29 12
Sittalpati-Musikot
Without project 87 54 41 26 41 25 24 9 1 998
Generated 3 1
Manma-Jumla
Without project 12 125 1 15 1 3 9 3 98 4
Generated 82 32 10 11 13 25 91 23 10
6. VOC Benefits: To estimate VOC benefits, the vehicle operating costs for each vehicle
type are obtained from the World Bank RED-VOC model according to the surface
types and condition. Without the project the IRI of the roads is 22 while with the project
the IRI of the roads is 5. This difference in road condition results in a VOC reductions
of 27% to 44% for each road section.
7. VoT Benefits: Time saving benefits—value of time (VoT)—are calculated on the basis
of the opportunity cost of time by using the hourly wage rate. The hourly wage rate is
estimated to be USD 0.76 (NPR 55) for the parent project (based on 2011 prices) and
USD 0.73 (NPR 106) for the additional finance roads (based on 2016 prices).
39
Table 3: Travel Time Savings With and Without Project
Speed Without
Project
Speed With
Project Time Savings
per km
(in minutes) Vehicle type (km/h) (km/h)
Bus Light 20.0 34.6 1.3
Bus Medium 20.0 29.4 1.0
Bus Heavy 20.0 30.2 1.0
Car Medium 20.0 34.2 1.2
Motorcycle 20.0 32.1 1.1
8. Benefits from preventing road closures: Based on surveys at the start of the project,
it was established that the additional finance project roads were closed for an average
of approximately 45 days a year due to landslides and flooding during monsoon
season.17
The annual output of economic services from any road is given by: Money value
of output = [daily number of vehicles*unit vehicle operation cost/km*length of
road*365]
The annual loss of output from road closures is equal to: Annual benefit from
improvement = [money value of output per day * no. of days closed per year]
In the ‘with project’ (WP) paved road case, it is anticipated that, given suitable road
maintenance, the number of closed days will be reduced by a year-in year-out
average of 75 percent, Thus the annual economic benefit is calculated as:
AADT*45 days*75%*unit cost/km VOC*road length km.
9. Benefits from modal shift: Benefits from modal shift are estimated for freight and
passengers as explained below.
Freight: It is assumed that road improvements will result in a switch from using
mules and porters to trucks. The assumptions about average load and distance
travelled per day are the same as those made at the project appraisal stage and the
estimation methodology is also the same. The net economic cost savings from
modal shift to trucks, from either porter or mule transport mode, is estimated to be
USD 3.65 (NPR 263) per tonne-km for the parent project roads and USD 3.55 (NPR
376) per tonne-km for the AF project roads.
Passenger: With a marked improvement to the road, if pedestrians begin to take bus
trips instead of walking, then the economic benefit—to each passenger—would be
at least equal to the amount they pay for the bus ride. Additionally, people might
begin to take much longer trips. To estimate benefits from passenger modal shift
the same assumptions as at project appraisal are made regarding the fraction of
17 For the parent projects, a similar survey established that the project roads were not closed during
monsoon times. Thus, benefits from reduced road closures for the parent project roads are assumed
to be zero.
40
pedestrians who switch to taking buses—this percentage varies from 20% for some
road sections to 40% for other road sections.
Results:
10. Cost benefit analysis indicates that the project achieved a favorable economic internal
rate of return (EIRR) at completion. The overall EIRR for the parent project roads is
41.1%. This is not only well-above the 12% threshold but also above the EIRR of
29.4% which was estimated at project appraisal. The EIRR for the AF road sections is
29.4%. This is also well-above the 12% threshold and above the EIRR of 23.4% which
was estimated at project appraisal. As shown in the table below the minimum EIRR for
any of the road section is 13.8%.18 The NPV for parent project roads is estimated to be
USD 63.7 million in terms of 2011 prices and the NPV for the AF project is USD 49.3
million.
Table 4: Net Present Value and Economic Internal Rate of Return
Road Sections
NPV at ICR(in
Millions of USD)
EIRR at
ICR
EIRR at
Appraisal
Parent Project:
Khodpe-Kalinga Bridge 6.8 24.6% 15.9%
Satbanjh-Gokuleshwar 13.0 35.6% 21.6%
Satbanjh-Tripurasundari 5.5 38.2% 12.2%
Surkhet-Khidkijhyula 27.2 61.7% 59.6%
Tallodungeshwar-Dailekh 11.1 45.9% 20.0%
Sub-Total: 63.7 41.1% 29.4%
AF:
Khidkijyula-Manma 2.5 23.7% 17.7%
Thaktoli-Darchula 4.9 32.0% 24.3%
Kalangagad bridge-Chainpur 2.7 21.2% 15.4%
Gokuleshwaor-Thaktholi 5.1 36.5% 26.4%
Chhinchu-Jajarkot 10.9 35.3% 26.7%
Sittalpati-Musikot 21.8 51.2% 39.9%
Manma-Jumla 1.3 13.8% 15.1%
Sub-Total: 49.3 29.4% 23.4%
11. Sensitivity analysis is performed to test the robustness of the results. In order to do so,
three scenarios are considered: a 20% increase in cost, a 20% reduction in benefits, and
a 20% increase in costs plus a 20% reduction in benefits. In all three scenarios the EIRR
18 EIRR at ICR is significantly higher than the EIRR at appraisal for some of the road sections in
the parent projects. This wedge is largely driven by freight modal shift benefits. It is unclear
whether modal shift benefits were included for the parent project at appraisal.
41
stays above the 12% threshold. For the parent project roads the EIRR varies from
21.6% to 34.3% and for the additional finance roads varies from 15.7% to 24.8%.
Table 5: Sensitivity Analysis
Sensitivity
NPV (in Millions
of USD) EIRR
Parent Project:
+20% Cost 57.5 34.3%
-20% Benefit 44.7 32.9%
-20% Benefit & + 20% Cost 23.3 21.6%
AF:
+20% Cost 42.0 24.8%
-20% Benefit 32.1 23.8%
-20% Benefit & + 20% Cost 11.1 15.7%
42
Annex 4. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Names Title Unit Responsibility/
Specialty
Lending
Kiran Ranjan Baral Consultant GSURR Consultant
Gizella Diaz Munoz Program Assistant GFA12 Team Assistant
Drona Raj Ghimire Senior Environmental Specialist GEN06 Environment
Sunita Gurung Program Assistant SACNP Team Assistant
Ernst-August Huning Consultant GTIDR Consultant
Surendra Govinda Joshi Consultant GSURR Consultant
Zarafshan H. Khawaja Manager OPSPF Sector lead
Marianne Kilpatrick Sr Transport. Spec. SASDT - HIS Task Team Leader
Nations Msowoya Voice Secondee TWITR - HIS Team Member
Bigyan B. Pradhan Senior Financial Management
Specialist SARFM Team Member
Binyam Reja Lead Transport Specialist GTI10 Economist
Narayan D. Sharma Procurement Specialist SARPS - HIS Procurement
Supervision/ICR
A. K. Farhad Ahmed Senior Transport Specialist GT107 Task Team Leader
Shambhu Prasad Uprety Procurement Specialist GGO06 Procurement
Olivier Le Ber Lead Transport Specialist GT107 Task Team Leader
Surendra Govida Joshi Senior Transport Specialist GTI07 Task Team Leader
Marianne Kilpatric Senior Transport Specialist GTI07 Task Team Leader
Yogesh Bom Malla Financial Management Specialist GGO24 Fiduciary
Ashok Kumar Team Member GTI06 Team Assistant
Deepak Man Singh Shrestha Peer Reviewer GTI06 Reviewer
Drona Raj Ghimre Safeguards Specialist GEB06 Safeguards
Shubu Thapa Consultant GT106 Consultant
Fabio Pittaluga Safeguards Specialist GSU04 Safeguards
Ishwor Neupane Safeguards Specialist GSURR Safeguards
Kiran Ranjan Baral Team Member GSURR Team Member
Shubu Thapa Team Member GTI06 Team Assistant
Zarafshan H. Khawaja Safeguards Specialist OPSPF Safeguards
Sunita Gurung Program Assistant SACNP Team Assistant
Satya N. Mishra Social Development Specialist GSU06 Safeguards
Nagendra Nakarmi Senior Program Assistant SACNP Team Assistant
Bigyan B. Pradhan Senior Financial Management
Specialist SARFM Team Member
Nastu Prasad Sharma Public Health Spec. SASHN- HIS Team Member
Neena Shrestha Procurement Assistant GGO06 Procurement
Silva Shrestha Water & Sanitation Specialist GWA06 Team Member
Paul Kaiser ICR Consultant GTI07 Consultant
Justin Runji Senior Tran. Spec./ ICR TTL GTI07 ICR TTL
Sri Kumar Tadimalla Senior Tran. Spec./ ICR TTL GTI06 ICR Co-TTL
43
(b) Staff Time and Cost
Stage of Project Cycle Staff Time and Cost (Bank Budget Only)
No. of Staff Weeks
US$, Thousands
(Including Travel and
Consultant Costs)
Lending
FY06 2 10,868.04
FY07 16.37 82,325.67
FY08 0.00 0.00
FY09 0.00 0.00
FY10 0.00 0.00
FY11 0.00 0.00
FY12 0.00 0.00
FY13 0.00 0.00
FY14 0.00 0.00
FY15 0.00 0.00
FY16 0.00 0.00
FY17 0.00 0.00
Total: 18.37 93,193.71
Supervision/ ICR
FY06 0.00 0.00
FY07 0.00 0.00
FY08 48.97 151,434.91
FY09 38.88 133,056.42
FY10 41.2 119,419.77
FY11 50.58 179,844.42
FY12 36.96 118,181.41
FY13 33.71 105,944.49
FY14 28.11 128,817.6
FY15 21.46 126,862.5
FY16 9.86 78,182.19
FY17 3.49 81,068.4
Total: 313.22 1,222,812.09
44
Annex 5. Beneficiary Survey Results
n/a
45
Annex 6. Stakeholder Workshop Report and Results
n/a
46
Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR
The GoN submitted a detailed ICR with updated data and information that will be included
in the main body and annexes of this ICR. Below are three sections of the GoN ICR that
provide a concise overview of Bank and Borrower performance, lessons learned, and
overall observations of RSPD
Performance of the Borrower and the Bank
Performance of Government
Government as per its road transport policy has approved RSDP as a key infrastructure
development project for mid-western and far-western development regions of the country.
The main responsibility of the government is to ensure adequate annual budget for the
project and to create conducive environment at project site and in project management
offices for smooth implementation of the project activities. Likewise the government plays
a vital role in coordinating inter-ministerial, inter-departmental and inter-agencies for
resolving project issues and problems related to them.
In most cases government has extended maximum support to the project and encouraged
for speedy implementation. Allocation of overall annual budget and government
counterpart fund was never a problem. However delayed approval of budget and release of
budget seldom affect the project activities.
Amendment of Road Board Act is one of the project output indicators, which has yet not
been achieved. The Government has already tabled the act in the parliament, but it is still
under discussion process in parliament sub-committee.
In overall performance of the government towards the execution Road Sector Development
Project is always positive, encouraging and sensitive.
Performance of Executive Agency
Ministry of Physical Infrastructure and Transport (MOPIT) as an executive agency plays a
pivotal role in implementing the project in smooth manner. Guidance and instruction from
MOPIT were always found to be very fruitful and constructive. It has provided important
support to prepare annual work program, financing plans and other policy level activities.
Deputation of required project staffs is also done by the ministry. MOPIT carries out
monitoring and evaluation of the project in regular basis. Since MOPIT being a line
ministry all important communication between project and government are done through
this office.
Monitoring and evaluation mechanism adopted by the ministry is not adequate and it needs
basic improvement for better feedbacks to the project.
Frequent transfer of project staffs in different levels has hampered the project progress in
many occasions. This has been mentioned in Bank’s aide memoires several times. Project
staffs should be designated for fixed time period so that the activities can run in systematic
manner.
Performance of Implementing Agency
47
Implementing agency has established a separate project coordination team at Foreign
Cooperation Branch. Deputy Director General is responsible for the overall coordination
and monitoring of the project. Senior Divisional Engineer is the Project Coordinator for
RSDP. The team is supported by the subordinate staffs and equipped all logistic facilities.
During the period of project duration team’s effort to make project a success is very
commendable. However the team has been disturbed repeatedly by discontinuity of
supporting staffs, less experience in donor funded projects and even frequent transfer of
higher authorities within the Department. This has resulted in delayed preparation of
implementation progress reports, audit reports and other technical and financial reports.
Periodic maintenance works are sporadically spread out all over the country and those were
managed by various division offices. Due to lack of well experienced staffs financial
management and even other works management had been cumbersome job and reporting
system was occasionally late and incomplete. Monitoring of such activities was a problem.
Likewise institutional strengthening component activities are also managed by respective
branches and units of the Department and structured monitoring is lacking. Department has
to improve the monitoring and evaluation mechanism in order to streamline wide spread
activities and to achieve the project goal.
Performance of the Bank
The World Bank is always supportive to the RSDP project and has provided necessary
assistance to make the project success. Bank’s persistent and continuous effort has helped
to resolve many issues and problems raised during the implementation. Particularly
safeguard compliance issues were minutely addressed by Bank mission team while visiting
the site and discussing with concerned authorities. The monitoring work carried out by the
Bank is commendable. Comments, remarks, advices and recommendations provided in
aide memoire after each mission were very fruitful for solving issues, expediting project
works and streamlining the outstanding problems and lagging behind activities. Bank’s
endeavor for maintaining the technical, financial, institutional, social and environmental
discipline as agreed in PAD and grant/credit agreements has established definite norms and
motivated the project staffs including consultants and contractors. As a result despite of
various impediments project objectives have been achieved to great extent. All the time
missions’ attitude and their suggestions were within the agreed standards and norms and
were directed to the success of the project.
Lessons Learnt
Road Sector Development Project is being implemented since eight years and it covers
remote hilly areas of Mid-western and Far-western Development Regions of Nepal. Its
scope of works includes almost all activities for which the Department of Roads is
responsible. Road upgrading, periodic maintenance, road safety works and institutional
strengthening and policy reform are dynamic activities DoR is striving to improve and
continue for long period. Lots of feedback was received from RSDP for continuing the
institutional endeavor. Likewise national construction industry has also gained substantial
experiences and opportunities for enhancing its capacity and capabilities. Some of the
major lessons learnt from the project are as follows:
a. Project development objective adopted by RSDP is very relevant for providing
reliable and safe all weather access to poor people from remote hilly areas of the
48
country. Similar objectives have to be continued in future as well by the
government policies and departmental targets.
b. Road construction in high mountains is a challenging and cumbersome job which
needs lots of technical and financial resources and takes long time for completion.
Unpaved roads are not sustainable and high standard roads are not feasible. But
RSDP has shown that upgrading the recently build tracks to all weather road
standards with moderate standard of pavement is cost effective and efficient in
service delivery to the people of remote areas.
c. Well-constructed Otta Seal pavement is cost effective particularly in low volume
traffic roads. Construction materials are easily available and construction
technology is very simple. However certain technical parameters have to be
maintained strictly which is yet to be disseminated to all stakeholders. Some study,
research and investigations have to be carried out on Otta Seal pavement based on
the already constructed such pavement in different environments of hill and Terai
of Nepal. Result of such studies shall develop technical papers, guidelines and
manuals. Technical training on Otta Seal construction should be organized for all
levels of technicians from government offices, consultants and contractors.
d. Road maintenance is still not getting sufficient priority and pace of deterioration of
existing roads is very high. RSDP has given great emphasis on the periodic
maintenance as a result condition of road in strategic road network has improved
substantially. DoR should continuously emphasize on the maintenance and it
should be planned and executed in a systematic manner. Sufficient budget should
be allocated for maintenance annually.
e. Road safety component should be included in all roads more aggressively so that
accident rate could be minimized. It should be integrated with safety awareness
programmes to be conducted in different levels and groups.
f. Construction and maintenance of bridges were not the part of original RSDP, which
seems to be a bit departure from the project objective of providing all weather roads
to people from remote areas. Bridges and other cross drainage structure should
always be entailed in project component.
g. Slope stabilization activities also received less attention in RSDP. Particularly in
hill roads slope stabilization is one of the main concerns which should be dealt very
sensitively. Landslide, road blockage, accidents etc. could be substantially reduced
if slope stabilization issues are addressed in time.
h. Small size civil contracts have attracted many national contractors, where as it
failed to attract international contractors. Contracts involving international
contractors can help to develop national construction industry through transfer of
knowledge in terms of project management, site management, resource
management and technology transfer.
i. Joint venture provision in civil contract should be elaborated in the sense that
capable and lead partner manages the contract at site. Otherwise, in many occasion
it was found that the inferior/junior partner handles the contract and lots of
49
problems and issues crop up due to lack of experience and competency resulting
delay in completion and even termination of the contract.
j. Coordination with all stakeholders including road users, road neighbors,
government offices, private agencies and other public institution is very essential
for the success of project. Project information should be transparently disseminated
to all stakeholders in every stage of project so that they can understand the project
objectives and accordingly contribute their effort for the success of project.
k. Acquisition of land, public and private properties required for the project is very
difficult task, which needs lots of coordination and cooperation among various
agencies. Concerned district administration office, land revenue office, district
survey office, forest office, project affected persons and local consultative forums
should be made aware of all project objective, construction activities, schedules and
plans for carrying out the project works. They should be convinced that without
successful completion of land acquisition and resettlement action plan construction
work cannot be implemented.
l. For the smooth implementation of any donor assisted construction project it is very
essential that the concerned government offices such as Ministry of Finance,
Finance Comptroller Office, and Auditor’s General Office etc. are aware of project
details including grant/loan agreements and their conditions.
m. Programme approach for the implementation of the project will help to solve many
issues developed during the project period. Institutional commitment from
concerned agencies shall be assured so that implementation process can be
expedited.
n. There are many incidents which affected the implementation of project such as
adverse weather condition, strike/bandh called by different local and national
groups, shortage of construction materials including fuel due to various reasons and
even unforeseen site conditions. Conditions of contract of civil works should
explicitly spell out the provisions and solutions for such incidents so that the issues
could be resolved without losing the time.
Conclusion
Implementation of Road Sector Development Project has revealed that such infrastructure
development project can deliver lots of benefits to the people of remote hilly areas of Nepal.
Government should encourage preparing such infrastructure development projects in
cooperation with bi-lateral and multi-lateral donor agencies so that more and more all
weather, safe and locally sustainable road access will be available for poor people from
remote areas.
However such project should always entail cross drainages including bridges, slope
stabilization works, road safety measures and have very effective social and environmental
safeguard activities including transparent resettlement and rehabilitation action plan and
environmental management plan.
50
The World Bank as an important and major development partner should continue to work
together with the government in such types of vital projects which will support to alleviate
poverty in remote rural areas and help to promote the overall social and economic
development of the area.
51
Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders
n/a
52
Annex 9. List of Supporting Documents
Aide Memoires
February 25-March 22 2007
June 3-12 2007
September 10-18 2007
March 9-13 2008
October 15-23 2009
March 12-19 2010
August 30-September 6 2010
December 19-28 2010
July 16-26 2011
July 23-27 2012
February 4-8 2013
August 26-September 4 2013
March 20-31 2014
September 16-26 2014
January 19-28 2015
July 29-August 6 2015
February 29-March 4 2016
September 1-9 2016
Country Partnership Strategy for Nepal, FY 2014-18, Report No. 83148-NP
Financing Agreements – Road Sector Development Project
January 31, 2008, Grant No. H339-NEP
March 4, 2011, Grant No. H629-NP, Credit No. 4832-NP, (AF)
Implementation Status and Results (ISR) Reports
Sequence 1-15
Interim Strategy Note for Nepal, January 22, 2007, Report No. 38119-NEP
Ministry of Physical Infrastructure and Transport, Department of Roads, Road Sector
Development Project, Second Trimester Report of FY 2015-16
Nepal Road Sector Assessment Report, 2014
Nepal: Transport Sector Policy Note, March 31, 2014
Project Appraisal Document on a Proposed Grant in the Amount of SDR 27.8 Million
(USUS$42.6 Million Equivalent) To Nepal. For a Road Sector Development
Project, Sustainable Development Department South Asia Region, Report No.
40698 – NP, November 6, 2007
Project Paper on a Proposed Additional Credit in the Amount of SDR 26.60 Million
(USUS$41.26 Million Equivalent) and Proposed Additional Grant in the Amount
of SDR 21.70 Million (USUS$33.74 Million Equivalent) to the Government of
Nepal for a Road Sector Development Project, Sustainable Development Unit,
Nepal Country Unit, South Asia Region, Report No: 57154-NP, October 27, 2010
53
Annex 10. Notes on Accessibility, Time Savings, and Employment Impacts of the
Project
A) Beneficiary Accessibility to RSPD Upgraded Roads
1. The GoN, in September 2014, commissioned the Accessibility Study. The approach
was to use a Geographic Information Systems (GIS)-based tool to measure the accessibility
of beneficiary district residents to roads supported by RSDP. The tool was developed
during the preparation of the GoN’s 2007-16 Priority Investment Plan, and was based
primarily on terrain and population models using DoR, census, and GIS data,
complemented by research and analysis in a project-focused Accessibility Study Report.
More specifically:
Baseline road network data of project districts was taken from the database of
Strategic Road Network (SRN) of DOR’s statistics 2011/12;
2011 population census data (with a projection for 2015 population level) and 2001
population census data (with a projection for 2008 population level) were used in
respectively used for the ex-ante and ex-post population estimates; and
A project-based terrain model established 20-minute and 4-hour accessibility
profiles used to inform relevant PDO indicators.
2. The following table summarizes the results of the Accessibility Study Report:
Time
Band
Estimated Road Accessible Population
Without
RSDP
With
RSDP
Additional
Population
Percentage
Increase (%)
Female
Beneficiary
Population
20
minute
195,730 (9%) 328,144
(15%)
132,414 6 70,179 (53%)
4 hours 1,103,810
(51%)
1,655,347
(76%)
551,537 25 292,314 (53%)
B) Time Savings and Economic and Social Centers in Project Districts
3. In addition to the Accessibility Study Report described above, the GoN
commissioned a project-focused Socio-economic Impact Study to identify the socio-
economic status of the households within “zones of influence” of upgraded roads,
specifically focusing on travel time, cost saving, and access to social services. Overall,
54
1,914 sample households were surveyed, with a total population of 11,781, (52.5% male;
47.5% female).
4. This study presented the following findings which informed PDO indicators:
Travel distance to all-weather road decreased from 42.2 km to 1.5 km (96.4%
decrease);
Travel time to all weather road decreased from 561 to 17 minutes (96.9%
decrease);
Travel time to social services decreased 51.4% (educational services by 60.8;
hospital by 58%; market centers by 56%; district headquarters by 46.5);
Travel time to economic centers decreased from 225 to 112.5 minutes (1.9 hours;
50% decrease);
Travel time to market centers decreased from approximately 170 minutes to 75
minutes, to district headquarters from 280 to 150 minutes after road upgrades.);
and
Travel time to key social centers decreased from 154.5 to 73.5 minutes (1.2 hours;
52% decrease).
5. The following tables summarize the results – by upgraded road section, of the
Accessibility Study Report:
S.N. Road Section
Secondary
School
College/
Campus HP/SHP Hospital
Market
Centers
District
Headquarters
Before After Before After Before After Before After Before After Before After
1. Satbanjh-Tripurasundari 22 21 78 47 34 23 93 43 66 32 102 53
2. Satbanjh-Gokuleshwor 31 29 213 100 35 34 319 154 85 47 313 154
3. Khodpe-Kalangagad 55 38 147 84 52 42 303 149 41 28 342 204
4. Tallodungeshwor-Dailekh 54 44 119 62 58 55 175 62 64 45 149 47
5. Surkhet-Khidkijyula 86 73 574 290 71 65 566 300 558 294 539 305
Average: Original Financing 50 42 239 122 50 45 301 147 182 99 296 156
6. Gokuleshwor-Darchula 50 42 120 58 109 89 311 135 86 62 264 166
7. Kalangagad-Chainpur 44 29 67 45 44 36 497 141 272 96 254 120
8. Chhinchu-Jajarkot 129 61 273 63 74 55 146 109 100 60 478 263
9. Sitalpati-Musikot 37 31 76 70 85 82 194 87 147 88 209 140
10. Khidkijyula-Jumla 69 33 300 46 83 31 256 68 209 53 247 64
Average: Additional Financing 62 39 193 55 79 58 275 101 163 60 269 146
Aggregate Average 58 40 212 83 62 51 286 120 170 75 280 150
55
S.N. Road Section
Secondary
School
College/
Campus HP/SHP Hospital
Market
Centers
District
Headquarters
Before After Before After Before After Before After Before After Before After
Note: Average of travel time to social service center computed based on the total travel time to household and
total number of household travelled to visit service center.
C) Employment creation
6. Although not discussed in the project documents, employment creation was listed
among the PDO indicators of the project. The employment refers to direct engagement of
people on road construction and maintenance sites by contractors during the life of the
project. PDO Indicator No. 7 measures the combined number of persons employed while
PDO Indicators 8 to 11 disaggregate the numbers into various categories of beneficiaries:
Male, Female, Dalit and Janajatis. The employment target were substantially exceeded. As
against the original target of generating 2.5 million person-days, the project generated
employment of 6.68 million person-days.
7. The reported numbers appear sufficiently credible. DoR has submitted a
comprehensive set of spread sheets that summarize several aspects of the employment,
including the DoR labor utilization norms, labor cost analysis, labor-based road work
activities and labor utilization summary along the various roads. The employment data
reported by DoR is summarized in the table below.
Employ
ment
generat
ed
(person
days)/N
PRm
Employ
ment
generate
d
(person
days)/$
m
Employ
ment
generat
ed
(person
days)/k
m
Total
Employment
generated
(person days)
Employ
ment
generate
d
(person
days)/N
PRm
Employment
generated
(person
days)/$m
Employm
ent
generated
(person
days)/km
Total
Employment
generated
(person days)
Caste 81.57 8,157 445 682,519 172 17,175 1,627 1,437,155 2,119,674
Ethnic 126.23 12,623 688 1,056,229 266 26,580 2,517 2,224,063 3,280,293
Dalit 49.29 4,929 269 412,442 104 10,379 983 868,465 1,280,907
Local 94.20 9,420 513 788,246 198 19,836 1,879 1,659,782 2,448,028
Non-Local 162.89 16,289 888 1,362,944 343 34,298 3,248 2,869,902 4,232,845
Male 231.57 23,157 1,262 1,937,642 488 48,760 4,618 4,080,021 6,017,663
Female 25.52 2,552 139 213,549 54 5,374 509 449,662 663,211
Total 257.09 25,709 1,401 2,151,190 541 54,134.41 - 4,529,683 6,680,874
RSDP Summary of employment data
Upgrading works
Total
Employment
generated
(person days)
Ethnicity
Origin
Gender
Periodic Maintenance
Category Sub-category
56
MAP
