Document of The World Bank

Report No: 25594-KH

FOR OFFICIAL. USE ONLY

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED CREDIT

IN THE AMOUNT OF SDR14.18 MILLION (US$20 MILLION EQUIVALENT)

TO THE

KINGDOM OF CAMBODIA

FOR THE

PROVINCIAL AND RURAL INFRASTRUCTURE PROJECT (PRP)

August 13,2003

East Asia and Pacific Region Infrastructure Department - Transport Unit

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. I t s contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective June 13,2003)

Currency Unit = Cambodian Riel KHR 1 = US$0.000261

US$1 = KHR3,835

ADB CAS DRR ERR FRMR GDTA HIV/AIDS ICB IDA IFAPER L O IRRPP JFPR JICA LBAT MEF MPWT MRD NGO NPRS PDPWT PDRD PRDC PRIP RID R I P RGC SEDP 11 UXO voc

FISCAL, YEAR January 1 -- December 31

ABBREVIATIONS AND ACRONYMS

Asian Development Bank Country Assistance Strategy Department o f Rural Roads Economic Rate o f Return Fund for the Repair and Maintenance o f Roads General Department for Technical Affairs Human Immunodeficiency VirudAcquired LmmunoDeficiency Syndrome International Competitive Bidding International Development Association Integrated Fiduciary Assessment and Public Expenditure Review International Labor Organisation Implementing Rules and Regulations Governing Public Procurement Japan Fund for Poverty Reduction Japan International Cooperation Agency Labor-based appropriate technology Ministry o f Economy and Finance Ministry of Public Works and Transport Ministry of Rural Development Non-Governmental Organization National Poverty Reduction Strategy Provincial Department o f Public Works and Transport Provincial Department o f Rural Development Provincial Rural Development Committee Provincial and Rural Infrastructure Project Road Infrastructure Department Rural Infrastructure Improvement Project Royal Government o f Cambodia Second Five Year Socio-Economic Development Plan 200 1-2005 Unexploded Ordnance Vehicle Operating Cost

Vice President: Jemal-ud-din-Kassum Country Managermirector: Ian C. Porter

Sector ManagerAIirector: Jitendra N. Bajpai Task Team Leader/Task Manager: Sally L. Burningham

FOR OFFICIAL USE ONLY

CAMBODIA PROVINCIAL AND RURAL INFRASTRUCTURE PROJECT (PRIP)

CONTENTS A. Project Development Objective

1. Project development objective 2. Key performance indicators

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 2. Main sector issues and Government strategy 3. Sector issues to be addressed by the project and strategic choices

C. Project Description Summary

1. Project components 2. Key policy and institutional reforms supported by the project 3. Benefits and target population 4. Institutional and implementation arrangements

D. Project Rationale

1. Project alternatives considered and reasons for rejection 2. Major related projects financed by the Bank and/or other development agencies 3. Lessons learned and reflected in the project design 4. Indications of borrower commitment and ownership 5. Value added of Bank support in this project

E. Summary Project Analysis

1. Economic 2. Financial 3. Technical 4. Institutional 5. Environmental 6. Social 7. Safeguard Policies

F. Sustainability and Risks

1. Sustainability 2. Critical risks

Page

2 2

2 3 7

9 10 11 12

13 14 16 16 16

17 18 18 19 22 24 27

27 28

This document has a restricted distr ibution and may be used by recipients only in the performance of their official duties. I t s contents may not be otherwise disclosed lwithout W o r l d Bank authorization.

3. Possible controversial aspects 28

G. Main Conditions

1. Effectiveness Condition 2. Other

H. Readiness for Implementation

I. Compliance with Bank Policies

Annexes

Annex 1: Project Design Summary Annex 2: Detailed Project Description Annex 3: Estimated Project Costs Annex 4: Cost Benefit Analysis Summary, or Cost-Effectiveness Analysis Summary Annex 5: Financial Summary for Revenue-Earning Project Entities, or Financial Summary Annex 6: (A) Procurement Arrangements

(B) Financial Management and Disbursement Arrangements Annex 7: Project Processing Schedule Annex 8: Documents in the Project F i le Annex 9: Statement o f Loans and Credits Annex 10: Country at a Glance Annex 11: Executive Summary o f the Environmental Assessment Annex 12: Resettlement Policy Framework Annex 13: Indigenous Peoples Development Framework

29 29

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31 35 46 47 56 57 70 79 81 82 83 85 96

108

MAP(S) IBRD - 32153 IBRD - 31517

CAMBODIA Provincial and Rural Infrastructure Project (PRIP)

Project Appraisal Document East Asia and Pacific Region

EASTR

BORROWER 3.00 I 0.32 I 3.32

Responsible agency: MINISTRY OF PUBLIC WORKS AND TRANSPORT Address: Comer Norodom Boulevard and Street #106, Phnom Penh, Cambodia Contact Person: Mr. Lim Sidenine, Director Tel: (855-12) 805-040 Fax: (855-23) 724-279 Email: WB-PIU2@bigpond.com.kh Other Agency(ies): MINISTRY OF RURAL DEVELOPMENT Address: Comer Russian Boulevard and Street #169, Phnom Penh, Cambodia Contact Person: Mr. Mour Kimsan, Deputy Director General for Technical Affairs Tel: (855-12) 938 072

Estimated Disbursements ( Bank FY/US$m):

Fax: (855-23) 426-823 or 844-160 Email: 0 12938072 @mobitel.com.kh or ksan-mrd @ forum.org.kh

Project implementation period: 4 years Expected effectiveness date: 10/30/2003 Expected closing date: 09/30/2007

A. Project Development Objective

1. Project development objective: (see Annex 1)

The development objective o f the Provincial and Rural Infrastructure Project (PRIP) i s to assist the Kingdom o f Cambodia to enhance the livelihood of the peoples residing in the provinces o f Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap by providing sustainable access to markets and essential services through (i) a program o f road rehabilitation and maintenance; (ii) a program o f capacity building and training; and (iii) development o f improved public policies and strategies.

2. Key performance indicators: (see Annex 1)

Achievement o f the project development objective w i l l primarily be assessed by monitoring the following leading indicators at mid-term review along the rehabilitated roads in the PRIP provinces:

i) increase in traffic levels including volume of goods and passenger traffic; ii) reduction in travel time along the project roads between major provincial centers in the four

provinces and increase in number o f villages linked to higher level roads in good condition; iii) reduction in transport costs; and iv) increase in kilometers o f roads under the Ministry o f Public Works and Transport and the

Ministry o f Rural Development receiving regular routine maintenance.

8. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: ID”2000-15 [IFC/R2000-23]

The main objective o f the World Banks CAS i s to help the authorities build the foundations for sustainable development and poverty reduction for the medium to long term. These foundations are: (i) good governance, including an efficient and accountable public administration and a credible legal and judicial framework that safeguards basic human and property rights; (ii) greater access for the poor to basic social services and economic opportunities; and (iii) a policy environment that encourages private investment and entrepreneurship. Since about 85 percent o f the population and 90 percent o f the poor reside in rural areas, the CAS and the recent National Poverty Reduction Strategy 2003-2005 accord special focus to rural infrastructure services and rural development. Donor coordination and partnerships are also accorded a high priority in both documents.

Date of latest CAS discussion: February 29, 2000

The Provincial and Rural Infrastructure Project (PRIP) development objective, outputs, and activities are consistent with the CAS since they aim to facilitate sustainable development and reduce rural poverty by: (i) improving governance through capacity building and road sector reforms aimed at strengthening provincial management o f secondary and tertiary roads, local participation in road selection, and transparency in contract management; (ii) rehabilitating physical infrastructure to improve access to markets and essential services, and stimulate growth; and (iii) facilitating private sector development by creating opportunities for development of the local contracting and consulting industry, for small businesses, for non-farm employment, for rural transport services, and for the emergence o f a market for small and petty contractors for maintenance works. The project will, in addition, facilitate the physical integration o f severely war-affected people and war-affected areas into the national economy by creating opportunities for employment in rural areas and a sustained livelihood. The PRIP w i l l address key CAS monitoring indicators including the percentage increase in kilometers o f rural all-weather access roads and an increased coordination between Ministry o f Public Works and Transport and Ministry of Rural Development.

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The project design further addresses issues raised in analytical work and preparation o f the National Poverty Reduction Strategy 2003-2005, including the Integration and Competitiveness Study (Part C - sector studies o f rice, diversified agriculture, handicrafts, garments, tourism, labor services), prepared under the Integrated Framework for Technical Assistance Program (200 l), the PPIAF Private Solutions for Infrastructure in Cambodia report (2002), the Asian Development Bank (ADB) supported Transport Sector Study (June 2002), and the Integrated Fiduciary Assessment and Public Expenditure Review (IFAPER) August 2003 background paper on the roads sector (June 2003). The first two studies, which focus on competitiveness, highlighted the lack o f an adequate network o f roads in the rural areas as a significant constraint affecting economic development and thus livelihood's o f residents o f these areas. The second two address sector-specific issues, among these the need to introduce local participation in the selection o f roads to be restored in these areas; the importance o f building capacity at the local level; and the need for open and transparent selection, financing and contracting o f roads.

2. M a i n sector issues and Government strategy:

As with much o f the economic infrastructure, the transport sector was severely damaged by the war. Since the mid 1990s, a concerted effort by the Government, supported by the donor community, has been made to reestablish the Kingdom's main transport infrastructure. Success has been achieved in a number of areas however much remains to be done. Cambodia's National Poverty Reduction Strategy 2003-2005 cites the lack o f all-weather access to transport infrastructure and services in rural areas as an impediment to improvement in the quality o f l i fe and reduction o f poverty o f people in rural areas. The Second Five Year Socio-Economic Development Plan 2001 -2005 (SEDP 11) further evidences the lack o f strategic positioning o f the sector to effectively contribute to the country's poverty reduction strategy.

IThe National Poverty Reduction Strategy (NPRS) 2003-2005 identifies the following actions as priorities for the road sector: 1. A reliable, steady and adequate source o f funding for roads, 2. Transparent management o f all public funds to the transport sector by the official transport agencies, 3. Upgrading and repair o f rural, provincial, and national roads, 4. Competitive bidding for all government and donor funded contracts, coupled with public outreach to

the local private sector and civi l society, 5. A program for institutional strengthening and capacity building at all levels in the public transport

agencies, 6. Adoption o f clear sector policies and strategies in support o f the NPRS, 7. Encouragement of public transit services using low cost methods, and 8. Development and strengthening o f regional links to facilitate the border trade with Vietnam and I Thailand.

The key issues and current impediments specific to the road sector are presented below.

Need for improved planning and management of the road network and a focus on maintenance through a steady source offunding. Cambodia's road network measures approximately o f 38,257 kilometers (km) including 4,757 km o f national roads and 5,700 km of provincial roads under the responsibility o f the Ministry o f Public Works and Transport (MPWT), and 27,800 km o f tertiary roads under the responsibility o f the Ministry o f Rural Development (MRD). This network i s in poor shape, notwithstanding a major effort at rehabilitation since the mid 1990s. Road condition surveys in 2003 indicate that 40 percent o f the network i s in good and fair condition, 52 percent in poor condition, and 8 percent in bad condition. Approximately 5 percent o f this network i s currently under reconstruction or rehabilitation. During the reconstruction period, approximately 1,500 k m s o f national roads and 11,000 kms o f rural roads were rehabilitated and reconstructed. There i s a concern however that these newly

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rehabilitated roads, especially those built to gravel or laterite standard, are deteriorating prematurely due to lack o f maintenance, thereby putting the sustainability o f these recreated road assets in jeopardy. This lack o f maintenance i s attributable both to ineffective road management and to insufficient allocation o f reliable and adequate funds.

Length I Good and fair I Poor Under Bad

National -MPWT Provincial -MPWT Tertiary -MRD Total Percentage

Source: Road Condition Survey, 2003, Ministry o f Public Works and Transport - Road Infrastructure Department Rural Road Inventory for Rural Road, Ministry of Rural Development, December 2002

. , 4,757 1,186 2,439 1,132 1,124 5,700 1,29 1 2,426 1,983 436

27,800 12,943 14,857 nla 200 38,257 15,420 19,722 3,115 1,760

40 % 52 % 8 % 5%

There i s a need to shift from the current focus on reconstruction and repair, to one based on prioritized plans for road maintenance and rehabilitation interventions in accordance with economic principles. Although MPWT carries formal responsibility for overall management and development o f the roads and transport sector, i t has been sidelined by the Ministry o f Economy and Finance (MEF) and the Office of the Prime Minister (OPM) through funding and contracting procedures that bypass the central ministry. MPWT thus has been unable to meet the challenges o f planning and preparing an integrated program o f rehabilitation and maintenance; it also cannot, under the circumstances, be held accountable. MRD, with responsibility for the development and maintenance o f rural roads, has been more successful in preparing and submitting budgets to MEF, and has received allocations under the Priority Action Plan for some maintenance and repairs.

Need for transparent management of all publicfunds. Government recognized the issue o f the need for maintenance funds and in 2000 established the Fund for the Repair and Maintenance o f Roads (FRMR) under Prakas 399 and SubDecree 39, which i s under the authority o f the Prime Minister and managed by the MEF. While the Fund was clearly intended to tackle the maintenance problem, the governing arrangements for the Fund are not well established. This lack o f clarity results in the Fund being used for rehabilitation o f roads and non-road infrastructure, with allocation decisions made by the OPM on the basis o f proposals made by provincial governors or channeled through MEF. Funds are disbursed in three ways: (i) MEF awards contracts to private contractors and the Mil i tary Corps o f Engineers without involvement o f the concerned line ministries and their provincial departments; (ii) MRD receives project-specific allocations in accordance with i t s budget proposals, to be implemented by i t s provincial departments; and (iii) allocations are made directly to the provinces, which then provide funds to the respective provincial department o f MPWT and MRD. Notwithstanding the fact that MRD received funds for routine maintenance for the last few years, the internal pressure and needs were such that these funds were diverted to rehabilitation. Thus, while both MPWT and MRD and their provincial (deconcentrated) agencies are well aware o f the need for maintenance, routine and periodic maintenance are rarely performed, and at most substituted by emergency interventions. The lack o f implementing rules, auditing, disclosure and transparency o f the Fund means that i t i s currently not achieving i t s intended purpose. MEF i s currently reviewing this situation in conjunction with the sector ministries.

Need for continued upgrading and repair of roads with a focus on decentralization and the "missing middle". The focus during the emergency reconstruction phase has been on the primary network and some o f the main urban roads. Some attention also has been given, through the now closed ADB-supported Rural Infrastructure Improvement Project (RIIP) to tertiary roads in six provinces in the

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south-east part o f the country, and through the SEILA program and others, to community-based infrastructure. Attention must now be given to the secondary and tertiary network in order to link effectively the primary and community level network.

The MPWT i s a centralized ministry carrying out most o f i t s non-donor funded works through machine-intensive force account units. I t s Provincial Departments o f Public Works and Transport (PDPWTs) have l i t t le authority and most have never let a contract. In fact, many PDPWTs act as contractors and bid for works in competition with private f i rms . In contrast, the MRD Second Five Year Socio-Economic Development Plan (2001 -2005) explicitly recognizes the need for institution building at the provincial and lower levels and assigns strategic importance to the development o f infrastructure to reduce rural poverty. MRD has formulated a Policy for Rural Roads which adopts labor-based appropriate technology (LBAT) as i t s preferred technical strategy. LBAT implies optimal use o f local resources such as labor, materials and sk i l ls . MRD i s undertaking a pronounced effort to assign (deconcentrate) management and implementation responsibilities for rural roads to the provincial level, and has developed detailed contract management procedures for provincial management o f rehabilitation and maintenance works. These procedures are currently in place in six provinces in the south-east and w i l l be introduced in three additional provinces under other ADB supported projects.

Need for competitive bidding for all Government and donorfunded contracts. There i s a concern that within the road sector that while donor funded contracts are typically competitively bid due to the required guidelines o f the donor agencies, there i s wide use under Government funded works o f non-competitively bid and non-transparent arrangements many o f which are sometimes beyond the MPWT and the MRD. Government has recognised this concern and as o f January 2003, successfully introduced "open" bidding, in line with the 1995 Procurement Sub-Decree (Anukret N0.60) in all ministries (except the ministr ies o f Defense, Interior and the Royal Palace) in line with the objectives in the NPRS. However, concerns remain that the Procurement Sub-Decree (i) i s only interpreted to address projects that draw from the national budget, thus a tol l road, a concession, a license, a Build-Operate-and-Transfer agreement, in fact any public-private contract in which there i s a flow o f funds to the Government or no flow o f funds except from the revenue stream o f users' fees, are not covered; (ii) allows for the relevant Government agency to define a procurement need as "urgent" and bypass the Sub-Decree altogether; and (iii) the Military Core o f Engineers i s executing a significant volume o f road works for which the cost effectiveness i s unknown.

Need for a program of institutional strengthening and capacity building at all levels in Government agencies and the private sector. The shortage o f qualified staff i s a problem for al l Government agencies. While MPWT has more than 1,400 staff in two o f i t s central roads departments in Phnom Penh, and between 100 and 300 staff in each of the 24 PDPWTs, there are provinces without any qualified engineer. Given the significant demand for private sector involvement in rural infrastructure construction and maintenance, the capacity o f the private sector to respond and the capacity o f government agencies to manage contracts may present a bottleneck in the near future. A number o f small scale contractors have been recently trained by the International Labor Organisation under the now closed Upstream Project, however substantially more w i l l be required. The technical constraints are even more critical in MRD and i t s provincial agencies. Nonetheless, MRD i s successfully pursuing a model which relies heavily on the contracting out o f works to the private sector and has so far, through various projects, trained 22 local contractors in labor-based appropriate technology for road construction and maintenance.

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Need for adoption of clear sector policies and strategies in support of the NPRS. The Government's goals for transport in the period 200 1-2005 emphasize efficiency, competition and the contribution o f transport services to economic growth and regional cooperation. This i s to be accomplished by: (i) rehabilitating, maintaining and expanding transport infrastructure to facilitate market integration and trade, giving priority to rural development, domestic and international trade routes and tourism; (ii) improving the efficiency o f use o f existing infrastructure and institutional performance; (iii) increasing transport sector revenues to cover an increasing share o f maintenance and development costs; (iv) strengthening institutional capacity in sector planning and management; and (v) promoting increased private sector participation in financing transport infrastructure. For roads, the focus i s on rehabilitating and reconstructing the national roads, building road links to neighboring countries and developing a sustainable road maintenance program. The Policy for Rural Roads, April 2002 o f the MRD emphasizes the establishment o f a strategic tertiary network linking district centers and improving access to isolated communities. These broad goals, however, are not supported by any formal clarification o f the most important policy issues facing the sector and the manner by which the goals are to be achieved. A draft Transport Sector Policy Statement was prepared along with the ADB supported 2002 Transport Sector Study (TSS), but has not yet been formally adopted. There remains a need to develop a consensus around a policy and strategy for the sector.

Need for public outreach to the local private sector and civil society through increased transparency. The involvement o f communities and their representatives i s often overlooked in the transport sector. MPWT, in particular, has no experience in outreach and does not have a public communications strategy or procedures in place for provincial level planning and prioritization. This means that there i s very l i t t le local knowledge o f budgets and plans with regard to national and provincial roads, and there are no established mechanisms for recourse. Increased transparency in budgets and planning would improve the Ministries' ability to respond to priorities at both the national and provincial levels. Communities, provincial level agencies, and nongovernmental agencies are currently by and large an untapped resource to improve local road safety and to prevent the spread o f HIV/AIDS which can result from improved transport services. There are local programs in place for mine accident prevention and awareness, and these, coupled with on-going efforts to reduce the spread o f HIV/AIDS, can successfully be built on for the benefit o f the transport agencies' community communication and awareness strategies.

Need for development and strengthening of regional links to facilitate border trade with Vietnam and Thailand. The key national road links to these countries has been a major focus o f the Government program. The national road No 6 from Phnom Penh through Siem Reap to the Thai border i s under construction through numerous projects. The national road to the east to Ho Chi Minh City in Vietnam i s also under construction on both sides o f the border.

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3. Sector issues to be addressed by the project and strategic choices:

This Provincial and Rural Infrastructure Project (PRIP) w i l l directly address concerns raised in the National Poverty Reduction Strategy (NPRS), as well as sector issues o f importance to the attainment of the Country Assistance Strategy and o f strategic importance to the transport sector. These issues are discussed below. There are, however, some critical issues that influence the sector but which the project i s not directly addressing since these are addressed in the country macroeconomic dialogue with the World Bank and other donors, and also in the Bank’s Structural Adjustment Credit and the Economic and Public Sector Capacity Building Project, and the RGC’s Governance Action Plan and Civi l Service Reform. With regard to the need for competitive bidding for all Government and donor funded contracts, continued discussions are ongoing through the mechanism o f the Country Procurement Assessment Review. The PRIP project also includes a conditionality related to transparency o f any non-competitively awarded contracts in the sector in the four project provinces. With regard to the encouragement o f public transit services this i s an area which s t i l l needs focus. Wi th regard to the regional links, the PRIP project does not focus on these since these areas are being well supported under other programs (including the ongoing World Bank supported Road Rehabilitation Project and the support o f many other donor supported projects). The PRIP i s specifically designed to complement and enhance the many ongoing initiatives in the sector.

The following sector issues are being addressed by the PRIP project.

Maintenance management andfinancing. Given the current lack o f attention to road maintenance, a key focus o f the project w i l l be to put in place proper maintenance management systems and begin to build a maintenance culture in the four PRIP provinces. Some work has been done to establish road maintenance management systems (RMMS) in MPWT and MRD; however, these systems are not yet operational. Key data, including the inventory o f road assets and the condition o f the network have not been entered into the systems. The project thus w i l l build on the work done to date and provide for the installation and operation o f an RMMS in both MPWT and MRD and in their provincial departments in the PRIP provinces. The decision to focus on the four provinces was made to demonstrate that maintenance i s both cost-effective and manageable. The systems that w i l l be put in place can easily be scaled up to cover the whole network. In addition to providing the analytical tools for improved road management, the project w i l l assist the Government in preparing annual maintenance programs and ensuring they are carried out as planned. As part o f the PRIP, the Government w i l l agree to the financing and execution o f routine maintenance on all roads in good and fair condition in each o f the four provinces. The maintenance needs w i l l grow as the network i s brought into maintainable condition. The larger issues o f governance and administration o f the Fund for the Repair and Maintenance o f Roads and other public expenditure management issues are being addressed as part o f the Integrated Fiduciary Assessment and Public Expenditure Review (IFAPER) and the NPRS.

Improving roads and management of roads at the provincial level focussing on the “missing middle”. As one o f the first projects in Cambodia to focus on a network approach addressing secondary, provincial and tertiary roads, the PRIP w i l l initiate an explicit, coordinated reconstruction and rehabilitation effort o f the secondary and tertiary road network in four provinces. In so doing, i t w i l l set a precedent in establishing sound processes and systems for provincial management at this level o f the road network. The project w i l l provide an opportunity to influence business practices and how the MPWT interacts with Provincial authorities on the planning and implementation o f rehabilitation and maintenance o f secondary roads. I t w i l l assist MPWT to implement the Government’s deconcentration policy by building provincial capacity to plan in a participatory manner and manage contracts in a transparent fashion. The project w i l l also strengthen capacity at the center in both MPWT and MRD for the required planning and coordinating support and monitoring functions. Participatory planning methods involving a range o f

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stakeholders including the Provincial Rural Development Committees w i l l enhance local involvement in decisions that affect their lives, and increase transparency and accountability (ref. E.6.2). Wi th regard to tertiary roads, the project w i l l extend and further strengthen existing MRD processes for provincial management to the four project provinces, and contribute to mainstream MRD’s policy of local responsibility for rural road management.

Capacity building of the public sector and facilitating the emergence of a private sector in the road industry. An assessment o f the capacity and constraints o f the national and provincial staffs o f MPWT and MRD, as well as the private sector consulting and contracting industry, was carried out as part o f project preparation. This assessment has shown that the demand for road works w i l l soon exceed the capacity o f the private sector to respond. Instead o f developing a capacity building component that i s project-specific, the focus w i l l be on expanding past efforts directed towards the institutionalization o f a training and capacity building program. The intention i s that the program wi l l become an integral part of a continuous development o f human resources for the roads and transport sector. The benefits of the program are expected to be significant. B y strengthening domestic training institutes, the ad hoc nature o f many past projects in this area w i l l give way to a continuous domestic training capacity in the road sector. B y training MPWTPDPWT and MRDPDRD staff in road planning and contract management, road maintenance w i l l be accorded higher priority and the quality o f works w i l l increase. By training local contractors in business management and labor-based appropriate technology, the PRIP wi l l stimulate the emergence o f a market for private enterprise in road rehabilitation and maintenance. Job opportunities w i l l be created on the roads in areas where unemployment and demobilization o f soldiers are a concern. Additional employment w i l l be created in the local non-farm sector, for example, through increased provision o f rural transport services along the roads in poor areas. These services are often operated by poor people for poor people.

Development of a policy and strategic framework. The PRIP w i l l seek to improve both the management and condition o f the secondary, provincial and tertiary road network in four provinces. These improvements can only be achieved within a larger framework o f road sector policy reforms governing the organization, structure, financing and management o f the sector. Although the TSS culminated in a draft policy statement, a consensus around this statement has not yet been forthcoming. However, the Government has agreed to prepare a draft letter o f sector policy that clearly states the Government’s objectives for the road sector (drawing on the NPRS, the Policy Rural Roads), articulates some guiding principles, clarifies the responsibilities o f Government and other players, and presents a time bound actionable program for a three to five year period. The project w i l l be implemented at the provincial level in support o f the Government policy to deconcentrate implementation to the provincial level as articulated in their NPRS. The PRIP w i l l also support implementation o f some o f the key recommendations o f the ZFAPER such as strengthening management of the Fund for the Repair and Maintenance o f Roads by establishing a formula-based allocation mechanism for maintenance funds and providing for regular financial and performance audits o f the Fund.

Public outreach, information dissemination and increased transparency. Community awareness programs w i l l be carried out in the project areas to: (a) mitigate the r isks o f increased traffic accidents on the rural population, as pedestrians (predominantly children, women and poor people) and users o f public transport and low cost vehicles are particularly exposed; (b) reduce the risk o f spreading HIV/AIDS along the improved roads; (c) help ensure that the general public i s aware o f the project and the procedures for road selection and management, and mechanisms for recourse if and when required; and (d) reduce the risk of mine accidents in the areas surrounding the improved roads (voluntary migrants and retumees are especially vulnerable in this regard).

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C. Project Description Summary 1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown):

In order to attain i t s development objective, the following w i l l be implemented under the Provincial and Rural Infrastructure Project (PRIP) in the four northwest provinces o f Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap provinces by the Ministry o f Public Works and Transport (MPWT) and the Ministry o f Rural Development (MRD). The PRIP w i l l draw on, and scale up, the successful experience o f earlier similar projects such as the MRD-implemented Rural Infrastructure Improvement Project (RIIP) and LO-assisted Upstream Project, and complement various Asian Development Bank (ADB) supported projects. Sustainable maintenance o f the secondary, provincial and tertiary roads presents significant challenges that the proposed project intends to address.

Component 1. Maintenance management (US$l.O million). The project w i l l support (a) the installation and operation o f road maintenance management systems at the national level in MPWT and MRD and in their respective provincial departments o f Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap and (b) the carrying out o f annual programs o f routine maintenance on all roads in good and fair condition in the provinces o f Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap. The funds for routine maintenance are included in the cost o f the project to be funded from Government annual budget allocations.

Component 2. Rehabilitation and periodic maintenance of secondary-national, provincial and tertiary roads (US$18.65 million). The project w i l l support the carrying out, in the provinces o f Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap, o f a program o f rehabilitation and periodic maintenance o f (a) approximately 300 km of strategic secondary-national and provincial roads under the Ministry o f Public Works and Transport; and (b) approximately 300 km of tertiary roads under the Ministry o f Rural Development. The works w i l l be contracted out and a program to develop qualified private contractors w i l l be run concurrently, increasing private sector involvement in the road sector. Works w i l l be carried out using labor-based appropriate technology to maximize local employment.

Component 3. of a program o f institutional capacity strengthening for M P W T and MRD at the national level and i t s departments in the provinces o f Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap. The project w i l l thus support the on-going deconcentration efforts in MRD, and seek to replicate these efforts in MPWT, where applicable.

Capacity building program (US$2.60 million). The project w i l l support the carrying out

Component 4. out o f a program to improve MPWT and MRD policy and strategy development in the areas o f (a) integrated planning and budgeting o f roads; (b) least cost life-cycle standards; (c) use o f appropriate technology; (d) mainstreaming o f road maintenance; and (e) institutional reform. This component w i l l support on-going policy development in the transport sector, primarily supporting initiatives that are already underway.

Policy and strategy development (US$0.20 million). The project w i l l support carrying

Component 5. carrying out through MPWT and MRD o f a community awareness program aimed at increased awareness by transport agencies and residents o f related risks in road safety; HIV/AIDS; people’s participation in road planning, and access to public information; and mine and Unexploded Ordnance risks and clearance programs.

Community awareness programs (US$0.55 million). The project w i l l support the

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1. Maintenance management MPWT- secondary and provincial roads MRD - tertiary roads

2. Rehabilitation and periodic maintenance MPWT - secondary and provincial roads MRD - tertiary roads

3. Capacity building program 4. Policy and strategy development 5. Community awareness programs

0.75 0.25

13.35 5.30 2.60 0.20 0.55

3.2 1.1

57.2 22.7 11.1 0.9 2.4 1.4

0.09 0.09

12.21 4.40 2.21 0.18 0.50 0.32

0.5 0.5

61.1 22.0 11.1 0.9 2.5 1.6 Refunding o f Project Preparation Facility Advances 0.32

Total Project Costs 23.32 I 100.0 I 20.00 I 100.0 Total Financing Required I 23.32 I 100.0 I 20.00 I 100.0

2. Key policy and institutional reforms supported by the project:

The proposed project supports the following key policy and institutional reforms as described in Annex 2. (a) Zntegratedplanning and budgeting of roads. The project supports adoption o f an explicit policy for transparent planning and budgeting in the road Ministries and a requirement for public disclosure o f any non-competitively bid contract awards; (b) Least cost &-cycle standards. The project supports the use o f alternative construction standards; (c) Use of appropriate technology. The project supports the use o f labor-based appropriate technology in the implementation o f the works and the training o f contractors; (d) Mainstreaming of road maintenance. The project supports the implementation o f routine and periodic maintenance and the related maintenance management systems. Government i s considering various approaches to improved management o f the FRMR and support for this may be funded from the project; (e) Institutional reform. The move towards contracting out o f maintenance services w i l l shift the roles o f MPWT and the PDPWT’s from direct works implementation to planning, budgeting, contracts management and monitoring. To assist staff in carrying out the new functions and minimize negative impacts, there i s need for capacity building and a well thought out program for human resource development. As a part o f this, MPWT has informally requested the World Banks possible future assistance to advise on a possible program o f reorientation and commercialization o f the force account units. The MPWT i s also reviewing options for the possible restructuring o f the Ministry in other areas.

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3. Benefits and target population:

Benefits. Economic and social benefits w i l l stem from an improved transportation system in the four project provinces. The improved road network w i l l stimulate the provision o f transport services, and reduce travel times and transport costs. This w i l l in turn promote development o f areas where agriculture and off-farm activities have been constrained due to lack of reliable all-weather road access andor high transport costs. The rehabilitated roads w i l l provide better access from previously isolated areas to markets and sources o f supply for many small-scale farmers and other producers in the provinces. They w i l l also facilitate access to essential health and education services and other public and financial services. The project w i l l also provide employment opportunities to previous conflict areas in dire need to reintegrate displaced people and demobilized soldiers in the social mainstream. I t w i l l enhance the impact o f numerous grass-root efforts at the village and commune level as these w i l l now be able to access district and provincial facilities and services beyond their own communities.

Target population. The beneficiary population comprises al l those living and/or working, and who w i l l settle, in the project areas in the provinces o f Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap, the rural home to 1.5 mill ion people (out o f a total Cambodian population o f 12.3 million). -rich and poor farmers (subsistence and surplus), employees in the non-farm sector such as teachers, health attendants and c iv i l servants in the districts and communities along the roads, traders and business people (petty, small, medium, and large), transport providers (bus and bicycle and motor-cycle trailer operators and truckers) and other road users. The beneficiary population also includes consumers in the small and provincial towns, local contractors and consultants, and those who w i l l be employed in the rehabilitation and maintenance o f the roads. The latter includes significant numbers o f unskilled laborers, o f which, in Cambodia, 40 percent are commonly women, from the project provinces. Over time, project benefits wi l l extend to rural people in other parts o f the country, especially when new road programs come on stream and follow the Government's policy for transparent planning and budgeting and the participatory decision-making processes established in the PRIP provinces.

There i s ample evidence in Cambodia o f the close link between rural roads improvements and increased trade and rural development. MRD monitoring along improved tertiary roads indicates a doubling o f road traffic (of which an increase in motorized traffic o f 10 percent), a decrease in travel time of 43 percent, a decrease in transport fares o f 38 percent, a 103 percent increase in goods transported, and a 600 percent increase in trips from rural areas to community centers and in trade activities in rural markets.

I t i s expected that, over time, indirect benefits such as more qualified teachers and health staff in rural areas and improved connectivity to the rest o f the country w i l l stem from the processes introduced by the project. Additional indirect benefits w i l l likely include:

Zncreased demand responsiveness: Well-informed local participation in planning w i l l result in interventions which are well-received and needed by the stakeholders in the provinces. This w i l l also contribute to break in the culture o f top-down decision-making in MPWT and sensitize the transport agencies, M P W T in particular, to the importance o f becoming more efficient road infrastructure providers that take account o f public views and priorities and facilitate mobil ity and access by poor people to affordable, reliable, and safe transport services.

Increased transparency: An allocation o f public expenditures in the road sector according to agreed upon plans at the national level and in the PRIP provinces w i l l reduce discretionary and ad hoc decisions, and contribute to improved sector governance. I t w i l l also increase efficiency in road sector expenditures and free up significant resources for road maintenance financing.

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Related dividends would stem from the establishment o f systems and technologies for capacity building and maintenance management and implementation at the provincial level. The adoption o f least-cost life-cycle standards and labor-based appropriate technology for secondary and tertiary roads by MPWT and MRD wi l l further increase value for money o f road sector expenditures and stretch existing resources, thus enabling improved and sustained access to more communities.

4. Institutional and implementation arrangements:

The institutional responsibilities within the road sector are divided between the Ministry o f Public Works and Transport (MPWT) and the Ministry of Rural Development (MRD). To reflect this the implementation responsibility for the PRIP project w i l l be with both MPWT and MRD. MPWT i s the lead agency which i s ultimately responsible for overseeing the PRIP project, reporting overall project implementation to the Government represented by the Ministry o f Economy and Finance (MEF), and fulfilling World Bank requirements. As executing agencies, MPWT and MRD wi l l cooperate according to the provisions o f the Project Implementation Plan and the Memorandum o f Understanding on implementation. Any matters arising from the Memorandum o f Understanding w i l l be resolved through the Steering Committee for the project. The MEF has a role in Cambodia o f reviewing contracts as described in the Memorandum.

The executing responsibility in MPWT i s with i t s Road Infrastructure Department (RID); and in MRD with i t s General Department for Technical Affairs (GDTA) through i t s Department o f Rural Roads (DRR). Both offices w i l l be staffed with the required competencies for the duration o f the implementation o f the project. These offices w i l l be responsible for all goods and consultants' services contracts and for works contracts above US$500,000 in the case o f MPWT and US$lOO,OOO in the case o f MRD; the development and implementation o f the training programs; the management o f the participatory process for the selection o f the subsequent years works; the management o f and reporting on any resettlement and environmental issues; and the quality control and clearance o f the works implemented by the Provincial Departments.

The Provincial Departments o f Public Works and Transport (PDPWT) and Provincial Departments o f Rural Development (PDRD) wi l l be responsible for the contracting and management o f works below US$500,000 in the case o f MPWT and US$lOO,OOO in the case o f MRD, in accordance with the agreed Project Implementation Plan. These offices w i l l be staffed with the required competencies for the duration o f the implementation o f the project.

The agreed staffing for these existing departments and agreed terms o f reference for their staff i s reflected in the agreed Project Implementation Plan. There are no special units being set up for the PRIP.

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Implementing structure for the Provincial and Rural Infrastructure Project (PRIP)

’ Ministry of Economy and Finance ‘

D. Project Rationale 1. Project alternatives considered and reasons for rejection:

The four proposed provinces or another area. The PRIP focuses on the four contiguous northwest provinces o f Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap. As per the 2000 poverty mapping o f the World Food Program, these four provinces are home to the most vulnerable population in Cambodia-more than 40 percent o f the households in these provinces are poor, higher than the national average o f 36 percent. Of Cambodia’s 24 provinces, Kampong Thom, Preah Vihear and Siem Reap, contain the highest percentage o f poor households, the situation i s slightly better in Oddar Meanchey but this i s a new province and the census i s therefore incomplete. These four provinces were particularly marked by the c iv i l war and contain large numbers o f displaced people; moving to other areas would serve the Bank overarching mission less well. Working in contiguous provinces w i l l l ikely enhance the project benefits since road networks establish connectivity. Project impacts w i l l be enhanced further by the ongoing rehabilitation o f the primary national road No. 6 connecting Phnom Penh to Kampong Thom, Siem Reap and the Thai border. Even though there are environmental challenges in the four project provinces, since about 20 percent of the country i s protected, selecting other provinces would bring little relief in this regard.

Ministry of Public Works and Transport

All levels of the road network or a focus on the secondary and tertiary levels. The Government opted not to include all levels o f the road network in the PRIP, but rather to focus on the “missing middle” which consists o f secondary and tertiary roads. Over the last decade, an intense effort to repair the main arteries

Steering Ministry of Committee Rural Development

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Memorandum of Understanding on implementation

General Department of Public Works

General Department of Technical Affairs W

Provincial Departments of Public Works & Transport

(Kampong Thom, Oddar Meanchey, Preah Vihear, Siem Reap)

Provincial Departments of Rural Development

(Kampong Thom, Oddar Meanchey, Preah Vihear, Siem Reap)

Provincial Rural Development Committees (PRDC)

o f the national road network has been made and i s on-going. There are also numerous on-going and planned efforts to improve village and commune level access. The PRIP w i l l complement and enhance the impact of these efforts. Many o f the entities consulted, e.g., the members o f the Provincial Rural Development Committees in Siem Reap and Kampong Thom, the chiefs o f Pouk and Angkor Thom districts, and numerous NGOs, spontaneously mentioned that they would welcome the proposed investments because these would enhance the impact o f their own development efforts. They also stated that improvement o f secondary and tertiary roads i s either beyond their mandate and/or command more resources than they have at their disposal.

Sector Issue

Ban k-financed Projects including road and bridge infrastructure

Single or multi sector approach. I t was decided to focus on roads for two reasons: (i) sector issues are many and complex and require focus; and (ii) recent commitment o f IDA support and funding by other donors to the peri-urban rural water sector, local governmentkommunity level infrastructure, and forthcoming support to rural electricity.

Project

Rural Investment and Local Governance (Cr. 37470) Flood Emergency Rehabilitation (Cr. 34720)

One or two executing agencies. The project has two executing agencies-MPWT and MRD. In the interest o f simplicity, the project could have opted to focus on MPWT and the secondary network only. Given the desire, however, to ensure maximum network impacts in the project area, and to capitalize on the potential for cross-fertilization between the road agencies at both provincial and central levels, it was decided that the project would have two implementing agencies. Yet another alternative would have been to address both secondary and tertiary roads but to have MPWT as the sole executing agency although in close collaboration with MRD. This alternative was rejected because o f an overarching concern for the continued ownership by both Ministries. Cross-fertilization between the Ministries has been successful during project preparation and w i l l be encouraged during implementation through the Steering Committee, the Provincial Rural Development Committees, joint f ield trips during supervision, joint mission wrap-up sessions, and joint meetings with the provincial agencies.

National or Provincial. I t was decided to reject central procurement o f al l c iv i l works contracts as this would further cement the already centralized structure in MPWT. Instead, the PRIP w i l l build on the positive experience o f the MRD implemented Rural Infrastructure Improvement Project and involve provincial procurement o f c iv i l works up to US$500,000 in MPWT and US$lOO,OOO in MRD. Close monitoring from central authorities w i l l be coupled with local monitoring and transparent processes.

Upgrade or maintain. I t was agreed that roads in good to fair condition in the project provinces would not be upgraded, even when built below standards, but maintained. Roads in poor condition w i l l be rehabilitated or upgraded.

2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned).

Latest SI

(Bank-finance Implementation

Progress (IP)

S

P S R )

S

lervision stings projects only)

Development Objective (DO)

S

S

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Xelated projects

dacro-economic operations

[elated projects under preparation

Ither development agencies lapan International Cooperation 4gency (JICA): 4USAID:

Road Rehabilitation (Cr. 31810) Social Fund 11 Supplemental Credit (Cr. 31791) Social Fund 11 (Cr. 31790) Northeast Village (Cr. 32160) Health Sector Support (Cr. 37280) Provincial and Peri-Urban Water Supply and Sanitation (Cr. 37460) Agriculture Productivity Improvement (Cr. N0110) Economic and Public Sector Capacity Building (Cr. 36780) Structural Adjustment Credit (Cr. 33230) Rural Electrification and Transmission

4 S I A N DEVELOPMENT BANK :ADB):

NR 6A, 7 Rehabilitation Project Bridge Rehabilitation on NR5 and 6 JFPR-Mainstreaming Labor-Based Road Maintenance to the National Roads Network, US$2.2 million, to be approved

Cambodia Road Improvement Project, November 2002 US$50 mil l ion

Northwestern Rural Development, November 200 1 US$27.2 mil l ion

Emergency Flood Rehabilitation, December 2000, US$55 mil l ion ADB 1697-CAM(SF) Primary Roads Restoration, September 1999, US$68 mil l ion Rural Development Project

TRIP Rural Transport Project

ADB 1945-CAM(SF) GMS:

ADB 1862-CAM(SF)

ADB 1824-CAM(SF)

SEILA 1 (1996-2000) ZUROPEAN UNION: JNDP/Sida/DFID: m:

S

S

S S S

S

U

S

U

Hiahlv Unsatisi I

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3. Lessons learned and reflected in the project design:

Engender client ownership. Successful projects require local ownership, clear objectives and strong commitment. The project was designed by Government to build on existing structures, to be implemented by the provincial offices, to have a participatory planning and decision making approach which included al l relevant structures o f Government both at national and provincial levels, and to foster cooperation o f different Government departments.

Civil society involvement builds ownership and requires outreach. The init ial investments in the project have been selected using a participatory planning and decision-making approach which i s described in Section 6.2. This same approach w i l l be used to determine future investments. The implementing agencies w i l l contract selected nongovernment organizations to design and implement public awareness campaigns for road safety, HIV/AIDS prevention, dissemination o f project information, and mine/Unexploded Ordnance security.

Good governance fosters sustainable and equitable development. The project w i l l promote good governance through the development and implementation o f transparent participatory planning and decision making processes. Transparency and good governance i s also included in the procurement processes and their subsequent technical and financial auditing and the disclosure o f information.

Capacity development of the in-country institutions requires well-tailored programs especially at the provincial level. The project includes a series o f combined class-room and practical on-the-job training sessions o f both the public and private sector to be dispensed on a continuous basis (Refer to Annex 2).

Coordination of development efforts is necessary to reduce transaction costs on client agencies, and avoid duplication of efSorts. The project w i l l scale up and draw extensively on the experience gained from the Ministry o f Rural Development implemented Rural Infrastructure Investment Project, the Upstream Project and others. I t w i l l also support existing initiatives in policy dialogue and assist the Government to build cooperation between i t s technical assistance supported by the Asian Development Bank, Japan, the World Bank and others in the transport sector.

4. Indications of borrower commitment and ownership:

Government collaboration, between Ministry o f Public Works and Transport (MPWT) and Ministry o f Rural Development (MRD), at central and provincial levels, has been highly satisfactory during project identification and preparation. There has been full involvement o f staff from MPWT and MRD during missions and field trips. A participatory workshop was organized early during project preparation around the logical framework to define and build consensus around the project development objectives and outputs. The Ministers o f MPWT and MRD made all the necessary resources promptly available for project preparation, such as assigning staff to the PRIP preparation team, and providing the necessary office and logistics support; two Project Preparation Facilities were used for project preparation. The provincial teams have been directly trained and involved in the field surveys o f the roads, and have participated extensively in the participatory planning and decision making processes. The Ministry o f Economy and Finance (MEF) has also been proactive in discussions on the financing o f the sector.

5. Value added of Bank support in this project:

The World Bank contribution o f the US$20.0 mill ion credit supporting the Royal Government o f Cambodia's program in the road sector represents significant financial support to the sector. The targeting to the part of the road network which has not attracted external finance w i l l support greater impact o f the

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investment on the other parts o f the road network. The Bank has, through i t s support during project preparation, assisted MPWT and MRD to undertake an extensive outreach and public participation in the selection o f investments. Through the Banks encouragement o f increased transparency, there w i l l be public disclosure o f information on al l roads contracts in the project provinces whether funded by the credit or funded by the Government itself. Through work with the Government on i t s public procurement, the Bank has supported the move towards wider competitive bidding and through the involvement in this project towards capacity building in the use o f government public procurement provisions. The Bank w i l l also contribute to set a precedent in the sector by taking on board existing systems for provincial management o f tertiary roads in MRD, established under projects supported by the ADB and E O . In this way, the Bank w i l l signal the importance o f contributing to mainstreaming and scaling up and reducing the proliferation o f project specific requirements and transactions costs on the client.

E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8)

1. Economic (see Annex 4): 0 Cost benefit 0 Cost effectiveness 0 Other (specify)

All candidate roads for rehabilitation, upgrading, and periodic maintenance are subject to economic analysis either using cost-benefit analysis or cost-effectiveness analysis. The costs include the cost o f works, and design and supervision o f such works. The main benefits are directly related to traffic including (i) savings in vehicle operating costs, (ii) savings in vehicle and passenger time costs. Additional non-quantifiable benefits include social benefits arising from better access to schools, medical facilities, and other social services. For the first years work program, traffic counts have been undertaken indicating motorized traffic, excluding motorcycles, to range from 4 AADT to 630 AADT. Given the growing network o f trafficable roads, the increasing number of motor vehicles in the country, and the robust growth o f Cambodia's economy, traffic i s developing rapidly. Recent counts near Siem Reap indicate annual average growth rates o f 16 percent for motorbikes, 40 percent for light vehicles, and 195 percent for heavy vehicles between 1998 and 2000.

For rehabilitation and periodic maintenance works, a cost-benefit analysis was used, applying the Highway Development and Management Model (HDM-4), which compares l i f e cycle road costs and vehicle operating cost and passenger time savings. The net present value (NPV) o f the project first year rehabilitation and improvement works amounts to US$14 mil l ion with a corresponding economic internal rate o f return (IRR) o f 35 percent. The NPV o f the project first year periodic maintenance works amount to US$0.42 mil l ion with a corresponding IRR of 28 percent. The NPV o f al l first year works, which represent 46 percent o f the project civi l work costs, amount to US$14.2 mil l ion with a corresponding IRR of 35 percent.

For periodic maintenance works, the cost-benefit analysis was complemented by a cost-effectiveness analysis, comparing the financial investment costs o f the road intervention with the population served on each road. The cost-effectiveness o f the investments was computed due to the nature o f the traffic on these roads, which i s mostly low local traffic serving the local population, and the project objective o f maximizing the provision o f al l weather access to as many persons as possible per available resources. All road sections have a cost-effectiveness ratio less than US$11 per person, which i s reasonable considering that a) the average GDP per capita i s US$280 in Cambodia and US$11 represents 4 percent o f the GDP per capita; and b) the investments w i l l ensure an all-weather access to the social and economic centers.

For routine maintenance works, economic analysis was not applied since the premise i s that the asset

NPV=US$14 million; ERR = 35 % (see Annex 4)

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should be maintained and traditionally economic rates o f return for this type o f intervention are extremely high.

2. Financial (see Annex 4 and Annex 5): NPV=US$ million; FRR = % (see Annex 4)

The fiscal sustainability o f the project relies on success in development o f the systems and incentives to ensure financing and implementation o f maintenance. To improve the likelihood o f success the project itself includes a maintenance component and support to policy development focused on maintenance funding. Parallel activities o f the Government on this issue are ongoing. The funds needed for such routine maintenance are available in the current sectoral budget o f the Government. Donor agencies active in the sector including ADB and JICA are emphasizing the need for maintenance.

Fiscal Impact:

The fiscal impact o f the project i s likely to be modest in the sector and marginal on the overall public budget (Source o f data: Integrated Fiduciary Assessment and Public Expenditure Review, August 2003).

Sectorfiscal impact. Of the US$23.32 mil l ion project, the Royal Government o f Cambodia counterpart fund contribution o f US$3.32 mill ion spread over four years represents approximately three percent o f the annual Government budget spent on roads. Total annual Treasury-executed expenditure (that is, excluding external project-related assistance) on road rehabilitation and maintenance (excluding expenditures funded from the Fund for the Repair and Maintenance o f Roads (FRMR)) i s estimated at Cambodian Riel 106 million, equivalent to about US$28 million, in 2001. External project-related assistance to the transport sector i s estimated at US$59.7 mill ion in 2001. Accumulated revenue in the FRMR reportedly i s estimated at US$3.5 mill ion in May 2002.

Overall public budgetfiscal impact. The total revenue o f the Government i s projected at US$450 mill ion in 2003 (based on the new national accounts). Reported external assistance flows are estimated at US$472 million. In relation to other sectors, (domestically resourced spending on education i s expected to increase to US$75 million, on health to US$45 mil l ion in 2002 and on the Commune/Sangat fund to about US$12 million), although the total expenditure on roads has increased significantly in the past several years, and are l ikely to increase further as resources become available from the FRMR, the total expenditure in 2001 o f US$28 mil l ion represents only 6 percent o f total domestically sourced expenditure. Given the focus on maintenance and rehabilitation o f secondary and tertiary roads in four target provinces, the future recurrent cost implications w i l l be positive however relatively small and readily funded from the FRMR. B y reinforcing the concept o f regular maintenance to preserve the road asset base, the project w i l l help to reduce the need for rehabilitation expenditures in the future and enhance the efficiency and effectiveness o f the use o f funds.

3. Technical:

The specific technical issues considered in the project design are summarized below:

Mines and Unexploded Ordnance (UXO). The entire project area has not been cleared o f mines and Unexploded Ordnances. "Pathfinding" (i.e. marking o f the location o f the mines and the Unexploded Ordnance to 50m o f either side o f the center-line o f the road) has been undertaken as part o f project preparation with the support o f an international charity. All the roads for the first year have been addressed. De-mining i s the responsibility o f the Government and shall be undertaken as part o f the road works contract to a strip o f 10m on either side o f the centerline o f the road. Improved access w i l l reopen land to agriculture and ease pressure elsewhere, however mines w i l l prevent people from returning to

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their land. Subsequently, further mine clearance would have to be considered in potentially contaminated areas made accessible by the rehabilitated roads.

Labor-based appropriate technology (LBAT). In the Policy for Rural Roads o f the MRD, LBAT i s identified as the preferred technology for rural roads. The MPWT and the PDPWTs recognize the merits o f LBAT for the construction and maintenance o f secondary roads, and MPWT has sought the technical assistance o f L O in this regard. In several places, however, LBAT might not be an appropriate option due to unsuitable local soils, lack o f available labor, or other technical considerations that would imply that an equipment based approach be followed. Government has committed US$2.4 mil l ion towards the “Mainstreaming Labor-Based Road Maintenance to the National Roads Network” in three provinces including two o f the PRIP provinces, namely Oddar Meanchey and Siem Reap. This i s complemented by a Japan Fund for Poverty Reduction grant of US$2.2 mill ion executed by the Asian Development Bank. This i s focussed on replicating the successful experience in MRD to relevant projects in the MPWT. The PRIP project w i l l support such mainstreaming and implementation, including training arrangements which w i l l be the same for both the “Mainstreaming” initiative and PRIP-supported works.

Standardization of Roads and Bridges Design. Multiple designs are used for the construction of structures and roads in Cambodia. While the MPWT has adopted standard specifications these are not uniformly applied through the various donor supported programs making capacity building less sustainable. The PRP adopts the MPWT standard specifications with specific provisions for labor-based appropriate technology which are being mainstreamed into MPWT and MRD works.

Alternative Road Surfaces. Though laterite i s a preferred material for the wearing course on unpaved secondary and tertiary roads, there are not many sources o f good laterite in the project area and many o f the roads are prone to rapid gravel loss and require frequent regravelling. Thus the project supports various options o f inexpensive pavements which have been field tested in Cambodia.

Trafsic Safety. Improved roads w i l l result in higher speed leading to an increase in road accidents. Apart from the human costs, accidents represent a significant drain on the country’s health system. All designs w i l l pay due consideration to safety concerns and the RGC has sought the assistance o f a local NGO to design and implement an effective community based road safety awareness campaign.

Market Place Design. The project w i l l assist in the re-design o f markets on a case-by-case basis where road safety concerns warrant. The district centers and markets are the interface between the rural and the provincial economies and often found at road junctions.

4. Institutional:

Overarching institutional concerns include governance and public sector expenditure management and procurement, an entrenched centralized culture in MPWT, and capacity constraints in both the public and private sectors. Additional challenges include overstaffing and low salaries. MPWT, in particular, i s overstaffed and salaries are low. The majority o f the 900 Phnom Penh-based staff on the payroll of the RID perform external jobs to make ends meet. Whenever the RID receives funds to execute a specific task on a force account basis, mostly emergency works, staff travel expenses and per diem are budgeted so as to constitute required compensation. This situation i s mirrored in other departments o f the central Ministries and in the provinces where the Director o f the PDPWT, at times, acts as a contractor gathering staff and renting equipment when she “gets a project.”

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4.1 Executing agencies:

There are two designated executing agencies for the project reflecting the fact that there are two ministries responsible for the road network. The Ministry o f Public Works and Transport (MPWT) i s responsible for the national, secondary-national and provincial road network, managing al l roads that are numbered and carry a daily traffic volume o f more than 50 motorized vehicles (two axle, four wheels). The Ministry o f Rural Development (MRD) i s responsible for tertiary roads. A signed joint declaration between MPWT and MRD from March 10,2000, confirms the allocation o f responsibilities between the two ministries with regard to the road sector. Both ministries execute their responsibilities to a greater or lesser extent through their provincial departments.

Within MPWT, the three departments most directly concerned with roads are the Road Infrastructure Department (RID), the Heavy Equipment or Road Construction Center (RCC), and the Technical Research Center (TRC). The RID i s responsible for coordinating road inventories and maintenance and has been designated as the MPWT executing department for the PRIP. The RCC i s responsible for road construction, mostly emergency interventions. The TRC sets standards. The RID, established under the Declaration on Conduction and Procedures o f Department o f Road Infrastructure, dated 16 August 1999 i s managed by the Director and four Deputy Directors who are in charge o f two offices and two units (Le. Planning and Technical Office; Administrative and Accountant Office; Bridge Construction Unit; and Road Construction Unit).

Within MRD, the Department o f Rural Roads (DRR) was established under the Prakas No. 15 1 PrK.MRD on the Organization and Functioning o f the DRR in July 2002. DRR i s under the General Department for Technical Affairs (GDTA) in the MRD and manages al l rural roads in the Kingdom o f Cambodia. The DRR carries out i t s duties in compliance with the Policy for Rural Roads. The DRR i s headed by the Director and two Deputy Directors who are in charge o f five Offices, as follows General Affairs Office, Planning and Statistics Office, Maintenance Management Office, Monitoring and Evaluation Office, and Research and Development Office. The functions o f the national DRR includes policy and technical advice, sub-sector coordination, preparation o f systems and technical guidelines, facilitation o f training, and advocacy. The GDTA in conjunction with i t s DRR has been designated as the MRD executing department for the PRIP.

4.2 Project management:

The MPWT and the MRD both have experience with executing World Bank supported projects. Their provincial departments, however, do not have such experience and, to date, have had litt le experience with contracting since this has typically been undertaken by the national offices. Local consultant services w i l l be provided directly to the provincial departments to assist with the preparation o f bid documents, the bid process, and supervision o f the works. A Project Implementation Plan has been developed with common procurement and financial management arrangements.

4.3 Procurement issues:

The Country Procurement Assessment Report (CPAR) i s currently under preparation. There i s no current CPAR. The Country Portfolio Performance Review (CPPR) of 10 August 2000 concluded that “procurement i s s t i l l a major impediment to efficient project implementation and disbursements.” The CPPR identified the need for training and the need to amend “complex and outmoded government processes and procedures.” An effort to develop standardized bidding documents for both Government-funded and donor-funded projects i s underway in conjunction with the CPAR. Governance

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issues are a serious concern and hence provisions have been made in the procurement design. See Annex 6(A) o f this document for further details. In addition, a technical and financial audit, including review o f the procurement procedures w i l l be carried out every financial year by an independent auditor to be appointed under the project.

World Bank staff undertook a procurement capacity assessment (see project f i le) of the executing agencies Ministry o f Public Works and Transport (MPWT), Ministry o f Rural Development (MRD), and Provincial Departments o f Public Works and Transport (PDPWTs) and the Provincial Departments of Rural Development (PDRDs) o f the four project provinces Kampong Thom, Oddar Meanchey, Preah Vihear, and Siem Reap. See Annex 6(A) o f this document for further details.

One o f the key objectives o f the project i s to encourage the reduced centralization o f operations by supporting the development o f capacity o f the provincial departments o f the project executing agencies, the Ministry o f Public Works and Transport (MPWT) and the Ministry o f Rural Development (MRD). The responsibilities are as follows:

For al l goods and consultants' services contracts, the Director o f the MPWT-RID and the Director o f the MRD-GDTA-DRR wi l l be responsible for procurement of their contracts. The Directors w i l l seek clearance from MEF and the World Bank as appropriate.

For works below US$500,000 in MPWT and below US$lOO,OOO in MRD:

0 the Director o f the relevant Provincial Departments of Public Works and Transport (PDPWTs)/the relevant Provincial Departments o f Rural Development (PDRDs) w i l l be responsible to prepare bidding documents, advertise for bids, conduct bid openings in the provincial offices, prepare the bid evaluation reports, sign the contracts and supervise such works. A consultant w i l l be assigned to the PDPWTPDRD to provide advice to the PDPWTPDRD on the steps o f implementation. The Director o f the PDPWTPDRD i s required to seek clearance for the draft bidding documents and the bid evaluation report from the Director o f MPWT-RIDDirector o f MRD-GDTA-DRR. In turn the Director o f MPWT-RIDDirector o f MRD-GDTA-DRR, after hisher review o f such documents, w i l l seek clearance o f MEF and the World Bank as appropriate. The Director o f the Provincial Departments w i l l be the "Employer" for the works contracts. A member o f staff o f the PDPWTPDRD wi l l be the "Engineer" for the works contracts.

For works contracts above US$500,000 in MPWT and above US$lOO,OOO in MRD

0 the Director o f the MPWT-RIDMRD-GDTA-DRR wi l l be responsible to prepare bidding documents, advertise for bids, conduct bid openings, prepare the bid evaluation reports, s i g n the contracts and supervise such works. The Director of MPWT-RIDMRD-GDTA-DRR wi l l seek clearance o f MEF and the World Bank as appropriate for the draft bidding documents and the bid evaluation report. The Director o f MPWT-RIDMRD-GDTA-DRR wi l l conduct the bid openings in the relevant project province, and the Director o f the PDPWTPDRD w i l l be included on the bid evaluation committee. The Director o f the MPWT-RIDMRD-GDTA-DRR w i l l be the "Employer" for the contract. A member o f staff o f the MPWT-RIDMRD-GDTA-DRR w i l l be the "Engineer" for the works contracts, alternatively the Director o f the MPWT-RIDMRD-GDTA-DRR may contract out to a consultant to be the "Engineer". A member o f staff o f the PDPWTPDRD wi l l also be assigned to the Employer's supervision team.

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4.4 Financial management issues:

World Bank staff undertook afinancial management assessment (see project file) o f the executing agencies Ministry o f Public Works and Transport (MPWT), Ministry o f Rural Development (MRD) and Provincial Departments o f Public Works and Transport (PDPWTs) and the Provincial Departments o f Rural Development (PDRDs) o f the four project provinces Kampong Thom, Oddar Meanchey, Preah Vihear, and Siem Reap. Each MPWT and MRD wi l l have their own Special Accounts (to receive IDA funds) and Counterpart Fund Accounts and be responsible for their own Financial Management Reports in accordance with the requirements o f the World Bank. Each w i l l submit their own Withdrawal Applications to the MEF and World Bank. Both agencies have experience o f implementing World Bank supported projects and satisfying the financial management requirements. See Annex 6(B) o f this document for further details.

5. Environmental: 5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including consultation and disclosure) and the significant issues and their treatment emerging from this analysis.

Environmental Category: A (Full Assessment)

Environmental Assessment (Operational Policy 4.01). During project preparation, an Environmental Assessment (EA), the executive summary o f which i s found in Annex 11, was prepared by an independent consultant in accordance with OP 4.01. The main findings are that, since the project w i l l support rehabilitation o f existing roads along their present alignments and within existing rights-of-way, any environmental impact o f the project i s expected to be limited to the construction effects associated with the rehabilitation and maintenance road works. The impacts may result from dust and noise, use o f bitumen on sections selected for surface treatment, disposal o f solid wastes, erosion control, siting and operation o f borrow areas and quarries, labor camp management, etc. These impacts are common in road works and can be mitigated with proven management techniques. On the positive side, the project w i l l achieve important environmental benefits through tree planting to reduce erosion and improve aesthetics, improved access and mobility for the motorized and non-motorized traffic, and improved drainage reducing erosion and flooding.

As a precaution, an Environmental Assessment has been carried out for the project and for the first year roads even though most o f the anticipated roads to be rehabilitated and maintained would be classified as environment category "B". The roads to be implemented in the first year have been defined using a participatory approach complemented by multiple criteria analysis (economic, technical, environment, social, beneficiary consultation, etc.) and represent about US$lO.O mil l ion o f the total US$23.0 mill ion project. A similar approach w i l l be employed for future roads to be rehabilitated under the project. An Environmental Management Plan has been developed to mitigate environmental impacts during implementation.

Natural Habitats (OP 4.04). Some o f the roads proposed for rehabilitation adjoin protected landscapes, national parks, or wildlife sanctuaries and are therefore subject to OP 4.04 on Natural Habitats. National road 66, the east-west highway adjoining the Beng Per Wildl i fe Sanctuary, w i l l be rehabilitated under the project. For future roads impacting national parks or other protected areas, an environmental impact assessment (EIA) would need to be conducted and submitted to the Bank for review. The EIA for such subprojects include consultations with park management authorities, confirmation that the proposed subproject would be consistent with the park management plan, and the endorsement o f the Ministry o f Public Works and Transport and the Ministry o f Rural Development that the road i s beneficial to the park and i t s inhabitants.

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Forestry (OP 4.36). Community forestry i s an expanding form o f land use in the project area and i s expected to increase even faster when the draft Community Forestry Sub-Decree i s approved by the RGC. Under community forestry arrangements, local communities receive long term tenure and rights to forest products in exchange for managerial efforts undertaken in cooperation with the concerned Government agencies -- Department o f Forestry and Wildlife, APSARA (National Authority for the Protection and Management o f Angkor and the Region o f Siem Reap), or Ministry o f Environment, depending on territorial jurisdiction. The project authorities w i l l ensure that land acquisition under the project takes due regard o f the recognized authority o f community forestry associations and that quarries, borrow pits and drainages do not adversely affect these areas. Project activities w i l l not involve conversion or degradation o f critical forest areas or related critical natural habitats as defined under the policy. Illegal logging i s o f concern in Cambodia and being addressed through other country wide initiatives.

Pest Management (OP 4.09). The project w i l l use mechanical or manual work for clearing areas for road rehabilitation. N o pesticides w i l l be used. OP 4.09 on Pest Management i s therefore not applicable.

Cultural Property (OPN 21.03) Given the potential for cultural relics in the project area, particularly in Siem Reap province, OP 4.11 on Cultural Property i s applicable. Provisions for dealing with cultural property finds during construction are included in the EMP. Future sections o f National road 66 cross at least three Angkor bridges which would require preservation or even restoration if it i s determined that those bridges should remain on the road alignment. The implementing agencies are familiar with dealing with such issues. For example under the National road 6 currently being rehabilitated under a World Bank supported project there are Angkor era ancient bridges.

The World Bank Policy on Disclosure of Information (2002). In l ine with the World Bank disclosure policy, the Ministry o f Public Works and Transport and the Ministry o f Rural Development formally disclosed on March 3 1,2003 the final drafts o f the Environmental Assessment, the Resettlement Policy Framework and the Indigenous Peoples' Development Framework to the public. These documents are available in English at the offices o f the MPWT-RID and the MRD-GDTA in Phnom Penh. MPWT and MRD also authorized disclosure o f the documents at the World Bank office Public Information Center in Phnom Penh, and through the World Bank Infoshop in Washington on March 31,2003. Khmer language versions o f the documents were made available at the above locations as well as at the Provincial Offices o f the MPWT and MRD, and the offices o f the Provincial Rural Development Committee (PRDC) in Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap.

5.2 What are the main features o f the EMP and are they adequate?

The recommendations o f the Environmental Assessment are reflected in the project design. An Environmental Management Plan (EMP) has been agreed which defines the prevention and mitigation measures for all potential adverse impacts that might arise from the roads and bridges rehabilitation works and the maintenance program (see Annex 11). The EMP wi l l be included in the works contracts for each road. Mitigation measures are included in the General Specifications o f the works contracts. Provision i s made in each contract for the financing o f trees to be planted along the sides o f the roads. The compliance o f the contractors in carrying out the provisions set forth in the contract documents wi l l be supervised during construction as part o f the work supervision system established under the Project and monitored by the World Bank during the regular supervision missions. Financing o f the mitigation measures i s covered in the works contracts and supervision contracts. The Development Credit Agreement includes a requirement that the Borrower shall carry out the Project in accordance with the Environmental Management Plan. The MPWT and MRD wi l l be responsible for ensuring the compliance with the environmental requirements o f the project.

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5.3 For Category A and B projects, timeline and status o f EA: Date o f receipt o f final draft: March 30,2003

5.4 How have stakeholders been consulted at the stage o f (a) environmental screening and (b) draft EA report on the environmental impacts and proposed environment management plan? Describe mechanisms o f consultation that were used and which groups were consulted?

The participation process for the selection o f the investments and those who participated i s described in Section 6.1 below and documented in the project files. With the help o f maps showing the location o f protected areas l ike national parks, wildlife sanctuaries, protected landscapes and biodiversity areas participants in the workshops were able to determine if roads would pass through or be close to such an area. Roads in or close to such an area received lower scores in the selection process. The results are discussed in the Environmental Assessment. The Environmental Management Plan (EMP) was prepared on the basis o f these findings. A Khmer language EMP wi l l be widely distributed along the project roads chosen for rehabilitation.

5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the environment? D o the indicators reflect the objectives and results o f the EMP?

The Environmental Management Plan (EMP) contains detailed environmental compliance monitoring requirements including parameters and indicators for all activities relating to the recommended mitigation measures. Implementation o f these measures would be supervised by a local consultant or NGO engaged by MPWT and MRD. The technical audit w i l l review implementation o f the works in accordance with the contract provisions.

6. Social: 6.1 Summarize key social issues relevant to the project objectives, and specify the project's social development outcomes.

A Social Assessment has been carried out during the project preparation with specific objectives that included: (i) assessment o f potential social impacts o f the project, with particular attention to gender, and poor, vulnerable, indigenous and ethnic minority groups; (ii) as a f i rst step, an overall assessment o f the social and economic conditions o f the people l iving in the proposed project provinces by gender, income, and ethnicity, and as a second step, consultation with beneficiaries about their needs and priorities and a more in-depth assessment o f the population along the roads to be improved to establish a baseline for social monitoring and evaluation; (iii) identification o f other key stakeholders, including c iv i l society groups and locally active NGOs with interest and some capacity to participate in project implementation and monitoring; (iv) identification o f any social risks; and (v) formulation o f appropriate measures to mitigate potential adverse impacts and risks.

The Social Assessment describes the socioeconomic situation of households in 29 villages (out of 8 1 villages) situated along the roads to be rehabilitated in the first year o f the project. The villagers interviewed are almost all (97 percent) below the poverty line, indicating that the project area i s indeed one of the poorer areas o f the country. The main sources o f income i s from paddy farming (60 percent), and casual wage labor (20 percent). 15 percent are engaged in small scale trading or vegetable selling.

The Social Assessment confirmed that generally people welcome the rehabilitation o f roads, and that communication and transport i s a constraint in the daily life. Most villages are fairly isolated and roads in disrepair. People had great difficulty travelling, particularly in the rainy season. People walked not just in the local community but over long distances. The most frequently used transport mode was the bicycle (85 percent) - used throughout the year. Motorcycles were used on a daily basis by only 6 percent o f

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respondents and on a monthly basis by 33 percent. Cars, buses and pick-up trucks were used infrequently, usually on a yearly base, however 65 percent o f respondents had never travelled in a car, 65 percent had never travelled in a pick-up truck and 32 percent had never used a motorcycle. Rehabilitation o f roads are expected by villagers to benefit them primarily for better market and business opportunities, and for easier access to health care facilities. However, villagers also fear an increase in road accidents, involving children and cattle.

Indigenous Peoples (Operational Directive 4.20). No reliable figures exist about the presence o f indigenous peoples in Cambodia. Indigenous Peoples, as described in O D 4.20, are often referred to as Highlands Peoples, and are mainly found in the north eastern provinces but are also found in villages in other provinces. Preliminary information suggests that indigenous minorities mostly l ive in forested areas away from the existing roads; no adverse impacts on these groups are foreseen. Other ethnic minority groups live in the villages and are likely to benefit from the project in terms o f improved access to markets and new opportunities for income generation. At least one o f the project provinces, Preah Vihear i s known to have some indigenous communities. The Ministry o f Public Works and Transport and the Ministry o f Rural Development have adopted an Indigenous Peoples' Development Framework (IPDF) (June 2003) (see Annex 13) in accordance with O D 4.20, and guidelines for screening and implementation are included in the agreed Project Implementation Plan (July 2003). Indigenous Peoples w i l l be determined based on five characteristics specified in the Operational Directive 4.20. For the first year roads, one indigenous community (a village o f the Kuoy ethnic group in Preah Vihear) i s affected and a stand alone Indigenous Peoples Development Plan has been adopted by the Government. Once the remaining roads are identified during project implementation, Indigenous Peoples Development Plans would be prepared, as needed, following the provisions o f the Indigenous Peoples' Development Framework.

Involuntary Resettlement (Operational Policy 4.12). Since the project w i l l support rehabilitation o f existing roads, there w i l l be limited acquisition o f private assets and resettlement o f people. The Ministry o f Public Works and Transport and the Ministry o f Rural Development have adopted a Resettlement Policy Framework (June 2003) (see Annex 12) in accordance with OP 4.12 and guidelines for screening and implementation are included in the agreed Project Implementation Plan (July 2003). For the first year roads, there i s no land acquisition or resettlement o f people required. Once the remaining roads are identified during project implementation, Resettlement Plans would be prepared, as needed, following the provisions o f the Resettlement Policy Framework.

Provisions and principles adopted in these Frameworks for the project supersede the provisions o f relevant decrees and laws currently in force in Cambodia, wherever differences exist.

Labor laws. The MPWT and MRD wi l l ensure that the c iv i l works contractors: (i) comply with al l applicable labor laws; (ii) apply equal remuneration for men and women for work o f equal value without gender differentiated wages; (iii) do not employ child labor below age 18; and (iv) seek to maximize the level o f female participation in appropriate construction works. Such provisions are included in all works contracts.

6.2 Participatory Approach: How are key stakeholders participating in the project?

The Ministries took a very proactive approach to the participatory process and their national and provincial offices actively led the process. A Provincial Transport Infrastructure Planning (PTIP) tool was developed, based on the requirement o f the Ministries, emphasizing a process that would be able to prioritize future investments and that would provide ample opportunity for residents to ensure investments were prioritized according to their needs. The tool essentially identifies the road network,

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evaluates existing public assets and prioritizes investments according to maximum need and impact. The planning process screens roads by comparing accessibility rankings with population served, environmental impact and economic potential.

The responsibility for preparing the Provincial Transport Infrastructure Plans was with the Provincial Rural Development Committees (PRDCs). The committees were presided over by the Provincial Governors and included officials from all technical departments at the provincial level (Rural Development, Public Works, Planning, Health, Education, etc), District Representatives plus a selection o f key constituents. The local "experts" included teachers, health workers, traders, transporters, women's group representatives, and other stakeholders. The selection o f the workshop participants attempted to reach a real cross section o f the community. During the planning process more than 5,500 people were consulted and took part in the planning and decision making. Planning activities took place from September to December 2002. Init ial provincial workshops were held in Kampong Thom on 28 August 2002, in Oddar Meanchey on 12 September 2002, and in Preah Vihear on 16 September 2002 (no initial workshop was held in Siem Reap), a series o f district workshops followed and then a second round o f provincial workshops were held from November to December 2002.

This mechanism was used to finally develop the first year work program. The mechanism w i l l again be employed to develop the program for further years and guidelines on how to conduct the participatory process for the selection o f future roads are included in the agreed Project Implementation Plan. In addition, the Social Assessment provided an opportunity for systematic feed back from local residents, both through the structured interviews with more than 800 households, and the focus group discussions in 29 villages along the f i rst year roads to be rehabilitated.

6.3 How does the project involve consultations or collaboration with NGOs or other c iv i l society organizations?

Consultation with NGOs and civi l society organizations active in the project area was included in the project preparation through the participatory planning process. The collaboration with local NGOs i s ensured through their participation in the PRDC. NGOs wi l l provide support to Government in the implementation o f the HIV/AIDS awareness and mitigation program, the road safety campaign, and the mine awareness campaign and mine path finding requirements.

6.4 What institutional arrangements have been provided to ensure the project achieves its social development outcomes?

I t i s proposed to raise awareness o f and build capacity for social and environmental management within the MPWT and MRD at provincial and central levels. Identified staff o f the MPWT and MRD have been assigned responsibility for social aspects.

6.5 How w i l l the project monitor performance in terms o f social development outcomes?

The Social Assessment carried out during the project preparation includes a socio-economic baseline that provides information on the project beneficiaries and their current situation. The baseline w i l l be used for monitoring the social changes that the project may induce and for post-implementation evaluation o f the project impacts.

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7. Safeguard Policies:

Natural Habitats (OP 4.04, BP 4.04, GP 4.04) Forestry (OP 4.36, GP 4.36) Pest Management (OP 4.09)

0 Yes 0 No 0 Yes 0 NO

Cultural Property (OPN 11.03) Indigenous Peoples (OD 4.20)

0 Yes 0 NO

0 Yes 0 NO

Involuntary Resettlement (OP/BP 4.12)

in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)" I 0 Yes 0 NO I

0 Yes 0 NO

7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies.

Safety of Dams (OP 4.37, BP 4.37) Projects in International Waters (OP 7.50, BP 7.50, GP 7.50)

Implementation o f environmental assessment w i l l be ensured through inclusion o f discussion of the Environmental Management Plan (EMP) provisions at the pre-bid meetings, inclusion o f environmental requirements and the EMP in the construction contracts, and environment and social impact mitigation management training for both construction contractors and MPWTMRD supervisors and project personnel. All contracts w i l l contain clauses that define the environmental requirements to be met during road construction. Compliance w i l l be monitored through the supervision arrangements. Natural habitats w i l l be protected through selection criteria and design. Roads selected for the first year do not cross any known heritage sites, and the EMP includes procedures to be followed to protect known or chance find o f cultural property. All safeguard policies compliance w i l l be closely monitored during World Bank supervision and mid-term review.

0 Yes 0 No 0 Yes 0 NO

F. Sustainability and Risks 1. Sustainability:

The project i s specifically designed to support sustainability by: (a) working through the existing units and structures o f the implementing Ministries in line with their designated responsibilities and supporting enhancement o f their capacity; (b) implementing through the existing provincial departments o f these Ministries to further enhance their long term capacity; (c) strengthening on-going efforts in policy development to ensure the required management and budgeting capacity for sustainable maintenance; (d) using procurement systems in line with local procurement rules; (e) supporting the development o f the local contracting and consulting industry by designing the project to be accessible to them in addition to the planned training program; and (f) introducing participatory planning methods and transparent decision making processes to last and potentially be replicated in other areas/sectors as well, particularly at the provincial level.

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2. Critical Risks (reflecting the failure o f critical assumptions found in the fourth column o f Annex 1):

Risk From Outputs to Objective Road maintenance policy including sustainable maintenance financing mechanism established through ongoing projects by year 3 and adopted by RGC. Mines and UXOs cleared in the surrounding areas.

Affordable transport services respond to the demand.

Security and rule o f law enforced and political tensions in RGC reduced. Rural health and education services expanded and improved; increased small business start-ups and local investment; and other complementary rural development projects achieved as planned. Transparent competitive tendering processes o f al l public road works in Cambodia.

From Components to Outputs MEF promptly clears feasibility reports, commitments, contracts and payments, and requests for replenishment o f Special Accounts. MEF releases counterpart funds according to predetermined schedule.

MEF releases funds for routine maintenance.

Overall Risk Rating

Risk Rating - H (High Risk), S (Substantial Ris

Risk Rating

H

M

N

M

N

S

N

M

S

S M (Modest Risk), N

Risk Mitigation Measure

Close follow up on the ADB-financed technical assistance and the IDA-supported Road Rehabilitation Project

While costs are substantial, i t i s a Government priority to demine these provinces to encourage settlement o f returnees and internally displaced population, and promote tourism development. A study on rural transport services assessed that there were no institutional, legal, financial or technical constraints that would hamper a supply response. Public information campaigns o f the PRIP are l ikely to result in increased market confidence by local transport providers. No action possible, related to internal politics and foreign policy. Inform the Ministries o f Health and Education, and the public, through regular campaigns, o f the PRIP. Coordinate with other development programs.

The Credit includes a conditionality that if any non-competitively bid contracts are awarded in the PRIP provinces in the road sector, the information w i l l be publically disclosed.

Close collaboration with World Bank country team and use o f macro dialogue.

Regular follow up o f funds release and incorporated as a covenant in the Credit Agreement. Incorporated as a covenant in the Credit Agreement for the funds to be released up front quarterly.

degligible or Low Risk)

3. Possible Controversial Aspects:

No controversial aspects identified.

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G. Main Credit Agreement Conditions 1. Effectiveness Condition The standard condition o f effectiveness o f the legal opinion from the Royal Government o f Cambodia applies. The following are specified as additional matters, within the meaning o f Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be furnished to the Association, namely that the Environmental Management Plan, the Resettlement Policy Framework and the Indigenous Peoples Development Framework have been duly authorized or ratified by, and are legally binding upon, the Borrower. Project specific conditions of effectiveness include: (a) the Borrower shall have made the initial deposits into the Counterpart Funds Accounts out of i t s own

resources as follows (A) deposit into the MPWT Counterpart Funds Account an init ial amount equivalent to Sixty Thousand Dollars ($60,000) and (B) deposit into the MRD Counterpart Funds Account an init ial amount equivalent to Sixty Thousand Dollars ($60,000);

(b) the Borrower shall have established a financial management system, acceptable to the Association, including: (i) adoption o f a financial management manual acceptable to the Association, and (ii) completion o f appropriate training for staff o f MPWT, MRD and their respective departments in the provinces o f Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap;

(c) the Borrower shall have adopted the Project Implementation Plan; and (d) the Borrower shall have allocated adequate resources in support o f a Project staffing plan acceptable

to the Association.

2. Other [classify according to covenant types used in the Legal Agreements.]

In addition to the standard legal covenants requiring the Borrower to carry out the project wi th due diligence and efficiency and in conformity with appropriate administrative, construction, financial, engineering, environmental and public utility practices, and social and environmental standards, and supplying as needed the funds, facilities and services and other resources required for the project, the following project specific covenants apply: (a) the Borrower shall cause adequate funds for routine road maintenance in the provinces o f Kampong

Thom, Oddar Meanchey, Preah Vihear and Siem Reap to be placed in the Counterpart Fund Account semi-annually to cover maintenance needs for the subsequent six month period;

(b) the Borrower shall, with respect to any contracts for works on roads in the provinces o f Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap that are pre-financed or awarded on a non-competitively bid basis and not financed out o f the proceeds o f the Credit, disclose publicly all pertinent contract information, including the contractor, contract terms, and such other information as the Association may from time to time require (public disclosure means disclosure within 30 days on the website for a period o f at least 60 days o f M P W T or MRD, as appropriate and that the following information w i l l be disclosed: (a) name o f the party to whom the contract i s awarded; (b) value o f the contract; (c) location o f the works; (d) length o f the road works; (e) duration o f the contract; and ( f ) any non-standard financing arrangements); and

(c) the Borrower shall cause MEF, MPWT and MRD to enter into a Memorandum o f Understanding by December 3 1, 2003 and thereafter, throughout the period o f implementation o f the project, maintain such Memorandum o f Understanding in full force and effect;

conduct technical assessments of Project implementation; and

required under, the Environmental Management Plan, the Resettlement Policy Framework and the Indigenous Peoples Development Framework.

(d) in carrying out components 1 and 2 o f the Project, the Borrower shall engage independent auditors to

(e) the Borrower shall carry out the Project in accordance with, and shall implement all measures

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H. Readiness for Implementation 1. a) The engineering design documents for the first year's activities are complete and ready for the

c] 1. b) Not applicable. start o f project implementation.

2. The procurement documents for the first year's activities are complete and ready for the start o f

3. The Project Implementation Plan has been appraised and found to be realistic and o f satisfactory

4. The following items are lacking and are discussed under loan conditions (Section G):

project implementation.

quality.

1. Compliance with Bank Policies 1. This project complies with al l applicable Bank policies.

0 2. The following exceptions to Bank policies are recommended for approval. The project complies with all other applicable Bank policies.

Acting for Sally L. Burningham Jitendra N. Bajpai Ian C. Porter Team Leader Sector ManageVDirector Country ManagedDirector

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Annex 1: Project Design Summary CAMBODIA: Provincial and Rural Infrastructure Project (PRIP)

I. Rural poverty reduced and xonomic & social ievelopment expanded.

2. National re-integration o f xoject provinces.

Project Development Objective: Enhanced livelihood o f the peoples residing in Kampong rhom, Oddar Meanchey, Preah Vihear and Siem Reap by providing sustainable sccess to markets and essentia services.

Sector Indicators: 1. Educational and literacy status (by gender, group).

2. Health status (infant and maternal mortality, etc.).

3. Nutritional status (by gender, group).

4. Income and employment status (by gender, group).

5. Increased participation in civil society and decision making (by gender, group).

Outcome / Impact Indicators: 1. Increased use o f health services (# clinic visits by groups, gender).

2. Increased use o f education services (enrollment rates by gender, group).

3. Increased volume and revenue o f tourism (WY).

4. Increased f low o f information in rural areas (agricultural markedretail prices, credit, provincial budgets, et al).

5 . Increased # o f non-farm :mployment opportunities.

Leading Indicators in PRIP vrovinces (3 years):

1. Increased # o f NGOs active n the project area.

2. Increased number of villages linked to higher level .oads in good condition (WY).

3. Increased volume o f goods

iector/ country reports:

Voject reports:

from Goal to Bank Mission)

[from Objective to Goal)

As markets expand, farmers wil l increase production levels.

Food availability increased.

Agricultural marketing, storage and distribution facilities w i l l complement PRIP efforts.

There are no adverse unmitigated environmental or social impacts from the PRIP initiatives.

Continued political stability.

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htput from each 2omponent: I, Maintenance management iystem established and Iperational.

L . Roads rehabilitated.

5 . Capacity building program :stablished and implemented.

transported (WY).

4. Increased volume o f rural passenger traffic (WY).

5. Transport costs reduced (m). 6. Increased km o f MPWT and MRD roads receiving regular maintenance.

Output Indicators:

Maintenance management established and implemented for secondary and tertiary roads in MPWT and MRD.

Maintenance program established in PRIP provinces:

0 300 km secondary roads and 300 km tertiary roads maintained to Z standard with year-round access financed by government project counterpart fund;

0 Sustainable financing plar established by year 3.

300 km o f secondary-national and provincial roads rehabilitated

300 km o f tertiary roads rehabilitated

2.3 # Contractors and consultants prequalified for road works (WY).

2.4 # Contracts let.

2.5 Private contractor and consultant data base established and maintained Adr performance records.

3.1 National level capacity building program implementec and training/TA support provided based on training needs assessment:

X # potential road sector contractors and

'roject reports: lrom Outputs to Objective)

Load maintenance policy icluding sustainable iaintenance financing iechanism established lrough ongoing projects by ear 3 and adopted by RGC.

4ines and UXOs cleared in i e surrounding areas.

Lffordable transport services espond to the demand.

lecurity and rule o f law nforced and political tensions n RGC reduced.

iura1 health and education ervices expanded and mproved; increased small iusiness start-ups and local nvestment; and other omplementary rural levelopment projects achieved s planned.

'ransparent competitive endering processes o f all iublic road works.

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and strategies and implemented.

consultants trained in business management, rehabilitation and maintenance;

staff trained in policy design, strategy development, public involvement methods, decentralized program management, and contract management and monitoring.

0 X # M F ' W T a n d M R D

1.2 Provincial level capacity ui ld ing program established md trainingITA support wovided based on a training ieeds assessment: 0 X # provincial officers

trained in planning, contract management, public involvement methods, decentralized contract management, and monitoring;

0 X # o f technicians trained in LBAT, management o f maintenance contracts anc supervision.

3.3 # I T C trainers trained in ,BAT road rehabilitation and naintenance.

3.4 Capacity in MF'WT and URD at central and provincial eve1 to manage social and 3nvironmental mitigation Aans established:

# staff trained in social and environmental management;

0 compliance in implementation o f RAPS and EMPs;

(differentiated by number o f PAPS).

0 time to implement RAP

4.1 Integrated planning & budgeting for roads adopted i r MPWT & MRD at national level and in PRIP provinces

4.2 Least-cost life-cycle standards for secondary and

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. Community awareness lrograms implemented.

Jroject Components / Sub-components: Zomponent 1 : Maintenance nanagement.

Zomponent 2: Rehabilitation md periodic maintenance of ,econdary-national, provincial md tertiary roads.

Zomponent 3: Capacity milding program.

Zomponent 4: Policy and itrategy development.

Zomponent 5: Community iwareness programs

rtiary roads adopted by PWT and h4RD.

3 Labor-based appropriate chnology policy adopted by PWT.

4 Sustainable funding for lad maintenance including )th periodic and routine :cured.

5 Institutional reform.

1 Road safety awareness 'ogram established.

2 HIV/AIDS public vareness and mitigation 'ogram established to .emote protection/ .evention.

3 Participatory road anning processes involving Jblic stakeholders Stablished and implemented.

4 Mine and UXO awareness rogram implemented in -oject areas.

)puts: (budget for each omponent) 'S$l.O mil l ion

tB18.65 million

W2.60 mil l ion

rS$0.20 mil l ion

rS$0.55 mil l ion

Project reports:

Annual works plans

Annual training plans

Quarterly Financial Monitoring Reports (FMRs)

Annual technical audits

Annual financial audits

(from Components to

MEF promptly clears feasibility reports, commitments, contract and payments, and requests for replenishment o f Special Account.

MEF releases counterpart funds in a timely manner.

MEF releases funds for routine maintenance in a timely manner.

Outputs)

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Annex 2: Detailed Project Description CAMBODIA Provincial and Rural Infrastructure Project (PRIP)

h

Indicator

The demographic context. O f the 24 provinces in Cambodia, the PRIP project targets the four northwestern provinces o f Kampong Thom, Oddar Meanchey, Preah Vihear, and Siem Reap. These four contiguous provinces are home to 1.5 mill ion of the 12.3 mill ion people in Cambodia and the percentage of poor in the provinces i s 40 percent compared to a national average o f 36 percent. (Source: World Food Program 2000 Poverty mapping).

. Total in

Kampong Oddar Preah SiemReap PRIP Total in Thom Meanchey Vihear Provinces Cambodia

Population Size (000) I 569.0 I 68.2 % of Total Population* I 4.97 0.57

119.2 696.1 1,500 12,300 1.03 6.04 12.2

Est. No. of Poor People (OOO)*

Population Density Poverty Share (%) *

158.9 24.5 32.9 356.8 573.1 3,03 1.5 5.24 .81 1.08 11.77 18.91 41 11 9 68 32

(Per sq Land Area (sq km) Unemdovment Rate

13,814 6,158 13,788 10,299 44,059 18 1,035 8.2 4.5 2.6 4.6 4.6

- 35 -

I ,

Labor Force Participation Rate Literacy Rate

51.9 56.2 61.9 58.2 54.3 56.4 41.1 48.7 48.2 47.3

Female Literacy Rate Firewood as Main Source of Cooking Fuel (% of Hhs) Grid-Connected Electricity (% o f Hhs) Piped Water (% of Hhs)

50.1 29.9 40.5 41.1 39.4 95.6 97.4 98.4 96.1 95.8

5.3 1.8 1.7 7.6 4.2

1.7 0.3 1.3 0.6 0.9

The condition of the road network. Cambodia's road network o f 38,257 kilometers (km) - including approximately 4,757 km of national roads and 5,700 km of provincial roads under the responsibility o f the Ministry o f Public Works and Transport (MPWT), and 27,800 km o f tertiary roads under the responsibility o f the Ministry o f Rural Development (MRD) - i s in poor shape, notwithstanding a major effort at rehabilitation since the mid 1990s. The network in the four provinces has an extent o f 2,445 km, with on average 44 percent being passable all year round, with 29 kilometers sealed. The provincial roads are in the poorest condition with only 25 percent being passable all year round. Efforts by the Military Engineers particularly in Oddar Meanchey mean that the network i s in reasonable condition. There i s a concern however that no maintenance plan i s in place for such roads.

Province KT

Table 2.2 Characteristics of the road network in the four target project provinces I Total I Al l I Dry I Provincial area I Al l weather

Network Length Weather Season Km2 Km/K" Secondary National Roads 52 52 0 Provincial Roads Tertiary Road Subtotal

137 26 112 202 44 158 39 1 122 270 13.814 0.01

I Subtotal 941 I 168 I 774 I 13,788 I 0.01 SRP ISecondary National Roads 261 I 239 1 29 I

In order to attain i t s development objective, the proposed US$23.0 mil l ion project has been designed to deliver the following components:

(Tertiary Road

Component 1. Component 2.

252 I 1151 137 I

Component 3. Component 4. Component 5.

ISubtotal

Maintenance management (US$ l .O million) Rehabilitation and periodic maintenance o f secondary-national, provincial and tertiary roads (US$18.65 million). Capacity building program (US$2.60 million) Policy and strategy development (US$0.20 million) Community awareness programs (US$0.55 million)

665 I 430 I 235 I 10,299 I 0.04

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Total in PRIP provinces 2,445 I 1,070 I 1,375 I 44,059 I 0.02 Total in Cambodia I 38,2571 181,035 I

By Component:

Project Component 1 - US$1 .OO million

Maintenance management. The project w i l l support: (a) the installation and operation o f road maintenance management systems at the national level in the Ministry o f Public Works and Transport and the Ministry o f Rural Development and in their respective provincial departments o f Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap; and (b) the carrying out o f annual programs o f routine maintenance on al l roads in good and fair condition in the provinces o f Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap. The funds for routine maintenance are included in the cost of the project to be funded from Government annual budget allocations.

The component includes the following: 1.1 Works for routine maintenance - US$778,000 (fully funded by Government at about US$400/km)

1.2 Consulting services for Maintenance Planning - US$150,000 1.3 Government staff incremental operating costs for transportation and accommodation - US$72,000

(MPWT - US$435,000 and MRD - US$343,000).

The installation o f the road maintenance management systems (RMMSs) w i l l be financed by IDA, including the cost o f equipment, training and consultant services. Such system w i l l consistent with and complement other ongoing initiatives. Both MPWT and MRD have recently engaged consultants to develop RMMSs. MPWT has piloted a RMMS in Kandall province and has prepared for i t s replication in six additional provinces. At the same time, efforts are underway to inventory and survey the MPWT roads under the IDA financed RRP.

The RMMS in MRD consists o f three components: (i) Planning; (ii) Contract management; and (iii) Financial management. I t has four categories (tertiary, sub-tertiary 1, 2 , and 3) and relies on an inventory o f road assets (rural roads, bridges, culverts, road signs, and so on), a road condition survey, and prioritization criteria. The full rural road network w i l l be surveyed under the PRIP and al l rural roads entered into the system. MRD has already installed the RMMS in the Department o f Rural Roads and w i l l pilot i t in the six RIP provinces. I t foresees the installation o f the system in three o f the four PDRD-DRRs in the PRIP provinces under on-going and forth-coming projects financed by the ADB. This means that only Preah Vihear province w i l l require the equipment and system software to be financed under PRIP. Assuming that the MRD-GDTA-DRR and three PDRDs w i l l already be equipped with the R M M S s by the time o f PRIP start, the PRIP design w i l l make provision to:

install the MRD RMMS in Preah Vihear Province (PDRD-DRR); and install and operate a RMMS in MPWT-RID and the four PDPWTs.

a) b)

Annual programs o f routine maintenance on all roads in good and fair condition w i l l be implemented in the provinces of Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap. The JFPR-ADB-RGC supported proposed project "Mainstreaming o f Labor-based Road Maintenance to the National Roads Network" w i l l also support implementation o f routine maintenance works and thus implementation modalities w i l l be harmonised between PRIP and the Mainstreaming project, including but not limited to aspects such as harmonised bidding documents, implementation procedures, formats o f submission to MEF in request for financing, and provision o f training to the labor-based contractors. The funds for routine maintenance are included in the cost o f the project to be funded from Government annual budget allocations. An inventory and condition survey o f the tertiary, provincial and secondary national roads in the four PRP provinces has been undertaken and roads priortised for maintenance based on their condition (see Tables 2.2). Targets for the f i r s t year include about 177 kilometers (km) under MPWT

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responsibility and about 109 km under MRD (see Table 2.3). The network o f roads receiving regular routine maintenance i s planned to increase annually to reach maintenance o f about 400 km of secondary national roads and provincial roads and 300 km of tertiary roads in the third year (as shown in Table 2.4) covering about a third o f the network o f 2,445 km in these four provinces. The maintenance needs and plan w i l l be updated annually. The cost during the first year i s estimated at US$108,834 to be funded by Government counterpart funds. Cost estimated at a general US$400 per kilometer for works (or US$500 per kilometer including supervision and other costs). Appropriate standards and guidelines w i l l be applied by PDPWTs and PDRDs in the RMMS to determine treatments, programming and cost estimates to establish maintenance programs in each PRIP province. They w i l l then contract and supervise the routine and periodic maintenance works.

Province Description I Length(km) I CostUS$ Ministry of Public Works and Transport (MPWT) Siem Reap I NR67 18.80 I 7,520 Siem ReaD I NR201 16.00 I 6,400 Siem Reap Oddar Meanchey Oddar Meanchey Oddar Meanchey Kampng Thom Preah Vihear

Subtotal

NR202 8.79 3,516 NR183 8 .OO 3,200 NR171 52.97 21,186 NR174 29.98 11,992 NR220 12.60 3,780 NR210 30.00 12,000

177.14 69.594

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Project Component 2 - US$18.65 million

Rehabilitation and periodic maintenance of secondary-national, provincial and tertiary roads. The project w i l l support the carrying out, in the provinces o f Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap, o f a program o f rehabilitation and periodic maintenance o f (a) approximately 300 km of strategic secondary-national and provincial roads under the Ministry o f Public Works and Transport; and (b) approximately 300 km of tertiary roads under the Ministry o f Rural Development.

Annual planning process. MPWT and MRD wi l l carry out the works in accordance with annual plans acceptable to the World Bank. Such annual work plans shall be submitted prior to any expenditure and only items on the agreed work plan shall be eligible for disbursement. Such plans shall include information on (i) the environmental and social assessment, (ii) road description, (iii) type o f works, (iv) road length, (v) expected cost, (vi) economic rate o f return, (vii) traffic count data, (ix) number o f beneficiaries, (x) mine and UXO clearance arrangements, and (xi) procurement plan. Details are outlined in the Project Implementation Plan.

Road selection process. The roads for the first year works plan have been selected on the basis o f a participatory process. One o f the criteria influencing the final selection o f roads for the first year work plan was the need to meet the general consensus that each province and each provincial department should have works in the first year, since the key objective o f the project i s the development o f provincial capacity. Further roads w i l l be selected on the basis o f the participatory procedures as outlined in Project Implementation Plan.

Implementation of road works. Works w i l l be contracted out in l ine with the procurement procedures set out in Annex 6 (A) and a training program to develop qualified private contractors w i l l be run concurrently, increasing private sector involvement in the road sector. Works w i l l be carried out using labor-based appropriate technology (LBAT) to maximize local employment. Works w i l l be implemented in line with the requirements o f the Environmental Management Plan which w i l l be included in all contracts and in line with the requirements o f the Resettlement Policy Framework and the Indigenous Peoples Development Framework. The JFPR-ADB-RGC supported project "Mainstreaming o f labor based Road Maintenance" w i l l also support implementation o f periodic maintenance works and thus implementation modalities between PRIP and the Mainstreaming project w i l l be harmonised including but not limited to aspects such as harmonised bidding documents, implementation procedures, formats o f submission to MEF in request for financing, and provision o f training to the labor-based contractors.

Mines and UXO clearance process. The MPWT and MRD are responsible to ensure that al l mine/UXO clearance activities are carried out in accordance with UN Guidelines. Provisions w i l l be included in al l contracts for the contractor to subcontract to a certified mine clearance party and demining contractor as certified by Cambodian Mine Action Center (CMAC), a Government body. In addition, the implementing agencies w i l l contract with a certified de-mining expert to verify the program o f the contractor and the demining contractor. Alternatively, i f the road has already been cleared, then MPWT and MRD shall provide certification o f such clearance from CMAC or the relevant Provincial Rural Development Committee.

Scope of road works. Civ i l works comprise rehabilitation and periodic maintenance o f roads, culverts, bridges and market access arrangements and include traffic signs and localized safety improvements in particular the crossings in built-up areas. All works contracts w i l l include tree planting along the roads with trees being selected on advise from the relevant provincial department.

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The component consists o f the following: 2.1 2.2

2.3

Works US$17.138 mil l ion (MPWT - US$12.456 mill ion and MRD - US$4.032 million) Supervision consultants for works component US$9 18,000 representing approximately 5 percent o f the cost of the works (MPWT - US$480,000 and MRD US$438,000) Detailed design consultants for additional roads and bridges works US$522,000 representing approximately 5 percent o f the cost o f the works (MPWT - US$366,000 and MRD - US$156,000) Government staff incremental operating costs for transportation and accommodation - US$72,000.

2.4

Road Category Carriageway width

Shoulders (of suitable construction strength and preferably sand sealed)

Roadway (shoulder edge to shoulder edge)

Design specifications. The design standards adopted for this project are the Ministry o f Public Works and Transport national standards for roads and bridges (CAM PW- 03-101-99). A review o f Roadworks Standards and Design Criteria was undertaken during project preparation, the results o f which are incorporated into the designs. There have been a number o f alternative surfacing trials ongoing including handpacked stone roads and the project w i l l support implementation o f some o f the successfully tested alternatives. In many cases the roads w i l l be upgraded to surfaced standards, given the rate o f deterioration o f gravel surfaces in Cambodia, and where justified on an economic basis. Traffic surveys carried out for the project plus those by L O around the Puok Market (on both main and secondary roads) (Refi Trafsic Characteristics around Puok Market, Socio-economic Series February 2002 Ministry of Rural Development and International Labor Organisation), indicate a very large proportion o f bicycles in the traffic on PRP roads, representing up to 60 percent o f the traffic. Stabilized shoulders (with lime/cement/pozzalan, and using a bituminous sand seal) that appear not to be paved, yet are smooth enough for bicycle traffic are included in the designs. The shoulder w i l l also be strong enough to resist the very aggressive steel rimmed ox car wheels. Further, considering the available resources, road standards have been somewhat relaxed in terms o f width (but not load carrying capacity or safety, and so more route kilometers can be constructed with a fixed amount o f funding).

Secondary National; R4 Provincial; R3 Tertiary road; R2 6.5 m 6.0 m 4.0 m (2 lanes+0.25m marginal (2 lanes+0.25m marginal (1 lane without margin) with white line marking) Rural & hi l ly area = 0.75 m

with white line marking) Rural & hilly area = 0.75 m Rural & hi l ly area = 0.50

m

Urban area = 1 .OO m Rural & hi l ly = 5.0m

Urban = 6.0 m

Urban area = 1 .OO m Rural & hi l ly = 8.0m

Urban = 8.5 m

Urban area = 1.00 m Rural & hi l ly = 7.5m

Urban = 8.0 m Side drains Rural area = continuous

road side channel road side channel road side channel Urban area = masonry side drain drain side drain

Rural area = continuous

Urban area = masonry side

Rural area = continuous

Urban area = masonry

Lateral clearances or berm Batter

End edging

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Hilly area = “V” gutter and gabion walls gabion walls and gabion walls Minimum: 6.0 meter Minimum: 4.0 meter Minimum: 2.0 meter Clayey soil: 1V : 2 H Clayey soil: 1V : 2 H Clayey soil: 1V : 2H Sandy silt: 1V : 3 H Sandy si l t : 1V : 3 H Sandy s i l t : 1V : 3 H Dressed stone block: 0.20 Dressed stone block: 0.20 None

H i l l y area = “V” gutter and H i l l y area = “V” gutter

Soil Verge width (outside of shoulder) Paved Crossfall Unpaved Crossfall (gravel) Minimum height of road surface above highest flood level in

wide x 0.30 thick 0.0 m 0.0 m

3 % 3 % 5 % (Shoulder) 0.5 meter 0.5 meter

wide x 0.30 thick

5 % (Shoulder)

ADT (24 hrs) in PCU for 30 vears Droiected ADT I meters (20 years return period) Paved Traffic Capacity

0.5 meter

3,000 - 10,000 1,000 - 3,000 150 - 1,000 P

Road No.

Labor laws. The MPWT and MRD wi l l ensure that the c iv i l works contractors: (i) comply with all applicable labor laws; (ii) apply equal remuneration for men and women for work o f equal value without gender differentiated wages; (iii) do not employ child labor below age 18; and (iv) seek to maximize the level of female participation in appropriate construction works. Cambodia i s signatory to the provisions o f the International Labor Organisation. Specific labor clauses are included in al l works contracts.

Location Length I ($1 I Structures Of ($1 ITotal Cost ($)I Starting Point End Point (km)

The first year annual work program comprises (see procurement plan in Annex 6(A)),

Siem Reap

Table 2.6 Component 2 - First Year Work Program for Rehabilitation

19.855 1,621,778 67,590 1,689,368 #65 Centre

#66 Junction with road 66 Beung Mealea (ch 8+427) 11 556,144 53,000 609,144

Soutr Nikum District Junction with road 66

#207 DamDaek Kampong Kleang 11.796 955,842 0 955,842 I I I

#181-1

#181-3

8+913 13.55 583,463 215,300 798,763 Samrong & Bos Sbov Communes

Kok SOW Cbone Kal District 15.15 588.083 121.875 709.958 I I I - I I I I

subtotall 28.71 1,171,5461 337,1751 1,508,721

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Project Component 3 - US$2.60 million

Capacity building program. The project w i l l support the carrying out o f a program o f institutional capacity strengthening for MPWT and MRD at the national level and i t s departments in the provinces o f Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap. The project w i l l thus support the on-going deconcentration efforts in MRD, and seek to replicate these efforts in MPWT, where applicable.

Annual planning process. MPWT and MRD wi l l carry out the training under this component in accordance with annual plans acceptable to the World Bank. Such annual training plans shall be submitted prior to any expenditure and only items on the agreed training plan shall be eligible for disbursement. Annual training plans shall include details on (i) proposed date and duration o f training; (ii) location o f training; (iii) full breakdown o f expected cost; (iv) number o f participants; (v) method o f procurement and delivery o f such training services. The training delivered shall be reported in the quarterly progress reports. Similarly for any incremental operating costs MPWT and MRD wi l l incur expenditures in accordance with annual plans acceptable to the World Bank. Such annual plans for incremental operating costs shall be submitted prior to any expenditure and only items on the agreed plan shall be eligible for disbursement. The expenditures shall be reported in the quarterly progress reports.

The component consists o f the following:

3.1

3.2 3.3 Computer training - US$30,000 3.4 3.5

Training program - US$457,800 covering items such as materials, venue, and contracted consultant services. English language training - US$lSO,OOO

External financial auditing - US$18,000 Financial management and accounting services - US$72,000 (MPWT - US$36,000 and MRD - US$36,000)

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3.6 3.7 3.8 3.9 3.10

External technical auditing and monitoring - US$128,000 Integrated Rural Accessibility Program - US$200,000 Office renovation costs - US$135,000 (MPWT - US$24,000 and MRD - US$111,000) Vehicles and office equipment - US$l,OOO,OOO (MPWT - US$500,000 and MRD - US$500,000) Incremental operating costs for office running costs such as office supplies and consumables, communications and printing costs, web-site maintenance costs- US$157,200 (MPWT- US$78,000 and MRD - US$79,200) Incremental operating costs for operation and maintenance o f the project vehicles - US$192,000 (MPWT - US$96,000 and MRD - US$96,000) Incremental operating costs for transportation and accommodations for project staff in carrying out monitoring and supervision - US$60,000 (MPWT- US$36,000 and MRD -US$24,000). IDA funding excludes salaries or salary supplements

3.11

3.12

The identified training needs o f the national and provincial staffs o f MPWT and MRD and the private sector consulting and contracting industry and the ITC form the basis o f the PRIP capacity building program. The guiding principle for the program i s to avoid, to the extent possible, project specific training and build on existing material and past efforts (e.g., MRD-RIIP-ADB; MRD-LO-Upstream-SIDA) to contribute to the institutionalization o f a training and capacity building program that w i l l become an integral part o f a continuous development o f human resources for the roads and transport sector.

The capacity building program has identified eight types o f courses, seminars, and study tours. The targeted groups can in some cases usefully participate in the same training events, for example contract supervisors (department staff or private consultants) and contractors can usefully both attend the site supervision training.

Project Component 4 - US$0.20 million

Policy and strategy development. The project w i l l support the carrying out o f a program to improve MPWT and MRD policy and strategy development in the areas o f (a) integrated planning and budgeting o f roads; (b) least cost life-cycle standards; (c) use o f appropriate technology; (d) mainstreaming o f road maintenance; and (e) institutional reform.

This component w i l l support on-going policy development in the transport sector, primarily supporting initiatives that are already underway, including building on the recommendations o f the Integrated Fiduciary Assessment and Public Expenditure Review (IFAPER) (August 2003), and the National Poverty Reduction Strategy Paper (NPRS). I t w i l l further assist with specific actions identified as priorities in the Letter o f Sector Policy being developed by MPWT and MRD. The purpose o f this component is, thus, to ensure funds are available to pursue specific aspects o f policy development, participatory approaches, analyses leading to legislative change, institutional strengthening and implementation support. Many o f these areas are currently receiving support from various sources; this component w i l l focus on gaps in this support, and on the integration and rationalization o f activities as required.

Some o f the initiatives that are underway but which may need additional support include:

(a) Integrated planning and budgeting of roads. As highlighted in the IFAPER, there i s currently no reliable or consolidated information on planned andor actual expenditures on roads, nor i s there information on total road expenditures by source (government, donor, private financing). I t further i s not clear how much o f this money i s released, as MEF makes many decisions over the budget

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allocation process and disburses funds directly to implementers, whether provincial, military or private contractor. Funding decisions are not always made in a transparent manner and contracts often are not awarded competitively. This arrangement not only undercuts MPWT’s role as the technical ministry responsible for the primary and secondary roads, but also destroys accountability and transparency in the use o f funds. While MRD has prepared annual programs and budgets since i t s inception in 2000, MPWT has not submitted a budget to MEF for expenditure o f the national budget for the last two years. An important starting point for improving the management o f the sector therefore w i l l be to put in place a coherent and clear process for developing prioritized plans and programs. Such a process w i l l build on the participatory planning process being used by MRD, as well as the inventories and planning tools (maintenance management systems) being established in the two roads ministries with donor (including IDA) support. Based on these plans, realistic and appropriately prioritized budgets can be prepared and submitted to MEF for approval. Provided funds are released on a timely basis and according to the agreed plan, the efficiency and effectiveness o f the sector should be greatly enhanced. This i s particularly true as estimates o f expenditure in the road sector suggest that the problem i s not the amount o f money available to the sector, but rather the ineffective use o f that money. Finally, as roads and transport are to be included in the Medium Term Expenditure Framework in the next round, timely assistance may be required to develop the necessary inputs.

(b) Least cost life-cycle standards. In planning and prioritizing roads, i t i s important to take into account both the capital cost (construction, rehabilitation) and the recurrent cost (routine and periodic maintenance) over the l i f e o f the road. For higher volume roads, cost benefit analysis considers the cost o f the road over i t s total l i fe of, say, 15 years versus the benefits expected to accrue over the same period. For low volume roads, where the objective i s to provide basic access, the roads selected would be constructed to a standard that minimizes the cost over the l i fe o f the road.

(c) Use of appropriate technology. The Policy for Rural Roads o f the MRD identifies labor-based appropriate technology (LBAT) as the preferred technology for rural roads. The MPWT and PDPWTs recognize the merits o f LBAT for the construction and maintenance o f secondary roads, and MPWT has sought the technical assistance o f L O in this regard. In some circumstances an equipment based approach may be the most suitable, depending on the type o f road, terrain and available materials. Assistance to further develop and extend this approach could be a candidate for PRIP assistance. MPWT may be awarded a JFPR grant o f US$2.2 mil l ion to mainstream labor-based works in that ministry.

(d) Mainstreaming of road maintenance. Ensuring sustainable funding for road maintenance including both periodic and routine maintenance. The ZFAPER estimates that in 2001, capital expenditures made up about 78 percent o f the total spent on roads in 2001, and o f the 22 percent from the recurrent budget, most was spent on emergency repairs, leaving l itt le for routine maintenance. The Fund for the Repair and Maintenance o f Roads was established in 2000 to ensure the availability o f funding for road maintenance. However, at present the FRMR i s being used to finance capital expenditures not just for roads, but also for irrigation, water supply, and other development projects, and there are serious problems o f transparency and accountability. Government i s considering various approaches to improved management o f the Fund, including procedures that would enable allocation and disbursement o f funds against maintenance plans prepared by the technical ministries, and verification o f how the funds were used through a system o f technical and financial audits. Assistance could be made available under this component to help, for example, with the development o f maintenance standards, guidelines, allocation procedures, and implementation o f the technical and financial audits.

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( e ) Institutional Reform. The move towards contracting out of maintenance services, already underway in MRD, wi l l have consequences for the staff o f MPWT, many o f whom are employed to carry out maintenance activities. As more works are contracted out, MPWT and PDPWT’s roles w i l l shift from direct implementation to planning, budgeting, contracts management and monitoring. To assist staff in carrying out the new functions and minimize negative impacts, there i s need for capacity building and a well thought out program for human resource development. As a part o f this, MPWT has informally requested the World Banks possible future assistance to advise on a possible program o f reorientation and commercialization o f the force account units. The MPWT i s also reviewing options for the possible restructuring o f the Ministry in other areas.

Project Component 5 - US$0.55 million

Community awareness programs. The project w i l l support the carrying out through MPWT and MRD o f a community awareness program aimed at increased awareness by transport agencies and residents o f related risks in road safety; HIV/AIDS; people’s participation in road planning, and access to public information; and mine and unexploded ordnance r i sks and clearance programs.

(a) Road Safety awareness program (US$250,000) - The RGC i s developing a national road safety campaign. MPWT wi l l be implementing aspects o f this including public information campaigns, streamlining road safety into the design o f their road works.

(b) HIWAIDS awareness program (US$125,000) - MPWT and MRD plan to target key road sections with an AIDS awareness program following the United Nations Development Program including use o f standard contractual clauses in the works contracts for the target roads to address both the road workers and the surrounding residents. The HIV/AIDS protection program w i l l be developed with assistance o f the National Aids Authority and the Ministry o f Health.

(e) People’s participation in road planning, and access to public information (US$75,000) - a successful planning process was undertaken for the development o f the first year work program involving extensive public participation, the same model w i l l be used for future selection o f roads. A model w i l l also be developed for providing public information during implementation o f the road works.

(d) Mines and Unexploded Ordnance risk and clearance awareness program (US$lOO,OOO) - MPWT and MRD have been working closely with HALO Trust for mine path finding during project preparation.

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Annex 3: Estimated Project Costs CAMBODIA: Provincial and Rural Infrastructure Project (PRIP)

Total Project Cost2 Total Financing Required

1. Maintenance management for MPWTPDPWT 1. Maintenance management for MRDPDRD 2. Rehabilitation and periodic maintenance o f 300 km of secondary and provincial roads under MPWT 2. Rehabilitation and periodic maintenance 300 km o f tertiary roads under MRD. 3. Capacity building program in MPWT 3. Capacity building program in MRD 4. Policy and strategy development 5. Community awareness programs Refund of Project Preparation Facil ity Advances Total Baseline Cost

Physical Contingencies

~~ . -

16.13 7.19 23.32 16.13 7.19 23.32

Price Contingencies

0.25 0.25 8.98

3.35

1 .oo 0.50 0.05 0.25 0.00

14.63 0.75 n Tr

0.25 0.25 3.12

1.20

0.60 0.50 0.15 0.30 0.32 6.69 0.25

0.50 0.50

12.10

4.55

1.60 1 .oo 0.20 0.55 0.32

21.32 1.00

n m c I i nn v. 13 U.LJ 1 .VU

Total Project Cost2 16.13 7.19 23.32 Total Financing Required 16.13 7.19 23.32

Works Goods Consultant Services Training Incremental Operating Costs Refund of Project Preparation Advances Unallocated

12.68 0.40 1 .oo 0.70 0.60 0.00 0.75

4.72 0.80 1.10 0.00 0.00 0.32 0.25

17.40 1.20 2.10 0.70 0.60 0.32 1 .oo

Details of the breakdown of costs for each component are included in Annex 2. In addition the following apply: 1. The physical contingency i s estimated at five percent and applied only to works and included in the works

category. 2. The price contingency i s estimated using foreign inflation estimated at 2 percent per annum (based on the World

Bank's Development EC Planning Assumptions Note) and local inflation rate i s estimated at 3 percent per annum based on the local CPI data and applied only to works.

3. Government to provide a minimum 10 percent allocation for counterpart funds net of taxes (to comply with I D A requirements applicable to all countries and projects BP6.30 September 1993).

4. Government wil l finance all taxes (the taxes are to be financed per category of items, the 10 percent VAT i s included in the cost estimate for works) and wil l finance all staff allowances.

5. A nominal cost has been allocated to land acquisition and resettlement. Should any such costs arise these wil l be fully funded by Government. Identifiable taxes and duties are 0 (US$m) and the total project cost, net of taxes, i s 23.32 (US$m). Therefore, the project cost sharing ratio i s 85.76%

1

of total project cost net o f taxes.

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Annex 4: Cost Benefit Analysis Summary CAMBODIA Provincial and Rural Infrastructure Project (PRIP)

The objective o f the project i s to reduce road transport costs and preserve the road network in an efficient and sustainable manner. The proposed investments w i l l reduce road user transport costs by lowering vehicle operating and travel time costs. An economic evaluation was done for the Phase 1 o f the project, consisting o f rehabilitation and improvement works (162.0 km) and periodic maintenance works (96.2 km), corresponding to an investment o f US$10 mill ion (46 percent o f the project c iv i l works costs). The evaluation was done with the Highway Development and Management Model (HDM-4), which compares l i fe cycle road costs and vehicle operating cost and passengers time savings.

The table below summarizes the results o f the analysis, which was done using a 12 percent discount rate. The overall Net Present Value (NPV) i s US$14.2 mill ion and the overall Internal Rate o f Return (IRR) i s 35 percent

[For projects with benefits that are measured in monetary terms]

Rehabilitation Periodic maintenance Total

costs: Rehabilitation Periodic Maintenance Total Net Benefits: Rehabilitation Periodic maintenance

Rehabilitation Periodic maintenance Total

21.53 0.82

22.35

7.74 0.40 8.14

13.79 0.42

14.21

35% 28% 35%

Financial Analysis

Summary of Benefits and Costs:

M a i n Assumptions: Under the PRIP project three road categories are taken into consideration: Secondary National Roads (two digits), Provincial (three digits) and Tertiary Roads (connecting district centers). The result o f a Transport Infrastructure Inventory i s summarized in the following table: indicating road condition and existing surface.

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All Weather Dry Season Only Earth Lateritic Bitumen Earth Lateritic

Surface Surface Surface Surface Surface Secondary National Roads 11.4 549.8 28.8 76.1 11.0 Provincial Roads 22.6 217.1 0.3 721.5 0.0 Tertiary Road 20.4 219.6 0.0 558.6 7.5 Total 54.4 986.5 29.1 1356.2 18.5 Percent 2% 40% 1% 55% 1%

To identify which roads are to be included into the PRIP project a screening and prioritization methodology was developed based upon consultation to ensure solid participation in the planning process. During provincial workshops, the participants have screened al l roads on the basis of the following criteria: accessibility, population served, environmental impact, economic impact, availability of local resources, and tourism potential. At an inter-provincial workshop, a tentative Phase 1 program was selected and on the basis o f this plan the detailed engineering surveys and economic analysis were initiated. Phase 1 comprises 162.0 km of rehabilitation and improvement works, 96.2 km of periodic maintenance works and 285.7 km of routine maintenance works. The table below presents a summary of Phase 1 road works costs.

Total Percent 677.1 28% 961.5 39% 806.1 33%

2444.7 100% 100%

Table 4.2

Routine Maintenance Periodic Maintenance

I Phase 1 S u m " Der Works Activity I Length cost cost/km m) (US$) (US$/km)

285.7 108,834 381 96.2 388,521 4,039

Rehabilitation and Improvement Total

162.0 9,263,152 57,180 543.9 9,760,507

Road works costs were estimated in financial and economic terms (net o f taxes), economic costs being on average 85 percent o f financial costs. Average unit maintenance costs estimates are given on the table below.

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Table 4.3

Pothole patching Double surface dressing resurfacing

Reeravell in P

Routine Maintenance

I Tvpical Maintenance Costs I

15.00 $lm2 1.87 $lm2

6.000 Skm 350 $ h - y

IMaintenance Work I Unit Cost I

Vehicle Annual Annual Service Private Number Work Number Operating Loading

Utilization Utilization L i fe Use Passengers Trips Wheels Weight Factor

The L O Upstream Project conducted a survey on road user costs in 2001 and this data was updated in Siem Reap province in December 2002 for the PRIP Project. Vehicle fleet characteristics and economic vehicle unit costs were defined for ten motorized vehicle and two non-motorized vehicles. The following table presents the average vehicle fleet characteristics.

Vehicle New New Fuel Lub. Oil Labor Crew Overhead Interest Work Non-Work Cargo

Vehicle Tire Cost Cost Cost Cost Cost Rate Time Time Time

Type I (km) (hours) (years) (%) (#) (%) (#) (tons) (ESA) Motorcycle 10000 400 10 100 1 75 2 0.2 0.000

Articulated Truck

ox cart Bicycle

Motorcycle w Trailer Medium Car 4 w D Light Goods Vehicle Mini-bus Medium Bus Light Truck Heavy truck

80000 215 0.30 1.80 2.50 1.00 2000 12 0.35 0.25 0.10 35 0 0.00 0.00 0.00 0.00 0 12 0.00 0.00 0.00

43 6 0 0.00 0.00 0.00 0.10 0 12 0.00 0.00 0.01

7700 24000 30000 16000 20000 54000 10500 86000

400 10 100 550 10 100

1300 8 0 1300 8 0 750 8 0

1750 7 0 1300 8 0 2050 14 0

1 75 2 1 75 4 1 75 4 0 0 4

12 75 4 40 100 6 0 0 4 0 0 10

0.7 1.2 1.8 3.0 1.5 6.0 7.0

13.0

0.000 0.000 0.020 0.010 0.010 0.700 0.100 2.280

I 18 28.0 4.630 Articulated Truck 86000 2050 14 0 0 0 Bicycle 5390 150 10 0 1 0 2 0.1 0.000

I 2 1.2 o.ooo] 3620 1300 3 0 0 0 ox cart

The following table presents average f leet economic costs.

Table 4.5

Type Motorcycle Motorcycle w Trailer Medium Car 4 w D Light Goods Vehicle Mini-bus Medium Bus Light Truck Heavy truck

($/veh) ($/tire) 1200 14 1250 10

14000 35 12000 40 4500 51

14200 28 42000 145

5500 105 42000 200

0.30 1.90 0.30 2.00 0.40 1.80 0.30 1.90 0.30 2.00 0.30 1.80 0.30 1.90 0.40 2.00

0.50 0.00 100 1.50 0.00 400 1.50 0.00 500 1.50 0.50 500 1.50 1.00 500 1.50 1.00 1200 1.50 1.00 800 1.50 1.00 1500

12 0.45 12 1.00 12 1.00 12 0.00 12 0.00 12 1.25 12 0.00 12 0.75

0.25 0.25 0.25 0.00 0.00 0.15 0.00 0.25

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The following table presents typical economic unit road user costs, in $ per 1000 vehicle-km, for a roughness equal to 4.0 IRI.

Table 4.6 Typical Road User Costs for Roughness = 4.0 IRI ($/lOOOvehicle-km)

Vehicle I Lub. Spare Maint. Depr. & Work Non-Work Cargo * Motorcycle Motorcycle w Trailer Medium Car

Light Goods Vehicle Mini-bus Medium Bus Light Truck Heavy truck Articulated Truck L Bicycle

Fuel Oil Tires Parts Labor Interest Crew Overhead Time Time Time Total 12 1 1 1 1 12 0 0 4 1 0 33 14 1 0 1 1 16 0 0 4 1 0 37

0 142 28 1 2 32 4 66 0 0 8 1 40 2 3 18 3 48 0 4 8 1 0 127 40 2 3 8 4 31 6 4 0 0 3 101 35 2 1 28 4 88 11 7 0 0 0 177 53 4 9 37 11 110 12 8 589 0 0 834 47 4 6 5 10 55 12 8 0 0 1 148

155 8 21 137 23 43 12 9 0 0 4 410 178 8 40 282 40 80 11 11 0 0 1 652

7 0 0 0 3 2 0 0 1 0 0 12 ox cart I 1 1 0 0 0 12 40 30 0 0 0 3 97

The following table presents typical total economic unit road user costs, in $ per vehicle-km, for different roughness levels.

Table 4.7 Typical Unit Road User Costs ($/vehicle-km)

Roughness (IRI) Vehicle Type Motorcycle Motorcycle w Trailer Medium Car 4 w D Light Goods Vehicle Mini-bus Medium Bus Light Truck Heavy truck Articulated Truck Bicycle ox cart

2 4 6 8 10 12 14 16 18 0.03 0.03 0.03 0.04 0.04 0.04 0.04 0.05 0.05 0.04 0.04 0.04 0.04 0.05 0.05 0.05 0.06 0.07 0.14 0.14 0.15 0.17 0.19 0.21 0.23 0.25 0.28 0.12 0.13 0.14 0.15 0.16 0.18 0.20 0.21 0.24 0.10 0.10 0.11 0.11 0.12 0.13 0.14 0.15 0.18 0.17 0.18 0.19 0.21 0.24 0.26 0.29 0.31 0.34 0.82 0.83 0.89 1.01 1.17 1.36 1.55 1.74 1.95 0.14 0.15 0.16 0.17 0.19 0.20 0.22 0.23 0.25 0.39 0.41 0.44 0.47 0.50 0.54 0.59 0.64 0.73 0.61 0.65 0.70 0.76 0.83 0.90 0.98 1.07 1.22 0.01 0.01 0.01 0.01 0.02 0.02 0.02 0.02 0.04 0.09 0.10 0.11 0.12 0.13 0.14 0.16 0.18 0.34

For the Phase 1 roads under consideration for rehabilitation or improvement, a one-week traffic count and origiddestination survey has been carried out on Secondary National and Provincial roads and a traffic count survey was conducted for only three days in the case o f Tertiary roads. In addition to the daytime traffic count survey, a night traffic count surveys was carried out on road number 65, indicating that the average night traffic i s around 10 percent o f the average annual daily traffic volume (AADT). Traffic volumes on Siem Reap and Kampong Thom provinces were found to be higher than on Oddar Meanchey and Preah Vihear provinces, which i s explained by the relatively higher population density and economic development o f Siem Reap and Kampong Thom provinces. The table below presents the average traffic volumes on the Phase 1 rehabilitation and improvement program roads.

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Table 4.8

Motorized Traffic Non-Motorized Provinces 4-Wheel Plus1 Motorcycles1 Total Traffic Siem Reap & Kampong Thom 266 I 13081 1574 2023

Total Traffic

3597 Otdder Meanchey & Praey Vihear I 811 3101 3981 7361 1134 A l l PRIP Provinces 1771 8091 9861 13801 2366

I Traffic Composition Siem Reap &

Kampong Thom 35.4% 0.4% 1.6% 1.3% 5.5% 0.1% 0.0% 0.9% 0.6% 0.0%

45.4% 8.6%

100.0%

The table below presents the typical daily traffic composition on the Phase 1 rehabilitation and improvement program roads.

(%) Oddar Meanchey &

Preah Viheat 37.9% 0.0% 0.8% 2.8% 2.3% 0.1% 0.0% 0.3% 1.8% 0.0%

45.4% 8.6%

100.0%

Typic Vehicle

%e Motorcycle Motorcycle w Trailer Medium Car 4 w D Light Goods Vehicle Mini-bus Medium Bus Light Truck Heavy truck Articulated Truck Bicycle ox cart Total

Given the growing network o f trafficable roads, the increasing number o f motor vehicles in the country, and the robust growth o f Cambodia's economy, traffic has developed rapidly. Recent counts near Siem Reap indicate annual average growth rates o f 16 percent for motorbikes, 40 percent for light vehicles, and 195 percent for heavy vehicles between 1998 and 2000. Conservatively, for the economic evaluation, on Siem Reap and Kampong Thom provinces, the traffic growth rate was considered to vary per vehicle type between 5 and 7 percent for the f i rs t 5 years; 3 to 5 percent from years 6 to 10; and thereafter decrease to 2 to 3 percent. On Oddar Meanchey and Preah Vihear provinces, the traffic growth rate was considered to vary per vehicle type between 2 and 6 percent for the first 5 years and thereafter decrease to 1 to 3 percent.

For discounting future costs and benefits to compute net present value and as a cut o f f point for IRR, a discount rate o f 12 percent has been used; the evaluation period used was 15 years; and the construction period used was 1 year.

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Rehabilitation and Improvement Works:

The table below presents the main road characteristics of the Phase 1 rehabilitation and improvement program.

Road Road Elass No. SN 65 SN 66 P 207 T P 181 P 181 T

SN 71 S N 71 T P 213 T

Table 4.10

Starting End Point Point Soutr Nikom Dist. Cen. Junction with road 66 Junction with road 66 Beung Mealea Temple Sou@ Nikom Dist. Cen. Kampong Khleang Varin Angkor Chum Samrong & Bos Sbov Chong Kal District KrasangCommune Chong Kal District Kouk Mon #56B KampongThmor ch 5+700 ch5+700 Kampong Cham Border Stoung Sala Visai RoVengBridge Kampong Salau Svaypat (#&I) sdao

Rov. SRP SRP

~

Length (km) 19.9 11.0 11.8 17.8 8.9

18.2 12.7 5.7

10.1 16.7 18.4 10.8 Ipv

Motorized Traffic Non-Motorized 4-Wheel Motorcycles Total Traffic Percent

49 1 1731 2222 2564 46% 95 335 430 503 46%

409 1441 1850 2208 46% 334 1177 1511 2778 35% 96 450 546 940 37% 19 90 109 188 37% 52 241 293 492 37%

625 2205 2830 2492 53% 625 2205 2830 2492 53% 161 568 729 1503 33% 58 270 328 149 69% 22 103 125 95 57%

Selected Alternative Upgrade DSD Upgrade DS Upgrade SSD Upgrade SSD Upgrade SSD Upgrade SSD Upgrade SSD Upgrade DSD Upgrade DSD Rehabilitate LS Upgrade SSD Upgrade SSD

Width (m) 6.5 6.5 6.0 4.0 4.0 4.0 4.0 6.5 6.5 5.0 4.0 4.0

-

-

36,4401 01 393,5521 36,440 I 1,337,2631 9,263,1521

~~

qam Road Characteristics 1

All roads are unpaved roads and are currently in poor to very poor condition. The economic evaluation compared up to three rehabilitation or improvement project-alternatives with a without-project alternative that consisted o f keeping the roads unpaved but with a proper level o f maintenance according to the functional classification and traffic. The table below presents the selected project-alternative per road and the corresponding investment costs. a

213

Total DSD -

T, Phase 1 Rehabilitation

Starting End Point Point Soutr Nikom Dist. Cen. Junction with road 66 Junction with road 66 Beung Mealea Temple Soutr Nikom Dist. Cen. Kampong Khleang Varin Angkor Chum Samrong & Bos Sbov Chong Kal District Krasang Commune Chong Kal District Kouk Mon #56B Kampong Thmor ch 5+700 ch 5+700 Kampong Cham Border Stoung Sala Visai Ro Veng Bridge Kampong Salau Svaypat (#64) Sdao

louble Surface Dressing, SSD - Single Surface Dressing.

a - p m Investment Costs

Works Costkml Structures1 Total Cost1 Total Cos%

47,243 78,279 32,859 28,325 36,259 23,955 92,858 85,337 21,721 54,496

96,000 60,200

337,500 638,438 115,875

89,250

(US$) 1,627,186

579,873 923,692 584,890 589,593

1,298,352 420,104 529,291 861,904 362,741 T 1,091,976

52,716 78,279 32,859 66,246 71,338 33,079 92,858 85,337 21,721 59,347

- 52 -

The following table presents the results o f the economic evaluation.

No. 65

Prov. SRP SRP SRP SRP OMC OMC OMC KT KT KT PV PV

Point Point Soutr Nikom Dist. Cen. Junction with road 66

- Road Class SN SN P T P P T

SN SN T P T

-

-

Road Class Road with 100 AADT Motorized Traffic

Table 4.12 Road I Starting End

Motorized Traffic Non-Motorized 4-Wheel Plus Motorcycles Total Traffic

18 82 100 30 26 35 44

j 213

124 150 46 165 200 61 206 250 76

Junction with road 66 Beung Mealea Temple Soutr Nikom Dist. Cen. Kampong Khleang Varin Angkor Chum Samrong & Bos Sbov Chong Kal District Krasang Commune Chong Kal District Kouk Mon #56B Kampong Thmor ch 5+700 ch 5+700 Kampong Cham Border Stoung Sala Visai Ro Veng Bridge Kampong Salau Svaypat (#64) Sdao

I

NPV IRRl

0.89 33% 2.43 52% 2.78 91% 0.34 22%

-0.38 7% 0.63 31% 0.87 40% 1.60 43% 1.55 62% 0.30 17% 0.26 20%

Total I 13.79 35%

The NPV of the rehabilitation and improvement program i s US$ 13.79 mil l ion and the IRR i s 35 percent. Most roads obtained a satisfactory rate o f return due to the relatively high traffic for unpaved roads and the low investment costs per km o f the upgrading options. The exception was the road between Krasang Commune and Chong Ka l District, with a 7 percent IRR, which has 19 vehicles per day o f 4-wheel plus motorized vehicles and a proposed investment o f US$71,338 per km. Options o f reducing the standards and investment costs o f this road are being reviewed.

Periodic Maintenance Works:

The periodic maintenance works consist typically o f regravelling 96.2 km o f roads that are in poor condition, with an average cost o f US$4,000 per km. No traffic surveys were done specifically for the Phase 1 periodic maintenance roads due to the extend of the network and the relatively low traffic on the network. Thus, the economic evaluation was done considering typical road classes with different traffic levels, which are presented on the table below.

Table 4.13

Road with 150 AADT Motorized Traffic Road with 200 AADT Motorized Traffic Road with 250 AADT Motorized Traffic

The economic evaluation was done with the HDM-4 Model and consisted on comparing a with-project alternative, representing regravelling the road and bringing i t to good to fair condition (12 IRI average roughness), with a without-project alternative, representing leaving the road in poor condition (18 IRI average roughness). The table below presents the results o f the economic evaluation o f each road class.

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Table 4.14 I Economic Evaluation of UnDaved Road Classes I

Road Road Starting End Length Cost/km Total Cost Population Prov. Class No. Point Point oun) US$^) (US$) Serve*

P 202 Pouk District Center Reul 8.5 4,750 40,328 2817 SRP SRP T Siem Reap Puok 10.0 3,800 38,000 3771 SRP T Siem Reap Rolous 8.0 3,800 30,400 4670 SRP T Siem Reap Peak Sneang 5.0 3,800 19,000 1048 SRP T Peak Sneang Wat Prei 4.2 3,800 15,960 548 SRP T Chi Kraeng Khvav 23.4 3,800 88,958 755 OMC P 181 Somrong & Bos Sbov Chong Kal District 9.0 4,500 40500 642

OMC P 171 # 68 Kirivom Village #67 Anlong Veng District 1 .o 5,250 5,250 12613 OMC P 174 Anlong Veng District C. Trapeang Prasat 0.1 5,250 525 7369 OMC T Kok Phoas Bantaey Ampil 17.0 3,800 64,600 358 Total 96.2 4,039 388,521 370

OMC P 183 Somron & Bansay Reak Kouk Mon #56B 10.0 4,500 45,000 1021

Road with 150 AADT Motorized Traffic 4.37 28% Road with 200 AADT Motorized Traffic 8.87 43% Road with 250 AADT Motorized Traffic 13.38 58%

CE Ratio

1.7 1.0 0.8 3.6 6.9 5.0 7.0 4.4 0.4 0.7

10.6 10.9

Conservatively, considering that the Phase 1 roads have an average traffic o f 150 AADT o f total motorized traffic (26 AADT 4-wheel plus motorized traffic) and that there are 96.2 km of road works, the NPV of the periodic maintenance program i s US$0.42 mill ion and the IRR i s 28 percent.

The evaluation o f the Phase 1 periodic maintenance works was complemented using the cost-effectiveness method, which compares the financial investment costs o f the road intervention with the population served on each road. The cost-effectiveness o f the investments was computed due to the nature o f the traffic on these roads, which i s mostly low local traffic serving the local population, and the project objective of maximizing the provision o f all weather access to as many person as possible per available resources. The table below presents the Phase 1 periodic maintenance program and the corresponding cost-effectiveness ratios, which expresses the amount o f U S dollars that the periodic maintenance w i l l cost per population served. All road sections have a cost-effectiveness ratio less than US$ 11 per person, which i s reasonable considering that a) the average GDP per capita i s US$280 in Cambodia and US$ 11 represents 4 percent o f the GDP per capita; and b) the investments w i l l ensure an all-weather access to the social and economic centers.

Sensitivity analysis / Switching values of critical items:

The sensitivity analysis o f the results show that most works w i l l continue to show rates o f return above the cutoff o f 12 percent in the event o f a 20 percent increase in the investment costs, a 20 percent decrease in the benefits or a combination o f the two. In the latter event, the overall project IRR results to be 24.4 percent. The following table summarizes the results o f the sensitivity analysis.

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Table 4.16

A-Cost +20% 32.1 % 28.3% 44.4% 76.2% 18.2% 4.4% 26.7% 33.4% 36.3% 53.7% 13.7% 17.4% 30.0% 28.2% 29.9%

F- B-Benefits - 20%

30.9% 27.3% 42.8% 73.3% 17.4% 4.0% 25.9% 32.1 % 34.9% 52.0% 13.0% 16.8% 28.9% 28.2% 28.8%

~

PV

SN P T P P T

SN SN T P T IPV

66 Junction with road 66 Beung Mealea Temple 207 Soutr Nikom Dist. Cen. Kampong Khleang

Varin Angkor Chum 181 Samrong & Bos Sbov Chong Kal District 181 Krasang Commune Chong Kal District

Kouk Mon #56B 71 KampongThmor ch 5+700 71 ch5+700 Kampong Cham Border

Stoung Sala Visai 213 RoVeng Bridge Kampong Salau

Svaypat (#64) Sdao

Phase 1 Sensitivity An2 toad I Road IStarting End :lass1 NO. lpoint Point SN I 65 ISoutr Nikom Dist. Cen. Junction with road 66

Total Re Periodic Total Phase 1

Base 38.2% 32.8% 52.3% 90.7% 22.1% 6.5% 30.9% 39.7% 43.1% 62.0% 16.8% 20.2% 35.4% 28.2% 35.1%

-

- - - -

A & B 25.8% 23.4% 36.2% 61.7% 14.0% 2.0%

22.2% 26.8% 29.2% 45.1% 10.2% 14.3% 24.2% 28.2% 24.4%

- 55 -

Annex 5: Financial Summary CAMBODIA: Provincial and Rural infrastructure Project (PRIP)

Years Ending December - the financial year of the Royal Government of Cambodia

I Year1 I Year2 I Year3 I Year4 I year5 I Year6 I Year 7 Total Financing Required

Project Costs Investment Costs 5.9 5.8 5.8 5.8 0.0 0.0 0.0 Recurrent Costs 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Total Project Costs 5.9 5.8 5.8 5.8 0.0 0.0 0.0 Total Financing 5.9 5.8 5.8 5.8 0.0 0.0 0.0

I BRDA DA 5.0 5.0 5.0 5.0 0.0 0.0 0.0 Government 0.9 0.8 0.8 0.8 0.0 0.0 0.0

Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Total Project Financing 5.9 5.8 5.8 5.8 0.0 0.0 0.0

Financing

Main assumptions: Costs are assumed to cover a four year period although the executing agencies w i l l be aiming to implement within a possible three year period. Total project cost i s US$23.32 million; Royal Government o f Cambodia financing i s US$3.32 mill ion and IDA supported funding i s US$20.00 mil l ion equivalent.

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Annex 6(A): Procurement Arrangements CAMBODIA: Provincial and Rural Infrastructure Project (PRIP)

Procurement

Summary of the Assessment of Agency's Capacity to Implement Procurement and Measures for Strengthening

1. o f the implementing agencies, Ministry o f Public Works and Transport (MPWT) and the Ministry o f Rural Development (MRD) and their relevant provincial departments in the four project provinces, Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap. The assessment was discussed with the implementing agencies. The assessment indicates the risk to be "high". The reason i s that the procurement o f works by National Competitive Bidding i s intended to be carried out by the provincial departments with clearances and support from the national offices. These provincial departments do not have experience in carrying out IDA funded or other donor funded procurement, although the provincial departments o f Rural Development in Siem Reap and Kampong Thom have some experience in handling procurement o f small works with other donors i.e. the United Nations Development Program and the World Health Organisation. The use o f the provincial departments i s integral to the objective o f the project to develop provincial capacity. The national offices, which w i l l carry out the procurement of all goods, services and International Competitively Bid works plus have a clearance function for the provincial National Competitively Bid procurement o f works, do have experience with World Bank funded projects and have shown satisfactory performance in this regard. There w i l l be no special Project Implementing Units created and the project w i l l be implemented directly by the responsible departments. The strengths o f other provincial departments have been developed under other donor supported projects and the Ministries plan to rotate staff from stronger provinces with experience to the less experienced ones to share experiences.

World Bank procurement accredited staff carried out a procurement assessment in October 2002

2. Government and i s incorporated into the design o f the project as follows.

In order to mitigate the risk, the following procurement action plan has been agreed with

0 Ensure that the MPWT, MRD and their provincial offices in four provinces are being assisted by a procurement consultant with excellent procurement knowledge and experience for at least the first year. Provide training o f staffs in the MPWT, MRD and their provincial offices in World Bank procurement procedures. Project Implementation Plan (PIP) shall be finalized and translated into local language and distributed to al l participating provinces. Conduct procurement supervision missions by one every four months for the f i rs t two years and one every six month for the year after. An annex to the procurement schedule in the Development Credit Agreement i s included for National Competitively Bid (NCB) procedures containing the provisions requirements to ensure consistency in procurement procedures with World Bank's Guidelines.

0

0

0

0

3. The procurement rules and regulations o f the Royal Government o f Cambodia, i.e. the Sub-Decree Governing Public Procurement no. 60 dated July 31, 1995 and the Implementing Rules and Regulations Governing Public Procurement (IRRPP) dated August 31, 1995 and the Amendment in 1998, are generally consistent with the World Bank's Guidelines. The exceptions are:

- 57 -

(1) Domestic Competition Bidding (DCB), which i s similar to the World Bank’s NCB, i s mainly designed for local bidders although “foreign firms doing business in Cambodia may be permitted to submit bids (IRRPP 1998 - Article 6.1.3). This provision limits the bidding to only foreign firms doing business in Cambodia. The World Bank’s procedures have no such limitation.

Applications (IRRPP 1998 - Annex 3). The World Bank requires passgail criteria.

Quality-Based Selection Method (QBS) (IRRPP 1998 - Annex 5). Under the World Bank’s procedures, the preferred method for the selection of consultants is Quality and Cost Based Selection (QCBS) and other methods of selection such as Least-Cost Selection and Consultants Qualification are available.

(4) Bids received must be opened publicly at the stipulated date, time, and place o f opening as mentioned in the bidding documents. The bid opening time should not be more than one hour from the deadline for submission o f bids. (IRRPP 1998 - Article 8.1.5). For reason of transparency, the World Bank’s procedures do not permit any time gap between bid closing and bid opening.

(5) If there i s obvious lack o f competition, (unexpectedly low turn-out o f bidders) or if all the bid prices substantially exceed the cost estimates, or if none o f the bids conform to the specifications, all the bid may be rejected. Thereafter, a re-bidding may be done but only after measures have been taken to remedy the causes o f the failure o f bidding. If all the bid prices exceed the cost estimates, negotiations with the lowest - priced evaluated responsive bidder to bring down the price may be resorted to instead o f calling for new bids. A reduction in price may be based on reduction in scope o f the contract or reduction o f responsibilities or obligations. (IRRPP 1998 - Article 8.1.1 1). The last sentence was added in the IRRPP 1998. With the 1998 addition, the only major diference with the World Bank’s procedures is that negotiation is still permitted when the lowest complying bid exceeds the Govemment’s cost.

(2) Pre-qualification Scoring System (PSS) i s used for evaluation o f Pre-qualification

(3) The only available method for employment o f consulting firm i s similar to the World Bank’s

4. international practice and the World Banks guidelines. Inconsistent procedures are addressed in the Development Credit Agreement as discussed below.

With the above exceptions, the procurement practices in the IRRPP 1998 are consistent with

Procurement variances in an annex to the procurement schedule in the Development Credit Agreement

5. included in an annex to the procurement schedule in the Development Credit Agreement. The Government’s sub-decree on public procurement and related procedures are acceptable and w i l l be used for the project, subject to the following provisions in respect o f contracts for goods and works financed under the Project and procured according to national competitive bidding procedures.

As normally done for World Bank financed projects in the country, procurement variances are

(1) Foreign suppliers and contractors from eligible countries shall, if they are interested, be allowed to participate without being required to associate or form joint ventures with local suppliers or contractors.

(2) Prior registration shall not be a requirement to participate in bidding procedures; but it may be required in the case o f a selected bidder as a condition o f signing a contract.

(3) Pre-qualification o f contractors shall be required for competitive bidding in the case o f large or complex works; in all other cases, pre-qualification shall only be required in justifiable cases and with the prior approval o f the Association.

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(4) When pre-qualification i s required, the evaluation methodology shall be based on pasdfail criteria relating to the firm's experience, technical, financial, physical and human resource capacities.

presentation o f bids, and without any intervening time lag, and, during such public bid opening ceremony, bids shall be opened and read out in public, and in the presence o f bidders' representatives who wish to attend.

(6) In all cases, the award shall be made to the lowest evaluated responsive and complying bid and, except with the prior approval o f the Association, no negotiations shall take place with any bidder prior to the award, even when all bids exceed the cost estimates.

(7) In the case o f al l contracts with a duration in excess o f 18 months, bidding documents shall allow for price adjustment formulae.

(8) Bidders, who disagree with arithmetic corrections made by the evaluating committee during the evaluation stage, shall not be allowed to withdraw their bids without forfeiting their bid security.

(9) The Association reserves the right to require that all contracts under national competitive bidding procedures financed by the Association, include a provision requiring suppliers and contractors to permit the Association to inspect their accounts and records relating the performance o f the contracts and to have them audited by auditors appointed by the Association.

(5) A public bid opening ceremony shall take place immediately after the deadline for

Procurement Guidelines

6. Guidelines Procurement under IBRD Loans and IDA credits (January 1995, revised January and August 1996, September 1997, and January 1999). The procurement of services w i l l be carried out in accordance with the World Bank's Guidelines Selection and Employment of Consultants by World Bank Borrowers (January 1997, revised September 1997, and January 1999 and May 2002).

The procurement o f goods and works w i l l be carried out in accordance with the World Bank's

7. Bidding (NCB) w i l l be carried out according to the 1995 Sub-Decree Governing Public Procurement in the Kingdom o f Cambodia No. 60, which i s the legal basis for procurement in the country, and as supplemented by Implementing Rules and Regulations governing Public Procurement o f 1995 (IRRPPs) and as amended 1998, except where such are not consistent with the World Bank relevant procurement Guidelines. The IRRPP allows that "contracts financed by external lending agencies shall be governed by the provisions o f the loan or aid agreement .............. should there be any inconsistency or conflict between these IRRPP and the methods and procedures o f these foreign institutions, the latter w i l l prevail. In the absence o f such conflicts the IRRPP may likewise be applied to foreign-funded contracts". With a few exceptions that are agreed in the annex to the procurement schedule in the Development Credit Agreement, the Sub-Decree and the IRRPPs are consistent with the World Banks procurement Guidelines. Any procurement not financed by the World Bank w i l l be carried out in accordance with the IRRPPs.

As provided in the Guidelines, the procurement o f works according to National Competitive

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Standard Bidding Documents

8. evaluation reports w i l l be used. The Standard Bidding Document - Smaller Contracts January 1995 revised June 2002 and March 2003 (or any update thereto) w i l l be used for International Competitive Bidding and adapted for National Competitive Bidding. For consulting services, the World Banks standard Request For Proposals dated July 1997, revised 1998, July 1999 and March 2002, sample evaluation report October 1999, and sample contracts w i l l be used.

The latest World Bank standard bidding documents for goods and works and standard bid

Advertisement

9. A General Procurement Notice (GPN) was published in the United Nations Development Business online (UNDB online) and in the Development Gateway Market (dgMarket) after appraisal, announcing all procurement o f goods and works on the basis o f International Competitive Bidding (ICB) and major consulting services to be procured under the project. The GPN w i l l be updated annually for all outstanding procurement over the l i fe time of the project. For International Competitive Bidding, invitations to bid shall be advertised as Specific Procurement Notices in the "Cambodian Daily" and 'I Remsey Kampuchea", newspapers o f national circulation, and w i l l appear twice in accordance with the IRRPP and shall also be published in United Nations Development Business online (UNDB online) and in the Development Gateway Market (dgMarket). For National Competitive Bidding, invitations to bid shall be advertised as Specific Procurement Notices in the "Cambodian Daily" and "Remsey Kampuchea", newspapers o f national circulation, and w i l l appear twice in accordance with the IRRPP. All adverts w i l l also be placed on the MPWT and MRD web sites.

Implementation Arrangements

10. The project w i l l be implemented by the Ministry o f Public Works and Transport (MPWT) and the Ministry o f Rural Development (MRD) including the Provincial Departments o f Public Works and Transport (PDPWT) and the Provincial Departments o f Rural Development (PDRD) in the project provinces o f Kampong Thom, Oddar Meanchey, Preah Vihear, and Siem Reap. Within MPWT, the Road Infrastructure Department w i l l be directly responsible and within MRD, the General Department for Technical Affairs (GDTA) in conjunction with the Department o f Rural Roads w i l l be directly responsible. The PDPWTs and PDRDs wi l l handle National Competitive Bidding procurement o f all road works with a clearance function from the national offices.

Good governance provisions

11. the Project Implementation Plan including but not limited to the following.

Specific lessons learned from other projects in the region have been explicitly incorporated into

0

0 Standard form o f advertisement required and included in the Project Implementation Plan. All adverts w i l l be placed in the "Cambodian Daily" (in English) and "Remsey Kampuchea" (in Khmer), newspapers o f national circulation, and w i l l appear twice in accordance with the IRRPPs . The source o f funding for the adverts i s defined and the responsible agency to actually place the adverts i s defined. A requirement that all contracts must be awarded within the 90 days bid validity period. There w i l l be no extensions o f bid validity periods. A provision that no changes to the bid documents are allowed once they have been approved. Any need for changes require new approvals.

0

0

0

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0 A specific detailed terms o f reference for the field consultants providing support to the provincial departments i s included so that the provincial project staff know what i s expected o f the consultant. Annual independent audit o f adherence to the procurement procedures and o f technical standards. At the end o f each quarter, the implementing agency, MPWT-RID and MRD-DRR wi l l publish in the"Cambodian Daily" and "Remsey Kampuchea", for al l contracts awarded to date, the following information: (i) name o f all bidders who submitted a bid; (ii) bid prices as read out at bid opening; (iii) name and evaluated prices o f al l bids that had been evaluated; (iv) name o f bidders that were disqualified and the reasons for their disqualification; and (v) name o f the bidder recommended for award and reason for recommendation, price, duration and summary scope o f the contract in a format to be agreed. For ICB contracts, this w i l l be done within 2 weeks o f the World Banks no objection and published in United Nations Development Business online (UNDB online) and in the Development Gateway Market (dgMarket). Anonymous calls can be made to the World Bank fraud hotline at 1-800-83 1-0463, alternatively collect calls can be made to USA-704-556-7046. Information i s also available at www.worldbank.org and included in the Project Implementation Plan.

0

0

Procurement methods (Table A)

Procurement Methods (Table A)

A total o f US$23.00 mil l ion o f works, goods, consultant services, training and incremental operating costs i s expected to be financed under the project, using the following procedures:

Procurement of Works (US$18.42 million)

12. Intemational Competitive Bidding (ICB): (US$2.42 million) Rehabilitation and periodic maintenance o f roads with contracts at and above US$l,OOO,OOO per contract w i l l follow ICB procedures. N o pre-qualification o f bidders i s proposed for any o f the ICB works procurement. Where international competitive bidding i s applied, a margin o f preference o f 7.5 percent w i l l be granted to domestic contractors and joint ventures between domestic and foreign firms with no more than 10 percent subcontracting to foreign f i r m s . Two or three such contracts are expected.

13. National Competitive Bidding (NCB): (US$15.00 million) Rehabilitation and periodic maintenance o f roads with contracts below US$ 1,000,000 per contract w i l l follow NCB procedures. Foreign contractors from eligible countries shall, if they are interested, be allowed to participate without being required to associate or form joint ventures with local contractors. Where national competitive bidding i s applied, no margin o f preference i s granted. 30 such contracts are expected.

14. Non-Bank Financed (N.B. F): (US$l.O million). Routine maintenance works.

Procurement of Goods (US$1.18 million)

15. office supplies and vehicles w i l l be procured under the following procedures:

Goods including office equipment (such as computers, printers, faxes etc), office furniture and

16. National Competitive Bidding (NCB): (US$0.2 million) Procurement o f goods such as equipment, below US$200,000 per contract w i l l follow NCB procedures which are acceptable to the

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Bank and where any interested international suppliers shall be allowed to participate.

17. including computers and printers, below US$lOO,OOO per contract w i l l follow International Shopping procedures where three quotations from at least three suppliers in two different countries shall be obtained as stated in Articles 3.5 and 3.6 o f the Guidelines Procurement under IBRD Loans and IDA Credits.

International Shopping (IS):( US$O. 15 million) Procurement o f goods, e.g. office equipment

18. National Shopping (NS): (US$O. 04 million) Procurement o f some simple office equipment, office supplies and furniture, in different provinces would be carried through National Shopping. National shopping may be used where the desired goods are ordinarily available from more than one source in the country at competitive prices. The estimated cost w i l l be around US$20,000 per contract. National Shopping w i l l be conducted on the basis o f a comparison o f at least three written price quotations as stated in Articles 3.5 and 3.6 o f the Guidelines on Procurement under IBRD Loans and IDA Credits.

19. Procurement through United Nations Inter-Agency Procurement Services Ofice: (US$O. 8 million) Procurement o f motorcycles and vehicles w i l l be done through the United Nations Inter-Agency Procurement Services Office. There i s a wide range o f specifications o f vehicles to choose from at standard advertised prices.

Procurement of Consultant Services (US$2.10 million)

20. Quality- and Cost- Based Selection (QCBS): (US$1, I million) Consulting services for construction design and supervision, contract management, quality assurance, contracting for roads, and capacity building of the Ministry o f Public Works and Transport and the Ministry o f Rural Development w i l l follow QCBS method.

21. f i r m s for project audits.

Least-Cost Selection (LCS): (US$O.I million) This method w i l l be used for selection o f audit

22. less than US$lOO,OOO per contract.

Consultant Qualifications (CQ): (US$0.5 million) These are small contracts estimated to cost

23. issues, community needs, and participatory approaches some consultants may be procured on a single source basis. These are small contracts estimated to cost less than US$lOO,OOO per contract.

Single Source (SS): (US$O. I million) Because of their involvement and knowledge o f local

24. implementation including procurement, financial management, coordinators, c iv i l works engineers, and technical specialists to prepare major bidding documents and technical specifications, w i l l be contracted through SIC procedures as in clauses 5.1 to 5.4 o f the Guidelines wherein it i s stated that individual consultants are selected on the basis o f their qualifications for the assignment. However, in exceptional cases where sole source selection i s justified, the Borrower could select the consultant on sole source basis with Banks prior approval.

Selection of Individual Consultants (SIC): (US$0.3 million) Individual consultants for project

Training (US$0.7 million)

25. World Bank based on an annual implementation plan. Cost o f training materials (printing), rental

Expenses for training and workshops w i l l be procured and disbursed with prior approval o f the

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facilities, transportation, food and board, and tuition for trainees w i l l follow Statement o f Expenditures (SOE) procedures.

6. Refunding of Project

Incremental operating costs (US$0.6 million)

(0.00) (0.00) (0.30) (0.00) (0.30) 0.00 0.00 0.32 0.00 0.32

26. This includes US$0.3 mill ion to be funded under the credit and includes the funding o f 50 percent o f such costs as office supplies and consumables, communications and printing costs, web-site maintenance costs, operation and maintenance o f the project vehicles, costs for transportation and accommodations for project staff in carrying out monitoring and supervision. US$0.3 mill ion i s funded by the Government and covers the 50 percent counterpart for the items discussed above. Any proposed staff salary supplements are separately and fully funded by Government.

Preparat ionAdvance Total

Table A: Project Costs by Procurement Arrangements (US$ million equivalent)

(0.00) (0.00) (0.32) (0.00) (0.32) 3.52 15.20 3.30 1.30 23.32

(3.23) (13.62) (3.15) (0.00) (20.00) "Figures in parentheses are the amounts to be financed by the IDA Credit. All costs include contingencies.

2' Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units and procurement of vehicles from UNIAPSO.

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Table A1 : Consultant Selection Arrangements (optional) (US$ million equivalent)

1 I (0.95) I (0.00) I (0.00) I (0.09) I (0.77) I (0.09) I (0.00) 1 (1.90) I Including contingencies

Note: QCBS = Quality- and Cost-Based Selection QBS = Quality-based Selection SFB = Selection under a Fixed Budget LCS = Least-Cost Selection CQ = Selection Based on Consultants' Qualifications Other = Selection of individual consultants (per Section V of Consultants Guidelines), Commercial Practices, etc. N.B.F. = Not Bank-financed Figures in parentheses are the amounts to be financed by the Bank Credit.

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Table B indicates the thresholds for prior review. The Bank w i l l conduct prior review o f procurement documents and actions in accordance with procedures set forth in paragraph 2 of Appendix 1 to the procurement Guidelines.

The following w i l l be subject to World Bank prior review:

Works: All ICB contracts and the first NCB contracts of each province for both MPWT and MRD of each year.

Goods: All ICB and the first NCB and I S contracts.

Consultants' Services: Contracts equal to or greater than US$lOO,OOO for f i r m s and those equal to or greater than US$50,000 for individual. All single source contracts for f i rms.

Proposed post review ratio: One out o f four contracts.

Table B: Thresholds for Procurement Methods and Prior Review

1. Works equal to and greater than US$1 mill ion

less than US$1 mill ion

ICB

NCB

3.00

7.50 2. Goods National Shopping 0.4

al l contracts I UNIAPSO 0.71 I 3. Services equal to or above

us$loo,ooo equal

Total value of contracts subject to prior review:

Frequency of procurement supervision missions proposed: Overall Procurement Risk Assessment: High

One every 6 months (includes special procurement supervision for post-review/audits)

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The Procurement Plan shall be reviewed and approved annually by the project team o f the World Bank and it shall be monitored and implemented in accordance with the Banks guidelines and the project legal agreement. Should there be a need to change the procurement method or the aggregated amount for a particular contract or method before the annual review of the procurement plan during project implementation, the Borrower shall seek the World Banks prior approval. Expected Procurement Plan for Year 1 i s given in the table below. The f i r s t batch o f c iv i l works contracts i s expected to be bid out according to the following schedule with more details available in the Microsoft Project procurement schedule.

Procurement Plan for works for Year 1 (2003) of MPWT

Province Length of Procurement Advertisement Starts Complete I Road(Km)l Method I Description Date I Works I Works 1 Contract number I Ministry 1 code 1 I I I I I I I I I I

Note: ICB-International Competitive Bidding NCB -National Competitive Bidding

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Procurement Plan for works for Year 1 (2003) of MRD

Length of Procurement Advertisement Starts Road (Km) Method Date Works Description Province Contract number Ministry code Complete

Works

I I ISu b-Total: MRD First Year Works Program - Periodic Maintenance PRIPOI/SRP-RWRD06 I MRD I SRP lSRP to Pouk & SRP Rolous PRIPOl/SRP-RWRD07 MRD SRP SRP to Peak Sneng to Wat Prei

Note: NCB -National Competitive Bidding

66.208

18 NCB 1-Aug-03 25-Sep-03 25-Sep-04 9.2 NCB I-Aug-03 25-Sep-03 25-Sep-04

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Procurement Plan for goods to be done Nationally by MPWT and MRD

Province Estimated Procurement Advertisement Starts Complete I Contract Number I Ministry I Code I Description I cost (US.$)I Method 1 Date 1 Works I Works I

Total MPWT & MRDl 1,228,2401 Note: Ofice equipment is computers, printers, faxes, etc

I S - International Shopping NS - National Shopping UNIAPSO - United Nations Inter-Agency Procurement Services Office

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Procurement Plan for Consultant Services by MPWT and MRD

Note: QCBS - Quality Cost Based Selection LCS- Least Cost Selection SS - Sole Source

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Annex 6(B): Financial Management and Disbursement Arrangements CAMBODIA: Provincial and Rural Infrastructure Project (PRIP)

Financial Management

1. Summary of the Financial Management Assessment

The Countly Financial Accountability Assessment (CFAA) was carried out by the Wor ld Bank and the report was delivered to the Government in May 2003. I t was noted that the legislative and regulatory framework governing public finances in Cambodia i s generally acceptable, with the exception o f the control function, which requires a complete overhaul. However, the implementation o f public expenditure i s very weak, resulting in a lack o f transparency and a high level o f risk concerning the reliability o f public expenditure management. In addition, the financial management systems and procedures cannot be relied upon to provide any assurance that the public funds are used for authorized purposes. Local government accounting and budget management remain undeveloped. The system i s all in cash based and most receipts and almost al l payments do not pass through bank accounts. Such a system provides many opportunities for corruption and misuse o f public funds.

The overall country fiduciary risk in Cambodia i s considered to be high. In spite o f the multiplicity o f controls and the centralized nature o f the Public Expenditure Management system, weak financial management practices pose serious fiduciary risks. The fundamental problems result from a weak control environment, severe weaknesses in National Treasury operations, especially in the area o f cash management, inadequacies in the public accounting system, and weak internal and external auditing capacity. These problems are so serious that the Government’s budget and reporting systems cannot be relied upon to expend resources in an accountable manner. These systemic weaknesses thus raise serious concerns about fiduciary risks and possible corruption. However, such fiduciary r isks are expected to be mitigated through the proposed system. These risks are considered as manageable due to the risk-mitigation measures to be taken as outlined in the financial management action plan.

To assess the existing capacity at the implementing agencies a financial management (FM) assessment was carried out o f the various implementing units, a summary o f which i s stated below. The detailed financial management assessment i s available on project f i les. Financial management assessments were conducted at Ministry o f Public Works and Transport (MPWT), Ministry o f Rural Development (MRD) and Provincial Departments o f Public Works and Transport (PDPWTs) o f the four project provinces and the Provincial Departments o f Rural Development (PDRDs) o f Kampong Thom, Oddar Meanchey, Preah Vihear, and Siem Reap.

MPWT has an existing FM unit at the Road Infrastructure Department (RID) which currently manages the IDA financed National Roads component o f the Flood Emergency Rehabilitation Project (FEW - Credit 3472 KH) and the Project Preparation Facility Advances and the PHRD grant funds o f the proposed Provincial and Rural Infrastructure Project. As a result this FM unit i s conversant on accounting software, contract payments, accounting procedures including IDA disbursement procedures and IDA Financial Monitoring Reporting requirements. Since the staff at this FM unit at RID posses adequate s k i l l s in project financial management, the Government has assigned the same staff for the financial management o f the PRIP subject to training on management o f provincial Project Accounts and refresher training on a computerized accounting system. RID has agreed for this training to be provided by the consultant firm hired to establish a financial management system for the project.

MRD has in operation two FM units for ongoing ADB and IDA funded projects and both units maintain satisfactory project accounts and a financial management system for the purpose o f assessing F M S for OPBP 10.02. However, the project management o f the MRD component o f PRIP w i l l be at the General

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Department for Technical Affairs (GDTA) through i t s Department o f Rural Roads (DRR) which was only recently established in June 2002. As a result capacity o f DRR for managing the finances of PRIP needs to be developed. GDTADRR wi l l be responsible for al l aspects o f project financial management o f the MRD component by installing a dedicated project accounting system and the hiring and training o f staff in accounting software, procedures and reporting.

There i s no established double entry based F M S nor i s there any other accounting/financial system in the any of the eight PDPWTs or PDRDs at present which maintains Project accounts for the purpose of accessing F M S for OPBP 10.02. Some o f the target provinces are allocated donor funds but these are managed by the donors or by MRD or MPWT directly from Phnom Penh through project implementation units or Provincial project implementing units which by-pass the PDRDPDPWT structure. The funds allocated under the SEILA program, a rural development fund in Cambodia, are also not managed by PDRDs or PDPWTs as these were formerly managed by the PRDCs o f each province and are now being managed by the Commune Councils.

All o f the PDPWTs and PDRDs lack adequate capacity for i t s financial activities and none manage any bank accounts. Present accounting staff o f these departments carry out very basic functions and their sk i l l s are very limited in these areas. Before each PDRDPDPWT can function as a fully fledged financial management unit, the staff w i l l have to be trained on the recording and submission o f appropriate documentation to Phnom Penh for paymentheplenishment and staff trained on the responsibility o f management o f a provincial Project Accounts. In addition, the system installed at Phnom Penh needs to be integrated into the financial units o f PDPWTsPDRD and staff trained on the procedures before the provincial level financial units can function as fully fledged units.

The overall assessment i s that the MPWT's Road Infrastructure Department has the capacity to manage project financial activities while the capacity at the o f MRD's GDTAJDRR needs to be developed. MRD has decided to assign an accountant to the GDTAJDRR who has been working on the IDA funded Northeast Village Development Project which i s due to close and for which the FM was satisfactorily handled. Also the capacity at the provincial level at both MPWT and MRD needs to established for project financial management at the provincial level.

2. Audit Arrangements

Annual project financial statements for each component w i l l be produced by both MPWT-RID and MRD-GDTA-DRR for the respective project components. These shall be consolidated by RID o f MPWT into project annual financial statements and audited by an independent auditor appointed under terms o f reference satisfactory to IDA. The Provincial Project Bank Accounts, if any, shall also be audited by auditors acceptable to IDA as part o f the annual financial audit. The auditor w i l l be required to express opinions on: (i) the annual Financial Statements; (ii) whether the Special Account(s) funds have been correctly accounted for and used in accordance with the Credit agreement; and (iii) the adequacy o f documents and controls surrounding the use o f the Statements o f Expenditures as a basis for disbursements. The audited financial statements w i l l be submitted to IDA within six months o f the year-end.

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3. Disbursement Arrangements

Disbursement o f the proceeds o f the Credit would be made against expenditure categories as shown in Table C.

Allocation of credit proceeds (Table C) I t i s expected that the proposed IDA credit o f US$ 20.0 mil l ion would be disbursed over a period o f approximately 4 years. The closing date i s September 30,2007. The allocation o f credit and grants proceeds according to expenditure category i s outlined in Table C.

Table C: Allocation of Credit Proceeds

(1) Works (a) MPWT Rehabilitation and periodic 11.68 maintenance (b) MRD Rehabilitation and periodic

I maintenance I 3.00

(b) MRD Goods

l(3) Consultants' services I

0.40

(a) MPWT Consultants' services (b) MRD Consultants' services (4) Training (a) MPWT training.

1.25 0.75 0.42

(b) MRD training (5) Incremental operating costs (a) MPWT Incremental operating costs

(6) Refunding o f Project Preparation Advances (7) Unallocated

(b) MRD Incremental operating costs

0.28 0.18

0.12 0.32

1-00

ITotal Project Costs with Bank Financing1 20.00

botai I 20.00

90 percent

90 percent

100% of foreign expenditures, 100% of local expenditures (ex-factory cost), and

85% o f local expenditures for other items procured locally.

100% o f foreign expenditures, 100% of local expenditures (ex-factory cost), and

85% of local expenditures for other items procured locally.

95 percent 95 Dercent 100 percent

100 percent 50 percent

50 percent Amount due pursuant to Section 2.02 (c)

of the Credit Agreement

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Use of statements of expenditures (SOEs):

Reimbursement w i l l be made on the basis o f Statement o f Expenditures for the following: (a) works under contracts each costing less than US$l,OOO,OOO equivalent; (b) al l goods contracts regardless o f the cost; (c) consultants' services under contracts awarded to consulting f i r m s each costing less than

(d) consultants' services under contracts awarded to individual consultants each costing less than

(e) training, regardless of the cost; and (f) incremental operating costs, regardless o f the cost.

US$ 100,000 equivalent;

US$50,000 equivalent;

The documentation w i l l be made available for the required audits as well as to the World Bank supervision missions, and w i l l be retained by MPWT, MRD and in the Provincial Departments for at least four years after receipt by the Bank o f the audit report for the year in which the last disbursement was made.

For contracts above these amounts, Withdrawal Applications would be supported by full documentation and signed contracts.

Special account: To receive IDA credit funds, MPWT and MRD shall each maintain a separate dollar Special Account at the National Bank o f Cambodia or in a commercial bank acceptable to IDA on terms and conditions satisfactory to IDA, including appropriate protection against set off, seizure and attachments. The Special Accounts w i l l cover the IDA shares o f eligible foreign and local expenditures in al l disbursement categories.

The MPWT Special Account w i l l have an authorized allocation o f US$1.5 mil l ion with an init ial deposit o f US$0.5 mil l ion equivalent to be withdrawn from the credit account and deposited in the Special Account. When the amount withdrawn from the credit account totals SDR 2.0 mil l ion equivalent, the init ial allocation w i l l be increased to the authorized allocation.

The MRD Special Account w i l l have an authorized allocation o f US$0.5 mil l ion wi th an init ial deposit o f US$0.2 mill ion equivalent to be withdrawn from the credit account and deposited in the Special Account. When the amount withdrawn from the credit account totals SDR 0.5 mil l ion equivalent, the init ial allocation w i l l be increased to the authorized allocation.

Withdrawal Applications for replenishment o f the Special Account would be submitted regularly, preferably monthly or whenever the Account has been drawn down by about 20 percent o f the initial deposit, whichever occurs first.

Financial Management Arrangements

Accounts and funds flow

i ) MRD-GDTALDRR, shall maintain a Counterpart Funds Account to receive RGC counterpart funds and a Special Account to receive IDA credit funds. The MPWT and MRD Counterpart Funds Accounts shall

National level. At the national level in Phnom Penh, each executing agency, MPWT-RID and

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each receive an init ial deposit o f US$60,000 from MEF.

ii) that funds are readily available for payment to small contractors. The provincial Project Accounts w i l l be maintained in US$ and shall be opened at a commercial bank in the four provinces on terms and conditions satisfactory to IDA. Given the current lack o f banking facilities in Preah Vihear and Oddar Meanchey the Project Accounts for these provinces may be maintained in a commercial Bank acceptable to IDA in Kampong Thom, Siem Reap, or Banteay Meanchey. These provincial Project Accounts w i l l be opened with a init ial advance o f US$lOO,OOO per account funded by the Government and flowing through the Counterpart Funds Accounts. The provincial Project Accounts w i l l be periodically reimbursed through a funds transfer from the Special Accounts to the Counterpart Funds Accounts (IDA funds shall not be advanced to the provincial Project Accounts). Reimbursement w i l l be based on submission o f duly certified proof o f payment by PDPWT or PDRD as appropriate. Applications to replenish the provincial Project Accounts supported by appropriate documentation shall be submitted at least 30 days from the date o f the last cash advance or whenever expenditures reach 1/3 o f the advance, whichever comes first.

Provincial level. Each PDPWT and PDRD may maintain a provincial Project Account to ensure

All contract payments can be made from the Special Accounts and Counterpart Funds Accounts in Phnom Penh. Alternatively, if the Government wishes, contract payments up to US$lO,OOO may be made from the provincial Project Accounts. Contract payments above US$lO,OOO shall be requested by the PDPWTs and PDRDs to be paid directly to the contractor from the Special Accounts and Counterpart Funds Accounts. All contract payments w i l l be by check drawn on the name o f the contractor or by electronic bank transfer to the account of the contractor. For the purpose o f facilitating payments contractors w i l l be required, at the time o f contract signing, to open a bank account in a bank o f their choice, which i s readily done in Cambodia.

Financial Management unit set up and stafSing

IDA wi l l review the capacity o f staff at all Financial Management units as the project progress and make recommendations if further staffing and training i s needed.

i ) MRD-GDTADRR wi l l each establish a Financial Management (FM) unit. Each FM unit shall be staffed with one full time Project Accountant and at least one Assistant Accountant. Staff shall possess qualifications and experience to the satisfaction o f IDA. The Ministries have already appointed the Assistant Accountants and are in the process o f appointing the Project Accountants. Terms o f reference are in the Financial Management Manual. The accountants w i l l report to the respective Project Director of MPWT-RID and MRD-GDTADRR. During implementation MPWT-RID and MRD-GDTADRR wi l l hire additional Assistant Accountants to supplement the capacity o f the existing staff if the volume o f work necessitates such. MPWT-RIDS assignee w i l l be from within staff o f the existing FM unit at MPWT-RID and who has thus gained experience in project accounting, English language, computer s k i l l s and in processing documentation and coordinating with IDA on replenishment applications. MRD-GDTADRR wi l l appoint a suitable staff from within i t s ministry cadre, a staff who has gained experience on a donor funded project. The FM staff o f MPWT-RID and MRD-GDTADRR wi l l be given introductory training by the consulting firm on the software package and related accounting procedures. In addition, training w i l l be provided on IDA disbursement procedures by MEF.

National Level: at MPWT-RID and MRD-GDTMDRR.. At the national level, MPWT-RID and

i i ) wi l l utilize existing staff in existing Financial Management (FM) units subject to capacity enhancement

Provincial Level: at PDPWTs and PDRDs. At the provincial level, each PDPWT and PDRD

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and training. Each FM unit w i l l be staffed with an Accounting Officer, and at least one Accounting ClerWCashier. Staff shall possess qualifications and experience to the satisfaction o f IDA. Terms o f reference are in the Financial Management Manual. MPWT-RID and MRD-GDTA/DRR wi l l give introductory training to the FM staff of PDPWTs and PDRDs on managing and replenishment o f a provincial Project Account, invoice processing and basic record keeping and provide follow-up on the job training during project implementation.

Financial Management responsibilities

The financial management responsibilities for the Project at the national and provincial level are described below. A Financial Management Manual describing in detail, the planning, budgeting, expenditure authorization, payment, recording and reporting has been produced.

i ) unit at MPWT-RID and MRD-GDTA/DRR shall be responsible inter alia for:

National Level: at MPWT-RID and MRD-GDTNDRR. The staff at each Financial Management

0

0

0 0 0

0

0 0

0

0

0 0 0 0

ensuring that World Bank guidelines and procedures are followed on disbursements, auditing and overall financial management. maintaining books o f accounts and recording transactions o f the Special Accounts, Counterpart Funds Accounts and the provincial Project Accounts preparing Withdrawal Applications and dealing directly with MEF and IDA on replenishments. verifying that for al l transactions the supporting documentation and authorizations are adequate obtaining authorisation for payments from the Special Accounts/Counterpart Funds Accounts from the head o f MPWT-RID or MRD-GDTA/DRR respectively. ensuring al l expenditures follow intemal approval procedures at MPWTMRD and the payment procedures stated in the Financial Management Manual. effecting payments through check payments or fund transfers, on satisfaction o f necessary approvals. preparing their quarterly Financial Monitoring Reports (FMRs). MPWT-RID shall consolidate these FMR into an overall project FMR. preparing the annual project budget for their respective project components in coordination with the respective PDRDs and PDPWTs. MPWT-RID shall consolidate these budgets into an overall project budget. preparing annual project financial statements and ensuring auditing by independant auditors and submission to IDA coordinating with MEF on counterpart fund requirements coordinating on direct contract payment requests from the provinces and effecting such payments replenishment and monitoring o f the provincial Project Accounts training financial staff at the PDPWTs and PDRDs

The Project Directors at MPWT-RID and MRD-GDTA/DRR shall be responsible for 0 ensuring adequate performance and staffing o f the FM unit and FM staff

authorization o f payments after verification by the Financial Management staff.

i i ) PDPWT and PDRD shall be responsible for inter alia: 0 initiating and approving contracts/invoices 0

0 maintaining records

Provincial Level: at PDPWTs and PDRDs. The staff at the Financial Management units at each

requesting direct payments from MPWT-RID or MRD-GDTA/DRR to contractors

- 75 -

If the province has a provincial Project Account, the staff at the Financial Management units at each PDPWT and PDRD shall also be responsible for inter alia: 0 0

0

0

0

0

maintaining cash book and expenditure records preparing bank reconciliation statements and on a monthly basis (at least 30 days from the receipt of the last cash advance or when expenditures reach 1/3 of the advance, whichever comes first) submitting reports with supporting documentation to MPWT-RID and MRD-GDTA/DRR for review and replenishment o f the provincial Project Account. forwarding information on expenditures to MPWT-RID or MRD-GDTA/DRR for inclusion in the overall project financial statements and for initiating replenishment effect payments from provincial Project Accounts through check payments or a fund transfers, on satisfaction o f necessary approvals ensuring all expenditures follow internal approval procedures and the payment procedures stated in the Financial Management Manual.

The head o f the respective PDPWTPDRD shall be responsible for 0 0

ensuring adequate performance and staffing o f the FM unit and FM staff authorization o f any payments after the verifications by the Financial Management staff

Financial management system. The financial management system operational at MPWT for the IDA- supported Road Rehabilitation project w i l l be adopted subject to modification o f the chart o f accounts to generate IDA required Financial Monitoring Reports (FMRs) for PRIP. The computerized accounting system with have a chart o f accounts which w i l l separately identify the disbursements o f the components by each provincial and central level and w i l l facilitate financial management and consolidation o f financial statements. The computerized accounting system w i l l be established at both MPWT-RID and MRD-GDTA/DRR to capture the transactions o f the respective accounts. The proposed accounting system contains the following features: (a) application o f consistent principles o f accounting for documenting, recording, and reporting financial transactions; (b) use o f the cash method o f accounting; (c) a double entry accounting system; (d) a chart o f accounts and a coding system that allows meaningful reporting to IDA and the Government; and (e) the production o f quarterly financial statements acceptable to IDA. A consulting firm has been hired to assist the project in the above process. The consulting firm w i l l design the chart o f accounts taking into account the decentralizedcentralized fund flow arrangements and the centralized recording and reporting arrangements o f PRIP. The Financial Management Manual i s guided by the existing Financial Management Manuals o f RRP and FEW and the internal invoice processing procedures in operation at the central and decentralized levels at MPWT, MRD and each PDRD and PDPWT. Appropriate procedures have been established for provincial fund flows and a single entry based manual accounting system operationalized in the provincial units given the lack o f capacity in Financial Management knowledge and English in the provinces.

Withdrawal of the IDA creditfinds. Disbursement o f IDA funds wi l l be based on Statements o f Expenditures, Withdrawal Applications or Direct Payment Applications. MPWT-RID and MRD-GDTA/DRR shall each prepare Withdrawal Applications to be submitted to IDA for their respective Special Accounts and through MEF deal with IDA on replenishments. Signatories on the IDA Withdrawal Applications shall be the Minister o f Finance and Economy or hisker designee and the Minister o f Public Works and Transport/Minister o f Rural Development or h isker designee.

Financial Monitoring Reports. Each MPWT-RID and MRD-GDTA/DRR shall prepare quarterly Financial Monitoring Reports (FMRs) which shall include at a minimum, the following documents:

1. 1-A Project Uses and Sources o f Funds by IDA Disbursement Category 2. 1-B Project Uses o f Funds by Project Activity 3. Contract Expenditure reports (Goods, Works and Consulting Services)

- 76 -

4. Contract Monitoring report (Goods, Works and Consulting Services) MPWT-RID wi l l consolidate 1A (Project Uses and Sources o f Funds by IDA Disbursement Category) and 1B (Project Uses o f Funds by Project Activity) prepared by MPWT-RID and MRD-GDTA/DRR into one project-wide report 1A and 1B. The Contract Expenditure and Contract Monitoring reports may be presented for each individual executing agency and be attached without consolidation. MPWT-RID w i l l submit the consolidated FMRs to IDA on a quarterly basis within 45 days o f the quarter end starting the first quarter following project f i r s t disbursement. Additional output monitoring reports w i l l be developed, if appropriate, during implementation.

Strengthening of Financial Management. I t has been agreed that the MPWT-RID, MRD-GDTA/DRR and the PDPWTs and PDRDs shall carry out a time-bound action plan as stated below for strengthening o f their financial management system. As a condition o f credit effectiveness, the Borrower shall have established a financial management system, acceptable to the Association, including: (i) adoption o f a financial management manual acceptable to the Association, and (ii) completion o f appropriate training for staff o f MPWT, MRD and their respective departments in the provinces o f Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap. When installation o f the accounting system i s complete IDA wi l l review and approve the system.

PRIP Financial Management Improvement Action Plan

Action I tem 1. As a pilot and training exercise for PRIP, install Peachtree Accounting Software at MPWT-RID to record transactions of the PPF. 2. Agreement on format Financial Monitoring Reports (FMRs). 3. Establish a computerised financial management system, including the chart of accounts, capable o f providing Financial Monitoring Reports (FMRs) acceptable to IDA. 4.1 Design accounting procedures for the provincial and central levels and finalize the Financial Management Manual. 4.2 Adopt the Financial Management Manual. 5. Training o f i) staff at MPWT-RID and MRD-GDTA/DRR on the accounting system and procedures ii) staff at MPWT-RID and MRD-GDTA/DRR on IDA disbursement procedures. iii) provincial staff at PDPWTs and PDRDs.

Resuonsibilitv MPWT-RID with assistance from RRP.

MPWT; MRD with assistance o f a consulting firm

MPWT and MRD

i) MPWT and MRD with assistance o f a consulting firm

ii) MEF

iii’, MPWT and MRD

Complete Date Completed.

Completed at negotiations

Effectiveness (status - ongoing)

4.1 Effectiveness (status - completed)

4.2 Effectiveness

Effectiveness.

- 77 -

Funds Flow Arrangements for PRIP (applies both to MPWT and MRD)

j

1 i

j

Special Counterpart Funds Account Account

I / I /

/ /

I I I I

/ /

I I / I / I / I / I / I / I /

I 1 I /

/ I I

Provincial Project Accounts for PDPWTPDRD

Kampong Thom, Oddar Meancheay,

Financial Management Unit at PDPWTs/PDR& in each province ................................................................................... 4 ....................................................................................

I I Payments < $10,000 + + v

I Payment of Contractors ............ b Initial advance from Counterpart Funds Account to provincial Project Accounts -) Reimbursement of eligible IDA expenditures to Counterpart Funds Account - - - + Payments to contractors -- 3 Request direct payments to contractors f rom MpWT/MRD ............. b Report al l provincial payments to MpWT/MRD

- 78 -

Annex 7: Project Processing Schedule CAMBODIA: Provincial and Rural Infrastructure Project (PRIP)

First Bank mission (identification)

Appraisal mission departure

/Time taken to prepare the project (months) I 26 I 27 I 02/28/200 1 02/28/200 1 05/05/2003 06/02/2003

Negotiations

Planned Date of Effectiveness 05/ 12/2003 06/13/2003 10/30/2003

Prepared by: The Ministry o f Public Works and Transport and the Ministry o f Rural Development of the Royal Government o f Cambodia.

Preparation assistance:

A Japanese Policy and Human Resources Development (PHRD) grant for US$73 1,000 (TF026422- Recipient executed) was received and used for project preparation by the Government to contract consulting services for the following preparation activities (including a contract with the International Labor Organisation in an amount o f US$409,000):

(a) improve the coverage, coherence and sustainability o f rural infrastructure provision in

(b) strengthen the institutional framework for rural roads and transport; (c) identify rural access needs and solutions at the provincial and district levels; (d) promote small businesses in the delivery o f Infrastructure services (e) assist in the Preparation o f the Project Implementation Plan; (f) carry out a baseline socio-economic impact assessment and prepare an Environmental

(g) strengthen project management and monitoring capacity.

Cambodia through policy and strategy formulation;

Assessment and an Environmental Management Plan; and

Grant Implementation and Results. The grant was successfully executed. All planned outputs were completed. Both the Government and stakeholders benefited from training programs and consultative workshops carried out, as well as gaining experience in program management and administration, the establishment o f separate project financial management systems, and international procurement.

The Government also utilized two Project Preparation Facilities in amounts o f US$206,230 (Q2790) and US$114,000 (42791). These were used for a provincial staff training series, vehicles and survey equipment, and mine path finding by The Halo Trust (US$76,584).

- 79 -

Bank staff who worked on the I Name Alain L. Labeau Sally L. Burningham Christina Malmberg Calvo Imogene R. Jensen Jitendra J. Shah Lars L. Lund M e i Wang Clifford Garstang Lingzhi Xu Chinnakorn Chantra Preethi K. Wijeratne Rodrigo Archondo-Calla0 Christopher D e Serio Dieter Schelling Zhi Liu Jennie Litvack

Speciality Lead Transport Specialist Task Team Leader, Senior Engineer Lead Economist Senior Economist Senior Environment Engineer Senior Social Scientist Counsel Legal Consultant Senior Procurement Specialist Procurement Specialist Financial Management Specialist Technical Specialist, Transport Sector Program Assistant Peer Reviewer Peer Reviewer Peer Reviewer at project concept stage

- 80 -

Annex 8: Documents in the Project File* CAMBODIA: Provincial and Rural Infrastructure Project (PRIP)

A. Project Implementation Plan

Project Implementation Plan, August 2003 Procurement Plan, August 2003

B. Bank Staff Assessments

Aide-memoire of identification mission, February 200 1 Aide-memoire o f preparation mission, April 2002 Aide-memoire of pre-appraisal mission, December 4 to 18, 2002 Aide-memoire of appraisal mission, June 2003 Financial Management Assessment for the PRIP project, October 2002 Procurement Capacity Assessment for the PRIP project, October 2002 Integrated Fiduciary Assessment and Public Expenditure Review (IFAPER) Cambodia Enhancing Service Delivery Through Improved Resource Allocation and Institutional Reform, Report No. 2561 1 KH, World Bank, August 2003 including the Country Financial Accountability Assessment (CFAA) Draft of the Country Procurement Assessment Review (CPAR), World Bank, July 2003 Country Portfolio Performance Review (CPPR), World Bank, August 2000

C. Other

Social Assessment, May 2003, Ministry of Public Works and Transport and Ministry of Rural Development for the PRIP project, Royal Government of Cambodia Environmental Assessment, June 10,2003, Ministry of Public Works and Transport and Ministry of Rural Development for the PRIP project, Royal Government o f Cambodia Resettlement Policy Framework, June 2003, Ministry of Public Works and Transport and Ministry of Rural Development for the PRIP project, Royal Government o f Cambodia Indigenous Peoples Development Framework, June 2003, Ministry of Public Works and Transport and Ministry of Rural Development for the PRIP project, Royal Government of Cambodia Main Technical Report, July 2003, produced by the International Labor Organisation for the PRIP project Policy for Rural Roads, April 2002, Royal Government of Cambodia, Ministry of Rural Development Road Condition Survey, 2003, Ministry of Public Works and Transport - Road Infrastructure Department Rural Road Inventory for Rural Road, Ministry of Rural Development, December 2002 *Including electronic files

-81 -

Annex 9: Statement of Loans and Credits CAMBODIA: Provincial and Rural Infrastructure Project (PRIP)

July -2003 Difference between expected

and actual disbursements' Original Amount in US$ Millions

Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'd PO70542 2003 KH-Health Sector Suppolt Project 0.00 17.20 0.00 0.00 29.02 0.00 0.00

PO7331 1 2003 PO71 146 2003 P 0 7 0 8 7 5 2002 PO71247 2002 PO71445 2002 PO73394 2001 P 0 6 5 7 9 8 2000 PO52006 2000 PO58544 2000 P 0 6 0 0 0 3 2000 PO59971 2000 P 0 0 4 0 3 0 1999 PO50601 1999 PO58841 1999 PO45629 1998 PO04033 1997

KH-Prov & Peri-urban Water Supply KH- Rural Investment and Local Governance KH-Land Management and Administration KH . Eco. & PS Capacity Building Project KH . Demobilization and Reintegration KH-Flood Emergency Rehabilitation Proj KH-BIO & PROTEC AREAS M KH 810 & PROT AREA M KH - Cambodia SAC KH-Forest Concession Mgt & Control Pilot KH-EDUCATION QUALITY IMPROVEMENT KH-Road Rehab. KH-SOCIAL FUND II KH-NORTHEAST VILLAGE KH-URBAN WATER SUPPLY KH-AGRICULTURAL PRODUCTIVITY IMPROVE

0.00 16.90 0.00 22.00 0.00 24.30 0.00 5.50 0.00 18.40 0.00 35.00 0.00 1.91 0.00 0.00 0.00 30.00 0.00 4.82 0.00 5.00 0.00 45.31 0.00 25.00 0.00 5.00 0.00 30.96 0.00 27.00

0.00 0.00 20.61 0.00 0.00 0.00 0.00 22.57 0.00 0.00 0.00 0.00 25.00 1.02 0.00 0.00 0.00 6.07 0.92 0.00 0.00 0.00 16.40 -3.95 0.00 0.00 0.00 20.28 3.20 0.00 0.00 0.00 1.37 0.87 0.86 2.75 0.00 2.08 3.73 1.39 0.00 0.00 15.42 26.89 0.00 0.00 0.00 3.53 3.39 0.00 0.00 0.00 0.35 0.32 0.00

0.00 0.00 24.88 25.59 0.00

0.00 0.00 3.01 -5.97 0.00 0.00 0.00 1.11 1.25 1.27 0.00 0.00 4.47 5.44 1.83 0.00 0.00 14.69 15.83 14.08

Total: 0.00 314.30 2.75 0.00 210.85 78.54 19.43

CAMBODIA STATEMENT OF FC's

Held and Disbursed Portfolio

In Millions U S Dollars July - 2003

Committed Disbursed IFC IFC

FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic

2000 SEF ACLEDA Bank 0.00 0.49 0.00 0.00 0.00 0.49 0.00 0.00 2003 Amanresort 1.20 0.00 0.00 0.00 1.20 0.00 0.00 0.00

Total Portfolio: 1.20 0.49 0.00 0.00 1.20 0.49 0.00 0.00

Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic 2000 SEF ACLEDA Bank 1.00 0.00 0.00 0.00

Total Pending Commitment: 1.00 0.00 0.00 0.00

- 82 -

Annex 10: Country at a Glance CAMBODIA: Provincial and Rural Infrastructure Project (PRIP)

income POVERTY and SOCIAL

Cambodia Development dlamond* I 2001 Population, mid-year (millions) GNI per capita (Atlas method, US$) GNI (Aflas method, US$ billions)

Average annual growth, 1995-01

Population (%) Labor force (%)

Most recent estimate (latest year available, 1995-01) Poverty (% of population below national poverty line) Urban population (“A of total population) Life expectancy at birth (years) Infant mortality (per 1,000 live births) Child malnutrition (% of children under 5) Access to an improved water source (% ofpopulation) Illiteracy (“A ofpopulation age 15+) Gross primary enrollment (% of school-age population)

Male Female

KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1981

GDP (US$ bilhons) Gross domestic InvestmenUGDP Exports of goods and services/GDP Gross domestic savings/GDP Gross national savings/GDP

Current account balance/GDP Interest payments/GDP Total debt/GDP Total debt service/exports Present value of debt/GDP Present value of debt/exports

1981-91 1991-01 (average annual growth) GDP 4 8 GDP Der caoita 2 1

12 3 270 3 3

2 3 2 6

36 16 54 88 47 30 32

119 128 110

1991

1 6 9 4

11 9 7 8 8 2

-1 5 0 9

1134

2000

7 7 5 3

East Asia & Pacific

1,826 900

1,649

1 1 1 3

37 69 36 12 74 14

107 106 108

2000 3 4

135 50 4 4 3

-9 4 0 4

78 3 1 9

58 3 1223

2001

6 3 4 1

251 1 430

1,069

Life expectancy

7-

I I

59 31 ~

1 Access to improved water source

----Cambodia 96

88 103 Low-income group

2001

3.4 17 9 53 2 9 8

-9 4 0 1

79 4 1 2

2001 -05

4 5 2 6

Economlc ratlor‘

Trade

1

Indebtedness

-*m* Cambodia Low-income group -~

Exporis of goods and services . 190 365 146 100

STRUCTURE of the ECONOMY

(“A of GDP) Agriculture Industry

Services

Private consumption General government consumption Imports of goods and services

Manufacturing

(average annual growth) Agriculture Industry

Services

Private consumption General government consumption Gross domestic investment lmoorts of aoods and services

Manufacturing

1981 1991

.. 49.9

.. 12.1 5.3

.. 38.0

.. 84.8 7.4

.. 13.6

1981-91 1991-01

1.6 .. 10.1

8.6 6.2

1.7 3.1

.. 10.5

.. 12.2

2000 2001

38.2 36.9 20.8 21.9

41.0 41.2

90.0 84.2 5.7 6.0

59.6 61.3

2000 2001

-0.3 3.9 34.6 15.5

5.8 2.7

2.3 2.2 15.5 13.1

-10.7 25.5 17.5 12.6

Growth of investment and GDP (%) I 0

20

-20 1

* M W * G D I “ I O I G D P I Growth of exports and imports (%)

Note: 2001 data are preliminary estimates. *The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete

- 83 -

Cambodia PRICES and GOVERNMENT FINANCE

Domestic prices (“A change) Consumer prices Implicit GDP deflator

Government finance (“A of GDP, includes current grants) Current revenue Current budget balance Overall surplus/deficit

TRADE

(US5 millions) Total exports (fob)

Rubber Logs and sawn timber Manufactures

Total imports (cif) Food Fuel and energy Capital goods

Export price index (1995=100) Import price index (1995=100) Terms of trade (1995=100)

BALANCE of PAYMENTS

(US$ millions) Exports of goods and services Imports of goods and services Resource balance

Net income Net current transfers

Current account balance

Financing items (net) Changes in net reserves

Memo: Reserves including gold (US$ millions) Conversion rate (D€C, /oca//US$)

EXTERNAL DEBT and RESOURCE FLOWS

(US5 millions) Total debt outstanding and disbursed

IBRD IDA

Total debt service IBRD IDA

Official grants Official creditors Private creditors Foreign direct investment Portfolio equity

World Bank program Commitments Disbursements Principal repayments Net flows Interest payments Net transfers

Composition of net resource flows

1981

1981

1981

1981

1 0 0

0 0 0

34 0 0 0 0

0 0 0 0 0 0

1991

107.4

4.5 -2.9 -3.3

1991

21 3 19 25

245

1991

227 258 -31

0 7

-25

81 8.0

1991

1,852 0 0

16 0 0

41 0 0 0 0

0 0 0 0 0 0

2000

-0.8 4.7

10.7 1.5

-5.2

2000

1,383 49 11

1,881

2000

1,587 1,927

-82 70

-31 8

381 -63

485 3,840.8

2000

2,635 0

207

31 0 1

201 72 0

126 0

37 37 0

37 1

35

2001

-0.6 -2.8

12.2 1.5

-6.0

2001

1,451

1,950

2001

1,681 2,006

-118 78

-320

386 -66

548 3,924.0

2001

2,704 0

238

21 0 1

91 0

63 40

0 40

1 38

------GDP deflator -CPI I Export and import levels (US$ mlll.)

~2,500 T 2 000

1 500

1 000

500

0

I 95 96 97 96 99 00 01

E3 Exports Imports

1 Current account balance to GDP (%)

1.20 1

:omposltlon of 2001 debt (US$ mill.)

A. IBRD E . Bilateral B. IDA D - Other multilateral F - Private C . IMF G - Short-term

- 84 -

Additional Annex 11 : Executive Summary of the Environmental Assessment CAMBODIA: Provincial and Rural Infrastructure Project (PRIP)

The Executive Summary o f the Environmental Assessment June 10,2003 i s presented here. The full report i s available separately on request or can be found on the World Bank web-site.

1.0 EXECUTIVE S U M M A R Y

1.1 Purpose of Environmental Assessment

Following the World Bank Operational Directive (OD) 4.0 1, this Environmental Assessment (EA) was prepared to ensure that the Provincial and Rural Infrastructure Project (PRIP) i s environmentally sound and sustainable by recognizing environmental consequences and identifying ways to prevent, minimize or mitigate adverse effects.

The first purpose o f the EA was to determine the characteristics o f the existing bio-physical and built environments that may be impacted by the PRIP. The second purpose was to provide the basis for the Environmental Management Plan (EMP), designed to prevent or mitigate potential negative impacts that may be caused by the project.

The specific objectives of the E A are to: 0

0

0 0

Describe and assess the existing environments that would be affected or impacted by the proposed road rehabilitation and maintenance project; Identify and assess the types and magnitude o f potential environmental impacts and identify issues or important areas o f impact requiring additional, in-depth assessment; Identify and describe measures to prevent or mitigate potential environmental impacts; and Prepare an Environmental Management Plan (EMP) o f impact prevention and mitigation actions to be taken and a monitoring program to ensure compliance with the plan.

This EA i s based upon the review o f available documents, f ield inspections o f the road sections to be rehabilitated and the environmental and social characteristics o f areas through which the roads pass, and consideration o f the construction methods and quantities that w i l l be involved on each road section.

1.2 Project Description

The PRIP i s a 5-year project to be implemented by the Ministry o f Public Works and Transport (MPWT), responsible for secondary and provincial roads, and the Ministry o f Rural Development (MRD), responsible for rural roads. Located in four provinces north o f Tonle Sap, the project has the long-range goal to alleviate poverty. The project area and the road sections selected for the PRIP Year-1 program are shown on Exhibit 1.

The PRIP i s designed to rehabilitate 300 to 4 0 0 h o f existing national-secondary (2-digit roads), provincial (3-digit roads), and tertiary-1 (rural roads) along their present alignments and within their existing rights-of-way (ROW). All existing roads are dirt roads. They are to be made all-season roads. Most w i l l be bitumen coated. Many bridges and culverts, particularly along rural roads, are deteriorated or lacking but a number o f bridges along provincial roads have been recently upgraded under Cambodia's Social Fund.

The type and magnitude o f planned works varies by road section. Works involve completion and minor

raising o f embankments, the sealing of completed roads with either a single or double coat o f bitumen, the repair or replacement o f damaged or under-strength bridges and culverts, and the periodic and routine maintenance o f maintainable roads in the PRIP area.

Completed road sections w i l l be 5-8m wide, with shoulders o f 50-100cm. They w i l l be constructed on existing but improved embankments o f lateriteklay designed to be above the 10-year flood level. This means that the final grades w i l l be an average o f about 50cm higher than their present grades. Labour Based Assisted Technology (LBAT) construction techniques w i l l be employed.

Exhibit 1: Project Area and PRIP Year-1 Roads

Where possible, embankment construction material w i l l be obtained from borrow pits within the ROW, alongside the existing roads. However, on four road sections, i t w i l l be necessary to obtain materials from outside the ROW. In these cases, laterite or clay material w i l l be bought from land owners at agreed prices per cubic metre extracted and be transported by truck to each road section. Gravel w i l l also be transported by truck from quarries nearby. Embankment material and gravel w i l l be spread by hand.

Borrow pits w i l l be approximately 20cm deep (laterite i s located in this soil zone). After materials extraction from pits within the ROW, the pits w i l l be finished as wide ditches to drain the completed roads or as ponds to retain water for local use and aquaculture. Borrow pits outside the ROW wi l l be graded and stabilized or, when requested by local communities, made into ponds.

Information on the road sections selected for PRIP year-1 and the planned works program i s summarized in Exhibit 2. Examples o f the road cross-sections designed by the International Labour Organization (KO) are shown in ANNEX A.1.1 Project Description.

Exhibit 2: Summary Information on PRIP Year-1 Roads

Road Section

Siem Reap NR-65 Soutr Nikum NR-6N?-66

NR-66 NR-65A3 Mealia

Var idA. Chum Tertiary road

Kampong Thom NR-71 K. ThmorK. Cham border

Stoung NR-6lSala Visai

Tertian road NR-64

Approx Length (W

22

9

21

15

21 west

Oddar Meanchey PR-181 I 10 north

Road width 8m Double-coat bitumen seal Some embankment material from outside the ROW Road width 8m Double-coat bitumen seal

Road width 5.25m Single-coat bitumen seal

Road width 8m Double-coat bitumen seal Some embankment material from outside the R O W Road width 5.25m Single-coat bitumen seal

1.9 25cm gravel base course 44,000 cu.m. gravel

25cm gravel base course 18,000 cu.m. gravel 20cm gravel base course 22,000 cu.m. gravel

25cm gravel base course 30,000 cu.m. gravel

20cm gravel base course 28,000 cu.m. gravel

1 .o

0.5

1.2

0.9

Approx Works Summary I cost

SamrongJChangkal districts

Kouk Mon, NR-56PR- 183 Tertiary road

Preah Vihear PR-213 Phnom Deik NR-64/Rik Reav commune

Svaypat NR-64lSdao Tertiary road

Total (approximate)

12

24

24

158km

Road width 8m Single-coat bitumen seal Some embankment material from outside the ROW

Road width 8m Single-coat bitumen seal Some embankment material from outside the ROW Road width 5.25m Single-coat bitumen seal

Road width 5.25m Single-coat bitumen seal

2.7 25cm gravel base course 40,000 cum. gravel

20cm gravel base course 25,000 cu.m. gravel

0.5

course 36,000 cum. gravel

course 13.000 cu.m. gravel

~

Notes: 1. 2.

3. 4.

Several road sections are expected to take more than 1-year to complete. No road in the Year-1 works program passes through or close to an important wetland, forest area, river, or archaeological site. Costs provided by ILO are stated to be indicative only. Construction will be similar on all roads. Differences l i e in the number of bitumen coats, the gravel base course and the road width. Roads will have laterite or clay base overlain by gravel compacted by vibrating compactor. Bitumen wil l be heated in-situ and applied to all roads, 2-coats for national and provincial roads, 1-coat for provincial and rural roads. Gravel and laterite embankment material (for the 4 road sections where there i s insufficient material within the ROW) will be transported by truck. Embankment material and gravel wil l be spread by hand.

- 87 -

1.3 Rights-of-way

National highway rights-of-way (ROW) are 50m, 25m each side o f the road centreline. Provincial road ROW are 40m, 20m each side o f the road centreline, and for rural roads, the ROW are 30m, 15m each side of the centre line. But Cambodian practice i s to “take” a “clear zone” considerably less in width than the legal ROW.

Clear zones o f 8-10m, sufficient for all PRIP roads, are vacant along all roads selected for PRP Year-1. There w i l l be no resettlement, no acquisition o f assets and, therefore, no need for compensation payments. However, asset acquisition may be required in PRIP Years 2 to 5 should part o f a required clear zone be used by villagers. For example, if i t were used for farming or contain fruit-bearing trees, residences, commercial buildings, or other structures that would need to be removed. In such a case, compensation would be paid to users and owners according to the MPWT and MRD policies on Involuntary Resettlement.

Rights-of-way (ROW) in the Kingdom of Cambodia are governed by the Prime Ministerial Edict: Measures to Eliminate Anarchical Land Grabbing (1 999), declaring public land on the verge of roads that must not be occupied per the ROW determined for each type of road.

1.4 Environmental Baseline

Information on the environmental baseline i s set out in Exhibit 3.

Exhibit 4 shows PRIP Year-1 roads in relation to national reserves and sanctuaries and that no PRIP Year-1 road enters or crosses a reserve or sanctuary.

Exhibit 3: Summarj Road Section

Siem Reap: Road “clear-zones’’ are adequate for al l planned works and no resettlement i s necessarv.

NR-65

Soutr Nikum, NR-6 to NR-66

NR-66

From NR 65 to Boeng Mealia

Kou l (A, Chum) to Varin

Tertiary or rural road

Environmental Baseline Information - PRIP Year-1 Roads Environmental Baseline

Over the 22km of road there are 18 different villages and a high population density. Land i s very productive with much of i t in paddy rice and mixed agriculture. The existing road of laterite carries a high volume of traffic compared to other PRIP roads. The “clear-zone’’ i s adequate and no resettlement i s necessary.

N o pictures were taken over this particular 9km stretch with 3 villages. The environmental setting i s very simi lar to that on the northern part o f NR-65 and the western part of NR-66 (’just west o f NR-65) and parts of the Kou l to Varin road. The land i s sandy soil with patches o f rice paddy and scrubland. The population density and traffic volume are much lower than along NR-65.

The area around the first part o f this road from Angkor Chum to about km13 i s productive rice paddy. After that, proceeding north, the soil becomes sandy and of low productivity except in scattered cleared areas among scrubland. In the area o f sandy soil, the setting i s s imi lar to that along NR-66 (above) but the ROW i s surrounded in parts by land mines that are currently being cleared.

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I Road Section

Kampong Thom: Road "clear-zones" are adequate for all planned works and no resettlement i s necessary.

NR-71 K. Thmor to K. Cham border

Stoung NR-6 to Salavisai on

Tertiary or rural road

-64

Two road sections

Oddar Meanchey: Road "clear-zones" are adequate for al l planned works and no resettlement i s necessary.

PR-181 SamronglChangkal districts

Two road sections

Kouk Mon, NR-56 to PR-183

Tertiary or rural road

Preah Vihear: Road "clear-zones" are adequate for al l planned works and no resettlement i s necessary.

PR-213 Phnom Dek, NR-64 to Rik Reav Commune

Svaypat, NR-64 to Sdao

Tertiary or rural road

Environmental Baseline

The land traversed by the road for the first 6km i s very productive and reflected in the population density. After about km6, the land deteriorates to dry scrubland on dry sandy soil with only occasional patches o f rice in lower lying areas (e.g., around Sralau Toung - k m l 0 to kmll). There are two abandoned factories at km9.

There are two road sections: approximately 21km in a west section and approximately 6km in the east section. The two sections are different. Only the west section i s included in PRIP Year-1. There are 19 villages along the western 21km, indicating high population density. Also there are many trees along this section o f road and in several villages -- but away from the road the area has been logged and cleared for agriculture. The east 6km section passes through land o f sandy soil o f low productivity and the road and bridges are extensively damaged. The road runs E-W crossing a large number o f small seasonal streams. Extensive seasonal floods imDede access severely.

There are two road sections: approximately 12km on the northern section and 6km on the southern section. Both are located in an area o f sandy soil. Only the northern section i s included in PRIP Year-1. There are patches rice land o f low productivity in logged and partly cleared forest and scrubland. The northern section has more extensive rice paddy lands and a higher population density than the southern section but both are in very similar environmental settings.

The 12km road connects two E-W road sections o f very poor condition. The areas o f sandy soil and lenses o f loam support patches o f rice paddy amongst logged forest and scrubland. There i s only one bridge over a seasonally wet ditch. There are no streams.

The road runs partly along the north side o f Boeng Per Wildl i fe Reserve. Srae Thnong, near NR-64, i s an indigenous community. From NR-64 to about Rik Reav Commune, there are large rice paddy areas and smaller patches o f rice amongst scattered logged forest and scrubland. The 24km section o f road included in the PRIP Year-1 program crosses two small rivers.

North o f Rik Reav almost to the Saen River crossed by a broken high viaduct bridge, the land i s sandy for some 15km. There are no houses, no rice paddy and only poor quality logged forest and scrubland.

This tertiary road, 27km in length traverses 14 small bridges, areas with many trees, and large stretches o f sandy soil. There are few areas o f rice paddy and low population density (3 villages along 27km o f road).

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1.5 Summary of Likely Impacts

Negative environmental impacts w i l l relate principally to construction activities. Impacts include those resulting from short-term construction traffic, dust, noise and other nuisance, potential erosion, and damage to small ponds and wetlands.

Because construction activities using LBAT methods use human labour rather than heavy equipment, many o f the impacts normally caused by road rehabilitation activities w i l l be less significant than those caused by mechanized construction methods. For example, the noise, dust, air pollution and traffic problems created by many thousands o f truck movements transporting earthworks materials w i l l be much reduced as w i l l the use o f graders. Embankment material w i l l be spread by hand. Borrow pits w i l l be shallow and dug by hand. Hence, the land w i l l be easy to stabilize and restore or the pits made into ponds.

The LBAT construction method w i l l employ many local people from villages along the roads. They w i l l return home at night but to cope with day-time sewage and domestic waste, latrines and domestic waste disposal pits w i l l be constructed at suitable locations adjacent to worksites.

The Social Assessment (SA) o f communities along PRIP Year-1 roads identified the social baseline, addressed potential impacts including those on Indigenous Peoples, and found Srae Thnong on PR-213

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(Preah Vihear province) to be an ethnic-minority community. For this reason, an Indigenous Peoples Development Plan (IPDP) was prepared for Srae Thnong. Both the SA and IPDP are under separate covers.

Long-term negative impacts w i l l be confined to those arising from increased traffic and travel speeds along the roads and the potential for long-term damage to reserves due to the increased access provided by the roads. One road selected for rehabilitation in PRIP Year-1 (PR-213) abuts a short, 7km stretch o f the northern boundary o f Boeng Per Wildlife Sanctuary. The current road i s wide and graveled and the section alongside the sanctuary easily accessible by car. The proposed treatment wil l upgrade the base of the road, bituminize its surface and improve drainage and culverts.

Positive socio-economic impacts w i l l include reduced travel time and cost, improved access to health and education facilities, services and cultural activities, improved access to markets and employment opportunities, short-term jobs created during the construction period, and improved access to heritage sites (to improve tourism income generation). Benefits w i l l also derive from improved flood control through the drainage facilities to be installed as part o f the road designs. The improved drainage w i l l result in better year-round access, particularly during the wet season when road sections often flood.

When roads have been rehabilitated, cars and 4-wheel drive vehicles used by Police and other Government authorities, as well as NGOs, w i l l have easier and faster access to areas served by PRIP roads (compared to the current easy access only by heavy trucks).

1.6 Impact Mitigation

Impact mitigation measures identified below relate to the above issues and to the need for the management o f travel speed, truck axle loadings, and the dissemination o f road safety information to villages located along the alignments.

This EA only addresses potential impacts that may be created during PRIP Year-1. However, the EMP and Environmental Impact Checklist w i l l guide EA in al l PRIP years when candidate roads are considered for inclusion in annual works programs.

1.7 Conclusions from the EA

The existing or baseline environment and potential project-caused environmental impacts have been identified for all road sections included in the PRIP Year-1 Works Program. These are typical, well understood, and can be either readily avoided or easily mitigated, for example, by adopting good engineering practices. Impacts w i l l be addressed by implementing standard impact prevention or mitigation measures, for example, by adopting normal engineering practices, to ensure that:

0 0

0

Adequate temporary and permanent drainage i s constructed; The faces o f embankments and waste materials piles are stabilized and planted to prevent erosion; Borrow pits are stabilized or finished to become fish-ponds or wide drainage ditches; Tree planting and landscaping and the design treatment o f bridges, enhance the road-scapes and increase the benefits accruing from the project.

Involuntary resettlement i s not required for PRIP Year-1 roads and not expected to become a major issue in subsequent years.

The EMP set out below w i l l be included in the Contract Documents for each road section.

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1.8 PRIP Environmental Management Plan

Location and Timeframe Impact Description and Mitigation Measures to

be taken Activity or Impact Implementation &

Monitoring

IUST, ODOR, A I R and NOISE

streambeds. h e most severe water quality impact would be from ,pilled bitumen, diesel or waste oil. These

Refer to MPMk Specification lust, odor and dry materials

See site plans Contractor M O E

iandling

)ust from road works

iir pollution and noise

W A T E R and W A T E R RESC Refer to MPWT Specification ~

)amage to wetlands ponds & vaterways

ilteration o f drainage

Tater Contamination

:ction 1.10 Dry material handling and transport produce large amounts o f dust. The Contractor shall prepare a dust control program. Water shall be sprayed where dry materials are handled, crushed and transported. Vehicles transporting materials will be covered to

reduce spills and dust. Mixing and crushing plants will be equipped with filters or water sprays. Operators should wear dust masks and ear protection. Regular road user vehicles and construction vehicles create large amounts of dust. Water shall be sprayed during construction, particularly in towns and villages, to ensure that dust is minimized throughout the construction zone. Vehicle and equipment emissions cause air pollution and noise. Vehicles and equipment will be maintained to meet Cambodian emission and noise standards (or Thailand’s standards if these are acceptable to MOE). Construction within lOOm of a village or town will be limited to daylight hours.

JRCES :ction 1.10 Wetlands and ponds are valuable natural habitats and resources for human use. Wetlands and ponds are to be retained wherever possible or replaced. Where appropriate the design of culverts will incorporate slots for inserting wood or sheet metal to form water-gates behind which water could be retained for dry-season use. Extra care will be taken to prevent runoff from works sites entering water bodies, wetlands, rivers or other sensitive areas by providing and maintaining sediment controls such as silt traps, rice-straw bales and plant cover within and around work sites. Stockpiles and materials waste piles will be located away from wetlands and water-courses. The quality of water in water bodies and the flow o f water in watercourses are important for natural habitats and human use o f natural resources (e.g., water and fish). Materials will be properly disposed of so as not to block streams and watercourses or damage water quality. Dry streambeds will be kept unobstructed and are not to be altered. Materials are not to be borrowed from

Throughout corridor During construction

houghou t corridor 3uring :onstruction

rhroughout corridor During construction

Wherever encountered During construction

Wherever encountered During construction

Contractor/ MPWT-RID ES

Sontractor 3s

?ontractor HOE 3

Contractor RIDIDGTA Environmental staff (ES)

Contractor ES

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tagnant water and sect-bome disease vectors

,ilting

PROTECTION of CULTUR 'rotection o f cultural heritage

substances are toxic to living organisms. Bitumen, diesel and waste oil will be handled and stored carefully to prevent leakage or spill. Waste oil will be collected, stored in drums and disposed at a site approved by the Engineer (according to M O E advice). Waste oil storage will be in drums, raised off the ground, covered to keep rain out and surrounded by a bund to contain any spills and simplib clean UP. The Contractor shall prepare a Spill Contingency Plan (including measures to be taken and equipment to be used) to ensure adequate clean up of any spills. Standing waters often lead to the spread o f insect-bome diseases such as malaria, dengue fever and schistosomiasis. Contractors will minimize standing waters by removing used tires and storage drums and ensuring adequate temporary drainage. Silting of water bodies causes deterioration in water quality, loss o f use for human consumption and damages habitats. Sediment traps or ponds will be built and maintained to intercept drainage waters and capture sediment before it reaches any water body.

'rotection o f national parks & onservation areas

o i l Erosion

L SITES, NATIONAL PARKS and CONSERVAT

Eroded material from embankments, waste disposal Primarily at water Contractor sites and borrow pits can block ditches and culverts, damage adjacent land and cause deterioration in water quality.

crossings During construction

ES

Road construction can damage cultural and heritage sites and artifacts When an archaeological s& is found, work will be stopped immediately and the Project Manager be notified. Then the Contractor will take the following steps: J Isolate the location, then call the Apsara Authority to assess the site and determine whether and how it should be preserved; J

area immediately around it; J

Apsara Authority to proceed. When an archaeological artifact is found, work is, again, stopped immediately and the Project Manager and Apsara Authority notified to assess the artifact and determine whether and how it should be excavated and moved. The Contractor: J Documents and photographs the artifact and the area immediately around it; J Does not proceed with construction until advised by the Apsara Authority.

Roads provide access to protected areas and so can contribute to damage to forests, to poaching of flora and fauna and to trade in endangered species The MPWT/MRD will advise the Ministry of Environment (MOE) when a road is to be rehabilitated within 5km of a national park, conservation area or wildlife reserve. The MPWT, in concert with the M O E will design facilities to be built along the road to control access and to accommodate officers involved in enforcement of park access, anti-poaching and CITES regulations.

Document andphotograph the site and

Stop construction until advised by the

uring construction

'herever encountered uring construction

ee site plans bring construction

IN AREAS Wherever necessary l u r i ng construction

Wherever necessary l u r i ng construction

ES

Contractor ES

Contractor ES

Contractor RID and DGTA ES APSARA Authority

Contractor RID and DGTA ES MOE

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agricultural land and restoration o f borrow pits

Solid Waste Disposal from work camps & works sites

'hroughout comdor luring construction

I Loss o f trees

Contractor RID and DGTA ES

Tree planting and environmental enhancement

TRAFFIC, PUBLIC CONVE Maintenance o f traffic flow and Road safety

Slopes w i l l be drained adequately, graded and :onsolidated and then planted. idequate temporary and permanent drainage will $e constructed and maintained. Culverts will be cleared regularly to prevent sbstruction of runoff andflood-water. Construction will be undertaken in the dry season zs much as possible. Works sites will be cleared in stages to meet :onstruetion needs and planted immediately after :onstruetion so as to minimize the area of land :leared or disturbed at any one time.

Loss o f arable land and topsoil diminishes farm and .ncomes and wastes natural resources. irable lands should not be used as borrow or rtorage sites but where unavoidable, the topsoil d l be removed and replaced after excavation. 4fter materials extraction, borrow pits will be :raded and planted or made into ponds.

Solid waste can create nuisance, encourage disease iectors (such as f l ies and rats) and block drainage :hannels. hfficient garbage containers will be provided in :onstruetion camps and at works sites, and be "tied daily, the waste being disposed of in a bndfill approved by the Engineer. Frees along the edges o f the ROW provide valuable ;hade, landscape features and improve air quality in iillages by trapping dust. rrees will not be cleared from the ROW without prior approval by the Engineer. Tree planting will be carried out where ippropriate in order to enhance the ambiance of he immediate environs around the road. A total budget of $US200,000 is set aside to purchase 10,000 seedlings of indigenous tree species, 100 to be plantedkm along the road as advised by local :ommunities. Fach Contract will be allocated $500 for tree ilantingper km in the Contract. Payment for tree planting wi l l be by lump sum for 111 materials, labour, equipment and other expenses he Contractor may incur as follows: 9 Contract price has been paid. 9 Taking-Over Certificate. 9 Defects-Liability Certificate. MPWT/MRD will work with the local authorities, oca1 communities and the Department of Forestry o prepare and implement an appropriate ree-planting program.

25% o f the lump sum when 50% o f the

25% o f the lump sum upon issue o f the

50% o f the lump sum upon issue of the

b e existing road serves many users and contributes o local and national incomes. Vormal traffic flow wil l be maintained by :ooperation among the Contractor, the Provincial bansportation Department, and the Police. rhe Contractor will: 9 Control construction vehicle speed through clear instructions, road safety education and fines. 9 construction areas. 9

Provide for adequate traffic flow around

Provide adequate signage and barriers

'hroughout corridor )uring construction

:onstruction camp and iorks sites lefore and during onstruction

Jear trees along ROW see EA) luring clearing

Contractor RID and DGTA ES

Contractor ES

Contractor Forest Dep't RID and DGTA

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lamage to roads used as haul 'outes

'ublic information

toad use monitoring - Iperational phase

digging and placing embankment material, in checking i t s quality, in digging and maintaining temporary and permanent drainage, in compacting slopes, spreading soil, and so on. Local villagers will be employed wherever possible. Locally affected people require information about the road works and potential impacts. Meetings will be held with community representatives to discuss the project, its impacts, and community issues. Signs and information sheets are posted on and around construction sites to provide information about the project. Provide opportunities for local residents to communicate with the Engineer. Maintain a register of complaints and how they were followed up.

to control traffic. 9 newspaper and village notices regarding the scope and timeframe of works and access restrictions.

Road construction traffic often damages rural roads used as materials haul routes. Trucks used for hauling construction materials are to be restricted in size to 5 cu. m. capacity in order to reduce damage to rural roads during the construction period. Contractors shall restore roads damaged during construction. Traffic speed and truck overloading can damage road surfaces and cause accidents. Road use and axle loads will be monitored. 4 traffic safety awareness program will be implemented to raise awareness of potential dangers caused by increased motorized traffic and travel speeds and the particular problems caused by the mix of slow-moving and faster moving

Communicate to the public through

1. 2.

3.

4.

5.

A l l rehabilitated roads During operations

LOCAL PARTICIPATION n a l employment I Many unskilled job opportunities wi l l be created in

Steps to ensure implementation of the EMP

Wherever possible During construction

A l l works areas Before and during construction

Contractor RID and DGTA ES

RID and DGTA Police

Contractor RID and DGTA

Contractor RID and DGTA ES

The two ministries w i l l include the EMP in the Contract Documents for each works package. At the Pre-Bid Meetings, the two ministries w i l l explain the EMP, the impact mitigation requirements and the associated cost implications, to short-listed contractors. The MPWT and MRD wi l l engage the services o f a suitable Environmental Consultant sub-contractor to deliver basic environmental training to contractors, supervisors, engineers and ministry staff and to monitor environmental management performance during construction. Soon after the appointment o f contractors, the Environmental Consultant w i l l deliver seminars to the contractors, supervisors, engineers and ministry staff. The seminars w i l l explain the causes o f environmental impacts caused by road works, the prevention and mitigation o f those impacts by implementing the EMP and by following the Specifications, and the environmental management monitoring to be undertaken during the construction period. The Environmental Consultant w i l l prepare for the Supervising Engineer, monthly environmental monitoring reports with respect to compliance with the EMP and the Specifications (detail on monitoring i s provided in section 5.2).

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Additional Annex 12: Resettlement Policy Framework CAMBODIA: Provincial and Rural Infrastructure Project (PRIP)

The overall goals o f the proposed Provincial and Rural Infrastructure Project (PRIP) are to reduce rural poverty and expand economic and social development, and to contribute to the national re-integration o f the project provinces into the mainstream national development. The development objective o f the project i s to provide sustainable, year-round, and safe improvements in rural accessibility to markets and essential services in the four provinces o f Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap.

The PRIP w i l l rehabilitate and maintain strategic secondary and tertiary roads in the four northwest provinces covered by the project. Since the project w i l l rehabilitate existing roads, no significant acquisition o f private assets and displacement o f population are foreseen. I t is, however, possible that rehabilitation o f some road sections and development o f market areas may require acquisition o f land or people may need to be resettled. This could result in loss o f private assets, including loss o f incomes or place o f residence.

The Resettlement Policy Framework, presented below, addresses adverse social impacts that may result due to involuntary acquisition o f assets and changes in land use and includes provision for compensation and rehabilitation assistance.

1. DEFINITIONS

Compensation means payment in cash or in kind for an asset to be acquired or affected by a project at replacement cost.

Cut-off Date i s the date prior to which the occupation or use o f the project area makes residentshers o f the project area eligible to be categorized as affected persons. The cut-off date coincides with the date o f the census o f affected persons within the project area boundaries. Persons not covered in the census, because they were not residing, having assets, or deriving an income from the project area, are not eligible for compensation and other entitlements.

Eligible landholders are affected persons who (a) hold title to land; or (b) do not hold title but whose possession o f land can be legalized with a title pursuant to the Land Law o f Cambodia.

Entitlement means a range o f measures comprising compensation, income restoration support, transfer assistance, income substitution, and relocation support which are due to affected people, depending on the nature o f their losses, to restore their economic and social base.

Project Authorities are the Ministry o f Public Works and Transport through i t s Road Infrastructure Department and the Ministry o f Rural Development through i t s Directorate General o f Technical Affairs.

Project Affected Persons (PAPS) includes any person or persons, households, a firm, or private or public institution who, in the context o f acquisition o f assets and change in land usage, as o f the cut-off date, on account o f the execution o f the project, or any o f i t s subcomponents or part, would have their:

(a) Standard o f l iving adversely affected; (b) Right, title, or interest in any house, land (including residential, commercial, agricultural and

grazing land) or any other moveable or fixed assets acquired or possessed, in full or in part,

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permanently or temporarily adversely affected; or

displacement. (c) Business, occupation, places o f work or residence or habitat adversely affected, with or without

PAP includes persons and affected household and consists o f all members o f a household residing under one roof and operating as a single economic unit, who are adversely affected by a project or any o f i t s components. For resettlement purposes, affected persons w i l l be considered as members o f affected households.

Rehabilitation means assistance provided to project affected persons seriously affected due to the loss o f productive assets, incomes, employment or sources o f living, to supplement payment o f compensation for acquired assets, in order to achieve, at a minimum, full restoration o f l iving standards and quality o f l i fe.

Replacement cost. With regard to land and structures, replacement cost i s defined as follows: For agricultural land, i t i s the pre-project or pre-displacement, whichever i s higher, market value o f land o f equal productive potential or use located in the vicinity o f the affected land, plus the cost o f preparing the land to levels similar to those o f the affected land, plus the cost o f any registration and transfer taxes. For land in urban areas, i t i s the pre-displacement market value o f land o f equal size and use, with similar or improved public infrastructure facilities and services and located in the vicinity o f the affected land, plus the cost o f any registration and transfer taxes. For houses and other structures, i t i s the market cost o f the materials to build a replacement structure with an area and quality similar to or better than those o f the affected structure, or to repair a partially affected structure, plus the cost o f transporting building materials to the construction site, plus the cost o f any labor and contractors’ fees, plus the cost o f any registration and transfer taxes. In determining the replacement cost, depreciation o f the asset and the value o f salvage materials are not taken into account, nor i s the value o f benefits to be derived from the project deducted from the valuation o f an affected asset.

Resettlement means all measures taken to mitigate any and all adverse impacts o f a project on PAP property and/or livelihood’s, including compensation, relocation (where relevant) and rehabilitation as needed.

Vulnerable group are distinct groups o f people who might suffer disproportionately or face the risk o f being marginalized from the effects o f resettlement and specifically include: (i) female headed households with dependents, (ii) disabled household heads, (iii) households falling under the generally accepted indicator for poverty, (iv) elderly households with no means o f support and landlessness, and (v) indigenous minorities.

2. CAMBODIAN LEGAL PROVISIONS

The Constitution of Cambodia provides for land acquisition for public purposes. In Article 20 i t states that ”Nobody shall be forced to transfer his or her ownership, if forcing i s necessary in public interest and if no proper and just indemnity has been paid to owner”. Regarding compensation, Article 40 o f the Constitution states that ”. .The right to confiscate (land) possession from any person shall be exercised only in the public interest as provided for under law and shall require fair and just compensation.”

Some protection for vulnerable groups i s also specified in the Constitution in Article 73: “The State shall give full consideration to children and mothers. The State shall establish nurseries, and help support women and children who have inadequate support” and Article 74: “The State shall assist the disabled and the families o f combatants who sacrificed their lives for the nation”.

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The new 2001 Land Law provides that no person shall be “deprived o f their ownership unless this action i s for the public interest consistent with formalities and procedures provided by laws and regulations, and after just and fair compensation” there are currently no such “laws and regulations” and there continues to be an absence o f definition for “just compensation”. In addition, a person holding illegally possessed property cannot claim compensation, even if there i s a t i t le (Article 19). Further, any “illegal and intentional or deceitful acquisition o f the public domain o f the State or public legal entity shall be punished” with a f ine and/or imprisonment. This penalty can be doubled if the landholder i s held to damage or delay work in favor o f the common interest, especially the possession o f land necessarily reserved for maintaining roads. Under the new Land Law, those who have occupied a right o f way or public properties may not be entitled to any compensation or social support, regardless o f their being an affected person or a member o f a vulnerable group.

Although individual rights to ownership and compensation are protected by present laws, there are no clearly defined specific provisions or a mechanism for land acquisition by the State through expropriation. The expropriation o f immovable properties i s based on decisions o f government staff and implementation in an ad-hoc manner varying from one project to another.

Traditional private land ownership was abolished during the Khmer Rouge period (1975-1979) and was not re-introduced until the late 1980s. Determining ownership and obtaining documentation to prove ownership i s a cumbersome and time consuming process which many landholders have not utilized. The boundaries o f public land s t i l l remain unclearly defined and it can be difficult to distinguish between public and private land. This blurring between public and private land i s particularly acute with regard to rights o f ways for roads, irrigation channels and the like. There was no specific law or regulation on rights o f way until 1999 when a Government o f Cambodia Decree identified a 50-meter right o f way for some specified national roads and 60 meters for other national roads. The width o f other rights o f way varies depending on the type o f road. No efforts were made to publicize the claimed rights o f way and no physical demarcations have been made for these rights o f way.

Presently, the Government’s Inter-ministerial Resettlement Committee (IRC) i s charged with determining entitlements, valuation o f affected assets and in fixing o f compensation rates.

Current legal provisions governing land acquisition, compensation and resettlement in Cambodia do not meet the objectives and principles o f World Bank‘s Operational Policy (O.P.) 4.12 on Involuntary Resettlement. This policy framework conforms to the objectives and principles o f the World Bank’s O.P. 4.12. In the case o f any inconsistency between the provisions of the Cambodian legal framework and this policy framework, the Cambodian law shall be waived to the extent necessary.

3. OBJECTIVES AND PRINCIPLES OF THE POLICY

3.1 Overall Objectives

This Policy framework seeks to address the inadequacy o f the existing legal provisions discussed in the previous section. This policy i s based on the philosophy that the project must serve the needs o f society and ensure that PAPS are at least as well o f f due to the project. This can be ensured through the following basic objectives:

(i) Avoid involuntary resettlement where feasible and minimize resettlement where population displacement i s unavoidable,

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(ii) Ensure that displaced people receive compensation, assistance and rehabilitation so that they would be at least as well o f f as they would have been in the absence o f the project,

(iii)PAPs w i l l benefit from the project, and (iv) Project stakeholders (which includes PAPs) are consulted and given the opportunity to

participate, as practicable, in the design, implementation, and operation o f the project. (v) Appropriate assistance and compensation, in cash or in kind, provided to adversely affected

people, including indigenous groups, ethnic minorities and pastoralists who may have usage or customary rights to the land or other resources taken for the project.

Three important elements o f involuntary resettlement are: (i) compensation for loss o f assets, loss o f livelihood and income, (ii) assistance for relocation, including provision o f relocation sites with appropriate facilities and services, and (iii) assistance for rehabilitation to improve, or at least restoration o f incomes and living standards to the pre-project level.

3.2 Principles on Compensation and Entitlements

The overriding principle for all development projects i s that people unavoidably affected should be compensated and assisted, so that their economic and social future would be at least as favorable as i t would have been in the absence o f the project. This w i l l be accomplished using the following specific principles.

(1) much as possible.

Acquisition o f land and other assets and shifting o f people w i l l be avoided and minimized as

(2) over resources within, the project area as the date o f the census (cut-off date) are eligible for compensation for loss o f assets, other assistance and rehabilitation for social and economic losses. PAPs wi l l be compensated for affected land, either through receiving replacement land or replacement cost for their land or by receiving special assistance’ in l ieu o f compensation for land located on public rights o f way. If landlessness results from this taking o f land for public purposes, then suitable replacement land shall be provided for landless PAPs.

Only PAPs who are found to be l iving in, doing business, or cultivating land, or having rights

(3) cost.

All compensation for affected land, structures, and other fixed assets shall be paid at replacement

(4) resettlement and rehabilitation for a segmenthection or phase (except where long-tem rehabilitation measures such as vocational training) w i l l be completed at least one (1) month prior to the initiation o f construction work under the respective segmenthection or phase thereof.

The resettlement transition period w i l l be minimized and the acquisition o f assets, compensation,

(5) remaining assets are determined as un-viable for continued use, w i l l be entitled for compensation for the entire assets at replacement cost.

PAPs losing al l o f their assets (farmland, house or business), or in case o f partial loss when the

(6) remaining assets remain viable for continued use, compensation for the affected assets w i l l be paid in cash.

In the case o f a partial impact on the assets, Le., partial loss o f land or structures and the

(7) Other types o f landholders who are on a right o f way or public land as o f the cut-off date w i l l be

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compensated for affected structures, other fixed assets and other losses but not for land. However, such affected persons shall receive special assistance such that they are not made worse o f f by the project taking the land on which they were located.

(8) equivalent productive value and/or characteristics at a location acceptable to PAPs. If replacement land at a location acceptable to PAPs i s not available, cash representing replacement cost o f land should be compensated.

In case o f land for land for arable land, the replacement land should be in the form o f land o f

(9) provide PAPs the appropriate plot o f land with basic services such as electricity, water, drainage, emergency sanitation service, and access at least at the pre-project level.

In case o f land for land for residential and commercial sites, the Implementing Agency shall

(10) For resettlement site land, the plot owner of the proposed relocation site w i l l also be entitled to compensation for hisher land, and depending on h isher choice, the compensation may be in cash or in the form o f a replacement land within or outside the relocation site.

(1 1) allowances to eligible PAPs:

The project authorities w i l l provide resettlement assistance and the following minimum

(a) Disruption allowance shall be given to PAPs whose business income i s temporarily lost due to the project. The independent shops on a right o f way that temporarily lose business during construction are eligible for this allowance. The allowance should be provided in cash based on the temporary projected business income lost,

(b) Vulnerable group assistance shall be provided for vulnerable families, such as female-headed household, poor families, and disabled headed households in an amount that shall assist them to become economically viable. In addition to any specific allowances to which members o f vulnerable groups may be entitled, they shall also receive rehabilitation assistance based on their priorities and needs.

(c) Rental allowance shall be given to house tenants o f affected main structures who w i l l be forced to find a new place to live, at an amount equivalent to three months rent. I t shall also be given to affected persons forced to lease premises until replacement land and housing i s available to them up to a maximum period o f three months.

(d) Transportation allowance (in cash or in kind according to mutual agreement o f the PAP and the project authorities) to relocating PAPs. When the allowance i s in cash, i t shall be an amount equivalent to actual transportation costs.

(e) Repair allowance i s given to PAPs affected by a partial loss o f structures and those affected during moving locations based on cost o f repairs.

(12) PAPS severely affected due to the loss o f productive assets and/or their only source o f income and which w i l l require them to engage in some other income-earning activities. The project authorities, by consulting with stakeholders, w i l l coordinate closely with concerned agencies (local authorities and independent assigned NGOs) that have the mandate and the expertise to undertake the needed rehabilitation assistance.

Rehabilitation assistance i s a form o f special s k i l l s training or other development support to

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(13) with a new environment and to improve their status. This assistance shall be based on the needs and priorities o f the vulnerable groups.

The project authorities w i l l provide vulnerable PAPs the rehabilitation assistance needed to cope

(14) property w i l l be mitigated by arrangements o f such property that w i l l ensure, as a f i rs t option, that new access o f those PAPS to an equivalent resource w i l l occur on a continuing basis, i f feasible. If i t i s not feasible, then other alternatives shall be identified in consultation with the PAPs.

Any PAPs’ loss due to any acquisition or restriction on access to common resources as a common

(15) timely design, planning, consultation and implementation o f compensation and resettlement. The project authorities w i l l ensure effective coordination with relevant agencies for the implementation o f the Resettlement Plan (RP).

Resettlement programs w i l l include adequate institutional arrangements to ensure effective and

(16) affected assets, socioeconomic survey, and the preparation and implementation o f RPs, including the timely conduct o f internal and external monitoring o f RP implementation.

Adequate arrangements w i l l be made for the timely conduct o f social assessments, inventory o f

General entitlements for compensation and rehabilitation assistance for different categories o f PAPs are shown in the Entitlement Matrix below but the relevant Resettlement Plan may provide for more specific or additional allowances.

1

Type of Loss

Arable land

Application

Loss o f arable land.

Temporary acquisition or easement

Entitled Person

Eligible landholder

Non-titled but possessory landholder1 Agricultural laborer

Lease holder

Eligible landholder

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Compensation

0 Land for land or cash compensation for lost land at replacement cost according to AP choice. “Land for land” w i l l be provided in terms o f a new parcel of land o f equivalent productivity and free o f taxes, registration and transfer cost; at a location acceptable to PAP; and with long-term security o f tenure.

0 Eligible for economic rehabilitation assistance and other allowances, as applicable.

0 N o compensation but additional assistance given so that they are not worse o f f due to the project and to enable them to replace affected assets. Cash compensation for agricultural laborer equivalent to three months salary and assistance in getting alternative employment. Cash compensation equivalent to replacement cost o f gross harvest for one vear.

0 Cash compensation based on opportunity lost during the period.

Residential land

Commercial land

Loss o f residential land

Temporary accluisition

Plots used for business affected

Eligible landholder

Non-titled but possessory landholder

Lessee

Eligible landholder

Non-titled but possessory landholder Lessee

Eligible landholder

Non-titled but possessory landholder

Lessee

Compensation in cash at replacement cost or, at PAP choice, replacement land o f minimum plot o f acceptable size or a plot o f equivalent size, whichever i s larger, in a nearby resettlement area with adequate physical and social infrastructure.

0 Replacement land to be free from taxes, registration and transfer costs.

0 Eligible for relocation assistance and other allowances as applicable. N o compensation but additional assistance provided so that they are not worse o f f due to the project and enable them to redace affected assets. Eligible for relocation assistance and other allowances, as applicable. Cash compensation for the net loss o f income and damaged assets. Assistance provided so that they are not worse o f f due to the project.

0 Cash compensation and other allowances. as auulicable. Compensation in cash at replacement cost for the affected portion or, at PAP option, replacement land o f sufficient size for business continuation in market area o f resettlement area or at location comparable to previous site. When the affected premises are larger than the relocation plot, cash compensation at replacement cost to cover the difference in area.

0 Eligible for relocation assistance and other allowances, as applicable. Eligible for economic rehabilitation assistance.

0 N o compensation but additional assistance provided so that they are not worse o f f due to the project and the assistance enables them to replace affected assets. This includes replacement land o f sufficient size for business continuation in market area o f resettlement area or at location comparable to previous site. Eligible for relocation assistance and other allowances, as applicable. Eligible for economic rehabilitation assistance.

0 Assistance for finding new commercial place.

0 Eligible for relocation assistance and other allowances, as applicable.

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A

- 5

6

- 7

8

- 9

- 10

Structures

Loss o f business I incomes or employment

Standing crops, trees

Common resources Electric andor water connection

Public facilities

Special assistance

Structures affected

Loss o f business I incomes I employment

Crops or trees affected by land acquisition or temporary acquisition/ easement Loss o f access

Loss of, or damage to, affected assets, partially or entirely. Loss of, or damage to, public infrastructure Special assistance to vulnerable group and indigenoust ethnic minorities

Owner

Tenant

Affected A P s

Owner o f crops or trees

A P S

A P S

Concerned agencies

Vulnerable groups and indigenous1 ethnic minorities

4. Public Participation and Consultation

0 Eligible for economic rehabilitation assistance Compensation in cash for affected portion o f the structure and other fixed assets at replacement cost, without depreciation and without deductions for salvaged material.

0 Assistance in restoration o f any remaining structure, if applicable. Eligible for relocation assistance and other allowance. Three months rent allowance and other allowances as applicable. Cash compensation for the loss o f business, incomes and wages. Assistance during the transition period. Eligible for rehabilitation assistance and other allowances, as auulicable.

0 Compensation in cash calculated on the basis o f type, age and productive value o f affected crops or trees. Other allowances as applicable.

0 Arrangement for new resource or rehabilitation assistance. Replacement or compensation to cover cost o f restoring the facilities.

0 Replacement or compensation in cash at replacement cost to respective agencies.

0 Vulnerable group and indigenous peopleslethnic minorities assistance I allowance based on identified needs and priorities.

The project authorities would be responsible for public consultation and public information dissemination. Consultations and public participation would be carried out as an ongoing process throughout project planning, design and implementation stages. Preparation o f appropriate documents and planning and implementation for the acquisition of land and other assets w i l l be carried out in consultation with the PAPs and the PAPs wi l l receive prior information o f the compensation, relocation and other assistance available to them including:

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The relevant details o f the project; The resettlement plan and various degrees o f project impact; Details o f entitlements under the resettlement plan and what i s required o f PAPS in order to claim their entitlements; Compensation process and compensation rates; Relocation and resettlement site development operation in order to obtain agreement and support o f affected people in participating in these operations; and Implementation schedule with a timetable for the delivery o f entitlements. Information concerning grievance procedures and how to use them.

The project authorities would also provide a detailed explanation o f the grievance process and enlist the help o f village leaders and other influential community officials in encouraging the participation o f the PAPs in resettlement activities. Finally, the project authorities shall attempt to ensure that al l vulnerable groups including indigenous peoples/ethnic minorities understand the process and that their needs are specifically taken into consideration.

Public participation i s performed and information i s made available during both preparation and implementation o f the Resettlement Plan and should include, at a minimum, public information booklet, community meetings and television and radio reports.

5. Grievance Redress mechanism

Grievances related to any aspect o f a project w i l l be handled through negotiations and are aimed at achieving consensus. All complaints received in writing (or written when received verbally) from the PAPs w i l l be documented by each level grievance committee, established by the project authorities at varying governance levels, Le., commune, district and/or provincial levels. PAPs w i l l be exempted from all administrative and legal fees incurred in pursuant to the grievance redress procedures. Grievance committees would comprise o f representatives o f PAPs, community leaders and independent assigned NGOs, in addition to the representatives o f commune and district officials, and project authorities.

If PAPs do not receive any response from an established grievance redress body (at whatever level) within 20 (twenty) days from the filing o f the complaint, or if the decision o f grievance redress body i s not satisfactory, the PAP w i l l have the right to submit the complaint to the next higher level o f the grievance redress mechanism.

If the matter still remains unresolved after all levels o f grievance redress have been utilized, the complainant may then forward hisher case to a court o f law.

In projects where indigenous minorities are affected, all complaints shall be discussed and negotiations shall be carried out in the community where the affected indigenous minorities live. Where necessary, the project proponents w i l l provide assistance so that the rights o f the indigenous minorities are protected.

In addition to the above mechanisms, and at the option o f the PAPs, grievances may be taken to other mediating bodies, such as a council o f village elders, monks at a local pagoda, or any other dispute resolution mechanism as may be decided by the PAPs.

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6. Monitoring and Evaluation

6.1. Internal Monitoring

The WB-PIU2 would appoint adequate full time staff to monitor the process o f resettlement. In order to assist with this monitoring, the authorities shall obtain and maintain appropriate baseline data prior to the resettlement impacts. The monitoring staff w i l l submit periodic progress reports to the involved authorities for inclusion in the progress report. The main objective o f the reports i s to determine whether the resettlement i s effective and to make the needed recommendations for change. The monitoring staff w i l l be present in the field as well as at every meeting related to resettlement.

6.2. External Monitoring

In the project, sub-project or any component thereof, with significant resettlement, an external agency w i l l be contracted to monitor the process o f resettlement. The external monitoring agency would be provided full access to project documents and database to facilitate monitoring process. The external monitoring agency w i l l prepare periodic monitoring reports for submission to the WB-PIU2 o f MPWT as well as to the World Bank.

In the event monitoring by either the internal or external monitor shows that PAPs are not receiving entitlements due to them, or there are other problems in implementation in accordance with the Resettlement Plan, then the project authorities w i l l take, on a priority basis, al l steps necessary to rectify the situation and ensure compliance with a Resettlement Plan.

6.3 Evaluation

Six months to one year after the completion o f resettlement in the project, the project authorities w i l l contract a competent external agency for ex-post evaluation o f resettlement implementation to determine whether the objectives o f the policy have been achieved and severely affected PAPs have been able to restore their incomes and livelihood to the pre-project levels. Where necessary, and based on the outcome o f the evaluation, additional assistance would be provided by the project authorities to achieve the objectives o f the policy framework.

7. Reporting and Documentation

7.1. Initial Social Assessment

The project authorities w i l l carry our init ial social assessment to determine potential social issues and likely adverse impacts at the sub-project identification stage. Based on the init ial social assessment decision can be taken on the types o f detailed studies and field investigations required and necessary documentation.

7.2 Abbreviated Resettlement Plan

Where in a sub-project less than 200 people are affected due to the loss of assets, incomes, employment or businesses, project authorities would carry out field surveys covering full census o f affected people and inventory o f affected assets, and prepare an abbreviated Resettlement Plan. The abbreviated Resettlement Plan would include: (i) brief description o f the sub-project, location and i t s impacts; (ii) consultation with project affected people; (iii) the baseline information o f affected people; (iv) category

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of PAPs by degree and type o f impacts; (v) entitlement to compensation, allowances, and rehabilitation assistance by category o f impacts in a compensation matrix; (vi) information on relocation site, where applicable; (vii) institutional responsibilities for implementation and monitoring; (viii) grievance redress procedures; (ix) estimated cost o f resettlement and yearly budget; and (x) a time-bound action plan for implementation.

7.3 Resettlement Plan

Where in a sub-project more than 200 people are affected, project authorities would be required to conduct detailed field investigations including census, inventory o f affected assets and socio-economic baseline surveys o f severely affected persons and prepare a Resettlement Plan for submission to the Bank. The Resettlement Plan (RP) would include: (i) brief description o f the sub-project, location and i t s impacts; (ii) principles and objectives governing resettlement preparation and implementation; (iii) Legal framework; (iv) the baseline information o f affected people; (v) category o f PAPs by degree and type o f impacts; (vi) entitlement to compensation, allowances, and rehabilitation assistance by category of impacts in a compensation matrix; (vii) information on relocation site together with socio-economic conditions on the secondary PAPs and host communities; (viii) institutional arrangement for planning and implementation; (ix) participatory procedures during planning and implementation; (x) grievance redress procedures; (xi) estimated cost o f resettlement and yearly budget; (xii) a time-bound action plan for implementation; and (xiii) internal and external monitoring procedures, including the TOR for external monitoring and evaluation.

8. LEGAL AND INSTITUTIONAL REQUIREMENTS

The Ministry o f Public Works and Transport (MPWT) and Ministry o f Rural Development (MRD) are jointly responsible for planning and implementation o f the PRIP. As the project proponent, both the ministries w i l l be responsible for, at a minimum, the following resettlement activities:

(a) Carry out all necessary surveys and field investigations and preparation o f necessary documents;

(b) resettlement activities in accordance with the approved RPs;

With assistance from other relevant agencies and local authorities, implementation o f

(c) Address all deficiencies identified in resettlement implementation;

(d) claims o f PAPs to ensure that the same are paid in time as planned; and

Ensure timely allocation o f resources and budgetary provisions, and process compensation

(e) Supervise and monitor RP implementation.

9. Costs and Budget

Necessary funds for planning and implementation o f Resettlement Plan / IPDP w i l l be provided by the project authorities. The project authorities w i l l also provide for al l costs related to mitigating adverse social impacts based on budgetary requirements established in the RP. All o f these costs are to be a part o f the total project cost.

Each RP w i l l detail cost estimates for compensation and relocation (if applicable) o f PAPs with a

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breakdown by category o f PAPs and by type o f asset affected, such as agricultural, residential, and commercial land; affected house, structures and other fixed assets; and type o f assistance, such as transport allowance, disruption allowance, etc. The cost estimates w i l l include adequate provisions for contingencies.

In case o f overruns due to unforeseen circumstances or delays, the project authorities w i l l allocate additional funds as necessary.

1/ “Special assistance” can include provision o f suitable land., rental allowances, disruption allowance, etc., as well as a vulnerable group allowance. The main point i s that affected persons are not made worse of f than they would have been had the development project not taken place.

2/ Where significantly large or entire landholdings are affected by the project or in cases where only partial land i s affected but the remaining land becomes economically non-viable, the general mechanism for compensation o f lost agricultural land w i l l be through provision o f “land for suitable land” arrangements o f equivalent productivity and at a location acceptable to the PAP. Where the PAPs stand to lose are losing residential land with structures that exist in a closely located group exceeding 20 households, the project authorities, in consultation with affected households, may offer a relocation option to ful ly developed resettlement sites, or alternative facilities to housing projects. If suitable residential / agricultural replacement land i s not available, and at the informed request o f the PAPs, cash compensation at replacement cost w i l l be provided.

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Additional Annex 13: Indigenous Peoples Development Framework CAMBODIA: Provincial and Rural Infrastructure Project (PRIP)

I. Introduction

1. reduce rural poverty and expand economic and social development, and to contribute to the national re-integration o f the project provinces into the mainstream national development. The development objective o f the project i s to provide sustainable, year-round, and safe improvements in rural accessibility to markets and essential services in the four provinces o f Siem Reap, Oddar Meanchey, Kampong Thom, and Preah Vihear.

The overall goals o f the proposed Provincial and Rural Infrastructure Project (PRIP) are to

2. The PRIP w i l l rehabilitate and maintain strategic secondary and tertiary roads in the four northwest provinces covered by the project. Since the project w i l l rehabilitate existing roads, no significant acquisition o f private assets and displacement o f population are foreseen. Three o f the project provinces are known to have some indigenous ethnic minorities. Preliminary information suggests that several indigenous minorities live in the forest areas, some distance away from the existing roads. Some indigenous minority communities l ive close to the provincial roads or villages and are likely to benefit from the project in terms o f improved access to markets and new opportunities for income generation. No significant adverse impacts on indigenous minority groups are foreseen but in some cases their access to community resources may be affected. I t i s also possible that rehabilitation o f some road sections and development o f market areas may result in increased in-migration, creating pressure on the land. The Indigenous Peoples Development Framework, presented below, addresses the principles and procedures for sub-projects in areas where indigenous ethnic minorities reside.

11. PRIP and Operational Directive 4.20

3. Directive 4.20 (Indigenous Peoples). This policy directive requires that special measures be established to protect the interests o f ethnic minorities, i.e. social groups with a social and cultural identity distinct from the dominant society that makes them vulnerable to being disadvantaged in the development process. Indigenous peoples can be identified in particular geographical areas by the presence in varying degrees o f the following characteristics:

(a) a close attachment to ancestral territories and to the natural resources in these areas; (b) self-identification and identification by others as members o f a distinct cultural group; (c) an indigenous language, often different from the national language; (d) presence o f customary social and political institutions; and (e) primarily subsistence-oriented production.

As a prerequisite to World Bank support, PRIP must meet the requirements o f Operational

4. descent, Muslim Chams and ethnic Lao, all o f whom, although (b), (c), and (d) above are present, are generally not considered to be indigenous to the area where they live in Cambodia, and therefore not covered under the O D 4.20. However, the Bank has determined that O D 4.20 applies with reference to indigenous minorities, often referred to as “Highland Peoples”, because these groups are indigenous to the area where they reside, and maintain cultural and socioeconomic practices different than those practiced by the Khmer national majority. Though their numbers are relatively small in proportion to the national population, the Highland Peoples are estimated to represent a majority o f the population in Ratanakiri and Mondolkiri provinces, both in the northeast. They represent much smaller proportions in other provinces. These groups, among them the Tampuan, Kuy, Jarai, Phnong, Kreung, Kavaet, Brou,

The largest ethnic minority groups in Cambodia include people o f Vietnamese and Chinese

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Stieng, Lun and others, are estimated to total about 120,000 people, or about one percent o f the national population.

5. Preah Vihear (Kuy), Kampong Thom (Pear and Kuy), and Siem Reap (Kuy). PRIP activities w i l l not affect land tenure or otherwise cause any direct adverse impacts. However ‘Highland Peoples’ lifestyles and livelihoods are under pressure in some areas because o f in-migration by others, forestry concession programs, and discouragement o f shifting cultivation practices. PRIP-related improvements o f roads and infrastructure could well induce future in-migration and pressure on access to resources. For these reasons, the Highland Peoples are considered potentially vulnerable to being disadvantaged in the development process, and this plan reviews actions taken, or to be taken, to safeguard their interests.

I t i s estimated that indigenous communities are present in three o f the four PRIP Provinces:

6. not to individual families. The identification o f ethnic minorities in the project area w i l l therefore be triggered by the identification o f groups of ethnic minority families and individuals.

In the context o f this project, i t i s important to note that the O D 4.20 refers to social groups and

7. The primary objectives o f O D 4.20 are:

0

0

to ensure that such groups are afforded meaningful opportunities to participate in planning that affects them; to ensure that opportunities to provide such groups with culturally appropriate benefits are considered; and to ensure that any project impacts that adversely affect them are avoided or otherwise minimized and mitigated.

8. implementation, if ethnic minorities are identified in any o f the project areas. For the purpose o f this Framework, the project areas are defined as the area influenced by the upgrading o f the road (approximately within 3 km from the road). In the PRIP project the purpose o f the Framework i s to ensure culturally appropriate consultation with indigenous minorities (where present), an opportunity to participate in the project, and additional support needed for coping with the impact o f improved access.

The following general principles and procedures w i l l be applied during project preparation and

111. The Cambodian Legal Context

9. However, at present there i s no comprehensive legislation or regulation relating specifically to protection of Highland Peoples rights or interests.

Under the Cambodian constitution, the Highland Peoples are afforded Cambodian citizenship.

10. draft “General Policy for Highland Peoples Development.” The draft, culminating from a long process o f consultations among local groups, NGOs, international development agencies and government, has never been formally adopted by the government. The policy statement would provide a number o f protections for Highland Peoples, many relating to land rights and access to resources. Of particular importance in the context o f RILGP are these provisions in the general policy statement:

In 1997, a special Inter-ministerial Committee for Highland Peoples Development released a

0

0

the government “shall promote understanding and respect o f cultural diversity and ensure that Highland Peoples can practice their own cultures” (para. 1); “Highland Peoples shall have the right to be fully informed about, determine the priorities for and to exercise control over their economic, social and cultural development” (para. 6);

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and this provision in the policy guidelines section o f the document:

0 “Highland Peoples’ communities shall be given the opportunity to participate and take responsibility in all decisions regarding infrastructure projects that affect them. The affected community and persons must have agreed, after being fully informed in a language that they clearly understand, o f the project and all i t s consequences for them and their natural environment, before any development project may proceed” (para. 7.2).

11. For the purposes o f PRIP, the above policy provisions have guided project design and implementation arrangements. Specific measures to ensure adequate opportunities to participate in both village and commune decision-making processes are explained in the sections that follow.

IV. Framework for identifying and assisting indigenous minority communities under the project

12. After the overall prioritization o f roads to be rehabilitated has been done in a participatory process o f stakeholders at the provincial level, and the next years roads identified, the detailed planning starts. The road-by-road social assessment i s one o f the activities incorporated into the detailed planning o f works to be carried out on individual roads. This w i l l follow the Project Implementation Plan, which specifies the technical, environmental and social procedures and standards. With regard to social aspects, the major areas o f activities are (i) Information dissemination and consultation, (ii) identification o f the need for land acquisition, after minimization (alternatives) has been considered, and (iii) the identification o f indigenous minorities for whom special measures would have to be taken.

13. Indigenous Peoples Development Plan, based on extensive consultations, and w i l l be part o f the annual work program to be approved by the project authorities and submitted to IDA for review.

For each subproject with indigenous minorities, the project authorities w i l l prepare a standalone

14. A social impact assessment and consultations would be carried out in preparation of the Indigenous People Development Plan (IPDP). The impact assessment w i l l include the following information:

(a) Household ownership o f economic and productive assets; (b) Annual income from primary and secondary opportunities; (c) Economic information on the community (e.g., brief information on economic and natural

resources, productive and livelihood systems, tenure systems); (d) Social information on the community (brief description o f kinship, value system, type o f

social organizations o f formal and informal groups, farming groups, etc., especially those that can help the group in adjusting to the potential impacts o f the project and including an assessment o f the degree o f inclusiveness and representativeness o f those groups, particularly with regard to vulnerable, marginal, and poor groups);

(e) Potential impact on basic services (e.g., water supply, health center, and school); and (0 Potential impact o f the project on social and economic livelihood.

15. a) information dissemination conducted in the local language; b) an indigenous minority representativeAeader and an independent assigned NGO representative or a social scientist knowledgeable in indigenous peoples history and tradition are present in all discussions with clusters o f

In order for meaningful consultation and participation to take place, specific steps w i l l include:

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indigenous peoples; and c) al l meetings are properly documented and shared with the concerned indigenous peoples.

If the preliminary social assessment indicates that the potential impact of the proposed sub-project wil l be significantly adverse, the sub-project wil l not go forward.

V. Indigenous People Development Plan (IPDP)

16. If the indigenous people conclude that the project w i l l be beneficial, measures and assistance w i l l be developed in consultation with tribal elders, community groups, and independent assigned NGOs, and the planned activities w i l l be documented in an IPDP in addition to the information described above. The assistance should include institutional strengthening and capacity building of tribal elders and community groups working on activities (e.g. resettlement i f any) within the project.

17. Where indigenous people are adversely affected by a sub-project, either by land acquisition or by other induced negative impacts, the IPDP, a standalone document, would have to, in addition to support mentioned above, include measures to mitigate adverse impacts. Acquisition o f land and other assets w i l l be governed by the Resettlement Policy Framework.

18. staff from MRD and Commune Council, facilitated by an NGO, where available and appropriate.

The implementation o f the IPDP wi l l be carried out by the community, assisted by appropriate

Costs and Budget

19. authorities. The project authorities w i l l also provide for all costs related to mitigating adverse social impacts based on budgetary requirements established in the Resettlement Plans. All o f these costs are to be a part o f the total sub-project cost.

Necessary funds for planning and implementation o f IPDP w i l l be provided by the project

Monitoring Arrangements

20. commune authorities. For most activities, monitoring includes recording o f attendance and minutes o f proceedings. Opportunities are also provided for participatory monitoring at the village level during implementation. Each year, the Commune Council w i l l disseminate a report on the status o f program implementation. Each village may review this report for general accuracy. Additionally, each year the village chief w i l l review project activities within i t s boundaries, to confirm whether construction, contracting arrangements, and other aspects have been implemented appropriately. The project authorities w i l l regularly inspect and monitor the implementation o f all IPDPs.

In PRIP, responsibility for project monitoring i s divided among national, provincial, and

Conflict Resolution Procedures

21, In general, Highland Peoples resort to traditional leadership and institutional arrangements to resolve conflicts arising from within the village. PRIP views these arrangements as the most appropriate venue for initial airing o f project-related conflicts. If mediation fails, disputes relating to sub-projects w i l l be addressed by the Commune Council prior to sub-project approval. Disputes arising in the course of implementation of the IPDP wi l l be addressed by the village chief/elders for submission to the project authorities and other relevant authorities.

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MAP SECTION