report no: 18339-bd · brta - bangladesh road transport authority brtc - bangladesh road transport...

Document ofThe World Bank

Report No: 18339-BD

PROJECT APPRAISAL DOCUMENT

ONA

PROPOSED CREDIT

IN THE AMOUNT OF SDR 129.3 MILLION (US$177 MILLION EQUIVALENT)

TO THE

GOVERNMENT OF THE PEOPLE'S REPUBLIC OF BANGLADESH

FOR

DHAKA URBAN TRANSPORT PROJECT

DECEMBER 17, 1998

Infrastructure Sector UnitBangladesh Country UnitSouth Asia Region

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

CURRENCY EQUIVALENTS

(Exchange Rate Effective October 31, 1998)Currency Unit = Taka

US$1 = Taka 48.5

FISCAL YEARJuly 1- June 30

ABBREVIATIONS AND ACRONYMS

ADB - Asian Development BankBRTA - Bangladesh Road Transport AuthorityBRTC - Bangladesh Road Transport CorporationCAS - Country Assistance StrategyDCC - Dhaka City CorporationDMA - Dhaka Metropolitan AreaDMP - Dhaka Metropolitan PoliceDOE - Department of Environment (of the MOEF)DUTP - Dhaka Urban Transport ProjectEIA - Environmental Impact AssessmentEIRR - Economic Internal Rate of ReturnGDTPCB - Greater Dhaka Transport Planning and Coordination BoardGOB - Government of the People's Republic of BangladeshICB - International Competitive BiddingIDA - International Development AssociationLGD - Local Government Division (of the MLGRDC)LGED - Local Government Engineering DepartmentMLGRDC - Ministry of Local Government, Rural Development & CooperativesMOC - Ministry of CommunicationsMOEF - Ministry of Environment and ForestMOF - Ministry of FinanceMOHA - Ministry of Home AffairsNCB - National Competitive BiddingO&M - Operation and maintenanceNMT - Non-motorized transportPCC - Public Consultative CommitteePCU - Project Coordination UnitPIU - Project Implementation UnitPD - Project DirectorRAJUK - Rajadhani Unnayan Karthpakhya (Capital City Development Authority)RAP - Resettlement Action PlanRHD - Roads and Highways Department (of the MOC)RRD - Roads and Railways Division (Ministry of Communications)VOC - Vehicle operating cost

Vice President: Mieko NishimizuCountry Director: Frederick TempleSector Manager: Frannie Humplick

Team Leader/Task Leader: Thampil Pankaj

BANGLADESHDhaka Urban Transport Project

CONTENTS

A: PROJECT DEVELOPMENT OBJECTIVE ................................ ....................................... 2

1. PROJECT DEVELOPMENT OBJECTIVE AND KEY PERFORMANCE INDICATORS ............................................ 2

B: STRATEGIC CONTEXT ........................................................................ 2

1. SECTOR-RELATED COUNTRY ASSISTANCE STRATEGY (CAS) GOAL SUPPORTED BY THE PROJECT ........... 22. MAIN SECTOR ISSUES AND GOVERNMENT STRA PEGY ........... ....... ............ 2........................................... 23. SECTOR ISSUES TO BE ADDRESSED BY THE PROJECT AND STRATEGIC CHOICES ....................................... 5

C: PROJECT DESCRIPTION SUMMARY ....................................................................... 5

1. PROJECT COMPONENTS ...................................................................... 52. KEY POLICY AND INSTITUTIONAL REFORMS SUPPORTED BY THE PROJECT ........... 63. BENEFITS AND TARGET POPULATION ...................................................................... 84. INSTITUTIONAL AND IMPLEMENTATION ARRANGEMENTS ............................... ....................................... 8

D: PROJECT RATIONALE ...................................................................... I I

1. PROJECT ALTERNATIVES CONSIDERED AND REASONS FOR REJECTION: .................................................. I 12. MAJOR RELATED PROJECTS FINANCED BY THE BANK AND/OR OTHER DEVELOPMENT AGENCIES .......... 123. LESSONS LEARNED AND REFLECTED IN THE PROJECT DESIGN ........... ....... .......................................... 124. INDICATIONS OF BORROWER COMMITMENT AND OWNERSHIP .................. ........................... 125. VALUE ADDED OF BANK SUPPORT IN THIS PROJECT ............................................. 13

E: SUMMARY PROJECT ANALYSIS .............................................. 13

1. ECONOMIC ............................................. 132. FINANCIAL ............................................. 143. TECHNICAL: .............................................. 144. INSTITUTIONAL: .............................................. 155. SOCIAL: ................................................................... . . , . , . , . . 156. ENVIRONMENTAL ASSESSMENT ................................................................... 167. PARTICIPATORY APPROACH .................................................................. 1 7

F: SUSTAINABILITY AND RISKS .................................................................. 17

1. SUSTAINABILITY .................................................................. 172. CRITICAL RISKS .................................................................. 183. POSSIBLE CONTROVERSIAL ASPECTS .................................................................. 20

G: MAIN CREDIT CONDITIONS .................................................................. 21

1. EFFECTIVENESS CONDITIONS: ................................................................................... 212. OTHER [CLASSIFY ACCORDIN(; TO COVEINAN T IxYPS USED IN THE LEGAL AGREEMENTS.]: .................. 21

H. READINESS FOR IMPLEMENTATION ..................... ............................................. 22

1. COMPLIANCE WITH BANK POLICIES ...................... ............................................. 22

Annexes

Annex 1. Project Design SummaryAnnex 2. Detailed Project DescriptionAnnex 3. Estimated Project CostsAnnex 4. Cost-Benefit Analysis SummaryAnnex 5. Financial SummaryAnnex 6. Procurement and Disbursement Arrangements

Table A. Project Costs by Procurement ArrangementsTable Al. Consultant Selection ArrangementsTable B. Thresholds for Procurement Methods and Prior ReviewTable C. Allocation of Credit Proceeds

Annex 7. Project Processing Budget and ScheduleAnnex 8. Documents in Project FileAnnex 9. Statement of Loans and CreditsAnnex 10. Country at a GlanceMaps

IBRD 29771 - Bangladesh - Project AreaIBRD 29772 - Dhaka Metropolitan Area (DMA)IBRD 29841 - Main Project Components

BANGLADESHDhaka Urban Transport Project

Project Appraisal Document

South Asia Region

Date: December 17, 1998 Team Leader/Task Leader: Thampil PankajCountry Director: Fredlerick Temple Sector Manager: Frannie HumplickProject ID: BD-PA-9524 Sector: Transportation Program Objective Category: ENLending Instrument: Specific Investment Loan Program of Targeted Intervention: [] Yes [xl No

Project Financing Data [ Loan [x] Credit [ Guarantee [] Other [Specify]

For Loans/Credits/01thers:

Amount (US$m/SDRm): SDR 129.3 million (US$177.0 million equivalent)Proposed terms: [x] Multi-currency [ ] Single currency, specify

Grace period (years): 10 [I Standard Variable [x] Fixed [] LIBOR-basedYears to maturity: 40Commitment fee: 0.5%

Service charge: 0.75%

Financing plan (US$m):Source Local Foreign Total

Government 44.1 44.1CofinanciersIBRDIDA 78.5 98.5 177.0Other (specify)Dhaka City Corporation 13.1 13.1

Total 135.7 98.5 234.2

Borrower: Government of BangladeshGuarantor: NAResponsible agency(ies): Ministry of Communications and Dhaka City Corporation

Estimated disbursements (Bank FY/US$M): 1999 2000 2001 2002 2003 20 20Annual 8.0 30.5 47.5 55.0 36.0

Cumulative 8.0 38.5 88.0 141.0 177.0

Project implementation period: 1999-2004 Expected effectiveness date: 03/1999 Expected closinig date: 06/2004

OSD PAD Form: July 30,1997

A: Project Development Objective

1. Project development objective and key performance indicators (see Annex l).

The project's overall objectives are: (a) To improve urban transport infrastructure and services inthe Dhaka Metropolitan Area (DMA) in an economically and environmentally sustainable manner, and(b) To strengthen institutional and policy framework and address long-term transport planning andcoordination issues in the Dhaka Metropolitan Area. The transport problems in DMA are multi-facetedand massive, and would need a phased program spread over several years. This project would focus onthe first phase, to deal with the most pressing constraints, including building up an institutionalframework and a policy environment that envisages active private sector and community involvemenit.

B: Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project (see Ann7ex I):

CAS document number: 17453-BD Date of latest CAS discussion: March 31, 1998

The CAS states that the Bank Group's mission in Bangladesh is reducing poverty by promotingrapid job-creating economic growth and interventions that directly assist the poor. The strategic prioritiesoutlined in the CAS include, among others: (a) institutional development, (b) promoting a competitiveprivate sector as the engine of growth, and (c) promoting better public sector management and improvedpublic services for private sector and civil society. In outlining the implementation of the assistancestrategy, the CAS states that the Bank Group will assist in providing better transport services and tacklingurbanization problems, and identifies Dhaka Urban Transport Project (DUTP) as one of the key vehiclesto achieve this.

The project supports these main priorities outlined in the CAS. It will help remove transportbottlenecks, and improve transport services, in the largest and the most important urban center inBangladesh, which has also a large percentage or urban poor; Dhaka has a population of 9 million andcontributes about 13% of the country's Gross Domestic Product (GDP). The project will also help todevelop institutional capacity for better coordination and improve public sector management of DMA'stransport system, expand private sector role and participation and assist the poor in better meeting theirmobility needs . An important focus of the project is building institutional capacities in a phased manner.The proposed Greater Dhaka Transport Planning Coordination Board (GDTPCB), with members fromkey private and public sector agencies, is expected to serve as a model for metropolitan transportationplanning and coordination in Bangladesh. The project will also strengthen the institutional capacities ofmany local agencies which have important roles in the metropolitan transport planning and management.The project envisages good bus services provided by private sector to be the main thrust of publictransportation in Dhaka city. Various steps will be taken under the project to facilitate greater privatesector participation in the provision of efficient bus services, including improving infrastructure andtraffic management which will reduce congestion, traffic delays and vehicle operating costs, providingadequate bus terminals and depots, deregulating fares, and facilitating credit from various sources forprivate bus entrepreneurs; some of these measures have already been initiated. The urban poor willparticularly benefit from improved bus services, better pedestrian facilities and support for non-motorizedtransport (NMT) which employs a large number of poor operators.

2. Main sector issues and Government strategy:

Sector Background: Urban population growth in Bangladesh in recent decades, has beenphenomenal; total urban population which was 2.6 million (or 4.8% of the total population) in 1961, roseto 22.5 million (around 20% of the total population) by 1991. The urban population growth per decadehas averaged 6.7% during this period. This has far outstripped the capacity of urban infrastructure,leading to low level of efficiency and massive shortages. The future expansion of the country's economy

significantly depends on the competitiveness of urban areas which are also the country's main industrialand commerciall centers; therefore, enhancing the efficiency and reach of urban infrastructure becomes ahigh priority. Main issues in the urban sector of Bangladesh are: (a) rapid increase in urban population;(b) extremely poor conditions of infrastructure and services, with huge backlogs and low-level of O&Mof existing services; (c) weak institutions at the local government level, with inadequate capacity forplanning and implementing projects, for managing municipal services and finances, and for maintaininginfrastructure; (d) poor revenue base and inadequate cost recovery; (e) overlapping responsibilities andpoor coordination among different government ministries and municipal agencies; and (f) lack ofstakeholder participation and adequate consultative processes.

The Government has realized the magnitude and importance of the problem and is now makingearnest efforts to tackle these issues, with the support of IDA, ADB, UNDP and bilateral fundingagencies to improve the efficiency of the urban sector, through strategic and technical studies, capacitybuilding initiatives, and development projects (ref. detailed discussion under para. on GovernmentStrategy below).

Dhaka's critical role: The urban hierarchy of Bangladesh is strongly dominated by metropolitanDhaka, whichl is the country's largest and most industrialized city, and also its administrative, commercialand cultural capital. The population of Dhaka is about 9 million presently and is projected to be about 16million by 2015, making it the seventh largest megacity in the world. Between 1960 and 1990 theaverage annual growth rate of population in DMA was eight percent. With a share of about 7% of thetotal population, Dhaka contributes about 13% of the national GDP. In spite of its relative importance inthe national economy, acute deficiencies exist in the provision of infrastructure facilities, resulting in awidening gap between supply and demand for services.

Transport Environment in Dhaka: The transport environment in Dhaka is characterized bytraffic congestion and delays, inadequate traffic management, conflict of jurisdictions and poorcoordination among agencies, and increasing air pollution problems. Dhaka is perhaps the only city of itssize without a well-organized, scheduled bus system or any other mass transport system. Women andurban poor are particularly disadvantaged in accessing the existing bus facilities due to extremeovercrowding. The city's traffic problems have recently reached crisis proportions; traffic delays havetripled in the last three years and automobile-related air pollution has become a major health problem.These shortcornings seriously compromise the ability of the transport system in Dhaka to sustaineconomic growth and reasonable quality of life. Deteriorating traffic and environmental conditions haveprompted a popular public "Save Dhaka" campaign to find urgent solutions. Moreover, the expectedaddition of another seven million people over the next 16-17 years will make conditions almostunbearable in the future, unless urgent measures are taken to remedy the situation.

In many respects, the distribution of modal choices in Dhaka is unique among cities ofcomparable size in the Asia region. Walking to work and non-motorized transport (NMT) trips are majorcomponents of the travel pattern in Dhaka. In terms of number of trips, almost 60% of the 8.5 millionweekday person trips are walk trips; 19.2% use the manually-pedaled cycle-rickshaw; 1.4% use auto-rickshaw (motorized three-wheelers); 9.2% travel by bus; 3.1% by private car; and the remaining, about7.7%, by various other modes. In terms of passenger kms. traveled, the share of buses is 30.6%, and thoseof cycle-rickshaw and walking are 21.7% and 17.7%, respectively. The high dependence on walking andcycle rickshaw, both slow and typically best suited for short trips on secondary roads, and a lowdependence on buses (the main form of public transport), in a city of nine million people with an urbanarea of about 2,000 square kms., is a symptom of inefficient and ineffective transport systems andoperations. Dominance of slow human pedaled cycle rickshaws, which are non-polluting and employ alarge number of poor, but adds to traffic congestion, particularly on main arterial roads, constitutes a

major social issue related to traffic management in Dhaka.

The principal problems/issues associated with transport services in Dhaka are: (a) weakinstitutional arrangements for planning, coordination and management of transport services, leading tooverlapping jurisdictions, and inadequate inter-agency planning and coordination; (b) absence of a goodscheduled bus system (or other mass transport), most buses being old, overcrowded and generallyinaccessible to women passengers; (c) poor road conditions and inadequate intersection managementfacilities for smooth traffic flow; (d) serious traffic congestion, which reduces speed and restricts thenumber of daily bus trips possible, thus increasing vehicle operating costs; (e) tariff regulations and otherdisincentives that discouraged large investments by the private sector (Currently most of the busoperations in the city - about 95% of around 1600 buses - are managed by the private sector, withregulated low tariff and traffic delays leading to substandard services; the tariff restrictions have beenrecently relaxed as condition of DUTP preparation, and the private sector has begun to bring in betterbuses at higher tariffs); (f) inadequate traffic management and inefficient road use because of poorenforcemenit of traffic regulations, conflict between slow and fast moving modes, encroachments bystreet vendors, and lack of coordination among different utility agencies and the road maintenanceagency; (g) high accident rates arising from inadequate traffic enforcement, poor road conditions anddriving standards; (h) poor accessibility for women to the existing bus services due to overcrowding, andinadequate sidewalks and pedestrian facilities which constrain poor women garment workers who walk towork in large numbers; and (i) automobile-related air pollution which has become a major hazard for theentire city population, due to the recent steep increase in the highly polluting two-stroke engines (three-wheeler auto-rickshaws), increased traffic congestion, use of old and badly maintained buses, and poorquality fuel.

Government Strategy: To deal with this deteriorating urban situation, the Government hasrecently conducted many studies and initiated actions to evolve a rational strategy in urban planning andhousing, inunicipal management and services, urban transport, and urban institutions, and address the keyissues involved. Some of these studies, such as the Urban and Shelter Sector Review, the Dhaka andChittagong City Master Plans, the Dhaka Integrated Transport study, Municipal Services FeasibilityStudy, and the Dhaka Water Supply Project studies have been partly funded by the UNDP, ADB, theWorld Bank and other key bilateral. There have been active discussions and dialogue within theGovernment and the country, and with the World Bank and other institutions in preparing a cogentstrategy for tackling the urban issues. For example, the National Program Document for Urban Sector(1994) prepared with UNDP assistance, provides the analytical underpinning to urban sector initiativesfor the next decade; Government also recently agreed with IDA, on a strategy for managing municipalfinance issues, based on the municipal finance sector study (1997) completed with IDA assistance. TheGovernment has also prepared Master Plans for Dhaka and Chittagong with UNDP assistance. More.specialized work in specific areas are currently under way, in parallel with initiation of projects forinfrastructure improvements and institutional strengthening. There has been genuine interest andcommitment by the Government in addressing urban issues. The Government's urban strategyemphasizes decentralization of authority to the local agencies, strengthening their capacity, and upgradinginfrastructure with a major role for private sector in the delivery of municipal services.

In the area of urban transport, the Government's strategy is to initially focus on the problems ofDhaka which is the largest and also one of the fastest-growing cities, and in the process, create asuccessful model in urban transport that can be replicated in other urban centers of the country. TheDhaka Integrated Transport Study (DITS, 1994) and subsequent discussions with Government havehighlighted the following elements that will constitute the urban transport strategy for Dhaka (which willalso set the tone for the other cities in the country): (a) institutional reforms to ensure efficient urbantransport planning and management, and coordination among different agencies, as well as with regionalland use planning process; (b) strengthening of the Dhaka City Corporation and other municipalities in

the Dhaka area, and other relevant agencies, to better manage transport services and projects; (c)improving maintenance systems and cost-recovery; (d) removing physical constraints in the transportsystem and reduce transport costs; (e) improving traffic management and safety; (f) enhanced role for theprivate sector in urban transport services, under competitive market conditions; (g) key role for theGovernment in undertaking public investments in critical common-user infrastructure facilities such asroads, traffic management improvements etc. and in providing an efficient regulatory system for safe,dependable services by the private sector, under adequate emission and environmental standards; (h)developing a multi-modal framework involving all relevant modes; (i) developing an efficient bus-transport system by private sector as the main mass-transport mode for the near future, while studyingother mass transport options for the long-term; () allowing multi-tier bus tariff systems, with free fare-setting for higher quality services (such as sitting-only', 'limited-stops' etc.) and with fare regulation forordinary services to ensure affordability for the poor; (k) ensuring a continued significant role for cycle-rickshaws (which is pollution-free and which provides employment support for about 1.0 million urbanpoor), as feeder services to bus transport, and as local services on non-main roads, by providing specialfacilities, while reducing their use on main arteries where they cause traffic congestion; (I) enhancingpedestrian facilities by providing, for example, clear sidewalks, and pedestrian bridges for safe crossings;(m) addressing the transport needs of specific vulnerable groups such as women, garment workers, andthe poor; and (n) addressing air pollution related issues by restricting the growth of two-stroke engines,setting and monlitoring emission standards.

IDA enclorses GOB's overall urban strategy and supports it mainly in two ways: (a) working withGOB in tackling major urban transport problems through the proposed DUTP, and (b) concurrentlysupporting GOB's efforts in strengthening municipal institutions, policy framework, decentralization andgeneral infrastructure improvements, through ongoing and new projects. The Dhaka Water SupplyProject funded by IDA in 1996, is ongoing, and a new Municipal Services Project, focused on an numberof small and medium size municipal towns, which also supports strengthening municipal institutionsgenerally, has been recently appraised and negotiated, and is expected to be presented to IDA Boardshortly.

While some urban projects for housing, water supply and other municipal services have beenfunded recently by various international agencies in selected cities and towns, no internationally fundedinvestment project has been undertaken so far for urban transport, and the proposed DUTP would be thefirst intervention in this sub-sector in Bangladesh. The strategic orientation identified by GOB for theurban transport sub-sector is fully reflected in the proposed DUTP.

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

The project will address the main sector issues relating to: building institutional capacity andimproving policy environment, strengthening planning and coordination capacity, infrastructure servicesprovision, betteir maintenance, improved traffic management, private sector participation, environmentalsustainability and addressing transport needs of the poor. The focus of this project is on the most urgent,institutional and infrastructure issues requiring immediate attention, and developing a phased approach toaddress the complex and multifaceted problems facing Dhaka, transport system. It will also provide amodel for dealing with transport issues in other urban centers in the country.

C: Project Description Summary

1. Project components (see Annex 2for a detailed description and Annex 3for a detailed costbreakdown):

PROJECT COMPONENTS AND COST SUMMARY

Cost incl. % of IDA % of IDAComponent Category Contingencies Total financing financing

(US$M) (US$M)Traffic System Improvements* Physical 50.1 21.4 37.6 21.2Road Improvements Physical 30.7 13.1 23.1 13.1Bus Route Improvements Physical 2.7 1.1 2.0 1.1Rehabilitation of Existing Bus Physical 17.2 7.3 12.8 7.2Terminals and Adjacent RoadsPedestrian Facilities Improvement Physical 5.4 2.3 4.0 2.3NMT Network Improvement Physical 5.4 2.3 4.0 2.3Grade Separated Interchange Facilities Physical 46.8 20.0 35.1 19.8Flood Damage Rehabilitation - Roads Physical 20.0 8.6 15.0 8.5& Drainage

Equipment and Vehicles Equipment 10.9 4.6 8.1 4.8Technical Assistance & Implementation Institution 34.4 14.7 34.0 19.2Support, and preparation of follow-up Building &proj ects Project

Management ___Resettlement Costs Physical 1.4 0.6 1.3 0.7Land Acquisition and Compensation 9.3 4.0 0.0 0.0

Total 234.2 100.0 177.0 100.0

Note: Figures may not agree due to rounding*Excludes related technical assistance

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

The proposed project will address the existing gaps and weaknesses in the policy and institutionalframework related to metropolitan transport planning and management in DMA, as described below. Theproposed arrangements are also expected to set a model for the rest of the country.

Setting up of GDTPCB: As part of the project preparation efforts, GOB has set up a GreaterDhaka Transport Planning and Coordination Board (GDTPCB), an inter-agency unit for overall transportplanning and coordination for DMA, to fill a major existing gap in the institutional framework forcoordination of urban transport. GDTPCB will be chaired by the Mayor of Dhaka and represented byother smaller municipalities in the metropolitan area, the private sector and all other important agenciesthat have a stake in transport planning and coordination in of transport related decisions in DMA. Sincetransport planning, policy and regulations are functionally the responsibility of the Ministry ofCommunications (MOC), GDTPCB will be administratively under the Ministry of Communications; theExecutive Director (ED) of GDTPCB will report to the Secretary of MOC. GDTPCB will play a lead rolein carrying out transport planning for the metropolitan area, and also assist in transport policy formulationand the coordination of major operational, and investment decisions regarding urban transport in DMA,with other agencies and stakeholders. In addition, it will play a major role in coordinating DUTPimplementation.

The structure of GDTPCB, with important roles for the Mayor of Dhaka City Corporation(DCC), MOC and other key players, is such as to ensure better coordination among key agenciesinvolved in transport operations in DMA. This organizational structure has been evolved in the light ofstudies by local and international experts after examining the mandates and capacities of existinginstitutions, current coordination problems, and intensive local-level consultations, and reflect consensusamong experienced local intellectuals and practitioners. Establishment of GDTPCB is a major

institutional reform undertaken by GOB, and its setting-up and appointment of key staff have beencompleted as part of DUTP preparation. The project will provide technical assistance, training andequipment to make this agency fully functional.

Other institutional reforms: The project will also devote attention to strengthening otherimportant institutions, namely DCC, Rajadhani Unnayan Karthpakhya (RAJUK), Bangladesh RoadTransport Authority (BRTA), Department of Environment (DOE) and Dhaka Metropolitan Police (DMP)so as to improve their capacity & efficiency in dealing with urban transport and pollution related issues,

Addressing O&M and Cost Recovery Issues: Project also seeks to address the existing poorlevels of operation and maintenance (O&M) in urban transport infrastructure in DMA, and to promotebetter cost recovery. This will be through strengthening DCC's maintenance department and theestablishment of a Road and Traffic Maintenance Fund (RTMF) for Dhaka Metropolitan Area, which willbe financed frorn road user charges collected by GOB and DCC. RTMF, managed under stakeholderoversight, will help ensure GOB/DCC in allocating adequate funds for efficient maintenance of roadinfrastructure, in order to ensure sustainability. GOB and DCC have agreed on the structure andoperational modalities of RTMF, and also on the annual maintenance funding levels (this is reflected inthe Action Plan agreed during Negotiations).

Currently, the estimated maintenance requirement for road and traffic infrastructure is aboutTk.550 million annually; this is expected to go up to Tk. 660 million after the completion of the project.Against this, the current level of expenditure on O&M is only aboutTk. 160 million. GOB collects mostof the road user charges (vehicle fees, fuel taxes) from the Greater Dhaka area to the tune of around Tk.740 million annually; some beneficiary payments are also indirectly collected by DCC through housetaxes. Since GOB collects the main user fees, it is proposed that GOB will provide 60% of the Dhakaarea's annual road maintenance requirement (i.e. Tk. 330 million out of total Tk. 550 million needed for1998). This grant money amount will be transferred by GOB to a separate/designated account for RTMF,mainitainied by DCC. The remaining 40% will be provided by DCC from its own resources, into thisaccount. RTMIF would be used only for periodic and routine maintenance of DMA's road and othertraffic related infrastructure. The initial allocation into the fund will be phased over two years (1998-2000), and will increase as maintenance needs increase; GOB/DCC and IDA have agreed on estimatedlevel of contributions during project period. DCC's share will increase in the last year of the project. TheRTMF will function under the monitoring and supervision of a Committee, chaired by the Mayor andwith members representing various stakeholder groups, namely, DCC Ward Commissioners -representing 10 DCC zones (rotational basis), bus & truck owners association, premium bus operatorsassociation, Metropolitan Chamber of Commerce & Industry (MCCI), GDTPCB, and the civil society (anappropriate representative will be nominated by the Association of Development Agencies inBangladesh). It was also agreed with GOB that based on the findings of the country-wide study on Road-User Charges, being conducted by GOB's consultants under the Second Rural Roads MaintenanceProject, vehicle registration charges and other user charges in the country will be suitably revised.

DCC will also prepare and implement a plan in consultation with IDA, for improvingmanagement and ensuring adequate cost recovery from the inter-district bus terminals improved underthe project. This plan will be agreed with IDA by December 1999, before the start of the civil works toimprove the terminals. Since the present fee collection method is not producing adequate returns,possibly due to problems in the current auctioning system for bus terminal operations, other options, suchas long-term leasing of the operations and maintenance of the terminals to the private sector (throughtransparent bidding), will also be considered for cost recovery.

Other policy reforms agreed relate to measures for ensuring competitive market entry andoperations for bus and other transport operators, in particular allowing market-based tariff-setting by bus

operators in DMA who bring better quality "premium" services (sitting only, limited-stop etc.); this tariffreform, recently announced as part of DUTP preparation, has already attracted new, improved busservices, and has been greatly welcomed by the public and media. A larger scale entry of private busoperating companies is expected when the project is underway and begins to reduce traffic congestionand vehicle operating costs. GOB has agreed to provide further incentives for entry of more private busservices. Tariff control is continuing (though not strictly enforced) only for "ordinary services" which aremostly used by the poor; the quality of these ordinary bus services will also improve with the removal oftraffic bottlenecks and delays through DUTP. Participatory processes for improving bus services for thepoor and women have also been agreed. A further review of the regulatory systems and functioning ofDhaka's transport services will be undertaken by GOB by the project's mid-term review in consultationwith IDA with a view to consider and institute any necessary changes. Another major area of reforn is inrestricting the use of highly polluting vehicles and encouraging less polluting vehicle types; the ActionPlan agreed with GOB includes many measures for this purpose.

3. Benefits and target population:

The main expected benefits and the major beneficiaries are:

(i) Enhanced institutional capacities and better policy (i) GOB, the relevant institutions involved and theenvironment in the urban transport sector in DMA. general population of Dhaka Metropolitan Area, and

also the country at large, since DMA is a main economiccenter in the country.

(ii) Reduced congestion/travel time and vehicle (ii) Commuters, vehicle operators of Dhakaoperating costs. Metropolitan Area, and other private sector enterprises.

(iii) Improved travel environment, more efficient road (iii) Bus operators, who are mostly in the private sector;use, enhanced traffic management and improved bus users of public transport, including women and low-system. income groups.

(iv) Network improvements for cycle rickshaws (NMT (iv) Cycle rickshaw operators, who are very poor; andnetwork), to improve their role as feeder services on many categories of commuters, especially women andsecondary roads. children.

(v) Improved side walks, pedestrian facilities and (v) All pedestrians, particularly women garmentmanagement. workers and low-income groups, who walk to work.

(vi) Better road maintenance standards. (vi) All road users, particularly users of motorizedvehicles and non-motorized vehicles.

(vii) Enhanced road safety. (vii) All road users.

(viii) Reduced vehicular pollution and improved (viii) All residents of Dhaka Metropolitan Area.environmental conditions.

4. Institutional and implementation arrangements:

The total implementation period is expected to be five years.

Executing Agencies (ref. Annex 2 for a detailed description of institutional arrangements):

The project will be designed and implemented with active participation of all key stakeholders,including, private sector, various citizen groups and representatives of the civil society of Dhaka. Theresponsibilities for various aspects of project design, execution and implementation will be shared bydifferent Government agencies with adequate coordination among them. In view of the multiplicity of

organizations involved in the Dhaka transport sector, it was agreed early that a preparation andcoordination body, to manage project preparation and implementation, would be set up under theMinistry of Communications (MOC) for overall project preparation, coordination and management.Project Preparation Unit (PPU) with a full-time Director, and representatives from Roads and HighwaysDepartment (RHD), Metropolitan and Regional Planning Authority (RAJUK), Dhaka City Corporation(DCC), Bangladesh Road Transport Authority (BRTA) and Dhaka Metropolitan Police (DMP), has beencoordinating the various aspects of project preparation, and this coordination effort has worked well.This PPU has since been converted to a Project Coordination Unit (PCU). The overall project oversightand coordination will be done by the PCU and its new parent agency, GDTPCB, which reports to MOC.In addition, considering the strategic importance of the project, a high-level Secretaries Committee ofconcerned Minist:ries has been set up to expedite various critical decisions related to the project; thiscommittee which was very effective in resolving issues during project preparation will continue duringimplementation.

The Ministry of Communications through PCU/GDTPCB, will bear the main responsibility tooversee project coordination and overall project management. DCC, RHD, BRTA, DMP, RAJUK andDOE will look after components in their own jurisdiction through specially instituted ProjectImplementation Units (PlUs) or project coordinators within their organizations. The above project unitswill have key trained staff partly funded through DUTP, to ensure proper accounting and financialmanagement of their respective components. Procurement of civil works and equipment allocated toDCC and RHD will be done by them in coordination with PCU/GDTPCB; all other procurement,including technical assistance, will be managed by PCU.

DCC will be a major important implementing agency, as about 60% of the project investmentswill be oni facilities and activities under its jurisdiction. DCC and RHD, with the two largest number ofcomponents, will have Project Implementation Units (PIUs), each under a Project Director to implementtheir respective components. In order to avoid delays, it has been agreed with DCC that the PIU/DCCwill work as an independent unit in DCC, reporting directly to the Mayor or the Chief Executive of DCC.

Project Coordination:

The PCU/GDTPCB will liaise witlh the individual PIUs and various other stakeholders to ensurecoordination and speedy implementation. A project-level operations committee has been establishedunder Executive Director (ED) of GDTPCB, with all PDs and Project Coordinators as members, to meetregularly and assess project progress on a periodic basis. To facilitate public consultation in projectpreparation and implementation, the Government has set up a Public Consultation Committee (PCC),under the chairmanship of DCC Mayor and with representatives from key project agencies, NGOs andthe private sector. This participatory process has worked well during project preparation. In addition,zonal-level consultative committees will be established, to ensure adequate public involvement andfeedback at a more localized level; NGOs will facilitate the working of these committees.

The Design Supervision and Monitoring (DSM) consultants to be funded under the project (andrecently appointed) will carry out important functions in project supervision, coordination and monitoringof the project. DSM consultants will report to GDTPCB, and will function as the "Engineer'sRepresentatives". Other experts in traffic management, road safety, financial management and otheraspects, provided under the project, will provide training in their respective areas, and also assist inproject implementation.

It is important to ensure that minimum disruptions/dislocations occur due to the civil worksduring implementation. The project will take every care to minimize dislocations due to civil worksduring implementation. It would commence with relatively smaller civil works components along with

institutional, training and TA components, to provide maximum early impact on traffic managementimprovements; construction of the flyovers (which are the largest civil works component) have beenscheduled to start only towards the third year of the project. In addition, for intersection improvements,several alternatives have been prepared and the one that will cause minimum disruptions have beenchosen. Appropriate traffic diversion plans have already been drawn up by the preparation consultants,and these will be further revised by DSM consultants before the commencement of major civil works.GOB has agreed to provide at least 200 additional traffic policemen to DMP; DMP staff will also receiveadequate training and the services of an Enforcement Specialist during the implementation phase. Allthese are expected to ensure that disruptions during the construction period would be minimal.

Project Oversight (policy guidance, etc.):

PCU/GDTPCB will be the agency responsible for overall project oversight. It will coordinateclosely with other agencies involved in project implementation. GDTPCB will also bear the responsibilityfor policy guidance and advice on strategic issues to the various agencies and stakeholders involved inproject design and execution. (see also above para on Project Coordination for details)

Accounting, financial reporting and auditing arrangements:

PCU/GDTPCB and PIU of DCC and RHD will have accounting units with qualified accountants.These units will maintain their respective accounts. PCU will gather required information from otherimplementing agencies/organizations to prepare consolidated financial statements for the project and willalso maintain consolidated accounts for all project expenditures. A computerized financial reportingsystem will be established in the PCU/GDTPCB and the PIUs of DCC and RHD before March 31, 2000.Until then project accounts will be maintained employing traditional book-keeping methods. Astandardized financial reporting format acceptable to IDA will be included in the Government's ProjectImplementation Plan (PIP).

For statutory purposes, the Comptroller and Auditor General (C&AG), through the Directorate ofAudit - Foreign Aided Projects, carries out audits of foreign aided projects. In addition, GOB has agreedto appoint accredited private auditors acceptable to IDA for timely audit of all project accounts, projectfinancial statements and SOE's relating to all project units (PCU and PIUs). The audit report will besubmitted to IDA no later than six months after the end of each fiscal year.

In addition, two operational audits will be carried out by a private audit firm acceptable to IDA,one prior to mid-term review and the other, an year prior to credit closing. The terms of reference ofthese operational audits would cover: (a) assessment of adequacy of financial and operational controls;(b) that the project maintenance cost will be sufficiently met in future by recurring revenue earnings;(c)identification of weaknesses in the financial management system and give recommendation forimprovements etc. The cost for conducting such audits will be included in the project costs and beeligible for financing under the project.

Monitoring and evaluation arrangements:

The project has set forth benchmarks and performance indicators (Annex 1) to evaluate progresson individual components. These have been agreed during negotiations. These will be periodicallyreviewed to see their effectiveness against performance standards and implementation schedules. Besides,the PCU/GDTPCB will submit quarterly progress reports to IDA. A mid-term review will be conductedjointly by IDA and GOB-GDTPCB, after two-and-a-half years to assess progress and improve on projectimplementation performance. Implementation of the Resettlement Action Plan (see section E. 5) will bemonitored internally by the project authorities on an ongoing basis, and supervised regularly by IDA.Independent external evaluations of impacts will also be undertaken, funded through the project.

D: Project Ratiornale

1. Project alternatives considered and reasons for rejection.

Capital Intensive versus Management Intensive: The option of infrastructure investments incapital intensive projects, such as light rail and new roads, was examined. However, in the light ofprevious UNDP-funded studies, it has been agreed with the Government that the project will adopt aphased approach to address the transport problems in DMA, with greater thrust on improving trafficplanning, management and coordination arrangements, enhancing institutional capacities, and withimmediate focus on improved scheduled bus services provided by the private sector. Examining otheroptions will be part of the long-term transport plan for DMA, and this will be prepared under DUTP.

Creating GDTPCB instead of retro-fitting existing institutions with planning and coordinationfunctions: The project examined the option of equipping and strengthenilng some of the existinginstitutions with the task of planning and coordinating transport planning and investments for the GreaterDhaka region. H[owever, the existing institutions lacked the necessary coverage, mandates andinstitutional capacities to deal with this issue effectively. None of the existing institutions is in a positionto ensure effective coordination of transport-related activities and investments for the entire GreaterDhaka region. Therefore, in the light of detailed studies, and based on the recommendations ofinstitutional experts, local consultants and GOB, it was decided that a separate organization, GDTPCB,dedicated to planning and coordinating transport-related investments was a better alternative to deal withthe existing and future transport issues in this area.

Selection of intersection improvements: The intersections selected for improvement, a keyproject component, were selected in the light of detailed studies showing with and without projectalternatives and with different technical alternatives. This approach also applies to other maincomponents.

NMT versus Motorized Vehicles: The option of banning slow moving cycle-rickshaw trafficfrom city roads was examined. In view of the considerable environmental, employment, and socialbenefits of cycle-rickshaws, it was agreed to develop approaches to better manage cycle-rickshaw trafficon the streets of Dhaka. Much as these vehicles create traffic conflict and congestion, they are also ameans of livelihood for about a million people poor presently (including dependent families). It was feltthat the development of other less expensive and faster mass transit modes like good bus services was abetter market based alternative for limiting the proliferation of rickshaws than an outright ban. The cycle-rickshaws will be given a positive role as feeder services to bus systems and as localized transport onnon-arterial roads that form about 90% of the DMA's road network. This will be through identificationof NMT routes, construction of small missing road links to form an NMT network, better parkingfacilities for NMT on secondary roads, and through provision of some underpasses to facilitate easyNMT movement and reduce conflict between various slow and fast modes.

Dedicated busways versus other options: The feasibility of providing dedicated busways alongkey bus routes was examined. However, considering the road space available, and the present volume ofbus traffic and other modes, it was decided that dedicated bus routes will not be immediately feasible.Instead the buses will be provided with priority lanes at critical locations in the network, such as approachto intersections, ramps of interchanges and etc.

Construction of grade-separated interchanges: The project examined the option of buildingflyovers at five key intersections to ease traffic flow and bring network-wide improvements. However,after considering the magnitude of investments required, resettlement and other social impacts andpotential of introducing effective traffic management measures, it was decided that the project willinclude only'two interchanges, at Mohakhali and Jatrabari.

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

None so far in urban transport.

3. Lessons learned and reflected in the project design:

The proposed project would be the first Bank financed urban transport project in Bangladesh.However, the Bank has been involved in a number of projects involving roads improvements andinfrastructure services upgrading in Bangladesh. Recently, IDA's Urban Development Project 1, withcomponents for environmental improvements for Dhaka and Chittagong cities, was completed in June1998. While the project has been satisfactory overall, the performance of DCC in procurement and landacquisition was assessed as weak. In general, many of the projects have suffered from: (a) poor quality atentry; (b) weak institutional capacity in project management and monitoring;(c) procurement delays; and(d) lack of sustainability in maintaining the capital investments made under the project. More recent andongoing projects are generally free from these short-comings. The key lessons learnt and incorporated inthe project, are:

Policy and Institutional Design: (a) required policy and institutional changes have been obtainedupfront and strengthening institutional capacity and effective coordination have been given considerablefocus from the beginning of project preparation; (b) borrower ownership is crucial, as also participationof key project beneficiaries and stakeholders. This has been ensured through borrower undertakings tospecific actions at various stages of project preparation and implementation (whose compliance has beenconfirmed), and extensive general and focused public consultation and participation; (c) private sectorprovision of transport (bus) services shall be complemented by provision of adequate infrastructure andamenities, thus defining the roles of the private and public sectors and encouraging private-publicpartnership in the provision and maintenance of transport services; and (d) project managementarrangements have been made strong to ensure accountability, transparency and avoid delays, and keyactions (such as setting up GDTPCB, PCU/PIUs and DSM consultants) have been completed before IDABoard consideration of DUTP credit.

Economic and Financial: (a) sustainability is ensured through appropriate cost recoveryfacilitated through the formation of a Road and Traffic Maintenance Fund (RTMF), by ensuring fundingarrangements for regular maintenance and by strengthening the maintenance department of DCC; and(b)careful monitoring and evaluation criteria have been incorporated in project design, to ensuresustainability of investments; and

Technical design: (a) careful economic and technical analysis of various project sub-componentshave been effected to ensure their feasibility and quality at entry; (b) project design has been kept simpleand flexible; (c) when trying something new, pilots were tried first, such as in the case of introduction ofpremium bus services.

4. Indications of borrower commitment and ownership:

The borrower has been fully committed to the project from its inception; it had made persistentrequests to IDA for including DUTP under the CAS, and has actively participated in defining projectobjectives and in preparing a framework for implementation. A structured consultation process hasincorporated views of different stakeholders into the project design, and contributed to broad support forthe project. The specific actions taken by the borrower during project preparation include: (a)deregulation of fares on premium bus services and other incentives, encouraging private sector greaterparticipation in the provision of improved bus services; (b) introduction of special bus routes on a pilotbasis which have become a great success with the public subsequently. The Government has also

committed to extending special bus lanes to other major corridors in the city; (c) setting up a PublicConsultative Group (PCG) with the Mayor of Dhaka city as the Chairman, and members from the privatesector, media, beneficiary groups and other stakeholders, to discuss project-design and issues; whichassisted project design considerably; (d) major advance implementation actions completed such as settingup the new coordination body GDTPCB, appointing project supervision and monitoring consultants andsetting up project implementation units, all before IDA Board date; and (e) overall enthusiastic supportfrom various levels of Government, including Ministers, higher level officials of main agencies and theMayor and officials of the Dhaka City Corporation, as also from public, transport operators, women'sgroups, NGOs and media, for the project.

5. Value added of Bank support in this project:

The role of IDA in addressing urban transport problems in Dhaka is three fold. First, drawingupon its international and regional experience, IDA is in a strong position to support the Government informulating the strategies necessary to ensure that an adequate, efficient, and sustainable level oftransport services is available to the city residents. IDA has considerable experience in undertakingurban transport projects in several countries, in the process, bringing about infrastructure investments andinstitutional and policy changes and adequate sustainability. The fact that Government made persistentrequests for IDA assistance and leadership for sorting out Dhaka's complex transport problems isrecognition of IDA's preeminent role in this sector. Second, IDA can assist the Government inimplementing these strategies through both the financing of technical advice, training and investmentsand direct analytical support to the Government during preparation and implementation. Assistance fromIDA during preparation has contributed to a more holistic and integrated approach, whiclh includesaddressing social and environmental issues along with the technical dimensions of the project. Third, thispioneering project will help prepare future strategy for dealing with Dhaka's transport problems and helpattract co-financing.

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

1. Economic (supported by Annex 4):

[x] Cost-Benefit Analysis: NPV=US$ 124 million; ERR=23% [x] Cost Effectiveness Analysis: [ Other

Economic analysis is conducted at two levels: for the overall project, and for major individualcomponents. At the first level, total project benefits are evaluated against the costs of all physicalcomponents, equipment, and technical assistance (excludipg follow-up studies and including physicalcontingencies), which constitute 87% of total project cost. The result from this analysis is treated as thebase case in the sensitivity tests. The major direct economic benefits of the project are expected to bereductions of vehicle operating costs (VOC) and travel time through network-wide mitigation of trafficcongestion and delays, rehabilitation of deteriorated roads, and improved bus terminals. There will alsobe additional benefits from improved traffic safety and reduced auto pollution. However, due to shortageof reliable data, the expected traffic safety and environmental benefits have not been quantified. Theroad network traffic benefits, which are the major part of the total project benefits, are evaluated using anetwork-based travel demand model. The model is calibrated with data from a city-wide travel origin anddestination survey and traffic counts at various locations; it is capable of simulating network trafficperformance under scenarios with and without the project. The ERR for all physical componentscontributing to the network-wide traffic improvement (including equipment and related technicalassistance) is estimated 23%. Sensitivity tests are performed by assuming alternative scenarios withalternative traffic growth rate, cost overruns, benefit reductions, or a combination of all, against the basecase described above. The test results suggest that the project economic viability is robust. The analysisalso tests the impact of traffic enforcement on the project performance. The results suggest that theeffective traffic enforcement is very important in the realization of expected benefits.

At the second level, detailed economic analysis has been made for each of the following majorphysical components: intersection improvements, flyovers, inter-district bus terminal rehabilitation, roadrehabilitation, and NMT underpasses. These analyses are conducted for assessing the economic viabilityof the above individual components even treated as stand-alone projects. These components altogetherrepresent 63% of the total project baseline cost. Their estimated ERRs range from 16% to 38%, with aweighted ERR of 27%.

2. Financial Assessment

Project costs: See section C and Annex 3 and for detailed project costs.

Financing plan: Cover sheet and Annex 3 show details of the financing plan. The proposed creditof US$ 177.0 million would finance about 75% of the total costs (US$ 234.2, incliding taxes and duties).The remaining portion would be financed by GOB (US$ 44.1 m) and DCC (US$ 13.1 In).

Fiscal impact: About 60% of the project investments would be for items directly unider thejurisdiction of DCC. Clear understanding on the share of DCC and GOB in providing counterpart fundshave been agreed in advance (see Annex 3). DCC generally depends on grant funds from GOB for majortransport related development and rehabilitation investments, such as covered by DUTP. since (i)Dhaka's transport constraints are perceived as a national problem, (ii) GOB receives most of the user feesfrom transport users in the form of fuel taxes and vehicle fees, and (iii) DCC's financial position ispresently weak. GOB proposes to transfer project funds, both IDA and GOB share, to DCC on a grantbasis. DCC will contribute 10% of project costs on all items excluding flyovers, resettlemenit andtechnical assistance. An analysis of DCC's financial profile and projections indicate that DCC will beable to provide adequate counterpart project funds, as agreed, and 40% of the expected maintenianice costs(increasing later), as reflected in the project agreements.

For regular maintenance of its facilities, DCC generally provides funding from its own sources,but this funding is inadequate. Therefore, special measures have been designed to ensure that the trafficand road facilities under DCC, including those created under the project are satisfactorily maintainedthrough adequate availability of funds, beneficiary/private sector oversight and an efficient maintenancedepartment. The decision to establish a Road and Traffic Maintenance Fund (RTMF) that will bemanaged by DCC, with involvement of user representatives and private sector transport operators, is astep in this direction (also ref. section C. 2 - Addressing O&M and Cost Recovery Issues).

3. Technical:

Two key agencies involved in implementation of the projects, particularly civil workcomponents, are the DCC and RHD. DCC's technical capacities are presently weak in areas liketransportation planning or road and traffic engineering; these aspects will be strengthened through theproject. DCC has established a Road Maintenance Unit (RMU) and a Traffic Engineering and RoadSafety Unit (TERSU). DCC has already taken steps to recruit additional technical staff who will betrained in the above mentioned skills through project activities and specialized training courses, providedunder the project. RHD possesses considerable experience in execution of bridge and highway projects;this experience will be invaluable during the implementation of the flyover components in the project.

The project will emphasize the introduction of international "best practice" to the urban transportsector in Bangladesh; for e.g., in modem traffic management techniques, such as design of complextraffic signalization, and introduction of "bus-only" lanes or busways along existing major roads in DMA.International consultants, assisted by local consultants, have been involved in the project preparation. Onthe procurement side, bid packages will be sized, and pre-qualification criteria prescribed to sufficientlyinterest well-qualified contractors. Construction supervision will be the responsibility of international

consultants, in joint venture with local engineering firms. Additional operational audits will be conductedduring project implementation to ensure adherence to technical quality and standards.

Road maintenance works presently carried out in DMA need introduction of new techniques. Theproject will introduce rational road maintenance planning, strengthened work methods and high degree ofquality control. To ensure long-term sustainability of improvements in the technical quality of roadworks, the project will include quality management methods, technical audits, modern financial and costaccounting systems and a mechanism for annual O&M built into the system..

4. Institutional:

a. Executing agencies

Multiplicity of central government ministries and departments, departments of DCC, and otheragencies involved in planning/implementation of infrastructure projects in DMA, create a difficultenvironment in coordinating policies and other decisions related to urban transport and regional land usein the Dhaka area. To resolve this problem, special coordination arrangements were successfully triedout during project preparation, and have been agreed for in the implementing phase, as described insection C-4. Essentially, the project will be implemented by beneficiary agencies through projectimplementation units, coordinated through the PCU under GDTPCB.

The newly created GDTPCB fills the long felt need for an apex body to coordinate metropolitantransport planning and decision making on transport policy and regulations, on a continuing basis. Thefunctions of GDTPCB will also be coordinated with structure planning and land-use planninig for themetropolitan region, so that transport planning by GDTPCB goes hand in hand with the regionaldevelopment vision. Following a recent UNDP-assisted Dhaka Structure Plan exercise, and a widelyattended workshop on the Structure Plan conducted in December 1995, the Government of Bangladeshhas set up a Capital Area Development Coordination Committee for the metropolitan structuredevelopment, under the Chairmanship of the Minister of Local Government, and with the Mayor ofDhaka as Joint-Convenor. This is a good start towards setting up a coordination body to resolvemetropolitan development and regional planning issues, which involve Dhaka and other smallMunicipalities as well; the Structure Plan Committee is working on a future form of organization formore sustainable metropolitan coordination in land use planning and other regional planning decisions.GDTPCB will coordinate its work with this larger and more important regional planning and coordinationbody.

b. Project Management

The Ministry of Communications through PCU/GDTPCB, will bear the main responsibility tooversee project coordination and overall project management. The supervision consultants funded underthe project will be attached to GDTPCB. DCC, RHD, BRTA, DMP, RAJUK and DOE will look aftercomponents in their own jurisdiction through specially instituted Project Implementation Units (PlUs) orother dedicated units within their organizations. Efforts will be made to strengthen the projectmanagement capacities of these institutions. The above project units will also oversee procurement, andwill have key trained staff to ensure proper accounting and financial management of their respectivecomponents. A Secretary-level inter-ministerial committee has been established for inter-ministerialcoordination of preparation and implementation, and this arrangement is working well presently.

5. Social:

All key stakeholders were consulted extensively during project preparation. The project hadtaken considerable efforts to mainstream social issues and concerns within the overall context of projectpreparation from very early stage on in the project preparation. To ensure that the interests and concerns

of the most vulnerable groups, eight Public Consultative Committee (PCC) meetings and a series ofworkshops & consultative meetings were held with various stakeholder groups, such as the lower-incomegroups, pedestrians, users of tariff-regulated ordinary buses, users of tariff-deregulated Premium BusService (PBS), cycle rickshaw owner and operator associations, three-wheeler owner and operatorassociations, bus-truck owner and operator associations, hawker associations, women's groups andgarment workers. The project team has extensively studied issues related to these groups. It has alsointeracted with NGOs, including women's NGOs, environmental NGOs, and other community-basedorganizations (CBOs) during project preparation. NGOs representing or working with these interestgroups were actively associated with project preparation, and will be consulted during projectimplementation.

Potential impacts have been studied as a part of the overall social assessment. The project willnecessitate some resettlement at sites of new flyovers, road intersections and sidewalk improvemetnts. Inthe preparation of detailed designs for civil work components, an important consideration has been theneed to minimize private land acquisition and impact on existing business and residential establishments.Through this integrated approach, design alternatives have been selected whicih have minimized negativesocial impacts.

For all components together, around 6,508 sq.m. of private land will need to be acquired. About80% of this is associated with construction of the two flyovers. The project's impact on residentialproperties is quite small. Some 10 dwellings will be affected, including 7 slum dwellings. On the otherhand, some 579 non-residential establishments (offices, personal services, clinics, warehouses andworkshops) will be affected. The majority of these businesses (295) are at the twoflyover sites whiie thenext largest group (143) is at Gabtali Inter District Bus Terminal (IDBT). In addition, permanenet, semi-permanent and mobile hawkers operating on side-walks of the roads, on Government land will also beaffected. The total for this group is 564 of which 410 (73%) are transient vendors. About 75% of themare located at the 20 intersections to be improved. Over half of the semi-permanent stalls (62 of 126) areassociated with the Gabtali IDBT and the Jatrabari flyover. The 28 permanent stalls that will be affectedare spread throughout the project area.

A policy framework for addressing unavoidable negative impacts has been prepared inaccordance with OD 4.30. A Resettlement Action Plan (RAP) detailing the implementation mechaniismsfor assisting affected people with compensation, relocation, livelihood assistance, and other supportmechanisms, consistent with IDA guidelines have been agreed with GOB.

Agreement has been reached about organizational mechanisms for implementing RAP, and staffare currently being mobilized. Since the current institutional capacity to deal with social impacts is weak,IDA will continue to supervise carefully the development of the organizational setup for this component.

6. Environmental assessment: Environmental Category [IA [x] B [] C

In view of the significant positive environmental impact of the project, the assignedEnvironmental Assessment Category is "B". A detailed environmental impact study of various projectcomponents has been completed. Based on this, necessary mitigation measures have been incorporatedin project component design, in accordance with relevant IDA guidelines. The project will havesubstantial positive impact on improving the air quality, by reducing vehicular emissions throughenforcement and new standards; in reducing congestion, road accident rates, and commuting time; and ingeneral improving the quality of urban life. The Department of Environment (DOE) and the BRTA haveagreed to develop and implement reforms in a number of areas that will bring substantial improvementsto the air quality. Some of these are: (a) develop and enforce emission standards for new and in-usevehicle imports of two-stroke engines, and other vehicles; (b) restrict new registrations, leading to the

eventual phasing out of highly polluting two-stroke engine three wheelers (baby-taxis); (c) provideincentives for increasing the share of bus transport with newer/better (less polluting) buses; (d) provideequipment for enforcement of standards; (e) evaluate and promote ways to reduce emissions from twostroke and diesel vehicles; (f) conduct awareness raising campaigns; (g) establish vehicular safety andemissions monitoring capability at BRTA; (h) collect and disseminate ambient air quality data (especiallyfor critical traffic intersections) through DOE; and (i) promote other related activities for control of airpollution within the Greater Dhaka area. A separate IDA-supported, air quality management project forDMA is also being developed in cooperation with DOE, which is consistent with DUTP.

7. Participatory approach [key stakeholders, how involved, and what they have influenced. ifparticipatory approach not used, describe why not applicable]:

Consultation and Collaboration:

During project preparation, the urban community in Dhaka metropolitan area was consultedextensively. These included representatives of government agencies, the Chamber of Commerce,NGOs,community groups, vehicle manufacturers and assemblers, research institutes, women's groups, vehicle-owner and drivers and operators associations (of buses, trucks, 2-stroke engine three-wheelers andrickshaws), rickshaw-pullers' association, and other stakeholders. A number of demand assessments ofaffected people were carried out. A household survey was carried out by a local NGO to assess thespecific transport constraints of poor women in Dhaka city. The survey was followed by a participationworkshop with university students, garment workers, and other working women, who face majortransport constraints at present. A survey of rickshaw pullers association and users of the pilot premiumbus services were also carried out. Other detailed surveys of the key stake-holders, relevant governmentagencies, banking institutes, academic institutes, community groups, beneficiaries were also carried out.The findings of consultations were utilized for the project design. A workshop to discuss ways to reduceair pollution was conducted in collaboration with all stakeholders and recommendations are beingincorporated in this and other projects. More workshops with user groups are planned. Similarly,support mechanisms developed as part of the project's Resettlement Action Plan have been developedthrough consultations with potentially affected people.

During implementation of this project, extensive consultation and collaboration with keystakeholders on an continued basis is envisaged. Technical assistance is being provided under the projectto facilitate such consultation and collaboration. Government has set up Public Consultation Commilittee(PCC) for the project under the Chairmanship of Dhaka Mayor with representation for key user-interests;PCG meets frequently. Localized participation groups facilitated by NGOs are also envisaged.

a. Primary beneficiaries and other affected groups:

Primary beneficiaries include pedestrian commuters, users of public transport (buses), othermotorized and non-motorized vehicle users, and private bus operators, and the large community of DMAresidents, and business man establishments. Affected groups include various categories of residential andbusiness establishments affected by land acquisition and resettlement, and operators of two-stroke auto-rickshaws.

b. Other key stakeholders: None

F: Sustainability and Risks

1. Sustainability:

The proposed project fosters a new approach to urban transport planning in DMA, which placesmore emphasis and responsibility directly on the community, and is geared to their priorities. A major

thrust of the proposed project is on the "software" components, aimed at improving traffic managementand enforcement of traffic regulations, bettering roads rehabilitation and establishing maintenancestandards, and strengthening line agencies capability to monitor and coordinate transport planning inDhaka, these efforts would cumulatively improve sustainability. The proposed project is also seen as thefirst major effort in providing a sustainable, long-term solution to the mounting urban transport problemsin DMA, to be followed by other potential projects (which will be studied under DUTP).

A key action in ensuring sustainability of the proposed investments is addressing cost recoveryand O&M issues. This will be through the establishment of a Road and Traffic Mailtelnalnce Fund(RTMF, see also section C. 2) for Dhaka Metropolitan Area. Establishment of RTMF will ensureadequate funding for periodic and routine maintenance of DCC's road infrastructure network includingroads, footpaths, drains, etc., primarily from user charges. Annual budget requirement for thie proposedRTMF, estimates based on requests of O&M for the new facilities and all existing facilities will be sharedbetween GOB and DCC at a ratio of 60:40 respectively, with DCC share increasing in the last year, andbe managed as a separate, designated account. This will be operationalized in 1999/2000. RTMF willhave stakeholder supervision and proper auditing to ensure that funds are used for maintenanice. Inaddition GOB/DCC will prepare and implement two plans, one for improved management and the otherfor adequate cost recovery, in consultation with IDA, to ensure better managemenit of the Inter-DistrictBus Terminals and adequate cost recovery from the investments made by the project. Sustainability willalso be enhanced by creating an enabling environment for private sector participation in the provision ofbuses (private sector share being about 95%); through public participation in project preparation andimplementation, including service users and providers; organizing public awareness programs; enhancingtechnical capacity of DCC for roads maintenance; and enhancing DMP capability for traffic monitoringand enforcing regulations.

2. Critical Risks (reflecting assumptions in the fourth column ofAnnex 1):

Risk Risk Risk Minimization MeasureRating

Annex 1, cell "from Outputs to Objective"

Institutional Risks: Inadequate coordination M Established a new agency (GDTPCB) toamong different line agencies, weak project address present problems in coordination inmanagement capacities. urban transport planning and coordination.

Also, important role during DUTP forcoordination.

Central government support througlh theexecuting agency. Program manlagementsupport to GDTPCB. Technical supportthrough TA consultants. Capacity buildingsupport through TA in traffic management,regulatory environment, safety andenvironment.

A higher Secretary-level Committee for inter-ministerial coordination which has workedwell during project preparation.

Operational Risks: Failure to implement bus M Pilot program initiated during project

priority schemes, traffic management and preparation to test viability of bus priorityimplementation schemes, road maintenance, schemes was very successful; increased rolecontrolling growth of 2-stroke engines, and for private sector in bus operations; TA forkeeping sidewallks clear of encroachments improved traffic management; RTMF for

ensuring O&M; strengthening BRTA formonitoring vehicle inspection; and supportfor DOE for setting up air quality standardsand monitoring these.

Annex 1, cell "from Components to Outputs"

Procurement risks: Delays in necessary land M Executing agency to identify resettlementacquisition where needed, and in needs, procurement packaging and schedule.procurement of equipment, works, and Use of standard bidding documents andconsultanms. procedures. Workshop on Bank procurement

by consultants. Advance actions before IDABoard (in appointing project supervisionconsultants and key project staff). Putting allproject procedures and staff in place is acredit effectiveness condition.

Implementation risks: Difficult traffic S Comprehensive preparation, involving alldiversion management plans during concerned agencies, sequencing of civil workimplementation of civil works. components, coordination with DMP and

DCC in preparing the advance trafficdiversion, recruitment of an enforcementspecialist and 200 additional policemen inDMP during implementation.

Operational risks: (a) Insufficient experience M Sufficient TA resources to procure equipmentwith traffic planning, management and for BRTA for measurement of ambient airenforcement, implementation of vehicle quality, mobile axle load checking andstandards, emission controls. pollution monitoring; strengthening DCC

technical units for road maintenance andtraffic engineering units; training of DMPtraffic police, and strengthening of BRTAstaff. Training for related staff in key projectagencies.

(b) Problems with contractor or consultants N International Supervision Consultantsperformance Workshops and training -- strengthening of

BRTA/DCC management skills.

(c) Problems with institutional capacities to H Considerable attention paid to enhance theexecute their components in a timely manner capacity of the various institutions involved,

through TA and training. Also special projectmanagement and coordination arrangementsenvisaged within these institutions tominimize such risks. Completing of all keyappointments of staff, consultants and

implementing modalities as conditions ofBoard.

Financing risks: Counterpart budget N Financing plans endorsed by Government,shortages DCC share relatively small, and review

shows it is within its annual income.

Construction risks: Delays in construction N Specific attention given in the design tophase of flyovers, causing congestion during minimize construction delays andconstruction period development of alternate routes during

construction phase, also Institutionalstrengthening in traffic management of DCC,DMP, BRTA and RHD.

Delays or inadequacies in implementation of S Systematic supervision by IDA to ensureResettlement Action Plan caused by lack of overall coordination; technical assistance toinstitutional capacity to address social selected project personnel to enhanceimpacts capacity; partnerships with local NGOs and

other civil society organizations.

Inadequate private sector response/credit M Powerful market incentives (such as vehicleavailability to invest in bus fleets, to free-tariff setting, and reduced operative costscomplement DUTP's public sector brought through DUTP) expected to work ininvestments. favor of adequate private sector response, as

has already happened in other city bus routes.The pilot initiative already brought above 100new buses. More being planned by manyfirms. GOB/IDA assisted through busfinancing seminars and bus depots.

Overall Risk Rating M

Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N (Negligible or Low Risk)

3. Possible Controversial Aspects:

Overall reception to the project from press and the public alike, have been very positive. Therehave been very complimentary media reports pointing to the importance of DUTP and praising variouson-going and proposed initiatives (like the Premium Bus Services) under the project;NGO's have alsobeen supportive of the project's positive approach to vulnerable groups like, poor cycle-rickshaw pullers(since project wants to give them positive role, rather than ban them), garment workers and women.

Every care is being taken to involve affected persons/groups through proactive participatorymeans, and to follow IDA Guidelines on resettlement action planning. However, because of the politicalpolarization and other sensitivities, some protests cannot be ruled out from persons affected by the projectsuch as, those affected by potential land acquisition, hawkers who may have to be cleared from sidestreets in some cases to ensure pedestrians' priority, and auto-rickshaw operators whose pollutingvehicles will face new restrictions under the project. Auto-rickshaw owners' association has alreadyestablished a co-operative for replacement of the existing two-stroke engine three-wheelers by minibusesand taxis, and in future, by less polluting 4-stroke engine three wheelers. We are facilitating this process,particularly in terms of providing guidance to access financing from banks and non-bank financialinstitutions.

G: Main Credit Conditions

There will be a Development Credit Agreement (DCA) with GOB and a Project Agreement (PA) withDCC.1. Effectiveness C-onditions:

(a) Association to receive evidence that GOB and DCC have established project managementarrangements and procedures satisfactory to the Association;

(b) Signing of the Subsidiary Grant Agreement (SGA) between GOB and DCC; and(c) Receipt of legal opinions regarding DCA, PA and SGA.

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

Other:During negotiations, in addition to standard covenants, agreement was reached with GOB and DCC onthe following aspects:

(a) Project management arrangements: Establishment of the Project Coordination Unit ( PCU) underGDTPCB, and PlUs under other implementing agencies, staffing them with qualified staff, andmaintaining these units during project implementation to implement and monitor project; and to keepa high level Secretaries' committee for inter-Ministerial consultation to expedite projectimplementation;

(b) Financing arrangements: Two special accounts, one under DCC and another under PCU; retroactivefinancing of early works, rehabilitation of flood damaged roads and related technical assistance,subject to these works/TA meeting all IDA procedures;

(c) Auditing arrangements, including annual audits by private auditors, and two operational audits beforemid-term review and project closing;

(d) Completion of GDTPCB staffing plan and all appointments by end-April 1999;(e) Phased plan for funding RTMF from July 1999, with agreed annual funding levels from GOB and

DCC up to year 2004, and arrangements for overseeing the fund's operation with the involvement ofprivate sector and other agencies, and the fund's audit;

(f) Preparation by DCC of annual maintenance plan for roads and traffic facilities, for IDA review, andits implementation;

(g) Preparation by DCC of a management improvement plan for the bus terminals improved under theproject, and an adequate cost-recovery plan from the terminals, satisfactory to IDA, before award ofcontracts, for implementation under a time-phased program;

(h) Implementing a national road user charge recovery plan to be agreed with IDA in the light of theRoad User Charges Study being completed under the on going RRMP 2 project;

(i) Keeping free market entry for private sector bus operators in DMA subject to safety and qualitystandards, deregulated fare-structure for premium bus operations and taking all actions to ensure freeand fair competition among operators; review of the changes needed in bus and other transportvehicle operations and regulatory system at mid-term review of the project, based on a study of thegrowth of bus transport services after the first two years of the project, to be completed by GOB;

(j) Prior review by GDTPCB before the undertaking of any new transport infrastructure investmentsexceeding US$ 5m per project in DMA, and exchanging views with IDA to ensure that there is noconflict with DUTP components;

(k) Project monitoring to be done as per agreed plan, with impact studies before project completion;(I) Implementation of RAP and EAP as per IDA guidelines, as agreed at negotiations; and(m) Implement following actions to reduce transport related air-pollution in Dhaka/Bangladesh:

(i) discontinue registration of additional two-stroke engine three-wheelers in Dhaka after July 1,

1999;(ii) phase out from Dhaka all existing two-stroke engine three wheelers by January 1, 2003;

(iii) discontinue importation of two-stroke engine three-wheelers and their engines, andreconditioned buses, into Bangladesh by July, 2001; and

(iv) develop vehicle-specific emission standards for all types of imported and locally assembledmotor vehicles by June 30, 2000.

H. Readiness for Implementation

[x] The engineering design documents for the first year's activities are complete and ready for the startof project implementation. [ I Not applicable.

[x] The procurement documents for the first year's activities are complete and ready for the start ofproject implementation.[x] The Project Implementation Plan has been appraised and found to be realistic and of satisfactoryquality.[ I The following items are lacking and are discussed under loan conditions (Section G):

I. Compliance with Bank Policies

[x] This project complies with all applicable Bank policies.

[l ] [The following exceptions to Bank policies are recommended for approval:. The project complieswith all other applicable Bank policies.]

Task Team Leader/Task Leader: Thamn a a SASIN)

Sector Manager: Frannie Humplick (SASIN)

Country Direr: Frederick Temple (SASBD)

Annex 1Project Design Summary

Narrative Summary Performance Indicators Monitoring & Assumptions/RiskEvaluation*

CAS Objectives: GOAL to Bank MissionAccelerate economicgrowth and reduce povertyby among other measures:increasing both public andprivate investments incritical infrastructureareas, institutionalstrengthening, reformingregulatory framework andfostering participation ofthe poor in the growthprocess

Project Development DO to GOAL:Objective (DO):

1. Improve urban transport 1.1 Living and vork environment in greater Economic 1. I Future growth of the cityservices in an Dhaka area improved; surveys; is in conformity vithenvironmentally 1.2 Road capacities increased through traffic Traffic surveys; coordinated developmentsustainable manner for management and improvements/rehabilitation of Air quality plans;Dhaka residents, including road network; surveys: 1.2 Implementing agenciesvomen and poor people. 1.3 Pedestrian safety enhanced; Bus transport have the necessary resources

1.4 Bus services improved, providing better study by mid- and competent staff toaccess to women and low-income groups: term review. manage and enforce traffic1.5 Environmental pollution from 2-stroke auto- rules;rickshaws, poor quality buses and trucks reduced. 1.3 Suitable measures are

put in place to controlgrowth of 2-stroke engines;1.4 Incentives to allow theprivate sector to invest inurban buses are in place.

2. Institutional and Policy 2.1 GDTPCB adequately staffed and functional Records of 2.1 Relevant staff madeFramework strengthenied. by July 31, 1999: implementing available for training and

2.2 PCU and PlUs within key agencies fully agency stays on the job for anstaffed and functional; extended period.2.3 Staff in implementing agencies trained.

Project Outputs: Output to DO:

I. Reduction in I. I Average delay at most critical intersections Transport 1.1 Traffic managementcongestion and delays reduced by 50% by the end of project: surveys, plans are implemented

1.2 Average speed by motorized vehicles Records of 1.2 Trained police forceincreased from 15 km/hour to 30 km/hour by the implementing available