road improvement project (loan 918-ind)

7/31/2019 Road Improvement Project (Loan 918-InD)

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PPA: IND 22008

PROJECT PERFORMANCE AUDIT REPORT

ON THE

ROAD IMPROVEMENT PROJECT(Loan 918-IND)

IN

INDIA

March 2002


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CURRENCY EQUIVALENTS

Currency Unit Indian rupee/s (Re/Rs)

At Appraisal At Completion At EvaluationSeptember 1988 March 1999 December 2001

Re1.00 = $0.07 $0.02 $0.02$1.00 = Rs14.51 Rs42.43 Rs48.20

ABBREVIATIONS

ADB Asian Development BankAP Andhra PradeshEA Executing AgencyEIRR economic internal rate of returnkm kilometerm meterMOST Ministry of Surface TransportNGO nongovernment organizationNH national highwayNHAI National Highways Authority of IndiaOEM Operations Evaluation MissionPCR project completion reportPPAR project performance audit reportPWD Public Works/Highway DepartmentTA technical assistanceTNRDC Tamil Nadu Road Development CompanyUP Uttar PradeshVOC vehicle operating cost

NOTES

(i) The fiscal year (FY) of the Government of India and the stategovernments ends on 31 March.

(ii) In this report, $ refers to US dollars.

Operations Evaluation Department, PE-588


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CONTENTS

Page

BASIC DATA ii

EXECUTIVE SUMMARY iii

MAP v

I. BACKGROUND 1

A. Rationale 1B. Formulation 1C. Purpose and Outputs 2D. Cost, Financing, and Executing Arrangements 2E. Completion and Self-Evaluation 3F. Operations Evaluation Department Evaluation 4

II. PLANNING AND IMPLEMENTATION PERFORMANCE 4

A. Formulation and Design 4B. Achievement of Outputs 5C. Cost and Scheduling 5D. Procurement and Construction 5E. Organization and Management 6

III. ACHIEVEMENT OF PROJECT PURPOSE 7

A. Operational Performance 7B. Performance of the Operating Entity 9C. Economic Reevaluation 10D. Sustainability 10

IV.

ACHIEVEMENT OF OTHER DEVELOPMENT IMPACTS 11

A. Socioeconomic Impacts 11B. Environmental Impact 11C. Impact on Institutions and Policy 11

V. OVERALL ASSESSMENT 12

A. Relevance 12B. Efficacy 12C. Efficiency 12D. Sustainability 12E. Institutional Development and Other Impacts 13F. Overall Project Rating 13

G. Assessment of ADB and Borrower Performance 13

VI. ISSUES, LESSONS, AND FOLLOW-UP ACTIONS 13

A. Key Issues for the Future 13B. Lessons Identified 14C. Follow-up Actions 14

APPENDIXES 15


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BASIC DATA

PROJECT PREPARATION/INSTITUTION BUILDINGTA No. TA Name Type Person-

monthsAmount

($)Approval

Date955 Road Improvement PPTA 13 75,000 24 Feb 1988

1058 Pavement Management ADTA 22 490,000 3 Jan 19891059 Expressway System Planning ADTA 18 260,000 3 Jan 1989

KEY PROJECT DATA ($ million) At Appraisal At CompletionSeptember 1988 March 1999

Total Project Cost 253.5 233.6Foreign Exchange Cost 87.0 87.3Local Currency Cost 166.5 146.3ADB Loan Amount/Utilization 198.0 172.8ADB Loan Amount/Cancellation 25.2

KEY DATES Expected ActualFact-Finding 6-28 Jun 1988Appraisal 18 Jul4 Aug 1988Loan Negotiations 1214 Oct 1988Board Approval 10 Nov 1988Loan Agreement 27 Dec 1988Loan Effectiveness 27 Mar 1989 10 Apr 1989First Disbursement 30 Oct 1990Project Completion Dec 1993 Mar 1998Loan Closing 31 Dec 1994 16 Feb 1999Months (effectiveness to completion) 58 109

KEY PERFORMANCE INDICATORS (%) Appraisal PCR PPAREconomic Rate of ReturnEntire Project 35.8 22.4 20.7

BallabhgarhMathura 34.1 29.6 28.8VisakhapatnamAnakapalle 59.5 23.3 19.9HyderabadRamagundam 25.4 17.8 15.2Chennai (Madras)Cuddalore 26.2 20.6 18.5AnkolaHubli 24.1 13.6 10.8

BORROWER IndiaEXECUTING AGENCIES Ministry of Surface Transport; national highway departments of the states of

Andhra Pradesh, Haryana, and Uttar Pradesh; Roads and Building Department ofthe state of Andhra Pradesh; Public Works Department of the state of Karnataka;and Highways and Rural Works Department of the state of Tamil Nadu.

MISSION DATAType of Mission

1 No. of Missions Person-daysFact-Finding 1 92Appraisal 1 68Project Administration

Inception 1 4Review 17 282Special Project Administration 2 12

Project Completion 1 28Operations Evaluation2

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ADTA = advisory technical assistance, PCR = project completion report, PPAR = project performance audit report,PPTA = project preparatory technical assistance, TA = technical assistance.

1Some of the review missions covered both the Project and 1041-IND: Second Road Project, for $250 million,approved on 30 October 1990, which was implemented in parallel.

2The mission comprised Caroline D. Heider, Senior Evaluation Specialist, and Ravinder Khera, Staff Consultant.


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EXECUTIVE SUMMARY

The Asian Development Bank approved the first loan to the road sector in India in 1988to assist the Government in improving selected national and state highways. The objective wasto facilitate faster, cheaper, and more efficient transport services in the project areas, and

thereby contribute to their industrial development. Five separate road sections in five stateswere selected (a total of 665 kilometers); two were to be expanded to four lanes to meetstandards for national highways, while the other three were to be improved to state highwaystandards. The estimated cost was $253.5 million.

Implementation took place from April 1989 to March 1998, more than four years longerthan expected. The delay was attributable to (i) inaccurate cost estimates in the feasibilitystudies (construction cost in local currency was underestimated to the extent that bids were 20percent above the allocated resources); (ii) inadequate preparation, such as obtaining right-of-way and clearing land, which in the case of one road section caused extended legalproceedings; and (iii) slow performance of contractors. The actual project cost was $233.6million. The 8 percent saving in dollar terms materialized because cost escalation was morethan offset by the devaluation of the Indian rupee. ADB financed $172.8 million of the actualproject cost; $25.2 million of the loan was canceled.

The Project was generally implemented as planned, except for the followingadjustments: (i) extending one state highway to link with a national highway, (ii) changingconcrete to bitumen surfacing for parts of one national highway, and (iii) not proceeding withsome realignments of one state highway due to environmental concerns. The riding quality is onaverage good and surface roughness is well within the designed level. The pavement conditionsare satisfactory, except for a few isolated portions where excessive bleeding of bitumen, rutting,and surface cracking were observed. The approaches to some bridges are not smooth, and thequality and maintenance of drainage is generally inadequate. But overall the project roads are insatisfactory or very good condition.

The road influence areas experienced economic growth in various sectors such asagriculture, industry, and tourism. Additional developments along road corridors includededucation centers and religious establishments. Road improvements contributed to thesedevelopments by facilitating short-distance travel (as compared with rail travel), and improvingconnections to markets thus increasing incentives for economic activities. However, not all ofthese developments can be attributed directly to the Project, as the existing roads wereupgraded to increase capacity (by widening) and improve surface quality (by resurfacing). Whilewidening of the roads was anticipated to help separate fast- and slow-moving traffic (such asbullock and camel carts), the change is not substantial.

The Project was accompanied by two technical assistance (TA) grants to addressinstitutional issues such as the need for planning tools for state highways and pavement

maintenance (management). These TAs did not create requisite capacities and few traces ofsustained outcomes can be found. The planning tools for state highways were considered to bestudies rather than an effort to build capacity, and the pavement management system requiredtoo much data to be kept updated. In addition, decision makers did not use the study results toallocate maintenance funds or prioritize maintenance works. Both TAs are rated unsuccessful.


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As the first loan to India's road sector, the Project provided learning experiences thathave been incorporated into more recent projects and procedures. For instance, projectpreparation is more closely supervised with the help of international consultants to checkfeasibility studies; and supervision consultants are hired in the role of engineer with powers and

responsibilities defined by international standardsthey no longer play the role of often-ignoredadvisers. However, some of issues remain to be addressed, most prominently those of roadsafety, and identification of priorities for and costing of road maintenance works. TheGovernment is experimenting with performance maintenance contracts, which will requirerealistic costing and monitoring. For road safety, the Governments education campaigns needto be expanded and law enforcement ensured.

The Project has been relevant to the Governments strategy for the road transport sectorand complements some of the road sections that are being upgraded under a current program.Project objectives were attained, albeit with serious delays, and the economic rate of return forthe Project as a whole is 20.7 percent in spite of these delays. Only one road section has a rateof return below the cut-off rate of 12 percent. While maintenance funds have fallen short of the

standard rates applicable, sustainability of the roads still seems assured. Based on thesefactors, the Project is rated successful.


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I. BACKGROUND

A. Rationale

1. In 1988 India already had an extensive transport network, which comprised rail, road, air,and water modes of transportation. The extent of the network as a whole and the road networkin particular were considered adequate but in poor condition. Only 30 percent of roads had acement concrete or bituminous pavement. While 90 percent of the state highways were paved,almost all had a width of less than 6 meters (m). Thirty percent of the entire road network hadsingle-lane roads (3.7 m), and many of the roads had high degrees of road roughness. Theseconditions resulted in constraints in terms of capacity, efficiency, transport time, road safety, andtransport cost, affecting freight and passengers transported on the road network. In the late1980s, road transport accounted for 50 percent of freight and 80 percent of passengers. Inaddition to these constraints, the road sector was expected to gain in importance over railwaysbecause of (i) a change in commodity mix, (ii) the distances freight was being transported, and(iii) liberalization of the road sector. With the increasing importance of the road networkcombined with its poor condition, the Government decided to invest in selected sections of thenetwork. The road sections included in the Project1 were justified on the basis of the increasingindustrial activities in the road influence areas, which required an adequate transportationsystem to spur economic growth.

B. Formulation

2. The Project was prepared in 1988 under a feasibility study supported by technicalassistance (TA).2 Domestic consultants, hired by the public works departments (PWDs) of therespective state governments, prepared feasibility studies for a number of subprojects fromwhich specific road sections were selected (para. 4). One exception to hiring consultants was inTamil Nadu where the Highway and Rural Works Department of the state governmentcompleted a feasibility study of the ChennaiCuddalore road in less than six months. The studyfor the VisakhapatnamAnakapalle road in Andhra Pradesh (AP) was completed in less than

two months. In other cases, the detailed design was prepared in parallel with and completed atthe same time as the feasibility study. The Ministry of Surface Transport (MOST)3 scrutinizedsome of the feasibility studies and missions of the Asian Development Bank (ADB) commentedon the studies. However, this limited time frame combined with the inexperience of domesticconsultants and state PWDs adversely affected the quality of feasibility studies, detaileddesigns, and overall planning. For instance, aspects pertaining to the actual status of land,existing obstructions and trees, environmental and social concerns, construction costs, trafficdata, and economic criteria were not adequately addressed. As such, the quality of the Projectat entry was inadequate. Based on the lessons learned, the feasibility and detailed design forthe subsequent project4 was scrutinized by dedicated international consultants on behalf ofMOST with better results.

1Loan 918-IND: Road Improvement Project, for $198 million, approved on 10 November 1988.

2TA 955-IND: Road Improvement, for $75,000, approved on 24 February 1988.

3The ministry has been subdivided and the part responsible for road transport renamed the Ministry of Road Transportand Highways.

4Loan 1041-IND: Second Road Project, for $250 million, approved on 30 October 1990.


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C. Purpose and Outputs

3. According to the appraisal report, the Project is designed to improve selected nationaland state highway sections that constitute important infrastructure support facilities for industrialactivities in five States, mainly by strengthening existing pavements and widening carriagewayswherever needed for present and projected traffic. These improvements were expected to

reduce transport constraints and facilitate faster, cheaper, and more efficient transport servicesin the project areas.

4. The planned project outputs were (see the map on page v)

(i) four-laning and strengthening national highway 2 (NH 2) from Ballabhgarh toMathura (111 kilometers [km], of which 9 km were four lanes at the time ofappraisal) in Haryana and Uttar Pradesh (UP);

(ii) four-laning and strengthening NH 5 from Anakapalle to Visakhapatnam (40 km),and improving the existing Anakapalle bypass (6 km) AP;

(iii) improving the HyderabadRamagundam road (216 km) in AP;

(iv) improving the AnkolaHubli road (132 km) in Karnataka;

(v) improving the Chennai (Madras)Cuddalore road (160 km) of the East Coast Roadin Tamil Nadu; and

(vi) providing equipment for quality control, pavement evaluation, and roadmaintenance for the PWDs of the five states concerned with the Project.

5. The project scope was not changed significantly during implementation, althoughmodifications were made to a number of the outputs (para. 14).

6. Two TAs accompanied the Project. The aim of the first5 was to build state capacity toimprove the use of maintenance funds by introducing a computerized pavement managementsystem. This TA provided inputs for developing the computerized system and for training staff.The second TA6 aimed to (i) increase MOST's capacity to plan, manage, and operateexpressways; (ii) develop an analytical system for assessing the likely diversion of traffic tospecific expressway segments, including an assessment of the impact of toll rates; and (iii)develop an economic evaluation model for establishing traffic benchmarks for alternativeoptions of improving traffic corridors.

D. Cost, Financing, and Executing Arrangements

7. The total project cost was estimated at $253.5 million, with a foreign exchange

component of $87.0 million (34.3 percent of the total) and a local currency component of $166.5million equivalent (65.7 percent). The ADB loan of $198.0 million was to finance 78.1 percent ofthe total project cost, while the Government was to fund the remaining 21.9 percent. The actualproject cost at completion was $233.6 million. ADB funded 74 percent, or $172.8 million; of this,

5TA 1058-IND: Pavement Management System for State Roads in Andhra Pradesh and Tamil Nadu, for $610,000,approved on 3 January 1989.

6TA 1059-IND: Expressway System Planning Study, for $270,000, approved on 3 January 1989.


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$85.6 million financed local currency costs. The balance of $25.2 million was canceled. The 8percent cost underrun was attributable to underused contingencies.7 Appendix 1 provides asummary of estimated and actual project costs. The Project was the first loan to MOST. Sinceapproval of the loan in late 1988 and the associated TAs in early 1989, the road sector in Indiahas received five loans and 21 TAs.

8. MOST, the overall Executing Agency (EA), established a project implementation cell atthe central level within the department responsible for roads and highways; it was headed by achief engineer. MOST was also responsible for the national highway components of the Project(BallabhgarhMathura and VisakhapatnamAnakapalle) for which it appointed chief engineersin Haryana, UP, and AP, for procurement and distribution of the equipment, and for the TAs.State highway components were executed by the (i) Roads and Buildings Department of AP(HyderabadRamagundam), (ii) Highway and Rural Works Department of Tamil Nadu(ChennaiCuddalore), and (iii) PWD of Karnataka (AnkolaHubli). Each of the statedepartments established a project implementation unit to supervise construction. The units wereheaded by a project director of the rank of superintendent engineer (senior highway engineer)nominated by each state for its stretch of the project road. The directors were assisted byresident engineer(s) who worked alongside the consultants (para. 18) hired to assist in

implementing the Project. The chief engineers from the states had administrative functions.

E. Completion and Self-Evaluation

9. The project completion report (PCR) was prepared by the Infrastructure, Energy, andFinancial Sectors Department (West) and circulated to the Board of Directors in 1999. The PCRobserved delays in bidding, contract award, and construction, which were largely attributed tothe performance of the EAs, particularly at the state level, and noted conflicts between thesupervision consultants and the EAs. Environmental problems were noted in the PCR, as sometrees had to be cut along the ChennaiCuddalore section, where, according to the PCR, minorrealignments were introduced to improve the geometric design. Nongovernment organizations(NGOs) protested the cutting of trees, taking the case through the legal system. Eventually,

implementation resumed and the PCR commented that the issue could have been managedbetter. The PCR noted that (i) the Project was built as planned, except for minor variations tosome of the components for which detailed descriptions were provided; and (ii) the quality of theroads was as per design with no major pavement defects. The PCR also reported that the TAswere implemented as planned and produced satisfactory results, but provided limitedinformation on capacities built and the potential for outcomes being sustained. The economicinternal rate of return (EIRR) was estimated for each component and resulted in rates lowerthan appraised due to increases in construction costs, delays, and lower than expected trafficcounts. Nonetheless, none of the components had an EIRR of less than 12 percent and theProject as a whole achieved an EIRR of 22.4 percent. The Project was rated generallysuccessful.

10. The PCR adequately reflected the achievements and shortfalls of the Project, althoughits assessment of the results of the TAs was too optimistic (paras. 36 and 37). The PCRidentified important lessons learned, some of which have been put into practice. For instance,construction supervision consultants are now used as engineers in their capacity defined by

7In Indian rupee terms, the cost was underestimated at design; this resulted in lengthy negotiations with contractors,and affected the rate of return of project components. In dollar terms, these cost increases were offset by thedevaluation of the Indian rupee against the US dollar.


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international standards rather than advisers (para. 18).8 Project experience also demonstratedthe need for public participation and involvement of NGOs to avoid disruptions inimplementation.9

F. Operations Evaluation Department Evaluation

11. This project performance audit report (PPAR) assesses the Projects relevance, efficacy,efficiency, sustainability, and institutional and other development impacts. The PPAR representsthe findings of the Operations Evaluation Mission (OEM) that visited the Project in December2001. The PPAR is based on discussions with officials working for the EAs and other relevantoffices, people living in selected villages situated along the project roads, staff of multilateral andbilateral agencies involved in the transport sector and of ADB, the analysis of documentation,and visits to sites. The OEM inspected the entire length of the project roads. Comments weresought from stakeholders from the Government, EAs, and within ADB and reflected in the finalPPAR.

II. PLANNING AND IMPLEMENTATION PERFORMANCE

A. Formulation and Design

12. At the time of appraisal, the rationale for the Project was, at least in part, based on theaim to contribute to the industrialization and economic growth of India, which were shared aimsof the Government and ADB. Road sections were to be selected to overcome transport capacityshortcomings along certain routes and to support ongoing industrialization in the road influencearea. In addition to these criteria, ADB financing was to be provided to a number of states toprovide equal access to external funding. The actual selection of roads was influenced by thesubmission of feasibility studies by the states (para. 2) before the deadline for proposing roadsections for ADB financing. At the time, ADB did not have a country operational strategy or aroad sector strategy. The individual road sections did not form a coherent whole under theumbrella of the loan, but were selected for equity rather than economic reasons. The

involvement of a large number of EAs (necessary because each section fell under theresponsibility of different agencies and because of the geographic distance it involved) hadseveral effects. First, the impact of the Project as a whole is dispersed across several parts ofIndia without creating synergy effects, and second, coordination and supervision by MOST andADB was more time-consuming and costly than if the road stretch had been contiguous. RecentADB loans each cover one continuous stretch of road rather than a mix of different sections.

13. Still, each of the road sections can be justified in its own context. The BallabhgarhMatura and the VisakhapatnamAnakapalle roads became part of the golden quadrilateral andthus made a small contribution to the Prime Ministers National Highway Development Project.10The AnkolaHubli road links with the MumbaiChennai connection (NH 4) of the goldenquadrilateral, parts of which are presently being upgraded with ADB assistance,11 providing an

additional link to other parts of Karnataka. The ChennaiCuddalore road is an important link to

8Loan No. 1274: National Highways Project, for $245 million, approved on 29 November 1993.

9ADB helped prepare environmental guidelines through TA 2002-IND: Environmental Management of Road Projects,for $240,000, approved on 29 November 1993.

10This project, estimated to cost Rs580 billion, comprises (i) the golden quadrilateral of 5,851 km connecting Delhi,Kolkata, Chennai, and Mumbai (estimated cost of Rs250 billion) for completion by end 2003, (ii) 7,300 km of NorthSouth (KashmirKanayakumari) and EastWest (SilcharPorbandar) corridors (estimated cost of Rs290 billion) forcompletion by end 2007, and (iii) port connectivity and link roads (estimated cost of Rs40 billion).

11Loan 1839-IND: Western Transport Corridor Project, for $240 million, approved on 20 September 2001.


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developments along the coast, and the PondicherryCuddalore section of this road has beenintegrated into the national highway system. The HyderabadRamagundam road does notfeature among the core network of state highways identified by the state government incooperation with the World Bank. However, it links with NH 16, an extension decided duringproject implementation (para. 14), and with a state highway upgraded with World Bankassistance.

B. Achievement of Outputs

14. Project outputs (para. 4) generally were produced as planned with the followingmodifications. The HyderabadRamagundam road was extended by 10.5 km to link with NH 16,parts of the BallabhgarhMathura road were finished with bituminous concrete rather thanconcrete, and some realignments on the ChennaiCuddalore road could not be implemented forenvironmental reasons. The PCR documents and explains these deviations from original plans.Bridges and culverts were strengthened as per design, although in some cases the approachesto the bridges are not smooth. Drainage facilities are generally inadequate, either lacking orovergrown, and poorly maintained. Hard shoulders were provided at varying width, and notalways with a hard surface. Service roads were built in few locations. Their use for other

purposes (e.g., repair shops) minimizes their utility for easing traffic congestion in town areas.Equipment was provided with certain modifications in numbers and distribution to the five states.In addition to the original specifications, asphalt content gauges were procured and distributed.Appendix 2 provides details on the road improvements financed under the Project.

C. Cost and Scheduling

15. In dollar terms, the actual project cost was 8 percent lower than estimated at appraisal,although the cost of civil works and right-of-way exceeded original estimates by 16 and 47percent (Appendix 1). These increases were well within the limits of project contingencies. Thecost overrun was more pronounced in local currency because of higher base prices, priceescalation, and exchange rate movements of foreign costs to local contractors, but were off-set

by the devaluation of the rupee. The underestimated costs of works affected the schedule forawarding contracts. Since bids exceeded estimated costs by more than 20 percent, governmentand ADB approvals had to be sought to revise allocations. Combined with lack of experiencewith ADB procedures, inexperience of state EAs in managing contracts, and environmental andright-of-way issues that were not resolved during project design, these factors resulted in majordelays of more than four years for the Project as a whole. Some road sections were completedwith less delay. The causes for the delays and solutions to mitigate them are documented in theProject Administration Study,12 summarized in Appendix 3.

D. Procurement and Construction

16. ADBs Guidelines for Procurementwere followed. However, being the first road project in

India, the EAs, especially at the state level, were not conversant with international standardsand ADB guidelines. Long delays, therefore, occurred at each stage of the procurement cycle(i.e., prequalification, preparation of bid documents including design and specifications,evaluation of bids, and award of contracts). On the government side, the multitude of

12ADBs Project Administration Strategy Study in was carried out by the Indian Resident Mission in 1997-1998 toidentify issues involved in implementation delays, their causes, and solutions to mitigate them. The study includedmost of the project roads, as well as project roads under the Second Road Project (footnote 4) and ADB-financedprojects in the power and port sectors.


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government agencies involved resulted in lack of ownership and too many approval stagesduring construction and the procurement of equipment.

17. Six contractors were engaged for the five road components comprising 15 contractpackages. The contractor for BallabhgarhMathura did not have adequate concrete pavingtrains, matching concrete placer, and concrete batching plants to cater for simultaneous work in

both states (Haryana and UP), and did not augment available resources in spite of beingrequested to do so from the start. This resulted in reduction of the original scope of concretepavement works in the UP stretch of NH 2 (para. 14) to avoid further delay in completing works.Although in all cases the quality of work was found to be satisfactory, the fact that all the projectroads were inordinately delayed, even with reduced scope, points to an unsatisfactoryperformance of the contractors. On analysis, the various contributing reasons were (i)insufficient importance given to prequalification of contractors,13 (ii) unsatisfactory sitemanagement (in some cases due to the presence of consultants, contractors did not even havequalified engineers at the site), (iii) inadequate financial management, (iv) poor performance ofcontractors plant and equipment, (v) inability to procure materials and deploy adequateresources when required, and (vi) the subcontracting of works to inexperienced andunsupervised subcontractors. This poor performance resulted in termination of one contract

package (replaced with the contract award to another contractor) and recommendations toterminate another.

18. The construction supervision consultants were to ensure that construction quality wasconsistent with the specifications, while the day-to-day construction supervision/inspectionrested with the PWDs. Under this arrangement, the role of domestic and internationalconsultants was advisory and the intended benefits from engaging them could not be fullyutilized. MOST lacked experience in implementing conditions of contract as stipulated by theFederation Internationale des Ingenieurs Conseils, and in many instances ignored the advice ofthe consultants. This was corrected under the National Highways Project (footnote 8) as the useof advisory consultants was dropped and the supervisory consultants were engaged as "theengineer" under the international federation's conditions of contract. Notwithstanding the

limitations, the performance of the domestic consultants was generally satisfactory. They wereable to (i) monitor the Project, prepare detailed monthly reports highlighting problems resultingin implementation delays, recommend ways to accelerate progress, and update cost estimates;(ii) provide key input to redesign pavement in some cases; (iii) assist in the planning andconstruction management of civil works; (iv) advise state PWDs on the contractors claims; and(v) certify the quality and quantity of the civil works. Each domestic consultant had aninternational consulting firm as an associate, with limited inputs pertaining to projectmanagement. The firm provided concrete (rigid) pavement and bituminous (flexible) pavementexpertise, as well as materials and contract administration support. The internationalconsultants also updated contractors and domestic consultants on current knowledge ontechnical aspects of construction work.

E. Organization and Management

19. During implementation, the concept of administration and management of projects of thismagnitude and geographic spread was not well established. It was and continues to be alearning exercise. However, being the first project of its kind, lessons were learned and many

13Some of the prequalified domestic contractors did not have sufficient resources to allocate for the contracts awarded.One of them was simultaneously involved in six road projects pertaining to the World Bank and the Project and thushad resources thinly deployed on each.


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adopted through constant interaction of the ADB review missions, resident mission staff, andconsultants. The project implementation cell within MOST (para. 8), established at thesuggestion of ADB, coordinated with various agencies. However, MOST had difficulty complyingwith covenants concerning land acquisition, separate accounting, and timely submission ofaudited financial statements.14 The multitude of agencies involved in project implementationaffected ownership and coordination, causing delays in acquiring land and securing right-of-

way. In addition, other agencies such as the revenue department and those providing servicessuch as electricity, telephone, and water supply, do not give priority to implementing externallyaided road projects, but their cooperation is essential for procuring land and for identifying pipesand underground cables that would affect road works. Some of these activities continued for upto two years beyond the original scheduled completion of the Project itself, e.g., HyderabadRamagundam road. Having learned the lesson, the Government amended the land acquisitionact applicable to national highways, and state governments are considering similar changes tostate legislation.

20. ADB conducted a total of 19 review and special administration missions comprising 294person-days. These missions reviewed other loans including TAs that MOST was implementingsimultaneously. This appears to have been an effective use of ADB staff time and resources.

Active ADB intervention helped the EAs, which were not familiar with ADB procedures, avoideven more delays in engagement of consultants and procurement, and helped the Project tomove forward in spite of implementation problems. Site visits were conducted and problemswere dealt with as they arose. ADB recommendations on technical aspects of the asphaltpavement resulted in substantial savings in long-term maintenance costs and were instrumentalin bringing about a change of specifications after due deliberations by experts. The newspecifications reduce the quantity of tack coat,15 prevent early bleeding of pavement,16 enablelonger life of pavement, and lead to maintenance cost savings.

III. ACHIEVEMENT OF PROJECT PURPOSE

A. Operational Performance

1. Traffic Carried

21. Based on the OEMs observations, the volume of traffic is slightly higher than at projectcompletion and the composition of traffic has more or less stayed the same. At appraisal the mixof slow and fast-moving traffic on the road and its impact on travelingspeedand road safetywas identified as a problem. The Project was intended to help segregate traffic, in particularnonmotorized vehicles from motorized vehicles. However, such segregation has not happenedon any of the project roads. The roads are used by motorized vehicles, including tractors; bynonmotorized vehicles, including bicycles and bullock carts; and by herders who drive theircattle, buffalo, and goats along the road. The only notable stretch where some segregationtakes places is along the ChennaiPondicherry route where about one third of the road

14Issues of separate accounting and of submitting audited financial statements were resolved during projectimplementation.

15Tack coat is the primer applied to substrates, concrete slabs, or stabilized base courses to provide good adhesion forthe next layer. Cutback bitumen or bitumen emulsions are generally used as tack coat.

16Bleeding is migration of bitumen to the surface of the pavement.


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shoulders have been resurfaced with concrete pavement blocks.17 The different color (lightgray) and rougher surface discourages use by motorized vehicles, except for emergencysituations, while bicycles and pedestrians were observed to stay mostly on the shoulders.

22. Road improvements have not necessarily contributed to improving road safety. Thenumber of road accidents, injuries, and fatalities in the five states increased between 1985 and

1998, often doubling; but the fatality rate (number of fatalities per 1,000 registered vehicles)actually dropped by more than 50 percent in most of the states (Appendix 4).18 On project roadsthat were expanded to four lanes, traffic moves in both directions on both sides of the median atintersections and in town areas. In a number of areas, the median has been broken to allowtraffic, including tractors, to cross the road in places that were not designed for this. In manyinstances, the middle line and markings for the shoulder are missing, road signs are absent, andno reflectors are installed, the absence of which adds to inappropriate safety standards.However, most of the accidents have to be attributed to irresponsible driving, due to a lack ofdriving skills, inattention, and fatigue. These and other shortcomings in road safety in generalare discussed in another evaluation.19

2. Technical Standards and Current Conditions

23. In general, the project roads are in satisfactory or very good condition. The riding qualityis on average good and surface roughness is well within the designed level (estimated at 2,000-3,000 millimeters/km). Overall, pavement conditions are satisfactory, except for a few isolatedportions where excessive bleeding of bitumen, rutting, and surface cracking were observed.Potholes were generally filled, except in very few areas where maintenance needs to beundertaken. The OEM was not able to establish conditions of the ChennaiCuddalore road asbuilt under the loan, because since January 2001 a public-private concessionaire, the TamilNadu Road Development Company Limited (TNRDC), has been operating and maintaining theroad. TNRDC has resurfaced more than 80 percent of the road, with plans to completeremaining stretches within a few months. These works may not have been necessary from thetechnical point of view; according to the PCR resurfacing should have been due after eight and

not six years. Nevertheless, the resurfacing was considered necessary to provide better serviceto customers, who otherwise might be unwilling to pay a toll. In many cases, drainage systemsare overgrown or do not exist. Only along the AnkolaHubli road are there stretches of drainswith a hard surface. Along the same road, a stretch of some 24 km suffered serious damage(bituminous bleeding and rutting along a mountainous bending road stretch), possibly due tooverloaded vehicles. The condition of the roads stands out positively in comparison withadjacent roads, including some of the national highways they connect with. Appendix 5 providesdetails on each of the road sections.

17Under the Project, earthen shoulders were provided on this road section. Since the beginning of 2001, the road hasbeen contracted to a concessionaire who decided to repave parts of the shoulders, choosing pavement blocks as atechnically viable option apparently not more costly than bitumen for around one third of the road stretch. Theremaining sections are about one third bitumen and one third earthen shoulders.

18At appraisal, traffic accident statistics were provided for the five states as a whole and not for the project roads assuch.

19ADB. 2001. Technical Assistance Performance Audit Report on Selected Technical Assistance in Road Safety.Manila.


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3. Maintenance

24. After the defect liability period of one year for which the contractor was responsible formaintenance, no major maintenance was required on the project roads, and regularmaintenance has been satisfactory. Maintenance allocations varied from Rs5,000 per km for theHyderabadRamagundam road to about Rs20,000 per km for the AnkolaHubli road (both are

two-lane roads). For the maintenance of the UP stretch of the BallabhgarhMathura road, theNational Highways Authority of India (NHAI) sanctioned Rs64 million for 20012002 to improveroad safety, bridges, and approaches to bridges over railway lines. These varying allocationswere made on the basis of norms and available funds rather than of actual requirementsdetermined using methods such as the pavement management system (para. 36).

B. Performance of the Operating Entity

1. Finance

25. At appraisal the road sector generated $5.3 billion per annum from taxes, fees, and tolls.Only tolls and part of the fuel tax were contributed to the Central Road Fund, which was a

dedicated fund for road maintenance. An increase in contributions to the fund by increasing thefuel tax share, which was decreed in 1988, was expected to yield a total annual funding level of$229 million equivalent at current exchange rates, 36 percent of which would be allocated to thecenter and 64 percent for state expenditure. The total road sector expenditure at appraisal wasestimated at $1.9 billion equivalent at current exchange rates, funded from the general budget,tolls, and the Central Road Fund. In 2000, the fund was revamped by establishing theDedicated Road Fund, again increasing its resource base by adding a new excise duty. Thenew fund is expected to generate $1.3 billion equivalent per year at the then current exchangerate. This fund is largely used for capital investments in the road sector, although funds can alsobe used for maintenance.

26. Expenditure for road maintenance is allocated from the central and state budgets, but

allocations reportedly fall short of requirements by around 40 percent. However, theserequirements are established on the basis of standard costing rates, which have been used formore than 20 years without verification of how much they reflect actual maintenance costs. Asdiscussed in para. 23, the project roads are in good condition, implying that funds wereavailable and adequate for maintaining them, even though below standard costing rates.

2. Institutions

27. The institutional framework for managing the sector has evolved since project appraisal.MOST was restructured and part of it now forms the Ministry of Road Transport and Highways,which is entirely focused on road transport and highways at the national level. It is responsiblefor two of the previous state highway sections, namely the AnkolaHubli and Pondicherry

Cuddalore stretches, as they are being reclassified from state to national highways. In addition,NHAI was established to be dedicated to national highways. It plays a major role in building andmanaging specific national highways, in particular those under the Prime Ministers NationalHighway Development Project (para. 13), which places the BallabhgarhMathura andVisakhapatnamAnakapalle roads under its authority. The ChennaiPondicherry road has beencontracted out to TNRDC (para. 23). Of all the project roads, only the HyderabadRamagundamroad continues with the state government of AP.


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28. These institutions are increasingly moving to using maintenance performance contracts,which require the private contractor to maintain the road at specified standards. NHAI isintroducing the corridor management concept, which will affect the BallabhgarhMathura andVisakhapatnamAnakapalle roads. The concessionaire will collect tolls on these roads, whilebeing responsible for maintaining the roads at an agreed standard. An eight-year operationalmaintenance contract is being finalized for the UP portion of the BallabhgarhMathura road. The

concession given to TNRDC for the ChennaiPondicherry route requires the concessionaire tomaintain the roads at specified standards, while giving it the right to toll the road and retain tollrevenue. TNRDC expects to break even after 15 years.20 TNRDC issued a six-yearmaintenance contract with performance standards and penalties if these standards are not met.A similar contract is being tried for a World Bank project in AP, and, if institutionalized, mayapply to the HyderabadRamagundam road over the longer term. Under this contract,Rs25,000/km are allocated for ordinary maintenance, while periodic maintenance (i.e.,resurfacing) is planned based on actual requirements. Because these concessions are in theexperimental phase, their effectiveness in keeping roads well maintained cannot be assessed.

C. Economic Reevaluation

29. The EIRR has been reestimated following the same methodology as used at projectcompletion, and updating traffic counts, traffic growth projections, and vehicle operating costs.All benefits and costs are expressed in 2001 constant prices. The EIRR has decreased incomparison with estimates at appraisal and completion because of (i) changes in maintenancecost (revised standards in publications of the Indian Road Congress), (ii) changes in trafficgrowth rates, and (iii) an increase in construction cost and extended implementation period.

30. The additional cost for upgrading the ChennaiCuddalore road (para. 23) has not beenincluded in the EIRR calculation, because requisite data could not be obtained. The EIRR forthis road section and for the Project as a whole is therefore higher than it should be. The lowrate of return for the AnkolaHubli road is explained by lower than expected traffic flows. TheEIRRs for each section and the Project as a whole are provided in Table 1. The detailed EIRR

calculation is in Appendix 6.

Table 1: Comparison of Economic Rates of Return(%)

Road Section Appraisal Completion Evaluation

BallabhgarhMathura 34.1 29.6 28.8

VisakhapatnamAnakapalle 59.5 23.3 19.9

HyderabadRamagundam 25.4 17.8 15.2

ChennaiCuddalore 26.2 20.6 18.5

AnkolaHubli 24.1 13.6 10.8

Entire Project 35.8 22.4 20.7

D. Sustainability

31. The Project is sustainable from a technical point of view. Financially, the newperformance maintenance contracts will have to prove whether arrangements other than purely

20The portion of the ADB loan for this road section was not passed on to the concessionaire, but made as a governmentcontribution.


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government-financed maintenance of roads are effective, although the Government will likelykeep maintaining roads at whatever standards can be afforded.

IV. ACHIEVEMENT OF OTHER DEVELOPMENT IMPACTS

A. Socioeconomic Impacts

32. The OEM collected data to assess socioeconomic developments in the road influencearea. Baseline information in the appraisal report was limited to basic information on industrialestablishments and their output, and some indicators for agriculture production and tourism.Data collected by the OEM indicates that most industrial and agriculture activities expanded interms of number of establishments, output, and/or yields. In addition, the OEM noted a numberof other activities that developed in the road influence area, such as tourism sites, educationcenters, and religious establishments. In many cases, the project roads contributed to theexpansion of economic activities and facilitated travel over shorter distances (rather than railtransportation). However, not all of these developments can be attributed to transportationalone. Also, the appraisal report did not contain baseline data for social services or povertyindicators. The OEM, therefore, did not collect information on these indicators as the project

impact (change as a result of the Project) could not be established. Appendix 7 summarizes theobserved development impacts.

33. Transportation service charges were not recorded at the time of project appraisal orcompletion. However, generally, the prices of transportation has been increasing and littleevidence is available to indicate that vehicle operating cost savings are being passed on tousers of transportation services.

B. Environmental Impact

34. Originally the Project did not anticipate any direct environmental impact. However, duringimplementation major problems arose along the ChennaiCuddalore section, where tree cutting

took place and resulted in protests of NGOs, which filed petitions against these practices. Courtorders were issued to suspend works until the Ministry of Environment and Forests provided anenvironmental clearance, which was done in February 1994. However, the clearance wasrevoked a year later when conditions attached to the clearance were not complied with. As aresult, ADB suspended loan disbursements between April 1996 and November 1997, wheneventually all conditions were met. These problems resulted in delays in project implementationand changes in the alignment and construction standards of the road section (para. 14). Withoutevidence on the preproject situation, the extent of environmental damage is difficult toreconstruct. The PCR reported that some trees were cut, while according to other sources asmany as 5,000 trees were felled. Previously cleared road stretches are not denuded ofvegetation, although current vegetation is just about 10 years old (instead of previous maturetrees) and set back at a reasonable distance of about 5 m from the shoulder. The current

concessionaire is realigning the road in several sections (as foreseen under the Project). Thelocal population apparently accepts this, even though tree cutting is involved.

C. Impact on Institutions and Policy

35. As the first assistance to the road sector in India, the Project was the starting point of anextended policy dialogue that has continued since its approval. Achievements in institutionaland policy reform are documented in the report and recommendation of the President of a


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recently approved loan (footnote 11). In addition, the Project generated lessons (para. 19) thathave been incorporated in design and implementation over the past years.

36. The more explicit institutional goals pursued with the help of the two TAs (footnotes 5and 6), namely introducing a pavement management system and an expressway managementsystem were not attained. The pavement management system was piloted only in Tamil Nadu

instead of two states. The basic data was collected and input into a computerized systeminstalled at a computer unit of the Highway Research Station. A second round of data wascollected in 1996, but not processed on the computer. Presently, the program is not installed orused, although staff present at the computer unit were well aware of the program and hadoperating manuals and input data at hand. Reasons given for not utilizing the program were itstime-consuming and costly requirements for data, and because results generated with theprogram were not used in decision making. ADB and the World Bank have made similarattempts in several states, but progress in finding acceptance of a pavement managementsystem is slow. Appendix 8 provides details on the TA.

37. The TA for developing an expressway management system generated some reports andan economic model that was used/referred to in a number of ADB reports. However, a system

for prioritizing the selection of highways is not in place other than using traffic counts and dataon capacity utilization. The choice of the golden quadrilateral, and the north-south and east-westcorridors (para. 13) was based on the need to connect main centers across the country, therebyproviding transport axis. The entire stretch will be four lanes regardless of whether somesections warrant two, four, or six lanes. For the economic assessment of individual roadinvestments, the World Banks highway development model is in common use. More details onthe TA are in Appendix 9.

V. OVERALL ASSESSMENT

A. Relevance

38. The Project contributed to the Governments efforts to improve the road network in thecountry and facilitated, to some extent, the shift from rail to road transport. Several sectionscomplement the core network now being upgraded under the Prime Ministers National HighwayDevelopment Project. The Project is rated relevant.

B. Efficacy

39. The Project's objective was attained as transport constraints were eased and vehicleoperating cost savings realized. Therefore, the Project is rated highly efficacious.

C. Efficiency

40. The EIRR for the Project as a whole is 20.7 percent in spite of the major implementationdelay. However, one road section falls below the 12 percent cut-off rate. The Project is ratedefficient.

D. Sustainability

41. The project roads have been relatively well maintained in spite of constraints onmaintenance funds. New arrangements for performance maintenance contracts could be a


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suitable way to ensure the sustainability of investments in the project roads. The Projectssustainability is rated likely.

E. Institutional Development and Other Impacts

42. Institutional development impacts were incidental in that the EAs learned from the

mistakes made during project implementation. Planned institutional development impacts to bebrought about with the help of the two TAs did not materialize. Other economic changes thattook place in the road influence areas can be attributed only in part to the Project. Both TAs arerated unsuccessful, and overall the Project is rated as having modest institutional and otherdevelopment impacts.

F. Overall Project Rating

43. Based on the above criteria, the Project is rated successful.

G. Assessment of ADB and Borrower Performance

44. The Project, being the first to the road sector in India, was a learning experience for the

EAs, which could have handled some situations more efficiently and effectively. For instance,land acquisition, right-of-way, and environmental issues could have been dealt with in advanceto avoid delays. Lessons have been learned from the experience with the Project (para. 49) andchanges introduced in procedures. ADB supervised the Project adequately (para. 20), althoughmore care could have been exercised in selecting road sections to be included in the Projectand in anticipating environmental issues.

VI. ISSUES, LESSONS, AND FOLLOW-UP ACTIONS

A. Key Issues for the Future

45. The ambitious Government plans (para. 13) for expanding the national highway systemraise some key issues that concern the project roads and the network as a whole. While someare currently being tackled, they require further attention.

46. To finance the recurrent cost of road maintenance, the Government is introducing a tollsystem and performance maintenance contracts (para. 28). However, the cost per km of roadmaintenance varies considerably and calls for a more systematic way of assessing the need forand cost of road maintenance works. The Government would be well advised to analyze currentpractices to avoid issuing contracts that may increase rather than rationalize maintenance costs.Otherwise, the current questionable practice of budgeting for road maintenance (para. 26)would be extended to a different contractual arrangement without reaping benefits that aperformance contract could bring about. In addition, mechanisms have to be put into place formonitoring the performance of maintenance contractors to ensure that performance standardsare met.

47. Capacity for identifying the need for and costing of road maintenance works must still bedeveloped. Such a system would be helpful to the Government for maintenance worksundertaken by its own departments as well as for costing the performance maintenancecontracts. Such a system was planned under one of the TAs (footnote 5), but expectations werenot met. To be more successful in building requisite capacity, the existing decision-makingprocesses (including inherent political pressures) must be understood, and systems identified


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that will improve decisions made. To manage political influences, decision makers need to be (i)involved in designing management tools, and (ii) trained to understand how these systems cansupport the decision-making process. The design of management systems should consider fromthe outset how much labor/time can be spent on data collection and processing, and optimizeresource inputs versus expected outcomes.

48. In addition, the following issues should be considered in future road projects:

(i) Truck/bus terminals for parking and vehicle repairs should form a part of theproject scope to improve traffic flow and to avoid excessive traffic congestion aswitnessed at the HaryanaUP border (BallabhgarhMathura road).

(ii) Construction costs should be estimated on the basis of market prices rather thanthe PWD's schedule of rates, and should be checked rigorously for accuracy.

(iii) Hard shoulders should be built as specified.

(iv) Road safety measures should be implemented on an urgent basis. These should

include extensive training and awareness building of drivers (in particularprofessional drivers) and stricter law enforcement.

B. Lessons Identified

49. Being the first project of its kind in India, the experiences gained have been well utilizedfor ongoing ADB and World Bank-funded road projects. The lessons include

(i) more detailed and systematic project preparation and checking by supervisionconsultants before commencement of works, as done under one of ADBs morerecent projects (footnote 8);

(ii) contract award only after land acquisition, removal of obstructions, and necessaryclearances from various government department and ministries to ensure goodstart-up;

(iii) effective use of construction supervision consultants as the engineer according tointernationally agreed standards (para. 18) and not as advisors; and

(iv) involvement of NGOs in environmental concerns (para. 10).

50. A major technical issue that was adjusted during implementation and adopted for otherprojects entailed reducing the quantity of tack coat application. This resulted in cost savings inconstruction and maintenance, and helped avoid excessive bleeding of bitumen, leading tolonger road life.

C. Follow-up Actions

51. No immediate follow-up actions to the Project are necessary.


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APPENDIXES

Number Title Page Cited on(page, para.)

1 Summary of Project Cost 16 3, 7

2 Road Improvements Financed under the Project 17 5, 14

3 Summary of the Project Administration Study 19 5, 15

4 Traffic Accidents 22 8, 22

5 Road Conditions at Appraisal and Evaluation 23 8, 23

6 Economic Analysis 24 10, 30

7 Socioeconomic Development Impacts 33 11, 32

8 Pavement Management System for State Roadsin Andhra Pradesh and Tamil Nadu (TA No.1058-IND)

38 12, 36

9 Expressway System Planning (TA No. 1059-IND)

40 12, 37


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16Appendix 1

SUMMARY OF PROJECT COST($000 Current Prices)

Appraisal Estimate Actual Percentage Change

Component FX LC Total

FX as% oftotal FX LC Total

FX as% oftotal FX LC Total

Right-Of-Way 0 5.69 5.69 0% 0 8.38 8.38 0% 0 47% 47%

Civil Works 44.79 115.36 160.15 28% 57.34 128.15 185.49 31% 28% 11% 16%

Equipment 1.00 0 1.00 100% 0.86 0 0.86 100% 14% 0 14%

Consulting Services 0 3.92 3.92 0% 0.20 3.77 3.97 5% 0 4% 1%

IncrementalOperation andAdministration

0 8.36 8.36 0% 0 6.04 6.04 0% 0 28% -28%

Contingencies 10.31 33.17 43.48 24% 0 0 0 0 100% 100% 100%

Subtotal 56.10 166.50 222.60 25% 58.40 146.34 204.74 29% 4% 12% 8%

Interest DuringConstruction 30.90 0 30.90 100% 28.90 0 28.90 100% 6% 0 6%

Total 87.00 166.50 253.50 34% 87.30 146.34 233.64 37% 0% 12% 8%

FX = foreign exchange, LC = local currency, TA = technical assistance.

Source: ADB appraisal reports and Project completion report.


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Appendix 2, page 1

17

ROAD IMPROVEMENTS FINANCED UNDER THE PROJECT

Planned At Project Appraisal1988

Evaluation Observations2001

All national highway (NH) sections except theAnakapalle bypass (6 kilometers [km]) will be widenedfrom two to four lanes and the existing pavement will bestrengthened.

About 152 km of NH stretches have been four laned, (i)

111 km from Ballabgarh to Mathura as part of the NH 2in the states of Uttar Pradesh and Haryana, and (ii) 41km from Visakhapatnam to Anakapalle as a part of NH 5in Andhra Pradesh. In addition, a 6 km stretch ofAnakapalle bypass was strengthened.

The Anakapalle bypass and all state highways will beimproved to two-lane standard, with widening of thecarriageway wherever necessary.

Strengthening and widening of other project roadsincluding the Anakapalle bypass has been carried out asoriginally envisaged. However, 10.5 km was added as apart of the Project on the HyderabadKarimnagarRamagundam road to link with NH 16. The total lengthof state highways as built under the Project areHyderabadRamagundam 225 km, AnkolaHubli 132km, and ChennaiCuddalore 160 km.

The present vertical and horizontal alignments aregenerally satisfactory. However, minor changes will bemade at certain locations to improve sight distancesand increase design speed.

Changes to the horizontal and vertical alignments havegenerally been made in line with design specifications.However, along the ChennaiCuddalore road,realignment of some stretches would have beendesirable, as the existing alignment contained sevenright-angled curves, which are more prone to accidents.However, realigning these stretches was not possibledue to local protests and resultant environmentalconditions set by the Ministry of Environment andForests.

All weak bridges and culverts on the project roads willbe strengthened or reconstructed as necessary and,

where warranted, overbridges will be constructed atrailway crossings. The design of these structures willbe based on the Indian Roads Congress class AAsingle-lane/Class A double-lane loading.

50 minor and major bridges have been constructed onthe project roads. These include six bridges on Ankola

Hubli road, which were originally envisaged for wideningbut due to their bad condition were reconstructed as partof the project works. A total of 1,114 culverts wereconstructed or widened. These include box culverts,pipe culverts, and slab culverts. Three railwayoverbridges (ROBs) were widened from two to fourlanes on VisakhapatnamAnakapalle road. These ROBswere, however, outside the scope of the Project. Whilethe structures were designed as per standards, theapproaches to some of the bridges and the existingROBs are not smooth, especially on the AnkolaHubli,HyderabadRamagundam roads for bridges, andBallabhgarhMathura road for existing ROBs. One ofthe existing ROBs at Mathura is an accident-prone spotwith a major intersection on the ROB itself; though not

constructed as a part of the Project.


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Appendix 2, page 2

18

Planned At Project Appraisal1988

Evaluation Observations2001

Drainage facilities alongside the roads will be improved,and in low-lying areas, the road embankment will besuitably raised.

In most of the low-lying areas where new constructionwas planned, road embankments have been raised. Onthe resurfaced stretches passing through paddy fields,the aspect of proper drainage has not been addressed(as in the PondicherryCuddalore road). The drainage

facility along the project roads is generally wanting: inmost places the drains are overgrown, invisible, ornonexistent. Where constructed with a hard surface,they are not well maintained/cleaned, thus prone toclogging.

Hard shoulders, 1.5 meters (m) wide, will be provided oneach side of the roads throughout their length, withsuitable bituminous surfacing of the entire width of theshoulders within town areas.

Hard shoulders of varying width have been provided onVisakhapatnamAnakapalle, BallabhgarhMathura, andHyderabadRamagundam roads with changedspecifications [from mix seal surface to 40 millimeter(mm) bituminous concrete]. On the AnkolaHubli road,18.5 km length has been provided with hard shouldersof superior specifications against doublecoat surfacedressing on 225 mm thick waterbound macadam

originally designed. The balance length of the road hashowever, been provided with soft shoulders. On theChennaiCuddalore road, only 8 km are bituminousconcrete shoulders, while the balance of the road eitherhad earthen shoulders or no shoulders at all.

In the case of NHs passing through town areas withmany crossroads, parallel service roads will be providedto limit the number of access points. The geometricstandards followed will be in accordance with therelevant Indian Roads Congress standards applicable tonational and state highways.

The VisakhapatnamAnakapalle road has beenprovided with about 7.5 km of service roads in selectedcongested/builtup areas. Though about 22.5 km ofservice roads have been provided on the NH 2 stretchbetween Ballabhgarh and Mathura, this is highlyinadequate with insufficient provision for propercrossings from one side to the other. The border of UttarPradesh and Haryana is a traffic bottleneck with

numerous trucks awaiting toll formalities resulting inclogging of the highway, as parked trucks take up onelane in each direction. Instead, parking facilities fortrucks would have been more appropriate, but were notforeseen in the design. On the ChennaiCuddaloreroad, due to lack of availability of land in the highlycongested area between km 11.8 and 22, service roadscould not be provided. In fact the project road is abuttingthe shops and other built up structures in this stretch.However, at Marakanam a 2.25 km bypass has beenprovided.

The pavement will be of a flexible (bituminous) type,except in the case of the additional two lanes for the

BallabhgarhMathura section of NH 2, which will be arigid cement pavement.

For the BallabhgarhMathura stretch of NH 2, the rigid(concrete) pavement construction on the additional two

lanes was reduced by about 27 km. The section wasconstructed as flexible (bituminous) pavement. On theHyderabadRamagundam road, about 1 km ofbituminous surface was changed to concrete pavementto guard against seepage from an adjacent reservoir.

Sources: Loan 918-IND: Road Improvement Project. Appraisal Report, October 1988; and Operations Evaluation Missionobservations made during site visits and based on project documentation.


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19Appendix 3, page 1

SUMMARY OF THE PROJECT ADMINISTRATION STUDY

Issues Causes Solutions

A. Quality at Project Entry

Lack of projectownership- Inadequate

involvement in projectdesign

- Lack of coordinationbetween Governmentagencies

- Inadequateconsultation with theproject-affectedpeople

1. No dedicated team responsible for projectdesign

2. Lack of scrutiny at any specified level andresponsibility thereof

3. Different priorities and lack of urgency ofconcerned departments at center andstates

4. Lack of interaction with project-affectedpeople

5. Lack of adequate interaction with andwithin the state, Government departments,and agencies

6. Lack of consultation with Nongovernmentorganizations (NGOs)

1. Core team is to be formed withinMinistry of Surface Transport(MOST) and Executing Agency (EA)and assigned responsibility forprocessing of the project.

2. An "empowered committee"comprising major departments underthe of the secretary, MOST, toresolve the bottlenecks.

3. Core team and empoweredcommittee are to be assisted by stateproject management units.

B. Start up delays

Delays in establishingproject implementationunits (PIUs)

1. Government budgetary rules do not allowfunding of PIUs before loan approval

2. Key personnel not properly identified inadvance

3. Lack of urgency on part of Government/EAin timely establishment (serious thoughtgiven after contract approval)

Instructions already exist for the settingup of the PIU from the Ministry ofFinance. Needs to be enforced by EAs.

Environmental andforest clearances

1. Lack of coordination between the EAs andGovernment approving agencies

2. Unfamiliarity with the ADB loanrequirements

3. Complicated Government procedures

Environmental and forest clearance iscompleted prior to loan negotiations.

Land acquisition 1. Government procedures do not allowbudget allocation before loan approval

2. Complicated Government proceduresincluding legal problems

Land acquisition is to be completed priorto contract award.

Recruitment ofconsultants

1. Government selection and approvalprocedures not clearly defined

2. Poor selection and negotiations(rates fixedby the Government )

A transparent and clear set of guidelinesconsistent with Asian Development Bank(ADB) guidelines to be developed.

C. Project Budgeting

Delays due to budgetaryprocess and fundstransfer

Current procedures for reimbursement of

expenditure require three months before EAsreceive funds.

Streamline the procedures allowing faster

flow of funds.

Diversion of funds 1. Lack of ownership of central Government -funded projects by states

2. State priorities prevail due to localpressures

Discuss with the state finance departmentfor ADB road projects by Department ofEconomics Affairs (DEA).


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D. Project Design/Construction Supervision Consultant

Deficiencies in projectdesign and drawings

- Inadequacies in project

scope of work, e.g., treeplanting andlandscaping, roadsafety, trafficmanagement andimportant linkages.

- Insufficient andinaccurate site data

1. Lack of adequate attention to details at the

planning stage2. Insufficient budget provision for carrying

out detailed investigation3. Inappropriate methods of survey

1. Need to have comprehensive terms

of reference.2. Carry out detailed survey/soil

investigation carried out for ADB-funded projects.

3. State Project Management Unit(PMU) are to provide funds forrequired quality investigations andsurvey.

Quality of consulting- Role of consultants and

delegation of powers- Contract management

skills

1. Role of consultants not clearlyappreciated/understood

Domestic Consultants:1. Inadequate contract management skills2. Exposure to such projects mostly non-

existent

Consultants are now being allowed to actas "engineer" as per internationallyagreed standards.

Consulting firms are to assign personnel

with relevant experience in internationalcontract management.

E. Procurement Delays

Lack of advanceprocurement planning

1. Inadequacy in survey, soil investigation,detailed design and drawings

2. Lack of preparedness for the award ofmajor contract

1. Current policies require substantialprocurement activities prior to loannegotiations.

2. Use two-stage approval for highwayprojects with detailed projectpreparation and investment.

Delays in award of contract- Unfamiliarity with ADBs

procedures andinternational procurement

Lack of proper understanding of proceduresby personnel involved (project staff, financedepartment officials, and approving

authority)

Upgrade skills and familiarize projectpersonnel with ADB policies andprocedures.

- Evaluation process 1. Noncompliance of standard biddingdocument issued by the Government ofIndia

2. Lack of proper guidelines in evaluationof proposals resulting in time-consumingprocedures

3. Interference by unauthorized personnelin the bidding process

1. The Government issued standardbidding documents, which aremandatory.

2. Advise project management units toensure compliance with theguidelines issued by the Governmenton the time frame for each activity inthe procurement cycle.

- Lack of authority Insufficient delegation of procurement andfinancial authority at project level

Enhance delegation keeping in view risein market prices

Contract packaging 1. Discourages participation of largeinternational contractors who are betterequipped to deliver the project in time

2. Difficulty in supervising a number ofsmall contracts

Contract packaging are to encourageparticipation by international bidders.

Prequalifications ofcontractor

1. Poor assessment of contractors'capability during prequalification, lack ofverification, and lack of appropriateprequalification criterion

2. Lack of awareness of contractors trackrecord

Proper verification of credentialssubmitted by bidders is essential at thetime of prequalification.


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F. Contract administration

Weak project management- Deficiencies in project

management setup

-Lack of proper planning ofworks at site

- Lack of financialmanagement and cashflow

1. Lack of continuity due to frequentchanges

2. Monthly, weekly, and daily planningprocedures not in place in most cases

3. Invisible activities having bearing on themain activity neglected in planning

4. Postponing timely actions5. Shortage of cash flow at site delayed

release of funds by the EAs6. This is compounded by unwarranted

deductions and delays in settlement ofvariations/claims

With the establishment of dedicated PIUsand the role of consultant as "engineer"

as per Federation International desIngenieurs-Conseil (FIDIC), projectsshould now be well managed. Furtherchanges in attitude towards consultantsand their role as "engineer" is essential.The latter and the PIU should work intandem: (i) to ensure proper monitoring ofthe contractors advance planning, (ii)adequate cash flow is maintained at siteby keeping the deductions strictly as percontract, and (iii) mechanism to be inplace for settlement of variationorders/claims of the contractor.

Slow progress of projectimplementation

- Implementing proceduresand monitoring

1. Absence of practical workprogram/adherence

2. Lack of advance actions for criticalactivities

3. Lack of effective monitoring tools andlack of familiarity of key project staff onthese techniques

1. Work program has to be preparedusing latest computer software andmonitoring needs to be done atappropriate level.

2. State PMUs to convene monthlyreview meetings to monitor theprogress. Meetings to monitor theprogress of work.

- Insufficient resourcemobilization by contractor

1. Generally slow in mobilization of plantand equipment

2. Mismatch of equipment and humanresources

Mobilization of plant, equipment, andstaffing or human resources to be tied upprior to award of contract and advancepayments to be linked with propermobilization

Lack of respect for thecontractual agreements

1. Lack of compliance by the EAs to meet

contractual obligations2. Inappropriate intervention from finance

and audit in the interpretation oftechnical matters

1. Owner's obligations to be provided

strictly as per contract.2. Instruct state finance departments.

That contracts in projects financed byADB be executed under the specifiedconditions of contract and in theevent of conflict with EA's localprocedures, the specified conditionsof contract will prevail.

G. Staffing

Inappropriate staffing 1. Lack of incentive for field staff resultingin poor selection

2. Lack of continuity due to Governmentpolicy on postings and transfers

3. Lack of relevant experience of project

director on ADB projects

1. To attract/retain good quality staff,project personnel to be givenappropriate incentives.

2. Selection procedures to bestreamlined so that project directors

are in place for the duration of theproject and are selected on the basisof appropriate skills and experience.

Unfamiliarity with contractconditions

Decision makers, project directors, and otherkey personnel on execution are mostlyunfamiliar with international contractconditions and their interpretations

1. Need to develop a training program.2. Ensure transfer of skills from

international consultants to projectdirectors and other key staff.


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Appendix 4

22

ROAD TRAFFIC ACCIDENTS

State

ItemAndhra

Pradesh Haryana Karnatakaa

Tamil Nadu Uttar Pradesh

Number of Accidents1985 11,306 2,571 14,700 24,530 13,6851998 27,599 7,983 30,899 46,723 17,631Increase (percent) 144.1 210.5 110.2 90.5 28.8

Number of Injured1985 9,509 3,608 16,527 20,786 8,1201998 31,735 7,893 43,531 42,495 14,193Increase (percent) 233.7 114.5 163.4 104.4 74.8

Number of Fatalities1985 3,509 985 2,695 5,080 4,8111998 8,886 2,769 5,814 9,801 9,201Increase (percent) 153.2 181.1 115.7 92.9 91.3

Fatality Rateb

1985 6.4 4.7 4.0 10.4 6.11998 3.0 2.2 2.6 2.4 2.9

Decrease (percent) (53.4) (53.7) (35.4) (76.8) (52.5)a For Karnataka the latest accident data available is for 1996.b

Number of fatalities per 1,000 registered vehicles.

Source: Road Safety Cell, Government of India. 2000. Statistics of Road Accidents in India (1991-1998), Delhi;andTransport Research Cell, Ministry of Road Transport and Highways, Government of India. 1999. MotorTransport Statistics. Delhi.


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Appendix 5

23

ROAD CONDITIONS AT APPRAISAL AND EVALUATION

At Project AppraisalConditions in 1988

Evaluation ObservationsConditions in 2001

The project roads are at present deficient in severalrespects, the main deficiencies being inadequate

pavement strength, poor riding quality of the surface, andnarrow width of carriageway on several stretches.

The project roads are generally in satisfactory to very goodcondition, except for a few portions. However, some few

stretches are affected by excessive loading of single-axletrucks and thus may warrant overlays before they would bedue if no overloading took place. Riding quality is averageto good and stands out compared with the adjacent roadsincluding some of the National Highways (NHs) they leadto.

The project road between Visakhapatnam andAnakapalle (NH 5) in Andhra Pradesh has a two-lanebituminous pavement in far too bad condition requiringrehabilitation and widening of the carriageway to fourlanes over 40 kilometer (km) of the 46 km sectionbecause of heavy traffic.

Some stretches have excessive bleeding of bitumen. This ismore pronounced in stretches with horizontal curves. Hardshoulders are affected by heavy vehicles, which useshoulders as regular carriageways, although shoulders arenot designed for this purpose. Riding quality is mostly goodexcept for the bleeding portions and certain embankmentstretches of the widened portions of Anakapalle bypass.

The section of NH 2 between Ballabhgarh and Mathura(111 km) in Haryana and Uttar Pradesh has a four-lanecarriageway over 9 km and a two-lane carriageway over102 km; both sections have bituminous pavement in faircondition. Because of heavy traffic, the four-laningneeds to be extended over the remaining 102 km sectionand the existing pavements require strengthening.

Riding surface is generally good. In some isolated portionsrutting has taken place due to excessive bleeding ofbitumen. Approaches to the rail overbridge at Kosi andsome of the major road junctions were recently repaired asa part of special maintenance.

The HyderabadRamagundam road (216 km) in AndhraPradesh has a bituminous pavement in bad conditionand about 25 percent of the road has a pavement widthless than 5.5 meter (m). Improvements are needed toupgrade and strengthen the road to two-lane standard,and bypasses are needed at Siddipet and Karimnagar

towns due to heavy traffic congestion there.

This project road shows signs of excessive bleeding inmany stretches resulting in rutting. The carriageway hasdeveloped cracks in about 25 percent of the road lengthand shows signs of pavement settlement. Shoulders aredeteriorating in many stretches due to inadequate crustthickness. Potholes were unattended at a few places on theroad. Bridge approaches are not smooth. Culverts in somereaches are not flush with the road surface and trafficcannot pass over these smoothly.

In Karnataka State, the AnkolaHubli road (132 km) hasa two-lane bituminous pavement in fair to bad conditionswhich requires strengthening.

The riding surface of AnkolaHubli road is fairly goodexcept a few portions in hilly stretches between km 48 andkm 64, where the surface has developed undulations,depressions, and serious rutting. These stretches are inurgent need of major repair.

The project road along the east cost in Tamil Nadubetween Chennai (Madras) and Cuddalore (160 km) hasmostly a substandard alignment and the pavement is in

bad condition, particularly over the single-lane stretches,which constitute more than one half of the road length.Realignment, widening, and strengthening of thepavement are required.

This project road has been overlaid to about 85 percent ofthe length between Chennai and Pondicherry. Thisresurfacing is undertaken by the concessionaire and was

considered necessary to justify road tolls that areintroduced. Details on the technical condition of the roadbefore resurfacing were not available to the OperationsEvaluation Mission. The few sections of the old pavementthat were visible show signs of a large number of repairedpotholes, although it cannot be said whether thesestretches are representative of the road condition beforeoverlaying started. Between Pondicherry and Cuddalore,the original project road is in fair condition, showing cracksand some potholes at a few locations.

Sources: Loan 918-IND: Road Improvement Project. Appraisal Report, October 1988; and Operations Evaluation Missionobservations made during site visits.


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Appendix 6, page 1

24

ECONOMIC ANALYSIS

A. General Assumptions

1. The economic analysis of benefits and costs of the Project follows the same approach asused at appraisal and completion. The economic life of the Project is assumed to be 20 years

from completion. No residual value of the road is assumed at the end of the Projects economiclife, as was done at appraisal and completion.

2. Benefits are derived from vehicle operating cost (VOC) savings. The costs included inthe calculation are the project economic cost and maintenance cost. Savings are estimated bycomparing costs and benefits that would arise without the Project and those with the Project.The valuation is expressed in Indian rupees (Rs) at constant 2001 prices.

3. Not included in the economic evaluation are other benefits such as time savings andother development impacts that are described in detail in Section IV, Achievement of OtherDevelopment Impacts of the project performance audit report.

B. Costs

4. Costs considered in the reevaluation include the project economic cost (construction andother costs, excluding taxes and adjusted by the standard conversion factor of 0.9), in 2001prices, and incremental maintenance costs, which are based on actual maintenanceexpenditure during the years of operation (19992001) and on standards published by theIndian Road Congress. Periodic maintenance is assumed on average every five years forbituminous pavements, but costs have been included in annual maintenance as per newguidelines of the Ministry of Road Transport and Highways. No maintenance cost savings result,because the widened carriageways increase the amount of road surface that needs maintaining.

C. Benefits

5. VOCs used at project completion were updated to reflect changes in the consumer price

index, road roughness, and level of road congestion or travel speed. Otherwise the same modelwas used as at project completion. VOC savings are calculated by comparing the VOCs forwith and without situations as shown in Table A6.1.


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Appendix 6, page 2

25

Table A6.1: Vehicle Operating Cost Savings(Rs per vehicle-km)

Project Road Section Year Car Bus Truck

WOP WP S(%) WOP WP S(%) WOP WP S(%)

BallabhgarhMathura 2001 2.63 2.20 16.14 8.33 6.61 20.62 7.59 5.81 23.452008 3.62 2.60 27.97 10.83 7.78 28.09 8.62 6.42 25.52

2015 4.70 3.65 22.31 13.30 10.66 19.79 9.80 7.97 18.61Visakhapatnam-Anakapalle 2001 3.57 2.21 37.96 9.96 7.54 24.29 8.95 6.07 32.172008 4.54 2.53 44.21 11.90 8.37 29.63 10.03 6.56 34.632015 5.26 3.23 38.49 13.44 9.99 25.71 10.94 7.54 31.03

HyderabadRamagundam 2001 3.27 2.22 32.11 7.41 6.86 7.45 7.13 6.35 10.94

2008 3.70 2.41 34.93 7.72 6.97 9.64 7.52 6.49 13.722015 4.05 2.60 35.89 8.06 7.11 11.80 7.93 6.68 15.76

ChennaiCuddalore 2001 3.33 2.27 31.63 7.45 6.89 7.50 7.17 6.39 10.972008 3.76 2.49 33.75 7.76 7.01 9.63 7.58 6.55 13.582015 4.07 2.65 34.80 8.00 7.08 11.57 7.87 6.66 15.37

AnkolaHubli 2001 3.25 2.21 31.99 7.40 6.86 7.38 7.11 6.34 10.852008 3.68 2.41 34.55 7.70 6.97 9.46 7.50 6.49 13.472015 4.01 2.60 35.16 8.51 7.50 11.86 8.40 7.08 15.67

S(%) = Vehicle operating costs savings (percent, WOP = without project, WP = with projectSource: Operations Evaluation Mission.

6. Comparing the current VOC savings with those estimated at project completion showsthat VOC savings have remained almost the same. Minor variations are due to an increase incongestion and the usual deterioration of the road surface.

D. Traffic Growth

7. Traffic was counted at two to six counting stations along different project roads for aconsecutive period of three days for 24 hours each day. The counts were adjusted by seasonaland weekday factors to represent typical annual average daily traffic. The results of the trafficcount are in Table A6.2. They represent an increase of 3 to 7 percent for passenger traffic (carsand buses) and 3 to 5 percent for goods (truck) traffic over the estimated traffic for the year2001 at project completion. The variance is on account of different categories of roads.

Table A6.2: Traffic Count(Annual Average Daily Traffic)

Type of VehicleBallabhgarhMathura

VisakhapatnamAnakapalle

HyderabadRamagundam

AnkolaHubli

ChennaiCuddalore

Cars 7,745 5,033 1,385 727 3,453Two Wheelers 4,046 10,127 1,543 1,085 56Minibus 309 0 8 91 33Bus 1,012 1,885 466 271 3,555LGV

a844 538 174 167 18

Truck 2-Axle 3,781 3,560 958 1,465 9,748Truck 3-Axle 1,750 538 225 120 1Multi-Axle Trucks 129 29 7 3 32

Tractor 117 14 33 13 20Tractor with trailer 828 60 123 28 52Nonmotorized 927 5,248 1,042 293 2,774Total 21,487 27,032 5,964 4,263 19,743a LGV = light goods vehicles.Source: Operations Evaluation Mission


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Appendix 6, page 3

26

8. Projections for traffic growth were revised to reflect trends shown in the updated trafficcount data, net state domestic product, population growth rates, and income elasticity oftransport demand. The revised traffic growth rates for each vehicle type are shown in TableA6.3.

Table A6.3: Annual Traffic Growth Rates

(percent)At Appraisal At PCR At PPARRoad section Type of

Vehicle 1995-2004

2005-

2013

Upto

2000

2001-2005

2006-2020

2002-2006

2007-2011

2012-2017

Cars 7.8 7.2 6.8 7.5 6.8 10.01 9.48 8.33Buses 6.3 6.0 5.0 5.5 5.3 8.51 9.14 7.81Trucks 6.7 6.3 5.3 5.2 4.0 7.17 7.30 5.10

Ba

road improvement project (loan 918-ind)

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