Document o f The World Bank

FOR OFFICIAL USE ONLY

Report No: 25853-BD

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED CREDIT

IN THE AMOUNT OF SDR138 MILLION (US190 MILLION EQUIVALENT)

TO THE

PEOPLE'S REPUBLIC OF BANGLADESH

FOR THE

RURAL TRANSPORT IMPROVEMENT PROJECT

May 22,2003

Energy and Infrastructure Unit Bangladesh Country Management Unit South Asia Regional Office

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

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ADB ADP BPIP C&AG DG DOSA DSM EA ECP EMF EMP FMR EOP FBS FMS GOB ICB ICR IPDP ISAP LCS LGED LGD LGI LGIP MOF MOLGRDC

MRMS MTR

CURRENCY EQUIVALENTS

(Exchange Rate Effective April 15,2003)

Currency Unit = Bangladesh Taka (Tk) 1 = US$.017

US$1 = Tk. 57.5

FISCAL YEAR July 1 -- June 30

ABBREVIATIONS AND ACRONYMS Asian Development Bank Annual Development Program Borrower’s Project Implementation Plan Comptroller & Auditor General Director General Dollar Special Account Design Supervision Monitoring Environmental Assessment Environmental Codes Practices Environmental Management Framework Environmental Management Plan Financial Management Report End of Project Fixed Budget Selection Financial Management System Government of Bangladesh International Competitive Bidding Implementation Completion Report Indigenous People’s Development Plan Institutional Strengthening Action Plan Landless Contracting Societies Local Government Engineering Department Local Government Division Local Government Institutions Local Government Improvement Plan Ministry of Finance Ministry of Local Government, Rural Development and Cooperatives Mobile Routine Maintenance System Mid Term Review

NH N S NGO PAP PC PMU

QCBS

RAP RF RHD RISS R&R SBD SEA SE&ME SGSA SIA SOE UFMS UMMC UP UR UZR voc VR XEN ZR

QA

QPR

National Highways National Shopping Non Government Organization Project Affected People Project Coordinator Project Management Unit Quality Audit Quality and Cost Based Selection Quarterly Progress Report Resettlement Action Plan Resettlement Framework Roads and Highways Department Rural Infrastructure Strategy Study Resettlement and Rehabilitation Standard Bidding Document Social and Environmental Assessment Socioeconomic Monitoring & Evaluation Second General Special Account Social Impact Assessment Statement o f Expenditure Unified Financial Management System Union Market Management Committee Union Parishad Union Roads Upazila Roads Vehicle Operating Cost Village Roads Executive Engineer Zila Roads

Vice President: Mieko Nishimizu

Sector Director: Vincent Gouarne Country Director: Frederick Thomas Temple

Task Team Leaders: Fabio GalliMohi Uz Zaman Quazi

FOR OFFICIAL, USE ONLY BANGLADESH

RURAL TRANSPORT IMPROVEMENT PROJECT

CONTENTS

A. Project Development Objective Page

1. Project development objective 2. Key performance indicators

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 2. M a i n sector issues and Govemment strategy 3. Sector issues to be addressed by the project and strategic choices

C. Project Descript ion Summary

1. Project components 2. K e y po l i cy and institutional reforms supported by the project 3. Benefits and target populat ion 4. Inst i tut ional and implementation arrangements

2 2

2 2 5

D, Project Rationale

1. Project altematives considered and reasons for rejection 2. M a j o r related projects financed by the Bank andor other development agencies 3. Lessons leamed and reflected in the project design 4. Indications o f borrower commitment and ownership 5. Value added o f Bank support in this project

8 9

10 11 11

E. Summary Project Analysis

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

11 12 13 14 16 18 21

F. Sustainability and Risks

1. Sustainability 22 2. Cnt ical n s k s 23

This document has a restricted distribution and may b e used by recipients only in the performance of their official duties. I t s contents may not be otherwise disclosed jwithout Wor ld Bank authorization. J

3. Possible controversial aspects 24

G. M a i n Conditions

1. Effectiveness Condition 2. Other

H. Readiness for Implementation

I. Compliance with Bank Policies

Annexes

Annex 1: Annex 2: Annex 3: Annex 4: Annex 5: Annex 6:

Annex 7: Annex 8: Annex 9:

Project Design Summary Detailed Project Description Estimated Project Costs Cost-Benefit Analysis Summary, or Cost-Effectiveness Analysis Summary Financial Summary for Revenue-Earning Project Entities, or Financial Summary (A) Procurement Arrangements (B) Financial Management and Disbursement Arrangements Project Processing Schedule Documents in the Project F i le Statement o f Loans and Credits

Annex 10: Country at a Glance Annex 1 1 : Environmental and Social Components o f Project Annex 12: Institutional Strengthening Act ion Plan for LGED

24 24

25

25

26 30 33 34 40 41 49 56 57 58 60 62 69

MAW) Project M a p

BANGLADESH Rural Transport Improvement Project

Project Appraisal Document South Asia Regional Off ice

SASE1

3 0 R R O W E R

late: M a y 22,2003 Sector Director: Vincent J. Gouarne Zountry Director: Frederick Thomas Temple 'roject ID: PO71435 ,ending Instrument: Specific Investment Loan (SIL) Project Financing Data [ ]Loan [XI Credit [ ]Grant [ ]Guarantee [ ] Other:

For LoanslCreditslOthers: Amount (US$m): SDR138 m i l l i on ( U S 1 9 0 mi l l ion equivalent)

Proposed Terms (IDA): Standard Credit

Team Leader: Fabio Gal l i Sector(s): Roads and highways (80%), Agricultural marketing and trade (20%) Theme(s): Rural services and infrastructure (P), Rural Policies and institutions (p), Rural (s)

65.00 I 0.00 I 65 .OO

Grace period (years): 10 Commitment fee: 0.50%

Years to maturity: 40 Service charge: 0.75%

Responsible agency: LOCAL GOVERNMENT ENGINEERING DEPARTMENT Address: Local Government Engineering Department, 7/23 Agargaon, Dhaka, Bangladesh

Contact Person: Mr. Md. Shahidul Hassan, Chief Engineer Tel: 880-2-81 1-6817 Fax: 880-2-81 1-6390 Email: ce-lged-@bangla.net Address: Local Government Engineering Department, 7/B Agargaon, Dhaka, Bangladesh Contact Person: Mr. Mohd. Az izu l Haque Tel: 880-2-91 2-2435 Fax: 880-2-912-6165 Email: rdpl l@lged.org =_ _I___

Project implementation period: About 5.5 years Expected effectiveness date: 09/30/2003 Expected closing date: 06/30/2009

A. Project Development Objective

1. Project development objective: (see Annex 1)

The development objectives o f the project are to provide rural communities with improved access to social services and economic opportunity, and to enhance the capacity o f relevant government institutions to better manage rural transport infrastructure.

2. K e y performance indicators: (see Annex 1)

The following key performance indicators w i l l be used to measure the achievement o f the project development objectives: (a) 25 percent reduction by end-of-project (EOP) in average travel time and transport costs in project area; (b) 20 percent increase by EOP o f roads categorized in 'good' condition (International Roughness Index (IRI) o f less than 4 d k m ) in the project area; (c) completion by EOP o f al l c iv i l works sub-components; (d) 5 percent annual real increase in maintenance funding for the Local Government Engineering Department (LGED)-managed road network; (e) 15 percent improvement by EOP in overall LGED operating efficiency (annual operating costs as percentage o f total annual budget); (f) 30 percent increase by EOP in revenue mobilization by participating Local Government Institutions (LGI); and (g) at least 24,000 person years o f employment created by EOP in project area.

B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: 21326-BD

The primary CAS goals for rural development in Bangladesh are to: (a) support growth in agriculture and nonfarm activities; (b) increase opportunities and assets available to the poor; (c) improve rural infrastructure services; and (d) strengthen local institutions. The CAS emphasizes the need for an integrated, community-supported approach to rural infrastructure development.

Date of latest CAS discussion: December 12,2000

The project i s consistent wi th the objectives o f the CAS and o f the 2002 Poverty Reduction Strategy Paper. More specifically, the project focuses on: (a) improving access to rural transport infrastructure services; (b) strengthening the capabilities o f LGED both technically and as a development intermediary in the rural infrastructure context; and (c) capacity building o f LGI's to enable them to better manage rural transport infrastructure. In focusing on these complementary goals, the project i s expected to improve the quality o f l i f e in rural areas by stimulating income generating and asset formation opportunities for the rural poor and b y supporting growth in agricultural economy. Furthermore, by emphasizing local participation, the project aims to encourage greater involvement by local government, communities, and women in the local management o f rural infrastructure. This should in turn further enhance the sustainability o f the rural development outputs o f the project.

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

COUNTRYAND SECTOR CONTEXT

Bangladesh, wi th a population o f about 13 1 mi l l ion (2002 estimate) and an area o f about 148 thousand square km, i s one of the most densely populated countries in the world. Wi th about 84 percent o f the population and about 90 percent o f the country's poor l iv ing in rural areas, i t also has one o f the lowest rates o f urbanization in the world. Although Bangladesh has experienced an annual Gross Domestic Product (GDP) growth rate o f about 4 percent during the last decade, this has only led to a marginal decline in the official poverty rate. This means that, wi th about 50 percent o f i t s population living below

the official poverty line, Bangladesh currently has the third largest number o f people classified as 'poor' in the world after India and China.

The agricultural sector in Bangladesh remains a critical element o f the economy, generating about 30 percent o f the GDP and employing about 70 percent o f the labor force. Despite growing urbanization, the rural economy i s expected to remain an important engine o f growth and employment for the economy. High population density, fert i le land and small-scale farming activities w i l l continue to provide a favorable basis for labor intensive farming, trading o f goods and services in rural areas. The development o f rural transpodtrade infrastructure, consisting o f rural roads, inland water transport and rural markets, remains critical to support the continued growth o f the rural economy.

Bangladesh has an extensive and diversified transport system which now includes 220,539 km o f roads, about 2,700 km o f railroads, about 6,000 km o f waterways, two major seaports and eight airports. Both the quality and connectivity o f the road network has improved considerably during the past two decades. This has led to an increase in transport demand in the 90's o f about 8 percent per annum. Today the road network consists of: (a) 3,086 km o f National Highways (NH); (b) 1,75 1 km o f Regional Highways (RH); (c) 7,543 km o f Zila Roads (ZR) (former Feeder Roads A); (d) 23,434 km o f Upazila Roads (UZR) (former Feeder Roads B); (e) 68,639 km o f Union Roads (UR) (former Rural Roads 1); and ( f ) about 114,126 km o f Village Roads (VR) (former Rural Roads 2 and 3). An additional 1960 km o f roads s t i l l remain to be re-classified. The Roads and Highways Department (RHD) i s responsible for the management o f the primary road network (NHs, R H s and ZRs) while LGED i s responsible for the management o f the secondary road network (UZRs and URs). The tertiary road network (primarily VRs), i s the responsibility o f LGIs, with technical support from LGED.

The improvement o f rural infrastructure in general, and o f rural transport infrastructure in particular, i s an important element o f the Government o f Bangladesh's (GOB) long term strategy to reduce the incidence o f rural poverty by improving the infrastructure endowment o f the rural economy. This strategy has been supported since 1984 by the implementation o f the recommendations/findings o f the Rural Infrastructure Strategy Study (RISS). The FUSS has helped to formulate GOB'S long-term strategy o f supporting the rural economy through a coherent set o f rural infrastructure development projects, financed wi th both domestic and donor resources. Consistent wi th this strategy, GOB has invested about US$2.4 bi l l ion in over 40 rural infrastructure development projects over the last ten years.

SECTOR ISSUES

The major sector issues facing the rural infrastructure sector in Bangladesh are as follows:

Poor quality and carrying capacity of rural infrastructure: Despite the large investments that have been made to develop the country's road network, i t s condition remains far f rom satisfactory. The riding quality, geometric standards and carrying capacity o f part o f the secondary and tertiary road networks remains poor. Only 13,000 km o f UZRs are o f a l l weather standard, and most o f the URs remain unpaved. This makes large portions o f the secondary and tertiary road networks impassable during the rainy season. Furthermore, the secondary and tertiary road networks s t i l l have about 140,000 m o f missing minor structures that prevent continuos through access. Taking into consideration the country's riverine and low-lying topography, a large number o f structures are required to ensure al l weather connectivity and to mitigate the adverse impacts o f frequent flooding.

e Inadequate funding and weak management of rural transport infrastructure maintenance: Inadequate road maintenance funding remains a major issue in Bangladesh. Based on the findings o f

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the 200 112002 public expenditure review commissioned b y IDA, there was an annual maintenance funding shortfall o f about US$9.0 mi l l ion (about Tk 522.0 million) for the secondary road network. This represented a gap o f about 28 percent o f the total maintenance funding requirements. Furthermore, on-the-ground effectiveness o f expenditures for both routine and periodic road maintenance remains weak.

Insufficient integration of trade and rural transport services: Transport and trade are vital elements o f the rural and national economy. Although roads increasingly (relative to other transport modes) carry the majority o f rural passengers and freight, inland water transport, together wi th rural markets that are located on river banks, continue to, play an important role in the rural economy. To maximize the transport sectors contribution to overall economic growth, i t i s increasingly necessary to better integrate the development o f transport and trade facilities. O f the 6,000 rural markets presently in Bangladesh, approximately 2,100 have been identified as Growth Center Markets (GCM) which significantly contribute to the marketing and sale o f agricultural products. One third o f these rural markets are located on river banks with adjoining river jetties. A more integrated transport and trade approach to the improvement o f rural roads, markets, and river jetty facilities would deliver significant positive impacts on agricultural growth and rural and non-rural incomes.

e Overlapping functional responsibilities in the management of the road network: The road classification system in Bangladesh has in the past fostered duplication o f responsibility between RHD and LGED in the management o f the various parts o f the road network. I t has also distorted the allocation o f scarce budgetary resources. GOB has finalized new guidelines for a more systematic secondary and tertiary road network classification and responsibility framework. The full implementation o f these new guidelines i s critical for progress towards sustainable improvements in the management o f the respective parts o f the road network.

0 Limited local capacity to manage and fund rural infrastructure: The capacity o f LGIs to fund and manage the development and maintenance o f rural infrastructure remains weak, despite the enactment o f LGI revenue raising powers and increasing devolution o f local infrastructure management responsibilities. For example, routine maintenance continues to be implemented directly by LGED while contractors, under LGED's management, carry out periodic maintenance. Furthermore, there i s limited involvement at present by local government and communities in the planning and management processes for these maintenance operations.

Although rural markets could be an important source o f income for LGIs, under the current system they only get a small share o f the market fees, with the majority o f income going to Central and District levels o f government. Furthermore, most Union Market Management Committees (UMMC) are not functioning effectively on behalf o f overall LGI interests. Their role, i s not well understood and the system for managing the maintenance o f the markets i s not well defined. The situation concerning the management and leasing o f river je t t ies i s even less clear, with responsibilities vested either at the District level or at the Union Parishad (UP) level. *

- 4 -

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

The major sector issues that w i l l be addressed by the project are the need to improve the sustainability, quality and capacity o f rural transport and trade infrastructure in a cost effective and integrated manner. The project design takes into account the lessons learned and successful implementation experience o f the two previous IDA-funded projects - First Rural Roads and Markets Improvement and Maintenance Project (RRMIMP-I) and Second Rural Roads and Markets Improvement and Maintenance Project (RRMIMP-11) - in the sector. The outcome o f both projects was to facilitate economic and community development in the targeted districts by improving rural mobility and access to social and economic services. The project aims to build on these achievements by focusing on a bigger project impact area and by improving both LGED's and selected LGI's capacity to manage rural transport infrastructure more effectively. The project also includes measures to promote integration and consolidation o f the knowledge and experiences o f other development partners operating in the sector. More specifically, the project w i l l address some o f the major sector issues, as outlined below:

Improving the quality of rural infrastructure: The project w i l l invest in the improvement o f high priority secondary roads, market facilities and river jetty infrastructure. Works w i l l be executed in a cost effective and in a socially and environmentally sustainable manner, meeting appropriate design standards and construction quality. The project w i l l also fund the maintenance/rehabilitation o f key parts o f the secondary road network to reduce the maintenance backlog and to bring a bigger portion o f the secondary road network to a maintainable state.

Improving maintenance funding and management: The project has set specific targets for increased maintenance funding to close the existing maintenance funding gap. To improve maintenance implementation capacity, the project w i l l also mainstream the LGED managed Mobile Routine Maintenance System (MRMS). The MRMS was successfully tested on a pilot basis as part o f the earlier two IDA-funded projects in the sector, and proved i t s e l f to be very cost effective. I t also generated significant employment opportunities for destitute women. The project w i l l also support further enhancements to LGED maintenance planning and management systems.

Integrating trade and transport rural infrastructure: The project will adopt an integrated approach to rural trade and transport infrastructure development by focusing on the physical improvements o f inter-linked roads, small bridgedculverts, markets and river jetties. The physical improvements w i l l support the further development o f multi-modal transport, and w i l l allow for a more seamless flow o f goods and services within rural areas and between rural and urban areas.

Reducing overlapping responsibilities for management of road network: The project w i l l support the ongoing implementation o f recommendations o f the Road Prioritization Study (2002) and recent GOB decisions which define the responsibilities o f the respective agencies for the development and maintenance o f Bangladesh's road network. The GOB has confirmed the revised road classification criteria covering the whole road network. Adjustments to the ownership o f the road network between RHD, LGED and LGIs, including associated inter-agency budgetary changes, are being implemented.

Enhancing LGIs capacity to manage rural infrastructure: The project will, on a pilot basis, provide for training, technical and financial assistance to selected LGIs to enhance their capacity to contribute to the maintenance and development o f rural infrastructure. This w i l l be achieved through: (a) a LGI training program; (b) technical assistance to implement the findings o f the local revenue mobilization study undertaken under the RRMIMP-11; (c) jo int LGED/LGI implementation o f pilot rural road maintenance programs in targeted high-performing UPS; (d) piloting o f

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'stand-alone' LGI implementation o f minor rehabilitation and maintenance initiatives, wi th LGED supervision; and (e) technical assistance to develop and implement improved management structures and leasing practices for market and river jetty facilities.

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

The project funds the following eight components: (a) improvement (minor widening and strengthening) o f about 1,100 km o f existing UZRs; (b) improvement o f about 500 km o f existing URs; (c) construction o f about 15,000 m o f missing minor (less than 30 meters) bridgedculverts on URs; (d) periodic maintenancehehabilitation o f about 1,500 km o f UZRs; (e) improvement o f about 150 existing rural markets and constructiodimprovement o f 45 river jetties; ( f ) implementation o f Resettlement Framework (RF), Environmental Management Framework (EMF), Resettlement Action Plans (RAP), Environmental Management Plans (EMP) and Indigenous People's Development Plans (IPDP) associated with the civ i l works components; (g) consultant services to assist in the design, supervision and monitoring o f the civ i l works components; and (h) technical assistance to build up LGED's and selected LGI's capacity in transport infrastructure planning and financing, maintenance management, quality assurance, transport safety, financial and project management, performance monitoring and evaluation.

Component

1. Improvement o f about 1,100 km o f UZRs 2. Improvement o f about 500 km o f URs 3. Periodic maintenancehehabilitation o f about 1,500 km o f UZRs 4. Construction o f about 15,000 meters o f minor bridgedculverts on URs 5. Improvement/construction o f about 150 rural markets and 45 river je t t ies 6. Implementation o f RF, EMF, RAPS, EMPs and IPDPs for c iv i l works components 7. Provision o f D S M services, quality, financial and procurement audit services and other consultant services 8. Provision o f TA, training, capacity building for LGED

Indicative costs

(US$M) 110.50 23.50 39.00

30.50

17.50

14.00

14.00

6.00 and LGIs, equipment and pre-investment studies

Total Financing Required I 255.00

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

The key policy reforms supported by the project are as follows:

% of Total

43.3 9.2

15.3

12.0

6.9

5.5

5.5

2.4

Bank- financing (US$M)

88.40 18.80 23.40

24.40

14.00

5.00

11.20

4.80

% of Bank-

financing 46.5

9.9 12.3

12.8

7.4

2.6

5.9

2.5

100.0 100.0

0 Ensuring the sustainability o f the rural road network through a more rational allocation o f scarce maintenance funds and by ensuring GOB'S commitment to increased long-term funding for asset management;

0 improving the integration o f rural road, transport and trade infrastructure investments by

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strengthening the planning and 'local government outreach' functions o f LGED, and increasing the role o f local governments and communities in planning and management o f local transport and trade networks;

ensuring the full implementation o f the revised road management framework by supporting LGED in resolving the financial, planning and asset management consequences o f the new framework, which should improve the sustainability o f the relevant parts o f the road networks. This supports the recent GOB decision clarifying the responsibility for the management o f different parts o f the road network among RHD, LGED and LGIs; and

developing a comprehensive rural road transport safety framework that supports the development o f a multi-phase rural transport safety action plan by LGED and other key parties to address these safety matters in an integrated fashion.

The key institutional reforms supported by the project are as follows:

Implementing sustainable enhancements to LGED's institutional capacities in planning, monitoring, finance, asset management, local government development, administration and governance;

strengthening the capacity o f LGIs to mobilize local resources as well as plan and manage the tertiary road network, markets, and jetties;

increasing user involvement in planning and management o f local trade and transport infrastructure, including rural roads, markets and jetties;

mainstreaming the management o f social and environmental aspects o f transport infrastructure within LGED and in LGIs; and

enhancing women's participation in LGI rural infrastructure decision-making and women's access to employment generation for road maintenance investments under the project.

3. Benefits and target population:

Project benefits: The project impact area covers 44,900 square km, 21 Districts and a total population o f about 45 million. This means that about 35 percent o f Bangladesh's total population and over 40 percent o f i t s rural population will benefit directly or indirectly f rom the project. The main benefits include: (a) improved mobility o f rural population; (b) reduced operating costs for both motorized and non-motorized modes o f transport; (c) lower freight and passenger transport costs; (d) improved access and quality o f rural markets to support agricultural and off-farm activities; (e) steady flow o f labor intensive maintenance contracts; (g) improved access to social services ( l ike health clinics, schools, etc.); and (g) improved environment through provision o f drainage structures and roadside tree plantation.

Target population: The target population includes everyone residing in the project impact area. More specifically, the target population w i l l be the villagers, road users, agricultural producers, agribusiness operators, and transport operators l iving or operating in the Project area. Furthermore, some o f the civ i l works funded under the project w i l l specifically target vulnerable groups such as destitute women by providing them with employment opportunities.

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4. Institutional and implementation arrangements:

Project oversight and coordination: A steering committee chaired by the Secretary o f the Local Government Division (LGD) o f the Ministry o f Local Government, Rural Development and Cooperatives (MOLGRDC) has been established to coordinate and monitor the project.

Implementing agency: The overall implementation o f the project w i l l be the responsibility o f LGED which i s the executing department o f the MOLGRDC. With the exception o f a pi lot tertiary road maintenance component, which w i l l be managed jo int ly by LGED and targeted UPS, al l other project components w i l l be fully implemented b y LGED.

Project management: A Project Management Unit (PMU) has been established within LGED to coordinate al l project preparation and implementation activities. A Project Coordinator (PC) (Additional Chief Engineer level) supported by two Project Managers (PM) (Superintending Engineer level) have been put in charge o f managing and coordinating the day-to-day project implementation activities. The two PMs wil l be supported by staff working o n a full time basis on project implementation, with expertise in social, environmental, procurement and financial management matters. Some o f the project preparation and implementation staff already have experience in implementing previous IDA or other similar donor assisted projects.

A Project Preparation Consultant (PPC) assisted LGED in the identification o f project components and design o f the f i rs t year's c iv i l works program. LGED has selected internationally experienced Design, Supervision and Monitoring Consultant (DSM) to assist i t in the preparation o f the engineering and bidding documents for the subsequent years c iv i l works programs. Furthermore, the D S M consultants w i l l assist LGED in monitoring and supervising the civ i l works components o f the project. Quality Audit (QA) consultant services w i l l also be engaged by LGED to assist in monitoring the construction quality o f a l l o f the c iv i l works components wi th particular focus on the structures on URs component.

Financial Management: The financial management arrangements for the project should be more than adequate. This i s because LGED already has substantial experience with IDA financial management, disbursement procedures and financial reporting requirements. The audit reports for on going as well as recently completed IDA funded projects have been submitted in a timely manner. Furthermore, during the implementation o f the RRMIMP-11, LGED has successfully maintained a Second Generation Special Account (SGSA) to facilitate payment flows to dispersed locations and contractors. Wi th the development by LGED of computerized Unif ied Financial Management System (UFMS) and the posting o f staff wi th previous experience in handling the financial management aspects o f IDA assisted projects.

A set o f sample project Financial Monitoring Reports (FMR) to be used during the implementation o f the Project have been finalized. Once the Credit i s made effective, the FMRs wil l be submitted to IDA at the end o f each quarter. The Comptroller and Auditor General (C&AG) w i l l carry out the annual audit o f the project. The audit report w i l l be submitted to IDA within six months o f the end o f each fiscal year. In addition to the GOB audit, a periodic financial audit by a private firm wil l be conducted with TOR and selection method acceptable to IDA. At least three such audits w i l l be conducted during the l i fe o f the project.

'

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

The project i s consistent with both the GOB'S strategy o f focusing on sector specific rural development and with IDA'S strategy o f supporting growth in the rural economy. During the design o f the project, the

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following alternatives were considered.

Sector Issue

a Integrated rural infrastructure development versus rural transport infrastructure development: Consideration was given to developing a rural infrastructure project which took an integrated approach to al l forms o f rural infrastructure needs such as rural water supply and sanitation, electricity, roads, rural drainage, health and educational facilities. I t was decided to focus on a single sector project complemented with the selective improvement o f rural market infrastructure, given the wide-ranging and complex policy and institutional reforms that would need to be addressed in implementing such type o f project. Even with the more focused sector approach, there w i l l be scope for the institutional development benefits o f this project to extend to sectors other than the transport sector, due to the cross-cutting local government support role o f LGED.

Project

a Centralized versus decentralizedproject implementation; GOB has embarked on an ambitious program o f developing rural areas through the decentralization in the management o f rural services. The project w i l l support decentralization o f road management through strengthening the institutional capacity o f LGIs, and through up-front enhancements o f LGED's capabilities as an intermediary. Pilot activities w i l l be initiated to increase the role and capacity o f targeted LGIs to manage and finance selected local transport and trade infrastructure. A pilot approach i s considered prudent since the lack o f adequate capacity at the local level requires careful testing o f the decentralization process to minimize risks. Thus, a gradual approach w i l l be adopted with LGED supporting targeted LGIs.

Bank-financed C0MPLETED:Rehabilitation o f NWRHs

Rehabilitation o f NH/RH

Improvement o f URs

Improvement o f URs

ONGOING: Rehabilitation o f NWRHs

a Improvement ofprimary versus secondaryAertiary road networks: IDA i s already active in assisting GOB in improving the country's primary road network. IDA's overall road sector strategy aims to assist GOB manage the coherent development o f the whole road network in a holistic manner to facilitate economic development o f urban, rural and peri-urban areas. The focus o f the project compliments IDA's strategy in the road sector since it focuses on developing the critical secondaryltertiary road network which serve to connect the rural areas with the rest o f the country.

Road Rehabilitation and Maintenance Project-I (Cr. 1827-BD) Second Road Rehabilitation and Maintenance Project (Cr.2 63 8-BD) Rural Roads and Markets Improvement and Maintenance Project (Cr. 1940-BD) Second Rural Roads and Markets Improvement and Maintenance Project (Cr.2927-BD) Third Road Rehabilitation and

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

Latest Supervision (PSR) Ratings

(Ban k-finance Implementation

Progress (IP)

S

H S

S

S

S

projects only) Development

Objective (DO)

S

S

S

S

S

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Maintenance Project (Cr.N-043-BD)

Xher development agencies

Rural Development Project-13 Rural Development Project -1 8

Rural Development Project-6

Rural Development Project-8

Rural Development Project-2 1 Rural Infrastructure Development Project Rural Development Project -14 Rural Development Project- 16

Road Improvement Project-I. Road Overlay and Improvement Project. Dinajpur-Panchgar Road Dhaka-Aricha Highway

Road Maintenance and Improvement Project. Southwest Road Network Development Project. Jamuna Bridge Access Road Project.

RURAL ROADS COMPLETED: ADB

SDC

E U

R U R A L ROADS ONGOING: A D B

GTZ (Germany) DANIDA

N A T I O N A L ROADS COMPLETED: ADB

ITALY DANIDA

N A T I O N A L ROADS ONGOING: ADB

P/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HL, (Highly Unsatisf

3. Lessons learned and reflected in the project design:

T o varying degrees, previous road projects in Bangladesh have suffered from: (a) delays in procurement decisions by respective Ministries; (b) delays in handing-over o f the construction sites to contractors due to delays in completing land acquisition; (c) weak design, engineering and construction supervision standards; (d) inadequate attention to the provision o f sufficient number o f structures on the secondary road network; (e) lack o f economies o f scale, and procurement problems due to small contract packages; (0 inadequate preparation and management o f the social and environmental aspects o f c iv i l works; and (g) weak involvement of users and local bodies to ensure transparency, and appropriate investment prioritization.

As a result o f the experience gained in the sector, the project incorporates the following key lessons: (a) early and comprehensive preparation o f engineering, social, environmental, participatory planning and institutional aspects to ensure quality at entry; (b) up front procurement actions to ensure high degree o f implementation readiness (about 20 percent o f the project works w i l l be ready for award by credit

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effectiveness); (c) substantial completion o f site readiness before c iv i l works contracts are approved to ensure smooth contract implementation; (d) integrated improvementlconstructiodrehabilitation o f UZRs, URs, markets and critical river jett ies to maximize synergistic benefits; (e) construction o f missing minor structures to improve connectivity; (0 targeted capacity building initiatives to increase the role o f LGIs and communities in planning and management o f local trade and transport infrastructure; and (g) strengthening o f LGED portfolio-wide monitoring and evaluation processes to improve performance management and public accountability.

4. Indications of borrower commitment and ownership:

Starting from 1982, GOB has funded, with the assistance o f IDA and other development partners, the implementation o f more than 40 Rural Development Projects (RDP). A further 24 RDPs are currently at various stages o f implementation. GOB continues to demonstrate i t s commitment to improving rural transport infrastructure by financing an increasing share o f rural roads investment and maintenance expenditures which have grown substantially over the last decade. For example, during that period, GOB's share o f funding of the rural transport infrastructure has increased from 48 percent to 60 percent wi th the balance being funded by i t s development partners. Furthermore, LGED has achieved most o f the physical implementation targets for the f i rs t five years (FY1996-2000) o f the updated RISS. Finally, the proposed policy and institutional reforms underpinning the design o f this project, embodied in the Institutional Strengthening Action Plan (ISAP), are more holistic and technically incisive than any previously undertaken by LGED and the GOB in this sector. These reforms have evolved from ongoing dialogue with GOB, LGED, LGIs and are fully owned by LGED and other stakeholders.

5. Value added of Bank support in this project:

IDA has been a major partner in the development o f Bangladesh's road sector and has established effective dialogue wi th GOB and the road sector agencies - LGED and RHD. More specifically, IDA has funded a share o f GOB's rural infrastructure development program through two rural roads improvement projects - RRMIMP-I and RRMIMP-11. This means that IDA has accumulated strong expertise in the sector and i s well positioned to assist GOB in implement i t s strategy o f improving the sector's performance. IDA'S involvement in the Bangladeshi road sector combines: (a) long term capital to support sector investments; (b) a combination o f lending instruments and advisory services for accelerating institutional and policy reforms; and (c) capacity to ensure that social and environmental concerns are fully addressed in sector development. Furthermore, IDA brings i t s global experience and expertise to bear on the sectoral dialogue with the GOB.

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

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

' L J Other (specify) The project components are described in detail in Annex 2 o f the PAD.

NPV=US$124.6 million; ERR = from 20 to 52 % (see Annex 4) - Cost effectiveness -

The UZRs selected for improvement were identified and preselected through a techno-economic prioritization study. The selection of rural markets and river jetties for improvementlconstruction were made using an integrated approach to rural development wi th most markets at the end o f the improved UZRs or URs. The selection o f structures on URs w i l l be done during project implementation through local consultative processes, wi th users and communities living along the roads to be improved. The UZRs selected for periodic maintenance have been prioritized by estimating their NPVlcost ratio. The

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selection o f URs for improvement i s based on the combination o f several criteria such as: (a) connectivity to U P headquarters; (b) community ranking; (c) cost effectiveness (i.e. the population served per unit o f investment); and (d) status o f connecting UZRs (developed or undeveloped). The selection of individual l inkshb-components was done on the basis o f cost-benefit as well as on cost-effectiveness analysis.

The project w i l l generate benefits for the project area through improved access and more efficient marketing resulting in lower transportation costs, savings o f up to 50 percent in the vehicle operating costs (VOC), and year round access. Although diff icult to quantify, several other socio-economic benefits w i l l be generated by the project. Improvements to transport infrastructure have produced significant changes in the modal mix, reduced the cost o f transport and provided significant employment. The socioeconomic impact study carried out by the Bangladesh Insti tute o f Development Studies (BIDS) under the RRMIMP-I1 demonstrated that improvements to rural road infrastructure have a significant impact on the household employment level, which in turn reduces poverty.

The benefits o f each component for which a detailed economic analysis has been carried out are estimated separately. For the UZRs improvement component the benefits were estimated using: (a) the savings in VOC; (b) change in modal mix; and (c) increased traffic due to improved access as wel l as natural traffic growth. The economic benefit o f improved markets has been estimated on the basis of: (a) reduction in spoilage o f perishable goods; and (b) increased market turn over. For the UZR maintenanceirehabilitation component the benefits would arise from reduced VOC for different vehicle types.

The components that have been covered by a detailed economic analysis represent about 72 percent o f the total estimated project cost. Their Economic Rate o f Return (ERR) is: (a) 20.5 percent for the U Z R improvement component; (b) 52 percent for the Phase I road maintenancehehabilitation component; and (c) 28.9 percent for the rural market improvement component. The combined NPV for the project i s estimated at USS 124.6 mi l l ion (Tk. 7.10 billion).

2. Financial (see Annex 4 and Annex 5): NPV=USS million; FRR = 'YO (see Annex 4) NIA

Fiscal hnpact:

Road maintenance (revenue) funding: GOB has been providing maintenance funding allocations from the revenue budget since FY92/93. During the implementation o f the RRMIMP-II, GOB agreed to increase maintenance funding for the LGED managed portion o f the road network by USS2.5 mi l l ion per year starting from FY97/98 to FYO 1/02. Although maintenance funding increased steadily during that period by about 7 percent a year, by FY01/02 the gap between maintenance funding and assessed maintenance needs o f the network grew to 28 percent - USS32.0 mill ion provided against a maintenance requirement o f USS41 .O mill ion. For FY02103 the maintenance funding gap has decreased to 13 percent thanks to an increase in the maintenance budget to USS37.5 mi l l ion against an assessed maintenance requirement o f USS43.0 mill ion. During the l i f e o f the project, GOB has committed itself to substantially eliminate the maintenance funding gap for the LGED-managed portion o f the network. The projected maintenance needs for the LGED-managed portion o f the road network (assuming the planned additional 7,000 km o f roads that should revert back f rom RHD to LGED) are as follows:

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Projected Annual Maintenance Funding Needs for LGED Managed Portion of Road Network

Type o f maintenance

Routine Maintenance: Periodic Maintenance:

FY03l04 FY04105 FY05106 FY06/07 FY07/08

million) mill ion) million) million) million) 14.2 14.3 14.4 14.5 14.6 42.7 43.1 43.5 50 50.5

(US$ (US$ (US$ (US$ (US$

1 Total Needs: I 56.8 I 57.3 1 57.9 I 64.4 I 65.1 I

Capital (development) investments funding: GOB has prepared a five year (FY02/03-FY06/07) planned capital investment program for the LGED managed Rural Development & Institutions (RD&I) sector. As per the new GOB planning process, LGED has also prepared and submitted i t s FY0213 to FY04105 Three Year Roll ing Plan (TYRP) for the RD&I sector for consideration by GOB. The total planned amount for the TYRP i s US$588.0 million. For FY02/03 the total Annual Development Program (ADP) allocations are US342 .0 mi l l ion o f which US267.0 mi l l ion i s for the RD&I sector.

Project funding: GOB has included the full planned cost (USS255.0 million) o f the project in the planned FY02/03-FY06/07 capital investment program. I t has also included a US$80.0 mi l l ion provision in the TYRP to fund the implementation o f the project. However, the actual allocations for the TYRP and the project wi l l be confirmed on an annual basis in the ADP. Taking into consideration that the implementation o f the RRMIMP-I and I1 did not suffer from funding shortages and that the planned funding requirements o f this project make up only 7 percent o f the five year capital investment program and 14 percent o f the TYRP, GOB should be in a position to adequately meet the funding needs o f the

' project.

Additional funding for sector: GOB i s considering the introduction o f a dedicated road fund to close the maintenance funding gap for both the RHD and LGED managed portions o f the road network and to generate additional tax revenue to meet the development needs o f the sector. An Issues Paper on Road Sector Reform (2002) was produced in which the possible creation o f a road fund was discussed. RHD, LGED, Bangladesh Road Transport Authority and other relevant stakeholders have been invited to comment on the paper and on the creation o f a road fund. However, the debate on the need, feasibility and modality o f introducing a dedicated road fund i s s t i l l in i t s infancy.

3. Technical:

The project's c iv i l works components aim to introduce quality, cost-effective, and technically feasible solutions to address Bangladesh's topographical and climatic factors. The civ i l works components w i l l also mainstream social and environmental standards and practices. Experienced D S M and QA consultants w i l l provide LGED and UPS with engineering and advisory services to manage more effectively the technical aspects o f the project and to ensure quality control. The key technical aspects o f the c iv i l works components are as follows.

0 Improvement of UZRs: Existing unpaved UZRs w i l l be paved and marginally widened from 4-5 m width to 5-6 m. Adequate cross drainage structures w i l l be provided throughout the UZR improvement works. Furthermore, there wi l l be some minor realignments to improve road safety.

Improvement of URs: Existing unpaved URs wil l be paved within the existing formation width. The URs that have been selected for improvement should not require any widening o f the formation width. This i s to minimize potential social and environmental impacts o f the works. Furthermore, cross drainage structures w i l l be provided to improve drainage.

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0

0

0

0

Maintenancdrehabilitation of UZRs: The UZRs covered under the rehabilitationlmaintenance component will be partly resurfaced and partly rehabilitated, depending on the pavement condition. All of the selected roads for rehabilitationlmaintenance will not require any carriageway or road formation widening.

Construction of structures on URs: A large number of small (less than 30 meters) bridges and culverts will be constructed to span gaps and replace damaged structures on URs in order to provide road alignments that are continuously passable by motorized and non-motorized vehicles. Standard designs will be used as far as possible to facilitate construction and minimize cost.

. .

Improvement of rural markets: LGED has prepared a manual on how to plan and design markets and guidelines for user participation. These guidelines wil l be followed to standardize, as much as possible, the specific improvements, to be implemented while at the same time meeting the specific needs of the users of the markets.

Improvement/consfruclion of riverjetties: The river jet t ies will be designed to suit hydrological conditions at each site. The various options for loadinghnloading facil i t ies will include: (a) jetties; (b) floating pontoons and walkways; and (c) protective walls with steps.

4. Institutional:

While LGED has been subject to extensive capacity building activities with the assistance o f various other donors, these activities have mainly been separately managed and narrowly focused. As a result, the benefits of such interventions have not been h l l y disseminated and achieved through al l parts o f LGED. Thus, one o f the objectives of the project i s to strengthen LGED’s overall capacity to fulfill i t s function o f developing and maintaining rural infrastructure and to assist selected LGIs in managing local infrastructure.

” .

The main focus of LGED’s institutional strengthening activi t ies under the project will be:

0 Financial management; 0 projecVprogram planning and monitoring; 0 maintenance management and operations; 0

0 rural transport safety management. management and mitigation of social and environmental aspects of infrastmcture investments; and

The institutional strengthening activities planned under the project will complement the institutional support that LGED i s already receiving from other development partners. This i s to avoid the previous duplication and fragmentation of effort and resources in this area. To ensure a more coordinated and holistic approach to the institutional strengthening strategy of LGED, a comprehensive ISAP, with time-bound monitorable milestones, has been prepared and endorsed by GOB. A copy of the endorsed ISAP i s found in full at Annex 12. The ISAP wi l l be implemented as part of the project, with the support o f Technical Assistance (TA) consultant services. The TA services will mostly be provided in a single ‘package’ that will enable the simultaneous assistance on specific LGED technical priorities and facilitatiodadvisory support to LGED management during the overall institutional strengthening process. Together with an overarching emphasis in the ISAP program on LGED-wide implementation of monitoring and evaluation processes, this deployment o f TA should help LGED to optimize the focus on sustainable high-value achievements and more strategic outcomes.

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Through LGED's planned Loca l Government Improvement Program (LGIP) and i ts access to specialist TA, the project w i l l also support capacity bui lding for selected L t i l s to:

0 0

0

0 0 0

0

Better manage and maintain rural infrastructure, w i th direct input from users and stakeholders; facilitate effective sustainable participatory processes at the U P level and among rural communities o n rural infrastructure development and maintenance; implement the more readily-achievable recommendations o f the Loca l Revenue Mobil izat ion Study; improve their o w n revenue mobil izat ion performance w i th in exist ing powers; implement effective minor road maintenance andor rehabilitation works on a pi lot basis; introduce effective and responsive r iver jetty and rural market faci l i t ies management structures; and assist in the development o f enhancements to the legal and f inancial status o f LGIs to strengthen their planning, management and revenue functions.

4.1 Executing agencies:

The executing agency for the project i s LGED. A project Steering Committee chaired by the Secretary o f LGD under the MOLGRDC has been established to provide guidance and monitor project preparation and implementation.

4.2 Project management:

Al though LGED w i l l be responsible for overall project management, a dedicated P M U has already been established within LGED. The P M U is headed by a PC supported by t w o PMs together w i th a small multi-disciplinary team. This i s to provide the necessary day-to-day focus required to implement a l l

monitor a l l c iv i l works components except for the structures o n URs component. The later w i l l be supervised by LGED engineers, with involvement o f LGIs. LGED wil l also engage experienced consultants to carry out the quali ty audit o f a l l the c iv i l works components o f the project and to conduct regular procurement and financial audits. Furthermore, separate technical assistance consultants wi l l be engaged to provide capacity building assistance to LGED under i ts o w n ISAP, including mult i level training and support to LGIs to improve their infrastructure management capacities, to help LGIs implement actions f rom the findings o f the local government resource mobil izat ion study and to support the implementation o f a p i lo t rural road maintenance program. Final ly, a monitoring and evaluation program to examine diverse socioeconomic impacts o f the project wi l l be undertaken as part of the overal l monitoring and evaluation framework o f the project.

4.3 Procurement issues:

Public procurement practices often causes problems affecting project implementation in Bangladesh. The Country Procurement Assessment Report (CPAR) has identi f ied a series o f deficiencies, including: (a) absence o f a sound legal framework goveming public sector procurement leading to inconsistent application o f outdated rules; (b) lengthy bureaucratic procedures leading to delays in decision making; (c) lack o f a critical mass o f trained professionals to carry out procurement; and (d) absence o f mechanisms to ensure transparency and accountability in public procurement. The GOB has endorsed the findings and recommendations o f the CPAR and with IDA's assistance has begun to implement the key reforms under the Public Procurement Reform Project (PPW).

' project components. Internationally experienced consultants are being selected to design, supervise and

Al though LGED has successfully handled the procurement aspects o f two previous and one current IDA-funded projects, i t s t i l l suffers f rom some o f the same governance problems that affect other GOB implementing agencies. Over the years, IDA has taken several steps to fulfill i t s fiduciary responsibility, including: (a) provision o f procurement training to LGED staff; (b) stepping up IDA's procurement supervision; and (c) use o f procurement audit including ex-post audit o f small contracts. As a result o f the procurement audit that was carried during the implementation o f the IDA-funded RRMIMP-11, additional remedial and strengthening measures have been adopted for the procurement activities under

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the project. To mitigate the risk o f procurement delays, all procurement arrangements have been well defined in advance and the procurementhelection started early in the project cycle.

Procurement under the project w i l l largely involve c iv i l works relating to the constructiodimprovementlmaintenance o f rural roads, structures, rural markets and river jetties, w i th small valued goods and consultancy assignments. Over 2,000 works contracts are expected to be implemented. Given the dispersed locations of contract sites, it i s envisaged that, except for four contracts using International Competitive Bidding (ICB), most o f the c iv i l works contracts w i l l be procured largely following National Competitive Bidding (NCB) procedures. Some o f the works wi l l follow the three quotations system. Civ i l works contracts have been packaged into larger sizes to try to attract more capable contractors. Major consultant services includes two sets o f consulting f i r m s for design, supervision and monitoring o f c iv i l works.

4.4 Financial management issues:

LGED has already introduced a computerized financial management system under the IDA financed RRMIMP-11, to meet the project’s financial management requirements. LGED i s planning to introduce the department-wide computerized UFMS b y mid-2003, which w i l l enhance the existing financial management system. The adequacy o f the present system and o f the planned UFMS to meet the financial management needs o f the project have been assessed and found to be satisfactory. This means that LGED wi l l be ready to generate FMR, for monitoring purposes, from the start o f project implementation.

The IDA project funds w i l l be channeled through a Dollar Special Account (DOSA) in the Bangladesh Bank (central bank) and w i l l be operated b y the P M U on terms and conditions acceptable to IDA. To facilitate the timely release o f funds for the project, i t has been agreed that SGSA w i l l be used. The SGSA w i l l be maintained centrally in a commercial bank on terms and conditions acceptable to IDA. The traditional Statement o f Expenditure (SOE) based disbursement system w i l l be followed for the project.

The accounting, reporting and fund f low system w i l l operate f rom the Upazila level, which i s the lowest level o f accounting in the LGED. The project accounting and physical progress data w i l l be transmitted by districts to the PC in the PMU, who w i l l review and compile financial information to prepare quarterly FMRs. Based on i t s positive experience wi th the traditional SOE-based disbursement system, LGED has decided to follow the same system to meet the disbursement needs o f the project.

The financial management weaknesses that are most l ikely to affect the implementation o f the project are: (a) inadequate capacity o f P M U to fully manage the financial management aspects o f the project; and (b) delays by the centrally located LGED P M U to release funds to District and Upazila offices and to contractors. The remedial measures to some o f these financial management weaknesses have been identified and agreed with LGED and are firther elaborated in Annex 6(B).

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

Environmental Category: A (Full Assessment)

The project should make a positive contribution to the quality of the environment in rural Bangladesh by improving health and safety conditions, as well as enhance accessibility to rural infrastructure and services. However, adverse environmental impacts could occur if the c iv i l works are not properly planned, designed and implemented. Most o f the possible adverse impacts are construction-related and are limited to the civ i l works sites. The potential environmental impacts in the ‘UZRAJR’ and ‘structures on UR civ i l works include: (a) borrow area operation and re-development; (b) location and operation o f

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bitumen mix ing sites and construction camps; and (c) disposal o f debris and bituminous waste and slope stabilization. The ‘rural market’ and the ‘river jetty’ c i v i l works components include issues such as adequate drainage, wastewater and solid waste management and related health issues. Some o f the c iv i l works could be located in or near forests, wetlands or other ecologically sensitive areas. Whenever or if such cases do occur, their environmental impacts wi l l need to be managed using appropriate mit igation measures. If debris disposal i s not properly managed fo r the UZR road improvement works in the hilly areas o f the project, i t could cause increased erosion and impact drainage patterns.

All potential impacts--including indirect and long-term impacts--have been identified in the Environmental Assessment (EA) carried out during the preparation phase, and w i l l be addressed through an Environmental Management Framework (EMF) during the implementation phase. The EA has been based on case studies o f a credible sample o f proposed c i v i l works, and o n the experience gained through implementation o f two similar IDA-funded projects (RRMIMP-I and RRMIMP-11).

The EA has recommended the following: (a) enhancements to the preparation (planning and design), implementation and supervision arrangements; (b) mit igation strategies for identified environmental impacts; (c) capacity improvement w i th in LGED to effectively integrate environment management in planning and implementation o f the c iv i l works components; and (d) training o f the LGED and other stakeholders, including supervision consultants and contractors o n environment management issues. In addition, the EA has made specific recommendations concerning changes to the current LGED environmental guidelines, standards and regulations, wh ich are designed to improve the medium and long term environmental management practices for a l l o f the LGED-managed c i v i l works. Al l o f these recommendations have been included in the EMF.

5.2 What are the main features o f the E M P and are they adequate?

The EMF includes: (a) specific c i v i l works screening mechanism; (b) environmental codes o f practice; and (c) sample EMPs fo r each type o f c iv i l works. These documents w i l l capture al l issues identi f ied during the EA process, and wil l be applied to the c i v i l works managed by LGED’s environment staff, local level LGED engineering staff (regional, district and Upazi la levels), and the D S M consultants.

The EMF includes a description o f the appropriate mit igat ion and enhancement measures to be identi f ied and implemented for the different types o f c i v i l works, and institutional, training and monitoring requirements associated with the project as a whole. Effect ive inspection, supervision and environmental auditing measures have also been specified.

The Environmental Codes o f Practice (ECP) include typical designs o f mit igation and enhancement measures, with technical specifications. The typical issues addressed in the environmental codes o f practice include: (a) construction camps and site operations; (b) roadside strip plantation and roadside vegetation; (c) erosion control and slope stability; (d) bor row area operation and rehabilitation; (e) site drainage and f lood prevention; (f, protection o f chance f inds o f cultural property; (g) wastewater and sol id waste management and site redevelopment; (h) site cleanliness, health and hygiene; (i) additional measures for c iv i l works in ecologically critical areas identi f ied in the National Environment Management Ac t ion Plan (NEMAP); and 0’) other habitats, hills and undulated terrain, wetlands, swamps or lakes.

Sample EMPs (Le., fo r a l l the f irst phase UZR road improvement works and one each for a l l other types o f works) have been prepared. These sample EMPs have been developed based o n actual f ie ld investigations o f the different types o f planned c i v i l works. During the planning‘design o f the subsequent phaselyear c i v i l works, either specific EMPs wil l be prepared, o r the environmental codes o f practice wil l be implemented depending on the outcome o f the works screening mechanism established as a part o f the EMF.

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The EMF gives the details o f the implementation arrangements. An environmental training plan has been formulated and included in the EMF. Specific responsibilities o f the LGED's environment staff, line department engineers (regional, district and Upazila), and D S M consultants have been indicated in the EMF, and a mechanism for implementing the line departments' works has been established.

5.3 For Category A and B projects, timeline and status o f EA: Date o f receipt o f final draft: April 2003 Date o f receipt o f independent review report: March 2003 Date o f receipt o f draft report: December 2002

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

During preparation o f the environmental and social assessments, extensive consultation was carried out wi th relevant stakeholders in the project districts. The entire c iv i l works planning and design process i s based on community participation. Consultation took place at village, UP and Upazila levels--with local community, non-government organizations (NGO), local self-governments, and other stakeholders. During implementation, the consultation and participation process w i l l be facilitated by consultants using participatory mechanisms with assistance from the LGED's community organizers (CO) at the Upazila level. Public consultation meetings and participation processes have been documented. The environmental and social assessment reports for the project were disclosed to the public, in country and at the World Bank Group headquarters, in April 2003. 5.5 What mechanisms have been established to monitor and evaluate the impact o f the project on the environment? D o the indicators ref lect the objectives and results o f the EMP?

The EMF includes a program, budget, reporting procedures, and institutional arrangements required to monitor and evaluate the environmental impacts o f the c iv i l works components. In addition to regular third party monitoring and inspection by LGED, a community-based participatory monitoring mechanism has been developed to measure the direct impacts on the beneficiaries. Furthermore, if required, the periodic environmental auditing o f the civ i l works wi l l be specified. The program wil l include sets o f indicators to monitor and evaluate compliance and performance in implementing environmental management measures. The EMF also specifies what action should be taken and by whom in the event that the proposed mitigation measures fail, either partially or totally, to achieve the level o f environmental quality expected o f the project.

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

The improvement o f UZRs, priority URs, rural markets and river jetty facilities together wi th the maintenancehehabilitation o f UZRs w i l l deliver significant positive socio-economic impacts. An increase in transport efficiency w i l l considerably reduce travel time and costs. When combined with improved market facilities, the project i s expected to bring about increased intra-rural and rural-urban socioeconomic transactions. Thus, the project w i l l be a catalyst for the growth o f both farm and nonfarm activities in the selected project districts, and lead to the introduction o f new skills, knowledge and innovations in rural areas. Improved accessibility to urban markets w i l l facilitate increases in rural productivity and output which, in tum, are expected to translate into greater labor demand and higher wages. Revised management structures that encourage direct participation o f women wil l be introduced to improved market places, thus promoting involvement o f women in trading and market management. This approach has been tested under the RRMIMP-I1 and wil l be further refined under this project. The

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project wi l l also provide destitute rural women with employment through routine maintenance o f roads and roadside tree plantation. Construction works are expected to create short term employment opportunities for both skilled and unskilled rural laborers.

Despite these benefits, the project w i l l create some adverse social impacts, caused by the need for land acquisition and displacement o f people f rom public lands. The minor widening o f the existing UZRs and minor re-alignments w i l l require acquisition o f some limited amounts o f private land. The U Z R improvement works w i l l generally require the acquisition o f narrow strips along the road, and linear acquisition for the minor re-alignments. Land acquisition, should in very few cases, render people completely landless. In most cases only small parts o f individual families land holdings. To the extent possible, alternative designs have been considered to minimize acquisition and physical relocation needs M ino r re-alignments, wherever required, are designed to use as much public land as possible, and to avoid dislocating people from their homes. In any case, appropriate Resettlement & Rehabilitation (R&R) instruments have been developed and w i l l be implemented in accordance with IDA'S OP4.12 on Involuntary Resettlement. A Resettlement Framework (RF) for the whole project and a Resettlement Action Plan (RAP) and an Indigenous People's Development Plan (IPDP) for the Phase I improvement works have been prepared and are ready for implementation.

With the assistance o f the PPC, LGED has prepared a Social Screening report to identify any other unknown social impacts on the roads, rural markets and river je t t ies that have been identified for improvement or rehabilitation or construction under the project. The scale and location o f the required land wil l be identified for al l the 1,600 km o f the UZRs and URs, o f which 270 km o f UZRs are in the Phase I program and require 50 hectares (ha) o f private land acquisition. The likely impact o f land acquisition and resettlement on peoples o f different socioeconomic strata and ethnicity have been estimated, with specific attention given to any cultural properties that are l ikely to be affected by the project. LGED then prepared a Social Impact Assessment (SIA) addressing all impact areas, and prepared a RAP for the Phase I UZR improvement works, which affects about 11,375 landowners (about 6,000 households) each on average losing 0.34 ha - about five percent o f their total land holdings. In addition, 172 squatters (losing 167 residential and 45 commercial structures) are also affected. Al l land, structures, ponds and fish stockicropsitrees lost wi l l be compensated at replacement value. In addition to compensation for land, the 280 landowners expected to lose over ten percent o f their landholdings, together wi th the 172 squatters, 355 owners losing their residences and 172 owners losing commercial structures, are also entitled to targeted assistance to restore their lost livelihood. The SIA incorporated the findings o f the social assessments undertaken under the RRMIMP-I and RRMIMP-11. This approach w i l l help ensure that: (a) social mitigation measures are focused on the most severe looses; (b) criteria to monitor and evaluate outcomes are clearly established in the RF; and (c) the results o f past projects provided useful inputs to identify policies that enhance and sustain the positive impacts and mitigate the negative ones. Particular care was taken to clarify the institutional arrangements and process o f land acquisition and R A P implementation. An independent assessment w i l l be conducted before the end o f the project to evaluate the effectiveness o f the framework and annual RAP planning and implementation process.

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

LGED and i t s consultants identified the various stakeholders and assessed their levels o f involvement during project preparation and implementation. Sociologists and community organizers o f LGED, who have been trained under the RRMIMP-11, formally met with 107 different social groups at U P level (over 3,000 local residents), and supported UPS to undertake participatory planning processes for selection, planning and design o f project components. During the census and preparation o f the RAP, discussions were also held with Project Affected People (PAP) at the local level to explore alternatives to minimize negative impacts. The draft RF was disclosed before appraisal at District headquarters and on LGED's

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website, and Bangla summaries were posted at District offices involved in the Phase I road improvement works programs.

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

The participatory planning process and the R&R policy o f the project also required the involvement o f NGOs. N G O representatives were included in the consultation processes with stakeholders and w i l l be involved in the grievance redress process. LGED has summarized the outcome o f the consultations - who was consulted, how many, where, when, what issues were raised and what i s being done about them,

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

LGED's Sociologists and Community Organizers at District levels were thoroughly involved in the project preparation process and w i l l assist in the implementation o f the project. Their continuous monitoring program i s described in the RF. This w i l l ensure that the social development outcomes are achieved or that plans are improved when needed. They have conducted participatory planning wi th the project beneficiaries, collected socioeconomic data for the census o f affected people, and will be directly involved in the Socio-economic and Monitoring and Evaluation (SE&ME) study. They w i l l also be involved in the land acquisition and R&R process. Institutional arrangements for the preparation and implementation o f the RAP were refined by incorporating implementation experiences o f RRMIMP-11. The adequacy o f institutional arrangements to ensure successful implementation o f the IPDP and RAP have been reviewed.

6.5 H o w wil l the project monitor performance in terms o f social development outcomes?

For each phaselyear's c iv i l works, social screening w i l l be done and a RAP wil l be prepared where required. A census w i l l be conducted to determine the detailed persodhousehold-specific impacts o f project activities, and baseline sample surveys w i l l be conducted to measure the extent to which the project's social development outcomes have been achieved. A set o f indicators have also been chosen and described in the resettlement policy framework and IPDP. The monitoring system w i l l provide for routine tracking o f progress and periodic evaluation o f the policies under implementation.

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7.1 Are any o f the following safeguard policies triggered by the Policy

Environmental Assessment (OP 4.01, BP 4.01, GP 4.01) Natural Habitats (OP 4.04, BP 4.04, GP 4.04) Forestry (OP 4.36, GP 4.36) Pest Management (OP 4.09)

prdect? Triggered

0 Yes NO

:-’ Yes 0 NO

(-) Yes 0 NO

I-’ Yes 0 NO

7.2 Describe provisions made b y the project to ensure compliance wi th applicable safeguard policies.

Environmental and social screening was carried out during project preparation to determine what safeguard policies may apply. Social and environmental assessments identified affected areas and details o f project impacts. Where possible, the project w i l l consider al l possible alternatives to avoid andor minimize land acquisition and displacement. Where resettlement i s required, the project w i l l apply appropriate resettlement and environmental mitigation measures, as described in the following documents.

Cultural Property (OPN 11.03) Indigenous Peoples (OD 4.20) Involuntary Resettlement (OP/BP 4.12) Safety o f Dams (OP 4.37, BP 4.37) Projects in International Waters (OP 7.50, BP 7.50, GP 7.50) Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)*

Policv

0 Yes - ‘ N o 0 Yes ‘-1 NO

0 Yes -’ N o fL’ Yes 0 NO

LJ Yes 0 NO

(-1 Yes 0 NO

Environmental Assessment (OP 4.01)

Natura l Habitats (OP 4.04)

Compliance Measures and Comments An EMF has been prepared for the project. As per this EMF al l c iv i l works w i l l be screened for environmental impacts, and categorized into environmental Categories 1,2 or 3. The category 1 civ i l works w i l l be subject to full EA and EMPs which w i l l subsequently be prepared and implemented. The Category 2 c iv i l works wi l l be subject to Limited EA (LEA) and resultant EMPs w i l l be prepared. The category 3 c iv i l works wi l l be implemented by incorporating the provisions o f the ECPs in the civ i l works designs and contract documents. The ECPs for each type o f c iv i l works have been prepared, and should suffice the needs o f the Category 3 c iv i l works. EMPs for the Phase I civ i l works (all UZR improvement works), and a sample o f each type o f other works have been prepared, which shall serve as guidance for the 2nd and 3rd yearlphase civ i l works. LEA, if required w i l l be conducted following similar EA steps adopted in the preparation o f these EMPs. For Category 1 c iv i l works, which are unlikely, unless the civ i l works are located in designated “environmentally critical areas”, detailed EA wil l be conducted.

None o f the Phase I civi l works are located within or near any designated natural habitats, and i t i s unlikely that any o f the remaining civ i l works would be located likewise. However, as a contingency provision, c iv i l works that affect a natural habitat w i l l be subject to full EA. As part o f the resultant EMP, an adequate management plan to mitigate and compensate any impacts

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~ Indigenous Peoples (OD An IPDP for the Phase I civ i l works was prepared to clarify the required steps to be taken where indigenous people are among those affected by the project. I t includes: (a) legal framework; (b) baseline data; (c) land tenure; (d) strategy for local participation; (e) development or mitigation activities; ( f ) institutional capacity; (g) implementation schedule; (h) monitoring and evaluation; and (i) cost estimates and financing plan for the f i rs t year's works. A RF and a RAP for the Phase I civ i l works were prepared to mitigate land acquisition and resettlement impacts. The framework contains: (a) a legal framework outlining the principles and guidelines which w i l l be used to acquire lands and mitigation o f the adverse impacts; (b) a mitigation pol icy matrix in terms o f different loss categories; (c) an organization framework to plan and implement the mitigation measures; (d) a grievance redress procedure for the PAPS; (e) a framework to monitor progress in land acquisition and R A P implementation; and ( f ) a planning process defining the tasks for phase-wise land acquisition and action plan preparation and implementation. This wi l l provide the basis to prepare separate RAPs for each yearlylphase c iv i l works program, and was used to prepare the f irst phase RAP. RAPs for the subsequent c iv i l works phases contain the details o f the impacts and impacted persons, budget and the implementation time-frame.

4.20)

Involuntary Resettlement (OP/BP 4.12)

on any natural habitats w i l l be prepared. No designated cultural property wi l l be impacted in the Phase I civi l works, and in the unlikely scenario o f any such impacts, the impacts wi l l be examined as part o f the full or limited EA, as applicable, and a detailed conservation plan for cultural property w i l l be prepared. A small number o f minor community and religious properties are close to the c iv i l works, including one such property in the Phase I UZR improvement works. All such properties wi l l be carefullv Drotected.

F. Sustainability and Risks 1. Sustainability:

T o ensure the sustainability o f GOB'S large investments in rural transport infrastructure, the project wi l l assist in implementing the following: (a) improving resource generation at the national and local levels to close the maintenance funding gap to ensure sustainability o f rural transport infrastructure; (b) mainstreaming o f more cost-effective maintenance management systems to ensure sustainability o f the secondary and tertiary road networks; (c) progressively building up the capacity o f LGIs and user groups to better utilize and manage their rural transport infrastructure assets; and (d) strengthening the role o f LGED to assist GOB and local government in developing, maintaining and managing rural transport infrastructure.

Furthermore, the project w i l l also continue to support a community-based, demand driven approach in developing marketshiver jetties/structures on URs to strengthen the ownership and hence sustainability o f developing such infrastructure. This participatory feature o f the project and the focus on capacity building o f UPS w i l l contribute to infrastructure and social capital formation - a key ingredient to sustainability.

Finally, by mainstreaming the environmental and social safeguard policies, the project w i l l help LGED and LGIs ensure environmentally and socially sustainable development o f rural transport and other infrastructure.

- 22 -

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

Risk Rating

M

S

S

S

S

S

S

M

S

S

I Risk Risk Mitigation Measure

Matching grants for structures on URs to be provided to better performing UPS and communities on a f irst come/first serve basis. Community organizers to fo l low up on contributions to construction cost. GOB upfront commitment to increase maintenance funding and close monitoring o f this commitment during implementation. Pilot maintenance activities wi l l be initiated with well performing UPS only. Transparent bidding processes to be adopted with increased involvement o f users in management. LGED to establish a monitoring and review mechanism on the leasing o f marketdjetties within the project area. Incentives w i l l be introduced to encourage LGED to decentralize defined responsibilities. LGED's success w i l l be measured according to i t s ability to help develop stronger UPS, and increased user involvement. Through local revenue mobilization, UPS will be empowered to demand LGED services. Agreed LGED focused ISAP, with monitorable hilestones, to be implemented during l i f e o f project.

A high powered committee in the MOLGRDC to enforce timely decisions o n contract awards: and to monitor project progress. Furthermore, the implementation timetables in the Borrower's Project Implementation Plan (BPIP wil l be closely monitored. Large topographically diverse project area and wide dispersion o f works sites to minimize disruption o f works f rom annual floods cycle. Strong record o f GOB to fund LGED-managed projects. Close monitoring o f counter part funding situation. GOB to closely follow up the land acquisition process and implementation o f RAP/EMP/IPDP. Close monitoring o f procuremenu'selection of contractors timetable as per the BPIP.

From Outputs to Objective Inadequate demand and funding from UPS and communities for structures on URs works.

,

Inability by GOB to increase maintenance funding as planned and UPS demonstrate weak commitment to fund pilot maintenance activities.

Inadequate commitment by GOB to decentralizing the management and development o f rural infrastructure.

Interference by local politicians and businessmen wi th markedjetties leasing process.

Inadequate commitment by GOB to implement planned institutional strengthening measures for LGED. From Components to Outputs Project implementation does not follow agreed implementation schedule.

Exceptional annual flooding affects implementation o f c iv i l works components in project area. Delays by GOB in releasing counterpart funds to implement project components.

Delays in completing land acquisition in a timely manner and in implementing RAP/EMP/IPDP. Slow procuremenu'selection o f contractors/consultant services.

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Overall Risk Rating

3. Possible Controversial Aspects:

None. A l l major risk factors have been addressed fully in the above risk analysis. Extensive consultations during project preparation with a wide variety o f stakeholders, civil society, and GOB should ensure that the project wil l be implemented in accordance with IDA policies and applicable norms and laws.

S Although this would be the third project o f a similar nature with LGED, there are still substantial implementation risks.

G. Main Creditconditions 1. Effectiveness Condition

(a) Standard legal conditions.

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

During negotiations, in addition to standard covenants, agreement was reached with the GOB on the following covenants:

Staring from FY2005/2006 and for the duration o f the project, GOB will provide at least 20 percent o f the training budget for LGED from the revenue account.

By December 3 1,2005, GOB wi l l undertake together with IDA a mid-term review o f project implementation and, if necessary, take actions to modify the project scope as may be mutually agreed.

GOB wi l l implement the EA, EMPs, RF, phase wise RAPs and IPDPs with agreed objectives, policies and time schedules to the satisfaction o f IDA.

Before the credit closing date, GOB wil l commission and complete an independent impact evaluation report on the outcome o f implementing the RF, phase wise RAPs and IPDPs, in accordance with a schedule and format agreed with IDA.

GOB wi l l continue to conduct annual monitoring o f the environmental impacts o f the project implementation for two years following the Credit closing date.

Starting from FY2004/2005 and for the duration o f the project, GOB wil l increase annual maintenance expenditure o f the LGED-managed portion o f the road network by at least five percent in real terms.

GOB wi l l provide IDA a QPR as specified in the BPIP within 45 days after the end o f each calendar quarter.

GOB wi l l implement the ISAP in accordance with guidelines and methodology agreed with IDA.

GOB wi l l fund only civil works on UZRs that have already been identified in the BPIP. Any additional and/or replacement road improvement works wi l l need to be studied in terms o f

- 24 -

techno-economic feasibility and screened for social and environmental impacts.

6) For the duration o f the project, GOB w i l l submit to IDA within 30 days o f approval the figures relating to LGED's share o f the ADP.

H. Readiness for Implementation 6 1. a) The engineering design documents for the first year's activities are complete and ready for the

start o f project implementation. 1. b) N o t applicable.

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

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

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

project implementation.

quality.

I. Compliance with Bank Policies E 1. This project complies with all applicable Bank policies. 5 2. The following exceptions to Bank policies are recommended for approval. The project complies

wi th al l other applicable Bank policies.

L I

M o h i U z Zamman Quazi & . Fabio Gal l i Team Leader

Vincent J. @Tame Sector Direktor Country Director

Team Leader

- 25 -

Annex 1: Project Design Summary BANGLADESH: Rural Transport Improvement Project

Hierarchy of Objectives Sector-related CAS Goal:

Key Performance Indicators

Sector Indicators: ncrease poor people's access o assets and opportunities in ura l areas by supporting yowth in agriculture and ionfarm activities through irovision o f improved rural nfrastructure services and nstitutions.

Improved rural transport access, market infrastructure and services.

More effective and sustainable management o f rural infrastructure at the local level.

iervices and economic Ipportunities, and to enhance he capacity o f relevant ;overnment institutions to letter manage rural transport nfrastructure.

'roject Development 3bjective: 'rovide rural communities with improved access to social

transport costs in project area by EOP.

2. 20 percent increase o f roads categorized in 'good' (IRI<4) condition in project area by EOP. 3. Completion o f a l l c iv i l works sub-component by EOP.

4. 5 percent annual real increase in the maintenance funding for the LGED managed road network.

5. 15 percent improvement by EOP in overall LGED operating efficiency (annual operating costs as percentage o f total annual budget).

6. 30 percent increase by EOP in revenue mobil ization by participating LGIs.

7 . 24,000 person years o f employment created in project area.

Outcome I Impact Indicators: 1. 25 percent reduction in average travel time and

3utput from each 2omponent: 1. Priority UZRs, U R s and

Data Collection Strategy

Output Indicators:

I. 1 About 1,100 km o f UZRs,

Sector1 country reports: Government Transport Sector Status Reports and Policy directives.

Project reports:

QPRs.

QPRs.

QPRs.

Annual revenue budget figures for LGED.

Institutional review reports (mid-term review and ICR) and annual beneficiary assessments.

Institutional review reports.

QPRs.

Project reports:

QPRs.

Critical Assumptions from Goal to Bank Mission) 'olitical commitment to rural levelopment, including lecentralization and ;trengthening o f local Zovernments.

:from Objective to Goal)

Zontinued commitment o f :entral, local government and :ommunities to support 2bjectives o f the project, iemonstrated by timely financial payments.

Implementation o f al l c iv i l works components as per the agreed Project timetable.

GOB'S continued commitment to fund road maintenance.

Commitment to support strengthening o f institutional capacity and efficiency.

Commitment o f GOB to strengthen LGIs.

Commitment by GOB to implementing all c iv i l works components as planned.

(from Outputs to Objective)

Land acquisition proceeds in a

- 26 -

xitical drainage structures vithin project area are ehabilitated providing mproved access.

!. R4aintenance program for jr iority UZRs and targeted JRs i s established, and works :ompleted.

I. Rural markets and strategic ,iver jetties are improved.

I. Strategic improvement in ,GED and LGIs capabilities ind effectiveness.

and 500 km o f URs are improved by EOP.

1.2 About 15,000 m o f bridgeslculverts on URs are constructed to expand continuously passable network o f URs by EOP.

1.3 RFIRAPsAPDPs and EMFIEMPsIECPs are implemented in a satisfactory manner.

1.4 L iv ing standards o f >75 percent o f PAPS not made worse o f f or improved by EOP.

2.1 UZR maintenance successfully achieve physical and financial targets.

2.2 1,500 km UZRs and URs are maintainedrehabilitated by EOP.

2.3 Maintenance funding increased by 5 percent annually in real terms between FY04-OS

3. Improvement o f 150 rural markets and 45 river jetties within the project area by EOP.

4.1 Implementation o f LGED-wide ISAP by EOP and Increase in number o f LGED, local govemment staff, and community members trained in management and financing by EOP.

4.2 Implementation o f LGED assistance to LGIs to improve service delivery and govemance.

4.3 Enhancement o f ICT asserts, I T strategic Planning, GIS and M I S capabilities.

2PRs.

aonthly updates1QPRs.

JPRsIImpact Evaluation ieports.

2PRs.

'roject Evaluation Reports :mid term review and ICR).

4nnual revenue budget figures 'or LGED.

JPRs.

2PRsAnstitutional Review ieport.

JPRsIInstitutional Review ieport.

JPRs/Institutional Review ieport.

imely manner, and contracts r e awarded promptly.

justained demand by UPS and :omuni t ies for structures on JRs, and up-front :ontributions are deposited vithout delay.

'hase wise and timely mplementation o f W/RAPsAPDPs md EMFEMPsECPs.

Zounterpart funding for naintenance i s received.

Lips demonstrate continued :ommitment to pi lot naintenance activities.

[nterference with marketijetties leasing process is minimized and transparent bidding processes are adopted.

Continued commitment by GOB to implement endorsed [SAP.

Continued commitment by GOB to implement endorsed ISAP.

Continued commitment by GOB to implement endorsed ISAP.

- 2 7 -

5 . Sustainable LGED and LGI measures for improved road safety, community participation (specially involving women); and :danced Socioeconomic and :nvironmental monitoring by LGED.

QPRslSE&ME report. I 5.1 Development o f Road Safety strategy and action plan jo in t ly by LGED and LGI and implementation o f the action plan.

5.2 Establish LGED framework for effective participation o f affected LGIs within the project area.

QPRs/SE&ME report.

QPRs/SE&ME report.

- 28 -

Hierarchy of Objectives Project Components I Sub-components: 1.1 Improvement o f about 1,100 km o f UZRs and about 500 km o f UR, construction of 15,000 m o f bridges/culverts on URs.

1.2 Implementation o f Social and environmental component (including land acquisition which i s GOB funded)

2. Periodic maintenance and rehabilitation o f about 1,500 km o f UZRs.

3. Improvement o f 150 markets and construction o f 45 jetties.

4. DSM, quality audit institutional strengthening, and TA consultant services; studies, project staff, training and equipment; rural road safety initiatives.

Key Performance indicators

nputs: (budget for each :omponent) JS$164.5 million.

JS$14.0 million.

JSS39.00 million.

JS$ 7.50 million.

JS$20.00 mil l ion

Data Collection Strategy

Voject reports:

)PRs.

donthly updateslQPRs.

)PRs.

>PRs.

>PRs.

)PRs.

Critical Assumptions [from Components to Outputs) Implementation follows agreed Project schedule.

Implementation follows agreed Project schedule.

Implementation follows agreed Project schedule.

Implementation follow agreed Project schedule.

Payment to PAPS i s made in a timely fashion.

Consultants services are appointed in a timely fashion and executed successfully.

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Annex 2: Detailed Project Description BANGLADESH: Rural Transport Improvement Project

Planned Phases First phase: Second phase: Third phase:

Total:

By Component:

Project Component 1 - US$110.50 million

Length Estimated Cost (US$ million) Estimated Cost (Tk. million) 280 km 24.1 1,398 510 km 47.3 2,743 310 km 39.1 2,268

1,100 km 110.5 6,409

Improvement of about 1,100 km of UZRs (total cost of component including contingencies): This component w i l l help to improve rural access and connectivity to markets and production centers in the 21 project Districts by making key UZR passable al l year around and b y improving their riding quality and carrying capacity. The engineering o f the f i rs t phase works has been completed and the bidding process will have been completed before IDA Board approval o f the project. The supervision and monitoring o f this component wi l l be done b y experienced internationally D S M consultants who w i l l be in place before the start o f the works. The civ i l works under this component w i l l be procured using I C B and N C B procurement procedures. The value o f the improvement contracts should range US$l-5 million. This component w i l l be implemented in three phases starting from the fourth quarter o f 2003. The detailed breakdown and cost estimates for the three phase UZR improvement program i s shown in the following table:

Planned Phases Length Estimated Cost (US$ million) First phase: 170 km 7.2 Second phase: 170 km 8.1 Third phase: 160 km 8.2

Total: 500 km 23.50

Estimated Cost (Tk. million) 418 470 475

1,363

Project Component 2 - US$23.50 million

Project Component 3 - US$39.00 million

Periodic maintenancdrehabilitation of about 1,500 km of UZRs (total cost of component including contingencies): This component w i l l help reduce the periodic maintenancehehabilitation backlog on the

- 30 -

LGED-managed portion o f the road network b y funding the overlaying, resealing and minor rehabilitation o f 1,500 km o f key UZRs in the 21 project districts. The periodic maintenanceirehabilitation contracts w i l l be procured using N C B procurement procedures and the value o f the contracts will range from US$250,000 to US$1 .O million. The D S M consultants w i l l assist LGED in supervising the maintenanceirehabilitation works. The works w i l l be implemented in four annual phases starting f rom the fourth quarter o f 2003. The detailed breakdown and cost estimate for the UZR maintenancehehabilitation program i s shown in the following table:

Planned Phases Length Estimated Cost (US$ million) First (annual) phase: 375 km 8.3

Third (annual) phase: 375 km 10.2 Second (annual) phase: 375 km 9.3

Estimated Cost (Tk. million) 48 1 539 592

Fourth (annual) phase: I 375 km

Project Component 4 - US$30.50 million

11.2 650

Planned Phases

Project Component 5 - US$17.50 million

Length Estimated Cost (US$ million) Estimated Cost (Tk. million)

Improvemenflconstruction of about 150 rural markets and 45 river jetties (total cost of component including contingencies): This component, through the improvingiconstructing 150 rural markets and 45 river jetties, w i l l help lower the cost o f goods and commodities in the 21 project Districts by facilitating their trade. Most o f the selected rural markets and river jetties for improvementlconstruction are linked to UZRs/URs and are being improved or maintained under the project. LGED w i l l be responsible for the supervision o f this component wi th the assistance o f Q A consultants. The procurement o f these works w i l l follow N C B procurement procedures and w i l l be implemented in four annual phases staring from the fourth quarter o f 2004. The detailed breakdown and cost estimate for the

- 31 -

I Planned Phases I Number o f Estimated Cost Estimated Cost

First phase:

IFourth Dhase: I 3 010 I 3.4 I 197 I

MarketsIRiver Jetties (US$ million) (Tk. million) 40115 4.3 250

/Total : I 150145 I 17.50 I 1.015 I

Second phase:

Project Component 6 - US$14.00 million

40115 4.7 273

Land acquisition, implementation of RF, EMF, RAPS, EMPs, IPDPs, utility relocation (total cost of component including contingencies): This component i s designed to assess and mitigate the social and environmental impacts o f implementing the civ i l works components o f the project. The land acquisition and cash compensation will be funded entirely by GOB. IDA wil l partly fund the balance o f the estimated costs o f implementing this component, such as relocation assistance programs, replacement o f assets, infrastructure facilities, resettlement sites, shifting o f utilities, etc. Some o f the costs associated with implementing the EMPs w i l l also be eligible for IDA funding.

Third Dhase: 40115

Project Component 7 - US$14.00 million

5.1 295

DSM consultant services, quality, financial and procurement audit services, and other consultant services (total cost of component including contingencies): This component i s designed to ensure the timely, quality, and cost effective construction, maintenancehehabilitation o f the civ i l works components under the project. The two sets o f D S M consultant services are being selected to assist LGED/GOB implement the road improvement and road maintenancehehabilitation c iv i l works funded under the project. Furthermore, Q A consultant services wi l l be employed to ensure the engineering and construction quality o f all o f the c iv i l works components being implemented under the project.

Project Component 8 - US$6.00 million

TA, training, capacity building of LGED and LGIs, equipment and pre-investment studies (total cost of component including contingencies): This component w i l l finance a wide variety o f activities and investments including enhanced training programs for LGED staff, LGED implementation o f improvednew business processes and systems, local government capacity building initiatives and rural road transport safety. More specifically, this component w i l l assist LGED in funding the implementation o f the ISAP and the corresponding planned TA services. The various ISAP targets are all aimed at enhancing the key elements o f LGED's policy framework, planning and operational capabilities, as well as building LGI's capacities for infrastructure management and related revenue mobilization, thus driving the substantive reform process in the sector with an integrated approach.

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Annex 3: Estimated Project Costs BANGLADESH: Rural Transport Improvement Project

68.40 14.60 24.20 18.90

10.90

10.60

8.10

4.10

159.80 16.00 17.60

Project Cost By Component 1. Improvement/rehabilitation o f about 1,100 km o f UZRs 2. Improvement o f about 500 km o f URs 3. Periodic maintenance o f about 1,500 km o f URs 4. Construction o f about 15,000 meters o f minor bridgedculverts on URs 5. Improvement/rehabilitation o f about 150 markets and o f about 45 rural je t t ies 6. Implementation o f RF, EMF, RAPS, EMPs and IPDPs for the civ i l works components 7. Provision o f D S M services, quality, financial and procurement audit services, and other consultant services 8. Provision TA, training, capacity building for LGED and LGIs, equipment and pre-investment studies Total Baseline Cost

Physical Contingencies Price Contingencies

22.80 4.80 8.00 6.30

3.60

1 .oo

3.50

0.90

50.90 5.10 5.60

Total Project Cost; Total Financing Required

193.40 193.40

6 1.60 61.60

Total US $million

9 1.20 19.40 32.20 25.20

14.50

11.60

11.60

5.00

210.70 21.10 23.20

255.00

I Identifiable taxes and duties are 20 (US$in) and the total project cost, net o f taxes, i s 235 (t iS$tn), Therefore, the project cost sharing ratio is 80.85%

of total project cost net o f taxes.

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Annex 4: Cost Benefit Analysis Summary BANGLADESH: Rural Transport Improvement Project

Present Value of Flows ECOnomic Financial Analysis’ An a I y s i s

137.66 153.0

80.02* 88.9

22.23 24.7 239.91 266.57

92.48 102.75

13.24* 14.41

10.63 11.81 116.35 129.00

45.18 50.20

66.78 74.20

The project components are described in detail in Annex 2 o f the PAD. The UZR selected for improvement were identified through a techno-economic prioritization study. The selection o f markets and river jetties for improvement/construction was made using an integrated approach to rural development wi th most markets at the end o f the improved UZRs or URs. The selection o f structures on URs wil l be done during project implementation through a consultative process with the users and communities on the rural roads to be improved. The UZRs that have been selected for maintenancehehabilitation are prioritized by estimating their NPV. The NPViCost ratio was used to prioritize the f i rs t year maintenancehehabilitation program after collecting data on 1,200 km o f UZRs roads. The selection o f URs for improvement w i l l require the use o f multiple criteria such as: (a) connectivity to UP headquarters; (b) community ranking; (c) cost effectiveness, Le., the population served per unit investment; and (d) status o f connecting UZRs road, developed or undeveloped. The selection o f the works under the different components was on the basis o f cost-benefit and cost- effectiveness analysis.

Fiscal Impact

Taxes Subsidies

The final l i s t o f UZRs and rural markets slated for improvement have been taken from the prioritization study and have been subjected to detailed economic analysis. The components for which a detailed economic analysis was carried out constitute 72 percent o f the total project cost with a combined N P V o f about US$124.6 million. The findings o f economic analysis for the project are summarized in the table below.

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

Benefits: 1. UZR

improvement: 2. Maintenance and rehabilitation of UZRs: 3. Market improvement: TOTAL:

costs: I. UZR

improvement: 2. Maintenance and rehabilitation of UZRs: 3. Market improvement: TOTAL:

Net Benefits: 1. UZR

improvement: 2. Maintenance and rehabilitation of UZRs:

- 34 -

"3. Market improvement: 12.60 14.00

124.56 138.40 TOTAL:

IRR: 1. UZR

20.5% improvement: 2. Maintenance and rehabilitation of UZRs: 52% 3. Market improvement: 28.9%

20 to 52% TOTAL:

Summary of Benefits and Costs:

The project should generate several benefits such as improved access and more efficient marketing resulting in lower transportation costs and year round access, and bring several other socio-economic benefits which are difficult to quantify. Some o f these socio-economic gains generated by the rural infrastructure improvements have been assessed in various post evaluation studies undertaken in Bangladesh for projects previously funded by IDA (RRMIMP-I and RRMIMP-11).

The benefits for each o f the project components, for which detailed economic analysis has been carried out, were estimated separately. For the UZRs improvement component, the benefits are estimated using: (a) the savings in VOCs; (b) change in modal mix; and (c) increased traffic due to improved access as well as natural traffic growth. The economic benefits o f markets improvement component have been estimated on the basis of: (a) reduction in spoilage o f perishable goods; and (b) increased tum over. For the UZRs road maintenance and rehabilitation component, the benefits w i l l arise f rom reduced VOC for different vehicle types. The cost o f each component covers al l costs - physical works, design, project supervision, and physical contingencies. Annual maintenance and periodic maintenance costs, over the l i f e cycle o f the project, were discounted to the base year and also included in the total cost.

UZR improvement component: The ERR for the selected 144 road links ranged from a l ow o f 13.8 percent to a high o f 46 percent. The ERR for most o f the roads ranged between 18-22 percent. The overall ERR for this component was estimated to be 20.5 percent and the NPV, discounted at 12 percent, USS45.10 million.

Market improvement component: The ERR for this component was estimated to be about 28.9 percent and it ranged from a low o f 16 percent to a high o f 78 percent. The NPV, discounted at 12 percent, was US$12.6 million. The typical ERR for 15 small market centers was 2 1.3 percent, for medium 43 market centers 23.5 percent, and for the remaining 92 large market centers 32.7 percent.

UZR maintenance/rehabiIitation component: The ERR for the 57 roads selected in the f i r s t year phase ranged from 13 percent to 1 1 1 percent wi th an average o f about 52 percent. The N P V for the f i rs t year

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program was estimated at US$66.68 mi l l ion and the l i f e time economic cost o f US$13.24 million. The N P V for this component i s extrapolated to US230 .0 million using the same ratio o f N P V to cost as for the f i rs t year program.

The project has an estimated ERR ranging from 20 percent to 52 percent for the different components covered by the economic analysis and a combined N P V o f US$124.6 mill ion (Tk 7.10 billion).

Main Assumptions:

UZR improvement component: A total o f about 1,100 km o f UZRs were identified for improvement under the project. These roads were selected from the l i s t o f feeder roads identified through techno-economic prioritization study using detailed economic analysis. Traffic counts were taken on the roads identified for the first phase program. For other identified roads, to be taken up from second phase onwards, traffic counts were taken on a 25 percent sample o f roads and for the rest, the traffic was estimated using population and socio-economic criteria and calibrated using the available traffic data on similar roads. The traffic on the selected roads varied from 600 ADT to over 2,000 ADT, with almost 65 percent being Non-motorized Traffic (NMT). The average traffic level on the roads selected for f i rs t year program was 400 ADTs for motorized vehicles and 750 ADTs for NMT. The traffic was assumed to grow at an annual rate o f eight percent, which i s conservative when compared to traffic growth rates measured in the earlier project after the UZRs were improved. N o modal shift was considered from non-motorized mode to motorized modes. The VOC savings were computed for each vehicle type using the output o f HDM-4 model for different road conditions and multiplying the number o f vehicles using the road and the road length. The roughness o f improved road was considered at an IRI o f 4 and the base case road condition varied from IRI 10 to 18. The VOC reduced by 15 percent to 25 percent for different vehicle types when the road with an IRI o f 10 was improved and 40 percent to 60 percent when a road with IRI o f 18 was improved. Benefits were estimated including savings in passenger time and generated traffic due to the road improvements. Total savings from passenger time formed about 8-10 percent o f the total savings in VOC. The average passenger time was estimated at Tk 10.50 per hour. Generated traffic formed 8-20 percent o f the normal traffic for different vehicle types. The average financial cost o f the improvement works was estimated at about Tk 5.5 mill ion (US$lOO,OOO) per km. The economic cost o f the road improvement and the subsequent maintenance during the project l i fe time, considered to be 17 years including construction period o f 12 to 18 months, was estimated by using a conversion factor o f 0.9.

Markets improvenrent component: A total o f 150 markets o f different sizes were selected for improvement under the project. These were f i rs t identified based on their turnover, annual value o f auction in the last three years, toll collected and the space available for extension o f market. In cases where the value o f auction or toll declined in any year from the previous year, the market was not selected, These growth centers were sub-divided into five groups, viz., small, medium, medium wi th cattle market, large and large with cattle market. For each group, three typical markets were selected for detailed economic analysis. The project benefits considered for economic analysis were the reductions in spoilage (defined as the loss in value o f goods over time o f the day due to deterioration o f goods in the market) o f the goods after the market i s improved. A value o f 2.5 percent was used for reduction in spoilage based on the observed values from the RRMIMP-11. The benefits were calculated by multiplying the annual turnover with the reduction in spoilage for perishable goods. The annual turn over was assumed to grow at five percent over the next 20 year o f the project l i fe . Benefits, due to reduced cost o f the goods resulting from improved access, have not been considered since the benefits o f reduced transportation costs are captured in the road component. The economic cost o f the project includes the init ial cost o f market improvement and annual costs o f i t s operation and maintenance over the l i f e cycle.

The financial cost o f the component were converted into economic costs by multiplying it by a factor o f 0.9. In addition, 45 river jetties were selected for improvement using cost effectiveness criteria.

UZR maintenancehehabilitation component: The maintenance study identified 375 km o f UZRs for which data was available and which needed urgent improvement during the first year o f the project. The roads were prioritized from a set o f roads that require urgent maintenance through traffic surveys and road condition, and the cost o f improvement using the HDM-4 model which identified the optimum intervention and the corresponding NPV o f benefits for the road, discounted at 12 percent. The roads were prioritized using a declining NPV/cost ratio. Traffic on the roads selected for the first year program varied f rom a l ow o f 140 ADTs to a high o f 1000 ADTs with an average o f 400-500 ADTs. The various interventions considered for the road maintenance included 12 mm seal coat, edge repair, patching, crack sealing, overlays o f 25 mm and 40 mm o f BC, and reconstruction. The cost o f each intervention varied and i s provided in the HDM input f i les. The average cost for 12 mm seal coat was USS8,600 (Tk 500,000) per km; that o f 40 rnm B C overlay USS14,700 (Tk 850,000) per km, and that o f reconstruction US$47,000 (Tk 2.7 million) per km. For the subsequent maintenancehehabilitation phases, roads w i l l be selected every year using the HDM-4, based on the road condition and traffic on the road in that particular year.

Improvement of URs: URs connecting local markets and union headquarters to the District headquarters o f the road system, w i l l be selected using the following criteria: (a) functional status o f URs, core or non-core; (b) Union headquarter connectivity, primary or secondary; (c) community ranking; (d) cost effectiveness, population served per Tk 1,000 o f investment; and (e) status o f connecting UZRs, developed or undeveloped. These roads w i l l be selected during the project implementation through community participation.

Sensitivity analysis / Switching values of critical items:

Project Components: The major risks which may affect the economic viability o f the project are increased costs o f different components, reduced benefits due to lower than estimated traffic growth, decrease in tum over o f the markets, delay in implementation o f the project or a combination o f these. These r isks are reflected by increasing the total project cost by 20 percent, reducing the benefits by 20 percent and the combination o f the two. Sensitivity results are tabulated below:

I Base Case: I 124.6 I I Cost Increased bv 20 percent: I 100.4 I I Benefi ts decreased by 20 percent: I 75.6 I

The above table indicates that the economic case for the project investment i s quite robust. Furthermore, the project will generate other socio-economic benefits besides the quantifiable ones. The component-wise sensitivity analysis i s described in the following paragraphs.

UZR improvement component: The major r isks which may affect the economic viability o f this component are cost overruns and lower traffic growth reducing the benefits, and delay in start o f works. In addition, the benefits from time savings were eliminated in order to test their impact on the overall benefits.

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Item Base case Cost increase by 20 percent Benefits reduced by 20 percent Combined case Time benefits not included Project delayed by one year

Switching values of critical components: The project cost has to increase by 50 percent and the benefits have to be reduced by 33 percent for the NPV to drops to zero.

ERR 20.50 % 16.72 % 15.84 % 13.16 Yo 14.60 Yo 22.52 Yo

Market improvement component: The r isks associated with the reduction in the economic returns o f the improvement o f markets components are: (a) lower reduction in the spoilage rate than assumed; (b) higher cost o f market improvements; (c) delay in implementation o f works; and (d) lower increase in turnover o f the market than assumed. The results o f the sensitivity analysis are tabulated below:

Item ERR Base case 20% increase in cost 20% reduction in spoilage rate combination o f the two One year delay in implementation

With the reduction o f spoilage from 2.5 percent to 2 percent, 25 markets would have an ERR lower than 12 percent and may not qualify for the improvement. Overall, the sensitivity tests indicate that even in the worst scenario o f increased cost and reduced benefits the economic results are quite robust.

28.9 Yo 17.7 % 16.7 % 12.6 % 23.6 %

Switching values of critical components: The cost o f the component would need to increase by 250 percent and the benefits have to decline by 60 percent before the NPV drops to zero.

Item Base case 20% increase in cost 20% decrease in benefits

UZR maintenance and rehabilitation component: The major r isks which may affect the economic returns are cost overruns and lower traffic growth thereby reducing benefits. The results o f the sensitivity analysis, tabulated below, indicate that the economic analysis o f this component i s very robust against the r isks associated wi th the project.

NPV* in US$ mill ion 66.08 64.13 50.77

I Combination o f the two I 48.12 I Note: * The NPV i s for the f i rst year program which consists o f about 430 km o f roads

Switching critical values of theparameters: For the NPV to become zero the cost o f the component has to increase by 504 percent and the benefits have to be reduced by 82.7 percent.

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Other development aspects: The project, besides the economic impact quantified through the detailed cost-benefit analysis, w i l l generate positive impacts on income generating opportunities, faster diffusion o f agricultural technologies, and increased utilization and access to health and educational facilities. The main project beneficiaries would be the rural population within the project area. I t w i l l have direct impact on the income o f farmers, transport operators, construction and maintenance workers, including vulnerable group and women (about 1,900 have been engaged in maintenance works under RRMIMP-11), small traders and other community members. The improved rural transport system i s also expected to result in lower commodity prices.

Impact on employment: The pre- and post-implementation survey (Socio-economic Impact Study o f RRMIMP-11; Employment and Poverty Impact, June 2002) carried out by Bangladesh Institute o f Development Studies as part o f RRMIMP-11, clearly demonstrated that there was a positive change in the size o f labor force and economic participation rate in the project area during the inter-survey period. In the project area, the size o f the female labor force and female participation registered a sharp increase, in contrast to a decline in the control area for the same reference period. Similarly the rate o f increase in self-employment was 18 to 24.7 percent in different project areas compared to only 13.3 percent in the control area (area that did not receive project intervention) during the period. Similar impacts are envisaged from implementation o f this project.

Impact on income andpoverty: The nominal wage rates, both for agriculture and non-agricultural labor, increased at a higher rate in the project area than in the control area during the intervening period. The results o f the survey also show that there was faster progress in poverty reduction during the inter-survey period in the project area, poverty decreased by two percent while it increased by four percent in the control area. The distributional sensitive measures o f poverty gap index declined in the project area at a sharper rate than for the control area suggesting that road improvement and attendant growth process have benefited the poorest as well. The project would have similar impact on income and poverty reduction.

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Annex 5: Financial Summary BANGLADESH: Rural Transport Improvement Project

Years Ending June 30

I Year1 1 year2 I Year3 I Year4 I Year5 I Year6 1 Year 7 Total Financing Required

Project Costs Investment Costs 22.2 48.2 62.5 58.8 32.0 11.3 0.0 Recurrent Costs 2.2 4.4 5.6 4.9 2.1 0.8 0.0

Total Project Costs 24.4 52.6 68.1 63.7 34.1 12.1 0.0 Total Financing 24.4 52.6 68.1 63.7 34.1 12.1 0.0

IBRDllDA 18.2 39.2 50.7 47.5 25.4 9.0 0.0 Financing

e........--..-* L . l 1 - A I? A 1 L Q 0 1 ? I n n I U U V I I I I I I I I I I L

1 . . 0.L 12.4 11.4 I0.L 0 . / J . 1 u.v ,.- - * * A , - .A ,-.A A A Lenrrai u.0 0.u u.u u.u u.u u.u u.u Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 User FeeslBeneficiaries 0.0 0.0 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Project Financing 24.4 52.6 68.1 63.7 34.1 12.1 0.0

Main assumptions:

Annex 6(A): Procurement Arrangements BANGLADESH: Rural Transport Improvement Project

Procurement

1. “Guidelines for Procurement under IBRD Loans and I D A Credits ”, published in January 1995, and revised in January and August 1996, September 1997, and January 1999. Consulting services and training wil l be procured in accordance with the Bank’s “Guidelines: Selection and Employment of Consultants by World Bank Borrowers ”, published in January 1997, and revised in September 1997, January 1999, M a y 2002. Procurement o f goods, works, and services w i l l follow the Bank’s approved/standard documents.

All IDA financed procurement o f goods and works w i l l follow procedures outlined in the Bank’s

Works (US$228.6 million)

2. The contracts for civil works include the improvement/construction o f UZRs, URs, structures on URs, rural markets, river jett ies and the periodic and off-pavement maintenance o f UZRs distributed across 21 districts (north-east and north-west through central parts o f Bangladesh). Given the focus and design o f the project, such works do not lend themselves to the formation o f packages large enough to attract large contractors equipped with adequate experience and construction plant. Over 2,000 civ i l works contracts are expected to be implemented under the project, they include 4 contracts valued at US$2 1.5 mi l l ion to be procured through ICB procedures, and 1,450 contracts totalling U S 2 0 0 mi l l ion to be procured using N C B procedures. Five hundred and fifty (550) contracts w i l l be procured through soliciting quotations and direct contracting f rom 1aborAandless contracting societies.

ICB (US$21.5 million): Civ i l works contracts estimated to cost US$5 mi l l ion equivalent or more per contract w i l l be procured using ICB. This includes four contracts relating to the improvement o f 185 km feeder roads. Bids wil l be invited under a “slice and package” arrangement in order to attract the interest o f both small and large contractors.

NCB (US$200 million): Civ i l works contracts estimated to cost less than US$5 mi l l ion equivalent per contract may be procured using NCB, up to an aggregate limit o f about US$200 million. This includes: (a) about 66 contracts for 840 km UZRs ( U S 9 1 million); (b) 200 contracts for 500 km URs (about U S 2 3 million); (c) 900 contracts for 15,000 m o f drainage structures (USS30 million); (d) 150 contracts for 150 rural markets (USSl5 million); (e) 45 contracts for 45 river jett ies (US$3 million); and (0 100 contracts for periodic maintenancehehabilitation o f 1,500 km o f UZRs (US$38 million). For 40 out o f the 66 feeder road contracts, bids w i l l be invited under a “slice and package” arrangement.

National Shopping (NS) (US$4.5 million): Up to an aggregate limit o f US$4.5 million, small works relating to supply and planting o f saplings and minor works relating to the implementation o f the RAP/EMPs may be procured, through shopping procedures by soliciting at least three quotations, in packages with an estimated value o f less than USS30,OOO equivalent per contract. About 300 contracts wil l be implemented following this procedure.

Community Participation (CP) (US$2.5 million): Off-pavement maintenance, tree nursing, and related works, estimated to cost less than US$lO,OOO equivalent per contract up to an aggregate limit o f USS2.5 million, may be procured directly through community participation o f destitute women using 1aborAandless contracting societies (LCS).

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Goods (US2.8 million)

3. Goods wil l b e procured using ICB, NCB, and national shopping for small valued contracts.

(a) I C B (USS2.3 million): Goods and equipment contracts estimated to cost US$300,000 equivalent or more per contract w i l l be procured using ICB. They include the procurement o f road pavement cutters, vibrating rammers, pick-up/trucks, motorcycles, computers, and accessories.

(b) NCB (USS0.3 million): Goods and equipment contracts estimated to cost less than US$500,000 equivalent per contract may be procured using NCB, up to an aggregate limit o f US$800,000. They include leveling sets, nuclear densimeters, and bump integrators.

(c) ZnternationaVNational Shopping (ZSLNS) (USS0.2 million): Up to an aggregate limit o f US$200,000 goods o f very small contracts or individual purchases o f off-the-shelf items may be procured, through prudent shopping procedures, in packages with an estimated value at less than US$30,000 equivalent per contract. Procurement o f theodolite, multimedia equipment, and video cameras wi l l fo l low Isms.

Consultants' Services and Training (USS17.0 million)

, 4. The IDA credit wi l l finance consultants' services valued at USS16.0 mi l l ion and training for U S $ l .O million. Ma jo r consultancy assignments include two contract packages (estimated at USS13.0 million) for the design, supervision and monitoring o f project works, followed b y other contracts for services relating to implementation o f ISAP, audit, impact study, and community road safety study.

(a) Quality and Cost Based Selection (QCBS): Consulting services through f i rms, estimated to cost USSl mi l l ion equivalent or more per contract, wi l l be procured following QCBS. Major assignments include two contracts for D S M consultants and preparation o f a follow-up project.

(b) Fived Budget Selection (FBS): Services through f i r m s estimated to cost less than US$1 mi l l ion equivalent per contract may be procured fol lowing FBS. Major contracts include services relating to procurement o f ISAP related services, technical and financial audit, and institutional development.

(c) Individual Consultants (IC): Services for assignments for which teams o f personnel are not required and the experience and qualifications o f the individual are the paramount requirement w i l l be procured through individual procurement procedure in accordance w i th Section V o f the Consultants Guidelines. Individuals w i l l be selected on the basis o f their qualifications for the assignment.

5. Provision for future trainindpilot assistance include: (a) basic training for U P members covering administrative, financial management, and rural transport safety; (b) capacity building training under a pilot program for 2 1 UPS; (c) infrastructure maintenance assistance; (d) studies for improving revenue by UPS; and (e) evaluation o f UP training. Most training wil l be provided by LGED staff and services o f individual experts f rom various accredited training institutes.

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Incremental Operating Costs (about US.SO.6 million)

6. Incremental operating costs w i l l be financed by IDA on a declining basis. These include incremental salaries o f a limited number o f professional staff who will be working directly on the implementation o f the project in areas such as social and environmental aspects.

Procurement and Selection Planning

7. The Procurement Plan for goods and works and the selection plan for services have been prepared and are attached to the BPIP. Prior to issuance o f invitation for bids for procurement o f goods and works and selection o f services, the proposed Plan shall be furnished to IDA for i t s review and approval, in accordance with the provisions o f paragraph 1 o f Appendix 1 to the respective Guidelines. Procurement o f goods and the selection o f consultants w i l l be undertaken in accordance with Plans approved b y IDA and with the provisions o f paragraph 1 o f Appendix 1 o f the respective Guidelines referred to above.

U s e of Standard Documents

8. For I C B procurement o f goods and works, the use o f IDA’S Standard Bidding Documents (SBD) i s mandatory. For N C B procurement, LGED w i l l use the SBDs for Goods and SBDs for works approved by IDA. For the selection o f consulting f i rms, the Bank’s Standard Request for Proposal (RFP), including standard contract forms, w i l l be used. The Bank’s Standard Bid Evaluation Form for goods and Sample Form o f Evaluation for consultants’ services w i l l be followed for submission o f evaluation reports to IDA.

Prior Review Thresholds

9. Goods and Works: IDA w i l l carry out prior review o f the following contracts: (a) Goods: al l goods contracts estimated to cost USS300,OOO equivalent or more irrespective o f procedures and the first one contract for procurement under N C B regardless o f value; and (b) Works: a l l contracts estimated to cost US$500,000 equivalent or more irrespective o f procedures. All other contracts w i l l be subject to selective post review by IDA.

10. estimated to cost USS100,OOO equivalent or more for f i r m s and USS50,OOO equivalent or more for individuals.

Consultants Services: IDA’S prior review w i l l be required for consultants’ services contracts

Post Review

1 1. review o f contracts that are below the prior review threshold. The project also includes funds for carrying out procurement audit by an independent auditor. Such review (ex-post procurement audits) o f contracts below the threshold w i l l constitute a sample o f 20 percent o f the contracts.

In order to meet compliance with procurement procedures, IDA w i l l carry out a sample post

Review o f Procurement Performance

12. a continuous basis. As part o f the project’s planned mid-term review, a comprehensive assessment o f procurement performance w i l l also be carried out. Based on the review, and in consultation with the government, IDA may revise the prior review threshold, including the procurement and selection methods.

IDA w i l l monitor compliance wi th different procurement methods and performance standards on

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Acceptability of NCB

13. provisions of Section I of the Procurement Guidelines:

In order to ensure economy of scale, efficiency, transparency, and broad consistency with the

standard bidding documents approved by IDA shall be used;

invitations for bids shall be advertised in at least one widely circulated national daily newspaper and bidding documents shall be made available to prospective bidders, at least 28 days prior to the deadline for the submission of bids;

bids shall not be invited on the basis o f percentage premium or discount over the estimated cost;

bidding documents shall be made available, by mail or in person, to al l who are willing to pay the required fee;

foreign bidders shall not be precluded from bidding and no preference o f any kind shall be given to national bidders;

qualification criteria (in the event that pre-qualifications were not carried out) shall be stated in the bidding documents, and if a registration process i s required, a foreign firm determined to be the lowest evaluated bidder shall be given reasonable opportunity o f registering, without any hindrance;

bidders may deliver bids, at their option, either in person or by courier service or by mail;

a l l bidders shall provide bid security as indicated in the bidding documents. A bidder’s bid security shall apply only to a specific bid;

bids shall be opened in public in one place immediately, but no later than one hour, after the deadline for submission of bids;

evaluation of bids shall be made in strict adherence to the criteria disclosed in the bidding documents, in a format and specified period agreed with IDA;

bids shall not be rejected merely on the basis of a comparison with an official estimate without the prior concurrence of IDA;

split award or lottery in award of contracts shall not be carried out. When two or more bidders quote the same lowest price, an investigation shall be made to determine any evidence o f collusion. I f collusion i s determined, the parties involved shall be disqualified and the award shall then be made to the next lowest evaluated and qualified bidder. If no evidence o f collusion i s confirmed, then fresh bids shall be invited after receiving the concurrence of IDA;

contracts shall be awarded to the lowest evaluated bidders within the initial period of bid validity so that extensions are not necessary. Extension of bid validity may be sought only under exceptional circumstances;

extension o f bid validity shall not be allowed without the prior concurrence o f IDA for the f i rs t

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request for extension if it i s longer than eight weeks and for all subsequent requests for extensions irrespective o f the period;

(p) negotiations shall not be allowed with the lowest evaluated or any other bidders;

(9) re-bidding shall not be carried out without IDA's prior concurrence; and

(r) all contractors or suppliers shall provide performance security as indicated in the contract documents. Contractors and suppliers performance security shall apply to a specific contract under which i t was furnished.

Reporting

14. formats agreed with GOB.

The project w i l l prepare quarterly Procurement Monitoring Report (PROCMOR) as per specific

Procurement Management Capacity

15. 200 1, stated procurement as a generic problem in Bangladesh. Procurement deficiencies include: absence o f a sound legal framework, protracted bureaucratic procedures allowing multi-point rent seeking, lack o f critical mass o f professionals to manage public procurement, inordinate delays in completing the procurement process, and ineffective contract administration and absence o f mechanisms for ensuring transparency and accountability in public procurement. To carry out procurement reform as per CPAR recommendations, the Government wi th IDA's support i s implementing the PPRP.

Capacity Review and Risk Assessment: The CPAR, endorsed by the Government in February

16. implementing several IDA-financed projects and has good knowledge and expertise to carry out project procurement activities. The LGED's procurement management capacity has been reviewed on the basis o f the following: (a) procurement assessment questionnaire; (b) institutional strengthening and staff skills; (c) quality and adequacy o f supporting and control systems; and (d) suitability o f ru les and regulations in reference to the PPRP. In addition, instances o f inappropriate practices identified in the independent procurement audit report for the previous project (RRMIMP-11) have been considered.

At the agency level, a l l procurements will be handled b y LGED. LGED has experience in

17. D S M consultants from shortlisted f i r m s and i s in the process o f inviting bids for the f i rs t phase works program with bidding documents already approved b y IDA. The procurement activities w i l l be handled as follows: (a) LGED HQ staff w i l l handle ICB contracts for works and all goods and consultants' contracts, valued at US$40.0 million; (b) district level Executive Engineers w i l l handle contracts valued at USS150.0 mill ion relating to feeder roads, rural roads and periodic maintenance; (c) remaining contracts valued at US$50.0 mi l l ion for drainage structures, markets, river jetties, off-pavement maintenance and tree plantation w i l l be handled by Upazila (sub-district) Engineers. Upazila Engineers w i l l handle a large number o f small valued contracts (1,700 out o f a total o f over 2,000 contracts) and their training in handling such contracts i s important. Given the experience o f LGED and associated nature o f contracts to be handled under the project, the procurement related risk i s rated average.

To accelerate readiness for project implementation, LGED has already invited proposals for

18. strengthen procurement management capacity, the following arrangements have been made:

Strengthening Procurement Capacity: T o mitigate the procurement associated r isks and to

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(a) LGED designated a mid-level Engineer (Executive Engineer) in the P M U to coordinate al l procurement related activities with the field and wil l work as the focal point for dissemination of procurement knowledge. This person has formal international procurement training; LGED nominated one person to undergo training o f trainers’ course under the PPRP; LGED wi l l arrange training o f 70 staff o f the field (mostly Upazila Engineers); LGED wi l l nominate an adequate number o f staff to undertake formal procurement training under the P P W ; LGED formed a task group, comprising two Executive Engineers, to liaise wi th the Central Procurement Technical Unit (CPTU) o f IMED and effectively participate in the preparation o f procurement rules/ bidding documents under the PPRP; and LGED wil l carry out procurement audit every year using the services o f private independent auditors (with international affiliation) with terms o f reference acceptable to IDA.

(b) (c) (d)

(e)

(f)

Expenditure Category 1. Works (includes periodic maintenance amounting to US$39.0 million out of which IDA allocation is US$23.40 million) 2. Goods

3. Services (includes training amounting to about US$1 .O million) 4. Miscellaneous*

Total

Procurement methods (Table A)

1 Procurement Method

ICB NCB Othe: N.B.F. Total Cost 2 1.50 200.00 7.10 0.00 228.60

(16.80) (1 5 1.10) (5.70) (0.00) (173.60)

2.30 0.30 0.20 0.00 2.80

0.00 0.00 17.00 0.00 17.00 (0.00) (0.00) (13.80) (0.00) (13.80)

0.00 0.00 0.60 6.00 6.60

(0.00) (0.00) (0.40) (0.00) (0.40) 23.80 200.30 24.90 6.00 255.00

(18.70) (151.30) (20.00) (0.00) (190.00)

(1.90) (0.20) (0.10) (0.00) (2.20)

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

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I Selection Method

QCBS QBS SFB LCS CQ Other N.B.F. I Consultant Services

Expenditure Category Total cost(

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

15.90 (12.70)

0.00

A. Firms

6. Individuals

0.00 1.00 0.00 0.00 0.00 0.00 16.90 (0.00) (0.80) (0.00) (0.00) (0.00) (0.00) (13.50) 0.00 0.10 0.00 0.00 0.00 0.00 0.10

~ Total (0.00) 15.90

(0.00) (0.10) (0.00) (0.00) (0.00) (0.00) (0.10) 0.00 1.10 0.00 0.00 0.00 0.00 17.00

(12.70) I (0.00) I (0.90) I (0.00) I (0.00) I (0.00) I (0.00) I (13.60) I\

Including contingencies

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

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Prior review thresholds (Table B)

Table 8: Thresholds for Procurement Methods and Prior Review‘

2. Goods

3. Services

16. Miscellaneous

Contract Value Threshold

>=5,000,000 (US$)

<=5,000,000

>=300,000

>=100,000

<=100,00

<= 100,000

>=50,000

<=50,000

Selective contracts <=75,000

Procurement Method

ICB

N C B

ICB

QCBS

FBS

FBS

IC - Qualifications, reference

IC - Qualifications, references

SSS- single source selection

Contracts Subject to Prior Review

Prior Review (US$)

’rior review - a l l contracts valued US$500,000 or

more Prior Review

Prior Review

Prior Review

Post Review

Prior Review

Post Review

Prior Review

Total value of contracts subject to prior review:

Frequency of procurement supervision missions proposed:

US$130 mil l ion

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

Overall Procurement Risk Assessment: Average

A part o f the fiduciary control, Bank’s staff as deemed appropriate wil l carry out post review o f contracts. (see Para. 12) I: Thresholds generally differ by country and project. Consult “Assessment o f Agency’s Capacity to Implement Procurenient” and contact the Regional Procurement Adviser for guidance.

- 48 -

Annex 6(B): Financial Management and Disbursement Arrangements BANGLADESH: Rural Transport Improvement Project

~~

Weaknesses Delay in releasing funds to District and Upazila offices and contractors by the PMU, which i s centrally located at LGED headquarters (Dhaka).

Financial Management

1. Summary of the Financial Management Assessment

Remedial Actions Agreement has been reached that the PMU/LGED w i l l develop a database or monitoring format using Excel for payment exceeding the Tk. 10 mi l l ion

Country Issues: IDA’s recent assessment o f LGED’s institutional capacity for financial management indicates that i t lacks the capacity to efficiently plan, coordinate, monitor, report, and take timely remedial action for GOB and donor funded activities. This has been the case for al l public sector institutions in the country which have limited capacity to translate public spending into effective public services and desired developmental outcomes. As a result, multiple project Implementation Units (PIU) were established within LGED to meet the donors’ requirements and follow specific “ring fenced systems” which in turn weaken LGED’s institutional capacity in financial management. The project w i l l follow GOB’S existing financial management procedures outlined in the project Accounting Manual for donor assisted projects and use the computerized UFMS in LGED. The project wi l l support the strengthening o f LGED’s public expenditure and fund management capacity through technical assistance.

LGED: A more detailedhpecific financial management assessment o f the implementing agency (LGED) was carried out during project preparation. The assessment resulted in the following observations:

LGED has demonstrated a good track record in terms o f operational and financial management o f IDA assisted projects that have recently closed. I t also has extensive exposure to IDA’S disbursement procedures and financial reporting requirements. The proposed project i s a follow-on project managed by LGED. This w i l l mean that some o f the key staff that worked on the previous project - RRMIMP- I I - and who are well versed with the project financial management and accounting requirements o f IDA and o f GOB, w i l l end up working on the RTIP. With the development o f the computerized UFMS in LGED and identification o f experienced staff for the project, the project financial management arrangements are adequate to meet the Credit effectiveness requirements; and

audit reports for on going as well as closed projects have been submitted in a timely manner.

Strengths and Weaknesses

Strengths: The LGED i s well versed wi th the IDA’s financial management policies and procedures. This i s due to: (a) LGED PIU’s have maintained a good track record in terms o f operations and financial management o f two similar IDA-funded projects; (b) the project’s FM system in the ongoing Municipal Services project, also implemented by LGED, has a computerized FM system which generates timely Project Monitoring Reports (PMRs); (c) the development b y LGED o f a financial management system software to handle the financial information generation requirements o f donor assisted projects; and (d) LGED staff having previous experience in implementing the financial management aspects o f IDA-funded projects w i l l be retained for the new project.

Weaknesses and Remedial Actions

The P M U has not yet developed the capacity to monitor and estimate project funding to Executive Engineer (XEN) offices and contractors o f the project. This weak capacity could hinder case projections by payment categories, cost centers and funding sources.

limit wi th date, name, amount o f f i rs t installment including the milestones and due date for subsequent payment to various XEN offices o f LGED and other third parties. The monitoring format w i l l form the basis for cash forecasts and payment request to IDA and GOB.

The monitoring format w i l l have linkage to the cash flow chart that w i l l be used in the project for smooth fund management.

Funds Flow

The funds flow process for the project wi l l be as follows:

IDA funds wil l be channeled through a DOSA in the Bangladesh Bank (central bank) and w i l l be operated by the P M U on terms and conditions acceptable to IDA. (LGED has considerable experience in managing DOSA. This i s because it has implemented several IDA-funded projects following such arrangements.)

T o avoid past delays in the release o f project funds by operating a DOSA account with the Bangladesh Bank (central bank), it was agreed that a SGSA wil l be used for the project. The SGSA wil l be maintained centrally in a commercial bank on terms and conditions acceptable to IDA. The P M U o f LGED wi l l withdraw funds from DOSA and deposit them into SGSA for making payment o f actual expenditure.

Agreement has been reached for retroactive financing. The procedures to claim fund under retroactive financing, the authorized allocatiodinitial deposit to DOSA and payment criteria f rom SGSA are further explained in the Disbursement Section.

The PC o f the P M U w i l l have access to both the DOSA and SGSA and w i l l be the authorized person for making payments through checkshransfer, preparing requests for counterpart funds and withdrawal o f funds from the IDA credit. Agreement has been reached that there w i l l be one alternate signatory.

The GOB w i l l allocate counterpart funds for the project on the basis o f the ADP. On request by LGED, counterpart funds in local currency w i l l be released on a quarterly basis to the MOLGRDC and the line ministry w i l l disburse the funds through the Controller General o f Accounts (CGA) based on eligible project expenditure.

Project funds w i l l be disbursed to various locations based on specific requisitions made by the XEN and Upazila offices o f LGED and as per contractual agreement with third parties. P M U w i l l not transfer any fund to divisional offices unless previous requisition i s fully adjusted and accounted for.

Accounting Policies and Procedures

The overall accounting framework w i l l be as follows:

The accounting policies and procedures o f the project w i l l be governed by the existing Financial Regulations o f the GOB and by the directions and circulars issued by the Ministry o f Finance (MOF). In addition, a Financial Management Manual incorporating project specific FM policies and procedures wil l be developed. The Manual w i l l serve as a reference document for all project staff and w i l l be used as training guide for project FM staff. The manual w i l l be in use by June 2003.

The accounting o f the project w i l l cover all project related transactions. To keep track with project expenditure, relevant accounting codes w i l l be used in the monthly summary o f accounts. Monthly expenditure summaries w i l l need to include project expenses met by GOB and SGSA and withdrawals made from DOSA. The FM manual w i l l include a detailed Chart o f Accounts for the project.

The use o f funds w i l l clearly indicate hnd movement from DOSA to SGSA. Reconciliation between bank statement and books o f accounts w i l l be done within the second week o f the following month. In addition to the reconciliation o f the individual bank statements for each o f the Special Account and the SGSA, a reconciliation should be performed between the SGSA and the Special Account on a monthly basis.

Books o f accounts w i l l be maintained using double-entry bookkeeping principles and on cash basis. Separate bookslrecords (Cash and Bank-Book, General Ledger, Payment Register, Inventory and Fixed Assets Register, Bank Reconciliation, etc.) wi l l be maintained for the project.

The key accounting functions for which P M U o f LGED w i l l be responsible are: (a) Budget preparation and control; (b) Receiving and transferring project funds; (c) Payments for eligible project expenditure including payments to various XEN offices o f LGED and other third parties; (d) Procurement o f goods and services; (e) Maintenance o f books o f accounts and bank accounts; (0 Monitoring cash f low and i t s management; and (g) Financial reporting to GOB, IDA and other stakeholders.

The key accounting function for which PMs w i l l be responsible are: (a) Monitoring funding status at respective locations and making payment requests for eligible expenditure to PMU; (b) Collection and maintenance o f supporting documents for financial transaction; (c) Maintenance o f subsidiary books and ledger; and (d) Preparation and submission o f monthly expenditure summary statement to PC.

A computerized accounting system w i l l be maintained using LGED's computerized UFMS software. The software has control features and w i l l process eligible transactions based on controls developed as per legal and operational requirements. The system wil l be able to provide financial data to measure performance against the outputs o f the project. The computerized UFMS software w i l l be tailored to meet project specific requirements and wil l be in place by June 30,2003.

Internal Controls

0 The internal control policy and procedures for the project wi l l follow GOB'S existing financial regulations. Delegation o f authority, approval limit at various levels, certification, payment responsibility and controls to safeguard project assets wi l l be as per policy and procedures outlined in the project Accounting Manual o f GOB. Processing time to initiate and account for financial transactions and thereafter reporting requirement are being developed to enable the P M U to properly perform project fiduciary obligations. A project FM manual w i l l include project internal

control arrangements.

0 The financial management positions at different tiers are segregated, reporting functions and key responsibilities are clearly laid down in the BPIP.

0 The Asset Management System o f LGED includes classification o f assets, custody and security o f assets, accounting, procurement and disposal policy and annual verification procedures, which P M U w i l l keep track for project specific assets.

Staffing

0 The PMU, with the help o f a Finance Manager w i l l ensure proper compliance with project financial management policies and procedures during project implementation. The Finance Manager w i l l collate, analyze and monitor financial information received from the project directors, recommend approval and prepare consolidated monthly financial statements for the project.

0 The two PMs wil l be assisted by three finance staff. They wil l perform the ex-ante function for the financial transactions o f their respective areas and w i l l keep track o f project expenditures. O f the total required (seven) financial management staff, some w i l l be transferred to project f rom the RRMIMP-I1 and a l l will be in place by June 30,2003.

0 Provision have been made for training o f project as wel l as LGED staff who w i l l be dealing wi th project financial management activities at various locations. The first such training i s planned within three months o f project effectiveness.

Financial Reporting and Monitoring

The mechanism for reporting and monitoring would be as follows:

The P M U wil l be responsible for consolidating financial transactions, maintaining supporting papers and preparing timely consolidated Financial Statements on a monthly basis. The Finance Manager w i l l be responsible for preparing monthly, quarterly and annual Financial Statements after scrutiny o f financial information received from LGED, monitoring o f actual expenditure against forecast and coordinating with other units o f P M U to reconcile financial information.

A set o f customized formats for the project FMRs have been finalized with LGED. The computerized UFMS software w i l l generate the FMRs on a quarterly basis once the Credit i s effective. The system has already generated a set o f FMRs using dummy figures and i s capable o f producing timely FMRs.

At the end o f each quarter, P M U would prepare quarterly FMRs showing IDA and GOB expenditure. The FMRs include: (a) Financial Statements (Statement o f Receipts and Payments, Uses o f funds by project activity; and (b) output monitoring reports (outputhnits) and Procurement Monitoring Reports (goods, works and consultant). These reports w i l l form the basis for preparation o f annual financial statements and FMRs be submitted to IDA within 45 days o f the end o f each quarter.

The P M U w i l l also prepare various financial statements required by Audit Directorate, IMED, MOF and the l ine ministry. The contents and formats o f these reports are indicated in the project

Accounting Manual o f the MOF

Information System

e The PC w i l l instruct various X E N offices and third parties for certain periodic financial information to be sent to the P M U within a time frame. P M U wil l summarize those information and prepare financial reports. P M U w i l l play the key role in disseminating information from the policy level o f the Ministry to the Steering Committee and will coordinate with government departments and external agencies by providing relevant information.

e The M I S of LGED i s being linked to the UFMS software. This would allow MIS in LGED to generate identical financial information on projects implemented by LGED including the proposed project.

Impact of Procurement Arrangements

e Procurement below prior review threshold wi l l undergo ex-post audits on a sampling basis. Procurement monitoring and audit reports w i l l be reviewed with procurement team. Procurement under retroactive financing w i l l require IDA’S prior clearance. Joint Procurement, Disbursement and Financial management review by IDA staff will be conducted twice during the l i f e o f the project.

Supervision Plan

e The project w i l l need intensive financial management supervision which w i l l be conducted twice a year. The init ial supervision focus w i l l be on the implementation progress o f agreed actions and on the internal audit reports o f the project.

2. Audit Arrangements

Internal Audit

e Internal audit w i l l be carried out b y the Internal Audit Cell o f LGED under a specific audit plan.

e The key internal audit functions wi l l : (a) ascertain whether the system o f internal checks and controls operating within the organization for preventing errors and fraud i s effective in design as wel l as in operation; (b) ensure reliability o f accounting and other records as well as seeing that accounting methods provide the information necessary for preparation o f correct financial statements; (c) examine whether project assets are safeguarded from any unauthorized use or losses; (d) verify whether administrative and financial regulations o f the government and instructions issued by the M O F as well as donors’ legal requirements are followed; and (e) ensure the effectiveness o f the system o f internal control adopted in preventing, as well as detecting waste, idle capacity and extravagance.

0 LGED w i l l arrange internal audit for the project and the report wi l l be submitted to the Chief Engineer o f LGED with a copy to the PC/PMU. The P M U w i l l take remedial action based on internal audit reports.

- 53 -

External Audit

Expenditure Category Civi l Works - l(a) Periodic Maintenance Civil Works - l(b) Other Civil Works 2. Goods:

The audit covenants o f the on-going IDA-funded project managed by LGED have been complied with. Necessary actions have been taken on observations which needed clarifications from the IDA’S perspective.

Amount in US$million Financing Percentage 2 1 .oo 60% 133.60 80% 2.00 100% of foreign, 100% of ex-factory

costs and 80% o f other items procured locallv

The C&AG wi l l carry out the annual audit for the project. The audit reports wil l be submitted to IDA within s i x months o f the end o f each fiscal year. The audit report wi l l include a separate opinion on project Financial Statements, Special Accounts (DOSA and SGSA) and SOEs.

3(b) Consulting Services 4. Incremental Operating Costs Unallocated

Total Project Costs with Bank Financing

Total

The PC o f the PMU wi l l be responsible for audit follow up and taking remedial actions. An audit query register wi l l be maintained. The register wi l l be updated at the end o f every month with particular attention to unattended and serious audit objections.

13.00 80% o f gross expenditure 0.40 19.00

190.00

i9n nn

80% in FY04 and 50% thereafter

In addition to the GOB audit, a periodic financial audit by private f i r m s wi l l be conducted with TOR and selection method acceptable to IDA. At least three such audits wi l l be conducted during the l i f e o f the project. The auditor wi l l submit the audit report to the Steering Committee, PMU and IDA. I t has been agreed that the findings and recommendations o f audit wi l l be discussed at the Steering Committee Meeting within three months o f submission o f the audit report.

The following audit reports would be monitored in the Audit Report Compliance system (ARCS):

Implementing Agencies I Audit 1 Auditors LGED I Proiect Accounts/SOEs I C&AG

I LGED I SDecial Accounts (DOSA) I C&AG I I LGED I SGSA I C&AG

3. Disbursement Arrangements

Disbursement under the proposed Credit wi l l be made as indicated in Table C below, which indicates the percentage o f financing for different categories o f expenditures o f the project. I t i s expected that IDA funds wi l l be disbursed over a period o f about five years. The f isca l year disbursement estimate i s provided on page 2 o f the PAD. The closing date o f the Credit i s June 30,2009. Allocation of credit proceeds (Table C)

Table C: Allocation of Credit Proceeds

13(a’l Training I 1 .oo I 100% I

- 54 -

Use of statements of expenditures (SOEs):

Transaction based disbursement procedures w i l l be applicable for withdrawal o f Credit funds. IDA w i l l require full documentation for all prior review contracts which exceed the equivalent of: (a) US$500,000 for works; (b) US$300,000 for goods; (c) US$lOO,OOO for services and training with f i rms; and (d) US$50,000 for individuals. Expenditures below the above threshold and al l expenditures under incremental staff salaries and training w i l l be claimed on SOEs. Initially, IDA w i l l closely review SOE claims to ensure that funds are utilized for intended purposes and in accordance with agreed guidelines.

Special account: For utilization o f IDA's share o f project expenditures, LGED w i l l open and maintain a US Dollar Special Deposit Account in the Bangladesh Bank. Since most o f the activities under the proposed project w i l l be dispersed monthly in rural areas, LGED will open and maintain SGSA in a commercial bank under terms and conditions acceptable to IDA. PC, P M U w i l l be responsible for accessing and managing the US Dollar Special Deposit Accounts and SGSAs including preparation and submission o f withdrawal applications to IDA. The authorized allocation to U S Dollar Special Account w i l l be US$14.0 mill ion equivalent. At the start o f the project, the init ial deposit to the Special Account w i l l be limited to US$8.0 mi l l ion equivalent. The remaining amount o f the authorized allocation (USs6.0 million) may be requested only after cumulative disbursements reach the equivalent o f SDR20.0 million.

Advance withdrawals from US Dollar Special Account for deposit into SGSA shall be made on the basis o f two to three months estimated local expenditure requirements and shall not exceed more than US$4.0 mi l l ion equivalent at a single instance or whichever i s less. Payments f rom the SGSA shall be made only for works executed, goods delivered and services and training provided. No advance withdrawal from the SGSA shall be made before expenditures are incurred. Any further advanced withdrawal from the Dollar Special Account w i l l only be made when at least 50 percent o f the earlier advance withdrawal i s accounted and reimbursed by IDA.

I t i s expected that all o f IDA's foreign exchange payments shall be made through the Dollar Special Account and local currency payment w i l l be made through the SGSA. However, large payments in the amount o f USs2.0 mill ion equivalent or more, may be requested direct payment to contractors/consultants or issuance o f Special Commitments to cover letters o f credit for imported goods. However, the US$2.0 mill ion limit w i l l be increased to US$3.5 mi l l ion when the full amount (US$14.0 million) o f the authorized allocation i s released.

Retroactive Financing

Retroactive financing not exceeding USs5.0 mi l l ion equivalent wi l l be provided in respect o f the following: (a) c iv i l works - US2 .0 mi l l ion equivalent; and (b) consultant services - US$3.0 mill ion equivalent. In order to be eligible for retroactive financing, procedures for procurement, the use o f consultants, and processing and clearance are subject to IDA's Procurement and Consultants Guidelines as applicable to the project. In addition, documentation requirements for expenditures claimed under retroactive financing are the same as those for disbursement against payments made after the Development Credit Agreement i s signed and effective. Finally, the retroactive financing provision can be used for all eligible expenditures incurred after April 1, 2003.

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Annex 7: Project Processing Schedule BANGLADESH: Rural Transport Improvement Project

First Bank mission (identification)

Appraisal mission departure

Negotiations

r i o j e c t Schedule I Planned I Actual I

05/15/2001 05/15/2001 04/01/2003 0410 61200 3 04/28/2003 0511 212003

/Time taken to prepare the project (months) I 24 I I

/Planned Date of Effectiveness I 09/30/2003 I I Prepared by: LGED, GOB

Preparation assistance: Funding from RRMIMP-IT to fund the PPC services that were used to assist LGED in project preparation tasks.

I Name Mr. F. Gal l i Mr. M.U.Z. Quazi Mr. Guang Zhe Chen Mr. A. Bansal Mr. K.M.M. Mannan Mr. Z. Islam Mrs. S. Zannath Mr. T.K. Barua Mr. W. Waters Mr. T. Paul Mr. E. Huning Mr. S. Hoque Mrs. G. Stevens Mr. J. Channe Mr. M. Sayeed Mr. I. Kratynski Mrs. A. Ryan-Rizvi

SDecialitv Co-Task LeaderISenior Financial Analyst Co-Task LeaderISenior Highway Engineer Sector Manager Senior Transport Planner/Economist Transport Specialist Senior Procurement Specialist Senior Financial Management Specialist Senior Sociologist Senior Social Scientist Environmental Specialist Institutional Development Specialist Office Administrator Program Assistant Procurement Specialist Disbursement Officer Senior Financial Management Specialist EngineedEconomist

Annex 8: Documents in the Project File* BANGLADESH: Rural Transport Improvement Project

A. Project Implementation Plan

Borrower's Project Implementation Plan (BPIP) prepared by LGED, Volume I & 11, April 2003

B. Bank Staff Assessments

(1) (2) (3) (4) (5)

1st Project Preparation Mission Aide Memoire, April 21-30,2002; 2nd Project Preparation Mission Aide Memoire, September 2-1 1,2002; 3rd Project Preparation Mission Aide Memoire, October 3 1 to November 10,2002; 4th Project PreparatiodPre-Appraisal Mission Aide Memoire, February 2-17,2003; and 5th Project PreparatiodAppraisal Mission Aide Memoire, April 6-16, 2003.

C. Other

(1) (2) (3)

Regional Road Network Prioritization Study, February 2002; Economic Analysis o f rural infrastructure prioritization; Social Assessment Reports: Resettlement Framework (RF), Resettlement Action Plan (RAP), Indigenous Peoples Development Plan (IPDP), Gender Development Action Plan, Public Consultation Report; Environmental Assessment: Environmental Management Framework (EMF), Environmental Mitigation Plan (EMP), Environmental Codes o f Practice; Special Position Paper on Institutional Strengthening Action Plan (ISAP), Local Government Improvement Plan (LGIP), Training , Road Safety , Socioeconomic Monitoring and Evaluation Design including bid documents o f first phase civ i l works; and TOR for different studies and services to be undertaken under the project.

(4)

(5)

(6) *Including electronic files

- 57 -

Annex 9: Statement of Loans and Credits BANGLADESH: Rural Transport Improvement Project

16-Apr-2003 Difference between expected

and actual disbursements' Original Amount in US$ Millions

Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'd PO53578 PO44876

PO71794 P 0 7 4 0 4 0 PO74731

PO75016 P 0 5 7 8 3 3 PO44810

PO50752 PO69933 PO59143

PO4481 1 PO49587 PO50751

PO09468 PO37294

PO41887 PO09524 PO50745

PO49790 PO09550 PO44789

PO40713

PO37857

2003 Social Investment Program Project 2002 Female Secondary School Assis. II 2002 Rural Elect. Renewable Energy Dev. 2002 Renewable Energy Development 2002 Financial Services for the Poorest 2002 Public Procurement Reform Project 2001 Air Quality Management Project

2001 Legal 8 Judicial Capacity Building 2001 Post-Literacy 8 Continuing Education 2001 HIWAIDS Prevention

2001 Microfinance II 2000 Financial Institutions Development

2000 Aquatic Biodiversity Conservation 2000 National Nutrition Program 2000 Fourth Fisheries 1999 Third Road Rehabilitation 8 Maintenance 1999 Municipal Services 1999 Dhaka Urban Transport

1999 Arsenic Mitigation Water Supply 1999 Export Diversification 1998 Primary Education Development

1998 Private Sector Infrastructure Dev 1998 Silk Development Pilot Project

1998 Health and Population Program

0.00 0.00

0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00

0.00 0.00

0.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00

0.00

18.24 0.00 0.00 120.90

190.98 0.00

5.00

4.50 4.71

30.60 53.30 40.00

151.00

46.90 0.00

92.00 28.00

273.00

138.60 177.00

32.40 32.00

150.00 235.00

11.40

250.00

0.00 0.00 0.00 0.00 8.20 0.00 0.00 0.00

0.00 0.00

0.00 0.00 0.00 0.04

0.00 0.00

0.00 0.00

0.00 0.00

0.00 0.00

5.00 1.25

0.00 0.00 5.00 8.25 0.00 0.00 0.00 0.00 0.00 64.89

0.00 4.35 0.00 0.00 0.00 25.63 0.00 0.00

0.00 3.53

0.00 0.78

18.50 103.79

200.92 8.68 4.69 4.02

3.86 27.76

51.16

38.54 64.25

14.22 2.70

87.24 12.92

143.19

90.87 62.85

19.45 7.27

41.95 140.82

2.26 58.33

0.00 0.00 2.74 0.00

31.52 0.00 0.19 0.00

-0.04 0.00 0.65 0.00

3.60 0.00 7.46 0.00

3.90 0.00

17.65 0.00 6.03 0.00

18.14 0.00 3.84 1.03

41.00 0.00 18.81 0.64

141.91 13.98

6.47 0.00 122.00 9.14

23.63 0.00 7.98 0.00

57.63 22.48 146.33 0.00

6.18 0.64 50.53 0.00

Total: 0.00 2085.53 18.20 108.72 1210.25 718.16 47.92

- 58 -

Bangladesh Statement of IFC's Held and Disbursed Portfolio

(In U S Dollars Millions) As o f 2/28/03

Held Disbursed FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1997 DBH 2.35 0.65 0.00 0.00 2.35 0.65 0.00 0.00 1991 Dynamic Textile 1998 Grameen Phone 1985/95 IDLC 1980/98 IPDC 1998199 Khulna 19982000 Lafarge Surma 2003 RAK Ceramics 1997/2000 Scancem

1.86 0.00 0.00 11.67 1.58 0.00 0.00 0.15 0.00 7.50 1 ,os 0.00

16.47 0.00 0.00 35.00 0.00 0.00 12.00 0.00 0.00 10.00 0.00 0.00

1.48 0.00 0.00 0.00

20.39 15.00 0.00 0.00

1.86 0.00 0.00 11.67 1.58 0.00 0.00 0.15 0.00 7.50 1 .os 0.00

16.47 0.00 0.00 0.00 0.00 0.00 5.00 0.00 0.00

10.00 0.00 0.00

1.48 0.00 0.00 0.00

20.39 0.00 0.00 0.00

Total Portfolio: 96.85 3.43 0.00 36.87 54.85 3.43 0.00 21.87

Approvals Pending Commitment Loan Equity Quasi Partic

1999 Khulna Swap 0.00 3.30 0.00 0.00 2000 USPCL 0.00 3.00 0.00 0.00 2000 ULC - Banglades 5.00 0.00 0.00 0.00 2001 Dhaka Westin 8.75 0.00 0.00 0.00 2001 BRACBank 0.00 3 .OO 0.00 0.00

Total Pending Commitment 13.75 9.30 0.00 0.00

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Annex I O : Country at a Glance BANG LADESH : Rural Transport Improvement Project

POVERTY and SOCIAL Bangladesh

2001 Population, mid-year (millions) GNI per capita (Atlas methcd, US'$) GNI (Atlas method, US$ billions)

Average annual growth, 199541

Population (%) Labor force 1%) Most recent estimate (latest year available, 199541) Poverty (% ofpopulation below national povedy line) Urban population (% of total populationt Life expectancy at birth (years) Infant mortality (per 1,000 live births) Child malnutrition (% of children under 51 Access to an improved Water source (% ofpopulation) Illiteracy (% ofpopulation age 75+) Gross primaly enrollment (% of school-age PoDUlation)

Male Female

KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1961

GDP (US$ billions) 19.8

Exports of goods and services/GDP Gross domestic investmenffGDP 17.6

5.3 Gross domestic savingdGDP 12.5 Gross national savings/GDP 17.8

Current account balancdGDP Interest payments/GDP Total debffGDP Total debt servicdexports Present value of debffGDP Present value of debffexports

-4.3 0.3

21.9 2.8

1961-91 199141 (average annual growth) GDP 3.7 5.0 GDP per capita 1.1 3.2 Exports of goods and services 5.0 13.2

133.4 380

50.7

1.7 2.9

34 26 61 60 48 97 58

106 108 105

1991

31 .O 16.9 6.7

14.6 19.7

-3.1 0.5

42.4 20.7

2000

5.9 4.1 8.6

South Asia

1,355 460 617

1.9 2.4

28 63 74 47 87 45

100 110 90

2000

47.2 23.0 14.0 17.9 23.1

-0.6 0.4 0.0 9.1

20.3 110.6

2001

5.3 3.4

22.8

LOW- income

2,459 420

1,030

1.9 2.4

32 59 77

76 38 98

102 86

2001

47.0 23.1 15.4 18.0 22.4

-2.2 0.3 0.0 7.4

200145

5.3 3.7

-2.2

Development dlamond.

Life expectancy

T GNI Gross per primary capita nrollment

Access to improved water source

Bangladesh Low-income group

-

Economic ratios'

Trade

T Domestic +--&"-- Investment

i savings

Indebtedness

Bangladesh Lowincome arouD

--

STRUCTURE of the ECONOMY

(% of GDPJ Agriculture Industry

Services

Private consumption General government consumption Imports of goods and services

Manufacturing

(average annual growth) Agriculture Industry

Services Private consumption General government consumption Gross domestic investment Imports of goods and services

Manufacturing

1961 1991

30.9 29.5 20.3 21.1 13.4 13.0 48.8 49.4

87.1 84.5 4.5 4.1

14.5 12.2

1961-91 199141

2.1 3.3 6.0 7.3 5.4 6.9 3.8 4.8

3.0 3.9 2.5 4.4 6.7 9.6 2.9 10.8

2000

24.6 24.4 14.7 51.0

77.7 4.6

19.2

2000

7.4 6.2 4.8 5.2

5.3 0.9 7.3 5.7

2001

23.3 25.1 15.1 51.6

78.5 4.5

21.5

2001

3.1 7.4 6.7 5.3

6.2 4.5 5.8

23.5

Growth of exports and imports (%) 60 r I M 40 M 20 10 0

-10

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

be incomplete.

- 60 -

Bangladesh

PRICES and GOVERNMENT FINANCE

Domestic prices Is', change) Consumer prices Implicit GDP deflator

Government ffnance (% of GDP, includes cumnt grants) Current revenue Current budget balance Overall surpius/defict

TRADE

(US$ millionsj Total exports (fob)

Raw lute Leather and leather products Manufactures

Total imports (ci0 Food Fuel and energy Capital goods

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

BALANCE of PAYMENTS

b (US$ millions) Exports of goods and services imports of goods and sewices Resource balance

Net income Net current transfers

Current account balance

Financing items (net) Changes in net reseives

Memo: Reserves including gold (US$ millions) Conversion rate (DEC, /oca//US$)

EXTERNAL DEBT and RESOURCE FLOWS

(US$ millions) Total debt outstanding and disbursed

IBRD IDA

Total debt service IBRD IDA

Composition of net resource flows Official grants Official creditors Private creditors Foreign direct investment Portfolio equity

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

1981

10.5

1981

1981

933 2,718

-1.785

-23 963

-844

445 399

16.3

1981

4,326 55

1,085

36 4 7

543 10 -4 0 0

212 159

0 159 11

149

1991

8.3 6.6

7.2 0.7

-5.4

1991

1,698 120 138

1,278 3,510

297 204

1,231

85 89 96

1991

2,113 3.829

-1,717

-102 846

-973

1,354 -381

880 35.7

1991

13,141 65

4,360

610 5

47

1,153 485 34

1 0

451 255

18 238 34

203

zoo0

3.5 1.9

8.5 0.7

-6.2

2000

5,752 72

195 5,123 8,403

38 1 684

2,133

127 136 94

2000

6,611 9,060

-2,449

-221 2,392

-278

357 -79

1,599 50.3

2000

15,613 24

6,431

789 7

129

56 1 336

13 194

3

233 357 87

270 49

221

2001

1.6 1.6

9.0 0.7

-5.1

2001

6,467 67

254 5,761 9,363

349 905

2,515

118 134 88

2001

7.178 10,103 -2,925

-264 2,171

-1,018

716 302

1,307 54.0

2001

15,294 17

6,439

678 7

143

432 401 270 174

0

280 312 99

213 50

163

10 8 8 4 2 0

96 97 98 99 00 01

I GDP dellator +CPI - I Export and Import levels (US$ mlll.) I

I 95 96 97 98 99 w 01

0 Exports IrQOrtS

[ Currant account balance to GDP (%)

:omposltion of 2001 debt (US0 mill.)

A: 17 F: 4483 294

-D 10,891 u \ - IBRD E. Bilateral I - IDA D .Other multilateral F - Rivale >. IMF G - Shm-term

Development Economics 5/21/03

- 61 -

Additional Annex 11 : Environmental and Social Components of Project BANGLADESH: Rural Transport Improvement Project

1. Project Description: T o provide rural access to markets and services, the project wil l: (a) improve about 1600 km of priority existing UZRs and URs; (b) construct about 15,000 m o f minor culverts and bridges on URs in a participatory manner; (c) maintenancehehabilitation o f up to 1,500 km o f UZR; and (d) improve about 150 existing rural markets and 45 river jetties. (See Annex 2 for detailed description o f a l l project components.) Environmental and social assessments and mitigation frameworks were prepared to guide screening and annual investment plans. The cost o f implementing the social and environmental frameworks and mitigation plans for the project are budgeted at about US$14.0 mi l l ion which i s about 5.5 percent o f the total project cost o f US$255.0 million. For the first phase works (and continuing for later phases), each civ i l works component was identified and planned through a participatory process that included environmental and social criteria in selecting the most appropriate alternative designs.

2. including bonow-area operation and redevelopment, drainage, construction camp and material sites, slope stabilization and disposal o f debris. Similarly, for market and river jetty investments, drainage, wastewater, solid waste and related health impacts require some degree o f mitigation. Sensitive locations wi l l be screened and possible erosion on hilly terrain managed carefully. Adverse social impacts are mainly related to small strips o f land acquired from a large number o f people (about 50 ha from about 11,480 owners in Phase I). O n average, land losses are estimated to be only five percent o f owner's total landholdings. Because o f high population density in rural areas, some homes and other structures wi l l also be affected. In the first phase about 167 squatter homes and 45 commercial structures; 147 commercial structures and 392 title-holder's homes will be affected. In addition, some o f the works could be located in areas were there are indigenous people.

Potential adverse environmental impacts are limited primarily to construction works sites,

3. through the preparation o f an EMF and RF, was adopted for managing social and environmental impacts. The frameworks consists of: (a) environmental and social assessment o f the proposed works; (b) preparation o f ECPs and EMPs and RAPS; (c) IPDPs; (d) implementation and supervision o f the environmental and social frameworks; and (e) audit and monitoring.

In light o f the multi-phased nature o f the various works components, a framework approach,

4. Ordinance, 1982, Land Acquisition Plans have been prepared for the f irst phase works, and are under review by the MOLGRDC (LGED's Ministry). To promote sustainable development in the country through conservation o f environment and natural resources, the GOB has formulated several policies and plans such as the National Environmental Policy (1992), the Forestry Policy (1994), the National Environmental Management Action Plan (NEMAP, 1992) and the National Land Transport Policy (2002). This project i s within the overall framework of the stipulated policies and plans o f the GOB, and would contribute to the enhancement o f the pertinent environmental objectives.

Applicable legal requirements: Under the Acquisition and Requisition o f Immovable Property

5. As per the Environment Conservation Rules o f Bangladesh (1997), the project falls in environmental category "Orange B" which requires clearance f rom the Ministry o f Environment and Forests. The interministerial pre-ECNEC clearance o f all Project components, including the environmental one, has been obtained. Works identified under the f i rs t phase do not require any other clearance. However, works to be identified in the remaining phases could require the clearance from the Ministry o f Environment and Forests or the Inland Water Transport Authority, which w i l l be obtained before any such works are taken up for implementation under this project.

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6. Safeguard Category “S 1” primarily because o f the large numbers o f people affected and potential for some o f the works in the subsequent phases to be located idnear ecologically sensitive areas. The policies triggered include Environmental Assessment OP 4.01, Cultural Property OPN 1 1.03, Indigenous Peoples O D 4.20, and Involuntary Resettlement OP 4.12.

Applicable I D A policies: The project has been classified as an Environment Category “A” and

Consultation Stage Init ial disclosure during community consultation (November 2002) Public disclosure o f draft reports (February 2003)

7. Planning included 107 focus groups group discussions and meetings involving more than 3,000 residents at the local Union Parishad level. The following summarizes disclosure to date:

Consultations with stakeholders: These were essential for the selection and design o f works.

Dissemination o f Information Documentation o f a summary o f the project description and objectives, and potential adverse effects o f the proposed works.

Draft EA and Resettlement Framework summaries (English) at LGED H Q in Dhaka, World Bank (Dhaka and Washington) and LGED website.

Draft EA and Resettlement Framework Summaries (Bangla translation) at LGED H Q in Dhaka, 21 LGED district offices and LGED website. H Q in Dhaka, 2 1 LGED district offices and LGED website.

Draft EA and S I A reports (English) at LGED H Q in Dhaka, Wor ld Bank (Dhaka and Washington) and LGED website.

8. as the basis for social and environmental review and preparation o f the project:

Description of environmental and social assessment studies: The following reports were used

Report On Participation & Consultation (February 2003): The report has been prepared giving details o f each consultation session, mainly focus group interviews, describing how each o f the concerns raised by the communities, NGOs, affectedhenefiting groups has been incorporated in the project. This report wi l l serve as guidance for consultation during the identification, planning and design o f the remaining works.

Social Screening And Social Impact Assessment Report (March 2003): This identified critical social impacts and ranked project works according to severity o f impact. I t presents a Resettlement Framework, an Indigenous Peoples Development Plan, and a Social Development and Gender Action Plan. Stakeholder analysis and public consultations are documented, public concerns and expectations reflected in mitigation plans, and public suggestions recorded.

Resettlement Framework (March 2003): I t contains: (a) the legal framework outlining the principles and guidelines used to acquire lands and mitigate adverse impacts; (b) a detailed mitigation policy matrix; (c) an organization framework; (d) a grievance redress procedure; (e) a framework to monitor implementation; and ( f ) a planning process defining the tasks and responsibility for phased RAP preparation, implementation and evaluation.

Resettlement Action Plan, Phase I (April 2003): The f i r s t phase plan includes census results,

- 63 -

location-specific impact details with a budget and implementation schedule. Later RAPS will, if necessary, reviewhevise mitigation measures, depending on the severity o f impacts, to ensure livelihood restoration. The plan identifies the entitlements to deliver and the steps and responsibilities for delivering them.

Indigenous Peoples Development Plan (April 2003): The Project affects a small number o f indigenous households requiring resettlement (seven individual households in the f i rs t phase) but a number o f indigenous peoples potentially experience indirect positive and negative impacts (indigenous households total about 62,000 in 21 Project districts). To ensure they benefit from the project and to avoid or mitigate adverse effects on their communities, interviews were held with the heads o f potentially affected households within the right-of-way, and assessment o f potential impacts through focus group discussions with the representatives o f a l l indigenous groups l iv ing in the area.

Environmental Analysis (March 2003): This includes a background study o f environment management in earlier and ongoing similar projects, particularly the IDA-financed RRMIMP-I and RRMIMP-11, which: (a) identified environmental assets and issues relevant to the project in the project districts; (b) carried out a generic analysis o f alternatives; and (c) provided an overview o f potential indirect and cumulative impacts. I t presents environment screening o f works, based on field investigation and participatory consultative process at the sites conducted by LGED staff. A sample o f 74 works were studied to understand the nature and magnitude o f impacts.

Environment Management Framework (March 2003): This establishes the process and institutional requirements for environmental management during planning, design, implementation, and operation and maintenance o f the project. The EMF ensures that works are subjected to an appropriate level o f assessment, do not create any serious impacts on the local environment, and appropriate mitigation and enhancement measures are integrated into designs. The EMF specifies: (a) the environmental screening process and documentation required; (b) environmental management/mitigation measures to be included in the bidding/contract documents; and (c) monitoring and audit procedures during implementation. Linked to the EMF, ECP have been prepared to define methods and procedures to be followed by LGED District and Upazila engineers, consultants and contractors to avoid or mitigate adverse environmental effects that may arise during the implementation o f the works. They describe the processes o f (a) overall project planning and design; (b) participatory planning and design; (c) site surveys and improvement designs; and (d) operation and maintenance.

Environment Management Plans (March 2003): They have been prepared for al l UZR works in Phase I and model EMPs have been prepared for sample works for each civ i l works type. The EMPs for the remaining works, as required and prepared as works are identified, screened for environmental impacts and designed during Project implementation.

Analysis of alternatives: For works in which major or critical issues were anticipated, comparison was undertaken o f the proposed investment design, site, technology and operational alternatives for potential environmental impacts; suitability under local conditions; and institutional requirements. In the case o f indirect and cumulative impacts, the project has investigated and recommended options (such as using bricks from gas-based kilns rather than wood or coal-fired ones). In the cases o f works with minor impacts, essentially contained within the site and easily mitigated, there was no need for the analysis o f alternative sites or content o f the various c iv i l works interventions. In these cases, alternative site plans, and alternative design o f facilities will be carefully identified and

- 64 -

investigated during the participatory planning and design sessions, wi th emphasis on environmental management, according to principles established in the earlier IDA-funded projects.

10. environment in rural Bangladesh by improving health and safety conditions, as wel l as enhance accessibility to rural infrastructure and services. Adverse impacts could occur if the c iv i l works are not properly planned, designed and implemented. Possible adverse impacts are construction-related and limited to the works sites. For ‘rural roads’ and ‘cross-drainage structures’ potential concerns include borrow area operation and redevelopment; location and operation o f bitumen mixing sites and construction camps; disposal o f debris and bituminous waste and slope stabilization. For ‘market’ and ‘river jetty’ investments, concerns include adequate drainage, wastewater and solid waste management and related health issues. Some future works could be located in or near forests, wetlands or other ecologically sensitive areas. In hilly terrain o f the northem districts, road works may accentuate erosion, and affect water drainage patterns if debris i s not properly managed.

Environmental impacts: The project w i l l have a positive contribution to the overall

11. works screened as having only minimal or short te rm impacts on the environment that can be addressed through standard measures. During the project, these codes w i l l be developed into Environmental Guidelines for al l LGED works. The use and effectiveness o f these codes w i l l be audited and refined during the l i fe o f the project. Works with moderate environmental impacts limited to the sites (which do not significantly affect communities or alter environmentally important resources such as wetlands, natural forests and prime agricultural area), are subject to LEA.

ECPs: These identify the necessary mitigation measures in the contract documents o f those

12. procedure to address the following:

Works EMPs provide practical mitigation measures, detailed specifications and contracting

0

0

0

0

0

13.

Pre-construction stage activities including site clearance approvals and permits; land and building acquisition; environmental training to the contractor, consultants and the LGED staff; relevant specification for construction plants, machinery and vehicles; work site survey, pegging and approval; and vegetation clearance.

Construction stage impacts and activities including traffic management; soil erosion, sedimentation, management o f stockpiles, spoil heaps and batters; provision o f drainage; protection o f water quality; construction noise; waste management; topsoil saving and re-use; material procurement and resource depletion; protection o f sensitive environmental assets, vegetation, cultural and archeological sites; reinstatements o f temporarily acquired areas for construction or material sourcing; site sanitation, waste disposal and hygiene in the works sites; and others.

Environment enhancement measures including rehabilitation o f borrow pits, drainage ditches, improved access to community water supply, and pond improvements.

Post-construction stage activities including re-vegetation, site decommissioning and ancillary site rehabilitation.

Operational stage impacts and activities including environmental monitoring, vehicular air pollution, safety and noise disturbances, contamination from spi l ls due to traffic movement and accidents, and maintenance o f storm water drainage systems.

Although none were found in the f i rs t phase, works with potentially significant adverse

- 65 -

environmental impacts that are sensitive, diverse, or unprecedented, or that could affect an area beyond the sites wi l l be subjected to full environmental assessment (EA); detailed works EMPs will be prepared, implemented and monitored.

Cost I t e m P M U Establishment Budget: Environmental MitigatiodEnhancement: Environmental Training: Community Consultation (Additional Consultation for

D S M Consultant Services (for Environmental Personnel Environmental Aspects):

14. No designated cultural property will be impacted in the Phase I works. In the unlikely scenario o f any such impacts occumng in the later phases, the impacts w i l l be examined as part o f the full or l imited EA, as applicable, and a detailed conservation plan for the cultural property will be prepared. A small number o f minor community and religious properties are close to the works sites, including one such property in phase one. All such properties will be carefully protected. In addition, procedures for conservation and protection o f the “archaeological chance finds” have been included in the contract documents.

(US$) 166,000

3,085,000 76,000

12,000

15. The total environment budget for the project i s about US$4.3 million. See details below:

and Associated Costs): Environmental Auditing Consultant Fees:

433,000 1 17,000

and Associated Costs): Environmental Auditing Consultant Fees:

433,000 1 17,000

Total: Contingencies (about 10 percent): Grand total environment imulementation budget:

16. f i r s t phase RAP. LGED, assisted by the PPC, consulted and provided information to the affected people on the mitigation measures and the processes to be followed, as well as the details o f grievance redress procedures. LGED i s responsible for informing the affected people, local communities, any c iv i l society organizations working in the project localities, as wel l as the local governments. A summary o f estimated land acquisition requirement and i t s impacts in the f i rs t phase are as follows:

Involuntary Resettlement: A participatory approach was also used to prepare the RF and the

4,126,000 4 12,000

4.301.000

Total: Contingencies (about 10 percent): Grand total environment imulementation budget:

4,126,000 4 12,000

4.301.000

Tota l amount of land acquisition (Phase I works): Total number o f landowners affected:

17. The RF uses the following principles to determine the impacts requiring mitigation and the people entitled to assistance: (a) absence o f legal title will not be considered a bar to assistance; (b) homestead-losers, including the households/persons squatting on public lands, wil l be given the options

50 ha 1 1,480

Tota l number o f households affected: 5.156 (Average acquisition per household: 0.0097 ha)

(Residential: 392; Commercial: 147)

(Residential: 167; Commercial: 45) Tota l number of trees affected:

Tota l number of private structures affected:

Tota l number of squatter structures affected:

539

212

38.877

o f physical relocation in designated sites or any locations they choose, and will be assisted with relocation; (c) the project w i l l rebuild or provide access to alternatives, where community facilities are affected; (d) economically well-off persons who use their social and political influence to use public lands w i l l not qualify for assistance; (e) the project w i l l not be used to collect taxes arrears; and (0 LGED w i l l ensure that entitlements due to the affected people are paid in full before they are evicted from the acquired private and public lands.

Items

18. The RAP for the f i rs t phase i s based on a census o f affected people and assets collected by LGED district and field staff during the works design. The first phase land acquisition i s required for only the UZR improvement works. In this phase, a total o f 34 UZRs comprising o f about 270 km, w i l l be improved in 15 districts. According to the detailed engineering designs, acquisition o f private lands amounts to a total o f 50 ha (equivalent to 123.5 acres), an average o f 0.18 he per km o f the 34 roads.

Phase I 1 Phase11 I PhaseIII I Total

19. Resettlement implementation schedule: The land acquisition process begins wi th the selection o f the works, determination o f the acquisition requirements and locations, and submission o f acquisition proposals to the Deputy Commissioner. As the census o f the affected persons and their assets can begin only after identifying land requirements and their locations, the RAPS must be produced annually. The RAP preparation process w i l l include census o f the affected assets and their owners, and survey o f current market prices o f the various affected items and preparation o f the mitigation budgets. At implementation, LGED w i l l ensure that a l l entitlements due to affected people are paid in full, before the works begin on the acquired lands or public lands resumed from private uses, verifying site readiness for c iv i l works and reporting progress using formats included in the RF.

Land Acauisition: 1.55 3.18

20. phase, land acquisition and resettlement under the entire project i s estimated to cost approximately US$9.7 mi l l ion (Tk. 564 million) o f which US$1.8 mi l l ion (Tk. 104 million) i s for Phase I. No land acquisition costs w i l l be covered by IDA.

Land acquisition and resettlement budget: Based on an extrapolation o f impacts o f the f i rs t

3.63 8.35

Estimated Resettlement Budget (US$ million)

Houses/structures: Trees, etc.: Others: Total:

0.09 0.18 0.21 0.48 0.08 0.17 0.18 0.43 0.09 0.18 0.20 0.46 1.80 3.71 4.2 1 9.73

2 1. IPS in project districts, interviewing heads o f potentially affected households living within the right-of-way, and focus group discussions with representatives o f a l l indigenous groups living near sites. Actions planned, based on their concerns and viewpoints, w i l l ensure their participation in works preparation and implementation processes. The budget for these activities i s about US$86,000:

Indigenous people: LGED conducted a baseline socio-economic study o f potentially affected

0

0 0

Identify potentially affected indigenous peoples and involve representatives in the survey process; identify mitigation measures in participation wi th the indigenous peoples; ensure LGED staff assist indigenous peoples in mitigation implementation process; and ensure women IP participation thorough separate meetings, PRA exercises, and skill mapping and employing women in maintenance and tree plantation contracts.

- 67 -

22. ensure women’s participation:

Social Development and Gender Action Plan (SDGAP): This describes the following actions to

0 0 0

0

Women’s participation in market management committees, and space for women traders; separate sanitation facilities in markets for women traders and buyers; as a direct income earning opportunity, the responsibility o f roadside tree plantation w i l l be given to the destitute women; lease preference for social afforestation and other tree plantation programs w i l l be given to the

women wil l be given preference in jobs that commensurate their sk i l ls during construction. organizationslsponsors which ensure greater participation o f poor women; and

23. “comprehensive environmental and social management capabilities to support LGED project planning, preparation, execution, monitoring and evaluation functions” and “effective community participation in al l phases o f LGED works.” Improvements in planning and implementation, screening, census, and other impact assessment and mitigation planning activities have been achieved by clarifying the roles o f those responsible - from P M U staff, D S M consultants and LGED field staff (District sociologist, community organizers, etc), as well as clearer scheduling o f activities. Monitoring effectiveness w i l l enable LGED to progressively apply the framework to all LGED investments.

Institutional strengthening: LGED’s Institutional Strengthening Action Plan (Annex 12) builds

- 68 -

Additional Annex 12: Institutional Strengthening Action Plan (ISAP) BANG LAD ESH : Ru ral Transport Improvement Project

Objective Required Action Action Plan

Short term Medium Term Long Term (up to 2 years) (2-5 years) (beyond 5 years)

0

1. Confirmation o f Establish and Implementation o f evolving LGED implement “LG o f business’ issued LGED strategic plan. role, core functions Infrastructure confirming LGED -December 2005. and resources for Development & responsibilities strategic planning. LGED” 3-5 year -June 2003

strategic plan.

1. N e w GOB ‘allocation

2. ‘LGED strategic vision’ prepared and cleared by MOLGRD&C - June 2004 1. Confirmation by GOB 2. Effective ‘Feeder Implementation o f

Roads’ and ‘Rural updated GOB authorities o f new road LGED road network Roads’ network guidelines for classifications and Master Plan finalized ownership and institutional responsibility guidelines - December 2006 management

1. Comprehensive

responsibility for FR - April 2003 and RR assets. 2. Consolidation o f LGED 2. GOB inter-agency

management o f a l l FR and determination o f access RR assets based on new to GOB road hnding GOB guidelines for LGED programs - December 2004 - December 2006

3. Sustainable Implementation o f 1 .Develop pi lot LG 1. Evaluate pi lot and LGED role in LGED assistance to Improvement Plan [LGIP] develop enhanced support to Local LGIs to improve under RTIP comprehensive LGIP Government services delivery and - December 2003 - December 2006 Institutions (LGIs) govemance 2. Initiate pi lot LGIP with

LGIs - March 2004

4. Strategic Implementation o f 1. Initiate “ISAP Steering 1. Implement intemal improvements in LGED-wide Group” - April 2003 ISAP communications LGED capabilities Institutional rocess in LGED - Julj and effectiveness Strengthening Action 2005

2. Evaluation o f ISAP program - July 2007

3. Recommendations b! LGED ISAP group for follow-on I S priorities in LGED - December

2. Determine multi-year ISAP and TOR for TA selection - June 2003

3. Implement Technical Assistance to support ISAP - December 2004

Plan (ISAP)

:yclical updating o f .GED Strategic Plan vith GOB, using orporate ‘monitoring Ir evaluation’ outputs

1. Effective LGED organizational structure, staffing

ktablishment o f Ledicated LGED nfrastructure funding nechanisms.

Resolution o f the 1. Finalize the LGED 1. Initiate systematic Integrate LGED LGED structure organogram, establishment intemal processes to ‘Staffing & [organogram], and staffing mix with review adequacy and Establishments’

'regressively enhance >GIP scope and nethodology joint ly with LGIs, using M&I iata

iev iew the integrated nstitutional levelopment o f LGEr

htegrate longer term ‘ocus on IS objectives ind actions into LGEI ;trategic planning and nanagement.

p”’” ~ b i a o i i m m e I i i anu ~ v ~ u ~ u ~ o c ~ , rianning eiiectiveness or LUCU ianning ac~ ion &ill< m i x npprllprl fnr I Cnm anrl MnF inrliirlino I ctaf f inu in rplatinn tn R rnactivplv with CnR

- 69 -

1 Iongoing and ]expanded functions in lfunctional priorities and emerging policy, Planning, Transport needs - December 2005 planning, execution Economics, Urban and LGI support functions. Resource Management, Staffing and

Management and Water 2. Develop an LGED

Socioeconomic and Establishments Environment planning process, to Management, align with functional LG Development, Asset priorities, needs and Management, IT & M I S , GOB development Monitoring & strategy - December Evaluation, Quality 2006 Assurance, Finance and Audit - December 2003

2. Implement new organizational establishment cjointly arrangements in HQ and field units and MOLGRD&C) to - December 2004. match confirmed

3. Negotiate longer profi le and skills - term LGED structure and

with PC, MoF, M o E

functional priorities, needs and GOB stratem -June 2007.

. Strengthened 1. Review and 1. Proactive LGED I. Develop LGED

trategic processes.

Integrate relevant ,GED govemance nd performance ccountability

enhance the LGED review framework using aspects o f M&E, F M S procurement WB-GOB program on MIS, F M S and M&E and corporate functions and Procurement Reforms - outputs - June 2005. management processec processes. June 2003 onwards effectively into

2. Enhance the 2. Development o f and process for annual internal and extemal effectiveness o f Socio-Economic report, including on reporting capabilities. LGED Monitoring & Monitoring & Evaluation LGED infrastructure Evaluation (M&E) Framework - July 2004 and LGI support - capabilities. December 2005.

3. Annual status report on LGED resources and program - o f LGED procurement infrastructure and July 2004 functionstprocesses -

participation in jo in t

2. Determine format systematic LGED

3. Establishment o f enhanced M&E functions, 3. Review effectiveness

JLGI support.

need assessment - December 2004

2. Commence ICT assets March 2007

IDecembe; 2006

term IT strategic plan - June 2007

esources for LGED >IS and M I S

2. Undertake GIS and M I S

:omprehensive ICT, IT strategic assessment - June 2004 lanning, GIS and

enhaiced GIS & M I S - LGED needs versus September 2005 1;ts in ICT, GIS anc

. Enhanced Technical and non-technical training services

1. Develop updated 1. Implement training Integrate training Training strategy and programs for new LG planning, delivery anc guidelines - December development, road review with other

[development and Iplanned and 12003 /network planning and ILGED corporate Lelivered to match ingoing LGED ieeds, informed by .ppropriate needs lssessments and vl&E feedback

training processes 1 support LGED functions and priorities.

management, road management processes 2. Strengthen the maintenance, E&SM, dedicated resources o f Quality Assurance, Increase annual GOB LGED Training and HRM M&E, Project and contribution to overall units - March 2004 Asset Management LGED training budget

and FMS functions - progressively to 3. New Training Needs June 2005 onwards moderate Assessment [TNA] ‘development/ project process - June 2004 2. Identify options for budgets’ dependence.

enhancement o f 4. Implement new RDEC departmental HRM facilities and capabilities processes - March in LGED Training 2006 activities - June 2004

5. Progressively develop multi-year, TNA-based andor revise Training LGED Training procedures, manuals, Program - September methodologies and 2006 materials as required for ongoing and new Training 4. Establish 15% GOB needs - December 2004 contribution to local onwards Training outlays under

development projects -

3. Imp1,ement long-term,

resource LGED financial meet LGED and RTIP monitoring system for functions and outputs management and management system requirements - September F M S applications - with overall LGED planning (FMS). 2003. December 2005 planning and

management processei 2. Implement FMS in HQ 2. Develop strategy for and district units - extension o f F M S December 2004 toolsiresources to

LGED-supported LGI activities - March 2006

2. Improve LGED Implementation o f 1. Update LGED Integrate Audit Review intemal Audit intemal Audit Action Plan to framework for program, activities and functions, processes capability. upgrade LGED implementation o f G O B outputs w i th LGED and resources every 3

Intemal Audit audit process - March corporate monitoring years to ensure functions and 2004 and management effectiveness. capabilities. processes - June 2006

2. Establish a viable LGED-specific Audit cell - December 2004

IV. Quality Assurance and Technical Auditing Improved LGED Development o f an 1. Establish dedicated 1. Implement Action Comprehensive project effective LGED-wide Quality unit and resources Plan on QA and TA LGED-specific Qualit development, works Quality Assurance Management (QM) quality and asset (QA) strategy 2003 processes/resources in strategy and resources management. inclusive o f LGED - June 2005

at LGED HQ - December functions/

Technical Audit 2. Review al l FA). Quality-related processes 2. Evaluate QA and TA

\July 2007

[ 1. Develop a 111. Financial Management and Audit 1. Improve financial /Implement unified 11. Finalize the F M S to (Integrate FMS

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I /in LGED and develop lframework and

Improvement in LGED road network maintenance and management

viable Action Plan - September 2004 term LGED needs

capabilities for longer

Strengthening o f 1. Review existing road 1. Develop GIS based Ongoing evaluation LGED H Q and field maintenance (RM) RM Information Systemand enhancement o f Maintenance planning, procedures and (RMIS) -June 2005 Road Maintenance functions and resources - June 2004 management capabilities 2. Implement framework and system

2. Upgrade the existing improvements to RM in LGED. road condition survey management functions system, resources and and systems in H Q and annual outputs - March f ield units - December 2005 2005

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VI. Transpor t Safety Sustainable LGED Development o f 1. Prepare init ial RS 1. Implement pilot stageongoing LGED and LGI measures Road Safety strategy position paper - June 2003 action plan with LG refinement o f RS for improved road for jo in t LGED and stakeholders - March framework and safety LGI action. 2. Develop pi lot phase 2005 resources within

Strategy and Action Plan - June 2004 2. Review pi lot results policies.

relevant GOB

and develop viable long term strategy - June 2007

VII. Environmental & Social Mi t igat ionmanagement Comprehensive Upgrade LGED 1. Establish dedicated 1. Evaluate Progressively apply E&SM capabilities functions and to support LGED resources for: in H Q and field units, Matr ix and enhancement o f LGEI project planning, (i) preparation o f initially supported with Environmental Codes pol icy and functional preparation, environmental and consultancy expertise in o f Practice for future framework for E&SM execution, social assessments, both Environment and ‘mainstream’ monitoring and mitigation plans; and Social Mitigation & application across all Integrate funding for evaluation functions. (ii) management o f Resettlement - December LGED projects - E&SM establishment

Effective communityneeds in LGED within LGED’s core participation in al l projects; and 2. Implement E&SM skills 2. Implement essential ‘GOB revenue’ budge phases o f LGED (iii) monitoring and training to prepare HQ functional, process works. evaluation o f social units and field staff for and/or resources

E&SM cells and resources effectiveness o f E&SM M&E data to

E&SM impacts and 2003 December 2006 and staffing fully

and environmental their E&SM duties - improvements for Ongoing support to impacts, plans and October 2003 LGED-wide E&SM communities and LGI: outcomes in LGED activities. establishments - in E&SM matters

Establish LGED framework for 3. Transfer funding effective participation o f f ield units progressively affected LGIs. from development

budget to revenue budeet - June 2008

roles in HQ and in field for their involvement

December 2007

E&SM staff in HQ and

MAP SECTION