ASIAN DEVELOPMENT BANK RRP:PAK 32058

REPORT AND RECOMMENDATION

OF THE

PRESIDENT

TO THE

BOARD OF DIRECTORS

ON A

PROPOSED LOAN

TO THE

ISLAMIC REPUBLIC OF PAKISTAN

FOR THE

PUNJAB ROAD DEVELOPMENT SECTOR PROJECT

October 2002

CURRENCY EQUIVALENTS (as of 30 September 2002)

Currency Unit – Pakistan Rupee (PRe/s)

PRe1.00 = ¥2.08 or $0.0169 $1.00 = PRs59.00 ¥122.65 ¥1.00 = Pre0.48 $0.0081

ABBREVIATIONS

ADB – Asian Development Bank AP – Affected person BOT – build-operate-transfer CSC – construction supervision consultant CWD – Communication and Works Department EIRR – economic internal rate of return GDP – gross domestic product HDM – Highway Design and Maintenance Model IEE – initial environmental examination IDC – institutional development component IRI – international roughness index LIBOR – London interbank offered rate NGO – nongovernment organization NHA – National Highway Authority O&M – operation and maintenance PEC – Project Engineering Cell PERI – Punjab Economic Research Institute PSF – Private Sector Fund PSP – private sector participation PPG – Punjab Provincial Government RAMS – Road Asset Management System RMF – road maintenance fund RMU – road maintenance unit RP – resettlement plan RSESAC – Road Safety Environment and Social Assessment Cell SBE – small business enterprise TA – technical assistance TST – surface treatment UNDP – United Nations Development Programme VOC – Vehicle operating cost

NOTES

(i) The fiscal year (FY) of the Government of Pakistan ends on 30 June. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2002 ends on 30 June 2002.

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

This Report was prepared by a team consisting of H. Carlsson, Sr. ProjectSpecialist and Mission Leader; S. Widowati, Project Engineer; S. Handayani, SocialDevelopment Specialist; D. Utami, Environment Specialist; V. You, Senior Counsel;and A. Lee, Sr. Investment/Project Implementation Officer, PRM.

CONTENTS

Page

LOAN AND PROJECT SUMMARY i

MAPS v

I. THE PROPOSAL 1

II. RATIONALE: SECTOR PERFORMANCE, PROBLEMS, AND OPPORTUNITIES 1 A. Performance Indicators and Analysis 1 B. Analysis of Key Problems and Opportunities 2

III. THE PROPOSED PROJECT 5 A. Objectives 5 B. Components and Outputs 5 C. Special Features 7 D. Cost Estimates 10 E. Financing Plan 11 F. Implementation Arrangements 11

IV. PROJECT BENEFITS, IMPACTS, AND RISKS 15 A. Economic Benefits 15 B. Poverty Reduction Impact 15 C. Social Dimensions and Impacts 16 D. Environmental Impacts and Measures 17 E. Project Risks 18 V. ASSURANCES 18

A. Specific Assurances 18 B. Condition for Loan Effectiveness 20 C. Condition for Loan Disbursement 20

VI. RECOMMENDATION 20

APPENDIXES 1. Project Framework 21 2. Paved Road Network in Punjab 23 3. External Financing for the Road Sector 24 4. Policy Framework and Action Plan 25 5. Summary of Design Approach and Technical Standards 28 6. Organization of Communications and Works Department 31 7. Detailed Cost Estimates 32 8. Implementation Arrangements 33 9. Selection Criteria for Rural Access Roads 34 10. Implementation Schedule 35 11. Indicative Contract Packages 36 12. Objectives and Summary Scope for Consulting Services 37 for the Institutional Development Component 13. Economic Analysis 38 14. Summary Poverty Reduction and Social Strategy 44

15. Summary of Resettlement Plan 47 16. Summary of Resettlement Framework 52 17. Summary Initial Environmental Examination 55

SUPPLEMENTARY APPENDIXES (available upon request) A. List of Identified Rural Access Roads B. Form and Contents of Subproject Approval Submission for Rural Access Roads C. Outline Terms of Reference for Strengthening Capacity of Road Safety Environment and Social Assessment Cell D. Summary Terms of Reference for Management Consultants E. Summary Terms of Reference for Construction Supervision F. Summary Terms of Reference for Detailed Design and Construction Supervision for Rural Access Roads G. Poverty Impact Assessment

LOAN AND PROJECT SUMMARY Borrower Islamic Republic of Pakistan Classification Poverty intervention

Thematic: Economic growth Environment Assessment Category B. An initial environmental examination (IEE) was

undertaken, and the summary IEE is a core appendix. Project Description The Project will improve about 303 kilometers (km) of

provincial highways and about 1,100 km of rural access roads in the province of Punjab to allow better access for the rural poor to the markets and distribution centers, districts and provincial cities, to (i) support pro-poor growth, (ii) contribute to poverty reduction, (iii) develop an effective road network, and (iv) support reforms in the road sector at the provincial level. A sector approach will be followed for selecting rural access road subprojects forming part of the provincial road master plan.

Rationale Efficient road transport and improved access in particular is

essential for poverty reduction and economic development in Pakistan. Many parts of Punjab have constrained road access and many sections of the provincial road network are in poor condition and suffer from capacity constraints. Improvement of provincial highways and rural access roads is therefore essential to enhance transport and communication between the rural population and market and distribution centers, provide much needed access to education and health facilities, and contribute to poverty reduction and creation of employment opportunities. Given the wide geographic coverage of the road network and the range of policy and institutional issues, a sector wide approach to road development has been adopted to sequence interventions in individual provinces over several years. This is the second intervention adopting this approach, following the road project that was approved in 2001 and covered the province of Sindh. The Punjab Provincial Government (PPG) has taken a number of initiatives to address institutional constraints at its Communications and Works Department (CWD) and some key road sector policy issues, especially road maintenance and private sector involvement. While action has been taken, major challenges remain necessary. These include (i) deepening the institutional reform and organizational changes at CWD, (ii) strengthening institutional capacity in road maintenance, (iii) securing stable funding for road maintenance, (iv) improving road safety, and (v) improving axle load control.

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Objectives The objectives of the Project are to (i) reduce rural poverty and increase access for rural populations to markets and social services by improving and rehabilitating the province’s rural access road network; (ii) improve important provincial highways that facilitate trade and provide access to income and employment opportunities; (iii) support continued organizational reform and institutional strengthening of CWD, including devolution of power and functions to districts and expansion of electronic governance; (iv) preserve road infrastructure assets by strengthening the planning and budgeting capacity at CWD and improving the processes for road maintenance, including the creation of a provincial road maintenance funding mechanism; and (v) increase private sector participation in the delivery of road infrastructure and maintenance.

The Project includes three main components following a

sector approach, covering (i) institutional development of CWD and the districts, (ii) rehabilitation of provincial highways on the primary road network, and (iii) rehabilitation of rural access roads on the secondary road network. All components support the implementation of the policy framework including 5-year time-bound action plan, that has been adopted by PPG and agreed with Asian Development Bank (ADB).

The component for institutional development centers on

adoption of good road management practices and includes consulting services for critical support to CWD in these areas including studies and capacity building with training. The institutional component will assist PPG and CWD to prepare and implement the next steps in the reform program; and secure funds for road maintenance and introduce preventive road safety measures, notably information and awareness campaigns and enhanced drivers' training and education. The component includes support for (i) development of the existing road asset management system at CWD and its expansion to district administrations, (ii) provision of essential information technology, and (iii) introduction of rehabilitate-operate-transfer concession and maintenance contracts.

The provincial highways component will include (i)

rehabilitating seven provincial highways with a total length of 303 km, (ii) installing weigh bridges on the same provincial highways, (iii) improving road safety and axle-load control through appropriate design features and with road safety audit, (iv) installing a pilot accident reporting center, and (v) providing consulting services for construction supervision.

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The rural access roads component will include (i) rehabilitating 1,100 km of rural access roads, (ii) improving road safety through appropriate design features and with road safety design audit, and (iii) providing consulting services for design and construction supervision.

Cost Estimates The total cost of the Project is estimated at $222.1 million

equivalent. The foreign exchange cost is $105.6 million, and the local currency cost is $116.5 million equivalent.

($ million) Financing Plan Source Foreign Local Total Percent

Exchange Currency Cost ADB 105.6 44.4 150.0 68 PPG 0.0 72.1 72.1 32

Total 105.6 116.5 222.1 100 ADB = Asian Development Bank, PPG = Punjab Provincial Government

Loan Amount and Terms A loan of ¥18,396,800,000 ($150 million equivalent) from

ADB’s ordinary capital resources will be provided under ADB’s LIBOR-based lending facility. The loan will have a 15-year term including a grace period of 3 years, an interest rate determined in accordance with ADB’s LIBOR-based lending facility, a commitment charge of 0.75% per annum, a front-end fee of 1.0%, and such other terms and conditions set forth in the draft Loan and Project Agreements.

Allocation and Relending Terms

The proceeds of the loan will be provided to PPG on the same terms and conditions as those between ADB and the Borrower.

Period of Utilization Until 31 December 2008 Estimated Project Completion Date

30 June 2008

Implementation Arrangements

The Project will be implemented by the established Project Engineering Cell (PEC) within CWD placed under the chief engineer of projects and headed by a project director. The secretary of CWD will chair a steering group which will guide the implementation of the policy framework and action plan agreed with ADB.

Executing Agency Punjab CWD

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Procurement All procurement will be carried out in accordance with ADB's Guidelines for Procurement. All civil works contract packages for the seven selected provincial highways will be procured following international competitive bidding procedures and the civil works contract packages for rural access roads will follow local competitive bidding procedures acceptable to ADB. Advance action for procurement was approved on 20 June 2002.

Consulting Services The Project will require 176 person-months of international

and 7,100 person-months of domestic consulting services for (i) institutional development and capacity building, (ii) project management and coordination, (iii) construction supervision for provincial highways, and (iv) design and construction supervision for rural access roads. The consultants will be recruited in accordance with ADB’s Guidelines on the Use of Consultants, and other arrangements satisfactory to ADB on the selection and engagement of domestic consultants.

Project Benefits and Beneficiaries

The main quantifiable benefits of the Project consist of savings in vehicle operating costs and passenger time. The economic internal rates of return (EIRR) for the selected seven provincial highways are 14.0–31.2%. The EIRRs for the five core rural roads exceed 12% and were subject to analysis based on multiple social and economic criteria. The Project will contribute to poverty reduction by (i) enabling the poor to participate in economic opportunities and enhancing their access to social services, and (ii) creating additional economic opportunities for the poor by stimulating economic growth. Project beneficiaries will comprise (i) the poor who will have increased access to economic opportunities and human development services because of improved provincial highways and rural roads; (ii) the poor who live in the districts in Punjab and were previously unable to pursue employment and other economic opportunities due to long journey times; and (iii) companies, employees, consumers and transport operators in Punjab Province who directly and indirectly use goods and services transported on the roads.

Risks and Assumptions The risks to the Project are related to sustainability of reforms

in CWD and adequacy of road maintenance. These will be mitigated through (i) PPG’s strong commitment to reforms, (ii) reform action already being implemented by PPG, (iii) involvement of several stakeholders including the private sector, (iv) actions initiated by CWD to improve road maintenance and increase its funding, and (v) capacity building in maintenance under the Project. CWD has satisfactorily implemented past loans in the road sector.

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I. THE PROPOSAL

1. I submit for your approval the following report and recommendation on a proposed loan to the Islamic Republic of Pakistan for the Punjab Road Development Sector Project.

II. RATIONALE: SECTOR PERFORMANCE, PROBLEMS, AND OPPORTUNITIES

2. Appendix 1 provides the logical framework for the Project. A. Performance Indicators and Analysis

3. Transport is an important sector in Pakistan, contributing to about 6% of the total gross domestic product (GDP). Road transport is the dominant mode of transport, and carries 91% of all passenger traffic and 95% of all freight traffic. Road transport services are largely in the private sector1 and subject to strong competition. During the 1990s, the overall demand for road transport grew at 7–8% per year while the average GDP grew at 4–5%. The number of registered motor vehicles more than doubled in the 1990s, from around 1.8 million in 1990 to 4.1 million in 2000, and the road network doubled to 250,000 kilometers (km) during the same period. A large proportion of this increase in demand for road transport took place in Punjab, which is the most developed and populated province in Pakistan and has 72.5 million people2 or 54% of the total population. About 70% of Punjab population live in rural areas. 4. The provincial road network3 (Appendix 2) in Punjab grew from 26,100 km in 1990 to 41,000 km in 2000. The largest increase was the expansion of farm-to-markets roads, which almost doubled4 with support of the Asian Development Bank (ADB) and Japanese funding. The increased demand for road transport and higher traffic intensity combined with frequent overloading of trucks and inadequate maintenance have contributed to deterioration in several parts of the road network in Punjab.5 The condition of roads in Punjab is generally in fair to poor condition and deteriorating rapidly owing to insufficient maintenance, the higher economic activity and traffic volumes relative to other provinces, susceptibility to flood damage, and the increasing road damage by heavy vehicles. A survey of a representative sample of 17,000 km of provincial roads found approximately 96% of them in fair-to-poor condition, causing high vehicle operating cost. 5. Since 1995, spending on road maintenance in Punjab has increased; budget allocations for road maintenance6 increased by 66% or 13% yearly, from PRs900 million in FY1998 to PRs1500 billion in the current FY2002 while the allocations for road development (investments) under the annual development grant remained largely constant at around PRs1700 billion to PRs1900 billion per year. The recent expansion of the road network and the increase of the road asset base to some PRs240 billion, or $4 billion equivalent, indicate that further increases of budget allocations for maintenance are required to sustain the road network. According to

1 About 95% of all road freight transport is carried out by the private sector. 2 From 1981 to 1998, the population grew at an annual average rate of 2.55%. 3 The provincial road network comprises 1,550 km of national highways (administered by the National Highway

Authority), 6,179 km of provincial highways, 9,653 km of secondary roads, 20,862 km of access roads and 2,800 km of sugar cess roads.

4 In 1990 Punjab had 14,654 km of farm-to-market roads, which increased to 22,000 km in 2000. 5 The information comes from conditions surveys, which are carried out by the road maintenance unit at

Communication and Works Department. 6 Road maintenance spending level in Punjab: FY1996/97―PRs695 million; FY1997/98―PRs901million;

FY1998/99―PRs967 million; FY1999/2000―984 million; FY2000/01―PRs1,300 million; and FY2001/02―PRs1,500 million.

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estimates, as much as PRs8 billion maybe needed annually to maintain the roads in their present condition.7 This implies a shift from road network expansion to improvement and maintenance of existing roads. With respect to road safety, Pakistan's total fatalities to vehicle ratio is about 10 times higher than that in developed countries. The situation is especially severe in Punjab because of the high traffic volumes relative to other provinces, prevailing capacity constraints with a large number of narrow roads, and high population density. In 1997, 2,742 people were killed in road accidents and the total number of reported road accidents reached about 5,400 during 2001; the actual numbers are likely much higher. B. Analysis of Key Problems and Opportunities

6. Poverty. In Pakistan the incidence of poverty increased from 26.6% in FY1993 to 32.2% or about 42 million poor in FY1999. Poverty is largely a rural phenomenon: about 108 million people live in rural areas (77% of the total population of 130 million). Thus, more than 40% of the population live below the poverty line in the rural areas. About 55% of the poor in Pakistan live in Punjab. While there are differences in poverty levels among the three regions in Punjab,8 the incidence of poverty is highest in southern Punjab, both in the rural and urban areas; but there are also pockets of poverty in many districts in northern Punjab.9 ADB is actively engaged in policy dialogue with the Government on poverty reduction and related issues. The poverty focus is emphasized in the country strategy program updates (CSPU) of May 2002 and a poverty partnership agreement between the federal Government and ADB was signed during 2002. 7. Programs to Reduce Poverty. Poverty is being tackled through various externally funded and federal and provincial Government projects, such as the Social Action Program10 to improve basic social services. PPG is also prioritizing critical infrastructure development, including rehabilitation of roads, to reduce poverty. This follows from the international experience that road transport often plays an important role in the income generation and redistribution process' through direct effects such as providing basic access to education, health, and markets and improving access to social and economic opportunities, including labor and product markets, schools, and clinics. Road transport also helps to empower the poor, enabling their participation in community and wider decision making, and overcoming social, cultural, and physical barriers, including geographical isolation. Adequate road transport allows constituents to get to meeting places and town centers, facilitates the flow of information, and so facilitates political and social participation.11 8. Institutional Capacity and Constraints. The Communication and Works Department (CWD), which is responsible for roads and buildings, is structured and functions as a typical public works department, and has not changed significantly in character until recently. While planning and budgeting capacity at CWD are relatively weak, the use of modern road asset management and maintenance systems and procedures for maintenance are not fully institutionalized and integrated in the day-to-day operations at CWD, although a separate road maintenance unit was established in 1999 with support of ADB and the Nordic Development Fund. Moreover, as a consequence of the ongoing devolution program,12 which was formally

7 Based on analysis by consultants supporting the road maintenance unit at Communication and Works Department. 8 Punjab can be divided into three regions: northern, central and southern. 9 In FY1999, urban poverty was the highest in the country in southern Punjab (39%), and almost double than in

northern Punjab. 10 This program is supported by an aid consortium comprising ADB, Department for International Development (DFID)

of the United Kingdom, the European Union, the Netherlands, and the World Bank. 11 ADB. 2000. Assessing the Impact of Transport and Energy Infrastructure on Poverty Reduction. Manila. 12 Under the devolution program, local governments have been created at district level.

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initiated in August 2001, significant institutional changes are taking place. The changes during this decade sets the basis for the transforming the CWD and the 34 district administrations. As part of the devolution program, 34,479 km or 79% of the provincial road network has recently been transferred from PPG to the district administrations along with 11,000 staff, while CWD has retained 10,100 staff and 8,559 km of the provincial road network. While these major structural changes pose several challenges for PPG, they have also implications for the effectiveness and efficiency of CWD and the district administrations. 9. Restructuring of CWD. With support of ADB-financed technical assistance (TA),13 the CWD developed and prepared a restructuring program, which was approved on 7 May 2002 by PPG. The program, which forms part of a wider PPG reform program, entails a reorganizing of CWD. It emphasizes adoption of modern road management principles and systems, strengthening of financial management and accounting systems, and procurement with appropriate audit functions, all of which are in support of good governance. Although devolution has been initiated and a new organizational structure has recently been adopted for CWD, planning and budgeting need to be strengthened and separated from executive functions. Moreover, assigning of functions to districts has yet to be developed and implemented, and systems for planning, budgeting, road asset management and maintenance need to be developed, supported by capacity building and training of staff, at CWD, and the district level. In this process, consultation and participation of staff from CWD, the districts, and other stakeholders are essential for successful implementation of the restructuring program at CWD and the ongoing devolution program. 10. Road Maintenance. At PPG and CWD, recognition is increasing that greater emphasis and more spending on road maintenance is necessary to preserve the provincial road infrastructure asset base. As a first significant step toward establishing a road maintenance fund (RMF), PPG has formally approved and established a nonprofit company that will be responsible for channeling funds for maintenance on a selected number of provincial roads. However, more work is required to develop this initiative further so that funding is secured and stable, with due regard to accountability, transparency, and involvement of road users and other stakeholders. The key road maintenance issues in Punjab include (i) further developing the existing road asset management system and extend it to districts; (ii) building capacity at CWD and at the district level in modern road management principles and road maintenance; (iii) providing an adequate, stable, secure, and sustainable source of maintenance funds for the network;14 (iv) ensuring transparency and accountability in the road maintenance funding process; and (v) ensuring that road users contribute as much as possible to the cost of maintaining the provincial road network and that roads are priced to improve economic efficiency in road transport, promote equity between categories of road users, and ensure nondiscrimination in implementing road user charging instruments. 11. Axle-Load Control. Vehicle overloading is a major impediment to sustainable development of road in Pakistan. Surveys by road agencies indicate that 88% of all trucks exceed the per axle load limit of 8 tons; 43% exceed the new proposed federal load limit of 12 tons per axle. This causes roads to deteriorate rapidly, reducing their service life and significantly reducing the economic benefits that should have been realized during the designed life of the roads.15 13 ADB. 1999. Technical Assistance to Pakistan for Management Assistance to the Communication and Works

Department. Manila. 14 The provincial revenue sources include motor vehicle annual taxes, tolls on provincial roads, ownership transfer fees,

driver's license fees, and sugarcane cesses. 15 Calculations for local conditions show that a truck loaded at 12 tons per axle destroys roads five times as fast as a

truck loaded at 8 tons per axle.

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Moreover, the high recurrent costs of maintenance and the need for reconstruction, erodes the limited development resources of the country. As a result, there is a great need to strengthen enforcement of rules for loading of vehicles and accelerate the introduction of weigh stations for the provincial highways with the highest traffic volumes or most damage, complementing the nationwide axle load program pursued by the National Highway Authority (NHA).16 12. Road Safety. The fatality rate on Pakistan's road network remains among the highest in Asia.17 The causes are high speeds, lack of road safety measures, poor discipline and enforcement, and poor condition of vehicles. Road safety audits are not conducted routinely for all new and improved roads. The road safety problem is exacerbated by lack of awareness and poor knowledge of road safety matters among the general public and the road users. Efforts and coordination within PPG are not concerted, and responsibilities and accountability among the departments of PPG are unclear. Extensive efforts in education and training of drivers, coupled with awareness building, are required to address the high fatality rate. 13. Private Sector Participation (PSP). The opportunities for PSP in road infrastructure projects is greater in Punjab than elsewhere in Pakistan due to the relative higher traffic volumes. The role of the domestic private sector in road contracting and provision of engineering services is fairly well developed. PPG has taken several steps to increase PSP, including the establishment of a dedicated private sector cell in the new organization structure at CWD. Thus, CWD has prepared seven road rehabilitation projects on a build, operate, and transfer (BOT) basis. Two BOT contracts have been awarded during 2002. However, CWD has limited experience in contracting out maintenance and thus the share of PSP in CWD’s operations could increase greatly and network management and performance-based contracts for maintenance could be achieved. 14. Road Sector Assistance and Lessons Learned. While the World Bank has mainly focused on and provided assistance to the national road network administered by NHA at the federal level, ADB has targeted development of the provincial road networks in Pakistan. ADB has approved six loans (Appendix 3), totaling $597 million, for Pakistan’s road sector, four of which have been for umbrella projects that include components in each of the country’s four provinces.18 That arrangement resulted in fragmentation of efforts, coordination problems, and weakening of the dialogue on critical policy issues, such as road management and maintenance, and, as a result, project implementation suffered with delays and implementation problems. Hence, while maintaining a continuing relationship with the World Bank and the federal agencies for the national highway network, ADB is now focusing on sustainable development of the provincial road sector institutions and networks, allowing for greater ownership, accountability, and enhanced development impact. The emphasis is on road sector policy reform at the provincial and district levels, support for capacity building, removal of capacity bottlenecks, and physical rehabilitation of critical parts of the provincial road network. This is expected to have a positive impact on poverty reduction and pro-poor economic growth.

16 The nationwide axle-load program pursued by the NHA includes installing of 30 weighbridges at strategic locations

on the national highway network. 17 Pakistan had 18.69 fatalities per 10,000 vehicles in 1992. This was lower than India (25.27) and Bangladesh (85.58)

but higher than in Southeast Asia (5 to 15 fatalities per 10,000 vehicles) and far above the countries with the lowest number of fatalities, such as the United Kingdom (1.60) and Japan (1.74). Source: ADB. 1995. Regional Initiatives in Road Safety. Manila.

18 Three loans have been for rural (farm-to-market) roads projects, and one for a provincial highways project.

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III. THE PROPOSED PROJECT

A. Objectives

15. The objectives of the Project are to (i) reduce rural poverty and increase access for rural populations to markets and social services by improving and rehabilitating the province’s rural access road network; (ii) improve important provincial highways that facilitate trade and provide access to income and employment opportunities; (iii) support continued organizational reform and institutional strengthening of CWD, including devolution and expansion of electronic governance (e-governance)19; (iv) preserve road infrastructure assets by strengthening the planning and budgeting capacity at CWD, and improve processes for road maintenance, including creating a provincial road maintenance funding mechanism; and (v) increase private sector participation in road infrastructure and maintenance. B. Components and Outputs

16. The Project includes three main components (i) an institutional development component (IDC) with capacity building at the CWD and district levels, (ii) rehabilitation of about 303 km of provincial highways, and (iii) rehabilitation of about 1,100 km rural access roads. The rehabilitation of the rural access roads will follow a sector approach.20 All components support the implementation of the policy framework, including a 5-year time-bound action plan, which have been adopted by PPG and agreed with ADB. The policy framework covers (i) strengthening the core road management functions in CWD's organization structure, (ii) preparing to convert CWD to a highway authority or corporation, (iii) expanding the RAMS, (iv) strengthening road maintenance, (v) establishing an RMF, (vi) introducing measures to improve axle load control, (vii) improving road safety, (viii) expanding PSP, and (ix) building capacity in environment and social assessment and resettlement planning. Further details are given in Appendix 4.

1. Institutional Development Component

17. The IDC draws on the findings of TAs provided by ADB to PPG.21 The IDC centers on capacity building in institutional development and adoption of modern road management practices, specifically for planning, budgeting, road maintenance, and road safety. The IDC supports PPG to implement the recently approved restructuring program for CWD22 and the devolution program, that are currently being undertaken in Pakistan. It includes consulting services, with capacity building and training, and provision of essential equipment for CWD and the districts. 18. The consulting services will be required to assist CWD to (i) prepare for the next steps in organizational reform and separation of planning and budgeting from executive functions; (ii) strengthen the institutional capacity at CWD and district levels in planning, budgeting, and road maintenance and road safety functions, including training of CWD staff, district staff, and trainers; 19 Defined in this context as the use of provincial government agencies of information technologies to improve and

transform relations with citizens, businesses, and other arms of government. 20 A sector loan is deemed appropriate where ADB policy for such loan is met. For this loan,(i) PPG has a provincial

road sector investment plan to meet the priority development needs, (ii) PPG through the CWD has the institutional capacity to implement the Project, and (iii) PPG road sector policies can be improved.

21 ADB. 2001. Technical Assistance to Pakistan for Environmental Assessment. Manila; ADB. 2001. Technical Assistance to Pakistan for Institutional Reform and Road Maintenance Funding Study. Manila; ADB. 2001. Technical Assistance to Pakistan for Preliminary Engineering Update. Manila; ADB. 2001. Technical Assistance to Pakistan for Poverty Reduction Study. Manila; and ADB. 2001. Technical Assistance to Pakistan for Social Impact Analysis and Resettlement Planning. Manila.

22 PPG approved the restructuring program on 7 May 2002.

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(iii) introduce modern maintenance concepts, including contracting out, and prepare maintenance manuals; (iv) prepare a number of complete maintenance contracts, including specifications for bidding by CWD; (v) further develop the RAMS at CWD and expand it to district administrations; (vi) assist PPG and CWD to design and implement a mechanism for stable and secured funding of road maintenance, including establishing an RMF; (vii) provide capacity building with training to enhance the institutional capacity of CWD in road safety, social and environment assessments, and handling of social and environmental problems associated with road sector works; and (viii) conduct poverty monitoring of the project by a non-government organization (NGO), specifically covering monitoring of contractors’ compliance with applicable labor and other laws, and measures to prevent child abuse and promote equal treatment and facilities for both genders. 19. The IDC includes provision of information technology23 to enhance CWD’s delivery of services. These inputs are important for (i) strengthening planning, budgeting, and maintenance functions; and (ii) further developing of the RAMS. IDC also provides for equipment for (i) material research and testing, (ii) road and bridge design, (iii) traffic and condition surveys, and (iv) a pilot road safety subcomponent that includes establishing an accident reporting center, all of which are deemed important but currently not available with CWD.

2. Provincial Highways Component 20. With support of the Project, seven provincial highways will be rehabilitated. The road sections include (i) Pindi Bhattian–Chiniot, 36 km; (ii) Jhang–Shorkot, 37 km; (iii) Kabirwala–Shorkot (missing lengths), 7 km; (iv) Kabirwala–Mahni Sial (on N-5), 14 km; (v) Kamalpur–Chiniot–Sargodha, 73 km; (vi) Sargodha–Khushab, 44 km; and (vii) Jhang–Toba Tek Singh–Chichawatni, 91 km. 21. The provincial highways roads will be widened to 7.3 meters and provided with 2.5 meter wide shoulders on each sides. Wherever possible, efforts will be taken to confine the widening to one side to minimize disruption or adverse impacts and ease construction and traffic management. The roads will be designed for asphalt-concrete pavements. As existing alignments will be followed, resettlement and environmental impacts will be minimal. A summary of the design approach and technical standards is provided in Appendix 5. 22. The seven provincial highways were identified and assessed under several previous ADB TA-financed by loans, and form part of the provincial road master plan. Their feasibilities were further evaluated under several small-scale TAs (footnote 21), and subjected to detailed technical evaluation and assessment, economic viability analysis, and analysis of poverty, social, and environmental impacts. The selection process involved consultation with stakeholders, specifically officials from the newly established district administrations under the devolution program, NGOs, public representatives, road users, and poor people living along or near the roads. 23. The Project includes a subcomponent to ensure axle-load control on the seven provincial highways. It covers installation of 28 weigh stations with equipment and related civil works. The locations and technical specifications will be determined during the detailed design stage of the Project, during 2002. A dedicated information campaign and training will be pursued by CWD in close coordination with the other PPG departments and agencies responsible for enforcement and information, such as the police, institutions for education, drivers’ training centers, truck and bus owners and operators, road user associations, and the general public (para. 36). 23 Hardware and software.

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3. Rural Access Roads Component 24. Following a sector approach, the Project will rehabilitate about 25 rural access roads totaling 1,100 km and traversing 21 of the Punjab's 34 districts, many of which are poor and in less developed areas. Thus, 55% of the core rural roads are in poor and disadvantaged districts and the remaining rural roads will be selected among poor districts.24 25. The rural access roads will be widened to 6.1 meters and provided with 2 meter wide shoulder on each side. Wherever possible, efforts will be taken to confine the widening to one side to minimize disruption or adverse impacts and ease construction and traffic management. As existing alignments will be followed, resettlement and environmental impacts would be minimal. The roads will be designed for triple surface treatment. Where the existing height of the embankment is adequate, pavements will be strengthened with waterbound macadam as a base or subbase, overlaid with triple surface treatment. Further information on the design approach and technical standards for the rural access roads is included in Appendix 5. 26. Similar to the provincial highways, the rural access roads were identified and assessed under previous ADB loan-financed TA forming part of the provincial road master plan. Five of the 25 roads, totaling 88 km and representing a sample of typical roads from northern and southern Punjab, and poor districts, were selected as core roads for further evaluation under the same TAs. These roads include (i) Shorkot City–Shorkot Cantt, 12 km; (ii) Abdul Hakim–Mian Channu, 26 km; (iii) Bhawalnagar–Bhukkan, 20 km; (iv) Phalia–Khuthiala Sheikhan, 16 km; and (v) Sheikhupura–Hafizabad, 44 km. 27. The selected core rural access roads were subjected to multiple economic and social criteria analysis, including economic analysis, social analysis, assessment of poverty reduction impacts, and environmental examination. A number of stakeholders, specifically from the district administrations, poor people, road users living along or near the roads, and NGOs were involved in the selection process. Interviews and surveys with several stakeholder groups indicate strong support for rehabilitating the selected rural access roads. C. Special Features

1. Institutional Reform and E-Governance

28. The Project supports implementation of the restructuring program for CWD, including a new organizational structure (Appendix 6) that was approved by PPG. The program aims at transforming CWD into a more efficient and effective organization with increased service orientation and capacity for delivery of services. Further involvement of road users and expansion of e-governance are a high priority of PPG to improve transparency, service, involvement and participation of the public and the people living in Punjab, including the poor. The Project is therefore a cornerstone in the restructuring program of CWD. The expansion of e-governance is expected to strengthen CWD’s relationship and interaction with district-level staff responsible for district road management, maintenance, and related functions. 29. As an initial step in e-governance, CWD has developed software to computerize applications covering, inter alia, recruitment of human resources, and applications related to roads, buildings, and other areas. The applications are being installed and completion is expected in mid-2003. The Project supports (i) consultants under the IDC; (ii) further organization reform; and (iii) empowerment of district administrations responsible for road management and maintenance of district (access) roads by expanding road asset management and maintenance 24 Based on a district development ranking carried out by the 21 Punjab Economic Research Institute.

8

systems, and by providing better service and broader participation in road sector development by Punjab citizens. The expected outcomes are (i) better delivery of services to citizens, such as approval of applications; (ii) improved interactions with business and industry; (iii) citizen empowerment, particularly at district level in support of devolution; and (iv) more efficient management by PPG and CWD of the road sector. 30. In the early 1990s, work was carried out by PPG and legislation prepared and passed for converting CWD into a highway authority. All the functions for maintenance and development of buildings were to be transferred to another ministry of PPG. Although preparatory work was completed, the new highway authority was, however, never established. During the 1990s, the road network has expanded rapidly in Punjab, and the asset base increased three-fold. With the increased demand on CWD for efficiency, effectiveness, service orientation, and institutional capacity, the issue of establishing a separate highway authority or corporation should be reassessed. IDC will study how CWD can be converted to a highway authority or corporation.

2. Strengthening of Capacity in Environment and Social Assessment

31. CWD has recently established the Road Safety Environment and Social Assessment Cell (RSESAC), under the director of planning and development. RSESAC is expected to carry out many functions for road safety, environment, and social assessment for the road sector. However, RSESAC lacks staff, expertise, and capacity to carry out environment and social assessment. To ensure RSESAC achieves its intended role and function, a program with action to enhance the capacity of this unit will be developed and implemented under the Project. A consultant team on social development, gender, resettlement, and environment will assist CWD under the IDC to prepare and implement the institutional enhancement program.

3. Road Maintenance

32. Recognizing the great need to preserve the road asset base, PPG has taken some steps to address the issue of road maintenance. The Project builds these steps with several subcomponents and activities under the IDC. Capacity building and training form an essential part of the input provided under the Project. 33. Road Maintenance Fund. CWD is currently collecting tolls on a few provincial highways, and PPG has recently approved the establishment of a dedicated provincial RMF. As a first step, PPG has established a nonprofit company that will be responsible for channeling funds collected through road user charges to road maintenance. The Project supports further development of such an RMF and mechanism, to ensure stable and secure funding of road maintenance. Consulting services will be provided under the IDC to briefly review the international experience with RMF, specifically the developments and practices among road sector institutions in similar environments elsewhere.25 Following this review, appropriate legislation or regulation along with administrative arrangements will be prepared with due regard to accountability, transparency, and representation of road users and other stakeholders including the poor. 34. Road Asset Management System. Among modern road sector institutions, a RAMS is a basic and critical support system to ensure effective road management and maintenance. With ADB support under loan-financed TA, CWD created a road maintenance unit (RMU) and developed a RAMS during 1997 to 1998. The system was put into operation in 1999 and is used to analyze the provincial network on the basis of the existing road condition data, application of

25 The review will draw on the findings of ADB. 1999. Regional Technical Assistance for Road Funds Strategy. Manila.

9

deterioration parameters,26 and prioritization of links after evaluation of required investment and returns in savings in vehicle operating costs. The Project includes support through provision of hardware, software development, and input of consultants under the IDC, to develop and expand the RAMS at CWD and extend the RAMS to the district level. One notable feature of the development concept during this expansion of the RAMS is inclusion of e-governance functions (paras. 29-30). Training of staff at CWD and the districts in road asset management and maintenance will be provided by consultants under the Project. 35. Contracting Out of Road Maintenance. As a relative new development in CWD, complete contract documentation, including specifications, will be prepared for bidding out periodic and routine maintenance to the private sector. In addition, with the support of consultants under the Project, contracts with specifications will be developed for network management and performance-based maintenance and bid out to the private sector on a pilot basis. The objective is to increase the contracted out maintenance over time so that the share of contracted out maintenance to the private sector reaches at least 10% by 2004, 20% by 2005, and 40% by 2006.

4. Axle-Load Control

36. One project focus is on improving axe-load control in Punjab, which is a major problem. Apart from the installation of weighbridges and related civil works for the provincial highways, the Project supports enhanced preventive measures, specifically information and awareness campaigns (para. 23) and workshops. Separate programs and targeted information campaigns will be also implemented over the next 5 years following the increased commitment and measures developed by PPG and CWD. This will be complemented by a review of current practices for enforcement and recommendations of measures to strengthen enforcement of vehicle loading regulations in Punjab.

5. Road Safety

37. Improvement of road safety in Punjab is a key feature of the Project. Acknowledging the importance of improving road safety, PPG has recently established a road safety commission (RSC) headed by the honorable minister of communications and works at PPG. The RSC will have members drawn from CWD, the departments of health, and education, and the police. It will also have representatives from road user groups and NGOs. The RSC will support preparation and implementation of a comprehensive program of road safety, comprising a series of preventive and corrective measures to reduce the number of road accidents in Punjab. The Project will support input from consultants, for the work in the RSC and CWD, specifically in planning, formulating, designing, and implementing parts of the road safety program including enforcement. 38. In support of developing systems and building capacity in road safety, the Project includes the establishment of a pilot accident reporting center in Lahore, including training of staff, and a dedicated information and awareness campaign supporting this initiative.

6. Private Sector Participation

39. Realizing the importance of further private sector development in provision and O&M of road infrastructure, PPG has established a separate cell and legal desk for promoting and preparing road rehabilitation projects on a BOT basis. Two such contracts have been awarded 26 The deterioration parameters include roughness, cracking, potholes, rutting, deflection and edge break.

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during 2002. The Project supports capacity building of CWD and the dedicated cell, and development of BOT concepts and preparation of a variety of maintenance contracts (para. 35) and model concession contracts for provision of road infrastructure. D. Cost Estimates

40. The estimated cost of the Project is $222.1 million equivalent, including civil works, consulting services, land acquisition, resettlement, institutional support to CWD and the Project Maintenance Unit, taxes, customs, and contingencies. The cost comprises $105.6 million in foreign exchange (47.5% of the total) including $3.8 million for interest during construction, and $116.5 million equivalent (52.5%) in local currency costs. Table 1 summarizes the cost estimates (detailed cost estimates are in Appendix 7).

Table 1: Cost Estimates ($ million)

Item ForeignExchange

Local Currency

Total Cost

A. Base Costa

1. Institutional Development Component a. Consulting Services 0.4 0.9 1.3 b. Equipment 0.9 0.0 0.9 2. Road Improvement a. Land Acquisition and Resettlementb 0.0 2.8 2.8 b. Provincial Highways Improvement 40.8 27.2 68.0 c. Rural Access Roads Improvement 45.3 67.9 113.2 3. Axle Load Control 1.1 1.7 2.8 4. Road Safety―Pilot Accident Reporting Center 0.1 0.1 0.2 5. Consulting Services a. Project Management Consultant 1.2 0.4 1.6 b. Construction Supervision―Provincial Highways 1.6 1.9 3.5 c. Detailed Design and Construction Supervision―

Rural Access Roads 0.8 6.0 6.8

6. Incremental Costs 0.0 1.4 1.4 Subtotal (A) 92.2 110.3 202.5

B. Contingencies 1. Physicalc 4.4 3.3 7.7 2. Priced 3.7 2.9 6.6 Subtotal (B) 8.1 6.2 14.3

C. Front-End Fee 1.5 0.0 1.5

D. Interest During Constructione 3.8 0.0 3.8 Totalf 105.6 116.5 222.1

a In mid-2002 prices. b Including allocated fund of $1.0 million for subproject roads. c 10% of base cost, excluding rural access roads improvement component. d At 2.4% annually, excluding rural access roads improvement component. e Including commitment charge for ordinary capital resources loan. f Including taxes, customs and duties. Source: Consultants: Staff Estimate.

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E. Financing Plan

41. The Government has requested a loan of ¥18,396,800,00027 from ADB’s ordinary capital resources to help finance the Project. The loan will have a 15-year term including a grace period of 3 years, an interest rate determined in accordance with ADB’s LIBOR-based lending facility, a commitment charge of 0.75% per annum, a front-end fee of 1.0% (the fee will be capitalized in the loan), and such other terms and conditions set forth in the draft Loan and Project Agreements. The Government has provided ADB with (i) the reasons for its decision to borrow under ADB’s LIBOR-based lending facility on the basis of these terms and conditions, and (ii) an undertaking that these choices were its own independent decision and not made in reliance on any communication or advice from ADB. The proceeds of the loan will be made available by the Borrower to PPG and CWD on the same terms and conditions as those between ADB and the Borrower.

Table 2: Financing Plan ($ million)

SOURCE Foreign

Exchange Local

Currency Total Cost

Percent

ADB Government

Total

105.6 0.0 105.6

44.4 72.1

116.5

150.0

72.1

222.1

68.0 32.0

100.0

ADB = Asian Development Bank 42. The amount of local currency funding takes account of the current fiscal situation in Pakistan. The country is one of the poorest in the world and the federal Government and PPG have difficulty mobilizing sufficient funds from their own resources to meet all development commitments, including rehabilitation and upgrading critical physical and social infrastructure. Although the need to generate domestic resources to finance investments for sustaining economic growth is well recognized, the country and has not yet developed the resource base necessary to finance adequately the required level of investments without external assistance. Under the current circumstances, a large investment-savings gap will continue exerting pressure on development programs; thus external support is needed to meet some of the local currency costs of projects. In line with the ADB policy to help provide local currency cost financing particularly for projects that address priority poverty concerns in the economically less developed regions, about 30% of the loan will be for that purpose. F. Implementation Arrangements

1. Project Management

43. CWD will be the Executing Agency and the chief engineer projects, under the secretary of CWD, will assume overall responsibility for project implementation. The secretary of CWD will chair a steering group, comprising senior staff of PPG and CWD, which will guide the CWD restructuring program and the action plan forming part of the policy framework agreed with ADB. The Project Engineering Cell, (PEC) responsible for project management, has been established under CEP and headed by a project director. The project director will be supported by other staff 27 Equivalent to $150 million, at the exchange rate of ¥122.65 = $1 as of 30 September 2002.

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including two deputies who will be in charge of day-to-day administration of the provincial highways and rural access roads. While PEC has experience with ADB-financed projects and is generally capable, some institutional strengthening is required to ensure effective project implementation. Thus, PEC will be supported by project management consultants (PMCs) under the Project as well as project construction supervision consultants (CSCs). The PMCs support the PEC in project management, supervision of short-term consultants under the IDC, contract administration, and project preparatory work, while CSCs will be responsible for construction supervision in accordance with Fẻdẻration International des Ingenieurs-Conseils (FIDIC) conditions. The consultants will help build capacity at CWD and PEC to effectively manage and implement all project components effectively, specifically the civil works and resettlement plans, and prepare subprojects for the rural access roads component. Project preparation and implementation manuals will be prepared by the PMCs early in their work. The Project’s implementation arrangements are shown in Appendix 8.

2. Subproject Preparation for the Rural Access Roads Component

44. The core rural roads are prescreened rural access roads prepared in a form that is acceptable for ADB approval. Specifically, the core roads have been found technically feasible, economically justified, and socially and environmentally responsible. Most of the data needed for the selection and prioritization of these roads were prepared under small-scale TA and loan-financed TA. However, the full data and documentation required for approval of all subprojects and to the core roads have not yet been provided. These data will be prepared under the Project. While the subproject roads will be selected at the discretion of CWD, ADB approval will be required prior to tendering for their improvement. 45. CWD will only submit subprojects to ADB that meet the criteria for financing under the loan (Appendix 9). A list of screened candidate subprojects is available in Supplementary Appendix A. Each subproject should be (i) economically viable, (ii) screened for environmental impacts, (iii) selected based on prioritized district development ranking, (iv) selected and designed to avoid or minimize resettlement and a resettlement plan prepared where needed, (v) part of the provincial road master plan, (vi) in compliance with all applicable ADB guidelines, and (vii) as appropriate, have the commitment of the relevant district to allocate budget for O&M of the road. CWD will seek ADB approval by submitting a request for subproject approval that will include (i) a cover sheet; (ii) a basic data sheet; (iii) a location map; (iv) an initial environmental examination (IEE) in ADB format; (v) the PPG environment approval; and (vi) a resettlement plan), in a format acceptable to ADB (Supplementary Appendix B).

3. Implementation Schedule

46. The Project will be implemented over 6 years, including of preconstruction activities. A summary implementation schedule, based on a detailed schedule prepared by CWD and ADB, is provided in Appendix 10. The schedule assumes that the project loan will be approved in September 2002 and be effective by 1 January 2003. The seven provincial highways and the five core rural access roads will be ready for contract awards in June 2003. The subprojects for the noncore rural access roads will be implemented in four batches, each involving subproject preparation, bidding, and award of civil works and construction.

4. Procurement

47. Goods and related services and civil works will be procured in accordance with ADB’s Guidelines for Procurement. Civil works for the provincial highways component will be procured

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through four contract packages following international competitive bidding (ICB) among prequalified bidders. ICB will be followed for civil works contracts with an estimated value exceeding $3 million. Contracts estimated to cost in excess of $500,000 for goods and related services will be subject to ICB. Civil works for the rural access roads component will follow local competitive bidding procedures acceptable to ADB with separate prequalification. The rural access roads component will entail about 50 contracts for civil works, each with an estimated value of $1.0 million to $2.5 million. Axle-load equipment will be procured under international shopping procedures. International shopping procedures will be followed for supply contracts valued at less than $500,000 equivalent and direct purchase procedures will be followed for items valued at less than $100,000. CWD has agreed to include the relevant sections of ADB’s Anticorruption Policy28 in all bidding documents and contracts. On June 2002, ADB approved CWD’s request for advance action for procurement. PPG and CWD were advised that such approval does not commit ADB to finance the Project. Contract packages for the provincial highways and the core rural roads are in Appendix 11.

5. Consulting Services

48. The Project will require 176 person-months of international and 7,100 person-months of domestic consulting services for (i) institutional development and capacity building under the IDC, (ii) project management and coordination at CWD supporting PEC, (iii) construction supervision of the civil works for the provincial highways, and (iv) detailed design and construction supervision for the rural access roads. All consultants will be selected in accordance with ADB’s Guidelines on the Use of Consultants, and other arrangements satisfactory to ADB for the engagement of domestic consultants. The quality and cost-based selection procedure will be followed for selection of consulting firms. CWD has agreed to include the relevant sections of ADB’s Anticorruption Policy in all invitation bidding documents and contracts. 49. The objectives and the overall scope for the consulting services for institutional development and capacity building under the IDC have been agreed between ADB and CWD (Appendix 12). While the terms of reference have been agreed on for strengthening the RSESAC (Supplementary Appendix C), detailed terms of reference for other consulting services under the IDC will be developed progressively and managed by the PMCs during project implementation, and will be submitted to ADB for review and approval. The consulting services for further development and expansion of the existing RAMS will be provided by a domestic firm. Other consulting services under the IDC will be provided by individual consultants. The approximate staffing inputs will be about 16 person-months of international and 250 person-months of domestic consultants. The overall period of the services will be about 36 months. 50. The consulting services for project management, supervision of consultants under the IDC, coordination and support services to PEC (including preparation of subprojects in a format acceptable to ADB) will be provided by an international firm in association with a domestic firm, comprising international and domestic experts. The PEC staffing inputs will be about 60 person-months of international and 220 person-months of domestic consultants. The terms of reference are in Supplementary Appendix D. 51. Given the length of project roads and the geographic dispersion, CWD will engage two consulting firms for construction supervision, one for the provincial highways component and the other for the rural access roads component. Staffing inputs will be about 100 person-months of international and 6,650 person-months of domestic consultants. The overall period of the services will be about 60 months. Furnished office facilities, utilities, vehicles, and equipment required by 28 ADB. 1998. Anticorruption Policy. Available: http://www.adb.org/work/Policies/Anticorruption

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the CSCs will be provided under the Project. Field offices, material testing laboratories with utilities, and vehicles required by construction inspectors will be supplied through the civil works contracts for the provincial highways and rural access roads, as appropriate. The terms of reference are given in Supplementary Appendixes E and F. 6. Disbursement Arrangements 52. All disbursement procedures under the loan will follow ADB’s Loan Disbursement Handbook dated January 2001. Direct payment procedures will be followed for consulting services and the civil works under ICB. Imprest account procedures will be used for the local bidding for civil works and also for CWD’s incremental expenditures under the loan. The imprest account will be established in the National Bank of Pakistan. The initial advance will not exceed the estimated expenditures for six months or 10% of the loan amount, whichever is lower.

7. Accounts, Audit, and Reports

a. Accounts and Audit

53. CWD will maintain records and accounts adequate to identify the goods and services financed out of the proceeds of the loan proceeds, the financing sources received, the expenditures incurred, and use of local funds. The accounts will be set up in accordance with sound accounting principles. External accounting experts will be engaged to design project accounts to be used by CWD. Consolidated project accounts and related financial statements will be audited annually by private sector auditors acceptable to ADB. The audited reports and related financial statements in English will be submitted to ADB not later than 6 months after the end of the fiscal year to which they relate. The director-general of audits in Punjab will coordinate all account activities and ensure compliance with ADB’s audit and accounting requirements. ADB will review and follow up on these matters as necessary. 54. All procurement activities will be subject to independent performance audit to ensure transparency and objective and independent assessment of such activities. The performance audit will be conducted three times during project implementation in conjunction with the annual audit of project accounts and financial statements and will be carried out by the same external auditors. In addition, ADB will conduct project procurement audits during implementation as part of its regular reviews. PPG has agreed to combat corruption in the road sector, including the procurement of contracts, by preparing an anticorruption strategy for the road sector, in consultation with civil society and anticorruption agencies in Pakistan and ADB. The strategy will be prepared within 6 months of loan effectiveness. PPG will implement such strategy during the remaining Project implementation period.

b. Reports

55. Prior to beginning the civil works under the Project, PEC will provide ADB with monthly progress reports on the status of preconstruction activities. These reports will be due at the end of each month and sent in electronic form. When the PMCs and the CSCs have been appointed, they will prepare monthly progress and quarterly reports29 for CWD, PEC and ADB. The format of these reports will be discussed and agreed to before commencement of the consulting services. Once the works have been completed, CWD will arrange for the consultants to submit a project completion report within three months of the physical completion of the Project. 29 The quarterly report will also include data on project performance monitoring and benefit monitoring.

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8. Project Performance Monitoring and Evaluation

56. CWD, with the assistance of the PMCs and the CSCs, will carry out project performance and benefit monitoring and evaluation by compiling and analyzing appropriate traffic, socioeconomic, and other data for the project roads. This evaluation will follow ADB’s Project Performance Management Systems Handbook. For this purpose, a baseline survey for two typical provincial highways and three rural roads has been carried out during 2002. This will be followed by data collection and other surveys during implementation and immediately after these project roads have been completed and handed over. The findings and supporting data will be incorporated into the project completion report. Systems for recording data and statistics for such monitoring will be established as part of the project implementation arrangements with assistance of the PMCs and the CSCs. CWD, assisted by the consultants will evaluate the benefits of the Project in accordance with a schedule and terms of reference to be agreed upon with ADB.

9. Project Review

57. ADB will conduct regular reviews throughout project implementation. Midway through implementation of the Project (end 2005), ADB, PEC, and CWD will review the Project and its implementation status in detail. This review will cover the entire scope of the Project to determine whether any adjustments to its proposed procurement and management arrangements are needed. The review will also address any outstanding procurement problems, and financing and scheduling matters.

IV. PROJECT BENEFITS, IMPACTS, AND RISKS

A. Economic Benefits

58. The economic analysis of the provincial highways shows that the economic rates of return (EIRRs) are 14.0―31.2%. The EIRRs for the core rural access roads are 17.2―31.4 percent. The sensitivity analysis shows that the EIRRs for all evaluated roads are above 12% in the worst scenario and, thus, are quite robust. Appendix 13 provides a detailed economic analysis of the provincial highways and the core rural access roads. 59. The economic analysis was carried out using the highway design and maintenance (HDM) software. The model evaluates project investments considering capital and recurrent costs as well as the benefits derived from savings in road user costs for the “with project" and “without project” cases. In the economic analysis the project life was taken to be 20 years. Two improvement options were considered i.e., asphaltic concrete overlay and surface dressing for different permutations of traffic levels and road roughness conditions. The main quantifiable benefits of the project are (i) savings on vehicle operating costs (VOC) for existing traffic, and (ii) VOC savings for generated traffic because of improvements in road surface conditions. In addition there will also be nonquantifiable benefits arising from improved access to markets, which will boost agricultural economic activities; reduced agricultural input costs because of better transport facilities; and improved access to health, education, and other social sector facilities. B. Poverty Reduction Impact

60. Punjab is one of the largest and most populated provinces in Pakistan. About 60% of 72.5 million people live in Punjab Province. Around 70% of them live in rural areas, where the incidence of poverty is almost 40%, compared to about 35.2% of the rural population living below

16

the poverty line for Pakistan as a whole.30 The project area is mostly in lower and middle Punjab where the poverty ratio is 37.6%. The household survey results indicate that poverty levels among road users sampled are 28―50%. 61. The Project is classified as a poverty intervention and will directly reduce poverty by lowering the costs of transport for the poor traveling to farmers’ markets, labor markets, health and education centers, and other social and public services. According to the poverty impact assessment (Supplementary Appendix G), the Project will have a large effect on reducing poverty, directly benefiting approximately 2.6 million road users in 19 districts. Of these, an estimated 1 million poor people will be direct beneficiaries, including those who will benefit in the long run from the lower transport costs and induced economic and social development. The rural access road component is targeted at districts with a high proportion of poor people. The districts were selected based on the survey conducted by Punjab Economic Research Institute (PERI, 2001). The PERI district rankings will be used as a targeting criterion for subproject selection and are being used by the Government for determining allocation of development expenditures.31 62. The estimated poverty impact ratio is 27% (with a range from 24―36%) of the net economic benefits accruing to the poor for the Project as a whole. The net economic benefits accruing to the poor are estimated at PRs432 million over the life of the provincial highways subproject. The poverty impact ratio for rural roads is 32% (with a range from 26―43%). Extrapolating on the basis of core rural road subprojects, total net benefits PRs639 million, or PRs636,000 in national benefits, are expected per kilometer of investment, of which PRs208 million will accrue to the poor. This estimate includes only the net economic benefits from the Project narrowly defined, including only saving in transport costs. The Project is likely to spur the province's economic growth by a factor of 2 times the net economic benefits from lower transport costs. These benefits will become evident in higher agricultural product profit margins for poor farmers, as well as lower cost and more timely access to schools, medical clinics, and employment centers. Furthermore, the lower transport costs will increase mobility among the poor to find employment opportunities in other areas. 63. The Project will generate significant employment opportunities for skilled and unskilled labor during its implementation phase. Unskilled labor (males and females) will be employed directly in road construction and maintenance and indirectly by providing materials and services to the construction and maintenance activities. The Project will generate for unskilled labor employment opportunities at approximately 11,778 person-months for provincial highways and 26,600 person-months for rural roads. The Project will have positive externalities, which will improve the livelihood of the poor. Poverty reduction aspects of the Project will be enhanced by encouraging contractors to engage local works in project areas and providing first priority to the poor and disadvantaged in the actual construction of subprojects. C. Social Dimensions and Impacts

64. The social dimensions of the Project, including stakeholder participation and equity consideration (para. 70) are designed to facilitate more pro-poor and equitable distribution benefits. The Project will adopt a participatory approach for effective implementation of the

30 The latest data available on poverty in Punjab is from Pakistan Integrated Household Survey conducted during

1998―2000. This data was used by the Federal Bureau of Statistics to estimate the poverty for the provinces and the country as a whole using a poverty line of PRs682 per capita per month. The poverty line implies a calorie intake of 2,550 per adult equivalent as well as minimum nonfood expenditures.

31 The PERI district rankings are based on indicators relating to agriculture, industry, services, education, health, housing, sewerage and drainage, and roads and transport.

17

resettlement plan and an awareness campaign on road safety issues. The initial poverty and social assessment did not identify any communities belonging to indigenous people and ethnic minorities. Therefore, an indigenous people’s development plan is not needed. A summary of poverty reduction and social strategy is in Appendix 14. 65. As part of the institutional reform of CWD, the Project will strengthen the capacity of RSESAC to enable CWD to address poverty, environment, social safeguard, and social development issues in the transport sector. Gender awareness training will be provided to CWD staff at provincial and district levels. Gender disaggregated data will be collected through the baseline project performance management system survey as well as in the subsequent surveys to be conducted at midterm and completion of the project. 66. In compliance with Government and international core labor standards, the capacity of RSESAC will be strengthened to monitor the implementation of labor laws, in particular the issues of equal pay for equal work between women and men workers; prohibition of child labor; and provisions on health, sanitation, and appropriate working conditions, including accommodation, where appropriate, for construction workers at campsites during the construction period. A number of covenants related to this issue have been incorporated into the loan agreement. 67. The Project was developed with a view to avoid or minimize the need for land acquisition and involuntary resettlement. A full census was conducted of all affected structures on the right-of-way for the provincial highway component and five representative subprojects for the rural road component, including a 25% socioeconomic sample survey for resettlement planning. The Project will require acquisition of approximately 70 hectares of land for the 21 km Jhang bypass, which is needed to minimize resettlement in several congested intersections. The bypass will not be constructed on agricultural land and will not affect any households or existing settlement. About 320 farmers (225 landowners and 95 tenants) are likely to be affected as a consequence of this land acquisition. The widening and improvement will affect 76 structures (60 shops or small business enterprises, 12 common properties, and 4 houses). The estimated cost for land acquisition, compensation, implementation, and monitoring is approximately $1.8 million equivalent. A summary resettlement plan is presented in Appendix 15. The summary in local language and in English has been disclosed through CWD and ADB websites. The complete plan is publicly available at CWD and at ADB's Pakistan resident mission. The remaining subprojects (rural access roads) will be selected during the implementation phase. In compliance with the requirements of ADB’s policy on involuntary resettlement for preparing the sector loan, a resettlement framework (Appendix 16) will be applicable for all subprojects. Resettlement Plan for each remaining subproject will be prepared and approved by PPG. D. Environmental Impacts and Measures 68. In accordance with ADB's requirements on environmental assessment, the Project is classified as a " B" project, and therefore an IEE was prepared for the seven provincial highways and the five core rural access roads. The IEE (summary in Appendix 17) shows that, generally, the Project will not cause significant environmental problems and the mitigation measures for potential adverse impacts are manageable. However, the rural access road connecting Shorkot City and Shorkot cantonment passes through a protected forest plantation, which is a wildlife sanctuary. A rapid wildlife assessment study will be carried out to decide if this road section will be included in the Project. An IEE will also be prepared for the other noncore rural access roads, and, if they pass through an environmentally sensitive areas, a rapid wildlife assessment study will be carried out. The Project will comply with all ADB's environmental assessment requirements. The environmental mitigation measures during the construction phase will be

18

incorporated into the bidding documents for civil works, and CWD will be responsible for overall environmental management. E. Project Risks

69. A potential risk is the progress of the provincial reform in the road sector in Punjab. PPG has already approved and commenced implementation of a number of reforms, covering organizational restructuring, institutional development with capacity building and other measures. Clear objectives with measurable targets have been set by PPG for continued restructuring of CWD, improvement and financing of road maintenance, and reduction of over-loading trucks and roads accidents. Moreover, there is a strong sense of ownership of reform as demonstrated by PPG and CWD actions. This is evident from some of the policy initiatives, which are new and unique at the provincial level in Pakistan. The risks for failure or slowdown in reform are therefore considered low. 70. Another element of risk is the capability at CWD to effectively and speedily implement the Project and provide sufficient attention and funding for road maintenance. To address these risks, the consultants will help CWD and PEC prepare and implement the project components. Maintenance forms a central and integral part of the IDC and PPG has taken steps to increase funding for maintenance and introduce new maintenance concepts and procedures. PPG has also delegated the authority to CWD and PEC in many areas, which will help to speed up the approval process. Moreover, PEC staff have previous experience with ADB-financed projects, which will help to ensure timely implementation and understanding of ADB’s guidelines and procedures. Some PEC staff have been trained at ADB headquarters in Manila and in Islamabad, and more such training is also planned. The consultants will train project management unit staff and staff at the district level.

V. ASSURANCES

71. In addition to the standard assurances, the Government, PPG and CWD have given the following assurances, which have been incorporated in the legal documents: A. Specific Assurances

72. Environment. PPG will ensure the following:

(i) Road construction and maintenance will be carried out as required under the Government's environmental laws and regulations and ADB’s environmental guidelines including: (a) appropriate selection of quarry and borrow sites and their subsequent rehabilitation after use; (b) proper disposal of spoils and construction materials; (c) use of sound environmental design and construction techniques that ensure slope stability and drainage; and (d) minimization of construction impacts such as dust, diversion of stream flow and increased turbulence, and equipment noise.

(ii) When project roads pass through or near protected or sensitive areas (e.g., nature

reserves, parks, conservation areas, biodiversity reserves, or cultural and historical sites), a rapid assessment will be carried out prior to commencement of any construction works. PPG will ensure cooperation with the responsible authority in preparing and implementing protective measures, which may include area demarcation, fencing, checkpoints, speed bumps, wildlife passage zones, patrols

19

or other measures to preserve the area from encroachment or environmental degradation due to road improvement and increased access.

73. Resettlement. Punjab CWD will ensure that land acquisition and resettlement activities are implemented in accordance with all applicable laws and regulations, and ADB’s Policy on Involuntary Resettlement, as set out in the agreed resettlement plans (for core subprojects) and resettlement framework (Appendix 16) (for noncore subprojects), including: (i) land and rights-of-way will be acquired in a proper and timely manner; (ii) compensation will be provided at replacement cost and entitlements as stipulated in the resettlement plan, with ADB’s policy to prevail in the case of any difference with the Government's laws and regulations; (iii) counterpart funds and disbursements will be provided promptly to affected people, with agreed compensation being provided to them before any land is taken or civil works contracts awarded, and the Project will not use any emergency provisions that allow land to be taken in advance of payment; (iv) Punjab CWD has guaranteed to meet unforeseen obligations in excess of budget estimates; (v) CWD will implement adequate supervision, monitoring, and reporting; (vi) a competent independent agency will be in charge of external monitoring and evaluation; (vii) resettlement fund disbursements and expenditures will be audited annually; (viii) adequate information dissemination and consultation with affected people will be done; (ix) consultation and grievances will be documented; (x) resettlement plans will be updated if the scope of the Project is changed; and (xi) progress will be regularly reported to ADB.

74. Health Risks and Provisions. PPG will ensure that the civil works contracts include an information and education campaign on sexually transmitted diseases and HIV/AIDS for construction workers as part of the health and safety program at campsites during the construction period. CWD will ensure that the civil works contracts include legally mandated provisions on health, sanitation, and appropriate working conditions, including accommodation, for construction workers at campsites during the construction period. 75. Labor Laws. PPG will ensure that the civil works contractors comply with all applicable labor laws, and do not employ child labor in construction activities. CWD will set employment targets for women for road construction activities acceptable to ADB. The Government will provide equal opportunity for women for road construction activities, and will not allow contractors to differentiate wages between men and women for work of equal value. A specific clause to this effect will be included in bidding documents, and compliance will be strictly monitored during project implementation. 76. RSESAC. CWD will strengthen the capacity and increase the number of core staff in RSESAC with five experienced experts by June 2003 to deal with issues, including road safety, resettlement planning and management, poverty reduction monitoring, labor practices, gender analysis, and environment. 77. Road Safety. By December 2005, CWD will carry out a safety audit for the provincial highways and core rural roads and develop recommendations to be used for other roads in Punjab.

78. Operation and Maintenance. PPG and district governments under it, as appropriate, will ensure that the improved roads are maintained to design standards and in accordance with sound maintenance practices. PPG and the district governments, as appropriate, will ensure that new road maintenance procedures and annual maintenance plans are prepared for the improved roads, on the basis of modern, agreed-upon maintenance standards, traffic volumes, and

20

assessment of needs, and in accordance with the policy framework and action plan agreed with ADB (Appendix 4). 79. Road Sector Reform. PPG will continue restructuring of CWD and reforming the road sector in accordance with the policy framework and action plan (Appendix 4). PPG and CWD will meet the milestones in the action plan including (i) strengthening functions in the organizational structure in CWD; (ii) preparing conversion of CWD to a highway authority or corporation; (iii) further developing the RAMS; (iv) strengthening road maintenance; (v) establishing an RMF or similar mechanism; (vi) improving axle-load control; (vii) improving road safety and enforcement of traffic and safety regulations; (viii) enhancing private sector involvement; (ix) further involving road user associations in the pilot accident reporting center and the provincial road safety committee, resettlement grievance, advisory committee, and nonprofit company for RMFs; and (x) capacity building in environment and social assessment and resettlement planning. 80. Road Sector Strategy. Within 6 months of loan effectiveness, the Government will cause the PPG to prepare a strategy for the road sector to strengthen the application and enforcement of principles of transparency, fairness and propriety with stricter sanctions for violations of these principles, including procurement procedures, in consultation with civil society and ADB. The Government will cause the PPG to implement such strategy during the remaining project implementation period.

81. Selection of Subprojects under the Rural Access Roads Component. A subproject will be eligible for financing under the loan if it satisfies the criteria set forth in Appendix 9.

B. Condition for Loan Effectiveness

82. The Government and PPG will have approved the Planning Commission Proforma I (PC-I) for the Project. C. Condition for Loan Disbursement 83. No loan proceeds for financing a civil works contract for a provincial highway or rural road will be disbursed until the construction supervision consultants for the provincial highways or for the rural roads, as appropriate, have been engaged.

VI. RECOMMENDATION

84. I am satisfied that the proposed loan would comply with the Articles of Agreement of ADB and recommend that the Board approve the loan of ¥18,396,800,000 to the Islamic Republic of Pakistan for the Punjab Road Development Sector Project from ADB’s ordinary capital resources with interest to be determined in accordance with ADB’s LIBOR-based lending facility; a term of 15 years, including a grace period of 3 years; and such other terms and conditions as are substantially in accordance with those set forth in the draft Loan and Project Agreements presented to the Board. TADAO CHINO President 7 October 2002

PROJECT FRAMEWORK

Design Summary

Performance Indicators/Targets Monitoring Mechanisms

Assumptions and Risks

Goal 1. Promote economic growth by improving transport

infrastructure. 2. Reduce poverty by improving access to income and

employment opportunities and social services for the poor.

Increased gross domestic product (GDP)

Improved social indicators

Provincial economic data and statistics

Other factors needed for economic/social development are in place or promoted

Purposes 1. Strengthen provincial road institutions and build

capacity in road management. 2. Reduce transport costs. 3. Induce more efficient movement of goods and

passengers in the province of Punjab.

Introduced institutional changes and completed actions Reduced transport costs Improved year-round access to rural areas.

ADB review missions Progress reports Traffic statistics Provincial economic indicators Project performance monitoring Project completion report

Transport providers will be given flexibility to adjust fares/tariffs to road improvements Road improvements will be justified Economic growth will not be retarded

Components/Outputs 1. Reform program:

a. Organization changes at Communication and Works Department (CWD)

b. Convert CWD into a highway authority or corporation

c. Improve road management practices and redesign processes

d. Strengthen capacity at CWD and at districts in planning, budgeting, and road maintenance

e. Strengthen axle-load control f. Improve road safety g. Increase private sector involvement

2. Improve 303 km of provincial highways with

installation of weigh stations at strategic locations 3. Improve 1,020 km of rural access roads

As per Policy Framework and Action

Plan agreed with Asian Development Bank (ADB)

Approved in 2005 Documented changes at CWD by Dec 2006 Measures taken Jun 2003–Jun 2006 Actions completed by Jan 2005 Accidents reduced by 50% in 2007 Increase share by 40% in 2006 Completed Dec 2006 at appropriate quality and cost Completed Jun 2008 at appropriate quality and cost

Monthly progress reports ADB review missions Audited annual financial statements Project Completion reports Benefit monitoring and evaluation

Reform program implemented as scheduled

Timely award of civil works contracts Timely award of civil works contracts

Design Summary

Performance Indicators/Targets Monitoring Mechanisms

Assumptions and Risks

Activities 1. Institutional Reform Program

a. Strengthen planning and budget capacity with delegation of tasks and separation from executive functions

b. Expand road asset management system at CWD and extend it to districts

c. Develop new maintenance procedures, revise maintenance manuals, and prepare contracts

d. Analyze maintenance funding requirements and design mechanism for sustainable and secured funding for road asset preservation

e. Build capacity at Road Safety Environment and Social Assessment Cell (RSESAC) at CWD

f. Implement axle-load control program with awareness and information campaigns

g. Implement provincial road safety program h. Increase private sector share in road

infrastructure provision i. Increase private sector share in periodic and

routine road maintenance 2. Implementation of provincial highway component 3. Implementation of rural access roads component

Implemented 2003-2005 Implemented in 2003-2005 Implemented 2003-2005 Analysis completed in 2003. Implement recommendations in 2004. Appointment of five core staff by 2003 and conducted training Implemented 2003-2005 Completed actions 5 built-operate-transfer (BOT) road rehabilitation contracts completed in 2007 10% contracted out in 2004 20% contracted out in 2005 40% contracted out in 2006 Jun 2002 – Dec 2006 Jun 2002 – Jun 2008

Proposal by CWD Reviews

Proposal by CWD Progress reports Issued maintenance procedures and contracts Consultant report CWD proposal with action plan Progress reports and reviews Progress reports and reviews CWD confirmation Progress reports and reviews Progress reports and reviews

Continued commitment to reform and institutional changes Capacity to implement system Availability of reliable data Enforcement of rules Road safety measures are effective Appropriate sharing of risks Response by local contractors Advanced procurement action results in speedy preconstruction activities with timely award of contracts

Project Inputs 1. Project funding total $222.1million: ADB $150 million,

67.5 %; Punjab government $72.1 million, 32.5 %. 2. Consulting services:

a. Institutional development including capacity building at CWD

b. Design and construction supervision, preparation of subprojects, and benefit monitoring

3. Civil works contracts: a. Provincial highways b. Rural access roads

Loan approval in Oct 2002; and effectiveness in Jan 2003 Apr 2003–Apr 2006 Jun 2003–Jun 2008 Jun 2003–Dec 2006 Jun 2003–Jun 2008

Loan Agreement signed on time Annual financial statement ADB’s loan ledger Progress reports Subproject approval requests and approvals Periodic review missions

Timely and adequate availability of counterpart funds Advance action results in speedy recruitment consultants All subproject preparatory and implementation work done in a timely manner Response by international contractors Performance of local contractors

Appendix 2 23

(km)

RoadsAccess Secondary Highways

Attock 324.3 414.2 287.0 1,025.5 Bhawalnagar 928.8 240.3 269.6 1,438.7 Bhawalpur 705.3 319.9 156.7 1,181.9 Bhakkar 488.5 463.8 257.8 1,210.1 Chakwal 561.2 312.8 271.9 1,145.9 D.G.Khan 829.7 119.6 0.0 949.3 Faisalabad 1,130.8 286.8 205.3 1,622.9 Gujranwala 578.2 500.3 173.9 1,252.4 Gujrat 461.8 403.9 130.6 996.3 Hafizabad 105.2 268.6 99.9 473.7 Jhang 511.7 190.8 496.3 1,198.8 Jhelum 401.9 130.0 145.3 677.2 Kasur 877.9 267.8 79.2 1,224.9 Khanewal 884.4 83.8 106.0 1,074.3 Khushab 517.9 467.9 211.5 1,197.3 Lahore 398.9 237.2 32.2 668.3 Layyah 469.8 217.1 185.2 872.1 Lodhran 512.8 136.1 139.8 788.6 Mandi-Bahou-Din 240.5 269.0 122.0 631.5 Mianwali 460.2 153.5 217.3 831.0 Multan 511.5 187.1 121.5 820.1 Muzaffargarh 441.4 212.6 499.7 1,103.7 Narowal 221.4 285.2 131.5 638.2 Okara 1,276.3 205.9 114.6 1,596.7 Pak Pattan 412.3 162.9 136.6 711.8 Rahim Yar Khan 1,213.5 332.7 117.3 1,663.5 Rajanpur 439.1 121.9 0.0 561.0 Rawalpindi 941.1 432.7 268.0 1,641.8 Sahiwal 684.9 164.8 70.9 920.6 Sargodha 780.6 584.8 224.0 1,589.4 Sheikhupura 715.4 484.3 245.9 1,445.6 Sialkot 572.0 342.3 287.5 1,201.8 T.T.Singh 518.6 337.9 139.6 996.2 Vehari 744.1 315.0 234.7 1,293.8

Total 20,862.0 9,653.2 6,179.4 36,694.6

Source: Punjab Communication and Works Department

District Total

PAVED ROAD NETWORK IN PUNJAB

24 Appendix 3

EXTERNAL FINANCING FOR THE ROAD SECTOR

Project Funding YearSource

Farm to Market Roads Project ADB 38.00 1986Second Farm to Market Roads Project ADB 113.00 1990Flood Damage Restoration Project ADB 78.00 1993Sukkur Bridge Project ADB 45.00 1994Rural Access Roads Project ADB 123.00 1996Road Sector Development Program ADB 200.00 2001

Subtotal 597.00

Locomotive Manufacturing Factory JBIC 81.00 1984Railway Transportation Reinforcement (II) JBIC 123.00 1985Indus Highways - Phase I JBIC 71.00 1989Indus Highways - Phase II JBIC 173.00 1991Track Circuit at 94 Mainline Station JBIC 27.00 1992Rural Roads Construction JBIC 95.00 1993New Locomotive Production JBIC 50.00 1993Indus Highways - Phase IIB JBIC 152.00 1993Diesel Electric Locomotive Rehabilitation JBIC 50.00 1993Kohat Tunnel Construction (I) JBIC 45.00 1994Diesel Locomotive Production II JBIC 71.00 1996Diesel Electric Locomotive Rehabilitation JBIC 56.00 1996Survey Vessel Modernization JBIC 20.00 1996Kohat Tunnel Construction (II) JBIC 34.00 2001

Subtotal 1,048.00

First Highway Project WB 17.00 1964Third Highway Project WB 50.00 1980Fourth Highway Project WB 152.00 1987Transport Sector Project WB 184.00 1991Karachi Port Modernization WB 91.40 1992Trade and Transport Facilitation WB 3.00 2001

Subtotal 497.40

Total: 2,142.40 ADB = Asian Development Bank, JBIC = Japan Bank for International Cooperation, WB = World BankSource: Staff Estimates.

Amount($ million)

POLICY FRAMEWORK AND ACTION PLAN

Main Areas of Reform

Objective Key Issues and Actions Taken Next Step of Reform and Actions Compliance Monitoring

Institutional Reform with new Organization Structure

Transform the organizational structure of Communication and Works Department (CWD) so it becomes an effective and modern road management organization.

A new organization structure for CWD was approved on 7 May 2002. It contains several new features and functions, including planning, maintenance, private sector involvement, road safety, social and environment assessment, and information technology. CWD is in advanced stage of putting in place a quality management system–ISO 9002 - to be managed by a quality management directorate, which will strengthen accountability and performance.

Transform CWD so it becomes a performance-oriented entity. Delegate appropriate road management tasks, specifically maintenance, to district administrations in support of devolution. Separate planning and budgeting from execution and support functions and monitoring. Consider conversion of CWD to a separate highway authority or corporation following approval during 2004 by the Punjab Provincial Government (PPG) and commence implementation thereafter with support provided under the Institutional Development Component (IDC) of the Project.

Prior to the approval of the new institutional set up and organizational structure, CWD will submit the new proposal and the implementation plan to the Asian Develoment Bank (ADB) for comments.

Planning and Budgeting Capacity

Ensure that CWD has systems, procedures, and capacity in place for preparing and monitoring operational plans (short-term, medium- term, and master plans) and budgets based on goals, including economic efficiency.

A road maintenance unit (RMU) was established in 1998 with support of ADB technical assistance (TA). The RMU is, however, not fully integrated in the current operations at CWD and at districts. Therefore, the RMU needs to be empowered at CWD as the focal point for maintenance planning and monitoring. The RMU also needs institutional strengthening, capacity building, and training including augmentation of core staff with appropriate background and experience.

The current road asset management system (RAMS) at RMU will be expanded and extended to districts. Procedures for planning, budgeting, control, and follow-up will be enhanced and linked to the districts. Planning capacity will be developed to adequately manage safety, social issues, and environmental assessment and impacts. All preparatory work is to be finished by the end of 2004 and new systems implemented from 2005 and on.

Consultant’s report. CWD will submit to ADB the proposal and the implementation plan for the RAMS, along with planning and budgeting systems.

Modern Maintenance Practices

Ensure that CWD has systems, procedures, and capacity to carry out effective and efficient road and bridge maintenance management.

Maintenance is at present rules-driven, labor-based, and performed by force account. Condition surveys are not institutionalized at CWD or district level. First steps toward semi-mechanized maintenance have been taken in a few pilot maintenance projects.

CWD, with the support of the consultants under the IDC, will develop systems, new maintenance procedures and manuals; and increased institutional capacity for developing, procuring; and supervising contracts for routine and periodic maintenance based on competitive tendering. The new maintenance contracts will include (i) standard or normal contracting out, (ii) network management, and (iiii) performance-based maintenance contracts.

Consultant’s report CWD will submit the implementation plan with brief description of the new system and procedures

Main Areas of Reform

Objective Key Issues and Actions Taken Next Step of Reform and Actions Compliance Monitoring

Financing of Road Maintenance

Ensure that funding of maintenance for long-term preservation of the provincial road network is adequate and sustained.

Funding from the Government Consolidated Revenue Fund for road maintenance is inadequate although it has increased from PRs1,000 million in FY2001 to PRs1,500 million in FY2002. CWD is establishing a separate company to finance maintenance of roads that can be tolled. This is a partial solution, and there is a need to ensure that funding of all road maintenance is adequate and sustained.

CWD will, with support of consultants under the IDC, analyze maintenance funding requirements and available options for secured and sustained funding for road asset preservation. PPG will approve a new scheme and funding mechanism in 2004 based on studies performed under the IDC. The preferred funding mechanism will be implemented from 2005.

Consultant’s report CWD will submit the new proposal and implementation plan to ADB

Axel Load Control

Reduce over-loading of vehicles, especially trucks, and prevent early deterioration of the provincial road network.

Overloading of trucks is a major and common problem in Pakistan. The National Highway Authority is implementing a program for axle load control for the national highway network comprising 30 weigh stations. CWD has currently three weigh stations in operation on a pilot basis.

As part of the Project, about 28 weigh stations will be installed for the seven provincial highways at strategic locations. Capacity and enforcement of rules will be strengthened through training of CWD and other staff, including the provincial police. Awareness campaigns will be carried out by CWD. CWD will prepare an action plan for improved enforcement of regulation, which will also link with the devolution and police reforms supported under ADB assistance.

CWD will submit an action plan for improved enforcement of regulations Project progress reports Physical inspection of installed weigh stations

Road Safety To improve road safety and reduce the total number of road accidents in the province of Punjab.

The Road Safety, Environment and Social Assessment Cell (RSESAC), was created in early 2002 at CWD. The Government has approved an ambitious target that the total number of road accidents will be reduced by 50% by 2007. There is a lack of coordination and capacity in PGP, specifically at CWD, education and health departments, and the police force, for preventive and corrective road safety measures including information campaigns, training, and education. No accident reporting centers have been established in Punjab.

PPG has established a road safety committee headed the honorable minister in-charge of CWD, comprising members from the education, health, and policy departments of PPG. The objective is to develop, prepare, and implement a comprehensive road safety program in Punjab, comprising, inter alia, awareness campaigns, strengthening of education in schools, drivers’ training, and enforcement of traffic rules. The IDC will support the committee's work and CWD will by 2003 institutionalize road safety audits for all road projects. One pilot accident reporting center will be established by 2003 in Lahore

Notification of establishment of road safety Committee. Status reports from the committee and task force. Status reports on action taken to improve enforcement of road safety and traffic regulations Physical inspection of accident reporting center

Main Areas of Reform

Objective Key Issues and Actions Taken Next Step of Reform and Actions Compliance Monitoring

Capacity Building in Environment and Social Assessment

To strengthen CWD’s institutional capacity in environment and social assessment of road projects.

RSESAC was created in early 2002 at CWD. RSESAC lacks, however, capacity and experienced staff. There is a great need to strengthen monitoring of civil works contracts compliance with labor laws, specifically gender inequality and child labor.

RSESAC will be strengthened through capacity building and training along, and with more staff, to be able to carry out environment and social assessments of road projects. Capacity building will be provided under the IDC.

Project progress reporting Project review missions

Private Sector Involvement

To increase private sector participation wherever feasible in CWD’s road maintenance operations and road rehabilitation program.

The Private Sector Participation Investment Cell was created at CWD in early 2002 supported by establishment of a legal desk. Prospects have been prepared for seven build-operate-transfer (BOT) projects for rehabilitation. Two road concession rehabilitation road projects have been awarded to the private sector by CWD. All rehabilitation works are carried out by the private sector.

CWD will increase contracting out of maintenance so that 10% of routine and periodic maintenance will be undertaken by the private sector in 2004, 20% in 2005, and 40% in 2006 (excluding BOT road rehabilitation projects). CWD will competitively award and substantially complete two BOT projects for rehabilitation of provincial highways by 2005 and five by 2007.

Yearly status report with completed actions to be submitted to ADB.

Road User Associations

To increase involvement and participation of the public and road users in road operations and development

A few road user associations are established in Pakistan and involved in various areas, such as education and road safety awareness campaigns. PPG has taken some steps to involve road user associations and nongovernment organizations in the road sector, specifically as members in (i) the road safety committee, (ii) the resettlement grievance and advisory committee, and (iii) a nonprofit company responsible for channeling and oversight of road maintenance funds.

PPG and CWD will encourage the establishment of road user associations and similar organizations for broader participation and more involvement by the public and road users in road operations and development in Punjab.

Project progress reporting

28 Appendix 5

SUMMARY OF DESIGN APPROACH AND TECHNICAL STANDARDS

A. General

1. The investment component includes improvements of about 302 kilometers (km) provincial highways (Pindi Bhattian–Chiniot–Kamalpur, 71.3 km; Jhang–Shorkot, 36.5 km; Kabirwala–Shorkot, 7 km; Kabirwala–Mahni Sial, 13.8 km; Chiniot–Sargodha–Khushab, 82.4 km; and Jhang–T.T.Singh–Chichawatni, 91 km), and improvements of about 1,020 km of rural access roads, with core roads of about 94.4 km (Shorkot City–Shorkot Cantt, 18 km; Abdul Hakeem–Mian Chunnu, 25.8 km; Bahawalnagar–Bhukkan, 20.6 km; Phallia–Khuthiala Sheikhan, 16.8 km; and Sheikhupura–Hafizabad, 13.2 km) that are substantially deteriorated and require major rehabilitation and/or reconstruction. B. Design Standards for Provincial Highways

2. The design criteria adopted is in accordance with the recommendations of the Punjab Communication and Works Department and the following design standards and policies:

(i) American Association of State Highway and Transportation Officials (AASHTO):

A Policy on Geometric Design of Highways and Streets (2001) for Geometric Design;

(ii) Highway Capacity Manual, by the United States Transportation Research Board (2000) for the analysis of roadway capacity;

(iii) AASHTO: Guide for Design of Pavement Structures (1993) and TRL Overseas Road Note 31 (1993) for the design of pavements; and

(iv) AASHTO: Pakistan Highway Code of Practice for Bridges, ASTM, ACI Code, and UBC for the analysis and design of structures.

C. General Design Considerations

3. Pavements have been designed for the new, realigned, and reconstructed sections of the road that have failed or are under severe distress and need to be raised due to hydraulic requirements. Provincial road improvements are designed for asphalt concrete pavements. Rural access roads are designed for triple surface treatment (TST). The roads are designed for 10 years service life. In urban areas, rigid pavement will be applied. 4. For provincial roads, where the height of embankment is adequate and hydraulically sound, existing pavement will be strengthened with base or subbase layers, including a leveling layer as per profile requirements. Waterbound macadam/aggregate base will be overlaid with designed thickness of asphalt concrete layers. Roads with low embankment height or water logging, warranting raising of embankment, new pavement structure will be constructed with granular subbase, waterbound macadam/aggregate base, and asphalt concrete of designed thickness after raising the embankment to profile requirement. 5. For rural access roads, where the height of embankment is adequate, existing pavement will be strengthened with waterbound macadam base or granular subbase, overlaid with TST. Roads with low embankment height or water logging, warranting raising of embankment, new pavement structure will be constructed with granular subbase, waterbound macadam as base, overlaid with TST.

Appendix 5 29

6. For design of drainage structures, hydraulic and drainage design requirements based on the data collected in the field and relevant data from the irrrigation department and meteorological offices will be utilized. Bridges will be improved or widened as necessary. Some culverts need to be upgraded to bridges, some pipe culverts will be replaced with slab culverts. Bridges are designed for 100 years and culverts for 25 years. Surface and storm water drainage are designed for 10 years. Special provision will be made for road drainage in urban areas. 7. Available data and reports on soils and materials are used and fresh surveys are carried out as necessary, to investigate the existing soils and pavements. Material investigations are done for potential borrow areas in the vicinity of the roads and the locally available coarse and fine aggregates for use in subbase, base course, asphalt, and concrete works. Soil and pavement samples collected during roadway investigations are tested in laboratories. 8. The design is based on minimal environmental impact. However, where necessary, adequate mitigation measures are incorporated in the bid documents to minimize environmental impacts during construction. D. Design Considerations for Provincial Roads 9. The major improvements on provincial roads involve

(i) widening the existing carriageways as required to 7.3 meters (m) (efforts will be made to confine widening to one side in areas with trees along the road and for ease of construction and traffic management);

(ii) providing 2.5 m wide shoulders on both sides;

(iii) providing bus bays at major junctions to accommodate bus loading/unloading

activities; (iv) providing parking areas in urban areas to accommodate parking vehicles;

(v) raising the embankment on low lying areas to provide a minimum subgrade level

1.0 m above the natural ground level or to meet hydraulic requirements;

(vi) improving horizontal and vertical alignments, particularly upgrading substandard curves, to allow a design speed of 90 km/hr in urban areas and 50 km/hr in rural areas;

(vii) providing bypass at Jhang on Jhang–Shorkot road to minimize resettlement

problems;

(viii) providing drainage and hydraulic designs for the urban areas along the project road and proposing erosion and protection works for embankment heights greater than 3.0 m;

(ix) improving road junctions and providing road furniture including traffic signs,

pavement markings, guard rails, right-of-way markers, kilometer posts, etc., taking into account safety considerations; and

30 Appendix 5

(x) providing tree plantation along the roads where appropriate. E. Design Considerations for Rural Access Roads

10. The major improvements on rural access roads involve

(i) widening the existing carriageways to 6.1 m; efforts will be made to confine widening to one side in areas with trees along the road and for ease of construction and traffic management;

(ii) providing 2.0 m wide shoulders on both sides; the inside 1.0 m of the shoulder

will be treated or with earthen shoulder;

(iii) raising the embankment on low lying areas to provide a minimum subgrade level 1.0 m above natural ground level or to meet hydraulic requirements;

(iv) improving horizontal and vertical alignment to allow a design speed of 70 km/hr

in urban areas and 40 km/hr in rural areas; the existing alignment will be followed in most part to minimize resettlement;

(v) providing drainage and hydraulic designs for urban areas along the project roads

and proposing erosion and protection works for embankment heights greater than 3.0 m;

(vi) providing road furniture including traffic signs, kilometer posts, etc.; and (vii) providing tree plantation along the roads where appropriate.

ORGANIZATION OF COMMUNICATIONS AND WORKS DEPARTMENT

Director Director Director Director Research and Director I: Lahore Director I Development Planning and Design Private Investments Planning and Design Material Testing and Monitoring

Director - Bridges Director Dedicated PBC - I Lahore Director Design and Director II: Lahore Director II Development Road Maintenance & Evaluation and Monitoring

PHC - Lahore Road Safety, Environment PBC - II Lahore Director Information Director: Gujarawala Computer Sectionand Social Assessment Cell Technology

PHC - Rawalpindi PBC - 1 Rawalpindi Director Quality Director: Rawalpindi Administrative SectionDirector Foreign Management System

PHC Faisalabad Funded Project I PBC Faisalabad Director: Faisalabad Drawing Branch

PHC Multan Director Foreign PBC Multan Director: MultanFunded Project II

PBC = Provincial Building Circle; PHC = Provincial Highway Circle.

Punjab

Chief EngineerProjects

Development

Chief Engineer

Communications and WorksSecretary

Department

Additional Secretary

Punjab

Chief EngineerDistrict Support

& Monitoring

ChiefArchitectureResearch and

Chief Engineer

AdministrationAdditional Secretary

Technical

HighwayChief Engineer

Works

Appendix 6 31

32 Appendix 7

% TotalFX Base

FX Local Total (%) CostsA. Institutional Development Component (IDC)

1. Consulting Servicesa. Institutional Development and Capacity Building 0.40 0.70 1.10 36.36 0.54b. Poverty Reduction Monitoring Program 0.20 0.20 0.00 0.10

2. Equipment 0.90 0.00 0.90 100.00 0.44Subtotal A 1.30 0.90 2.20 59.09 1.09

B. Project Management 1. Consulting Services 1.20 0.40 1.60 75.00 0.79

Subtotal B 1.20 0.40 1.60 75.00 0.79C. Provincial Roads Improvement

1. Land acquisition and resettlement 0.00 1.80 1.80 0.00 0.892. Civil Works

a. Pindi - Bhattian Chiniot - Kamalpur 10.00 6.70 16.70 59.88 8.25b. Jhang - Shorkot - Kabirwala - Mahni Sial 7.60 5.00 12.60 60.32 6.22c. Chiniot - Sargodha - Khushab 11.50 7.60 19.10 60.21 9.43d. Jhang - TT Singh - Chichawatni 11.80 7.80 19.60 60.20 9.68

3. Axle Load Control Subcomponent 1.10 1.70 2.80 39.29 1.384. Pilot Road Safety Subcomponent 0.10 0.10 0.20 50.00 0.105. Consulting Services for Construction Supervision 1.60 1.90 3.50 45.71 1.736. Incremental Administration Costs C 0.00 0.50 0.50 0.00 0.25

Subtotal C 43.70 33.10 76.80 56.90 37.93D. Rural Access Roads Improvement

1. Land acquisition and resettlement 0.00 1.00 1.00 0.00 0.492. Civil Works 45.20 68.00 ##### 39.93 55.903. Consulting Services for Design and Supervision 0.80 6.00 6.80 11.76 3.364. Incremental Administration Costs D 0.00 0.90 0.90 0.00 0.44

Subtotal D 46.00 75.90 ##### 37.74 60.20

Total Baseline Costs 92.20 110.30 ##### 45.53 100.00Physical Contingencies 4.40 3.30 7.68 57.29 3.79Price Contingencies 3.70 2.90 6.60 56.06 3.26Total Baseline Costs Plus Contingencies ##### 116.50 ##### 46.27 107.05Interest During Construction 5.30 0.00 5.30 100.00 2.62Total Project Cost 105.6 116.5 222.1 47.6 109.7

FX = foreign exchangeSource: TA 3677-PAK:Staff estimates

($ million)

DETAILED COST ESTIMATES Project Component Costs

IMPLEMENTATION ARRANGEMENTS

Steering Group- Reform ProgramChairman: Secretary CWDMembers: Secretary, P&DChief Engineer ProjectsAddl Secretary FinanceAddl Secretary Local GovernmentAddl Secretary Regulation (O&M)

Executive Engineer Executive Engineer Executive Engineer Executive Engineer

Assistant Engineer Assistant Engineer Assistant Engineer Assistant Engineer

Supervision Consultants SupervisionConsultants Consultant: Design and Consultant: Design andSupervision Supervision

District Engineer District Engineer

CWD = Communication and Works Department; O&M = operation and maintenance; P&D = planning and development

SecretaryCWD

ProvincialHighways

ProvincialHighways

Chief EngineerProjects

Project ManagementConsultants

Zone 1

Rural AccessRoadsZone 2

Rural AccessRoads

Contract 1-2 Contract 3-4

Project DirectorProject Engineering

Cell

Appendix 8 33

34 Appendix 9

SELECTION CRITERIA FOR RURAL ACCESS ROADS 1. Length and Cost. Each proposed subproject road will have a minimum length of 5 kilometers , and a maximum estimated cost of $2.5 million. 2. Environmental Considerations. Each proposed subproject road will have been screened for its environmental impacts in compliance with the requirements of the Government and the Asian Development Bank (ADB),1 and will not cause any major adverse impact on the environment. No proposed subproject road can be classified as a category A project under the ADB’s environmental guidelines, and ADB will have received and reviewed the initial environmental examination, if any, prepared for a proposed road. 3. Poverty Targeting. The proposed subproject road will have been prioritized based on the district development ranking used by the Government for determining allocation of its development expenditures. 4. Resettlement. The proposed subproject road will not involve any involuntary resettlement or land acquisition, or will have minimal impact on any affected persons of land acquisition or their livelihood. If a subproject involves land acquisition or involuntary resettlement, a resettlement plan acceptable to ADB will have been prepared in accordance with the resettlement framework agreed between the Government and ADB. 5. Economic Feasibility. The proposed subproject road has an economic internal rate of return of at least 12%. 6. Provincial Road Master Plan. The proposed subproject road will be included in the provincial road master plan. 7. District Commitment. The relevant district of the Punjab Provincial Government will have confirmed, in a manner acceptable to ADB, its commitment to the proposed subproject road, including but not limited to the provision of budgetary allocations for rehabilitation and operation and maintenance for the road.

1 ADB. 1998. Environmental Assessment Requirements of the Asian Development Bank. Manila.

Project Component 2003 2004 2005

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Consulting ServicesConsultant SelectionConsultant Services

Institutional Development ConsultantsProject Management Consultant

Subproject PreparationProject Management

Provincial Roads ConsultantRural Access Roads Consultant

Detailed DesignConstruction Supervision

Provincial RoadsContract ProcurementContract Works

Rural Access RoadsCore Roads (Phase I)

Contract ProcurementContract Works

Phase II Civil WorksContract ProcurementContract Works

Phase III Civil WorksContract ProcurementContract Works

Phase Iv Civil WorksContract ProcurementContract Works

IMPLEMENTATION SCHEDULE

2007 20082006

36 Appendix 11

INDICATIVE CONTRACT PACKAGES Provincial Roads and Core Rural Access Roads

Package No.

Road Section

Procurement

Mode

Length

(km)

Approximate

Value ($ million)

Completion

(months)

P–1a Pindi Bhattian–Chiniot–Kamalpur ICB 71.3 17.3 36

P–2a Jhang–Shorkot Shorkot–Kabirwala Kabirwala–Mahni–Sial

ICB

36.5 7.0 13.8

13.8

30

P–3a Chiniot–Sargodha–Khushab ICB 82.4 19.7 40

P–4a Jhang–T.T.Singh–Chichawatni ICB 91.0 20.0 44

R–1 Shorkot City–Shorkot Cantt LCB 18.0 2.0 24

R–2 Abdul Hakim–Talamba LCB 10.5 1.1 20

R–3 Talamba–Mian Channu LCB 15.3 1.7 24

R–4 Bhawalnagar–Bhukkan LCB 20.6 2.2 24

R–5 Phalia–Khuthiala–Sheikan LCB 16.8 1.8 24

R–6 Sheikhpura–Hafizabad LCB 13.2 1.4 20

ICB = international competitive bidding, km = kilometer, LCB = local competitive bidding. a Including 2 weigh stations for each road section. Source: Punjab Communication and Works Department; staff estimates.

Appendix 12 37

OBJECTIVES AND SUMMARY SCOPE FOR CONSULTING SERVICES FOR THE INSTITUTIONAL DEVELOPMENT COMPONENT

1. The objectives and summary scope of the consulting services for the institutional development component are to assist the Punjab Provincial Government and the Communication and Works Department (CWD) to

(i) build and strengthen capacity of the Road Safety Environment and Social Assessment Cell (RSESAC) in environmental and social assessment and provide training of RSESAC core staff;

(ii) carry out poverty monitoring of the project roads; (iii) assist the established provincial Road Safety Committee in its work, by

preparing its program and activities and its policy and strategy papers for enhancement of awareness; and strengthening education and drivers’ training and the knowledge of road safety matters among road users, road sector institutions, and other stakeholders;

(iv) prepare and introduce a road safety design audit system including provision of training;

(v) assist CWD to prepare and implement an action plan for improved axle-load control of heavy vehicles, covering preventive and corrective measures;

(vi) assess the causes and prepare an action plan for improved enforcement of road safety and traffic regulations;

(vii) prepare a program and complete package of supportive legislation and regulation and administrative arrangements for conversion of CWD to a corporation;

(viii) review opportunities and identify areas for further involvement of the private sector in operations, maintenance, and rehabilitation and provision of road infrastructure and other areas;

(ix) capacity building at the road maintenance unit (RMU) in road maintenance;

(x) assess road maintenance funding sources and user charges and develop a sustainable system and prepare complete with legislation and/or regulation and administrative arrangements, for secure and stable funding of road maintenance including establishment of a road maintenance fund;

(xi) support RMU to develop modern maintenance concepts and prepare maintenance procedures and manuals for typical road maintenance;

(xii) assist RMU to prepare complete contract documentation, including specifications for contracting out of periodic and routine road maintenance;

(xiii) assist RMU to prepare complete contract documentation including specifications for introduction of (a) network management and (b) performanced-based road maintenance on a pilot basis;

(xiv) further develop and expand the existing road asset management system to districts with provision of additional functions and applications to support of electronic government activities;

(xv) introduce highway design and maintenance model-4 (HMD-4) at CWD and provide training of staff; and

(xvi) implement other related activities as may be agreed with Asian Development Bank, supporting the project objectives.

38 Appendix 13

ECONOMIC ANALYSIS A. Methodology

1. The benefits to road users are estimated from the differences between the costs in the "without project" case and the "with project" case. The highway design and maintenance model 4 was used to estimate the benefits over time. The assumptions regarding these two cases are discussed below. 2. The "without project" case is defined as the situation where the quality of service provided by the existing roads is maintained at the present level. Any further deterioration is controlled by maintenance activities aimed at sustaining the present situation. To ensure this situation, the level of expenditure on keeping the road in its current condition is defined as the holding maintenance. This includes a level of routine and periodic maintenance. It is assumed that the international roughness index (IRI) for the main provincial highways is allowed to deteriorate only until level IRI 6. At that point periodic maintenance works are carried out to improve the condition to IRI 4. For the rural access roads, it is assumed that the IRI is allowed to deteriorate until IRI 10 and at that point periodic maintenance works are carried out to improve the road condition to IRI 8. The routine maintenance activities have been considered using the prevailing standards of the Punjab Communication and Works Department. The activities that are covered under routine maintenance include nominal patching of potholes, crack sealing by bituminous seal coat, grass cutting, grading of shoulders as well as cleaning of culverts and ditches, and refurbishing of the sign posts. This maintenance strategy is assumed to remain constant for the entire 20 year evaluation period. 3. For the “with project” case, two options have been considered. The first option is for the main provincial highways with IRI levels between 4 and 6 and rural access roads with IRI levels between 4 and 10. Here there will be a 50 millimeters overlay with asphalt concrete surface to reduce the IRI to 2.5. The second option is for main provincial highways with IRI greater than 6 and rural access roads with IRI greater than 10. Under this option for main provincial highways, the project will improve the IRI to 4 and for rural access roads to IRI 8 using double or triple surface treatment. 4. For the "with project" scenario it is assumed that after completion routine maintenance will be improved and will include potholes being completely patched, ditch clearing will be carried out on regular basis, any safety measures disturbed will be refurbished, and grading of shoulders will be carried out at regular intervals especially after monsoon. Periodic maintenance based on road condition in terms of roughness level has been adopted. It is assumed that (i) as soon as the roughness value reaches IRI 6 for the main provincial highways and IRI 10 for the rural access roads, periodic resealing will be done in addition to the annual routine maintenance; (ii) this will be required every 6 years. The above strategy was subsequently applied to all of the project roads through the highway design and maintenance model to produce pavement deterioration profiles for the entire 20 year evaluation period. B. Road Condition and Traffic

1. Road Condition 5. The existing road condition has been investigated by topographic survey, pavement condition survey, roughness survey, and pit investigations. The summary of these results is given in Table A13.1.

Appendix 13 39

Table A13.1 : Road Condition Data

Road Section

Roughness (IRI) m/km

Provincial Roads Pindi Bhattian–Chiniot Jhang–Shorkot Kabirwala–Shorkot Kabirwala–Mahni Sial Kamalpur–Sargodha Sarghoda–Khushhab Jhangh–Chichawatni

9.6 8.8 8.6 10.1 8.8 9.0 9.7

Rural Access Roads Shorkott City–Shorkot Cantt Mian Chunmon–Abdul Hakim Bahawalnagar–Bhukkan Phallia–Khuthiala–Sheikhan Shiekhupura–Hafizabad

9.1 12.5 8.9 8.5 10.4

2. Traffic Volume

6. Annual traffic surveys are carried out by CWD. The department classifies motorized vehicles into seven classes and records data for animal drawn carts. The 2000 survey results are used to obtain the base year traffic volume. The classified traffic count is shown in Table A13.2.

Table A13.2 : Traffic Data for Projects Roads (Year 2000)

Animal- Drawn

Motor- cycles Cars Wagons Buses Trucks

2 AxlesTrucks 3Axles

Trucks >3 Axles

Total Motorized

Traffic Provincial Roads Pindi Bhattian–Chiniot 139 587 687 384 423 971 286 104 3,442 Jhang–Shorkot Road 39 203 624 421 351 708 331 222 2,860 Shorkot–Kabirwala 36 365 726 414 270 839 341 222 3,177 Kabirwala–MahniSial 123 1,314 707 452 138 580 251 116 3,558 Kamalpur–Chiniot 90 867 1,301 897 610 2,031 272 89 6,067 Chiniot–Sargodha 96 1,394 1,221 725 370 2,033 498 41 6,282 Sargodha–Khushab 235 1,231 1,964 1,521 812 1,081 211 77 6,897 Jhang–TT Sindh 230 1,176 664 440 191 302 467 84 3,324 TT Singh–Chichawatni 286 3,105 1,433 880 378 294 192 14 6,296 Rural Access Roads Shorkot City–Shorkot Cantt. 621 531 641 43 56 178 195 62 1,706 Mian Chunnon–Abdul Hakeem 257 1,611 752 350 123 139 84 4 3,063 Bahawalnagar–Bhukkan 25 279 466 268 263 277 194 21 1,768 Phallia–Khuthiala–Sheikhan 213 1,325 1,055 663 294 292 85 21 3,735 Sheikhupura–Hafizabad 145 648 645 572 92 155 205 1 2,318

40 Appendix 13

3. Traffic Growth Rate Assumptions 7. The traffic growth rates were estimated following analysis of historical traffic growth rates, economic surveys, traffic counts on project roads, and other data. Adopting a conservative approach, the traffic growth rates in Table A13.3 were adopted for the project roads.

Table A13.3: Traffic Growth Rates

Years Motor Cycle

Car Jeep Minibus Bus

Light Comm. Vehicle

Truck Truck-Trailer

Tractor-Trolley

Animal Drawn

1991-2000 4.40 4.60 3.75 3.30 2.50 3.70 3.80 4.20 (3.0)

2001-2010 4.15 4.35 3.50 3.05 2.50 3.45 3.55 3.95 (3.0)

2011-2020 3.90 4.10 3.25 2.80 2.50 3.20 3.30 3.70 (3.0)

2021-2025 3.65 3.85 3.00 2.55 2.50 2.95 3.05 3.45 (3.0)

C. Costs 1. Vehicle Operating Costs 8. The vehicle composition has been regrouped into six categories for this analysis: bus, car, motorcycle, two-axle trucks, three-axle trucks, heavy trucks (i.e., more than three axles), wagons, and animal carts. The economic prices for vehicles, tires and tubes, spare parts and accessories, fuel, maintenance crew labor, passenger time and cargo time have been used in this analysis. Fuel prices, particularly diesel and gasoline are at “border” prices. Other items are net of taxes and duties. The economic costs for vehicle, tires, fuel, and crew/labor are shown in Table A13.4

Table A13.4: Vehicle Cost Data (in PRs)

New Replacement Fuel Crew Vehicle Tyre (per liter) (per hr)

Bus 1,913,308 4,769 Car 334,574 892 15.94 Motorcycle 24,516 438 15.94 2-axle truck 1,502,085 4,769 12.83 50 3-axle truck 2,025,085 4,769 12.83 50 > 3-axle truck 2,025,085 4,769 12.83 50 Wagon 729,769 1,885 12.83 50 Animal cart 200,000 20

9. The vehicle maintenance labor cost is significant for the economic analysis as these savings can be realized directly by the user. Once the road condition is improved these costs will be reduced. The maintenance cost/hour is PRs30 on an average. Crew cost is significant in the case of trucks and buses and studies show that it is PRs50 per hour. The interest rate is taken as 15% for evaluating the vehicle operating cost (VOC) based on the current lending rates for cars in Pakistan.

Appendix 13 41

10. Vehicle utilization values depends on various factors. Due to the present condition of the road network, the utilization values are significantly low. To have a realistic estimate the consultant has reviewed the data available from World Bank studies. Table A13.5 shows the values assumed for this analysis.

Table A13.5: Vehicle Utilization in Punjab

Vehicle Category Hours Driven per Year

Life (Years) Km Driven per Year

Bus 1,750 10 70,000 Car 550 10 23,000 Motorcycle 400 10 10,000 2-axle truck 2,920 14 70,000 3-axle truck 2,920 12 70,000 > 3-axle truck 2,920 12 70,000 Wagon 1,500 10 60,000 Animal cart 1,300 3 4,000

2. Road Improvement and Maintenance Costs

11. Cost involves the improvement costs during the construction period (assumed to be two years) and the recurrent cost due to periodic and routine maintenance activities for the subsequent life of project duration. Estimated construction costs have been prepared for four traffic categories (high, medium, low, and very low) and the two improvement strategies (para. 4). The improvement cost estimates are shown in Table A13.6.

Table A13.6: Project Improvement Unit Cost Estimates

(million PRs. per km)

Traffic Category

Asphalt Concrete

Surface Dressing

High 15.0 10.0 Medium 13.0 9.0 Low 12.0 8.0 Very Low 12.0 7.5

12. The unit rates for maintenance and operations costs are given in Table A13.7.

Table A13.7: Unit Maintenance and Operations Costs

Operation Financial cost

Economic cost

Unit

Patching 275 234 m2

Reseal 18 15 m2

Overlay 50mm 260 221 m2

Surface dress TST 159 135 m2

Shoulder edge Repair

85 72 m2

Routine Maintenance 70,000 59,500 per km

TST= triple surface treatment.

42 Appendix 13

13. All the costs are financial costs. To obtain the resource costs, financial cost, i.e., as per the market prices, need to be converted into economic cost. Here, all the financial costs for the civil works have been converted in to economic cost using the factor of 0.9. It is assumed that the project duration is 2 years, with 50% of the works to be carried out in year 1 and 50% in year 2. D. Benefits 14. The main quantifiable benefits of the investment are (i) the savings in VOCs for existing traffic; and (ii) VOC savings to generated traffic. A minor component will be savings in periodic maintenance cost to be incurred by the Communication and Works Department. The savings in VOC are generated though better road surface conditions. As the access to markets, which reflects agricultural benefits, becomes better, it is expected that there will be more economic activities resulting in the generated traffic. The benefits due to generated traffic are considered, as 50% of the savings due to the normal traffic. 15. Due to the low economic activities and prevailing significant unemployment and underemployment in the region coupled with little opportunities for alternative gainful employment, the value of time to the road users is not considered to be significant. Hence the value of time has not been considered in the analysis. In other words, the project benefits that will accrue due to the investment are on conservative side. However this situation may change over the time once the economic activity improves and time savings can be regarded as an unquantified benefit from this Project. Another unquantified benefit is the fact that, by rescuing the road network now, the Project will bring these roads back to maintainable condition. This will help the Punjab Provincial Government avoid the need to rebuild the roads in the near future, which would most likely be necessary if nothing is done to preserve this asset base.

E. Results of Economic Evaluation and Sensitivity Analysis

16. The economic internal rates of return (EIRRs) have been calculated using the highway design and maintenance model for each road. For the provincial highways, strategy I (asphaltic concrete) is better than strategy II (surface treatment). For the core rural access roads, strategy II is better than strategy I. A sensitivity analysis was also carried out, using the better strategy for three scenarios (i) 15% increase in project cost; (ii) 15% decrease in benefits; (iii) 2-year delay in project road implementation; (iv) less than optimal maintenance for the provincial and rural access roads; and (v), (i) and (ii) combined. The sensitivity analysis also included calculation of switching values for which the EIRRs of the project roads would fall to 12%. The sensitivity test for (iv) showed no significant impact on the EIRRs. The results show that the quantified economic benefits are quite robust and a summary of the results is shown in tables A13.8 and A13.9.

Appendix 13 43

Table A13.8: Summary of EIRRs with Sensitivity Analysis

Road Section

Strategy I

Asphaltic Concrete

Strategy II

Surface Treament

15 % Increase in Costs

15 % Decrease

in Benefits

Two Year Delay in project

completion

Combined 15 %

Increase in Costs and

15 % Decrease in

Benefits Provincial Roads Pindi Bhattian–Chiniot

18.4 16.7 16.3 16.0 12.9 10.2

Jhang–Shorkot 17.5 14.9 15.3 15.0 13.4 10.3 Shorkot–Kabirwala 18.5 16.2 16.1 15.8 14.6 11.1 Kabirwal–Mahni Sial 12.9 10.1 11.1 10.9 9.0 6.4 Kamalpur–Chiniot 28.8 29.3 26.0 25.6 20.5 17.2 Sargodha–Khushhab 28.0 24.3 25.3 25.0 19.0 16.2 TT Singh–Chichawatni

15.5 10.5 13.8 13.7 10.9 8.6

Core Rural Access Roads

Shorkott City–Shorkot Cantt

15.9 20.0 17.4 18.1 16.7 13.2

Mian Chanu–Abdul Hakim

11.0 16.4 14.7 14.7 9.3 7.3

Bahawalnagar–Bhukkan

16.8 21.2 18.6 18.2 18.6 14.2

Phallia–Khuthiala–Sheikhan

23.8 30.6 27.0 26.8 27.2 21.4

Shiekhupura–Hafizabad

15.9 19.1 17.0 16.8 14.4 11.4

Table A13.9: Switching Values

Increase in Costs

Decrease in Benefits

Provincial Roads (Asphaltic Concrete)

Pindi Bhattian–Chiniot 1.56 0.64 Jhang–Shorkot 1.45 0.69 Kabirwala–Shorkot 1.50 0.67 Kabirwala–Mahni Sial 1.07 0.93 Kamalpur–Sargodha 2.75 0.36 Sargodha–Khushhab 2.68 0.37 Jhangh–Chichawatni 1.15 0.75 Core Rural Access Roads (Triple Surface Treatment)

Shorkott City–Shorkot Cantt 1.60 0.63 Mian Chanu–Abdul Hakim 1.43 0.70 Bahawalnagar–Bhukkan 1.76 0.57 Phallia–Khuthiala–Sheikhan 2.59 0.39 Shiekhupura–Hafizabad 1.64 0.61

Switching Value – factor that will reduce the EIRR to 12%.

44 Appendix 14

SUMMARY POVERTY REDUCTION AND SOCIAL STRATEGY

A. Linkages to the Country Poverty Analysis Sector identified as a National Priority in Country Poverty Analysis?

Yes

Sector identified as a National Priority in Country Poverty Partnership Agreement?

Yes

Contribution of the sector/subsector to reduce poverty in (Pakistan): Poverty in Pakistan has historically been higher in rural than urban areas. Poverty rose more sharply in the rural areas in the 1990s, and FY1999 the incidence of rural poverty (36.3%) was significantly higher than urban poverty (22.6%). During the 1990s, income distribution also worsened in rural areas while it improved slightly in urban areas. The increase in poverty is mainly attributed to declining economic growth, lack of social safety nets, persistence of severe macroeconomic imbalances, reduced flow of remittances from out-of-country Pakistani workers, and poor governance. The province of Punjab, with a population of 72.5 million, comprises 60% of the country’s population. Around 70% of households live in rural areas, where the incidence of poverty reaching almost 40% in lower Punjab. Poverty intervention is a critical theme of the Project. The direct and indirect potential for poverty reduction in road improvement include (i) increased access to markets, (ii) improved transportation of goods between areas of surplus and areas of deficit; (iii) reduced transport costs (potentially reduced cost of freight and goods as well as passenger fares), (iv) increased food security, and (v) increased employment opportunities. Improved transportation will improve the distribution of social services to the villages along the project roads. This will include better support for the local medical clinics and educational facilities. Furthermore, road construction creates higher levels of income from agriculture and crop production; demand for agricultural labor, wage rates, and wage income, and income; from business and industries. The Project will generate employment for people along the route. Unskilled labor will be employed directly in road construction and maintenance and indirectly by providing material and services to the construction and maintenance activities. Unskilled labor per kilometer of provincial highways is estimated to amount to 1,045 person-days and for rural roads around 780 person-days. The Project will generate employment opportunities for unskilled labor: approximately 11,778 person-months for provincial highways and 26,600 person-months for rural roads. More important are the long-term impacts of the Project, which include narrowing the gap of intradistrict disparities and reducing poverty. Providing the poor with better access to services and economic opportunities available in the larger towns and cities is a necessary condition for economic development of poor communities. An improved road network, including primary and rural roads, will increase economic opportunities for the poor, unemployed youth, and women. B. Poverty Analysis Proposed Classification: PI What type of poverty analysis is needed? Punjab has 34 districts and there is quite sharp regional differences in poverty with poverty levels in lower Punjab being the highest (38.9%) followed by those in the middle (31.0%) and upper Punjab (24.4%). However, additional evidence shows that 50–60% of rural households in some districts are poor, with highly skewed land distribution. Poverty estimates at the district levels are not available for any province in Pakistan; however, Punjab Economic Research Institute (PERI) developed a district development ranking based on indicators relating to agriculture, industry, services, education, health, housing, sewerage and drainage, road and transport. The government of Punjab is using this indicator for determining allocation of its development expenditures. Based on this secondary information, approximately 40% of the proposed

Appendix 14 45

provincial roads are in poorer or less developed areas of Punjab. More than 55% of core-subproject rural roads will be located in poorer districts. Poverty targeting based on the district development ranking will be used for the selection of noncore subprojects. Poverty impact assessment was carried out for five core representative rural access roads. These assessments provide an indication of the type of poverty reduction impacts that can be expected as a result of the Project. Significant benefits are expected to accrue to Punjab as a whole, and a large part will accrue to the poor. The poverty impact ratio (PIR) estimate for the provincial highways are averaging around 27% (with a range of 24–36%) in benefits accruing to the poor for the Project as a whole. Total benefits for the provincial roads are PRs1.568 million or PRs5.31 million in national benefits expected per kilometer of investment. The value of net benefits accruing to the poor is estimated at PRs432 million over the life of the provincial highways subproject. The poverty impact ratio for rural roads is 26–43% and the average is 32%. Extrapolating on the basis of core rural road subprojects, total net benefits for the entire rural road network of 1,020 km proposed for development would be approximately PRs638.7 million, or PRs636.000 in national benefits per kilometer of investment, of which PRs208 million will accrue to the poor (at a rate of PRs204, 000 per kilometer). Detailed poverty impact assessment is presented in Supplementary Appendix G. Poverty reduction monitoring will be undertaken during and after construction to assess the impact of the Project on the poor, particularly in the zone of influence of the rural access roads. Benchmark poverty and gender data (quantitative and qualitative) will be established prior to road construction. Institutional capacity of Road Safety Environment and Social Assessment Cells established recently by Communication and Works Department (CWD) will be strengthened to enable CWD to address poverty, environment, social safeguard, and social development issues in the transport sector. C. Participation Process Stakeholder analysis and consultation with relevant stakeholders have been conducted during the project design. Public consultation and awareness campaigns will be designed for improving road safety. Community participation will be encouraged during the design, implementation, and monitoring of rural access roads. Nongovernment organization will be hired to conduct independent poverty and gender monitoring as well as implement income restoration program for affected people. D. Potential Issues1

Significant/ Not Significant/

Uncertain/ None

Strategy to Address Issues

Plan

Required2

Resettlement3 Significant The Project will improve 316 km of provincial highways and approximately 1,020 km rural access roads. Land acquisition and resettlement is expected to be minimal for provincial highways and rural access roads subcomponents since road improvement will be constructed along the existing right-of-way and resettlement will primarily involve strip acquisition where required. A resettlement plan was prepared and agreed to by the Government of Punjab. The summary of resettlement plan is presented in Appendix 15. The policy and resettlement framework contained in Appendix 16 will also be applied to the later subprojects.

Full

46 Appendix 14

Gender

Not significant In the road sector, women are mainly involved as road construction workers, the lowest paid job. Women make up only 0.1% of CWD staff. Road workers are part of the informal sector. Women form 40% of the total workers in projects employed through informal subcontracts for manual work mainly for construction of rural roads. In most cases, the entire family works as a unit and in mixed-gender teams. For work as independent individual workers, the wages of women and men differ. Most of construction workers, except for permanent skilled workers of large construction companies, are not provided with adequate site facilities stipulated in provisions under the labor laws of Pakistan, such as the Industrial and Commercial Employment (Standing Order) Ordinance of 1968, Labor Camp Rules, and the Workmen Compensation Act. The Project will ensure that the civil work contracts include legally mandated provisions for health, sanitation, and appropriate working conditions, including accommodation, where appropriate, for construction workers at campsites during construction period. It will also ensure that civil works contractors comply with all applicable labor laws, including elimination of gender-differentiated wages, and do not employ child labor in construction activities. Gender monitoring, in particular related to implementation of labor laws, will be built in as part of poverty monitoring during and after the project implementation.

No

Affordability

Not significant The Project will reduce transport costs (potentially reduced passengers fares, cost of freight and goods), which could reduce rural poverty. Therefore, the poor could afford to travel more frequently.

No

Labor

Not significant The Project will have no negative impact on labor rationalization. It will create employment, particularly for unskilled and poor people.

No

Indigenous People

Not significant Based on the social assessment, there are no indigenous peoples and/or ethnic minorities in the project area. Therefore, an indigenous peoples development plan is not warranted.

No

Other Risks/ Vulnerabilities

Significant Lack of capacity of executing agency and other stakeholders in addressing cross-cutting social issues and social safeguard policy. Land acquisition issues could be a potential social risk. The Project will support policy and institutional reforms focusing on institutional efficiency consideration including strengthening capacity of Road Safety Environment and Social Assessment Cell of CWD to address poverty reduction, community involvement, and environmental aspects.

Yes

1 If not known, a contingency should be included in the Technical Assistance budget to predict the need of a plan. 2 A plan will be required at the design stage if any of the potential issues are found significant. 3 Significant involuntary resettlement requires a full resettlement plan; not significant requires a short resettlement

plan.

Appendix 15 47

SUMMARY OF RESETTLEMENT PLAN

A. Background

1. The Punjab Road Sector Development Project aims at widening and improving 316 kilometer (km) of provincial highways and upgrading and/or rehabilitating about 1,020 km of rural access roads in Punjab. The project highways cover the districts of Faisalabad, Hafizabad, Jhang, Khanewal, Khusab, and Sargodha. Only 88 km of rural roads (Jhang, 12 km` Khanewal 26 km, Bhawalnagar 20 km, Mandi Baha-ud-Din 16 km, and Sheikhupura 14 km) has been selected as “core” subprojects. For the remaining rural access roads, the guiding principles in the selection will include: (i) minimized adverse impacts; (ii) connection to market centers, (iii) agro-industrial activity and economic viability, (iv) population served by the access roads, and (v) poverty reduction in the project area. The Project Engineering Cell (PEC) will conduct proper impact assessment for the subprojects and submit appropriate mitigation and resettlement plans for review and approval by the Asian Development Bank (ADB) prior to civil work contract. In the case of adverse impacts, the policy and resettlement framework contained in this resettlement plan (RP) will apply.Thus, this RP forms a “model” for resettlement under new subprojects. 2. This RP has been prepared in accordance with the ADB policy on involuntary resettlement and handbook on resettlement. The RP outlines the remedial measures for mitigating adverse impacts of the Project, and how and when these measures must be implemented. It is based on socioeconomic assessment of the potentially affected persons (APs). The project impacts are largely confined to dislocation and temporary disruption of roadside shops and businesses. Efforts will be made to further minimize the over all impacts during design update/implementation by adopting off-set/symmetrical widening to avoid unnecessary displacement. PEC will use the RP as a planning tool, and will verify, update, and finalize the inventory of the APs based on plan-profile drawings of the project roads. B. Scope of Land Acquisition and Resettlement 3. The proposed two-lane improvements will be carried out within the existing rights-of-way without any fresh land acquisition, except for the 21 km Jhang bypass, on the Jhang–Shorkot road. Construction of this bypass will require an estimated 70 hectares to avoid and minimize displacement in congested intersections and markets in Jhang City. 4. Land acquisition for this bypass will not displace any households or settlements. Further, the proposed bypass will pass through largely cultivated land, with some scattered wood and fruit trees. Based on a 20% sample, an estimated total of 320 farmers (225 landowners and 95 tenants) are likely to be affected by this land acquisition. Despite limited land acquisition for this bypass, the improvement activities will nonetheless affect roadside small shops/businesses consisting of unauthorized ribbon development on both sides of the existing carriageways, particularly around road intersections, bus stops, and roadside rural and semi-urban markets. These small business enterprises (SBEs), which conducts businesses on the right-of-way land provide a range of services linked to the roads, road users, and local economies. 5. A full census of all potentially affected SBEs and households on the project corridor of impact was conducted in April-May 2002. The widening and improvement works will partly affect only 75 structures/assets, of which 60 are SBEs, 12 are cultural (mosques and tombs) and/or vacant/abandoned structures, and only 4 are residential-cum-livestock houses. The affected structures/assets will not require any relocation. The census inventory will be verified and updated based on detailed engineering design of the project roads. Civil works will begin in each road stretch or subproject only when the displaced people have been resettled.

48 Appendix 15

C. Objectives, Policy Framework, and Entitlements 6. In Pakistan, the Land Acquisition Act of 1894 (as amended) is the core legal tool available to and used for acquiring private lands for a public purpose. This is further elaborated by the Punjab Land Acquisition Rules, 1983. As per the provisions of the act and rules, cash compensation is paid at the market rate to affected landowners for the land, and to the registered tenants for the affected crops only. The legal framework does not cover illegal/squatters and encroachers. However, in many project-specific cases, the Governments of Pakistan/Punjab have assisted project-affected persons even without any legal titles. In Punjab, several legislation that are related to resettlement assistance, particularly for non-titled/squatter population, includes: (i) Status of the Anti-Encroachment Act; (ii) (Housing and Development Schemes) act, 1974; (iii) Punjab Junnah Abadis for Non-Proprieter's in Rural Areas Act, 1986;and (iv) Punjab Katchi Abadi (Squatters) Act, 1992. 7. Pakistan has no specific policy on resettlement. In the absence of a formal policy to assist nontitled persons, a project-specific set of resettlement principles consistent with ADB policy requirements has been adopted in this Project. As a result, the affected SBEs and households are entitled to a combination of compensation measures and resettlement assistance, depending on the nature of ownership rights of lost assets and scope of the impact, including social and economic vulnerability of the APs. In general terms, the APs will be compensated for the loss of lands, and assisted to restore their SBEs and cultural/community structures/assets (Table A15.1)

Table A15.1: Project Compensation Principles and Entitlements

Type of Losses Entitlement Loss of agricultural land, crops and trees by owners (and sharecroppers)

• Cash compensation for land based on market value • Cash compensation for loss of crops/trees at the market value • Compensation to sharecropper as per Land Acquisition Act • Encroachers/squatters are not eligible for compensation for land on the right-of-way but

eligible for compensation for lost assets Loss of residential and commercial structures by owners

• Compensation for losses at full replacement costs • Owners of affected structures will be allowed to take all salvageable materials for

rebuilding • Transfer allowance to cover the cost of moving structures, including business premises • Compensation for wells and other immovable assets and replacement value, plus

installation charges Loss of business premise by renters

• One-time cash assistance equivalent to 2-month rent to the renters for alternative premise for re-establishing businesses

• Shifting allowance will be applied to all affected persons. Kiosks will receive assistance for relocation at another fixed place

Income assistance for loss of business by shops/SBE owners

• One-time lump sum grant; based on the nature of business and type of losses, the following range will apply: (i) small business up to PRs2,000; (ii) medium business up to PRs3,500; and large business/manufacturing up to PRs10, 000.

Loss of income by tenants

• One-time lump sum grant of PRs1,000

Loss of wages by small business enterprises employees

• Wages for 30 days @ local wage rate • Family workers in small business enterprises are not eligible – already covered by

income assistance for loss of business by shops/SBE owners. • Special assistance to vulnerable persons like those under poverty-line—lump sum

PRs1,000 as grant for enhancing livelihoods Restoration of cultural/ community structures

• Cash compensation for restoring affected cultural/community structures

a If the replacement cost is more than the compensation (at 'market price' as determined by Authority as per CWD and District Commissioner), then the difference is to be paid by the project in the form of assistance.

Appendix 15 49

D. Consultation, and Grievance Redress Participation

8. Grievances Redress and Advisory Committees. Provisions under the Land Acquisition Act (LAA-1894) enable grieved APs to represent their cases to Land Acquisition office or to court for redressal and seek higher compensation. Major grievances that might require mitigation include (i) APs not enlisted, (ii) losses not identified correctly (iii) compensation/assistance inadequate or not as per entitlement matrix, (iv) dispute about ownership, (v) delay in disbursement of compensation/assistance, and (vi) improper distribution of compensation/assistance in case of joint ownership. Thus, the main objective of the grievance redressal procedure will be to provide a mechanism to mediate conflict and cut down on lengthy litigation, which often delays infrastructure projects. It will also provide people who might have objections or concerns about their assistance, a public forum to raise their objections and through conflict resolution, address these issues adequately. The project will establish a grievance redressal committee, with members from local nongovernment organization and/or CBO the Communication and Works Department (CWD), and local government administration. 9. The resettlement advisory committee will encourage local participation, ensure full transparency and accountability regarding the resettlement program and people’s entitlements, and safeguard the rights of the most vulnerable peoples affected by the Project. The Committee will comprise of representatives of the APs, RP implementing NGOs, PEC, and other stakeholders of the Project (the district Land Acquisition officer and local elected representatives). Women should be represented in the Committee. The committee will provide coordinating nodes for land acquisition and compensation, relocation, and resettlement, and assist the APs all possible ways to minimize disruption and hardship during relocation. E. Participation, RP Implementation, and Budget

10. There is strong support for and positive public response to the Project. Stakeholders’ meetings and group interviews were held during the field surveys. An extensive community awareness and consultation process was carried out. In total, 113 group interviews were held all along the 12 project roads. The PEC and resettlement officials will increase information campaigns and publish brochures on the project resettlement principles and entitlements, payment procedures, and construction schedule aimed at social preparation for relocation and resettlement of the affected SBEs and households. The PEC will hire an NGO to assist in the information campaign and consultation program, road safety awareness, and resettlement-related activities in the project area prior to the implementation of the RP. RACs will be formed to seek inputs from stakeholders in decision-making for and implementation of the RP. Affected businesses and other vulnerable groups will be represented in committees and involved actively in the grievance resolutions concerning compensation and other resettlement benefits. A full-time project resettlement officer will be appointed, and will be responsible for the day-to-day activities for implementing the RP. An implementation schedule has been prepared in accordance with the road construction schedule. The summary of the RP has been posted on the ADB website. PEC and an NGO will provide information campaign and will publish brochures on the project resettlement principles and entitlements, payment procedures, and construction schedule aimed at social preparation for relocation and resettlement of the affected SBEs and households. The summary RP will be translated into Urdu in a brochure and distributed among the APs.

50 Appendix 15

F. Income Restoration Strategy

11. The entitlement matrix (Table 1) is expected to suffice to restore the income. Based on extensive consultation with the affected businessmen and other stakeholders such as local business and community leaders, affected SBEs will relocate on their own prior to the project construction civil work. CWD will notify the owners of SBEs about 6 months ahead of scheduled construction. The affected owners will receive support from PEC resettlement unit during the process of relocation, and will receive compensation for structures and start to restore their business and/or income. Thus, they will receive due compensation/assistance and support from the Project during relocation and resettlement. The affected SBE owners will be allowed to take the salvageable materials for reconstructing their shops. The PEC resettlement unit and the NGO will assist the local business leaders and affected shop owners with better land use planning and to organize the relocated business area, taking into consideration the through traffic and the safety of the local traffic and road users. G. Institutional Framework

12. CWD, as the Executing Agency, will establish a resettlement and social development cell within PEC to implement the RP. CWD will hire an NGO to assist the cell in implementing the RP, particularly for social preparation, public consultation, road safety awareness, and other resettlement-related activities. H. Resettlement Budget and Financing

13. The total estimated cost for land acquisition and resettlement is expected to be in the amount of PRs107.0 million ($1.8 million). CWD and the government of Punjab are committed to provide the entire funds for RP implementation. The detailed cost estimates are provided in Table A15.2

Table A15.2: Detailed Costs Estimates for Land Acquisition and Resettlement of APs

Item

PRs

$

Land Acquisition (including crops, trees, tube-wells) 60,000,000 1,000,000.00 Structure - Shops/SBE and Houses/Livestock sheds 2,000,000 33,333.33 Cash Grant/Income Assistance to SBE, tenants, etc. 2,000,000 41,666.67 Compensation for cultural/community structures 3,000,000 41,666.67 Sub-total 67,000,000 1,116,666,67 Hiring of NGO to assist RP implementation 3,500,000 58,333.33 Computer, Equipment, RU staff training 3,500,000 58,333.33 Office, Transport/vehicles for Field Offices 5,500,000 91,666.67 Monitoring Panel of experts 2,000,000 33,333.33 Short-term Consultants (RP/ Training/M&E) 3,000,000 50,000.00 Sub-Total 17,500,000 291,666.67 Administrative costs (10% of A+B) 8,450,000 140,833.33 Total: 92,950,000 1,549,166.67 Contingencies (15 % of Total Costs) 13,942,500 232,375.00 Grand Total: 106,892,500 1,781,541.67

a Exchange rate: PRs60.00 to $1.00.

Appendix 15 51

I. Implementation Schedule 14. PEC will implement the RP before civil works start, which is in the fourth-quarter of 2003. A time-bound implementation schedule has been prepared in accordance to the timing of civil works.1 The Project will provide adequate advance notification to the APs and will pay compensation and resettlement assistance for lost assets at least 30 days prior to actual possession of land or relocation of affected structures and assets. An identify card will be prepared for each AP and will be issued during census survey. J. Monitoring and Evaluation

15. RP implementation will be supervised and monitored by the PEC and the resettlement advisory and grievances redress committees. The monitoring will be done both internally and externally. The project director of PEC will prepare monthly reports on the progress of RP implementation. Project supervision consultants will monitor the RP implementation and will report on a quarterly basis to CWD and ADB on the progress of resettlement activities. A panel of local experts, who will be engaged by CWD, will conduct independent twice yearly reviews of resettlement implementation and provide feedback to CWD and ADB on the effectiveness of the RP implementation.

1 A detailed time schedule for implementing the RP is in the main RP document, and available upon request.

52 Appendix 16

SUMMARY OF RESETTLEMENT FRAMEWORK

A. Purpose 1. The framework establishes the screening, planning, and management procedures for involuntary resettlement that apply to noncore road subprojects, so that they conform to the Policy on Involuntary Resettlement of the Asian Development Bank (ADB). The framework applies to these activities as they are prepared after Board approval and during loan implementation. B. Procedures 2. The procedures for preparing a resettlement plan (RP) for noncore subprojects during project implementation are as follow:

(i) screen the subprojects with possible land acquisition and resettlement effects to ensure their consistency with ADB's Policy on Involuntary Resettlement;

(ii) identify resettlement effects, and avoid or minimize them; (iii) identify the need for full or short RPs in accordance with the criteria set

under ADB's Handbook for Resettlement,1 and (iv) the project engineering cell prepares each subproject RP when required,

to be submitted for approval to ADB,and to be implemented before the award of civil works contracts.

C. Scope of the Resettlement Framework 3. The resettlement framework includes the following elements:

(i) Scope of Land Acquisition and Resettlement. This includes (a) the scope and reasons for subproject resettlement, maps, any alternative options to minimize land acquisition, and main resettlement effects; (b) likely resettlement risks for impoverishment or increased vulnerability, key stakeholders;and (c) primary responsibilities for resettlement.

(ii) Socioeconomic Information. This includes (a) census data, including

numbers and spatial distribution of people affected by different types of loss; (b) methods for conducting socioeconomic surveys; (c) asset inventory; (d) likely resettlement effects; (e) all resettlement losses; (f) socioeconomic survey data of people affected, including household size, composition and income expenditure by key social groups; (g) definition of severely affected households; (h) impact on the poor and vulnerable groups and any special measures needed for them, e.g., social preparation.

1 A full resettlement plan should be prepared if the subproject will have a significant impact on people

affected. Resettlement will be “significant” where 200 or more people experience major impacts. “Major” impacts are being physically displaced from housing and/or when more than 10% of the household’s productive (income generating) assets are lost.

Appendix 16 53

D. Objectives, Policy Framework and Entitlements. 4. Objectives and Policy Framework. See Appendix 15, paragraphs 6–7. 5. Entitlement Matrix. See Entitlement Matrix Role, Table A15.1

Table A15.1: Project Compensation Principles and Entitlements

Type of Losses Entitlement Loss of agricultural land, crops and trees by owners (and sharecroppers)

• Cash compensation for land based on market value • Cash compensation for loss of crops/trees at the market value • Compensation to sharecropper as per Land Acquisition Act • Encroachers/squatters are not eligible for compensation for land on

the right-of-way but eligible for compensation for lost assets Loss of residential and commercial structures by owners

• Compensation for losses at full replacement costs • Owners of affected structures will be allowed to take all salvageable

materials for rebuilding • Transfer allowance to cover the cost of moving structures, including

business premises • Compensation for wells and other immovable assets and replacement

value, plus installation charges Loss of business premise by renters

• One-time cash assistance equivalent to 2-month rent to the renters for alternative premise for re-establishing businesses

• Shifting allowance will be applied to all affected persons. Kiosks will receive assistance for relocation at another fixed place

Income assistance for loss of business by shops/SBE owners

• One-time lump sum grant; based on the nature of business and type of losses, the following range will apply: (i) small business up to PRs2,000; (ii) medium business up to PRs3,500; and large business/manufacturing up to PRs10, 000.

Loss of income by tenants

• One-time lump sum grant of PRs1,000

Loss of wages by small business enterprises employees

• Wages for 30 days @ local wage rate • Family workers in small business enterprises are not eligible – already

covered by income assistance for loss of business by shops/SBE owners.

• Special assistance to vulnerable persons like those under poverty-line—lump sum PRs1,000 as grant for enhancing livelihoods

Restoration of cultural/ community structures

• Cash compensation for restoring affected cultural/community structures

a If the replacement cost is more than the compensation (at 'market price' as determined by Authority as per CWD and District Commissioner), then the difference is to be paid by the project in the form of assistance.

6. Relocation of Housing and Settlement. Relocation will be addressed as required in the RPs including (i) options for relocating housing and other structures; site selection and planning; and layout, and design; (ii) measures for integration with host communities; (iii) vulnerable group issues; and (iv) any environmental risks and measures to manage and monitor them. 7. Income Restoration Strategy. Income restoration measures include (i) identification of livelihoods at risk, (ii) income restoration strategies, (iii) job creation plan, (iv) income substitution, (v) retraining, (vi) self-employment, and (vii) business relocation.

54 Appendix 16

8. Institutional Framework. The Project Engineering Cell will be responsible for the execution of the project resettlement activities. An executive engineer will be appointed as project resettlement officer (PRO) in charge of the resettlement operations and will report to the project director. The PRO will work in close coordination with the field-based land acquisition and control officers, construction supervision consultants, resettlement specialists, and the nongovernment organization for day-to-day activities of the resettlement plan implementation. The PRO through the field offices and NGO will execute and monitor progress of the work and ensure coordination between the relevant departments, NGO, Grievance Committee and project affected people. In addition, the Road Safety Environment and Social Assessment Cell will be responsible for periodic internal monitoring and evaluation of the project activities. A panel of experts will be engaged to evaluate the RP implementation. Independent evaluations will be undertaken twice annually for the first 2 years and then once every year during the rest of the Project. 9. Resettlement Budget and Financing. This will include measures for (i) planning and budgeting for land acquisition and resettlement costs, annual budget, and sources of funding; (ii) arrangements for approval of RP cost estimates; and (iii) the flow of funds to reach people affected and the contingency arrangements. Guarantees to finance any additional costs required to meet the resettlement objectives; confirmation of the delivery of entitlements to people affected on time. 10. Implementation Schedule. This is an indicative schedule for RP preparation and implementation in relation to technical works and will include the time schedule of all resettlement activities, showing start and finish dates before demolition and procedures for implementing the key elements. 11. Monitoring and Evaluation. This will include arrangements for internal and independent monitoring and evaluation for RPs, including plans, timing, resources, and indicators for internal monitoring and external independent evaluation of resettlement targets; and an assessment of capacity of internal and external monitoring and evaluation.

Appendix 17 55

SUMMARY INITIAL ENVIRONMENTAL EXAMINATION A. Introduction 1. The proposed Road Sector Development Project for Pakistan is categorized as a “B” Project in accordance with the Environmental Assessment Requirements of the Asian Development Bank (ADB). An initial environmental examination (IEE) was prepared. This appendix is based on the information in the IEE reports that were undertaken under the project preparatory technical assistance.1 B. Description of the Project 2. The proposed Project will rehabilitate 7 provincial highways with total length about 302 kilometers (km) and about 1,020 km of rural access roads (RARs). The sample RARs with total length 88 km were included in the IEE study. A summary of the proposed road improvements is given in Appendix 5. C. Description of the Environment 3. The seven provincial highways are located within Faizalabad, Hafizabad, Jhang, Khanewal, Khushab, Sargodha, and Toba Tek Singh districts. Almost all of these 7 provincial highways are part of Southern Highway Circle and the rural access roads are within Bhawalnagar, Jhang, Khanewal, Mandi Bhauddin, and Sheikhupura districts. The environmental condition of the project area is briefly summarized as follows 4. Pindi Bhatian–Chiniot. The improvement starts from Pindi Bhattian intersection of Lahore–Islamabad Motorway (M-2) and the take-off point is located on the existing Hafizabad–Chiniot Highway. The traffic density is about 3,873 vehicles per day have been reported. Owing to fertile lands, where highway is passing through, vast tracts of sugarcane have been observed. During cane crushing season, dangerously overloaded tractor trolleys have been reported and have caused of many fatal accidents. Almost the entire length of the provincial highways runs along a meandering flood protective embankment, 2.5–3.0 meter (m) height, being at its right. It provides floodwater protection from Chenab River, running along the road at a variable distance of 3–5 km. However, the highway is always flooded during paddy cultivations. No water logging has been noted in this project area. The roadside plantations are sparse and sporadic. Many of the standing trees are mature, diseased, and dead. The common tree species are kikar (Acacia nilotica), shisham (Dalbergia sissoo), phulahi (Acacia modesta,, dharaik (Melia azadirachta), mesquite (Prosopis juliflora), mulberry (Morus alba) and simal (Bombax cieba).The provincial highway does not pass through forest/game reserve, wildlife sanctuary, or any protected area. No endangered species of trees, grasses, shrubs, birds, mammals, or reptiles have been reported. 5. Jhang–Shorkot . The improvement starts from the outskirts of Jhang City and terminates at Chowk Ali Abad. The traffic density is about 2,519 vehicles per day. About 7.00 km, on its right side, a flood protection embankment, 2–3 m high, runs parallel to the provincial highway. The soil condition is characterized by young alluvium deposit and it is very fertile soil, therefore, no wasteland along the highway. A mixed tree crop exists on both sides of the provincial highway, where first 7.00 km have been found almost devoid of any cover. However, in the last 14.00 km, good patches of roadside woodlots in the right-of-way strips have been noted where tree density is nearly 60–70%. Most of the trees had attained maturity age and are either dying or diseased, with

1 ADB. 2001. Technical Assistance to Pakistan for Environmental Assessment. Manila.

56 Appendix 17

the highest dieback rate in shisham (Dalbergia sissoo). Besides kikar (Acacia nilotica), the other common tree species are van (Salvadora oleoides), frash (Tamarix aphylla), mulberry (Morus alba), and sufaida (Eucalyptus camaldulensis). The highway passes through flat irrigated lands where no forest/game reserve, wildlife sanctuary or any protected areas have been encountered. No endangered species of trees, grasses, shrubs, birds, mammals, or reptiles have been reported. 6. Kabirwala–Shorkot. This provincial highway also a small section of Jhang–Shorkot–Kabirwala highway, joining the national highway (N-5) at Kabirwala This is the only provincial highway that is running on a raised embankment with an average height of 2.00 m. Its traffic density is 2,931 vehicles per day. The first 5 km section of provincial highway is passing through a flood plain of the Sidhnai Barrage where from spill-water, in high floods, is provided an escape route. This section is completely devoid of any tree cover. Despite some visible effects of salinity, it serves as a rangeland for the local herders. Population settlements and cultivations exist at terminal ends. The highway passes through irrigated lands where no forest or game reserve, wildlife sanctuary, or protected areas have been encountered. No endangered species of trees, grasses, shrubs, birds, mammals, or reptiles have been reported. 7. Kabirwala–Mahnisial. The highway start from Kabirwala City. The current maintenance state of the highway is quite dilapidated. Due to high population and cultivations, a large traffic composition exists on this provincial highway. Its traffic density is 2,931 vehicles per day, equivalent to Kabirwala–Shorkot provincial highway. It runs through cultivation fields where mango and citrus orchards are in abundance. The other common trees are kikar (Acacia arabica/nilotica), shisham (Dalbergia sissoo) and sufaida (Eucalyptus camaldulensis). Most of the settlements are having thin tree cover. However, along short stretches a tree density ranging from 60–80% has been noted. In aggregate, the overall tree density is almost 20–30%. The highway passes through flat irrigated lands where no forest or game reserve, wildlife sanctuary, or any protected areas have been encountered. No endangered species of trees, grasses, shrubs, birds, mammals, or reptiles have been reported. 8. Kamalpur–Chiniot–Sargodha. This provincial highway originates at the outskirts Faisalabad and it takes-off from Kamalpur. Out of all the selected provincial highways, this is one of the busiest highways, having a traffic density of 7,113 vehicles per day. The land along the highway is fertile with high crop yield. During paddy cultivations and flood season inundation is quite common. The Chenab River is crossed 26 km from Faisalabad, where isolated and protruding rocky-mountains are located. After passing through Chenab Nagar town, a small woodlot of FD is bisected by the provincial highway at 39 km. At 52 km, for nearly 8.00 km, once again the landscape is girdled with isolated rocky mountains, which are housing nearly 300–350 stone crushing operations. Due to the heavy concentration of crushers, heavy concentrations of dust has been noted, and is a source of respiratory disorders. The present tree cover is 15%. The common tree species are kikara (Acacia nilotica), shisham (Dalbergia sissoo), shareen (Albizzia lebbek), shareen (Albizzia procera), borh (Ficus religiosa), barna (Crataeva religiosa), phulahi (Acacia modesta), dharaik (Melia azadirachta), mesquite (Prosopis juliflora), mulberry (Morus alba) and simal (Bombax cieba). The highway does not pass through forest orgame reserve, wildlife sanctuary, or any protected area. No endangered species have been reported. However agro-forestry has provided alternate habitats for many birds. 9. Sargodha–Khushab. This provincial highway originates at the outskirts of Sargodha. The highway has a traffic density of 6,925 vehicles per day, and is the second busiest roadway in the Project. The current provincial highway riding conditions are not good. The population density along the roadsides is high. The Sargodha–Mianwali railway line runs parallel with this provincial highway. The road runs almost on level ground, adjoining vast stretches of cultivated fields where

Appendix 17 57

citrus orchards are in abundance and through flat irrigated lands. The common trees are kikar (Acacia arabica/nilotica), shisham (Dalbergia sissoo) and sufaida (Eucalyptus camaldulensis). The average tree density is almost 20–25%. No forest or game reserves, wildlife sanctuary, protected areas, or endangered species have been reported. 10. Jhang–Toba Tek Singh–Chichawatni . This provincial highway originates from Jhang, crossing through Toba Tek Singh and terminating at Chichawatni. The traffic density of the road is 4,193 vehicles per day. The provincial highway passes through two major towns: Toba Tek Singh, and Kamalia. It also crosses the Ravi River and five major and five minor canals. The area is at the fringes of Thal Desert and, between two rivers, Indus and Jhelum, the entire area is a fairly young alluvial deposit. From Jhang to Chichawatni, the soil characteristics vary from sandy loam to silty sand loam. No roadside afforestartion work has been done and most of the area has very thin plant cover. The average tree cover is 10–15%. At Chichawatni a compact linear plantation of xxxx hectares is found, and is sandwiched between national highway 5 and the main Karachi–Peshawar railway line. The common tree species are kikar (Acacia nilotica), shisham (Dalbergia sissoo) and Mesquite (Prosopis juliflora); some scattered species of van (Salvadora oleoides), frash (Tamarix aphylla), simal (Bombax cieba), mulberry (Morus alba), sufaida (Eucalyptus camaldulensis) and jand (Prosopis cineraria) occur. The highway does not pass through forest orgame reserves, wildlife sanctuaries, or protected area. No endangered species have been reported. 11. Shorkot City–Shorkot Cantt. This RAR starts from a T junction of Jhang–Shorkot–Kabirwala gighway. The traffic volume is 829 vehicles per day, and has recently doubled. The road runs on a flat level ground through cultivated fields and the population density is relatively high. The area has high salinity and a high water table. Toward its terminal end at Shorkot Cantt, the road also crosses a major canal, the Trimu–Sidhnai Link. The roadside vegetative cover is very poor, with an average density of 10%. However, it is the only project road, that passes through a corner of a protected forest, the Shorkot Plantations, xxxx hectares Shorkot is an irrigated plantation where common trees are kikar (Acacia arabica/nilotica), shisham (Dalbergia sissoo) and Sufaida (Eucalyptus camaldulensis). This plantation is also a wildlife sanctuary where common species are foxes (Vulpes bengalensis), jackals (Canis aureus) and wild boar (Sus scrofa). Owing to extensive sugarcane cultivation the wild boar population has increased considerably. Among the birds, the eagle (Aquila rapax ridhiana), hawk (Accipiter badius cenchroides), kite (Milvus migrans govinda), parrot (Paleornis torquata), partridge (Fvancolinus pondoceraianus mecrranesis), and common crow (Corvidae splendens) are quite common. Because of the presence of canals, a large variety of waterfowl and migratory birds are also available. 12. Abdul Hakim–Mian Channu. According to the traffic survey of the Communication and Works Department (CWD), the road carries 3,114 vehicles per day. However, during field reconnaissance, a far lesser traffic density had been observed. The road runs through irrigated and cultivable lands where Talamba Town, the only major town on this RAR, is passed at its outskirts. The road also crosses two major canals: Sidhnai–Mailsi Link Canal and Lower Bari Doab Canal. Like other RARs it is on a leveled ground, adjoining vast stretches of cultivated fields where mango orchards are in abundance. The road has a mixed tree density of 0–50%, with an average of 20–25%. The common trees are kikar (Acacia arabica/nilotica), shisham (Dalbergia sissoo) and sufaida (Eucalyptus camaldulensis). Most of the trees are mature or dead, and no new plantings has occurred. Other scattered tree species are poplar (Populus euramericana), van (Salvadora oleoides), frash (Tamarix aphylla), simal (Bombax cieba), jamin (Syzygium cumini), shareen (Albizzia lebbek), borth (Ficus religiosa), dharaik (Melia azadirachta) and simal (Bombax cieba).There are no trees along the road side and no forest or game reserves, wildlife sanctuaries, or protected areas. No endangered species have been reported.

58 Appendix 17

13. Bhawalnagar–Bhukkan. This RAR start from the middle of the Bhawalnagar Town. The road crosses settlements agricultural land, and range land. The traffic density is 1,787 vehicles per day. Except on the approaches on the Sutlej River river bridge, the road is on a leveled ground with adjoining cultivated fields with some mango orchards. Though some good patches of roadside trees have been found, the overall density is barely 10–15%. The common tree species are kikar (Acacia arabica/nilotica), shisham (Dalbergia sissoo), mesquite (Prosopis juliflora), van (Salvadora oleoides) and frasj (Tamarix aphylla). No fores or /game reserves, wildlife sanctuaries, or protected areas occur along the road and no endangered species have been reported. 14. Phalia–Kuthiala Sheikhan. The road originates from the outskirts of Phalia, a subdivision of Mandi Bha-ud-Dind District. The traffic volume is high at about 1,775 vehicles per day. The road is level with the adjoining cultivated fields and water table is high. Thus, the pavement has developed many cracks and corrugations, making the riding rough and bumpy. Of all the project roads tree density, with some the strectches having 100% cover, and over all tree cover is 40–50%. The common trees are kikar (Acacia nilotica), shisham (Dalbergia sissoo), sufaida (Eucalyptus camaldulensis), mesquite (Prosopis juliflora), frash (Tamarix aphylla), simal (Bombax ciebal) and mulberry (Morus alba). Most of the trees are mature or dead. Because of the high roadside population, biotic pressure is increasing and heavy lopping damage has also been noted. In aggregate, the overall tree density is almost 20 – 30 %. No forest/game reserve, wildlife sanctuary or any protected areas have been encountered. No endangered species have been reported. 15. Sheikhupura–Hafizabad. This road is on the existing 45.0 km Sheikhupura–Hafizabad Road. For about 21.00 km, the road has 6.10 m wide pavement and is on a raised embankment, after which it tapers down to 3.65 m width and is at field level. The traffic volume is about 1,540 vehicles per day. Owing its narrow width, and with high traffic density, the road is in a very poor state of maintenance. Because the road is with the adjoining lands and the water table is high, the 3.65 m (12 ft) wide pavement has developed many cracks, potholes and corrugations, making the riding very rough. The road has the least tree density, barely 5 %. Common trees along the road are kikar (Acacia nilotica), shisham (Dalbergia sissoo), mesquite (Prosopis juliflora) and jamen Syzygium cumini). The road does not pass through any forest or game reserves, wildlife sanctuary, or protected areas. No endangered species have been reported. D. Screening of Potential Environmental Impacts and Mitigation Measures 16. No significant environmental impact is expected due to the 12 project roads, because the Project will be confined to rehabilitating existing roads. However since one of the RARs will cross a wildlife sanctuary, efforts to prevent any adverse impacts to the sanctuary and road users during the construction or operation. An in-depth environmental study to identify the impacts on the sanctuary and its biodiversity, will be carried out to recommend how the road design, construction works, and operation of the road can sustain the sanctuary while providing a better and safe access for the road users. The findings of the study will be taken into account in road design, construction, and operation. The subproject may be rejected if unacceptable adverse environmental impacts are found. 17. The environmental impacts associated with the construction stage may include (i) disruption of traffic in the construction area, (ii) increased air pollution due to increased dust and other volatile chemical substances from asphalt plant, (iii) noise and vibration, (iv) disruption of water systems due to cut and filling and other earth work, and (v) potential landslide associated with elevating of the road. These impacts will occur only during the construction period. Mitigation measures will include (i) rerouting the traffic during construction stage; (ii) maintaining the optimum moisture

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content during handling of soil, spraying water to minimize dust, and maintaining safe distance between asphalt plants and public facilities including education facilities; (iii) strictly controlling the construction works that create noise and vibration by prohibiting night work in residential areas; (iv) pumping stagnant water, and providing adequate drainage systems; (v) stabilizing road embankment side slopes; (vi) avoiding road widening at ponds and widening roads only on one side to avoid excessive tree cutting; and (vii) planting trees. All these mitigation requirements will be included in the contract document for the contractor. Clearly, all the impacts are temporary and manageable. 18. The environmental impact associated with the operation of the Project will mainly be on traffic safety, therefore, adequate traffic signs and physical barriers to reduce motorists speeds will be provided. Borrow pit operations will be strictly controlled (e.g. no borrow pits allowed in the agriculture lands or areas prone to erosion and landslide, and ex-borrow pit areas will be rehabilited). E. Institutional Requirement and Environmental Monitoring Program 19. Institutional Framework and Responsibility. Implementation of mitigation measures during the construction stage will be the responsibility of the contractor. An environmental specialist will be hired as part of the consultant team for implementing the Project and will assist the Road Safety, Environment and Social Assessment Cell (RSESAC) within CWD to prepare contractual documents so that the bidding documents, bills of quantity, and other obligations of the contractors clearly identify their environmental responsibilities and describe penalties for noncompliance. In addition, the environmental specialist as part of the consultant team, will also be responsible for preparing an environmental management plan and supervisisng the SEU in monitoring the implementation of mitigation measures during the construction stage. CWD and its RSESAC will be responsible for implementing overall environmental monitoring and management. 20. The in-depth environmental study for the Shorkot City–Shorkot cantt segment will be undertaken to identify the impacts of road rehabilitation on the sanctuary and its biodiversity, and will be carried out by a consultant hired as part of the engineering design team. The recommendations from this study will be conveyed to the Asian Development Bank for final decision on inclusion of this segment. F. Finding and Recommendations

21. The IEE study shows that environmental impacts associated with this proposed Project are manageable and can be mitigated. Therefore, a full environmental impact assessment is not required to assess further impacts for roads involved in this Project. An in-depth environmental study is required for Shortkot City–Shorkot Cantt road, which crosses a wildlife sanctuary area.. Civil works for this segment road can be started only after the in-depth environmental study is completed and results are integrated into the project design. G. Conclusion

22. The Project will improve roads that are currently in place. The overall IEE finding is that the Project will not cause a significant environmental problem and the potential adverse impacts are manageable. Subsequent in-depth study of one subproject will confirm its potential impact on a wildlife sanctuary and its biodiversity. Depending of the findings of the study, that subproject will be rejected or still included. Continued monitoring will be carried out.