FOR OFFICIAL USE ONLY - World Bank...KMTT Kandy Multimodal Transport Terminal KTIP Kandy Transport...

FOR OFFICIAL USE ONLY

Report No: PAD3671

INTERNATIONAL DEVELOPMENT ASSOCIATION

PROJECT APPRAISAL DOCUMENT

ON TWO

PROPOSED CREDITS

IN THE AMOUNT OF SDR 47,137,315 (CONCESSIONAL) AND US$5.00 MILLION (NON-

CONCESSIONAL) (US$69.33 MILLION EQUIVALENT)

TO THE

DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA

FOR A

KANDY MULTIMODAL TRANSPORT TERMINAL DEVELOPMENT PROJECT

April 27, 2020 Transport Global Practice South Asia Region

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

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CURRENCY EQUIVALENTS

(Exchange Rate Effective March 31, 2020)

Currency Unit = Sri Lanka Rupees (LKR)

LKR 189.25 = US$1

US$1.3648 = SDR 1

FISCAL YEAR

January 1 – December 31

ABBREVIATIONS AND ACRONYMS

CBA Cost-Benefit Analysis

CBD Central Business District

CEA Central Environmental Authority

CPF Country Partnership Framework

CPPTSA Central Province Passenger Transport Services Authority

DA Designated Account

DPD Deputy Project Director

DRM Disaster Risk Management

EIA Environmental Impact Assessment

EIRR Economic Internal Rate of Return

ESCP Environmental and Social Commitment Plan

ESF Environmental and Social Framework

ESIA Environmental and Social Impact Assessment

ESMP Environmental and Social Management Plan

ESS Environmental and Social Standards

FA Financing Agreement

FM Financial Management

GBV Gender-based Violence

GDP Gross Domestic Product

GHG Greenhouse Gas

GoSL Government of Sri Lanka

GRM Grievance Redress Mechanism

HEIS Hands-on Expanded Implementation Support

ISPTP Integrated Strategic Public Transport Plan

IUFR Interim Unaudited Financial Report

JICA Japan International Cooperation Agency

KMC Kandy Municipal Council

KMTT Kandy Multimodal Transport Terminal

KTIP Kandy Transport Improvement Program

LMP Labor Management Procedure

MFD Maximizing Finance for Development

MTSM Ministry of Transport Services Management

MUDWSHF Ministry of Urban Development, Water Supply and Housing Facilities

NAOSL National Audit Office of Sri Lanka

NDC Nationally Determined Contribution

NMT Nonmotorized Transport

NPF National Policy Framework

NPV Net Present Value

NTC National Transport Commission

PDO Project Development Objective

PIU Project Implementation Unit

PMU Project Management Unit

PLR Performance and Learning Review

PPP Public-Private Partnership

PPSD Project Procurement Strategy for Development

RAP Resettlement Action Plan

RDA Road Development Authority

SCDP Strategic Cities Development Project

SDG Sustainable Development Goal

SEP Stakeholder Engagement Plan

SLR Sri Lanka Railways

SLTB Sri Lanka Transport Board

SPD Standard Procurement Document

STEP Systematic Tracking of Exchanges in Procurement

TA Technical Assistance

TnG Touch-and-Go

ToD Transit-oriented Development

UDA Urban Development Authority

UNFPA United Nations Population Fund

Regional Vice President: Hartwig Schafer

Country Director: Idah Z. Pswarayi-Riddihough

Regional Director: Guangzhe Chen

Practice Manager: Shomik Raj Mehndiratta

Task Team Leader(s): Wei Wang

The World Bank Kandy Multimodal Transport Terminal Development Project (P172342)

TABLE OF CONTENTS

DATASHEET ........................................................................................................................... 1

I. STRATEGIC CONTEXT ...................................................................................................... 7

A. Country Context................................................................................................................................ 7

B. Sectoral and Institutional Context .................................................................................................... 7

C. Relevance to Higher Level Objectives ............................................................................................. 11

II. PROJECT DESCRIPTION .................................................................................................. 13

A. Project Development Objective ..................................................................................................... 13

B. Project Components ....................................................................................................................... 14

C. Project Cost and Financing ............................................................................................................. 15

D. Project Beneficiaries ....................................................................................................................... 16

E. Results Chain ................................................................................................................................... 17

F. Rationale for Bank Involvement...................................................................................................... 18

G. Lessons Learned and Reflected in the Project Design .................................................................... 18

III. IMPLEMENTATION ARRANGEMENTS ............................................................................ 19

A. Institutional and Implementation Arrangements .......................................................................... 19

B. Results Monitoring and Evaluation Arrangements......................................................................... 19

C. Sustainability ................................................................................................................................... 20

IV. PROJECT APPRAISAL SUMMARY ................................................................................... 21

A. Technical and Economic Analysis ................................................................................................... 21

B. Fiduciary .......................................................................................................................................... 22

C. Legal Operational Policies ............................................................................................................... 23

D. Environmental and Social ............................................................................................................... 23

E. Climate and Disaster Screening and Climate Co-Benefits .............................................................. 27

F. Gender ............................................................................................................................................ 28

G. Citizen Engagement ........................................................................................................................ 29

V. GRIEVANCE REDRESS SERVICES ..................................................................................... 30

VI. KEY RISKS ..................................................................................................................... 30

VII. RESULTS FRAMEWORK AND MONITORING ................................................................... 33

ANNEX 1: Implementation Arrangements and Support Plan .......................................... 40

ANNEX 2: Detailed Project Description .......................................................................... 47

ANNEX 3: Background of the Project ............................................................................. 52


ANNEX 4: Economic Analysis ......................................................................................... 54


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DATASHEET

BASIC INFORMATION BASIC_INFO_TABLE

Country(ies) Project Name

Sri Lanka Kandy Multimodal Transport Terminal Development Project

Project ID Financing Instrument Environmental and Social Risk Classification

P172342 Investment Project Financing

Substantial

Financing & Implementation Modalities

[ ] Multiphase Programmatic Approach (MPA) [✓] Contingent Emergency Response Component (CERC)

[ ] Series of Projects (SOP) [ ] Fragile State(s)

[ ] Disbursement-linked Indicators (DLIs) [ ] Small State(s)

[ ] Financial Intermediaries (FI) [ ] Fragile within a non-fragile Country

[ ] Project-Based Guarantee [ ] Conflict

[ ] Deferred Drawdown [ ] Responding to Natural or Man-made Disaster

[ ] Alternate Procurement Arrangements (APA)

Expected Approval Date Expected Closing Date

18-May-2020 31-May-2025

Bank/IFC Collaboration

No

Proposed Development Objective(s)

The Project Development Objective (PDO) is to enhance accessibility, efficiency, and safety for public transport users of the Kandy Multimodal Transport Terminal.


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Components

Component Name Cost (US$, millions)

Development of Kandy Multimodal Transport Terminal 64.32

Urban Integration and Road Safety Improvements around KMTT 1.00

Institutional Strengthening and Capacity Building 4.00

Contingent Emergency Response Component 0.00

Organizations

Borrower: Democratic Socialist Republic of Sri Lanka

Implementing Agency: Ministry of Urban Development, Water Supply and Housing Facilities

PROJECT FINANCING DATA (US$, Millions)

SUMMARY-NewFin1

Total Project Cost 69.33

Total Financing 69.33

of which IBRD/IDA 69.33

Financing Gap 0.00

DETAILS -NewFinEnh1

World Bank Group Financing

International Development Association (IDA) 69.33

IDA Credit 69.33

IDA Resources (in US$, Millions)

Credit Amount Grant Amount Guarantee Amount Total Amount

Sri Lanka 69.33 0.00 0.00 69.33

National PBA 64.33 0.00 0.00 64.33


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Transitional Support 5.00 0.00 0.00 5.00

Total 69.33 0.00 0.00 69.33

Expected Disbursements (in US$, Millions)

WB Fiscal Year 2020 2021 2022 2023 2024 2025 2026

Annual 0.00 1.50 12.00 17.00 17.00 17.00 4.83

Cumulative 0.00 1.50 13.50 30.50 47.50 64.50 69.33

INSTITUTIONAL DATA Practice Area (Lead) Contributing Practice Areas

Transport Infrastructure, PPP's & Guarantees

Climate Change and Disaster Screening

This operation has been screened for short and long-term climate change and disaster risks

SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT)

Risk Category Rating

1. Political and Governance ⚫ Moderate

2. Macroeconomic ⚫ Substantial

3. Sector Strategies and Policies ⚫ Low

4. Technical Design of Project or Program ⚫ Substantial

5. Institutional Capacity for Implementation and Sustainability ⚫ Substantial

6. Fiduciary ⚫ Substantial

7. Environment and Social ⚫ Substantial

8. Stakeholders ⚫ Substantial

9. Other

10. Overall ⚫ Substantial


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COMPLIANCE

Policy Does the project depart from the CPF in content or in other significant respects?

[ ] Yes [✓] No

Does the project require any waivers of Bank policies?

[ ] Yes [✓] No

Environmental and Social Standards Relevance Given its Context at the Time of Appraisal

E & S Standards Relevance

Assessment and Management of Environmental and Social Risks and Impacts Relevant

Stakeholder Engagement and Information Disclosure Relevant

Labor and Working Conditions Relevant

Resource Efficiency and Pollution Prevention and Management Relevant

Community Health and Safety Relevant

Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Relevant

Biodiversity Conservation and Sustainable Management of Living Natural

Resources

Not Currently Relevant

Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional

Local Communities

Not Currently Relevant

Cultural Heritage Relevant

Financial Intermediaries Not Currently Relevant

NOTE: For further information regarding the World Bank’s due diligence assessment of the Project’s potential environmental and social risks and impacts, please refer to the Project’s Appraisal Environmental and Social Review Summary (ESRS). Legal Covenants

Sections and Description


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The Recipient shall by no later than three (3) months after the Effective Date (or such other date which the Association has confirmed in writing to the Recipient is reasonable and acceptable under the circumstances, as determined by the Association in its sole discretion), establish, and thereafter maintain throughout the period of Project implementation, the Steering Committee within its MUDWSHF and chaired by its Secretary, which shall be responsible for overall Project oversight and supervision, coordinating with the its MTSM, SLTB, SLR. (FA, Schedule 2, Section I.A.1)

Sections and Description The Recipient shall establish and fully staff, by no later than three (3) months after the Effective Date (or such other date which the Association has confirmed to the Recipient is reasonable and acceptable under the circumstances, as determined by the Association in its sole discretion), and thereafter maintain, throughout the period of Project implementation, a Project Management Unit (“PMU”) located in Kandy within its MUDWSHF, which shall be headed by a full-time project director and which shall be provided with competent, experienced and qualified staff in sufficient numbers and under terms of reference acceptable to the Association, including an officer seconded from the Recipient’s MTSM, to carry out the day-to-day implementation of the Project, including: (i) ensuring that all activities are planned, financed and implemented as per the Project work program and budget and the Project Operations Manual (“POM”); (ii) ensuring that procurement and financial management activities are carried out timely and in accordance with policies and procedures acceptable to the Association; (iii) ensuring that social and environmental safeguard requirements are fully complied with; (iv) monitoring Project activities; and (v) preparing and submitting to the Association Project financial and progress reports. (FA, Schedule 2, Section I.A.2.(a))

Sections and Description The Recipient shall by no later than twelve (12) months after the Effective Date (or such other date which the Association has confirmed in writing to the Recipient is reasonable and acceptable under the circumstances, as determined by the Association in its sole discretion), ensure that the Project has adequate supervision capacity, through either by (i) hiring, and thereafter maintain throughout the period of Project implementation, a supervision consultant whose terms of reference acceptable to the Association; or (ii) building up the technical competencies of the PMU (including, but not limited to, ensuring to have an experienced team to handle the complexity of the civil works and to have sufficient on-site personnel for overseeing the proper execution of works and completion of the Project in a timely manner) to conduct supervision consultant’s roles within the PMU, satisfactory to the Association. (FA, Schedule 2, Section I.A.2.(b))

Sections and Description The Recipient shall furnish to the Association for approval as soon as available, but in any case, not later than November 30 of each year during Project implementation, a proposed annual work plan and budget (“Annual Work Plan and Budget”) for the Project and the updated Procurement Plan for each subsequent Fiscal Year, of such scope and detail as the Association shall have reasonably requested, except for the annual work plan and budget for the first Fiscal Year which shall be furnished prior to the commencement of the relevant activities under the Project. (FA, Schedule 2, Section I.A.3)

Sections and Description The Recipient shall, not later than two (2) months after furnishing each Annual Work Plan and Budget referred to in the preceding paragraph to the Association, finalize and adopt, and thereafter ensure that the Project is carried out in accordance with, such plan and budget as agreed in writing with the Association. (FA, Schedule 2, Section I.A.4)


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Sections and Description The Recipient shall, not later than twelve (12) months after the Effective Date (or such other date which the Association has confirmed in writing to the Recipient is reasonable and acceptable under the circumstances, as determined by the Association in its sole discretion), form a committee whose terms of reference acceptable to the Association to explore different options to manage the KMTT in a more collaborative and sustainable manner. (FA, Schedule 2, Section I.A.5)

Sections and Description By no later than six (6) months after the Effective Date, the Recipient shall prepare and adopt a manual for the implementation the Project (the “Project Operations Manual”) and ensure that it is, in form and substance, acceptable to the Association. (FA, Schedule 2, Section I.C.1)

Sections and Description The Recipient shall furnish to the Association each Project Report not later than one month after the end of each calendar quarter, covering the calendar quarter. (FA, Schedule 2, Section II.A)

Sections and Description The Recipient shall: (a) on or about December 5, 2022, prepare and furnish to the Association a mid-term report, in such detail as the Association shall reasonably request, documenting progress achieved in the carrying out of the Project during the period preceding the date of such report, taking into account the monitoring and evaluation activities performed pursuant to Part A above, and setting out the measures recommended to ensure the continued efficient implementation of the Project and the achievement of its objectives during the period following such date; and (b) review with the Association such mid-term report, on or about the date forty-five (45) days after its submission, and thereafter take all measures required to ensure the continued efficient implementation of the Project and the achievement of its objectives, based on the conclusions and recommendations of the mid-term report and the Association’s views on the matter. (FA, Schedule 2, Section II.B)

Conditions


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I. STRATEGIC CONTEXT

A. Country Context

1. Sri Lanka has shown steady growth over the last decade although key macroeconomic challenges persist. Sri Lanka is an upper-middle-income country with a gross domestic product (GDP) per capita of US$4,102 (2018) and a total population of 21.7 million. Following 30 years of civil war that ended in 2009, Sri Lanka’s economy grew at an average of 5.6 percent during 2010–2018, reflecting a peace dividend and a determined policy thrust toward reconstruction and growth. However, economic growth witnessed a slowdown in the last few years.

2. Social indicators rank among the highest in South Asia and compare favorably with those in middle-income countries. Economic growth has translated into shared prosperity with the national poverty headcount ratio declining from 15.3 percent in 2006/07 to 4.1 percent in 2016. Extreme poverty is rare and concentrated in some geographical pockets. However, a relatively large share of the population subsists on slightly more than the poverty line. Female labor force participation at 34.9 percent was less than half of men (73.4 percent) by 2019 and needs to increase to facilitate sustained economic growth.1

3. Macroeconomic vulnerabilities remain high due to weak fiscal buffers, high indebtedness, and large refinancing needs. The outbreak of COVID-192 is expected to dampen growth significantly through reduced export earnings, private consumption, and investment in the short run. Reforms to improve competitiveness will be important to enhance growth potential.

B. Sectoral and Institutional Context

4. The COVID-19 pandemic has taken a significant human and economic toll throughout the world, and Sri Lanka is no exception. This project will be implemented during the pandemic recovery. In the short term, it will generate significant employment opportunities, aiding the country in the COVID-19 economic recovery. In the medium term, the project will support increased travel, commuter, and tourism needs of Kandy city in the post-pandemic period.

5. Kandy, a city of strategic importance, is in central Sri Lanka. The Kandy city region is known for both its natural and cultural attractions and its strategic geographic location. The city has a population of 173,121 (2011)3 spread across a land area of approximately 28.53 km2. Kandy is the capital city of the Central Province of Sri Lanka, which is the second-biggest contributor to the country’s economy with a share of 10.7 percent4 of the GDP. The city’s central location, with road access to all other regions of the island, positions it with the potential to become a residential and commercial hub. Kandy was identified as a World Heritage Site by the United Nations Educational, Scientific, and Cultural Organization in 1988 and is a major tourist attraction in the country. Thus, the city region stands to benefit significantly from a

1 Department of Census and Statistics, Sri Lanka, http://www.statistics.gov.lk/samplesurvey/2019Q1report.pdf. 2 Coronavirus Disease - 2019 3 Public Transport Design & Operations Management Plan & Strategic Traffic Demand Management & Design Plan for Kandy. 4 Central Bank of Sri Lanka, Annual Report 2019.

http://www.statistics.gov.lk/samplesurvey/2019Q1report.pdf


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well-planned urban transport network that could enhance accessibility to and from the city, efficient mobility within the city region, and its attractiveness as a tourist destination.

6. Traffic congestion poses a major constraint to the city’s development potential. The Kandy city region attracts many commuters for employment, shopping, education, services, cultural, and entertainment purposes. Under the World Bank’s Strategic Cities Development Project (SCDP), a comprehensive traffic analysis was conducted within the Kandy city region to identify major bottlenecks for transport and passenger commuting.5 The study found that nearly 389,000 commuters enter the city on a typical weekday through different transport modes for various purposes (27 percent for employment and 19 percent for education). Around 58 percent of these commuters use public transport to enter the city, around 15 percent use private vehicles, and 8 percent use paratransit (mostly three-wheelers/tuk-tuks) modes. The share of passengers using nonmotorized transport (NMT) such as bicycles is insignificant (0.03 percent); tourist vans, school vans, and other transport modes like tractors make up the rest of the passenger transport. The high volumes of vehicle and passenger flows into the city region have resulted in significant levels of congestion in the heart of the city during peak hours, leading to inefficiency, loss of productivity, and air pollution.

7. Lack of adequate transport infrastructure has aggravated traffic congestion in the city. The main mode of public transport in Kandy is buses, with 500–600 buses operated by the state-owned Sri Lanka Transport Board (SLTB) and around 1,900 buses operated by private bus operators. The city center has a large bus terminal—the Goods Shed—and two smaller-scale bus stations—Clock Tower and Torrington— (collectively referred to herein as the terminals), which are used by both public and private bus operators for both inter- and intra-provincial services. They attract nearly 80 percent (165,000) of the 209,000 bus commuters entering the city daily through approximately 5,000 bus trips. With an equal number of outbound bus travelers, a total of nearly 330,000 passengers (served by 10,000 bus trips) use the three terminals on a daily basis. The Goods Shed terminal is the largest terminal, and, given its proximity to Kandy railway station, attracts the majority of the passenger flow. Nearly all bus trips (97.4 percent of the 5,000 trips) to the Kandy city region terminate at these three terminals (with 69 percent of the 5,000 trips terminating at the Goods Shed), with only 2.6 percent of inter-provincial trips bypassing or passing through the city for onward journey (touch-and-go [TnG]).

8. The terminals lack critical infrastructure—such as adequately planned bus bays, parking areas for buses, waiting and queuing areas for passengers, adequate sanitation facilities, and centralized ticket/information counters—to accommodate the high volume of bus and passenger traffic. Passenger queues can most often be seen spilling over to the road due to the lack of adequate space. The lack of segregation of bus and pedestrian movement around the area poses significant safety risks for the pedestrians. The large number of bus trips terminating at the three terminals has led to an abnormally high requirement of dispatch and parking bays, spillover parking on the road around the terminals, long layovers, and congestion around the three terminals. Facilities provided in the three existing terminals and in the parking places in the surrounding areas are not sufficient to meet current bus parking requirements. Organized off-street bus parking is available only at two venues—Bogambara and Kandy South Depot—for 70 and 30 buses, respectively, and are far fewer than required. Furthermore, the high

5 Public Transport Design and Operations Management Plan and Strategic Traffic Demand Management and Design Plan for Kandy: Integrated Strategic Public Transport Plan (ISPTP) and Strategic Traffic Management and Traffic Circulation Plan Report for Kandy Central Business District (CBD).


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level of passenger flows around the terminals, coupled with pedestrians within the city, results in heavy pedestrian movement around the city area. Lack of safe walking paths and pedestrian-friendly infrastructure has added to the traffic congestion in the city and has created safety risks for pedestrians.

9. The existing terminals are inadequate to safely maintain full or partial passenger operations during pandemics. Given frequent crowding and insufficient space during peak hours, adequate social distancing is not practical. Existing sanitary facilities are insufficient and do not allow for effective sanitary practices before and after bus trips. Given the number of passengers who use public transport in Kandy, the terminal is a potential hot spot for pandemic virus transmissions, unless the risks are effectively mitigated.

10. The existing terminals do not provide adequate facilities to ensure the personal safety of commuters or public transport workers. The Goods Shed terminal and the other existing bus stands do not have adequate lighting, passenger waiting areas, adequate segregation of bus and pedestrian movement, security surveillance, personnel to handle safety concerns, or signage with necessary instructions. This has led to these areas being particularly unsafe for female commuters as well as female workers and has created an environment where women are subjected to sexual harassment. The terminals also lack other female-friendly facilities such as breastfeeding areas and adequate sanitation facilities. Lack of such facilities and safety of women has also been identified as a key reason for the low engagement of women in bus operations such as timekeeping and bus crews. This has led to a large gender gap in employment in bus transport operations, where only 3 percent are women. A recent study by the World Bank has identified security concerns and inadequate or unsafe transportation networks as a key constraint in increasing female employment6 in Sri Lanka.7 A United Nations Population Fund (UNFPA) study at the national level found that at least 90 percent of the women surveyed have been subjected to sexual harassment when using public transport.8 Sexual harassment and the resulting environment of insecurity, as well as the lack of other facilities in public transport, can limit women’s full participation in public life, employment, and education, especially for women from lower socioeconomic background who depend on public transport.9 Studies also reflect low rates of women seeking support from law enforcement and knowledge of services that were available to report harassment.

11. Kandy is among cities with the highest number of road accidents in the country. The total number of road accidents in Kandy in 2016 was 2,221, and 105 of these incidents were fatal10 (3.5 percent of the total fatalities recorded in the country). While reliable data on road safety in Kandy are not

6 Sri Lanka’s female labor force participation remains low with only 34.9 percent of the labor force being women as compared to 73.4 percent of men (Source: Department of Census and Statistics, Sri Lanka: http://www.statistics.gov.lk/samplesurvey/2019Q1report.pdf). 7 Solotaroff, J. L., G. Joseph, and A. Kuriakose. 2018. Getting to Work: Unlocking Women’s Potential in Sri Lanka’s Labour Force. Washington, DC: World Bank. 8 UNFPA. 2015. Sexual Harassment on Public Buses and Trains in Sri Lanka. https://srilanka.unfpa.org/sites/default/files/pub-pdf/FINAL%20POLICY%20BRIEF%20-%20ENGLISH_0.pdf. 9 Asian Development Bank. 2014. Rapid Assessment of Sexual Harassment In Public Transport and Connected Spaces in Karachi. Technical Assistance Consultant’s Report. https://www.adb.org/sites/default/files/project-document/152881/44067-012-tacr-19.pdf; UNFPA. 2015. Sexual Harassment on Public Trains and Buses, Sri Lanka. 10 NTC. 2017. “National Transport Statistics.”

http://www.statistics.gov.lk/samplesurvey/2019Q1report.pdf

https://srilanka.unfpa.org/sites/default/files/pub-pdf/FINAL%20POLICY%20BRIEF%20-%20ENGLISH_0.pdf

https://srilanka.unfpa.org/sites/default/files/pub-pdf/FINAL%20POLICY%20BRIEF%20-%20ENGLISH_0.pdf

https://www.adb.org/sites/default/files/project-document/152881/44067-012-tacr-19.pdf

https://www.adb.org/sites/default/files/project-document/152881/44067-012-tacr-19.pdf


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available, data at the national level show around 37 percent of lives lost are pedestrians and cyclists,11 with motorcycle-pedestrian crashes accounting for about 40 percent of pedestrian fatalities.

12. A fragmented institutional structure has made transport planning and integration difficult both at the national and provincial levels. The complex institutional structure distributes urban transport responsibilities across multiple ministries, with no lead institution or coordinating body for the sector. Urban transport responsibilities fall under three cabinet-level ministries: The Ministry of Transport Services Management (MTSM) focuses on railways and buses; the Ministry of Roads and Highways focuses on expressways and national highways; and the Ministry of Public Administration, Home Affairs, Provincial Councils, and Local Government is responsible for provincial and local roads. Certain transport projects, such as light rail transit and multimodal transport terminal development, are under the purview of the Ministry of Urban Development, Water Supply, and Housing Facilities (MUDWSHF). The SLTB, a state institution under the MTSM, operates public buses at both the national and provincial levels. Private bus ownership is extremely fragmented, with around 20,241 private buses across the country being owned and operated mostly by individuals. The National Transport Commission (NTC) under the MTSM regulates inter-provincial private buses at the national level, while provincial Passenger Transport Service Authorities under the provincial Ministries of Transport regulate intra-provincial private buses.

13. The fragmented institutional structure has led to a complex ownership and operational structure of the existing bus terminals in Kandy, and this presents additional pandemic management risk. Operations of the terminals are managed by two authorities: the SLTB manages all state buses, while the Central Province Passenger Transport Service Authority (CPPTSA) manages the intra- and inter-provincial private buses. The SLTB maintains small offices in each terminal that house a timekeeper to serve state buses. No space has been allocated for private bus operators to maintain offices. There is no formal timetable integration among state buses and private operators and therefore both operators function on independent timetables creating many inefficiencies. While time schedules are observed fairly well for long-distance operations for both state and private buses, local operations are fraught with unplanned operations often dictated by timekeepers. Ownership of the terminals is complex as the land is owned by the Kandy Municipal Council (KMC),12 while the structures are owned by the respective operators. This has also led to a situation where expenses related to the maintenance of the terminals (cleaning, utilities etc.,) are borne by the operators, while rent from commercial operations within the terminal areas is collected by the KMC. The terminals lack adequate financial planning to understand revenues and expenditures and potential sources of funding This complex institutional structure makes communications and management more challenging during unexpected emergency situations such as pandemic periods.

14. Sri Lanka’s Readiness Plan for Implementation of Intended Nationally Determined Contributions 2017–201913 identifies the transport sector as one of the major contributors to greenhouse gas (GHG) emissions. The increase in private vehicles has resulted in increased traffic congestion, reduced fuel economy, and higher emissions. Vehicles are primarily powered by imported petroleum oil (crude and refined) and 3 billion liters per year (about 70 percent) of the petroleum (mainly

11 World Health Organization. 2018. Global Status Report on Road Safety. 12 In the case of Torrington, which is a just a bus stand along a roadside, land ownership is with the Road Development Authority (RDA). 13 http://www.climatechange.lk/Publications_2016/Readiness%20Plan%20For%20INDCS%20In%20Sri%20Lanka.pdf

http://www.climatechange.lk/Publications_2016/Readiness%20Plan%20For%20INDCS%20In%20Sri%20Lanka.pdf


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diesel) is consumed by the transport sector. The plan recognizes the potential for reducing fuel consumption, and thereby the GHG emissions, in the road transport sector by switching from private vehicles to public (or mass) transport modes.

15. The ongoing SCDP has identified and implemented a number of urban development interventions to address these issues in the Kandy city region. The project supports priority infrastructure investments in the city for urban service improvements and public urban spaces enhancements. The interventions include, among others, development of an Integrated Strategic Public Transport Plan (ISPTP), a strategic traffic management and traffic circulation plan for Kandy, and an urban design scheme and rehabilitation of selected roads (see annex 3 for details). The development of a multimodal transport terminal where the Goods Shed terminal is located, given its proximity to Kandy railway station, and its current use as the major downtown bus terminal while also integrating the other two bus stations (Clock Tower and Torrington) with the terminal as TnG bus stands was one of the key public transport improvement measures recommended by the ISPTP as a critical area for urban improvement. The Kandy Multimodal Transport Terminal (KMTT) once operational is expected to play a significant role in addressing the critical urban mobility issues identified earlier by improving public transport facilities and services in the Kandy city region.

16. The development of the KMTT is a key intervention that is part of a comprehensive transport planning currently underway in the Kandy city region. A key intervention under the SCDP, as part of the development of the public transport plan and the traffic plan,14 was the development of a comprehensive bus scheduling and route planning exercise to increase the efficiency of bus transport in Kandy. As part of this exercise, a new operational plan has been proposed with a number of interventions to restructure the current route operations, including combining routes, spliced routes, introducing new routes, introducing combined timetables for identical routes, and converting the Clock Tower and Torrington bus stations into TnG bus stands (once the KMTT is operational). The plan has been developed considering the potential impact of the KMTT on public transport and passenger mobility within the city once it is operational and therefore the interventions are expected to complement the impact of the KMTT in improving public transport and urban mobility in Kandy. This proposed operational plan has been discussed and agreed with all relevant stakeholders, including the KMC and the Urban Development Authority (UDA). In addition to these interventions, the project is well coordinated with other infrastructure planning activities carried out in the city by other development partners. Key activities are the proposed development of tunnels for vehicle circulation funded by the Government of the Republic of Korea and the development of the Greater Kandy Urban Plan by the UDA of Sri Lanka under the assistance of the Japan International Cooperation Agency (JICA).

C. Relevance to Higher Level Objectives

17. The project is being appraised during the COVID-19 pandemic, and project implementation will be critical for post-pandemic economic recovery. The COVID-19 pandemic has taken a significant human and economic toll throughout the world, and Sri Lanka is no exception. The outbreak of COVID-19 is expected to dampen growth significantly through reduced export earnings, reduced private consumption, and reduced investments in the short term. As all borders are closed, international tourism has come to

14 Public Transport Design and Operations Management Plan and Strategic Traffic Demand Management and Design Plan for Kandy and Strategic Traffic Management and Traffic Circulation Plan Report for Kandy CBD.


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a halt. As such, the new terminal proposed by the project will help reinvigorate the tourist appeal of the Kandy city areas after the pandemic. The project will also create many short-term employment opportunities, which will help expedite the overall post-pandemic economic recovery of the region.

18. The project is well aligned with the World Bank Group’s Sri Lanka Country Partnership Framework (CPF) for FY17–FY20 discussed by the Board on June 28, 2016 (Report No. 104606-LK), as updated by its Performance Learning Review (PLR) of the CPF FY17–FY21 (Report No. 135126-LK). It ties in directly with the Pillar 1 of the PLR that seeks to improve the competitiveness of the economy. The project has the potential to significantly improve the economic contribution of the Kandy region by improving the efficiency of its transport system. An efficient transport system can improve productivity and increase the region’s attractiveness as a tourist destination, thereby creating more economic benefits. The project also contributes in achieving the key objective of urban livability under Pillar 3 of the PLR by reducing congestion in Kandy city and promoting safe and climate-friendly transport systems. In addition, the project contributes to Pillar 2 of the PLR (that seeks to promote inclusion and opportunities for all) by providing more opportunities and access to economic and social activities of the city for residents and commuters.

19. Sri Lanka’s National Policy Framework (NPF) emphasizes the need to improve public transportation in the country as well the importance of integrating physical spatial systems to address disparities in urbanization. It envisions the development of transport networks for an efficient and environment-friendly public transport system. The policy framework identifies Kandy as one of the urban areas to be developed as a national city. The project, given its contribution to improving the public transport system and its strategic location in Kandy and as the gateway to tourism and commuters, will directly contribute in helping the Government of Sri Lanka (GoSL) to achieve the objectives outlined in the NPF.

20. The expected results of the project will contribute directly in achieving a number of Sustainable Development Goals (SDGs). In particular, the project will contribute to achieving SDG 9: Industry, innovation and infrastructure and SDG 11: Sustainable cities and communities by promoting resilient, well-integrated public transport infrastructure that contributes to a reduction in poverty and improvement in economic growth and development. Under SDG 11, the project specifically ties in with the target of ensuring access to safe, affordable, accessible, and sustainable transport systems for all and improving road safety, with special attention to the needs of those in vulnerable situations. The project will also directly contribute to SDG 13: Climate action in mitigating the impacts of climate change by reducing GHG emissions through a modal shift from private to public transportation and reduced congestion in the project area. The proposed terminal design incorporates measures to address the impacts of climate change and disaster risks as well as green building guidelines.

21. The Readiness Plan for Implementation of Intended Nationally Determined Contributions 2017–2019 of the GoSL, which outlines the nationally determined contributions (NDCs) for the transport sector in line with the Paris Agreement, identifies improvement of energy efficiency/fuel economy in the transport sector as a national priority. The plan identifies the transport sector as a major mitigation sector in NDCs. This project has the potential to address a few of the key NDCs identified under the transport sector: establishing energy-efficient and environmentally sustainable transport systems by 2030, shifting passengers from private to public modes of transport, and reducing traffic congestion to lower GHG emissions.


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22. The project has the potential to explore opportunities in Maximizing Finance for Development. Under Component 3, the project will develop a comprehensive business development plan for the KMTT that will explore how the private sector can be engaged, including opportunities for potential public-private partnerships (PPPs), in the institutional arrangements and the operations and maintenance of the Kandy terminal. Studies proposed under Component 2 will assess and inform the Government of the opportunities to engage the private sector in urban integration and road safety improvements around the KMTT.

II. PROJECT DESCRIPTION

23. The development of the KMTT at the existing Goods Shed station in Kandy is critical for post-pandemic economic recovery, as it not only enhances accessibility, efficiency, and safety for public transport users but also creates many short-term employment opportunities post COVID-19. The development of the KMTT was conceived as an important step toward streamlining public transport facilities and services in Kandy from the strategic consultations and studies carried out under the SCDP (see annex 3 for details). The Goods Shed station is located at the city center and provides access to the railway station. Therefore, the terminal is expected to integrate bus, rail, and some paratransit modes (three-wheelers) and pedestrian commuters in the city. The construction of the terminal, including the implementation of transitional transport service solutions, was originally included in the SCDP. However, the GoSL and the World Bank agreed on the development of the KMTT as a stand-alone project, considering the following reasons: (a) a significant delay in the design of the KMTT, (b) the strategic importance of addressing mobility and safety issues in the Kandy city center, (c) the technical complexity of the transport terminal, (d) links of other proposed transport interventions in the city, (e) the size of the intervention, and (f) the need to provide more focused attention to the SCDP and the KMTT development with dedicated implementation support. This project builds on the work carried out under the SCDP, along with essential technical assistance (TA) in the areas of road safety, business development, adapting to pandemics and natural disasters, institutional strengthening, and capacity building required for public transport planning and the operation and maintenance of the multimodal transport terminal.

24. A number of preliminary activities around the development of the KMTT have been initiated under the SCDP. Some of these activities are already completed and some are contracted and currently ongoing. To avoid disruption, the ongoing activities that are currently contracted under the SCDP will continue to be funded by the SCDP until their completion as outlined in the respective contracts. The construction of the main KMTT, the supervision activities, and other TA activities according to Components 2 and 3 will be funded under this project. The completed and ongoing activities related to the KMTT which are carried out under the SCDP are described in detail under annex 3.

A. Project Development Objective

PDO Statement

25. The Project Development Objective (PDO) is to enhance accessibility, efficiency, and safety for public transport users of the Kandy Multimodal Transport Terminal.


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PDO Level Indicators

26. The PDO-level outcome indicators are proposed to be the following:

(a) Access to the intermodal terminal from different transport modes15 measured by the (i) availability of intermodal transfer passages and (ii) presence of physical accommodation and facilities for people with disabilities and baggage

(b) Efficiency measured by share of buses departing the terminal on time

(c) Safety for pedestrians accessing public transport inside the terminal measured by the (i) availability of designated waiting areas for passengers well-separated from bus bays and bus parking areas and (ii) availability of facilities inside the terminal to allow for effective social distancing and sanitation.

(d) Personal security measured by the percentage of passengers who feel safe to travel through the terminal (gender-disaggregated)

B. Project Components

27. The project consists of the following components (see detailed description of the project components in annex 2):

Component 1: Development of Kandy Multimodal Transport Terminal (US$64.32 million)

(a) Construction of a functional terminal building and bus parking facilities which are connected by an internal road

(b) Construction of 150-meter-long skywalk, allowing pedestrians to move safely between the railway station, hospital, and KMTT

(c) Development of pedestrian-friendly public space

(d) Construction of a diversion of Meda Ela, the urban storm water drainage canal, in order to facilitate the construction of the terminal

Component 2: Urban Integration and Road Safety Improvements around KMTT (US$1.00 million)

(a) Carrying out of (i) a study of possible pedestrian-friendly measures around KMTT and (ii) studies to explore transit-oriented development in the surrounding neighborhood

(b) Carrying out of a road safety improvement study from the perspective of engineering design, enforcement of policy, and public awareness

15 Rail, three-wheelers, motorbikes, and other taxis.


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Component 3: Institutional Strengthening and Capacity Building (US$4.00 million)

(a) Preparing a business development plan for overall terminal management and operation which would (i) identify the best institutional arrangement for the management and operations of the KMTT and (ii) analyze financial options and explore potential for private sector participation in maintenance and operation of the KMTT

(b) Building capacity for key stakeholders involved in the management, operation and maintenance of the KMTT through the provision of training, technical assistance

(c) Support to the PMU, including the training of environmental and social requirements and procurement process

Component 4: Contingent Emergency Response Component (US$0 million)

(a) Provision of immediate response to an Eligible Crisis or Health Emergency

C. Project Cost and Financing

28. The total cost of the project will be US$69.33 million, of which US$64.33 million equivalent will be financed through the recommitment of the amount cancelled from the SCDP. IDA concessional terms are applicable to this US$64.33 million equivalent recommitted from the amount cancelled under SCDP. The remaining US$5 million equivalent will be financed under IDA transitional financing support at IDA non-concessional financing terms.

Table 1. Project Cost and Financing (US$, millions)

Project Components Cost Financing Source

IDA Concessional

IDA Non-Concessional

1. Development of Kandy Multimodal Transport Terminal

64.32 59.33 4.99

2. Urban Integration and Road Safety Improvements around KMTT

1.00 1.00 0.00

3. Institutional Strengthening and Capacity Building 4.00 4.00 0.00

4. Contingent Emergency Response Component 0.00 0.00 0.00

Total project cost 69.32 64.33 4.99

Front-end feea 0.01 0.00 0.01

Total cost 69.33 64.33 5.00

Note: a. The front-end fee is one quarter of one percent (0.25 percent) of the IDA non-concessional credit amount.

29. Eligible expenses related to the KMTT part of the project will be charged under the SCDP only up to the date of restructuring of the SCDP.16 Retroactive financing up to an amount equal to US$0.5 million

16 Date of the signature of SCDP restructuring: April 9, 2020.


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will be made available for eligible expenses under Component 117 from such date18 up to the signing of the Financing Agreement (FA) of the project.

D. Project Beneficiaries

30. The key beneficiaries of the project will be public transport users in the Kandy city region. The development of the terminal and the TA provided under the project will lead to less congestion in the city; safer and faster commutes; and greater accessibility to markets, employment, schools, and health facilities, thereby improving the living standards of the general public. Special focus on women and people with disabilities in the design of the project will ensure that they have equal access to the benefits created through the project. A less congested city with a well-planned public transport system will also lead to increased business opportunities as well as increased tourism potential around the city, which will create more employment opportunities for the citizens. The transport operators will also benefit from improved efficiency in their services, which will lead to lower operational costs and improved revenues. Improvements brought by the project will also help preserve the city’s cultural heritage and improve overall city branding through a new, modern, and safe ‘gateway’ to this major tourist hub.

17 As per provision in the FA 18 Date of the signature of SCDP restructuring: April 9, 2020


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E. Results Chain

31. The Theory of Change around the PDO is outlined in figure 1.

Figure 1. Theory of Change

Note: GBV = Gender-based violence; RAP = Resettlement Action Plan.


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F. Rationale for Bank Involvement

32. The GoSL is keen to improve public transport systems and enhance its competitiveness and safety, especially given Kandy’s status as a popular tourist destination. Public transport is universally a publicly financed and subsidized sector given its large economic and social benefits and the need to keep fares at a socially acceptable level and to provide adequate transport coverage. The World Bank’s role is justified because of the project’s economic and social benefits. The World Bank’s engagement in Sri Lanka’s transport sector adds value, including (a) bringing global experience in urban transport planning and investment; (b) providing best practices in climate-resilient and sustainable transport solutions; (c) supporting the GoSL to explore alternative/new arrangements for the management of the transport facility, including possible private sector involvement; and (d) helping address environmental and social safeguards. The World Bank’s global experience in developing multimodal transport terminals, especially in Latin America, East Asia, and South Asia, will ensure that the Government has the appropriate technical designs and implementation strategy for the development of the KMTT. The standards established in this project have the potential to influence broader public transport improvements and other multimodal transport terminal developments that are planned in other cities of Sri Lanka.

G. Lessons Learned and Reflected in the Project Design

33. The project design incorporates key lessons learned from the implementation arrangements of the SCDP. A key shortcoming in the SCDP implementation agency was the lack of capacity in procurement and contract management in the Project Implementation Unit (PIU) staff in Kandy. At the request of the GoSL, this project has assigned a World Bank staff member under Hands-on Expanded Implementation Support (HEIS) to provide continuous support to the Project Management Unit (PMU) staff to build their capacity in processing contract awards and in contract management.

34. The project design has also incorporated lessons learned in other World Bank-funded urban transport projects. Experience in past projects shows that terminal designs often lack comprehensive planning for the needs of passengers. The project therefore has a strong emphasis on user-based designs to provide a smooth flow of passengers and walkways with sufficient capacity. It incorporates lessons learned from projects such as the Sao Paulo Metro Line 4 for enhanced inclusion of people with disabilities, such as tactile paving to alert people of hazards and provide directional assistance, clear signage, modern clear lighting, and escalators and lifts.19 Experience from the Shijiazhuang Urban Transport Project,20 an urban transport project in China, shows that building terminals with improved station layout helped decongest the previously informal terminal areas. The project design specifically focuses on accommodating the needs of bus passengers, cyclists, and pedestrians. The development of the terminal is complemented by TA to support better management and enforcement to address urban mobility issues around the Kandy city center.

35. Similar projects showed that to make an overall positive impact on the city, effective supportive planning policies and zoning regulations must be applied, along with public sector leveraging and opportunities for risk sharing. The development of the KMTT goes beyond the simple construction of a

19 World Bank. 2013. Practical Guidance Note: Improving Accessibility to Transport for People with Limited Mobility (PLM), 30. 20 World Bank. 2009. ICR: Shijiazhuang Urban Transport Project, 13 and 18.


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station and is part of an integrated concept that is aligned with the overall planning vision for the city. Experience in other similar projects, such as the ‘Complete Streets’ initiative in Sao Paulo, shows that (a) enhancing inclusive and safe street networks; (b) enhancing integrated, user-oriented transport services; and (c) managing the demand for private vehicle use lead to more equitable access to opportunities.21 Therefore, Component 2 of the project ensures that principles of safety and urban integration are incorporated in the design and development of the KMTT.

III. IMPLEMENTATION ARRANGEMENTS

A. Institutional and Implementation Arrangements

36. The MUDWSHF, under which the SCDP is implemented, will continue to be the key implementing agency of this project. The project will be implemented in close coordination with the MTSM, under which the key transport entities (including the SLTB and Sri Lanka Railways [SLR]) are housed. Project preparation was carried out by the SCDP PMU together with the SCDP Kandy PIU. A new PMU (referred to as the KMTT PMU hereafter) has been established in Kandy under the MUDWSHF for the implementation of the project, with a dedicated project director and dedicated procurement, financial management (FM), and environmental and social personnel. The key personnel assigned for procurement and environmental and social are the same personnel who were responsible for these activities for the KMTT under the SCDP PMU.

37. The KMTT PMU will include a public transport planner, traffic management engineers, and other operational and technical officers for implementation support. The MUDWSHF will ensure adequate and appropriate supervision and management of the main KMTT contract, either through a supervision consultant or through a dedicated team to be put in place that is adequately qualified and experienced, in consultation with the World Bank. To ensure continued coordination with the MTSM and the Ministry of Provincial Transport, representatives of the ministries will be seconded to the PMU as Deputy Project Directors (DPDs). A representative from the UDA will also be seconded as a DPD. As requested by the GoSL, a World Bank staff member will be assigned under HEIS to support the PMU staff to carry out procurement and contract management activities well and to build their capacity in these areas. The KMTT PMU will be based in Kandy to enable close supervision of the implementation of the project.

B. Results Monitoring and Evaluation Arrangements

38. The overall monitoring of the project will be carried out at three levels:

(a) Level 1. A local-level coordinating committee will be appointed to resolve day-to-day operational-level issues and ensure continued coordination with all stakeholders. Any issues that are not resolved at the local level will be referred to the Level 2 monitoring arrangement.

(b) Level 2. A project-specific Steering Committee responsible for oversight of the implementation activities will be established within three months of project effectiveness.

21 World Resources Report, From Mobility to Access for All: Expanding Urban Transportation Choices in the Global South, 2019.


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The committee will be chaired by the MUDWSHF and will include relevant stakeholders including the MTSM, SLTB, SLR, UDA, NTC, and CPPTSA. It will conduct quarterly progress review meetings with the participation of the Department of National Planning, External Resources Department, Department of Project Management and Monitoring, and other relevant stakeholders. Any issues that are not resolved at this level will be referred to the Level 3 monitoring arrangement.

(c) Level 3. Project progress will also be monitored by an existing Steering Committee chaired by the Secretary to the Treasury, which is expected to oversee all existing and proposed multimodal transport terminals of the country.

39. A Quarterly Project Monitoring Report will be compiled and shared by the KMTT PMU. The report will provide key information, such as the progress of civil works, key issues, disbursement, and compliance with the legal covenants included or referred to in the FA with the World Bank. This report will be used to assess progress toward the achievement of the PDO and intermediate indicators of the project. A midterm review will be scheduled within 30 months of the effectiveness of the project credits.

40. As stipulated under the FM section, FM activities will be monitored through the interim unaudited financial reports (IUFRs) submitted by the KMTT PMU and the audited annual project financial statements.

41. Progress of procurement and contracting management will be monitored by the World Bank HEIS staff assigned to the PMU, who will furnish periodic progress reports to the World Bank. Progress of civil works will be supervised and assessed by the supervision consultant or the dedicated supervision team appointed under the KMTT PMU, as the case may be. All progress reports produced by the supervision consultant/team will be reviewed by the World Bank.

C. Sustainability

42. The KMTT is one of the transformational projects proposed under the comprehensive transport plan developed for Kandy city, which is currently being implemented. The GoSL’s NPF and the election manifesto of the new regime emphasize the critical importance of improving the public transport system in the country. The GoSL has recognized this project as one of the most critical developments in addressing congestion and other urban landscape issues in the city and has considered the development of the terminal in the design of other transport initiatives planned for Kandy. Extensive stakeholder consultations have been carried out in preparing the project to ensure that all stakeholders—most importantly the transport authorities (SLTB and SLR)—are in agreement with the project. Therefore, there is a considerable level of commitment from the GoSL to carry out the implementation of this project without any deviations.

43. Component 3 includes support for an appropriate institutional arrangement for operations and maintenance of the terminal, as well as a robust financing plan, to be developed through a study that will identify the cost of operations and maintenance and potential sources of revenue. The comprehensive capacity-building plan on terminal management and public transport planning will ensure that the KMTT investment can be managed efficiently and sustainably.


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44. Project preparation was coordinated with the Kandy City Heritage Committee (including in the design of the terminal) to ensure that the city’s historic and cultural features will be preserved. This coordination will be maintained throughout the implementation of the project.

IV. PROJECT APPRAISAL SUMMARY

A. Technical and Economic Analysis

(i) Technical Analysis

45. The design requirements of the KMTT are based on the analysis conducted in the SCDP study22 for Kandy, which looked at the key measures to address mobility issues in the city. The rationale for the selected location and design lies in the proximity of the site to Kandy railway station and its current use as the major downtown bus terminal. The proposed activities, including the development of the KMTT, represent global good practice in addressing urban mobility issues and are appropriate for the Kandy context. The preliminary design developed under the SCDP has been dictated by the availability of land and the need to provide space for terminating and passing routes, layover areas for short-term parking, passenger access and egress, and improved passenger facilities within the terminal.

46. The preliminary KMTT design consists of two main structures about 100 m apart—the main terminal for boarding-alighting-TnG and a bus parking facility for short overlays—which are connected by an internal road. The main terminal building is designed to accommodate bus flows on the ground floor and the first floor and the ticketing and passenger waiting areas on the second floor. The first floor of the parking facility is for buses with short layovers. This section of the terminal also accommodates a pickup/drop-off area (kiss and ride) on the ground floor for private vehicles and three-wheelers to park briefly alongside the main terminal. The terminal and the parking facility will include services to facilitate the commuters and bus services as well as transport terminal facilities. Pandemic-resilient measures (such as adequate space for social distancing and adequate handwashing facilities) will be considered during the detailed design.

47. The second floor of the terminal connects to a pedestrian overhead walkway (skywalk) that will serve the areas to the east and west and connect to Kandy railway station. The 150 m skywalk from old Peradeniya Road to William Gopallawa Road and the adjoining Kandy Teaching Hospital will enable pedestrians to move safely between the railway station, the hospital, and KMTT. The skywalk height will be informed by historical flood levels and inundation, specifically the risk of urban flooding. Component 2 will further inform this on optimal options for urban integration at the street level to ensure safety and enhanced walkability.

48. The World Bank review of the preliminary design has identified the need to strengthen the design to better address bus and passenger flows, capacity, terminal user aspects, and pandemic resilience. These gaps will be reviewed through a design gap analysis and will be addressed through the design-build contract.

22 Public Transport Design and Operations Management Plan and Strategic Traffic Demand Management and Design Plan for Kandy: ISPTP and Strategic Traffic Management and Traffic Circulation Plan Report for Kandy CBD.


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(ii) Economic Analysis

49. Cost-benefit analysis (CBA) was conducted using the consumer surplus method that computes project benefits in terms of reduction in travel time for KMTT bus passengers, vehicle operating costs of buses using the KMTT, and vehicle operating costs and CO2 emissions of the vehicle fleet served by the KMTT-influenced road network. The project is economically justified with an overall economic internal rate of return (EIRR) of 21.0 percent and a net present value (NPV), at a 6 percent discount rate, of US$96.79 million; this corresponds to an NPV/investment cost ratio of 2.0. Sensitivity analysis shows that the project is economically justified even if the investment cost is 20 percent higher and the project benefits are 20 percent lower. In this case, the overall EIRR would drop to 15.4 percent.

50. Gross CO2 emissions over the 24-year evaluation period under the ‘without-project scenario’ are estimated at 756,461 tons and under the ‘with-project scenario’ at 729,656 tons, resulting in a net decrease in CO2 emissions of about 26,805 tons or 1,117 tons per year. The minimum shadow price of carbon23 emission saving is equivalent to US$1.38 million (undiscounted) based on a low-value estimate and is US$2.77 million based on a high-value estimate. The EIRR, NPV, and other relative analysis are calculated based on the low-value estimate. (See annex 4 for the detailed economic analysis).

(iii) Financial Analysis

51. Component 3 includes resources for a comprehensive financial analysis for the terminal. The analysis will be carried out once the design-build contract is awarded and will identify construction costs and operations and maintenance costs to be borne by each responsible party and the long-term costs which will be incurred once the contract is completed. This analysis will explore various financing options, including private sector participation, to reduce the fiscal burden of operating and maintaining the terminal, as well as avenues for augmenting the revenues of the terminal to ensure that the terminal is self-sustaining. This analysis will also serve as a model/pilot for other terminals in the country.

B. Fiduciary

(i) Financial Management

52. The KMTT PMU under the MUDWSHF will be responsible for overall FM under the project. An FM assessment of the implementing agency (MUDWSHF) was carried out and found to be Satisfactory. The project accountant appointed for the KMTT PMU is envisaged to be the focal point for the project on behalf of the MUDWSHF. The proposed FM arrangements are in accordance with the fiduciary requirements of the World Bank Operational Policies for Investment Project Financing (OP 10.00). The KMTT PMU under the MUDWSHF will be responsible for overall FM under the project. The MUDWSHF has a satisfactory track record for managing FM aspects in World Bank-financed operations and currently there are a few ongoing World Bank projects managed by the MUDWSHF. Due to this, the FM risk is assessed as Moderate.

53. Disbursements will be report based using IUFRs reflecting six-month forecasted expenditures. A Designated Account (DA) would need to be opened at the Central Bank of Sri Lanka for disbursements. The

23 As per the 2017 World Bank guidance note on shadow price of carbon in economic analysis.


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PMU will submit IUFRs for the project within 45 days of the end of each quarter. The external audit of the project will be carried out by the National Audit Office of Sri Lanka (NAOSL). Audited annual project financial statements are to be submitted to the World Bank no later than the first six months of the following financial year (see details in annex 1).

(ii) Procurement

54. Procurement of works, goods, and services will be carried out in accordance with the World Bank Procurement Regulations for IPF Borrowers dated July 2016, revised November 2017 and August 2018 (Procurement Regulations), and the provisions stipulated in the FA. Unless otherwise agreed with the World Bank, the World Bank’s Standard Procurement Documents (SPDs), Requests for Proposals, and Forms of Consultant Contract will be used.

55. The new PMU under the MUDWSHF, consisting of staff from the PMU for the SCDP, will be responsible for procurement. The migrated procurement staff in the PMU have experience in implementing a project under World Bank financing but have no experience of using the World Bank’s Procurement Regulations. However, to further strengthen the implementation and provide greater transparency, the GoSL has requested HEIS from the World Bank, which will be provided in accordance with Paragraph 3.10 of the Procurement Regulations. When the PMU under the MUDWSHF has been established, a separate procurement capacity assessment will be carried out, before any procurement is implemented by the new PMU.

56. A Project Procurement Strategy for Development (PPSD) has been prepared and submitted to the World Bank. The strategy takes a view on complex and large procurement contracts, assess market and implementation risks, and proposes mitigations for the smooth implementation of procurement under the project. The project has one large contract (International Competitive Bidding – ICB) with an estimated value of US$61 million for the construction of the terminal which is the key contract that presents a market risk. In the event that the PMU revisits its decision to supervise the main KMTT contract through its own staff, it will also be critical to procure successfully a supervision consultant to ensure the smooth implementation of the contract. The PPSD has reviewed the market conditions for these packages and proposed market approaches that mitigate some of the risks. The PPSD feeds into the Procurement Plan that has set methods and approaches for procurement under the project. The Procurement Plan will be managed in Systematic Tracking of Exchanges in Procurement (STEP) (see details in annex 1).

C. Legal Operational Policies . .

Triggered?

Projects on International Waterways OP 7.50 No

Projects in Disputed Areas OP 7.60 No .

D. Environmental and Social

57. The project is located in the heart of Kandy city with a number of significant civic infrastructures in its immediate surrounding. The project is likely to result in a range of environmental and social impacts


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associated with large civil works and construction-related transport carried out in an urban center during the project’s construction stage.

58. Environmental and social standards. Environmental and social safeguards due diligence for this project will be carried out under the World Bank’s new Environmental and Social Framework (ESF). As per the current assessment, six environmental and social standards (ESSs) are directly relevant to the project: ESS1: Assessment and Management of Environmental and Social Risks and Impacts; ESS2: Labor and Working Conditions; ESS3: Resource Efficiency and Pollution Prevention and Management; ESS4: Community Health and Safety; ESS5: Land Acquisition, Restrictions on Land Use and Involuntary Resettlement; and ESS10: Stakeholder Engagement and Information Disclosure. While not significantly relevant, ESS6: Biodiversity Conservation and Management of Living Natural Resources and ESS8: Cultural Heritage could have implications with polluted runoff from the site potentially reaching the river downstream through the Meda Ela drainage canal and the potential to encounter archaeological chance finds, respectively. ESS7 Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Local Communities and ESS9 Financial Intermediaries will not apply to the project.

59. Environmental and social assessment and management. There are considerable construction-related social environmental impacts expected from the proposed construction of the KMTT (discussed in detail in the Key Risks section). To manage these risks, the SCDP PMU has prepared an Environmental and Social Impact Assessment (ESIA) and an Environmental and Social Management Plan (ESMP) for both construction and operational phases; these were disclosed on the MUDWSHF’s website on February 19, 2020. Accordingly, the project complies with the World Bank’s new ESF and ESS. The project does not require Environmental Impact Assessment (EIA) clearance from the Central Environmental Authority (CEA), as the proposed intervention does not fall within the stipulated thresholds for EIA clearance; however, it will be subjected to other national and local permits and clearances according to the existing legal and institutional framework. The requirements to obtain such permits and clearances have been recorded in the Environmental and Social Commitment Plan (ESCP).

60. Labor and working conditions. The project will engage a sizeable workforce, estimated to be 150–200 contracted workers, some of whom may have to be brought in from outside the project area. The various categories of workers hired for the anticipated civil works (as required) and the influx of ‘followers’ will be subject to the requirements of ESS2 (and ESS4). To address labor-related issues, a labor management procedure (LMP) has been prepared and was disclosed on the MUDWSHF’s website on February 19, 2020. There will also be a grievance mechanism for labor issues, drawing on national laws and procedures. Further, to ensure health and safety of workers during the construction and operational phases of the project, a Health, Safety, and Environmental Plan, in line with the World Bank Group Environmental Health and Safety Guidelines and Good International Industry Practice, will also be prepared during project implementation.

61. Resource efficiency and pollution prevention and management. The KMTT has been designed to obtain the green building certification from the UDA. Green building guidelines have been considered in the KMTT design, governing areas such as energy efficiency, water efficiency, sustainable site planning and management, materials and resource management, and green cover enhancement. The operationalization of the KMTT is expected to contribute to improved city air quality through lessened traffic congestion. The project will put in place a program to measure and document ambient city air quality in collaboration with the CEA including the setting up of an air monitoring station within the KMTT.


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However, the project will have high demand for water, energy, and construction material during the civil works, and construction activity will also increase the risk of air and water pollution, which would be mitigated through the implementation of the contractor’s ESMP. All construction materials will be sourced from licensed sources and wastes from the site will be either treated and discharged and/or collected and disposed of in approved sites. The ESCP includes provision for an assessment of GHG emissions for the overall project.

62. Community health and safety. The design of the KMTT has been based on international criteria to ensure health and safety of users in a transport terminal, including (a) incorporation of fire safety measures designed to the mandatory national and international standards; (b) maximization of natural light and ventilation and where needed powered ventilation to maintain good internal air quality; (c) incorporation of green cover areas for improved air quality and to turn down the thermostat; and (d) space, facilities, and signage inside the terminal to allow for effective social distancing and sanitation to the extent possible to cope with pandemics. However, construction of the project is expected to elevate health and safety risks to the urban community. To address such risks, during construction, the site will be completely delineated and public access to the construction area will be prohibited. Contamination of Meda Ela and subsequently the Mahaweli River downstream with chemicals and turbidity can give rise to various health issues although this risk is low and can be managed. The ESCP requires the contractor to retain an experienced health and safety expert to develop a full Health and Safety Plan complete with emergency procedures.

63. Land acquisition, restrictions on land use, and involuntary resettlement. Acquisition of private land under the project is considered to be minimal because of the total land requirement for the KMTT, 99.5 percent of which is public land which will be secured from various government agencies.24 However, the project-related economic damages include both permanent and temporary loss of livelihoods that would affect an estimated 841 businesses, mobile vendors, shop assistants, three-wheelers, and so on, operating in the existing bus station and/or its immediate buffer zone. To address these impacts, a comprehensive RAP prepared under the SCDP and cleared by the World Bank was disclosed on November 9, 2018 and is currently under implementation. Since the RAP was prepared under the World Bank’s previous safeguards policies, a rapid audit of the RAP was conducted to verify the payment of compensation, livelihoods support, and relocation support and to assess the adequacy of the RAP against the requirements of the ESS5. Overall, the RAP audit indicates that the preparation and implementation of the RAP to date has been satisfactory and meets the requirements under the ESF. A few areas for improvement include strengthening information dissemination channels, expediting disbursement of compensation, establishing a robust monitoring mechanism to assess progress under the livelihood restoration programs, and creating greater awareness about the function of the grievance redress mechanism (GRM) and broadening the scope of the existing GRM. The RAP audit has been appended to the current RAP and redisclosed on the MUDWSHF’s website on February 19, 2020.

64. Biodiversity conservation and sustainable management of living natural resources. Since the project area is a completely modified urban landscape with little remnant natural features, the application of ESS6 is expected to be minimal. Potential risks associated with the discharge of turbid wastewater into the Meda Ela during the construction period that may carry pollution as far down as the Mahaweli river, removal of some large trees within the project area, and the need for large quantities of construction

24 Land acquisition will not be funded by the project.


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material from burrowing, quarrying, and extraction could potentially have impacts on natural habitats. The ESMP will cover all such ancillary facilities should they be operated directly by the contractor.

65. Stakeholder consultation and information disclosure. As defined under ESS10, the project involves ‘affected parties’ (for example, business operators, mobile vendors, three-wheeler operators, and shop assistants); ‘other interested parties’ (for example, the KMC, SLR, CPPTSA, Kandy Police, utility providers, commuters, contractors, civil society, and nongovernmental organizations); and ‘vulnerable groups’ (for example, affected persons suffering from chronic illnesses, people with disabilities, women-headed households, and those living below the poverty line). During the preparation of the Social Impact Assessment and RAP, extensive consultations were carried out with all categories of affected persons with effect from November 2017. However, since these consultations were carried out mainly as part of RAP preparation, a separate Stakeholder Engagement Plan (SEP) has been prepared that specifies (a) how the activities carried out so far will be retrofitted to meet the ESF requirements; (b) additional consultations that need to be carried out at this stage; (c) consultations that will be required during project implementation; and (d) the full list of relevant stakeholders (other than the direct project-affected people), including their interest and influence on the project.

66. At present, under the SCDP, there is a project-based four-tier GRM which is easily accessible to the aggrieved parties. The GRM is considered transparent and accountable in grievance handling as well as in responding both effectively and efficiently to the grievances reported by the affected parties. Under Component 3 of the project, specific activities will be carried out to strengthen the ESF capacity within the KMTT PMU and implementing agencies, especially on stakeholder engagement.

67. The existing RAP was cleared by the World Bank and disclosed on November 9, 2018, on the GoSL’s website25 as well as the World Bank’s external website26. The Environmental Screening Report prepared under safeguards policies was disclosed on the GoSL’s website27 and the World Bank’s external website28 on November 7, 2019. The updated RAP (with the audit), the ESIA, ESMP, LMP, SEP, and the ESCP were subsequently cleared by the World Bank and disclosed on the MUDWSHF’s website on February 19, 202029. The ESCP30 and the SEP31 were disclosed on the World Bank’s external website on February 26, 2020, and the ESIA32, the update RAP (with the audit),33 and the LMP34 were disclosed on the World Bank’s external website on March 4, 2020.

25 https://www.scdp.lk/pdf/social_safeguard/Kandy/Roads/SCDP%20Resettlement%20Action%20Plan-KMTT-Final.pdf 26 http://documents.worldbank.org/curated/en/577701579496551578/Resettlement-Action-Plan 27 https://www.scdp.lk/pdf/env_report/ESR%20for%20KMTT.pdf 28 http://documents.worldbank.org/curated/en/885621573192464315/Environmental-Screening-Report-for-Construction-of-Kandy-Multimodal-Transport-Terminal 29 http://minud.gov.lk/web/index.php/en/projects/kandy-multimodal-transport-terminal-project1 30 http://documents.worldbank.org/curated/pt/996651582677863798/Environmental-and-Social-Commitment-Plan-ESCP-Kandy-Multimodal-Transport-Terminal-Development-Project-P172342 31 http://documents.worldbank.org/curated/en/844891582677868209/Stakeholder-Engagement-Plan-SEP-Kandy-Multimodal-Transport-Terminal-Development-Project-P172342 32 http://documents.worldbank.org/curated/en/733711583349497706/Environmental-and-Social-Impact-Assessment-Kandy-Multimodal-Transport-Terminal-Development-Project-P172342 33 http://documents.worldbank.org/curated/en/471361583349501024/Audit-of-the-Resettlement-Action-Plan-Kandy-Multimodal-Transport-Terminal-Development-Project-P172342 34 http://documents.worldbank.org/curated/en/921221583349491046/Labor-Management-Procedures-Kandy-Multimodal-Transport-Terminal-Development-Project-P172342

https://www.scdp.lk/pdf/social_safeguard/Kandy/Roads/SCDP%20Resettlement%20Action%20Plan-KMTT-Final.pdf


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68. Environmental and Social Commitment Plan. An ESCP has been prepared for the project which sets out a summary of measures and actions needed to address potential environmental and social risks and impacts of the project as well as targeted training for capacity building of environmental and social specialists in keeping with the World Bank’s environmental and social due diligence under the new ESF.

69. Organizational capacity and competency. The environmental and social specialists of the SCDP (in the PMU and PIU/Kandy) have provided technical support for the preparation of the KMTT including the development of the ESF-related documents. However, a new PMU for KMTT has been established with key staff positions for environmental and social management consisting of a social specialist and an environmental specialist who have served in the PIU of the SCDP during the preparation of the KMTT. The environmental and social staff of the KMTT PMU will consist of the following: (a) resettlement manager who will be appointed as PMU environmental and social specialist to lead and coordinate the work of a dedicated Environmental and Social Unit consisting of (i) livelihood restoration manager; (ii) resettlement officer; (iii) citizen engagement officer; (iv) social development officer responsible for information and communications, consultations, and grievance handling; (v) monitoring and documentation officer; and (vi) management assistant and (b) a senior safety, health, and environment specialist. Once all the staffing positions within the PMU are filled, a capacity assessment will be carried out to identify capacity gaps in implementing the ESF.

70. The level of knowledge, awareness, and commitment of the environmental and social staff from the SCDP Kandy/PIU who will support the KMTT PMU for environmental and social risk management is satisfactory. Their familiarity with the KMTT project and experience in implementing safeguards under the SCDP are considered advantages which the KMTT PMU will benefit from. In addition to this, KMTT-specific training and capacity building for sound environmental and social management have been included in the project and will be carried out once the full staffing has been carried out.

71. Monitoring and reporting. The reporting requirements of the project are outlined in the ESCP. While the contractor will report to the PMU on the status of environmental compliance on a monthly basis, the PMU will submit consolidated quarterly environmental and social monitoring reports to the World Bank. Further, the project will conduct independent environmental and social audits at least three times during the project construction period to review compliance and ensure due diligence.

E. Climate and Disaster Screening and Climate Co-Benefits

(i) Climate and Disaster Screening

72. The project is subject to the World Bank’s climate screening, and the overall risk rating of the project is considered Moderate. The risk rating to the development outcome of the project is also considered Moderate. Sri Lanka is highly vulnerable to the adverse effects of climate change. The most frequently reported disaster events in Sri Lanka are floods, droughts, landslides, and storm surges and cyclones. Kandy District is situated within the wet zone and the intermediate zone. The most western parts of the district toward the central highland depict more wet climate conditions than the eastern slopes. Kandy is 488 m above average sea level and the average annual temperature is 24.5°C; precipitation averages 2,083 mm. The most western parts of Kandy District receive major rainfall during the southwestern monsoon that takes place during May and September. Furthermore, the two inter-monsoonal periods that extend from October to November and March to April enrich the district with


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considerable rainfall. Kandy is among the 10 districts prone to landslides in Sri Lanka. A canal (called Mid-canal or ‘Meda Ela’) that originates from the overflow sluice of the Kandy Lake runs through Kandy city (the project area), and thereafter drains into the Mahaweli River, is prone to flooding. Climate projections predict that the frequency of floods and landslides is likely to increase in the Central Hills due to climate change. The project location’s risk of exposure to urban flooding and slope failures/landslides is Moderate. The overall risk to the outcome of the project is considered Moderate. However, if mitigation measures are addressed in the design and an emergency system is developed, the risk to the outcome/service delivery can be Low.

(ii) Climate Co-Benefits

73. The project design has incorporated a number of measures to address the impacts of climate change. Component 1, the development of the KMTT, along with the implementation of the proposed traffic management plan, is expected to improve the efficiency of public transportation, thereby reducing the use of private vehicles and paratransit modes within the city. This is expected to ease traffic congestion in Kandy city, which will help reduce GHG emissions. The modal shift from private to public transportation and the reduction in GHG emissions tie in directly with the climate impact mitigation activities identified in the Joint Report on Multilateral Development Banks’ Climate Finance (2018). The technical design of the KMTT will incorporate necessary design features to mitigate the impacts of flooding and landslides, and an emergency system will be developed within the terminal. Slope stabilization measures will be incorporated in the design of the KMTT, as slope failures are caused when mountain slopes are rendered unstable where the natural slopes are disturbed, and land use is altered by road construction activities. In addition, the terminal design has incorporated features to qualify for green building certification from the UDA. Component 2 explores ways of enhancing the use of NMT and integrating transport and urban development planning through a transit-oriented development (ToD) approach—two important mitigation activities identified in the Joint Report on Multilateral Development Banks’ Climate Finance (2018). Component 3 on institutional strengthening and capacity building incorporates specific and targeted training activities in the hazard risk reduction strategies and emergency planning mechanisms.

F. Gender

74. This project, as a key public transport project in a strategically important urban area in the country, expects to address two key gender issues or gaps: first, women’s safety concerns when using public transportation and second, the low percentage of women employed in bus transport operations (currently at 3 percent).

(a) In terms of project activities to address the gap in female employment, the project will (i) provide female-friendly facilities (such as sanitation facilities), (ii) flexible work schedules, and (iii) safer work areas. In addition, it will have targeted outreach and recruitment to increase the number of women employed and provide them with tailored training once recruited (Component 3). The change brought about by the project will be measured by the indicator ‘Percentage of female employment in bus transport operations at the KMTT’, increasing from a baseline of 3 percent to a target of 10 percent.


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(b) To address the issue of women’s safety concerns and GBV within the transport terminal, the project will (i) incorporate female passenger-friendly features such as women-only waiting areas, breastfeeding rooms, and sanitation facilities in the design of the KMTT (Component 1), (ii) install a Kiosk at the terminal to include specific referral mechanisms for women and girls to report sexual harassment experienced during travel and within the terminal, and (iii) establish a dedicated hotline to record and refer cases of sexual harassment to the required law enforcement authority. More details are provided in annex 2.

(c) The effectiveness in addressing safety and GBV concerns will be measured by the following indicators: (i) Number of women using the kiosk and/or hotline to report sexual harassment and (ii) Percentage of complaints related to sexual harassment in public transport received through the kiosk/hotline referred to relevant authorities or service providers within two weeks of being recorded.

75. Due to the construction components of the project, a GBV risk assessment was conducted and the project received a low risk rating of 8.75. The project will sensitize the implementing agency to GBV risks and reflect them in the ESMP and other safeguard documents, integrate GBV reporting in the GRM, and specify the requirements to be included in the bidding documents for a code of conduct to address GBV.

G. Citizen Engagement

76. The project will have a robust citizen engagement approach to contribute to the achievement of the PDO. At the design stage, the project conducted comprehensive consultations with stakeholders, including the residents, commuters, and business operators in the area and bus operators as well as the Kandy City Heritage Committee to ensure that the technical design of the project will help in the preservation of the historical and cultural features of the city. These consultations consisted of individual face-to-face discussions as well as 22 focus group discussions with various stakeholders. The citizen engagement approach in the implementation stage includes the following:

(a) A three-tier GRM has been established to process complaints or grievances related to construction and the use of the terminal, including GBV and personal safety-related complaints. The different forms of uptake include in-person, email/letter, and/or telephone call.

(b) An information cell has been established under the SCDP in the Kandy railway station premises, which is a few meters away from the KMTT site. This cell will continue its operations for another five years to assist the stakeholders who search for information regarding the project and as a venue for providing feedback and reporting grievances/complaints.

(c) Continued consultations will be carried out on the design and construction of the terminal with all key stakeholders throughout the project. Under Components 2 and 3, a number of consultations will be carried out to (i) determine safer pedestrian circulation around the KMTT for commuters (with a special focus on women and people with disabilities), (ii)


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determine ToD potential around the KMTT, and (iii) assess capacity requirements of the terminal operators.

(d) A kiosk will be set up at the terminal to facilitate commuters to report issues around personal security, particularly of women and girls, issues of service provision, and suggestions for improvements of the facilities. Under Component 3, the project will examine mechanisms to address these reported issues under the institutional arrangement of the terminal for operations and maintenance. The periodic safety audits will monitor the extent to which these issues are addressed.

(e) A satisfaction survey will be carried out among the terminal commuters. This survey will assess, among others, perceptions on the reduction in travel times, ease of access to the terminal, safety, personal security, and suggestions for further improvement in the services of the terminal.

77. The SEP for the project provides further information on the citizen engagement activities planned. It identifies the key stakeholders to be engaged for information disclosure and consultations, the information requirements of each stakeholder group, planned methods of consultation, the responsible entities to carry out consultations, and the resources required to implement the SEP.

78. The beneficiary feedback indicators of the project include (a) the percentage of public transport users who are satisfied with the transport services of the terminal (through the satisfaction survey) and (b) the percentage of complaints related to terminal service provision received through the kiosk addressed within six months of being recorded.

V. GRIEVANCE REDRESS SERVICES

79. Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/en/projects-operations/products-and-services/grievance-redress-service. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org.

VI. KEY RISKS

80. The overall risk of the project is rated Substantial based on the political, macroeconomic, sector strategies, technical, institutional, fiduciary, environment and social, and stakeholder risks involved. The key risks rated Substantial are described in the following paragraphs.

http://www.worldbank.org/en/projects-operations/products-and-services/grievance-redress-service

http://www.inspectionpanel.org/


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81. Macroeconomic risk is rated Substantial. Macroeconomic vulnerabilities remain high due to weak fiscal buffers, high levels of indebtedness and large refinancing needs. Central government debt is estimated at 84 percent of GDP, largely denominated in foreign currency. Gross international reserves (US$7.6 billion, end-2019) remain low relative to short-term external liabilities (US$6.3 billion for the next 12 months). The slowdown in growth and additional spending associated to the COVID-19 response are expected to further deteriorate debt dynamics. Thus, while the macroeconomic situation is not expected to hamper immediate project implementation, a prolonged outbreak could severely hamper growth and place further strain on fiscal sustainability. Public investment would be reduced to mitigate the impact of revenue shortfalls and create space for additional recurrent expenditures under the stimulus package and for COVID-19 related expenses. The project is expected to help lessen longer term economic impacts by providing efficient and safe public transport which will help create economic opportunities such as increased access to employment and improved potential for tourism, and thereby sustaining mobility and livelihoods.

82. The risk related to the technical design of project is rated Substantial. The World Bank’s review of the preliminary design of the terminal developed under the SCDP identified several issues regarding bus flows, passenger flows, capacity, and terminal user aspects. Therefore, the project has allocated funds to carry out a gap analysis of the design to allow a revision of the design as necessary. The construction of the KMTT will be done on a design-build contract, which provides more room for further design improvements. Consultations with all relevant stakeholders will be carried out including in the areas of safety and accessibility, with particular attention to the views of the more vulnerable groups. The World Bank team will work closely with the PMU and the design consultant to review and evaluate the design adequately.

83. Institutional capacity for implementation risk is rated Substantial. The project will be implemented by a new PMU set up under the key implementing agency, the MUDWSHF. Given that most of the groundwork was carried out by the SCDP PMU, the new PMU staff will likely lack the background knowledge which comes with being engaged in the project from its inception. However, key staff who have already worked on the KMTT on procurement and environmental and social risk under the SCDP PMU have been continued under the new PMU, which will help mitigate this risk to a certain extent. The World Bank team will work closely with the implementing agency to identify the required skills for project implementation, ensure that personnel are deputed from agency departments or hired externally to meet these skills, and provide hands-on training and support to strengthen their technical capacity to operate and manage multimodal transport terminals. Under Component 3, the project has made specific allocations to provide substantial implementation support to all staff of the PMU to ensure efficient and timely implementation of the project. The team will also maintain tight oversight on procurement and contract management as this has been identified as a critical shortfall in PMU capacity in implementing the SCDP.

84. Fiduciary risk is rated Substantial. It is expected that the major procurement packages will be procured by the KMTT PMU, which will be staffed by former SCDP procurement staff. Owing to their experience in implementing the ongoing project, the staff have adequate capacity and experience in implementing procurement and FM. FM risk is assessed as Moderate. However, the procurement staff have no experience of using the World Bank’s Procurement Regulations. To mitigate any risks associated with this, adequate training will be provided to them. To further strengthen the implementation and provide greater transparency, the GoSL has requested HEIS from the World Bank, which will be provided


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in accordance with Paragraph 3.10 of the Procurement Regulations. When the full PMU under the MUDWSHF has been established, based on procurement and FM capacity assessment carried out before any procurement is implemented by the new PMU, any risks identified will be mitigated through additional training and, if necessary, amended procurement implementation arrangements.

85. Environment and social risk is rated Substantial. The project is expected to require acquisition of 3.6742 ha of land, out of which 99.5 percent is public land under the ownership of various government agencies (that is, SLR, SLTB, and Kandy Teaching Hospital). While private acquisition is expected to be minimal, economic displacement will be significant with 841 businesses, mobile vendors, shop assistants, three-wheelers, and so on, operating in the existing bus station and/or its immediate buffer zone, being affected. The scope of construction work of the terminal is comparatively large and is expected to require a sizeable workforce, including workers from outside the project areas. Thus, risks relating to labor management and working conditions as well as those associated with influx of workers and ‘followers’ are significant. However, the GBV/sexual exploitation, abuse, and harassment screening indicates that such risks for the project are Low. The project is also expected to cause temporary construction-related disturbances to the public, such as noise and dust and other public inconveniences.

86. Some of the key environmental impacts anticipated include air emissions; noise and vibration; disposal and management of construction waste; risks to public/worker health and safety; and, most significantly, possible impacts on traffic congestion in the city due to construction activity, particularly on the two main arteries bordering the site, which routinely experience long travel time during peak hours with restricted mobility. Impacts to biodiversity and living natural resources are not significant because the site is a completely urbanized landscape. Traffic congestion is one of the greatest challenges faced by urban Kandy on a daily basis. The project, once completed, is expected to transform urban mobility within the city, which in turn is expected to bring about many positive environmental impacts, such as improved city air quality, public and road safety, and aesthetics. The necessary measures to mitigate the environmental and social risks have been identified and incorporated in the ESIA, ESMP, RAP, LMP, and SEP.

87. Stakeholders risk is rated Substantial. The fragmented institutional structure in Sri Lanka’s transport sector involves many stakeholders. Furthermore, the project is implemented under the MUDWSHF, which is not the key agency for transport infrastructure. As the KMTT is also part of a broader city strategy, close coordination with all involved stakeholders is critical. To guarantee close collaboration and strict supervision, a Steering Committee will be established to oversee the implementation of the project. The committee includes stakeholders directly involved in the KMTT development as well as key stakeholders involved in other development projects in the city. During project preparation, the World Bank team has worked in coordination with the Korea Eximbank and JICA to align the ongoing development activities supported by them with the project. The World Bank will maintain this collaboration during project implementation to ensure coordination among all development partners.

.


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VII. RESULTS FRAMEWORK AND MONITORING

Results Framework COUNTRY: Sri Lanka

Kandy Multimodal Transport Terminal Development Project

Project Development Objectives(s)

The Project Development Objective (PDO) is to enhance accessibility, efficiency, and safety for public transport users of the Kandy Multimodal Transport Terminal.

Project Development Objective Indicators

RESULT_FRAME_TBL_ PD O

Indicator Name DLI Baseline End Target

Improved accessibility to the terminal

Availability of intermodal transfer passages (Yes/No) No Yes

Presence of physical accommodation and facilities for people with disabilities and baggage (Yes/No)

No Yes

Improved efficiency of bus operations

Share of buses departing the terminal on time (Text) No timetable to monitor bus departure times at present Target of 85% buses departing on time based on the timetables/schedules prepared under the project

Improved safety inside the terminal

Availability of designated waiting areas for passengers well-separated from bus bays and bus parking areas (Text)

No Yes

Availability of facilities inside the terminal to allow for effective social distancing and sanitation (Text)

No Yes


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RESULT_FRAME_TBL_ PD O


Improved personal security in the terminal

Percentage of passengers that feel safe to travel through the terminal (gender-disaggregated) (Text)

To be updated during the first year of project implementation based on a satisfaction survey of the existing terminal

To be determined based on the results of the initial satisfaction survey

PDO Table SPACE

Intermediate Results Indicators by Components

RESULT_FRAME_TBL_ IO


Development of Kandy Multimodal Transport Terminal (KMTT)

KMTT terminal built and in operation (Yes/No) No Yes

Percentage of public transport users who are satisfied with the transport services of the terminal (gender-disaggregated) (Text)

To be updated during the first year of project implementation based on a satisfaction survey of the existing terminal

To be determined based on the results of the initial satisfaction survey

Percentage of grievances received related to the development of the KMTT addressed within one month of being recorded in the GRM database (Percentage)

0.00 90.00

Urban integration and road safety improvements around KMTT

A road safety action plan developed for the Kandy city (Yes/No) No Yes

Institutional strengthening and capacity building

A robust financial plan for the terminal’s operations and maintenance developed (Yes/No)

No Yes

Institutional setup for the operations and maintenance of the terminal established (Yes/No)

No Yes

Percentage of complaints related to terminal service provision received through the kiosk addressed within six months of being 0.00 80.00


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RESULT_FRAME_TBL_ IO


recorded (Percentage)

Number of women using the kiosk and/or hotline to report sexual harassment (per year) (Number) 0.00 80.00

Percentage of complaints related to sexual harassments in public transport received through the kiosk/hotline referred to relevant authorities or service providers within two weeks of being recorded (Percentage)

0.00 80.00

Percentage of female employment in bus transport operations at the KMTT (Percentage)

3.00 10.00

IO Table SPACE

UL Table SPACE

Monitoring & Evaluation Plan: PDO Indicators

Indicator Name Definition/Description Frequency Datasource Methodology for Data Collection

Responsibility for Data Collection

Availability of intermodal transfer passages

Improved intermodal access from other modes, such as motorbikes, three-wheelers, taxis, and rail

Quarterly

Quarterly Project Monitoring Report

PMU

Presence of physical accommodation and facilities for people with disabilities and baggage

The terminal design will include physical features to ensure that it provides universal access to passengers, including to those with disabilities, people carrying baggage,

Quarterly


PMU


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children etc. - features such as footpaths, sidewalks and elevators.

Share of buses departing the terminal on time

This indicator will assess to what extent the proposed bus schedules/time tables are followed.

Quarterly


Data will be collected from the GPS and information system to be installed in the terminal

PMU

Availability of designated waiting areas for passengers well-separated from bus bays and bus parking areas

This indicator will assess the safety measures incorporated in the design to ensure passenger safety.

Quarterly

Quarterly Project Monitoring Report/Periodic safety audits

PMU

Availability of facilities inside the terminal to allow for effective social distancing and sanitation

This indicator will asses whether space, facilities, and direction inside the terminal to allow for effective social distancing and sanitation to the extent possible has been provided.

Quarterly


PMU

Percentage of passengers that feel safe to travel through the terminal (gender-disaggregated)

This indicator will help assess the prevalence of any sexual harassment incidents within the terminal and in particular, whether female passengers feel safe to use the terminal.

Annual

A satisfaction survey carried out after the terminal has been in operation for six months and the

PMU


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period safety audits will also monitor this indicator

ME PDO Table SPACE

Monitoring & Evaluation Plan: Intermediate Results Indicators

Indicator Name Definition/Description Frequency Datasource Methodology for Data Collection

Responsibility for Data Collection

KMTT terminal built and in operation

This indicator will assess whether the terminal is constructed and in operation

Quaterly

Quarterly Project Monitoring report/Reports submitted by Bank staff assigned to the PMU under Hands on Expanded Implementation Support (HEIS)

PMU/Bank staff assigned to the PMU under HEIS

Percentage of public transport users who are satisfied with the transport services of the terminal (gender-disaggregated)

This indicator will assess how satisfied the passengers are with the services provided by the terminal.

Annual

A satisfaction survey carried out after the terminal is in operation

PMU


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Percentage of grievances received related to the development of the KMTT addressed within one month of being recorded in the GRM database

This indictor will assess how efficiently the grievances are addressed by the GRM system

Quartery


PMU

A road safety action plan developed for the Kandy city

A road safety action plan will be developed for the Kandy city to address road safety issues identified under a comprehensive study

Quarterly


PMU

A robust financial plan for the terminal’s operations and maintenance developed

This analysis will explore various financing options to reduce the fiscal burden of operating and maintaining the terminal, as well as avenues of augmenting revenue of the terminal to ensure that the terminal is self-sustaining in the long-run.

Quarterly

Quarterly project Monitoring Report

PMU

Institutional setup for the operations and maintenance of the terminal established

An appropriate institutional arrangement for the operations and maintenance of the terminal will be explored, including possibility of pursuing PPP opportunities.

Quarterly


PMU

Percentage of complaints related to terminal service provision received through the kiosk addressed within six months of being recorded

This indicator will assess how efficiently the issues around operations of the terminal are resolved to

Quarterly

Quarterly Project Monitoring Report/perio

PMU


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ensure a satisfactory service to the passengers.

dic safety audits

Number of women using the kiosk and/or hotline to report sexual harassment (per year)

This indicator will track the use of the kiosk/hotline by women for recording of complaints related to sexual harassments

Annual


PMU

Percentage of complaints related to sexual harassments in public transport received through the kiosk/hotline referred to relevant authorities or service providers within two weeks of being recorded

This indicator will assess how efficiently the complaints related to sexual harassment incidents within the terminal/in public transport are addressed by the system put in place

Quarterly

Quarterly Project Monitoring Report/periodic safety audits

PMU

Percentage of female employment in bus transport operations at the KMTT

This indicator will ensure that job opportunities in bus transport operations at KMTT are equally accessible to women

Quarterly

Quarterly Monitoring Report

PMU

ME IO Table SPACE


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ANNEX 1: Implementation Arrangements and Support Plan

COUNTRY: Sri Lanka


I. Implementation Arrangements

Financial Management

1. It is envisaged that the FM responsibility will rest with the FM Unit that will be established at the PMU. FM responsibilities include (a) ensuring compliance with all financial covenants in the project legal agreements; (b) obtaining funds from the World Bank credit and managing such funds in an efficient, effective, and transparent manner; (c) furnishing financial reports and project audit reports to the World Bank; and (d) carrying out overall management of payments and accounting functions of the project and any other requests related to FM made by the World Bank’s task team.

2. World Bank credit proceeds will be used to finance eligible expenditures necessary to meet the development objectives of the project with due attention to considerations of economy and efficiency in accordance with the provisions of the FA. If the World Bank determines that the credit has been used to finance ineligible expenditures, the amounts used for such expenditures shall be refunded to the World Bank by the GoSL.

3. FM staffing. The head of finance appointed for the PMU and FM support staff will handle project funds. It is envisaged that the FM Unit of the PMU will be headed by a qualified and experienced accountant who would preferably have prior experience in FM under the World Bank- or donor-financed projects. The accountant will work on a full-time basis and provide guidance and direction to ensure that the FM arrangements are implemented to the satisfaction of the GoSL and the World Bank. FM support staff assigned or recruited for the operation by the PMU will work under the accountant to support the management of routine accounting and FM activities of the project. The accountant in the PMU will be responsible for managing day-to-day FM activities for the project, which may include (a) project budgeting, disbursement planning, and forecasting; (b) operating the DA, including claiming replenishments, disbursing funds, and making required payments; (c) maintaining books and records for project financial transactions; (d) submitting quarterly IUFRs; (e) preparing annual project financial statements; and (f) interacting with project internal and external auditors on audit issues and follow-up.

4. Budgeting. The PMU will forecast the required resources to be budgeted for the project and these forecasts will need to be incorporated into the overall MUDWSHF budget estimates, which are then submitted to the Department of National Budget of the Ministry of Finance. A separate budget code (line item) will be set up for the project under the MUDWSHF. The PMU will prepare detailed implementation plans in line with the detailed project budget to clearly specify the funding requirement for the project components and activities. The PMU can implement the activities under the project by using the budgetary provision provided for this under foreign funds.

5. Fund flow and disbursement arrangements. A separate DA will be opened for the PMU for the project. The DA will be operated and managed by the PMU, which will maintain separate sets of accounts


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for the project. Disbursement of funds will be report based. The PMU will submit quarterly IUFRs to the World Bank within 45 days of the end of each quarter. The World Bank will advance funds to the DAs in adequate amounts to meet forecasted expenditures for six months, as reflected in the respective IUFR. Withdrawal applications will be prepared by the PMU and replenishments to the DA will be based on the IUFRs approved by the World Bank. The specific format of IUFRs, designed for the project in accordance with the guidelines issued by the World Bank, has been agreed and has been attached to the Disbursement Letter.

6. The PMU will also open a dedicated Sri Lanka rupee account. The PMU will operate this account to make payments for eligible expenditures and track the inflow and outflow of the project funds. Exchange losses arising due to the transfer from the DA to the Sri Lanka rupee account will not be considered eligible expenditure and will not be absorbed under the credit. The PMU will have the option of requesting a direct payment to suppliers by (a) the Central Bank of Sri Lanka, using the proceeds in the DA or (b) the World Bank against the credit for large payments. It is agreed that all payments related to the project will be handled centrally by the PMU, and no funds will be transferred to any other agency/unit. In addition, all fund transfers will be between bank accounts and no cash transfers will take place, except for petty cash.

7. Accounting policies and procedures. The accounting and FM staff in the PMU will closely coordinate with technical staff where a systematic verification of invoices needs to be carried out before payment. The accounting practices will be governed by the GoSL Financial Regulations and applicable circulars. Bank accounts will be reconciled on a monthly basis, and trial balances and financial statements will be prepared on a monthly basis to facilitate monitoring of the progress of the project.

8. Accounting system. It is envisaged that the PMU can manage the accounting aspects through a manual and Excel-based system. This system will be used for the generation of financial information by creating relevant modules/ledgers and chart of accounts for the same. The accounting system will need to facilitate the generation of expenditure reports by budget classification/components and subcomponents, thus enabling comparison with the budget/components and effective monitoring of expenditure. A separate chart of accounts and separate ledgers will be established for the project which enables separate accounting.

9. Internal audit. The project will be subjected to an internal audit. The internal audit team of the MUDWSHF will carry out the internal audit of the project and will work under the overall guidance of the Secretary. The internal auditors will assess whether the funds have been disbursed on time and used effectively and efficiently for the intended purposes. This will provide further assurance on the legitimacy and the eligibility of the payments made from the credit proceeds. The findings of the internal audit team will be reviewed by an Internal Audit Committee appointed for the project. The PMU will share the internal audit reports with the World Bank at agreed intervals.

10. External audit and audit reports. It is proposed that the external audit of the project be carried out by the NAOSL. The external auditing arrangements have been discussed and finalized. The PMU will prepare the annual project financial statements for auditing by the NAOSL. The audit will cover all component activities carried out by the PMU and all payments made from the project accounts related to the same. The audit will be conducted annually. The audit report will be submitted within six months after the end of the financial year. The PMU will be responsible for the timely submission of the annual audited


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financial statements to the World Bank. The audit report will be monitored in the World Bank’s Audit Reports Compliance System. According to the World Bank’s Access to Information Policy, the audit reports received by the World Bank will be disclosed on the World Bank’s external website for public access. Currently, there are no overdue audit reports for projects carried out by the implementing ministry.

Table 1.1. Audit Reports

Implementing Agency Audit Report Auditor Date

PMU Annual project financial statements Auditor General June 30 each year

11. Financial covenants. The financial covenants related to the project will include (a) audited annual project financial statements to be submitted to the World Bank no later than the first six months of the following financial year and (b) IUFRs to be submitted to the World Bank no later than 45 days following the end of the reporting quarter.

12. Consistent with a risk-based approach to FM supervision, FM supervision activities for this project will consist of desk reviews of internal and external audit reports, including verification of the adequacy of the resolution of major audit observations and reviewing of quarterly IUFRs, supplemented by dialogue with the PMU staff as needed, especially during the initial years of project implementation. FM supervision missions will be conducted at least once every six months. Other supervision tools and resources, such as transaction reviews and site visits, will be used to periodically monitor the adequacy of the FM system. In addition to the regular FM implementation support, the World Bank team will provide training, capacity building, and knowledge sharing for FM staff, internal audit staff, and the external audit staff as required.

13. Disbursement categories. The World Bank will finance 100 percent of eligible expenditures for goods, works, non-consulting services, consulting services, training and workshops, and incremental operating costs of the project including taxes.

14. Under the project, the proceeds of World Bank credit will be disbursed against eligible expenditures in the categories shown in table 1.2.

Table 1.2. Disbursement Categories

Category

Amount of the Concessional Credit (Credit No. 6623-LK) Allocated (expressed

in SDR)

Amount of the Non-Concessional Credit (Credit No. 6624-LK) Allocated (expressed

in US$)

Percentage of Expenditures to be

Financed (inclusive of taxes)

(1) Goods, works, non-consulting services, Incremental Operating Costs, Training and Workshops and consulting services for Part 1 of the Project

43,500,000 4,987,500 100%

(2) Goods, non-consulting services, Incremental Operating Costs, Training and Workshops and consulting

3,637,315 0 100%


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Category

Amount of the Concessional Credit (Credit No. 6623-LK) Allocated (expressed

in SDR)

Amount of the Non-Concessional Credit (Credit No. 6624-LK) Allocated (expressed

in US$)

Percentage of Expenditures to be

Financed (inclusive of taxes)

services for Parts 2 and 3 of the Project

(3) Emergency Expenditures 0 0

(4) Front-end Fee for the Non-Concessional Credit

12,500 Amount payable pursuant to Section 4.01 of the FA in accordance with Section 3.08 (b) of the General Conditions

(5) Interest Rate Cap or Interest Rate Collar premium for the Non-Concessional Credit

0 Amount due pursuant to Section 4.06 (c) of the General Conditions

Total amount 47,137,315 5,000,000

15. Incremental operating costs include the normal expenditures of the operation such as reasonable costs of goods and services required for the day-to-day implementation of the operation, including maintenance of vehicles and equipment; fuel; office supplies; utilities; consumables; office rental and maintenance; bank charges; advertising expenses; salaries, allowances, and benefits of the PMU; communications; travel of staff (including per diems and accommodation); and salaries, allowances, and benefits of selected contracted support staff but excluding salaries and salary top-ups of civil servants of the Government.

Procurement

16. Country procurement environment. Sri Lanka operates under a fairly good procurement regime. The latest set of procurement guidelines were established in 2006 and covers adequately all aspects of procurement of goods, works, and consulting services. The guidelines compare favourably with the international best practice and UNCITRAL35 Model Procurement Law. The National Procurement Commission was established under the Chapter XIX B of the Nineteenth Amendment to the Constitution of the Democratic Socialist Republic of Sri Lanka to Strengthening Good Governance and Excellence in Public Sector Procurements. The commission consists of five members appointed by the President on the recommendation of the constitutional council. The assigned functions of the commission are to formulate fair, equitable, transparent, competitive, and cost-effective procedures and guidelines for the procurement of goods and services, works, consultancy services, and information systems by government institutions and cause such guidelines to be published in the Gazette. The government institutions covered by the commission’s mandate include ministries, government departments, public corporations, local authorities, any business or other undertaking vested in the Government, and companies registered or deemed to be registered under the Companies Act No. 7 of 2007, in which the Government, a public corporation, or any local authority holds more the 50 percent of the shares. The basic contract law has no specific provision directly bearing on public procurement. Other than the financial regulations and the

35 United Nations Commission on International Trade Law.


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guidelines, there is no separate body of laws that regulates public procurement. The Regulatory and Legal Framework including tax regime does not pose any additional procurement risk and impact on cost.

17. The Contracting Industry Development Authority, formerly ICTAD,36 regulates the contracting industry and provides registration and classification of contractors as well as capacity building to contractors and government officials.

18. Procurement of works, goods, and services will be carried out in accordance with the Procurement Regulations and the provisions stipulated in the FA. Unless otherwise agreed with the World Bank, the World Bank’s SPDs, Requests for Proposals, and Forms of Consultant Contracts will be used.

19. Capacity assessment. The procurement risk is assessed as Substantial. Procurement under the project would be implemented by a PMU which will be staffed by former SCDP procurement specialists. It is expected that the major procurement packages will be procured by this PMU. Owing to their experience in implementing the ongoing project, the PMU staff have adequate capacity and experience to implement procurement. However, they have no experience of using the World Bank’s Procurement Regulations. To mitigate any risks associated with this, adequate training will be provided to the PMU staff. To further strengthen the implementation and provide greater transparency, the GoSL has requested for HEIS from the World Bank, which will be provided in accordance with Paragraph 3.10 of the Procurement Regulations.

20. Procurement methods. All methods and approaches contained in the Procurement Regulations and as agreed in the Procurement Plans may be used under the project.

21. Procurement of works (Component 1: Development of Kandy Multimodal Transport Terminal - US$64.32 million). This contract under Component 1 will involve the construction of the multimodal terminal at the existing Goods Shed station in Kandy and the maintenance of the terminal to ensure a smooth transition. A preliminary technical design for the terminal has been developed under the SCDP based on the requirements identified in the public transport plan and the traffic plan. In addition, the contract will involve the diversion of the Meda Ela canal.

22. Procurement of goods. Major procurements of goods are not envisaged under the project.37

23. Selection of consultants. Selection of consultants will include consultancy services related to traffic and safety management and operation of the terminal and possible selection of consultancy services for construction supervision of the main KMTT contract, should the PMU choose to do so instead of managing the main contract through its own staff.

24. National procurement procedures. In accordance with the Procurement Regulations, when approaching the national market, as agreed in the Procurement Plan tables in STEP, the country’s own procurement procedures may be used. When the borrower, for the procurement of goods, works, and non-consulting services, uses its own national open competitive procurement arrangements as set forth

36 Institute for Construction Industry Training and Development. 37 May include procurement of office equipment.


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in Sri Lanka’s Procurement Guidelines 2006, such arrangements shall be subject to Paragraph 5.4 of the Procurement Regulations and the following conditions:

(a) Only bidding documents acceptable to the World Bank shall be used for all national open competitive procurement.

(b) The request for bids/request for proposals document shall require that bidders/proposers submitting bids/proposals present a signed acceptance at the time of bidding, to be incorporated in any resulting contracts, confirming application of, and compliance with, the World Bank’s Anti-Corruption Guidelines, including without limitation the World Bank’s right to sanction and the World Bank’s inspection and audit rights.

(c) The eligibility of bidders shall be as defined under Section III of the Procurement Regulations. Accordingly, no bidder or potential bidder shall be declared ineligible for contracts financed by the World Bank for reasons other than those provided in Section III of the Procurement Regulations.

25. Complaint handling mechanism. To promote an open, fair, and transparent procurement process, the implementing agencies will administer a complaint handling system for the project. The composition of the complaint handling committee, the form of complaint register, response time, decision-making mechanism, and other features will be outlined in detail in the Operations Manual and will be subject to the World Bank’s review and clearance.

26. A PPSD has been prepared. The strategy takes a view on complex and large procurement contracts, assess market and implementation risks, and proposes mitigations for the smooth implementation of procurement under the project. The project has one large contract (International Competitive Bidding – ICB) with an estimated value of US$61 million for the construction of the terminal which is the key contract that presents a market risk. The PPSD has reviewed the market conditions for these packages and proposed market approaches that mitigate some of the risks. The issuance of bidding documents for the main contract is expected to be carried out on August 17, 2020 and the contract is expected to be awarded on February 26, 2021. The PPSD feeds into the Procurement Plan that has set methods and approaches for procurement under the project. The Procurement Plan will be managed in STEP. The proposed market approaches in the PPSD are detailed in table 1.3.

Table 1.3. Summary of PPSD to Support the Preparation of the Project Appraisal Document by the World Bank

Note: D&B BAFO = Design and Build and Best and Final Offer; QBS = Quality-Based Selection.

Contract Title, Description, and

Category

Estimated Cost (US$, millions) and Risk Rating

Bank Oversight

Procurement Approach/

Competition

Selection Method

Evaluation Method

Design and Construction of Kandy Multimodal Transport Terminal (KMTT)

61.28/Substantial

Prior Open International

Prequalification/D&B BAFO

Best overall value

KMTT Supervision Contract

3.04/Substantial Prior Open International

QBS QBS


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II. Implementation Support Plan: Strategy, Approach, and Resource Requirements

27. As the project was prepared by an acting PMU (SCDP PMU/PIU) and will be implemented by a new dedicated PMU (KMTT PMU) for the project which has been established under the MUDWSHF, there is a risk of the new KMTT PMU staff lacking the necessary background, capacity, and ownership of the project. The World Bank will work in close coordination with the KMTT PMU to ensure that capacity assessments for safeguards and fiduciary activities are carried out, any shortfalls in capacity are addressed, and adequate implementation support is provided.

(a) As the environmental and social requirements under the ESF have been prepared by the SCDP PMU/PIU, the World Bank will ensure that the KMTT PMU will be provided adequate training on the ESF and the implementation of the safeguards outlined in the ESCP and other documents.

(b) Both PMUs will be provided training on the Procurement Regulations. HEIS will be provided to improve procurement and contract management capacity of both PMUs. Similarly, FM capacity requirements will be provided to both PMUs as necessary.

28. As the preliminary technical design of the KMTT was developed under the supervision of the SCDP PMU/PIU, the World Bank will ensure that the KMTT PMU will be closely engaged in carrying out the gap analysis of the design proposed under Component 1 and in any further improvements to the design. This will ensure that the KMTT PMU is familiar with the technical design of the terminal.

29. Implementation of this project also requires skills and capacity around operations of a multimodal terminal and integrated transport and urban development planning. Capacity-building support provided under Component 3 of this project will ensure that the PMU receives training on operations, management, and maintenance of a multimodal terminal as well as on public transport planning. Particular focus will be on improving capacity on developing financial models for infrastructure development of this nature. This will ensure that the Government can sustain the investment and manage it efficiently.

30. Given the many stakeholders involved in this project, the PMU will ensure that necessary consultations are carried out with all stakeholders and their capacity requirements for operations and management of the KMTT are also addressed through the project. The Steering Committee proposed to be established for monitoring of the project will create a platform to bring all stakeholders together and consult them on various aspects of the project.


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ANNEX 2: Detailed Project Description

COUNTRY: Siri Lanka


Component 1: Development of Kandy Multimodal Transport Terminal (US$64.32 million)

1. This component will finance the construction of the multimodal terminal at the existing Goods Shed station in Kandy. A preliminary technical design for the terminal has been developed under the SCDP based on the requirements identified in the public transport plan and the traffic plan.38 A gap analysis of this preliminary design of the terminal will be carried out and any revisions as necessary will be incorporated to ensure that the terminal is accessible, efficient, safe, and user friendly.

2. The design of the KMTT consists of the following key structures:

• The preliminary KMTT design consists of two main structures about 100 m apart—the main terminal for boarding-alighting-TnG and a bus parking facility for short overlays—which are connected by an internal road. The terminal will be built using principles of universal design; it will include gender-informed designs, such as women-only waiting areas, breastfeeding rooms, and sanitation facilities that are in safer locations and well lit, to increase safety and comfort for female travelers as well as female workers at the terminal. The terminal design will be guided by the World Bank’s guideline for disability-inclusive station design.39 Fire safety measures and safe refuge shelters for floods and landslides will be incorporated in the architectural design to adapt to climate risks and other hazards. The detailed engineering design will determine appropriate building materials and resilient features to withstand the impacts of slope failures/landslides, flooding, or fire and to prevent damages. Sustainable construction material will be used to minimize carbon emissions. To the extent possible, supplies will be locally produced and taken from renewable resources such as wood. This terminal is designed to obtain the green building certification from the UDA. Green building guidelines have been considered in the KMTT design to the extent possible, governing areas such as energy efficiency, sustainable site planning management, materials and resource management, quality of the building environment, water efficiency, and green cover enhancement.

• Terminal design supporting pandemic-resilient bus operations will be considered. This includes crowd forecasting and facility sizing to facilitate adequate social distancing throughout the terminal, providing adequate signage and enforcement to ensure social distancing, and providing adequate sanitation facilities to promote sanitary practices.

• The second floor of the terminal connects to a pedestrian overhead walkway (skywalk) that will serve the areas to the east and west and connect to Kandy railway station.

38 Public Transport Design and Operations Management Plan and Strategic Traffic Demand Management and Design Plan for Kandy; Strategic Traffic Management and Traffic Circulation Plan Report for Kandy CBD. 39 World Bank. 2013. Improving Accessibility to Transport for People with Limited Mobility (PLM): A Practical Guidance Note.


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• The terminal area will also consist of pedestrian-friendly public space. The design of the public space will be guided by international best practice on gender-inclusive planning. The creation of the public space is expected to lead to increased NMT and user satisfaction.

• In addition to these features, this component will finance the diversion of Meda Ela, the urban stormwater drainage canal that runs across the proposed site to facilitate the construction of the terminal.

Component 2: Urban Integration and Road Safety Improvements around KMTT (US$1.00 million)

3. Subcomponent 2.1: Technical assistance to identify safer and better pedestrian circulation and access to the terminal and potential for ToD. Making the city pedestrian friendly and offering easy access to public transport for all will lead to a reduction in the use of private vehicles, thus reducing congestion and air pollution. The KMTT, as a major new transport hub in the heart of the city, will provide the opportunity to reshape the city to make it more pedestrian friendly. This subcomponent will complement the existing studies carried out under the SCDP on walkability improvements and on providing good and equal access to the terminal for all users, based on the latest pedestrian-priority urban design strategies and interventions. This TA will focus on the following aspects:

(a) Identify improvements for pedestrian circulation around the KMTT (US$0.30 million). The study will carry out a thorough analysis of possible pedestrian-friendly measures around the KMTT and offer design/planning solutions for easy access to the new KMTT building, easy change of modes, and safe walkways to the city center and surrounding areas. The study will pay particular attention to improving safety for women and children commuters and ensuring adequate space for people with disabilities to move conveniently and safely.

(b) Identify potential for ToD (US$0.20 million). Options will be explored to make the terminal area a compact, mixed-use, pedestrian-friendly development organized around the terminal, embracing the idea that locating amenities, employment, retail shops, and housing around transit hubs promotes transit use and nonmotorized travel. The TA would lay out ways for collaboration and possible intervention to guide decision makers to move forward on this initiative. The subcomponent will also explore potential for private participation/PPPs for identified ToD interventions.

4. Subcomponent 2.2: Road safety (US$0.50 million). Road safety concerns discussed in the Sectoral and Institutional Context section indicate a clear need for improvements, especially for pedestrians at major transport terminals in the city center. As physical improvements alone cannot address these issues, this subcomponent will look into measures within a broader scope of road safety enforcement and traffic policing supported by transport authorities and police departments, emergency medical and rehabilitation services, and community education and awareness programs. The project will address safety comprehensively from three major aspects: (a) engineering design; (b) enforcement, legal, and policy aspects; and (c) public education/campaigns.


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Component 3: Institutional Strengthening and Capacity Building (US$4.00 million)

5. Subcomponent 3.1: Develop a comprehensive business development plan for overall terminal management and operation (US$1.00 million). This subcomponent will develop a business plan to identify the best institutional arrangement for the management and operation of the terminal, carry out a financial analysis, and explore potential for private sector participation in the operation and maintenance of the terminal.

(a) Ownership of the terminal and its operation and maintenance. As there are a number of stakeholders involved in the KMTT (bus operators, landowners,40 etc.), the Government has proposed a trust or special purpose vehicle to be set up with the participation of all key stakeholders to transfer the ownership of the terminal. The business development plan will explore the viability of this proposed arrangement as well as alternative arrangements based on local and international experience. The plan will also explore potential for private participation/PPPs for the operation and maintenance of the terminal. An Operations Manual that outlines roles and responsibilities of each stakeholder involved in ownership, operations, management, and maintenance of the terminal will also be developed under this subcomponent.

(b) Financial analysis of the KMTT. This subcomponent will support a comprehensive financial analysis of the KMTT to identify the short- and long-term costs involved, including operations and maintenance costs. It will also explore funding options, such as private sector participation and use of municipal finance, as well as options to potentially augment its revenues so that the terminal could possibly be financially self-sustaining in the long run. This analysis will create the foundation for the GoSL to initiate a broader discussion among its stakeholders on whether the terminal will be capable of generating sufficient return to recover the initial capital expenditure in the long run. The financial analysis and models developed through this project could also serve as a model for other terminals in the country.

6. Subcomponent 3.2: Capacity building for key stakeholders involved in the management, operation, and maintenance of the terminal (US$1.00 million)

(a) Enhance capacity in operations, maintenance, and management of the terminal. The project will provide support to improve the capacity of the KMTT PMU, CPPTSA, SLTB, and other relevant stakeholders in carrying out comprehensive financial analysis and financial planning for transport infrastructure projects as identified in the business plan under Subcomponent 3.1. This will also provide capacity building in the areas of contract structure and management for public transport services.

(b) Increase the number of women working in bus transport operations in Kandy. To address the current low number of women working in bus transport operations, including among bus crews, the project will provide (i) female-friendly facilities (such as sanitation facilities),

40 The land ownership of the area proposed for the KMTT is under four key state agencies: KMC, RDA, SLR, and Kandy Teaching Hospital.


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(ii) flexible work schedules, and (iii) safer work areas. In addition, it will have targeted outreach and recruitment to increase the number of women employed and provide them tailored training, once they are recruited.

(c) Enhance transport planning capacity of relevant authorities in Kandy. This will provide support to enhance the transport planning capacity of institutions such as CPPTSA, SLTB, and NTC. The areas will include, among others, traffic management, route planning, bus scheduling, integration with other transport modes, bus dwell time analysis, and real-time transport information system.

(d) Provide pandemic, emergency response, and climate adaptation-related capacity building for resilience for terminal operation. The project will support the development of a pandemic response operational plan and other emergency planning mechanisms; disaster risk management plans; strengthened communication to users of the terminal/local communities around the terminal; and coordination between relevant stakeholders such as transport service providers, terminal operators, police departments, and fire and other emergency services in case of emergency to supply early warning systems.

(e) Personal safety-related measures

(i) A kiosk will be set up at the terminal for reporting issues around personal security of commuters, particularly of female users; issues of service provision; and suggestions.

(ii) The 24-hour hotline will be available either in call or SMS form. A protocol will be developed for the people handling these services both as part of the kiosk and the hotline on how to record the complaints against sexual harassment and the method of referring the person to the requested services (police, health, and civil society organizations). The personnel will also be trained to handle reports of GBV beyond sexual harassment experienced while using public transport and be able to refer them to additional services such as shelters, legal services and organizations working on GBV service provision. Police, health, legal, and women’s organizations working on GBV response will be engaged and consulted when developing protocols. The hotline number and usage will be advertised widely throughout the transport system, terminal, and skywalk.

(iii) All stakeholders in the management and operation of the terminal, bus and train drivers, and conductors will be trained on the issue of sexual harassment and a bystander intervention initiative will be carried out to encourage community participation to prevent incidents of sexual harassment in public transport.

(iv) Safety audits will be carried out periodically—both during construction and operation of the terminal—to ensure safety measures are in place and functional and to notify the management of areas which require further improvements, with particular attention to female commuters.


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(v) Messaging around zero tolerance of sexual harassment and processes of reporting incidents will be displayed in and around the terminal, skywalk, and other public spaces around the terminal.

7. Subcomponent 3.3: Project management (US$2.00 million). This subcomponent will support the KMTT PMU in its new setup, including its incremental operating costs, training requirements such as applying the new Environmental and Social Framework and the World Bank’s procurement processes, and capacity building for project management and contract management.

Component 4: Contingent Emergency Response Component (US$0 million)

8. This component will allow for rapid reallocation of uncommitted project funds from other components to support immediate response and recovery needs in the event of a natural or man-made disaster or crisis. To activate this component, the GoSL must declare an emergency or a state of a disaster or provide a statement of fact justifying the request for the activation of emergency funding. No withdrawal will be made under this component until the GoSL has (a) declared that a disaster or emergency has occurred, and the World Bank has agreed with the determination; (b) prepared and disclosed all safeguards instruments required for activities under Component 4 of the project, if any, and the GoSL has implemented any actions that are required to be taken under said instruments; (c) established adequate implementation arrangements, including a positive list of goods and/or specific works and services required for emergency recovery, satisfactory to the World Bank, including staff and resources for these activities; and (d) prepared and adopted an Emergency Response Manual acceptable to the World Bank.


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ANNEX 3: Background of the Project

COUNTRY: Sri Lanka


1. The SCDP, supported by the World Bank, included Kandy as a city for key strategic interventions. Two broad technical consultations were carried out under the SCDP to identify the key activities to be financed under the project for the improvement of the urban space of the city. In the initial consultation, the Kandy Transport Improvement Program (KTIP) identified the need for improved and well-managed public transport services as a prerequisite for relieving traffic congestion and facilitating the growth momentum in Kandy.

2. A comprehensive technical study was commissioned under KTIP to identify bottlenecks in urban transport in Kandy city. The Public Transport Design and Operations Management Plan and Strategic Traffic Demand Management and Design Plan for Kandy comprised an ISPTP and a Strategic Traffic Management and Traffic Circulation Plan for Kandy CBD.

3. The study recognized that improvements to the public transport network in Kandy city to reduce overcrowding of buses within the city core require reorganization of the city’s key transport infrastructure. In this context, key interventions recommended by the study are to establish an integrated, multimodal transport hub; transport facilities outside the city at appropriate locations; a revised bus network; enhanced services; and bus priority measures on selected main routes. Traffic reducing measures were also recommended to be put in place to improve pedestrian friendliness, such as migrating on-street car parking to off-street facilities, setting up a traffic management regime, and prioritizing public transport and pedestrians within the city. The development of the KMTT and a number of other interventions under the SCDP carried out in Kandy have been the result of these studies and consultations. Other activities carried out in Kandy under the SCDP are as follows:

(a) Improve connectivity around Kandy to provide alternative routes across the greater Kandy region.

(b) A Vision Statement and Urban Design Scheme for Kandy, considering the plans for the KMTT. Urban upgrading interventions in Kandy included a walkability analysis to highlight important pedestrian links within and across the city as well as key landmarks that generate high numbers of pedestrians, such as the KMTT.

(c) Subprojects that have been implemented in the Civic Hub (Car Park Rooftop and George de Silva Park) were selected in part due to their proximity to the KMTT and the enhancement they provided to public space within the crowded city. From a walkability viewpoint, these then link to the Lake Walk Around Enhancement and the Tomlin Park Pilgrim Drop-Off and Reception Center. The design of the KMTT created new opportunities to improve walkability across the site and within Kandy, including linking the bus terminal with the train station and the hospital.

(d) The drainage activities addressed flooding within the city center, especially along the Meda Ela. These improvements also contribute to improving the urban environment.


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4. A number of preliminary activities around the development of the KMTT have already been initiated (some completed) under the SCDP. These are listed in table 3.1. The incomplete/ongoing activities have already been contracted under the SCDP and therefore will be fully funded by the SCDP until their completion as outlined in the respective contracts.

Table 3.1. Preliminary Activities Related to the Development of the KMTT Carried Out under the SCDP

Subproject Cost (US$, millions) Present Status

Construction of Bus Terminal at Bogambaraa 1.18 Completed

Preparation of Bus TnG Boarding and Alighting Bays at Torrington Bus Terminal and four other sitesb

0.17 Completed

Construction and Improvement to Clock Tower Bus Terminal, SWRD Bandaranayake Mw, and Other Sites

0.12 Completed

Construction of Bus Parking Facilities at Kandy South Depot

0.68 Parking area completed; other works are ongoing and will be completed by June 2020.

Utility Diversion for KMTT Area including KMC Water Mainc

1.54 Contract awarded and commenced on January 31, 2020. The contract period is 12 months.

Development of IT Platform for Transitional Bus Operation Management for Bus Operation during Transition Period and Support for Maintenance and Management of Bus Operation Control Centre up to December 31, 2021

1.03 Ongoing

Purchase of Equipment for Control Center for Bus Operation for Transition Arrangement and Terminal Operation

0.04 Completed

Purchase of Furniture for Control Center for Bus Operation for Transition Arrangement and Terminal Operation

0.01 Completed

Purchase of GPS equipment for 2,380 buses for the use in transitional bus operation management in Kandy

0.16 Completed

Purchase of Electronic Ticketing Machines for 1,650 Buses for the Use in Bus Operation Management in Kandy

0.43 Completed

Implementation of support construction works for Transitional bus operation

0.20 Ongoing

Bus passenger counts at transitional terminal and analysis

0.02 Ongoing

Review of the KMTT design 0.09 Ongoing

Note: a. A transitional bus operation plan was developed and submitted to the SLTB and CPPTSA in January 2018, which identified the locations for the transitional services and other activities required to carry out the transition. b. SWRD Bandaranaike Mawatha bus halt, Udurawana Mawatha bus halt, Central Market bus halt, and Yatinuwara bus halt. c. This contract includes the activities related to demolition of the existing infrastructure at the Goods Shed station.


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ANNEX 4: Economic Analysis

COUNTRY: Siri Lanka


A. Economic Evaluation Assumptions

1. The CBA was conducted using the consumer surplus method that computes project benefits in terms of reduction in travel time of KMTT bus passengers, vehicle operating costs of buses using the KMTT, and vehicle operating costs and CO2 emissions of the vehicle fleet served by the KMTT-influenced road network. The following assumptions were applied:

• A discount rate of 6 percent and an evaluation period of 24 years. The estimated construction period for the KMTT is 4 years, and hence the period recommended for accruing benefits is 20 years after the completion of construction.

• Based on the initial estimates made by the PMU under the SCDP, the overall investment cost of the KMTT is US$64 million. The estimated financial cost is converted to economic cost by leaving out financial contingencies and the value added tax and then applying a conversion factor of 0.87 to the remainder. Annual operation and maintenance costs of the KMTT are estimated at 4 percent of the investment cost. Similarly, periodic maintenance which is scheduled every 10 years is estimated at 15 percent of the investment cost. The salvage value is 20 percent.

• Value of time for bus passengers is US$0.73 per hour, based on an average monthly income of LKR 25,000 for bus passengers.41 Work time value is estimated at 1.2 times hourly income and non-work time value is estimated at 0.25 times working time. Crew time is estimated to be US$1.74 per hour, considering that the crew of a bus is composed of a driver42 and a conductor.

• The social cost of carbon in 2020 is US$80 per ton equivalent, increasing to US$122 per ton equivalent in 2039, based on the high scenario derived from the 2017 World Bank guidance note on the shadow price of carbon in economic analysis.43

• Bus passengers, currently around 350,000 per day, using the current terminals will save on average six minutes44 of travel time per trip with the construction of the KMTT. Bus passengers’ benefits will increase annually as a result of (a) annual passenger demand

41 Average salary of unskilled labor. 42 The average income of a driver is estimated to be LKR 35,000 per month. 43 The guidance note presents low and high scenarios of the social cost of carbon over time, from which the low scenario was used due to negative net CO2 emission of the project. 44 Passenger time saved is estimated to vary from 3 to 10 minutes per trip for the different passenger types: passengers using through services, passengers transferring buses, and passengers terminating a trip.


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increase and (b) annual income per capita increase, resulting in 1.5 percent annual increase per year.

• Buses using the KMTT, currently 10,000 vehicles per day, will save on vehicle operating costs (for example, crew time cost and fuel cost) with operating hours saved due to improved parking conditions, reduced average layover times, and reduced travel distances. It is estimated that 1.3 million hours per year of crew working hours will be saved with the KMTT, increasing at 3.0 percent per year based on vehicle fleet traffic growth defined as a function of the estimated growth of GDP per capita.45

• Once the KMTT is in operation, bus operations will be more organized and compact, and consequently the current disruption to normal traffic within Kandy city would be minimized, leading to an increase in the average speed for normal traffic on the KMTT-influenced road network46 by about 1 km per hour. This will result in savings of vehicle operating costs and CO2 emissions.47

B. Results of the Economic Evaluation

2. The overall EIRR of the project is 21.0 percent and the NPV, at 6 percent discount rate, is US$96.79 million, corresponding to an NPV/investment cost ratio of 2.0; the project is therefore economically justified. Bus passengers time savings account for 66.5 percent of the project benefits, bus crew and vehicle operating costs savings account for 31.0 percent, influenced network vehicle operating costs account for 2.2 percent, and influenced network CO2 emissions savings account for 0.3 percent of the project benefits. The minimum shadow price of carbon emission saving is equivalent to US$1.38 million (undiscounted) based on a low-value estimate and is US$2.77 million based on a high-value estimate. The EIRR, NPV, and other relative analysis are calculated based on the low-value estimate. Table 4.1 presents the resulting flow of net benefits.

Table 4.1. Cost-Benefit Stream for the Project (US$, millions, 2019 Constant Prices)

Year Capital Costs

Recurrent Costs

Bus Passengers

Savings

Bus Crew and VOC

Savings

Network VOC

Savings

Network CO2

Savings

Net Benefits

(%)

2020 5.33 0.00 0.00 0.00 0.00 0.00 −5.33

2021 12.10 0.00 0.00 0.00 0.00 0.00 −12.10

2022 20.82 0.00 0.00 0.00 0.00 0.00 −20.82

2023 10.17 0.00 0.00 0.00 0.00 0.00 −10.17

2024 0.00 1.94 9.81 4.06 0.29 0.04 12.26

2025 0.00 1.94 9.96 4.18 0.30 0.04 12.54

2026 0.00 1.94 10.11 4.30 0.31 0.04 12.83

2027 0.00 1.94 10.26 4.43 0.32 0.04 13.12

2028 0.00 1.94 10.42 4.57 0.33 0.05 13.42

45 The International Monetary Fund estimates the GDP per capita growth rate will be 3.0 percent per year from 2020 to 2024. 46 The KMTT-influenced road network is estimated to be 6.9 km carrying on average 27,827 vehicles per day. 47 The increase in travel speeds of 1 km per hour will decrease the average unit vehicle operating costs of the vehicle fleet from US$0.17 to US$0.16 per vehicle per kilometer and will decrease the unit CO2 emissions for buses from 323 g to 311 g per vehicle per kilometer.


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Year Capital Costs

Recurrent Costs

Bus Passengers

Savings

Bus Crew and VOC

Savings

Network VOC

Savings

Network CO2

Savings

Net Benefits

(%)

2029 0.00 1.94 10.57 4.70 0.34 0.05 13.72

2030 0.00 1.94 10.73 4.85 0.35 0.05 14.04

2031 0.00 1.94 10.89 4.99 0.36 0.05 14.36

2032 0.00 1.94 11.05 5.14 0.37 0.06 14.68

2033 0.00 1.94 11.22 5.29 0.38 0.06 15.02

2034 7.26 1.94 11.39 5.45 0.39 0.06 8.10

2035 0.00 1.94 11.56 5.62 0.40 0.07 15.71

2036 0.00 1.94 11.73 5.79 0.41 0.07 16.07

2037 0.00 1.94 11.91 5.96 0.43 0.07 16.43

2038 0.00 1.94 12.09 6.14 0.44 0.08 16.80

2039 0.00 1.94 12.27 6.32 0.45 0.08 17.19

2040 0.00 1.94 12.45 6.51 0.47 0.09 17.58

2041 0.00 1.94 12.64 6.71 0.48 0.09 17.98

2042 0.00 1.94 12.83 6.91 0.49 0.09 18.39

2043 −9.68 1.94 13.02 7.12 0.51 0.10 28.49

EIRR 21.0%

NPV at 6%

96.79

Present value at 6%

44.5 18.7 106.2 49.6 3.6 0.6 96.79

Note: VOC = Vehicle operating cost.

3. Sensitivity analysis shows that the project is economically justified even if investment cost is 20 percent higher or if the project benefits are 20 percent lower or both. If investment costs were 20 percent higher and the project benefits were 20 percent lower, the overall EIRR would drop to 15.4 percent.

C. GHG Accounting

4. The total gross CO2 emissions over the 24-year evaluation period under the without-project scenario are estimated at 756,461 tons and under the with-project scenario at 729,656 tons, resulting in a net decrease of CO2 emissions of about 26,805 tons or 1,117 tons per year. Thus, the project will reduce CO2 emissions due to the lower congestion.

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