Kazakhstan: CAREC Transport Corridor I (Zhambyl Oblast ......Kazakhstan 2503, 2562, 2697, Cofinance...

Completion Report

Project Numbers: 41121-023, 41121-033, 41121-043, and 41121-053 Loan Numbers: 2503, 2562, and 2697 Cofinancing Numbers: 8251 and 2735 August 2017

Kazakhstan: CAREC Transport Corridor I (Zhambyl Oblast Section) [Western Europe–Western People’s Republic of China International Transit Corridor] Investment Program This document is being disclosed to the public in accordance with ADB’s Public Communications Policy 2011.

CURRENCY EQUIVALENTS

Currency Unit – tenge (T)

Loan 2503 At Appraisal At Project Completion (15 October 2008) (31 December 2013)

T1.00 = $0.008342 $0.006507 $1.00 = T119.88 T153.69

Loan 2562

At Appraisal At Project Completion (15 September 2009) (22 October 2015)

T1.00 = $0.006628 $0.003611 $1.00 = T150.865 T276.930

Loan 2697 and Cofinance 8251 At Appraisal At Project Completion (25 October 2010) (22 April 2015)

T1.00 = $0.00678 $0.00538 $1.00 = T147.5 T185.8

(1 August 2016) ¥1.00 = $0.01069 $0.01110 $1.00 = ¥93.5 ¥90.1

Loan 2735 At Appraisal At Project Completion (14 February 2011) (31 December 2014)

T1.00 = $0.0068 $ 0.0055 $1.00 = T146.45 T 182.33

ABBREVIATIONS AADT – annual average daily traffic ACA – accepted contract amount ADB – Asian Development Bank BER – bid evaluation report CAREC – Central Asia Regional Economic Cooperation CLG – community liaison group COR – Committee of Roads CPS – country partnership strategy CSC – construction supervision consultant DMF – design and monitoring framework EIA – environmental impact assessment EIRR – economic internal rate of return EMP – environmental management plan FFA – framework financing agreement IDB – Islamic Development Bank IEE – initial environmental examination IFB – invitation for bids IRI – international roughness index ITS – intelligent transport system JICA – Japan International Cooperation Agency JSC – joint-stock company KAZ – Kazakhstan Km – kilometer marker km – kilometer LAR – land acquisition and resettlement LARP – land acquisition and resettlement plan LLP – limited liability partnership m – Meter MFF – multitranche financing facility MID – Ministry of Investment and Development MOF – Ministry of Finance MOTC – Ministry of Transport and Communications NPV – net present value O&M – operation and maintenance PMC – project management consultant PRC – People’s Republic of China SPS – Safeguards Policy Statement TOR – terms of reference VOC – vehicle operating cost vpd – vehicles per day

GLOSSARY

Akim – Head of an akimat Akimat – A municipal, district, or provincial government CAREC

Corridor 1 – Western Europe–Western People’s Republic of China (PRC)

International Transit Corridor running from Khorgos at the border with PRC, through Almaty and Shymkent, to the western border with the Russian Federation

Facility – Multitranche financing facility provided by the Asian Development Bank (ADB) to finance projects under the Investment Program

Investment Program

– Central Asia Regional Economic Cooperation Transport Corridor I (Zhambyl Oblast Section) [Western Europe–Western People’s Republic of China International Transit Corridor] Investment Program, financed by ADB, the Islamic Development Bank (IDB), and the Japan International Cooperation Agency (JICA)

Oblast – A local administrative unit analogous to a province Raion – A local administrative subdivision of the oblast, which is

analogous to a district Project – Refers to the combined scope of ADB and cofinance loan Tranche – Refers to the scope under ADB loan proceeds alone

NOTES

(i) The fiscal year (FY) of the government and its agencies ends on 31 December. (ii) In this report, "$" refers to US dollars, “¥” refers to Japanese yen.

Vice-President W. Zhang, Vice-President (Operations 1) Director General S. O’Sullivan, Central and West Asia Department (CWRD) Director D. Pyo, Officer-in-Charge, Transport and Communications Division

(CWTC), CWRD Country Director

G. Capannelli, Kazakhstan Resident Mission (KARM), CWRD

Team leader T. Herz, Transport Specialist, CWRD Team members M. Capulong, Senior Project Officer (Transport), CWRD A. Chakenova, Project Officer (KARM), CWRD A. Silverio, Senior Operations Assistant, CWRD

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS

Page

BASIC DATA i

MAP xiii

I. PROGRAM DESCRIPTION 1

II. EVALUATION OF DESIGN AND IMPLEMENTATION 2

A. Relevance of Design and Formulation 2 B. Program Outputs 3 C. Program Costs 4 D. Disbursements 5 E. Program Schedule 6 F. Implementation Arrangements 6 G. Conditions and Covenants 7 H. Consultant Recruitment and Procurement 7 I. Performance of Consultants and Contractors 7 J. Performance of the Borrower and the Executing Agency 8 K. Performance of the Asian Development Bank 8

III. EVALUATION OF PERFORMANCE 9

A. Relevance 9 B. Effectiveness in Achieving the Program Outcome 9 C. Efficiency in Achieving Outcome and Outputs 11 D. Preliminary Assessment of Sustainability 11 E. Contribution of Program to Institutional Development 12 F. MFF Program Impact 13

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 14

A. Overall Assessment 14 B. Lessons 15 C. Recommendations 15

APPENDIXES

1. Program Framework 16 2. Summary of the Investment Program and Its Projects 20 3. Summary Engineering Design 21 4. Program Cost and Financing Plan 22 5. Contract Packages 27 6. Contract Awards and Disbursements of All Loans under MFF 29 7. Program Implementation Schedule 30 8. Chronology of Major Events 31 9. Program Organizational Structure 36 10. Status of Compliance with Facility-Level Undertakings and Loan Covenants 37 11. Economic Reevaluation 47 12. Environment and Social Safeguards 55 13. Program Overall Assessment 60 14. Contribution to the ADB Results Framework 61

BASIC DATA

A. Loan Identification 1. Country 2. Loan Numbers 3. Project Title 4. Borrower 5. Executing Agency 6. Amount of MFF

Tranche 1: Loan 2503 Tranche 2: Loan 2562 Tranche 3: Loan 2697 Cofinance: Loan 8251 Tranche 4: Loan 2735

7. Project Completion Report Number

Kazakhstan 2503, 2562, 2697, Cofinance 8251, 2735 CAREC Transport Corridor I (Zhambyl Oblast Section) [Western Europe–Western People’s Republic of China International Transit Corridor] Investment Program Republic of Kazakhstan Ministry of Investments and Development $700,000,000 Original: $340,000,000 Revised: $224,950,000 $187,000,000 $173,000,000 ¥6,361,000,000 ($68,000,000 equivalent) $112,000,000 1650

B. Loan Data 1. Appraisal

Loan 2503–Tranche 1 – Date Started – Date Completed

26 August 2008 2 September 2008


20 February 2009 27 February 2009

Fact-Findinga




22 November 2010 27 November 2010

2. Loan Negotiations




6 October 2008 9 October 2008 28 September 2009 29 September 2009 30 June 2010 30 June 2010

a No further appraisal missions (OM D11/OP) were conducted after January 2010.

ii



Loan 8251 (Cofinance) – Date Started – Date Completed

14 April 2010 14 April 2010

3. Date of Board Approval

Loan 2503–Tranche 1 Loan 2562–Tranche 2 Loan 2697–Tranche 3 Loan 2735–Tranche 4 Date of Approval Loan 8251–Cofinance

30 December 2008 7 October 2009 15 November 2010 21 February 2011 31 May 2010

4. Date of Loan Agreements

Loan 2503–Tranche 1 Loan 2562–Tranche 2 Loan 2697–Tranche 3 Loan 2735–Tranche 4

30 March 2009 3 December 2009 15 December 2010 7 June 2011

Loan 8251–Cofinance 23 August 2010

5. Date of Loan Effectivenessb Loan 2503–Tranche 1 – In Loan Agreement – Actual – Number of Extensions

29 May 2009 31 July 2009 1

Loan 2562–Tranche 2 – In Loan Agreement – Actual – Number of Extensions

1 February 2010 13 April 2010 2


13 February 2011 15 June 2011 2


6 August 2011 22 December 2011 2

Loan 8251 (Cofinance) – In Loan Agreement – Actual – Number of Extensions

15 July 2011 0

b Loan effectiveness expiry was scheduled 60 days after the date of the loan agreement in all loans under MFF.

iii

6. Closing Date


31 December 2013 20 March 2014 0


30 June 2015 22 October 2015 0


31 December 2013 22 April 2015 1


31 December 2014 27 April 2015 0

Loan 8251 (Cofinance) – In Loan Agreement – Actual – Number of Extensions

15 July 2020 1 August 2016 0

7. Terms of Loan

Loan 2503–Tranche 1 – Interest Rate – Commitment Charges – Maturity (number of years) – Grace Period (number of years)

Sum of the LIBOR and 0.60% per annum as provided by section 3.02 of the loan regulations, less a credit of 0.40% per annum as provided by section 3.03 of the loan regulations 0.15% per annum 25 years 5 years


Sum of the London interbank offered rate (LIBOR) and 0.60% per annum as provided by section 3.02 of the loan regulations, less a credit of 0.40% per annum as provided by section 3.03 of the loan regulations 0.15% per annum 25 years 5 years


Sum of the LIBOR and 0.60% per annum as provided by section 3.02 of the loan regulations, less a credit of 0.40% per annum as provided by section 3.03 of the loan regulations 0.15% per annum 19 years 4 years

iv


Sum of the LIBOR and 0.60% as provided by section 3.02 of the loan regulations, less a credit of 0.30% as provided by section 3.03 of the loan regulations 0.15% per annum 24 years 4 years

Loan 8251 (Cofinance) – Interest Rate – Commitment Charges – Maturity (number of years) – Grace Period (number of years)

1.70% per annum (fixed) 0.1% per annum 25 years 7 years

8. Disbursements

a. Dates

Initial Disbursement Final Disbursement Time Interval Loan 2503 11 December 2009 20 March 2014 51.33 months Loan 2562 18 August 2010 22 October 2015 62.17 months Loan 2697 13 December 2011 22 April 2015 40.33 months Loan 2735 Loan 8251 (Cofin)

29 March 2012 19 December 2011

27 April 2015 31 March 2016

36.97 months 51.40 months

Effective Date Original Closing Date Time Interval Loan 2503 31 July 2009 31 December 2013 53.00 months Loan 2562 13 April 2010 30 June 2015 62.60 months Loan 2697 15 June 2011 31 December 2013 30.53 months Loan 2735 Loan 8251 (Cofin)

22 December 2011 15 July 2011

31 December 2014 15 July 2020

36.30 months 108.03 months

b. Amount ($ million)

Category

Original Allocation

Last Revised

Allocation

Amount

Canceled

Net Amount

Available

Amount

Disbursed

Undisbursed

Balancea

Loan 2503 1. Works 297.00 216.55 80.45 216.55 216.00 0.55 2. Consulting Services 14.00 8.41 5.59 8.41 8.11 0.30 3. Unallocated 29.00 0.00 29.00 0.00 0.00 0.00 Total 340.00 224.95 115.05 224.95 224.10 0.85 Loan 2562 1. Works 166.00 183.79 0.00 183.79 181.83 1.96 2. Consulting Services 4.00 3.21 0.00 3.21 2.83 0.38 3. Unallocated 17.00 0.00 0.00 0.00 0.00 0.00 Total 187.00 187.00 0.00 187.00 184.66 2.34 Loan 2697 1. Works 149.81 166.13 0.00 166.13 160.27 5.86 2. Consulting Services 6.87 6.87 0.00 6.87 4.40 2.47 3. Unallocated 16.32 0.00 0.00 0.00 0.00 0.00 Total 173.00 173.00 0.00 173.00 164.67 8.33 Loan 2735 1. Works 96.70 107.20 0.00 107.20 101.61 5.59 2. Consulting Services 4.80 4.80 0.00 4.80 2.64 2.16

v

Category

Original Allocation

Last Revised

Allocation

Amount

Canceled

Net Amount

Available

Amount

Disbursed

Undisbursed

Balancea

3. Unallocated 10.50 0.00 0.00 0.00 0.00 0.00 Total 112.00 112.00 0.00 112.00 104.25 7.75 Loan 8251 (Cofin)

1. Works 56.77 69.27 0.00 69.27 68.33 d 0.94 2. Contingencies 11.23 1.45 0.00 1.45 0.00 1.45 Total 68.00b 70.72 c 0.00 70.72 68.33 2.39 a The undisbursed balances were canceled at loan closing. b USD equivalent of ¥6,361,000,000 at approval date. c USD equivalent of ¥6,361,000,000 at last reallocation date. d USD equivalent of total disbursement of ¥6,109,005,925 on various transaction dates.

C. Project Data

1. Project Cost ($ million)

Cost Appraisal Estimatea Actual

Project 1 Foreign Exchange Cost 400.00 266.01 Total 400.00 266.01

Project 2 Foreign Exchange Cost 415.00 408.96 Total 415.00 408.96 Project 3 Foreign Exchange Cost 281.00 269.31 Total 281.00 269.31 Project 4b Foreign Exchange Cost 130.76 122.89 7 Total 130.76 122.89

a The project cost was not split into foreign exchange and local currency categories at appraisal. b The investment program at appraisal does not include the Project 4 cost.

2. Financing Plan ($ million)

Cost Appraisal Estimate a Actual

Project 1 Implementation Costs Borrower-financed 60.00 41.91 ADB-financed 340.00 224.10 Total 400.00 266.01 Project 2 Implementation Costs Borrower-financed 58.00 54.30 ADB-financed 187.00 184.66 IDB-financed 170.00 170.00 Total 415.00 408.96 Project 3 Implementation Costs

vi


Borrower-financed 40.00 36.31 ADB-financed 173.00 164.67 JICA-financedb 68.00 68.33 Total 281.00 269.31 Project 4 Implementation Costs Borrower-financed 18.76 18.64 ADB-financed 112.00 104.25 Total 130.76 122.89 ADB = Asian Development Bank, IDB = Islamic Development Bank, JICA = Japan International Cooperation Agency. a At appraisal, Project 4 was not envisaged. Its project cost is not included in the total for the investment program to

avoid double counting. b US dollar equivalent of the loan in Japanese yen.

3. Cost Breakdown by Project Component ($ million)

Project 1

Item Appraisal Estimate Actual

A. Base Costsa

1. Road Development Component

a. Civil Works

Km 404–443 (39 km) (ADB) 137.00 108.62

Km 443–483 (40 km) (ADB) 139.00 102.38

Km 214–260 (46 km) (ADB) 74.00 41.95

b. Consulting Services (ADB)

Construction Supervision Consultant 9.00 5.52

Project Management Consultant 3.00 2.62

Subtotal 362.00 261.09

2. Road Operations and Maintenance Component (ADB)

a. Improvement of Road Maintenance System 1.00 0.60

b. Development of Intelligent Transport System 1.00 0.90

Subtotal 2.00 1.50

Total Base Costs 364.00 262.59

B. Recurrent Costb 1.00 3.42

C. Contingency 35.00 0.00

Total Project Cost 400.00 266.01

ADB = Asian Development Bank; Km = kilometer marker; km = kilometer. a Tax and duties are included. b Recurrent costs include the government’s expenditure, such as costs for land acquisition and resettlement. Source: ADB’s loan financial information system.

Project 2

Component Appraisal Estimate Actual

A. Base Costs

1. Road Development Component a. Civil Works Km 310.5–358.6 (48.1 km) (ADB) 110.00 125.94 Km 358.6–389.4 (30.8 km) (ADB) 74.00 80.06 Km 536–593 (57 km) (IDB) 167.00 184.44 b. Consulting Services

vii


Construction Supervision (ADB) 5.00 3.22 Project Management (IDB) 3.00 2.35 Construction Supervision (IDB) 7.00 3.52 Subtotal 366.00 399.53

2. Road Operations and Maintenance Component Road Operation Facilities (ADB) 11.00 9.42 Subtotal 11.00 9.42

Total Base Costs 377.00 408.96 B. Contingency 38.00 0.00 Total Project Cost 415.00 408.96

ADB = Asian Development Bank; IDB = Islamic Development Bank; Km = kilometer marker; km = kilometer.

Source: ADB’s loan financial information system.

Project 3


A. Base Costs 1. Road Development Component

a. Civil Works Km 383–404 (20 km) (JICA) 66.79 76.53 Km 162–260 (80 km) (ADB) 163.62 175.72 Korday to the Kyrgyz border (17.7 km) (ADB)

12.62 12.14

b. Consulting Services (ADB) Construction Supervision Consultant 6.87 4.92 Total Base Costs 249.90 269.31 B. Contingency 31.10 0.00 Total Project Cost 281.00 269.31

ADB = Asian Development Bank; JICA = Japan International Cooperation Agency; km = kilometer, Km = kilometer marker. Source: ADB’s loan financial information system.

Project 4


A. Base Costs 1. Road Development Component Civil Works: Km 261.5–310.5 (49 km) (ADB) 113.76 118.86 Construction Supervision Consultant (ADB) 4.80 4.03 Total Base Costs 118.56 122.89 B. Contingency 12.20 0.00

Total Project Cost 130.76 122.89

ADB = Asian Development Bank; Km = kilometer marker; km = kilometer. Source: ADB’s loan financial information system.

4. Project Schedule


Project 1 Civil Works Km 214–260 (46 km) Invitation for Bids September 2008 June 2009 Date of Award June 2009 November 2009 Completion of Work December 2012 June 2013

viii


Km 404–443 (39 km) Invitation for Prequalification September 2008 June 2009 Date of Award June 2009 November 2009 Completion of Work December 2012 November 2012 Km 443–483 (40 km) Invitation for Bids September 2008 June 2009 Date of Award June 2009 November 2009 Completion of Work December 2012 November 2012 Consulting Services Construction Supervision

Recruitment Noticea September 2008 September 2008 Contract Award Date June 2009 October 2009 Completion of Services December 2012 December 2013 Project Management

Recruitment Noticea September 2008 September 2008 Contract Award Date June 2009 October 2009 Completion of Services December 2013 December 2013 Road Maintenance System Development

Recruitment Noticea September 2008 September 2008 Contract Award Date June 2009 December 2010 Completion of Services December 2009 April 2013 Intelligent Transport System

Recruitment Noticea September 2008 September 2010 Contract Award Date December 2009 November 2011 Completion of Services February 2010 November 2012 Project 2 Civil Works Km 310.5–358.6 (48.1 km) (ADB) Invitation for Bidsa October 2009 December 2009 Contract Award Date February 2010 May 2010 Completion Date December 2012 June 2013 Km 358.6–389.4 (30.8 km) (ADB) Invitation for Bidsa October 2009 December 2009 Contract Award Date February 2010 May 2010 Completion Date December 2012 December 2012 Road Operation Facilities (ADB) Invitation for Bidsa October 2009 September 2010 Contract Award Date February 2010 July 2011 Completion Date December 2012 June 2015b Km 536–593 (57 km) (IDB) Invitation for Bidsa 2009 2009 Contract Award Date November 2009 April 2010 Completion Date February 2013 January 2013 Consulting Services Construction Supervision (ADB) Recruitment Noticea October 2009 November 2009 Contract Award Date February 2010 November 2010 Completion of Services December 2012 June 2015 Project Management (IDB) Recruitment Noticea N/A N/A Contract Award Date N/A January 2010 Completion of Services N/A January 2013 Construction Supervision (IDB) Recruitment Noticea N/A N/A

ix


Contract Award Date June 2009 February 2010 Completion of Services February 2013 February 2013 Project 3 Civil Works Km 383–404 (20 km) Invitation for Bids September 2010 September 2010 Contract Award Date January 2011 August 2011 Completion Date March 2013 October 2013 Km 162–260 (80 km) Invitation for Bids September 2010 September 2010 Contract Award Date January 2011 August 2011 Completion Date March 2013 November 2014 Korday to Kyrgyz border (17.7 km) Invitation for Bids September 2010 September 2010 Contract Award Date January 2011 November 2011 Completion Date December 2012 November 2014 Consulting Services Construction Supervision Consultant Recruitment Notice August 2010 December 2010 Contract Award Date January 2011 April 2012 Completion of Services March 2013 December 2014 Project 4 Civil Works Km 261.5–310.5 (49 km) Invitation for Bids March 2011 February 2011 Contract Award Date July 2011 January 2012 Completion Date July 2013 May 2014 Consulting Services Construction Supervision Consultant Recruitment Notice March 2011 April 2011 Contract Award Date June 2011 June 2012 Completion of Services July 2013 December 2014

a Advertisement of the invitation for bids for consultant services recruitment process.

ADB = Asian Development Bank; IDB = Islamic Development Bank; Km = kilometer marker; km = kilometer; N/A = not applicable.

5. Project Performance Report Ratings

Implementation Period a

Ratingsb

Development Objectives

Implementation Progress

Project 1 From 30 December 2008 to 31 December 2010 Satisfactory Satisfactory From 1 January 2011 to 31 December 2013 On track Project 2 From 7 October 2010 to 31 December 2010 Satisfactory Satisfactory From 1 January 2011 to 31 December 2015 On track Project 3

From 15 November 2010a to 31 December 2010 Satisfactory Satisfactory

From 1 January 2011b to 31 December 2011c Potential problem

x

Implementation Period a

Ratingsb

Development Objectives

Implementation Progress

From 1 July 2012 to 31 December 2014 On track Project 4 From 21 February 2011 to 31 December 2014 On track

a The implementation period starts from the loan approval date. b From 1 January 2011, the project performance rating system was replaced with the eOperations project performance

rating system, with ratings including “on track,” “potential problem,” and “actual problem.” c The delayed loan effectivity due to a lengthy government internal procedure also delayed the contract award,

commencement of works, and disbursement.

D. Data on Asian Development Bank Missions

Project 1

Name of Missiona

Date

No. of Persons No. of Person-Days

Specialization of Membersb

Fact-finding 11–24 June2008 6 14 c, e, f, p, t, te Appraisal 26 August–

2 September 2008 4 32 f, p, t, te

Loan negotiations 6–9 October 2008 3 21 c, p, te Inception 21–26 February 2009 4 24 aa, p, t, te Project Review 1 21 April–1 May 2009 2 15 p, t Project Review 2 6–14 June 2009 Project Review 3 2–13 February 2010 3 12 p(2), t Project Review 4 27 September–

5 October 2010 2 9 p, t

Project Review 5 26 January–4 February 2011

2 10 p, s

Consultation 24–30 March 2011 5 7 e, p, s, t, u Midterm Review 13–19 July 2011 4 7 p(2), t(2) Project Review 6 4–11 October 2011 4 8 p(3), t Project Review 7 9–16 February 2012 6 8 a, p(3), t(2) Project Review 8 25 September–

8 October 2012 7 14 e, s, p(3), t(2)

Project Review 9 3–12 April 2013 3 10 p(2), t Project Review 10 3–11 June 2013 3 9 p(2), t Project Review 11 15–19 July 2013 1 5 s Project Review 12 5–20 September 2013 2 21 e, s Project Completion Review 21–31 October 2013 4 18 p(2), s, t

a Missions were combined for other projects. b a = advisor; aa = analyst; c = counsel; d = director; e = environment specialist; f = financial specialist; h = advisor

and head; n = economist; p = project officer; s = social development specialist (safeguards); t = transport specialist; te = transport economist; u = consultant.

Project 2

Name of Missiona Date No. of

Persons No. of

Person-Days b Specialization of Members

Consultation 20‒27 February 2009 4 32 a, c, r, w Consultation 21‒30 April 2009 2 20 a, w Consultation 6‒14 June 2009 4 36 a, d, w, y Inception 2‒13 February 2010 4 44 b, e, o, t

xi

Name of Missiona Date No. of

Persons

No. of Person-Days b

Specialization of

Members Project Review 2 27 September‒5

October 2010 2 16 b, t

Safeguards Review 1 7‒13 June 2011 3 21 j, l, x Consultation 30 June‒01 July 2011 1 2 d Project Review 3 13‒19 July 2011 4 28 a, i, p, u Midterm Safeguards (Environment) Review 6‒13 August 2011 1

8 n

Midterm Social Safeguards Review 6‒26 August 2011 2 42 m, u Special Loan Administration 4‒11 October 2011 5 40 b, g, p(2), u Consultation 17 October 2011 1 1 d Project Review 4 4‒19 October 2011 1 16 g Safeguards Review 2 16‒27 January 2012 1 12 n Project Review 5 9‒16 February 2012 6 48 a, f, i, p(2), u Project Review 6 23 April‒4 May 2012 6 72 a, f, n, m, g, u Project Review 7 25 September‒8

October 2012 8 104 a, n, m,

g(2), p, u, w Project Review 8 3‒12 April 2013 5 50 a, g(2), p, u Project Review 9 3‒11 June 2013 3 27 a, p, u Social Safeguards Consultation 15‒19 July 2013 1 5 k Social Safeguards Consultation 6‒7 September 2013 1 2 k Project Review 10 21‒30 October 2013 5 50 g, h, k, p, q Special Project Administration Mission

5‒7 March 2014 4 12 n, h, k, q

Project Review 11 29 September‒4 October 2014

5 30 h, d, g, p, q

Project Review 12 2‒9 March 2015 5 40 h, g, p, q, v Project Review 13 25‒30 May 2015 5 30 h, m, n, p, q Project Review 14 15–22 October 2015 6 48 p, g(2), h, q, s Project Completion Review 25–28 April 2016 3 10 g, p, q

a = principal transport specialist; b = senior transport specialist; c = senior transport economist; d = director; e = country director; f = senior advisor; g = transport specialist; h = senior public–private partnership specialist; i = young professional (transport); j = lead safeguards specialist; k = principal social development specialist (safeguards); l = senior social development specialist; m = social development specialist (safeguards); n = environment specialist; o = senior programs officer; p = senior project officer; q = associate project officer (infrastructure); r = program analyst; s = associate project analyst; t = senior operations analyst; u = operations analyst; v = associate operation analyst; w = senior operations assistant; x = operations assistant; y = resettlement consultant. a Missions were combined for other Kazakhstan projects.

Project 3

Name of Missiona Datea No. of

Persons No. of

Person-Daysb Specialization of Members

Fact-Finding 2–13 February 2010 4 12 a, i, j, d Project Consultationc 2–10 June 2010 3 7 a, j, d Project Consultation 27 September–5 October

2010 2 6 a, j, d

Safeguards (Social) Review 1 26 January–4 February 2011

2 4 g

Safeguards Review 2 7–13 June 2011 3 21 h, g, k Project Review 1 13–19 July 2011 4 24 a, i, j Midterm Safeguards Review 6–15 August 2011 3 6 f, g, i Special Project Administration Review

4–11 October 2011 5 8 a, i, j

xii

Name of Missiona Datea

No. of Person

s

No. of Person-Daysb

Specialization of

Members Project Review 3 23 April–4 May 2012 6 24 a, e, f, g, j, d Midterm Project Review 25 September–8 October

2012 8 14 a, f, g, i, j, k

Project Review 4 3–12 April 2013 5 6 a, i Project Review 5 3–11 June 2013 3 4 a, i, j Safeguards Review 3 15–19 July 2013 1 1 g Project Review 6 21–30 October 2013 5 7 a, b, h, i Safeguards Review 4 5–7 March 2014 4 4 h, b, f, i Project Review 7 29 September–4 October

2014 5 5 a, b, i, c

Project Review 8d 2–6 March 2015 5 5 a, b, i, j Project Review 9 25–30 May 2015 2 4 b, f, g, i Project Completion Review 15–22 October 2016 3 12 i, b, a, j, k a = transport specialist; b = public–private partnership specialist; c = director of the Transport and Communications Division under ADB’s Central and West Asia Department (CWRD); d = country director (Kazakhstan Resident Mission); e = advisor; f = environment specialist; g = social development specialist; h = safeguard specialist; i = project/operations officer; j = project/operations analyst; k = operations assistant. a All missions for this project were combined with other projects in Kazakhstan. The mission dates cover all ADB

projects in Kazakhstan. b Number of person-days allotted for the project. c No appraisal missions (OM D11/OP) took place after January 2010. d Final disbursements during the winding-up period were discussed.

Project 4

Name of Missiona Datea

No. of Persons

No. of

Person-Daysb Specialization of Members

Safeguards Consultation 26 Jan–4 February 2011 2 4 a, g, d Fact-Finding 13–19 Jul 2011 4 4 a, i, j Midterm Safeguards Review 6–15 August 2011 3 6 f, g, i Special Project Administration Review

4–11 October 2011 5 5 a, i, j

Project Review 1 9–16 February 2012 6 6 a, e, i, j Project Review 2 23 April–4 May 2012 6 6 a, e, f, g, j, d Project Review 3 25 September–8 October

2012 8 8 a, f, g, i, j, k

Project Review 4 3–12 April 2013 3 3 a, i Project Review 5 3–11 June 2013 3 3 a, i, j Safeguards Review 1 15–19 July 2013 1 1 g Safeguards Review 2 5 – 15 September 2013 2 4 f,g

Project Review 6 21–30 October 2013 5 7 a, b, h, i Safeguards Review 3 5–7 March 2014 4 4 h, b, f, i Project Review 7 29 September–4 October

2014 5 5 a, b, i, c

Project Completion Review 17–21 November 2014 3 15 a, j, k a = transport specialist; b = public–private partnership specialist; c = director of the Transport and Communications Division under ADB’s Central and West Asia Department (CWRD); d = country director (Kazakhstan Resident Mission); e = advisor; f = environment specialist; g = social development specialist; h = safeguard specialist; i = project/operations officer; j = project/operations analyst; k = operations assistant. a All missions for this project were combined with other projects in Kazakhstan. The mission dates cover all ADB

projects in Kazakhstan. b Number of person-days allotted for the project.

I. PROGRAM DESCRIPTION

1. The government of Kazakhstan’s Western Europe–Western People’s Republic of China (PRC) Corridor investment program aimed to improve approximately 2,715 kilometers (km) of road running from Khorgos through Almaty and Shymkent to the Russian Federation’s western border. Within Kazakhstan, the corridor overlaps with the Central Asia Regional Economic Cooperation (CAREC) Transport Corridor 1. The investment program was intended to improve existing roads and construct new road alignments to efficiently accommodate international traffic. The government targeted completion by 2014.

2. The government sought assistance from international financial institutions to finance part

of the investment program. In response, the Asian Development Bank (ADB), the Japan International Cooperation Agency (JICA), and the Islamic Development Bank (IDB) committed to financing approximately 480 km1 of the CAREC Transport Corridor 1 (Zhambyl Oblast Section) [Western Europe–Western PRC International Transit Corridor] Investment Program.2 At the onset of the program, ADB committed to financing approximately 301 km through a multitranche financing facility (MFF), IDB committed to financing 159 km, and JICA 20 km. The European Bank for Reconstruction and Development (EBRD) and the World Bank committed to financing 102 km and 1,062 km, respectively.

3. ADB approved the MFF on 12 November 2008, with an aggregate amount not to exceed $700 million from its ordinary capital resources to finance part of the investment program. The MFF has two components: (i) physical—road development component, and (ii) nonphysical—road operation and maintenance (O&M) component. The government and ADB signed the framework financing agreement (FFA) on 13 January 2009. Under the MFF, three tranches were initially approved to improve 301.6 km of the project road. The first tranche of $340 million was approved on 30 December 2008 (Loan 2503), the second tranche of $187 million on 7 October 2009 (Loan 2562), and the third tranche of $173 million on 15 November 2010 (Loan 2697). IDB approved its first loan of $170 million in 2009 for 57 km and JICA approved a $68 million loan on 31 May 2010 for 20 km (Loan 8251). IDB withdrew from its earlier commitment, to finance an additional 114 km in a second loan, due to financial charge issues. The government requested to use MFF savings and ADB approved tranche 4 of $112 million on 21 February 2011 (Loan 2735) to improve 49 km, part of IDB’s originally committed road sections.3

4. The investment program aimed to develop an efficient transport system in Kazakhstan’s Zhambyl Oblast through shorter travel times, lower freight costs, and lower road crash rates. Improvements in road efficiency and safety would in turn boost international trade and regional cooperation and so sustain economic development. To realize this objective, the investment program built or improved 427.6 km of roads in Zhambyl Oblast. All road construction was completed in November 2014. The program design and monitoring framework (DMF) is in Appendix 1. The projects making up the program generally comprised reconstructing existing

1 Following a due diligence engineering review of the feasibility study undertaken by MOTC in 2007, the number of

kilometers (km) was corrected from 470 km to 480 km for the program roads. As IDB increased its commitment from 159 km to 171 km, the total length of the program was further increased to 492 km. However, IDB later withdrew from its commitment.

2 ADB. 2008. Report and Recommendation of the President to the Board of Directors on the Proposed Multitranche Financing Facility and Administration of Loan to the Republic of Kazakhstan for CAREC Transport Corridor 1 (Zhambyl Oblast Section) [Western Europe–Western PRC International Transit Corridor] Investment Program. Manila.

3 ADB approved the government’s request for partial cancellation of the loan proceeds of Tranche 1 (Loan 2503) equal to $115.05 million because of savings identified after all civil works contracts were awarded.

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sections of highway to four-lane divided carriageway standard, typically with a concrete pavement. These projects were:

(i) Project 1: 125 km of highway were reconstructed between kilometer markers (Km) 404 and 483 (Kulan–Taraz, 79 km) and Km 214 to 260 (Blagoveschenka–Korday, 46 km); and reports on developing an intelligent transport system (ITS) and improving road O&M system were prepared.

(ii) Project 2: 135.9 km of highway were reconstructed between Km 310.5 and 389.4 (Kulan–Blagoveschenka, 78.9 km) and Km 536 to 593 (Taraz–Zhambyl Oblast border, 57 km); and three road operations facilities were constructed or upgraded. IDB, under a parallel cofinancing arrangement, financed the reconstruction of 57 km section between Km 536 and 593.

(iii) Project 3: 117.7 km of highway were constructed or upgraded between Km 162 and 260 (Otar–Blagoveschenka, 80 km), Km 0 to 17.7 (Korday–Kyrgyzstan border at Karasu, 17.7 km) and Km 383 to 404 (Kulan Bypass, 20 km). The latter road section was jointly cofinanced by JICA.4

(iv) Project 4: 49 km at Km 261.5–310.5 (Widening of a 49-km road section at Km 261.5–310.5 Blagoveschenka to Aspara).

5. Appendix 2 presents a summary of the investment program and the projects that the MFF financed. Kazakhstan’s Ministry of Transport and Communications (MOTC) was the executing agency of the investment program at appraisal, and the Committee of Roads (COR) under MOTC was the implementing agency (see para. 29).

II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation

6. At appraisal, the overall design was consistent with the government’s top-priority road investment for CAREC Corridor 1 as defined in its medium-term Road Development Program for 2006–2012,5 which was intended to address core problems in the transport sector.6 The medium-term road program is part of the government’s overall transport strategy for 2006–2015.7 The program is also consistent with ADB’s Strategy 2020,8 which identifies transport infrastructure as

a core area of ADB operations, and with ADB’s CAREC program, which emphasizes regional cooperation in transport, energy, and trade facilitation. The program focus is CAREC Corridor 1, which is one of six corridors included in the CAREC Transport and Trade Facilitation Strategy, which CAREC member countries endorsed in 2007.9

7. Program preparation was adequate. MOTC’s Zhambyl Oblast Roads Department commissioned the road design preparation from state design institutes, the KazDorProject Limited Liability Partnership (LLP), AstanaDorProject LLP, KazniipiDortrans LLP, and Central Asian Consultant Agency LLP. The road construction designs complied with the country’s

4 JICA approved a loan of ¥6.36 billion ($68 million equivalent) for Project 3 and the loan agreement was signed on 23

August 2010 (L8251-KAZ). 5 Ministry of Transport and Communications. 2006. Road Development Program for 2006–2012. Astana. 6 Core transport problems included poor-quality existing road assets, weak management capacity, road maintenance

financing gaps, road safety issues, and poor traffic operations information systems. These are detailed in ADB’s Report and Recommendation of the President for the MFF and Tranche 1.

7 Decree of the President of the Republic of Kazakhstan. 2006. Transport Sector Strategy of the Republic of Kazakhstan up to 2015. Astana.

8 ADB. 2008. Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank, 2008–2020. Manila. 9 Central Asia Regional Economic Cooperation. 2007. CAREC Transport and Trade Facilitation Strategy. Manila.

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requirements.10 The detailed design and cost estimates were reviewed by the state project examination authority, GosExpertisa, and approved by the Agency of Construction Affairs in 2009. The summary engineering design is in Appendix 3.

8. As part of the technical due diligence, several consultations through missions (fact-finding, project consultation, and safeguards missions) were conducted with various stakeholders, including the government, MOTC, COR, JICA, IDB, World Bank, EBRD, akims, and local communities along the proposed roads under the investment program.

9. At completion, the program’s overall design remains relevant as the project continues to be consistent with the (i) revised Transport Sector Program (2010–2014),11 which aimed to develop efficient transport infrastructure that is integrated with the international transport system in support of the Strategy for Economic Development and the State Program on Accelerated Industrial-Innovative Development; 12 (ii) ADB’s Strategy 2020; (iii) ADB Country Partnership Strategy (CPS)13 for 2012–2016, which supports modernizing the country’s transport and logistics system; and (iv) the newly approved CAREC Transport and Trade Facilitation Strategy 2020,14 which aims at improving transport and logistics infrastructure and to promoting trade facilitation.

10. The program DMF (Appendix 1) was relevant at appraisal and at completion. The intended outcome and output performance indicators were achieved. The completed roads contributed to an increase in traffic volume, reduced average travel times, reduced vehicle operating costs (VOCs), reduced road crash rates, and provided other benefits to road users.

B. Program Outputs

11. At appraisal, the investment program envisaged constructing approximately 480 km of highway in Kazakhstan’s Zhambyl Oblast and improving the road O&M system (paras. 2 and 4). At completion, the initially defined program built or improved 427.6 km of roads, reconstructed three road maintenance depots, and prepared reports on improving the road O&M and ITS. Under a separate stand-alone loan from ADB a further 65 km of Taraz Bypass were constructed, achieving the 492.6 km (para. 16) envisioned at appraisal.15 Of these outputs, ADB financed 350.6 km, all road maintenance depots and reports. JICA covered the construction of the 20 km Kulan Bypass, while IDB covered the construction of the 57 km Kulan–Zhambyl Oblast border road section. The works for the 427.6 km road were all completed, within budget and meeting the international roughness index (IRI) requirement of less than 3 meters (m)/km, as designed at appraisal. There were some minor variations to the engineering design in response to unanticipated developments and requirements. Taking-over certificates were issued to all contractors upon approval by the engineer and the Working Commission,16 after works were

10 The design followed Soviet construction norms and regulations, harmonized with the American Association of State

Highway and Transportation Officials and British standards for concrete pavement in cold climates. 11 The government road development plan for 2006–2012 has been revised as the Transport Sector Program for

2010–2014, which was approved in July 2010. 12 Government of Kazakhstan. 2010. Transport Sector Program, 2010–2014. Astana (approved in July); Government

of Kazakhstan. 2010. The 2020 Strategy for Economic Development. Astana (approved in February); and Government of Kazakhstan. 2010. State Program on Accelerated Industrial-Innovative Development. Astana.

13 ADB. 2012. Country Partnership Strategy: Kazakhstan (2012–2016). Manila. There was no country strategy and program or country partnership strategy between 2006 and 2012 for Kazakhstan.

14 ADB. 2014. CAREC Transport and Trade Facilitation Strategy 2020. Manila. This was endorsed by all 10 CAREC countries at the 12th CAREC Ministerial Conference, held in Astana, Kazakhstan, in October 2013.

15 ADB. 2011. Report and Recommendation of the President to the Board of Directors on the Proposed Loan to the Republic of Kazakhstan for CAREC Corridor 1 (Taraz Bypass) Project. Manila (Loan 2824-KAZ).

16 The Working Commission consisted of representatives from the Committee of Roads, Zhambyl Zhol Laboratory, KazAvtoZhol Zhambyl division, Kazakhavtodor Zhambyl, contractors, and the project engineer.

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substantially completed. Completion certificates were issued to the contractors after the engineer accepted the quality of the completed roads with all defects rectified, at the end of the defects notification period.

12. Project 1. The works (125 km) were all completed by June 2013. The report on the road O&M system provided various recommendations for future road-sector maintenance operations. The ITS component produced (i) a draft ITS plan showing the system’s architecture and installation locations along the Corridor; and (ii) a draft long-term plan for ITS implementation that considers the institutional setup, budgeting, and technical aspects of hardware to be installed.

13. Project 2. The roadworks (135.9 km) were completed in 2013. Four maintenance depots were planned for construction during the project. All depots experienced construction delays caused by various factors, including change in design, delayed issuance of construction permit, and cash-flow problem by the contractor, and only Merke depot was completed within the project implementation period. The government financed the remaining works of the road maintenance depots in Akyrtobe and Korday until their substantial completion by 2017. The road maintenance depot in Otar was terminated and planned to be part of the future roadworks package.

14. Project 3. This project comprised 117.7 km of road at Otar–Blagoveschenka (Km 162–260, 80 km, new alignment, ADB financed), Kulan Bypass (Km 383–404, 20 km, JICA financed), and Korday to the Kyrgyz Border at Karasu (Km 0–17.7, 17.7 km, ADB financed). All were physically completed in November 2014.

15. Project 4. Following IDB’s withdrawal of its earlier commitment to a second loan on 7 January 2011, the Government submitted to ADB a periodic financing request for a fourth tranche loan of $112 million to improve 49 km (Km 261.5–310.5), part of the originally-outstanding 114-km IDB sections. Since it was considered to be crucial to complete the entire 427.6 km of the program corridor, ADB concurred with the Government’s request. The works were completed in 2014.

16. For the remaining 65 km of initial IDB sections, ADB approved a stand-alone loan of $95 million, at the government’s request, to finance the Taraz Bypass project (para. 11), since the total financing of the four loans already approved had reached the MFF ceiling of $700 million. This allowed the completion of the entire 492.6 km of the Zhambyl Oblast investment program along the CAREC Corridor 1.

C. Program Costs

17. At appraisal, the total program cost was estimated at $1,096 million: $956 million (87%) for civil works, $35.9 million (3%) for consulting services, and $104 million (9%) for recurrent costs and contingency. ADB provided $700 million through its MFF to finance (i) works for the road reconstruction and road maintenance depots; and (ii) consulting services for project management, construction supervision, road maintenance system improvement, and ITS development. JICA provided ¥6.36 billion (an amount equivalent to $68 million) for road reconstruction. ADB administered the Japan Bank for International Cooperation (JBIC) joint cofinancing under the Accelerated Cofinancing Framework Agreement between ADB and JBIC, which was signed in 2007.17 IDB provided $170 million for roadworks. IDB provided parallel cofinancing following the framework cofinancing agreement between ADB and IDB, which was signed in September 2008. The Government of Kazakhstan provided counterpart funds of $158 million. Interest during construction was not included in the program and project costs, as agreed. However, ADB

17 On 1 October 2008, JBIC was integrated with JICA.

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collected directly from the government and, as of 17 April 2017, the payments amounted to $2,518,300.46 (commitment charges) and $19,390,349.88 (interest charges). For Loan 8251, JICA billed the government directly for commitment and interest charges as per the loan agreement between the two parties. ADB billed JICA for administration fee. The program and project cost by component and the financing plan are in Appendix 4.

18. During implementation, loan proceeds of $115.05 million were cancelled from Tranche 1 (Loan 2503), which reduced the loan amount to $224.95 million. The loan savings were used to finance Tranche 4 (Loan 2735) (para. 3). The savings resulted from lower than expected bid prices for civil works contracts and inclusion of higher contingencies at appraisal.

19. At completion, the program cost was $1,067.17 million, 2.6% less than envisaged at appraisal. The economic internal rate of return (EIRR) at completion (21.0%) was acceptable. The uncommitted amounts of the civil works category and contingency were reallocated to civil works and utilized to finance contract variations and cover escalating costs of road construction materials, and also increases in labor costs for all contracts. 18 Variations in works contracts resulted from changes in scope and design, and from ancillary facilities to adjust to actual conditions and the needs of the local population, including installing additional cattle crossings, culverts, and safety facilities. Total contract variations amounted to T6.72 billion, 7% of the total accepted contract amount, while price escalation amounted to T27.29 billion, 29% of the accepted contract amount.19

20. The total cost for the construction supervision and project management consulting services was 32% less than the appraisal estimate, without major changes in the original scope. The consultants performed all tasks as originally designed. The decrease in the consulting services cost was due to overestimation at appraisal. The total cost of the road O&M system and ITS component was also lower than the appraisal estimate. The accepted contract amount and revised contract amounts are in Appendix 5.

D. Disbursements

21. Disbursement of ADB and JICA loan proceeds followed ADB’s Loan Disbursement Handbook (2007, as amended from time to time). The direct payment procedure was applied for works and consulting services contracts. An imprest account was not required. The statement of expenditure (SOE) was not used. The disbursement of the IDB loan followed IDB procedures.

22. The MOTC established a financial unit within the COR in June 2009 for the investment program and assigned qualified staff to facilitate disbursements, in coordination with the Ministry of Finance (MOF) and ADB. Electronic Storage and Retrieval (eStar) was used to upload applications for loan withdrawals from August 2011 onward, which expedited processing of withdrawal application.20 Prior to August 2011, submission of withdrawal applications was done via email, scanned copies for advance information, and couriers for the original documents. The COR’s access to the ADB Loan Financial Information System website assisted its staff in monitoring disbursement achievements against projections.

18 All construction prices—including labor, fuel, gravel, cement, bitumen, and steel—increased over time. Among these

materials, labor (65% increase) and fuel (40% increase) registered the highest increases from their base prices in 2010 to 2013. Labor and fuel contributed the largest amounts to the total price escalation. Price indices were sourced from the Statistics Agency of Kazakhstan.

19 The contracts were priced in Kazakhstan Tenge. These percentages are the weighted average of all contract variations and price escalations to the total accepted contract amount of all works contracts.

20 eStar is an electronic document repository for ADB documents.

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23. Initial disbursements were late due to start-up delays for works and consulting services. However, disbursements progressed smoothly after the advance payments were made. The closing date of Loan 2697 was extended for one year, at the government’s request, to accommodate completion of additional works. The closing dates of the other loans were not extended. Final claims for works and consulting services done on or before loan closing dates were paid before the expiry of the 4-month winding-up period.

24. For the facility amount of $700 million, the aggregate disbursements for the four loans reached $677.68 million. Aggregate savings of $19.27 million were realized at closing: $0.85 million for Loan 2503, $2.34 million for Loan 2562, $8.33 million for Loan 2697, and $7.75 million for Loan 2735. These amounts were canceled at each loan financial closing date. The contract awards and disbursements of all loans under the MFF are in Appendix 6.

25. For financial management of the disbursements, the COR set up and maintained separate project financial accounts and records by funding source (ADB, JICA, IDB, government) for all expenditures incurred on each project. Project financial accounting followed cash-based International Public Sector Accounting Standards.

26. The MOF engaged an independent auditor to audit each project financial account annually. All audited project financial statements were acceptable. The audit reports included separate auditor’s opinion confirming that the financial statements presented a fair view of the projects’ financial position and financial performance, and the loan proceeds were used only for project purposes.

E. Program Schedule

27. The investment program was scheduled for 6 years, inclusive of procurement and consultant recruitment activities. It was approved in December 2008 and was completed by 31 December 2014, as planned at appraisal, despite the following challenges: (i) lengthy internal government procedures in declaring the loan effective—on average, it took 7.6 months for a loan to become effective after approval; (ii) start-up delays in commencing works; (iii) financial difficulties of one local contractor, which hindered the prompt completion of the roadworks in projects 1 and 3; (iv) 1-year extension of Project 3 to finish additional works—the implementation of the three other projects was not extended; and (v) IDB’s withdrawal of earlier commitments to finance the remaining 114 km. The program implementation schedule is in Appendix 7.

28. The FFA was signed on 13 January 2009. The first financing tranche was approved for Project 1 in December 2008. The last financing tranche for Project 4 was approved in February 2011. Approval of Project 4 was timely because it complied with the FFA’s deadline for execution of the last financing tranche, which was no later than June 2011. The JICA loan was planned to cofinance Project 2, but JICA chose to postpone it to Project 3. The first IDB loan was approved in February 2009. All loans were closed within the winding-up period. The chronology of major events is in Appendix 8.

F. Implementation Arrangements

29. At appraisal, the MOTC was the executing agency of the investment program. On 6 August 2014, the government reorganized and established the Ministry of Investment and Development (MID), which absorbed the MOTC’s functions. The COR remained the implementing agency. The COR’s deputy chairman was appointed as the project director, with assistance from selected COR staff with expertise in engineering, finance, legal matters, and procurement; the Zhambyl Oblast Road Department, representing COR in the field sites to ensure smooth program implementation;

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the Zhol (road) laboratories to monitor laboratory test results related to road construction; the project management consultant (PMC) engaged under the first project to manage the succeeding projects; and the construction supervision consultant (CSC), who administered contracts and supervised the works’ progress, quality, and timeliness.

30. KazAvtoZhol joint-stock company (JSC) became involved during project implementation in 2013 on instruction from the COR chairman to provide technical support to the COR.21 Later in 2014, its role was limited to monitoring safeguards compliance, and the Zhol (road) laboratory was appointed COR’s representative in the field. Appendix 9 shows the program’s organizational arrangement.

G. Conditions and Covenants

31. The details of compliance with the facility-level undertakings and loan covenants for each project are in Appendix 10. No facility-level undertakings or loan covenants were modified, suspended, or waived. All FFA and loan covenants were complied with.

H. Consultant Recruitment and Procurement

32. At completion, the contract packages for all projects were procured as planned at appraisal (Appendix 5). ADB approved advance contracting to start procurement of works and consultant recruitment activities prior to loan approval. The advance contracting notice for each project was posted on the ADB website. This was followed by advertising invitations for bid (IFB) and consulting services recruitment notices.

33. All consultants financed from the ADB loans were recruited following the ADB Guidelines on the Use of Consultants (2007, as amended to date) and the projects’ procurement plans, while IDB followed its own procedure. Consulting firms were selected and engaged using ADB’s quality- and cost-based selection method with the standard quality–cost ratio of 80:20, and full technical proposals. A simplified technical proposal was adopted for the Project 2 construction supervision consultant. Seven consulting firms were engaged during the program period, one for project management, four for construction supervision (one for each project), one for road maintenance system improvement, and one for ITS development.

34. The procurement of works for the ADB- and JICA-financed road sections followed ADB’s Procurement Guidelines (2007, as amended to date). Works contracts over $3 million were procured using international competitive bidding from a list of pre-qualified bidders for Project 1 and post-qualified bidders for the subsequent projects. National competitive bidding for works in the road maintenance depots with contracts not exceeding $3 million was adopted. ADB and MOTC reviewed the procurement procedures for national competitive bidding to ensure consistency with ADB requirements. Due to MOTC’s misinterpretation of ADB’s Procurement Guidelines, Project 1 civil work’s contracts had to be rebid. The contracts incorporated relevant sections of ADB’s Anticorruption Policy (1998, as amended to date) and Safeguard Policy Statement (2009), as well as road safety features.

I. Performance of Consultants and Contractors

35. Consultants. The CSCs’ overall performance was rated partially satisfactory because of frequent replacement of staff, delays in reporting, and a lack of sufficient backstopping, resulting

21 KazAvtoZhol JSC was established in February 2013 as the national road operator. On 27 October 2015, the law on

the national road operator was amended, declaring KazAvtoZhol JSC the sole operator for the (i) repair and maintenance of national highways, as well as project management; and (ii) development of road infrastructure.

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in project disruption. The consultants carried out the key tasks indicated in the terms of reference (TOR), including (i) reviewing the detailed design; (ii) administering the four civil works projects; (iii) controlling the contractors’ work quality; (iv) ensuring timely completion of works; (v) monitoring implementation of the environmental management plan (EMP) and land acquisition and resettlement plan (LARP); (vi) monitoring traffic safety during implementation; and (vii) preparing the required reports (monthly and quarterly progress reports, biannual environmental monitoring reports, biannual social monitoring reports, works completion reports, and a traffic management plan).

36. Contractors. Overall, the performance of the contractors was satisfactory, except for the local contractors responsible for the civil works of the maintenance depots. All roadworks contractors fulfilled the obligations under their respective contracts and completed the roadworks following the original engineering designs with technical variations (para. 11). They constructed quality roads, with IRI below 3m/km. All contractors implemented the environmental mitigation measures and effectively implemented traffic safety management plans and campsite safety measures (para. 59).

J. Performance of the Borrower and the Executing Agency

37. The performance of the borrower (the government of Kazakhstan, represented by MOF), the executing agency (MOTC/later MID), and the implementing agency (COR) was satisfactory overall, despite lengthy government internal procedures to declare loan effectivity (para. 27). The government reorganization in August 2014, which changed the executing agency from MOTC to MID, did not affect project implementation as COR kept its role as the implementing agency (para. 29). The MOF, MOTC/MID, and COR complied with all loan covenants during project implementation, including ensuring that counterpart financing was adequate and available as required. The COR implemented a financial management system and maintained separate records for ADB, IDB, and JICA loans, as the annual audit reports confirmed.

38. The COR implemented the program following (i) ADB’s guidelines on safeguards, anticorruption, disbursements, procurement of works, recruitment of consultants, and management of consultant contracts; and (ii) guidance from the International Federation of Consulting Engineers (FIDIC) on management of works contracts. Through implementing the ADB-financed projects COR gained valuable experience in managing externally funded projects. Day-to-day communication with the ADB project team facilitated implementation and enhanced project management and problem-solving.22 The COR effectively chaired the community liaison group (CLG) established in March 2011, which was responsible for the grievance redress mechanism for all the projects.

K. Performance of the Asian Development Bank

39. ADB’s performance was satisfactory. Teamwork between ADB headquarters and the Kazakhstan Resident Mission facilitated effective project preparation, implementation, and completion. ADB collaborated with the MOF and MOTC/MID to strengthen project readiness through preparing due-diligence reports on safeguards and economic analysis. During project implementation, ADB provided substantial and timely support to MOTC/MID and COR by (i) providing guidance in resolving implementation issues; (ii) promptly responding to requests to reallocate loan proceeds, which resulted in full utilization of the program financing; (iii) quickly

22 COR’s involvement in other initiatives implemented under technical assistance (TA) 7433 (mainstreaming land

acquisition and resettlement in Central and West Asia) and TA 7548 (improving environmental safeguards) helped improve its understanding of ADB policy and enhanced its capacity to manage safeguards complaints.

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reviewing contract variations so as not to delay works progress; (iv) promptly uploading withdrawal applications through eStar for faster disbursements; (v) extending the loan closing date in a timely manner at the government’s request; and (vi) coaching their staff on ADB guidelines on procurement, consultant recruitment, project administration, contract administration, disclosure, and disbursements, as requested.

40. ADB monitored the implementation progress and resolution of issues through project missions, project progress and safeguards reports, and video/teleconferencing. ADB fielded project review missions and carried out site visits with Zhambyl Oblast COR officials. In general, the communication and coordination among ADB, MID, and COR were smooth and effective.

41. Teamwork among ADB, JICA, and IDB for joint parallel cofinancing arrangements also facilitated effective project preparation, implementation, and completion. JICA joined the consultation mission in February 2010 to discuss the scope and financing arrangements among the government, JICA, and ADB. Following JICA’s Accelerated Cofinancing Framework Agreement (para. 17), ADB, as the loan administrator, carried out project appraisal, procurement review, disbursement review, and other elements of project administration (such as conducting missions, reporting and monitoring on project progress, and completion). In general, the communication and coordination between ADB and JICA were smooth and effective.

III. EVALUATION OF PERFORMANCE

A. Relevance

42. The program is rated relevant at both appraisal and completion. It addressed poor road network coverage, poor quality of road assets, impassable roads in winter, road safety issues, and other transport issues (para. 6, footnote 5). The project objective of developing an efficient transport system in Zhambyl Oblast to boost international trade and regional cooperation among neighboring countries is aligned with (i) the government’s transport sector strategies, which prioritized improvement of the road network; (ii) ADB Strategy 2020 and ADB’s Country Partnership Strategy (CPS); and (iii) the CAREC program (paras. 6 and 9).

43. The design was unchanged from appraisal to completion and was adequate to attain the program’s intended outputs and objective. There were minor variations in works during implementation (paras. 11 and 19)—including additional guardrails, sheltered bus stops, and crossings for cattle and agricultural machinery—which increased project benefits to all road users and therefore, enhanced the program’s relevance. Various stakeholders were involved during preparation, implementation, and completion of the project (paras. 7–8).

44. There was a strong sense of government ownership of the program. The MOTC, as the original executing agency, commissioned the project’s engineering design (para. 7). The COR monitored the project’s progress, visited the project sites during implementation, and assessed the quality of the roads before taking over road operations (paras. 29 and 46). The representatives of the Zhambyl Zhol laboratory and Kazakhavtodor monitored the rectification of defects and inspected the project roads during the defects notification period. The KazAvtoZhol JSC will take over operations and maintenance after the defects notification period (footnote 21).

B. Effectiveness in Achieving the Program Outcome

45. The program is rated effective. Based on the strong commitment of all involved parties, the investment program was effective in achieving the outcome intended at appraisal. All project roads as planned at appraisal were completed within schedule and budget. Furthermore, using MFF savings, ADB approved a fourth tranche, financing an additional 49 km of improved road

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(paras. 3–4). ADB responded with flexibility to changes in the financing and implementation arrangements and worked closely with the executing and implementing agencies to address capacity constraints during project implementation. This is confirmed by the fact that, even after one of the financing partners withdrew its earlier commitment, the entire program corridor within Zambyl Oblast could be completed. The main outcome of improving road efficiency along the project roads has been significantly achieved, measured by a substantial reduction in road user costs. Increase in traffic measured on all project roads is linked to growth in economic activities. The completed roads with reduced roughness index (para. 11) provided the benefits as envisaged at appraisal (Appendix 3). In addition, the new road sections reduced the travel distance from Otar to Blagoveschenka by 20 km, and the Korday to Kyrgyzstan border at Karasu as well as the various bypasses reduced travel time. Overall, the program resulted in reduced travel time, reduced VOC, and improved road safety (Appendix 11).

46. The MOTC/MID, together with the COR as its implementing agency, established close supervision of all program components through the appointment of the COR’s deputy chairman as the project director managing day-to-day implementation. Additionally, COR staff with expertise in engineering, finance, legal matters, and procurement, together with the Zhambyl Oblast Road Department, ensured the program’s delivery, quality, and timeliness.

47. Traffic has significantly increased with the road improvements. The annual average daily traffic (AADT) for all program roads grew to 7,820 vehicles per day (vpd) in 2016 as compared to the forecasted 4,000 vpd at appraisal in 2007 (Appendix 11). The lifting of customs controls at all Kazakhstan–Kyrgyz Republic border crossing points effective 12 August 2015 led to a further increase in border traffic at Karasu and at other border crossings and all ADB-financed roads along CAREC Corridor 1. VOC savings are considerable, with savings for freight vehicles between 14.9% for two-axle trucks to 24.7% for large, articulated trucks. The average journey time was reduced to 6 hours in 2015 (down from 10 hours in 2009)—a reduction of 4 hours. This was a result of the reduction in travel distance by approximately 20 km, the decrease in congestion and increased speeds due to dual carriageway and bypass construction. The average road accident rate across the network considered in the analysis in 2016 was 10.509 fatalities per 100 million vehicle kilometers. This is lower than the 13.750 fatalities per 100 million vehicle kilometers assumed at appraisal for four-lane roads in Zhambyl Oblast.

Table 1. Average Annual Daily Traffic at Appraisal and Reevaluation Pro-ject

From Km –To Km

Length (km)

Location (From–To)

Construction Type

2016 AADT, Appraisala

2016 AADT, Re- Evaluationb

3 162–260 80.0 Otar–Blagoveschenka New road (69.5 km), 2L cement

5,258 6,852

New road (10.5 km), 2L crushed stone mastic asphalt

4 261.5–310.5 49.0 Blagoveschenka–Aspara Upgraded, 4L cement 4,523 7,621

2 310.5–358.6 48.1 Aspara–Kulan (Sect 1) Upgraded, 4L cement 8,978 7,621

2 358.6–389.4 30.8 Aspara–Kulan (Sect 2) Upgraded, 4L cement 8,978 7,621

3 383–404 20.0 Kulan Bypass

Upgraded (5.2 km), 4L cement,

4,191 7,745 New bypass (14.8 km), 4L cement

1 404–483 79.0 Kulan–Begin Taraz Upgraded, 4L cement 8,305 7,745

2 536–593 57.0 End Taraz–Oblast Border Upgraded, 4L cement 8,907 6,167

1 214–260 46.0 Blagoveschenka–Korday Reconstructed, 2L asphalt

8,387 7,015

3 0–17.7 17.7 Korday–Kyrgyzstan border at Karasu

Reconstructed (10.3 km), 2L crushed stone, mastic asphalt

3,043 4,945

11

Pro-ject

From Km –To Km

Length (km)

Location (From–To)

Construction Type

2016 AADT, Appraisala

2016 AADT, Re- Evaluationb

New road (7.4 km), 2L crushed stone, mastic asphalt

Total 427.6 MFF-financed c Various 7,820

AADT = annual average daily traffic; km = kilometer; L = lane. Source: Post Construction Economic Evaluation—Investment Program, June 2017. a As forecasted at appraisal. b Based on 2016 traffic counts. c The MFF program had originally included 60 km of Taraz Bypass. As mentioned in para. 16, 65 km of Taraz Bypass was built under separate Loan 2824-KAZ.

C. Efficiency in Achieving Outcome and Outputs

48. The program is rated efficient in achieving its intended outputs and outcomes within the allocated time and budget. All project outputs were achieved as designed at appraisal (para. 10 and Appendix 3) and surpassed the 480 km programmed at appraisal. For some of the projects, invitation for bid (IFB) was issued before board approval.

49. To assess project efficiency, the EIRR was reevaluated using the same methodology adopted at appraisal, with updated data (Appendix 11).23 The economic costs and benefits were compared between the with-project and without-project scenarios. The economic benefits considered in the reevaluation were the same as those at appraisal: (i) VOC savings, (ii) improvements in travel time, and (iii) reduction in road crash costs. The reevaluated EIRR for the program is 21.0%. Although the net present value (NPV) reduced, the EIRR increased. The principal reasons for the differences in the economic indicators between the appraisal and completion stages are (i) reduction in traffic growth rate as assumed at appraisal due to the unforeseen reduction in gross domestic product (GDP) growth forecasts, (ii) reduction in investment costs, (iii) use of loan savings to build an additional 49 km of road, and (iv) increased accident benefits based on actual accident data since opening. The former negatively affected economic efficiency, whereas the latter two factors had the opposite effect.

Table 2: Program Economic Indicators

Section NPV

(2009 $ million, World Price Numeraire)

BCR

(ratio)

EIRR

(%)

At Appraisal 666.18 - 18.2%

At Completion 481.23 1.79:1 21.0%

BCR = benefit to cost ratio; EIRR = economic internal rate of return; NPV = net present value. Source: Post Construction Economic Evaluation—Investment Program, June 2017.

D. Preliminary Assessment of Sustainability

50. The program is likely to be sustainable.

51. Road Safety. The road sections were designed to improve safety by eliminating any hazardous curves and by improving road geometrics. By expanding the cross section of the existing road to a four-lane divided highway and by providing bypasses of urban areas, the risk of major accidents was greatly reduced. In addition, road markings, traffic signs, lights, and other improvements increased road safety. Rest areas and bus stops with gender-sensitive toilets were installed. These facilities and regular road safety audits by the MID will contribute to the sustainability of road safety over time.

23 The economic analysis at both appraisal and reevaluation was carried out using the Highway Development and

Management model.

12

52. Axle-Load. The pavement was designed for an axle-load of 13 tons, compared to the Kazakh government regulation of 10 tons per axle.24 Axle-load monitoring and enforcement is in place. To monitor the axle-load, there are three special automated measuring devices (one in Merke and two in Almaty) and one transport control post in Aktai, Kazylorda—all along the CAREC Corridor 1.25 MID strictly enforces the axle-load regulation of 10 tons per axle. The original design and long-term enforcement mechanisms will minimize road surface deterioration over time.

53. Road Maintenance. KazAvtoZhol JSC (footnote 21), through a statute of 27 October 2015, was declared the sole operator to build and maintain the 24,000-km national highway network. KazAvtoZhol JSC is expected to be fully self-financing by 2022, through tolling of 7,000 km of major republican highways, including 2,500 km of CAREC Corridor 1. The program roads are primary candidates to become toll roads. An allocation from the state budget for road maintenance is likely to be needed in parallel with the toll revenue. Projected annual revenue from tolled sections of CAREC Corridor 1 is T8.5 billion ($25 million), or $10,000 per km. Although this revenue will be sufficient to maintain tolled sections, and contribute to maintenance on untolled national highways, the government has been providing substantial allocations for road maintenance. 26 If KazAvtoZhol JSC is not fully self-financing by 2022, the government will supplement funds for road maintenance. Currently, $1,100 per km/per year is allocated to all roads within the oblast, while the latest estimates indicate that $2,700 was spent in 2016 on the MFF corridor. For more details, refer to Appendix 11.

54. KazAvtoZhol staff have technical expertise on road development, construction, and maintenance. Most staff are from the oblast CORs, Zhol laboratories, Kazakhavtodor, or other local private road maintenance firms. There are existing road maintenance depots at Korday, Merke, and Otar, near the project site, and others at Aksuyek, Akyrtobe, Shu, and Taraz in Zhambyl Oblast—along CAREC Corridor 1—which are currently being managed by Kazakhavtodor. With the institution, staff expertise, funds, facilities, and quality pavement in place, the project roads are likely to be sustainable.

E. Contribution of Program to Institutional Development

55. While there was no stand-alone institutional strengthening component under the MFF, during the course of program and project implementation, technical assistance was provided in the form of consultant support in the areas of procurement and social safeguards.27 The reports produced under Tranche 1 on road operations and maintenance systems provided several recommendations for future road sector maintenance operations, including an automated asset management system and performance-based maintenance contracts using local construction firms. The ITS component produced a draft ITS plan showing the system’s architecture and installation locations along CAREC Corridor 1 in the Zhambyl Oblast, and a draft long-term plan for ITS implementation. These exercises provided critical input to the State Program for Development and Integration of Transport System Infrastructure up to 2020, adopted by MOTC in November 2013.

24 MID Minister Order No. 342 of 26 March 2015 on the permissible parameters of vehicles intended for movement on

highways of the Republic of Kazakhstan. 25 Source of load measuring devices: http://transport.mid.gov.kz/en. 26 In 2013–2015, the government allocated T37.6 billion for road maintenance. 27 ADB. 2008. Technical Assistance for CAREC Transport Corridor (Zhambyl Oblast Section) Project. Manila. (TA 7071-

KAZ, Major Change in Scope and Amount); ADB. 2013. KAZ: Strengthening and Use of Country Safeguard Systems—Community Consultation and GRM in the Committee of Roads. Manila (TA 7566-REG).

http://transport.mid.gov.kz/en

13

F. MFF Program Impact

56. The program impact is highly satisfactory based on the initial contribution to regional cooperation and the local economy. The program provides for sustainable development and increased trade through reduced VOC, travel time, and accident rates. Being the first MFF in Kazakhstan, its impact on capacity development in the transport sector was significant.

57. Regional Economic Impact. The impact intended at appraisal is likely to be achieved. Improved roads will stimulate trade between Kazakhstan and its neighbors—such as the PRC, Kyrgyz Republic, the Russian Federation, and Uzbekistan—along CAREC Corridor 1. The project road toward Karasu, with the truck parking area near the border gate, may have contributed to the increased cargo volume at the Karasu border crossing with the Kyrgyz Republic (para. 47). Cargo volume at Karasu border crossing with Kyrgyz Republic was at 393,155 tons per year, in both directions in 2010. It quadrupled to 1,714,812 tons in 2014, although dropped to 910,707 tons in 2015, due partly to the significant Tenge devaluation. The lifting of customs controls at all Kazakhstan–Kyrgyz border crossings (including Karasu) in August 2015 is likely to have further increased border traffic at the Karasu crossing and increased transit traffic on other ADB-financed roads along the CAREC Corridor 1.

58. Socioeconomic Impact. The project level impact was generally positive. Construction on the four project sites between 2009 and 2014 provided employment opportunities and income to residents. The MFF-financed program directly employed about 5,137 persons, of whom over 50% came from communities along the program corridor.28 Construction aggregates and supplies were procured locally, generating employment and income in the local market. The program also generated rental income from temporary use of land for construction activities.

59. Environmental Impact. In 2008, an environmental assessment review framework (EARF) was prepared for CAREC Corridor 1 to guide MOTC in its further environmental assessment of projects and define steps for ensuring compliance with environmental safeguard requirements. Environment impact assessments for the projects were prepared in accordance with ADB’s Environment Policy (2002) for the initial project and Safeguard Policy Statement (2009) for subsequent projects, the country's environmental laws and regulations, and the EARF. For each project, public consultations were held during the processing stage. Of the four projects under the MFF, projects 1 and 4 were categorized as “B” and projects 2 and 3 as “A”. EMPs, initial environmental examinations (IEEs), and environmental impact assessment (EIAs) for all projects were incorporated into contract documents for monitoring and implementing environmental impact mitigation activities. According to the EMPs prepared for the MFF’s four tranches, the overall budget for environmental and mitigation costs was estimated at about $5 million, including restoration of all borrow pits. All contractors prepared and implemented site-specific EMPs. The government program on tree replanting, however, remains pending. MID will launch an overall program on tree replanting in 2017 along the entire corridor (including other international financial institutions and government-financed sections) once the entire corridor is completed (see Appendix 12). 60. Land Acquisition and Social Safeguards Impact. MOTC prepared a land acquisition and resettlement framework (LARF) in 2008 to apply a consistent approach in planning and managing land acquisition and resettlement issues throughout the corridor in compliance with national procedures and ADB policy requirements. The LARF established the main principles to be complied with during design and implementation of all projects, as well as consequent steps for preparation of land acquisition and resettlement plans (LARPs). The government conducted

28 The number of employed local personnel and workers was based on contractors’ records.

14

initial consultations with local akimats and communities in 2007 at the feasibility study stage for the entire road corridor. The design consultants held consultations in 2008 to inform those affected about the project, grievance redress procedures, and the estimated land acquisition budget. Detailed designs were prepared in 2009 with a cut-off date of 31 March 2008 for entitlements eligibility for the corridor. Of the four MFF projects, tranches 1 and 2 were classified as category “A” for resettlement and tranches 3 and 4 as category “B”. In total, 1,875 affected persons, including 373 households, 38 legal entities and 14 village/reserved land owners were permanently affected, while a total of 93 comprising 76 households, 7 legal entities, and 10 village/reserved land owners were temporarily affected. All compensation payments to affected persons and structures were completed in 2013 for tranches 1 to 3, and in November 2014 for Tranche 4. Any works started only after compensation was completed. 61. Only one land acquisition and resettlement–related issue was pending resolution after completion of the MFF program. This was closely monitored under Loan 2562, Project 2. The affected person lost his roadside business revenue because of the realignment of the main road at Merke village. Beginning in 2013, COR and the Merke administration (akimat) proposed different options to compensate him for his losses, including a land swap, but he did not accept any of the options. In April 2016, with ADB facilitation, a decision was reached among the affected person, the akimat, and the COR that the affected person would complete an independent valuation of his losses and property, the akimat would issue a resolution for acquisition of land and compensation of losses, and the COR would allocate government funds for the compensation. This process is ongoing and ADB will continue to monitor the situation to reach a mutually acceptable solution. 62. The COR, and its branch in Zhambyl Oblast, was responsible for planning and implementing the LARPs, with local akimats taking a greater role in implementing these responsibilities in 2011 when the Law on State Property was adopted to define a legal order of state property management. The CSC monitored LARP implementation internally under each individual MFF project and reported to ADB on a semiannual basis. External monitoring was done by an independent consultant and the PMC for all four projects during 2012–2014. Under the MFF, 18 social internal monitoring reports and 5 external monitoring reports were prepared. All reports were disclosed on the ADB website. 63. A grievance redress mechanism was established for the program with the CLG in 2011 to identify potential concerns and resolve the issues. A grievance redress database was maintained and regularly updated. Information on the number of affected people under the MFF and complaints logged in the grievance redress system is in Appendix 12, paras. 17–18.

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment

64. The program is rated successful (Appendix 13). It was designed, implemented, and completed as conceived. It is relevant to the government’s transport sector programs, the country’s development strategies, ADB’s CPS, and the CAREC program (paras. 6, 9, and 42). The four projects have improved transport efficiency in Zhambyl Oblast along CAREC Corridor 1 (paras. 10 and 45) through reduced travel time, reduced VOC, and a reduced road crash rate. The program is rated effective, and likely to be sustainable (paras. 50–54), with a significant initial positive impact on the economy and safeguards (paras. 58–59).

15

B. Lessons

65. The key lessons learned from this program, which was the first of its kind in Kazakhstan, are the following: (i) Project implementation improved during the various stages of MFF realization and initial difficulties in procurement, contract award and implementation were improved; (ii) The program was implemented jointly with IDB and JICA through collaborative cofinancing. The partnership of three development institutions enabled the road transport corridor within Zhambyl Oblast to be completed within a short period. It serves as a good example of development partner coordination for the benefit of a developing member country; (iii) Well-prepared road designs and cost estimates are important: Tranche 1 overestimated the project cost for civil works and consulting services and excessive contingencies, which was corrected during subsequent projects. This highlights the need to more accurately estimate the cost; (iv) There is a need for further improvement of the MID’s project management capacity, especially in the fields of procurement and social safeguards; (v) High-level policy dialogue is essential to accomplish a project of this magnitude; and (vi) Outcome statement and performance indicators were successfully adopted. Measurability and data availability should be considered in selecting performance indicators.

C. Recommendations

1. Program-Related 66. Program-related recommendations include: (i) Monitoring the outstanding reforestation works. ADB should monitor and remind the COR that reforestation works along the project roads must be completed as planned. In addition, ADB will continue to monitor the outstanding compensation case, through the resident mission and ADB headquarters follow up; (ii) Covenants: Most loan covenants adequately addressed the project implementation requirements and can be maintained in their present form. On road safety, the government should continuously conduct road-safety audits, raise road-safety awareness, and increase police oversight. The government should consider internal changes to shorten its procedures for initiating loan effectiveness; (iii) Corridor management and safety: As part of the operational maintenance reform, the completed corridor is being considered for conversion into a toll road. An integrated road management should be implemented, based on ITS solutions, to enable better traffic planning and control and improve road safety and road asset management. The government should continue to support KazAvtoZhol in making the transition toward establishing more toll roads to fund overall road network maintenance; and (iv) Road design: There were no substantial changes to the overall project designs, however, various minor changes did extend the project completion date in some cases. In future, such changes should be minimized with closer involvement of all related agencies (e.g., road agencies, the archeological institute, the utility companies, akimats, communities in the project area, and other stakeholders during the detailed engineering design preparation stage).29

2. General 67. For future project preparation, project schedules should be prepared taking into consideration: (i) lengthy government procedures; (ii) time and resources needed for mandatory due diligence; (iii) additional works requirements from local communities and road user perspectives. Adding time contingencies for factors such as these will improve project performance. In addition, government shall further improve MID’s project management capacity, especially in the fields of procurement and social safeguards. During implementation, careful selection and ongoing monitoring of construction supervision consultants is important to avoid project disruption.

29 ADB will monitor through the social safeguards staff at Kazakhstan Resident Mission.

16 Appendix 1

PROGRAM FRAMEWORK

DESIGN AND MONITORING FRAMEWORK: PERFORMANCE ASSESSMENT

Design

Summary

Performance

Indicators/

Targets

Data Sources

and/or

Reporting

Mechanisms

Status at Completiona Remarks

Impact a

Contribution to

sustainable

economic

development

By 2020

Kazakhstan’s GDP

grew by 68% from

2010

Kazakhstan’s

export and import

growth increased

by 30% from 2010

Government

statistics

GDP in Kazakhstan grew by approximately 26.1% from 2010 to 2016 Imports decreased 9.5% between 2010 and 2016 Exports decreased 28% between 2010 and 2016

Government sustained

policies conducive to

trade expansion and

economic growth and

remains committed to

enhanced policy reforms

and regional integration.

Increased overall

economic efficiency

following existing trend

after program

completion, reflected in

reduced travel time and

deadweight losses

caused by time delays,

spoilage, and damages

in road transport.

Outcomea

Development of

an efficient

transport network

in Zhambyl Oblast

By 2015

Increased average

traffic volume to

7,000 vpd in 2015

from 4,000 vpd in

2007

National,

provincial, and

district

socioeconomic

statistics from

Central Statistics

Office

Periodic

classified traffic

counts and

accident data

Freight

Forwarder

Association

statistics

Achieved

The AADTb volume for all program roads grew substantially, reaching an average of approximately 7,820 vpd in 2016 from 4,000 vpd in 2007

Increased availability

and quality of transport

services following

improvement of the

investment program

roads.

Improved cross-border

facilities and procedures

at the border points

between Kazakhstan

and neighboring

countries.

COR continues

constructing remaining

sections of the corridor

as scheduled, at the

same quality as those of

the program.

Government of

Kazakhstan committed

Reduced average

travel time

between Almaty

and Shymkent to 8

hours in 2015 from

12 hours in 2007.

Achieved

Reduced average travel time between Almaty and Shymkent to 8 hours in 2015 from 12 hours in 2007.

Reduced transport

cost for freight to

5% of the cargo

value from 10% in

2008

Achieved

VOC savings per kilometer for freight vehiclesd realized at: 14.9% (2-axle truck), 21.18% (3-axle truck),

Appendix 1 17

24,76% (articulated truck), 15.81% (pickup) in 2016 compared to 2008

to provide adequate

financial resources for

road maintenance

Adequate road safety

measures

Sufficient budget for

investment

Reduced road

accident rate to

0.1 fatality/km from

0.3 fatality/km in

2006

Achieved

The road accident rate was found to reduce to 0.253 fatality/km in 2016 compared with 0.3 fatality/km in 2006 assumed at appraisal for four-lane roads in Zhambyl Oblast.

Mitigating Measures

Loan covenant to

ensured sufficient

budget for investment

and maintenance

Road operations

maintenance component

suggested appropriate

funding system for road

maintenance

Outputs By 2014 e

Highway sections

in Zhambyl Oblast

reconstructed

480 km highway

sections

reconstructed on

time, within budget,

and meeting

technical

specifications with

IRI of less than 3

m/km (Revised to

427.6 in FAM

2013).

Project progress

reports

ADB project

completion

report

Achieved

427.6 km road sections

reconstructed through

MFF with an average IRI

of less than 3 m/km.

Timely provision of

counterpart resources

and support for the

program

Project management

setup was effective for

externally funded

projects

Mitigating Measures

Project management

consultant teams were

recruited

Anticorruption and

financial management

action plans to be

followed

Road operations

and maintenance

system improved

Sustainable road O&M system prepared and pilot projects formulated ITS strategy developed Investment plan for ITS agreed for implementation

Project progress

reports

ADB project

completion

report

Achieved.

The report on the road

O&M system provided

various

recommendations for

future road sector

maintenance operations.

The ITS component

produced (i) a draft ITS

plan showing the

Assumptions

Government is

committed to further

reform the road sector

COR is committed to

improving road O&M

18 Appendix 1

under subsequent projects Recommendations for improving road O&M system implemented

system’s architecture

and installation locations

along CAREC Corridor 1

in the Zhambyl Oblast;

and (ii) a draft long-term

plan for ITS

implementation that

considers the

institutional setup,

budgeting, and technical

aspects of hardware to

be installed on roads.

The above exercises

provided critical input

into the State Program

for Development and

Integration of Transport

System Infrastructure up

to 2020, adopted by

MOTC as a framework

to implement a

comprehensive road

asset management

system over the

country’s road network.

Activities and Actual Milestones

Project 1

1.1 Consultants for project management

and construction supervision

recruited in October 2009; services

completed in December 2013.

1.2 Civil works contracts for three

packages awarded in November

2009.

1.3 Civil works for Km 404–440 and Km

440–483 (2 sections) completed in

November 2012.

1.4 Civil works for Km 214–260 section

completed in June 2013.

1.5 Consultant for road O&M system

improvement recruited in December

2010; services completed in March

2013.

1.6 Consultant for development of ITS

recruited in November 2011;

services completed in November

2012.

Project 2 2.1. Civil works contracts for two road

sections awarded in May 2010;

contracts for depot construction at

Inputs at

Appraisal

ADB Loan: $700.00M (OCR)

JICA Loan: $68.00 M ($-equivalent)

IDB Loan: $170.00 M

Government: $158.00 M

Total:

$1,096.00 M

Actual Inputs

ADB Loan: $677.68 M (OCR)

JICA Loan: $ 68.33 M ($-equivalent)

IDB Loan: $170.00 M

Government: $151.16 M Total:

$1,067.17 M

Appendix 1 19

four sites awarded in July 2011.

2.2 Consultant for construction

supervision contract awarded in

November 2010; services

completed in June 2015.

2.3 Civil works for road section Km

358.6–389.4 completed in

December 2012; for Km 310.5–

358.6 completed in June 2013.

Merke depot completed in July

2014. Korday and Akyrtobe depots


Project 3

3.1 Construction supervision consultant contract awarded in April 2012; services completed in December 2014.

3.2 Civil works contracts for sections Km 383–404 and Km 162–260 awarded in August 2011; Km 0–17.7 Korday to Karasu section in November 2011.

3.3 Civil works for all sections

completed in November 2014.

Project 4

4.1 Construction supervision consultant

recruited in June 2012; services


4.2 Civil works contract awarded in

February 2012.

4.3 Civil works completed in May 2014.

AADT = annual average daily traffic; ADB = Asian Development Bank; COR = Committee of Roads; GDP = gross domestic product; IDB = Islamic Development Bank; IRI = international roughness index; ITS = intelligent transport system; JICA = Japan International Cooperation Agency; Km = kilometer marker; km = kilometer; m = meter; M = million; MFF = multitranche financing facility; MOTC = Ministry of Transport and Communication; O&M = operation and maintenance; OCR = ordinary capital resources; VOC = vehicle

operating cost; vpd = vehicles per day. a Outcome statement and indicators are for the entire investment program. Achievements at completion refer to those of the project

only. b Raw traffic counts provided by COR through its letter of October 2016. c Travel time savings were calculated, comparing with- and without-project scenarios. d Since the data on the transport cost for freight are not available, VOC savings per kilometer for freight vehicles were calculated,

comparing with- and without-project scenarios. e About 65 km of new and reconstructed Taraz bypass road sections allowed the completion of the entire 492.6 km of Zhambyl

Oblast (financed through a separate loan). Note: The DMF of the original approved project, approved in 2008, has been revised in 2013 to more accurately reflect the impacts and outcomes of the program. Sources: Asian Development Bank, Committee of Roads under the Ministry of Investment and Development (MID), and Consultant’s Report on Economic Reevaluation of the Investment Program.

20 A

ppend

ix 2

SUMMARY OF THE INVESTMENT PROGRAM AND ITS PROJECTSa

Project No. Project 1 Project 2 Project 3 Project 4

Loan No. Loan 2503 Loan 2562 IDB Loanb Loan 2697 Loan 8251b Loan 2735

MFF 0024 Tranche No. (Tranche 1) (Tranche 2) (Tranche 3) (Tranche 4)

Road Sections

Km 214–260, Km 404–483

Km 310.5–389.4 Km 536–593 Km 1–17,

Km 162–260 Km 383–404 Km 261.5–310.5

Road Length (km)

– Target 125 78.9 57 97.7 20 49

– Actual 125 78.9 57 97.7 20 49

Other Components Road

maintenance and ITS

4 road maintenance

depots n/a n/a n/a n/a

Loan Amount – Original 340.00 187.00 170.00 173.00 70.30c 112.00

– Revised 224.95d n/a n/a n/a n/a n/a

– Actual 224.10 184.66 170.00 164.67 68.33e 104.25

Loan Approval

30 December 2008 7 October 2009 8 February 2009 15 November 2010 31 May 2010f 21 February 2011

Loan Signing 30 March 2009 3 December 2009 31July 2009 15 December 2010 23 August 2010 7 June 2011

Loan Effectiveness 31 July 2009 13 April 2010 16 January 2010 15 June 2011 15 July 2011 22 December 2011

Loan Closing – Original 31 December 2013 30 June 2015 11 July 2013 31 December 2013 15 July 2020 31 December 2014

– Revised n/a n/a n/a 31 December 2014 n/a n/a

– Actual 20 March 2014 22 October 2015 12 November 2013 22 April 2015 1 August 2016 27 April 2015

ADB = Asian Development Bank; IDB = Islamic Development Bank; ITS = intelligent transport system; JICA = Japan International Cooperation Agency; Km = kilometer marker; km = kilometer; MFF = multitranche financing facility; n/a = not applicable. a ADB financed the investment program through an MFF with four tranches: Loan 2503, Loan 2562, Loan 2697, and Loan 2735. b

The IDB-financed component, on parallel cofinancing arrangement, was not administered by ADB. The JICA-financed component was administered by ADB. c

The loan amount approved by JICA was ¥6,351,000,000 ($68,000,000 equivalent at approval). d Loan proceeds partially cancelled. e Actual amount = ¥6,109,005,925.00 ($68,326,710.64 equivalent at completion). f The date shown is the JICA approval date.

Sources: Asian Development Bank and the Committee of Roads under the Ministry of Investment and Development.

App

end

ix 3

21

SUMMARY ENGINEERING DESIGN

Summary Design Description

Existing Road

Upgraded/Newly Constructed Roada

Km

Road Section

Project No.

Length (km)

Construction Type

Lanes

Pavement Category

No. of Lanes

Width

Pavement Category

Design Institute

Roadworks

162–260 Otar–Blagoveschenka 3 80.0 Constructing new road

n/a n/a 2b 9.25 Cat IB (cement concrete,

69.50 km);

“PII KazDorProekt Almaty” LLP

Cat II (crushed stone mastic

asphalt, 10.50 km)

261.5–310.5 Blagoveschenka–Aspara 4 49.0 Improving existing road 2 Cat II 4 2x9.25 Cat IB (cement concrete)

“KazNiipiDorTrans" LLP

310.5–389.4 Kulan–Blagoveschenka 2 78.9 Improving existing road 2 Cat II 4 2x7.25 + 4 m

median

Cat IB (cement concrete)

“KazNiipiDorTrans" LLP

383–404 Kulan Bypass (JICA-financed)

3 20.0 Improving existing road (5.2 km)

2 Cat II 4 2x9.25 Cat IB (cement concrete)


Constructing new road (14.8 km)

n/a n/a 4 2x9.25 Cat IB (cement concrete)

404–483 Kulan–Taraz 1 79.0 Improving existing road 2 Cat II 4 2x9.25 Cat IB (cement concrete)


536–593 Taraz–Zhambyl Oblast Border (IDB-financed)

2 57.0 Improving existing road 2 Cat II 4 2x7.25 + 4 m

median

Cat IB (cement concrete)

“Agency Central-Asian Consultant”

LLP

214–260 Blagoveschenka–Korday 1 46.0 Improving existing road 2 2 9.25 Cat II (asphalt)


0–17.7 Korday to the Kyrgyz Border at Karasu

3 17.7 Improving existing road (10.3 km)

2 n/a 2 7.50 Category II (crushed stone mastic asphalt)

“Astana DorProekt” LLP

Constructing new road (7.4 km)

n/a n/a 2 7.50

Total 427.6

Road Maintenance Depots

Korday 2 Improving existing depot n/a n/a n/a n/a n/a KazDorProekt

163 Otar 2 Constructing new depot n/a n/a n/a n/a n/a KazDorProekt

453 Akyrtobe 2 Constructing new depot n/a n/a n/a n/a n/a KazDorProekt

Merke 2 Improving existing depot n/a n/a n/a n/a n/a KazDorNIPI Dortrans

Km = kilometer marker; km = kilometer; LLP = limited liability partnership; m = meter; no. = number; n/a = not applicable. a Russian road design (SNIP) standards and policies have been used and harmonized with the American Association of State Highway and Transportation Officials

and British standards for concrete pavement in cold climates. The pavement design was based on a 13-ton single-axle load. The design speed is 120 km per hour for category I and II roads for flat roads, 100 km per hour for rolling roads, and 80 km per hour for mountainous roads.

b The project includes a four-lane embankment to facilitate future expansion. Sources: Asian Development Bank and the Committee of Roads under the Ministry of Investment and Development.

22 A

ppend

ix 4

PROGRAM COST AND FINANCING PLAN ($ million)

Investment Program

Appraisal Estimate Actual Cost

Item ADB IDB JICA Gov’t Total % ADB IDB JICA Gov’t Total %

A. Base Costa 1. Civil Works Project 1 297.00 0.00 0.00 53.00 350.00 31.93 215.98 0.00 0.00 36.97 252.95 23.70 Project 2 166.00 146.00 0.00 51.00 363.00 33.12 181.83 164.64 0.00 53.40 399.87 37.47 Project 3 149.81 0.00 56.77 36.45 243.03 22.17 160.27 0.00 68.33 35.79 264.39 24.77

612.81 146.00 56.77 140.45 956.03 87.22 558.08 164.64 68.33 126.16 917.21 85.94 Project 4b 96.70 0.00 0.00 17.06 113.76 0.00 101.61 0.00 0.00 17.25 118.86 11.14

Subtotal (civil

works) 709.51 146.00 56.77 157.51 1,069.79 87.22 659.69 164.64 68.33 143.41 1,036.07 97.08

2. Consulting Services Project 1 14.00 0.00 0.00 0.00 14.00 01.28 8.12 0.00 0.00 1.52 9.64 0.90 Project 2 4.00 9.00 0.00 2.00 15.00 01.37 2.83 5.36 0.00 0.90 9.09 0.85 Project 3 6.87 0.00 0.00 0.00 6.87 0.63 4.40 0.00 0.00 0.52 4.92 0.46

24.87 9.00 0.00 2.00 35.87 3.28 15.35 5.36 0.00 2.94 23.65 2.21 Project 4b 4.80 0.00 0.00 0.00 4.80 0.00 2.64 0.00 0.00 1.39 4.03 0.38

Subtotal (consulting

services) 29.67 9.00 0.00 2.00 40.67 3.28 17.99 5.36 0.00 4.33 27.68 2.59

Total Base Cost (A) 637.68 155.00 56.77 159.51 991.90 90.50 677.68 170.00 68.33 147.74 1,063.75 99.67

B. Recurrent Costsc

Project 1 0.00 0.00 0.00 1.00 1.00 0.09 0.00 0.00 0.00 3.42 3.42 0.33

C. Contingency Project 1 29.00 0.00 0.00 6.00 35.00 3.28 0.00 0.00 0.00 0.00 0.00 0.00 Project 2 17.00 15.00 0.00 5.00 37.00 3.38 0.00 0.00 0.00 0.00 0.00 0.00 Project 3 16.32 0.00 11.23 3.55 31.10 2.84 0.00 0.00 0.00 0.00 0.00 0.00

62.32 15.00 11.23 14.55 103.10 9.50 0.00 0.00 0.00 0.00 0.00

Project 4b 10.50 0.00 0.00 1.70 12.20 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Total Recurrent Costs

(B) and Contingency (C) 72.82 15.00 11.23 17.25 116.30 9.59 0.00 0.00 0.00 0.00 3.42 0.33

Total Investment

Program Cost 700.00 170.00 68.00 158.00 1,096.00 100.00% 677.68 170.00 68.33 151.16 1,067.17 100.00%

ADB = Asian Development Bank; IDB = Islamic Development Bank; JICA = Japan International Cooperation Agency. a Taxes and duties are included. b Project cost of Project 4 at appraisal was not included in the total investment project cost to avoid double counting. Project 4 cost at appraisal is the project cost after aligning Project 1 savings to Project 4.

c Recurrent costs on government’s expenditures, such as costs for land acquisition and resettlement. d Contingency includes physical and price adjustments.

App

end

ix 4

23

Project 1

Appraisal Estimate Actual

Item

ADB

(L2503) Government Total %

ADB

(L2503) Government Total %

A. Base Costsa

1. Road Development

Component

a. Civil Works: CW3-1

Taraz–Kulan, 39 km (Km

404–443)

116.00 21.00 137.00 34.25

92.53 16.09 108.62 40.83

b. Civil Works: CW3-2

Taraz–Kulan, 40 km (Km

443–483)

118.00 21.00 139.00 34.75

87.58 14.80 102.38 38.49

c. Civil Works: CW6-2

Blagoveschenka–Korday, 46

km (Km 214–260)

63.00 11.00 74.00 18.50

35.87 6.08 41.95 15.77

d. Construction Supervision

Consultant

9.00 0.00 9.00 2.25

4.58 0.94 5.52 2.08

e. Project Management

Consultant

3.00 0.00 3.00 0.75

2.20 0.42 2.62 0.98

Subtotal (1) 309.00 53.00 362.00 90.50

222.76 38.33 261.09 98.15

2. Road O&M Component

a. Improvement of Road

Maintenance System

1.00 0.00 1.00 0.25

0.50 0.10 0.60 0.23

b. Development of ITS 1.00 0.00 1.00 0.25

0.84 0.06 0.90 0.34

Subtotal (2) 2.00 0.00 2.00 0.50 1.34 0.16 1.50 0.56

Total (A) 311.00 53.00 364.00 91.00 224.10 38.49 262.59 98.71

B. Recurrent Costsb 0.00 1.00 1.00 0.25

0.00 3.42 3.42 1.29

C. Contingency

a. Price Contingency 29.00 6.00 35.00 8.75

0.00 0.00 0.00 0.00

Total Project Cost (A+B+C) 340.00 60.00 400.00 100.00% 224.10 41.91 266.01 100.00%

ADB = Asian Development Bank; CW = civil works; ITS = intelligent transport system; Km = kilometer marker; km = kilometer; L = Loan; O&M = operation and maintenance.

a Taxes and duties are included. b Recurrent costs include the government’s expenditure, such as costs for land acquisition and resettlement.

Sources: Asian Development Bank and Kazakhstan Ministry of Transport and Communications.

24 A

ppend

ix 4

Project 2


Item

ADB

(L2562)

IDB Gov’t Total %

ADB

(L2562) IDB Gov’t Total %

Project 2 – Total 136 km sections

A. Base Costa

1. Civil Works

a. Km 310.5–358.6 (48.1 km) 93.00 0.00 16.00 109.00 26.27 100.41 0.00 25.51 125.92 30.79

b. Km 358.6–389.4 (30.8 km) 63.00 0.00 11.00 74.00 17.83 73.13 0.00 6.93 80.06 19.58

c. Four road maintenance facilities 9.00 0.00 2.00 11.00 2.65 8.26 0.00 1.16 9.42 2.30

d. Km 536.6–593 (57 km) 0.00 146.00 22.00 168.00 40.48 0.00 164.64 19.80 184.44 45.10

Subtotal (civil works) 166.00 146.00 51.00 361.00 87.23 181.83 164.64 53.40 399.84 97.77

2. Consulting Services

a. Construction Supervision (ADB) 4.00 0.00 1.00 5.00 1.20 2.83 0.00 0.39 3.22 0.79

b. Project Management (IDB) 0.00 3.00 0.00 3.00 0.72 0.00 2.17 0.18 2.35 0.57

c. Construction Supervision (IDB) 0.00 6.00 1.00 7.00 1.69 0.00 3.19 0.33 3.52 0.86

Subtotal (consulting services) 4.00 9.00 2.00 15.00 3.61 2.83 5.36 0.90 9.09 2.22

Total Base Cost (A) 170.00 155.00 53.00 377.00 90.84 184.66 170.00 54.30 408.96 100%

B. Contingencyb 17.00 15.00 5.00 38.00 9.16 0.00 0.00 0.00 0.00 0

Total Project Cost (A+B) 187.00 170.00 58.00 415.00 100% 184.66 170.00 54.30 408.96 100%

ADB’s Tranche 2 – 79 km sections

A. Base Cost

1. Civil Works

a. Km 310.5–358.6 (48.1 km) 93.00 0.00 16.00 110.00 100.41 0.00 25.51 125.94

b. Km 358.6–389.4 (30.8 km) 63.00 0.00 11.00 74.00 73.13 0.00 6.93 80.06

c. Four road maintenance facilities 9.00 0.00 2.00 11.00 8.26 0.00 1.16 9.42

Subtotal (civil works) 166.00 0.00 29.00 195.00 181.83 0.00 33.60 215.43

2. Construction Supervision 4.00 0.00 1.00 5.00 2.83 0.00 0.39 3.22

Total Base Cost (A) 170.00 0.00 30.00 200.00 184.66 0.00 33.99 218.65

B. Contingencyb 17.00 0.00 3.00 20.00 0.00 0.00 0.00

Total Project Cost (A+B) 187.00 33.00 220.00 184.66 33.99 218.65

ADB = Asian Development Bank; IDB = Islamic Development Bank; Km = kilometer marker; km = kilometer; L = Loan. a Taxes and duties are included. b Contingency includes physical and price adjustments. Sources: Asian Development Bank and Committee of Roads, Ministry of Investments and Development.

App

end

ix 4

25

Project 3

ADB = Asian Development Bank; JICA = Japan International Cooperation Agency; Km = kilometer marker; km = kilometer; L = Loan. a In 2010 prices. b In 2016 prices. c USD equivalent of the JICA loan in yen at appraisal and at completion. d Taxes and duties are included. e Contingency includes physical and price adjustments.

Sources: Asian Development Bank and Committee of Roads under the Ministry of Investments and Development.

Appraisal Estimatea Actual Costb

Item

ADB

(L2697)

JICAc

(L8251) Gov’t Total

ADB

(L2697)

JICAc

(L8251) Gov’t Total %

A. Base Costd

1. Civil Works

a. Km 373–404 (20

km) 0.00 56.77 10.02 66.79 23.77 0.00 68.33 8.20 76.53 28.42

b. Km 162–260 (80

km) 139.08 0.00 24.54 163.62 58.23 149.93 0.00 25.79 175.72 65.25

c. Korday to Karasu

(17.7 km) 10.73 0.00 1.89 12.62 4.49 10.34 0.00 1.80 12.14 4.51

Subtotal Civil Works 149.81 56.77 36.45 243.03 86.49 160.27 68.33 35.79 264.39 98.18

2. Consulting Services

Construction

Supervision Consultant 6.87 0.00 0.00 6.87 2.44 4.40 0.00 0.52 4.92 1.83

Subtotal Consulting

Services 6.87 0.00 0.00 6.87 2.44 4.40 0.00 0.52 4.92 1.83

Total Base Cost (A) 156.68 56.77 36.45 249.90 88.93 164.67 68.33 36.31 269.31 100

B. Contingencye

Total Contingency

(B) 16.32 11.23 3.55 31.10 11.07 0.00 0.00 0.00 0.00 0

Total Project Cost

(A+B) 173.00 68.00 40.00 281.00 100% 164.67 68.33 36.31 269.31 100%

26 A

ppend

ix 4

Project 4

Appraisal Estimate Actual

Item

ADB


ADB


A. Base Costsa

1. Road Development

Component

a. Civil Works: 49 km (Km

261.5–310.5) 96.70 17.06 113.76 87.00

101.61 17.25 118.86 96.72

b. Construction Supervision

Consultant 4.80 0.00 4.80 3.67

2.64 1.39 4.03 3.28

Total (A) 101.50 17.06 118.56 90.67

104.25 18.64 122.89 100.00

B. Contingency

a. Price Contingency 10.50 1.70 12.20 9.33

0.00 0.00 0.00 0

Total Project Cost (A+B) 112.00 18.76 130.76 100%

104.25 18.64 122.89 100%

ADB = Asian Development Bank; Km = kilometer marker; km = kilometer; L = Loan. aTaxes and duties are included.

Sources: Asian Development Bank and Kazakhstan Ministry of Transport and Communications.

App

end

ix 5

27

CONTRACT PACKAGES ($ million)

Contract Amount

Description Contractor/

Consultant

Procure-

ment/

Recruit-

ment

Method

Bidding

Procedure/

Type of

Proposal

Accepted Contract

Amount Value Variations %

Price

Escalation %

Revised Contract

Amount Contract

Period

(Mos.)

Comple-

tion

Date

Project 1 Civil Works

1 Km 404–443 (39

km) ZholKyrylys ICB 1S1E Т13,629,708,592.00 Т582,878,767.67 4 Т1,883,775,088.48 14 Т16,096,362,448.15 35 7-Nov-12

2 Km 443–483 (40

km)

Joint Venture of

KCC E&C (KOR)

and Zhambyl Zhol

Kurylys (KAZ)

ICB 1S1E Т12,333,781,698.00 Т836,746,060.24 7 Т2,097,021,764.17 17 Т15,267,549,522.40 34 23-Nov-12

3 Km 214–260 (46

km)

Akmola Kurylys

Materialdary (KAZ) ICB 1S1E Т5,107,777,777.00 0.00 0 0.00 0 Т5,107,777,777.00 37 30-Jun-13

Consulting Services

4 Construction

Supervision

SMEC

International

(AUS)

QCBS FTP $8,124,471.56 ($2,607,365.72) (32) 0.00 0 $5,517,105.84 42 22-May-13

5 Project

Management

SAI Consulting

Engineers. (IIND) QCBS FTP $3,357,013.00 ($734,269.63) (22) 0.00 0 $2,622,743.37 42 15-Jun-13

6

Improvement of

Road Maintenance

System

Egis Bceom

International (FRA) QCBS STP $826,245.00 ($229,211.50) (28) 0.00 0 $597,033.50 6 1-Aug-11

7

Development of

Intelligent

Transport System

ISAN Corporation

(KOR), Korean

Transport Institute

(KOR), Daeyeong

Ubitech (KOR) and

KAZ SE&DI

Dortrans (KAZ)

QCBS STP $1,047,143.00 ($150,687.88) (14) 0.00 0 $896,455.12 6 12-Jul-12


8 Km 310.5–358.6

(48.1 km)

KCC Eng'g and

Construction Co.

Ltd (KOR)

ICB 1S1E Т12,103,767,435.00 Т3,080,711,747.04 25 Т2,459,154,517.25 20 Т17,643,633,699.29 33 18-Jun-13

9 Km 358.6–389.4

(30.8 km) ZholKyrylys ICB 1S1E Т8,536,346,373.68 Т654,773,761.54 8 Т3,599,907,047.23 42 Т12,791,027,182.45 28 29-Dec-12

1

0

Road operation

facilities (Korday)

Axioma Service

Contract LLP

(KAZ)

NCB 1S1E Т417,766,362.00 Т12,355,389.76 3 Т68,232,885.88 16 Т498,354,637.64 _ tbd

1

1

Road operation

facilities (Otar)

Axioma Service

Contract LLP

(KAZ)

NCB 1S1E Т331,705,191.00 Т10,297,895.00 3 Т57,997,813.05 17 Т400,000,899.05 26 10-Jun-14a

1

2

Road operation

facilities (Akyrtobe)

Kulager

Construction Corp

LLP (KAZ)

NCB 1S1E Т337,479,769.20 Т130,598,133.68 39 0.00 0 Т468,077,902.88 _ tbd

28 A

ppend

ix 5

Contract Amount

Description Contractor/

Consultant

Procure-

ment/

Recruit-

ment

Method

Bidding

Procedure/

Type of

Proposal

Accepted Contract

Amount Value Variations %

Price

Escalation %

Revised Contract

Amount Contract

Period

(Mos.)

Comple-

tion

Date

1

3

Road Operation

Facilities (Merke)

Kulager

Construction Corp

LLP (KAZ)

NCB 1S1E Т425,000,000.32 Т5,667,329.39 1 Т65,772,043.80 15 T496,439,373.51 34 15-Jul-14

Consulting Services

1

4

Construction

Supervision

Dohwa Consulting

Engrs Co. Ltd.

(KOR)

QCBS FTP $3,227,405.71 $371,844.55 12 0.00 0 $3,599,250.26 58 30-Jun-15


1

5

Km 383–404 (20

km)

ZholKyrylys LLP

(KAZ)a ICB 1E1S Т8,649,562,291.68 Т82,732,905.83 1 Т2,632,965,335.59 30 Т11,365,260,533.10 23 17-Oct-13

1

6

Km 162–260 (80

km)

Cengiz Insaat ve

Ticaret Anonim

Sirketi (TUR)

ICB 1E1S Т18,290,797,377.17 Т366,963,062.90 2 Т8,381,785,888.16 46 Т27,039,546,328.23 36 06-Nov-14

1

7

Korday to the

Kyrgyz Border

(17.7 km)

Akmola Kurylys

Materialdary LLP

(KAZ)

ICB 1E1S Т1,487,678,879.30 Т177,791,820.07 12 Т452,741,720.95 30 Т2,118,212,420.32 35 26-Nov-14

Consulting Services

1

8

Construction

Supervision

SNC Lavalin Int’l

Inc (CAN) in

association with

KazdorProject

(KAZ)

QCBS FTP $3,432,953.3 +

CAD3,527,947.88 0.00

0 0.00 0 $3,432,953.3 +

CAD3,527,947.88 33 31-Dec-14


1

9

Km 261.5–310.5

(49 km)

KCC Eng'g and

Construction Co

Ltd. (KOR)

ICB 1E1S Т12,452,189,420.00 Т652,834,390.00 5 Т5,586,855,946.54 45 Т18,691,879,756.54 24 21-May-14

Consulting Services

2

0

Construction

Supervision

Kocks Consult

GMBH (GER) in

association with

Almati Joba LLB

(KAZ), Quality

Planning Company

Limited (UZB), and

Astana

Engineering

Centre LLP (KAZ)

QCBS FTP $4,361,825.00 ($959,118.00) (22) 0.00

0 $3,402,707.00 38 31-Dec-14

Appendix 6 29

CONTRACT AWARDS AND DISBURSEMENTS OF ALL LOANS UNDER MFF

Table A5: Annual and Cumulative Contract Awards and Disbursements

Item Loan No. 2009 2010 2011 2012 2013 2014 2015 2016 Grand

Total

Contract Awards

Annual L2503 222.77 1.33 224.10 L2562 176.40 8.26 184.66 L2697 160.27 4.40 164.67 L2735 104.25 104.25 Total ($M) 222.77 176.40 169.87 108.65 0.00 0.00 0.00 677.68 % 32.87 26.03 25.07 16.03 0.00 0.00 0.00 100.00

Cumulative Total ($M) 222.77 399.17 569.04 677.68 677.68 677.68 677.68 677.68

% 32.87 58.90 83.97 100.00 100.00 100.00 100.00 100.00

Disbursements

Annual L2503 27.22 63.79 70.35 54.43 8.12 0.19 224.10 L2562 22.31 51.12 87.05 21.10 1.31 1.74 0.03 184.66 L2697 21.77 46.75 59.56 35.81 0.79 164.68

L2735 52.61 37.10 7.71 6.85 104.27

Grand

Total ($M) 27.22 86.10 143.24 240.84 125.86 45.02 9.37

0.03 677.68

% 4.02 12.71 21.14 35.54 18.57 6.64 1.39 0.00 100.00

Cumulative Total ($M) 27.22 113.32 256.56 497.40 623.26 668.28 677.65 677.68 677.68

% 4.02 16.72 37.86 73.40 91.97 98.61 100.00 100.00 100.00

L = loan; M = million; MFF = multitranche financing facility.

Figure A5: Annual and Cumulative Contract Awards and Disbursements

30 A

pp

end

ix 7

PROGRAM IMPLEMENTATION SCHEDULE

Q = quarter. a Refers to roadworks. b From advertisement of the invitation for bids or consultant services recruitment notice to contract signing. c Refers to all consultants. d From commencement of works or consulting services to physical completion.

Sources: Asian Development Bank and the Committee of Roads under the Ministry of Investments and Development

Item Activity

Project 1Loan ApprovalLoan EffectivityLoan Closing

`




Q4 Q1 Q2 Q3

2016

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2010 2011 2012 2013 2014 2015

Q4

Civil WorksProcurement

Implementation

Consulting ServicesRecruitment

Implementation

Implementationd

Milestone Events

Milestone Events

Q2 Q3 Q4 Q1 Q2 Q3Q4 Q1 Q2 Q3 Q4 Q1Q2 Q3


Implementation


Implementation

2009

Q1 Q2 Q3 Q4

Milestone Events

Civil WorksaProcurementb

Implementationb

Consulting ServicescRecruitmentd

Milestone Events


Implementation


Implementation

2008

Q4Q3

At appraisal Actual Defects Liability Period

Appendix 8 31

CHRONOLOGY OF MAIN EVENTS

Project 1

Year Date Main Event

2008 27 February–7 March Reconnaissance mission fielded. 11–24 June Fact-finding mission fielded. 26 September Staff review committee held. 26 August–2 September Appraisal mission fielded. 6–9 October Loan negotiations held. 30 December Investment program and its first tranche (the project) approved. 2009 13 January Financing framework agreement signed. 21–26 February Inception mission fielded. 30 March Loan agreement signed. 21 April–1 May Project review mission fielded. 6–14 June Project review mission fielded. 31 July Loan effectiveness declared. 23 September ADB requested that MOTC cancel the bidding process and proceed

with rebidding procurement of civil works contracts. 13 October Contract awards for construction supervision and project

management consulting services approved. 14 October Contract for the construction supervision consultant signed. 6 November Contract awards for three civil works packages (Km 214–260, Km

404–443 and Km 443–483) approved. 10 November Contract for the project management consultant signed. 20 November Works contract for Km 404–443 road section signed. Works contract for Km 214–260 road section signed. 23 November Works contract for Km 443–483 road section signed. 2010 2–13 February Project review mission fielded. 15 July Partial cancellation of loan proceeds of $115.05 million from the

original loan proceeds of $340.00 million approved. 6 August APFS for FY2009 accepted. 27 September–5 October Project review mission fielded. 7 December Contract award for the road maintenance system development

consulting services approved. 20 December Contract for the road maintenance system consulting services signed. 2011 26 January–4 February Social safeguards review mission fielded. 24–30 March Project consultation mission fielded. The first community liaison group

meeting was held. 7–13 June Safeguards mission fielded. 13–19 July Midterm review mission fielded. 11 July APFS for FY2010 accepted. 20 July ADB’s Office of Anticorruption and Integrity disclosed the project

procurement–related review report on the ADB website. 4–11 October Project review mission fielded. 23 November Contract award for the ITS improvement consulting services

approved. 2 December Contract for the ITS improvement consulting services signed. 2012 9–16 February Project review mission fielded. 21 May Reallocation of loan proceeds approved. 20 September APFS for FY2011 accepted, and the reallocation of loan proceeds

approved. 25 September–8 October Project review mission fielded. 8 November Final report of the ITS improvement subcomponent approved. 7 November Works for Km 404–443 road section completed. 23 November Works for Km 443–483 road section completed.

32 Appendix 8

2013 1 March Final report of road maintenance system development component approved.

3–12 April Project review mission fielded. 6 May Extension of the contract for construction supervision consulting

services to 30 June 2015 approved. 3–11 June Project review mission fielded. 30 June Works on Km 214–260 road section completed. 9 July Extension of the contract for project management consulting services

to 15 April 2014 approved. 15–19 July Safeguards (social) review mission fielded. 31 July APFS for FY2012 accepted. 5–20 September Safeguards review mission fielded. 21–31 October Project completion review mission fielded. 7 November ADB approved the reallocation of loan proceeds. 31 December Loan closing date as indicated in the loan agreement. 2014 20 March Loan financially closed and undisbursed balance cancelled.

Project 2

Year Date Main Event

2008 19 February Concept paper approved. 8 September Advance contracting of civil works and consulting services

approved. 2009 20–27 February Consultation mission fielded. 21–30 April Consultation mission fielded. 6–14 June Consultation mission fielded. 1 September Management review meeting held. 28–29 September Loan negotiations between ADB and Ministry of Finance held. 1 October Advance contracting notice posted on ADB and executing agency

websites. 7 October Loan 2562 (MFF second tranche) approved. 26 November CSRN for construction supervision consultant advertised. 3 December Loan 2562 agreement signed. 23 December IFB for procuring roadworks advertised. 2010 27 January Extension of loan effectiveness deadline approved. 2–13 February Loan inception mission fielded. 13 April Loan 2562 effectiveness declared. 25 May Works contract award for constructing the two road sections in

Kulan–Blagoveshchenka approved. 3–9 June Loan review mission fielded. 5 June Works contract for constructing Km 358.36–389.40 road section in

Kulan–Blagoveshchenka signed. 2–10 June Loan review mission fielded. 1 July Works contract for Km 310.5–358.36 road section in Kulan–

Blagoveshchenka signed. 17 September All roadworks in Kulan–Blagoveshchenka commenced. 23 September IFB for procuring depot works through NCB advertised. 27 September–5 October Project review mission fielded. 15 November Contract for construction supervision consultant awarded. 17 November Contract for construction supervision consultant signed. 10 December Services of the construction supervision consultant commenced. 2011 26 January–4 February Safeguards (social) review mission fielded. 7–13 June Safeguards review mission 7 July Works contracts for depots at four sites awarded to two local firms.

Appendix 8 33

13–19 July Project review mission fielded. 2 August Works contracts for four road maintenance depots (Korday, Otar,

Akyrtobe, and Merke) signed. 6–15 August Midterm safeguards (environment) review mission fielded. 6–26 August Midterm safeguards (social) review mission fielded. 15 September Works for NCB-4 contractor (Merke depot) commenced. 4–11 October Special project administration mission fielded. 2 December Minor change in project scope approved. 2012 16–27 January Safeguards review mission fielded.

19 January Works for Korday depot contractor commenced.

9–16 February Project review mission held.

13 April Works for Otar depot contractor commenced.

23 April–4 May Project review mission fielded.

17 August Works for Akyrtobe depot contractor commenced.

25 September–8 October Midterm project review mission fielded.

2012 29 December Works for road contract (Km 358.6–389.4) completed. Engineer issued the taking-over certificate.

2013 2–12 April Project review mission fielded. 3–11 June Project review mission fielded. 18 June Works for road contract (Km 310.5–358.6) completed. Engineer

issued the taking-over certificate to the contractor. 15–19 July Safeguards (social) consultation mission fielded. 6–7 September Safeguards (social) consultation mission fielded. 21–30 October Project review mission fielded. 2014 2 January Project implementing agency changed from COR to KazAvtoZhol

JSC. 5–7 March Safeguard mission held. 10 June COR terminated the works contract for Otar depot. 8–16 July Project review mission held. 15 July Certificate of completion issued to Merke depot contractor, with

defects liability period from 16 July 2014 to 15 July 2015. 6 August Executing agency changed from Ministry of Transport and

Communications to Ministry of Investments and Development. COR as implementing agency retained.

29 September–4 October Project review mission held. 23 October IFB for the remaining of works at Otar depot posted, but no bid

was submitted due to small contract size. COR will rebid further out of state budget.

22 December Extension of completion date for Akyrtobe depot from 7 December 2014 to 5 June 2015 approved.

2015 2–6 March Project review mission held. 25–30 May Project review mission held. 30 June Services of construction supervision consultant completed under

ADB loan. Contract extended up to end of defects liability period under government of Kazakhstan financing.

30 June Loan closing date as indicated in the loan agreement. Remaining works at depots beyond the loan closing date will be financed by the government of Kazakhstan.

12–22 October Project review mission held. 22 October Loan 2562 financially closed and undisbursed balance canceled. 2016 25–28 April Project completion mission fielded.

34 Appendix 8

Project 3 2010 2–13 February Fact-finding mission fielded. 14 April JICA loan negotiations held between ADB and Ministry of Finance. 2–10 June Project consultation mission fielded. 20 May Advance contracting notice advertised. 31 May JICA Loan 8251 approved. 30 June ADB loan negotiations held between ADB and Ministry of Finance. 23 August JICA Loan 8251 agreement signed. 24 August CSRN for construction supervision consultant advertised. 15 September IFB for procuring works advertised. 27 September–5 October Project consultation mission fielded. 15 November ADB Loan 2697 (MFF third tranche) approved. 15 December ADB Loan 2697 agreement signed. 2011 26 January–4 February Safeguards (social) review mission fielded. 26 March Community liaison group was formed. 7–13 June Safeguards review mission conducted. 15 June ADB Loan 2697 effectiveness declared. 13–19 July Project review mission fielded. 15 July JICA Loan 8251 effectiveness declared. 6–15 Aug Midterm safeguards review mission fielded. 12 August Works contracts for Km 383–404 and Km 162–260 road sections

awarded. 4–11 October Special project administration mission fielded. 8 November Works contract for Korday to Karasu section awarded. 18 November Works at Km 162–260 road sections commenced. 23 November Works at Km 383–404 road section commenced. 2012 26 January Works on the Korday to Karasu section commenced. 9–16 February Project review mission held. 4 April Contract for construction supervision consultant awarded. 9 April Contract for construction supervision consultant signed. 22 April Services of the construction supervision consultant commenced. 23 April–4 May Project review mission held. 25 September–8 October Midterm project review mission fielded. 2013 2–12 April Project review mission held. 3–11 June Project review mission held. 15–19 July Safeguards mission held. 21–30 October Project review mission held. 23 October Works on road section Km 383–404 completed. 18 November Loan 2697 closing date extension approved from 31 December 2013

to 31 December 2014. 2014 5–7 March Safeguards mission held. 6 August Executing agency changed from MOTC to Ministry of Investments

and Development. 29 September–4 October Project review mission held. 6 November Works on road section Km 162–260 completed. 26 November Works on the Korday to Karasu road completed. 31 December Services of construction supervision consultant completed. Contract

extended up to end of defects liability period under financing from the government of Kazakhstan.

2015 2–6 March Project review mission held. 25–30 May Project review mission held. 22 April Loan 2697 financially closed and undisbursed balance canceled. 15–21 October Project completion mission held. 2016 1 August Loan 8251 financially closed and undisbursed balance canceled.

Appendix 8 35

Project 4 2010 27 September–5 October Consultation mission fielded. 2011 9–10 February Loan negotiation held. 21 February Loan 2735 (tranche 4) approved. 24–30 March Consultation mission fielded. The first community liaison group

meeting was held. 7–13 June Safeguards review mission fielded, led by the safeguards specialists

from the Regional and Sustainable Development Department. 13–19 July Project review mission fielded. 4–11 October Project review mission fielded. 2012 3 February Works contract for Km 261.5–310.5 signed. 25 June Contract for construction supervision consultant signed. 25 September–8 October Project review mission fielded. 2013 3–12 April Project review mission fielded. 15–19 July Safeguards (social) review mission fielded. 31 July APFS for FY2012 accepted. 5–20 September Safeguards review mission fielded. 21–31 October Project review mission fielded. 2014 5–7 March Safeguards review mission fielded. 4 July APFS for FY2013 accepted. 8–11 and 16 July Project review mission fielded. August Project review mission fielded. 29 September–3 October Project review mission fielded. Works for Km 261.5–310.5 completed. 17–21 November Project completion review mission fielded. 31 December Contract for construction supervision consultant completed. 2015 27 April Loan financially closed and undisbursed balance cancelled.

ADB = Asian Development Bank; APFS = audited project financial statement; COR = Committee of Roads; CSRN = consultant services recruitment notice; FY = fiscal year; IFB = invitation for bids; ITS = intelligent transport system; JICA = Japan International Cooperation Agency; Km = kilometer marker; km = kilometer; MFF = multitranche financing facility; MOTC = Ministry of Transport and Communications; NCB = noncompetitive bidding. Source: Asian Development Bank.

36 Appendix 9

PROGRAM ORGANIZATIONAL STRUCTURE

Implementing Agency Committee of Roads

L2503 PMCd

Team Leader (in Astana)

SAI (IND)

Contracting Firms ZholKyrylys LLP (KAZ)

[Km 383–404]e

Cengiz Insaat ve Ticaret

Anonim Sirketi (TUR) [Km 162–260]

Akmola Kurylys

Materialdary LLP (KAZ)

[Km 0–17.7]

L2697 CSC SNC Lavalin International

Inc. in association with

KazdorProject (KAZ)

Zhambyl Oblast Dept of

Committee of Roadsc / Zhol Laboratory

L2562 CSC DOHWA Consulting

Engineers Co. Ltd.(KOR)

L2735 CSC Kocks Consult GmbH

(GER) in association with Almati Joba LLB (KAZ),

Quality Planning Co. Ltd. (UZB), and Astana Eng’g

Centre LLP (KAZ)

Contracting Firm KCC E&C (KOR)

[Km 261.5–310.5]

Contracting Firms KCC E&C (KOR) [Km 310.5–358.6]

KazahDorStroy (KAZ)

[Km 358.6–389.4]

Kulager LLP (KAZ)

[Merke and Akyrtobe Depots]

Axioma LLP (KAZ)

[Korday and Otar Depots]

Contracting Firms Kazakhdorstroy LLP(KOR)

[Km 404 to 443]

JV KCC E&C (KOR) /Zhambyl Zhol Kurylys

(KAZ) [Km 443-483]

Akmola Kurylys

Materialdary LLP (KAZ) [Km 210-260]

PMC Deputy Team Leader (in Zhambyl

Oblast)

Executing Agency Ministry of Investment and

Development b

Borrower Ministry of Finance

International Financial Institutions

Asian Development Bank

Japan International Cooperation Agency

Islamic Development

Bank a

COR = Committee of Roads, CSC = Construction supervision consultant, IDB = Islamic Development Bank, ITSD = intelligent transport system development, KAZ = Kazakhstan., RMSI = road maintenance system improvement. a IDB had a separate set of PMC, CSC and contracting firm for its financed-road section. b The Government’s reorganization on 6 August 2014 replaced Ministry of Transport and Communications (MOTC) with

Ministry of Investment and Development (MID), which absorbed the functions of MOTC. c During project implementation in 2013, Zhambyl Oblast Road Department was replaced with the Road Laboratory as

the project administrator. KazAvtoZhol’s function was limited to monitoring and resolving safeguards issues. d The project management consultant engaged under Project 1 is for the 4 projects financed by ADB. e JICA-financed road section. Sources: Asian Development Bank and Committee of Roads under the Ministry of Investment and Development.

L2503 CSC SMEC International

(AUS)

L2503 RMSI

Egis International (FRA)

ITSD Isan Corporation

(KOR)

IDB PMC MinConsult (MAL)

IDB CSC

Dar-Alhandasah (LEB)

Contracting Firm K-Dorstroy JSC (KAZ)

Appendix 10 37

STATUS OF COMPLIANCE WITH FACILITY-LEVEL UNDERTAKINGS AND LOAN COVENANTS

Reference

in FFA

Facility-Level Undertakings Correspond-

ing LA Reference

Status of Compliance

Schedule 6 Para1

Budget Resources The Borrower will make available all counterpart funds required for timely and effective implementation of the Investment Program through annual budget allocations to MOTC, and will ensure that necessary resources thus required are released in a timely manner. The Borrower will cause MOTC to include the updated funding requirements for implementation of the Investment Project in its annual development program.

Schedule 5, Para. 5

(LA 2503); Para. 4

(LA 2562); Para. 7

(LA 2697, LA 2735)

Complied with. In all ADB loans, the Ministry of Finance (MOF) annually allocated government counterpart funds and released payments in a timely manner for withdrawal applications from loan proceeds from 2009 through 2015. The Ministry of Transport and Communication (MOTC)—later the Ministry of Investments and Development (MID)—annually updated its funding requirements for program implementation to facilitate payments. Note that final claims for works and services done on or before the loan closing date of 31 December 2014 were processed during the winding-up period.

Schedule 6 Para 2

The Borrower will cause MOTC to allocate routine maintenance budget in accordance with the Road Development Program 2006-2012 (RDP) and that, each fiscal year after 2012, the budget is increased by no less than annual inflation rates, provided always that sound fiscal balance is maintained; Without limiting the generality of the foregoing, the Borrower will allocate and make available, on a timely basis, sufficient funds for the implementation of the RDP and shall ensure that the road sections covered by the RDP are maintained in accordance with applicable standards and best international practices. The Borrower will have such expenditures audited annually and make them available to ADB upon request.

Schedule 5, Para. 6

(LA 2503)

Complied with. In previous years, the government budget for road maintenance was underfunded by international norms. However, in recent years, the government has been providing a substantial allocation for road maintenance. During 2013 to 2015, funding for periodic maintenance was T63.2 billion, while that for routine maintenance was T37.61 billion. With respect to maintenance after the end of the defects liability period, through a statute of 27 October 2015, KazAvtoZhol JSC, a joint-stock company, was declared the sole operator for the (i) regular repair and maintenance of national highways, as well as project management; and (ii) development of road infrastructure with the budget allocated from the government.

Schedule 6 Para 3

Construction Quality The Borrower through MOTC will ensure that the Investment Program is carried out in accordance with the applicable technical specifications and

Schedule 5, Para. 7

(LA 2503); Para. 5

(LA 2562); Para. 8

Complied with. MOTC commissioned the state design institutes (such as KazDorProekt Limited Liability Partnership, [LLP], (ii) AstanaDorProekt LLP, KazniipiDortrans LLP, and Agency Central Asian Consultant)

38 Appendix 10

Reference in FFA

Facility-Level Undertakings

Correspond-ing LA

Reference


design, and that the construction supervision, quality control and project management of the Investment Program are performed in accordance with applicable standards and best international practices.

(LA 2697, LA 2735)

to prepare the road designs for the investment program. The state project examination authority, GosExpertisa, reviewed the compliance of the detailed design and cost estimates with the country’s requirements. The Agency of Construction Affairs approved the designs upon GosExpertisa’s endorsement. The design followed the Soviet construction norms and regulations (SNiIP, GOST), harmonized with the American Association of State Highway and Transportation Officials and British standards for concrete pavement in cold climates. The construction supervision consultants monitored the construction quality following contract provisions and applicable technical specifications and drawings. MOTC/MID and project management consultant staff regularly conducted site visits and quality/progress inspection meetings with the Oblasts’ Road Department, construction supervision consultant, and contractors.

Schedule 6 Para 4

Road Safety The Borrower through MOTC will ensure that civil works contracts under the Investment Program will include contractor’s obligation to comply with road safety measures. MOTC will monitor the accident rate and traffic volume after commencement of the operation of the Investment Program Road.

Schedule 5, Para. 8

(LA 2503); Para. 6

(LA 2562); Para. 9

(LA 2697, LA 2735)

Complied with. All civil works contracts under the investment program included contractors’ obligation to prepare and implement the road safety plan during construction. The construction supervision consultants regularly monitored the contractors’ compliance with the road safety plan, which benefited both the road users and road workers. The MID regularly monitors the traffic volume while the police record the road crash rates during and after completing the road construction.

Schedule 6 Para 5

Anti-Corruption Measures The Borrower will comply with, and will ensure that MOTC complies with, ADB’s Anticorruption Policy (1998, as amended to date). The Borrower, consistent with its commitment to good governance, accountability and transparency, agrees (a) that ADB has the right to investigate, directly or through its agents, any alleged corrupt,

Schedule 5, Para. 15

(LA 2503); Para. 12

(LA 2562); Para. 16 (LA 2697, LA 2735)

Complied with. The MOF agreed that ADB has the right to investigate any irregularities, and to cooperate fully with any such investigation. For Project 1, ADB conducted a pre–project procurement related review (PPRR) and a PPRR in 2011 as ADB’s Anticorruption Policy (1998, as amended to date) may have been violated by contractors and consultants. The findings from these two investigations resulted in a firm receiving a

Appendix 10 39

Reference in FFA


Correspond-ing LA

Reference


fraudulent, collusive or coercive practices relating to the Investment Program and (b) to cooperate fully with any such investigation and to extend all necessary assistance, including providing access to all relevant books and records, as may be necessary for the satisfactory completion of any such investigation. In addition, the Borrower will (a) conduct periodic inspections on the contractors’ activities related to fund withdrawals and settlements; (b) ensure that all contracts financed by ADB in connection with Investment Program include provisions specifying the right of ADB to audit and examine the records and accounts of all contractors, suppliers, consultants, and other service providers as they relate to the Investment Program; and (c) the construction supervision consultant shall verify the contractors’ payment certificates in accordance with working drawings and contract specifications. MOTC will announce the Investment Program and business opportunities associated with it, including the applicable tender process on its web site.

warning, but no violations of ADB’s Anticorruption Policy were confirmed. There were no other investigations of corruption conducted for other projects under the investment program, as no record of any irregularities was reported during project implementation. (a) With the assistance of the project management consultant and construction supervision consultants, the Committee of Roads (COR) conducted periodic inspections. (b) All contracts included provisions specifying ADB’s right to audit and examine records and accounts. (c) The construction supervision consultant verified and signed each contractor’s payment certificate of works done vis-à-vis actual progress, works program, contract provisions, technical specifications, and working drawings. The project management consultant (PMC) further verified all payment certificates before submission to COR. The COR implemented the anticorruption action plan indicated in the facility administration manual (FAM).

Schedule 6 Para 6

Policy Framework and Dialogue The Borrower will (a) ensure compliance with the sector Roadmap which identifies the institutional development actions as set out in Table 1 of Schedule 1 (actions to implement road sector reforms included in the Road Development Program 2006-

Complied with. (a) At appraisal, the overall design was consistent with the government’s top-priority road investment for CAREC Corridor 1 as defined in the government’s medium-term Road Development Program for 2006–2012,1 which was intended to address core problems in the transport sector.2 The

1 Ministry of Transport and Communications. 2006. Road Development Program for 2006–2012. Astana. 2 Core transport problems included poor-quality existing road assets, weak management capacity, road maintenance

financing gaps, road safety issues, and poor traffic operations information systems. These are detailed in ADB’s Report and Recommendation of the President for the MFF and Tranche 1. 2008.

40 Appendix 10

Reference in FFA


Correspond-ing LA

Reference


2012 and Transport Strategy for the Republic of Kazakhstan comprising good governance and accountability, sustainable financing policy and regulatory framework, institutional reform and capacity development, road safety, road sector sustainability, and road transport operations and management), (b) maintain the Investment Program and use the Facility funds effectively and efficiently to implement the Investment Program and achieve its objectives, and (c) implement the financing plan agreed for the Investment Program. The Borrower will keep ADB informed in a timely manner of any changes to and progress in implementing the Roadmap, Investment Program and the financing plan. The Borrower will consult with ADB and other donors involved in road sector in a policy dialogue affecting any of these elements, and keep them regularly informed of the progress in implementing the road sector reforms.

medium-term road program is part of the government’s overall transport strategy for 2006–2015.3 The program is also consistent with ADB’s Strategy 2020,4 which identifies transport infrastructure as a core area of ADB operations, and with ADB’s CAREC program, which emphasizes regional cooperation in transport, energy, and trade facilitation. The program focus is CAREC Corridor 1, which is one of six corridors included in the CAREC Transport and Trade Facilitation Strategy5 that CAREC member countries endorsed in 2007. (b) The facility funds were efficiently used. Project 1 (Loan 2503) was partially cancelled and the facility fund savings were used to finance Project 4 (Loan 2735). (c) The financial plan agreed for the investment program was implemented.

Schedule 6 Para. 7

Project Selection and Implementation The Borrower will ensure that (a) all Projects under the Investment Program meet, to the satisfaction of ADB, the criteria and procedural requirements set out in Schedule 4 of this FFA, and

Article 5, Section 4.01

(LA 2503, LA 2562, LA 2697, LA 2735)

Complied with. Project Readiness The MOTC ensured the readiness of the projects under the investment program. Due diligence was conducted in preparation for the project, in terms of design, procurement, safeguards, and economic analysis.

(b) in the preparation and implementation of the projects, the arrangements set out in Schedule 3 to this FFA, and ADB’s policies and procedures on safeguards and

Schedule 5, Paras. 1–4 (LA 2503); Paras. 1–3 (LA 2562);

Implementation Arrangements The MOTC was assigned as the executing agency for the investment program. It has the overall responsibility in executing the investment program. It designated the COR

3 Decree of the President of the Republic of Kazakhstan. 2006. Transport Sector Strategy of the Republic of Kazakhstan

up to 2015. Astana. 4 ADB. 2008. Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank, 2008–2020. Manila. 5 Central Asia Regional Economic Cooperation. 2007. CAREC Transport and Trade Facilitation Strategy. Manila.

Appendix 10 41

Reference in FFA


Correspond-ing LA

Reference


social dimensions (and specifically, the requirements set out in Schedule 5 to this FFA), procurement, disbursement, governance and anticorruption, and gender are complied with.

Paras. 1–2 (LA 2697, LA 2735)

as the implementing agency for all projects under the investment program. The COR appointed a project director from its staff to be responsible for the (i) implementation of the investment program, and (ii) preparation and implementation of the subsequent projects. The project director was assisted by • SAI Consulting Engineers (India), the project management consultant engaged under the first project (Loan 2503), in managing the investment program and subsequent tranche projects. • the construction supervision consultants engaged under each project (SMEC, Dohwa, SNC Lavalin, and Kocks), in supervising the works progress and administering contracts to ensure quality and timely completion of road construction. • COR staff responsible for road engineering, financial, legal, and procurement matters. As a result of the government’s reorganization on 6 August 2014, the Ministry of Investment and Development (MID) absorbed the functions of MOTC. Under this new setup, the COR remained the implementing agency under the MID.

Schedule 4, Paras. 1–7 (LA 2503); Paras.1–9 (LA2562,

LA 2697)); Paras. 1–10 (LA 2735)

Procurement of works and consulting services The procurement of works followed ADB’s Procurement Guidelines. The contracts of more than $3 million were procured through an international competitive bidding procedure and those of less than $1 million through a national competitive bidding procedure. The recruitment of consultants (project management, construction supervision, road maintenance, and intelligent transport system) followed ADB’s Guidelines on the Use of Consultants. QCBS was used, with a Q/C ratio of 80:20.


(LA 2503); Para. 10

Execution of contracts Subsequent to contract awards, a notice-to-proceed was issued to contractors for respective sections or parts of the project

42 Appendix 10

Reference in FFA


Correspond-ing LA

Reference


(LA 2562); Para. 9

(LA 2697, LA2735)

road that complied with the applicable provisions of the LARP, IEE, and EMP.

Schedule 3 Paras. 1–5 (LA 2503, LA 2697); Paras. 1–4 (LA 2562, LA 2735)

Disbursements The loan proceeds were disbursed following ADB’s Loan Disbursement Handbook. Reallocation between categories was applied, as needed. The conditions of withdrawal for Loan 2503 and Loan 2697 were fulfilled. For Loan 2503, MOTC submitted a certification that the project management consultant had been adequately staffed, including the appointment of the project director, and had become operational to implement the investment program. For Loan 2697, the JICA loan agreement (Loan 8251) was duly executed and all conditions were fulfilled. There were no conditions of withdrawal from the other two loan accounts (Loan 2562 and Loan 2735).

Schedule 5, Paras. 17–18

(LA 2503); Paras. 14–15

(LA2562); Paras. 3–4, 6

(LA 2697, LA 2735)

Project monitoring, review, and evaluation The COR monitored and evaluated the project’s performance through a project performance monitoring system (PPMS), which consisted of (i) a DMF specifying the performance targets and indicators, along with risks; (ii) project performance reports consisting of monthly and quarterly progress reports prepared by the project management consultant and the construction supervision consultant, safeguards (environment and LAR) monitoring reports, and annual financial audit reports; and (iii) a project completion report detailing the project achievements. The progress reports included updates on road and works safety. Data collection included (i) joint project review and safeguards missions with ADB; (ii) consultations/meetings with consultants, contractors, affected people, and other concerned agencies; (iii) project records of COR, consultants, and contractors; and (iv) other technical road surveys.

Appendix 10 43

Reference in FFA


Correspond-ing LA

Reference


A midterm review mission was conducted for each project to ensure successful implementation and the achievement of objectives of the projects and the investment program.

Schedule 5, Paras. 9–10 (LA 2503); Paras. 7–8 (LA 2562);

Paras. 11–12 (LA 2697, LA 2735)

Environmental safeguards The design, road construction and O&M followed ADB’s Safeguards Policy Statement (SPS), Kazakhstan’s applicable environmental laws and regulations, the EARF, and EIA. The EMP was updated prior to notice-to-commence issuance. The works contracts incorporated applicable environmental measures identified in the EIA and the EMP. Construction supervision consultants supervised the contractors' preparation and implementation of the site-specific EMPs to minimize if not eliminate potential adverse environmental impacts arising from the projects. MOTC/MID allotted a budget of about $1.0 million to implement, monitor and record EMP implementation for the investment program. MOTC/MID submitted environmental safeguards monitoring reports for each project, and reports were disclosed on the ADB website after endorsement by the CWRD safeguards specialist. The EMRs included a progress review on implementing the EIA/EMP. Updates were also included in the monthly or quarterly project progress reports.


(LA 2503); Para. 9

(LA 2562); Paras. 13–14

(LA 2697, LA 2735)

LAR safeguards The LARP for each project, based on the LARF, was disclosed to the affected persons (APs). Consultations with APs and local authorities started during the project feasibility stage. Necessary lands and rights-of-way required by all projects were acquired and made available on time before civil works

44 Appendix 10

Reference in FFA


Correspond-ing LA

Reference


commenced. In the absence of an alternative land plot, APs received monetary compensation for lost assets following Kazakhstan legislation. Physical displacement of persons occurred and a notice-to-commence was issued after (i) the LARP was finalized, and (ii) compensation and other entitlements were provided to APs. The payments of all compensations to APs and structures were completed in 2013. Any works started only after the compensation procedure was completed. The MOTC/MID submitted LARP compliance internal monitoring reports, which were disclosed on the ADB website after endorsement by the CWRD safeguards specialist. An external or independent monitoring expert, financed by ADB, conducted the LARP verification for projects with category A and the reports were disclosed on ADB website. Surveys and consultations were conducted during implementation to identify new or potential affected households and a supplemental LARP was prepared, as appropriate. The community liaison group (CLG) mechanism was established in March 2011 for the investment program and Taraz Bypass project. The CLG coordinator was engaged under the project management consultant to monitor and regularly report any safeguards issues, and coordinate with COR Zhambyl Oblast/KazAvtoZhol for timely resolution. The CLG coordinator maintained the grievance database of safeguards issues with corresponding actions and updates to monitor timely resolution.

Schedule 5 Para. 13

(LA 2503); Para. 11

(LA 2562); Paras 10, 15

(LA 2697, LA 2735)

Prevention of illegal trafficking The CSC monitored and found no illegal trafficking of humans, wildlife, endangered species, or controlled substances in the project area during project implementation. Health and social protection

Appendix 10 45

Reference in FFA


Correspond-ing LA

Reference


The works contracts incorporated (i) applicable core labor laws and workplace occupational safety; and (ii) provisions on no child labor, no payment differentiation between men and women for work of equal value, employment of local poor persons, and employment of skilled and unskilled women laborers; and (iii) to the extent possible, maximized employment of disadvantaged persons for project construction purposes, provided that the requirements for job and efficiency were adequately met. The projects delivered benefits to all categories of travelers, including women. The new roads, with two lanes in each direction, safety barriers, and high-quality surface, attract more female drivers, who used to avoid potentially risky intercity travel, and allow them to travel more and benefit from the new economic and social opportunities. During the projects, consultants and contractors employed female managers and specialists under strict compliance with nondiscriminatory treatment of female workers. The CSC monitored the projects, but no outstanding issues have been identified. Contractors have signed agreements with local social protection and labor authorities to employ local unemployed persons. On preventing HIV/AIDS, contractors conducted an orientation program for HIV/AIDS and distributed HIV/AIDS awareness materials to the local communities along the project road.

Schedule 6 Para. 8

Fiduciary Oversight The Borrower will ensure that each Project account is audited by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB and the audit reports will be submitted to ADB within 6 months of the end of the relevant fiscal years. The Borrower will further ensure the compliance with the specific

Article IV, Section 4.05

(a) (LA 2503, LA 2562, LA 2697, LA 2735)

Complied with. An independent auditor audited each project account. The audit reports for FY 2009 to FY2015 were submitted and all audited project financial statements (APFSs) were acceptable. The corresponding management letters were also submitted. The audit reports included a separate auditor’s opinion confirming that the financial statements presented a fair view of the project’s financial position and financial performance and the loan proceeds were used only for project

46 Appendix 10

Reference in FFA


Correspond-ing LA

Reference


accounting, auditing and reporting requirements set out in Schedule 3 of this FFA.

purposes. The audit reports were uploaded to the eOps project record, as required. The APFS for the cofinanced JICA loan (Loan 8251) for its final disbursement in March 2016 was submitted on 9 August 2017 and being reviewed by ADB. MOF/MOTC set up and maintained separate financial records and accounts for utilizing the ADB loan, JICA loan, and Borrower’s counterpart funds. The cash-based International Public Sector Accounting Standard was used in preparing the annual financial statements.

ADB = Asian Development Bank; AP = affected person; APFS = audited project financial statement; CAREC = Central Asia Regional Economic Cooperation; CLG = community liaison group; COR = Committee of Roads; CSC = construction supervision consultant; CWRD = Central and West Asia Department; DMF = design and monitoring framework; DNP = defects notification period; EA = executing agency; EARF = environmental assessment and review framework; EIA = environmental impact assessment; EMP = environmental management plan; FAM = facility administration manual; FFA = facility financing agreement; FY = fiscal year; IA = implementing agency; IFI = international financial institution; JICA = Japan International Cooperation Agency; L = loan; LA = loan agreement; LARF = land acquisition and resettlement framework; LARP = land acquisition and resettlement plan; MID = Ministry of Investment and Development; MOF = Ministry of Finance; MOTC = Ministry of Transport and Communications; O&M = operation and maintenance; PMC = project management consultant; PPRR = project procurement related review; PPMS = project performance monitoring system; QCBS = Quality and Cost Based Selection ; SPS = Safeguards Policy Statement. Sources: Asian Development Bank and the Committee of Roads under the Ministry of Investment and Development.

Appendix 11 47

ECONOMIC REEVALUATION

A. Background

1. The Asian Development Bank (ADB) approved the Central Asia Regional Economic Cooperation (CAREC) Transport Corridor 1 (Zhambyl Oblast Sections) [Western Europe–Western PRC International Transit Corridor] Investment Program in Kazakhstan in 2008. The program consists of four projects with a total length of about 480 kilometers (km) as follows:

Project 1: reconstruction of 125 km of Taraz–Kulan and Blagoveschenka–Korday road sections at Km 404–483 and Km 214–260, and preparation of studies on intelligent transport systems (ITS) development and road maintenance system improvement.

Project 2: roadworks include (i) rehabilitation of 135.9 km, which includes 78.9 km Kulan–Blagoveshchenka road section at Km 310.5–389.4 and 57 km Taraz–Zhambyl Oblast border road section at Km 536–593; and (ii) construction of road maintenance depots/facilities in Otar, Merke, Akyrtobe, and Korday. The Islamic Development Bank (IDB) originally intended to cofinance the Taraz–Zhambyl Oblast border road section, but ADB subsequently took this over.

Project 3: roadworks totaling 117.7 km road sections, which include 80 km new roads along Otar–Blagoveshchenka at Km 162–260, 18 km at the Korday–Kyrgyzstan border, and the 20 km Kulan Bypass at Km 383–404). The Japan International Cooperation Agency (JICA) cofinanced the Kulan Bypass works.

Project 4: widening of a 49 km Taraz–Korday road section at Km 261.5–310.5 from two lanes to four lanes.

B. Economic Analysis at Appraisal Stage

2. The economic analysis at appraisal was carried out using the Highway Development and Management (HDM) model (version 1.3). The HDM model computes road user’s economic costs for each section of road for each year of analysis. The inputs to the HDM model were adapted and calibrated to enable vehicle speeds and operating costs to be estimated as accurately as possible in the context of the road network in Kazakhstan. 3. The with-project scenario involved improvement of the four projects in the CAREC Transport Corridor 1 (Zhambyl Oblast Sections) (para. 1). The without-project scenario assumed that the roads would remain largely unchanged, with the same cross section and deteriorating road conditions over time. 4. The following economic benefits for existing traffic were identified and monetized at appraisal: (i) vehicle operating cost (VOC) savings; (ii) time savings, and (iii) accident cost savings. To calculate changes in VOC, the initial international roughness index (IRI) values were collected from surveys carried out in 2007 by Kazdorproekt with values recalculated annually by the HDM-4 model. 5. Benefits were calculated separately for generated traffic. Anticipated generated traffic was estimated at 20% of the existing traffic volume, with benefits per user assumed to be equal to 50% of the benefits of existing users, applying the “rule of a half” as standard in economic analysis of transport projects. Road accident savings were estimated by assuming a reduction in accident losses once the CAREC Transport Corridor 1 (Zhambyl Oblast) sections are improved. The

48 Appendix 11

original economic appraisal was based on a 6-year construction period (2009–2014), with the project opening in 2015, followed by 18 years of economic life. C. Economic Reevaluation

6. ADB conducted an economic reevaluation at completion to ascertain whether the investment program remained economically viable. The reevaluation compared “with-” and “without-project” scenarios, which remain generally the same as at appraisal, and calculated incremental changes to costs and benefits using HDM. 7. As at appraisal, (i) VOC savings, (ii) time savings, and (iii) accident cost savings were considered. The project costs and benefits have been calculated over a 25-year appraisal period (2009–2033), after which a residual value—designed to capture the benefits of the project in the post-appraisal period—will be considered.

8. 1 The methodology involved a standard incremental discounted analysis of project cost–

benefit streams. D. Demand Estimation

9. The demand analysis at appraisal was based on estimates of annual average daily traffic (AADT) derived from traffic counts taken in 2007 by Kazdorproekt. Traffic was forecast to grow in line with changes in real GDP, where the 2007 study prepared by “Kazdorproekt” foresaw the growth of normal traffic at 4% per year over the period 2007–2012 and 6% per year from 2012 onwards. 10. The demand analysis for the economic reevaluation is based on additional traffic counts conducted by the executing agency in 2015 and 2016. Traffic forecasts have been amended downwards to account for a sharp slowdown of gross domestic product (GDP) growth to 1.0% in 2015 from 4.3% in 2014 based on low prices for oil, the country’s main export. Growth was expected to remain low at 0.7% in 2016, but recover slightly to 1.0% in 2017. Kazakhstan’s GDP growth is projected to improve to 3.4% for 2018 due to the resumption of oil production in the Kashagan field and the improvement of the Russian economy. The normal traffic growth rate assumed at reevaluation was 4% per year over the period 2007–2012 and 6% per year from 2012 to 2014. Actual traffic count data were available for 2016 and, subsequently, the assumed growth rates were 1.0% in 2017 and 4% per year thereafter. 11. Table A11.1 shows the current (2016) and forecast (2033) traffic demands on the project roads at appraisal and at reevaluation. Current traffic on the Project 3 bypasses and Project 4 was underestimated at appraisal, whereas on projects 1 and 2, the traffic was overestimated. The effects of the lower traffic growth rates from 2012 also resulted in significant reductions in forecast (2033) flows on project 1 and 2 sections.

Table A11.1: Current and Forecast Demand on the Project Roads

Project Section Kilometer Length Appraisal

AADT 2016 Completion AADT 2016

Appraisal AADT 2033

Completion AADT 2033

Project 1 Km 214–260 45.3 8,387 7,015 22,585 12,335

Project 1 Km 404–483 79.0 8,305 7,745 22,363 13,619

Project 2 Km 310.5–389.4 79.0 8,978 7,621 21,979 13,401

1 Based on actual contract data supplied by the executing agency, the updated salvage value was estimated at 31%

of the initial project costs.

Appendix 11 49

Project Section Kilometer Length Appraisal

AADT 2016 Completion AADT 2016

Appraisal AADT 2033

Completion AADT 2033

Project 2 Km 536–593 57.0 8,907 6,167 23,985 10,844

Project 3 Km 1–17 17.7 3,043 4,945 8,194 8,695

Project 3 Km 162–260 80.0 5,258 6,852 14,156 12,049

Project 3 Km 383–404 20.0 4,191 7,745 11,285 13,619

Project 4 Km 261.5–310.5 49.0 4,523 7,621 14,394 13,401

AADT = annual average daily traffic. Source: Asian Development Bank. 2016.

E. Economic Costs

12. A comparison of actual investment costs with those forecast at appraisal is shown in Table A11.2. The actual civil works project costs were $1,036.07 million, with savings of some $33 million compared with the cost at appraisal. The civil works costs for the project roads involved mainly upgrading to a four-lane dual carriageway standard. The total value of the consulting services at completion was 32% lower than the estimated amount at appraisal.

Table A11.2: Financial Cost

($ million, 2009 prices)

ADB = Asian Development Bank; IDB = Islamic Development Bank; JICA = Japan International Cooperation Agency. a The project cost at appraisal was not included in the total investment project cost to avoid double counting. The Project 4 cost at

appraisal is the project cost after aligning Project 1 savings to Project 4. b Includes recurrent costs on government expenditures, such as costs for land acquisition and resettlement. Source: ADB.

13. The economic analysis of the road development component includes the following costs: (i) capital investment (i.e., civil works and construction supervision); and (ii) the difference in operation and maintenance (O&M costs) between the with- and without-project scenarios. Costs related to taxes, duties, and financing charges during implementation have been excluded. Costs

and benefits were converted from financial to economic prices in line with ADB guidelines.2 The

economic analysis was conducted using the world price numeraire. A standard conversion factor

2 ADB. 1997. Guidelines for the Economic Analysis of Projects. Manila.

ADB IDB JICA Gov’t Total ADB IDB JICA Gov’t Total

A.

1 Civil Works

Project 1 297 53 350 215.98 36.97 252.95

Project 2 166 146 51 363 181.83 164.64 53.4 399.87

Project 3 149.81 56.77 36.45 243.03 160.27 68.33 35.79 264.39

Project 4 a 96.7 17.06 113.76 101.61 17.25 118.86

Subtotal (civil works) 709.51 146 56.77 157.51 1,069.79 659.69 164.64 68.33 143.41 1,036.07

2 Consulting Services

Project 1 14 14 8.12 1.52 9.64

Project 2 4 9 2 15 2.83 5.36 0.9 9.09

Project 3 6.87 6.87 4.4 0.52 4.92

Project 4 a 4.8 4.8 2.64 1.39 4.03

Subtotal (consulting services) 29.67 9 0 2 40.67 17.99 5.36 0 4.33 27.68

637.68 155 56.77 142.45 991.9 573.43 677.68 170 68.33 147.74

B.

Project 1b 29 7 36 3.42 3.42

Project 2 17 15 5 37 0

Project 3 16.32 11.23 3.55 31.1 0

Project 4 a 10.5 1.7 12.2 0

72.82 15 11.23 17.25 116.3 0 0 0 0 3.42

700 170 68 158 1,096.00 677.68 170 68.33 151.16 1,067.17

Total Contingency (B)

Total Investment Program Cost


Item

Base cost

Total Base Cost (A)

Contingency

50 Appendix 11

for non-tradable goods of 0.94 was applied, the shadow wage rate for skilled labor was 0.95 and

the shadow wage rate for unskilled labor was 0.70, based on a previous study in Kazakhstan3

and as applied at appraisal.

14. Economic costs were brought to a 2009 price base year as used at appraisal by application of a relevant price index.4 Unit rates for road maintenance were based on the assumptions used in the economic analysis at appraisal: (i) routine maintenance costs of $1,100 per km; and (ii) periodic maintenance in 2020 and 2027 at a unit rate of $5 per square meter (m2). F. Economic Benefits

15. The benefits considered in the economic reassessment are: savings in VOC; improvements in travel time; and reduction in accidents. The projects include both new alignment with time savings based on a reduction in vehicle-km traveled and expected increases in average speed due to the increased capacity of the four-lane highway after rehabilitation on the existing alignment. The calculation of time savings benefits did not include crew costs, because they form part of the VOC calculations. The actual traffic count data for 2014, 2015, and 2016 were considered to include 20% generated traffic as at appraisal. The benefits for existing users were first calculated and then the benefits for generated traffic were assumed to be equal to 50% of the benefits of existing users, applying the “rule of a half” as standard in economic analysis of transport projects. 16. Savings in VOC are calculated for the project and derive from improvements to the surface conditions and roughness on the upgraded sections, relative to the existing substandard sections. Unit rates for VOC/km, which vary with IRI, were calculated using the HDM model. Average speeds used in the economic analysis were also calculated within the HDM model based on road condition, geometry, and traffic intensity. 17. The economic analysis used hourly values of time for car passengers of $4.04 for work travel and $1.21 for non-work travel and for bus passengers of $1.39 for work travel and $0.42

for non-work travel.5 The calculation of savings from reductions in the number of road casualties

was updated at reevaluation relative to at appraisal with actual accident records for fatalities and injuries, since the upgrading of the road to a four-lane dual carriageway significantly reduced the accident rate. Accidents were assumed to cost $412,800 for a fatal casualty and $51,600 for

personal injury casualties.6 G. Results of Economic Reevaluation

18. The results of the economic reevaluation covering the full analysis period are in Table A11.3. The economic indicators provided are: net present value (NPV), benefit–cost ratio (BCR), and economic internal rate of return (EIRR). Although the NPV decreased significantly, the EIRR decreased only marginally. The principal reasons for the differences in the economic indicators between the appraisal and completion stages are (i) reduction in traffic growth rate at appraisal due to the unforeseen reduction in GDP growth forecasts, (ii) reduction in investment costs, and

3 ADB. 2003. Report and Recommendation of the President: Rural Area Water Supply and Sanitation Project,

Kazakhstan. Manila. 4 Construction Price Index (CPI) data from the Statistics Committee of the Ministry of National Economy of Kazakhstan. 5 The values of time are based on ADB’s 2008 due-diligence study review of economic analysis for CAREC Transport

Corridor I (Zhambyl Oblast) section, updated in line with the growth of GDP during the period 2007–2008. 6 The values of accident casualties are based on ADB’s 2007 Feasibility Study for the Western China–Western Europe

International Transit Corridor, updated in line with the growth of GDP during the period 2007–2008.

Appendix 11 51

(ii) increased accident benefits, based on actual accident data since opening. The former negatively affected economic efficiency, whereas the latter two reasons had the opposite effect.

Table A11.3: Project Economic Indicators

Section

NPV (2009 $ million, World

Price Numeraire) BCR (ratio)

EIRR (%)

At Appraisal 666.18 - 18.2% At Completion 481.23 1.79:1 21.0%

BCR = benefit–cost ratio; EIRR = economic internal rate of return; NPV = net present value. Source: Asian Development Bank estimates, project preparatory technical assistance consultant’s report.

19. Sensitivity tests and calculations of switching values were carried out to determine the effect of variations in key input parameters on the key economic indicators. Table A11.4 shows the results of the sensitivity analysis. There was no switching value for VOC or the value of accidents, as the analysis demonstrated that even when either vehicle operating benefits or accident savings are ignored the investment program remains feasible. A switching value of -90% with respect to value of time (the main source of benefits) was calculated, showing that the project remains economically viable across various scenarios.

Table A11.4: Result of the Sensitivity Analysis

Scenario

NPV (2009 $ million, World

Price Numeraire) EIRR (%)

Switching Value (%)

Base 481.23 21.0 N/A Vehicle Operating Costs –25% 393.32 19.5 - Value of Time –25% 359.97 19.0 -90% Value of Accidents -25% 443.68 20.5 - EIRR = economic internal rate of return; N/A = not applicable; NPV = net present value. Source: Asian Development Bank estimates.

20. In summary, the economic reevaluation was undertaken in line with ADB’s guidance. The project return exceeds the 12% threshold, and the project remains economically viable.

52 Appendix 11

Table A11.5: Detailed Results of the Economic Analysis ($ million, 2009 prices, world price numeraire, undiscounted)

EIRR = economic internal rate of return; NPV = net present value; VOC = vehicle operating cost. Source: Asian Development Bank estimates.

Capital Maintenance Cost VOC Time Accident Net

Year Costs With Without Reduction Savings Savings Savings Benefits

2009 28,69 0,55 0,60 0,05 0,00 0,00 0,00 (28,63)

2010 115,97 0,54 0,65 0,10 3,67 0,70 0,00 (111,89)

2011 180,93 0,56 0,69 0,13 7,38 2,90 0,00 (171,46)

2012 263,39 0,58 0,72 0,15 12,12 6,32 0,00 (246,48)

2013 148,85 0,58 0,76 0,18 18,26 11,34 0,00 (121,77)

2014 36,73 0,61 0,78 0,16 44,89 55,36 16,30 69,40

2015 - 3,88 0,79 (3,09) 65,94 93,36 30,82 169,74

2016 - 3,89 0,79 (3,10) 77,85 107,57 32,13 194,67

2017 - 32,87 0,77 (32,10) 88,14 119,55 32,31 186,09

2018 - 3,93 0,75 (3,18) 99,11 131,86 32,16 236,03

2019 - 3,95 0,74 (3,21) 114,52 150,78 33,45 268,38

2020 - 39,24 19,23 (20,01) 131,88 172,11 34,79 287,97

2021 - 4,00 0,45 (3,55) 49,11 81,92 36,18 148,46

2022 - 3,73 0,45 (3,28) 55,49 89,03 37,63 162,30

2023 - 32,64 0,46 (32,18) 62,80 97,49 39,13 149,11

2024 - 3,81 1,02 (2,79) 71,86 107,70 40,70 197,44

2025 - 3,87 1,60 (2,28) 81,53 119,43 42,33 218,89

2026 - 32,89 2,17 (30,72) 92,40 132,92 44,02 214,14

2027 - 10,31 19,23 8,92 105,22 148,39 45,78 281,10

2028 - 4,00 0,45 (3,55) 33,15 96,29 47,61 157,40

2029 - 32,58 0,45 (32,13) 38,68 101,29 49,52 140,13

2030 - 3,74 0,46 (3,28) 45,43 107,04 51,50 182,15

2031 - 3,79 1,01 (2,77) 52,39 113,49 53,56 196,71

2032 - 32,67 1,59 (31,08) 60,39 121,04 55,70 184,50

2033 (262,51) 0,83 2,25 1,42 69,91 129,89 57,93 498,23

EIRR (%) = 21.00%

NPV (Discount Rate: 12%) = 481.23

Appendix 11 53

H. Financial Sustainability

21. There are 23,500 km of national roads under the responsibility formerly of the Ministry of Transport and Communications (MOTC), now the Ministry of Investment and Development (MID), managed by the Committee of Roads (COR), with KazAvtoZhol joint-stock company (JSC) as the national road operator. The COR is funded from government budget, including funding of KazAvtoZhol, which is under COR. 22. Road sector expenditures (construction, rehabilitation, and maintenance) on public roads depend on government funding. During the 1990s and 2000s, road sector expenditures have been underfunded according to international norms. Road maintenance accounted for only 7% of the road sector budget, with routine maintenance being frequently applied to seriously deteriorated locations in order to operate within an allocated budget that is lower than needed.

23. With recent improvement of nationwide road networks, the importance of maintenance has increased. On average, during 2001–2010, 21.7% of the government’s expenditure on roads was allocated to maintenance activities, with about 40% spent for routine maintenance (e.g., repairs to pavement), 28% for periodic maintenance (replacement of wearing courses), and the remainder for capital repair (e.g., rehabilitation or reconstruction). Specifically, in the Zhambyl Oblast section, the budget for road maintenance was $2.20 million in 2012, 67.94% higher than the $1.31 million budget in 2010.

24. In recent years (2013, 2014, 2015), the financial allocation for road sector development and maintenance increased from 0.63%, 0.67%, and 0.84% of GDP (T36 billion, T40 billion, T41 billion, respectively), while annual inflation was 5.8%, 6.7%, and 6.6%, respectively. The budget increases for each fiscal year after 2012 are in Table A11.5.

Table A11.5: Financing of Road Sector (2013–2015) (T million)

Year Construction and Rehabilitation

Periodic Maintenance

Routine Maintenance

Total Road Expenditure

2013 2014 2015

200,260 231,157 303,846

19,000 19,214 25,079

8,000 15,502 14,114

1227,260 265,873 343,039

25. To ensure long-term funding for road maintenance, the government planned to increase the annual allocation of $76 million in 2014 to $165 million by 2020 to maintain national roads under MOTC/MID jurisdiction and managed by KazAvtoZhol, by introducing toll systems on 7,000 km of national highways to generate revenues for road maintenance and repair. 26. Toll systems are planned to be launched in November 2017 on 700 km of long-distance highways on the following sections: (i) Almaty–Kapshagay, (ii) Astana–Temirtau, and (iii) Almaty–Khorgos. Currently, there are 217 km of toll roads (Astana–Shchuchinski). KazAvtoZhol has taken over the relevant road depots and subdepots from Kazakhavtodor (responsible for contracting routine maintenance), and carries out routine maintenance using toll revenues.

27. Annual revenue from tolls is projected at T8.5 billion ($25 million) or $10,000 per kilometer of tolled roads. Although such revenue will be sufficient to maintain tolled sections, and contribute

54 Appendix 11

to maintenance of untolled national highways, the government will supplement funds for road maintenance if KazAvtoZhol is not fully self-financing by its expected schedule in 2022. Currently, $1,100 per kilometer is allocated to all roads within the Oblast, while the latest estimates indicate that $2,700 per kilometer was spent in 2016 on the MFF corridor. The government is now providing substantial allocation for road maintenance. 28. With respect to maintenance of project roads after the defects notification period, KazAvtoZhol took over the project roads and provided regular maintenance with the budget allocated from the government. The government allocated funding for national highways in Zhambyl Oblast totaling 1,287 km, amounting to T900 million in 2015, T1,000 million in 2016 and T1,100 million in 2017 for routine and periodic maintenance as necessary, based on regular checks of road conditions. 29. Since its establishment in March 2013 up to 31 December 2013, KazAvtoZhol’s operation showed a profit of T58,710 based on its financial statement, However, for fiscal years ended 31 December 2014 and 2015, it incurred losses of T79,199 and T7,865, respectively, due to administrative and income tax expenses. The trend improved for fiscal year ended 2016 with a profit of T27,172.

30. The government has committed to providing necessary maintenance by making most of the budget allocated to ensure sustainability. It also has a long-term plan to implement automated asset management systems throughout the corridor financed by the investment program, in line with the newly-adopted sector program. MOTC/MID, COR, and KazAvtozhol JSC initiated further institutional reforms toward improving road O&M, a road asset management system, road safety, and road services. Loan 2503 of the multitranche financing facility (MFF) included the development of a sustainable road O&M system and formulation of a pilot project. Various recommendations were made, such as (i) conducting a regular road condition survey to determine appropriate maintenance methods and timing, (ii) introducing an automated asset management system using geographic information system (GIS) software, and (iii) a performance-based maintenance project currently proposed for implementation with ADB financial and institutional support. Other donor agencies, such as the World Bank, also have O&M initiatives, in addition to their physical investments.

Appendix 12 55

ENVIRONMENT AND SOCIAL SAFEGUARDS

A. Environment

1. Loan 2503-KAZ (Tranche 1) – The project was classified as environmental category B at appraisal. An initial environmental examination (IEE) was carried out during project preparation in accordance with the Asian Development Bank’s (ADB’s) Environment Policy (2002), the environmental assessment and review framework (EARF), and the country’s relevant laws. A cumulative impact assessment was also undertaken along the project roads to examine anticipated effects of the investment program and other development initiatives. The IEE found no significant environmental impact and an environmental impact assessment (EIA) was deemed unnecessary. The relevant mitigation measures for identified site-specific environmental impacts were proposed in the IEE, and were included in the environmental management plan (EMP). All the contractors prepared site-specific EMPs, which the construction supervision consultant (CSC) approved. 2. During implementation of civil works residents some raised complaints about noise, dust, and vibration as well as unregulated use of quarries. These issues were mainly due to the contractor’s and CSC’s initially insufficient resources to implement and monitor EMPs. This was rectified after the Ministry of Investment and Development (MID) increased the resources for project management and CSCs to strength their capacity in managing environmental safeguards. By project completion, all issues were resolved and the contractors had recultivated the borrow pits and quarries. The total cost of environmental mitigation and monitoring was estimated at $1,143,600. 3. The IEE was posted on ADB’s website in August 2008. Five environmental monitoring reports prepared by the supervision consultant from 2011 to 2013 were disclosed on the website. 4. Loan 2562-KAZ (Tranche 2) – The Project was classified as category A in accordance with ADB’s Environment Policy (2002), the country’s environmental laws and regulations, the EARF, and the cumulative EIA prepared for the investment program. Public consultations during project processing were held in Kulan and Merke in January 2009. The anticipated environmental impacts included air and water pollution, contamination and erosion of soil, increased noise, clearing roadside vegetation, creating passages for animals and agricultural equipment, traffic hindrance and congestion, safety and accidental risks, traffic safety, earthworks and borrow pit operations, solid-waste management, and impacts on archeological sites in the project’s right-of-way. The total cost of mitigation and monitoring was estimated at $1.45 million. 5. The project’s implementation complied with the EMP prepared by contractors and approved by the CSC. Independent laboratories engaged by the contractors monitored air and water quality, noise, and vibrations. The borrow pits, quarries, and service roads were reinstated upon completion of the works. 6. The EIA was posted on ADB’s website in June 2010. Five semiannual environmental monitoring reports were uploaded to the website during implementation. 7. Loan 2697-KAZ (Tranche 3) – The Project was classified environment category A at appraisal. The EIA identified environmental impacts related to pollution (air, water, and noise), flora and fauna, and archeological and burial sites in the project’s right-of-way. Mitigation measures set out in the EIA and the site-specific EMPs were fully complied with during construction.

56 Appendix 12

8. During project implementation, the CSC approved the site-specific EMPs that the contractors prepared. The EMPs also identified which permits were needed to comply with government regulations. The contractors engaged independent laboratories to monitor impacts related to air, noise, vibration, and water. For the archeological sites on the Km 162–260 road section, the contractor engaged a specialized institute, KazArcheology LLP, in 2012 to undertake an archeological study and excavate about 17 cultural monuments. Artifacts were turned over to the National Museum of Kazakhstan. A burial site dating from 1930 was discovered at Km 390–363 during geodetic pegging. The contractor had the site investigated, and the remains were reinterred at a cemetery in Zhalpaksza village. The contractors cut 2,045 trees, but replanting of trees is planned in a separate state program through the national road operator KazAvtoZhol JSC utilizing the road maintenance budget. The contractors fully complied with the mitigation measures set out in the EIA and the site-specific EMPs during construction. The four environmental monitoring reports prepared by the CSC recorded all the environmental issues, and confirmed that there were no significant negative impacts during implementation. 9. At completion, local authorities reported no residual impacts and no complaints from people living along the project roads. Upon completion of the Kulan Bypass and the Korday–Karasu road sections, the contractors restored the borrow pits, quarries, service roads, plants, camps, and other project facilities. On the Otar–Blagoveschenka road section, these project facilities have not been restored. They are being used to build the government-financed one-way, two-lane cement concrete pavement, where construction started after the ADB-funded component was complete. These will be restored after the government-financed project is complete. No other environment issues were raised. 10. The draft EIA for each road section was posted on ADB’s website on 19 February 2010 and the final EIAs were posted on ADB’s website in October 2010. Four environmental monitoring reports prepared during project implementation from 2012 to 2014 were uploaded onto the website. 11. Loan 2735-KAZ (Tranche 4) – The Project was classified as category B given that the project road followed the original alignment with limited environmental impacts. The IEE and EMP were prepared in 2011. Based on that EMP, the contractor prepared a site-specific EMP, which was monitored by construction supervision consultant and the executing agency. During implementation, the contractor carried out mitigation and monitoring activities. Semiannual reports were disclosed on the websites of the executing agency and ADB. The total cost of mitigation and monitoring was estimated at $78,100. B. Land Acquisition and Social Safeguards 12. Loan 2503-KAZ (Tranche 1) was classified as category A for social safeguards. A land acquisition and resettlement plan (LARP) was prepared during loan processing in 2009, which determined that 167.72 hectares (ha) of land would need to be acquired permanently under the project and 69 households and legal entities would be permanently affected. An additional 108.20 ha would be acquired for temporary use and 86 households and legal entities would be affected. A supplemental LARP was prepared in 2011 when five café owners located at Km 439 in T. Ryskulov Raion (originally not included in the LARP) were evaluated and confirmed eligible for compensation. According to the valuation, the total area of affected structures was 530 square meters (m2) and the compensation budget was T42,5 million. The project acquired 178.29 ha of land that would be permanently affected and 137.68 ha for temporary use. At completion, 99 households and legal entities were permanently affected and 86 temporarily affected. The actual

Appendix 12 57

cost of compensation paid under the project was T521,496,471. The road department of Zhambyl Oblast (a branch of the Committee of Roads [COR]) took a lead role in the institutional arrangements for land acquisition and resettlement (LAR)–related activities, with the help of the project management consultant (PMC) and CSC, as well as the community liaison group (CLG) coordinator. The PMC maintained a grievance database, which was updated monthly. 13. Loan 2562-KAZ (Tranche 2) was classified as category A for social safeguards. The LARP identified 99 households and 11 legal entities that would be affected by the project. Due to realignment of the road, additional LARPs were prepared in 2011 and one more was prepared in 2013 for three affected persons who were left out of the original LARP. At completion, a total of 110 households and 13 legal entities were defined and compensated. All complaints were resolved during project implementation except for two cases. The first case, involving a honey vendor, is almost resolved: a 1 ha land plot was provided to establish a honey market and the vendors were displaced to a new location. The new site has been provided with electricity and the legal registration of a new market is ongoing. The second case, related to business losses caused by road realignment is pending resolution. This complaint was raised by an affected person in 2013 but still has not been resolved. The affected person rejected an initial offer of a land swap proposed by the executing agency due to the lack of water and electricity utilities; this option is no longer a valid because of a recent moratorium on land. ADB facilitated several consultations with the affected person, executing agency, and local akimat, including the last consultation in August 2016 at which the parties discussed and agreed on acquiring the remaining land plot and payment of compensation. A time-bound action plan was agreed to, according to which the affected person is to engage a valuator and submit a valuation report to the executing agency for verification by the Chamber of Valuators. Once the compensation amount is confirmed, the executing agency will send a request to the local akimat to issue a decree on acquisition of land to be followed by the executing agency’s submission of a state budget application to the Ministry of Finance to pay compensation. This is targeted for September 2017. ADB is closely monitoring the case. 14. Loan 2697-KAZ (Tranche 3) was classified as category B for resettlement. The draft LARP, which identified 107 people to be displaced, and 529 ha of land to be acquired, was prepared in September 2011. The LARP was updated during implementation to include additional affected households and structures to a total of 1,0871 ha. A LARP due-diligence report was prepared for 16 containers at the Kainar interchange which needed to be removed. Several consultations were conducted with the container owners on LARP provisions and entitlements. The local akimat allocated a land plot for 16 containers while the contractor provided water and electricity connections. A total of 530,44 ha of permanent land was acquired, with a further 174.08 ha for temporary use. Compensation in the amount of T294,527,207 was paid from the state budget to 107 affected parties, of which 98 were households and 9 were legal entities. 15. Loan 2735-KAZ (Tranche 4) was classified as category B for resettlement. The affected persons for this project were originally identified during the preparation of the detailed design, which was completed in March 2009. The LARP was updated in 2011, identifying a total of 59 parties (54 households and 5 legal entities) that would be affected by implementation of the project. A total of 174 ha of land was to be acquired for permanent use; no land was required for temporary use. However, the number of affected persons and the extent of impacts on Km 306–310 were affected by the realignment of the adjacent Km 310.5–331 section, approximately 150–200 m to the north and parallel to the previous new alignment, due to a new government requirement to stay within the territory of Kazakhstan, well away from the Kyrgyz border. A tentative budget of T26,230,611 was estimated as the compensation amount to be paid under the project. However, it changed due to the case of an affected person who was not satisfied with the valuated amount.

58 Appendix 12

A court decision revised the amount to T1,222,611, which the affected person accepted. He was paid on 12 August 2013. C. Key Mitigation Measures

16. For Tranche 1, the Ministry of Transport and Communications (MOTC) issued a supplemental LARP in 2011 specifically to accommodate five café owners who suffered business losses, and completed payment of all compensation in August 2011. In 2012, additional eligible cases were confirmed, all of which involved business losses resulting from unexpected land acquisition along the project road; these cases were closed with payment of agreed-upon compensation. 17. For Tranche 2, 20 honey vendors were affected. To compensate for business losses, they received a 1 ha land plot to establish a honey market and have already set up their honey stalls at the new location. One affected person’s case is still awaiting resolution following a lengthy procedure to resolve the case. 18. For Tranche 3, there were 16 containers at the Kainar interchange that needed to be moved to a new location, and the akimat provided the land. The government took responsibility for timely delivery of entitlements and compensation to 107 verified affected parties, which included 98 households and 9 legal entities. 19. For Tranche 4, as of November 2014, the compensation for land and structures for 47 affected households and legal entities was paid. Thirteen households relinquished their land voluntarily because the evaluated compensation amounts were considered minor. D. Indigenous People

20. All four multitranche financing facility (MFF) projects were classified as category C for indigenous people, as the projects did not affect any people falling under ADB’s definition of such groups. E. Grievance Redress Mechanism

21. A grievance redress mechanism was set up for the MFF program in 2011 with the establishment of the CLG, which was composed of representatives of the executing agency, its branch in Zhambyl Oblast, local akimats, the PMC, the CSC, and the contractors. The CLG was established to provide timely and effective feedback on local communities’ concerns, and raise awareness of project activities. 22. The CLG coordinator was recruited under the PMC contract, and was based on site in Taraz for day-to-day work. The coordinator played a key role in communicating with local communities by holding regular consultations and managing grievances. The CLG coordinator maintained a separate grievance database for each MFF project, which included data on complaints (date logged, contacts of complainant, nature of complaint) and actions to be taken to resolve issues. Complaints related to environmental issues (irrigation, burial sites, etc.), resettlement issues not defined by the LARP, and works-related issues (access roads, crossings for livestock). In total, 134 were complaints logged into the database, which were resolved by project completion. By the time the MFF program was completed, only one LAR-related issue was pending resolution. This was closely monitored. The affected person lost his roadside business revenue because of the realignment of the main road at Merke village. Beginning in 2013, the

Appendix 12 59

COR and Merke administration (akimat) were proposing different options to compensate him for his losses, including a land swap. The affected person did not accept any of the options. In April 2016, with ADB facilitation, a decision was reached among the affected person, the akimat, and the COR that the affected person would complete an independent valuation of his losses and property, the akimat would issue a resolution for acquisition of land and compensation of losses, and the COR would allocate government funds for compensation. As of June 2017, the akimat’s resolution was expected to be issued by the end of that month, and full compensation to the affected person is expected in Q3 2017.

60 Appendix 13

PROGRAM OVERALL ASSESSMENT

Criterion Weight (%) Assessment Scorea Weighted Rating

Relevance 25 Relevant 2 0.50 Effectiveness 25 Effective 2 0.50 Efficiency 25 Efficient 2 0.50 Sustainability 25 Likely to be Sustainable 2 0.50 Overall Assessmentb Successful 2.00

a Rating range: 3 = highly relevant/effective/efficient/most likely; 2 = relevant/effective/efficient/likely; 1 = less than relevant/effective/efficient/less likely; 0 = irrelevant/ineffective/inefficient/unlikely.

b Highly successful: Overall weighted average is ≥ 2.7; Successful: overall weighted average is ≥1.6 and < 2.7; Less

than successful: overall weighted average is ≥ 0.8 and < 1.6; Unsuccessful: overall weighted average is < 0.8.

Sources: ADB. 2006. Guidelines for Preparing Performance Evaluation Reports for Public Sector Operations. Manila. ADB. 2013. Amendments to the IED Guidelines for Preparing Performance Evaluation Reports for Public Sector Operations. Manila.

SUMMARY PERFORMANCE RATING PER TRANCHE PROJECT

Loan Number Performance Rating a

Loan 2503 Successful Loan 2562 Successful Loan 2697 and Cofin 8251 Successful Loan 2735b Successful

a As reported in project completion reports. b As assessed during Facility Completion Report preparation.

Appendix 14 61

CONTRIBUTION TO THE ADB RESULTS FRAMEWORK

No.

Results Framework Indicatorsa

Target Achieved Methods or Comments

1 Roads built or upgraded (km) 370.6 370.6 Total km-length achieved as originally designed based on the engineer’s works completion reports:

125 km for Loan 2503

78.9 km for Loan 2562b

117.7 km for Loan 2697 and Cofin 8251

49 km for Loan 2735

2 Use of roads built or upgraded (average daily vehicle-kilometers in the first full year

of operation)c

3,052,139 Average daily vehicle kilometers for each road section based on consultant’s post construction economic evaluation report in 2016:

AADT = annual average daily traffic; ADB = Asian Development Bank; IDB = Islamic Development Bank; km = kilometer. a These are the standard transport sector Level 2 indicators as defined in ADB’s Results Framework: Interim Update

to Align with the Midterm Review of Strategy 2020 (2014). The indicator on “roads built or upgraded (km)” replaced the earlier indicator of “national highways, provincial, district, and rural roads built or upgraded (km)”.

b This excludes the output of the IDB-financed 57 kilometers, on the parallel cofinancing arrangement. c The “use of roads built or upgraded” indicator was not included in the approved report and recommendation of the

President and period financing request reports. This figure was estimated at completion. Sources: Asian Development Bank, and the Committee of Roads under the Ministry of Investment and Development.

Project Section Kilometre Length AADT 2016Average Daily

Vehicle Kilometres

Project 1 Km 214-260 46 7015 322 690

Project 1 Km 404-483 79 7745 611 855

Project 2 Km 310.5-389.4 79 7621 602 059

Project 2 Km 536-593 57 6167 351 519

Project 3 Km 1-17 17,7 4945 87 527

Project 3 Km 162-260 80 6852 548 160

Project 3 Km 383-404 20 7745 154 900

Project 4 Km 261.5-310.5 49 7621 373 429

TOTAL PROGRAM 427,7 3 052 139

Kazakhstan: CAREC Transport Corridor I (Zhambyl Oblast ......Kazakhstan 2503, 2562, 2697, Cofinance...

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