Prefeasibility Study for Bishek - UN ESCAP Report_Mongolia.pdf · Prefeasibility study of the...
Transcript of Prefeasibility Study for Bishek - UN ESCAP Report_Mongolia.pdf · Prefeasibility study of the...
Economic and Social Commission for Asia and the Pacific
Promotion of Investment in the selected Asian Highway Routes
in four countries (Bangladesh, Kyrgyzstan, Mongolia and Myanmar)
Final Report
Prefeasibility Study of Upgrading Khovd – Uliastai Highway
(AH32) in Mongolia
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This study was undertaken with the financial assistance of
Korea Expressway Corporation
Bangkok
November 2014
Disclaimer
The analyses, findings, views and opinions expressed and arguments employed in the report are those of
the study team members involved with the prefeasibility study, and do not necessarily reflect the official
views of the ESCAP secretariat or of the Government of Mongolia.
The data and other information, analyses, and findings presented in the report are provided without
warranty of any kind, either express or implied, including their accuracy and completeness for investment
or for any other purpose. The user of the report specifically acknowledges the limitations of the study and
agrees that the use of any materials of the report is at the user’s sole risk.
The designations employed and the presentation of the material including on the maps in this report do
not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations
concerning the legal status of any country territory, city or area or of its authorities, or concerning the
delimitation of its frontiers or boundaries.
Mention of firm names and commercial products does not imply the endorsement of the United Nations.
This report has been issued without formal editing.
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Foreword
This prefeasibility study is based primarily on data that were readily available from various
secondary sources, including concerned government departments, and previous studies and reports. The
study itself did not commission any field study to complement data available from secondary sources. A
field trip was however undertaken by the study team mainly to understand the project’s physical and overall
development contexts, and the nature of its likely social and environmental impacts in broad terms. The
available data and information from secondary sources were mostly limited to physical (topographical and
cross-sectional), traffic flow, standard construction costs for different road construction items and some
socio-economic aspects. The study lacks any quantitative assessment of environmental and social impacts
based on surveyed data. However, some initial comments based on observations during the field trip are
included. Given the significance of environmental and social impacts of a road project, any future full-scale
feasibility study of the project should carefully investigate these impacts and consider suitable mitigation
measures through detailed field-level studies.
An attempt was made by the study team to understand the broader development contexts of the
project, including future potential benefits due to improved domestic and cross-border connectivity with the
neighboring countries. However, these understandings were mainly qualitative in nature (and reflected so in
narrative text in the report). A full-scale feasibility study may investigate this aspect further and examine how
the benefits of enhanced cross-border connectivity may be assessed and evaluated for use in a conventional
economic or investment analysis.
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Abbreviations and Acronyms
AADT
AH
ADB
AHN
B/C
BCA
CAS
COS
CPS
CSP
DBST
EIA
EIP
ESCAP
GOM
IA
IEE
IR
IRR
KEC
MDB
MRTCUD
NPV
O/D
PCE
SIP
TA
UNESCAP
VOC
WB
Annual Average Daily Traffic
Asian Highway
Asian Development Bank
Asian Highway Network
Benefit/Cost Ratio
Benefit Cost Analysis
Country Assistance Strategy
Country Operational Strategy
Country Partnership Strategy
Country Strategy and Program
Double Bituminous Surface Treatment
Environmental Impact Assessment
Environmental Investment Program
Economic and Social Commission for Asia and the Pacific
Government of Mongolia
Implementation Agency
Initial Environmental Examination
Involuntary Resettlement
Internal Rate of Return
Korea Expressway Corporation
Multilateral Development Bank
Ministry of Road, Transport, Construction and Urban Development
Net Present Value
Origin/Destination Survey
Passenger Car Equivalent
Social Investment Program
Technical Assistant
United Nations Economic and Social Commission for Asia and the Pacific
Vehicle Operating Cost
World Bank
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Table of Contents
Foreword……………………………………………………………………………………….. ii
Abbreviations and Acronyms………………………………………………………………….. iii
Table of Contents……………………………………………………………………………… iv
Section 1 Introduction ............................................................................................................................................. 1 1.1 Background ................................................................................................................................................. 1
1.2 Project Description ..................................................................................................................................... 2
1.3 Methodology ............................................................................................................................................... 1
1.4 Study Team ................................................................................................................................................. 2
1.5 Limitation of the study (Recommendations for a formal feasibility study) ................................................ 2
Section 2 Data Survey and Review of Previous Studies ........................................................................................ 3 2.1 Data Survey................................................................................................................................................. 3
2.2 Review of previous studies ......................................................................................................................... 3
Section 3 Development Plan and Socio-economic Characteristics ...................................................................... 5 3.1 Development Plan ....................................................................................................................................... 5
3.2 Socio-economic Characteristics .................................................................................................................. 5
3.3 Road System Inventory ............................................................................................................................. 10
3.4 Asian Highway Network ........................................................................................................................... 11
Section 4 Technical Feasibility .............................................................................................................................. 12 4.1 Route Assessment ..................................................................................................................................... 12
4.2 Traffic Forecast ......................................................................................................................................... 16
4.3 Improvement Plan ..................................................................................................................................... 18
4.4 Cost Estimation ......................................................................................................................................... 20
Section 5 Economic Analysis ................................................................................................................................. 22 5.1 Methodology ............................................................................................................................................. 22
5.2 Benefit/Cost Analysis................................................................................................................................ 23
5.3 Sensitivity Analysis ................................................................................................................................... 27
Section 6 Environmental and Social Impact ........................................................................................................ 28 6.1 Environmental Impact ............................................................................................................................... 28
6.2 Social Impact ............................................................................................................................................ 28
Section 7 Recommendation ................................................................................................................................... 29 7.1 Conclusion ................................................................................................................................................ 29
7.2 Recommendation ...................................................................................................................................... 29
7.3 Implementation Plan ................................................................................................................................. 30
Appendices 31 Appendix A. List of persons met .............................................................................................................................. 31
Appendix B. Implementation Agency ....................................................................................................................... 32
Appendix C. Economic Analysis .............................................................................................................................. 33
Appendix D. Asian highway Design Standard (1993) .............................................................................................. 36
Appendix E. Data Survey Request ............................................................................................................................ 37
Section 1 INTRODUCTION
1.1 Background
Efforts have been made in recent years to assess the current level of investment and to identify
investment needs and priorities for the development, mainly upgrade of Asian Highway (AH) to the
required technical standard, of AH Network (AHN) including:
Priority Investment Needs for the development of the Asian Highway Network (2006,
UNESCAP)
Prefeasibility study of the selected routes (upgrading of priority routes) in Armenia,
Bangladesh, Mongolia and Myanmar (2007, UNESCAP)
Investment Forum (16 November 2007, UNESCAP)
To facilitate the promotion and development of AH investment, a second phase of prefeasibility study
of selected routes in Bangladesh, Kyrgyzstan, Mongolia and Myanmar is being implemented as an
ongoing effort by UNESCAP with the financial support from Korea Expressway Corporation (KEC).
ESCAP decided that study routes should be nominated by recipient countries considering a set of
given criteria reflecting their needs and overall strategic development contexts.
Figure 1. Asian Highway Network
1.2 Project Description
Project Summary
The Ministry of Road, Transport, Construction and Urban Development (MRTCUD), Mongolia, has
proposed the improvement of Khovd-Uliastai section (473km) on AH32. It is also a part of the
Millennium Road Project. The Project connects two centers of western region, Khovd and Uliastai, as
an effort to enhancing connectivity and mobility between western region and Ulaanbaatar. It is below
AH Class III as per AH classification and design standards except Khovd~Myangad section
(Aspahalt Concrete Pavement, 24.5km), which represents AH Class III.
Figure 2. Khovd-Uliastai Section in Mongolia
Source: Based on UN country map for Mongolia available at
http://www.un.org/Depts/Cartographic/map/profile/mongolia.pdf
The boundaries and names shown and the designations used on this map do not imply official endorsement or acceptance by the United Nations.
Khovd - Uliastay
L = 473km
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Strategic context of the project
Strategic context of the project is as follows:
1. Formulation of the principal east to west corridor in Mongolia by connecting Khovd ~ Uliastai (473km),
which is a part of AH32. It connects:
Khovd, the capital of Khovd Aimag (Province), the far western region of Mongolia with 17
ethnicities; and
Uliastai, the capital of Zavkhan Aimag
2. Provision of improved connectivity and mobility in the western region will facilitate economic and social
development at the regional as well as national level.
1.3 Methodology
The overall approach of the prefeasibility study is represented diagrammatically in Figure 3 as below. Due to
the limited availability of data, a simple trend analysis has been used for the future traffic forecasting.
Figure 3. Prefeasibility Study Process
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1.4 Study Team
This prefeasibility study report has been issued by the Transport and Tourism Division, Economic and Social
Commission for Asia and the Pacific (ESCAP). The external consultant, Mr. Woohyun Kwon has prepared
the report with assistance from other consultants and experts.
Mr. Hyunha Kwon and Mr. Byungryeol Kim from Naekyung Engineering, Korea, provided additional
assistance with the technical study, traffic forecast and economic evaluation. Mr. Yanjiv Bayarkhuu (Head of
Researh Investigation, Drawing and Design Sector, Department of Roads, MRTCUD, Mongolia) and Ms.
Delgermaar Baatar (Officer, International Cooperation Division, Department of Roads, MRTCUD,
Mongolia) provided relevant data and inputs as national experts.
1.5 Limitation of the study (Recommendations for a formal feasibility study)
1. Given the limited resources, this study has been conducted with the objective of providing an initial
evaluation of the candidate route, which was proposed by the Government of Mongolia (GOM), to facilitate
interventions by bilateral and/or multilateral donors. In this regard, the limitation of this study and
recommendations for a formal feasibility study are as follows:
The rationale review of the candidate route, which was suggested by the recipient county, and an
exploration of its alternatives have been omitted;
The output of the report has mainly relied on the limited information and data provided by GOM.
This report benefitted significantly from the World Bank study – the 2007 Road Master plan and
Feasibility Study for Road Development in Western Aimags in Mongolia;
The route assessment for 473km long project was done during a three-day site survey while
thorough investigation of the site should be in place for efficient planning/design and estimation of
quantities regarding the improvement plan; and
Unit cost analysis instead of estimation of BOQ has been done in this regards. Cost estimates of the
previous study and CPI, as an inflator, have been used. Historical cost data and (digital) terrain map
would be necessary for detail cost estimator.
2. In countries with a low traffic demand such as Mongolia, traditional Benefit Cost Analysis may not
capture the need of infrastructure development properly. By the nature of traffic demand, a derived
secondary function of a variety of socio-economic activities and development plans, the output of the traffic
forecasting and economic analysis in Mongolia may be insignificant since the initial values of major
indicators including registered vehicles and population are very low.
Considering this, a holistic, instead of demand-driven, approach may be appropriate for Mongolia.
3. More reliable economic assessment of the project can be undertaken with the availability of the following
information.
Socio-economic data/statistics including development plan of regions and transport facilities in the
catchments;
Per-unit data for economic analysis in the context of Mongolia including reduction of traffic
accidents and environmental benefits; and
Traffic survey data including O/D, network, sectional volumes, and travel speed
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Section 2 DATA SURVEY AND REVIEW OF PREVIOUS STUDIES
2.1 Data Survey
The project team had requested the background materials for data collection in the form of a country report
(Appendix E). National, regional and project level development context was assessed through collection of
country report from project country, internet research, document review and a field mission.
Major data collection and survey items are as follows:
A. National (and Regional) Outlook
Area, population, Currency and exchange rate
GDP/GRP, GDP per capita, Economic growth rate, Inflation rate, Employment rate by sector
Trade (Import, Export), Major trade commodities, Major trade partners (Import, Export)
B. National & Sub-national strategy and priority
Road Master Plan, Regional & sub-regional Planning
Development and upgrading plan of AHN
Strategies and priorities
C. Implementation Agency (Road authority)
Organization
Implementation process including planning, design, construction and maintenance
D. Engineering data
Design specification
Road and bridge inventory
Traffic data (volume, O/D, travel speed, number of accident)
Unit construction cost(road, box & culvert, bridge, T/N)
Maintenance cost (Routine maintenance, periodic overlay)
Toll rate
Geotechnical and hydraulic survey
E. Socio-economic data
Social discount rate (%)
Passenger Car Equivalent (PCE), Vehicle occupancies, Number of registered Vehicles
Time Value, Vehicle Operating Cost (VOC)
GRP/GDP
Land use plan
2.2 Review of previous studies
Previous studies regarding AH were thoroughly reviewed and be incorporated as needed. Major previous
studies are as follows:
1. Priority Investment Needs for the development of the Asian Highway (AH) Network (2006, UNESCAP)
National priorities and intermodal connectivity have been identified as follows:
Status of AH network: Mongolia has a total 4,286km long AH network, among which 3,501km is
below class III
Priority investment needs: Khovd-Ulanbaatar (L=1,291km, AH32) was identified as one of three
priority projects with the estimated cost of USD 188million.
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2. Road Master plan and Feasibility study for Road Development in Western Aimags in Mongolia (2007, World Bank)
A formal feasibility study for Khovd-Uliastai was done with Engineering study, Environmental Assessment
and Economic Analysis from March to November 2007. Findings and recommendations are as follows:
3 options routes were presented for existing AC section (Khovd-Myangad, 39km), Earth road
(Myangad-Junction of Uliastai, 391.8km) and Gravel road (Junction of Uliastai-Uliastai City,
24.5km) following a comprehensive site survey (3 weeks) and route assessment.
Traffic analysis, based on the traffic count and OD survey, represents 396 (Junction of Uliastai) to
2,377 (Khovd-Myangad) AADT in 2033.
AH class III road with total 10m road width ([email protected]), AC surface (50mm), 26 new bridges
and 221 new culverts, was recommended.
Total construction cost was estimated based on the surface type; $94million (AC), $85million
(DBST) and $58 (Gravel).
Maintenance cost was also estimated for AC surface (AC/DBST, $6,471/km) and Gravel surface
($6,466/km)
Economic analysis represents feasible including 15.4% of IRR at a 12% discount rate.
The methodology used to quantify the benefits including a residual value of 35%, potential benefits
to the regional agriculture GDP (82% of total benefits) as well as traditional VOCS (15%) and
VOTS (3%).
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Section 3 DEVELOPMENT PLAN AND SOCIO-ECONOMIC CHARACTERISTICS
3.1 Development Plan
1. National Development Strategy (NDS, 2007-2021)
2. National Transport Strategy for Mongolia (NTS)
3. Transit Mongolia program (2008-2015)
4. Mongolian Road Master Plan (RMP, 2008-2020)
“Further details are not available”
3.2 Socio-economic Characteristics
3.2.1 General
Mongolia is the 19th largest and the most sparsely populated country in the world. It is also the second largest
landlocked country next to Kazakhstan. It is divided into 5 regions and 21 Aimags (Provinces).
The key Socio-economic indicators of Mongolia (ADB, 2011) are as follows:
Surface Area: 1,564,116 ㎢
Population: 2.75 million
Population growth: 1.35%
GNI per capita: US $1,870 (2011)
GDP Growth Rate: 6.9%
Currency unit: Tughrik (MNT)
US $1=1,395.63 (effective as of Oct 1, 2012 )
3.2.2 Socio-economic characteristics
Population
The population of Mongolia is 2.75million (2010) with very low annual average growth rate of 1.35% since
2001.
Table 1. Population trend in Mongolia
Year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Growth
Rate
(‘00~‘10)
Population
(1000
people)
2,411 2,435 2,459 2,485 2,514 2,547 2,584 2,625 2,667 2,712 2,756 1.35%
Source: UNESCAP Statistics Homepage, http://www.unescap.org/stat/data/statdb
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Figure 4. Population trend in Mongolia
2,200
2,300
2,400
2,500
2,600
2,700
2,800
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Population(Thousand)
Regional distribution of Population
Mongolia is geographically divided into five regions including, Western Region (Khovd, Zavkhan, etc.),
Khangai Region, Central Region, Eastern Region and Ulaanbaatar Region.
The capital city Ulaanbaatar represents 1,152thousand, 41.4% of the total population, while Western Region
including Khovd and Zavkhan aimags represents 14.5% of the total population.
Figure 5. Regional distribution of population
Bayan-Olgii4%
Govi-Altai2%
Zavkhan3%
Uvs3%
Khovd3%
Arkhangai3%
Bayankhongor3%
Bulgan2%
Orkhon3%
Ovorkhangai4%
Khovsgol4%Govisumber
0%
Darkhan-Uul3%
Dornogovi2%
Dundgovi2%
Omnogovi2%
Selenge4%
Tov3%
Dornod3%
Sukhbaatar2%
Khentii3%
Ulaanbaatar41%
2010 POPULATION, by aimags and the Capital
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Table 2. Regional distribution of population (unit: 1000 people)
Region Aimag 2010 2009 2008
Populaion(B) B/A Populaion(B) B/A Populaion(B) B/A
Western
Bayan-Olgii 100.8 3.6% 101.9 3.7% 101.3 3.8%
Govi-Altai 58.4 2.1% 59.4 2.2% 59.8 2.2%
Zavkhan 76.9 2.8% 79.3 2.9% 79.8 3.0%
Uvs 78.2 2.8% 78.8 2.9% 79.8 3.0%
Khovd 88.4 3.2% 88.5 3.2% 88.4 3.3%
Sub Total 402.7 14.5% 407.9 14.9% 409.1 15.2%
Khangai
Arkhangai 91.6 3.3% 92.5 3.4% 92.5 3.4%
Bayankhongor 85.1 3.1% 85.4 3.1% 85.2 3.2%
Bulgan 62.6 2.3% 62.3 2.3% 61.4 2.3%
Orkhon 85.8 3.1% 83.1 3.0% 81.9 3.1%
Ovorkhangai 117.4 4.2% 117.5 4.3% 116.6 4.3%
Khovsgol 124.6 4.5% 124.1 4.5% 123.0 4.6%
Sub Total 567.1 20.4% 564.9 20.6% 560.6 20.9%
Central
Govisumber 13.8 0.5% 13.3 0.5% 12.9 0.5%
Darkhan-Uul 91.7 3.3% 90.0 3.3% 88.2 3.3%
Dornogovi 59.5 2.1% 58.3 2.1% 57.2 2.1%
Dundgovi 46.3 1.7% 47.7 1.7% 48.2 1.8%
Omnogovi 51.0 1.8% 49.3 1.8% 47.7 1.8%
Selenge 106.6 3.8% 103.5 3.8% 101.6 3.8%
Tov 90.2 3.2% 88.5 3.2% 86.8 3.2%
Sub Total 459.1 16.5% 450.6 16.5% 442.6 16.5%
East
Dornod 73.6 2.6% 73.6 2.7% 73.6 2.7%
Sukhbaatar 55.0 2.0% 55.0 2.0% 54.9 2.0%
Khentii 71.8 2.6% 71.5 2.6% 71.0 2.6%
Sub Total 200.4 7.2% 200.1 7.3% 199.5 7.4%
Ulaanbaatar Ulaanbaatar 1,151.5 41.4% 1,112.3 40.7% 1,071.7 39.9%
Grand Total(A) 2,780.8 100.0% 2,735.8 100.0% 2,683.5 100.0%
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Number of Registered Vehicles
Mongolia represents relatively small number of registered vehicles, 608,255, in 2012. It is noted that annual
average growth rate of registered vehicles is 19.3% during 2002-2012. It is also noted that annual growth rate
has increased sharply between 2010 and 2009 by 61.0%.
Table 3. Number of registered vehicles
Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Growth
Rate
(‘02~‘12)
No. of
vehicles 103,805 105,775 120,418 131,184 140,872 161,989 190,459 265,572 427,526 529,885 608,255 19.3%
Source: National Statistical Office of Mongolia Homepage, http://www.nso.mn/v3/index2.php
Internal data (2009-2012, Department of Road)
Figure 6. Number of registered vehicles
Passenger Car represents the largest portion, 64%, of the total vehicles with annual average growth rate of
30.3% as below1.
Table 4. Number of vehicles by types and annual growth rate
Year Passenger car Truck Bus Others Total
2007 110,150 68.0% 33,676 20.8% 13,038 8.0% 5,125 3.2% 161989 100.0%
2008 127,538 67.0% 41,138 21.6% 15,780 8.3% 6,003 3.2% 190459 100.0%
2009 153,906 58.0% 47,291 17.8% 16,136 6.1% 48,239 18.2% 265,572 100.0%
2010 281,182 65.8% 97,577 22.8% 4,563 1.1% 44,204 10.3% 427,526 100.0%
2011 340,944 64.3% 115,157 21.7% 5,168 1.0% 68,626 13.0% 529,895 100.0%
2012 388,888 63.9% 133,817 22.0% 5,584 0.9% 79,966 13.1% 608,255 100.0%
Growth
Rate
(‘07~‘12)
28.7% 31.8% -15.6% 73.2% 30.3%
Source: National Statistical Office of Mongolia Homepage, http://www.nso.mn/v3/index2.php Internal data (2009-2012, Department of Road)
1 It is noted that significant deviations were identified in growth rate among vehicle types. It may be due to the possible
change of vehicle classification.
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Figure 7. Per cent of vehicles by type
Number of vehicles by region
59% of total vehicles are in Ulaanbaatar while 3.6% are in the project region (Khovd and Zavkhan Aimag).
Table 5. Number of vehicles by region
Region Aimag
2011Year 2010Year 2009Year
Number of
Vehicles (B) B/A
Number of
Vehicles (B) B/A
Number of
Vehicles (B) B/A
Western
Bayan-Olgii 12,270 2.3% 10,406 2.4% 7,289 2.7%
Govi-Altai 7,038 1.3% 6,546 1.5% 4,915 1.9%
Zavkhan 8,635 1.6% 7,593 1.8% 6,501 2.4%
Uvs 8,719 1.6% 6,804 1.6% 5,209 2.0%
Khovd 10,521 2.0% 9,223 2.2% 7,667 2.9%
Sub Total 47,183 8.9% 40,572 9.5% 31,581 11.9%
Khangai
Arkhangai 7,087 1.3% 6,065 1.4% 5,632 2.1%
Bayankhongor 12,150 2.3% 11,173 2.6% 8,293 3.1%
Bulgan 7,610 1.4% 5,897 1.4% 4,736 1.8%
Orkhon 15,314 2.9% 12,635 3.0% 9,527 3.6%
Ovorkhangai 12,657 2.4% 10,381 2.4% 7,988 3.0%
Khovsgol 14,466 2.7% 11,890 2.8% 8,931 3.4%
Sub Total 69,284 13.1% 58,041 13.6% 45,107 17.0%
Central
Govisumber 1,894 0.4% 1,550 0.4% 1,236 0.5%
Darkhan-Uul 13,966 2.6% 11,711 2.7% 8,814 3.3%
Dornogovi 12,734 2.4% 10,546 2.5% 4,381 1.6%
Dundgovi 6,101 1.2% 5,069 1.2% 4,224 1.6%
Omnogovi 16,993 3.2% 13,164 3.1% 9,646 3.6%
Selenge 13,942 2.6% 11,756 2.7% 8,471 3.2%
Tov 9,534 1.8% 7,399 1.7% 6,240 2.3%
Sub Total 75,164 14.2% 61,195 14.3% 43,012 16.2%
East
Dornod 10,459 2.0% 8,335 1.9% 6,353 2.4%
Sukhbaatar 7,180 1.4% 5,601 1.3% 3,827 1.4%
Khentii 6,704 1.3% 5,569 1.3% 4,245 1.6%
Sub Total 24,343 4.6% 19,505 4.6% 14,425 5.4%
Ulaanbaatar Ulaanbaatar 313,911 59.2% 248,213 58.1% 131,447 49.5%
Grand Total(A) 529,885 100.0% 427,526 100.0% 265,572 100.0%
10
GDP
The annual growth rate of GDP represents 6.9% from 2001 to 2010.
Table 6. GDP trend (2005 Nominal price)
(unit : Million 2005 US dollars)
Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Growth Rate
(‘01~‘10)
GDP 1,898 1,988 2,127 2,353 2,523 2,739 3,019 3,289 3,247 3,454 6.9%
Source: UNESCAP STATISTICS Homepage, http://www.unescap.org/stat/data/statdb
Figure 8. GDP trend
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
GDP(Million 2005 US dollars)
3.3 Road System Inventory
The road network in Mongolia comprises 49,186 kilometers, of which 2,063.9 kilometers are paved State
Roads.
Table 7. Pavement type by level of administration
Administrative
Level
Paved Unpaved Total
Con’c AC Gravel Improved Earth Earth
State 56.6 2,007.3 1,508.4 1,312.3 6,282.6 11,136.2
Local 55.0 276.0 498.0 499.0 36,637.0 38,031.0
Total 111.6 2,283.3 2,006.4 1,811.3 42,919.6 49,186.2
Source: DOR, 2007
11
3.4 Asian Highway Network
The Asian Highway network in Mongolia is consisted of 3 routes as below. Out of total 4,318km long AH,
2,450km is unpaved roads.
Table 8. Current Status of AH network in Mongolia
Route
No. Itinerary Length (km)
Paved (km) Unpaved
(km) 2 Lanes or
more 1 Lane
AH3 Altanbulag-Darkhan-Ulaanbaatar-Nalayh-
Saynshand-Zamiin Uud 992.0 868.1 123.9
AH4 Ulaanbaishint-Khovd-Bayan Ulgii-Yarantai 743.1 194.3 548.8
AH32 Sumber-Choibalsan-Ondorkhaan-Nyaayh-
Ulaanbaatar-Uliastai-Khovd 2,583.0 805.5 1,777.5
Total 4,318.1 1,867.9 2,450.2
Percentage 100.0% 43.3% 56.7%
Source: Internal data (Department of Roads, MRTCUD, Mongolia)
Figure 9. Asian Highway Routes in Mongolia
Source: United Nations ESCAP
12
Section 4 TECHNICAL FEASIBILITY
Technical viability of candidate route was assessed in terms of its geometry, alignment, traffic volume,
project cost and cross-border connectivity.
4.1 Route Assessment
4.1.1 Field Mission
A UNESCAP mission comprising Mr. Abdul Quium (UNESCAP), Mr. Woohyun Kwon (KEC), Mr. Hyunha
Kwon and Byungryeol Kim (Naekyung Engineering) visited Mongolia from May 6 to 12, 2012. Meetings
were held with Department of Roads and Department of Roads and Transportation Policy, including Mr.
Enkhtur Baasandorj (Director General), Mr. Onon Rentsendorj (Deputy Director General), Mr. Bayasgalan
Choijiljav (Head of Road Construction, Production, Management and Supervision Div.), Mr. Batsuuri
Namsrai (Head of Road Utilization, Maintenance Management and Supervision Div.), Mr. Yanjiv Bayarkhuu
(Head of Researh Investigation, Drawing and Design Sector), Ms. Delgermaa Baatar (Officer, International
Cooperation Div.), Mr. D. Naranpurev (Director General, Road and Transport Policy Department), and Mr.
Ganbold Khatanbaatar (Senior Officer, Road and Transport Policy Department).
The mission also met Mr. Nyamdavaa Gendenjav (Governor, Khovd Aimag), Mr. Yadamsuren Sanjmyatav
(Governor, Uliastai City, Zavkhan Aimag) and Mr. Jamiyansuren Sodnomstseren (Governor’s Consultant,
Uliastai City, Zavkhan Aimag) during a three day site visit to Khovd-Uliastai (L=473km) from May 9 to
May 11, 2012.
Mr. Yanjiv Bayarkhuu (Head of Researh Investigation, Drawing and Design Sector) and Ms. Delgermaa
Baatar (Officer, International Cooperation Div.) joined the site visit.
The objectives of the mission were:
To identify the strategic context of the project;
To assess the road and traffic conditions; and
To identify social and environmental constraints, if any
The mission provided comments to MRTCUD to assist them with formulating investment proposal including
traffic forecast, economic analysis and safeguard during the meetings and one day capacity building
workshop on May 8, 2012.
4.1.2 Review of road and traffic conditions
General
Since the site survey for the 473km long project has been done in a relatively short period, 3 days, selected
outputs and findings from the previous study2 that surveyed the site for 3 weeks were used as a main
reference.
Alignment: No significant constrains were identified for the alignment except Khar Us National Park since
the project road runs flat and rolling terrain mostly. The climatic characteristics of the project represent dry
steppe and Gobi desert mainly. It is noted that the provision of drainage system is needed as well as surfacing
the project road except for the city of Khovd and Uliastai sections.
2 Road Master plan and Feasibility study for Road Development in Western Aimags in Mongolia (2007, World Bank)
13
Bridges: Seven bridges were identified with good conditions.
Social and Environmental Impact: Land acquisition and resettlement may not be needed for the project road
due to the Government land ownership. No significant negative impact on the environment of the catchment
of the project road is expected. It was categorized as class B in terms of the World Bank guideline in the
previous study, which was done in 2007.
Division of homogeneous road sections: Considering the surface type, terrain, climate and characteristics of
traffic, eight homogeneous road sections were formulated as below.
Table 9. Division of sections
Section
No
Section Surface Type Length (km)
From To
1 Khovd city Myangad soum Asphalt Con’c. 39
2 Myangad soum Dorgon soum Earth track 58
3 Dorgon soum Sar Khairhan Bridge Earth track 77
4 Sar Khairhan Bridge Junction to Urgamal Earth track 83
5 Junction to Urgamal Zavhanmandal soum Earth track 51
6 Zavhanmandal soum Erdenehayrhan soum Earth track 53
7 Erdenehayrhan soum Aldarkhaan soum Earth track 86
8 Aldarkhaan soum Uliastai city AC under construction 26
Total 473
1. Khovd~Myangad (Section 1 AC pavement section)
The Khovd~Myangad is 39km long, two-lane asphalt pavement section, which was constructed in 1996. It is
Asian Highway Class III standard. The overall surface condition is fair/bad. It is noted that raising the height
of embankment is needed to prevent highway deterioration from permafrost in the middle of the section. This
section represents fair alignment and includes 3 bridges with good conditions.
Table 10. List of bridges in section 1
No Location
Types Length (m) Width (m) N E
BR 1 48 09 12.4 91 44 53.4 RC T-beam 54.0 8.0+0.5*2
BR 2 48 09 26.2 91 44 49.3 RC T-beam 45.0 7.8+0.5*2
BR 3 48 14 47.8 91 54 24.3 RC T-beam 145.0 7.8+0.5*2
Source: Road Master plan and FS for Road Development in Western Aimags in Mongolia (2007, World Bank)
For this section, the improvement of pavement with partial repair based on the current alignment is
recommended.
2. Myangad~ Sar Khairhan (Section 2, 3 KHar Us National Park section)
The Myangad~Sar Khairhan section is 135km long, unpaved, earth road. It passes on the flat steppe and
14
rolling terrain, mostly pasture-land, and is below Asian Highway Class III standard. It is noted that Asphalt
Concrete pavement with a proper height of embankment and drainage should be in place to avoid freezing
and thawing.
Approximately 20km of the section passes close to Khar Us Lake National Park, one of six Ramsar sites in
Mongolia. Remedies shall be provided during the detailed study. Current alignment alongside the Chono
Kharaikh River at Dorogon needs to secure proper spacing to protect the embankment from flooding.
List of bridges in this section is as follows:
Table 11. List of bridges in section 2 and 3
No Location
Type Length (m) Width (m) N E
BR 4 48 17 22.7 93 29 13.5 RC T-beam 72.0 6.5
BR 5 48 17 48 93 29 46.5 PS Box girder 127.0 8.0+0.75*2
Source: Road Master plan and FS for Road Development in Western Aimags in Mongolia (2007, World Bank)
Figure 10. Route map of Khovd~Sar Khairhan secton
3. Sar Khairhan Bridge~Zavhanmandal (Section 4, 5 Gobi desert section)
15
This 134km long section is an earth road, which runs on the flat steppe and rolling terrain. It is below Asian
Highway Class III standard. Due to the influence of Gobi Desert, this section represents lack of grazing for
animals and lack of water for agriculture. It is recommended that Asphalt Concrete pavement with a proper
height of embankment and drainage system may be in place to avoid freezing and thawing.
Figure 11. Route map of Sar Khairhan-Zavhanman Section
4. Zavhanmandal~ Aldarkhaan (Section 6, 7)
This 139km long section is an earth road, which runs on the dry steppe and rolling terrain. It is below Asian
Highway Class III standard. It is recommended that Asphalt Concrete pavement with a proper height of
embankment and drainage system should be in place to avoid freezing and thawing. .
5. Aldarkhaan~Uliastai city (Section 8)
This 26km long section connects from Donoi airport to Uliastai city. Construction of Asphalt Concrete
pavement is underway. It is below Asian Highway Class III standard.
16
List of bridges in this section is as follows:
Table 12. List of bridges in section 8
No Location (km) Type Length (m) Width (m)
BR 6 4.25 RC T-beam 15 11
BR 7 5.1 RC T-beam 15 11
Source: Road Master plan and FS for Road Development in Western Aimags in Mongolia (2007, World Bank)
Figure 12. Route map of Zavhanmandal~ Aldarkhaan
4.2 Traffic Forecast
17
4.2.1 Current Traffic condition
Due to the limited survey period, and lack of data in Asian Highway Database, traffic survey from the
previous study was used as a baseline data, which represents significantly low volumes.
Table 13. Current traffic volumes in AH32 (2011)
Survey Location AADT Traffic Composition (%)
Truck Bus Light vehicle
Khovd 433 26 4 70
Myangad Bridge 166 47 2 51
Sarhairkhan Bridge 35 51 1 48
Yaruu river Bridge 36 29 6 65
Gants Pass 40 40 3 57
Khovd-Modon ovoo Hill 92 19 9 72
Source: Internal data (Department of Roads, MRTCUD, Mongolia)
4.2.2 Traffic forecast
Simple Trend Analysis
A simple trend analysis has been used for the future traffic forecasting considering the limited budget,
absence of comprehensive traffic database including traffic count and O/D survey and transport network data.
Traffic Projection of existing road
Traffic volume in the base year, including traffic conversion from adjacent road by upgrading the project, is
as below based on the above-mentioned study.
Table 14. Traffic volume in base year including diverted traffic
Section Passenger
car
Bus Truck Motorcycle Total
Small Large Small Medium Large
Khovd - Myangad Bridge 192 8 3 18 52 32 63 368
Myangad Bridge -
Sarkharkhan Bridge 26 4 2 12 27 7 12 90
Sarkhairkhan Bridge -
Durbuljin soum 16 3 0 7 16 2 9 53
Durbuljin soum - Uliastai 32 13 4 14 14 6 18 101
Source: Internal data (Department of Roads, MRTCUD, Mongolia)
30 year traffic projection has been provided as below to synchronize the period of economic analysis from
year 2016 to 2045 considering 3-year construction periods from 2013 to 2015. The GDP growth rate was
used as an independent variable for the regression model of traffic forecasting considering the strong
correlation between traffic growth and GDP growth3. The future estimates from the IMF were used as below
in this regards.
3 However, it may lead to overestimating traffic projections since GDP growth rate is higher than the growth rate of
vehicle registration in the catchment of the project
18
Table 15. GDP Projection by IMF
Subject 2011 2012 2013 2014 2015 2016 2017 After 2017
GDP growth (%) 17.514 12.667 15.742 11.81 4.719 13.807 9.686 9.272
Source: International Monetary Fund, World Economic Outlook Database, October 2012
Table 16. Traffic Projection
Section Year Passenger car
Bus Truck Motor Cycle Total
small large small Medium Large
Khovd - Myangad
Bridge
2016 392 16 6 37 106 65 129 751
2020 561 23 9 53 152 94 184 1,075
2025 874 36 14 82 237 146 287 1,675
2030 1,362 57 21 128 369 227 447 2,610
2035 2,318 97 36 217 628 386 761 4,067
2040 3,305 138 52 310 895 551 1,085 6,335
2045 5,150 215 80 483 1,395 858 1,690 9,870
Myangad Bridge -
Sarkharkhan Bridge
2016 53 8 4 25 55 14 25 184
2020 76 12 6 35 79 20 35 263
2025 118 18 9 55 123 32 55 410
2030 184 28 14 85 192 50 85 638
2035 314 48 24 145 326 85 145 995
2040 448 69 34 207 465 121 207 1,549
2045 697 107 54 322 724 188 322 2,414
Sarkhairkhan Bridge -
Durbuljin soum
2016 33 6 0 14 33 4 18 108
2020 47 9 0 20 47 6 26 155
2025 73 14 0 32 73 9 41 241
2030 113 21 0 50 113 14 64 376
2035 193 36 0 85 193 24 109 586
2040 275 52 0 121 275 34 155 912
2045 429 80 0 188 429 54 241 1,421
Durbuljin soum - Uliastai
2016 65 27 8 29 29 12 37 206
2020 94 38 12 41 41 18 53 295
2025 146 59 18 64 64 27 82 460
2030 227 92 28 99 99 43 128 716
2035 386 157 48 169 169 72 217 1,116
2040 551 224 69 241 241 103 310 1,739
2045 858 349 107 375 375 161 483 2,709
4.3 Improvement Plan
19
Summary of Current status
Based on the given information, discussion and site survey, major findings are as follows:
Most sections run through flat and rolling steppe terrain.
Part of the sections, section 4, 5, 6, is in the influence of Gobi desert. Availability of underground
water during construction need to investigated.
Most sections are earth road and represent below Asian Highway Class III standard except section 1
(AC) and 8 (AC is underway); however overall alignment doesn’t need to be improved.
The overall surface condition of AC pavement, section 1, is fair and poor.
To avoid freezing and thawing, a proper height of embankment and drainage system nee to be in
place.
7 bridges are found to be in good conditions.
To address these challenges, upgrading plan for the minimum Asian Highway class Ⅲ standard is proposed
as follows:
Improvement of Asphalt Concrete pavement in Khovd~Myangad (Section 1, 39km)
Construction of two-lane, asphalt concrete pavement for Myangad~ Aldarkhaan (Section 2~7)
For the last section, Aldarkhaan to Uliastai (Section 8, 26km), no suggestion was made since
construction of Asphalt Concrete pavement is already underway.
From Myangad to Sar Khairhan Bridge (Section 2 and 3, 135km), a northern bypass of Khar Us
Lake National Park and Har Lake was proposed.
From Urgamal Junction to Aldarkhaan Soum (Section 5, 6 and 7), three alternatives were explored
considering the connectivity and mobility of small villages alongside the routes.
Alternative 1: Northern route which provides connectivity to Zavhanmandal and Erdenehayrhan
Soum.
Alternative 2: Central route, the shortest one, which connects Uliastai directly without connecting
any Soum.
Alternative 3: Southern route which provides connectivity to Durvoljin, Argalant and Ugoomor
Soum.
Table 17. Comparison of Alternatives
Alternatives Contents of improvement plan Quantity
Alternative 1
1. Section 1: Improvement of AC pavement 39 km
2. Section 2~7: Construction of AC pavement 408 km
3. Section 8 : AC pavement is under construction 26 km
Alternative 2
1. Section 1: Improvement of AC pavement 39 km
2. Section 2~7: Construction of AC pavement 384 km
3. Section 8 : AC pavement is under construction 26 km
Alternative 3
1. Section 1: Improvement of AC pavement 39 km
2. Section 2~7: Construction of AC pavement 409 km
3. Section 8 : AC pavement is under construction 26 km
20
4.4 Cost Estimation
Given the limited inputs, cost estimates from the previous study were used mainly as below. Local conditions
including seasonal restrictions on work in Mongolia, availability of materials and transport cost were taken
into account.
Estimation of average total cost per km
Average total cost per km in the previous study4 is as below.
Improvement of asphalt pavement : US $ 88,836/km
Total construction of 1 km of paved road : US $ 220,655/km
Table 18. Average total cost
Content Length(km) Cost(US$) Average total cost per km
Improvement of AC HU-1 39 3,464,620 88,836
New AC
HU-2 58 12,955,896 223,378
HU-3 77 16,523,273 214,588
HU-4 86 18,798,819 218,591
HU-5 90 19,071,387 211,904
HU-6 81 19,147,580 236,390
Total 392 86,496,955 220,655
The cost has been escalated by use of CPI from the base year of the previous study (2006) to 2011.
Table 19. Consumer Price Index (Country)
Year 2006 2007 2008 2009 2010 2011 2006~2011
CPI 105.1 114.6 143.3 152.3 167.8 183.7 174.8%
Source: World Databank Home Page, World Bank
Note: Dec. 2005 = 100
Escalated Average total cost per km is as follows:
Improvement of asphalt pavement per km: US $ 155,285/km
Total construction of 1 km of paved road : US $ 385,705/km5
4 Road Master plan and FS for Road Development in Western Aimags in Mongolia (2007, World Bank)
5 It falls within the given average construction cost of USD 375000~385700 from MRTCUD, Mongolia, which cannot
be used due to the lack of details at this time.
21
Preliminary construction cost estimation
Based on the work items under each alternative and its unit cost, a preliminary construction cost for each
alternative is estimated as below.
Table 20. Preliminary construction cost of Alternatives
Alternatives Contents Quantity
Unit
cost
(US $)
Cost
(US $,
thousand)
Alternative 1
1. Section 1: Improvement of AC 39 km 155,285 6,056
2. Section 2~7: Construction of new AC pavement 408 km 385,705 157,368
3. Section 8: Under construction of AC pavement 26 km -
Sub Total 163,424
Alternative 2
1. Section 1: Improvement of AC 39 km 155,285 6,056
2. Section 2~7: Construction of new AC pavement 384 km 385,705 148,111
3. Section 8: Under construction of AC pavement 26 km -
Sub Total 154,167
Alternative 3
1. Section 1: Improvement of AC 39 km 155,285 6,056
2. Section 2~7: Construction of new AC pavement 409 km 385,705 157,753
3. Section 8: Under construction of AC pavement 26 km -
Sub Total 163,809
22
Section 5 ECONOMIC ANALYSIS
5.1 Methodology
General
Economic feasibility was reviewed by Benefit/Cost Analysis (BCA). Benefit Cost Analysis is a calculation of
the stream of both benefits and costs over the lifetime of the facility or strategy. Major indices of BCA are as
follows:
Internal Rate of Return (IRR): The ratio of the total discounted benefit to the total discounted cost
),....2,1(0)1(1
nir
CiBiN
ti
Net Present Value (NPV): The discounted value of the absolute welfare gain minus discounted
value of the investment over the whole life of the project
),....2,1()1(1
nid
CiBiNPV
N
ti
Benefit Cost ratio (B/C): The discount rate that equates the present value of a future stream of
benefits to the investment (Discount rate such that NPV=0)
N
ti
N
ti
nid
Ci
d
BiCB
11
),.....,2,1()1(
/)1(
/
Where, Ci = cost in year i, Bi= benefit in year i, i = year, N = project life, i = discount rate
Figure 13. Economic Analysis Process
23
Evaluation Criteria
Internal Rate of Return (IRR) > Social Discount Rate
Benefit - Cost Ratio (B/C) > 1
Net Present Value (NPV) > 0
5.2 Benefit/Cost Analysis
5.2.1 Economic Analysis Criteria
Basic assumptions for the analysis are as follows:
Project road: Khovd – Uliastai (473km)
Construction period: 3 years (2013-2015)
Analysis period : 2016 ~ 2045 year (30 years after opening)
Discount rate : 12.0% (proposed value of ADB)
Basic Price: Market price in 2011
(Economic price, converted from market price, was used for the analysis)
5.2.2 Estimation of Costs
Construction and maintenance cost were estimated and used for the analysis. For the economic analysis, the
shadow price was calculated by eliminating taxes and interests from the total costs.
Initial Cost
Construction cost was equally divided into 3 years of construction as below.
Table 21. Allocation of construction cost for the analysis
Year
Annual Cost(US thousand dollars)
Alt. 1 Alt. 2 Alt. 3
2013 46,303.4 43,680.6 46,412.7
2014 46,303.4 43,680.6 46,412.7
2015 46,303.4 43,680.6 46,412.7
total 138,910.2 131,041.8 139,238.0
�
Maintenance Cost
It is assumed that the periodic maintenance shall be done in every 10 years and the cost of routine
maintenance is estimated as a 10% of periodic maintenance work. For this project, only periodic
maintenance cost was included considering the extremely low traffic volumes.
Table 22. Estimated Maintenance Cost
Year Maintenance Cost(US thousand dollars)
Alt. 1 Alt. 2 Alt. 3
Periodic 49,475 46,965 49,580
24
Routine 4,948 4,696 4,958
5.2.3 Estimation of Benefits
Vehicle Operation Cost Saving (VOCS)
The costs of operation of a selection of vehicle types, when used under a range of operating conditions can
be estimated by Vehicle Operating Cost models. Due to the absence of relevant data from Government of
Mongolia, Korean VOC model has been used. Vehicle types are modified in the context of Mongolia.
Table 23. Vehicle operating cost for vehicles under various speed (2009)
(Unit: Korean Won/km)
Speed(km/h) Passenger car Pick-up Bus Truck Trailer
10 440.40 384.62 758.41 601.31 856.25
20 356.45 307.64 606.76 463.47 678.65
30 302.56 256.91 498.49 395.27 573.27
40 258.87 222.01 424.54 343.42 505.78
50 227.08 200.79 379.76 314.02 457.58
60 209.93 187.20 353.58 296.70 432.27
70 198.03 179.51 339.52 290.20 419.52
80 186.08 176.21 332.23 292.85 417.90
90 180.47 179.53 330.49 308.11 440.10
100 178.57 190.10 339.93 347.08 465.02
110 179.54 384.62 363.26 - -
120 183.15 - 758.41 - -
Source: Guidelines for Transport project evaluation, 4th edition (MLTM, 2011)
VOC model for this study was estimated by regression as below.
Where, VOC: VOC for vehicles under ideal conditions (Won/Veh-km)
V: Speed under ideal conditions (km/hr)
a,b,c,d: parameters
The unit VOC of Motorcycle was assumed as 1/5 of Passenger car VOC due to the lack of data in Mongolia.
Table 24. VOC model parameters
Vehicle type a b c d R2
Passenger car 400.734 -4.68767 1172.673 0.024462 0.997121
Pick-up 690.8032 -9.26246 2119.066 0.05802 0.996183
Bus 366.5035 -5.04615 933.398 0.033327 0.998794
Truck 551.848 -7.98578 1653.167 0.059748 0.998844
25
Trailer 795.9204 -10.7247 2215.565 0.075531 0.999495
Travel speed was estimated as:
40km/h for unpaved road
60km/h for 2-lane paved road
80km/h for 2-lane improved road
Table 25. Per unit cost of VOC
(Unit: Korean Won/km)
Travel
Speed Passenger car Small Bus Large Bus Small Truck
Medium
Truck Large Truck
Motor
Cycle
40km/h 281.68 353.03 466.11 241.32 369.34 543.17 56.34
60km/h 227.08 277.34 379.24 199.27 315.35 461.27 45.42
80km/h 196.93 236.79 347.62 187.77 316.04 449.03 39.39
Alternative 2, the central route, is approximately 23~24km shorter than others as below.
Table 26. Comparison of travel distance among alternatives
Alternatives Length (km)
Alt. 1 473
Alt. 2 449
Alt. 3 474
VOCS benefit is as follows:
Table 27. VOC saving
(Unit: US thousand dollars/yr)
Alternatives 2016 2025 2035 2045
Alt. 1 1,738.3 3,875.8 10,279.2 22,832.1
Alt. 2 2,068.5 4,611.9 12,231.7 27,168.9
Alt. 3 1,724.6 3,845.1 10,197.9 22,651.4
Travel Time Saving
Due to the lack of proper data in the context of Mongolia, GNI Per capita was used to estimate the value of
time (VOT) in Mongolia instead of average wage rate per various types of vehicles, which shall be used in
the Marginal Substitution method to value all activities. Experience demonstrates that approximately 30% of
Travel Time Savings could be used as a production inputs in developing countries. The output of VOT
26
estimation in Mongolia is as below.
Table 28. VOT Calculation by GNI, Annual workdays and Average working hours
Classification Detail
Per capita GNI (USD) 2,320 (WB, 2011)
Annual workdays(days) 280
Average working hour for a day(hours) 8
% of Travel Time Savings can be used as a
Production inputs 30%
Per capita VOT (USD/hours) 0.311
Table 29. Time Value of Passenger by Vehicle Types
(Unit: USD/ vehicle·hour)
Classification Passenger
car
Bus Truck Motor-cycle
small large
Passenger6 2.3 10 18 1 1.5
VOT/vehicle 0.715
3.107 5.593 0.311 0.466
average VOT/vehicle 4.350
The output of Travel time saving has been relatively low comparing VOCS due to the level of income in
Mongolia.
Table 30. Travel Time Saving
(Unit: US thousand dollars/yr)
Alternatives 2016 2026 2036 2046
Alt. 1 317.6 708.1 1,877.9 4,171.2
Alt. 2 341.0 760.2 2,016.2 4,478.3
Alt. 3 316.6 705.9 1,872.1 4,158.4
Other Benefits
Given the limited availability of data, only two user benefits including Vehicle Operating Cost (VOC) and
Travel Time Saving are used in this project. Other benefits can be considered are as follows:
Change in Externality Costs: traffic accident, environmental costs, regional developments
6 Vientiane 3rd Ring Road Feasibility Study, December, 2008, Lao People's Democratic Republic
27
Change in system operating costs and revenue
Co-benefits (CO2 emission reduction)
Benefits due to new developments
5.2.4 Results of Economic Analysis
As expected, the shortest alternative, Alternative 2, represented better output in economic analysis as below.
Table 31. Economic Analysis
Content Alt. 1 Alt. 2 Alt. 3
B/C 0.204 0.253 0.202
NPV (US 1,000$) -99,167.1 -87,879.3 -99,637.4
IRR 0.33% 1.84% 0.27%
In terms of the evaluation criteria, the economic viability of the representative alternative, Alt. 2, is
significantly slim as follows:
Internal Rate of Return (IRR) = 1.84%< Social Discount Rate (12%)
Benefit - Cost Ratio (B/C) = 0.253< 1
Net Present Value (NPV) = -99,637.4< 0
5.3 Sensitivity Analysis
The sensitivity of economic analysis for Alt. 2 was done by re-running B/C, NPV and IRR calculations for:
Total Benefits at +/- 10% and 20%
Total Costs at +/- 10% and 20%
Table 32. Sensitivity Analysis (Alt. 2)
Cost Indicator Benefit
0% -10% -20%
0%
B/C 0.253 0.228 0.203
NPV -87,879.3 -81,127.5 -83,791.4
IRR 1.84% 1.10% 0.27%
10%
B/C 0.230 0.207 0.184
NPV -88,973.9 -91,637.8 -94,301.7
IRR 1.17% 0.43% -0.42%
20%
B/C 0.211 0.190 0.169
NPV -99,484.2 -102,148.1 -104,812.0
IRR 0.56% -0.20% -1.06%
28
Section 6 ENVIRONMENTAL AND SOCIAL IMPACT
6.1 Environmental Impact
For the project road, Environmental Safeguarding would be triggered due to the impact on the wild life and
Khar Us Lake National Park; however, no significant negative impact on the environment of the catchment
of the project road is expected. It may be categorized as class B in terms of the World Bank guideline.
Trigger of Environmental safeguard should be decided based on the detailed site survey.
Followings are the Environmental Categorization in MDB guidelines.
Table 33. Environmental Categorization (ADB)
A
• Environmental Impact Assessment(EIA) report
• Environmental Management Plan including a budget
• Public consultation(at least twice)
• Disclosure 120 days in advance of Board Consideration
B • Initial Environmental Examination(IEE) report
• Public consultation
C • Review of Environmental Implications(No EIA or IEE is required)
FI
• Environmental Management System(Equity Investment)
• EMS including Environmental Assessment and Review Procedures
for Subprojects(Credit Lines)
6.2 Social Impact
No land acquisition and resettlement is needed for the project road due to the Government ownership of the
land and the nomadic characteristic of Mongolian.
Women’s economic and social empowerment is essential in economic growth and poverty reduction. The
project will provide better access to the employment, child care, education, health & political processes for
the women in the rural areas including Myangad, Durgon, Urgamal, Zavkhanmandal, Erdenekhairkhain
Soum.
Social Safeguarding including Involuntary Resettlement (IR) and Gender Impact shall be assessed in terms
of National, Bilateral and Multilateral donors’ guidelines during a formal study.
29
Section 7 RECOMMENDATION
7.1 Conclusion
1. It is noted that Khovd-Uliastai section (473km) on AH32 connects two centers of the western region,
Khovd and Uliastai, as an effort of enhancing connectivity and mobility between western region and
Ulaanbaatar. It is also noted that most of the sections are below AH Class III standard except
Khovd~Myangad section (AC Pavement, 24.5km, AH Class III).
2. The shortest connection between Khovd and Uliastai was proposed with AC surfacing. The total cost is
estimated as USD 154 million.
Improvement of AC pavement (39km, USD 6.1million)
Construction of new AC pavement (384 km, USD 148.1million)
It is also estimated that traffic projection in 2045 is maximum 2,709 (Khovd - Myangad bridge 9,870)
vehicles per day, which is significantly low.
3. Based on the given information, AC pavement option is economically infeasible in light of evaluation
criteria as below. IRR cannot be found under the given conditions.
Internal Rate of Return (IRR) = 1.84%< Social Discount Rate (12%)
Benefit - Cost Ratio (B/C) = 0.253< 1
Net Present Value (NPV) = -99,637.4< 0
This economic output appears inconsistent with the 2007 World Bank study that represents 15.4% of IRR at
a 12% discount rate. It is mainly because the previous study quantified benefits including:
a residual value of 35%; and
Potential benefits to the regional agriculture GDP (82% of total benefits) as well as traditional
VOCS (15%) and VOTS (3%).
7.2 Recommendation
1. 2-lane AC pavement is found to be economically infeasible; however, a holistic, instead of demand-driven,
approach may be appropriate for the countries like Mongolia, which represents very low initial values of
major indicators for traffic projection including registered vehicles and population. In the long-run, wider
economic benefits are expected if the road is constructed.
2. In this regards, improved connectivity and mobility should be provided in the near term with sustainable
financing solutions, which will be vital for economic and social development in the western region as well as
whole nation.
30
7.3 Implementation Plan
7.3.1 Preparation and Procurement
The output of this study was presented during Investment Forum in October 2013 (Bangkok, UNESCAP) for
a Project Identification of major donors. Subsequently, project preparation, project appraisal, loan/credit
negotiations, loan/credit approval and signing will take minimum two years depending on the internal
process of multi-lateral or bi-lateral donors. Then, procurement process will follow.
7.3.2 Implementation
The project area represents an extreme continental climate with long, cold winters and short summers
including:
Average annual temperature of minus 2.9 ℃.
Extreme temperature in winter, maximum 45 ℃ below zero Celsius at night
Annual precipitation of 350mm, which is extremely low.
Pavement works can be done for 6 months, from May to October in this regards.
Table 34. Implementation Plan
Work Item 1st Year 2nd Year 3rd Year
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Earth Work
Pavement
Work
Bridge Work
31
Appendices
Appendix A. List of persons met
Ministry of Road, Transport, Construction and Urban Development (MRTCUD)
Road and Transport Policy Department
Mr. D. Naranpurev (Director General)
Mr. Ganbold Khatanbaatar (Senior Officer)
Department of Roads
Mr. Enkhtur Baasandorj (Director General)
Mr. Onon Rentsendorj (Deputy Director General)
Mr. Bayasgalan Choijiljav (Head of Road Construction, Production, Management and Supervision Div.)
Mr. Batsuuri Namsrai (Head of Road Utilization, Maintenance Management and Supervision Div.)
Mr. Yanjiv Bayarkhuu (Head of Researh Investigation, Drawing and Design Sector)
Ms. Delgermaa Baatar (Officer, International Cooperation Div.)
Local Government
Mr.Nyamdavaa Gendenjav (Governor, Khovd Aimag)
Mr. Yadamsuren Sanjmyatav (Governor, Uliastai City, Zavkhan Aimag)
Mr. Jamiyansuren Sodnomstseren (Governor Consultant, Uliastai City, Zavkhan Aimag)
32
Appendix B. Implementation Agency
33
Appendix C. Economic Analysis
ALT. 1
discount rate 12.0% B/C 0.204
Base Year 2011 NPV -99,167.1
IRR 0.33%
Unit:1,000US $
Year
Cost Benefit
CV PV VOCS Time saving VOCS+Time
saving PV
2013 46,303.4 36,912.8
2014 46,303.4 32,957.8
2015 46,303.4 29,426.6
2016 4,947.5 2,807.4 1,738.3 317.6 2,055.9 1,166.6
2017 4,947.5 2,506.6 1,901.3 347.3 2,248.6 1,139.2
2018 4,947.5 2,238.0 2,079.6 379.9 2,459.5 1,112.5
2019 4,947.5 1,998.2 2,274.5 415.5 2,690.0 1,086.5
2020 4,947.5 1,784.1 2,487.8 454.5 2,942.3 1,061.0
2021 4,947.5 1,593.0 2,718.4 496.6 3,215.1 1,035.2
2022 4,947.5 1,422.3 2,970.5 542.7 3,513.2 1,010.0
2023 4,947.5 1,269.9 3,245.9 593.0 3,838.9 985.4
2024 4,947.5 1,133.8 3,546.9 648.0 4,194.9 961.4
2025 4,947.5 1,012.4 3,875.8 708.1 4,583.8 937.9
2026 4,947.5 903.9 4,235.1 773.7 5,008.8 915.1
2027 4,947.5 807.0 4,627.8 845.4 5,473.3 892.8
2028 4,947.5 720.6 5,056.9 923.8 5,980.7 871.1
2029 4,947.5 643.4 5,525.8 1,009.5 6,535.3 849.8
2030 4,947.5 574.4 6,038.2 1,103.1 7,141.3 829.1
2031 4,947.5 512.9 6,716.1 1,226.9 7,943.0 823.4
2032 4,947.5 457.9 7,470.1 1,364.7 8,834.8 817.7
2033 4,947.5 408.9 8,308.8 1,517.9 9,826.7 812.1
2034 4,947.5 365.1 9,241.7 1,688.3 10,930.0 806.5
2035 4,947.5 326.0 10,279.2 1,877.9 12,157.1 800.9
2036 4,947.5 291.0 11,034.9 2,015.9 13,050.9 767.7
2037 4,947.5 259.8 11,846.1 2,164.1 14,010.3 735.8
2038 4,947.5 232.0 12,717.0 2,323.2 15,040.2 705.3
2039 4,947.5 207.1 13,651.8 2,494.0 16,145.9 676.0
2040 4,947.5 185.0 14,655.4 2,677.4 17,332.8 648.0
2041 4,947.5 165.1 16,014.3 2,925.6 18,939.9 632.2
2042 4,947.5 147.4 17,499.2 3,196.9 20,696.1 616.8
2043 4,947.5 131.6 19,121.7 3,493.3 22,615.0 601.8
2044 4,947.5 117.5 20,894.7 3,817.2 24,712.0 587.1
2045 4,947.5 104.9 22,832.1 4,171.2 27,003.3 572.8
Total 287,335.8 124,624.7 254,606.0 46,513.5 301,119.5 25,457.6
34
ALT. 2
discount rate 12.0% B/C 0.253
Base Year 2011 NPV -87,879.3
IRR 1.84%
Unit:1,000US $
Year
Cost Benefit
CV PV VOCS Time saving VOCS+Time
saving PV
2013 43,680.6 34,821.9
2014 43,680.6 31,091.0
2015 43,680.6 27,759.8
2016 4,696.5 2,664.9 2,068.5 341.0 2,409.5 1,367.2
2017 4,696.5 2,379.4 2,262.4 372.9 2,635.4 1,335.2
2018 4,696.5 2,124.5 2,474.5 407.9 2,882.4 1,303.9
2019 4,696.5 1,896.8 2,706.5 446.1 3,152.7 1,273.3
2020 4,696.5 1,693.6 2,960.3 488.0 3,448.2 1,243.5
2021 4,696.5 1,512.1 3,234.8 533.2 3,768.0 1,213.2
2022 4,696.5 1,350.1 3,534.7 582.6 4,117.3 1,183.6
2023 4,696.5 1,205.5 3,862.5 636.7 4,499.1 1,154.8
2024 4,696.5 1,076.3 4,220.6 695.7 4,916.3 1,126.7
2025 4,696.5 961.0 4,611.9 760.2 5,372.1 1,099.2
2026 4,696.5 858.0 5,039.6 830.7 5,870.2 1,072.5
2027 4,696.5 766.1 5,506.8 907.7 6,414.5 1,046.3
2028 4,696.5 684.0 6,017.4 991.9 7,009.3 1,020.9
2029 4,696.5 610.7 6,575.4 1,083.8 7,659.2 996.0
2030 4,696.5 545.3 7,185.1 1,184.3 8,369.4 971.7
2031 4,696.5 486.9 7,991.7 1,317.3 9,309.0 965.0
2032 4,696.5 434.7 8,889.0 1,465.2 10,354.2 958.4
2033 4,696.5 388.1 9,887.0 1,629.7 11,516.7 951.8
2034 4,696.5 346.5 10,997.0 1,812.7 12,809.7 945.2
2035 4,696.5 309.4 12,231.7 2,016.2 14,247.9 938.7
2036 4,696.5 276.3 13,130.9 2,164.4 15,295.3 899.7
2037 4,696.5 246.7 14,096.2 2,323.5 16,419.7 862.4
2038 4,696.5 220.2 15,132.5 2,494.3 17,626.8 826.6
2039 4,696.5 196.6 16,244.9 2,677.7 18,922.6 792.3
2040 4,696.5 175.6 17,439.1 2,874.5 20,313.7 759.4
2041 4,696.5 156.8 19,056.1 3,141.1 22,197.2 740.9
2042 4,696.5 140.0 20,823.0 3,432.3 24,255.3 722.9
2043 4,696.5 125.0 22,753.8 3,750.6 26,504.3 705.2
2044 4,696.5 111.6 24,863.5 4,098.3 28,961.8 688.1
2045 4,696.5 99.6 27,168.9 4,478.3 31,647.2 671.3
Total 271,936.3 117,715.0 302,966.4 49,938.6 352,905.0 29,835.8
35
ALT. 3
discount rate 12.0% B/C 0.202
Base Year 2011 NPV -99,637.4
IRR 0.27%
Unit:1,000US $
Year
Cost Benefit
CV PV VOCS Time saving VOCS+Time
saving PV
2013 46,412.7 36,999.9
2014 46,412.7 33,035.6
2015 46,412.7 29,496.1
2016 4,958.0 2,813.3 1,724.6 316.6 2,041.2 1,158.2
2017 4,958.0 2,511.9 1,886.2 346.3 2,232.5 1,131.1
2018 4,958.0 2,242.7 2,063.1 378.7 2,441.8 1,104.6
2019 4,958.0 2,002.4 2,256.5 414.3 2,670.8 1,078.7
2020 4,958.0 1,787.9 2,468.1 453.1 2,921.2 1,053.4
2021 4,958.0 1,596.3 2,696.9 495.1 3,192.0 1,027.7
2022 4,958.0 1,425.3 2,947.0 541.0 3,488.0 1,002.7
2023 4,958.0 1,272.6 3,220.2 591.2 3,811.4 978.3
2024 4,958.0 1,136.2 3,518.8 646.0 4,164.8 954.5
2025 4,958.0 1,014.5 3,845.1 705.9 4,551.0 931.2
2026 4,958.0 905.8 4,201.6 771.3 4,972.9 908.5
2027 4,958.0 808.8 4,591.2 842.9 5,434.0 886.4
2028 4,958.0 722.1 5,016.9 921.0 5,937.9 864.8
2029 4,958.0 644.7 5,482.1 1,006.4 6,488.5 843.8
2030 4,958.0 575.7 5,990.4 1,099.7 7,090.1 823.2
2031 4,958.0 514.0 6,662.9 1,223.2 7,886.1 817.5
2032 4,958.0 458.9 7,411.0 1,360.5 8,771.5 811.9
2033 4,958.0 409.7 8,243.0 1,513.3 9,756.3 806.3
2034 4,958.0 365.8 9,168.5 1,683.2 10,851.7 800.7
2035 4,958.0 326.6 10,197.9 1,872.1 12,070.0 795.2
2036 4,958.0 291.6 10,947.6 2,009.8 12,957.3 762.2
2037 4,958.0 260.4 11,752.4 2,157.5 13,909.9 730.6
2038 4,958.0 232.5 12,616.3 2,316.1 14,932.4 700.2
2039 4,958.0 207.6 13,543.8 2,486.4 16,030.2 671.2
2040 4,958.0 185.3 14,539.5 2,669.2 17,208.6 643.3
2041 4,958.0 165.5 15,887.6 2,916.6 18,804.2 627.6
2042 4,958.0 147.8 17,360.7 3,187.1 20,547.8 612.4
2043 4,958.0 131.9 18,970.4 3,482.6 22,453.0 597.4
2044 4,958.0 117.8 20,729.4 3,805.5 24,534.9 582.9
2045 4,958.0 105.2 22,651.4 4,158.4 26,809.8 568.7
Total 287,977.5 124,912.6 252,591.0 46,370.7 298,961.8 25,275.2
36
Appendix D. Asian highway Design Standard (1993)
Notes: Figures bracket are desirable values
Minimum horizontal curve shall be determined in conjunction with super-elevation
37
Appendix E. Data Survey Request
Section 1. General Information
1.1 National/Regional Outlook
Area, Population
Currency and exchange rate:
GDP/GRP/GNI, GDP/GNI per capita:
Economic growth rate, Inflation rate, Employment rate by sector
Trade (Import, Export), Major trade commodities, Major trade partners (Import, Export)
1.2 Traffic related information
Driving style: Left-hand side drive
International border crossing points (example)
Maximum gross weight and axle load permissible
Major Tourism spot
Section 2. Data Collection and Survey
2.1 Implementation Agency (Road authority)
Organization
Implementation process including planning, design, construction and maintenance
2.2 National & Sub-national strategy and priority, Guidelines
Road Master Plan
Regional & sub-regional Planning
Development and upgrading plan of AHN
Strategies and priorities
Design specification
2.3 Asian Highway Database – Any update of AHDB 2011(draft, Appendix 1) including:
Traffic data (volume, accident, etc.)
Road and bridge inventory
Toll rate
2.4 Other Engineering and Socio-economic data (Appendix 2) including
Social Discount Rate
Travel speed, Time value, Value of Time
O/D, Number of registered Vehicles
Land use plan
Unit construction cost(road, box & culvert, bridge, T/N)
Maintenance cost (Routine maintenance, periodic overlay)
Geotechnical and hydraulic survey
Appendices
Appendix 1. AHDB 2011(draft version to UNESCAP)
Appendix 2. Engineering & Socio-economic Data (attached)