TACR: Afghanistan: Railway Development Study Assistance Consultant’s Final Report Project Number:...

Technical Assistance Consultant’s Final Report

Project Number: ADB TA 7259-AFG May 2010

Afghanistan: Railway Development Study Financed by the Asian Development Bank (ADB) For Ministry of Public Works Government of Islamic Republic of Afghanistan Prepared by

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25 September 2010 Mr. Hong Wang Director, CWTC Asian Development Bank Manila, Phillipines Subject : Submission of TA Final Report of ADB TA 7259 AFG: Railway Development Study Dear Mr. Wang, We are pleased to submit the TA Final Report of the Feasibility and Pre-feasibility Study of Sherkhan Bandar to Herat Railway Line. The report includes the Phase- I and Phase- II study under the TA. The report has been finalised incorporating the comments received from Railway Workshop held on 23 May 2010. The comments received from MPW on Phase- II have been answered seperately as those coments are mainly related to in depth Feasibility Study. Thanking you and with best regards, Yours sincerely, Shireen Lutfunnessa General Manager Enclosed: TA Final Report of ADB TA 7259 AFG: Railway Development Study (3 Copies)

1. Eng. Noor Gul Mangal Techincal Deputy Minister of Public Works, Government of Afghanistan, Kabul Afghanistan Fax: 230 1361 - (with copy of TA Final Report)

2. Balabhaskara Reddy Bathula

Transport Specialist Central and West Asia Department Asian Development Bank Tel (632) 632-5646 Fax (632) 636-2428 - (with copy of TA Final Report)

ii ADB Technical Assistance 7259 AFG Railway Development Study

Asian Development Bank Consultants’ Final Report

ABBREVIATIONS

ADB - Asian Development Bank

ADT - Average Daily Traffic

ARA - Afghanistan Railway Authority

ANDS - Afghanistan National Development Strategy

CAREC - Central Asia Regional Economic Cooperation

CSC - Construction Supervision Consultant

EA - Executing Agency

EIRR - Economic Internal Rate of Return

EMP - Environmental Management Plan

ENPV - Economic Net Present Value

EPC - Engineering, Procurement, and Construction

FGD - Focus Group Discussion

FIRR - Financial Internal Rate of Return

GDP - Gross Domestic Product

GOA - Government of Afghanistan

IEE - Initial Environmental Examination

ISAF - International Security Assistance Force

LARP - Land Acquisition and Resettlement Plan

MOCI - Ministry of Commerce and Industry

MOF - Ministry of Finance

MOI - Ministry of Interior

MOM - Ministry of Mine

MPW - Ministry of Public Works

NEPA - National Environmental Protection Agency

NGO - Non-Government Organization

NPV - Net Present Value

O&M - Operation and Maintenance

PIU - Project Implementation Unit

SLARP - Short Land Acquisition and Resettlement Plan

TZ - Turkmenistan Railways

TZD - Tajikistan Railways

UTY - Uzbekistan Temir Yullari (Uzbekistan Railways)

VOC - Vehicle Operating Cost

WACC - Weighted Average Cost of Capital

ADB Technical Assistance 7259 AFG Railway Development Study iii


TABLE OF CONTENTS

ABBREVIATIONS ................................................................................................................................... ii

TABLE OF CONTENTS..........................................................................................................................iii

LIST OF APPENDICES .......................................................................................................................... v

I. INTRODUCTION........................................................................................................................ 1

A. Objectives of the Study .............................................................................................................. 2

B. Components and Outputs .......................................................................................................... 3

C. Conduct of the Study.................................................................................................................. 3

1. Methodology............................................................................................................................. 3

2. Study Team .............................................................................................................................. 4

II. RATIONALE: SECTOR PERFORMANCE, PROBLEMS, AND OPPORTUNITIES................. 4

A. Background of the Study............................................................................................................ 4

B. Key Problems and Opportunities ............................................................................................... 6

1. Constraints ............................................................................................................................... 6

2. Opportunities ............................................................................................................................ 7

C. Government Policies, Plan and Strategy ................................................................................... 8

D. External Assistance.................................................................................................................... 8

E. ADB Strategy and Sub Sector Experiences............................................................................. 10

F. Rationale for the Project........................................................................................................... 11

III. THE PROPOSED PROJECTS............................................................................................... 12

A. Description of Proposed Railway Routes................................................................................. 12

B. The Proposed Route Described............................................................................................... 13

1. Connecting Iran at Herat ............................................................................................. 13

2. Connecting Turkmenistan at Torghundi and Aqina .................................................... 13

3. Connecting Uzbekistan at Naibabad........................................................................... 14

4. Connecting Tajikistan at Sherkhan Bandar ................................................................ 14

C. Detailed Description of Alternative Route Options for Phase - II ............................................. 15

D. Recommendation Regarding Alternative Route Options for Phase - II ................................... 19

E. Project Implementation Period................................................................................................. 21

IV. FEASIBILITY ANALYSIS OF THE STUDY ............................................................................ 21

A. Feasibility Analysis of Phase - I ............................................................................................... 21

1. Traffic Demand Forecast ............................................................................................ 21

2. Technical Analysis ...................................................................................................... 22

3. Project Financial Viability ............................................................................................ 23

4. Project Economic Viability........................................................................................... 23

iv ADB Technical Assistance 7259 AFG Railway Development Study


5. Social Safeguard Analysis .......................................................................................... 24

6. Environmental Impact Assessment............................................................................ 25

B. Pre-feasibility Analysis of Phase - II......................................................................................... 26

1. Traffic Demand Forecast ............................................................................................ 26

2. Technical Analysis ...................................................................................................... 27

3. Railway Engineering ................................................................................................... 27

4. Proposed Rail Gauge for Phase - II ............................................................................ 28

5. Proposed Transshipment Facilities............................................................................. 28

6. Land Required for the Project ..................................................................................... 28

7. Proposed Bridges for the Project ................................................................................ 29

8. Economic Viability for Phase - II ................................................................................. 29

9. Financial Analysis for Phase - II.................................................................................. 30

10. Environmental Impact Assessment............................................................................. 31

11. Summary of Possible Social and Resettlement Impacts ............................................ 33

V. PLANS FOR INSTITUTIONAL STRUCTURE......................................................................... 33

1. Coordination Setting.................................................................................................... 35

2. Railway Sector Policy.................................................................................................. 35

a. Policy Principles for Railway Management .......................................................... 35

b. Policy Measures for Railway Operations.............................................................. 35

3. Possible Public/ Private Participation Options ............................................................ 37

VI. STAKEHOLDER PARTICIPATION AND CONSULTATION.................................................. 37

A. Stakeholders Consulted ........................................................................................................... 37

B. Participatory Approach............................................................................................................. 39

VII. CONCLUSION AND RECOMMENDATIONS ......................................................................... 40

A. Conclusion ............................................................................................................................... 40

B. Recommendations ................................................................................................................... 41

LIST OF FIGURES

Figure 1: Map of the Country and Location Map of the Study...............................................vii

Figure 2: Proposed Alignment of phase-I and II .................................................................. 17

Figure 3: Alignment Layout of Option 4 ............................................................................... 18

Figure 4: Maps Showing Mineral Deposits .......................................................................... 20

LIST OF TABLES

Table 1: Main Features of five Option Alignments ............................................................... 19

Table 2: Phase II Implementation Period............................................................................. 21

Table 3: List of Organization Participate in the Workshop ................................................... 37

ADB Technical Assistance 7259 AFG Railway Development Study v


LIST OF APPENDICES

APPENDIX 1: COST ESTIMATES AND FINANCING PLAN

APPENDIX 2: IMPLEMENTATION SCHEDULE

APPENDIX 3: RAILWAY INSTITUTIONAL ASSESSMENT AND PROPOSAL

APPENDIX 4: SUMMARY OF SOCIAL AND POVERTY ANALYSIS

APPENDIX 5: ECONOMIC ANALYSIS

APPENDIX 6: FINANCIAL ANALYSIS

APPENDIX 7: SUMMARY OF INITIAL ENVIRONMENTAL EXAMINATIONS

APPENDIX 8: FORCASTED TRAFFIC VOLUME

vi ADB Technical Assistance 7259 AFG Railway Development Study


EXECUTIVE SUMMARY

In order to meet the demand for fast growing intra-regional trade and improve connectivity,

Afghanistan has urgent need to develop its transport infrastructure. The present road system

of the country in terms of its capacity and network is inadequate and the railway

infrastructure almost non-existent. Movement of passengers and goods within the country

and across the borders remains seriously constrained. In addition the Government of Islamic

Republic of Afghanistan (GOA) has agreed with the strategy adopted by the Central Asia

Regional Economic Cooperation (CAREC) program, which is aimed to develop six corridors

across the region and all through Afghanistan. Once these Rail corridors are commissioned,

the country can efficiently handle the growing transportation demand.

This rail study is formed in two Phases as under: Phase - I Hairatan – Mazar-e-Sharif

(Naibabad); Phase - II Herat - Mazar – Sherkhan Bandar and Aqina Branch. At the time of

compilation of this report, Phase - I has been authorized and construction is already under

way. 25 km of the route has been constructed, and completion is envisaged for November

2010. The Phase - II Pre-Feasibility Study has been completed. It is envisaged that with the

completion of Phases - I and II railway construction programs, the economic growth (which is

currently 10%) will pick up at faster rate. Trade with the CAREC region especially with

Uzbekistan will considerably increase.

The GOA has specified a system capable of handling double-stacked container trains and

heavier axle loads, compatible with the intra-regional railway systems. The differential

railway track gauges in the region remain a bottleneck for smooth movement of traffic across

the borders. The feasibility study of Phase - I reveals that the Project is technically feasible.

A full Environmental Impact Assessment (EIA) has not been done, but the Initial Environment

Examination (IEE) indicate that the negative impact is minimum (soil erosion and noise

pollution), and this can be mitigated during construction. As minimum public land acquisition

will be involved for the Project, the Social Impact Assessment (SIA) indicates that the

adverse impact on human life is ‘insignificant’. The outcome of the consultation process was

encouraging since the survey team did not experience any resistance against the Project.

The study team observed that Railway Projects (compared with Road) all over the world are

typically environmentally friendly and that this project is no exception in that regard. The

project appears to have two potential risks – i) start-up and implementation delays, and ii)

security hazards, the project is feasible in terms of technical, economical and financial

viability. The GOA has planned strong measures to mitigate these risks.

This feasibility study indicates that with the estimated Project cost of about US$170 million

and Economic Internal Rate of Return (EIRR) of 15%, Phase - I of the Project is financially

viable. Sensitivity tests demonstrate the Project to be robust across a broad range of key

parameter variations. The Phase - II Project is also financially sound, and its economic

internal rate of return is estimated at about 13.5%. Sensitivity tests demonstrate the Project

to be robust across a broad range of key parameter variations. During the study period, the

GDP grew on average by 11% per year.

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ay Development Study

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Figure 1: Map of the Country and Location Map of the Study

ADB Technical Assistance 7259 AFG Railway Development Study

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I. INTRODUCTION

1. The geographical uniqueness of Afghanistan is that it borders on six countries and also has river ports. Very few countries of the world have this kind of strategic opportunity. From this point of view, Afghanistan has tremendous potential to develop its economy. But economic development cannot be achieved without a sound transport infrastructure, in which regard Afghanistan is very deficient. The country will have to develop new Road and Rail infrastructures and also strengthen the existing one. The ADB TA 7259 – AFG (the TA) is a step forward towards such initiative of the Government of Afghanistan (GOA).

2. In addition the border countries have business interests not only with Afghanistan but also among themselves. If the border countries want to establish ground connectivity between them, they are obliged to operate through Afghanistan. So development of transport infrastructure in Afghanistan is not only important for its own economy, but also for the neighboring countries as well. The CAREC has been formed of countries including Afghanistan, Azerbaijan, People’s Republic of China, Kazakhstan, Kyrgyz Republic, Mongolia, Tajikistan, and Uzbekistan to develop ground connectivity through six corridors for the entire region. The Project is a part of Transport Strategy and Action Plan agreed under the CAREC program. These transcontinental corridors are expected to transport 20-30 million tons of cargo in total each year.

3. Afghanistan has potential to develop its tourism sector. But the internal situation does not favor in this regard. But once the Project along with other Railway Projects become operational, firstly internal and eventually external tourism will develop in the country. Tourism will not only boost the economy of the country, but will also help normalization of the internal situation.

4. Trade is increasing between Afghanistan and its neighboring countries. Annual growth rates exceed 10%. Total trade valued at US$3.5 billion of which US$0.50 billion is export and US$3.0 billion is import. The volume of trade is two million tons and is increasing steadily.

5. The GOA plans to formulate a comprehensive Railway Development Program not only to improve connectivity of its own important cities and commercial places, but also with the neighboring countries. Initially the GOA has identified 2000 km routes as follows:

• Route 1A: in the north from Sherkhan Bandar to Herat via Mazar-e-Sharif (this project);

• Route 1B: from Mazar-e-Sharif to Kabul, Jalalabad and Torkham (Pakistan border);

• Route 1C: in the south from Kandahar to Chaman (Pakistan border).

6. Construction of the Phase - I Project will further enhance trade with Uzbekistan and will benefit both the countries for the reason that through the port of Hairatan, 50% of the commercial goods are transported. Phase - I of the study is being executed via a two-fold EPC turn-key contract with UTY, (i) design and construction of the Project, and (ii) Operation and maintenance of the Project. Along with the GOA, ADB will provide required TA to oversee the execution of the Project. Once the EPC turn-key contract is constructed, tested and commissioned, the rail service will be operated and maintained by UTY.

7. As part of the TA, reviews of the (i) national economy, (ii) hinterland economy, (iii) assessment of transport sector in Afghanistan, (iv) information on new cold storage projects and (v) industrial developments was carried out in course of the forecasting exercise. In

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regard to growth in goods traffic, growth trends for both population and per capita income were calculated. The EIRR of the Project is 14.25%.

8. The TA study team conducted reconnaissance surveys, identified probable alignments and finalized the preferred option after discussing with the client. Later on, detailed topographical surveys of the alignments were carried out. Regarding Phase - I, preliminary designs and drawings including longitudinal profiles and plan view of the entire alignment were prepared. A transshipment yard is proposed at Naibabad, near Mazar-e-Sharif. Existing railway infrastructures at Hairatan railway yard are of Russian broad gauge to match the Uzbekistan system, therefore, the transshipment yard has also been designed according.

9. The Total cost of the Phase - I Project including provision for physical and price contingencies is US$170.0 million. An amount of US$134.50 million is set for Railway development which includes costs relating to civil and railway works, resettlement, and construction supervision. An amount of US$0.7 million is set for the institutional development program. GOA has requested a grant of US$165.0 million from ADB’s Special Fund resources to help finance the construction, consultantancy services, project management and security, and contingencies of the Project. GOA will provide US$4.5 million to cover the costs of land acquisition and resettlement and taxes.

10. A detailed financial analysis has been conducted in accordance with ADB’s Guidelines, the result of which shows that the Financial Internal Rate of Return (FIRR) is 3.18%, greater than the WACC of 1.37%. Therefore, the project is viable provided that a fixed fee and/or revenue sharing scheme with a prospective rail operator is within the estimated range.

11. Environmental and Social Impact Assessment indicates that the adverse impact of both phases of the Project on environment and human life is ‘insignificant’. But, as defined in ADB Guidelines, the environmental and social issues have been made conditional with ADB loan.

12. It is also mentioned that the process of stakeholder consultation was systematically done within the project impact area. The outcome of the consultation process is encouraging, due to the fact that the survey team did not experience any resistance against the project. The study team observed that Railway Projects (compared with Road) worldwide are typically environmentally friendly, and this Project is no exception in that regard.

A. Objectives of the Study

13. The objectives of the Project are to (i) promote economic development and regional cooperation by improving the strategic railway link to Northern Afghanistan, (ii) continue support for institutional and policy reforms, and (iii) enhance operational efficiency of railways by developing the capacity of Afghanistan Railway Authority to operate commercially in a competitive environment.

14. The specific objectives of the study are to:

• Creation of improved transport links across Northern Afghanistan from Iran through to, and between Turkmenistan, Uzbekistan and Tajikistan;

• Improved accessibility to Afghan’s mineral deposits;

• The Afghan Northern Corridor line will act as an extension of the Iranian line to Herat, creating a new rail corridor between Northern Afghanistan/Central Asia and Bandar Abbas on the Persian Gulf;


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• Creation, in conjunction with the Iranian line to Herat, of a new transport corridor between Central Asia and the Indian Ocean ports via Iran; and

• Create a new source of revenue for Afghanistan from rail transit traffic.

B. Components and Outputs

15. The Project will facilitate building a railway line linking Hairatan and Mazar-e-Sharif. It will have two components: (i) railway construction, and (ii) institutional development.

16. These components will cover project management, construction supervision, and institutional support. An advisor will be recruited and tasked with developing (i) a railway sector institutional plan, (ii) a railway legal and regulatory framework, (iii) an O&M agreement, and (iv) a training program.

17. The outputs of the project will include a new railway line capable of handling double stacked container operation. It will also include a rehabilitation of the inoperative marshaling yard at Hairatan Port. The new transshipment facilities at Mazar-e-Sharif will enable efficient handling of transferred traffic.

C. Conduct of the Study

1. Methodology

18. The TA consists of railway engineering, economic and financial analysis, a review of the progress of institutional development within the railway subsector, a detailed initial environmental examination and a social and poverty analysis. The TA commenced with a pre-screening of three alternative railway alignment proposals from Hairatan port to Mazar-e-Sharif city. It was agreed that a pre-screening of the above alternatives would be included in the Inception Report for the TA. The final list of pre-screening criteria included GOA priority; Importance to Regional Integration and International Trade, Social Impact, Potential Capacity Improvement, Environmental Impact, Traffic Potential and Project Cost.

19. The economic analysis commenced with an overview assessment of the transport sector in Afghanistan. Traffic flows were then investigated as were the current detailed flows on the Hairatan-Mazar-e-Sharif road. A review of factors likely to influence future flows was carried out prior to the preparation of traffic forecasts. A review of the national economy and the hinterland economy was also carried out in the course of the forecasting exercise. Information was obtained on new cold storage projects and industrial development that would likely generate traffic. Regional factors likely to influence traffic levels such as the growth within the economy of Afghanistan and the growth in neighboring markets were studied. Commodity specific factors were also considered. As regards growth in goods traffic, growth trends were calculated for both population and per capita income. Traffic forecasts were prepared for the period 2009-2035.

20. A Topographic survey was conducted along the finally selected alignment. The alignment design and detailed engineering design were prepared and coasted. The assessment on institutional development for the Railway Authority was conducted and discussed with concerned Ministries. The railway construction proposal was subjected to an Initial Environmental Examination - and the fact that the proposed railway works will take place entirely within the railway right of way, which entails that a full Environmental Impact Statement was not required. A social and poverty analysis was carried out with detailed discussions being held with stakeholders in the area of influence. Affected families were identified and the compensation mechanism was developed.



21. The Project was subjected to technical, economic and financial appraisal. The key assumption of these analyses was that the implementation of the project will have minimum public land acquisition and maximum environmental benefits. Economic benefits included costs of road transport, fuel consumption and equipment utilization savings. Financial benefits were calculated as the revenue that otherwise would have been lost because of the loss of traffic to road transport; the savings in track maintenance; and savings in the utilization of equipment. Tariff analyses were carried out focusing on a comparative analysis with the traffic structure of the roads. Projections of MPW's financial condition over the forecast period were carried out.

2. Study Team

22. The study Team includes both international and national experts and is being headed by a Railway Operation Engineer/Team Leader. The international expertise includes two International railway engineers, a financial specialist, an economic specialist, an environmental specialist, a social and poverty specialist and an institutional development specialist. The national expertise consists of four railway civil engineers, two railway engineers, a railway operational and maintenance expert, a transport economist, two social specialists, an environmental specialist, a private sector specialist and an institutional specialist. Besides, to support the core team, a number of support teams consisting of local survey experts, AutoCAD expert were actively involved in the project activities.

II. RATIONALE: SECTOR PERFORMANCE, PROBLEMS, AND OPPORTUNITIES

A. Background of the Study

23. Afghanistan is located in a highly strategic position. It is estimated that the transcontinental corridors through Afghanistan have the potential to transport 20 to 30 million tons of cargo each year. The CAREC Transport Corridors 3, 5 and 6, identified in the CAREC Transport and Trade Facilitation Strategy, pass through the northern part of the country. The strategy highlights the great potential of Afghanistan to serve as a transit route for traffic and trade among Central Asia, South Asia, and the Middle East. Although Afghanistan's road network is being improved with external assistance, at present it is unable to meet the growing transport demands.

24. Afghanistan’s current transport network has roads, rails, airports, and inland waterways. The official road network is 38,500 kilometers, which include 330 km of regional roads, 4,700 km of national roads, 9,700 km of provincial roads, 17,000 km of rural roads, and 3,800 km of urban roads. The total length of railways is only 25 km, being a 10 km cross-border extension from Turkmenistan to a transshipment yard in Torghundi and a 15 km extension from Uzbekistan to a transshipment yard in Hairatan. Hairatan is a gateway for commercial goods entering and transiting Afghanistan. Hairatan accounts for about 50% of all imports. Hairatan is both a dry and river port. Import and transit items include oil and fuel, wheat and flour, fertilizer, agricultural and other equipment, construction materials and consumer products. Hairatan is also the main entry point for humanitarian relief goods. No other rail project is being sponsored by any multilateral agency in Afghanistan.

25. The Government of Afghanistan plans to formulate a comprehensive railway development program to link its potentially important cities and commercial centers within Afghanistan to neighboring countries. The study of ADB TA 7259 AFG, which consists of the Route 1A is closely linked to ADB's Country Partnership Strategy: Afghanistan, 2009–2013, identifies the rehabilitation and construction of national roads and railways, including links to neighboring countries, as a priority for ADB assistance.


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26. HB Consultants Ltd., Bangladesh in association with ABCD Consultants and Hi-Tech Consultant Ltd. of Afghanistan has been assigned for the Implementation Consulting Services relating to the Railway Development Study. The services include Phase - I – Feasibility Study of Hairatan to Mazar-e-Sharif Railway line and Phase - II - Pre-feasibility study of Sherkhan Bandar to Herat via Mazar-e-Sharif. The TA team has completed its phase - I feasibility study of the selected routes in August 2009 and ADB is providing financial assistance for the implementation of phase - I railway link. The GOA is implementing the project with the assistance of the ADB. The main objective of the project is to help the economic growth of the country by improving the railway sector through improvement of the infrastructure, procurement of rolling stock, implementation of policy reforms and commercial orientation.

27. The construction of the Hairatan to Mazar-e-Sharif Railway Project is the first initiative taken by ADB as part of the railway development in Afghanistan and is expected to be completed by November 2010. This will increase trade between Afghanistan and Uzbekistan. It will also reduce transport costs, increase vehicle operation savings, and create job opportunities in the Project area. The Project will be constructed as a modern, efficient and sustainable railway connection between northern Afghanistan and southern Uzbekistan.

28. The Phase - I has been executed through EPC contract. This will have arrangements for fixed price and fixed time delivery date, with appropriate clauses for penalties and premiums. An independent consultant will oversee the EPC contract, tests and commission the quality standards. Once the line is constructed, tested, and accepted, the Government will sign an operation and maintenance (O&M) contract with UTY. This contract will also be on performance based, and be subject to independent supervision and validation. ADB will provide the required technical assistance to oversee the execution of the Project, and subsequent to that, its management. Headquarters and ADB Afghanistan Resident Mission staff will assist with the project implementation.

29. Uzbekistan Temir Yullari (UTY) has been awarded two contracts: (i) an EPC contract for design and construction, and (ii) an O&M contract for phase - I implementation. The Project will expand the transport network in Afghanistan and the region, and generate immediate benefits to freight operators, traders, businesses, and local communities. The Project will raise the profile of Afghanistan as a transit route; make it easier to deliver humanitarian relief and complement other modes of transport, including two CAREC transport corridors and the airport at Mazar-e-Sharif, which will be expanded soon. The Project is financially sound and its economic internal rate of return is estimated at 15%. Sensitivity tests demonstrate the Project to be robust across a broad range of key parameter variations.

30. Route 1B is currently also under study. This constitutes the main north-south traffic corridor in Afghanistan. Once the Turkmenistan rail system has been extended for the relatively short distance from Kerki to the border opposite Aqina, construction of Route 1B will complete a major new trans-continental rail / sea route in an approximate straight line as follows. Baku – Turkmanbashi (Caspian Sea) – Ashqabad – Mary – Aqina – Mazar-e-Sharif – Kabul – Torkham. Changes of rail gauge will however be required between the Turkman and Afghan, and the Afghan and Pakistan rail systems. It is suggested that CAREC Corridor 2 should then have an extension leg added from Mary through to Kabul and Pakistan. The study of ADB TA 7259 AFG, which consists of Route 1A is closely linked to ADB's Country Partnership Strategy (CPS): Afghanistan, 2009–2013, and identifies the rehabilitation and construction of national roads and railways, including links to neighboring countries, as a priority for ADB assistance.

31. The Phase - II line will increase trade with Tajikistan and Turkmenistan, expand the transport network in Afghanistan and the region, and generate immediate benefits to freight



operators, traders, businesses, and local communities. It will also create a valuable revenue stream for Afghanistan from transit traffic earnings. An important aspect of this project’s proposal is that it will create a new rail traffic corridor for Central Asia free from area of Russian influence, and provide such access to world markets as has never existed before.

B. Key Problems and Opportunities

32. The transport sector performance in Afghanistan is affected by three main problems: inadequate infrastructure, limited government capacity, and insecurity.

1. Constraints

33. Inadequate Infrastructure and Facilities: Before 2001, investment in road reconstruction and maintenance was negligible. Since than it has improved, although only 7% of the total road length is paved. About 70% of inter-provincial and inter-district roads are in a poor state of repair. In the medium term the estimate is about US$1.7 billion for 3,000 km of national roads and US$1 billion for 17,000 km of provincial and rural roads. The railway network is negligible. Capacity at the Hairatan marshalling yard is adequate but all cargo has to be unloaded and reloaded into trucks.

34. The road network is incomplete. Various parts of the country are poorly connected or not connected at all. Four provincial capitals remain unconnected to the regional network isolating them from domestic and regional markets. The coverage gap affects connectivity, which cuts trade and investment opportunities, increases the cost of doing business and reduces the country’s competitiveness and job creation capability. This increases costs, and generates losses.

35. Regional connectivity is underdeveloped primarily due to cross-border bottlenecks. Key constraints to the expansion of cross-border trade among Central and South Asian countries include inadequate customs facilities and a heavy reliance on cargo transshipment at borders, aggravated by the need for transit permits, and lack of vehicle standard and axle load controls, as well as visa regulations, unofficial charges, and the protection given to local trucking. Transit agreements are either nonexistent or poorly enforced. Link roads and facilities at border crossings are inadequate. The few existing cross-border railway links have not been developed.

36. Limited Government Capacity: The transport sector requires clear investment plans, stable and predictable financing flows. These investment plans need to distinguish better between capital and recurrent expenditures, especially for operation and maintenance (O&M). Seed capital is provided by donors. However, not all donors include infrastructure in their business strategies. The result is that financing will likely remain a binding constraint for the foreseeable future.

37. Security Problem: Insecurity is a constant threat for the reconstruction effort and makes it difficult for the Government to extend basic public services, increases project costs, limits bidding interest from construction companies, makes recruiting international contractors and consultants (including expatriate Afghans) difficult, and erodes popular support for government staff and international personnel. The international connections in southern and eastern Afghanistan are currently not sufficiently safe or reliable. Security hinders the transportation of goods and humanitarian aid. There is a need to expand all modes of transport and to open up more reliable and efficient routes for trade in and out from Afghanistan. A new rail line in the north will support economic development and poverty reduction in the country and the region.


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2. Opportunities

38. Significant Increase of Trade: The Project will expand the transport network in Afghanistan and the region and generate immediate benefits to freight operators, traders, businesses, and local communities. The Project will promote regional cooperation and trade. The facility will attract high-value traffic on to railways, promote inter-model traffic, and encourage private sector shippers and freight forwarders to trade cargo to Afghanistan, Central Asia, South Asia, the Middle East, and Europe. The Project will complement CAREC road corridors.

39. Afghanistan has significant mineral, industrial, and agricultural potential, which require a reliable and cost-effective transport system. From neighboring countries like Uzbekistan, Tajikistan, Turkmenistan, Pakistan, etc. all imports and transit goods are brought to the borders by rail, and then transshipped onto the trucks for movement within Afghanistan or across the borders. Compared with roads, railways offer a cheaper and quicker mode of transport for bulk commodities such as fuel and minerals. Moreover, the extraction of natural resources from major mines in Afghanistan requires a sustainable and safe mode of transport.

40. The road network, which carries the majority of the country's freight and passenger traffic, is being improved, but the transport system remains inadequate, inefficient, and unsafe. Only half of the roads that connect 24 provinces of the country are serviceable throughout the year, greatly restricting job creation and economic growth. A railway network would complement Afghanistan's roads and form part of an integrated multimodal transport system to enable seamless connectivity from origin to destination for goods, and link this landlocked country to nearby seaports and trade centers.

41. Health Issue: The Project has some gender content. It can create job opportunities but also reduce health risks associated with current road truck operations (HIV/AIDS vectors). At the same time people will have greater and easy access to the Health Centers if developed.

42. The rail line will replace some road-based cargo. The Project will cut transport costs in the region and Afghanistan, and generate time savings by unlocking current logistics and transport bottlenecks at the Hairatan marshalling yard. This will increase truck productivity and transport capacity. By removing heavy trucks from the small road network, it would permit the continued development of intercity and commuter bus transportation.

43. Develop Humanitarian Access Corridor: The Project will raise the profile of Afghanistan as a transit route; make it easier to deliver humanitarian relief and complement other modes of transport, including two CAREC transport corridors and the soon to be expanded airport at Mazar-e-Sharif.

44. Environment Friendly Transport System: Railways all over the world are typically environmentally friendly. The Project will therefore improve environmental sustainability by using regenerative locomotives, and better technology for noise reduction and soil erosion prevention. It will use double-stack containers to increase fuel-efficiency and environmental benefits.

45. Possibility of Private Sector Involvement: Attracting private sector participation is an effective approach to increase the efficiency and transparency of the administrative agency of the government for railway. By and large private participation involves allocation of risks and pattering of resources that private sector has access to including capital and technology. In Afghanistan large private sector organizations exist who can bear with risks and have access to capital and technology.



46. Railway network incorporates the broad elements of infrastructure, regulation, operation, and services. Private sector participation in infrastructure, operation and services is possible to achieve by including service contract, leases, and concessions program. Build operate and transfer (BOT) is another option for infrastructure development. Successes of these programs require strong political leadership, established policies, legal framework, and effective institutions which in reality are absent particularly in railway sector.

C. Government Policies, Plan and Strategy

47. The Afghanistan National Development Strategy (ANDS),1 adopted by the Government in April 2008, is the country’s main strategic platform for development over 2008–2020. The Government’s overall vision, as articulated in the ANDS, is to consolidate peace and stability through just and democratic processes and institutions, and to reduce poverty and achieve prosperity through broad based and equitable economic growth.

48. The ANDS features three mutually supporting pillars: (i) security; (ii) governance, rule of law, and human rights; and (iii) economic and social development. The ANDS indicates that progress across all fronts is needed to reduce poverty and promote prosperity. The economic and social development pillar includes the following sectors: agriculture and rural development; education, culture, youth, and media; energy, water, and irrigation; health and nutrition; mining; private sector development; refugees, returnees, and internally displaced persons; social protection; transport; information and communications technology; and urban development. The ANDS also identifies anticorruption activities, capacity development, counter-narcotics, environment, gender equity, and regional cooperation as important crosscutting concerns. Rural development, and particularly the links between jobs, production, and markets, is also seen as crucial to reducing widespread poverty. It aims to promote growth, generate wealth, and cut poverty and vulnerability. The strategy includes transport and logistics. In this regard, it sets out quantitative and qualitative targets, both physical and nonphysical, and covers various systems, including roads and railways.

49. The main objective under the transport strategy is to develop corridors between Central Asia and South Asia. Two regional road corridors, North-South and East-West have been identified and are at various stages of development. The North-South Corridor runs from Central Asia through Afghanistan to the Pakistani ports of Karachi/Port Qasim and Gwadar. The East-West Corridor runs from Central Asia through Afghanistan to the Iranian ports of Bandar-e-Abbas and Chabahar. Key development actions are:

• Investments in transport and trade infrastructure; • Strengthening trade-related institutions and improving the efficiency at ports and

customs; • Harmonizing transport, trade, and tariff policies, standards, and regulatory

frameworks; and • Fostering private sector involvement.

D. External Assistance

50. ADB has financed the improvement of nearly 1,100 km of regional and national roads since 2004, mostly in the northern and northwestern parts of the country. ADB’s investment amounts to over US$600 million. The United States Agency for International Development

1 Islamic Republic of Afghanistan. 2008. Afghanistan National Development Strategy. Kabul.


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and the World Bank are other large players in the road sector. The European Union is financing an experimental performance-based maintenance contract for a Kabul-Jalalabad road. The Japan Bank for International Cooperation is helping MPW improve the management and use of road-maintenance equipment, a major action to improve institutional effectiveness and project implementation.

51. ADB has numerous initiatives for the development of Transport sector in Afghanistan and in this region. The road infrastructure component of the ADB-financed Emergency Infrastructure Rehabilitation and Reconstruction Project (EIRRP) undertook urgently needed repair and rehabilitation of the Pol-e-Khomri – Mazar-e-Sharif – Sheberghan section of the national ring road, including international links to Turkmenistan (Sheberghan–Andkhoy–Aqina road) and Uzbekistan (Mazar-e-Sharif – Naibabad – Hairatan road) at an estimated total cost of US$65 million. The Government of Japan also provided US$20 million in JFPR funding to finance rehabilitation of the Naibabad–Hairatan (55 km) and Naibabad– Balkh (57 km) sections of the northern road.

52. Rehabilitation of the Japan Fund for Poverty Reduction financed Kandahar–Spin Boldak road (US$25.0 million) is largely complete as of end-July 2005. ADB also provided TA for a feasibility and design study for the Herat–Andkhoy road (US$1 million); leading to the US$80 million Andkhoy-Qaisar Road Project (approved in December 2004) will rehabilitate 210 km of the Herat-Andkhoy road. A proposed US$55 million grant-funded project in 2005 (the Qaisar-Bala Murghab Road Project) will rehabilitate a further 90 km of the Herat-Andkhoy road.

53. In 2004, ADB provided TA for the preparation of a road master plan that will develop a road development program for the next 5-10 years, with focus on identifying major east–west and north–south corridors to cross-link with the national “ring road” network. The TA also will assess financing requirements for sustainable road maintenance and will propose desirable and sustainable financing mechanisms. The TA is expected to result in a planned US$140 million North–South Corridor Project, with a further road sector project planned subsequently. In 2005, ADB also provided additional capacity building TA to the Ministry of Public Works.

54. ADB provided US$1 million in TA to undertake feasibility and design studies for the rehabilitation of Afghanistan’s regional airports. The TA led to a US$30 million Regional Airports Rehabilitation Project to help repair seven regional airports: Bamyan, Chaghcharan, Faizabad, Farah, Maimana, Qala-i-Naw, and Zaranj. The project will reconstruct runways and taxiways, build new passenger terminals or renovate existing ones, reconstruct road access and car parks, connect water supply and sewerage, provide airport maintenance equipment, and install security and boundary fences and gates. The project also will help to strengthen sector management and airport operations and maintenance. A US$40 million Regional Airports Rehabilitation Project Phase - II was planned for 2006 or 2007. ADB also planned additional TA in 2005 and 2006 to support capacity strengthening of Afghanistan’s civil aviation sector.

55. Afghanistan’s national primary roads are being rehabilitated with financial and technical assistance from bilateral and multilateral funding agencies. Priority has been given to rehabilitating strategic road connections, including the “ring road” and border access roads to neighboring countries.

56. The World Bank has funded the repair of the 175 kilometer (km) Kabul–Doshi road (US$60 million) as well as rehabilitation of the 2.7 km Salang tunnel (US$5 million). The World Bank also funded the rehabilitation of the road from Pol-e Khomri to Sherkhan Bandar (land) port. The road to the north and northeast through Doshi is one of Afghanistan’s six international links to its neighboring countries. The World Bank has also provided US$18.8



million plus an IDA credit of US$20.4 million for rehabilitation of secondary and tertiary roads (2,000 km) and bridges (2,300 m).

57. The European Union awarded a €26 million contract to a Chinese engineering company, China Railway Shisiju Group Corporation, for a 75 km stretch (Sarobi-Jalalabad) of the vital 222 km Kabul– Jalalabad–Torkham road. The European Union also will fund a follow-on project for a total of some €65 million. USAID has funded rehabilitation of the following sections of the national ring road: Kabul–Kandahar Road section (km 43-432) totaling US$182 million; Kandahar–Herat highway (km 356-456) for US$71.6 million; and four bridges on Kandahar–Herat road for US$5.4 million.

58. The Government of Japan provided US$29.3 million for reconstruction of Kabul–Kandahar road section G and will finance for reconstruction of the Kandahar–Herat road (km 0-116). The Government of Japan also provided US$18.6 million for reconstruction of Kabul’s road transport. The Government of Saudi Arabia has provided US$30 million for the reconstruction of the ring road segment Kandahar–Herat (Girishk- Delaram or km 116-231). The Government of India will fund the rehabilitation of Zaranj– Delaram road. The Government of Iran has already funded the following national roads: Herat–Islam Qala (US$45 million); Milak–Zaranj road (5 km) and a bridge; and Herat–Koruk (US$20 million-US$30 million). The Government of Italy has committed funds for construction of a new Maidan Shar–Bamian road (€36 million). The Government of Pakistan is assisting in rehabilitation of the transit road (approximately 60 km) from Torkham to Jalalabad.

59. The North Atlantic Treaty Organization (NATO), as part of its International Security Assistance Force (ISAF) responsibilities, is coordinating assistance to Afghanistan’s aviation sector. The World Bank is funding the rehabilitation of Kabul International Airport (US$24 million). The Government of Japan will provide US$31 million for the construction of a new terminal building at Kabul International Airport, and will also provide US$2.85 million in equipment for the airport. The Governments of the United States and India are providing TA for organization development, program management, aviation law, and regulatory oversight, etc.

E. ADB Strategy and Sub Sector Experiences

60. The Afghanistan Country Partnership Strategy (CPS) 2009–2013 is fully aligned with ANDS priorities and planned outcomes. ADB’s ongoing and future investments will continue to support Afghanistan’s further economic growth, thus contributing to the country’s economic and social development and poverty reduction. At the Government’s request, and in line with ADB’s Strategy 2020, ADB’s assistance to Afghanistan will continue to focus on a limited number of priority sectors and subsectors. The CPS results framework reflects higher level Afghanistan Compact and ANDS benchmarks, with ADB assistance contributing to the following development outcomes:

61. The ADB's Strategy for railway and road transport is to contribute to the development of regional transport corridors in coordination with regional initiatives by other international aid agencies. Regional transport improvements will meet infrastructure needs that support wider economic co-operation. An important aspect of the sectoral focus is the strengthening of institutional capacity and proactive support of sector reforms. Restructuring of existing institutions will be supported so that the Government's role is limited to transport policy formulation, programming and planning of projects, monitoring of performance, regulating and licensing, and developing mechanisms to introduce private sector participation in transport operations.

62. The ADB supported Regional Cooperation program “The CAREC Transport Sector Road Map (2005–2010)” aimed to develop an integrated and efficient transport system in


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CAREC countries in support of sustainable economic growth and poverty reduction. The Road Map sets six strategic priorities: (i) Harmonization and simplification of cross-border transport procedures and documentation among CAREC countries to facilitate the movement of passengers and freight across borders. (ii) Harmonization of transport regulations among CAREC countries to create a level playing field for transport operators and promote efficiency and better services. (iii) Development and improvement of regional and international transport corridors to link production centers and markets within CAREC countries and to enhance CAREC countries’ access to neighboring regions and markets. (iv) Restructuring and modernization of railways to provide quality and efficient services through private sector participation and improved corporate governance. (v) Improvement of sector funding and management to ensure that the regional transport network is developed, operated, and maintained properly. (vi) Incremental approach to liberalization of civil aviation, focusing on the adoption of bilateral agreements using common legislative clauses, with a view to expanding sub-regional agreements among neighboring countries, and potentially more widely in the long term. Enhancement of external inputs from all stakeholders, especially business and tourism, in aviation policy making. The Project will strongly support regional railway corridor development.

F. Rationale for the Project

63. The Project has strong rationale. It will develop a reliable, efficient, safe, and sustainable transport link within the country and between the country and its neighbors. Hairatan already doubles up as Afghanistan's most important dry and river port, acting as the gateway for almost half of Afghanistan's total imports. Key commodities and goods moving through this point include oil and fuel, wheat and flour, fertilizer, construction materials such as cement and bitumen, agricultural and off-highway equipment and consumer goods. Hairatan is also a largest port for the supply of humanitarian relief to Afghanistan. However, the existing transport infrastructure and facilities at Hairatan cannot cope with an expanding volume of trade and humanitarian relief.

64. The existing rail line between Termez in Uzbekistan and Hairatan does not extend into Afghanistan. Freight destined for Afghanistan and beyond has to be off-loaded and reloaded into trucks at this border. Moreover, other established trade and supply routes servicing Afghanistan are disrupted because of security constraints. The Termez–Hairatan railway line helps but Afghanistan and other Central Asian countries would benefit if this were to be extended to Herat and Sherkhan Bandar. This expanded rail line will remove major physical bottlenecks at the borders.

65. Another important feature of the Project is its strong strategic and logistical content to countries in Central Asia. Afghanistan is the natural transit route to reach ports in Pakistan and the Caspian, for the onward sale of goods to South and East Asia, Middle East, and Europe. The railway line at Hairatan will raises the profile of Afghanistan as a transit route and complements the connectivity arising out of the two CAREC corridors (3 and 6), now under construction.

66. The Project fits well with the Government's development strategy and ADB's Country Partnership Strategy for 2009–2013. The latter flags transport as a priority area for assistance. The Project also fits well with the CAREC Transport and Trade Facilitation Strategy and the Action Plan. The Project will be implemented in line with ADB's approach to engaging with weakly performing countries.

67. A reliable, efficient, safe, and sustainable transport link between Afghanistan and its neighboring countries is essential to increase regional cooperation and trade. It is also a key to expanding job creation, investment, and ultimately poverty reduction in Afghanistan. A railway network adds to the transport modes, including the existing roads being built in the north and center of the country, and soon to the expanded airport at Mazar-e-Sharif, the



country's second-largest commercial center. The extension of the railway line from Hairatan to Mazar-e-Sharif is a top priority of the Government and fits its development strategy.

68. Due to the ongoing conflicts in Afghanistan and Pakistan, the reliability of transport supply and trade routes into Afghanistan is impaired. The movement of goods by rail from the Uzbekistan border is relatively safe, and can become a cost effective transport mode. Hairatan is already Afghanistan's main dry and river port, accounting for close to 50% of its total imports. But the movement of cargo is constrained by its unloading and reloading into trucks at the border. This is costly, slow, and limits volume flows including humanitarian relief. Removing this bottleneck is an urgent task.

69. The new railway line between Sherkhan Bandar to Herat will connect Central Asia to South Asia, Caucasus, and the Middle East. The railway targets mainly the transport of bulk and nonperishable cargo such as cotton, cement, and bitumen for road construction, agricultural and off-highway construction equipment, oil and fuel, processed foods, and consumer products. The existing rail line from Termez to Hairatan in Uzbekistan terminates at the Afghanistan border. The extension of the Termez– Hairatan link into Mazar-e-Sharif (close to the airport) can remove physical constraints at Hairatan and create an alternative and competitive transport made for trade between Afghanistan and its neighboring countries. Sherkhan Bandar-Herat line connecting three borders will result in an integrated transport facility. So in terms of better connectivity, the project will increase efficiency of the transportation system of the country as well as of the region.

III. THE PROPOSED PROJECTS

A. Description of Proposed Railway Routes

70. The TA team identified and selected the final alignment of Phase - I between Hairatan at the border with Uzbekistan and Mazar-e-Sharif city from the three alternatives. The total length of the proposed link is 71 km and the Project involves the construction of this Railway line. The Project represents a first phase of a larger rail network planned across the north and other parts of the country, including links to Herat, Tajikistan, and Pakistan. It will expand the existing transport network in Afghanistan and is expected to substantially improve internal and international connectivity. The Project is a part of the Transport Strategy and Action Plan agreed under the CAREC Program. It will add capacity to two transport corridors under CAREC and will open up alternative routes of supply for national and international trade, as well as for humanitarian relief to Afghanistan.

71. The TA has studied the Phase - II route of the Northern Corridor Line as originally proposed, and is submitting a number of optional alterations which will improve the route in terms of effectiveness and significantly reduced cost. The original route is hereafter referred to in this report as the Base Case. The total length of the Base Case route approached 1100 km, and had been designed to serve all provincial and administrative centres between Herat and Sherkhan Bandar. Adoption of the team’s proposed amendments will reduce the overall length of the main line to 884 km (excluding the Aqina branch), with the loss only of Kunduz as a main centre. Kunduz was not in fact on a direct line of route to Tajikistan, and serving the location would have involved a diversion, thereby extending the transit of throughout traffic.

72. The Team’s approach has been to design the Northern Corridor line primarily as a Freight railway, with passenger traffic as possible subsequent ‘add-on’ traffic. It is planned to create initial capacity for some 10-12 daily pairs of trains, with passive provision for subsequent capacity increase. It is intended to offer premium transit times, and to encourage


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containerisation of long distance traffic, to eliminate the current costly and inefficient double-handling at terminals, with the consequent risk of damage and loss of goods.

73. This Project represents the second phase of a larger rail network planned across the north and other parts of the country, including links to Kabul and Pakistan. It will expand the existing transport network in Afghanistan and is expected to improve substantially internal and international connectivity. An outline description of the route is given below and the alignment of phase-I and II is shown in figure 2.

B. The Proposed Route Described

1. Connecting Iran at Herat

74. The line will commence at an ‘end-on’ junction with the new line from Iran. This will be on the north side of the city. The line from Iran (currently under construction) will cross to the north side of the road from Islam Qala between Ghorian and Jono stations in order to avoid land under cultivation. Location of Herat rail station to the north of the city will cause minimal alteration to existing habitation, as well as facilitate re-routing of the Northern Corridor line towards Kushk. If the team’s proposals for extension of the 1520 gauge Torghundi line south to Herat are accepted, it will be necessary to construct transhipment facilities here, and 1520mm gauge storage terminals for fuel oil, gas and petroleum.

75. The Base Case shows the alignment east of Herat to follow the road to Qala-e-Naw, which would involve transiting a 2461m high mountain pass. This would be unsatisfactory for a rail route, being expensive, and involving gradients which would restrict train loads and speeds. An alternative route therefore is proposed, running north from Herat initially to Kushk then turning east to Qala-e-Naw. This alignment will be 36km longer than the base route but will avoid the cost and operational limitations of routing through the mountains.

2. Connecting Turkmenistan at Torghundi and Aqina

76. The Turkman rail branch from Mary to Torghundi handles 2/3 full load trains daily to the very active unloading terminal at Torghundi. Most traffic is Import traffic to Afghanistan but there are also some exports of fruit/vegetable traffic from Afghanistan. Some 60% of the imported traffic is fuel oil / LPG / petroleum – traffics which are unsuitable for intermediate transhipment. Torghundi is 119 km from Herat. There appear to be three options to achieve connectivity between the Turkman and Afghan rail systems: a) Conversion of part of Torghundi layout to standard gauge to enable to a standard gauge branch line from the Afghan railway; b) Extension of the Turkman line to meet the Afghan line, and provision of a separate parallel 1520 mm gauge line into Herat, c) Extension of the Turkman line to meet the Afghan line and provision of dual gauge track into Herat; and d) Option 1 2would avoid the need for additional terminal facilities at Herat: Options 2/3 would require such terminal facilities to be provided.

77. Option 1 is a major traffic centre in its own right. Furthermore it is likely to become a significant traffic interchange point if, in future, the Afghan rail system is completed with construction of a line from Herat south to Kandahar. Therefore extension of the Russian gauge line is recommended. Provision of dual gauge track would be the cheaper option due to the cost otherwise of providing double track structures en route. Appropriate signaling will need to be installed to provide for the dual gauge track. An intermediate loop for the standard gauge line will be required between Kushk and Herat, but would not be necessary

2 TA Consultants identified five alternative options for phase-II route. For details see page 15.



for the Russian gauge line. From Qala-e-Naw via Murghab to Maymana the Base Case alignment, which skirts high ground, is confirmed by the Study. From Maymana an alternative direct route to Sheberghan is proposed, avoiding the circuitous route of the Base Case proposal via Andkhoy, and saving 100 km of line. Andkhoy will continue to be served by the branch line from Sheberghan to Aqina.

78. Aqina Border Crossing (New East and West Rail Traffic Corridors): Aqina is a rapidly developing border crossing with Turkmenistan, the road to which is currently undergoing substantial upgrading and reconstruction. Currently this border processes some 50 road vehicles daily in each direction. From observation on the day of visit the main traffics are containers and fuel oil/gas tankers. It is clear that Aqina is set to become a major border post with the development of substantial flows of ‘land-bridge’ traffic between Central Asia and the Indian Sub-continent/ the Arabian Sea, as described below. Construction of the railway to this border crossing, together with the anticipated extension of the Turkmenistan Rail System (TZ) from Kerki to Aqina (c100km), will create an important rail traffic corridor which will run (in an approximately geographical straight line) eastwards.

79. Baku-Turkmanbashi-Ashqabad-Mary-Aqina-Mazar-e-Sharif: Change of rail gauge will be necessary at some point as the TZ system is built to Russian gauge. Subsequent construction of the planned Afghan Rail Line 1B will importantly extend the ‘straight line’ corridor further eastwards to Kabul and Torkham at the Pakistan border. As mentioned above, a further change of rail gauge will be required, possibly at Jalalabad as the Pakistan rail system is built to 1676mm track gauge.

80. It is suggested that this corridor should be added as an extension of CAREC Corridor 2 (B). This corridor can offer further important westward links to Central and Western Europe, avoiding Russia, as: (i) via Black Sea train ferry services between Constanta / Varna and Poti / Batumi through the Caucasus region; and (ii) By throughout rail beyond Baku to Europe, via the Tiblisi-Kars line (under construction) through Turkey and the Bosphorus Marmaray Tunnel.

81. Change to Russian gauge will be necessary between Baku through the Caucasus region via either route. Central Asian countries will in due course have two main rail corridors to the Arabian Sea and world markets: a Western route via Sarakks/Mashhad or Herat/Karaf through Iran to Bandar Abbas; an Eastern route via Aqina/Kabul/Torkham and Pakistan to Karachi.

82. Sheberghan-Aqcha-Mazar-e-Sharif (Gur-e-Mar)-Naibabad: The Base Case route for this section is supported by the Team, though it is now recommended that the main line passes to the north of Mazar-e-Sharif City to minimize need for relocation in residential areas.

3. Connecting Uzbekistan at Naibabad

88. The 70 km extension from Hairatan to Naibabad will provide connection with the

Uzbekistan rail system, and full interchange facilities will be provided. Initially it is anticipated

that only ‘dry’ goods will transfer from Hairatan – the fuel oil and gas traffic remaining there.

Once Route IB is constructed, providing rail service to Kabul and beyond, Naibabad will

become a major rail interchange point.

4. Connecting Tajikistan at Sherkhan Bandar

83. The Base Case proposal shows the line to be routed to Sherkhan Bandar via Kunduz for cross-river connection with the Tajikistan rail system (TZD). This is a somewhat circuitous route, and there is a 40 km gap in Tajikistan to the nearest railhead at Shaartuz. The road


15


bridge at Sherkhan Bandar, constructed two years ago, was not designed for rail traffic, and an additional bridge will need to be built to achieve through rail connection.

84. The Tajikistan Government has proposed an alternative river crossing from the west of the country at Aywadz – at a point where its rail system is already close to the river. Re-routing of the Afghan line to this location would save a further 125 km on the distance from Herat, further reducing costs and transit time. An additional aspect is that, as the Tajik system is 1520mm gauge, transhipment facilities will need to be provided. As such facilities are being provided at Naibabad for traffic from Uzbekistan, the line from Aywadz to Naibabad would be built to 1520mm gauge to take advantage of common transhipment facilities at that point. The proposed new rail border crossing at Aywadz could be a ‘text book’ example of a modern border crossing. If ‘dry port’ customs facilities were provided at Mazar-e-Sharif and Dushanbe there would be no need for similar provision at this border, and it could operate more efficiently on that account.

85. Naibabad-Khulm-Kunduz-Sherkhan Bandar: The Base Case alignment for this section is supported by the team’s studies. A salient factor affecting rail traffic levels in this area is the eventual alignment for Route I B Mazar-e-Sharif – Kabul – Jalalabad. This line is shown on the published outline map to pass from Naibabad via the Tashqurghan Pass/ Samangan to Pol-e-Khumri, a route which appears not feasible for rail. It seems that the eventual route, to avoid the pass and the adjacent mountainous area, will need to pass very close to or via Kunduz, in which case it could sensibly commence at Kunduz rather than Naibabad, to avoid duplication of routes. Study of this route has however not yet commenced.

86. Additional considerations are that this rail route to the north from Kabul might be used for copper output from the Aynak copper mine, now under development, and also conceivably for iron ore from the Hajigak deposit, the concession for which is expected to be awarded shortly. Either or both of these potentially heavy traffic flows could pass northwards via the Kunduz-Sherkhan Bandar route into Central Asia and beyond. All these questions however remain outstanding, but could radically affect design of the Kunduz rail terminal, which could develop into a major interchange between rail routes, possibly also involving facilities for change of rail gauge.

87. The border crossing at Sherkhan Bandar is particularly important as it is located on the north-south route (CAREC Corridor 6) to and from Kabul and Pakistan to the south, and through Tajikistan and Kyrgyzstan to China to the north. A site for the rail terminal at Sherkhan Bandar on the river bank has been identified. Construction of a rail river bridge will be required and a 40 km extension of the TZD rail system south to meet the Afghan system will be necessary for through rail services.

C. Detailed Description of Alternative Route Options for Phase - II

88. The following alternative route options have been identified following careful study of the Base Case proposal:

89. Alignment Option 1: The Base Case route originates at Sherkhan Bandar and terminates at Herat, via Kunduz – Khulm – Naibabad - Mazar-e-Sharif – Aqcha – Sheberghan – Andkhoy – Dawlatabad - Maymana – Almar – Qaiser – Ghormach – Murghab - Qala-i-Naw – Karukh - Herat. The route follows the same alignment as the existing roads. The route has a branch at Andkhoy to Aqina at the border between Afghanistan and Turkmenistan (35km). The route length of this option is 1048 km excluding the Andkhoy-Aqina branch.

90. Alignment Option 2: The alignment of Option 2 mirrors that of Option 1 between Sherkhan Bandar and Qala-e-Naw. From Qala-e-Naw this alignment runs west as far as



Kushk (121 km). Thereafter the alignment runs south for 70 km to Herat to join The Khwaf-Herat railway at a suitable location on the north side of the city. Route length of this alignment is 1084 km excluding the Andkhoy-Aqina branch. This alignment will transit comparatively less high ground and it will be convenient to connect with the Khwaf-Herat route at a suitable location on the northern outskirts of the city.

91. Alignment Option 3: Option 3 alignment commences at Sherkhan Bandar. After Kunduz (61km) it will run towards Pul-e-Khumri (78km). From Pul-e-Khumri the alignment will reach Khulm via Aybak (84km) from Pul-e Khumri, Hazrat-i-Sultan (69km). From Khulm the alignment will follow the same alignment as Option 2 to Herat. The route km of this option will be total 1192 km - 118 km more than Option 2. During the field visit to the Sherkhan Bandar-Kunduz section on March 2010 and discussion with the Governor, Director of Governor office and Director MPW of Kunduz this option was discarded due to terrain difficulties between Pol-e-Kumri and Khulm.

92. Alignment Option 4: Option 4 will follow the same course as Option 3 between Sherkhan Bandar and Sheberghan. It will reach Maymana directly bypassing Andkhoy and Dawlatabad. Route km under this option will be reduced by about 75 km to 1058km.

93. Alignment Option 5: The consultation with the EA confirmed that it has been ascertained that the Government of Tajikistan has expressed interest to the GOA to build a new rail link from Aywadz to Khulm in order to secure connection to Aqina. EA has also informed that GOA is equally willing to establish this line very quickly. Option 5 will originate at Aywadz in Tajikistan, cross the border of Afghanistan at a location as close to Khulm as possible .A new bridge over Amu river will be required for this proposed link with Tajikistan. From Khulm the route will follow the same route as Option 4. The route km of this option will be 125 km less than that of Option 4 ie 917 km. This option should have 1520 mm gauge for the Aywadz - Naibabad sub-section. Building of CIS gauge (about 78 km within Afghanistan) will enable transhipment at Naibabad Transhipment Yard using equipment provided for the Phase - I: -Mazar-e-Sharif project.


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Figure 2: Proposed Alignment of phase-I and II

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ADB Technical Assistance 7259

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Figure 3: Proposed alignment of phase-II (Option 4)


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Table 1: Main Features of five Option Alignments

D. Recommendation Regarding Alternative Route Options for Phase - II

94. Of the above Options, Option 4 (see figure 3) is strongly recommended to be adopted for the following reasons:

• It most directly connects the main traffic centres • It avoids high ground en route • it provides the best opportunity to exploit mineral deposits en route

95. The total route length of this option is 1105 km excluding from Sherkhan Bandar to Heart including Sheberghan-Aqina branch. These developments will enable the country of Afghanistan to become more self-sufficient. All electricity power currently is imported, and revenue from minerals export will substantially improve the country’s balance of payments. The following mineral deposits exist along the line of route (see Figure 4):

• Coal north of Herat and in the area of Kunduz; • Oil and Gas in the area of Sheberghan; and • Iron Ore near Khulm.

96. In addition there are major deposits of copper at Aynak and iron ore at Hajigak. The copper traffic will be destined to China and likely to use the Northern Corridor between Kunduz and Sherkhan Bandar. Destination of the iron ore has yet to be determined, but if bound eastwards, will use the Northern Corridor for a major distance.

97. The total route length of option four is 1,058 km excluding 107 km of the Sheberghan - Aqina. This option saves 75 km in route length between Herat and Sherkhan Bandar. Connection between Andkhoy and Maymana is not important as Andkhoy is not a major traffic center. The proposed railway is designed for long distance traffics, not short intermediate traffic flows between adjacent stations.

Options Total Length Main Features

Option 1

1,097

The route follows the same alignment as the existing roads. The route has a branch at Andkhoy to Aqina

Option 2 1,133 From Qala-e-Naw this alignment runs west as far as Kushk (121 km). Thereafter the alignment runs south for 70 km to Herat to join The Khwaf-Herat railway

Option 3 1,251 From Pul-e-Khumri the alignment will reach Khulm via Aybak (84km) from Pul-e-Khumri, Hazrat-i-Sultan (69 km). From Khulm the alignment will follow the same alignment as Option 2 to Herat.

Option 4 1,105 It will reach Maymana directly bypassing Andkhoy and Dawlatabad

Option 5 917 From Khulm the route will follow the same route as Option 4. The route km of this option will be 125 km less than that of Option 4 ie 919 km

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Figure 4: Maps Showing Mineral Deposits


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E. Project Implementation Period

98. The Phase - I: Hairatan to Mazar-e-Sharif Railway Project is planned to be implemented over a period of 18 months including testing, commissioning, and trial operations. The project has already been awarded to UTY and the design and construction activities started in November 2009. The phase - I implementation is expected to be completed at the end of this year (2010).

99. The Phase - II: Sherkhan Bandar to Heart is yet to be financed. This 1105km long railway line is proposed to be implemented in two phases consisting three sections as described in the table below. If the constructions of the two sections start at the same time the total implementation period of the project required will be five years. However in case the implementation is done is done separately. The Herat-Naibabad section/site will take four years and the Naibabad-Sherkhan Bandar link section/site two will take three years and the Sheberghan-Aqina link of section/site two will take two years. It includes feasibility and design as well. The tentative implementation schedule of each section has been presented in Appendix 2. The implementation of Phase - II route has been presented below in Table 2.

Table 2: Phase - II Implementation Period3

Phase - II Railway Link Details

Total length of the route- 781 km.

Cost of construction- US$3.956 million

Section- 1 Herat-Naibabad

The Period of construction is 4 (four) years

Total length of the route- 217 km

Cost of Construction- US$1.118 Million

Section- 2 a. Naibabad- Sherkhan Bandar Link

The period of construction is 3 (three) years

Total length of the route- 107 km

Cost of construction- US$567 Million

b. Sheberghan- Aqina Link

The period of construction is 2 (two) years.

IV. FEASIBILITY ANALYSIS OF THE STUDY

A. Feasibility Analysis of Phase - I

1. Traffic Demand Forecast

100. The traffic data were collected from the recently completed studies and surveys to assess the quantum of new traffic that can be generated in the region due to the Project. The quantum of additional traffic that can be carried by the railways via the proposed rail line route, etc. The various elements of the studies are transport surveys from various modes of

3 Detail cost estimates is presented in Appendix 1



transport operators, stakeholder consultations, consultations with the project affected people, and consultations with the people of the project region to assess the requirement and locations of Railway stations, transshipment yard and other passenger amenities and rail related matters, etc.

101. In the Performance Management System report of the project “Rehabilitation of Roads from Pul-e-Khumri via Mazar-e-Sharif to Balkh and Naibabad to Hairatan” submitted to ADB in February 2009 against their Loan No. 1997-AFG (SF) it has been mentioned that in 2004 the average annual daily traffic was 4006 vehicles. The total number of trucks per day as per manual counting is 1073 in 2004. The percentage of freight traffic including 486 two axle truck, 442 three axle truck and 145 multi axle trucks was 27%. The empty truck on Hairatan-Mazar-e-Sharif Road is almost 50%, that is, load bearing trucks were 537 in 2004.

102. It has further been reported by the international trade department of Ministry of Commerce and Industry that owing to porous border with Uzbekistan and poor trade facilitation process the official statistics usually reflect fifty percent of actual number of trucks engaged in cross border trade, which means the official statistics might have reported presence of less number of trucks in 2004. But, actually, there is 1073 number of trucks per day which were engaged in carrying freight and half of were empty.

103. The divert ability of truck transportation to rail mode has been considered on the basis of Logit Curve-based Equation mentioned in the report, Analysis for Assessment of Likely Traffic Diversion, submitted to ADB in 1991. The form of equation changes according to the level of cost ratio. The curve generally shows limited sensitivity to changes when the cost ratios are extremes. At cost ratio of 1.00, denoting equal costs for the alternative modes, somewhat more than half of the traffic is estimated to use the alternative mode. The rail freight cost is half of the road transportation cost in this project and the application of cost ratio (0.50) to the equation specified to this situation estimates a diversion to the tune of 97% of truck to the railway mode.

104. The forecasted traffic volume of phase - I is presented in Table 1 of Appendix 8.

2. Technical Analysis

105. The fundamental technical aspects like preliminary soil condition, hydrological situation, geological consideration have been well taken care of during the study. The volume of traffic at the beginning has been estimated to be on the lower side necessitating only crossing lines in between. But at the request of the MPW subsequently the stations of Jairatan and Taza-Omid, which were designed with one loop line was upgraded to two loop lines stations. Altogether 6 stations have been proposed in considering the volume of traffic.

106. The inter-modal transshipment facilities were provided at Naibabad with the idea of relieving burden on existing Hairatan port. For railway transshipment from 1520mm gauge to 1435 mm (standard gauge) has also been incorporated. Purpose of such incorporation of rail transshipment was to have seamless standard gauge from Naibabad – Mazar-e-Sharif-Herat.

107. Since the entire route of proposed railway shall run almost parallel to the existing road, a total of 33 numbers of Box Culverts has been proposed. These will facilitate unobstructed passing of water/precipitation of the adjoining road bridges.

108. To avoid huge quantity of earthwork in embankment as well as level crossing, at the approaches of Kabul-Mazar high way, the consultants proposed a 6m span box culvert (to be served as road over bridge) having 7.50m high vertical clearance. The lineal length of box culvert will match with the width of the over head Kabul-Mazar road.


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109. Considering the volume of road traffic over the existing road as well as the future prospect of road construction within the region the consultants have proposed to provide 36 level crossings. Of which 3 are special class and the rest 33 are ordinary un-manned ordinary class.

110. The forecasted traffic volume of Phase - I is presented in Table 1 of Appendix 8.

111. In any typical railway route design, curve is generally discouraged unless it is compelled by physical constraints. It is worth mentioning here that from south end of the Friendship Bridge of Hairatan to the proposed Hairatan station, some important oil companies such as Gaznafar Group, National Fuel Company etc exist. So, to avoid shifting of these establishments, some curves of shorter radii is proposed. However, at this location only one curve of more than 800m might be required, if decision is taken to relocate the establishments. Further, to be noted here that the proposed alignment crosses the Mazar-Kabul Highway at Naibabad. To avoid the hilly area that starts after the road crossing at Naibabad, a curve of shorter radius is proposed. However, the proposed radii (400m radii) of all the curves are within the permissible limits for the Standard Gauge tracks.

3. Project Financial Viability

112. It is assumed that the Hairatan to Mazar-e-Sharif Railway is operated as an independent agency. It is also assumed that the railway agency will eventually; (i) be subject to corporate income tax, business tax and any surcharges; and (ii) undertake design, construction and operation of the railway, and bears associated risks.

113. The expected construction period for this project is 2 years (2009-2010) and the expected operation period is 25 years, from 2011 to 2035. All costs and revenues are expressed in 2009 constant prices in US dollars. The financial analysis is associated with the economic analysis, traffic forecast and other sections in this report. The financial analysis is conducted in accordance with ADB’s Guidelines.

114. The Project's annual net cash flows were forecast over 26 years (2009–2035), including the construction period, under a with- and without-project scenarios. Constant mid-2009 prices were used to calculate the FIRR and weighted average cost of capital (WACC). The incremental cash flow included all payments incurred to construct, operate, and maintain the facilities over their useful life. Taxes and physical contingencies were included, but price contingencies were excluded. FIRR is estimated at 4.5% and WACC at 1.9%. This is based on generating minimum revenue of 35% based on rail freight transport tariffs. The project financial analysis, including its sensitivity analysis, is in Appendix 6.

4. Project Economic Viability

115. Economic analysis was carried out in accordance with ADB's Guidelines for the Economic Analysis of Projects. The main project benefits comprise freight-cost savings, commodity loss reductions, increased trade, and incremental truck productivity. Other benefits include avoided externality costs, reduction in road maintenance, and lower traffic. The potential Project beneficiaries will be shippers, freight forwarders, and local communities. Women will also benefit from the Project. The rail line also has high regional cooperation content. The Project's EIRR is estimated at 15%.

116. The completion of the railway project will make available especially fuel/oil at the railway head near Mazar town, which means the oil carrying trucks will no more be required to travel 56 km for loading/unloading point at Hairatan. On the contrary the trucks, especially more than two axle, will move to loading/unloading point near Mazar town. This will cause a savings of distance of 37 km (56-19) in one direction. Actually, there will be a savings of 74



km (37x2) distance for a round journey from Naibabad to Mazar and back for all categories of freight traffic presently destined to Hairatan for trucking purposes but coming from Kabul and eastern directions.

117. It has been ascertained from local enquiry at Hairatan and at Mazar that the per km freight rate for trucks between Mazar-e-Sharif and Hairatan is USD 0.140 and the rate for trucks between Hairatan and Kabul-wards is USD 0.098 at normal times. It is known that freight rates includes Vehicle Operating Costs (VOC) and the transfers like profitability, taxes, insurances and factor costs like wages of drivers, attendants etc.

118. The project is like to leave effective impacts on the local economy visa-e-via Afghan economy. Because there will be lesser transportation cost, the exportable commodities will be cheaper and import commodities will also be cheaper. There may be consumer surplus as well as more exporting. The continuous railway connectivity may lead to better trade facilitation arrangement leading to more trade between Afghanistan and Uzbekistan.

119. The economic viability of the project has been examined on the basis of EIRR estimation based on the benefits accruing to the project on account of freight savings and savings for shortening of distance to collect goods available presently at Hairatan. The cutoff mark has been considered as 12%. It is found the project base case EIRR is 18.79% and NPV is US$116.19 millions.

120. Sensitivity tests were carried out to assess the impact of different benefit and cost variables. Under a combined freight-cost saving reduced by 20% and construction costs increased by 10%, the EIRR is estimated at 12%. Assuming that there is no productivity gained by the trucks, the Project remains feasible with an EIRR of 13%. The reduction of freight diversion rate from 30% to 25% will reduce the EIRR to 13%. The sensitivity tests demonstrate that the Project is robust across a broad range of variations in key parameters.

121. The sensitivity test result, EIRR of phase-I is in Appendix 5.

5. Social Safeguard Analysis

122. Social Impacts: Infrastructure projects, like the upcoming Railway project, will give rise to social impacts in and around the project impact area, ranging from loss of lands and homesteads, loss of income sources to displacement and resettlement in new areas. lf the social impacts of the Project is not identified and mitigated, there is great possibility of land loss and higher poverty levels in the impact area. In that case the Projects will encounter delays and cost overruns due to issues related to land acquisition and resettlement, including severe constraints on the availability of replacement-land, distortions in the land market. The Project entails minor land acquisition and resettlement since most of the railway route passes through uninhabited and unused desert land. The impact of the railway route is only on 2 vacant plots. Based on this impact, the Project has been classified B for resettlement purposes.

123. None of the people affected by the Project belongs to groups classified as indigenous peoples under ADB's Policy on Indigenous Peoples (1998). The Project has been categorized as C for impacts on indigenous peoples. A summary on social safeguards is in Appendix 4.

124. Impact on Gender: In Afghanistan women in the past were generally denied of their rights such as participation in decision making in the households as well as in the community, acquiring education and having adequate food and nutrition. Most literature indicated that women in the country were traditionally given lower status than men despite the injunctions of Islam which does not differentiate the role and right of men and women. In


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practice, men exercise control over all aspects of women’s lives in accordance to traditional value. Culturally, women’s role is limited to home or homestead as mothers and housewives and help the family in their farming activities. Sometimes they go to bazaar to purchase household items. They collect drinking water from well or river. In some places the distance of the river from home is one or two kilometers away and some housewives also collect wood for fire, which prevents them from income opportunities. The Project is expected to have the following social impacts:

• Women and other vulnerable groups will benefit from the Project, as they will have greater accessibility in employment opportunity and wage earning scope created by the establishment and operation of the railway project.

• The scope of local and rural industries will be increased that will also be the scope for employment of the poor and vulnerable peoples.

• Although the country has no significant experience of vulnerability of HIV/AIDS, there will be need of awareness rising because the bigger transport infrastructure network may bear risk of spreading of HIV/AIDS. Local government institutions and NGOs may be assigned responsibilities for information campaigning activities.

125. Impact on Poverty: A poverty and social analysis for the Project was conducted in August 2009. It involved key stakeholders including local communities (including women), pastoral nomads, MPW, and district government officials.

126. The Project is located in the Balkh Province. The main beneficiaries will be local companies, local communities, shippers, and freight forwarders. Women will also benefit from the Project. The Project will generate considerable economic and social benefits. Railways will likely attract additional economic activity into the area, thus generating job opportunities, including for women.

127. Women and other vulnerable groups will benefit from the Project because the railway will generate demand for local labor, increase economic activity, including small business opportunities. The expansion of secondary and tertiary industries, due to increased trade, will help generate additional employment opportunities for both men and women.

128. A summary poverty reduction and social analysis is provided in Appendix 4. The operation of the railway could have a beneficial impact on the incident of HIV/AIDS and sexual transmitted diseases. Evidence has shown that long-haul truck drivers are a primary vector for geographical spread of HIV/AIDS. The Project will reduce the amount of long-haul truck operations, especially trucking across international and provincial borders. Further, providing modern transport infrastructure reduces the migration of workers seeking employment elsewhere, again reducing sexually transmitted diseases transmission vectors. The Project will not require importing a large number of workers.

129. The railway route generally avoids high ground and follows the northern river plain. Where possible cultivated and populated areas will be avoided. Provision will be made to maintain water-courses and for movement of livestock. There will be little impact on populated areas, and in relation to the job and earning opportunities offered by the railway, there will be little adverse social impact as a result of the project.

6. Environmental Impact Assessment

130. An IEE was prepared for phase - I, shows that no major negative environmental impacts are likely to occur due to the construction and operation of the Hairatan - Mazar-e-Sharif rail line.



131. The potential impacts that could arise from the project have been assessed allowing the impact assessment and the development of mitigation measures to focus on the significant issues. As the majority of the alignment passes through unoccupied areas of desert or semi-desert there are no sensitive receptors in these areas. Human activity is concentrated around the northern and southern ends of the alignment and it is in these areas that the construction and operation of the rail line has been assessed for its possible impacts.

132. The results of the screening process identified that there would be no impacts on surface water, ground water, ecological resources or physical and cultural heritage from the rail line. The key impacts identified were noise, vibration and air quality issues associated with both the construction and operation of the rail line. Issues associated with any construction camps were also identified as being potentially significant. Construction materials will be transported by truck, therefore vehicle movements may also result in significant impacts.

133. It is expected that the outcome of this project will enhance current understanding of how rail transport infrastructure and services contribute to poverty reduction, to fill gaps in empirical knowledge, and to identify lessons learned and good practices.

134. The primary benefit of the project will be related to the movement of passengers, goods and services in a shorter time, as well as reduction in levels of stress and frustration experienced during traffic congestion by other modes of transportation. Health and safety are always an issue of environment and rail transport is more environmental friendly than many other transport modes. There will be significant diversion of road to rail travel and associated with that, reductions in emissions, most notably CO2, as well as large increase in fuel savings.

135. The Project will have some minor environmental impacts, which will be both positive and negative, including: (a) soil erosion, (b) temporary effect on noise and air quality due to construction activities; (c) increased growth in the economy of the region; (d) substantial income and employment opportunities; (e) better indoor air quality; (f) better life style and improved living conditions; (g) reduced health risk, (h) development of small to medium sized enterprises, (i) reduced poverty; and (j) advanced environmental skills and awareness level among the MPW officials.

136. Implementation of appropriate mitigation measures during the design, construction, and operation phases will minimize the negative impacts of the Project to acceptable levels. To ensure that these mitigation measures are implemented and negative impacts avoided, the measures will be included in the contract specification of the Project. Environmental monitoring of the Project will be undertaken regularly through the first three years of its operation to ensure that the measures are being implemented properly.

137. In IEE summary, as the rail route avoids most high ground by following the northern river plain, construction will not have major impact on the regions transversed. Disruption caused by construction will be mitigated. In relation to the employment and transport opportunities provided, the effect of the railway construction is envisaged to be beneficial and positive. The Summary of IEE is in Appendix 7.

B. Pre-feasibility Analysis of Phase - II

1. Traffic Demand Forecast

138. The following traffics are anticipated to form the traffic base for the proposed Shekhan Bandar to Herat rail line:


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• Import/Export traffic between Central Asia and the World Market

• Imported aid traffic including the World Food Programme and re-construction materials to Afghanistan

• Movement of exploitable natural mineral resources

139. The base traffic flow for the above route is anticipated to be import/export traffic in containers through Iran and via the Persian Gulf port of Bandar Abbas. In addition to normal levels of such traffic, substantial quantities of import aid traffic and re-construction materials to Afghanistan are expected to be attracted to this route.

140. There are significant deposits of exploitable mineral resources along the route in Afghanistan, as shown on the following two maps. Transport limitations have previously prevented these potential assets from being exploited, and railway provision will enable the developments of: (i) Movement of coal for power generation; and (ii) Export of iron ore/gas and oil

141. These developments will enable the country of Afghanistan to become more self-sufficient. All electricity power currently is imported, and revenue from minerals export will substantially improve the country’s balance of payments. The mineral deposits exist along the line of route (see Figure 4) are (i) Coal north of Herat and in the area of Kunduz; (ii) Oil and Gas in the area of Sheberghan; and (iii) Iron Ore near Khulm.

142. In addition there are major deposits of copper at Aynak and iron ore at Hajigak. The copper traffic will be destined to China and use the Northern Corridor between Kunduz and Sherkhan Bandar. Destination of the iron ore has yet to be determined, but if bound eastwards, will use the Northern Corridor for a major distance.

143. The forecasted traffic volume of section 1 and 2 of phase – II is present in Appendix 8.

2. Technical Analysis

144. The Northern Corridor route is intended to be the first line of a proposed rail system for Afghanistan, which will connect main traffic centres, and handle transit traffic moving along a number of ‘land-bridge’ traffic corridors which pass through the country.

145. The route has been chosen as an extension of the Iranian line to Herat and transits across the northern plain of Afghanistan, avoiding mountainous areas of the country. It will serve all the main provincial and traffic centres, and continue to the Tajikistan border at Sherkhan Bandar. It largely avoids high ground and serves en route the city of Mazar-e-Sharif-e-Sharif, which is planned in future to become a major hub of activity in the region, in conjunction with substantial expansion of the airport. It will provide access for major deposits of mineral resources along the line of route, and is anticipated to initiate substantial development of Afghanistan’s natural deposits.

146. The railway is being planned initially as a freight railway with the start-up capacity for some 10-12 pairs of trains, with passive provision for future increase. Passenger traffic can be added according to demand.

3. Railway Engineering

147. The peculiarity of the regions’ engineering-geological condition, the climate, the soil condition (specially the intensity and wide spread occurrence of mudflows, suffusion, karsts,



ventilation, collapsing and seasonal soil frost penetration depth) including the regions’ estimated seismicity from 6 to 8 are the most vulnerable factors to dictate the type of embankment, formation, sub-base, bridges, culverts and other appurtenances which are required for the proposed construction of the rail link.

148. In order to minimize the negative consequences of railway construction, it will be necessary to develop an effective engineering solution to deal with drainage, slope stabilization and traffic safety. The strategy to deal with these complex problems will be identified as part of the in-depth feasibility study. The chosen solution must be carefully considered so as not to compromise the overall construction.

4. Proposed Rail Gauge for Phase - II

149. A major question to be decided is that of the rail gauge to be adopted for the country. Afghanistan’s bordering countries have rail systems of differing gauges and this fact, amongst others, has hindered development of the country’s rail system. Iran uses the European standard gauge (1435mm) and this gauge is used by all countries in Europe to the west of Iran, apart from the Iberian Peninsular. Turkmenistan, Uzbekistan and Tajikistan, being ex-Soviet countries use the Russian broad gauge of 1520mm. Pakistan uses the Indian broad gauge of 1676mm.

150. Gauge-changing is expensive in terms of labour and equipment, and imposes transit delays, reducing the attractiveness of the rail mode. Transshipment of containers is relatively simple at a purpose-designed terminal, but is nevertheless expensive and the cause of delay. However change of gauge or transshipment at a minimum number of locations is clearly unavoidable if connectivity is to be achieved to adjoining rail systems.

151. A primary objective of the Northern Corridor rail route, apart from improving transport in Afghanistan, is to establish, in conjunction with the Iranian rail system, a totally new rail corridor between Central Asia and world markets, by providing speedy access to the Indian Ocean. For Afghanistan to take full advantage of this opportunity, it is clearly appropriate that its new rail system should match that of Iran. It is therefore proposed that standard gauge be adopted for the Afghan internal system, with interchange provided at suitable locations to establish connectivity with the rail systems of adjoining countries. At a minimum number of interchange locations therefore, transhipment and/or gauge changing equipment will need to be provided.

5. Proposed Transshipment Facilities

152. Subject to agreement on routing options the following provision of transshipment facilities is proposed:

a. Herat: Transshipment facilities and dual gauge track from Kushk, with broad gauge line. Extension between Kushk and Torghundi;

b. Aqina or Kerki: transshipment between broad and standard gauges;

c. Naibabad: transshipment between broad and standard gauges;

d. Sherkhan Bandar: transshipment and/or gauge changing equipment.

6. Land Required for the Project

153. Total requirement of land for the project is 53,995,000 square meter or 53,995 hectare.


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7. Proposed Bridges for the Project

154. There will be at least 30 bridges of around 200 m span over rivers like Khan Abad, Kunduz, Darya-e-She-Ab, and Almar, Qaiser, Hari-Rod and Murghab and other waterways across the alignment. It has been proposed to provide RCC Box culvert @two no per km of the route having an average of 5 m span. The total lineal waterway to be bridged has been assessed to be in and around 20,000 m.

155. In addition the alignment between Herat-Kushk has river/waterways running almost parallel to it, may necessitate construction of track over viaduct for a considerable length of the alignment (20 km).The advantage of choosing the route via Herat – Kushk - Kushki Kuhna -Qala-e-Naw instead of Herat – Karukh - Qala-e-Naw on ground of existence of high mountains (elevation 2450 m as against 1550 m) may not result construction cost reduction significantly.

156. It is worth mentioning that no bridge has been proposed over the river Amu Darya/Pywandj for connecting railways within the territory of Tajikistan.

8. Economic Viability for Phase - II

157. The economic analysis of the Railway Development Project is intended to optimize the allocation of scare financial and other resources and project benefits leading to improvement in Afghanistan’s national income and income of project beneficiaries. The objective is to determine whether he flow of benefits from operation of the railway is more than sufficient to cover all economic costs and generate economic returns over and above the country’s opportunity cost of capita. The methodology used that comparing the estimated economic costs to be incurred and the benefits to be generated by the project under the “with and without” project scenario undertake by the analysis. The time period for the analysis is 30 years, salvage values, if any, assumed for structures beyond the 30th year. The measures of economic project worth used were the EIRR and the Economic Net present Value (ENPV). The estimated project life was 60 years.

158. Using the estimated economic costs and benefits, the measures of project worth was computed in the base case scenario. The result shows that the project is feasible, assuming at economic hurdle rate (discount factor) of 12%. The estimated EIRR value for Section – I was 13.30% and the ENPV at 12% is US$ 507.04 million. On the other hand, the estimated EIRR value for Section – II was 13.58% and the ENPV was US$66.90 million. The analysis used Vehicle Operating Cost (VOC) from Phase – I study report. However, it could be assumed that with extraction of coal and other minerals, CO2, the economic worth will be more than estimated one, which was not considered for making traffic projection. With the proposed railway project, it is expected that the Afghanistan economy would reap substantial benefits in terms of macroeconomic impact. Lower freight rates for container and bulk freight due to mass volume carrying capacity, trade facilitation at border crossing and railway integration with CAREC member countries.

159. It is estimated that about 4,000 employments would generate for maintaining of track and operation and maintaining of trains. The other benefits are: (a) increased mobility and access to employment, (b) facilitating the establishment of business that employ the poor, and increasing their productivity, (c) increasing of self-employed business, (d) increase agricultural productivity and better sales opportunities for agricultural products, (e) improved access to education and health service, and (f) saving time and effort, thus increasing time and effort to channel to other activities.



160. The economic analysis also developed a set of verifiable and monitor-able performance indicators, which are indicated as equity and efficiency indicators. The equity indicators will intend to help monitoring towards more equitable distribution of project benefits is ensured across different income groups, regions, and genders and across generations (i.e. to ensure sustainability).

161. The infrastructure development cost of the project has been based on preliminary engineering estimation, which includes earthworks, bridges and protection walls, track, signaling and station buildings. In addition, the pre-feasibility study includes estimates for rolling stock requirement and costs for 10 pairs of trains. The rolling stock includes locomotives, coaches and freight wagons.

162. Sensitivity analysis was expanded from the usual ± 10% increase/decrease in specific factors, i.e. increase in capital cost or operating and maintenance cost or decrease in benefits. In general, sensitivity analysis is carried out to examine the impact of unexpected future changes. The cases of sensitivity analysis were: (a) 10% increase in capital/investment cost, (b) 10% decrease in project benefits, (c) 10% increase in operating/maintenance costs, and combined of (a) and (b). The results of the sensitivity analysis in the above four cases are shown in Table 10 and Table 11 for Section – I and Section – II respectively in the supplementary report 2 of Volume II. In all these cases, EIRR is above the hurdle rate of 12%, while, it is 11.80% (which is about 12%) in the worse cases for Section – I only, which is increase in capital cost by 10% and decrease in project benefits by 10%. Considering these scenarios and future investment in the mining sector and CO2 benefits, it can be assumed that the project is economically viable.

9. Financial Analysis for Phase - II

163. The financial analysis and financial projections are conducted for the Herat-Sherkhan Bandar Railway Project (the Project) in line with the ADB’s Guideline on Financial Management and Analysis of Projects.4 The financial analysis is conducted both by the Project and by Section and financial projects are undertaken by the Project.

164. The expected construction period is 6 years (from 2010 to 2015) for Section- 1, and 4 years (from 2010 to 2013) for Section- 2. The expected operation period is 30 years (from 2015 to 2044) for Section- 1 and 32 years (from 2014 to 2044) for Section- 2. FIRRs are calculated for the period from 2010 to 2044 and pro forma financial statements are prepared for the period from 2010 to 2044.

165. The revenues of the Project are generally from two sources: (i) operating revenue; and (ii) other revenue. The operating revenues include freight revenue and passenger revenue. The freight revenue is determined by freight traffic and tariff while the passenger revenue is determined by passenger traffic and tariff. The total traffic forecast in ton kilometer is derived by multiplying the freight traffic in unit by ton per unit for respective category and the length of the railway. The total traffic forecast in passenger kilometer is calculated by multiplying the passenger traffic in unit by numbers of passengers per unit for respective category and the length of the railway. Actually, the railway company will receive additional revenue from parcels, mail, baggage and accessorial transportation, loading and unloading, warehouse, and storage services. Given the similarity of the proposed railway to other railway in Asia, a conservative value of 4.5% of total freight and passenger revenues is assumed in this analysis.

4 ADB, Financial Management and Analysis of Projects, Manila, 2005.


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166. Detailed capital costs of the Project (including Section- 1 and Section- 2); consist of base costs, physical contingency, price contingency and financial charges during implementation. The total cost of the Project is US$7,062.6 million, of which US$6,546.7 is for Section- 1 and US$515.9 for Section- 2. The capital costs during the construction period for financial analysis include base costs (civil works, rolling stocks, land acquisition, environmental mitigation and consulting and project management) and physical contingencies, but exclude price contingencies and financial charges during implementation. Annual capital cost outlay for Section- 1 is assumed at 3%, 8%, 15%, 20%, 30%, and 24% respectively from 2010 to 2015, and 10%, 25%, 35%, and 30% respectively from 2010 to 2013.

167. Annual operating and maintenance costs of the Project (including Section- 1 and Section- 2) consist of: (i) fixed costs; (ii) passenger transport variable costs; (iii) freight transport variable costs; and (iv) other expenses. Operating costs are calculated by multiplying the unit cost by appropriate quantities. Unit costs for the above four components provided are assumed based on the similar standard in Asia.

168. The unit fixed cost consists of labor, materials, maintenance and repair of track and other fixed infrastructure assets including electrical lines. The unit passenger and freight variable costs are composed of labor, fuel (including electric power) and maintenance materials and are determined by traction (single or double), ruling gradient, empty wagon rate, number of passenger coaches/train, and other factors affecting productivity. Other operating expenses are assumed at 0.003 per ton-km or passenger-km.

169. The taxes that will be applicable to the railway company in Afghanistan are business tax and corporate income tax. It is assumed that the applicable corporate income tax rate and business tax rate are 20% and 2% respectively in Afghanistan.

170. It is estimated that ADB and the Government will contribute 99.1% and 0.9% of total source to finance the Project respectively. ADB loan’s interest rate has been computed at the 30-year forward London interbank offered rate plus a spread of 0.2%. The effective rate for the ADB resource is estimated at 4.38% since as of 6 May 2010 the Indicative Lending Rates for Loans under the LIBOR-Based Loan Facility is 4.18% for 30 years. The Government required rate of return is assumed at 7%, same as the rate in Phase - I.

171. The after-tax WACC is estimated at 1.97% by following the guideline of ADB. The results of financial analysis for the overall Project, Section- 1 and Section- 2 are summarized in Table 5, which shows that the FIRRs of the Project before and after tax are 4.39% and 3.71% respectively, greater than the WACC of 1.97%. Therefore, the overall Project is viable. The FIRRs before and after tax are 4.55% and 3.85% for Section- 1, and 2.54% and 2.03% for Section- 2, which are higher than the WACC. However, the FIRR for Section- 2 is only marginally higher than WACC since only freight traffic is generated.

172. The FIRRs of the overall Project, Section- 1 and Section- 2 are tested under the unfavorable parameters and the results of the sensitivity analysis are summarized in Table 6. The sensitivity results of the overall Project show that FIRR is not sensitive to the unfavorable changes of passenger tariff, O&M cost and freight tariff. The sensitivity results of Section- 1 suggest that FIRR is not sensitive to the unfavorable change of passenger tariff and O&M cost. The sensitivity results of Section- 2 indicate that any unfavorable changes of parameters will have significant impacts on the viability of Section- 2.

10. Environmental Impact Assessment

173. The proposed railway line (linking Sherkhan Bandar of Kunduz Province, Mazar-e-Sharif. and Herat) Project has no significant adverse impact on the environment. As per ADB



Guideline this project falls under the category “B”. To fulfill the requirement for category-B, GoA intends to carry out an environmental study to ensure that the contractor complies with the environmental requirements during the construction period, with the aim of making the project environmentally sound.

174. This section provides a description of the existing environmental resources of the project area in terms of physical resources, ecological resources, economic development, and social and cultural resources. The description is based on literature, review of available reports, map analysis and site visit notes. The majority of the alignment passes through desert and semi-desert where the terrain is featureless, uninhabited and barren. The entire alignment follows the road direction from Mazar-e-Sharif to Herat. The study area for the impact assessment is a 2 km wide corridor covering an area of 1 km either side of the rail line.

175. The alignment is located along the Northern Plain of Balkh Province and passes through Andkhoy, Qaiser, Gormach, Bala-Murghab, Lemon, and will terminate at Herat. The area is flat, and made up of areas of desert and semi-desert. The alignment’s topographical condition is the same as that defined in Balkh. The topography around the project site forms part of an extensive partially covered plain which abuts the foothills of the Hindu Kush to the south and extends across the border.

176. As the almost entire alignment passes along rural areas with no major industrial or other air polluting activities in the vicinity, it can be concluded that air quality in the project area is generally good and does not contain any materials harmful to the environment.

177. The result of the screening process identified that there would be no impacts on surface water, ground water, ecological resources or physical and cultural heritage from the rail line. The key impacts identified were noise, vibration and air quality issues associated with both the construction and operation of the rail line. Issues associated with any construction camps were also identified as being potentially significant. Construction materials will be transported by truck, therefore vehicle movements may also result in significant impacts.

178. Once operational there will be no significant air quality impacts from the rail line. Diesel locomotives will be used to power the trains and so there will be some emissions from the engines. However the air quality of the region is good, there are no other sources of pollution close to the line and the prevailing winds will quickly disperse emissions to acceptable levels.

179. Environmental monitoring is a very important aspect of environmental management during construction and operation stages of the project to safeguard the protection of environment. Compliance monitoring will be conducted in accordance with the Environmental Monitoring and Management Plan (EMMP).

180. Finally, it may be concluded that all participants at the meetings opted favorably for construction of the rail line and its related works. The project will have significant environmental and social benefits and, if the prescribed mitigation and management measures are fully implemented, the project is unlikely to have major adverse environmental impacts. The rail line can be built in an environmentally sound and sustainable manner, if the identified mitigation measures and environmental management plans are adopted. Notwithstanding the above, the major issue is the need to minimize disturbance to the local population in the areas of development. Measures will be undertaken to compensate promptly people affected by land acquisition at an adequate price as per GOA Law.


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11. Summary of Possible Social and Resettlement Impacts

181. The proposed 1,105 kilometer long railway alignment required 55,250,000 square meter lands for its area of 1,105,000 meter long and 50 meter width from Herat to Sherkhan Bandar. According to field reconnaissance, official information and idea of the local people 99% or, 54,697,500 square meters is government land and 1% or 552,500 square meters is private land.

182. About 50 housing structures (low and medium quality) will be affected which are located on 55,250,000 square meters area of alignment. On the proposed alignment from Herat to Sherkhan Bandar there are several segments where there will be some resettlement impacts, related to use of agriculture land under private use, residential land and housing structures. Some residential houses shall be affected in Andkhoy, Sheberghan, Qala-e-Naw and Maymana and some agricultural land shall be affected from Naibabad to Aqcha and in Kunduz province.

183. The average price of per square meter of land is estimated at 0.50 USD per square meter based on official record, present market price and idea of local communities. Similarly average cost of per housing structure is estimated at 2,500 USD including moving allowances.

184. The alignment has been selected through careful attempt to avoid impact of resettlement as much as possible. The present situation does not involve any risk for land acquisition and resettlement as the almost all lands are free from trees, perennial crops, historical sites, and major establishment of educational, business, social or government offices.

185. Almost all land is clear of trees, perennial crops, historical sites, and major establishment of educational, business, social or government offices. The detailed social and poverty analysis report has been prepared and presented in the Phase - II Final Report.

186. Indicative budget for resettlement- Amount of estimated affected land under private use 459,500 m2. The number of estimated affected housing structures: 50; Estimated current price of per square meter of affected land: 0.5 USD; Total estimated price of land (459500m2X.05) =229,750 USD; Estimated average price rate of affected housing structure: 2,500 USD; Estimated total price of housing structure 50x2500 USD=12,500 USD; Total estimated cost of affected land under private use and housing structures: 354,750 USD; Overheads @15% = 53,213 USD; Grand total: = 637,713.000 USD.

V. PLANS FOR INSTITUTIONAL STRUCTURE

187. Plans for an Afghanistan Railway System reportedly commenced in 1983 with an Executive order. Up to the present date however, other than two cross border links across the northern borders with Uzbekistan and Turkmenistan, there are no functioning railways in the country. The existing two railway links are from Termez in Uzbekistan to in the Balkh province and from Mary in Turkmenistan to Torghundi in Herat province, both of which are actively in operation. The total length of the railways is 25 km. and comprise cross border extensions to TRS yards in Torghundi. Construction of a railway link between Khwaf in Iran and Herat is also underway: this started in 2006.

188. The country is now aiming to undertake as many as four projects which are under active consideration by the government, proposing to connect Afghanistan with Pakistan, Tajikistan and Kyrgyzstan railway network (source: National Report of Afghanistan on Transport Sector). The railway transport system is owned and run by the state supported by



Article twenty of the Constitution (1990) of Afghanistan. The same article of the constitution also encourages private sector participation in investment.

189. The MPW Ministry of Commerce (MOC) and Ministry of Transport and Civil Aviation (MOTCA) shares the responsibilities of developing and operating the railway in terms of regulation, construction and maintenance, and operation. The MPW and MOTCA are responsible for the planning, development & maintenance of the railway network and regulatory matters respectively. The Ministry of Commerce in conjunction with UTY are performing all the commercial and rail services which includes TRS of cargos and maintenance of tracks at Port and management of railway assets at the port.

190. Currently there is a small rail organization of nineteen positions of which fifteen are currently filled within the MPW to oversee development of the Afghan rail system. This organizational set-up is appropriate at this stage as planning and constructional activities are paramount. In due course it is assumed that the railway system will be absorbed within the MOTCA.

191. An Afghanistan Railway Authority (ARA) is due to be established, and moves toward this happening are taking place. An initial meeting convened by the consultant, tabled the following considerations in its formation:

• There should be clear responsibility for each position in the proposed railway organization;

• Professional staff should be deployed in the new organization for successful operation;

• Financial and tariff issues need to be covered; • Maintenance/ workshop facilities/ railway infrastructure/ rolling stock to be

provided; • The organization should be designed for incremental expansion in parallel with

the rail system; and • Rail performance, safety and competitive issues need to be regulated by the

ARA.

192. Aviation (MOTCA) shares the responsibilities of developing and operating the railway in terms of regulation, construction and maintenance, and operation. The MPW and MOTCA are responsible for the planning, development & maintenance of the railway network and regulatory matters respectively. The Ministry of Commerce in conjunction with Uzbek Railway is overseeing all the commercial and rail services (including TRS of cargos and maintenance of tracks) at Hairatan and Torghundi Ports and management of railway assets at the port, and will continue these activities with the line extension currently in hand to Mazar-e-Sharif.

193. Based on the above mentioned reform proposal and organization options in the process of Afghanistan railway development and its operation, the following issues can be identified:

• Capacity enhancement of the existing organization; • Policy formulation and establishment of legal and institutional framework of the

Afghanistan railway.

194. Policy framework and the resulting legal framework shall be established in the following, but not limited to:

• Act of Afghanistan Railway Authority ,


35


• Asset ownership of the ARA, • Infrastructure including stations and rolling stocks, • Regulation related to private sector involvement, including concession for AR

operation, • Regulation related to subsidy by the Government to the AR at the operation

phase, • Clear definition for railway development and operation, • Development of separate operated body for Afghanistan Railway, • Consensus building among the stakeholders.

1. Coordination Setting

195. A Steering Committee will need to be established to oversee the development plan and their implementation for road transport, railway and cross border trade. Stakeholders in the railway sector like Ministry of public works, Ministry of Transport & Civil Aviation, Ministry of Commerce and Ministry of Interior should be member of the Steering committee. Details of their roles and responsibilities will have to be outlined and effectively be in place for coordinated integration, construction, efficient operation and control in transport sector. The committee will also oversee the framing and compliance of the legal and regulatory measures in transport sector for the purpose of efficient functioning of the sector activities.

2. Railway Sector Policy

a. Policy Principles for Railway Management

196. In the face of existing challenges, to create a better managed, commercially responsive and market led railway the obvious need is a clear policy, which the Afghan railway is lacking and needs to be formulated. In the effort of policy framing the policy makers should bear in mind some guiding principles, which could be:

• Interdependency of the railway system to those of the neighboring countries.

• Connectivity with the capital and provincial cities • An appropriate framework within which all modes of transport can operate

and efficiently compete. • Best possible development, maintenance and utilization of railway

infrastructure • Promotion of trade, sharing of resources and seamless trans border

operation by the railways • Appropriate allocation of roles of government and private sector to help

promote growth and investment including private sector participation • Ensuring railway safety, security and reliability • Customer satisfaction by providing quality service delivery and choice • Promoting the environment protection and improvement of energy

efficiency in the rail sector. • Developing of competent human resources for railway and ensure to

retain them.

b. Policy Measures for Railway Operations

197. Given that commercially responsive and market led operations of the Afghan railway is the objective and with the desired railway services (i.e. all category of Freights) identified, the next step is to identify those aspects of the Afghan national transport policy which apply to the railway, and lay out the important policy issues which have to be resolved if the objective is to met. This process will have an impact on both the objective and services and



lead to a clearer and realistic understanding of the duties and obligations which the Afghan government and the railway department must assume. The policy issues are summarized as:

198. Cost recovery: Revenues and government support for identified railway services should be equated with cost. To operate on commercial basis, the railway must charge its customers such rates that cover the operating and capital costs of the services they will demand. The strategic plan must include a careful assessment of the degree of cost recovery which is anticipated in total, and for each of the market/service segments. If there is little or no demand for a service and adequate rate cannot be charged, the service should be discontinued by the railway. Again if government is prepared to cover the shortfall between revenues and the operating and capital costs for a service, the railway should willingly provide the service. In other words, the cost recovery must be achieved either through revenue generation or a combination of revenue, subsidies, borrowings etc.

199. Pricing policy: A variety of approaches to railway pricing exists and they are likely to differ by major line of business. Policy makers should reach an agreement on the pricing principles to be used in each market segments for example, fully commercial, ‘value of service’ pricing for freight (and selected inter city passenger services applicable in future), marginal cost pricing for commuters, and competitively based profit maximization for commercial services such as leasing space in stations to private businesses. Railway be given substantial freedom to negotiate contract rates with its freight customers, and to raise and lower rates in response to competition, in market and service segments that the government will not directly subsidize. Such freedom will require some regulation to prevent monopolistic or predatory pricing situation.

200. Railway safety policy: Railway Safety Act (RSA) and other applicable legislation promotes and regulates the safety of railway operations. Afghanistan railway should develop an RSA which will enable them to promote safe railway operations. The purpose of such Rail Safety Compliance and Enforcement Policy will be to provide guidance to Afghan railway officials involved in:

• promoting compliance with railway safety regulatory requirements to be developed under the RSA and other applicable legislation and the safety of railway operations; and

• monitoring for compliance and safety.

201. Compliance is defined here as conforming to regulatory requirements including, but not limited to legislative provisions, regulations, rules, standards, orders and emergency directives established under the RSA; while enforcement is defined as the measures that are undertaken to bring about compliance.

202. Social service commitments: Railways all over the world have been used explicitly and implicitly as instruments of social policy. As such the government must identify those uneconomic services that are to be continued, define the levels of required support, and identify the public authorities for providing the fund.

203. Private sector participation: As the Afghan railway department is a newly created organization and not equipped and experienced in managing and operating the rail services including construction and maintenance of infrastructure, it is essential that the private sector (at home or abroad) be encouraged for carrying out the rail service activities. This will need framing of detail policy by carefully determining and delineating the extent of their involvement and identification of suitable options in the framework of private - public partnership arrangement.


37


204. Based on the above mentioned reform proposal and organization options in the process of Afghanistan railway development and its operation, the following issues can be identified.

3. Possible Public/ Private Participation Options

205. As the Afghan railway department is a newly created organization and not equipped and experienced in managing and operating the rail services, or in construction and maintenance of infrastructure. It is essential that the private sector (at home or abroad) be encouraged to carry out rail service activities. This will need framing of detailed policy by carefully determining and delineating the extent of their involvement, and identification of suitable options in the framework of private - public partnership arrangement. Private operator or investment funder participation is an important method of reducing pressure on the investment budget. Very careful drawing up of contracts will be necessary to delineate responsibilities and liabilities, and inclusion of effective incentives is important to ensure that financial returns are devoted to system development and not drained away from the business.

206. Aspects of Public/ Private Participation in funding and operation of the railway will be dealt with in greater depth in the final report for this project. The institutional assessment and proposed is presented in Appendix 3.

VI. STAKEHOLDER PARTICIPATION AND CONSULTATION

A. Stakeholders Consulted

207. A list of people consulted as part of the environmental and Social Studies is included in the Appendix to the full IEE report. The principal measure of consultation for this project has been the holding of a major Consultation Workshop in Kabul on April 22nd, attended by 130 representatives from government departments, trade associations and representatives from provincial and local organizations. This event was given full coverage by TV and Press, receiving very favorable comment and support.

Table 3: List of Organization Participate in the Workshop

S. No Name of Organization Name of Participant

1 German Embassy Abdul Wadood

2 Kabul Politechnical University Prof. Nejabi

3 Heart Governor Office M. Anwar Mateen

Mr. Wu Gang Chen 4 Chinese Embassy

Mr. Zhang Peng

Mr. Jeff Preet 5 Technologest Incorporation

Engr. Arif

General Sadat

Abdul Majeed

Mr. Mathew K. Cowklin

Mr. P Jeff Harrison

6 Ministry of Interior

General Mohammad Tahir

7 President House Prof. Dr. A. Rahman Ashraf

8 Afghan Construction & Log. Unit Engr. Mohammad Karim

9 Ministry of Labour and Social Affairs Sardar Mohammad Nabard

10 ABCD Consultants Abdullah




Mr. Moin A. Khalid

Mr. Mehrabuddin Seraj

Dnight J. Crossland

Damp Thoswin

Vacri P. Tian

Seema

Roqya

Haji Mohammad

Jonathan Peter

11 Ministry of Mines

Jeremy Sortain

12 Kyrgyz Trade Representative Almaz Kaliev

13 Balkh Governor Office Mohammad Zaher Wahdat

14 Jozjan Governor House Haji Mohammad Akbar

15 DSV Air and Sea Henning I. Hansen

16 Asian Development Bank Craig Steffensen

17 Uzbekistan Embassy P. A Live

18 LBC Convay

19 Parliament Aziz Ahmad Nadeem

20 World Bank Mohammad Ajmal

21 European Union Bashir Ahmad

Ali Hussain

Engr. Hedayat-ullah

Sayed Hekmatullah

Nasir Abdullah

Mohammad

Abdul Bari Sediqi

Abdul Najib

22 Ministry of Public Works

Marzia Sulaimankheil

Sayed Torak 23 USAID

Rick Broadhead

A. Benjam 24 US Embassy

Robert K. Felby

25 IDLG Abdul Molek Sediqi

Mohammad Asif Muhammadi

Kahir Mohammad

Ali Zaki

Qurban Ali

26 ACCI

Saed Qayoum

27 TOLO TV-Medai Tamim

28 AKDN Nabila Alibhai

Hiro Kikuchi 29 Japan Embassy

Ahmad Zubair

30 Ministry of Economy Mr. Arghandiwal

31 Turkmenistan Embassy Ahmad Yazeyor

32 Ariana TV-media Hakimullah

33 Russian Embassy Djiddy Vakhid

34 Pajhwak Press-media A. Qadir Sediqi

35 Shamshad TV-media Salahud-din

36 BBC Fraidoon Ibrahimy

37 Kunduz Public Works Engr. Faraidoon Jawanshir


39



38 RTA National TV Ahmad Javed

39 Yak TV-media Naheed Fetry

40 Badghis Governor House Dilberjan Arman

Zre Jian Hui 41 MCC

Wang Dao

42 Ministry of Agriculture Ghulam Yahya Gul Fani

43 AISA Naseem Akbar

44 Afghanistan Times Qayoumi

45 8am Daily Times Zafar Shah

46 Tamadon TV-Media Mohammad Asif Sahar

47 BNA Mohammad Farman

48 Tajikistan Embassy Imanov

49 Noor TV-media Abdul Haris Jamalzada

50 Azadi Radio BroadCost Seend

51 Cheraagh Daily Razia

Mohammad Jamal 52 Rahe-Farda TV-media

Jalaluddin

53 RTA National TV Ghulam Nabi

54 Negah TV-media Ali Mujtaba

55 MCC Hedayat Azizi

56 JICA Kenshio Tanaka

Ayal 57 Rana TV-media

Jawed

208. A wide range of stakeholders have been consulted to make as far as possible in the duration of the mission. An in-depth analysis was done for different groups of potential beneficiaries of the project, and to assess the project's benefits, impacts and risks. Stakeholders were involved at different levels of discussion and in different places. Issues discussed in the consultation sessions are merits, demerits of railway alignment, land acquisition and resettlement issues, etc, the consultation sessions were open for all to share and exchange views, ideas and experiences.

209. In the course of the present TA, several public and private organizations and individuals in Balkh Province and within the immediate project hinterland were consulted as to the anticipated impact of the project. Further details of those contacted are provided in Land Acquisition and Resettlement Plan Report and in the Initial Environmental Examination, which accompanies this Report as a separate volume. Besides, several ministries were consulted for the development of Institutional set up.

B. Participatory Approach

210. All these stakeholders have been consulted for social assessment, using different qualitative and quantitative approaches. Issues discussed in the consultation sessions are merits, demerits of railway alignment, land acquisition and resettlement issues, etc,. The consultation sessions were open for all to share and exchange views, ideas and experiences. Most of the information was obtained through direct interviews. It was not that easy to obtain and review secondary information; sometimes only parts of documents could be obtained. This was a constraint in obtaining homogeneous information and data.

211. Concerning the participatory approach itself, it was more a classical socio-economic field survey. The true participatory approach is used when the beneficiaries are consulted at



all stages of a project: first for the selection of the project, then at project design level. They will feel responsible for the infrastructure (a road, a school, a health center, a borehole, etc.), if not owner. They will have to operate the infrastructure (generally through a users association). This is not the case in the current situation. The expected beneficiaries of the project have been consulted for the selection of project and for its design. The MPW staff in Hairatan and Mazar-e-Sharif had awareness of the project at the first visit of the Consultant.

212. Project assumes maximum coordination efforts by government agencies in Afghanistan, and full commitment and support of the Balkh Provincial government, local communities, and security institutions. Moreover, it is assumed that the Government will formulate policies conducive to economic growth and remain committed to regional cooperation and integration.

VII. CONCLUSION AND RECOMMENDATIONS

A. Conclusion

213. Creation of these new transport corridors will increase transport capacity and reduce costs, enabling exploitation of natural resources and improvement in the quality of life throughout Central Asia. The whole Project will raise the profile of Afghanistan as a transit route; make it easier to deliver humanitarian relief, and will complement other modes of transport, including three CAREC transport corridors and the airport at Mazar-e-Sharif, which will soon be expanded. The Project is financially sound, and its economic internal rate of return is estimated at about 13.5%. Sensitivity tests demonstrate the Project to be robust across a broad range of key parameter variations.

214. The railway will generate substantial volumes of transit traffic and a new source of income for Afghanistan. For Afghanistan to become economically, financially, socially more viable and also to become a ‘Transit Country’, construction of these rail corridors is not only important but also very urgent. That the Phase - II Base Case rail route, as amended in this report, will be a viable operation, and will prove a valuable aid to increased industrial activity in Afghanistan, Turkmenistan, Uzbekistan and Tajikistan.

215. The institutional arrangement and in-house capacity should be agreed (by GOA and ADB) and be in place as soon as possible. Construction of this railway will create employment and earning opportunities across a wide area of country. Social mobility will be increased and substantial reduction in poverty deprivation will result. The railway will transit a region which is currently inadequately served even by road. It will transform transits throughout the region and extend market opportunities for produce and stimulate employment. Educational and medical opportunities will be extended.

216. The Study is wholly in line with the principles advanced by CAREC and is designed to improve the GDP of the countries of Central Asia. An intensive programme of public consultation, including a major workshop in Kabul was introduced the proposed railway lines conducted in the TA. It is confidently expected that industrial partners, freight forwarders and traders will enthusiastically support this project. Ability to fund project; as mentioned above via the consultation process, it is anticipated that sources of public and private finance will be identified. GOA ability to establish legal and organizational framework for rail system: Investment in rail is a long term process, and successful development of the Afghan rail system will depend upon consistent institutional support. GOA ability to create trained staff for reliable operation of rail system: Measures will need to be instituted to ensure creation of a trained Afghan rail staff, presumably by the initial concessionaire who will operate the system. Need to provide for passenger traffic demand: Government policy commonly promotes population mobility, and it is likely that provision will need to be made for this


41


traffic. Need for sustained GOA policy support for completion and maintenance of national rail system: The investment cycle for rail transport is long term, and sustained policy support will be necessary for financial return to be achieved.

217. It is apparent that this project has a number of potential risks. The project is however shown to be feasible in terms of operational capability and financial viability. On the assumption that the project will be taken forward for authority, a period of consultation with stake-holders will take place to identify funding opportunities. It is anticipated that the clear economic benefits to all countries involved will exert sufficient pressure to ensure that the system becomes operational as soon as possible. Identification of Operational Concessionaire, interest in rail construction has already been identified and a number of options have been recorded for operation of the system. The GOA will plan strong measures to mitigate this risk.

B. Recommendations

218. That as Afghanistan needs to become more economically, financially and socially viable and independent, construction of this and other rail corridors should be regarded as urgent. That for strategic, economic and technical reasons, the Afghan rail system should be constructed to the standard railway gauge.

219. That this scheme be taken forward for detailed design, financial authority and construction as soon as practicable.

220. That passive provision be made for passenger services between main centres to aid population mobility. That passenger services be operated by diesel multiple units to provide frequent ‘day return’ services at low cost. That passenger services be subsidized to encourage mobility and aid unification of the country.

221. That the GOA proceeds with planning to appoint a concessionaire to operate the system in due course, and train an Afghan rail staff within an agreed timescale. That the GOA proceeds with development of a pan-Afghan rail system to build on the productivity of the Northern Corridor Line.

222. That the proposed ARA should be given substantial authority in decision making, and should adopt a commercial focus with a business planning approach to key businesses. That in parallel with rail system development, an effective regime of management and control of road transport is introduced to ensure that road and vehicle safety standards are adhered to.

223. That the ARA should involve the private sector in rail operations where this can result in financial advantage. Private operation of train services will reduce pressure on investment budgets and spread the financial risk in rail operation.

224. That the following natural resources be exploited following railway construction:

• Coalfields west of Kunduz and north of Herat,

• Oil / gas fields in the region of Sheberghan.

225. Private investment to be encouraged to provide for train operation.

226. Provision of feeder roads from rail stations be made to spread the coverage of the rail line. Encourage the spread of containerization to improve transport quality and reduce costs.



APPENDICES

Cost Estimate And Financing Plan

ADB TA No. 7259-Afghanistan

1-1

APPENDIX 1: COST ESTIMATE AND FINANCING PLAN

A. Investment Plan of Phase - I

1. Cost Estimates of Phase - I

1. The Total cost of the Project including provision for physical and price contingencies is US$170.0 million. Interest during construction and other charges amount to a further US$4.5 million. An amount of US$0.7 million is set for the institutional development program. Given recent experience in project implementation, physical contingencies of 16 % have been included. Detailed Cost estimates are given in Supplementary Report 5 and a summary is provided in Table 1.

Table 1: Cost Estimate Item Amounts a A. Base Cost b I. Railway Development a. Land acquisition and resettlement 0.5 b. Civil and railway works 130.0 c. Design review and supervision 4.0 II. Institutional Development 0.70 III. Taxes and Duties d 4.5 Subtotal (A) 139.7 B. Project Management 0.5 Subtotal (B) 0.5 C. Contingencies c 29.8 Subtotal (C) 29.8 Total (A + B + C) 170.00 a Includes taxes and duties. b In mid-2009 prices. c Physical and price contingencies are computed at 16% respectively for the basic construction costs. Exchange

rate fluctuations are estimated using a purchasing power parity adjustment model. d Includes interest and commitment charges.

2. Financing Plan

2. The Government requests ADB to provide $165 million from Special Fund resources in the form of a grant to finance the Project. The Government will provide $5 million to cover the costs of land acquisition, resettlement, and taxes. The financing plan is in Table 2.

Table 2: Financing Plan Source Amount ($million) % Asian Development Fund Grant 165 97 Government of Afghanistan 5 3 Total 170 100

Source: Asian Development Bank estimates.

B. Project Investment Plan of Phase II

3. The total cost of the Project is estimated at $7,062.6 million. A summary is presented in Table 3. Of the total base cost, $5,432.3 million (92.5%) is for Section- 1, $439.2 million (7.5%) for Section- 2. Base costs include railway development (civil works), Land acquisition, environmental



1-2

mitigation and consulting and project management. Total costs include base cost of $5871.6 million, physical contingency of $120 and price contingencies of $1,191 million based on local and international price escalation factors.

1. Cost Estimates of Phase II

Table 3: Financing Plan Item Amount 1

($ million)

A. Base Cost 2

1. Section- 1

a. Railway Development (Civil Works) 5,240.6

b. Rolling Stocks 1,52.9

c. Land Acquisition 0.4

d. Environmental Mitigation 0.0

e. Consulting and Project Management 38.6

Subtotal Section- 1 5,432.3

2. Section- 2

a. Railway Development (Civil Works) 394.5

b. Rolling Stocks 33.3

c. Land Acquisition 0.1

d. Environmental Mitigation 0.0

e. Consulting and Project Management 11.4

Subtotal Section- 2 439.2

Subtotal (A) 5,871.6

B. Contingencies 3

1. Physical Contingencies 112.0

2. Price Contingencies 1,079.0

Subtotal (B) 1,191.0

C. Financial Charges During Implementation4

Total 7,062.6

Source: consultants’ estimates.

2. Financing Plan

4. The financing plan has not been finalized up to the completion of PPTA report. ADB contribution could be a loan or grant or combination. However, the Government has requested ADB to provide $7,062.6 million from Special Fund resources in the form of a grant to finance the Project. The ADB grant of $6,999.8 million is equal to 99.1% of the total Project cost. The grant will finance the base cost, physical contingencies, and price contingencies.

5. The Government will provide $62.8 million to cover the costs of land acquisition and consulting and project management. The financing plan is in Table 4.

Notes: 1 Includes taxes and duties.

2 In 2010 prices

3 Physical contingencies computed at 1.59% and 5.83% of base costs for Section 1 and Section 2 respectively.

Price contingencies computed using local cost escalation factors of 6.8% and 5.4% for 2010 and 2011 respectively and 5% for years 2012 to 2015, and foreign cost escalation factors of 1.0%, 0% and 0.3% for years 2010 to 2012 and 0.5% for years 2013 to 2014.

4 Includes interest, commitment charge, and front-end fee, which are assumed to be zero.



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6. The ADB grant will be channeled to MPW through Ministry of Finance (MOF). The Project funds will be provided to MPW on the same terms and conditions as the ADB provides grant to the Government.

Table 4: Financing Plan

Source Total

($ million) Percentage

ADB Fund Grant 6,999.8 99.1 The Government of Afghanistan 62.8 0.9 Total 7062.6 100.0


3. Cost of Construction- Phase II

a. Cost of Construction for Section-1: (Herat-Naibabad)

Sl. No.

Description of work Quantity Unit price in

US$ Total price in

US$ Remarks

1 Earthwork in embankment 130,083,200 cu m

10 per cu m 1,300,832,000

2 Earthwork in cutting 115356800 cu m

8 per cu m 922,854,400

3 Construction of culvert 7769.30 m 7500 per lineal meter

58,202,250

4 Construction of bridge/viaduct

20,483 m 20,000 per lineal meter

409,660,000

5 Retaining wall/protection work

141,126 m 1000 per lineal meter

14,126,000

Track building work consists of the following: a. Survey b. loading/unloading of materials c. compaction of sub-ballast & initial ballasting d. laying of sleeper over leveled ballasts e. track linking f. welding of rail joints for LWR/CWR g. ballasting h. ballast regulating i. first temping of track j. Final ballasting k. stabilizing l. final tamping m. placing of SEJ at ends of LWR/CWR

6 Track building 832 km 100,000 per km

832,000,000

n. attainment of track geometry as per tolerances

7 Manufacture &installation of turn-outs with all fittings & fastenings

90 sets 20,000 per set 1,800,000 Rails to be supplied by employer

8 Manufacture & installation of turn-outs with all fittings &fastenings

24 sets 15,000 per set 360,000 Rails to be supplied by employer



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Sl. No.


US$ Total price in

US$ Remarks

9 Manufacture &installation of SEJ with all fittings &fastenings

42 sets 5000 per set 210,000 Rails to be supplied by employer

10 Manufacture & installation of trap switch with all fittings &fastenings

45 sets 2500 per set 112,500 Rails to be supplied by employer

11 Construction of special level-crossing gates with gate-lodge, lifting barrier with provision of signalling and interlocking

54 no 200,000 each 10,800,000

12 Construction of ordinary level crossing gates

555 no 5000 each 2,775,000

13 Supply of rails for main-line, loop-line, goods siding , other sidings, turn-outs, SEJ, trap-switches and check-rails of level-crossings etc

102,000. m tons

1000 per ton 102,000,000

14 Supply of ballast 1,640,000 cu m

50 per cu m 83,

200,000.00

15 supply and placement of 400mm thick sub-ballast

2,279,680 cu m

25 per cu m 56,992,000

16 Supply of pre-stressed concrete sleepers with Pandrol UK type e-clip fastening system consisting of 4 elastic rail clip,2 studded rubber pads and 4 glass-filled nylon liners for each

1,456,000 no

100 each 145,600,000

17 Supply of wooden sleepers for turn-outs, SEJ, trap-switches and level-crossings crossings with all fastenings /fittings complete

3,178.35 cu m

20,000 per cu m

63,567,000

18 Building and other civil construction (station buildings, platforms, platform-sheds, foot-over bridge, yard drains, approach roads etc.) for stations having 200 sq m of plinth areas including electrification, water-supply and sanitary facilities

14 stations I,000,000 each

14,000,000

19 station buildings provided only for crossing of trains

7 station 50,000 per station

350,000

20 Signaling & interlocking of stations

20 block sections

500,000 per block section

10,000,000

21 supply and commissioning of

Lump sum Lump sum 10,000,000 Heavy duty tamping machine, ballast



1-5

Sl. No.


US$ Total price in

US$ Remarks

equipment and machinery for maintenance of track

cleaning machine, ballast regulator, heavy duty gang car, excavators, loaders, roller/compacter, motor trolley ,rail cutting and rail drilling machines

Total cost for Section 1 3,956,241,150

b. Cost of Construction Section-2 (a): (from Naibabad-Sherkhan Bandar)

Sl. No.

Description of work Quantity Unit price in US$

Total price in US$

Remarks

1 Earthwork in

embankment

35,960,500

cu m

10 per cu

m

359,605,000

2 Earthwork in cutting 31,889,500

cum

8 per cu m 255,116,000

3 Construction of culvert 2147.20 m 7500 per

lineal

meter

16,104,000

4 Construction of

bridge/viaduct

5660.80 m 20,000 per

lineal

meter

113,216,000

5 Retaining

wall/protection work

3,904 m 1000 per

lineal

meter

3,904,000

Track building work

consists of the

following:

a. Survey

b. loading/unloading

of materials

c. compaction of sub-

ballast & initial

ballasting

d. laying of sleeper

over leveled ballasts

e. track linking

f. welding of rail

joints for LWR/CWR

g. ballasting

h. ballast regulating

i. first temping of

track

j. Final ballasting

k. stabilizing

6 Track building 230 km 100,000

per km

230,000,000

l. final tamping



1-6

Sl. No.


Total price in US$

Remarks

m. placing of SEJ at

ends of LWR/CWR

n. attainment of track

geometry as per

tolerances

7 Manufacture

&installation of turn-

outs with all fittings &

fastenings

26 sets 20,000 per

set

520,000 Rails to be supplied

by employer

8 Manufacture &

installation of turn-outs

with all fittings

&fastenings

12 sets 15,000 per

set


by employer

9 Manufacture

&installation of SEJ

with all fittings

&fastenings

12 sets 5,000 per

set


by employer

10 Manufacture &

installation of trap

switch with all fittings

&fastenings

20 sets 2500 per

set


by employer

11 Construction of special

level-crossing gates

with gate-lodge, lifting

barrier with provision of

signaling and

interlocking

14 no 200,000

each

2,800,000

12 Construction of

ordinary level crossing

gates

153 no 5000 each 765,000

13 Supply of rails for

main-line, loop-line,

goods siding , other

sidings, turn-outs, SEJ,

trap-switches and

check-rails of level-

crossings etc

28,920 m

tons

1000 per

ton

28,920,000

14 Supply of ballast 460,000 cu

m

50 per cu

m

23,000,000

15 supply and placement

of 400mm thick sub-

ballast

630,200 cu

m

25 per cu

m

15,755,000



1-7

Sl. No.


Total price in US$

Remarks

16 Supply of pre-stressed

concrete sleepers with

Pandrol UK type e-clip

fastening system

consisting of 4 elastic

rail clip,2 studded

rubber pads and 4

glass-filled nylon liners

for each

402,500 nos 100 each 40,250,000

17 Supply of wooden

sleepers for turn-outs,

SEJ, trap-switches and

level-crossings

crossings with all

fastenings /fittings

complete

878.40 cu m 20,000 per

cu m

17,568,000

18 Building and other civil

construction (station

buildings, platforms,

platform-sheds, foot-

over bridge, yard

drains, approach roads

etc.) for stations having

200 sq m of plinth

areas including

electrification, water-

supply and sanitary

facilities

3 stations I,000,000

each

station

3,000,000

19 station buildings

provided only for

crossing of trains

3 stations 50,000

each

station

150,000

20 Signaling &

interlocking of stations

5 block

sections

500,000

each block

section

2,500,000

21 supply and

commissioning of

equipment and

machinery for

maintenance of track

Lump sum Lump sum 5,000,000 Heavy duty tamping

machine, ballast

cleaning machine,

ballast regulator,

heavy duty gang car,

excavators, loaders,

roller/compacter,

motor trolley ,rail

cutting and rail

drilling machines

Total cost for Section 2 (a) 1,118,463,000



1-8

c. Cost of Construction for Section-2 (b): (from Sheberghan-Aqina)

Sl. No.


US$ Total price in

US$ Remarks

1 Earthwork in

embankment

18,136,600

cu m

10 per cu m 181,366,000

2 Earthwork in cutting 16,083,400

cu m

8 per cu m 128,667,200

3 Construction of culvert 1,083.50 m 7500 per lineal

meter

8,126,250

4 Construction of

bridge/viaduct

2,856.50 m 20,000 per lineal

meter

57,130,000

5 Retaining wall/protection

work

1,970 m 1000 per lineal

meter

1,970,000

Track building work

consists of the

following:

a. Survey

b. loading/unloading

of materials

c. compaction of

sub-ballast & initial

ballasting

d. laying of sleeper

over leveled ballasts

e. track linking

f. welding of rail

joints for LWR/CWR

g. ballasting

h. ballast regulating

i. first temping of

track

j. Final ballasting

k. stabilizing

l. final tamping

m. placing of SEJ at

ends of LWR/CWR

6 Track building 116 km 100,000 per km 116,000,000

n. attainment of

track geometry as

per tolerances

7 Manufacture

&installation of turn-outs

with all fittings &

fastenings

16 sets 20,000 per set 320,000 Rails to be supplied

by employer

8 Manufacture &

installation of turn-outs

with all fittings

&fastenings

12 sets 15,000 per set 180,000 Rails to be supplied

by employer



1-9

Sl. No.


US$ Total price in

US$ Remarks

9 Manufacture

&installation of SEJ with

all fittings &fastenings

6 sets 5000 per set Rails to be supplied

by employer

10 Manufacture &

installation of trap switch

with all fittings

&fastenings

4 sets 2500 per set Rails to be supplied

by employer

11 Construction of special

level-crossing gates with

gate-lodge, lifting barrier

with provision of

signaling and

interlocking

7 no 200,000 each

12 Construction of ordinary

level crossing gates

77 no 5000 each

13 Supply of rails for main-

line, loop-line, goods

siding , other sidings,

turn-outs, SEJ, trap-

switches and check-rails

of level-crossings etc

14,760.00 m

tons

1000 per ton

14 Supply of ballast 232,000 cu

m

50 per cu m 11,600,000

15 supply and placement of

400mm thick sub-ballast

317,840 cu

m

25 per cu m 7,946,000

16 Supply of pre-stressed

concrete sleepers with

Pandrol UK type e-clip

fastening system

consisting of 4 elastic

rail clip,2 studded rubber

pads and 4 glass-filled

nylon liners for each

203,000 no 100 each 30,000

17 Supply of wooden

sleepers for turn-outs,

SEJ, trap-switches and

level-crossings

crossings with all

fastenings /fittings

complete

443.25 cu m 20,000 per cu m 10,000

18 Building and other civil

construction (station

buildings, platforms,

platform-sheds, foot-over

bridge, yard drains,

approach roads etc.) for

stations having 200 sq m of

plinth areas including

electrification, water-supply

2 stations I,000,000 each 1,400,000



1-10

Sl. No.


US$ Total price in

US$ Remarks

and sanitary facilities

19 station buildings

provided only for

crossing of trains

1 station 50,000 385,000

20 Signaling & interlocking

of stations

3 block

sections

500,000 14,760,000

21 supply and

commissioning of

equipment and

machinery for

maintenance of track

Lump sum Lump sum 5,000,000 heavy duty tamping

machine, ballast

cleaning machine,

ballast regulator,

heavy duty gang

car, excavators,

loaders,

roller/compacter,

motor trolley ,rail

cutting and rail

drilling machines

Total cost for Section 2 (b) 567,605,450

Note: Cost of workshop Equipment, Rerailing crane & transshipment equipment not included

Implementation Schedule


2-1

APPENDIX 2: IMPLEMENTATION SCHEDULE

I. Implementation Schedule for Construction of Hiratan - Mazar-e-Shair Railway Line (Phase- I)



2-2

II. Implementation Schedule for Construction of Sherkhan Bandar-Herat Railway Line (Phase- II)

A. Implementation Schedule for Construction of Herat-Naibabad

Sl.

No.

Description of work Year

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Month JFMA MJJA SOND JFMA MJJA SOND JFMA MJJA SOND JFMA MJJA SOND JFMA MJJA SOND JFMA MJJA SOND

1 Feasibility cum

design & tendering

2 Land acquisition and

resettlement

3 Earthwork

4 Bridges, culverts &

protection works

5 Track

6 Signaling &telecom

7 Stations and building

8 Ancillary works

9 Testing &

Commissioning



2-3

B. Implementation schedule for construction of Naibabad-Sherkhan Bandar

Sl.

No.

Description of work

Year

Year 1

Year 2

Year 3

Year 4

Year 5

Month JFMA MJJA SOND JFMA MJJA SOND JFMA MJJA SOND JFMA MJJA SOND JFMA MJJA SOND

1 Feasibility cum

design & tendering


resettlement

3 Earthwork

4 Bridges, culverts &

protection works

5 Track



8 Ancillary works

9 Testing &

Commissioning



2-4

C. Implementation Schedule for Construction of Sheberghan - Aqina

Year

Year 1

Year 2

Year 3

Year 4

Sl.

No.

Description of work

Month JFMA MJJA SOND JFMA MJJA SOND JFMA MJJA SOND JFMA MJJA SOND

1 Feasibility cum design &

tendering


resettlement

3 Earthwork

4 Bridges, culverts & protection

works

5 Track



8 Ancillary works

9 Testing & Commissioning

Railway Institutional Assessment And Proposal ADB TA No. 7259-Afghanistan.

3-1

APPENDIX 3: RAILWAY INSTITUTIONAL ASSESSMENT AND PROPOSAL

I. Overall Institutional Setup for Afghanistan Railway

A. Public Sector Arrangement

1. Railways are traditionally owned and managed directly by the government ministries. It depends on the specific country policy, operational capacity and assurance of services to the rail users. While such a structure functions well, it usually becomes severely handicapped by lack of transparency, accountability or incentives for efficient customer that is, market orientation.

2. On the other hand, public enterprise is a common approach of public ownership and operation of railways, but even this generally has far less managerial or financial autonomy in practice. In fact, the need for greater management responsibility and autonomy has led to the development of performance agreements between government and the public enterprise which specify the objectives, authority and obligations of each. Public enterprise is often production oriented with little concern for the market requirement and hence they require a substantial subsidy.

3. In Afghanistan the railway sector public enterprise i.e. the Department of Afghanistan Railway has been created by the government under the administrative control of the MPW and is now functioning to execute railway construction. The department needs to be reformed and strengthened to improve its absorptive capacity to carry out its current mandated functions and future extended as well as expanded responsibilities in the railway sector in its entirety. The reformed/ restructured railway department is a useful option for current and future management of the rail sector including construction and operation when privatization is not considered.

4. However, we must bear in mind that shaping of the agency that is Railway Department will require careful consideration of the areas like: i) Legislative (area that creates the legal base for all activities. Normally it includes legislated policies, regulations and authorized funding of basic programs), ii) Operational (area that includes construction, operation and maintenance), iii) Regulatory (this includes guidelines and measurements of conformity of action with the standards), iv) Corporatization (make into a share holding company), v) Commercialization (make financially and managerially autonomous), vi) access to budgetary financing for example to compensate for non-commercial public service obligation, and vii) participation in the formulation of pricing/freight policies.

B. Private Sector Arrangement

5. In many country private sector participation also exist in rail operation. Financial viability of the project and the financial implication of the Government are preconditions for such participation. Attracting private sector participation is an effective approach to increase the efficiency and transparency of the administrative agency of the government for railway. By and large private participation involves allocation of risks and pattering of resources that private sector has access to including capital and technology. In Afghanistan large private sector organizations exist who can bear with risks and have access to capital and technology. Railway network incorporates the broad elements of infrastructure, regulation, operation, and services.

6. A key to private sector participation in railways is separating rail transport activities for example; separation of the ownership of fixed facilities i.e. stations and network from operations. Such separation do not require privatization, it can be an effective way to make public operators more transparent and efficient. However it facilitates Private Sector


3-2

Participation (PSP). It relieves the railway of its base of fixed assets and long term debt (if any), freeing it to function commercially; permits the establishment of profit and cost centers for improved financial information and accountability; makes the railway structurally more in competing mode.

7. Private sector participation in railway sector (that is, infrastructure, operation and services is possible through the options of i) service contracts, ii) management contracts, iii) leasing, and iv) concessions. Allocation of the key responsibilities under the main private sector participation options are shown in the following matrix.

Table 1: Key responsibilities under Private Sector Participation (PSP) options

Option Asset ownership

Operation and maintenance

Capital investment

Commercial risk

Duration

Service contract Public Public and

private

Public Public 1 – 2 years

Management

contract

Public Private Public Public 3 – 5 years

Lease Public Private Public Shared 8 – 15 years

concession Public Private Private Private 25 – 30 years

Source: Selecting options for private sector participation, Toolkit – 1, The World Bank

8. Successes of any of these programs require strong political leadership, established policies, legal framework, and building of effective institutions.

C. Approach for Institutional Set up

9. The following approach may be considered for institutional set up of the Afghanistan Railway in the future.

Figure 1: Approach for Overall Institutional Setup of Afghanistan Railway

1. Government Organization

for Railway Policies, Plans

and project Formulation

2.Government Regulatory

Organization

Afghanistan Railway

3. Afghanistan Railway

Operation

Afghanistan Railway

Corporation/Company

(ARC)

4. Private sector Operator


3-3

II. Organizational Structure of Afghanistan Railway – Review and Proposed

A. Review of Existing Structure

10. Figure -1 of this report shows the existing and future organization structure of the Department of Railway proposed by the Afghanistan government under the administrative control of MPW. The organogram is inadequate in its entirety. It did not include important areas like planning, workshop arrangement for maintenance of rolling stocks and other assets. Pertinent to mention that the department should include estate section to manage and maintain the emerging land assets that the department will own. Provision for Training centre/institute has not been made in the current and future structure proposed by the government which is essential to develop the human resources of the newly created railway department. Safe rail operation emphatically calls for a small but highly powerful safety inspectorate to act with full authority to ensure that the train, freight, and passengers are safe to destination. These aspects must be included with due importance in the structural design of the department.

11. Needless to mention that the role of Afghanistan railway is immense in the way that it will boost Afghan trade both import and export with the neighboring countries through efficient and cost responsive transportation. Furthermore, the country is a member of CAREC whose aim and future plan are to connect all member countries by railway transport. Railway service, therefore, has become significantly important issue in the recent years not only with the connectivity of the neighboring countries but also to establish connectivity internally with all the provincial capitals of the country by railway mode of transport.

12. It is observed that the current staffing provision has been made for a short period requiring quick execution of the construction of railway infrastructures only being financed by ADB. If we analyze Railway Department’s functions and job descriptions of the existing officials, it reflects that this department is meant for building up of the infrastructure and ignored the operational, regulatory and other related aspect of rail operation. Again it is not explicit as to who will bear the responsibility of the operation of the railway once building up of the infrastructure is complete.

B. Creation of Ministry of Transportation and Afghan Railway Authority

13. It is apparent from the analyses of roles and responsibilities of the Existing Transport Related Organizations (as described in Para 22 of this report) that functional performance for example, developing, operating and regulating the transport sector on the basis of specific mandate, policies and/ or strategies (which is virtually nonexistent particularly with respect to railway subsector) along with better coordination and integration are factors to be taken into consideration while framing a sound organizational set up and structure for Afghan railway. A sound organizational set up and its structure should also aim at to create a pragmatic division or allocation of responsibilities between government and the respective transport sector organizations. It is therefore, optimal that a separate ministry for example, the Ministry of Transportation (MOT) be established with exclusive and explicit mandate for the development and operation of the transport sector.

14. Creation of MOT should best be done by merging MPW and MOTCA or the related department of these ministries. However, the act of merger will require a meticulous examination of the possibility, extent and procedure of merging the two ministries. Streamlining of the departments/wings of the newly created MOT should also be made at the outset to clearly define the functional jurisdictions covering mandate and responsibilities along with legal, regulatory and policy framework for each of them and MOT per se.

15. The proposed Ministry of Transport may have under its administrative control the future organizations (to be created) like:


3-4

• Afghan Road Authority;

• Afghan Railway Authority;

• Afghan Civil Aviation Authority;

• Urban Transport Authority; and

• Rural Roads.

16. Creation of the Ministry of Transportation and Railway Authority will require having respective Act or Ordinance in place to give them statutory status to function.

17. The benefits of creating such railway authority are aimed at but not limited to:

• An explicit division of responsibilities between the owner government and their respective railway organization;

• Management teams allowed to manage railway as business that is, with freedom to make commercial decisions affecting revenues, costs and return on investments;

• A corporate culture directed towards more market and customer oriented;

• Financial viability allowing the railway to operate without government financing (other than compensation for public service obligation);

• A streamlined core network tailored to serve commercially attractive traffic and integrated with other modes e.g. ports, roads, etc. in order to minimize overall transport costs;

• Effective and efficient coordination between government, road and railway organizations;

• A well trained and motivated workforce able to achieve increased productivity.

C. Proposed Structure

18. Based on the above analysis, the study suggests that the railway authority must be a self contained entity in terms of planning, infrastructure design & development, operations and other related aspect with delegation of full authority reflection of which should be there in the organizational structure of the organization. Bearing this in mind the following organogram (Figure 4) and corresponding human resource strength (Appendix 2A and Appendix 2B) has been proposed which however, will need to be implemented step by step determining the phase wise coverage of railway operations by the Afghanistan government.

19. The proposed structuring of the Railway authority has been looked into from the perspective of; i. infrastructure, ii. Operations and rolling stock, iii. Planning & operation and iv. Administration & finance. Human resource Development, Safety and public relations has also been taken into consideration. The structuring assumes that the partner agencies (stakeholders) will continue to provide their services to the railway authority. Parameters like objectives, key functional areas, and major tasks were used in the process of identification of indicative human resource requirement establishing a logical linkage among the parameters as shown in the following flowchart.

Objectives Key Functional Areas Major Tasks Human Resource

Strength

20. Based on the analysis of structuring of Afghan Railway which is an outcome of Key Functional Area analysis an organizational structure has been envisaged for the Afghan Railway Authority (central office) with a total indicative strength of 50 (excluding public relation, training institute and railway inspectorate) multidisciplinary personnel headed by a


3-5

Director General. The Railway Authority will have 4 wings each led by an Additional Director general. The organogram showing operational linkages has been depicted in figure 4.

D. Choice of Executing Agencies of Afghanistan Railway

21. Multiple executing agencies are now responsible and playing role for railway development and operation’ in terms of construction, and operation & maintenance (O&M). Careful analyses of the roles and responsibilities of these agencies in the railway construction, operations and maintenance have led to draw three options as the framework of organizational set up for Afghanistan Railway. The options are presented below:

1. Option A: Fully Responsible Railway Authority at the proposed Ministry of Transportation

22. It is a single responsibility through all the phases from construction (current responsibility) to O&M. The Railway Authority at the proposed Ministry of Transportation will be responsible for construction of railway infrastructure (presently MPW is constructing Hairatan - Maze-e-Sharif railway line) and its operation and maintenance. The other responsibilities will be procurement of rolling stocks and their maintenance. (Ref: Figure 4)

• Pros: A single agency responsible for the entire railway which includes construction/procurement and O&M.

• Cons: All cost and risks will come under the responsibilities of the Railway Authority (currently functioning as Department - a weak service provider). The mix of railway development and operational budget is likely to lack transparent accounting system.

2. Option B: Creation of a new operational statutory body

23. It can be said Afghanistan Railway Company/Corporation with division of responsibility between Railway Authority and Afghanistan Railway Company/Corporation. Construction of railway infrastructure and its maintenance will be provided by Railway Authority while Afghanistan Railway Company/Corporation will be responsible for procurement of rolling stocks, their maintenance, and train operation.

• Pros: Construction and ownership of rail facilities are fully separated from other rail functions that is, train operations and business promotion. Railway Authority will have the responsibility for constructing, owning, providing and controlling the infrastructure while an entirely independent set of operating body will run train on commercially responsive basis.

• Cons: Coordination between two executing agencies is necessary. The Railway Safety Act should clarify that railway safety inspectors exercise their powers under the authority of the Minister.

3. Option C: Private Operating Company

24. As per government rules for operation, company rules, and Public Service Obligation (PSO) arrangement, private company may be involved in train operation.

• Pros: No government cost involvement for train operation, rolling stock procurement & maintenance, and operation staff.

• Cons: Proper monitoring of contractual obligation both by the Government and the Operator/s.


3-6

E. Organization Chart of Option B

25. This section illustrates an organization structure in the case of creation of an operational body by the Government, which will have statutory status. The organization is typically consisting of (a) administration division to manage the entire company; (b) planning & business division responsible for demand analysis and enhancing business promotion; (c) facility division responsible for maintenance of rolling stock and facilities; and (d) transportation division with the mandate of train service and station operations.

Figure 2: Organization Chart of Afghanistan Railway Company/Corporation

Railw

ay Institutional Assessment And Proposal

ADB TA No. 7259-Afghanistan.

3-7

Figure 3:

Proposed Organizational Structure of Afghanistan Railway

Railway Institutional Assessment and Proposal ADB TA No. 7259-Afghanistan

3-8

III. Issues of Railway Business

A. Improvement of Financial Viability

• Railway construction requires an enormous capital investment, which becomes an intense burden on the railway operator in financing and repayment by fare-box revenue. This calls for coverage of the whole construction cost with public funds which is normal practice in developed countries. This helps railway to be a financially viable business.

• Financial viability is important to run railway business, and at the same time, to provide mobility for those people who do not have private cars, the fare for the railway must be affordable to them, taking into account the prevalent public transport fares and living expenses of ordinary citizens.

• Accordingly, it is highly likely that public subsidies or management assistance will be required to cover operating costs. It is necessary to establish a subsidy system but the ultimate policy must be aimed at cost recovery.

• The proposed line is a strategic corridor for freight movement but passengers must also be taken into consideration as such proper locations for stations must be identified and established in the six provincial capitals and two district towns covered by this corridor.

B. Improvement of Ridership and Goods Movement

26. In order to operate in commercially responsive manner, it is essential to attract maximum volume and numbers of goods and passengers on the railway. The following specific measures will help improved ridership and goods movement.

• Integrated trade facilitation measures at border crossings and rational fare comparison with available public transport, and

• Create attraction and inducement for rail users in and around railway stations.

C. Public Service Obligation

27. In transport sector, PSO is an arrangement in which a governing body or other authority as applicable offers an auction of subsidies and permits the wining company, essentially a private sector organization, to operate exclusively a specified service for a specified period of time. The PSO is also offered in public transports where the operation is not profitable but is socially desirable. Afghan railway network being the first of its kind may need at the outset to give a thought on PSO arrangement for its kick off and survival in the transport market.

IV. Regulatory Framework

28. The regulatory framework for railway encompasses the central (if need arises also provincial) legislation, regulations, rules, and standards that provide the structure in which railway companies can operate commercially and safely. Operations are therefore regulated by law. Several statutes play a role in the regulation of railways, the most important of which is the Railway Safety Act, together with the regulations and rules made pursuant to it. Other legislation affecting railway operations and safety in particular includes: the Transportation of Dangerous Goods Act, the Accident Investigation Act, the Labor Code and the Transportation Act.


3-9

A. Laws Related To Railway Operation

29. The legal system of regulating railways in Afghanistan has not so far been effectively framed and this needs to be addressed. The Act will provide a framework for implementation of related codes, rules and manuals. These rules and codes will cover management and service assurance by the Afghanistan Railway. The rules and codes, for instance, Highway Act will have to be established parallel with railway which should include permissible axle load, vehicle condition, speed regulation, and emission level and others. It is also necessary to establish technical standards to be complied.

B. Laws and Regulation required for Railway Development

30. The following laws and regulation should be framed and established:

• Afghanistan Railway Act: Purpose, investors, articles of incorporation, administration committee, officers and employees, accounting, supervision, subsidy, penalties, and others;

• Afghanistan Railway Business Act: provisions on the railway operators, license application, licensing standards, approval of construction, inspection of railway facilities, confirmation of coaches/wagons, use of rails, fares, and others;

• Afghanistan Railway Structure Regulation: Rails and structures, electric facilities, safe riding facilities, rolling stocks, and others;

• Standards and others:

o Railway technical Standards;

o Driving regulation for safe driving;

o Design standards for railway structures;

o Standard for rolling stock, inspection and track maintenance;

o Safety measures to prevent accidents;

o Provision on treatment of road facilities and buried objects;

o Fare setting; and

o others.

31. A process for the formulation and/or adoption of rules, standards and exemptions should be established by regulation. All stakeholders must have an opportunity to be involved in developing the process. This regulation should embody the following but not limited to, the principles of:

• transparency and openness;

• meaningful involvement of Afghan Railway Department;

• appropriate participation of stakeholders;

• high quality legal drafting; and

• consistency with the Railway Safety Act to facilitate a modern, flexible and efficient regulatory framework.

32. Ideally the process should be governed by the Statutory Instruments Act, which sets out requirements for examination of the proposal, consultations, publication across the country particularly among the stakeholders and users, review by Cabinet, and final publication and promulgation. It is required that the draft proposal be accompanied by a formal Regulatory Impact Analysis Statement (RIAS) that describes the potential impacts of the proposal, overall


3-10

costs, options considered and the degree of contention and support among affected parties and general Afghans.

C. Governance

33. Governance of railway operation is the process by which the institutions, organizations and individuals involved communicate with each other, make decisions, are accountable and generally guide themselves. It is the foundation of the regulatory framework and the relationships among its participants. Governance defines, both formally and informally, the roles and responsibilities of the actors. The governance issues:

• Are the roles and responsibilities of all participants in railway development clear and well understood?

• Are these responsibilities carried out consistently and with full accountability, transparently, and in the public interest?

• Are communications and consultations effective for all actors irrespective of large or small?

• How can the spirit of mutual trust and collaboration be assured?

34. For Afghan railway multi ministerial institutions, organizations and individuals will be involved with railway operation and safety. These include central government departments and agencies, provinces (may be), and other stakeholders (for example, municipal authorities, landowners and residents near tracks and yards, users of roads at crossings, and customers of railway companies including intermodal carriers who expects safe and on time deliveries). The public is generally interested in protection of the environment and sustainable development, and issues that affect the transportation network as a whole.

35. Specific roles, responsibilities, accountability, transparency, and communication of these institutions and stakeholders need delineation to ensure safe operation of the trains and timely delivery of services by the railway. This will need at the outset formation of technical/consultative committees comprising of relevant government institutions and stakeholders within Railway department or as the Afghan government decides. The committees will act as forum within a legal framework to formulate acts/rules/regulations and their enforcement regarding governance issues and structure which should ensure safe and profitable operation/performance of all railway activities.

V. Capacity Building for Afghan Railway

36. This section provides initial assessment on the existing capacity regarding Afghan Railway Department based on review of documents, interviews, meetings and discussions with the key informants.

A. Capacity of the Existing Railway Department

37. While the railway department should be responsible to provide consistently a safe and reliable transportation of goods and commodities for the promotion of trade and commerce vis -a - vis the economy of the country, it appears from the consultation with the key informants and review of documents that the department has limitations in carrying out its responsibilities effectively and efficiently. The consultant understands that assessment of the issue like absorptive capacity of the railway department needs to be addressed. Absorptive capacity refers to the ability of the department to carry out anticipated workload as envisaged in the


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strategic plan. Capacity assessment addresses key questions in terms of carrying out current functions and they are:

• Is the current/anticipated workload of the officers of railway department too great?

• Is there shortage of officers in the railway department?

• Are delegation of power and authority properly exercised?

• Are levels of performance impeded by lack of skills?

• Is individual performance impaired by systemic barriers?

38. Specifically human resource issues for example, staffing pattern, planning and distribution of work, workload, job descriptions and performance requirements, training and development, and logistics support needs to be examined in detail. The approach of these diagnostic analyses should consist of the analyses of the current role of the railway and its allies departments based on their mandate, strengths and weaknesses, Key Functional Areas of railway service, and also training needs to identify inhibiting and facilitating forces. Clear strategy and policy regarding capacity building of the railway department should be framed by the government’s concerned agency and be in place with a plan of action.

B. Assessment of the Absorptive Capacity

39. The assessment of the absorptive capacity of the railway department has been made on the basis of discussion with the key informants. As methodology, available primary and secondary data were used and analyzed. The areas that were looked into are staffing pattern, work load, work planning and distribution of work, job descriptions, and skill levels. However, this needs further investigation in detail to arrive at a conclusion acceptable and usable for the purpose of building an operational capacity development program.

40. Staffing Pattern: According to the current organization structure the Railway Department’s central office encompasses human resource strength of 19 of which 15 personnel are in post and the remaining 4 posts are vacant but as was told recruitment in these posts is under process. The present strength contains only 2 technical personnel although the railway is dominantly a technical department. The revised and future organogram as prepared by the administrative reform commission on the basis of ideas generated from observing the same in other countries has provision for 40 employees with increased number of technical personnel.

Table 2: Staffing Pattern of the Railway Department

Existing Posts Approved Human

Resource as per Existing Organogram

Regular On second-mend

/Deputation

Vacant Additional Human Resource proposed in MPW’s future Organogram

Grade I 1 - 1 -

Grade II 1 1 -

Grade III 3 2 1 3

Grade IV 3 1 2 2

Grade V 4 4 - 8

Grade Vi 3 3 8

Grade VII-VIII 4 4 -

Total 19 15 4 21

Source: Railway Department, Ministry of Public Works


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41. In addition, according to a conservative estimate the human resource requirement for management and maintenance of the 1000 km railway from Sherkhan Bandar to Herat and Hairatan to Mazar-i-Sharif and branch lines will be approximately 3000 employees of different grades and disciplines. Broadly the disciplines include station, track, operations, utility service, yard, store, estate, workshop, finance and railway training institute. Recruitment of the employees in each of the disciplines will need to carry out at least a year ahead determining the priority and put them on training at home or abroad as is required. Placement for training will require identification of training needs of the respective personnel in the respective fields. Prior to this action the Railway Department should take appropriate steps to formulate and make available in place an implementable recruitment policy, followed by recruitment plan and preparation of job specifications for the specific posts. A training policy also needs to be framed and be in place.

• Work Load: No doubt the service coverage of the railway department has increased and will continue to increase but it had not reached its full complement as some positions are invariably vacant (or is likely to be filled up in future only). It would all too easy to conclude from this evidence that the department is understaffed and weak as well. The recruitment process seems long but believed to be once initiated will result in the supply of appropriate human resources. The most effective way of dealing with the vacant positions is to prioritize work. Nevertheless, the existence of unfilled vacant posts provides the railway department with a potential capacity to absorb more work leaving a scope for restructuring the recently approved organogram and the human resource requirement.

• Work Planning and Distribution of Work: It is seemingly apparent that the current top down drive for change and improvement is having positive impact on performance although more thorough measurement would be needed in this respect. However, constant pressure and strict monitoring from the top will be required to sustain the desired level of performance. Goal setting seems to be the most appropriate means of increasing organizational performance within the given staffing levels.

• Job Descriptions and Performance Requirement: The railway department currently has some form of job description for its employees. While these job descriptions may not be ideal in terms of what would normally be included in a well written job description, they may nevertheless be useful documents for work planning and distribution of work. A template for writing job descriptions ideally and in detail is appended showing parameter to be considered along with job specification. Information obtained using this format will help the management not only to identify among others the tasks to be performed but also the responsibility, accountability, authority (administrative & financial) etc. explicitly together with job specification and training requirements for the job and the individual.

• Job descriptions also specify the performance standards for each task so that the incumbents would better understand what is expected of them. It helps to prioritize work and manage time more effectively. A clear and measurable job description focuses on core tasks and increases the absorptive capacity by eliminating unproductive activities. Railway Department needs to reformulate their existing job descriptions and formulate the same accordingly where it is non existent.

• Skill Levels: Officials belongs Grade I to IV have formal academic qualifications with university degree or diploma in a mix of discipline. In most cases they have taken in-service foundation/ orientation training and also have had further domestic and overseas training but only two officials had training with exposure to railway. Other employees just have literacy as academic qualification and have had on the job training but other than railway disciplines. Despite this training and skill development interventions conducted as part of institutional capacity building of the


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railway employees, problems persist with productivity, service delivery and quality of work. So skills alone are not the answer to improved performance. For railway department skill development is a necessary condition for greater absorptive capacity but is not a sufficient one.

C. Training and Development Plan

42. The objective of this plan is to map out a framework by which the officers and staff of the railway department will receive the best value training and staff development services available (this is equally applicable for the proposed railway authority once it is established by the Afghanistan government). The overall aim is to build capacity of the staff to strengthen the Department of Railway. In the first instance this will be under the auspices of a project training component, which eventually will be passed over to the railway training center or academy to be created under the Department of Railway or as deemed by the government worthwhile and when that organization has built up a suitable training and human resource development infrastructure.

43. The advent of the department’s mandate has made it imperative that the organization be restructured and consequently the staffing be revised. Based on which the consultant has developed and proposed options for a management and technical functions structure (figure 4) for the railway department.

44. An important consideration in framing the structure of the department is the increased level of management and technical responsibilities expected to be attached to the officers and staff. Acknowledging these factors, the training and development plan has to be structured to give due prominence to upgrading the required skills of the employees.

45. The acceptance and institutionalization of the proposed organization structure is nevertheless the key factor among others in the design of the training and staff development plan. The plan needs to be constructed to accommodate the new organization and to strengthen it. Therefore before the plan can operate effectively, the following events will have to be occurred.

46. The organogram of the department is finalized, approved and accepted.

• All staffs of the department are recruited/ placed to the various positions in the structure in accordance with the staffing plan.

• Assessment of the current stock with the help of training record database.

• Training Needs Analysis (TNA) using parameters like

o A Training Specialist shall Objectives and Key Functional Areas of the Department of Railway

o Organizational needs

o Job descriptions of all categories

o Training record database

o Academic background

o Deficiency in the academic background needed to improve the job skill i.e. the training needs.

47. A Training Specialist shall have to be engaged to map out a detailed training plan for building the capacity of the Railway Department or of the proposed Railway Authority (if in place) in both short and medium term.

Summary of Social and Poverty Analysis


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APPENDIX 4: SUMMARY OF SOCIAL AND POVERTY ANALYSIS

I. SUMMARY RESETTLEMENT PLAN OF PHASE- I 1. The Islamic Republic of Afghanistan has requested ADB a US$ 165 million grant to undertake the Uzbek Border-Mazar-e-Sharif Railway (the Project) The Project, with the Ministry of Public Works of Afghanistan as the Executing Agency (EA) will pursue the construction of a 71 km- long railway joining the Uzbek railway network at the Uzbekistan-Afghanistan border with a station in the proximity of the Mazar-e-Sharif Airport. A. Land Acquisition and Resettlement (LAR) 2. The Project entails very minor LAR impacts since most of the railway's route passes through uninhabited and unused desert land. Along the 71 km railway between the Uzbek border Mazar-e-Sharif, the impacts are only residential plots without any structure built on the plots. The two affected households will have to be compensated for their land. 3. To plan the compensation of these impacts the EA has prepared one short LAR Plans (SLARP) for the railway. The document fit the provisions of the relevant Afghanistan Laws, ADB’s Policy on Involuntary Resettlement (1995), and Operations Manual F2 on Involuntary Resettlement (2006). Based on ADB policy and practice Project appraisal and implementation will entail the following LAR-related conditions:

(i) Project appraisal will be conditional to the SLARP approval by Government and ADB and to their disclosure;

(ii) Provision of notice to proceed to contractors will be conditional to the full implementation of the SLARP.

4. The SLARP provide clear implementation principles, and compensation eligibility and entitlements provisions. They list the following principles: (i) LAR will be avoided or at least minimized; (ii) compensation will guarantee the maintenance of the pre-project living standards of the people affected; (iii) those affected will be fully informed/consulted on compensation options; (iv) their socio-cultural institutions will be supported and used; (v) LAR provisions will equally apply to women and men; (vi) lack of formal title will not be a bar to compensation/rehabilitation; (vii) particular attention will be paid to female-headed households and to vulnerable groups; (viii) LAR will be conceived and executed as an integral part of the project and LAR budgets will be included in project costs; and (ix) compensation will be fully provided prior to ground leveling and demolition. SLARP also cover all issues relevant for effectively conducting LAR tasks in compliance with ADB policy (see next paragraphs). 5. The document also provides compensation eligibility/entitlement provisions fitting the specific impacts occurring in the railway. 6. Institutional responsibilities. MWP has overall responsibility for LARP preparation, implementation and financing and will exercise its functions a Land Acquisition and Resettlement unit tasked with the management, planning and implementation of all land acquisition and resettlement tasks. MWP will coordinate with the local governments which have jurisdiction over land administration/title verification and valuation. Beside MWP and the local governments the Ministry of Finance will be responsible for the provision of LAR funds to MWP. The local jirgas will assist in the identification of AP with traditional rights and will provide support to community consultation and to the solution of grievances.



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7. Grievance procedures. Grievances will be first handled at the village level with involvement of the rayon government. If no solution is reached, the persons affected will raise the complaint to the PMO. If no settlement is reached, the case can be brought directly to MPW. If the grievance remains unsettled the persons affected will be able to seek redress at the communal court. 8. Monitoring/evaluation. The PMO will carry out the Internal monitoring of LAR and will report to ADB through the quarterly project implementation reports. External monitoring will be carried out by an Independent Agency and will involve the preparation of a compliance report at the end of the implementation of the SLARP as a condition to start civil works.

9. FINANCES and schedules. The cost of the compensation program under the SLARP amounts to US$ 4,750. B. Indigenous Peoples Issues 10. No communities inhabited by persons fitting with the definition of Indigenous People (IP) of the relevant ADB Policy are affected by the Project. As such no specific IP action has been taken and the Project has been classified as C for IP purposes.

II. GENDER ANALYSIS

11. This chapter briefed the disparity between men and women in respect of position in family, community, participation in local and national development as well as and sharing the decision making process for planning, implementation and monitoring of development projects/programs.

1. Socio Economic Status of Women in Project Area

12. Like many other countries in the developing world, women in Afghanistan are far behind to men in respect of sharing opportunities in education, economic development, enrollment in democracy and decision making process. 13. The surveys and assessments clearly indicate that the women are not at all in a position to play any important role in planning and managing the household activities because no woman is found in a position of house hold head even. Although there are some women are serving as the school teacher in each province, they are not empowered for sharing for decision making process.

2. Position of Education and Employment of Male and Female

14. In the traditional male dominant society in Afghanistan, men have easy access to livelihood earnings. Physical capacity and social inclusion in the traditional society causes less opportunity of employment and access to education for female as a whole. In addition proportionately high rate of dropping out from higher education is common issue in case of female children.

Table 1: The Detail Education Rate of Each Project Provinces

Province Herat Balkh Faryab Kunduz Jawzjan Badghis

Literacy rate of male 62.31 57.34 51.36 72.222 73.337 45.36

Literacy rate of female 36.12 31.325 23.14 40.321 29.345 22.321

Average literacy rate 49.215 44.3325 37.25 56.2715 51.341 33.8405



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15. The house holds survey conducted in project provinces found average literacy rate of male is 60% and of female is 30%. The greater inequalities in gender development are mostly in poor and vulnerable households.

Table 2: The Exact Position of Male/Female Employment in the Project Provinces

Provinces Male employee Female employee % of female employee Herat 10895 5971 35

Balkh 15088 3,288 18

Faryab 6873 2440 26

Kunduz 6143 2177 26

Jawzjan 6160 2001 25

Badghis 2,105 198 9

Total 47264 16075 25

16. The female employment in all six project provinces is lower than male employment.

3. Women Rights and Empowerment

17. Women in the project impact areas enjoy similar status as that of the traditional Afghan society constrained with cultural and religious bindings. Women in general have no access over leadership in village and also in their families. 18. In recent years, some of the women have got access to the local leadership through their direct participation in community development councils. The community development council responsible for planning, implementation and monitoring & evaluation of community based development projects/programs through mobilization of human and financial resources.

III. MAJOR ISSUES AND RECOMMENDATIONS OF PHASE- II

A. Project Benefits

19. Despite little adverse impact due to land acquisition and displacement of some house holds, the affected households and communities have a very positive attitude towards the project and the communities recognized the benefits of the railway development project in terms of improved transportation and access to better markets for procurement of support inputs and technology for their production and achieving goods prices of their produces through selling in the wider range of market opportunities.

4. Specific Potential Impacts

• Improved and secured transport system;

• Easy access to wider market network;

• Greater access to education;

• Access to health services;

• Be able to procure inputs for agriculture production timely at lower price;

• Be able access to competitive market network for selling their produced goods; and

• In addition to above the people believe that the railway project will create local based employment for the poor and vulnerable people for its construction and operation & maintenance.



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5. Concerns and Mitigative Actions

20. The Project design has incorporated the views, needs and aspirations of the communities expressed in various public consultations/meetings in various stages with the objectives of maximizing benefits and minimizing adverse social effects on the affected people.

6. Land Acquisition and Resettlement Impact

21. On the proposed 1,105 kilometer long alignment from Herat to Sherkhan Bandar there are several segments where there are some resettlement impact related with use of agriculture land under private use, residential land and housing structures.

7. Houses Impacted Areas

• Andkhoy point some houses will be affected;

• From Naibabad to Aqcha, some agriculture land & houses will be affected;

• At Sheberghan point some houses will be affected;

• At Qala-e-Naw some houses will be affected; and

• At Maymana point some houses will be affected.

22. The proposed 1,105 kilometer long railway alignment required 55,250,000 square meter lands for its area of 1,105,000 meter long and 50 meter width from Herat to Sherkhan Bandar. According to field reconnaissance, official information and idea of the local people 99% or, 54,697,500 square meters is government land and 1% or 552,500 square meters is private land. 23. About 50 housing structures (low and medium quality) will be affected which are located on 55,250,000 square meters area of alignment. 24. The average price of per square meter of land is estimated at 0.50 USD per square meter based on official record, present market price and idea of local communities. Similarly average cost of per housing structure is estimated at 2,500 USD including moving allowances. 25. The alignment has been selected through careful attempt to avoid impact of resettlement as much as possible. The present situation does not involve any risk for land acquisition and resettlement as the almost all lands are free from trees, perennial crops, historical sites, and major establishment of educational, business, social or government offices.

8. Description of Affected Assets, Costs and Indicative Budget

• Amount of estimated affected private land is 552,500 square meters

• Average price of per square meter land is 0.50 USD

• Total estimated price of 55,2500 square meter land is (552,500x0.50 USD) =276,250 USD

• Number of estimated affected housing structure is 50

• Estimated average cost including moving allowance of per affected housing structure is 2,500 USD

• Estimated total cost including moving allowances of 50 housing structures is (50x2500 USD) =125,000 USD

• Total estimated cost of affected private land and housing structures is (276,250+125,000) =401,250 USD

• Over head cost @ 25% against 401,250 is 100,300USD



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• Total estimated budget for land acquisition and resettlement is 501,550 USD

Note: Provision of 25% over head for compensation of crops and any other affected assets which would be identified through detailed measurement survey and preparation of inventory of affected assets.

9. Involuntary Resettlement Identification and Categorization

26. Resettlement impact of this railway development project phase- II is significant, because more than 200 people will be affected by losing more than 10% assets as well as housing structures. Therefore according to ADB’s Involuntary Resettlement Policy it is identified as Involuntary Resettlement Category A, which will need preparation and implementation of Full Resettlement Plan.

10. Time Schedule for Land Acquisition and Resettlement

27. Although period of time for land acquisition and implementation of resettlement activities depend upon capacity of resettlement unit under Ministry of Public works and field offices, we assume 10 to 12 months period of time will be required to complete land acquisition and implementation of resettlement plan.

11. Livelihood Impacts

28. During detail study and analysis any loss of livelihoods would be properly assessed and mitigation actions would be ensured through compensation according ADB’s Involuntary Resettlement Policy

12. Women and Other Vulnerable Groups

29. Development projects by changing patterns of use of land, water, and other natural resources cause a range of resettlement effects. The entire process of economic and social dislocation could, and often does, exacerbate existing social economic disparities and inequalities. Certain groups of population by virtue of their socio-economic realities are considered socially vulnerable and thus in need of special consideration so that they can benefit from the development activities of the Project. These groups in the Project area comprised of the following:

• Hard core poor households;

• Female-headed households;

• Disable households; and

• Household losing more than 10% of their income due to loss of agriculture land.

30. Taking into account the socio-economic vulnerabilities of the above groups, specific provisions and special measures would be incorporated in Project (RAPs) to ensure that these groups are not marginalized in the process of development. 31. A Public Consultation and Participation Plan (PCPP) would be designed to ensure that adequate and timely information is made available to the project affected people and communities and sufficient opportunities would be provided to them to voice their opinions and concerns and participate in influencing upcoming project decisions and processes. 32. A Gender Action Plan would also be prepared to promote women’s participation in project planning and implementation and maximize women’s access to project benefits.



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13. Challenges

33. The 1105 kilometer long railway alignment has passed through 6 provinces, and along this route there are many different environments and ethnic groups. Livestock one of the major sources of income of the local community people mainly in the project influenced provinces. Generally the farmers are used to use government land for livestock production. Kuchi farmers who have no even any permanent settlement for living but their livelihoods is fully depend on the livestock production. 34. In all these provinces there are many irrigation schemes and these are most essential element for agriculture and crop production. In Afghanistan crop failure due to drought is very common issue. 35. The railway alignment has crossed highways and local roads and some where even crossed near to the provincial and district town in that case appropriate measures would be essential for safety and mobility of the local communities.

Economic Analysis ADB TA No. 7259-Afghanistan

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APPENDIX 5: ECONOMIC ANALYSIS

I. SENSITIVITY ANALYSIS AND EIRR OF PHASE- I

A. Sensitivity Analysis

1. The sensitivity analysis confirms that the project EIRR under extreme unfavorable condition does not go below the cut-off mark of 12%. It is further observed that freight benefit is much more sensitive than that of distance saving benefits. The results of sensitivity analysis are shown in table below.

Table 1: Sensitivity Analysis Results

B. Distribution Analysis

2. An estimation of EIRRs based on freight and Marshalling yard benefits together and separately only on savings from distance indicate that there is very likelihood the project will turn economically unviable if implemented by either one of the countries. The benefits arising mainly from freight and Marshalling yard are generally will be enjoyed by Uzbekistan; because Uzbekistan has favorable trade balance with Afghanistan. The benefits from distance savings will generally be enjoyed by Afghanistan. The project is an example in hand which shows that the economic viability of the project depends on international cooperation. Individually the project is unviable but jointly it is strongly viable.

Scenarios Base case

(%) EIRR (%)

NPV ($ millions)

15% Project cost hike 17.12 97.34

15% reduction from freight benefits 17.67 94.25

15% reduction from freight benefits and Marshall Yard

17.57 92.66

15% reduction from distance benefits 17.99 100.52

1 year project delay 17.97 98.41

All together

18.79

14.62 44.88


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Table 2: Estimation of Base EIRR

Year

Project Cost at

Economic Prices

Maintenance Cost

Savings from

Freight

Marshalling Yard

Savings from

Distance

Net Benefits

Base EIRR

2009 55.77 0 0 0 -55.8

2010 103.57 0 0 0 -103.6

2011 0 1.5 8.56 1.70 6.12 14.9

2012 1.5 9.80 1.70 7.00 17.0

2013 1.5 11.21 1.70 8.01 19.4

2014 1.5 12.82 1.70 9.16 22.2

2015 1.5 14.67 1.70 10.48 25.3

2016 7.9 16.77 1.70 11.97 22.5

2017 1.5 19.16 1.70 13.69 33.1

2018 1.5 21.90 1.70 15.64 37.7

2019 1.5 25.04 1.70 17.88 43.1

2020 1.5 28.62 1.70 20.44 49.3

2021 1.5 32.82 1.70 23.44 56.5

2022 1.5 37.65 1.70 26.89 64.7

2023 1.5 43.18 1.70 30.84 74.2

2024 1.5 49.53 1.70 35.38 85.1

2025 1.5 49.53 1.70 35.38 85.1

2026 7.9 49.53 1.70 35.38 78.7

2027 1.5 49.53 1.70 35.38 85.1

2028 1.5 49.53 1.70 35.38 85.1

2029 1.5 49.53 1.70 35.38 85.1

2030 1.5 49.53 1.70 35.38 85.1

2031 1.5 49.53 1.70 35.38 85.1

2032 1.5 49.53 1.70 35.38 85.1

2033 1.5 49.53 1.70 35.38 85.1

2034 1.5 49.53 1.70 35.38 85.1

2035 1.5 49.53 1.70 35.38 85.1

18.79%


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Table 3: Freight Benefit

Likely Diversion of loaded Trucks to Rail

Services (97%) Load carried by Trucks 30% to use rail

Year No. of

Loaded Truck

2 Axle

3 Axle

Multi Axle

2 Axle @10 ton

3 Axle @17 ton

Multi Axle @25 ton

2 Axle @10 ton

3 Axle @17 ton

Multi Axle @25 ton

Total Load to

be Carried by rail

Savings @$ .060 per km

Annual Savings

in million USD

2011 1235 543 493 162 5425 8388 4047 1628 2516 1214 5358 321 8.6

2012 1413 621 564 185 6206 9596 4629 1862 2879 1389 6129 368 9.8

2013 1616 710 646 212 7100 10978 5296 2130 3293 1589 7012 421 11.2

2014 1849 812 739 242 8123 12558 6059 2437 3767 1818 8022 481 12.8

2015 2115 929 845 277 9292 14367 6931 2788 4310 2079 9177 551 14.7

2016 2417 1062 966 317 10621 16421 7922 3186 4926 2377 10489 629 16.8

2017 2763 1214 1104 362 12140 18769 9055 3642 5631 2716 11989 719 19.2

2018 3158 1388 1262 414 13876 21453 10350 4163 6436 3105 13704 822 21.9

2019 3610 1586 1442 473 15860 24521 11830 4758 7356 3549 15663 940 25.0

2020 4126 1813 1649 541 18128 28028 13522 5438 8408 4056 17903 1074 28.6

2021 4733 2079 1891 620 20793 32148 15509 6238 9644 4653 20535 1232 32.8

2022 5428 2385 2169 712 23850 36874 17789 7155 11062 5337 23554 1413 37.6

2023 6226 2736 2488 816 27355 42294 20404 8207 12688 6121 27016 1621 43.2

2024 7142 3138 2854 936 31377 48511 23403 9413 14553 7021 30987 1859 49.5

2025 8191 3599 3273 1074 35989 55642 26844 10797 16693 8053 35543 2133 49.5

2026 9420 4139 3764 1235 41387 63989 30870 12416 19197 9261 40874 2452 49.5

2027 10833 4760 4329 1420 47596 73587 35501 14279 22076 10650 47005 2820 49.5

2028 12458 5473 4978 1633 54735 84625 40826 16420 25388 12248 54056 3243 49.5

2029 14327 6295 5725 1878 62945 97319 46950 18884 29196 14085 62164 3730 49.5

2030 16476 7239 6583 2160 72387 111917 53992 21716 33575 16198 71489 4289 49.5

2031 18824 8270 7521 2467 82702 127865 61686 24811 38359 18506 81676 4901 49.5

2032 21506 9449 8593 2819 94487 146086 70477 28346 43826 21143 93315 5599 49.5

2033 24571 10795 9818 3221 107952 166903 80519 32385 50071 24156 106612 6397 49.5

2034 28072 12333 11217 3680 123335 190687 91993 37000 57206 27598 121804 7308 49.5

2035 32073 14091 12815 4204 140910 217859 105103 42273 65358 31531 139162 8350 49.5


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Table 4: Distance Savings Benefits

Savings

Bo

rder

Tra

de

Bo

un

d 2

-axle

d T

ruck

Heavy T

ruck

74 150 74 150 Year

2 Axle

3 Axle

Multi Axle

Total of 3 and

Multi-axle Half

of 2-axle

80% 20% 80% 20% 0.10 0.05 0.12 0.08

Annual Total

Savings (million

$)

2011 1119 1017 334 1351 559 447 112 1081 270 3311 839 9598 3243 6.12

2012 1280 1164 382 1546 640 512 128 1237 309 3788 960 10980 3710 7.00

2013 1464 1331 437 1768 732 586 146 1415 354 4333 1098 12561 4244 8.01

2014 1675 1523 500 2023 837 670 167 1618 405 4957 1256 14370 4855 9.16

2015 1916 1742 572 2314 958 766 192 1851 463 5671 1437 16439 5554 10.48

2016 2190 1992 653 2645 1095 876 219 2116 529 6482 1642 18790 6348 11.97

2017 2503 2276 747 3023 1252 1001 250 2419 605 7409 1877 21477 7256 13.69

2018 2861 2602 854 3456 1431 1144 286 2764 691 8469 2146 24548 8293 15.64

2019 3270 2974 976 3950 1635 1308 327 3160 790 9680 2453 28059 9479 17.88

2020 3738 3399 1115 4515 1869 1495 374 3612 903 11064 2803 32071 10835 20.44

2021 4287 3899 1279 5178 2144 1715 429 4143 1036 12690 3215 36786 12428 23.44

2022 4917 4472 1467 5939 2459 1967 492 4752 1188 14556 3688 42193 14255 26.89

2023 5640 5130 1683 6812 2820 2256 564 5450 1362 16695 4230 48396 16350 30.84

2024 6469 5884 1930 7814 3235 2588 647 6251 1563 19150 4852 55510 18753 35.38

2025 7420 6749 2214 8963 3710 2968 742 7170 1793 21964 5565 63670 21510 35.38

2026 8534 7761 2546 10307 4267 3413 853 8246 2061 25259 6400 73220 24737 35.38

2027 9814 8925 2928 11853 4907 3925 981 9482 2371 29048 7360 84203 28447 35.38

2028 11286 10264 3367 13631 5643 4514 1129 10905 2726 33405 8464 96834 32714 35.38

2029 12978 11803 3872 15676 6489 5191 1298 12540 3135 38416 9734 111359 37621 35.38

2030 14925 13574 4453 18027 7463 5970 1493 14421 3605 44178 11194 128063 43264 35.38

2031 17052 15508 5088 20596 8526 6821 1705 16477 4119 50474 12789 146312 49430 35.38

2032 19482 17718 5812 23531 9741 7793 1948 18824 4706 57666 14611 167161 56473 35.38

2033 22258 20243 6641 26884 11129 8903 2226 21507 5377 65884 16694 190982 64521 35.38

2034 25430 23128 7587 30715 12715 10172 2543 24572 6143 75272 19072 218197 73715 35.38

2035 29054 26423 8668 35091 14527 11621 2905 28073 7018 85999 21790 249290 84220 35.38


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II. SENSITIVITY ANALYSIS AND EIRR OF PHASE- II

A. Sensitivity Analysis

1. Sensitivity analysis was expanded from the usual ± 10% increase/decrease in specific factors, i.e. increase in capital cost or operating and maintenance cost or decrease in benefits. In general, sensitivity analysis is carried out to examine the impact of unexpected future changes. The cases of sensitivity analysis were: (a) 10% increase in capital/investment cost, (b) 10% decrease in project benefits, (c) 10% increase in operating/maintenance costs, and combined of (a) and (b). The results of the sensitivity analysis in the above four cases are shown in Table 5. In all these cases, EIRR is above the hurdle rate of 12%, while, it is 11.89% (which is about 12%) in the worse cases, which is increase in capital cost by 10% and decrease in project benefits by 10%. Considering these scenarios and future investment in the mining sector, it can be assumed that the project is economically viable.

Table 5: Results of Sensitivity Analysis

Factor Changes Economic Internal

Rate of Return

Net Present Value

(US$ million)

Increase in capital cost by 10% 12.62% 296.82

Decrease in project benefits by 10% 12.57% 247.13

Increase in operating and maintenance cost by 10% 13.31% 583.00

Increase in capital cost by 10% and decrease in project benefits by 10%

11.89% (-) 51.99


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Table 6: Economic Analysis of Section – 1 of Phase- II

Year Investment

Cost

Maintenance

and Rolling

Stock Cost

Operating

Cost Savings

Indirect

Benefits

Passenger

Time

Savings

Cash Flow

(US$ million)

1 130.54 -130.54

2 348.10 -348.10

3 652.69 -652.69

4 870.25 -870.25

5 1305.38 -1305.38

6 1044.30 -1044.30

7 2.88 202.07 114.88 19.17 333.25

8 2.88 220.76 125.83 20.71 364.42

9 2.88 241.28 137.89 22.37 398.65

10 2.88 263.81 151.17 24.15 436.25

11 2.88 288.56 165.81 26.09 477.58

12 2.93 315.77 181.95 28.17 522.97

13 2.93 345.70 199.76 30.43 572.97

14 2.93 378.64 219.42 32.86 628.00

15 2.93 414.90 241.14 35.49 688.61

16 92.11 454.85 265.14 38.33 666.21

17 2.93 494.24 288.45 41.40 821.15

18 3.08 537.08 313.82 44.71 892.53

19 3.23 583.67 341.46 48.29 970.19

20 3.39 634.36 371.56 52.15 1054.68

21 3.56 689.50 404.35 56.32 1146.61

22 3.74 749.50 440.07 60.83 1246.65

23 3.93 814.77 478.98 65.69 1355.52

24 4.12 885.80 521.38 70.95 1474.00

25 4.33 963.10 567.57 76.62 1602.96

26 4.54 1047.22 617.91 82.75 1743.34

27 4.77 1131.00 667.34 89.37 1882.94

28 5.01 1221.48 720.73 96.52 2033.72

29 5.26 1319.19 778.39 104.24 2196.57

30 5.52 1424.73 840.66 112.58 2372.45

31 5.80 1538.71 907.91 121.59 2562.41

32 6.09 1661.80 980.55 131.32 2767.58

33 6.39 1794.75 1058.99 141.82 2989.17

34 6.71 1938.33 1143.71 153.17 3228.49

35 7.05 2093.39 1235.21 165.42 3486.97

36 -2175.63 7.40 2260.87 1334.02 178.66 5941.77

EIRR = 13.30%

ENPV = $507.04


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Table 7: Economic Analysis of Section – 2 of Phase- II

Year Investment Cost Maintenance and

Rolling Stock Cost

Operating Cost

Savings

Indirect Benefits Cash Flow

(US$ million)

1 36.57 -36.57 2 91.41 -91.41 3 127.98 -127.98 4 109.70 -109.70 5 0.55 9.51 11.08 20.04 6 0.58 10.75 12.53 22.71 7 0.61 12.16 14.17 25.73 8 0.64 13.75 16.03 29.14 9 0.67 15.55 18.13 33.01

10 0.70 17.59 20.50 37.39 11 0.74 19.89 23.18 42.34 12 0.77 22.49 26.22 47.94 13 0.81 25.44 29.65 54.27 14 0.85 28.77 33.53 61.44 15 0.90 31.65 36.88 67.63 16 27.56 34.81 40.57 47.82 17 0.94 38.29 44.63 81.98 18 0.99 42.12 49.09 90.22 19 1.04 46.33 54.00 99.29 20 1.09 50.97 59.40 109.28 21 1.14 56.06 65.34 120.26 22 1.20 61.67 71.87 132.34 23 1.26 67.84 79.06 145.63 24 1.32 74.62 86.96 160.26 25 1.39 80.59 93.92 173.12 26 1.46 87.04 101.44 187.01 27 1.53 94.00 109.55 202.02 28 1.61 101.52 118.31 218.23 29 1.69 109.64 127.78 235.73 30 1.77 118.41 138.00 254.64 31 1.86 127.89 149.04 275.07 32 1.96 138.12 160.97 297.13 33 2.05 149.17 173.84 320.96 34 2.16 161.10 187.75 346.69 35 2.26 169.15 197.14 364.03 36 -182.83 2.38 177.61 207.00 565.05

EIRR 13.58% ENPV $66.90

Financial Analysis


6-1

APPENDIX 6: FINANCIAL ANALYSIS

I. SENSITIVITY ANALYSIS AND FIRR OF PHASE- I

A. Weighted Average Cost of Capital (WACC)

1. In theory, the WACC is zero if ADB is the only contributor of the project as a grant. However, there is an opportunity cost for ADB funds. The Government also contributes $4.5 million to finance certain components. Table 1 illustrates the estimate of after-tax WACC by following the ADB guidelines. WACC is estimated at 1.37%

Table 1: Estimate of the WACC

Item ADB Government Total

Amount ($ million) 165 4.5 169.5

Weighting 97% 3% 100%

Nominal Cost 3.00% 7.00%

Tax Rate 20% 0.00%

Tax-Adjusted Nominal Cost 2.40% 7.00%

Inflation Rate 1.00% 6.00%

Real Cost 1.39% 0.94%

Weighted Component of WACC 1.35% 0.03% 1.37%

Weighted Average Cost of Capital (Real) 1.37%

Source: consultants’ estimates

B. Financial Internal Rate of Return

2. The result of financial analysis is illustrated in Table 2, which shows the FIRR of 3.18% is greater than the WACC of 1.37%. Therefore, the project is viable if fixed fee and/or revenue sharing scheme with a prospective rail operator is within the estimated range.

Financial Analysis


6-2

Table 2: FIRR the Base Case

Cash Outflow Cash Inflow

Year Capital

Expenditure Operating Outflows

Operating Inflows

Net Free Cash Flow

2009 16.12 0.00 0.00 -16.12

2010 145.08 0.00 0.00 -145.08

2011 1.61 3.57 1.96

2012 1.61 4.02 2.41

2013 1.61 4.52 2.91

2014 1.61 5.09 3.48

2015 1.61 5.73 4.11

2016 8.06 6.44 -1.62

2017 1.61 7.25 5.64

2018 1.61 8.16 6.55

2019 1.61 9.19 7.57

2020 1.61 10.34 8.72

2021 1.61 11.63 10.02

2022 1.61 13.09 11.48

2023 1.61 14.73 13.12

2024 1.61 16.58 14.97

2025 1.61 18.66 17.05

2026 8.06 21.00 12.94

2027 1.61 21.00 19.39

2028 1.61 21.00 19.39

2029 1.61 21.00 19.39

2030 1.61 21.00 19.39

2031 1.61 21.00 19.39

2032 1.61 21.00 19.39

2033 1.61 21.00 19.39

2034 1.61 21.00 19.39

2035 32.24 1.61 21.00 -12.85

FIRR 3.18%

NPV 33.98

Source: consultant’s estimates

Financial Analysis


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C. Sensitivity Analysis

3. The FIRR for the project are tested under the unfavorable parameters. The results of the sensitivity analysis are presented in Table 3. It shows that FIRR is highly sensitive to tariff and capital costs.

Table 3: Summary Results of Sensitivity Analysis

FIRR NPV Switching Value

Base case 3.2% 34.0

20% increase in capital cost 1.8% (1.1) 19%

20% increase in O&M cost 2.9% 25.8 83%

10% decrease in freight transport tariff 2.2% 9.0 -14%

Source: consultant’s estimates

II. SENSITIVITY ANALYSIS AND FIRR OF PHASE- II

A. Weighted Average Cost of Capital (WACC)

1. It is estimated that ADB and the Government will contribute 99.1% and 0.9% of total source to finance the Project respectively. As ADB fund has an opportunity cost, ADB loan’s interest rate has been computed at the 30-year forward London interbank offered rate plus a spread of 0.2%. The effective rate for the ADB resource is estimated at 4.38% since as of 6 May 2010 the Indicative Lending Rates for Loans under the LIBOR-Based Loan Facility is 4.18% for 30 years1. The Government required rate of return is assumed at 7%, same as the rate in Phase I.2

2. Table 4 illustrates the estimate of after-tax WACC by following the ADB guideline. Line A is the proportions of capitals contributed by ADB and the Government respectively. Line B is the nominal costs of each type of capitals before tax. Line G is the after-tax cost of that type of capitals adjusted by inflation rate. The last line is the WACC of the Project, i.e. 1.97%.

1 Source: Treasury Department, ADB

(http://www.adb.org/Documents/Brochures/Libor/indicative_rates.pdf) 2 RRP: Proposed Asian Development Fund Grant, Islamic Republic of Afghanistan: Hairatan to Mazar-e-Sharif Railway Project, Phase I, September 2009.

Financial Analysis


6-4

Table 4: Estimates of the WACC

ADB loan Government Total

a Proportion of capital 0.99 0.01 1

b Nominal rate 4.38% 7.00%

c Tax rate 20% 0%

d Nominal cost adjusted by tax 3.50% 7.00%

e Inflation rate 1.50% 5.00%

f Real cost adjusted by tax 1.97% 1.90%

g Cost of types of capital 1.96% 0.02% 1.97%

Weighted average (real) cost of capital 1.97%


B. Estimates of FIRR

3. The result of financial analysis of the overall Project is shown in Table 5, which shows that the FIRRs before and after tax are 4.39% and 3.71% respectively, greater than the WACC of 1.97%. Therefore, the overall Project is viable given the assumptions above. The results of financial analysis for the overall Project, Section- 1 and Section- 2 are summarized in Table 8. The FIRRs before and after tax are 4.55% and 3.85% for Section- 1 , and 2.54% and 2.03% for Section- 2, which are higher than the WACC. However, the FIRR for Section- 2 is only marginally higher than WACC since only freight traffic is generated.

Table 5: Summary Results of Financial Analysis

Overall Project Section- 1 Section- 2

Before Tax 4.39% 4.55% 2.54%

After Tax 3.71% 3.85% 2.03%

WACC 1.97% 1.97% 1.97%


Financial Analysis


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Table 6: Estimates of FIRR of the Overall Project in the Base Case

(Unit: $ million)

Year Capital Costs

O&M Revenue Business Tax

Income Tax

Net Cash Flow Before Income Tax

Net Cash Flow After Income Tax

2010 212.0 0.0 0.0 0.0 0.0 (212.0) (212.0) 2011 557.7 0.0 0.0 0.0 0.0 (557.7) (557.7) 2012 990.5 0.0 0.0 0.0 0.0 (990.5) (990.5) 2013 1,243.2 0.0 0.0 0.0 0.0 (1,243.2) (1,243.2) 2014 1,655.6 0.6 0.0 0.0 0.0 (1,656.2) (1,656.2) 2015 1,324.5 0.6 0.0 0.0 0.0 (1,325.1) (1,325.1) 2016 210.2 347.2 6.9 0.0 130.1 130.1 2017 229.1 378.9 7.6 0.0 142.1 142.1 2018 250.0 413.5 8.3 0.0 155.3 155.3 2019 272.8 451.6 9.0 0.0 169.7 169.7 2020 295.7 489.9 9.8 2.7 184.4 181.7 2021 320.7 531.5 10.6 5.8 200.2 194.3 2022 347.8 576.7 11.5 9.3 217.4 208.1 2023 377.2 625.8 12.5 13.0 236.1 223.0 2024 409.1 679.0 13.6 17.1 256.4 239.3 2025 533.0 736.9 14.7 3.6 189.2 185.6 2026 481.5 799.8 16.0 26.3 302.3 276.0 2027 522.5 868.0 17.4 31.4 328.1 296.7 2028 567.2 942.2 18.8 37.0 356.2 319.1 2029 615.7 1,022.8 20.5 43.1 386.6 343.5 2030 664.8 1,104.6 22.1 49.3 417.7 368.4 2031 717.8 1,192.9 23.9 56.1 451.3 395.2 2032 775.1 1,288.4 25.8 63.3 487.5 424.2 2033 836.9 1,391.4 27.8 71.1 526.7 455.5 2034 903.7 1,502.8 30.1 79.6 569.0 489.4 2035 975.9 1,623.0 32.5 88.7 614.7 525.9 2036 1,053.8 1,752.8 35.1 98.6 664.0 565.4 2037 1,137.9 1,893.0 37.9 109.3 717.3 608.0 2038 1,228.7 2,044.5 40.9 120.8 774.9 654.1 2039 1,326.8 2,208.0 44.2 133.2 837.1 703.9 2040 1,421.1 2,366.2 47.3 145.4 897.7 752.4 2041 1,522.5 2,536.1 50.7 158.4 962.9 804.5 2042 1,631.3 2,718.6 54.4 172.4 1,033.0 860.6 2043 1,748.1 2,914.7 58.3 187.5 1,108.3 920.8 2044 1,873.7 3,125.4 62.5 203.7 1,189.2 985.6 IRR: 4.39% 3.71%

NPV: 3,321.79 2,208.56


C. Sensitivity Analysis

4. The FIRRs of the overall Project, Section- 1 and Section- 2 are tested under the unfavorable parameters and the results of the sensitivity analysis are summarized in Table 7, Table 8, and Table 9 respectively. The sensitivity results of the overall Project show that FIRR is not sensitive to the unfavorable changes of passenger tariff, O&M cost and freight tariff.

Financial Analysis


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Table 7: Results of Sensitivity Analysis for the Overall Project

FIRR before Tax FIRR after Tax

Base case 4.39 3.71

20% increase in capital cost 3.42 2.82

20% increase in O&M cost 2.53 negative

20% decrease in freight traffic 4.11 3.45

20% decrease in passenger traffic 3.5 2.89

20% decrease in freight tariff 2.87 negative

20% decrease in passenger tariff negative negative


5. The sensitivity results of Section- 1 suggest that FIRR is not sensitive to the unfavorable change of passenger tariff and O&M cost.

Table 8: Results of Sensitivity Analysis for Section- 1


Base case 4.55 3.85

20% increase in capital cost 3.57 2.95

20% increase in O&M cost 2.53 negative

20% decrease in freight traffic 4.32 3.64

20% decrease in passenger traffic 3.59 2.98

20% decrease in freight tariff 3.89 3.25

20% decrease in passenger tariff negative negative


6. The sensitivity results of Section- 2 indicate that any unfavorable changes of parameters will have significant impacts on the viability of Section- 2.

Table 9: Results of Sensitivity Analysis for Section- 2


Base case 2.54 2.03

20% increase in capital cost negative negative

20% increase in O&M cost negative negative

20% decrease in freight traffic negative negative

20% decrease in passenger traffic NA NA

20% decrease in freight tariff negative negative

20% decrease in passenger tariff NA NA


Initial Environmental Examination ADB TA No. 7259-Afghanistan

7-1

APPENDIX 7: SUMMARY OF INITIAL ENVIRONMENTAL EXAMINATION

I. SUMMARY INITIAL ENVIRONMENTAL EXAMINATION OF PHASE- I

A. Introduction

1 The SIEE is a summary of the IEE and is prepared according to a strict ADB format. It defines the extent of the environmental effects, both direct and indirect, associated with the proposed project during key period of work, lists the extent, duration and severity of the impacts, and specifies the estimated cost of proposed mitigative actions. The Environmental Action Plan is also summarized. The IEE concludes with a recommendation on the need for any further environmental analysis.

2 This IEE is a RoU document, and was completed using a combination of fieldwork, consultation with central and oblast-level officials as well as the local public and secondary information from existing documents. The IEE was prepared by the TA consultant on behalf of MPW. Consultant identifies any significant direct and indirect environmental effects associated with the proposed project during key period of work, the extent, duration and severity of the impacts, the assessment of all significant impacts, and the preparation of a set of costed mitigative actions.

3 The IEE also provides an examination of the institutional capacity of the UTY and other bodies likely involved in the implementation of the EMP's mitigative and monitoring measures.

B. Description of the Project

4 The project will build a railway line linking Hairatan and Mazar-e-Sharif. The project will have two components: (i) railway construction and (ii) railway sector and institutions development. The Project will be enhanced by the improved and modernized custom facilities in Hairatan being funded by the European Commission. The first phase of this Euro 13 million project to handle import goods is completed. The second phase for export goods will follow. The Project will be synchronized with the newly built customs facilities to maximize the project benefits.

5 The existing Uzbek railway network stops at the border town of Hairatan. This is a gateway to Afghanistan, but it has reached its toll capacity (4,000 tons of cargo per month). The flow of goods from Central Asia to Afghanistan will increase from 25,000 tons to 40,000 tons per month over the next few years. To prevent bottlenecks at the border, the existing Uzbek railway at Hairatan needs to be extended into Afghanistan, to Mazar-e-Sharif. At a later stage, the railway network will be extended to Herat in the west and Tajikistan in the east. The railway line is expected to significantly save transport costs and time for strategic commodities such as fuel and general cargo. The new railway line will also divert the road transport to rail that reduces the transport costs by road, traffic accidents, pollution, and green house gases. The diversion of road to rail freight will also reduce the road maintenance costs. In the long run, the railway extension to Charbakhar Port would make it more attractive for cotton exports from Uzbekistan.

6 The rail line will run for a distance of 75 km, starting at the Friendship Bridge which crosses the border between Uzbekistan and Afghanistan, and finishing just south of the village of Gur-e-Mar some 18 km east of Mazar-e-Sharif.


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7 The track gauge will be 1520 mm which will ensure standardization with the rail networks of the Commonwealth of Independent States (CIS). The loading gauge will also be the CIS standard. This has a wide clearance and so will permit cargo from other gauges to be trans-shipped on flat wagons. Passing stations will be constructed every 20 km. The passing stations will be 1.7 km in length allowing for 100 wagon trains made up of 17 m wagons. Maximum speed will be 80 km/h.

8 The rail civil works will be constructed by the Uzbekistan Temir Yullari (UTY) or Uzbek National Railroad Corporation. UTY is also likely to be the operator of the trains and undertake the management and maintenance of the railway facilities. UTY is a member of the CIS family of railroads, which is the large former Soviet network that reaches over most of Central Asia and into Eastern Europe. The CIS’s main characteristic is the use of a 1520 mm track gage largely built using standards developed by All Russia Railway Institute. The result is a high degree of standardization and interoperability.

9 The project will be implemented over a period of 18 months. The design and construction activities will start in November 2009. Civil and track works will start early in January 2010. The construction is expected to be completed by November 2010.

C. Description of the Environment

1. Physical and Ecological Resources

10 The alignment is located on the Northern Plain of Balkh Province. This area of the province is flat, and made up of areas of desert and semi-desert. The northern half of the alignment from Hairatan to the Naibabad junction is covered by wind blown sands. From Naibabad to Gur-e-Mar the alignment crosses arid loess soils. The topography around the project site forms part of an extensive sparsely covered plain which abuts the foothills of the Hindu Kush to the south and extends across the border into Turkmenistan and Uzbekistan to the north. Loess comprises fine soil particles that are transported during the summer by the prevailing northwest wind from the central Asian plains and deposited on the foot of the mountains where wind speed is frustrated by relief. The plain is gently rolling or flat with elevation 350-550 m.

11 The geology of the area comprises Neogene and Quaternary (Pleistocene) sediments comprising loess cover beds tens of meters thick, which overlie alternating layers of pebbles/gravels, sands, silts and clays. The sediments represent the products of erosion of the mountains. Modem alluvial deposits occur along the current river valleys. The quaternary sediments overlie Mesozoic limestones, conglomerates, sandstones, siltstones, and shales extending to several kilometers depth. The Mesozoic rocks are gently folded and faulted forming the reservoir strata and structures for the region's natural gas resources. The Mesozoic rocks are exposed to the south in the foothills of the Hindu Kush.

12 Mazar-e-Sharif climate is characterized with very hot summer with daily temperatures of over 350C in June, July, and August. Winter is cold with temperature below 00 C in December, January and February. Spring and autumn are pleasant with moderate temperatures. Mean monthly temperature varies from -2.10C to 38.9 0C; humidity ranges from 27% to 79%. Average monthly rainfall ranges from 0 to 43.8 mm with 190mm annual rainfall. Winds are primarily northwesterly and southeasterly. East winds are also common in winter and fall. Prevailing wind speeds are 2 to 3 m/s. Rare strong winds (up to 20 m/s) occur in late spring or summer and are usually accompanied by dust storms, reducing visibility to several meters.

13 The Amu Darya River at the start of the alignment is the only surface water feature within the study area. This flows in an east west direction away from the alignment of the


7-3

railway. There are no other surface water features within 10 km of the alignment. At the Southern end of the alignment the Balkh River is some 20 km to the west.

14 On average 67% of households in the province have access to irrigated land, whereas 28% of rural households and 14% of urban households have access to rain-fed land.

15 There are no significant ecological resources in the study area with the majority of the alignment crossing barren arid desert or semi-desert areas. There is no natural vegetation in the desert. In the semi desert areas the ground cover is sparse consisting of drought-resistant grasses including needle grass, sheep fescue, blue grass, and sedge. The grass usually dies back by mid-summer and the terrain takes on a desert appearance.

16 The harsh desert conditions of the study area mean that there is only a small number of fauna species adapted to inhabit it. These include the Midday Gerbil Meriones meridianus, the Social Vole Microtus socialis and the Cape Hare Lepus capensis. Donkeys and horses graze the semi-desert areas and foxes area also found. The Patch-nosed desert snake Salvadora hexalepis is sometimes found in the study area.

2. Human, Economic Development and Quality of Life

17 The majority of the study area is uninhabited and so there is little economic activity taking place. At the northern end of the alignment is the industrial area of Hairatan where there are a number of rail spurs, warehousing, and fuel farms that deal with goods imported from Uzbekistan. The rail alignment will follow the route of the existing Hairatan-Naiababad road to the south which is also the route of a 330 kV transmission line. The alignment will cross the A76 road at Naiababad before turning west. At the southern end of the alignment is the village of Gur-e-Mar. This section of the IEE therefore describes the economic development and the social and cultural resources of the wider region as there is little to describe within the study area.

18 There is one fertilizer factory operating in the province. The majority of commercial activity in Balkh is related to agriculture and small businesses. The sector of small industries is dominated by one commodity - karakul1 skin. The districts of Dawlat Abad, Balkh, Chimtal, and Sholgara together house close to three quarters of the villages engaged in this particular industry. In the area of handicrafts, rugs are the most prominent, engaging more than 408 villages of the 1,140 (36%). Carpets, jewelry, and shawls are also produced, albeit in substantially less number of villages: rugs concentrated particularly in Chahar Kint, Sholgara, and Dawlat Abad; carpets in Dawlat Abad, Dehdadi, Balkh, and Chahar Bolak; jewelry in Dehdadi and Chahar Kint; and shawls in Dawlat Abad, Chimtal, Chahar Kint, and Sholgara.

19 The provision of basic infrastructure such as water and sanitation, energy, transport and communications is one of the key elements necessary to provide the building blocks for private sector expansion, equitable economic growth, increased employment and accelerated agricultural productivity. In Balkh province, on average only 31% of households use safe drinking water. This rises to 67% in the urban area, and falls to 12% in rural areas. Four of five households (80%) have direct access to their main source of drinking water within their community, however almost one in five households (18%) has to travel for up to an hour to access drinking water, and for 1% travel to access drinking water can take up to 6 hours. On average only 12% of households have access to safe toilet facilities. The situation is better in

1 Karakul is the soft curly black wool from central Asian lambs used for fur coats.


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the urban areas where 15% of households have safe toilets, but this is accurate for only 10% of rural households.

20 In terms of meeting the basic requirements for energy, 49% of households in Balkh province have access to electricity with a majority of these (41%) relying on public electricity. In the urban areas 95% of households have access to electricity however this figure falls to just 26% in rural areas, and a little more than half of these (14%) have access to public electricity.

21 Agriculture is the major source of revenue for 42% of households in Balkh province, including 61% of rural households and 7% of households in the urban areas. Seventy percent of rural households and 6% of urban households own or manage agricultural land or garden plots in the province. However, more than half of households (58%) in the urban areas and more than one-fifth of households (21%) in rural areas derive income from trade and services. More than a third of households (35%) in urban and at least a quarter (25%) in rural areas earn some income through non-farm related labor. Livestock also accounts for income for 29% of rural households.

22 Around a quarter of the households in the province report having problems satisfying their food needs at least 3–6 times a year, and a further more than fifth of households face this problem up to three times a year. Nearly a third of the population in the province is estimated to receive less than the minimum daily caloric intake necessary to maintain good health. This figure is much less for the rural population (17%) but significantly high for people living in the urban areas (53%). In both rural and urban areas just about half the population has low dietary diversity and poor or very poor food consumption.

23 In 2005, 24% of the population of Balkh province received allocations of food aid, which reached a total of 265,402 beneficiaries. In addition, of the 25% of households who reported taking out loans, 58% said that the main use of their largest loan was to buy food. A further 10% used the money to cover expenses for health emergencies. In the same year about a third of the households in the province reported feeling that their economic situation had got worse compared to a year ago, and more than two-thirds felt that it had remained the same.

24 In 2005, more than a tenth of all households in the province reported having been negatively affected by some unexpected event in the last year, which was beyond their control. Rural households were slightly more vulnerable to such shocks, with 17% of households affected, as opposed to urban households (5%). People living in urban areas were most vulnerable to shocks related to natural disaster and drinking water, whereas those in rural areas were most at risk from agricultural shocks. Of those households affected, nearly three quarters reported that they had not recovered at all from shocks experienced in the last 12 months (73%), and a quarter said they had recovered only partially (25%).

D. Forecasted Environmental Impacts and Proposed Mitigative Measures

1. Physical Environment

a. Soils and Materials

25 Construction Period: The construction of the rail line will require earthmoving and compaction to provide a suitable base for the track. Environmental impacts that could occur during the preparation of the track base include contamination resulting from spills or disposal of oil, lubricants or other chemicals. The impacts of any spills are likely to be confined to very local contamination and therefore are unlikely to be significant. The lack of any sensitive receptors along most of the alignment further reduces the likely significance.


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26 In order to minimize the likelihood of spills and to ensure proper clean up if a spill occurs the following measures will be included in the EMP. All hazardous wastes and hazardous materials, lubricating oil, solvents and fuels, will be stored within a bunded area that has the capacity of at least 110% of the largest container in the storage area. Oil spill clean-up materials (sorbent pads, loose sorbent material, etc.) will be made available. Any spill or leak shall be addressed immediately and the contaminated soil and material be disposed appropriately.

27 The sources of construction materials such as cement, ballast, sleepers and track have not yet been finalized. Unlicensed quarries and cement plants have the potential to create significant environmental impacts if not operated properly. Truck movements may disturb and disrupt villages and towns. Ballast and cement must be obtained from licensed facilities and the contractor must ensure vehicles use haulage routes that avoid villages and towns.

28 Operation Period: During the operation stage routine maintenance activities may also result in small scale spills of hazardous materials. Bunded hazardous materials storage facilities will be constructed which will have the capacity of at least 110% of the largest container in the storage area. Spill clean up kits will be available. Staff will be trained in safe handling of hazardous materials and spill clean up requirements.

29 Trains using the line will carry a variety of materials and may include wagons carrying bulk liquids. The unloading of bulk fuel carriers will present a risk of significant spills if not undertaken in a controlled manner. At present the freight handling facilities are still at the concept design stage; if bulk storage of fuel is included as part of the detailed design then the facilities must designed in accordance with a suitable international standard such as AS1940: The storage and handling of flammable and combustible liquids or ISO28300: Petroleum, petrochemical and natural gas industries - Venting of atmospheric and low-pressure storage tanks.

b. Air Quality

30 Construction Period: The earthmoving and compaction requirements are likely to generate dust. The impacts associated with generated dust will only be significant where work is taking place close to residential or industrial areas. As the majority of the works will take place in areas of desert or semi desert many kilometers from the nearest inhabited areas dust generation will not be a significant issue. Air quality in the region is good and the prevailing winds are likely to disperse the dust to acceptable levels before it reaches any receptor.

31 Works taking place near Hairatan, Naibabad or Gur-e-Mar will need to monitor the levels of dust being generated by the works. In the event that dust from the construction activities is being deposited on the nearby houses and buildings the contractor will be required to implement dust control measures. These will include ensuring that diesel equipment is operated and maintained properly; reducing dust generation by reduced speed limits; and spraying water on work sites to suppress dust.

32 Operation Period: Once operational there will be no significant air quality impacts from the rail line. Diesel locomotives will be used to power the trains and so there will be some emissions from the engines. However the air quality of the region is good, there are no other sources of pollution close to the line and the prevailing winds will quickly disperse the emissions to acceptable levels. The number of trains using the line will be one or two a day and so there will not be an accumulation of emissions from multiple locomotives.


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c. Noise and Vibration

33 Construction Period: The operation of plant and equipment during the construction of the rail line will generate noise and vibration. As the majority of the construction will be occurring many kilometers away from the nearest sensitive receptors any significant noise or vibration will be attenuated by the distance. Materials for the construction for the rail line will be bought to site by truck. This will include sleepers, rails and ballast. Truck movements have the potential to generate significant noise and vibration, particularly when passing through villages and towns. Local housing is often constructed from mud bricks, which is particularly sensitive to damage from vibration. In order to prevent any noise and vibration issues arising from truck movements the contractor will be required to develop haulage routes that ensure that any villages or towns are bypassed by trucks.

34 There are two locations where construction activities will be taking place close to villages; these are the construction of the rail crossing of the A76 road to the west of Naibabad and the development of the freight terminus south of Gur-e-Mar village. No noise monitoring has been undertaken as part of this IEE but existing noise levels at both sites are expected to be low, reflecting the rural nature of the area. Road noise from traffic on the A76 is the major noise source during the day which is significantly reduced at night. Both sites are a few kilometers away from the villages and so attenuation over distance will cause a significant reduction in noise levels. However the contractor will be required to liaise regularly with both communities and in the event that there are night time noise impacts the contractor will be required to limit construction to the hours of 7am to 7pm.

35 Operation Period: The noise and vibration impacts during operation are expected to be minimal, as there will only be one or two trains a day using the line. Any noise impacts from the locomotives will be short term and intermittent in nature and, as the line will be located away from villages and towns it is likely that noise levels will be attenuated by the distance.

36 The operation of the freight terminus may generate unwanted noise for nearby communities; however the location of the terminus has yet to be determined. When choosing the location the design should take account of any nearby residential areas. If the terminus is to be located close to housing then an earth bund should be constructed between the terminus and the houses to act as a noise barrier.

2. Socioeconomic Environment

37 The use of local labor during the construction will increase benefits to the local community by providing employment opportunities and economic benefits. Increased traffic during construction will be managed through coordination between the contractor, PIU and the local police. Contractors will communicate to the public through community consultation regarding the scope and schedule of construction, as well as certain activities causing disruptions or access restrictions.

3. Proper Construction Practices

38 The contractor’s conformity with contract procedures and specifications during construction will be carefully monitored. Stakeholder consultations have shown that prime contractors tended to use sub contractors without ensuring that they conform to general construction guidelines (good engineering practice and good working practices). Such practices degrade the quality of construction as well as the benefits of the Project. Contractors will be made to follow standard construction practices, monitored and supervised by construction supervision consultants (CSC) employed under the Project.


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4. Health, Safety and Hygiene

39 Contractors will ensure that no wastewater is discharged to local water bodies and that no site-specific landfills will be established at the construction camps. Each contractor will therefore be required to recruit an environmental, health and safety manager to address such concerns in the work sites and liaise/work with the laborers. Mitigation measures include:

� Provision of adequate healthcare facilities (first aid) within construction sites;

� Training of all construction workers in basic sanitation and healthcare issues, general health and safety matters, an on the specific hazards of their work;

� Personal protection equipment for workers, such as safety boots, helmets, gloves, protective clothing, goggles and ear protection;

� Clean drinking water to all workers;

� Adequate protection to the general public, including safety barriers and marking of hazardous areas;

� Safe access across the construction site;

� Adequate drainage throughout the camp to ensure that disease vectors such as stagnant water bodies and puddles do not form; and

� Septic tank and garbage box will be set up in construction site, which will be periodically cleared by the contractors to prevent outbreak of diseases.

� Where feasible the contractor will arrange the temporary integration of waste collection from work sites into existing waste collection systems and disposal facilities of nearby communities.

5. Hazardous Materials & Waste Management

40 The following hazardous materials and waste management measures will be implemented during construction:

� all areas designated for the storage of fuels, oils, chemicals or other hazardous liquids shall have a compacted base and be surrounded by a bund to contain any spillage. These areas shall be covered by a roof structure to minimize the potential for infiltration and contamination of rainwater. Alternatively ventilated containers and individual spill pallets could be used, dependent on the volume of hazardous materials;

� areas designed for the storage of hazardous materials are to be clearly designated and storage of such materials outside these areas strictly prohibited.

� an Emergency Spills Contingency Plan shall be prepared as part of the Contractors Environmental Management Plan.

� apply any waste minimization and management strategies as nominated;

� dispose of waste to nominated project disposal sites;

� ensure that the waste management measures are implemented on the project site;

� prepare and implement a hazardous waste management plan for the disposal of waste oil, batteries and other hazardous materials;

� ensure that topsoil is stockpiled for used in post construction landscaping;

� chip and mulch vegetation cleared and reuse it as an organic base for re-vegetation; ensure that materials, which may cause land/water contamination or create odor problems, are not disposed of on the site;

� keep work areas tidy;

� ensure that there is the adequate provision of correctly marked waste containers made available at convenient locations for the disposal of wastes;

� ensure adequate toilet and ablution facilities are provided for the duration of the


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contract. Domestic sewage and sullage from these facilities shall be subject to suitable treatment prior to discharge in to environment. Under no circumstances untreated wastes shall be discharged into the environment.

E. Institutional Requirements and Environmental Monitoring

1. Institutional Requirements

41 Institutions responsible for executing and monitoring the environmental aspects of this Project are:

� Ministry of Public Works (MPW) is responsible for planning, constructing, operating and maintaining rail infrastructure in Afghanistan. The Project Implementation Unit (PIU) will be in charge of project management to ensure that the contract provisions are properly maintained. Both the supervision consultants and the Environmental Specialist within the Environment & Social section of the PIU are responsible for environmental monitoring and management of project implementation.

� The rail civil works will be constructed by the Uzbekistan Temir Yullari (UTY), the Uzbek National Railroad Corporation.

� The MPW and its provincial authorities will also undertake routine and random monitoring of specific environmental plans addressed in this IEE.

� The Project will provide PIU with the assistance of a construction supervision consultant (CSC) to help ensure the implementation of environmental management practices at each stage of the construction and operation.

� NEPA shall be consulted if complicated issues arise during construction and operation stages.

42 Implementation and monitoring of mitigation measures as per the Environmental Monitoring and Management Plan during the construction stage shall be the responsibility of the UTY. The environmental specialists of CSC will supervise the monitoring of implementing mitigation measures during construction. The domestic environmental specialist shall coordinate with the international environmental specialist for resolving complicated issues that arise in the field and to provide continuously updated information in order to submit reports to PIU and ADB.

43 After project completion, it is likely that operation and maintenance of the line will also be undertaken by UTY, who shall develop and implement the monitoring plan for the operational phase.

F. Mitigation

1. Preconstruction

44 During the pre-construction period there will be a number of important environmental costs, principally the, a) updating of EMP during detailed design phase and inclusion of environmental clauses in bid and contract documents, b) provision of training on environmental compliance monitoring and reporting.

2. Construction

45 Construction period mitigation costs will involve the environmental performance of contractors with regard to control measures pertaining to material storage, location of work camp, noise, waste disposal, traffic management, worker’s safety, etc. and the environmental inspection as part of the overall construction inspection program. Included in this cost is data assembly and reporting.


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3. Operating Period

46 Much of the environmental costs during the operating period will be monitoring. O&M practices and environmental effects including materials handling, soil contamination, noise, vibration, and air quality.

G. Monitoring

47 The Construction Supervision Consultant (CSC) in cooperation with PIU during project implementation shall develop an environmental auditing protocol for the construction period, formulate a detailed monitoring and management plan, supervise the environmental monitoring regularly, and submit quarterly reports based on the monitoring data. The PIU shall submit the following environmental reporting documentation to ADB:

(i) Baseline Monitoring Report: The Baseline Monitoring Report shall be submitted to ADB prior to commencement of civil work and shall include a detailed environmental management and monitoring plan (including data collection locations, parameters and frequency), baseline environmental data, relevant standards and data collection responsibilities.

(ii) Environmental Monitoring Reports: The environmental monitoring reports shall include environmental mitigation measures undertaken, environmental monitoring activities undertaken, details of monitoring data collected, analysis of monitoring results, recommended mitigation measures, environmental training conducted, and environmental regulatory violations. The environmental monitoring reports shall be submitted to ADB semi-annually during the construction period and for one year after completion of construction.

H. Mitigation and Monitoring Costs

48 Since environmental impacts are minimal and mitigative actions deal mainly with contractors following acceptable and environmentally responsible work practices, estimated costs for mitigation and monitoring remained low, in relation to other projects of this size. Total mitigation, monitoring and training costs were estimated at US$303,000 as shown in Table 1 below.

Table 1: Mitigation and Monitoring Costs

No. Unit Cost ($) Total

Environmental Costs – Civil Works (included in Contractor’s civil work package)

Air Quality and Dust Monitoring (baseline) Site 3 2,000 6,000

Air Quality and Dust Monitoring Site 6 3,000 18,000

Noise and Vibration Monitoring (baseline) Site 3 1,000 3,000

Noise and Vibration Monitoring Site 6 2,000 12,000

Worker and Storage Compound Site 2 1,000 2,000

Dust Suppression Measures Day 180 50 9,000

Disposal of old machinery and equipment Site 1 10,000 10,000

Provision of Environmental, Health & Safety Manager MM 18 3,000 54,000

Subtotal 114,000

Environmental Costs – Project Implementation Unit (PIU) Budget

I. Environmental Management and Monitoring (during design and construction) a. Remuneration and Per diems

International Environmental Specialist (design) MM 1 18,000 18,000

International Environmental Specialist (CS) MM 3 18,000 54,000


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No. Unit Cost ($) Total

Domestic Environmental Specialist (design) MM 3 3,500 10,500 Domestic Environmental Specialist (CS) MM 6 3,000 18,000

b. Travel

International Travel Trip 6 2,500 15,000

Domestic Travel No 12 500 6,000

Subtotal 121,500

II. Environmental and Social Management Training

a. Remuneration and Per diems

International Environmental Specialist MM 1 21,000 21,000

International Social/Resettlement Specialist MM 1 21,000 21,000

Domestic Environmental/Curriculum Specialist MM 2 3,500 7,000

Domestic Social/Resettlement Specialist MM 2 3,500 7,000

b. International Travel Trip 2 2,500 5,000 c. Trainees Allowance

Person 10 200 2,000

d. Logistics and Others No 9 500 4,500

Subtotal 67,500

Total (PIU)

121,500

Grand Total 303,000

I. Public Consultation

49 After some thirty years of war, Afghanistan is attempting to rebuild itself, but on-going, sporadic conflict makes operating in the country difficult for security reasons. It is not possible to conduct effective wide spread community consultation under the current security situation. However it has been possible to meet with selected government officials and villagers from Gur-e-Mar village. No consultation was possible in Hairatan. As the majority of the study area is uninhabited the consultation which has been completed can be considered to have reached a good proportion of those people likely to be affected by the project.

50 The responses and issues raised were similar from both government officials and the villagers. Both sets welcomed the project and felt that it would contribute to the national and local economies in a number of ways. The villagers felt the railway offered good prospects for increasing trade in farm produce by allowing them to access markets further a field. Noise and dust issues were raised as possible impacts during the construction period but they also stated that these issues were not a significant concern. None of the participants was opposed to the project.

J. Findings and Recommendations

51 The IEE shows that no major negative environmental impacts are likely to occur due to the construction and operation of the Hairatan - Mazar-e-Sharif rail line.

52 The Project will have some minor environmental impacts, which will be both positive and negative, including: (a) soil erosion, (b) temporary effect on noise and air quality due to construction activities; (c) increased growth in the economy of the region; (d) substantial income and employment opportunities; (e) better indoor air quality; (f) better life style and improved living conditions; (g) reduced health risk, (h) development of small to medium sized enterprises, (i) reduced poverty; and (j) advanced environmental skills and awareness level among the MPW officials.

53 Implementation of appropriate mitigation measures during the design, construction, and operation phases will minimize the negative impacts of the Project to acceptable levels. To ensure that these mitigation measures are implemented and negative impacts avoided, the


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measures will be included in the contract specification of the Project. Environmental monitoring of the Project will be undertaken regularly through the first three years of its operation to ensure that the measures are being implemented properly.

K. Conclusions

54 The project will have significant environmental and social benefits and, if the prescribed mitigation and management measures are fully implemented, the project is unlikely to have major adverse environmental impacts. An environmental monitoring plan has been prepared and responsibilities for implementation assigned. A budget has been allocated for environmental management and monitoring. Based on the findings of the IEE, the classification of the subproject as Category “B” is confirmed, and no further special study or detailed EIA will be required to comply with ADB’s Environment Policy (2002).

II. ENVIRONMENTAL IMPACTS AND MITIGATION MEASURES OF PHASE- II

1. Screening Environmental Impacts and Mitigation Measures: The potential impacts that could arise from the project have been assessed. Those activities that have no potential to cause a significant environmental impact have been screened out, allowing the impact assessment and the development of mitigation measures to focus on the significant issues. As the majority of the alignment passes through uninhabited areas of desert or semi-desert there are no sensitive receptors in these areas. Human activity is concentrated around the northern and southern ends of the alignment and it is in these areas that the construction and operation of the rail line has been assessed for its possible impacts.

2. The results of the screening process identified that there would be no impacts on surface water, ground water, ecological resources or physical and cultural heritage from the rail line. The key impacts identified were noise, vibration and air quality issues associated with both the construction and operation of the rail line. Issues associated with any construction camps were also identified as being potentially significant. Construction materials will be transported by truck, therefore vehicle movements may also result in significant impacts.

A. Physical Environment

1. Soils and Materials

3. Construction Period: The construction of the rail line will require earthmoving and compaction to provide a suitable base for the track. Environmental impacts that could occur during the preparation of the track base include contamination resulting from spills or disposal of oil, lubricants or other chemicals. The impacts of any spills are likely to be confined to very local contamination and therefore are unlikely to be significant. The lack of any sensitive receptors along most of the alignment further reduces the likely significance.

4. In order to minimize the likelihood of spills and to ensure proper clean up if a spill occurs the following measures will be included in the EMP. All hazardous wastes and hazardous materials, lubricating oil, solvents and fuels, will be stored within a bounded area that has the capacity of at least 110% of the largest container in the storage area. Oil spill clean-up materials (sorbent pads, loose sorbent material, etc.) will be made available. Any spill or leak shall be addressed immediately and the contaminated soil and material be disposed appropriately.

5. The sources of construction materials such as cement, ballast, sleepers and track have not yet been finalized. Unlicensed quarries and cement plants have the potential to create significant environmental impacts if not operated properly. Truck movements may disturb and


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disrupt villages and towns. Ballast and cement must be obtained from licensed facilities and the contractor must ensure vehicles use haulage routes that avoid villages and towns.

6. Operation Period: During the operation stage routine maintenance activities may also result in small scale spills of hazardous materials. Bunded hazardous materials storage facilities will be constructed which will have the capacity of at least 110% of the largest container in the storage area. Spill clean up kits will be available. Staff will be trained in safe handling of hazardous materials and spill clean up requirements.

7. Trains using the line will carry a variety of materials and may include wagons carrying bulk liquids. The unloading of bulk fuel carriers will present a risk of significant spills if not undertaken in a controlled manner. At present the freight handling facilities are still at the concept design stage; if bulk storage of fuel is included as part of the detailed design then the facilities must designed in accordance with a suitable international standard such as AS1940. The storage and handling of flammable and combustible liquids or ISO28300: Petroleum, petrochemical and natural gas industries - Venting of atmospheric and low-pressure storage tanks.

2. Air Quality

8. Construction Period: The earthmoving and compaction requirements are likely to generate dust. The impacts associated with generated dust will only be significant where work is taking place close to residential or industrial areas. As the majority of the works will take place in areas of desert or semi desert many kilometers from the nearest inhabited areas dust generation will not be a significant issue. Air quality in the region is good and the prevailing winds are likely to disperse the dust to acceptable levels before it reaches any receptor.

9. Works taking place near Aqcha, Sheberghan, Andkhoy, Aqina, Qaiser, Doabi, Gormach, BalaMurghab etc. will need to monitor the levels of dust being generated by the works. In the event that dust from the construction activities is being deposited on the nearby houses and buildings the contractor will be required to implement dust control measures. These will include ensuring that diesel equipment is operated and maintained properly; reducing dust generation by reduced speed limits; and spraying water on work sites to suppress dust.

10. Operation Period: Once operational there will be no significant air quality impacts from the rail line. Diesel locomotives will be used to power the trains and so there will be some emissions from the engines. However the air quality of the region is good, there are no other sources of pollution close to the line and the prevailing winds will quickly disperse the emissions to acceptable levels. The number of trains using the line will be one or two a day and so there will not be an accumulation of emissions from multiple locomotives.

3. Noise and Vibration

11. Construction Period: The operation of plant and equipment during the construction of the rail line will generate noise and vibration. As the majority of the construction will be occurring in many kilometers away from the nearest sensitive receptors any significant noise or vibration will be attenuated by the distance. Materials for the construction for the rail line will be bought to site by truck. This will include sleepers, rails and ballast. Truck movements have the potential to generate significant noise and vibration, particularly when passing through villages and towns.

12. Local housing is often constructed from mud bricks, which is particularly sensitive to damage from vibration. In order to prevent any noise and vibration issues arising from truck movements the contractor will be required to develop haulage routes that ensure that any villages or towns are bypassed by trucks.


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13. Operation Period: The noise and vibration impacts during operation are expected to be minimal, as there will only be one or two trains a day using the line. Any noise impacts from the locomotives will be short term and intermittent in nature and, as the line will be located away from villages and towns it is likely that noise levels will be attenuated by the distance.

14. The operation of the freight terminus may generate unwanted noise for nearby communities; however the location of the terminus has yet to be determined. When choosing the location the design should take account of any nearby residential areas. If the terminus is to be located close to housing then an earth bund should be constructed between the terminus and the houses to act as a noise barrier.

B. Socioeconomic Environment

15. The use of local labor during the construction will increase benefits to the local community by providing employment opportunities and economic benefits. Increased traffic during construction will be managed through coordination between the contractor, PIU and the local police. Contractors will communicate to the public through community consultation regarding the scope and schedule of construction, as well as certain activities causing disruptions or access restrictions.

16. The sitting of construction camps has the potential to cause conflict with the local population if done without consideration for local tradition and customs. The influx of a large number of foreign workers into a small rural community that is both religiously and socially conservative can lead to conflict. The employment of local labor on the project will go some way to decreasing the risks but there will still need to a sizable proportion of the workforce recruited from outside the area. Construction camps must therefore be sited well away from local communities so to minimize interactions between the workforce and the local populations. In this case a 5 km buffer zone is achievable.

1. Proper Construction Practices

17. The contractor’s conformity with contract procedures and specifications during construction will be carefully monitored. Stakeholder consultations have shown that prime contractors tended to use sub contractors without ensuring that they conform to general construction guidelines (good engineering practice and good working practices). Such practices degrade the quality of construction as well as the benefits of the Project. Contractors will be made to follow standard construction practices, monitored and supervised by Construction Supervision Consultants (CSC) employed under the Project.

2. Health, Safety and Hygiene

18. Construction Period: The construction sites are likely to have limited public health impacts due to their isolated location. However, contractors will ensure that no wastewater is discharged to local water bodies and that no site-specific landfills will be established at the construction camps. There will be a potential for diseases to be transmitted, exacerbated by inadequate health and safety practices. Each contractor will therefore be required to recruit an environmental, health and safety manager to address such concerns in the work sites and liaise/work with the laborers. Mitigation measures include:

• Provision of adequate healthcare facilities (first aid) within construction sites,

• Training of all construction workers in basic sanitation and healthcare issues, general,

• health and safety matters, an on the specific hazards of their work,

• Personal protection equipment for workers, such as safety boots, helmets, gloves,


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• protective clothing, goggles and ear protection,

• Clean drinking water to all workers,

• Adequate protection to the general public, including safety barriers and marking of hazardous areas,

• Safe access across the construction site,

• Adequate drainage throughout the camp to ensure that disease vectors such as stagnant water bodies and puddles do not form,

• Septic tank and garbage box will be set up in construction site, which will be periodically cleared by the contractors to prevent outbreak of diseases,

• Where feasible the contractor will arrange the temporary integration of waste collection, and

• From work sites into existing waste collection systems and disposal facilities of nearby communities.

3. Hazardous Materials & Waste Management

19. During the construction period a wide range and substantial volumes of waste may be generated including gravel; concrete; miscellaneous structures such as culverts, poles and cables; steel; organic material, such as cleared vegetation, timber; and soil. In addition there will be oils, fuel, grease and chemicals from plant, equipment and vehicle servicing. Any hazardous materials that are used will also need to be stored and handled correctly to prevent spills and pollution. The following hazardous materials and waste management measures will be implemented during construction:

• All areas designated for the storage of fuels, oils, chemicals or other hazardous liquids;

• Shall have a compacted base and be surrounded by a bund to contain any spillage;

• These areas shall be covered by a roof structure to minimize the potential for infiltration and contamination of rainwater;

• Alternatively ventilated containers and individual spill pallets could be used, dependent on the volume of hazardous materials areas designed for the storage of hazardous materials are to be clearly designated and storage of such materials outside these areas strictly prohibited;

• An Emergency Spills Contingency Plan shall be prepared as part of the Contractors along with Environmental Management Plan;

• Apply any waste minimization and management strategies as nominated;

• Dispose of waste to nominated project disposal sites;

• Ensure that the waste management measures are implemented on the project site;

• Prepare and implement a hazardous waste management plan for the disposal of waste oil, batteries and other hazardous materials;

• Ensure that topsoil is stockpiled for used in post construction landscaping;

• Chip and mulch vegetation cleared and reuse it as an organic base for re-vegetation;

• Ensure that materials, which may cause land/water contamination or create odor problems, are not disposed of on the site;

• Keep work areas tidy;

• Ensure that there is the adequate provision of correctly marked waste containers made available at convenient locations for the disposal of wastes;


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• Ensure adequate toilet and ablution facilities are provided for the duration of the contract;

• Domestic sewage and sullage from these facilities shall be subject to suitable treatment; and

• Prior to discharge in to environment. Under no circumstances untreated wastes shall be discharged into the environment.

C. Institutional Requirement and Environmental Monitoring Plan

1. Institutional Framework for Environmental Management

20. Institutions responsible for executing and monitoring the environmental aspects of this project are:

• MPW is responsible for planning, constructing, operating and maintaining rail infrastructure in Afghanistan.

• The PIU will be in charge of project management to ensure that the contract provisions are properly maintained. Both the supervision consultants and the PIU are responsible for environmental monitoring and management of project implementation.

• The rail civil works will be constructed by the contractor to be deployed in due time,

• The MPW and its provincial authorities will also be undertaken routine and random monitoring of specific environmental plans addressed in this IEE.

• The Project will provide PIU with the assistance of a CSC to help ensure the implementation of environmental management practices at each stage of the construction and operation.

• NEPA will be consulted if complicated issues arise during construction and operation stages.

21. Implementation and monitoring of mitigation measures as per the Environmental Monitoring and Management Plan during the construction stage will be the responsibility of the contractor (to be deployed). The environmental specialists of CSC will supervise the monitoring of implementing mitigation measures during construction. The domestic environmental specialist will coordinate with the international environmental specialist for resolving complicated issues that arise in the field and to provide continuously updated information in order to submit reports to PIU and ADB.

22. After project completion, it is likely that operation and maintenance of the line will also be undertaken by the contractor (to be deployed) and will be responsible for the development and implementation of the monitoring plan for the operational phase.

2. Environmental Monitoring Program (EMP)

23. Environmental monitoring is a very important aspect of environmental management during construction and operation stages of the project to safeguard the protection of environment. Compliance monitoring will be conducted in accordance with the EMMP provided with this report (Table 1). Aspects to be monitored are as follows:

• Pre-project implementation: updating of EMMP during detailed design phase and inclusion of environmental clauses in bid and contract documents.

• Construction: environmental performance of contractors with regard to control measures to pertaining to material storage, location of work camp, noise, waste disposal, traffic management, worker’s safety etc.


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• Operation: O&M practices and environmental effects including, materials handling, soil contamination, noise vibration and air quality.

24. The CSC in cooperation with PIU during project implementation will be required to develop an environmental monitoring procedure for the construction period, formulate a detailed monitoring and management plan, supervise the environmental monitoring regularly and submit quarterly reports based on the monitoring data. The PIU shall submit the following environmental reporting documentation to ADB:

i) Baseline Monitoring Report: The Baseline Monitoring Report shall be submitted to ADB prior to commencement of civil work and will include a detailed environmental management and monitoring plan (including data collection locations, parameters and frequency), baseline environmental data, relevant standards and data collection responsibilities.

ii) Environmental Monitoring Reports: The environmental monitoring reports will include environmental mitigation measures and environmental monitoring activities undertaken, details of monitoring data collected, analysis of monitoring results, recommended mitigation measures, environmental training conducted, and environmental regulatory violations. The environmental monitoring reports will be submitted to ADB twice annually during the construction period and twice annually for one year after completion of construction.

25. The following Table-2 depicting the monitoring of the environmental parameter, frequency and cost would be performed during pre-construction, construction and post construction phase.

Table 2: Environmental Management and Monitoring Plan

Responsibility Sl. No.

Environmental Impact/Issue

Mitigation Measures

Location Implementation Supervision

1 Preconstruction Phase

1.1 Up-Dating of EMMP

during Detailed

Design for the project

components

Updating of EMMP during

detailed design phase and

incorporation of mitigation

measures in the project

design Allocating and

revise budgets estimates

for EMMP

Entire

rail line

project

PIU MPW

1.2 Lack of

Environmental

Specifications for

Contractor in Bid

Documents,

Environmental

Clauses for Contracts

Prepare relevant

environmental sections in

the tender documents for

bidders Prepare a bid

evaluations section for

environment, according to

ADB bid evaluation format

Prepare environmental

contract clauses for

contractors (refer to

EMMP)

Entire

rail line

project

PIU MPW

2 Construction Phase: 2.1-Physical Environment

2.1.1 Provision of health

safety and use

Provision of adequate

healthcare facilities (first

Entire

rail line

Contractor CSC/PIU


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Mitigation Measures


personal protective

equipments to the

workers.

aid) within construction

sites; health and safety

matters, an on the specific

hazards of their work;

Use of Personal

protection equipment

should be ensured.

Personal protection

equipment for workers,

such as safety boots,

helmets, gloves, protective

clothing, goggles and ear

protection;

Should be clean

drinking water to all.

Clean drinking water to all

workers;

Safety Barrier to the

construction Site

should be ensured.

Adequate protection to the

general public, including

safety barriers and

marking of hazardous

areas;

Safe access across the

construction site;

Should be ensured

the followings:

Adequate drainage

system,

Properly manage all

wastage materials

through waste

disposal system.

Adequate drainage

throughout the camp to

ensure that disease

vectors such as stagnant

water bodies and puddles

do not form; and Septic

tank and garbage box will

be set up in construction

site, which will be

periodically cleared by the

contractors to prevent

outbreak of diseases.

Where feasible the

contractor will arrange the

temporary integration of

waste collection; From

work sites into existing

waste collection systems

and disposal facilities of

nearby communities.

project

2.1.1 Soils and Material

(top soil erosion, soil

contamination from

oil spill and waste

disposal, erosion of

material stockpile)

Removal of contaminated

soil from the site and

conduct remediation

measures;

Cover the material

stockpiles or store inside a

covered area;

Recycle and dispose the

waste as per contractor’s

Entire

rail line

project

Contractor CSC


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Mitigation Measures


plan and contain the

hazardous waste;

2.1.2 Solid Waste

(old equipments,

waste from worker

camps)

Recycle the scrap material

Contain and store the

hazardous waste in

building or drums

Dispose the waste from

camps at the nearest

landfill site or garbage bins

Entire

rail line

project

Contractor CSC

2.1.4 Air Quality (Increased

dust, pollution from

exhaust, gas leak)

Spray water at the

construction site

Maintaining the

construction vehicles and

machinery

Ban the use of machinery

causing excess pollution

Follow the proper

rehabilitation procedures

to avoid any leak, and in

case of leakage

emergency response must

be taken immediately

Entire

rail line

project

Contractor CSC

2.1.5 Noise and

Vibration(Constructio

n activities,

machinery and

vehicles)

limit of 70dBA will be set in

the close vicinity of the

construction site (Aqcha,

Sheberghan, Andkhoy,

Aqina, Cheghazi, Doabi,

Gormach, Bala-Murghab

etc.Villages)

Entire

rail line

project

Contractor CSC

2.2 Ecological Environment

2.2.1 Flora

(clearing of

vegetation around

sites, cutting

vegetation for fuel

wood)

Educate workers on nature

conservation and provide

appropriate fuel in work

camps

Entire

rail line

project

Contractor CSC

2.2.2 Fauna

(destruction/interfere

nce with habitat,

disturbing

individuals, poaching

by workers)

Educate workers about

wildlife conservation

Entire

rail line

project

Contractor CSC

2.3 Socioeconomic Environment

2.3.2 Health Safety and

Hygiene

(Health, safety and

hygiene of workers

Workers safety and health

care should be ensured.

Provision of safety

components for workers

Entire

rail line

project

Contractor CSC


7-19



Mitigation Measures


and work space) and emergency plans

should be in place.

2.3.3 Employment

(Increased job

opportunity)

Prefer employing the local

worker and train them in

the construction of rail line

wherever needed

Entire

rail line

project

Contractor CSC

3. Operational Phase: 3.1- Physical Environment

3.1.1 Soil (Soil

contamination from

oil spill, chemical

leakage)

Proper maintenance of

equipments, machineries

and vehicles; Hazardous

chemicals to be stored in

contained space; Provide

the necessary kit and

training for containment of

spill and remediation.

Entire

rail line

project

PIU-consultant PIU

3.2 Socioeconomic Environment

3.3.1 Health, Safety and

Hygiene

(officers working

during the operation

and maintenance of

rail line and people

living in vicinity)

Keep the safety offsets

Provide proper health and

safety equipments and

Trainings to officers

Entire

rail line

project

PIU-consultant PIU

3.3.2 Employment

(Increased job

opportunity)

Local people should be

given preference for new

jobs at the railway-station

(security, lineman, worker

etc.).

Entire

rail line

project

PIU-consultant PIU

Abbreviation:

i. MPW = Ministry of Public Works, ii. CSC= Construction Supervision Consultant, iii. PIU = Project Implementation Unit,

Initial Environmental Examination


7-20

26. A lump sum budget like previously prepared under this project in phase I would be allocated in the environmental mitigation to cover monitoring cost and environmental reporting requirements in the phase II project also. PIU will hire a recognized organization for environmental monitoring and ensure that the project sites are monitored regularly for the first year of its operation.

D. Environmental and Social Management Training

27. The MPW has very limited experience and resources for environmental and social management and monitoring. It will be very difficult for PIU to efficiently supervise the monitoring of environmental and social safeguard parameters. For a better understanding of environmental issues, implementation of mitigation measures and subsequent monitoring, capacity building of PIU and regional administration is essential. Training for the officials is crucial for proper environmental monitoring addressed in the IEE. The contractor shall be provided hands-on-training in the site by the CSC in association with the contractor’s environmental, health and safety manager.

28. Environmental monitoring and mitigation cost (tentative) of the project: The monitoring and mitigation cost is proposed for Hairatan-Mazar-e-Sharif Project in phase-I which would be adapted for this project phase-II also.

Table 3: Monitoring of Environment Parameter and its Cost.

Sl. No.

Mitigation

Measure

Parameters to be

monitored

Location Frequency Responsibilities Cost

(US$)

Remarks

1. Pre-construction Phase - establish baseline conditions

Noise Leq (18 hr)

At a sample

of residential

properties

within 2km

of the

alignment

3 monitoring

events

before the

start of

construction

PIU 3000

Air quality Mg dust/m2

using sticky

pad

measurements

Pads to be

located

along the rail

line

influences

houses and

villages.

3 weekly

monitoring

events prior

to the

start of

construction

PIU 6000

2. Construction Phase

Noise Leq (18 hr)

At any

residential

property

within 2km

of

construction

activities

Weekly until

construction

stops or

complaint is

dealt with

Contractor 1000

per

event

Noise Leq (18 hr)

At the

boundary of

any

construction

Weekly until

construction

stops or

complaint is

Contractor 2000

per

event



7-21

Sl. No.

Mitigation

Measure

Parameters to be

monitored

Location Frequency Responsibilities Cost

(US$)

Remarks

area causing

noise

impacts and

complaints

dealt with

Air Quality Visible dust, to

determine if

off site

migration of

dust is

impacting on

surrounding

residential

areas

At all

construction

sites

daily Contractor 50

per

day.

Air Quality Mg dust/m2

using sticky

pad

measurements

Pads to be

located at

any house

within a

residential

area

affected by

dust

deposition

Weekly until

dust

suppression

measures

are

successful

Contractor 2000

per

event

3. Operational Phase

Noise Leq (18 hr) At a sample

of residential

properties

close to the

freight

handling

facility

3 monitoring

events

during

operations

Operator 3000



7-22

Table 4: The probable cost of the project phase II may be as bellows

Sl. No

Unit Quantity Unit Cost Total

Civil Works (included in Contractors civil work package)

1 Air Quality and Dust Monitoring Site 3 1,000 3,000

2 Noise and Vibration Monitoring Site 3 1,000 3,000

3 Worker and Storage Compound Site: 2 1,000 2,000

4 Dust Suppression Measures Day 180 50 9,000

5 Disposal of old machinery and equipment

(e.g. valves) Site

1 10,000 10,000

6 Provision of Health, Safety and

Environmental Manager MM.

6 3,000 18,000

Subtotal 45,000

Environmental Costs - Project Implementation Unit (PIU) Budget

1. Environmental Management and Monitoring (during design and construction)

a. Remuneration and Per diems:

International Environmental Specialist

(design)

4 MM 17000 68000

International Environmental Specialist

(CS)

6 MM 17000 102000

Domestic Environmental Specialist

(design)

5 MM 3500 17500

Domestic Environmental Specialist (CS) 10 MM 3500 35000

b. Travel

International Travel 10 Trip 2500 25000

Domestic Travel 12 Trip 500 6000

Sub Total= 253500

ENVIRONMENTAL AND SOCIAL MANAGEMENT TRAINING

a. Remuneration and Per diems

International Environmental Specialist 2MM 20000 40000

International Social/Resettlement

Specialist

2MM 20000 40000

Domestic Environmental/Curriculum

Specialist

3MM 3,500 10500

Domestic Social/Resettlement Specialist 3MM 3,500 10500

International Travel Trip 2 2500 5000

Trainees Allowance Person 10 Persons 180 1800

Logistics and Others 10 No 500 5000

Sub Total = 112800

Total(PIU) = 366300

Grand Total = 411300



7-23

III. FINDINGS, RECOMMENDATIONS AND CONCLUSION

A. Findings

29. The IEE of the proposed project has been carried out addressing potential environmental aspects in term of both of project design and environmental definition. This is the appropriate level of assessment for the present stage of project development. The key areas of environmental sensitivity have been identified. A monitoring process has been defined to ensure that environmental sensitivities are adequately addressed at all stages of project development.

30. The Project will have some minor environmental impacts, which will be both positive and negative. The generative impacts are:

• soil erosion, and

• temporary effect on noise and air quality due to construction activities.

31. The positive impacts are:

• increased growth in the economy of the region;

• substantial income and employment opportunities;

• better indoor air quality;

• better life style and improved living conditions;

• reduced health risk,

• development of small to medium sized enterprises, and

• reduced poverty;

B. Recommendations

32. Implementation of appropriate mitigation measures during the design, construction, and operation phases will minimize the negative impacts of the Project to acceptable levels. To ensure that these mitigation measures are implemented and negative impacts avoided, the measures will be included in the contract specification of the Project. Environmental monitoring of the Project will be undertaken regularly through the first three years of its operation to ensure that the measures are being implemented properly.

• The present study shows that there is no major adverse impact due to the construction of the phase-ii rail line project;

• However insignificant impacts find out and recommended remedial measures in chapter-4 should be followed by the contractor to make the project environmentally sound;

• Dust and air pollution control at the construction site through installation of water sprinkler system should be in place;

• Preparation of a plan and its implementation through joint works supervision by Contractor’s representative PIU’s representative and the supervision consultant in respect of soil pollution prevention, slope protection of embankment of rail line etc;

• Top soil land preservation should be ensured; and

• It is also recommended that the contractor should create an environmental cell and appoint an Environmental Manager to monitor the issues recommended in the chapter-5 to make the project environment friendly.



7-24

33. Finally, it may be concluded that the proposed: Project - Afghanistan Railway Project can be implemented safely and in an environmentally friendly manner. So it is recommended that the project may be cleared to proceed with works.

C. Conclusions

34. The Herat-Mazar-Sherkhan Bandar rail line can be built in an environmentally sound and sustainable manner, if the identified mitigation measures and environmental management plans are adopted. Construction of the phase-II rail line will have substantial impact upon both short and long-term employment opportunities for the people living besides the proposed rail line, as well as in collateral towns, cities, and provinces. The construction of the rail line will employ thousands of men, both as skilled and unskilled laborers. In addition, people living in the neighboring countries will also be benefited from the proposed rail line project through increased trade, commerce and traffic.

35. The rail line can be built in an environmentally sound and sustainable manner, if the identified mitigation measures and environmental management plans are adopted.

36. Notwithstanding the above, the major issue is the need to minimize disturbance to the local population in the areas of development. Effort will be undertaken to promptly compensate the people affected by land acquisition at an adequate price as per GOA Law.

37. The proposed project activities have no significant long term or residual adverse environmental impact. Short-term impacts are also insignificant and mitigation measures are well within the normal practices of construction. The proposed Railway Development Project can be implemented by the MPW and ADB as well.

Forecasted Traffic


8-1

APPENDIX 8: FORCASTED TRAFFIC

Table 1: Forecasted Freight Traffic of Phase- I

*Freight Traffic from Actual Survey

Per Day

Year Elasticity GDP

Growth Rate (%)

Traffic Growth Rate (%) 2 Axle 3 Axle

Multi Axle

Total No. of

Loaded Truck

2004* 486 442 145 1073 537

2011 1.20 12.00 14.40 1119 1017 334 2470 1235

2012 1.20 12.00 14.40 1280 1164 382 2825 1413

2013 1.20 12.00 14.40 1464 1331 437 3232 1616

2014 1.20 12.00 14.40 1675 1523 500 3698 1849

2015 1.20 12.00 14.40 1916 1742 572 4230 2115

2016 1.30 11.00 14.30 2190 1992 653 4835 2417

2017 1.30 11.00 14.30 2503 2276 747 5526 2763

2018 1.30 11.00 14.30 2861 2602 854 6317 3158

2019 1.30 11.00 14.30 3270 2974 976 7220 3610

2020 1.30 11.00 14.30 3738 3399 1115 8252 4126

2021 1.40 10.50 14.70 4287 3899 1279 9465 4733

2022 1.40 10.50 14.70 4917 4472 1467 10857 5428

2023 1.40 10.50 14.70 5640 5130 1683 12453 6226

2024 1.40 10.50 14.70 6469 5884 1930 14283 7142

2025 1.40 10.50 14.70 7420 6749 2214 16383 8191

2026 1.50 10.00 15.00 8534 7761 2546 18840 9420

2027 1.50 10.00 15.00 9814 8925 2928 21666 10833

2028 1.50 10.00 15.00 11286 10264 3367 24916 12458

2029 1.50 10.00 15.00 12978 11803 3872 28654 14327

2030 1.50 10.00 15.00 14925 13574 4453 32952 16476

2031 1.50 9.50 14.25 17052 15508 5088 37648 18824

2032 1.50 9.50 14.25 19482 17718 5812 43012 21506

2033 1.50 9.50 14.25 22258 20243 6641 49142 24571

2034 1.50 9.50 14.25 25430 23128 7587 56144 28072

2035 1.50 9.50 14.25 29054 26423 8668 64145 32073

Forecasted Traffic


8-2

Table 2: Annual Traffic Forecast for Section- 1 of Phase- II

(Unit: million Freight Ton-km/Passenger-km)

Year Total Articulated 3-Axle 2-Axle Bus Minibus Taxi Total

2010 1,522.2 654.9 661.0 206.3 2,136.4 3,076.4 2,499.6 7,712.4

2011 1,721.5 740.6 747.6 233.3 2,307.3 3,322.5 2,699.5 8,329.4

2012 1,946.9 837.6 845.4 263.8 2,491.9 3,588.3 2,915.5 8,995.7

2013 2,201.7 947.2 956.1 298.4 2,691.2 3,875.4 3,148.7 9,715.4

2014 2,489.9 1,071.2 1,081.3 337.4 2,906.5 4,185.4 3,400.6 10,492.6

2015 2,815.8 1,211.4 1,222.8 381.6 3,139.1 4,520.2 3,672.7 11,332.0

2016 3,184.4 1,370.0 1,382.9 431.6 3,390.2 4,881.9 3,966.5 12,238.6

2017 3,601.3 1,549.3 1,563.9 488.0 3,661.4 5,272.4 4,283.8 13,217.6

2018 4,072.7 1,752.2 1,768.6 551.9 3,954.3 5,694.2 4,626.5 14,275.0

2019 4,605.8 1,981.5 2,000.1 624.2 4,270.7 6,149.7 4,996.7 15,417.1

2020 5,066.3 2,179.7 2,200.1 686.6 4,612.3 6,641.7 5,396.4 16,650.4

2021 5,573.0 2,397.6 2,420.1 755.3 4,981.3 7,173.1 5,828.1 17,982.4

2022 6,130.3 2,637.4 2,662.1 830.8 5,379.8 7,746.9 6,294.4 19,421.0

2023 6,743.3 2,901.1 2,928.3 913.9 5,810.2 8,366.7 6,797.9 20,974.7

2024 7,417.6 3,191.2 3,221.2 1,005.2 6,275.0 9,036.0 7,341.7 22,652.7

2025 8,159.4 3,510.4 3,543.3 1,105.8 6,777.0 9,758.9 7,929.1 24,464.9

2026 8,975.3 3,861.4 3,897.6 1,216.3 7,319.1 10,539.6 8,563.4 26,422.1

2027 9,872.9 4,247.5 4,287.4 1,338.0 7,904.7 11,382.7 9,248.5 28,535.9

2028 10,860.2 4,672.3 4,716.1 1,471.8 8,537.1 12,293.4 9,988.4 30,818.8

2029 11,946.2 5,139.5 5,187.7 1,619.0 9,220.0 13,276.8 10,787.4 33,284.3

2030 12,901.9 5,550.7 5,602.7 1,748.5 9,957.6 14,339.0 11,650.4 35,947.0

2031 13,934.0 5,994.7 6,050.9 1,888.3 10,754.2 15,486.1 12,582.4 38,822.8

2032 15,048.7 6,474.3 6,535.0 2,039.4 11,614.6 16,725.0 13,589.0 41,928.6

2033 16,252.6 6,992.3 7,057.8 2,202.6 12,543.7 18,063.0 14,676.2 45,282.9

2034 17,552.9 7,551.6 7,622.4 2,378.8 13,547.2 19,508.0 15,850.3 48,905.5

2035 18,957.1 8,155.8 8,232.2 2,569.1 14,631.0 21,068.6 17,118.3 52,817.9

2036 20,473.7 8,808.2 8,890.8 2,774.6 15,801.5 22,754.1 18,487.7 57,043.4

2037 22,111.5 9,512.9 9,602.1 2,996.6 17,065.6 24,574.5 19,966.8 61,606.8

2038 23,880.5 10,273.9 10,370.3 3,236.3 18,430.9 26,540.4 21,564.1 66,535.4

2039 25,790.9 11,095.8 11,199.9 3,495.2 19,905.3 28,663.7 23,289.2 71,858.2

2040 27,080.5 11,650.6 11,759.9 3,670.0 21,497.7 30,956.8 25,152.4 77,606.9

2041 28,434.5 12,233.2 12,347.9 3,853.4 23,217.6 33,433.3 27,164.6 83,815.4

2042 29,856.2 12,844.8 12,965.3 4,046.1 25,075.0 36,108.0 29,337.7 90,520.7

2043 31,349.0 13,487.1 13,613.5 4,248.4 27,081.0 38,996.6 31,684.7 97,762.3

2044 32,916.5 14,161.4 14,294.2 4,460.8 29,247.4 42,116.3 34,219.5 105,583.3


Forecasted Traffic


8-3

Table 3: Annual Traffic Forecast for Section- 2 of Phase- II

(Unit: million Freight Ton-km)

Year Total Articulated 3-Axle 2-Axle

2010 454.9 254.1 188.7 12.0 2011 514.4 287.4 213.4 13.6 2012 581.8 325.0 241.4 15.4 2013 657.9 367.5 273.0 17.4 2014 744.1 415.7 308.7 19.7 2015 841.5 470.1 349.1 22.3 2016 951.6 531.6 394.8 25.2 2017 1,076.2 601.2 446.5 28.5 2018 1,217.0 679.9 505.0 32.2 2019 1,376.4 768.9 571.1 36.4 2020 1,514.0 845.8 628.2 40.1 2021 1,665.4 930.3 691.0 44.1 2022 1,831.9 1,023.4 760.1 48.5 2023 2,015.1 1,125.7 836.1 53.3 2024 2,216.6 1,238.3 919.7 58.7 2025 2,438.3 1,362.1 1,011.7 64.5 2026 2,682.1 1,498.3 1,112.8 71.0 2027 2,950.3 1,648.1 1,224.1 78.1 2028 3,245.4 1,813.0 1,346.5 85.9 2029 3,569.9 1,994.3 1,481.2 94.5 2030 3,855.5 2,153.8 1,599.7 102.0 2031 4,163.9 2,326.1 1,727.6 110.2 2032 4,497.1 2,512.2 1,865.9 119.0 2033 4,856.8 2,713.2 2,015.1 128.5 2034 5,245.4 2,930.2 2,176.3 138.8 2035 5,665.0 3,164.6 2,350.4 149.9 2036 6,118.2 3,417.8 2,538.5 161.9 2037 6,607.7 3,691.2 2,741.5 174.9 2038 7,136.3 3,986.5 2,960.9 188.9 2039 7,707.2 4,305.5 3,197.7 204.0 2040 8,092.5 4,520.7 3,357.6 214.2 2041 8,497.2 4,746.8 3,525.5 224.9 2042 8,922.0 4,984.1 3,701.8 236.1 2043 9,368.1 5,233.3 3,886.9 247.9 2044 9,836.5 5,495.0 4,081.2 260.3


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