PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Project Name PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Bhutan Second Rural Access Project Region SOUTH ASIA Sector Roads and highways (100%) Project ID P Borrower(s) KINGDOM OF BHUTAN Implementing Agency Department of Roads, Bhutan Environment Category [ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared October 16, 2006 Date of Appraisal November 20, 2006 Authorization Date of Board Approval February 8, Country and Sector Background Report No.: AB After opening up to the outside world in the 1960s, Bhutan has made significant socioeconomic progress. As a result of prudent macroeconomic management, rational exploitation of its hydropower resources and substantial support of international development agencies, the country has built up physical and social infrastructures and experienced strong economic performance with GDP growth at 6 percent per annum and nearly 8 percent over the past five years. Sustained growth has led to increased GDP per capita from US$470 in 1999 to US$760 in Being a landlocked country, Bhutan substantially depends on an efficient and reliable road network in its socio-economic development. Rural communities are poorly connected to basic social and economic services, which are mostly concentrated in urban centers. Although the road network grew from 0 km in the 1960s to 4,400 km (62 percent paved) in 2006, accessibility remains inadequate. 21 percent of the Bhutanese rural households live within one to four hours of walking distance from the nearest all-season road, and another 21 percent live within more than four hours 1. Many communities remain isolated and dependent on animal and head-load transport. As a result, they have to pay times more for transporting their produce to the market in the nearest town 2. The improvement of accessibility in Bhutan is mainly constrained by the rough and fragile terrain, and scarce financial resources The country s transport sector strategy, similar to other national strategies and programs, is framed by Bhutan s Development Vision, which recognizes maximization of human happiness, and not only economic progress, as an overarching goal. The development strategy for the transport sector has three broad objectives: (i) to facilitate balanced regional and urban development, support internal trade and commerce, and integrate the relatively isolated central 1 Bhutan s Office of Census Commissioner: 2 The data is provided by the Baseline Survey, which was conducted by the Social Consultant Kyingkhor Consultancy Services for RAP-II.

2 and eastern regions with the rest of the country; (ii) to reduce the cost of international transport and improve logistics of international trade and commerce; and (iii) to improve rural accessibility (especially access to markets, employment, and education, health and social services) in an environmentally sustainable and socially responsible manner Although the achievement of the rural accessibility improvement objective is constrained by several challenges - the country s rough and fragile terrain, obsolete road construction technology and practices, and insufficient resources - the Rural Access Project (RAP-I), closed on June 30, 2006, succeeded in coping with these challenges. RAP-I successfully constructed 129 km of roads using environmentally friendly methods, built and strengthened the capacity of the public road sector, and supported piloting of community-based contracting for road maintenance works. The proposed Second Rural Access project (RAP II) is a follow-up repeater operation and is designed to replicate the positive lessons and good practices from RAP-I in three new districts of the country. RAP-II is in a good position to follow up applying similar approaches and to achieve its objective of rural access expansion, which is also assigned a high priority by the PRSP/Ninth Plan 3 and CAS Objectives 2.1 The Project Development Objective (PDO) is to support residents of beneficiary Geogs to utilize improved rural transport infrastructure and services and benefit from enhanced access to social services and economic opportunities. The target beneficiaries are about 12,300 rural residents in several geogs (blocks of villages) of Wangdue, Dagana, and Pemagatshel Dzongkhags, which have the highest demand for access in Bhutan. The dzongkhags and geogs were selected taking into account: (i) the development objectives set out in the Ninth and Tenth Five-Year Development Programs; (ii) the demand for access in the area and the road prioritization as per the RGOB s 20-year Road Master Plan; (iii) the exclusion of the selected geogs from projects supported by other donors; (iii) the costeffectiveness of the individual road; and (iv) the detailed geotechnical survey of the individual roads. 2.2 The following outcome indicators will be used to monitor and evaluate the progress of the project implementation: (i) 75 percent of rural residents in the targeted geogs will be brought to within 2 km or 30 minutes of walking distance to all-season road. This is consistent with IDA 14 Indicators; (ii) travel time by targeted beneficiaries to economic and social centers will be reduced by 50 percent; (iii) transportation costs of commodities and supplies will be reduced by 50 percent in project areas; (iv) overall beneficiaries satisfaction with the improved delivery of road infrastructure. 3 The PRSP/Ninth Plan ( ) outlines an integral path of change guided by Bhutan s unique and homegrown development vision: Gross National Happiness, which is underpinned by four pillars that further define the effort to balance spiritual and material advancement-sustainable socioeconomic development, conservation and sustainable use of the environment, promotion of culture, and good governance. 4 CAS was released on November 18, 2005.

3 3. Rationale for Bank Involvement 3.1 Repeater Operation. The Bank funding of a repeater operation is appropriate in light of the progress made so far by the RGOB, lessons learnt from previous operation RAP-I and availability of additional funding under IDA. RAP-II is designed to replicate the positive lessons and good practices from RAP-I, which succeeded in constructing 129 km of roads, building and strengthening the capacity of the public road sector, piloting community-based contracting for road maintenance and introducing environmentally friendly road construction (EFRC) methods. The findings of the socio-economic impact study conducted for RAP-I indicate that the new feeder roads have brought a large number of benefits to the rural communities, including: (i) improved access to markets, schools, health centers and other economic and social infrastructure: shift from head-loading and animal transport to motorized transport; 76 percent reduction in travel time and 75 percent reduction in transportation costs; Reduced distance to economic and social services; (ii) Improved quality of life of the rural communities: Improvement in social services; Improvement in the quality of housing; (iii) Improvement in the productivity of the rural communities: Diversification of crops; Increase in income from the sale of agricultural and farm produce. RAP-II is in a good position to continue applying the RAP-I approaches and bringing benefits to isolated rural communities in three new dzongkhags. 4. Description 4.1 The project will include the following components: (i) The Road Access Component (around US$ 8.69 million, excluding contingencies) will include the following: a) construction of three new feeder roads of approximately 65 km length in total; b) upgrading of about 24 km of roads to feeder road standards; and c) piloting the low-cost sealing of feeder roads and performance based maintenance mechanisms using the National Work Force (NWF) and/or community involvement or petty contracting; d) construction/upgrading of 8 bridges with a total length of 116 meters. (ii) The Capacity Development and Implementation Support Component (US$ 0.67 million) will comprise the following: (a) Human resource development and training; (b) Technical Assistance to pilot performance-based maintenance mechanisms; (c) Project implementation support for Project Coordination Unit in Thimphu and project Management Units in the three project sites; (d) Socio-economic impact monitoring study.

4 5. Financing Source: ($m.) BORROWER/RECIPIENT 0 INTERNATIONAL DEVELOPMENT ASSOCIATION 10 Total Implementation 6.1 Project Management. The project will be implemented using the DOR s existing resources. A Project Management Unit (PMU) will be established in each project site. The PMU will be headed by a Project Manager (of Executive Engineer or senior Assistant Executive Engineer level), one or two Junior Engineers and an Accountant. The Unit will be responsible for day-today supervision of works and ensure compliance with design standards, including engineering geometry, quality of materials and works and measurement of works carried out by the contractor. Quality assurance and EFRC will be key elements in project supervision. The PMU shall be responsible for preparing monthly reports as established by DOR for the compliance of material tests and frequency of requirements as stated in Quality Assurance Plan (QAP) in the specifications and conformity of implementation of Environmental Management Plan (EMP) by the contractor. The PMU shall also be responsible for checking payment certificates submitted by the contractors and certifying verified payments. The PMU shall not certify any interim payment of items for the works, which does not confirm to QAP and EMP. 6.2 Project Implementation and Coordination. A Project Coordinating Unit (PCU) will be established in DOR as the main apex body for project implementation and coordination. The PCU will be headed by a Senior Executive Engineer as Project Coordinator and will be supported by one or two Assistant Project Coordinators, a Junior Engineer, and a full time accounts officer. In addition, the PCU will have intermittent inputs from various DOR divisions, including geo-technical expert, environmental specialist, survey and design. Social development specialist will be recruited as needed from the market. The main responsibilities for the PCU will include: (i) coordination of project implementation by PMUs, (ii) undertaking of survey and design, (iii) technical back stopping to PMUs, (iv) coordination of training activities, (v) procurement of works, services and goods, (v) monitoring of project progress, (vi) technical assessments of works carried out as regard with quality of works, (vii) environment and social safeguard compliance, and(viii) preparing quarterly monitoring reports and submission to IDA. The PCU, including the relevant DOR staff, will visit each project sites at least four times a year and submit quarterly monitoring report to IDA. During the field visit, the PCU will have the authority to instruct for stopping any payment to a contractor for works in non-compliance with project requirements. 7. Sustainability

5 7.1. The project sustainability relates to sustainability of improved rural accessibility, EFRC application, institutional capacity built and strengthened under the project, and environmental and social sustainability. The key indicator of project sustainability will be the ability of rural roads improved to all season standard to remain operational (with acceptable interruption) during the monsoon season and retain satisfactory riding quality for the duration of their design life of ten years. Institutional sustainability will be ensured through provision of institutional development and implementation support, specifically organization development assistance for IDD, support to training and institutions and universities, technical assistance for piloting performance-based contracting with NWF which will be converted into small enterprises, and project implementation support for PMU and PCU. Safeguards sustainability will be addressed through the implementation of EMP and social assessment framework. 8. Lessons Learned from Past Operations in the Country/Sector 8.1. The ICR has been recently completed for RAP-I, which successfully achieved its objectives in improving access of targeted beneficiaries to important socio and economic places and, in doing so, it improved the quality of life of the former isolated rural communities and productivity of the agriculture sector. The following lessons identified by the ICR have been taken into account in the design of RAP-II: (ii) Geotechnical surveys (hazard spots assessments) should be carried out prior to the start of construction, as in the case of the proposed project. Geological surveys should be a prerequisite for each road construction project in a mountainous country with monsoon seasons. It is important to identify potential geological problems prior to the start of construction to avoid costly remedial works. The mitigation measures and other recommendations suggested by the geotechnical survey should be fully integrated in the detailed design of the proposed roads. (iii) Quality assurance requires establishment of an accountability mechanism and empowerment for decision-making. Responsibilities and roles should be clearly defined and reporting linkages should be precisely determined and established between all concerned parties (e.g., DOR Head Office, field offices, project coordinating unit and project site engineers). The de-concentrated nature of the implementation arrangements requires the project site engineers be more empowered to make project-related decisions in-situ. This lesson has been reflected in the current implementation arrangement. (iv) Expansion of the rural road network in Bhutan is expensive, but unavoidable development undertaking. Due to the scarce and scattered population and mountainous terrain in Bhutan, investment in feeder roads is an expensive and costly proposition. However, the socio-economic impact monitoring study of the RAP has revealed a broad number of positive impacts the road accessibility has made upon the isolated rural settlements. Roads are crucial for boosting the rural economy and improvement in the welfare of rural population. The road access facilitates the arrival of other development programs and services. Thus, such costly investment is unavoidable to achieve the country s poverty reduction goals. (v) Introduction and adapting of an innovative environmentally sustainable approach in road projects requires a commitment of the higher level government. The success of EFRC introduction and implementation in the RAP is due to the RGOB s environmental consciousness

6 and stringent environmental policy that were already in place when the project started. The Country Systems Assessment conducted by the World Bank has recognized the RGOB s environmental policy comprehensiveness and concluded that it may be used to address environmental safeguard issues in the Bank-supported projects. 9. Safeguard Policies (including public consultation) Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) [X] [ ] Natural Habitats (OP/BP 4.04) [ ] [X] Pest Management (OP 4.09) [ ] [X] Cultural Property (OPN 11.03, being revised as OP 4.11) [ ] [X] Involuntary Resettlement (OP/BP 4.12) [X] [ ] Indigenous Peoples (OP/BP 4.10) [ ] [X] Forests (OP/BP 4.36) [X] [ ] Safety of Dams (OP/BP 4.37) [ ] [X] Projects in Disputed Areas (OP/BP 7.60) * [ ] [X] Projects on International Waterways (OP/BP 7.50) [ ] [X] 9.1 Environmental Assessment. EA categorization for this project is B since this project s civil works will be implemented following environmentally friendly construction approach, which emphasizes phased construction and bioengineering for slope stabilization. In addition, the civil works involve small works for (i) upgrading existing roads to all season roads, and (ii) maintenance of existing all season roads built in an environmentally friendly manner under the previous RAP-I. 9.2 Natural Habitats OP The expected project alignments do not fall under any protected and nature conservation areas declared under Forest and Nature Conservation Act of Bhutan, However, the project includes improvement of structures on Janchucholing-Tashidinkha for better drainage and slope stability. This road partly falls under buffer zone of the biological corridor connecting two of the national parks Jigme Dorji National Park (JDNP) and Jigme Singye Wangchuck National Park (JSNP), as confirmed by Nature Conservation Division (NCD) officials. In addition, Drujegang-Balung Road passes through degraded forest areas with limited patches of wildlife habitat. Hence the OP 4.04 is applicable. The EA has considered this aspect with necessary mitigation and management measures to avoid, minimize and mitigate impacts. 9.3 Cultural Property OPN The proposed project alignments do not pass through or impact any Cultural Property. However, as the EA information indicates, the proposed Drujegang Balung Road alignment passes by the side of a famous holy tree and a religious lake. The EA has included necessary measures to avoid construction stage impacts on these land uses. During construction period, there could be a situation of chance finds related to cultural heritage of Bhutan. In view of this, Cultural Property Policy will be applicable. The EA has been disclosed as per Bank policies. * By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties claims on the disputed areas

7 9.4 Involuntary Resettlement OP 4.12: Involuntary Resettlement OP 4.12: Although no involuntary resettlement and rehabilitation is anticipated under the project, a Resettlement Policy Framework (RPF) in accordance with the provisions of OP 4.12 has been prepared in the event that minor land acquisition is unavoidable or if project activities result in loss of privately owned assets, livelihoods or the displacement of people. 10. List of Factual Technical Documents Environmental Assessment Jangchucholing Tashidingkha Road, Wangdue Phodrang Ministry of Works and Human Settlements, Department of Roads. Thimphu Environmental Assessment Drujegang_Balung Road, Dagana Ministry of Works and Human Settlements, Department of Roads. Thimphu Environmental Management Framework Ministry of Works and Human Settlements, Department of Roads. Thimphu Social Assessment Framework Ministry of Works and Human Settlements, Department of Roads. Thimphu Social Impact Assessment Jangchucholing-Tashidingkha Road, Wangdue Phodrang Ministry of Works and Human Settlements, Department of Roads. Thimphu Social Impact Assessment Drujegang_Balung Road, Dagana Ministry of Works and Human Settlements, Department of Roads. Thimphu World Bank Country Assistance Strategy for the Kingdom of Bhutan: Washington, D.C. 11. Contact point Contact: Binyam Reja Title: Transport. Economist Tel: (202) Fax: (202) Breja@worldbank.org 12. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C Telephone: (202) Fax: (202) pic@worldbank.org Web:

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