Completion Report

Project Number: 37328-013 Loan Number: 2330 September 2015

India: Madhya Pradesh State Roads Sector

Project II

This document is being disclosed to the public in accordance with ADB’s Public Communications Policy 2011.

CURRENCY EQUIVALENTS

Currency Unit – India rupee/s (Rs)

At Appraisal At Project Completion (1 May 2007) (31 December 2011)

Rs1.00 = $0.0243 $0.0188 $1.00 = Rs41.1900 Rs53.1050

ABBREVIATIONS

ADB – Asian Development Bank EA – executing agency EIRR – economic internal rate of return EMP – environmental management plan GSDP – gross state domestic product IEE – initial environmental examination km – kilometer MPPWD – Madhya Pradesh Public Works Department MPRDC – Madhya Pradesh Road Development Corporation PCR – project completion review PPMS – project performance monitoring system QCBS – quality- and cost-based selection RAMS – road asset management system TA – technical assistance

NOTES

(i) The fiscal year of the Government of India ends on 31 March. FY before a

calendar year denotes the year in which the fiscal year ends, e.g., FY2015 ends on 31 March 2015.

(ii) In this report, "$" refers to US dollars. Vice-President W. Zhang, Operations 1 Director General H. Kim, South Asia Department (SARD) Director M. Teresa Kho, India Resident Mission (INRM), SARD Team leader A. Bajaj, Senior Project Officer (Transport), INRM, SARD Team members G. Mahajan, Senior Environment Officer, INRM, SARD M. Sharma, Associate Project Analyst, INRM, SARD

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

CONTENTS

Page

BASIC DATA i

I. PROJECT DESCRIPTION 1

II. EVALUATION OF DESIGN AND IMPLEMENTATION 1

A. Relevance of Design and Formulation 1

B. Project Outputs 2

C. Project Costs 3

D. Disbursements 4

E. Project Schedule 4

F. Implementation Arrangements 5

G. Conditions and Covenants 5

H. Related Technical Assistance 6

I. Consultant Recruitment and Procurement 6

J. Performance of Consultants and Contractors 7

K. Performance of the Borrower and the Executing Agency 8

L. Performance of the Asian Development Bank 8

III. EVALUATION OF PERFORMANCE 8

A. Relevance 8

B. Effectiveness in Achieving Outcome 9

C. Efficiency in Achieving Outcome and Output 9

D. Preliminary Assessment of Sustainability 10

E. Impact 11

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 13

A. Overall Assessment 13

B. Lessons 13

C. Recommendations 14

APPENDIXES 1. Design and Monitoring Framework 15 2. Summary of Project Outputs 18 3. Project Cost and Financing 20 4. Disbursement of ADB Loan Proceeds 22 5. Appraisal and Actual Implementation Schedules Compared 23 6. Chronology of Major Events 24 7. Organization Structure for Project Implementation 26 8. Status of Compliance with Major Loan Covenants 27 9. Technical Assistance Completion Report 37 10. Summary of Contract Packages 39 11. Economic Reevaluation 41 12. Summary of Socioeconomic Impacts 46 13. Contribution to ADB Results Framework 49

BASIC DATA A. Loan Identification 1. Country 2. Loan Number 3. Project Title 4. Borrower 5. Executing Agency 6. Amount of Loan 7. Project Completion Report Number

India 2330-IND Madhya Pradesh State Roads Sector Project II India Government of Madhya Pradesh acting through Madhya Pradesh Road Development Corporation $320 million PCR: IND 1539

B. Loan Data 1. Appraisal – Date Started – Date Completed 2. Loan Negotiations – Date Started – Date Completed 3. Date of Board Approval 4. Date of Loan Agreement 5. Date of Loan Effectiveness – In Loan Agreement – Actual – Number of Extensions 6. Closing Date – In Loan Agreement – Actual – Number of Extensions 7. Terms of Loan

– Interest Rate – Commitment Charges – Maturity (number of years) – Grace Period (years) – Front-end Fee

8. Terms of Relending (if any)

5 March 2007 9 March 2007 24 April 2007 26 April 2007 31 May 2007 23 July 2007 20 October 2007 31 August 2007 0 31 December 2010 31 December 2011 1 LIBOR-based lending facility 0.35% 25 5 0 None

9. Disbursements

a. Dates Initial Disbursement

23/10/2007 Final Disbursement

29/05/2012 Time Interval 55.7 Months

Effective Date 31/08/2007

Original Closing Date 31/12/2010

Time Interval 40.0 Months

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b. Amount ($)

Category Original

Allocation

Last Revised

Allocation

Amount Increased (canceled)

Amount Disbursed

Undisbursed Balance

1. Investment Component 319,000,000 319,000,000 - 316,830,958 2,169,042

1A. Civil Works 307,000,000 307,000,000 - 306,708,518 291,482

1B. Consulting Services 12,000,000 12,000,000 - 10,122,440 1,877,560

2. Institutional Development 1,000,000 1,000,000 - 0 1,000,000

Total 320,000,000 320,000,000 - 316,830,958 3,169,042

Notes: The undisbursed amount was cancelled at loan financial closure on 5 October 2012.

10. Local Costs (Financed):

- Amount ($) 0 - Percent of Local Costs 0% - Percent of Total Cost 0%

C. Project Data

1. Project Cost ($ million)

Cost Appraisal Estimate Actual

Foreign Exchange Cost 267.9 258.4

Local Currency Cost 132.1 128.6

Total 400.0 387.0

2. Financing Plan ($ million)

Cost Appraisal Estimate Actual

Implementation Costs

Borrower Financed 55.7 61.7 ADB Financed 320.0 316.8

Total 375.7 378.5 IDC Costs and other Financial Charges

Borrower Financed 24.3 8.5 ADB Financed 0 0

Total 24.3 8.5 ADB = Asian Development Bank, IDC = interest during construction.

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3. Cost Breakdown by Project Component ($ million)

Component Appraisal Estimate Actual

A1. Sample Subproject

(Lakhnadon-Mandla-Dindori, SH-10, about 190 km)

1. Civil Works 28.9 35.7

2. Relocation of Utilities 0.1 0

A2. Non-Sample Subproject (about 1,600 km)

1. Civil Works 277.8 327.6

2. Relocation of Utilities 1.5 0

3. Land Acquisition and Resettlement 0.1 0

Subtotal (A) 308.4 363.3

B. Consulting Services 12.0 11.2

C. Project Management 4.0 4.0

D. Institutional Development (Equipment) 1.0 0

Subtotal (A+B+C+D) 325.4 378.5

E. Contingencies

1. Physical Contingencies 32.5 0

2. Price Contingencies 15.8 0

F. Interest During Construction 24.3 6.8

G. Commitment Charges 2.0 1.7

Total 400.0 387.0

Note: (i) The actual cost for relocation of utilities is included in the cost for civil works; (ii) No cost incurred for land acquisition and resettlement during implementation. km = kilometer

4. Project Schedule

Item Appraisal Estimate Actual

A. Project Preparation

Sample Subprojects Q1 2007–Q2 2007 Q1 2007–Q2 2007

Other Subprojects Q1 2007–Q2 2007 Q1 2007–Q3 2007

Q1 2009–Q3 2009

B. Construction Supervision

Selection Q1 2007–Q3 2007 Q1 2007–Q3 2007

Supervision Q3 2007–Q2 2010 Q3 2007–Q4 2011

C. Civil Works

Procurement Q2 2007–Q3 2007 Q2 2007–Q1 2008

Q2 2009–Q1 2010

Construction Q3 2007–Q2 2010 Q3 2007–Q2 2011

D. Technical Assistance

Implementation Q4 2007–Q3 2008 Q2 2008–Q3 2009

Note: During implementation, three additional subprojects were prepared, approved and procured in 2009–2010.

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5. Project Performance Report Ratings

Ratingsa

Implementation Period Development Objectives Implementation Progress

From 31 May to 31 December 2007 Satisfactory Satisfactory

From 1 January to 31 December 2008 Satisfactory Satisfactory

From 1 January to 31 December 2009 Satisfactory Satisfactory

From 1 January to 31 December 2010 Satisfactory Satisfactory

From 1 January to 31 December 2011b On Track

a Project performance report ratings are based on parameters on implementation progress which are different than those used for the project completion report.

b Based on new ratings for evaluation of project performance from 2011.

D. Data on Asian Development Bank Missions

Name of Mission Date No. of

Persons

No. of Person-

Days Specialization of Members

Fact-finding 15–25 January. 2007 7 63 a, a, c, f, f, f, f

Appraisal 5–9 March 2007 2 10 a, d

Inception 21–25 April 2008 4 20 a, a, a, e

Review 1 27 May 2008 2 2 a, a

Review 2 23–24 September 2008 1 2 a

Review 3 16–20 February 2009 2 10 a, e

Midterm review 15–24 September 2010 4 40 a, b, c, e

Project completion review 17–24 December 2014 1 6 f

a = transport specialist; b = environmental specialist; c = resettlement and social development specialist; d= counsel; e = analyst; f = consultant.

I. PROJECT DESCRIPTION 1. At the request of the Government of India, the Asian Development Bank (ADB) approved a loan of $320 million and a technical assistance grant of $1 million on 31 May 2007 for the Madhya Pradesh State Roads Sector Project II.1 The primary objective of the project was to improve transport efficiency of the state road network in Madhya Pradesh, which would contribute to the expansion of economic opportunities and the reduction of poverty. The objective would be realized by (i) improving the state road network, (ii) facilitating safe and appropriate road usage, (iii) increasing efficiency of transport services, and (iv) enhancing the state government’s capacity for road asset development and management.2 2. At appraisal, the project comprised rehabilitation and reconstruction of about 1,800 kilometers (km) of state roads identified under the state road rehabilitation program. Road improvement works under the project included rehabilitating and improving existing roads, strengthening existing culverts and bridges, and constructing new bridges and cross-drainage structures. The project included consulting services to support implementation of the civil works. The total investment cost was estimated at $400 million, which was to be financed by the ADB loan of $320 million and the counterpart fund of $80 million equivalent from the Government of Madhya Pradesh (the state government). It was agreed that the project executing agency (EA) would be the state government acting through the Madhya Pradesh Road Development Corporation (MPRDC). The project would also enhance overall sector management capacity by providing (i) equipment for the state government to enhance sector capacity, such as road safety and control of overloading; and (ii) technical assistance (TA) to support the state government’s sector development initiatives, especially for reform and capacity building of the Madhya Pradesh Public Works Department (MPPWD), including (a) enhancing planning capacity, (b) improving business processes, (c) improving human resources management, and (d) increasing private sector participation. 3. At appraisal, the project anticipated that the improved road network would enhance the overall road condition and usability, thus increasing travel speeds and reducing travel time, accidents, and overloading. The project would also enhance MPPWD’s capacity for road asset development and management. This would improve governance in road administration and accountability, and create an environment that encouraged competition and efficiency within MPPWD and in the construction industry, ensuring more efficient road asset development and management, and higher quality of construction and maintenance. In addition, the project implementation would lead to social and economic development in the state, including improved access to socioeconomic services, increased employment opportunities, and more transport services. In turn, this would reduce poverty in the region and stimulate economic growth and human development in Madhya Pradesh. The economic internal rate of return of the project was estimated at 13%－49% for the candidate state roads.

II. EVALUATION OF DESIGN AND IMPLEMENTATION A. Relevance of Design and Formulation 4. The state of Madhya Pradesh is located in the center of India. At appraisal, about half of

1 Government of India and Asian Development Bank, 23 July 2007. Loan Agreement on Madhya Pradesh State

Roads Sector Project II. Delhi. 2 ADB. May 2007. Report and Recommendation of the President to the Board of Directors on Proposed Loan and

Technical Assistance Grant to India for the Madhya Pradesh State Roads Sector Project II. Manila.

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the state roads in Madhya Pradesh were assessed to have deteriorated severely and required major rehabilitation. The state government made substantial efforts to reduce the backlog of deferred road maintenance as set out in Refurbishing Roads in Madhya Pradesh.3 The state road rehabilitation program was to immediately strengthen and improve the state road network by 2009/10. Under the State Road Policy, the state government also took on sector development initiatives to develop and maintain the road network in accordance with Indian Roads Congress standards, develop efficient asset management systems, enhance the capacity for effective and efficient road construction, attract private sector in financing roads, and ensure high standards of road safety and travel comfort. 5. Guided by India: Country Strategy and Program (2003–2006) and its updates, ADB assistance to India aimed to support infrastructure-led poverty reduction. 4 Madhya Pradesh was a focal state for ADB’s lending activities as it was one of the poorest states in India and road was the predominant mode of transport services. Before the project, ADB had provided loans and TA amounting to about $3.4 billion to India, including three loans to improve the state road networks of Madhya Pradesh in 2002, Chhattisgarh in 2003, and Uttaranchal in 2006. ADB also provided support to improve state road sector management capacity. The first loan to Madhya Pradesh road sector development demonstrated major sector reform achievements, including establishment of MPRDC and its adoption of best practices for planning and maintenance systems, financial management, and public procurement. The project was proposed by the state government to pursue sector development and improve the state road network based on the substantial progress with sector reforms under the first ADB assistance.5 6. ADB provided a TA to support the state government in project formulation and preconstruction activities. 6 The project remains relevant and consistent with the state government’s objectives and ADB’s country partnership strategy in its design and formulation. At completion, 1,698.64 km of state roads had been rehabilitated or reconstructed (para.7), which had effectively improved the connectivity in the project areas; and the TA to support sector development initiatives was successfully implemented (para.17). The outputs and outcomes of the project have met India’s development objectives and ADB’s country partnership strategy.7 The project design and monitoring framework (DMF) with results is in Appendix 1. B. Project Outputs

1. Investment Component 7. At appraisal, the project anticipated the rehabilitation or reconstruction of about 1,800 km state roads, including one sample subproject (Lakhnadon-Mandla-Dindori road) and other 21 candidate roads. During early stages of implementation, the project reviewed and selected 1,627.49 km of candidate roads according to the selection criteria and approval process agreed and specified in the appraisal documents. 8 Subsequently, the state government and ADB

3 Government of Madhya Pradesh. 2005. Refurbishing Roads in Madhya Pradesh. Bhopal.

4 ADB. 2003. Country Strategy and Program (2003-2006) for India. Manila.

5 ADB. 2002. Report and Recommendation of the President to the Board of Directors on the Proposed Loans and

Technical Assistance Grant to India for the Madhya Pradesh State Roads Sector Development Program. Manila. (Loan 1958-IND and 1959-IND, approved in December 2002.)

6 A component TA of $250,000 for project preparation support for the project was provided under the TA Cluster to India for Project Processing and Capacity Development (ADB. 2006. Technical Assistance Cluster to India for Project Processing and Capacity Development. Manila.)

7 ADB. 2009. Country Partnership Strategy (2009-2012) for India. Manila.

8 During implementation, the 22 roads were packaged into 15 subprojects.

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appraised and approved 3 additional subprojects with a total length of 71.15 km by using the loan balance.9 Upon completion, the project had rehabilitated or reconstructed 25 roads (18 subprojects) totaling 1,698.64 km of state roads, involving widening and strengthening the roads from single-lane or intermediate-lane roads to intermediate-lane or two-lane standards with bituminous pavement. The civil works also repaired, strengthened, and/or constructed 133 bridges and 1,270 culverts, and installed road signage and furniture. During implementation, the project made minor engineering revisions in the project roads due to changes in field conditions and to enhance their durability and performance. This included adjustments in pavement composition, increase in utility shifting as per site requirements, and adopting cement concrete pavement in the built-up sections and waterlogged areas. MPRDC and ADB approved the related contract variations. 10

8. During implementation, the contractors carried out quality control of construction in accordance with contractual requirements. The supervision consultants assessed and supervised the works to ensure that the specifications had been met. No significant defects or quality problems were reported during the defect notification period. 11 The ADB’s project completion review (PCR) mission in December 2014 observed that the rehabilitated roads were of good quality, enabled comfortable ride as the international roughness indices were low,12 and a routine maintenance system was in place to keep the roads in good condition. Appendix 2 provides a summary of project outputs.

2. Institutional Development Component 9. At appraisal, $1.0 million in loan funds were allocated for procuring equipment necessary for the state government to enhance sector capacity, such as in road safety, and control of overloading. During implementation, MPRDC analyzed the requirement for equipment for road safety and overloading with assistance from the TA consultants. The state government observed that addressing road safety and overloading control required a comprehensive integrated programmatic approach and involvement of all stakeholders. This resulted in change in government policy, and the $1.0 million provision for equipment was not utilized.13 Under the updated policy, the state government, through a project with other stakeholders, is establishing (i) an accident response system for Madhya Pradesh with its own funds, and (ii) computer networked check-posts at all the 24 entry points along the state border with private sector participation for control of overloading. C. Project Costs 10. At appraisal, the project cost was estimated at $400.0 million equivalent, which also included contingencies and financial charges. The estimated civil works cost for the sample subproject (Lakhnadon-Mandla-Dindori road) was $28.9 million and a provision of $277.8 million was made for the remaining subprojects. Upon completion, the total project cost was $387.0 million, consisting of $363.3 million for the investment component, $15.2 million for consulting services and project implementation management, and $8.5 million for financial charges. Compared to appraisal, the actual project cost was about 3.3% lower, mainly as a result of less

9 The loan balance resulted from lower loan interest rate and the exchange rate fluctuation since loan approval.

10 The cost for the quantity changes was below 3.5% of the total contract cost.

11 The defects notification period is 1 year after civil work completion as per the works contracts under the project.

12 The international roughness index of the project roads was in the range of 1.5–2.2, as measured by the

supervision consultants. 13

MPRDC letter to ADB. 12 December 2012. Utilization of US$1 million for Institutional Development (Equipment) under ADB Loan 2330-IND.

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interest paid due to lower interest charges during implementation ($17.5 million), and cancellation of equipment procurement ($1.0 million). The civil works cost was 17.8% higher, mainly caused by statutory price escalations during implementation in accordance with the conditions of the contracts (about 75% of the total contract cost variations) and physical contingencies due to field conditions. Appendix 3 compares project costs at appraisal and at completion.

11. Under the financing plan at appraisal, the ADB loan of $320.0 million (80% of the total project cost) and government funds of $80.0 million equivalent (20% of the total project cost) would finance the project. At completion, slightly lower final project cost together with minor cancellation (para. 12) resulted in ADB financing 81.9% with government financing decreasing to 18.1% (Appendix 3).

D. Disbursements 12. ADB approved the loan on 31 May 2007. The loan was signed on 23 July 2007, and became effective on 31 August 2007. The loan proceeds were disbursed in accordance with ADB’s Loan Disbursement Handbook (January 2007, as amended from time to time). Reimbursement procedures as provided in the Handbook were used for civil works and consulting services. The statement of expenditure method was not used during implementation as the individual payments were generally larger than the threshold for this method. The loan agreement was amended on 9 October 2007 to reflect the changes to the calculation of rebates and surcharges under ADB’s LIBOR-based loans.14 The first loan disbursement was made on 23 October 2007, which was for the supervision consulting services. The loan disbursements peaked in 2009 and 2010 ($101.2 million and $124.1 million respectively). Due to implementation delays in civil works (para. 13), the loan closing date was extended once from original 31 December 2010 to 31 December 2011 upon request from the government. Along with the civil works completion, the loan was physically closed on the extended date of 31 December 2011.15 At loan financial closure on 5 October 2012, $316,830,958 was disbursed (99.0% of the loan amount) and the remaining undisbursed loan amount of $3,169,042 was canceled (1.0% of the loan amount). 16 The actual disbursements of the ADB loan are in Appendix 4. E. Project Schedule 13. At appraisal, it was expected that the project would be implemented over 3 years, inclusive of procurement and preconstruction activities in 2007, and be completed by 30 June 2010. The supervision consultants mobilized in August 2007 and the civil works started in September 2007 (para. 19 and 20). During the inception mission in April 2008, ADB found progress was behind schedule due to contractors’ slow mobilization of equipment, key personnel and labor.17 The contractors were instructed to submit a revised work program to make up for lost time. Accordingly, action plans were drawn for each contract which included

14

ADB letter to Ministry of Finance of India. 9 October 2007. Amendments to Rebate and Surcharges Provisions of Loan Agreements.

15 ADB Fax to Ministry of Finance. 19 May 2010. Loan 2330-IND: Madhya Pradesh State Roads Sector Project II –

Approval of Extension of Loan Closing Date. 16

ADB Fax to Ministry of Finance. 18 October 2012. Loan 2330-IND: Madhya Pradesh State Roads Sector Project II – Final Cancellation and Actual Loan Closing Date.

17 In March 2008, the Government of India effected a change in certain provisions for customs and excise exemption

for construction equipment, which resulted in delay in mobilizing the equipment being imported/procured by the contractors. In the process, about 2 to 2.5 months of the working season were lost.

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mobilization of additional resources by the contractors to accelerate their physical and financial progress. ADB also requested that the supervision consultants work closely with the contractors. One contract was terminated in September 2009 due to the contractor’s poor performance and a new contract was procured in January 2010 to complete the balance of works. During implementation, 3 additional subproject roads were appraised and approved which were procured in late 2009 to early 2010.The state government assessed that additional time was required to complete the civil works, particularly on the additional subprojects. ADB approved a loan extension upon request from the Government of India (para. 12). The ADB midterm review mission in September 2010 observed that after initial delays in mobilization, all the contractors had improved their performance by implementing series of measures, including mobilization of additional resources, and 10 out of the 18 contract packages had been completed. The mission noted that recouping lost time was facilitated by MPRDC through early decision-making and fast processing of payments. Eventually, all contract packages were substantially completed by 28 April 2011, which was about 4 months later than the anticipated loan closing date at appraisal and 8 months before the extended loan closing date. 14. The actual implementation schedule compared with the schedule at appraisal is in Appendix 5, and a chronology of major events is in Appendix 6. F. Implementation Arrangements 15. As agreed at appraisal, the state government was the EA for the project acting through MPRDC. MPRDC is wholly owned by the state government and was originally established as the project management unit for the previous ADB financed project – the Madhya Pradesh State Roads Sector Development Program (footnote 5). MPRDC was designated the State Highway Authority in October 2005, responsible for development and maintenance of all state roads in the Madhya Pradesh. MPRDC is headquartered in Bhopal and has seven regional offices. As agreed, a chief engineer at MPRDC was designated the “the project in charge” for the project implementation. MPRDC, assisted by the consultants, implemented all aspects of project management, including project preparation and design, procurement and contract management, financial management and audit, construction supervision and quality control, environmental and safeguard measures, institutional strengthening, and loan covenant compliance. The Environmental and Social Cell at headquarters, reporting to the chief engineer, was responsible for ensuring that the subprojects complied with environmental and social safeguards. The subprojects were categorized under Bhopal and Jabalpur regions according to their geographical locations. The divisional managers of the regional offices were delegated adequate technical and administrative authority for field decisions for the civil works. For matters attracting financial and contracting implications, the decisions were referred to MPRDC headquarters. Two consulting firms were engaged to assist MPRDC with supervision of construction, and monitoring and reporting of project progress. An updated organization chart of MPRDC is in Appendix 7. G. Conditions and Covenants 16. The EA complied with all loan covenants for the project, enabling the state to carry out the project with due diligence and efficiency, and in conformity with sound administrative, financial, engineering, and environmental practices. The EA provided adequate oversight, coordination, and the financial support required for project implementation. It submitted audited financial statements to ADB, albeit with some delays in the initial years of implementation. MPRDC was fully operational with adequate staff and resources. The EA selected all subprojects in accordance with the criteria and approved by the process specified in the project

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appraisal document. Likewise, the EA carried out the procurement of all civil works contracts and engagement of consultants in accordance with ADB guidelines and procedures. The EA implemented the measures for environmental and social aspects were implemented. The EA prepared and submitted the project reports as required and submitted to ADB on a timely basis. MPRDC now carries out road maintenance through zonal contracts on an annual basis, and receives regular fiscal allocations from the state government. It is also pilot testing road maintenance through public private participation. The status of compliance with major loan covenants is summarized in Appendix 8. H. Related Technical Assistance 17. In conjunction with the project, a TA was provided to support the state government’s sector development initiatives.18 The objective was to strengthen MPPWD’s capacity in road asset development and management. The TA of $1.0 million was financed by the Government of Japan through the Japan Special Fund, and implemented by an international consulting firm. The TA aimed to equip MPPWD with (i) norm-based planning and budgeting, (ii) improved business practices, and (iii) improved human resources management. The TA also aimed to review the state’s road sector institutions and suggest an alternative realigned structure to further facilitate long-term road sector reform. The TA envisaged making recommendations to modernize MPPWD’s operations by adopting technologies and practices in the context of the MPPWD environment. MPPWD was the executing agency for the TA. 18. The TA commenced on 7 April 2008 and was completed on 30 September 2009. The TA consultants carried out the activities specified in the terms of reference (TOR) including (i) reviewing MPPWD’s institutional structure and capacity in road development, (ii) strengthening planning capacity, (iii) enhancing the MPPWD’s business practices in procurement and contracting processes, (iv) human resource management, and (v) improving road maintenance efficiency. The TA consultants prepared a set of manuals and guidelines, and conducted a large number of in-country training sessions. In addition, the TA supported setting up an IT training center, and several basic computer trainings were conducted. During implementation, the consultants delivered the required reports timely, including the final report, submitted in September 2009. These activities and achievements have substantially improved MPPWD’s capacity in road development and management. The achievements were well recognized by MPPWD. Upon completion, a total of 30.55 person-months international and 40.02 person-months national consulting services had been provided. The consultants’ work was rated as satisfactory. The TA realized its objectives of assisting the state government to strengthen MPPWD’s capacity in road asset development and management. The achievements were well recognized by the state government. The TA is rated successful. The TA completion report is attached in Appendix 9.

I. Consultant Recruitment and Procurement 19. At appraisal, it was envisaged that two international consulting firms would be recruited for the construction supervision using ADB’s quality- and cost-based selection (QCBS) procedures and in accordance with ADB’s Guidelines on the Use of Consultants (2006, as amended from time to time). About 56 person-months of international and 1,760 person-months of national consultants were expected to be required. Advance contracting for the supervision consultants was initiated at appraisal. The process of recruitment started in January 2007.

18

An associated TA of $1.0 million for Institutional Strengthening of Madhya Pradesh Public Works Department (TA4934-IND), was implemented during September 2009–December 2010.

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Fourteen consulting firms were shortlisted and seven of them were technically qualified. The financial proposals of the qualified firms were evaluated by MPRDC. After ADB approval of MPRDC’s evaluation of financial proposals and final ranking on 20 June 2007, the selection of two consulting firms was finalized—one each for the Bhopal and the Jabalpur regions. The contracts were signed on 6 August 2007 and were scheduled for completion in October 2010. Due to delays in implementation of the civil works, the contracts for the supervision consultants were extended until the civil works were completed. 20. The procurement of civil works was carried out in accordance with ADB’s Procurement Guidelines (2006, as amended from time to time). At appraisal, a procurement plan was prepared. The civil works were packaged into 15 contracts taking into account various factors, including geographic location and size. All the civil works contracts were procured through international competitive bidding procedures. ADB’s standard bidding documents for large works with post-qualification under the two-envelope system was adopted. For expediting project implementation, ADB approved advance contracting for the civil works. The bid documents were approved and the invitation for bids was published in March 2007. Bids were received until 8 June 2007. MPRDC evaluated the bids and submitted the evaluation reports on technical and price bids to ADB for approval. The qualifications of the bidders were approved by ADB on 2 August 2007. After ADB approval, 11 contracts were awarded during August–November 2007. Four contracts were awarded during December 2007–January 2008 pursuant to rebidding due to lack of qualified bidders or rejection of bids that were significantly higher than the estimated costs. The total contract price of these 15 civil works contracts was Rs13 billion, which was about 4.7% lower than the estimate at appraisal. Due to poor progress on package 5, the related contract was terminated in September 2009. The contract for the balance of work of package 5 was procured in January 2010. During implementation, three more subprojects totaling 71.15 km length were prepared and approved during January–July 2009 utilizing the likely loan balance. The procurement of these new contracts followed the prescribed procedures. These three contracts were awarded during June 2009–February 2010. During implementation, MPRDC and ADB approved contract variations incorporating physical and price contingencies. All the project contract packages with contracted and actual costs are summarized in Appendix 10. J. Performance of Consultants and Contractors 21. The overall performance of the consultants is rated satisfactory. At appraisal, it was envisaged that 56 person-months of international and 1,760 person-months of national consultants would be required for the project construction supervision. The consultants were engaged to assist MPDRC as per terms of reference to supervise project implementation and ensure high standards of quality assurance under Federation Internationale des Ingenieurs-Conseils conditions. In addition, the consultants were also required to assist MPDRC to comply with environment and social safeguards, undertake project performance monitoring and evaluation, and prepare progress reports and maintenance manuals. Two consulting teams were engaged as engineers for the subprojects in Bhopal and Jabalpur regions during implementation. The consultants undertook the tasks specified in the terms of reference. Due to overall delays in implementation of the civil works, the contract periods of the consultants were extended and the consulting services were completed in November 2011 for both consulting teams. At completion, the project had used 66 person-months of international consulting services and 3,875 person-months of domestic consulting services. 22. The performance of the civil works contractors is rated satisfactory. The civil works were implemented under 18 contract packages. The performance of one of the contractors (Package

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5) was persistently slow and the contract was terminated in September 2009. This contractor is rated unsatisfactory. A new contract was procured in January 2010 to complete the balance of works of the terminated contract. After the initial delays, through the joint efforts of MPRDC, supervision consultants, and the ADB missions, the performance of contractors improved significantly and progress accelerated. By the end of 2010 (original loan closing date), eight out of the 18 civil works contracts were substantially completed. The remaining contracts were fully completed before April 2011, some 8 months ahead of the extended loan closing date. The quality of the civil works met the road specifications. The traffic management and compliance with environment and safety norms by the contractors were satisfactory. K. Performance of the Borrower and the Executing Agency 23. The overall performance of the borrower and the EA is rated satisfactory. The borrower of the loan was the Government of India and the EA was the Government of Madhya Pradesh (the state government). The related government agencies, mainly the Ministry of Finance, actively participated in the coordination and monitoring of project implementation. The state government provided counterpart funding for the project implementation. Implementation complied with all loan and project covenants (Appendix 8). MPRDC, assisted by the consultants, implemented all aspects of project management, including project preparation and design, procurement, contract management, financial management and audit, construction supervision and quality control, environmental and safeguard measures, institutional strengthening, and loan covenant compliance. MPPWD also successfully implemented the TA to support the state government’s sector development initiatives. The performance of the borrower, the EA and MPRDC for implementing the project are satisfactory. L. Performance of the Asian Development Bank 24. The performance of ADB is rated satisfactory. ADB’s headquarters in Manila administered the preparation and early implementation of the project and the TA, then delegated these to the India Resident Mission effective 28 April 2008. During implementation, ADB was closely involved in identifying and resolving issues through tripartite portfolio review meetings and regular fielding of project review missions. ADB provided substantial input to MPRDC in preparing detailed action plans for expediting progress by the contractors. ADB approved project documents and disbursed payment claims in a timely manner. On India’s request, ADB extended the loan closing date once to facilitate implementation and completion of the project. In addition, ADB conducted training on many aspects related to the project, which ensured successful implementation. In general, the government recognized the role of the ADB missions in providing timely advice on technical and contract administration matters.

III. EVALUATION OF PERFORMANCE A. Relevance 25. At both appraisal and completion, the project was rated relevant as the project was an integral part of India’s strategy for economic growth and poverty reduction through the development of highways and roads. ADB's Country Partnership Strategy (2009–2012) for India was designed to support government efforts to address some of the constraints identified in the government’s Eleventh Five-Year Plan.19 In the County Partnership Strategy (2013–2017) for India, ADB continues to support the strategic goals of the government—faster, more

19

ADB. 2009. Country Partnership Strategy (2009–2012) for India. Manila

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inclusive and sustainable growth—emphasized in the government’s Twelfth Five-Year Plan.20 By the end of 2013, ADB had provided 49 loans totaling $10,142.05 million to the transport sector in India, accounting for about 32.05% of ADB’s lending to India.21 This project loan was the second intervention for state roads in Madhya Pradesh. Given its success, ADB approved a third loan for state roads and a fourth loan for district roads in Madhya Pradesh to assist with its road sector development. Overall, the project is relevant both to India’s development objectives and plan, and to ADB’s country partnership strategy and lending policy. 26. Performance, key problems and opportunities of the road subsector in Madhya Pradesh were well analyzed, and lessons from previous projects in India, especially the previous road project in Madhya Pradesh (footnote 5), were incorporated in the project design. Engineering design was prepared to minimize social and environmental impacts. Advance actions were taken to ensure that the construction could be commenced without unnecessary delay. In addition, the project supported state government’s initiatives for sector development, especially for MPPWD reform and capacity building. Overall, the project design and formulation were adequate. B. Effectiveness in Achieving Outcome 27. The project is rated effective in achieving its purposes and outcomes (Appendix 1). At appraisal, most of project roads were 3.5 meters (m) in width and in poor condition. Upon completion, 25 state roads totaling 1,698.64 km had been rehabilitated or reconstructed. The roads were widened to 5.5–7.0 m and observed to be in good quality, with international roughness indices ranging between1.5–2.2, a significant improvement from the original roughness indices of 3.5–7.0. The average vehicle speeds on project roads increased from 25 km–30 km/hour before the project to 30 km–60 km/hour after the project. The improvement of the project roads has led to a substantial reduction in vehicle traveling time and transport costs for both passengers and freight. According to the surveys after project completion, the average vehicle traveling time was reduced by about 52%, compared to an anticipated average improvement of 25% at appraisal. The vehicle operation cost reduced by about 36% after the project. The project has improved connectivity in project areas, leading to remarkable impacts to local socioeconomic development (para. 36). 28. The associated TA assisted MPPWD in various aspects of institutional reform and capacity-building. MPPWD staff gained exposure to advanced concepts in road development and management. Since project completion, MPRDC has taken up new initiatives, including the establishment and statewide implementation of (i) an accident response system for Madhya Pradesh with its own funds, and (ii) computer networked check-posts at all the 24 entry points along the state border with private sector participation for control of overloading. The TA has significantly facilitated improvement in the effectiveness and efficiency of the state road sector development and management. C. Efficiency in Achieving Outcome and Output 29. The project is rated efficient given the traffic growth and robust results of economic reevaluation. The project was implemented within cost and with minimal delay. 30. After completion of the road improvements, the project’s supervision consultants carried

20

ADB. 2013. Country Partnership Strategy (2013–2017) for India. Manila 21

ADB. 2014. Asian Development Bank & India – Fact Sheet. Manila

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out traffic surveys in 2010 and 2011.22 Results showed that traffic had increased by an average 31% compared to traffic volumes before the project. Actual traffic volumes increased much faster (9.4% per annum) than forecast at appraisal (about 7.4% in 2007–2011). By vehicle types, light trucks increased by about 32.7% per year, implying fast industrial and agricultural development in the project areas. 31. The ADB PCR mission reevaluated the economic internal rate of return (EIRR) for the project roads using methodology similar to that used at appraisal. The reevaluated EIRR was calculated at 29.7% for the whole project in comparison with forecast 26.2% at appraisal.23 The higher EIRR was due mainly to higher traffic volumes and lower project investment costs. The EIRR is above the ADB recommended discount rate of 12%. The project is therefore considered to be economically viable. Results from the sensitivity analysis indicate that the project continues to be economically viable for all scenarios. If a 50% maintenance cost increase were to be combined with a 50% benefit reduction, the EIRR would be 15.7% for the whole project. The sensitivity analysis also indicates that the EIRR is more sensitive to changes in benefits. Therefore, the state government needs to pay particular attention to socioeconomic development in the project area, such as fostering transport services, and increasing incomes for rural road users. Appendix 11 presents the economic reevaluation. D. Preliminary Assessment of Sustainability 32. The project is rated likely sustainable by considering the institutional and financial arrangements for the road maintenance, fast growing traffic and its impacts, and ADB’s continued financial and technical support to the state road development in Madhya Pradesh. 33. Established in 2004, MPRDC is a state government-owned company responsible for the development and maintenance of all the state roads, totaling 15,231 km in Madhya Pradesh. Of these, about 5,016 km were developed and maintained through build-operation-transfer modality. Currently, MPRDC has 173 staff out of the total 277 sanctioned posts. Additional staff is being recruited and taken on deputation from time to time depending on work load. MPRDC receives fiscal allocations from the state government for road development and maintenance. Fiscal allocations were Rs6,030 million in 2011/12, Rs6,760 million in 2012/13, and Rs7,810 million in 2013/14. All road maintenance activities, including routine and periodical maintenance for non-tolled roads, are outsourced through public bidding. The ADB PCR mission noted that the project roads were in good condition even after 4–5 years of operation and routine maintenance was in place. MPRDC is now piloting road maintenance concessions to the private sector to improve maintenance efficiency. By December 2014, 14 roads, including two roads rehabilitated with ADB assistance, have been selected for pilot testing. Designated MPRDC staff regularly inspect the roads and instruct road maintenance activities as per road condition and stipulated road maintenance specifications. Upon successful testing of road maintenance through the private sector, this model might be applied to other state roads. 34. Traffic on project roads has increased rapidly, which reflects good road condition and enhanced road transport capacity. Considering the socioeconomic development trends and as well as emphasis on the road network development, it is expected that the traffic would keep increasing in near future. Road safety has been an issue of serious concern. The state government and the road/transport authorities are addressing the issue. The road and transport

22

The traffic surveys were conducted in 2010 for the original 15 subprojects and in 2011 for the three additional subprojects.

23 The EIRRs at appraisal were 13%–49% for the 22 candidate roads.

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authorities are installing additional traffic safety facilities in ongoing projects. The state government is establishing a statewide accident response system. It is also implementing a vehicle overloading control system, including establishing axle-load inspection stations at all 24 entry points to Madhya Pradesh.

35. ADB continues to extend financial and technical support to the state road development in Madhya Pradesh with ADB approving a third project loan for state roads in 2011,24 and a fourth project loan for rehabilitation of district roads in Madhya Pradesh in 2014.25 Besides these, ADB has been supporting Madhya Pradesh though technical assistance in the state roads sector. E. Impact

1. Socioeconomic Impacts 36. The project has had significant socioeconomic impacts in the project areas. Madhya Pradesh has experienced rapid economic development with actual gross state domestic product (GSDP) annual growth rates of 9.23% in 2006/07, 4.69% in 2007/08, 12.37% in 2008/09, 9.55% in 2009/10, and 8.96% in 2010/11, and an average of 10.06% per annum in the Eleventh Five-Year Plan (2007–2012). In the eleventh plan period, the GSDP growth by sectors was 8.75% for the primary sector, 11.11% for the secondary sector, and 10.08% for the tertiary sector. The Twelfth Five-Year Plan (2012–2017) has a target average GSDP growth rate of about 9% per annum.

37. At appraisal, the social impact of the project on poverty reduction, gender, HIV/AIDS, human trafficking, and others, was assessed. The assessment didn’t identify any adverse impact on tribal groups within the project influence areas and also noted that indigenous groups in the project area had been assimilated into the local population. Nonetheless, an indigenous people development framework was prepared at appraisal in accordance with ADB’s Policy on Indigenous Peoples (1998), should there be a future need to prepare an indigenous people development plan. During implementation, a project performance monitoring system was developed that included indicators for monitoring the socioeconomic impacts of the project on economic growth, transport costs, access to social service, reduction of poverty, increase in employment opportunity, road safety, road improvement, as well as other measures. The supervision consultants carried out the baseline surveys in 2007 and follow-up surveys in 2010 and 2011 after civil works completion. Two project performance monitoring and evaluation reports were prepared and submitted to ADB—in 2011 for the Jabalpur region and in 2012 for the Bhopal region. 26 The reports indicated that the project brought substantial positive socioeconomic impacts to the project areas, mainly:(i) traffic increased by 26.1%–47.1% on project roads; (ii) average vehicle traveling time fell by about 52%; (iii) actual vehicle operation cost fell by over 30%; (iv) employment of 1,720 man-years was provided by the project, including 759 man-years for unskilled labor; (v) household income increased by 78% and the poverty ratio fell from 32% to 28%; (vi) travel time to access health care fell on average by 58% for public health centers and by 50% for major hospitals; (vii) many new hotels, shops and

24

ADB. 2011. Report and Recommendation of the President to the Board of Directors on Proposed Loan and Technical Assistance Grant to India for the Madhya Pradesh State Roads Sector Project III. Manila.

25 ADB. 2014. Report and Recommendation of the President to the Board of Directors on Proposed Loan to India for

the Madhya Pradesh District Connectivity Sector Project. Manila. 26

MPRDC. 2012. Project Performance Monitoring and Evaluation Report (Package 1–Bhopal). Intercontinental Consultants and Technocrats Pvt. Ltd.

MPRDC. 2011. Project Performance Management System (Package 2–Jabalpur). Scott Wilson Ltd. - Jabalpur.

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garages opened along project roads, providing substantial new working opportunities for local people; (viii) price for land along the project roads increased by an average 74% for agricultural land and 111% for commercial land; and (ix) road safety features incorporated in the project road design and construction have significantly improved the road safety on project roads. A summary of the socioeconomic impacts is in Appendix 12. 38. The loan required that the state government should ensure through MPRDC that the civil works contracts under the project incorporate provisions for HIV/AIDS and human trafficking awareness programs for labor, and not employ or use children as labor. During implementation, the contractors complied with the related requirements stipulated in the contracts. The local health agencies and the supervision consultants inspected the worker’s campus and provided training on the awareness and prevention of HIV/AIDS. MPRDC confirmed that no child labor was used for project implementation.

2. Environmental Safeguards 39. The overall environment categorization for the project was B as the project roads were not expected to have adverse environmental impacts as shown in the initial environmental examination (IEE) of the sample subproject. The IEE duly showed that the environmental impact would mostly occur during construction due to clearing for widening of carriageways, construction work related to compaction of embankments and cut and fill, as well as from quarrying to support construction activities. The environmental impacts were assessed to be temporary and, therefore, a further EIA was not required. Nevertheless, adequate mitigation measures were provided in the environmental management plan (EMP). 40. MPRDC implemented the overall mitigation measures, whilst some were implemented by the contractors. The Environmental and Social Cell of MPRDC was responsible for monitoring EMP implementation. The environmental assessment of the follow-up subprojects was carried out and the IEE for each civil works package was prepared in accordance with the Environmental Assessment and Review Framework, which was formulated to ensure that follow-up subprojects complied with national laws and ADB’s Environment Policy (2002). The identified mitigation measures were incorporated into the design. During implementation, MPRDC and civil works contractors obtained all permissions required from government agencies according to the applicable statutory environmental regulations to enable them to work in reserved forest areas for cutting trees, and to establish and operate construction equipment.27 No changes in specific locations or alignments of project roads were made. MPRDC, through its environmental expert, closely monitored the implementation of the environment management and monitoring plan for all the packages. The main impacts during construction were dust and traffic management, which were addressed through regular sprinkling of water and deploying of flag persons. The supervision consultants designated existing site staff for environmental coordination as an additional responsibility, over and above the environmental experts assigned to the project. A complaint system was established at each construction site for effective and timely redress. Several workshops on compliance of environment safeguards were conducted. MPRDC, assisted by the consultants, prepared and submitted the required semi-annual environmental monitoring reports covering construction sites, pollution control measures adopted, measures for workers safety, and camp site, among others. During implementation, MPRDC didn’t receive any complaints from the public. With improved road conditions, less traffic congestions and reduced dusty conditions have been reported. This, in turn, has reduced

27

Madhya Pradesh Forest Department, Department of Revenue, MP Pollution Control Board, Department of Mining, Directorate of Explosives and others.

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idling of vehicles resulting in less vehicular emissions. At project completion, a final environmental monitoring report was submitted to ADB. The project complied with all environmental covenants stipulated in the loan agreement.

3. Land Acquisition and Resettlement 41. At appraisal, it was envisaged that the road rehabilitation and reconstruction would be carried out within the available right-of-way, and no land acquisition was expected. The project design avoided or minimized the need for land acquisition and involuntary resettlement by adopting the most feasible technical design. The assessment of the sample subproject confirmed that it did not entail any involuntary resettlement and land acquisition. Nonetheless, a resettlement framework was prepared for the project, in accordance with ADB’s Involuntary Resettlement Policy (1995), to address any potential adverse resettlement impacts on assets such as land, structures, and cultural assets arising during detailed design and construction of the sample subproject and for follow-up subprojects. Resettlement plans, if required for future subprojects, were to be prepared in accordance with the agreed resettlement framework. ADB asked MPRDC to ensure that no civil works contractor commenced construction or displaced people until those affected were compensated in accordance with a resettlement plan acceptable to ADB. During ADB’s inception mission, no land acquisition or resettlement impacts were identified for the original civil works contract packages. Upon completion, it was reported that no land acquisition or resettlement were required for the project.

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS A. Overall Assessment 42. The project is rated successful. The project is considered relevant for India’s overall development objectives and ADB’s country partnership strategy. The project has effectively and efficiently achieved the outcomes and outputs anticipated at appraisal. The improved state roads had a significant impact on connectivity and supported regional socioeconomic development in the project areas. The project has had significant socioeconomic impacts for local residents, particularly the poor. The project is likely sustainable by considering the institutional and financial arrangements for road maintenance and safety. The economic reevaluation indicates that the project continues to be viable. Through the related TA, the project supported institutional reform and capacity building of MPPWD. However, project implementation experienced some delays, which postponed the anticipated benefits. B. Lessons 43. Implementation delay. The project implementation initially experienced delays mainly due to slow mobilization by the civil works contractors, even though the pre-construction activities were carried out in a timely fashion by MPRDC. Subsequently, the termination of a poorly performing contractor and procurement of a new contractor for completing the balance of works, and the addition of three new subprojects in 2009–2010 further affected the implementation schedule. Nonetheless, ten civil works packages were completed before original loan closing date, whilst the others were completed about 8 months before the extended loan closing date. This was achieved by close coordination between MPRDC and ADB in identifying issues and preparing action plans to expedite the implementation and recoup time lost. Consequently, the contractors improved their planning and mobilized additional resources. The supervision consultants closely monitored the progress achieved by the contractors on the action plan. The recouping of time lost was facilitated by MPRDC through early decision-making

14

and fast processing of payments. Timely identification of the issues, formulation of suitable action plans and close monitoring of progress helps improve project implementation. 44. Performance of contractors. Despite reiterated requests and financial support from MPRDC, one civil works contractor continued to perform poorly and the contract had to be terminated. Incorporating additional evaluation criteria in the bidding document on past poor performance or terminated or abandoned contracts would facilitate identification of such contractors in future procurement activities.

45. Financial management. Based on observations of financial auditors, ADB recommended MPRDC to strengthen internal audit system with regard to nature and scope of verification, timely preparation of audit reports, and to improve fund management. These measures together with regular and robust assessment of financial sustainability would facilitate better financial management.

C. Recommendations

1. Project Related 46. Future monitoring. The project was well implemented and completed. MPRDC is already implementing a third state roads project with ADB assistance. The state government should reassess project performance about 5 years after project completion, when the full benefits of the project will be apparent. 47. Further action or follow-up. The state government should ensure the measures for continued sustainability of the project. MPRDC as State Highway Authority has emerged as a model for successful project implementation in state roads and is already being replicated by some other states in India. There is a need to document the institutional framework and working of MPRDC, which should be disseminated for the benefit of other road sector organizations.

48. Timing of the project performance evaluation report. The project performance evaluation report may be prepared in 2018 or later when the third state roads project in Madhya Pradesh would have been completed and operational for about 2 years. By then, traffic development, road maintenance and physical condition, benefits attained and socio-economic impacts can be better assessed.

49. Capacity Building. The capacity building programs for MPRDC and MPPWD should be continued, particularly on contract management, asset management and road safety.

2. General

50. In order to achieve early delivery of projects, it should be ensured that the institutional set-up for project implementation is in place, preparatory activities are initiated well in advance, project readiness is high, and the performance of consultants and contractors is closely monitored.

DESIGN AND MONITORING FRAMEWORK

Design Summary Performance

Targets/Indicators Project Achievements

Impact Increase economic growth in Madhya Pradesh

Contribution of road transport sector to the state gross domestic product increased to 6%–10% by 2015 (from 3% according to recent data)

The actual GSDP annual growth rates in Madhya Pradesh were 9.23 % in 2006/07, 4.69 % in 2007/08, 12.37% in 2008/09, 9.55 % in 2009/10, and 8.96% in 2010/11, and an average 10.06% per annum for the eleventh plan period . The twelfth plan period’s (2012–2017) growth target is an average of about 9% per annum. In the eleventh plan period, the GSDP growth by sectors was 8.75% for primary sector, 11.11% for secondary sector, and 10.08% for tertiary sector. The approved overlay for transport sector was Rs85.75 billion, about 12.19% of the total overlay, which financed reconstruction of a total of 6,332 km of state roads, upgrading of 8,894 km of roads, and construction of 145 major/medium bridges.

Outcome Enhanced road transport capacity

Actual growth rates of traffic on project roads surpasses those assumed growth rates by 15% (e.g., from 7% for cars). Vehicle operating costs on project roads fell by 35% for heavy vehicles and by 25% for passenger cars after completion. Travel time on the project roads reduced by 25% on average.

Actual traffic growth on project roads averaged 9.4% per annum after project completion. Considering the average 10.1% annual increase in consumer prices and 20% increase in fuel price in the period of 2008–2011, the vehicle operation cost was reduced by about 36% for heavy vehicles and 37% for passenger cars compared to roads outside the project. The average vehicle traveling time fell by about 52%. Before the project, travel speed averaged 25–30 km/h; after the project travel speed was 40–60 km/h.

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Design Summary Performance

Targets/Indicators Project Achievements

Access of the rural poor to social services, markets, and other economic activities improved (e.g., the number of daily trips by the rural poor doubled). Project roads maintained with International Roughness Index below 5.

The average time used for traveling to public health centers was decreased from 52.07 minutes at baseline to 21.70 minutes after project completion, a 58% reduction. The average time traveling to major or district hospitals decreased from 2.10 hour at baseline to 1.05 hour after project completion, a 50% reduction. The frequency of public transport services also increased, providing better access for local people to public health centers and major or district hospitals. In addition, students are able to study at bigger cities, villagers can access better health facilities in bigger centers, doctors and health workers are willing to visit patients at their places, and access to banking facilities has increased, especially for agricultural loans. The project roads are of good quality, with international roughness indices of 1.5–2.2.

Outputs 1. Rehabilitated and improved state roads 2. Improved sector management

Approximately 1,800 kilometers of state roads rehabilitated or improved by 2009. Medium-term and long-term road investment and maintenance program developed for the state and district. Project delay reduced by 50%.

The project plan included the rehabilitation of 22 candidate project roads of about 1.800 km in length that were identified at appraisal. In addition to those candidate roads, three additional project roads were selected and rehabilitated. In total, 25 project roads comprising 1,698.64 km were rehabilitated as per specific rehabilitation requirements utilizing the loan funds. MPRDC has in place a medium-term and long-term road investment and maintenance program. Fiscal allocations from the state government were Rs6,030 million in 2011/12, Rs6,760 million in 2012/13, and Rs7,810 million in 2013/14. Project delays were reduced by about 63%.

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Design Summary Performance

Targets/Indicators Project Achievements

Allocated funds are fully utilized.

The first ADB financed state road project in Madhya Pradesh exceeded the planned completion by 27 months. The second project (the project) exceeded the planned completion by 10 months. The state government provided timely and adequate fiscal allocations which were utilized fully.

Activities with Milestones 1. Investment Component 1.1 Engagement of construction supervision consultants by August 2007 1.2 Procurement of first group of civil works completed by September2007 1.3 Construction of all civil works completed by June 2010 2. Sector Development (equipment) 2.1 Equipment procured by end of 2008 3. Sector Development (technical assistance) 3.1 Consultant selection by end of 2007 3.2 Consulting services by March 2008 3.3 Training of MPPWD staff by end of 2008 3.4 Road asset management system fully operational by end of 2008 3.5 Road investment and maintenance program by March 2009

Original Inputs For 1 and 2: • ADB: $320 million • Government: $80 million For 3: • ADB: $1 million • Government: $0.25 million in-kind contributions

Actual Inputs For 1 and 2:

Total $387.0 million • ADB: $316.8 million • Government: $70.2 million Comprising: • Sample Subproject: $35.7 million • Non-Sample Subprojects: $327.6 million • Consulting Service: $11.2 million • Project Management: $4.0 million • Interest during Construction: $6.8 million • Commitment Charges: $1.7 million • Equipment: Nil

For 3: • ADB: $0.965 million • Government: $0.25 million in-kind contributions

ADB = Asian Development Bank; GSDP = gross state domestic product; Government of Madhya Pradesh = state government; MP = Madhya Pradesh; MPRDC = Madhya Pradesh Road Development Corporation. Source: ADB. May 2007. Report and Recommendation of the President to the Board of Directors on Proposed Loan and Technical Assistance Grant to India for the Madhya Pradesh State Roads Sector Project II. Manila; and ADB project completion review mission.

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SUMMARY OF PROJECT OUTPUTS

At Appraisal Actual Length

(km)

A. Investment Component

About 1,800 km of state roads would be rehabilitated or reconstructed. The candidate project roads included:

A total of 25 roads comprising 1,698.64 km were rehabilitated or reconstructed.

1,698.64

1 Shivpuri–Sheopur–Rajasthan Border (SH-6) 1 Shivpuri–Sheopur–Rajasthan Border (SH-06) 142.02

2 Gairathganj–Silwani–Gadarwara (SH-44) 2 Gairathganj—Silwani--Gadarwara Road (SH-44) 64.40

3 NH-12 Junction to Silwani (SH-15) 3 NH-12 Junction to Silwani (SH-15) 34.80

4 Bareli–Pipariya road (SH-19) 4 Bareli–Pipariya Road (SH-19) 39.00

5 Mandleshwar–Kasrawad (SH-1) Kasrawad–Khargone road (SH-31)

5 Mandleshwar–Kasrawad Road (SH-1) and Kasrawad–Khargone Road (SH-31)

44.34

6 Banher to Maharashtra Border (SH-31) 6 Banher to Maharashtra Border Road (SH-31) 64.56

7 Barwaha–Dhamnod road, Khalghat–Manawar road (SH-38) and Khalghat–Kasrawad road

7 Barwaha--Dhamnod Road, Khalghat--Manawar Road (SH-38) and Khalghat --Kasrawad Road (SH-31)

122.00

8 Indore–Deparpur road (MDR) 8 Indore--Deparpur Road (MDR) 34.08

9 Girgodha–Indoria road (MDR) 9 Girgodha--Indoria Road (MDR) 30.00

10 Shyampur–Goras road (SH-23) 10 Shyampur–Goras Road (SH-23) 65.00

11 Morena–Porsa road (SH-2) 11 Morena--Porsa Road (SH-2) 50.00

12 Khandwa–Khargone road (SH-26) 12 Khandwa--Khargone Road (SH-26) 75.00

13 Hoshangabad–-Budni–-Nasrullaganj-Khategaon road (SH-22)

13 Hoshangabad--Budni--Narullaganj--Khategaon Road (SH-22) 87.40

14 Nagod–Jasso–Saleha–Pawai–Semaria–Amanganj road 14 Nagod—Jasso—Saleha—Pawai—Mohindra—Semaria—Amanganj Road

100.83

15 Amanganj–Malhera (SH-10) 15 Amanganj-Malhera (SH-10) 76.86

16 Seoni–Chiraidongri (SH-11A) 16 Seoni—Chiraidongri (SH-11A) 92.63

17 Balaghat–Nainpur (SH-11) 17 Balaghat—Nainpur (SH-11) 80.60

18 Tala–Shahdol (Chhatisgarh Border) (SH-10) 18 Tala—Shahdol (Chhatisgarh Border) (SH-10) 69.90

19 Katni–-Barhi–Tala (SH-10) 19 Katni—Barhi—Tala (SH-10) 70.04

20 Lakhnadon–Mandla–Dindori (SH-10) 20 Lakhnadon—Mandla—Dindori (SH-10) 151.63

21 Bela–Gonvindgarh–Churhat (SH-52) 21 Bela—Govindgarh—Churhat (SH-52) 56.60

22 Rewa–Sirmor–Dabhore road 22 Rewa—Sirmor—Dabhore Road 75.80

23 Bargwan – Bedhan (SH-6 Old) 27.35

24 Nasrullganj – Koshmi section of Nasrullaganj - Echhawar-

Sehore road (MDR) 20.00

25 Ingoriya – Unhel road (MDR) 23.80

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B. Institutional Development Component

Provide equipment necessary for the state government to enhance sector capacity such as in road safety and control of overloading.

MPRDC analyzed the requirement for equipment for road safety and overloading with assistance from the TA consultants. The $1million provision for the purchase of equipment for road safety and control of overloading was not utilized as the state government observed that addressing road safety and overloading control effectively required a comprehensive integrated approach and involvement of all stakeholders. The state government has taken up the establishment and statewide implementation of (i) an accident response system for Madhya Pradesh, and (ii) computer networked check-posts at all the 24 entry points along the state border for control of overloading in coordination with other stakeholders.

C. Technical Assistance Project

A technical assistance (TA) was attached to the project for supporting state government initiatives of sector development, especially for MPPWD reform and capacity building.

This TA was successfully implemented in 2008–2009.The major achievements included (i) review of MPPWD’s institutional structure and capacity in road development and providing recommendations, (ii) strengthening planning capacity by providing a framework for operationalizing the Planning/RAMS unit, (iii) enhancing the MPPWD’s business practices in procurement and contracting by preparing a set of contracting documents, (iv) strengthening quality assurance by upgrading laboratories, related facilities and arrangements, (v) functional specifications for procurement and customization of financial management system to meet MPPWD requirements and replace the paper-based accounting system, (vi) developing the human resource management by restructuring institutional arrangement and developing three-year plans, and (vii) improving road maintenance efficiency by introducing RAMS.

MDR = major district road; MP = Madhya Pradesh; MPPWD = Madhya Pradesh Public Works Department; RAMS = road asset management system; SH = state highway; TA = technical assistance Source: Madhya Pradesh Roads Development Corporation.

Ap

pen

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2 1

9

PROJECT COST AND FINANCING

Table A3.1: Project Costs ($ million)

Item

Appraisal Estimate Actual

Foreign Exchange

Local Currency

Total Cost

Foreign Exchange

Local Currency

Total Cost

A1. Sample Subproject

(Lakhnadon-Mandla-Dindori, SH-10)

1. Civil Works 19.7 9.2 28.9

24.4 11.4 35.7

2. Relocation of Utilities

0.1 0.1

A2. Non-Sample Subproject (about 1,600 km)

1. Civil Works 188.9 88.9 277.8

222.8 104.8 327.6

2. Relocation of Utilities

1.5 1.5

3. Land Acquisition and Resettlement

0.1 0.1

Subtotal (A) 208.6 99.8 308.4

247.1 116.2 363.3

B. Consulting Services 3.0 9.0 12.0

2.8 8.4 11.2

C. Project Management

4.0 4.0

4.0 4.0

D. Institutional Development (Equipment) 1.0

1.0

Subtotal (A+B+C+D) 212.6 112.8 325.4

249.9 128.6 378.5

E. Contingencies

1. Physical Contingencies 22.1 10.4 32.5

2. Price Contingencies 6.9 8.9 15.8

F. Interest During Construction 24.3 - 24.3

6.8

6.8

G. Commitment Charges 2.0 - 2.0

1.7

1.7

Total 267.9 132.1 400.0 258.4 128.6 387.0

Note: (i) The actual cost for relocation of utilities is included in the cost for civil works; (ii) no cost incurred for land acquisition and resettlement during implementation.

Source: ADB. 2007. Report and Recommendation of the President to the Board of Directors on Proposed Loan and Technical Assistance Grant to India for the Madhya Pradesh State Roads Sector Project II. Manila; Asian Development Bank loan financial information system. Manila; Madhya Pradesh Roads Development Corporation.

20 A

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3

Table A3.2: Project Financing ($ million)

Source

At Appraisal Actual

Total Cost % of Total Total Cost % of Total

Asian Development Bank 320.00 80.0%

316.83 81.9%

Government 80.00 20.0%

70.17 18.1%

Total 400.00 100.0% 387.00 100.0% Source: Asian Development Bank.

App

end

ix 3

21

22 Appendix 4

DISBURSEMENT OF ADB LOAN PROCEEDS

Table A4: Annual and Cumulative Disbursement of ADB Loan Proceeds

($ million)

Year

Annual Disbursement Cumulative Disbursement

Amount % of Total Amount % of Total

2007 22.8 7.2

22.8 7.2

2008 43.1 13.6

65.9 20.8

2009 101.2 31.9

167.1 52.7

2010 124.1 39.2

291.2 91.9

2011 20.1 6.3

311.3 98.2

2012 5.6 1.8

316.8 100.0

Total 316.8 Source: Asian Development Bank.

Figure A4: Annual and Cumulative Disbursement of ADB Loan Proceeds

($ million)

Source: Asian Development Bank

APPRAISAL AND ACTUAL IMPLEMENTATION SCHEDULES COMPARED

Source: Madhya Pradesh Roads Development Corporation; Asian Development Bank project completion review mission.

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Project Preparation

Construction Supervision Consultants

Civil Works

Technical Assistance (TA)

At appraisal At actual

Procurement

Implementation

D

Construction

2010

C

Sample Subprojects

Supervision

Other Subprojects

Selection

A

B

2011Item

2007 2008 2009

App

end

ix 5

23

24 Appendix 6

CHRONOLOGY OF MAJOR EVENTS

Date Main Event

2006

17–20 April ADB consultation mission to Madhya Pradesh, India

30 May–2 June ADB TA consultation mission to Madhya Pradesh, India

30 June ADB approval of the PPTA

3–6 October ADB loan consultation mission to Madhya Pradesh, India

12–20 December ADB loan reconnaissance mission to India

2007

15–25January ADB fact-finding mission to India

21 Feb ADB management review meeting

5–9 March ADB loan appraisal mission

27 March ADB staff review committee meeting

24–26 April Loan negotiations at Delhi, India

2 May RRP Board circulation

31 May ADB Board consideration and approval

8 June Bids for civil works packages were received

23 July Signing of the loan agreement

2 August ADB approval of the qualifications of bidders

6 August Contract awarding for supervision consultants

31 August Loan Effectiveness

24 September 2007– 25 January 2008

Contract awarded for 15 civil works contracts

9 October Amendment of the loan agreement to reflect the changes to the calculation of rebates and surcharges under ADB’s LIBOR-based loans

23 October First disbursement of the loan, which was for the supervision consulting services

26 October ADB issuing the Request for Proposal to shortlisted consulting firms for TA4934-IND

2008

7 March Contract award to the TA consultants

7 April Fielding of the TA consultants

21–25 April ADB loan inception mission

28 April Administration of the loan delegated to the ADB’s India Resident Mission

27 May ADB project review mission for the TA

23–24 September ADB project review mission for the TA

2009

16–20 February ADB loan and TA review mission

Appendix 6 25

Date Main Event

12 June 2009– 4 February 2010

Contract award for 3 civil works contracts

2 September Termination of the contract for civil works package 5

30 September Completion of the TA

15–21 December Completion of civil work contracts of package 14 and package 4

2010

12 January Contract award for civil works package 5A (the balance works of package 5)

15 February–24 June Completion of contracts for package 11, 3, 7, 1, 6, 13, 18, and 12

19 May ADB approval of extension of the loan closing date to 31 December 2011

15–24 September ADB project midterm review mission

10 December Financial closure of the TA grant

31 December Original loan closing date

2011

21 January Completion of civil works contracts for package 2, 8, 15, 16, 9, 10, 5A, and 17

28 April Substantially completion of all 18 civil works contracts.

19 October ADB President visited MPRDC office and also travelled on the Bhopal–Vidisha road constructed under ADB Loan 1959-IND.

15 November Contract completion of supervision consultants

31 December Actual loan closing date

2012

5 October Closure of financial account of the ADB loan

2013

26–29 July Delegates from PWD of Government of Orissa visited MPRDC and three project sites.

2014

26 January PWD Minister along with other dignitaries from Government of Rajasthan visited MPRDC and one of the project sites under ADB Loan.

4–5 February PWD Minister from Government of Karnataka along with other dignitaries visited MPRDC and one of the project sites under ADB Loan.

22–23 July Delegation from South Africa visited MPRDC and one of the project sites under ADB Loan.

30–31 October Delegates from Department of PWD, Government of Chhattisgarh visited MPRDC and one of the project sites under ADB Loan.

17–24 December ADB project completion review mission

ADB = Asian Development Bank; MPRDC = Madhya Pradesh Road Development Corporation; PPTA = project preparation technical assistance; PWD = public works department; RRP = Report and Recommendation of the President to the Board of Directors; TA = technical assistance. Source: The ADB project completion mission; Madhya Pradesh Roads Development Corporation.

ORGANIZATION STRUCTURE FOR PROJECT IMPLEMENTATION Madhya Pradesh Road Development Corporation

Source: Madhya Pradesh Roads Development Corporation.

Managing Director

Technical Advisor

Chief General Manager

General Manager (F)

CAO

AGM (F)

Manager (F)

Asst. Gr-III

Company Secretary

Chartered Accountant

General Manager (HR)

DGM (HR+MIS)

AGM (HR)

Manager (MIS)

Computer Operator

Manager (HR)

Asst. Gr-1 Asst. Gr-II Asst. Gr-III Steno Typist

Chief Engineer (BOT)

General Manager (BOT)

DGM (BOT)

AGM (BOT)

Manager (BOT)

Steno Typist

Manager (Enviro.)

Chief Engineer (Maint)

General Manager

DGM (P)

AGM (P)

Manager (P)

Steno Typist

General Manager

Divisional Manager

AGM (Tech.)

Manager (Tech.)

Steno Typist

Chief Engineer (Build.)

General Manager

DGM

AGM

Manager

Computer Operator

Chief Engineer (ADB)

General Manager

DGM

AGM

Manager

Computer Operator

EA to MDManagemnet

AssitantPA to MD

26 A

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ix 7

Appendix 8 27

STATUS OF COMPLIANCE WITH MAJOR LOAN COVENANTS

Covenant

Reference in Loan

Agreement Status of Compliance

(a) The Borrower shall cause the State, and the State through MPRDC to carry out the Project with due diligence and efficiency and in conformity with sound administrative, financial, engineering, environmental and state road development practices. (b) In the carrying out of the Project and operation of the Project facilities, the Borrower shall perform, or cause to be performed, all obligations set forth in this Loan Agreement.

Article IV Section 4.01

Complied with.

The Borrower shall make available to the State, promptly as needed, the funds, facilities, services and other resources which are required, in addition to the proceeds of the Loan, for the carrying out of the Project.

Article IV Section 4.02

Complied with.

The Borrower shall ensure that the activities of its departments and agencies with respect to the carrying out of the Project and operation of the Project facilities are conducted and coordinated in accordance with sound administrative policies and procedures.

Article IV Section 4.03

Complied with.

The Borrower shall take all action which shall be necessary on its part to enable the State, and the State through MPRDC to perform its respective obligations under the Project Agreement, and shall not take or permit any action which would interfere with the performance of such obligations.

Article IV Section 4.04

Complied with.

(a) The Borrower shall exercise its rights under the financing arrangements with the State, and State through MPRDC in such a manner as to protect the interests of the Borrower and ADB and to accomplish the purposes of the Loan. (b) No rights or obligations under the financing arrangements with the State and/State through MPRDC, shall be assigned, amended, abrogated or waived without the prior concurrence of ADB.

Article IV Section 4.05

Complied with.

Execution and Implementation The State through MPRDC shall be the Executing Agency and shall be responsible for overall implementation of the Project including detailed appraisal of Subprojects under the Project.

Schedule 5 para. 1a

Complied with. MPRDC was the executing agency for the project.

MPRDC and PIUs The implementation arrangements for execution and implementation of the Project shall be in accordance with the Project implementation organizational chart referred in Section 1.02(k). The Chief Engineer at MPRDC headquarters shall be designated as the Project-in-charge for implementation of the Project. (a) Each of the seven PIUs established under

MPRDC at divisional level, shall be headed by a

Schedule 5 para. 2 & 3

Complied with. The project execution and implementation was in accordance with the arrangements as envisaged at appraisal. The Chief-Engineer of MPRDC was designated as the Project-in-charge during project implementation. Seven divisional offices (PIU), headed by

28 Appendix 8

Covenant

Reference in Loan

Agreement Status of Compliance

divisional manager who shall be delegated with adequate technical and administrative authority for expeditious Project and Subprojects implementation on field.

(b) Each PIU shall be responsible for implementation of the identification, formulation, appraisal, design and implementation of all Subprojects including conformance with State and Borrower’s statutory laws and regulations as also ADB policies on safeguards and social matters.

(c) The Environment and Social Cell at MPRDC headquarters reporting to the Chief Engineer shall be responsible to ensure compliance with social safeguards, environment, and engineering aspects of the Subprojects. One or two full time Project managers shall be assigned for each contract package under the Subprojects. In addition the construction supervision consultants engaged by MPRDC shall act as the construction contracts engineers.

divisional managers with requisite authorities, were established for implementing the subprojects in their territories. Divisional offices under the guidance of MPRDC headquarters were responsible for implementing the subprojects including conformance with the Government of India’s and ADB’s policy on safeguards and social matters. The Environment and Social Cell at MPRDC headquarters was responsible for ensuring compliance with social and environmental safeguards. Two supervision consultant firms were acting as engineers.

Counterpart Funds (a) State shall provide timely and adequate

counterpart funds for the project. (b) The State shall make available the Loan

proceeds to MPRDC under appropriate arrangements acceptable to ADB, and ensure timely and adequate counterpart funds, for the efficient implementation of the Project.

Schedule 5 para. 4

Complied with. The state government provided the timely and adequate fiscal allocations for the project, including, FY2007/08–Rs2,351.3 million, FY2008/09–Rs3,400.0 million, FY2009/10–Rs6,995.5 million, FY2010/11–Rs4,381.5million, and FY2011/12–Rs312.1 million. Loan proceeds for the project were made available to MPRDC during implementation.

Subprojects Selection Criteria and approval process for Subprojects The State through MPRDC shall ensure that all Subprojects meet and are implemented, to the satisfaction of ADB, in accordance with the Subprojects Selection Criteria and approval process for Subprojects.

Schedule 5 para. 5

Complied with. All subprojects were selected in accordance with the selection criteria and approved as per the process stipulated in the project appraisal documents.

Sector Development; Road Maintenance The State shall implement measures included in the IDAP during the project implementation as also implement the agreed recommendations of the TA, in a timely manner.

Schedule 5 para. 6

Complied with. The state implemented its institutional development plan in a timely manner. The state acknowledged the recommendations of the TA and took up the establishment and statewide implementation of (i) an

Appendix 8 29

Covenant

Reference in Loan

Agreement Status of Compliance

The Borrower and the State shall ensure that adequate and timely funding or other mechanism is available to the MPRDC for maintenance of the roads improved under the Project.

Schedule 5 para. 7

accident response system for Madhya Pradesh with its own funds and (ii) computer networked check-posts at all the 24 entry points along the state border with private sector participation for control of overloading. MPRDC receives regular fiscal allocations from the state government for road maintenance. MPRDC is also pilot-testing road maintenance through PPP, particularly Maintain, Operate and Transfer mechanism.

Environment The State through MPRDC shall ensure that: (a) the Project is carried out and all

Project/Subproject facilities are designed, constructed, operated, maintained, and monitored in compliance with the environmental laws and regulations of the Borrower, the State, ADB's Environment Policy (2002), and the EARF;

(b) an IEE or EIA report as required shall be prepared, including an EMP with budget identifying the cost of its implementation (as incorporated in the related procurement bid document), with adequate public consultation for each Subproject, in accordance with the EARF. This shall be submitted to ADB for review and approval before award of related civil works contract.

(c) the EIA or IEE for Subprojects categorized under ADB's Environment Policy(2002) as "A", or "B sensitive" shall be subject to prior approval of ADB before the 120 day requirement of public disclosure under ADB's Environment Policy (2002);

(d) all environmental clearances required by all laws, acts, and regulations of the Borrower, State and local levels shall be obtained in a timely manner and prior to commencement of civil works for the relevant section of the Subproject as applicable;

(e) all mitigation measures identified in the IEEs, the SIEEs, the EIAs or the SEIAs, and the EMPs, prepared for the Subproject, as applicable, are incorporated in Subproject designs, and are carried out during their construction, operations and management, and are disclosed to stakeholders;

(f) if there are any changes in specific locations or alignments of any infrastructure or Project facilities after completion of the process of IEE or EIA, or any new information is made available

Schedule 5 para. 8

Complied with. The project was carried out in compliance with the environmental laws and regulations of the borrower, the state, ADB’s environmental policy, and the EARF. The IEEs for the sample subprojects were prepared during appraisal. The IEEs for all other subprojects were prepared during appraisal/implementation in accordance with the EARF. The overall environment categorization for the project was B. During implementation, MPRDC and civil works contractors obtained permissions from government agencies in a timely manner and prior to commencement of civil works. All identified mitigation measures were incorporated in the design, disclosed to stakeholders, and carried out during construction. The SIEE report was disclosed on the ADB website. The IEEs were disclosed by MPRDC on their website. No change in specific locations or alignments was required.

30 Appendix 8

Covenant

Reference in Loan

Agreement Status of Compliance

during detailed design or implementation that has an impact on the environmental assessment process carried out thus far, then additional environmental assessment shall be carried out in accordance with ADB's Environment Policy (2002) and the EARF, and prior approval of ADB shall be obtained before further physical implementation of the relevant section of the Subproject as applicable; and

(g) semi-annual progress reports shall be submitted to ADB on the implementation of the EMPs, and measures under the IEE/EIA, and the environmental monitoring carried out as a regular part of Project Implementation for review and disclosure in accordance with ADB's Public Communications Policy (2005).

MPRDC, assisted by the consultants, prepared and submitted semi-annual environmental monitoring reports, which were disclosed in accordance with ADB’s policy.

Involuntary Resettlement: Indigenous People The State through MPRDC shall undertake the Project in accordance with the Borrower’s, and State’s laws and regulations, ADB’s Policy on Involuntary Resettlement (1995), and the RF.

Schedule 5 para. 9

Complied with. The project assessment confirmed that the project did not entail any involuntary resettlement and land acquisition impact. Nonetheless, a resettlement framework was prepared for the project, in accordance with ADB’s Involuntary Resettlement Policy (1995), to address any potential adverse resettlement impacts on assets such as land, structures, and cultural assets arising during detailed design and construction of the sample subproject and for follow-up subprojects.

The State through MPDRC shall ensure that to the extent possible, Subprojects shall not require land acquisition or involuntary resettlement.

Schedule 5 para. 10

Complied with. MPRDC reported that no land acquisition and involuntary resettlement was required on the project.

In case of adverse impacts identified during planning, design or implementation of any Subproject on indigenous peoples, the State through MPRDC shall ensure that an IPDP or integration of specific actions in favor of the indigenous peoples in the RP, is prepared in accordance with ADB’s Policy on Indigenous Peoples (1998) and the IPDF and that the same is further (i) approved by ADB before award of related civil works contract, and (ii) implemented before commencement of the relevant section of the civil works contract as applicable. Any updation of IPDP due to detailed designs or during implementation shall follow requirements similar to the RPs as described for involuntary resettlement.

Schedule 5 para. 11

Complied with. The project assessment didn’t identify any adverse impact on tribal groups and also noted that indigenous groups in the project area had been assimilated into the local population. Nonetheless, an indigenous people development framework was prepared at appraisal in accordance with ADB’s Policy on Indigenous Peoples (1998). During implementation, a project performance monitoring system (PPMS) was developed that included indicators for monitoring socioeconomic impacts.

HIV/AIDS and Human Trafficking; Labor The State through MPRDC shall ensure that the civil works contracts under the Project incorporate provisions to the effect that the contractors shall (i)

Schedule 5 para. 12

Complied with. During implementation, the contractors complied with requirements stipulated in

Appendix 8 31

Covenant

Reference in Loan

Agreement Status of Compliance

carry out HIV/AIDS and human trafficking awareness programs for labor; (ii) not employ or use children as labor; (iii) disseminate information of worksites on risks of sexually transmitted diseases and HIV/AIDS as part of health land safety measures for those employed during construction; and (iv) follow and implement all statutory provisions on labor (including equal pay for equal work), health, safety, welfare, sanitation, and working conditions. The civil works contract shall also provide for termination of the contract by the State through MPRDC in case of breach of any stated provisions by the contractors.

the contracts. The local health agencies and the supervision consultants inspected the workers’ campus and provided significant training on awareness and prevention of HIV/AIDS. MPRDC reported that no child labor was used during project implementation.

Project Performance Monitoring System (PPMS) and Progress Reports Within 3 months of the Effective Date, the State through MPRDC shall establish the PPMS in a form and substance acceptable to ADB including the baseline for performance indicators to be used for monitoring implementation of each Subproject. The PPMS shall track the Project implementation activities. MPRDC shall thereafter conduct evaluation surveys annually under each Subproject in accordance with the PPMS to evaluate the scope, implementation arrangements, progress and achievements of Project objectives. Without limiting the generality of Section 2.08 of the Project Agreement, the State through MPRDC shall: (a) prepare and provide ADB with quarterly

progress reports on implementation of the Project and the Subprojects, that shall include report on progress made during the period of review, changes if any on implementation schedule, problems or difficulties encountered and remedial actions taken, work to be undertaken and Subprojects/Components to the proposed for financing in the coming quarter. The reports shall also include a summary financial account for each Subproject, expenditures to date, and report on performance monitoring and results of monitoring undertaken pursuant to Safeguards and Social considerations included under this Schedule; and

(b) within three months of the physical completion of each Subproject, or such later date as ADB may agree for this purpose, prepare and furnish to ADB a Subproject completion report, in such form and in such detail as ADB shall reasonably request. This report shall cover a detailed evaluation of the Subproject covering the design, costs, contractors' and consultants' performance, social and economic impact,

Schedule 5 para. 13& 14

Complied with. The PPMS was established in a timely manner. Besides the required set of indicators, MPRDC subsequently added additional indicators in consultation with ADB. The baseline survey was conducted in 2007 for original 15 civil works packages and in 2009/10 for the three additional packages. The monitoring surveys upon project completion were conducted in 2010 and 2011 for all civil works packages. The final monitoring and evaluation reports were submitted to ADB. MPRDC, assisted by supervision consultants, prepared and submitted to ADB quarterly progress reports. The completion reports for each subproject were prepared by MPRDC as part of quarterly progress reports and submitted to ADB. The overall project completion report was prepared by MPRDC and submitted to ADB on 11 December 2014.

32 Appendix 8

Covenant

Reference in Loan

Agreement Status of Compliance

economic rate of return, and such other Project related details as may be requested by ADB.

Reviews (a) Based on review of quarterly progress reports

submitted in accordance with the preceding paragraph, ADB and the State through MPRDC, as required, will meet to discuss progress of the Project, any changes to implementation arrangements or remedial measures required to be undertaken towards achieving overall objectives of the Project.

(b) In addition to regular reviews including a midterm review for the Project in shall be undertaken by ADB, the Borrower, the State and MPRDC in January 2009. The mid-term review shall include a detailed evaluation of the Project scope, implementation arrangement, any outstanding issues, environment, resettlement and other safeguard issues, achievement of scheduled targets, and other issues, as appropriate.

Schedule 5 para. 15

Complied with. Quarterly progress reports were prepared by MPRDC and submitted to ADB in a timely manner. ADB was closely involved in identifying and resolving issues through tripartite portfolio review meetings and regular fielding of project review missions, including the inception mission and the midterm review mission, which was carried out in September 2010.

(a) The State through MPRDC shall carry out the Project with due diligence and efficiency, and in conformity with sound administrative, financial, engineering, environmental and state roads development practices. (b) In the carrying out of the Project and operation of the Project facilities, the State and MPRDC shall perform all obligations set forth in the Loan Agreement to the extent that they are applicable to the State and MPRDC respectively, and in this Project Agreement.

PA Section 2.01

Complied with.

The State and MPRDC respectively, shall make available, promptly as needed, the funds, facilities, services, equipment, land and other resources which are required, in addition to the proceeds of the Loan, for the carrying out of the Project.

PA Section 2.02

Complied with.

(a) In the carrying out of the Project, the State through MPRDC shall employ competent and qualified consultants and contractors, acceptable to ADB, to an extent and upon terms and conditions satisfactory to ADB. (b) Except as ADB may otherwise agree, all Goods, Works and consulting services to be financed out of the proceeds of the Loan shall be procured in accordance with the provisions of Schedule 4 to the Loan Agreement. ADB may refuse to finance a contract where Goods, Works or consulting services have not been procured under procedures substantially in accordance with those agreed between the Borrower, the State, and MPRDC and ADB or where the terms and conditions of the contract are not satisfactory to ADB.

PA Section 2.03

Complied with.

Appendix 8 33

Covenant

Reference in Loan

Agreement Status of Compliance

The State and MPRDC shall carry out the Project in accordance with plans, design standards, specifications, work schedules and construction methods as agreed between ADB, State and MPRDC. The State and MPRDC shall furnish, or cause to be furnished, to ADB, promptly after their preparation, such plans, design standards, specifications and work schedules, and any material modifications subsequently made therein, in such detail as ADB shall reasonably request.

PA Section 2.04

Complied with.

(a) The State through MPRDC shall take out and maintain with responsible insurers, or make other arrangements satisfactory to ADB for, insurance of Project facilities to such extent and against such risks and in such amounts as shall be consistent with sound practice. (b) Without limiting the generality of the foregoing, the State through MPRDC undertakes to insure, or cause to be insured, the Goods to be imported for the Project and to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable to replace or repair such Goods.

PA Section 2.05

Complied with.

The State through MPRDC shall maintain, or cause to be maintained, records and accounts adequate to identify the Goods, Works and consulting services and other items of expenditure financed out of the proceeds of the Loan, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof) and to reflect, in accordance with consistently maintained sound accounting principles, its operations and financial condition.

PA Section 2.06

Complied with.

(a) ADB, the State, and MPRDC shall cooperate fully to ensure that the purposes of the Loan will be accomplished. (b) The State and MPRDC respectively shall promptly inform ADB of any condition which interferes with, or threatens to interfere with, the progress of the Project, the performance of its respective obligations under this Project Agreement or the financing arrangements, or the accomplishment of the purposes of the Loan. (c) ADB, the State, and MPRDC shall from time to time, at the request of either party, exchange views through their representatives with regard to any matters relating to the Project, and the Loan.

PA Section 2.07

Complied with.

(a) The State and MPRDC shall furnish to ADB all such reports and information as ADB shall reasonably request concerning (i) the Loan and 3 the expenditure of the proceeds thereof; (ii) the

PA Section 2.08

Complied with.

34 Appendix 8

Covenant

Reference in Loan

Agreement Status of Compliance

Goods, Works and consulting services and other items of expenditure financed out of such proceeds; (iii) the Project; (iv) the administration, operations and financial, position of the State and MPRDC in so far as it relates to the Project; and (v) any other matters relating to the purposes of the Loan. (b) Without limiting the generality of the foregoing, the State through MPRDC shall furnish to ADB quarterly reports on the execution of the Project and on the operation and management of the Project facilities within 45 days of end of each quarter. Such reports shall be submitted in such form and in such detail and within such a period as ADB shall reasonably request, and shall indicate, among other things, progress made and problems encountered during the quarter under review, steps taken or proposed to be taken to remedy these problems, and proposed program of activities and expected progress during the following quarter. (c) Promptly after physical completion of the Project, but in any event not later than three (3) months thereafter or such later date as ADB may agree for this purpose, the State through MPRDC shall prepare and furnish to ADB a report, in such form and in such detail as ADB shall reasonably request, on the execution and initial operation of the Project, including its cost, the performance by the State and MPRDC of its obligations under this Project Agreement and the accomplishment of the purposes of the Loan. The State through MPRDC shall (i) maintain separate accounts for the Project and for overall operations of MPRDC; (ii) have such accounts and related financial statements (balance sheet, statement of income and expenses, and related statements of MPRDC) audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB; and (iii) furnish to ADB, promptly after their preparation but in any event not later than nine (9) months after the close of the fiscal year to which they relate, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors' opinion on the use of the Loan proceeds and compliance with the covenants of the Loan Agreement as well as on the use of the procedures for statement of expenditures), all in the English language. The State and MPRDC as requested shall furnish to ADB such further information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request.

PA Section 2.09

Complied with. Separate accounts for the project and for operations were maintained. The audited financial statements were submitted to ADB, with some delay in the initial years of implementation.

Appendix 8 35

Covenant

Reference in Loan

Agreement Status of Compliance

The State and MPRDC as applicable shall enable ADB's representatives to inspect the Project, the Goods and Works financed out of the proceeds of the Loan, all other plants, sites, properties and equipment of the MPRDC and any relevant records and documents.

PA Section 2.10

Complied with.

(a) MPRDC shall, promptly as required, take all action within its powers to maintain its corporate existence, to carry on its operations, and to acquire, maintain and renew all rights, properties, powers, privileges and franchises which are necessary in the carrying out of the Project.. (b) MPRDC shall at all times conduct its business in accordance with sound administrative, financial, environmental and state roads development practices, and under the supervision of competent and experienced management and personnel. 4 (c) MPRDC shall at all times operate and maintain its plants, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound administrative, financial, engineering, environmental, state roads development, and maintenance and operational practices.

PA Section 2.11

Complied with.

Except as ADB may otherwise agree, MPRDC shall not sell, lease or otherwise dispose of any of its assets which shall be required for the efficient carrying on of its operations under the Project, or the disposal of which may prejudice its ability to perform satisfactorily any of its obligations under this Project Agreement.

PA Section 2.12

Complied with.

Except as ADB may otherwise agree, the State and MPRDC shall apply the proceeds of the Loan to the financing of expenditures on the Project in accordance with the provisions of the Loan Agreement and this Project Agreement, and shall ensure that all Goods, Works and consulting services financed out of such proceeds are used exclusively in the carrying out of the Project.

PA Section 2.13

Complied with.

Except as ADB may otherwise agree, the State and MPRDC shall duly perform all its respective obligations under the financing arrangements with the Borrower for the Loan, and this Project Agreement, and shall not take, or concur in, any action which would have the effect of assigning, amending, abrogating or waiving any rights or obligations of the parties under the financing arrangements with the Borrower for the Loan, and this Project Agreement.

PA Section 2.14

Complied with.

MPRDC shall promptly notify ADB of any proposal to amend, suspend or repeal any provision of its Charter/basic documents and shall afford ADB an

PA Section 2.15

Complied with.

36 Appendix 8

Covenant

Reference in Loan

Agreement Status of Compliance

adequate opportunity to comment on such proposal prior to taking any action thereon.

ADB = Asian Development Bank; Government of Madhya Pradesh = the state government; MPRDC = Madhya Pradesh Road Development Corporation; PPMS = project performance monitoring system. Source: The ADB project completion review mission.

Appendix 9 37

TECHNICAL ASSISTANCE COMPLETION REPORT

TA Number, Country, and Name: TA 4934–IND: Institutional Strengthening of Madhya Pradesh Public Works Department

Amount Approved: $1,000,000

Revised Amount: $1,000,000

Executing Agency: Madhya Pradesh Public Works Department

Source of Funding: Japan Special Fund

Amount Undisbursed: $34,385.92

Amount Utilized: $965,614.08

TA Approval TA Signing Fielding of First Date: Date: Consultants: 31 May 2007 8 August 2007 7 April 2008

TA Completion Date Original: Actual: 30 September 2008 30 September 2009 Account Closing Date Original: Actual: 30 September 2008 10 December 2010

Description In conjunction with Madhya Pradesh State Road Sector Project II,

1 a technical assistance (TA) for Institutional

Strengthening of Madhya Pradesh Public Works Department (MPPWD) was provided to support the state government’s sector development initiatives. The objective was to strengthen MPPWD’s capacity in road asset development and management. The TA was financed through a grant from the Japan Special Fund, funded by the Government of Japan, and carried out by an international consulting firm. It was planned that the TA would be implemented in 12 months, from October 2007 to September 2008. International consulting inputs of about 30 person-months and national inputs of about 40 person-months would be required. MPPWD was designated the executing agency for the TA.

Expected Impact, Outcome, and Outputs During TA implementation, MPPWD was to be equipped with (i) norm-based planning and budgeting, (ii) improved business practices, and (iii) improved human resources management. An alternative realigned structure of the state’s road sector institutions would be proposed for long-term road sector reform. This capacity building TA replicates in MPPWD capacity building initiatives similar to those undertaken for MPRDC in 2002 under the ADB-financed TA for Institutional Strengthening and Capacity Building for the Madhya Pradesh State Road Sector, which adopted best practices of planning and maintenance systems, financial management, and procurement. The TA was expected to make recommendations to modernize MPPWD’s operations by adopting technologies and practices in the context of the MPPWD environment. Delivery of Inputs and Conduct of Activities During TA implementation, an international consulting team (VicRoads International, Australia, in association with SMEC India Ltd.) was engaged using ADB’s quality- and cost-based selection (QCBS) procedures and in accordance with ADB’s Guidelines on the Use of Consultants. The contract commenced on 7 March 2008. The TA activities developed MPPWD capability in each of the target area through a process that involved (i) situational analysis of MPPWD practices, (ii) exposure to modern business practices applied in developing countries and applicability of suitable practices to MPPWD; (iii) development and documentation for adopting modern business practices in the state context; (iv) development of information management tools; (v) training in functional areas; (vi) identification of staff development and training requirements; and (vii)recommendations on the way forward for institutional reforms. In the early stages, the TA implementation was behind the agreed schedule, mainly due to working level staff having a limited appreciation of the technical assistance and the time required for extensive discussions in order to evolve an integrated approach when more than one department had shared or complementary roles. For improving coordination, communication and direction, MPPWD established an Institutional Strengthening Committee (ISC), which met twice a month and was the forum for MPPWD top management to monitor and make decisions to ensure that there would be no further slippage in the TA implementation. This helped catching up with the schedules and significantly facilitated TA activities. Upon request from MPPWD, the TA completion date was extended to 30 September 2009 to allow completion of the TA activities, especially the implementation of a financial management system. Upon completion, 30.55 person-months international and 40.02 person-months national consulting services were provided. The consultants’ work was rated as satisfactory. MPPWD provided counterpart support and financing, and its ISC facilitated the TA activities and regularly monitored consultants’ progress. The performance of MPPWD was satisfactory. ADB’s supervision of the TA was satisfactory. ADB monitored TA implementation through review missions and review of consultants’ inputs.

1 ADB. May 2007. Report and Recommendation of the President to the Board of Directors on Proposed Loan and

Technical Assistance Grant to India for the Madhya Pradesh State Roads Sector Project II. Manila.

38 Appendix 9

Evaluation of Outputs and Achievement of Outcome During implementation, the TA completed the outputs specified in the TOR including (i) reviewing MPPWD’s institutional structure and capacity in road development and providing recommendations, (ii) strengthening planning capacity by providing a framework for operationalizing the planning/RAMS unit, (iii) enhancing MPPWD’s business practices in procurement and contracting processes by preparing a set of contracting documents, (iv) strengthening quality assurance by upgrading laboratories, related facilities and arrangements, (v) functional specifications for procurement and customization of existing financial management system to meet MPPWD requirements as a replacement of paper-based accounting system, (vi) developing the human resource management by restructuring institutional arrangement and developing three year plans, and (vii) improving road maintenance efficiency by introducing a RAMS. In addition to the terms of reference, the TA supported setting up an IT Training Center and several basic computer training sessions were conducted. The TA also prepared a set of manuals and guidelines, and conducted a large number of in-country training sessions. During implementation, the consultants delivered the required reports in a timely manner, including the final report submitted in September 2009. All of these activities and achievements have substantially improved MPPWD’s capacity in road development and management. The achievements were well recognized by MPPWD. Overall Assessment and Rating The TA realized its objectives of assisting the state government to strengthen MPPWD’s capacity in road asset development and management. The TA implemented most of the tasks specified in the TOR and the achievements were well recognized by MPPWD. The TA is rated successful. Major Lessons The major lessons from TA implementation were (i) successful implementation of an institutional reform and development program requires strong commitment and support from the government, (ii) adequate facilities and budget for regular training for all new or adjusted institutional arrangements is necessary, (iii) close coordination between the consultants’ team and government’s technical team ensures effective delivery of envisaged outputs, (iv) design of technical assistance initiatives should incorporate effective mechanisms for implementing multi-department tasks, and (v) strong monitoring and evaluation systems should be adopted to ensure that the desired and sustainable outcomes are achieved. Recommendations and Follow-Up Actions While continuing policy dialogue with the state government and assisting institutional reform, ADB’s future technical assistance might enhance the technical capacity in policy and planning, road safety and asset management, as well as provide timely training as required by the government agencies. The TA report provided substantial recommendations for way forward in various functional areas. MPPWD should review and implement suitable recommendations, as appropriate.

ADB = Asian Development Bank, state government = Government of Madhya Pradesh, MPPWD = Madhya Pradesh Public Works Department, MPRDC = Madhya Pradesh Road Development Corporation, RAMS = road asset management system, TA = technical assistance, TOR = terms of reference. Prepared by: Arun Bajaj Designation and Division: Senior Project Officer (Transport), India Resident Mission In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

SUMMARY OF CONTRACT PACKAGES

S. No.

Contractor/Consultant Description/Nature of Works Procurement

Method Contract

Date

Contract Amount Actual Amount

Currency Amount Total Amount

(Rs)

ADB Financing

($)

Supervision Consultants

459,076,176 10,122,438

1

Intercontinental Consultants & Technocrats (P) Ltd., India in association with Theme Engg Services (P) Ltd., India

Construction supervision Package 1 (Bhopal)

QCBS 06/08/2007 Rs 187,832,212 244,490,060 5,045,222

$ 1,426,972

362,944

2 Scott Wilson India Pvt. Ltd., India

Construction supervision Package 2 (Jabalpur)

QCBS 06/08/2007 Rs 155,077,025 214,586,116 4,714,272

$ 899,880

Civil Works

14,283,665,791 16,566,517,923 306,708,510

3 NKG Infrastructure Ltd., India

Package 8: Hoshangabad-Nasrullaganj-Khategaon Road (SH-22)

ICB 24/09/2007 Rs. 774,595,979 910,096,798 16,974,843

4 Montecarlo Construction Ltd., India

Package 12: Balaghat-Nainpur Road (SH-11)

ICB 24/09/2007 Rs. 722,929,135 869,460,113 16,110,889

5 Sadbhav Engineering Ltd., India

Package 1: Shivpuri-Sheopur-Rajasthan Border (SH-6)

ICB 26/09/2007 Rs. 1,146,660,264 1,432,185,032 26,801,773

6 PNC Construction Co. Ltd., India

Package 2: Gairathganj-Silwani-Gadarwara (SH-44), NH-12 Junction to Silwani (SH-15) and Bareli-Pipariya Road (SH-19)

ICB 26/09/2007 Rs. 959,124,692 1,172,326,928 21,652,506

7 MSK Projects (India) Ltd., India

Package 7: Khandwa-Khargone Road (SH-26)

ICB 27/09/2007 Rs. 764,460,698 896,676,739 16,629,150

8 Sadbhav Engineering Ltd., India

Package 11: Seoni-Chiraidongri Road (SH-11A)

ICB 26/09/2007 Rs. 817,647,670 995,641,384 18,435,635

9 Reddy Veeranna Construction (P) Ltd., India

Package 5: Indore-Depalpur Road (MDR) &Birgodha-Ingoriya Road (MDR)

ICB 29/09/2007 Rs. 94,045,135 94,045,136 1,528,076

10 Montecarlo Construction Ltd., India

Package 14: Lakhnadon-Mandla-Dindori Road (SH-10)

ICB 24/10/2007 Rs. 1,299,987,659 1,609,381,059 29,611,123

11 JMC Projects (India) Ltd., India

Package 3: Mandleshwar-Kasrawad Road (SH-1) Kasrawad- Khargone Road (SH-31) and Banher--Maharashtra Border Road (SH-31)

ICB 01/11/2007 Rs. 907,091,919 1,095,094,499 20,367,459

App

end

ix 1

0 3

9

S. No.

Contractor/Consultant Description/Nature of Works Procurement

Method Contract

Date

Contract Amount Actual Amount

Currency Amount Total Amount

(Rs)

ADB Financing

($)

12 Prakash Ashphalting& Toll Highways Ltd. , India

Package 4: Barwaha-Dhamnod Road (SH-38), Khalghat-Manawar Road (SH-38), and Khalghat-Kasrawad Road (SH-31)

ICB 30/10/2007 Rs. 1,109,940,760 1,446,480,546 26,842,176

13 KNR Construction Ltd., India Package 6: Shyampur-Goras Road (SH-23) &Morena-Porsa Road (SH-2)

ICB 27/10/2007 Rs. 967,674,793 976,103,356 18,096,456

14 MBL Infrastructure Ltd., India Package 9: Nagod-Jasso-Saleha-Pawai-Mohindra-Semaria-Amanganj Road (SH10)

ICB 17/12/2007 Rs. 805,920,611 849,649,125 15,631,432

15 MBL Infrastructure Ltd., India Package 10: Amanganj-Malhera Road (SH-10)

ICB 17/12/2007 Rs. 667,449,456 604,634,712 11,177,071

16 Vijai Infrastructure Ltd., India Package 13: Tala-Shahdol (Chhatisgarh Border) (SH10) &Katni-Barhi-Tala (SH-10)

ICB 07/01/2008 Rs. 942,827,262 1,018,116,098 18,868,073

17 Ramky Infrastructure Ltd., India

Package 15: Bela-Govindgarh-Churhat (SH-52) &Rewa-Sirmor-Dabhore Road

ICB 25/01/2008 Rs. 1,082,435,436 1,422,238,907 26,125,389

18 Ketan Construction Ltd , India

Package 16: Bargawan-Bedhan Road (SH-6 Old)

ICB 12/06/2009 Rs. 333,520,505 299,010,497 5,472,416

19 SPC Infrastructure Pvt. Ltd., India

Package 18: Ingoria-Unhel Road in Ujjain District (MDR)

ICB 04/02/2010 Rs. 237,072,765 182,276,076 3,407,692

20 DilipBuildcom Pvt. Ltd., India Package 5A: Balance work for Package 5

ICB 12/01/2010 Rs. 445,603,391 456,464,566 8,642,490

21 DilipBuildcon Pvt. Ltd., India Package 17: Nasrullaganj-Koshmi Section of Nasrullaganj-Echhawar-Sehore Road

ICB 24/08/2009 Rs. 204,677,661 236,636,352 4,333,861

ICB = international competitive bidding, QCBS = quality- and cost-based selection. Source: ADB loan financial information system; Madhya Pradesh Roads Development Corporation.

40

Ap

pen

dix

10

Appendix 11 41

ECONOMIC REEVALUATION

1. Introduction. The Asian Development Bank (ADB) project completion review (PCR) mission conducted an economic reevaluation of the project using methodology similar to that used at appraisal and the updated data. Actual project capital costs were used in the reevaluation. Economic benefits were calculated by comparing the “with” project and “without” project scenarios. It was assumed that the original state of the roads would be retained in “without” project scenario. In the “with” project scenario, the roads have been improved so that vehicles could drive at higher speeds with lower operating costs and reduced travel time. Consequently, the economic internal rate of return (EIRR) was calculated and assessed for the project, and sensitivity analysis was conducted. A. Traffic Analysis

2. Baseline traffic surveys for the project roads were conducted for each subproject in 2007 for the original subprojects and in 2009–2010 for the additional subprojects. The actual traffic counts were collected by six vehicle types and then converted into annual average daily traffic (AADT). Table A11.1 shows the survey results.

Table A11.1: Baseline Traffic Survey (Annual average daily traffic, number of vehicles)

Subproject No.

year Car/van Motor Cycle

Bus Truck Large Truck

Tractor Total

1 2007 744 316 236 912 27 144 2,379

2 2007 670 606 297 951 23 540 3,087

3 2007 1,274 589 704 2,766 27 315 5,675

4 2007 549 771 351 567 9 347 2,594

5 2007 538 261 340 240 5 113 1,497

6 2007 647 456 123 264 5 216 1,711

7 2007 1,192 506 876 2,325 27 454 5,380

8 2007 696 806 378 144 5 90 2,119

9 2007 1,533 776 231 200 10 195 2,945

10 2007 562 250 215 70 11 13 1,121

11 2007 2,432 1,760 710 240 45 162 5,349

12 2007 1,011 655 340 65 10 160 2,241

13 2007 315 137 125 60 6 19 662

14 2007 2,407 1,375 1,100 280 25 130 5,317

15 2007 2,418 1,100 1,175 215 37 350 5,295

16 2009 332 170 105 45 14 17 683

17 2009 159 203 108 120 0 149 739

18 2010 120 220 126 183 5 162 816

Average 978 609 419 536 16 199 2,756 Source: Madhya Pradesh Road Development Corporation

3. At civil works completion, follow-up traffic surveys were conducted in 2010–2011 for the same vehicle types as at baseline survey. Compared with the baseline survey, actual traffic at project completion increased by an average of 9.4% per annum. Traffic growth at appraisal was projected to average 7.4% per annum in 2007–2011). The actual traffic volume was also much higher than that projected at appraisal (about 38% higher in 2010). The actual traffic at project completion is in Table A11.2.

42 Appendix 11

Table A11.2: Traffic Survey at Project Completion (Annual average daily traffic, number of vehicles)

Subproject No.

year Car/van Motor cycle

Bus Truck Large Truck

Tractor Total

1 2010 858 376 299 1,056 63 167 2,819

2 2010 886 725 432 1,092 54 738 3,927

3 2010 1,461 640 1,092 3,276 63 347 6,879

4 2010 728 961 402 786 23 369 3,269

5 2010 667 319 399 300 14 162 1,861

6 2010 806 506 147 297 27 261 2,044

7 2010 1,590 673 1,149 2,720 32 549 6,713

8 2010 838 1,064 519 330 41 162 2,954

9 2010 2,360 1,150 680 295 25 300 4,810

10 2010 795 270 285 100 20 35 1,505

11 2010 2,684 2,100 850 390 70 175 6,269

12 2010 1,390 900 485 125 20 220 3,140

13 2010 334 142 139 75 9 31 730

14 2010 4,144 1,800 1,250 550 130 170 8,044

15 2010 3,170 1,500 1,410 290 40 400 6,810

16 2011 445 295 135 90 40 22 1,027

17 2011 379 410 204 147 - 163 1,303

18 2011 147 231 132 201 9 171 891

Average 1,316 781 556 673 38 247 3,611 Source: Madhya Pradesh Road Development Corporation

4. Taking into consideration the actual traffic status and increase in traffic demand, the future traffic growth rates predicted at appraisal were reassessed. The following table presents the adopted traffic increase rates for future years.

Table A11.3: Adjusted Traffic Forecast (% increase per annum)

Car/van Motor cycle

Bus Truck Large Truck

Tractor Average

2007–2011 10.4% 8.7% 9.9% 7.9% 32.7% 7.5% 9.4%

2012–2016 10.0% 8.0% 6.0% 7.0% 10.0% 6.0% 7.8%

2017–2021 6.4% 4.0% 3.6% 5.0% 7.5% 5.0% 5.3%

2022–2026 6.1% 3.0% 3.0% 3.0% 6.9% 3.0% 4.2% Source: The Asian Development Bank project completion review mission.

B. Economic Costs

5. Actual project cost was $287.0 million equivalent, or about 3.3% lower than the appraisal estimate. Actual annual investment costs for the project were used in the economic reevaluation. For the maintenance costs, national norms were used, including routine maintenance costs (ordinary repairs) at Rs95,057 per km for two-lane state roads and periodical maintenance cost (overlay) at 20% of capital cost. The periodical maintenance was scheduled to take place every 5 years. All of the capital and maintenance costs were adjusted to 2014 price by applying price indexes over the period of 2010–2014. The economic costs were estimated by applying to the financial costs a conversion factor of 0.90, which was adopted from other projects, such as the Madhya Pradesh State Roads Sector Development Project. It was also assumed that the routine maintenance cost would increase by 3% annually along with road condition deterioration.

Appendix 11 43

C. Economic Benefits

6. Due to improvement of road conditions, the vehicles now drive at much faster speeds, from 25–30 km/h before the project to 30–60 km/hr after the project, which has led to substantial economic benefits in the project areas. Using similar methodology as that at appraisal, two types of economic benefits were captured for the project roads, including (i) savings in vehicle operation cost (VOC), and (ii) savings in passenger travel time costs. The VOC savings were recalculated using the unit VOC data by road roughness, which were adopted from a similar project in the state and adjusted to 2014 prices.1 The VOC savings per vehicle-km were estimated at Rs1.6 for cars and vans, Rs.0.5 for motorcycles, Rs5.6 for buses, Rs6.4 for light trucks, Rs9.6 for large trucks, and Rs2.4 for tractors. Passenger travel time cost savings were recalculated for different types of passenger vehicles (car/van, motorcycle, and bus). The passenger time cost was derived from the per capita income of Madhya Pradesh in 2010/11.2This per capita income was adjusted to 2014 prices by applying 5% annual increase. Other factors taken into account in calculating passenger time cost savings included average vehicle loads, percentage of work-related trips, time costs by different road users, and travel speeds for different types of passenger vehicles. Average passenger vehicle speeds were assumed at 30 km/h–60 km/h for the “with” project scenario, and 25 km/h–30 km/h for the “without” project scenario. The benefit calculation results showed that the benefit distributions in 2014 were about 67% from VOC savings and 33% from passenger time cost savings. D. Economic Reevaluation and Sensitivity Test

7. Based on the assumptions and parameters above, the EIRR for the project was calculated for a period of 24 years (2006–2029), including project implementation period and 20 years of operation (with some overlaps of construction and operation). The project residual of 15% of the total capital cost was added to the last year. The EIRR was calculated at 29.7% for the whole project, which is higher than that estimated at appraisal (average 26.2%).3 The higher EIRR was mainly caused by higher traffic volumes and lower project investment cost. The EIRR is above the ADB recommended discount rate of 12%. The project is therefore considered to be economically viable. The detailed EIRR calculations for the project are in Table A11.4. 8. The EIRR was subjected to sensitivity analysis to test different scenarios of maintenance costs and benefits. The sensitivity analysis results indicated that the project continued to be economically viable for all scenarios. If a 50% maintenance cost increase would be combined with a 50% benefit reduction, the EIRR would be still 15.7% for the whole project. The sensitivity analysis confirmed that the project has robust economic viability. The sensitivity analysis also showed that the EIRR is more sensitive to changes in economic benefits. For this reason, the state government needs to pay attention to the socioeconomic development of the project area, foster local transport services, and increase incomes for rural road users. The results of the sensitivity analysis are in Table A11.5.

1 The roughness of the project roads was about 3.5–7.0 before the project and 1.5–2.2 at completion.

2 Government of Madhya Pradesh. Twelfth five Year Plan (2012-2017). Planning, Economic and Statistics

Department.. 3 The EIRRs at appraisal were 13%–49% for the proposed 22 roads.

44 Appendix 11

Table A11.4: Economic Reevaluation (Rs million)

Costs Benefits Net Net Present Value Year Capital

Mainte-nance

Total VOC Time Cost

Total Benefit

2006 1,864.8

1,864.8

-1,864.8 -4,617.2

2007 3,317.2

3,317.2

-3,317.2 -7,333.3

2008 7,470.3

7,470.3

-7,470.3 -14,745.0

2009 8,455.5

8,455.5 - - - -8,455.5 -14,901.4

2010 1,318.6 19.7 1,338.4 4,723.3 2,228.7 6,952.0 5,613.6 8,833.1

2011 334.0 108.5 442.6 5,185.7 2,455.5 7,641.2 7,198.6 10,113.6

2012

197.3 197.3 5,569.3 2,661.3 8,230.5 8,033.2 10,076.9

2013

203.2 203.2 5,982.4 2,885.2 8,867.6 8,664.4 9,704.1

2014

209.3 209.3 6,427.4 3,129.0 9,556.5 9,347.2 9,347.2

2015

215.6 215.6 6,907.0 3,394.5 10,301.6 10,086.0 9,005.3

2016 4,585.9 197.3 4,783.2 7,424.0 3,683.7 11,107.7 6,324.5 5,041.8

2017

203.2 203.2 7,795.3 3,881.6 11,676.9 11,473.7 8,166.8

2018

209.3 209.3 8,186.1 4,090.9 12,277.0 12,067.7 7,669.2

2019

215.6 215.6 8,597.6 4,312.0 12,909.6 12,694.0 7,202.9

2020

222.1 222.1 9,030.8 4,545.9 13,576.7 13,354.6 6,765.9

2021 4,585.9 197.3 4,783.2 9,486.9 4,793.2 14,280.1 9,496.9 4,295.9

2022

203.2 203.2 9,858.4 5,035.3 14,893.7 14,690.4 5,933.2

2023

209.3 209.3 10,246.4 5,290.6 15,537.1 15,327.8 5,527.3

2024

215.6 215.6 10,652.0 5,560.0 16,211.9 15,996.4 5,150.4

2025

222.1 222.1 11,075.8 5,844.1 16,920.0 16,697.9 4,800.2

2026 4,585.9 197.3 4,783.2 11,519.0 6,144.0 17,662.9 12,879.7 3,305.9

2027

203.2 203.2 11,982.3 6,460.4 18,442.8 18,239.5 4,180.0

2028

209.3 209.3 12,467.0 6,794.4 19,261.4 19,052.1 3,898.4

2029 -3,414.1 215.6 -3,198.5 12,974.1 7,147.0 20,121.1 23,319.5 4,260.4

Economic Net Present Value (ENPV): 91,682

Economic Internal Rate of Return (EIRR): 29.7%

Discount Rate: 12%

EIRR = economic internal rate of return; ENPV = economic net present value; VOC = vehicle operating cost. Source: The Asian Development Bank project completion review mission.

Appendix 11 45

A11.5: Sensitivity Test

Tests EIRR (%)

ENPV@12% (Rsmillion) Case

Maintenance Cost

Benefits

Base Case 29.7% 91,681.8

Changes (+/-) 10% 29.6% 90,762.0

20% 29.5% 89,842.3

50% 29.2% 87,083.2

10% 31.9% 106,121.4

20% 34.0% 120,561.0

-10% 27.5% 77,242.1

-20% 25.1% 62,802.5

-50% 16.7% 19,483.6

10% -10% 27.3% 76,322.4

20% -20% 24.8% 60,963.1

50% -50% 15.7% 14,885.0 EIRR = economic internal rate of return; ENPV = economic net present value. Source: The Asian Development Bank project completion review mission.

46 Appendix 12

SUMMARY OF THE SOCIOECONOMIC IMPACTS

1. Introduction. The supervision consultants carried out the baseline surveys in 2007 and follow-up surveys at civil works completion in 2010－2011. The project performance monitoring and evaluation reports were prepared and submitted to ADB in 2011 for the Jabalpur packages and 2012 for Bhopal packages.1The monitoring reports indicated that the project had brought substantial positive socioeconomic impacts to the project areas. A. Socioeconomic Development in Madhya Pradesh 2. The state of Madhya Pradesh was formed on 1 November 1956 as the result of the reorganization of states in India. The state now has 10 Commissioner Divisions, 50 Districts, 342 Sub-districts (272 Tehsils) and 313 Community Development Blocks, including 89 tribal development blocks, 54,903 villages and 476 towns. According to the 2011 census, the state had a population of 72.598 million compared to 60.348 million in 2001, registering growth of 20.3% in that decade. The state population is about 6% of the country's total population and ranked the 6th among all states in India. Madhya Pradesh is now the second largest state in India with an area of 308,000 sq km, constituting 9.4% of the total geographical area. The incidence of poverty in Madhya Pradesh is one of the highest in India. Poverty declined from 48.6% in 2004/05 to 36.7% in 2009/10. 3. The Gross State Domestic Product (GSDP) growth was targeted to average 7.9% per annum during the Eleventh Five-Year Plan period (2007–2012). The actual GSDP annual growth rates at 2004/05 prices were 9.23% in 2006/07, 4.69% in 2007/08, 12.37% in 2008/09, 9.55% in 2009/10, and 8.96% in 2010/11. The per capita income of the state increased from Rs15,442 in 2004/05 to Rs33,906 in the year 2010/11. At constant prices, the growth rate averaged 6.64% per annum for Madhya Pradesh. The Twelfth Five-year Plan period (2012–2017) has a target average growth of 9% per annum.2 4. The Twelfth Five-Year Plan emphasizes that it is essential that Madhya Pradesh steps up the road building activity to cope with ever increasing requirements. The strong road network will undoubtedly help overall development of the state, because roads play a vital role in the strategic, social, economic, educational, industrial and overall development of the area. Madhya Pradesh Public Works Department (MPPWD) has proposed an outlay of Rs167.050 billion for implementing the plan, and set a target of construction of 455 major bridges, 36 railway overbridges, and construction and upgrading of 21,955 km roads. B. Connectivity Improvement by the Project 5. Under the project, 25 state roads totaling 1,698.64 km were rehabilitated or reconstructed, involving widening and strengthening the roads from single-lane or intermediate-lane roads to intermediate-lane or two-lane standards with bituminous pavement.3 The civil works also included strengthening/repairing and/or constructing133 bridges and 1,270 culverts, and installing road signage and furniture. The project roads were well built and of good quality,

1 MPRDC. 2012. Project Performance Monitoring and Evaluation Report (Package 1–Bhopal). Intercontinental

Consultants and Technocrats Pvt. Ltd. MPRDC. 2011. Project Performance Management System (Package 2–Jabalpur). Scott Wilson Ltd. - Jabalpur. 2 Government of Madhya Pradesh.Twelfth Five Year Plan (2012-2017).Planning, Economic and Statistics

Department. Bhopal. 3 In the built-up sections and water logged areas, cement concrete pavement was adopted.

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and with international roughness indices of 1.5–2.2. The average vehicle speed has increased from 25–30 km/h before the project to 40–60 km/h after the project. 6. The improvement of the project roads has led to a substantial reduction in vehicle traveling time and transport costs for both passengers and freight. According to the surveys after project completion, the average vehicle traveling time fell by an average 52%. The vehicle operation cost increased by an average 8.0%–8.5%. However, considering the average 10.1% annual increase of consumer prices and 20% increase in fuel price in the period of 2008–2011, the actual vehicle operation cost fell by about 30–40%. The project has substantially improved the connectivity in the project areas, which has led to remarkable socioeconomic impacts to the local development, including stimulating industrial and agricultural development, increasing household income and reducing poverty, increasing land prices, accessing more social and health services, and generating substantial employment opportunities, among others.

7. The total number of vehicles registered in Madhya Pradesh was 4.609 million in 2005/06 and had increased to 6.591 million in 2010/11, a growth of 7.42% per annum during the period. Of the total registered vehicles, non-commercial vehicles accounted for more than 90%. Motorcycles are the major constituent of non-commercial vehicles population. The number of commercial vehicles like taxicabs, three wheelers, buses, and trucks increased from 0.499 million in 2005/06 to 0.779 million in 2009/10 registering a growth of 11.78% per annum during those four years.

C. Socioeconomic Impacts of the Project 8. Employment generation. During construction, the project generated considerable work opportunities for local people, especially for the poor. According to the monitoring reports, total direct employment of 1,720 person-years was generated by the project, including 759 person-years of unskilled labor. In addition, construction materials’ manufacturers also increased their local manpower to meet the project demands for materials. Indirect employment of 2,459 person-months was also generated. Such work opportunities increased the income of the local people, especially the poor households. 9. Accessibility to market. Due to road improvement and lower transport cost, farmers are now able to go to larger markets and to sell their products at higher prices. According to the discussions with local people, improved accessibility to markets has increased the negotiating power of the farmers while at the same time providing easy access to information and keeping them abreast of market conditions. Further, improved accessibility facilitates interaction with fellow farmers from other villages and enables knowledge sharing. Higher prices of agricultural products and application of new technology has stimulated fast agriculture development in the project area. According to the statistics, the agriculture sector development (including animal husbandry) in Madhya Pradesh increased at an annual average rate of 9.28% in 2007–2010. 10. Increased household income and poverty reduction. Due to construction activities and impacts of the project roads, the average rural household income has increased substantially. The baseline surveys showed that the average household income before the project was about Rs7,126 per month in 2007. The surveys after project completion showed that the household income increased to an average Rs12,719 per month i.e., about 78% increase over baseline figures. The increased income was partially contributed by employment opportunities provided by the project and the agriculture and industrial developments in the project areas. Meanwhile, the poverty ratio in the project areas decreased from an average of 32% at baseline to 28% after project completion.

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11. Accessibility to health care. Due to improved road connectivity in the project areas, the accessibility to health care has improved significantly. The surveys showed that the average time required to reach public health centers was 52 minutes at baseline improving to 22 minutes after project completion—a 58% reduction. The average time required to reach major hospitals was 2.10 hours at baseline, improving to 1.05 hours after project completion—a 50% reduction. Besides, the frequency of the public transport services also increased, helping more people access the public health centers and the major hospitals.

12. Access to other social services. Consultations with local people revealed that (i) students now can study at bigger cities facilitated by improved road condition and increased frequency of public transport. This is visible both for girls and boys who want to go for higher education; (ii) villagers can access better health and other facilities in bigger centers due to better access and riding quality and faster transport. Also, doctors and health workers are more willing to visit far away patients; and (iii) access to banking facilities has improved due to better road conditions, which also facilitated access to loans for agricultural purposes as traveling became easier for both farmers and banking officials.

13. Roadside business development. With traffic increasing along the project roads, large numbers of new hotels, shops and garages were opened to provide a variety of services to passerby and local people. According to the surveys at baseline and after project completion, the hotels and roadside eateries increased by 61%, shops and kiosks increased by 45%, and garages and workshops increased by 48%. These roadside businesses support the fast growing traffic as well as provided substantial employment opportunities to the local people. 14. Increase in land prices. Due to the improved connectivity and socioeconomic development in the project areas, land prices along the project roads have increased sharply. According to local inquiries during completion surveys, the average price for agriculture land increased from Rs204,930 per acre at baseline to Rs356,122 per acre after project completion, which amounts to a 74% increase. The average price for commercial land increased from Rs4.229 million to Rs8.930 million per acre, which amounts to a 111% increase. 15. Road safety. During project design, black spot locations on the project roads were identified. During implementation, safety features such as metal beam crash barriers, proper road markings, and sign boards had been incorporated into the design and construction of project roads. Police data collected from the local police stations at baseline and during monitoring surveys shows that total road accidents were reduced by 12%, which included a 22% reduction in non-fatal accidents and a 6% reduction in fatal accidents.

CONTRIBUTION TO ADB RESULTS FRAMEWORK

No. Level 2 Result Framework

Indicator Target

Revised Target

Aggregate Output Methods/Comments

Transport

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

Average daily traffic of 4,564,372 vehicles-kilometers in 2010.

Average daily traffic of 6,133,506 vehicles-kilometers in 2010.

The target was projected based on the traffic survey and forecast in the RRP. The average daily traffic at baseline was 1,970 vehicles in 2006. It was forecast that the traffic would increase at an average 7.4% per year in 2007

－2011. The aggregate output is the actual

observed traffic during the first year of traffic operations on the improved project roads.

2 Roads built or upgraded: expressways and national highways (kilometers)

About 1,800 km of state roads would be rehabilitated or reconstructed

Total 1,698.64 km of state roads were rehabilitated or reconstructed

For this sector project, the candidate project roads were appraised, selected and designed during implementation. All the candidate project roads identified at appraisal were selected and rehabilitated. Three additional project roads were selected and rehabilitated. Actual lengths of all project roads were measured during implementation. At completion, 25 project roads comprising 1,698.64 km were rehabilitated or reconstructed as per specific rehabilitation requirements utilizing the loan funds.

Source: The Asian Development Bank project completion review mission

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