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Completion Report
Project Number: 43322-012 Grant Number: 0180 July 2018
Timor-Leste: Road Network Development Sector
Project
This document is being disclosed to the public in accordance with ADB’s Public Communications Policy 2011.
CURRENCY EQUIVALENTS
The currency in Timor-Leste is the United States dollar.
ABBREVIATIONS
ADB – Asian Development Bank DRBFC – Directorate of Roads, Bridges, and Flood Control EIRR – economic internal rate of return EMP – environmental management plan ICB – international competitive bidding IEE – initial environmental examination JICA – Japan International Cooperation Agency km – kilometer MOF – Minister of Finance MOI – Ministry of Infrastructure MTRNDP – Medium-Term Road Network Development Program NCB – national competitive bidding PBM – performance-based maintenance PISC – project implementation support consultant PMU – project management unit RMA – road maintenance advisor RMC – road maintenance contract RME – road maintenance engineer RMP – road maintenance plan SDP – strategic development plan TA – technical assistance
NOTES
(i) The fiscal year (FY) of the Government of Timor-Leste and its agencies ends on 31 December. “FY” before a calendar year denotes the year in which the fiscal year ends, e.g., FY2018 ends on 31 December 2018.
(ii) In this report, “$” refers to United States dollars.
Vice-President Stephen P. Groff, Operations 2 Director General Ma. Carmela D. Locsin, Pacific Department (PARD) Director Olly Norojono, Transport, Energy and Natural Resources Division, PARD Team leader Rustam Ishenaliev, Principal Infrastructure Specialist, PARD Team members Maila Conchita Abao, Project Analyst, PARD
Pedro Aquino, Senior Project Officer, PARD Ninebeth Carandang, Safeguards Specialist, PARD Rommel Rabanal, Senior Economics Officer, PARD Cha-Sang Shim, Transport Specialist, PARD Jean Williams, Senior Environment Specialist, PARD
In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.
CONTENTS
Page
BASIC DATA i
MAP v
I. PROJECT DESCRIPTION 1
II. DESIGN AND IMPLEMENTATION 3
A. Project Design and Formulation 3 B. Project Outputs 4 C. Project Costs and Financing 7 D. Disbursements 7 E. Project Schedule 8 F. Implementation Arrangements 8 G. Technical Assistance 8 H. Consultant Recruitment and Procurement 9 I. Safeguards 9 J. Monitoring and Reporting 11
III. EVALUATION OF PERFORMANCE 11
A. Relevance 11 B. Effectiveness 12 C. Efficiency 12 D. Sustainability 12 E. Development Impact 13 F. Performance of the Borrower and the Executing Agency 13 G. Performance of the Asian Development Bank 13 H. Overall Assessment 14
IV. ISSUES, LESSONS, AND RECOMMENDATIONS 14
A. Issues and Lessons 14 B. Recommendations 15
APPENDIXES
1. Design and Monitoring Framework 16
2. Road Maintenance 20
3. Project Cost at Appraisal and Actual 25
4. Disbursement of ADB Loan and Grant Proceeds 28
5. Implementation Schedule (Planned vs Actual) 29
6. Contract Packages for Civil Works (Planned vs Actual) 30
7. Contract Awards of ADB Loan and Grant Proceeds 31
8. Status of Compliance with Grant Covenants 32
9. Economic Re-evaluation 40
BASIC DATA A. Grant Identification
1. Country The Democratic Republic of Timor-Leste 2. Grant number and financing source 0180, Asian Development Fund 3. Project title Road Network Development Sector
Project 4. Recipient Government of the Democratic Republic of
Timor-Leste 5. Executing agency Ministry of Development and Institutional
Reforms1 6. Amount of Grant $46,000,000 7. Project completion report number PCR:TIM 1689
B. Grant Data
1. Appraisal – Date started – Date completed
11 May 2009 25 May 2009
2. Grant negotiations – Date started – Date completed
6 October 2009 6 October 2009
3. Date of Board approval 20 November 2009 4. Date of Grant agreement 26 February 2010 5. Date of Grant effectiveness – In Grant agreement – Actual – Number of extensions
27 May 2010 5 April 2010 0
6. Project completion date
– Appraisal – Actual
30 November 2014 31 October 2015
7. Grant closing date – In Grant agreement – Actual – Number of extensions
31 May 2015 31 May 2016 1
8. Financial closing date
– Actual 15 December 2017
1 Formerly the Ministry of Infrastructure.
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9. Disbursements
a. Dates
Initial Disbursement 24 May 2010
Final Disbursement 5 April 2017
Time Interval 82 months
Effective Date
5 April 2010
Actual Closing Date 15 December 2017a
Time Interval 92 months
a Financial closing date.
b. Amount ($ ‘000)
Category
Original Allocation
(1)
Increased during
Implementation (2)
Reallocated during
Implementation (3)
Last Revised
Allocation (4=1+2–3)
Amount Disbursed
(5)
Undisbursed Balance (6 = 4–5)
Works
-Road rehabilitation
-Road maintenance
-Roads and parking areas of border posts
24,750.00
7,000.00
950.00
3,190.00
2,000.00
950.00
27,940.00
9,000.00
0.00
27,414.01
9,498.02
0.00
525.98
(498.02)
0.00
Equipment 200.00 200.00 199.10 0.90
Project management 2,100.00 460.00 2,560.00 2,848.58 (288.58)
Consulting services 4,540.000 1,760.00 6,300.00 5,940.63 359.36
Unallocated 6,460.00 6,460.00
Total 46,000.00 7,410.00 7,410.00 46,000.00 45,900.35 99.64
C. Project Data
1. Project cost ($ ‘000)
Cost Appraisal Estimate Actual
Foreign exchange cost 46,000.00 45,900.35
Local currency cost 6,900.00 7,116.94
Total 52,900.00 53,069.62
2. Financing plan ($ ‘000)
Cost Appraisal Estimate Actual
Implementation cost
Borrower financed 6,900.00 7,116.94
ADB financed 46,000.00 45,900.35
Other external financing
Total implementation cost 52,900.00 53,069.62
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3. Cost breakdown by project component ($ ‘000)
Component Appraisal Estimate Actual
A. Investment Costs
1. Civil Works
a. Road rehabilitation
b. Road maintenance
c. Access roads and parking areas of border posts
27,500.00
10,000.00
1,000.00
30,464.07
13,578.67
0.00
2. Consulting Services
a. Project implementation support
b. Financial auditing
4,490.00
50.00
5,888.13
59.76
3. Project management 2,100.00 2,879.87
4. Equipment 200.00 199.10
B. Contingencies 7,560.00 0.00
Total 52,900.00 53,069.62
4. Project schedule
Item Appraisal Estimate Actual
Date of contract with consultants
1. Project implementation & support consultant
2. Chief technical advisor
3. Finance administrator
4. Road maintenance engineer
Q3 2010
Q1 2010
Q1 2010
Q1 2010
16 December 2010
1 October 2009a
14 September 2010
1 December 2010
Civil works contract
1. Road Rehabilitation
a. Liquica–Mota Ain Road 1 (R1)
Date of award
Completion of work
Q2 2011
Q4 2013
10 October 2011
14 November 2013
b. Liquica–Mota Ain Road 2 (R2)
Date of award
Completion of work
Q2 2011
Q4 2014
31 July 2012
30 September 2015
2. Road Maintenance
a. Batugade—Maliana Road 1 (RMC1)
Date of award
Completion of work
Q2 2011
Q4 2013
10 October 2011
14 November 2013
b. Batugade—Maliana Road 2 (RMC2)
Date of award
Completion of work
Q2 2011
Q4 2013
31 July 2012
29 November 2014
c. Batugade—Maliana Road 3 (RMC3)
Date of award
Completion of work
Q2 2011
Q4 2013
10 October 2011
7 December 2013
d. Batugade—Maliana Road 4 (RMC4)
Date of award
Completion of work
Q2 2011
Q4 2013
19 July 2012
12 December 2013
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Item Appraisal Estimate Actual
3. Performance-Based Contracts
a. Performance-Based Contract 1
Date of contract
Not in PP
2 April 2014
b. Performance-Based Contract 2
Date of contract
Not in PP 19 February 2015
Equipment and supplies Q4 2010 6 December 2010
PP = procurement plan, RMC = road maintenance contract. a Retroactive financing was allowed under the grant.
5. Project performance report ratings
Implementation Period
Ratings
Development Objectives Implementation Progress
From 31 May 2010 to 31 December 2010 Satisfactory Satisfactory From 1 January 2011 to 31 March 2011 Satisfactory Satisfactory Single Project Rating From 1 April 2011 to 31 March 2011 On track From 1 January 2012 to 31 December 2012 On track From 1 January 2013 to 31 December 2013 On track From 1 January 2014 to 31 December 2015 On track From 1 January 2014 to 31 December 2016 On track From 1 January 2014 to 31 March 2017 On track
D. Data on Asian Development Bank Missions
Name of Mission Date No. of
Persons No. of Person-
Days Specialization of
Membersa
Fact-Finding Mission 11–25 May 2009 6 90 a, e, f, g, j, k Inception Mission 22–30 March 2010 3 27 a, b, c Review Mission 1 11 March 2011 4 44 a, e, l Review Mission 13–21 September 2012 7 66 a, b, e, g, h, i Review Mission 13–21 August 2013 5 35 a, h, i, l Review Mission 25–27 August 2014 1 3 a Review Mission 19–30 May 2015 1 9 a Review Mission 21 November–
2 December 2016 4 40 a, b, e, k
Project completion review 2 – 6 July 2018 1 4 a a a = transport and infrastructure specialist; b = project analyst; c= governance specialist; d = counsel; e = safeguards
environment specialist; f = climate change specialist; g = social development specialist; h = national social development specialist; I = national project analyst; j = economist; k = project administration unit head; l = national portfolio management officer.
I. PROJECT DESCRIPTION 1. The Asian Development Bank (ADB) approved the grant for the Road Network Development Sector Project on 20 November 2009.1 The project aimed to support the national priorities and development vision of the Democratic Republic of Timor-Leste by establishing an improved and sustainable road network and strengthening sub-regional cooperation with Indonesia through upgrading facilities at border posts. 2. The declaration of independence from Indonesia by the people of Timor-Leste in 1999 was followed by a conflict that resulted in massive internal displacements and damage to infrastructure, including roads and bridges. Restoration of roads became critical to enable the return of the displaced population and the resumption of economic activity. ADB took the lead in implementing the infrastructure restoration program. An Emergency Infrastructure Rehabilitation Project focusing on roads and related structures was completed in two phases utilizing the Trust Fund for East Timor, administered by the International Development Association.2 Due to the emergency conditions, the scope of the project was kept flexible to allow adding rehabilitation works that were not identified earlier. While 80% of phase 1 resources were used for roads and 20% for ports and power infrastructure, the supplementary grant under phase 2 was used entirely for roads. Under phase 1, efforts were made to introduce a computer-based road asset management system. However, this could not continue due to the low capacity of the responsible government agency. Phase 2 introduced routine maintenance operations by utilizing communities and village groups. 3. The road network in Timor-Leste consists of about 1,400 kilometers (km) of national roads, 800 km of districts or municipal roads, 700 km of urban roads, and 1,700 km of core rural roads for a total of about 4,600 km. In addition, there are an estimated 4,100 km of non-core rural roads.3 The network is susceptible to damages by natural causes. Mountainous terrain, sensitive geology, and heavy rainfall compounded with lack of maintenance, make it difficult to keep the network operational. In its 2002 National Development Plan, the government set a 10-year vision to bring the road network to a sustainable condition where the regular maintenance and lifecycle cost is minimized, road closures are reduced and manageable, and road access is reliable.4 In line with this vision, in 2005, ADB provided assistance to Timor-Leste through an Asian Development Fund grant for the Road Sector Improvement Project to rehabilitate and maintain four crucial roads in agricultural areas to promote economic and social development. The project also implemented a community empowerment component aimed at strengthening the capacity of rural communities to maintain their connectivity to the national road network. 4. The current project followed the same vision but was based on an extensive study of the national road network under project preparatory work.5 The study evaluated 63 road links, of which 48 were national (1,675 km) and 15 were district (1,410 km). Based on an economic assessment, ‘repair and maintenance’ was selected as the preferred road improvement strategy. Thirty-two road links were considered essential and formed the core road network that was 1 Asian Development Bank (ADB). 2009. Report and Recommendation of the President to the Board of Directors on a
Proposed Asian Development Fund Grant to the Democratic Republic of Timor-Leste for the Road Network Development Sector Project. Manila.
2 ADB. 2010. Project Performance Evaluation of the Timor-Leste: Emergency Infrastructure Rehabilitation Project, Phase 1 and 2. Manila.
3 Government of Timor-Leste, Ministry of Public Works, Transport and Communications. 2015. Rural Roads Master Plan and Investment Strategy (2016–2020). Dili.
4 Government of Timor-Leste, Planning Commission. 2002. The National Development Plan. Dili. 5 ADB. 2008. Technical Assistance to the Democratic Republic of Timor-Leste for Preparing the Road Network
Development Project. Manila (TA 7100-TIM).
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included in the Medium-Term Road Network Development Program (MTRNDP). Five criteria guided the program: (i) fostering economic development, (ii) improving the quality of life of residents, (iii) serving rural and remote areas, (iv) enhancing regional development within the country, and (v) creating employment. 5. At appraisal, the project envisaged four components to deliver the intended outputs:
(i) Road rehabilitation. The selection of subprojects from the MTRNDP followed a sector modality. Two subprojects (Liquica–Batugade–Mota Ain and Ermera–Maliana, totaling about 140 km, were appraised as part of project preparatory work to (a) serve as a model for undertaking the technical, economic, social, and environmental assessments required by the project’s eligibility criteria, and (b) assist in determining the feasibility of other roads selected under the project. The project was expected to rehabilitate about 232 km of priority national and districts roads to a maintainable condition.
(ii) Road maintenance program. The project targeted the development and
implementation of a road maintenance program (RMP), initially on a pilot basis covering about 302 km of national roads in three border districts (Bobonaro, Covalima, and Oecussi). Subsequently, in years 4–5 of implementation, the executing agency—the Ministry of Infrastructure (MOI) through its Directorate of Roads, Bridges and Flood Control (DRBFC)—was expected to take over the implementation of the RMP and gradually expand it to core national roads in the rest of the country.6 The RMP implementation also promoted national contractors by packaging contracts within the threshold for national competitive bidding (NCB). The objective was to enable national contractors to gain experience and develop capacity. The project implementation support consultants (PISC) were to provide training to small national contractors in technical, contractual, and management aspects of road maintenance contracts. The project design envisaged that the RMP would generate significant employment opportunities that would reduce the high levels of unemployment in the rural areas.
(iii) Improving border post facilities. The project was expected to supplement the
government’s efforts of constructing new cross-border facilities at selected border posts. Specifically, the project envisaged the construction of roads and parking lots at border posts located at Mota Ain, Oesilo, Sakato, and Salele. The government was expected to follow the ADB Procurement Guidelines (2007, as amended from time to time) for works financed under the project.
(iv) Consulting services. The terms of reference for PISC included project
management, feasibility studies, detailed engineering, procurement support, construction supervision, monitoring, and evaluation. In addition, individual consultants were to be engaged to support the project management unit (PMU), and for the RMP.
6 During project implementation, Ministry of Infrastructure went through several reorganizations. First, it was changed
to the Ministry of Public Works and then to the Ministry of Public Works, Transport, and Communications. Now these functions are under the Ministry of Development and Institutional Reforms, which includes (i) public works, (ii) transport and communications, and (iii) urban planning and housing.
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6. Impact and outcome. The envisaged impact of the project was poverty reduction, to be achieved through economic growth facilitated by an increase in direct and indirect employment opportunities and by improving cross-border trade. The project was expected to expand access to socio-economic facilities in the project area by increasing mobility. This was to be achieved through reduced travel times to primary schools, clinics, and bus terminals, reduction in road closures experienced after heavy rainfall, and improving efficiency in border crossing.
II. DESIGN AND IMPLEMENTATION A. Project Design and Formulation 7. At the time of appraisal in 2009, the government was in the process of developing a medium-term strategic plan focusing on the key objectives of (i) poverty reduction, (ii) private sector development, and (iii) core infrastructure development, including roads and bridges. The project conformed with the medium-term strategic plan and the infrastructure development priority for 2010, which targeted roads and water supply infrastructure. 8. The project conformed with ADB’s country strategy and program update of 2006–2008.7 The country strategy was anchored in the National Development Plan of 2002 (footnote 4) and identified transport infrastructure as a key area for ADB’s assistance. The project was also in line with the country partnership strategy, 2011–2015, which supported the implementation of the first phase of Timor-Leste’s Strategic Development Plan (SDP), 2011–2030, and the focus on the development of road infrastructure.8 9. The project preparatory work was built upon earlier technical assistance and extensive nationwide surveys for roads conditions, classified traffic counts, origin-destination studies, and stakeholder consultations, which led to the development of the MTRNDP, which in turn guided the preparation of the project.9
10. The design was very relevant in terms of improving the core road network and included activities to ensure sustainability, including the development and implementation of the RMP, improving the capacity of the DRBFC, and building the capacity of national contractors, thereby creating employment opportunities. The project design also promoted climate-proofing in carrying out rehabilitation and maintenance of roads and improving road safety.
11. The project supported Timor-Leste’s strong trade partnership with Indonesia through the improvement of roads leading to the border and improving cross-border facilities. This approach supported economic growth and also helped reduce poverty in the border region where border trade is the primary source of income.
12. The project’s intended impact and outcome remained relevant at completion. As noted in the SDP, roads are the primary mode of transport in Timor-Leste, providing development and delivery of economic and social services to all parts of the country and support to other sectors. On completion, the project remained consistent with ADB’s country partnership strategy, 2016–2020, which supports economic growth and diversification through removing infrastructure bottlenecks and institutional constraints.
7 ADB. 2005. Country Strategy and Program Update: Timor-Leste, 2006–2008. Manila. 8 ADB. 2011. Country Partnership Strategy: Timor-Leste, 2011–2015. Manila; Government of Timor-Leste. 2011.
Timor-Leste Strategic Development Plan, 2011–2030. Dili. 9 ADB. 2001. Technical Assistance to East Timor for Transport Sector Improvement. Manila (TA 3731-TIM). Report
published in 2005.
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B. Project Outputs 13. The planned outputs are described briefly in this section. The design and monitoring framework in Appendix 1 has been updated to reflect project achievements.
1. Output 1 – Road Rehabilitation 14. The project aimed at rehabilitating 232 km of selected national and districts roads in project districts to bring them to a maintainable level. Two subproject roads, for which feasibility studies were completed during project preparation, were initially selected. These were (i) Liquica–Mota Ain (78.8 km) through six NCB contracts at a total cost of $5.78 million, and (ii) Ermera–Malina (63.9 km) through one contract following international competitive bidding (ICB) at a cost of $10.30 million. 15. On commencement of implementation, detailed engineering and bid documents of two road sections on the Liquica–Mota Ain road were initially prepared for rehabilitation. As the cost of contract packages exceeded the NCB threshold, the procurement followed ICB procedures and contracts (R1 for 14 km and R2 for 52 km) were awarded. While the works were underway, MOI directed that these roads needed to comply with Timor-Leste’s SDP, which required all core national roads to be upgraded to a higher standard involving widening the pavement to 6 meters with 1-meter shoulders and asphalt concrete overlay. After consultations and eventual agreement, the road sections were redesigned to incorporate the new standards, resulting in the doubling of the cost of R1 to $10.3 million. Similarly, the cost of R2 increased significantly and, to remain within the project’s funding envelope, its length was reduced to 23.6 km and the contract price adjusted to $20.23 million. Consequently, the rehabilitation target of 232 km for the project was reduced to 37.6 km.
16. Despite the reduction in output, the successful road improvement under the project provided the template for improvement of core national roads across the country. It was the first project where SDP guidance for improvement of core national roads was applied. The resulting road was wide enough to safely allow two-lane traffic with high riding quality and reduced vehicle operating costs. This road improvement strategy was adopted in subsequent projects by ADB and development partners.
2. Output 2 – Maintenance 17. The road network in Timor-Leste suffers from premature deterioration due to the climatic conditions that involve high-intensity rainfall and unique geomorphology that causes stability issues and landslides during construction, resulting in frequent road closures. The government’s funding for maintenance was low. Only $4.5 million were allocated in 2009 for maintenance compared to the need of about $20–$30 million. Insufficient capacity of DRBFC compounds the problem. The project addressed this issue at appraisal by including measures to arrest road deterioration. At appraisal, it was envisaged that (i) initially, the PMU would engage an international road maintenance advisor to develop a road maintenance program (RMP) and a operations manual, (ii) the road maintenance advisor (RMA) would also conduct training of the staff of DRBFC, PMU—including a road maintenance engineer (RME)—and small contractors, (iii) in years 2–3 of implementation, the RME would take the lead in implementing the RMP on a pilot basis on about 302 km of national roads in the border districts (Bobonaro, Covalima, and Oecussi), (iv) the DRBFC staff would receive training during the implementation of the pilot program, (v) in years 4–5 of implementation, DRBFC staff would gradually take over responsibility of implementing the RMP in the project districts, and (vi) the RME would prepare a strategy to
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expand the road maintenance program nationwide for MOI to review and approve (Appendix 2). Two major benefits of the RMP implementation were (i) the opportunities for national contractors to develop their capacity; and (ii) the employment opportunities that would increase significantly when the RMP expanded to all 13 districts, particularly benefiting the younger population. 18. During implementation, the RMA prepared the RMP and operations manual. Initial planning estimates included 188 km of roads for maintenance under 15 NCB contracts in the first 2 years, and 302 km during years 3 and 4. The annual cost estimates were $2.27 million for 188 km and $2.69 million for 302 km. However, based on inventory and condition assessments of the project roads, it was concluded that none of the project roads could be classified as in ‘maintainable condition’ as the extent of the damage required that all the roads first undergo rehabilitation. Thereafter, maintenance activities could be performed. The estimates for 188 km have increased from $2.27 million to $56.31 million.
19. The RMA conducted a priority assessment of roads based on the Japan International Cooperation Agency (JICA) Capacity Development of Road Works report.10 After considering all factors, the RMA determined that the resource available for maintenance under the project would be best utilized on the selected roads with the highest priority. The Batugade–Maliana road (41.25 km) was chosen. Based on road condition and to keep contract costs within the NCB limits, the road was divided into four contract packages for rehabilitation and maintenance. Three packages (of 4.85 km – road maintenance contract (RMC)1, 5.6 km – RMC3, and 7.4 km – RMC4) were awarded on an NCB basis and one contract package covering 23.4 km (RMC2) and requiring a higher level of rehabilitation intervention was awarded following ICB procedures. In view of damages caused during construction, the ICB package was re-designed to include climate proofing specifications as used for the Liquica–Batugade road, which led to an increase in contract cost. To remain within the project’s funding envelope, the contract length was reduced from 23.4 km to 14.82 km. Compared to earlier estimates of 41.3 km, the maintenance contracts were actually carried out on a reduced length of 32.62 km. Consequently, the output target of maintaining 302 km of national roads at appraisal was changed to improving 33 km of a priority national road to a maintainable level. 20. Two performance-based maintenance (PBM) pilot contracts for routine maintenance works were awarded after completion of the above contracts. One contract covering 18 km under the RMC1, RMC3, and RMC4 contracts was carried out for a period of 23 months. The other contract covered 14 km under the R1 contract for a period of 13 months. A national contractor undertook the two PBM contracts.
3. Output 3 – Border Posts 21. The project envisaged improvements comprising access roads and parking areas at four border posts located at Mota Ain, Sakato, Salele, and Oesillo. ADB’s March 2011 review mission noted that the government had initiated construction of border facilities in late 2010 and the works were progressing rapidly on building facilities. The PMU was tasked with the coordination with MOI to submit detailed design and bid documents for access roads and parking areas for ADB’s approval. The mission expected the works to start by August 2011. However, the Minister of Finance (MOF) informed the PMU that, in order to meet the July 2011 deadline for the
10 Japan International Cooperation Agency (JICA). 2014. The Project for the Capacity Development of Road Works in
the Democratic Republic of Timor-Leste (CDRW). Timor-Leste. http://open_jicareport.jica.go.jp/pdf/12182325_01.pdf.
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inauguration of the border posts, it intended to award contracts on a non-competitive basis. As such, these contracts could not be financed under the project. The savings were diverted to rehabilitation works. 22. PMU and staff of Timor-Leste Resident Mission who have visited the border posts have reported that these facilities are well-constructed with good access roads, ample parking areas, and smooth operations.
4. Output 4 – Capacity of National Contractors 23. A two-pronged approach was adopted at appraisal to promote the growth of the national contracting industry. First, most civil works contracts under rehabilitation and maintenance were packaged into small (less than $1.0 million) contracts to allow for the use of the NCB procurement mode. Second, under the RMP, the road maintenance engineer was to carry out training of small contractors to develop their capacity to bid on maintenance works. 24. However, in view of changes in the rehabilitation and maintenance components (para. 15 and 19), only six contracts were awarded under the project. For better project management, two contracts categorized under rehabilitation works were awarded under ICB procedures. Of the four contracts categorized under road maintenance works, three were awarded on an NCB basis. Due to the package size, the fourth was an ICB contract.
25. Due to the significant reduction in the number of NCB contracts compared to the appraisal estimates, not many training programs for contractors were carried out under the project. The PMU and PISC conducted three training sessions covering contract management, ADB bidding documents, and quality control of construction materials. DRBFC staff also benefitted from this training.
5. Output 5 – Capacity of MOI 26. The DRBFC is responsible for the development and management of national roads under MOI. However, the PMU managed the project due to insufficient capacity of the DRBFC. At the time of appraisal, ADB and other development partners were carrying out capacity development of the DRBFC through various initiatives. To complement this effort under the project, it was envisaged that the PMU will undertake on-the-job-training of DRBFC staff in road prioritization, detailed engineering, and construction supervision. In addition, selected DRBFC staff would undergo training in implementing road maintenance contracts under the RMP. However, during implementation only three staff from the DRBFC were assigned to the project and underwent training by the PMU and PISC in the day-to-day management of the project and design and implementation of road maintenance works.
6. Output 6 – Road Safety 27. The project included (i) safety provisions in road designs, and (ii) conducting road safety awareness in project areas. While road safety provisions were included in the detailed engineering design, including lane markings and road signs, proper road safety awareness campaigns were not carried out systematically in the communities, particularly among those living along the road. 28. Although traffic volume and vehicle speed have increased significantly due to the improved roads, roadside communities continue to use the road for walking; particularly children
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use the road for going to school. The road signs need to be improved to reflect the safety needs of the community.
7. Output 7 – Climate Proofing 29. Timor-Leste’s geology is affected by plate tectonics that caused steep uplifts and a heavily folded mountainous region. Cutting mountainsides for the construction and widening of roads results in unstable slopes and landslides. Coupled with high-intensity rainfall, this causes land degradation, erosion, and dumping of sediments on roads and blockage of drainage structures. Aside from high maintenance and reconstruction costs, frequent road closures have an adverse impact on the economy. The project recognized this problem and required building climate-proofing measures into the design and construction of rehabilitation and maintenance works. The project envisaged that this would serve as a model for future development and improvement of roads in the country. 30. While detailed engineering design included climate proofing these were modified during construction as reflected in the increased size of roadside drains and bio-engineering along slopes. On two contracts, the climate related damages were so severe that the road sections were significantly upgraded.
31. After heavy rains in late 2017, number of slope failures on the rehabilitated section of the Liquica–Batugade road show the need for additional efforts involving embankment and slope stabilization. ADB engaged a technical audit consultant to identify the causes of these failures.11 C. Project Costs and Financing 32. The project cost at appraisal was estimated at $52.9 million with $46 million (87%) coming from the ADB grant and $6.9 million (13%) from the government. There was not much variation in the completion cost. A total of $45.9 million was used from the grant leaving an undisbursed balance of about $0.1 million. The government financing slightly increased to $7.1 million. The project costs at appraisal and actual are presented in Appendix 3. 33. Changes in rehabilitation and maintenance strategies during the early stages of implementation caused a significant increase in the cost of civil works (para.15 and 19). It was recognized that the project scope and output targets would have to be curtailed severely. When the project component involving improving border post facilities was deleted from the project, $1 million allocated for this activity was transferred to the civil works contracts.
34. The cost of consulting services for project implementation support increased by 31% from $4.54 million to $5.94 million, and the cost of project management that comprised PMU staff and its operations increased by 36% from $2.1 million to $2.85 million. This was due to the extension of (i) the project completion date from 30 November 2014 to 31 October 2015, and (ii) the grant closing date from 31 May 2015 to 31 May 2016. D. Disbursements 35. The disbursement projections at grant effectiveness were reasonably realistic and compared favorably with the actual disbursement figures at completion (Appendix 4). The
11 ADB. Forthcoming. Results of the Geotechnical Investigation: Road Network Development Sector Project–Package
R2. Manila.
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projections were refined in 2014 based on an ADB-wide exercise for all projects. The grant winding-up period was extended from 20 September 2016 to 31 March 2017 to allow the PMU to process their pending claims due to contractors, consultants, and suppliers, including the liquidation of the advance fund. The grant account was financially closed on 15 December 2017 after the final liquidation and refund of the unused advance fund. At closing date, the undisbursed grant amount of $99,642.09 was canceled.
E. Project Schedule 36. The project experienced several delays during the early stages of implementation (Appendix 5). The late submission of a legal opinion by the government delayed effectiveness. Also, a revision of the terms of reference contributed to a delay of 5 months in the engagement of PISC. The implementation schedule prepared at appraisal targeted fielding of the consultant by the second quarter of 2010. Instead, the consultant mobilized in January 2011. This affected the schedule for the preparation of detailed design and bid documents, which was delayed further due to the change in road improvement strategy involving road widening and asphalt concrete overlay. The NCB contracts originally envisaged for rehabilitation at appraisal were changed to ICB due to the contract size, requiring preparation of new bid documents. The two rehabilitation contracts were awarded in the last quarter of 2011 resulting in a delay of 1 year compared to the appraisal estimate. The civil work contracts were delayed further due to rainfall causing landslides and erosion and requiring major climate-proofing efforts. The contracts were finally completed by the end of September 2015 causing an overall delay of almost 3 years and requiring an extension of the grant closing date. 37. The initial start-up delays also affected the design of the RMP. Field investigations and the design of the RMP were completed by the third quarter of 2011 compared to the appraisal estimate of mid-2010. Four road maintenance contracts were awarded by the last quarter of 2011 compared to the appraisal estimate of last quarter of 2010. Climate-related damages caused stabilization, erosion, and drainage issues, and required redesigning of one contract to provide larger drainage structures and asphalt concrete overlay. This contract was completed by the end of 2014 compared to the appraisal estimate of end of 2012, causing an overall delay of 2 years. F. Implementation Arrangements 38. MOI was the executing agency. Based on the assessment of MOI’s and DRBFC’s procurement capacity conducted during appraisal, it was recommended to establish a PMU to administer the grant and carry out all implementation activities. Since a PMU was already in existence since 2002–2003 to manage the Emergency Infrastructure Rehabilitation Project – Phase 2, it was decided to continue to use the same PMU. The PMU was strengthened with additional staff in the areas of finance and environmental and social safeguards. An international road maintenance advisor and a national road maintenance engineer were also engaged under the PMU to develop and implement the RMP and train DRBFC staff. The implementation arrangement worked well as the PMU had gained significant experience by implementing two earlier projects and became familiar with the workings of the MOI, ADB, development partners, and other stakeholders in the government. The continuity of senior PMU staff added to its capacity. G. Technical Assistance 39. Project preparatory technical assistance (TA) was used to prepare the project (footnote 5). The TA prepared the Timor-Leste Core Road Network Development Program (MTRNDP)
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based on a master plan for national roads that was developed under an earlier TA (footnote 9). The TA also (i) prepared sample technical and economic feasibility studies for two roads under the project, (ii) assessed institutional capacity development needs, and (iii) developed an outline for a labor-based maintenance program. The TA also studied climate change impacts on the national road network and proposed adaptation measures. The MTRNDP was very useful in designing the project and later ADB-financed investments in roads. H. Consultant Recruitment and Procurement
1. Project Implementation Support Consultant 40. An international consulting firm was recruited following the ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time) using quality-and cost-based selection procedures (80:20 quality:cost ratio). The shortlist of consultants was finalized by the second quarter of 2010, proposals were received in July, evaluation was finalized in September, and negotiations were carried out in November. The consultant mobilized in January 2011.
2. Individual Consultants Recruited under PMU
41. All PMU staff were competitively engaged in accordance with ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time) for both international and national positions. Two national staff that were competitively selected for the Emergency Infrastructure Rehabilitation Project – Phase 2, had their contracts extended to cover the project.
3. Civil Works Procurement 42. The project intended to promote the national contracting industry as indicated by the size of the civil works contract packages in the procurement plan prepared at appraisal. The contract size was kept within the NCB threshold of $1 million to encourage national contractors (Appendix 6) to participate. However, the contracts were repackaged (para. 14–15, 18–19). The two rehabilitation contracts and one maintenance contract followed the ICB mode of procurement. The remaining three maintenance contracts were procured following NCB procedures. The award of civil work contracts was delayed due to the redesign of rehabilitation works. This is reflected in Appendix 7 which shows there was a lag in projections and actual awards. I. Safeguards
1. Environment
43. The initial environmental examination (IEE) undertaken at appraisal gave category B to the project as no major environmental impacts were identified during screening. The impacts were expected to be generally minor to moderate as the works involved rehabilitation and reconstruction of existing roads within the existing corridors. The potential impacts envisaged included (i) impact on protected areas, (ii) geological instability and erosion, (iii) quarry selection and management, (iv) handling of stockpiles, (v) air quality, and (vi) noise. An environmental management plan (EMP) was prepared as part of the IEE to ensure that the mitigation measures were properly followed and positive impacts were enhanced. The EMP was expected to be updated during detailed design to include specific construction and operations activities. It was recognized that construction impacts would be short-term and could be mitigated by addressing the EMP requirements. Environmental impacts for maintenance activities were considered
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insignificant. Consultation with local stakeholders and training of DRBFC field staff were included for the detailed design. The PMU was required to include the EMP in civil work contracts. 44. The EMP compliance matrix at the completion of civil work contracts showed general overall compliance and consultation with local stakeholders. The contractor paid specific attention to (i) the location of plant so as not to pollute the river or affect nearby communities, (ii) controlling dust by frequent spraying of water, (iii) restoration of vegetation through bioengineering in areas affected by landslides, (iii) cleaning up and disposal of waste, (iv) traffic management and public safety, and (v) managing any impact on community facilities. Capacity development of DRBFC could not be done due to non-availability of relevant staff. Independent experts carried out regular monitoring of the EMP implementation during the execution of the civil work contracts.
2. Resettlement 45. A resettlement framework was prepared at appraisal to guide the preparation of resettlement plans for each subproject to enable payment of compensation to affected people for lost or damaged assets and minor land acquisition. The project was categorized as B for involuntary resettlement and the grant covenants required that no subproject would involve significant involuntary resettlement impacts. All subprojects were to undergo a resettlement screening process to establish their eligibility. An entitlement matrix was also prepared as part of the resettlement framework. The matrix indicated that lands to be acquired would be compensated and all people owning crops, trees, temporary structures, or other assets on affected land were entitled to compensation for the loss of or damage to these assets. The affected persons were also to receive priority for employment with civil works contractors under the project. Community consultation, grievance redress mechanism, and external monitoring were also required. 46. The resettlement was minimal under the original design for the rehabilitation of roads, as the entire works were within the existing road corridors. However, the decision to widen roads to 6 m with 1-m shoulder and an additional 1.5 m for side drains triggered resettlement impacts. New resettlement plans were prepared and approved by ADB. No land acquisition was needed as the road expansion remained within the road reserves. The road widening affected roadside temporary structures consisting of kiosks and shops, and trees. These were relocated to the edge of the new road corridor with the help of the contractor, who also provided building materials and tools. The loss of business due to the disruption was less than a week. In all, about 290 affected persons were paid over $63,000 in cash compensation. In addition, most of the affected persons were offered employment opportunities with the contractor. Alternative measures for supplying water were used when water lines were disrupted. To alleviate community concerns, the contractor instituted traffic management during construction and also controlled dust through water spraying. Consultation with communities and district agencies continued during construction and grievances were addressed. Independent experts monitored the resettlement plans and reported on progress. 47. The project was categorized C for indigenous peoples. No action was required to comply with the Policy on Indigenous Peoples.12 Nevertheless, all project activities were undertaken in a culturally appropriate manner.
12 ADB. 1998. The Bank’s Policy on Indigenous People. Manila.
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J. Monitoring and Reporting 48. The project generally complied with all general and special covenants (Appendix 8). Partial compliance was noted for the covenant on maintenance, which required that the Fiscal Year (FY) 2010 allocation of $4 million be increased by 30% annually to reach the required funding level. However, as most of the network is not in a maintainable condition and roads improved under various externally assisted projects are covered under 2–5 years of performance-based maintenance contracts, a realistic assessment of network maintenance funding is needed. 49. The covenant regarding road safety was complied with during construction; however, partial compliance was noted during operations and a road safety audit is needed to ensure identification of black spots, improving safety provisions, and road safety awareness among roadside communities.
50. The only noncompliance was for project performance monitoring and evaluation. Review of project documents and consultation with the PMU staff indicate that no baseline data were collected to monitor project impacts. The borrower’s project completion report does not include any information on monitoring and evaluation. Regular audits of the project accounts were carried out and audited project financial statements were submitted in compliance with the financial covenant, but there were concerns on the timeliness of the submissions. Some weaknesses identified in the financial management assessment were not resolved as the PMU failed to procure accounting software and its record-keeping practices have not improved significantly. These add to the high internal control risk.
III. EVALUATION OF PERFORMANCE
A. Relevance 51. The project is rated highly relevant. At the time of appraisal, the government was in the process of developing a medium-term strategic plan focusing on the key objectives of (i) poverty reduction, (ii) private sector development, and (iii) core infrastructure development, including roads and bridges. The project conformed with the medium-term strategic plan and also the infrastructure development priority for 2010, which targeted roads and water supply infrastructure. The project also conformed with ADB’s country strategy and program update (2006–2008) (footnote 7). The country strategy was anchored in the National Development Plan and identified transport infrastructure as a key area of ADB’s assistance (footnote 4). The project remained in line with the country partnership strategy, 2011–2015, which supported the implementation of the first phase of Timor-Leste’s SDP, 2011–2030 and maintained focus on the development of road infrastructure (footnote 8). 52. The sector approach was used for the first time and proved to be very relevant in terms of improving the core road network and provided necessary flexibility to adequately respond to the priorities of the government at time of implementation. The project preparatory work was built on the technical assistance for transport sector improvement (footnote 9) that was completed in 2005 and led to the development of the MTRNDP, which, in turn, guided the preparation of the project and later ADB road projects. The project’s intended impact and outcome remained relevant at completion. The sector modality provided the necessary flexibility during implementation. As noted in the SDP, roads are the primary mode of transport in Timor-Leste providing development and delivery of economic and social services to all parts of the country and support to other sectors. On completion, the project remains consistent with the country partnership strategy, 2016–2020, which supports economic growth and diversification through removing infrastructure
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bottlenecks and institutional constraints. The successful road improvement under the project provided the template for improvement of core national roads across the country. This road improvement strategy was adopted in subsequent projects by ADB and other development partners. B. Effectiveness 53. The project is rated less than effective. As no database was available for project outcomes, other indicators were used. Timor-Leste Rural Roads Masterplan and Investment Strategy (2016-2020) (footnote 3) noted that rural mobility had increased significantly, as demonstrated by the increase in the Rural Access Index for Timor-Leste from 21% in 2007 to 49% in 2015.13 This means that the project outcome indicated by travel time to schools, clinics and bus terminals has fallen by well over the targeted 10%. The significant shortfall in achieving project outputs was compensated by follow-on investments by the government and ADB that helped in achieving the project’s intended outcome. Similarly, the outcome of more efficient border crossings was achieved without project financing as new facilities were constructed at the four border posts by the government using its own resources. 54. The outputs relating to maintenance could not be achieved. The deterioration of pilot roads turned out to be far worse than estimated at appraisal, requiring repairs before maintenance. The significantly higher cost to bring the roads to a maintainable level led to a severe reduction in output targets (para. 18–19). Performance-based routine maintenance was done for a limited period. This prevented the intended capacity development of DRBFC and national contractors (para. 25). C. Efficiency 55. The project is rated efficient. The economic re-evaluation of the investments for rehabilitation and repair and maintenance works were carried out as part of the project completion review and based on updated traffic counts. The economic internal rate of return (EIRR) for Liquica–Batugade rehabilitation works was estimated at 15%. The sensitivity analysis showed that with 25% increase in cost, 25% reduction in benefits and a combination of both resulted in reducing the EIRR to 10%–13% demonstrating the robustness of the economic viability. The EIRR for Batugade–Maliana repair and maintenance works was estimated at 9%, which reduced to 5%–7% under the sensitivity analysis. The lower EIRR and negative net present value (NPV) for repair and maintenance works is due to the very high cost of restoring and climate proofing almost 50% of the road length under repair and maintenance contracts. The overall EIRR for the project is estimated at 14%. Appendix 9 has the detailed results of the economic re-evaluation. D. Sustainability 56. The project is rated less than likely sustainable. The project included implementation of road maintenance contracts on 302 km of pilot roads by a large number of national contractors leading to the capacity development of the national contracting industry. As its capacity developed, the DRBFC was to gradually take over responsibility for implementing the RMP. However, not much was achieved, as roads were not maintainable and required improvements to bring them to a level where they could be economically maintained. The funds allocated for maintenance were used for these improvements. Two performance-based routine maintenance
13 International Labor Organization.2017. Bangkok. Rural Access Index (RAI)-the Case of Timor-Leste: R4D Technical
Paper. http://www.ilo.org/jakarta/whatwedo/publications/WCMS_615282/lang--en/index.htm.
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contracts were financed from the project to protect some of the investments. Looking to the future, several proposals are under consideration to ensure sustainable maintenance of the improved road network. These include but are not limited to (i) immediate measures to quickly start a cost-efficient routine maintenance program implemented by national contractors and communities along the lines of the Roads for Development program for rural roads, financed by the Australian Department of Foreign Affairs and Trade; and (ii) initiating the recommendation of starting dialogue between the government and development partners on a national road maintenance plan that is to be funded on a cost-sharing basis, which is included in the proposed Transport Sector Master Plan (2018).14 The current level of road maintenance funding remains low with annual allocation below 20% of required level. E. Development Impact 57. The project is rated satisfactory. Initial assessments indicate that communities are now more mobile as they can travel comfortably due to an increase in the availability of public transport on improved roads, thereby reducing travel times.15 This assessment is supported by a significant increase in the Rural Accessibility Index from 21% in 2007 to 49% in 2015 (footnote 13). A reduction in travel times positively impacts access to social services, such as health centers and schools, which can contribute to an improved workforce in the future. Women in particular informed that time savings allow them to perform their multiple roles productively enabling more quality time with the family. Communities also associated improved roads with more opportunities to diversify their income sources and increase earnings. Higher traffic on improved roads creates new business opportunities such as roadside kiosks. The additional earnings were used to pay children’s school fees, meet family needs, and pay off credits. F. Performance of the Borrower and the Executing Agency 58. The performances of the borrower and the executing agency (MOI) were satisfactory in supporting project preparatory works and ensuring the timely effectiveness of the grant. The executing agency also ensured that a functioning and experienced PMU was established quickly, and counterpart funds were provided on time. The executing agency, through the PMU, was instrumental in implementing project activities, particularly the procurement of PISC and other individual consultants, and procuring civil work contracts for rehabilitation and maintenance. Design changes and contract variations were handled effectively during project implementation. The executing agency’s commitment to the project ensured that grant covenants were substantially met. G. Performance of the Asian Development Bank 59. ADB’s performance is rated satisfactory. Implementing the project from the resident mission allowed close coordination with the executing agency and development partners. The project was formally reviewed every year, but regular informal interactions with the PMU, project consultants, and contractors ensured ADB’s timely guidance and support. Acknowledging the significant reduction in the project outputs, ADB was very active in processing additional financing and new follow-on projects to pick up the gaps in improving the national road network.16 Active
14 ADB. Forthcoming. Transport Sector Master Plan (2018). Manila. 15 A total of 11 community members from sucos (villages) along the project roads participated in the focus group
discussions conducted by the PMU to identify project benefits. 16 ADB. 2012. Road Network Upgrading Project (RNUP). Manila; ADB. 2013. Road Network Upgrading Sector Project
(RNUSP). Manila; ADB. 2015. Additional Financing for RNUSP. Manila; ADB. 2016. Additional Financing for RNUP. Manila.
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coordination with development partners ensured that the project’s successes and lessons were shared. H. Overall Assessment 60. The project’s assessment is based on a review of its relevance, effectiveness, efficiency, and sustainability. The project is highly relevant in initiating a national roads improvement program following the road standards articulated in the SDP. This is demonstrated by additional financing and new loans granted to fill in the output shortfall. The project is rated less than effective due to this shortfall. However, the project’s impact and outcome were significantly achieved. The project is rated efficient as the return on investments remained healthy and robust despite high construction costs. The project’s sustainability is reduced to less than likely due to lack of effort by the government to fund and implement road maintenance. The government also lacks capacity. However, as of 2018, efforts are underway to protect the investments and set up a sustainable road maintenance program. The project is therefore rated overall as successful.17
Overall Ratings
Criteria Rating Relevance Highly relevant Effectiveness Less than effective Efficiency Efficient Sustainability Less than likely Overall Assessment Successful Development impact Satisfactory Borrower and executing agency Satisfactory Performance of ADB Satisfactory
ADB = Asian Development Bank Source: Asian Development Bank.
IV. ISSUES, LESSONS, AND RECOMMENDATIONS
A. Issues and Lessons 61. Project Management. With the reorganization of MOI into the Ministry of Development and Institutional Reforms, a strengthened DRBFC is the key government agency responsible for roads. Therefore, it is important that DRBFC is more involved in ongoing and new projects and works closely with the development partners. In addition, PMU should work with DRBFC in decision-making regarding civil works’ contract implementation, completion, oversight during the defects liability period, demobilization of the contractor, and taking over the roads. This is critical for the sustainability of works financed by both the government and development partners.
62. Road maintenance. There is a need to start routine maintenance immediately as a measure to protect the project’s investment on road improvement. The model used under the Roads for Development program has yielded successful results. The program is financed by Australia’s Department of Foreign Affairs and Trade with technical support from the International Labor Organization and using communities engaged through national contractors. A similar model could be used effectively to serve the routine maintenance needs for the national roads completed under ADB financing.
63. The above does not rule out the need of a comprehensive road maintenance program for national roads. The proposed Transport Sector Master Plan (2018) (footnote 14) articulates the
17 ADB. 2016. Guidelines for the Evaluation of Public Sector Operations. Manila.
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need for dialogue between the government and development partners on a national road maintenance plan with financing on a cost-sharing basis. The Master Plan suggests priority action on this effort.
64. Capacity of national contractors. The project efforts to develop capacity of national contractors did not materialize (para. 23–25). Ongoing and future road projects should include (i) efforts to improve the capacity of the national contracting industry and (ii) small contact packages to allow national contractors to get regular work and gain experience.
65. Road design standards. Roads have been categorized as (i) national, (ii) municipal, and (iii) rural. Though national roads are considered class A and municipal as class C, it is not clear if detailed design standards exist for each category of road. Future projects should review available literature on road design standards and suggest improvements. These standards should also include climate proofing and road safety. B. Recommendations 66. Future Monitoring. The covenant on road maintenance requiring adequate budget allocation and staff arrangements is partially complied with and need further monitoring under ADB’s ongoing road sector projects. 67. Further action or follow up:
(i) Road safety. Road safety is an issue and immediate action is needed (para. 28). PMU should undertake a safety audit of the roads improved under the project to identify black spots and take measures to improve road safety. There is also a need for road safety campaigns to create awareness in communities and especially for school children.
(ii) Climate proofing. Failures on one of the rehabilitated sections of the Liquica–
Batugade road highlight the need for additional efforts to improve climate proofing through embankment and slope stabilization. A technical audit conducted by an independent geotechnical consultant proposed measures that are summarized in a forthcoming report (footnote 11).
(iii) Governance. The government agencies and the PMU handling the day-to-day
project implementation should develop a policy for stronger corporate governance, which includes enhancing financial management capacity using adequate accounting software, improving record-keeping practices, formulating and implementing a robust asset management policy, and establishing an internal audit unit, among others.
68. Timing of the project performance evaluation report (PPER). The proposed timing for PPER is after spot improvements to the failed roads sections based on recommendations of technical audit have been completed, and first year of envisaged community-based contracting has started, tentatively, in year 2020.
16 Appendix 1
DESIGN AND MONITORING FRAMEWORK
Design Summary Performance Indicators and
Targets Project Achievements Impact Economic growth and poverty reduction in the project areas
By 2015: 10% decrease in the number of people living below the poverty line in the project areas (national average in 2007: about 49%). About 22,000 person-months of job opportunities generated in the project areas for both men and women. 10% increase in cross-border trade (exports to Indonesia in 2008: about $2.12 million).
By 2018: Achieved. Based on 2014 figures, poverty in Timor-Leste fell to 39% Direct employment generation through consulting services and civil works contracts for rehabilitation and maintenance ranged from 15,000 to 20,000 person-months during project implementation. If indirect employment opportunities through suppliers, vendors, and subcontractors are added, this figure should exceed the target of 22,000 person-months. Achieved. Data shows that the cross-border trade has increased to at least $2.4 million.
Outcome Improved access to social and economic facilities in project areas
By 2014: 10% reduction in average travel time to primary schools in project areas for both men and women (national average: 28 minutes for primary school and 56 minutes for secondary school). 10% reduction in average travel time to the clinic in project areas, for both men and women (national average: 54 minutes). 10% reduction in average travel time to bus terminal or stop in project areas, for both men and women (national average: 49 minutes). Reduction in road closures due to severe climate.
By 2018: Likely achieved. Figures on actual travel time reduction are not available as work continues on other sections on the Liquica–Mota Ain and Batugade–Maliana roads. However, the World Bank estimates that the Rural Access Index had increased from 21% in 2007 to 49% in 2015.a Achieved. The frequency of road closures has been reduced on the Liquica–Mota Ain and Batugade–Maliana roads with the completion of rehabilitation and maintenance contracts under the project.
Appendix 1 17
Design Summary Performance Indicators and
Targets Project Achievements More efficient land border crossing (average time for border crossing in 2014 is about 1 hour).
Achieved. With the construction of new, fully equipped and staffed cross-border facilities at Mota Ain, Sakato, Salele, and Oesilo, the time for crossing the border has been reduced to less than 30 minutes. The government financed this project in its entirety. Due to the urgency to complete the construction of these facilities before the July 2011 deadline, the contracts were awarded on a non-competitive basis and, hence, ADB project funds could not be used.
Outputs 1.Road rehabilitation 2. Road maintenance program established
By 2014: 1.1 About 232 km of national roads improved to a maintainable condition. 2.1 Annual maintenance implemented on about 302 km of national roads in the three border districts during the project.
By 2018: 1.1 Partially achieved. Under the Strategic Development Plan of Timor-Leste (2011–2030),b the government mandated to improve all national and district roads to international standards (i.e., with a width of 7 meters) and drainage and slope protection to stabilize roads in mountainous areas. In consultations between the government and development partners, it was agreed that asphalt concrete pavement would be constructed with a width of 6 meters and 1-meter shoulders. Incorporating this in the detailed engineering plans along with climate-proofing measures resulted in an average cost of $800,000 per km compared to the appraisal estimate of $110,000 per km. As a result, only about 37.2 km of national roads were upgraded to the agreed standard, which was subsequently used for all future road improvements by ADB and development partners. 2.1 Not achieved. After completion of field surveys for the road maintenance program, it was determined that none of the project roads were in maintainable condition. Hence the approach to first rehabilitate and then maintain was adopted. Based on the prioritization of roads following the JICA model,c the Batugade–Malina road of 78.8 km was selected. The works were awarded through four contract packages; three under the NCB mode and one following the ICB method. The road condition under the
18 Appendix 1
Design Summary Performance Indicators and
Targets Project Achievements 3. Border posts constructed in Mota Ain, Sakato, Salele, and Oesilo 4. Improved capacity of national contractors to implement road rehabilitation and maintenance works 5. Improved MOI capacity to manage road projects and road maintenance program 6. Improved awareness of road safety among
3.1 Four border posts constructed at Mota Ain, Sakato, Salele, and Oesilo. 4.1 About 80 national contractors trained in contract administration and labor-based road maintenance. 4.2 Road maintenance civil works undertaken by national contractors completed on time and accepted by the government. 5.1 DRBFC staff capable of planning and implementing annual road maintenance in three border districts. 6.1 Traffic safety measures incorporated into the
ICB contract package severely deteriorated following high-intensity rainfall. Redesign involving climate-proofing measures resulted in the upgrade of this section to the same standards as the Liquica–Batugade road. Due to the increase in cost, the scope of work was reduced resulting in a decreased length from 23.4 km to 14.82 km. 3.1 Achieved. New border posts were constructed at Mota Ain, Sakato, Salele, and Oesilo. These were equipped and staffed to make them fully functional. However, these facilities were entirely financed by the government. Due to the urgency to complete construction of these facilities before the July 2011 deadline, the contracts were awarded on a non-competitive basis. Hence, ADB project funds could not be used. 4.1 Not achieved. The national contractors’ training program relied heavily on the road maintenance program under which, during the first 2 years of implementation, 15 contract packages were to be developed for carrying out maintenance. Sample contracts for labor-based routine maintenance were also developed for small contractors. However, it was determined that none of the project roads were maintainable and a ‘rehabilitate first and then maintain’ approach was adopted. Hence the training program for national contractors was never implemented. 4.2 See above. 5.1 Partially achieved. Two DRBFC staff were trained in planning and designing of road maintenance works. 6.1 Partially achieved. Adequate road safety measures such as road signs
Appendix 1 19
Design Summary Performance Indicators and
Targets Project Achievements communities in project areas 7. Climate-proofing incorporated into road rehabilitation and maintenance
engineering design and civil works contracts. 7.1 Climate-proofing measures implemented in road rehabilitation and maintenance works.
and lane markings were incorporated into the design and construction of civil works. However, not enough work was done in creating awareness among roadside communities. 7.1 Achieved. Measures were taken during detailed engineering design and construction of civil works, and designs were modified to improve climate proofing. This was reflected in the increased size of roadside drains and bio-engineering along slopes. On one road maintenance contract, the climate-related damages were so severe that the road section had to be significantly upgraded.
ADB = Asian Development Bank, DRBFC = Directorate of Roads, Bridges and Flood Control, JICA = Japan International Cooperation Agency, km = kilometer, MOI = Ministry of Infrastructure, NCB = national competitive bidding. a World Bank. 2015. Rural Access Index. https://openknowledge.worldbank.org/handle/10986/17414. b Government of Timor-Leste. Year. Strategic Development Plan of Timor-Leste (2011–2030). Place of publication. c Japan International Cooperation Agency (JICA). 2014. The Project for the Capacity Development of Road Works in
the Democratic Republic of Timor-Leste (CDRW). Timor-Leste. http://open_jicareport.jica.go.jp/pdf/12182325_01.pdf..
Source: Asian Development Bank.
20 Appendix 2
ROAD MAINTENANCE A. Provision in the Project 1. The road network of Timor-Leste comprises of about 1,400 kilometers (km) of national roads, 800 km of district or municipal roads, 700 km of urban roads, and about 1,700 km of core rural roads for a total of about 4,600 km. In addition, there are about 4,100 km of non-core rural roads. The condition of the road network shows premature deterioration caused by high-intensity rainfall and the unique geomorphology that makes it prone to slope instability and landslides during construction. As a consequence, there are frequent road closures. Maintenance funding has remained low due to the government’s priority to improve the network. Only $4.5 million were allocated in 2009 for maintenance compared to the need of about $20–$30 million. Insufficient capacity of the road agency—the Directorate of Roads, Bridges and Flood Control (DRBFC)—exacerbates the issue. 2. The project addressed maintenance at appraisal by including measures to be tested on a pilot basis in a few districts before expanding the maintenance program nationwide. The project design envisaged that (i) an international road maintenance advisor (RMA) would be engaged by the project management unit (PMU) to develop a road maintenance program (RMP) and associated operations manual; (ii) the RMA would develop the capacity of DRBFC staff, PMU staff, which included a road maintenance engineer (RME), and small contractors in road maintenance; (iii) during years 2–3 of implementation, the RME would take the lead in implementing the RMP on a pilot basis on about 302 km of national roads in the border districts of Bobonaro, Covalima, and Oecussi; (iv) DRBFC staff would be trained during the implementation of the pilot program; (v) in years 4–5 of implementation, DRBFC staff would gradually take over the responsibility for implementing the RMP in the project districts; and (vi) the RME will prepare a strategy to expand the road maintenance program nationwide for the MOI to review and approve. 3. Two major benefits of the RMP implementation were (i) the opportunities for national contractors to develop their capacity and (ii) increased employment opportunities when the RMP expanded to all 13 districts, particularly benefiting the younger population. B. Measures Taken During Project Implementation
1. Road Maintenance Program 4. The RMP document covered the condition of the pilot roads in the three project districts and a detailed assessment of the types of deterioration and failures commonly occurring due to climate impacts. It also included the fundamentals of maintenance (routine, periodic, and emergency) and a planned road maintenance program for the pilot roads to be implemented in phases. 5. Initial planning estimates included covering 188 km of roads for maintenance in the first 2 years, expanding to 302 km during years 3 and 4. The annual cost estimates were $2.27 million for 188 km and $2.69 million for 302 km (Table A2.1).
Appendix 2 21
Table A2.1: Annual Cost Estimates
Road Maintenance Program
Phase 1 Phase 2 2011 2012 2013 2014
Length (km) 188 188 302 302 Funding Need ($ million) 2.27 2.27 2.69 2.69
km = kilometer. Source: Asian Development Bank.
6. The implementation of phase 1 was supported by 15 national competitive bidding (NCB) packages valued between $0.16 and $0.39 million. 7. The RMP included a manual on road maintenance, which could have been used to train DRBFC staff and also serve as a reference. The topics included (i) maintenance organization using DRBFC regional staff, (ii) maintenance management, (iii) maintenance contracts, (iv) introduction to performance-based maintenance (PBM), (v) site management, and (vi) road repair and maintenance procedure. 8. However, the RMP could not be implemented. Based on inventory and condition assessments of roads in the three project districts, it was concluded that none of the roads could be classified as being in a ‘maintainable condition’. The RMA advised that the extent of the damage required both minor and more substantial repairs of the road before undertaking maintenance activities. The RMA estimated that the cost for repairing 188 km of roads increased from $2.27 million to $56.31 million. 2. Selection of Roads for ‘Repair First Then Maintenance’ Approach 9. During implementation, the RMA carried out a priority assessment of pilot roads based on the JICA CDRW report.1 After consideration of all factors, the RMA determined that the resources available for maintenance under the project would be best utilized on repairing the roads with the highest priority to bring them to a maintainable condition. The Batugade–Maliana road (41.25 km) was chosen. Based on the road’s condition and to keep contract costs within the NCB threshold, the road was divided into four contract packages for repairs and rehabilitation. Three packages (of 4.85 km, 5.6 km, and 7.4 km) requiring minor repairs were awarded on the NCB basis and one contract package covering 23.4 km that required a significantly higher intervention was awarded following the international competitive basis (ICB) procedures. In view of damages caused during construction, the ICB package was re-designed for upgrading and climate proofing following the same treatment as for the road upgrading works on the Liquica–Batugade road.2 This led to a reduction in the length of construction from 23.4 km to 14.82 km. These contracts are summarized in Table A2.2.
1 Japan International Cooperation Agency (JICA). 2014. The Project for the Capacity Development of Road Works in
the Democratic Republic of Timor-Leste (CDRW). Timor-Leste. http://open_jicareport.jica.go.jp/pdf/12182325_01.pdf.
2 Two sections of Liquica-Batugade national road were upgraded under rehabilitation contracts R-1 (14.1 km) and R-2 (23.6 km)
22 Appendix 2
Table A2.2: Summary of Grant Contracts
Contract Length
(km) Mode of Procurement Cost
($’000) Unit Cost ($’000/km)
RMC-1 4.85 NCB 1,037 214 RMC-2 14.82 ICB 9,028 609 RMC-3 5.58 NCB 1,239 222 RMC-4 7.34 NCB 1,604 219
ICB = international competitive bidding, km = kilometer, NCB = national competitive bidding, RMC = road maintenance contract. Source: Asian Development Bank.
3. Pilot Performance-Based Maintenance Contracts 10. The PMU in consultation with ADB decided to undertake pilot performance-based maintenance (PBM) contracts for the routine maintenance of roads where defects liability periods had been completed. The purpose was to (i) protect investment on newly rehabilitated roads, (ii) test PBM contracts, and (iii) utilize unused rehabilitation funds. These contracts were carried out by a national contractor. The PMU monitored the performance due to the unavailability of DRBFC staff. Details of the PBM contracts are in Table A2.3.
Table A2.3: Details of PBM Contracts
PBM Contracts Contracts
Length (km)
Period (months)
Total Cost ($)
Unit Cost ($/km/year)
PBM-01 RMC-01, 03 & 04 17.85 24 347,539 9,735 PBM-02 R-1 14.14 13 59,525 3,886
km = kilometer, PBM = performance-based maintenance, RMC = road maintenance contract. Source: Asian Development Bank.
C. Government Efforts 11. The government’s Strategic Development Plan (SDP), 2011–20303 states, “The primary strategy will be to repair and then maintain existing roads. This will mean repairing a road to a maintainable condition in which they can be maintained, followed by a program of maintenance to prevent deterioration from recurring”. The SDP also specifies improving national roads to international standards with widening and climate proofing. 12. As of July 2018, the rehabilitation and improvement program for national roads based on the SDP guidelines is progressing well with the support of development partners. However, the DRBFC has failed to provide adequate resources for road maintenance in its annual budgets or carry out planned maintenance. DRBFC reported that allocation for maintenance in 2006–2016 has ranged between $3 and $5 million per year and these funds were used mostly for emergency works. D. Addressing Road Maintenance under Ongoing Projects by ADB and Development Partners 13. For ADB-financed projects nearing completion or under implementation, the maintenance issue is addressed by adding a performance-based maintenance contract, generally for a period
3 Government of Timor-Leste. 2011. Strategic Development Plan (2011–2030). Timor-Leste.
Appendix 2 23
of 2 years after completion of the defects liability period. Similar arrangements are made on road improvement projects financed by other development partners such as the World Bank and JICA. This approach is more akin to buying time rather than addressing the issue. 14. In countries with no history of regular budgeting and implementation of road maintenance program, PBM contracts implemented by international contractors are a very expensive solution and also deny regular work to national contractors, which may improve their experience and capacity. E. Rural Road Maintenance under the Roads for Development Program 15. The Roads for Development program is a successful rural roads program financed by Australia’s Department of Foreign Affairs and Trade and managed by the International Labor Organization. The program successfully demonstrates that communities engaged through national contractors can contribute to the development and maintenance of rural roads in remote areas of Timor-Leste. The program started in 2012 and has gradually developed standard procedures and practices for managing the rural roads network, including, among others, a social and environmental safeguards framework, core rural roads design standards, municipality-based contract tendering, monitoring and evaluation framework, contractor training and mentoring, budgetary and payments processes. 16. The first phase of Roads for Development program was completed in March 2017 and the second 4-year phase began in April 2017. This is supported by the International Labor Organization’s sister program, Enabling Rural Access, which is also early in its second phase. The program has worked closely with the DRBFC and has contributed to its capacity development. 17. The approach developed by this program could be utilized effectively to undertake routine maintenance of roads improved under the project. According to very preliminary estimates, the cost ranges between $5,000 to $10,000 per km per year. This could be an interim arrangement to protect project investments until a more comprehensive road maintenance program is developed, financed, and implemented. F. Road Maintenance under the Proposed Transport Sector Master Plan 18. The proposed Transport Sector Master Plan (2018) (TSMP)4 includes the targets for road maintenance as shown in Table A2.4.
Table A2.4: Road Maintenance Targets Item Target Timeframe National Road Maintenance Plan Establish a national road maintenance plan in
cooperation with development partners to define maintenance requirements for all roads in Timor-Leste.
2018
Establish a performance-based program to implement the plan
Agree with development partners on a cost-sharing plan to train, upgrade standards, evaluate results, and implement both own and contracted road maintenance as needed for all roads in Timor-Leste.
2019
4 ADB. Forthcoming. Transport Sector Master Plan (2018). Manila.
24 Appendix 2
Item Target Timeframe Implement phase 1 of the performance-based road maintenance
Implement the cost-sharing plan for 7 years while the development partners component diminishes and the Timor-Leste government component increases.
2020
Implement phase 2 of the performance-based road maintenance
Use the program to bring all roads in Timor-Lest back to a good to fair standard and then continue to maintain to that standard.
2025
Source: Asian Development Bank.
G. Suggestions to Protect Road Infrastructure Improved under the Project 19. Until such time that the above is agreed upon, the Roads for Development (para. 15–17) maintenance model could be used to provide routine maintenance for roads improved under the project and other projects financed by ADB and other development partners. 20. The TSMP (footnote 4) recommends the need for dialogue between the government and development partners on a national road maintenance plan and arranging financing on a cost-sharing basis. The TSMP also suggests that this should be done on a priority basis to be completed in 2018. 21. Building on the TSMP approach, the detailed steps for sustaining road network are outlined below:
(i) Set up a road maintenance fund with effective and independent management; (ii) The fund should be jointly supported by the government and development
partners; (iii) The government should commit to providing at least an agreed level of resources
annually; (iv) Development partners’ contributions should at least match their portfolio of
improved roads; (v) A road fund board should review and approve annual maintenance plans that are
based on road condition and priority factors; (vi) National contractors should be trained before getting work; (vii) All contracts to be NCB; and (viii) Focus on routine maintenance.
Appendix 3 25
PROJECT COST AT APPRAISAL AND ACTUAL
($'000)
Appraisal Estimate Actual
Item Foreign
Exchange Local
Currency Total Cost Foreign
Exchange Local
Currency Total Cost A. Investment Costs 1. Civil Works a. Road Rehabilitation 14,000.00 13,500.00 27,500.00 27,414.01 3,046.24 30,464.07 b. Road Maintenance 1,600.00 8,400.00 10,000.00 9,498.02 4,070.70 13,578.68 c. Access Roads and Parking Areas of Border Postsa
600.00 400.00 1,000.00 0 0 0
2. Consulting Services a. Project Implementation Support 3,020.00 1,470.00 4,490.00 5,880.88 0.00 5,888.14
b. Financial Auditing 40.00 10.00 50.00 59.76 0.00 59.76 3. Project Management 1,570.00 530.00 2,100.00 2,848.59 0 2,848.37 4. Equipment (Vehicles and Office Equipment) 120.00 80.00 200.00 199.10 0.00 199.1 Subtotal (A) 20,940.00 24,400.00 45,340.00 0.00 7,116.94 0.00 B. Contingencyb 1. Physical 2,300.00 2,680.00 4,980.00 0.00 0.00 0.00 2. Price 630.00 1,950.00 2,580.00 0.00 0.00 0.00 Subtotal (B) 2,930.00 4,630.00 7,560.00 0.00 0.00 0.00 Total (A+B) 23,870.00 29,030.00 52,900.00 45,900.36 7,116.94 53,017.30
a This output was canceled. b Contingency was reallocated to works and consultant categories as the scope of roads rehabilitated and maintained was increased. Source: Asian Development Bank.
26 Appendix 3
PROJECT COST BY FINANCIER
Table A3.1: Project Cost at Appraisal by Financier (‘$000)
ADB
Government
Total Cost
Amount % of Cost Category Amount
% of Cost Category Amount
Taxes and Duties
Item A A/C B B/C C D A. Investment Costs
1. Civil Works a. Road Rehabilitation
24,750.00
90%
2,750.00
10%
27,500.00
b. Road Maintenance 7,000.00 70% 3,000.00 30% 10,000.00 0 c. Access Roads and Parking Areas of Border Posts 950.00 95% 50.00 5% 1,000.00 0 2. Consulting Services
0 0
a. Project Implementation Support 4,490.00 100%
4,490.00 0 b. Financial Auditing 50.00 100%
50.00 0
3. Project Management 2,100.00 100%
2,100.00 0 4 Equipment operation and maintenance 200.00 100%
200.00 0
Total Base Cost 39,540.00 87.2% 5,800.00 12.8% 45,340.00 0 B. Contingencies 6,460.00 85.5% 1,100.00 14.6% 7,560.00 0
Total Project Cost 46,000.00 0.00% 6,900.00
52,900.00 0 % Total Project Cost
87%
13.0%
100%
Note: Numbers may not sum precisely because of rounding.
Source: Asian Development Bank.
Appendix 3 27
Table A3.2: Project Cost at Completion by Financier ($’000)
ADB
Government
Total Cost
Amount % of Cost Category Amount
% of Cost Category Amount
Taxes and Duties
Item A A/C B B/C C D A. Investment Costs
1. Civil Works a. Road Rehabilitation
27,414.83
90%
3,046.24
10%
30,464.08
b. Road Maintenance 9,507.98 70% 4,070.70 30% 13,578.68
c. Access Roads and Parking Areas of Border Posts
95%
5%
2. Consulting Services
a. Project Implementation Support 5,947.90 100% 0.00
5,947.00
b. Financial Auditing 59.76 100%
59.76
3. Project Management 2,888.37 100% 0.00
2,888.37
4 Equipment operation and maintenance 199.10 100% 0.00
200.00
Total Base Cost 39,540.00 87.2% 5,800.00 12.8% 45,340.00
B. Contingencies
85.5%
14.6%
Total Project Cost 45,961.18
7,116.94
53,069.20
% Total Project Cost
87%
13.0%
100% Notes: Numbers may not sum precisely because of rounding.
Source: Asian Development Bank.
28 Appendix 4
DISBURSEMENT OF ADB LOAN AND GRANT PROCEEDS
Table A4.1: Annual and Cumulative Disbursement of ADB Loan Proceedsa ($ million)
Annual Disbursement Cumulative Disbursement
Year Amount ($ ‘000) % of Total
Amount ($ million) % of Total
2010 973.7 2.1% 973.7 21.1% 2011 2,131.1 4.6% 3,104.8 6.8% 2012 7,793.3 17.0% 10,898.1 23.7% 2013 12,428.6 27.2% 23,326.7 50.8% 2014 10,398.2 22.7% 33,724.9 73.5% 2015 11,934.1 26.0% 45,659.0 99.5% 2016 233.0 0.5% 45,892.0 100.0% 2017 8.3 0.0% 45,900.3 100.0% Total 45,900.30 100.0%
ADB = Asian Development Bank. a Includes disbursements to advance accounts. Source: Asian Development Bank.
Figure A4.1: Projection and Cumulative Disbursement of ADB Grant Proceeds
($ ‘000)
0.0
5,000.0
10,000.0
15,000.0
20,000.0
25,000.0
30,000.0
35,000.0
40,000.0
45,000.0
50,000.0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Disbursements ($ '000)
Effectivity Revised Actual
Appendix 5 29
IMPLEMENTATION SCHEDULE (PLANNED VERSUS ACTUAL)
30 Appendix 6
CONTRACT PACKAGES FOR CIVIL WORKS (PLANNED VS ACTUAL)
Contract Packages Envisaged at Appraisal Actual Contracts Awarded
Contract Description Estimated
Cost ($ million)
Road Length
(km) Method
Contract Description
Cost ($ million)
Road Length
(km) Method
Civil Works: Rehabilitation
1 Ermera–Maliana 10.30 63.90 ICB 1 Liquica–Mota
Ain (R1) 10.34 14.14 ICB
2 Liquica–Mota Ain 1 0.98 14.00 NCB 2 Liquica–Mota Ain (R2)
20.23 23.60 ICB
3 Liquica–Mota Ain 2 0.93 9.00 NCB
Sub-total: 30.57 37.74
4 Liquica–Mota Ain 3 0.96 6.00 NCB
5 Liquica–Mota Ain 4 0.97 12.60 NCB
6 Liquica–Mota Ain 5 0.97 17.40 NCB
7 Liquica–Mota Ain 6 0.98 19.80 NCB
Sub-total: 16.09 142.70
Civil Works: Maintenance
1 Batugade–Maliana 1 0.36 20.65 NCB 1 Batugade–
Maliana (RMC1) 1.04 4.85 NCB
2 Batugade–Maliana 2 0.36 20.65 NCB 2 Batugade–Maliana (RMC2)
9.03 14.82 ICB
3 Maliana–Oeleu 0.40 15.50 NCB 3 Batugade–Maliana (RMC3)
1.24 5.58 NCB
4 Oeleu–Lourba 0.26 9.80 NCB 4 Batugade–Maliana (RMC4)
1.60 7.34 NCB
5 Lourba–Atsabe Bdy 0.20 7.00 NCB Sub-total: 12.91 32.59
6 Oeleu–Fatululik 1 0.30 8.35 NCB
7 Oeleu–Fatululik 2 0.30 8.35 NCB
8 Oeleu–Fatululik 3 0.30 8.35 NCB
9 Oeleu–Fatululik 4 0.30 8.35 NCB
10 Lourba–Zumulai 1 0.39 12.79 NCB
11 Lourba–Zumulai 2 0.39 12.79 NCB
12 Suai–Tilomar 0.16 12.20 NCB
13 Tilomar–Border 1 0.31 15.00 NCB
14 Oecussi–Botiometo 1 0.26 14.30 NCB
15 Oecussi–Botiometo 2 0.26 14.30 NCB
Sub-total: 4.55 188.38 ICB = international competitive bidding, NCB = national competitive bidding, RMC = road maintenance contract. Source: Asian Development Bank
Appendix 7 31
CONTRACT AWARDS OF ADB LOAN AND GRANT PROCEEDS
Table A7.1: Annual and Cumulative Contract Awards of ADB Loan Proceeds ($ million)
Annual Contract Awards Cumulative Contract Awards a
Year Amount ($ ‘000) % of Total
Amount ($ million) % of Total
2009 1,574.1 3.4% 1,574.1 3.4% 2010 6,456.0 14.0% 8,030.1 17.5% 2011 11,304.5 24.6% 19,334.7 42.1% 2012 25,868.1 56.3% 45,202.8 99.6% 2013 167.8 0.4% 45,370.6 98.7% 2014 347.5 0.8% 45,718.2 99.5% 2015 142.4 0.3% 45,860.6 99.8% 2016 100.6 0.2% 45,961.2 100% Total 45,961.0 100.0% ADB = Asian Development Bank. a Classified by contract signing dates. Source: Asian Development Bank.
Figure A7.1: Projection and Cumulative Contract Awards of ADB Grant Proceeds ($’000)
32 Appendix 8
STATUS OF COMPLIANCE WITH GRANT COVENANTS
Covenant Reference in
Grant Agreement Status of Compliance Project Implementation and Management: Project Executing Agency—MOI shall be the EA for the Project, responsible for the overall management of the Project.
Schedule 4, Para. 1
Complied with.
Established, Staffed, and Operating PMU or PIU.
Schedule 4, Para. 2
Complied with. The PMU was established in Oct 2009.
Subproject Selection Procedure and Criteria: The Recipient shall enable that the subproject selection criteria and procedures as set forth in Schedule 4, para. 4 and 7. The PMU shall select the candidate subproject roads from the list provided under the MTRNDP and undertake stakeholder consultations to investigate their relevance to (i) fostering economic development, (ii) improving the quality of life of residents; (iii) providing services to rural and remote areas; (iv) fostering within-country regional development; and (v) creating employment. The PMU, after stakeholder consultations, shall obtain MOI's endorsement for the appraisal of the shortlisted subprojects. The PMU, assisted by the Project implementation support consultants, shall conduct appraisal of the MOI-endorsed subprojects, ensuring that the subprojects must: (i) be economically viable, and demonstrate an EIRR of at least 12%; (ii) not cause any environmental impacts that are classified as environmental category A, according to ADB's Environmental Assessment Guidelines (2003); (iii) not require acquisition resulting in significant resettlement impacts as per ADB's Involuntary Resettlement Policy (1995); and (iv) be provided with funds and resources, by MOI, necessary for construction, operation, and maintenance in a timely manner. After the appraisal, the PMU shall obtain MOI's endorsement for the final candidate subprojects and submit them for ADB's approval
Schedule 4, Para. 3
Complied with. The subproject selection criteria and procedures set forth in the grant agreement were followed in determining the projects to be designed and implemented.
Imprest Account – Except as ADB may otherwise agree, the Recipient shall (i) establish immediately after the Effective Date an imprest account at a bank acceptable to ADB and authorize PMU to manage it under the supervision of MOI and MOF; (ii) ensure that the imprest account is exclusively used to finance ADB's share of eligible expenditures;
Schedule 2, Para. 5
Complied with. An imprest account was established for the exclusive use of the project and was maintained in accordance with the requirements of the grant agreement based on the findings of the financial auditor
Appendix 8 33
Covenant Reference in
Grant Agreement Status of Compliance (iii) ensure, and cause MOF to ensure, that withdrawals from the imprest account are managed by two signatories, as approved by ADB, one from the EA or PMU and another person from the Treasury Department of the MOF. The imprest account shall be established, managed, replenished, and liquidated in accordance with ADB's Loan Disbursement Handbook and detailed arrangements agreed upon between the Recipient and ADB. The initial amount to be deposited into the imprest account shall be 6 months estimated expenditures to be financed from the imprest account or $500,000, whichever is lower. The subsequent amount to be deposited into the imprest account shall not exceed the lower of (i) the estimated expenditure to be financed from the imprest account for the next 6 months of Project implementation, or (ii) the equivalent of 10% of the Grant amount.
that conducted the audit for the project.
Fielding of Consultants Schedule 3, Para. 7
Complied with. The contracts with PMU’s international road maintenance advisor and project implementation support consultant were signed in Dec 2010.
Project Operation and Maintenance Subproject Selection. The EA shall ensure that (i) all subprojects are selected from the Recipient's MTRNDP, or included into the MTRNDP once selected; and (ii) ADB's concurrence is obtained on the inclusion of the subproject for financing under the Project, based on the agreed appraisal and eligibility criteria prior to the detailed design of any subproject.
Schedule 4, Para. 8
Complied with. Subprojects were selected from the MTRNDP, and ADB’s concurrence was obtained before inclusion for financing under the project.
Project Operation and Maintenance Counterpart Financing. The Recipient shall ensure that (i) all funds and resources necessary for construction, operation and maintenance, and management of the Project are provided in a timely manner; (ii) all necessary measures are taken, including the provision of additional funds to ensure that the Project is successfully implemented, managed, and operated after completion of construction; and (iii) MOI has adequate budget to maintain counterpart DRBFC staffing in PMU and to support PMU's operations related to the Project.
Schedule 4, Para. 10
Complied with. The government has allocated a general fund under the MOF to meet counterpart financing needs of all foreign-assisted projects to ensure their successful implementation.
Road Safety. The EA shall ensure that (i) appropriate road safety facilities during Project implementation, including pavement markings, traffic signs and signals, warning signs, and hazard barriers are installed; and (ii) road safety
Schedule 4, Para. 11
During construction: Complied with. Road warning signs were used and flagmen were mobilized at
34 Appendix 8
Covenant Reference in
Grant Agreement Status of Compliance awareness program for the roadside communities is implemented.
strategic locations to guide traffic. During Operations: Partially complied with. Road safety provisions were incorporated in the detailed design of project roads, and lane markings and road signs were installed. However, road signs at bends and speed signs on various sections of the project roads were missing. A road safety audit is needed for identification of black spots and improving road safety. Road safety awareness training was not conducted adequately in the local communities affected by the project roads to avoid accidents.
Road Maintenance. The Recipient shall, and shall cause the EA to ensure, that (i) road maintenance for the Project roads is implemented with adequate budget and staff arrangements, and maintained after the Project completion to ensure long-term sustainability; and (ii) budget allocation for national and district roads is increased to at least $4.0 million for FY2010, and increased by at least 30% p.a. in each subsequent year until the road maintenance needs are fully satisfied.
Schedule 4, Para. 12
Partially complied with. The financing needs for the maintenance of the road network as assessed at appraisal was in the order of $25–$30 million annually. Based on 30% annual increase in maintenance funding required under this covenant, the above target would have been reached in 2016. However, the allocation for 2016 was $4 million, which reduced to $3.3 million in 2017. However, most of the network is not in a maintainable condition and roads improved under various foreign assisted projects are under performance-based maintenance contracts financed from these projects. Therefore, the actual need for annual road maintenance financing is far less than $25–$30 million. A realistic assessment of maintenance funding is needed.
Governance and Anticorruption Measures: Auditing. Without limitation to the overall application of Sec. 4.02 of Grant Agreement, the EA shall ensure that (i) separate records
Schedule 4, Para. 13
Complied with. The project accounts were maintained in accordance with
Appendix 8 35
Covenant Reference in
Grant Agreement Status of Compliance and accounts are maintained for the Project to identify goods, works, and consulting services financed under the Project, all expenditures incurred on the Project outputs, and counterpart funds, as expended; (ii) Project accounts, including financial statements, are audited annually as part of the regular audit by an auditing firm acceptable to ADB, using international accounting and auditing standards; (iii) the auditor's report and copies of the certified accounts and related financial statements, including auditor's opinion is submitted to ADB no later than 6 months after the close of each fiscal year in English language; (iv) the auditor's opinion includes: (a) an assessment of the adequacy of accounting and internal control systems regarding Project expenditures and transactions to ensure safe custody of Project-financed assets; (b) a determination as to whether the Recipient and MOI have maintained adequate documentation for all financial transactions, specifically including the imprest account procedures; and (c) confirmation of compliance with ADB's requirements for Project management; and (v) a separate audit opinion is issued on the use of the imprest account.
the grant agreement and the accounts were regularly audited and reports submitted to ADB.
Governance. The EA shall ensure that (i) the Project is carried out in compliance with all applicable anticorruption laws and regulations of the Recipient, and ADB's Anticorruption Policy (1998, as amended to date); (ii) an information disclosure system is established by (a) displaying, on the notice boards outside government offices and important public places at the roadside community level, the information regarding contracts, list of participating bidders, name of the winning bidder, basic details on bidding procedures, contract award, and list of goods and services procured; and (b) notifying the communities of the date and location of selected events in the procurement process (e.g., public bid openings, progress reviews, and handover ceremonies); and (iii) within 3 months of the Effective Date, a grievance redress task force is established as PMU to receive and resolve complaints/grievances or act upon repots from stakeholders on misuse of funds and other irregularities. The task force shall (a) review and address grievances of stakeholders of the Project, in relation to either the Project, any of the service providers, or any person responsible for carrying out any aspect
Schedule 4, Para. 14
Complied with. The project was being carried out in compliance with the requirements set forth in the grant agreement.
36 Appendix 8
Covenant Reference in
Grant Agreement Status of Compliance of the Project; and (b) proactively and constructively respond to them. Governance and Anticorruption Measures Project Performance Monitoring and Evaluation. The EA shall ensure that (i) Project impacts are monitored and evaluated; (ii) the indicators and baseline data prepared by the Project consultants are discussed and agreed upon with ADB prior to the commencement of Works; (iii) the data during Project implementation and at Project completion is monitored and compared; (iv) monitoring and evaluation reports are submitted to ADB 1 month after the completion of the Project's consultants' field work; and (v) the indicators and baseline data makes full use of gender-disaggregated data and information.
Schedule 4, Para. 15
Not complied with. It is not clear whether (i) baseline data was collected to monitor projects impacts and (ii) regularly updated during implementation. The executing agency’s project completion report does not include any information on monitoring and evaluation.
Reporting. The EA shall ensure that quarterly Project progress reports are prepared and submitted to ADB, including: (i) a narrative description of progress made during the reporting period; (ii) changes in the implementation schedule; (iii) projected expenditure in the next 6 months; (iv) problems or difficulties encountered; (v) implementation of Resettlement Plan, if any; (vi) activities to be undertaken in the next reporting period; and (vii) a subproject completion report, within 3 months of the completion of each subproject, and a Project completion report within 6 months after the Project completion are prepared and submitted to ADB.
Schedule 4, Para. 16
Complied with. The PMU submitted quarterly progress reports to ADB. Subproject completion reports were not submitted; however, a project completion report was submitted to ADB within 6 months of project completion.
Environment. The EA shall ensure that (i) no subproject assessed as involving significant environmental adverse impacts is approved under the Project; (ii) the Project implementation complies with all applicable laws and regulations of the Recipient and ADB's Environment Policy (2002); (iii) the EMPs are updated, as required, during final design; (iv) the environmental mitigation measures specified in the EMP are incorporated into the bidding documents and Works specifications; (iv) ADB's approval of the IEE and relevant EMP of a subproject is obtained before issuing bidding documents; (v) Works contractors are closely supervised to ensure compliance; (vi) the Project consultants undertake environment monitoring and reflects the results in the quarterly Project progress reports and Project completion report; and (vii) environmental management and monitoring training is provided to DRBFC staff of PMU to increase
Schedule 4, Para. 17
Complied with. The EMP prepared at appraisal were updated during implementation and included in civil works contract documents. The EMP compliance matrix at the completion of the civil work contracts showed general overall compliance. Specific attention was paid to (i) location of contractors’ plant so as not to pollute the river or affect nearby communities, (ii) controlling dust by frequent spraying of water, (iii) restoration of vegetation through bioengineering in areas affected by landslides, (iii) cleaning up and disposal of waste, (iv) traffic management and public safety, and (v)
Appendix 8 37
Covenant Reference in
Grant Agreement Status of Compliance their capacity in environmental supervision and monitoring during construction.
managing any impact on community facilities. Regular monitoring of EMP implementation was carried out during the execution of the civil work contracts.
Land Acquisition and Resettlement. The EA shall ensure that (i) all Project rehabilitation and maintenance works are undertaken within existing right-of-way; and (ii) ADB is informed in the event of any unforeseen land acquisition or resettlement needs and the Resettlement Plan is prepared in accordance with the relevant laws and regulations of the Recipient and ADB's Involuntary Resettlement Policy (1995) and approved by ADB.
Schedule 4, Para. 18
Complied with. Resettlement was minimal under the original design; however, the decision to widen the road triggered resettlement impacts. New resettlement plans were prepared and approved by ADB. No land acquisition was needed. The road widening affected roadside temporary structures consisting of kiosks and shops, and trees. These were relocated to the edge of new road corridor with the help of the contractor, who also provided building materials and tools. The loss of business due to disruption was less than a week. The affected persons were compensated for the loss of trees and provided employment opportunities with the contractor.
Gender and Development. The EA shall ensure that (i) Project is implemented in accordance with ADB's Policy on Gender and Development (1998); (ii) Project contractors are encouraged to employ 30% of women in road rehabilitation and maintenance works; (iii) equal pay to men and women for work of equal type is paid in accordance with the laws of the Recipient and international treaty obligations; (iv) safe working conditions for both male and female workers is provided; (v) specific provisions to this effect are included in the bidding documents; and (vi) progress in achieving the employment targets for women are reflected in the Project progress reports and project completion report.
Schedule 4, Para. 19
Complied with. Provisions were included in the civil works documents to encourage the employment of female workers. However, based on construction supervision reports, female workers were employed only on two contracts, and female workers represented only between 10%–12% of the workforce.
Health Risks. The EA shall ensure that (i) all Works contracts include a requirement to conduct an information and education campaign on STDs, including HIV/AIDS for construction workers as part of the health and safety program at Project construction campsites; (ii) similar information on the risk of transmission of STD, including HIV/AIDS is disseminated at the worksites and to local communities in the corridor of influence, in coordination with
Schedule 4, Para. 20
Complied with. STI-HIV/AIDS awareness orientation sessions were conducted for all civil works contractors’ staff, local communities, district officers, and local chiefs. These campaigns were held with the collaboration of the Ministry of
38 Appendix 8
Covenant Reference in
Grant Agreement Status of Compliance national agencies working on this issue; and (iii) compliance with this provision is monitored by PMU.
Health and were conducted by a local NGO.
Labor Laws. The EA shall ensure that (i) Works contractors comply with all applicable labor laws of the Recipient and related international treaty obligations; (ii) child labor is not employed for rehabilitation and maintenance activities; and (iii) specific provisions to this effect are included in bidding documents and Works contractors, and compliance is strictly monitored.
Schedule 4, Para. 21
Complied with. PMU advised the contractors and consultants on Government labor laws and these requirements were included in the contracts. PMU also monitored compliance during project implementation.
ART. III, Sec. 3.04. Withdrawals from the Grant account in respect of Goods, Works, and consulting services shall be made only on account of expenditures relating to (a) Goods which are produced in and supplied from and Works and consulting services which are supplied from such member countries of ADB as shall have been specified by ADB from time to time as eligible sources for procurement, and (b) Goods, Works, and consulting services which meet such other eligibility requirements as shall have been specified by ADB from time to time.
Section 3.04 Complied with. All withdrawals were made in accordance with the grant agreement.
ART. III, Sec. 3.02. The Goods, Works, consulting services, and other items of expenditure to be financed out of the proceeds of the Grant and the allocation of amounts of the Grant among different categories of such Goods, Works, consulting services, and other items of expenditure shall be in accordance with the provisions of Schedule 2 of the Grant Agreement, which may be amended from time to time by agreement between the Recipient and ADB.
Section 3.02 Complied with.
ART. IV, Sec. 4.03. The Recipient shall enable ADB's representatives to inspect the Project and the goods financed out of the proceeds of the Grant, and any relevant records and documents.
Section 4.03 Complied with.
ART. IV, Sec. 4.02 (b) The Recipient shall enable ADB, upon ADB's request, to discuss the Recipient's financial statements for the Project and its financial affairs related to the Project from time to time with the auditors appointed by the Recipient pursuant to Section 4.02(a), and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB, provided that any such discussion shall be conducted only in the presence of an authorized officer of the Recipient unless the Recipient shall otherwise agree.
Section 4.02 (b) Complied with.
Appendix 8 39
Covenant Reference in
Grant Agreement Status of Compliance ART. III, Sec. 3.03. Except as ADB may otherwise agree, all Goods, Works, and consulting services to be financed out of the proceeds of the Grant shall be procured in accordance with the provisions of Schedule 3 of the Grant Agreement.
Section 3.03 Complied with. All goods, works, and consulting services were procured in accordance with the provision of the grant agreement.
ART. III, Sec. 3.01. The Recipient shall cause the proceeds of the Grant to be applied to the financing of expenditures on the Project in accordance with the provisions of the Grant Agreement.
Section 3.01 Complied with, based on the findings of the external auditor.
ART. IV, Sec. 4.02 (a) The Recipient shall (i) maintain, or cause to be maintained, separate accounts for the Project; (ii) have such accounts and related financial statements audited financially, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience, and terms of reference are acceptable to ADB; (iii) furnish to ADB, as soon as available but in any event not later than 6 months after the end of each related fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditor's opinion on the use of the Grant proceeds and compliance with the financial covenants of the Grant Agreement, as well as on the use of the procedures for imprest account statement of expenditures), all in the English language; and (iv) furnish to ADB such other information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request.
Section 4.02 (a) Complied with. The project maintained separate accounts that were subjected to regular financial audit.
ADB = Asian Development Bank, DRBFC = Directorate of Roads, Bridges and Flood Control, EA = executing agency, EMP = environmental management plan, EIRR = economic internal rate of return, FY = fiscal year, MOF = Minister of Finance, MOI = Ministry of Infrastructure, MTRNDP = Medium-Term Road Network Development Program, NGO = nongovernment organization, para = paragraph, PIU = project implementation unit, PMU = project management unit, STD = sexually transmitted diseases, STI = sexually transmitted infections. Notes: 1. The civil works under road maintenance contract (RMC)1, 3 & 4 contracts included minor repairs.
2. The civil works under RMC2 contract included major repairs similar to rehabilitation contracts. a ADB. 2008. Technical Assistance to the Democratic Republic of Timor-Leste for Preparing the Road Network
Development Project. Consultant’s report. Manila (TA 7100-TIM).
40 Appendix 9
ECONOMIC RE-EVALUATION A. General 1. The economic analysis that was done during project preparation used the Roads Economic Decision (RED) Model, which is a simplified version of the Highway Development and Management Model (HDM-4) and generally used for low volume roads.1 For consistency, the RED model is also used for this economic re-evaluation. The two road links improved under the project were studied as part of project preparatory work, which involved studying 48 national road links and selecting 32 for inclusion in the Medium-Term Road Network Development Program (MTRNDP). However, detailed economic feasibility was done only for the Liquica–Batugade–Mota Ain road link. Table A9.1 summarizes the results of the economic evaluation done for preparing the MTRNDP and the sample feasibility study.2
Table A9.1: Summary of Economic Evaluation During Project Preparation
ID* Road Link Length (km) EIRR for MTRNDP EIRR for Feasibility A03-3 Liquica–Batugade 78.8 21% 19% A03-5 Batugade–Maliana 41.3 13% - * Road ID used in the Feasibility Report
EIIR = economic internal rate of return, ID = identification, MTRNDP = Medium-Term Road Network Development Program.
Source: Asian Development Bank.
B. Traffic Analysis 2. New traffic counts were conducted during 26–28 March 2018 on the two roads improved under the project. Traffic counts on 26 and 28 March were conducted over a period of 12 hours and, on 27 March, 24-hour traffic counts were carried out. A comparison of the 12 hours and 24 hours traffic counts indicates that nighttime traffic was 10%–15% of the daytime traffic. Table A9.2 summarizes the new traffic counts and shows a comparison with the traffic counts undertaken in 2008 during the project preparatory stage.
Table A9.2: Traffic Count by Vehicles
Road ID
Year Motorcycle Car/ Taxi
Jeep/ 4WD
Van Mini bus
M/L Bus
Light Truck
Med Truck
Heavy Truck
Total
A3-03 2008 551 24 141 139 42 39 33 56 21 1,046 2018 4,272 43 179 427 315 36 165 83 7 5,529
A3-05 2008 588 6 54 78 19 43 18 37 12 855 2018 1,229 13 27 115 2 23 51 9 9 1,548
4WD=four-wheel drive, ID = identification, M/L= medium/large. Source: Asian Development Bank.
3. On the Liquica–Batugade road link, the traffic volume increased for all vehicles types except medium/large buses and heavy trucks. While the decrease in buses is minimal, the heavy truck traffic has reduced by two-thirds. The overall traffic growth rate is 12.7%, which is significantly higher than the rate forecast at appraisal (insert appraisal rate). On the Batugade–Maliana road, the traffic volumes of motorcycles, cars, pickups/vans, and light trucks have
1 ADB. 2008. Technical Assistance to the Democratic Republic of Timor-Leste for Preparing the Road Network
Development Project. Manila (TA 7100-TIM). 2 ADB. 2009. Preparing the Road Network Development Project. Consultant’s Report. Manila (TA 7100-TIM).
Appendix 9 41
increased, while they decreased for all other types of vehicles. The overall growth rate is 6.1%, which is lower than the rate forecast at appraisal (insert the rate forecast at appraisal). C. Growth Rate and Traffic Forecasts 4. The traffic growth rates developed during project preparatory work and used for MTRNDP and detailed feasibility studies are given in Table A9.3.
Table A9.3: Traffic Growth by Vehicle Type
Vehicle 2009–2013 2014–2018 2019–2028 Motorcycle 20 10 2.5 Car/Jeep 15 10 5 4WD/Van/Bus 10 7.5 5 Truck 5 4 3
4WD=four-wheel drive Source: Asian Development Bank.
5. These growth rates were based on trends in the gross domestic product (GDP), vehicle registrations, and other socio-economic variables. At the time when project preparatory work and feasibility studies were done, the oil revenues were increasing and, correspondingly, Timor-Leste’s GDP, per capita incomes, exports, imports, and trade and commerce were also showing an upward trend. The slump in oil prices in 2012 led to a decline in the GDP, per capita incomes, exports, imports, and other economic activities. The trends in GDP and per capita incomes from 2000 to 2016 are given in Table A9.4.
Table A9.4: Growth in GDP 2000 to 2016 (% per annum)
Source Current Prices Constant Prices GDP 11.5 7.6 - Oil based 15.9 15.7 - Non-oil based 10.2 4.5 Per Capita Income 9.0 5.1 - Oil based 13.2 13.0 - Non-oil based 7.6 2.1
GDP = gross domestic product. Source: Asian Development Bank.
6. The traffic growth rates in Table A9.3 have been reviewed in relation to the increase in population and long-term growth rates of GDP and per capita income. The growth rates have been adjusted as shown in Table A9.5 for use in the economic re-evaluation.
Table A9.5: Traffic Growth Rates used in Re-evaluation (% per annum)
Vehicles 2014–2023 2024–2028 2029–2038 Motorcycles 10.0 7.5 5.0 Light Trucks 10.0 7.5 5.0 All Other Vehicles 5.0 5.0 5.0
Source: Asian Development Bank.
42 Appendix 9
D. Construction Costs 7. Compared to the estimates in the feasibility study, the construction costs increased significantly during project implementation. For the Liquica–Batugade road, the decision to adopt the core national road standards outlined in the Strategic Development Plan (2011–2030) required major upgrading on the two road sections selected on the Liquica–Batugade road.3 The upgrading required widening of the carriageway to 6 meters with 1-meter shoulders and using asphalt concrete overlay in the pavement construction. This increased the cost per kilometer estimated in the feasibility study by over six times. For the Batugade–Maliana road, the increase in cost should not have been significant as the civil works involved repair and rehabilitation. However, climate-related erosion, landslides, and stabilization issues affecting over half of the rehabilitated length of road required asphaltic concrete pavement and major works in roadside and cross drainage structures. This increased the cost to almost three times the feasibility estimate. The construction costs at completion and feasibility estimates are shown in Table A9.6.
Table A9.6: Construction Costs at Completion and Feasibility
ID Road Name Length
(km)
Completion Cost Feasibility Cost Total
($ million) Per Km ($’000)
Per Km ($’000)
A03-3 Liquica–Batugade 37.6 30.57 813.03 128.9 A03-5 Batugade–Maliana 32.6 12.91 396.01 142.8
km = kilometer. Source: Asian Development Bank.
E. Other Inputs 1. Vehicle Operating Costs and Time Savings 8. For consistency, the vehicle fleet characteristics involving unit costs, utilization, and loading used at the feasibility stage were utilized for the economic re-evaluation. Similarly, the vehicle occupancy and passenger value of time used in the economic re-evaluation were the same as used in the feasibility study. A conversion factor of 0.85 is used as per the feasibility study. 2. Road Treatment Alternatives 9. The RED Model evaluates two alternatives (1 – for ‘repair and maintain’ and 2 – for ‘reconstruct and rehabilitate’) against the alternative 0 – ‘without project’. The economic evaluation for MTRNDP and sample feasibility was done for both alternatives 1 and 2. Based on the road improvement works done under the project, alternative 2 is used for the economic re-evaluation. 3. Discount Factor 10. The feasibility study used a discount rate of 12% for bringing future costs and benefits to their present value. Although the current ADB Guidelines for the Economic Analysis of Projects recommends a discount rate of 9% for evaluation of infrastructure projects in developing
3 Government of Timor-Leste. Year. Strategic Development Plan of Timor-Leste (2011–2030). Place of publication.
Appendix 9 43
countries, a discount rate of 12% is used for this economic re-evaluation for consistency and compatibility with the results of the feasibility study. 4 F. Results of the Economic Re-evaluation 11. The economic internal rate of return (EIRR) calculated for the two road links were based on streams of cost and benefits over the economic life of the project. The detailed results are shown in Tables A9.8 and A9.9, and are summarized in Table A9.7.
Table A9.7: Economic Re-evaluation Results
ID Road Name Length
(km) Traffic (vpd)
Investment ($ million) IRR
NPV ($ million)
Analysis Table
A03-03 Liquica–Batugade 37.6 5529 30.57 15% 5.96 A10.8 A03-05 Batugade–Maliana 32.6 1548 12.91 9% -1.99 A10.9
ID = identification, IRR = internal rate of return, km = kilometer, NPV = net present value, vpd = vehicles per day. Source: Asian Development Bank.
12. For Liquica–Batugade, the EIRR of 15% shows that despite high construction costs the economic performance of this road remained satisfactory. This is due to the significant increase in traffic, which grew at a rate of about 13% compared to the forecast of about 7% at appraisal. The EIRR of 15% compares well with the estimate at project preparation stage of 19%. 13. For Batugade–Maliana, the EIRR of 9% shows low economic performance. This is due to the major restoration and climate proofing of almost half of the road length at a significantly higher cost than originally estimated to ensure that the road is open throughout the year. Combined with low traffic growth compared to the growth rate forecast at appraisal, this resulted in negative net present value (NPV). If enough data were available and the benefits of avoiding frequent road closures could be factored in the economic analysis, the EIRR may have reached the 12% benchmark. The economic analysis at project preparation stage yielded an EIRR of 13%. 14. The combined EIRR for the project at completion comes to 14% showing satisfactory overall economic performance. G. Sensitivity Analysis 15. The sensitivity analysis involved (a) a 25% increase in construction and maintenance costs, or (b) a 25% reduction in user benefits, or (c) a combination of both these factors together. For the Liquica–Batugade road, the EIRR reduces to 13% for (a), 12% for (b), and 10% for (c) showing economic robustness. The NPV also remains positive for (a) and (b). For the Batugade–Maliana road, the EIRR reduces to 7% for (a) and (b), and 5% for (c). The NPV remains negative for all three cases.
4 ADB. 2017. Guidelines for the Economic Analysis of Projects. Manila.
44 Appendix 9
Table A9.8: Economic Re-evaluation of Liquica—Batugade Road Link
Appendix 9 45
Table A9.9: Economic Re-evaluation of Batugade—Maliana Road Link