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Report and Recommendation of the President to the Board of Directors Project Number: 52298-001 March 2020 Proposed Loan India: Maharashtra State Road Improvement Project Distribution of this document is restricted until it has been approved by the Board of Directors. Following such approval, ADB will disclose the document to the public in accordance with ADB’s Access to Information Policy.
CURRENCY EQUIVALENTS
(as of 13 March 2020)
Currency unit – Indian rupee/s (₹)
₹1.00 = $0.01343
$1.00 = ₹74.4395
ABBREVIATIONS
ADB – Asian Development Bank
CRN – core road network
EIRR – economic internal rate of return
HDI – human development index
IEE – initial environmental examination
km – kilometer
MPWD – Maharashtra Public Works Department
PAM – project administration manual
PIU – project implementation unit
PMS – project management services
PMU – project management unit
NOTES
(i) The fiscal year (FY) of the Government of India ends on 31 March. “FY” before a
calendar year denotes the year in which the fiscal year ends, e.g., FY2020 ends
on 31 March 2020.
(ii) In this report, “$” refers to United States dollars.
Vice-President Shixin Chen, Operations 1
Deputy Director General Diwesh Sharan, Officer-in-Charge, South Asia Department (SARD)
Director Ravi Peri, Transport and Communications Division, SARD
Team leader Kirsty Rowan Marcus, Transport Specialist, SARD
Team members Melinda Agudo, Operations Assistant, SARD
Chandra Arora, Senior Procurement Officer, India Resident Mission
(INRM), SARD
Iris Bombay, Safeguards Officer (Environment), SARD
Merdinia Dequilla, Associate Project Analyst, SARD
Sajid Raza Khan, Financial Management Specialist, SARD
Laureen Laurito, Social Development Specialist, SARD
Douglas Perkins, Principal Counsel, Office of the General Counsel
Prabhasha Sahu, Senior Project Officer (Transport), INRM, SARD
Dinesh Shiwakoti, Procurement Specialist, Portfolio and Financial
Management Department
Karma Yangzom, Senior Environment Specialist, SARD
Peer reviewers Oyunchimeg Erdene, Principal Transport Specialist, Central and
West Asia Department
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
PROJECT AT A GLANCE
MAP
I. THE PROPOSAL 1
II. THE PROJECT 1
A. Rationale 1
B. Project Description 3
C. Value Added by ADB 4
D. Summary Cost Estimates and Financing Plan 4
E. Implementation Arrangements 6
III. DUE DILIGENCE 7
A. Technical 7
B. Economic Viability 7
C. Sustainability 7
D. Governance 8
E. Poverty, Social, and Gender 8
F. Safeguards 9
G. Summary of Risk Assessment and Risk Management Plan 11
IV. ASSURANCES AND CONDITIONS 11
V. RECOMMENDATION 11
APPENDIXES
1. Design and Monitoring Framework 12
2. List of Linked Documents 15Project Classification Information Status: Complete
PROJECT AT A GLANCE
1. Basic Data Project Number: 52298-001
Project Name Maharashtra State Road Improvement Department/Division SARD/SATC
Project
Country India Executing Agency Public Works Department
Borrower India of the Government of
Maharashtra
Country Economic https://www.adb.org/Documents/LinkedDocs/
Indicators ?id=52298-001-CEI
Portfolio at a Glance https://www.adb.org/Documents/LinkedDocs/
?id=52298-001-PortAtaGlance
2. Sector Subsector(s) ADB Financing ($ million)
Transport Road transport (non-urban) 177.00
Total 177.00
3. Operational Priorities Climate Change Information
Addressing remaining poverty and reducing inequalities Climate Change impact on the Medium
Accelerating progress in gender equality Project
Tackling climate change, building climate and disaster resilience, and
enhancing environmental sustainability ADB Financing
Promoting rural development and food security Adaptation ($ million) 12.76
Strengthening governance and institutional capacity
Sustainable Development Goals Gender Equity and Mainstreaming
SDG 5.5 Effective gender mainstreaming (EGM)
SDG 9.1
SDG 13.a Poverty Targeting
General Intervention on Poverty
4. Risk Categorization: Low
.
5. Safeguard Categorization Environment: B Involuntary Resettlement: B Indigenous Peoples: C
.
6. Financing
Modality and Sources Amount ($ million)
ADB 177.00
Sovereign Project (Regular Loan): Ordinary capital resources 177.00
Cofinancing 0.00
None 0.00
Counterpart 78.99
Government 78.99
Total 255.99
Currency of ADB Financing: US Dollar
Source: Asian Development Bank
This document must only be generated in eOps. 12032020173738714960 Generated Date: 24-Mar-2020 13:34:13 PMINDIA
MAHARASHTRA STATE ROAD IMPROVEMENT PROJECT
N
0 75 150
MADHYA PRADESH
Kilometers Nandurbar
Gondiya
EPC a
EPC b Nagpur Bhandara
Jalgaon
Dhule EPC b
EPC a
GUJARAT
Amravati
Akola Wardha
EPC CHHATTISGARH
Buldana
Yavatmal
Washim
Nasik MAHARASHTRA EPC Gadchiroli
Aurangabad
Chandrapur
Palghar Jalna
Hingoli
Parbhani
Thane
Ahmadnagar
TELANGANA
Mumbai Suburban Nanded
Mumbai Bid
Raigarh Pune
EPC
Latur
EPC
Package Number Road District/s Length
Osmanabad (kilometer)
EPC
EPC1a SH Ratnagiri 23.50
Satara EPC1b MDR Ratnagiri 10.35
Solapur
EPC2a SH Ratnagiri 28.10
EPC2b SH Ratnagiri 23.70
EPC b
EPC3 SH Solapur 61.90
EPC a
Ratnagiri EPC4 SH Solapur 50.54
Sangli EPC5 SH Washim and Yavatmal 56.05
EPC a KARNATAKA
EPC6 SH Amrava and Yavatmal 64.65
Kolhapur
EPC7a SH Akola and Amarava 24.00
EPC b EPC7b MDR Amarava 17.55
EPC8a SH Amrava 15.08
EPC8b SH Amrava 40.80
Project Road
EPC9 SH Solapur 35.23
Road
Sindhudurg
State Capital Total 451.45
City/Town
This map was produced by the cartography unit of the Asian Development Bank.
District Boundary The boundaries, colors, denominations, and any other information shown on this
GOA
State or Union Territory Boundary map do not imply, on the part of the Asian Development Bank, any judgment on the
EPC = Engineering, Procurement, and Construction legal status of any territory, or any endorsement or acceptance of such boundaries,
colors, denominations, or information.
Boundaries are not necessarily authoritative.
- ABVI. THE PROPOSAL
1. I submit for your approval the following report and recommendation on a proposed loan to
India for the Maharashtra State Road Improvement Project.
2. Project summary. The Government of India requested assistance from the Asian
Development Bank (ADB) to support the improvement of state highways and major district roads
in Maharashtra. The project will upgrade and maintain about 450 kilometers (km) of state roads
forming part of the core road network (CRN) in Maharashtra, which will enhance transport
accessibility and efficiency, and improve the sustainability of the road network, in line with the
state’s Road Development Plan 2001–2021. 1 It will involve upgrading of state roads to two-lane
standard and performance-based maintenance contracts to maintain the improved road assets
for 5 years after construction. It also includes initiatives to build institutional capacity within the
Maharashtra Public Works Department (MPWD), the project executing agency, focusing on
strengthened sustainability and road safety practices.
II. THE PROJECT
A. Rationale
3. State context. The state of Maharashtra is located in central and western India and
borders the states of Andhra Pradesh, Chhattisgarh, Goa, Gujarat, Karnataka, and Madhya
Pradesh. With an area of about 0.3 million square km (9.4% of India’s total), it is India’s third-
largest state. It is also India’s second-most populous state, with 122.9 million people, 2 which is
forecast to increase to 125.7 million by 2031. 3 The major cities are Amravati, Aurangabad,
Kolhapur, Mumbai, Nagpur, Nasik, Pune, Ratnagiri, Sangli, Solapur, and Thane.
4. Road transport context. Maharashtra’s extensive road network totals about 303,350 km,
and includes national highways (12,275 km), state highways (34,450 km), and district roads
(110,750 km). The state’s economic growth has generated significant passenger and freight traffic
demand. There were 31.4 million registered vehicles in Maharashtra in 2018, having increased at
a compound annual growth rate of 9% since 2001. 4 The average annual daily traffic on the state
highways is currently 8,000 equivalent passenger car units per day, and traffic volumes are
expected to continue to grow at a compound annual growth rate of about 5%. The MPWD is the
main institution responsible for development and maintenance of national highways, state
highways, major district roads, and bridges in Maharashtra. Other district roads and rural roads
are managed by the Rural Roads Department. 5
5. Development need. The key development challenge for Maharashtra is translating the
state’s economic growth into more balanced development throughout the state’s rural areas. The
Human Development Index (HDI) and per capita income levels vary greatly across the districts in
the state; rural areas away from Mumbai, Nagpur, Pune, and Thane are experiencing slow
economic growth, which is reflected by lower relative HDI and per capita income values.
1 Government of Maharashtra, Public Works Department. 2012. Road Development Plan 2002-2021 . Mumbai.
2 Government of Maharashtra. 2019. Government of Maharashtra Desk Diary 2019. Mumbai.
3 Government of India, Ministry of Finance, Department of Economic Affairs. 2019. Economic Survey 2018-19 Volume
1. New Delhi.
4 Government of Maharashtra. 2019. Directorate of Economics and Statistics. 2019. Economic Survey of Maharashtra.
Mumbai.
5 Further details on the road transport subsector in Maharashtra are in the Sector Assessment (Summary): Transport
(Road Transport [Nonurban]) (accessible from the list of linked documents in Appendix 2).2 Economic inequality in rural districts has increased. 6 Most of Maharashtra’s population resides in rural areas (54%), where the agriculture sector is the dominant source of employment and livelihoods; 62% of employed women work in agricultural occupations, compared with 31% of employed men. 7 The agriculture sector is facing repeated droughts, with the sector’s share of gross state value added steadily declining, and was estimated to have grown by just 0.4% in 2019 (footnote 4). In contrast, the contributions made by the industrial and service sectors to the state’s economy are expanding. Growth and development outside of the state’s major urban centers must be promoted by connecting agricultural and industrial areas to markets and connecting rural areas to second-tier cities and towns. This will provide opportunities for livelihood outside of the agriculture sector, particularly for women. 6. Road transport needs and issues. Road transport is critical to accessibility, mobility, and connectivity of rural communities in Maharashtra, particularly for accessing markets, employment opportunities, and services beyond the agriculture sector. The core development problem is that roads connecting rural areas and urban centers are congested, unsafe, and of poor quality. This problem is caused by the inadequate carrying capacity of the state highway and major district road network; deteriorating road assets; and poor planning and implementation for road safety. Nearly 80% of state highways and major district roads in Maharashtra are either single-lane or intermediate-lane standard, while 68% of state highways are in average to very poor condition with a roughness index of 3,000 according to the Indian Road Congress standard, highlighting the need for better road asset maintenance planning. 8 In 2018, Maharashtra reported 35,717 road accidents (7.6% of India’s total), including 13,261 fatalities (8.8% of India’s total), an 8.1% increase in the number of fatalities in comparison to 2017. 9 This project will help the government address the need for (i) increased road capacity; (ii) improved road asset management planning; and (iii) better road safety, especially for women and other vulnerable groups. 7. Government’s plans for road transport. The Government of Maharashtra, through the MPWD, is implementing a road network development plan, with the objectives of improving state roads connecting industrial, tourist, religious, and district headquarters to two-lane roads; connecting villages with all-weather roads; and expanding the overall length of Maharashtra’s road network to 336,994 km (footnote 1). In 2016, the MPWD undertook a review to identify a CRN of roughly 18,000 km of state highways and major district roads for development in phases. Based on the CRN review, about 450 km of high-priority roads were identified. 8. Alignment with strategic objectives. This lending proposal aligns with ADB’s country partnership strategy, 2018–2022 for India, which emphasizes boosting economic competitiveness to create more and better jobs; providing inclusive access to infrastructure networks and services; addressing climate change and increasing climate resilience; and building greater institutional capacities. 10 The project contributes to ADB’s Strategy 2030 operational priorities by (i) addressing remaining poverty and reducing inequalities; (ii) accelerating progress in gender equality; (iii) tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability; (iv) promoting rural development and food security; and (v) strengthening governance and institutional capacity. It is also included in ADB’s country 6 Sector Assessment (Summary): Transport (Road Transport [Nonurban]) (accessible from the list of linked documents in Appendix 2). 7 Government of India, Ministry of Health and Family Welfare. 2017. India National Family Health Survey (NFHS-4 2015-2016). New Delhi. 8 Intermediate road width is 5.5 meters and single-lane road width is 3.75 meters. 9 Government of India, Ministry of Road Transport and Highways. 2019. Road Accidents in India 2018. New Delhi. 10 ADB. 2017. Country Partnership Strategy India, 2018–2022—Accelerating Inclusive Economic Transformation. Manila.
3 operations business plan, 2020–2022 for India. 11 9. Lessons from previous ADB assistance in the road transport subsector. Lessons from previous road transport projects, such as the Chhattisgarh Road Connectivity Project and Rajasthan State Highway Investment Program, and sector assessments in India highlight the need for (i) a longer-term maintenance planning horizon, (ii) stronger attention to road safety, (iii) better monitoring of project outcomes and impacts, and (iv) analysis of the needs of the executing agency to ensure realistic project implementation timeframes. 12 This project’s design is informed by these lessons. With support from a project management services (PMS) consultant, the new executing agency’s capacity for road maintenance planning and road safety auditing will be improved, and a project performance monitoring system will be developed and implemented. The PMS consultant will provide capacity support to the MPWD throughout project implementation in social, gender, and environmental safeguards implementation, as well as financial management. ADB has also provided a series of focused safeguards and gender training workshops to the executing agency during due diligence. B. Project Description 10. The project is aligned with the following impact: connectivity between industrial areas, agricultural areas, administrative headquarters, and economic centers of Maharashtra enhanced (footnote 1). The project will have the following outcome: transport accessibility, efficiency, sustainability, and safety of the CRN in Maharashtra improved. 13 11. Output 1: State highways and major district roads of the CRN upgraded and maintained. The project will (i) upgrade about 25 km of major district roads and 425 km of state highways with climate change adaptation features; (ii) commence road maintenance using performance-based contracts for 450 km of roads; and (iii) install road safety features friendly to the elderly, women, children, and people with disabilities at appropriate locations. 12. Output 2: Capacity in road safety and maintenance increased. The loan will finance (i) development and adoption of a maintenance planning methodology for the project roads and other CRN roads; (ii) piloting and establishment of a systematic approach to road safety audits for 200 km of state highways; (iii) training in climate change adaptation and disaster-resilient features applicable to road design for MPWD project staff, including women staff; (iv) training in road safety auditing, for MWD project staff, including for women staff; and (v) increased road safety awareness among contractors’ personnel, including women personnel. 13. Roads selected for ADB assistance. This project aims to upgrade priority roads that form part of the CRN—11 state highways and 2 major district roads to benefit 7 districts in Maharashtra. Roads were prioritized systematically using criteria that include (i) population served; (ii) connectivity to national highways, other state highways and interstate roads, sea ports, airports, and major rail hubs; (iii) connectivity to industrial areas, enterprise clusters, and agricultural areas; (iv) existing traffic volumes; (v) existing road width; (vi) economic internal rate of return (EIRR); and (vii) land, environment, and social impacts. The state roads selected will improve accessibility and safety in districts with relatively lower HDI scores (Amravati, Osmanabad, Washim, Yavatmal), as well as areas with heavy reliance on the agriculture sector 11 ADB. 2019. Country Operations Business Plan: India, 2020–2022. Manila. 12 ADB. 2019. Report and Recommendation of the President to the Board of Directors: Proposed Chhattisgarh Road Connectivity Project. Manila; ADB. 2017 Report and Recommendation of the President to the Board of Directors: Proposed Rajasthan State Highway Investment Program Manila. 13 The design and monitoring framework is in Appendix 1.
4
for employment.
14. In Ratnagiri, the targeted road upgrades to state highways and one major district road will
improve access to the national highways from Mumbai to Goa and Mumbai to Kolhapur, which
connect to the neighboring state of Karnataka. Access will also be enhanced to markets for
horticulture products as well as to new employment opportunities in the tourism and new power
generation projects. In northern Akola and eastern Amravati, upgrades to the selected state
highways and major district road will improve connectivity between rural areas and administrative
headquarters and the major strategic national highway from Mumbai to Kolkata via Nagpur, as
well as to national highways connecting to the adjacent state of Madhya Pradesh. In Yavatmal,
connectivity will be enhanced to the national highway connecting Washim to the Mumbai–Kolkata
strategic national highway and to the state of Telangana to the south. In Solapur, the upgrades to
two state highways will enhance connectivity between industrial areas and the national highway
from Solapur to Pune, as well as to national highways connecting to Telangana. Overall, the
selected road improvements will enhance employment opportunities and help reduce poverty in
rural areas of Maharashtra by providing more efficient and safe connections to important
administrative headquarters (Amravati, Ratnagiri, and Solapur) and the state’s major economic
centers (Mumbai, Nagpur, Nashik, and Pune). Additional priority roads forming part of the CRN
in Maharashtra are planned as a subsequent project for ADB’s assistance.
C. Value Added by ADB
15. ADB has extensive experience in road transport projects across India at the national and
state levels. This project is the first proposed ADB financing for the development of state highways
and major district roads in Maharashtra and complements ADB’s ongoing assistance in
Maharashtra to improve 2,100 km of rural roads. 14 ADB is currently coordinating with the
Government of India, through the Ministry of Road Transport and Highways, to strengthen road
safety through a state road incentive program. That program excludes infrastructure components
and focuses on institutional aspects, accident response and monitoring systems, vehicle fitness
and awareness campaigns. This project’s scope complements the state road incentive program
through infrastructure improvements relating to road safety. Through this project, road
maintenance planning and road safety within the new executing agency will be updated to include
latest best practices and formalized through systematic methodologies. All civil works contracts
encourage private sector involvement by including 5-year performance-based maintenance
obligations to improve asset quality and service levels. An overall road maintenance strategy and
plan will be defined for the project roads once the 5-year performance-based maintenance period
is over. A tool kit and road safety audit framework will be developed alongside hands-on training
in road safety auditing. Knowledge-sharing events will benefit officials, contractors, consultants,
MPWD staff, and other stakeholders. The project will also implement women-specific initiatives
such as health camps at different communities along the project roads. Bus shelters will include
solar lighting, empowerment messages for women, and helpline numbers for women-specific
schemes.
D. Summary Cost Estimates and Financing Plan
16. The project is estimated to cost $255,990,000 (Table 1).
17. Detailed cost estimates by expenditure category and by financier are included in the
14 ADB. 2019. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical
Assistance Grant to India for Maharashtra Rural Connectivity Improvement Project. Manila.5
project administration manual (PAM). 15 Civil works and consulting services are the major
expenditure items under the project.
Table 1: Summary Cost Estimates
($ million)
Item Amounta
A. Base Costb
1. State highways and major district roads of the core road network upgraded 211.55
and maintained
2. Capacity in road safety and maintenance increased 7.68
Subtotal (A) 219.23
B. Contingenciesc 24.96
C. Financial Charges During Implementationd 11.80
Total (A+B+C) 255.99
a Includes taxes and duties of $37.3 million funded by the government and the Asian Development Bank. The Asian
Development Bank share does not represent an excessive share of the project cost.
b Prices as of October 2019.
c
Physical contingencies are computed at 5.0% for civil works. Price contingencies computed at average cost
escalation factor of 4.0% on base costs.
d Includes interest and commitment charges. Interest during construction for the ordinary capital resources loan has
been computed at the 5-year United States dollar fixed swap rate plus an effective contractual spread of 0.50% and
maturity premium of 0.10%. Commitment charges for the ordinary capital resources loan are 0.15% per year to be
charged on the undisbursed loan amount.
Source: Asian Development Bank estimates.
18. The government has requested a regular loan of $177,000,000 from ADB’s ordinary
capital resources to help finance the project. The loan will have a 25-year term, including a grace
period of 5 years; an annual interest rate determined in accordance with ADB’s London interbank
offered rate (LIBOR)-based lending facility; a commitment charge of 0.15% per year (the interest
and other charges during construction to be capitalized in the loan); and such other terms and
conditions set forth in the draft loan and project agreements. Based on the straight-line method,
the average maturity is 15.25 years, and there is a 0.10% maturity premium payable to ADB.
19. The summary financing plan is in Table 2. ADB will finance the expenditures in relation to
civil works and consulting services. The government has agreed to make counterpart funds
available to meet additional costs arising from unforeseen circumstances, such as price
escalation or design changes.
Table 2: Summary Financing Plan
Amount Share of Total
Source ($ million) (%)
Asian Development Bank
Ordinary capital resources (regular loan) 177.00 69.10
Governmenta 78.99 30.90
Total 255.99 100.00
a The Government of Maharashtra will fund the 5-year performance-based maintenance contracts.
Source: Asian Development Bank.
20. Climate adaptation and finance. The climate change impact on the project is assessed
as medium. A climate risk and vulnerability assessment indicated an increased risk of extreme
temperatures and increased rainfall because of climate change. 16 High temperatures and heat
15 Project Administration Manual (accessible from the list of linked documents in Appendix 2).
16 Climate Change Assessment (accessible from the list of linked documents in Appendix 2).6
waves impact road pavement integrity, causing surface failures, including cracking, raveling,
potholes, and ruts. The pavement design has adopted the use of viscosity-graded VG-30 paving
bitumen in lieu of the earlier grade used in most state roads in India. This heavier duty bitumen
pavement will tolerate significant traffic loads and distress induced by higher temperatures.
Extreme rainfall is projected to increase in all districts of Maharashtra, with the greatest increases
in the northern areas. Drainage will be resized and improved to cope with higher flooding
frequency and to provide higher discharge capacities. Roads will also be raised by about 0.3
meters. Road embankments will be raised in critical sections to prevent water stagnation and
flooding impacts. Climate change adaptation measures are estimated to cost about $16.79
million. ADB will finance 76.0% of adaptation costs.
E. Implementation Arrangements
21. The project will be implemented by the MPWD through the project management unit
(PMU) and project implementation unit (PIU) field offices for civil works contract packages. The
MPWD will also engage consulting firms to be the authority engineers for the works contracts,
and a PMS consultant to support project implementation. The implementation arrangements are
summarized in Table 3 and described in detail in the PAM (footnote 15).
Table 3: Implementation Arrangements
Aspects Arrangements
Implementation period April 2020–December 2024
Estimated completion date 31 December 2024
Estimated loan closing date 30 June 2025
Management
(i) Executing agency Government of Maharashtra, Public Works Department
(ii) Key implementing agency Project management unit in the Public Works Department,
Government of Maharashtra
(iii) Implementation unit Project implementation unit in the Public Works Department,
Government of Maharashtra, about 45 staffa
Procurement Open competitive Nine contracts $183.31 million
bidding (nationally
advertised)
Consulting services Quality- and cost- Three contracts for $9.57 million
based selection; authority engineer and
full technical project management
proposal services
2,545 person-months
Retroactive financing and/or Retroactive financing of eligible works and consulting services
advance contracting expenditures, incurred before loan effectiveness but within 12
months prior to loan signing, up to 20% of the loan amount; advance
contracting for recruitment of consultants and procurement of civil
works.
Disbursement The loan proceeds will be disbursed following ADB’s Loan
Disbursement Handbook (2017, as amended from time to time) and
detailed arrangements agreed between the government and ADB.
ADB = Asian Development Bank.
Note: The performance-based maintenance contracts will commence during the implementation period and extend
beyond the estimated loan closing date. The Government of Maharashtra will fund these maintenance activities.
a Excluding administrative support staff.
Source: Asian Development Bank.7
III. DUE DILIGENCE
A. Technical
22. The project was assessed as technically viable. The MPWD prepared and approved the
engineering design of the proposed project roads during project preparation. The engineering
design follows applicable criteria in line with Indian Roads Congress regulations and also
incorporates several climate change adaptation and road safety aspects. The project team
conducted an independent review of the engineering design, and all recommended improvements
have subsequently been addressed in the design.
B. Economic Viability
23. The project is economically viable. Economic evaluation of the project was undertaken in
accordance with ADB guidelines by comparing life cycle economic costs and benefits in with-
project and without-project scenarios, against an assumed hurdle rate of 9% as decision criteria. 17
The Highway Development Model 4 (HDM-4) was used to estimate road agency and road user
costs based on input data on traffic, road geometry, pavement condition, and improvement and
maintenance costs. Project benefits include savings associated with vehicle operating costs and
travel times. Additional benefits derived from better safety and quality of maintenance works have
not been included in the quantitative analysis and would improve the economic viability of the
project. The EIRR of the project is estimated at 16.5%, not including the benefits of reduced road
accidents. Sensitivity analysis demonstrated the robustness of the economic viability of the project
under adverse changes in costs and benefits, with an EIRR of 11.3% under the most sensitive
scenario involving (i) a 10% increase in capital costs, (ii) a delay of 1 year in opening the project
roads, (iii) a 15% decrease in traffic demand, and (iv) a decrease of 10% in time values of
passengers. 18
C. Sustainability
24. The project will not generate revenue. Once the 5-year performance-based maintenance
period is over, the MPWD will assume responsibility for maintenance through regular budget
allocations in each financial year. Financial sustainability analysis demonstrated that the MPWD’s
annual budget allocation for maintenance increased from ₹17.46 billion in fiscal year (FY) 2015
to about ₹18.00 billion in FY2020, although portions of the road network still require maintenance
and rehabilitation. The project’s recurrent costs will not place an excessive burden on the MPWD
to maintain the project roads in the future. The total estimated cost of maintaining the project
roads is ₹1.09 billion in constant prices over the 20-year asset life. The annual recurrent cost for
routine maintenance is estimated at ₹54.17 million in constant prices, while periodic maintenance
will only be required in 2034 at an estimated cost of ₹7.41 million in constant prices. The project’s
estimated annual recurrent costs are estimated at about 0.3% of the MPWD’s overall
maintenance budget allocation for FY2020.
25. The MPWD has committed to prioritizing the allocation of maintenance funding for the
project roads. However, road maintenance funding must be sustainable, and therefore the project
sustainability risk is high. Capacity development under output 2 of this project (para. 12) will assist
the MPWD in developing a methodology to help sustain road assets at desirable levels; improve
policies and procedures; and increase project sustainability.
17 Asian Development Bank. 2017. Guidelines for the Economic Analysis of Projects. Manila.
18 Economic and Financial Analysis (accessible from the list of linked documents in Appendix 2).8 D. Governance 26. Institutional. The MPWD will implement the project through a PMU dedicated to ADB projects, situated in the state capital Mumbai. Because the project covers a large geographic area, four field offices have been established under a PIU to support the PMU operation. The PMU and the field offices have sufficient staff capacity to prepare and implement the project. The PMS consultant will support the PMU in the areas of asset management, road safety, reporting, financial management, and safeguard monitoring. 27. Financial management. The assessed premitigation financial management risk is moderate, mainly because the MPWD and the PMU have not previously implemented ADB- supported projects and the PMU lacks an internal audit function. The risk will be mitigated through appropriate measures, such as engagement of a chartered accounting firm to perform internal audit of the project on a semiannual basis, and recruitment of specialist staff to prepare a financial management manual and to provide training. 28. Procurement of civil works. The procurement risk level is medium. The assessment concluded that the executing agency has significant experience in contract management and the procurement of civil works and consultant recruitment under national and Government of Maharashtra procurement regulations. However, the executing agency is new to ADB’s procurement policies and regulations. Capacity-building sessions for procurement have already been provided. Under advance contracting, the procurement of nine civil works packages and recruitment of consulting services are at advanced stages. The procurement of civil works and consulting services financed by the ADB loan is in accordance with the ADB Procurement Policy (2017, as amended from time to time) and Procurement Regulations for ADB Borrowers (2017, as amended from time to time), and all procurement has been conducted under prior review. The e-procurement system was assessed by ADB as part of due diligence and found to be satisfactory. Value for money has been optimized using multiple contract bidding to ensure least- cost combinations for civil works packages and 5-year performance-based maintenance contracts to ensure quality of work. The procurement strategy considered location in packaging both civil works and consulting services packages. 29. ADB’s Anticorruption Policy (1998, as amended to date) was explained to and discussed with the government and the MPWD. The specific policy requirements and supplementary measures are described in the PAM (footnote 15). E. Poverty, Social, and Gender 30. Poverty. The average poverty level in Maharashtra is lower than the national rate as a result of relatively higher average income levels in the four main urban centers: Mumbai, Nagpur, Pune, and Thane. However, there is wide income disparity within Maharashtra, which the project will help address by improving connectivity, facilitating access to services, and accelerating economic growth. The project will improve state highways and major district roads in rural areas; beneficiaries, including the poor, will benefit from improved access to basic services and living environments. The project will also improve livelihoods and trade opportunities for the nonurban population. The project preparatory phase involved consultations with local communities—both women and men—living along the proposed project roads. Community members were supportive of the project and expressed that the improved roads will enhance mobility between commercial centers, which would increase economic and employment opportunities. Local communities also expressed their belief that improved connectivity would contribute to reducing poverty.
9 31. Gender. The project is categorized effective gender mainstreaming. There are several gender-related advantages to improved road infrastructure, including improved access to health and education services, increased income opportunities, affordable and reliable transportation facilities promoting safe mobility, better implementation of government outreach programs, and reduced time poverty. A gender action plan has been prepared detailing activities with indicators and targets, responsible agencies, and timeframes to ensure effective implementation, monitoring, and reporting of gender action plan activities. The gender action plan outlines activities to (i) enhance women’s economic and human development opportunities; (ii) build institutional gender capacities through gender training for staff, consultants, and contractors; (iii) strengthen the technical and management capacities of women staff in climate adaptation and resilience features applicable to road design and road safety auditing; (iv) create space for women’s participation in decision-making and leadership; (v) reduce time poverty; and (vi) promote gender-responsive infrastructure by ensuring that road and bus shelter design includes features responsive to the needs of the elderly, women, children, and the differently abled. This component will include a pilot initiative of additional design features, such as solar lights and information on women-specific schemes, empowerment messages for women, and helpline numbers in select bus shelters. 32. Labor. The bidding documents for the civil works contractors include provisions to (i) ensure that all applicable labor laws are complied with, including the prohibition against employing children in construction; (ii) encourage employment of the poor and inhabitants of affected communities; and (iii) ensure that wages for men and women are equal for work of equal value. F. Safeguards 33. In compliance with ADB’s Safeguard Policy Statement (2009), the project’s safeguard categories are as follows. 19 34. Environment (category B). All road works will follow existing alignments, except for a few improvements in road geometry in some portions. No significant, irreversible environmental impacts are anticipated. Two roads—State Highway 204 (Barshi–Solapur) and State Highway 68A (Korti–Awati portion)—pass through portions of the Great Indian Bustard Sanctuary. 20 The biodiversity assessment established that the sanctuary is not a critical habitat for, nor will the road improvement impact, the endangered birds. 21 Mitigation measures were proposed in the initial environmental examination (IEE) for the observed movement of wildlife, such as black bucks and other small mammals along these roads. No other roads pass through or are near any protected or environmentally sensitive areas. The MPWD prepared an IEE in accordance with ADB’s Safeguard Policy Statement (2009), which is on the ADB website. The MPWD will not allow road construction to commence without obtaining the necessary permits and clearances. Anticipated environmental impacts from the project entail typical road construction-related issues, such as acquisition of forest land; removal of trees; generation of dust, noise, exhaust, and waste from construction and worker camps; water contamination; occupational health and safety issues; slope failures; erosion; and siltation. There will be minimal noise and air pollution as a result of increased traffic volumes, and levels will not exceed the National Ambient Air Quality and International Finance Corporation standards, except in some built-up locations where the baseline 19 ADB. Safeguard Categories. 20 The Great Indian Bustard Sanctuary (formerly Jawaharlal Nehru Bustard Sanctuary) is identified as an Important Bird and Biodiversity Area by BirdLife International, although noted as unsuitable habitat for the Great Indian Bustard. 21 As assessed based on the International Finance Corporation’s Guidance Note 6 on Biodiversity Conservation and Sustainable Management of Living Natural Resources updated in 2019, and ADB’s Safeguard Policy Statement.
10
already exceeds the Indian noise standard. The improvement works in these locations are
anticipated to reduce noise by improving road surface conditions and reducing traffic congestion.
Vibration during construction and implementation is also unlikely to negatively affect sensitive
receptors along the road. Mitigation measures to address environmental impacts have been
included in the road-specific environmental management plans, which are part of the bid
documents. The MPWD conducted meaningful consultations with the affected persons and other
key stakeholders (e.g., forestry officials) while preparing the IEE. Concerns of affected persons
and stakeholders have been considered and will continue to be addressed during project
implementation through the grievance redress mechanism.
35. Involuntary resettlement (category B). The project will entail only limited involuntary
resettlement because of minor land acquisition and some encroachment in built-up areas. Works
will be restricted to rights-of-way already owned by the executing agency, except in Pusad,
Yavatmal district, where 216 square meters of barren land will be required for geometric
improvements to the road design. The MPWD will acquire the land owned by one person by direct
purchase based on the provisions of national law, state policy, and ADB’s Safeguard Policy
Statement. Should negotiations fail, land and assets will be acquired using eminent domain in
accordance with the same law and policies. The MPWD has prepared a resettlement plan for
each of the nine project roads based on full census surveys using detailed design specifications.
The resettlement plans adequately assess the scope of involuntary resettlement, and the
proposed mitigation measures are commensurate with the known risks and impacts. According
to the surveys, 380 households (1,772 persons) will experience impacts on land, structures,
and/or livelihoods. This includes one titled landowner and 379 nontitled households, which mostly
own kiosks that will be shifted back, but remain in situ. The most sensitive subproject is in
Yavatmal District, where 40 nontitled households (190 persons) will experience loss of greater
than 10% of productive assets. 22 Compensation rates at replacement cost, shifting assistance,
income-restoration assistance, and support for vulnerable groups are provided in the resettlement
plans. The MPWD conducted meaningful consultations with displaced persons. The resettlement
plans are disclosed in village council offices and the ADB website. Grievance redress committees
at each field office will address affected persons’ concerns. An implementation nongovernment
organization will be engaged to support the MPWD.
36. Indigenous peoples (category C). The social impact assessments undertaken to
prepare the project roads for rehabilitation suggest that no indigenous peoples’ communities
within the meaning of ADB’s Safeguard Policy Statement will be affected by the project.
37. Safeguards implementation. The PMU includes nodal officers for environmental and
social safeguards. The PMU nodal officers will be responsible for the overall management of
safeguards under the project, supported by PIU officers, who will serve as the safeguards focal
points at the site level. The PMS consultant will provide project implementation support, including
safeguards implementation to the PMU. Two authority engineers will supervise and manage the
construction works, including safeguards implementation. The civil works contractors will be
responsible for implementing the environmental management plan and will include environment,
health, and safety officers in their team. The MPWD will organize an initial coordination or training
workshop to clarify the roles and responsibilities of each party for complying with environmental
and social safeguard requirements. Hands-on training will be conducted by the authority
22 The subproject will improve the Shrirampur–Vaijapur–Risod–Washim–Pusad–Mahagaon–Fulsawangi–Mandvi Road
(SH51) under Package EPC5. The census indicates that 19 kiosks and 11 residential structures owned by 33
households will be fully affected. The affected persons will not be required to relocate because all structures will be
reconstructed in situ.11
engineers or ADB as necessary during project implementation.
G. Summary of Risk Assessment and Risk Management Plan
38. Significant risks and mitigating measures are summarized in Table 4 and described in
detail in the risk assessment and risk management plan. 23
Table 4: Summary of Risks and Mitigating Measures
Risks Mitigation Measures
Insufficient funding Civil works contracts include 5-year performance-based maintenance under the
for maintenance responsibility of the contractors. The project roads have been designed for 15-year
reduces project durability thereafter. The Maharashtra Public Works Department has committed to
sustainability allocating maintenance funding. The project will also provide support for capacity
building in road maintenance planning, and thereby improve sustainability.
Lack of experience Additional support from Asian Development Bank staff, staff consultants, and
of executing consultants under the project is required to successfully implement the project. The
agency results in project implementation schedule includes sufficient time for capacity building and
implementation support for the executing agency. The project management unit is taking advance
delays during initial actions to ensure implementation readiness. The project will provide
phases implementation support through the project management services consultant.
Source: Asian Development Bank.
IV. ASSURANCES AND CONDITIONS
39. The government and the MPWD have assured ADB that implementation of the project
shall conform to all applicable ADB requirements, including those concerning anticorruption
measures, safeguards, gender, procurement, consulting services, financial management, and
disbursement as described in detail in the PAM and loan documents.
40. The government and the MPWD have agreed with ADB on certain covenants for the
project, which are set forth in the draft loan and project agreements.
V. RECOMMENDATION
41. I am satisfied that the proposed loan would comply with the Articles of Agreement of the
Asian Development Bank (ADB) and recommend that the Board approve the loan of
$177,000,000 to India for the Maharashtra State Road Improvement Project, from ADB’s ordinary
capital resources, in regular terms, with interest to be determined in accordance with ADB’s
London interbank offered rate (LIBOR)-based lending facility; for a term of 25 years, including a
grace period of 5 years; and such other terms and conditions as are substantially in accordance
with those set forth in the draft loan agreement presented to the Board.
Masatsugu Asakawa
President
27 March 2020
23 Risk Assessment and Risk Management Plan (accessible from the list of linked documents in Appendix 2).12 Appendix 1
DESIGN AND MONITORING FRAMEWORK
Impact the Project is Aligned with
Connectivity between industrial areas, agricultural areas, administrative headquarters, and economic
centers of Maharashtra enhanced (Road Development Plan 2001–2021)a
Data Sources and
Performance Indicators with Reporting
Results Chain Targets and Baselines Mechanisms Risks
Outcome By 2025:
Transport accessibility, a. Average daily vehicle-km a–e. Post- Significant
efficiency, sustainability traveled on project roads in the implementation downturn in the
and safety of the CRN in first full year of operation increased surveys endorsed by state economy
Maharashtra improved to 3.5 million average vehicle-km MPWD may reduce the
per day (2019 baseline: 2.9 million traffic on project
average vehicle-km per day) roads.
b. Average travel time on project
roads reduced by at least 15% for
motorized transport (2019
baseline: 1.8 minutes per km for
motorized transport)
c. Vehicle operating cost
(economic) on project roads
reduced by 10% for both cars and
heavy vehicles
(2019 baseline: ₹7.13 per km for
cars and ₹23.95 per km for heavy
vehicles).
d. At least 450 km of state roads
maintained at roughness index of
2,000 India Road Congress
standard
(2019 baseline: Roughness index
of 3,000 India Road Congress
standard)
e. Average number of fatalities per
year in road accidents on the
project roads reduced by at least
5%
(2019 baseline: 29 fatalities)
Outputs By 2024: 1a–c. Progress Increase in
1. State highways and 1a. About 25 km of major district reports endorsed by prices of
major district roads of the roads and 425 km of state MPWD construction
CRN upgraded and highways upgraded with climate materials
maintained change adaptation features (2019 beyond
baseline: 0) (TI 1.3.1) projections may
1b. Roads maintenance affect the total
commenced using 5-year length of roads
performance-based maintenance to be
contracts for 450 km of roads constructed.
(2019 baseline: Not applicable)Appendix 1 13
Data Sources and
Performance Indicators with Reporting
Results Chain Targets and Baselines Mechanisms Risks
1c. Road safety features friendly to
elderly people, women, children,
and people with disabilities
installed at 50 appropriate
locationsb
(2019 baseline: 0) (TI 2.4.1)
2. Capacity in road safety By 2024: Insufficient
and maintenance 2a. Maintenance planning 2a. Annual funding for road
increased methodology for the project roads maintenance maintenance
and other MPWD CRN roads program of MPWD reduces
developed and adopted project’s
(2019 baseline: Not applicable) sustainability.
2b. Systemized approach for road
2b. Post-
safety audits and engineering
implementation
interventions in road designs in
progress report
MPWD established and piloted for
endorsed by MPWD
200km of state highways
(2019 baseline: Not applicable)
2c–e. Post-
2c. At least 100 eligible MPWD
implementation
project staff, including all women
surveys by trainer or
project staff, reported increased
subject-matter
knowledge in climate change and
expert, endorsed by
disaster resilient features
MPWD
applicable to road design
(2019 baseline: Not applicable). (TI
2.5.2)
2d. At least 50 eligible MPWD
project staff, including all women
project staff, reported increased
knowledge in technical capacity on
road safety auditing
(2019 baseline: Not applicable)
2e. At least 80% contractors’
personnel, including all women
personnel, report increased
awareness in road safety
(2019 baseline: Not applicable)
Key Activities with Milestones
1. State highways and major district roads of the core road network upgraded and maintained
1.1 Procure civil works by Q1 2020 and complete construction by Q4 2023.
1.2 Award and mobilize authority engineer by Q1 2020.
2. Capacity in road safety and maintenance increased
2.1 Recruit consultants for road asset management program by Q3 2020.
2.2 Complete training for road safety and sexually transmitted infections by Q4 2020.
2.3 Deliver training on climate change and disaster-resilient features applicable to road design by Q1 2021.
2.4 Complete and pilot road safety audits by Q1 2023.
2.5 Deliver capacity building in road safety auditing by Q2 2023.
2.6 Commence road maintenance activities by Q4 2023.
Inputs
Asian Development Bank: $177 million (loan)14 Appendix 1
Government: $78.99 million
Assumptions for Partner Financing
Not applicable
CRN = core road network, km = kilometer, MPWD = Maharashtra Public Works Department, Q = quarter, TI = tracking
indicator.
Note:
Contribution to the ADB Results Framework:
TI 1.3.1: Infrastructure assets established or improved (25 km of major district roads and 425 km of state highways)
TI 2.4.1: Time-saving or gender-responsive infrastructure assets and/or services established or improved (50
locations)
TI 2.5.2: Gender-inclusive climate and disaster resilience capacity development initiatives implemented (20 women)
a Government of Maharashtra, Public Works Department. 2012. Road Development Plan 2001–2021. Mumbai.
b Road safety features include geometric improvements, safety and crash barriers, improved drainage, pavement
markings, well-marked crossings, safety signage, and pedestrian walkways.
Source: Asian Development Bank.Appendix 2 15
LIST OF LINKED DOCUMENTS
http://www.adb.org/Documents/RRPs/?id=52298-001-3
1. Loan Agreement
2. Project Agreement
3. Sector Assessment (Summary):Transport (Road Transport [Nonurban])
4. Project Administration Manual
5. Economic and Financial Analysis
6. Summary Poverty Reduction and Social Strategy
7. Risk Assessment and Risk Management Plan
8. Climate Change Assessment
9. Gender Action Plan
10. Initial Environmental Examination
11. Resettlement Plan: NH 66 to Kante Tulasani Devrukh Road
12. Resettlement Plan: Dabhole-Shiposhi–Korle-Vatul Road
13. Resettlement Plan: Barshi–Solapur Akkalkot Dudhani Aland to State Border Road
14. Resettlement Plan: Daund Karmala Paranda Barshi Osmanabad Road
15. Resettlement Plan: Wasim-Pusad Road
16. Resettlement Plan: Riddhipur-Tiswa-Anjansingi–Dhamangaon-Devao-Yavatmal Road
17. Resettlement Plan: Walgaon-Dariyapur-Akot Road and Dariyapur-Amla to
Runmochan Asara Road
18. Resettlement Plan: Amravati–Chandur Railway Station to Talegaon Road and
Riddhipur to Teosa Road
19. Resettlement Plan: Daud-Karmala-Paranda-Barshi-Osmanabad RoadYou can also read
