Completion Report

Project Number: 43063-013 Loan Number: 2736 Technical Assistance Number: 7785 June 2019

India: Madhya Pradesh State Roads Project III

This document is being disclosed to the public in accordance with ADB’s Access to Information Policy.

CURRENCY EQUIVALENTS

Currency Unit – Indian rupee/s (₹)

At Appraisal At Project Completion (29 November 2010) (30 June 2016)

₹1.00 = $0.0215 $0.0148 $1.00 = ₹45.9417 ₹67.4263

ABBREVIATIONS

AADT – annual average daily traffic ADB – Asian Development Bank ARS – accident response system CPS – country partnership strategy DMF – design and monitoring framework EIRR – economic internal rate of return EMP

FIDIC – –

environmental management plan International Federation of Consulting Engineers

IEE – initial environmental examination MPRDC – Madhya Pradesh Road Development Corporation OMT – operation-maintenance-transfer PCR – project completion review PIU – project implementation unit PPER – project performance evaluation report PPMS – project performance monitoring system PPP – public–private participation QCBS – quality- and cost-based selection SOE – statement of expenditures TA – technical assistance TOR – terms of reference VOC – vehicle operation cost

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., FY2019 ends on 31 March 2019.

(ii) In this report, "$" refers to United State dollars.

Vice-President Shixin Chen, Operations 1 Director General Hun Kim, South Asia Department (SARD) Director Kenichi Yokoyama, Country Director, India Resident Mission, SARD Team leader Arun Bajaj, Senior Project Officer (Transport), SARD Team members Shiva Raju Dodla, Associate Project Officer (Transport), SARD

Girish Rameshwar Mahajan, Senior Environment Officer, SARD Meenakshi Sharma, Associate Project Analyst, SARD

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

CONTENTS

Page

BASIC DATA i

I. PROJECT DESCRIPTION 1

II. DESIGN AND IMPLEMENTATION 1

A. Project Design and Formulation 1 B. Project Outputs 3 C. Project Costs and Financing 3 D. Disbursements 4 E. Project Schedule 4 F. Implementation Arrangements 5 G. Technical Assistance 6 H. Consultant Recruitment and Procurement 6 I. Gender Equity 7 J. Safeguards 8 K. Monitoring and Reporting 9

III. EVALUATION OF PERFORMANCE 9

A. Relevance 9 B. Effectiveness 10 C. Efficiency 11 D. Sustainability 12 E. Development Impact 12 F. Performance of the Borrower and the Executing Agency 13 G. Performance of the Asian Development Bank 13 H. Overall Assessment 13

IV. ISSUES, LESSONS, AND RECOMMENDATIONS 14

A. Issues and Lessons 14 B. Recommendations 15

APPENDIXES 1. Design and Monitoring Framework 16 2. Summary of Project Outputs 17 3. Project Cost at Appraisal and Actual 18 4. Project Cost by Financier 19 5. Disbursement of ADB Loan Proceeds 20 6. Appraisal and Actual Implementation Schedules 21 7. Chronology of Main Events 22 8. Organization Chart 24 9. Technical Assistance Completion Report 25 10. Summary of Contract Packages 27 11. Status of Compliance with Loan Covenants 28 12. Economic Reevaluation 38 13. Summary of Socioeconomic Impacts 45 14. Contribution to ADB Results Framework 48

14

BASIC DATA

A. Loan Identification 1. Country 2. Loan number and financing source 3. Project title 4. Borrower 5. Executing agency 6. Amount of loan 7. Project completion report number 8. Financing modality

India 2736 (ordinary capital resources) Madhya Pradesh State Roads Project III India Madhya Pradesh Government, acting through Madhya Pradesh Road Development Corporation Original: $300 million 2736 Project loan

B. Loan Data 1. Appraisal – Date started – Date completed 2. Loan negotiations – Date started – Date completed 3. Date of Board approval 4. Date of loan agreement 5. Date of loan effectiveness – In loan agreement – Actual – Number of extensions 6. Project completion date – Appraisal – Actual

7. Loan closing date – In loan agreement – Actual

– Number of extensions

8. Financial closing date – Actual

9. Terms of loan

– Interest rate – Commitment charges – Maturity (number of years) – Grace period (years) – Front-end fee

10. Terms of Relending (if any)

– Interest rate – Commitment charges

15 November 2010 19 November 2010 18 January 2011 18 January 2011 10 March 2011 15 June 2011 13 September 2011 28 July 2011 none 30 June 2014 30 June 2016 30 June 2014 30 June 2016 3 21 December 2016 London interbank offered rate (LIBOR)-based 0.15% 25 5 none London interbank offered rate (LIBOR)-based 0.15%

– Maturity (number of years) – Grace period (years) – Front-end fee

25 5 none

11. Disbursements

a. Dates Initial Disbursement

9 September 2011 Final Disbursement 21 December 2016

Time Interval 63 months

Effective Date 28 July 2011

Actual Closing Date 30 June 2016

Time Interval 59 months

b. Amount ($)

Category

Original Allocation

(1)

Increased during

Implementation (2)

Cancelled during

Implementation1 (3)

Last Revised Allocation2 (4=1+2–3)

Amount Disbursed

(5)

Undisbursed Balance3 (6 = 4–5)

1 Works 249,000,000 33,000,000 216,000,000 211,339,904 4,660,096

2 Equipment 1,000,000 1,000,000 1,000,000

3 Consulting service

15,000,000 15,000,000 10,774,643 4,225,357

4 Unallocated 35,000,000 35,000,000

Total 300,000,000 68,000,000 232,000,000 222,114,547 9,885,453

1. First loan partial cancellation of $50.0 million was effective 27 November 2013. Second loan partial cancellation of $18 million was effective 3 September 2015.

2. The last loan reallocation was made on 3 September 2015. 3. The undisbursed amount was cancelled at loan financial closure. ** C. Project Data

1. Project Cost ($ million)

Cost Appraisal Estimate Actual

Foreign Exchange Cost Not Applicable —

Local Currency Cost Not Applicable —

Total

Note: At appraisal, the project cost was not categorized by foreign exchange and local currency.

2. Financing Plan ($ million)

Cost Appraisal Estimate Actual

Implementation Costs

Borrower Financed 57.5 50.1

ADB Financed 300.0 222.1

Total 357.5 272.2 IDC Costs and other Financial Charges

Borrower Financed 17.5 4.6

ADB Financed

Total 17.5 4.6

ADB = Asian Development Bank, IDC = interest during construction.

ii

3. Cost Breakdown by Project Component ($ million)

Component Appraisal Estimate Actual

A. Base Cost

1. Civil works 300.0 258.2

2. Consulting services 15.0 12.4

3. Institutional development 1.0 1.6

Subtotal (A) 316.0 272.2

B. Contingencies

1. Physical contingencies 24.0 a

2. Price contingencies 17.5 a

C. Financial Charges during Implementation 17.5 4.6

Total 375.0 276.8 a are included in civil works.

4. Project Schedule

Item Appraisal Estimate Actual

A. Project Preparation

Loan Processing and Approval Q3 2010–Q1 2011 Q3 2010–Q1 2011

B. Construction Supervision Consultants

Selection Q4 2010–Q1 2011 Q4 2010–Q2 2011

Supervision Q2 2011–Q2 2014 Q2 2011–Q1 2016

C. Civil Works

Procurement Q4 2010–Q1 2011 Q4 2010–Q3 2011

Construction Q2 2011–Q2 2013 Q3 2011–Q2 2016

D. Technical Assistance

Implementation Q1 2012–Q1 2013 Q2 2012–Q1 2014

5. Project Performance Report Ratings

Implementation Period Single Project Ratings*

From 1 July 2011 to 31 December 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 2014 On track

From 1 January 2015 to 31 December 2015 On track

From 1 January 2016 to 31 December 2016 On track * based on new ratings for project performance in the E-operations

iii

D. Data on Asian Development Bank Missions

Name of Mission Date

No. of Persons

No. of Person-

Days

Specialization of

Members

Loan consultation 20–23 September 2010 5 20 a, d, g, h(2)

Fact finding 15–19 November 2010 3 11 g, h

Inception 21–26 August 2011 3 13 g(2), h

Review 1 22–29 February 2012 3 24 a, d, g

Review 2 9–16 January 2013 3 24 a, d, g

Special administration 1 24–30 October 2013 1 7 g

Portfolio management 19 May 2014 2 2 f, g

Midterm review 5–11 September 2014 2 14 d, g

State level review 1 10 April 2015 3 3 c, f, g

Review 3 6–10 July 2015 2 10 a, g

State level review 2 16 October 2015 4 4 c, e, g(2)

Special administration 2* 23–27 November 2015 2 15 a, g

Special administration 3* 17–22 October 2016 2 12 a, g

Completion review 26 February–2 March 2018 1 5 b

* mission combined with other projects in the area. a = analyst, b = consultant, c = country director, d = environmental specialist; e = head, project management unit, f = portfolio management specialist, g = project officer, h = transport specialist

iv

I. PROJECT DESCRIPTION 1. On 10 March 2011, the Asian Development Bank (ADB) approved a loan of $300 million to the Government of India for the Madhya Pradesh State Roads Project III.1 The primary objective of the project was to continue to support the development of the state highway network in Madhya Pradesh and enhance the road safety capacity of the state government. The long-term impact of the project would be accelerated economic growth in Madhya Pradesh. The immediate project outcome would be more efficient and sustainable transport operations of the state highway network.

2. At appraisal, the project’s intended outputs were (i) rehabilitation and upgrading of about 1,080 kilometers (km) of state highways identified under the state road rehabilitation program, and (ii) improvement in the road safety management capacity of Madhya Pradesh Road Development Corporation (MPRDC). The project would provide (i) consulting services to support implementation of the civil works, and (ii) equipment necessary for MPRDC to enhance road safety. The total investment cost was estimated at $375 million, which was to be financed by the ADB loan of $300 million (80% of total project cost) and counterpart funds of $75 million equivalent (20%) from the government of Madhya Pradesh. It was anticipated that the project would bring substantial economic benefits and lead to socioeconomic development in the state, including improved access to socioeconomic services, better employment opportunities, and improved transport services. In turn, this would help reduce poverty in the region and stimulate economic growth and human development in Madhya Pradesh. The economic internal rate of return of the project was estimated at 18.3%–45.5% for the candidate state roads. The executing agency for the project, which would be implemented over 3 years, would be the government of Madhya Pradesh acting through MPRDC.

3. In conjunction with the project, technical assistance (TA) would be provided to support the MPRDC initiatives of institutional development, especially road safety through the establishment of a road accident emergency response system, and the promotion of private sector participation in state highway network development and maintenance.2 The estimated cost of the TA was $1.25 million, of which ADB would finance $1.00 million equivalent.

II. DESIGN AND IMPLEMENTATION

A. Project Design and Formulation 4. At appraisal, road transport in India accounted for 68% of freight movement and 87% of passenger traffic. The freight traffic on these roads had increased by about 12% per year and passenger traffic by about 8% per year over the previous decade. The national highways and the state highways (i.e., the secondary road system) were unable to cope with the rapid traffic growth. This had led to congestion, road deterioration, and increased transport costs. State highways, which link national highways with district headquarters and important towns, comprised about 13% of the road network and carried about 40% of the total traffic. 5. The state highway network in Madhya Pradesh comprised 10,249 km of roads. However, given the poor coverage and condition of the roads, they could not cope with the increasing demand for road transport. As a poverty reduction strategy, the state government had encouraged

1 ADB. February 2011. Report and Recommendation of the President to the Board of Directors on Proposed Loan

and Technical Assistance Grant to India for the Madhya Pradesh State Roads Project III. Manila. 2 ADB. TA 7785-IND: Capacity Building for Road Safety and Public–Private Participation (PPP) Support.

2

infrastructure-led growth by successfully rehabilitating about 7,400 km of state highways through ADB assistance, public–private participation (PPP) schemes, and state funds. The state government then decided to rehabilitate another 665 km with state resources, 771 km under PPP schemes, and requested ADB to finance 1,080 km of the state highways which were mostly in the very poor and less developed areas of the state (i.e., the eastern and west central areas).

6. Under the country partnership strategy (2009–2012) for India, ADB supported all levels of road sector development as a core infrastructure operation to facilitate sustainable economic growth in the country.3 ADB has been the only multilateral development agency in Madhya Pradesh for state highway development until this project. Prior to this, ADB had already approved two loans for state highway development in Madhya Pradesh.4 A TA for project preparation was provided to support project readiness and support due diligence in the project design and preconstruction activities.5 Lessons from previous projects, especially from the two earlier ADB projects, were incorporated in the project design. This project was ADB’s third intervention for highway development in the state, and was included in the country operations business plan (2011–2013).6 The project aimed to rehabilitate the parts of the state highway network that had not been upgraded and enhance the road safety capacity of MPRDC, with the purpose of transforming it into a full-fledged state highway agency by building on its success as an implementing agency. Based on lessons learned and the achievements of the previous two projects in the state, the project was designed to facilitate efficient and sustainable transport operations by improving the identified roads and also : (i) minimizing the impact of climate change through proper engineering design and measures towards sustainability as "green" highways, (ii) addressing road safety through modern technology, (iii) incorporating suggestions on road safety based on gender consultations and the promotion of gender awareness, and (iv) preparing a long-term strategy for private sector participation in road network development and maintenance. Adequate consultations with stakeholders were conducted during the design stage, including with women. All the subprojects were fully prepared during appraisal, and so the project lending modality was adopted. The design and monitoring framework (DMF) indicators were logical and appropriate, but could have been improved to include specific outcome indicators on sustainability and the strategy for private sector participation. Nonetheless, those are inherently included in the outcome statement of sustainable transport operations. The DMF with results is in Appendix 1.

7. During and after implementation, the project was found to be relevant to the Government of India’s objectives and policies, as well as to ADB’s country strategy (paras. 31–33). The project was implemented largely as planned. Minor adjustments were done during implementation for the Accident Response System, but did not alter any output or outcome target in the DMF. In particular, the state government used its own funds instead of loan funds to procure equipment for the road safety component (para. 10). Nonetheless, the project outputs were achieved. The results show that the project effectively contributed to meeting the Government of India’s objectives and strategy and ADB’s country strategy.

3 ADB. 2009. Country Partnership Strategy: India, 2009–2012. Manila. 4 ADB. 2002. Report and Recommendation of the President to the Board of Directors: Proposed Loans and Technical

Assistance Grant to India for the Madhya Pradesh State Roads Sector Development Program. Manila (Loan 1959-IND); ADB. 2007. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical Assistance Grant to India for the Madhya Pradesh State Roads Sector Project II. Manila (Loan 2330-IND).

5 ADB TA 7390-IND: Advanced Project Preparedness for Poverty Reduction - Madhya Pradesh State Roads Project III for $600,000. Approved on 11 September 2009.

6 ADB. 2010. County Operations Business Plan: India, 2011–2013. Manila.

3

B. Project Outputs 8. Investment component. At appraisal, the project envisaged the rehabilitation and upgrading of about 1,080 km of state highways identified under the state road rehabilitation program.7 During project preparation, the candidate roads were reviewed and selected according to the selection criteria and the approval process specified in the project appraisal documents. Upon completion, 15 sections of state highways, totaling 1,083.1 km, were rehabilitated or reconstructed. This involved widening and strengthening the roads from single or intermediate-lane roads to intermediate or two-lane standards with bituminous pavement. Overall, 149 bridges and 1,330 culverts were rehabilitated, and road signage and furniture provided. Compensatory reforestation of 1:15.7 was achieved against the targeted 1:7.8 A road accident emergency response system was developed and became operational in June 2015. A summary of the outputs of the investment component is in Appendix 2.

9. During implementation, the contractors carried out quality control of construction in accordance with contractual requirements. The construction supervision consultants assessed and supervised the works to ensure that the specifications had been met. No significant defects or quality problems were reported during the defect liability period. ADB’s project completion review (PCR) mission observed that the project roads were of good quality enabling a comfortable and safe ride; environment protection facilities were installed along the roads; and a routine maintenance system was in place to keep the roads in good condition.

10. Institutional development component. At appraisal, the project envisaged the improved road safety capacity of MPRDC and allocated $1.0 million for purchasing related equipment. During implementation, the Madhya Pradesh government considered that road safety and vehicle overloading can be better addressed through a comprehensive integrated programmatic approach and the involvement of all stakeholders. The government therefore focused on the development and operationalization of an emergency road accident response system (ARS). It developed ARS with assistance from the TA consultants and implemented it statewide in coordination with other related initiatives that entailed the purchase of equipment using its own funds. Upon operationalization, training courses were conducted on the ARS in addition to other road safety trainings. To further enhance road safety, MPRDC, with private sector participation, established computer-networked check-posts at all the 24 entry points along the state borders to address the overloading issue. For implementation of the ARS, the government procured equipment worth $1.56 million through its own funds as it enabled optimal use of its resources from related initiatives and was administratively more convenient. At completion, the project component of the improved road safety capacity of MPRDC was fully achieved.

C. Project Costs and Financing 11. At appraisal, the total project cost was estimated at $375.0 million covering the base cost, contingency, and financial charges of the loan. During implementation, the project cost in Indian rupee increased by 8.3% for civil works, mainly due to higher bid prices, price escalation, and minor revisions in quantities. However, the cost in dollar terms was substantially less, mainly due to the depreciation of the Indian rupee. 9 Meanwhile, the savings from the institutional development component resulted in lower financial charges for the loan. At project completion, the total project cost was $276.8 million equivalent, which was 26.2% lower than that estimated

7 The roads were mostly selected from very poor and less developed areas of the state. 8 The statutory requirement for compensatory reforestation is 1:2. 9 The exchange rates was $1 = ₹45.94 at appraisal and $1 = ₹67.43 at loan closing on 30 June 2016.

4

at appraisal. Compared with the cost estimations at appraisal, the actual costs decreased by $41.8 million for civil works (13.9%), $2.6 million for consulting services (17.1%), and $12.9 million for financial charges for the loan (73.9%). The allocation for equipment was not utilized (para. 10). Appendix 3 compares the project costs at appraisal and at completion. 12. At appraisal, ADB was to provide a loan of $300 million to finance 80% of the project cost and the state government was to finance the balance of $75.0 million (20.0%). Because of the reduced project cost and consequent cancellation of $68.0 million from the loan (para. 13), the project financing at completion was $222.1 million from the ADB loan and $54.7 million equivalent from the state government, constituting 80.3% and 19.7% respectively of the project cost. The detailed comparison of the project financing at appraisal and the actual is in Appendix 4.

D. Disbursements 13. The ADB loan was approved on 10 March 2011, signed on 15 June 2011, and made effective on 28 July 2011. The loan proceeds were disbursed in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time). Pursuant to ADB’s reimbursement procedures, the Government of India provided the loan proceeds in local currency to the state government on the same terms and conditions as received from ADB. The statement of expenditures (SOE) procedure for reimbursement of individual payments not exceeding $100,000 was not used because the individual payments far exceeded the threshold, which suggests the potential for a higher threshold for future projects. Under retroactive financing, the first loan disbursement was made on 9 September 2011. The loan disbursements then peaked in 2012 ($54.6 million) and 2013 ($60.3 million), representing 18% and 20% of original loan amount, respectively. Depreciation of the Indian rupee led to a surplus in the loan fund. Upon request from the Government of India, ADB approved a partial loan cancellation of $50 million effective 27 November 2013.10 During the Tripartite Portfolio Review Meeting in July 2015, MPRDC advised of additional loan savings, mainly due to the further depreciation of the Indian rupee and a fall in the prices of certain construction materials. Hence, a second partial loan cancellation of $18 million was made effective on 3 September 2015.11,12 At loan financial closure on 21 December 2016, $222,114,547 had been disbursed (74.0% of the original loan amount and 95.7% of the loan amount after partial cancellations) and the remaining undisbursed amount of $9,885,453 was cancelled (3.2% of the original loan amount).13 The actual disbursements of the ADB loan proceeds are in Appendix 5. E. Project Schedule 14. At appraisal, it was envisaged that the project would be implemented over 3 years. To facilitate project implementation, ADB approved advance procurement and retroactive financing on 15 June 2010. Procurement started in October 2010, and the bid evaluation report for civil works contracts was approved by ADB on 3 June 2011. By the time of ADB’s inception mission in August 2011, all contracts for the civil works and consulting services had been awarded.14 The

10 ADB Fax to Ministry of Finance. 9 December 2013. Loan-2736-IND: Madhya Pradesh State Roads Project III –

Approval of Partial Loan Cancellation from the Loan Account. INRM 11 ADB Fax to Ministry of Finance. 10 September 2015. Loan-2736-IND: Madhya Pradesh State Roads Project III –

Approval of Partial Loan Cancellation from the Loan Account. INRM 12 The last loan category reallocation was made on 3 September 2015. 13 ADB Fax to Ministry of Finance. 5 January 2017. Loan-2736-IND: Madhya Pradesh State Roads Project III – Final

Cancellation and Effective Loan Closing Date. INRM 14 13 civil works contracts were awarded in June to July 2011, and 2 contracts for supervision consultants were

awarded in April 2011.

5

following ADB mission in February 2012 found that 9 out of 13 civil works contracts had achieved less than 1% progress during July–December 2011. These initial delays were mainly caused by (i) extended rainfall that affected the availability of adequate work sites; and (ii) the failure of some contractors to make effective use of that period for mobilization activities. However, following close monitoring and meetings with MPRDC, the performance of the contractors started to improve during January–February 2012. ADB missions and MPRDC also actively engaged in resolving the implementation delays and took measures to expedite progress, including the preparation of action plans. MPRDC took stringent actions against slow progressing contractors and terminated two civil works contracts for very poor performance in October 2012 and July 2013. To complete the remaining works, new contracts were procured, and the contracts were awarded in May and November 2013. The ADB mission in October 2013 observed that four civil works contract packages, which had maintained good progress since commencement, had been completed. Some of the other contract packages were lagging behind the original schedule, mainly due to deficiencies in planning and in the timely availability of resources, besides the heavy extended rainfall in 2013. 15. Despite all these efforts, it was considered unlikely that the remaining civil works would be completed by the original loan closing date. ADB therefore approved an 18-month extension of the loan closing date. The ADB mission in October 2014 found that most of the contractors had improved their performance and the issue of the shortage of aggregates had been largely resolved. By the extended loan closing date of December 2015, 8 out of 13 civil works contract packages had been completed while another 2 had achieved about 95% physical progress. The remaining 3 contracts, including the 2 new contracts for completing the remaining works of the terminated contracts, had achieved 80% physical progress. In these circumstances, ADB approved further extensions of the loan closing date by total 6 months to enable MPRDC to fully complete the works and achieve the intended project objectives. Eventually, all civil works contracts were completed by the extended loan closing date of 30 June 2016. 16. The actual implementation schedule compared with the schedule at appraisal is in Appendix 6, and a chronology of the main events is in Appendix 7. F. Implementation Arrangements 17. As agreed at appraisal, the Madhya Pradesh government was the executing agency, acting through MPRDC, which is wholly owned by the state government and responsible for development and maintenance of all state roads in Madhya Pradesh. MPRDC’s headquarters is in Bhopal and a chief engineer there was in charge of project implementation. MPRDC, with the engagement of the supervision consultants, implemented all aspects of the project including project preparation and design, procurement and contract management, financial management and audit, construction supervision and quality control, safeguard measures, institutional strengthening, and loan covenant compliance. The Environmental and Social Cell at headquarters was responsible for ensuring compliance with the environmental and social safeguards of the project. The project roads were categorized under Bhopal and Jabalpur regions, depending on their geographical locations. Seven project implementation units (PIUs) were established in the field for project implementation (Bhopal, Gwalior, Indore, Jabalpur, Rewa, Sagar and Ujjain divisions). Each PIU was headed by a divisional manager, who was assisted by project managers and other staff as required. PIUs were delegated adequate technical and administrative authority for expeditious and field-level decisions. For matters having financial implications or affecting contracts’ milestones, the decisions were referred to MPRDC headquarters. Two consulting firms were engaged to assist MPRDC with project management and construction supervision. An organization chart of MPRDC is in Appendix 8.

6

G. Technical Assistance 18. In conjunction with the project, ADB approved a TA grant of $1 million for capacity development. This would provide further support to the MPRDC’s initiatives of institutional development, especially for road safety management and private sector participation in state highway network development and maintenance.15 An international consulting firm would be recruited with inputs of 18 person-months of international and 64 person-months of national experts. The TA had two components, i.e. road safety and PPP. 19. During implementation, an international consulting firm was recruited in accordance with ADB’s Guidelines on the Use of Consultants (2010, as amended time to time). The contract was signed on 26 March 2012 and the consultants started work on 10 April 2012. They carried out all activities in accordance with the terms of reference (TOR). The major outputs of the TA were a comprehensive Road Safety Improvement Program; a conceptual plan for the Road Accident Reporting, Analysis, and Monitoring System; development of an Accident Response System; identification of PPP corridors and suggestions for expanding private sector participation; and a State Highway Development Plan. During implementation, based on a request by MPRDC, an international insurance expert was also recruited to help them explore the feasibility of insurance coverage for road accident victims in the state. The contract with the insurance expert was signed on 16 December 2013 and the TA completion date was extended to enable completion of this additional activity. When the TA was completed in March 2014, it had realized its objectives of assisting the government in strengthening the capacity of MPRDC in road safety management and expanding private sector participation in road network development and maintenance. The TA’s achievements are well recognized by the state government. The TA is rated successful. A TA completion report is in Appendix 9.

H. Consultant Recruitment and Procurement 20. The TOR for consulting services had been prepared as part of the project appraisal documents. The recruitment of consultants together with the procurement of civil works contractors started in October 2010 under advance procurement and retroactive financing. Two international consulting firms were recruited using the quality- and cost-based selection (QCBS) procedure – one for Bhopal region and the other for Jabalpur region; the contracts were signed in April 2011. The supervision consultants were selected and engaged in accordance with ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time). During implementation, the consultants established their main offices at Bhopal and Jabalpur, and various site offices for implementing the construction supervision services. The consultants acted as the project engineer and carried out all the tasks specified in the TOR, including contract management based on the standards set by the International Federation of Consulting Engineers (FIDIC), construction supervision and quality control, oversight of compliance with safeguards, assistance with financial accounting, and on-site training. Because of delays in the implementation of the civil works, the contracts for the supervision consultants were extended until the civil works had been completed. Upon completion, 4,743 person-months of consulting services had been provided to the project, consisting of 92.5 person-months for international consultants and 4,650.5 person-months for national consultants. The performance of the supervision consultants is rated satisfactory.

15 TA of $1.0 million for Capacity Building for Road Safety and Public–Private Participation (PPP) Support (TA7785-

ND), implemented from March 2012 to March 2014.

7

21. The civil works procurement conformed to ADB’s Procurement Guidelines (2010, as amended from time to time). As planned at appraisal, 13 civil works contracts were procured through international competitive bidding.16 ADB standard bidding documents for large works with post qualification under the single-stage two-envelope procedure were followed. All 13 civil works contracts were awarded in June and July 2011. During implementation, the contractors mobilized the required resources, established camps for their staff, set up laboratories and other engineering facilities, and provided medical facilities for their workers. The contractors installed road signage during the work as agreed by the local traffic management authority. Quality control was carried out by the contractors as per the requirements in the contracts. The contractors were familiar with the awareness practices needed to combat HIV/AIDS and implemented appropriate programs during construction. The contractors largely performed satisfactorily, except the contractors for packages 4 and 10, who were terminated by MPRDC. New contracts were procured for completion of the remaining works. Action plans to expedite civil works were drawn up, which helped the contractors improve their performance. However, some contractors continued to be slow due to their internal financial difficulties and limited resources. The contract management was undertaken in a disciplined manner by strictly controlling time extensions and imposing penalties as per FIDIC norms. With continued efforts, the remaining 3 contract packages, including the 2 new contracts, were completed by June 2016. On an overall basis, the civil works contractors are rated satisfactory.

22. The project contract packages with costs are summarized in Appendix 10. I. Gender Equity 23. Women in the project area are largely involved in household work, cultivation, and other agricultural activities, including some employment in government and the private sector. Their use of roads ranges from day-to-day household activities to economic activities, such as agriculture and markets. At appraisal, the gender classification of the project was “some gender benefits.” During appraisal, consultation and assessment of gender issues was carried out. The focus group discussions concluded that road safety during construction should be ensured. Most women felt that the improved roads would benefit them as they would be get better access to markets for selling their products, thereby helping to increase household income. Provisions were made in the bidding documents for the contractors to ensure that all civil works would comply with all applicable labor laws. Specifically, child labor would not be used for construction and maintenance activities; employment of the poor particularly women would be encouraged; and no wage difference would be made between men and women for work of equal value. At appraisal, a study of the impact of past ADB-funded state road projects on women was carried out, which focused on gender, land acquisition and resettlement, health, and labor.17 The findings of the study showed that past ADB-funded road projects have provided women with better economic opportunities and improved access to healthcare and education.

24. During implementation, MPRDC, the consultants and the contractors paid adequate attention to the issues raised by women during appraisal. Adequate provisions for road safety in the road design and during road construction were made. To ensure that gender issues were well addressed, gender specialists were engaged by the construction supervision consultants to design and implement the gender awareness program, including road safety for the project

16 As planned at appraisal, the 15 project roads were packaged into 13 civil works contracts. Civil works contract

packages 4 and 7 covered two project roads each. 17 ADB. 2010. Impact of Transport Project on Women: A Case Study of Madhya Pradesh State Roads (Loan 1959 and

Loan 2330).

8

stakeholders. During construction, about 10% of the direct employment generated by the project was for female workers. The PCR mission noticed that many of the roadside businesses were operated by women. The fast-growing public transport in the project area has encouraged women to travel farther distances and participate in more socioeconomic activities. Land prices have increased, employment and education opportunities have improved, and healthcare has become more accessible (para. 42). Overall, women empowerment in the project areas has improved. J. Safeguards

25. Environmental safeguards. The project was classified as environment category B in accordance with ADB’s Safeguard Policy Statement,2009. Accordingly, initial environmental examination reports were prepared for all subprojects. All environmental management plans were attached to the bidding document prior to issuance. The project was designed with the aim of minimizing the impact of climate change. Measures toward “green highways” were adopted (para. 26). Accordingly, provisions for related costs and measures were made in the bidding documents. 26. The contractors implemented all measures required in the contracts. MPRDC worked closely with the construction supervision consultants in monitoring the environmental impacts and implementing the environmental management plans (EMPs). A grievance redress mechanism was established and several workshops on compliance with environmental safeguards were conducted. During the ADB inception mission, MPRDC confirmed that all environmental and forest clearances for the project had been obtained from the statutory authorities and thus no implementation delays would be caused by those. Upon request from ADB missions, institutional arrangements and environmental safeguard compliance were further strengthened. Upon completion, 1,599 trees were saved and compensatory reforestation achieved 1:15.7 as against 1:7 targeted for achieving the green highway status.8,18 During implementation, no complaint was received by MPRDC from the public. Nine environmental monitoring reports were prepared and submitted to ADB, which are disclosed on the ADB website.19 27. Involuntary resettlement. At appraisal, a due diligence survey was undertaken for all project roads to assess likely involuntary resettlement impacts. Based on the assessment, no land acquisition or resettlement impact was anticipated, since the project was confined to the rehabilitation and upgrading of existing road alignments. The project roads were categorized as category C in accordance with ADB’s Safeguard Policy Statement 2009. During implementation, the electric lines and poles located on the road alignment were moved promptly and so there was no delay to the works. Water supply pipelines at built-up areas for some packages were shifted, as required, and re-laid suitably. The related costs were included in the civil works. Upon completion, MPRDC confirmed that there was no land acquisition and resettlement under the project.20

28. Indigenous peoples. The project roads were categorized as category C for indigenous peoples in accordance with ADB’s Safeguard Policy Statement, 2009. Scheduled tribes, such as the Baiga and Gonda, were present in the project areas. Social assessment was carried out at appraisal, which concluded that the project would not bring any adverse impact on these tribal groups, since the project was on existing road alignments. The construction activities did not impact adversely on their socioeconomic condition, nor did they lead to any disruption in the life or culture of these communities. Instead, the improved road network was expected to augment

18 Total 2,202 trees were actually cut out of 3,801 trees planned to be cut. 19 https://www.adb.org/projects/43063-013/main#project-documents 20 MPRDC letter to ADB. 13 December 2016.

9

access to socioeconomic facilities for these groups. Upon completion, MPRDC confirmed no adverse impact on indigenous people.21 K. Monitoring and Reporting

29. During implementation, the state government provided adequate oversight, coordination, and financial support for project implementation. MPRDC was fully operational with adequate staff and resources. The procurement of civil works contracts and the engagement of consultants were carried out in accordance with ADB guidelines and procedures. Measures for environmental and social aspects were incorporated in the contracts and implemented accordingly. After completion, road maintenance is being undertaken by MPRDC through divisional maintenance contracts with fiscal allocations based on field assessments or operate-maintain-transfer (OMT) contracts. 30. Clear and effective project progress and monitoring reports were prepared as required and submitted to ADB on a timely basis. A project performance monitoring system was established, and surveys were carried out at baseline and after project completion. The audited project financial statements were submitted within the stipulated timelines.22 The borrower’s project completion report was prepared and submitted to ADB. The borrower and executing agency complied with all loan covenants for the project. The status of compliance with the loan covenants is summarized in Appendix 11.

III. EVALUATION OF PERFORMANCE A. Relevance 31. The project is rated relevant at both appraisal and completion, as it was an integral part of India’s strategy for economic growth and poverty reduction through the development of roads. The project supported the Government of India’s (i) Eleventh Five-Year Plan (2007–2012), which articulated the need for adequate, cost-effective, and high-quality infrastructure as a prerequisite to sustaining growth; and (ii) Twelfth Five-Year Plan (2012–2017), which continued to focus on inclusive growth and encouraged development in agriculture, education, health, and social welfare through government spending. As a result of state government’s focus on infrastructure development, the GDP growth rate for Madhya Pradesh, one of the poorest states in India, was 8.6% in FY2016, higher than the national average of 7.6%. The coverage and condition of the state’s road network was very poor, and so its improvement was a high development priority. At completion, the project remained aligned with the 12th Five-Year Plan, which aims to reduce inequalities between and within states, as it rehabilitated and upgraded 1,080 km of roads, mostly in the poorest eastern and western central areas. 32. At appraisal, the project was in line with two of the priorities set out in the country partnership strategy (2009–2012), namely (i) inclusive and environmentally sustainable growth; and (ii) improved infrastructure and services. The project involved road sector development with special features to incorporate road safety and environment-friendly elements, and facilitated sustainable economic growth. At completion, the project remained fully aligned with the following thrusts of the country strategy partnership for 2013–2017: inclusive growth, environmental sustainability, infrastructure development, and institutional strengthening and capacity development. ADB has been a significant contributor in the development of Madhya Pradesh,

21 MPRDC letter to ADB. 13 December 2016. 22 5 out of 6 were submitted within the due date, including 4 that were submitted 3 months before the due date. One

was submitted within one month after the due date.

10

being the only multilateral agency for state highway development until this project (para 6). The project was the third intervention of ADB. Given the success and impacts of implemented projects, ADB approved two further loans for road network development in Madhya Pradesh, which underscores the importance and relevance of road sector development in the state.23 By the end of 2016, ADB had provided 157 loans, grants and TA to the transport sector in India for a total of $13.1 billion, accounting for about 32.8% of total assistance to India.24 Overall, the project is closely relevant to the Government of India’s development objectives and plans, as well as ADB’s country partnership strategy and lending policy. 33. Performance, key problems, and opportunities in the road subsector in Madhya Pradesh were well analyzed. Lessons from previous projects, especially previous state highway projects in Madhya Pradesh, were incorporated in the project. The DMF was sound and indicators were logical and appropriate. Performance targets for outcome and outputs were objective, realistic and measurable. Nonetheless, the DMF could have been improved with inclusion of indicators on sustainability and private sector participation. An engineering design was prepared to minimize social and environmental impacts and to adopt the “green highway” approach. Adequate consultations with stakeholders, particularly with women, contributed significantly to project formulation. Advance actions were taken to ensure that the construction could start without unnecessary delay. All the preparatory activities for the project outputs were completed during project appraisal. In addition, capacity development TA was attached to the project to support the MPRDC’s initiatives related to road safety management. The TA helped MPRDC put the road accident emergency response system into operation and enhanced MPRDC’s road safety capacity through training (para. 7). B. Effectiveness 34. The project is rated highly effective in achieving its outcome and outputs. At completion, 5 out of 6 targets were exceeded. Upon completion, the project had improved 1,083.1 km of state highways, which were widened to 5.5–7.0 meters and observed to be of good quality with the

international roughness indices ranging between IRI 3–4.25 The traffic surveys at completion showed that the traffic had increased by an average 6.5% per year, which is lower than anticipated at appraisal (average 8.2% per year during 2009–2015 and 7.0% during 2016–2020). Considering the socioeconomic development trends as well as the emphasis on road network development, it was predicted that the traffic would keep increasing in the near future. The improvement of the project roads has led to a substantial reduction in vehicle traveling time and transport costs for both passengers and freight. According to the surveys after project completion, the average vehicle traveling time was reduced by 45%, which is much more than anticipated at appraisal (25%). The rehabilitation of the project roads has also resulted in increased vehicle speeds, from an average 30–40 km/hour before the project to 50–80 km/hour after the project. This can be a safety hazard, especially in built-up areas and certain rural areas. The actual vehicle operation cost (VOC) has fallen by at least 17% in real terms. In addition, fatal accidents have reduced by 41% in comparison with appraisal, due to project development and implementation of ARS (para.

10).26 On average, ARS has been serving over 400 accidents annually.

23 Loan 3189-IND: Madhya Pradesh District Connectivity Sector Project. $350 million. Approved 19 November 2014.

Loan 3437-IND: Madhya Pradesh District Road II Sector Project. $350 million. Approved 30 September 2016. 24 ADB, April 2017. Asian Development Bank Member Fact Sheet - India. 25 The roads were widened primarily to two-lane but at few locations to intermediate-lane due to right of way restrictions. 26 According to the monitoring reports of the project, the number of fatal accidents declined from 154 before the project

to 91 after the project. The state government needs to continue its efforts to further improve road safety.

11

35. Project implementation complied with the environment safeguards specified in the loan covenants. During implementation, measures toward “green highways” were adopted, which resulted in the achievement of compensatory reforestation (para. 26). The PCR mission observed that the borrow areas were redeveloped and replantation was implemented. The project was designed and developed with no land acquisition and resettlement, which was confirmed by MPRDC during implementation. The project promoted gender awareness and incorporated suggestions on road safety based on gender consultations. 36. The associated TA is rated effective in achieving its objectives and outcomes. The TA realized its objectives of helping the state government strengthen the capacity of MPRDC in road safety management and private sector participation in road network development and maintenance. The ARS has been established and is fully operational. The TA achievements were well recognized and adopted by the state government (para. 19). C. Efficiency 37. The project is efficient in achieving its outcomes and outputs. To assess the efficiency of the project, the economic internal rate of return (EIRR) of the project was reevaluated using a similar methodology to that used at appraisal and the updated data.27 The economic benefits were calculated by comparing the “with-project” and “without-project” cases, including (i) VOC savings, and (ii) savings in passenger travel-time costs. The EIRR was calculated at 19.7% for the whole project—21.8% for the roads in the Bhopal region and 14.4% for the roads in the Jabalpur region. The recalculated EIRRs are lower than those estimated at appraisal (average 18.3%–45.5%), which was mainly due to the higher capital cost, a prolonged implementation period, and lower traffic growth rates in comparison with those envisaged at appraisal (para. 11, 15, 34).The EIRRs are above the ADB-recommended discount rate of 12%. The project is therefore considered to be economically viable. The EIRR was subjected to sensitivity analysis to test various scenarios for maintenance costs and benefits. The sensitivity analysis results indicated that the project continued to be economically viable for all tested scenarios. If a 20% maintenance cost increase is combined with a 20% benefit reduction, the EIRR will still be 13.5% for the whole project. The sensitivity analysis confirmed that the project has robust economic viability. The sensitivity analysis also showed that the EIRR was more sensitive to changes in economic benefits. For this reason, the state government needs to pay attention to the socioeconomic development of the project area, foster local transport services, and help increase incomes for rural road users. The details of the economic reevaluation are in Appendix 12. 38. In terms of process efficiency during implementation, the project experienced initial delays, despite the timely completion of the preconstruction activities. Subsequently, the termination of two poorly performing contractors and the procurement of new contractors for completing the remaining works affected the project schedule. With joint efforts and close monitoring by MPRDC, ADB, and the supervision consultants, the contractors improved their performance by drawing contract-by-contract action plans and mobilizing additional resources. ADB approved extension of the loan closing date by two years, enabling MPRDC to fully complete the works and achieve the envisaged project objectives. Eventually, all civil works contracts were completed by the extended loan closing date. Although project completion was delayed, lower project completion costs contributed to project efficiency (para. 11).

27 At appraisal, the EIRR was calculated by each road. The project is, however, considered a state road transport sector

project rather than individual roads, as all the subprojects are state highways with similar characteristics and complement each other in a network manner. EIRR satisfying the economic efficiency criteria of 12% was considered robust. At completion, the EIRR was calculated for the whole project supported by calculations for the two regions.

12

D. Sustainability 39. The project is rated likely sustainable by considering the institutional and financial arrangements for road construction and maintenance, fast growing traffic, improved road safety management capacity, and ADB’s continued financial and technical support to state road development in Madhya Pradesh. 40. Road construction and maintenance. MPRDC is responsible for construction and maintenance of the state roads on behalf of the state government. In the past 10 years, the total fiscal allocations to MPRDC have increased by an average 20.5% per year. With budgetary allocations, about 80% of the maintenance requirements are being met. The balance is met through OMT contracts awarded to the private sector with toll charges. The roads improved under earlier ADB interventions are in good condition. MPRDC carries out road maintenance by assessing specific technical requirements and awarding divisional maintenance contracts basis for non-toll roads and by OMT contracts for toll roads.28,29 MPRDC decides the appropriate contract modality based on a broad assessment of the likelihood of receiving a reasonable premium from bidders. All the improved project roads, except two, are maintained through divisional contracts. Two project roads totaling 87.3 km are amongst 22 roads being maintained by MPRDC through OMT contracts. MPRDC has developed and applies a maintenance mechanism for the roads under OMT with a concession period of 4–10 years. The PCR mission visited one of the two OMT roads and found that a toll plaza was in place to collect tolls from commercial vehicles (private vehicles do not pay tolls); about 20 locally hired staff were working at the plaza in three shifts; and the toll plaza has an office equipped with a computer system, an ambulance, a crane, and other required facilities. The toll level is decided in accordance with the toll policy of the Madhya Pradesh government with an increase of about 5% each year. The concessionaire is responsible for road maintenance, including routine maintenance and overlay for 15% of the road length each year. MPRDC staff inspect the road condition regularly. 41. Institutional development. Building on the capacity development support during the past ADB intervention, the associated TA has strengthened the institutional development of MPRDC in road safety management and private sector participation in road construction and maintenance. During implementation, the construction supervision consultants provided substantial training on various aspects of road project management. With continuous institutional capacity improvement since MPRDC was established in 2004, MPRDC now manages a vast network of 19,165 km of roads as compared to 2,352 km in 2006. MPRDC is now focusing on road safety and network sustainability, and planning initiatives for technology-based solutions. The ARS has significantly improved road safety management and accident response. Senior officials from many states in India including Andhra Pradesh, Maharashtra, Karnataka, Orissa, Sikkim and Rajasthan have visited MPRDC to understand and explore the possibility of replicating the ARS, besides two multilateral development agencies. Further enhancement and expansion of ARS will evolve with greater experience and user feedback. E. Development Impact

42. The project’s development impact is rated satisfactory. During implementation, the supervision consultants developed a project performance monitoring program and carried out

28 Similar to build-operate-transfer concessions, but without any reference to costs of initial capital works. 29 MPRDC is establishing an asset management system. Mapping of all state highways and collection of relevant data

are at an advanced stage.

13

surveys at completion. Substantial data on the performance indicators were compared with those at appraisal. The data revealed that (i) the GDP growth rates of the state were higher than the national average in recent years, increasing 9.5% in FY2014, 10.2% in FY2015, and 8.6% in FY2016, compared with the national averages of 4.7% in FY2014, 7.2% in FY2015, and 7.6% in FY2016; (ii) traffic on the project roads increased by about 30%–50%; (iii) the average vehicle traveling time declined by an average 45%; (iv) the VOC declined by an average 17% in real terms; (v) total unskilled labor of 18,798 person-months was used by the project, including about 10% of women; (vi) household income increased by an average 37.3% in the project areas; (vii) the poverty ratio reduced from an average 40.3% to 30.1% in the project areas; (viii) the travel time to access health care reduced by an average 33% to public health centers, 31% to major hospitals, and 35% to district hospitals; (ix) many new hotels, shops, and garages have opened along the project roads (increase of 56% for hotels and roadside restaurants, 43% for shops, and 54% for garages), which has provided substantial new working opportunities for local people, especially the poor; (x) the price of the land along the project roads increased by an average 45% for agriculture land and 78% for commercial land; and (xi) the road safety situation has improved, although the number of road accidents is still significant. 43. The upgraded roads generated 4.7 million vehicle-kilometers of daily usage in the first year of operation. The traffic analysis predicted that the traffic on the project roads would continue to increase by 8–10% per year during 2017–2020. The project brought better opportunities for women. During project construction, about 10% of the direct employment was generated for female workers (para. 24). The PCR mission noted that many of the roadside businesses were operated by women. The fast-growing public transport in the project area has encouraged women to travel farther distances and participate more in socioeconomic activities. Women empowerment in the project areas has improved. A summary of the development impacts is in Appendix 13. F. Performance of the Borrower and the Executing Agency 44. The overall performance of the borrower (the Government of India) and the executing agency (the Madhya Pradesh government acting through MPRDC) is rated satisfactory. The related government agencies, mainly the Ministry of Finance, participated in the coordination and monitoring of project implementation, and the state government provided counterpart funding of $54.7 million. The project implementation complied with all loan and project covenants (Appendix 11). MPRDC, assisted by the consultants, implemented all aspects of the project, including project preparation and design, procurement, contract management, financial management and audit, construction supervision and quality control, safeguards, and institutional strengthening. MPRDC also successfully implemented the TA to support the state government’s sector development initiatives. G. Performance of the Asian Development Bank 45. ADB’s overall performance was satisfactory. The project’s administration was undertaken by ADB’s headquarters until December 2011, when it was transferred to ADB’s India resident mission. ADB was closely involved in identifying and resolving issues during implementation through (i) tripartite project review meetings between the borrower, the executing agency, and ADB; and (ii) regular review missions. In all, ADB fielded 12 review missions, including the inception mission in 2011, midterm review mission in 2014, several special loan administration missions, and a completion review mission in 2018. The ADB missions analyzed implementation issues affecting the project and provided substantial inputs in preparing action plans to expedite the project’s implementation. The ADB project team and experts provided regular training and handholding support to the MPRDC staff, consultants, and contractors on project management

14

and environmental and social safeguards, which built their capacity. Document approval during processing and implementation was timely, and all claims for payment were promptly processed. The role of ADB missions in providing timely advice and technical support on all aspects of the project implementation was well recognized by the Madhya Pradesh government. H. Overall Assessment 46. Overall the project is rated successful. The project is relevant to both the Government of India’s development objectives and ADB’s country partnership strategy. The project was designed well and implemented without any major change in scope. The project is rated highly effective in achieving its outcomes. The project’s outputs and outcomes demonstrate that it was an effective intervention that substantially improved the transport efficiency of the state highway network, as well as enhanced MPRDC’s operational capacity in road development and management including road safety. The project is rated efficient in achieving its outcomes and outputs. The recalculated EIRR was robust and indicated that the project continues to be economically viable, although lower than expected during appraisal. At completion, the project had substantially improved connectivity and brought significant socioeconomic benefits to the project area. These benefits are expected to continue as the project is rated likely sustainable by considering the institutional and financial arrangements for road maintenance, road safety management, and fast growing traffic.

Overall Ratings

Criteria Rating Relevance Relevant Effectiveness Highly Effective Efficiency Efficient Sustainability Likely sustainable

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 47. Implementation delay. Implementation delays are not uncommon in India. With the rapid expansion of road construction and maintenance needs in the country, the availability and capacity of domestic contractors is inadequate. It is suggested that contract packaging, contract completion periods, and overall project implementation periods be rationalized, bearing in mind the general capacity in the contracting industry. For example, bids could be staggered. Further, the state government could introduce investment schemes considering the industry capacity; take measures to make the business environment more attractive; and conduct business opportunity events and road shows to improve participation by good contractors. 48. Performance of contractors. Despite efforts by MPRDC, the completion of civil works for three packages was delayed due to contractors’ financial problems, deficiencies in planning, and the general recession in the construction industry. Additional measures to regulate and improve contractors’ performance could include application of more stringent financial criteria during procurement, provision of advance payment in stages, and bonuses for early completion. Evaluation criteria covering past performance would facilitate identification and disqualification of

15

contractors who have performed poorly on previous projects. 49. Road Safety. The project incorporated and implemented several road safety measures. Although fatal accidents were reduced, the number of accidents is high, which largely reflects negligent driver behavior, violation of traffic rules, speeding, lack of enforcement, mixed traffic conditions, and inadequate road safety awareness. This issue may be more pronounced where the number of agricultural vehicles is high. Being a systemic issue in India, the government needs to make more efforts in driver training, enforcement of traffic rules, and safety awareness.

50. Road Asset Management System. The state government needs to expedite establishment of a road asset management system to facilitate objective planning, programming, budgeting, and implementation of the expanding state road network. B. Recommendations 51. Future monitoring. ADB has thus far provided five loans in the state roads sector in Madhya Pradesh, covering both state highways and major district roads. An in-depth analysis could be undertaken to assess and document the overall design, formulation, implementation, and socioeconomic impacts. The experiences and lessons learned can be disseminated and incorporated into future operations. 52. Further action or follow-up. Generally, the benefits of such road projects, particularly those located in remote areas, expand rapidly after 2–3 years of operation. A follow-up survey is needed to assess the impacts. Based on an analysis of such survey data, additional government interventions should be planned to further maximize and accelerate the socioeconomic benefits. ADB may consider continued support to the state to further facilitate efficient road sector operations. 53. Timing of the project performance evaluation report. The project performance evaluation report may be prepared in 2022 or later when ongoing road projects in the state, including those assisted by ADB and other development partners, are completed. By then, the whole state road network will have been rehabilitated, and traffic, road condition, maintenance, benefits, and socioeconomic impacts can be better assessed.

16 Appendix 1

DESIGN AND MONITORING FRAMEWORK

Design Summary Performance

Targets/Indicators Project Achievements

Impact Accelerated economic growth in Madhya Pradesh

The gap between national and state GDP growth rates is reduced by more than 1.0% during 2014 and 2018 (baseline: average annual national GDP growth from 2003 to 2007 was 8.9%; state GDP growth for the same period was 5%).

Exceeded target. The GDP growth rates of the state were higher than the national average in recent years, respectively 9.5% in 2013/14, 10.2% in 2014/15, and 8.6% in 2015/16, in comparing the national averages of 4.7% in 2013/14, 7.2% in 2014/15, and 7.6% in 2015/16.

Outcome Improved efficiency and sustainable transport operations

Travel time on the project roads is reduced by 25% on average from the current travel time of about 2.5 minutes per kilometer. Road safety on project roads is improved (10% reduction in number of fatalities)

Exceeded target. The average vehicle traveling time reduced by average 45% in comparing that before and after project. Exceeded target. The road safety has improved considering that the number of fatalities have reduced by 41% after the project.

Outputs 1. Rehabilitated and improved state highways with measures for “green” highways. 2. MPRDC capacity for road safety improves.

About 1,080 kilometers of state highways are rehabilitated by 2013. 1:7 compensatory reforestation Road accident emergency response system fully operational by March 2013.

Exceeded target. Total 1,083.1 km of state highways were rehabilitated or improved upon completion of the project. Exceeded target. Achieved compensatory reforestation 1:15, whereas statutory requirement is 1:2. Achieved. The road accident emergency response system started trial operation in June 2015 and is now fully operational.

Inputs at Appraisal Total project cost $375.0 million ADB $300.0 million Government $75.0 million Among which, Civil works $300.0 million Consulting service $15.0 million Equipment $1.0 million Contingency $41.5 million Financial charge $17.5 million

Actual Inputs Total project cost $276.8 million ADB $222.1 million Government $54.7 million Among which, Civil works $258.2 million Consulting service $12.4 million Equipment $1.6 million Financial charge $4.6 million

ADB = Asian Development Bank, GDP = gross domestic product, MPRDC = Madhya Pradesh Road Development Corporation Source: MPRDC’s Project Performance Monitoring Reports and ADB project completion review mission.

SUMMARY OF PROJECT OUTPUTS

Actual Length

(km) Bridge

(no) Culvert

(no)

A. Investment Component

1,083.11 km of state highways in 15 sections were rehabilitated and upgraded, incuding:

1,083.11 149 1,330

I. BHOPAL PACKAGE

1. Bhind-Ater-Porsa (SH2) 60.85 6 38 2. Mihona-Lahar-Daboh-Bhander-Chirgaon Road (SH45) 86.15 4 77 3. Pichhore-Chanderi-Mungawali-Onder-Kurwai Road (SH19) 147.37 26 142 4. Manawar-Mangod (Bandheri) Road (SH38)

100.67 19 164 5. Sardarpur-Rajgarh-Bagh Road (SH38) 6. Agar-Barod-Alot-Jawra Road (SH41) 108.71 19 146 7. Pachor-Chapikheda-Jirapur-Machalpur-Soyat (SH-51) 87.04 15 124 8. Badi-Baktara-Dobi-Shahganj-Budhni Road (SH15)

87.45 10 127 9. Silwani-Udayapura Road (SH44) Total (Bhopal region) 678.23 99 818 II. JABALPUR PACKAGE

10. Rahatgarh-Khurai-Khimlasa Road (SH42) 47.48 2 46 11. Damoh-Hata-Gaisabad-Semariya Road (SH47) 62.41 14 72 12. Hata-Patera-Kumhari & Raipura-Saliya-Bahuriband-Sehora Road (SH49) 91.07 8 109 13. Amarpatan-Gorsari-Badera Road (SH13 and MDR) 46.50 4 40 14. Sundara-Singpur-Kothi-Jaitwara-Birsinghpur-Semaria Road (SH52) 86.13 21 124 15. Sidhi-Beohari Road (SH55) 71.29 1 121 Total (Jabalpur region) 404.88 50 512

Source: Madhya Pradesh Road Development Corporation

Appendix 2 17

PROJECT COST AT APPRAISAL AND ACTUAL

Table A3.1: Project Costs ($ million)

Appraisal Estimate Actual

Item Total ADB

Financing Government

Financing Total

ADB Financing

Government Financing

A. Base Cost

1. Civil Works 300.00 249.00 51.00 258.20 211.34 46.86 (1) Bhind-Ater-Porsa (SH2) 15.00 14.27 11.23 3.05 (2) Mihona-Lahar-Daboh-Bhander-Chirgaon Road (SH45) 24.00 18.55 14.34 4.22 (3) Pichhore-Chanderi-Mungawali-Onder-Kurwai Road (SH19) 34.00 39.60 35.26 4.34

(4) Manawar-Mangod (Bandheri) Road (SH38) $ Sardarpur- Rajgarh-Bagh Road (SH38)

32.00 23.53 17.76 5.78

(5) Agar-Barod-Alot-Jawra Road (SH41) 35.00 29.33 24.33 4.99 (6) Pachor-Chapikheda-Jirapur-Machalpur-Soyat (SH-51) 27.00 21.71 17.91 3.80

(7) Badi-Baktara-Dobi-Shahganj-Budhni Road (SH15) & Silwani-Udayapura Road (SH44)

25.00 23.69 19.69 4.00

(8) Rahatgarh-Khurai-Khimlasa Road (SH42) 11.00 8.23 6.35 1.88 (9) Damoh-Hata-Gaisabad-Semariya Road (SH47) 20.00 18.70 15.73 2.97

(10) Hata-Patera-Kumhari & Raipura-Saliya-Bahuriband-Sehora Road (SH49)

24.00 19.73 16.23 3.50

(11) Amarpatan-Gorsari-Badera Road (SH13 and MDR) 11.00 8.33 6.87 1.46

(12) Sundara-Singpur-Kothi-Jaitwara-Birsinghpur-Semaria Road (SH52)

25.00 19.24 15.57 3.67

(13) Sidhi-Beohari Road (SH55) 17.00 13.29 10.08 3.21 2. Consulting Services 15.00 15.00 12.44 10.77 1.66 3. Institutional Development Component

(1) Equipment 1.00 1.00 1.56 1.56 Subtotal (base cost) 316.00 265.00 51.00 272.20 222.11 50.09

B. Contingencies

1. Physical Contingencies 24.00 20.24 3.76

2. Price Contingencies 17.50 14.76 2.74

C. Financial Charges During Implementation 17.50 17.50 4.57 4.57

Total (A+B+C) 375.00 300.00 75.00 276.77 222.11 54.66

Note: As planned at appraisal, the 15 project roads were packaged into 13 civil works contracts. Civil works contracts 4 and 7 covers two project roads each. Source: Madhya Pradesh Road Development Corporation, ADB loan financial information system.

18 Appendix 3

Appendix 4 19

PROJECT COST BY FINANCIER

Table A4.1: Project Cost by Financier ($ million)

Source

At Appraisal Actual

Total Cost % of Total Total Cost % of Total

Asian Development Bank 300.0 80.0% 222.1 80.3%

Government 75.0 20.0% 54.7 19.7%

Total 375.0 100.0% 276.8 100.0%

Source: Madhya Pradesh Road Development Corporation; the ADB loan financial information system

Table A4.2: Project Cost at Completion by Financier and Component ($ million)

Item

ADB Government Total Cost Amount

% of Cost Category

Amount % of Cost Category

A. Base Cost

1. Civil Works 211.34 81.9% 46.86 18.1% 258.20 (1) Bhind-Ater-Porsa (SH2) 11.23 78.6% 3.05 21.4% 14.27

(2) Mihona-Lahar-Daboh-Bhander-Chirgaon Road (SH45)

14.34 77.3% 4.22 22.7% 18.55

(3) Pichhore-Chanderi-Mungawali-Onder-Kurwai Road (SH19)

35.26 89.0% 4.34 11.0% 39.60

(4) Manawar-Mangod (Bandheri) Road (SH38)

$ Sardarpur- Rajgarh-Bagh Road (SH38)

17.76 75.5% 5.78 24.5% 23.53

(5) Agar-Barod-Alot-Jawra Road (SH41) 24.33 83.0% 4.99 17.0% 29.33

(6) Pachor-Chapikheda-Jirapur-Machalpur-Soyat (SH-51)

17.91 82.5% 3.80 17.5% 21.71

(7) Badi-Baktara-Dobi-Shahganj-Budhni Road (SH15) & Silwani-Udayapura Road (SH44)

19.69 83.1% 4.00 16.9% 23.69

(8) Rahatgarh-Khurai-Khimlasa Road (SH42) 6.35 77.1% 1.88 22.9% 8.23 (9) Damoh-Hata-Gaisabad-Semariya Road (SH47) 15.73 84.1% 2.97 15.9% 18.70

(10) Hata-Patera-Kumhari & Raipura-Saliya-Bahuriband-Sehora Road (SH49)

16.23 82.2% 3.50 17.8% 19.73

(11) Amarpatan-Gorsari-Badera Road (SH13 and MDR)

6.87 82.5% 1.46 17.5% 8.33

(12) Sundara-Singpur-Kothi-Jaitwara-Birsinghpur-Semaria Road (SH52)

15.57 80.9% 3.67 19.1% 19.24

(13) Sidhi-Beohari Road (SH55) 10.08 75.8% 3.21 24.2% 13.29 2. Consulting Services 10.77 86.6% 1.66 13.4% 12.44 3. Institutional Development Component

(1) Equipment 1.56 1.56 Subtotal (base cost) 222.11 81.6% 50.09 18.4% 272.20

B. Contingencies

1. Physical Contingencies

2. Price Contingencies

C. Financial Charges During Implementation 4.57 100.0% 4.57

Total (A+B+C) 222.11 80.3% 54.66 19.7% 276.77

ADB = Asian Development Bank Source: Madhya Pradesh Road Development Corporation; the ADB loan financial information system

20 Appendix 5

DISBURSEMENT OF ADB LOAN PROCEEDS

Table A5.1: Annual and Cumulative Disbursement of ADB Loan Proceeds

($ million)

year

Annual Disbursement Cumulative Disbursement

Amount % of Total Amount % of Total

2011 24.9 11.2% 24.9 11.2%

2012 54.6 24.6% 79.5 35.8%

2013 60.3 27.1% 139.8 62.9%

2014 40.1 18.1% 179.9 81.0%

2015 28.3 12.7% 208.2 93.7%

2016 13.9 6.3% 222.1 100.0%

Total 222.1 100%

ADB = Asian Development Bank. Source: the ADB loan financial information system

Figure A5.2: Annual and Cumulative Disbursement of ADB Loan Proceeds

($ million)

ADB = Asian Development Bank. Source: the ADB loan financial information system

APPRAISAL AND ACTUAL IMPLEMENTATION SCHEDULES

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

Appendix 6 21

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

Project Preparation

Construction Supervision Consultants

Civil Works

Technical Assistance (TA)

At appraisal At actual liability period

C

Procurement

Construction

D

Implementation

2016

A

Loan Processing and Approval

B

Selection

Supervision

2010 2011 2012 2013 2014 2015Item

22 Appendix 7

CHRONOLOGY OF MAIN EVENTS

Date Main Event

2010

15 June ADB approval of advance procurement and retroactive financing

9 August Project concept paper meeting

20 – 23 September ADB loan consultation mission

15 – 19 November ADB project fact-finding mission

15 December ADB management review meeting

2011

18 January Loan negotiation for L2736

10 March ADB board approval of L2736

10 March ADB approval of associated TA 7785-IND

8 April Awarding contract for construction supervision of Bhopal package

15 April Awarding contract for construction supervision of Jabalpur package

3 June ADB approval of bid evaluation report for civil works contracts

15 June Singing of Loan Agreement for L2736

6 June – 4 July Award all civil works contracts

28 July Loan effectiveness

21 – 26 August ADB project inception mission

9 September Initial loan disbursement

14 December Project and TA administration transfer to INRM

2012

22 – 29 February ADB project review mission

26 March Contract awarding for TA consultants (TA 7785-IND)

10 April Commencement of TA consultant (TA 7785-IND)

25 October Termination of civil works contract 10

2013

9 – 16 January ADB project review mission

25 May – 30 June Completion of civil works contracts 5, 6, 7 and 11

20 May Awarding civil works contract 10A

1 July Termination of civil works contract 4

24 – 30 October ADB special loan administration mission

27 November First loan partial cancellation of $50 million

28 November Awarding civil works contract 4A

16 December Contract signing with insurance expert

31 December Original project completion date

Appendix 7 23

Date Main Event

2014

7 March ADB approval of first extension of loan closing date from original 30 June 2014 to 31 December 2015

31 March Completion of associated TA (TA 7785-IND)

25 April Completion of civil works contract 2

30 June Original loan closing date

19 May ADB portfolio management mission

5 – 11 September ADB midterm review mission

30 September Financial closure for TA grant (TA 7785-IND)

2015

10 January – 6 May Completion of civil works contracts 9, 3, 1, and 8

10 April ADB state level review mission

6 – 10 July ADB project review mission

3 September Second loan partial cancellation of $18 million

3 September Last loan proceed reallocation

23 – 27 November ADB special loan administration mission

17 December ADB approval of second extension of loan closing date from 31 December 2015 to 31 March 2016

31 December First extended loan closing date

2016

12 March – 25 April Completion of civil works contracts 10A, 12, 13, and 4A

31 March Second extended loan closing date

5 May ADB approval of third extension of loan closing date from 31 March 2016 to 30 June 3016

30 June Actual loan closing date

17 – 22 October ADB special loan administration mission

13 December MPRDC letter of confirming that there was no Land Acquisition and Resettlement during project implementation

13 December MPRDC letter of confirming that there was no adverse impact on Indigenous People during project implementation

21 December Final loan disbursement

21 December Financial closure of loan account

2018

26 February – 1 March ADB project completion review mission

ADB = Asian Development Bank; INRM = ADB India Resident Mission Source: The ADB project completion mission

ORGANIZATION CHART Madhya Pradesh Road Development Corporation

ADB = Asian Development Bank, AGM = assistant general manager, CA = charged accountant, CAO = chief accounting officer, CE = chief engineer, CGM = chief general manager, CS = company secretary, DGM = deputy general manager, E-in-C = Engineer in chief, GM = general manager, MIS = management information system, TA = technical advisor Source: Madhya Pradesh Road Development Corporation

24 Appendix 8

Appendix 9 25

TECHNICAL ASSISTANCE COMPLETION REPORT TA Number, Country and Name: TA 7785-IND: Capacity Building for Road Safety and Public-Private Participation (PPP) Support

Amount Approved: $1.0 million

Revised Amount: N/A

Executing Agency: Madhya Pradesh Road Development Corporation

Source of Funding ADB TA Special Fund

Amount undisbursed $133,566.63

TA Amount Utilized $866,433.37

TA Approval TA Signing Fielding of Consultants: Date: Date: Date: 10/03/2011 05/05/2011 10/04/2012

TA Completion Date: Original: 31/03/2013 Actual: 31/03/2014 Account Closing Date: Original: 30/09/2013 Actual: 30/09/2014

Description At appraisal, MPRDC had adopted a modern management structure and was equipped with capacity to use modern systems. The institutional capacity in terms of planning, operation and maintenance management had to be built up. With the increasing traffic, capacity augmentation would be a challenge and substantial private sector participation would be required. Road safety management was another challenge that needed to be addressed to make the state highway travel safer for road users. To address these challenges and enhance road safety capacity of MPRDC as envisaged and ensure successful implementation of the loan (L2736),1 a capacity development TA in the amount of $1,250,000 equivalent was also approved by ADB on 10 March 2011 together with the loan. For the TA, ADB would provide a grant not upto the amount of $1,000,000 equivalent from ADB’s TA Special Fund (TASF–other sources).

Expected Impact, Outcome, and Outputs The primary objective of the loan was to continuously support for the development of the state highway network in Madhya Pradesh and enhance road safety management of the government. The long-term impact of the project would be accelerated economic growth in Madhya Pradesh. The immediate project outcome would be more efficient, sustainable transport operations of the state highway network. The main objective of the TA was to strengthen the capacity of MPRDC in road safety management through establishment of road accident system and expansion of the private sector participation in road network development and maintenance. The technical assistance had two components, i.e. Road Safety and Public Private Participation, focusing on the tasks of (i) conceptual development, (ii) system development and implementation, (iii) accident response system, and (iv) capacity building for large private sector participation.

Delivery of Inputs and Conduct of Activities At appraisal, an international consulting firm would be recruited with required inputs of 18 person-months of international and 64 person-months of national experts. A terms of reference (TOR) was set out in the PAM. It was expected that the TA would complete by 31 March 2013. As planned, an international consulting firm was recruited in accordance with ADB Guidelines on the Use of Consultants (2010, as amended time to time). The contract was signed on 26 March 2012 and the consultants mobilized on 10 April 2012 by fielding 2 foreign experts. During implementation, the consultant team (i) collected time series accident data, analyzed the existing accident situations, and conducted consultation with various stakeholders, including women; (ii) proposed a two-tier system in setting up of the Road Safety Cell and the creation of road safety fund, and provided related trainings; (iii) prepared a comprehensive Road Safety Improvement Program; (iv) developed conceptual plan for the Road Accident-Reporting, Analysis and Monitoring System (RA-RAMS); (v) carried out road safety audit for 4 roads and identified 21 improvement projects; (vi) assisted MPRDC to establish an Accident Response System (ARS) and prepared implementation plan; (vii) reviewed the PPP schemes and status in the state, identified PPP corridors, proposed payment mechanism for OMT contracts, suggested ways to expand private sector participation and project delivery through innovative financing; (viii) developed the State Highway Development Plan for 2013–2033, including investment plan and modalities; (ix) recommend MPRDC to engage with relevant government stakeholders and representatives from financial industry, and developed

1 ADB. February 2011. Report and Recommendation of the President to the Board of Directors on Proposed Loan and

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

26 Appendix 9

financing mechanism for implementation by MPRDC; and (x) conducted workshop for dissemination of the findings and recommendations of the TA. The consultants submitted the Inception Report in May 2012, Interim Reports in July 2012 and February 2013, and Final Report in June 2013. The Inception Report and Interim Report-I covered the aspects of conceptual development of road safety management and reviews of proposed OMT scheme at MPRDC. The Interim Report-II covered the RA-RAMS. The Final Report covered all aspects of the TA and provided main findings and recommendations. During implementation, as requested by the MPRDC, an international insurance expert was recruited as individual consultant to help MPRDC to explore feasibility of insurance coverage for road accident victims in the State. The contract was signed on 16 December 2013. The completion date was extended to complete the additional works requested by MPRDC and ensure the successful implementation of the TA. The TA was fully completed in March 2014. The performance of the consultants was rated satisfactory.

Evaluation of Outputs and Achievement of Outcome Under the TA, substantial work was carried out in road safety management and PPP scheme in the state, covering substantial data collection and analysis. The proposed and developed working plans and recommendations have effectively improved the capacity of road safety management and private sector participation in road sector development in Madhya Pradesh. As suggested by the TA consultant and with their assistance, a Road Safety Cell (RSC) was created and institutionalized at MPRDC. An accident response system (ARS) has been established and is now fully operationalized, which is integrated with the electronic toll collection system (ETCS) with ambulances at toll booths connected to the system. A broad state highway development plan was developed and potential for PPP projects was assessed. The government appreciated the outputs of the TA, which enabled MPRDC to actively pursue its road safety initiatives including setting up of a statewide ARS. Overall, the TA has contributed substantially to the institutional strengthening of the road safety management and private sector participation in the state.

Overall Assessment and Rating The TA is highly relevant with the government’s development plan and ADB’s country strategy. Its implementation realized its objectives of strengthening the capacity of MPRDC in road safety management and expanding the private sector participation in road network development and maintenance. The TA is effective by considering the TA activities carried out, outputs delivered, and impacts. The TA implementation is efficient by comparing its outputs and outcomes with the inputs. The TA is sustainable with no risk in financial, sociopolitical, institutional, and environment aspects. The TA implemented tasks as per the TOR and the achievements are well recognized by the government. The TA is rated successful.

Major Lessons The major lessons learnt from the TA implementation include (i) successful implementation of an institutional development program requires strong commitment and support from government and related implementing agencies; and (ii) close coordination between the consultant’s team and government’s technical staff ensures effective delivery of envisaged outputs.

Recommendation and Follow-Up Actions During ADB PCR mission, it was found that the ARS mainly focuses on accident response and communication with other concerned agencies. There is potential for further development and enhancing utilization of the ARS by expanding its scope and integration with existing systems. Detailed accident data need to be collected and analyzed. It is recommended that the following ADB TA program in the state may provide more financial and technical support in further development and utilization of the ARS. The government may update the development plan and undertake PPP activities accordingly.

ADB = Asian Development Bank; ARS = accident response system; ETCS = electronic toll collection System; MPRDC = Madhya Pradesh Road Development Corporation; OMT = operation-maintenance-transfer; PAM = project administration manual; PPP = public-private-participation; RSC = Road Safety Cell; TA = technical assistance; TOR = terms of reference.

Prepared by: Designation: Arun Bajaj Senior Project Officer (Transport) 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 judgements as to the legal or other status of any territory or area.

SUMMARY OF CONTRACT PACKAGES

No.

Contractor/ Consultant Description/Nature of Works Procurement

Method Contract

Date

Original Contract Actual Cost

Currency Amount Total

Amount (₹)

ADB Financing

($)

Civil Works - Bhopal

1 Gangotri Enterprises Ltd, India Bhind-Ater-Porsa (SH2) ICB 29/06/2011 ₹ 628,762,351 829,456,829 11,225,889

2 Niraj Cement Structurals Ltd., India- Gangotri Enterprises Ltd., India (JV)

Mihona-Lahar-Daboh-Bhander-Chirgaon Road (SH45) ICB 29/06/2011

₹ 870,844,742 1,118,933,574 14,336,105

3 KNR Constructions Ltd., India Pichhore-Chanderi-Mungawali-Onder-Kurwai Road (SH19)

ICB 30/06/2011 ₹

1,458,996,069 2,235,450,913 31,906,188

4 Atlanta Limited, India - ARSS Infrastructure Projects Ltd., India (JV)

(terminated) ICB 24/06/2011

₹ 1,177,058,473 82,816,155 3,354,174

4A KCC Buildcon Pvt. Ltd, India -Shivalaya Construction Co. Pvt. Ltd., India (JV)

Manawar-Mangod (Bandheri) Road & Sardarpur-Rajgarh-Bagh Road (SH38/35)

ICB 28/11/2013 ₹

1,311,111,895 1,397,503,275 17,759,255

5 M/s Montecario Construction Ltd. Agar-Barod-Alot-Jawra Road (SH41) ICB 04/07/2011 ₹ 1,330,893,112 1,571,256,423 24,334,043

6 KCC Buildcon Pvt. Ltd., India- M.G. Contractors, India (JV)

Pachor-Chapikheda-Jirapur-Machalpur-Soyat (SH-51)

ICB 30/06/2011 ₹

1,013,111,114 1,165,252,833 17,912,245

7 Valecha Engineering Ltd., India Badi-Baktara-Dobi-Shahganj-Budhni Road and Silwani-Udayapura Road (SH15/44) ICB 04/07/2011

₹ 1,019,775,595 1,291,672,132 19,690,527

Civil Works - Jabalpur

8 Gangotri Enterprises Ltd, India Rahatgarh-Khurai-Khimlasa Road (SH42) ICB 29/06/2011 ₹ 395,003,821 486,250,809 6,349,701

9 Montecarlo Construction Ltd., India Damoh-Hata-Gaisabad-Semariya Road (SH47)

ICB 04/07/2011 ₹

801,766,621 1,102,521,624 15,728,693

10 Niraj Cement Structurals Ltd., India - ARSS Infrastructure Projects Ltd., India (JV)

(terminated) ICB 27/06/2011

₹ 897,506,953 10,570,780 401,230

10A VIL Ltd., India Hata-Patera-Kumhari & Raipura-Saliya-Bahuriband-Sehora Road (SH49) ICB 20/05/2013

₹ 1,147,760,517 1,231,955,603 15,824,161

11 Montecarlo Construction Ltd., India Amarpatan-Gorsari-Badera Road (SH13 and MDR)

ICB 04/07/2011 ₹

429,952,692 468,641,533 6,868,989

12 GVR Infra Projects Ltd., India Sundara-Singpur-Kothi-Jaitwara-Birsinghpur-Semaria Road (SH52)

ICB 04/07/2011 ₹

937,999,540 1,150,968,507 15,566,848

13 GVR Infra Projects Ltd., India Sidhi-Beohari Road (SH55) ICB 04/07/2011 ₹ 611,023,470 796,621,786 10,081,854

Supervision Consultants

1 International Consultants & Technocrats (P) Ltd. India

Supervision Consultants for Package 1- Bhopal QCBS 08/04/2011

₹ 231,290,000 396,369,522

$ 1,000,000 6,023,142

2 Scott Wilson Ltd., UK in JV with Scott Wilson Pvt. Ltd., India in association with Ayoleeza Consultants Pvt. Ltd., India

Supervision Consultants for Package 2- Jabalpur

QCBS

15/04/2011

₹. 163,573,800 320,520,598

$ 750,000 4,751,501

ADB = Asian Development Bank, ICB = international competitive bidding, QCBS = quality- and cost-based selection, ₹ = Indian rupee, $ = United States Dollar Source: Madhya Pradesh Road Development Corporation; The ADB loan financial information system.

Appendix 10 27

28 Appendix 11

STATUS OF COMPLIANCE WITH LOAN COVENANTS

Covenant

Reference in Loan

Agreement Status of Compliance

Particular Covenants

(a) The Borrower shall cause the State and MPRDC to carry out the Project with due diligence and efficiency and in conformity with sound applicable technical, financial, business, and development practices. (b) In the carrying out of the Project and operation of the Project facilities, the Borrower shall perform, or cause the State or MPRDC to perform, all obligations set forth in Schedule 5 to this Loan Agreement.

LA, Artl IV Sec. 4.01

Complied with. (a) The project was carried out with due

diligence and efficiency and conformity with sound financial, business, and development practices.

(b) The project implementation and operation performed all obligations set forth in Schedule 5 to the Loan Agreement.

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

LA, Artl IV Sec. 4.02

Complied with. During implementation, the State provided the resources, as required, in addition to the proceeds of the Loan, for the carrying out of the project. The state government provided timely and adequate counterpart funds of total $54.7 million equivalent and required facilities for the project.

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

LA, Artl IV Sec. 4.03

Complied with. The project was carried out and operated by close coordination with related departments and agencies in accordance with sound administrative policies and procedures.

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

LA, Artl IV Sec. 4.04

Complied with. The state and MPRDC performed its obligations under the Project Agreement,

(a) In so far as it relates to the Project, the Borrower shall exercise its rights under the financing arrangements with the State, and State through MPRDC in such a manner as to protect the interests of the Borrower and ADB and to accomplish the purposes of the Loan. (b) In so far as it relates to the Project, no rights or obligations under the financing arrangements with the State and/State through MPRDC, shall be assigned, amended, abrogated or waived without the prior notice to ADB.

LA, Artl IV Sec. 4.05

Complied with. (a) The government protected the interests

of the Borrower and ADB. (b) No rights and obligations under the

financing agreements with the state were assigned, amended, abrogated or waived prior notice to ADB.

Implementation Arrangements The Borrower, the State, and MPRDC shall ensure that the Project is implemented in accordance with the detailed arrangements

LA, Sch 5. Para. 1

Complied with.

Appendix 11 29

Covenant

Reference in Loan

Agreement Status of Compliance

set forth in the PAM. Any subsequent change to the PAM shall become effective only after approval of such change by the Borrower and ADB. In the event of any discrepancy between the PAM and this Loan Agreement, the provisions of this Loan Agreement shall prevail.

The project was implemented in accordance with the detailed arrangements set forth in the PAM.

Road Maintenance

The State and MPRDC shall ensure either by themselves or through the contractors, adequate maintenance of the Project Roads.

LA, Sch 5. Para. 2

Complied with. The road maintenance is carried out by MPRDC through regional contracts or OMT contracts.

Counterpart Funding

The Borrower shall ensure that the State and MPRDC provides the timely and adequate counterpart funds and facilities for the Project, including the funds needed for implementing the EMP and any cost overruns in respect thereof.

LA, Sch 5. Para. 3

Complied with. During implementation, the state government provided timely and adequate counterpart funds of total $54.7million equivalent and required facilities for the project, covering the cost for EMP implementation and cost overruns.

Environment

The Borrower shall cause the State and MPRDC to ensure that: a. the Project is designed, constructed,

operated, and maintained in accordance with the environmental laws and regulations of the Borrower, the State, and ADB’s Safeguard Policy Statement (2009);

b. the EMP and the mitigation measures included therein, as specified in the IEEs, are properly implemented;

c. the mitigation measures set out in the EMP are incorporated into the bidding documents and Works contracts, and are updated, if necessary, in the course of Project implementation with prior approval of ADB;

d. all environmental permits, licenses and clearances are obtained in a timely manner prior to commencement of Works in the relevant section of the Project roads;

e. any adverse impact on the environment that may arise from the Project implementation is promptly mitigated or minimized in accordance with the EMP;

f. implementation of the EMP, including any safety breaches, violation of environmental standards, and corrective

LA, Sch 5. Para. 4

Complied with. The project was designed, constructed, operated, and maintained in accordance with ADB’s Safeguard Policy Statement 2009 and also with the environmental laws and regulations of the government. Accordingly, provisions of cost and measures for implementing the EMP were made in the bidding document. During implementation, the contractors implemented all EMP measures required in the contracts. MPRDC worked closely with the construction supervision consultants in monitoring the environment impacts and implementing the EMPs. MPRDC confirmed that all environmental and forest clearances for the project had been obtained from Statutory Authorities and copy handed over to the contractors well within time and there was no delay to the work as result. Semi-annual environmental monitoring reports were prepared and submitted to ADB. Total 9 environmental monitoring reports are disclosed on the ADB website.

30 Appendix 11

Covenant

Reference in Loan

Agreement Status of Compliance

measures taken in respect thereof are reported semi-annually to ADB; and

g. reports and information are provided to ADB on request to enable it to verify that the Goods, Works, and Consulting Services financed out of the proceeds of the Loan, have been procured in a responsible manner with a view to resource efficiency, waste minimization, and other environmental considerations.

The State through MPRDC shall promptly report any change in the alignment of any Project road to ADB, so as to determine if additional environmental assessment study is necessary.

LA, Sch 5. Para. 5

Complied with. During implementation there was no change in alignment.

The Environment and Social Cell at MPRDC shall be responsible for ensuring compliance with the environment social safeguards aspects of the Project.

LA, Sch 5. Para. 6

Complied with. The Environment and Social Cell at MPRDC was responsible for ensuring compliance with the environmental and social safeguards aspects of the project. Upon request from ADB missions, institutional arrangement and environment safeguard compliance were strengthened during implementation.

The State and MPRDC shall ensure that measures towards “green” highway that are included in the Project designed, including extensive vegetative control in addition to structural measures to combat erosion; compensatory reforestation by 1:7, preservation of trees through minor geometric realignments, exclusive use of native tree species in reforestation and inclusion of tree survival as part of post-project monitoring, are implemented. The contractor is required to carry out and maintain all roadside plantations for 2 years after construction. MPRDC shall ensure that the Works contracts under the Project incorporate provisions to the effect.

LA, Sch 5. Para. 7

Complied with. The project was designed with the aim of minimizing the impact of climate change. Measures towards “green highways” were adopted. Accordingly, provisions of related costs and requirements were made in the bidding document. Total 1,599 trees were saved and compensatory reforestation achieved 1:15.7 as against the target of 1:7, while statutory requirement is 1:2.

Resettlement

The Project will not entail any land acquisition and any involuntary resettlement. However, if any modification to the design of the Project during the Project implementation period is deemed necessary, ADB’s prior approval to any proposed modification shall be required. If any land acquisition and/or involuntary resettlement is required under the proposed modification, the Borrower shall cause the State and MPRDC to:

LA, Sch 5. Para. 8

Complied with.

At appraisal, the assessment indicated there would be no land acquisition and resettlement impacts since the project is confined to the rehabilitation and upgrading of existing road alignments. The project roads were categorized as category C in accordance with ADB’s Safeguard Policy Statement.

Appendix 11 31

Covenant

Reference in Loan

Agreement Status of Compliance

a. prepare a RP for the relevant part of the Project in accordance with the applicable laws and regulations of the Borrower, the State and ADB’s Safeguard Policy Statement (2009) and submit to ADB for approval and disclosure on its website;

b. give adequate opportunity to all affected people to participate in the resettlement planning and implementation;

c. disclose the RP to the affected people, who shall be compensated and assisted prior to displacement from their houses, land and assets, before commencement of Works in the relevant section of the Project roads; and

d. monitor, internally by the Project implementation units, the implementation of the RP and submit monthly report to MPRDC who subsequently shall report the results quarterly to ADB.

During implementation, the electric lines/poles falling in the alignment were shifted and removed well within time and as such there was no delay attributed to the works. Water supply pipelines at built up areas locations for some packages were also shifted and re-laid along a new alignment. The related cost was included in the civil works. Upon completion, MPRDC, through its letter on 13 December 2016, confirmed that there was no land acquisition & resettlement under the project.

Social Impacts

The State and MPRDC shall ensure that the Works contracts under the Project incorporate provisions to the effect that the contractor is required to (i) carry out HIV/AIDS awareness programs for labor; (ii) disseminate information at worksites on risks of sexually transmitted diseases and HIV/AIDS as part of health and safety measures for those employed during construction; and (iii) follow and implement all statutory provisions on labor (including equal pay for equal work and non-employment of child labor), health, safety, welfare, sanitation, and working conditions. The State and MPRDC shall ensure that the Works contract also provide for termination of the contracts by the State and/or MPRDC in case of breach of any of the said provisions by the contractors.

LA, Sch 5. Para. 9

Complied with. Adequate attentions were paid to the social impacts of the project. HIV/AIDS awareness programs were implemented, and related labor law was applied to the project implementation. Provisions on related cost and requirements were made in the bidding documents. During implementation, PPMS monitoring programs were carried out at completion of each project road. During implementation, two civil works contracts were terminated due to poor performance. New contracts were procured to complete the balance work.

Grievance Redress Mechanism

The existing MPRDC grievance redress mechanism shall be used to receive and resolve complaints/grievances or act upon reports from stakeholders on the implementation of the Project, other implementation irregularities, including grievances due to social and environment matters. MPRDC will (i) make public of the existence of this grievance redress mechanism; (ii) review and address grievances of stakeholders of the Project, in relation to either the Project, any of the

LA, Sch 5. Para. 10

Complied with. Grievance redress mechanism was established. Several workshops on compliance of environmental and social safeguards were conducted. During implementation, MPRDC didn’t receive any complaint from the public.

32 Appendix 11

Covenant

Reference in Loan

Agreement Status of Compliance

service providers, or any person responsible for carrying out any aspect of the Project; and (iii) proactively and constructively responding to them. An officer of MPRDC at the level of a deputy general manager has been designated as public information officer. The supervision consultant will help MPRDC in strengthening the mechanism and in handling complaints/grievances. Procurement

The Borrower, the State and MPRDC shall ensure that all contracts financed by ADB in connection with the Project shall include provisions specifying the right of ADB to review and examine the records and accounts of the Borrower, the State, MPRDC and all the contractors, suppliers, consultants, and other service providers as they relates to the Project. The Borrower, the State and MPRDC shall allow and assist ADB’s representatives to carry out random spot checks on the work in progress and utilization of funds for the project.

LA, Sch 5. Para. 11

Complied with. The civil works procurement conformed to ADB’s Procurement Guidelines (2010, as amended from time to time). Provisions on the ADB’s rights to review and examine the records and account were made in all bidding documents and contracts. ADB carried out random checks on the work-in-progress and fund utilization from time to time.

The State and MPRDC shall (i) standardize bidding documents; (ii) strictly monitor work progress through the Management Information System (MIS) section; (iii) disclose targets, progress, and achievements to the public on its website; (iv) undertake maintenance works, including through outsourcing to the private sector as feasible;; (v) ensure proper equipment records and simplified contractor registration ; and (viii) implement FIDIC-based contract management.

LA, Sch 5. Para. 12

Complied with. ADB’s standard bidding documents for large works with post qualification under the single-stage two-envelope procedure were applied. The State and MPRDC monitored progress through MIS and disclosed achievements on its website. Maintenance was undertaken though. Proper records were maintained.

Reporting

The State, through MPRDC, shall prepare quarterly progress reports, which will cover changes, if any, to the implementation schedule; problems or difficulties encountered and remedial actions taken; anticipated problems and the proposed remedial measures; work proposed to be undertaken in the following period; summary financial accounts for the Project; and social and environmental impacts. The State shall submit the quarterly progress reports to ADB within 45 days from close of each quarter.

LA, Sch 5. Para. 13

Complied with. The project progress and monitoring reports were prepared as required and submitted to ADB within the timelines. Project performance monitoring for each project road was carried out at baseline and after project completion.

Within three (3) months of physical completion of each Project road, the State shall prepare a Project road completion

LA, Sch 5. Para. 14

Complied with. The required borrower’s project completion report was prepared and submitted to

Appendix 11 33

Covenant

Reference in Loan

Agreement Status of Compliance

report, and within six (6) months of completion of the overall Project, a Project completion report. The State and MPRDC shall ensure that these reports include detailed evaluation of each Project road and the overall Project, respectively, covering design, costs, contractors’ and consultants performance, social and economic impact, economic rate of return and other details relating to the Project as ADB may request.

ADB.

Project Performance Monitoring and Evaluation

Within three (3) months of the Effective Date, the State shall establish a baseline for performance indicators, which shall be used for monitoring the implementation of each Project Road, and thereafter conduct annual surveys in accordance with the Project performance monitoring system for each Project road to evaluate the scope, implementation arrangements, progress and achievements of the Project.

LA, Sch 5. Para. 15

Complied with. At appraisal, impact assessment of the project was carried out. Accordingly, a design and monitoring framework and a project performance monitoring program were designed as part of the project appraisal document. The supervision consultants carried out completion survey in 2015/16. Substantial data on the designed indicators were collected.

Project Review ADB, the State, and MPRDC shall meet as regularly as necessary to discuss the progress of the Project and any changes to implementation arrangements or remedial measures required to be undertaken. ADB, the State, and MPRDC shall also undertake a mid-term review of the Project, which will focus on issues relating to the implementation arrangements, and on changes, if any, needed to achieve the objectives of the project.

LA, Sch 5. Para. 16

Complied with. During implementation, ADB, the state government, and MPRDC met as regularly as necessary to discuss the progress of the project and any changes to implementation arrangements or remedial measures required to be undertaken. During implementation, ADB fielded 12 review missions, including the inception mission in 2011, midterm review mission in 2014, and several special loan administration missions, and completion review mission in 2018.

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

PA, Artl II, Sec. 2.01

Complied with. (a) The State and MPRDC carried out the project with due diligence and efficiency, and in conformity with sound practices. (b) The state and MPRDC performed all obligations set forth in the Loan Agreement.

34 Appendix 11

Covenant

Reference in Loan

Agreement Status of Compliance

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

PA, Artl II, Sec. 2.02

Complied with. The state government provided timely and adequate counterpart funds of total $54.7 million equivalent and required facilities for the project.

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

PA, Artl II, Sec. 2.03

Complied with. (a) During implementation, the State and MPRDC employed competent and qualified consultants and contractors, acceptable to ADB. (b) All Goods, Works and Consulting Services financed out of the proceeds of the Loan was procured in accordance with the provisions of Schedule 4 to the Loan Agreement.

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

PA, Artl II, Sec. 2.04

Complied with. The project was carried out generally in accordance with plans, design standards, specifications, work schedules and construction methods as agreed with ADB.

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

PA, Artl II, Sec. 2.05

Complied with. (a) The state protected the Project facilities against risks and in adequate amounts consistent with sound practice. (b) No goods were imported and financed for the project.

The State and MPRDC, shall maintain, or cause to be maintained, records and

PA, Artl II, Sec. 2.06

Complied with. The MPRDC maintained records and

Appendix 11 35

Covenant

Reference in Loan

Agreement Status of Compliance

accounts adequate to identify the Goods, Works and Consulting Services and other items of expenditure financed out of the proceeds of the Loan, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof) and to reflect, in accordance with consistently maintained sound accounting principles, its operations and financial condition.

accounts adequate that identified the Goods, Works and Consulting Services and other items of expenditure financed out of the proceeds of the Loan, which were disclosed to reflect the operations and financial condition.

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

PA, Artl II, Sec. 2.07

Complied with. (a) During implementation, ADB, the State, and MPRDC cooperated fully to ensure that the purposes of the Loan would be accomplished. (b) The State and MPRDC promptly informed ADB the progress of the project, the performance of its obligations under this Project Agreement, and the accomplishment of the purposes of the Loan. (c) During implementation, ADB, the State, and MPRDC exchanged views on the matters relating to the project, the state, MPRDC, and the Loan.

(a) In so far as it relates to the Project, the State and MPRDC shall furnish to ADB all such reports and information as ADB shall reasonably request concerning (i) the Loan and the expenditure of the proceeds thereof; (ii) the Goods, Works and Consulting Services and other items of expenditure financed out of such proceeds; (iii) the Project; (iv) the administration, operations and financial status of the State (in so far as it relates to the Project) and MPRDC; and (v) any other matters relating to the purposes of the Loan. (b) Without limiting the generality of the foregoing, the State and MPRDC, shall furnish to ADB quarterly reports on the execution of the Project and on the operation and management of the Project facilities. Such reports shall be submitted in such form and in such detail and within such a period as ADB shall reasonably request, and shall indicate, among other things, progress made and problems encountered during the quarter under review, steps taken or proposed to be taken to remedy these problems, and proposed program of

PA, Artl II, Sec. 2.08

Complied with. (a) During implementation, the State and MPRDC furnished to ADB all such reports and information as ADB reasonably requested. (b) The State and MPRDC furnished the periodic and other reports on the execution of the project, as ADB requested.

36 Appendix 11

Covenant

Reference in Loan

Agreement Status of Compliance

activities and expected progress during the following quarter. (c) Promptly after physical completion of the Project, but in any event not later than three (3) months thereafter or such later date as ADB may agree for this purpose, the State shall prepare and furnish to ADB a report, in such form and in such detail as ADB shall reasonably request, on the execution and initial operation of the Project, including its cost, the performance by the State and MPRDC of its obligations under this Project Agreement and the accomplishment of the purposes of the Loan.

(c) After completion, the State prepared and furnished to ADB its Project Completion Report covering the execution and initial operation of the project, including its cost and other related matters.

The State and MPRDC, shall (i) maintain separate accounts for the Project; (ii) have such accounts and related financial statements (balance sheet, statement of income and expenses, and related statements) audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB; and (iii) furnish to ADB, promptly after their preparation but in any event not later than 6 months after the close of the fiscal year to which they relate, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors' opinion on the use of the Loan proceeds and compliance with the covenants of the Loan Agreement as well as on the use of the procedures for statement of expenditures), all in the English language. The State and MPRDC shall furnish to ADB such further information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request.

PA, Artl II, Sec. 2.09

Complied with. The MPRDC maintained separate accounts for the project. The audited project accounts and related financial statements were submitted to ADB as required in the loan agreement, and were considered acceptable by ADB. For 5 out of 6 years, the submissions were within the due date. For 1 year, the submission was within one month after the due date.

The State and MPRDC shall enable ADB's representatives to inspect the Project, the Goods and Works financed out of the proceeds of the Loan, and any relevant records and documents.

PA, Artl II, Sec. 2.10

Complied with. The State and MPRDC facilitated ADB's missions to inspect the project works and relevant records and documents.

(a) In so far as it relates to the Project, the State and MPRDC shall, promptly as required, take all action within its powers to maintain its corporate existence, to carry on its operations, and to acquire, maintain and renew all rights, properties, powers, privileges and franchises which are

PA, Artl II, Sec. 2.11

Complied with. (a) MPRDC maintained its mandated corporate existence and carried out its operations, and to acquire, maintain and renew all rights, properties, powers, privileges and franchises which were necessary in the carrying out of the

Appendix 11 37

Covenant

Reference in Loan

Agreement Status of Compliance

necessary in the carrying out of the Project or in the conduct of its business. (b) In so far as it relates to the Project, the State shall execute and implement the Project, and MPRDC shall at all times conduct its business in accordance with sound administrative, financial, environmental and state road development practices, and under the supervision of competent and experienced management and personnel. (c) The State as relevant to the Project, and MPRDC shall at all times operate and maintain its plants, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound administrative, financial, engineering, environmental, state road development, and maintenance and operational practices.

project. (b) The State and MPRDC executed and implemented the project in accordance with sound practices. . (c) The State and MPRDC operated and maintained promptly its plants, equipment and other property as needed, in accordance with sound practices.

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

PA, Artl II, Sec. 2.12

Complied with. The State and MPRDC didn’t lease or dispose of any of its assets that were required for satisfactory and efficient performance of any of its obligations under this Project Agreement.

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

PA, Artl II, Sec. 2.13

Complied with. The State and MPRDC applied the proceeds of the Loan to the financing of expenditures on the project in accordance with the provisions of the Loan Agreement and this Project Agreement.

ADB = Asian Development Bank; EA = executing agency, EMP = environment management plan; LA = loan agreement; MPRDC = Madhya Pradesh Road Development Corporation; OMT = operation-maintenance-transfer; PPMS = project performance monitoring system. Source: The ADB project completion review mission.

38 Appendix 12

ECONOMIC REEVALUATION

1. The Asian Development Bank (ADB) project completion review (PCR) mission conducted an economic reevaluation of the project using similar methodology as that at appraisal and the updated data.1 In the “without-project” case, it was assumed that original state of the highways would be retained. In the “with-project” case, 15 sections of the state highways were rehabilitated or upgraded so that vehicles could drive at higher speeds with lower operating costs and reduced travel time. A traffic analysis compared the actual traffic counts on the project highways with those at appraisal. Economic benefits were calculated by comparing the “with-project” and “without-project” cases. Consequently, economic internal rate of return (EIRR) for the project was calculated and its sensitivities were tested. A. Traffic Analysis

2. During project preparation, traffic survey was carried out in 2009. After completion of each project road, the supervision consultants carried out follow-up traffic surveys in 2013–2016. Traffic counts in 10 vehicle types were collected, including passenger car/van, bus, 2 and 3-wheelers, 4 types of freight trucks, and agriculture vehicles. In comparing the traffic before and after the project, the average traffic growth rate was about 6.5% per year. In comparing with the estimated at appraisal, the actual traffic growth rates were lower than expected.2 By using actual growth rates, the traffic in 2017 was estimated to be average 4,371 vehicles per day, respectively average 5,159 vehicles for the roads in Bhopal region and 2,974 vehicles in Jabalpur region.

Table A12.1. Traffic Survey at Baseline and at Completion (vehicles per day)

No. Road Name

Survey at commencement

Survey at Completion

Year Traffic Year Traffic

Bhopal Region

1 Bhind-Ater-Porsa (SH-2) 2009 3,184 2015 4,267

2 Mihona-Lahar-Daboh-Bhander-Chirgaon (SH-45) 2009 3,101 2016 4,363

3 Pichor-Chanderi-Mungawali-Ondere-Kurwai (SH-19) 2009 2,469 2015 2,629

4 Manwar-Mangod (Banderi) (SH-38) 2009 2,494 2016 3,510

5 Sardarpur-Rajgarh-Bagh (SH-35) 2009 1,683 2016 3,699

6 Agar-Barod-A lot-Jawara (SH-41) 2009 3,051 2013 3,581

7 Pachor-Chapikheda-Jirapur-Machalpur-Soyat (SH-51) 2009 4,973 2013 5,242

8 Badi-Baktar-Dobi-Shahganj-Budhni (SH-15) 2009 2,606 2013 3,914

9 Silwani-Udaipura (SH-44) 2009

Average – Bhopal Region 2,989 3,795

Jabalpur region

10 Rahatgarh-Khurai-Khimlasa (SH-42) 2009 2,086 2015 2,795

11 Damoh-Hata-Gasiabad i/c Hata Town Portion (SH-47) 2009 3,331 2015 4,464

12 Hata-Patera-Kumhari & Raipura-Salaiya-Bahuribandh-Sihora (SH-48) 2009 1,549 2016 2,180

13 Amarpatan-Gorsari-Badera (SH-11) 2009 1,605 2015 2,151

14 Sundara-Singhpur-Kothi-Jaitwara-Birsinghpur-Semaria (SH-52) 2009 1,447 2016 2,038

1 At appraisal, the EIRR was calculated by each road instead of whole project. PCR has undertaken the economic

reevaluation for whole project as all the subprojects are state highways with similar characteristics. The EIRR for the whole project is supported by calculations for the two regions.

2 At appraisal, it was predicted that the traffic on the project roads would increase by 8.2% per year in 2009–2015 and 7.0% per year in 2015–2020.

Appendix 12 39

15 Sidhi-Beohari (SH-55) 2009 2,240 2016 3,151

Average – Jabalpur Region 1,995 2,744

Source: the Borrower’s project completion report

3. According to the fast socioeconomic development in the project areas and recent traffic growth rates, the traffic forecast for future years (2018–2036) was revised slightly. The revised traffic forecast was used in the economic reevaluation.

Table A12.2. Revised Traffic Growth Rate (annual increase %)

Car/Jeep

/Van 2-

wheeler 3-

wheeler Bus

Mini Bus

LCV 2-Axle Truck

3-Axle Truck

MAV Tractor

2017–2020 8 8 10 8 10 10 5 10 10 10

2021–2025 6 5 8 6 7 8 5 8 4 7

2026–2030 5 4 5 3 3 6 4 6 2 2

2031–2036 3 3 2 2 2 3 3 3 1 1

Source： ADB PCR Mission estimates.

B. Economic Costs

4. The project costs comprised capital and maintenance costs. The actual annual investment costs for the project were used in the economic reevaluation. Comparing with the cost estimation at appraisal, the actual civil works cost, in terms of rupees, was about 8.4% higher, due to prolonged construction period, price escalation, and quantity changes in civil works. In the evaluation, only the costs for civil works and consulting services were included and financial charges were excluded.

Table 12.3. Annual Investment Costs (Rs. million)

Bhopal Jabalpur

Civil works Consulting Total Civil Works Consulting Total

2011/12 862.6 53.5 916.1 94.7 48.1 142.7

2012/13 3,910.5 108.8 4,019.3 1,220.9 78.6 1,299.5

2013/14 2,008.2 106.2 2,114.4 1,206.3 57.7 1,264.0

2014/15 1,834.6 68.6 1,903.1 1,343.4 67.1 1,410.5

2015/16 911.7 42.5 954.2 1,165.3 50.9 1,216.2

2016/17 247.6 16.7 264.3 227.5 18.2 245.7

Total 9,775.2 396.4 10,171.5 5,258.1 320.5 5,578.6

Source: the Borrower’s project completion report

5. The original annual investment costs were adjusted to 2017 price by applying the price indexes in the period of 2011/12 to 2016/17. For the maintenance costs, the national norms were used, which were estimated at ₹134,772 per kilometer-year. According to general practice and the road conditions, it was assumed that the routine maintenance cost would increase by 3% per year. The periodical maintenance was assumed to take place in every 5 years mainly for overlay of the project roads at the costs of 30% of the capital cost of the project. 6. The financial capital and maintenance costs were converted into economic costs using the conversion factor of 0.90 at appraisal.

40 Appendix 12

C. Economic Benefits

7. Due to improvement of road conditions, the vehicles now drive at much faster speeds, from average 30–40 km/hour before the project to 50–80 km/hour after the project, which has led to substantial economic benefits in the project areas. Using similar methodology as that at appraisal, two types of economic benefits were captured for the project highways, including (i) savings in vehicle operation cost (VOC), and (ii) savings in passenger travel time costs. The VOC savings were recalculated using the latest unit VOC data provided by MPRDC. The VOC savings per vehicle-km were estimated at ₹1.6 for cars/jeeps/vans, ₹3.6 for bus, ₹0.1 for two wheelers, ₹0.5 for three wheelers, ₹3.1 for light trucks, ₹4.2 for heavy trucks, and ₹2.7 for tractors.

Table 12.4. Unit Vehicle Operation Costs (₹ per vehicle-kilometer)

Car/Jeep

/Van 2-

wheeler 3-

wheeler Bus MiniBus LCV

2-Axle Truck

3-Axle Truck

MAV Tractor

Without Project (IRI 7.5-16)

8.4 2.3 4.1 17.7 15.0 12.6 18.4 30.3 39.1 11.7

With Project (IRI 3-4)

6.8 2.2 3.5 14.1 11.0 9.5 15.6 26.0 35.8 9.0

VOC Savings 1.6 0.1 0.5 3.6 4.0 3.1 2.7 4.2 3.2 2.7

Source: MPRDC

8. Passenger travel time cost savings were recalculated for different types of passenger vehicles (car/jeep/van, two wheeler, three wheeler, and bus). The passenger time cost was derived from the per capita income of Madhya Pradesh in 2015/16.3 This per capita income was adjusted to 2017 prices by applying 5% annual increase. Other factors taken into account in calculating passenger time cost savings included average vehicle loads, percentage of work-related trips, time costs by different road users, and travel speeds for different types of passenger vehicles. 9. The benefit calculation results showed that the benefit distributions in 2017 were about 64%–78% from VOC savings. In future years, the benefit from passenger time cost increased fast along the traffic development and living standard improvement, which would achieve 36%–52% in 2035. D. Economic Reevaluation and Sensitivity Test

10. Based on the assumptions and parameters above, the EIRRs were calculated for a period of 26 years (2011–2036), including 6 years for project implementation and 20 years for operation (with some overlaps of construction and operation periods). The EIRR was calculated at 19.7% for the whole project, respectively 21.8% for the roads in Bhopal region and 14.4% for the roads in Jabalpur region. The lower EIRR for Jabalpur region was mainly due to lower traffic level. The recalculated EIRRs are much lower than that estimated at appraisal (ranging 18.3%–45.5%). The lower EIRR is due to higher capital cost, prolonged construction period, and lower traffic growth rates in early years of operation. The recalculated EIRRs are above the ADB recommended discount rate of 12% at appraisal. The project therefore continues to be economic viable.

11. The EIRR was subjected to sensitivity analysis to test different scenarios of maintenance costs and benefits. The sensitivity analysis results indicated that the project continued to be economically viable for all scenarios. If a 20% maintenance cost increase would be combined with a 20% benefit reduction, the EIRR would be still 13.5% for the whole project. The sensitivity analysis

3 ₹16,411 per household per month in 2016, from the socioeconomic monitoring reports.

Appendix 12 41

confirmed that the project has robust economic viability. The sensitivity analysis also showed that the EIRR was more sensitive to changes in economic benefits. For this reason, the state government needs to pay attention to the socioeconomic development of the project area, foster local transport services, and increase incomes for rural road users. The results of the sensitivity analysis are in the following table.

Table A12.5: Sensitivity Test for the Whole Project

Tests EIRR (%)

ENPV @12% (₹ million) Case Maint. Cost Benefits

Base Case 19.7% 21,084.4

Changes (+/-) 10% 18.2% 17,903.1 20% 16.8% 14,721.7 10% 21.3% 26,374.2 20% 22.9% 31,664.0 -10% 18.0% 15,794.7 -20% 16.2% 10,504.9 10% -10% 16.5% 12,613.3

20% -20% 13.5% 4,142.2

Switching Point 66% 12.0%

12.0%

-40% 12.0% EIRR = economic internal rate of return, ENPV = economic net present value. Source: The Asian Development Bank project completion review mission.

42 Appendix 12

A12.6: Economic Reevaluation for Whole Project (₹ million)

Costs Benefits Net Benefit year Capital Maintain Total VOC Time Cost Total

2011 1,158.5 1,158.5 -1,158.5

2012 5,343.8 5,343.8 -5,343.8

2013 3,175.2 3,175.2 -3,175.2

2014 2,960.4 42.7 3,003.1 733.7 251.0 984.7 -2,018.5

2015 1,914.9 51.0 1,965.9 1,222.8 418.3 1,641.1 -324.8

2016 467.0 98.6 565.6 2,201.0 753.0 2,954.0 2,388.4

2017 131.4 131.4 2,445.5 836.7 3,282.2 3,150.8

2018 135.3 135.3 2,668.8 949.8 3,618.7 3,483.3

2019 139.4 139.4 2,913.1 1,078.3 3,991.4 3,852.0

2020 4,506.0 131.4 4,637.3 3,180.3 1,224.2 4,404.5 -232.8

2021 135.3 135.3 3,380.1 1,360.1 4,740.2 4,604.9

2022 139.4 139.4 3,593.1 1,511.2 5,104.3 4,964.9

2023 143.6 143.6 3,820.3 1,679.1 5,499.4 5,355.9

2024 147.9 147.9 4,062.7 1,865.8 5,928.4 5,780.6

2025 4,506.0 131.4 4,637.3 4,321.2 2,073.2 6,394.5 1,757.1

2026 135.3 135.3 4,488.2 2,226.7 6,714.9 6,579.6

2027 139.4 139.4 4,662.9 2,391.8 7,054.6 6,915.3

2028 143.6 143.6 4,845.7 2,569.2 7,414.9 7,271.3

2029 147.9 147.9 5,037.1 2,759.9 7,797.0 7,649.1

2030 4,506.0 131.4 4,637.3 5,237.5 2,965.0 8,202.5 3,565.1

2031 135.3 135.3 5,352.5 3,137.9 8,490.4 8,355.1

2032 139.4 139.4 5,470.5 3,321.0 8,791.4 8,652.1

2033 143.6 143.6 5,591.5 3,514.8 9,106.3 8,962.8

2034 147.9 147.9 5,715.7 3,720.0 9,435.7 9,287.9

2035 4,506.0 131.4 4,637.3 5,843.2 3,937.2 9,780.4 5,143.1

2036 135.3 135.3 5,974.0 4,167.2 10,141.2 10,005.9

Economic Net Present Value (ENPV): 21,084.4

Economic Internal Rate of Return (EIRR): 19.7%

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

Appendix 12 43

A12.7: Economic Reevaluation for Bhopal Region (₹ million)

Costs Benefits Net

Benefit year Capital Maintain Total VOC Time Cost

Total

2011 1,002.4 1,002.4 -1,002.4

2012 4,038.2 - 4,038.2 - -4,038.2

2013 1,987.2 - 1,987.2 - -1,987.2

2014 1,700.3 32.9 1,733.2 590.2 170.6 760.8 -972.4

2015 841.9 41.1 883.0 983.6 284.3 1,267.9 384.9

2016 242.0 74.0 316.1 1,770.5 511.8 2,282.3 1,966.3

2017 82.3 82.3 1,967.2 568.7 2,535.9 2,453.6

2018 - 84.7 84.7 2,149.8 645.6 2,795.4 2,710.7

2019 - 87.3 87.3 2,349.7 733.0 3,082.6 2,995.4

2020 2,943.6 82.3 3,025.9 2,568.6 832.2 3,400.7 374.9

2021 - 84.7 84.7 2,728.1 924.7 3,652.8 3,568.1

2022 - 87.3 87.3 2,898.3 1,027.5 3,925.8 3,838.5

2023 - 89.9 89.9 3,079.7 1,141.8 4,221.5 4,131.6

2024 - 92.6 92.6 3,273.1 1,268.9 4,541.9 4,449.4

2025 2,943.6 82.3 3,025.9 3,479.4 1,410.1 4,889.5 1,863.6

2026 - 84.7 84.7 3,610.0 1,514.5 5,124.5 5,039.8

2027 - 87.3 87.3 3,746.6 1,626.7 5,373.3 5,286.1

2028 - 89.9 89.9 3,889.5 1,747.3 5,636.9 5,547.0

2029 - 92.6 92.6 4,039.1 1,877.0 5,916.1 5,823.5

2030 2,943.6 82.3 3,025.9 4,195.5 2,016.4 6,212.0 3,186.1

2031 - 84.7 84.7 4,284.2 2,133.9 6,418.1 6,333.3

2032 - 87.3 87.3 4,375.1 2,258.2 6,633.3 6,546.1

2033 - 89.9 89.9 4,468.3 2,389.9 6,858.2 6,768.3

2034 - 92.6 92.6 4,563.9 2,529.2 7,093.2 7,000.6

2035 2,943.6 82.3 3,025.9 4,662.0 2,676.8 7,338.7 4,312.9

2036 - 84.7 84.7 4,762.6 2,833.0 7,595.5 7,510.8

Economic Net Present Value (ENPV): 19,316.8

Economic Internal Rate of Return (EIRR): 21.8%

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

44 Appendix 12

A12.8: Economic Reevaluation for Jabalpur Region (₹ million)

Costs Benefits Net

Benefit year Capital Maintain Total VOC Time Cost

Total

2011 156.2 156.2 -156.2

2012 1,305.6 1,305.6 -1,305.6

2013 1,188.0 1,188.0 -1,188.0

2014 1,260.2 9.8 1,270.0 143.5 80.4 223.9 -1,046.1

2015 1,073.0 9.8 1,082.8 239.1 134.0 373.2 -709.7

2016 225.0 24.6 249.5 430.4 241.2 671.7 422.2

2017 49.1 49.1 478.3 268.0 746.3 697.2

2018 - 50.6 50.6 519.0 304.3 823.3 772.7

2019 - 52.1 52.1 563.4 345.4 908.8 856.7

2020 1,562.4 49.1 1,611.5 611.7 392.0 1,003.8 -607.7

2021 - 50.6 50.6 651.9 435.5 1,087.4 1,036.8

2022 - 52.1 52.1 694.8 483.7 1,178.6 1,126.5

2023 - 53.7 53.7 740.7 537.3 1,278.0 1,224.3

2024 - 55.3 55.3 789.6 596.9 1,386.5 1,331.2

2025 1,562.4 49.1 1,611.5 841.9 663.1 1,505.0 -106.5

2026 - 50.6 50.6 878.2 712.2 1,590.4 1,539.8

2027 - 52.1 52.1 916.3 765.1 1,681.3 1,629.2

2028 - 53.7 53.7 956.2 821.8 1,778.0 1,724.4

2029 - 55.3 55.3 998.1 882.9 1,880.9 1,825.7

2030 1,562.4 49.1 1,611.5 1,042.0 948.5 1,990.5 379.0

2031 - 50.6 50.6 1,068.3 1,004.0 2,072.3 2,021.7

2032 - 52.1 52.1 1,095.4 1,062.7 2,158.1 2,106.0

2033 - 53.7 53.7 1,123.2 1,124.9 2,248.1 2,194.5

2034 - 55.3 55.3 1,151.8 1,190.7 2,342.6 2,287.3

2035 1,562.4 49.1 1,611.5 1,181.2 1,260.5 2,441.7 830.2

2036 - 50.6 50.6 1,211.4 1,334.3 2,545.7 2,495.1

Economic Net Present Value (ENPV): 1,767.7

Economic Internal Rate of Return (EIRR): 14.3%

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

Appendix 13 45

SUMMARY OF THE SOCIOECONOMIC IMPACTS

1. During implementation, Madhya Pradesh Road Development Corporation (MPRDC) with assistance of the supervision consultants developed a project performance monitoring system (PPMS) incorporating relevant parameters based on the design and monitoring framework of the project appraisal documents. A set of indictors were selected, covering many aspects of economic development, connectivity improvement, socioeconomic impacts, women empowerment, health service improvement, and road safety. During implementation, the supervision consultants carried out surveys in 2014/15 and final surveys after project completion in 2016. Substantial data were collected and analyzed and comparisons were made for the changes before and after the project; and socioeconomic impacts of the project were assessed. The final PPMS reports were prepared and submitted to ADB for the Jabalpur and Bhopal packages.1 Following is the summary of the surveys and analysis. A. Connectivity Improvement by the Project

2. Under the project, 15 state highways totaling to 1,083.1 km were rehabilitated or reconstructed, involving widening and strengthening the roads from single or intermediate-lane roads to intermediate or two-lane standards with bituminous pavement.2 The civil works also included strengthening/repairing and/or constructing 149 bridges and 1,330 culverts, and installing road signage and furniture. The project roads were constructed in good quality (average international roughness indices ranging between IRI 3–4). 3. The improvement of the project roads has led to substantial reduction in traveling time and transport costs for both passengers and freight vehicles. The average vehicle speeds on the project roads increased from average 30–40 km/hour before the project to 50–80 km/hour after the project. According to the surveys before and after project completion, it indicated that the average vehicle traveling time reduced by average 45%, which is much more than anticipated at appraisal of 25% on average. The vehicle operation cost is reduced by at least 48% (17% in real terms). Such road improvement has well facilitated and promoted the traffic development on the project highways. The comparison of traffic data before and after projects shown that the traffic increased by average 34.0% in comparing that before and after project completion, respectively 27.4% for passenger vehicles, 61.0% for commercial vehicles, and 93.8% for agriculture vehicles.

Table A13.1: Traffic Surveys of Before and After Project

(number of vehicles)

Passenger Vehicles

Commercial Vehicle

Agriculture Vehicle

Total

Before After Before After Before After Before After

Bhopal Packages

(1) Bhind-Ater-Porsa 2,586 3,465 168 226 430 576 3,184 4,267

(2) Mihona-Lahar-Daboh-Bhander-Chirgaon

2,033 2,860 639 899 429 604 3,101 4,363

(3) Pichor-Chanderi-Mungawali-Ondere-Kurwai

1,863 1,519 271 557 335 553 2,469 2,629

(4) Manwar-Mangod (Banderi) and Sardarpur-Rajgarh-Bagh

3,040 4,894 965 1,379 172 936 4,177 7,209

1 M/s URS Scott Wilson. May 2016. “Project Performance Monitoring and Evaluation Report – Final Report”.

ICT. November 2016. “Project Performance Monitoring Report – Final Report” 2 In the built-up sections and water logged areas, cement concrete pavement was adopted.

46 Appendix 13

(5) Agar-Barod-A lot-Jawara 1,954 2,030 1,001 1,151 96 400 3,051 3,581

(6) Pachor-Chapikheda-Jirapur-Machalpur-Soyat

3,992 2,764 501 1,621 480 857 4,973 5,242

(7) Badi-Baktar-Dobi-Shahganj-Budhni and Silwani-Udaipura

2,045 2,890 415 855 146 169 2,606 3,914

Jabalpur Packages

(8) Rahatgarh-Khurai-Khimlasa 1,188 1,591 360 483 538 721 2,086 2,795

(9) Damoh-Hata-Gasiabad i/c Hata Town Portion

2,873 3,850 322 432 136 182 3,331 4,464

(10) Hata-Patera-Kumhari & Raipura-Salaiya-Bahuribandh-Sihora

1,050 1,478 381 536 118 166 1,549 2,180

(11) Amarpatan-Gorsari-Badera 1,062 1,423 480 644 63 84 1,605 2,151

(12) Sundara-Singhpur-Kothi-Jaitwara-Birsinghpur-Semaria

1,016 1,430 348 491 83 117 1,447 2,038

(13) Sidhi-Beohari 1,880 2,645 341 479 19 27 2,240 3,151

Source: Madhya Pradesh Road Development Corporation

B. Socioeconomic Development in the Project Area

4. The project has substantially improved the connectivity in the project areas, which has led to significant socioeconomic impacts to the local socioeconomic development, including stimulating industrial and agricultural development, increasing household income and reduction in poverty, increasing in land prices, accessing more social and health services, generating substantial employment opportunities, etc. 5. Employment generation. During implementation, the project employed substantial local workers amounting to 33,498 person-months, including unskilled labor of 18,798 person-months. During construction, large amount of local agriculture products and construction materials were used by the project. After rehabilitation of the project roads, many new hotels, shops and garages were opened along the project roads, an increase of 56% for hotel/dhaba, 43% for shop, and 54% for garage. Hence, the project has provided additional working opportunities to local people, especially the poor. 6. Accessibility to market. On the improved roads, the traveling time and transport cost has had substantial reduction, which facilitated and promoted the farmers to go to larger markets to sell their products at higher prices. According to the consultations with local people, improved accessibility to markets has increased the negotiating power of the farmers and at the same time keeps them abreast with the market conditions providing easy access to information. Further, improved accessibility facilitates interaction with fellow framers from other villages and helps them in sharing knowledge. Higher prices of agricultural products and application of new technology has stimulated fast agriculture development in the project area.

7. Increased household income and poverty reduction. Due to construction activities and impacts of the project roads, the average rural household income has increased substantially. The survey results showed that the average household income per month increased by average 37.3% from average ₹11,956 in 2011/12 to ₹16,411 in 2015/16. Meanwhile, the poverty ratio in the project areas decreased from average 40.3% at baseline to 30.1% after project completion, respectively from 35.1% to 29.2% in Bhopal region and 46.4% to 31.3% in Jabalpur region.

8. Accessibility to health care. Due to improved road connectivity in the project areas, the accessibility to health care has improved significantly. The surveys showed that the average time required to reach public health centers was 32.4 minutes at commencement of project which improved to 20.2 minutes after project completion, i.e. a 38% reduction. The average time

Appendix 13 47

required to reach major hospitals was 1.65 hours at commencement of the project which improved to 1.14 hours after project completion, i.e. a 31% reduction. The average time required to reach district hospitals was 1.19 hours at commencement of project which improved to 0.78 hours after project completion, i.e. a 35% reduction. Besides, the frequencies of the public transport services have also increased to help more people to access the public health centers and the major hospitals. 9. Increase in land prices. Due to improved connectivity and socioeconomic development in the project areas, land prices along the project roads have increased sharply. According to the surveys, the average price increased by 45% for agriculture land and 78% for commercial land. C. Road safety

10. During project design, blackspot locations on the project roads were identified. During implementation, safety features such as metal beam crash barrier, proper road markings, and sign boards had been incorporated in the design and construction of the project roads, particularly incorporating suggestion from gender consultations held at appraisal. As per the data collected from the local police stations during monitoring surveys, the total road accidents after the project increased by 7%, which implies 22% increase in non-fatal accidents and 41% reduction in fatal accidents. The accidents are significant, which largely reflect negligent driver behavior, violation of traffic rules including over-speeding, lack of enforcement besides mixed traffic conditions and inadequate road safety awareness. This issue may be more pronounced particularly on the roads where number of agricultural vehicles is high. This is a systemic issue in India, which is being addressed by the government in a progressive manner. More efforts are required in driver training, enforcement of traffic rules and road safety awareness to the road users in an effective manner.

Table 13.2: Road Accidents on the Project Roads

(number of accidents)

Road sections

Commencement of project Completion of project

Total Non-Fatal Fatal Total Non-Fatal Fatal

Bhopal Packages

(1) Bhind-Ater-Porsa Nil Nil Nil 34 29 5

(2) Mihona-Lahar-Daboh-Bhander-Chirgaon Nil Nil 72 61 11

(3) Pichor-Chanderi-Mungawali-Ondere-Kurwai 226 136 90 193 156 37

(4) Manwar-Mangod (Banderi) and Sardarpur-Rajgarh-Bagh

78 45 33 234 214 20

(5) Agar-Barod-A lot-Jawara 48 45 3 23 22 1

(6) Pachor-Chapikheda-Jirapur-Machalpur-Soyat 38 34 4 24 20 4

(7) Badi-Baktar-Dobi-Shahganj-Budhni and Silwani-Udaipura

18 15 3 7 6 1

Jabalpur Packages

(8) Rahatgarh-Khurai-Khimlasa 65 63 2 22 20 2

(9) Damoh-Hata-Gasiabad i/c Hata Town Portion 78 71 7 30 26 4

(10) Hata-Patera-Kumhari & Raipura-Salaiya-Bahuribandh-Sihora

15 12 3 6 6 0

(11) Amarpatan-Gorsari-Badera 5 4 1 2 2 0

(12) Sundara-Singhpur-Kothi-Jaitwara-Birsinghpur-Semaria

45 41 4 21 17 4

(13) Sidhi-Beohari 25 21 4 16 14 2

Total 641 487 154 684 593 91

Source: Madhya Pradesh Road Development Corporation

CONTRIBUTION TO ADB RESULTS FRAMEWORK

No. Level 2 Result Framework

Indicator Target Aggregate Output Methods/Comments

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

- Total 4.70 million vehicle-kilometers per day in 2017

The target was projected based on the traffic survey and forecast in the RRP. It was estimated at appraisal that the traffic would increase at an average 8.2% per year in 2009-2015 and 7.0% per year in 2015-2020. The aggregate output (actual traffic in 2017) was estimated based traffic surveys at project completion.

2 Roads built or upgraded – Provincial, district, and rural roads (kilometers)

1,080 km of state highways

Total 1,083.1 km of state highways were rehabilitated or upgraded

At project completion, 15 sections of project highways comprising total 1,083.1 km were rehabilitated or upgraded per specific rehabilitation requirements utilizing the loan funds.

3 Beneficiaries from road projects (passenger-km)

5,321,600 per day 9,532,000 per day Based on average daily traffic, occupancy and distance.

Source: The Asian Development Bank project completion review mission

48 Appendix 14