ROAD SECTOR DEVELOPMENT PROJECTImplementation ReviewDecember 19-28, 2010

AIDE-MEMOIRE

I. Introduction and Acknowledgments

1. A World Bank review team comprising Messrs/Mmes. Olivier Le Ber (Task Team Leader),Surendra Govinda Joshi (Sr. Transport Specialist), Farhad Ahmed (Sr. Transport Specialist), SilvaShrestha (Research Analyst), Satya Narayan Mishra (Social Development Specialist), IshworNeupane (Social Development Specialist), Drona Raj Ghimire (Environment Specialist), BigyanPradhan (Sr. Financial Management Specialist), Nagendra Nakarmi (Sr. Program Assistant), SunitaGurung (Program Assistant) and Nirmala Bhatt (Team Assistant) carried out the implementationreview from December 19-28, 2010 for the Road Sector Development Project. The team visited Far-Western Region to oversee the quality of works and progress status of 12 contracts. The objective ofthe team was to review the status of the project and identify key implementation issues and agree withthe Government of Nepal (GON) on an action plan for satisfactory implementation of the project.

2. The team is grateful for the hospitality extended to it by the Government of Nepal, especially thecounterpart agencies and officials. This Aide-memoire summarizes the team's findings anddiscussions held in a wrap up meeting on December 28, 2010 at the Ministry of Physical Planning andWorks. As agreed at the wrap up meeting, this Aide-memoire will be classified as a public documentunder the World Bank's Access to Information policy.

II. Summary of Key Messages

* The overall progress of the project is satisfactory, with good implementation performanceincluding physical progress and compliance with safeguard and fiduciary requirements. However,monitoring and reporting of safeguard activities need to be improved.

* Printed asset ledgers are yet to be established in all DOR offices. It has been agreed that DOR willestablish asset ledgers in all DOR offices by end-April 2011.

* It is necessary to expedite the feasibility studies required for the potential future projects to beimplemented by DOR related to bridge repair and rehabilitation, ii) extension of the highwaynetwork, and iii) trade and transit facilitation investments.

* The Financial Management Information System (FMIS) needs further improvements asthe systemis still not functional and able to generate reliable information. The Project Team confirmed thatsuggestions made would be incorporated and the trimester reports would be submitted through thesystem.

* It is required to expedite the implementation of RAPs for the first lot of contracts underAdditional Financing. Until the compensation payments for lost land and assets are satisfactorilycompleted, as provisioned in RAP, including for those related to the ongoing project, no contractswill be awarded.

III. Achievement of Development Objectives Status

3. The progress made in achieving the Project Development Objective' (PDO) is satisfactory. DORfield project offices carried out a preliminary traffic survey and a road users' survey to determine

The Project Development Objective is for the residents of beneficiary districts to have all-season road accessthereby reducing travel time and improving access to economic centers and social services.

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savings in travel time to economic centers. DOR has also provided geospatial data to determineincrease population in the project area to have all-weather motorable access within 20 minuteswalking distance from their residence. The household social impact study is due at the fullcompletion of the upgrading works (by March 2012).

4. Based on the current observed progress, the PDO appears to be achievable: i). The GIS mappingshows that, so far, there was 11.3 % increase in the number of people in project districts that haveall-weather motorable access within 20 minutes of walking distance from their residence against anMTR target of 11%. ii). The DOR survey also shows that where road upgrading works have beensubstantially completed there had been a 35% decrease in travel time to economic centers forresidents of the project area. The MTR target in this case is only 15%.

5. Annex 1 gives an overview of the progress towards reaching the outcome indicators.

IV. Current Implementation Status

6. The overall implementation performance in terms of physical progress as well as activitiesenvisaged under the institutional strengthening and policy reform component is found to besatisfactory if the project elapsed time of 37 months (65% of project duration) is considered.

Road Development Component

7. Upgrading Works Sub-Component The project aim is to upgrade 297 km of earthen tracks toall-weather low cost motorable road standard. This will improve connectivity of five remote districtheadquarters (Baitadi, Darchula, Bajhang, Dailekh and Kalikot). By end-November, 2010 a total of23 contracts have been awarded for the upgrading of 290.6 km roads. Of these, 20 contracts (265.5km) have been completed. Baitadi and Dailekh District headquarters are now connected by all-weather roads. The overall physical progress of this component is 95 percent. The progress of threeother incomplete contracts ranges between 43% and 82%. Six contracts to upgrade monsoondamaged sections of the roads have also been awarded by DOR. It has been reported that thecontractors are in the process of mobilization.

8. The Supervision Team noted that the variation order (VO) for the additional services of thedesign and supervision consultant was yet to be approved by GON. Such an approval is required asthe revised contract amount is over 15% of the original contract amount. The VO was necessary dueto the additional time required for rebidding and to accommodate design and supervision ofadditional emergency works to address monsoon damaged road portions. It is reported that the VOhas been sent to the Cabinet for approval. It is hoped that the GON approval process will becompleted by January 2011.

9. Periodic Maintenance Sub-Component. Periodic maintenance of a total of 450 km of blacktopstrategic roads was planned for 3 years under the project. A total of 16 contracts that involve 455km of strategic roads (blacktop) have been awarded. So far 387 km length has been completed. Thismeans that the physical progress achieved is 86%.

10. Road Safety Works: Out of five road safety related roadwork contracts (foot paths, safetybarrier and signals etc.) four have been awarded. Another contract requires re-bidding. Twocontractors already started the work and the other two contractors are yet to start the work. It isexpected the procurement process will be completed soon and the works will be completed by June2011.

Institutional Strengthening and Policy Reform Component.

11. The institutional activities have been continued as per the scope of the original project andplans have been prepared for the implementation of the activities under the Additional Financing.

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Although, in general, there has been progress in these activities, the activities under this componentare moving at a much slower pace than the physical works component. The progress is behind thetarget set as per the implementation plan. The yearly budgets and plan of activities are preparedfollowing the three year business plans of different units of DOR. The plans are also being used bythe units to garner support from projects other than RSDP. The current business plans are for FY2007/08 to 2010/11. However, there is a need to review, revise/update and approve the businessplans by DOR.

The key activities and emerging issues for the units supported under the project are as follows:

12. Geo-technical, Environmental and Social Development Unit (GESU). An EnvironmentalOfficer and a Social officer (both are Consultants) have been hired by GESU. They will beresponsible for safeguard due diligence for both the ongoing roadworks and the roadworks that willbe undertaken under the Additional Financing. The external social monitoring report has called forthe strengthening of GESU capacity. It concluded that the unit did not have adequate number ofstaff required for effective monitoring and supervision. GESU is yet to be restructured as visualizedin the ESMF.

13. Mechanical Training Center. The documents for the procurement of Hydraulic Demo Benchaccessories are being prepared. The team learned that the demo bench was being used effectivelyfor training purposes. The centre needs to expedite the accessories procurement process to avoidany potential disruptions to the training programs.

14. Preparation of Road Safety Action Plan (TESU. The unit has been preparing the terms ofreference for a road safety Technical Advisor. The advisor will be placed in the unit for a year.He/she will assist the unit in the planning road safety related activities and providing on-the jobadvice for implementation of road safety initiatives and pilot programs. The training schedules forthe unit staff and the approach for the pilot programs on road safety will be determined once thetechnical advisor takes his/her position.

15. Road Asset Management- Highway Management Information System (HMIS). The Unit has sofar not managed to recruit an international consultant, who would advise them on the appropriatehighway management system. The recruitment delay has resulted in delays in the purchase of thehardware/ software required for the unit. This also affected the management of the training activitiesof the unit. The unit has prepared a road asset management system. The system has been populatedby the consultants with the available information. DOR has also prepared a draft report on the roadasset. It is understood that the format for the road asset register has also been prepared. It isexpected to be printed and sent to the divisional offices soon. DOR needs to take quick decision onhow to operationalise the system. This includes: (i) populating the system with full live data and (ii)periodic updating of the system.

16. Road Sector Skill Development Unit- Human Resource Development. The unit has alreadycompleted international training for DOR engineers at AIT, Bangkok, Thailand. Other localtrainings are being planned as per the approved business plan.

17, IT and MIS Development (MIS-IT). In the past the Bank has provided concurrence for theprocurement of services of one IT Manager (consultant). However, the IT Manager could not berecruited for various reasons. The unit has re-started the recruitment process for this position andhas requested for no-objection from the Bank. DOR has already completed the procurement for theInformation Security Solution for its E-procurement System. The system is expected to be in placeby April 2011. The Unit has also prepared a stand-alone FMIS for the divisional offices. The systemis expected to be a simple one and it will be integrated with the system at the center.

18. Roads Board Nepal. Consultants for the Preparation of Charts of Account and DevelopingMonitoring and Evaluation Tools in order to strengthen, integrate and support Local Road Agencies

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have submitted their draft report. RBN will share the documents with the Bank team for comments.Road Users' Satisfaction Survey has been planned to be carried out in FY 2011/12. The Bank teamhas advised RBN to prepare a detailed training plan including plans for any trips outside the countryenvisaged as part of training. The plan will be prepared following the business plan of RBN and willspecify the nature, schedule and participants of such training. It is also required that the Boardendorses the plan and MoF clears any overseas travels. The Bank team suggested that RBN wouldcoordinate with DOR so that training that is relevant for both the organization could be organizedtogether.

19. Progress in Implementing the GAAP. The implementation of GAAP has been found to besatisfactory. The annual procurement plan has been posted on DOR website. All works biddingdocuments are made available on the web. Contract information is being disclosed by the e-procurement section of DOR, which is accessible using the link www.eproc.dor.gov.np. Auditedproject financial statements have also been made public through DOR website. The ComplaintRegister has been maintained and complaints on procurement, fraud/corruption and constructionquality have been dealt with on their occurrence. However, it is desirable to expedite the process offollow-up actions. Independent technical audits are being carried by the National Vigilance Centreas provisioned in the project.

20. The Additional Finance of US$ 75.00 million of IDA support was approved by the Board onNovember 23, 2010. The Financing Agreement was signed on March 4, 2011 (after the reviewvisit).

Safeguards performance

Social Safeguards

21. RAP Implementation: The implementation of RAP has been completed for 15 out of 23packages undertaken prior to Additional Financing. The difficulties in finalizing the PAP list, due togaps between the engineering alignment and the social impact survey, were later addressed throughcadastral surveys. The affected land and house losers were listed, grievances relating to land claimsresolved and compensation payment accelerated. The implementation of RAP for the ongoing fiveroads is in progress. The distribution of compensation for a certain section of the affected landowners, including absentee title holders, is still pending. GESU is trying to expedite theprocess. Two of the five RAPs required for the additional phase have been prepared and reviewedby the Bank. They need to be finalized. It is necessary to finalize RAPs and to complete the landacquisition process, in line with the Environmental & Social Management Framework (ESMF),prior to awarding contracts for the new roads undertaken under Additional Financing. It isemphasized that timely finalization and disclosure of the list of the affected land, or/and structureowners will be crucial to completing land acquisition prior to the award of civil work contracts.Stronger coordination between GESU and the Project Management team, which seem to be weak atthe moment, is required for the timely completion of the acquisition process.

22. Updating ESMF: GESU has completed training of field staff on ESMF in two phases betweenOctober-December 2010. The training reports show that many participants found ESMF toocumbersome and wanted it simplified and updated. Based on the feedback received, DOR is in theprocess of commissioning a consultant to prepare and publish easy to refer brochures on ESMF. TheBank has given its "no-objection" to proceed with external safeguard audit and updating of ESMF.

23. External Safeguard Review Findings: The external social safeguard review of July 2010 hascome up with findings that will be important for improving social safeguard management. Areasthat made progress include: (a) raising awareness on HIV-AIDS among workers; (b) prevention ofchild labor; (c) payment of LA and R&R assistance to 92 percent of the affected people incompliance with ESMF. Areas that require further attention include: (i) slow implementation ofVulnerable Community Development Plan (VCDP) with disbursement of assistance to only 10

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percent of the people; and (ii) weak internal monitoring and reporting systems. It is advised thatGESU should develop a safeguard action plan based on the findings of the external review andtraining reports, which provides feedback regarding implementation of the ESMFand suggestsmeasures for its simplification and improvement.

24, Future Activities: The review team discussed future activities including sections of the AsianHighway and East-West Highway and feasibility studies for certain roads and bridges as a part ofthe Additional Financing. It is advised that the social aspects be duly incorporated in the feasibilitystudies, which will plan more specific social impact assessment studies for preparing RAPs forthese activities, if required.

Environmental Safeguards

25. Since MTR, GESU has carried out a number of activities including: (i) periodic compliancechecks of three ongoing roads; (ii) organized training/orientation on ESMF and on RAP; (iii)translation of ESMF into Nepali and its printing; (iv) finalization of a report on IndependentExternal Monitoring; (v) review of SS-EMAPs of the two first year Additional Financing roads; (vi)recruitment of a GESU environmental specialist. A number of issues have been brought to thenotice of the review team including: (i) landslides at Bangabagar of SG Road has caused significantdamage; (ii) the spoil disposal at school play ground (KJC Road) was improper; and (ii) a issuerelated to location of the road drain outfall at Chainage 4+00 of KJC has not been resolved yet. Theteam wants to flag the following issues for further action by GESU: (i) status report on thecompleted or substantially completed packages has not been initiated yet; (ii) updating/revision ofGESU Capacity/Institutional Strengthening Plan proposed in the ESMF 2007 is incomplete; (iii) noenvironmental screening or monitoring has been done in the road maintenance and road safetyworks supported by the project; (iv) SS-EMAPs of the Khidkijyula-Manma-Jumla Road, Chinchu-Devisthal-Jajarkot Road, and Shitalpati (Salyan)- Musikot (Rukum) Road proposed for AdditionalFinancing funding are yet to be started; and (v) A detailed work-plan for the RSDP safeguardactivities for the remaining period of this fiscal year is yet to be prepared by GESU. (Annex 4provides further details on environmental safeguards).

V. Procurement, Financial Management and Disbursement

26. Procurement. All contracts linked to civilworks, goods and services under the original scopeof the project have been procured.

The status of procurement under Additional Financing contracts are discussed below:

27. Upgrading Component. DOR has invited the first tranche of bids for 7 contracts in the FarWestern Region and these contracts will be awarded latest by June 2011. The progress of thepreparation of bid documents of the upgrading works for Mid Western region appears to be goodand it is expected that bids will be invited by June 2011.

28, Periodic Maintenance. DOR has invited bids for 22 first year contracts. The contracts areexpected to be awarded by end-February 2011. However, DOR is yet to process the hiring ofindividual consultants to support the Road Divisions for the supervision of the contracts. DOR hasagreed to submit RFP by end-February 2011.

29. Institutional Component. Bids for the procurement of 5 project pick-up vehicles have alreadybeen invited by DOR. Bid documents for the procurement of a Bridge Inspection Vehicle and IThardware are under preparation. They will be processed as per the procurement plan.

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30. Financial Management

Budget for FY2009/10 and Estimated Expenditures. The total approved budget duringFY2009/10 is as follows:

Budget Head Budget in Rs. millionGON RBN IDA Total

Recurrent Budget (48-3-407) 13.93 0 0 13.93Capital Budget (48-4-407) 135.01 0 1,452.85 1,587.86

Capital Budget (48-4-695) 0 324.41 0 324.41

Total 148.94 324.41 1,452.85 1,926.20

31. The total approved budgeted amount for FY2009/10 was NRs.1,926.20 million. Of theamount NRs.1,452.85 million was allocated under IDA financing, NRs.324.41 million under

Roads Board Nepal and the remainder (NRs.148.94 million) under GON counterpart financing.Total expenditures during FY2009/10 were Rs.1,494.45 million. This corresponds approximately77.6% of the approved budget. NRs.l 15.66 million (of the reimbursable expenditures incurredduring FY2009/10) remained outstanding. The amount needs to be reimbursed to the government'streasury.

32. Budget for FY2010/11 and Estimated Expenditures. There was a delay in theannouncement of budget for FY20 10/11. It was announced after the end of the first trimester. Thishas significantly affected the implementation of the Project. The table shows the approved budgetfor FY20 10/11:

Budget Head Budget in Rs. million % ChangeGON RBN IDA Total over

FY2009/10

Recurrent Budget (48- 15.98 0 0 15.98 14.73-407)Capital Budget (48-4- 598.86 0 1,647.88 2,246.74 50.0407) 1 1Capital Budget (48-4- 0 1,118.91 0 1,118.91 244.9695)Total 614.84 1,118.91 1,647.88 3,381.63 75.7

33. The total approved budget allocation for FY2010/11 is NRs.3,381.63 million. Of the amountNRs.1,647.88 million, NRs.1,118.91 million and NRs.614.84 million are allocated under IDAfinancing, Roads Board Nepal and GON counterpart financing respectively. The budgeted amountfor maintenance through Roads Board Nepal has seen a significant increase (an increase ofapproximately 245% when compared with FY2009/10 figures). The overall year-on-year budgetincrease is roughly 76%. Total estimated expenditure as of November 15, 2010 (i.e. the end of thefirst trimester) is NRs.1 19.58 million. This figure is approximately 3.5% of the total approvedbudget. The late announcement of the budget is mainly responsible for the low level ofexpenditures.

34. Disbursements. As of December 24, 2010 total disbursements from IDA source under theoriginal project was US$32.63 million (which is about 76%). Of the amount only about US$22.35million has been registered as actual expenditures. The reminder being the unutilized advance inthe designated account. If the unutilized figures are excluded, the actual usage is about 52%.Disbursement progress seems to be on track as currently there is no disbursement lag, which isbased on projections made in the project appraisal document.

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35. Client Connection. The new Program Coordinator has just been appointed. The review teamreminded GON to send the revised signatory for operating the project accounts. The team alsosuggested that a separate signatory letter for Additional Financing should be sent as soon as itbecomes effective. The team also reminded the new Program Coordinator and the Signatory toregister in the Client Connection in order to register for enabling the signatories for e-submissionof withdrawal application.

36. Financial Management. The review of the financial management system (including theFinancial Management Information System or FMIS) has been done by the review team. The teamhas suggested areas for further improvements. It is noted that the system is still not functional togenerate reliable information. The Project Team confirmed that suggestions made would beincorporated and the trimester reports would be submitted through the system. The review teamalso emphasized the need: (i) to make an arrangement for a good back-up system, (ii) to ensure thatthe consultant provides back-up staff for ongoing support, and (iii) to arrange after sales supportservice to ensure sustainability of the system.

37. The review team also stressed that a high priority should be given in monitoring projectoutputs and expenditures in order to ensure that physical and financial progress reconciles. TheProject Team agreed that the training to all Project Managers and Accounts Officers will beorganized twice a year and DOR will mobilize a field visit on a periodic basis to provide guidanceon the accounts and also to follow-up on the expenditure statements (this has already been initiatedand will be expanded). Since the Additional Financing agreement will be finalized soon and thenew budget has just been announced, the review team suggested that the training should beorganized on or before February 15, 2011. The team also suggested DOR to improve internalcontrol systems to track eligible expenditures and to ensure that the government's financialprocedures are duly followed.

38. In addition to the above, the review team has stressed the following : (i) All ledgers and booksof accounts to be updated in the FMIS system; (ii) Advances (except for mobilization advances)should not be treated as expenditures and claimed to IDA until such advances are actually realizedas the reported expenditures (the team has suggested that a separate record of such advances shouldbe maintained); (iii) All contract details by cost centers, components, budget heads etc. should berecorded in vouchers prior to the payments approval; and (iv) The development of a contractmonitoring system that will be able to monitor the implementation status of each contract. Such asystem should be made operational by July 15, 2011.

39. Implementation Progress Report. There are no pending Implementation ProgressReports. The third trimester Implementation Progress Report of FY2009/10 has been submitted onAugust 31, 2010 within the due date. IDA team has already reviewed and approved the report. Thereview team also has reminded the Project Team that the next progress report (first trimester ofFY2010/11) is due is due for submission on December 31, 2010.

40. Audit Report. There are no pending audit reports. The unaudited accounts for FY2009/10have been submitted. IDA team has reviewed the report and comments have been sent with advicefor re-submission. The revised report is yet to be submitted. The Project Team has been remindedthat audit report for FY2009/10 is due on January 15, 2011.

41, Future Projects. At the request of the GON, review team also discussed the potential futureproject support in the sector. Based on the discussions made preceding the preparation of theInterim Strategy Note 2012/2013 it has been agreed to initiate the identification of the followingprojects. Official requests from the MoF have not yet been received for these potential projects.

i) Result Based Bridge Support. Work will be initiated for the rehabilitation, maintenanceand new construction of bridges on strategic roads. It is expected that GON will also co-finance the project. The interventions will be based on an agreed sub-sector strategy and a

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priority plan. IDA has already issued no-objection for the shortlist of consultants to carryout a bridge inventory and condition survey, to prepare a strategy for rehabilitation,maintenance and new construction, and to develop a priority plan with detail feasibilitystudies. DOR agreed to submit the RFP for IDA concurrence by end-February 2011.

ii) Extension of Highway Network. Due to the shortage of project funds DOR has agreedto carry out a feasibility study of Khurkot-Ghurmi (63 km) section of the proposedhighway from GON budget. However, the Terms of Reference for the consulting serviceto carry out the study will be discussed and agreed with the Bank. It is also agreed that allthe study reports will be shared with the Bank for review and the final reports will beproduced to the satisfaction of the Bank. DOR has agreed to submit the TOR for Bank'sreview by March 15, 2011.

iii) Regional Trade & Transportation Facilitation. A separate IDA team visited Nepal inearly-December to discuss the project. The team has provisionally identified Birgunj-Pathlaiya section of the Birgunj-Kathmandu road for upgrading to a 4-lane AsianHighway standard road. In order to expedite the processing of the project, the reviewteam and DOR have agreed to extend the service of present RSDP design and supervisionconsultants. The consultants will now also conduct feasibility studies of the road corridor.The consultants are expected to start the studies by end-February 2011.

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Annex I

Progress on the Achievement of Results by MTR

PDO Project Outcome Indicators Progress To Date (MTR)(i) To provide residents of 6 percent increase in population GIS shows 3.15% increase (MTRbeneficiary districts with all in project districts to have all target 3%)season road access thereby season road access within 20reducing travel time and minutes walking distance (inimproving access to economic eight project districts)centers and social services.

35 percent decrease in journey Preliminary survey by DORtimes to key economic centers in project offices resulted in a 35%the project area reduction in travel time (MTR

target 15%)25 percent decrease in journey Impact study to be carried out fortimes to key social services in the completed roads by June 2012.project areaReduce the percentage of black 20 % of black top road in poortop SRN in poor condition to 15 condition (MTR)percent

Intermediate Outcomes Intermediate OutcomeIndicators

Road Development Component I

(i) Targeted SRN is all weather 100 percent of 700 km of target 285 km have been completed.sealed gravel road roads receiving upgrading works

(ii) Sustainable periodic 100 percent of 2550 km of 386 km have been completed.maintenance of targeted highways received periodichighways and feeder roads maintenanceexecuted

No backlog periodic maintenance The backlog is about 800 km bywithin the project period. MTR.,

(iii) Road Safety Action Plan & Publication and implementation DOR to submit an action plan asphysical works of actions inconsideration of the

recommendation s from Bank inOctober 2010.

Institutional Development Component II

(i) Improved staff capacity within HR policy updated and 3 year Trainings being undertaken as perDOR training plan finalized. Domestic the business plan,

and international trainingprovided for DOR staff as perpolicy and plan

(ii) Capacity building in Geo- a) Completion of geo-technical a) Assessments of ongoingtechnical, Environmental and assessments, b) EMAP and RAP improvement carried out asSocial aspects and create compliance monitoring and c) recommended, b) EMAP andawareness on HIV/ AIDS performance in creating RAP monitoring being done

awareness among project periodically, independent externalconstruction workers and road consultant to monitor completed.

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PDO Project Outcome Indicators Progress To Date (MTR)users on HIV/AIDS First round of HIV awareness

program carried out by NGO.

(iii) DOR IT based MIS Completion of pilot installation of WAN installed in 9 offices ofoperational wide area network (WAN) in DOR in Kathmandu Valley. A

DOR division offices in business plan to operate MISKathmandu and satisfactory software to be submitted to IDAoperation and maintenance of IT which includes proposal forbased management system phase-wise operationalization of

the different modules(iv) Road asset management tools HDM4 used for bi annual road Consultants have submined theused for prioritization of road condition assessment and report for the Road Assetmaintenance and upgrading preparation of annual Register. DOR to prepare anworks maintenance plan action plan for the best use of

HDM4 in the local context toprepare the annual maintenanceplan.

(v) Improved quality assurance Quality monitoring plan prepared The Central Road Lab has carriedeach year and quality audit out internal quality audits.carried out by Central Road Lab

(vi) Improved effectiveness of RBN Act amended and more Bill approved by the cabinet andRoads Board Nepal training and logistics provided sent to the special committee for

Government decision to discussion before submitting tobenchmark salaries to market the parliament for approval.ratesHuman resource development(HRD) plan

(vii) Third party technical audit Third party technical audit carried over 20% of the contracts hadout for 20 percent of the project third party technical audit byworks each year NVC,

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Annex II

Status of Key Actions Agreed During March 2010 Implementation Review

Action Responsibility Timing (dates) StatusRoad Development Component

* Award of contracts for emergency works DORIDA November 2010 Done* Award of Contracts for road safety works DOR/IDA December 2010 Done

Maintenance Component

* Monitor quality of periodic maintenance DOR/CRL February 2010 NYDworks by CRL & report* Status of maintenance of RMDP Roads DOR/Maintenance November 2010 Substantially due.

Branch

Institutional Component

* Approval of Variation Order for additional MOPPW/DOR January 2011 Good progressservices of the supervision Consultants.

* Road Asset Ledger printed and road DOR/Road Divisions January 2011 No substantialdivisions maintain the ledger progress

* Bid invitation of 25% of works proposed DOR December 2010 Good progressunder the Additional Financing (AF)

* Bid Documents for first year periodic DOR divisions December 2010 Good progressmaintenance works under AF

* Individual consultants to monitor periodic DOR February 2011 NYD

maintenance works (AF)

* Report on Monitoring Guidelines and RBN February 2011 Draft report submitted

Chart of Accounts

* IT hardware and software contract DOR November 2010 Done.

awardedFinancial Management

* Operationalize the Financial Management DOR September 10, 2010 Partially doneInformation System (FMIS) and prepare thefinancial monitoring reports using the system.

* Submit RFP for Contract Monitoring Systemto monitor the contracts. DOR December 31, 2010. Pending

* Audit report required ofr FY2009/10 DOR January 15,2011submitted to IDA January 15, 2011. Pending* Satisfactory operationalization of IT based December 31, 2010FMIS Partially operational

Social and Environmental Safeguard

Re-notification/ facilitation to PAFs for the CDC/DOR/ PCU November 15, 2010payment of pending compensation and Doneallowances

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Action Responsibility Timing (dates) Status

* Updating information on: November 15. 2010 i) In processi) aggregate employment generation in PCU/ ConsultantRSDP ii) Due

ii) review overall performance of NGOs RSDP/GESUagainst their TOR.

September 20, 20 10* Disclosure and circulation of ESMF (prior to appraisal of Substantially done

translated (Nepali) version at DOR website, RSDP/GESU Add. Financing) (translated, printed, readyOn each payment for circulation)

* Continue enforcement on circular request of contractorrequiring Supervision Consultant to attach on a regular basisa signed observation note on E & S Donesafeguard condition in each payment RSDP/GESU/

request from contractor December 31, 2010

* RSDP Safeguard related detailed/ final GESU Delayedaction plan for FY 10/11

* Preparedness check including orientation Done, combined withto PMUs and contractors' site managers compliance check(Khodpe-Jhoda I 1A, 11B)

RSDP/GESU/March 2011

* Site orientation to site-supervisors, On schedulemachine-operators, labor-group leader, etc RSDP/GESU/

December 31, 20 10* Verification of safeguard measures Done

incorporation in Satbanj-Gokuleshwor Supervision consultant/draft/final documents PMU

* Monthly and quarterly reports to includeinformation on environmental and socialsafeguard activities undertaken as well asdifficulties faced (if any) for each contractseparately. GESU

* Screening and checking periodic December2010maintenance activities SupervisionDl

consultant/PMU

* Periodic (six-monthly) compliance check December 2010of all ongoing RSDP works RSDP/GESU/ Done

* Training on RAP and ESMF to projectstaff, DOR, and other stakceholders RSDP/GESU/

S Preparation and publication of simple RSDP/GESU/ December 31 2010brochure (Nepali and English) on ESMF Done

" Final checks on the status of safeguard March 2011mitigation works on packages that have in Processbeen substantially completed as ofoJuly2010

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Annex III

Key New Actions Agreed During December 2010 Implementation Review

Issues Responsibility Deadline Comments

Road Development Component

* Award first lot of contracts in FarWestern region. DOR/IDA June 2011* Second lot bids invited for contracts in June 2011the Mid Western region DOR/IDA

Maintenance Component

* Monitor quality of periodic DOR/CRL April 2011maintenance works by CRL & report* Status of maintenance of RMDP DOR/Maintenance June 2011

Roads Branch

* RSDP-AF First Year contracts DOR Road Divisions February 2011awarded

Institutional Component

* Approval of Variation Order for MOPPW/DOR February 2011additional services of the supervisionConsultants.

DOR/Road Divisions April 2011* Road Asset Ledger printed and roaddivisions maintain the ledger

DOR April 2011* Individual consultants to monitorperiodic maintenance works (AF)

Financial Management* Training of DOR officials DOR/PCU Feb 15, 2011

* Training on impact monitoring DOR/PCU July 15, 2011system

DOR/PCU Dec 31, 2011* Submit IDA I"s Trimester report of

FY2010/011DOR/PCU Jan 15, 2011

* Submit Audit report of FY 2009/010

Social and Environmental Safeguard GESU and RSDP PCU Feb 28, 2011

Share findings of the GESU's monitoringof November 2010 and discuss/agree next

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Issues Responsibility Deadline Comments

step/ mitigations with the project

Final checks on the environmental status of GESU March 31, 2011the completed or substantially completedconstruction packagesGeo-technical Training and Bioengineering GESU January 2011 andTraining February 2011

respectively

Plan of action for implementing the GESU in consultation As soon as possiblerecommendations of the independent with RSDP PCU andexternal monitoring DOR

Updated GESU's Capacity/ Institutional GESU in consultation 31 March 2011Strengthening Plan with RSDP PCU and

DOREnvironmental screening and/or monitoring GESU 28 February 2011 On sample basis, firstof road maintenance and road safety works round.supported by the project.Preparation of SS-EMAPs of the GESU with support As soon as possibleKhidkijyula-Manma-Jumla Road, Chinchu- from RSDP PCU andDevisthal-Jajarkot Road, and Shitalpati supervision consultant(Salyan)- Musikot (Rukum) Roads.Detailed work-plan for the RSDP safeguard GESU 28 February 2011activities for the remaining period of thisfiscal year.Future Projects

* Preparation of Interim strategy Review team 2012/2013

* Result based Bridge supportprogram

Submit the RFP for IDA DOR February 2011concurrence

* Mid Hill Highway DOR March 15, 2011Submit TOR for Bank review

* North-East Regional Trade & End of February 2011transportation Facilitation project

Consultants are expected to startthe study

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Annex IV

Environmental Safeguard

Periodic Compliance Check (six-monthly), GESU has carried out periodic compliance checks onthe following construction ongoing roads: Khodpe-Jotha-Chainpur (KJC), Satbanjh-Gokuleshwor(SO), and Satbanjh- Tripura Sundari -Jhulaghat (STJ). There was no highly significant issueobserved in STJ Road. In the KJC Road, the position of drain outlet/outfall around chainage 4+00has been opposed by the local people. The alternative location being proposed by the project hasalso been opposed by another group of people. Timely construction of the drain outlet/outfall isimportant, in absence of which there is risk of greater damage during the upcoming rainy season.The other issue observed in this road was the disposal of spoil in school premise / play ground.According to the school, the understanding was that the ground after disposal of the spoil will besmoothened to suit a school playground and there will be adequate protection of the site. The sitehas been left unfinished and unsuitable for school play ground, and without slope/ toe protectionposing risk to the land and houses below. At around Bangabagar, chainage 49-+700 to 970 of SCRoad, unanticipated landslide has destroyed 5 houses and cultivated land. The risk was notidentified by IEE, or by SS-EMAP, or by other assessment during planning and design. GESU ispreparing a full report on the findings of the monitoring. The review team advised that thesefindings are shared and next step/ mitigations are discussed with the project as soon as possible(by January 31, 2011).

Orientation and training. As agreed during the MTR, GESU has organized training/orientation onESMF from October 25-26, 2010 and on RAP from December 12-16, 2010. The training/orientations were attended by DOR Projects Managers, consultants and contractors as well as byrelevant government agencies such as DoLIDAR and Ministry of Physical Planning and Works.GESU has tentatively planned a Geo-technical Training in January 2011 (through RSDP fundingsupport) as well as Bioengineering Training in February 2011 (through GESU's internal sources).

ESMF Translation and brochure preparation. GESU has translated the ESMF into Nepali. TheNepali version of the ESMF is printed and are ready for distribution. Simple brochure on ESMFis being prepared.

Final Check on the status of safeguard mitiQation works. GESU team has visited KJC, STJ andSG Roads in November 2010. However, preparation of status report on the completed orsubstantially completed packages has not been initiated yet: the review team noted that, althoughthere is time for this activity (this was planned to be done by March 2011), the progress is slowand needs to be expedited.

Independent External Monitorinz. GESU has received final report of the Independent ExternalMonitoring. GESU will prepare and discuss a plan of action for implementing therecommendations of the independent external monitoring.

Updated GESU Capacitv Strengthening Plan. GESU informed that some background informationhas been collected for the updating/revising of GESUCapacity/Institutional Strengthening Planproposed in the ESMF 2007 (Chapter 10). However, the Plan has not been updated yet. Thereview team emphasized and advised to prepare the updated capacity/ institutional plan as soon aspossible (by 15 February 2011).

Road maintenance works and Road Safety Works. The review team noted that no environmentalscreening or monitoring has been done in the road maintenance and road safety works supported

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by the project. Although major environmental issues are not expected from these works, theseworks are required to be screened and monitored on sample basis. It was agreed that GESU willscreen the proposed works and monitor the activities on sample basis: first round of theseactivities to be done by 15 February 2011.

Site Specific Environmental Management Plan (SS-EMAP). SS-EMAP has been received for theGokuleshwor-Thakthaoli-Darchula Road and Kalangagad Bridge-Chainpur Road proposed underthe AF. These are under GESU review. SS-EMAPs of the following roads have not been preparedyet: Khidkijyula-Manma-Jumla Road, Chinchu-Devisthal-Jajarkot Road, and Shitalpati (Salyan)-Musikot (Rukum) Road.

Human Resource Status and logistic. GESU has recruited an environmental specialist, which wasabsent for some time hampering the environmental safeguard works. The environmental specialistwill support GESU in environmental activities related to RSDP as well as other projects underDOR. There is provision of full-time environmental specialist in the supervision consultant team.GESU shared the experience that the lack of dedicated vehicle for monitoring purpose is thecritical constraint in undertaking environmental and social monitoring by GESU in DOR projects.

GESU's annual safeguard work-plan for RSDP, GESU will prepare a detailed work-plan for theRSDP safeguard activities to be undertaken in the remaining period of this fiscal year by 31January 2011. The review team was informed that this year government has allocated NRS(3592+3900 AF) in thousands for the GESU.

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