bangladesh: road maintenance and improvement project

EvaluationIndependent

Bangladesh: Road Maintenance and Improvement Project

Performance Evaluation Report

Reference Number: PPE BAN 2014-16

Project Number: 33243

Loan Numbers: 1789/1790

Independent Evaluation: PE-775

Performance Evaluation Report

December 2014

Bangladesh: Road Maintenance and Improvement

Project

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

NOTES

(i) In this report, “$” refers to US dollars.

(ii) For an explanation of rating descriptions used in ADB evaluation

reports, see ADB. 2006. Guidelines for Preparing Performance

Evaluation Reports for Public Sector Operations. Manila.

Director General V. Thomas, Independent Evaluation Department (IED)

Director Bob Finlayson, Independent Evaluation Division 2, IED

Team leader E. Kwon, Principal Evaluation Specialist, IED

Team members F. De Guzman, Senior Evaluation Officer, IED

M. Fortu, Senior Evaluation Assistant, IED

The guidelines formally adopted by the Independent Evaluation Department on

avoiding conflict of interest in its independent evaluations were observed in the

preparation of this report. To the knowledge of the management of the Independent

Evaluation Department, there were no conflicts of interest of the persons preparing,

reviewing, or approving this report.

In preparing any evaluation report, or by making any designation of or reference to a

particular territory or geographic area in this document, the Independent Evaluation

Department does not intend to make any judgment as to the legal or other status of

any territory or area.

Abbreviations

AADT - average annual daily traffic

ADB - Asian Development Bank

ADF - Asian Development Fund

ADP - annual development plan

CIC - corridor improvement component

CPAR - Chittagong Port access road

DMF - design and monitoring framework

EIRR - economic internal rate of return

FGD - focus group discussion

FIRR - financial internal rate of return

FY - fiscal year

GDP - gross domestic product

ha - hectare

HDM - highway development and management

IED - Independent Evaluation Department

IEM - independent evaluation mission

IRI - international roughness index

KII - key informant interview

km - kilometer

LARP - land acquisition and resettlement plan

LGED - local government engineering department

MVO - Motor Vehicles Ordinance

OCR - ordinary capital resources

PCR - project completion report

PPER - project performance evaluation report

PPP - public–private partnership

RHD - Roads and Highways Department

RMC - road maintenance component

SDR - special drawing rights

VOC - vehicle operating cost

Currency Equivalents

Currency Unit – taka (Tk)

At Appraisal At Program Completion At Evaluation

(October 2000) (April 2009) (February 2013)

P1.00 = $0.0186 $0.0140 $0.0127

$1.00 = Tk 53.75 Tk 71.23 Tk 78.35

Contents

Acknowledgement v

Basic Data vii

Executive Summary ix

Chapter 1: Introduction 1

A. Project Scope 1

B. Evaluation Purpose and Process 1

Chapter 2: Design and Implementation 2

A. Background 2

B. Rationale 3

C. Outcomes and Outputs 4

D. Project Risks and Mitigation Arrangements 5

E. Cost, Financing, and Executing Arrangements 6 F. Project Outputs 8

Chapter 3: Performance Assessment 11

A. Overall Assessment 11

B. Relevance 11

C. Effectiveness 13

D. Efficiency 14

E. Sustainability 15

F. Development Impacts 16

G. ADB Performance 18

H. Borrower and Executing Agency Performance 18

Chapter 4: Issues, Lessons, and Follow-Up Actions 19

APPENDIXES

1. Design Summary 22

2. Implementation 24

3. Covenants 25

4. Policies 29

5. Economic Reevaluation 32

6. Financial Reevaluation 41

7. Socioeconomic Reevaluation 44

Acknowledgement

The guidelines formally adopted by the Independent Evaluation Department (IED) on

avoiding conflict of interest in its independent evaluation were observed in the

preparation of this report. Mr. Joselito Supangco, Mr. Ahmed Faruque, and Mr. Nazrul

Islam assisted the IED PPER team with field evaluation, project-related documents, data

and information, and the socioeconomic field survey. To the knowledge of the

management of IED, there were no conflicts of interest of the persons preparing,

reviewing, or approving this report.

Basic Data

Bangladesh: Road Maintenance and Improvement Project

As per ADB

Key Project Data Loan Documents Actual

($ million) 1789 and 1790 1789 and 1790

Total project cost 160.20 117.77

Foreign exchange cost 75.60 48.13

Local currency cost 84.60 69.64

ADB loan amount utilized 67.60

ADB loan amount cancelled 37.27

Key Dates

Fact-finding 24 Feb–15 Mar 2000

Appraisal 9–22 June 2000

Loan negotiations 16–18 October 2000

Board approval 29 November 2000

Loan agreement 18 December 2000

Loan effectiveness 18 March 2001 10 September 2001

Number of extensions 3 2

First disbursement 20 Dec 2001 10 Sep 2001

Project completion Mar 2004 Mar 2004 Jun 2007 Sep 2008

Loan closing 30 Jun 2005 30 Jun 2005 15 Apr 2009 18 Jun 2008

Months (effectiveness to

completion)

57 57 99 81

Borrower: Bangladesh

Executing Agency: Roads and Highways Department

Mission Data

Type of Mission No. of Missions No. of Person-Days

Fact-finding 1 100

Appraisal 1 140

Inception 1 30

Special loan administration 1 64

Road sector implementation issues 1 9

Environmental compliance review 1 4

Special project administration 1 2

Review 12 230

Project completion 1 6

Independent evaluation 1 12

ADB = Asian Development Bank.

Executive Summary

This project performance evaluation report (PPER) evaluates the Road

Maintenance and Improvement Project in the People’s Republic of Bangladesh to assess

its performance and highlight its lessons.

The Project

The project was developed in response to the Government of Bangladesh’s

focus on the country’s five major road corridors. Developing and maintaining an

effective road network was a key theme in Bangladesh’s Fifth Five-Year Plan, 1997–

2002.

Expanding the capacity of the Dhaka–Chittagong Corridor was necessary to

establish efficient transport between the country’s capital and its main port. Improving

the road network was expected to lead to significant economic growth and poverty

reduction in the southeast region. The project was designed to develop physical

infrastructure and introduce specific policy and institutional reforms in the road

subsector.

Project objectives were to (i) improve transport efficiency on existing roads

nationwide by strengthening the governance of road maintenance and conducting

priority periodic maintenance works; (ii) improve transport efficiency on the strategic

Southeast Road Corridor by upgrading road conditions and increasing capacity; and (iii)

increase private sector participation in the delivery of road infrastructure by

establishing an enabling policy and legal environment and by implementing a toll

road demonstration project.

The project was comprised of a corridor improvement component (CIC) and a

road maintenance component (RMC). Each component had investment and policy

outputs. For the CIC, the outputs consisted of constructing of 111 kilometer (km)

sections of road along the Southeast Road Corridor, and establishing a policy and legal

framework for toll-funded private sector operation and maintenance, and a legal

framework for controlled access highways. For the RMC, the outputs consisted of

adopting and implementing a policy framework for road maintenance, and periodically

maintaining an estimated 250–400 km of roads for each of the 3 years from fiscal year

(FY) 2002/03 to FY2004/05.

The Asian Development Bank (ADB) approved the project in November 2000. Its

total cost was estimated at $160.2 million. ADB approved total funding of $94 million

equivalent, comprised of $72 million equivalent from the Asian Development Fund

(ADF) (Loan 1789) and $22 million from ordinary capital resources (OCR) (Loan 1790).

The two loans became effective in September 2001, with a 6-month delay from the

original target date for loan effectiveness. The project was completed in April 2009,

about four years after the targeted completion date of June 2005. The actual project

cost was $117.77 million, which was 74% of the original estimated cost. ADB had to

cancel loan amounts totaling $37.27 million, representing 24% of the loan approved,

which the PPER reported were derived mainly from construction cost savings.

The CIC component’s achievements were as follows: (i) a total of 113.25 km of

road was constructed on the Southeast Road Corridor, exceeding the target of 111 km,

x Bangladesh: Road Maintenance and Improvement Project

and (ii) a legal framework was provided and environment outputs were enabled to

support private sector participation in roads. The RMC component achieved the

following: (i) sealing and overlay of a total of 369.5 km of road, which was about 30%

of the original target; and (ii) a policy framework for road maintenance, which was

partially achieved.

The 4-year overrun was due to: (i) delays in the contract award for the RMC

subprojects due to changes in procurement arrangements envisaged at appraisal, (ii)

delays in government approval for the interim operation and maintenance contract of

the Chittagong Port access road (CPAR), (iii) slow progress in implementing the

contract for the feasibility study and detailed design for the Dhaka–Chittagong

Highway, and (iv) delays in the approval of the feasibility study by the Government

Purchase Committee. The executing agency was the Road and Highway Department

(RHD) of the Ministry of Communications. Procurement was implemented through

eleven packages, comprising nine packages for civil works and one package each for

construction supervision and the feasibility study.

Assessment

The project’s objective was to resolve problems of inadequate road

infrastructure and road maintenance. These issues were resulting in chronic congestion

(i.e., traffic growth outstripping capacity on strategic corridors) that was putting strains

on many road sections, shortening their economic life. The poor condition of the road

network made road transport services expensive and unreliable. These, in turn, reduced

the mobility of labor and goods and services, constraining economic development

potential and impeding poverty reduction efforts. As a result, there was an urgent need

to upgrade the existing road network and expand the capacity of the Southeast Road

Corridor, the country’s main highway, focusing on the Dhaka–Chittagong Corridor.

This corridor links Dhaka to the country’s main port, Chittagong. The rehabilitation

was expected to spur economic growth and employment opportunities in Bangladesh.

The project was expected to improve the transport network connecting urban

and rural areas in order to stimulate nonfarm activities and attract private investment

in the rural areas. Setting up effective maintenance systems and promoting private

sector participation in roads were vital to supporting reforms to improve transport

system efficiency by increasing the sustainability of investments.

ADB’s support for transport infrastructure in Bangladesh focused on upgrading

road infrastructure and improving the enabling environment for private sector

participation in the road subsector. ADB’s assistance was designed to reduce the road

maintenance backlog by establishing a special road maintenance fund. These initiatives

were designed to improve road conditions and provide sustainable funding sources to

meet periodic road maintenance requirements.

Transport infrastructure in the project areas was generally improved in the CIC

through the completion of civil works and the passage of key policy measures,

especially those pertaining to financing road maintenance. The actual road length for

which periodic maintenance works were completed under the RMC fell short of what

was envisaged at appraisal. The likelihood that this shortfall will be addressed has

increased following the recent approval of the Road Fund Board Act. This legislation

will provide the legal basis for delivering a stream of public sector–sourced revenues to

fund road maintenance. Despite these reforms, there is no evidence that this funding

Executive Summary xi

will be forthcoming, or that it will be sufficient to meet asset management

requirements.

The project is rated less than successful. In terms of the specific evaluation

criteria, the project was rated relevant, less than effective, efficient, and less than likely

sustainable:

(i) Relevance: relevant. The project’s objectives and design were closely

aligned with the government’s development strategies and ADB’s

country strategy in Bangladesh. It had strong economic development

and poverty reduction elements. The project design for the CIC

provided the necessary capacity for the sections of the Dhaka–

Chittagong Highway that were subject to high traffic volumes. The

project included the construction of bypasses, the piloting of private

sector maintenance of roads, and the policy formulation and

implementation needed to address high-priority road maintenance

activities and their funding. Offsetting this result, only 30% of the RMC

maintenance component was implemented, and 24% of the total loan

amount was cancelled, raising questions about the relevance of the

original design. The project design did not adequately reflect the

differences in timelines for constructing infrastructure, relative to

developing new institutional capacity.

(ii) Effectiveness: less than effective. It is difficult to evaluate the

project’s effectiveness due to the absence of any baseline data

that could be used to determine the level of benefits accruing to

beneficiaries. The CIC achieved its intended outputs—road

construction, reforms to the policy and legal framework for toll -

funded private sector operation and maintenance, and the legal

framework for developing controlled access highways. In

comparison, the RMC outputs were only partially achieved, with

two of the five project components being fully achieved and three

partially achieved. The partially achieved components were: (i) the

road length covered for periodic maintenance was less than

forecast; (ii) the budget for periodic maintenance continued to be

combined with the annual road development budget, making it

difficult to confirm the availability of maintenance funds; and (iii)

sources of finance of the road fund are still not secured.

(iii) Efficiency: efficient. The delayed implementation process undermined

the project’s efficiency: the project had a time overrun of 108%, taking

eight years rather than the original estimate of four years to reach

completion. There are also concerns about lack of funding for

maintenance. Nevertheless, the re-estimated economic internal rates of

return at 17.1% and 17.4% for the CIC and RMC, respectively, confirm

the project’s economic viability.

(iv) Sustainability: less than likely sustainable. Project sustainability relies on

adequate maintenance practices and funding. The sections improved

under the CIC and RMC are receiving some maintenance from the RHD,

but it is unclear how sustainable this maintenance will be, given

uncertainties about road funding. On 25 June 2012, the government

enacted the Motor Vehicles Axle Load Control Regulations, which ban

xii Bangladesh: Road Maintenance and Improvement Project

overloaded vehicles from the country’s road network. Strict

enforcement of the regulations would strengthen the sustainability of

the project roads, but this effect has not yet been demonstrated by this

project. In July 2013 Parliament passed the Road Maintenance Fund

Board Bill, providing for the creation of a fund for proper maintenance,

repair, and renovation of roads under the RHD. Offsetting these

developments, the PPER noted that sources of the Road Fund Board

Act, approved in 2013, have yet to be secured, and that 70% of the

maintenance component under the loan was not implemented,

indicating that the government has limited commitment to

maintenance. There is no evidence that funding is being provided at a

level that reflects asset sustainability levels. This uncertainty undermines

the probability that the project’s outputs under the RMC will be

adequately maintained over the project’s economic lifetime.

(v) Impact: Projected institutional reforms, such as sustainable

maintenance funding for roads, were not achieved. The project’s

socioeconomic impacts include shortened travel time to nearby cities,

towns, and growth centers; diversified income sources as a result of

increased economic opportunities; expanded trade and businesses;

improved access to social services; and more social interactions within

as well as outside communities. Offsetting this result, the project did

not gather any baseline data that could be used to assess impacts, and

it is difficult to attribute the project’s benefits to the country’s

economic growth at that time. Unrealistic economic benefit forecasts

presented in the RRP are unlikely to be realized. The views expressed by

the local population, representatives of local councils, and various

government agencies did not identify any major environmental or

resettlement problems.

Issues, Lessons, and Follow-up Actions

Time dimension of reform process. Implementing policy reforms entails a

complex and long-term process of change. The legislation and policy measures that

were enacted required fundamental changes to the roles of several concerned

institutions. These types of reforms can take longer than anticipated, adding

uncertainty to the realization of actual outputs and outcomes. The full extent of

reforms, especially to institutional arrangements, may extend well beyond the usual

administrative life of a project loan. Also, performance targets during the operating

period can entail time lags that require a longer time frame than the development

period of the loan to be fully measured.

Baseline data collection is a priority. At appraisal and during implementation,

greater attention should have been given to the design and monitoring framework,

especially in establishing measurable indicators and their baseline values, and target

values with a realistic time frame to achieve these goals. Higher priority should have

been given to ensure that baseline data were collected prior to project implementation,

and updated during project implementation and at completion. The absence of

baseline data has made this independent evaluation of the project difficult.

ADB should closely monitor the CPAR, especially the development of vehicle

parking facilities by the private sector and the periodic adjustment of tolls to cope with

the increased costs of toll road operations and maintenance. The government should

Executive Summary xiii

carefully consider lessons from the implementation of this pilot public–private

partnership to ensure that future projects are not only attractive to the private sector,

but beneficial to users as well.

Project design and risk analysis. The mitigation measures identified in the RRP

to address project risks were largely unsuccessful, and the project was subject to long

time delays, problems with land acquisition and procurement, shortfalls in demand,

and insufficient funding for maintenance. Despite advance procurement actions,

enactment of legislation for maintenance, and establishment of controlled access

arrangements for the CPAR, the expected results were not achieved. In part, the

problem appears to be attributable to weaknesses in the project design, in which the

feasibility study and detailed design were not completed until 9 March 2008, seven

years after loan approval. A greater level of upfront efforts in project preparation,

particularly in the areas of preparing credible traffic forecasts and identifying road

alignments, could pay large dividends. Similarly, credible solutions can be developed

upfront before finalization of the loan to address perennial issues such as delays in land

acquisition and procurement.

Road Maintenance Fund. The adequacy of funding for the Road Maintenance

Fund is a critical risk for the CIC that needs to be monitored.

CHAPTER 1

Introduction

1. This chapter describes the scope of the project, the purpose of this project

performance evaluation report (PPER), and the process taken to prepare it.

A. Project Scope

2. The Road Maintenance and Improvement Project was approved by the

Board of the Asian Development Bank (ADB) in November 2000 and was

developed in response to the Government of Bangladesh’s focus on the development

of the country’s five major road corridors. Constructing and maintaining an effective

road network was a key theme in road infrastructure development in Bangladesh in

its Fifth Five-Year Plan, 1997–2002.

Expanding the capacity of the Dhaka–Chittagong

Corridor, which was one of the five corridors, was necessary to establish efficient

transport between the country’s capital and its main port. Improvement of the road

network under the project was expected to lead to significant economic growth

throughout the southeast region and contribute to poverty reduction. The project was

designed to introduce specific policy and institutional reforms in the road subsector to

support improvements in road maintenance, and enable a greater level of participation

by the private sector.

3. The project was completed in April 2009, about four years after the targeted

completion date of June 2005. The project completion report (PCR) was prepared in

December 2009 and it rated the project successful. The project was rated highly

relevant, effective, efficient, and less likely to be sustainable.1

B. Evaluation Purpose and Process

4. The purpose of this evaluation is to prepare an independent PPER, which has

been scheduled for about 5 years after the project’s completion. This interval provides

adequate time to assess progress in achieving the project’s effectiveness, efficiency, and

sustainability objectives. The schedule provided sufficient time to assess the impact of

the improvements to the roads under the project. The timing of the preparation of the

PPER should enable key lessons to be identified for successful implementation of similar

road projects in the country. The independent evaluation mission (IEM) that was fielded

to prepare this PPER was conducted in December 2012. As part of the preparation of

the PPER, an independent socioeconomic team was fielded between October 2012 and

February 2013 to assess the project’s socioeconomic impacts.

1 ADB. 2009. Project Completion Report: Bangladesh: Road Maintenance and Improvement Project (Loans

1789 and 1790). Manila.

The project

was designed

to introduce

specific policy

and

institutional

reforms to

support

improvements

in road

maintenance,

and enable a

greater level of

participation by

the private

sector

CHAPTER 2

Design and Implementation

5. This chapter reviews the project background, rationale, outcomes and outputs,

and resource and financing assumptions underlying the project design; project risks

and mitigation arrangements identified in the loan documents; and the actual

implementation program. The chapter compares the projected performance of the

original design with its actual performance.

A. Background

6. Bangladesh’s road network was in poor condition at the time of project

preparation. This poor condition was largely due to inadequate maintenance and

resulted in expensive and unreliable transport services, which, in turn, constrained

movements of labor, goods, and services. Increasing numbers of vehicles, inadequate

road safety measures, and weak discipline and enforcement of traffic regulations led to

a high level of road accidents. Maintenance activities suffered, since total spending on

periodic maintenance fell short of the required level for asset sustainability, and was

insufficient to address the maintenance backlog.

7. Insufficient maintenance and rehabilitation of Bangladesh’s road network

resulted in chronic congestion, with traffic growth outstripping capacity on strategic

corridors. In particular, the capacity of the Southeast Road Corridor from the country’s

capital (Dhaka) to its main port (Chittagong) needed expansion to promote economic

growth and employment opportunities. Also, there was a need to put in place a

transparent and effective maintenance system and enhance private sector participation

in road infrastructure. These conditions were considered critical impediments to

poverty reduction efforts.

8. Against this background, the government sought to accelerate infrastructure

development by focusing on the country’s major road corridors. In 1999, the

government asked ADB to improve the Southeast Road Corridor between Dhaka and

Chittagong, which is the country’s most important highway. Expanding this corridor’s

capacity was considered vital to accommodate rapid growth in traffic and improve

transport efficiency between the country’s capital city and its main port. This corridor

serves a large proportion of the country’s population in both urban and rural areas.

9. The government also asked for ADB assistance the following year, 2000, to help

reduce the road maintenance backlog and institutionalize a special road maintenance

fund. A third private sector component was added to the project as expanded private

sector participation was needed to improve economic efficiency and reduce the

required amount of public financing for road infrastructure. The project was based on

various feasibility studies and reports on the environment, land acquisition and

resettlement, and poverty reduction impacts. The proposed project design

underpinning the loan was formulated in consultation with the government and its

development partners.

Design and Implementation 3

B. Rationale

10. The project, through a combination of investment and policy elements, was

designed to expand road capacity and upgrade road maintenance to achieve

improvements in transport efficiency. By focusing on the country’s strategic highway, it

aimed to accelerate economic development and poverty reduction. A key project

priority was the development of a system for periodic road maintenance. Road

maintenance is essential to achieve transport efficiency. Easing the huge backlog on

road maintenance was preferable to further increasing the capacity of road

infrastructure. However, these objectives would have more chance of success if the

assistance provided a suitable policy and legal framework to encourage greater private

sector participation.

1. Need for Road Capacity Expansion

11. The demand for road transport increased rapidly in the 1990s, at an annual

rate of 8% for passengers and 7% for freight. Between 1989 and 1997, modal share for

roads rose from 57% to 75% for passenger traffic, and from 59% to 65% for freight.

Over the same period, the vehicle fleet grew at an annual rate of 8%. In 2006, road

transport accounted for 88% of passenger kilometers (km) and 80% of freight-ton km,

compared to 1998 levels of 72% and 65%, respectively.2

Traffic growth on the major

corridors outstripped capacity, resulting in congestion and reduced transport efficiency.

Inefficient and unreliable road transport and a poorly developed road network limited

mobility of goods and services, thereby constraining economic development.

12. The Dhaka–Chittagong Corridor, which had the strategic sections with the

highest traffic levels and greatest importance to the economy, urgently needed to

expand capacity to respond to the country’s increasing demand for transport

infrastructure. The corridor served the majority of freight and passenger traffic. At

appraisal, the traffic flow was more than 10,000 vehicles per day, with a high

proportion of trucks and buses. The corridor’s capacity needed to be expanded to

accommodate the traffic growth of over 7–8% per annum that was occurring at that

time.

2. Road Maintenance and Funding

13. The road network administered by the Roads and Highways Department (RHD)

consisted of about 20,850 km of roads in 1999.3

A substantial amount of money was

being spent every year for repairs and maintenance of these roads. However, funding

for maintenance remained insufficient, resulting in many roads not reaching their

economic life. Unless periodic maintenance is undertaken regularly, roads will rapidly

deteriorate and rehabilitation expenses can become very high. Periodic maintenance

practices were inadequate due to a lack of strategic planning, financing, and execution.

14. Adequacy of funding for road maintenance was a critical issue.4

The

government financed road maintenance from the revenue budget and the annual

2 Bangladesh Sixth Five-Year Plan FY2011–2015—Accelerating Growth and Reducing Poverty. Planning

Commission, Ministry of Planning Government of the People’s Republic of Bangladesh. July 2011.

3 HDM Circle. Maintenance and Rehabilitation Needs Report of 2012–2013 for RHD Paved Roads. Roads and

Highways Department.

4 Road sector revenues were collected through (i) fuel taxes; (ii) customs, excise duties, and sales taxes on

vehicle acquisition, spare parts, and tires; (iii) registration and annual vehicle license fees and other fees

A key project

priority was the

development of

a system for

periodic road

maintenance…

4 Bangladesh: Road Maintenance and Improvement Project

development plan (ADP). The RHD of the Ministry of Communications regularly used

project funding in the ADP to supplement its budget for periodic maintenance. Periodic

maintenance work financed from the revenue budget and ADP fell short of the amount

required to meet the sustainable level stated in the Annual Road Maintenance Plan

(ARMP) and reduce the maintenance backlog. As a result, the government was using

available funds to improve capacity by rehabilitating the existing road network, rather

than expanding the road network to meet increases in demand.

15. The maintenance backlog was gradually increasing, as the available funds could

not meet the 13–16% growth in demand. To reduce the backlog, the government

needed to access additional sources of external and domestic funding for maintenance.

In order to do so, the government needed to implement several measures, including

the following: (i) a policy commitment to prepare road maintenance and periodic

maintenance budgets using the Highway Development and Management (HDM-4)

model under the ARMP; (ii) transparent budgeting to enable monitoring of periodic

maintenance expenditure; (iii) setting the periodic maintenance budget at the level

required for asset sustainability; (iv) funding the periodic maintenance budget on a

permanent basis from domestic sources; and (v) adequately resourcing the

maintenance directorate. ADB’s assistance to address the backlog was based on the

need for the government to improve road conditions and develop sustainable sources

of funding from the public and private sectors to finance the maintenance backlog and

meet periodic road maintenance requirements.

3. Private Sector Participation Policy

16. Private sector participation in the road sector was limited to supplying goods,

materials, equipment, and consulting services. Private contractors were engaged in toll

collection, and were only permitted to provide routine maintenance. Collected toll

revenues could not be used to maintain related road assets, or be set at levels that

generated an economic return on investment.

17. As a result, the private sector had not invested in roads, or participated in their

operation. With persistent traffic growth on the strategic road corridors, toll roads

needed to be made more commercially attractive to private investors to encourage

them to invest in the sector. Other constraints were the lack of both a policy and legal

framework to provide clarity and establish confidence among potential investors that

they would generate a return on their investment, and private sector experience

working in the road sector in Bangladesh. In 2005, the government approved a policy

framework for public–private partnerships (PPPs).5

Private sector investment in roads

offered opportunities to complement the government’s meager resources for road

investments.

C. Outcomes and Outputs

18. The project’s main objectives and outcomes were to: (i) improve transport

efficiency on the strategic Southeast Road Corridor by upgrading road conditions and

increasing capacity; (ii) increase private sector participation in the delivery of road

infrastructure by establishing an enabling policy and legal environment and

implementing a toll road project; and (iii) improve transport efficiency on existing roads

related to drivers’ licenses and route permits percent; and (iv) tolls and charges on ferries and selected

bridges.

5 Prime Minister’s Office, Government of the People’s Republic of Bangladesh. 2004. Bangladesh: Private

Sector Infrastructure Guidelines. Dhaka.

The project’s

outcomes were

to: (i) improve

transport

efficiency on the

strategic

Southeast Road

Corridor; (ii)

increase private

sector in road;

and (iii) improve

transport

efficiency on

existing roads

nationwide


nationwide by strengthening the governance of road maintenance and by

conducting prioritized sections for periodic maintenance works, targeting areas

with a high incidence of poverty. The project framework indicated that the expected

impacts were enhanced economic growth and reduced poverty in the project areas; the

expected outcome was improved transport efficiency.

19. The project had two components: (i) the corridor improvement component

(CIC); (ii) and the road maintenance component (RMC). Each of these components had

investment and policy elements. The CIC was designed to improve sections of the

Southeast Road Corridor, establish the policy and legal framework for increased

private sector involvement in the road subsector, and implement a toll road

demonstration project for the Chittagong Port access road (CPAR). The RMC was

designed to address the policy, planning, implementation, and financing requirements

for establishing adequate maintenance of the RHD road network.

20. The project had the following intended outputs. For the CIC, the outputs were

construction of an 111-km section of road along the Southeast Road Corridor, and a

legal framework and enabling environment for private sector participation in roads,

which included establishment of a policy and legal framework for toll-funded private

sector operation and maintenance, and setting up a legal framework for controlled

access highways.6

For the RMC, the outputs were the adoption and implementation of

a policy framework for road maintenance, and periodic maintenance of an estimated

250–400 km for each of the 3 years from fiscal year (FY) 2002/03 to FY2004/05.

D. Project Risks and Mitigation Arrangements

21. The report and recommendation of the President (RRP) primarily focused on

risks associated with the CIC. The main risk identified in the RRP was the level of

sustainability of the benefit streams from the CIC investment due to inadequate

maintenance and truck overloading. The RRP indicated that this risk factor would be

addressed by incorporating a project component that would secure a government

budget for road maintenance and undertaking policy dialogue to improve axle-load

control. The RRP recognized there were risks that the maintenance policy framework

would not be implemented and funding for maintenance would not be secured. The

RRP noted that, based on previous experience, more direct means of cost recovery

needed to be devised, including toll collection and creation of funds reserved for road

maintenance. Traffic volumes were identified as a risk for the CIC if the government did

not include adequate provision for controlling access, or if new port developments led

to a significant shift in traffic levels and patterns. The former risk would be addressed

through the policy component of the RMC and by having a private concessionaire

operate and maintain the CPAR. The latter risk was addressed by a provision in the loan

agreement to strengthen controlled access arrangements under the Highways Act and

the Motor Vehicles Ordinance (MVO). The government had agreed to amend the MVO

within 18 months of loan effectiveness, to strengthen its provisions in enforcing

controlled access. The loan agreement provided for suspension of loan withdrawals if

legal provision for access control was removed.

22. The RRP highlighted the need to pay careful attention to project formulation

and design, including acquiring the right-of-way, and providing sufficient resources for

6 The CIC comprised three parts: (i) overlay and widening of the Chandina, Comilla, and Feni bypasses

(52km); (ii) upgrading and widening of the Feni–Chittagong section, including construction of local

bypasses (47 km); and (iii) construction of the Chittagong Port access road, an access-controlled toll road

(12 km).

The RMC was to

adopt and

implement a

policy

framework for

road

maintenance,

and periodically

maintain about

250–400 km for

each of the 3

years

The CIC was to

improve the

Southeast Road

Corridor,

establish the

policy and legal

framework for

private sector

involvement in

road, and

implement the

tolled

Chittagong Port

access road


feasibility studies and design. The approach to implementation must take account of

the capacity of road sector institutions and the private contracting industry. The RRP

highlighted the need to provide adequate attention to the social and environmental

aspects of road projects. The project was classified as environmental Category A due to

the need for a new alignment under a subcomponent of the CIC. No details were

provided in the RRP on social safeguards. The government prepared an environmental

impact study (EIA), which was approved by the Department of Environment in June

2000, following a public hearing at the project site. The principal adverse social impact

identified was the loss of land due to the need for land acquisition and resettlement

under the CIC. ADB-financed surveys sought to address these impacts in accordance

with the government’s procedures and ADB’s Policy on Involuntary Resettlement. At

appraisal, the government prepared a summary land acquisition and resettlement plan

(LARP). It was estimated that under the CIC component, about 58.6 hectares (ha) of

land would be required and a total of 8,229 people would be affected. The risk of

implementation delays was addressed by (i) completing detailed engineering prior to

appraisal, (ii) taking advance action for procurement, (iii) preparing the LARP and EIA

by consulting with stakeholders, and (iv) providing sufficient resources for supervision

consulting services.

E. Cost, Financing, and Executing Arrangements

1. Costs and Financing

23. Initial project preparation was financed through a project preparatory technical

assistance project at a total cost to ADB of $250,000, equivalent to 0.2% of the

estimated project cost.7

At appraisal, the project’s total cost was estimated at $160.2

million equivalent, of which the foreign exchange cost was $75.6 million, and the local

currency cost was $84.6 million equivalent. At completion, the project’s actual cost was

$117.77 million equivalent, which was 27% lower than the appraisal estimates. Within

this total, the actual cost for the CIC was $68.61 million equivalent, compared to the

appraisal estimate of $100.83 million equivalent, an underspending of 31%. For the

RMC, the actual cost was $26.8 million equivalent, compared to the estimate of $36.0

million equivalent at appraisal, an underspending of 26%. Offsetting these results, land

costs increased from an estimate of $6.1 million to an actual cost of $9.6 million.

24. ADB financed about 60% of estimated project costs, totaling $94.0 million

equivalent, of which $22.0 million was sourced from the ordinary capital resources and

$72.0 million equivalent was sourced from the Asian Development Fund (ADF).8

The

loan was denominated in a mix of US dollars and special drawing rights (SDR). As a

result of the contract cost savings and deferral of maintenance under the RMC, the

government requested four partial cancellations from the ADF loan, totaling 32% of

the original loan amount, which ADB approved.9

7 ADB. 1996. Technical Assistance to the People’s Republic of Bangladesh for the Third Road Improvement

Project (TA 2678-BAN, piggy-backed to Loan 1478-BAN). Manila.

8 This amount was equivalent to SDR 55,660,000.

9 The PCR indicated that loan cancellation amounted to $31,360,929.61 million equivalent. Following the

last disbursement of the ADF loan, ADB canceled the remaining balance of $1,358,171.49 equivalent on

loan closing, reducing the ADF loan amount to $51,513,601 equivalent. Following the last disbursement of

the OCR loan, ADB canceled the remaining balance of $5,904,928.72, reducing the loan amount to

$16,095,071.28.


2. Project Scheduling and Implementation

25. The project was approved on 29 November 2000 and it became effective on 10

September 2001. The targeted loan closing date was 30 June 2005 for both the ADF

and ordinary capital resources (OCR) loans. ADB approved the reallocation of a portion

of the ADF loan to the further preparation of the feasibility study and detailed design

of the Dhaka–Chittagong Expressway. The feasibility study and detailed design were

completed on 9 March 2008, 7 years after loan approval. The government requested an

extension for loan closing five times, which ADB approved: three for the ADF loan and

two for the OCR loan. The project was originally scheduled to be implemented over 4.0

years, including preconstruction activities. In practice, construction took about 7.4

years (89 months), an overrun from the plan by about 43 months (108%).

26. The main causes of the delays were: (i) protracted implementation of land

acquisition and resettlement of affected people; (ii) protracted government approval

procedures for the recruitment of construction engineering firms, and an interim

operation and maintenance contract for the CPAR; and (iii) the time taken to prepare

the feasibility study and detailed design for the Dhaka–Chittagong Expressway.10

A

total of 17.8 ha of land affecting 2,366 persons was acquired for the CIC, which was

substantially less than the 58.6 ha and 8,229 people originally estimated in the RRP. In

terms of procurement, a total of eleven packages, comprising nine civil works, and one

each for construction supervision and feasibility study and detailed design, were

competitively tendered over a time frame of about 2.5 years from issuing expressions of

interest to awarding the contract. Details are presented in Appendix 2.

27. The RHD was the executing agency for the project. The Office of ADB Projects in

the RHD was headed by a full-time additional chief engineer who was the project director

and reported to the RHD chief engineer. For the CIC, a full-time superintending engineer

was assigned as an additional project director and chief resettlement officer, reporting

to the project director. The superintendent was supported by an executive engineer and

three RHD project managers responsible for day-to-day implementation. For the RMC,

an additional chief engineer from the RHD was assigned as the project director for the

contracts under the first-year cycle and was responsible for overseeing the selection of

subprojects, procurement, monitoring, and reporting for the second- and third-year

cycles.11

Executive engineers, as project managers of the subprojects, were responsible

for overall implementation, administration, and financial management of subprojects.

28. At appraisal, it was expected that supervision consultants would be engaged

for a total of 1,058 person-months over a 42-month period. This figure was comprised

of 178 person-months of international consulting services and 880 person-months of

national consulting services. The consultants were mobilized in October 2001. Due to

delays in project implementation, the project required additional consulting services.

The actual consulting services amounted to 1,381 person-months, an increase of about

30%. This increase was comprised of 222 person-months for international experts and

1,159.1 person-months for national experts, over a 66-month period.12

The

10

The feasibility study and conceptual design for a four-lane Dhaka–Chittagong access-controlled

expressway, were prepared with funding from an ADB project completed in 2008. The study’s progress

was slower than anticipated and the approval by the Government Purchase Committee for the feasibility

study of the Dhaka–Chittagong Expressway was also significantly delayed.

11 Contract administration and other day-to-day implementation activities were delegated to RHD zonal

offices, headed by the zonal additional chief engineer, who was supported by superintending engineers,

executive engineers, and other staff members.

12 Supervision consultants’ services were extended for RMC contracts, CIC contract 4, and the time overrun of

CIC contracts 2–4. These were undertaken by the consultants with no additional costs.

The project was

originally

scheduled to be

implemented

over 4 years,

including

preconstruction

activities, but

construction

took about 7.4

years

The delays were

due to

protracted

implementation

of land

acquisition,

government

approval

procedures, and

preparation of

the feasibility

study …


engagement of consultants followed ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time).

29. The loan agreement had 27 covenants, of which, 17 covenants pertained to

sector policies and the balance related to implementation arrangements. One of these

implementation covenants concerned environmental mitigation, two pertained to

resettlement, one concerned financial matters, and six were related to project

performance monitoring, implementation, and financial auditing. A total of 23

covenants were complied with and four covenants were partly complied with. Sector

covenants 1 and 2 on sustainable road maintenance funding and covenant 6 on

performance audits were partly complied with.13

Of particular note, the road

maintenance fund has not been established and is still under review by the Ministry of

Finance, there is no time-bound action plan to implement such a mechanism, and no

performance monitoring arrangements have been defined or agreed. Further details are

presented in Appendixes 3 and 4.

F. Project Outputs

1. Project Outputs of the Corridor Improvement Component

30. Output indicators presented in the project framework were: (i) road

construction, (ii) a policy and legal framework for toll-funded private sector operation

and maintenance, and (iii) a legal framework for controlled access highways. The PPER

mission confirmed that all three output indicators were fully achieved.

31. Road construction: A total length of 113.2 km was improved, slightly more

than the 111.0 km planned at appraisal. These covered the overlay and widening of the

Chandina, Comilla, and Feni bypasses (51.8 km); upgrading and widening of the Feni–

Chittagong section (47.9 km); construction of the CPAR (13.6 km) as a pilot for PPP;

and detailed design of an ensuing road sector loan (Table 1).

Table 1: Corridor Improvement Actual Costs by Subproject

Contract

Number Road Section

Length

(km)

Amount

($ million)

1 Overlay and widening of Chandina, Comilla, and Feni bypasses 51.8 19.15

2 Upgrading and widening of Feni–Chittagong section 1 25.4 30.85

3 Upgrading and widening of Feni–Chittagong section 2 22.5

4 Construction of Chittagong Port access road (new) 13.6 18.81

km = kilometer.

Source: ADB. 2009. Project Completion Report.

32. Policy and legal framework for toll-funded private sector operation and

maintenance: The government’s policy on private sector participation was approved in

March 2005, which resulted in a private concessionaire taking control of the toll

collection and routine maintenance of the CPAR. The draft contract prepared by the

consultant was approved in February 2006. Due to the delayed selection of the

concessionaire, the civil works contractor undertook a 1-year interim contract on toll

collection and operation and maintenance of the CPAR. A private concessionaire,

Monico–ATT Consortium, took over after completion of the interim contract in October

2008 and is the current toll road operator.

13

This required an enactment of a new law and up to the time of the IED field visit was still undergoing final

revisions by the Ministry of Communications.

A total length of

113.2 km was

improved,

slightly more

than the 111 km

planned at

appraisal


33. Legal framework for controlled-access highways: The government introduced

the rules under the Highway Act of 1925 to provide a legal provision for access control

and a regulation under the MVO of 1983. This regulation was designed to enforce

access control primarily at the CPAR to prevent slow-moving vehicles and pedestrians

from using the highway, control roadside development, and give the RHD or a private

concessionaire the authority to manage the highway. The provisions were fully

implemented.

2. Project Outputs of the Road Maintenance Component

34. The output indicators presented in the project framework for the RMC were: (i)

a policy framework for road maintenance adopted and implemented covering the

national land transport policy; (ii) maintenance selection system; (iii) budgeting and

human resources; (iv) sustainable financing sources for maintenance; and (v) sealing

and overlay of priority roads within annual road maintenance plans. Of these, the first

two indicators were fully achieved and three were partially achieved. The national land

transport policy was adopted and implemented and a road maintenance selection

system was developed and used.

35. Adoption and Implementation of the National Land Transport Policy: The

government approved the national land transport policy on 24 April 2004. This

redirected the RHD’s major undertaking toward road maintenance from capital

projects, and established and approved a clear distinction of responsibility for road

maintenance between the RHD and the local government engineering department

(LGED). The RHD was responsible for the maintenance of the primary and regional

roads and a limited number of feeder roads, while the LGED was responsible for the

maintenance of rural and feeder roads. The RHD was further tasked to utilize a system

to prioritize road maintenance using the HDM-4 model. The government then decided

to merge this policy with the existing shipping policy, add policy issues related to air

transport, and prepare a comprehensive multimodal transport policy.

36. Maintenance selection system: To optimally disburse maintenance funds to the

road network, the RHD has employed the HDM-4 model to select and prioritize

maintenance works since FY1999–2000. A report of road maintenance and

rehabilitation work is prepared every year to assess whether or not the 5-year

investment plan met the acceptable levels of service provision for the RHD road

network.

37. Maintenance Budgeting: A periodic maintenance budget still has to be

separated from the road development plan. ADB agreed with the government that the

RHD be given a budget exclusively for periodic maintenance to be included in the ADP

expenditures related to periodic maintenance for roads under the jurisdiction of the

RHD. The government initiated a proposal to establish a separate maintenance budget

in 2003, which was undertaken for FY2004. The government now provides a non-

development revenue budget in the ADP for the maintenance of roads, bridges, and

highways. All non-maintenance works continue to be carried out under the RHD’s

annual road maintenance budget.

38. Maintenance financing: The government agreed to review the funding

mechanisms of the ARMP from domestic sources and prepare and implement a time-

bound action plan to meet the annual maintenance costs of all roads under the RHD to

an acceptable standard. The Road Fund Board Act is expected to help improve road

The national

land transport

policy was

adopted and

implemented

and a road

maintenance

selection system

was developed

and used, but

others were

only partially

achieved


maintenance financing, but at this stage there is no firm commitment from the

government to meet this funding obligation.

39. Sealing and overlay of priority roads within the ARMP: Road sections totaling

369.5 km were improved under the ADB loan through periodic maintenance work

under five contracts. This result was far short of its targeted level of 250–400 km each

year over a 3-year period. Implementation of the RMC was significantly delayed due to

the change in the procurement arrangements envisioned during appraisal, which

protracted prequalification procedures for contractors and formalities of government

approval.

Road sections

totaling 369.5 km

were improved

through periodic

maintenance

work, short of its

targeted level

CHAPTER 3

Performance Assessment

40. This chapter examines the project’s performance as per standard evaluation

criteria. The project’s contribution to institutional development and its socioeconomic

impact are also examined.

A. Overall Assessment

41. The project is rated less than successful. The main impacts indicated in the

project’s design and monitoring framework (DMF) were enhanced economic growth

and reduced poverty in the project areas. As there were no baseline data it is not

possible to fully assess whether impacts were achieved. The project’s main outcome

was improved transport efficiency in the project areas. This was only partially achieved

due to lack of progress on maintenance objectives. Some progress was made

developing a new law permitting private sector participation and the establishment of

a road maintenance fund. However, the government has not made any progress on

actually committing funds to the maintenance fund. Implementation was subject to

long delays, reducing overall efficiency. The probability of the project’s sustainability

has improved following the enactment of the new law, but it is still uncertain due to

the government’s lack of commitment for funding.

42. Table 2 summarizes the ratings for the four evaluation criteria and

corresponding weighting given to each criterion.14

The project is rated relevant, less

than effective, efficient, and less than likely sustainable.

Table 2: Overall Performance Assessment

Criterion Assessment Rating (1–3) Weight (%) Weighted Rating

Relevance Relevant 2 25% 0.50

Effectiveness Less than effective 1 25% 0.25

Efficiency Efficient 2 25% 0.50

Sustainability Less than likely

sustainable 1 25% 0.25

Total rating 1.50

Source: Independent Evaluation Department estimates.

B. Relevance

43. The project is rated relevant. The project was aligned with the government’s

development strategies and ADB’s country assistance strategies, both at project

appraisal and completion. Its objectives were pertinent to address the issues affecting

the poor condition of Bangladesh’s road network, the need to expand road capacity,

and the insufficient financing sources for the roads’ periodic maintenance. The project’s

14

The evaluation criteria focus on the project’s performance, following the Independent Evaluation

Department’s (IED’s) guidelines of four evaluation criteria: (i) relevance of the project to the government’s

and ADB’s development strategies, and project design; (ii) effectiveness of project implementation,

outputs, and outcomes; (iii) efficiency of its design and implementation; and (iv) sustainability of the

project outputs and outcomes.

The project is

rated less than

successful,

relevant, less

than effective,

efficient, and

less than likely

sustainable


intended impacts, outcome, and outputs were consistent with the government’s

development strategies as presented in the Fifth Five-Year Plan (FYP) for 1997–2002 and

ADB’s country assistance plan for 2001–2003.15

ADB’s country assistance plan for 2001–

2003 established poverty reduction as the primary objective and road infrastructure as

an important instrument.16

44. In 2000, at the time of appraisal, the country’s transport network, especially

along the main transport corridor, the Dhaka–Chittagong Corridor, suffered from

severe and chronic congestion and insufficient maintenance. Given the scale of the

funding requirements, the government needed external financing to reduce the

maintenance backlog. The government also needed to put in place various mechanisms

to conduct periodic maintenance on a sustainable basis, which included a policy

commitment to maintain roads and to allocate funds for a periodic maintenance

budget up to the level required for sustainability.

45. The project supported ADB’s country partnership strategy, 2011−2015 for

Bangladesh, which aims to provide assistance within Strategy 2020’s development

agenda of inclusive economic growth, environmentally sustainable growth, and

regional cooperation.17

The project prioritized private sector development to accelerate

growth by addressing major infrastructure constraints and skill gaps, improving the

regulatory setting, and enhancing capacity for PPP and private sector investments and

supporting suitable PPP projects once identified, including those in the transport sector.

46. The project design addressed the critical issues of improving road maintenance,

piloting private sector maintenance of roads, and developing a policy and institutional

framework to support these initiatives. Offsetting this result, the design was not

sufficient to achieve the program objectives, particularly on maintenance. In the

absence of an effective maintenance framework under the CIC, it is not clear why the

focus of the project was on constructing new capacity, rather than increasing the

effective capacity of the existing network by investing in maintenance. Other things

being equal, the economic returns were more likely to be greater for investment in the

maintenance of existing assets, rather than in developing greenfield capacity that could

not be maintained.18

Only 30% of the RMC maintenance component was implemented,

and the road maintenance framework was not operationalized. More success could

likely have been achieved if technical assistance had been used to design and develop

maintenance capacity before disbursing the loan, and linking disbursements to

achievement of pre-agreed milestones.

47. The underlying logic in the project DMF was also weak. For instance,

implementing the reform measures such as the legislation of the Road Fund Board Act

took substantial time, much more than expected at appraisal, and could extend beyond

the project’s implementation period. Similarly, for the nonphysical elements, even if

they were achieved as planned, they would be unlikely to immediately accompany the

intended outcomes. However, the project DMF assumed this outcome would be the

case, and it did not recognize this potential mismatch. An example is the enhanced

15

A key element is to improve integrated multimodal transport encompassing railways, roads, and inland

water transport having connectivity with the country’s neighbors. Under the Sixth Five-Year Plan, a top

priority is to build transport network corridors that provide regional connectivity to the national ports of

Chittagong and Mongla. Planning Commission, Ministry of Planning, Government of the People’s Republic

of Bangladesh. 2011. Sixth Five Year Plan FY2011–2015: Accelerating Growth And Reducing Poverty.

16 ADB. 2000. Country Assistance Plan (2001–2003) for Bangladesh. Manila.

17 ADB. 2011. Country Partnership Strategy Bangladesh (2011–2015). Manila.

18 This conclusion is reinforced by the economic internal rates of return (EIRRs) presented in the RRP for

maintenance versus new construction.

Performance Assessment 13

level of private sector participation in roads projected in the RRP. It was assumed that

realization of the policy elements would mean that private sector participation in roads

was promoted. In fact, although the key elements of the policy and legal framework

were successfully implemented, the actual level of private participation in roads was

not noticeably increased. Considering the significant gestation period and the time lags

for these policy initiatives, the assumption that the policy actions would have

contributed to the project performance appeared to be too presumptive. It is more

likely that the realization of intended policy reforms may benefit future road projects’

performance, and therefore should be considered in the context of sector level

performance rather than an individual project’s performance.

C. Effectiveness

48. The project is rated less than effective in achieving the outcomes of the project as

defined in the DMF.

49. The actual outcome at the time of project completion could not be assessed

against baseline targets as the DMF prepared at appraisal did not present any outcome

targets or values of the vehicle operating costs (VOCs) and average journey times that

could be used as a baseline for deriving estimates of savings for comparison purposes.

However, the economic analysis in the RRP assumed growth rates for demand starting at

8% per year to 2007, declining to 6% from 2008 to 2012, and to 5% from 2013

thereafter. The PCR reviewed these estimates in 2007 and found that for the Chandina,

Comilla, and Feni bypasses the actual growth exceeded the target in the RRP for 2007 by

2%, whereas there was a traffic shortfall of 39% for the Feni–Chittagong component,

and a shortfall of 72% for the CPAR.

50. During the IEM field visit, travel times from Dhaka to Chittagong and the CPAR

were observed. The RHD officials accompanying the mission validated the reduction in

travel time compared to the without-project situation. However, since there were no

baseline data available to the IEM, the measured reduction in travel time could not be

compared with the baseline data. The PCR estimated that the project reduced travel

time by 20 minutes to 45 minutes between Chittagong and major cities. These time

savings could not be validated without baseline travel-time data either from the DMF or

from the required baseline survey under the project performance monitoring system.

Based on the road condition level of international roughness index (IRI) 2 and without-

project road condition of IRI 6.0, the estimated per-km VOC savings using HDM-4

ranged from 8.5% to 12.0%, while travel-time savings per km under the same

assumptions ranged from 12.3% to 25.3%. Available traffic count data collected by the

IEM from the RHD validated the effectiveness of the roads in facilitating vehicle

movements, especially in the more congested and heavily trafficked areas such as

Chandina, Camilla, Feni, and Chittagong. Traffic volume on the CIC road sections is

usually high, as it is the main corridor between Dhaka and Chittagong, with its major

international port. From 2007 to 2011, actual traffic on the Chandina, Camilla, and Feni

bypasses increased by 17.0% per year and on the Sitakunda–Chittagong section by

11.7%. These exceeded the annual forecast growth rate of 9.0% for the 2007–2011

period. In the Feni–Mirsarai section, traffic growth for the 2007–2011 period was only

4.5% per year, less than the 9.0% forecast growth rate. A section of the RMC roads

leading to Cox’s Bazar, a major tourist area, also shows heavy vehicular traffic, where

the actual traffic growth on the Chittagong–Cox’s Bazar section was 22.9%. Therefore,

the project’s intended outcome for the physical construction—improved transport

efficiency—has reasonably been achieved in the project areas, as measured by traffic

growth, travel-time savings, and reduction in VOCs.


51. For the RMC, only 30% of the maintenance program envisaged in the RRP was

implemented, and there is no evidence of improvements in maintenance as a result.

Three of the five suboutputs were not achieved. These included: (i) the road length on

which periodic maintenance work was implemented; (ii) the budget for period

maintenance, which continues to be lumped with the annual road development

budget; and (iii) sources of funding for the road fund that are still not secured.

Given that improvements in maintenance were a primary objective underpinning

the program, the absence of these outputs is a significant shortfall .

D. Efficiency

52. The project is rated efficient in the use of resources to achieve its intended

outcomes and outputs. Procurement and implementation of resettlement plans were

delayed, which meant the loans were disbursed more slowly than planned at appraisal.

Actual implementation of all components took approximately 7.5 years (89 months)—

an overrun of about 3.5 years, in effect more than doubling the original construction

period. The PCR reported that there was a substantial shortfall in demand for the CIC,

reducing the baseline benefits. Only 30% of the RMC was implemented, further

reducing benefits and the derived efficiency of the loan. Offsetting this result, there

were large cost savings arising from the low cost of civil works, compared to the

original estimates.

53. The RRP estimated an economic return for the CIC of 37%, and this was revised

downwards to 28.6% in the PCR. For the RMC, the RRP provided hypothetical estimated

economic internal rates of return (EIRRs) that ranged from 118% to 462%. Despite the

shortfall in demand growth identified in the PCR for the Feni–Chittagong section and

the CPAR, the re-estimated benefits of the CIC were 28.6% and the RMC economic

benefits ranged from 32% to 165%. The combination of assumption used in the PCR

derived a compound annual growth rate for project economic benefits of 29% over 20

years, resulting in a 1,000-fold increase in real benefits over a 20-year period. This growth

is far in excess of gross domestic growth (GDP) growth rates, and does not take into

account likely congestion, which will negatively impact available capacity and associated

traffic flows.

54. In re-estimating project benefits, the PPER team used updated information,

especially traffic data. The PPER team collected data on (i) available classified traffic

counts for each road section, (ii) the road condition survey conducted during the PPER

mission, and (iii) 2004–2005 VOCs. The RHD is currently undertaking the four-laning

work of the Dhaka–Chittagong Highway, totaling 192.30 km of road. This project

involves the construction of 28 bridges, including five major bridges, three flyovers over

the railway lines, and two underpasses.19

This four-laning work will likely negatively

affect the traffic level, forecast at appraisal and completion, along the CIC and RMC

subsections of the Dhaka–Chittagong Highway.20

For a conservative estimation, the

PPER team adjusted the traffic forecast level of appraisal and completion for the

abovementioned road sections downward by 50% from 2014 onward, once the four

lanes along the Dhaka–Chittagong Highway are completed. The two-lane project road

will henceforth carry traffic in only one direction, while the additional two lanes will

19

In parallel with the four-laning work, the existing two lanes are being overlaid to match the road

conditions of the two new lanes. Under the existing contracts for the four-laning, the contractors have

been responsible for the routine maintenance of the existing highway since the start of the project. 20

The subsections affected by the four-laning work for the CIC are the Chandina, Comilla, and Feni bypasses,

and the Feni–Chittagong section; for the RMC, they are the Daudkandi–Chandina bypass, end of Chandina

bypass–start of Comilla bypass, and end of Comilla bypass–start of Feni bypass.


carry traffic in the opposite direction. The recalculation of the EIRRs reconfirms the

project’s economic viability. The recalculated EIRR for the CIC subprojects was 17.1%

and the recalculated EIRR for the RMC subprojects was 17.4%. This result assumes that

the project infrastructure is fully maintained. Details are presented in Appendix 5.

E. Sustainability

55. The PPER assesses the project less than likely sustainable by examining (i)

government ownership and commitment to the project, (ii) appropriate policies to

ensure continued funding for maintenance of the project roads, (iii) appropriate

policies to ensure the maintenance of required human resources, and (iv) financial

viability of operating entities.

56. At completion, some concerns were raised that may affect the project’s

sustainability, such as: (i) some project road sections were already damaged at project

completion, requiring maintenance work; (ii) funding for sustainable maintenance was

still unsecured; (iii) the weighbridge station along the project road was not yet

operational at completion and so overloaded vehicles continued to be a problem. The

PPER, conducted 5 years later than the PCR, noted several new developments. It notes

that the recent approval and implementation of the Road Fund Board Act may provide

a legal basis for a sustained stream of revenue for financing road maintenance. Further,

the recently passed Road Fund Board Law aims at raising funds for road maintenance

and supervision works from road taxes, motor vehicle taxes, motor vehicle fitness, route

permits, registration and license fees, road cutting and utility fees, and road penalties.

Meanwhile, there continue to be serious concerns about maintenance funding. In

particular, the road maintenance fund has not been established and is still under review

by the Ministry of Finance. This negatively affects the project’s sustainability, and

affects both the CIC and the RMC. Further concerns arise due to the poor financial

performance of the CPAR component of the CIC. During the PPER, a financial internal

rate of return (FIRR) on the CPAR was recalculated at -2.47%, indicating that traffic

volumes from the CPAR are not sufficient to recover the operation and maintenance

and investment costs.21

The PCR noted that in 2007 actual traffic volumes were only

about 25% of estimated volumes.

57. While the government has taken some important steps to address the issue of

sustainability, it continues to demonstrate a lack of commitment to provide a

sustainable source of funding needed to maintain the project assets. Similarly, the

CPAR is not generating sufficient revenues from tolls to sustain the operation. In the

light of these findings, the PPER rates the project less than likely sustainable.22

21

FIRR for the PPER is lower than the appraisal FIRR but higher than the PCR FIRR. The differences in FIRRs

estimated at appraisal, completion, and PPER were mainly due to updated traffic forecasts at each time. At

appraisal, high levels of diverted and generated traffic were estimated for the toll road; at completion, the

traffic forecasts were adjusted significantly downward, based on existing traffic. At the PPER, the normal

traffic forecast was adjusted upward, considering persistently growing traffic levels of cargo and

containers at Chittagong Port. Based on Chittagong Port Authority statistics, total cargo volumes

comprising imports and exports from 2006 to 2011 increased by 9.8% annually, container traffic increased

by 9.7% annually, and vessel calls increased by 2.8% annually. Given such a growth scenario, it is expected

that CPAR traffic will continue to increase. Details are in Appendix 6.

22 The individual components’ ratings were aggregated using weights, RMC (28%) and CIC (72%), reflecting

the relative importance of the component to expected overall project outcomes and the cost of each

component’s ADB-funded civil works as a percentage of the total civil works cost funded by the ADB loan.


F. Development Impacts

58. The project framework indicates that the project’s targeted goals were

enhanced economic growth and reduced levels of poverty in the project areas. The

qualitative performance indicators formulated at appraisal included increased

competitiveness of industry and agriculture, increases in the GDP and expansion in

employment and earnings, and improvement in social indicators. However, the

framework had neither quantifiable targets nor baseline information for performance

indicators. No poverty impact survey was conducted at PCR.

59. The project’s achievement, listed in the project framework of the PCR, was

growth in the regional GDP by about 6% per year for the period 2004–2008. The PCR

indicated that economic development was stimulated and employment was increased.

The government’s national statistics showed that the upper level of poverty fell from

52% in 1999 to 43% in 2007. Lower-level poverty decreased from 46% in 1999 to 20%

in 2005. However, the PCR did not provide any meaningful discussion on how much

the reduced rate of poverty was attributed to this project. The PPER therefore finds it

hardly conclusive that the country’s macroeconomic achievement during the period (in

terms of GDP growth and reduced poverty rate) was attributed to the project, as

claimed by the PCR.

1. Impact on Institutions

60. The RHD benefited from specific outputs that were produced under the project

or loan covenants. The government’s commitment and ownership of the transport

reform initiatives strengthened the credibility of the project during implementation.

Some of these initiatives delineated roles for institutions and contributed to capacity

development. The national land transport policy, approved in April 2004, clearly defines

the responsibility of the RHD and the LGED: The RHD is responsible for national and

regional highways and Type-A feeder roads, while the LGED is responsible for major

parts of feeder roads.23

61. The establishment of the Road Fund Board, consisting of 13 members, paves

the way for forming the self-financed Road Fund in Bangladesh. Once this framework

becomes operational, it will provide the RHD with a sustainable stream of revenues to

cover current road maintenance requirements and backlogs that have accumulated

through the years. Also, the amended rules for enabling and enforcing access control

and the policy and guidelines for private investment in highway projects, when

implemented fully, will alleviate the RHD’s burden in maintaining national roads as

vehicle traffic diverts to private toll road facilities. Given that the environment for

developing sustainable roads was not realized by the project, the impacts on

institutions were less than satisfactory.

2. Socioeconomic Impact

62. The land acquisition and resettlement plan provided compensation for losses

incurred by affected persons, and rehabilitation measures that would benefit the

community. The PCR reported that no resettled person was in worse condition as a

result of the project and that no issues relating to indigenous peoples and/or ethnic

23

Except the “zilla roads,” which are Type-A feeder roads connecting the district headquarters or a major

national road network. The zilla roads were mandated to the RHD for development and maintenances.


minorities arose during project implementation. The broader socioeconomic benefits

generated by the project were reduced travel time to nearby cities, towns, and growth

centers; increased economic opportunities to local residents and diversified sources of

their income; expanded social interactions and participation in community activities;

and increased participation by women in economic and social activities. Focus group

discussions and household surveys were conducted as part of the socioeconomic field

work for the PPER. The field assessment indicated that after the roads were improved,

more people opted for professions other than agriculture, bringing new employment

and trading opportunities. More people have set up small businesses, diversifying

income sources to include agriculture, small trade, manufacturing industries, small and

medium-sized enterprises (SMEs), and service institutions such as schools. New

economic opportunities in the region have led to an increase in household wealth,

increasing household assets and diversification of economic activities. Farmers and local

producers directly sold their produce to urban-based wholesalers and retailers rather

than to middlemen. The urban-based wholesalers and retailers of agricultural products

now reach the production sites, reducing transportation cost and travel time.

63. The project has promoted trade and business activities significantly. Local

people established small businesses, creating more job opportunities. Investors from

large cities such as Dhaka and Chittagong now invest in the region, resulting in more

job opportunities. Investors have built hotels and established highway restaurants

catering to the needs of inter-district passengers, creating more employment

opportunities. There has been a significant increase in the number of light vehicles,

making it easier for farmers and local businesses to transport various products and

goods, including electronic home appliances, agricultural products, and products

manufactured by SMEs in the rural areas. The project roads have enabled the local

people to easily access institutions and social services (Appendix 7).

64. Offsetting this result, with the improved project road conditions, large vehicles

such as buses, trucks, microvans, and others can operate at higher speeds, resulting in

an increased number of traffic accidents. Focus group discussions recommended that

road dividers be provided to avoid the numerous head-on collisions that have become a

regular occurrence and a major concern of villagers along the road. Overall, the project

generated positive benefits, but the absence of benchmarks and reliable survey data

makes it difficult to make a case that the project achieved its stated socioeconomic

impacts.

3. Environmental Impact

65. Based on the PCR, the government prepared an initial environmental impact

study, with the CPAR being the major focus of attention since it was to be built on a

new alignment. Other CIC and RMC activities were on existing roads and therefore had

minimal adverse impacts on the environment. On the whole, the assessment found that

neither component would have significant adverse environmental impacts. The

consultants prepared guidelines for an environmental management and monitoring

plan. The project was found to be compliant with the mitigation measures and

monitoring requirements cited in the plan.

66. This finding was also confirmed by the PPER’s socioeconomic and impact

evaluation, in which the local population, representatives of local councils, and various

government agencies observed that the project did not pose any major environmental

problems. Currently, people living adjacent to the project roads have complained of

noise and air pollution, especially during the dry season. In Chittagong, the CPAR has


functioned as a flood protection embankment, protecting the villages along the road

from flash floods and subsequent waterlogging. As with the socioeconomic

assessment, given shortfalls in demand, and in the absence of benchmarks and reliable

survey data, it is difficult to make a case that the project achieved its stated

environmental impacts.

G. ADB Performance

67. The project was initially administered by ADB headquarters. Its administration

was transferred to the Bangladesh Resident Mission in January 2004. This change made

it easier to monitor project implementation activities. Compliance with the loan

covenants was facilitated through the resident mission's efforts, especially those

pertaining to coordination with the executing agency and conduct of regular policy

dialogues with the government.

68. During project implementation, ADB conducted 16 missions and provided

advice on technical issues, bid evaluations, and loan administration. Some of the

missions followed up on the loan covenant for the establishment, staffing, and

operation of a project performance monitoring system, including baseline surveys for

performance indicators and updates. As reported in several mission reports, it was

expected that this requirement would be included in the executing agency’s PCR. This

did not materialize and what was provided was highly inadequate. During the PPER

mission the executing agency indicated that it was generally satisfied with ADB’s

performance and that ADB had responded in a timely manner to their requests and

inquiries. The performance of ADB is rated satisfactory.

H. Borrower and Executing Agency Performance

69. The PCR rated the performance of the borrower and executing agency

satisfactory. The RHD had effectively managed physical implementation of the project,

although delays occurred in approvals at various stages of procurement due to

bureaucratic procedures. This affected the overall project implementation schedule and

triggered the need for loan extensions. Civil works were delayed due to land acquisition

and resettlement issues. The borrower made available necessary counterpart funds in a

timely manner. There were no undue delays in approving payments to the consultants

and contractors.

70. It was noted at appraisal that the RHD, assisted by consultants, would establish

a project performance monitoring system. The key indicators for monitoring were

defined in the DMF. Although limited information is available, such as traffic data,

monitoring was not undertaken as envisaged at appraisal. There is no evidence that

project benefit monitoring surveys were conducted on poverty, employment, earnings,

and social indicators in the project area.

CHAPTER 4

Issues, Lessons, and Follow-

Up Actions

71. This chapter discusses issues and lessons pertinent to the project. The lessons

provide pointers for follow-up actions.

72. Time dimension of the reform process. Implementing policy initiatives entails a

complex and long-term process. In general, sufficient time is needed to build political

consensus, strengthen institutional capacity, and put in place necessary enabling

conditions for reforms. The legislation and policy measures that were enacted required

fundamental changes among institutions, which cover a longer time horizon and add

some uncertainty as to the timing of realization of actual outputs and outcomes. The

full extent of reforms, especially the institutional type, may extend well beyond the

usual administrative life of a project loan. Also, performance targets entail time lags

and as such, their effects could not be readily realized within the time frame presented

in the DMF. More success would likely have been achieved if ADB had provided a

greater amount of technical assistance to help develop institutional capacity for

procurement and establishment of the road maintenance fund prior to the processing

of the loan.

73. Baseline data collection is a priority. At appraisal and during implementation,

greater attention should have been given to the DMF, especially to establishing

measurable indicators and their baseline values, and target values with realistic time

frames. In particular, the indicators measuring socioeconomic impacts should have

been carefully designed, their initial values measured and presented, and their updates

monitored throughout the project period as well as at completion. Higher priority

should have been given to ensuring that baseline data were collected and reported

during project implementation. The absence of these data made independent

evaluation of the project considerably more difficult.

74. Private sector participation. Based on the evaluation findings, one follow-up

action is proposed: ADB should closely monitor developments on the CPAR, especially

on the development of vehicle parking facilities by the private sector and the

adjustment of toll fees to cope with the increased costs of toll road operations and

maintenance. The government should carefully consider lessons learned from the pilot

PPP to make future projects more successful. Credible traffic forecasts and tolls that are

set at full cost recovery are essential if the private sector is to be incentivized to

participate in the transport sector.

75. Project design and risk analysis. The mitigation measures identified in the RRP

to address project risks were largely unsuccessful, and the project was subject to long

delays, problems with land acquisition and procurement, shortfalls in demand, and

insufficient funding for maintenance. Despite advance procurement actions, enactment

of legislation for maintenance, and establishment of controlled access arrangements

for CPAR, the expected results were not achieved. In part, the problem appears to be

Implementing

policy initiatives

entails a

complex and

long-term

process

At appraisal and

during

implementation,

greater attention

should have

been given to

the DMF


attributable to weaknesses in the project design, in which the feasibility study and

detailed design were not completed until 9 March 2008, seven years after loan

approval. A greater level of upfront investment in project preparation, particularly in

the areas of preparing credible traffic forecasts and identifying road alignments, could

pay large dividends. Similarly, credible solutions can be developed upfront before

finalization of the loan to address perennial areas such as delays in land acquisition and

procurement.

76.. Road Maintenance Fund. The financing and adequacy of funding for the Road

Maintenance Fund is a critical risk for the CIC that needs to be monitored.

Appendixes

APPENDIX 1: DESIGN SUMMARY

Summary Design and Monitoring Framework Showing Project Achievements Against Intended Impacts,

Outcome, and Outputs (IED)

Design Summary

Performance

Indicators/Targets Assessment Project Achievements

Impact

Promoted economic

growth in project

target areas

Reduced poverty in

project target areas

Increased competitiveness

of industry and agriculture

Increased the gross

domestic product and

expanded employment

and earnings

Improved social indicators

No targets were

given at appraisal.

However,

fieldwork during

PPER activities

indicated that the

impacts are

considered to have

been generally

achieved.

- Reduced travel time to nearby cities and

growth centers, subdistrict towns, and

district towns

- Increased economic opportunities

- Diversified household income sources

- Expanded trade

- Increased private investment from other

regions into the project areas

- Increased social interactions and

participation in community activities

Outcome

Improved transport

efficiency in project

target areas

Within project target

areas, achieved transport

efficiency gains in terms of

savings in travel time,

transport costs for

passengers, and VOCs

No targets were

given at appraisal.

However, the

outcomes are

considered to have

been generally

achieved.

From the economic reevaluation

conducted, net travel time savings

achieved by 2012 were estimated at Tk

1,114 million ($19.3 million) for the CIC

and Tk 31 million ($0.54 million) for the

RMC. By 2027, expected travel time

savings were estimated at Tk 4,143 million

($71.7 million) for the CIC, and Tk 189

million ($3.3 million) for the RMC.

For reduction in VOCs for 2007–2012, the

reevaluation estimated net savings at Tk

6,696 million ($115.9 million) for the CIC

and Tk 1,803 million ($31.2 million) for

the RMC. By 2027, net VOC savings were

estimated at Tk 27,664 ($478.8 million)

million for the CIC and Tk 10,038 million

($173.7 million) for the RMC.

Output

1. Road Maintenance 1.1 Policy framework

for road maintenance

adopted and implemented

within 4 years of

effectiveness, covering the

national land transport

policy, maintenance

selection system,

budgeting and human

resources, and an

established sustainable

source of financing.

Mostly achieved Savings in transport costs were not

measured.

There were no baseline values to

recalculate the percentage change in the

values of the indicators measured.

A national land transport policy was

approved by the Bangladesh government

on 24 April 2004 in which the

responsibilities of the RHD and the LGED

were clearly defined.

The maintenance selection system (HDM-

4) is being used to prepare the

maintenance and rehabilitation needs

report for RHD paved roads. This is used to

prepare the annual road maintenance

budget of the RHD.

A Road Board Authority Act has been

Design Summary 23

Design Summary

Performance

Indicators/Targets Assessment Project Achievements

1.2 Sealing and

overlay of priority roads

within annual road

maintenance plan, 2002–

03, 2004–05

drafted and circulated to the various

ministries concerned. At end of 2012, it

had not been approved and remains a

loan conditionality still to be achieved.

Only 369.5 km of road were sealed and

overlaid from 2005–2007 as against the

annual target of 250–400 km over the

project duration.

2. Corridor

Improvement

2.1 Road construction

to be completed by March

2004: Feni–Chittagong (47

km)

Achieved

Most road construction subprojects were

completed in 2007.

Section 1: Wahedpur–Banshbaria.

New construction of 4.67 km,

reconstruction of 12.01 km, and overlay

of 8.76 km. Road safety improved by

widening concrete pavements and

footpaths in four market areas,

Barodarogar Hat, Hadi Fakir, Nizampur,

and Suklal Hat.

Section 2, Banshbaria–Alanker

Cinema Hall. New construction of 2.60

km, reconstruction of 12.067 km, and

overlay of 7.795 km. Road safety

improvements by widening concrete

pavements and footpaths in 11 market

areas.

Chandina, Comilla, and

Feni bypasses (52 km)

Achieved - Chandina, Comilla, and Feni bypasses

and overlay of two bridges, one at km

13.04 (90 m) and another at km 20.15

(160 m) on Dhaka–Daudkandi Road

- Marikhail Bridge – 3 spans x 30 m

- Bhatir Char Bridge – 169 m

- Road safety widening of concrete

pavement and footpaths in seven

market areas

Chittagong Port access

road (12 km)

Achieved New construction of 12.318 km and

overlay of 1.264 km. Bridges at km 4.33,

4.34, and 4.35.

3. Legal framework and

enabling

environment for

private sector

participation in road

sector

3.1 Policy and legal

framework for toll-funded

private sector operation

and maintenance

established by third year of

effectiveness.

3.2 Legal framework for

controlled-access highways

established by 18 months

of effectiveness.

Achieved

Achieved

The government’s overall policy on private

sector participation was approved in

March 2005.

The government established enforcement

provisions under the MVO to (i) prevent

slow-moving vehicles and pedestrians

from using the highway, (ii) control

roadside development, and (iii) give the

RHD or a private concessionaire the

authority to manage the highway. These

were implemented.

CIC = corridor improvement component, HDM = highway development and management, IED = Independent Evaluation Department,

km = kilometer, LGED = local government and engineering department, m = meter, MVO = Motor Vehicles Ordinance, RHD = Roads

and Highways Department, RMC = road maintenance component, VOC = vehicle operating cost.

Source: Independent Evaluation Department.

APPENDIX 2: IMPLEMENTATION

Project Implementation Schedule (Appraisal, Preparation, and Actual)

ADB = Asian Development Bank, BWDB = Bangladesh Water Development Board, CIC = corridor improvement component, ICB = international competitive bidding, PAP = project-affected

people, RMC = road maintenance component.

Source: ADB. 2009. Project Completion Report: Bangladesh: Road Maintenance and Improvement Project (Loans 1789 and 1790). Manila.

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 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Corridor Improvement Component (CIC)

C-1 Overlay and Shoulder Work

Sections not Needing

Resettlement of PAPs

Sections Needing

Resettlement of PAPs

BWDB Sections (7.3 km) and

Overlay (1.13 km)

Road Maintenance Component (RMC)

Implementation RMC 1 1st Year Cycle

Implementation RMC 2

Selection, Design,

Procurement (ICB)

Implementation RMC 3

Implementation RMC 4 WORK TERMINATED

Implementation RMC 52nd and 3rd Year Cycles

Legend: Appraisal Preparation Actual

Note: Actual inclusive of liability period.

Bidding, Approval & Award

Pre-construction Stage

(CIC)

Pre-qualification

Selection, Design,

Procurement (ICB)

2008Project Component

Land Acquisition and Resettlement

Consulting Services

Selection

Supervision (CIC and RMC)

2002 2003 2004 2005 2006 2007

RMC

First Year Cycle

(Recycle+Overlay)

RMC

Second and Third Year

Cycle

2000 2001

Other Sections

C- 4

Construction

(CIC)

C- 2&3

APPENDIX 3: COVENANTS

Status of Compliance with Loan Covenants

Covenant

Reference in Loan

Agreement Status of Compliance

Sector

1. Operations and Maintenance Financing. Within 2

years of loan effectiveness, an expert working group, with

composition and terms of reference satisfactory to ADB, will

complete a review of mechanisms for domestic funding of

the full requirements of the ARMP, including the option of

establishing a road maintenance fund, and submit its

recommendations to the government along with a time-

bound action plan for funding the full requirements of the

ARMP, with the existing backlog of periodic maintenance

being separately financed.

Schedule 6, para. 8 Partly complied with.

Although the review was

completed, a time-

bound action plan was

not established. In

addition, the road

maintenance fund has

not been established and

is still under review by

the Ministry of Finance.

2. Within 4 years of loan effectiveness, the government

will implement the recommendations of the expert working

group on mechanisms for domestic funding of the full

requirements of the ARMP under a time-bound action plan

acceptable to ADB, such that the government will meet the

annual costs of maintaining all roads under the RHD’s

jurisdiction to a standard acceptable to ADB, with the

existing backlog of periodic maintenance being separately

financed.


The road fund has still

not been established.

3. The borrower shall ensure that all periodic

maintenance expenditure under the RMC is expenditure for

the project over and above the existing maintenance

expenditure by the borrower.

Schedule 6, para. 10 Complied with

4. The borrower shall ensure that each civil works

contract for periodic maintenance under the ARMP using civil

works contractors shall amount to no less than $1,000,000

equivalent and be supervised by consultants.


5. The borrower shall ensure that an ARMP satisfactory

to the Bank is prepared annually.


6. Road Maintenance Policy. Within 2 years of loan

effectiveness, the government will approve a national land

transport policy satisfactory to ADB that will include (a)

establishing road maintenance as the priority activity of the

RHD; (b) clearly dividing responsibilities for feeder roads

between the RHD and the LGED, with the RHD being

responsible for national and regional highways and Type-A

feeder roads; and (c) determining all annual RHD road

maintenance expenditure in accordance with the HDM

ranking of road maintenance priorities in the ARMP.


7. The borrower shall ensure that the RHD shall only

have jurisdiction over feeder roads that meet the criteria of

Type-A feeder roads.


8. Maintenance Budgeting. The government will

ensure that the consolidation of all ADP expenditures on RHD

periodic maintenance for roads for the ARMP will be

completed by June 2001 in form and substance satisfactory

to ADB, and will be maintained on an annual basis for no less

than 5 years.


9. Within 18 months of loan effectiveness, the

government will review existing maintenance expenditures

under the RB, introduce a reclassification of RB maintenance

expenditures by maintenance function, and ensure that


26 Appendix 3

Covenant

Reference in Loan


periodic maintenance expenditure under the RB is assigned

in accordance with the ARMP.

10. Road Maintenance Component Subproject

Selection. The RHD shall ensure that the selection of roads

for inclusion in the RMC shall be carried out annually, subject

to criteria agreed with the Bank and subject to Bank

approval.


11. Access Control. The government will ensure that

access control for the Chittagong Port access road is in

accordance with the amended legislation, rules, and

regulations for enabling and enforcing access control.


12. The government will ensure that the RHD monitors

the effect of access control measures applied to the Kumira

bypass of the Dhaka–Chittagong Highway and submits an

evaluation report to ADB not later than 3 years after the

physical completion of the bypass.


13. Within 18 months of loan effectiveness, the

government will enact amendments to the MVO satisfactory

to ADB to enable enforcement of the traffic and

encroachment rules established under the Highways Act.


14. Private Sector Participation. Within 18 months of

loan effectiveness, the government will amend and approve

a policy and guidelines for private investment in highway

projects in Bangladesh, in form and substance satisfactory to

ADB.

Schedule 6, para. 4 Complied with. The

government policy on

private sector

participation has been

approved.

15. Within 3 years of loan effectiveness, the government

will enact legislation and establish a regulatory framework

satisfactory to ADB, in accordance with the government’s

approved Policy and Guidelines for Private Investment in

Highway Projects.


16. Within 6 years of the effective date, an expert

working group, consisting of representatives of the

borrower, the private sector, and NGOs, with composition

and under terms of reference satisfactory to the Bank, shall

have completed and submitted recommendations to the

borrower on the feasibility of transferring the Chittagong

Port access road to private ownership.


17. The borrower shall ensure that the operation and

maintenance of the Chittagong Port access road shall be in

accordance with concession to a private sector company on

the basis of international competitive bidding procedures

acceptable to the Bank.


Environment

1. The government will ensure that all environmental

mitigation measures identified in the SEIA are incorporated

into the project design and followed during project

construction and O&M, in consultation with DOE and in

accordance with ADB’s environmental guidelines and the

environmental monitoring plan agreed upon with ADB.

Schedule 6, para. 26 Complied with. An

environmental

compliance review

mission noted several

mitigation issues, which

were then implemented.

Social

1. The government will ensure that the LARP agreed

upon with ADB, other relevant authorities, and the persons

affected by the project is implemented by the RHD through

an agency under arrangements in the involuntary

resettlement and ADB’s Handbook on Resettlement (1998, as

amended from time to time).


2. The borrower shall ensure that all counterpart Schedule 6, para. 24 Complied

Covenants 27

Covenant

Reference in Loan


funding required for the project is in accordance with the

financing plan, including the cost of land acquisition, other

resettlement compensation, and implementation and

monitoring under the LARP utility relocation. General project

management expenses shall be fully provided for through

approved ADP allocations from FY2001/2002 for each fiscal

year to project completion.

Financial

1. Cofinancing. Within 9 months of the effective date,

or at a later date as the Bank may otherwise agree, the

borrower shall have obtained the DFID grant or shall have

made other arrangements, satisfactory to the Bank, to find

the amount intended to be provided by the DFID grant.

Schedule 6, para. 22 Complied with. DFID

financed the TA for

preparation of the land

transport policy, road

fund program, and

financial management.

Others

1. Established, Staffed, and Operating PMU/PIU.

Project Performance Monitoring System. The RHD shall

establish capacity for and undertake a PPMS through an

initial sample survey to establish a baseline for subsequent

performance monitoring and annual surveys, including data

sufficient to meet the project management need for

feedback on implementation status and early warning of

impending situations that may jeopardize development

objectives.

Schedule 6, para. 20 PCR: Partly complied

with. No adequate

monitoring on poverty

and performance

indicators set out at

appraisal.

IED: No baseline report

was ever provided.

2. Fielding Consultants. The selection, engagement,

and services of the consultants shall be subject to the

provisions of this schedule and of the Guidelines on the Use

of Consultants by ADB and its Borrowers (October 1998, as

amended from time to time), which have been furnished to

the borrower and the RHD, and other arrangements

satisfactory to the Bank

Complied with

3. Project Implementation. The RHD shall ensure that

the Office of the Additional Chief Engineer (ADB Projects) is

responsible for all components. The RHD shall also ensure

that this office is headed at all times by a project director

who is the Additional Chief Engineer (ADB Projects)


4. For the CIC, the RHD shall ensure that the project

director is assisted by (a) an additional project director, who

is a superintendent engineer and who is, inter alia,

responsible for implementation of the LARP; and (b) three

project managers, who are executive engineers and are

responsible for day-to-day implementation of the project.


5. For the RMC, the RHD shall ensure that the project

director shall, inter alia, be responsible for the oversight of

subproject selection under the ARMP using HDM,

procurement, monitoring, and project coordination, with

day-to-day implementation being delegated to RHD zonal

offices, through Zonal Additional Chief Engineers.


6. Without limiting the generality of section 4.06, the

borrower shall furnish to the Bank, no later than 6 months

after the end of each fiscal year, audited accounts and

related financial statements for the project, by a reputable

private external accounting firm acceptable to the Bank. The

same accounting firm shall also concurrently undertake

independent performance audits on all procurement-related

activity and furnish the results of such audits to the Bank no

later than 9 months after the end of the fiscal year. Such


Financial audits

acceptable to ADB were

conducted annually, and

performance audits were

also started.

28 Appendix 3

Covenant

Reference in Loan


performance audits shall be undertaken twice during the

duration of the project. The firm shall be engaged in

accordance with terms of reference acceptable to the Bank.

ADB = Asian Development Bank, ADP = annual development plan, ARMP = annual road maintenance plan, CIC = corridor

improvement component, DFID = Department for International Development of the United Kingdom, DOE = Department of

Environment, FY = fiscal year, HDM = highway development and management, IED = Independent Evaluation Department, LARP

= land acquisition and resettlement plan, LGED = local government engineering department, MVO = Motor Vehicles Ordinance,

NGO = nongovernment organization, O&M = operations and maintenance, PCR = project completion report, PIU = project

implementation unit, PMU = project management unit, PPMS = project performance monitoring system, RB = revenue budget,

RHD = Roads and Highways Department, RMC = road maintenance component, SEIA = summary of environmental impact

study, TA = technical assistance.


APPENDIX 4: POLICIES

Road Sector Policy Matrix

Subject Policy Developments Requirement Actually Achieved

1. Road Maintenance

1.1. National Land

Transport Policy

Within the national land transport policy, provide overall direction

with regard to road maintenance, including that (i) since most of the

road network has been built, maintaining it in future will be the major

task of the RHD, and account for the majority of its expenditure; (ii)

the RHD will be responsible for maintaining primary and regional

roads with a limited number of feeder roads, while the LGED will be

responsible for rural roads and most feeder roads; and (iii) all RHD

road maintenance expenditure will be determined annually on the

basis of the highway design and maintenance model ranking of road

maintenance priorities in the annual road maintenance plan.

The government must approve a

policy statement that all RHD

road maintenance expenditure

will be determined annually on

the basis of the HDM-4 model

ranking of road maintenance

priorities in the annual road

maintenance plan.

Policy development must be

supported by the project,

including consulting services for

a nationally owned policy

development process involving

all main stakeholders, beginning

with a preliminary workshop to

discuss a first set of proposals

attended by relevant

government institutions, aid

agencies (including ADB, DFID,

and the World Bank),

academics, and NGOs, leading

to an agreed-upon policy

development process that is

expected to include further

review, analysis, and

consultation, which in turn will

lead to the government’s

adoption of the policy.

Completed. The

government approved the

national land transport

policy on 24 April

2004. The maintenance

expenditure was estimated

using the HDM-4 model

and was undertaken within

the annual road

maintenance plan.

1.2. Budgeting In the government budget, allocations for road maintenance need to

be (i) made distinct from those for road development, reconstruction,

and upgrading; (ii) over the medium term, budgeted on the basis of

all periodic maintenance under the annual development plan,

including those domestically funded and aid supported being

separately identified and determined through the annual road

maintenance plan; and (iii) over the longer term, when the existing

Consulting services must review

and identify maintenance and

development expenditures

within the annual development

plan and revenue budget and

assist in establishing improved

budget headings for these

Completed

30 Appendix 4


maintenance backlog has been reduced, shifted from the annual

development plan to the revenue budget to reflect the recurrent

nature of maintenance expenditures.

items.

The government must ensure

consolidation of all expenditure

for periodic maintenance in the

annual development plan, and

this must be continued for at

least the next 5 years.

The government must complete

studies and implement budget

reclassification.

The government must commit

to shifting maintenance under

the annual development plan to

an expanded revenue budget

within a stipulated period.

Completed

Completed

Not completed

1.3. Maintenance

Institutions

Strengthen organizational arrangements within the RHD with respect

to all aspects of maintenance of RHD roads to support effective

overall management of the annual road maintenance plan,

maintenance planning, analysis, budgeting, programming, design,

implementation, and monitoring.

To be addressed through the

DFID-funded institutional

development component.

Ongoing

1.4. Maintenance

Financing

Establish additional sources of road maintenance financing capable of

ensuring that the annual road maintenance plan can eventually be

fully financed from domestic sources on a sustainable basis.

With support from ADB, DFID,

and the World Bank, carry out a

national review of options for

sustainable funding of the

annual road maintenance plan,

with options to include

establishing a road fund and

funding the full costs of the

plan directly under the

government budget, and

develop and implement an

action plan for introducing a

sustainable funding mechanism.

Review completed, but

road fund not established

2. Private Participation

2.1. Policy and Legal

Framework

Establish policy and legal framework for private sector investment in

road projects, including the operation of toll roads and conducting

maintenance on a concession basis.

Reactivate government

consideration of 1998 draft

policy and guidelines for private

investment in highways projects

Completed. Policy

approved in March 2005.

Policies 31


in Bangladesh, and obtain

government approval for a

policy and guidelines

satisfactory to ADB.

With ADB support, amend law

to reflect adopted policy and

guidelines for private investment

in highways.

As no private operator was

in place to operate the toll

road, ADB approved on 4

February 2007 a contractor

to undertake a 1-year

contract on toll collection

and O&M for the

Chittagong Port access

road.

3. Access Control

3.1. Legal

Framework

Establish legal provision for introduction and enforcement of

controlled-access highways. Provisions include (i) avoidance of

encroachment of the right-of-way by markets, bus stops, and business

frontage and driveways; and (ii) restricting slow-moving traffic, such

as three wheelers, bicycles, and farm animals.

With ADB support, introduce

rule under the Highways Act

and regulation under the Motor

Vehicles Ordinance, and amend

the ordinance.

Completed

ADB = Asian Development Bank, DFID = Department for International Development of the United Kingdom, HDM = highway development and management, LGED = local

government engineering department, NGO = nongovernment organizations, O&M = operation and maintenance, RHD = Roads and Highways Department.


APPENDIX 5: ECONOMIC REEVALUATION

1. The economic reevaluation for the project was undertaken for both components, the corridor

improvement component (CIC) and the road maintenance component (RMC), as well as for each

subsection per component. The with- and without-project situations were compared to determine

the effects of introducing the project roads. The project’s main economic benefits consisted of

savings in vehicle-operating costs (VOCs) and time. The methodology used in this reevaluation was the

same used at appraisal and the project completion report (PCR).

2. The CIC consisted of three parts: (i) overlay and widening of the Chandina, Comilla, and Feni

bypasses; (ii) upgrading and widening of the Feni–Chittagong section, including construction of

local bypasses; and (iii) construction of the Chittagong Port access road (CPAR), an access-controlled

toll road.

3. The RMC financed a 3-year period of priority road maintenance from the annual road

maintenance plan. At completion, periodic maintenance work was undertaken on the thirteen

sections, which were selected according to Asian Development Bank (ADB) criteria. These sections

were: (i) Daudkandi–Chandina bypass, (ii) Chandina–Comilla bypass, (iii) Comilla–Feni bypass, (iv)

Comilla–Chandpur, (v) Laxmipur–Raipur, (vi) Raipur–Chandpur, (vii) Lalmai–Laksham–Sonaimuri, (viii)

Begumgonj–Maijdi–Sonapur, (ix) Chittagong–Cox’s Bazar, (x) Cox’s Bazar–Teknaf, (xi) MiaBazar–

Kashinagar–Harischar, (xii) Maidji–Uderhat, and (xiii) Kalurghat–Manashertek.1

Of the 13 sections, the

first ten were included in the economic recalculation for the RMC, since traffic counts for the last three

sections were not available to the project performance evaluation report (PPER) team.

4. The reevaluated economic internal rate of return (EIRR) for the CIC considered the economic

costs and benefits over the construction period plus 20 years of operation as at appraisal. The

RMC considered the economic costs and benefits over the construction period plus 10 years of

operation as at appraisal. All costs and benefits were expressed in 2008 constant prices. The

methodology for calculating the EIRR used the highway and design maintenance (HDM) model as at

appraisal.

5. In re-estimating project benefits, the PPER team employed updated information, especially

traffic data. The PPER team collected data on the available classified traffic counts for each road

section, the road condition survey conducted during the PPER mission, and 2004–2005 VOCs. The HDM

Circle of the Roads and Highways Department (RHD) collects and consolidates data on vehicle traffic

counts, road conditions, and VOCs on a periodic basis, as part of its mandate in preparing the annual

road maintenance (routine and periodic) and rehabilitation requirements for the national, regional, and

local roads in its database. The latest traffic count data available on project relevant road sections was

for 2011. However, the availability of traffic counts on relevant road sections was inconsistent. The

HDM Circle provided the PPER mission with available average annual daily traffic (AADT) estimates

based on traffic count data for 2004, 2006, 2007, 2008, 2009, and 2011 for national roads and 2004,

2007, 2008, and 2011 for regional roads.

6. The AADT data provided showed increasing and decreasing trends in traffic flows. Using AADT

data from 2004 to 2011, it was not possible to determine a stable growth rate for each project road

section. A traffic forecast was prepared using traffic growth rates by vehicle type estimated in the PCR.

These were higher than those used at appraisal, although the methodology used was the same,

including the assumptions made.2

1 Road sections implemented under the RMC were to be selected according to ADB criteria, one of which was that the

economic internal rate of return (EIRR) be at least 20% based on a minimum 10-year evaluation period.

2 GDP growth assumption from 2010 onward was 5% and elasticity of demand for transport was 1.5 for both passenger and

freight traffic. The appraisal growth rate estimates were lower than those used in the PCR, but resulted in high traffic forecasts

as compared to actual traffic due to the higher baseline traffic used. The traffic growth rate estimates in the PCR are higher

Economic Reevaluation 33

7. The actual growth in the number of vehicles in Bangladesh has been very robust at 12% for the

2007–2010 period and 9% for the 2002–2010 period. Table A5.1 gives the vehicle registration statistics

from 2002 to 2010, including the estimated growth rate per vehicle type. The traffic growth rates used

are given in Table A5.2, which was also used for the RMC traffic forecast.

Table A5.1: Vehicle Registration Statistics 2002–2010

Vehicle Type 2002–03 2003–04 2004–05 2005–06 2006–07 2007–08 2008–09 2009–10 2007–10a 2002–10

b

Bus/Minibus 31,848 33,302 34,388 35,349 36,526 37,906 39,088 40,059 2.8% 2.9%

Microbus 16,244 17,359 18,826 20,998 23,637 26,484 30,056 34,148 13.6% 9.7%

Trucks 50,786 52,951 55,082 57,399 59,674 61,717 65,064 71,424 7.6% 4.4%

Jeep 11,009 11,172 11,386 11,704 12,090 12,506 13,028 13,625 4.4% 2.7%

Car 66,393 69,461 72,254 75,728 80,453 87,142 96,137 106,291 10.4% 6.1%

Auto

Rickshaw

84,693 94,120 99,930 104,432 111,046 122,092 135,875 148,982

10.5% 7.3%

Motorcycle 239,884 257,086 281,599 316,847 366,031 433,287 501,825 567,553 14.4% 11.4%

Total 500,857 535,451 573,465 622,457 689,457 781,134 881,073 982,082 12.1% 8.8%

Notes: a = growth rates

b = growth rates

Source: Statistical Yearbook of Bangladesh 2010, Bangladesh Bureau of Statistics.

Table A5.2: Traffic Growth Rates (%)

Vehicle Type

2007–2011 2012–2016 2017 onward

PCR & PPER Appraisal PCR & PPER Appraisal PCR & PPER Appraisal

Motorcycle 7.0% 6.6% 6.6%

Auto Rickshaw 7.0% 6.6% 6.6%

Cars 9.0% 6.0% 7.5% 5.0% 7.5% 5.0%

Trucks 9.0% 6.0% 7.5% 5.0% 7.5% 5.0%

Buses 9.0% 6.0% 7.5% 5.0% 7.5% 5.0%

PCR = project completion report, PPER = project performance evaluation report.

Source: Asian Development Bank database.

8. The PPER traffic forecast for the CPAR utilized the traffic data collected by the toll road operator

from 2007 to October 2012. The 2012 traffic was used as baseline data for the PPER forecast and the

traffic growth rates as given in Table A5.2 were applied.

9. The RHD is currently undertaking the four-laning work of the Dhaka–Chittagong Highway,

totaling 192.30 kilometers (km). This four-laning work involves the construction of 28 bridges,

including five major bridges, three flyovers over the railway lines, and two underpasses. The project is

funded by the Government of Bangladesh/Japan Debt Cancellation Fund of about Tk 31,836 million. At

completion of the four-laning work (expected in 2013), the entire Dhaka–Chittagong Highway will be

four lanes. In addition, the existing two lanes will be overlaid to match the road conditions of the two

new lanes. Under the existing contracts for the four-laning, the contractors have been responsible for

the routine maintenance of the existing highway since the start of the project. This four-laning work is

affecting the CIC and RMC subprojects located on the Dhaka–Chittagong Highway:

Corridor Improvement Component

(i) Chandina, Comilla, and Feni bypasses

(ii) Feni–Chittagong section

Road Maintenance Component

(i) Daudkandi–Chandina bypass

(ii) End of Chandina bypass–start of Comilla bypass

but used lower baseline traffic, resulting in lower traffic forecasts. Using the PCR growth rate estimates, the resulting PPER

traffic forecast was lower since the 2011 actual traffic was lower.

34 Appendix 5

(iii) End of Comilla bypass–start of Feni bypass

10. The four-laning work is expected to be completed by the end of 2013. For a conservative

estimation, the PPER team adjusted the traffic forecast downward for the abovementioned road

sections by 50% from 2014 onward, considering that vehicle traffic will utilize four lanes (or two lanes

in each direction). The revised traffic forecasts along the CIC, including the CPAR, are given in Table

A5.3.

Econom

ic Revaluation 35

Table A5.3: Traffic Forecast for CIC Road Sections, Including CPAR, 2004, 2009, 2014, and 2019 Appraisal and PPER Estimates

Year Source Motorcycle

Auto

Rickshaw Car Utility

Micro

bus

Mini

bus

Large

Bus

Small

Truck

Medium

Truck

Heavy

Truck Total

Total

- All Traffic

A. Chandina, Comilla, and Feni Bypasses

2004 Appraisal 1,801 845 1,208 1,756 716 4,408 106 10,840 10,840

PPER 993 1,210 1,136 1,019 1,218 1,884 2,704 837 5,112 660 14,570 16,773

2009 Appraisal 2,598 1,218 1,742 2,532 1,032 6,357 153 15,632 15,632

PPER 1,165 3,657 1,113 249 1,669 233 2,736 664 6,923 300 13,887 18,709

2014 Appraisal 3,444 1,615 2,309 3,357 1,368 8,427 202 20,722 20,722

PPER 571 3,504 711 633 855 816 1,433 1,189 4,182 231 10,050 14,125

2019 Appraisal 4,449 2,087 2,983 4,337 1,767 10,887 261 26,771 26,771

PPER 785 4,824 1,021 908 1,227 1,172 2,057 1,708 6,003 332 14,428 20,037

B. Feni–Mirsari Section of Feni–Chittagong

2004 Appraisal 3,697 1,746 1,190 2,856 714 6,462 397 17,062 17,062

PPER 227 3,325 489 365 1,456 579 1,484 323 6,562 462 11,720 15,272

2009 Appraisal 5,332 2,517 1,716 4,119 1,030 9,319 572 24,605 24,605

PPER 866 5,831 1,170 384 1,465 882 2,226 591 8,682 1,014 16,414 23,111

2014 Appraisal 7,068 3,337 2,275 5,460 1,365 12,353 758 32,616 32,616

PPER 607 3,073 837 158 788 777 884 798 4,491 482 9,215 12,895

2019 Appraisal 9,132 4,311 2,939 7,055 1,764 15,959 980 42,140 42,140

PPER 836 4,230 1,202 226 1,132 1,115 1,269 1,145 6,447 692 13,229 18,294

C. Sitakunda–Chittagong Section of Feni Chittagong

2004 Appraisal 3,290 1,190 1,227 2,988 714 7,062 514 16,985 16,985

PPER 587 1,464 488 409 830 1,336 385 538 1,712 20 5,718 7,769

2009 Appraisal 4,744 1,716 1,769 4,309 1,030 10,184 742 24,494 24,494

PPER 692 5,886 576 180 1,639 809 364 633 1,215 23 5,439 12,017

2014 Appraisal 6,289 2,275 2,345 5,712 1,365 13,499 983 32,468 32,468

PPER 564 3,142 836 203 540 338 383 411 546 20 3,276 6,982

2019 Appraisal 8,125 2,939 3,030 7,380 1,764 17,441 1,270 41,949 41,949

PPER 777 4,325 1,200 291 776 485 549 591 783 28 4,703 9,805

D. Chittagong Port Access Road

2004 Appraisal 353 189 294 141 209 4,786 226 6,198 6,198

PPER -

2009 Appraisal 509 273 424 203 302 6,903 329 8,943 8,943

PPER 347 604 9 37 1,766 2,416 2,763

2014 Appraisal 674 362 562 270 400 9,150 436 11,854 11,854

PPER 381 958 9 50 2,560 3,578 3,959

2019 Appraisal 871 467 726 348 517 11,822 563 15,314 15,314

PPER 525 1,376 13 72 3,675 5,136 5,661

CIC = corridor improvement component, CPAR = Chittagong Port access road, PPER = project performance evaluation report.

Source: Bangladesh Roads and Highways Department database.

36 Appendix 5

11. The appraisal and PCR did not have traffic forecasts for the RMC roads. The actual roads

covered under the RMC were different from those identified at appraisal. The PCR also did not give the

traffic forecasts for the RMC subprojects, although an economic evaluation was prepared. The PPER

prepared traffic forecasts for the RMC subprojects, for which traffic counts were obtained from the

RHD. These are shown in Table A5.4.

Table A5.4: Traffic Forecast in AADT for RMC Road Sections (2004, 2009, 2012, 2019 and 2027)

Year

Motor-

cycle

Auto


Micro

bus

Mini

bus

Large

Bus

Small

Truck

Medium

Truck

Heavy

Truck Total

Daudkandi–Chandina Bypass

2004 127 354 486 388 602 1,176 2,654 570 3,441 163 9,961

2009 261 1,356 1,49

7

251 1,814 655 2,597 773 5,635 300 15,139

2012 319 1,655 1,91

2

321 2,317 837 3,317 987 7,197 383 19,244

2019 249 1,294 1,57

3

264 1,906 688 2,728 812 5,920 315 15,750

2027 415 2,158 2,80

5

470 3,399 1,227 4,866 1,448 10,558 562 27,910

Chandina–Comilla Bypass

2004 993 1,210 1,13

6

1,019 1,218 1,884 2,704 837 5,112 660 16,773

2009 1,165 3,657 1,11

3

249 1,669 233 2,736 664 6,923 300 18,709

2012 1,004 6,168 1,24

2

1,104 1,492 1,424 2,500 2,076 7,298 403 24,712

2019 785 4,824 1,02

1

908 1,227 1,172 2,057 1,708 6,003 332 20,037

2027 1,310 8,044 1,82

2

1,620 2,189 2,090 3,668 3,045 10,707 591 35,085

Comilla–Feni Bypass

2004 613 904 775 654 865 1,411 2,804 460 6,433 223 15,142

2009 235 1,056 287 72 422 180 811 298 2,858 189 6,408

2012 287 1,289 367 92 539 230 1,036 381 3,650 241 8,111

2019 224 1,008 302 76 443 189 852 313 3,003 199 6,608

2027 374 1,681 538 135 791 337 1,520 558 5,355 354 11,643

Comilla–Chandpur

2004 1,054 1,333 400 392 491 963 951 537 1,162 148 7,431

2009 491 3,761 570 14 649 663 1,161 414 618 - 8,341

2012 599 4,590 728 18 828 846 1,483 529 789 - 10,412

2019 469 3,590 599 15 681 696 1,220 435 649 - 8,354

2027 782 5,986 1,06

8

27 1,215 1,242 2,175 776 1,158 - 14,429

Laxmipur–Raipur

2004 520 519 90 142 112 405 336 202 224 70 2,620

2009 532 1,820 236 75 249 280 336 254 612 - 4,395

2012 822 6,844 612 164 632 801 777 1,188 1,285 - 13,124

2019 1,286 10,705 1,00

6

271 1,040 1,318 1,279 1,954 2,113 - 20,971

2027 2,144 17,850 1,79

5

483 1,855 2,350 2,280 3,485 3,769 - 36,011

Raipur–Chandpur

2004 495 509 29 65 28 145 87 86 139 68 1,651

2009 678 1,293 244 57 184 223 205 236 622 - 3,743

2012 1,125 3,960 121 135 216 1,087 861 1,289 1,518 - 10,313

2019 1,759 6,195 200 223 355 1,788 1,417 2,120 2,497 - 16,554

2027 2,933 10,329 356 397 634 3,189 2,526 3,782 4,454 - 28,601

Lalmai–Laksham–Sonaimuri

2004 217 213 273 288 250 219 516 328 915 23 3,242


Year

Motor-

cycle

Auto


Micro

bus

Mini

bus

Large

Bus

Small

Truck

Medium

Truck

Heavy

Truck Total

2009 236 1,572 255 5 340 338 682 389 581 - 4,399

2012 152 1,326 356 148 434 395 675 705 849 - 5,041

2019 238 2,074 585 244 714 649 1,111 1,160 1,397 - 8,174

2027 398 3,459 1,04

4

435 1,274 1,158 1,981 2,069 2,492 - 14,309

Begumgonj–Maijdi–Sonapur

2004 412 1,002 167 192 229 335 668 266 596 36 3,903

2009 570 1,044 251 370 370 615 533 477 471 7 4,707

2012 696 1,275 320 472 472 785 681 610 601 8 5,920

2019 1,089 1,994 527 776 776 1,292 1,120 1,003 989 14 9,580

2027 1,815 3,324 939 1,385 1,385 2,304 1,997 1,789 1,765 25 16,728

Chittagong–Cox’s Bazar

2004 220 291 93 218 438 254 430 150 422 28 2,544

2009 643 708 211 453 1,052 286 604 374 823 19 5,173

2012 447 1,387 311 205 943 599 560 907 1,421 35 6,815

2019 699 2,169 511 338 1,551 985 921 1,493 2,338 58 11,063

2027 1,165 3,617 912 602 2,766 1,757 1,643 2,662 4,170 104 19,399

Cox’s Bazar–Teknaf

2004 128 837 61 97 658 73 155 148 302 2,459

2009 896 1344 38 294 507 456 33 43 195 3 3,809

2012 603 695 223 396 350 211 217 381 413 - 3,488

2019 944 1,087 366 651 577 347 357 626 679 - 5,634

2027 1,574 1,813 653 1,161 1,028 618 637 1,117 1,211 - 9,812

AADT = average annual daily traffic, HDM = highway development and management, RHD = Roads and Highways Department,

RMC = road maintenance component.

Note: AADT data for 2004, 2009, and 2011 (baseline) were from HDM Circle, RHD. AADT for 2012, 2019, and 2027 were estimated

using 2011 as baseline and growth rate as given in Table A5.2.

Source: Roads and Highways Department database. Bangladesh.

12. The 2004–2005 VOC inputs to the HDM-4 model were provided by the HDM Circle. The

resulting VOC per km estimate by vehicle type and road condition was used to estimate VOC savings by

vehicle type. For the CIC roads, except for CPAR, the computed VOC and VOC savings per km by vehicle

type assumed an international roughness index (IRI) of 6 for without-, and 2 for with-project situation.

For the CPAR, aside from the difference in road condition (IRI values of 4 for the without-project

situation and 2 for the with-project situation), the without-project situation assumed a road length of

20 km (road to the port via the internal city road) compared to the with-project situation of a shorter

route of 13.58 km or a difference of 6.42 km. 1

The computed VOC by road condition and IRI is shown

in Table A5.5.

Table A5.5: Economic Vehicle Operating Cost per km, by IRI Value and Vehicle Type, in Taka/km

IRI Road Condition

Motor-

cycle

Auto


Micro

bus

Mini

bus

Large

Bus

Small

Truck

Medium

Truck

Heavy

Truck

IRI 6 Without Project 2.57 2.57 9.46 18.98 11.70 12.30 19.38 10.25 16.09 24.75

IRI 2 With Project 2.35 2.35 8.62 16.69 10.49 11.25 17.49 9.11 14.39 23.46

HDM = highway development and management, IRI = international roughness index, PPER = project performance evaluation report, RHD

= Roads and Highways Department.

Source: PPER estimates using HDM-4. Basic 2004–2005 operating cost data were provided by RHD’s HDM Circle, 2012.

1 HDM-4 estimates the VOC based, on among other factors, the road condition as expressed in IRI values indicated below:

Paved Roads Roughness (IRI, m/km)

Road Condition Primary Roads Secondary Roads Tertiary Roads

Good 2 3 4

Fair 4 5 6

Poor 6 7 8

Bad 8 9 10

Source: HDM-4 software guide.

38 Appendix 5

13. The estimate of the project’s actual economic costs was based on the actual financial costs for

civil works, land acquisition and resettlement, design and construction supervision, and project

administration. Land acquisition and resettlement costs were allocated only to CIC subprojects, while

design and construction supervision and project administration were allocated to both CIC and RMC

projects. Interest costs during construction were not considered an economic cost. Based on PCR

estimates of economic costs, it was calculated that economic costs comprise about 80% of financial

costs. This calculation was used to adjust the financial costs of CIC and RMC subprojects to economic

costs. Since data on the actual cost incurred per year for each subproject were not available, the actual

implementation periods for the CIC and RMC contracts were used to distribute the costs over the

implementation period of each subproject under a specific contract.

14. The routine and periodic maintenance costs for each subproject were included as part of the

subproject maintenance cost and estimated using 2004 prices at Tk 40,000 per km, although the four-

laning contract for the Dhaka–Chittagong Highway included the routine maintenance of said highway

inclusive of the CIC and RMC subprojects on the alignment. The periodic maintenance costs for the

subprojects on the Dhaka–Chittagong Highway were advanced to 2013 instead of the planned 2016

overlay. The routine maintenance cost for the CPAR was already included in the contract price of the

toll collector and the periodic maintenance cost was assumed, as in the PCR, to be undertaken in 2016.

For the RMC projects outside of the Dhaka–Chittagong Highway and Chittagong–Teknaf road, the

periodic maintenance cost was assumed to be undertaken in 2018. The RHD had scheduled the overlay

of the Chittagong–Teknaf road for 2013. The estimated periodic maintenance cost at 2004 prices was

estimated at Tk 3.52 million/km.

15. The EIRR was estimated based on the subproject cost and benefit streams. The bulk of the

project’s costs were incurred in 2003–2006 for the CIC and in 2005–2007 for the RMC.

16. The recalculated EIRR for the CIC subprojects, taken as one component, was 17.1% (see Table

A5.6). The recalculated EIRRs for each CIC subproject are given in Table A5.7:

Table A5.6: Recalculation of EIRR for Total Corridor Improvement Component

(Tk million, 2004 prices)

Year

Capital

Cost

Maintenance

Cost Total Cost VOC Savings

Travel Time

Savings Total Benefits Net Benefits

2002 385.54 385.54 - (385.54)

2003 1,293.31 1,293.31 - (1,293.31)

2004 983.25 983.25 - (983.25)

2005 1,437.17 1,437.17 - (1,437.17)

2006 1,106.37 1,106.37 - (1,106.37)

2007 377.65 377.65 823.54 155.21 978.75 601.10

2008 72.65 4.53 77.18 964.75 179.38 1,144.13 1,066.95

2009 4.53 4.53 1,209.50 189.66 1,399.16 1,394.63

2010 4.53 4.53 1,171.53 185.53 1,357.05 1,352.52

2011 4.53 4.53 1,209.90 194.82 1,404.72 1,400.19

2012 4.53 4.53 1,316.91 209.34 1,526.25 1,521.72

2013 4.53 4.53 1,414.92 224.79 1,639.71 1,635.18

2014 4.53 4.53 839.85 120.99 960.84 956.30

2015 4.53 4.53 902.39 129.92 1,032.32 1,027.78

2016 52.29 52.29 969.60 139.52 1,109.12 1,056.82

2017 4.53 4.53 1,041.82 149.82 1,191.64 1,187.10

2018 4.53 4.53 1,119.42 160.88 1,280.30 1,275.77

2019 4.53 4.53 1,202.81 172.76 1,375.57 1,371.04

2020 4.53 4.53 1,292.41 185.53 1,477.93 1,473.40

2021 4.53 4.53 1,388.69 199.23 1,587.92 1,583.39

2022 4.53 4.53 1,492.15 213.95 1,706.10 1,701.57

2023 4.53 4.53 1,603.32 229.76 1,833.08 1,828.55

2024 4.53 4.53 1,722.79 246.74 1,969.53 1,964.99

2025 4.53 4.53 1,851.16 264.98 2,116.13 2,111.60


Year

Capital

Cost

Maintenance

Cost Total Cost VOC Savings

Travel Time

Savings Total Benefits Net Benefits

2026 4.53 4.53 1,989.10 284.56 2,273.66 2,269.13

2027 4.53 4.53 2,137.33 305.60 2,442.93 2,438.40

EIRR 17.1%

NPV $2,513.19

EIRR = economic internal rate of return, NPV = net present value, VOC = vehicle operating costs.

Source: Reports and recommendations of the President, project completion reports, and project performance evaluation report

calculations.

Table A5.7: Results of EIRR Recalculation for CIC, Appraisal, PCR, and PPER (in %)

Description

Length

(in km)

Economic Internal Rate of Return

Appraisal PCR PPER

Widening of Chandina, Comilla, and Feni bypasses 51.76 35.9% 36.9% 26.6%

Feni–Mirsarai section of Feni–Chittagong 25.44 46.5% 29.4%

31.1%

Sitakunda–Chittagong section of Feni–Chittagong 22.46 15.9%

Chittagong Port access road 13.58 15.4% 13.1% 12.2%

All CIC subprojects 113.24 37.0% 28.6% 17.1%

CIC = corridor improvement component, EIRR = economic internal rate of return, km = kilometer, PCR = project completion

report, PPER = project performance evaluation report.

Source: Reports and recommendations of the President, project completion reports, and project performance evaluation report

calculations.

17. Of the 13 subprojects, the recalculated EIRR for the RMC subprojects excluded the MiaBazar–

Kashinagar–Harischar, Maidji–Uderhat, and Kalurghat–Manashertek roads, for which traffic counts

were not available. The PCR did not recalculate the EIRR for the RMC projects as a whole. For the 11

subprojects in the RMC, the EIRR was 17.4% (see Table A5.8). The recalculated EIRRs for each RMC

subproject are given in Table A5.9.

Table A5.8: Recalculation of EIRR for Total Road Maintenance Component

(Tk million, 2004 prices)

Year

Capital

Cost

Maintenance

Cost

Total

Cost

VOC

Savings

Travel Time

Savings

Total

Benefits

Net

Benefits

2005 568.09 568.09 - (568.09)

2006 568.09 568.09 - (568.09)

2007 568.09 568.09 - (568.09)

2008 16.03 16.03 310.14 4.93 315.07 299.04

2009 16.03 16.03 314.46 5.39 319.84 303.81

2010 16.03 16.03 348.40 6.02 354.42 338.39

2011 16.03 16.03 399.90 7.19 407.08 391.05

2012 16.03 16.03 429.68 7.72 437.40 421.37

2013 141.43 141.43 461.68 8.29 469.97 328.53

2014 77.08 77.08 334.00 6.43 340.44 263.36

2015 16.03 16.03 358.86 6.91 365.77 349.74

2016 16.03 16.03 385.57 7.42 392.99 376.96

2017 16.03 16.03 414.27 7.97 422.24 406.21

2018 358.42 358.42 445.11 8.55 453.67 95.25

2019 16.03 16.03 478.25 9.19 487.43 471.40

2020 16.03 16.03 513.85 9.86 523.72 507.69

2021 16.03 16.03 552.11 10.59 562.70 546.67

2022 16.03 16.03 593.22 11.37 604.59 588.56

2023 16.03 16.03 637.39 12.21 649.61 633.58

2024 16.03 16.03 684.85 13.12 697.97 681.94

2025 16.03 16.03 735.86 14.09 749.94 733.91

2026 16.03 16.03 790.66 15.13 805.78 789.75

2027 16.03 16.03 849.54 16.24 865.79 849.76

EIRR 17.4%

EIRR = economic internal rate of return, VOC = vehicle operating costs.

Source: Project completion reports, and project performance evaluation report calculations.

40 Appendix 5

Table A5.9: Results of EIRR Recalculation for RMC, PCR, and PPER (in %)

Description

Length

(in km)

EIRR

PCR PPER

Daudkandi–Chandina bypass 28.69 33% 15.1%

End of Chandina bypass–start of Comilla bypass 12.69 30%

29.9%

End of Comilla bypass–start of Feni bypass 34.62 13.4%

Comilla–Chandpur 50.5 166% 18.0%

Laxmipur–Raipur 16 62% 20.5%

Raipur–Chandpur 27 38% 19.9%

Lalmai–Laksham–Sonaimuri 38 56% 15.1%

Bagumgonj–Maijdi–Sonapur 13.5 144% 36.9%

Chittagong–Cox’s Bazar 62.5 93% 20.2%

Cox’s Bazar–Teknaf 37 78% 8.6%

All RMC 320.5 17.4%

EIRR = economic internal rate of return, km = kilometer, PCR = project completion report, PPER = project

performance evaluation report, RMC = road maintenance component.

Source: Project completion reports, and project performance evaluation report calculations.

APPENDIX 6: FINANCIAL REEVALUATION

1. The Chittagong Port access road (CPAR) was intended to provide a new express access road

between Chittagong’s northern approaches and Chittagong Port, the primary and major international

port of Bangladesh. CPAR was originally intended as a build, operate, and transfer project, but the

estimated financial internal rate of return (FIRR) was too low to attract private sector participation.

Subsequently, it was transformed into the first limited-access toll road to be operated and maintained

by the private sector in Bangladesh.

2. The subproject’s FIRR was re-estimated using the latest traffic statistics available and compared

with the FIRRs estimated at appraisal and at project completion. The major assumptions used in

recalculating the FIRR were the following:

(i) Capital costs were comprised of actual capital expenditures incurred during the

construction of the CPAR, including civil works and equipment, but excluding interest

expenses during construction.

(ii) Operation and routine maintenance costs were based on the contracted cost as given

in the contract for operation of the CPAR between the government of Bangladesh and

the concessionaire, a joint venture of Monico Limited and Asian Traffic Technologies,

Ltd.

(iii) The periodic maintenance cost and year of implementation was as given in the project

completion report (PCR).

(iv) The toll collection revenues were based on actual traffic using the CPAR from 2007 to

October 2012 as provided by the concessionaire through the Roads and Highways

Department (RHD) office in Chittagong. The average annual daily traffic (AADT)

increased by 10.3% per annum from 2007 to 2012. In the appraisal report, the total

estimated AADT in 2009 was 8,942, while the actual AADT was only 2,763 or a

difference of 6,179 (69.1%) below the appraisal estimate. In the preparation of the

traffic forecast, the traffic growth rates used were the same as the estimated growth

rates by vehicle type given in the PCR. This was determined to be the most reasonable

estimate given that Chittagong Port’s capacity utilization was reaching its design

levels.1

Table A6.1 gives the traffic growth rates used in the traffic forecast. Table A6.2

gives the actual AADT for the CPAR from 2007 to 2012 and Table A6.3 the traffic

forecast from 2013 to 2027 by vehicle toll class. The toll rates charged by vehicle class

are given in Table A6.4.

Table A6.1: Traffic Growth Rates Used for the CPAR, 2013–2027, in %

Vehicle Type 2012–2016 2017 onward

Motorcycle 6.6 6.6

Auto Rickshaw 6.6 6.6

Cars 7.5 7.5

Trucks 7.5 7.5

Buses 7.5 7.5

CPAR = Chittagong Port access road.

Source: Roads and Highways Department, Bangladesh.

1 The Study Design, Layout Plan, Costing, and Project Appraisal Report for Techno-Economic Feasibility Study of a Deep Sea Port

in Bangladesh, Pacific Consultants International (PCI), Japan, in association with AEC, Thailand, and DECON, JPZ & DEVCON,

Bangladesh, November 2008.

42 Appendix 6

Table A6.2: Actual and Forecast AADT for the CPAR by Vehicle Class per Toll Rate Charged

Actual AADT, 2007–2012

Year

Class I Class II Class III Class IV Class V Class VI

Total MC/AR

Microbus/

Car

Small

Truck

Medium

Truck

Large

Truck

Heavy Truck/

Tanker

2007 338 431 4 27 13 1,293 2,106

2008 377 480 4 32 7 1,436 2,336

2009 347 604 9 37 18 1,749 2,763

2010 287 663 6 23 19 1,527 2,524

2011 328 710 5 41 74 1,730 2,887

2012 336 829 8 43 31 2,184 3,431

a.g.r. (0.14%) 13.99% 14.32% 10.21% 18.46% 11.06% 10.26%

AADT = average annual daily traffic, AR = auto rickshaw, CPAR = Chittagong Port access road, MC = motorcycle.

Note: a.g.r. = annual growth rate (estimate by the Independent Evaluation Department).

Source: Roads and Highways Department—Chittagong, December 2012.

Table A6.3: AADT Forecast, 2013–2027

Year

Class I Class II Class III Class IV Class V Class VI

Total MC/AR

Microbus/

Car

Small

Truck

Medium

Truck

Large

Truck

Heavy Truck/

Tanker

2007 338 431 4 27 13 1,293 2,106

2008 377 480 4 32 7 1,436 2,336

2009 347 604 9 37 18 1,749 2,763

2010 287 663 6 23 19 1,527 2,524

2011 328 710 5 41 74 1,730 2,887

2012 336 829 8 43 31 2,184 3,431

2013 358 892 8 47 33 2,348 3,686

2014 381 958 9 50 36 2,524 3,959

2015 407 1,030 10 54 39 2,714 4,253

2016 433 1,108 10 58 42 2,917 4,568

2017 462 1,191 11 62 45 3,136 4,907

2018 493 1,280 12 67 48 3,371 5,270

2019 525 1,376 13 72 52 3,624 5,661

2020 560 1,479 14 77 55 3,896 6,081

2021 597 1,590 15 83 60 4,188 6,532

2022 636 1,709 16 89 64 4,502 7,017

2023 678 1,837 17 96 69 4,839 7,537

2024 723 1,975 19 103 74 5,202 8,096

2025 770 2,123 20 111 80 5,593 8,697

2026 821 2,283 21 119 86 6,012 9,342

2027 875 2,454 23 128 92 6,463 10,036

AADT = average annual daily traffic, AR = auto rickshaw, MC = motorcycle.


Table A6.4: Actual Toll Rates Charged by Vehicle Type

Vehicle Class

Category Vehicle Description

Toll

(in Taka/Vehicle Class)

I Motorcycle, auto rickshaw, tempo 5

II Microbus, car, pick-up 15

III Small truck 20

IV Medium truck 25

V Large truck, large bus 30

VI Heavy truck, tanker 50

Source: Monico Limited and Asian Traffic Technologies, Ltd., December 2012.

Financial Reevaluation 43

3. The recomputed FIRR for the CPAR is -2.47%. This is lower than the appraisal estimate of 4.8%,

but higher than the PCR recomputation of -4.3%. The difference between the PPER recomputation and

the appraisal result can be attributed to the actual lower traffic used, which was 69.1% lower than

forecast. The base toll rates assumed at appraisal were also higher than the implemented toll rates.

Since the concessionaire is just collecting the tolls and undertaking routine maintenance of the road on

a fixed contract, it has no control over the toll rates, which the government sets. It was not possible to

trace the cause of the difference in the PCR results, since the PCR did not show the actual and forecast

traffic used. In analyzing the revenue streams for both the PCR and the Independent Evaluation

Department (IED), the PCR traffic forecast was lower than the actual traffic attained. For example, the

2012 PCR estimate of revenues was Tk 46.79 million, while the actual 2012 realized revenues totaled Tk

53.04 million or a difference of TK 6.25 million. Table A6.5 shows the details of the recomputation of

the CPAR FIRR.

Table A6.5: Recomputation of the CPAR Financial Internal Rate of Return

Year

Capital

Cost

Operating &

Maintenance

Cost

Periodic

Maintenance Total Cost

Toll

Revenues

Net

Revenues

2003 311.68 311.68 (311.68)

2004 331.22 331.22 (331.22)

2005 636.14 636.14 (636.14)

2006 488.08 488.08 (488.08)

2007 131.93 20.00 151.93 31.28 (120.65)

2008 20.00 20.00 34.68 14.68

2009 20.00 20.00 42.24 22.24

2010 20.00 20.00 37.52 17.52

2011 20.00 20.00 42.99 22.99

2012 20.00 20.00 53.04 33.04

2013 20.00 20.00 57.02 37.02

2014 20.00 20.00 61.29 41.29

2015 20.00 20.00 65.88 45.88

2016 20.00 41.83 61.83 70.81 8.98

2017 20.00 20.00 76.12 56.12

2018 20.00 20.00 81.82 61.82

2019 20.00 20.00 87.95 67.95

2020 20.00 20.00 94.53 74.53

2021 20.00 20.00 101.62 81.62

2022 20.00 20.00 109.23 89.23

2023 20.00 20.00 117.41 97.41

2024 20.00 20.00 126.20 106.20

2025 20.00 20.00 135.66 115.66

2026 20.00 20.00 145.82 125.82

2027 20.00 20.00 156.74 136.74

FIRR (2.47%)

CPAR = Chittagong Port access road, FIRR = financial internal rate of return.


APPENDIX 7: SOCIOECONOMIC REEVALUATION

1. The socioeconomic evaluation used various instruments, including a household survey, focus

group discussions (FGDs), key informant interviews (KIIs), a survey of drivers and passengers, and

reviews of secondary data and information. Using structured questionnaires, the household survey was

conducted in the project areas to collect data on the socioeconomic situation that prevailed before and

after the completion of the project.

2. The project roads, totaling 113.28 km between Comilla and Chittagong districts, intersect 97

mouzas located in 5 upazillas1

in 3 districts: Chandina and Comilla Sadar in Comilla District; Feni Sadar

in Feni District; and Mirsarai, Sitakunda, and Chittagong City Corporation in Chittagong District.2

The

socioeconomic and poverty impact evaluation examined sample households residing not only along the

project roads, but within 2km of them. A total of 570 households were randomly selected for the

household surveys from the 27 mouzas (15 mouzas along the project roads and 12 mouzas within 2

km of them). The total number of sample households within 2 km of a project road is 50% of the

number of sample households from the mouzas along the project road.

Table A7.1: List of Selected Mouzas

District Upazilla

Along the Project Road Within 2km of the Project Road

Mouza Name Number of HH Mouza Name Number of HH

Comilla Chandina Tircho 162 Kashimpur 85

Nautala 168 Asadnagar 96

Keramkhal 107

Comilla Sadar Amtali 127 Asrafpur 110

Lalbagh 117 Chhota Gopalnagar 117

Feni Feni Sadar Zerkachhar 59 Safiabad 67

Ilaspur 60 Madhuai 66

Jatrasiddhi 51 Mirganj 56

Chittagong Mirsarai Purba Mayani 109 Chhota Kamaldaha 97

Sitakunda Dakshin Terail 131 Saidpur 116

Nayakhali 222 Lot 8 Kumira 93

Sitakunda Bara Kumira 106 Ward 12 103

Chittagong City Ward 10 175 Ward 25 99

Sitakunda Uttar Salimpur 187

Chittagong Sadar Ward 26 262

HH = household, km = kilometer.

Source: Bangladesh Bureau of Statistics database.

3. The following occupations were included in the sample of the household surveys, FGDs, and

KIIs: villagers, businessmen and traders, farmers, passengers, shopkeepers, social elites such as

teachers, religious leaders, local council members, students, day laborers, government officials, and

private sector companies collecting tolls on the Chittagong Port access road. To ensure that all upazillas

in the project roads were covered, a purposive sampling method was used.

4. The study adopted a “before-after” approach to assess changes in socioeconomic indicators

before and after the project. Villagers’ perceptions about the changes in socioeconomic indicators and

about their access to transport facilities, markets, employment, and service institutions were analyzed

to capture the socioeconomic and poverty impact of the project road. Key indicators used to measure

the socioeconomic and poverty impact included: employment, earnings, female employment and

wages, travel costs and time, environment, available social services, and other related activities.

1 Upazilla is the third level of administration of local government after divisions and districts (zila).

2 Mouza is the lowest administrative unit in Bangladesh and its boundary can be easily identified. On the other hand, the

boundary of villages is somewhat unclear in many cases and difficult to define. As such, the study preferred to consider mouza

as a survey unit. A typical village is comprised of several mouzas.

Socioeconomic Reevaluation 45

A. Changes in Socioeconomic Indicators

5. Diversification of household income and expenditure. The improved roads have increased

economic opportunities and diversified household income sources. Participants in the FGDs and KIIs in

Comilla, Chandina, and Feni reported that the local population was mainly engaged in agriculture

before the roads were improved.3

In recent years, more people are opting for occupations other than

agriculture owing to the increased accessibility to cities and business hubs, which have brought about

new employment and trading opportunities for the population in the project area. More people have

set up their own small business. Major income sources include agriculture, small trade, manufacturing

industries, small and medium-sized enterprises (SMEs), and service institutions such as schools (Table

A7.2).

Table A7.2: Main Occupation in the Project Area: Before and After the Project

2005 2012

Agriculture Small and Medium-sized Enterprises

(SMEs)

Small trade Day Laborers

Rickshaw/Van Puller Doctors

Shopkeepers Drivers

Farmers

Government Officials

Livestock raiser

Private Services

Rickshaw/Van Puller

Shopkeepers

Source: Household Survey and Focus Group Discussion, November 2012.

6. A large number of the respondents in the project areas mentioned that the improved roads

have increased their access to income opportunities. Of the 380 sample households along the project

road, 93% of the respondents said that their incomes have increased since the project.4

A change in

their expenditure patterns has also been noticed since the road improvements. Household expenditures

along the project road sections in basic social services such as health care and education have increased

by 29% and 24%, respectively (Table A7.3).

Table A7.3: Household Expenditures of Sample HHs (%)

Expense item Along the Project Road Within 2km of the Project Road

Food (15.59) (13.17)

Heath care/

Medical 28.67 30.03

Clothes 15.14 24.24

Education 23.80 63.26

Water (22.07) (4.12)

Electricity (0.15) 23.99

Gas (12.91) (13.10)

Transportation (2.26) 11.88

Recreation (13.57) 7.17


Source: Household Survey, November 2012; Commodity Price Index from the Bureau of Bangladesh Statistics.

7. Household wealth. Household wealth has also increased since the road improvement (Table

A7.4). Changes in household wealth are also positively related to diversified economic activities in the

3 Focus group discussions and key informant interviews in Comilla, Chandina, and Feni districts.

4 Household survey, November 2012.

46 Appendix 7

project areas. Ownership of mobile phones has had a tremendous impact on boosting local economic

activities. Farmers and local producers of agricultural products can directly market and sell their goods

to urban-based wholesalers and retailers, eliminating the need for middlemen. The improved roads

have allowed the urban-based wholesalers and retailers of the agricultural-based products and

vegetables to reach rural farmers at the production sites, reducing transportation cost and travel time

in project areas in Comilla, Feni, and Chittagong.

Table A7.4: Household Wealth of Sample HHs in the Project Mouzas

HHs Asset

Along the Project Road Within 2 km of the Project Road

2005 2012 % 2005 2012 %

TV Number of hh who had 202 300 49 105 148 41

(% of total sample hh) 53.18 78.95 55.26 77.89 Motorbike Number of hh who had 11 22 100 9 23 156

(% of total sample hh) 2.89 5.79 4.74 12.10 Car Number of hh who had 2 5 150 0 0 -

(% of total sample hh) 0.53 1.31 Truck Number of hh who had 2 4 100 0 0

(% of total sample hh) 0.53 1.05 Sewing

machine

Number of hh who had 12 32 167 13 23 77

(% of total sample hh) 3.16 8.42 6.84 12.10 Mobile

phone

Number of hh who had 160 347 117 74 182 146

(% of total sample hh) 42.11 91.31 38.95 95.79 Goat/lamb Number of hh who had 21 23 10 12 15 25

(% of total sample hh) 5.53 6.05 6.31 7.89 Cow/buffalo Number of hh who had 67 89 33 36 63 75

(% of total sample hh) 17.63 23.42 18.95 33.16 Solar home

system

Number of hh who had 3 4 33 0 0 -

(% of total sample hh) 0.79 1.05

hh= household, km = kilometer.

Source: Household Survey 2012.

8. Trade and Business. Trade and business activities have expanded significantly since the road

improvements. Local people established small shops and restaurants, creating more job opportunities

in the project areas. Improved roads have also allowed investors from large cities such as Dhaka and

Chittagong to invest in the area, resulting in increased land prices and job opportunities. Investors from

outside have set up hotels and restaurants catering to the needs of inter-district passengers using these

roads. These highway restaurants have also created employment for locals, mostly youth.

9. Apparel industries, beverage factories, agricultural and food processing plants, among others,

are the business investments set up by large investors. Participants in the FGDs have noted that the

price of land has increased over the last few years due to the improved roads.5

Booming land markets

have also been attributed to the higher demand for land. Many investors have purchased large pieces

of land, causing land prices to go up. New companies resell these lands as smaller residential plots to

mostly wealthy residents of nearby cities or district towns.

10. Because the improved roads allow vendors to quickly supply products and goods, shops in the

villages now sell a variety of goods and products that were not available before. Suppliers can now

directly reach village shops with their own vans to deliver their products and goods. This has reduced

transport costs for small traders in project villages. There has been a significant rise in the number of

shops and customers at the local markets and haat bazaars located on roadsides, attracting and

facilitating trade among villagers. Wholesale markets for vegetables have been found in several places

along the roads. These roadside wholesale markets supply much-needed vegetables for consumers of

5 Focus group discussion in Chandina in Comilla District, November 2012.


large cities such as Dhaka and Chittagong (footnote 4). This increased economic activity resulting from

the improved roads has greatly benefitted vulnerable farmers whose livelihoods largely depend on

agriculture.

11. Transport use and cost. People in the project area now have access to different kinds of vehicles

for local and long-distance travel since the road was improved. While the number of households using

motorized vehicles has increased, the amount of foot travel has fallen (Table A7.5).

12. There has been a significant increase in the use of auto rickshaws, specifically three-wheelers

run by compressed naturalized gas (CNG), to travel to nearby villages and cities. Before the project,

local communities would wait longer for crowded buses. Four-wheeler tempos, about the size of a

microvan, are also widely used in the region to visit relatives and travel to nearby market places and

service institutions. Improved roads have allowed local transport entrepreneurs to introduce these types

of vehicle. Many auto rickshaws are owned by their drivers, while many of the more affluent members

have also started new ventures to rent their auto rickshaws on a daily basis to local drivers. This has

helped new forms of transport business to flourish in these regions.

13. The introduction of various motorized vehicles has had an impact on the choice of the mode of

transportation to travel to nearby places. More people now avoid walking to markets. Instead, they use

more convenient and faster auto rickshaws or tempos.

Table A7.5: Mode of Transport of Sample HHs (% of Total Sample)

Mode of Transport

Along the Project Road Within 2 km of the Project Road

2005 2012 2005 2012

Foot 35 31 31 29

Non-motorized 3 3 7 7

Bicycle 3 3 1 4

Motorbike 2 3 7 8

Private Vehicle 3 3 2 1

Bus 32 40 31 48

Minibus 3 6 1 3

Tempo/CNG 3 18 1 21

Battery-run Auto 3 5 1 1


Source: Household Survey, November 2012.

14. Travel time. Travel time was reduced between project upazillas and major cities, district towns,

and the capital. Before, people spent 3 hours to travel the 66 km from Chandina to Dhaka but now

they can do so in 1.5 hours (Table A7.6). All bypasses in Comilla and Feni that were improved under the

project made the road accessible, facilitating traffic flow and reducing travel distance, resulting in

decreased travel time. Before the construction of the bypasses, traffic gridlock occurred frequently at

the Chandina bus stand, and in Comilla and Feni City. Participants of the FGD in Chandina confirmed

that the travel time between Chandina to the nearest district towns, regional business hub, and the

capital have been significantly reduced. The CPAR has also reduced the travel time for trucks, container

movers operated by freight, and forward service providers.

Table A7.6: Travel Time between Chandina and Comilla, Feni, Dhaka, and Chittagong

Cities Distance (km)

Before

(hours) After (hours)

Comilla 20.87 2 0.3

Feni 76.00 3 1.3

Dhaka (Capital City) 65.55 3 1.5

Chittagong 155.58 4 2.0

km = kilometer.

Source: Focus group discussion in Chandina in Comilla District, 17 November 2012.

48 Appendix 7

15. Accessibility to the port. The FGDs and KIIs with transport operators, freight and forward

services providers, drivers and businessmen in Chittagong, Comilla, Feni, and Dhaka have shown that

the port access roads have reduced travel time to the port. Respondents of the KII in Chittagong noted

that the port access roads have decreased traffic congestion to some extent. However, many

respondents of the KII have said that the CPAR remains underutilized and many heavy vehicles still ply

the roads running through the Chittagong city center. Inaugurated on 16 October 2008, the access

road was expected to reduce traffic gridlock in the city center significantly by diverting heavy vehicles

from the Chittagong Port, Chittagong export processing zone, and different terminals at Patenga. The

officials of the Chittagong Port Authority said that a good number of heavy vehicles avoid the CPAR

and use the busy port connecting road to avoid paying tolls, thereby contributing to traffic congestion

in the Chittagong city center.

16. Transportation of goods and products. Since the project, there has been a significant increase

in the number of light vehicles, which makes it easier for farmers and local businesses to transport

various products and goods, including electronic home appliances, agricultural products, and products

manufactured by SMEs in the rural areas along the project roads. Before the project, 33% of the

households along the roads had difficulties transporting goods to the nearest market places (Table

A7.7). Some 16% of the respondents along the project road sections indicated that they had

experienced problems finding light vehicles to transport their products to the nearest district towns or

large wholesale markets where they could potentially get better prices. Some 7% of the respondents

along the project roads had difficulties transporting electronic home appliances and goods such as

refrigerators and televisions due to the unavailability of adequate light vehicles.

Table A7.7: Difficulties in Transporting Goods and Products before the Project (%)

Type of Goods and Products Along the Road Within 2 km of the Road

Agricultural products 36 37

All types of goods 1 1

Construction materials 3 1

Cotton 0 1

Crops 2 4

Electronics 7 5

Goods to the nearest markets for sale 33 26

Fish 1 2

Products manufactured by SMEs 16 20

Medicine/medical products 3 1

km = kilometer, SME = small and medium-sized enterprise.


17. Agriculture. Although the number of SMEs continues to grow in the project areas, most still

rely on agriculture for their livelihood. The improved roads have contributed to increased productivity

by allowing farmers to use new agricultural technology (Table A7.8). Some 88% of the total sample

households responded that they used tractors for cultivation after the roads were improved. Before the

project, only about 50% of the respondents used tractors. The declining use of animal traction and

hand plows is also evident since the roads were improved.

Table A7.8: Methods Used for Cultivation of Crop Land

Agricultural Methods Used

Along the Road Within 2 km of the Road

2005 2012 2005 2012

Tractor 13 (50%) 23 (88%) 25 (49%) 12 (67%)

Animal traction 9 (35%) 1 (3.8%) 19 (37%) 1 (5.6%)

Hand plow 4 (15%) 2 (7.6%) 7 (14%) 5 (2.8%)

Total Responded 26 26 51 18

km = kilometer.



18. The use of non-motorized vehicles to transport agricultural products has decreased since the

project. Some 13–28% of the respondents had to use passenger buses to transport their products to

the nearest markets due to the lack of motorized vehicles (Table A7.9). Since the road improvements,

only 1% of the respondents along the project road use buses to transport their produce. Participants in

the FGD said that they can easily hire pick-up vans, small trucks, or auto rickshaws to transport their

products since the roads were improved. Villagers indicated that transporting agricultural products by

passenger bus was inconvenient as they often had to load their goods on the bus’s roof. With the

improvement of roads, farmers can now access several types of motorized vehicles such as pick-up vans

and mini trucks owned mostly by local transport operators. A large number of farmers still use non-

motorized rickshaws to move their products to the nearest markets as these are more cost efficient for

small farmers who can hardly afford to rent a pick-up van.

Table A7.9: Vehicle Types Used by HHs to Transport Farm Produce to Markets (%)

Vehicle Type

Along the Road Within 2 km of the Road

2005 2012 2005 2012

Hand carry 3 0 0 0

Locally made motorized pick-up van 0 1 0 0

Bus 28 1 13 0

Auto rickshaw 7 16 0 40

Pick-up van 0 11 0 14

Rickshaw 10 10 38 14

Truck 0 4 0 0

Mini truck 3 0 0 0

Rickshaw van 48 58 50 31



19. Employment. There has been a noticeable increase (about 79–86%) in employment

opportunities in the project mouzas since the roads were improved (Table A7.10). Factories along the

project road sections have created job opportunities for women who were previously unemployed. New

industrial plants, such as apparel factories established in project areas, have brought new employment

opportunities to the region. Many new service institutions, such as nongovernment organizations

(NGOs), have started their operations in the project areas, thereby benefitting local people by creating

more employment opportunities.

Table A7.10: Responses on Employment Opportunities after the Project (%)

Project Mouzas Yes No

Along the project road 86 14

Within 2 km of the project road 79 21

km = kilometer.

Source: Household survey and Focus Group Discussion, November 2012.

20. Self-employment among women is very common in the region. Many women have started

small businesses and enterprises in their homes, producing such items as handicrafts or processed

foods. These initiatives not only help generate income, but also ensure that the women can now enjoy

financial independence thereby enhancing their status in the household. As a result, women can now

participate in household decision making. The sample households in the project area responded

positively about the increased employment opportunities offered by various service institutions in the

region since the roads were improved (Table A7.11).

Table A7.11: Responses of Sample HHs on Increased Access to Employment (%)

Project Mouzas Yes No

Along the project road 51 49

Within 2 km of the project road 54 46



50 Appendix 7

21. With the improvement of the roads, women in project mouzas now have access to employment

opportunities in agro-based small industries, brickfields, SMEs, educational institutions, garment

factories, NGOs, and hospitals (Table A7.12). The respondents within 2km of the project road said that

women have better work opportunities in garment factories and the education sector (25% and 29%

each). Respondents along the project roads said that women have increased opportunities to work in

various SMEs (23%).

Table A7.12: Responses on Employment Opportunities for Women (% of Sample HH Heads)

Sectors and Service Institutions Along the Road

Within 2 km of the

Road

Agro Industry 3 3

Brickfield 4 3

Business 0 1

Day Labor 10 4

Education Sector 18 25

Farming 7 3

Garment Factory 25 29

Industry 23 18

NGO 6 9

Nursing 1 5

Private Services 3 2



22. Access to service institutions and business centers. The absence of adequate service institutions

remains a common phenomenon in rural Bangladesh. Rural populations often experience a number of

barriers in accessing existing service institutions and social services. The absence of road connections is

one of the major challenges to accessing the social and financial services offered by a limited number

of service institutions. The improved roads in Comilla, Feni, and Chittagong have enabled a large

portion of the population in the region to easily access a number of service institutions and social

services, including hospitals, health care centers, wholesale markets, educational institutions such as

schools and colleges, NGOs, government agencies, and information service providers.

23. The project areas have also witnessed the establishment of various service institutions such as

schools, health care facilities, commercial banks, microfinance NGOs, shops and markets, roadside

restaurants, and filling stations. Large microfinance providers such as BRAC, Grameen Bank, and ASA

have started to offer various social and financial services for the poorest segment of the population in

the surveyed project mouzas. The fieldwork shows that people in the project areas now have more

access to various service institutions and information service providers (Table A7.13).

Table A7.13: Responses on Access to Service Institutions/Business Centers (%)

Service Institutions/Business Center Along the Road

Within 2 km of the

Project Road

Schools 47 48

Hospitals 63 66

Markets 74 74

Factories/Industrial Plants 29 26

km = kilometer


24. Access to markets. Market accessibility has also increased with better road connections. The

local population now has easier access to the nearest marketplaces, including wholesale markets

established along the roads. Participants in the FDG pointed out that the improved roads made it easier

than ever to reach the nearest wholesale markets for vegetables. These markets attract buyers from

large cities such as Chittagong and Dhaka, who purchase large amounts of agricultural products and


vegetables. This allows small and medium farmers with limited sources of income to negotiate better

prices for their products.

25. Access to government services. The FGDs held in Chandina and Feni showed that the improved

roads have enabled many community members to easily travel to the government offices in town. The

roads made it easier to participate in government meetings.

26. Access to educational institutions. It is difficult to find a correlation between school attendance

and the improved roads, as the government in Bangladesh has continued to provide a range of

incentives to encourage parents to send their children to school, which has resulted in increased school

attendance. However, the roads have made it easier for the local youth, particularly young women, to

attend colleges located in the nearby cities or district towns due to the availability of better transport

services and reduction in travel time. The bypass roads in Chandina in Comilla and Feni have

significantly reduced travel times where most undergraduate-level educational institutions are located.

27. Access to health care services. Common diseases in Bangladesh include fever, typhoid, colds,

flu, and jaundice. Health care facilities such as hospitals and clinics are available in the nearby upazilla,

town, or district town. Before the roads were improved, it took much longer to reach the upazilla or

district towns to receive these medical services. Participants in the FGDs and key informant interviews

noted that traveling to the nearest health care facility was less time-consuming mainly due to the

improved roads. Travel time to the major health care service providers in the nearest cities such as Feni,

Comilla, and Chittagong has been reduced. Furthermore, it is now easy for the population to transport

patients who need emergency medical attention to hospitals.

28. Access to financial services. The fieldwork shows that a large number of households currently

have access to various financial services, including microcredit. These service institutions provide a

range of financial services, including support for microenterprises, and benefit a large population in the

project areas. The penetration of increased financial service institutions into the region is also evidenced

by the increased economic activities in the project area.

29. Land prices. Land prices have risen significantly since the project. Higher land prices change a

land-use pattern. Investors from large cities have bought large pieces of land alongside the roads,

which tends to reduce the amount of land available for agricultural purposes. However, these lands are

reserved potentially for manufacturing industries, which in turn will bring new economic opportunities,

including employment for the local population. Some real estate investors have purchased large

amounts of land along the roads in the project areas and developed it for residential plots (footnote 3).

30. Environment. Consultations with the local population and KIIs with representatives of local

councils and various government agencies revealed that the project has not posed any major

environmental problems. However, some local inhabitants living adjacent to the roads complained

about noise pollution and excessive dust, especially during the dry season. In Chittagong, a FGD

revealed that the Chittagong Port access road worked as a flood protection embankment, protecting

the villages along the road from flash floods and subsequent waterlogging. Before the project, some of

the villages near the toll collection plaza of the CPAR were flooded every year. Since the roads were

built, using land owned by the government and along the Bay of Bengal, the CPAR has not contributed

to any significant reduction in agricultural lands. Only a few farmers were affected.

31. Road accidents. Many participants in the FGDs in Chandina and Feni indicated that large

vehicles such as buses, trucks, container trucks, and microvans could run faster due to the improved

quality of the roads, resulting in an increased number of traffic accidents. The participants in the FGDs

and KIIs recommended that road dividers be provided for in the road maintenance and improvement

plan for highways with a lot of vehicular movement. Due to the increased number of vehicles on the

52 Appendix 7

roads, head-on collisions have been a regular phenomenon and a major concern for the villagers living

along the road sections. There is no proper mechanism to collect accident data.

32. The traffic control mechanism for these road sections was found to be weak. The roads also do

not include speed controls, posing a risk for the local population in crossing the roads. Many

participants in the FGDs residing along the road sections said that it has become much more difficult to

cross the roads due to the increased traffic. This has made villagers reluctant to engage in business and

agriculture activities across the roads, limiting their ability to engage in income-generating activities.

Many have, therefore, suggested building low-cost pedestrian bridges over the roads.