Document of The World Bank

FOR OFFICIAL USE ONLY

Report No: ICR0000807

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-45590)

ON A

LOAN

IN THE AMOUNT OF US$516.0 MILLION

TO

INDIA

FOR THE

THIRD NATIONAL HIGHWAYS PROJECT

October 1, 2008

Sustainable Development Unit India Country Management Unit South Asia Region

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective 09/30/2008)

Currency Unit : Indian Rupee (INR)

Indian Rupee 1.00 : US$0.021 US$1.00 = INRs.46.56

FISCAL YEAR

April 1 – March 31

ABBREVIATIONS AND ACRONYMS

ABP Allahabad Bypass Project M&E Monitoring & Evaluation ADB Asian Development Bank MOSRTH Ministry of Shipping, Road Transport

and Highways AM Aide Memoire MOST Ministry of Surface Transport ATMS Advanced Traffic Management System MTR Mid-term Review BOT Build-Operate-Transfer NH National Highway CAS Country Assistance Strategy NHAI National Highways Authority of India CMU Corridor Management Unit NHDP National Highways Development

Program COS Committee of Secretaries PAD Project Appraisal Document DoRTH Department of Road Transport and

Highways PDO Project Development Objectives

EMP Environmental Management Plan PIU Project Implementation Unit ESDU Environmental and Social Development

Unit PPP Public-Private Partnership

GOI Government of India PSR Project Status Report GQ Golden Quadrilateral PWD Public Works Department GTRIP Grand Trunk Road Improvement

Project QAG Quality Assurance Group

HDM Highway Design and Maintenance Standards Model

RAP Resettlement Action Plan

IERR Internal Economic Rate of Return TNHP Third National Highways Project ISR Implementation Status and Results

Report VOC Vehicle Operating Cost

LMNHP Lucknow-Muzaffarpur National Highway Project

ICRR Implementation Completion and Results Report

Vice President: Isabel Guerrero Country Director: Rachid Benmessaoud (Acting)

Sector Manager: Michel Audigé Project Team Leader: Rajesh Rohatgi

ICRR Team Leader: Tawia Addo-Ashong

INDIA Third National Highways Project

CONTENTS

Data Sheet

B. Key Dates ........................................................................................................................ iC. Ratings Summary ............................................................................................................ iD. Sector and Theme Codes................................................................................................ iiE. Bank Staff....................................................................................................................... iiG. Ratings of Project Performance in ISRs ....................................................................... ivI. Disbursement Profile ...................................................................................................... v1. Project Context, Development Objectives and Design................................................... 12. Key Factors Affecting Implementation and Outcomes .................................................. 43. Assessment of Outcomes ................................................................................................ 94. Assessment of Risk to Development Outcome............................................................. 125. Assessment of Bank and Borrower Performance ......................................................... 126. Lessons Learned............................................................................................................ 147. Comments on Issues Raised by Borrower/Implementing Agencies/Partners.............. 16Annex 1. Project Costs and Financing.............................................................................. 17Annex 2. Outputs by Component...................................................................................... 18Annex 3. Economic and Financial Analysis ..................................................................... 19Annex 4. Bank Lending and Implementation Support/Supervision Processes................. 21Annex 5. Beneficiary Survey Results ............................................................................... 23Annex 6. Stakeholder Workshop Report and Results....................................................... 24Annex 7. Summary of Borrower's ICRR and/or Comments on Draft ICRR.................... 25Annex 8. Comments of Co-Financiers and Other Partners/Stakeholders......................... 33Annex 9. List of Supporting Documents .......................................................................... 34

MAP IBRD 30824

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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A. Basic Information Country: India Project Name: THIRD NATIONAL HIGHWAYS

PROJECT Project ID: P009972 L/C/TF Number(s): IBRD-45590 ICRR Date: 10/01/2008 ICRR Type: Core ICRR Lending Instrument: SIL Borrower: REPUBLIC OF INDIA Original Total Commitment: USD516.0M Disbursed Amount: USD403.93M

Environmental Category: B Implementing Agencies: National Highways Authority of India Co financiers and Other External Partners: None B. Key Dates

Process Date Process Original Date Revised/Actual Date(s) Concept Review: 07/21/1999 Effectiveness: 10/02/2000 10/02/2000 Appraisal: 01/31/2000 Restructuring(s): 01/08/2007 Approval: 06/08/2000 Mid-term Review: 11/15/02 11/29/2002 Closing: 06/30/2006 12/31/2007 C. Ratings Summary C.1 Performance Rating by ICRR Outcomes: Moderately Satisfactory Risk to Development Outcome: Substantial Bank Performance: Moderately Satisfactory Borrower Performance: Moderately Unsatisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICRR) Bank Ratings Borrower Ratings

Quality at Entry: Moderately Satisfactory

Government: Moderately Satisfactory

Quality of Supervision: Moderately Satisfactory

Implementing Agency/Agencies:

Moderately Unsatisfactory

Overall Bank Performance:

Moderately Satisfactory

Overall Borrower Performance:

Moderately Unsatisfactory

C.3 Quality at Entry and Implementation Performance Indicators

Implementation Performance Indicators QAG Assessments (if

any) Rating

Potential Problem Project at any time (Yes/No): No Quality at Entry (QEA): Satisfactory

Problem Project at any time (Yes/No): Yes Quality of Supervision

(QSA): Moderately Satisfactory

DO rating before Closing/Inactive status: Moderately Satisfactory

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D. Sector and Theme Codes Original Actual

Sector Code (as % of total Bank financing) Central government administration 3 3 Roads and highways 97 97

Theme Code (Primary/Secondary) Access to urban services and housing Secondary Secondary Other urban development Primary Secondary Rural services and infrastructure Primary Primary Social safety nets Secondary Secondary E. Bank Staff

Positions At ICRR At Approval Vice President: Isabel M. Guerrero Mieko Nishimizu Country Director: Rachid Benmessaoud (Acting) Edwin R. Lim Sector Manager: Michel Audigé Jonathan S. Kamkwalala Project Team Leader: Rajesh Rohatgi Christopher J. Hoban ICRR Team Leader: Tawia Addo-Ashong ICRR Primary Author: J. Matthew Mitchell (Consultant) F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) 1. To reduce transport constraints on economic activity and reduce transport costs. 2. To improve institutional capabilities to manage road programs, assets and service. Revised Project Development Objectives (as approved by original approving authority): The PDOs were not revised. (a) PDO Indicator(s)

Indicator Baseline Value Original Target Values

(from approval documents)

Formally Revised Target

Values

Actual Value Achieved at

Completion or Target Years

For Objective 1: Reduce transport constraints on economic activity and reduce transport costs. Indicator 1 : Travel time on project corridor from Delhi to Kolkata Value quantitative or Qualitative)

About 5 days for trucks

Reduced to 15 % on project roads by end of project

About 4 days for trucks

About 3 days for trucks

Date achieved 11/29/02 06/30/06 06/30/06 12/31/07 Comments (incl. % achievement)

The project surpassed the target, reducing travel time by an additional day.

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Indicator Baseline Value Original Target Values

(from approval documents)

Formally Revised Target

Values

Actual Value Achieved at

Completion or Target Years

Indicator 2 : Vehicle operating cost on project roads Value quantitative or Qualitative)

Rs. 11.00 per truck km

Vehicle operating costs reduced by 10 %.

Rs. 9.90 per truck km Rs 9.1 per truck km

Date achieved 11/29/02 06/30/06 06/30/06 12/31/07 Comments (incl. % achievement)

The actual cost per truck km. project surpassed the target, reducing vehicle operating costs by 17 percent of the baseline figure, instead of by 11 percent.

For Objective 2: Improve institutional capabilities to manage road programs, assets and services. Indicator 3 : Reduction in the share of the core road network in poor condition. Value quantitative or Qualitative)

40%

20 % NA NA

Date achieved 05/12/00 06/30/06 NA NA Comments (incl. % achievement)

During the restructuring of the project, the Bank and the Borrower agreed to replace this indicator with Indicator No. 5 below.

Indicator 4 : Percentage of contracts under implementation that are delayed Value quantitative or Qualitative)

21% None 10 % 49%

Date achieved 10/31/06 NA 12/31/07 12/31/07 Comments (incl. % achievement)

Target was not achieved because 93 contracts (out of about 188) that NHAI was supervising experienced delays, compared to their original completion schedule.

Indicator 5 : The percentage of NHAI core road network (Golden Quadrilateral, the North/South Corridor and the East/West Corridor) under maintenance contracts

Value quantitative or Qualitative)

30% None 45% 55%

Date achieved 10/31/06 Not Applicable 12/31/07 12/31/ 07 Comments (incl. % achievement)

The project surpassed its target.

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target

Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : National Highways widened to four lanes under the project Value (quantitative or Qualitative)

None 475 km. None 458 km.

Date achieved Not applicable 06/30/06 Not applicable 12/31/2007 Comments (incl. % achievement)

The project achieved 96 percent of its target.

iv

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target

Values

Actual Value Achieved at

Completion or Target Years

Indicator 2 : Corridor Management Units (CMUs) established Value (quantitative or Qualitative)

None 2 NA 9

Date achieved Not applicable 06/30/06 NA 12/31/07 Comments (incl. % achievement)

The project exceeded the target significantly, establishing more than double the number of corridor maintenance units planned.

Indicator 3 : Pilot maintenance contracts awarded and results evaluated Value (quantitative or Qualitative)

None 3 Not applicable 1

Date achieved Not applicable 06/30/06 NA 12/31/07 Comments (incl. % achievement)

NHAI awarded one such long–term performance-based contract due to change in GoI’s policy.

G. Ratings of Project Performance in ISRs

No. Date ISR Archived DO IP Actual Disbursements

(USD millions) 1 08/02/2000 Satisfactory Satisfactory 0.00 2 02/09/2001 Satisfactory Satisfactory 30.16 3 08/08/2001 Satisfactory Satisfactory 43.94 4 02/12/2002 Satisfactory Satisfactory 59.03 5 08/22/2002 Satisfactory Satisfactory 76.41 6 01/29/2003 Satisfactory Satisfactory 91.09 7 08/28/2003 Satisfactory Satisfactory 126.24 8 02/27/2004 Satisfactory Satisfactory 141.69 9 08/31/2004 Satisfactory Satisfactory 193.83

10 02/25/2005 Moderately Satisfactory Moderately Satisfactory 237.56 11 08/26/2005 Moderately Satisfactory Moderately Satisfactory 318.53 12 03/01/2006 Moderately Satisfactory Moderately Satisfactory 337.21 13 10/31/2006 Moderately Satisfactory Moderately Satisfactory 391.02 14 05/14/2007 Moderately Satisfactory Moderately Unsatisfactory 399.58 15 09/24/2007 Moderately Satisfactory Moderately Unsatisfactory 402.80

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H. Restructuring (if any)

ISR Ratings at Restructuring Restructuring

Date(s)

Board Approved PDO

Change DO IP

Amount Disbursed at

Restructuring in USD millions

Reason for Restructuring & Key Changes Made

01/08/2007 MS MU 391.48

(a) Savings in the costs of civil works for the Highway Upgrading Component. (b) Changes in conditions surrounding the implementation of the Corridor Management and Road Safety Works Component due to GOI’s decision to widen GQ to six lanes. (c) Need to strengthen the result monitoring framework.

I. Disbursement Profile

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1. Project Context, Development Objectives and Design

1.1 Context at Appraisal Country/sector background When the Bank appraised the Third National Highway Project (TNHP) in January 2000, India’s per capita gross national product was about US$440 dollars. Nearly 35 percent of the country’s nearly one billion people were living below the national poverty line. Prospects for expanding economic growth were strong, but inadequate transport infrastructure was constraining expansion.

India’s road transport system depended heavily on a small number of congested, poorly maintained, two-lane highways. About 1.6 percent of national road system was carrying over 40 percent of total road traffic1. The highway network had deteriorated substantially due to the heavy traffic load and inadequate maintenance, with the budget meeting only about 40 percent of the maintenance needs. Transport costs, travel delays and accidents were high. The resulting economic loss was about US$3-4 billion annually based on higher vehicle operating costs alone. The Government of India had established an institutional framework and investment program to accelerate highway development. It had created the National Highway Authority of India (NHAI) in 1988 to consolidate responsibility for national highway (NH) development in the country, which had previously been the responsibility of the Ministry of Surface Transport with delegated implementation to the public works departments of the India’s states. The Government also had established the National Highway Development Program (NHDP) to accelerate expansion and improvement of the highway system over a ten-year period, beginning in 2000. NHDP consisted of the upgrading, from two lanes, to four or six lanes, of about 14,000 km of national highways. It included highways connecting Delhi, Mumbai, Chennai and Kolkata, known as the Golden Quadrilateral (GQ), and the North-South (N-S), East-West (E-W) corridors connecting, respectively, Srinagar to Kanyakumari, and Silchar to Porbandar. The Bank began its support of NHDP with TNHP. It later approved three complementary projects, all with similar objectives, during the period 2001-2004. TNHP and the Grand Trunk Road Improvement Project (GTRIP) have financed the upgrading of stretches of about 475 km and 420 km respectively, along the northern arm of GQ National Highway 2 (NH2) corridor from Agra to Barwa Adda. The Allahabad Bypass Project (ABP) is supporting new construction of a bypass of about 87 km for Allahabad town. The Lucknow Muzaffarpur National Highway Project (LMNHP) is financing the upgrading to four lanes of about 480 km along E-W corridor (NH28).

1 India’s road system spanned nearly 3.3 million kilometers (km) but of that total, the national highways accounted for

52, 000 km.

2

Country Assistance Strategy (CAS) TNHP supported the Bank’s Country Strategy (CAS) for India (February 1999). A key objective of the CAS was to remove infrastructure bottlenecks to economic growth and reduce road transport costs through: (a) improved funding for road investment and maintenance; (b) better institutional and financial performance in the management of the road sector; and (c) an increased role for the private sector in all aspects of road development – engineering, construction, operations, maintenance, and financing. Key Issues and Strategic Choices In support of the CAS objective, TNHP addressed the issues constraining national highway development. First was the deterioration of highway capacity and inadequate funding for the upgrading and maintenance of road assets. Also of concern were outdated highway construction technologies and capacity constraints in India’s private road construction industry. The third was NHAI’s lack of strategic planning and focus on meeting road user needs. The project’s design incorporated several strategic choices to resolve these issues including the provision of support to improve a priority section of NH2 and assistance to NHAI in improving its overall management capability in road construction and maintenance. 1.2 Original Project Development Objectives (PDO) and Key Indicators

Objective Indicators (End of Project) Physical Objective: reduce transport constraints on economic activity and reduce transport costs.

• 15 percent reduction of travel time • 10 percent reduction of vehicle operating

costs Institutional Objective: improve the institutional capabilities (of NHAI) to manage road programs, assets and services across the entire network for which NHAI is responsible.

No more than 20 percent of NHAI’s core network in poor condition compared to a baseline of about 40 percent at the time of project appraisal.

1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification The Bank did not revise the project’s development objectives. However, as part of project restructuring and a reallocation of loan proceeds, the outcome indicators evaluating the achievement of the project’s institutional objective were revised. These indicators were: (i) an increase in the share of NHAI’s core network2 under maintenance contracts from a baseline of 30 percent in October 2006 to 45 percent; and (ii) a decrease in the number of delayed contracts for road expansion/construction from a baseline value of 21 percent of all such contracts in October 2006 to not more than 10 percent by the end of project.

2 Defined as the GQ plus the East/West and North South Corridors, totaling about 13, 146 km.

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1.4 Main Beneficiaries The project’s primary beneficiaries were users of national highways who would gain from reduced travel time, transport costs, traffic separation in towns and improved pavement quality. Secondary beneficiaries were roadside communities and businesses as well as the cities, towns and rural areas in the states of Uttar Pradesh, Bihar and Jharkhand.3

1.5 Original Components (as approved)

Component Description Cost (US$ million)

Highway Upgrading

Civil works for the widening and strengthening of about 475 km. of National Highway No. 2 (NH2), from two lanes to four-six lanes divided carriageway and service roads where required.

610.80

Corridor Management and Road Safety Works

Pilot contracting of management and maintenance to the private sector along with the creation of two Corridor Management Units (CMUs) and minor road improvements to reduce traffic delays and accidents.

24.00

Institutional Strengthening and Training

Studies and technical assistance for the capacity-building of NHAI, including a GIS-based road information system (RIS); corridor management units; proposals for minor road works to improve travel conditions; a road safety policy; and staff training/development.

10.00

1.6 Revised Components Corridor Management and Safety Works Component. A reallocation of funds from this component was necessary due to a change in the Government’s program for upgrading a highway stretch designated for a pilot operations and maintenance (O&M) contract. While the bidding process for an O&M contract for a four-lane highway stretch was in progress, the Government decided to expand the specific highway stretch to six lanes instead of four. This decision changed the bid specifications, resulting in cancellation of the bids. NHAI selected another highway stretch for the pilot O&M contract. However, this change occurred late in the project’s implementation and NHAI decided to fund the contract with its own resources. The Bank and NHAI agreed to reallocate the remaining US$20 million to other components. Institutional Strengthening and Training Component. The Bank and NHAI agreed to conduct the planned study of India’s construction industry, initially planned under TNHP, as part of the Bank’s sector work program. As a result, the Bank and NHAI agreed to cancel the funds originally allocated for the study.

3 Jharkhand, the 28th State of India came into existence on November 15, 2000 (post project appraisal)

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1.7 Other Significant Changes Schedule. NHAI requested an extension of 18 months due to delays in the completion of civil works. The Bank initially extended TNHP’s loan closing date for four months, pending satisfactory completion of a Financial Management Action Plan (FMP). Based on satisfactory progress with the FMP, the Bank agreed to extend the closing date an additional 14 months. Funding Allocations/Cancellations. The initial loan amount was US$516 million. At the request of the Borrower, the Bank cancelled US$25.16 million and US$83.05 million in January 2007 and April 2008 respectively. In May 2008, the Bank cancelled the balance of US$3.85 million that remained at the end of the four-month grace period following loan closure.

2. Key Factors Affecting Implementation and Outcomes

Project Preparation, Design and Quality at Entry Project Preparation The project’s preparatory work was substantial. In particular, the project’s preparation benefited from the 1996 India Infrastructure Report, which recommended an ambitious program for upgrading India’s arterial road network from two to four lanes. Detailed feasibility studies identified, as a priority, the upgrading of nearly 1,000 km of NH2. There was considerable background work on institutional strengthening, including a PHRD grant to help NHAI identify institutional development needs. All major construction packages were ready for bid invitation by the time of project negotiations. A social safeguard assessment with site readiness was a precondition for contract award. The project’s preparation also included a working group to evaluate industry constraints that could adversely affect the highway sector and the project. Adequacy of the Participatory Process The participatory process established state-level project coordinating committees in Bihar and Uttar Pradesh. TNHP also formed an advisory group of external stakeholders to periodically to review the overall highway development program and the project’s strategy. However, the participatory process was not fully satisfactory because it did not hold sufficient public consultations on the detailed design work. This deficiency contributed to design inconsistencies, disputes and delays. Project Design TNHP was the first Bank-financed project with NHAI as the implementing agency. Overall implementation arrangements were satisfactory with the planned technical assistance to NHAI, adequate functioning of coordination arrangements with the states involved, and consultations with key stakeholders. The project’s design focused on incorporating the major lesson learned in past projects, which was that delays in the implementation of road projects are costly in India. To avoid delays, the project’s design incorporated: (i) technical assistance to build NHAI’s capacity

5

for project management and with engineering design by experts with international experience; (ii) a comprehensive environmental management plan (EMP) and Resettlement and Rehabilitation Action Plan (RAP); and (iii) a stakeholder workshop with representatives from the construction industry. Risk Assessment and Mitigation Measures The PAD cites the overall risk rating for TNHP as moderate. Most risks identified were evaluated as moderate. The exceptions were the risk of delay in site readiness, rated substantial, and inadequate funding, rated negligible. The Bank underestimated the risks of unsatisfactory contractor/consultant performance and inadequate cooperation, rating them as moderate and not substantial. Although the risk mitigation measures outlined were adequate, it appears that in some cases the Bank did not take sufficient actions to ensure adherence. Overall Quality at Entry The Quality Assessment Group (QAG) prepared a Quality-at-Entry Assessment (QAE) for the project, and rated it satisfactory. The cited strengths were a suitable fit with CAS objectives; substantial attention, during project preparation, to social safeguards; and timely completion of civil works packages. The weaknesses were the lack of measurable, well-defined results indicators and insufficient focus on coordinating the technical assistance and training elements in building NHAI’s capacity.

2.2 Implementation The project’s implementation received mixed ratings. Progress was rated as satisfactory during the first four years. But the rating declined to moderately satisfactory rating for two years, and the project closed with a moderately unsatisfactory implementation rating. The following sections outline the key factors underlying the final performance rating. Key Factors that Affected Project Implementation (a) Factors Contributing to the Project’s Success The project benefited from dedicated NHAI directors in the Project Implementation Units (PIUs). Interviews with selected directors, during ICRR preparation, showed a high level of professionalism, interest in the project, and appreciation of the supervision team’s technical assistance. The ICRR has incorporated some observations of these directors in the section on lessons learned. The keen attention of Bank staff to safeguards helped to improve compliance performance. Project files indicate that the Bank raised compliance issues at the highest level of NHAI, even proposing delays in some payments to contractors and consultants if Environmental Officers were absent from a project site.

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(b) Factors contributing to the Project’s Implementation Problems The project’s main problems were delays in the implementation of physical and institutional components. These problems resulted from factors within the control of NHAI as well as changes in sector developments outside its control. The factors within NHAI’s control were poor design and evaluation procedures, protracted pre-construction activities, and inadequate attention to the institutional strengthening component, and the routinely appealing decisions on disputes with contractors. Factors outside of NHAI’s control included NHAI’s increased workload due to expanded responsibility for development of the national highway system, constraints in India’s construction industry, and law and order problems in certain areas of the project’s operations.

Poor design and Evaluation Procedures. A design and construction review identified significant deficiencies in design and NHAI’s capabilities/processes for design review. The main problems were inadequate coordination between NHAI and its consultants working on the detailed design for each highway upgrading package and the lack of public consultation on detailed design reports, producing deficient designs. This led to the lack of consistency in specifications across the different carriageway stretches and cost variations.

Protracted Preconstruction Activities. The coordination between NHAI and the participating state entities in key activities such as tree cutting and land acquisition was often ineffective. NHAI lacked in-house capacity to manage these activities. This led to the shifting of utilities and land acquisition for highway widening taking much longer than anticipated. MOSRTH staff have suggested that the Bank’s resettlement policies were too difficult to implement in the Indian context and may have caused delays.

Insufficient Attention to Institutional Strengthening Activities. Project documents show that NHAI set up a Transition Management Team to coordinate institutional studies and training in support of the organization’s institutional objective. It is not clear how active this team was during TNHP’s implementation. The project team suggested that NHAI management tended to emphasize ‘building kilometers’ rather than developing the institutional capabilities. Frequent Appeals of Decisions on Disputes. In disputes with contractors, NHAI regularly disagreed with the decisions of the Dispute Resolution Board (DRB) when they should have done so selectively, in cases unfair decisions. Appeals to higher authorities contributed to delays in contract implementation. NHAI’s Increased Workload due to Expanded Responsibility. The near doubling of NHAI’s responsibility for national highway development, from 14,000 to 27,000 km. between 2000 and 2008 vastly increased the organization’s workload. Staffing constraints limited the amount of attention that NHAI staff could give to the project.

Constraints in India’s Construction Industry. Key industry constraints, included shortages and high prices of construction materials, a lack of skilled manpower in consulting and contracting, and slow mobilization of the work by some contractors.

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Law and Order Difficulties in Some Project Areas. There was deterioration in the law and order in the states of Bihar and Jharkhand during project implementation. These included disruption of work activities, violent attacks and kidnappings, exacerbating the difficulties in retaining contractor staff on site. Contribution of the Mid-Term Review (MTR) An MTR workshop took place, with the participation of MOSRTH, the World Bank, consultants, contractors and other stakeholders. The key contributions of this review were validation of the project’s objectives in terms of sector priorities and modification of the monitoring framework for more measurable indicators.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization Design The design of the project’s M&E framework evolved during the project’s implementation period, increasing the number of measurable indicators. The outcome indicators for the physical objective of removing transport constraints --reduced travel time and lower vehicle operating costs –were standard for transport projects, designating the users of national highways the primary beneficiaries. 4 The sole measurable outcome indicator, in the Project Appraisal Document (PAD), to measure the institutional objective of NHAI’s improved capability to manage their assets across their network, was the decline in the share of the core network in poor condition. This indicator was not particularly meaningful as most of NHAI’s network was under construction during project’s implementation period. The PAD's M&E framework did not capture other aspects of NHAI’s institutional capacity, such as management of pre-construction activities and construction contracts. During project implementation, the Bank and NHAI developed more appropriate outcome indicators for institutional development – a reduction in the share of NHAI’s delayed contracts and the share of its core network covered by maintenance contracts. The M&E framework in the PAD had measurable output indicators for the highway upgrading and corridor management and safety works components. For highway upgrading the output was the completed upgrading of 475 km of highway. Other new indicators were: resettlement of about 13,000 families and planting of at least 190,000 trees. For corridor management and safety works, there were two quantitative indicators -- the establishment of two corridor management units and the award of at least three pilot corridor management and maintenance contracts. However, there were no quantitative output indicators for the multifaceted institutional strengthening component. During the MTR, the Bank increased the number of measurable output indicators. The most important of these were on the institutional side, including the training of

4 The project did not have any direct outcome indicators for the secondary beneficiaries –roadside communities that

might benefit from the highway, as the project did not directly support any higher-level income-generating or poverty reduction objectives.

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90 percent of NHAI’s officers by the end of the project and the convening of two stakeholder meetings each year. Implementation and Utilization Annex 2 reviews the output indicators and the extent to which the project achieved planned targets. The ICRR has reviewed the output indicators that appeared in the PAD rather than those of the MTR for three reasons. First, the Bank did not consistently monitor the additional output indicators of the MTR. Second, the final supervision report reviewing these indicators reverts to those in the PAD. Third, it is not clear from the project files that the Borrower was aware of any changes in output indicators. During the project’s implementation, the Bank changed the format for reports on project implementation status, tracking outcome indicators and related intermediate outcome indicators but not output indicators. Three of the output indicators were changed into intermediate outcome indicators—completed widening of highway stretches to four lanes, the establishment of CMUs and the number of pilot maintenance contracts awarded. The team’s attention to meeting reporting requirements on the indicators in the M&E framework varied during the project’s implementation, improving after the MTR. However, their utilization as a meaningful input to decision-making is not evident in the supervision reports. 2.4 Safeguard and Fiduciary Compliance Safeguards The Bank rated safeguards compliance as moderately satisfactory at project closing. The project’s major achievement was the establishment the Environmental and Social Development Unit (ESDU), to handle land acquisition, resettlement, rehabilitation and environmental issues. However, the ESDU remains understaffed. It has five staff working at ESDU handling the entire NHDP with only one staff member specifically responsible for environmental aspects of highway projects. By the end of 2005, about 98 percent of the project’s resettlement and rehabilitation activities were complete. The remaining two percent consisted of households that had requested higher compensation from the courts, claimants whose land ownership was in dispute, and shopkeepers entitled to compensation for removal of a market area. There were occasional lapses in the implementation of the Environmental Management Plan (EMP). These concerned deficiencies in the management of construction campsites, disposal of some industrial wastes, etc. Although TNHP is closed, NHAI still must comply with the agreed EMPs and the RAP. The Bank’s environmental and social safeguards team will continue to provide support to NHAI and monitor progress as part of the ongoing engagement with NHAI in the ongoing GQ projects.

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Fiduciary Aspects Financial Management. At project closure, NHAI’s financial management was rated moderately satisfactory. The main compliance issues during implementation were delays in submitting audit reports, periodic inadequate financial controls, and the lack of sufficient permanent staff. These were resolved when NHAI took actions including the appointment of a professional accountant to compile the audit report, the updating of the Accounting Manual for the Project Implementation Units (PIUs), regular training of PIU staff, appointment of internal auditors and the procurement of project financial management system (PFMS). Procurement. The procurement of works, goods and equipment, consulting services and training component took place in accordance with the Bank guidelines. For civil works, International Competitive Bidding was the preferred form of procurement while for most of the consulting services Quality and Cost Based Selection criteria applied Legal Covenants. During most of the project’s implementation, NHAI complied with the covenants in the project’s legal agreements. However, because of the delay in completion of the road information system (RIS), for a period of time, NHAI did not comply fully with the requirement for submission of an annual report on the condition of NHAI’s assets and projected user costs. However, the installation of the RIS resolved this issue. 2.5 Post-completion Operation/Next Phase At loan closing, TNHP had completed six out of eight highway upgrading packages. The remaining works involve short stretches scheduled for upgrading, but delayed due to difficulties in land acquisition. The conditions causing the delays have not improved and the work is likely to continue into 2009. For almost all upgraded highway stretches, NHAI has procured private sector services for O&M. These services consist of routine maintenance, safety enhancements and provision of incident support services, including a highway patrol, a crane and an ambulance. Questions as to the effectiveness of these services remain and will be monitored. The addition of two lanes has reduced traffic congestion, allowing increased travel speeds. However, the increased speeds remain a concern due to high accident rates and are the subject of ongoing discussion.

3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation Based on the most recent CAS (September 14, 2004), the project’s objectives are still relevant. The CAS priorities for infrastructure development, include roads and transport; a focus on innovative public-private partnerships (PPPs); and attention to India’s poorest states. TNHP addressed all of these priorities.

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3.2 Achievement of Project Development Objectives Objective 1: Reduce transport constraints on economic activity and reduce transport costs The project met this objective through the project’s component for highway upgrading. The upgrading of 458 km of highway from two to four lanes has reduced traffic congestion. Increased speeds due to the reduced traffic congestion led to travel time for trucks along between Delhi and Kolkata declining from a baseline of five days to three days, compared to the target reduction of four days. The related cost of truck transport has decreased from a baseline of Rs.11 per truck-km to Rs.9.1 per truck-km, a slightly lower cost than the planned target of Rs.9.9 per truck-km., thus exceeding the two outcome indicators. Objective 2: Improve institutional capabilities to manage road programs, assets and service The project’s components for corridor management and institutional strengthening supported the achievement of this objective. However the causal linkages between the outputs/intermediate outcomes and the final outcome indicators are less explicit than for the physical objective. The project established nine CMUs, surpassing the intermediate outcome target of two CMUs but executed only one pilot O&M contract compared to an intermediate outcome indicator of three. Nevertheless, the project surpassed its final outcome indicator for improved institutional capability in O&M contracting, with 55 percent of NHAI’s core highway network under O&M contracts by the end of the project compared to a target of 45 percent. With regards to the second outcome indicator – the reduced share of delayed contracts in NHAI’s total number of upgrading/construction contracts, the share of delayed contracts increased substantially to 49 percent from a baseline of 21 percent to instead of the decreased target of 10 percent.

3.3 Efficiency The PAD estimated the internal economic rate of return (IERR) at 31 percent, well above the cost of capital in India. A post-construction cost/benefit analysis resulted in IERRs for investment in highway upgrading to four lanes ranging from about 28 percent to 40 percent for each of the eight highway stretches included in the project. The average IERR for all highway stretches combined, was about 32 percent, slightly higher than the appraisal estimate. Annex 3 outlines the key assumptions in the analysis. 3.4 Justification of Overall Outcome Rating Rating: Moderately Satisfactory The evaluation of project takes account of three key elements —relevance, efficiency and achievement of objectives. Sections 3.1 and 3.3, respectively, show that the project is still relevant to the CAS and has met planned efficiency criteria for a satisfactory outcome. However, while the project slightly surpassed the target indicators for its physical objective, TNHP’s performance in meeting its institutional objective was mixed with moderate shortcomings, overall. While it met the target indicator for the share of the core highway network

11

under maintenance contracts, the quality of this maintenance work is uncertain. The project also fell short of the other target indicator for the institutional objective. The share of delayed contracts in NHAI’s total contracts more than doubled instead of declining by about half as planned. The ICRR’s assessment of outcome has attached greater weight to the institutional objective for two reasons. First it concerns the operation and preservation of the entire 14,000 km. network under NHAI’s supervision, whereas the physical objective affects about 475 km. of road. Second, a major focus of the project was to reduce delays in road development given its importance to the Indian economy. Therefore, the ICRR has rated the overall project outcome as moderately satisfactory. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development The overall impact of implementation of RAP has been positive. In many cases, it has improved the living standards of the people affected. At the minimum it has ensured the restoration of living standards for all the affected populations with a few exceptions where RAP implementation had not been completed at project closing. The positive impacts include the following: • Improved Livelihoods and Income Levels. The average household income has

increased marginally among all the households (7%). The number of income earning members in households has also risen. More than 50% of the affected people benefited from various training programs to improve their livelihood.

• Quality of Life. An evaluation report has shown improvement in the post-project quality of life among the project-affected people. It indicated that the resettlement program has improved access to drinking water, markets, health centers, education and entertainment facilities and notes improvements to sanitary conditions.

• Economic Resettlement. The project compensated 203 commercial squatters for their loss through the provision of a new market place. These squatters now have become titleholders. This improved legal status will enable them to access institutional credit and develop more organized business activities.

(b) Institutional Change/Strengthening The project had a major impact on NHAI’s initial development. NHAI has gained in experience in procurement and management of large civil works and consultancy contracts. The technical assistance and studies for institutional strengthening have caused NHAI to revisit its organizational structure in view of the expanded mandate, considering various options for PPPs. NHAI now has a GIS-based road information system, and sett a dedicated unit for handling the social and environment safeguards aspects of highway development projects. Although NHAI did not use the funds for the corridor management component, the Authority is well aware of the need to maintain the physical assets and has benefited from technical assistance in corridor

12

management and maintenance that the project has provided. NHAI never implemented the training plan prepared under the project. Bank supervision reports have indicated that NHAI has conducted training with its own funds on an ad-hoc basis but have not provided details for comparison with the training plan. However its expanded mandate and capacity constraints may continue to hamper its highway development programs. (c) Other Unintended Outcomes and Impacts (positive or negative) 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops Not applicable.

4. Assessment of Risk to Development Outcome Rating: Substantial The evaluation of risk to development outcome has taken into account the sustainability of the investments in highway upgrading and the institutional development of NHAI as envisioned at project appraisal. NHAI has set up more CMUs than planned. The Authority also has more O&M contracts with the private sector than envisioned. However, the award of these contracts takes place on an ad-hoc basis in the absence of a comprehensive maintenance strategy. Also NHAI is understaffed, especially for managing pre- construction activities. Because of the increasing volume of PPP contracts in its portfolio, NHAI needs a comprehensive training program aligned to this development, most notably in the areas of financial management, risk analysis, toll operations and maintenance. Given the uncertainties surrounding the maintenance program for investments and the future role of NHAI, the ICRR has rated the risk to development outcome is rated as substantial.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory The Bank’s performance at preparation stage with regards to technical, economic and financial analysis, as well as the design of safeguards was satisfactory. The project’s design incorporated lessons learned in previous projects. However, the institutional component, although small in financial terms in comparison to the investment in highway upgrading, had a greater breadth of impact, affecting the entire NHAI institution and highway network. Although the PAD contained an action plan there were no explicit linkages to a phased development plan for NHAI and the various possibilities for private/public partnerships that the institutional study during project preparation had identified. In particular, the implementation framework did not give sufficient attention to monitoring the staffing and training needs in order for NHAI to fulfill mandate. It also provided no measurable output indicators for technical assistance and training. Furthermore, the two-year timeline in the PAD’s action plan for NHAI’s transformation was unrealistic. Therefore the ICRR has rated quality at entry as moderately satisfactory.

13

(b) Quality of Supervision Rating: Moderately Satisfactory The Bank supervised the project with a multi-disciplinary team that had an adequate skill mix (Annex 4). The team successfully resolved financial management issues. It diligently monitored safeguards. The project team also showed flexibility in restructuring the project, responding to NHAI’s changing needs. However there was not always pro-active follow-up on the technical side and the team did not give enough priority attention to the project’s institutional development components. The Seventh Quality of Supervision Assessment (QSA7) rated the project’s supervision as moderately satisfactory. However it rated the candor and quality of performance reporting as moderately unsatisfactory. The ICRR review also found deficiencies and inconsistencies in monitoring and evaluation. Taking account of strengths and shortcomings, the ICRR has rated overall Bank performance in project supervision as moderately satisfactory. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory Given overall ratings of moderately satisfactory for both ensuring quality at entry and supervision, the ICRR has rated overall Bank performance as moderately satisfactory.

5.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory The Government’s main contribution to the project was the development of a sector framework supportive of NHAI’s development and the encouragement of the private sector to participate in the development of the national highway system. Prior to the project, the Cabinet approved the implementation of the NHDP by NHAI. It also approved the Authority’s restructuring, providing it with substantial financial and administrative powers. However, the Government could have done more to improve inter-agency co-ordination to prevent project delays and support the institutional development of NHAI. Given these shortcomings, the ICRR has rated Government performance as moderately satisfactory. (b) Implementing Agency or Agencies Performance Rating: Moderately Unsatisfactory NHAI demonstrated a strong initial commitment to the project during its preparation. The Authority successfully mobilized consultants for feasibility and engineering studies as well as preliminary studies on institutional development. NHAI also prepared all of the construction packages and bid documents for the highway-upgrading component. During project

14

implementation, NHAI showed improvement in financial management and safeguards performance. However, NHAI did not ensure proper coordination of the design consultants, nor the various state-led pre-construction activities. The Authority also could have made a greater effort to improve the quality of public consultations in the design phase. This would have helped ensure the timely completion of contracts for highway upgrading, some of which were still incomplete at project closure. NHAI also gave relatively little attention to the implementation and timely completion of the project’s institutional development components and to the M&E framework. With regards to the maintenance contracts, there is little evidence of their effectiveness. The ICRR has rated overall performance moderately unsatisfactory because the shortcomings in performance during project implementation were considered significant. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Unsatisfactory The ICRR ratings for the Borrower are mixed, with a moderately satisfactory government performance and a moderately unsatisfactory performance of the implementing agency. Although the project’s overall outcome was moderately satisfactory, the ICRR has rated overall Borrower performance as moderately unsatisfactory, due the fact that weight of responsibility for delivery and outcomes rested on NHAI.

6. Lessons Learned Project-Specific Lessons Framework for Institutional Change. The absence of measurable indicators for the institutional development of an implementing agency focused on more on the physical works can reduce the visibility of key technical assistance and training required to sustain the physical assets. While the institutional development of NHAI was likely to be dynamic requiring some flexibility of approach, a more detailed monitoring framework could have served as a focusing mechanism, which the Bank and NHAI could have fine-tuned in response to NHAI’s changing needs. State of the Construction Industry. Insufficient knowledge on the state of the construction industry (manpower, raw materials, machinery, etc.), can constrain the performance of a highway investment project even if its design and implementation framework are adequate. . Had the study of India’s construction industry taken place early in the project, as planned, it might have been possible to reduce factors outside the project that had an adverse impact on its performance (See Section 2). However, the draft study, after years of delay when it was part of the project, finally took place outside it but was not completed until about two months prior to the project’s closing date.

Coordination of Development Partners. The lack of coordination among development partners in can result in missed opportunities for meeting common objectives. Such coordination can not only avoid duplication of effort but increase leverage to manage and preserve physical assets and share ideas on how to improve the M&E framework. Both the Bank and ADB apparently

15

supported institutional strengthening of NHAI during the project’s implementation period but coordination of their efforts was not apparent in project supervision reports. Responsibility for Institutional Development. The assignment of responsibility for sector studies and technical assistance to the implementing agency instead of the sector ministry can reduce the attention to a highway project’s broader institutional and sector development aspects. NHAI was primarily concerned with implementing the Ministry’s policy by building roads. It is not clear that the organization had the capability to concentrate on monitoring and evaluating the various institutional studies. Also, policy and planning in the roads sector are the responsibility of the ministry and the studies under the project were more in line with this mandate than that of NHAI. Human Resource Development. The lack of attention to human resource development in a period of rapid change in the highway sector can constrain project development implementation. The current shortage of qualified manpower is out of phase with the enormous demand of large infrastructure projects. The Government and industry need to create incentives and facilities for systematic training to increase the number of qualified road engineers, and technicians. There is also a need for competent environmental officers, an important career track not yet widely recognized in the road sector. Improvement needed in Project Preparation Activities. Problems with the preparation and quality of the detailed project reports (DPRs) led to delays and cost variations in the civil works contracts. NHAI will need to improve its internal design review process and increase public consultations with all stakeholders, including state authorities to ensure a smooth implementation process along project corridors. Coordination of NHAI’s Programs with the Affected States. The lack of smooth coordination of key preconstruction activities that fall under the responsibility of particular state authorities can substantially delay the execution of contracts of a highway authority operating on a national level, depending on state support. There is a need for better coordination and simpler implementation mechanisms, between NHAI and the state governments, to accelerate land acquisition, forestry clearance, tree cutting, utility relocation, etc. NHAI's Contract Management Practices. The lack of clear, consistent contract management practices, including a model for streamlining decision making, can lead to unnecessary delays in physical works. NHAI should examine its contract management practices and rationalize its internal processes to improve the framework for decision-making. Lessons of general applicability Leverage of Bank Assistance. In developing countries such as India, where there is an increased flow of private financial resources into highway development, the Bank’s contribution to the overall funding picture continues to diminish. This may reduce its leverage in achieving institutional change required to sustain the benefits of highway investments. Therefore, the Bank may need to give greater attention to demonstrating the importance of a sustainable framework in project design and implementation as well as its policy dialogue with the governments.

16

Resettlement Policy. Introducing the Bank’s resettlement compensation policy in a country that has a national policy which provides different levels of compensation, may introduce distortions that affected populations perceive as unfair. In designing resettlement policies, it would be prudent at the outset, to try and harmonize the policies of the Bank and the Borrower. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies No comments have been received from the Borrower, however their contribution to the ICRR has been included in its entirety in the Annex 7. (b) Co financiers Not applicable (c) Other partners and stakeholders Not applicable

17

Annex 1. Project Costs and Financing

(a) Project Cost by Component (in USD Million Equivalent) Components Appraisal

Estimate (USD

million)

Revised Estimate

(USD million)

Actual/Latest Estimate

(USD million)

Actual/Latest Estimate as

Percentage of Appraisal Estimate

Actual/Latest Estimate as

Percentage of Revised Estimate

Highway Upgrading (including civil works and tree planting)

526.74 579.10 534.60 101.5 92.3

Corridor Management and Road Safety Works

20.90 25.00 2.74 13.1 NA

Institutional Strengthening 9.20 10.00 0.64 6.9 6.4

Total Baseline Cost 556.84 614.10 537.98 96.6 87.6 Physical Contingencies 53.50 0.00 0.00 0.00 0.00 Price Contingencies 34.50 0.00 0.00 0.00 0.00 Total Project Costs 644.84 619.26 537.98 83.4 86.9 Front-end fee PPF 0.00 0.00 0.00 0.00 0.00 Front-end fee IBRD 5.16 5.16 5.16 100.0 NA Total Financing Required 650.00 619.26 543.14 83.6 87.7

(b) Financing Source of Funds Type of

Co-financing Appraisal Estimate

(USD million)

Revised Estimate

(USD million)

Actual/ Latest Estimate (USD million)

% of Appraisal Estimate

% of Revised Estimate

International Bank for Reconstruction and Development

516.00 490.84 403.93 78.3 82.3

Government of India

134.00 128.34 134.05 101 105.4

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Annex 2. Outputs by Component Components Target Indicators Actual Achievement Highway Upgrading

475 km of national highways widened to four lanes, including planting of trees (along full length); service roads (60 km) and satisfactory safety audit completed.

458 km widened to four lanes (as of end December 2007) or 96 percent of the target.

Two pilot Corridor Management Units established in NHAI and fully staffed and functional

NHAI established nine CMUs, during project implementation, exceeding the target.

Technical assistance for corridor management in place and functional.

Completed. The consultant prepared corridor management concept document, a model contract document, and pavement management system protocol.

Technical assistance for program of minor improvements in place and functional.

Completed. The consultant prepared report identifying locations for improvement and bid documents for minor improvement works.

At least 3 pilot maintenance contracts awarded and results evaluated.

NHAI could only award one such long-term performance based contract due to GOI decision to widen the entire Golden Quadrilateral corridor to six lanes. NHAI funded the contract with its own resources. The positive experience with the contract’s performance has resulted in NHAI’s consideration of similar contracts for the maintenance of the North /South and East /West corridors. They have begun the preparation of bidding documents for two more contracts.

Corridor Management and Road Safety Works

At least 30 hazardous locations identified and made safer through spot improvements.

Achieved. These locations were identified through the technical assistance for minor improvements, and improvements made through annual maintenance contracts.

Technical assistance for institutional strengthening in place and functioning.

Completed. It led to NHAI’s organizational restructuring proposal.

Training program developed. Training plan for NHAI prepared. Corporate strategy developed. The development of NHAI’s corporate strategy is ongoing, as

it continues to evaluate the most effective form of PPP to execute its mandate for highway development. The Government of India has approved a restructuring proposal.

Reporting of NHAI’s activities and performance established, functioning and to be reported annually.

Study completed.

Financial management strengthened and improved.

Achieved.

A well -functioning Management Information System in place and functioning.

Achieved.

A road condition and operational information system established and functioning.

The Road Information System (RIS) is functioning and information on road conditions is available on NHAI’s website.

A Road Safety Policy study completed. Achieved. A report defined road safety problems and reviewed the legal, financial, and institutional environment. It has led to a draft National Road Safety Policy, which is under consideration by the Government.

A construction industry study completed. Deleted from the project. The Bank prepared a draft study in 2007 as part of its sector work program for roads.

Institutional Strengthening & Training

NHAI and other staff trained in (a) Quality Management, (b) Environmental and Social management, and (c) Project monitoring and contract administration.

NHAI had been training staff but not according to the training plan that the project prepared.

19

Annex 3. Economic and Financial Analysis

Category Appraisal US$ million

ICRR US$ million

Economic Financial Economic Financial Benefits Reduced road user and maintenance costs 2,094 2,324 1394 1549 Costs Road construction, land acquisition and resettlement, utility relocation and future maintenance

408 453 431 478

Net Benefits 1,686 1,871 964 1071 Internal Rate of Return (IRR) 31 31 31.8 31.8

A. Assumptions

Category Appraisal ICRR General

Highway Lifespan --Asphalt --Cement

20 years 30 years

20 years 30 years

Scrap value at end of project life

20 % of costs 20 % of costs

Discount Rate for Calculating Net Present Value

12 % 12 %

Conversion factor from financial costs to economic costs

0.9 0.9

Road, vehicle, and traffic specifications Basis of road design Current levels of truck overloading Current levels of truck overloading are

assumed on the basis of DPR. Road condition Without project case: maintained

every five years but not improved for the evaluation period. With project case: Pavement strengthened every 10 years in addition to regular maintenance

Without project case: maintained every five years but not improved for the evaluation period. With project case: Functional overlay was scheduled in the 5th and 15th years, while structural overlay was scheduled in the 10th and 20th years after construction.

Impact of road congestion

Incorporated in the HDM-3 model. The PAD states that “No disruptive effect was assumed for road traffic during the years of project implementation, as by design the highway widening work will take place aside the existing right-of-way.”

Incorporated in the HDM-4 model. The ICRR states that “No disruptive effect was assumed for road traffic during the years of project implementation, as by design the highway widening work will take place aside the existing right-of-way.”

Base year traffic levels Most recent traffic counts at time of appraisal, verified through field inspection

Base year 1998 traffic is taken from previous DPRs whereas for 2008, from traffic counts conducted in 2008 for each package

Traffic growth rates Estimated for each road package based on estimates of growth in population and per capita income in the area served

Estimated for each package based on the compound average growth rate from 1998 to 2008 and adopted for this period. From 2008 onwards a suitable growth rate has been adopted.

20

Category Appraisal ICRR Income (total GDP) elasticities of traffic demand

Passenger vehicle traffic: 1.8-2.0 Freight vehicle traffic: 1.0-1.25

Trend growth method was used.

Generated traffic (for the first year after road completion)

Price elasticity: 0.2 Road user benefits: 50 % of those accruing to normal traffic

-

Costs Base cost estimation Bill of Quantities developed by

consultants for 475 km. of roads, for which preliminary design was completed. Included costs of construction, supervision, land acquisition, resettlement and utility relocation. Unit cost per km. of road: US$1.2 million (Included substantial road-widening and shoulder reconstruction).

Actual costs incurred during the implementation obtained from respective PIUs which includes costs of construction, supervision, land acquisition, resettlement and utility relocation. Unit cost per km. of road: US$1.7 million.

Maintenance costs Based on costs resulting from a Road Maintenance study

Based on the prevailing NHAI guidelines.

Benefits General Calculated using the HDM-3 model Calculated using the HDM-4 model Savings in road user costs

(1) Reduced vehicle operating costs (VOCs) calculated per vehicle type based on a Road User Cost Study of 1991 updated to 2000.

(2) Reduced passenger travel time based on per capita income of average passengers, by vehicle type.

(3) Reduced cargo travel time, with time value based on the Road User Cost Study cited above.

1. Reduced vehicle operating costs (VOCs) calculated per vehicle type based on a Road User Cost Study of 1991 updated to 2000 using HDM-4 Model.

2. Reduced passenger travel time based on per capita income of average passengers, by vehicle type using HDM-4 Model

3. Reduced cargo travel time, with time value based on the Road User Cost Study cited above using HDM-4 Model.

Savings in maintenance costs

Based on the prevailing NHAI guidelines.

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Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members

Name Title Unit Responsibility/

Specialty Lending A. K. Swaminathan Highway Engineer SASIN Highway Engineer Alberto Nogales Consultant SASIN Project Costs Alok Nath Bansal Transport Planner SASIN Traffic Analysis Anil Bhandari Principal Transport Specialist SASIN Task Team Leader (1997-1999) Anil H. Somani Sr. Environmental Specialist EASES Environnent Arnab Bandyopadhyay Consultant SASIN Implementation Arrangements Arun Mokashi Transport Specialist SASIN Institutional Reforms Christopher Hoban Principal Highway Engineer SASIN Task Team Leader (1999-2000) D. C. Mishra Procurement Specialist SARPS Ernesto Corrales Program Assistant SASIN Guang Zhe Chen Senior Economist SASIN Economic Analysis I.U.B. Reddy Social Development Specialist SASSD Social and Resettlement L. R. Kadiyali Consultant SASIN Highway Engineering Mridula Singh Rural Sociologist SASSD Social and Resettlement N. Raman Consultant SARPS Procurement N. S. Srinivas Team Assistant SASIN Reidar Kvam Senior Social Scientist SASSD Social and Resettlement Sangeeta Anand Team Assistant SASIN Sanjay Vani Sr. Financial Management Specialist SARFM Financial Management Sonia Kapoor Environmental Specialist SASEN Environment

Name Title Unit Responsibility/ Specialty

Supervision/ICRR A. K. Swaminathan Sr. Highway Engineer SASEI Task Team Leader (2000-2003) A. S. Harinath Environmental Specialist SASDI Alok Nath Bansal Senior Transport Planner SASDT Anil Bhandari Lead Specialist AFTTR Institutional Arnab Bandyopadhyay Sr. Transport. Engineer SASDT D. C. Mishra Senior Procurement Specialist SARPS Debabrata Chakraborti Sr. Procurement Specialist. SARPS Ernst-August Huning Consultant SASEI Institutional Specialist G. George Tharakan Lead Transport Specialist SASEI Task Team Leader (2006-2007) Gaurav D. Joshi Environmental Specialist SASDI Isabel Chatterton Financial Specialist SASEI J. Matthew Mitchell Consultant SASDT ICRR Preparation Juan Pablo Covarrubias Consultant SASEI Concrete Pavement Manmohan Singh Bajaj Sr. Procurement Specialist SARPS Mridula Singh Sr. Social Development Specialist SASDI N. Raman Consultant SARPS Procurement Nupur Gupta Transport Specialist SASEI Piers Antony Vickers Sr. Transport. Specialist SASEI Institutional

22

Name Title Unit Responsibility/ Specialty

Pratap Tvgssshrk Transport Specialist SASDT Priya Goel Sr. Financial Management Specialist SARFM Rajat Narula Sr. Financial Management Specialist SARFM Rajesh B. S. Dongol Program Assistant SASDO Rajesh Rohatgi Transport Specialist SASDT Task Team Leader (2007-2008) Ritu Sharma Program Assistant SASDO Sally L. Burningham Sr. Transport Specialist SASEI Sangeeta Anand Program Assistant SASEI Shiraz Tayabji Consultant SASEI Concrete Pavements Sonia Chand Sandhu Sr. Environmental Specialist SASDI Stein Lundebye Senior Transport Engineer SASEI Road Safety Sujit Das Senior Highway Engineer SASEI Task Team Leader (2003-2006) Sushil Kumar Bahl Sr. Procurement Specialist SARPS Tapas Paul Sr. Environmental Specialist SASDI Tawia Addo-Ashong Senior Transport Specialist SASDT ICRR Team Leader Venkata Rao Bayana Consultant SASDI Social Warren Waters Sr. Social Scientist SASES

(b) Staff Time and Cost

Staff Time and Cost (Bank Budget Only) Stage of Project Cycle No. of staff weeks USD Thousands

(including travel and consultant costs) Lending

FY00 97 0.00 FY01 1 0.87 Total: 98 0.87

Supervision/ICRR FY01 32 71.00 FY02 27 67.00 FY03 29 80.00 FY04 17 62.00 FY05 19 70.00 FY06 20 76.00 FY07 31 78.00 FY08 24 115.00 FY09 0 7.00 Total: 199 626.00

23

Annex 5. Beneficiary Survey Results (if any)

(Not applicable)

24

Annex 6. Stakeholder Workshop Report and Results (if any)

(Not applicable)

25

Annex 7. Summary of Borrower's ICRR and/or Comments on Draft ICRR

26

27

28

29

30

31

32

33

Annex 8. Comments of Co-Financiers and Other Partners/Stakeholders

(Not Applicable)

34

Annex 9. List of Supporting Documents Project Preparation and Appraisal WS Atkins International Limited, National Highways Authority of India, Organization and Development, Phase 2 Report, January 1996. Letter from Yogendra Narain, Chairman, NHAI to Mr. Bauer, on India: Proposed Third National Highway Project March 1996 Mission, June 5, 1996. India : Proposed Third National Highway Project, Preparation Mission, June-July 1996: Back-to-Office Report, August 26, 1996. India: National Highways Project: Social Impacts and Resettlement: Principles and Policy Framework, April 1998. Aide Memoire, Proposed Third National Highway Project, World Bank Preparation Mission, June 1 to 6, 1998. National Highways Authority of India, India: Third National Highway Project, Social Impacts and Resettlement: Principles and Policy Framework, October 1998. Project Concept Document for India, Third National Highway Project, May 2, 1999. Prime Minister’s Task Force on Infrastructure (India), Report on the Use of the Dedicated Cess Revenues for NHDP, July 1999. Institutional Strengthening of the National Highways Authority of India, Comments on a Discussion Paper, dated December 21, 1999 India: Third National Highway Project, Aide Memoire of the Appraisal Mission, February 2000. Workshop on Institutional Strengthening of NHAI, February 2000. Memorandum from V.K. Sinha, Chief Engineer, NHAI to A.K. Swaminathan, Highway Engineer, World Bank, regarding pre-qualification of contractors, May 1, 2000. Agreed Minutes of Negotiations between the Government of India and the International Bank for Reconstruction and Development Regarding the Proposed Third National Highway Project, May 1-5, 2000. Project Appraisal Document on a Loan to the Government of India for the Third National Highways Project, Report No. 20219, May 12, 2000. Fax on Extension of the Closing Date for the Japanese Grant Agreement from June 30, 2000 to December 31, 2001, dated May 25, 2000. India: Third National Highway Project: Summary of Discussion at the Meeting of the Executive Directors of the Bank and IDA, June 8, 2000. World Bank, Final Quality at Entry Assessment (QEA4) for TNHP, April 24, 2001.

35

Project Supervision Implementation Status Reports (ISRs) 2000 – 2007

Aide Memoires of Supervision Missions (by year and mission dates) 2000 -2007

Other Supervision Documents Letter from Alok Bansal, Senior Transport Planner, to Deepak Dasgupta, Chairman, National Highways Authority of India, Sub: Indian Road Construction Opportunities: Road show in Europe, Seminar in France, October 11, 2000. Project-Related Studies Louis Berger Group, Inc., USA, National Highways Authority of India: Inception Report for Technical Assistance for Development & Operation of Pilot Corridor Management Units, June 2002. Price-Waterhouse, NHAI-Institutional Reform and Computerized MIS, Implementation Phase: Performance Rating System. (Undated). Training Plan for NHAI (Undated but reportedly sometime in 2002). Gosh, P., and Bayana, V., Quantification of Time Overrun in Pre-Construction Activities of National Highways Packages Funded by World Bank and Asian Development Bank, December 2007. Sector Studies Documenting Reforms: Case Studies from India (undated article on the results of the National Highways Development Program, 2005 or later). World Bank, Indian Road Construction Industry: Capacity Issues, Constraints and Recommendations, October 2007 (Draft). World Bank (PowerPoint Presentation), National Highway Development Program, October 2007. Reports of Other Related Projects Infrastructure Sector Unit, South Asia Regional Office, World Bank, Project Appraisal Document on a Proposed Loan in the Amount of US$589 Million Equivalent to the Government of India for the Grand Trunk Road Improvement Project, Report No. 22169-IN, May 30, 2001. World Bank, Implementation Completion Report on a Loan/Credit in the Amount of US$153.0 Million and SDR116.2 Million (US$153 Million Equivalent) to the Government of India for the Second National Highway Project, May 21, 2002.

B I H A R

U T T A R

P R A D E S H

MADHYA PRADESH

ORISSA

WEST

BENGAL

HIMACHALPRADESH

HA

RYA

NA

RAJA

STHA

N

PUN

JAB

I N D I ATHIRD NATIONAL HIGHWAYS PROJECT

78° 80° 82° 84° 88°

30°

28°

26°

24°

22° 78° 80° 82° 84° 86 ° 88° 22°

24°

26°

28°

30°

N E P A L

C H I N A

Chambal

Ganga

Yam

una

Ghaghara

Ghaghara

Ganga

Gandak

Ganga

Son

Damodar

BANG.

BANG.

0 100 200

KILOMETERS

86°

NATIONAL HIGHWAY UPGRADING UNDER THE PROJECT

NATIONAL HIGHWAYS ALREADY 4-LANED, OR 4-LANING IN PROGRESS

NATIONAL HIGHWAYS

OTHER ROADS

RAILROADS

RIVERS

CITIES, BY POPULATION:

<100,000

100,000–250,000

250,000–500,000

500,000–1,000,000

1,000,000–2,500,000

>2,500,000

This map was produced by the Map Design Unit of The World Bank.The boundaries, colors, denominations and any other information shownon this map do not imply, on the part of The World Bank Group, anyjudgment on the legal status of any territory, or any endorsement oracceptance of such boundaries.

STATE CAPITALS

NATIONAL CAPITAL

STATE BOUNDARIES

INTERNATIONAL BOUNDARIES

Kolkata

IBRD 30824

MAY 2000

NewDelhi

Kolkata(Calcutta)

Ghaziabad

Bhopal

Lucknow

Kanpur

Patna

Patna

Patna

Chandigarh

Meerut

Faridabad

Agra

Gwalior

Jabalpur

Allahabad

Bareilly

Varanasi

Dhanbad

Howra

Agra

Ranchi

Aligarh

Asansol

Bhagalpur

Dehra Dun

Gaya

Gorakhpur

Jhansi

Kharagpur

Moradabad

Muzaffarpur

Sagar

Saharanpur

Jamshedpur

Gaya

Rourkela

KatiharAmbala

Amroha

Bulandshahr

Gurgaon

Hapur

Karnal

Muzaffarnagar

Panipat

Rohtak

Sambhal

Sonepat

Yamunangar

Arrah

Bahraich

BankuraBarddhaman

Bharatpur

Bhind

Bihar Sharif

Biratnagar

Budaun

Chapra

Darbhanga

Dehri

Etawah

Fatehpur

Firozabad

Giridih

Haldwani

Hathras

Katihar

Mathura

Maunath Bhanjan

Midnapore

Mirzapur

Monghyr

Murwara

Pilibhit

Purnea

Rae Bareli

Rampur

Rewa

Saharsa

Satna

Shahjahanpur

Sitapur

Unnao

Jaunpur

Bilaspur

Fategarh

Haridwar

Hardoi

Faizabad

Bokaro Steel CityBermo

Begusarai

Berhampore

KultiAndal

Durgapur

Krishnanagar

Korba

Aurangabad

MughalSarai

Naini

Sasaram

Sherghati

Mohania

Barachatti

Gorhar BarwaAdda

HandiaKokhraj

Khaga

Bhognipur

Pratappur

Sikandra

Gorhar

8

2

24

24

28

28

30

1

8

10

2

11

3

26

25

2

12

7

727

2

29

31

31

34

23

23

65

33

32

23

31

31

To Ja

ipur

To Ja

land

har

24