Completion Report

Project Number: 26522 Loan Number: 1711, 2413 August 2014

Sri Lanka: Southern Transport Development Project This document is being disclosed to the public in accordance with ADB’s Public Communications 2011.

CURRENCY EQUIVALENTS

Currency Unit – Sri Lanka rupee/s (SLRe/SLRs)

At Appraisal At Project Completion 30 September 1999 05 July 2013

SLRe1.00 = $0.014 $0.008 $1.00 = SLRs71.85 SLRs130.60

ABBREVIATIONS

ADB – Asian Development Bank CEA – Central Environmental Authority CEPA – Centre for Poverty Analysis CRP – Compliance Review Panel GRC – grievance redress committee EIA – environmental impact assessment EIRR – economic internal rate of return EMP – environment management plan EOMMD – Expressway Operation Maintenance and Management Division ESD – Environment and Social Division (of the RDA) FIDIC – International Federation of Consulting Engineers GPS – global positioning system IRP – Income Restoration Program JBIC – Japan Bank of International Cooperation JICA – Japan International Cooperation Agency LAA – Land Acquisition Act LARC – land acquisition and resettlement committee MOHRD – Ministry of Highways and Road Development MOT – Ministry of Transport NDF – Nordic Development Fund NGO – nongovernment organization NIRP – National Involuntary Resettlement Policy NRSS – National Road Safety Secretariat PMU – Project Management Unit PPER – project performance evaluation report RDA – Road Development Authority RIP – resettlement implementation plan SEEDS – Sarvodaya Economic Enterprises Development Services SEIA – summary environmental impact assessment Sida – Swedish International Development Agency STDP – Southern Transport Development Project TA – technical assistance UDA – Urban Development Authority VOC – vehicle operating cost

Vice-President W. Zhang, Operations 1 Director General Hun Kim, Director General, South Asia Department (SARD) Directors Sri Widowati, Sri Lanka Resident Mission (SLRM), SARD Co-Team Leaders

A. Nanayakkara, Senior Project Officer (Road and Transport), SLRM, SARD C. Chen, Transport Specialist, Transport and Communication Division (SATC), SARD

Team members A. Tayyab, Unit Head Portfolio Management

E. Perera, Safeguards Officer, SLRM, SARD

H. Yamaguchi, Unit Head, Project Administration, SATC K. Bandara, Senior Project Officer (Environment), SLRM, SARD K. Yangzom, Environmental Specialist, SATC, SARD

N. Amarasekera, Associate Project Analyst, SLRM, SARD

N. Gunasekara, Senior Gender Officer, SLRM, SARD

R. Sagari, Assistant Project Analyst, SLRM, SARD

S. Zhao, Social Development Specialist, SATC, SARD

Y. Narayanatheva, Associate Project Analyst, SLRM, SARD

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

CONTENTS

Page

BASIC DATA ii

MAP ix

I. PROJECT DESCRIPTION 1 II. EVALUATION OF DESIGN AND IMPLEMENTATION 2

A. Relevance of Design and Formulation 2 B. Project Outputs 3 C. Project Costs 5 D. Disbursements 5 E. Project Schedule 6 F. Implementation Arrangements 7 G. Conditions and Covenants 8 H. Related Technical Assistance 8 I. Consultant Recruitment and Procurement 8 J. Performance of Consultants, Contractors, and Suppliers 9 K. Performance of the Borrower and the Executing Agency 10 L. Performance of the Asian Development Bank 10

III. EVALUATION OF PERFORMANCE 10 A. Relevance 10 B. Effectiveness in Achieving Outcome 11 C. Efficiency in Achieving Outcome and Outputs 11 D. Preliminary Assessment of Sustainability 12 E. Impact 12

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 13 A. Overall Assessment 13 B. Lessons 14 C. Recommendations 15

APPENDIXES 1. Revised Design and Monitoring Framework 16 2. Project Outputs and Financing Sources 21 3. Relevance of the Southern Transport Development Project with Respect to Government

Plans 23 4. Comparison of Cost Estimates at Appraisal and Actual Cost at Project Completion 26 5. Composition of Project Financing by Source 28 6. Disbursements and Contract Awards 29 7. Implementation Schedule – Planned and Actual 30 8. Project Implementation Organization 31 9. Compliance with Loan Covenants 32 10. Technical Assistance Related to the Southern Transport Development Project 43 11. Project Economic Analysis 49 12. Financial Analysis 56 13. Project Impacts 58 14. Social Safeguard Implementation 61 15. Impact on Gender and Development 76 16. Environmental Safeguards 98 17. Chronology of Significant Events 110

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BASIC DATA A. Loan Identification 1. Country 2. Loan Number 3. Project Title 4. Borrower

5. Executing Agency 6. Amount of Loan 7. Project Completion Report Number

Sri Lanka L1711 SRI (SF) , L2413 SRI Southern Transport Development Project Government of Sri Lanka Ministry of Highways, Ports and Shipping

1

L1711: SDR 64,856,000 L2413: $90,000,000 PCR-SRI 1464

B. Loan Data 1. Appraisal L1711 – Date Started – Date Completed L2413 – Date Started – Date Completed 2. Loan Negotiations L1711 – Date Started – Date Completed L2413 – Date Started – Date Completed

3. Date of Board Approval 4. Date of Loan Agreement

5. Date of Loan Effectiveness L1711 – In Loan Agreement – Actual – Number of Extensions

L2413 – In Loan Agreement – Actual – Number of Extensions

14 June 1999 7 July 1999 4 September 2007 14 September 2007 4 October 1999 6 October 1999 31 January 2008 1 February 2008

L1711: 25 November 1999 L2413: 6 March 2008 L1711: 16 December 1999 L2413: 30 April 2008

16 March 2000 30 October 2002 5

30 July 2008 13 June 2008 0

1 During approval of loan STDP original loan (L2413), the executing agency was identified as the Ministry of Transport and Highways, which was subsequently converted in to two ministries: the Ministry of Transport and the Ministry of Highways. At approval of STDP supplementary loan (L2413), the executing agency was identified as the Ministry of Highways and Road Development, which in 2013 was renamed the Ministry of Highways, Ports and Shipping.

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6. Closing Date L1711 – In Loan Agreement – Actual – Number of Extensions L2413 – In Loan Agreement – Actual – Number of Extensions 7. Terms of Loan L1711 – Interest Rate – Maturity – Grace Period L2413 – Interest Rate – Maturity – Grace Period

31 December 2006 25 February 2011 2 30 December 2010 5 July 2013 3 1.0% during grace period and 1.5% thereafter 32 years 8 years LIBOR 25 years 5 years

8. Disbursements L1711 a. Dates Initial Disbursement

20 February 2003

Final Disbursement

25 February 2011

Time Interval

96 months

Effective Date

30 October 2002

Original Closing Date

31 December 2006

Time Interval

50 months

L2413 a. Dates

Initial Disbursement Final Disbursement Time Interval 15 July 2008 5 July 2013 60 months

Effective Date Original Closing Date Time Interval 13 June 2008 30 December 2010 30 months

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b. Amount L1711 Category or Subloan

Original Allocation

Last Revised Allocation

Amount Disbursed

Undisbursed Balance

SDR $ SDR SDR $ SDR 01A Civil Works - SHC

39,541,000 54,875,713 55,653,720 55,653,192 82,417,003 528

01B Civil Works - RSC

1,405,000 1,941,558 683,269 683,269 1,018,458 0

02 Consulting Services

3,416,000 4,740,786 6,181,024 6,181,024 9,228,303 0

03 Incremental Expenditure

360,000 499,614 1,201,895 1,049,623 1,618,968 152,272

04 Interest Charge

2,046,000 2,839,476 1,136,092 1,136,091 1,693,476 1

05 Unallocated

18,088,000 25,102,853 0 0 0 0

Total 64,856,000 90,000,000 64,856,000 64,703,199 95,976,209 152,801 RSC = road safety component, SDR = special drawing rights, SHC = southern highway component.

L2413 Category or Subloan Original

Allocation Last Revised Allocation

Amount Disbursed

Undisbursed Balance

$ $ $ $ 01 Civil Works 69,250,000 79,431,523 79,431,522 1 02A Consulting Services - Construction Supervision

8,000,000 4,589,875 4,589,875 0

02B Consulting Services - Management Consultants

1,300,000 2,094,373 2,094,373 0

03 Project Management 1,000,000 1,126,169 1,126,169 0 04 Road Safety 2,450,000 2,758,060 2,758,060 0 05 Unallocated 8,000,000 0 0 0 Total 90,000,000 90,000,000 89,999,999 1

9. Local Costs (Financed)2

- Amount ($ million) 19.26 - Percent of Local Costs 68.48% - Percent of Total Cost 20.07%

2 Local cost is only applicable to L1711. Therefore, only L1711 cost was considered.

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C. Project Data 1. Project Cost ($ million) Cost Appraisal Estimate Actual

Foreign Exchange Cost 155.00 579.73

3

Local Currency Cost 140.90 326.74 Total 295.90 906.47

2. Financing Plan ($ million)

Cost Appraisal Estimate Actual A. Implementation Costs a. Borrower Financed 78.20 209.71 b. ADB Financed Asian Development Fund (ADF) 87.16 94.29 Ordinary Capital Resources (OCR) 0.00 90.00 c. Other External Financing Japan Bank for International Cooperation (JBIC) 120.00 333.83 Nordic Development Fund 6.70 3.70 Swedish International Development

Cooperation Agency 1.00 0.80

Export-Import Bank of China (CEXIM) - 159.48 Total 293.06 891.81 B. Interest Costs Interest During Construction (ADB-OCR) - 6.00 Interest Charges (ADB-ADF) 2.84 1.69 Interest Charge (JBIC) 0.00 4.05 C. Commitment Charges Commitment Fee (CEXIM) 0.00 1.37 Commitment Charges (ADB-OCR) 0.00 0.40 Commitment Charge (JBIC) 0.00 1.14 Total 295.90 906.46 ADB = Asian Development Bank, IDC = interest during construction. 3. Cost Breakdown by Project Component ($ million) Component Appraisal Estimate Actual Southern Highway Component 249.10 874.50 Road Safety Component 8.00 13.41 Project Management 0.50 3.90 Contingencies 35.40 0.00 Interest Charges and Other Financing Charges 2.90 14.66 Total 295.90 906.47

3 For L2413 there is no separation of local cost and foreign cost identified. Therefore, the total cost is considered to be the foreign cost.

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4. Project Schedule Item Appraisal Estimate Actual Date of Contract with Consultants Supervision Consultants (Halcrow) Q2 2001 – Q4 2005 Q4 2002 – Q3 2007 Supervision Consultants (Roughton) Q3 2007 – Q1 2013 Management Consultants (Egis Bceom) Q2 2001 – Q4 2005 Q1 2009 – Q3 2012 Civil Works Contract Construction of Kurudugahahetekma to Galle Q2 2001 – Q2 2005 Q1 2003 – Q4 2012

Black Spot Improvement on Colombo-Ratnapura- Wellawaya-Batticaloa Road (A004) from 23.08 km to 23.48 km (Homagama Town)

Q2 2001 – Q2 2005 Q1 2005 –Q4 2007

Black Spot Improvement Peliyagoda-Puttalama Rd Nawaloka Roundabout (0.60 km), Mattumagala to Samagi Mawatha (7.1-9.0 km), Periyamulla Junction (31.8 km) Black Spot Improvement Colombo-Galle-Hambantota Road, Uyankelle Stretch (27.96 km to 28.36 km) and Maliban Junction (13.3 km) Black Spot Improvements Peliyagoda-Puttalam Rd Black Spot Improvements Colombo-Kandy Road (A001)

Q2 2001 – Q2 2005

Q2 2001 – Q2 2005

Q2 2001 – Q2 2005 Q2 2001 – Q2 2005

Q2 2005 – Q4 2007

Q2 2005 – Q4 2007

Q3 2005 – Q 2007 Q3 2005 – Q1 2009

Equipment

Road Safety Equipment Q1 2011 – Q4 2011

5. Project Performance Report Ratings Implementation Period

Ratings Development Objectives

Implementation Progress

L1711 and L2413 From 30 Dec 1999 to 30 Dec 2000 Satisfactory Satisfactory From 31 Dec 2000 to 29 Sep 2002 Satisfactory Unsatisfactory From 30 Sep 2002 to 30 May 2006 Satisfactory Satisfactory From 31 May 2006 to 28 Feb 2008 Satisfactory Partly Satisfactory From 1 Mar 2008 to 31 Dec 2010 Satisfactory Satisfactory After the change of ADB performance rating system (effective from 1 January 2011) L1711 From 1 Jan 2011 to 25 Feb 2011 On Track L2413 From 1 Jan 2011 to 31 Dec 2011 On Track From 1 Jan 2012 to 30 Sep 2012 Potential Problem From 1 Oct 2012 to 5 July 2013 On Track

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D. Data on Asian Development Bank Missions Name of Mission

Date

No. of Persons

No. of Person-Days

Specialization of Members

Project Preparatory TA Mission 29 Nov-10 Dec 1996 3 36 a,b,c Review Mission 24 Sep-6 Oct 1998 3 36 a,d,e Consultation Mission 16-24 Nov 1998 1 8 g Review Mission 16-18 Nov 1998 5 10 a,d,f,h,i Project-Specific Contact Mission

5-9 Mar 1999 3 12 b,d,j

Consultation Mission 13-19 Mar 1999 2 12 e,k Fact-Finding Mission 21 Apr-7 May 1999 7 112 a,f,l,m,n,n,o Appraisal Mission 23 Jun-7 Jul 1999 5 70 a,j,m,p,q Inception Mission 7-10 Dec 1999 3 27 h,j,r Review Mission 4-15 Sep 2000 1 11 s Review Mission 9-16 Nov 2000 3 21 a,p,s Special Project Administration Mission

2-13 Jul 2001 2 22 t,u

Special Project Administration Mission

11-14 Sep 2001 2 6 t,v

Special Project Administration Mission

15-15 Oct 2001 1 1 t,v

Consultation Mission 21-22 Nov 2001 2 2 i,m Consultation Mission 10-12 Dec 2001 4 8 i,m,q,v Mission to JBIC 7-8 Mar 2002 3 3 m,q,w Consultation Mission 17-21 Jun 2002 2 8 a,m,p,q,x,y Japan Consultation Mission 31 Oct-1 Nov 2002 1 1 a Joint Review Mission 19-21 Jan 2003 5 10 e,g,s,t,z Inception / Consultation Mission 18-27 Feb 2003 6 54 s,t, u,v,aa,ab Joint Review Mission 30 Jun-3 Jul 2003 8 24 s,s,t,y,z,ac

g,ad Review Mission 17-18 Sep 2003 3 3 x,s,af Joint Review Mission 19-21 Jan 2004 6 12 g,s,t,z,ag,ah Safeguard Review Mission 10-25 May 2004 7 105 p,q,s,v,x,ai, Review Mission 10-11 Aug 2004 5 5 x,s,aj,ak,al, Review Mission 4-18 Oct 2004 6 84 s,t,y,x,ai,am Social Impact Assessment 8-16 Oct 2004 1 8 v Safeguard Review Mission 21-24 Mar 2005 1 3 an Safeguard Review Mission 2-9 Sep 2005 1 7 s Consultation Mission 5-6 Dec & 16 Dec 2005 1 2 s Review Mission 3-3 Nov 2005 7 7 n,s,v,x,y,an, ao, Reconnaissance Mission 3-7 Apr 2006 5 5 g,n,s,y,ao Consultation Mission 5-8 Jun 2006 5 15 g,n,s,y,ao Midterm Review Mission 16-25 Aug 2006 9 81 g,n,s,y,ao,an,ap,

aq Consultation Mission 28-29 Aug 2006 1 1 n Fact-Finding Mission 3-13 Oct 2006 9 90 n,p,p,s,t,y,v,ao,ar

, Consultation Mission 6-7 Dec 2006 1 1 n Consultation Mission 5-12 Jun 2007 8 56 g,n,p,p,s,t,v,y,ao,

ar Consultation Mission 7-13 Jun 2007 2 24 n,t Consultation Mission 20-21 Aug 2007 2 2 n,s Appraisal Mission 4-14 Sep 2007 10 100 g,n,p,p,s,t,v,y,

ao,ar

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Name of Mission

Date

No. of Persons

No. of Person-Days

Specialization of Members

Loan/TA Inception Mission 21-23 May 2008 3 6 n,s,y Inception Mission 1-3 Jun & 9 Jun 2008 2 6 y,y Review Mission 20-21 Aug 2008 3 3 s,y,ao Inception Mission 14 Nov 2008 2 2 y,af Consultation Mission 9-13 Feb 2009 5 20 q,y,af,ar,as, Midterm Review Mission 9-11 Mar 2009 6 12 p,y,y,af,ao,at Review Mission 28 Sep-2 Oct 2009 6 24 p,s,y,y,af,ao Review Mission 30 Mar-8 Apr 2010 6 54 p,s,y,y,af,ao Review Mission 23-30 Nov 2010 7 49 p,s,y,y,af,ao,at Review Mission 22 Jun-8 Jul 2011 6 96 p,s,y,y,ao,at Review Mission 22-26 Oct 2012 6 24 p,s,t,u,y,at Project Completion Review 1 Jan-20 Feb 2014 n,p,s,t,u,au,av,av a = project engineer, b = project economist, c = project assistant, d = manager/ Infrastructure, Transport and

Communications - West Division, e =manager, f = senior program officer, g = programs officer, h = senior project economist, i = resident representative, j = senior project engineer, k = vice president (West), l = programs manager, m = transport development economist, n = environmental specialist, o = social impact specialist, p = social development specialist, q = counsel, r = project economic Infrastructure, Transport and Communications - West Division,, s = senior project specialist, t = transport specialist, u = assistant project analyst, v = resettlement specialist, w = poverty reduction specialist, x = country director, y = project implementation officer, z = regional manager - Asia, aa = private sector development specialist, ab = operations officer, ac = road safety specialist, ad = road safety component review consultant, af = portfolio management head, ag = senior project manager - transport, ah = chief representative in Colombo, ai = portfolio management specialist, aj = senior advisor, ak = assistant general counsel, al = director Transport and Communications Devision, South Asia Regional Department, am = principal project management specialist, an = senior compliance specialist, ao = gender specialist, ap = Technical Assistance consultant, aq = Japan Bank for International Cooperation consultant, ar = senior procurement specialist, as = senior guarantees and syndication specialist, at = representative Japan International Cooperation Agency, au = environmental officer, av =project completion report consultant

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1

I. PROJECT DESCRIPTION 1. The Southern Transport Development Project (STDP) is the largest greenfield road project ever implemented in Sri Lanka. It has been declared a milestone in Sri Lanka’s development history and may well be regarded as a mega project.1 In addition to the cost of the investment, "mega" is also associated with the challenges involved in planning and implementing the project. The project has received a high level of public attention, galvanized by substantial direct and indirect impacts on the community, environment, and budgets. The project’s expected substantial impact on both the regional economy and that of Sri Lanka is important, as is the significant capacity building and knowledge impact which the STDP has created during its implementation.

2. The STDP was financed by the government and five development partners.2 The project involved the construction of the Southern Expressway, which is an access-controlled expressway of about 126 kilometers (km) from Kottawa to Godagama; the Galle Port Access Road, which is a 5.5 km long access road from the Southern Expressway to Galle; and a road safety component. The Southern Expressway has been divided into four sections for financing purposes.3 Originally, the Japan International Cooperation Agency (JICA) financed sections I and II, while the Asian Development Bank (ADB) financed sections III and IV. 3. The primary objectives of the STDP were to act as a catalyst for the development of the economically deprived southern region, and improve road safety in Sri Lanka. The secondary objective was to reduce poverty by providing the poor with improved access to employment opportunities and to health, education, and other social services. The design and monitoring framework is in Appendix 1. To finance the project, ADB first approved the project loan4 (STDP original loan) in 1999, and then approved a supplementary loan5 (STDP supplementary loan) in 2008. The objectives of the STDP supplementary loan were consistent with the objectives of the STDP original loan and financed (i) cost overruns, in respect of the construction of the original two-lane highway; and (ii) the extra cost involved in expanding the design of that section from two to four lanes. More details of project outputs and financing sources are in Appendix 2.

4. While the financing from the various sources was managed in parallel, the completed Southern Expressway is a continuous expressway from Kottawa to Godagama. The Southern Expressway was formulated from the very beginning as a single project, and a single project management unit (PMU) managed the implementation of the whole project regardless of the financing source. Therefore, the project completion review will assess the whole Southern Expressway in terms of project design and implementation, relevance, efficiency, effectiveness,

1 Mega projects are very large investment projects. In the context of Sri Lanka, the investment in the STDP of almost $900 million qualifies as a mega project. N.Bruzelius et al. 2003. Megaprojects and Risk. An Anatomy of Ambition. Cambridge: Cambridge University Press.

2 These partners were the Asian Development Bank (ADB), the Japan International Corporation Agency (JICA), the Nordic Development Fund (NDF), the Swedish International Development Agency (Sida), and later the Export and Import Bank of China.

3 Section I is from Kottawa to Dodangoda, section II is from Dodangoda to Kurundugahahethekma, section III is from Kurundugahahethekma to Pinnaduwa, and section IV is from Pinnaduwa to Godagama.

4 ADB.1999. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the Democratic Socialist Republic of Sri Lanka for the Southern Transport Development Project. Manila (Loan 1711-SRI [SF], approved on 25 November).

5 ADB. 2008. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical Assistance Grants to the Democratic Socialist Republic of Sri Lanka for the Southern Transport Development Project. Manila (supplementary loan 2413-SRI, approved on 6 March).

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and sustainability, but will focus only on the ADB-funded section to assess the performance of consultants, contractors, the borrower, and financiers.

II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation 5. The STDP draws its relevance from different policy issues and directions. Specifically, relevance must be assessed against Sri Lanka’s regional social and economic imbalances, the country’s gradual shift from a predominantly rural-based economy to an urban economy dominated by manufacturing and services, and the poor quality of transport infrastructure stifling development efforts. The design of the project was relevant to the country needs at its various levels. It was also consistent with ADB’s country strategy, which emphasized integrating the southern region into the country's economic mainstream by improving access to economic and social opportunities for residents of the region, requiring an efficient transport system.6 Further details about the relevant strategies and policies are in Appendix 3. 6. Project formulation has been long and complex, as has been the experience with mega projects worldwide.7 Spanning 7 years, the planning process consisted of master planning,8 feasibility studies,9 and engineering.10 ADB technical assistance (TA) was used for feasibility studies, and activities under the TA provided a good beginning for the project. The preparation of detailed designs was financed from the Road Network Improvement Project11, which was innovative as the project design advance concept was not available at that time.

7. The detailed design consultant was mobilized in November 1999 and the consultant’s services were extended till February 2001, as the road alignment was changed on a number of

6 ADB. 1999. Country Operational Strategy - Sri Lanka. Manila.

7 N.Bruzelius. et al. (footnote 2). See also: R. W. Poole, Jr. and P. Samuel. 2011. Transportation Mega-Projects and Risk. Los Angeles: Reason Foundation. Both books found that common to many mega projects are the political aspiration and prestige associated with them; long implementation delays and “project creep” leading to growth in project scope and adding new elements and complexity; heightened awareness of environmental and social concerns; inadequate participation of stakeholders in the planning process; and, as a result of all these factors, substantial cost overruns.

8 JICA. 1996, Master Plan Study for Southern Area Development. Colombo. The master plan determined the need for a new inland road connection from the Southern Province to Colombo. While several options for the road alignment existed prior to the JICA study, the study did not determine a preferred option.

9 Four studies were conducted to prepare preliminary designs, assess project viability, and conduct safeguard studies: (i) Road Development Authority. 1993. Final Report of the Pre-feasibility Studies for Proposed Highway Project prepared for Road Development Authority by Resources Development Consultants in Association with Asphaltin. Colombo; (ii) the prefeasibility study was updated through an economic feasibility study conducted by the University of Moratuwa in 1997; (iii) in 1997, ADB provided project preparatory TA: ADB. 1997. Technical Assistance (financed from the Japan Special Fund) to the Democratic Socialist Republic of Sri Lanka for the Southern Transport Corridor Project. Manila. (TA 2892-SRI); and (iv) In 1999, after completion of the first project preparatory TA, ADB provided a second project preparatory TA project to assist the Road Development Authority to, among other things, review the earlier economic analysis, and to prepare the summary environmental impact assessment (SEIA) report: ADB. 1999. Technical Assistance to the Democratic Socialist Republic of Sri Lanka for the Preparation of the Southern Transport Development Project. Manila (TA 3184-SRI).

10 Preliminary and detailed engineering for the ADB-financed section of the STDP (from Kurundugahahethekkma to Godagama) was undertaken through a consultancy contract awarded to the firm that had carried out the feasibility studies and was financed through the ADB-financed Road Network Improvement Project. This consultant has also assisted the RDA in procurement of civil works contracts. Preliminary and detailed engineering for the JICA-financed section of the highway was undertaken through a JICA-financed consulting services contract.

11 ADB.1999. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the Democratic Socialist Republic of Sri Lanka for the Road Network Improvement Project. Manila

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occasions to address concerns of different stakeholders. These changes of alignment affected the implementation of land acquisition and resettlement plans and subsequently caused significant delays in implementation of the civil works contract. Even with the best compensation package for land acquisitions ever proposed in Sri Lanka, the STDP faced a lot of difficulties at an early stage of implementation in engaging stakeholders because of the lack of a proper communication strategy with affected people and other stakeholders.

8. The Southern Highway was designed with a view to being constructed in stages, whereby the first stage would involve construction to a two-lane standard (except for section I, which was from the beginning constructed to the four-lane standard) and scheduled to be upgraded to the four-lane standard after 2010. However, during implementation, traffic growth on the Galle Road from 2000 to 2005 had been higher than forecast in 1999 and there was a similar increase in traffic volume for road networks in the Western and Southern Provinces. In addition, the proposed expansion of the highway to four-lane standard undertaken simultaneously with the two-lane construction was expected to result in substantial time and cost savings and reduce disruption caused by construction activities. Considering these factors, the government decided to advance the upgrading of the whole road to four-lane standard in 2007. The upgrading involved a restructuring of the civil works contracts for the sections funded by ADB and JICA. At that time, earthworks, road structures, and around 10 km of road pavement works in the ADB-funded section IV had already been completed and the balance of works in that section were excluded from the ADB finance. Subsequently, section IV was financed by the Export and Import Bank of China. 9. Both JICA and ADB processed additional financing in 2008 to accommodate this change of scope and the cost overrun in respect to the construction of the original two-lane highway. 10. The project’s road safety component was mainly to implement the road safety Action Plan II, developed under the road safety component in the Third Road Improvement Project (TRIP),12 to reduce the very high rate of road accidents, which has fatality rates of around 18 times higher than in developed countries. However, during implementation, there were some scope changes to include road safety equipment and control vehicles required to operate the expressway. 11. Overall, a relevant project concept was formulated at the approval stage, and the detailed design was finally completed at the early stage of project implementation. The process, while circuitous and lengthy, has not compromised the project’s overall objective and relevance. The extent to which a more coherent approach could have led to greater effectiveness in the delivery of expected outcomes will be examined in subsequent sections in this report.

B. Project Outputs 12. The STDP consists of two outputs-the Southern Highway component13 and the road safety component-which were financed by ADB, the Japan International Cooperation Agency

12 ADB.1994. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the Democratic Socialist Republic of Sri Lanka for the Third Road Improvement Project. Manila (Loan 1312 – SRI(SF)). Under this loan, an action plan was prepared to reduce the high rate of road accidents in Sri Lanka. The first part of the plan, referred to as Action Plan I, was implemented under the TRIP and the second part, Action Plan II, was assigned under the road safety component of STDP original loan.

13 The term “highway” has been used in the original loan for the project road, as at that time the expected output was an access-controlled two-lane road and not an expressway.

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(JICA), the Nordic Development Fund (NDF), the Swedish International Development Agency (Sida), the Export and Import Bank of China, and the Government of Sri Lanka (the borrower).

1. Southern Highway Component

13. The output of the ADB original loan was the southern highway-a single carriageway, two-lane, access-controlled highway with a new road link to Galle. The JICA-funded section I was a four-lane configuration and section II was two lanes. In 2007, the original scope was changed and the final output was a four-lane expressway from Kottawa to Godagama and the Galle Port Access Road.

2. Road Safety Component

14. Traffic safety institutions. The Road Safety Unit within the Road Development Authority (RDA) and National Road Safety Secretariat were established. The secretariat coordinates the work of the National Council for Road Safety, which has stakeholders appointed to coordinate implementation of the National Road Safety Strategic Plan. Road safety consulting services funded by Sida provided assistance to the RDA for activities such as strengthening road safety institutions, conducting road safety audits on existing roads and on the final project design, revising traffic laws and regulations, establishing emergency rescue services, and identifying and designing rectification measures for accident black spots. 15. Black spot improvements. ADB financed civil works for reducing safety hazards at specific locations in national highways as a pilot model on how to prioritize black spot location and the management of technical and other aspects of black spots. Black spot improvements in 20 areas under six packages in several ADB-financed roads were completed by April 2007. 16. Road safety equipment. The road safety equipment component under the project was funded by the NDF. However, the procurement of road safety equipment was constrained by changes in institutional set up and priorities so that only a limited number of items were procured. Computer equipment and software for the accident data system as well as equipment for traffic police were installed. The STDP supplementary loan and the second JICA loan covered the procurement of equipment required to operate the Southern Expressway, comprising (i) an advanced traffic management system to centrally monitor the Southern Expressway; (ii) weigh stations to control overloading; (iii) speed monitoring equipment; and (iv) ambulances, police vehicles, rescue equipment, and other ancillary services to operate the expressway. 17. Traffic laws and regulations. The regulations for a road safety fund were finalized. It has been gazetted that 1% of the insurance premium for third-party motoring risks is transmitted to the fund. The Motor Traffic Bill Part I, Act No. 8 of 2009 has been published. Part 2 is still under discussion and provision for operating expressways has been introduced to the Motor Traffic Act in the form of regulations. 18. Overall, all expected outputs were delivered. The increase in scope led to substantial increases in project cost and subsequent provision of additional financing. The adoption of the four-lane expressway standard led to the addition of other components, notably equipment for toll road operation and intelligent transport equipment for traffic monitoring, which were financed by JICA. Important outputs of the road safety component have also been delivered.

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C. Project Costs

19. At appraisal in 1999, the total cost of the project was estimated at $295.9 million equivalent14 with foreign exchange costs accounting for $155.0 million and local currency costs $140.9 million. The estimated cost for the ADB-financed component was $132.3 million15 and the component financed by the Japan Bank of International Cooperation (JBIC)-JICA was $163.6 million.

20. At appraisal for the supplementary loan in 2008, the total cost was $757.7 million. The actual project total cost, at project completion in 2014, had risen to $906.5 million. The structure of cost increase is shown in Table 1 and detailed cost data is shown in Appendix 4.

Table 1: Project Cost Increases by Major Cost Items Costs ($ million)

Item Appraisal in 1999

Appraisal in 2008 Completion

Land/Resettlement 7.6 44.2 38.6 Civil Works 221.9 592.6 792.1 Supervision 17.3 33.7 39.6 Management Consultant 2.3 6.3 4.2 Project Management 0.5 1.5 3.9 Environmental Management 0.0 2.0 2.0 Black Spot Improvements 2.6 2.6 1.5 Toll Facility and Other Equipment 2.1 7.0 7.3 Road Safety Consultants 3.3 3.3 2.6 Contingencies 35.4 37.3 0.0 IDC and Other Financing Charges 2.9 27.1 14.7 Total 295.9 757.7 906.5

IDC = Interest during construction, Source: Government of Sri Lanka. 2011. Southern Transport Development Project: Borrower Project Completion Report. Colombo and Appendix 4.

21. A substantial part of the increase in the civil work cost is explained by the additional work related to the upgrading of the highway to four-lane standard and the balance is due to other factors including cost overruns under the original loan component, price increases, and substantial amounts of contractor claims.

22. The expanded project scope also led to additional costs for toll road equipment and extensions of consultant contracts. The 7-year increase in the project implementation period also resulted in proportional increases because of price escalation provided for in the civil works contracts.

23. Appendix 5 shows the changes in the composition of financing sources that occurred during the implementation period. The increase in project scope caused both ADB and JICA to provide additional financing.

D. Disbursements 24. The disbursement details of the three major financing sources-ADB, JICA, and the Export and Import Bank of China-are in Table 2. The grants of the NDF and Sida together

14 Including customs duties and taxes, estimated at about $41.7 million equivalent, as per Table 01 , RRP of STDP Original Loan

15 Which included the cost for land acquisition, civil works, road safety equipment, consultancy services, and contingencies.

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amounted to $6.2 million equivalent and were disbursed during 2003-2006 (NDF) and in 2007 (Sida).

Table 2: Sources of External Financing

Financing Source

Loan/Grant Number

Amount ($ million)

Initial Disbursement

Final Disbursement

Disbursed Amount ($ million)

Undisbursed Amount ($ million)

ADB

L1711 SRI (SF) L2413

90.0

90.0

20/02/2003

15/07/2008

25/02/2011

05/07/2013

96.0

90.0

0.2a

0.0 JICA SL-P70

SL-P92

160.0

165.0

2003

2008

01/05/2009

09/12/2013

167.0

172.03

0.0

CEXIMb

BLA 201011 BLA 201012

138.2 4/2011 2014 159.5 58

ADB = Asian Development Bank, CEXIM – Export and Import Bank of China, JICA = Japan International Cooperation Agency. a Loan amount was $90.0 million at loan approval, and at loan closure the net effective loan amount was $96.2 million. Therefore, after disbursements of $96.0 million, there was an undisbursed balance of $0.2 million.

b: The section financed by the Export and Import Bank of China was completed in January 2014 and opened to traffic on 15 March 2014. The loan is likely to be closed in 2014.

Sources: Government of Sri Lanka, RDA. 2011. Project Completion Report of the Management Consultant. Colombo. and STDP PMU data

25. The loan proceeds from ADB were disbursed in accordance with ADB’s Loan Disbursement Handbook, including reimbursement, commitment letter, direct payment, and imprest account. 26. Disbursement schedules as planned and actually realized are presented in Appendix 6. The disbursements occurred more slowly than projected at appraisal, which is consistent with the delays encountered by the project during the early stage of implementation. Disbursements from all sources started only in 2003, reflecting significant delays in preconstruction activities. Considering that important details of the final project design had to be determined after ADB’s loan approval in 1999, the disbursement schedule envisaged at appraisal was less than realistic.

E. Project Schedule

27. ADB approved the project in November 1999, and it was expected to be implemented from 2000 to 2005. The STDP original loan was declared effective on 30 October 2002 and closed on 31 December 2010. The STDP supplementary loan was declared effective on 13 June 2008 and closed on 5 July 2013. The ADB- and JICA-funded sections were substantially completed by November 2011. Specifically, sections I-III (Kottawa-Pinnaduwa) were opened for traffic on 26 November 2011 and section IV (Pinnaduwa-Godagama) was opened on 15 March 2014. Overall, it took 13 years to complete the project compared to the originally expected implementation period of 6 years. Actual and appraisal implementation schedules for all major project activities are compared in Appendix 7. 28. There were two major causes for the delays. First, when the ADB loan was declared effective in October 2002, the preconstruction activities were not advanced enough to proceed to construction. The land acquisition process was not completed at the time of award of the civil works contract. There were disagreements among affected people regarding the selection of the final alignment. They challenged the adequacy of the compliance with the government’s legal procedures and ADB’s compliance with its own policies and procedures through the ADB

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accountability mechanisms, which also caused delays in land acquisition. Secondly, the major change in scope involved additional time required to upgrade from two-lane highway to four-lane expressway.

F. Implementation Arrangements

29. The implementation arrangements were as planned at appraisal. Two executing agencies were responsible for implementation. The RDA was the executing agency for the construction of the Southern Expressway, while the Ministry of Transport (MOT) acted as executing agency for the road safety component. However, after the approval of STDP supplementary loan, the Ministry of Highways and Road Development (MOHRD)16 became the executing agency for the civil works with the RDA assuming the role of implementing agency. The project coordinating committee, which was originally established within the RDA, also became the responsibility of the MOHRD, with the secretary of the MOHRD chairing the committee. The implementation organization is given in Appendix 8.

1. Road Development Authority

30. The RDA has been implementing ADB-financed projects since the mid-1980s and is assumed to have the resources and capability to manage a project of this size and complexity. A PMU headed by a project director was responsible for day-to-day management of the project. A team of management consultants assisted the PMU in areas of contract management, claims, toll operations, and maintenance. There was only one PMU for all externally financed road sections and contracts. The RDA was also responsible for the extensive land acquisition and resettlement program that the STDP required. 31. Civil works for the ADB-financed section of the Southern Expressway were implemented through one contract procured in accordance with the international competitive bidding procedures of ADB's Procurement Guidelines. ADB's approval of the contract award was preceded as planned by the engagement of the engineering and supervision consultants as well as the team of management consultants. To make this possible, ADB had approved advance action for procurement and the recruitment of consultants.

2. Road Safety Component

32. The road safety component was implemented as a continuation of the road safety program supported by ADB under TRIP. While the MOT was the executing agency for the component, the National Road Safety Secretariat (NRSS) under the MOT acted as an implementing agency for all road safety activities, which also included the black spot program. This role of implementation was shared with the RDA, which is responsible for procurement, supervision, and quality control. To adequately discharge its widened responsibility, the NRSS increased its staff strength by adding a director and four professional staff. 33. Civil works for the black spot improvement program were carried out by Sri Lankan contractors, who were selected based on national competitive bidding procedures. Equipment for the safety component was financed by the NDF and procured in accordance with NDF procedures.

16 The MOHRD had earlier been the Ministry of Transport and Highways and later adopted its present name, the Ministry of Highways, Ports and Shipping.

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G. Conditions and Covenants 34. All major loan covenants have been complied with or partially complied with. The borrower implemented credible sector governance reforms, undertook legal initiatives, as well as adopted modern safeguard standards. It is noteworthy that, rather than assigning to the ADB project, many covenants had sector-wide relevance. This applies to promoting the private contracting industry, reforming the road maintenance regime, improving traffic safety, and organizational structures. The process of restructuring is still continuing. The National Highways Act (renamed the Thoroughfares Act) was passed by the Parliament in October 2008. The draft Expressway Authority Bill, which is to become the legal basis for an expressway authority, has been submitted to the legal draftsman. The Expressway Operation Maintenance and Management Division (EOMMD)17 has been formed and is now functioning under the RDA. The EOMMD will evolve into an expressway authority once the bill is approved in the parliament. Consistent with the loan covenant, the government has obtained Cabinet approval to set up the expressway authority and the draft of the authority is to be submitted to Parliament by the end of 2014. The status of compliance with the major loan and grant covenants is in Appendix 9.

H. Related Technical Assistance

35. ADB TA has been instrumental in implementing the STDP; however, the STDP has also leveraged the knowledge provided under previous TA not directly related to the STDP. Five ADB TA projects18 were processed to address project implementation challenges in the STDP. This applies to TA projects directed at the RDA’s reorganization, safeguard units, and contract management and procurement issues. This is explained in greater detail in Appendix 10.

I. Consultant Recruitment and Procurement 36. The project included two separate sets of consulting services: supervision consultants, and management consultants. 37. The supervision consultants were responsible for administering the civil works contract as the engineer, in accordance with International Federation of Consulting Engineers (FIDIC).19 The tasks of the consultant resulted from the FIDIC terms of contract and included day-to-day supervision of the civil works, ensuring compliance with the engineering design, and environmental and social impact mitigation requirements. Major responsibilities included checking and approving the contractor’s work measurements, and paying claims and certifying them for payment or submitting for further settlement through the Dispute Adjudication Board, or other avenues for claims settlement.

17 The official website of the EOMMD is at http://www.exway.rda.gov.lk

18 ADB. 1999. Technical Assistance for Development of a National Policy on Involuntary Resettlement Policy. Manila (TA 3246, $300,000, Approved on 27 August). ADB. 2005. Technical Assistance for Improving Capacity of the Environmental and Social Division of RDA. Manila (TA 4736, $400,000, Approved on 15 December in conjunction with L2217 National Highway Sector Project). ADB. 2009. Technical Assistance for Strengthening Road Development Authority in Implementation of the Environmental Management Plan of the Southern Transport Development Project, Manila (TA 7239-SRI, $150,000, Approved on 12 February). ADB. 2008. Technical Assistance for Land Use Planning of Southern Highway Corridor, Manila (TA 7065, $300,000, Approved on 6 March, in conjunction with L2413: Supplementary Loan for STDP). ADB. 2005. Technical Assistance for Independent External Monitoring of Resettlement Activities of STDP, Manila (TA 4748, $511,000, Approved on 19 December).

19 For this civil works contract, International Federation of Consulting Engineers (FIDIC) Fourth Edition 1987 (Condition of Contract for works of Civil Engineering Construction) has been used.

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38. The management consultant20 was to assist the PMU of the RDA in its duties as an executing agency. In contrast to the supervisory consultants, whose role was recognized in the construction contract, the management consultants had no such contractual significance. The management consultants prepared plans for the operation and maintenance of the expressway; monitored project implementation and the budget for the contracts; established a financial accounting system for the PMU, from which an accounting system for the RDA was developed; and helped implement the environmental and resettlement action plans. Overall, the consultants carried out a considerable number of capacity building activities for project management staff throughout the project implementation period.

39. Consultant recruitment and procurement proceeded without major problems. The ADB-financed consultants were recruited using the Quality and Cost-Based Selection (QCBS) method consistent with ADB’s Guidelines on the Use of Consultants. For the ADB supplementary loan, the single source selection (SSS) method was used to extend the services of the incumbent construction supervision consultants. Two engineering firms were engaged for construction supervision, the first covering 2001-2007 and the second the remainder period up to project completion. There were no deviations from agreed-upon procedures, nor were there any disagreements between the executing agency and ADB on consultant selection. 40. Under the loans, contracts were awarded for civil works and for equipment and vehicles. All packages financed by ADB were procured in accordance with ADB’s Procurement Guidelines. The civil works contracts were procured using international competitive bidding after prequalification. For additional scope of works related to the four-lane expressway, the same contractor was engaged by restructuring the existing civil works contracts. J. Performance of Consultants, Contractors, and Suppliers

41. The performance of the supervision consultants was satisfactory. The complexity of the project and the exigencies of the contracts have to be borne in mind when assessing the performance of the consultants. Acting as the engineer, the consultant had to cope with the challenges of a sizeable and complex contract, which had been drafted by the design consultants. The performance of the management consultants was satisfactory. 42. An international contractor was engaged for the civil works contract in the ADB-funded section of the STDP. Initially, under the STDP original loan, this contractor was engaged for construction works in both section III and section IV of the Southern Expressway, and with the processing of STDP supplementary loan, this contractor was engaged for the civil works in section III.21 The overall performance based on quantity and quality of delivered outputs was satisfactory. One of the notable features in the civil works contract is the large number of claims from the contractor which were settled through the International Court of Arbitration of the International Chamber of Commerce.

43. The performance of the suppliers was satisfactory. Suppliers delivered equipment, materials, and vehicles, fulfilling contract specifications, and provided related services such as installation.

20 There were two management consultancy contracts for the project: FINROAD was engaged as the management consultant under the STDP original loan and its contract was up to January 2009. Subsequently, Egis Bceom was engaged under STDP supplementary loan

21 The balanced of works in section IV were completed by an international contractor engaged under Export and Import Bank of China funding.

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K. Performance of the Borrower and the Executing Agency

44. The performance of the government (the borrower), the executing agency, and implementing agencies was satisfactory. The RDA benefited from ADB technical assistance and the experience gained with the project. With this experience, the RDA gained confidence to start the construction of two more expressways: the Katunayake-Colombo Expressway, which was opened to the public on 27 October 2013; and the Colombo Outer Circular Road, stage 1 of which was opened to the public on 9 March 2014. The government has started the feasibility study for the Northern Expressway.

45. The government has addressed all issues in land acquisition and compensation, positively taking the STDP experiences and incorporating some of those good practices into Sri Lanka’s Involuntary Resettlement Safeguards system. In addition, the government positively responded to all recommendations of the ADB Compliance Review Panel to bring the project back into compliance.

46. The PMU displayed ownership and strong commitment to the project. During implementation, the RDA through the project directors appropriately addressed various project implementation issues. L. Performance of the Asian Development Bank

47. ADB’s performance is rated satisfactory. Overall, ADB played a constructive role in bringing the project to a successful end. ADB’s assistance was comprehensive and timely. The large number of review missions and the active participation of the Sri Lanka Resident Mission are testimony to this. Five technical assistance projects were provided to the government to enhance the capacity of STDP project implementation agencies and two loans-Additional Finance for National Highway Sector Project (NHSP-AF) 22and the Southern Road Connectivity Project (SRCP)23-were provided to rehabilitate and improve access roads to the Southern Expressway interchanges. In addition, ADB posted an international staff member at the Sri Lanka Resident Mission to exclusively supervise the implementation of the STDP.

48. There were safeguard compliance issues early in the implementation. ADB’s compliance review procedure was triggered and a series of remedial actions were recommended. ADB and the government implemented all actions, from which the affected people have eventually benefited. The project was eventually brought back into compliance. ADB did not deviate from original objectives and coped with the emerging challenges throughout project implementation. In addition, ADB considered challenges related to safeguards as an opportunity to adopt international best practices and work with the borrower. The present high level of safeguard systems and practices in Sri Lanka have resulted from the safeguard system piloted under the STDP.

III. EVALUATION OF PERFORMANCE

A. Relevance

49. The project is rated relevant. Its stated goals to stimulate the development of the economically deprived southern region and improve Sri Lanka’s road safety record remained

22 ADB.2011. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the Democratic Socialist Republic of Sri Lanka for the Additional Finance for National Highway Sector Project. Manila

23 ADB.2013. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the Democratic Socialist Republic of Sri Lanka for the Southern Road Connectivity Project. Manila

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relevant at completion. The project was fully consistent with the government’s strategy, which is directed at a more spatially balanced distribution of welfare and economic opportunities. The project also supported ADB’s country strategy program, which emphasized integrating the southern region into the country's economic mainstream by improving access to economic and social opportunities for residents of the region, requiring an efficient transport system. However, during the early stage of implementation, the project could not get some stakeholders’ support because of the lack of a proper communication strategy.

B. Effectiveness in Achieving Outcome

50. The project is rated effective in achieving the expected outcomes, which include an expressway in operational condition and increased economic opportunities for residents in the southern region. The travel time between Colombo and Matara has been reduced to 1.5 hours as of March 2014. In addition, after opening of the Southern Expressway, there is a reduction in the fatal accident rate on the Galle Road. In 2010, the accident rate was 25 per 1 million vehicles; in 2011, it went down to 21 per 1 million vehicles, and in 2012 it was 16 per 1 million vehicles. Two new industrial estates (Koggala and Mirijjawila) have been set up in the Southern Province and Hambanthota Port and Hambanthota International Airport were built after the STDP project started. While the expressway section from Kottawa to Galle has only been operating since November 2011, the social and economic investments made under the STDP since 2000 have attracted borrower and private sector investment to the Southern Province.

51. Overall, there is an increase in socioeconomic conditions in all three districts in the Southern Province. The four sample villages in the design and monitoring framework are in Galle and Matara districts. Yakdehimulla and Kabaragala are close to the Galle Port Access Road and the Pinnaduwa Interchange. The other two villages are mainly benefiting from a section of the Southern Expressway funded by the Export and Import Bank of China. Clearly, there is an increase in socioeconomic conditions in all four villages.

C. Efficiency in Achieving Outcome and Outputs

52. The project is rated efficient. The economic internal rate of return (EIRR) of the completed STDP, as recalculated by the project completion review, is 16.9% and exceeds the estimates undertaken in connection with (i) the project’s first appraisal in 1999 (14.5%), and (ii) the justification in 2007 of the supplementary financing (15.3%). The recalculated EIRR incorporates delays and cost overruns associated with the delivery of the final output, which is why they are not rated separately. Benefits that have contributed to the higher EIRR include higher operating speeds, as well as savings in vehicle operating costs and travel times. Details of the revised economic evaluation are presented in Appendix 11.

53. As wider economic impacts are typically not covered by conventional economic analysis, the scope of the benefits tends to be understated. Another potential project benefit not considered in the evaluation results from the inland alignment of the Southern Expressway, which makes the project less vulnerable to climate change risks. Appendix 11 contains an assessment of the economic impacts not covered by conventional economic analysis and provides in outline form an approach to better capture such benefits in future expressway projects using the concept of agglomeration economies as a source of economic impacts.24 24 D. J. Graham and K. Van Dender. 2010. Estimating the agglomeration benefits of transport investments: some tests for stability. Imperial College London: Joint Transport Research Centre of the Organization for Economic Co-peration and Development (OECD) and the International Transport Forum.

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D. Preliminary Assessment of Sustainability

54. The project is rated likely sustainable. Funding for maintenance is not considered a risk, as the Southern Expressway will be operated as a toll road and the RDA will retain the income to operate and maintain the expressway.25 The financial analysis in Appendix 12 demonstrates that the toll income will be adequate to cover the Southern Expressway’s operating costs, routine and periodic maintenance costs, as well as depreciation. The EOMMD, which is the nucleus of the future expressway authority, has an institutional setup to operate and maintain the Southern Expressway.

E. Impact 55. The projects had a significant impact, contributing to expansion of economic opportunities and improvement of socioeconomic conditions of the people in the southern region. All design and monitoring framework targets have been achieved. Many development programs by the government and other development partners since 1999 also contributed. Clearly, the restoration of peace in 2009 had a major beneficial impact.

56. The STDP has also acted as a change agent (see Appendix 13 for details on the various impacts). The project has already changed, or is about to change, institutional, economic, social, and environmental conditions surrounding highway planning and construction in Sri Lanka. Given the short period the project has been operating, it may still be too early to assess the STDP’s overall economic impact.

57. Institutional impact. The institutional impact of the project has been substantial. The RDA’s organization as well as its activities have benefited from the STDP. It has emerged from implementing the project as a more effective organization with a strengthened institutional capacity. This is reflected in the use by the RDA of various knowledge products generated by TA projects funded by ADB. The skills, competencies, and abilities of staff from the RDA’s newly formed EOMMD, as well as of staff from the Planning Division, have been enhanced in the development and operation of a road asset management system, which did not exist before the construction of the STDP. For social safeguard, the mechanism of land acquisition and resettlement committee (LARC) was implemented for the first time. These committees played a very constructive role in redressing grievances. The government also adopted the system in others sectors.

58. Involuntary resettlement. Recognizing and mitigating vulnerability as a major risk to the social and environmental sustainability of the project is another significant achievement of the STDP. As the executing agency, the RDA also had to manage the project's safeguard components, often under difficult circumstances, by having to respond to complaints from different groups. The implementation of the resettlement implementation plan succeeded in restoring the incomes of affected people. Almost all poor households have restored and in most cases improved their household incomes and livelihood sources to escape from

25 The RDA is currently in charge of the functions related to expressways. The proposal to establish a national expressway authority to administer and manage the operation and maintenance of the already commissioned expressways and to plan and construct the proposed new projects was approved by the Cabinet. Daily FT. 2014. Govt. to establish authority to manage operations of expressways. Colombo: 6 February.

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impoverishment.26 Details on resettlement and the restoration and improvement of incomes, living standards, and livelihoods of the resettled families are presented in Appendix 14.

59. Gender. Some key impacts on resettled women through the STDP were loss of common facilities, e.g., water and transport, in the resettlement sites; loneliness and isolation in the new locations caused by the lack of former kin networks and social support systems; threats to their security in resettlement sites; and increased family expenditures. Self-relocated families were better off as they settled in places with infrastructure and other public facilities, were closer to kinfolk, and could initiate new livelihood activities with their support. Affected people who remained along the expressway trace27 were affected by noise, dust, insecurity for women, damage to property, and the inconvenience of ongoing construction work.

60. Gender issues in the STDP were addressed primarily through the Income Restoration Program (IRP), which focused on reestablishing home gardens and providing some skill training to affected people. However, as it commenced late in project implementation, affected women and men did not benefit as much as they could have had it commenced earlier. Vulnerable groups-such households headed by women, and the aged-were given special attention and assistance by project staff, who also provided assistance with entry to schools near the new sites. Despite difficulties faced by resettled households over land acquisition, displacement, and resettlement, in general most households gradually overcame their problems and have consolidated their lives to a reasonable degree in the new resettlement locations. More details of the gender impact of the project are given in Appendix 15.

61. Environment. The project was a category A project and expected to create significant environmental impacts requiring large quantities of construction materials, significant cutting and filling works, disturbance to existing hydrological systems, and displacement and relocation of a large number of people. As required by the pertinent ADB policies,28 a summary environmental impact assessment (SEIA) was prepared and disclosed for both the loans. The complaint registered with the Compliance Review Panel (CRP) included one issue related to environmental safeguards. Based on its investigations, the panel issued a number of general and specific recommendations. Two of the general recommendations and two of the specific recommendations concerned environmental safeguards; all four recommendations were implemented as recorded in the monitoring reports of the CRP of July 2006 and December 2007. Over the course of the construction period, 25 semiannual environmental monitoring reports (nine on the ADB section and 16 on the JICA section) were prepared and disclosed on the ADB website during 2006-2011. Further details on the performance of environmental safeguards are provided in Appendix 16.

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment

62. Overall, the project was well implemented and is rated successful. The project was relevant to the development goals and context at appraisal and remained so at completion. The

26 Centre for Poverty Analysis. 2009. Final Report, Independent External Monitoring of Resettlement Activities of the Southern Transport Development Project. Colombo. (ADB. 2005. Technical Assistance for Independent External Monitoring of Resettlement Activities of STDP, Manila (TA 4748, $511,000, Approved on 19 December 2005).

27 In STDP, the expressway alignment or route is commonly referred as the trace.

28 ADB. 1998. The Environmental Assessment Requirements of the Asian Development Bank was the applicable environment safeguards policy at the time of approval of STDP original loan while the ADB. 2003. Environmental Assessment Guidelines was the applicable policy at the time of approval of STDP supplementary loan.

14

main outputs have been well implemented. The goals of the project as stated in the report and recommendation of the President have largely been achieved, while its long-term impact on the regional economy has to be assessed at a later stage. The reevaluation of economic viability showed an EIRR of 16.9%. Financial sustainability is ensured through the toll income that will be used for expressway operation and maintenance. The project overcame a number of major challenges during implementation, and contributed to capacity development of the RDA. 63. The opening of the Southern Expressway on 27 November 2011 is the most significant accomplishment of the transport sector. The Southern Expressway has redefined the profile of Sri Lanka’s road transport. Prior to the opening of the Southern Expressway, road transport was characterized by a low-capacity road network, poor road conditions, and slow traffic speeds. With the opening of the Southern Expressway, the government is on the way to establishing a trunk road network comprising well-connected expressways and national roads.

B. Lessons 64. The success of the project can be attributed to a combination of solid government ownership and strategic vision; the long-term partnership between the government, ADB, and a number of development partners; the high level of advocacy of civil society groups; and a series of well-targeted TA projects that bridged existing knowledge gaps. The STDP is an invaluable source of lessons for mega road project planning and implementation. 65. Planning and preparing a mega greenfield road project requires adequate allocation of resources and time to allow for timely and efficient commencement of civil works. The project implementation essentially focused on the concept finalization and detailed engineering in the first 4 years. For a country with no prior experience of expressway development, direct support from ADB on project conceptualization and detailed formulation is necessary to ensure project quality and final success. Even with such support, the finalization of engineering design took twice as much time as planned at project appraisal. ADB’s lending instruments are now more diversified than they were in 1999. A recommended model is to use a TA loan or a project design advance to assist the government in finalizing the engineering before the project loan proposal is submitted to the ADB Board.

66. The impact of the lead time between the initial conceptualization and the commencement of services can be significant enough to change the feasibility of project alternatives and may result in a different preference. It was already envisaged in 1999 that the Southern Expressway would ultimately be a six-lane, high-capacity, limited-access express highway, and a stage-wise construction approach was adopted. However, the fast social and economic development in the southern region demanded a high-capacity highway earlier than the projection. The government, cofinanciers and ADB demonstrated great patience and flexibility to allow the further development of project concept during the early stage of project implementation, and finally ensured the relevance of project outputs.

67. Managing the public relationship is an important part of successful project management. Even with the best ever compensation package in Sri Lanka, strong public protests were faced at the beginning of the project with regard to the land acquisition and compensation process. A proper project communication plan was not prepared during the project formulation and early implementation stage. To manage the public relationship, the RDA established a project communication plan in 2005 and ran a number of public awareness campaigns. Finally, the RDA gained strong support from stakeholders.

15

68. Lastly, the implementation of mega projects can provide good opportunities for improving safeguard systems. Under the STDP resettlement implementation plan, the mechanism of LARC system was introduced to Sri Lanka for the first time. These committees were very popular among affected people as they played a very constructive role in redressing grievances. This mechanism managed a large number of cases which would otherwise have resulted in legal procedures, and thus significantly reduced implementation delays. The government also adopted the LARC system in others sectors. It was also learned that the grievance redress system needed to be established as early as possible and stakeholders made aware of it. C. Recommendations

1. Project Related

69. Timing of the project performance evaluation report. Since the section from Galle to Matara was only opened to the public on 15 March 2014, and because it is a significant project, it is recommended that a project performance evaluation report (PPER) be prepared in 2017. By that time, the long-term impacts related to agglomeration benefits, transport commercialization, and land use along the STDP corridor will be more discernible than was the case when this report was prepared. A detailed study on the impact on socioeconomic conditions of the four indicator villages-Godagama, Kabaragala, Paraduwa, and Yaddehimulla-which are in the expressway section from Galle to Matara and were used as the baseline indicators for the project in 1999, will also be assessed during the PPER. 70. Wider impact assessment. A study is recommended to assess the wider impacts of the STDP. The methodology will enable more comprehensive coverage of development and other wider economic impacts accruing from the project. This study will contribute to advancing the implementation of the government’s road master plan, in which expressways have a share of more than 30% of total investments. 71. Contract administration. There were more than 1,000 contractor claims, more than 50% of which came from the contractor assigned to the ADB section. There were delays in finalizing these claims and some were finally settled as commercial settlements or by adjudication. These claims represent valuable knowledge and offer insights into the underlying causes, both documentary and procedural. It is, therefore, recommended that ADB provide support to review the claims and extract relevant material to be used as case studies for future learning. This study should also look into the proposal to use Engineering Procurement and Construction (EPC) and turnkey contracts (FIDIC Silver Book)29 for mega construction projects.

2. General

72. From the lessons derived from the STDP, it is recommended that project design facilities or TA loans are used during the preparatory phase to implement most, if not all, of the preconstruction activities before project loans. The main preconstruction activities include feasibility study, detailed engineering, procurement, land acquisition and resettlement, and environmental safeguards.

29 FIDIC Conditions of Contract for EPC Turkey Projects

16 A

ppendix 1

DESIGN AND MONITORING FRAMEWORK

Design Summary

Performance Targets/Indicators

Data Sources/ Reporting

Mechanisms Actual Achievements (as of May 2014) Assumptions and Risks

Impacta

Expansion of economic opportunities and improvement of socioeconomic conditions of the people in the southern region

1.Contribution of the southern region to the national economy will increase. The GDP of the Southern Province was growing at 3.0% and the growth rate at the national level was 4.5% in 1999-2000. It is expected that the growth rate of Southern Province will be equal to the growth rate at the national level in 2013. 2.Rate of unemployment in the southern region will reduce from around 19% in 1999 and 9% in 2006 to be at least equal to the national unemployment rate in 2013 3.Proportion of people in poverty in the project area was 33% in 1996, and is expected to decline to 20% in 2013

1.Department of Census and Statistics 2.Department of Census and Statistics: quarterly labor market surveys

Substantially achieved b The GDP of the Southern Province has grown at 11.96% and the national GDP growth rate in 2012-2013 was 6.40%.

The rate of unemployment in the southern region in 2012 was 4.8% and the national unemployment rate is 4.0%. The percentage of people in the project area considered poor in 2010 was 9.8% of the total population in that area c

Assumption Economy remains stable and environment is conducive to economic growth

.

Appendix 1 1

7

Design Summary

Performance Targets/Indicators

Data Sources/ Reporting

Mechanisms Actual Achievements (as of May 2014) Assumptions and

Risks

Outcome 1. Operation of the highway 2. Increased economic opportunities for residents in the southern region through efficient road connectivity with the capital city and other regions

Travel time between Colombo and Matara reduced from 4.0–5.0 hours to 1.5-2.0 hours by 2010 Fatal accident rate on Galle Road (360 per 1 million vehicles) will be reduced by at least 10% in the first year of operation of highway, and is expected to continue to reduce in the following years, to reach 50% by 2013 Membership of Board of Investments of industries and commercial enterprises continually increases Number of commercial establishments within 1.5 km of side of the highway continually increases. Socioeconomic conditions of the four villages (Godagama, Kabaragala, Paraduwa, Yaddehimulla) used as the sampling baseline in 1999 will improve, especially on access to

RDA (Planning Division) annual report Board of Investments reports UDA/local authority records Direct field survey during construction and operation of highway in close consultation with Department Census and

Achieved Travel time between Colombo and Matara reduced to 1.5 hours in March 2014 After opening of the Southern Expressway, there is a reduction in the fatal accident rate on the Galle Road. In 2010, the accident rate was 25 per 1 million vehicles, in 2011 it went down to 21 per 1 million vehicles, and in 2012 it was 16 per 1 million vehicles. Two new industrial estates (Koggala and Mirijjawila) have been set up in the Southern Province and Hambanthota Port and Hambanthota International Airport were built after the STDP project started.

d

All four villages are in Galle and Matara districts. Yakdehimulla and Kabaragala are close to the Galle Port Access Road and the Pinnaduwa Interchange. The other two villages are mainly benefiting from the Export and Import Bank of China-funded section of the Southern Expressway. Overall, there is an increase in socioeconomic conditions in all four villages.

Assumptions The Motor Traffic Act and Thoroughfares Act will be enacted prior to operation of the highway. MOHRD and UDA coordinate with each other to implement special zone development areas along the highway Assumption Other resource inputs affecting the improvement of socioeconomic conditions of these four villages could be identified.

18 A

ppendix 1

Design Summary

Performance Targets/Indicators

Data Sources/ Reporting

Mechanisms Actual Achievements (as of May 2014) Assumptions and

Risks health, education and social services, transportation, and employment.

Statistics

Outputs 1. A four-lane limited access highway from Kottawa to Matara and the Galle access road are operating. 2. Interchange development area as a growth center

Construction completed by 2010; Basic road safety equipment in place by 2010. Around 100 staff for maintenance posts and rescue and emergency posts are assigned. By the first quarter of 2009: • zoning and guidelines for zoning formulated, and • at least three interchange development plans as centers of growth completed

By 2010 : Emergency response booths/posts are available at each interchange rescue and emergency staff are assigned.

RDA’s project performance management system TA report, UDA report RDA’s project Performance management system

Construction of the ADB-funded section of Southern Expressway was completed in April 2011; JICA-funded sections were completed in August 2011 and the Export and Import Bank of China-funded section was completed in January 2014. More than 400 staff were assigned in August 2011 to toll plazas, maintenance posts, and rescue and emergency posts. Zoning and guidelines for zoning were formulated and three interchange development plans as centers of growth completed in August 2009. The main emergency response center was established at Galanigama interchange and Emergency response posts were established at Galanigama, Kurundugahahethekma and Pinnaduwa interchanges in 2011. More than 100 staff, who are specially trained in rescue and emergency operations related to crashes

Assumptions The contractors perform satisfactorily without delaying the works to meet the agreed completion date.

MOHRD and RDA are effective in leading the contractors to complete civil work construction as scheduled.

Continued commitment on the counterpart budget Assumptions Effective coordination between MOHRD and UDA and supervision of the TA consultants ensures timely TA implementation.

Appendix 1 1

9

Design Summary

Performance Targets/Indicators

Data Sources/ Reporting

Mechanisms Actual Achievements (as of May 2014) Assumptions and

Risks 3. Incomes, employment, and living conditions of affected households are restored or improved 4. Public awareness campaign on operation and use of the highway

By 2009 the income restoration program is completed, and all resettlement sites are handed over to local authorities by the first quarter of 2008. At least 1 month prior to opening the highway, (i) a leaflet on what to do and not to do on the highway is distributed to the public, and (ii) a wide media information campaign is conducted.

Memorandum of understanding between RDA and local authorities Brochure/leaflet about operation of highway available for the public

were assigned in 2011. The income restoration program was completed in November 2010 and all resettlement sites were handed over to local authorities in the first quarter of 2008. . RDA started a public awareness campaign using electronic and print media three months prior to the opening of the Southern Expressway and continued the campaign after opening. Some of the videos produced on the use of the expressway are available at http://www.rda.gov.lk/supported/expressways/stdp.htm

Assumptions Effective RDA supervision of implementation of the income restoration program and completion of construction. RDA provides all required basic infrastructure at remaining resettlement site. Coordination between RDA and MOT for administrative regulation of transport sector is effective.

20 A

ppendix 1

Activities with Milestones Actual Implementation Schedule Inputs at Appraisal Actual Inputs 1. Civil Works 1.1. Package 1: Contract variation completed and approved by ADB January 2008; construction completed by September 2009 1.2. Package 2: Construction completed by third quarter 2010 2. Consultants 2.1 Construction supervision consultant: package 1 in place by March 2008 2.2. Management consultant: phase 2 in place by January 2009 3. Technical assistance TA commenced by June 2008 and completed by May 2009 4. Supporting facilities and others 4.1 Interchange development plan approved by UDA, third quarter 2009 4.2 Income restoration program completed by 2009 4.3 Handover of 32 resettlement sites to local authorities by second quarter 2008 4.4. Construction of emergency response booth completed by the end of 2010 4.5 Leaflet for operating the highway distributed or submitted to the public starting fourth quarter 2009

1. Civil Works 1.1. Package 1 (ADB-funded section): a restructured contract and not a contract variation. The restructured contract was signed on 25 June 2008 and the construction was completed in April 2011. 1.2. Package 2 (Export and Import Bank of China-funded section): construction was completed in January 2014

2. Consultants 2.1 Construction supervision consultant for package was appointed in July 2007. 2.2. Management consultant package was appointed in January 2009.

3. Technical assistance TA commenced in May 2008 and completed in October 2009

4. Supporting facilities and others 4.1 Interchange development plan approved by UDA in the third quarter of 2009 4.2 Income restoration program completed in November 2010 4.3 Handover of 32 resettlement sites to local authorities in the first quarter of 2008 4.4. Construction of emergency response booth in southeast section from Kottawa to Galle completed in August 2011. 4.5 Leaflet for operating the highway distributed / submitted to the public starting third quarter of 2011

1.1. The borrower: $89.1 million, and ADB loan: $90.0 million 1.2. The borrower will provide $99.2 million 2.1. ADB loan: $8.0 million 2.2. The borrower will provide $1.5 million and ADB loan $1.3 million 3. ADB TA grant: $300,000 and borrower contribution $75,000 in-kind

1.1. The borrower: $73 million; ADB loan: $90 million 1.2. The borrower provided $35.2 million and Export and Import Bank of China provided $38.0 million. 2.1. ADB loan of $8 million 2.2. The borrower will provide $1.5 million and ADB loan $1.3 million 3. ADB TA grant of $300,000 and borrower contribution $75,000 in-kind

ADB = Asian Development Bank, GDP = gross domestic product, JICA - Japan International Cooperation Agency, MOHRD = Ministry of Highways and Road Authority, MOT = Ministry of Transport, RDA = Road Development Authority, STDP – Southern Transport Development Project, TA = technical assistance, UDA = Urban Development Authority Notes : a. These are achievements of the first 2 years of operation of the Southern Transport Development Project. While the period of operation may be short, the social and economic investments made under the STDP since 2000 have attracted government and private sector investment to the Southern Province b. Data for 2013 were not available at the time of study c. The poverty report is updated in every 3 years and the latest data is available for 2009/10. d. As per the approved land use plan, there is a restriction for establishing new commercial establishments in close proximity to the Southern Expressway. As such, this indicator is inconsistent with the approved land use plan. It is therefore proposed that other indicators be monitored for the PPER study

Appendix 2 21

PROJECT OUTPUTS AND FINANCING SOURCES

1. The first two sections of the Southern Transport Development Project are financed by the Japan International Cooperation Agency (JICA) and the total length of these two sections is 66.6 kilometers (km). The civil works contract of the first section (section I) from Kottawa to Dodangoda (34.9 km) was awarded in August 2005. The civil works contract of the second section (section II) from Dodangoda to Kurundugahahethekma (31.7 km) was awarded in March 2006 as a two-lane section and was subsequently restructured to four lanes in 2008. The JICA-financed sections were completed in August 2011. 2. The present third and fourth sections (section III from Kurundugahahethekma to Pinnaduwa and section IV from Pinnaduwa to Godagama) of the project (total 59.6 km) were originally financed by the Asian Development Bank (ADB) under STDP original loan1. The main scope was the construction of a two-lane, access-controlled highway from Kurundugahahethekma to Godagama, and the Galle Port Access Road. In view of the envisaged stage construction, right-of-way had been acquired for six lanes. The civil works contract was awarded in January 2003. In 2006, the government decided to upgrade the two-lane highway to a four-lane expressway, and requested a supplementary loan, which ADB approved.2 3. ADB processed a supplementary loan (STDP supplementary loan3) in 2008 to complete section III as four lanes. The civil works contract was restructured accordingly. Subsequently, the government sought financial assistance from the Export and Import Bank of China for the completion of the balance of works in section IV (about 30 km). 4. Details of all funding agencies, civil works contractors, and consultants involved in the project are given in the following table.

Project Output Financing Agency Loan No.

Consultant/ Contractor

Southern Highway Component Southern Highway Component Management Consultancy (up to Jan 2009) Management Consultancy (From Jan 2009 up to Dec 2011)

NDF

ADB

324

1711-SRI (SF)

Finnroad with Surath Wickramasinghe Associates Egis Bceom International in association with Consulting Engineers and Architects

Southern Highway Component

ADB Section-Kurundugahahethekma to Matara Supervision Consultancy

ADB 1711-SRI (SF) Halcrow Group with Roughton International and ECL

Southern Highway Component

ADB Section-Kurundugahahethekma to Pinnaduwa Construction Contract

ADB 1711-SRI (SF) Kumagai Gumi

Southern Highway Component ADB 2413-(SRI) Kumagai Gumi

1 ADB. 1999. Report and Recommendation of the President to the Board of Directors: Proposed Loan to the Democratic Socialist Republic of Sri Lanka for the Southern Transport Development Project. Manila (Loan 1711-SRI [SF], approved on 25 November).

2 ADB granted the request for the following reasons: (i) there was adequate traffic demand, (ii) financial savings from the civil works would result from converting the road into a four-lane expressway, (iii) to ensure a consistent four-lane standard for the entire length from Kottawa to Matara, and (iv) to improve road safety.

3 ADB. 2008. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical Assistance Grants to the Democratic Socialist Republic of Sri Lanka for the Southern Transport Development Project. Manila (Supplementary Loan 2413-SRI, approved on 6 March).

22 Appendix 2

Project Output Financing Agency Loan No.

Consultant/ Contractor

ADB Section – Supplementary Loan Kurundugahahethekma to Pinnaduwa Construction and Supervision Consultancy

Roughton International, UK

Southern Highway Component South Section (Balance Work) Pinnaduwa to Godagama and GPAR Construction and Consultancy

CEXIM China National Technical Import & Export Corporation. RDC/ECL/MGC Joint Venture

Southern Highway Component

JICA Section-Kottawa to Kurundugahahethekma Design and Supervision Consultancy

JICA SL-P 70 Oriental Consultants with JBSI and RDC

Southern Highway Component

JBIC Section-Kottawa to Dodangoda Construction Contract (Package 1)

JICA SL-P 70 China Harbour Engineering Company

Southern Highway Component

JBIC Section-Dodangoda to Kurundugahahethekma Construction Contract (Package 2)

JICA SL-P 70 Taisei Corporation

Road Safety Component Road Safety Component Road Safety Consultancy

Sida and NDF

1999-02432 Sweroad with RDC

Road Safety Component Procurement of Equipment

NDF 324 Partly completed and terminated

Road Safety Component Black Spot Civil Works

ADB 1711- SRI (SF) Awarded to local contractors and completed

ADB – Asian Development Bank, CEXIM - Export and Import Bank of China , JICA - Japan International Cooperation Agency, NDF – Nordic Development Fund, Sida - Swedish International Development Project Source: Government of Sri Lanka. 2013. Southern Transport Development Project: Borrower’s Project Completion Report. Colombo and STDP Project Management Unit data

Appendix 3 23

RELEVANCE OF THE SOUTHERN TRANSPORT DEVELOPMENT PROJECT TO GOVERNMENT PLANS

A. General 1. The Southern Province, one of the country's nine provinces, covers nearly 5,500 square kilometers, about 8.4 % of the country. About 20% of the population live in urban areas, including Galle (the provincial capital and district center, with a population of 100,000), Matara and Hambantota towns (the other district centers), and four other towns. The population is approximately 2.2 million, which makes it the country's second most densely populated province and accounts for about 13% of Sri Lanka’s total population. However, this significance is not matched by economic performance. Unemployment, underemployment, and poverty rates are high throughout the province and are seen by the government as key concerns that must be addressed. The relative significance of the provincial economy is reflected in its share of gross domestic product, as shown in the following table.

Provincial Shares in Gross Domestic Product

GDP = gross domestic product. Source: Central Bank of Sri Lanka. 2013

2. The southern region has traditionally been constrained by poor transport links to other parts of the country, which contributed to low per capita incomes and high rates of unemployment, contributing to a gross domestic product per capita which on average from 2000 to 2010 was 20% below the national average and only half that in Colombo. While the southern region has benefited from social development, it is still lagging behind other regions in terms of economic development. The districts within the southern region have satisfactory access to basic social services but are characterized by low levels of per capita income and high levels of unemployment, especially among females. Poverty is associated with lack of economic opportunity, caused by slow growth of agriculture, with nonfarm activities being mainly confined to the coastal towns, and tourism growth having been curtailed by the civil unrest of the past. 3. A master plan for the development of the Southern Area was prepared in 1995/96 with assistance from the Japan International Cooperation Agency (JICA). The master plan was intended to provide a strategy for economic growth in the south and advocated, among other things, strengthening the links to Colombo and improving access to inland areas and the southeast dry zone. The master plan identified many potential development projects, one of the most important being improved road connections from the southern area to Colombo, by the coastal corridor, and also by an existing but yet to be improved central route. The preparation of the master plan reflects the government’s determination to realize economic growth in the south. Fundamental to the success of many of the

Province Growth (%)

2008 2009 2010 2011 2012 2011/12

Western 45.4 45.8 44.8 44.2 43.4 13.7

Central 9.8 9.8 10.0 9.8 9.8 15.3

Southern 10.5 10.5 10.7 11.1 11.5 21.3

Northern 3.2 3.2 3.4 3.7 4.0 25.9

Eastern 5.6 5.8 6.0 5.8 6.3 25.0

North Western 9.9 9.7 9.5 10.0 9.6 11.4

North Central 4.7 4.6 4.8 4.7 4.7 15.9

Uva 4.5 4.5 4.5 4.5 4.5 15.4

Sabaragamuwa 6.4 6.1 6.3 6.2 6.2 15.2

National GDP 100.0 100.0 100.0 100.0 100.0 15.9

Share in GDP (%)

24 Appendix 3

economic and social development projects proposed for the region is the need to ensure that basic infrastructure facilities are available to avoid bottlenecks to development.

4. To implement the strategy for the Southern Province, the government in 1996 established the Southern Development Authority. The authority initially focused its efforts on developing and implementing large projects, including an international port for Hambantota, the Southern Expressway, the Southern International Airport, and the Matara-Kataragama railway line. Subsequently, the focus was on small and medium-scale regional development projects and at attracting local and foreign investors to the region. In addition, the Southern Development Authority has been able to revitalize tea factories. Having identified the needs of rural communities, the authority implemented various development programs in the manufacturing industry, plantations, fisheries, and agriculture.

5. The expected outcomes of these efforts are an expansion of formal sector employment, notably in manufacturing and services, which may reduce the high rates of unemployment among females and young people. In both cases, existing unemployment is partly due to unwillingness to take up low-paid and low-skill jobs, such as work on plantations. If more formal sector jobs become available, it may be expected that more women and young people will wish to take up employment. Increased female participation in the labor force and increased employment take-up by women may be the most significant gender impacts. B. Relevance of the Project

6. The government has long considered that the development of the southern region is of strategic importance to the country's political stability and economic prospects, with balanced regional development and the unexploited potential of the Southern Province the main concerns. To date, Sri Lanka’s economic growth has been driven by the Colombo Metropolitan Region, which currently generates about 45% of the country’s gross domestic product (GDP), while the Southern Province is much below the country’s average in terms of regional GDP, per capita income, and employment. To achieve a more spatially balanced distribution of welfare and economic opportunities, the government has identified potential growth centers to serve as regional and subregional hubs. 7. The prospective growth centers1 include Hambantota and Galle in the Southern Province. The establishment of the Southern Development Authority coupled with a number of major development projects, notably the construction of a new sea port and international airport at Hambantota, reflect the government’s determination to implement its ambitious strategy, of which the STDP is an integral part. 8. Sri Lanka’s urban population has been growing steadily and this trend is expected to continue. Along with urbanization, Sri Lanka is shifting from a predominantly rural-based economy to an urban economy, concentrated on manufacturing and services.2 Fundamental to desirable outcomes of the structural change process and to the success of the government’s regional policy is the availability of efficient transport infrastructure.

9. The Galle Road has been the primary connection between the Southern Province and the economically advanced Western Province. It has been and still is one of the country's most heavily trafficked transport arteries. Although the road has been rehabilitated following the tsunami disaster of 2004, its design has not been improved and remains inadequate to cope with current traffic volumes. Trying to increase the Galle Road’s capacity on its existing alignment was found impractical because of the prohibitive cost involved in land acquisition and involuntary resettlement. In addition, the road would

1 Ministry of Finance and Planning. 2006. Mahinda Chintana: Vision for a new Sri Lanka. A Ten-Year Horizon Development Framework 2006–2016. Discussion Paper. Colombo. Available: http://www.mahindarajapaksa.com/ MahindaChinthanaEnglish.pdf

2 World Bank. 2013. Country Program Snapshot. Washington, DC.

Appendix 3 25

still have to pass through densely populated areas and would thus not have removed the basic problems of long travel times, high transport costs, and safety and environmental risks. Considering that its economic strategy rests on efficient transport logistics, which is a determinant of the country’s trade competitiveness,3 the government did not accept the status quo and assessed several inland alternatives to the Galle Road. As such, the Southern Expressway is critical to the development of the Southern Province and the government has already started to extend the Southern Expressway up to Hambanthota. 10. The Mahinda Chintana: Vision for a New Sri Lanka-A Ten Year Horizon Development Framework 2006-2016 had an ambitious goal of completing around 600 km of access-controlled expressways in 10 years to provide a high-quality road network with unsurpassed intercity mobility for the transportation of passengers and goods, recognizing the strategic correlation between investment in roads and economic growth. The Mahinda Chintana 2010 introduced an additional objective for the expressway program-to support and facilitate the transformation of Sri Lanka into a dynamic global hub for shipping, aviation, and commerce, thus enhancing the country’s historical role as a link between the East and the West. Accordingly, once the Southern Expressway is extended to Hambanthota, the expressway system formed by the proposed Northern Expressway, proposed Colombo-Kandy Expressway, and the recently opened Katunayaka Colombo Expressway will (i) provide high-speed road connectivity between the two international ports (Colombo and Hanbantota) and the two international airports (Bandaranayake International Airport and Matalla); and (ii) link these strategic transport assets with a network of five planned metro regions, including 14 main urban centers.4 This would help deconcentrate economic activity from Colombo and assure a more even distribution of economic opportunity as well as urban settlements. Reductions in travel times, distances, and vehicle operating costs are expected to result in considerable resource savings for consumers and producers, especially for high-value freight and perishable commodities. Faster, safer, and more comfortable travel will provide a major boost to tourism. With concurrent improvements in transport logistics, just-in-time delivery will become possible, allowing manufacturers and distributors to hold smaller inventories and respond more quickly to changing market tastes.

3 RDA. 2007. National Road Master Plan (2008–2017). Colombo: Ministry of Highways.

4 These are the Colombo metro region (Colombo, Gampaha, Kalutara), North Central metro region (Anuradhapura,

Polonnaruwa, Trincomalee, Dambulla), Southern metro region (Hambantota, Galle), Northern metro region (Jaffna), Eastern metro region (Ampara and Batticaloa), and two important district headquarters—Kandy and Kurunegala.

26 Appendix 4

26

COMPARISON OF COST ESTIMATES AT APPRAISAL AND ACTUAL COST AT PROJECT COMPLETION ($ million)

GOSL JBIC NDF SIDA CEXIM Total GOSL JBIC NDF SIDA CEXIM Total

ADF (L1711) OCR(2413) ADF (L1711) OCR(2413)

A. Southern Highway Component

a. Land Acquisition 0.00 0.00 7.60 0.00 0.00 0.00 0.00 7.60 0.00 0.00 44.20 0.00 0.00 0.00 0.00 44.20

b. Civil Works 57.00 0.00 56.90 108.00 0.00 0.00 0.00 221.90 71.35 69.25 186.27 265.73 0.00 0.00 0.00 592.60

c. Consulting Services

Supervision Consultancy 5.30 0.00 12.00 0.00 0.00 0.00 17.30 9.80 8.00 3.20 12.72 0.00 0.00 0.00 33.72

Management Consultancy 0.00 0.00 0.00 0.00 2.30 0.00 0.00 2.30 0.00 1.30 2.80 0.00 2.30 0.00 0.00 6.40

Sub Total 62.30 0.00 64.50 120.00 2.30 0.00 0.00 249.10 81.15 78.55 236.47 278.45 2.30 0.00 0.00 676.92

B. Road Safety Component

a. Civil Works (Black spot improvements) 2.10 0.00 0.50 0.00 0.00 0.00 0.00 2.60 2.10 0.00 0.50 0.00 0.00 0.00 0.00 2.60

b. Road Safety Equipment and other facilities 0.00 0.00 0.00 0.00 2.10 0.00 0.00 2.10 0.00 2.45 4.45 0.00 2.10 0.00 0.00 9.00

c. Consultancy 0.00 0.00 0.00 0.00 2.30 1.00 0.00 3.30 0.00 0.00 0.00 0.00 2.30 1.00 0.00 3.30

Sub Total 2.10 0.00 0.50 0.00 4.40 1.00 0.00 8.00 2.10 2.45 4.95 0.00 4.40 1.00 0.00 14.90

C. Project Management Component

a. Incremental Expenditure 0.50 0.00 0.00 0.00 0.00 0.00 0.00 0.50 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

b. Project Management 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1.00 0.50 0.00 0.00 0.00 0.00 1.50

Sub Total 0.50 0.00 0.00 0.00 0.00 0.00 0.00 0.50 0.00 1.00 0.50 0.00 0.00 0.00 0.00 1.50

D. Contingencies

a. Physical 6.70 0.00 1.70 0.00 0.00 0.00 0.00 8.40 4.50 3.50 7.90 0.10 0.00 0.00 0.00 16.00

b. Price 15.50 0.00 11.50 0.00 0.00 0.00 0.00 27.00 6.70 4.50 10.00 0.15 0.00 0.00 0.00 21.35

Sub Total 22.20 0.00 13.20 0.00 0.00 0.00 0.00 35.40 11.20 8.00 17.90 0.24 0.00 0.00 0.00 37.34

Interest Charge and Other Financing Charges

a. Interest Charge

Interest During Construction (ADB - ADF) 2.90 0.00 0.00 0.00 0.00 0.00 0.00 2.90 0.00 0.00 0.00 11.30 0.00 0.00 0.00 11.30

Interest Charge (JBIC/JICA) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3.00 0.00 6.00 0.00 0.00 0.00 0.00 9.00

b. Commitment Charge 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Commitment Charges (ADB - OCR) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.40 0.00 0.00 0.00 0.00 0.40

Commitment Charge (JBIC/JICA) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 6.35 0.00 0.00 0.00 6.35

Commitment Fee (CEXIM) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Sub Total 2.90 0.00 0.00 0.00 0.00 0.00 0.00 2.90 3.00 0.00 6.40 17.65 0.00 0.00 0.00 27.05

Total 90.00 0.00 78.20 120.00 6.70 1.00 0.00 295.90 97.45 90.00 266.22 296.34 6.70 1.00 0.00 757.71

Component

Appraisal as at 1999

ADB

Appraisal as at 2008

ADB

Appendix 4 27

ADB – Asian Development Bank, CEXIM – Export - Import Bank of China, FC – Foreign Component, GOSL – Government of Sri Lanka , JBIC – Japan Bank of International Cooperation, LC – Local Component, NDF – Nordic Development Fund, SIDA – Swedish International Development Agency Source: PCR computations from STDP Project Management Unit data

FC LC Total

A. Southern Highway Component

a. Land Acquisition 7.60 44.20 0.00 0.00 38.62 0.00 0.00 0.00 0.00 0.00 38.62 38.62

b. Civil Works 221.90 592.60 67.32 15.10 82.42 79.43 79.43 157.05 313.70 0.00 0.00 159.48 540.50 251.59 792.08

c. Consulting Services 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Supervision Consultancy 17.30 33.72 7.00 2.22 9.23 4.60 4.60 8.55 17.25 0.00 0.00 0.00 24.25 15.36 39.62

Management Consultancy 2.30 6.40 0.00 2.09 2.09 0.19 0.00 1.90 0.00 0.00 1.90 2.28 4.18

Sub Total 249.10 676.92 74.32 17.33 91.65 86.12 86.12 204.40 330.95 1.90 0.00 159.48 566.65 307.85 874.50

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

B. Road Safety Component 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

a. Civil Works (Black spot improvements) 2.60 2.60 0.71 0.31 1.02 0.00 0.45 0.00 0.00 0.00 0.00 0.71 0.77 1.47

b. Road Safety Equipment and other facilities 2.10 9.00 0.00 2.76 2.76 3.70 2.88 0.00 0.00 0.00 2.88 6.46 9.34

c. Consultancy 3.30 3.30 0.00 0.00 0.00 0.00 1.80 0.80 2.60 0.00 2.60

Sub Total 8.00 14.90 0.71 0.31 1.02 2.76 2.76 4.15 2.88 1.80 0.80 0.00 6.19 7.22 13.41

C. Project Management Component 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

a. Incremental Expenditure 0.50 0.00 0.00 1.62 1.62 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1.62 1.62

b. Project Management 0.00 1.50 0.00 1.13 1.13 1.15 0.00 0.00 0.00 0.00 0.00 2.28 2.28

Sub Total 0.50 1.50 0.00 1.62 1.62 1.13 1.13 1.15 0.00 0.00 0.00 0.00 0.00 3.90 3.90

D. Contingencies

a. Physical 8.40 16.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

b. Price 27.00 21.35 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Sub Total 35.40 37.34 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Interest Charge and Other Financing Charges

a. Interest Charge

Interest During Construction (ADB - ADF) 2.90 11.30 1.69 0.00 1.69 0.00 6.00 0.00 0.00 0.00 0.00 1.69 6.00 7.69

Interest Charge (JBIC/JICA) 0.00 9.00 0.00 0.00 0.00 0.00 0.00 4.05 0.00 0.00 0.00 4.05 0.00 4.05

b. Commitment Charge 0.00 0.00

Commitment Charges (ADB - OCR) 0.00 0.40 0.00 0.00 0.00 0.00 0.40 0.00 0.00 0.00 0.00 0.00 0.40 0.40

Commitment Charge (JBIC/JICA) 0.00 6.35 0.00 0.00 0.00 0.00 0.00 1.14 0.00 0.00 0.00 1.14 0.00 1.15

Commitment Fee (CEXIM) 0.00 0.00 0.00 0.00 0.00 0.00 1.37 0.00 0.00 0.00 0.00 0.00 1.37 1.37

Sub Total 2.90 27.05 1.69 0.00 1.69 0.00 0.00 7.77 5.20 0.00 0.00 0.00 6.89 7.77 14.67

Total 295.90 757.71 76.72 19.26 95.98 90.00 90.00 217.48 339.03 3.70 0.80 159.48 579.73 326.74 906.47

Component

Actual

ADB GOSL JBIC/JICA NDF

Appraisal

as at 1999

SIDA EXIM Bank

Total

ADF (L1711) OCR (L2413)

Appraisal

as at

2008

28 Appendix 5

COMPOSITION OF PROJECT FINANCING BY SOURCE

ADB – Asian Development Bank, JBIC – Japan Bank of International Cooperation, JICA – Japan International Cooperation Industry, NDF – Nordic Development Fund, SIDA – Swedish International Development Agency Source: PCR computations from STDP Project Management Unit data

FINANCING SOURCE

Foreign Local Total Foreign Local Total

Exchange Currency Shares Exchange Currency Shares

Government 0.0% 29.6% 14.1% 0.0% 91.9% 24.0%

JBIC/JICA 59.0% 42.9% 51.4% 50.6% 0.0% 37.4%

ADB 37.5% 27.0% 32.5% 24.9% 8.1% 20.5%

NDF 3.1% 0.4% 1.8% 0.6% 0.0% 0.4%

SIDA 0.5% 0.1% 0.3% 0.1% 0.0% 0.1%

CEXIM 0.0% 0.0% 0.0% 23.8% 0.0% 17.6%

TOTAL 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

APPRAISAL (1999) COMPLETION (2011)

FINANCING SOURCE

Foreign Local Total Foreign Local Total

Exchange Currency Cost Exchange Currency Cost

Government 0.0 78.2 78.2 0.0 217.5 217.5

JBIC/JICA 84.7 35.3 120.0 339.0 0.0 339.0

ADB 64.3 25.7 90.0 166.7 19.3 186.0

NDF 5.2 1.5 6.7 3.7 3.7

SIDA 0.8 0.2 1.0 0.8 0.0 0.8

CEXIM 0.0 0.0 0.0 159.5 0.0 159.5

TOTAL 155.4 140.9 296.3 669.7 236.7 906.5

APPRAISAL (1999) COMPLETION (2011)

($ million) ($ million)

Appendix 6 29

DISBURSEMENTS AND CONTRACT AWARDS

I. Disbursements

Figure A6.1: ADB Loans – Cumulative Disbursements (Actual and Planned) ($ million)

Source: PCR computations from STDP Project Management Unit data.

II. Contract Awards

Figure A6.2: ADB Components – Cumulative Contract Awards (Actual and Planned)

($ million)

Source: PCR computations from STDP Project Management Unit data

30 A

ppendix 7

IMPLEMENTATION SCHEDULE – PLANNED AND ACTUAL

Sources: PCR computations from STDP Project Management Unit data

A. Pre-construction Activities

Selection of Consultants for Engineering and Supervision

Prequalif ication of Contractors

Bidding of Civil w orks

Land Acquisition and Resettlement

Environment

B. Civil Works

Construction (all sections)

Design Variation to 4-lane standard

Contract CEXIM Bank

D. Operation on Completed Sections

Legend Appraisal Actual

ACTIVITIES 2008 2009 2010 2011 2012 20132004 2005 2006 20072000 2001 2002 20031999

Appendix 8 31

PROJECT IMPLEMENTATION ORGANIZATION

ADB – Asian Development Bank, CEXIMB - Export-Import Bank of China, JICA = Japan International Cooperation Agency, STDP – Southern Transport Development Project

Source: Government of Sri Lanka. 2011. Southern Transport Development Project: Borrower’s Project Completion Report. Colombo

Ministry of Highways, Ports &

Shipping

External Financing Agencies

(JICA, ADB, CEXIMB)

Road Development Authority (Executing Agency)

Project Management Unit Management Consultants

Engineering and Construction Supervision

STDP Coordinating

Committee

Involuntary Resettlement

Monitoring

32 Appendix 9

COMPLIANCE WITH LOAN COVENANTS

Covenant Status Remarks 1 Project Administration

RDA to have a PMU and assisted by management Consultants (LA Schedule 6, para 2)

Complied with

2 A Project coordination Committee (PCC) shall be established. It shall be chaired by the chairman, RDA and have representatives from ERD, MOTH, RDA, and National Planning Department, JBIC, the Bank, engineering services consultants, SHC management and construction supervision consultant and other members to be invited for specific purposes. The PCC shall be responsible for coordinating the Bank and JBIC-financed components of Part A of the Project, in particular coordination of land acquisition, resettlement, environment impact mitigation, technical standards and scheduling. (LA Schedule 6, para 4)

Complied with

Subsequently, the same PCC also coordinated the activities of the Export and Import Bank of

China funded section.

3 No later than 12 months after the award of the first civil works contract for the Bank-financed portion of the SHC, the Borrower will have acquired the balance of the right-of-way (the first 50% of the right-of-way will have been acquired as a condition for the award of the first civil works contract). (LA Schedule 6, para 8)

Partly Complied with

100 % of ROW was

handed over to the contractor at the end

of September 2005. Handing over the

5km long section in

Akmeemana area was delayed until

September 2005. All payment of

compensation in ADB financed section was

completed in January

2007, and 99% payment of all

compensation in JBIC section completed as

of end June 2007. Additional land acquisition, which has become necessary due to changes to the design, slope failures etc. has also been completed.

Appendix 9 33

Covenant Status Remarks 4 Environmental Matters

The Borrower will ensure that all environmental mitigation measures identified in the EIA and in the Central Environment Authority's approval of the Project are incorporated in the design of the SHC, and followed during construction, operation, and maintenance of the project highway. RDA will ensure that the Project adheres to ADB's Environmental Guidelines for Selected Infrastructure Project (Highways and Roads). (LA Schedule 6, para 9)

Complied with

The Bank guidelines

have been translated into EMP that was

approved by CEA on

September 2005. The updated EMP to

accommodate the finding of the SEA

study was submitted to CEA on 24 January

2007. The updated EMP was approved by CEA

on 3 September 2007 and was implemented

under the whole

project. The same EMP was also used

for the Export and Import Bank of China funded section.

5 The Borrower and RDA will ensure that contracts with consultants and civil works contractors include provisions requiring them to avoid adverse consequences to the environment. (LA Schedule 6, para 11)

Complied with

Appropriate clauses

were included in the contract for civil

works. The revised

EMP was implemented.

6 Resettlement The Borrower and RDA will ensure that relocation, resettlement, and compensation of all persons who are adversely affected by the Project will be carried out in accordance with the Resettlement Implementation Plan, as agreed between the Borrower and the Bank, the Bank's Policy on Involuntary Resettlement and Handbook on Resettlement, so that project- affected persons will improve or at least maintain the standard of living they were enjoying before the implementation of the Project. (LA Schedule 6, para 12)

Complied with

Resettlement and compensation paid to all affected persons.

Resettlement and compensation payments have been completed. Income restoration measures have been completed and an assessment has been conducted to fulfill the covenant requirement of ensuring that project affected persons will improve or at least maintain the standard of living.

7 The following principles will apply for the entitlements and compensation of project-affected persons: (a) the Borrower and RDA will ensure that all compensation payments will be made to project-affected persons prior to their relocation; (b) the Borrower and RDA will ensure that vulnerable groups,

Partly Complied with.

In the Second Annual Monitoring Report, the Compliance Review Panel concluded that the requirement of the Borrower that all

34 Appendix 9

Covenant Status Remarks such as households headed by women, will be provided with an adequate entitlement package which will include entitlement to build housing, assistance to build housing with materials and labor, and other administrative and technical assistance as required; (c) the Borrower and RDA will ensure that a special compensation package is made available to untitled land users and squatters, (d) the Borrower and RDA will ensure that project-affected persons who are operating commercial enterprises are provided with an assessment of the development of small business areas with access to markets to assist them in finding suitable sites for new businesses if cash compensation alone is insufficient; and (e) the Borrower and RDA will ensure that they will assist project-affected persons purchase land for farming and livelihoods if so required. (LA Schedule 6, para 13)

compensation payments will be made to project-affected persons prior to their relocation has not been fulfilled for some affected people. The Borrower informed that they have received the balance payments after the relocation. The following have been fully complied with at project completion: assistance to vulnerable and women households, special compensation for untitled land users, and assistance to small commercial enterprises. Please refer to Appendices 14 and 15 for details

8 RDA will contract with an independent monitoring agency acceptable to the Bank by no later than 30 June 2000 to supervise and monitor the Resettlement Implementation Plan. The services of the monitoring agency will extend until the completion of all compensation, resettlement, and relocation under the Plan. (LA Schedule 6, para 14)

Complied with.

Monitoring agency was engaged and their services were terminated in April 2003 due to poor performance. MC undertook the task of monitoring. Another independent external monitor was hired and mobilized on 3 April 2006. ADB recruited,

through TA4748, an independent external

monitoring team, the

Centre for Poverty Analysis (CEPA) from

March 2006 for 2 years. ADB extended

the services of CEPA until December 2011.

9 Once the Project is complete, and the project highway has been in service for some time, RDA will contract with an independent external agency acceptable to the Bank to evaluate the impact of the Project on development within the

Not yet Due. The expressway section from Pinnaduwa to Matara was opened to public

Appendix 9 35

Covenant Status Remarks project area. The evaluation will include changes in land use, private and public sector investments, poverty levels, and such other indicators as RDA and the Bank agree are appropriate. The evaluation will also study the impact of the Resettlement Implementation Plan, to assess whether project-affected persons regained or improved the livelihood and standard of living they enjoyed before the Project commenced. (LA Schedule 6, para 15)

only in March 2014. As such, the Borrower is intending to do this study in early 2015.

10 Operations and maintenance. Commencing on completion of the SHC, the Borrower will ensure that the routine and periodic maintenance of the project highway will be contracted out to private sector operators by RDA. (LA Schedule 6, para 16)

Being complied with

In 2011, RDA invited bids from private sector for maintaining the expressway on the Performance Based Road Maintenance contract. Bid prices received were excessively higher than the engineer’s estimate and RDA decided to call for bid when the whole Southern Expressway is completed. Now the Southern Expressway is completed and RDA is considering outsource the routine and periodic maintenance of the Southern Expressway On OPRC basis.

11 Commencing in Fiscal Year 2005, the Borrower will ensure that it has made adequate provision for the routine and periodic maintenance of the project highway, by increasing the annual budget allocation for routine and periodic maintenance of the roads for which RDA is responsible over and above the allocations covenanted under the Loan Agreement for Loan 1649-SRI(SF): Road Network Improvement Project. (LA Schedule 6, para 17)

complied with

Road Maintenance Trust Fund has been established in October 2005. In 2006, all allocations for road maintenance are being channeled through this trust fund. The Borrower has allocated $36 million and $42 million during FY 2006 and FY 2007 , respectively, for road maintenance. Later These are significant increase compared to FY2005 budget of $19 million. The financial analysis carried out during the

36 Appendix 9

Covenant Status Remarks PCR study has found that income generated from the Southern Expressway is sufficient to recover all its cost including, maintenance, depreciation and maintenance cost.

12 RDA and NRSS will ensure that the contracts they enter into with consultants for their respective components of the Project contain provisions requiring the consultants to submit the reports described in para. G9 (LA Schedule 6, para 18 to 20)

Complied with

13 RDA shall ensure that the contract concluded with the engineering services consultant for the Bank financed portion of the SHC shall include a clause requiring the engineering services consultant to provide monthly reports to RDA, MOTH, ERD and the Bank, such monthly reports to include reports on the status of land acquisition and to be provided until the civil works contracts for the SHC of the project have been executed by RDA. (LA Schedule 6, para 18)

Complied with

Monthly progress reports were submitted by consultants through out the project period

14 RDA shall ensure that the contract concluded with the management consultant for the SHC shall include: (a) a clause that, upon commencement of implementation of the SHC, the consultant shall provide RDA, MOTH, ERD, JBIC and the Bank with monthly reports based on detailed reports of supervision consultants for the JBIC-financed portion and the Bank-financed portion under the SHC; and (b) a clause that, upon completion of the project, the management consultant shall provide RDA, JBIC, MOTH, ERD and the Bank with a Project Completion Report in a format acceptable to RDA, JBIC and the Bank. (LA Schedule 6, para 19)

Complied with

15 MOTH shall ensure that the contract concluded with consultants for the RSC of the Project shall include a clause requiring the consultants to provide quarterly reports for submission to NRSS, MOTH, Sida, NDF and the Bank. (LA Schedule 6, para 20)

Complied with

16 Accounts and Audits Without limiting the generality of the provisions of section 4.04 of this Loan Agreement, the Borrower shall ensure that (i) records and accounts be maintained which identify the financing resources received and expenditures made on the project: (ii) such Project accounts and related financial

Complied with

Appendix 9 37

Covenant Status Remarks statements are audited annually in accordance with sound auditing standards by auditors acceptable to the Bank; and (iii) such Project accounts and related financial statements shall be supplied by the Borrower to the Bank no later than 12 months after the end of the Fiscal Year to which they refer. (LA Schedule 6, para 22)

17 Monitoring and Evaluation For the SHC, RDA assisted by SHC management and supervision consultants, shall undertake arrangements satisfactory to the Bank on monitoring and evaluation. Such monitoring and evaluation shall include traffic, axle load and other data required to establish a base line for the pre-construction condition of access highways and shall continue to be monitored by RDA after Project completion. (LA Schedule 6, para 23)

Complied with

18 For the RSC, NRSS, assisted by the RSC consultants, shall undertake arrangements, satisfactory to the Bank on monitoring and evaluation. Such monitoring and evaluation shall include indicators on fatality and accident numbers. (LA Schedule 6, para 24)

Complied with

This monitoring of the Southern Expressway is carried out by EOMMD.

19 The borrower shall ensure that the recommendations arising from the technical assistance provided by the Bank on the National Highways Act and the Motor Traffic Act shall be taken into account in preparing and approving for enactment amendments to the Borrower’s Motor Traffic Act required for purposes of Part D of the Project. The amendments to the Borrower’s Motor Traffic Act thus finalized shall have been enacted by the Borrower’s Parliament by 31 December 2001. (LA Schedule 6, para 27)

Delayed Compliance.

The National Highways Act was renamed as The National Thoroughfares Act and was passed in the parliament and gazetted in Dec 2008, The Mortar Traffic Act was passed in the parliament gazetted in Aug. 2011.

20 Reengineering of Road Sector Institutions The Borrower will (a) ensure that the recommendations of the TA on Reengineering Road Sector Institutions are completed by no later than 31 December 2000; (b) review the completed recommendations of the Reengineering TA with the Bank and agree with the Bank on an action plan for implementation of the recommendations; (iii) by no later than 31 March 2001, ensure that Cabinet approves a national roads policy taking account of the recommendations, and submits to Parliament any legislative change to the statutory basis for road sector institutions required to implement this national roads policy; and (iv) after Cabinet approval of the national roads policy, continue to keep the Bank informed at regular intervals as to implementation of the policy.

Complied with

(i) The TA was completed in 2001.

(ii) The Re-engineering Action Plan was agreed upon between ADB and the Borrower in 2001.

(iii) The National Road Policy took into account the re-engineering action plan. No

38 Appendix 9

Covenant Status Remarks (LA Schedule 6, para 25)

regulatory change was proposed.

The Re-engineering action plan has been implemented under Loan 1986-SRI: Road Sector Development Project.

Specific Assurances under Loan No. 2413-SRI

Covenant Status Remarks 1 Environment. The Borrower will cause MOHRD and RDA to

ensure that (i) the Project is designed, constructed, implemented, and maintained in accordance with the Borrower's National Environmental Act. No. 47 of 1980, as amended, and ADB's Environment Policy (2002); (ii) the revised EMP is implemented in accordance with its terms so that all adverse environmental impacts during construction and operation of the project highway are mitigated; and in the event of any unanticipated adverse environmental impacts, such impacts are reported to CEA and ADB, and remedial actions taken to mitigate the impacts in consultation with the affected persons, CEA, and ADB; (iii) necessary staff and resources are provided to the environmental monitoring committee and ESD to enable it to review, audit, and monitor implementation of the EMP; (iv) contractors and supervision contractors are provided with the approved EMP, EIA, and summary EIA; and the contractors implement the required mitigation measures as described in the EMP in a satisfactory manner, and report on the implementation of the EMP on a regular basis, along with any deviation from the EIA; and (v) the management consultant submits a monitoring report every 6 months to ADB and to the environmental monitoring committee through CEA. (LA Schedule 5, para 3)

Complied with

2 Resettlement and Social Development. The borrower shall ensure, and cause MOHRD and RDA and ensure, that all land acquisition, and relocation, resettlement and compensation of all persons who are adversely affected by the Project or who will be reallocated as a consequence of the Project are promptly and efficient carried out in accordance with the RIP, Borrower’s laws, regulations, and policies, as applicable, and ADB’s Involuntary Resettlement Policy (1995)

The borrower shall ensure, and cause MOHRD and RDA to ensure, that

Complied with

Appendix 9 39

Covenant Status Remarks (i) The independent external monitoring agency appointed by RDA continues to supervise and monitor the RIP, including the grievance procedures and resolution of disputed claims for compensation, (ii) RDA promptly implements the recommendations of the monitoring agency, and (iii) RDA extends the services of the monitoring agency until the completion of all compensation, resettlement and relocation of affected persons in accordance with the RIP. Upon completion of the project, the borrower shall ensure, and cause MOHRD and RDA to ensure, that RDA executes a contract with an independent external agency under terms of reference agreed between the borrower and ADB to identify and monitor the project’s development impacts including changes in land use, increased investment, and reduction in poverty. The terms of reference of such independent external agency shall also include a provision examining whether the affected persons regained or improved the livelihood and standard of living they enjoyed before the project commenced. The Borrower will cause MOHRD and RDA to (i) implement the findings and recommendations of ADB's due diligence report dated August 2006 on the involuntary resettlement process; (ii) fully implement the IRP and strengthen the management information system by taking into account recommendations from the gender study and the independent external monitoring agency, expeditiously complete the infrastructure facilities at the last one resettlement site, and hand this over to the local authorities by June 2008; (iii) promptly provide new title deeds for the allotments at the resettlement sites and entitlement certificates to all affected persons whose properties were acquired under the Project; (iv) in the event of any additional land acquisition during construction works, submit an addendum to the RIP for ADB approval, disclose it to the affected persons, and fully compensate the affected persons according to the RIP, prior to continuing with follow-up construction works in the relevant section; (v) in an exceptional or unforeseen situation, such as a landslide during construction that may endanger life, residences and other structures, relocate the affected persons immediately and inform ADB, and ensure that they are fully compensated and resettled, if required, soon thereafter according to the RIP; (vi) deposit promptly with the local court, any statutory compensation and resettlement assistance, which is yet to be paid to affected persons due to reasons such as joint ownerships or disputed claims; (vii) in the event of any mishap or accident at the project site, ensure that the party responsible for the accident will compensate the affected person in a prompt, equitable, and transparent manner; and (viii) provide necessary staff to ESD to enable it to review, audit, and monitor the implementation of the RIP and IRP

40 Appendix 9

Covenant Status Remarks (LA Schedule 5, para 4 to 7)

3 Thoroughfares Act (TA) and the Motor Traffic Act (MTA). The Borrower will ensure that the Thoroughfares Act (earlier known as the National Highway Act), and the Motor Traffic Act, are approved by Cabinet, and submitted to Parliament by September 2008, and will thereafter secure early enactment of the two laws.

Partially Complied with

The National Thoroughfares Act was passed in the parliament and gazetted in Dec 2008, The Mortar Traffic Act was passed in the parliament gazetted in Aug. 2011.

4 Midterm Review. The Borrower will ensure that the recommendations of the midterm review of the original loan undertaken by ADB are implemented, and that the action plan is reviewed and monitored by the Project Coordination Committee. (LA Schedule 5, para 16)

Complied with

The midterm review was conducted from 09 to 11 March 2009

5 Project Performance Monitoring and Evaluation System Within three (3) months of the effective date, the borrower shall cause MOHRD and RDA to adopt a Project performance and management system based on the revised design and monitoring framework in consultation with ADB as set out in Appendix 1 to the RRP, and replace the earlier benefit monitoring and evaluation system. Within six (6) months of the effective date, the borrower shall cause RDA to carry out the first survey in accordance with the project performance and management system (LA Schedule 5, para 17)

Complied with

Baseline studies of environmental aspects (noise, water and air quality) have been carried out. DMF was introduced. ADB consultant together with ESD has prepared Project Performance Monitoring & Evaluation (PPMS). The PPMS was regularly updated by ESD and last report was submitted in Mach 2014.

6 Co-financing. In the event the Borrower receives co-financing for civil works in the Borrower-financed section of the highway, the Borrower will cause the cofinancier's acceptance of the EMP, RIP, and IRP, and unified approach to implementing and monitoring the all sections of the Project, and cause such cofinancier to reach a suitable understanding with ADB. (LA Schedule 5, para 11)

Complied with

The Borrower adopted unified approach to implementing and monitoring the all sections of the Project.

7 Counterpart Funds. The Borrower will make available the funds, facilities, services, and other resources as shall be

Complied with

Appendix 9 41

Covenant Status Remarks necessary or required, for timely completion of the Project, and shall furnish to ADB, promptly at its request, evidence satisfactory to ADB that such funds, facilities, services, other resources are available for purposes related to the Project (LA Schedule 5, para 12)

8 Expressway Authority Upon completion of the Project highway, the Borrower shall make suitable arrangements for operation and maintenance of the Project highway through the proposed expressway authority to be established by the Borrower for operation and maintenance of all highways/expressways. (LA Schedule 5, para 8)

Complied with

The EOMMD will evolve into an Expressway Authority once the bill is approved in the parliament. Consistent with the loan covenant, the Borrower has obtained the cabinet approval to set up the Expressway Authority and the draft of the Expressway Authority to be submitted to Parliament by end 2014.

9 Anticorruption The borrower shall ensure that all contracts financed by ADB in connection with the Project shall include provisions specifying the right of ADB to audit and examine the records and accounts of MOHRD, RDA and all contracts, suppliers, consultants, and other service providers as they relate to the project. The borrower shall cause RDA to (i) Disclose contract awards on RDA’s website within 7 working days of the award of the contract (ii) Undertake necessary measures to create and sustain a corruption-free environment, (iii) Ensure that the Borrower’s Anticorruption Law and ADB’s anticorruption policy (1998, amended to date) are strictly enforced and are complied with during Project implementation, and (iv) Conduct periodic inspections on the Project contractor’s activities related to fund withdrawals and settlement (LA Schedule 5, para 9 & 10)

Complied with

10 Reporting Within three (3) months of the completion of the project or such later date that ADB may agree for this purpose, the project management unit assisted by the management consultant and construction supervision consultant shall prepare a project

Complied with

42 Appendix 9

Covenant Status Remarks completion report in a format acceptable to MOHRD, JBIC, ADB and other co-financiers, if any (LA Schedule 5, para 14)

Appendix 10 43

TECHNICAL ASSISTANCE RELATED TO THE SOUTHERN TRANSPORT DEVELOPMENT PROJECT

A. Land Use Planning of the Southern Highway Corridor 1. To maintain effective operational conditions of an access-controlled highway, the Southern Transport Development Project (STDP) needed guidelines for planning and controlling the developments in the area adjacent to the STDP. The government’s Urban Development Authority (UDA) in 2005 had declared a 3-kilometer (km)-wide corridor as a special area, to be managed under the Urban Development Act. In this context, the need for a land use plan arose. The Asian Development Bank (ADB) supported the UDA in developing guidelines under a development plan for the corridor, as well as for the 11 interchanges that connected the STDP to access roads.1 The objectives of the technical assistance (TA) were to (i) prepare a long-term corridor development plan, (ii) set out appropriate strategies to implement the long-term objectives of the corridor development plan and to facilitate implementation of priority projects, (iii) identify priority projects and prepare prototype project proposals for intersection area development, and (iv) facilitate the implementation of priority projects. The main outputs of the TA were (i) a land use plan covering commercial, industrial, residential, agricultural, tourism, small-scale industrial village, and ecological zones; (ii) development areas likely to attract high-priority development projects including implementation plans; (iii) criteria and guidelines for private sector participation; (iv) prototype plans for 11 interchanges; and (v) detailed development plans for three selected interchanges. 2. The TA was completed within 13 months with all outputs delivered by the team of consultants. The overall output and result have been appreciated by the government, which has in the meantime adopted the zoning regulations recommended by the TA, while progress on implementing the zonal plan has been slow. The TA completion report was circulated to the Board on 28 July 2010 and a copy of the Technical Assistance Completion Report (TCR) is attached at the end of this appendix.

B. Capacity Building of the Environmental and Social Division of the Road Development

Authority 3. The TA2 for strengthening the Road Development Authority (RDA) in implementing the environmental management plan built on, and benefited from, earlier capacity building TA which had helped create the Environmental and Social Division (ESD) of the RDA. 3 In the course of implementing the STDP, the government encountered difficulties in applying ADB’s social and environmental safeguards policies, leading to complaints by affected people and the request in 2004 for a compliance review of the project. In response, ADB’s Compliance Review Panel (CRP) recommended that the environmental management plan (EMP) be implemented continuously during the construction of the whole highway. The government wanted the RDA’s ESD to monitor the socioeconomic impact of the project and EMP implementation, and requested ADB provide further TA for strengthening the ESD. 4. The expected outputs of the TA included (i) semiannual reports on EMP monitoring; (ii) brochures, leaflets, and a website on implementing the EMP; and (iii) updated socioeconomic conditions reports. With the assistance of the national communication consultant, the ESD prepared

1 ADB. 2008. Technical Assistance for Land Use Planning of the Southern Highway Corridor. Manila (TA 7065-SRI. $300,000.

Approved on 6 March). 2 ADB. 2009. Technical Assistance for Strengthening Road Development Authority in Implementation of the Environmental Management Plan of the Southern Transport Development Project, Manila (TA 7239-SRI, $150,000, Approved on 12 February).

3 The ESD was created under ADB. 2006. Technical Assistance for Capacity Building of the Environmental and Social Division of the Road Development Authority, Manila (TA 4736-SRI. $400,000. Approved on 15 December). The division was set up to improve the capability in the RDA to manage the environmental and social aspects of project implementation effectively. The ESD has approximately 25 professional staff in environmental, social, and information management disciplines.

44 Appendix 10

brochures and leaflets, updated the project website, and conducted media tours on the STDP. The TA consultants conducted needs assessment surveys to identify training needs. More than 20 training programs and workshops were conducted for ESD staff.4 In the context of the TA, the ESD conducted three important studies related to the STDP: (i) reviewing the Income Restoration Program; (ii) updating socioeconomic data of three sample villages, which were identified at the time of project processing; and (iii) socioeconomic survey of households in the STDP corridor. As these studies were conducted during the implementation of the project, the information collected was useful in identifying the social indicators in the project area just before the official opening of the STDP. The CRP annual monitoring reports in 2010 and 2011 recognized the role of the ESD in safeguard compliance. 5. The expected impact of the TA, which is environmentally sound highway construction institutionalized through a transparent environmental management system, is likely to be achieved. The outcomes-a fully implemented EMP to mitigate environmental impacts of the STDP, and fully monitored socioeconomic conditions along the STDP-have been achieved. The TA was implemented in close consultation with major development partners, the Japan International Cooperation Agency (JICA), and the World Bank, which were invited to all stakeholder workshops and received all reports under the TA for their comments. The TA was rated successful.5 The TA completion report was circulated to the Board on 17 October 2013. C. Preparing the Southern Highways Investment Program for Expressway Development and

Operation 6. ADB provided capacity development TA6 to build the institutional capacity for expressway development and operation. Under the TA, which is ongoing, consultants are facilitating the implementation of an action plan to bring the proposed expressway corporation into operation. Specifically, the TA will (i) prepare an action plan to strengthen the institutional and policy framework plan for expressway development and operation, (ii) recommend appropriate construction technologies for Sri Lanka's road subsector, and (iii) provide technical support for project preparation to review the feasibility study and preliminary design of the Southern Expressway extension and to improve the implementation readiness. D. Synergies between the Southern Transport Development Project and Other ADB

Technical Assistance 7. The implementation of the STDP has leveraged the knowledge generated under a series of previous TA and capacity building measures. This applies to TA directed at RDA’s reorganization and safeguard units, as well as at contract management and procurement issues.7

4 These programs included qualitative and quantitative data collection and analysis, hands-on training on initial

environmental examinations (IEEs) and environmental impact assessments, formulation and implementation of EMPs, negotiation skills and communication skills, formulation of project performance monitoring systems for ADB projects, evaluation and monitoring projects, hands-on training on the grievance redress mechanism, public disclosure of project information, and report writing skills.

5 ADB. 2011. Technical Assistance Completion Report for Strengthening Road Development Authority in Implementation of the Environmental Management Plan of the Southern Transport Development Project. Manila.

6 ADB. 2012. Technical Assistance for Preparing the Southern Highways Investment Program. Manila (TA 8271 SRI.

$1,000,000. Approved on 10 Dec). 7 ADB. 1995. Technical Assistance for Improvement of Contract Approval and Implementation Procedures, Manila (TA 2433

– SRI. $100,000. Approved on 26 October and a supplementary TA for $20,000, approved on 10 October 1996). ADB.1997. Technical Assistance for Improvement of Project Implementation in Sri Lanka, Manila. (TA 2745-SRI. $45,000, approved on 7 January). ADB. 1989. Technical Assistance for Institutional Strengthening of RDA, Manila. (TA 1110-SRI. $575,000. Approved on 17 January). ADB. 1998. Technical Assistance for reengineering of Road Sector Institutions, Manila. (TA 3110-SRI. $640,000. Approved on 8 December).

Appendix 10 45

8. The Road Sector Development Project8 had a component for RDA reengineering, in the course of which the RDA was streamlined from 16 to five divisions. A report of ADB’s Independent Evaluation Department noted that the organizational restructuring benefited land acquisition and resettlement procedures because of lessons learned from the STDP.9 This is also reflected in the use by the RDA of various knowledge products generated by the TA projects.10 Overall, the RDA became a more effective organization with a strengthened institutional capacity. Furthermore, the STDP experience also contributed to the creation of knowledge products outside of the RDA. Also noteworthy is the TA11 that ADB provided to develop a national involuntary resettlement policy in 2001, which resulted in legislation that, while having been endorsed, is awaiting sanctioning by Parliament. An excellent example is a publication of the Centre for Poverty Analysis, which draws useful conclusions from involuntary resettlement and the impact of construction on livelihoods.12 E. Japan International Cooperation Agency Technical Cooperation: Expressway

Administration Project

9. JICA also provided technical cooperation (on a grant basis) for the RDA to establish and train required staff for operation of the expressway network. The 3-year technical cooperation project enabled establishment of traffic management, toll operation, and expressway general control and operation systems and procedures. All staff recruited for the expressway management unit were provided with specific job training through the project. This included in-country practical job training for more than 300 traffic and toll operation staff, and both in-country and trainings in Japan for supervisory and management staff. User manuals were prepared for all the main operations to facilitate training of future recruits.

8 ADB. 2002. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical

Assistance Grants to the Democratic Socialist Republic of Sri Lanka for the Road Sector Development Project. Manila (Loan 1986-SRI[SF], approved on 19 December).

9 Independent Evaluation Department. 2010. Performance Evaluation Report on Environment Capacity Development Projects in Selected South Asian Countries. Manila: ADB.

10 ADB. 2010. Designing and Implementing Grievance Redress Mechanisms: Guide for Implementors of Transport Projects in Sri Lanka. Manila; and Ministry of Land and Land Development. 2013. Land Acquisition and Implementation of the National Involuntary Resettlement Policy. A Guide for Public Officials on Good Practices. Colombo.

11 ADB. 2001. Technical Assistance for Capacity Building for the National Policy on Involuntary Resettlement (TA 3792. $150,000. Approved on 11 December).

12 S. Jayawardena. 2011. Right of Way. A Journey of Resettlement. A Publication of the Centre for Poverty Analysis with support from ADB. Colombo.

46 Appendix 10

Technical Assistance Completion Report TA No., Country and Name: Amount Approved: $300,000 TA7065-SRI: Land Use Planning of Southern Highway Corridor

Revised Amount: $300,000

Executing Agency: Ministry of Highways and Road Development

Source of Funding ADB TA funding program

Amount Undisbursed: $6,897

Amount Utilized: $293,104

TA Approval Date:

TA Signing Date:

Fielding of First Consultant(s):

TA Completion Date Original: 31 May 2009

Actual: 31 October 2009

6 March 2008 2 May 2008 1 October 2008 Account Closing Date Original: 31 May 2010

Actual: 27 May 2010

Description The Southern Transport Development Project (STDP) was initiated by the Government of Sri Lanka (the borrower) to facilitate and speed up the development of the Southern Province of Sri Lanka. The STDP consists of several project components, financed by the Asian Development Bank (ADB), the Japanese International Cooperation Agency (JICA), the Nordic Development Fund, the Swedish International Development Agency, the Export and Import Bank of China, and the government. The project constitutes Sri Lanka’s first access-controlled highway-the 128 kilometer (km) Southern Highway, connecting Kottawa (Colombo suburbs) to Godagama (a town in the Southern Province), with a 5.5 km-long, two-lane access road from the STDP to Galle. The sections of the STDP financed by ADB and JICA are scheduled to be completed by early 2011, and the section financed by the Export and Import Bank of China is scheduled to be completed by early 2012. As the Southern Highway is an access-controlled highway with a high cruising speed, it has become essential to control and guide developments in adjacent areas for the intended functional efficiency of the highway. Consequently, on 23 November 2005, the government’s Urban Development Authority (UDA), by a notification in the government gazette, declared a 3-km-wide corridor along the highway as a special area which should be managed under the Urban Development Act. Subsequently, the government identified the need for a land use plan for the corridor and a detailed urban planning study for 11 interchanges of the highway for managing the area development. Expected Impact, Outcome, and Outputs The main outputs of the technical assistance (TA) are (i) a land use plan for the corridor for various uses of land, including commercial, industrial, residential, agricultural, tourism, small-scale industrial village, and ecological zones; (ii) development areas identified within the corridor that are likely to attract high priority for development purposes and preparation of an implementation plan; (iii) criteria and guidelines developed for private sector participation for the development of projects within the corridor; (iv) prototype plans for 11 interchanges developed; and (v) detailed development plans for three selected interchanges developed.

Appendix 10 47

Delivery of Inputs and Conduct of Activities ADB engaged a consulting firm for 48 national person-months and 6 international person-months (later increased to 6.95 person-months to accommodate additional works). The UDA provided a full-time town planner as counterpart staff to support the consultant. The local members of the consultant team were mobilized on 1 October 2008 and the team leader was mobilized on 6 October 2008. The consultant submitted the inception report on 30 October 2008. The consultant assessed the existing situation along the Southern Highway and the surrounding towns within the corridor, including demographic trends, socioeconomic conditions, land uses, topographical features, resources, and environmental conditions, and conducted extensive public and stakeholder consultations. The draft land use plan was submitted on 3 April 2009 and comments of stakeholders were obtained. The draft final report (Draft Interchange Area Development Plans) was submitted on 7 July 2009. This report consists of prototype plans for the 11 interchanges. The consultant submitted the final report,11along with detailed development plans for selected interchanges, in six volumes on 21 August 2009. Overall, the reports delivered by the consultant were comprehensive. During the implementation of the TA, the consultant attended monthly STDP Project Coordination Committee meetings, chaired by the secretary of the Ministry of Highways and Road Development, and monthly planning committee meetings chaired by the director general of the UDA. At these meetings, the consultant discussed implementation issues with stakeholders including ADB. During the preparation of detailed development plans for interchanges, the consultant encountered delays due to the absence of some critical details on digital maps provided by the Survey Department and the UDA. The consultant discussed this issue with the Sri Lanka Resident Mission (SLRM), and subsequently the SLRM authorized the consultant to utilize provisional sums under the contract to carry out additional ground surveys with the corresponding digitization and processing to generate urban land use maps for 11 area development plans. In addition, there was a 3-week delay in the procurement of the "SPOT Image," as the satellite image supplier was affected by the weather and cloudy conditions prevailed over the project area, which caused a 23-day delay in the finalization of the draft final report. After the submission of the draft final report, the UDA made a special request to the consultant to facilitate the process of approval of the proposed regulatory measures for zoning regulations. The consultant conducted a "2-day write-shop," which was a legal-document-writing workshop to draft necessary regulations for the implementation of the land use plan, with the participation of UDA specialists, legal specialists from the Ministry of Urban Development and Sacred Area Development, and other resource persons. During implementation, the UDA highlighted the need to acquire a global positioning system (GPS) facility (Trimble GEO XT Hand Held GPS system) for carrying out ground surveys to collect and process data for the preparation of area development plans for remaining interchanges. The SLRM carried out a minor change of scope and the consultant procured a GPS system for the UDA by utilizing savings in the consultancy contract. The TA was extended by 3 months to accommodate the procurement of GPS equipment. The TA was implemented in close consultation with major development partners, JICA, and the World Bank, who were invited to all stakeholder workshops and received all reports under the TA for their comments.

11 The final report is available at www.adb.org/Documants/Reports/Consutmat/26522-SRI/default.asp

48 Appendix 10

Evaluation of Outputs and Achievement of Outcome The final report has developed the land use plan and detailed development plans for selected interchanges for the corridor in accordance with the terms of reference and as agreed with the borrower. From 9 December 2009, the borrower is adopting zoning regulations as recommended in the land use plan. The TA was completed in 13 months compared to the original plan of 10 months. The consultant contract was extended by 4 months to accommodate the procurement of GPS equipment and delays resulting from lack of adequate details on the digital maps provided by the Survey Department and the UDA. However, the overall output and result have been appreciated by the borrower. Overall Assessment and Rating The TA is rated highly successful in delivering the output. The TA also provided required training and capacity building within the UDA in preparation of area development plans for remaining interchanges of the corridor and implementation of the land use plan. Major Lessons The TA has highlighted the importance of active involvement of all regional offices of the UDA in formulating detailed development plans for interchanges and a land use plan for a development corridor like the STDP. This active participation of staff of regional offices of the UDA created a sense of ownership among UDA staff. One of the reasons for the delay in the project was the lack of adequate details on the digital maps provided by the Survey Department and the UDA. As a result, additional resources had to be allocated to carry out additional ground surveys with the corresponding digitization. To avoid this type of delay in the future, thorough assessment of availability of adequate data and technology should be done during processing of TA projects. Recommendations and Follow-Up Actions During review missions of the STDP, the SLRM should also review the progress of implementation of the land use plan and the preparation of development plans for remaining interchanges.

Prepared by: Aruna Uddeeptha Nanayakkara Designation: Project Implementation Officer (Road and Transport)

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

Note: The Technical Assistance Completion Report was circulated and approved on 13 October 2013.

Appendix 11 49

PROJECT ECONOMIC ANALYSIS

I. INTRODUCTION 1. The economic analysis is conducted for the total length of the Southern Expressway from Kottawa to Godagama and is based on the eight segments shown in Table A11.1.

Table A11.1: Southern Transport Development Project Sections

Section Segment Distance

(km) Section I Kottawa-Kahathuduwa 5.9

Kahathuduwa-Gelanigama 7.8 Gelanigama-Dodangoda 21.1

Section II Dodangoda-Welipenna 11.2

Welipenna-Kurudugahahethekma 21.6 Section III Kurudugahahethekma-Baddegama 12.2

Baddegama-Pinnaduwa 15.5 Section IV Pinnaduwa–Godagama 32.2

km = kilometer. Source: Government of Sri Lanka, Road Development Authority. 2000. Southern Transport Development Project: Final Design Report

2. The economic evaluation compares the economic costs and benefits that occur under the with-project and without-project scenarios. In the without-project scenario, road users are assumed to experience relatively higher vehicle operating costs (VOCs) and travel time costs as compared to the with-project scenario.

II. APPROACH

A. General

3. The evaluation followed the standard approach of cost-benefit analysis, which uses the concept of a numeraire reflecting either border prices for tradable goods or domestic prices converted at official exchange rates to convertible foreign exchange cost, the underlying rationale being to measure any gain or loss to the economy in terms of external trade.1 For that purpose, the inputs and outputs of the project were broken down into their traded and nontraded components. This was done for all project capital, operating and working capital costs, and for all project benefits as shown in Table A11.2. 4. The unit of account (the numeraire) is the United States (US) dollar, which is a convertible currency, and the current exchange rate was used to convert the Sri Lanka rupee to the dollar. The majority of construction inputs are internationally traded. Local wages were converted to dollar prices and reduced by taxes to meet the border price principle. Other inputs include petroleum products and cement, which is sourced both from the domestic market and from other countries. There are two types of time savings-time savings of passengers and time savings of capital tied up in vehicles. The valuation of passenger time savings is consistent with the valuation of labor. The assumed rate is equivalent to an average wage rate net of taxes. Time savings also accrue to vehicles as capital is freed up by the time savings, thus allowing higher turnaround of vehicles and reduced unit costs. The prices involved in vehicle time savings are international prices free of taxes and duties. The average rate of change of the converted over the nonconverted components is the standard conversion factor,

1 ADB. 1997. Guidelines for the Economic Analysis of Projects. Manila.

50 Appendix 11

which in the case of the project is 0.84, implying that the economic costs and benefits are about 16% below the financial equivalents.

Table A11.2: Traded and Nontraded Components of Project Cost and Benefits Cost and Benefit Component Traded Components Nontraded Components Conversion Equipment Construction equipment

and machinery Deduction of duties and taxes to

establish border price Material Petroleum products Cement, sand, gravel Domestic price to be reduced by

taxes to reflect world market prices

Labor As there is no labor surplus in the construction industry and labor is imported, the cost of labor reflects the price of a traded component

Domestic price to be reduced by taxes to reflect world market prices

Transport The transport service is a nontraded component although it contains traded elements, which were not separately identified

Domestic price to be reduced by value-added tax on transport

VOC savings (benefit)

Cost of vehicle operation and spare parts

Cost reflect border prices based on HDM model

Time savings (benefit)

Savings in capital tied up in assets (vehicles)

Savings in passenger and drivers’ time

(i) As to asset component: Deduction of duties and taxes to establish border price

(ii) Domestic wage to be reduced by taxes to reflect world market prices

HDM = Highway Design and Maintenance, VOC = vehicle operating cost. Source: Project Completion Review Mission based on: ADB. 1997. Guidelines for the Economic Analysis of Projects. Manila.

B. Cost and Benefits

5. The approach to estimate the economic feasibility of the STDP largely follows the analytical framework of the Highway Development and Management (HDM) model, which is based on the concept of pavement life cycle analysis.2 The key assumption is that road pavements deteriorate as a result of several factors, including traffic loading, climatic conditions, and maintenance regimes. Impacts of the road condition and design standards on road users are measured to predict economic resource consumption reflected in economic costs. Such road user costs comprise VOCs (fuel, tires, oil, spare parts consumption, depreciation, and capacity utilization); costs of travel time for both passengers and freight; capital costs involved in the vehicle fleets; and costs to the economy of road accidents. The model ensures that traffic volumes would reach the capacity of the road (in either the without-project or with-project situation), while not allowing to grow beyond the ceiling during the period under review. The primary inputs to the model will include road characteristics and sectioning, proposed works interventions, vehicle fleet, VOCs, and value of passenger travel time updated to the current year.

2 World Road Association (PIARC). 2002. HDM-4 Version 2. Paris.

Appendix 11 51

6. The construction period of the STDP was 2003-2011, so that benefit generation starts at the beginning of 2012.3 The assumed economic life is 20 years after the completion of construction in 2011. C. Traffic 7. The base-year traffic volume expressed in terms of average annual daily traffic, its composition, and the forecast future growth rates are essential inputs to the economic analysis. In addition, generated and diverted traffic have also been estimated based on origin-destination surveys conducted to assess the impact of the Southern Expressway.4 Table A11.3 shows the average annual daily traffic in 2013 by sections of expressway.

Table A11.3: Current Traffic on the Southern Expressway, 2013

Section Counted AADT

Kottawa–Kahathuduwa 8,044

Kahathuduwa–Gelanigama 8,553

Gelanigama–Dodangoda 7,695

Dodangoda–Welipenna 6,682

Welipenna–Kurundugahahethekma 6,094

Kurundugahahethekma–Baddegama 5,282

Baddegama–Pinnaduwa 4,752

Pinnaduwa–Godagama 4,752

(assumed) AADT = .Annual Average Daily Traffic Source: W.K. Mampearachchi, et al. 2014. Evaluation of the Impact on A2 Road from the Southern Expressway. Unpublished..

8. Traffic was assumed to grow in step with economic growth. Based on experience, traffic growth is elastic to changes in economic growth. Therefore, and based on an assumed growth rate of the economy of 5.0% per year, traffic is forecast to grow by 6.5% per year. 9. Generated traffic was projected based on the growth rates applied to normal traffic (6.5%). Generated traffic is the traffic that is expected to occur under the with-project scenario as a result of lower transport costs and travel times, which will induce traffic. The underlying rational is a negatively sloped demand curve, suggesting that reduced prices lead to an expansion in the demand for transport. The expansion is a function of the price reduction and the elasticity of demand. Based on the consumer surplus theory, generated traffic is valued at half the savings of normal traffic. D. Vehicle Fleet 10. The vehicles are representative of the vehicle fleet in Sri Lanka and the consequent determinants of VOCs. As it was not possible to simulate the operating costs of every individual vehicle brand or model, representative vehicles for major types operating on the project road were chosen (Table A11.4).

Table A11.4: Vehicle Fleet Used in the Economic Analysis

3 For simplicity, these assumptions were also applied to the last section from Pinnaduwa to Godagama, although it was only opened to traffic in January 2014.

52 Appendix 11

Vehicle Type Description Typical Vehicle

Car Cars, station wagons, jeeps Toyota Corolla 1500 cc (petrol) Van Vans and micro-buses, 8-

15 seats Toyota Hi-Ace (petrol)

Standard bus Standard 35-56 seat bus Ashok Leyland (VIKING) (diesel) Light Goods Vehicle Light truck, pick-up DimoBatta (diesel) Medium Goods Vehicle Two-axle trucks with six

wheels Isuzu Forward 450 (diesel)

Heavy Goods Vehicle Three-axle rigid with 10 wheels

Ashok Leyland (TAURUS 2516)

Multi-Axle Vehicle Multi-axle with trailer Ashok Leyland (Turbo) Plus trailer Source: Government of Sri Lanka: Road Development Authority. 2014. Vehicle Fleet Used in the Economic Analysis. Colombo

11. The composition of traffic is shown in Table A11.5. As indicated in the table, the share of trucks in traffic on the STDP is still insignificant, providing evidence for the still low level of manufacturing and trade in the Southern Province.

Table A11.5: Composition of Traffic on Southern Expressway, 2013 (%)

Item Car Van Bus LGV MGV HGV Total percentage

58.5 25.1 4.3 9.3 2.6 0.2

LGV – Light Goods Vehicles MGV – Medium Goods Vehicles HGV – Heavy Goods Vehicles Source: W.K. Mampearachchi, et al. 2014. Evaluation of the Impact on A2 Road from the Southern Expressway. Unpublished.

E. Economic Benefits 12. The following benefits were included in the economic evaluation:

(i) Savings in travel time for passengers and goods in transit. (ii) Savings in VOCs and travel time costs because of the shortened distance with the

project. (iii) Savings in road maintenance costs. (iv) Reduction in the number as well as severity of accidents and the related costs. While

this is likely to become a substantive benefit, it has not been included in the analysis because of lack of reliable data.

13. VOC savings include the differential between the speed and travel time of the with- and without-project situations, considering the surface quality and road congestion under the different scenarios. The HDM 4 model estimates the VOCs for traffic in each vehicle category on each selected road section in the with-and without-project situations. The resources consumed are reflected in the major VOC items, including fuel, tires, maintenance parts, maintenance labor, lubricants, crew, depreciation, interest, overheads, passenger time, and capital tied up by freight in transit. 14. Time savings were computed with respect to passengers and freight. All passengers were assumed to accrue a monetary benefit from the saving in travel time. The travel time between Colombo and Matara was about 4.5 hours when using the Galle Road. With the improved road quality and reduced distance the travel time is about 1.5 hours, generating time savings of 3.0 hours per passenger or freight trip. Similarly, savings are realized with respect to vehicles and freight during transit. It is estimated that the weighted average of the freight mix is $850 per ton carried. The interest rate applied

Appendix 11 53

was 8%, which has been the average cost of capital for the period from 2009-2014. It should be noted that the respective savings are somewhat negligible because of the low volume of trucks. 15. The cost per passenger hour requires estimates of the value of time. In estimating this value, it is normal to distinguish between working and nonworking time. The value of working time is directly related to the hourly wage rate. The value of working time for car passengers and drivers was assumed to be $4, which is considered representative for passengers using private cars. In contrast, the value assumed for workers employed and nonworking time was $1 per hour, which was assumed for all bus passengers. 16. The cost differential between the maintenance assumed for the two scenarios represents benefits to the project. The costs include periodic and routine maintenance costs. Periodic maintenance interventions are scheduled at intervals of 8 years based on rates made available by the RDA. No periodic maintenance was assumed for the without-project scenario.

III. RESULTS OF THE ANALYSIS 17. The result of economic evaluation is available at the end of this appendix. The evaluation has demonstrated an adequate economic viability of the project with an EIRR of 16.9%. The economic feasibility analysis of the project rests on three main factors: (i) substantial time savings, which account for 35% of total benefits; (ii) VOC savings for road users on the Galle Road because of reduced congestion (15%); and (iii) VOC savings accruing to normal traffic on the Southern Expressway (9%). Overall, the economic feasibility of the project is robust and can tolerate adverse developments to the primary benefit and cost categories and changes in parameters. This was assessed in the risk and sensitivity analysis supporting the EIRR calculation (Table A11.6).

Table A11.6: Sensitivity Analysis

EIRR

Sensitivity Indicator

Switching Value

Normal case 16.9 n.a.

Increase in cost By 20% 13.6 -0.94 1.38

Increase in construction period by 50% 13.7 0.98

Decrease in benefit by 20% 13.1 0.94

Combined impact (A) and (C) 11.9 n.a. EIRR = economic internal rate of return. Note: The sensitivity indicator is defined as the percentage change of the EIRR resulting from the percentage change in the independent variable. Switching value is the percentage change of an independent variable chosen to make the EIRR fall to a defined hurdle rate and the net present value to become zero. An increase in project cost by 38% would reduce the EIRR to 12% and the net present value to zero. Source: Project Completion Review Mission based on RDA Planning Division data

A. Fiscal Impact and Sustainability Analysis 18. Funding for maintenance is not considered a risk as the STDP will be operated as a toll road and the RDA will retain the income to operate and maintain the Southern Expressway. Financial analysis undertaken demonstrates that the toll income will be adequate to cover STDP’s operating costs, routine and periodic maintenance costs, and a portion of depreciation. It needs to be emphasized in this connection that the Southern Expressway was not built with a view to allowing to fully fledged commercial operation. It is not alarming, therefore, that the Financial Internal Rate of Return (FIRR) for the Southern Expressway is barely positive

54 Appendix 11

54 A

ppendix 11

Results of Economic Evaluation for the Southern Transport Development Project

Study Name: SOTHERN TRANSPORTING PROJECT

Run Date: 1/10/2014

Currency: US $ (million)

Discount Rate: 12%

Section From To Length

Kottawa-Godagama 129.8 km

WITH WITHOUT WITH WITHOUTNET PASS CAPITAL TOTAL GENERATEDVOC A2 TOTAL

2003 43.27 0 0 43.27 0 0 0 0 0 0 0 0 0 0 0 (43.27)

2004 27.04 0 0 27.04 0 0 0 0 0 0 0 0 0 0 0 (27.04)

2005 48.68 0 0 48.68 0 0 0 0 0 0 0 0 0 0 0 (48.68)

2006 59.49 0 0 59.49 0 0 0 0 0 0 0 0 0 0 0 (59.49)

2007 75.72 0 0 75.72 0 0 0 0 0 0 0 0 0 0 0 (75.72)

2008 140.62 0 0 140.62 0 0 0 0 0 0 0 0 0 0 0 (140.62)

2009 64.90 0 0 64.90 0 0 0 0 0 0 0 0 0 0 0 (64.90)

2010 59.49 0 0 59.49 0 0 0 0 0 0 0 0 0 0 0 (59.49)

2011 21.63 0 0 21.63 0 0 0 0 0 0 0 0 0 0 0 (21.63)

2012 0 25.46 1.53 23.93 61.71 74.30 12.60 49.05 2.33 51.38 7.48 1.91 60.62 62.52 133.97 110.04

2013 0 25.71 1.57 24.14 65.74 78.76 13.03 51.99 2.47 54.46 7.70 1.95 64.25 66.21 141.40 117.26

2014 0 25.97 1.62 24.35 71.75 86.10 14.35 55.11 2.62 57.73 7.94 2.14 68.11 70.25 150.25 125.90

2015 0 26.23 1.67 24.56 79.40 94.66 15.25 77.61 3.11 80.72 8.17 2.31 72.20 74.50 178.65 154.09

2016 0 26.49 1.72 24.77 84.57 100.34 15.77 82.26 3.30 85.56 8.42 2.38 76.53 78.91 188.66 163.89

2017 0 26.76 1.77 24.99 91.52 108.54 17.02 87.20 3.50 90.70 8.67 2.56 81.12 83.68 200.07 175.08

2018 0 27.03 1.82 25.20 99.38 117.67 18.29 102.17 4.25 106.42 8.93 2.78 85.61 88.39 222.03 196.83

2019 25.46 25.46 1.88 49.04 106.07 124.79 18.72 107.49 4.48 111.97 9.20 2.83 89.90 92.73 232.62 183.58

2020 0 25.71 1.94 23.78 113.34 132.60 19.26 120.13 5.30 125.43 9.48 2.96 93.94 96.90 251.07 227.29

2021 0 25.97 1.99 23.98 116.83 141.96 25.13 125.23 5.53 130.76 9.76 3.83 97.99 101.82 267.47 243.49

2022 0 26.23 2.05 24.18 123.24 148.52 25.28 133.45 6.27 139.71 10.05 3.87 102.19 106.06 181.11 156.93

2023 0 26.49 2.11 24.38 128.69 155.89 27.20 138.78 6.52 145.30 10.35 4.16 106.28 110.44 293.30 268.92

2024 0 26.76 2.18 24.58 133.94 164.99 31.05 144.05 6.77 150.82 10.66 4.76 110.05 114.81 307.34 282.76

2025 0 27.03 2.24 24.78 139.57 170.92 31.35 149.53 7.02 156.55 10.98 4.80 113.97 118.77 317.65 292.87

2026 0 27.30 2.31 24.99 143.59 179.14 35.56 154.78 7.27 162.05 11.31 5.50 117.56 123.06 331.98 306.99

2027 25.46 25.46 2.38 48.54 144.42 191.74 47.33 158.27 7.43 165.70 11.65 7.30 120.28 127.58 352.27 303.73

2028 0 25.71 2.45 23.26 148.39 196.18 47.79 161.85 7.60 169.45 12.00 7.38 123.08 130.46 359.70 336.44

2029 0 25.97 2.52 23.45 152.12 204.00 51.88 165.52 7.77 173.29 12.36 8.02 125.95 133.97 371.51 348.06

2030 0 26.23 2.60 23.63 156.12 218.03 61.91 168.83 7.93 176.76 12.73 9.59 128.47 138.06 389.46 365.83

2031 0 26.49 2.68 23.82 160.44 223.16 62.72 172.21 8.09 180.30 13.12 9.67 131.04 140.71 396.84 373.03

2032 0 26.76 2.76 24.00 164.03 131.67 67.64 175.65 8.25 183.90 13.51 10.52 133.66 144.18 409.24 385.24

2033 (162.26) 27.03 2.84 (138.07) 122.25 227.14 104.89 179.17 8.41 187.58 13.92 17.14 136.33 153.48 459.86 597.93

EIRR 16.9%

SHARES IN TOTAL BENEFITS 9.3% 35.3% 2.8% 1.4% 27.4% 28.8% NPV 239.44

Comparison of Cost Streams (Discounted)

YEARTIME SAVINGS DIVERTED

TRAFFIC

VOC

SAVINGS

EXOGENOUS BENEFIT

TOTAL

BENEFITS

ROAD USER COSTS AND SAVINGS

NET

BENIFITS

RECURRENT WORKS

CAPITAL

WORKS

ROAD AGENCY COST

NET

COST

NORMAL TRAFFIC

Appendix 11 55

IV. WIDER ECONOMIC BENEFITS 19. As wider economic impacts are typically not covered by conventional cost–benefit analysis, the scope of the benefits tends to be understated. This is unsatisfactory, particularly in connection with large projects such as the STDP. Wider economic benefits in the case of the STDP are merely captured by benefits accruing to generated traffic, which serves as a proxy for all development benefits. Generated traffic does not capture agglomeration economies as a potential source of wider economic impacts.4 Agglomeration and other wider economic benefits are created when a faster, more efficient transport facility provides better access to jobs and to higher productivity jobs, and enables synergies among clusters of enterprises, thereby increasing productivity. Substantial projects like the STDP enhance agglomeration economies by reducing transport costs. With lower costs, agglomeration of economic activity increases, which in turn creates benefits through economies of scale.5 Not being part of conventional cost-benefit analysis, agglomeration benefits must be estimated separately based on a new approach to economic evaluation. The project completion review proposes that such a new approach be tested in connection with the STDP. Such an approach has been developed by the United Kingdom Department of Transport, which also provides guidance on the estimation of wider economic impacts.6 A separate study will be needed to collect the necessary input data and to run the model. As the Road Master Plan of the government envisages construction of expressways on a large scale, such a study will contribute significantly to the planning of future expressways.7 20. Another potential project benefit not considered in the evaluation results from the inland alignment of the Southern Expressway, which makes the project potentially less vulnerable to climate change risks. When the various alignment options for the Southern Expressway were examined in the context of the first feasibility study, the Galle Road improvement option was rejected because, among other factors, even in late 1990s, the Galle Road was for much of its length vulnerable to erosion from the sea, requiring substantial repair and protection works. While the impact of climate change on the Galle Road was not explicitly considered when the project was formulated, climate change may have already been at work. In the meantime, climate change as reflected in increased precipitation, floods, and rising sea level has become a concern in Sri Lanka and its impacts are projected to intensify in the decades to come, threatening the development and security of the country’s coastal regions.8 Given the projected change in climate, the economic evaluation could have captured the benefits of avoiding the impact by having shifted the alignment inland. However, the available technical information, notably the alignment and elevation of the Galle Road and the nature of the impact on the road pavement and other structures, has not permitted quantifying the impacts and the corresponding benefits.

4 D. J. Graham and K. Van Dender. 2010. Estimating the agglomeration benefits of transport investments: some tests for

stability. Imperial College London. Joint Transport Research Centre of the Organization for Economic Co-operation and Development (OECD) and the International Transport Forum.

5 Adam Smith more than 200 years ago in a simple way already recognized the significance of agglomeration in the ability of

roads to bring the remote parts of the country closer to “the town”: “Good roads, canals, and navigable rivers, by diminishing the expense of carriage, put the remote parts of the country more nearly upon the level with those in the neighbourhood of the town. They are upon that account the greatest of all improvements.” A. Smith: 1776. An Inquiry into the Nature and Causes of the Wealth of Nations. New York: Random House.

6 United Kingdom Department for Transport. 2014. Wider Impacts - Transport Analysis Guidance (TAG). https://www.gov.uk/

transport-analysis-guidance-webtag 7 Road Development Authority. 2007. National Road Master Plan (2008 – 2017). Colombo: Ministry of Highways.

8 M. Rhein et al. 2013. Observations: Ocean. In: Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge, United Kingdom and New York: Cambridge University Press.

56 Appendix 12

Financial Analysis for the Southern Transport Development Project ($ million)

( ) = negative, FIRR = Financial Internal Rate of Return.

YEAR

CAPITAL

WORKS COST INCOME NET INCOME

2003 49.80 0 0 (49.80)

2004 31.10 0 0 (31.10)

2005 56.00 0 0 (56.00)

2006 68.40 0 0 (68.40)

2007 87.10 0 0 (87.10)

2008 161.70 0 0 (161.70)

2009 74.60 0 0 (74.60)

2010 68.40 0 0 (68.40)

2011 24.90 0 0 (24.90)

2012 0 3.30 4.00 0.70

2013 0 3.40 8.00 4.60

2014 0 3.40 12.00 8.60

2015 0 3.50 12.60 9.10

2016 0 3.60 13.20 9.70

2017 0 3.60 13.90 10.20

2018 0 3.70 14.60 10.90

2019 25.50 3.80 15.30 (13.90)

2020 0 3.90 16.10 12.20

2021 0 3.90 16.90 12.90

2022 0 4.00 17.70 13.70

2023 0 4.10 18.60 14.50

2024 0 4.20 19.50 15.40

2025 0 4.30 20.50 16.30

2026 0 4.40 21.60 17.20

2027 25.50 4.40 22.60 (7.30)

2028 0 4.50 23.80 19.20

2029 0 4.60 24.90 20.30

2030 0 4.70 26.20 21.50

2031 0 4.80 27.50 22.70

2032 0 4.90 28.90 24.00

2033 0 5.00 30.30 25.30

2034 0 5.10 31.80 26.70

2035 25.50 5.20 33.40 28.20

2036 0 5.30 35.10 29.80

2037 0 5.40 36.90 31.40

2038 0 5.50 38.70 33.20

2039 0 5.60 40.60 35.00

2040 0 5.70 42.70 36.90

2041 0 5.90 44.80 38.90

2042 0 6.00 47.00 41.10

2043 25.50 6.10 49.40 17.80

2044 0 6.20 51.90 45.60

2045 0 6.30 54.50 48.10

2046 0 6.50 57.20 50.70

2047 (65.00) 6.60 60.00 118.40

FIRR 1.0%

Kottawa-Godagama 129.8 km

Appendix 12 57

Explanations of the Financial Analysis

1. Evaluation period. The financial analysis covers a period of 35 years excluding the 9-year construction period. This is in line with the financial objective of the Road Development Authority (RDA) for full cost-recovery over 35 years of Southern Expressway operations. 2. Project cost. The cost of the project includes all costs related to the construction of the expressway, and operating and maintenance costs. Construction cost is actual cost including taxes. The recurrent maintenance cost is based on actual and the periodic maintenance cost unit costs were derived from the actual cost incurred by the RDA on a comparable highway (the Colombo-Kandy highway). It should be noted that traffic on this highway exceeds current traffic volumes and loads on the Southern Expressway so that the assumption is unfavorable to the financial performance of the expressway. 3. Traffic. Traffic volumes and growth are identical with the figures used in the economic analysis. Given the current dominance of passenger cars on the Southern Expressway, the corresponding axle loads are relatively low, which has an implication for revenues and maintenance. With an increase in the share of heavy vehicles in total traffic, revenues will grow faster than the current traffic composition and assumed traffic growth would permit. On the other hand, a rise in axle loads will lead to an increase in wear and tear and higher maintenance cost. While this cost effect is taken care of by using maintenance cost from the Kandy Road, which has a much higher share of heavy vehicles than the Southern Expressway, the impact on revenues is not reflected. Overall, therefore, the likely change in traffic composition with more trucks using the Southern Expressway will improve the financial performance of the expressway. 4. Revenues. Revenues used are actual annual gross revenues provided by the RDA’s Expressway Maintenance Operation and Management Unit. The revenues were projected to increase in step with traffic growth. 5. Sensitivity. As mentioned, the financial performance is sensitive to changes in traffic composition with an increase in the share of trucks in total traffic leading to an increase in the Financial Internal Rate of Rerun (FIRR). Based on the specific assumption underlying the financial model, such an increase will not to the same extent cause an increase in maintenance cost.

6. Overall result. The calculation above indicates that at a (FIRR) of 1% the Southern Expressway will be able to recover all its cost including depreciation and periodic maintenance. The figures used reflect 2013 cost and revenues. The computation is based on the existing traffic composition which is concentrated on passenger vehicles and other light cars. An increase in the share of trucks will likely benefit the financial performance of the Southern Expressway as the assumed cost of periodic maintenance already reflects the axle loads attributable to trucks.

58 Appendix 13

PROJECT IMPACTS

1. The institutional impact of the project has been substantial. The organization and the activities of the Road Development Authority (RDA) have benefited from the Southern Transport Development Project (STDP). The RDA has emerged from implementing the project as a more effective organization with a strengthened institutional capacity. This is reflected in the use by the RDA of various knowledge products generated by technical assistance (TA) projects funded by the Asian Development Bank (ADB). The skills, competencies, and abilities of staff from the RDA’s newly formed Expressway Operation, Maintenance and Management Division (EOMMD), which is the nucleus of the future expressway authority, as well as of staff from the Planning Division, have been enhanced in the development and operation of a road asset management system, which did not exist before the construction of the Southern Expressway. This involved devising and integrating systems for all asset types, including road pavements, bridges, slopes, and other assets.1 A road asset management system is a complex system that emphasizes accountability to stakeholders and uses decision models to generate cost-effective solutions for road construction and maintenance. Its full adoption will entail further changes in the organizational culture of the RDA and the way the RDA conducts its business. 2. Involuntary resettlement. Having recognized and mitigated vulnerability as a major risk to social and environmental sustainability of the project is another significant achievement of the STDP. It had been clear from the start that the government would have to compensate affected people,2 but the challenge turned out to be more than expected.3 The land lost to the chosen expressway trace4 consisted of agricultural land, forest areas, wetlands, and the catchment areas of five rivers. It had a population density of 940 per square kilometer (km2), exceeding the national average of 351 per km2. Approximately 10,271 land lots have been acquired for the project, which is estimated to have affected about 5,800 families. Of these, about 1,326 households were physically displaced by the STDP, while 600 households were indirectly affected, including families of agricultural laborers who had worked on farms and plantations that had to close down. 3. One of the major challenges in implementing the resettlement implementation plan was the expressway alignment, which was changed on a number of occasions to address concerns of different stakeholders. These changes affected the implementation of land acquisition and resettlement plans. Even with the best compensation package for land acquisitions ever proposed in Sri Lanka, the STDP faced a lot of difficulties in the early stage of implementation in engaging stakeholders because of the lack of a proper communication strategy with affected people and stakeholders. Neither ADB nor the RDA had anticipated the extent of vulnerability caused by the STDP land acquisition and resettlement.5 As executing agency for the project, the RDA, in addition to supervising the construction of the STDP, also had to manage the project's safeguard components, often under difficult circumstances having to respond to complaints from different groups. Thus, plans kept on changing and not everything went according to plan. The RDA’s original target to complete land acquisition by June 2003 was only reached in November 2006. The box summarizes the essential developments that have contributed to the delays.

1 J. Weligamage. 2012. Southern Expressway Development Project - Institution Development and Capacity Building for

Asset Management. Colombo. 2 The government’s National Involuntary Resettlement Policy required that those who were displaced and affected in other

ways had to receive fair compensation for losses and enough support to start again. 3 This chapter of the project completion report uses a detailed account of the safeguards experience given by: S.

Jayawardena. 2011. Right of Way. A Journey of Resettlement. A Publication of the Centre for Poverty Analysis (CEPA)DB. Colombo.

4 In STDP, the expressway alignment or route is commonly referred as the trace

5 ADB Accountability Mechanism. Compliance Review Panel. 27 December 2007. Annual Monitoring Report 2006-2007 to

the Board of Directors on CRP Request No. 004/1 on the Southern Transport Development Project in Sri Lanka. (ADB Loan No. 1711-SRI [SF]). Manila.

Appendix 13 59

How things came to a head

4. The RDA with ADB assistance created a separate division, the Environmental and Social Division (ESD), to handle project-related environmental and social issues. The ESD played a very effective role and established itself as a leading institution in Sri Lanka in this field of specialization. 5. The RDA and the government have taken the STDP experiences in land acquisition and compensation and incorporated some of those good practices into Sri Lanka’s involuntary resettlement safeguards system. In addition, the government positively responded to all recommendations of ADB’s Compliance Review Panel to bring the project back into compliance. 6. Overall, the implementation of the resettlement implementation plan succeeded in restoring the incomes of affected people after resettlement without leaving them impoverished. Almost all poor households have restored and in most cases improved their household incomes and livelihood sources to escape from impoverishment.6 7. Environment. The project was expected to have significant environmental impacts requiring large quantities of construction materials, significant cutting and filling works, disturbance to existing hydrological systems, and displacement and relocation of a large number of people. As required by the pertinent ADB policies,7 a summary environmental impact assessment was prepared and disclosed for both the loans. During the course of finalizing the detailed design of the highway and in the time between the approval of the two loans, further revisions were made to the original environmental impact assessment report to update changes in impacts due to the shift in the trace from the original trace to the combined trace and the final trace. The complaint registered with the Compliance Review Panel included issues under nine subject areas, one of which was environmental safeguards. Based on its

6 Centre for Poverty Analysis. 2009. Final Report, Independent External Monitoring of Resettlement Activities of the Southern Transport Development Project (TA-4748 SRI).

7 The Environmental Assessment Requirements of the Asian Development Bank (March 1998) was the applicable environmental safeguards policy at the time of approval of STDP original Loan, while the Environmental Assessment Guidelines 2003 was the applicable policy at the time of approval of STDP supplementary loan.

How things came to a head In August 2001, the Court of Appeal had to address a complaint of a group of 49 affected persons. (They opposed changes to the road alignment as the changes were decided without proper consultation. The affected persons complained that at least 40% of the original trace had been altered, for which the required studies and consultations had not been conducted. The affected persons claimed to be suffering from loss of homes and livelihoods, damage to the environment, degradation to wetlands, dispersion of integrated communities, damage to five temples, negative effects of resettlement, and human rights violations. The appeal was dismissed in May 2003. 42 households then appealed to the Supreme Court which, in January 2004, determined that the deviations were indeed not covered by the Environmental Impact Assessment and that RDA had altered the trace after the Central Environmental Authority (CEA) had approved an earlier route. The Court noted that the people affected by the deviations were entitled to prior notice and to be heard and that their rights under the Constitution had been violated. In December 2004, ADB’s Compliance Review Panel (CRP) registered a request for compliance review filed by a group representing the affected communities. In June 2005, the CRP, after having investigated the case, recommended measures necessary to bring the project back into compliance. Implementation of those measures was monitored over two years. In December 2007, the CRP found that implementation of the remedial action has resulted in significant progress in bringing the project into compliance. Project implementation was thus given the green light to proceed. Sources: Sharni Jayawardena. 2011. Right of Way. A Journey of Resettlement. A Publication of the Centre for Poverty

Analysis (CEPA) with support from ADB. Colombo. ADB Accountability Mechanism. Compliance Review Panel. 27 December 2007. Annual Monitoring Report 2006-2007 to the Board of Directors on CRP Request No. 004/1 on the Southern Transport Development Project in Sri Lanka. (ADB Loan No. 1711-SRI [SF]). Manila.

60 Appendix 13

investigations, the panel issued a number of general and specific recommendations. Two of the general recommendations and two of the specific recommendations concerned environmental safeguards. All four recommendations were implemented as recorded in the monitoring reports of the panel of July 2006 and December 2007. 8. Major environmental issues faced during construction were damaged property due to vibration generated by the construction works, chronic drainage issues of siltation and blockage of culverts and irrigation channels, soil erosion, and disturbance to local communities from excessive noise. These issues were addressed through efforts by the contractors, supervision consultants, and the RDA. Mitigation or compensation measures taken to address the issues included using machines with lower capacities to reduce vibration levels, payment of cash compensation for damaged property and payment of inconvenience allowance to people affected by the noise, continuous clearing and desilting of clogged culverts and irrigation channels, and construction of cement drains and turfing of embankments to control erosion. Over the course of the construction period, 25 semiannual environmental monitoring reports (nine on the ADB section and 16 on the Japan International Cooperation Agency section) were prepared and disclosed on the ADB website during 2006-2011. ADB review missions visited the affected area at least twice a year. 9. Conclusion. The need for compliance with social and environmental safeguards is often seen as a challenge for project planning and management. Clearly, incorporating safeguards into project designs and monitoring compliance have added complexity to the process. Borrowers have built roads and acquired land in the name of the common good for centuries; however, the heightened environmental and social concerns often manifested in civil society advocacy on behalf of affected people is a relatively recent part of the planning process. The (National Involuntary Resettlement Policy (NIRP), which was developed with TA support from ADB,8 reflects this new thinking. The policy aims to prevent impoverishment as a result of land acquisition and resettlement. The legal process is focused on the principles of fairness, equity, and inclusiveness; applying these principles in the context of the STDP has been effective in restoring the livelihood of the affected people. In applying these principles, the STDP departed from Sri Lanka’s law on land acquisition and compensation9 by allowing the affected communities to participate in the process. The mechanism was the Land Acquisition and Resettlement Committee, which provided the space for people to speak and negotiate decisions. Based on the experience gained from STDP on grievance redress mechanisms, ADB prepared a guide10 for designing and implementing grievance redress mechanisms. Overall, the safeguard process of the STDP, with its people-centric approach, created a significant impact on institutions and society at large. It is a significant part of the STDP’s legacy.

8 ADB. 2001. Capacity Building for the National Policy on Involuntary Resettlement. Manila (TA No. 3792-SR). 9 Land Acquisition Act (LAA) No. 9 of 1950.

10 ADB 2010, Designing and Implementing Grievance Redress Mechanisms- A Guide for Implementers of Road Projects in Sri Lanka

Appendix 14 61

SOCIAL SAFEGUARD IMPLEMENTATION

I. SOCIAL SAFEGUARD PLANNING

A. Project Preparation 1. During the project design stage, the National Involuntary Resettlement Policy (NIRP) for Sri Lanka was developed with technical assistance from the Asian Development Bank (ADB) and approved by the government in May 2001. During project preparation, social impact assessment 1and environmental impact assessment (EIA)2 studies were undertaken in 1999, an additional socioeconomic survey was conducted in 2000, and a detailed inventory of losses study was conducted during 2000-2002 to record actual property losses of affected people. The Road Development Authority (RDA) prepared a comprehensive resettlement implementation plan (RIP) in line with government (the borrower) and ADB policies on involuntary resettlement for the project. The RIP was approved by the government and ADB in October 2002. 2. The government acquired land for a six-lane expressway and the RIP was prepared accordingly. The plan provided details for land acquisition; the number of affected people or households based on the land survey and inventory of losses; entitlements for lost assets; the extent of resettlement, rehabilitation support, and income and livelihood restoration activities; and institutional arrangements. In addition, a detailed resettlement investment budget with implementation schedule was also included in the RIP. The matrix of entitlements included in the RIP was detailed and entitlements exceeded ADB requirements. The matrix was translated into Sinhala, the local language used by affected people, and each affected person was given a copy. Divisional secretary offices in the project area received a copy of the RIP translated into Sinhala, which was also disclosed on the ADB website in May 2004 and the RDA website in June 2004. The entitlement certificate was also distributed to each affected person after full payment of compensation and entitlements. 3. Additional land acquisition became necessary during the construction of the expressway. The need for such land acquisition arose for a variety of technical reasons such as land filling and cuts, waterlogging, rock blasting, underpasses, and bridges, and also from some difficulties in accessing private land adjoining the right-of-way of the expressway. The RDA acquired additional land following the procedures of the Land Acquisition Act (LAA) and the procedures for land purchase introduced by the Ministry of Highways in 2006. The secretary of the Ministry of Highways issued Circular No.MH/W/1/93 of 8 September 2006 incorporating all entitlements listed in the RIP addendum. This circular facilitates the sale of economically unviable or small land parcels (of less than 375 m2 each) that were left after the acquisition of land for the project. The addendum to the RIP provided additional information on resettlement impacts arising from the acquisition of additional land and other assets which were not originally listed for acquisition. In addition to those who were displaced and affected by additional land acquisition, some owners of the remaining residential and agricultural land opted to sell their land and requested the RDA to purchase or acquire such small strips of land.

1 Final report of social impacts assessment carried out by the University of Colombo in March 1999 and social

impact assessment updated report prepared by Wilbur Smith Associates in November 2000. 2

Environmental impacts assessment report was carried out by the University of Moratuwa in 1999 and an additional study report was prepared in February 2006.

62 Appendix 14

B. Legal Framework 4. Land and other assets were acquired within the framework of the LAA of 1950 and its amendments. The provisions in this act did not meet the standards of the ADB Involuntary Resettlement Policy3 and, therefore, new project-specific policies and procedures were introduced in the RIP. The NIRP of Sri Lanka also identified some inadequacies in the procedures adopted in land acquisition in terms of significant delays in taking possession of land and associated problems such as submission of legal documents to prove land ownership and a number of steps involved in land acquisition. There were no legal provisions to pay replacement costs for land and structures and resettlement of the affected people. The time taken for land acquisition of land under the LAA was estimated to be about 72 weeks from the issuing of Section 2 notice to the taking over physical possession. C. Land Acquisition and Resettlement Committees 5. Since the LAA did not meet the requirements of the ADB Involuntary Resettlement Policy to pay market value for land and replacement cost for structures, the project established land acquisition and resettlement committees (LARCs), which were the first of their kind in Sri Lanka. The Cabinet also approved entitlements proposed in the RIP for payment for nontitleholders and other payments as assistance for relocation and income restoration, which was another first in Sir Lanka. The LARCs decide additional compensation for land and structures and resettlement assistance for each affected person in addition to the compensation paid under Section 17 of the LAA for the acquisition of land and structures. 6. The LARC comprised the divisional secretary (chair), the district superintendent of survey or his or her representative, the district valuer or a representative, an officer nominated by the RDA, and the affected person or a person nominated by the affected person. Some improvements were suggested to expedite the activities of LARCs, such as assistance of a lawyer to clear the titles, payment of a daily allowance to the affected person, appointment of private surveyors for the perimeter survey approved by the Survey Department, and assistance from resettlement assistants from the RDA for obtaining deeds and other legal documents. LARCs negotiated with the affected people for payment of ex-gratia payments, such as (i) the difference or enhanced payment between the replacement cost and the amount of statutory compensation for land and structures, (ii) payment for cultivation and trees, (iii) payment for other structures and improvements, (iv)) loss of income from property, (v) inducement payment (25% of statutory compensation), (vi) house rent, (vii) resettlement allowance for squatters/encroachers, (viii) resettlement allowance for landowners, (ix) loss of interruption of employment or income, (x) payment for vulnerable heads of households, (xi) shifting cost of movable properties, and (xii) loss of employment of sharecroppers (farmers and informal sector commercial activities) and other allowances. It was decided later to pay the cost of connections to get basic services (telephone, water, and electricity) to the new houses and commercial structures. A self-relocation allowance of SLRs100,000 was also paid. Such additional compensation is the key feature of the compensation framework under the project. The details of the ex gratia payments were explained to the affected people. D. Relocation Plan and Displacement Support 7. There were no legislative provisions under the LAA which mandated the preparation of relocation plans and displacement support. However, NIRP policy objectives stated that

3 ADB. 1995. Involuntary Resettlement Policy: Manila

Appendix 14 63

resettlement should be planned, replacement land should be an option for legal owners and nontitled persons, and affected people should be consulted in the selection of resettlement sites. Encroachers and subfamilies of affected families were provided with free house plots. According to the entitlement policy in the RIP, 1,315 residential structures, 151 commercial structures, and other secondary structures such as fences and sheds were to be compensated for in cash at full replacement cost without deduction for depreciation or salvageable materials. All affected structures were compensated for at replacement value and land was compensated for at market value. E. Implementation Arrangement 8. A resettlement program was designed and implemented by the RDA through its project management unit. This unit was led by the project director who had the overall responsibility for RIP implementation. It was linked to the Land Acquisition and Resettlement Division head office in Colombo, and four regional resettlement unit offices-at Banadaragama and Dodangoda in the JICA funded section and Kurundugahahethekma and Pinnaduwa in the ADB section. Each unit was staffed with one resettlement officer and 8-12 resettlement assistants. The RIP also recommended the recruitment of 10 community resettlement workers and women’s support officers. The divisional secretaries were responsible for land acquisition and payment of compensation under the LAA. The 126-kilometer (km) long Southern Expressway spanned 22 divisional secretariats. A LARC was established for each divisional secretariat area. The acquisition of land and payment of compensation under section 17 of the act and LARC payments were made by each divisional secretary. The representatives from the Survey Department and Valuation Department in LARC meetings played a key role in implementing the RIP. In the RIP it was also recommended that community consultative groups were established, consisting of grama niladharies (Village Head), chief incumbents of local Buddhist temples, and other community leaders. 9. During 2003–2005, the project director and deputy project director, who were based at head office in Colombo, managed all of the above programs through four consultants and project staff in regional offices. The implementation of the majority of land acquisition and resettlement activities was carried out in close cooperation with divisional secretariat offices, the Department of Valuation, and the Department of Survey. The resettlement officers did field management of all resettlement and land acquisition activities with the assistance of resettlement assistants in each region. The resettlement assistants were responsible for a certain number of affected persons, and their key responsibilities included (i) updating the inventory of loss files; (ii) carrying out consultations for the affected people on procedures of property acquisition, compensation, and other assistance, (iv) directing affected people to the LARCs; and (iv) helping affected people to identify and settle into resettlement sites.

II. LEVEL OF PROJECT IMPACT 10. About 5,800 households were affected by the project, out of which 1,326 were fully affected and displaced. Table A14.1 provides a detailed breakdown of the project impact.

64 Appendix 14

Table A14.1: Project Impact Impact Number Total number of households affected 5,800 Fully affected and displaced households 1,326 Fully affected commercial structures 102 Partially affected from land acquisition (agricultural land) 4,372 Temporarily affected form damage to houses from blasting, vibration, and crops (based on complaints)

About 600 households

Acquired paddy land (fully affected and income losses) 272.5 ha (about 800 households)

Acquired highlands (fully affected cash crops) 734.2 ha ha = hectare. Source: STDP PMU Records

11. Thirty two resettlement sites were developed by the RDA-20 in the ADB section and 12 in the JICA section. The key activities facilitated by the project included selecting and developing resettlement sites, providing infrastructure, issuing title deeds, strengthening housing societies, and handing over sites to local authorities. Four hundred and fifty nine physically displaced households opted to relocate to the various resettlement sites. 12. About 200 households were classified as vulnerable households and received special assistance, including (i) free house plots (150-250 m2) for encroachers; (ii) provision of infrastructure facilities at resettlement sites (water, electricity, and access roads); (iii) house construction, including 32 households who received extra cash assistance to complete house construction; (iv) homestead improvements including support for free seeds and fertilizer; (v) skills training for self-employed people; (vi) issuance of title deeds; and (vii) support for forming local societies and regular support for problem solving by resettlement staff.

III. KEY COMPONENTS OF SOCIAL IMPACTS MITIGATION PROGRAM 13. The project’s resettlement program included several components for implementation and management of the program, including a land acquisition and resettlement program, a resettlement site development program, a housing society development program, an income restoration program, and a home garden improvements program. 14. The land acquisition and resettlement program was responsible for acquiring lands under the LAA, determining the replacement value of acquired properties, and determining other ex gratia payments complying with the entitlement matrix of the RIP through the LARC. 15. Activities related to acquiring lands for resettlement sites, site planning, plot allocation, planning, and providing infrastructure and assisting affected people to construct houses and resettle were accomplished under the resettlement site development program. 16. Organizing resettlers in each resettlement site and building awareness among them on how to develop contacts with outside resources, maintaining common amenities, and working collectively for the development of their new settlement were the activities of the housing society development program. 17. Assistance for restoration of lost income due to the acquisition of business premises and agricultural lands and providing training for affected people on new income restoration program activities were conducted under the income restoration program.

Appendix 14 65

18. The main objective of the home garden program was to develop a home garden in each plot of resettled land to meet the day-to-day food and vegetable requirements that people used to receive from their lands before relocation. A. Land Acquisition, Resettlement, and Compensation Payment Program 19. The salient features of the RIP included (i) compensation before displacement, (ii) compensation at replacement cost without deductions and depreciation, (iii) assistance and benefits provided for non-titleholders, (iv) income restoration and improvement activities, (v) compensation for structures and crops at market value, (vi) provision of rental stipend for 12 months for displaced households, (vii) restoration of community buildings and facilities, (viii) compensation for temporary losses and damage, (ix) special assistance to vulnerable households, and (x) recognition of gender issues. 20. The project management unit coordinated with divisional secretariat offices, the Department of Valuation, and Department of Survey. Stationery and transport facilities were provided by the RDA for officials of these departments. Resettlement officers and assistants spent time with divisional secretariat offices and with affected people to expedite land acquisition and LARC activities to provide compensation and other entitlements to affected people. 21. Cabinet approval was given to the executing agency on 24 August 2001 to pay replacement value in addition to the compensation decided by the LAA, through LARCs. 22. The RDA received further Cabinet approval on 26 September 2001 to reduce the time period of acquisition from 72 weeks to 18 weeks. The same Cabinet memorandum specified the functions of the LARC system and also introduced special assistance programs by the RDA for affected people who would find land by themselves for relocation and for expenses for new water and electricity connections and for rented houses while constructing new houses. Incentives of an additional 25% of compensation were given to affected people who gave up possession in time to the RDA.

1. Comparison of Original and Actual Implementation Schedules 23. According to the original plan for implementation of land acquisition and resettlement, activities in the ADB section were to be completed by February 2003, and in the Japan International Cooperation Agency (JICA) section by June 2003. Payment of compensation, selection of resettlement sites and provision of infrastructure, and commencement of livelihood restoration were to be completed during 2003 in both sections, followed by construction activities. However, construction activities in the ADB section started during April 2003, but land acquisition and resettlement activities had still not been completed. Public obstructions, which started because of the changes in the road alignment, caused delay to land acquisition activities. Two groups (from Gelenigama and Akmeemana) campaigned against the acquisitions of the RDA, with people also from road-deviated areas supporting these demonstrations. The actual implementation schedule indicated a large difference between original time schedules and actual time schedules in both sections. 24. As the external monitoring report at the end of July 2003 stated, only 47% of affected people had been paid compensation and other payments in full in the ADB section, and only 7% in the JICA-funded section. No payments had been made in Akmeemana, on the Galle Port

66 Appendix 14

Access Road, and on road diversion locations in the ADB section. However, positive progress was made during the next 3 years and, by the end of August 2006,4 99.1% of affected people had been paid in full in the ADB section, while 93.8% had been paid in full in the JICA section. As the same report states, out of 1,295 who were to be resettled, 827 had found land by themselves and had resettled, while 468 were settled in RDA-developed resettlement sites.

25. After the original right of way had been acquired, it was necessary to acquire additional land for various technical, environmental, and social reasons. Some changes to the original design of the expressway took place to get more space for embankment development, drainage facilities, access roads, and to protect areas subject to potential landslides. 26. The RDA, Management Consultant, and ADB took several important actions to expedite social impact mitigation activities, including land acquisition and resettlement, having considered the delay in the project implementation activities. ADB staff monitored STDP programs continuously through their loan review missions and made recommendations to expedite land acquisition and resettlement activities. 27. Making full payments before resettlement, completing provision of infrastructure to resettlement sites, implementing proper income and livelihood restoration programs, developing additional EIAs for deviations (final trace) of the expressway and updating the environment management plan, commencing the benefit monitoring and evaluation program, developing special programs for women and gender issues, and developing a management information system were included in the recommendation check list of the Compliance Review Panel (CRP) which should be completed by the RDA. Continuous project progress monitoring by ADB ensured correct implementation of social and environmental impact mitigation programs complying with ADB and NIRP policies.

2. Comparison of Cost Estimates for Land Acquisition and Resettlement 28. According to the STDP Original Loan, SLRs541.88 million ($7.6 million; $1 = SLRs71.3 in 1998) was estimated and reserved for land acquisition and resettlement, whereas the RIP estimated it to be SLRs2,861.503 million.5 According to the records of the Land Division of the STDP, the total amount of compensation payments for land acquisition, including additional land acquisition, was SLRs4,988.13 million as at the end of January 2014. 29. Originally, the whole project was scheduled to be completed by the end of 2006. However, unexpected public obstructions, court cases, ADB-CRP involvement, and the time-consuming land acquisition process caused delays to resettlement activities. 30. Original estimates of resettlement and land acquisition proved to be unrealistic, since the original cost was based on a survey of 20% of the project area completed for the feasibility study. Subsequently, detailed design was prepared taking into account the recommendation of the Central Environmental Authority (CEA) to avoid ecologically sensitive areas. Based on the detailed design, a 100% survey of the affected area resulted in the much higher land acquisition and resettlement cost.

4 Government of Sri Lanka, Road Development Authority. 2006. Land Acquisition and Resettlement Progress

Report No.39-August 2006 5 Government of Sri Lanka, Road Development Authority. 2002.Resettlement Implement Plan of STDP - Chapter 7.

p3. This page is reproduced at the end of this appendix

Appendix 14 67

31. Although the RDA commenced land acquisition activities in August 2000 and expected to complete land acquisition for the first 50% of the highway by 30 November 2002 and the balance by 28 February 2003 in the ADB section, there were significant delays in land acquisition. On 2 December 2002, ADB approved the award of the civil work contract to Kumagai Gumi in the ADB section. This was subject to the loan agreement condition that the RDA shall have acquired no less than 50% of the length of the right-of-way in the ADB section (ADB priority section). ADB approved the notice to proceed on 29 April 2003 to commence construction activities on the first 50% of the highway length. 32. The project has a long history of objections to the change in road alignment and subsequent land acquisition raised by different groups and affected people. These objections through court cases and land surveys have resulted in delays in land acquisition in some road sections. A group of 49 affected people appealed to the Appeal Court6 in July and August 2002. Two applications were dismissed on 30 May 2003. Forty two affected people then appealed to the Supreme Court against the decision of the Court of Appeal in 2003 and other affected people after the Appeal Court judgment obliged to allow survey works and land acquisition. About 260 lots were acquired and paid compensation during 2004. 33. The Supreme Court judgment was given on 20 January 2004, after which the RDA, instructed the Survey Department to complete the survey works for land acquisition. The affected people claimed that the project affected them as a result of change in road alignment without their consultation or conduct of social and environmental studies for the change in alignment. Also, some affected people, including many of those who initiated the court actions referred to above, requested ADB’s inspection mechanism to stop land acquisition. Two requests for inspection of the project were denied under ADB’s Inspection Policy7 by the Board’s Inspection Committee in 2002. Allegations of ADB’s noncompliance with its operational policies and procedures were unfounded but resulted in a recommendation to bring about a mediated resolution of the objectors’ concerns. In response, ADB engaged a local nongovernment organization (NGO) to undertake a mediation program with the 32 people opposed to the project. Only eight people accepted mediation and 24 remain opposed. After the Supreme Court judgment in January 2004, a group of affected people, called the Joint Organization of Affected Communities, filed a complaint with ADB’s Office of Special Project Facilitator. It determined eligibility for inspection. The office submitted its report in September 2004 and concluded its consultation without any agreement with the affected people. The CRP met in December 2004 and determined that the request was eligible and the ADB Board recommended a compliance review. The CRP submitted its first report to the ADB Board in May 2005. 34. At the end of December 2004, 86 lots in the Akmeemana area and 4 lots in the Bandaragama divisional secretariat area were not surveyed for land acquisition (about 10 hectares) because of the continued resistance. The RDA and ADB prepared a report on the land acquisition process and payment of compensation in the contested area from October to the end of 2006. The RDA published special notices in the newspaper on 14 November 2004 and 6 January 2005. The resettlement staff in consultation with the divisional secretariat, Survey Department, and valuation department made special arrangements to complete survey works and property valuation, and organized LARC meetings and payment of compensation. All entitlements were paid to affected people, except ex gratia payments. The CRP mission and ADB monitored these activities continuously until 2011. All land acquisition and compensation

6 Two appeal court cases, 1330/2002 and 1447/2202

7 ADB. 1995. Inspection Policy. Manila

68 Appendix 14

payment activities were completed during 2010 in the ADB-funded section and in 2011 in the JICA section.

B. Income Restoration Program

35. The RIP was developed with a broader objective to address socioeconomic impacts of the project, and to ensure at least the restoration of pre-project household incomes and improvement of living standards and income-earning capacity of vulnerable and poor affected households. In this context, an Income Restoration Program (IRP) was implemented for affected households, beginning in 2005. Prior to 2005, the PMU accomplished activities such as the opening of a bank account for each project-affected household to deposit cash compensation, appointing resettlement officers and resettlement assistants to assist project-affected people to negotiate their entitlements with project authorities, obtaining replacement value for their lost property, and buying land plots at resettlement sites to build new houses. These activities focused more on land acquisition and compensation and resettlement than on income restoration and improvement. Because of the generous compensation and resettlement assistance packages built into the resettlement process, project authorities generally assumed that all affected households could restore their income and livelihoods using their cash compensation packages. The IRP was perceived as an additional support package to help poor households including the old and disabled to improve their income and livelihood. 36. This formal IRP initially assisted 1,050 affected households, including 266 vulnerable households headed by women, who moved into RDA resettlement sites. 37. Several training programs were conducted with the help of a number of institutions such as local centers of the Vocational Training Authority, provincial Department of Agriculture, and local depot of the Sri Lanka Transport Board Western Province and Southern Province. In total 186 people participated in this program and 84 applicants were selected for Vocational Training Authority training programs and driver training programs. 38. ADB sought to improve the IRP program implementation and recommended outsourcing of the program. The RDA signed an agreement with an NGO, Sarvodaya Economic Enterprises Development Services (SEEDS), to formulate a new IRP program during August 2005. After conducting a socioeconomic survey in the project area, SEEDS submitted a final proposal in March 2006 and the contract was signed on 15 September 2006. SEEDS did not perform satisfactorily, and a review meeting was held during January 2008 to review its performance with the participation of the Center for Poverty Analysis (CEPA), an independent external monitor of the STDP. In consideration of the overall performance and poor planning efforts of SEEDS, the RDA decided to terminate SEEDS’ contract on 21 February 2008 and to implement a restructured IRP program. The restructured program focused on three areas: household income restoration for identified households, strengthening 32 housing societies which had been set up within the RDA-facilitated resettlement sites, and home gardening around resettlement sites.

C. Housing Committee Development Program 39. The monthly progress reports of the Land Division of the STDP in June 2011 stated that out of 1,359 displaced families, 361 families were settled in 32 RDA-developed resettlement sites. Although there were 530 housing lots allocated for affected families for housing in resettlement sites, 169 families decided to settle in other villages and expected to use house

Appendix 14 69

plots for their children. Twenty housing societies were formed; 18 housing societies are now registered, and 518 title deeds were issued as at January 2014, with only 18 to be issued. 40. Housing society strengthening activities were implemented by RDA resettlement staff during 2003–2009. Training programs for housing committees were conducted during September 2005, October 2005, and February 2006, and all societies of the ADB-funded section and societies of Annasigalahena, Diyagama, and Miriswatta in the JICA-funded section were included. D. Resettlement Site Development Program 41. Thirty two resettlement sites were developed (20 in the ADB section and 12 in the JICA section). The key activities facilitated by the STDP included selecting and developing resettlement sites, providing infrastructure, issuing title deeds, strengthening housing societies, and handing over sites to local authorities. 42. Provision of infrastructure in resettlement sites has been undertaken from 2003 and important activities such as provision of water, electricity, telecommunications, internal roads, culverts, common land, and side drains have been completed. 43. Two independent committees were appointed during 2006 and 2007 to investigate the progress of completion of infrastructure at these sites. Legal handover of sites to local authorities, with deeds of common locations of resettlement sites, was completed in the JICA section during 2010. The lands allocated for common activities such as cemeteries and community halls in 19 out of 20 sites had been handed over to local authorities as at the end of January 2014 and deeds in Hallalawatta resettlement site had yet to be handed over. E. Home Gardening Program 44. The STDP provided assistance for resettlers to reestablish their home gardens on their new land to assist them to restore their lost income from their home gardens while complying with the objective of restoring the resettlers’ lives to the standards before resettlement or a little more than those standards. The home garden program was implemented in parallel with the income restoration program. 45. In the beginning, 343 householders were involved in establishing new home gardens. The home garden planning was carried out with the assistance of the officers of the Department of Agriculture during 2007-2008. According to their instructions and resettlers’ requests, it was decided to provide materials to all home gardens, including pots, plants, and fertilizer, to initiate activities. Necessary training and experience-sharing tours and distribution of plants, seeds, and pots were also conducted. 46. A rapid assessment of the established home gardens was carried out in December 2008. It revealed that 235 home gardens were successfully continuing. The size of the plot of land of the majority of settlers was 500 Square Meters (m2). Some of those resettlers who previously had larger home gardens which provided them vegetables, coconuts, livestock, firewood, etc. prior to resettling in the new land complained about the size of the home garden. Although they were paid compensation for loss of their agriculture crops, it would not be possible to compensate for the long-term value of agricultural produce, which they had enjoyed.

70 Appendix 14

IV. GRIEVANCES REDRESS COMMITTEE PROGRAM 47. The STDP implemented the first project-based grievance redress committee (GRC)8 program and it was established based on provisions in the NIRP and ADB involuntary resettlement policy. One of the NIRP policy objective is to make all affected people aware of processes available for the redress of grievances that are easily accessible and immediately responsive. The ADB document stated that “GRCs are generally of two types: formal courts of appeal concerning land compensation practices, or locally constituted GRCs for dispute resolution involving resettlement benefits. Operational procedures for GRCs should be formalized and established clearly.” 9 48. GRC’s were established during 2002 and 2003 for the purpose of inquiring into and finding solutions for the problems, grievances, and disputes which arose as a result of implementation of the land acquisition and resettlement activities to construct the expressway. 49. As a first step, four GRCs were established focusing on four districts (Colombo, Galle Kalutara, and Matara) and with the coverage of 22 divisional secretariats of the project area. These GRCs consisted of seven members and were chaired by the additional district secretary or district secretary. The other members were the district valuer, district engineer of the RDA, and four members from civil society organizations recommended by the district secretary (one clergy member, one woman member, and two community leaders). 50. Later the structure of GRCs was changed. The position of chair was changed from additional district secretary to assistant divisional secretary. Among the other members, the chair of Samantha Mandala, relevant grama niladhari, a representative from an NGO, an elite member of the relevant area, representatives from the contractor and engineer, and social impacts monitoring officer were included. 51. This composition of the committee was very appropriate, especially for reviewing and resolving issues related to construction impacts, which were the majority of the complaints. While representatives of the engineer and the contractor review complaints and possible solutions with regard to conditions of the contract, the assistant divisional secretary and representatives of the community organizations consider all comments independently, with special attention given to the reasonableness of complainants’ requests at GRC committees. However, the final decision was made with the collective agreement of all parties. 52. The majority of complaints involved construction impacts from rock blasting or heavy machinery operations. This highlights the need for resolving complaints on construction impacts promptly, as getting the majority ruling by GRCs could delay scheduled construction activities of the expressway. When the management failed to resolve such issues in time, complainants disturbed or opposed construction activities in particular locations. The contractors subsequently stopped scheduled works and claimed losses because of idling resources. 53. A considerable number of issues related to drainage, air pollution, dust emission, soil erosion, land acquisition, local roads, and access were addressed by GRCs, while a lesser number of complaints related to resettlement, common amenities, cut slopes, dumping sites,

8 The experience gained from STDP on grievance redress mechanisms was the basis for the ADB publication: ADB 2010, Designing and Implementing Grievance Redress Mechanisms - A Guide for Implementers of Road Projects in Sri Lanka 9 Government of Sri Lanka. 2002. Resettlement Plan. Colombo

Appendix 14 71

waste disposal, pile driving, and irrigation systems were also received by GRCs. Table A14.2 summarizes how GRCs acted in practicing different functions to resolve issues.

Table A14.2: Grievance Redress Committee Functions and Impact GRCs’ Different Functions in Resolving

Public Issues Impact Clarification of the issue Affected person is aware of the actual issue,

reasons, responsible parties, and the path to resolve the issue

Doing joint field investigations GRC members are aware of the issue and how realistic and/or reasonable it is and possible and/or practical solutions

Facilitating in identifying responsible agencies to resolve issues

Contractor, engineer, employer, and any other relevant party each accept their responsibility on resolving the issue

Facilitating in negotiating acceptable solutions or decisions for all parties

All are satisfied with the decision taken and confident of the resolving steps and/or actions

Proposing to relevant parties alternative solutions and/or options to resolve the issue

Responsible agency does not ignore or avoid the responsibility of resolving the issue

Acting as a mediator among rival parties and groups

Rival groups and parties understand the nature of the independence within the GRC committee

Facilitating in giving assurances to complainants on solutions of relevant parties

Uncertainty in resolving issue by relevant party will be lost

Representing a government agency while ensuring accountability on public rights

Create confidence among complainants on the GRC decision rather than the other parties’ individual decisions

Facilitating agencies in complying with their public service policies and principles and mandate on the people

Complainants are satisfied with solutions which come through GRCs, although they were delayed

Assisting agencies in estimating losses due to the project

All parties, including party responsible for paying compensation, are satisfied with independent calculation system on compensation

Facilitating parties to find acceptable loss assessment system and recommending suitable government agencies and or institutions to do the job

Confidence in the loss assessment system and compensation amount is established among complainants

GRC = Grievance redress committee Source: CEPA 2009. A Review of the Southern Transport Development Project (STDP) Grievance Redress Mechanism, Colombo and STDP Project Management Unit data

V. MONITORING AND REPORTING

53. Implementation of project monitoring and reporting activities of the STDP was activated in two ways-internal and external. A. Internal Monitoring 54. Internal monitoring activities were conducted by RDA consultants and the deputy project director of the PMU during 2003-2006. Subsequently, the responsibility for these activities was taken over by the deputy directors of lands and social and environment, who were based in head office and coordinated with the deputy directors in the regional offices. The internal reporting system was carried out in the field by resettlement officers and deputy directors.

72 Appendix 14

55. The format of data collection was prepared by RDA consultants at the beginning and sent to resettlement officers in four regional offices, who filed these formats in consultation with resettlement assistants and sent them back to RDA consultants. The consultants then prepared progress reports and presented them at the project coordination committee meetings which were held monthly. At the same time, the same information was used by management consultants to prepare resettlement progress reports sent to lending agencies, including ADB. B. External Monitoring 56. During 2001–2003, external monitoring activities were conducted by an agency called Environmental Resources Management. After 2 years of external monitoring activities, the PMU decided to discontinue the services as the findings were not acceptable to the PMU. 57. Consequently, ADB suggested that management consultants undertake external monitoring activities, and they submitted 34 external monitoring reports from May 2003 to March 2006. 58. During 2006 ADB decided to change the arrangement for independent external monitoring and from April 2006 the CEPA was engaged to carry out these activities through ADB technical assistance.10 Using a stratified sample of 400 affected families, the CEPA conducted its monitoring studies covering the areas of verification of outputs and processes of the RIP, restoration of living standards, livelihoods of affected people, levels of satisfaction of affected people, effectiveness of resettlement planning, and social and environmental impacts. 59. The CEPA presented its findings quarterly and annually to ADB and the PMU. These reports were reviewed by the Sri Lanka Resident Mission and ADB, and the CRP missions used them to understand the project situation and perceptions of affected people in resettlement operations.

VI. FINDINGS, CONCLUSION, AND RECOMMENDATIONS A. Findings 60. This section provides findings from the CEPA’s external monitoring report from 2011 on the outcomes from the livelihood restoration program.

1. Agricultural and Commercial Activities 61. The findings indicated that the majority of households engaged in cash crops were on the path to recovery. However, there was a minority of farmers who were showed deterioration. Affected people who were identified as on a positive recovery trend during the 2006 evaluation had mostly reached the preacquisition level of income. The households vary from large-scale cultivators (for example, affected people who lost 32,000 m2 of land) as well as affected people who lost small land plots (e.g., 125 m2 of land). All of them have restarted and continue to cultivate cash crops which contribute to the household income. However, they also have other sources of income, predominantly in the formal salaried sector and wage labor. As in the case

10 ADB. 2005. Independent External Monitoring of Resettlement Activities of the Southern Transport Development Project. Manila (TA-4748 – SRI, $511,000, approved on 19 December 2005)

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of commercial activities, recovery of these households is influenced by diversification of the household income portfolio. External factors such as an increase in the market price of tea, and salary and pension increases, have also contributed to the recovery. 62. The majority of the affected people who were part of a negative recovery trend in 2006 have now made a turnaround; most are recovering while a few have made a full recovery by reaching their pre-land-acquisition income level. Most affected people in this group lost a significantly large amount of land, (more than 2500 m2) and only a small proportion of households had replaced the lost land. In line with the general trend observed in household livelihood portfolios, expansion and diversification influenced the coping ability of these households. For those who were producing tea as a cash crop, the improved market price for tea was the major contributor in the turnaround of income. 63. There was a further group which showed neither an increase nor decrease in their household income when comparing pre- and post-land-acquisition levels. Land acquisition had neither improved nor decreased their income, despite the acquisition of their cash crop land, because cash crop cultivation had been a secondary source of income for these households while their primary source of income came from trading and salaried employment. 64. For impacts on commercial property, substantial improvements in the replacement of lost commercial activities were observed in 2011 versus the monitoring carried out in 2006. In 2006, the replacement of lost commercial activities was around 35% of commercial activities, and this increased to 56% by the first half of 2010. This demonstrates that there is a positive trajectory for livelihood restoration.

2. Income Restoration Program 65. The impact of the IRP on the livelihoods of affected people is directly related to the level of participation. Those affected people who actively participated in an intervention are more likely to report positive impacts on household livelihood in terms of increased income from employment and self-employment, and expansion of livelihood opportunities, particularly through tea and home gardening. Participating affected people are also more likely to report that the IRP is relevant and useful. Affected people who received assistance towards home gardening reported that they were able to earn some income from this activity. In these cases, the IRP activity was valued as the affected person was vulnerable because of disability or age. Those who received assistance for tea cultivation expect to see an economic benefit in the future, as plants are newly established and not yet generating an income. Two affected people received advice on management of their compensation and one of these households reports improvements, particularly in relation to their cattle-rearing business as they are able to obtain a higher price for their milk. 66. The majority of the affected people (79%) interviewed felt that a program to assist in livelihood restoration was an important component of resettlement assistance and compensation in projects such as the STDP. Within the assistance offered, nonmonetary assistance, such as compensation management, facilitating replacement of livelihood assets such as land was vital in the process of resettlement. It was felt that such assistance was needed as many affected people were vulnerable during the period of change and replacement. Assistance was also seen as particularly needed for affected people who were from vulnerable and “helpless” households.

74 Appendix 14

3. Home Gardening Program

67. The project reached about 348 households with materials and training. Close to 97% of these beneficiaries were households living in resettlement sites. The low numbers of self-relocated households participating in the IRP was due to difficulties with engaging with the program on a practical level as most activities were delivered through the resettlement sites. However, the program’s main target group was households in resettlement sites, and more than 90% of the households living in the sites participated in the program. 68. The materials provided through the project included seeds and seedlings of vegetables and fruit trees, baskets for growing plants, and compost. All the beneficiaries in the sample of households received seeds and the large majority (83% of sample) gained a harvest from the plant seedlings. This harvest was mainly used for household consumption, which resulted in saving on household food expenses. In the absence of baseline data, it was difficult to assess the contribution of this to household nutrition. In addition, a few households (26% of sample) sold a part of the harvest and gained an income.

B. Conclusions and Recommendations 69. Specifically in regard to social safeguards, it is considered that a more organized public consultation process during the design stage could have minimized issues that emerged because of the design of the expressway, such as drainage, public access, flood, embankment construction, and additional land acquisition. At the same time, having good dialogue and coordination with government agencies such as the Department of Irrigation, Department of Agrarian Services, the Sri Lanka Land Reclamation Development Commission, the Urban Development Authority (UDA), and divisional secretariat offices during the design of the expressway could have minimized design issues which created social and environmental problems that delayed construction activities. 70. It is considered that more public consultation and more cooperation from politicians to build awareness among the public could have taken place at the initial stage. Although there were public meetings held at divisional secretariat office levels and in some public places of villages, some community leaders such as local politicians may not have cooperated fully towards project implementation. Indeed, it is understood some politicians actively organized people against construction activities, leading to enhanced compensation payment rates. 71. Since the expressway concept was new to Sri Lanka, some people believed that the expressway was useful only for people owning vehicles. People and government agencies in relevant divisional secretariat areas were not aware of the long-term benefits which can be expected from the expressway, and lacked an understanding of the objectives of the expressway, such as linking key economic and social centers of the main cities of three provinces while acting as the catalyst of Southern Province development. If more awareness had been created at the initial stage, less people would have opposed the project activities.

Appendix 14 75

Original Budgets on Resettlement and Land Acquisition as in the Resettlement Implementation Plan

Source : Reproduced from the Page 3 in Chapter 7 – Government of Sri Lanka, Road Development Authority. October 2002. Resettlement budget, Resettlement Implementation Plan (RIP) for the Southern Transport Development Project (STDP), Main report - Volume 1

Category Unit Cost Value Total

No m2

Ha. Nos. SLRs SLRs SLRs

1 Lands

Paddy 299.88 450,000.00 134,946,360.00

Other Lands 645.66 1,200,000.00 774,789,960.00

Livestock Farms 3 500,000.00 1,500,000.00

Subtotal 911,236,320.00

2 Structures

Houses 83,751.81 10,764.26 901,526,500.00

Other Buildings 820.94 13,455.33 11,046,000.00

Commercial Prem 9,181.21 43,057.05 395,316,000.00

Subtotal 1,307,888,500.00

3 Common Amenities

Coop-Buildings 1 800,000.00 800,000.00

Library 1 1,000,000.00 1,000,000.00

Market Building 1 1,500,000.00 1,500,000.00

Cemeteries 5 500,000.00 2,500,000.00

Wells 2 50,000.00 100,000.00

Public Toilets 9 25,000.00 225,000.00

Subtotal 6,125,000.00

4 Loss of Crops

Paddy 299.88 15,000.00 4,498,212.00

Other Crops 396 15,000.00 5,940,000.00

Subtotal 10,438,212.00

5 Income Restoration 59,165.700.00

6 Temporary Accommodation 25%1315=329 50,000.00 16,450,000.00

Subtotal 16,450,000.00

7 Shifting Allowance 1,315.00 1,500.00 1,972,500.00

Subtotal 1,972,500.00

8

Resettlement Sites lot of

Land 68.79 1,186,080.00 81,590,443.20

Cost of Land 68.79 2,594,854.00 178,500,006.66

Subtotal 260,090,449.86

9 Monitoring 28,000,000.00

Subtotal 28,000,000.00

Total 2,601,366,681.86

10 Contingencies 10% 260,136,668.19

Grand Total 2,861,503,350.05

Unit

76 Appendix 15

IMPACT ON GENDER AND DEVELOPMENT A. Introduction 1. The impact of the Southern Transport Development Project (STDP) on the lives of women who were displaced and resettled as a result of the project is discussed in this appendix. Based on the results of a literature review and a field study, the appendix describes the magnitude of the effects of displacement on women, including households headed by women, as a result of the acquisition of their private properties for the STDP. The appendix also identifies the issues and problems that they encountered during displacement, their transition to new locations and resettlement, and their current status. The types of interventions made by the Road Development Authority (RDA) to secure the rights of displaced women, to restore their livelihoods, and improve their living conditions are also discussed. B. Study Methodology 2. The methodology of the study included both a literature review and a field study. The documents reviewed for the literature survey included the resettlement implementation plan (RIP) of the STDP, periodic reviews conducted on the income restoration program (IRP) of the STDP, an initial study report on gender issues1, monthly and annual progress reports of Sarvodaya Economic Enterprise Development Services (SEEDS)2 and the STDP, reports of the independent external monitor (the Center for Poverty Analysis [CEPA]3), annual monitoring mission reports of the Compliance Review Panel (CRP) of the Asian Development Bank (ADB) (2005-2011), safeguard policies of ADB on gender and involuntary resettlement, and a few international research studies4 that explored the impact of infrastructure development on gender and development. 3. The field study adopted three different methodologies-focus group discussions, individual interviews, and a survey of a sample of affected women. The study was conducted with three distinct categories of affected families in the STDP: (i) those who were resettled in government-sponsored resettlement sites after displacement, (ii) those who self-relocated after displacement, and (iii) those who were living in their original homesteads located along the expressway after losing part of their household property (hereinafter called families living on the same property). The focus group discussion were conducted with groups of women and men living on the government resettlement sites, whereas individual interviews were conducted with the people in the other two categories. It was difficult to bring the latter two categories of families

1 ADB, 2006. Gender Related Issues: Southern Transport Development Project (STDP). Consultant’s report. Colombo. 2 Sarvodaya Economic Enterprise Development Services (SEEDS) was the implementing agency of the income restoration program of the STDP during 2005–2008. 3 The CEPA was the independent external monitor of the STDP during 2006-2010 under ADB. 2005. Independent External Monitoring of Resettlement Activities of the Southern Transport Development Project. (TA 4748, $511,000) 4 P.K.Gellert and B.D.Lynch. 2003. Mega Projects as Displacements. International Social Science Journal. 55 (175) Blackwell Publishing, Oxford pp. 15-25; R. Masika and S. Baden. 1997. Infrastructure and Poverty: A Gender Analysis. Institute of Development Studies, University of Sussex, Brighton; B. Pandey and B.K. Rout. 2004. Development Induced Displacement in India: Impact on Women. National Commission for Women. New Delhi; Y. Tan, G. Hugo and L. Potter. 2005. Rural Women, Displacement and the Three Gorges Project. Development and Change 36 (4), Institute of Social Studies, Blackwell Publishing, Oxford. pp.711-734

Appendix 15 77

together for group discussions because of their wider geographical spread and relative isolation from each other. Four focus group discussions were conducted (two with women and two with men) on the Annasigahahena and Nisalagama resettlement sites, and 22 women and 16 men participated. Individual interviews were conducted with nine men and eight women of the self-relocated families currently living in areas such as Athkandura, Akuraliya, Bandaragama, Galanigama and Kurundugahahethekma and Weniwelkola. Interviews conducted with families living on the same property included three men and eight women who were living in Baddegama and Galanigama areas. Altogether, 66 men and women were consulted with the primary objective of gaining a qualitative understanding and insights into the processes of displacement, transition, and resettlement; problems and issues encountered; and the changes that occurred in the lives of men and women after displacement and resettlement. Social changes were explored in terms of household practices, household incomes and expenditures, individual roles, access to services, social support systems, livelihoods, and psychosocial status. Discussions and interviews were also focused on understanding the experiences of men and women in the process of land acquisition and payment of compensation, participation in the livelihood restoration programs, and the specific issues that affected households headed by women. 4. These qualitative assessments were followed by a survey of a sample of 100 women selected to represent the three categories of affected families of the expressway. The sample included 50 self-relocated women, 30 women living on the government resettlement sites, and 20 women living on the same property. The selection of individual respondents from each sampling category was based on a purposive sample taking into consideration the enumerators’ prior knowledge of the respondents, and their convenience and easy access to the respondents. Also, a weight was placed to include more households headed by women into the sample as they have been treated as a vulnerable group in the resettlement planning process that required special assistance from the project. The main objective of the survey was to quantify the qualitative information that was generated from the focus group discussions and individual interviews, and assess the relevance and applicability of the information to the larger population of displaced and resettled women. The women who participated in the earlier focus group discussions and individual interviews were excluded from the sample of 100 women. The survey data was analyzed using the Statistical Package for the Social Sciences (SPSS). Three resettlement assistants and the deputy director of environment and social of the STDP, who were extensively involved in both the resettlement process and the income restoration programs, were also interviewed. C. Infrastructure Development, Displacement, and Gender 5. Various studies have shown that infrastructure service provision, e.g., roads, transport, electricity, water, and sanitation, and their improvements have a potential contribution to increase agricultural output, industrial growth in the cities, and employment and income generation. Access to basic infrastructure services is often regarded as an indicator of well-being as it helps in reducing poverty and improving health conditions among poor people. Similar studies have also described how infrastructure development can have a negative impact on specific social groups because of displacement, environmental pollution, health risks, and loss of livelihoods and jobs. Infrastructure development can have different significance for and impact on men and women, primarily because of the gender-based divisions of labor, cultural norms, patterns of activity, behavior, and preferences.5

5 R. Masika and S. Baden. 1997. Infrastructure and Poverty: A Gender Analysis. Institute of Development Studies, University of Sussex, Brighton.

78 Appendix 15

6. Mega infrastructure development projects transform the landscapes of not only the bio-geophysical environments such as mountain tops, rivers, fauna, and flora but also the human communities and their social organization, values, understandings, and actions. While mega development projects create new economic opportunities, social spaces, new cultural forms, and socio-natural interactions, they can also cause both primary and secondary displacements. Primary displacements can result in planned eviction and resettlement, labor camps, loss of resource base due to construction, and/or flooding. Secondary displacements can lead to loss of access to property and resources, unemployment, psychosocial stresses, urbanization, unsustainable agriculture in resettlement areas causing soil erosion, and ethnic conflict due to resettlement.6

7. Development-induced displacement and resettlement has resulted in a wide range of economic, social, and environmental consequences, including the loss of livelihoods and means of production and the impoverishment of the people concerned. For those resettling in a new environment, where the lifestyle, local culture, language, and means of production differ from the areas of origin, it has become arduous to adapt to the new physical and human environment. Studies have found that in the process of resettlement, women have less adaptability and diversity in their choices than men in transferring from traditional agricultural sectors to nonagricultural ones. Most women are unable to achieve occupational mobility and shift from agriculture to secondary or tertiary industry through displacement. Unemployment and underemployment are serious problems faced by the resettlers, aggravated by the surpluses in the rural labor force among both men and women. In the gender-segregated environment, it is difficult for women to find employment opportunities. Female resettlers often face double discrimination in the labor market as women and resettlers.7 8. Development projects have widened gender disparities within affected communities, either by imposing a disproportionate share of social costs on women or through an inequitable allocation of the benefits generated. The complex role that a woman performs as a food collector, collector of fuel wood and water, a mother of children, and a partner in agricultural activities gets dealt a disproportionate blow when compared to men in the process of displacement. Displacement may affect women differently. In a broad sense, displacement brings loss of access to common property resources, loss of access to livelihoods, loss of access to services, lack of sanitation, breakdown of family life during the transition period, additional burden of workloads and responsibilities, deteriorating health, breakdown of community networks, problems of marriage of daughters, rise in alcoholism and domestic violence, deterioration of social status of tribal women, a sense of insecurity, and a breakdown of lifestyle.8

D. Affected Population in the Southern Transport Development Project 9. The STDP has affected both women and men in terms of loss of property (due to acquisition), livelihoods, and social networks. The RIP of the STDP forecast that 1,800 people would be displaced by the project-971 females (54%) and 829 (46%) males. The estimated number of people to be displaced in the Japan International Cooperation Agency (JICA) section

6 P.K.Gellert and B.D.Lynch. 2003. Mega Projects as Displacements. International Social Science Journal. 55 (175) Blackwell Publishing, Oxford pp. 15-25.

7 Y.Tan, G, Hugo and L. Potter. 2005. Rural Women, Displacement and the Three Gorges Project. Development and Change 36 (4), Institute of Social Studies, Blackwell Publishing, Oxford. pp.711-734

8 B. Pandeyand B.K. Rout. 2004. Development Induced Displacement in India: Impact on Women. National Commission for Women. New Delhi. pp.10.19 & 20

Appendix 15 79

of the expressway was 829-446 females (54%) and 383 males (46%). In the ADB section, 971 persons were to be displaced, comprising 492 females (50%) and 479 males. 9 10. The quoted figures in the RIP demonstrate that the female population to be displaced either exceeded or remained on a par with the projected male displacements. However, information available on actual displacements pointed to a lesser number of female displacements. For example, the management information system of the STDP contained details of 317 affected people who had been resettled in the 32 government resettlement sites and another 806 who have resettled in places of their own choice (self-relocated). A sex- disaggregated analysis of the two categories of resettlers showed that out of a sample of 294 affected people (of 317)10 who had been resettled in the government sites, there were 112 females (38%) and 182 males (62%). Meanwhile, there were 257 females (32%) and 549 males (68%) among the 806 self-relocated affected people (accessed in March 2013). 11. The management information system also recorded a total of 18,640 who had received compensation for their various losses, which consisted of 14,591 affected people for loss of their agricultural properties, 1,189 for loss of their nonagricultural properties, 295 for loss of their commercial properties, and another 2,565 for loss of their houses (accessed in March 2013). A sex-disaggregated analysis of a sample of 7,838 recipients11 of compensation points to 1,992 females (39%) and 3,089 males (61%) receiving compensation for loss of agricultural land, 310 females (42%) and 425 males (58%) for loss of nonagricultural properties, 36 females (50%) and 36 males (50%) for loss of their commercial properties, and 732 females (38%) and 1,218 males (62%) for the loss of their houses.

E. Households Headed by Women in the Southern Transport Development Project 12. The RIP estimated an overall population of 20,340 people to be affected either directly or indirectly by the project. Of them, 16% were counted as households headed by women.12 The households had been identified as one among the “other vulnerable categories” (which included families having members with various forms of disabilities, the elderly, and households headed by women) of the affected people. N. Gunasekera13 pointed to the lack of clarity in relation to gender in the analysis at the project preparatory stage where households headed by women were subsumed under the larger category of “vulnerable groups”. The total number of vulnerable households to be affected was estimated at 214, or 747 people.14 The estimates provided by SEEDS15, however, pointed to the presence of 266 households headed by women 9 Government of Sri Lanka. Ministry of Highways, Road Development Authority. 2002. Demographic Profile of the APs (Appendix C). Resettlement Implementation Plan for the Southern Transport Development Project (STDP) Kottawa to Matara (128Km) Volume 1 Main Report. Colombo

10 The management information system database has not maintained sex-disaggregated data. The present analysis of sex disaggregation was done for the purpose of this study by identifying the males and females through their respective national identity card numbers. Thus, affected people whose national identity card numbers have not been entered into the database could not be included in the analysis.

11 Foot note 10

12Government of Sri Lanka. Ministry of Highways, Road Development Authority. 2002. Resettlement Impact. Resettlement Implementation Plan for the Southern Transport Development Project (STDP) Kottawa to Matara (128Km) Volume 1 Main Report. Colombo. para 2.2.5

13 N. Gunasekera is the social development and gender specialist at the Sri Lanka Resident Mission of ADB.

14 Government of Sri Lanka. Ministry of Highways, Road Development Authority. 2002. Resettlement Impact. Resettlement Implementation Plan for the Southern Transport Development Project (STDP) Kottawa to Matara (128Km) Volume 1 Main Report. Colombo

15 Sarvodaya Economic Enterprise Development Services. 2007. Southern Transport Development Project Income Restoration Programme. Quarterly Progress Report 15.12.2006 – 15.3.2007

80 Appendix 15

among 1,050 affected people who needed assistance from the project. Sumanasekera16 showed that vulnerable households and households headed by women were in the poor category of affected people who were earning less than SLRs6,000 per month. Meanwhile, the Center for Poverty Analysis17 observed that not all households headed by women were vulnerable. It was only 20% of the affected people who fell into the category of households headed by women and, of them, 85% had been multiple income earners and it was only 15% who had a single source of income. These were the widows or those separated and engaged in self-employment or farming. The CEPA, however, cautioned on the impoverishment trends among households headed by women since the houses of 57% of them were in a state of partial completion and single women with dependents experienced difficulties in coping with their problems in the new environments. F. The Effect of the Southern Transport Development Project on Women 13. A number of study reports, assessments, and monitoring and evaluation reports conducted on the STDP have highlighted numerous issues that affected the displaced and resettled women in the STDP. Rosa18 having interviewed nearly 80 affected people, articulated a number of issues that particularly affected the women in the government resettlement sites. The issues highlighted included

(i) several women being deprived of their supplementary sources of livelihoods and incomes as a result of losing their customer bases, access to raw materials, and markets;

(ii) women (who never engaged in an economic activity) now having to engage in some form of livelihood activity, thereby resulting in a change of their traditional roles;

(iii) women suffering from not having adequate common facilities such as water, transport, etc. in the resettlement sites;

(iv) loneliness and isolation of women resulting from the disintegration of kinship and neighborhood relations and loss of their social support systems that particularly supported them in their reproductive roles;

(v) reduction in social interactions among resettled families in the government sites because of class and caste differences;

(vi) threats to security of women and raising their fears having to walk through isolated jungle areas and roads, possible attacks from reptiles, and lack of proper public lighting systems, and the inability to call for support in times of need and emergencies because of distance between houses in the resettlement sites;

(vii) increase in family expenditures as a result of having to send children to schools by public or private transport;

(viii) women having to accompany children because of security reasons and wasting their valuable time which otherwise could have been used to engage in some productive activity;

(ix) women suffering from physical abuse and domestic violence from their alcoholic husbands who vented their frustrations on women; and

16 ADB. 2009. Review of Income Restoration program (IRP) for affected persons (APs) in the Southern Transport Development Project (STDP). Consultant’s report. Colombo

17 ADB. 2009. Technical Assistance for Independent External Monitoring of Resettlement Activities of the Southern Transport Development Project. Case Study Series – Experiences from the Southern Transport Development Project. Colombo (TA4748 SRI, $511,000, Approved on 19 December 2005).

18 ADB, 2006. Gender Related Issues: Southern Transport Development Project (STDP). Consultant’s report. Colombo.pp.7-20

Appendix 15 81

(x) women having the burden of looking after sick children who suffered from respiratory problems and hearing defects causing from dust and vibration during the road construction period

14. In contrast, self-relocated families were in a better position as they could settle closer to places where better infrastructure facilities were available, settle closer to their kinfolk, initiate new livelihood activities with the support of their kinfolk, and increase their self-esteem (Rosa, 2006:16). 15. SEEDS19 observed the reluctance on the part of women to engage in employment outside their settlements because of the insecure environment that prevailed in the new resettlement sites, noncompletion of houses, lack of neighborhood relations, and the single responsibility of looking after the children in the absence of support earlier provided by kinship and neighborhood networks. Women have become more dependent on men and their incomes20. They felt insecure and vulnerable in the new surroundings and in the presence of construction workers.21 A survey conducted during the construction period with 600 households in 100 grama niladhari divisions22 located along the Southern Expressway noted that women in 35% of the households had difficulty of traveling because of changes in the existing access roads. Regular household work of women in 87% of the households had been disturbed because of dust, vibration, and noise. Women in 28% of the households had restricted mobility because of security reasons and the presence of outsiders during road construction.23

16. A review of the income restoration program of the STDP pointed to demoralization of many poor households caused by their difficulties in integrating into host communities, future uncertainties, and project delays which, in turn, became obstacles for recovery from poverty and vulnerabilities. G. Compliance with Gender and Involuntary Resettlement Policies 17. ADB’s Policy on Gender and Development (1998) places high priority on the promotion and improvement of the status of women as it helps not only in securing gender equity, fundamental human rights, and social justice but also in achieving sustainable development. Low levels of education and training, poor health and nutritional status, and limited access to resources not only depress women’s quality of life but also limit productivity and hinder economic efficiency and growth. ADB’s policy adopts mainstreaming as a key strategy in promoting gender equity, and its key elements include the following:

(i) Gender sensitivity. To observe how ADB operations affect women and men, and to take into account women’s needs and perspectives in planning its operations.

19 Sarvodaya Economic Enterprise Development Services. 2007. Southern Transport Development Project Income

Restoration Program. Quarterly Progress Report 15.12.2006 – 15.3.2007 20 ADB. 2009. Technical Assistance for Independent External Monitoring of Resettlement Activities of the Southern Transport Development Project. Final Report of the Southern Transport Development Project. Colombo (TA4748 SRI, $511,000, Approved on 19 December 2005).pp.49

21 ADB. 2009. Technical Assistance for Independent External Monitoring of Resettlement Activities of the Southern Transport Development Project. Case Study Series – Experiences from the Southern Transport Development Project. Colombo (TA4748 SRI, , $511,000, Approved on 19 December 2005).pp.5

22 The lowest administrative unit at village level.

23 ADB. 2010. Report of the Socio economic survey of households in GN Divisions of the Southern Expressway Corridor. Management Consultant. Colombo (STDP supplementary loan)

82 Appendix 15

(ii) Gender analysis. To assess systematically the impact of a project on men and women, and on the economic and social relationships between them.

(iii) Gender planning. To formulate specific strategies that aim to bring about equal opportunities for men and women.

(iv) Mainstreaming.24 To consider gender issues in all aspects of ADB operations, accompanied by efforts to encourage women’s participation in the decision-making process in development activities.

(v) Agenda setting. To assist developing member country governments in formulating strategies to reduce gender disparities and in developing plans and targets for the education of women and girls, health, legal rights, employment, and income-earning opportunities25

18. Meanwhile, ADB’s Involuntary Resettlement Policy (1995) also places emphasis on protecting the rights of women and sustaining gender equity in all project interventions geared towards assisting affected populations and in their resettlement. The objective of the Involuntary Resettlement Policy is to avoid involuntary resettlement wherever possible; to minimize involuntary resettlement by exploring project and design alternatives; to enhance, or at least restore, the livelihoods of all displaced persons in real terms relative to pre-project levels; and to improve the standards of living of the displaced poor and other vulnerable groups. The policy principles advocate conducting a gender analysis to screen and identify past, present, and future involuntary resettlement impacts and risks on displaced men and women, carrying out meaningful consultations with women to identify their specific needs, informing them of their entitlements and resettlement options, improving the standards of living of women to at least national minimum standards, and in rural areas providing them with legal and affordable access to land and resources26 19. Furthermore, it is also one of the principles of the National Involuntary Resettlement Policy (NIRP) adopted by the Government of Sri Lanka in 2001 to ensure that gender equality and equity are maintained throughout the resettlement process27

20. In compliance with the ADB safeguard policy principles and the NIRP, the RIP outlined the following specific interventions for the benefit of displaced women: (i) provision of a cash grant of SLRs15,000 to vulnerable households (which also included households headed by women) for income restoration, (ii) built houses and other assistance28, (iii) consulting women on the selection of resettlement sites and house designs29, (iv) appointing women support officers to work with households headed by women and to facilitate consultation and participation of women in planning processes including gender planning and to support the

24 ADB. 2012. Guidelines for gender mainstreaming are provided in the Guidelines for Gender Mainstreaming Categories of ADB Projects. Manila.

25 ADB. 2003. Gender and Development. Our Framework Policies and Strategies Bank: Manila, pp.39

26 ADB. 2009. Safeguard Policy Statement: Manila. pp.17 27 Government of Sri Lanka, Ministry of Land and Land Development. 2013. Land Acquisition and Implementation of

the National Involuntary Resettlement Policy, A Guide for Public Officials on Good Practices: Battaramulla, Sri Lanka. P.4 28 Government of Sri Lanka. Ministry of Highways, Road Development Authority. 2002. Resettlement Policy and Strategies. Resettlement Implementation Plan for the Southern Transport Development Project (STDP) Kottawa to Matara (128Km) Volume 1 Main Report. Colombo. para 3.10.6

29 Government of Sri Lanka. Ministry of Highways, Road Development Authority. 2002. Relocation of homesteads and commercial establishment. Resettlement Implementation Plan for the Southern Transport Development Project (STDP) Kottawa to Matara (128Km) Volume 1 Main Report. Colombo. Para 5.4

Appendix 15 83

households headed by women in relocation30, and (v) providing income restoration benefits to households headed by women31. Rosa32 recommended the following measures to address the difficulties faced by resettled women and to improve their living conditions: (i) reactivating the housing societies in order to facilitate better integration of communities in resettlement sites, (ii) conducting training programs on micro credit programs for women who lost their income sources because of relocation, and (iii) issuing title deeds for affected people including households headed by women which can be used as collateral to obtain loans to start new businesses and ensure their own security and stability. 21. Even though there had been a proposal under the income restoration program of the STDP to establish a revolving loan fund with a credit portfolio of SLRs10 million to facilitate loans for small and medium-sized enterprises of the displaced people and to link them with financial institutions such as banks, in practice this was never realized.33 No houses were built for the vulnerable families as proposed in the RIP. Instead, they were provided only with an additional allowance. Women support officers were never appointed and their expected functions were carried out by resettlement assistants who were mostly women34. Further, it is also reported that the resettlement assistants did not have adequate time or resources to fully concentrate on issues related to income restoration or to deal with specific issues that affected women as they were, at that time (2002-2005), directing their energies towards addressing issues and grievances arising from land acquisition and the payment of compensation. No funds were allocated for the implementation of the IRP35 . Interviews with resettlement assistants revealed they received little gender-focused training to deal with issues affecting women.36 However, in the field, they did provide various forms of assistance to vulnerable families including households headed by women, such as reporting their grievances to relevant authorities, linking them with various institutions, and facilitating assistance through the RDA, merely because of their own empathy towards these vulnerable families. 22. There was little conscious or planned effort to address gender issues, at least in the early stages (2002–2005) of the resettlement process. After the STDP came under the purview of ADB’s CRP, the annual missions of the CRP raised several concerns over the inadequate

30 Government of Sri Lanka. Ministry of Highways, Road Development Authority. 2002. Institutional arrangement for implementation of RIP. Resettlement Implementation Plan for the Southern Transport Development Project (STDP) Kottawa to Matara (128Km) Volume 1 Main Report. Colombo. Para 8.2.3

31 Government of Sri Lanka. Ministry of Highways, Road Development Authority. 2002. Economic Rehabilitation and Income Restoration Programme. Resettlement Implementation Plan for the Southern Transport Development Project (STDP) Kottawa to Matara (128Km) Volume 1 Main Report. Colombo. Para 6.8

32 ADB, 2006. Gender Related Issues: Southern Transport Development Project (STDP). Consultant’s report. Colombo.

33 ADB. 2012 Income and Livelihood Restoration in the Resettlement Program of the Southern Transport Development Project – Issues and Lessons Learned. Consultant’s report. Colombo. (ADB. 2010. Technical Assistance for Strengthening and Use of Country Safeguard Systems. Manila (TA 7566 REG, $9,000,000, approved on 26 June 2010)).

34 ADB. 2009. Technical Assistance for Independent External Monitoring of Resettlement Activities of the Southern Transport Development Project. Final Report of the Southern Transport Development Project. Colombo (ADB. 2005. Technical Assistance for Independent External Monitoring of Resettlement Activities of STDP, Manila (TA 4748, $511,000, Approved on 19 December 2005)):pp.28 & 37

35 ADB. 2012 Income and Livelihood Restoration in the Resettlement Program of the Southern Transport Development Project – Issues and Lessons Learned. Consultant’s report. Colombo (ADB. 2010. Technical Assistance for Strengthening and Use of Country Safeguard Systems. Manila (TA 7566 REG, $9,000,000, approved on 26 June 2010)): pp.3

36 A training workshop on Gender Issues in the Transport Sector for the Southern Transport Development Project for STDP project staff was conducted by the ADB Sri Lanka Resident Mission gender specialist on 5–6 June 2008 in Colombo.

84 Appendix 15

attention paid to identify and address the gender needs and issues in the STDP37. Among the issues raised by the CRP were

(i) the need to appoint women service officers who would engage women in planning income restoration programs and basic amenities,

(ii) The absence of a special program in the RIP for economic rehabilitation and income restoration for households headed by women,

(iii) not incorporating gender issues identified in the initial social impact assessment into the project logical framework and RIP,

(iv) not conducting a separate gender analysis and the inadequacy of what was presented in the report and recommendation of the President,

(v) unsatisfactory implementation of the limited assistance provided to households headed by women,

(vi) management not adequately taking the women in development issues into account when designing and implementing the project,

(vii) The absence of special gender action plans in the implementation and monitoring details38, and

(viii) not incorporating the recommendations of the gender study into the IRP39. 23. In the circumstances, the CRP recommended (i) conducting an analysis of gender issues on the project and ensuring that the program under the project adequately addressed them40, and (ii) designing effective interventions identified through the management information system41. 24. Following the intervention of the CRP and the involvement of the Sri Lanka Resident Mission, the RDA took several measures to address gender concerns. An external gender consultant was recruited to carry out a gender analysis of the STDP.42 Steps were taken to incorporate gender dimensions into the IRPs implemented by SEEDS (2005-2008) and thereafter by the PMU of the STDP (2008-2010). Gunasekera43 emphasized the need for a further analysis of gender concerns incorporated into the IRP and support provided from a gender perspective. The IRP outlined three distinct interventions which, apart from addressing its core objective of income restoration and improvement of the displaced population, were also intended to deal with gender issues. The three interventions planned were establishing and strengthening housing societies within resettlement sites, vocational and technical skills 37 ADB. 2005. Final Report to the Board of Directors on CRP Request No. 2004/1 on the Southern Transport Development Project. Sri Lanka. ADB. 2006. Annual Monitoring Report 2005-2006 to the Board of Directors on CRP Request No. 2004/1 on the Southern Transport Development Project. Sri Lanka. ADB. 2007. Annual Monitoring Report 2006-2007 to the Board of Directors on CRP Request No. 2004/1 on the Southern Transport Development Project. Sri Lanka. ADB. 2009. Annual Monitoring Report 2007-2008 to the Board of Directors on CRP Request No. 2004/1 on the Southern Transport Development Project. Sri Lanka. ADB. 2010. Annual Monitoring Report to the Board of Directors from 1 March 2009 to 14 May 2010 on the Implementation of Remedial Actions for the Southern Transport Development Project. Sri Lanka. ADB. 2011. Annual Monitoring Report to the Board of Directors from 15

May 2010 to 22 March 2011 on the Implementation of Remedial Actions for the

Southern Transport Development Project. Sri Lanka 38 ADB. 2005. Final Report to the Board of Directors on CRP Request No. 2004/1 on the Southern Transport Development Project. Sri Lanka. pp. 53 & 59

39 ADB. 2007. Annual Monitoring Report 2006-2007 to the Board of Directors on CRP Request No. 2004/1 on the Southern Transport Development Project. Sri Lanka. pp.27

40 ADB. 2005. Final Report to the Board of Directors on CRP Request No. 2004/1 on the Southern Transport Development Project. Sri Lanka. pp. 61

41 ADB. 2006. Annual Monitoring Report 2005-2006 to the Board of Directors on CRP Request No. 2004/1 on the Southern Transport Development Project. Sri Lanka. pp.12

42 ADB, 2006. Gender Related Issues: Southern Transport Development Project (STDP). Consultant’s report. Colombo.

43 ADB. 2010. Aide Mmeo of Review Mission on March/April 2010,

Appendix 15 85

development training, and improving home gardens. Strengthening housing societies was aimed at improving social cohesion and unity among resettled families, establishing a base for setting up micro credit schemes that provided loans for income-generating activities, and empowering the resettled communities for collective community action and their negotiations with service provision agencies. Vocational skills development programs were intended to compensate for the lost livelihoods which were largely land based and to help the displaced families to initiate alternative income-generating activities. The home gardening program was focused on helping the displaced families to recover their lost produce and incomes from acquired properties, and improve the nutritional status and food security of the families. Gunasekera44 highlighted the importance of promoting home gardens as it was directly related to women and their role in family. However, she noted the inadequacy of sex-disaggregated data maintained for home gardens and other gender-related activities under the project. 25. SEEDS was successful in establishing 25 housing societies in the resettlement sites, which were further facilitated and strengthened through subsequent interventions of the PMU. A large number of vocational and technical training programs were conducted by SEEDS under its income restoration program implemented during 2006-2008. They included dressmaking, dairy farming, mushroom cultivation, food processing, compost manufacturing, microfinance, and computer training, a majority of which were exclusively focused on developing the skills of women. Support provided for the improvement of home gardens became one of the key interventions of the PMU during 2008–2010 and the package provided included technical trainings in home gardening, seeds and planting materials, and fertilizers. A review of the progress reports of SEEDS (2007)45 and the monthly progress reports on the IRP compiled by the STDP (2008 and 2009)46 points to a higher participation of women in vocational training programs and housing society meetings compared to their counterpart men. The CRP subsequently noted the positive steps taken by both the Sri Lanka Resident Mission and the STDP management to identify women’s needs and to address the gender issues. Those positive measures included (i) the Sri Lanka Resident Mission addressing the gender issues and the priority action required through activities conducted by the CEPA (external monitor) and SEEDS that implemented the IRP47; (ii) the Sri Lanka Resident Mission persuading SEEDS to address gender issues and monitor the outcomes through the home garden program, microfinance loans, and new small businesses48; (iii) the IRP now being managed by the RDA taking action to address gender issues in the IRP49 ; and (iv) the support and encouragement provided by the RDA for women’s participation in housing societies and the home gardening program50.

44 Foot note 43

45 Sarvodaya Economic Enterprise Development Services. 2007. Southern Transport Development Project Income Restoration Programme. Quarterly Progress Report 15.12.2006 – 15.3.2007; Sarvodaya Economic Enterprise Development Services. 2007. Southern Transport Development Project Income Restoration Programme. 4

th Quarter

Progress Report 30.6.2007 – 30.9. 2007 46 Southern Transport Development Project. Income Restoration Program. Monthly Progress Reports for the period

2008-2009, Colombo 47 ADB. 2006. Annual Monitoring Report 2005-2006 to the Board of Directors on CRP Request No. 2004/1 on the

Southern Transport Development Project. Sri Lanka. pp.13 48 ADB. 2006. Annual Monitoring Report 2005-2006 to the Board of Directors on CRP Request No. 2004/1 on the

Southern Transport Development Project. Sri Lanka.. pp.20-21 49 ADB. 2009. Annual Monitoring Report 2007-2008 to the Board of Directors on CRP Request No. 2004/1 on the

Southern Transport Development Project. Sri Lanka. pp.10 50 ADB. 2007. Annual Monitoring Report 2006-2007 to the Board of Directors on CRP Request No. 2004/1 on the

Southern Transport Development Project. Sri Lanka. pp.10

86 Appendix 15

26. Despite these measures, women’s participation in training programs began to decline gradually as they were found to be inappropriate to the local context, existing educational standards, skills and capacities of the poor families, and their needs and aspirations51. The home garden promotion program became reasonably popular and effective in achieving its objectives. The CEPA52 noted the appreciation of the home garden program by resettled families as one that was useful and well implemented. And, harvest from home gardens had been primarily used for family consumption, resulting in a savings on household food expenditure.

H. Status of Women Before and After Resettlement: A Comparative Analysis 27. This section of the paper presents the results of the study elicited through the qualitative assessments conducted with affected women and men as well as from the survey of 100 women. The qualitative information generated through focus group discussions and individual interviews is used to explain the quantitative information derived from the survey.

1. Socio-Demographic Characteristics of Women

28. Forty three out of the sample of 100 women reported that their families were displaced during 2002–2003, implying that they have now almost completed 10 years in their new settlements. Another 41 families were displaced during 2004-2005 and they have been living in their new habitats for nearly 8 years. The other 16 families moved into their new settlements during 2006–2008. The age structure of the women shows that 51 women were in the age group of 50–69 years while another 21 were 70 years or older. Only 28 were in the 30–49 year age group. In terms of educational levels reached by the 100 women, six had never had any formal education, while 39 had had less than 10 years of schooling. The number of women who completed General Certificate of Education Ordinary Level (GCE OL) was 35 and the number of women who graduated to General Certificate of Education Advanced Level (GCE AL) was 13. Only seven women studied beyond GCE AL and pursued higher education. The civil status among the 100 women was 59 married, 35 widowed, 4 divorced or separated, and 2 single. 29. Sixty percent of the women were living in households headed by men while the other 40% were headed by a woman. Sixty two percent of women lived in nuclear families with their immediate family members while the balance had extended families where their parents and/or married children occupied the same dwelling. 30. Most women who had reached their old age and/or abandoned their previous economic activities were extensively dependent on their children, husbands, or relatives. Fifty nine women were dependent on a single source of support whereas another 39 claimed having received support from two overlapping sources. Two women had three or more intersecting sources of support. Fifty percent of women were dependent on children while another 47% depended on their husband’s incomes. Four percent were dependent on their kinsfolk and one woman on subsidies provided by the government. Forty seven percent of women also had independent

51 ADB. 2012. Income and Livelihood Restoration in the Resettlement Program of the Southern Transport Development Project – Issues and Lessons Learned., Consultant’s report. (ADB. 2010. Technical Assistance for Strengthening and Use of Country Safeguard Systems. Manila (TA 7566 REG, $9,000,000, approved on 26 June 2010)). 52 ADB. 2009. Technical Assistance for Independent External Monitoring of Resettlement Activities of the Southern

Transport Development Project. Final Report for Phase 4 Continuous Monitoring of the Southern Transport Development Project. Colombo (TA4748 SRI) pp.15

Appendix 15 87

sources of income, which in some cases was complemented by support received from their children, husbands, and relatives. 31. The 40 households headed by women who responded to the survey reported that they never remained in complete isolation or a state of deprivation as they had access to multiple sources of support and care provided by kinship and neighborhood networks. This is contrary to the popular belief that households headed by women run the risk of impoverishment because of their relative isolation and lack of support systems. Fifty five percent of the households headed by women had a single source of support in times of need while another 35% had two coexisting sources of support. Support for the remaining 10% came from three different sources-children, relatives, and neighbors. Seventy eight percent of households headed by women were looked after by their children. Another 45% received help and support from their neighbors in times of need, and 32% were helped by their relatives. In accessing services provided by the government agencies, 88% of the households headed by women did not experience any form of discrimination or major difficulty. Only 12% of the households headed by women encountered difficulties in approaching service agencies because of their inability to go alone or the difficulty of finding someone to accompany them. 32. The present study, however, has not been able to assess the quality of care and support extended by others towards these displaced women and households headed by women and the degree to which their basic requirements were met, particularly for those who did not have their own income or the income of their spouse. One tends to conclude that increased dependency of women on others who were economically active at one time of their lives would have inevitably led to a change in their intrahousehold relationships and in their own self-esteem and individuality. However, it is interesting to observe that, despite their economic and financial dependency on others and their old age, a majority of women in this study claimed to have a major share in the intrahousehold decision-making processes. Only in 25 households did men exclusively dominate the decision-making processes. There was joint decision making in important household matters by both husbands and wives in 29 households. Yet, in 45 households, including households headed by women, household decision making was exclusively in the hands of women. It was only in a single situation (an unmarried woman) where decision making was vested with one of the woman’s own siblings.

2. Assets Owned by Women

33. In a majority of the households (60 households), the ownership of the key physical assets such as the house, land, agricultural implements, livestock, etc. was vested with men who were also the heads of households. The number of women who claimed that they owned a house before resettlement was only 36 out of the total sample population. Of them, 53% were widows who inevitably would have inherited the property after the death of their husbands. Another 35 women owned either a highland (30) or paddy land (5). Twenty nine percent of these female landowners were in households headed by women. The number of women who owned a house after resettlement increased from 36 to 44, half of whom were from households headed by women. This increase was partly due to the death of their husbands after resettlement, where the ownership was automatically transferred to the next of kin, and partly because of the new land and compensation that was given to the subfamilies who were earlier living in their parental home. Meanwhile, the number of women who owned highlands and paddy lands also showed a slight increase, from 35 to 38, of whom 45% were in households headed by women.

88 Appendix 15

34. The major asset owned by a majority of women (64) before resettlement was their own gold jewelry. However, 36 women never possessed any gold jewelry, a symbol that characterizes women’s wealth and brings an elevated status in traditional Sri Lankan society. This may be because of the meager resources that such families possessed, which in turn prevented them from investing in such valuable assets. After resettlement, the number of women owning such jewelry fell from 64 to 54, partly because they transferred such jewelry to their children in their old age or else it was sold to meet the cash shortages that arose during the construction of their houses. Thirty women owned a sewing machine before displacement but after resettlement the figure was 27. Six business premises were owned by women before resettlement but this was reduced to three after resettlement due either to loss of such property after land acquisition or the transfer of property to their children. Three women were engaged in livestock rearing (cattle and buffaloes) before displacement but they had to abandon those activities as they had neither the space nor the proper grazing grounds to feed their animals in their new settlements. Eight women never owned a single valuable asset prior to resettlement and this number increased to 10 after resettlement, probably because they had surrendered all their assets and were dependent on others in their old age.

3. Role of Women Before and After Resettlement

35. Women performed multiple roles both before and after resettlement. Apart from their customary reproductive roles, several women were economically active both before and after resettlement, while making a substantive contribution to the family economy. At the same time, a significant proportion of resettled women have now been constrained by their old age, illness, and lack of suitable space and other services in their new settlements to continue with their previous economic activities. Table A15.1 shows the different roles that women have performed prior to resettlement and their role changes after resettlement.

Table A15.1: Role of Women Before and After Resettlement Number of Responses by 100 Women

Women’s role Before

resettlement

After Resettlement Number of women not performing previous roles

Number of women

performing new roles

Total number of women at present

Cooking and cleaning house 98 7 0 91 Looking after children 60 25 3 38 Looking after elderly or sick 11 8 0 3 Employed in a government job 7 3 0 4 Employed in a private sector job 6

4 4 6

Employed abroad 2 2 0 0 Engaged in casual labor work 15 7 2 10 Engaged in agriculture 15 9 2 8 Engaged in animal husbandry 3 3 0 0 Engaged in business 8 3 1 6 Engaged in trading 9 4 2 7 Engaged in self-employment 16 13 4 7 Pensioner 3 0 0 3 Other 1 1 1 1 Source: Sample Survey of 100 affected women conducted by C.Weerackody in 2013.

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36. Seven out of 98 women have given up cooking and conducting other household activities after resettlement because of their old age. They were looked after by their children. Since children have grown up, 25 out of 60 women were also relieved of looking after children. However, 38 women still had the burden of looking after their children or grandchildren. With the demise of elderly and sick family members, 8 out of 11 women who earlier looked after them were freed from this obligation. 37. Three out of seven women who were earlier employed in government jobs and one out of six women employed in the private sector had retired from service because of their old age. The three former government servants remained as pensioners. Two other women who were employed in the private sector had resigned from their jobs as they could not cope with their household obligations and looking after children. Another private sector employee could not find suitable employment in and around her new settlement. Meanwhile, four other women who were not employed before displacement gained new employment in the private sector after their resettlement. Two women who were employed in the Middle East returned because their children did not want them to stay away from homes in their old age. 38. Seven out of 15 women who worked as casual laborers could no longer perform such tasks because of their old age and illness. However, two women who have never worked as casual laborers joined the workforce since they could not continue with their previous economic activities in the new settlements. 39. One out of 15 women who was engaged in agricultural activities gave up those activities because of her old age. Another eight women moved away from agricultural activities as they did not have adequate land for cultivation in their new settlement sites, or the soil was infertile and unproductive. Nevertheless, two women began agricultural activities in their new settlements. As mentioned earlier, three women who were engaged in livestock rearing abandoned those activities as they had neither the necessary space nor the grazing grounds to feed their cattle and buffaloes. 40. Twenty out of 33 women who earlier conducted small businesses, retail trade, or cottage industries before displacement gave up those activities, largely because they could no longer conduct those activities in their new environments because of inadequate infrastructure facilities (12%), competition from other existing businesses in the area, and the loss of their regular customer base (42%). The CEPA53 also observed that home-based livelihood activities were not the main source of income for families and the new environments were not conducive to restarting these secondary livelihoods. Three women gave up those economic activities because of their old age. Conversely, seven women who had never performed an economic role prior to displacement began conducting small business enterprises, retail trade, or other cottage industries as they could capture a good market for their products in the new settlements.

4. Women’s Contribution to Household Economy Before and After Resettlement

41. Table A15.2 presents a self-assessment by women of the proportion of the financial contribution that they have brought into the family economy from their own earnings before and after resettlement. Looking at these estimates, it is very clear that a little more than 75% of

53 ADB. 2009. Technical Assistance for Independent External Monitoring of Resettlement Activities of the Southern Transport Development Project. Final Report of the Southern Transport Development Project. Colombo (TA4748 SRI, $511,000, Approved on 19 December 2005) pp.57

90 Appendix 15

women have played a significant role in the process of generating household incomes and meeting the family needs. They have been engaged in diverse economic activities (Table A15.1). However, 24 out of 100 women never made any financial contribution to the household economy either before or after displacement or resettlement. They remained as housewives throughout their lives and never engaged in any form of income-generating activity. After resettlement this increased to 51, an increase of 113%. The reason for this increase was the severe reduction (except in two instances where women’s contribution increased slightly) in the financial contribution made by women to the family budget. Multiple reasons have been attributed to this decrease. Nineteen percent lost their livelihoods and income sources after displacement and resettlement. For example, women who were selling food to plantation workers or engaged in dressmaking lost their regular customers after resettlement. Incomes that women generated by selling coconuts, bananas, vegetables, cinnamon, etc. that were planted on their homesteads were no longer available to them with the acquisition of those homesteads. Livestock rearing was no longer possible because of limited space and lack of grazing grounds. Women who were registered on tea or cinnamon plantations as regular laborers lost the registration when they moved. 42. Ten percent of women experienced drastic reduction of their incomes from livelihood sources after resettlement. For example, though some women had been able to find casual labor work on the estates that surrounded their new habitats, the work that was offered to them was irregular and unpredictable. Alternatively, the women who reestablished their businesses such as dressmaking and retail grocery stores in the new locations could not completely regain their customer base. Another 13% lost their livelihoods or the regular incomes as they could no longer work because of old age and illness. 43. Meanwhile, the slight increase of the financial contribution of four women to their respective family economies was attributed to the new livelihood activities that they initiated after resettlement, expansion of their existing livelihood activities, and the new employment that they found around the new settlements.

Table A15.2: Women’s Contribution to Household Economy

Estimated proportion of cash contribution by women

Before resettlement (No. women)

After resettlement (No. women)

Nothing 24 51 < 25% 16 18 25%–50% 30 12 51%–75% 14 8 76%–99% 0 2 100% 16 9 Source: Sample Survey of 100 affected women conducted by C.Weerackody in 2013.

5. Changes in Household Economy after Resettlement

44. Eighty eight women were of the view that their household economy has changed since resettlement; the other 12 women observed no change. Seventy six percent of women who observed a change in their household economies reported an increase of their household expenditures, while another 59% pointed to a decrease of their household incomes. Fifty three percent of women attributed their increase of expenditure and decrease of incomes exclusively to the loss of incomes and produce from their acquired properties. A variety of crops grown on the homesteads, such as cinnamon, tea, pepper, banana, coconut, jackfruit, breadfruit and vegetables, brought supplementary incomes to the families when such produce was sold to the

Appendix 15 91

traders or in a weekly fair. Alternatively, the produce from the homesteads had been used for family consumption and their reliance on markets for coconuts and vegetables was much reduced. Forty two percent having lost their property had to buy coconuts and vegetables from the market, leading to an increase in their household expenditures. Twenty four percent lost their supplementary source of livelihood, which was largely generated from the homesteads that were acquired for the highway. CEPA54 also noted that the increased household expenditure was due to loss of home gardens. Another study55 also observed an increase in household expenditures on consumption among 25% of the households because of acquisition of their home gardens. A major grievance of men and women who participated in this study was that they were not compensated for their crop losses. In the earlier-mentioned Egis bceom International study, 32% of the sample (out of 34% of households whose lands were acquired) mentioned that their agricultural losses were not properly compensated56. Twenty two percent lost their primary source of livelihood. In addition to the loss of livelihoods and incomes that resulted in a decrease of family incomes and an increase of family expenditures, 48% of the women also recognized that the increase in their household expenditures was partly influenced by the country’s general trends of escalating cost of living. Table A15.3 presents the reasons given by women for increases in their family expenditures and the decrease in their incomes.

Table A15.3: Reasons for Decrease in Family Incomes and Increase in Expenditures Reason

No. Respondents Percentage

Loss of income from acquired land 12 13.6 Loss of agriculture produce from acquired land which was earlier used for home consumption

35 39.7

Increase of goods purchased from the market 37 42.0 Loss of primary source of livelihood 19 21.5 Loss of supplementary source of livelihood 21 23.8 Increased expenditure on children’s education 5 5.6 General increase in the cost of living in the country

42 47.7

Source: Sample Survey of 100 affected women conducted by C.Weerackody in 2013.

45. Meanwhile, incomes of 26% of the households increased. This was attributed to the financial support provided by grown-up and employed children (18.0%), new livelihood activities established after resettlement (6.8%), and general wage increases in the country (6.8%). Expenditures of 2% of the households decreased as a result of their grown-up children completing their education and/or leaving home after marriage. Only a very few women (5.6%) reported that their debts increased. 46. The women who encountered a family budget deficit, where their household expenditures exceeded the incomes, adopted a number of coping strategies to manage such deficits, including (i) asking for financial assistance from children or relatives (27%), (ii) buying grocery items on credit (26%), (iii) borrowing money (25%), (iv) engaging in additional work such as casual labor work (sometimes by both husband and wife) or petty trade (15%), (v) pawning jewelry (14%), (vi) reducing the quality of meals (12%), and (vii) cutting down family

54 ADB. 2009. Technical Assistance for Independent External Monitoring of Resettlement Activities of the Southern

Transport Development Project. Final Report of the Southern Transport Development Project. Colombo (TA4748 SRI, $511,000, Approved on 19 December 2005) pp.56 55 Egisbceom International in association with Consulting Engineers and Architects, Management Consultant. 2010. Report of the Socio economic survey of households in GN Divisions of the Southern Expressway Corridor. Colombo. pp.39 56 Foot note 55

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expenditures. However, 8% of women mentioned that they would manage the household economy without falling into debt. I. Compensation for Acquired Properties and Management of Compensation 47. Compensation for properties acquired from 46 of the affected households was received exclusively by the male head of the household. In another five households, compensation was paid to both husband and wife where both of them either held joint ownership or else they owned separate entities of the acquired property. In 37 households, including households headed by women, compensation was received by a woman. Compensation for 12 other households was received by another family member. There was no evidence of women being discriminated against in the process of land acquisition or payment of compensation. The CEPA57 also confirmed this observation in its monitoring and other study reports where it was reported that “both men and women participated in the land acquisition process. Women were not discriminated in the land acquisition process or payment of compensation. But some women felt that if a male attended LARC and super LARC the process [sic], they would have received more compensation”. 48. In 26 households, compensation money was exclusively managed by the male head of the household. There was joint management of compensation by both the wife and husband in 31 households. The CEPA58 also noted this process of joint decision making within households on how to spend the compensation money. Furthermore, the CEPA observed a preference on the part of men to invest in livelihoods whereas the preference of women was to invest in housing. In 32 households, management of compensation was exclusively in the hands of women. A family member managed the compensation in the remaining 11 households. 49. Despite the recurring grievances of most of the affected people on the inadequacy of compensation they received, 96 women were satisfied with the manner in which they managed the compensation money; only four women were dissatisfied with the way it was managed. Reasons for their discontent included inadequacy of compensation that they received, having to spend compensation on other purposes such as medical treatment of a family member, their inability to invest in income-generating activities, and the misuse of compensation money by the person who was responsible for its management.

50. Compensation was largely used for the construction of houses and rarely for investment in income-generating activities. Several affected families were of the view that if compensation for their crop losses was paid to them they could have invested that money to buy a piece of new land for cultivation or in some other economic activity. In situations where the acquired property was under joint ownership, compensation was divided among several parties leaving only a small portion for each individual. In such instances, individual compensation was hardly adequate for a meaningful investment. Some families had to use part of their compensation to fulfill family obligations such as giving dowries to their daughters. In the face of an escalating demand for land from the displaced families leading to an increase in land prices, compensation received by some families was hardly sufficient to purchase the same amount of land that they

57 ADB. 2009. Technical Assistance for Independent External Monitoring of Resettlement Activities of the Southern Transport Development Project. Case Study Series-Experiences from the Southern Transport Development Project. Colombo (TA4748 SRI, $511,000, Approved on 19 December 2005). pp.4-5

58 ADB. 2009. Technical Assistance for Independent External Monitoring of Resettlement Activities of the Southern Transport Development Project. Case Study Series-Experiences from the Southern Transport Development Project. Colombo (TA4748 SRI, $511,000, Approved on 19 December 2005).. pp.3

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owned prior to displacement. However, there were several other families who were able to buy more land than they possessed prior to their displacement. J. Perceived Impacts of the Southern Transport Development Project 51. In this section, the impacts of the STDP on the affected families, as perceived and experienced by the participants of this study, are detailed. The impacts were both positive and negative. It should be noted that the Southern Expressway, which has been operating since the latter part of 2012, has not yet made a significant impact on the lives of affected families in terms of improved access to transportation, employment generation, new livelihood activities, market opportunities, etc. It may take a few more years to witness such broad socioeconomic changes. 52. Housing. Apart from compensation money, for house construction several families used construction materials that were removed from their demolished houses and additional funds taken out of their own savings, pawned jewelry, or disposal of part of their assets such as vehicles. Almost all the families consulted for this study agreed that the condition of their houses was superior to the houses that they had been living in before and that the houses were relatively large in size. Higher investments in housing were triggered by two factors. One was that affected families could not completely disregard the modern architectural designs for houses which, among others, are characterized by tiled floors, asbestos roofs and roof ceilings, pantries, and attached bathrooms and the modern household appliances that go along with a modern house. The families were keen to follow those new designs and purchase new appliances and fittings as much as they could in the construction of their houses. On the other hand, families who did not own any other property to give away to their children, either as part of their daughters’ dowry or to build separate house for the sons, considered accommodating at least one child within the same household after his or her marriage, and who would then remain in close proximity to look after the parents in their old age. Thus, a number of families planned to build spacious houses, sometimes with two or three stories. 53. Sixty seven out of 100 women were able to construct a house with extra space and facilities. Fifty five percent of them were from the self-relocated families, 27% from families living in the government resettlement sites, and the balance (18%) from families living on the same property. This study, however, did not explore what socioeconomic factors have helped a significant number of self-relocated families to build better houses compared to the other two categories. Perhaps it may be due to the relatively high wealth they possessed, higher compensation they received, or the support they received from their kinship networks. Sumanasekera(2009)59 observed that except for a very few, a majority of the families resettled in RDA sites were poor and they did not have regular source of income. They were extensively dependent on seasonal labor work and agriculture. Some families were engaged in small income generating activities such as retail trading, trading in weekly fairs and as skilled labor. In contrast, a majority of the families who were self-re-located did not require assistance from the project to restore their livelihoods as many of them belonged to either rich or middle class families. 54. Twenty two women, however, reported that the compensation they received was hardly adequate to complete the house construction work. Of them, 68% were from families who were

59 ADB. 2009. Review of Income Restoration program (IRP) for affected persons (APs) in the Southern Transport Development Project (STDP). Consultant’s report. Colombo

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resettled in the government sites, 23% from the self-relocated families, and 9% from families living on the same property. 55. Infrastructure facilities. Fifty nine women reported that they were provided with better infrastructure facilities such as water, electricity, roads, and transport in their new settlements. Forty two percent of them were from the self-relocated families, 36% from families living in the resettlement sites, and 22% from the families living on the same property.

56. Prior to resettlement, firewood for cooking was collected by women from nearby shrub jungles or from their own gardens at no extra cost to the family budget. After resettlement, 24 women did not have access to a forest or other suitable place where they could collect firewood for cooking and other domestic use. Forty six percent of them were from the self-relocated families, 38% from the families living on the resettlement sites, and the remaining 16% from the families living on the same property. As a result, several families had to either use liquid petroleum gas or buy firewood from traders, which added an extra cost to their household budget. It may be necessary that resettled communities are provided with access to common property resources such as forests to collect firewood or other nontimber products for their domestic use. 57. Access to services. Improved access to service centers such as schools, tuition centers, markets, hospitals and dispensaries, administrative agencies, etc. was reported by 40 women. Fifty three percent of them were from the self-relocated families, 30% from the families living in the resettlement sites, and 18% from families living on the same property. Sixteen women, of whom 69% were from the self-relocated families and 31% were from the resettlement sites, had difficulties in accessing service centers. In the focus group discussions, several participants mentioned that since they settled down closer to their original habitats (i.e., 1-2 kilometers away), and they did not experience major difficulty in accessing the service centers that they used before resettlement. Thirty seven women have settled closer to their original habitats, of whom 51% were from the self-relocated families, 27% were from the families in the resettlement sites, and 22% were from families living on the same property. 58. Social networks. Thirty four women reported that resettlement did not severely affect their kinship and neighborhood ties, primarily because they were able to resettle closer to their original habitats. Fifty three percent of these women who claimed that their social networks remained intact were from the self-relocated families. Twenty four percent of each category of families resettled in the government sites as well as those living on the same property also did not perceive a major breakdown of their social networks due to resettlement. The CEPA60 also observed that “many APs [affected persons] have retained continuity with social environment.” Only five women mentioned that they had distanced themselves from their familial networks. 59. Livelihoods. Seventeen women reported that they lost valuable property, 47% of whom were from the self-relocated families, 35% from the government resettlement sites, and 18% from the families living on the same property. Fifty eight women have lost their livelihoods as well as incomes from the acquired properties-48% from the self-relocated families, 28% from government resettlement sites, and 24% from families living on the same property. Seven women complained of not receiving any compensation for the loss of their agricultural crops-57% were from the self-relocated families. Eight women noted the inadequacy of compensation

60 ADB. 2009. Technical Assistance for Independent External Monitoring of Resettlement Activities of the Southern Transport Development Project. Final Report of the Southern Transport Development Project. Colombo (TA4748 SRI, $511,000, Approved on 19 December 2005)

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for reestablishing their lost livelihoods-half of them were from the families living on resettlement sites. Eight women were able to initiate new livelihood activities in their new settlements-63% were from the self-relocated families. 60. Only three women claimed that their family members were employed in the STDP, although some male members of the affected families were engaged in temporary employment in the STDP during road construction.

61. Disturbance to lives and security. Twenty women (75% of whom were from the families living on the same property) complained of the suffering that they had to endure because of dust and vibration during prolonged construction of the expressway. They described how they had to cover up their houses with polythene sheets and remain indoors, how their family members and particularly the children suffered from illnesses, how cracks appeared on the walls because of vibration, and the sense of insecurity that they felt while living in those cracked houses. Five women from self-relocated families also experienced difficulties due to dust and vibration. Four women reported how the education of their children was disturbed, particularly during the transition period where they lived in temporary shelters (until their new houses were built) with no proper facilities for children’s studies. Only four women experienced feelings of insecurity and uncertainty in life during the early stages of their resettlement. In general, resettled families did not experience a major problem with the social environment into which they migrated or with any of the host communities. K. Women’s Participation in Protest Campaigns 62. The history of the STDP, running for more than a decade, included an enormous number of protest campaigns, confrontations, individual and collective complaints, and judicial actions instituted by affected parties against land acquisition, payment of compensation, loss of livelihoods and other common resources, and resettlement. The survey results reveal that 87 out of 100 women have never participated in such protest campaigns; only 13 women claimed that they participated in protest campaigns. Of those who participated, 46% reported that they did not receive any benefit from their participation in the protest campaigns; the rest were of the opinion that they could voice their grievances, get the authorities to listen to their grievances, and win their demands as a result of their participation in protest campaigns.

L. Future Outlook 63. Despite being dispossessed of valuable property, loss of livelihoods, claims of inadequate compensation to fully restore their living conditions, enormous difficulties experienced during transitional periods, and problems of adapting to new geophysical and social environments, 68 resettled women were optimistic and confident of their future and did not perceive any major threat to their lives. However, 24 women were pessimistic of their future and expressed uncertainty with regard to their future lives. Eight women could not forecast any opinion on their future. 64. Fifty nine percent of women who held a positive view on their future did not have any worries since their children have grown up and attained a stable position in society. Another 18% had been well looked after by their children and relatives. Sixteen percent had gained ownership of a new house and land which they did not have prior to resettlement. Another 16% were satisfied with the new environment, which was much better than the place they previously lived in. Twenty percent of women have been able to enhance their family economic status by establishing new income-generating activities.

96 Appendix 15

65. The multiple reasons attributed by women who had fears in regard to their future included (i) loss of their incomes and lack of stable incomes (50%), (ii) old age and illness (21%), (iii) children not being able to achieve any stability in their lives, (iv) absence of any caregiver to look after them in their old age (13%), (v) inability to complete their houses (13%), and (vi) lack of any savings. M. Suggestions for Future Projects 66. Both men and women who participated in the focus group discussions, personal interviews, and the survey proposed several suggestions to be considered by the relevant agencies that implement large infrastructure development projects such as the STDP leading to population displacements and resettlement. Their major propositions revolved around the restoration of livelihoods and incomes of displaced families in general and enhancing the economic contribution of women to the household economy in particular. Fifty one women proposed that specific interventions should be designed, planned, and implemented by the project executing agencies for restoring the livelihoods of women and enhancing their incomes. They further suggested that credit schemes should be launched to supplement the investments in livelihood activities. Fifteen women emphasized the importance of developing the technical and vocational skills of women. Thirteen women highlighted the necessity to introduce special welfare programs to assist the most vulnerable families, particularly households headed by women, and the education of the children of displaced families. Nineteen women suggested that priority be given to the youth of the displaced families in providing permanent employment in the project. Seven women who lived on government resettlement sites proposed that they be granted an additional portion of land to engage in agricultural activities. Seven other women wanted the project implementing agencies to ensure that resettlement sites are adequately provided with necessary services such as electricity, water, transport, etc. well in advance of the resettlement of displaced families. N. Conclusions 67. The STDP is the first experience of Sri Lanka in the construction of an expressway. The project led to significant population displacements, both physical and economic, and several resettlement-related issues which were sometimes irreversible. It is important that lessons learned from such an experience, both positive and negative, are well recorded so that future projects of this nature can draw insights into their design and planning processes. 68. The women who were affected by the STDP had been performing an active role in the household economy, shouldering a substantive part of family income generation and coping with family expenditures. In some instances, this economic role of women remains invisible and intangible, for example in the case of women generating incomes by selling part of the produce from their home gardens and using another portion for family consumption. It is now clearly evident that both displacement and resettlement have resulted in a significant change in the economic role of women with a severe reduction of their contribution to the family economy.

69. A majority of women have now reached their old age and/or are suffering from various forms of illness and they are no longer capable of engaging in any productive activity. It is one of the unique features of the Sri Lankan culture and tradition that elderly parents are still taken care of by their children or, in their absence, by close kinfolk. The STDP has not resulted in a major breakdown or disintegration of social support systems, as the present study points out. A majority of women who were displaced and resettled, including households headed by women, had the privilege of benefitting from the care and support extended by children, kinfolk, and

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neighbors. However, this dependency could have been reduced to some extent if these women had access to some independent source of income such as from home gardens or some extra savings which they lost along with their displacement and resettlement. Such extra incomes could have been used by these women at least partly to compensate their caregivers for the services they render or fill any gaps in their own needs. Such reciprocities in the long run not only reinforce the mutual relationships and obligations between the two parties but the relative independence and self-esteem of the women concerned. Neither the initial social assessments nor the resettlement plans of the STDP have placed much emphasis on assessing and addressing the future risks and vulnerabilities of the affected men and women that particularly arise in their old age. 70. Finally, despite the enormous difficulties that resettled families have experienced over land acquisition, displacement, and resettlement, overall the families have been able to gradually overcome many of their problems and have consolidated their positions in the communities where they resettled reasonably well. O. Recommendations 71. This study wishes to make the following recommendations.

(i) It is important that programs planned for the restoration and improvement of livelihoods and incomes of affected families take into account and add value to both the visible and the invisible roles that women perform in managing and sustaining their household economies. Income restoration programs should design appropriate interventions and create opportunities for strengthening these diverse economic roles of women. Strengthening women’s participation in economic activities will not only add multiple livelihood sources for families but also reduce the risk of families dependent on a single source of income falling into impoverishment in times of severe crisis and disasters. Realizing such an objective, however, requires a set of well-planned strategies that encompass land-based and non-land-based interventions for promoting diverse livelihood activities, regular consultation and facilitation with affected women, and methodical and efficient monitoring and evaluation of their economic performance after resettlement.

(ii) The ADB safeguard policy principles advocate conducting a gender analysis to screen and identify the past, present, and future involuntary resettlement impacts and risks on displaced men and women (emphasis added). Therefore, it may be prudent for resettlement planners to explore and devise methodologies for assessing not only the existing vulnerabilities of the affected people at the time of their displacement and resettlement but also their potential and future vulnerabilities so that strategies can be planned to reduce such vulnerabilities and dependencies.

98 Appendix 16

ENVIRONMENTAL SAFEGUARDS A. Applicable ADB Safeguard Policies

1. At the time of the original project approval in 1999, the applicable environment safeguards policy for the Asian Development Bank (ADB) was the Environmental Assessment Requirements of the Asian Development Bank (March 1998). By the time of approval of the supplementary loan in 2008, the Environmental Assessment Guidelines 2003 was the applicable policy. The 2003 guidelines provided more detailed guidance on environmental assessment procedures, preparation of an environmental management plan (EMP), public consultation, and information disclosure. Hence, by the time of the approval and implementation of the supplementary loan, preparation of environmental assessment documents and implementation and reporting of environment safeguard requirements was more streamlined than at the time of the original project.

1. Applicable National Policies

2. Key national policies applicable to the project were the National Environmental Act No. 47 of 1980 and its amendment Act No. 56 of 1988. In accordance with its requirements, the highway project was required to secure an environmental clearance from the Central Environmental Authority (CEA). This required the submission of a detailed environmental impact assessment (EIA) study which would be subjected to public review and consultations. 3. On 4 May 1999, the Road Development Authority (RDA) submitted an EIA report prepared by the University of Moratuwa to the CEA. The report was made available to the public for comments at the RDA office and 16 divisional secretariat offices. Further, as required by the National Environmental Act, the CEA conducted two public hearings on the project—in Panadura on 3 July 1999 and Galle on 10 July 1999. As a result, 286 comments were received from the public on the EIA report. 4. On 23 July 1999, conditional approval of the EIA report was granted by the CEA, with 58 conditions. The most important conditions were shifting the alignment to avoid important wetlands, preparing a detailed hydrology study, and paying compensation to affected people. Another letter was issued by the CEA to the RDA on 12 August 1999 requiring a supplementary EIA if the final trace1 of the expressway changed from the combined trace2 or original trace.3 After repeated communications between the RDA and CEA from 2000 to 2004, and clarification that the final right-of-way was within the area of study covered in the 1999 EIA, the CEA issued a letter on 31 May 2004 confirming the validity of its original approval in 1999 with no requirement for further approvals.

1 In STDP, expressway alignment in common referred as trace. The final trace is the trace or the expressway alignment on which the final EIA and the RIP were submitted to ADB. In early January 2000, the RDA officially confirmed the final trace as the accepted alignment.

2 The combined trace, which was the route in ADB’s first report and recommendation of the President, represented a compromise between the original trace and the alternate trace as it was located between the original trace and an alternative trace. The combined trace followed the original trace for about 60% of its length, and avoided a number of sensitive wetlands and watersheds, as well as densely populated townships and urban areas. The alternative trace is an oceanside trace that was conceived as an alignment more likely to attract short-distance traffic and, consequently, to also have shorter connections and be more likely to relieve congestion on the existing national highway (Galle Road).

3 The original trace is the new construction traversing the mountainside inland areas. In 1994, an EIA for this trace was prepared by the University of Moratuwa

Appendix 16 99

5. In addition to the NEA, there were a number of other policies applicable to the project, i.e., the Geological Survey and Mines Bureau (Mines and Mineral) Act No.33 of 1992, Urban Development Authority law No. 41 of 1978, fauna and flora protection ordinance amended by Act N0. 49 0f 1993 (Chapter 469), the Motor traffic Act No.14 of 1951 and its amendments, the Land Acquisition Act No. 9 of 1950, the State Land (Recovery of Possession) Act No. 7 of 1979, the Water Resources Board Act No 29 of 1964, the Control of Pesticides Controlling Act No 33 of 1980, the Irrigation (Amendment) Act No 13 of 1994, the Irrigation Ordinance of 1990, and regulations of local authorities. 6. During the course of project implementation, many site-specific and period-specific permits were required under some of the acts mentioned above. Hence, licenses and clearances were obtained, such as environmental protection licenses for asphalt plants, concrete batching plants, and crusher plants; working beyond daytime hours; and mining license for blasting works from the Geological Survey and Mines Bureau.

2. Environmental Assessment Carried Out to Fulfill ADB and Central Environmental Authority Requirements

7. A number of environmental assessment studies and reports were prepared from the time of project preparation in 1996 to the time of project approval and implementation of both the original and supplementary project. A summary of the key documents prepared is provided in Table A16.1.

Table A16.1: Environmental Assessment Reports Prepared for the Project Name of Report Year Remarks

Environmental impact assessment (EIA) prepared by the University of Moratuwa

December 1996 This was the first environmental assessment report prepared for the highway based on the Original Trace

Initial environmental examination (IEE) prepared under PPTA 2892 (Southern Transport Corridor)

March 1999 The assessment covered four alternative alignments with the Combined Trace recommended as the preferred alternative.

EIA on Cobined Trace and Original Trace prepared by the University of Moratuwa

March 1999 This report mainly updated the 1996 EIA report to cover the CT.

Summary EIA (SEIA) report prepared by Balloffet and Associates

July 1999 The report contents were based on the EIA of March 1999 as well the IEE of March 1999. This SEIA was circulated to the Board on 20 July 1999, 120 days before the Board planned approval date.

Environmental findings report prepared by Wilbur Smith Associates under PPTA 3184 (Preparation Of The Southern Transport Development Project)

November 2000 The focus of this report was to assess actions taken to address requirements of the CEA’s conditional approval letter and make updates to the EIA report of 1999 prepared by the University of Moratuwa.

Drainage report May 2003 This report was prepared in response to CEA’s requirement for conduct of a detailed hydrological study to mitigate impacts of flooding and include adequate drainage structures in the detailed design.

Supplementary environmental assessment and updating of the

August 2006 This report was prepared to fill gaps in environmental assessment for those

100 Appendix 16

Name of Report Year Remarks environmental management plan for the ADB section and Galle Port Access Road prepared by University of Moratuwa.

sections of the Final Trace which deviated from the Combined Trace. This included the Galle Port Access Road.

EIA of expansion to four lanes. Prepared by RDA

September 2006 This study assessed the environmental impacts associated with expanding the expressway from two to four lanes from Kurundugahahethekma to Godagama in Matara.

SEIA for the supplementary financing loan and technical assistance grant

April 2007 This SEIA was based on the supplementary environmental assessment of August 2006 and the EIA of expansion to four lanes of September 2006. It followed the Environmental Impact Assessment Guidelines (2003) of ADB. This SEIA was disclosed on 19 April 2007 to meet the 120 day disclosure requirement.

Source: PMU Records

8. As indicated in Table A16.1, the environmental assessment reports were revised and updated mainly to cover the differences in impacts from the shift in the project trace from the OT to the Combined Trace and finally to the Final Trace. The shift from the Original Trace to the Combined Trace was mainly due to technical design requirements, while the shift from the Combined Trace to the Original Trace was mainly to incorporate recommendations of the CEA to avoid important wetlands-Bolgoda lake, Koggala wetland, and Madu Ganga wetland. The Combined Trace deviated from the Original Trace for about 40% of its length, while the Final Trace deviated from the Combined Trace for about 45 kilometers (km). The Final Trace ranged from less than 100 meters to about 3.25 km away from the Combined Trace. 9. Significant anticipated environmental impacts identified in the reports entailed flooding and drainage congestion upstream and impacts on wetlands downstream, requirements for huge quantities of construction material and associated impacts, air pollution, noise, vibration, impacts on surface and groundwater quality, erosion and siltation, acquisition of private property, and relocation of people.

3. Implementation and Monitoring of the Environmental Management Plan a. The Environmental Management Plan

10. An environmental management plan (EMP) is a key document that prescribes specific mitigation activities for implementation on site by the contractor and monitoring by the executing agency and supervision consultants. The 1999 EIA report did not include an EMP but instead recommended the development of a mitigation-monitoring program based on the environmental impacts identified and mitigation measures recommended in the report prior to the start of construction works. The mitigation-monitoring program was prepared by the Road Development Authority (RDA) and shown as appendix D in the Environmental Findings Report of 2000. In addition, clauses for minimizing and mitigating key environmental issues were included in the contract documents. Hence, the contracts awarded in 2003 had the necessary environmental safeguards in place for implementation, though the standard EMP matrix was absent. Further,

Appendix 16 101

the international consultancy firm, which was engaged for construction supervision, supervised environmental safeguard measures related to the project and reported in the monthly progress reports. The August 2006 report included a detailed EMP chapter along with the standard EMP matrix. Hence, all contracts awarded from 2006 onwards included an EMP matrix along with the environmental clauses. Moreover, by then the standard practice of requiring the contractor to submit an environmental management action plan for approval by the engineer before the start of physical works was already in place in Sri Lanka. The Environmental Assessment Guidelines 2003, which were effective at the time of the approval of the supplementary loan, had specific requirements for an EMP. Hence, the summary EIA of April 2007 included a detailed EMP. This EMP was further revised and updated in May 2007. 11. The EMP of the 2007 EIA identified seven types of potential environmental issues during the design stage, 16 types during the construction stage, and nine types of issues during the operation stage. A number of mitigation measures were proposed to address every issue identified. Significant issues and mitigation measures identified for the design stage were:

(i) minimizing social impacts of land acquisition and resettlement; (ii) meeting CEA requirements mainly concerning trace adjustments; (iii) minimizing hydrological and drainage issues; (iv) managing noise impacts; and (v) meeting national policy requirements for sourcing, transporting, and handling

construction material and handling spoil disposal.

12. Significant issues and mitigation measures identified for the construction stage were (i) maintaining hydrology and drainage; (ii) controlling erosion; (iii) avoiding water and air pollution; (iv) minimizing noise and vibration; (v) avoiding impacts on wetlands; (vi) proper sourcing, transport, and handling of construction material and proper

disposal of construction waste; (vii) occupational health and safety; and (viii) traffic management.

13. Significant issues and mitigation measures identified for the operation stage were

(i) continued maintenance of vegetation planted to avoid landslides and erosion; (ii) water quality monitoring; (iii) enforcement of requirements for air pollution, noise, and garbage disposal by

road users; and (iv) control measures along with emergency response measures for road accidents

and transport of dangerous goods.

14. The EMP of the April 2007 EIA was further updated and revised in May 2007 to incorporate lessons learnt from the ongoing construction works on the ADB section. The revised EMP had additional specific measures for the construction stage on

(i) handling irrigation and groundwater quality impacts, (ii) addressing slope failure and ground subsidence, and (iii) addressing damage to nearby properties during blasting works.

15. Specific measures were also added for the operation stage on

(i) handling waste and pollution issues during conduct of maintenance works,

102 Appendix 16

(ii) controlling and planning development along the roadside to minimize adverse impacts on the local environment,

(iii) monitoring pollution effects on nearby crops from the traffic, and (iv) improving the aesthetic appearance along the road.

b. The Monitoring Plan

16. Along with the EMP, a monitoring plan for monitoring specific performance indicators was also prepared in the April 2007 EIA to keep track of the effectiveness of the mitigation measures in the EMP. This monitoring plan, which included taking measurements of parameters of air and water, noise and vibration levels, tracking compliance with local statutory requirements, and removal of vegetation and trees, was also revised in May 2007. The revisions included significant expansion of the monitoring plan where monitoring activities were identified for 15 types of environmental issues consistent with those identified in the revised EMP of May 2007:

(i) hydrology; (ii) quality of sediments, groundwater, and air; (iii) level of noise and vibration; (iv) sourcing, transport, and handling of construction materials; (v) social impacts; (vi) impacts on flora and fauna; (vii) road accidents during operation; (viii) garbage disposal during operation; (ix) transport of dangerous goods during operation; and (x) slope stability and ground subsidence.

c. Implementation of the Environmental Management Plan and

Monitoring Activities

17. Over the course of implementing the physical construction works, approximately 25 semiannual environmental monitoring reports-9 on the ADB section and 16 on the Japan International Cooperation Agency (JICA) section-were prepared and disclosed on the ADB website during 2006-2011. In addition, there were a host of other monitoring reports being prepared on a monthly basis to report on activities related to public complaints, assessments and payments made for damage to private property, findings of monitoring measurements made, safety, and outstanding issues. These reports were prepared by the contractor and the Construction Supervision Consultant (CSC) for submission to the RDA for internal recording and monitoring purposes within the project team. 18. Monitoring methods included a combination of taking measurements (such as for air, water, and sediment quality and levels of noise, vibration, and groundwater), visual inspections to verify implementation of mitigation measures, checking documentation (such as records of quantities of materials), and discussion with project stakeholders on implementation of specific programs (such as efficiency of law enforcement on traffic regulations, conduct of awareness programs on safety). Meetings were held at various levels and time intervals. At the project implementation level, meetings were held weekly, biweekly, and monthly between the contractor, management consultants, the CSC, and the RDA. Higher level meetings, such as with the CEA and ADB, were held monthly, quarterly, and biannually. 19. All the adverse environmental impacts as expected in the EIA reports were experienced during the project design and construction stages. In fact, additional issues on soil subsidence,

Appendix 16 103

landslides, irrigation facilities, etc. were experienced and, hence, the EMP had to be updated to incorporate mitigation measures for these impacts in May 2007. The contractors were able to obtain licenses and permits for operation of plants and blasting works on a timely basis. However, the limits set in the licenses were sometimes exceeded. Most significant impacts or incidents of noncompliance faced during the construction stage in various locations in both the ADB and JICA sections, and measures taken to address them, are provided in Table A16.2.

Table A16.2: Significant Impacts and Mitigation Measures Significant Impact Mitigation Measures Taken 1. Damage of property due to exceeding vibration levels during blasting and compaction works

Lower capacity machines used Where it was not possible to use lower capacity machines to maintain construction quality, compensation was paid to affected people whose property was damaged

2. Drainage issues: siltation and blockage of culverts, blocking irrigation channels

Culverts, drains, and irrigation channels desilted and cleaned Toe drains constructed to drain excess water

3. Erosion causing damage to agricultural land and road embankments

Agricultural land desilted Earthen bund constructed to protect agricultural land Road embankment turfed Soil cement drain constructed to prevent erosion

4. Exceeding prescribed noise levels, causing disturbances to local community

Noisy operations such as crusher plants enclosed within a fence to contain noise Inconvenience allowance paid to affected people

Source: Bi-annual Environmental Management Plan Reports prepared by Management Consultant

20. The impacts mentioned in Table A16.2 were repeatedly faced throughout the construction period in various locations along the alignment. Efforts were constantly made to improve the construction methods to minimize impacts and provide compensation to affected people when it was technically not possible to lower noise and vibration levels. 21. A total of 2,140 complaints were received throughout the construction period on the ADB section; actions were taken on 2,110 cases. The rest were found to be minor or irrelevant complaints. The south section received 249 complaints, all of which were resolved. On the ADB section 3,710 claims for payment were received. Of these, 3,551 eligible claims were assessed and compensation was paid in 3,305 cases. 22. The RDA (national implementing agency), the management consultants, construction supervision consultants, and the contractors were the agencies involved in the direct day-to-day implementation and monitoring of the project activities including safeguards. Technical guidance and monitoring was provided by a number of national government agencies: the CEA, the Geological Survey and Mines Bureau, and provincial irrigation departments. In addition, a number of committees comprising officials from other government agencies and stakeholders were formed to guide and monitor specific environment safeguard issues:

(i) Environmental Monitoring Committee. Comprised members from the CEA,

Ministry of Highways, the project management unit under the RDA, the Sri Lanka Low Lying Areas Reclamation and Development Corporation, provincial irrigation offices, the Department of Irrigation, the Department of Agrarian Services, the Department of Agriculture, and divisional secretaries.

104 Appendix 16

(ii) Blast Monitoring Committee. Comprised members from the CEA, Geological Survey and Mines Bureau, construction supervision consultants, the contractor, and the RDA.

B. Compliance with Requirements of the Compliance Review Panel 1. Background

23. In December 2004, the Compliance Review Panel (CRP) registered a request for compliance review of the STDP submitted by the Joint Organization of Affected Communities of the Colombo-Matara Highway. The complaints submitted by the complainants or requesters were divided into nine categories: environmental safeguards, involuntary resettlement, governance, economic analysis, benefit monitoring and evaluation, gender and development, processing of loan, cofinancing, and change in project scope of implementation arrangements. 24. Under environmental safeguards, the requesters raised nine issues which broadly involved the lack of environmental assessment for the final trace of the main alignment and the Galle access road, inadequate analysis of environmental issues in the EIA studies, and inadequate public consultation with newly affected people during the shift of alignment to the final trace. The panel generally agreed with seven of the nine issues raised. 25. After reviewing all the categories of issues, the panel found lapses in compliance with seven sections of the ADB Operations Manual. One of these was Section 20 on Environmental Considerations in Bank Operations.4 The CRP concluded that the EIA prepared for the national highway was insufficient, the Galle access road was not adequately assessed for environmental impacts, and public information and participation during the environmental review process was inadequate.

2. Recommendations

26. Based on the findings and conclusions of the panel on all issues reviewed, four general recommendations and 15 specific recommendations were provided. Of the four general recommendations, the first and fourth, which involved environment safeguards, were

(i) review selected road projects as to how changes in scope may make the application of environment and resettlement policies difficult; and

(ii) provide to the CRP (with a copy to the Board) by 31 August 2005 a course of action with timelines on implementation of these measures for the CRP’s monitoring and reporting to the Board.

27. Of the 15 specific recommendations, the first two, which involved environment safeguards, were

(i) assess the environmental impacts of the Galle access road and any stretch of the ADB section on the final trace different from the combined trace, including consulting project-affected people; and

(ii) ensure the incorporation of the environmental impact assessments and the recommended mitigation measures of any stretch of the ADB section on the final trace different from the combined trace and of the Galle access road in the EMP for the project

4 Section 20 on Environmental Considerations in Bank Operations

Appendix 16 105

3. Implementation of Recommendations

28. Following the submission of the final report of the CRP investigations to the ADB Board on 22 June 2005, the panel closely monitored the implementation of the recommendations through missions to Sri Lanka, consultations with affected people and other government and nongovernment stakeholders in Sri Lanka, and consultations with ADB staff in ADB headquarters and the Sri Lanka Resident Mission. Four annual monitoring reports were prepared by the panel during 2006-2010 and submitted to the ADB Board. 29. In the first monitoring report of July 2006, it was noted that the course of action as required under general recommendation (iv) was submitted by ADB management to the panel with a copy to the Board by 31 August 2005. It also noted that the management had updated the course of action as given in the project’s April 2006 progress report and this was shared with stakeholders who requested it. Therefore, general recommendation (iv) was found to have been complied with. 30. In the second annual monitoring report of December 2007, it was noted that the panel had received and reviewed a draft report from Management on identifying issues in the differentiation between minor and major changes in scope. Therefore, general recommendation (i) had been complied with. In the same report it was also noted that specific recommendations (i) and (ii) had been complied with. On specific recommendation (i), the panel confirmed that the Sri Lanka Resident Mission and ADB would make the draft final supplementary environmental assessment report and the addendum available to the public if requested. C. Consultations and Information Disclosure

31. During the course of project preparation and implementation many consultations were carried out with the affected people, government stakeholders, and nongovernment organizations. A summary of the consultations carried out are given in Table A16.3.

Table A16.3: Summary of Public Consultations Conducted for the Project Date Location Remarks 3 July 1999 Panadura Public hearing organized by CEA as

part of the environmental clearance process.

10 July 1999 Galle Public hearing organized by CEA as part of the environmental clearance process.

2000 All grama niladharies along the final trace

Discussions were with the local people in all grama niladharies (Village Head) by WSA consultants when determining the final trace and preparing the environment findings report of November 2000

10–15 September 2005

Godagama, Hallala, Nalawana, Kokmaduwa, Kabragala, Deegoda, Kodagoda, and Horagoda

Farmers in all the locations

6 October 2005 Pinnaduwa, Deegoda, Discussion held with the local

106 Appendix 16

Galle, Baddegama, Dodangoda, and Bombuwela

community for collection of socioeconomic data

2000–2012 Throughout the project road

As hundreds of complaints were filed on various issues, consultations were continuously held with affected people to address the complaints during the construction stage of both the original and supplementary loan.

CEA – Central Environmental Authority Source: STDP Project Completion Review

32. For the preparation of the environment section of the project completion report, consultations were held in December 2013 with key stakeholders comprising the CEA, provincial irrigation department of the Southern Province, the project director of the RDA, the Wildlife Conservation Department, and resettled affected people. 33. Feedback received from different agencies during the consultations held in December 2013 are summarized as follows: 34. Central Environment Authority. The CEA is satisfied with the performance of the project and confirmed that all 58 conditions issued along with the conditional approval in 1999 have been fulfilled. CEA staff expressed that the project has taught them many lessons and also contributed to capacity building. Pending issues highlighted by the CEA were (i) long-term maintenance of the drainage and irrigation canals that were constructed under the project but now fall outside the right-of-way, and (ii) provision for noise barriers along sensitive sites in the long term. 35. To address the concern on drainage and irrigation canals, the RDA has been advised to meet with the provincial irrigation departments of the Southern and Western Provinces. At this stage there is no need for noise barriers as the noise levels are not significant. However, the RDA will continuously monitor the noise level and install noise barriers along sensitive sites when the need arises. 36. Provincial irrigation department, Southern Province. The divisional assistant and technical officer expressed that there was inadequate coordination between the RDA and the provincial irrigation department on the irrigation and drainage systems which have been affected by the road construction. This has resulted in technical problems of differences in structures constructed under the project and the existing irrigation system, resulting in irrigation distribution and drainage problems in downstream agricultural areas. The irrigation department has been asked to provide a list of problematic canals along with cost estimates to the RDA. The RDA will release budget to the provincial irrigation department for rectifying the technical errors. 37. Wildlife Conservation Department. The director (natural resources management) highlighted that the expressway does not cross any protected area. Hence, major impacts have been avoided during the design stage when finalizing the location of the trace. However, there are many types of wildlife species, such as reptiles and small animals like palm civets (Hermaphroditus), porcupines (Hystrix Indica), mongoose (Herpestes), iguanas (Iguana iguana), fishing cats (prionailurus viverrinus), and stray dogs (Canis Iupus) living on either side of the road, and they often get killed when crossing the road. In turn, small animals and crows enter the carriageway to eat the carcasses, causing a safety hazard for traffic and often causing

Appendix 16 107

accidents. Some birds come to dust-bathe on dirt roads created beside the expressway, making them vulnerable to vehicles. The department also expressed that changes have been created in the drainage pattern, particularly the Gin Ganga River and its tributaries, due to the project, resulting in modifications in the wetland habitat around the project area. The project road has caused habitat fragmentation and created a barrier for wildlife movement on either side of the road. The RDA in consultation with the Wildlife Conservation Department has been advised to find appropriate technical solutions to facilitate wildlife movement across the road and avoid traffic hazards. However, since there are no protected areas immediately near the road, the overall significance of the impacts on important wildlife species and their habitat is low. 38. Affected people. Discussions were held with two resettled families in Piyawaragama. Both families had interesting feedback on the change in their family life and lifestyle as a result of moving to a new area. One of the families had only positive feedback, indicating that with the compensation payments they now live in a bigger and nicer house. The wife of the other family expressed dissatisfaction. Even though she got more land than she owned before, she has lost her customers that bought lunchboxes from her in her former location. However, her husband, who ran a bicycle repair shop, said that he is much happier in this new location. 39. Road Development Authority. Discussions were held with the project director, who expressed overall satisfaction with the results of the project and current performance of the expressway. He highlighted that the main challenge that remains relates to irrigation. To address this, the RDA has been releasing budget to the provincial irrigation department to fix the irrigation canals according to budget estimates provided by the department. The mission has advised the department to continue these efforts in order to resolve all pending issues. D. Conclusions and Lessons

1. Conclusions

40. As the first expressway project, the STDP has been a major undertaking of the Government of Sri Lanka. While many problems and challenges were faced during the project design and construction, as many lessons have been learnt and all stakeholders including ADB have gained useful experience. The experience and knowledge gained from the STDP by agencies such as the CEA is now being applied to the many expressway construction projects under way in the country. 41. Significant impacts of erosion, siltation, vibration, noise, dust, resettlement, and damaged property were experienced during project construction. While most of these impacts were expected in the EIA reports, additional issues such as soil subsidence, landslides, and disruption of irrigation facilities were also experienced during construction. The EMP was updated to address these additional concerns and implemented accordingly. Despite the large scale of works, continuous receipt of complaints from affected people, and other compliance issues, continuous efforts were made to implement all mitigation measures and address all complaints and bring the project back into compliance. As a result, the Southern Expressway is now functioning as a scenic world class expressway. 42. In addition to a successfully operating expressway, another important environmental safeguard benefit of the project is the improved capacity of the Environment and Social Division

108 Appendix 16

in the RDA5 through training workshops, preparation of guidelines and handbooks on implementation of IEEs and EMPs, and purchase of environmental monitoring equipment. 43. A significant benefit of shifting the alignment further inland was that it avoided risks and costs due to climate change impacts. The existing Galle Road or Galle road which runs along the coast from Colombo to Galle faces high risks of increased damage and costs due to increasing storm surges, flooding due to heavier monsoons, and consequently increased coastal erosion. The Southern Expressway is beyond the zone of such climate change risks.

2. Lessons

44. Based on review of documents and discussions held with stakeholders, one of the key lessons learnt on better implementation of environment safeguards in future expressway or highway projects in Sri Lanka and within the region is formal engagement of members from the irrigation department within the project team right from the design stage to address technical issues concerning design and construction of drainage and irrigation canals, especially in areas where the road alignment passes through agricultural areas. 45. One of the reasons for complaint to the CRP was lack of proper public consultation and coverage of the project area under the environmental assessment. This shows that thorough environmental assessment right from the start and preparation of proper management and monitoring plans is key to the success of a project. Given the strategic location of the project, the induced impacts went far beyond the physical boundaries of the highway, in the form of development of other industrial estates, a seaport, and an airport. This indicates that the environmental assessment must also include a detailed cumulative and induced impacts assessment covering a much larger area than the immediate project area. In addition, this project has clearly shown the importance of meaningful consultations, early engagement, and awareness programs for the general public and other key stakeholders through local media and other means to avoid disgruntled public and the risks of complaints and delays. This is a very important lesson that was learned the hard way in this project.

3. Recommendations

46. The RDA needs to continue monitoring noise levels along the expressway with the help of its Environmental and Social Development Division. As soon as the noise levels are close to prescribed limits, noise barriers must be constructed where there are sensitive receptors before exceeding the limits. 47. Similarly, the RDA could periodically monitor the air quality along the highway. If there is significant deterioration of air quality and it is close to the maximum limits, appropriate measures could be taken in collaboration with relevant agencies. 48. The study on wildlife accidents is being carried out by the Environmental and Social Development Division for the project expressway as well as the Colombo-Katunayake expressway, and this study must be followed up by appropriate improvement measures (if required) to minimize and mitigate wildlife-related accidents on the highway. Further discussion

5 As a result of the CRP’s recommendation for continued implementation of the EMP during project implementation,

capacity development technical assistance, on Strengthening Road Development Authority in Implementation of the Environmental Management Plan of the Southern Transport Development Project, was implemented during

2009–2010.

Appendix 16 109

must also be carried out with the Wildlife Conservation Department to confirm the recommendations given in the study.

49. The RDA should coordinate with the provincial irrigation department to resolve all pending irrigation issues.

110 Appendix 17

CHRONOLOGY OF SIGNIFICANT EVENTS Date Event 29 Nov-10 Dec 1996 TA2892 - PPTA mission 31 Oct 1997 Approval for TA2892 for the Southern Transport Corridor Project 24 Sep-6 Oct 1998 TA2892 - Tripartite meeting 16-18 Nov 1998 TA2892 - Review mission 5-9 Mar 1999 L1711 - Project-specific contact mission 27-28 Apr 1999 L1711 - Fact-finding mission 23 Jun-7 Jul 1999 L1711 - Appraisal mission 13 Nov 1999 Mobilization of design consultant for details design under Road

Network Improvement Project 7-10 Dec 1999 L1711 - Inception Mission 16 Dec 1999 L 1711 - Loan signing 24 Mar 2000 L 1711 - Request for extension of loan effectiveness (from 16

March 2000 to 30 October 2000) 4-5 Sep 2000 L1711 - Review Mission 9-16 Nov 2000 L1711 - Review Mission 10 Apr 2001 L 1711 - Request for extension of loan effectiveness (from 30

October 2000 to 15 March 2001) 2-13 Jul 2001 L1711 - Special project administration mission to review the status

of resettlement implementation plan 18 Jul 2001 L 1711- Request for extension of loan effectiveness (from 15

March 2001 to 30 June 2001) 11-14 Sep 2001 L 1711 - Special loan administration mission to finalize the RIP

and discuss the implementation of RIP 15 Oct 2001 L1711 - Special Project Administration Mission to review the

progress of finalizing the RIP 21-22 Nov 2001 L1711 - Consultation mission to meet the complainants and

explore possible solutions 10-12 Dec 2001 L1711 - Consultation mission to meet the complainants and

explore possible solutions 18 Dec 2001 L 1711 - Request for extension of loan effectiveness 7-8 Mar 2002 L1711 - Mission to Japan to meet JBIC project team 21 Mar 2002 L1711 - Board Inspection Committee submitted its report and

recommendations for the consideration of the Board of Directors on compliance review

17-21 Jun 2002 L1711 - Consultation mission for mediation to support resolution of remaining land acquisition and resettlement problems

Sep 2002 L1711 - Third party confirmation was carried out by individual household interviews with the 32 households

30 Oct 2002 L 1711 - STDP Loan Effectiveness 31 Oct-1 Nov 2002 Japan - Consultation Mission to discuss the recent developments

of STDP 4 Dec 2002 L1711 - Third party mediation was appointed

19-21 Jan 2003 L1711 - Joint review mission 13 Jan 2003 L 1711 - STDP - Award of civil works contracts 19-27 Feb 2003 L 1711- Inception mission

Appendix 17 111

Date Event 14 Mar 2003 L1711 - Third party mediation report was submitted 16 Apr 2003 L1711 - Opening of imprest fund 30 Jun-3 Jul 2003 L 1711 - Joint emergency review mission (ADB, NDF, and Sida) 30 Jun-3 Jul 2003 L1711 - Joint review mission 17-18 Sep 2003 L1711 - Review mission 23 Oct 2003 L 1711 - Reallocation of loan proceeds and change in ADB

financing percentage 19-21 Jan 2004 L 1711 - Joint review mission (ADB, Sida, and NDF) 19-21 Jan 2004 L1711 - Joint review mission 5 Apr 2004 L1711 - STDP Compliance review was initiated by ADB's South

Asia Department (later called safeguard compliance review) for implementation of RIP

10-25 May 2004 L1711 - Safeguard review mission 10-11 Aug 2004 L1711 - High-level review mission to review implementation

progress on resettlement activities 11 Aug 2004 L 1711 - MOU signed for additional actions to be taken for the

new scope 8-16 Oct 2004 L1711 - Social impact assessment 21-24 Mar 2005 L1711 - Safeguard review mission 2-9 Sep 2005 L1711 - Safeguard review mission 5-6 Dec and 16 Dec 2005

TA4748 - Consultation mission to finalize draft technical assistance report for independent external monitoring of resettlement activities of STDP

3 Nov 2005 L1711 - Review mission 3-7 Apr 2006 L 2413 - Reconnaissance mission 2 Jun 2006 L 1711 - Extension of loan closing date 5-8 Jun 2006 L2413 - Consultation mission to review consultant work progress

in carrying out the preparation studies for the proposed supplementary loan for STDP

30 Jun 2006 L 2413 - Approval of project concept paper 16-25 Aug 2006 L1711 - Midterm review mission 28-29 Aug 2006 L1711 - Consultation Mission to discuss proposed supplementary

loan 3-13 Oct 2006 L 2413 Fact-finding mission 1 Dec 2006 L1711 STDP - Approval of determination on processing of a major

change in scope 6-7 Dec 2006 L1711/2413 Consultation mission to discuss proposed

supplementary loan for STDP and major change in scope 26 Feb-6 March 2007 L 2413 - Consultation mission for processing of proposed

supplementary loan for STDP 9 Mar 2007 L2413 - Approval of contract facilitator for contract negotiations

between contractor and RDA 18 Apr 2007 L 1711 - Approval of contract variation for civil works 23 May 2007 L 1711 - STDP - Contract variation for construction and

supervision consultancy and updating the LFIS 29 May 2007 L 1711 - STDP - Reallocation of funds (from unallocated to civil

works and consultants) 5-12 Jun 2007 L2413 - Consultation mission for processing of proposed

112 Appendix 17

Date Event supplementary loan for STDP and discussion for cost overrun

7-13 Jun 2007 L2413 - Consultation mission for processing of proposed supplementary loan for STDP and discussion for cost overrun

20-21 Aug 2007 L2413 - Consultation mission for processing of proposed supplementary loan for STDP and discussion for cost overrun

4-14 Sep 2007 L2413 - Appraisal mission for processing of proposed supplementary loan for STDP and discussion for cost overrun

3 Dec 2007 L 1711 - Reallocation of funds (from road safety to civil works and consultants)

2 Jan 2008 L 1711/2413 - Approval for contract addendum for civil works contract

31 Jan-1 Feb 2008 L 2413 - Loan negotiation 14 Feb 2008 L 1711 - Board approval for major change in scope 4 Apr 2008 L 1711 - Extension of loan closing date 11 Apr 2008 L1711 - Extension of loan closing date 15 Apr 2008 L 1711 - Approved overriding of at-risk rating 21–23 May 2008 L2413/TA 7239 - Loan/TA inception mission 1-3 Jun and 9 Jun 2008 L2413 - Inception mission 27 May 2008 L 2413 /TA No 7065 - Delegation of loan and TA administration

work 5 Jun 2008 L 1711 - Amendment to the loan agreement 13 Jun 2008 L 2413 - Loan effectiveness 13 Jun 2008 L 1711 - Amendment agreement no 2 to the loan agreement 3 Jul 2008 L 2413 - Minor change in implementation (disbursements)

arrangement 20-21 Aug 2008 L2413- Review mission 20 Nov 2008 L2413 - Single source selection of construction supervision

consultant, request for approval of the evaluation of technical and financial proposal

26 Nov 2008 L 2413 - Request for approval of the executing agency’s financial proposal and final ranking evaluation documents for recruitment of management consulting firm

9-13 Feb 2009 L2413 - Consultation mission to discuss second supplementary financing for STDP

2 Mar 2009 CDTA 7239 - Delegation of TA administration 9-11 Mar 2009 L2413 - Midterm review mission 28 May 2009 L 1711 - Recommendation for increase in imprest account ceiling

from $100,000 to $200,000 18 Jun 2009 L 1711 - Recommendation to increase imprest account ceiling to

$250,000 20 Jul 2009 CDTA 7239 - Request for remitting funds to SLRM 8 Sep 2009 L 1711 - Reallocation of funds (from road safety and consultancy

to civil works and incremental) 28 Sep-2 Oct 2009 L1711/2413 - Review mission 13 Jan 2010 L 1711 - Reallocation of funds (from civil works to incremental) 28 Jan 2010 CDTA 7239 (SRI) - Minor change of scope for extension of ta

completion date and reallocation of TA categories 16 Feb 2010 L 2413 - SRI: major change in financing plan (reallocation and

Appendix 17 113

Date Event changing civil works from 50% to 75% and management consultant 46.4% to 100.0%

30 Mar-8 Apr 2010 L1711/2413 - Review mission 22 Mar 2010 L 2413 - major change in implementation arrangement for contract

variation in construction supervision consultant contract 27 May 2010 TA7065- Financial closure 16 Jun 2010 TA 7065 - Technical assistance completion report for printing and

board circulation 30 Jun 2010 L 2413 - Minor change in implementation arrangement for

consultant contract variation 16 Jul 2010 TA 7065 - Technical assistance completion report for printing and

board circulation 9 Aug 2010 L 1711 - Extension of loan closing date 17 Nov 2010 TA 7239 (SRI) - Request to close TA account 23-30 Nov 2010 L1711/2413 - Review mission 26 Nov 2010 TA 7239 - Financial closure 6 Dec 2010 L 1711 - Reallocation of funds (from IDC to category 3 and

category 01A) 25 Feb 2011 L1711: Financial closure of loan account 6 May 2011 L 2413 - Reallocation of funds (from unallocated to project

management category) 22 Jun-8 Jul 2011 L2413 - Review mission 13 Sep 2011 L 2413 - reallocation of funds (from unallocated to project

management category) 5 Dec 2011 L 2413 - Request for minor change to a project for reallocation

and procurement of additional equipment under rad safety. 23 Dec 2011 L 2413 SRI - Request for second extension of loan closing date 28 Jun 2012 L 2413 - Request for minor change to a project for reallocation of

funds from unallocated funds to construction supervision and extension of consultants and cost variation

22-26 Oct 2012 L2413 - Review mission 1 Jul 2013 L 2413 - Minor change to project 4 Jan-20 Feb 2014 L1711/2413 - Project completion review mission

ADB – Asian Development Bank, CDTA – Capacity Development Technical Assistance, JBIC – Japan International Cooperation Agency, LFIS – Loan Financial Information System, MOU – Memorandum of Understanding, NDF – Nordic Development Fund, PPTA – Project Preparatory Technical Assistance, RDA –– Road Development Authority, RIP – Resettlement Implementation Plan, STDP – Southern Transport Development Project, Sida – Swedish International Development Authority, SLRM – Sri Lanka Residence Mission, TA –– Technical Assistance