Document of The World Bank FOR OFFICIAL USE ONLY Report No: 69508-AF EMERGENCY PROJECT PAPER ON A PROPOSED GRANT IN THE AMOUNT OF SDR82.8 MILLION (US$125 MILLION EQUIVALENT) TO THE ISLAMIC REPUBLIC OF AFGHANISTAN FOR AN AFGHANISTAN RURAL ACCESS PROJECT June 11, 2012 Sustainable Development Department Afghanistan Country Management Unit South Asia Regional office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective May 31, 2012) Currency Unit = Afghani Afghani 49.94 = US$ 1 US$0.66 = SDR 1 GOVERNMENT FISCAL YEAR March 21 - March 20 ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank ARTF Afghanistan Reconstruction Trust Fund ARAP Afghanistan Rural Access Project CAREC Central Asia Regional Economic Cooperation CDC Community Development Council DA Designated Account DAB Da Afghanistan Bank (Central Bank) ESMF Environmental and Social Management Framework FMA Financial Management Agent HDM Highway Design and Maintenance Model IC Implementation Consultant IDA International Development Association ISN Interim Strategy Note M&E Monitoring and evaluation MOF Ministry of Finance MPW Ministry of Public Works MRRD Ministry of Rural Rehabilitation and Development MTR Mid-term Review NCU National Coordination Unit NEEP National Emergency Employment Program NERAP National Emergency Rural Access Project NGO Non-governmental Organization NRAP National Rural Access Program PAP Project Affected People PDO Project Development Objective PFM Public Financial Management PIU Program Implementation Unit RED Road Economic Decision Model UNOPS United Nations Office for Project Services USAID United States Agency for International Development Vice President: Isabel Guerrero Country Director: Robert J. Saum Sector Director: John Henry Stein Acting Sector Manager: Binyam Reja Task Team Leader: Mesfin Wodajo Jijo AFGHANISTAN Afghanistan Rural Access Project CONTENTS Page Introduction..r.......... . 1 A. Emergency Challenge: Country Context, Recovery Strategy and Rationale for Proposed Bank Emergency Project..............1......................... B. Bank Response: The Project ....................3........................3 C. Appraisal of Project Activities ...................7....... .................7 D. Implementation Arrangements and Financing Plan......................... 15 E. Project Risks and Mitigating Measures ................................ ..... 16 F. Terms and Conditions for Project Financing.................................. 17 Annex 1: Detailed Description of Project Components............................ 18 Annex 2: Results Framework and Monitoring. .................................. 25 Annex 3: Summary of Estimated Project Costs................................... 30 Annex 4: Financial Management and Disbursement Arrangements .................... 31 Annex 5: Procurement Arrangements............................................ 45 Annex 6: Implementation and Monitoring Arrangements ..................... 58 Annex 7: Project Preparation and Appraisal Team Members ........................ 62 Annex 8: Safeguards Policy Issues ..................................... ..... 63 Annex 9: Economic Analysis.............................................. 69 Annex 10: Documents in Project Files ........................................ 76 Annex 11: Statement of Loans and Credits ............................... 77 Annex 12: Country at A Glance............................................ 79 Annex 13: Rural Roads Maintenance Approach ................................. 82 Annex 14: Map ............................................................ 94  AFGHANISTAN AFGHANISTAN RURAL ACCESS PROJECT PROJECT PAPER SOUTH ASIA REGION SASDT Date: June 11, 2012 Team Leader: Mesfin WodaJo JiJo Country Director: Robert J. Saum Sectors: Rural Roads (100%) Sector Manager: Binyam Reja Themes: Rural services and infrastructure Sector Director: John Henry Stein (100%) Project ID: P125961 Environmental category: Partial Assessment Lending Instrument: Emergency Recovery Loan Project Financing Data [ ] Loan [ ] Credit [X] Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Total Bank financing (US$m): 125.00 Proposed terms: Standard IDA Grant Financing Plan (US$m) Source Local Foreign Total BORROWER/RECIPIENT 0.00 0.00 0.00 IDA Grant 112.50 12.50 125.00 Afghanistan Reconstruction Trust Fund 185.00 22.00 207.00 Total: 297.50 34.50 332.00 Borrower: Islamic Republic of Afghanistan Responsible Agency: Ministry of Public Works (MPW) 1st Microryan Kabul, Afghanistan Tel: +93(0)202300374 Ministry of Rural Rehabilitation and Development (MRRD) Darluaman Road Nelabagh Street Afghanistan Tel: (93-79) 930-6173 1 Estimated disbursements (Bank FY/US$m) FY 2013 2014 2015 2016 2017 2018 IDA Annual 8.00 28.00 31.00 32.00 14.00 12.00 Cumulative 8.00 36.00 67.00 99.00 113.00 125.00 ARTF Annual 13.00 45.00 50.00 51.00 29.00 19.00 Cumulative 13.00 58.00 108.00 159.00 188.00 207.00 Project implementation period: Start October 1, 2012 End: September 30, 2017 Expected effectiveness date: October 1, 2012 Expected closing date: March 31, 2018 Does the project require any exceptions from Bank policies? Ref Section Appraisal of Project Activities [ ]Yes [X] No Have these been approved by Bank management? [ ]Yes [ ] No Does the project include any critical risks rated "substantial" or "high"? [X]Yes ]No Ref Section Project Risks and Mitigating Measures Project development objective: The project development objective is to enable rural communities to benefit from all-season road access to basic services and facilities. Project description: The project consists of three components: Component A - Improvement and maintenance of secondary roads (US$186.0 million) which will be implemented by MPW. The output will be about 1,000 km of rehabilitation; 250 km of upgrading existing pavement to bituminous standard; about 1,000 km of routine and periodic maintenance of paved and unpaved secondary roads, and construction of about 1,000 linear m of bridges. Component B - Improvement and maintenance of tertiary roads (US$128.0 million) will be implemented by MRRD. The output will be about 1,300 km of rehabilitation and 2,000 km of routine and periodic maintenance of tertiary roads; and construction of about 1,600 linear m of bridges. Component C- Program Planning and Development, Institutional Strengthening and Program Coordination Support (US$18.0 million) will be jointly implemented by MPW and MRRD coordinated by NCU; the component supports human resource and institutional capacity building, program monitoring and evaluation, and program development activities. Which safeguard policies are triggered, if any? The project will focus mainly on the rehabilitation and upgrading of existing access roads along their current alignments with a minimum standard, thereby posing low to medium environmental and social impact. Since civil works that would have significant irreversible environmental or social impacts are excluded from the project, the environmental category will be B. Given the nature of such scale of road rehabilitation, the Environmental Assessment (OP/BP 4.01), Natural Habitat (OP/BP 4.04) and Involuntary Resettlement (OP/BP 4.12) Policies are triggered. However, as under preceding projects, an environmental and social safeguards management framework (ESMF) has been agreed, against which every proposed road section and bridge will be evaluated and, if warranted, appropriate mitigation measures will be defined and implemented. 11 Introduction 1. This Project Paper seeks the approval of the Executive Directors to provide a grant in an amount of US$125 million to Afghanistan for an Afghanistan Rural Access Project (ARAP). The project is being processed under the Rapid Response to Crises and Emergencies (OP/BP 8.00). 2. The proposed grant would help finance the improvement and maintenance of secondary and tertiary rural roads, construction of bridges, implementation support and capacity building activities. The project would also finance eligible expenditures under the project, incurred and paid by the Government prior to the date of the Financing Agreement, but on or after June 1, 2012, up to an aggregate amount not exceeding US$5.0 million equivalent. Afghanistan has made good progress in improving the core road network devastated and neglected during the decades of conflict. Since 2002, about a tenth of the rural road network has been rehabilitated under the government's on-going National Rural Access Program (NRAP). About half of the rural road network is in bad to fair condition, and over a third is barely accessible. Given the demand, the current achievement is far from addressing the enormous needs of connecting the isolated areas that are otherwise vulnerable to shocks caused by the active conflict and natural disasters such as droughts, snow storms and flash floods. The proposed support will help respond to the situation through financing the improvement of priority secondary and tertiary roads, construction of bridges and a program of maintenance for the maintainable rural road network rehabilitated under NRAP and other programs in the past. The outcomes to be achieved upon completion of the project will include: (i) reduction in travel time to essential services; (ii) increased frequency of such trips; and (iii) reduction of price differentials between villages and the nearest district town markets for core consumption items and crops sold.- The project will be financed by the International Development Association (IDA) with a grant of US$125 million and co-financed from the Afghanistan Reconstruction Trust Fund (ARTF)I with a grant of US$207 million. A. Emergency Challenge: Country Context, Recovery Strategy and Rationale for Proposed Bank Emergency Project 3. Two decades of civil war did severe damage to the Afghan road network at all levels: regional and national highways, provincial roads and local access roads. While road statistics vary, the length of the overall road network by type is estimated as follows: Type of Road Length (kin) Regional Highways: foster regional trade with neighboring countries 3,200 National Highways: extend Regional Highways to provincial capitals 4,900 Provincial Roads: link district headquarters to respective provincial capitals and between 9,700 important district headquarters Urban/City Roads are roads within municipalities and other urban areas 3,800 Rural Roads (Secondary and Tertiary) connect the hinterland to provincial roads, district 101,400 headquarters and market centers Total 123,000 The trust fund is administered by the World Bank to channel financial resources through the Government budget system. Currently more than 30 donors are contributing to ARTF. Donors who in the past used to prefer separate but parallel arrangements to channel funding, pledged during the July 2010 Kabul conference, to channel at least half of their aid through ARTF. 1 4. As the nation started to emerge from the conflict in 2001, only a very small part of the road network was in good condition. Despite the lack of accurate data at the time, it was believed that the prolonged conflict had denied most of the rural population access to essential social services like markets, health centers, schools and government administrative offices. The cost of transportation on the limited functioning network was unaffordable to most rural people. The Ministry of Public Works (MPW) had been responsible for maintaining major highways through its force account, which was weak and hence ineffective. Prior to the conflict, while MPW had the authority to collect toll fees on key corridors to finance maintenance, it had very limited success. Since no other funds were specifically earmarked for road maintenance, the MPW was totally dependent on the Ministry of Finance (MOF) for annual allocation for road maintenance. For rural roads, there has never been a well-functioning road maintenance system or funding mechanism except for some traditional ways whereby communities mobilized themselves to maintain the roads that otherwise would seriously affect their livelihoods. 5. Since the transition period the Afghan government has attached the highest importance to addressing the vulnerability of the rural poor through integrating it to the market and other economic opportunities in the adjacent districts, provinces and regions. The transitional government included the promotion of livelihoods through job creation as an important element of its overall strategy. The rehabilitation and maintenance of the devastated rural infrastructure -- mainly roads and irrigation canals-- presented an opportunity to implement this strategy. Formulated in 2002, the National Emergency Employment Program (NEEP) funded short-term employment through restoration of the dilapidated rural infrastructure. NEEP evolved into the National Rural Access Program (NRAP) from 2005 until now, with a strong focus on provision of year-round rural access to basic social services. More than 10,000 km of rural roads and related drainage structures have been upgraded or rehabilitated under NEEP/NRAP through four projects financed through IDA, ARTF and other funds. The scope of these projects spanned from relatively simple emergency funding with a primary objective of creating employment in rural areas, to more extensive involvement in building institutional capacity in the two ministries responsible for the sector, the Ministry of Public Works (MPW) for secondary roads and the Ministry of Rural Rehabilitation and Development (MRRD) for tertiary roads; coordinated by the MOF. The most recent of these Bank-supported projects, named National Emergency Rural Access Project (NERAP), is currently in its fourth year and due to be completed in 2013. In parallel, the United States Agency for International Development (USAID) and the Asian Development Bank (ADB) have focused their financing on major highways, to restore the national-level ring highway that links all major cities and main border crossings. 6. The Bank's policy dialogue with the Afghan Government has also addressed the keen interest of Central Asian countries (all landlocked) to see trade corridors opened to ports on the Indian Ocean. The ADB has been supporting this multi-country dialogue through its Central Asia Regional Economic Cooperation (CAREC) initiative. In this connection the Afghan government recently commissioned a railways master plan, which has examined, at strategic level, the options for developing a railway network for the benefit of the Afghan economy, as well as serving the transit interests of Central Asian countries. Interest in this concept was heightened in 2010 by the finding of substantial mineral deposits in large areas of northern and central 2 Afghanistan, for which -at least in the longer run-export by rail would be less costly than road transport. 7. The on-going IDA and ARTF financed NERAP project includes maintenance, rehabilitation and/or minor improvement of secondary and tertiary roads throughout Afghanistan, at a pace of about 500 km per year. The NERAP project is rated Moderately Satisfactory as per the latest ISR dated November 21, 2011, towards achieving the PDO and Implementation Progress. The proposed project would help the Government build capacity to scale up this activity by the time the ongoing NERAP project is completed, i.e., December 31, 2013. 8. The mid-term review of NERAP, conducted in May 2010, found that the two implementing agencies had developed basic systems and capacity for delivering their work programs, albeit with delays and at a higher cost than anticipated. The main reasons for the higher costs were the absence of appropriate road design standards to ensure year-round access resulting in the eventual adoption of higher road standards; and higher unit costs due to deterioration of the security situation. The upward creep in design standards has applied particularly to secondary roads. As a result, while providing additional financing for NERAP it was a condition that the two ministries (MPW and MRRD) agree on a design standard that would deliver basic access at a minimum cost, so that a given budget would allow the greatest possible number of communities to benefit. 9. The main challenge of the scaling up envisaged under the proposed project has been to develop appropriate criteria for subproject identification and prioritization, design and appraisal (including application of safeguards), as well as standardized institutional models for implementation that devolve some functions from the central level to lower administrative levels, and substantial strengthening of the central government teams to manage and oversee the lower- level staff. Progress in this direction has so far been somewhat limited, but with the appointment in early 2012 of two new ministers, government commitment to this objective is now strong. 10. In parallel, the Bank has engaged both MPW and MRRD in a dialog about how best to ensure that funds intended for basic rural access are not diverted to upgrading of existing roads that already carry significant amount of traffic. Save for a few exceptions to be included in this project, secondary roads that warrant substantial upgrading (as opposed to maintenance and minor upgrading) will be addressed through other projects. B. Bank Response: The Project Bank's Strategy ofEmergency Support 11. Rural access has been central to the second pillar of the Bank's Interim Strategy Note (ISN) for 2009-2011 of "promoting growth of the rural economy and improving rural livelihoods". The ISN for 2012-2014 approved in April 2012 focuses on "institutions and programs that can sustainably ensure equitable delivery of basic services across the country and for all Afghans". The Bank's support through the proposed project helps connect rural communities to the nearest towns and markets, improving farmers' access to markets and enabling them to get better prices for their produce, while lowering the cost of consumption 3 essentials as well as farm inputs. It makes it easier for children to reach schools and in particular encourages families to continue the schooling of their daughters. It puts remote communities within reach of doctors and medical facilities in the provincial towns. Road maintenance and improvement works create employment for men in the local communities. The creation of new jobs and improved prospects for farming should reduce the incentive for villagers to grow poppy for processing into opium. The project will take into account possible decline in external aid following the withdrawal of ISAF forces by 2014, which is influencing the Government's strategies. In response to the focus it has adopted on maintenance of infrastructure, the proposed project will scale up (among other things) the on-going pilot routine maintenance scheme. 12. Improving rural access will also enhance the livelihoods of a great many communities, reducing poverty, the key mission of the Bank. Furthermore, Bank has been successfully engaged in this sector since the NERAP and has made considerable progress in building capacity in the key implementing agencies. Continued involvement is essential to ensure sustainability of the results achieved so far and for initiating systems and capacity building for maintaining the improved assets. While other Development Partners have focused on the main highways, the World Bank is seen as the lead partner engaged in improving rural access. Improving rural access complements and enhances the impact of World Bank and other donor support in the social sectors such as health and education. Project Development Objectives 13. The Project Development objective is to enable rural communities to benefit from all- season road access2 to basic services and facilities. Summary of Project Components 14. The project has three components: (a) Improvement and maintenance of secondary roads; (b) Improvement and maintenance of tertiary roads; and, (c) Program Planning and Development; Institutional Strengthening; and Program Coordination Support. 15. Component A: Improvement and maintenance of secondary roads (US$186 million). MPW will implement this component, focusing on improving about 1,250 km of secondary roads, comprising about 1000 km of unpaved roads (gravel surface) and 250 km of paved roads (bituminous surface). To initiate the practice of regular maintenance in MPW, the component will include routine and periodic maintenance of about 850 km of unpaved and 150 km of paved roads as well as spot improvements of the priority rural road network, and construction of bridges (about 1,000 linear meters) to improve the connectivity of communities living in barely accessible rural areas. MPW has applied socio-economic parameters (Annex 9) to objectively prioritize the gravel road links proposed by the communities, local governments and parliamentarians for financing under this project. In summary, there will be eight subcomponents: 2 'all season road access' means a road that is accessible to motorized traffic all year round except for an interruption of up to 10 days in any given year. 4 (i) rehabilitation of about 1000 km of secondary roads; (ii) upgrading of about 250 km of existing pavement of secondary roads to bituminous standards ; (iii) construction of about 1,000 linear m of bridges along secondary roads; (iv) periodic maintenance of about 850 km of unpaved secondary roads; (v) periodic maintenance of about 50 km of paved secondary roads; (vi) routine maintenance of about 850 km of unpaved and 150 km of paved roads; (vii) emergency maintenance; and (viii) project management and implementation support activities. 16. Component B: Improvement and maintenance of tertiary roads (US$128 million). MRRD will improve about 1,300 km of the tertiary road network, carry out routine and periodic maintenance on about 2,000 km of priority tertiary road links, and construct bridges totaling about 1,600 linear meters in length. To initiate the practice of regular maintenance in MRRD, this component supports routine and periodic maintenance of about 2,000 km of maintainable road links to ensure that the investments made under NRAP are preserved. Similar to the secondary roads, the tertiary roads will be selected for improvement based on pre-defined criteria. A road condition survey will also be carried out to generate the data required to identify and prioritize candidate tertiary road links to be included in the routine and periodic maintenance programs. The on-going project (NERAP) is piloting routine maintenance by contracting works directly to the communities along the road. As contracts have been signed only recently and winter followed soon, making labor-based maintenance difficult in most regions, it is too soon to draw meaningful lessons at this stage. As implementation unfolds, the experience gained will inform the design of the current project. Experience of other countries is being explored, including quasi output- and performance-based contracting, customized to suit the local setting. 17. The component will also include construction of new bridges to improve connectivity to isolated communities in remote areas. In addition, institutional strengthening and capacity building programs are included for MRRD, aimed at decentralization of management functions to regional and/or provincial offices, promoting performance-based routine maintenance contracting, and outsourcing design and supervision to the private sector. The component is broken down into the following six subcomponents: (i) rehabilitation of about 1,300 km of tertiary roads; (ii) construction of about 1,600 linear meters of bridges on tertiary roads (iii) periodic maintenance of about 2,000 km of tertiary roads; (iv) routine maintenance of about 2,000 km of tertiary roads; (v) emergency maintenance; and (vi) Project management and implementation support activities. Scope is limited to the existing carriageway but including rehabilitation/improvement of existing structures 5 18. Component C: Program Planning and Development; Institutional Strengthening; and Program Coordination Support (US$18 million). To achieve institutional sustainability for managing the road network, cross-cutting institutional strengthening activities launched under NERAP will be continued under this project. This will include network planning, a network development and management system, setting appropriate design standards, an effective cost estimation system and preparation of follow-on projects for external financing. It also includes new capacity building initiatives in the areas of financial management, maintenance contracting, and outsourcing of some government functions. MRRD and MPW will each be responsible for the various activities they undertake individually, while ensuring close coordination with each other, facilitated by the National Coordination Unit (NCU). The activities under this component, which are described in detail in Annex 1, include: (i) Setting up a rural roads planning and management system (ii) Institutional Strengthening (iii) Program Coordination Support 19. The estimated cost of the project components are summarized in Table 1. Table 1. Detailed Project Cost by Activities (US$ million) Component/Activities US$ million A. Improvement and maintenance of Secondary Roads (MPW) i. Rehabilitation of about 1000 km, gravel surface secondary roads 67.5 ii. Upgrading of about 250 km of secondary roads to bituminous standards 40.0 iii. Bridge construction work for about 1000 linear m 9.0 iv. Routine and Periodic maintenance for about 1,000 km of secondary roads & provision for emergency maintenance 21.0 v. Project Management and Implementation Support (IC & PIU staff) 48.5 Sub-Total for Secondary Roads 186.0 B. Improvement and maintenance of Tertiary Roads (MRRD) i. Improvement of about 1,300 km of tertiary roads to gravel surface standard 58.5 ii. Bridge construction works for about 1,600 linear m 10.0 iii. Routine & Periodic maintenance of about 2,000 km of tertiary roads & provision for emergency maintenance 25.5 iv. Project Management & Implementation Support (IC & PIU staff) 34.0 Sub-Total for Tertiary Roads 128.0 C. Program Planning & Development, Institutional Strengthening, and Program Coordination Support i. Setting up a rural roads planning and management system 5.0 ii. Institutional Strengthening & Capacity Building 7.0 iii. Program Coordination Support 6.0 Sub-Total for Component 'C' 18.0 Total Project Cost* 332.0 *As this is a programmatic operation, no contingency is included IC = Implementation Consultant (UNOPS) PIU Project Implementation Unit 6 Eligibility for Processing under OP/BP 8.0 20. Coming out of two decades of conflict, Afghanistan remains a country in transition. Under OP 8.0 the Bank may provide rapid response in support of, inter alia, rebuilding and restoring physical assets, restoring the means of production and economic activities, preserving or restoring essential services, establishing or preserving human and institutional capital, facilitating peace building, and assisting with the initial crucial stages of capacity building for long-term reconstruction and risk reduction. The proposed project will provide timely and strategic continuity of the existing IDA/ARTF funded program of rebuilding, restoration and addition of rural road assets; with a view to restoring and improving the productive, economic and social activities in some of the poorest and most deprived rural areas of the country, and contributing to the return of normalcy in areas affected by decades of war and strife. It can thereby be expected to contribute to peace building and continuing the process of building up human and institutional capacity for the country's long-term development. Expected Outcomes 21. The project seeks to realize the following outcomes, which are closely aligned with the development objectives: (i) Percent of rural population living within 2 km (equivalent to about a 20 minute walk) of all season roads: This is a core indicator for rural transport (also known as Rural Access Index (RAI) and captures the essence of increasing the access of the rural population to essential services. (ii) Reduction in travel time to essential services: All-season roads allow motor vehicles, including buses and cars, to move passengers and goods faster than by walking, riding an animal or bicycle, or using an animal-drawn vehicle. (iii) Increased numbers of trips to essential services: Operating motor vehicles on improved rural roads is less costly than on rough tracks; competition among operators will bring down passenger fares and charges for carrying goods, thereby stimulating more frequent travel to satisfy household and commercial needs and beyond. 22. Baseline, intermediate and end-of-project indicators will be (i) percent of rural population living within 2 km of all season roads; (ii) travel time taken by pre-defined non-motorized and motorized means of transport along the improved roads; and (iii) number of trips taken by household members to a district market, schools, and clinics located by the improved road;. C. Appraisal of Project Activities TECHNICAL 23. Consistent with Government's priorities, Bank has assisted in increasing rural accessibility by financing the improvement of about 10,000 km of the rural road network through successive projects. Given the huge backlog and the consequent demand for improving rural connectivity, those efforts will continue substantially under this project. To improve implementation capacity at the same time, however, the project will also introduce, expand or 7 improve on certain technical, planning and management aspects, some of which were already started under earlier operations. The most important of these is to increase the focus on network based development and management of the rural roads including routine and periodic maintenance. In order to do this systematically, comprehensive road condition surveys will be prepared for the entire rural road network and kept updated; unit prices for various types of road works and bridges will be developed; and based on this information, investment and maintenance plans will be prepared and adequate budgetary allocations will be sought (details of the various improvements and capacity building activities are discussed in Annex 1 - Component C). 24. With increased motorization and higher traffic volumes, there is also a substantial demand for improving the standards of the rural road network. A more objective system of selection and prioritization of roads and bridges has been developed for both secondary and tertiary roads (for details see Annex 9). An important innovation that was piloted under a previous project but will be substantially expanded under this project is for performance based routine maintenance to be done by contracting with Community Development Councils (CDC). Under this system, a given community will maintain the road segment (about 2-3 km) which falls under the jurisdiction of that particular community. The CDC will hire a local person to do the work and performance will be checked on a monthly basis jointly by a representative of the CDC, the responsible ministry and an independent consultant. Simplified output and performance based contract documents will be prepared and opted for routine maintenance with the CDCs. At the same time, periodic maintenance, which for gravel roads will consist largely of periodic grading and re-gravelling and for paved roads resealing or asphaltic overlays, will be undertaken through contracting of small and medium sized road contractors. Details of implementation of maintenance are given in Annex 14. 25. Based on the lessons learnt in NERAP, parameters for rural roads design standards have been agreed and the details will be finalized under this project. Innovative options for durable, yet cost effective, road surfacing including concrete, block, emulsified asphalt, fog seal, otta seal, etc., will be considered during implementation. Similarly for water-crossings, alternatives to traditional bridge designs, including causeways, ARMCO culverts, simple stone masonry drifts, timber bridges, etc., will also be explored. More experience has been gained by the implementing agencies in preparing deigns using the current NRAP standards. The design and monitoring capacity will further be enhanced by engaging local private consulting firms to prepare designs and carryout on-site supervision. More and more domestic contractors are now used to the road standards, the bidding/contract documents from the previous operations. INSTITUTIONAL 26. The institutional arrangement for the ongoing operation is working reasonably well and will generally apply for ARAP. Afghanistan is in the process of devolving greater responsibilities to the provinces and empowering local governments and communities to make important decisions affecting their economic wellbeing. In line with this principle and the expanding rural road operations, the project will strengthen regional/provincial offices of MRRD and MPW to take on more and more responsibilities. As their capacities develop, MRRD and MPW will also gradually take over responsibilities that hitherto have been assumed by the implementation consultant. At the same time given the complexity and multiplicity of project sub-components and the need for coordination among the two major implementing agencies and 8 other stakeholders, the project provides for further strengthening the capacity of NCU which is under the MoF, to fulfill this role while maintaining the full responsibility for the delivery and quality of outputs with the two Ministries, MPW and MRRD. ENVIRONMENT AND SOCIAL ENVIRONMENT 27. The ARAP would scale up the activities supported under the on-going NRAP. The project investment will focus on improving existing access roads along their current alignments with minimum standards, thereby posing low to medium environmental and social impact. Since civil works that would have significant irreversible environmental or social impacts are excluded from the project, the project has been classified as Environmental Category "B". Due to the programmatic nature of the project a priori information is not available that would allow us to say which safeguard policies, if any, will specifically be triggered. However, as under preceding projects, an Environmental and Social Management Framework (ESMF) has been developed against which every proposed road section and bridge will be evaluated and, if warranted, mitigation measures will be defined. The findings are summarized in the ESMF (see summary in Annex 8). SOCIAL 28. The Environmental and Social Management Framework (ESMF) dated March 2012 outlines the major impacts of the project on local communities along with mitigation strategies for the identified impacts. No sub-projects will be funded under ARAP which would involve land acquisition involving more than 200 Project Affected People (PAP), and the ESMF includes a 'negative list' which defines features rendering a sub-project ineligible. Review of the ESMF implementation will be an important aspect of project supervision. The ESMF includes a Framework for abbreviated resettlement action plan for sub-projects that result in land acquisition affecting less than 200 PAPs (further elaborated in Annex 6 of the ESMF). Moreover, the framework for the abbreviated resettlement action plan includes guidelines for land and asset acquisition, compensation and documentation in accordance to the OP 4.12 (WB Involuntary Resettlement Policy). PROCUREMENT 29. Procurement activities financed under the project will follow procedures outlined in Procurement Guidelines" -- "Guidelines: Procurement of Goods, Works and Non-consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011, "Consultant Guidelines" - "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011, Anti-Corruption Guidelines" -- the "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and revised in January 2011. The implementing agencies have developed a modest capacity in procurement which needs strengthening to cope with the project needs. In view of this, the Project Implementation Units (PIU) will be strengthened with additional national procurement staff, assisted by an international procurement specialist (provided by the Implementation Consultants 9 [IC] or hired directly by the PIUs). A detailed description of project procurement procedures can be found in Annex 5. Learning from NERAP's experience, the implementing agencies have started design and survey works earlier, which will enable them to do the procurement earlier in the project implementation phase. Contract packaging has been done based on the contractors' annual capacity demonstrated in the previous projects, which will be expected to improve implementation. This has largely meant to make each contract size within the range of local contractor capacities, which is about 7 km of rehabilitation works per annum. A procurement plan has been prepared and is being reviewed and finalized for the Project for the first 18 months. 30. Some procurement functions related to community based construction and maintenance contracts would be delegated to the regional/provincial offices on a pilot basis, in a view to cope with the management challenges of hundreds of small contracts. The delegation will follow the strengthening of local offices with suitably qualified and trained staff having clear responsibilities. FINANCIAL MANAGEMENT 31. A PFM performance rating system has been developed for Afghanistan by the Public Expenditure and Financial Accountability (PEFA) multi-agency partnership program, which includes the World Bank, IMF, EC, and other agencies. Afghanistan's ratings against the PFM performance indicators portray a public sector where financial resources are, by and large, being used for their intended purposes as authorized by a budget that is processed with transparency and has contributed to aggregate fiscal discipline. 32. At the central level, financial management and audit functions for the proposed project will be undertaken through agents contracted under the IDA-financed Public Financial Management Reform Project II. This is the primary instrument for continuing to strengthen the fiduciary measures put in place for ensuring transparency and accountability of funds provided by the Bank and other donors. Under these contracts, two advisers - Financial Management and Audit - are responsible for working with the government and line ministries to carry out these core functions. The former, the Financial Management Agent (FMA) is responsible for helping MoF maintain the accounts for all public expenditures, including Bank-financed projects and for building capacity within the government offices for these functions. The latter, the Audit Agent is responsible for providing technical assistance to the Control and Audit office in the performance of annual audits. 33. At the project level, the PIUs (Project Implementing Units) already set up under NERAP in the implementing agencies MRRD and MPW will be responsible for project supervision and will act as focal points. The National Coordination Unit (NCU) in MoF is responsible for overall project coordination of the two implementing ministries. The Finance departments in the two agencies will be responsible for the financial management aspects for the components implemented by them. The agencies will also use the services of an Implementation Consultant (IC) to perform the overall financial management functions and consolidated reporting. The implementing agencies will incrementally take over the financial management responsibilities from the IC. Before the midterm review, the Bank will assess the capacity of the finance departments of both ministries, and if found satisfactory, they will assume full responsibility for 10 the financial management functions. To help achieve this aim, the financial management capacity of both agencies will be strengthened by the hiring of FM staff, and provision of training and resources. MRRD and MPW will use AFMIS (Afghanistan Financial Management Information System - for development budget) for their budget tracking and accounting. The central AFMIS is planned to be rolled out to all line ministries in the next 1-2 months. The IC will use a computerized accounting system, satisfactory to IDA, to maintain relevant accounting records and generate the required periodic reports on project activities. 34. Consolidated Quarterly Interim Financial Reports will be prepared by the IC, this will be facilitated by the reports prepared by MRRD and MPW for its own activities. The consolidated IFRs will be submitted to the Bank within 45 days from the end of the quarter. Consolidated project reports will be prepared, reviewed, and approved by the MoF, supported by the FMA. 35. Two designated accounts (DA) under each of the funding sources will be opened at Da Afghanistan Bank (DAB, Central Bank) in the name of the project on terms and conditions satisfactory to IDA. These two designated accounts will be operated by MRRD and MPW respectively, and the DAs will be maintained by MoF. A float account will be opened and maintained by the IC to facilitate timely payments for the components implemented by the IC. Advances to the float account will be made directly from the grant. Withdrawal applications for new advances and expenditure reports will be submitted monthly. Detailed financial management arrangements for the project can be found in Annex 4. FUND FLOWS 36. Fund management for the Project will follow existing procedures which allow for the advance to the Float Account to be opened and managed by an Implementation Consultant. As with all public expenditure, payments under the project will be routed through MoF except for the payments from the float account that will be made by the IC directly. The FMA will assist MoF in executing and recording project payments. In keeping with current practices for other projects in Afghanistan, the DAs will be operated by the Special Disbursement Unit (SDU) in the Treasury Department of MoF and the Float Account will be managed by the IC. MRRD/MPW will request the SDU for payments from the designated accounts. In addition to payments from DA funds, MRRD/MPW can also request SDU to make direct payments to consultants or consulting firms, and special commitments for contracts covered by letters of credit. Such requests will follow World Bank procedures. The Float Account will fund expenditures for components implemented by the IC. All withdrawal applications to IDA, including advances, replenishments, and direct payment applications, will be prepared and submitted by MoF. 37. Disbursement arrangements for the proposed project will follow standard World Bank procedures and be based on the best funds-flow arrangements possible, while working within the government's centralized payment system. The ongoing NRAP experience shows that continued improvement in communication, planning, and troubleshooting between MRRD Finance and the Special Disbursement Unit remains a priority. However for MPW, basic disbursement and FM capacity building is a priority. While the SDU will retain final authority over payment approvals so as to ensure a smooth flow of funds, MRRD and MPW need to proactively manage its disbursements, ensuring better communication links with Treasury and World Bank counterparts, 11 and improving transaction monitoring. The building blocks of basic disbursement and FM capacity will have to be built within MPW. ACCOUNTING AND REPORTING 38. The IC and MRRD/ MPW finance departments will maintain essential project transaction records using computerized accounting system/Excel spreadsheets and generate required monthly, quarterly, and annual reports. There is a planned roll out of the central AFMIS for development budget in the next 1-2 months to all line ministries. MRRD and MPW will use AFMIS for their budget tracking, accounting and reporting. They will also maintain additional records in excel as needed. This will be supplemented by hiring of qualified FM staff and provision of adequate training which is expected to strengthen the line ministries' accounting and reporting functions. 39. The NRAP FM Manual, to be updated by the IC and MRRD/MPW finance departments, and to be approved by the Bank by August 31, 2012, will include: (a) financial management arrangements for the proposed project; (b) roles and responsibilities of IC/MRRD/MPW FM staff and the linkages between the IC and MRRD/MPW finance departments; (c) documentation and approval procedures for payments; (d) project reporting requirements and individual responsibilities; and (e) quality assurance measures to help ensure that adequate internal controls and procedures are in place and are being followed. 40. The FM Manual will establish project financial management in accordance with standard Afghan government policies and procedures, including use of the government Chart of Accounts to record project expenditures. The use of these procedures will enable adequate recording and reporting of project expenditures. Overall project accounts will be maintained centrally in SDU, which will be ultimately responsible for recording all project expenditures and receipts in the Government's accounting system. Reconciliation of project expenditure records with MoF records will be carried out monthly by the IC and MRRD/MPW finance departments. DISBURSEMENT METHOD 41. Disbursements from the grant will be made using advances, replenishments, direct payment, and payments under Special Commitments including records or against reports, in the form of statements of expenditures, as appropriate. AUDIT OF PROJECT FUNDS 42. The Auditor General, supported by the Audit Agent, is responsible for auditing the accounts of all IDA and trust fund-financed projects, and will also be responsible for the Project audit. Annual audited project financial statements will be submitted within six months of the close of the GoA's fiscal year. 43. The Bank-funded/administered projects already implemented or currently being implemented by MRRD and MPW (National Solidarity Project (NSP), Afghanistan Rural Enterprise Development Project (AREDP), National Rural Access Project (NERAP), Rural 12 Water Supply Project (RWSSP), Capacity Building for Impact Evaluation (CBIE)) have no overdue audit reports or overdue interim financial reports. There were ineligible expenditures of US$3.2 million under NSP and US$86,990, under CBIE and both resolved on June 4, 2012. Key issues raised in the audit reports have been resolved up to Solar Year 1388. The issues raised in the solar year 1389 audit reports for NSP, NERAP, RWSSP and AREDP have been communicated to MRRD and MPW (for NERAP), and responses are awaited. However, responses for NERAP have been received and are in the process of being reviewed. 44. The responsible entities for the audit report are Ministry of Rural Rehabilitation and Development (MRRD) and Ministry of Public Works (MPW). ECONOMIC ANALYSIS 45. During implementation of the Bank-supported projects already completed (most recently NEEPRA) and currently being carried out (NERAP), MRRD and MPW have constructed mostly gravel-surfaced roads but also a few bituminous roads. They were not subject to a formal economic cost-benefit analysis, as their prime purpose was social as part of recovery from an emergency: to give the inhabitants of remote villages and communities reliable access to essential services, whilst providing the much needed short term employment opportunities. 46. The same is proposed for most of the roads and bridges to be improved under the project now being appraised. To ensure that investment funds are allocated in a consistent and transparent way that will maximize the social impact, the implementing ministries will apply an agreed approach for setting priorities by evaluating candidate roads against a set of social criteria and, where appropriate, economic criteria. 47. Investments proposed under the project are largely for improvement of rural roads that carried little motorized traffic. Some of the tracks improved were little more than mule trails and the design standard to which these tracks and trails were to be upgraded were in most cases gravel-surfaced and basically only one lane wide, with shoulders and passing bays that would allow two vehicles to cross with care. Thus, For ARAP, appraisal of the roads to be included in the project will proceed on the basis of agreed prioritization indicators given in Annex 9. But before any secondary road is approved for upgrading to a higher standard including paving it should have a traffic volume of at least 300 vehicles per day (vpd) as a matter of MPW policy. In addition, MPW will submit an economic analysis that shows the proposed investment has an economic rate of return (ERR) that is at least equal to or greater than the opportunity cost of capital or has a Net Present Value that is positive at a discount rate of 12 percent. The economic analysis would be conducted using the HDM-4 model (or an equivalent road investment evaluation model). 48. Bridges will be prioritized on the basis of the population connected with year-round access and the likely traffic volumes, relative to the investment cost of the bridge. For example, priority will be given to bridges that connect villages to roads already improved, but also taking into account the population served. As far as possible, low-cost solutions will be adopted, such as concrete weirs and culverts and other floodable structures such as causeways. 13 49. It is intended that MPW will hire an international consultant to conduct the economic analysis of rural secondary roads totaling about 500 km, from among which the highest-priority segments totaling about 250 km of roads will be selected for upgrading to a higher standard gravel, DBST or asphalt concrete surfaced road. Given the current constraints in Afghanistan and also the limited institutional capacity and availability of accurate data, the international consultant will review and analyze the current situation of the road sector and will identify the model best able to reconcile the need for a rigorous economic justification with the high cost of collecting data. LESSONS LEARNED 50. The National Rural Access Program (NRAP) is one of the Government's priority programs, which the Bank has been supporting since its re-engagement in Afghanistan in 2002- 3. Implementation required an understanding of the ever-changing situation on the ground to feedback project design; demanded a higher level of flexibility than operations in a normal environment. Several key lessons have emerged from these operations, which are relevant for other fragile states and post-conflict reconstruction cases. 51. First, post-conflict projects require good understanding of local social structures and an ability to work with local leaders. Project implementation in a conflict-affected environment requires flexibility in deploying and redeploying staff; good understanding of local social structures; an ability to work with community leaders to ensure access to project sites and security; good capacity to manage and supervise community-based contracting, which, in volatile areas, may be the most appropriate solution; and the provision of visible benefits to the population through short lead times, employment creation, and quality infrastructure. This lesson was critical to inform the design of routine maintenance included in this project. 52. Second, we have to expect rapid rotation of staff on the client side, which presents a big challenge for continuity. Rapid rotation of staff on both the client and the Bank sides increases the need for robust fiduciary systems. And yet it is difficult to attract to the country quality staff that can develop and update such systems. 53. Third, keep projects simple. Projects need to focus on one or two key objectives and minimize institutional demands on incipient public sector administrations. This is especially valid during the initial post-conflict reconstruction period. This was also one of the recommendations of the Bank's FY07 Quality of Supervision Assessment of NEEPRA: Countries emerging from conflict generally face considerable damage to institutional capacity, social capital and relations, economic conditions and infrastructure, coupled with large numbers of donors and NGOs seeking government attention. 54. Fourth, Bank management needs to be flexible and hold modest expectations. Risk is inherently higher in these contexts, and expectations need to be adjusted in line with what can be reasonably achieved during the initial reconstruction phase. Although the Bank provides for a fast-track procedure for project preparation in conflict-affected countries, implementation procedures remain as for standard Bank operations, and this may affect project delivery, timeliness and effectiveness. Revision of Bank policies for implementation might be necessary to 14 reap the full benefits of accelerated project preparation. Post-conflict conditions need to be taken into account and procedures should be flexible enough to accommodate specific implementation needs. D. Implementation Arrangements and Financing Plan 55. Implementation Arrangements. The proposed project would be implemented over the period from October 1, 2012 to September 30, 2017. 56. The overall implementation arrangement will remain the same as for the ongoing NERAP while the Government functional units MPW and MRRD continue to take on more responsibilities from the implementation consultant. The government has maintained a strong interest to take on even more implementation responsibility than it did under NERAP; a further move away from reliance on implementation consultants. The Bank supports this aspiration, which is a necessary step to institutional sustainability for the rural access program as it is scaled up. 57. MPW and MRRD will each be responsible for the overall implementation of Components A, and B respectively, which focus on the improvement and maintenance of secondary and tertiary rural roads, and the associated implementation support activities. The two ministries implement the rural roads sub-projects under NRAP through a dedicated Program Implementation Units (PIU) established in each ministry. The PIUs have functional units responsible for planning, survey and design, procurement, contract management, and have built a reasonable capacity, extensively supported by an implementation consultant (IC). The role of the IC in these functions has been gradually decreased to more of an advisory and quality assurance role; which will continue in ARAP4. However the FM capacity of the two ministries has remained weak and they have delegated this responsibility (except for the non-works activities under MRRD) to the IC5 . ARAP focuses on the capacity building of financial management in the ministries so that they will start managing their finances over a period of 18 months; until then however, IC will continue to assume the responsibility. MPW and MRRD will also use private contractors, CDC, private consultants and individual experts to implement the components. 58. MPW and MRRD also implement a large part of Component C, which supports program planning and development, institutional strengthening and program coordination activities. The NCU was established under NRAP to ensure adequate coordination of some of the cross-cutting and more strategy oriented activities, and providing oversight of the progress in implementing the overall rural access program through monitoring and evaluation of the projects with support from MPW and MRRD on procurement and financial management. NCU will continue this role and be further strengthened under ARAP to be specifically responsible for overall coordination of the two ministries to ensure uniformity in monitoring and evaluation of project implementation, provide consolidated implementation progress reports; provide consolidated financial management and accounting reports; facilitate donor coordination and program development activities. It will also ensure uniformity in adoption of common polices and best practices in the delivery and management of rural access roads and intervene in a timely fashion 4 The division of implementation responsibility between the IC and the PlUs is summarized in Annex-6. MRRD has some capacity and was able to manage its non-works expenses of the NERAP project 15 to resolve cross-cutting issues that affect the progress of project implementation. Details of the implementation arrangements for Component C are provided in Annex-6. 59. The Steering Committee (SC) established under NERAP will continue to be responsible for the overall policy, strategic planning and project oversight and integration with other national rural development programs. Donors to NRAP will be permanent members of the SC. 60. The project will be financed from the IDA and ARTF resources in line with the financing plan shown in Table 2. The project will finance eligible expenditures under the project, incurred and paid by the Government prior to the date of the Financing Agreement, but on or after June 1, 2012, up to an aggregate amount not exceeding US$5.0 million equivalent. Table 2: Financing Plan (US$ millions) Local Foreign Total IDA 112.5 12.5 125.0 ARTF 185.0 22.0 207.0 Total 297.5 34.5 332.0 E. Project Risks and Mitigating Measures 61. Given the years of strife, the limited institutional and human capacity, and the volatile and uncertain political environment, the proposed project is exposed to a number of very serious risks. The key risks and ratings, and the measures proposed to mitigate them are outlined below. Risk Description Mitigation Measure Risk Rating* Stakeholder Risk: stakeholder's pressure on The Basic Rural Access Standard developed S MRRD and MPW to apply higher road and the prioritization system adopted will be standards consistently applied. A covenant to strictly adhere to the standards/systems will be included in the Grant agreement. Security Situation: Security risks include the Mitigation of this risk is outside the Bank's H impact on project implementation and ability scope. Bank will continue to monitor to supervise in some parts of the country. developments closely and modify the program if necessary. Increased involvement of third-party monitoring including communities. Institutional arrangements for rural roads: Continue dialogue with Government using S Fragmented planning development and the organizational study financed under the management of operation of rural roads. project. Capacity: Low capacity to carry out timely Survey, design and some engineering H road surveys and designs. supervision tasks will be outsourced to private firms. Weak internal controls: are risks for FM Agents will be posted at MOF's H misappropriation of funds and delays in Treasury Department; Audit Agents will be submission of acceptable financial reports posted at the Control and Audit Office, which affects implementation and agreed business standards will be disbursements progress. Lengthy contractors' monitored, and recourse to the complaint 16 Risk Description Mitigation Measure Risk Rating* payment processes lead to rent-seeking. handling mechanism will be made easier. Protracted procurement process: is a risk IDA provides periodic training to address H which affects performance and outputs of the emerging procurement issues. New cost proposed project. estimation system will be in place to minimize unrealistic cost estimate that affects bid evaluation process. Contract packaging: Lack of attention to IDA will continue to work with the lAs on S appropriate contract packaging may unfairly packaging to maximize competition and suit only particular bidders. participation by the majority of capable contractors. M&E system for outputs has been developed New M&E system has been developed; S but never implemented; existing system has implementation will be started with the help gaps in properly recording project output data of an expert. NRAP management will and outcomes of interest. regularly monitor implementation progress, and will ensure full implementation within two months of Grant effectiveness. Sustainability: Absence of asset management Speed up the setting up of a routine H system to guide maintenance practices and the maintenance system. Deepen the on-going required funding puts the network's dialogue on setting up a road maintenance sustainability at risk. Applying a basic access funding mechanism. standard will only be sustainable if routine maintenance is done in a timely way. Overall Risk H *H - High; S - Substantial; M - Moderate F. Terms and Conditions for Project Financing 62. The financing will be on standard IDA grant terms and will finance 100 % of project expenditures, including taxes. 17 Annex 1: Detailed Description of Project Components Afghanistan Rural Access Project 63. The Afghanistan Rural Access Project (ARAP) is a follow-on project to the series of Bank's supports made in the last ten years, to the Government's National Rural Access Program (NRAP). NRAP has been one of the Government's national priority programs with a broader vision of enhancing human security, equitable growth and integrating the rural economy to the regional market, through the provision of sustainable rural access to basic services. In line with this vision, the development objective of the proposed project is to enable the rural communities to benefit from all season road access to basic services and facilities. 64. The total estimated cost of the proposed project is US$332 million and will be funded by an IDA grant of US$125 million equivalent and an ARTF grant of US$207 million equivalent. The project will be implemented over a period of 66 months (October 2012 to March 2018) and being part of the wider NRAP programmatic support, will overlap with the ongoing Bank/ARTF supported project-NERAP. 65. The proposed project builds on the successful design and implementation of the previous IDA and ARTF-funded projects. Ministry of Rural Rehabilitation and Development (MRRD) and the Ministry of Public Works (MPW) will implement the project, with extensive support from international and local consultants. Pre-NERAP, the two ministries delegated implementation responsibilities entirely to the Implementation Partner (IP), the United Nation Office for Project Services (UNOPS). NERAP had been designed with the aim that MPW and MRRD take on increasing implementation responsibilities, with a gradual transfer of more responsibilities from the Implementation Consultant thereby reducing the dependence on international technical assistance. The proposed project will follow the same trajectory; and will, in addition, seek opportunities for decentralized project management wherever feasible, with extensive engagement of local private firms in design and onsite supervision, to improve efficiency of delivery and ensure sustainability of the program. 66. The proposed project has three components: (a) Improvement and maintenance of secondary roads; (b) Improvement and maintenance of tertiary roads and; (c) Program Planning and Development; Institutional Strengthening; and Program Coordination Support. 67. Component A: Improvement and maintenance of secondary roads (USUS$186 million): The scope of work under this component includes identification of roads, prioritization, planning, design, procurement, management of the civil works, monitoring and focused capacity building activities. Road improvement in this project context includes both rehabilitation of road features to their original state and upgrading some to enhance safety and durability. MPW will implement this component, focusing on 1,250 km of secondary roads, comprising 1000 km of unpaved roads (gravel surface) and 250 km of paved roads (bituminous surface). It also includes a program of routine maintenance and resurfacing/resealing works on an estimated 1000 km of secondary rural roads. Component A will have the following eight subcomponents: 18 (i) Improvement of 1000 kilometers of standard secondary roads: The roads are identified by the CDCs/shuras, parliamentarians, provincial governors, all representing their constituencies; and the requests sent to MPW for financing. MPW applied the criteria set out in Annex 9 to prioritize the roads. The roads will be designed and improved to the secondary rural roads standards set by the government for providing basic access. The main features are single lane carriageway, 3.5 m wide and shoulders 0.5-1.5 m varying depending on terrain, projected traffic, socio economic importance, availability of right of way etc. The total width of the road surface will therefore be, on average, 5.5m single carriageway. The surfacing will be largely gravel meeting prescribed engineering specifications. Some low cost but more durable sealing options could also be looked at during implementation and applied on a case by case basis, particularly through townships. The sub-component will be implemented in two overlapping phases based on the level of preparedness of sub projects for implementation. Phase I will include 540 km of roads for which the design and bidding documents have been prepared in house and is ready for bidding after the Bank's review. The projects in this phase will be implemented mostly within the first 18 months of the project period. Phase II will include 460 km of roads, for which MPW will outsource the engineering design, technical and bidding documents preparation to local private engineering firms. Based on the recent year's market prices and the variations within the different geographic zones, the unit cost of unpaved secondary roads is in the range of US$60,000-68,000 per km. (ii) Upgrading of 250 kilometers of secondary roads to paved standards: these secondary roads are considered by the Government as important links and warrant improvement to a higher standard than the one set for rural access roads. Typically the roads will have 6 m 6 wide bituminous surfaced carriageway, and sealed shoulders of 0.5-1.0 m. A two-stage method is adopted to identify candidate roads: (i) roads that meet one or a combination of the following criteria: carry traffic >200 vpd, serving population > 1000/km, terrain type (rolling or mountainous) with average gradient > 12%, and unavailability of suitable gravel within 80 km; (ii) roads that meet the criteria in stage (i) will be subject to simple cost benefit analysis, using appropriate economic evaluation tools, such as the HDM-4 model. Those roads with the highest return on investment will be included for financing subject to a total ceiling of 20% of the project cost for secondary roads (The criteria for prioritization of roads are shown in Annex 9). MPW will outsource the engineering design, technical and bidding documents preparation to local private engineering firms. Based on the recent market prices and the variations within the different geographic zones, the unit cost of these roads averages about US$160,000 per km. (iii) Construction of about 1,000 linear meters of bridges on secondary roads: These bridges have been selected using criteria set out in Annex 9. Bridges along secondary roads are designed for longer life than the adjacent roads, thus have a wider carriageway typically 7 m and elevated pedestrian way of 1 m on both sides. Given the type of resources and technical expertise required to construct bridges, most of the contracts will be undertaken by experienced private contractors. Based on NRAP experience the most economical design has been adopted for these roads and the unit cost is estimated at US$9000 per linear meter. 6 Surfacing includes bituminous or other paving options. 19 (iv) Periodic maintenance of about 850 km of unpaved secondary roads: this is a planned activity to restore the pavement condition to its original state by regarding and re- gravelling, without changing the horizontal or vertical road geometry, restoration of lateral drains and spot repairs of drainage structures. Candidate roads for this intervention will have road condition that cannot be restored through routine maintenance. The periodic maintenance will focus largely on the same 850 km of unpaved secondary roads that are earmarked for routine maintenance. Periodic maintenance involves reshaping of grades and cambers, and re-gravelling with 100-150 mm of select gravel. The sub- component will be implemented into two phases. Phase I will include high-priority 400 km and Phase II will include 450 km. Unit cost is about US$10,000/km. (v) Periodic maintenance of about 50 km ofpaved secondary roads: this is a planned activity to restore the pavement condition to its original state by resealing, without changing the horizontal or vertical road geometry. Candidate roads for this intervention will have road condition that cannot be restored through routine maintenance. The 50 km of paved roads to receive periodic maintenance will be selected from the 150 km of paved secondary roads earmarked for routine maintenance. Periodic maintenance involves reshaping of grades and cambers and resurfacing of pavement. Such works tend to require plant and equipment, thus would be contracted to experienced contractors. The sub-component will be implemented in Phase II. Unit cost is about US$36,000/km. (vi) Routine maintenance on about 150 km of paved roads and 850 km of unpaved secondary roads. Routine maintenance involves the day to day up keep of the road functionality. It consists of works that will be planned and performed on a routine basis to maintain and preserve the condition of the road system or to respond to specific conditions and events that require restoring the road system to an adequate level of service'. The routine maintenance work on gravel roads will be supplemented by periodic re-grading operations so that excessive ruts, gravel windrows (corrugations), and deformations would be arrested before they become costly to maintain. The routine maintenance of paved roads will include patching works, grass cutting and cleaning of drains, and its unit cost is US$2400/km and for paved and US$1500/km for unpaved roads. (vii) Emergency Maintenance. A provision has been made of US$1.5 million for emergency maintenance to keep the roads open when the road is closed on account of adverse weather (snow or heavy rains). (viii) Project management and implementation support including project-related incremental operating expenses of the PIU-MPW incurred on account of project implementation support and management including project staff salaries, domestic travel and per diem but excluding salaries of officials and staff of the Recipient's civil service, rental of office space; the operation, maintenance, rental and insurance of vehicles; fuel; communications supplies and charges; advertisements; books and periodicals; office administration and maintenance costs; bank transaction charges; utility charges. Under AASHTO Highway Subcommittee on Maintenance 20 the sub component the following will also be supported: purchase of goods required for project implementation, cost of consultancy services for survey, engineering design, supervision and other consulting services. The key objective of this sub-component is to enhance the PIU capacity to manage the program. 68. Component B: Improvement and maintenance of tertiary roads US$128 million): This component will focus on carrying out routine and periodic maintenance of about 2,000 km of the maintainable roads, which is critical to ensure that the investments made under NRAP are well preserved. In addition, the component will provide for emergency maintenance of about US$ 1.5 million and conduct a road condition survey of the 2,500 km of poor condition roads. It will also provide for rehabilitating about 1,300 km of high priory roads in poor condition in order to bring them back to maintainable condition. The proposed roads for rehabilitation (1,300 km) will be selected based on pre-determined socio-economic selection criteria and the project will ensure that by the end of ARAP a total of 3,300 km of roads are in a good and maintainable condition. The implementation experience of NERAP has brought out good lessons of improving maintenance techniques using local communities, which will be followed in an expanded way under ARAP. Component B will have the following six sub-components: (i) Rehabilitation of about 1,300 kilometers of tertiary roads: The road selection for this sub-component is based on the criteria explained in Annex 9. The sub-component will be implemented in two phases. Phase I will include 600 km for which the design and bidding documents have been prepared in house and are ready for bid launching and expected to be completed during the first 18 months of the project. Phase II will include 700 km for which the MRRD will prepare the engineering design and bidding documents with support of local consultant. Based on NRAP experience the most economical design has been adopted for these roads and the average unit cost is US$45,000 per km. (ii) Periodic maintenance of about 2000 km of maintainable tertiary roads: The subcomponent will be implemented in two phases. Phase I will include high priority 1,000 km and Phase II will include 1,000 km of other priority roads. The engineering design and bidding documents for all roads will be prepared with support of local consultants. Based on NRAP experience the most economical design has been adopted for these roads and the average unit cost is US$ 6,000 per km. (iii) Routine maintenance of about 2,000 km maintainable tertiary roads": The routine maintenance will be carried out by awarding contracts to local communities. The routine maintenance of graveled roads will include patching, grass cutting and cleaning of drains and its unit cost is US$1,500 per km. (iv) Emergency Maintenance. This sub component includes a provision of US$1.5 million for emergency maintenance to keep the road open when threatened with closure on account of bad weather (snow or heavy rains). (v) Construction of about 1,600 linear meters of bridges on tertiary roads: These bridges have been selected using criteria outlined in Annex 9. The sub-component will be The same 2,000 km on which periodic maintenance is being carried out. 21 implemented in two phases. Phase I will include high priority 800 m of bridges and Phase II will include the remaining 800 meters. The engineering design and preparation of technical and bidding documents for all roads will be done with support of local consultants. Based on NRAP experience the most economical design has been adopted for these bridges and the unit cost is in the range of US$ 6,000-9,000 per linear meter. (vi) Project management and implementation support including project-related incremental operating expenses of the PIU-MRRD incurred on account of project implementation support and management including project staff salaries, domestic travel and per diem but excluding salaries of officials and staff of the Recipient's civil service, rental of office space; the operation, maintenance, rental and insurance of vehicles; fuel; communications supplies and charges; advertisements; books and periodicals; office administration and maintenance costs; bank transaction charges; utility charges. Under the sub component the following will also be supported: purchase of goods required for project implementation, cost of consultancy services for survey, engineering design, supervision and other consulting services. The key objective of this sub-component is to enhance the PIU capacity to manage the program. 69. The overall project management and implementation support cost accounts about 27% of the total project cost and appears to be high. However the cost includes the entire operational expenditures of the PIUs related to project implementation and the cost of the implementation consultant (IC) to assist in project management. The actual operation cost is 3-5%; the table below shows that PIU staff cost accounts for 14-15% of the total project cost; PIU operations 3- 5%; goods 1%; and IC 4-5%. Table A1.1. Breakdown of Implementation Support Cost Other PIU IC non-civil Description Amount $ %age of total operations operations works MRR MRR MP MRR MP MRRD MPW MRRD MPW D MPW D W D W Total Civil Works 93,999,797 137,500,000 73% 74% PIU Staff cost 19,049,699 25,990,333 15% 14% PIU Operations 5,990,040 6,349,669 5% 3% 20 17% 4% 5% 3% 4% IC cost 4,688,294 9,512,799 4% 5% % Goods 1,916,430 1,267,200 1% 1% Consultancy Services 2,355,740 5,380,000 2% 3% Total Non -Civil works 34,000,203 48,500,000 27% 26% Total Project cost 128,000,000 186,000,000 1 1 i i i 1 1 70. The IC and PIU costs take into account the gradual transfer of responsibilities to PIUs which hitherto have been assumed by the IC. Particularly the financial management will be fully taken over by the finance directorates in the respective ministries within the first two years of implementation. 71. Component C: Program Planning and Development; Institutional Strengthening; and Program Coordination Support (US$ 18.0 million): In spite of the very large investment 22 the Government has made to improve rural access, much remains to be done. In order to meet the needs, the program to improve rural access has to be planned and developed on a rational and sustainable basis, the institutions responsible for improving rural access need to be organized properly and their capacity strengthened continuously, and all activities in the sector need to be routinely and systematically monitored and evaluated in order to optimize outcomes. Many activities towards this end were launched under the NERAP and will be continued under this project. MPW and MRRD will be responsible for undertaking certain activities under this component individually, while closely coordinating with each other. For some other cross cutting activities, while MPW and MRRD will remain responsible for the day-to-day implementation (procurement, FM, logistics, etc.), the National Coordination Unit (NCU) will assume a leading role, in close coordination with both ministries. The activities under this component are broadly disaggregated in the following three sub-components, with each one of them having several sub- activities under them. (i) Setting up a rural roads planning and management system. The objective of this sub- component would be to develop and install a comprehensive system of data collection and analysis for strategic planning and sustainable management of the rural road network. The sub-activities under this component consist of: (a) Creating a complete set of rural road network inventory including its length and condition and a system for its continuous updating: In 2005-6, there has been an attempt to carry out a national rural roads network inventory by MRRD's in house experts. The size of the network including all tracks and trails was then estimated to be over 79,000 km. The inventory included collection of other road related data: condition, road geometry, location, habitations, etc. Under the ongoing NERAP a consultant has been hired to validate the data, and examine its usability, and the suitability of the database for network planning and management. The task is time consuming and resource intensive, and may not be completed under the current contract. The proposed activity will therefore, build on the initial works under NERAP and complete a database (including secondary roads) that will be appropriate for the rural road network management taking into account the public as well as the private sector capacity. (b) Updating and strengthening a network planning, development and management system including the definition of appropriate service levels and using appropriate economic appraisal techniques: The current planning system is not network based but consists of the development of fragmented segments of rural roads driven by ad hoc demands by beneficiaries and other stakeholders leading to sub-optimal choices. Under NERAP there is an ongoing effort to improve the system and the proposed activity will enable the completion of the effort. (c) Developing a comprehensive set of rural roads design standards and cost estimation system: Major parameters of rural road standards for basic access were set in 2010, but related details and technical specifications have not been standardized. While there is an ongoing effort to develop a comprehensive standard under NERAP, the work is not likely to be completed before the closing date of the project. The proposed activity will continue under this project, building on the earlier effort. (d) Setting up a system for the short, medium and long term maintenance of the rural road network and a system to respond to emergency maintenance works and support for their implementation; (e) Establish capacity and a system for preparing and develop at the same time, a 5-year rolling investment plan for rural roads (including maintenance, rehabilitation, upgrading and new construction). 23 (ii) Iniutional Strengthening. The objective of this sub-component is to review the institutional arrangements in the rural roads sector and propose any necessary changes; and assess the capacity of the public and private sectors to address the needs of the sector and propose measures to fill the identified gaps. These objectives will be achieved through the following activities: (a) Carry out a study of the laws, regulations, organizational structure and the human resource capacity of the rural roads sector and propose any necessary changes and strengthening measures. Terms of reference for the study are under review and the study is planned to be completed during the first year of project implementation; (b) Prepare and implement a comprehensive capacity development plan for public sector staff at central, provincial and local levels responsible for the management of the rural roads sector. Discussion and agreement on details of the capacity building plan would be a continuous process during project implementation and subject to adjustments as needed. The capacity building plan will include sponsorship of about 20 staff for higher education through distance learning, 6 month on-the-job structured training for about 50 fresh graduates per year, and 4-month sponsorship for training 140 interns per year from various universities; (c) Capacity building for domestic consulting firms and contractors. This has become critical with quantum increase in development projects and the need to ensure quality products from the local industry. A plan to improve the capacity of domestic companies through specialized publications, seminars, workshops and training programs will be prepared in collaboration with the ministries and representatives of the local companies and implemented proactively under the project; and, (d) Developing capacity for in-house financial management and management of environmental and social safeguards. Currently, most financial management and safeguard related activities are carried out by the IC (UNOPS) staff. Under this component, it is intended to build capacity within MRRD and MPW to substantially take-over these functions within the project period; and (e) construction of functional office and laboratory buildings in the eight regional offices, and improving the program library. (iii) Program Coordination Support. The objective of this sub-component is to provide support for project management, technical and financial audits, monitoring and evaluation, and public outreach. This will be achieved through the following: (a) Financing the operating costs of the National Coordination Unit (NCU) (b) Supporting the monitoring and evaluation, technical and financial audits, fiduciary and safeguard control measures for MPW and MRRD; (c) Provide technical support for the Steering Committee in the preparation of the Mid-Term Review (MTR) and all other reporting activities; (d) Conducting baseline and regular surveys to obtain information and data including project implementation progress and outputs, in support of the monitoring and evaluation of the project; and (e) Preparing a public relations program using appropriate media to publicize the activities of the rural roads program and its implementation, and mobilize public support for its activities; and (f) Preparation of follow on program/project. 24 Annex 2: Results Framework and Monitoring Afghanistan Rural Access Project 72. The Project M&E Framework will track progress in implementation, measure intermediate outcomes, and evaluate project impacts and outcomes. The 'Framework' outlines key performance indicators, a timetable for data collection/reporting, some unique and innovative approaches to monitoring that are already being used in earlier projects, and the agencies responsible for the monitoring activities. The Framework will be used to monitor, evaluate and supervise the implementation of the project as well as to facilitate timely improvements in project implementation and identify lessons to inform planning for subsequent phases. 73. The main monitoring activities under the project will consist of the following: (i) Baseline study. A baseline study, which will be completed within the first year of project implementation, will define the pre-project status of the indicators that will be used to assess achievement of the project objectives and evaluate project impact. In accordance with the data requirements for the project results framework and impact evaluation (described below), the project results framework will be updated with data from the baseline study when this is completed. The baseline study cannot be done earlier because the targeted roads and populations benefiting from them are in the process of being identified and finalized. (ii) Information system for monitoring implementation. The information management system will provide an integrated platform for monitoring project implementation in the two implementing ministries (MPW and MRRD). The system will track data on procurement, contracts, finances, and other inputs, as well as monitoring project activities and outputs. Data will be stored electronically in a centralized database (separately in the two ministries) from which comprehensive implementation progress reports can be generated. (iii) Impact evaluation. An independent impact evaluation will be designed and implemented. The goal of the impact evaluation is to enable the Government, the Bank and other donors and stakeholders to assess the cost-effectiveness and overall success of the project, and its impact on the well being of the intended beneficiaries. The impact evaluation will utilize a diverse set of data sources including primary data collection through the baseline studies and follow-up surveys including household interviews. Opportunities will be sought during project implementation to expose selected staff from the two implementing Ministries to different M&E methodologies and approaches. (iv) Action-oriented studies and annual workshops. A plan will be prepared which will specify the mechanisms for internal and external monitoring. The plan will include provisions for learning through action-oriented studies of key implementation activities. Annual stakeholder workshops will be conducted to draw lessons of experience in real time and facilitate a learning approach to project implementation. 25 74. The information for the monitoring activities will be collected from various sources, some on a routine basis and some others on a periodic and opportunistic basis. These sources, inter alia are: (i) Administrative data on project implementation. Quarterly progress reports will describe the main achievements of the project. Reports will include detailed information on contracts, procurement, disbursement, the project's financial status, inputs, and a range of additional operational indicators to track project status. These reports will be produced by the PIUs in the MPW, MRRD as well as IC. Careful monitoring of procurement will be especially important to ensure that project funds are disbursed appropriately, transparently, and in accordance with all relevant guidelines. (ii) Participatory focus group discussion. Participatory focus group discussions will be conducted periodically and to the extent the security situation allows with local level officials, communities in the targeted rural areas, local contractors and businessmen, and other stakeholders. (iii) Household and market surveys. Periodic household and market surveys will be conducted along project financed roads to determine changes in travel times, and trips made to schools, hospitals and other socio-economic centers and identify any other impacts resulting from improving access. (iv) Beneficiary satisfaction surveys. Periodic satisfaction surveys of beneficiary communities will be conducted to facilitate the identification of areas where improvements are required, and will allow for corrective action during implementation. (v) The institutional and staffing arrangements for the M&E activities will consist of the MPW and MRRD establishing an M&E cell within their respective PIUs that will be responsible for the overall management and implementation of the Results Framework and other project monitoring and evaluation activities. This will include supervising data collection, updating and maintaining project databases, coordinating all M&E activities and producing periodic monitoring reports including the quarterly progress reports mentioned above. A senior M&E consultant in NCU will assist in carrying out the following functions: * Provide overall guidance and supervise all project M&E activities. * Provide mentoring and capacity building support to staff in MPW and MRRD. * Manage procurement and contracting for conducting the surveys, focus group discussions, impact evaluation required for project M&E. 75. Given the unique challenges faced in Afghanistan in implementing projects, some special approaches to project monitoring are already being utilized in the ongoing rural access projects. Some of these are expected to be continued in a selective and opportunistic fashion. (i) External Third party monitoring. As agreed with ARTF donors, the Bank has contracted an international monitoring agent (MA) to monitor the implementation of 26 several ARTF-financed projects. NERAP was selected as one of the projects to be monitored by the MA. The reports submitted by the MA were appreciated by NERAP management. This system of external monitoring will be continued under this project. The external MA will provide regular feedback using a number of methods including periodic interviews and surveys, random visits, and stakeholder and/or public consultations. (ii) Community-based monitoring was piloted on NERAP subprojects where communities have been trained on monitoring implementation to ensure compliance with the contracts and acceptable norms. A local NGO was hired to mobilize, train and help the communities in field monitoring and providing feedback to interested stakeholders for improvement. This kind of community based monitoring is proposed to be continued under the proposed project. (iii) Technical Audit. A technical audit of the NERAP was done by an independent international consultant. The findings highlighted issues such as project documentation, consistency of information, design and other technical standards, authority and accountability in decision making processes, quality of construction, construction management and field record keeping. The findings were appreciated by all stakeholders. This kind of audit will be repeated in the proposed project. 27 Project Development Objective (PDO): To enable rural communities to benefit from all-season road access to basic services and facilities. PDO Level Results 8 Unit of Cumulative Target Values Data Source! Responsibility Comments o Baseline Frequency for Data Indicators Q Measure YR 1 YR2 YR 3 YR 4 YR 5 Methodology Collection Percent of rural population % To be Annual Baseline & MPW/MRRD* living within 2 km of all / establish Follow-up season roads ed surveys Percent reduction in travel At At least At least Annual Baseline & MPW/MRRD* time by a 4-wheel drive % least 30% 30% Follow-up vehicle along roads improved 30%9 surveys under the project I Increased frequency of trips At At least At least Annual Baseline & MPW/MRRD* to nearest essential services least 15% 15% Follow-up (including town markets, % 15% surveys schools and health facilities) connected by the roads improved under the project INTERMEDIATE RESULTS Km of gravel surfaced Km 0 38 228 455 680 1000 Quarterly MPW/Contract MPW secondary roads rehabilitated ors/Progress Reports Km of asphalt surfaced Km 0 13 80 160 240 250 Quarterly MPW/Contract MPW secondary roads rehabilitated ors/Progress Reports Km of gravel surfaced tertiary Km 0 75 450 900 1100 1300 Quarterly MRRD/Contra MRRD roads rehabilitated ctors/Progress Reports Construction of bridges on Running 0 - 300 600 900 1000 Quarterly MPW/Contract MPW secondary roads Meters ors/Progress I_ I_ I_ I_ I IIIReports *Data collection may be outsourced; baselines will be completed no later than end of 2nd year. 9 Outcomes begin to realize towards the end of the project, hence results will be collected when road sub projects achieved 60% and 100% around the third and last year of implementation. 28 Construction of bridges on Running 0 - 600 1200 1400 1600 Quarterly MRRD/Contra MRRD tertiary roads Meters ctors/Progress Reports Km of secondary roads under Km 0 150 500 700 900 1000 Quarterly MPW/Contract MPW routine and periodic ors/Progress maintenance scheme Reports Km of tertiary roads under Km 0 300 600 1200 1800 2000 Quarterly MRRD/Contra MRRD routine and periodic ctors/Progress maintenance scheme Reports Text System System Inventor Inventory Once; to be MPW/MRRD/ MPW/MRRD/ incomple comple y Complete kept up-to- NCU Complete Road Inventory te te and Complet 100% date in e 40% place Improved Network Text No System Once MPW & MPW & Management system in place reliable in place MRRD MRRD system Design standards developed Text Incomple Standard Standards Once MPW MPW and adopted te design develope being &MRRD &MRRD standard d adopted Cost estimation system Text No System MPW & MPW & developed and fully functional reliable in place MRRD MRRD system Financial Management System Text No System Once MOF/MPW/ MOF/MPW/M in MRRD and MPW reliable in place MRRD RRD developed and functional system Road Sector Organizational Text Study Once MPW/MRRD MPW/MRRD Study Prepared I Complete I I 29 Annex 3: Summary of Estimated Project Costs Afghanistan Rural Access Project Table 1: Detailed Project Cost by Activities (US$ million) Component/Activities Total A. Improvement and maintenance of Secondary Roads (MPW) Secondary road work for about 1000 km, gravel surface 67.5 Secondary road work for about 250 km, asphalt surface 40.0 Bridge construction work for about 1000 m 9.0 Secondary road maintenance for about 1,000 km roads 21.0 Implementation Support (IC & PIU staff) 48.5 Sub-Total for Secondary Roads 186.0 B. Improvement and maintenance of Tertiary Roads (MRRD) Tertiary road work for 1,300 km, gravel surface 58.5 Bridge construction work for 1,600 m 10.0 Tertiary road maintenance for 2,000 km roads 25.5 Implementation Support (IC & PIU staff) 34.0 Sub-Total for Tertiary Roads 128.0 C. Program Planning & Development; Institutional Strengthening and Program Coordination Support Setting up a rural roads planning and management system 5.0 Institutional Strengthening 7.0 Project implementation support 6.0 Sub-Total for Institutional Strengthening 18.0 Total Project Cost 332.0 30 Annex 4: Financial Management and Disbursement Arrangements Afghanistan Rural Access Project Country Issues 76. The Bank has gained substantial experience and understanding of the financial management environment in Afghanistan through the large number of projects under implementation over the past four years. The Public Financial Management Reform Project II (PFMRP II) is the primary instrument to continue and enhance the fiduciary measures put in place during the past years to help ensure transparency and accountability for the funding provided by the Bank and other donors. 77. A PFM performance rating system using 28 high-level indicators that was developed by the Public Expenditure and Financial Accountability (PEFA) multi-agency partnership program was applied in Afghanistan in June 2005. PEFA is comprised of the World Bank, IMF, EC, and several other agencies. The system is structured around six core dimensions of PFM performance: (i) budget credibility, (ii) comprehensiveness and transparency, (iii) policy-based budgeting, (iv) predictability and control in budget execution, (v) accounting, recording, and reporting, and (vi) external scrutiny and audit. Afghanistan's ratings against the PFM performance indicators generally portray a public sector where financial resources are, by and large, being used for their intended purposes. This has been accomplished with very high levels of support from international firms; this assistance will continue to be needed over the medium term if these ratings are to be maintained. There is also much room for improvement. 78. In spite of undeniable gains made in reconstruction since the end of 2001, the challenges facing Afghanistan remain immense; not least because of the tenuous security situation in the region and continued prevalence of a large illegal and illicit economy. The policy framework benchmarks have not yet been fully estimated so various priorities are funded through the annual budgeting process. The rising costs of the security sector constitute the major constraint on attainment of fiscal sustainability. With regard to executive oversight, the national assembly will play an increasingly active role. All in all, the new national strategy has created high expectations of the executive which could prove to be quite difficult to meet. 79. The public sector, in spite of considerable efforts to reform its core functions, remains extremely weak outside of Kabul. The lack of qualified staff in the civil service and the absence of qualified counterparts in the government after 30 years of war and conflicts is a binding constraint. Delays in reforming the pay structure and grading of civil servants have severely crippled the public administration of the country. Domestic revenues lag behind expenditures by a factor of ten to one. Large-scale corruption could emerge to undermine the government's efforts to enhance aid flows through national accounts. Capacities to track expenditures and monitor expenditure outcomes have improved, but they need rapid and substantial strengthening if progress toward the attainment of national development targets is to be monitored. Currently, 75% of external revenues bypass government appropriation systems. 31 80. The World Bank is financing a Financial Management Advisor to assist the Ministry of Finance, an Audit Advisor to assist the Control and Audit Office, and a Procurement Advisor to assist in Procurement-related activities. Also an Internal Audit function is being developed within the Ministry of Finance with World Bank financing. USAID, and earlier the Indian Aid Assistance Program, is financing a team of consultants and advisors to assist the Da Afghanistan Bank in local as well as foreign currency operations. The activities carried out under the existing Public Financial Management Reform projects have helped the Government to ensure that appropriate fiduciary standards are maintained for public expenditures, including those supported by the Bank and the donor community. 81. Progress has been slower than expected in shifting from operations support provided by the three Advisors to capacity development and knowledge transfer to the civil servants. Given that, is expected that the Advisors will continue to be required for the medium term. Challenges still remain in attaining the agreed upon fiduciary standards and also to further enhance them. And to make matters more complex, the regulatory environment in Afghanistan has advanced significantly in the past three years. Unfortunately, even mastery of basic skills in the early environment does not fully qualify the civil servants to work effectively in the new emerging environment. Risk Assessment and Mitigation 82. The table below identifies the key risks that the project may face and indicates how these risks are to be addressed. The overall FM risk rating is high but the residual risk rating after application of the mitigating measures is substantial. Risk Risk Risk Mitigation Measures Residual Condition of Rating Risk negotiations, Board or Effectiveness _____________ ____ ___________________________ ______ (YIN) 1. Inherent Risk Country Inherent M Source - PFM study M N Risk Project Financial H Designated Accounts' movements will be S N Management Risk monitored closely to ensure timely availability of funds, regular expenditure reporting, and reconciliation. Fiduciary functions will be performed by an Implementation Consultant (IC) and the MRRD and MPW Finance departments. MRRD and MPW Finance Departments will hire required additional staff to be funded from the project. AFMIS will be used both by MRRD and MPW for their accounting, and the FM systems in MRRD/ MPW will continue to be strengthened in preparation to take over FM responsibilities from the IC. Perceived Corruption H Strong Government commitment and oversight, S N internal controls and internal audit along with improved fiduciary systems and strengthening of 32 Risk Risk Risk Mitigation Measures Residual Condition of Rating Risk negotiations, Board or Effectiveness (YIN) FM capacity in MRRD and MPW will mitigate the high level of perceived corruption. Overall Inherent Risk H S 2. Control Risk 1. Weak S This is a follow-on project and the M N Implementing Entity implementation arrangements that have already been tested will continue and further improved. Project will continue to utilize the services of the IC. MRRD and MPW will use AFMIS, their finance departments will be adequately staffed to cope with additional responsibilities, and the FM systems in both ministries will be strengthened. The National Coordination Unit in MoF will be responsible for the overall project coordination and will report to an inter-ministerial Steering Committee, chaired by the Minister of Finance. 2. Funds Flow S Project components are grant financed which M N will ensure timely availability of funds to the project. All disbursement options viz. advance and replenishment; direct payments and special commitments will be available to the project. Funds will flow to Designated Accounts of MRRD and MPW and the IC operated Float Account, or paid directly by the Bank from the Grants on the basis of authorized applications from SDU. Payments will be made to contractors, consultants, suppliers, etc. from the DAs by SDU-MoF and/ or from the FA by the IC for those activities managed and supervised by the IC. 3. Budgeting S Project funds will be allocated in the M N Government's annual Development Budget of MRRD and MPW. To facilitate continued availability of funds, unutilized budget allocations will be carried forward for use at the beginning of the new year while awaiting the Parliament's approval of the new year's budget. MPW and MRRD along with IC and in coordination with NCU will prepare annual budget based on annual work plan for the project. The IC will help maintain the consolidated budget for the project and monitor utilization for reporting purposes. 33 Risk Risk Risk Mitigation Measures Residual Condition of Rating Risk negotiations, Board or Effectiveness (YIN) A Budget Committee comprising of representatives from MRRD, MPW, MoF, NCU and the IC will coordinate the budget preparation and monitoring process, and shall report to the inter-ministerial Steering Committee. 4. Accounting S Project will follow generally accepted M N Policies and accounting principles and good practices for Procedures project accounting and reporting. This would take into account national/ international practices and standards. Primary accounting records will be maintained by MRRD, MPW and the IC. Consolidation of accounts for overall project reporting will be carried out by IC. MRRD and MPW will use the central AFMIS system for accounting. The existing FM Manual for NRAP will be updated with agreed project FM arrangements jointly by MRRD, MPW and the IC, and approved by the Bank. 5. Internal Audit H The internal audit (IA) units of MPW and S N MRRD will periodically review project internal controls of the project and carry out quarterly internal audit of the project under agreed ToR. Quarterly internal audit reports will be shared with the Bank. The internal audit unit of MPW will be strengthened through the hiring of an internal auditor under the project and capacity building. 6. External Audit H The project will be audited by CAO with S N support from Audit Advisor and the report will be shared with the Bank within six months from the close of the Government's fiscal year. 7. Reporting and H MRRD and MPW will prepare quarterly project S N Monitoring IFRs based on their primary records which will be consolidated by the IC and submitted to the Bank within 45 days from the end of each quarter. Strengthening the SDU is a priority under the new FM Advisor contract, to provide information that will comply with agreed format of financial reports. Overall Control Risk H S Detection Risk S Adequate accounting, recording, reporting, M N oversight and regular audits will be provided in project procedures. 34 Risk Risk Risk Mitigation Measures Residual Condition of Rating Risk negotiations, Board or Effectiveness (Y/N) In addition, accounting/ recording/ oversight by SDU - MoF of all advances and utilization (M- 16) supported by Financial Management Advisor will mitigate detection risk. Risk rating: H=high risk; S=substantial risk; M=modest risk; L-low risk Overall FM Risk H S Rating Strengths and Weaknesses Strengths 83. The Government provides assurance to the Bank and other donors that the measures in place to ensure appropriate utilization of funds will not be circumvented. The Government strongly supports reforms through the Public Financial Management Reform Projects to enhance financial management in Treasury operations, public procurement, internal audit in the public sector, and external audit by the Auditor General. 84. The implementing line ministries, MRRD and MPW have implemented and are implementing other Bank funded projects, so the agencies have experience in implementing Bank projects and following Bank procedures. The implementing agencies have shown a great deal of ownership, and MRRD's and MPW's finance departments and FM systems will be strengthened in preparation to gradually take over the FM responsibilities from the Implementation Consultant. Weaknesses and Action Plan 85. The main weakness in this project, as in many others in Afghanistan, is the ability to attract suitably qualified and experienced counterpart staff especially for financial management. The utilization of an Implementation Consultant, additional FM staff to be funded under the project, usage of the centralized AFMIS by MRRD and MPW, together with training is expected to strengthen the fiduciary arrangements in MRRD and MPW. Action Plan - To be reviewed at 'Initial Supervision' Significant Action Responsible Agent Completion weaknesses Date Inadequate financial Usage of the central AFMIS system that will MPW/MRRD June 30, 2012 management system be rolled out to all line ministries. AFMIS will within the record all project expenditures and generate the implementing basic reports required by donors and agencies stakeholders 35 Significant Action Responsible Agent Completion weaknesses Date Support of IC and involvement of MRRD MPW/MRRD Exists Shortage of qualified finance department in project implementation. and experienced FM July 31, 2012 staff Staffing and strengthening of MPW's finance MPW department by recruitment of FM Specialist Project internal NERAP financial management manual to be IC/MPW/MRRD August 31, 2012 controls and updated procedures need to be defined Weak internal audit Hiring of national internal auditor MPW December 31, arrangements 2012 Interim reports need Un-audited interim financial report formats for Bank/MRRD/MPW Before to include required the project to be confirmed negotiations information Implementing Entity 86. The project will be implemented by MPW and MRRD. The Finance departments of the two ministries will be responsible for financial management of the components/activities implemented by them. In continuation of the arrangement under NRAP, the ministries will receive the support of an Implementation Consultant in its day to day operations as well as for consolidated project level reporting. During midterm review, the Bank will assess the capacity of the finance departments of both ministries, and if found satisfactory, they will assume full responsibility for financial management of the project. To help achieve this aim, the financial management capacity of both ministries will be strengthened by hiring required FM staff and provision of training and resources. MRRD and MPW will use the central AFMIS for their accounting that is planned to be rolled out to the line ministries in 1-2 months. 87. Project oversight. An inter-ministerial Steering Committee (SC), chaired by the Minister of Finance (or his representatives) will be responsible for the overall policy, strategic planning and project oversight. The SC will meet twice a year and on an ad hoc basis when required. To facilitate the work of the SC, the National Coordination Unit will function as the secretariat. 88. Project coordination and monitoring. The National Coordination Unit already set up in the Ministry of Finance under NRAP will continue to be responsible for overall program coordination, including development and monitoring. NCU will ensure program development and donor coordination, which are key elements of a sustainable multi-year programmatic approach. NCU will also work in coordination with the program implementation units, and other relevant ministries and agencies involved in rural development for effective day to day coordination of the program. A budget committee will support the NCU for annual budget preparation and monitoring and the IC will provide support as per their assigned role. 89. The Implementation Consultant shall have qualified and experienced financial management staff, and will work closely with MRRD and MPW finance departments to carry out day-to-day financial management operations of the project, and overall contract and project management. Detailed working relationships between the IC and MRRD/ MPW finance departments, IC's FM reporting requirements & responsibilities, staffing, systems and other FM 36 arrangements will be included in the IC's contract and the FM manual to be finalized by August 31, 2012. The IC will maintain appropriate systems, procedures and controls to plan, execute, monitor, record and report on the areas of activities assigned to them under the project. Budgeting 90. A budget committee will be appointed to coordinate the preparation of annual work plan and the derivation of annual budget. MRRD and MPW will prepare their annual plans and budgets following prescribed budgeting procedures which will take into account funds allocation and proposed project activities. These budgets will be finalized in consultation with the budget committee. The budget committee will be made up of representatives from MRRD, MPW, MOF, NCU and the IC, and shall report to the inter-ministerial Steering Committee. The Steering Committee will have responsibility to approve the project budgets. The budget committee shall also coordinate quarterly budget reviews to ensure adequate budget discipline and control. The committee will be responsible for ensuring that project expenditures for each fiscal year are captured in the Governmental Development Budget of that fiscal year; carry forward budgets are used during the first few months of the new year while waiting for Parliament's approval of the new year's budget. 91. The budgeting process and the key role of Budget Committee on periodic budget reviews will be detailed in the FM Manual. Annual work plans and annual budgets will be submitted to the Bank for review and approval, not later than three months before the end of the fiscal year. Funds Flow 92. The standard funds flow mechanism in Afghanistan, similar to other ongoing projects, will be followed in this project. Project funds will be advanced to two Designated Accounts (DAs) under each funding source - one each for MRRD and MPW and replenished on the basis of utilization. The DAs will be opened in Da Afghanistan Bank (DaB) and will be operated by the Special Disbursement Unit (SDU) in the Treasury Department of MoF. Requests for payments from the DAs will be made to the SDU by MRRD and MPW when needed. In addition a float account (FA) will also be opened in DaB by the IC. Advances directly from the Bank will be made to this FA to be managed by the IC. From the FA, payments will be made for all activities and works supervised by the IC. 93. In addition to payments out of DAs, the project can also request the SDU to make applications (a) for direct payments from the Grant Account to contractors, consultants, and suppliers based on approved documents; and (b) for special commitments for contracts covered by letters of credit. These direct payments will follow World Bank procedures. All project payments will be made to either international firms or local firms that have bank accounts in DAB, a local commercial bank, or an overseas bank. All payments will be made either through bank transfers into the account of such firms or by check. Expenditure booking for each component and payments will be made after relevant approvals from the component implementing entity as per the delegation of authority and in accordance with the approval mechanisms documented in the project's FM Manual. 37 FUNDS FLOW CHART IC-managed Float World Bank / IDA AAccount Advance! Provides SOEs AReplenishment with supporting U documentation, reconciliations, . IDA & requests replenishment * Replenishes Payment for transfers to Designated . Designated Direct Pament Account, OR requests Direct * Accounts payments components A ayment, * implemented by Payments Designated SDU (MoF) Accounts 5+ 5 Consultants/ suppliers/ contractors etc MRRD/MPW Finance departments MRRD/ MPW PIu FUND FLOW DIAGRAM Legal requirements for authorized signature 94. Ministry of Finance has authorization to request disbursement from the Grant. Specimen signatures of authorized signatories in MoF are on file with the Bank. Accounting 95. The SDU will maintain accounts of all grant funds received and expended under the project along with relevant supporting documents in original. However supporting documents for expenditures for IC implemented components will be maintained by the IC and reviewed/ verified by the Bank where appropriate. The FM staff of MPW and MRRD will be responsible for: (i) preparing supporting documents for expenditures; (ii) preparing payment orders (Form M16); (iii) obtaining approval for M-16s from the Minister or Deputy Minister depending on the payment amount; and (iv) submitting them to the Treasury Department in MoF for verification and payment. While original copies of required supporting documents are attached to the Form MI6, the project/ ministry is required to keep photocopies of these documents for records, retention, audit and verification. The FM Advisor in the MoF/SDU will use the government's 38 computerized accounting system, AFMIS, for accounting, reporting, generating relevant financial statements, and exercising controls. 96. All project expenditures will be accounted for under MPW and MRRD budget in accordance with the assigned implementation responsibilities of the components under the project. MRRD and MPW finance departments will use the central AFMIS to maintain essential project transaction records and generate required monthly, quarterly, and annual reports. AFMIS is planned to be rolled out to all line ministries in the 1-2 months. MRRD and MPW will also maintain additional records in excel as needed. FM capacity building will be supplemented by hiring qualified FM staff and provision of adequate training which is expected to strengthen the line ministries' accounting and reporting functions. 97. Accounting by IC. Although all project expenditures will be booked under MRRD and MPW, payments for components implemented by the IC under the project (such as payments to contractors approved by MPW/ MRRD; disbursement of routine maintenance expenditures to CDCs bank accounts) will be made from the FA operated by the IC. Proper systems and procedures will be followed by the IC for recording and monitoring these expenditures. The IC will submit monthly expenditure reports to MPW and MRRD for claiming replenishment from the Bank. Under OP 8.50, no further supporting documentation will be required to support replenishment application, except for those contracts which are subject to prior review where supporting documents will be required (invoices, receipts, etc). IC will reconcile FA account balance on a monthly basis. 98. The FM manual, to be updated by the IC/MRRD/MPW by August 31, 2012, and to be approved by the Bank, will include: (a) financial management arrangements for the proposed project; (b) roles and responsibilities of IC/MRRD/MPW FM staff and the linkages between the IC and MRRD/MPW finance departments; (c) documentation and approval procedures for payments; (d) project reporting requirements and responsibilities; and (e) quality assurance measures to help ensure that adequate internal controls and procedures are in place and are being followed. 99. Integration of project accounts with country systems. The FM manual will establish project financial management arrangements that are in accordance with standard Afghan government policies and procedures including use of the government Chart of Accounts to budget and record project expenditures. The use of these procedures will enable adequate recording and reporting o f project expenditures. Overall project accounts will be maintained centrally in SDU, which is be ultimately responsible for recording all project expenditures and receipts in the Government's accounting system. This will be facilitated through the use of AFMIS by MRRD and MPW. Country systems also require the implementing ministries to maintain accounting records and reconcile them with MoF records. Therefore, MRRD and MPW assisted by IC will carry out reconciliation of their project expenditure with MoF records on a monthly basis. 39 Internal Control & Internal Auditing 100. MRRD and MPW finance departments will be responsible for coordinating FM activities for the project with the SDU. Project-specific internal control procedures for processing requests and approval of funds disbursements and preparation of claims will be described in the FM manual including segregation of duties, delegation of financial powers, documentation requirements, physical asset control, cash handling and management and reporting. 101. There will be monthly reconciliation of project expenditure as per MMRD/MPW records with that of MoF/SDU. Differences identified will be resolved within agreed timeframe. Similarly, annual project financial statements prepared by SDU/MoF providing the sources and application of funds by grant, component and detailed activities will be reconciled with MRRD/MPW records of expenditure. These reconciliations will ensure integrity of project expenditures. 102. Internal Audit. Project financial management systems will be subject to review by the internal audit departments of MRRD and MPW. Due to weak internal audit arrangements within MPW, an internal auditor will be hired under this project who will work with the Internal Audit department staff of MPW in performing the audits and building capacity. Internal audit to be conducted by the internal audit departments will be according to programs to be determined by MRRD's and MPW's Director General of Internal Audit using a risk-based approach. Internal audit TORs will be reviewed and approved by the Bank. The internal Audit departments of MRRD and MPW have been assessed, and MPW's capacity has been found to be inadequate to meet the needs of this project; hence the mitigating measure of strengthening its capacity by outsourcing has been adopted. 103. The frequency of the internal audit exercise should be at least every six months. A copy (English version) of each internal audit report should be provided to the World Bank once completed. The audit report should also provide the status of pending observations from previous audits including statutory audit. 104. The Bank also reserves the right to conduct an external review of the project activities and financial flows. External Audit 105. The project accounts will be audited by the Auditor General, with the support of the Audit Advisor, with terms of reference satisfactory to the Association. The audit of the project accounts will include an assessment of the: (a) adequacy of the accounting and internal control systems; (b) ability to maintain adequate documentation for transactions; and (c) eligibility o f incurred expenditures for Association financing. The audited annual project financial statements will be submitted within six months of the close of fiscal year. All agencies involved in implementation and maintaining records of expenditures would need to retain these as per the IDA records retention policy. 40 106. The following audit reports will be monitored each year in the Audit Reports Compliance System (ARCS): Responsible Agency Audit Auditors Date MRRD/MPW SOE, Project Accounts and Auditor General June 20 Designated Account 107. The Bank-funded/administered projects already implemented or currently being implemented by MRRD and MPW (National Solidarity Project (NSP), Afghanistan Rural Enterprise Development Project (AREDP), National Rural Access Project (NERAP), Rural Water Supply Project (RWSSP), Capacity Building for Impact Evaluation (CBIE)) have no overdue audit reports or overdue interim financial reports. There are ineligible expenditures of US$3.2 million under NSP and US$86,990 under CBIE which were resolved on June 4, 2012. Key issues raised in the audit reports have been resolved up to Solar Year 1388. The issues raised in the solar year 1389 audit reports for NSP, NERAP, RWSSP and AREDP have been communicated to MRRD and MPW (for NERAP), and responses are awaited. However, response for NERAP has been received and is in the process of being reviewed. Financial Reporting 108. Financial Statements and Project Reports will be used for project monitoring and supervision. Based on the FM arrangements for this project, financial statements and project reports will be prepared monthly, quarterly, and annually by the IC together with MRRD and MPW. Consolidated project reporting will be the responsibility of the IC. MRRD and MPW will submit reports to the IC in relation to their expenditures to facilitate the consolidation. These reports will be produced based on records from three sources: (a) IC's, MRRD's and MPW's accounting system; (b) expenditure statements from SDU (as recorded in AFMIS) and reconciled with the IC/MRRD/MPW records; and (c) bank statements from DAB. 109. The consolidated quarterly Project Interim Financial Reports will show: (a) sources and uses of funds by project components; and (b) expenditures consolidated and compared with government budget heads of account. The project will forward the relevant details to SDU/DBER, with a copy to the Bank within 45 days of the end of each quarter. Government and the Bank have agreed on a pro forma report format for all Bank projects; a final customized format for the ARAP project will be provided before project negotiations. 110. The annual project accounts to be prepared by SDU from AFMIS after due reconciliation with records maintained at the project, will form part of the consolidated Afghanistan Government Accounts for all development projects. This is done centrally in the Ministry of Finance Treasury Department, supported by the Financial Management Advisor. Disbursement Arrangements 111. The project will be 100% financed by IDA and ARTF grants, inclusive of taxes. Disbursements procedures will follow the World Bank procedures described in the World Bank Disbursement Guidelines and the Disbursement Handbook for World Bank Clients (May 2006). Table 1 below shows the allocation of IDA and ARTF proceeds in a single, simplified 41 expenditure category. Based on implementation experience under NERAP, project activities under ARAP will not be specifically assigned to IDA or ARTF, this is to provide flexibility for use of funds. Neither will each payment be split between IDA and ARTF in the proportion of funding ratio. Rather, for all practical purposes, each payment will be made either from IDA or ARTF depending on availability of funds in the relevant bank account at any given point in time. This will ensure timely payment of project expenditures and as a result, smooth implementation. The implementation experience under NERAP indicates that implementing entities, including MRRD and IC (i.e. UNOPS), have been able to keep track of disbursements separately under IDA and ARTF and account for funds being utilized under different funding sources. 112. Project funds will be disbursed over 63 months. The closing date o f the project will be December 31, 2017 with a final disbursement deadline six months after the closing date. 113. During this additional 6-month grace period, project-related expenditures incurred prior to the closing date are eligible for disbursement or documentation against advances to the designated accounts and the float account. Table 1: IDA and ARTF Financing by Category of Expenditure (US$ 332 million) Expenditure Category Amount of the Financing Grant Percentage Allocations IDA ARTF (in US$ M) (1) Goods, works, non-consulting services, consultants' 125 207 100 % services, training, and Incremental Operating Costs'0 Total 125 207 - 114. Summary Reports. Summary reports in the form of Statements of Expenditure will be used for expenditures against contracts for: (a) works valued at less than US$500,000 equivalent per contract; (b) goods valued at less than US$200,000 equivalent per contract; (c) consulting firm valued at less than US$100,000 equivalent per contract; and (d) individual consultants valued at less than US$50,000 equivalent per contract, all training programs and incremental operating costs. Supporting documents will be required for expenditures against contracts above the above mentioned thresholds. For advances/replenishments to the FA (see below), an expenditure report prepared by the IC in accordance with procedures agreed with the MRRD and MPW constitutes the sufficient supporting documentation except for expenditures against contracts that are subject to prior review, in which case, supporting documents, such as invoices, receipts, etc, will be required. 115. Designated Accounts. Two segregated Designated Accounts (DAs) under each funding source (IDA and ARTF), to be managed by the Special Disbursement Unit of the Treasury Department of the Ministry of Finance, will be established at the Da Afghanistan Bank (central 10 Incremental Operating Costs refers to project-related incremental expenses incurred on account of project implementation support and management including the rental of office space; the operation, maintenance, rental and insurance of vehicles; fuel; communications supplies and charges; advertisements; books and periodicals; office administration and maintenance costs; bank transaction charges; utility charges; domestic travel and per diem but excluding salaries of officials and staff of the Recipient's civil service. 42 bank of Afghanistan) in USD for the project, i.e. one for MRRD and the other for MPW, with a ceiling of advance up to four (4) months' worth of expenditures to be paid out of the DAs. The SDU will manage payments from and new advances/ replenishments to the DAs. Cash advances may be taken from the Designated Accounts, and held and managed by MPW and/or MRRD. These agencies' controls for holding, accounting, and preparation of Statements of Expenses (SOEs) have been satisfactorily assessed. New cash advances will only be made when all other prior cash advances have been justified through submission of SOEs to the SDU. Monthly expenditure reporting for payments made from the designated accounts is required. 116. Float Account. One 'pooled' float account (FA) will be established in USD at the Da Afghanistan Bank to hold funds from both IDA and ARTF. An advance with a ceiling up to four (4) months' worth of project expenditures expected to be financed by the FA will be made to the IC-managed FA directly from the Grant. Conditions for the FA will be spelled out in the consultant contract and the FM manual. Disbursement of routine maintenance works expenditures to the CDCs bank accounts will also be made from the FA, as will payments for all other IC-supervised activities. The IC should submit a monthly expenditure report to MPW and MRRD for approval and for further processing replenishment claims. The replenishment claim will be supported by FA bank statement and its reconciliation. The IC-prepared expenditure report is considered a source document. In line with lightened fiduciary requirements under OP 8.50, supporting documentation in remote locations that cannot feasibly be routed to Kabul is not required. Thus, the Bank will accept the IC's expenditure reporting by itself as an acceptable basis for disbursement. Contractors' source documentation (on site in provinces) is not required to support the IC expenditure report, except in cases where the contracts are subject to prior review. The IC's fees cannot be paid out of the FA. 117. Direct Payments. Third-party payments (direct) and Special Commitments will be permitted for amounts exceeding 20% of advances to the designated accounts. All such payments require supporting documentation in the form o f records (copies of invoices, bills, purchase orders, etc.). 118. Disbursement for Routine Maintenance Expenditures. Under the Routine Maintenance Component, Bank will finance expenditures for routine maintenance works, channeled through the CDC or Shura accounts opened at local Banks for NERAP/ARAP routine maintenance, and ultimately paid to the communities for the maintenance work they do certified by the regional engineers of the IC, MRRD/MPW. The grant financing agreement is to be retained either at the community/village level or elsewhere if community/village level document retention is not feasible. Disbursement of Routine Maintenance works expenditures would be reported on via submission of a statement of expenditure. 119. Preparation of Withdrawal Applications. MRRD and MPW will prepare Summary Reports (Statements of expenditures or Summary Sheet) for expenditures paid from the DAs and will review/approve the expenditure reports prepared by the IC for expenditures paid from the FA and forward those reports to the SDU for further processing and consolidation as a replenishment application. The SDU will review withdrawal applications for quality and conformity to Treasury procedures, and then obtain signature. Selected IC, MRRD, MPW and 43 SDU finance staff will be registered as users of the World Bank Web-based Client Connection system, and take an active hand in managing the flow of disbursements. Financial Management Covenants 120. MRRD/MPW shall submit to the Bank audited financial statements for the project within six months of the end of each fiscal year. The Project's audit report will cover the financial statements, the Designated Accounts, the float account, and SOEs, in accordance with terms of reference agreed with the Association. 121. Consolidated project interim financial reports will be submitted by the IC/MRRD/MPW on a quarterly basis to the World Bank and a copy to SDU-MoF within 45 days after the end of each quarter. 122. Special financial management covenant. The implementing entities will ensure that key FM staff of its finance departments and the IC is retained throughout the duration of the project in order to ensure smooth project implementation. Regular Supervision Plan 123. During project implementation, the Bank will supervise the project's financial management arrangements. The team will: 124. Review the project's quarterly interim financial reports as well as the project's annual audited financial statements and auditor's management letter. 125. Review the project's financial management and disbursement arrangements (including a review of a sample of SOEs and movements on the Designated Accounts/float account and bank reconciliations) to ensure compliance with the Bank's minimum requirements. 126. Review IC's and agencies' performance in managing project funds to ensure that it is timely, accurate, and accountable. Particular supervision emphasis will be placed on asset management and supplies. 127. Review of financial management risk rating, compliance with all covenants, and follow up on the action plan. 128. The FM arrangements, including the systems, processes, procedures, and staffing are adequate to support this project- subject to implementation of the action plan. 44 Annex 5: Procurement Arrangements Afghanistan Rural Access Project Country Context 129. The World Bank has gained substantial experience and understanding of the procurement environment in Afghanistan. This has been through its involvement in the interim procurement arrangements put in place under the Emergency Public Administration Project and experience gained working with institutions with current responsibility for procurement functions including the Afghanistan Reconstruction and Development Services (ARDS). As part of the broader review of Afghanistan's Public Finance Management (PFM) system, the World Bank carried out two assessments (in June 2005 and September 2007) of the procurement environment based on the baseline and performance indicators developed by a group of institutions led by the World Bank and OECD/DAC. 130. The first key issue identified through the procurement assessment is lack of ownership and a procurement champion in the Government. This is a serious impediment to reform and to inter-Ministerial dialogue. A second, related issue is the lack of capacity in line Ministries, as evidenced by their inability to define and communicate effectively the desired functional specifications. The lack of capacity is also evident in the local private sector: while the number of bids is reasonably high, there is a lack of understanding on application of public procurement rules. 131. With donor assistance, Afghanistan has made considerable efforts to establish the Legal and Regulatory Framework for public procurement over the last five years. A new Procurement Law (PL) reflecting international best practice in public procurement has been adopted in November 2005 replacing the earlier procurement regulations, and it radically transforms the legal and regulatory framework. While the law provides a modem legal system for procurement, effective implementation of the law may encounter difficulties in the current weak institutional structure and capacity. As per the Law, a Procurement Policy Unit (PPU) was established under the Ministry of Finance (MoF) to provide oversight for implementation of the Law through the creation of secondary legislation, standard bidding documents, provision of advice, creation of the necessary information systems for advertising and data collection. The PPU has issued several circulars regarding implementation of the Procurement Law, including "Rules of Procedures for Public Procurement" (Circular: PPU/C005/1386 of April 12, 2007) and "Procurement Appeal and Review Mechanism" (Circular: PPU/N001/1385 of March 18, 2007). PPU/MoF has currently developed several SBDs/SRFPs/RFQs for national and international procurement of goods/works and consulting services following national procedures as per the PL. MoF has now mandated the use of: (a) SBDs for Goods and Works (Circular PPU/C024/1388 of June 10, 2009); (b) Standard Request for Quotations (SRFQ) (Circular PP/C026/1388); and (c) Standard Request for Proposal (SRFP) (Circular PPU/C029/1388 of January 13, 2010). A Procurement Information Management System (PIMS) has been developed and is being piloted in three ministries. In addition, the PPU web site will facilitate publication of procurement notices and contract awards, besides similar action under the ARDS website and web sites of the line ministries as applicable. 45 132. The Procurement Law has been revised in July 2008 and amended in January 2009 issued as a new Law by the Ministry of Justice and was published in the Official Gazette Number 957, 29.10.1387 (18 January 2009). The revised "Rules of Procedures for Public Procurement" has been issued as circular PPU/C027/1387 of November 18, 2009. 133. The Special Procurement Commission (SPC) comprised of the Ministry of Justice and Ministry of Economy (MoE), under the chairmanship of MoF approves high-value contracts. These approvals will be according to Article 91 of the Afghan Public Procurement Law. 134. In the absence of adequate capacity to manage procurement activities effectively, some interim arrangements have been put in place to improve Afghanistan's procurement management. A central procurement facilitation service, the Afghanistan Reconstruction and Development Services Procurement Unit (ARDS PU), has been established under the supervision of MoE to support line ministries and project implementing agencies. 135. The World Bank and the Government have agreed on a program for country-wide procurement reform and capacity building, leading to the transition from centralized to decentralized procurement services. The above is implemented by an international consultant under the supervision of PPU/MOF and financed under the Public Administration Capacity Building project (PACBP) / Public Finance Management Reform Project (PFMRP). There have been several training programs conducted by the consultant at basic, intermediate and advanced levels. The implementation of the procurement reform component of PACBP should be considered with due priority to ensure that fiduciary standards are further enhanced and that capacity is developed in the Government to maintain these standards. General 136. Procurement for the Rural Access project will be administrated in accordance with the World Bank's Procurement Guidelines" -- "Guidelines: Procurement of Goods, Works and Non- consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011, "Consultant Guidelines" - "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011, Anti-Corruption Guidelines" -- the "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and revised in January 2011;" and the provisions stipulated in the Financing Agreement. The World Bank's Standard Bidding Documents, Requests for Proposals (SRFP) Forms of Consultant Contract and Form of community contract (approved by Bank) will be used. Civil works and goods under International and National Competitive Bidding (ICB, NCB) procedures shall be procured using the agreed Standard Bidding Documents (SBDs) for Afghanistan. 137. In case of conflict/contradiction between the World Bank's procurement procedures and any national rules and regulations, the World Bank's procurement procedures will take precedence; this is clearly stated under Article 4 (2) of the Procurement Law July 2008 (Amendments in January 2009 incorporated) of the Government of Afghanistan, and the same has been agreed with the recipient. 46 Procurement of Works 138. The proposed grant would finance rehabilitation and improvements of about 1000 Kilometer of secondary road and 1300 kilometer of tertiary road along with Maintenance and construction of bridges The World Bank's Standard Bidding Documents (SBD) for all ICB and National SBD agreed with (or satisfactory to) the World Bank will be used. Threshold for ICB civil works will be equivalent or more than US$5,000,000 equivalent per contract; threshold for NCB works will be less than US$5,000,000 or equivalent. All civil works estimated to cost US$100,000 equivalent or less per contract can be procured through the shopping procedure according to paragraph 3.5 of the "Consultant Guidelines" - "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011. Contracts with community will be procured under direct contracting US$60,000 or less. Routine maintenance will be procured under direct contracting with community (US$60,000 or less) and also on pilot bases for one province using construction contractors. 139. It is envisaged that almost all of the works will have estimated cost of less than US$5 million and hence will be procured under National Competitive Bidding (NCB). Works are of relatively small value and widely distributed, hence it is not feasible to package them together and follow ICB procedure. Procurement of Goods 140. Goods to be procured under this project, office furniture, office equipment, IT equipment, vehicles, technical equipment, civil engineering equipment, engineering quality control equipment, software including software for project management and engineering design etc. Goods will be procured either using World Bank's SBD for Goods for all contracts following International Competitive Bidding (ICB) procedures, or National SBDs agreed with World Bank or satisfactory to World Bank for procurement of goods under National Competitive Bidding (NCB) procedures. Shopping shall be in accordance with paragraph 3.5 of World Bank's Procurement Guidelines" -- "Guidelines: Procurement of Goods, Works and Non-consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011. All contracts estimated to cost more than US$200,000 per contract shall be procured following ICB procedures. Contracts estimated to cost more than US$50,000 equivalent per contract and less than US$200,000 per contract shall be procured following NCB procedures. All contracts estimated to cost less thanUS$50,000 equivalent per contract shall be procured following Shopping procedures. Goods which meet the requirements of paragraph 3.6 of World Bank's Procurement Guidelines" -- "Guidelines: Procurement of Goods, Works and Non-consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011, may be procured following direct contracting procedures with the prior agreement of IDA. 47 Selection of Consultants 141. The proposed grant would finance several consultancy assignments. The Bank's selection procedures for hiring of consultants will be followed. 142. Individual Consultants. The Grant will finance several individual assignments to advice, implement and monitor project implementation. The Bank's procedures for hiring the services of individual consultants will be followed. 143. Shortlists of consultants for services estimated to cost less than US$100,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the "Consultant Guidelines" - "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011. The selection methods applicable for consultants are QCBS, QBS, CQS, LCS, FBS and SSS for firms and Section V of the World Bank's "Consultant Guidelines" - "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011 for Individuals. Threshold for CQS will be less than US$200,000 per contract. 144. Operating Costs. Incremental Operating Costs refers to project-related incremental expenses incurred on account of project implementation support and management including the rental of office space; the operation, maintenance, rental and insurance of vehicles; fuel; communications supplies and charges; advertisements; books and periodicals; office administration and maintenance costs; bank transaction charges; utility charges; domestic travel and per diem but excluding salaries of officials and staff of the Recipient's civil service. 145. Training of project staff. The cost of training would mainly cover the travel, hotel and per diem, training kit and field trip costs for project staff and will be borne by the project. Assessment of the agency's capacity to implement procurement 146. The Ministry Rural Rehabilitation and Development (MRRD) and Ministry of Public Works (MPW) will have overall responsibility for all procurement under the project with the assistance of the international and national procurement specialists to be hired under the project. Procurement activities under this project will be carried out by the project procurement unit under the overall responsibility of MRRD/MPW. 147. An assessment of the capacity of MRRD/MPW-PIUs was carried out by the World Bank Procurement Department. The assessment reviewed the overall organizational structure of ministries procurement unit, and the project procurement unit for implementing the project and interactions. 148. MRRD/MPW's Procurement Directorate is headed by a Director of Procurement, and is assisted by procurement advisers/specialists who are consultants funded by different donors. Procurement under the project is carried out by procurement department under the program implementation unit and is assisted by international procurement specialists provided by 48 implementation consultant. Staff turnover and inadequate staffing in the procurement department of PIU is a concern. 149. Based on the assessment the procurement risk is noted to be "High" (subject to revision after completion of the P-RAMS). 150. Procurement consultants/specialists in the MRRD/MPW-PIUs will continue to be required for the medium term. Challenges still remain in attaining the agreed fiduciary standards and also to further enhance them. Even though the procurement regulatory environment in Afghanistan has advanced significantly, unfortunately most civil servants lack basic procurement skills and therefore cannot work effectively in the new emerging environment. As part of the capacity building exercise of the Ministry, civil servants involved in the project will be provided extensive training in essential procurement procedures according to international best practice. 151. Based on the above arrangements, the project risk could be rated as "medium" from a procurement perspective. Quality of the documentation provided for prior review is satisfactory. 152. PIU under MRRD is headed by the Sr. Procurement Officer (National) and supported by 6 National procurement officer and International procurement Specialist provided by the IC. Recruitment of 4 more officers is under process. PIU under MPW is also supported by International procurement specialist provided by the IC and headed by procurement officer (National). Four procurement assistants also have working in the department and PIU will hire 3 more procurement officers till the end of July 2012. 153. MRRD/MPW will ensure that all invitations for bidding (EOIs) are given wide publicity using its own website or the website of MRRD/MPW, Afghanistan Reconstruction and Development Services (ARDS), United Nations Development Business (UNDB) and national newspapers. Further for individual consultants the REOI/vacancy notice will be published on the following websites: www.acbar.org, www.devnetiobs.org and www.reliefweb.int. 154. With regard to procurement complaints, MRRD/MPW will be guided by Article 71-72 of Procurement Law 2008 (revised January 2009) and Procurement Guidelines" -- "Guidelines: Procurement of Goods, Works and Non-consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011. "Consultant Guidelines" - "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011, Anti-Corruption Guidelines" -- the "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and revised in January 2011. MRRD/MPW will inform the Bank as soon as a procurement complaint is received and subsequently on the final outcome. MRRD/MPW shall establish a system to register and monitor the receipt and resolution of complaints. The progress of such action will be reviewed by the Bank during supervision missions. 155. MRRD/MPW will prepare a Procurement Monitoring/Activity Schedule for Procurement of goods/works and a Selection Monitoring Activity Schedule for consultants and update the schedules on a monthly basis. All bid/proposal evaluations will be completed within the 49 following time periods: (a) 5-7 working days for shopping; (b) 21 and 35 working days for NCB and ICB procedures; (c) 10 working days for individual consultants; and (d) 15 working days for firms for REOI evaluation, 21 working days for Technical Evaluation Reports (TER) and 21 working days to conclude contract negotiations. 156. The framework of the procurement risk mitigation monitoring plan as given below need to be agreed with MRRD/MPW. This will be updated during implementation support/supervision missions (ISMs - at least once every six months) and will be part of each mission's Aide M6moire. Procurement Risk Mitigation Framework Procurement Process indicator Sources of information and Use of Performance process/step means of verification information target to be for risk achieved mitigation 1 General GPN Published. Documentary evidence filled in To ensure that 100% Procurement MRRD/MPW. GPN is widely Notice published to increase transparency. Number of responses Existence of updated response To increase 100% received against GPN. registration files in competition. MRRD/MPW. 2 REOI/Invita REOI/IFB Published Copy to be available in the file. To ensure 100% tion for Bids 10% of the procurement files SPN/REOJ is and Bidding will be verified. widely process published to increase transparency. Minimum bidding time Deviations to be collected from To ensure 100% provided [4 weeks for procurement files. competition. NCB and RFP and 6 weeks for ICB and RFP with complex assignments]. Attention of Copy to be available on file. To ensure 100% firms/individuals who 10% of the procurement files competition. expressed interest against will be verified. GPN while issuing REOI/SPN was called. Number of Bid Documents Sale of bid documents register To ensure 100% sold and number of firms and confirmation from competition. which confirmed consultants about receipt of participation against RFP RFP. 10% procurement files issued. will be verified. Clarifications/addendums Copy to be available on file. To ensure 100 % issued. 10% of the procurement files transparency. will be verified. 50 Procurement Process indicator Sources of information and Use of Performance process/step means of verification information target to be for risk achieved mitigation 3 Preparation Cleared by IDA without Number of cases to be Capacity Continued of Bid seeking collected from procurement building progress Documents/ clarifications/comments. files. measures RFPs initiated by International Procurement Specialist. 4 Bid Bid opening minutes sent Timeliness to be verified from To ensure 100% Submission to all bidders immediately procurement files. transparency. for all procurements / and to the Bank for prior review contracts. 10% of the procurement files will be verified. 5 Bid Formation of bid Deviations to be collected from To expedite 100% Evaluation/ evaluation committee procurement files, finalizing of before bid closing. bids/proposal REOI and evaluation. proposal Timeliness of Evaluation: Deviations to be collected from Finalization of Compliance evaluation Procurement Activity bids/proposal and (a) 5-7 working days for Schedule, evaluation in continuous shopping procedure; (b) 21 timely improvement and 35 working days for manner, in timelines NCB and ICB procedures for all respectively; (c) 10 activities. working days for individual consultants; and (d) 15 working days for firms for REOI evaluation, 21 working days for TER and 20 working days to conclude contract negotiations. Number of re-bids Procurement files. Continuous improvement for reduction in number of re-bids. 6 Bid Cleared by Bank without Data to be collected from To improve Evaluation seeking procurement files, procurement Report and clarifications/comments, process. Technical Evaluation Report 7 Contract Contract awards within Deviations to be collected from To improve 100% Award original bid validity. Procurement Activity procurement Schedule, process. (a) Contract award Data to be collected from To ensure 100% published within 14 days procurement files. transparency. of NOA t (b) Average time taken for 51 Procurement Process indicator Sources of information and Use of Performance process/step means of verification information target to be for risk achieved mitigation publication of award. (c) Number of awards not published. 8 Delivery/ Delivery time: Percentage Data to be collected from To improve Completion of Contracts completed/ procurement files. procurement delivered within original process schedule as mentioned in Contract. Liquidated damage: Data to be collected from To improve 60% Percentage of Contracts procurement files. procurement having liquidated damage process imposed for delayed delivery/completion. Completion rate: Data to be collected from To improve 90% Percentage of Contracts procurement files. procurement fully completed and process. accepted. 9 Payment Average number of days Data to be collected from To improve 100% taken to release payment in procurement files. procurement / line with contract payment provisions. process. Late payment: Percentage Data to be collected from To improve 20% of cases (considering each procurement files. procurement installment as a case) with process. delayed payment. 10 Complaints Procurement complaints Complaint register. To ensure 90% pending over 60 days. transparency. Resolution of complaints Complaint register and To ensure 0% resulted in modification of procurement files. transparency. contract award. Resolution of complaints Complaint register. To ensure 70% within 15 working days transparency. Complaints forwarded to Complaint register. To ensure 100% MOF for independent transparency. review. 11 Contract Unresolved Disputes over Procurement files. To ensure 10% dispute 60 days. transparency. resolution 12 Procurement Number of procurement To improve 80% of Capacity staff trained in Civil procurement MRRD/MPW Building Service Institute. process. procurement staff to be trained Procurement training plan. during first year and 100% by second year Number of staff trained To improve One staff outside Afghanistan. procurement during first process. 18 months 52 157. Governance and Accountability (GAC) agenda. All contract opportunities and contract awards will be widely published on the internet, ARDS website, Ministry website and when required in UNDB. MRRD/MPW will set up a system to ensure that staff/consultants who handled the procurement process/contract management/contract execution do not join the consultants/contractors. This will be reviewed during supervision missions. Procurement Plan 158. The Borrower, at appraisal, developed a Procurement Plan for the first 18 months of project implementation, which provides the basis for the procurement methods. This plan has been agreed between the recipient and the Project Team and is available at MRRD/MPW. It will also be available in the Project's database and in the World Bank's external website. The Procurement Plan will be updated in agreement with the Project Team annually or as required, in order to reflect project implementation needs and improvements in institutional capacity. Frequency of Procurement Supervision 159. In addition to the prior review supervision to be carried out from World Bank offices, the capacity assessment of the Implementing Agency has recommended two supervision missions each year. 160. Procurement post review. In addition to prior review, World Bank staff and/or World Bank appointed consultant(s) will carry out post procurement reviews annually as well as during the supervision missions. 53 Procurement Appendix 1: Procurement Plann A. General 161. Project Information: Country/Borrower: Islamic Republic of Afghanistan Project Name: Rural Access Project Implementing Agency: Ministry of Rural Rehabilitation and Development and Ministry of Public Works (MRRD/MPW) Grant No: TBG 162. Bank's approval Date of the Procurement Plan [Original: Revision 1: TBD] 163. Date of General Procurement Notice: 164. Period covered by this procurement plan: 18 months B. Goods and Works and non-consulting services (a) List of contract Packages that will be procured following ICB, NCB and direct contracting: 165. Procurement Method and Threshold SN Procurement Method Threshold for Methods Comment (US$) 1. ICB (Works) 5,000,000 Equivalent or more 2. ICB (Goods) 200,000 Equivalent or more 3. NCB (Works) 5,000,000 Equivalent or less 4. NCB (Goods) 200,000 Equivalent or less 5. Shopping (Goods) 50,000 Equivalent or less 6. Shopping (Works) 100,000 Equivalent or less 7. ICB (Non-Consultant Services) 200,000 Equivalent or more 8 NCB (Non- Consultant Services) 200,000 Equivalent or less 166. Prior Review Threshold: Procurement Decisions subject to Prior Review by the Bank as stated in Appendix 1 to the Procurement Guidelines" -- "Guidelines: Procurement of Goods, Works and Non-consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011. 1 This is the first procurement plan and covers the first 18 months of the project. As the other TOR and tender documents are prepared, MRRD/MPW will update the procurement plan. The procurement plan will include procurements to be done under the project. No procurement will be done unless included in the procurement plan (original and revised) and approved by the Bank. The procurement plan will be updated by the MRRD/MPW annually or as required to reflect the actual project implementation needs. 54 167. The thresholds will be finalized based on the capacity assessment of the MRRD/MPW procurement unit including the consultants presently hired by MRRD/MPW. The review thresholds may be modified subject to the review of the capacity of MRRD/MPW. SN Procurement Method Prior Review Threshold US$ Comments 1. ICB (Goods & Works) and ICB (non All Contracts Equivalent or more consultant services) 2. NCB (Works) 650,000 and First 3 Contracts for Equivalent or more works which include periodic maintenance regardless of value 3. NCB (Goods) 200,000 Equivalent or more 4. Direct Contracting (Goods. Works) All regardless of value except community contracts. First 3 community contacts for routine maintenance will also be reviewed by the Bank 5 Community contracting N/A (See above under Direct Contracting), as community contracts by nature are small due to the fact that the scope of rehabilitation and maintenance is limited to the community's jurisdiction 168. Prequalification. NIL 169. Procurement Packages with Methods and Time Schedule 170. Goods, Works and Non Consulting Services: C. Selection of Consultants 171. Selection Methods and Thresholds SN Selection Method Threshold Comments 1. CQS for Firms US$200,000 equivalent or less 2. QCBS,QBS, FBS, LCS, SSS depending on the nature and complexity of assignment 172. Prior Review Threshold. Selection decisions subject to Prior Review by World Bank as stated in Appendix 1 to the "Consultant Guidelines" - "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011. SN Selection Method Prior Review Threshold Comments 1. Competitive Methods (Firms) US$100,000 or more 2. Competitive methods (individuals) US$50,000 or more 3 Single Source (Firms)/Individuals All regardless of value 55 a) Short list comprising entirely of national consultants: Short list of consultants for services, estimated to cost less than US$100,000 equivalent per contract, may comprise entirely of national consultants in accordance with the provisions of paragraph 2.7 of the "Consultant Guidelines" - "Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers" dated January 2011. b) Selection of Consultants: Consultancy Assignments with Selection Methods and Time Schedule Capacity Building 173. The following programs are proposed to enhance the knowledge of the staff of MRRD/MPW: Expected outcome/Activity Estimated Cost Estimated Start date Comments Description Duration Familiarity of MRRD/MPW Bank Budget 7 days TBD Bank staff attached to Civil servant staff in Kabul office will conduct procurement of goods following in English/Dari. shopping procedures/selection of consultants Familiarity of civil servants staff As per TBD with Procurement under Bank standard of Financed Projects PPU/MOF Familiarity of civil servant staff To be estimated Two weeks TBD with Procurement under Bank based on Financed Projects training needs Familiarity of civil servant staff PPU carries out with Procurement under Public procurement training on a Procurement Law of continuous basis. Afghanistan 174. Agreed Procedures for National Competitive Bidding (a) Standard bidding documents approved by the Association shall be used. (b) Invitations to bid shall be advertised in at least one (1) widely circulated national daily newspaper and bidding documents shall be made available to prospective bidders, at least twenty eight (28) days prior to the deadline for the submission of bids. (c) Bids shall not be invited on the basis of percentage premium or discount over the estimated cost. (d) Bidding documents shall be made available, by mail or in person, to all who are willing to pay the required fee. (e) Foreign bidders shall not be precluded from bidding. (f) Qualification criteria (in case pre-qualifications were not carried out) shall be stated on the bidding documents, and if a registration process is required, a foreign firm determined 56 to be the lowest evaluated bidder shall be given reasonable opportunity of registering, without any hindrance. (g) Bidders may deliver bids, at their option, either in person or by courier service or by mail. (h) All bidders shall provide bid security as indicated in the bidding documents. A bidder's bid security shall apply only to a specific bid. (i) Bids shall be opened in public in one place preferably immediately, but no later than one hour, after the deadline for submission of bids. (j) Evaluation of bids shall be made in strict adherence to the criteria disclosed in the bidding documents, in a format, and within the specified period, agreed with the Association. (k) Bids shall not be rejected merely on the basis of a comparison with an official estimate without the prior concurrence of the Association. (1) Split award or lottery in award of contracts shall not be carried out. When two (2) or more bidders quote the same price, an investigation shall be made to determine any evidence of collusion, following which: (A) if collusion is determined, the parties involved shall be disqualified and the award shall then be made to the next lowest evaluated and qualified bidder; and (B) if no evidence of collusion can be confirmed, then fresh bids shall be invited after receiving the concurrence of the Association. (m) Contracts shall be awarded to the lowest evaluated bidders within the initial period of bid validity so that extensions are not necessary. Extension of bid validity may be sought only under exceptional circumstances. (n) Extension of bid validity shall not be allowed without the prior concurrence of the Association (A) for the first request for extension if it is longer than four (4) weeks, and (B) for all subsequent requests for extensions irrespective of the period, in case of prior review. (o) Negotiations shall not be allowed with the lowest evaluated or any other bidders. (p) Re-bidding shall not be carried out without the Association's prior concurrence, in case of prior review. (q) All contractors or suppliers shall provide performance security as indicated in the contract documents. A contractor's or a supplier's performance security shall apply to a specific contract under which it was furnished. 57 Annex 6: Implementation and Monitoring Arrangements Afghanistan Rural Access Project 175. General: The overall implementation arrangement of NERAP will be applied also for the proposed project with some modifications; MPW and MRRD will continue to be implementing agencies (IA) while MOF will continue to play the coordination role. The government has maintained a strong interest to take on even more implementation responsibility in the proposed project than it did under NERAP; a further move away from reliance on implementation consultants. The Bank supports this aspiration, which is a necessary step to institutional sustainability for the rural access program. The only way to scale up the program to meet the needs will be to build capacity at regional and provincial level, revising the role of the central administration from direct involvement in operations to one of strategic planner and budget manager, program overseer and evaluator. In this context the lAs are considering incremental delegation of some of the functions to the regions and provinces. The Government's note on decentralization is available in the project file. 176. Under the previous Bank-supported rural road projects the implementing ministries relied heavily on UNOPS to manage program implementation. It is now agreed that the ministries will gradually take back several functions from UNOPS. In particular they will strengthen their own capacity for procurement and financial management, all the time mindful of their responsibility to the donors for competent management, accountability and transparency. The shift of functions will have further advantages: ministry staff will cost far less than the international staff hired by UNOPS, and they will be able to supervise implementation in the provinces more closely since UNOPS staff is constrained by UN security rules to travel outside Kabul. The planned steps towards building institutional capacity and decentralizing operations are described in detail below. 177. Implementation arrangement for the project components: MPW and MRRD will each be responsible for the overall implementation of Components A and B respectively, which focus on the improvement and maintenance of secondary and tertiary rural roads, and the associated implementation support activities. The ministries implement rural roads under NRAP through dedicated Program Implementation Units (PIU). The PIUs have functional units responsible for planning, design, procurement, contract management, and have built a reasonable capacity over the years, supported by implementation consultant (IC). The role of the implementation consultant (IC) in these functions however has been gradually scaled down to a more advisory and quality assurance role and the same will continue in ARAP. However the FM capacity of the two ministries has remained weak and they delegated this responsibility (except the non-works in MRRD implemented activities) to the IC. ARAP focuses on the capacity building of financial management in the ministries so that they will start managing their finances over a period of 18 months; until then however, IC will continue to assume the responsibility. In ARAP the IAs are planning to selectively outsource engineering survey and design, and on-site supervision activities to local private firms; and they will reciprocally focus on building the capacity to manage the procurement and contact management, resulting from the outsourcing activities. The lAs will also use private contractors for road improvement and periodic maintenance works while engaging community development councils (CDC) to carryout routine 58 maintenance. The regional offices and provincial offices, wherever available, will be strengthened to manage the increased activities in their areas. These offices once strengthened will also assume more responsibilities delegated to them by the headquarters. Under ARAP, 8 regional office blocks to be used by MPW and MRRD are planned to be constructed and suitably furnished and equipped to facilitate closer implementation and supervision of planned sub- projects. Key PIU staff in the areas of survey, design, contract management and supervision will take up positions in these regional offices and gradually more and more of the procurement and financial accounting responsibilities would be decentralized in line with Government's long term policies. 178. The community monitoring pilot initiative started in NERAP, will be scaled up to enhance good governance and accountability through third party independent monitoring and improve the quality and efficiency of delivery of the roads and bridge works at site. 179. MPW and MRRD will also be responsible to implement key sub-components of Component C, which supports program planning and development, institutional strengthening and program coordination activities and manage their financing. The National Coordination Unit (NCU), under the Ministry of Finance was established under NRAP to ensure adequate coordination of some of cross-cutting and more strategic oriented activities, and providing oversight of the progress in implementing the overall rural access program through monitoring and evaluation of the projects with support from MPW and MRRD on procurement and financial management. NCU will continue this role and be further strengthened under ARAP to be specifically responsible for overall coordination of the two ministries to ensure uniformity in monitoring and evaluation of project implementation, provide consolidated implementation progress reports; provide consolidated financial management and accounting reports; facilitate donor coordination and program development activities. It will also ensure uniformity in adoption of common polices and best practices in the delivery and management of rural access roads and intervene in a timely fashion to resolve cross-cutting issues that affect the progress of project implementation. For the organizational study of the rural road sector, a panel of peer reviewers drawn from relevant sector and academic institutions would be formed to provide inputs and guidance to study. Engineering and other firms and individual experts may be engaged to help in implementing the component. The implementation arrangement for component C is provided in Table 6-1 below. 180. Project oversight. The inter-ministerial Steering Committee (SC), established under NERAP, will continue to provide for oversight and guidance to the program. The SC is chaired by the Minister of Finance (or his representative) and comprising the executing ministers (or their delegates) of MRRD, MPW, will be responsible for the overall policy, strategic planning and project oversight and for integration with other national rural development programs. Donors to NRAP will be permanent observers of the SC. Other observers such as local authorities (public and private), donors, and experts may be invited to attend the SC meetings as required. The SC will meet twice a year and on an ad hoc basis when required. To facilitate the work of the SC, the National Coordination Unit (see below) will function as the secretariat. In the past years there has been a tendency to refer issues of implementation to a steering committee, whose members are too busy to be frequently available to discuss routine implementation issues. Such 59 issues would rather be handled, the senior management from both ministries coordinated facilitated by the NCU. 181. For monitoring and evaluation of the project, each of the two PIUs in MPW and MRRD has a unit adequately staffed with personnel responsible for gathering the data and information (with the help of consultants as needed) to monitor the progress of implementation and evaluation of the results being achieved. These units will be further strengthened through training recruitment of additional staff or consultants as needed to cope with the expanded program, and provided with the necessary tools to monitor project implementation more effectively and compile regular reports for management. NCU, which has one M&E Specialist on its staff, will be responsible for collating the M&E reports submitted by MPW-PIU and MRRD-PIU for on- ward reporting to MOF, World Bank and other relevant government entities and stakeholders. It will also be responsible for: ensuring uniformity in results monitoring and application of standards, policies, and best practices; facilitating relevant training in common areas such as procurement, financial management, quality assurance, contract management, development of the domestic contractors and consultants; public outreach; and ensuring the program of enhancing rural access remains on target at all times. Stakeholders will be updated on project progress through regular reports, publications, print and electronic media. With a view to enhance governance and accountability, the pilot community based monitoring initiative launched under NERAP will be scaled up and replicated under the project. 60 Table 6-1. Responsibility Matrix Arrangement for Component C Activities Sub Estimated Responsible Components Major Activities cost Implementation (US$mil.) Entity Establish rural road network inventory system, and carry out the first cycle inventory Setting up a Establish a network planning, development and management system, By PIU-MPW rural roads including a mechanism for definition of appropriate service levels, and appropriate techniques for economic appraisal, a system for the 1.50 inaos planning and codnto short, medium and long term rural roads maintenance; a system for management preparing a rolling 5 year investment plan for rural roads with PIU- system MR Develop a comprehensive set of rural roads design standards, improvement of cost estimation system, of productivity norm, and 0.50 iupdating the technical specifications. Sub Total 5.00 Carry out a study of the laws, regulations, organizational structure and the human resource capacity of the rural roads sector and propose any 0.50 necessary changes and strengthening measures. Prepare and implement a comprehensive capacity development plan for public sector staff responsible for NRAP. 1.20 Provide 6 months on-the job training for 50/year fresh graduates from Institutional engineering and social science fields; By PlU-MRRD Support to 140/year internship student of engineering and social i science universities by providing them incentives during their research and Capacity coordination building and practical period; 1.60 with PIU-MPW Sponsor Master's Degree programs for about 20 program staff through national and international academic institutions; and Capacity building of the domestic construction industry through training, workshop Construction of regional functional buildings and material laboratories in 8 regions and, enhancement of the current programs' library and 3.70 archive consolidation Sub Total 7.00 Financing the operating costs of the National Coordination Unit (NCU) 2.40 Supporting the monitoring and evaluation, baseline and follow up Program survey, technical support for MTR, technical and financial audits for 1.30 Fis YeR coordination MPW and MRRD (9 MRRD support Preparing a public relations program and implementation 0.50 a flW Support governmental endeavors for establishment of Road agency, 1.80 __________1 preparation of follow up projects, study tours and sector studies. Sub Total 6.99 Grand Total 18.90 _______ 61 Annex 7: Project Preparation and Appraisal Team Members Afghanistan Rural Access Project The project was prepared and appraised by a team consisting of the following members. Name Title Unit Responsibility/ Specialty Abdul Hameed Khalili Consultant SASDT Operations Management Abdul Mohammad Durani Consultant SASDS Safeguards Ahmad Rafi Hotofat Team Assistant SASDO Team Assistant Aimal Sherzad Procurement Analyst SARPS Procurement Arun Banerjee Consultant SASDI Institutional, M&E Asha Narayan Financial Mgmt. Spec. SARFM Financial Management Asif Ali Senior Proc. Specialist SARPS Procurement Asta Olesen Sr. Social Dev. Specialist SASDS Social Development Chau-Ching Shen Senior Finance Officer CTRLN Project Financing Claudia Nassif Sr. Country Economist SASEP Economist Graham Smith Consultant ECSS5 Planning & Economics Hasan Afzal Zaidi Transport Specialist SASDT Transport Specialist Johanna van Tilburg Senior Counsel LEGES Senior Counsel Luquan Tian Sr. Transport Specialist SASDT Task Team Leader Manzoor Ur Rehman Sr. Transport. Spec. SASDT Transport Specialist Mesfin Wodajo Jijo Sr. Transport Specialist SASDT Task Team Leader Mohammad Arif Rasuli Senior Env. Specialist SASDI Environment Mohammad Yasin Noori Consultant SASDS Safeguards Mohammed Ajmal Askerzoy Operations Officer SASDT Operations Management Muhammad Wali Ahmadzai Financial Mgmt. Analyst SARFM Financial Management Nancy Zhao Consultant SACAA Operations Adviser Obaidullah Hidayat Consultant SASDI Safeguards Rajesh Dongol Program Assistant SASDO Team Assistant Richard Jeremy Spencer Country Sector Coord. SASDE Sector Coordination Subhash C. Seth Consultant SASDT Highway engineering Zohra Farooq Financial Mgmt. Specialist SARFM Financial Management 62 Annex 8: Safeguards Policy Issues Afghanistan Rural Access Project Background 182. The proposed project will scale up the activities supported under NERAP and will assist the client in secondary and tertiary road rehabilitation. The first two components of ARAP (i) infrastructure improvements and (ii) maintenance of the maintainable rural road network may have some minor adverse impacts, but the location of specific sub-projects and detailed designs are not known at appraisal. Given that the ARAP follows a program approach, the implementing agencies/PIUs have, based on the experience gained under NERAP, developed an Environmental and Social Management Framework (ESMF) that outlines expected impacts of sub-projects on local communities, along with mitigation strategies for the identified impacts. 183. In general, road projects bring about changes in natural environment and therefore, are considered environmentally sensitive. ARAP will reduce environmental problems arising from such intervention to the extent possible. The overall impact is not expected to be of significant nature; therefore, ARAP project is placed in Environmental Category "B". 184. The potential adverse social impacts, as anticipated at appraisal, would largely result from land and asset acquisition which may be required in connection with the rehabilitation/reconstruction of tertiary and secondary roads, and OP 4.12 on Involuntary Resettlement is thus triggered. No adverse impact on physical cultural heritage is expected, but the ESMF covers chance find procedures to be followed in accordance with national law. Since the proposed project spreads over different part of rural Afghanistan it is subject to the National Biodiversity Strategy Act 36 of Afghanistan Environmental Law which outlines the procedure for protection of the Habitats for Protected Species under Act 41. This law is in line with the triggered World Bank Policy Natural Habitats OP/BP 4.04. The ESMF also defines the procedure to mitigate the negative impacts on biodiversity. Purpose of the Environmental and Social Management Framework 185. The main purpose of the ESMF is to identify potential environmental and social impacts early in the project cycle. The Framework provides general policies, guidelines, and procedures to be integrated into the project's implementation. The objective of the ESMF is to ensure that activities under the project will: (a) protect human health, (b) provide guidelines for preparing the environmental and social mitigation plan to address adverse impacts, (c) prevent or compensate any loss of livelihood, (d) prevent environmental degradation as a result of either individual subprojects or their cumulative effects, (e) enhance positive environmental and social outcomes, and (f) describe the implementation and implementation arrangements to ensure compliance with World Bank safeguard policies and Afghan environmental law and EIA regulation. 63 186. It includes a Negative List which identifies features which render sub-projects ineligible, such as adverse impacts on protected areas, cultural heritage sites or land acquisition impacting more than 200 people. 187. The ESMF provides guidance on the approach to be taken during planning and implementation of sub-projects and ensures the effective application of the World Bank's safeguard policies and relevant national laws and regulation, such as the Land Expropriation Law, on Managing Land Affairs, and the Environmental Law. The Framework guides environmental and social impact assessment of project schemes and outlines the process for identifying potential adverse social and environmental impacts due to construction and upgrading of rural roads. Moreover, it describes the implementation and institutional arrangements for managing environmental and social impacts and mechanism for addressing any gaps. General Principles 188. The approach to mitigation measures includes avoiding or reducing negative impacts by changing road alignment or design or reducing the level of intervention at a site, while at the same time ensuring due diligence in managing potential environmental and social risks. This Framework is based on the following principles: (i) All proposed components will be screened to ensure that the environmental and social risks can be adequately addressed through the application of standardized guidelines. (ii) Regardless of the outcome of environmental screening, each subproject will have its site- specific ESMP for the construction package prepared during the detail engineering design process. (iii) Consultation and disclosure requirements will be simplified to meet the special needs of this project. Potential Environmental and Social Impacts of Various Components 189. The environmental and social impacts of ARAP are generally related to road rehabilitation and improvement of the existing secondary and tertiary roads, which are not expected to involve any significant adverse environmental or social impacts. Specifically: 190. The rehabilitation may have negative impact on soil erosion, clearing of vegetation, cause landslides, slope instability, contamination of water, air and sound pollution, operation of quarries and borrow pits; discharge of sewage and other fluid waste from construction camps, and spillage of pollutants (fuel, oil), as well as traffic safety and occupational health and safeguard of workers and etc. 191. The negative impacts that may occur during implementation of the road works could include temporary road diversion that may affect people's property and safety. 64 192. Most potential environmental and social impacts are related to problems with slope stabilization, cutting of trees and land acquisition. The impact may also include environmental degradation related to borrow pits, extraction of materials, noise, and dust generation. Moreover, assessment and mitigation of potential impacts will be addressed through the application of environmental and social safeguard policies, procedures, mine risk and safety procedures. 193. Rehabilitation and improvement works on the secondary and tertiary roads are limited to widening of road widths in certain road sections. Normally, the land required for widening the existing road is limited to strips of a few meters on either side of the road, which does not result in any significant loss of productive lands. 194. No direct impacts on archeological, burial or historical sites are to be expected. The project will however institute "chance find" procedures to ensure protection of such sites, if found when borrow pits and material sites are opened. Positive Impacts 195. It is expected that the Project will have significant positive social impact towards reducing poverty through increased opportunities for production and marketing of agricultural and livestock products, improved access to economic and social service centers and financial institutions, health posts, hospitals and schools. As a result, the potential benefits from the road works will be much greater than the losses. The previous project had a positive impact as to involvement of communities in the planning and implementation process, particularly in road maintenance activities, where communities now have responsibilities for routine maintenance. Safeguard Screening 196. The selection, design, contracting, monitoring and evaluation of sub-projects will be consistent with the following guidelines: (i) The environmental and social screening checklist is designed to capture and record relevant information for subproject, as indicated in Annex 1 of the ESMF. (ii) Confirmation must first be received through the Regional Mine Action Center that areas to be accessed during reconstruction and rehabilitation activities have been de-mined (Mine Risk Management section of the ESMF). (iii) A negative list with features that would make a proposed subproject ineligible for support (exclusion list in the ESMF). (iv) Guideline and format for preparation of Abbreviated Resettlement Action Plan in case a sub-project involves land acquisition of less than 200 PAPs and or land acquisition below 10% of total land holdings (annex 6 of the ESMF). 65 Mitigation Measures Environmental 197. Potential Impact Identification and Analysis: The environmental issues will be identified and potential impacts will be assessed in site-specific manner for each subproject. The impacts will be identified based on the findings of a screening report and verified through site visits during follow ups and ESMP preparation. 198. Environmental Mitigation Principles: The approach to mitigation measures includes avoidance of impacts by changing the alignment and design, or minimizing the impact by reducing the level of intervention at that site. The tender instruction to bidders shall explicitly mention the site-specific mitigation measures to be taken, the materials to be used, labor camp arrangements and waste disposal areas, as well as other site-specific environmental requirements. 199. To enhance the environment in villages and townships through which the project roads pass, the roads would be lined (for about half a kilometer on either side of the township) with fruit trees (or other commercially viable trees) planted on both sides of the Right-of-Way (ROW) which would be cared for by the local communities. Small plots of land would be set aside in the villages along the road to provide nurseries for the trees as well as grow the fruit trees for food supply and/or sale in the markets. This will enhance livelihoods and encourage women to participate in the development effort. Similarly, small sections (about half a kilometer), passing through populous townships, or adjoining schools or health centers would be considered for paving with bituminous surfacing to reduce the effects of dust in dry weathers. Involuntary Resettlement 200. Any land needed for the project would be acquired through voluntary land donation or compensation by the local community, to keep the cost of the project low and make it viable. General Guidelines: a. No sub-project affecting more than 200 people or land acquisition of more than 10 per cent of total land holdings will be allowed. b. Resettlement and land acquisition will be kept to a minimum, and will be carried out in accordance with the detailed guidelines on consultation and compensation in the ESMF. c. These guidelines provide principles and instructions to compensate negatively affected persons either by the community or government to ensure that Project Affected People (PAPs) will be assisted to improve, or at least to restore, their living standards to pre- project levels. d. Subproject proposal that would require demolishing houses or acquiring productive land should be carefully reviewed to minimize or avoid their impacts through alternative 66 alignment. No structures or assets should be impacted without compensation to the owner. e. In compliance with the Bank's Operational Policy 4.12, in case of less than 200 PAPs, guideline for Abbreviated Resettlement Action Plan shall be followed in order to assess the impact and to guide compensation for loss of land and livelihood through a consultative and mutually agreeable process. f. The voluntary nature of any donation should be fully ensured and any land acquisition or donation process should be fully documented as per the ESMF, and completed with transfer of deed. Grievance Redress Mechanism 201. To make project-supported works more transparent, a comprehensive Grievance Redress Mechanism will be set up. It will develop a policy, guidelines and operating procedures, detailing how the complaints should be received, sorted, processed, acknowledged, investigated and acted upon, and monitored. Clearly defined timetables for complaint acknowledgement and follow-up activities will be established and publicized externally as part of the ARAP's communication strategy. The PIU staff at Kabul and regional levels will be assigned complaints handling responsibilities and provided the necessary training. In addition, complaints nodal volunteers will be identified at the community level, to inform community members how to register their complaints. In addition, the grievance redress mechanism will be developed in line with a Procurement Appeal and Review mechanism. Institutional Arrangement 202. The PIUs have established safeguard units under the ongoing NERAP, which consist of safeguard officers at headquarters and a safeguard focal point at each of its regional offices. These safeguard units in collaboration with their technical counterparts will have overall responsibilities for implementing the safeguard requirements and compliance with the ESMF in the planning and implementation of the ARAP. Consultation Requirement 203. The project shall ensure that the affected population and other stakeholders are informed, consulted, and allowed to participate actively in the development process. Consultation with affected people is required throughout the project, both during preparation, implementation, and monitoring of project results and impacts. Community meetings will be held in each affected district and sub-project level to inform the local community about the project and compensation requirements for the affected people by the community. Communities should reach an agreement with PAPs for provision of compensation for loss of land, property and livelihood. Prior to such agreement, the PIUs should prepare an Abbreviated RAP to assess livelihood impact on PAPs. The implementing agency should also ensure individual consultations with the PAPs. In all cases of consultations, these should be conducted for men and women separately, to ensure that women's views and concerns are taken into account and women should be encouraged to express 67 their views and their male family members should be made aware of the need for women's participation in order to ensure the success of road sub- projects. A recent study by the World Bank reported instances where women, in spite of their best intentions, were not allowed or encouraged to take part in community meetings, for example discussing mitigation plans for road widening, because the males in the village felt they were not experienced enough to make decisions on the matter. Hence, it is necessary to ensure that males are made aware of the need for integration of women's views in transport planning right from the design stage of the project. If possible, a separate budget should be allocated for sensitization activities through social mobilizers and project staff responsible for project planning from the design stage. 204. Appropriate measures include: (a) Holding separate meetings for men and women for feedback on road design options, in particular with regard to drainage, road safety, location of amenities, and road crossings; (b) Ensuring that surveys on road user satisfaction collect both men's and women's views; (c) Identifying different means of disseminating project information that is comprehensible to both men and women; (d) Encouraging representation of both men and women in the project team and field professionals hired for surveys and consultations and other engagements with the community. (e) In case of land acquisition, separate consultations with female PAPs are mandatory. (f) Separate meetings for men and women should be held in the project influence area. Separate meetings for men and women on potential employment opportunities during the construction and operation stages of road projects should also be encouraged Public Disclosure 205. This ESMF was developed by the MPW and MRRD on the basis of the generic Framework for World Bank-funded reconstruction operations, a review of the ESMF implementation in NERAP project and a review of the specific requirements of the planned project. Prior to approval by the World Bank Board, this ESMF will be disclosed by MPW and MRRD in Dari and Pashto in relevant places in the country and English version of the ESMF at the World Bank Infoshop. The ESMF will also be posted on MRRD and MPW websites. 68 Annex 9: Economic Analysis Afghanistan Rural Access Project Prioritization of Road Segments and Economic Analysis for Higher Standard Roads 206. During implementation of the Bank-supported projects already completed (most recently the National Emergency Employment Program for Rural Access (NEEPRA) or currently being carried out (the National Emergency Rural Access Project --NERAP), the Ministry of Rural Rehabilitation and Development (MRRD) and the Ministry of Public Works (MPW) have constructed mostly gravel-surfaced roads but also a few bituminous roads. They were not subject to a formal economic cost-benefit analysis, as their prime purpose was social: to give the inhabitants of remote villages and communities reliable access to essential services. 207. The same is proposed for most of the roads and bridges to be improved under the project now being appraised. To ensure that investment funds are allocated in a consistent and transparent way that will maximize the social impact, the implementing ministries will apply an agreed approach for setting priorities by evaluating candidate roads against a set of social criteria and, where appropriate, economic criteria, as follows. Identification and Selection of Roads for Basic Access 208. Most of the rural roads proposed for improvement today carry little motorized traffic - probably because only trucks and pickups with 4-wheel drive can get through. Some of the tracks identified are little more than mule trails and the design standard to which these tracks are to be upgraded is in most cases gravel-surfaced and basically only one lane wide, with shoulders and passing places that will allow two vehicles to cross with care. 209. Each proposed road and bridge has first to be included in a long list on the grounds that it meets one or more of the following criteria: (i) Direct or indirect requests from communities. Collect and register the requests received for improvement of rural roads from communities channeled through CDCs, PDCs, PRRDs, district governors, province governors, members of parliament and other governmental organizations often with peace and reconciliation objectives in strategic areas. Identify if the road or bridge is under MRRD's or MPW's mandate and prepare two databases of the requested roads in a GIS system under the NRAP planning units of the two Ministries. Digitize the registered roads and bridges using GIS for the purpose of better planning and decision making. (ii) Being part of the Rural Road Network. Check that the identified road (or bridge) belongs to the existing or planned rural road network (i.e. it should be a tertiary or secondary road). In addition, specifically to meet the objectives of ARAP, if a secondary road is already more than 7m wide (width of roadway) and has a reasonable volume of traffic moving on it year round, it will not be considered for improvement under ARAP because 69 it probably already provides all-season access - with the exception of a missing bridge or ineffective water-crossing. (iii) Economic importance. A road (or bridge) in a district that has a high potential for cash crop cultivation, or serves areas with natural resources such as minerals, forests, tourism, etc., will be considered and included in the listl2 (iv) Ensure connectivity to the existing road network. Check the identified road (or bridge) for upward connectivity to higher-level roads within Afghanistan's overall road network. If the road only connects a village to another village that is not connected further to some part of the road network, it will not be included in the list. (v) Complementarity with another sub-project completed under the program. Consolidation works for roads (or bridges) that were rehabilitated under the National Emergency Employment Program (NEEP), NEEPRA or NERAP, such as, drainage, upgrade works, surfacing of road with double-bituminous surface treatment, etc. or completion of road works which were only partially funded under these projects, such as an access road leading to a NEEP/NEEPRA/ NERAP-funded bridge. 210. A list of candidate roads and bridges for the first two years of this project has been prepared on the basis of meeting one or more of the above attributes for further consideration. The roads (including any missing bridges) are separated into tertiary and secondary roads. For identifying secondary roads that may be considered for higher standard construction (including paving), the traffic volumes must be greater than 300 vehicles per day and subjected to the prioritization criteria described. Table A9.1. Categorizing Road Segments (and Bridges) for Prioritization and Economic Analysis Road Type Typical Traffic Evaluation Approach (before improvement) (vehicles/day) Rough roads, mule trails (often <300 Prioritization on the basis of indicators of traffic volume, closed during winter or rainy population served, access to essential services and other season) and low-grade narrow dirt socio-economic indicators and Cost/Beneficiary Index. roads, vulnerable to closures More established roads, classified >300 In addition to ranking using population and traffic as secondary volume, economic analysis using HDM-4 model or equivalent 211. Roads and bridges selected into the two lists will now be prioritized in accordance with the points system set out below. All roads and bridges earmarked for financing under ARAP will follow the priority list thus developed, subject to budget constraint. 212. The roads to be financed for basic access will be prioritized using the criteria set out below while secondary roads to be considered for paving or higher standard design be subject to 12 Because of the lack of requisite data on economic importance, this criterion is not readily applied. 70 further ranking on the basis of cost-benefit analysis applying the HDM-4 model or its equivalent. In order to preserve the focus on basic access, it has been agreed that not more than 20% of the project funds will be used for secondary roads designed to higher standards, including DBST or asphalt concrete pavement. 213. When preparation of this project began, there were significant differences between the two ministries as to the indicators used and the weight given to each indicator. However, a uniform approach has now been agreed, particularly with regard to the elements of the prioritization criteria (Table A9.2). Bridges 214. Bridges will be prioritized on the basis of the population connected with year-round access and likely traffic volume, relative to the investment cost of the bridge. For example, priority will be given to bridges that connect villages to roads already improved, but also taking into account the population served. As far as possible, low-cost solutions will be adopted, such as concrete weirs and culverts and other floodable structures, which might not be passable for a few hours during and immediately after heavy rains - but such rains may fall only once or twice a year. 215. Bridge design is complicated by the lack of hydrological data regarding annual rainfall and run-off during the three decades of war and conflict. However, the bridge design engineers will consult with community leaders to identify high-water marks from major floods that can be interpreted as the 10-year or 50-year peak flood. Sub-Project Prioritization Criteria 216. The list of roads and bridges (tertiary and secondary) selected for prioritization will be subjected to the following criteria to establish their priority and rank them in accordance with their score. Bridges will be considered in terms of the roads on which they are located: (a) Population Served. This is measured as the number of people living within 2-2.5 km on either side of the candidate road. The limit for the maximum score is a population of 50,000 for secondary roads and 3,000 for tertiary roads. (b) Access to Social Centers. This criterion counts the number of schools and health centers to which the road provides access. The number for maximum score is 5 for both secondary and tertiary roads. However, in the interim, MRRD has used a system for awarding 2 points for every center, up to a maximum of 20 points. (c) Access to Economic Opportunities. This measures the number of facilities that provides opportunities for employment and other forms of income generation, such as major markets and townships, administration center, mine, factory or commercial farm. The number for maximum score is 3 for both categories of roads. For lack of detailed data, MRRD has used a substitute sub-criterion whereby economic opportunity is linked to the 71 type of connectivity - hence to Provincial Center (20 points); to District Center (18 points); to Main Road (16 points); and to Village (14 points). Table A9.2. Prioritization Criteria for Rural Access Roads and Bridges S.N. Criteria Description Weight Comment A Population served 30 Within 2 - 2.5 km on either side of the road B Access to social centers (number) 20 Schools, health centers, local markets C Access to economic opportunities 20 Major markets and townships, admin center, (including employment) (number) mine, factory, commercial farm, etc. D Direct/indirect request from community 10 All or nothing (Yes/No) E Current level of accessibility 10 Worst situation gets higher score F Traffic volume (PCU) 10 Average annual daily traffic Total Maximum Score 100 (d) Direct or Indirect Request from Communities. As a result of stakeholder consultations in the provinces, and also direct representation for communities, a number of plans have been developed in the past for improvement of rural roads including ranking in terms of priority. The Interim Rural Roads Investment Plan, prepared in 2005-06, is one of them that includes ranking by priority. The Provincial Development Plan, prepared in March 2008, is another. The aim of this criterion is to ensure that roads that were prioritized in the past after lengthy consultations with the communities and other stakeholders are given some weight under ARAP. It is an all-or-nothing criterion with a score of either 10 (included in at least one of these plans) or zero (not included in either plan). (e) Current Level of Accessibility. This criterion evaluates how accessible the area being served by the road is to the network or how passable the road is at present. Remote areas with little or no all-season access to the network will score higher points. (f) Traffic Volume. The higher the annual average daily traffic using the road, measured in passenger car units* (PCUs) per day, including non-motorized transport, the higher the score. At present, MRRD does not have the detailed data on the traffic breakdown by vehicle type, other than the average ADT (vehicles per day). In that case, until such time as more detailed data is collected at the district level, the ADT figure may be used in place of PCU. *PCU Equivalent Factors: Light passenger car, pick-up, jeep 1.00 Motorcycle 0.40 Animal cart, motorcycle trailer 0.60 Bicycle 0.30 Animal transport 0.40 Light commercial truck (6 tires) 2.00 Heavy commercial vehicle 2.50 Bus (> 4 tires) 2.25 Minibus (4 tires)/tractor 1.10 72 217. Table A9.3 gives the detailed scoring for tertiary and secondary roads, including those that require bridges. Since bridges are part of the road infrastructure with equal importance for the communities in terms of providing access, the same criteria as for roads will be used to prioritize them when they are part of a road also being considered for improvement as an access road. Hence, if the bridge is already a part of the road under consideration, then it will automatically be selected for improvement or construction if the road is selected. Otherwise the bridge alone is subjected to further prioritization criteria as explained below. Table A9.3. Detailed Scoring for Prioritization of Rural Access Roads S.N. Criteria Weight Tertiary Roads Secondary Roads Sub-criteria Score Sub-criteria Score A Population Served 30 3,000 or more 30 5,000 or more 30 2,000 - 3,000 25 3,000 - 5,000 25 1,000 - 2,000 20 1,000 - 3,000 20 < 1,000 10 < 1,000 10 B Access to social 20 5 or more 20 5 or more 20 centers* 1-4 10 1-4 10 None 0 None 0 C Access to 20 3 or more 20 3 or more 20 economic 1-2 10 1-2 10 opportunities** None 0 None 0 D Direct/Indirect 10 Yes 10 Yes 10 request from No 0 No 0 Community or inclusion in IRRIP E Current level of 10 Bad or none 10 Bad, Poor or None 10 accessibility Poor 6 Limited or Fair 5 Limited or Fair 3 Good 0 Good 0 F Traffic Volume*** 10 40 or more 10 100 or more 10 (PCUs) 30-40 6 25- 100 5 20-30 3 <25 0 <20 0 Total 100 Score (Tertiary) Score (Secondary) * For Tertiary Roads, MRRD has currently adopted to award 2 points for each social center (maximum 20). ** For Tertiary Roads, for lack of detailed data, MRRD links economic opportunity to the connectivity to administrative centers, Hence to Provincial Center (20 pts.); to District Center (18 pts.); to Main Road (16 pts.); and to Village (14 pts.). * Because detailed breakdown of traffic by vehicle type is not available, MRRD has used ADT in vpd instead of PCUs. Priority Ranking (for Access Roads) 218. Roads scoring the highest points would be chosen for further prioritization on the basis of the Cost per Beneficiary Index (CBI), for financing under ARAP. CBI is the estimated cost divided by the estimated number of beneficiaries to establish the cost effectiveness with respect to the number of beneficiaries served. The road with the lowest cost per beneficiary would rank first and be allocated the same number of points as the highest ranked road in the multi-criteria prioritization list, and the road with the highest CBI value would be allocated the same score as the lowest score in the priority list. The remaining scores would be prorated according to the difference in the CBI value. If the relative weights of the score in the multi-criteria and the score 73 for CBI are assumed equal (50% each), then the two scores may simply be added and the ranking determined on the basis if the total score. The highest score would also be the highest in priority, and ARAP would finance roads in this list in the order of their priority until constrained by the budget. Due to serious concerns regarding equitable sharing of resources and the need to take into account historical neglect of certain impoverished provinces and border security issues, Afghanistan has the practice of allocating resources to the provinces on the basis of the Vulnerability Index (which takes account of population, access, level of development etc.) derived for each province. In this case, the prioritization exercise would be conducted at the provincial level. Special Criteria for Prioritizing Bridges on Roads not Included in the Priority List 219. If a bridge is part of a road that is selected for financing under ARAP following the above identification and prioritization criteria, then it will automatically be selected for construction. However, if the allocated budget permits, then bridges yet remaining to be selected may be prioritized on the basis of two key criteria, namely, Population Served and the Traffic Volume (in PCUs) as shown in Table A9.4. Table A9.4 Criteria for Prioritizing Bridges not Included in the Access Roads Priority List S/N Criteria Weight Tertiary Road Bridge Secondary Road Bridge Sub-criteria Score Sub-criteria Score 1. Population Served 70 3,000 or more 70 5,000 or more 70 2,000 - 3,000 50 3,000 - 5,000 50 1,000 - 2,000 30 1,000 - 3,000 30 < 1,000 10 < 1,000 10 2. Traffic Volume* 30 40 or more 30 100 or more 30 (PCUs) 30-40 22 25 - 100 20 20-30 14 <25 10 <20 6 Total 100 Score (Tertiary road Score (Secondary bridge) road bridge) * Because detailed breakdown of traffic by vehicle type is not available, MRRD has used ADT in vpd instead of PCUs. Priority Ranking (for Bridges not included with Priority Access Roads) 1) High or first priority for scores 80 - 100 2) Second priority for scores: 60 - 80 3) Third priority for scores: 50 - 60 220. Bridges scoring the highest points would be chosen for further prioritization on the basis of Cost per Beneficiary Index, in the same manner as for basic access roads. The bridges with the highest combined multi-criteria score and the CBI score would rank the highest in priority, and selected for financing under ARAP within the allocated budget, as in the case of basic access roads. 74 Prioritization Criteria for Higher Standard Design of Secondary Roads, including Paving 221. Secondary roads that are under consideration for upgrading to a higher standard or paving will be subject to the criteria detailed in Table A9.5 and broadly agreed with the World Bank. Those which exceed the minimal score for acceptance into this category (70 points out of 100) will then be subject to an economic analysis using HDM-4 or an equivalent road investment evaluation model. 222. The cost for roads selected on the basis of the above criteria, would be estimated on the basis of a preliminary design (or a number of alternative designs). Based on the results of the economic analysis, the best (or optimal) design alternative (e.g. high-standard gravel surface, DBST, asphalt concrete, etc.) for an individual road would be determined on the basis of the maximum positive NPV at a discount rate of not less than 12%; followed by a ranking of a number of such roads with optimal designs (mutually independent projects) on the basis of the ratio of NPV to the investment cost, i.e. the index NPV/Cost. A road with the highest NPV/Cost ratio would rank first. Table A9.5. Prioritization Criteria for Higher Standard Construction of Secondary Roads S.N. Criteria Weight Sub-criteria Score Remarks 1. Terrain: Average vertical 15 12 % or more 15 Considering topography (flat, gradient (%) 8- 12 % 10 rolling, mountainous) <8% 0 2. Traffic volume (motorized, 40 300 or more 40 Minimum threshold for higher AADT) in vehicles per day < 300 0 design standard is 300 vpd (vpd) 3. Population served 30 1,000 or more 30 Population within 5 km on (persons/km) 500 - 1,000 15 either side of the road (i.e. 10 < 500 0 km catchment zone) 4. Haulage distance to 15 80 km or more 15 Higher standard will prolong availability of suitable 30 - 80 12 periodic maintenance interval construction material (km) <30 0 Total Score 223. It is intended that MPW will hire an international consultant to conduct the economic analysis of rural secondary roads totaling about 500 km, from among which the highest-priority segments totaling about 250 km of roads will be selected for upgrading to DBST or asphalt concrete. Given the current constraints in Afghanistan and also the limited institutional capacity and availability of accurate data, the international consultant will review and analyze the current situation of the road sector and will identify the model best able to reconcile the need for a rigorous economic justification with the high cost of collecting data. 75 Annex 10: Documents in Project Files Afghanistan Rural Access Project No Documents 1 Technical Note for Identification and Prioritization Paper, MPW, Jan 14, 2012 2 Technical Note for Identification and Prioritization Paper, MRRD, April 04, 2012 3 Environmental and Social Safeguard paper, MRRD, Jan 01, 2012 4 Environmental and Social Safeguard paper, MPW, Jan 12, 2012 5 Technical Note for ENVIRONMENTAL AND SOCIAL SAFEGUARDS, NRAP, Feb 26, 2012 6 Executive Summary Environmental and Social Management Framework, NRAP, January 2012 7 Decentralization Approach paper, MRRD, Jan 2012 8 Decentralization Approach paper, MPW, Feb 2012 9 Financial Management paper, MRRD, Feb 2012 10 Financial Management paper, MPW, Feb 2012 11 Financial Management Approach paper for ARAP, Jan 2012 12 Terms of Reference for Survey an Design Services, MPW, Jan 2012 13 Terms of Ref. for Survey, Design and Construction supervision consultancy, MRRD, Jan 18, 2012 14 ARAP GENERAL PROCUREMENT NOTICE, Feb 05, 2012 15 Procurement Plan, MRRD, April 04, 2012 16 Procurement Plan, MPW, April 2012 17 Procurement Arrangement, NRAP, Feb 2012 18 Proposed 18 months work program, MRRD, Feb 2012 19 Component A major Activities Matrix, MPW, Feb 29, 2012 20 Component B major Activities Matrix, MRRD, Feb 2012 21 Component C major Activities Matrix, NCU, April 03, 2012 22 ARAP Implementation Arrangement paper, MPW, MRRD, NCU, March 28, 2012 23 Project Estimated Cost paper, NRAP, March 2012 24 Result Framework, NRAP, Jan 14, 2012 25 RURAL ROAD MAINTENANCE Paper, NRAP, March 12, 2012 26 Average Cost Per KM, MRRD, March 19, 2012 27 Economic analysis Paper for High standard Roads, MPW, Jan 14, 2012 28 Organizational Structures 29 Design Standards 30 Community Consultation Manual, NRAP, March 2012 31 ARAP Project Description, NRAP, Jan 2012 32 ARAP Maps, MRRD & MPW, April 2012 33 Organization Chart for Road Maintenance, MPW, March 13, 2012 76 Annex 11: Statement of Loans and Credits Afghanistan Rural Access Project Project Fiscal Active Project Name IDA Undisb. Orig. Frm Rev'd ID Year P104301 2008 AF: Microfinance Project 30.00 0.75 13.74 P102573 2008 AF: Skills Development Project 20.00 5.59 5.14 P112872 2010 AF: Customs Reform & Trade Facilitation 50.48 29.94 P106259 2008 AF: Edu. Qlty. Improvement Program 11 30.00 1.17 0.55 84.17 P083908 2004 AF: Emergency Power Rehabilitation Project 105.00 10.23 4.58 4.58 P110644 2009 AF: Financial Sector Strengthening Project 8.00 7.25 3.72 P101502 2008 AF: HIV/AIDS Prevention Project 10.00 1.14 0.93 P122235 2011 AF: Irrigation Restoration &Development 97.80 88.37 P103343 2008 AF: National Emergency Rural Access Project 152.00 28.04 -8.67 8.23 P117103 2010 AF: National Solidarity Program ill 40.00 21.19 P118053 2011 AF: New Market Development 22.00 19.89 0.31 P113421 2010 AF: Pension Admin and Safety Net 7.50 4.17 2.91 P110407 2010 AF: Rural Enterprise Development Program 30.00 19.36 P112446 2009 AF: Strengthening Health Activities 79.00 30.99 -25.66 P089040 2005 AF: Strengthening Higher Educ. Program 60.00 19.11 -1.32 8.34 P087860 2006 AF: Urban Water Sector 40.00 15.45 36.66 14.06 P121755 2011 Afghanistan ICT Sector Development Project 50.00 44.02 6.39 P118925 2011 Afghanistan SDNRP 11 52.00 48.24 1.00 P098118 2006 Afghanistan: Natural Resources Development 40.00 10.64 -1.75 P119047 2012 Financial Sector Rapid Response Project 19.00 16.58 4.00 Overall Result 942.78 422.11 42.51 119.37 77 Afghanistan Statement of IFC's Committed and Disbursed Outstanding Investment Portfolio As of 4/30/2012 (In USD Millions) Committed Disbursed Outstanding **Ouasi Partici **Ouasi Partici FY Approval Company Loan Equity Equity *GT/RM pant Loan Equity Equity *GT/RM pant 2009 Acomet 0 0 4.3 0 0 0 0 2.8 0 0 2009/10 Areeba afg. ltd 58.89 16.4 0 0 0 42.8 13.5 0 0 0 2007/08 Brac bank inc 0 0.3 0 0 0 0 0.18 0 0 0 2003 Fmba 0 0.82 0 0 0 0 0.82 0 0 0 2004 Tps (a) 0 0 4 0 0 0 0 4 0 0 Total Portfolio: 58.89 17.52 8.3 0 0 42.8 14.5 6.8 0 0 * Denotes Guarantee and Risk Management Products. ** Quasi Equity includes both loan and equity types. Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic. Total pending commitment: 0.00 0.00 0.00 0.00 78 Annex 12: Country at A Glance Afghanistan Rural Access Project Afghanistan at a glance Key D ovala pMent Inditators Soulh Low Afghanislan A sis Intoms Agadiaziribldan, 2009 120 flw) Iale Frnao Population,m~äd-year(millons) 30,6 1.568 846 7'79 S urface aråa Qha us and s q, km) 652 5,131 17038 Populaiongr~th(%) 2.8 [5 2.2 UrbanpopulatIon(%oftolalpopuatI1n) 24 30 29 9 GNI (Allas m:thedUS$ blillons) 5.98 GNlpercapno(Atlsiethod,US$) 470 1.127 509 "9 GNlpercapit (PPP,Inlämallonal$) 2,972 1220 4 GDP grovh (%) 54 8.1 45 'r im GDP per ceapta grovah (%) 0,6 65 2-4 (most recsnt sstknats, 2004-201f) Povsrtyhadcountratlo al 1.25aday (PPP.9 36 40 -- P overtyheadcount rain al $2. a day(PPP,%) 74 -- Undär -5 rn rtalIty rata [p wr 1,50) Life expectancy st birth (yars) 44 64 57 Infant mortality(per 1000 livs births) 134 55 76 3Um ChIdmalnutritIon(%ofchlIdränunderS) 33 42 28 250 Ad UnIleray,m ale(%ofagas 1andolder) . 73 69 A dun lnera ty, fem ale (%a r agos 1 ard a Ide) 5 s0 55 Gross primrynronlmeni,m ale(of age group) 123 1%S 10 GrossprmBrynromenl,remale(%ofagegroup) 83 las 10 Ac:sssloanlmprovad watarsaure(%fpopulallon) 40 87 64 Accessoimprovedsanittlonfacnlnos (%ofpopulaln) 37 36 35 1990 1995 2000 2009 *IIIAfgh19 1Slh~l 51 Net Aid Flowi 1980 1990 2000 2010 (USS Mäfbns) NetODAondofficilo]d 32 122 196 5261 GrowthorGDPandQDPpercapita(% Top 3 dio non (In 2008): Unit ed Siites 2 56 2 4,507 16 EuropeanLnklo nInstitutlons 0 2 1 144 11 Germany 1 a 11 119 r2 Ald (~GNIO ) 0,9 . 1.4 45.7 AldperCapa(US$) 2 6 5 172 6 Long-Term Enonomin Trend - Consumerprices (annual%change) .. .. .. 77 *3DP Implcit deflator(annual%chango) -- 3.8 D6. lG - ÖDP tn Exchange rata (annual average,loca lper LUS 44.1 50.6 67.7 47.0 Trmsoffredelndex(2 000=10) -- Populatlon,m Id-year(milllons) 153 1.0 20.D 304 GDP (US$ millasns) 3.642 . 2,462 1.956 (%ofGDP) Agricuiture .. .. 45.2 32.2 Indusiry .. . 19.7 23.7 Manufacturing .. ., 1.0 1 Services .. .. 351 44.1 Houschold nnal consum pt lon expenditure .. .. 1f5 88.5 General govt finalonsumptlon expenditure . 7.9 9.0 Gross capHalformatlon 29 .. f6 25.0 Expo rts ofgoods andservicos 1.8 . 306 S.2 Importsorgaods andsorvices .9 .. 66 59.0 Grass savings Naie: Figures are torihe fis tal year 20/11 203 data are prellmInary. Gro up data are ? r2009. .. Indicates data are not avallable. å.Ald data are for 2009. 79 Afghanistan Balance of Payments and Trade 2000 2010 (US$ millions) Total merchandise exports (fob) 1,291 2,512 Total merchandise imports (cif) 1,697 9,169 Net trade in goods and services -1,363 -6,656 Current account balance -150-163 asa% of GDP -3.5 -1.1 v soOsend soo Workers' remittances and compensation of employees (receipts).... oicessm 11ty Reserves, including gold 425 5,321 Lo0ecommuene1 Central Government Finance contr of ooruson 0 25 M 75 100 (01 of GDP) Current revenue (including grants) 7.8 20.1 Tax revenue.. 5.4 Current mvo,wsrooroi-10 expenditure 7.9 19.4 Sao- KafOman,, My -Aor,, WoIdB ank Technology and Infrastructure 2000 2009 Overall surplus/deficit -0.1 0.7 Paved roads (% of total).. 29.3 Highest marginal tax rate (%) Fixed line and mobile phone Individual .. .. subscribers (per 100 people) 0 41 Corporate 20 20 High technology exports (% of manufactured exports) .. .. External Debt and Resource Flows Environment (US$ millions) Total debt outstanding and disbursed 169 2,297 Agricultural land (% of land area) 58 58 Total debt service 8 9 Forest area (% of land area) 2.1 2.1 Debt relief (HIPC, MDRI) 654 20 Terrestrial protected areas (% of land area) .. .. Total debt (% of GDP) 7.1 17.8 Freshwater resources per capita (cu. meters) 2,213 1,946 Total debt service (% of exports) 0.6 0.3 Freshwater withdrawal (billion cubic meters) 23.1 .. Foreign direct investment (net inflows).. 185 C02 emissions per capita (mt) 0.03 0.03 Portfolio equity (net inflows) .. 0 GDP per unit of energy use (2005 PPP $ per kg of oil equivalent) .. .. Composition of total external debt, 2009 Short- term, 20 IDA, 466 MF, 106 Bilateral, 1,080 tOther multi- Iateral, US$millions 551 Energy use per capita (kg of oil equivalent) .... World Bank Group portfolio 2000 2009 (US$ millions) lB RD Total debt outstanding and disbursed -- Disbursements-- Principal repayments-- Interest payments-- IDA Total debt outstanding and disbursed 0 466 Disbursements 3527 Private Sector Development 2000 2010 Total debt service 31 2 Time required to start a business (days) - 7 IFC (fiscal year) Cost to start a business (% of GNI per capita) - 26.7 Total disbursed and outstanding portfolio 0 12 Time required to register property (days) - 250 of which IFC own account 0 12 Disbursements for IFC own account 0 3 Ranked as a major constraint to business 2000 2010 Portfolio sales, prepayments and (% of managers surveyed who agreed) repayments for IFC own account 0 0 .. ..MIGA 80 Millennium Development Goals Afghanistan With selected targets to achieve between 1990 and 2015 (estimate closest to date shown, +/- 2 years) Afghanistan Goal 1: halve the rates for extreme poverty and malnutrition 1990 1995 2000 2009 P overty headcount ratio at $1.25 a day (P P P, % of population) P overty headcount ratio at national poverty line (% of population) .. 36.0 Share of income or consumption to the poorest qunitile (%) .. 9.0 Prevalence of malnutrition (% of children under 5) .. 44.9 Goal 2: ensure that children are able to complete primary schooling P rimary scho ol enrollment (net, %) .. 28 P rimary completion rate (% of relevant age group) 28 39 Secondary school enrollment (gross, %) 11 21 13 44 Youth literacy rate (% of peo pie ages 15-24) Goal 3: eliminate gender disparity in education and empower women Ratio of girls to boys in primary and secondary education (%) 54 47 0 62 Women employed in the nonagricultural sector (% of nonagricultural employment) 18 P ropo rtion of seats held by women in national parliament (%) 4 .. .. 28 Goal 4: reduce under-5 mortality by two-thirds Under-5 mortality rate (per 1,000) 250 235 222 199 Infant mortality rate (per 1,000 live births) 167 157 148 134 M easles immunization (proportion of one-year olds immunized, %) 20 41 35 76 Goal 5: reduce maternal mortality by three-fourths Maternal mortality ratio (modeled estimate, per 100,000 live births) 1,700 1,800 1,800 1,400 Births attended by skilled health staff (% of total) 12 24 Contraceptive prevalence (% of women ages 15-49) 5 15 Goal 6: halt and begin to reverse the spread of HIVIAIDS and other major diseases Prevalence of HIV (% of po pulation ages 15-49) Incidence of tuberculosis (per 100,000 people) 189 189 189 189 Tuberculosis case detection rate (%, all forms) 18 4 18 48 Goal 7: halve the proportion of people without sustainable access to basic needs A ccess to an improved water source (% of po pulation) .. 3 21 48 Access to improved sanitation facilities (% of population) .. 29 32 37 Forest area (% of land area) 2.1 .. 2.1 2.1 Terrestrial protected areas (% of land area) C02 emissions (metric tons per capita) 0.1 0.1 0.0 0.0 GDP per unit of energy use (constant 2005 P PP $ per kg of o il equivalent) Goal 8: develop a global partnership for development Telephone mainlines (per 100 people) 0.2 0.1 0.1 0.4 M obile phone subscribers (per 100 people) 0.0 0.0 0.0 40.3 Internet users (per 100 people) 0.0 .. 0.0 3.4 Personal co mputers (per 100 people) .. .. .. 0.4 Education indicators (%) Measles immunization (% of 1-year ICT indicators (per 100 people) olds) 75 100 50 40 50 75 30 25 50 20 0 25 10 2000 2005 20109 I 199O 1995 2000 200g 2000 25009 Primary net erolment rad i.) -- tio of gi Isto bWs in prmary & secondary Afghanistan MSouth Asia MFixed + mobile subsabermlntemet uers education Bank capital to asset ratio (0& Note: Figures in italics are for years other than those specified. 2010 data are preliminary. 4/2(12 indicates data are not available. -indicates observation is not applicable. 81 Annex 13: Rural Roads Maintenance Approach Afghanistan Rural Access Project Background 224. Since 2002 the World Bank, ARTF donors, and others have provided some very substantial resources for the rehabilitation/upgrading of more than 10,000 km of the rural road network. While the implementing agencies have developed some capacity in undertaking rehabilitation and upgrading, they have yet to develop a proper maintenance system. Nor do they have an adequate and predictable funding mechanism to sustain the road assets that they have or are being created. It has been shown that US$1 deferred maintenance leads to an increase of about US$2-3 of vehicle operating costs (VOC)13 and future maintenance costs. Rural roads which are normally built to lower standards are prone to even higher rates of deterioration in the absence of proper maintenance and are therefore at risk of much shorter service lives. 225. A routine maintenance system has been developed and pilot maintenance activities have been launched under the ongoing NERAP. The pilot involves local communities mobilized through their CDCs to undertake the maintenance work, supervised by the MRRD regional offices and the implementation consultant (IC). MRRD provides training and a small amount of money to the communities to acquire the necessary hand tools suitable for labor based maintenance (wheel barrow, shovel, hand compactor, grass slasher, etc.). The contracting is a hybrid of daily wage labor and output/performance based contract. A person is assigned to a segment of 1-2 km of road and is paid a wage per day for the period he/she is engaged in the contract subject to satisfactory performance. Most of these pilot contracts were awarded in the middle of 2011, and it is too early to do a comprehensive evaluation of the pilot. However, the experience gained from this pilot shall inform the design of the scaled up maintenance program that is intended to be undertaken in the proposed ARAP. Scope of the maintenance component under ARAP 226. Since the PDO of the project is to improve and sustain the accessibility and connectivity of the rural areas, the criteria of roads that are eligible for inclusion under the project maintenance component are as follows: * Rural roads rehabilitated under NERAP; * Rural roads rehabilitated under other MPW and MRRD programs; and * Other rural roads connected to regional, national or provincial trunk roads, or local major public service facilities. 13 Stephen Brushett, International Seminar on Highway Rehabilitation and Maintenance, New Delhi, November, 1999 82 227. The total length of the network planned to be included for maintenance is 3000 km. This network will be selected following a quick condition survey and assessment leading to screening for roads only in "maintainable condition"l4 228. Most of the roads in the first 2 groups above are believed to be in maintainable condition and the defects liability period is just expiring. Roads from the 3rd group of rural roads above should be in maintainable condition before they are chosen for maintenance and will be prioritized based on the lowest cost per beneficiary in order to be included in the project. Where no information is available on the current condition of the road, an initial rapid road condition survey is to be undertaken for the above selected roads with the road condition to be classified as "Good", "Fair" and "Bad". Roads in "Good" and "Fair" condition will be regarded as "maintainable", whereas roads in "Bad" condition will need to be rehabilitated first. The results of initial road condition surveys will also be used to form the project baselines. Maintenance Interventions 229. Three types of interventions are envisaged under the maintenance scheme of the proposed project namely: (a) routine maintenance; (b) periodic maintenance; and (c) emergency repairs. (a) Routine maintenance (RM) involves the day to day upkeep of road functionality. It consists of work that is planned and performed on a routine basis to maintain and preserve the condition of the road system or to respond to specific conditions and events in order to restore the road system to an adequate level of service . Both cyclic (roadside vegetation clearing, culvert and side ditch cleaning) and reactive (patching and pothole filling, crack sealing, camber correction including light grading to reshape unsealed surfaces, sign board repairing, etc.) activities are included in RM. The operation under this project will use appropriate methods for road maintenance focusing on the use of unskilled/semi-skilled community labor and hand tools and locally available materials as resources. These regular operations are a good opportunity to identify periodic maintenance needs such that the RM work on gravel roads will be supplemented by a periodic re-grading operation once or twice a year to correct excessive ruts and deformations. (b) Periodic maintenance (PM) is a planned activity to restore the pavement condition to its original state by re-gravelling or resealing, without changing the horizontal or vertical road geometry. These operations are normally large scale and require specialist equipment and skilled resources to implement, and usually necessitate the temporary deployment of those resources on one road section at a time. The operations are costly and require specific identification and planning for implementation, and may require some designing. The periodic maintenance program is prepared on pluri-annual basis, 14 A network of about 2000 km tertiary roads and 1000 km of secondary roads will be considered based on the estimated cost of US$1500-2400/km per annum for routine maintenance and US$10,000-60,000/km for periodic maintenance of unpaved and paved roads, with a budget ceiling of US$ 46.5 million. A more precise network length "maintainable" will be established following the road condition survey 15 AASHTO Highway Subcommittee on Maintenance 83 which would be updated every year. Candidate roads for this kind of intervention would be in a condition that cannot be restored through routine maintenance. Works can include re-gravelling, resurfacing, resealing and repairs to structures. Each road under routine maintenance is expected to receive periodic maintenance once in the project period under contract with a private contractor. Generally, heavy re-grading and re- gravelling of unpaved roads is expected at least once in 2-4 years, while a single surface treatment (SST) or a double bituminous surface treatment (DBST) on paved roads is expected once in 4-6 years. On higher standard or heavily trafficked sealed roads, an asphalt overlay (A/C) may be warranted once in 6-8 years. A pavement strengthening overlay or pavement reconstruction is normally not considered to be 'maintenance' and in many countries, is often funded separately under 'development' or 'capital' budgets. (c) Emergency repairs address repair works to roads and bridges along secondary and tertiary roads that become impassable to traffic following natural disasters such as heavy snow, rock falls, landslides, heavy rains and flooding. They also include the provision of emergency access to enable the traffic flow to continue, whilst the permanent measures are put in place. Implementation Arrangement 230. Communities through their CDCs or local shura will be the primary implementers of routine maintenance. A given community will be contracted to maintain about 10 km of a road segment, which is estimated to be the stretch which naturally falls under the jurisdiction of that particular community. Adjacent segments will be the responsibility of the neighboring communities. The CDC will select individuals (on a rotating basis, if necessary) who will maintain a stretch of about 2.0 km each. This arrangement will promote an equitable distribution of employment opportunities. To supervise the maintenance activities and make payments to the communities, the road would be jointly inspected once a month by representatives of the CDC, MRRD or MPW and an independent oversight agent (Consultant) where feasible. To reduce the complexities of having the Implementing Agency managing a large number of community contracts, a number of community contracts may also be clustered under one big contract, say at district/province level and be managed by an NGO or a private consulting firm. 231. Periodic maintenance operations require intensive roadway leveling works to achieve a smooth formation, acquisition of surfacing material delivered to the project site, and high quality surfacing operations. All of this requires heavy equipment and at least some technical expertise. Hence contractors would be selected on the basis of such capacity and qualifications, but encouraged to draw their labor requirements from the local communities in the vicinity of the road. 232. Emergency maintenance operations would be identified as they arise; the scope will be quantified and priced by the regional offices. The quickest possible method of mobilizing contractors would be recommended to minimize delays and disruption to traffic. A provisional sum would be included in the contracts with private sector for periodic maintenance for this purpose. Similar provision could be made in the routine maintenance contracts with CDs, but for smaller emergencies which can be handled in a labor-intensive manner. 84 Contract Model and Procurement 233. The following contract models are proposed to be considered for use in maintenance interventions: * Direct Contracting with Communities (CDCs) for routine maintenance: the intent is to engage communities to a greater extent in maintaining the roads in their vicinity; thus direct contracting with the communities will be the preferred model in provinces/regions where the network planned for maintenance is of manageable size for the respective provincial/regional offices of MRRD or MPW. Similarly, in certain areas where contractors are unlikely to be interested to operate due to perceived security risks, or if there are no planned rehabilitation works under this project in the same province which would attract contractors to operate in that province, direct contracting between the client and communities may be the only option. Generally, communities do not have the capacity for re-grading; hence this task would be undertaken by contract with private contractors. * Periodic maintenance by contract. This will be the most likely mode of carrying out periodic maintenance. For a group of 100-200 km of roads under routine maintenance, one contractor would be selected to carry out regular re-grading (once or twice a year) of gravel roads and re-gravelling or re-sealing of unpaved and paved roads, respectively, at least once in the project period. * Packaging maintenance with rehabilitation contracts. In certain provinces/regions where the planned maintenance network is very large and managing many community contracts is unfeasible, the routine and periodic maintenance works may be packaged along with one rehabilitation works contract planned in the area, and launched for private contractors to competitively bid for. Contractors are likely to involve machinery and skilled labor intensively for rehabilitation, periodic maintenance, re-grading of gravel roads, etc., however they will be encouraged to use adjacent communities to carry out the major routine maintenance activities. 234. The principle of output and performance based contracting will be adopted initially for routine maintenance only, but in time, for periodic and rehabilitation works also combined with long term routine maintenance. The output and performance based contract for routine maintenance will be in its simplest form, such that it is easily understandable and implementable by the CDCs, contractors and local supervisors. The first such contract with any CDC will be for one year and on satisfactory performance, would be extended by another three years at a time. Performance Criteria and Indicators 235. An Output and Performance-based Road Contract (OPRC) is designed to increase the efficiency and effectiveness of road asset management and maintenance. It should ensure that the physical condition of the roads under contract is adequate for the need of road users, over the entire period of the contract which is normally several years. This type of contract significantly 85 expands the role of the private sector (or local community), from the simple execution of works to the management and conservation of road assets. A fundamental feature of the OPRC contract is that the contractor is responsible for determining and carrying out the works, services and actions he believes are necessary in order to achieve and maintain the Service Levels stated in the contract. The Service Levels are defined from a road user's perspective and may include factors such as average travel speeds, riding comfort, safety features, etc. It is therefore important to understand that under OPRC, contractors are generally not paid directly for "inputs" or physical works (which they will undoubtedly have to carry out), but for achieving specified Service Levels. 236. Minimum road conditions and Service Levels are defined through output and performance measures, and these are used under the OPRC to define and measure the desired performance of the Contractor. In the OPRC, the defined performance measures are thus the accepted minimum thresholds for the quality levels of the roads for which the Contractor is responsible. Intelligent management, the timeliness of interventions and the adequacy of technical solutions are critical. It is expected that the use of private specialized firms under output and performance-based contracts will unleash significant efficiency gains, and stimulate innovation in comparison with traditional road administration practices. Overall Service Level 237. Given that the roads to be maintained under ARAP are mostly for basic access, the required overall service level need not be of very high standard as would be the case for high volume roads in the network. The following three levels (Fair, Good and Very Good) are suggested for application under ARAP (Table 14-1). Table 14-1. Suggested Service Levels for Rural Access Roads Service Level Compliance Rate* Average Speed (kph)** (%) Unpaved Road Paved Road Very Good 100 50 60 Good 95 45 50 Fair 90 35 40 * Percent length of road under contract complying with performance standards ** By a specified vehicle, such as a pick-up or SUV Performance Standards and Criteria 238. Usability of the Road. The Contractor will have to ensure that the road is open to traffic and free of interruptions at all times. Permitted exceptions could be: * A section of the road may, of necessity, be closed wholly or partially to traffic following a severe accident. In this case the Contractor should ensure that the police are informed immediately and that the road is re-opened within, say [three] hours of the police giving permission to do so. * A section of the road may, of necessity, be closed wholly or partially to traffic following an emergency event such as a wash out or landslide. In this case the Contractor should follow the emergency procedures and contingency plan specified in the contract and may 86 have to provide a temporary diversion. The Contractor should open the road as soon as possible after the emergency works have been completed. * Sections of the road may, of necessity, be closed for works and maintenance activities. Half-width closures of the carriageway, rather than full width, should be used wherever possible, especially on two-lane roads. * In all the above road closures or restricted traffic flows the Contractor should provide traffic management in accordance with the terms of the contract. 239. Average Traffic Speed. The Contractor has to ensure that a vehicle of the type defined in the contract (say a double cabin pick-up or an SUV) is able to circulate in a safe manner at a certain average speed defined in Table 14-1 above in accordance with the specified level of service. 240. Road Durability. Road durability aspects include those features and characteristics that ensure sustainability of the road as an infrastructure asset, such as road roughness, gravel thickness, useable roadway width, drainage features, as shown in Table 14-2 (D1-D5). However maintenance of roughness, gravel thickness and useable roadway width (D1-D3) would apply only to contracts that include rehabilitation and/or periodic maintenance and not to contracts for routine maintenance only. 241. Road User Comfort. The road user must be able to circulate at a certain level of comfort and safety, which depends on several criteria, such as cleanliness of roadway surface, potholes, camber and rut depth, surface corrugation, shoulder repairs and vegetation control which are defined in Table 14-2 (C1-C6). 242. Other. Other elements required to be maintained include Environmental aspects, such as grassing of side slopes and maintenance of trees along the ROW (E1-E2) as well as road furniture, including signs and safety features such as guard rails (Fl) shown in Table 14-2. 243. The Contractor is given the first 60 days to organize himself and gradually reach the compliance rate required under the overall service level. On larger and more complex networks, the enforcement of the criteria for road user comfort could be made even more gradual, in the sense that it is applied to a certain percentage of the network which increases according to an agreed timetable, until a 100% of the required rate of compliance is reached after some time. Basis ofPayment 244. The basis for payment of maintenance services will be the simplified Bill of Quantities that would provide for payments on a lump sum per km per month basis for maintaining the roads covered under the contract, at the Service Levels defined in the Specifications. The rates given by the bidder (or negotiated with the CDC) shall, except insofar as is otherwise provided under the Contract, include all plant, equipment, labor, management and supervision, surveys, materials, erection, maintenance, insurance, profit, taxes and duties, together with all general risks, liabilities and obligations set out or implied in the Contract. However, considering the lack of tools, materials and basic equipment with the CDCs, a special provision as detailed in the 87 BOQs, would be made in the contract for supply of tools and materials by the Client (MRRD or MPW) or direct purchase by the CDC under the contract. Monitoring and Inspection of Maintenance Works 245. Under the terms of the contract, the Contractor will be responsible for the continuous monitoring and control of road conditions and Service Levels for all roads or road sections included in the contract. This will not only be necessary to fulfil the contract requirements, but it is an activity which will provide him with the information needed to be able (i) to know the degree of his own compliance with Service Level requirements, and (ii) to define and plan, in a timely fashion, all physical interventions required to ensure that service quality indicators never fall below the indicated thresholds. Under the output and performance based modality, the Contractor will not receive instructions from the Employer concerning the type and volume of road maintenance works to be carried out. Instead, all initiative rests with the Contractor who must do whatever is necessary and efficient to achieve the quality levels required. This concept is expected to lead not only to significant efficiency gains, as mentioned earlier, but also to technological innovation. Inspection, Monitoring and Penalty for Non-Compliance 246. Once a month, the CDC will organize its own inspection visit to the entire road and monitor the performance of each 1 km section of the road to check if the various performance measures have complied or not complied with the required thresholds. For each non-compliant measure in any 1 km, the relevant penalty shown in Table 14-2 will be applied in the form of a percentage reduction in the 1 km length being inspected (after adjusting for the agreed compliance rate for the stated Level of Service, namely Fair, Good, or Very Good, as per Table 14-1) - for payment purposes. The maximum penalty on any 1 km section may not exceed 100 percent. The Contractor will prepare his monthly report (as per the sample shown in Table 14-3) and submit an invoice to the Employer based on the inspection report and his rate for payment per km/month. 88 Table 14-2. Performance Standards and Compliance Thresholds for Maintenance of Rural Roads Level of Service Performance Vr eat % Element Code Compliance Criteria Very Penalty(% Standard/Indicator Fair Good Good Road Usability Accessibility Ul Ensure that the road is open to traffic and free of interruptions All All All 20 at all times Average Traffic Average travel speed with a Average traffic speed on the road must not be less than: 20 Speed pick-up or SUV U2 (a) On paved roads: 40 kph 50 kph 60 kph (b) On gravel Roads: 35 kph 45 kph 50 kph Road Durability Roughness* (measured with D1 (a) Maximum roughness for any 1km section of existing calibrated equipment such as the road must be less than: 10 IRI 10 IRI 9.0 IRI 20 Bump Integrator) (b) Average roughness for entire existing road section must be less than: 9.0 IRI 9.0 IRI 7.5 IRI 20 (c) Maximum roughness of any 1km section of newly constructed or re-graveled unpaved road must be less than: N/A N/A 6.0 IRI 20 Gravel wearing course D2 Minimum thickness must not be less than: 100 mm 100 mm 150 mm 20 thickness* Useable roadway width* D3 Maximum reduction in useable carriageway width must not be greater than: . 20cm 25 For 6 m carriageways: For 3.5 m carriageways: 15 cm 25 Lateral drains, miter drains and D4 Lateral drains and miter drains must be clean, free from scour checks debris and obstructions, in proper shape and free flowing. Scour checks in good condition and functional. All All All 10 Cross drains and structures D5 Repair culvert inlets, outlets, outfalls, wing walls, erosion (including culverts, vented control works. All drainage structures should be fully causeways, bridges) functional and free flowing. Minimum percent of cross- section of drainage facility that must be unobstructed: 80% 80% 90% 10 89 Level of Service Element PerformanceCode Compliance Criteria Very Penalty (%) Standard/Indicator Fair Good Good Road User Comfort Cleanliness of the roadway C1 The road surface must always be clean and free of soil, surface including shoulders. debris, trash and other objects. Dirt, debris and obstacles must be removed: (a) If they pose a danger to traffic safety, within: 4 hours 4 hours 3 hours 20 (b) If they do not pose any danger to traffic safety, within: 2 days 2 days 1 days 10 Pothole patching C2 Patch and compact all potholes on road carriageway. Number of open potholes greater than 30 cm per km must not exceed: 3 3 2 20 Surface camber and rut depth C3 Restore camber to original cross-slope. Repair all ruts. Maximum average permissible rut depth in any 100m of road 3 cm 2 cm 2 cm 10 section: Surface corrugation, windrow C4 Repair corrugations. Recommend re-grading if maximum average amplitude value in any 50m section of road exceeds: 2.5 cm 2.5 cm 2.5cm 15 Shoulders C5 Repair shoulders including potholes, edge breaks, deformations, erosion, etc. All All All 5 Vegetation control C6 Clear vegetation in drains and roadside (within 1.5 meters from edge of drain or embankment on each side) All All All 5 Environmental Grassing and trees El Grow grass on slopes (where applicable), water trees along ROW edge within 0.5km of township (> 1000 population) boundaries and replant where needed. All All All 5 Snow and minor landslides E2 Remove snow and material from minor landslides or rock falls to make road passable. All All All 15 Road Furniture and Road signs, guard rails F1 Any given sign or safety feature has to be present, complete, Safety clean, legible and structurally sound; and clearly visible at All All All 15 night. * These criteria will not apply to routine maintenance only contracts. 90 247. To monitor compliance with the agreed service levels, regional maintenance officers of MRRD or MPW, jointly with the representative of CDC, the individual maintaining the particular road and/or a consultant (Project Manager) will undertake a planned, joint inspection tour of the road (and bridges) under maintenance at least once every month. The Project Manager, as part of his mandate to ensure compliance with the service levels at all times, may also carry out unscheduled visits on his own. The monthly invoices submitted by the CDC will be the basis for the joint inspection, payment for the month and for the Project Manager to advise the contractor and CDC on any non-compliance in performance indicators and the time limit for remedying the deficiencies . 248. Wherever private consultants are needed for on-site supervision of the maintenance operation, they may be selected independently or the contract may be packaged with the supervision services for road rehabilitation contracts in the province/ region planned under the project. 249. MPW and MRRD will establish maintenance units under the NRAP PIUs, which will have a core team at HQ and suitably qualified staff in the regional offices. The regional maintenance engineer will have the responsibilities of managing the road surveys used for prioritization, perform inspection of service levels, and manage the maintenance contracts. MPW and MRRD will explore the merits of managing the maintenance of rural roads (both secondary and tertiary) through one of their units to minimize a fragmented and less cost-effective operation when managed through the HQs. 16 Sample Specifications, World Bank, OPRC Sample bidding document 91 Table 14-3 Sample Standard Reporting Table for Compliance with Service levels (Routine maintenance of gravel roads) Contract No: Required Service Level: Very Good Compliance Report for Month of: March, 2012 Contractor: Date of Inspection: April 1, 2012 Maintenance: Routine only Road Section: Persons Present: Section total length: Sub-section CRITERA (Penalty %) Total Required Length Length Ul D4 D5 C1(a) C1(b) C2 C3 C4 C5 C6 El E2 F1 Penalty length in not Complied From: To: (20) (10) (10) (20) (10) (20) (10) (15) (5) (5) (5) (15) (15) (%) compliance Complied (km) (km)* (km) Ch 00 Ch 01 X T 7 T 7 T x 7 7 7 X T 35 1.00 0.35 0.65 ChOl Ch 02 X X X X X X X X 100 1.00 1.00 0.00 Ch 09 Ch 10 9 _ _ _ _ _ _ _ 7 7 7 9 _ 0 1.00 0.00 1.00 Total 3.00 1.35 1.65 =Complied; X = not complied. * Length x Required Compliance rate (dependent on LOS) Total Length Complied with: km Length not complied with: km Payment due: Length complied x rate per km/month] = Afn Payment withheld: [Length non-compliant x rate/km/month]= Afn Prepared by Contractor' self control unit: Inspected, revised and certified by Employer or his Agent: Signature/Date Signature/Date 92 250. In summary, the method of procurement and the mode of monitoring and inspection are as given in Table 14-4 below. Table 14-4. Implementation and Supervision of Routine and Periodic Maintenance Category Main Activities Procurement Inspection Team Comments Method Routine maintenance Veg. control, drainage Direct contracts MRRD (or MPW), About 10 km per (RM) cleaning and repairs, with CDCs CDC representative, CDC with camber maintenance, individual labor, third individuals shoulder repairs, party consultant (if handling about 2 pothole patching, road required) once a km each. One signs , lane markings, month year contract minor bridge repairs, initially guard rails, etc. Periodic maintenance Re-grading of gravel NCB for civil MRRD (or MPW), One supervision (PM) roads (1-2 times a year) works (one Road Contractor and Consultant may Re-gravelling of contract for about Supervision be selected for a unpaved roads (100-150 200-300 km) Consultant)- on-site region, province mm, once in four years) inspections or zone DBST on paved roads NCB for depending on the (once in project period) Supervision length under PM Consultant (for (say 500 km) one or more civil works PM contracts and selected RM contracts with CDCs if required) 93 Annex 14: Map Afghanistan Rural Access Project lamic Republic ofAfghanistan Ministry of Publc Work and M1nIstry of Rural Rehabilitation and Devedopment zbekistan National Rural Access Program Tastan Afghanistan Rural Access Projet {ARAP) Location map of Roads and bridges Turkmenistan - - -- - -nPakistan India | R000 |ran Pakistan 0 3 0 12D 1M 24094 94