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ASIAN DEVELOPMENT BANK PCR: BAN 22237
PROJECT COMPLETION REPORT
ON THE
JAMUNA BRIDGE PROJECT (Loan 1298-BAN[SF])
IN
BANGLADESH
December 2000
CURRENCY EQUIVALENTS
Currency Unit – Taka (Tk)
At Appraisal (31 January 1994)
Tk1.00 = $0.0249 $1.00 = Tk40.07
At Project Completion (30 June 2000)
Tk1.00 = $0.0197 $1.00 = Tk50.85
ABBREVIATIONS
AADT – annual average daily traffic ADB – Asian Development Bank EFAP – erosion and flood action plan EIRR – economic internal rate of return EMAP – environmental management action plan ICB – international competitive bidding IRP – independent review panel JMBA – Jamuna Multipurpose Bridge Authority NGO – nongovernment organization O&M – operation and maintenance OECF – Overseas Economic Cooperation Fund PAPs – project-affected persons PCRM – Project Completion Review Mission POE – panel of experts RRAP – revised resettlement action plan TA – technical assistance
NOTES (i) The fiscal year (FY) of the Government ends on 30 June. (ii) In this report, “$” refers to US dollars.
BASIC DATA
MAP
I. PROJECT DESCRIPTION
II. EVALUATION OF IMPLEMENTATION
A.8.C.D.E.
Project ComponentsImplementation ArrangementsProject Costs and Financing PlanProject ScheduleEngagement of Consultants and Procurement of Goodsand ~ervlcesPerformance of Consultants, Contractors, and SuppliersConditions and CovenantsDisbursementsEnvironmental and Social ImpactsPerformance of the Borrower and the Executing ,A.gencyPerformance of the Asian Development Bank
F.G.H.I.J.K.
EVALUATION OF INITIAL PERFORMANCE AND BENEFITSIII.
Financial AnalysisEconomic PerformanceAttainment of Benefits
A.B.C.
CONCLUSIONS AND RECOMMENDATIONSIV.
ConclusionsLessons LearnedRecommendations
A.B.C.
APPENDIXES
CONTENTS
Page
ii
vi
1
2
2334
4555567
7
778
899
11
Loan Identification
CountryLoan NumberProject TitleBorrowerExecuitng Agency
A.
1.2.3.4.5.
6.
B.
1.
PCR Number
Loan Data
Appraisal- Date Started- Date Completed
2. Loan Negotiations- Date Started- Date Completed
3. Date of Board Approval
4. Date of Loan Agreement
5. Date of Loan Effectiveness- In Loan Agreement- Actual Number of
ExtensionsClosing Date- In Loan Agreement- Actual- Number of Extensions
Terms of Loan- Maturity (no. of years)
Grace Period (no. of years)
6.
7.
-
8. Disbursements
a. Dates
Initial Disbursement05 October 1994
Effective Date12 August 1994
BASIC DATA
Bangladesh1298Jamuna Bridge ProjectPeople's Republic of BangladeshThe equivalent in various currencies of SDR145.607million ($200.0 million equivalent) from the AsianDevelopment Bank's (ADB's) Special Funds resources.PCR: BAN 597
--
--
-
19931993
06 September20 September
--
12 January 199413 January 1994
08 March 1994
18 March 1994
--
-
-
16 June 199412 August 1994
--
30 June 199930 June 2000
--
one
4010 (service charge of one percent per annum)
--
Final Disbursement30 September 2000 (est.)
Original Closing Date30 June 1999
Time Interval6 years and 1 month
Time Interval5 years and 9 months
b. Amount ($)
Component Category Allocation Allocation Disbur$ed Loa" Bala"ce
Civil WorksConsultingServicesService ChargeUnallocated
Totala
a Disbursements as of 22 November 2000.
Local Costs (ADS-Financed)Amount ($ million)Percentage of Local CostsPercentage of Total Costs
Project Data ($ millionc.
Project Cost1.
Civil WorksConsulting ServicesOthersContingenciesTotal Cost
Financing Plan2.
ADBWorld BankOECFThe
ADS = Asian Development Bank, OECF = Overseas Economic Cooperation Fund.
iii
Amount UndisbursedLatestOriginal
-23,050.869-1,123,896
167,315,067 168,302,975 191,353,8449,193,703 10,367,758 10,366,021
03012101
5,272,54327,621,610
209,402,922
026,390,105
2,215,339
0 5,272,5430 0
209,207,747 206,992,408
69019301
17.119.92.3
=-
Appraisal
555.0729.7060.49
108.47753.73
517.3527.0052.5099.15
696.00
AppraisalActual
206.99199.11200.00147.63
200.00200.00200.00
96.00
Cost Breakdown by Project Component ($ million)3.
ADB1. Civil Works2. Consulting Services3. Service Charge
Subtotal (A)World Bank1. Civil Works2. Consulting Services
Subtotal (B)OECF1. Civil Works2. Consulting Services
Subtotal (C) 200.00 200.00
. FX = foreign currency, LC = local currency.
4. Project Schedule
Civil Works Contracts- Date of Award- Completion of Work
Data on Bank MissionsD.
No. of No. of SpecializationName of Mission Date Persons Persondays of MembersaFact-Finding 14-26 June 1988 6 13 a,c,d,eInception 23-25 August 1988 2 3 a,cSupplementary Study 21-25 October 1988 2 5 a,cFollow-up Fact-Finding 27-31 March 1989 3 5 a,c,eReview 9-16 November 1989 5 7 a,c,eReview 10-12 December 1989 4 3 a,c,eReview 14-17 May 1990 5 4 a,c,d,eFact-Finding and Pre- 30 July-1"7 August 1990 6 19 a,b,c,d,e
AppraisalConsultation 6-10 September 1990 2 5 a,eCofinanciers' Meeting 27-29 April 1992 1 3 aCofinanciers' Meeting 5-7 August 1992 2 3 a,e
iv
ActualFX LC Total
Appraisal EstimateLC TotalFX
159.52 25.83 185.358.15 1.27 9.425.23 5.23
172.90 27.10 200.00
191.3510.345.30
206.99
175.43 15.929.15 1.195.30
189.88 17.11
~
190.309.70
200.00
189.1010.01
199.11
190.309.70
190.309.70
AppraisalEstimate Actual
14 May 199420 June 1998
Feb 1994June 1998
.'
Cofinanciers' MeetingAppraisalLoan Negotiations (WB)Loan Negotiations (ADB)Project Launch WorkshopFirst Milestone MeetingReviewCofinanciers' MeetingSecond Milestone MeetingThird Milestone MeetingCofinanciers' MeetingCofinancers' MeetingFourth Milestone Meetingand Cofinanciers' MeetingFifth Milestone Meetingand Cofinancers' MeetingSixth Milestone MeetingSeventh Milestone MeetingReviewMidterm ReviewEighth Milestone MeetingNinth Milestone MeetingInaugurationPCR Mission
ADB = Asian Development Bank, PCR = Project Completion Report, WB = World Bank.
a a = engineer, b = counsel, c = economist, d = procurement specialist/consultant, e = programs officer, f = control officer,9 = project assistant, h = social development specialist.
v
171331111122
2141243743311
aa,b,c,d,f,ha
18-19 August 19926-20 September 199329 November 199312-13 January 199416-19 April 199424-26 January 199508-14 March 199511-14 March 199527-29 April 199520-22 June 199528 June 199522 August 1995
5-9 October 1995
24-25 March 199610-12 July 19968-10 December 199630 Nov - 5 Dec 19963-10 March 19977-9 October 199722-24 March 199828 June 19983-11 May 2000
a,b,ea,b,daaaaaaa
1 5 a
236134123
233673319
a, Ca,ca,c,haa,c,ha,haa,ca,9
.
.
1. The Jamuna River, which is one of the world's largest rivers, physically dividesBangladesh into two halves, the east and the west. The eastern half of the country is moredeveloped than the western half, partly because of its access to the capital Dhaka and tointernational markets through Chittagong port. The western half, which has fertile agriculturalland with higher average yields for major crops than the rest of the country, is dependent onagriculture as the dominant sector of the economy. A higher proportion of poor people live inthe western half; particularly in northwestern of Bangladesh, which has a population of about30 million.
2. Until the project bridge was constructed, the Jamuna River was crossab/e mainly byferries and to a lesser extent by launches and manually operated boats. The ferries for roadand railway transport were both grossly inadequate in terms of capacity and service levels.The use of outdated, costly, and unreliable ferry services had led to frequent and extensivedelays at ferry crossings, resulting in high transport costs for passenger and freightmovements.1 These problems were compounded by increased risk during the monsoonperiod from May to October. Because of these limitations and prevailing transport constraints,the economic potential of the areas on both sides of the Jamuna River had not been fullyutilized. The absence of a permanent Jamuna River crossing had constrained economic andsocial development in Bangladesh, particularly on the western side, and had exacerbatedregional disparities. Although the Government had for sometime accorded a high priority toestablishing a permanent crossing, it had not built a bridge, mainly because of its high cost,related to the width of the river, its flow volume, depth, uncertainty of its course, and othertechnical issues.
3. The main objective of the Project was to connect the eastern and western halves ofthe country, separated by the Jamuna River, and thus help stimulate economic growth byfacilitating the transport of passengers and freight and the transmission of electricity, naturalgas, and telecommunications across the Jamuna River more economically and efficiently. Inaddition, the Project was to establish a railway connection between the east and the west in acost-effective manner.
4. Because of its expected major development impact, the Project was accorded highpriority by the Government of Bangladesh. The Project was also consistent with the AsianDevelopment Bank's (ADB's) Country Operational Strategy and transport sector strategy. Itprovided essential infrastructure and emphasized the strong links between poverty reduction,good governance, and private sector development. Due to the large size, complexity, and thelarge funding requirements for the Project, the Government sought assistance from ADB,Overseas Economic Cooperation Fund (OECF)2, and World Bank.
5. The Project envisaged the construction of a bridge over the Jamuna River, about 7kilometers (km) south of Sirajganj, with provision for road lanes, and capable of supporting anelectric power interconnector, telecommunications cables, a gas pipeline, and a meter gaugerailway. The Project comprised
(i) construction of a bridge 4.8 km long and 18.5 meter (m) wide to carry initiallyfour road lanes with sidewalks and capable of supporting an electricinterconnector, a gas pipeline, telecommunication facilities, and a meter gauge
railway;
1 At times, 600 freight wagons waited up to 30 days at the railway ferry crossing.2 OECF assistance has since been replaced by that from the Japan Bank for International Cooperation (JBIC).
PROJECT DESCRIPTIONI.
construction of two viaducts,3 each about 128 m in length, connecting thebridge to the approach roads;construction of two guide bunds, each about 2.2 km long, and a floodprotection bund on the east bank to regulate the river at the selected site;construction of two approach roads, one 16 km long to the east and the other14 km to the west, with two-lane single carriageways with paved shouldersand provision for widening to dual carriageway;measures to mitigate adverse project impacts on the environment;implementation of the resettlement action plan for project-affected persons(PAPs); andconsulting services for project management, construction supervision andtraining of Government staff in the operation and maintenance (O&M) of thebridge.
(ii)
(iii)
(iv)
(v)(vi)
(vii)
6. The Jamuna bridge is the most expensive and technically one of the most challengingtransport infrastructure projects ever attempted in Bangladesh. To implement the Project, theGovernment created the Jamuna Bridge Multipurpose Authority (JMBA) in 1985 andassigned it the responsibility of preparing and implementing the Project (para. 10). As anintegral part of the Project, ADS also financed complementary follow-on investment projects4to expand the road network on the east side of the Jamuna River and connect the separaterail networks on either side of the river.
Project ComponentsA.
7. The physical project components were generally implemented as envisaged atappraisal. The 4.8 km long bridge was constructed with four lanes for vehicles and included adual gauge rail track.5 Dual gauge track was selected instead of the envisaged meter gaugetrack following indepth analysis under technical assistance (T A)6 provided by ADB. It wasfound to be the optimal solution for rail network development, thereby integrating the railwaynetwork in Bangladesh with the dominant broad gauge7 network in India. To protect thebridge, two guide bunds were constructed as envisaged at appraisal. The two constructedapproach roads were connected with viaducts to the bridge. The bridge was also providedwith an electric power transmission interconnector, a gas pipeline (separately funded), andtelecommunications facilities.
8. The Project required the acquisition of almost 3,000 hectares of land in a countrywhere land is scarce, affecting about 100,000 people. Due to the large scale and complexityof the Project, comprehensive social and environmental studies were carried out to mitigateits adverse environmental and social impacts, leading to the preparation of an environmentmanagement action plan (EMAP) and a revised resettlement action plan (RRAP). This wasthe first time that such plans were prepared for a large infrastructure project in Bangladesh.
3 Viaducts, guide bunds, and long approach roads were required because of the braided nature of the Jamuna
River. It has a width of about 4 km in winter and as much as 30 km in summer and a depth difference of asmuch as 8 m between low and high water. While continuous shifting of channels takes place in the JamunaRiver, its width and location will change unless forced to stay in channels established through river trainingworks.
4 Loan 1478-BAN(SF): Jamuna Bridge Access Roads Project, for SDR49,856,OOO ($72 million), approved on 5
November 1996; and Loan 1561-BAN(SF): Jamuna Bridge Railway Unk Project, for SDR80,670,OOO ($110million), approved on 2 October 1997.
5 Dual gauge involves the installation of a third rail, allowing both broad and meter gauge operations over the
same set of tracks.8 TA 2235: Fourth Railways, for $594,000, approved on 13 December 1994.7 Broad gauge has a 1,676 milimeter distance between the rails.
2
EVALUATION OF IMPLEMENTATIONII.
Despite these efforts, a local nongovernment organization (NGO) submitted a complaint tothe World Bank's inspection panel for alleged violations of the World Bank's operationalprocedures in the resettlement of PAPs living downstream and on upstream chars (temporaryislands that are formed and submerged by changes in river direction and flow). Subsequentinvestigations showed that char PAPs had not been fully provided for in the RRAP. TheGovemment then decided to compensate all those affected by erosion in the project impactarea. In addition, a comprehensive char-specific erosion and flood action plan (EFAP) wasprepared under the Project to supplement the existing EMAP and RRAP (paras. 23-24).
9. The consulting services for project management, construction supervision, andtraining of Govemment staff in the O&M of the bridge were implemented as envisaged atappraisal. Consultants were engaged to supervise the four civil works contracts and aninternationally experienced management consultant was selected to provide projectmanagement support to JMBA in implementing all aspects of the Project. In addition, a panelof experts (POE) was formed, comprising leading domestic and international experts, toadvise JMBA on all technical matters related to the Project. A chronology of the main eventsof project implementation is in Appendix 1.
B. Implementation
10. The implementation arrangements followed those envisaged at appraisal. JMBA wasdesignated as the Executing Agency headed by a secretary to the Government. It wasstaffed with senior professionals who worked with the consultants engaged for constructionsupervision and project management (para. 19). With the assistance of the consultants,JMBA established a monitoring system acceptable to ADB. The POE provided expertiseand guidance on a range of technical matters to JMBA. In addition, a committee wasestablished with representatives from ADB, OECF, and World Bank, which held regularmeetings throughout the implementation of the Project. These implementation arrangementsworked well and the regular meetings facilitated critical discussions, exchange of information,and decisions on key implementation matters. Appendix 2 shows the organization of JMBA.
11. The need for efficient day-to-day project administration called for the nomination ofone of the Project's three funding agencies as the lead agency. The World Bank wasassigned this role and it appointed one senior engineer who supervised the Project on aregular basis. ADB was consulted on major issues during the implementation of the Projectand was actively involved in project administration (para. 28).
c. Project Costs and Financing Plan
12. The total project cost at appraisal was estimated at $696 million equivalent, whichwas based on actual bid prices obtained under international competitive bidding (1GB). Theestimated foreign exchange cost was $509 million (73 percent) and the estimated localcurrency cost was $187 million (27 percent). The estimate included 9.4 percent of the totalbase cost of the Project for physical contingencies. It provided for an annual price escalationof 3.1 percent for foreign exchange costs and 6 percent for local currency costs. The actualcosts estimated by the Project Completion Review Mission (PCRM) were $753.7 million, withforeign exchange costs of $581.2 million (77 percent of total cost) and local currency costs of$172.5 million (23 percent of total cost)8. A summary of the project costs estimated atappraisal and the actual costs is shown in Table 1 (with further details in the Basic Data).
3
Arrangements
Table 1: Summary of Project Cost Estimates at Appraisal and Actual Expenditures($ million)
Component
A. Base Cost1. Contract 1
Main Bridge2. Contract 2
River Training3. Contract 3 & 4
Approach Roads4. Consulting Services5. Others
Subtotal (A)B. Contingencies
1. Physical2. Price
Subtotal (B)
13. The actual project cost was close to the cost estimated at appraisal. This was largelydue to the extensive work carried out during the project preparation phase (paras. 37-38),including advance procurement actions with bids received at appraisal. In addition, JMBA,with the support of the consultants, POE, and three funding agencies, resolved a number ofcomplex technical issues, such as the final location of the bridge, the need for extensive rivertraining, and the risk of the guide bunds being washed away. The PCRM noted theunresolved contractual claims for which a provision of $25 million was included.
14. The financing arrangements were as envisaged at appraisal. ADS, OECF, and WorldBank each provided a loan of about $200 million equivalent. The Govemment financed thebalance of $147.6 million equivalent, which includes $25 million as allocation for pendingcontractual claims and $57.7 million more than expected at appraisal largely because of theincreased costs of the river training and the approach roads.
Project Schedule
15. Project implementation was completed in June 1998 as envisaged at appraisal. Thiswas a major achievement considering the large size and complex nature of the Project andthe difficult environment, including severe hydrological conditions and short working seasons.A comparison of actual and appraisal implementation schedules is in Appendix 3.
E. of Consultants and Procurement of Goods and ServicesEngagement
16. The consultants for construction supervision and project management were recruitedin accordance with ADS's Guidelines on the Use of Consultants. For reasons of efficiencyand economy, the design consultants were retained for construction supervision, as providedfor in the ADS guidelines.
-4
Foreign Local TotalCost
Local TotalCostExchange Exchange
~
178.97
207.20
41.43 220.40
36.85 244.05
39.00
38.00
183.70
231.61
28.9027.3025.00 a
496.51
222.70
269.61
26.18 26.72 52.9022.68 4.32 27.00
52.50 52.50435.03 161.82 596.85
62.7629.7060.49
645.26
33.862.40
35.49148.15
45.3328.6473.97
10.8714.3125.18
56.2042.9599.15 84.67 23.80 108.47
~
5
17. The four civil works contracts (for the bridge, river training, and the two approachroads) were awarded following Ice procedures in accordance with ADB's Guidelines forProcurement. The thorough project preparation phase, which included extensive technicaland other studies, appropriate bid packaging, and preparation of high-quality biddingdocuments, contributed to the timely award of all contracts.
18. JMBA also decided to contract out toll collection and O&M for the bridge, awarding afive-year contract (1998 to 2002) in 1998. JMBA followed ICB procedures in awarding thiscontract. The selection process was not funded under the Project.
F. Performance of Consultants, Contractors, and Suppliers
19. The consultants engaged for both construction supervision and project managementperformed satisfactorily. The consultants to supervise construction played a critical role incoordinating the three civil works contracts, and ensuring appropriate quality in accordancewith specifications and completion of works within the stipulated contractual time period. Themanagement consultants provided day-to-day support to JMBA in the management ofcontractual matters and implementation of the RRAP, EMAP, and EFAP. The POE providedthe requireq technical guidance as well as specific expertise on critical and complex technicalmatters.
20. The contractors performed satisfactorily. The bridge as constructed generally metspecified performance requirements. The overall construction quality of all the works was inline with international standards and superior to similar projects in South Asia. The ridingquality of the approach roads is excellent although that of the bridge itself is not as goodbecause of the need to reduce the cost and the weight of the bridge. Construction problemsencountered during project implementation included (i) cracks on the bridge deck and its pre-cast units, (ii) underwater subsoil problems that led to slope failures in the river trainingworks, (iii) a need to redesign the east guide bund, (iv) delayed handover of the east bridgeend area, and (v) slow progress in embankment construction. However, all these constructionproblems were resolved in a cooperative manner with the contractors and the consultants.
Conditions and Loan CovenantsG.
21. Loan conditions and covenants were fully complied with (Appendix 4). The PCRMobserved that more covenants targeting institutional development of JMBA would have beenjustified to sustain the developmental impact of the Project and JMBA's capacity to handlelarge infrastructure projects.
Disbursements
22. As a result of speedy project implementation, disbursements of the loan proceedswere somewhat quicker than the projections made at appraisal. Details of the annualdisbursements of the loan are in Appendix 5. The original loan closing data was 30 June1999, which was extended to 30 June 2000. While the Project was substantially completed inJune 1998, the extension was necessary to accommodate, to the extent possible, thecontractual claims for contract number 2 for river training works, which were settled througharbitration.
Environmental and Social Impacts
23. The Project was expected to have significant environmental and social impacts (para.8), but the Government successfully implemented major measures to mitigate all adverseimpacts. The EMAP was developed for implementation during the life of the Project. Theidentified measures included (i) mitigation of impact during construction, (ii) agricultural
development, (iii) mitigation of adverse impact on fisheries, (iv) wildlife protection, (v) socialafforestation, (vi) water resources management, and (vii) improvements in health andsanitation. One major environmental issue that arose during construction of the bridge wasthe closing of the upstream Dhaleswari river channel. However, another channel wasdeveloped just south of the bridge to offset the impact of the Dhaleswari's closing.
24. To mitigate adverse social impacts of the Project, a comprehensive RRAP and anEFAP were implemented under the Project. These addressed the social concerns identifiedat the project formulation stage and the complaints raised by an NGO with respect to PAPson chars (para. 8). It was the first time in Bangladesh that such a broad-based andcomprehensive approach had been followed to mitigate adverse environmental and socialimpacts and it became a benchmark for future projects.
25. In terms of social impact, the PCRM noted increased market and social activities onboth sides of the bridge. In addition, new commercial and residential developments wereidentified along and beyond the approach roads to the bridge. The new bridge had also led tothe introduction of new direct bus services linking northwestern Bangladesh to Dhaka and theIndian city of Calcutta. These bus links in turn contributed to new food services, localmarkets, and the development of new establishments along the highway leading to thenorthwestern side of the Jamuna River. The PCRM conducted a small survey (para. 36) onthe social profile of bus passengers and people living near the bridge on both sides of theJamuna River. The results from the survey indicate that (i) poor travelers appreciate the newbus services, which are perceived as more convenient and faster than the old ones; and (ii)local markets have developed on both sides of the bridge. More people and goods moveacross the Jamuna River now than before the bridge was in place.
J. Performance of the Borrower and the Executing Agency
26. The performance of the Government was highly satisfactory. On-lending the loanproceeds to JMBA and assigning JMBA the status of a Government department contributedto the good performance of both the Government and JMBA. The Government adopted aflexible approach, waiving some laws and regulations, and took a proactive approach inraising funds for the Project. In 1986, the Government introduced the Jamuna BridgeSurcharge and Levy Ordinance to fund project preparation and the subsequent construction.As part of project preparation efforts, in 1986 JMBA conducted a feasibility study withfinancing from the United Nations Development Programme (UNDP), followed by furthertechnical and economic feasibility studies and subsequent recommendations on appropriatetechnical and engineering configurations. With the support of the three funding agencies, theGovernment ensured full implementation readiness by the time the loan became effectiveand supported advance actions for procurement and other preparatory work.
27. JMBA's performance was satisfactory. JMBA willingly accepted responsibility forproject implementation. JMBA played a key role in project preparation and implementation,providing the necessary focus and continuity within the Government. As the focal point, italso gave confidence to the three funding agencies to implement the Project. Staff turnover atJMBA was reasonable considering the usual high turnover of staff in Government offices.However, while JMBA was reasonably staffed, it had to rely on loan-financed TA toimplement the RRAP, EMAP, and EFAP, and to handle contractual issues and disputes.Thus, the planned transfer of knowledge and skills did not occur fully because of the focus bythe consultants on project implementation rather than training. Although the Project wascompleted largely on schedule in June 1998, there were still some contractual claimspending. This is not unusual given the complexity of the Project and the Government hastaken actions to resolve these claims.
6
~
:
,
Performance of the Asian Development Bank
28. ADB actively monitored the implementation of the Project. ADB staff followed aproactive approach. From 1994 to 1998, ADB fielded 4 review, 13 special loanadministration, and 2 special consultation missions. ADB also took active part in a joint ADB-World Bank midterm review mission in March 1997. ADB pursued several important projectissues, including the provision of dual gauge rail track on the bridge, and paid due attentionto social development issues.
EVALUATION OF INITIAL PERFORMANCE AND BENEFITSIII.
Financial Analysis
29. At appraisal, it was agreed that the Government would pursue a policy of costrecovery for the project, setting tolls that would not discourage bridge users.9 Based on astudy on the structure and level of tolls, completed in mid-June 1997, the Government settolls that were higher than envisaged at appraisal and more than sufficient to meet futuredebt-service obligations.1O So far the revenues being generated from the bridge are in linewith the toll study. The PCRM observed that the tolls had not had a negatively impact ontraffic, which was higher than estimated at appraisal and should be able to generate anadequate level of revenue to cover operations and maintenance and debt servicing costs andhave a surplus to create a reserve fund for emergency repairs for the bridge. A summary ofthe projected cash flow for the next 35 year-period is provided in Appendix 6.
Economic PerformanceB.
30. The PCRM recalculated the economic internal rate of return (EIRR) following thesame methodology that was used at appraisal.11 The estimated EIRR was 16.8 percent,which is higher than the appraisal estimate of 14.5 percent, confirming the positive effects ofthe higher-than-estimated traffic on the bridge despite the higher tolls set by the Government.While this confirms the economic viability of the Project, it is also an important achievementin light of the controversy on this matter at the early stage of project formulation, which ledto extensive economic analysis. An additional $25 million has been added as the projectedcost increase based on an assessment of the outstanding claims. The economic benefits areexpected to increase further when ADB-financed road and rail links (footnote 4) to the bridgeare completed in 2002, and when impediments to cross-border road and rail traffic betweenIndia and Bangladesh are reduced and eventually removed. A summary of the results of theeconomic reevaluation is in Appendix 7.
31. The Project was generally implemented as envisaged at appraisal, achieving all itsmajor physical and non-physical objectives. Substantial development impact is expected withthe Project, providing improved connection is established to the Northwest of Bangladeshwith over 30 million people, most of whom are poor. The PCRM noted that the Project isalready generating increased economic development through reduced transport cost andimproved access. Market developments were observed both on the east side of the JamunaRiver toward Dhaka, and on the west side, near the bridge site and along the access road to
9 No financial internal rate of return was calculated at appraisal, reflecting the focus on economic benefits rather
than financial returns, and because toll rates were to be determined during project implementation.10 During initial operations from July 1998 to March 2000, actual toll revenue was Tk1, 063 billion which is higher
than the Tk1,037 billion estimated at appraisal. The one-way total toll rates are: trucks, Tk1,OOO ($19.7); buses,Tk800 ($15.7); light vehicles, Tk400 ($79). In comparison the ferry rates in 1998 were: truck, Tk700; buses,Tk700; light vehicles, Tk270.
11 The recalculated EIRR followed the same methodology and led to the same results as in a similar
project completion report prepared by the World Bank.
7
the bridge. The positive impact of the Project is evidenced in the higher-than-expected use ofthe bridge during the initial operations from June 1998 to December 1999. As observed, thebridge had 41 percent more traffic during the initial operations compared to the appraisalestimate. This is despite the relatively high tolls adopted by the Government to maximizefinancial return rather than economic benefits.
C. Attainment of Benefits
32. The Project achieved its objectives on time and largely within budget. The mostimportant objective met by the Project was to connect the eastern and western halves ofBangladesh to foster economic development. Traffic on the project bridge is higher thananticipated, indicating the attainment of benefits beyond the expectation at the time of projectappraisal. The Project was generally implemented as envisaged at appraisal.
33. The Project is having a substantial development impact by providing improvedconnections to northwestern Bangladesh, with its more than 30 million people, most of thempoor. The PCRM noted that the Project is already promoting economic development byreducing transport costs and improving market access. The positive impact of the Project isevident from the higher-than-expected use of the bridge from June 1998 to December 1999.
34. With the completion of ongoing ADB-financed road and rail links (footnote 4) to thebridge in 2002, and the expected improvement in border arrangements between Bangladeshand India, the bridge will fulfill its role as a critical transport link on the still incomplete Trans-Asian Highway and the Trans-Asian Railway. This will facilitate trade between Bangladesh,Bhutan, India, and Nepal and promote Indian transit traffic through Bangladesh.
35. With continued economic growth in Bangladesh and growing subregional cooperation,cross-Jamuna traffic is expected to increase further, bringing economic benefits and makesubregional cooperation easier and more attractive. The Project will strengthen tradeopportunities and support the development of improved transport networks for the efficientflows of services and goods, including improved access to the northwestern region of
Bangladesh.
36. The small survey conducted by the PCRM confirmed increased travel and perceivedbenefits for the poorer groups of people traveling by bus and living on both sides of thebridge. Some of these perceived benefits are improved services, greater access, andreduced travel times. The PCRM also noted increased commercial activities along and nearthe access roads to the bridge on both sides of the river. These include new restaurants, foodstalls, shops, car service centers, and gas stations.
IV.
A. Conclusions
37. The Project has been satisfactorily implemented and is rated highly successful. Themain objective of the Project has been met, connecting the eastern and western parts of thecountry, separated by the Jamuna River, through a fixed link. The Project will stimulateeconomic growth by facilitating the transport of passengers and freight and the transmissionof electricity, natural gas, and telecommunications across the Jamuna River moreeconomically and efficiently. In addition, a dual gauge rail track has been provided on thebridge in a cost-effective manner. Without the Project, Bangladesh would have continued itsferry operations with high O&M costs and loss of lives due to frequent floods and overloadedboats. In addition, 30 million people living in the northwestern part of Bangladesh would nothave enjoyed easy access to the eastern side of Bangladesh. There would also had been
8
~
:
SIONS AND RECOMMENDATIONSCONCLU,
9
less passenger and freight traffic across the Jamuna River resulting in lower inducedbenefits. Given the large size and complexity of the Project, involving three funding agencies,the project performance demonstrates the importance of preparatory work. For the Project,this included project planning, design, procurement, early attention to environmental andsocial measures, detailed implementation arrangements, and a strong Governmentcommitment demonstrated by advance actions. The Project also shows the general capabilityof the Government to implement large and complex projects with many stakeholders, giventhe strong support of the three project financiers.
B. Lessons Learned
38. The good project implementation performance confirms that ADB, to the extentpossible, should insist on commitments, advance approvals, and actions by the Governmentbefore loan negotiations. Project preparatory and advance actions were crucial for speedyimplementation of the Project. It is also critical to have a capable executing agency withstrong project management skills supported by good consultants for the successfulimplementation of large and complex projects of this nature. Proactive ADB involvement withfrequent missions is necessary to resolve implementation issues, that may arise duringproject implementation. To maximize and sustain development impact, more attention andresources should be invested in the capacity building and institutional development of theexecuting agency.
39. The major factors that contributed to the successful implementation of the Projectwere
(i) good quality at entry with sufficient preparatory work (advance actions fordesign, prequalification of contractors, procurement of civil works, recruitmentof consultants, and Government approvals);
(ii) clear development objectives with well-defined project components;(iii) the Government's strong sense of ownership and commitment to the Project
and its provision of adequate counterpart funding and resources;(iv) good partnerships and clear roles among the Project's three funding agencies;(v) good implementation arrangements and an executing agency which was
strengthened with consultants' inputs;(vi) strong supervision and project management with adequate resources (ADB,
OECF, World Bank, the Government, and consultants);(vii) early identification of social and environmental measures, preparation of
suitable project components, albeit slightly delayed; and(viii) engagement of NGOs in implementing the RRAP, EMAP, and EFAP.
C. Recommendations
1. Project-related
40. During project preparation, a participatory approach should be adopted involving allstakeholders. Preparation of environmental and social mitigating measures should be givenhigh priority and be part of the project.
41. To expand the Project's development impact and ensure medium-term sustainability,further ADB involvement in the transport sector is warranted, subject to a strong continuedcommitment to reforms by the Government.
42. The preparation of a project performance audit report should await the completionand the initial operation of ADB-financed road and railway links (footnote 4); it could beprepared in 2003.
2. General
43. To expedite the implementation of projects, ADS should insist that the Governmentestablish project implementation arrangements before loan negotiations. Projects should bedesigned with sufficient attention and resources for project preparation to ensure the projectpreparedness. A single project management and coordination unit and a monthly progressmonitoring system should be established.
44. Projects of a similar nature should be designed with a separatecapacity building of the executing agency with sufficient trainingdevelopment, including social and environmental aspects.
45. Project design should further address expected impacts on poverty and contain amethodology and procedure for collecting and analyzing data required for the evaluation ofsuch impacts and benefits, particularly on the poor. As part of this work, interviews, surveys,and other types of activities should be included.
10
component for theand institutional
~
:
1
2
Chronology of Main Events
JMBA Organization and Project SupervisionArrangements
Implementation Schedules
Status of Compliance with Loan Covenants
Disbursement Schedule
Cash Flow Projection for the Jamuna Bridge
Economic Reevaluation
3
4
5
6
7
11
APPENDIXES
12 3,9
3,10
4,15
5,21
5,22
7,29
7,30
17
18
19
21
22
23
DATE
14-26 June23-25 August28 September15 October
06 October21 October31 October
29 January
30 January
15 February
3 March
27-31 March28 April
10May
29 August
9-16 November7 November
10-12 December
31 January1 March
13 March
14-17 May
14 May
18May
12 Appendix 1, page 1
CHRONOLOGY OF MAIN EVENTSLoan 1298-BAN(SF): Jamuna Bridge Project
MAIN EVENTS
1988 Reconnaissance Mission.Inception Mission.Draft prequalification report received.General procurement notice published in DevelopmentBusiness.Advance procurement action approved.Supplementary Mission fielded.Specific notice published in Development Business.
~
..
1989 Draft tender documents received by the Asian DevelopmentBank (ADB) for Contract 1 - bridge and approach viaduct;contract 2 - river training works and reclamation; contract 3 -east road approach and contract 4 - west road approachreceived.Draft bidding documents for contract I submitted for review toADB.Draft design report for river training works - vol. II submitted forreview to ADB.Environmental impact assessment report and draft finalfeasibility report, phase II study, received by ADB.Follow-up Fact Finding Mission fielded.Prequalification evaluation report for the four contracts receivedand reviewed by ADB.Procurement committee meeting approved the prequalificationof civil works contracts.The final feasibility study report recommended the constructionof a road-cum-rail bridge including a east-west powerinterconnector.Review Mission fielded.Draft Letter of Invitation to Project Management andConstruction Supervision Consultant received.Review Mission fielded.
1990 Notice to proceed with the final design.Draft terms of reference and letters of invitation for constructionsupervision firm and management consultants received.List of prequalified contractors for Contracts 1, 2, 3, and 4received by ADB. -Cofinanciers' meeting in Washington, DC to discuss costing andimplementation arrangements. It was also agreed thatRPT/Nedeco/BCL would be retained as consultants for technicalsupervision of the Project.Submission of final design reports and tender documents forContract 3: East Road Approach.Submission of final design reports and tender documents forContracts 1, 2, 3, and 4.
.
22 May
19 July
19 July30 July-17 August31 July
31 August
6-10 September
11 December
06 February
26 February16 March
27-29 April30 June26 July
30 July
5-7 August18-19 August28 August
3 September6 -20 September13 September
15 September13-15 October29 November
7 January12-13 January28 February
8 March
13 Appendix 1, page 2
Shortlisted firms for the management consultants received byADB.Draft letter of invitation and terms of reference for constructionsupervision and project management consultants received byADB.Strategy Report on the Resettlement Study completed.Fact-Finding/Pre-Appraisal Mission fielded.Advance action on the recruitment of consultants andretroactive financing approved by ADB Management.Consultants' selection committee meeting approved the shortlistand draft invitation documents for the construction supervisionand project management consultants.ADB held discussions with the World Bank on the rail link on thebridge.ADB approved the list of prequalified contractors for Contracts1, 2, 3, and 4.
ADB and the World Bank approved a new re-prequalification forcontractors.Draft prequalification of contractors received by ADB.General Procurement Notice as well as the Specific Noticepublished in the Development Business for the re-prequalification of contractors.Cofinanciers' meeting in held in Washington, DC.Bid opening for Contracts 1 and 2.Executing Agency approved the prequalification shortlists andevaluation prepared by consultants for the four civil workscontracts.ADB received the report on evaluation of renewedprequalification for Contracts 1-4.Cofinanciers' Meeting in held in Washington DC.Cofinanciers' Meeting held in Tokyo.ADB Board Paper on Advance Procurement Action andFlexibility in Tender Documents to Permit Joint Financing withWorld Bank.Management review meeting.Appraisal Mission fielded.ADB Management approved circulation of summaryenvironmental impact assessment (SEIA).ADB received tender documents for Contracts 1, 2, 3 and 4.Pre-bid conference for Contracts 1, 2, 3, and 4.Loan negotiations between the World Bank and theGovernment.
1992
Loan and technical assistance coordination committee meeting.Loan negotiations held in Dhaka.Procurement committee meeting approved award of contracts 1- Hyundai Engineering and Construction Co. JV Korea, 2 -Ham-VOA Joint Venture The Netherlands, 3 - Samwhan Corp,and 4 - Samwhan Corp.Loan approval.
1994
18 March16-19 April10May
10 August12 August18-29 September21 December
24-26 January7 March
11-14 March15 April
19 April24 April
27-29 April5-25 May20-22 June21 June
31 July
22 August5-9 October
30 December
03 January
15 January
16 January
24-25 March15May
14 Appendix 1, page 3
Loan signing.Project launch workshop held in Dhaka.ADB approved direct negotiations with construction supervisionconsultants, RPT -Nedeco-BCL.Appointment of management consultants, finalized and signed.Loan declared effective.Joint supervision mission held in Dhaka.Cofinanciers' monitoring committee meeting held in Dhaka.
~
First Milestone Meeting held in San Francisco, USA.Retroactive financing from $20.0 million to $31.5 millionapproved by ADB.Cofinanciers' monitoring committee meeting held in Dhaka.ADB received a copy of the position paper on the FisheriesMitigation Plan.Cofinancier's Monitoring Committee Meeting held in Dhaka.ADB received a copy of the terms of reference for FisheriesMitigation Plan - Fish Culture Development, from World Bank.Second Milestone Meeting held in Nijmegen, Netherlands.World Bank Resettlement Mission.Third Milestone Meeting held in Washington DC, USA.ADB received a copy of Jamuna Multipurpose Bridge Project(Land Acquisition) Ordinance of 1995, which was approved bythe Government of Bangladesh.World Bank Environmental Management Action Plan (EMAP)Mission.Cofinanciers' monitoring committee meeting held in Dhaka.Fourth Milestone Meeting and Cofinanciers Review Missionmeeting held in Dhaka.Signing of the contract for Plantation and Social Afforestation(Group 1- Plantation along Flood Embankment, East Side), asubcomponent of Environment Managemnt Action Plan.
1995
ADS had no objection to the constitution of an independentreview panel (IRP) and sharing the funding with OverseasEconomic Cooperation Fund (OECF).Polli Unnayon Andolon (ROM) was awarded contract asnongovernment organization (NGO) for the implementation ofthe Revised Resettlement Action Plan (RRAP).
1996
.Signing of Minutes of Understanding (MOU) between JamunaMultipurpose Bridge Authority (JMBA) and Department ofFisheries (DOF) for the fisheries survey and monitoring ofEMAP.Fifth Milestone Meeting held in Bangkok.ADB approved processing of a small-scale technical assistance(SSTA) project in the amount of $50,000 to finance a midtermreview to be carried out by an independent panel of experts(more particularly on the EMAP and RRAP components), thecost of which was to be equally shared by the cofinanciers ofthe Project.
6 June
10-23 June
8-14 July10-12 July16-26 August15 September
20 September
15 October
30 Nov-5 Dec8-10 December
24 February03-10 March8 March
13 March
2 April
8 April
16 April
15 July
22 June
7-9 October23 October
12 November
19 December
22 February
22-24 March6 April
15 Appendix 1, page 4
Amended terms of reference of the IRP presented by the WorldBank to be funded by ADB, OECF, and World Bank.World Bank Resettlement Mission fielded to supervise theimplementation of the RRAP.Review Mission fielded.Sixth Milestone Meeting held at the bridge site.IRP for EMAP and RRAP's mission set up.ADB received a copy of Guidelines for Compensating Erosionand Flood Affected Persons (EFAP).ADB received the final draft of Management Response toInspection Panel.ADB received the draft final report of the IRP on EMAP andRRAP.Review Mission fielded.Seventh Milestone Meeting held at the Project Site.
1997 Final report of the IRP received by the ADB.Midterm Review fielded.Workshop for the implementation of RRAP and Erosion andFlood Affected Persons Policy (EFAP).ADB received the procurement notice for the operation andmaintenance (O&M) and tolling contracts.ADB approved the extension of the management consultant'senvironmental advisor from 30 June 1997 to the end of theproject.Specific Notice for publication in the Development Business andADB Business Opportunities (ADBBO) for O&M and tollingcontracts approved by ADB.ADB approved a change in the loan financing percentage forthe civil works contract from 30.10 to 26.21 percent (foreigncurrency) and reduction of the local currency financing to zeroeffective 30 April 1997.Draft final report on Jamuna Bridge Project, Meter Gauge andBroad Gauge Loading received by ADB to determine whetherthe bridge can accommodate broad gauge operations.OECF has no objection to the draft prequalification documentsfor the O&M.Eighth Milestone Meeting held at Bhuapur Site, Dhaka.ADB received request for approval of revised contract amountfor contracts 1, 2, 3 and 4 (civil works).ADB received request for publication of a notice in the ADBBOand United Nations Development Business for theBangabandhu Bridge Tourism Development Project.T A 2725-BAN: Jamuna Bridge Train Configurations, for$100,000, approved by ADB.
The toll rate was announced effective from the date ofinauguration of the Bangabandhu Bridge.Ninth and last Milestone Meeting was held at the project site.ADB received a request from the Government on the increaseof ADB financing percentage along with the other cofinanciers
1998
29 May
08 June
23 June28 July
4 August
4 August
12 August
3 September
02 February
09 March
27 April
31 May
23 July
3-11 May
16 Appendix 1, page 5
from 26.21 to 36.50 percent for all the civil works contractseffective from the work certified for March 1998.ADB approved the Borrower's request to increase the loanfinancing percentage from 26.21 to 36.50 percent for all civilworks contracts effective from 1 March 1998 (foreign currency36.50%, local currency cost zero percent).OECF advised JMBA of some unresolved claims by the
contractors.Inauguration of the Bangabandhu Bridge.JMBA advised that negotiated settlement of claims should be
discussed at a mini-milestone meeting.
~
,World Bank advised that cofinanciers are willing to providefunding for appointment of expert to reach a fair settlement of
claims.Samwhan Corporation was successful for Contracts 3 and 4 inan arbitration award dated 10 July 1998 rendered by the ArbitralTribunal of International Chamber of Commerce.JMBA advised that it would not be possible for them to prepareall position papers by end August 1998.ADB received Inspection Panel report on the progress ofimplementation of EFAP.
JMBA requested ADB's approval of payments of fees and otherrelated expenses of the Facilitators and Queen's Counselproposed to be appointed to settle the disputed claims underdifferent contracts of the Project.ADB received copy of the Agreement for Facilitation Servicesfor the forthcoming negotiations on settlement of outstandingfinancial claims of Contract 1.ADB approved funding for the facilitator and Queen's Counselout of the undisbursed portion of the loan.Ministry of Finance requested for an extension of loan closingdated from 30 June 1999 to 30 June 2000.ADB approved the request for extension of loan closing datefrom 30 June 1999 to 30 June 2000.
1999
2000 Project Completion Review Mission
.
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STATUS OF COMPLIANCE WITH LOAN
Covenant
Covenant related to effectivenessof the Loan Agreement:
1. The Government will ensure the effectiveness of IDA andOECF loan agreements. To accomplish these (i) a subsidiaryagreement for relending must be finalized; (ii) contracts relatingto construction supervision, project management, andmonitoring of implementation of the RRAP and EAP must besigned; (iii) substantial progress must be made in the purchaseof replacement land for resettlement; and (iv) all necessarygovernment action required to implement the RAP and EAPmust be taken.
2. The Government's approval of Project Proformas for theProject as a whole, including the RAP and EAP.
Covenants related to ProjectAdministration:
3. The Government will ensure that the Project is carried outwith due diligence and in conformity with sound administrative,financial, engineering, environmental, and road constructionpractices.
4. Make available funds, facilities, services, land, and otherresources required in addition to loan proceeds.
5. Maintain records and accounts adequate to identify thegoods and services and other items of expenditure financedfrom the loan proceeds.
6. JMBA will maintain separate accounts for the Project thatwill have to be audited annually in accordance with soundauditing standards by independent auditors acceptable to ADBand should be furnished to ADB six months after the close ofthe fiscal year all in the English language.
7. Within one year of loan effectiveness, the Government willtake necessary action for the enactment of legislation toempower JMBA to operate and maintain the bridge, implementthe Bridge End Facilities Land Use Plan and collect tolls.
8. The Borrower will provide adequate initial working capital toenable JMBA effectively to assume the operation andmaintenance of the Jamuna Bridge upon its completion.
19 Appendix 4, page 1
COVENANTS
Status of Compliance
Complied with. The loan becameeffective on 12 August 1994.
Complied with.
with.Complied
Complied with.
Complied with. Audited FinancialStatement for FY99 submittedon 11 May 2000.
Complied with. Bridge Manage-ment contractor appointed.
Complied with.
9. Within one year of loan effectiveness, JMBA will controland monitor construction activities and other land uses in thevicinity of the Bridge that might interfere with its construction,operation and maintenance and ensure safety of personsemployed in the Project or using the project facilities.
10. Open and maintain in a commercial bank a bridgeemergency fund of at least $10 million equivalent and inconsultation with ADB replenish the said fund as and whenrequired to meet the required expenditures.
11. Carry out midterm review of the Project.
12. Implement and monitor resettlement rehabilitation inaccordance with the Resettlement Action Plan includingestablishment and operation of a management informationsystem.
13. Implement and monitor the Environmental Action PlanJncluding implementation of mitigation measures for the effectsand closure of the northern intake of the Dhalashwari river.
14. Maintain with responsible insurers for insurance of theproject facilities to such extent and against such risks and in anamount consistent with sound practice.
15. Take all necessaryproject proformas includingand EMAP.
~
20 4, page 2Appendix
Complied with.
Complied with. Fund establishedin 1995.
~
Complied with. Midterm ReviewMission carried out on 3-9 March1997.
Complied with.
Complied with.
Instead of insuring the facilitiesan emergency fund has beencreated out of the tolls collectedfrom the bridge.
Complied with.action required forthe implementation
preparing theof the RRAP
~ Projected Actual
1994 10.580 25.6431995 58.700 78.9051996 110.500 132.5331997 155.680 179.3731998 178.890 198.8501999 200.000 201.8702000 206.992
Appendix 521
DISBURSEMENT SCHEDULE
(Projected and Actual)
CASH FLOW PROJECTION FOR THE JAM UNA BRIDGE
(Tk million)
Total ReturnYear Total Costs Revenue Net Income (%) Cost Cover1998 535.5 539 3.7 0.7 1.011999 389.8 632 242.0 38.3 1.622000 395.3 768 372.7 48.5 1.942001 481.7 836 354.4 42.4 1.742002 607.9 906 297.9 32.9 1.492003 731.6 1,069 337.8 31.6 1.462004 1,103.1 1,153 50.3 4.4 1.052005 1,333.8 1,244 (90.3) (7.3) 0.932006 1,368.0 1,314 (54.2) (4.1) 0.962007 1,463.9 1,390 (73.5) (5.3) 0.952008 1,348.4 1,611 262.4 16.3 1.192009 1,306.1 1,707 400.6 23.5 1.312010 1,323.3 1,807 484.0 26.8 1.372011 1,427.2 1,914 487.1 25.4 1.342012 1,574.0 2,029 454.9 22.4 1.292013 1,558.5 2,356 797.7 33.9 1.512014 1,701.8 2,498 796.0 31.9 1.472015 1,913.7 2,647 733.3 27.7 1.382016 2,020.2 2,807 786.9 28.0 1.392017 2,131.8 2,977 845.1 28.4 1.402018 2,058.8 3,464 1,404.7 40.6 1.682019 1,979.3 3,674 1,694.2 46.1 1.862020 2,006.5 3,897 1,890.1 48.5 1.942021 2,127.4 4,133 2,006.0 48.5 1.942022 2,294.9 4,384 2,089.2 47.4 1.912023 2,231.2 5,109 2,877.4 56.3 2.292024 1,893.9 5,420 3,526.6 65.1 2.862025 1,606.9 5,749 4,142.4 72.1 3.582026 1,650.9 6,046 4,395.3 72.7 3.662027 1,767.0 6,356 4,589.1 72.2 3.602028 1,682.7 7,346 5,662.9 77.1 4.372029 1,591.3 7,720 6,128.6 79.4 4.852030 1,615.8 8,118 6,502.0 80.1 5.022031 1,742.3 8,476 6,733.8 79.4 4.862032 1,920.0 8,974 7,053.7 78.6 4.672033 1,645.7 9.436 7,789.8 82.6 5.73
Additional details:
Total Costs: Operation & maintenance plus debt service (principal plus interest).Total Revenue: Road tolls plus other revenue streams.Net Income: Total revenue minus total costs.Return: Net income over total revenue.Cost Cover: Total revenue over total costs.Assumptions: Taka depreciates by about 2 percent a year against the US dollar; toll revenues are increased
by about 10 percent every 5 years; and nontoll rates are as per negotiated rates.
Mission estimates.Source:
22
Appendix 6
~
I
General
1. The methodology of the economic reevaluation was similar to that used atappraisal. The Project Completion Review Mission (PCRM) used the latest project dataavailable.1 The actual project implementation period followed the estimated one atappraisal.
B. Economic Costs
2. The capital costs were expressed in 1993 prices. All transfer items, such as localtaxes and import duties, have been excluded. Price contingency provisions and interestand other charges during construction have also been excluded.
3. There is still some uncertainty regarding the final capital cost of the Projectbecause of the large amount of outstanding claims from the four major civil workscontractors. To determine a reasonable estimate of the final cost of the Project, thereevaluation assumed an additional amount of $25 million equivalent for additionalcontractual claims. With this assumption, the financial cost of the Project reaches $754million.
4. The local currency cost was converted to economic cost by applying a standardconversion factor of 0.89, as at appraisal, and the foreign exchange financial costs wereconverted to economic costs by using border prices. After adjusting the financial costsinto economic costs, the final economic cost of the Project was estimated at $660million, a 5.3 percent increase over the $627 million estimated at appraisal.
5. To reflect the increase in capital costs, the operation and maintenance (O&M)costs of the bridge and river training works were adjusted proportionally to the increasein capital costs and the expected increase in O&M requirements from the O&M contract.Thus, the resulting annual average O&M costs have been increased by 41 percent to$3.8 million, compared with the figures used at appraisal.
c. Economic
6. Actual traffic data was obtained from the JMBA as well as from the Aricha-Nagabari Ferry crossing from the Bangladesh Inland Water Transport Corporation forthe period June 1998 to December 1999. From the actual bridge-crossing traffic data,actual annualized average daily traffic (AADT) volumes were calculated using the samemethodology applied at appraisal. The traffic data was also related to traffic growth ratesfrom 1993 to 1997. These results are summarized in Table A7.1.
1 The data used by the PCRM was the same as used by World Bank staff when preparing a similar project
completion report.
23 Appendix 7 f page 1
ECONOMIC REEVALUATION
Benefits
Table A7o 1: Summary of Traffic Development- °Li9ht Total-
Trucks Buses Vehicles VehiclesAppraisal Estimates --000_'_-
AADT in opening year (1998) 1,093 340 196 1,629Annual Growth rate (1993-1997) 6.6 % 6.6 % 8.2 % 7.5 %
Actual at Project CompletionAADT in opening year (1998) 920 799 575 2,294Annual Growth rate (1993-1997) 3.6 % 24.1 % 32.7 % 18.1 %
Change in AADT (16 %) 135 % 193 % 41 %.. - - - .. ~. 'v
AADT = annual average daily traffic.
Source: World Bank estimates
7. The PCRM confirmed that the actual traffic volume at project completion wassubstantially higher than the estimate at appraisal despite somewhat lower truck traffic.In addition, the actual growth rate of truck traffic during 1993 to 1998 was lower than theappraisal estimates. The higher-than-expected traffic volumes of light traffic may beexplained by (i) conservative estimates at appraisal of induced traffic, (ii) the relativelylow toll for buses compared with the ferry tariff, (iii) more recreational visits to the bridgeduring the first year, (iv) time savings for passengers, and (v) reduced rates forcrossings. The lower-than-expected truck traffic could be explained by (i) the relativelyhigh toll level on trucks (Tk1,OOO per truck [one-way]) per bridge crossing as comparedto Tk700 per ferry crossing), (ii) various incentive schemes to attract drivers to the ferrycrossing, (iii) the reduced waiting time for truck traffic at the ferry crossing as a result ofthe large traffic diversion to the Jamuna Bridge, and (iv) the ongoing improvement of theTangail-Dhaka road which is scheduled for completion in 2002.
8. The actual growth rates between 1993 and 1998 have been adopted as thegrowth rates up to mid-1998 in the revised economic analysis. Keeping in mind theconservative assumptions made at appraisal, the traffic forecast for 1998-2025 hasremained the same as at appraisal at 5 percent. After 2025, traffic benefits wereassumed constant, as was done at appraisal. As a result of the revised traffic volumes,the Project's economic internal rate of return (EIRR) was affected. The higher volume ofpassenger traffic was offset by the reduction in freight benefits because of lower trucktraffic volumes.
9. At appraisal, benefits were also expected from the power transmission pylons onthe bridge (for about $6 million) compared with a stand-alone power connector (for about$114 million). The saving was taken at appraisal for the net difference in economic costsfor the power transmission across the river with and without the bridge scenario. Thissaving remained unchanged at project completion.
10. A gas pipeline was also fitted to the bridge to convey natural gas from the west tothe east and for potential export. This followed the Government's decision to bring gasacross the Jamuna River using the Jamuna Bridge for producing power on the westernside in Siranganj until gas in commercial quantities is discovered and developed on thewest side. As such, this energy benefit was quantified in terms of savings of consuminggas at the power plants instead of more costly imported oil as the alternative and
24 Appendix 7 I page 2
savings in power transmission lines from the power plant in the east to the Siranganjpower plant in the west. The net economic cost savings were estimated at about $20million from 1998 to 2000. However, since this component was not included in theoriginal economic analysis, the economic reevaluation of the EIRR was also madewithout this benefit.
11. Following a similar methodology adopted at appraisal and using the revised datadiscussed above, it was estimated that the EIRR has improved to 16.8 percent (TableA 7 .2) compared with 14.5 percent estimated at appraisal. The PCRM analyzed changesin costs and estimated benefits. If the final cost increase (based on an increase of thefinal costs resulting from increased acceptance of claims to 50 percent instead of 33percent), then the EIRR would be reduced from 16.8 to 16.2 percent. Without the gaspipeline benefit, the EIRR would be 15.3 percent. In the worst case scenario, whereproject costs increase by 20 percent and traffic benefits decrease by 20 percent, theEIRR would fall to 13 percent, but the Project would still remain viable.
D. Nonquant
12. At appraisal, many substantial potential benefits to Bangladesh were not includedbecause of the difficulties in quantifying those benefits. The high cost of freight trafficcrossing the Jamuna River had created a physical barrier to trade across the riverincurring heavy losses on both sides of the river. The elimination of this barrier by thebridge will lead to more efficient flow of services and goods within the country andstimulate economic development in the northwest of the country, which is relativelyundeveloped and has 30 million people, many of whom are poor. Another benefit willcome from expected increases in subregional traffic (road and railway), including transitfrom India through Bangladesh to eastern Indian states, which may reach 2-3 milliontons per year. It is, however, uncertain when transit traffic may materialize and itsbenefits have not been included in the EIRR, following the methodology adopted atappraisal.
13. The multipurpose bridge with road and rail links and facilities fortelecommunications, and power and gas transmission, will assist in bringing about astructural change in the economy, but this will take time. To address these developmentissues and maximize the impact of the bridge, there are a number of ongoing andplanned initiatives supported by the Asian Development Bank. These include (i)preparing an area development plan for the northwest, (ii) developing an agriculturaldevelopment master plan, (iii) financing key investments aimed at agriculturaldevelopment, (iv) constructing the east access road to the Jamuna Bridge for traffic toand beyond Dhaka, and (v) constructing railway links to connect the country's twoseparate rail networks. The Japan Bank for International Cooperation and the WorldBank are also supporting various initiatives and financing a number of projects in thetransport sector on both sides of the Jamuna River.
25 Appendix 7 I page 3
Benefitsifiable
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