NEPAL NORTH-SOUTH TRANSPORT CORRIDOR North South Transport Corridor Options IDA Strategy Note TABLE OF CONTENTS Page ... List of Previous Studies on Fast Track Route between Kathmandu

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    March 1, 2005

  • Nepal: North South Transport Corridor Options IDA Strategy Note


    Acknowledgement 3

    Abbreviations and Acronyms 4

    Executive Summary 5

    1. Background 8

    2. Sector Issues 8

    3. North South Transport Corridor Options 13

    4. Conclusions and Recommendations 18

    Annex 1: DOR Road Sector Portfolio 19

    Annex 2: Status of North South Links to District Headquarters 21

    Annex 3: List of Previous Studies on Fast Track Route between Kathmandu and Terai 22


  • Nepal: North South Transport Corridor Options IDA Strategy Note

    ACKNOWLEDGEMENT The Strategy Note was prepared by Binyam Reja, (Transport Economist/Task Team Leader, SASEI) with

    input from Rod Stickland (consultant). Surendra Joshi (Sr. Transport Specialist, SASEI) and Ernst

    Hunning (consultant) contributed to an earlier draft. Peer reviewers were Jean-Noel Guillossou (Sr.

    Transport Economist, AFTTR) and Simon Thomas (Sr. Transport Economist, SASEI). The Note was

    prepared under the overall guidance of Guang Zhe Chen, Sector Manger, Transport, SASEI. The Note

    incorporates comments received from His Majestys Government of Nepal. An earlier draft was discussed

    during a stakeholder workshop in Kathmandu, Nepal.


  • Nepal: North South Transport Corridor Options IDA Strategy Note


    BOT Build-Operate-Transfer

    DDCs District Development Committees

    DOLIDAR Department of Local Infrastructure Development & Agriculture Roads

    DOR Department of Roads

    EWH East-West Highway

    FR Feeder Roads

    FY Fiscal Year

    GDP Gross Domestic Product

    HMGN His Majestys Government of Nepal

    IDA International Development Association

    LID Local Infrastructure Development

    MOLD Ministry of Local Development

    MPPW Ministry of Physical Planning & Works

    NEPECON Nepal Engineering Consultancy Services Center Ltd.

    NPC National Planning Commission

    PIP Priority Investment Plan

    PPP Public Private Partnership

    PSP Private Sector Participation

    RF/RBN Road Fund and Roads Board Nepal

    SRN Strategic Road Network


  • Nepal: North South Transport Corridor Options IDA Strategy Note

    EXECUTIVE SUMMARY 1. His Majestys Government of Nepal (HMGN) has requested assistance from the International Development Association (IDA) to improve Nepals north-south transport corridors, aimed at enhancing the accessibility of remote hill districts and at improved market integration and trade facilitation. In this context, the concept of north-south transport corridors involves three distinct elements: (i) development of Feeder Roads to link unconnected District Headquarters with Nepals Strategic Road Network (SRN); (ii) construction of additional cross-border links with China; and (iii) construction of a new direct link between Kathmandu and the Terai, also known as the Fast Track.

    2. To enable IDA to consider this request further, an IDA team has considered relevant aspects of Nepals roads sector circumstances and institutions, has examined the specific technical and investment issues, and on that basis has identified key elements of possible investment to HMGNs road sector program.

    3. Sector Overview. Both by regional comparisons and relative to local development needs, Nepals main road network has, since the late 1990s advances, lacked much-needed expansion and improvement, as well as showing a marked deterioration in the overall road condition and quality. The main impediments have been:

    (a) Resource constraints due to low resource mobilization in the sector and declining HMGN allocations for sector expansion, as well as maintenance funding;

    (b) Lack of effective, integrated sector policies and implementation strategy;

    (c) Ineffective, narrowly focused road investment planning based primarily on administrative connectivity targets rather than on economic objectives and development outcomes; and

    (d) Institutional constraints for effective performance due to capacity, structural and incentive problems, weak monitoring and poor overall accountability.

    4. Conflict Impacts. The ongoing conflict between HMGN and the Maoists insurgents has clearly hampered but not prevented implementation of development assistance projects. As adherence to open and substantive community consultation and participation during implementation has proven valuable, any operations in this sector would need an effective local communication strategy aimed at the affected communities.

    5. Sector Resources. While the establishment of an autonomous Roads Board and Road Fund is designed to improve domestic resource mobilization for road maintenance, the resources generated by the Road Fund so far have still been relatively low. Even in combination with HMGN budget allocations, this leaves 80 percent of the road sector budget in FY04/05 to be dependent on external assistance. Overall, the road sector is acutely under funded, and both HMGN budget allocations and the scale of collections for the Road Fund should be increased to match current and projected needs.

    6. Road Sector Strategy. As presently expressed in the 2001 HMGN National Road Transport Policy and the HMGN Tenth Five Year Plan, HMGN road sector strategy needs to shift from administrative priorities into a more broadlybased, outcome-oriented roads development and investment policy, wherein sector-wide priorities reflect both strategic and development objectives. The primary aim should be balancing the needs of the population and the economy across all regions, with more priority being given to the construction and management of all weather feeder roads that provide transport access


  • Nepal: North South Transport Corridor Options IDA Strategy Note

    to settlements. The roads classification and responsibility framework also needs updating by HMGN to ensure realistic and effective attribution of responsibility and ownership for all roads.

    7. Institutional Factors. Responsibility for implementing HMGN road sector objectives has been relatively fragmented and uncoordinated among relevant agencies, which must be overcome in order to develop a sector-wide program. Capacity building activities in the sector need to shift from the typical project-oriented focus to aim at sustainable sector-wide approaches and outcomes. The sector also needs an effective performance evaluation and management framework.

    8. The Department of Roads (DOR), the main HMGN roads agency responsible for the SRN, is beginning to embrace such reforms in its Institutional Strengthening strategy. It is implementing major changes, including modernized staff mobility policies, road sector skills training, functional and staffing adjustments, more cost-effective and accountable business practices, upgraded quality management and (subject to HMGN endorsement) appropriate performance incentives and performance management mechanisms. For feeder road developments to link district headquarters, the DOR has the appropriate HMGN mandate, although its limited resources have so far been concentrated on operating and maintaining the main national highways, leaving it with little capacity for feeder roads development and operations in remote areas. To meet future feeder road demands for linking district headquarters, DOR will need to strengthen its regional units and to take action to counter the effects of poor incentive structures, its heavily centralized management style, and lack of expertise in community-based road works, which are essential for feeder road development in remote areas.

    9. Development of Feeder Roads to link unconnected District HQ with the SRN. Only half of the 1570 km earthen tracks identified in the Priority Investment Plan (PIP) and other DOR documents to connect the 17 non-road-served district HQs have so far been opened to a Fair Weather Earth Track standard. Motorized transport has yet to start because of the poor road construction quality, missing links and the lack of completion of the initial track access to district headquarters. To serve the beneficiary communities appropriately, the Earthen Tracks at least need upgrading to all-weather standard, as well as links to settlements along the corridor. Beyond the PIP, a new, well-defined, outcome-oriented Road Sector Program should be prepared by HMGN to guide the development of appropriate road access to all isolated settlements, and of all-weather motorable links to the SRN for large-population settlements. The Road Sector Program should provide the basis for donor support in the sector, as well as for providing support for road connectivity and upgrading of existing roads to all weather access to hill districts.

    10. Cross Border Links with China. Of the nine official border crossing points with China, in terms of year-round transport accessibility and capacity for further trade growth, only Kodari and Rasuwagadi would warrant development at present, with Rasuwagadi the more promising site. In consultation with HMGN, China is helping to develop Rasuwagadi as a second main border crossing. While designs for the missing 18 km from Syabrubesi to the border now being prepared by a Chinese technical team, HMGN will also need to consider upgrading the present Kathmandu-Syabrubesi road to achieve a viable commercial route overall. The associated arrangements for trade and transit across Nepals northern border will need further consultations and agreement b


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