Document ofThe World Bank

Report No. 20792 IN

PROJECT APPRAISAL DOCUMENT

ONA

PROPOSED LOAN

IN THE AMOUNT OF US$381 MILLION

TO,

THE REPUBLIC OF INDIA

FOR THE

GUJARAT STATE HIGHWAY PROJECT

AUGUST 7, 2000

Infrastructure Operations UnitSouth Asia Regional Office

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CURRENCY EQUIVALENTS

(Exchange Rate Effective March 1998)

Currency Unit = Indian Rupee (INR)INR 1.00 = US$ 0.025US$1.00 = INR39.71

FISCAL YEARApril I - March 31

ABBREVIATIONS AND ACRONYMS

AADT Annual Average Daily Traffic NPV Net Present ValueBSES Baseline Socio-Economic Survey ODR Other District RoadCAS Country Assistance Strategy PAP Project Affected PeopleCOI Corridor of Impact PCC Project Coordinating ConsultantEMP Environmental Management Plan PFMS Project Financial Management SystemEMU Social & Environmental Management Unit PIC Project Implementation Cells,RR Economic Rate of Return PIU Project Implementation Unit

FY Fiscal Year RAP Resettlement Action Plan(GOG Government of Gujarat QCBS Quality and Cost BasedGOT Government of India R&BD Roads and Buildings DepartmentGRRP Gujarat Rural Roads Project R&R Resettlement and rehabilitationHDM Highway Design and Maintenance Model ROB Road Over BridgesICB Intemational Competitive Bidding RMS Road Management SystemICR Implementation Completion Report RUB Road Under BridgesIDS Institutional Development Study SA Special AccountIRI Intemational Roughness Index SEA Sectoral Environmental AssessmentMDR Major District Road SH State HighwayNCB National Competitive Bidding SOE Statement of ExpenditureNGO Non Govermmental Organization SOS Strategic Options StudyNH National Highway TA Technical Assistance

VR Village Road

Vice President: Mieko NishimizuCountry Director: Edwin R. Lim

Sector Director: Jonathan KamkwalalaTask Leader: Fabio Galli

INDIAGUJARAT STATE HIGHWAY PROJECT

CONTENTS

A. Project Development Objective Page

1. Project development objective 22. Key performance indicators 2

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 22. Main sector issues and Government strategy 23. Sector issues to be addressed by the project and strategic choices 3

C. Project Description Summary

1. Project components 42. Key policy and institutional reforms supported by the project 43. Benefits and target population 44. Institutional and implementation arrangements 5

D. Project Rationale

1. Project alternatives considered and reasons for rejection 62. Major related projects financed by the Bank and other development agencies 73. Lessons learned and reflected in proposed project design 84. Indications of bonower commitment and ownership 85. Value added of Bank support in this project 8

E. Summary Project Analysis

1. Economic 92. Financial 103. Technical 114. Institutional 125. Environmental 146. Social 167. Safeguard Policies 19

F. Sustainability and Risks

1. Sustainability 202. Critical risks 213. Possible controversial aspects 21

G. Main Loan Conditions

1. Effectiveness Condition 212. Other 22

H. Readiness for Implementation 22

]:. Compliance with Bank Policies 22

Annexes

Annex 1: Project Design Summary 23

Annex 2: Project Description 25Annex 3: Estimated Project Costs 27Annex 4: Cost Benefit Analysis Summary, or Cost-Effectiveness Analysis Summary 28Annex 5: Financial Summary 31Annex 6: Procurement and Disbursement Arrangements 32

Annex 7: Project Processing Schedule 37

Annex 8: Documents in the Project File 38

Annex 9: Statement of Loans and Credits 39

Annex 10: Country at a Glance 43Annex I 1: Quarterly PMR Report 45

Annex 12: Institutional Strengthening Action Plan Matrix 49Annex 13: Social and Environmental Assessment 52

MAP(S)IBRD 29985

INDIA

GUJARAT STATE HIGHWAY PROJECT

Project Appraisal Document

South Asia Regional OfficeSASIN

Date: August 7, 2000 Team Leader: Fabio GalliCountry Manager/Director: Edwin Lim Sector Manager/Director: Jonathan S. Kamkwalala

Project ID: P010566 Sector(s): TH -HighwaysLending Instrument: Specific Investmnent Loan (SIL) Theme(s): Transport

Poverty Targeted Intervention: N

Project Financing Data3 Loarn O Credit LI Grant OI Guarantee L Other (Specify)

For Loans/Credits/Others:Amount (US$m): 381.0

Proposed Terms: Variable Spread & Rate Single Currency Loan (VSCL)Grace period (years): 5 Years to maturity: 20Commitment fee: 0.75%

Financ Pt n: $urce ---- ; -GOVERNMENT 152.00 0.00 152.00IBRD 218.90 162.10 381.00

Total: 370.90 162.10 533.00

Borrower: REPUBLIC OF INDIA (GOVERNMENT OF INDIA)Responsible agency: GOVERNMENT OF GUJARAT ROADS AND BUILDINGS DEPARTMENT

Address: 14, SARDAR BHAVAN, SACHIVALAY, GANDHINAGAR - 382010 (INDIA)Contact Person: Mr. H.P. Jamdar, Principal Secretary, Government of GujaratTel: 91-2712-20177 Fax: 91-2712-20036 Email: secrnb@gujl.guj.nic.in

Estimated disbursements (Bank FYIUS$M):

Annual 55.0 83.0 90.0 75.0 53.0 25.0Cumulative 55.0 138.0 228.0 303.0 356.0 381.0

Project implementation period: 5 yearsExpected effectiveness date: 11/15/2000 Expected closing date: 12/31/2005

OCS PAD - R W-K =

A. Project Development Objective

1. Project development objective: (see Annex 1)

The principal development objectives of the Project are to enhance the capacity of the Government ofGujarat (GOG) for the effective and efficient planning and management of road infrastructure, whileconcurrently maximizing existing road infrastructure asset utilization through priority investments andincreased maintenance funding.

2. Key performance indicators: (see Annex 1)

The achievement of the project development objectives will be monitored using the following keyperformance indicators: (a) by December 2004 about 800-900 km of high priority roads widened andstrengthened; (b) by December 2002 about 1,000 km of state roads maintained to a "good" standard(International Roughness Index (IRI) less than 4.0); (c) by end of project travel time reduced by about 10%on 1,800-1,900 km key State roads; (d) by end of project 10% reduction in ratio of administrative costs tocapital/maintenance expenditures; and (e) by end of project comprehensive training of about 500 staff fromthe Roads and Buildings Department (R&BD) in training schemes.

B. Strategic Context1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1)Document number: 17241-IN Date of latest CAS discussion: 02/18/99

Increasing India's potential long term growth rate through the reduction of road transport supplybottlenecks is an important CAS objective. More specifically, the CAS targets the reduction ofinfrastructure growth constraints by: (a) promoting State-level reforms in the road infrastructure sector; (b)improving strategic planning and maintenance effectiveness; (c) mobilizing increased outlays for investmentand maintenance of road infrastructure; and (d) facilitating private sector involvement in engineering,construction, and maintenance.

2. Main sector issues and Government strategy:

Road transport has become the dominant transport mode in India for both passenger and freight traffic,with demand increasing by about 10% per annumn during the last decade. As a result of this growth, theroad network carries about 60% of all freight traffic in terms of ton-km and over 80% of passenger trafficin terms of passenger-km, for a combined share of about 75%. If the current long-term rate of economicgrowth of about 5-6% is maintained, demand for inter-city freight and passenger transport is expected todouble within the next decade. To meet the growing demand for road transport infrastructure, a twentyyear (1981-2001) National Road Plan (Lucknow Plan) was prepared by the Government of India (GOL),with the objective of increasing the length of the key National Highway (NH) network from 32,000 to66,000 km. Although by 1999 the length of the NH network had been expanded to about 62,000 kmthrough the reclassification of existing State Highways (SHs) to NHs, most of the newly declared NHshave not been brought up to full NH standard and will not for the foreseeable future. The inability of theNH network to accommodate increasing traffic levels has led to the diversion (as in the case of Gujarat) oflarge volumes of traffic to the structurally and capacity deficient State road networks.

Gujarat has an area of 196,000 square km, a population of about 48 million (1999 estimate), and one of themost developed and congested road networks in India. Gujarat's road infrastructure consists of 1,570 kmof NHs, 19,655 km of SHs, 20,364 km of Major District Roads (MDR), 10,355 km of Other DistrictRoads (ODR), and 18,665 km of Village Roads (VR). During the last 15 years, the State road network has

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expanded in length from about 45,108 km to 70,609 km and the paved part of it has increased from about66% to 91% of the total length. However, most of the growth in the length of the State road network hasoccurred on the low traffic VR network which carries a very small percentage (less than 10%) of the Stateroad traffic. Today, because of high vehicle ownership growth in Gujarat (14% per year during the last 15years), motor vehicle density per 100 km of paved road is 44% above the National average. This ratio willfurther deteriorate since it is projected that car vehicle ownership in Gujarat will grow faster than thenational average.

To meet the growing demand for road infrastructure, GOG prepared a State specific road developmentmaster plan (Gujarat Road Development Plan, 1981-2001), which has been funded in part with WorldBank assistance. The first World Bank financed State specific road sector operation in Gujarat wasdtheGujarat Rural Roads Project (GRRP), which focused on the expansion and improvement of the VRnetwork. The proposed Gujarat State Highway Project (GSHP) will focus on the capacity and structuralimprovement of the core SH network which carries the bulk of the State's road traffic.

In 1996, to better define and update the objectives of the Road Development Plan, GOG issued a cabinetendorsed "State Road Policy" which included the following objectives: (a) provide connectivity to allvillages by all weather roads; (b) provide an adequate and efficient road system encompassing alltransportation needs to ensure smooth and uninterrupted flow for intra and inter-State goods and passengertraffic; (c) upgrade technology by introducing superior and quicker construction and maintenance methods;(d) induct more scientific principles in resource allocation for maintenance and new construction programs;and (e) set high standards of road safety and travel comfort. To achieve the above objectives, GOG isplanning during the 9th State Plan (1997-2001) to more than double allocations for the road sector, ascompared to the previous Plan.

Finally, to supplement public sector investment in the road sector, GOG has also developed the necessaryenabling environment to attract private sector financing in the road sector. More specifically, to facilitatepublic-private partnerships in road infrastructure financing/development, GOG has created under theR&BD the Gujarat Road Development Corporation (GSRDC). The GSRDC was established to developand implement road infrastructure projects with private sector participation with or without GOG financialsupport. So far, the GSRDC has taken up over 20 potential projects for which the feasibility studies for 10of them have been received and are currently being evaluated for funding. GOG also created two specialpurpose vehicles to fund the four laning of the Vadodara-Halol and Ahmedabad-Mehsana SHs. At present,the Vadodara-Halol SH is nearing completion and should be open to traffic as a tolled facility during the3rd quarter of the year 2000.

3. Sector issues to be addressed by the project and strategic choices:

The Project addresses several key sector issues by: (a) strengthening the institutional capacity of the R&BDto better manage the State road network through the development and implementation of a comprehensiveinstitutional strengthening action plan; (b) improving the capacity and structural quality of key segments ofthe core State road network by widening and strengthening about 800-900 km of SHs; and (c) reducing themaintenance backlog by funding the periodic maintenance of about 1,000 km of high priority State roads.

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C. Project Description Summary

1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed costbreakdown):

Indicative Bank % ofComponent Sector Costs % Of financing Bank-

(US$M) Total (USM) 'financing1. Widening & strengthening of about Highways 415.00 77.9 290.50 76.2800-900 km of SHs2. Land acquisition and resettlement Resettlement 2.00 0.4 1.50 0.4and rehabilitation (R&R) costs forCategory 1 project expenditures3. Periodic maintenance of about 1,000 Highways 68.00 12.8 47.60 12.5km of SHs4. Design & supervision of civil works Engineering 32.00 6.0 27.50 7.2contracts5. Institutional strengthening services Institutional 12.00 2.3 10.90 2.9including TA, training, and equipment Development6. Pre-investment studies Engineering 4.00 0.8 3.00 0.8

Total Project Costs 533.00 100.0 381.00 100.0

Total Financing Required 533.00 100.0 381.00 100.0

2. Key policy and institutional reforms supported by the project:

As a result of the Project: (a) R&BD's evolution from "provider" to "manager" of road infrastructure willbe accelerated and institutionalized; (b) during the next five years GOG has committed itself to increasemaintenance funding by at least 10% per annum in real terms to reduce the existing maintenance fundinggap; and (c) intemational "best practices" in the areas of engineering preparation, road construction, qualitycontrol and contract supervision will be further mainstreamed in Gujarat.

3. Benefits and target population:

The Project will lead to a net reduction in transport costs and travel times between major economic centers.The lower passenger and freight transport costs should cause a reduction in fares, marketing costs ofproducts and the price of goods. It should also cause a reduction in the transport bottlenecks which arecurrently affecting economic development in Gujarat. The Project will also generate direct benefits to thetraveling public, agricultural and industrial producers, consumers and local communities through improvedaccess to social, health and education services.

More specifically the Project will lead to: (a) greater employment opportunities through increased economicactivity and enhanced competitiveness of the tradable sectors of the State economy; (b) enhancedagricultural sector productivity and incomes through improved access to urban industrial consumptioncenters; (c) better use of public funds for the road sector through the improved efficiency and effectivenessof the R&BD; (d) modernization of the Indian road construction industry through a steady flow of high

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quality civil and maintenance contracts over a five year period; and (e) reduced social and environmentalimpacts of road infrastructure development by fully developing the traffic carrying capacity of existingroad right-of-way (ROW).

4. Institutional and implementation arrangements:

The R&BD will have overall responsibility for project implementation. It has established and staffed aProject Implementation Unit (PIU) to manage (on a day-to-day basis) project preparation andimplementation activities. The PIU is headed by a Special Secretary & Chief Engineer who is assisted by anumber of technical staff. The Project Coordinating Consultant (PCC) will also assist the R&BD duringproject implementation in the areas of: (a) design; (b) procurement; (c) finalization and implementation ofresettlement and environmental action plans; and (d) other project management activities.

A high level GOG Tender Committee (TC) will be responsible for procurement decisions and will overseethe approval of civil works and consultant contracts. GOG has already established a "Committee forMonitoring Infrastructure Development" to facilitate and expedite inter-departmental decision-making onlarge infrastructure projects.

The PIU, assisted by the PCC, will prepare comprehensive quarterly progress reports covering the physicaland financial progress of the Project. Specific monitoring of environmental and resettlement aspects of theProject will also be included in the implementation plan and quarterly reports. A formal mid-term reviewof the Project will be held by mid-2002 to review procurement and implementation progress as agreed inthe Borrower's Project Implementation Plan (BPIP). Finally, within 6 months of the closing of the Project,GOG will prepare an Implementation Completion Report (ICR) for discussion with the World Bank.

T'he road widening and strengthening component of the Project will be implemented in three phases.Internationally experienced supervision consultants will be engaged by the R&BD to serve as the"engineer" on all of the civil works contracts for this component. For the periodic maintenance componentsupervision of the works will be done primarily by the R&BD with the assistance of internationallyexperienced consultants to ensure construction quality and adherence to technical specifications.

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D. Project Rationale

1. Project alternatives considered and reasons for rejection:

The Project focuses on strengthening the institutional capacity of the R&BD to plan and manage the roadnetwork and on improving part of the core SH network to address its growing capacity and structuraldeficiencies. The Project is consistent with the World Bank's own sector strategy as defined in the "IndiaTransport Sector - Long Term Issues Report (1995)" which will be updated in 2000/2001. The WorldBank's sector strategy focuses both at the National and State levels to meet the investment and maintenancerequirements of India's core road network. Consistent with this strategy, at the National level, the WorldBank has recently approved the Third National Highway Project and has started the preparation of theFourth National Highway Project which will include the four-laning of part of the Great Trunk Route(NH2) between New Delhi and Calcutta. At the State-level, the World Bank has prepared and is currentlypreparing several State-sprecific highway projects. In the particular case of Gujarat, the GSHP will be thesecond State-specific World Bank funded road project and will complement the development objectives(expanding the quality and connectivity of VR network) of the GRRP.

GOG completed a Strategic Options Study (SOS) of the core State road network to identify roads forimprovement based on condition, capacity, traffic and connectivity criteria. Of the roads screened, about1,500 km of SHs were selected for further techno-economic feasibility studies. The feasibility studies(using economic criteria within a constrained budget scenario) selected about 800-900 km of SHs forimmediate improvement. The feasibility studies considered and optimized the different types ofconstruction improvement interventions such as: (a) strengthening roads within existing formation width;(b) widening and strengthening roads with paved shoulders; (c) widening and strengthening roads withoutpaved shoulders; and (d) four laning.

To reduce the existing SHs periodic maintenance backlog, about US$68 million has been allocated underthe Project for the periodic maintenance of the core State road network. The roads selected for periodicmaintenance works were screened on the basis of condition, traffic, connectivity and geographicdistribution criteria and all yielded positive Net Present Value (NPV) and very high Economic Rate ofReturn (ERR) (in the range of 50% to 100%).

The final choice of SHs slated for improvement and periodic maintenance works (asphalt overlays) wasmotivated by the following two considerations: (a) maximizing the benefits to the State economy; and (b)ensuring that for geographic equity reasons, the civil works should cover as large a portion of the State coreroad network as possible. Furthermore, the final size of the Project was influenced by the goodimplementation capacity demonstrated by the R&BD during the implementation of GRRP and through arealistic assessment of the financial capacity of the State to meet its counterpart funding requirements.Finally, if the GSHP is successfully implemented, a follow-up project will be considered to meet thegrowing demand for road infrastructure in the State.

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2. Major related projects fmanced by the Bank and/or other development agencies (completed,ongoing and planned).

Sector isue ,.,.,- R

Implementatlon DevelopmentBank-financed Progress (IP) Objective (DO)COMPLETEDConstruction/rehabilitation of VR Gujarat Rural Roads Project S S(basic connectivity) (Cr. 1757-IN)

Bihar Rural Roads Project (Cr. U U1072-IN)

Four laning of NHs (congestion First National Highway Project U Ureduction) (Ln. 2534-IN)Widening and strengthening of state States' Road Project (Ln. U Uroads (rehabilitation and improvement 2994/Cr. 1959-IN)of state road networks)ONGOINGFour laning of NHs (congestion Second National Highway S Sreduction) Project (Ln. 3470/Cr. 2365-IN)Technical assistance to prepare State State Roads Infrastructure S SRoad Projects (enhance institutional Development Technicalcapacity to prepare State level projects) Assistance Project (Ln.

4192-IN)Widening and strengthening of state Andhra Pradesh State Highway S Sroads (rehabilitation and improvement Project (Ln. 4192-1N)of state road networksFour laning of NHs (congestion Third National Highwayreduction) Project (Ln. 4559-IN)PLANNEDWidening and strengthening of state Proposed Rajasthan, Tamilroads (rehabilitation and imnprovement Nadu, Orissa, Mizoram,of state road networks) Kamataka, Uttar Pradesh State

Road Projects (FY2001-2003)Four laning of NHs (congestion Fourth National Highwayreduction) Project _

Other development agenciesAsian Development Bank (ADB) - First and Second HighwayStrengthening and widening to four Projects & National Highwaylanes selected NHs ProjectJapanese Bank for International Proposed First NationalCooperation (formerly OECF) (JBIC) - Highway Project & YamunaFour laning of NHs and bridge Bridge Projectconstruction

IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)

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3. Lessons learned and reflected in the project design:

To varying degrees, all World Bank-funded road projects in India have suffered from: (a) poor quality atentry; (b) weak institutional capacity for project management and contract administration; (c) inexperiencewith World Bank procurement procedures; (d) inadequate inter-agency coordination; (e) delays in handingover project sites to contractors; and (f) weak contractor and consultant capabilities.

As a result of the experience gained in implementing several road projects in India, the preparation andimplementation of World Bank funded road projects have/will incorporate the following key lessons: (a)comprehensive preparation of engineering, social, environmental, and institutional aspects to ensure qualityat entry before the start of project appraisal; (b) early implementation of institutional strengthening -measures to enhance institutional capacity for effective project management; (c) strengthened procurementcapabilities to ensure procurement of contractors and award of civil works contracts immediately followingLoan Effectiveness; (d) improved inter-agency coordination and ownership through a participatory projectpreparation process; (e) full site preparation and availability before award of civil works contracts; and (f)improved competitiveness of contractor/consultant industry through efficient procurement, improvedproject management, and contract administration.

4. Indications of borrower commitment and ownership:

GOG has demonstrated a high degree of commitment to the project design concept by fully endorsing themodel Project Identification & Preparation Framework and by outsourcing all major project preparationactivities to intemationally experienced consultants. GOG was also one of the first States to submit a"Road Sector Policy Letter" outlining the State's commitment to improve both the management and fundingof the road sector. Finally, it was one of the first States to conclude a "Participation Agreement" with GOIto access approximately US$4.2 million in project preparation funds available under the WorldBank-funded State Road Infrastructure Development Technical Assistance Project (TA Loan) (Ln.4114-IN). To date, the GOG has actually spent about US$7.0 million under the TA Loan without anyassurance that the Project would go ahead. It has also started the implementation of some of thecomponents (maintenance works) of the Project.

In 1994, GOG funded the preparation of a pre-feasibility study focusing on the investment needs of thecore SH network, to serve as the basis for a follow-on project to the GRRP. In 1995, GOG funded thepreparation of an SOS which provided the strategic prioritization of the core SH network. Together withthe pre-feasibility study, the SOS provided the basis for the preliminary selection of roads that, subject tothe results of the techno-economic feasibility studies, would be imrproved under the Project.

GOG has maintained an unusually high degree of continuity in its project management team and this hasgreatly facilitated the project preparation process. Furthermore, the same team that prepared the Project

will also be implementing it which should ensure continuity and its smooth implementation. Finally, theR&BD has also successfully completed the implementation of the GRRP exposing it to the World Bank'soperational procedures.

5. Value added of Bank support in this project:

The World Bank is in a unique position to respond to the opportunities and challenges faced by the IndianStates today, by: (a) providing and catalyzing the critical long-term capital needed to support acceleratedgrowth; (b) using the leverage of its lending volume and its advisory capabilities to accelerate theinstitutional and policy reform process; and (c) ensuring that social development and environmentalconcerns are fully reflected in project design, preparation, and implementation.

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More specifically, the implementation of the IDA-funded GRRP, which focused on the improvement andconstruction of approximately 6,000 km of VR in Gujarat, provided a strong basis to design and implementa follow-up operation in the State. Based on the GRRP and other relevant road project experiences inIndia, the World Bank has developed a State-level approach to improve road investment, management andfinancing. The preparation of several State-level road projects throughout India enables the World Bank toprovide GOG valuable first hand experience from the preparation and implementation of similar projects.Furthermore, the World Bank emphasizes "best practices" in road construction and management bysupporting the employment of consultants to carry out: (a) appropriate preparation and supervision ofconstruction and maintenance works; and (b) procurement activities.

E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8)

1. Economic (see Annex 4):* Cost benefit NPV=US$838 million; ERR = 44 % (see Annex 4)O Cost effectivenessO Other (specify)

Background. The economic analysis of the Project was based on the "Gujarat State Highways Project -Investment Prioritization Report", which included the feasibility study for widening and strengthening ofabout 1,500 km of SHs selected under the SOS. Of the roads studied, about 820 km of high priority SHswere selected for inclusion in the Project for widening and strengthening. A separate feasibility study wasundertaken which resulted in the selection of about 855 km of priority State roads for periodic maintenancetreatment under the Project's road maintenance component. The combined ERR for all the projectcomponents is estimated at 44% with an NPV of US$838 million.

Widening and strengthening component. The economic analysis was prepared using the dTIMS model(using relationships similar to the World Bank's Highway Design and Maintenance Model (HDM) IIImodel), which follows a life-cycle cost and benefit analysis. The model first calculates the discounted cashflows on a series of pavement intervention strategies comparing a "with project" scenario to a "withoutproject" scenario. (A without project scenario represents the continuation of current maintenancepractices.) Secondly, the dTIMS model applies an efficiency frontier approach to detenmine the optimuminvestment strategy under the project's constrained budget scenario. The reduction in transport costsconsists of: (a) savings in road and bridge maintenance costs; (b) savings in vehicle operating costs,including savings in "time costs" for passengers and freight in transit; (c) reduction in traffic accident costs;and (d) the net change in social and environmental costs due to the Project. Construction costs include civilworks, design and supervision, land acquisition and resettlement, environmental costs, and physicalcontingencies. The annual average daily traffic (AADT) on project roads ranges from about 3,200 to13,000 vehicles. Traffic volumes are projected to grow from a low of about 4% per year for agriculturaltractors to a high of about 11% annually for two-wheelers, with an average growth rate of about 8% perannum for all types of vehicles for the next decade. The ERR for each section of the project roads areestimated between 17% to 62%, and the component's overall rate of return and NPV are respectively 33%and $446 million, using a 12% discount rate.

Maintenance component. A maintenance study using dTIMS was also applied on about 2,000 km ofState roads to prioritize the accrued maintenance backlog of the core State highway network. The majorityof roads have traffic volumes ranging from 2,000 to 6,000 AADT. Periodic maintenance treatments usingvarious options ranging from thin to thick overlays were tested based on the road conditions and trafficvolumes. A cost-benefit analysis using a "with" and "without" project case scenario was then applied to

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assess the economic benefits of the different treatment options, taking into account savings in vehicleoperating costs, travel time and future rehabilitation costs if the roads were not optimally maintained. This

has led to the initial selection of 855 km of State roads to be funded under the Project to reduce the State's

road maintenance backlog. The estimated ERR for the component is 100% with an NPV of US$392million. The high ERR and NPV is because of the low cost of the intervention and the very deterioratedstate of the roads that have been selected for the periodic maintenance component.

Other components. Since the benefits of the institutional strengthening component are difficult toqualify/quantify, they were not included in the economic evaluation of the Project. However, both theenvironmental mitigation and R&R costs were fully incorporated into the calculation of the economic rate

of return for the widening and strengthening component of the Project.

2. Financial (see Annex 5):NPV=US$ million; FRR = % (see Annex 4)

Fiscal Impact:

Plan (capital) allocations. The Project will generate total counterpart funding requirements of about

US$152 million, of which, at least US$130 million will be from Plan allocations spread over five years. At

present, 9th State Plan allocations for the road sector are estimated at Rs. 726 Crores (about US$183million), although actual expenditures for the first three years have already exceeded this amount. For

example, during the three years of the 9th State Plan (FY97-99) have been about Rs. 831 Crores (about

US$209 million), already exceeding the Plan ceiling. For FY2000 GOG has allocated about Rs. 450Crores (about US$113 million). Although Plan expenditure for the road sector has increased substantially

above what was forecast at the beginning of the 9th Plan, counterpart funding requirements for the Project

will still place a significant burden on overall road sector allocations. This could mean that without some

funding "additionality" to meet the counterpart funding needs of the Project, the R&BD may have to

re-prioritize some of its allocations for the road sector.

Despite the large funding demands of the Project, GOG is confident that it will be able to meet the

counterpart funding requirements of the Project without "crowding out" other essential investments in the

road sector. For example, GOG has substantially increased Plan allocations (see table below) for the road

sector in anticipation of the Project starting. This is because of additional Plan resources that have becomeavailable during the 9th Plan due to more buoyant tax revenue being generated.

What follows are the State Plan expenditures for the road sector for the last six/current year:

iud"etarv Allocation Actual Exoi nditures

Indian Fiscal Year Rs. USS Rs. USSCrores Million Crores Million

1994-1995 84.0 (21.2) 118.0 (29.7)

1995-1996 101.0 (25.4) 137.0 (34.5)

1996-1997 164.0 (41.3) 164.0 (41.3)

1997-1998 170.5 (42.9) 181.1 (45.6)

1998-1999 299.0 (75.3) 366.7 (92.4)1999-2000 361.0 (90.9) 361.0 (90.9)

2000-2001 450.0 (113.4)

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Non-Plan (maintenance) allocations. Compared to Indian FY 1999-2000, 2000-2001 maintenanceallocations for routine and periodic maintenance are expected to increase by 18% to about Rs. 324 Crores(about US$81 million). GOG has been increasing maintenance funding in real terms for the last severalyears and is now spending about 60% of GOI Finance Commission norms for road maintenance versus lessthan 50% three years ago. Although maintenance funding levels have improved during recent years, theyare still insufficient and have led to a large periodic maintenance backlog. This is especially the case forthe high traffic SH network which is the focus of the Project.

To reduce the maintenance backlog, a US$68 million maintenance component was included for fundingunder the Project. The maintenance component will generate counterpart funding requirements of aboutUS$21 million over a three year period. To meet the counterpart funding needs of the maintenancecomponent and to reduce the existing maintenance funding gap, GOG is fully committed to implementingthe provisions of the "State Policy Letter" which calls for an annual 10% real increase in maintenancefunding over the next five years. If maintenance funding is increased as committed in the "State PolicyLetter", the counterpart funding requirements of the maintenance component of the Project could beabsorbed by GOG.

To reduce the counterpart funding impact of the maintenance component on the maintenance budget, GOGis considering making allocations for the Project "additional" to regular non-plan budgetary allocations formaintenance. To supplement the maintenance budget, GOG is also seriously considering the possibility ofestablishing alternative dedicated funding mechanisms such as a dedicated road fund to at least meet themaintenance funding needs of the State road network.

What follow are the road maintenance expenditures for the last six years and for the current year brokendown by type of State road:

SH MDRIOODRVR Total Total(Actual) (Actual) (Actual) (Budgoted)

Indian Fiscal Rs. US$ Rs. lJus$ R. USs Rs. USsYar Crores Million Crores Million Crores Million Crores Million

1994-1995 114.0 (28.7) 87.0 (21.9) 201.0 (50.6) 161.0 (40.6)1995-1996 114.0 (28.7) 87.0 (21.9) 201.0 (50.6) 163.0 (41.0)1996-1997 128.0 (32.2) 94.0 (23.7) 222.0 (55.9) 178.0 (44.8)1997-1998 132.0 (33.2) 95.0 (23.9) 227.0 (57.1) 195.0 (49.1)1998-1999 153.5 (38.7) 109 (27.5) 262.0 (66.0) 238.8 (60.2)1999-2000 161.4 (40.7) 112 (28.2) 273.4 (68.9) 274.0 (69.0)2000-2001 324.3 (81.7)

3. Technical:High volumes of heavy, often overloaded, inter and intra-State road traffic have so distressed roadpavements that their economic lives have been prematurely shortened and their reconstruction and wideningis, in most cases, long overdue. The improvement of SHs selected under the Project will involve provenconstruction techniques, while the engineering standards will follow a blend of Indian and international"best practice". Accordingly, the Project will introduce higher standards than currently followed on SHs inIndia in terms of road geometry and pavement design, construction methodology and quality control. The

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quality of engineering preparation was enhanced through the use of highly qualified engineering consultantinputs. To ensure high and construction quality, construction supervision will be the responsibility ofindependent internationally-experienced consultants who will be the "Engineer".

Under the periodic maintenance component, proven overlay and resealing techniques using automaticpavers and bituminous mixes will be used. The Project will build on the R&BD's current practice ofcontracting out maintenance works to the private sector and will introduce advanced maintenance planningtechniques, strengthened work methods and quality control. Contractors will be procured to executeperiodic maintenance contracts and experienced consultants will assist R&BD in investigations andimplementation of the maintenance works. The Project will include transfer of "best practices" through theprogressive introduction of surface dressing techniques.

To ensure the long-term sustainability in the technical quality of road construction standards, theinstitutional strengthening action plan includes the introduction of sound business practices such as qualitymanagement, technical audits and training of R&BD staff and contractors.

4. Institutional:

4.1 Executing agencies:

The structure of the R&BD is similar to that of other Public Works Departments (PWD) in India and it isresponsible for the operation and maintenance of all State-owned roads and buildings. The R&BD has anagency agreement with the Ministry of Surface Transport (MOST) for the maintenance of NHs in Gujarat.The R&BD includes eight units: Roads and Buildings (State), National Highways, Capital Projects,Expressways, Roads and Buildings (Rural), Quality Control, Engineering Staff Training College, andArbitration. The R&BD currently employs about 31,000 people of which about 1 1,000 are staff and about20,000 are laborers.

To accelerate the transformation of the R&BD from "provider" to "manager" of road infrastructure, GOGhas procured internationally experienced consultants to undertake a comprehensive InstitutionalDevelopment Study (IDS) of the R&BD. The objectives of the IDS are to improve the capabilities of theR&BD in executing the following activities:

a. road planning and investment selection based on user requirements, road transportation networkfactors, and sound economic considerations;

b. planning, implementation, and management of road construction programs;c. development and management of efficient, cost-effective, and rationally-determined road network

maintenance programs;d. generation of increased, dedicated, and sustained levels of funds for on-going road network

maintenance needs and planned road investment requirements;e. effective use of private sector resources in the engineering and execution of Gujarat's road

projects/programs; andf. consultation with the main road user stakeholders in Gujarat in the planning of road network

developments, and investments for improved road transport.

The IDS was completed prior to project appraisal and was prepared in a fully participatory manner tomaximize inputs from other relevant departments within GOG and from road transport infrastructure users.Based on the results of the IDS, GOG has fornulated a comprehensive "Institutional Strengthening ActionPlan Matrix" (see Annex 12) to be implemented during the life of the Project. (Despite the fact that project

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implementation has not started, GOG has gone ahead and started the implementation of certain parts of theaction plan.) The action plan comprises of a set of activities, which will be undertaken by GOG andR&BD, to create new units and to launch/implement new systems for strengthening road planning andmanagement. Actions proposed are divided into five main groups of activities:

a. actions to strengthen R&BD's policy formulation and planning capacity;b. actions to strengthen highway design capacity and construction administration;c. implementation of a Road Management System (RMS);d. actions by GOG and R&BD to improve road transport coordination; ande. installation of computer systems needed to operate modem financial management systems.

The full development and implementation of the aforementioned activities have been costed and will befunded under the Project. This should result in sustainable improvements to GOG's institutionalframework for effective and efficient management and development of road infrastructure in the State.Furthermore, the establishment of the GSRDC will facilitate public-private partnerships in roadinfrastructure development and will contribute to a more sustainable road network through increasedfunding and more efficient management of key segments of the road network.

4.2 Project management:

The R&BD has demonstrated the necessary institutional capacity to manage both the preparation andimplementation of the Project. The establishment of a PIU together with continuity in key R&BD staff willmean that the same team that prepared the Project will actually be implementing it which should ensuremore than adequate project management capacity. Furthermore, to assist the R&BD in implementing theproject, specialized consultant services have been and will be used to assist in project management.

4.3 Procurement issues:

A procurement plan for all of the project components has been prepared and agreed with the World Bankand the implementation of certain components of the project has already started and will be funded usingretroactive funding. The widening and strengthening component will be procured in three phases (Phase I,IIA & IIB) using international competitive bidding (ICB) while the periodic maintenance component will beprocured in a three year program, of which the first year program has already started, using nationalcompetitive bidding (NCB). The total number of contracts to be procured using ICB will be about 14while about 60 contracts will be procured using NCB. The contract amounts for the ICB procurement willrange from about US$10-40 million while for the NCB procurement will range from US$1-5 million.Consultants to provide supervision, TA, and training services will be selected following Fixed Budgetmethod, Sole Source Procurement and Quality and Cost Based (QCBS).

4.4 Financial management issues:

Having successfully completed the implementation of the GRRP, R&BD is familiar with the World Bank'sfinancial reporting, accounting, and auditing requirements. At present, R&BD follows a cash-basisgovernment accounting system. The cash-basis govermment accounting system focuses mainly onbookkeeping and expenditure control vis-a-vis budgeted grants as opposed to overall financial managementof activities. Under the current system, there are delays in obtaining relevant costing information and thedepartment is not well equipped to capture and produce timely financial management infonnation.

To improve its financial management systems, the R&BD has agreed to develop and implement acomputerized Project Financial Management System (PFMS) capable of providing timely and reliableinformation to monitor the Project's progress in achieving the development objectives. The system willreflect component and category-wise expenditures, provide costing information and produce financial

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reports that show up-to-date actual versus budgeted expenditures for the current period and to date. ThePFMS will be able to capture procurement related information so that procurement limits outlined in theprocurement schedules are properly followed and up-to-date contractual costing information is available.The system will also be able to generate the Schedule of Withdrawal of Proceeds (Form 1B) and theStatement of Expenditure (Form 1C) required for submission to the World Bank for withdrawal of Loanfunds.

Project financial statements compiled by the PFMS will be audited annually by an independent auditor inaccordance with auditing standards acceptable to the World Bank. The audit of project accounts willinclude an assessment of: (a) the adequacy of accounting and internal control systems; (b) the ability tomaintain adequate documentation for transactions; and (c) the eligibility of incurred expenditures for WorldBank financing. The audited project financial statements (which include a summary of Statement ofExpenditure (SOE) disbursements and the auditor's opinion) will be submitted to the World Bank within 6months after the closure of each fiscal year. The audit report on the Special Account (SA) maintained bythe Department of Economic Affairs (DEA) will include a summary of SA transactions and the closingbalance held by the Reserve Bank of India (RBI). The SA audit report will be submitted to the WorldBank not later than 6 months after the closure of each fiscal year.

5. Environmental: Environmental Category: B (Partial Assessment)5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (includingconsultation and disclosure) and the significant issues and their treatment emerging from this analysis.

A Sectoral Environmental Assessment (SEA) consistent with the World Bank's OD 4.01 and has beencarried out by the R&BD. A preliminary screening was conducted on 1,500 km of roads of which about886.4 kmn have been selected for further development on the basis of environmental, engineering, social andeconomic criteria. The SEA covers the full 1,500 km of proposed State roads. Of the 826.8 kmn selectedfor detailed engineering, Phase I includes about 246 km for which the detailed engineering was carried outand a more comprehensive environmental impact assessment was completed before project appraisal. Ofthe remaining 580 kIn, about 244 km have been covered under Phases IIA and the remaining roads arecovered under Phase IIB. The Environmental Assessment (EA)/Environmental Management Plan (EMP)for Phase HA has been completed by applying the same procedures defined by the SEA and GOIspecifications.

The proposed project construction activities will be restricted to the existing ROW except for certain minorrealignments and one or two short bypasses. According to the SEA, no sensitive environments have beenidentified on the project roads. Two sanctuaries, the Wild Ass Sanctuary and the Khijadia Bird Sanctuarynear Jamnagar, both of which are part of the Phase IIB roads are located at least 5-10 km from the nearestproject roads. The EMP for Phase IIB roads covers the stretch of the roads near the two sanctuaries andappropriate mitigation measures have already been incorporated in the engineering designs whereappropriate.

The road construction work will mainly consist of widening and strengthening of pavement and berms,re-placement of culverts and drainage ways, improvements to road surface and reconstruction and/orrehabilitation of existing bridges. Except for minor realignments (required to improve road safety), almostall the construction work will be carried out within the existing ROW. Thus the direct impact of the roadwill be restricted to the existing ROW and only limited land acquisition is expected. Some communityrelated impacts such as partial loss of ponds, shrines, sacred groves, etc. were also identified. In mostcases, the mitigation measures for such communal issues were in the form of "design" solutions which havealready been included in the detailed engineering.

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With only minimal impact on land use, the other potential environmental impacts include: (a) air and noisepollution during construction and during operation; (b) dust and smoke from material transport, borrowareas, quarries, crushers and asphalt plants during construction; (c) pollution from oil, fuel, and lubricantspills; and (d) sewage and solid waste generated by construction camps. The EA recommends specificmeasures for incorporation in the design, construction and operation of the Project roads to minimizeadverse impacts. For example, in the design phase, widening of the road will be done on the side with theleast number of trees to minimize the loss of road side plantings. Extensive compensatory afforstetationwill be done both along the State roads being improved under the Project and as part of existing forestryschemes in other parts of the State.

Overall, the Project will generate significant environmental benefits such as reducing dust and noise,increasing the productivity and supply of services, and improving road safety in Gujarat. The Project willalso lead to a reduction in road congestion and thereby to a decrease in local air pollution. The positivebenefits will be enhanced by incorporation of appropriate mitigation measures and enhancement actionssuch as tree planting, dust suppression, traffic separation through construction of medians, and designmodification for non-motorized traffic.

5.2 What are the main features of the EMP and are they adequate?

The EMP has been prepared by the R&BD and agreed with the World Bank. The Plan includes, in genericterms, measures to mitigate environmental impacts during construction, monitoring of relevant indicators,institutional strengthening, and screening of possible future road components with indicative budgets andtarget dates. For Phase I & IIA roads, a detailed Environmental Study Reports including the EMP andRAP have been prepared and disclosed in the Infoshop.

The key mitigation actions (environmental clauses) included in the construction contract specificationsinclude: (a) restoration of borrow areas and prevention of stagnant water; (b) seeding of embankmentslopes and planting of trees; (c) proper placement and management of construction camps and maintenancedepots; (d) proper disposal of solid and liquid wastes from construction camps; (e) prevention of dust,accidents and vehicular damage through road sprinkling and safe handling and diversion of constructiontraffic; and (f) proper selection, mnaintenance and operation of equipment to minimize environmentaldisturbance and to ensure compliance with air, noise, and emission standards. Clauses have also beenadded to the contract terms and conditions of the civil works contracts covering issues concerning technicalability of the contractor to execute environmental mitigation measures, proper notification of works, the useof local materials, etc.

5.3 For Category A and B projects, timeline and status of EA:Date of receipt of final draft: April 1998

The SEA for the full project together with EA for Phase I and IIA works have been cleared by the WorldBank.

5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EAreport on the environmental impacts and proposed environment management plan? Describe mechanismsof consultation that were used and which groups were consulted?

For the SEA, initial stakeholder consultation and establishment of a consultation task force were carriedout at the State-level. Later, during the preparation of Phase I, IIA and IIB environmental assessmentreports, the consultation focused at the local community level and was carried out on an on-going basis toensure satisfactory resolution of issues. In the GSHP, community consultation was carried out beyond thescope of conventional consultation and was aimed at the generation of positive outlook and confidence

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building of the concerned communities towards the project. Therefore, considerable attention was paid tothe design and method of information sharing (leaflets and materials were prepared in Gujarati, postersshowing the proposed roads and providing information and dates of meetings were designed and displayedat prominent places, etc.), and follow-up meetings were conducted to discuss issues raised by stakeholdersand how these issues were being tackled. Consultation was carried out at the village level, through focusgroups, individual interviews and discussions with the local non governmental organization (NGO).

During the consultation process, stakeholders raised a number of issues including disruption duringconstruction, the entitlement framework and road safety. Other related issues focused on were: roadwidening, safety of school children and pedestrians crossing the roads, provision of bus stops, drainage,cultural properties, tree plantation, and parking spaces. The issues raised during consultation process weresuccessfully addressed by modifying the engineering designs and making appropriate provisions in the RAPand the EMP.

5.5 What mechanisms have been established to monitor and evaluate the impact of the project on theenvironment? Do the indicators reflect the objectives and results of the EMP?

A Social & Environmental Management Unit (EMU) has been established within the PIU to manage theimplementation of the social and environmental mitigation measures, to carry out environmental monitoringand to tackle future environmental issues. The Unit will be responsible for: (a) reviewing project designsfor environmental adequacy; (b) supervising and monitoring the social and environmental aspects of theProject during construction; and (c) assisting with other related environmental matters.

Ambient air quality will be monitored for breathable and suspended particulates (RPM & SPM), carbonmonoxide, nitrogen oxide, hydro-carbons, sulfur dioxide and lead at designated locations, for at least fiveyears from the commencement of construction. Similarly, water quality will be monitored for standardphysical, chemical and heavy metal parameters. Ambient noise level measurements will be carried out atvarious designated locations along all project corridors. All contractors are required to submit a monthlyreport on environmental supervision carried out and document key environmental concerns. These reportswill form part of the monthly status report to be prepared and submitted by the EMU on the status andimplementation of the EMIP.

To assist and enable the EMU to implement the EMP and RAP, a comprehensive training program hasbeen set up as part of the institutional strengthening of the PIU. The training will cover basic principles andrequirements of the environmental and social mitigation plans and programs, implementation techniques,monitoring and management methods and tools. Parts of the training modules will be offered to contractorssupervising personnel. The training program will upgrade technical knowledge and will also targetmid-level management through environmental awareness-raising seminars. An immediate operational planfor the EMU has been suggested including procurement of external expertise to assist in the initial period ofimplementation of the project.

6. Social:6.1 Summarize key social issues relevant to the project objectives, and specify the project's socialdevelopment outcomes.

The project will result in substantial social benefits through the improvement of the core State roadnetwork. The project will also contribute to the reduction in road congestion, abatement of air and noisepollution, and improvement of roadside drainage especially in the urban sections. At the village and locallevels, people will be provided access roads, footpaths, service lanes, bus stops, truck parking facilities,street lighting, road side rest areas, and improved road side environment.

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Although the project will generate substantial social benefits, it will also cause some adverse impactsassociated with land acquisition and displacement of people depending on the ROW for livelihood and/orshelter. However, land acquisition will not be a major issue under the project, since the proposed workswill stay largely within the existing road ROW which is generally clear of structures. Only about 65hectares of land will need to be acquired for one/two by-passes, realignment of curves (for safety reasons)and improvement ofinter-sectionjunctions. Through screening and local consultation, project preparationhas minimized land acquisition requirements and other losses of assets or resources. About 50 ProjectAffected Families (PAF) will be severely affected in the form of loss of livelihood or house in a total lengthof 826.8 km. Another 1,203 PAFs will suffer only minor or temporary impacts such as loss of a small partof their land holdings, loss of wells and tress, etc. Where temporary or permanent relocation of people isrequired, or where the Project is likely to cause other types of losses, appropriate R&R actions have beenundertaken as an integral part of project preparation and implementation, in accordance with the relevantWorld Bank's OD/BPs on involuntary resettlement, and GOIIGOG's guidelines for social andenvironmental assessment of road projects. The R&R entitlement framework and RAP have been preparedcontaining the mitigation measures and resettlement assistance to be extended to the affected persons toimprove their overall living standards.

The key social issues and risks arising out of the project are: (a) potential adverse impacts associated withland acquisition and (b) social inclusion by extending the assistance and support to the vulnerable affectedsquatter and encroached persons in re-establishing their shelter and livelihood opportunities who otherwiseare not eligible for any assistance and compensation under local laws and procedures.

What follows is a summary table of the number of PAFs that will be affected by the project:

. . . .._. t ! P.#*tsie ' . N4m*TYPO ptoffssO)o~mU. Toa

Severe Impacts (Loss of 4 27 19 50livelihood or house)

Minor or temporary 197 614 392 1203impacts*

TOTAL 201 641 411 1253

Land Acquisition 9.0 26.78 29.80** 65.58(Hectares) _ l

* Minor or temporary losses include agriculture encroachment, pushing of Kiosks beyond COI without affecting their livelihood,residential and commercial spillover encroachments, loss of small/narrow strip for realignments, loss of wells, trees, etc.

**lndicative estimates. Actual estimates will be available after the completion ofjoint measurement surveys.

6.2 Participatory Approach: How are key stakeholders participating in the project?

A series of public participation activities were undertaken during the project preparation process. The keystakeholders involved during these process include; various government departments including R&BD,NGOs, affected persons, road side communities, local government representatives, and villages heads. Thetechniques used for participation meetings include village meetings, focus group meetings, individualinterviews and consultations with NGOs. The major issues discussed during the meetings included, butwere not limited to; road widening, safety, compensation, resettlement policy provisions, impact onencroachers and squatters, creation or improvement to bus stops, drainage, impact on common properties,etc.

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6.3 How does the project involve consultations or collaboration with NGOs or other civil societyorganizations?

GOG has confirmed that the social and environmental components of the Project have been prepared in afully participatory manner to meet the needs and aspirations of the people living within the project impactarea. Extensive consultations were held with a wide variety of stakeholders during the project preparationphase and furither consultations will be held during the period when the final designs are available. Keystakeholders included community leaders, local government officials as well as the rank and file ofpotentially affected people. These consultations resulted in basic changes in the road design in terms ofpavement widths and "shoulder" treatrnent to benefit non-motorized traffic, more sensitive selection ofalignments, and sensitive treatment of roadside shrines. Other key stakeholders include grass rootsassociations established for "vulnerable groups", NGOs, and special user groups indirectly affected by theROW location. These stakeholders have had an influence in shaping construction practices, such as dustsuppression and reduction in noise levels in the vicinity of communities. Extensive consultation will takeplace with entitled people on entitlement options, grievance process during the implementation of actionplans.

6.4 What institutional arrangements have been provided to ensure the project achieves its socialdevelopment outcomes?

The EMU that has been created within the R&BD department will not only oversee the implementation ofthe environmental component of the Project but will also manage the implementation of its socialcomponents such as the RAP. The necessary expertise to implement the RAP will be fully mobilized priorto the start of project implementation and the process to recruit local NGOs having similar experience toprovide the R&BD with support to implement the RAP has already started. The district level market value"Assessment and Grievance Redress Committees" will be established prior to the start of implementation inaccordance with the policy provisions to deal with the issues of payment of compensation and hear thegrievances of the Project Affected People (PAP).

6.5 How will the project monitor performance in terms of social development outcomes?

The RAP has developed both the monitoring and evaluation process/procedures. These include keybaseline data in terms of socioeconomic and demographic characteristics, asset ownership, type of housing,monthly incomes and nature of occupations which will become reference for assessing the impact of theproject during the post implementation period. The Quarterly Progress Reports will include some of thekey physical and financial indicators concerning the implementation of the RAP which will be used as amanagement tool to monitor progress in its implementation and, if required, to make mid course alterations.The RAP also provides the scope for undertaking an independent impact evaluation by an extemal agencyat the end of implementation period to assess the social development outcomes. The assessment of socialdevelopment outcomes will provide information for the preparation of the ICR for the Project.

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7. Safeguard Policies:7.1 Do an of the following safeguard policies apply to the project?

3 Environmental Assessment (OP 4.01, BP 4.01, GP 4.01) Z Yes Cl NoEl Natural habitats (OP 4.04. BP 4.04. GP 4.04) U Yes El No

El Forestry (OP 4.36, GP 4.36) [ Yes El No[E Pest Management (OP 4.09) E1 Yes El NoEl Cultural Property (OPN 11.03) U Yes El NoEl Indigenous Peoples (OD 4.20) El Yes El No

3 Involuntary Resettlement (OD 4.30) X_ ___Y_es El NoEl Safety of Dams (OP 4.37. BP 4.37) O Yes O Nol Projects in International Waters (OP 7.50. BP 7.50 GP 7.50) a Yes El NoEl Projects in Disputed Areas (OP 7.60. BP 7.60. GP 7.60) Yes 2 No

7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies.

The GOG through the EMU/PIU will manage the implementation of the environmental mitigation measuresand will carry out the environmental monitoring and address any environmental issue that may arise. Acoordinator(s) working with an environmental specialist, concerned NGOs, and a social specialist will beincluded in the EMU. The Unit will be responsible for: (a) reviewing project designs for environmentaladequacy; (b) supervising and monitoring the environmental aspects of the Project during construction; and(c) assisting with other related enviromiental matters. The Unit will also provide input to the QuarterlyProgress Reports to monitor the implementation of the environmental component of the Project and willhold training workshops and briefings to disseminate appropriate information to the site supervisors and thecontractors' personnel.

The R&R entitlement framework has been reviewed and endorsed by both the World Bank and GOG.Consistent with the R&R Entitlement Framework, the RAP was prepared/finalized by GOG after reviewand endorsement by the World Bank. The RAP is currently being updated to reflect more up-to-dateinformation on all three road widening and strengthening phases. The preparation of the RAP wascoordinated by the R&BD, working closely with a local NGO who had previous experience in theapplication of the World Bank's R&R requirements. A joint R&BD/Department of Revenue verification ofthe legal boundaries of ROW and a census of people and assets along the road corridor was undertaken toact as a baseline with verified resources (structures, land, etc.) and to provide a cut-off point for eligibilityfor compensation or other assistance. The joint verification also included privately held assets andproperties that are currently occupied by squatters and encroachers within the ROW. Following this, amore detailed Baseline Socio-Economic Survey (BSES) was undertaken for the State roads to be improvedunder the Project. The BSES distinguishes between impacts inside and outside the public ROW; providestargeted support to vulnerable groups; and addresses potential losses of assets, livelihood, and impacts oncommunities and groups such as loss of common property resources. The RAP contains individualentitlements under the proposed policy, organizational mechanisms, principles for consultation and localparticipation, grievance procedures, budget, time-table and monitoring and evaluation mechanisms.

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The EMU/PIU will be responsible to ensure the implementation of the RAP. During projectimplementation, a social development specialist from the World Bank will periodically visit project sites toensure the timely and appropriate implementation of the RAP. The Quarterly Progress Reports will alsoprovide the necessary information to ensure the monitoring of the compliance of safeguard policies oninvoluntary resettlement.

F. Sustainability and Risks

1. Sustainability:

GOG's commitment to increase maintenance funding for the road sector to gradually reduce the current gapis probably the single most important factor that should ensure the long term sustainability of the State'sroad network. The Project will enable GOG to fund the periodic maintenance of about 1,000 km of keyState roads thereby reducing the accrued maintenance backlog, lowering road maintenance costs andhelping to preserve the capital investment already incurred on those roads. However, without a sustainedcommitment to real increases in maintenance funding, the State's road network will continue to deteriorateand this will result in increased transport costs for both the State and National economy.

Increased maintenance funding will be complemented by imnproved maintenance management practices andthrough the introduction and "operationalization" of a RMS. Improved maintenance management practicesshould facilitate a more effective and hence sustainable use of scarce maintenance funding resources.

Furthermore, the institutional strengthening action plan developed for the Project focuses on theintroduction of improved planning, budgeting, financial and management practices for the R&BD. Amodernized and strengthened R&BD would be in a better position to effectively manage the State roadnetwork, further ensuring its sustainability.

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2. Critical Risks (reflecting assumptions in the fourth column of Annex 1):

7' 1 , :7' ' ' , , 7 : '.sk R M '. .,, :u i

From Outputs to ObjectiveContinued traffic congestion due to higher M Realistic traffic growth projections and fourthan expected traffic growth. laning of roads wherever traffic volume and cost

warrant it.Weak ownership of institutional M Full ownership through extensive consultation instrengthening action plan. the development & implementation.of

institutional strengthening action plan.Delays in implementation of institutional M Detailed Institutional Strengthening Action Planaction plan. Matrix with monitoring indicators has already

been developed and agreed.Inadequate maintenance funding M Fully funded maintenance component to reduceprovisions. maintenance backlog together with State Policy

Letter committing GOG to increasedmaintenance allocations should ensure adequatemaintenance funding.

From Components to OutputsExecution of civil works by poorly M Strict pre-qualification criteria, supervision byqualified contractors leading to internationally experienced supervisionconstruction delays, low construction consultants, and suitably packaged contractquality and cost overruns. packages should ensure satisfactory execution of

civil works contracts.Inadequate, erratic and delayed flow of M 25% GO1 advance central assistance forcounterpart funds. externally funded projects should ensure smooth

implementation.Delays in site preparations and in M Up-front preparation of RAP and EMP togetherimplementation of RAP and EMP. with close monitoring of its implementation by

World Bank.

Overall Risk Rating M

Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk)

3. Possible Controversial Aspects:

None. All major adverse factors have been addressed fully in the above risk analysis. Extensiveconsultation with a wide variety of stakeholders, civil society and GOG should ensure that the physicalcomponents of the Project will be implemented in a transparent manner and in full compliance with WorldBank policies, local norms and laws.

G. Main Loan Conditions

1. Effectiveness Condition

1. Standard legal conditions; and2. Appointment of consultant for development and implementation of a computerized PFMS in the PIU

(effectiveness condition already met).

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2. Other [classify according to covenant types used in the Legal Agreements.]

1. GOG will implement the EMP and RAP in accordance with agreed objectives, policies, and tirneschedules;

2. GOG shall ensure that all civil works contracts include environmental mitigation measures satisfactoryto the World Bank;

3. GOG will increase, for the duration of the Project, annual maintenance expenditure by at least 10% inreal terms starting from Indian FY2000/200 1;

4. For the duration of the Project, GOG shall submit to the World Bank its approved capital andmaintenance allocations for the roads sector within thirty days of GOG approval;

5. By June 30, 2002, GOG will undertake together with the World Bank a mid-term review of projectimplementation and, if necessary, take actions to modify the project scope as may be mutually agreed;and

6. Develop and install a computerized PFMS by December 31, 2000.

H. Readiness for Implementation

Z 1. a) The engineering design documents for the first year's activities are complete and ready for the startof project implementation.

[] 1. b) Not applicable.

IS 2. The procurement documents for the first year's activities are complete and ready for the start ofproject implementation.

Z 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactoryquality.

El 4. The following items are lacking and are discussed under loan conditions (Section G):

1. Compliance with Bank Policies

1 1. This project complies with all applicable Bank policies.El 2. The following exceptions to Bank policies are recommended for approval. The project complies with

all other applicable Bank policies.

Gahi ffJonathan S. Kamkwalala E in LimTea Leader Sector Manager/Director Country Manager/Director

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Annex 1: Project Design SummaryINDIA. GUJARAT STATE HIGHWAY PROJECT

Sector-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goal to Bank Mission)1. Reduce road infrastructure State Plan allocations for World Bank to monitor actual GOG continued commitmentbottlenecks by: (a) promoting capital improvements of road 9th State Plan allocations and to State-level reforms.State-level reforms; (b) sector & sustained real of non-Plan budget allocationsimproving strategic planning increases in maintenance and actual expenditures forand maintenance funding as committed by GOG road sector.effectiveness; (c) increasing in State Road Policy Letter.road sector outlays and; (d)facilitating private sectorinvolvement.

Project Development Outcome I Impact Project reports: (from Objective to Goal)Objective: Indicators:1. Enhance State Government 1.1 Reduce travel time by 10% 1.1 Quarterly progress reports; Continued commitment ofcapacity for effective/efficient on about 1900 km of roads supervision mission reports; GOG to objectives of projectroad infrastructure planning improved & maintained under project evaluation (mid-term and to increasing funding forand management and Project. and ICR). road sector.maximize existing roadinfrastructure asset utilizationthrough priority investmentsand increased funding formaintenance.

1.2 Maintenance funding to be 1.2 Quarterly progress reports; Continued commitment byincreased by 10% in real project evaluation (mid-term GOG to 'State Policy Letter'.terms over the next five years. and ICR).

1.3 ERRs as per appraisal 1.3 Implementationestimates. Completion Report.

1.4 Maintenance backlog 1.4 Quarterly progress reports;reduced by 20% on State project evaluation (mid-termHighways by and ICR).December 2002.

Output from each Output Indicators: Project reports: (from Outputs to Objective)component:1. Road improvement program 1.1 Baseline and regular traffic 1.1 PIU to prepare annual Traffic growth/diversioncompleted resulting in counts & IRI measurements traffic and IRI surveys of roads forecasts materialize.increased road capacity and on improved SHs. under improvement.quality.

1.2 About 800-900 km of high 1.2 Quarterly progress reports; Roads to be adequatelypriority SHs improved by supervision mission reports; maintained by GOG.December 2004. project evaluation (mid-term,

ICR).

2. Periodic maintenance 2. About 1,000 km of State 2. Quarterly progress reports; Increased maintenanceprogram completed, resulting roads maintained to a 'good' supervision missions reports; funding as per the 'Statein reduced maintenance standard (IRI<4.0) by project evaluation (mid-term, Policy Letter'.backlog. December 2002. ICR).

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3. Institutional capacity for 3.1 Reduce administrative cost 3.1 Mid-term and ICR. Continued ownership andmanagement of State road ratio to capital/maintenance commitment by GOG tonetwork strengthened and expenditures by 10% at the implement institutionalmodemized. end of Project. strengthening action plans.

3.2 Implementation of agreed 3.2 PIU and consultants toinstitutional strengthening and prepare status reports onmodernization action plans. implementation of TA and

institutional strengtheningaction plans.

3.3 At least 500 R&BD and 3.3 Supervision missionproject-related staff to have reports; project evaluationparticipated in training (mid-term, ICR).schemes.

Project Components / Inputs: (budget for each Project reports: (from Components toSub-components: component) Outputs)1. Widening and strengthening 1. US$415 million 1. Quarterly progress & GOG to meet in a timelyto about 800-900 km of SHs. (Loan: US$290.5 million). disbursement reports. manner counterpart funding

requirements of civil workscontracts.

GOG should agree to conducta mid-term construction audit.

Timely availability ofconstruction sites beforeaward of civil works contracts.

2. Land acquisition and R&R. 2. US$2 million 2. RAP monitoring and GOG commitment to provide(Loan: US$1.5 million). evaluation reporting. adequate resources to carry

out RAP.

3. Periodic maintenance 3. US$68 million 3. Quarterly progress & Adequate and timely provisionprogram of about 1250 km of (Loan: US$47.6 million). disbursement reports. of counterpart funds.SHs.

GOG should agree to conducta mid-term construction audit.

4. Design & supervision of civil 4. US$32 million 4. Quarterly progress & Adequate and timely provisionworks contracts. (Loan: US$27.5 million), disbursement reports. of counterpart funds.

Expeditious selection ofinternationally qualifiedconsultants.

5. Implementation of 5. US$16 million 5. Quarterly progress & Full ownership and actualinstitutional strengthening & (Loan: US$13.9 million). disbursement reports. implementation by GOG ofmodernization action plan(s): institutional strengthening(a) TA for institutional action plans.strengthening;(b) TA for implementation of aRMS;(c) equipment; and(d) pre-investment studies.

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Annex 2: Project DescriptionINDIA: GUJARAT STATE HIGHWAY PROJECT

By Component:

Project Component 1 - US$415.00 millionWidening and Strengthening of SHs (total cost of component including contingencies). Thiscomponent will help increase the carrying capacity and structural strength of part of the core State roadnetwork through the widening and strengthening of about 800-900 km of high priority SHs. The civilworks contracts will be procured in three phases. In each phase, 3-7 civil works contracts will be procuredfor a total of about 14 civil works contracts. The estimated implementation period for the componenit isabout 48 months, and with the exception of one or two of the contracts, all will be in the US$ 10-40 millioncost range. The detailed breakdown of contract packages under Component 1 is shown in the followingtable:

F . ..- , - | - Sl-|-|- .'.-0th -'-ae :ao co-

GSHP-1 Sarkhej - Viramgam 47.6 21.4 850

GSHP-2 Mehsana - Palanpur 63.1 20.5 814

GSHP-3 Rajkot- Jamnagar 61.1 25.3 1005

GSHP-4 Kadodara - Bajipura 36.5 14.1 560

GSHP-5 Halol - Godhra 38.0 16.7 663

GSHP-6 Mehsana - Palanpur 59.6 38.7 1537

GSHP-7 Shamlaji- Godhra 121.5 44.0 1747

GSHP-8 Ladvel - Dakor - Godhra 63.5 27.7 1100

GSHP-9 Vadodara - Jambusar 94.0 37.5 1489

Bharuch - Dahej

GSHP-10 Jetpur- Junagadh 93.1 33.8 1342

Rajkot - Morvi

GSHP-11 Jamnagar - Khambalia 65.7 19.0 754

Jamnagar - Dhrol

GSHP-12 Virangam - Dhrangadhara - Halvad 70.8 23.4 929

GSHP-13 Bagodara - Dolka 47.4 18.3 727

Wataman - Pimpri

GSHP-14 Surat-Olpad 24.5 8.4 334

Madgella-Navasar

Total: 886.4* 348.8 13851

*Total length includes double counting of four-laning of Mehsana - Palanpur Road section.

Project Component 2 - US$2.00 millionLand Acquisition and R&R Expenditures (total cost of component including contingencies). The landacquisition costs and cash compensation paid under land acquisition act and assistance covered underState-sponsored rehabilitation schemes will be borne by GOG. Other costs, such as the difference between

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the compensation paid under land acquisition act and replacement value of assets acquired (which will bepaid in the form of assistance), infrastructure facilities and resettlement sites, R&R entitlements includingallowances, training, and monitoring and evaluation expenditures, will be funded by the World Bank.

Project Component 3 - USS 68.00 millionPeriodic Maintenance of SHis (total cost of component including contingencies). This component willhelp reduce the periodic maintenance backlog of the State by funding the overlaying, resealing and minorrehabilitation of about 1,000 km of SHs. Works will be packaged into approximately 15-20 contractpackages with each contract package ranging between US$1-S million. The periodic maintenance programwill be implemented in three phases over a three year period and the contracts will be procured using NCBprocedures. The works will be largely supervised by R&BD staff with the assistance of consultants forquality assurance and progress monitoring. The breakdown of the phased maintenance program is shown:

1 279.6 18,739

2 284.5 17,748

3 292.4 18,727

Total: 856.5 55,214

Project Component 4 - US$32.00 millionDesign and Supervision of Civil Works Contracts (total cost of component including contingencies).Internationally experienced supervision consultants will be procured to supervise the widening andstrengthening component (Component 1) of the Project They will have full responsibility as the "engineer"on site as per Fed6ration International des Ingenieurs Conseils conditions. Intemationally experiencedconsultants are being used for the techno-economic feasibility and engineering preparation of the Project.The cost (about US$4.0 million) of the preparation of the techno-economic feasibility studies for theProject and detailed engineering for Phases I and IIA roads was funded under the TA Loan (Ln. 4114-IN).Experienced consultants will also be used for preparation of bid documents and oversight of periodicmaintenance works.

Project Component 5- US$12.00 millionInstitutional Strengthening, TA, Training and Equipment (total cost of component includingcontingencies). This component will fund consultant services and TA required to implement the IDSdeveloped institutional strengthening action plans designed to strengthen the R&BD's role as the "manager"of Gujarat's road network. The training needs envisaged under the Project will focus on the planning andmanagement of the State road network with particular emphasis in the areas of procurement, constructionand maintenance management of the existing network. Equipment will be procured under this componentfor R&BD office & laboratory modernization and road management systems. This component will alsoinclude the procurement of equipment to monitor pollution and noise emissions along main arterial routes.

Project Component 6 - US$4.00 millionPre-investment Studies (total cost of component including contingencies). This component will find thetechno-economic feasibility and detailed engineering studies required for a possible follow-up project.

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Annex 3: Estimated Project CostsINDIA: GUJARAT STATE HIGHWAY PROJECT

Local ..... .Foregn TotalPro: - cost: :- -o - US$milkion VS $m010n, US, mion

1. Widening and Strengthening of about 800-900 km of SHs 242.60 100.40 343.002. Land Acquisition and R&R 1.00 0.70 1.703. Maintenance of about 1,000 km of SHs 39.70 16.50 56.204. Design and Supervision 15.40 11.10 26.505. Institutional Strengthening, Training, TA, and Equipment 6.40 4.10 10.506. Pre-investment Studies 1.90 1.40 3.30

Total Baseline Cost 307.00 134.20 441.20Physical Contingencies 23.00 10.10 33.10Price Contingencies 40.90 17.80 58.70

Total Project Costs 370.90 162.10 533.00Total Financing Required 370.90 162.10 533.00

Poe Cost By = U = = == = =X $ir l . USw$illionCivil Works 355.30 126.20 481.50Goods 0.50 1.00 1.50Services 10.00 23.00 33.00Unallocated 5.10 11.90 17.00

Total Project Costs 370.90 162.10 533.00Total Financing Required 370.90 162.10 533.00

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Annex 4: Cost Benefit Analysis SummaryINDIA: GUJARAT STATE HIGHWAY PROJECT

Benefits $691 m $417 m $1108 m $768 m $463 m $1231 m

Costs $245 m $25 m S270 m $272 m $28 mP $300Em

Net Benefits $446 m $392 m $838 m $496 m $435 m $931 m

ERR 33% 100% 44% N/A NIA N/A

Summary of Benefits and Costs:Project benefits are derived from a net reduction in generalized transport costs on the project roads

compared to a "without project" scenario. The transport costs of the project included vehicle operatingcosts, time costs, accident costs, social and environmental costs, and maintenance and construction costs ofproject roads.

Main Assumptions:Details of the economic analysis are described in 'Gujarat State Highways Project - InvestmentPrioritization", located in the project files. The key features are:

* Unit construction costs for the improvement component were based on the analysis and adoption of unitrates collected from different sources for basic work items on current prices, as well as the calculationof quantities by the consultant based on the preliminary design. Base work costs were increased byabout 12% to include physical contingencies, design and supervision costs. The average cost of aboutUS$470,000 per kilometer includes substantial widening and shoulder reconstruction, and four laningon some road sections (about 63 Iam), as well as urban section improvements. Most of theimprovements are the standard of 10-meter paved width on a 12-meter formation. Maintenance unitcosts were similarly developed based on the analysis of unit rates for various of maintenance operationsand work requirements. A standard conversion factor of 0.9 and a discount rate of 12 percent wereapplied throughout the analyses.

* Net Benefits were evaluated using the dTIMS model developed by Deighton and Associates of Canada,(similar to the World Bank's HDM III model) whose principal methodology is based on the life-cyclecosts and benefits analysis. The model calculated the discounted cash flows of a series of pavementintervention strategies that compare a "with project" to a "without project" scenario representing thecontinuation of current maintenance practices. It then applies an efficiency frontier approach todetermine the optimum investnent strategy under the project's budget constraint. The optimizationprogram took into account various agency and society costs including construction and maintenancecosts, vehicle operating costs (including time and congestion costs), traffic accident costs, opportunitycosts of land and buildings that would be acquired for road widening, economic costs of relocation andresettlement, and economic costs of the project impact on the environment. It is important to note thatthe project derives 95% of its benefits from the savings in vehicle operating costs. For the maintenancecomponent, only vehicle operating costs were considered as Road User Costs.

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* Road improvement will lead to time savings by vehicles, crews, passengers and payloads, and savingsof inventory costs for goods in transit. For value of passenger time, only 20% of earning rate forpassengers who are in paid employment was valued as economic benefit. These savings wereestimated. Time savings typically counted for about 27% of users' benefits.

* Safety impacts from road widening were quantified by utilizing limited past data on accidentoccurrence and costs, taking into account economic costs of road fatalities, vehicle repair, and theestimated net effect of road widening in reducing accident costs. However, the magnitude of thisbenefit is relatively small, accounting for less than 2% of total benefits.

* The traffic growth rate estimates used for the initial years were based on rates of population growth,per capita income for passenger traffic, and the rates of growth in agriculture, mining and industrialproduction for freight traffic projections. These produced initial growth rates between 4% and 11% fordifferent types of vehicles during the period of 2000-2001, with an average annual growth rate of about8%. The growth rates are forecast to decrease slightly during the period of 2002-2007, then stabilizefor the remainder of the Project life (2008-2017). The traffic volumes of project roads included in thewidening component in the initial year of the project's economic life range from 3,200 to 13,000vehicles per day.

* For the widening component, the "without project" base case assumes that roads are maintained(potholes patched) but not improved over the 20 year evaluation period; and that roads are providedwith periodic maintenance treatment which results in a network average International Roughness Index(IRI) of just over 6.0 n/km. In the "with project" case, further pavement strengthening is providedthrough a 40 mm asphalt concrete overlay when the IRI reaches 5.0 m/km if traffic exceeds 10,000AADT, 5.5 m/km for 5,000-10,000 AADT and 6 m/km for less than 5,000 AADT; in addition tonormal routine maintenance requirement. For the road maintenance component, the "without project"case represents the existing practice of applying thin overlays on roads to the extent allowed bymaintenance funding.

For the maintenance component, various treatment types of overlays were analyzed based on traffic,deflection, surface condition, and roughness of the roads studied, totaling 2,000 km. Each road sectionwould receive an optimal treatment based on its current condition and traffic volume. Using the Project'sbudget constraint for this component, the sections which have the highest return were selected for inclusionin the Project. For most of the selected sections, the IRI values are in the range of 7-10 m/kni, with trafficvolumes largely in the range of 2,000 to 6,000 AADT. The high traffic volumes and high initial roughnesslevels, combined with relatively low maintenance investment costs, have caused the high rates of returnobserved for this component. The project's overall ERR and NPV were calculated combining the cashflows of the improvement and maintenance components.

Sensitivity analysis / Switching values of critical items:(Analysis covers the widening and strengthening component). The major risks affecting the economicanalysis are cost overruns (benefit decreases as a result of slower traffic growth than forecast). This wasreflected by: (a) 15% reduction in benefits; (b) 15% increase in cost; and (c) a combination of the two. Theimpact of these scenarios is shown in the following table. In addition, there is the risk of delays inimplementation and site readiness for construction work. This is captured by an assumed average one-yeardelay in opening of all works, with a commensurate increase in costs and a delay in the benefit stream.Sensitivity to changes in future maintenance practices were relatively small, as they mainly affect usercosts in the later years of the evaluation period. Macroeconomic problems could also lead to reducedtraffic growth and implementation delays, which have been assessed in terms of possible overall costincreases and benefit reductions. In particular, the analyses showed that the ERR is proportional to the

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change in traffic growth. If traffic growth rates were to increase by 10%, the ERR would reach 36%. Iftraffic growth rates were to decrease by 10%, the ERR would be reduced to 30%.

Base Case 33% 446

Completion delayed one year 29% 388

Benefits decreased by 15% 28% 343

Cost increased by 15% 30% 410

Benefits down 15% and costs up 15% 25% 307

Switching values of critical items. The cost of widening and strengthening works would have to increaseby 182% or the users' benefits to drop by 65% before the NPV of this component would fall to zero.

Distribution of benefits. State roads are used by all income groups, such as travelers, suppliers andconsumers of goods and services. Without the Project, high transport costs would continue to affect pricesand availability of services to the community, and would constrain economic development at all levels.With the Project, transport costs will decrease, travel times between major centers will be reduced. Thelower passenger and freight transport costs will lead to reduction in fares, marketing costs of products andthe price of goods, and to the reduction of transport bottlenecks affecting economic development This willhave direct benefits for the traveling public, agricultural and industrial producers, consumers, and localcomnmunities having improved access to health and education services. The trucking industry in Gujarat iscompetitive, and is likely to pass on the benefits of operating cost savings through reduced freight rates andextended services. Bus services are primarily provided by the State; even if fares are not reduced, theextent and schedules of bus services are likely to respond to changes in road capacity and quality. Theimpact on poverty reduction will be indirect from passing on of transport cost savings to farmers throughhigher farm-gate prices. Services such as electricity, health, education, and agricultural extension willbecome even more available in rural areas.

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Annex 5: Financial SummaryINDIA: GUJARAT STATE HIGHWAY PROJECT

Years EndingJune 30

WP. L .L' Lr, . N .. 10| Year 1| Year 2 | Year3 | Year4 | Year5 | Year 6 Year 7

Total Financing RequiredProject CostsInvestment Costs 71.4 104.7 112.5 96.6 67.6 32.2Recurrent Costs 6.0 10.5 12.5 9.0 7.0 3.0

Total Project Costs 77.4 115.2 125.0 105.6 74.6 35.2 0.0Total Financing 77.4 115.2 125.0 105.6 74.6 35.2 0.0

FinancingIBRD/IDA 55.0 83.0 90.0 75.0 53.0 25.0Government 22.4 32.2 35.0 30.6 21.6 10.2

Central 0.0 0.0 0.0 0.0 0.0 0.0Provincial 0.0 0.0 0.0 0.0 0.0 0.0

Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0User Fees/Beneficiaries 0.0 0.0 0.0 0.0 0.0 0.0Others 0.0 0.0 0.0 0.0 0.0 0.0Others 0.0 0.0 0.0 0.0 0.0 0.0Others 0.0 0.0 0.0 0.0 0.0 0.0Others 0.0 0.0 0.0 0.0 0.0 0.0Others 0.0 0.0 0.0 0.0 0.0 0.0

Total Project Financing 77.4 115.2 125.0 105.6 74.6 35.2 0.0

Main assumptions:The Project will be implemented over a five year period from Loan Effectiveness

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Annex 6: Procurement and Disbursement ArrangementsINDIA: GUJARAT STATE HIGHWAY PROJECT

Procurement

Procurement methods (Table A)

All project activities financed under the Loan shall be procured in accordance with World Bank Guidelinesfor Procurement, January 1995, Revised January and August 1996, September 1997 and January 1999, inrespect of Goods and Works. Consulting services to be funded through the World Bank's Loan would beprocured in conformity with the World Bank's Guidelines for selection and Employment of Consultants bythe World Bank Borrowers, January 1997, Revised September 1997, and January 1999. All civil works,goods and services will be procured using India-specific World Bank's Model Standard Pre-qualificationand Bidding Documents.

Widening and strengthening civil works will be procured through ICB. The works will be implementedin three phases with contract packages sized to attract interest from international contractors. It isenvisaged that the majority of contracts will be implemented in packages of US$10-40 million, with onecontract above US$40 million. Bidders for these civil works contracts will be pre-qualified in accordancewith World Bank guidelines. All civil works will be procured using India specific World Bank StandardPre-qualification and bidding documents.

Up to 2% of the value of civil works contracts will be procured under Force Account to enable the (a)construction of road over bridges (ROB) and/or under bridges (RUB) by Indian Railways (IR) and(b) shifting of public utilities.

Periodic maintenance civil works will consist NCB contracts for periodic maintenance works in packagesof US$1-5 million.

Goods & equipment and related services for office modernization and road management systems inconjunction with institutional strengthening will be procured by a combination of ICB, NCB and Nationalshopping as appropriate based on thresholds.

Consulting services will be procured following World Bank procurement guidelines and will be providedfor:

(a) construction supervision for widening and strengthening works: three phases - one supervisionconsultant contract for each of the construction phases;

(b) remaining design works and assistance with project coordination and development of strengthenedproject management procedures: Phase IIB services; one consultant contract already procuredusing fixed budget method;

(c) assistance with preparation and oversight of periodic maintenance contracts:1-3 consultant contracts;

(d) TA for institutional strengthening: 1- 3 consultant contracts; and(e) pre-investment studies for preparation of future project(s).

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Items (d) and (e) will be procured on the basis of a Fixed Budget method**The Fixed Budget method will be used only for complex, multidisciplinary consultant assignments like (d)

and (e) to mitigate price as a factor in the selection of the services. or Sole Source procurement, while items

(a) and (c) will be procured on the basis of QCBS (Time-based).

Training will be conducted over a three year period and will focus on: procurement, environmentalscreening, maintenance and contract management. At least 500 R&BD and related staff will be trainedunder the Project in recognized institutions both within and outside of India. The R&BD and the World

Bank will agree early in the execution of the Project, the priorities and selection criteria for the training

program. Disbursement claims will be based on SOEs.

Table A: Project Costs by Procurement Arrangements(US$ million equivalent)

Expenditure Category _ Tota C.¢t

1. Works 411.00 68.00 5.60 0.40 485.00

(287.70) (47.60) (4.30) (0.00) (339.60)2. Goods 1.00 0.50 0.50 0.00 2.00

(0.90) (0.50) (0.40) (0.00) (1.80)

3. Services 0.00 0.00 46.00 0.00 46.00

(0.00) (0.00) (39.60) (0.00) (39.60)0.00 0.00 0.00 0.00 0.00((0.00) 0.00) (0.00) (0.00) (0.00)

Total 412.00 68.50 52.10 0.40 533.00

=__________________________ (288.60) (48.10) (44.30) (0.00) (381.00)

" Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies

2 1Includes civil works and goods to be procured through national shopping, consulting services, services of

contracted staff of the project management office, training, technical assistance services, and incrementaloperating costs related to (i) managing the project, and (ii) re-lending project funds to local governmentunits.

Note: N.B.F. = Not World Bank-financed (includes elements procured under parallel co-financing procedures,

consultancies under trust funds, any reserved procurement, and any other miscellaneous items). The procurement

arrangement for the items listed under "Other" and details of the items listed as "N.B.F." need to be explained in

footnotes to the table or in the text.

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Prior review thresholds (Table B)Procurement Planning

GOG has prepared a procurement plan for the identified packages under the project, which has beenreviewed and approved by the World Bank. Procurement of all packages would be undertaken inaccordance with this procurement plan.

Review of Procurement Decisions by the World Bank

Prior Review

* All widening and strengthening civil works contracts of US$5.0 million and above.* Civil works contracts for maintenance including pilot works under US$5.0 million will not

be subject to prior review, after the first three NCB contracts are reviewed and clearedwith the World Bank.

* Consultants' contracts with an estimated value of US$100,000 and above for firms andUS$50,000 and above for individuals.

* Procurement of goods with an individual contract value of US$50,000 and above.

NCB Provisions

With reference to the procedures for undertaking procurement on the basis of NCB, all NCB contracts shallbe awarded in accordance with the provisions of Paragraphs 3.3 and 3.4 of the Guidelines for ProcurementUnder IBRD Loans and IDA Credits published by the World Bank in January 1995 and revised in Januaryand August 1996, September 1997, January 1999 [the Guidelines]. In this regard, all NCB contracts to befmanced from the proceeds of the Loan shall follow the following procedures:

(a) Only the model bidding documents for NCB agreed with the Govenment of India TaskForce [and as amended from time to time], shall be used for bidding.

(b) Invitations to bid shall be advertised in at least one widely circulated national dailynewspaper, at least 30 days prior to the deadline for the submission of bids.

(c) No special preference will be accorded to any bidder when competing with foreign bidders,state-owned enterprises, small-scale enterprises or enterprises from any givenState.

(d) Except with the prior concurrence of the World Bank, there shall be no negotiation of pricewith the bidders, even with the lowest evaluated bidder.

(e) Except in cases of force majeure and/or situations beyond control of GOG, extension ofbid validity shall not be allowed without the prior concurrence of the World Bank [a] forthe firstrequest for extension if it is longer than eight weeks; and (b) for all subsequent requestsfor extension irrespective of the period.

(f) Re-bidding shall not be carried out without the prior concurrence of the World Bank. Thesystem of rejecting bids outside pre-determined margin or "bracket" of prices shall not beused.

(g) Rate contracts entered into by DGS&D will not be acceptable for any procurement underNational Shopping procedures only.

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Procurement Information

Procurement information will be collected and recorded as follows:

(a) Prompt reporting of contract award information by the PIU for the respective components.

(b) Comprehensive quarterly reports by PIU indicating:(i) revised cost estimates for individual contracts and total cost;(ii) revised timings of procurement actions including advertising, bidding, contracts

award and completion time for individual contracts; and(iii) compliance report by the borrower within three months of the Loan signing date.

Table B: Thresholds for Procurement Methods and Prior Review

1. WorksCivil works for widening 5,000 and above ICB Yes/411

and strengthening of SHs

Civil works for ROBs, Under 1,000 up to an Force Account No

shifting of utilities, and aggregate of 6,000R&R

Civil works for periodic Under 5,000 NCB No*maintenance of SHs2. GoodsEquipment for office 200 and above ICB Yes/1.0modemization and road 50 to under 200 NCB Yes/0.5management systems

__________ __ Under 50 National Shopping No

3. ServicesConsulting Services Firms, 100 and above World Bank Guidelines Yes/33.0

Individuals, 50 and above

Firms, under 100 World Bank Guidelines No-___________________ Individuals, under 50 including single source

Total value of contracts subject to prior review: 445.5

Overall Procurement Risk Assessment

Average

Frequency of procurement supervision missions proposed: One every 12 months (includes special

procurement supervision for post-review/audits)*First three contracts irrespective of their value will be subject to prior review.

Thresholds generally differ by country and project. Consult OD 11.04 "Review of ProcurementDocumentation" and contact the Regional Procurement Adviser for guidance.

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Disbursement

Allocation of loan proceeds (Table C)The allocation of Loan proceeds is given in Table C. Disbursements against civil works contracts willcover about 70% of the certified expenditures, with the balance to be financed from counterpart funds.

Table C: Allocation of Loan Proceeds

Exponditure Category Amoun in US"$mion Financing Percentag(1) Civil Works 328.00 70%Widening and strengthening andperiodic maintenance(1) Civil Works 1.50 95%Resettlement and rehabilitation of PAPs(2) Goods 1.50 100% of foreign or ex-factory costs and

80% for other items procureddomestically

(3) Consulting services, training and 33.00 100% of total expendituresstudies (net of taxes)4) Unallocated 17.00

Total Project Costs 381.00

Total 381.00

Use of statements of expenditures (SOEs):

Some withdrawals from the Loan Account may be made on the basis of SOEs under contracts costing lessthan the equivalent of:

(a) US$2,500,000 for civil works;(b) US$100,000 for the services of consulting firms;(c) US$50,000 for the services of individual consultants, all under terms and conditions as shall be

specified by notice to the Borrower;(d) US$50,000 for goods; and(e) training and studies.

Special account:A Special Account will be established with the RBI with an authorized allocation of US$38 million whichcan meet about four months worth of project expenditures.

Retroactive financing:

Retroactive financing limited to a maximum of US$20 million for eligible payments after October 1, 1999but before Loan Signing, will be provided to cover expenses associated with: (a) initiation of Phase I civilworks contracts; (b) initiation of supervision and other consultant services; and (c) initiation ofprocurement of goods under the project.

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Annex 7: Project Processing Schedule

INDIA: GUJARAT STATE HIGHWAY PROJECT

Time taken to prepare the project (months) . 40

First Bank mission (Identification) 03/16/95

Appraisal mission departure 03/31/98 03/23/98NegotiatIons 05/14/98 05/18/98Planned Date of Effectiveness 11/15/2000

Prepared by:

R&BD, GOG

Preparation assistance:

States' Road Infrastructure Development Technical Assistance Project (Ln. 4114-IN) - About US$7.0million

Bank staff who worked on the project included:

Fabio Galli Task Leader/Financial AnalystDouglas Gray Program AssistantGuang Zhe Chen Transport EconomistSujit Das Highway EngineerErnst Huning Institutional SpecialistMoncef Chaabouni Consultant EngineerHiroko Imamura Legal CounselReidar Kvam Social Development OfficerI.U.B. Reddy Social Development OfficerAnil Somani Environmental SpecialistRajat Narula Finance and Accounting SpecialistSanjay Vani Finance and Accounting SpecialistCecil Perera Disbursement OfficerN. Raman Procurement SpecialistAnil Bhandari Transport SpecialistIrene Christy Program AssistantAntonio Cittati Highway EngineerPeter Long Peer ReviewerDieter Havlicek Peer ReviewerManuel Rosini ConsultantSonia Kapoor Environmental SpecialistSyed Ahmed Legal CounselBlanchard Marke Disbursement Officer

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Annex 8: Documents in the Project File*

INDIA: GUJARAT STATE HIGHWAY PROJECT

A. Project Implementation Plan

Borrower's Project Implementation Plan, May 1998

B. Bank Staff Assessments

Proposed Gujarat State Highway Project Review of Environmental Component Mission, Aide Memoire,March 3, 2000Proposed Gujarat State Highway Project Post Negotiations Prep. Mission, Aide Memoire, November 17,1999Proposed Gujarat State Highway Project Post Negotiations Prep. Mission, Aide Memoire, Sept. 30, 1998Proposed Gujarat State Highway Project Initiation of Appraisal Mission, Aide Memoire, April 1, 1998Proposed Gujarat State Highway Project Pre Appraisal Mission, Aide Memoire, January 25, 1998Proposed Gujarat State Highway Project Preparation Mission, Aide Memoire, October 18, 1997Proposed Gujarat State Highway Project Preparation Mission, Aide Memoire, March 22, 1997Proposed Gujarat State Highway Project Preparation Mission, Aide Memoire, December 4, 1996Proposed Gujarat State Highway Project Identification Mission, Aide Memoire, March 16, 1995

C. Other

Strategic Options Study, September 1995Main Report, Volume 1, February 1998Executive Summary to Main Report, March 1998Sectoral Environmental Assessment, Volume 2A, March 1998Environmental Study Report, Volume 2B, March 1998Summary Resettlement Action Plan. Final Report -Volume 2E, April 1998.Design Report, Volume 3, February 1998Institutional Development Strategy Report, February 1998Road Maintenance Component, March 1998Natural & Social Environment: A Compendium, Volume 2D, April 1998Natural & Social Environment: Source Information, Volume 2C, April 1998Environmental Study Report (Phase IIA) Volume 2A, December 1998Environmental Impact Assessment of the Unava Bypass (Phase IIA) Volume 2B, December 1998*Including electronic files

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Annex 9: Statement of Loans and Credits

INDIA: GUJARAT STATE HIGHWAY PROJECT

Difference between expectedand actual

Original Amount in USS Millions disbursements

Project ID FY Borrower Purpose IBRD IDA Cancel. Undisb. Orig Frm Rev'd

P045051 1999 India 2ND NATL H1IV/AIDS CO 0.00 191.00 0.00 18.47 8.40 0.00

P049301 1997 India A.P. EMERG. CYCLONE 50.00 100.00 0.00 96.00 87.71 0.00

P010407 1993 India ADP - RAJASTHAN 0.00 106.00 0.00 13.92 17.22 0.00

P010503 1995 India AGRIC HUMAN RES DEVT 0.00 59.50 0.00 18.35 19.98 0.00

P010489 1995 India AP 1ST REF. HEALTH S 0.00 133.00 0.00 46.44 18.82 0.00

P045049 2000 India AP DPIP 0.00 111.00 0.00 109.49 D.00 0.00

P049385 1998 Indla AP ECON RESTRUCTURIN 301.30 241.90 0.00 407.12 7D.58 0.00

P010449 1994 India AP FORESTRY 0.00 77.40 0.00 6.08 897 0.00

P035158 1997 India AP IRRIGATION III 175.00 150.00 0.00 235.09 71.79 0.00

P049537 1999 India AP POWER APL I 210.00 0.00 0.00 147.87 34.87 0.00

P010522 1995 India ASSAM RURAL INFRA 0.00 126.00 0.00 82.75 48.90 0.00

P010455 1994 India BLINDNESS CONTROL 0.00 117.80 0.00 71.52 48.91 0.00

P010480 1996 India BOMBAY SEW DISPOSAL 167.00 25.00 0.00 104.49 97.21 0.00

P043310 1996 India COAL ENV & SOCIAL MITIGATION 0.00 63.00 0.00 36.14 24.05 0.00

P009979 1998 India COAL SECTOR REHAB 530.00 2.00 15.00 293.37 127.76 127.76

P009870 1994 India CONTAINER TRANSPORT 94.00 0.00 15.00 44.38 59.38 47.17

P010464 1995 India DISTRICT PRIMARY ED 0.00 260.30 0.00 98.41 60.45 0.00

P035821 1996 India DPEP II 0.00 425.20 0.00 213.59 7.73 0.00

P038021 1998 India DPEP III (BIHAR) 0.00 152.00 0.00 125.34 55.80 0.00

P036062 1997 Incia ECODEVELOPMENT 0.00 23.00 0.00 19.70 9.99 0.00

P043728 1997 India ENV CAPACITY BLDG TA 0.00 50.00 0.00 39.91 23.10 0.00

P010563 1995 India FINANCIAL SECTOR DEV PROJ. (FSDP) 700.00 0.00 301.30 92.73 0.00 0.00

P010448 1994 India FORESTRY RESEARCH ED 0.00 47.00 0.00 13.67 32.43 1.01

P035160 1998 India HARYANA POWER APL-I 60.00 0.00 0.00 28.08 20.06 0.00

P010485 1996 India HYDROLOGY PROJECT 0.00 142.00 0.00 75.24 71.48 0.00

P009977 1993 India ICDS II (BIHAR & MP) 0.00 194.00 0.00 98.58 100.83 98.84

P039935 1996 India ILFS-INFRAS FINANCE 200.00 5.00 0.00 178.79 153.20 0.00

P067330 2000 India IMMUNIZATION STRENGTHENING PROJECT 0.00 142.60 0.00 141.54 0.00 0.00

P010463 1995 India INDUS POLLUTION PREV 143.00 25.00 1.64 141.63 127.51 2.66

P010418 1993 India KARNATAKA WS & ENVIS 0.00 92.00 0.00 0.43 1.04 0.00

P049477 1998 India KERALA FORESTRY 0.00 39.00 0.00 28.43 40.07 0.00

P010461 1995 India MADRAS WAT SUP II 275.80 0.00 189.30 35.68 216.22 4.58

P050651 1999 Indla MAHARASH HEALTH SYS 0.00 134.00 0.00 126.00 130.75 0.00

P010511 1997 India MALARIA CONTROL 0.00 164.80 0.00 137.38 81.26 0.00

P009946 1992 India NAT. HIGHWAYS 11 153.00 153.00 0.00 82.38 65.99 19.09

P009869 1989 India NATHPA JHAKRI HYDRO 485.00 0.00 0.00 80.50 80.50 14.95

P009972 2000 India NATIONAL HIGHWAYS III PROJECT 516.00 0.00 0.00 516.00 0.00 0.00

P010561 1998 India NATL AGR TECHNOLOGY 96.80 100.00 0.00 186.27 56.77 0.00

P010424 1993 India NATL LEPROSY ELIMINA 0.00 85.00 8.70 16.40 26.78 17.30

P009982 1990 India NOR REG TRANSM 485.00 0.00 35.00 105.16 140.16 0.00

P010496 1998 India ORISSA HEALTH SYS 0.00 76.40 0.00 72.28 15.56 0.00

P035170 1996 India ORISSA POWER SECTOR 350.00 0.00 0.00 266.18 146.18 0.00

P010529 1996 India ORISSAWRCP 0.00 290.90 0.00 130.04 34.56 0.00

P010457 1994 India POPULATION IX 0.00 88.60 0.00 41.55 28.08 0.00

- 39 -

Difference betweenexpected

Original Amount In US$ Millions and actualdisbursements'

Project ID FY Borrower Purpose IBRD IDA Cancel. Undisb. Orig Frm Revwd

P009963 1992 India POPULATION Viii 0.00 79.00 0.00 42.94 44.78 0.00P045050 1999 indla RAJASTHAN DPEP 0.00 85.70 0.00 80.08 9.83 0.00P010505 2000 India RAJASTHAN DPIP 0.00 100.48 0.00 99.06 0.00 0.00P049770 2000 India REN EGY II 80.00 50.00 0.00 129.30 0.00 0.00P010410 1993 India RENEWABLE RESOURCES 75.00 115.00 0.00 64.67 94.26 0.00P010531 1997 India REPRODUCTIVE HEALTH1 0.00 248.30 0.00 188.06 91.72 55.94P009959 1993 India RUBBER 0.00 92.00 36.61 13.62 50.70 1.44P044449 1997 India RURAL WOMEN'S DEVELOPMENT 0.00 19.50 0.00 16.07 11.26 0.00P009921 1992 Indla SHRIMP & FISH CULTUR 0.00 85.00 50.02 14.86 62.95 14.34P035825 1996 India STATE HEALTH SYS II 0.00 350.00 0.00 197.04 144.27 0.00P009995 1997 India STATE HIGHWAYS l(AP) 350.00 0.00 0.00 283.27 78.27 0.00P045600 1997 India TASrS RD INFRADEV 51,50 0.00 0.00 19.93 13.43 15.43P059501 2000 India TA for Econ Reform Project 0.00 45.00 0.00 44.36 0.00 0.00P010476 1995 India TAMiL NADU WRCP 0.00 282.90 0.00 150.49 110.54 0.00P050637 1999 India TN URBAN DEV II 105.00 0.00 0.00 89.54 15.74 0.00P010473 1997 India TUBERCULOSIS CONTROL 0.00 142.40 0.00 123.87 81.00 0.00P055456 2000 India Telecommunications Sector Reform TA 62.00 0.00 0.00 62.00 0.00 0.00P05063i 1998 India UP BASIC ED II 0.00 59.40 0.00 14.39 7.84 0.00P009955 1993 India UP BASIC EDUCATION 0.00 165.00 0.00 9.83 2.00 0.00P035824 1998 India UP DiVAGRC SUPPORT 79.90 50.00 0.00 117.16 42.98 0.00P050667 2000 Inda UP DPEP III 0.00 182.40 0.00 174.79 0.00 0.00P035169 1998 India UP FORESTRY 0.00 52.94 0.00 37.34 9.80 0.00P050657 2000 India UP Healh Systems Development ProJect 0.00 110.00 0.00 108.39 0.00 0.00P035172 2000 India UP POWER SECTOR RESTRUCTURING PROJECT 150.00 0.00 0.00 150.00 0.00 0.00P010484 1996 India UP RURAL WATER 59.60 0.00 7.20 37.60 23.90 0.00P050646 1999 India UP SODIC LANDS II 0.00 194.10 0.00 176.57 21.82 0.00P009961 1993 India UP SODIC LANDS RECLA 0.00 54.70 0.00 2.40 2.35 0.00P009964 1994 India WATER RES CONSOLID H 0.00 258.00 0.00 102.19 79.17 0.00P035827 1998 India WOMEN &CHILD DEVLPM 0.00 300.00 0.00 283.04 11.03 0.00P041264 1999 India WTRSHD MGMT HILLS II 85.00 50.00 0.00 120.46 40.05 0.00

Total: 6089.90 7370.22 659.77 7942.65 3416.43 420.51

-40 -

INDIASTATEMENT OF IFC's

Held and Disbursed Portfolio

In Millions US Dollars

Committed DisbursedIFC IFC

FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic

1989 AEC 6.81 0.00 0.00 0.00 6.81 0.00 0.00 0.001994 Ambuja Cement 7.70 4.94 0.00 9.38 7.70 4.94 0.00 9.381992/93 Arvind Mills 0.00 10.55 0.00 0.00 0.00 10.55 0.00 0.001997 Asian Electronic 0.00 5.50 0.00 0.00 0.00 5.50 0.00 0.001984/91 Bihar Sponge 0.00 0.05 0.00 0.00 0.00 0.05 0.00 0.001997 CEAT 20.00 0.00 0.00 0.00 20.00 0.00 0.00 0.001990/92 CESC 22.50 0.00 0.00 50.25 22.50 0.00 0.00 50.251993/95/97 Centurion Bank 10.00 0.00 0.00 0.00 10.00 0.00 0.00 0.002000 Chinai 1.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001994 Chowgule 12.63 4.58 0.00 19.38 12.63 4.58 0.00 19.381997 Duncan Hospital 7.00 0.00 0.00 0.00 7.00 0.00 0.00 0.001997 EEPL 0.00 0.03 0.00 0.00 0.00 0.03 0.00 0.001986 EXB-City Mills 0.48 0.00 0.00 0.00 0.48 0.00 0.00 0.001986 EXB-STG 0.31 0.00 0.00 0.00 0.31 0.00 0.00 0.001995 EXIMBANK 13.64 0.00 0.00 0.00 13.64 0.00 0.00 0.001995 GE Capital 7.50 5.00 0.00 0.00 7.50 4.39 0.00 0.001986/92/93/94 GESCO 0.00 1.86 0.00 0.00 0.00 1.86 0.00 0.001988/94 GKN Driveshafts 0.00 0.33 0.00 0.00 0.00 0.33 0.00 0.001994/97 GVK 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001994/98/00 Global Trust 0.00 5.00 0.00 0.00 0.00 2.78 0.00 0.00

Gujarat Ambuja 0.00 7.31 0.00 0.00 0.00 7.31 0.00 0.001994 HDFC 0.00 0.67 0.00 0.00 0.00 0.67 0.00 0.001978/87/91/93 HOEL 0.00 0.28 0.00 0.00 0.00 0.28 0.00 0.001990 Hindustan 1.68 0.00 0.00 0.00 1.68 0.00 0.00 0.001987 IAAF 0.00 6.50 0.00 0.00 0.00 0.98 0.00 0.001998 ICICI-IFGL 0.00 0.14 0.00 0.00 0.00 0.14 0.00 0.001990/94 ICICI-SPIC Fine 0.00 2.79 0.00 0.00 0.00 2.79 0.00 0.001990/95/00 IDFC 0.00 15.46 0.00 0.00 0.00 15.46 0.00 0.001998 IL&FS 0.00 3.12 0.00 0.00 0.00 3.12 0.00 0.001990/93/94/98 IL&FS Venture 0.00 0.60 0.00 0.00 0.00 0.60 0.00 0.001992/95 ITW Signode 0.00 0.34 0.00 0.00 0.00 0.34 0.00 0.001981/86/91/93/96 India Direct Fnd 0.00 7.47 0.00 0.00 0.00 6.01 0.00 0.001996 India Equipment 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001986/93/94/95 India Lease 0.00 0.30 0.00 0.00 0.00 0.30 0.00 0.001984/90/94 Indo Rama 0.00 2.14 0.00 0.00 0.00 2.14 0.00 0.001993/94/96 Indus HI 0.00 5.00 0.00 0.00 0.00 4.50 0.00 0.001996 Indus Mauritius 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001996 Indus VC Mgt Co 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.001992 Indus VCF 0.00 0.93 0.00 0.00 0.00 0.93 0.00 0.001992 Info Tech Fund 0.00 0.64 0.00 0.00 0.00 0.64 0.00 0.001992 Ispat Industries 0.00 3.64 0.00 0.00 0.00 3.64 0.00 0.001992/94/97 JSB India 0.00 0.84 0.00 0.00 0.00 0.84 0.00 0.001989/95 M&M 0.00 0.59 0.00 0.00 0.00 0.59 0.00 0.001981/90/93 MUSCO 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001964/75/79/90

Total Portfolio: 217.72 156.36 0.00 88.01 183.57 125.65 0.00 88.01

-41-

Approvals Pending Commitment

FY Approval Company Loan Equity Quasi Partic

2000 APCL 7100.00 0.00 1900.00 0.001999 Carraro 10000.00 0.00 0.00 0.002000 IndAsia 0.00 0.00 15000.00 0.002000 SREI II 10000.00 4982.65 0.00 0.001999 Sarshatali Coal 30000.00 0.00 5000.00 0.002000 Tanflora 0.00 0.00 513.08 0.00

Total Pending Commitment: 57100.00 4982.65 22413.08 0.00

-42 -

Annex 10: Country at a Glance

INDIA: GUJARAT STATE HIGHWAY PROJECT

POVERTY and SOCIAL South Low-India Asia hncome Development dfamond

i908Population. mid-year (millions) 979.7 1.305 3.536 LifeexpectancyGNP per capita (Atiss method. USS) 440 430 520GNP (Atlas nethod. US$ billions) 427.4 560 1.842

Averge annual growth. 1992-98

Population (%) 1.7 1.8 1.7 GNLabor force (%) 2.0 2.3 19 GNP Gross

per primaryMoat recent estimate (latest year evallable. 19S2-S8) capit enrollment

Poverty f% of population below natIona povertY ino) 35Urban population (% of total pOopuleon4) 28 28 30Lfe expectancy at birth (years) 63 62 83Infant mortalty (per t,000 live births) 70 75 68Chid malnutrition (% of chldren under 5) 53 51 36 Access to safe waterAccesa to safe water (% Of popUlation) S1 77 73Illiteracy (% of populstion age 15+) 44 47 31Gross riimary enrollment (% of school-age population) 100 100 107 India - Low-income groupMete 109l Ito 112 -Female 90 90 102

KEY ECONOMIC RATIOS and LONG-TERM TRENDS

1978 1988 1il97 1997 1Economic ratios'

GDP (USS bIllhons) 134,6 289.7 407.9 419.7Gross domestik ihvestmentlGDP 22.3 24.3 23.4 21.8Exports of goods and services/GDP 6.2 6.3 111 11.3 TradeGross domestic savingsGOP 21.1 21.4 19.9 19.1Gross national savings/GDP 21.9 21.2 21;9 20.7

Current account balance/GOP .0.1 -2.4 .174 .1.0 DomesticInterest payments/GDP 0.3 0.7 0.8 I I omesb InvestmentTotjl debt/GDP 12.2 20.9 23.1 23.4 SavIngsTotal debt servIce/exports 13.0 28.5 18.6 17.0Present value of debt/GDP 18.7Present value of debt/exports 130.3

. . ~~~~~~~~~~~~~~Indebtedness197848 1988-98 1997 1998 199-042

(average annual growth)GDP 5.0 5.5 4,6 6.3 6.2 - India - L--ow-income groupGNP per capita 2.6 3.7 2,9 4.3 4.4Expons of goods and sevlces 4.2 11.9 6.2 4.5 7.0

STRUCTURE of the ECONOMY1978 1988 1997 1998 Growth of Investment and GDP I%)

(% of GDP)Agriculture 38.8 32.8 28.0 29.1Industry 24.2 26.8 27.1 25.7 20

Manufacturing 16.5 16.4 16.6 15.6 10 _Services 37.0 40.4 44.9 45.2 2_

5 05 90 97 98Private consumption 69.3 66.4 68.8 69.9 |10 9 94

General government consumption 9.6 12.3 11.3 11.0 GDI - GDPImports of goods and services 7.4 9.3 14.5 14.0

1978-88 1988-98 1997 1998 Growth of exports and Imports (%)(average annual growth)Agriculture 2.8 3.1 -1.9 7.2 40

Industry 5.9 6.4 5.9 3.9 30

Manufacturing 6.1 6.9 4.0 3.6 2

Services 6.2 7.3 9.0 8.3

Private consumption 5.1 5.6 1.6 10.3General government consumption 7.7 4.6 10.6 6.5 0 oGross domestic Investment 4.8 5.6 13.1 -0.1 1 9 9

Imports of goods and services 7.3 9.9 11.7 10 9 I Exportl -importsGross national product 4.9 5.6 4.7 6.3

Note: 1998 data are preliminary estimates.

The diamonds show four key indicators In the country (in bold) compared with its Income-group average. If data are missing, the diamond willbe incomplete.

-43 -

India

PRICES and GOVERNMENT FINANCE

Domestic prices 1978 1988 1997 1998 Inflation (X)

(% change)Consumer prices .. 9.3 7.0 7.0 7 00Implicit GDP deflator 2.5 8.1 6.4 9.4

Govemment finance .(% of GOP, incdudes cumrent grants)Current revenue .. 23.6 22.7 22.1 93 91 95 95 97 98

Current budget balance .. 1.0 -0.2 0.0 - GDP deflator CPI

Overall surplus/deficit .. -10.0 -8.0 -9.3

TRADE1978 1988 1997 1998

(US$ millions) Export and import levels (US$ mill.)Total exports (fob) .. 13,970 35,013 34,298 50,DD0

Tea 421 505 482 40,000Iron .. 465 476 359Manufactures .. 10,727 27,348 27,530 30.000

Total imports (cif) .. 19,497 41,484 47,544 20,000

Food .. 1,203 1,845 2,647Fuel and energy .. 3,009 8,217 6,435 10.0CO

Capital goods .. 4,803 9,796 9,497 092 93 94 95 as 97 ga

Exportpriceindex(1995=100) .. 111 100 96Import price index (1995=100) .. 88 94 90 * Exports * ImportsTerms of trade (1995=100) .. 125 106 106

BALANCE of PAYMENTS1978 1988 1997 1998 Current account balance to GDP(%)

(US$ millions)Exports of goods and services 8,380 18,213 45,109 47,484 D

Imports of goods and services 9,900 26,843 59,297 58,565Resource balance -1.520 4,630 -14,188 -11,081

Net income 223 -1,056 -3,166 -3,544Net current transfers 1,150 2,654 11,830 10,280 I -l i i iCurrent account balance -147 -7,032 -5,524 -4,345

Financing items (net) 147 5,600 9,120 8,721Changes in net reserves 0 1,432 -3,596 -4,376 -2

Memo:Reserves induding gold (US$ millions) 7,299 5,467 30,314 33,206Conversion rate (DEC, locallUS$) 8.2 14.5 37.2 42.0

EXTERNAL DEBT and RESOURCE FLOWS1978 1988 1997 1998

(US$ millions) Composition of 1998 debt (USS mill.)Total debt outstanding and disbursed 16.466 60,477 94,404 98,232

IBRD 646 5,590 8,138 7,993 G:4.329 A 7,993

IDA 3,972 12,019 17,912 18,562

Total debt service 1,309 5,945 10,832 10,001IBRD 126 777 1,411 1,627 :18,S62IDA 38 179 381 1,372

Composition of net resource flows F: 39.448 C288Offidal grants 449 406 379 307Official creditors 603 2,645 -312 1,727 D:3.965

Private creditors -10 5,741 2,840 -1,433Foreign direct investment 0 287 3,557 2,462Portfolio equity 0 0 1,828 -61 E: 23.647

World Bank programCommitments 1,829 2,645 1,755 2,055 A - IBRD E -BilateralDisbursements 507 2,472 1,372 1,421 B- IDA D - Other mulblateral F -PdvatePrincipal repayments 84 383 1,071 2,193 C - IMF G - Short-termNet flows 423 2,088 302 -772Interest payments 80 572 721 806Net transfers 342 1,516 -420 -1,578

Development Economics 3/28/00- 44 -

AdditionalAnnex No.: 11

Format for Quarterly PMR Report 1-ASources and Uses of Funds (Rs. Million)

-f,. e- wo -. .

OPENING BALANCE

SOURCE OF FUNDSFrom IntemalsourcesFrom Govt. ofGujarat

TotalLess:USES OF FUNDS

Civil Works(a) For Parts A.1 and Bof the Project(b) For Part A.2 of theProiect

Goods

Consultants'Services, training &studies

Total

CLOSING BALANCE

Note: " This should reflect latest amendments/ reallocations, if any

-45-

Annex 11

Format for Quarterly PMR Report 1-BUses of Funds by Project Activity

As at March 3i/June 301SePtember 30/December 31 in Rs. Million

1. Widening andStrengthening of.SHs

2. PeriodicMaintenance ofSHs

3. Design andSupervision ofCivil WorksContracts

4. InstitutionalStrengthening,TA, Training andEquipment

Total ProjectExpenditure:

-46 -

Annex 11Format for Quarterly PMR Report 1-C

Project Cash Withdrawals (Disbursement)For the Quarter Ending as at March 31/June 30/September 30/December 31

in Rs. Million and US Dollars 000's (Exchange Rate: I US Dollar = Rs. )

ACTUAL CURRENT QUARTERIn Rs. 000's In US Dollars 000's

Disbursement Eligible Project IBRD Eligible Project IBRO Eligible Total Bank BankCategory % Expenditures Expenditures Expenditures Expenditures Disbursement Loan

Paid during the Paid during Paid during the Paid during the to Date CreditQuarter the Quarter Quarter Quarter (e) (f)

(a) (b) (c) (d)

Civil Worksa) for Parts Al and 70%

B of the Project 95%

b) for Parts A2 of

the Project

GoodsForeign 100%Local (ex-factory) 100%Local (other) 80%

Consultants' 100%services, trainingand studies

Total__ _ _ _ _ _

Actual Elr ible Cash Expenditure during theQuarter

Less: Amount payable from SIA to Project (FromReport)

Amount paid via Direct Payment

Balance Payable to Bank for Current ProjectExpenditure

Add: Replenishment Required to S/A balance(From Report)

IBRD Disbursement Required

NOTES1/: This line shows the "Actual Eligible Cash Expenditure during the Quarter) including the "Amount paid via DirectPayment".2/: Where the project is prefunanced by the Borrower and does not therefore maintain a Special Account, this line will showthe amount to be reimbursed.3/: Columns (e) and (f) are to facilitate a comparison of Bank Disbursements to date with that in the loan/credit agreement.

-47 -

Format for Quarterly PMR Report 1-DCash Forecast

As at March 31IJune 301Sptmber 3OlDecember 31

Civil Worksa) for Parts Al and 70%

B of the Projectb) for Parts A2 of 95%

the Project

GoodsForeign 100%Local (ex-factory) 100%Local (other) 80%

Consultants' 100%services, trainingand studies

Total

Total IBRD Eligible Cash Expenditures for the next 2 quartersLESS:

S/A Balance as of the end of reporting quarter before adjustmentsAmount to be paid through Direct Payment

Replenishment required to S/A Balance

-48 -

AdditionalAnnex No.: 12

Institutional Strengthening Action Plan Matrix

Oblctie | Os A A be-__:-_._.:_._--__- Taken TJaken

L "eg' w .fMey_____1. Development of Long Term Vision 2010 Completed-1999

Strategy for Road Sector_ _______________________ State Road Polic Completed-1996

2. Strategy to modernize Institutional Development Completed-1998 Implementation ofR&BD Study (IDS) IDS during life of_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ th e n ro ie ct

1. Right sizing and improved Reduction of unskilled staff Hiring freeze Freeze to continue;skill mix since 1988 re-training of staff

2. Increase transparency and Preparation of annual Underaccountability of R&BD performance report for consideration

R&BD activities3. Separate 'execution' from Establish Policy & Decision taken Appoint & train

planning function Planning Unit staff4. Streamline clearance for Gujarat Investment Established

infrastructure projects Development Board(GIBD)

5. Social & environmental Functioning social & SEC established Full staffing ofcapabilities environment cell (SEC) SEC

6. More focused rural road Separate CE to manage Completednetwork management rural roads network

7. Computerize key functions Progressive introduction of Computerization Completeof R&BD to improve computer systems of R&BD has computerization ofefficiency throughout R&BD started key functions

8. Improve design capabilities Establishment & equipping Transfer of Full staffing ofof modern design unit GSHP design design unit and

know how and procurement ofequipment additional

eauipment.9. Equip R&BD with legal Appointment of law officer Decision taken Law officer to be

expertise to R&BD appointed in_R&BD

10. Improve utilization of Functioning HRD system Decision taken Appoint HRDavailable staff resources & comprehensive training manager for R&BDthrough new HR strategies program

Finalize detailedtraining programfor R&BD

-49 -

1. Facilitate private investment Establishment of Decision taken Activatein infrastructure privatization cell and cell already privatization celldevelopment in place

2. Focus GOG role in road Establishment of Gujarat Established andinfrastructure funding State Road Development functioning_ __________________ Corporation (GSRDC)

3. Demonstration effect of Vadodara-Halol & Vadodara-Halol Ahmedabad-PPP's activities Ahmedabad-Mehsana substantially Mehsana initiated

_____ _____ _____ ____ tole SHs com lete

1. Increase long term Establishment of a 2nd Decision To be implementedsustainability of road generation road fund pending by end of projectmaintenance financing

2. Increase maintenance 10% a year real increase in Decision taken Already beingfunding to decrease in the maintenance funding implemented andmedium term the will continue to bemaintenance funding gap implemented

3. Develop road maintenance Functioning PMS, BMS Decision taken Initiate consultancysystem for improved road and RMMS for core state and developasset management road network appropriate systems

4. Reduction of periodic About 1000 km of key 1St year 2nd & 3rd yearmaintenance backlog SH/MDR to be improved maintenance maintenance

during next 3-4 years program under programn to beim l mimDlementain ==9ed

1. Establishment of a road Activate permanent road Already in place Activatesafety council safety council

Co-ordinate with other Already in place Activatedepartments road safetyinitiatives _

2. Establishment of a Road Form Road Transport Decision Taken Establish andTransport Council Council activate

- 50 -

VI.1. Comprehensive project & Improved project, CPFMS already Appointment of

financial management accounting and funds established financial controllercapabilities management and mainstream

CPFMS2. Strengthen construction & Strengthened QC Wing, Decision Taken Activate by mid-

quality control (QC) improved control termsvstems procedures and documents

3. Efficient execution of Contracting out of periodic Completed To gradually bemaintenance works maintenance expanded to routine

maintenance4. Introduce improved Introduction of surface Being Depending on

maintenance techniques & dressing implemented results will betechnology under lSt year introduced also for

maintenance 2nd & 3rd yearprogram maintenance

______________________________ program

- 51 -

AdditionalAnnex No.: 13

Social and Environmental Assessment

1. Introduction

Project Description. The GHSP primarily focuses on the widening and strengthening of high traffic SHsusing existing ROW (subject to minor modifications in order to improve road geometry and for roadsafety). The corridor of impact (COI), as it relates to the environmental and social impact, is typicallydefined as given in the following Table:

Right of Way: Tyoically 30m

Clear lear

i Shoulder houlder

M 25.5m -

7.Om _ 7.Om

Corridor of Impact

Typical Corridor of Impact

Environmental Benefits From Project. The project should lead to reduction in road congestion;abatement of ambient air and noise pollution; improvement of roadside drainage conditions, especially inthe urban sections of the roads. A major contribution of the project will be towards increased safety levelsfor both pedestrians as well as motorists. On a local scale, people will be provided with facilities such asaccess roads, service lanes and parking lane, community areas and roadside rest areas, improvedhighway-side environment, etc. Within 'urban stretches'; bus stops, bus bays and truck parking bays;improved storm water drainage, demarcated pedestrian road crossing areas and footpaths; streetlights etc.will be provided.

Project Phasing. Phase I involves widening and strengthening of 246 km of SHs, whereas Phase IIAconsists of 244 km of SHs (the 65 km Mahesana-Palanpur corridor is common to both Phases I and IIA:existing two-lane carriageway to be strengthened in Phase I, and a two-lane new carriageway to be added inPhase IIA). The remaining 393 km or roads are part of Phase IIB. The project is also divided into contractpackages. Each contract package is a group of project roads packaged together and there will be a total of14 contract packages.

Public Participation. For the SEA, the initial Stakeholder consultation and establishment of the TaskForce were carried out at the state level. The Environmental Study Reports focus on the local communityconsultation program.

The first stage was to select the communities where village meetings or focus group discussions would beconducted. Individual consultations were conducted where there was a small number of stakeholders. Thesecond stage was to set a time, venue and date for the consultation. The third stage was to discuss with thepotentially affected community and likely PAPs, the implications of the project. Preliminary design of the

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project corridor was shown to, and discussed with them, with an objective of generating responses andinformation, as well as design solutions. The next stage involved visiting these communities and makingcontact with a local NGO. The last stage took place once the final designs were ready. The interests of thecommunity and the individual aspirations were accommodated in the final design of the project as far aspossible. This last stage also attempted to create a consensus among the (fully or partially affected)community for the GSHP.

EMP. The EMP has been prepared to deal with the implementation procedure of the guidelines andmeasures recommended to avoid, minimize, and mitigate environmental impacts of the project. It alsoincludes management of measures suggested for enhancement of the environmental quality along thehighway.

"Hotspot" mitigation prescription -For each of the hotspots identified a mitigation/amelioration measurewas established. In most of the cases the mitigation measures were in the form of a 'design' solution. Eachof the design details is included in the contract drawings.

RAP. A RAP has been prepared for the affected PAFs. The RAP in particular provides the R&REntitlement Framework to be followed for compensating PAPs and other actions for mitigation andmanagement of impacts due to the project. It includes the RAP Implementation Plan for the same, withidentified tasks and the organizations and officials responsible for implementation of RAP. Estimated costand budgetary allocations are also calculated for the tasks to be carried out under RAP.

2. Institutional Setting

Role and Responsibilities of the Agencies Involved. The responsibilities of the agencies involved are oftwo kinds. The Secretary, R&BD and the PIU are co-ordinating and facilitating agencies, whereas, theEMU is responsible for implementing the EMP and RAP components. The EMU, of course, will need toimplement and monitor a major part of the EMP through the Project Implementation Cells (PIC) and theEngineers who are in charge of the main contractors.

PIU. The PIU has the overall responsibility for the execution of every aspect of the Project. It retains finalresponsibility for implementing the EMP and the RAP. The PIU acts on behalf of the employer and it isresponsible for ensuring that construction sites can be handed over to contractors free of obstructions at thestart of contracts. The PIU is responsible for producing Quarterly Progress Reports for the World Bankand monthly reports and periodic recommendations for the Tender Committee.

Project Co-ordinators/PlCs. A project co-ordinator will be appointed for each package of contracts.Based on-site, each project co-ordinator will be assisted by one assistant project co-ordinator per contractand other staff to form a PIC. The PICs will co-ordinate all environmental and R&R actions in the field; ineffect, they will be the field representatives of the EMU.

Role and responsibilities of the EMU. The global responsibilities of the EMU are to implement the EMP,the RAP, to oversee compliance and performance monitoring. The EMU will act as the employer forcontractors retained to undertake environmental works that are not included in the construction contracts.Given its responsibilities for monitoring, the EMU will continue to function for several years after thecompletion of construction; and is planned to become a permanent unit within the R&BD.

Task Force. A Task Force, staffed by the Secretaries of the R&BD, the Department of Revenue, and theDepartment of Environment & Forests; the Director, Environment, of the Department of Environment &Forests; the Commissioner of the GEC; and the Project Director, has been created. It is anticipated that theTask Force will usually react to requests for advice or assistance from the EMU, but it may, from time totime, take proactive initiatives.

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Special External Advisors. Special External Advisors will assist the EMU periodically over the first twoyears of its operation with experience in mitigating and monitoring biophysical and social impacts,including resettlement and rehabilitation. The advisors will assist in activating the EMU, includingdeveloping its operational procedures, and in co-ordinating training programs for its staff.

Grievance Redressal Committees. They will be created in each District to recommend solutions toproblems experienced by PAP or persons who believe that they should be recognized as PAPs or they arenot compensated properly.

Market Value Assessment Committees. They will be created in each District to recommend the value ofland and assets that will have to be acquired for the purposes of the Project.

NGO(s). A number of responsibilities, especially with respect to the implementation of the RAP rest withNGOs, which will be procured by the EMU.

External Monitoring Agency. The mid-term and post-implementation performance monitoring will becontracted to external agencies, which will report directly to the EMU.

3. Environmental Setting of Project Roads

Natural Environment. A baseline environmental setting so as to compare and monitor the predictednegative and positive impacts resulting from the project has been prepared in detail for each of thecorridors.

Sons:

Land in most parts of the state exhibits an excessive loss of topsoil, exposed sub-soil and bedrockentrenched gullies and ravines as a result of fluvial erosion and aeolian erosion. The typology ranges fromdeep black cotton soil in southern parts of Saurashtra to alluvial sandy loam (in northern parts ofSaurashtra) and clayey loam in eastern and southern parts of the State. Some corridors also traversethrough areas marked with saline soil type.

Quarries. There are around 90 quarries in Gujarat designated/certified by the R&BD for use in roadconstruction. These quarries have a variety of geological materials with the aggregate rocks being granite,lime stone, basalt and quartzite.

Borrow Pits. Soils to be used as sub-grade, select sub-grade and shoulder material needs to be hauledfrom designated borrow areas. Similar to the identification of suitable quarries, the Project team identifiedsuitable borrow areas for the supply of soil to the new road grade. Since it is likely that the fill materialshall be obtained from other selected borrow areas (beyond the ROW), their present environmental statuswas ascertained.

Hydrological Setting:

Surface Water. In Saurashtra, the rivers are generally characterized by short stream lengths with wideand shallow cross-sections. This is due to the low average annual rainfall. However, some of these doexperience formidable flooding occasionally during rainy season. Owing to its sub-humid climate thedrainage system in South Gujarat is well developed. The river basins in the Gujarat plain, howeverexperience semi-arid conditions.

Water Quality. All surface water resources (cross drainage channels, stagnant water bodies, etc.) andground water resources (presence of aquifers, recharge areas, etc.), and their characteristics were identifiedand examined along the GSHP road corridors. Samples of water were collected from water bodies along

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all corridors. Water quality standards for a few parameters, set by Central Pollution Control Board wereused for analysis of the same.

Ground Water. Gujarat as a whole is a water scarce State. Due to the low reliability of rainfall, groundwater is the main source of water for domestic, irrigation and commercial use. The extraction rate is on amassive scale. Due to reversal of the hydraulic gradient, there is a growing intrusion of saline water fromthe sea. Salinity ingress is affecting areas up to 160 km from the coastline. The quality of ground waterfrom recharge areas down to the central alluvial zone is within suitable limits for irrigation. However, thequality, begins to deteriorate moving westward, i.e., towards coastal areas due to increasing salinity.

Ambient Air Quality. Existing ambient air quality data on various sections of the project corridors wascollected to establish a baseline database. The average values were obtained after 3 days of continuousmonitoring (except carbon mono-oxide and hydro carbons, for which samples were collected every 8hours). Ambient Air Quality was monitored at various locations having different land uses such asresidential, commercial, agricultural, industrial, etc.

Ambient Air quality monitoring data reveals that SPM and RPM are of concern in most of the Projecthighways. Overall, twenty-four hours average SPM concentrations varied from 261-431 g/m3, while RPMvaried from 74 gIm3 to 96 g/m3. S02 and N02 concentrations were within acceptable limits. Carbonmonoxide concentrations ranged between 1107 and 1946 mg/m3. Air-borne Pb concentrations variedbetween 0.58 g/m3 and 1.18 g/m3. The value of CO, HC, and Pb observed in case of certain corridors is acause of serious concern.

Ambient Noise. Noise monitoring along the various corridors of GSHP was carried out for 24 hours ateach site selected. At least 40-50 readings were recorded over a measuring period of 5-10 minutes eachhour. Locations were selected close to the corridor so as to assess the noise contribution mainly fromtraffic. In addition, noise levels were also monitored near a stone-crushing unit to assess the noisegenerated from the crushing operation.

Sound levels during the daytime varied from a minimum of 63.08 decibels to a maximum of 78.33 decibels.During night, the sound levels were lower compared to the daytime and varied between a minimum of59.51 decibels and a maximum of 65.71 decibels. The impact of road-related noise is maximum when theroad passes through densely populated areas, townships and markets, and when there is a traffic bottleneck(or a high mix of slow and fast moving vehicles). All the settlement stretches of the project highway haveother sources of noise due to anthropogenic activities, apart from vehicular traffic. The mean sound levelat stone crushing units during day time varied from a minimum of 70.81 decibels to a maximum of 86.06decibels. The same varied from 67.44 decibels to 70.55 decibels.

FloraNone of the GSHP road corridors pass through any significant natural vegetation community due tointensive agricultural land-use along most of the project corridors. Drier and less inhabited zones ofdegraded land have open woodlands or shrub lands populated by Mesquite (Prosopisjuliflora), anintroduced tree. None of the corridors pass through any reserved forests. However there are a fewforest/reserved areas within 10km radius of some of the road corridors. The Junagadh reserved forests arewithin 1.5 km from the Corridor 26 (Phase IIB). Strip plantations of trees within the ROW of SHs havebeen declared as Protected Forests on all the project roads. Most of the trees were planted through theaction of the Social Forestry Program. Approximately, 271,342 trees exist within the ROW of Phase IIAand IIB corridors.

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Green tunnels. In some areas of roadside plantations the trees are large and regular on either side to forma canopy over the road. These are referred to as "green tunnels". Stretches of such plantations wereidentified in this Project, when the canopy over the road is at a minimum of 200/m in length. Green tunnelsmostly occur along Corridors 10 (7 km cumulative, at 3 locations), 26 (1 Iam) and 12 (3 Iam).

Bio-diversity and endangered flora species. Published reports indicate that 53 species of plants that arerare and restricted to certain habitats in the state. There are no rare and endangered species, that occur inany of or are close to the GSHP corridors.

Fauna

Bio-diversity and Endangered Species. There are 20 wildlife sanctuaries and 4 national (wildlife) parksin Gujarat, covering an area of 16,902 square km. In case of the GSHP the main issue is the impact ofimprovements to part of Corridor 02 (Viramgam-Halvad Road) on wild ass crossings.

The wild ass is an endangered species which inhabits the Little Rann of Kutch in Wild Ass Sanctuary.Corridor 02 passes south of the Wild Ass Sanctuary and the animal has been seen in areas close to theproject road and sometimes crosses it.

Another area of potential environmental impact is the Khijadia Bird Sanctuary, located in the coastal beltof the Gulf of Kachchh close to the fast developing industrial belt of Jamnagar. The area is a seasonalinland wetland adjoining to coastal wetlands covering mud flats, creeks, salt pans, saline land, marshvegetation and mangroves. Blue bull, jungle cat, fox, mongoose are the main mammalian species in theshrub land. Black necked stork, painted stork, cranes, ducks, geese, coot, grebes, rails, cormorants, herons,egrets, bittems, ibis and spoonbill, flamingos, waders, gulls, terns, kingfishers, jacanas and harriers, arefound in this sanctuary. Many of these species are migratory and some of them are endangered.

Social Environment

Demographic and socio-economic conditions also vary from area to area crossed by the project roads.Social studies have been conducted at two levels. One is at the taluka level based on lowest availablehierarchy of secondary data; the second at ROW level since most of the Project affected persons are likelyto be within the ROW.

In a socio-economic study it is essential to prepare a baseline database in order to predict the likely impactsand also to suggest an effective management plan. The socio-economic analysis of people, structures, andproperty likely to be impacted by the proposed project has been presented in the RAP of the respectivepackages.

4. Project Social and Environmental Impacts

The focus of the social and environmental impacts of the GSHP has been on the positive and negativeimpacts associated with the rehabilitation of the road corridors. Since the project mainly involves wideningand strengthening of existing roads, and not the construction of new ones, the magnitude and

severity of impacts is mostly confined to the ROW. Where possible, positive and negative impacts havebeen assessed either as short or long-term and reversible or irreversible.

The environmental screening in the SEA categorized all the GSHP road corridors under "Category B". Thecorridors were further categorized, in order of sensitivity, as those falling into High, Medium and Lowimpact category.

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Natural Environment

The assessed negative impacts on natural environmental resources and values have been identified for allroad corridors. However, many of the environmental impacts of the project can be considered minimal andcan be easily mitigated.

Climate. Although no adverse effects are envisaged on macro-climatic conditions (precipitation,temperature, and wind), microclimate conditions may be temporarily modified by vegetation removal andthe addition of increased pavement. Negative impacts on the microclimate may be long tern, but reversibleif appropriate mitigation measures are implemented during or immediately after construction.

Physiography. The impacts on physiography would include destabilization of slopes due to cut and filloperations. The road rehabilitation in GSHP proposes only a slight increase in the height and width of thecurrent highway cross-section. Any negative impacts arising out of these activities will be minor in thelong term, but reversible.

Impact on Soils

Soils, within and outside the ROW, will be negatively impacted due to the proposed widening andstrengthening of the project roads. Within the ROW, any adverse impact is due to the actual construction;whereas, areas outside may be only temporarily affected if they serve as traffic detours, borrow areas,quarries, and for hot mix plants.

Loss of Productive Soil. Loss of productive soil due to road-construction is a major direct adverselong-term impact. However, in this project the road widening is to take place principally within the existingROW. Consequently, loss of productive soil is considered a minor adverse impact. Only in some caseswill land acquisition be required beyond the existing ROW for improved road geometry and this could leadto the loss of productive soil in some road corridors. In all, a total of only about 65 hectares of land will beacquired for the full project.

Soil Erosion. Erosion of top-soil can be considered a moderate, direct, and long-term adverse impactresulting from the construction and maintenance of roads. The potential for soil erosion is high during theconstruction phase. This is because trees and vegetation will need to be cut/stripped which will expose rawsoil. The construction of new fill slopes for grading and bridge-end fills also exposes large areas of soil toerosion, if protection methods are not implemented.

Compaction of Soil. Soil compaction will occur beyond and within the carriageway due to movement ofvehicles and heavy machinery. Substantial areas of soil beyond the ROW are likely to be compacted andthereby reduce the productivity of the soil and in-filtration of water.

Contamination of Soil. The sites wherein construction vehicles are parked and serviced are usuallycontaminated because of leakage or spillage of fuel and lubricants. Soil pollution can also occur in areaswhere hot-mix plants are located because of leakage or spillage of asphalt or bitumen. Refuse and solidwaste from labor camps can also contaminate the soil. During the operation phase of the road, soilpollution, due to accidental vehicle spills or leaks is a low probability but potentially disastrous to theenvironment should it occur. Contamination of soil may be considered a major long-term residual negativeimpact of the GSHP.

Impact on Water Resources

The drainage improvements can, in some corridors, be considered a positive impact to local residents andvillages. Longer-term negative impacts will arise if these fill slopes are not re-planted, stabilized ormaintained.

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Loss of Water Bodies. The most significant adverse impact to water bodies from construction is the lossof storage capacity due to in-filling by earthmoving activities. Since the majority of road corridors are inarid and semi-arid parts of the state, where water scarcity is a constant problem, it is important to preservethese water resources. Therefore, the silting-up or reduction of unusable areas of these water bodies can beconsidered a moderate direct long-term negative impact during construction and operation stages of theroad.

Loss of Other Water Supply Sources. Widening of a road entails the removal of open wells, tube or borewells within the ROW resulting in a permanent loss of water supply. Where an existing well is being used,the extent of the negative impact will depend on the quantity, quality, and its location to the user group.

Run-off and Drainage. Sediment accumulation in water bodies decreases the storage capacity for roadrun-off. A short-term increase in run-off during the construction phase may also occur by the removal oftrees, vegetative cover, and the compaction of the surrounding soil. All of these issues can arise and mayaffect the run-off capability.

Water Quality Degradation. The water quality could get degraded during construction due to thedisposal of solid and liquid waste from labor camps, fuel and lubricant spills or leaks from constructionvehicles, fuel storage and distribution sites and from bitumen or asphalt storage at hot-mix plants. In theoperational stage, pollutants from vehicles and accidental fuel spills may also make their way into thereceiving environment.

Ground Water Recharge and Flow Modifications. Groundwater recharge areas may be reduced due toan increase in impermeable soils resulting from compaction. Contamination of groundwater by run-offcarrying pollutants could potentially cause a long-term adverse impact. In Gujarat, with all fresh water at apremium, and most domestic use is through wells, groundwater depletion or contamination must be avoidedby all means.

Use of Local Water Supply for Construction. In a water scarce state like Gujarat, the use of water forroad construction may place a significant demand upon local water supplies. The overall impact may beconsidered minor and short-term, as the strain on supply will cease after construction is complete.

Air Quality

Air Quality along the GSHP corridors will be negatively impacted during construction phase and inoperation phase when increasing volumes of vehicles use the SHs. The negative impacts duringconstruction will be from a number of sources.

Generation of Dust. Dust is generated due to procurement and transport of raw materials from thequarries and the borrow sites to the road construction area. It is also generated due to site clearance anduse of heavy vehicles and machinery/equipment etc. The other source of dust during the construction stageis from a stone crushing operation. The dust, in addition to being an eyesore, reduces visibility, which is asafety concem. These negative impacts are assessed as minor due to their short-term influence.

Generation of Exhaust Gases. Hot-mix plants contribute substantially to the deterioration of air qualityduring the construction phase. Levels of oxides of sulphur, hydrocarbons and particulate are likely toreduce the quality of the ambient air. Bitumen production also releases volatile toxic gases through theheating process.

Once the road has been improved, there will be a slow but steady increase in the air pollution level due tohigh volumes of vehicular traffic. However, the air pollution load depends largely on the nature andlocation of the various Project corridors.

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Ambient Noise. The most commonly reported impacts of increased noise levels are interference in oralcommunication and disturbance in sleep. Crushing plants and asphalt production plants produce high noiselevels (90-100 decibels). The movement of heavy vehicles, loading, transportation, and unloading ofconstruction materials also produces significant noise. The impact due to the operation of the crushingplants will be severe. Noise produced by vehicles using the road during the operational phase can beattributed to the engine, vibration, tyre noise, and horns.

Impacts on Flora. The principal impact on flora involves the removal of trees and stripping of vegetativecover for construction and a clear zone within the ROW. It is estimated that a total of 134,370 trees wouldbe removed during Phase I, IIA and IIB of the Project. In a number of stretches, roadside plantation nowconstitutes the only green cover in the immediate vicinity of the road. Loss of this green cover is significantand will need to be mitigated by a comprehensive afforestation program. The project, however, does notimpact any forest land or forest plantation. Furthermore, the project does not require the cutting of anyendangered or rare or protected floral species.

Impacts on Fauna. There are very few recorded wild life habitats near the project roads. Foremostamongst these is the Wild Ass Sanctuary. This is parallel to a section of Corridor 02 and at the nearestpoint it is about 7.5 km from the road. The sanctuary area is too far to be directly impacted by the Project.However, there are wild asses, an endangered species, that stray and inhabit some of the areas outside thesanctuary. This is because in the search for food and water wild asses tend to wander over a wide rangeand in this process sometimes cross the project road raising the risk of collision with vehicles.

The other sanctuaries are the Marine National Park, the Khijadia Bird Sanctuary and the Sundarpara Parknear Vadodara. The Marine Park is more than 5 km from the nearest project road. In the case of theSudarpara forest it is fenced and hence movement of the animals from the earmarked areas is not possible.The Khijadia Bird Sanctuary is around 2 km from the nearest project road. The proposed road wideningworks is unlikely to have any adverse impact on the bird sanctuary.

Social Environment

Adverse socio-economic impacts include all disruptions on the social and economic interactions ofcommunities due to the road project. This involves the impact on both the adjacent communities (mostlydirect) as well as the nearby communities (mostly indirect). Some of these impacts are general, holdinggood for all corridors while a few others are specific, pertaining to particular locations along the variousGSHP corridors.

General Impacts

Uncertainty About Future. The project might create uncertainty among land and property owners to theextent of land loss and the nature/level of compensation. In addition, the land less, such as share croppers,tenant farmers and agricultural laborers and squatters have concerns regarding how and when land-takemay affect them.

Impact on Land Prices. Once the project roads have been selected for improvement, speculators couldmove in to purchase large quantities of land which could in turn drive up land prices. This is more likely tooccur in the case of urban fringe areas during the design and pre-construction phase.

Inducement of Squatter Influx. Professional squatters may attempt to occupy land along and adjacent tothe proposed roads to be improved in the hope of receiving some forns of compensation once constructioncommences.

Loss of Utflities and Amenities. Site clearance involves removal of various assets, utilities and amenitiesincluding natural and physical. Relocation of utilities can be disrupted during the road improvement phase.

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Public Health and Safety. Impacts on public health and safety may arise during the pre-construction,construction and operation phases. Breaking and dismantling of properties during pre-construction haspsychological impacts on their owners and others associated with them. Unsanitary conditions in the laborcamps might also result in impact on health of laborers as well as the local population. The risk ofaccidents is also likely to increase.

Resettlement of People. People, displaced from their homes and agricultural lands on account of theproject, shall induce additional pressures on the local resource base. These include pressure on waterresources in areas where availability is low, grazing lands and fuel-wood and public services such asschools and medical facilities. This is critical since number of displaced persons being squatters is largerthan legal landholders.

Land Use Changes. Land use changes along the road corridors are anticipated. There could be a changein land uses with higher return uses displacing lower return uses. For example, major urban fringe areasand major inter-sections will be subjected to such ribbon development.

Disturbance to the Road Side Services. Along the road corridors, near settlements, small shops getattracted to serve the local people as well as the road users. It is likely that due to implementation of theproject some of the shops may get displaced. This could cause a negative impact to the livelihood of peopleas well as loss of service to the local communities and road users.

Removal of Encroachments and Squatters. Minor land clearing will be required in several stretches ofthe project corridors leading to removal of encroachers and squatters.

Sensitive Community Facilities. Other socio-economic impacts involve the presence of sensitivecommunity facilities or institutions along the project corridors such as, educational institutions, healthfacilities, a number of recreational facilities and others, like ponds and cultural community assets.

Specific Impacts

Widening and improvement along GSHP Project roads will require the acquisition and clearing of varioustypes of properties. The properties likely to be impacted can be categorized as within the ROW and theother outside the ROW.

Impact within the ROW. The following 10 categories of properties are impacted within the ROW (mostof these are illegal encroachment, but this project does compensate for loss of illegal properties also, basedon the livelihood and poverty criteria): (a) land; (b) houses; (c) shops/businesses; (d) land and houses; (e)land and shops; (f) shops and houses; (g) spill-over residential spaces; (h) spill-over business spaces; (i)sources of water; and (j) others including schools, hospitals or community properties/assets. Of theseproperties businesses are predominant. These are mostly informal, temporary and some semi-permanentshops, e.g., kiosks, tea and snack stalls that mainly cater to the road users. Some of the other likelyaffected properties are spill over residential or business spaces that encroach on the public ROW.

Impact on Property Outside the ROW. Impact on property outside ROW includes legal land orstructures to be acquired for the purpose of the project. However, due to design considerations, limiting theproposed road widening mostly within the ROW, limited land acquisition is required in GSHP. Additionallands is required only at a few places for geometric improvements, adequate sight distances, improved roadintersections and for saving natural and other community resources.

Impact on Livelihood. Of the total properties likely to be impacted 562 are shops. In the case of closureof these shops, 63% of the total PAPs will have their livelihood (fully or partly) affected.

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Impact on Vulnerable Groups. Of the total households in all three phases of GSHP, 58.3% arevulnerable and hence, are prone to extra impoverishment and consequently extra support under the RAP.In this Project they are being classified into four categories: (a) scheduled castes; (b) scheduled tribes; (c)women-headed households; and (d) households below poverty line.

5. Avoidance and Mitigation Measures

Avoidance and mitigation measures involve decisions and strategies taken during the entire study andproject period to minimize the negative impacts and enhance the positive impacts of the project on thesurrounding environment. In order to minimize the adverse impacts of the road project, avoidance andmitigation measures were formulated and implemented as part of the project design.

Standard Avoidance and Mitigation Measures

Establishment of the COL The primary objective of the environmental team has been to ameliorate theCOI without compromising the safety needs of the road design and the restriction of construction activities.The main measures taken to modify the COI include: (a) optimizing of the COI width by provision ofretaining walls in environmental hot spot areas; (b) incorporating the desired lower design speeds and hencenarrower cross sections in the settlement areas; (c) protecting community giant trees and cultural propertiesby the construction of retaining walls and the installation of road-side barriers and appropriate signage; and(d) provide closed drains (where applicable) in urban areas to ensure proper drainage and minimize thepossibility of the drains becoming open sewers or clogged with garbage.

Enhancement of Safety Measures. Physical changes in the road environment to increase speeds may alsoimpact future safety standards. Some potential measures to achieve this include: (a) utilizing rumble stripsto increase driver alertness of an upcoming change in environment; (b) changing the roadway surfacematerial to increase driver alertness; (c) roadway illumination to increase night visibility and enhancesafety; (d) modified cross sections to promote lower speeds; and (e) provision of parking lane and bicycletracks.

Avoidance and Mitigation of Impacts - Natural Environment

Adverse impacts that have greater impact, but that can be easily mitigated, are discussed in the followingsections.

Soil Resources

Mitigation measures include avoidance of an area with highly productive soils and protection measuresformulated in the design and construction stages.

Traffic detours needed during the rehabilitation and reconstruction of cross-drainage structures have beenchosen so as to avoid or minimize temporary or permanent acquisition of productive agricultural lands. Inareas where land acquisition of productive land occurs, the productive top layer (15 cm) of soil will bestripped and stored in stockpiles (height not exceeding 2 m) and used for the top dressing as surface layerof the newly constructed embankment and fill slopes.

Strict monitoring of the movement of construction vehicles, machinery and equipment will reducecompaction of soil in the areas adjacent to the construction sites. As far as possible, new borrow pits willnot be allowed in areas of good agricultural production. Where these are permitted, the top soil will beconserved and reclaimed as described above. Borrow pits will be reclaimed as per Ministry ofEnvironment and Forests' guidelines.

Erosion Protection. Erosion protection measures formulated and incorporated in the design phase includeslope protection measures and providing erosion control measures at the inlets and outlets of the cross

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drainage structures. The slope of the road embankment has been fixed at 2:1. In general, the embankmentswill be protected against erosion by planting grass (Cynodon dactylon and Stenotaphrum secundatum) andshrubs (Capparis sepiaris). Embankments higher than 3 m will utilize stone pitching or have supportthrough measures such as gabion box retaining walls.

Protection measures at bridge crossings have been designed with the primary objective of preventingerosion from undermining the bridge end fill. The construction work will consist of measures to controlsoil erosion, sedimentation and water pollution, through use of berms, dikes, sediment basins, slope drainsand other devices. To prevent surface runoff over raw earth, all earthworks especially stored topsoil, willbe covered with mulch, grass, or fiber mats.

Reduction and Management of Spoil. To minimize and reduce spoil, it will be required that the cut andfill works are carried out strictly in accordance with the design drawings. Where extra spoil material isgenerated, the spoil material will be used to reclaim borrow pits and quarries, low lying areas in barrenlands and in settlements along the Project corridors.

Quarry Operations. The Contractor will obtain materials from quarries only after the consent of theDepartment of Forest or other concerned authorities and only after developing a comprehensive quarryredevelopment plan, as per the Gujarat Mining Rules.

Prevention of Soil Pollution. In order to prevent higher emission levels from vehicles, the roads have beendesigned for uniform speeds and smoother grades. Hardy and indigenous species will be planted along theroadsides to ensure improved survival of roadside vegetation. Vehicle/machinery and equipmentmaintenance and refueling will be carried out so that spillage of fuels and lubricants do not contaminate thesoil.

Water Resources

Road widening has been limited to the ROW in all locations close to road-side water bodies. Excavation forreplacement or enlargement of water bodies will be at the closest possible place/location, with respect to theoriginal water body or where the fill has been placed. In any water bodies that are used for fish farmning,construction will be limited to the dry seasons only.

Relocation of Other Water Supply Sources. Compensatory water supply sources will be set up beforethe start of construction activities. Any source of community water (potable or otherwise) such as wells,ponds, tube-wells and bore-wells, accidentally lost will be replaced immediately.

Maintaining Surface Drainage. All cross drainage structures have been designed to handle a 50-yearpeak flood level. River training measures have been formulated to prevent over-topping of the bridgestructures. Erosion protection measures or rip-rap have been designed to meet the highest possiblevelocities at the inlet and outlet of these structures. Drainage details have been designed out for everymajor settlement where areas that are liable to be inundated can drain into an improved roadside drainagesystem.

Management of Water Required for Construction. The Contractor is expected to obtain water forconstruction purposes that is of a high quality. The contractor is required to minimize wastage of waterespecially in the corridors located in Saurashtra and obtain prior permission of the Gujarat Ground WaterBoard for the establishment of bore wells.

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Prevention of Water Quality Degradation. Design of settling ponds and the installation of oilinterceptors that must be constructed by the contractor to prevent contamination of surface water have beenprovided in the contract drawings. The discharge standards promulgated under the EnvironmentalProtection Act, 1986 will be strictly adhered to. All wastes arising from the project will be disposed in amanner that is acceptable to the Gujarat Pollution Control Board.

Disruption to Other Users of Water. The Contractor will be responsible for arranging adequate supplyof water for use during construction period. While working across or close to perennial water bodies, theContractor will not impede or block any flow of water. Construction over and close to any non-perennialstreams will be carried out in the dry season.

Air Quality. Improved speed levels and a reduction of stops and starts can improve the air quality throughreduction of emissions. Vehicles delivering loose and fine materials like sand and fine aggregates will becovered to reduce spills on existing roads. Water will be sprayed on earthworks, temporary haulage anddetour roads on a daily basis. Stone quarries will be maintained in such a way that dust emission from thecrusher and vibrating screen do not exceed the standards set by the government. Air quality would bemonitored at least twice a month for the period the crusher is in operation. Any portable hot mix plantswill be located at a minimum of 1000 m from any settlement.

Noise and Vibration. Noise standards will be strictly enforced for all vehicles, plants, equipment, andconstruction machinery. All construction equipment used for an 8 hour shift will conform to a standard ofless than 90 decibels. If required, high noise producing generators such as concrete mixers, generators,graders, etc. will be provided with noise shields. Machinery and vehicles will be maintained regularly, withparticular attention to silencers and mufflers, to keep construction noise levels to minimum. Workers in thevicinity of high noise levels must wear earplugs, helmets and be engaged in diversified activities to preventprolonged exposure to noise levels of more than 90 decibels per 8/h shift. In construction sites within 150m of residential areas, construction will be halted between 2100 and 0600 hours to minimize noise impact.

Flora. To minimize loss of trees, clearance of only those trees identified from the design will be removed.Temporary traffic detours should be constructed in a manner so as to minimize tree loss. Compensatoryafforestation will be taken up as per the Forest (Conservation) Act, 1980. For each tree felled, at least twotrees will be planted. In addition to the compensatory afforestation, trees shall be re-planted along theproject roads. Considering the combined compensatory afforestation by the Department of Forest and there-plantation under the GSHP, a total of at least 392,409 saplings will be planted. No tree will be removedin the zone of construction without the prior approval of the Department of Forest, through the supervisingengineer. During construction, at any point of time, if a rare/threatened/endangered flora species is found,it will be protected in a suitable manner.

Fauna. To decrease the likelihood that wild assess will cross Corridor 02, it is proposed that a reflectorsystem that reflects the headlight of an approaching vehicle, creating an illusion of a barrier will be testedand installed. In addition, slab culverts have been provided at a regular interval for the safe movement ofthe animal to the other side of the road. During construction some of the water sources of the animalsmight get contaminated due to the run-off from the construction site. A silt fence has been proposed for allwater bodies to filter out the sediments.

Provision of dense plantation in areas close to the Khijadaia Bird Sanctuary, near Corridor 28, will beundertaken. This will create a thick buffer zone between the bird habitat and the SH, even though there areno likely impacts resulting from road development activities in the area.

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Social Impacts

Uncertainties Regarding Future. To reduce uncertainty from the mind of PAPs, public participationsessions were/will be conducted at different stages of project preparation/implementation. Also, affectedcommunities will be encouraged to be involved in programs such as social forestry, tree plantation,restoration of cultural properties, etc. To reduce the uncertainty factor, all PAPs likely to be displaced willbe told well in advance by NGOs of when they will be displaced and of what benefits they will be entitledunder the RAP.

Impact on Land Prices. There is a time bound program to calculate the actual cost of land. In calculatingthe actual land cost individual PAP & NGOs will be involved to avoid speculative pressures.

Land Use Changes. Since the project will focus on road widening within the existing ROW, thepossibility of major land acquisition is not foreseen. The probable impact on road-side business and treeswithin ROW has been minimized through engineering design modifications/solutions.

Inducement of Squatter Influx. Once the project roads have been selected for improvement, squattersmay attempt to occupy the land along the corridor in anticipation of compensation. To avoid such asituation, the date of when the BSES was conducted has been considered as the cut off date foridentification of PAPs. The cut off dates will be used to establish whether a person located in the ROWqualifies as a PAP for the disbursement of compensation.

Removal of Encroachments and Squatters. By implementing the RAP in a phased manner the impact onencroachments and squatters will be reduced. Furthermore, squatters and encroachers will be given fourmonth notice of when they will be moved from the ROW to allow the road construction activities.

Resettlement of PAP. A comprehensive RAP has been prepared to improve the standard of living of theaffected population if not at least restore their livelihood to regain their former standard of living.

Host Communities. Families displaced due to the project will be resettled in suitable locations. This mayput pressure on the existing scarce infrastructure and amenities available with the host community. Specialprovision has been made in the comprehensive RAP for the host communities to absorb the impact of thePAPs being moved in their areas.

Loss of Utilities and Amenities. The site clearance may result in loss or relocation of certain utilities andamenities. Although such impacts are unavoidable in large infrastructure projects, every care will be takenin co-ordinating with concemed departments, to restore the services within the shortest possible time toavoid any prolonged hardship or inconvenience to the community.

Sensitive Community Facilities. The impacts due to the project on the sensitive community facilities oreducation institutions, health facilities, a number of recreational facilities, and others like ponds andcultural community assets has been avoided in the design phase of the project.

Disturbance to Roadside Service. To avoid any impact on livelihood of people dependent on roadsidebusiness, the shifting of such informal establishment will be carried out in a phased manner as part of theRAP. Temporary/permanent loss of livelihood of the displaced shop owners will be compensated as perassistance or entitlements of the R&R Entitlement Framework for the GSHP.

Public Health and Safety. Debris generated from the demolition of properties will be properly disposed ofto avoid possible health problems with the affected communities. The dismantling activity will only beallowed between 0900 to 1700 hours. Roadside plantations will be maintained to reduce dust generationand air pollution. Where there are hospitals and schools noise pollution levels will be strictly enforced.

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In the labor camps, all temporary accommodation must be constructed and maintained in such a fashionthat uncontaminated water is available for drinking, cooking and washing. The sewage system for thecamp will be properly designed built and operated so that no health hazard occurs. Garbage bins will beprovided in the camp and regularly emptied. The collected garbage will be disposed in a hygienic andapproved manner.

Accidents and Safety. The contractor will provide, erect and maintain barricades, including signs markingflags lights and flagmen as required by the Engineer. In the operation phase, traffic control measures suchas speed breakers and sign-boards (including speed limits) will be provided and strictly enforced inresidential areas, near schools and water bodies like ponds and wells.

6. EMP

The EMP is a plan of action for the mitigation/management/avoidance of the negative impacts of theproject and enhancement of the project corridor. For each measure to be taken, its location, timeframe,implementation and overseeing/supervision responsibilities are listed.

Incorporation of the environmental elements in the design and bid documents is one of the notable featuresof the GSHP and special focus has been given to two strategies. Foremost is adopting a structure in whichcompliance with the environmental clauses becomes mandatory. This is achieved by making the EMP apart of the contract between the employer, R&BD, and the contractors. Thus, this empowers the Engineerwith the monitoring powers instead of leaving the monitoring and administering of environmental clauseswith a separate body, which is not substantially associated with other components of the project. Thesecond, and more important, is the recognition that "good" engineering practices (which are often neglected)take care of a number of environmental issues. This project brings such practices to the fore, as part ofEMP for ready reference and better compliance.

Environmental Monitoring Program

For effective implementation of the EMP, it is essential that an effective monitoring program be designedand carried out. It is expected that the EMU will ensure compliance with the measures suggested herein toensure that the GSHP is implemented with due regard to the environment. Once the works have beencompleted, field checks during site visit, albeit very infrequently, should be coupled with the samplingprogram to assess the efficiency and effectiveness of the measures proposed. The objectives of themonitoring program are to: (a) ensure that the measures suggested herein are being taken duringconstruction; (b) evaluate the efficiency of the proposed mitigation and enhancement measures; (c) toprovide an update on baseline conditions of the phase II corridors and work towards the development ofair-shed models in the vicinity of the corridors where air sampling is carried out regularly; (d) investigatethe adequacy of the EMP as well as suggest improvements to it; (e) generate data that could beincorporated in future EMPs; and (f) evaluate what additional enforcement is required for the effectiveimplementation of the EMP.

Ambient Air Quality Monitoring. Ambient air quality will be monitored for RPM, SPM, CO, Nox, HC,So2 and Pb. These are to be monitored at designated locations twice a year for at least five years from thecommencement of construction. Air quality data should be generated over three days on a 24 hour basis atall identified locations in winter also.

Water Quality Monitoring. Water quality will be monitored for pH, total solids, total dissolved solids,total suspended solids, oil & grease, COD, chloride, lead, zinc and cadmium by Standard Methods.Monitoring will be carried out once a year in January starting at the scheduled time of construction for fiveyears.

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Ambient Noise Monitoring. Noise level measurements will be carried out at various designated locationsalong GSHP project corridors. Twenty-four hours of sound pressure levels on an hourly basis will bemonitored with intervals of two minutes during construction and operation phases. Noise should berecorded at a "A" weighted frequency using a "slow time response mode" of the measuring instrument.

All contractors are required to submit a monthly report on key environmental concerns. This will provideinformation to the EMU on status and degree of compliance by each contractor towards the implementationof the EMP. Similarly, the EMU is also required to submit to the PIU a monthly progress report, corridorwise, on the implementation of the EMP requirements.

7. RAP

RAP describes the principles and approach to be followed in minimizing and mitigating negative adversesocio-economic impacts due to implementation of the project. It summarizes the contents of a detailed andtime-bound RAP. It also describes the institutional and organizational mechanisms to undertake the RAP.Both Indian and World Bank guidelines related to resettlement aim at achieving the following over-allgoals:

* Involuntary resettlement shall be avoided or minimized wherever feasible, exploring all viablealternative project designs; and

* Where displacement is unavoidable, people losing assets, livelihood or other resources shall be assistedin improving or at least regaining their former status of living at no cost to themselves.

The number of individuals affected in one way or another in GSHP project is currently estimated to beabout 7,694 (about 1,253 families).

Types of Impacts to be Addressed

Studies conducted during preparation indicate that there are three broad categories of social and economicimpacts, which require mitigation in the project. They are: (a) loss of assets, such as loss of land and/orhouse of individuals; (b) loss of livelihood or income opportunities for individuals; and (c) collectiveimpacts on communities/groups, such as loss of common property resources.

Support Principles for Different Categories of Impacts

The three types of entitlements as defined in the R&R Entitlement Framework, which are applicable to thewhole project are:

(a) entitlements for PAFs are to cover loss of land, structures and other assets, such as crops. Includedalso are shifting allowance, rights to salvage building materials and counseling on alternativeassistance;

(b) Entitlements for PAPs: every PAP over the age of 14 is eligible for assistance for loss oflivelihood. Additional support mechanisms will be made available to vulnerable groups tore-establish or enhance their livelihood through existing govenmment employment programs. Ifavailable, employment associated with the project would be provided; and

(c) entitlements for project affected groups: community-based entitlements will be provided wherepossible, and targeted especially at vulnerable and weaker groups.

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Targeted Support to Vulnerable Groups

For the purposes of this project, vulnerable groups have been defined as:

* Scheduled castes,* Scheduled tribes;* Women headed households; and* Households earning less than Rs 2,000 per month.

Vulnerable groups will receive targeted support and special attention from the project, and be provided withmore options and support mechanisms than others.

By allowing people to choose among different options, the project will seek to make people activelyparticipate in the development process, and achieving greater acceptance of the project.

Phased Approach in Implementing Social Component

Social Assessment. A social impact assessment has been undertaken for the project, in order to generateparticipation and make the social factors affecting development impacts and results more explicit. Thissocial assessment identified stakeholders and key social issues, and formulated a consultation strategy. Itspecifically addressed the issue of how poor and vulnerable groups may benefit from the project.

Census and BSES. A census and a BSES have been undertaken to register and document the status of thepotentially affected population within the project impact area in GSHP. This provides a demographicoverview of the population and covers people's assets, main sources of livelihood and income. It covers100 percent of the potentially affected population. During the census study the full ROW (wider than theCOI) was surveyed to ensure that all potentially affected people and assets were properly registered.Following final designs, the numbers were updated based on the actual COI. A similar approach wasfollowed for Phase I, IIA and fIB corridors. Were land needs to be acquired it will be acquired afternotification under Section 4 of the Land Acquisition Act. In this process, legal boundaries including theROW were verified.

Cut-off Date. The cut-off date is the end of the socio-economic survey or census of PAPs. It establishes,who among the PAPs living within the ROW, are entitled for compensation or assistance. Furthermore,any person who was not covered by the census can be considered if he can produce documentary evidencethat he is a PAP. The EMU will be responsible for such verification.

Consultation and Participation Process. Experience indicates that involuntary resettlement can give riseto severe social, economic and psychological problems for the affected population. These problems wouldbe reduced if, as part of a resettlement program, people are properly informed and consulted on the Project;their status and preferences are asked, and are allowed to make meaningful choices of their own. Thiswould help in reducing the insecurity and opposition to the Project which otherwise is likely to occur. Theconsultation process planned for the project uses different types of techniques like:

* Individual interviews includes head of the household and other members;* Village Meetings includes Village Panchyat, villagers and other stakeholders;* Focus Group Discussion includes clusters of PAPs and other stakeholders; and* NGOs consultation includes local and state level voluntary organizations, Government agencies and

academic institutions.

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lImplementation Arrangements

Overall Co-ordination. The PIU will have over-all responsibility for co-ordinating resettlement alongwith other Project components. The specific aspects of resettlement and rehabilitation will be implementedand managed by the EMU.

Market Value Assessment Committees. Will be established in each such district where the Project willbe active. These committees will undertake the work required in that district, in co-ordination with EMU.The EMU, in itself will have sub-units at the districts where the Project will be active.

Grievance Redressal Committee. Will be established at district level, which will hear complaints andfacilitate speedy solutions. This Grievance Redressal process will be used to settle disputes through.mediation and will help in reducing unnecessary litigation.

Collaboration with Local NGOs. Since much of the work related to resettlement involves socialdevelopment and community participation, the Project will involve agencies with similar experience.NGOs with desired experience will be involved in GSHP as a link between the Project proponent and thelocal communities.

Co-ordination with other Government Agencies. Various government agencies including the RevenueDepartment will have an important role in the smooth functioning of the resettlement program. The EMUwill be responsible for the over-all co-ordination of this work. Efforts will be made to undertake this workin a co-ordinated fashion, to build upon services and programs already in place. Where feasible,cost-sharing arrangements will be attempted.

Monitoring and Evaluation of RAP

The RAP contains indicators and benchmarks for achievement of the objectives under the resettlementprogram. Two levels of monitoring have been suggested for the RAP - intemal and external.

Internal monitoring. This refers to, monitoring activities that will be carried out by the EMU and itsagents, such as NGOs and the Gujarat Redressal Committee. It is essentially compliance monitoring,designed to compare on a monthly basis the tasks completed with those called for under the RAP.

External monitoring. This refers to, involvement of a third party, preferable an NGO with priorexperience in rehabilitation/resettlement or other social development program in carrying out the evaluationand reporting of the implementation of the RAP.

The indicators and benchmarks for extemal monitoring are of four types as given below:

(a) Physical indicators, indicating the results in terms of periodic target set for number of projectaffected people/households/communities compensated and resettled, training held, credit disbursed,etc., and the targets achieved;

(b) Monetary/financial indicators, indicating results in terms of budgetary outlays and expendituremade under each activity; Perception of PAPs about the RAP, related to evaluate the perception ofPAPs about the various aspects of RAP including the implementation procedure adopted; and

(c) Evaluation of Quality of Life, refer to combination of objective conditions, which can be measurednumerically and subjective perception about those objective conditions.

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