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Evaluation of the Roads Development Project in Mongolia
Completed: 2007

The Roads Development Project (RDP) was the first ADB loan for the roads sector of Mongolia. It comprised an investment component designed to carry out periodic maintenance of about 300 kilometers of the Ulaanbaatar–Altanbulag road, including the reconstruction of two bridges on the Darhan–Erdenet road, and a technical assistance component for policy and institutional development.

The RDP was a rational entry point for ADB into the roads sector and it supported the process of transition to a market-driven economy. As the first road improvement project implemented using international standards, it improved the efficiency of the road network linking the key economic centers of Darhan, Erdenet, and Ulaanbaatar and further to Altanbulag. The Ulaanbaatar–Altanbulag road was part of several priority routes identified by the medium-term road master plan being the only direct link between the capital Ulaanbaatar and the international border with the Russian Federation (via Darhan). The accompanying policy dialogue during implementation of the RDP revolved around resources available for the road sector in general, and more specifically to the level of cost recovery, i.e., user payments.

Summary of Findings

Overall, the RDP is rated "successful" as it also paved the way for subsequent project loans in the roads sector. The socioeconomic impact of RDP has been mixed. While the RDP proved not sufficient to enable development of a free trade zone in Altanbulag, it generated livelihood improvements in the impact areas. Improved access to markets was perceived as an important trigger for migration to RDP influence areas. It enabled diversification in alternative livelihoods including increased participation by women.

The RDP is rated "highly relevant" owing to its consistency with the Government's development strategy, as well as ADB's lending strategy in the country and the region. ADB now needs to move on to the next level where it can add value in terms of knowledge transfer and policy building, besides project funding.

The RDP is rated "effective". Firstly, the expected benefit of growth in trade was not fully achieved despite an increase in traffic levels. Although trade values have grown since its completion, the share of freight traffic by road vis-à-vis rail has remained constant. Use of the project road for trade has been constrained by customs restrictions and the absence of an all-weather road linking Ulaanbaatar and the southern border with the People's Republic of China. Potential remains for trade with the Russian Federation as well as for transit trade between the PRC and the Russian Federation across Mongolia. Lastly, the rapid increase in traffic has affected road safety. Currently, the intensity of accidents in terms of fatalities in Mongolia is among the highest on the RDP road.

The RDP is rated "efficient". The recalculated economic internal rate of return is higher than at project completion. The viability of the RDP rests on a cost-efficient maintenance regime.

Sustainability is rated "likely". After 7 years of operations after project completion, the RDP road remains in reasonably good condition except in a few sections. Despite severe weather conditions, the relatively small traffic level has produced relatively low abrasion of the pavement surface. Sector concerns relate to the adequacy of policies and regulatory conditions. The Government will need to continue to improve funding allocations to the roads sector and further efforts are made to improve the institutional resources for planning as well as execution.

The RDP contributed to policy development in terms of drafting legislation leading up to the Road Act (1998) and the Road Transport Act (1999). The attached technical assistance, rated "successful", was useful in developing road sector policies for a market-oriented economy. It has mixed outcomes in terms of the effectiveness and sustainability of its components. While its policy components were broadly effective in ensuring the creation of new legislations, the cost recovery component was "less effective" in improving the functioning of the road fund. The institutional components were "effective" in restructuring the Department of Roads and in training the staff, but this was not sustained because of changes in the structure of the Ministry of Roads, Transport, and Tourism and staff turnover.

Key Issues
  • Lack of adequate institutional capacity. The sustainability of institutional resources continues to be affected by staff turnover and changes in the institutional structure. There is a need for the Ministry of Roads, Transport, and Tourism staff to be trained on international best practices and for the Government to explore various incentives to retain staff in the public sector.


  • Absence of a robust road maintenance regime caused by inadequate funding, prioritization, availability of equipment, and inadequate construction standards to suit local weather conditions. Policy dialogue by ADB and other development partners has been partly effective in highlighting the importance of maintenance, and there is room for further work along these lines. The current road fund needs to be reformed to ensure better transparency in the flow of funds to the roads sector as well as to provide better focus on funding of road maintenance.
Lessons

ADB needs to

  • Design projects along the lines of regional cooperation and trade to ensure national and regional benefits
  • Add better value for Mongolia by bringing in innovative practices and ideas for improving the road sector in terms of policy advice, technical advice, and institutional capacity development
  • Ensure better project preparation
Recommendations

Follow-up actions for ADB include:

  • Initiating consultations with the Government to improve the road safety situation in key areas such as use of seatbelts, driver awareness to discourage drunken driving, better vehicle import and usage regulations, etc.
  • Resolving the issue that relate to delays in submission of audited project accounts in conjunction with the Government
EVALUATION APPROACH PAPER
Main Text [ PDF: 37 kb | 6 pages ]
Appendix 1: ADB Assistance to Mongolia Transport Sector [ PDF: 20 kb | 1 page ]
Appendix 2: Key Findings of PCR And Major Points Raised During Loan Processing of Loan 1364-MON(SF): Roads Development Project [ PDF: 16 kb | 1 page ]
Appendix 3: Table A3.1: Methodology and Distribution of Tasks and A3.2: Evaluation Framework [ PDF: 44 kb | 7 pages ]
Appendix 4: Terms of Reference for ADB Staff and Consultants [ PDF: 48 kb | 7 pages ]