Bhutan: Strengthening Air Transport Regulatory and Operational Performance

Sovereign Project | 42238-012

Summary

The Government of Bhutan requested capacity development technical assistance (TA) from the Asian Development Bank (ADB) to strengthen air transport regulatory and operational performance. ADB approved the TA concept paper on 15 November 2011. On 1 September 2011, an ADB fact-finding mission held discussions on preparations for the TA with the Ministry of Information and Communication (MOIC), the Department of Civil Aviation (DCA), and the Department of Public Accounts of the Ministry of Finance. The mission reached an understanding with the government on the TA project's impact, outcome, outputs, implementation arrangements, cost, financing arrangement, and terms of reference. The design and monitoring framework is in Appendix 1.

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Project Name Strengthening Air Transport Regulatory and Operational Performance
Project Number 42238-012
Country Bhutan
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7945-BHU: Strengthening Air Transport Regulatory and Operational Performance
Technical Assistance Special Fund US$ 300,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector Transport - Air transport
Gender Equity and Mainstreaming No gender elements
Description The Government of Bhutan requested capacity development technical assistance (TA) from the Asian Development Bank (ADB) to strengthen air transport regulatory and operational performance. ADB approved the TA concept paper on 15 November 2011. On 1 September 2011, an ADB fact-finding mission held discussions on preparations for the TA with the Ministry of Information and Communication (MOIC), the Department of Civil Aviation (DCA), and the Department of Public Accounts of the Ministry of Finance. The mission reached an understanding with the government on the TA project's impact, outcome, outputs, implementation arrangements, cost, financing arrangement, and terms of reference. The design and monitoring framework is in Appendix 1.
Project Rationale and Linkage to Country/Regional Strategy

Air transport activity in Bhutan is expected to increase substantially as a result of (i) the government's continued effort to market tourist attractions in the country, and (ii) the introduction of domestic air travel to provide access to and promote tourism in the less-developed regions. In 2010, the air passenger volume at Paro International Airport, the country's only operational airport, reached about 127,000 passengers--more than triple the estimated 33,900 passengers in 2001. Based on the updated air traffic forecast, assuming physical capacity improvements keep pace with demand, air passenger traffic could grow to about 491,000 passengers per year by 2020, of which about 12% (60,000 passengers) would be carried on the new domestic services. This anticipated traffic growth emphasizes the need to ensure optimum sector performance and service delivery in terms of safety, security, and capacity.

The air transport sector assessment, carried out under an ongoing ADB project preparatory TA, has revealed inadequacies in several critical areas, particularly the institutional, legal, and regulatory frameworks, as well as the role and capacity of the DCA. Since being established in January 1986 under the MOIC, the DCA has been responsible for providing both the regulatory and operational functions for civil aviation. This dual role, where the DCA regulates its own operations, creates the potential for conflict of interest. The DCA has developed an organization plan to separate the two functions, although both functions would remain within the same organization and under the same overall leadership. In the interest of aviation safety and in keeping with best international practice, the regulatory and operational functions performed by the DCA need to be separated more clearly. Ideally, the DCA would evolve into a regulatory authority outside the government structure rather than functioning as a department of the government subject to the constraints of the civil service. The operational functions currently performed by the DCA could then be handed off to a commercial entity, incorporated as a government-owned company, free to function on a commercial basis. New legislation and amendments to existing laws would be required to facilitate this transformation.

Impact Improved air transport connectivity
Project Outcome
Description of Outcome Improved air transport regulatory and operational performance
Progress Toward Outcome

The TA proposes a total separation of regulatory and operational functions throug the creation of a separate corporate organization to operate, maintain, and upgrade the national airports, and to operate the air traffic control services in Bhutan.

The TA has also developed a new Civil Aviation Law to replace an earlier, outdated, legal instrument.

Implementation Progress
Description of Project Outputs

1. Improved legal and regulatory provisions for civil aviation

2. Enhanced capabilities in technical oversight and airport operations

Status of Implementation Progress (Outputs, Activities, and Issues)

The new civil aviation law, titled Civil Aviation Act 2014, has been prepared as draft legislation to enable Bhutan to put in place a modern legal instrument that provides for all of the legal provisions that civil aviation regulation now requires.

DCA staff have attended several trainings on airport operations.

Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services tbd
Procurement Extensive consultation was undertaken with the MOIC and DCA, including a workshop to discuss and conceptualize the assistance.
Responsible ADB Officer Tomoaki Kawabata
Responsible ADB Department South Asia Department
Responsible ADB Division Transport and Communications Division, SARD
Executing Agencies
Ministry of Information and CommunicationGovernment of Bhutan, Thimphu Bhutan
Timetable
Concept Clearance 15 Nov 2011
Fact Finding 24 Aug 2011 to 02 Sep 2011
MRM -
Approval 05 Dec 2011
Last Review Mission -
Last PDS Update 31 Mar 2015

TA 7945-BHU

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
05 Dec 2011 27 Jan 2012 27 Jan 2012 31 Dec 2014 31 Dec 2015 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
300,000.00 0.00 0.00 0.00 0.00 0.00 300,000.00 05 Dec 2011 210,156.94
Title Document Type Document Date
Strengthening Air Transport Regulatory and Operational Performance Technical Assistance Reports Dec 2011

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