Azerbaijan: Second Road Network Development Investment Program - Tranche 1

Sovereign Project | 45389-002

Summary

Project 1 will fund two components: i) Infrastructure Development Component - construction of an approximately 30 km section of the new motorway between Masalli and Jalilabad of the Masalli-Shorsulu road; and ii) Project Implementation Support Components - project implementation support to ARS for construction supervision and program management covering planning, procurement, project preparation and implementation.

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Project Name Second Road Network Development Investment Program - Tranche 1
Project Number 45389-002
Country Azerbaijan
Project Status Approved
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2921-AZE: Second Road Network Development Investment Program - Tranche 1
Ordinary capital resources US$ 250.00 million
Strategic Agendas Inclusive economic growth
Regional integration
Drivers of Change Private sector development
Sector / Subsector Transport - Road transport (non-urban)
Gender Equity and Mainstreaming Some gender elements
Description Project 1 will fund two components: i) Infrastructure Development Component - construction of an approximately 30 km section of the new motorway between Masalli and Jalilabad of the Masalli-Shorsulu road; and ii) Project Implementation Support Components - project implementation support to ARS for construction supervision and program management covering planning, procurement, project preparation and implementation.
Project Rationale and Linkage to Country/Regional Strategy

The Southern Corridor is a major transportation artery for Azerbaijan. The existing southern corridor road, from Alyat to Astara (M3) is a 240 km two-lane road. Current road section is in poor condition, resulting in high transport costs, long delivery times and traffic accidents due to limited capacity, and has a high roughness index and is in need of major rehabilitation. Previous analyses have concluded that improvements on the southern corridor required building a totally new 4-lane road in order to minimize the resettlement problem that widening the existing road would have created.

Improvement of the southern road corridor will (i) provide a good road connection with Iran with expanded capacity and facilitate bilateral trade and transit trade at a faster rate; (ii) reduce the cost of transportation of agricultural products to Baku markets; and (iii) bring savings in travel time and transportation cost for all road users in general and for the local population in particular.

Impact Generate economic growth in Azerbaijan and expanded trade with neighboring countries.
Project Outcome
Description of Outcome An adequate, efficient, safe, and sustainable southern motorway corridor section connecting Baku
Progress Toward Outcome All contracts have been awarded under this project. Outcome will be determined at completion.
Implementation Progress
Description of Project Outputs

About 30 km section of the newly constructed motorway between Masalli and Jalilabad.

Project implementation support to ARS for construction supervision and program management.

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

Civil works contract commenced in March 2014. Construction of bridges and culvert works and utility relocations works are ongoing. Overall physical progress is low, but is expected to improve in the coming months as delays in the preparation and approval of construction drawings has been largely solved. No land acquisition and resettlement issues were identified.

The construction supervision and program management consultants are providing services to support the PIU/ARS.

Geographical Location Masalli-Shorsulu Road
Safeguard Categories
Environment A
Involuntary Resettlement A
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects An environment assessment and review framework20 for the investment program was prepared following ADB's Safeguard Policy Statement (2009) and relevant laws and regulations in Azerbaijan. The proposed motorway is on a new alignment with a 7 km section passing through wetlands. The sections to be financed by tranche 1 and 2 are classified as environment category A. The environmental impact assessment (EIA) 21 reports were prepared in 2007; the World Bank in 2011 prepared an addendum that looked more closely into the wetlands and its environmental implications. Based on these reports, a single updated EIA was prepared that reflects compliance with the requirements of ADB's Safeguard Policy Statement. The EIA recommends specific mitigation measures with regard to motorway design and construction and a robust long-term monitoring program. The contracts for the supervision consultant, program management consultant, and civil works will include stringent provisions for compliance with environmental safeguards. An ecological expert and environmental specialist will be engaged to ensure implementation of the environmental management plan. Assurances to mitigate potential harm to the wetlands are also included in the loan agreement, framework financing agreement, and facility administration manual.
Involuntary Resettlement A resettlement framework for the investment program was prepared following ADB's Safeguard Policy Statement and relevant laws and regulations in Azerbaijan, and adopting the rehabilitation strategy in the resettlement policy framework. LAR activities were substantially completed based on the World Bank's resettlement plan, which the government agreed upon under the earlier World Bank-assisted highway project. A due diligence assessment confirmed that compensation payments were made following the resettlement policy framework agreed upon with the World Bank and are consistent with the requirements of ADB's Safeguard Policy Statement. Outstanding LAR activities include compensating the remaining 2% (15 privately owned plots) of households losing portions of their agricultural lands, paying compensation for affected municipal land, and providing additional rehabilitation assistance for severely affected and vulnerable households by prioritizing them for civil works jobs. Tranche 1 is classified as category A for involuntary resettlement. For tranche 1, a land acquisition and resettlement plan was prepared to cover the remaining LAR activities, including rehabilitation measures and actions to address temporary impacts and emerging LAR issues during implementation. Both the LAR framework and plan were disclosed on the ADB website on 23 July 2012. Implementation of the LAR plan will be monitored internally and externally. The program management consultant will conduct refresher training for the land acquisition department of ARS and respective district administrative staff on safeguards, and will monitor LAR-related activities.
Indigenous Peoples The investment program area does not have any known social or cultural groups classified as indigenous peoples under ADB's Safeguard Policy Statement. Tranche 1 is classified as category C for indigenous peoples impact.
Stakeholder Communication, Participation, and Consultation
During Project Design Public consultation were undertaken with communities, government and non-governmental organisations (NGOs) in relation to the construction of the road. Most feedback received from communities related to land compensation and access matters with little comment on environmental issues. At a meeting with environmental NGOs and local biodiversity experts some concerns were expressed over potential impacts on wetland ecology and a number of design mitigation measures were agreed to be considered.
During Project Implementation Consultation will be conducted during project implementation, when required.
Business Opportunities
Consulting Services Consultant recruitment financed will follow ADB's Guidelines on the Use of Consultants (2013, as amended from time to time).
Procurement Procurement of goods and works will follow ADB's Procurement Guidelines (2013, as amended from time to time).
Responsible ADB Officer Zheng Wu
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Transport and Communications Division, CWRD
Executing Agencies
Ministry of TransportPANAHOV@MINTRANS.AZ1054, Tbilisi Avenue
Baku, AZ1122
Republic of Azerbaijan
Timetable
Concept Clearance -
Fact Finding -
MRM 24 Jul 2012
Approval 25 Oct 2012
Last Review Mission -
Last PDS Update 17 Mar 2015

Loan 2921-AZE

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
25 Oct 2012 22 Apr 2013 30 Jul 2013 31 Dec 2016 - -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 312.00 Cumulative Contract Awards
ADB 250.00 25 Oct 2012 154.03 0.00 62%
Counterpart 62.00 Cumulative Disbursements
Cofinancing 0.00 25 Oct 2012 52.12 0.00 21%

Evaluation Documents

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