|Project Rationale and Linkage to Country/Regional Strategy
From 1975 until 1999, a struggle for independence led to prolonged violent conflict. After a brief period under United Nations administration, Timor-Leste gained formal independence in 2002. However, it had suffered massive loss of livelihoods, social capital and basic social services. Public infrastructure had been destroyed or was otherwise dilapidated. International assistance was provided to start building government institutional capacity and state authority from scratch. However, from 2006 until 2008, internal factionalism, which resulted in temporary displacement of nearly a quarter of the population, disrupted recovery efforts and international support for maintaining law and order was again required until 2012. While considerable progress has been made, Timor-Leste remains fragile and its performance remains weak in many respects. ADB's approach to achieving development effectiveness is relevant to the design of any development intervention.
Timor-Leste has, since 2005, derived income from offshore oil and gas. Its sovereign wealth fund had accumulated over $11billion by the end of 2012. Government spending has generated strong economic momentum with gross domestic product (excluding the petroleum sector and the contribution from the United Nations) growing at an average annual rate of 11.7% since 2008 and forecast to continue at 10% in 2013 and 2014. While withdrawals from the fund are prudently managed, Timor-Leste is well placed financially to invest in development.
In 2011, the government published its Strategic Development Plan (SDP), 2011-2030 which aims to sustain economic growth and fast track economic development to achieve a modern and diversified economy with high-quality infrastructure. The SDP envisages three pillars for development - social capital development, infrastructure development, and economic development. Public investment (including in roads) over the first 5 years of the SDP is intended to create the conditions to attract private investment and ensure a private sector-led economy by 2030. An efficient and safe transport system is essential to achieving the three developmental pillars. Upgrading of roads is emphasized in the SDP and the operational plans of the current government.
Alignment with country owned strategies is an important element of engagement in fragile and conflict affected situations (FCAS). Additionally, engagement in FCAS should promote inclusive growth. Economic expansion in Dili is encouraging rural-urban migration, a high rate of youth unemployment and high demands on basic services. Diversification of economic activity beyond Dili is needed to help stem these pressures and share the benefits of petroleum wealth more widely. An efficient transport network is central to economic diversification and national integration.
The currently poor condition of roads results in high costs and unreliable services. The core network comprises 1,426 km of national roads and 869 km of district roads. Rural roads, about 3,000 km in length, provide access to villages and more remote areas. Almost the entire core road network cannot be economically maintained. Only about 8% of the core road network is assessed to be in fair condition and about 70% in very poor condition. This is a constraining the country's efforts to emerge from fragility. Support is essential to bring about "quick wins" and transformational changes to the road network to underpin economic progress and social stability.
The MPW, assisted by ADB, has developed the Medium-Term Road Network Development Program, the implementation of which started in 2010. The Road Network Development Sector Project (RNDSP), the Road Network Upgrading Project (RNUP) and projects supported by Japan International Cooperation Agency and World Bank for the upgrading are under implementation and will upgrade about 356km of road. These development partner supported projects are closely coordinated and are piloting performance based road maintenance by including two-year post construction maintenance in the construction contracts. Performance based maintenance will help alleviate capacity issues that currently constrain effective road maintenance. Local contractors now have the capacity for such maintenance contracts but do not have capacity for major upgrading work. International contractors will be needed in the short and medium term. A sector assessment is in Appendix 2.
Road safety is a related emerging issue. Lack of enforcement of regulations, lack of road safety awareness, and poor road conditions contribute to high accident rates. In 2012, 76 people died according to traffic police data. However the recent WHO 2013 Global Status Report on Road Safety suggests significant under reporting of fatalities and gives a likely "point estimate" of 190 deaths or 19.5 per 100,000 population. The vehicle fleet is expanding rapidly, especially motorcycles, with a threefold increase between 2005 and 2009.
MPW is responsible for planning, developing, and maintaining roads. In common with many FCAS, human capacity is a major constraint. The MPW's Directorate of Roads, Bridges, and Flood Control (DRBFC) has only 12 engineers severely limiting its capacity to manage the road infrastructure. More professional staff, particularly new graduates, are required so that capacity development efforts can be effective. ADB supports the preparation of a medium term capacity development framework for the MPW. Ongoing TA supports scholarships and a technical upgrading program. Twinning arrangements with Indonesia and the Philippine Department of Public Works and Highways are being developed. A project management unit (PMU) will continue to be essential for management of development-partner financed projects. In line with FCAS principles, this will be gradually integrated with the line ministry.
Since 1999, ADB has been the lead development agency in the road sector. It has provided six TA projects, three project grants, one sector grant, and two loans to the road sector. The country partnership strategy (CPS), 2011-2015 continues ADB's strategic directions by concentrating on infrastructure development and management. ADB plans to provide complementary assistance in the core specializations of finance, regional cooperation and integration, and education, and will support the private sector as a key driver of change to help make the transition from a public sector-led economy. ADB support for infrastructure, financial services, and skills training will help meet the needs of a growing economy. An emphasis on the provision of services outside the capital will support growth of the rural economy. Poverty will be alleviated, particularly in rural areas, by connecting the poor to markets and increasing the availability of basic public services.
The emphasis in the CPS on infrastructure reflects its importance to the achievement of the government's development priorities for 2011 2017 and ADB's established presence and comparative strength in infrastructure. ADB will help to coordinate capacity development and investment programming across infrastructure sectors (particularly road transport and water and sanitation), and help to mobilize financial resources for infrastructure investment.
The project will support upgrading of priority sections of the national road network. In particular, the project will finance the upgrading of the trans-island road from Manatuto to Natarbora, which, in addition to greatly improving national connectivity, will directly support the governments' petroleum and gas developments on the south coast. The project will also finance the preparation of other high-priority road links.