Azerbaijan : Second Road Network Development Investment Program - Tranche 1

Transport / Road transport (non-urban)

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; rehabilitation of the R32 UjarZardabAgjabedi 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.

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.

A major change in scope was approved on 6 June 2018 to utilize about $90 million of loan savings for the rehabilitation of the R32 Ujar-Zardab-Agjabedi road. The expanded project outputs include (i) construction of an approximately 30 km four-lane road section between the cities of Masalli and Jalilabad as part of the new Alat-Astara Road; (ii) project implementation support for construction supervision and program management covering planning, procurement, project implementation, financial management and compliance with safeguard requirements; and (iii) Rehabilitation of approximately 70 km of the R32 Ujar-Zardab-Agjabedi road.

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.

Trade with neighboring countries expanded and economic growth of Azerbaijan improved.

Efficient, adequate, safe, and sustainable road corridors in Azerbaijan achieved.

Civil works for the Alat-Astara Motorway Masalli to Jalilabad Intersection (km 142.89 to km 110.7) is 100% completed (30 km), road is opened to traffic in September 2018.

Major change in scope of T1 approved on 6 June 2018, civil works contracts for R32 signed on 31 Oct 2018.

The R32 Ujar-Zardab-Agjabadi Road (70.5 km) comprises two lots: (i) Lot 1 contract (km 0-37) was awarded to JV Korpu Bina Tikiti and Mehmet Gunes on 31 October 2018, and (ii) Lot 2 contract (km 37-70.5) was awarded to Polat Yol Yapi Sanayi ve Ticaret A.S on 19 November 2018. A contract variation under Lot 1 contract was approved on 28 October 2019. The implementation of contracts is on schedule: as of 29 February 2020 (i) Lot 1 contract's physical and financial progress reached 54% and 57%, respectively; and (ii)Lot 2 contract's physical and financial progress reached 61% and 70%.

A new motorway between Masalli and Jalilabad constructed and key sections of R32 rehabilitated.

Support to AAY on program management, supervision and implementation provided.

Due diligence requirements for new road sections R32 and M5/R57 completed.

Consulting service to deliver due diligence requirements for 2 new road sections completed in Q1 2018.

Required report preparation and submission are attended to during project implementation.

All civil works and consulting services contracts under the project have been awarded. The works for Masalli-Jalilabad motorway section successfully completed, taking over certificate issued on 18 Aug 2017.

The R32 Ujar-Zardab-Agjabadi Road (70.5 km) comprises two lots: (i) Lot 1 contract (km 0-37) in the amount of AZN67,960,100.67 ($40,013,765.24 equivalent) was awarded to JV Korpu Bina Tikiti and Mehmet Gunes on 31 October 2018 (contract no. 01/ICB/2018/L1), and (ii) Lot 2 contract (km 37-70.5) for AZN59,604,647.11 ($35,079,450.02 equivalent) was awarded to Polat Yol Yapi Sanayi ve Ticaret A.S on 19 November 2018. The implementation of contracts is on schedule: as of 29 February 2020 (i) Lot 1 contract's physical and financial progress reached 54% and 57%, respectively; and (ii)Lot 2 contract's physical and financial progress reached 61% and 70%.

Construction supervision and program management consultants continues to provide services to support the PIU/ARS.

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 was monitored internally and externally. The program management consultant conducted refresher training for the land acquisition department of ARS and respective district administrative staff on safeguards, and monitored LAR-related activities.

The final LARP implementation report for R32 road was disclosed on ADB website on 9 January 2020. LARP completion validation mission took place during 30 January 6 February 2020. Subsequently, the updated LARP implementation report was provided on 10 April 2020.