Bhutan: South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project

Sovereign Project | 47284-002

The project will promote regional connectivity in the Phuentsholing area with a direct road connection between Samtse and Chhukha districts. The new road section between Phuentsholing and Chamkuna will (i) complete the last missing 3.3-kilometer (km) link along the Phuentsholing-Samtse national highway, (ii) activate the full value of the entire 58 km Southern East-West Highway (SEWH) section for road users, and (iii) link Samtse district to the rest of the country. The trade facilitation and logistics component is aimed at improving the infrastructure and services at the border crossing points by adding additional equipment to facilitate cross-border traffic and transit of goods and services, trade, and commerce nationwide. These interventions are targeted at improving the working conditions and service delivery at the checkpoints so that goods and services can be exported and imported safely and efficiently.

Project Details

  • Project Officer
    Norbu, Tshewang
    South Asia Department
    Request for information
  • Country/Economy
    Bhutan
  • Modality
    • Grant
    • Loan
  • Sector
    • Transport
Project Name South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project
Project Number 47284-002
Country / Economy Bhutan
Project Status Active
Project Type / Modality of Assistance Grant
Loan
Source of Funding / Amount
Grant 0492-BHU: South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project
Asian Development Fund US$ 5.00 million
Loan 3421-BHU: South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project
Asian Development Fund US$ 14.61 million
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Regional integration
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Sector / Subsector

Industry and trade / Trade and services

Transport / Road transport (non-urban)

Gender Equity and Mainstreaming Some gender elements
Description

The project will promote regional connectivity in the Phuentsholing area with a direct road connection between Samtse and Chhukha districts. The new road section between Phuentsholing and Chamkuna will (i) complete the last missing 3.3-kilometer (km) link along the Phuentsholing-Samtse national highway, (ii) activate the full value of the entire 58 km Southern East-West Highway (SEWH) section for road users, and (iii) link Samtse district to the rest of the country. The trade facilitation and logistics component is aimed at improving the infrastructure and services at the border crossing points by adding additional equipment to facilitate cross-border traffic and transit of goods and services, trade, and commerce nationwide. These interventions are targeted at improving the working conditions and service delivery at the checkpoints so that goods and services can be exported and imported safely and efficiently.

Project Rationale and Linkage to Country/Regional Strategy

Landlocked Bhutan faces unique development challenges and opportunities. The country's small population of about 745,000 is dispersed throughout its mostly mountainous terrain. Formidable weather conditions make it difficult and expensive to deliver services and build and maintain vital infrastructure, particularly roads. Almost two-thirds of Bhutan's population still lives in rural areas and depends on an improved and available road network to ensure its daily basic needs. Bordered by India in the east, west, and south, Bhutan is heavily reliant on its much larger neighbor for international trade. India accounts for 84% of its exports, including electricity, and 73% of its imports. However, Bhutan's inadequate cross-border road network and customs infrastructure are hampering its international trade and logistics capacity. It is important to lower high transport costs and improve accessibility and customs clearance services to spur the country's economic and social development.

Road transport is the dominant mode of transport for passengers and freight within the country and with neighboring states in India, and national highways are the main arteries in the road network. However, road construction in Bhutan remains a challenge due to the difficult environment and extreme weather conditions, especially during the monsoon season, when landslides make roads along the hillsides unpassable.

The main border crossing point between Bhutan and India is in the city of Phuentsholing and connects Bhutan's northsouth highway to India's national highway network. Phuentsholing is the most important gateway for cross-border traffic and accounts for 74% of the total value of import and export trade in the country. The inadequacy of the border facilities in dealing with this traffic causes long idle times, particularly when clearing goods for transport, which leads to heavy congestion and constrains trade in the city.

Bhutan is a member of the SASEC Trade Facilitation Program and receives support through the Asian Development Bank (ADB) and other multilateral donors in complying with international standards and facilitate the safe and efficient trade of goods. However, cross-border trade, logistics procedures, and infrastructure require more extensive assistance. Currently there are no cross-border facilities for trade on either side of the border. Through ADB assistance, construction of a new mini dry port (MDP) in Phuentsholing and a land custom station (LCS) in Allay will be completed by early 2019. The trade facilitation and logistics component under this project will finance identified additional equipment for trade facilitation, which will supplement the ADB-financed infrastructure and improve the customs processes for handling goods in the two cross-border facilities to support efficient and secure cross-border trade in the subregion. The main beneficiaries of improved handling of goods are the industry and trade, and agriculture sectors. Key imports are construction materials, food, and household goods; key exports are timber, cardamom, apples, potatoes, oranges, steel, and ferro-alloys. The project will expedite customs modernization and reform processes and help Bhutan comply with the revised Kyoto Convention standards to simplify and harmonize customs procedures.

The government's strategic thrusts under the country's Eleventh Five Year Plan, 2013-2018, are inclusive social development, accelerated green economic development, and strategic infrastructure development. In the transport sector, this involves the construction and improvement of national highways. Improving efficiency in the sector will boost domestic and cross-border trade and allow for better delivery and wider coverage of basic social services.

Impact

Mobility and cross border movement of goods and passengers improved.

Project Outcome
Description of Outcome

Road connectivity and service delivery at the border crossings in Samtse and Chhukha districts improved.

Progress Toward Outcome Ongoing procurement activities for the additional 3 equipment; contract award expected by Q4 2022.
Implementation Progress
Description of Project Outputs

National highway between Phuentsholing and Chamkuna constructed.

Equipment for trade facilitation and logistics at MDP in Phuentsholing and the LCS in Allay procured and installed

Electronic customs management system (eCMS) developed.

Highway between Chamkuna and Amochu Bridge improved.

Status of Implementation Progress (Outputs, Activities, and Issues) The construction work for Phuentsholing - Chamkuna Road, 3.36km was commenced from 15 May 2019. About 69% physical progress has been achieved as of September 2022. 13 out of 14 total equipment for MDP and ALCS were completed in November 2022. The consultancy firm for development of electronic Customs Management System (eCMS) was mobilized in March 2021. As of September 2022, User Acceptance Testing for 15 (out of 20 modules) are ongoing. Construction of Chamkuna-Amochhu road, 3.62 km was commenced from 4 January 2021. About 38% of physical progress has been achieved as of September 2022. The 18-months contract for improvement of 31 km Pasakha-Manitar road has commenced from 1 November 2022.
Geographical Location Phuentsholing
Safeguard Categories
Environment B
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects The project is categorized 'B' as per ADB's Safeguards Policy Statement (SPS) 2009 as there are no environmentally sensitive features in the project. An initial environmental examination (IEE) report, including an environmental management plan (EMP) for the project has been prepared following ADB's Safeguard Policy Statement (2009), government guidelines, regulations, and policies. The main environmental impacts of the project are related to the construction of the 3.3 km embankment road that is 4 to 6 meters above the existing ground level, of which about 1.0 km directly abuts the Amochhu Riverbank. The construction requires excavation, erosion protection works, and river training. Significant slope stabilization in the form of gabions, spur dikes, and river channels are incorporated in the design to provide adequate toe and flank protection of the embankment road against the erosive force of the Amochhu River. Although less severe, other impacts are related to the borrow area and the transport of material and should also be addressed. The environmental impacts include deterioration of air quality from dust and vehicular emissions, increased noise level, vibration, deterioration of surface water quality, and occupational and community health and safety. Adequate mitigation measures were included in the EMP to address these impacts and were an integral part of the bidding documents. The key long-term impacts of vehicular emissions will be managed through mandatory annual vehicular emission testing. Meaningful consultations have been conducted throughout the project preparation stage and all concerns of the affected persons and stakeholders have been incorporated in the initial environmental examination and the EMP. An integrated social and environmental grievance redress mechanism has been formed to continue receiving feedback and complaints, if any, from affected parties, and to address them during the construction and operation stages. Implementation arrangements ensure that the PMU and PIUs have adequate capacity to manage environmental impacts through consultant support and capacity building. Environmental monitoring is being carried out regularly. The semi-annual environmental monitoring report for January-June 2022 reporting period has been prepared, submitted and disclosed.
Involuntary Resettlement The project is categorized ''C" as for Involuntary resettlement as the project components do not include any land acquisition or relocation of the people is foreseen.
Indigenous Peoples The project is categorized "C" for Indigenous People safeguards as per ADB's Safeguards Policy Statement (SPS) 2009 as there are no indigenous peoples living in the project areas. No impacts anticipated.
Stakeholder Communication, Participation, and Consultation
During Project Design During project preparation, consultations were held with government stakeholders, such as district officials, and Department of Roads and Department of Revenue Customs representatives, as well as 67 people comprising landowners and renters located next to the road alignment, and residents and businesspeople in Phuentsholing. Moreover, 272 residents and 330 business owners in the Phuentsholing commercial area participated in a socioeconomic survey during the preparation of the poverty and social analysis. Overall, people consulted and surveyed were supportive of the project and of the alignment selected, which avoids impacting private land and property, and did not raise any particular concerns. The Bhutan Exporters Association was involved in the design of the project during the preparation of the poverty and social analysis.
During Project Implementation Consultations will continue to take place during implementation to address community concerns. These will be facilitated and documented by the supervision consultant's team social development expert.
Business Opportunities
Consulting Services

All consultants will be recruited according to ADB's Guidelines on the Use of Consultants (2013, as amended from time to time). The terms of reference for all consulting services are detailed in Section D of the Project Administration Manual.

An estimated 347 person-months (27 international, 320 national) of consulting services are required to facilitate project management and implementation for the Phuentsholing to Chamkuna Road. Consulting firms will be engaged using the quality- and cost-based selection (QCBS) method with a standard qualitycost ratio of 90:10.

Procurement

All procurement of goods and works will be undertaken in accordance with ADB's Procurement Guidelines (2015, as amended from time to time).

International competitive bidding procedures will be used for civil works contracts estimated to cost $3,000,000 or more, and supply contracts valued at $1,000,000 or higher. Shopping will be used for procurement of works and equipment worth less than $100,000.

When and if any national competitive bidding (NCB) is proposed, ADB and the government will review the public procurement laws of the central and state governments to ensure consistency with ADB's Procurement Guidelines (2015, as amended from time to time), before the start of any procurement.

Responsible ADB Officer Norbu, Tshewang
Responsible ADB Department South Asia Department
Responsible ADB Division BHRM
Executing Agencies
Department of Roads
Phuentsholing Thromde
Timetable
Concept Clearance 26 Aug 2014
Fact Finding 11 Apr 2016 to 21 Apr 2016
MRM 20 May 2016
Approval 31 Aug 2016
Last Review Mission -
Last PDS Update 07 Dec 2022

Grant 0492-BHU

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
31 Aug 2016 29 Sep 2016 21 Dec 2016 30 Jun 2022 30 Jun 2023 -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 5.00 Cumulative Contract Awards
ADB 5.00 25 Jan 2023 4.38 0.00 88%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 25 Jan 2023 2.14 0.00 43%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating Satisfactory Satisfactory Satisfactory Satisfactory - Satisfactory

Loan 3421-BHU

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
31 Aug 2016 29 Sep 2016 21 Dec 2016 30 Jun 2022 30 Jun 2024 -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 18.07 Cumulative Contract Awards
ADB 14.61 25 Jan 2023 10.24 0.00 73%
Counterpart 3.46 Cumulative Disbursements
Cofinancing 0.00 25 Jan 2023 6.03 0.00 43%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating Satisfactory Satisfactory Satisfactory Satisfactory - Satisfactory

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Title Document Type Document Date
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Phuentsholing Thromde Audited Project Financial Statements (July 2021-June 2022) Audited Project Financial Statements Jan 2023
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Department of Roads Audited Project Financial Statements (July 2021-June 2022) Audited Project Financial Statements Jan 2023
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Department of Roads Audited Project Financial Statements (July 2020-June 2021) Audited Project Financial Statements Jul 2022
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Phuentsholing Thromde Audited Project Financial Statements (July 2020-June 2021) Audited Project Financial Statements Jul 2022
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Procurement Plan Procurement Plans May 2022
Amendment to the Financing Agreement (Special Operations) for Loan 3421-BHU and Grant 0492-BHU: South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project Financing Agreement Apr 2022
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Department of Revenue and Customs Audited Project Financial Statements (July 2020-June 2021) Audited Project Financial Statements Nov 2021
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Department of Roads Audited Project Financial Statements (July 2019-June 2020) Audited Project Financial Statements Feb 2021
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Phuentsholing Thromde Audited Project Financial Statements (July 2019-June 2020) Audited Project Financial Statements Jan 2021
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Department of Revenue and Customs Audited Project Financial Statements (July 2019-June 2020) Audited Project Financial Statements Jan 2021
Amendment to the Financing Agreement for Loan 3421-BHU and Grant 0492-BHU: South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project Financing Agreement Jul 2020
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Department of Roads Audited Project Financial Statements (July 2018-June 2019) Audited Project Financial Statements Mar 2020
Amendment to the Financing Agreement for Loan 3421-BHU and Grant 0492-BHU: South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project Financing Agreement Feb 2019
Amendment to the Financing Agreement for Loan 3421-BHU and Grant 0492-BHU: SASEC Transport, Trade Facilitation and Logistics Project Financing Agreement Oct 2018
Project Agreement (Special Operations) for Loan 3421 and Grant 0492-BHU South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project Project/Program Agreements Sep 2016
Financing Agreement (Special Operations) for Loan 3421 and Grant 0492-BHU South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project Financing Agreement Sep 2016
SASEC Transport, Trade Facilitation and Logistics Project: Report and Recommendation of the President Reports and Recommendations of the President Aug 2016
SASEC Transport, Trade Facilitation and Logistics Project: Project Administration Manual Project/Program Administration Manual Aug 2016
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project Initial Poverty and Social Analysis Aug 2014

Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

Title Document Type Document Date
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Phuentsholing–Chamkuna Road and Chamkuna–Amochhu Road Construction Environmental Monitoring Report (January-June 2022) Environmental Monitoring Reports Oct 2022
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Phuentsholing–Chamkuna Road and Chamkuna–Amochhu Road Construction Social Monitoring Report (January-June 2022) Social Monitoring Reports Oct 2022
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Phuentsholing–Chamkuna Road and Chamkuna–Amochhu Road Construction Environmental Monitoring Report (July-December 2021) Environmental Monitoring Reports Jan 2022
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Phuentsholing–Chamkuna Road and Chamkuna–Amochhu Road Construction Social Monitoring Report (July-December 2021) Social Monitoring Reports Jan 2022
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Pasakha-Manitar Road Improvement Resettlement Due Diligence Report Safeguards Due Diligence Reports Oct 2021
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Pasakha-Manitar Road Improvement Initial Environmental Examination Initial Environmental Examination Oct 2021
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Phuentsholing–Chamkuna Road and Chamkuna–Amochu Road Construction Social Monitoring Report (July-December 2020) Social Monitoring Reports Feb 2021
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Construction of Phuentsholing–Chamkuna 4- Lane Road and Chamkuna–Amochu Bridge Road Environmental Monitoring Report (July-December 2020) Environmental Monitoring Reports Feb 2021
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Phuentsholing-Chamkuna Road Social Monitoring Report (January-June 2020) Social Monitoring Reports Jul 2020
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Phuentsholing-Chamkuna Road Project Environmental Monitoring Report (January-June 2020) Environmental Monitoring Reports Jul 2020
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Phuentsholing-Chamkuna Four-Lane Road Safeguards Due Diligence Report Safeguards Due Diligence Reports May 2020
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Phuentsholing-Chamkuna Four-Lane Road Initial Environmental Examination Initial Environmental Examination Apr 2020
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Phuentsholing-Chamkuna Road Environmental and Social Monitoring Report (January-December 2019) Environmental and Social Monitoring Reports Apr 2020
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Chamkuna-Amochu Bridge Road Improvement Initial Environmental Examination Initial Environmental Examination Jan 2020
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Chamkuna-Amochu Bridge Road Improvement Safeguards Due Diligence Report Safeguards Due Diligence Reports Dec 2019
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Phuentsholing-Chamkuna Road Resettlement Due Diligence Report Safeguards Due Diligence Reports Nov 2018
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Phuentsholing-Chamkuna Road Resettlement Due Diligence Report Safeguards Due Diligence Reports Apr 2018
South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project: Initial Environmental Examination Initial Environmental Examination May 2016

Evaluation Documents See also: Independent Evaluation

None currently available.


Related Publications

None currently available.


The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.

Tenders


Contracts Awarded

Contract Title Approval Number Contract Date Contractor | Address Executing Agency Total Contract Amount (US$) Contract Amount Financed by ADB (US$)
Construction of Pasakha - Manitar Road Loan 3421 02 Nov 2022 HI-TECH:HVC JV | Phuntsholing, Chukha, Bhutan Phuentsholing Thromde 3,994,663.29 3,413,232.59
DEVELOPMENT OF ELECTRONIC CUSTOMS MANAGEMENT SYSTE M (ECMS) Grant 0492 16 Feb 2021 YANG KHOR PVT. LTD | BHUTAN Department of Roads 1,868,760.00
PACKAGE 018: CONSTRUCTION OF CHAMKUNA TO AMOCCHU ROAD Loan 3421 22 Dec 2020 YANGKIL CONSTRUCTION PVT. LTD. | PHUENTSHOLING, CHUKHA BHUTAN Department of Roads 1,257,914.97 1,074,927.15
CONSTRUCTION OF PHUENTSHOLING-CHAMKUNA ROAD Loan 3421 24 May 2019 M/S CHIMNI RD | THIMPHU CHUBACHU BHUTAN Department of Roads 4,402,718.97 3,751,085.09
CONSTRUCTION SUPERVISION OF THE PHUENTSHOLING- CHAMKUNA ROAD Loan 3421 16 Apr 2019 DAINICHI CONSULTANTS INC IN ASSOCIATION WITH | 3-2-21 YABUTA MINAMI GIFU 500-8384 JAPAN Department of Roads 750,497.66 634,956.66