Bhutan: South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project
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
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Project Officer
Norbu, Tshewang
South Asia Department
Request for information -
Country/Economy
Bhutan -
Modality
- Grant
- Loan
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Sector
- Transport
Related Projects
Project Name | South Asia Subregional Economic Cooperation Transport, Trade Facilitation and Logistics Project | ||||||||
Project Number | 47284-002 | ||||||||
Country / Economy | Bhutan |
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Project Status | Active | ||||||||
Project Type / Modality of Assistance | Grant Loan |
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Source of Funding / Amount |
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Strategic Agendas | Environmentally sustainable growth Inclusive economic growth Regional integration |
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Drivers of Change | Gender Equity and Mainstreaming Governance and capacity development |
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Sector / Subsector |
Industry and trade / Trade and services Transport / Road transport (non-urban) |
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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 north south 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. |
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Impact | mobility and cross border movement of goods and passengers improved |
Project Outcome | |
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Description of Outcome | Road connectivity and service delivery at the border crossings in Samtse and Chhukha districts improved |
Progress Toward Outcome | Achieving the targets needs full completion of the project. |
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 constructed. |
Status of Implementation Progress (Outputs, Activities, and Issues) | The scope of the PCR was changed from double lane to four lanes and further added 3.8 km road improvement roads from Chamkuna to Amochhu bridge. 8 out of the 14 equipment for procurement have been completed. Some equipment originally identified for LCS will no longer be required or can be shared with MBP. PT to work on variation and submit to ADB through MOF. The Chamkuna-Amochhu road section work is underway. |
Geographical Location | Phuentsholing |
Safeguard Categories | |
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Environment | B |
Involuntary Resettlement | C |
Indigenous Peoples | C |
Summary of Environmental and Social Aspects | |
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Environmental Aspects | In accordance with the requirements of the Safeguard Policy Statement, the road project component was classified as environment category B. Therefore, an initial environmental examination, including an environmental management plan (EMP), was prepared and disclosed on the ADB website. 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 River bank. The construction requires dredging, 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 were conducted during the project preparation stage, and concerns of the affected persons and stakeholders were considered in the initial environmental examination and the EMP. The consultations were attended by representatives from key environmental agencies, roadside communities, and non-government organizations. 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. The project management unit for the Phuentsholing to Chamkuna road will be created under the DOR, which will include an environmental specialist to supervise the effective implementation of the EMP and the preparation of semiannual environmental monitoring reports for public disclosure. The project management unit will be supported by a construction supervision consultant who will include an environmental specialist in their team. |
Involuntary Resettlement | The project is categorized as C for involuntary resettlement as per ADB's Safeguard Policy Statement (2009). Due diligence of social impacts of the road works concluded that the project will neither affect private assets nor cause physical or economic displacement. The road alignment is located on government land, and field verification and consultations confirmed the absence of private assets within the corridor of impact. The trade facilitation and logistics component does not have any resettlement impacts. |
Indigenous Peoples | There are no indigenous people in the project area. The civil works under this project will not affect any persons and the project is categorized as C for indigenous peoples. |
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 | |
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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 quality cost 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 $100,000. When and if any national competitive bidding (NCB) is proposed, ADB and the government will review the public procurement laws of the central and state governments to ensure consistency with ADB's Procurement Guidelines (2015, as amended from time to time), before the start of any procurement. |
Responsible ADB Officer | Norbu, Tshewang |
Responsible ADB Department | South Asia Department |
Responsible ADB Division | BHRM |
Executing Agencies |
Department of Roads Mr. Sangpa Tamang Ministry of Communications Thimphu Bhutan Phuentsholing Thromde [email protected] Post Box. 02, Pelkhil Lam, District Chukha, Phuentsholing, Bhutan |
Timetable | |
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Concept Clearance | 26 Aug 2014 |
Fact Finding | 11 Apr 2016 to 21 Apr 2016 |
MRM | 20 May 2016 |
Approval | 31 Aug 2016 |
Last Review Mission | - |
Last PDS Update | 02 Dec 2021 |
Grant 0492-BHU
Milestones | |||||
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Approval | Signing Date | Effectivity Date | Closing | ||
Original | Revised | Actual | |||
31 Aug 2016 | 29 Sep 2016 | 21 Dec 2016 | 30 Jun 2022 | 30 Jun 2023 | - |
Financing Plan | Grant Utilization | ||||
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Total (Amount in US$ million) | Date | ADB | Others | Net Percentage | |
Project Cost | 5.00 | Cumulative Contract Awards | |||
ADB | 5.00 | 01 Apr 2022 | 3.48 | 0.00 | 70% |
Counterpart | 0.00 | Cumulative Disbursements | |||
Cofinancing | 0.00 | 01 Apr 2022 | 1.60 | 0.00 | 32% |
Status of Covenants | ||||||
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Category | Sector | Safeguards | Social | Financial | Economic | Others |
Rating | Satisfactory | Satisfactory | Satisfactory | Satisfactory | - | Satisfactory |
Loan 3421-BHU
Milestones | |||||
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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 | Loan Utilization | ||||
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Total (Amount in US$ million) | Date | ADB | Others | Net Percentage | |
Project Cost | 18.07 | Cumulative Contract Awards | |||
ADB | 14.61 | 01 Apr 2022 | 6.94 | 0.00 | 48% |
Counterpart | 3.46 | Cumulative Disbursements | |||
Cofinancing | 0.00 | 01 Apr 2022 | 3.86 | 0.00 | 26% |
Status of Covenants | ||||||
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Category | Sector | Safeguards | Social | Financial | Economic | Others |
Rating | Satisfactory | Satisfactory | Satisfactory | Satisfactory | - | Satisfactory |
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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.
Evaluation Documents See also: Independent Evaluation
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Related Publications
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Tenders
Contracts Awarded
Contract Title | Approval Number | Contract Date | Contractor | Address | Executing Agency | Total Contract Amount (US$) | Contract Amount Financed by ADB (US$) |
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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 |
Procurement Plan
Title | Document Type | Document Date |
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SASEC Transport, Trade Facilitation and Logistics Project: Procurement Plan | Procurement Plans | Aug 2016 |