Nepal: South Asia Subregional Economic Cooperation Highway Improvement Project
The project will support capacity, quality, and safety improvements of the East -West Highway (EWH), which is the main domestic and international trade corridor of Nepal, and which forms part of the South Asian Association for Regional Cooperation (SAARC) corridor 4 linking Kathmandu to Dhaka and Chittagong through India. The project will (i) rehabilitate and widen about 87 kilometers (km) of the EWH between Kanchanpur and Kamala in southeastern Nepal; (ii) improve road safety, asset management, and gender equality and social inclusion (GESI) on the 1,027 km EWH; and (iii) strengthen the road safety and GESI capacity of road sector agencies. The project will promote economic growth and contribute to improving the competitiveness of Nepal's exporting industries by enhancing the efficiency of the transport system, strengthening national and regional connectivity, and improving the safety of the road network.
Bhatt, Bhupendra Chandra
South Asia Department
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|Project Name||South Asia Subregional Economic Cooperation Highway Improvement Project|
|Country / Economy||Nepal
|Project Type / Modality of Assistance||Loan
|Source of Funding / Amount||
|Strategic Agendas||Environmentally sustainable growth
Inclusive economic growth
|Drivers of Change||Gender Equity and Mainstreaming
Governance and capacity development
|Sector / Subsector||
Transport / Road transport (non-urban)
|Gender Equity and Mainstreaming||Effective gender mainstreaming|
|Description||The project will support capacity, quality, and safety improvements of the East -West Highway (EWH), which is the main domestic and international trade corridor of Nepal, and which forms part of the South Asian Association for Regional Cooperation (SAARC) corridor 4 linking Kathmandu to Dhaka and Chittagong through India. The project will (i) rehabilitate and widen about 87 kilometers (km) of the EWH between Kanchanpur and Kamala in southeastern Nepal; (ii) improve road safety, asset management, and gender equality and social inclusion (GESI) on the 1,027 km EWH; and (iii) strengthen the road safety and GESI capacity of road sector agencies. The project will promote economic growth and contribute to improving the competitiveness of Nepal's exporting industries by enhancing the efficiency of the transport system, strengthening national and regional connectivity, and improving the safety of the road network.|
|Project Rationale and Linkage to Country/Regional Strategy||
Country context. Nepal is landlocked and bordered to the north by the People''s Republic of China (PRC), and to the south, east, and west by India. Consequently, Nepal relies heavily on its direct neighbors for international trade particularly India, with which it shares 19 official trading posts. In fiscal year (FY) 2017, 65% of Nepal''s imports were from India, and 13% from the PRC; India received 57% of Nepal''s exports, and the PRC 2.3%. Biratnagar, located 68 km east of Kanchanpur, is Nepal''s largest export gateway, handling 29.5% of its exports, while the port of Kolkata is the primary transit point for seaborne freight.
Economic rationale. The gross domestic product of Nepal grew at an average annual rate of 4.5% during FY2007 -FY2017 and is forecast to grow at 5.9% in FY2018 and 5.5% in FY2019. The economy of Nepal suffers from a structural lack of competitiveness; exports have alarmingly decreased at an average annual rate of 6.1% in real terms during FY2007 -FY2017, while the agriculture sector still employs 69.4% of the labor force. The trade deficit is widening, as foreign remittances have sustained import growth, which increased by 21.3% annually during FY2007 -FY2017. The economy is hampered by deficient domestic and cross-border infrastructure networks, which increase transport costs and impede regional integration and trade with indirect neighbors: excluding India, trade with other SASEC and SAARC member countries accounts for just 0.8% of Nepal''s total trade.
Transport sector context. Road transport carries over 90% of passengers and goods in Nepal. The strategic road network (SRN) totals 12,494 km, 51% of which is paved, and is developed and maintained by the Department of Roads (DOR) of the Ministry of Physical Infrastructure and Transport (MOPIT). The SRN provides vital linkages to major economic centers and neighboring countries, and features eight north south and three east west corridors, including the 1,027 km-long EWH which carries the highest traffic volumes. The local road network totals 57,600 km, 3.5% of which is paved. The road density of Nepal, at 2.5 km of road per 1,000 people, is low, and there are few alternatives to road transport. Although projects supported by development partners are expected to increase the capacity and density of airport, railway, and inland waterway networks, road transport will continue to have a major role in the economic development of Nepal.
Road safety. Vehicle ownership remains low, with only 0.08 vehicles per capita, but vehicle sales increased by 17.5% annually during FY2007 -FY2017, and the number of registered vehicles is expected to quadruple in the next decade. Motorcycles account for 79.7% of sales, which further increases road safety risks, particularly on deteriorated or wet pavements conditions. The traffic fatality rate is estimated at 302 fatalities per 100,000 vehicles, one of the highest rates in Asia, and reported traffic accidents increased from 3,800 in FY2002 to 13,580 in FY2013.
Transport connectivity within Nepal and with neighboring countries improved
Physical connectivity and multimodal linkages for land-based transport along major trade routes enhanced
|Description of Outcome||Efficiency and safety of the road transport system improved|
|Progress Toward Outcome||Institutional Strengthening of Road Safety and Gender Equality consultant commenced work in July 2019.Training Calendar for all GESI activities aligning sub activities with cost estimates is being prepared and finalized by 31 July 2022. The implementation of such activities will commence as per the approved training plan.|
|Description of Project Outputs||
Road network upgraded and maintained
Planning and management for road safety strengthened
Facilities and project readiness of Project Directorate (ADB) improved
|Status of Implementation Progress (Outputs, Activities, and Issues)||
Civil works contracts for KK-01 and KK-02 signed on 25 June 2020 and has commenced the work from 29 October 2020. As of June 2022, the physical progress in KK-1 and KK-2 is 13.70% and 14.03% respectively, which gives the average physical progress of 14.00% against the elapsed time of 56%.
The assessment of road safety works was carried out by TA consultant and submitted the final report. The report is being reviewed by the DOR.
A Plan is being prepared for conducting awareness activities in 2022.
129 divisional and regional officers, engineers, administration, and data managers of all divisional and regional offices from seven Provinces trained on GESI Operational Guidelines. Among trainees, 29(22.48%) were women and 100 (77.51%) were men officials.
Contract for construction of PD Office building was awarded on 24 January 2022 and commenced work from 10 April 2022.
|Geographical Location||Kamala River, Kanchanpur|
|Summary of Environmental and Social Aspects|
|Environmental Aspects||Environmental impacts will be mainly restricted to the construction stage with no expected irreversible impacts.|
|Involuntary Resettlement||Land acquisition and resettlement impacts are expected to be limited as the project is developed in the current right-of-way of DOR.|
|Indigenous Peoples||There are no indigenous people in the project area.|
|Stakeholder Communication, Participation, and Consultation|
|During Project Design||Consultations with the local communities, including women, were conducted to ensure that they were involved in the preparation and analysis of the project design. Consultations on poverty and social assessment, resettlement plan, and environmental assessment are currently being carried out, and overall highlight a high level of support for the project.|
|During Project Implementation||Stakeholders will be consulted during project implementation, particularly for the design and conduct of community awareness campaigns to be undertaken under the project.|
|Consulting Services||All consultants and nongovernment organizations will be recruited according to ADB''s Procurement Regulations (2017, as amended from time to time). All firms will be recruited using ADB's quality- and-cost-based selection (QCBS) under full technical proposal (FTP) and a standard quality -cost ratio of 90:10.|
|Procurement||All procurement of goods and works will be undertaken in accordance with ADB''s Procurement Policy (2017, as amended from time to time) and Procurement Regulations for ADB Borrowers (2017, as amended from time to time). Open competitive bidding (OCB) procedures will be used for all civil works contracts with provision for domestic preference. Requests for quotations will be used for procurement of works and goods estimated to cost less than $100,000.|
|Responsible ADB Officer||Bhatt, Bhupendra Chandra|
|Responsible ADB Department||South Asia Department|
|Responsible ADB Division||Nepal Resident Mission|
Ministry of Physical Infrastructure and Transport
Mr. H.L. Regmi
Nepal Project Directorate (ADB) - Department of Roads
Mr. O.H. Halls
|Concept Clearance||05 Apr 2018|
|Fact Finding||21 May 2018 to 01 Jun 2018|
|MRM||13 Jul 2018|
|Approval||03 Oct 2018|
|Last Review Mission||-|
|Last PDS Update||27 Jul 2022|
|Approval||Signing Date||Effectivity Date||Closing|
|03 Oct 2018||20 Nov 2018||05 Dec 2018||30 Jun 2024||-||-|
|Financing Plan||Loan Utilization|
|Total (Amount in US$ million)||Date||ADB||Others||Net Percentage|
|Project Cost||256.40||Cumulative Contract Awards|
|ADB||180.00||25 Jul 2022||97.20||0.00||54%|
|Cofinancing||0.00||25 Jul 2022||32.26||0.00||18%|
|Status of Covenants|
|Approval||Signing Date||Effectivity Date||Closing|
|03 Oct 2018||27 Oct 2018||27 Oct 2018||31 Jan 2022||31 Dec 2022||-|
|Financing Plan/TA Utilization||Cumulative Disbursements|
|750,000.00||0.00||0.00||0.00||0.00||0.00||750,000.00||25 Jul 2022||681,412.60|
|Status of Covenants|
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ADB Providing $180 Million to Improve Nepal's Main East–West HighwayADB's Board of Directors has approved a loan of $180 million to support improvements to Nepal’s East–West Highway, the country’s main domestic and international trade route also known as the Mahendra Highway.
|Contract Title||Approval Number||Contract Date||Contractor | Address||Executing Agency||Total Contract Amount (US$)||Contract Amount Financed by ADB (US$)|
|Construction of Project Directorate Office Building With Necessary Accessories||Loan 3722||04 Feb 2022||BKOI Builders Pvt. Ltd. | Manamaneshwori Marga, House no. 166, Tangal, Kathmandu||Ministry of Physical Infrastructure and Transport||2,386,079.41||1,684,428.45|
|CONSTRUCTION SUPERVISION CONSULTANT||Loan 3722||28 Aug 2020||KUNWHA ENGINEERING AND CONSULTING CO. LTD. | 38 HEUNGAN-DAERO, 427 BEON-GIL DONGAN-GU, ANYANG-SI, GEYONGGI-DO KOREA, REPUBLIC OF||Ministry of Physical Infrastructure and Transport||5,337,988.10||3,819,925.81|
|PROJECT PREPARATORY CONSULTANT||Loan 3722||27 Aug 2020||M/S SOOSUNG ENGINEERING CO. LTD. IN ASSOC W/ | 510 CHANGI-DAERO, UICHANG-GU, CHANG-WON-SI, GYEONGSANGNAM-DO 51430 KOREA, REPUBLIC OF||Ministry of Physical Infrastructure and Transport||3,834,013.18||2,756,449.33|
|Title||Document Type||Document Date|
|South Asia Subregional Economic Cooperation Highway Improvement Project: Procurement Plan||Procurement Plans||Feb 2022|