Report and Recommendation of the President

to the Board of Directors

Project Number: 42254

April 2010

Proposed Loans and Technical Assistance Grant

Democratic Socialist Republic of Sri Lanka:
Northern Road Connectivity Project
 CURRENCY EQUIVALENTS
(as of 31 March 2010)

Currency Unit – Sri Lanka rupee/s (SLRe/SLRs)

SLRe1.00 = $0.0087298121
$1.00 = SLRs114.550003

ABBREVIATIONS

ADB – Asian Development Bank

CPS – country partnership strategy
EIRR – economic internal rate of return
EMP – environmental management plan
ESD – Environment and Social Division
IEE – initial environmental examination
MLGPC – Ministry of Local Government and Provincial Councils
MOHRD – Ministry of Highways and Road Development
NCP – North Central Province
NPC – Northern Provincial Council
NPRDD – Northern Provincial Road Development Department
PAM – project administration manual
RDA – Road Development Authority
TA – technical assistance

NOTES

(i) The fiscal year (FY) of the government and its agencies ends on 31 December.
(ii) In this report, "$" refers to US dollars.

Vice-President X. Zhao, Operations 1

Director General S. H. Rahman, South Asia Department (SARD)
Director S. Widowati, Transport and Communications Division, SARD

Team leader D. K. Lee, Transport Specialist, SARD

Team members N. M. Amerasinghe, Project Implementation Officer, Sri Lanka Resident
Mission (SLRM), SARD
K. M. Emzita, Senior Counsel, Office of the General Counsel
C. Epa, Financial Management/Disbursement Officer, SLRM, SARD
A. Gamaathige, Social Sector/Resettlement Officer, SLRM, SARD
S. Muthugala, Procurement Officer, SLRM, SARD
A. Nanayakara, Project Implementation Officer, SLRM, SARD
J. Perera, Principal Safeguards Specialist, SARD
Peer reviewer Y. Tanaka, Senior Transport Specialist, Southeast Asia Department

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.
 CONTENTS

Page

MAP {To be inserted}

I. THE PROPOSAL 1
II. THE PROJECT 1
A. Rationale 1
B. Impact and Outcome 2
C. Outputs 2
D. Investment and Financing Plans 2
E. Implementation Arrangements 4
III. TECHNICAL ASSISTANCE 5
IV. DUE DILIGENCE 6
A. Technical 6
B. Economic 6
C. Governance 7
D. Poverty and Social 8
E. Safeguards 9
F. Risks and Mitigating Measures 10
V. ASSURANCES 10
VI. RECOMMENDATION 10
APPENDIXES
1. Design and Monitoring Framework 11
2. List of Linked Documents 13
 I. THE PROPOSAL

1. I submit for your approval the following report and recommendation on proposed loans
to the Democratic Socialist Republic of Sri Lanka for the Northern Road Connectivity Project.
The report also describes proposed technical assistance (TA) for Capacity Development of the
Northern Provincial Road Development Department, and if the Board approves the proposed
loan, I, acting under the authority delegated to me by the Board, will approve the TA.

2. The project is to rehabilitate about 140 kilometers (km) of provincial roads in Northern
Province and 170 km of national roads in Northern Province and North Central Province (NCP).
The project is timely and targeted—to improve road connectivity in the country's conflict-affected
area in the northern region, helping to restore access to basic social services and markets. It will
facilitate economic growth and contribute to reducing disparities in Sri Lanka, consistent with one
of the Government’s key goals, which emphasizes equitable growth1.

II. THE PROJECT

A. Rationale

3. Northern Province is one of the worst conflict-affected regions in the country, emerging
from nearly three decades of civil war. The damage to physical infrastructure has been severe
and extensive. In particular, the road network lies in a state of total disrepair due to prolonged
neglect and underinvestment. People in this region no longer have access to markets or basic
social services as they once had and the transport of goods has dramatically slowed. Mobility
between Northern Province and the country's southern region is also poor due to the substantial
travel time required because of the poor condition of the linking national arterial roads. This has
hindered the spread of economic activities and development. Northern Province has the highest
poverty rate in the country.

4. The 140 km of provincial roads to be rehabilitated are in Mannar and Vavuniya districts,2
and comprise minor feeder roads connecting settlements with markets, and major feeder roads
connecting towns and villages. Ultimately, these roads connect to the main north–south national
arterial road.3 The 170 km of national roads to be rehabilitated comprise 108 km connecting
major provincial centers within Northern Province and 62 km in NCP. They will help link Northern
Province with major city centers in the country's southern region. The roads in Northern Province
will be rehabilitated to all-weather bituminous surfaces and will facilitate access to basic social
services, such as schools, hospitals, and local markets. The national link roads in NCP will
receive improved surfacing and marginal widening, which will reduce travel time and cost, helping
to revitalize travel to and from the north. Consequently, the improved road connectivity will
stimulate new economic opportunities.

5. To ensure development coordination, consultations were held with other developing

partners to ensure equitable geographic coverage and avoid overlaps. The project's main
outcome—improving road connectivity—complements the recently approved Asian Development
Bank (ADB) supplementary loan for the North East Community Restoration and Development

1
Government of Sri Lanka. 10-Year Development Franmework (2007-2016). Sri Lanka.
2
The project covers two of five districts in Northern Province. The World Bank is planning to cover Jaffna district.
The two remaining districts (Mullaitivuu and Kilinochchi) will be covered under future projects after unexploded
ordnance are cleared.
3
Connects to A9 section (Galkulama–Jaffna), which is undergoing rehabilitation financed by China Exim Bank.
2

Project II4 and the proposed Conflict Affected Region Emergency Assistance Project,5 which focus
on reconstructing Northern Province's essential infrastructure such as schools, hospitals, and
administrative services and buildings. These, collectively, help ensure that ADB assistance is
provided in an integrated fashion and will effectively help the government to build capacity for
sustainable social and economic integration.

6. The project is consistent with the strategic objective set out in ADB's country strategy
and program (2009–2011): To improve the transport system in Sri Lanka, and promote
regionally balanced and socially inclusive economic growth. The project is included in the
country operations business plan, Sri Lanka (2010–2012).

7. In conjunction with the project, an associated TA is proposed to develop the capacity of

the Northern Provincial Road Development Department (NPRDD) to effectively manage Northern
Province's provincial road network.

B. Impact and Outcome

8. In support of the country strategy and program outcome, the project impact will be
balanced and inclusive growth in Northern Province. The project's immediate outcome will be
improved road connectivity within Northern Province and with the southern region of the
country.

C. Outputs

9. The project outputs are (i) approximately 170 km of national roads in Northern Province
and NCP are rehabilitated; (ii) approximately 140 km of provincial roads in Northern Province
are rehabilitated, and selected bridge links are rehabilitated or replaced; and (iii) NPRDD offices
are rehabilitated.

D. Investment and Financing Plans

10. The project is estimated to cost $173 million, including taxes and duties of about
$18.6 million to be financed by the government. The total cost includes physical and price
contingencies, and interest and other charges during implementation. The detailed cost
estimates by expenditure category and detailed cost estimates by financier are in the project
administration manual (PAM). The investment plan is summarized in Table 1.

11. The government has requested a loan of $130 million from ADB’s ordinary capital
resources to help finance civil works for national roads and recurrent costs for project
management and consulting services, and a loan of SDR {amount to be determined and
inserted} ($24.4 million equivalent) from ADB’s Special Funds resources to help finance civil
works for provincial roads, recurrent costs for project management, and capacity development
equipment.

12. The loan from ADB’s ordinary capital resources will have a 25-year term, including a
grace period of 5 years, an annual interest rate determined in accordance with ADB’s London
interbank offered rate-based lending facility, a commitment charge of 0.15% per year, and other
4
ADB. 2010. Report and Recommendation of the President to the Board of Directors: Proposed Supplementary
Loan to the Democratic Socialist Republic of Sri Lanka for the North East Community Restoration and
Development Project II. Manila (Loan 2168-SRI, for $52.8 million, approved on 2 March).
5
Under processing for consideration by the ADB Board of Directors in April 2010.
 3

such terms and conditions set forth in the draft loan agreement. The interest and other charges
during construction will be capitalized in the loan. The government has provided ADB with (i) the
reasons for its decision to borrow under ADB’s London interbank offered rate-based lending
facility based on these terms and conditions, and (ii) an undertaking that these choices were its
own independent decision and not made in reliance on any communication or advice from ADB.

13. The loan from ADB’s Special Funds resources will have a term of 32 years, including a
grace period of 8 years, with an interest rate of 1.0% per annum during the grace period and
1.5% per annum thereafter, and other such terms and conditions set forth in the draft loan
agreement.

Table 1: Project Investment Plan

($ million)
Item Amounta
A. Base Costb
1. National roads 115.62
2. Provincial roads 21.37
3. Equipment—vehicles 0.22
4. Consulting services 7.20
5. Project management 0.80
Subtotal (A) 145.21
B. Contingenciesc 23.03
C. Financing Charges during Implementation d 4.76
Total (A+B+C) 173.00
a
Includes taxes and duties of $18.6 million to be financed from government resources.
b
In early 2010 prices.
c
Physical contingencies computed at 10.0% for civil works and equipment; and consulting services
contract values. Price contingencies computed at 2.0% on foreign exchange costs and 7.0% on
local currency costs; includes provision for potential exchange rate fluctuation under the assumption
of a purchasing power parity exchange rate.
d
Includes interest and commitment charges. Interest, which will be capitalized during implementation,
is computed at the 5-year forward London interbank offered rate plus an effective contractual spread
of 0.2% per annum for the ordinary capital resources loan; and at 1.0% per annum for the loan from
ADB’s Special Funds resources. Commitment charges for the ordinary capital resources loan are
0.15% per year to be charged on the undisbursed loan amount.
Source: Asian Development Bank estimates.

14. ADB will finance 89%6 of the total project investment cost; the government will finance
11% (Table 2). The government's financing will cover taxes and duties only. This will ease the
government's financial burden to provide counterpart funding and ensure adequate cash flow
during implementation. It is also consistent with the country strategy and program approach,
considering a difficult macroeconomic environment and supporting the government's high
priority to develop Northern Province. Detailed cost estimates and a financing plan are provided
in the PAM, including the magnitudes of physical contingencies as a percentage of the base
costs and of the inflation factors used in estimating price contingencies.

15. ADB's Road Project Preparatory Facility7 was utilized to undertake project preparatory
activities.

6
The current country limit for Sri Lanka is 90%.
7
ADB. 2004. Report and Recommendation of the President to the Board of Directors: Proposed Technical
Assistance Loan to the Democratic Socialist Republic of Sri Lanka for the Road Project Preparatory Facility. Manila
(Loan 2080-SRI, for $15 million, approved on 13 April).
4

Table 2: Financing Plan

Amount Share of
Source ($ million) Total (%)
ADB Ordinary Capital Resources Loan 130.00 75.0
ADB Special Funds Resources Loan 24.40 14.0
Government 18.60 11.0
Total 173.00 100.0
ADB = Asian Development Bank.
Source: Asian Development Bank estimates.

E. Implementation Arrangements

16. The implementation arrangements are summarized in Table 3 and described in detail in
the PAM.
Table 3: Implementation Arrangements
Aspects Arrangements
Implementation period 5 years
Estimated project completion 30 June 2015
date
Project management
Overall oversight body National Steering Committee, cochairs: MOHRD and MLGPC; members:
MOFP represented by DST, National Planning Department, Finance
Commission, NPC, provincial MIDR, and NPRDD
National Road Component
Executing agency MOHRD
Implementing agency RDA
Project implementation unit Colombo with district offices in Northern Province and NCP, number of
staff proposed: 18
Provincial Road Component
Oversight body Provincial Coordinating Committee, chief secretary of Northern Province
(chair), provincial MIDR, and NPRDD
Executing agency MLGPC (utilizing the existing project coordinating unit for ADB Loan 2546)a
Implementing agency NPC—NPRDD
Project implementation unit Trincomalee (main office), number of staff proposed: 17
Procurement International competitive bidding 8 contracts About $103 million
National competitive bidding 6 contracts About $19 million
Shopping tbd tbd
Consulting services PIC for national road (QCBS) 33 international About $2.7 million
and 745 national
PIC for provincial road (QCBS) 35 international About $2.7 million
and 780 national
Advance contracting Works and consulting services
Disbursement The loan proceeds will be disbursed in accordance with ADB's Loan
Disbursement Handbook (2007, as amended from time to time) and
detailed arrangements agreed to by the government and ADB.
ADB = Asian Development Bank, DST = Department of Secretary of Treasury, MIDR = Ministry of Infrastructure
Development and Reconstruction, MLGPC = Ministry of Local Government and Provincial Councils, MOFP =
Ministry of Finance and Planning, MOHRD = Ministry of Highways and Road Development, NPC = Northern
Provincial Council, NPRDD = Northern Provincial Road Development Department, PIC = project implementation
consultant, QCBS = quality- and cost-based selection, RDA = Road Development Authority.
a
ADB. 2009. Report and Recommendation of the President to the Board of Directors: Proposed Loan and
Technical Assistance Grant to the Democratic Socialist Republic of Sri Lanka for the Eastern and North Central
Provincial Project. Manila (Loan 2546-SRI, for $70 million, approved on 16 September).
Source: Government of Sri Lanka.
 5

17. Domestic preference. Although Sri Lanka's current annual gross national income per
capita (formerly gross national product) is above the eligible threshold8, the government has
requested domestic preference to facilitate the country's post conflict recovery, in particular for
the construction industry. Sri Lanka's construction industry has been impacted by a combination
of adverse factors, including many years of an uncertain business climate during the conflict
period, commodities price shock 2 years ago, and more recently, the global financial crisis.
Many contractors have been unable to maintain capital expenditures on plants and machinery,
and continue to suffer loss of permanent technical staff due to migration and to other industries.
As the country is emerging from a prolonged conflict period and the reconstruction begins in the
north, the government's priority is to ensure opportunities for the domestic contractors – to
recover and strengthen. In support of the Government's request, the Project is to use a
domestic preference of 7.5% when evaluating civil works under international competitive
bidding9. The proposed relaxation of eligibility for domestic preference has been considered
based on a recommended approach to engaging with Weakly Performing Countries (WPC)10.
While Sri Lanka is no longer considered a WPC, the country does exhibit weak performance
due to post conflict fragility, and supporting the Government's request is in keeping one of
ADB's guiding principles of promoting domestic construction industries in the developing
member countries. This will also contribute to a harmonized approach among donors, as the
World Bank, which uses the identical eligibility threshold, is currently providing similar domestic
preference for works in Sri Lanka for the road transport projects.

III. TECHNICAL ASSISTANCE

18. The percentage of maintainable roads in Northern Province, although very small at
present, will rise in time as more roads are rehabilitated to maintainable conditions. Therefore,
in conjunction with the project, capacity development TA will be provided with the objective of
strengthening the capacity of the Northern Provincial Council–Northern Provincial Road
Development Department (NPC–NPRDD) to effectively manage and maintain the provincial
road network. This is consistent with lessons from ADB's previous projects on the need to
ensure that provincial road development departments or agencies strengthen their capacity and
utilize a systematic approach for road asset management. To maximize effectiveness,11 the TA
will focus on NPC–NPRDD, as ADB's other ongoing project12 is strengthening the capacity of
the Road Development Authority (RDA). The TA will carry out the following activities:

(i) Engage a TA consultant by June 2011.

(ii) Prepare a capacity development plan by September 2011, which includes
improved organizational arrangements, optimized staffing allocation and

8
Current limit set in the World Bank OM (OP3.10 – Annex D) is $975 and Sri Lanka's annual GNI is $1,780.
9
Bidding for the national road packages, which will be procured under international competitive bidding, will not
commence until the proposed domestic preference is approved by the ADB Board.
10
ADB. 30 May 2007. Management Paper on Achieving Development Effectiveness in Weakly Performing Countries
(The Asian Development Bank's Approach to Engaging with Weakly Performing Countries) recommends flexibility
and relaxation of eligibility rules for procurement when operating in weak performing countries or countries which
exhibit evidence of weak performance such as in post conflict fragility.
11
Lessons from ADB. 2002. Report and Recommendation of the President to the Board of Directors: Proposed Loan
and Technical Assistance Grants to the Democratic Socialist Republic of Sri Lanka for the Road Sector
Development Project. Manila (Loan 1986-SRI, TA 4074-SRI, and TA 4075-SRI; approved on 19 December).
12
Institutional strengthening for RDA is ongoing under ADB. 2005. Report and Recommendation of the President to
the Board of Directors: Proposed Loan and Technical Assistance Grant to the Democratic Socialist Republic of Sri
Lanka for the National Highways Sector Project. Manila (Loan 2217-SRI and TA 4736-SRI, approved on 15
December).
6

assignments, needs-based training programs, and requirements for an upgraded

office management information system.
(iii) Implement the upgraded office management information by December 2011,
which includes upgraded basic computers, networking, and updated financial and
accounting software.
(iv) Implement a basic road maintenance management system, including completing
a database of a provincial road inventory with updated conditions by June 2012
and preparing a prioritized 3-year rolling road investment plan by December
2012, which includes an annual maintenance work program and draft annual
road maintenance budget application for FY2013.
(v) Conduct needs-based in-house and out-of-country training programs by
December 2010, in project management, contract administration, financial
management, performance-based maintenance, and road safety.

19. The TA is estimated to cost $560,000, of which ADB will finance $500,000 on a grant
basis from ADB's Technical Assistance Special Fund (TASF–IV). The government and NPC–
NPRDD will provide the remaining $60,000 equivalent in kind. The government will provide
office space and NPC–NPRDD will provide counterpart staff. The TA falls under category B as
implementation is expected to be relatively simple. The TA will provide required consultant
inputs and necessary equipment and facilities. Renovation and upgrading of NPC–NPRDD's
district offices in Vavuniya and Mannar will be financed under the loan. Individual consultants
will be recruited in accordance with ADB's Guidelines on the Use of Consultants (2007, as
amended from time to time). Disbursements will be in accordance with ADB's Technical
Assistance Disbursement Handbook.13 International consulting inputs of 12 person-months and
national consulting inputs of 16 person-months will be required. The TA will be implemented
from January 2011 to December 2012. The details of the TA costs and activities, including the
terms of reference, are in the PAM.

IV. DUE DILIGENCE

A. Technical

20. The engineering design has been carried out based on site condition surveys and field
investigations, optimizing the required improvement works for economy and construction
efficiency in accordance with applicable international design standards. The construction
method will utilize proven technology with standard materials compatible with local conditions.

B. Economic

21. The economic assessment was carried out in accordance with ADB's Guidelines for the
Economic Analysis of Projects. The principal benefits expected are in terms of savings in
vehicle operating costs and travel time. The highway design and maintenance model was
utilized to calculate vehicle operating costs and time costs with appropriate input parameters for
Sri Lanka. The estimated economic internal rates of return (EIRRs) range from 20.1% to 24.1%
for national road sections. The sensitivity analysis with adverse variation in project costs and
project benefits14 also indicates that the national road sections have an EIRR above 12% even
with increased costs and reduced benefits. The EIRRs for provincial roads range from 12.8% to

13
ADB. 2008. Technical Assistance Disbursement Handbook. Manila.
14
Sensitivity factors: 15% decrease in project benefits (vehicle operating cost and travel time savings), and 15%
increase in project cost individually and in combination
 7

49.9%. The overall estimated EIRR for the provincial road component is 21.3%. The sensitivity
analysis of the provincial road component resulted in an EIRR above 12% in all sensitivity tests.
A few of the provincial road sections, individually, may have an EIRR below 12% if there is an
adverse variation in costs and benefits. However, these provincial road sections provide
essential accessibility to the rural and poor population in the interior areas. Based on the
findings of the economic assessment, the proposed improvements under the project are
economically viable and sustainable, and are justified in social cost–benefit terms.

C. Governance

22. Policy and legal. RDA, the implementing agency for the national road component, was
established by the Road Development Authority Act in 1981. Under the Ministry of Highways
and Road Development (MOHRD), RDA is responsible for the development and maintenance of
the national highway network comprising the class A and class B trunk roads. RDA is headed by
a chairperson who reports to the secretary of MOHRD. NPC, the implementing agency for the
provincial road component, in accordance with the 13th Amendment to the Constitution,15 is
responsible for the development and maintenance of Northern Province's provincial road
network comprising class C and D roads. NPC–NPRDD carries out the functions for planning
and executing rehabilitation and improvements. NPRDD is headed by a provincial director who
reports to Northern Province's chief secretary through the secretary of MIDR. Northern Province
was a conflict-affected region and still does not have an elected council, but elections are
expected to be held very soon. This, however, is not anticipated to affect project implementation
as the chief secretary of Northern Province, who is the chief executive officer with wide
provincial administrative authority, will chair the project coordinating committee, which is
responsible for monitoring provincial project implementation. This is similar to the arrangement
adopted for ADB's ongoing project in neighboring Eastern Province16.

23. Institutional capacity. NPRDD's capacity has been supplemented through the project
preparatory stage with support provided by the ongoing ADB Road Project Preparatory Facility
(footnote 7), administered by the Ministry of Local Government and Provincial Councils
(MLGPC), the executing agency for the provincial road component of the project. NPRDD's
capacity for implementation will be supported by the provision of a project implementation
consultant who will assist with the supervision of works. For long-term capacity strengthening,
an associated TA will be provided to enhance organizational effectiveness with respect to
developing and maintaining the provincial roads. RDA has sufficient capacity, past experience,
and institutional strength to implement the project.17

24. Financial management. Financial management assessment was carried out for the
implementing agencies—RDA for the national road component and NPC–NPRDD for the
provincial road component. RDA has prior and ongoing experience with implementing ADB-
funded projects and has satisfactory capacity in terms of project financial accounting and
knowledge of ADB disbursement procedures. Within the project implementation unit for the

15
An important milestone in the long-term solution to the conflict, the 13th Amendment to the Constitution attempts to
decentralize administration by devolution. It established nine provincial councils and granted them powers to plan,
execute, and manage selected functions.
16
ADB. 2009. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical
Assistance Grant to the Democratic Socialist Republic of Sri Lanka for the Eastern and North Central Provincial
Project. Manila (Loan 2546-SRI, for $70 million, approved on 16 September).
17
RDA was established in 1981 and has been undergoing reform and institutional strengthening with assistance from
ADB's Road Sector Development Project (Loan 1986-SRI), completed in December 2009, and the ongoing ADB
National Highways Sector Project (Loan 2217-SRI).
8

national road component, RDA will establish a dedicated project accounting and finance team
with suitably qualified accountants: a project accountant, an assistant accountant, and three
account clerks. NPC–NPRDD does not have recent experience with externally funded projects
and necessary capacity strengthening will be carried out before and during implementation.
Within the project implementation unit for the provincial road component, NPC–NPRDD will
establish a dedicated project accounting and finance team with suitably qualified accountants
comprising a project accountant and two management accountants. This team will be provided
with training and guidance by MLGPC staff who have practical knowledge of ADB disbursement
guidelines and procedure. NPC–NPRDD's capacity will be strengthened during implementation
under the capacity development TA, by implementing a financial management information
system that includes accounting software, networked computers, and training.

25. Both RDA and NPC–NPRDD will establish and maintain separate project records and
accounts to identify the financing resources received and expenditures made for the project,
ensuring an adequate audit trail. The government's Office of Auditor General will annually audit
the project accounts and related financial statements in accordance with international auditing
standards. To further minimize any risks, ADB's direct payment procedure will be utilized for
substantial disbursement of payments for works, goods, and consulting services.

26. Procurement and anticorruption. Procurement of goods and works will be carried out
in terms of the relevant ADB guidelines, with strong and real time oversight by ADB at key steps
in the procurement process. A country procurement assessment is needed and is under
discussion with the government. The emphasis is on improving the procurement environment.
The Bribery Act, No. 11 of 1954 (as amended), the Declaration of Asset and Liabilities Act,
No. 1 of 1975, and Permanent Commission to Investigate Allegations of Bribery and Corruption
Act, No 19 of 1994, provide a strong legal basis to deal with bribery and corruption. The
Permanent Commission to Investigate Allegations of Bribery and Corruption is conducting
decentralized bribery-related investigations in Northern and Eastern provinces to coincide with
large amounts of post-conflict development assistance and investment. ADB’s Anticorruption
Policy (1998, as amended to date) was explained to and discussed with the government,
executing agencies (MOHRD and MLGPC), and implementing agencies (RDA and NPC-
NPRDD). The specific policy requirements and supplementary measures are described in the
PAM.

D. Poverty and Social

27. Improving road access within the project area and connectivity to other provinces in the
country are expected to develop and expand agriculture, fishing, commercial activities, and
other services. The beneficiary group includes subsistence farmers, poor fisherfolk, small
traders, and other services providers. The project will have positive social and economic
benefits for all ethnic groups in the project area. The project does not have substantive gender
issues as impacts and benefits will apply equally to men and women. The project will provide
equally positive benefits for both genders in terms of improved access to schools, health care
institutions, and other services. The contract for civil works will include measure to ensure safe
and healthy working environment for both men and women laborers. The civil works contractors
will be required to implement appropriate measures with respect to compliance of equal pay for
equal work for men and women, health and safety at construction sites and labor camps, and
awareness program for workers on prevention of HIV.
 9

E. Safeguards

1. Involuntary Resettlement and Indigenous Peoples

28. The project is categorized as category B in accordance with ADB's new Safeguard
Policy Statement (2009). During the project preparatory studies and assessments, project strip
plans, based on cross sections, were prepared and verified the project boundaries and limits of
the new construction. Based on this, the improvement works are envisaged to be within the
existing right-of-way boundaries. However, if a land acquisition requirement is identified during
implementation, such as small strips of land adjacent to the road that could affect some
properties, including boundary walls, business establishments, crops and trees, home gardens,
or other resettlement impacts, the following steps will be taken; assess whether any type of
permanent or temporary displacement—physical or economic or both—will take place because
of the project, formulate a resettlement plan in consultation with affected peoples and other
stakeholders for approval by ADB and disclosure, and implement the resettlement plan. The
construction activities may proceed, after these requirements are met satisfactorily.

2. Environment

29. The project is classified as category B for the environment, and initial environmental
examinations (IEEs), in accordance with ADB's new Safeguard Policy Statement, were
conducted for each of the identified roads. Based on the findings of the IEEs, the project does
not give rise to any significant adverse impacts that are irreversible, diverse, or unprecedented.
All impacts can be managed through the adoption of suitable mitigation measures, which are
described in the respective IEEs and environmental management plans (EMPs), which will be
incorporated in the contract documents. Typical impacts associated with road construction work,
such as dust generation, temporary disruption to traffic, temporary disruption of access to those
living in areas adjoining work areas, and soil erosion from exposed surfaces, can be mitigated
through measures described in the IEEs and EMPs. The main environmental concern with
respect to this project is the availability of suitable borrow and quarry sites within the project
area. Most of the suitable sites are located outside Northern Province. This results in long
haulage distances. The implementing agencies will ensure that sites selected as borrow and
quarry sites will have sufficient material to cater to the project needs, while not compromising
the requirements of existing users within the area where the sites are located, and that haulage
will be done along roads approved by respective local authorities to ensure that the roads have
sufficient carrying capacity for such haulage. While the project envisages using borrow and
quarry sites already in operation, if any new sites are to be opened the implementing agencies
will ensure that measures described in the EMPs are adopted during selection and site closure,
and relevant approvals from the respective authorities are obtained. The project road
improvement proposals have been approved by the Central Environmental Authority, and its
recommendations were incorporated in the EMPs and bidding documents. The public were
consulted during project preparation and consultations will continue throughout implementation.

30. RDA is responsible for ensuring that EMPs are implemented in the national roads
component. The Environmental and Social Division under RDA will monitor environmental
compliance by the contractor on behalf of RDA. To ensure adequacy, the project
implementation consultant team, including an environmental specialist, will supplement the
Environmental and Social Division’s field monitoring. For the provincial roads, NPC, through
NPRDD, will be responsible for ensuring implementation of the respective EMPs. Since NPRDD
does not have adequately skilled staff, the project implementation consultant team for the
10

provincial component, including an environmental specialist, will help NPRDD monitor

environmental compliance.

F. Risks and Mitigating Measures

31. The integrated benefits and impacts are expected to outweigh the costs18.

V. ASSURANCES

32. The government, MLGPC and MOHRD have assured ADB that implementation of the
project shall conform to all applicable ADB policies including those concerning anticorruption
measures, safeguards, gender, procurement, consulting services, and disbursement as
described in detail in the PAM and loan documents.

33. The government, MOHRD, and MLGPC have agreed with ADB on certain covenants for
the project, which are set forth in the loan agreements and project agreements.

VI. RECOMMENDATION

34. I am satisfied that the proposed loans would comply with the Articles of Agreement of
the Asian Development Bank (ADB) and recommend that the Board approve
(i) the loan of $130,000,000 to the Democratic Socialist Republic of Sri Lanka for
the Northern Road Connectivity Project from ADB’s ordinary capital resources,
with interest to be determined in accordance with ADB’s London interbank
offered rate (LIBOR)-based lending facility; for a term of 25 years, including a
grace period of 5 years; and such other terms and conditions as are substantially
in accordance with those set forth in the draft loan and project agreements
presented to the Board; and
(ii) the loan in various currencies equivalent to SDR {amount to be determined and
inserted} to the Democratic Socialist Republic of Sri Lanka for the Northern Road
Connectivity Project from ADB’s Special Funds resources with an interest charge
at the rate of 1.0% per annum during the grace period and 1.5% per annum
thereafter; for a term of 32 years, including a grace period of 8 years; and such
other terms and conditions as are substantially in accordance with those set forth
in the draft loan and project agreements presented to the Board.

35. {To Insert recommendation for waiver of eligibility requirement for domestic preference}.

Haruhiko Kuroda
President
{Date19}

18
Major risks and mitigating measures are summarized in the Risk Assessment and Risk Management Plan
(Appendix 2)
19
{Use date of the President's approval of the RRP for submission to the Board.}
 Appendix 1 11

DESIGN AND MONITORING FRAMEWORK

Design Performance Targets and Data Sources and Assumptions

Summary Indicators with Baselines Reporting Mechanisms and Risks
Impact By 2018: Publications of the Assumption
Balanced and Per capita annual income in Ministry of Finance and Policy directions of
inclusive growth in Northern Province increases from Planning the government's
Northern Province $952 to $1,688 and percentage of 10 Year
national average from 50% to 80% Publications of the Development
Ministry of Local Framework will
Government and remain valid.
Provincial Councils
Risk
Government
investments are not
adequate.

Outcome By project completion (2015): NPRDD's completion Assumptions

Improved road report The government
connectivity within Travel time on project roads remains committed
Northern Province reduced by an average of 20% in Road Development to restoring and
and to the southern Northern Province and North Authority, Ministry of sustaining vital
region of the country. Central Province. Highways and Road infrastructure in
Development Northern Province.
Travel time from Colombo (national
capital) to Jaffna (Northern Project performance
provincial capital) is reduced by monitoring system
38% (from 13 hours to 8 hours).

Accident rate (fatalities by vehicle-

km) is reduced by 20% from 2010
rate.
Outputs By project completion (2015): Engineer's progress Assumption
reports Qualified contractors
1. National highways Approximately 170 km of national are available.
are rehabilitated. highways in North Central Province Audit reports
and Northern Province are
rehabilitated. RDA's and NPRDD's
project progress and
2. Provincial roads Approximately 140 km of provincial completion reports
are rehabilitated and roads in Northern Province are
selected bridge links rehabilitated, and selected bridges
are rehabilitated and rehabilitated or replaced.
replaced.

3. NPRDD's offices NPRDD's district offices in Mannar

are rehabilitated. and Vavuniya are rehabilitated.
12 Appendix 1

Activities Inputs

1. Rehabilitation and Improvement of National Roads ADB: $154.4 million

1.1 Contract award of civil works by October 2010 Government: $18.6 million (taxes and duties)
1.2 Completion of all construction and maintenance works
by June 2015
2. Rehabilitation of Provincial Roads, Bridges, and
NPRDD Offices
2.1 Contract award of civil works by July 2010
2.2 Completion of all construction and maintenance works
by June 2015
3. Project Management
3.1 Engagement of project implementation consultant by
July 2010
3.2 Project management on-the-job training completed by
December 2012

NCP = North Central Province, NPRDD = Northern Provincial Road Development Department, RDA = Road
Development Authority.
Source: Asian Development Bank
 Appendix 2 13

LIST OF LINKED DOCUMENTS

1. Loan and Project Agreements

2. Sector Analysis
3. Project Administration Manual
4. Project Classification Summary
5. Contribution to the Output Aggregates of the ADB Results Framework
6. Development Coordination
7. Economic Analysis
8. Country Economic Indicators
9. Summary Poverty Reduction and Social Strategy
10. Resettlement Framework
11. Risk Assessment and Risk Management Plan
 SUBSECTOR ANALYSIS
(Sri Lanka: Northern Road Connectivity Project)

1. For the road transport subsector in Sri Lanka, the end of nearly three decades of civil war
in the country's northern and eastern provinces presents special challenges as well as
opportunities. The prolonged neglect and underinvestment in the conflict-affected region have
caused the roads to lie in a state of total disrepair requiring immediate and sustained investment.
Particularly in Northern Province, the damage to physical infrastructure was severe and extensive
due to the intensity of conflict toward the end of the war. As the Government of Sri Lanka is
carrying out the resettlement of the displaced population in the region, reestablishment of linkages
to social services and markets through a robust road network is essential for the return of normal
socioeconomic activities and civil life. The Northern Road Connectivity Project will improve road
connectivity in Northern Province—restoring mobility of people and goods, providing access to
social services and markets, and enhancing nationwide connectivity to help integrate the country

A. Performance Indicators and Analysis

2. Northern Province’s share of the national gross domestic product is about 2.9%. Per
capita income is about $952 (as of 2008), which is approximately half of the national average
with the lowest growth rate in the country1. At present, the majority of people living in Northern
Province earn their livelihood as farmers, fisherfolk, or professionals in the civil and business
sectors. Small-scale industries such as chemicals, light manufacturing, cement, and textiles,
which were in operation prior to the conflict, have yet to resume operation. Table 1 summarizes
Northern Province's key statistics.

Table 1: Geographic and Demographic Details of Northern Province and the Country
Feature Northern Province Sri Lanka
Area (km2) 8,884 65,610
Road density(km/km2) 0.48 1.50
Population (million) 1.041 18.750
Population density (people/km2) 117.2 296.0
GDP (SLRs billion) in 2008 128 4,411
Per capita income (2008, SLRs/year) 109,530 218,161
Per capita income (2008, $/year) 952 1,897
Manufacturing, plantation
Agriculture (rice),
Primary industries (tea, rubber, coconut),
livestock, fisheries
tourism, garments
km = kilometer, km2 = square kilometer.
Source: Central Bank, Sri Lanka.

1. Road Network and Traffic Volumes

3. The road network in Sri Lanka is classified into national, provincial, and local authority
roads according to functionality and management responsibility. National roads, comprising
class A (trunk roads) and class B roads (main roads), are managed by the central government
through the Road Development Authority (RDA). The provincial road network, comprising class
C and D, is managed by the respective provincial councils.

4. An overview of the road network in Northern Province is provided in Table 2.

1
2007. Central Bank of Sri Lanka, Provincial GDP 2007. Sri Lanka.
2

Table 2: Road Network in Northern Province

Northern
Northern Province
Item Sri Lanka (km) Province/Sri Lanka
(km)
(%)
National roads (class A and B) 1,271 11,671 10.9
Provincial roads (class C and D) 1,960 15,532 12.6
Local government roads (class E) 5,600 64,659 8.7
Total 8,831 91,862 9.6
Source: Road Development Department, Northern Province, 2008.

5. Northern Province is served by several important national roads, which facilitate

connectivity within the province and to southern regions of the country. The most important
arterial road is A009, which runs north–south from Kandy in Central Province to Jaffna in
Northern Province (northernmost district of Northern Province). It provides connectivity for
regional centers within the province such as Jaffna, Kilinochchi, Mankulam, Paranthan
Vavuniya, and, and to several important regional centers outside Northern Province such as
Anuradhapura, Dambulla, and Matale. Other important national roads in Northern Province
include A032 (along the western provincial coast from Mannar to Jaffna), A034 (connecting
Mullaitivu located on the eastern seaboard to A009 at Mankulam), and A035 (connecting
Mullaitivu to A009 at Parantan).

6. Northern Province's provincial road network comprises 855.25 kilometers (km) of gravel
roads and 1,104.75 km of metalled and tarred roads with approximately 60 bridges and 4,000
culverts. Due to neglect and underinvestment during the prolonged conflict in the region, about
90% of the national and provincial roads in Northern Province are reported to be in less than
satisfactory condition. Table 3 summarizes the present condition of the road network by
surfacing type and lane width.

Table 3: Condition of Roads in Northern Province

% of Length by Road Condition
Category Type of Surface
Total Km Good Fair Poor
National (No updated records on surface types) 1,271.00 10 20 70
Provincial Gravel, earth road (single lane 2–4 m) 855.25 10 15 75
Metalled and tarred (single lane 2–4 m) 1,104.75 10 15 75
Total 3,231.00 10 17 73
km = kilometer, m = meter.
Source: Road Development Department, Northern Province, 2008.

7. In 2007, the estimated fleet of motorized vehicles in Northern Province was 70,141
(3.2% of the fleet in the country). Overall traffic growth has fluctuated with the level of conflict,
but the two-wheeler and three-wheeler fleets have grown steadily over the past 10 years. This
indicates that the population is gradually becoming motorized by acquiring low-cost private
modes of transport.

2. Road Asset Management

8. National road. RDA is a statutory body under the Ministry of Highways and Road
Development incorporated under the RDA Act No. 73 of 1981. RDA is the premier highway
authority in the country and is responsible for the maintenance and development of the national
highway network. It is also responsible for the planning, design, and construction of new highways,
expressways, and bridges. It is managed by a chairperson and board of members appointed by
the minister of highways and road development. A general manager (the chief executive officer)
 3

is assisted by six additional general managers and 14 directors to carry out RDA’s various
functions. RDA has been undergoing reform and institutional strengthening under ADB's Road
Sector Development Project2 and the ongoing National Highway Sector Project3.

Table 4: Vehicle Fleet in Northern Province, 2007

Vehicle Type Northern Province % of Sri Lanka
Omnibuses 538 3.4
Private coaches 398 1.6
Dual purpose vehicles 1,255 0.7
Private cars 1,418 0.6
Land vehicles 4,177 4.5
Goods transport vehicles 1,916 1.1
Motor cycles 57,258 5.1
Three-wheelers 2,864 0.8
Others 317 5.5
Total 70,141 3.2
Source: Central Bank, Sri Lanka

9. Provincial road. NPC-NPRDD is responsible for the construction, maintenance, and

administration of the provincial road network. It is headed by a provincial director who works
directly under the authority of the secretary of the Provincial Ministry of Infrastructure
Development and Reconstruction. Three of the five chief engineers in NPRDD are assigned for
the execution of regional works in Jaffna, Killinochchi, and Vavuniya districts. Each chief
engineer is supported by two executive engineers in the execution of road works in their
respective districts. The chief engineer in Vavuniya supervises two districts through the
respective executive engineers located in Vavuniya and Mannar. Due to the prolonged conflict,
NPRDD is generally weak and has not been provided with any substantial capacity
strengthening programs.

3. Maintenance Expenditure

10. National roads. Periodic and routine maintenance are funded through the Road
Maintenance Trust Fund (RMTF), established in late 2005 with ADB assistance. Based on a
schedule prepared by assessing the network condition, RDA releases a predefined allocation
for each divisional office after assessing the value of the maintenance requirement. Annual
allocation and expenditure for road maintenance in Northern Province during 2004–2009 is
provided in Table 5.

Table 5: Utilization of Road Sector Maintenance Funds by the Road Development

Authority in Northern Province
SLRs Million
Source
2005 2006 2007 2008 2009
Allocation 179.0 259.6 228.6 211.8 265.5
Road Maintenance Trust
Expenditure 154.1 109.1 102.7 108.8 132.0
Fund
Utilization (%) 86.1 42.0 44.9 51.4 49.7
Source: Planning Division, Road Development Authority.

2
ADB. 2002. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical
Assistance Grants to the Democratic Socialist Republic of Sri Lanka for the Road Sector Development Project.
Manila (Loan 1986-SRI, TA 4074-SRI, and TA 4075-SRI; approved on 19 December).
3
ADB. 2005. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical
Assistance Grant to the Democratic Socialist Republic of Sri Lanka for the National Highways Sector Project.
Manila (Loan 2217-SRI and TA 4736-SRI, approved on 15 December).
4

11. Provincial roads. NPRDD executes routine maintenance work on the provincial road
network by utilizing the road maintenance component of recurrent expenses provided through
the block grant received from the Treasury. Utilization of road sector maintenance funds during
last 5 years is shown in Table 6.

Table 6: Utilization of Road Sector Maintenance Funds, Northern Province

SLRs Million
Source
2005 2006 2007 2008 2009
Allocation 34.00 50.00 24.00 35.00 40.0
Block Grant-Road
Expenditure 33.90 49.70 23.60 34.92 31.2
Maintenance Component
Utilization (%) 99.7 99.4 98.3 99.7 78.0
Source: Provincial Road Development Department, Northern Province.

12. Annually, NPRDD prepares a work program for routine maintenance and improvements
to the provincial road network, anticipating allocations of funds through the national and
provincial budgets. However, NPRDD often does not receive the total recurrent or capital
allocations made for the year and hence a significant part of the work program has to be
continued over or be deferred to the following year. To keep programs in an active state,
NPRDD has adopted a multiyear improvement program that can be completed in stages over a
period of years depending on the availability of funds.

B. Key Problems and Opportunities

1. Northern Road Connectivity

13. Poor road connectivity is a major constraint to achieving one of the Government's main
development goals: inclusive socioeconomic development. As 80% of the population lives in rural
areas, limited connectivity to economic opportunities and social services widens inequality among
geographic regions. Particularly in Northern Province, neglect and underinvestment during the
prolonged period of conflict have caused the roads to lie in a state of total disrepair. Also, the main
arterial roads connecting the north and the south are inadequate due to insufficient investment in
rehabilitation. This results in low travel speed and poor service, discouraging long distance travel
to and from the north, and ultimately hindering the spread of economic activities and development.

14. The project is to rehabilitate about 140 km of provincial roads and 108 km of national
highways within Northern Province, and improve about 62 km of link national highways in North
Central Province including a section of A009 that serves as the main arterial highway connecting
to south. The project is timely and targeted—to help restore accessibility to essential social
services for rural residents of Northern Province and to improve its nationwide connectivity. It will
facilitate economic growth and contribute to reducing disparities in Sri Lanka, consistent with the
key goals of the government’s 10-Year Development Framework (2007–2016), which
emphasizes equitable growth.

2. Provincial Road Management

15. As the entire inventory of provincial roads is freed of security restrictions, NPRDD's
capacity needs to be strengthened for it to effectively carry out its main responsibility of
managing and maintaining the provincial road network efficiently and economically. To request
allocation of funds through the national and provincial budgets, NPRDD prepares a work
program for routine maintenance and improvements, but the budget is estimated based on a
 5

generalized scope of work for important roads only. In this regard, a road maintenance
management system needs to be developed and implemented with a comprehensive road
inventory and condition database—a prerequisite for preparing annual or rolling road
rehabilitation and maintenance programs along with associated budgets. Also, NPRDD's office
infrastructure, particularly the district offices, is in a state of disrepair without a functioning
management information system. It lacks vehicles necessary to conduct supervision of large-scale
works project.

16. In conjunction with the project, a capacity development technical assistance will be
provided with the objective of strengthening the capacity of NPRDD—optimizing organizational
arrangements; modernizing the financial and management information system; implementing a
functional road maintenance management system; and providing training in project
management, contract administration, financial management, performance-based maintenance,
and road safety. For better and focused institutional strengthening, the capacity development
technical assistance will concentrate on NPRDD. This approach is consistent with lessons from
ADB's Road Sector Development Project completed in December 2009. Institutional
strengthening for RDA is ongoing under the ADB's National Highways Sector Project.

3. Road Financing

17. In general, road expenditures are funded from central government funds, foreign or
external funds, and provincial revenues. While rehabilitation of provincial roads has relied
heavily on foreign-funded projects, existing domestic funding is insufficient for provincial road
agencies to maintain their road networks. In Northern Province, during the last 5 years, the
average annual maintenance allocation comprised SLRs101 million ($0.9 million) for national
roads, facilitated through the RMTF, and SLRs35 million ($0.3 million) for the provincial roads
from a portion of the government's block grant allocated by the Northern Provincial Council.
Although these allocations appear substantially low, the actual requirement during the previous
5 years is difficult to assess as Northern Province experienced prolonged conflict and only a
small percentage of roads were in maintainable condition.

18. However, as substantial portions of Northern Province's national and provincial roads
are rehabilitated under the project as well as other projects funded by external sources, road
budgets need to be increased and a greater amount of the budget assigned to road
maintenance based on road conditions. Proper planning needs to be developed, and the
government's commitment to provide adequate financing for maintenance secured.

19. The RMTF was established in late 2005 to finance routine and periodic road
maintenance using proceeds from fuel levies. Although in its infancy, the RMTF's current
funding is not sufficient to meet actual maintenance requirements for national roads and it does
not cover provincial roads. Currently, with World Bank assistance, the RMTF’s effectiveness is
being reviewed with respect to fund management, fuel levy, and coverage for provincial roads.
ADB and the World Bank have conducted coordinated policy dialogue on this matter.

20. To overcome the inadequacy and inconsistency of road maintenance financing,

performance-based maintenance has been practiced in several road projects in other provinces
and results are reasonably satisfactory. Under the project, the civil works contracts for national
and provincial roads will include provision for 3-year performance-based maintenance upon
completion. This is intended to increase the quality of construction and efficiency of
maintenance work, and lessen the initial maintenance burden.
Project Administration Manual

Project Number: 42254-01

Loan and/or Grant Number(s): {LXXXX (OCR); LXXXX (ADF) – to be determined}
March 2010

Sri Lanka: Northern Road Connectivity Project

2

Contents
ABBREVIATIONS 4
I. PROJECT DESCRIPTION 5
A. Project Rational, Location and Beneficiaries 5
B. Impact and Outcome 5
C. Outputs 5
II. IMPLEMENTATION PLANS 7
A. Project Readiness Activities 7
B. Overall Project Implementation Plan 8
III. PROJECT MANAGEMENT ARRANGEMENTS 9
A. Project Stakeholders – Roles and Responsibilities 9
B. Key Persons Involved in Implementation 10
C. Project Organization Structure 12
IV. COSTS AND FINANCING 15
A. Cost Estimates by Expenditure Category 15
B. Allocation and Withdrawal of Loan Proceeds 17
C. Fund Flow Diagram 18
V. FINANCIAL MANAGEMENT 20
A. Financial Management Assessment 20
B. Disbursement 20
C. Accounting 21
D. Auditing 22
VI. PROCUREMENT AND CONSULTING SERVICES 23
A. Advance Contracting 23
B. Procurement of Goods, Works and Consulting Services 25
C. Procurement Plan 26
D. Consultant's Terms of Reference 26
VII. SAFEGUARDS 27
VIII. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION 29
A. Project Design and Monitoring Framework 29
B. Monitoring 31
C. Evaluation 31
D. Reporting 32
E. Stakeholder Communication Strategy 32
IX. ANTICORRUPTION POLICY 32
X. ACCOUNTABILITY MECHANISM 33
XI. RECORD OF PAM CHANGES 33
XII. ATTACHMENTS 34
Attachment A: Procurement Plan 34
Attachment B: Outline Terms of Reference for PIC (National Road) 34
Attachment C: Outline Terms of Reference for PIC (Provincial Road) 34
Attachment D: Outline Terms of Reference for Capacity TA Consultant 34
 3

Project Administration Manual Purpose and Process

The project administration manual (PAM) describes the essential administrative and
management requirements to implement the project on time, within budget, and in
accordance with Government and Asian Development Bank (ADB) policies and procedures.
The PAM includes references to all available templates and instructions either through
linkages to relevant URLs or directly incorporated in the PAM.

The executing and implementing agencies are wholly responsible for the implementation of
ADB financed projects, as agreed jointly between the borrower and ADB, and in accordance
with Government and ADB’s policies and procedures. ADB staff is responsible to support
implementation including compliance by executing and implementing agencies of their
obligations and responsibilities for project implementation in accordance with ADB’s policies
and procedures.

At Loan Negotiations the borrower and ADB shall agree to the PAM and ensure consistency
with the Loan Agreements. Such agreement shall be reflected in the minutes of the Loan
Negotiations. In the event of any discrepancy or contradiction between the PAM and the Loan
Agreements, the provisions of the Loan Agreements shall prevail.

After ADB Board approval of the project's report and recommendations of the President
changes in implementation arrangements are subject to agreement and approval pursuant to
relevant Government and ADB administrative procedures (including the Project
Administration Instructions) and upon such approval they will be subsequently incorporated in
the PAM.
4

Abbreviations

ADB = Asian Development Bank

ADF = Asian Development Fund
EA = executing agency
EMP = environmental management plan
ESD = Environmental and Social Division
FGIA = first generation imprest account
IA = implementing agency
MLGPC = Ministry of Local Government and Provincial Councils
MOHRD = Ministry of Highways and Roads Development
NCP = north central province
NH = national highway
NP = northern province
NPC = Northern Provincial Council
NPRDD = Northern Provincial Road Development Department
OCR = ordinary resource capital
PAM = project administration manual
PIC = project implementation consultant
PR = provincial road
RDA = Road Development Authority
RP = resettlement plan
SGIA = second generation imprest accounts
SOE = statement of expenditure
SPS = Safeguard Policy Statement
 5

I. PROJECT DESCRIPTION

A. Project Rational, Location and Beneficiaries

1. NP is one of the worst conflict affected region, emerging from the nearly three decades
of civil war. The damage to physical infrastructure has been severe and extensive, and
particularly the road network lies in a state of total disrepair due to prolonged neglect and
underinvestment. People in this region no longer have access to markets or basic social
services as they once had and the transport of goods has dramatically slowed. The mobility
between NP and the country's southern region is also poor due to the substantial travel time
required as the linking national arterial roads are in inadequate condition, which has hindered the
spread of economic activities and development. NP has the highest poverty level in the country.

2. The proposed Project is to rehabilitate about 140 km of provincial roads in Northern

Province (NP) and 170 km of national roads in NP and North Central Province (NCP). The
proposed Project is timely and targeted - to improve road connectivity in the country's conflict
affected area in the northern region, helping to restore access to basic social services and
markets. It will facilitate economic growth and contribute to reducing disparities in Sri Lanka,
consistent with the key goals of the Government’s 10-Year Development Framework (2007-
2016), which emphasizes equitable growth.

3. The Project supports the strategic objective established in ADB's Country Policy and
Strategy (2009-2011): To improve transport system in Sri Lanka, promoting regionally balanced
and socially inclusive economic growth. The Project is included in the Country Operations
Business Plan, Sri Lanka (2010-2012).

B. Impact and Outcome

4. In support of the CPS outcome, the Project impact will be balanced and inclusive growth
in the NP. The Project's immediate outcome will be improved road connectivity within NP and to
the southern region of the country.

C. Outputs

5. The Project outputs are:

(i) approximately 170 km of national highways in NP and NCP rehabilitated;

(ii) approximately 140 km of provincial roads in NP rehabilitated, and selected bridge

links rehabilitated or replaced; and

(iii) NPRDD offices are rehabilitated.

6. Project roads and their location are described below:

6

Province Total
Package / Road No. Road Section Name Length
District (km)
National Roads
NH-CP1 NCP A009 Dambulla-Thonigala 23.35
NH-CP2 NCP A009 Thonigala -Galkulama 24.17
NH-CP3 NCP A020 Anuradhapura-Rembewa 14.50
Subtotal: 62.02
NH-CP4 NP A032 Navatkuli-Keraitivu 17.40
NH-CP5 NP B268 Manipai-Kaithady 14.02
NH-CP6 NP B437 Vallai-Telippalai-Araly 27.40
Subtotal: 58.82
NH-CP7 NP A034 Mankulam-Mullaittivu (1/2) 25.00
NH-CP8 NP A034 Mankulam-Mullaittivu (2/2) 25.00
Subtotal for National Roads: 170.84
Provincial Roads
PR-CP1 NP 15.45
Mannar NPMAC001 Thalimannar village Road
NPMAC005 Olaithoduvai Road
NPMAC007 Thoddavelli-Malupadi Road
NPMAC010 Pesalai-Vauadipanai Road
NPMAC020 Karisal Road
PR-CP2 NP 26.50
Mannar NPMAC029 Veppankulam-Periyamurippu Road
PR-CP3 NP 17.32
Mannar NPMAC002 Espalnde Road
NPMAC003 South Bar Road
NPMAC004 Mannar-Thaivupadu-Tharanpuram
NPMAC008 Vankalai-Sirrunavatkulam Road
NPMAC012 Pallimunai Beach Road
NPMAC014 Uyilankulam-Manadkulam-Nanaddan
NPMAC017 Puthukamam Road
NPMAC034 Murungan - Nanaddan
NPMAC044 Approach Road to Public Building
PR-CP4 NP 26.00
Vavuniya NPVAC027 Intperiyakulam- Puthoor Road
NPVAC029 Cheddikulam-Thudarikulam
NPVAC034 Pandichurichchan-Andiyapuliyankulam
PR-CP5 NP 28.80
Vavuniya NPVAC007 Madhukandai- Iretperiyakulam Road
NPVAC010 Mahiankulan-Pallamadu Road
PR-CP6 NP 27.20
Vavuniya NPVAC014 Puthoor- Palamoddai Road
NPVAC032 Mankulam-Maruthamadhu-Mingettigama

Subtotal for Provincial Roads: 141.27

Total: 312.11
 7

II. IMPLEMENTATION PLANS

A. Project Readiness Activities

7. The project readiness activities, responsibilities, and estimated timeframe as follows:

Mon Date Project Processing Milestones Advanced Procurement Activities

Year Project Provincial Road National Roads
Implementation Components Components
Consultant (PIC)
Responsible ADB RDA (National) NPC/NPRDD RDA
by: MLGPC-PCU
(Provincial)
Dec
2009 18 Concept Paper Review Meeting
… approve advance contracting

Jan ►Advertise EOIs

2010

29 Consultant's preparatory outputs

Feb 03- Fact-Finding Mission
17 … MOU and Preliminary PAM
►Shortlist Report

Mar
►Issue RFP
23 Management Review Meeting ►Invite bids

Apr 01 ►Send report & recommendation of the

President & Loan Agreement to Government
of Sri Lanka ►Proposal
26-27 ►Loan Negotiations Submission ►Bid submission
May ►Technical Eval.
►Submit tech
►Financial open evaluation
31 ►Board Consideration/Approval
Jun ►Financial open ►Invite bids
14 ►Loan Signing
►Submit financial
30 ►Loan Effective evaluation
Jul ►Contract Sign

►Commence ►Bid submission

►Contract sign
Aug

►Commence works ►Submit tech

evaluation
Sep ►Financial open

►Submit financial
evaluation
Oct

►Contract sign

Nov
►Commence works
ADB = Asian Development Bank, CSRN = consulting services recruitment notice, EOI = expression of interest,
MLGPC = Ministry of Local Government and Provincial Councils, MOU = memorandum of understanding, NPC =
Northern Provincial Council, NPRDD = Northern Provincial Road Development Department, PAM = project
administration manual, PCU = project coordination unit, PIC = project implementation consultant, RDA = Road
Development Authority
 8

IMPLEMENTATION SCHEDULE B.

2010 2011 2012 2013 2014 2015

J F MA M J J A S O N D J F MA M J J A S O N D J F MA M J J A S O N D J F MA M J J A S O N D J F MA M J J A S ON D J F MA M J J A S ON D
Item Year 1 Year 2 Year 3 Year 4 Year 5

A. Project Preparation

Loan Processing and Approval by ADB

Loan Signing and Effectiveness

B. Project Management

1. Recruit Project Implementation Consultants

2. Consulting Services Execution

C. Civil Works

1. Procurement (Advance Action)

Overall Project Implementation Plan

2. Construction

3. Performance-Based Maintenance

D. TA for Capacity Development for NPRDD

1. TA Consultant Recruitment

2. Consulting Services

Defects & Liability Period

ADB = Asian Development Bank, TA=technical assistance, NPRDD=Northern Provincial Road Development Department
Source: Asian Development Bank
 9

III. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Stakeholders – Roles and Responsibilities

Project Stakeholders Management Roles and Responsibilities

Executing agency (EA) Ministry of Highway and Roads Development (MOHRD)

(National Road Component)
… overall coordination of project implementation
… interagency coordination
Implementing agency (IA) Road Development Authority (RDA)
(National Road Component)
… day-to-day project management
… consultant recruitment and procurement of works
… withdrawal applications
… project progress reports
… maintaining project accounts and complete loan
financial records
Executing agency Ministry of Local Government and Provincial Councils
(Provincial Road Component) (MLGPC)
… overall coordination of project implementation
… interagency coordination
… consultant recruitment
Implementing agency Northern Provincial Council (NPC) - NPRDD
(Provincial Road Component)
… day-to-day project management
… procurement of works
… withdrawal applications
… project progress reports
… maintaining project accounts and complete loan
financial records
National Steering Committee … oversee and monitor project implementation as well
(co-chaired by MOHRD and as the adequacy of overall project funding
MLGPC with representation … hold meeting as required but at least quarterly to
from Ministry of Finance and discuss overall status and project issues, and when
Planning, External Resource and as necessary invite representatives from the
Department, NPD, FC, NPC, Central Environmental Agency, Geological Survey
NPRDD) and Mines Bureau, and utilities (electricity,
telecommunications, water, and drainage) for
coordination purposes
Provincial Project … monitoring project implementation at the provincial
Coordination Committee level
(chaired by the Chief
Secretary of the Northern
Province with representation
from MIRD, NPRDD, Utilities)
10

Project Stakeholders Management Roles and Responsibilities

ADB … Monitor and review overall implementation of the

project in consultation with the EAs/IAs including: the
project implementation schedule; actions required in
terms of poverty reduction, environmental impacts,
and resettlement plans (RPs) if applicable;
timeliness of budgetary allocations and counterpart
funding; project expenditures; progress with
procurement and disbursement; statement of
expenditure when applicable; compliance with
particular loan covenants; and the likelihood of
attaining the project’s immediate development
objectives.

B. Key Persons Involved in Implementation

Executing Agencies
MOHRD Mr. Wasantha Karannagoda
Secretary
Ministry of Highways and Road Development
Sethsiripaya Office Complex
P.O. Box 53, Battaramulla
Sri Lanka.
Telephone: 94-11-2871821-30
Fax: 94-11-2862705

Mr. R.W.R. Pemasiri

General Manager, Road Development Authority
No. 756 B/1
Parliament Road, Pelawatta
Battaramulla, Sri Lanka

Mr. S. Chandrapalan
Project Director, Road Development Authority
Telephone: 941 1 278 7915
Email address: nrcp@sltnet.lk
No. 756 B/1
Parliament Road, Pelawatta
Battaramulla, Sri Lanka

MLGPC
ADB
Transport and Communications
Division of South Asia Regional
Department (SATC)
Mission Leader
Note: Update as changes occur
11
Mr. Cashian Herath
Secretary
No. 330, Union Place
Colombo 02, Sri Lanka
Mr. Eric Illayapparachchi
Additional Secretary (Development)
Telephone: 941 0 230 3723
Email address: rppfse@sltnet.lk
No. 330, Union Place
Colombo 02, Sri Lanka
Mr. J.A. Jayarathne
Project Coordinator
No. 330, Union Place
Colombo 2, Sri Lanka
Sri Widowati
Director, SATC
Telephone No.: (63) 2 632 6794
Email address: swidowati@adb.org
Dong-Kyu Lee
Transport Specialist, SATC
Telephone No.: (63) 2 632 5992
Email address: dklee@adb.org
12

C. Project Organization Structure

8. The flow chart below shows the reporting lines essential internal structures of key
organizations involved in implementation, including the national steering committee, executing
agencies, provincial coordinating committee, implementing agencies, and project
implementation units.

National Steering Committee Asian

Development
… MOHRD (Co-Chair) … MLGPC (Co-Chair) Bank
… MOFP, ERD … NPC
… NPD, FC … MIDR/NPRDD
… Utility agencies

National Roads Component Provincial Roads Component

Ministry of Highways and Ministry of Local

Road Development Government and Provincial
Councils
Executing Agency Executing Agency

Project Coordinating Unit

Road Development Authority Northern Provincial Council Provincial

- Provincial Road Development Coordinating
Department Committee
Implementing Agency Implementing Agency
… Chief Secretary
… MIRD/Secretary
Project Implementation Unit Project Implementation Unit … PRDD
… Utility agencies
supported by supported by
Project Implementation Project Implementation
Consultant Consultant

9. The following flow charts show the reporting lines essential internal structures of the
project implementation units and their staffing assignments.
 13

Project Implementation Organization – National Roads

Road Development Authority

(RDA)
Implementing Agency

General Manager

Environmental & Project Implementation Unit

Social Division (ESD) (PIU)

Social/Environmental Project Director [1]

Officer [3]

Accounting/Finance Project Supervision Administration

Project Accountant [4]
Key positions:
… Assist. Accountant [4A]
… Accounts Clerk 1 [4B]
… Accounts Clerk 2 [4C]
… Accounts Clerk 3 [4D]
Deputy Project Director [2-1] Admin Manager [5]
Deputy Project Director [2-2]
Key positions:
Key positions: … Admin Assistant 1 [5A ]
… Assistant Engineer 1 [2A] … Admin Assistant 2 [5B]
… Assistant Engineer 2 [2B] … Admin Assistant 3 [5C]
… Assistant Engineer 3 [2C] … Office Aid [5D]
… Office Aid [5E]

Staffing Assignment and Recruitment Plan as of 16 February 2010:

Serial Position Name Existing New Recruit

No. [timeframe]
1 [1] Project Director Mr. S. Chandrapalan appointed
2 [2-1] Deputy Project Director tbd by May/2010
3 [2-2] Deputy Project Director tbd by May/2010
4 [2A] Assistant Engineer 1 Mr. U. A. Munasinghe appointed
5 [2B] Assistant Engineer 2 tbd by May/2010
6 [2C] Assistant Engineer 3 tbd by May/2010
7 [3] Social/Environmental Officer Mr. S. Gajesinghe appointed
8 [4] Project Accountant Mr. N. A. Wijeratne appointed
9 [4A] Assistant Accountant tbd by May/2010
10 [4B] Accounts Clerk 1 Ms. K Chandrakanthi appointed
11 [4C] Accounts Clerk 2 Ms. W. Kodagoda appointed
12 [4D] Accounts Clerk 3 tbd by May/2010
13 [5] Admin Manager tbd by May/2010
14 [5A] Admin Assistant 1 Ms. W.A.G. Priyanthika appointed
15 [5B] Admin Assistant 2 Mr. M.H.G. Jayasinghe appointed
16 [5C] Admin Assistant 3 tbd by May/2010
17 [5D] Office Aid 1 Mr. I Nihal Wasantha appointed
18 [5E] Office Aid 2 Ms. Y.S.D.Jayasundara appointed
14

Project Implementation Organization – Provincial Roads

Project Coordinating Committee

NPC Chief Secretary (Chair)

Northern Provincial Council

- Northern Provincial Road Development
Department
Implementing Agency
Provincial Project Coordinator [A]
Secretary, Provincial Ministry of Infrastructure
Development & Reconstruction (MIDR)

Project Implementation Unit (PIU)

Project Director [A1]
(Provincial Director)

Accounting/Finance Project Supervision Administration

Project Accountant Deputy Project Director [C] Deputy Project
[B] Director – PIU
(ADB-PRP) [D]
Key positions:
Key positions: Key positions:
… Management Assistant Vavuniya District Mannar District … Project Engineer [D1]
(Accounts) [B1] Project Engineer [C1] Project Engineer [C2] … Project Secretary [D2]
… Management Assistant Technical Officer [C3] Technical Officer [C4] … Management Assistant
(Accounts) [B2] Mgmnt. Assistant [C5] Mgmnt. Assistant [C6] (Administration) [D3]
… Management Assistant
(contracts) [D4]
… Management Assistant
(IT) [D5]

Staffing Assignments and Recruitment Plan as of 16 February 2010:

Sr. Position Name Existing New Recruit
No. [timeframe]
1 [A] Secretary, MIDR Eng.A.E.S. Rajendra appointed
2 [A1] Project Director Eng.T.Sivarajalingam appointed
3 [B] Project Accountant Mr. N.Jeyaganesh appointed
4 [B1] Management Assistant (accounts) Mr. S.Ravishangar appointed
5 [B2] Management Assistant (accounts) tbd by May/2010
6 [C] Deputy Project Director Eng.V.Jegananthan appointed
7 [C1] Project Engineer - Vavuniya Eng.S.Sainthan appointed
8 [C2] Project Engineer – Mannar Eng.C.Amirthaseelan appointed
9 [C3] Technical Officer – Vavuniya Eng.C.Amirthaseelan appointed
10 [C4] Technical Officer – Mannar Mr.S.Senkaialiyan appointed
11 [C5] Management Assist.- Vavuniya Ms.S.Tharjana appointed
12 [C6] Management Assist.- Mannar tbd by May/2010
13 [D] Deputy Project Director - Admin by May/2010
14 [D1] Project Engineer - PIU Office Eng.N.Apiramy
15 [D1] Project Secretary tbd by May/2010
16 [D2] Management Assistant (admini) Mr.J.Rajkulenson appointed
17 [D3] Management Assistant (contracts) Ms.U.Hema appointed
18 [D4] Management Assistant (IT) tbd by May/2010
 15

IV. COSTS AND FINANCING

10. The project is estimated to cost $ 173 million, including taxes and duties of about $18.6
million to be financed by the Government. The total cost includes physical and price
contingencies, and interest and other charges during implementation. The investment plan is
summarized in Table 1.
Table 1: Project Investment Plan
($ million)
Item Amounta
b
A. Base Cost
1a. national roads 115.62
1b. provincial roads 21.37
2. equipment - vehicles 0.22
3. consulting services 7.20
4. project management 0.80
Subtotal (A) 145.21
B. Contingenciesc 23.03
C. Financing Charges During Implementation d 4.76
Total (A+B+C) 173.00
a
Includes taxes and duties of $18.6 million to be financed from government resources.
b
In early 2010 prices.
c
Physical contingencies computed at 10.0% for civil works and equipment; and consulting services
contract values. Price contingencies computed at 2.0% on foreign exchange costs and 7.0% on
local currency costs; includes provision for potential exchange rate fluctuation under the assumption
of a purchasing power parity exchange rate.
d
Includes interest and commitment charges. Interest which will be capitalized during implementation
period has been computed at the 5-year forward London interbank offered rate plus an Effective
Contractual Spread of 0.2% per annum for OCR loan; and at 1.0% per annum for ADF loan.
Commitment charges for OCR loan are 0.15% to be charged on the undisbursed loan amount.
Source: Staff Estimates

11. The Government has requested a loan of $130 million from ADB’s ordinary capital
resources (OCR) to finance civil works for national roads, recurrent costs for project
management, consulting services, and a loan of Special Drawing Right (SDR) {amount to be
determined and inserted} ($24.4 million equivalent) from the ADB's Special Funds resources to
finance civil works for provincial roads, recurrent costs for project management, and capacity
development equipment. The Government will provide $ 18.6 million for local taxes and duties.
The ADB and the Government will finance 89% and 11% of total project investment cost,
respectively. The financing plan for the Project is in Table 2.
Table 2: Financing Plan
Source Amount ($ million) Share of Total (%)
Asian Development Bank, OCR Loan 130.00 75
Asian Development Bank, ADF Loan 24.40 14
Government 18.60 11
Total 173.00 100
OCR = ordinary capital resource, ADF = Asian Development Fund
Source: Staff estimate

A. Cost Estimates by Expenditure Category

12. The detailed cost estimates by expenditure category and detailed cost estimates by
financier are presented below, including the magnitudes of physical contingencies as a
percentage of the base costs and of the inflation factors used in estimating price contingencies.
 16

DETAILED COST ESTIMATES AND FINANCING PLAN

($ million)

Total ADB % of Total ADB % of Total ADB Government ADB Government % of Total
Item Cost OCR OCR ADF ADF Total Total (%) (%) Base Cost
A. Investment Costs [a] [b]
1. Civil Works 136.99 103.23 75.36 19.08 13.93 122.31 14.68 89.28 10.72 79.2
a. National Roads 115.62 103.23 89.28 0.00 0.00 103.23 12.39 89.28 10.72 66.8
b. Provincial Roads 21.37 0.00 0.00 19.08 89.28 19.08 2.29 89.28 10.72 12.4
2. Equipment 0.22 0.00 0.00 0.20 89.29 0.20 0.02 89.29 10.71 0.1
a. Capacity Development Equipment 0.22 0.00 0.00 0.20 89.29 0.20 0.02 89.29 10.71 0.1
3. Consultants 7.20 5.80 80.56 0.00 0.00 5.80 1.40 80.56 19.44 4.2
a. National Roads 3.89 3.10 79.69 0.00 0.00 3.10 0.79 79.69 20.31 2.2
b. Provincial Roads 3.31 2.70 81.57 0.00 0.00 2.70 0.61 81.57 18.43 1.9
Subtotal (A) 144.41 109.03 75.50 19.28 13.35 128.31 16.10 88.85 11.15 83.5
B. Recurrent Costs
1. Project Management [c] 0.80 0.20 25.00 0.60 75.00 0.80 0.00 100.00 0.00 0.5
a. Road Development Authority 0.20 0.20 100.00 0.00 0.00 0.20 0.00 100.00 0.00 0.1
b. Project Corrdination Unit 0.20 0.00 0.00 0.20 100.00 0.20 0.00 100.00 0.00 0.1
c. Northern Province 0.40 0.00 0.00 0.40 100.00 0.40 0.00 100.00 0.00 0.2
Subtotal (B) 0.80 0.20 25.00 0.60 75.00 0.80 0.00 100.00 0.00 0.5
C. Contingencies
1. Physical Contingency [d] 15.88 11.47 72.22 2.68 16.87 14.15 1.73 89.09 10.91 9.2
2. Price Contingency [e] 7.15 5.42 75.85 0.96 13.43 6.38 0.77 89.29 10.71 4.1
Subtotal (C) 23.03 16.89 73.34 3.64 15.81 20.53 2.50 89.15 10.85 13.3
D. Financing Charges During Implementation
1. Interest During Implementation [f] 4.44 3.56 80.18 0.88 19.82 4.44 0.00 100.00 0.00 2.6
2. Commitment Charges [g] 0.32 0.32 100.00 0.00 0.00 0.32 0.00 100.00 0.00 0.2
3. Front-end Fees [h] 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.0
Subtotal (D) 4.76 3.88 81.51 0.88 18.49 4.76 0.00 100.00 0.00 2.8
Total Project Cost (A+B+C+D) 173.00 130.00 75.14 24.40 14.10 154.40 18.60 89.25 10.75 100.0
[a] In early 2010 prices based on detail design.
[b] Inclusive of local taxes and duties computed at 12.0% for civil works contract values, consultant services, and equipment, and 25.0% for foreign consultant remuneration.
ADB will pay 100% of consulting services excluding taxes.
[c] Incremental administrative expenditures, including bank charges related to imprest accounts.
[d] Computed at 10.0% for civil works and equipment, and consulting services contract values.
[e] Computed at 2.0% for foreign currency costs, and 7.0% for local currency costs.
[f] Capitalized during implementation period, consisting of OCR at ADB's London interbank rate (LIBOR) plus Effective Contractual Spread of 0.2% per annum; and
ADF at 1.0% per annum.
[g] Capitalized at 15 basis point on flat amounts of undisbursed loan balances (OCR portion only).
[h] None.
Source: Asian Development Bank
 17

B. Allocation and Withdrawal of Loan Proceeds

13. Unless specifically stated otherwise, the following are applicable to both the Ordinary
Operation and Special Operation loans.

a. Percentages of ADB Financing: Except as ADB may otherwise agree,

each item of expenditure shall be financed out of the proceeds of the
Loan on the basis of the percentages set forth in the tables attached
to Schedule 3 to the Ordinary Operation loan agreement and
Schedule 2 to the Special Operation loan agreement.

b. Interest and Commitment Charge (Ordinary Operation loan): The

amount allocated to Category [to be determined] in the table attached
to Schedule 3 to the Ordinary Operation loan agreement, is for
financing interest and commitment charge on the loan during the
implementation period of the Project. ADB is entitled to withdraw from
the loan account and pay to itself, on behalf of the Government, the
amounts required to meet payments, when due, of such interest and
commitment charge.

c. Interest Charge (Special Operation loan): The amount allocated to

category [x] in the table attached to Schedule 2 to the Special
Operation loan agreement, is for financing the interest charge on the
Loan during the implementation period of the Project.

d. Reallocation: Notwithstanding the allocation of Loan proceeds and the

withdrawal percentages set forth in the tables,

i. if the amount of the Loan allocated to any category appears to be

insufficient to finance all agreed expenditures in that category, ADB
may, in consultation with the Government, (i) reallocate to such
category, to the extent required to meet the estimated shortfall,
amounts of the loan which have been allocated to another category
but, in the opinion of ADB, are not needed to meet other
expenditures; and (ii) if such reallocation cannot fully meet the
estimated shortfall, reduce the withdrawal percentage applicable to
such expenditures in order that further withdrawals under such
category may continue until all expenditures thereunder will have
been made; and

ii. if the amount of the loan allocated to any category appears to

exceed all agreed expenditures in that category, ADB may, in
consultation with the Borrower, reallocate such excess amount to any
other Category.

{allocation tables for the OCR and ADF loans will be inserted }
18

C. Fund Flow Diagram

14. The following diagrams, one for national road component and one for provincial road
component, show how the funds will flow from ADB and the Borrower to implement project
activities.

[National Roads Component]

First Generation Imprest Asian

Account ($) Development
(OCR) Bank
@ Central Bank
Road Development
Authority

Second Generation
Imprest Account (SLRs)
(OCR)
@ state owned bank
Road Development
Authority

Project Director

Contractors (above
$100,000) and Consultants

Note: Cash flow

Reports for reconciliation and replenishment (with copy to Ministry of Finance)
Direct payment procedure – withdrawal application/payment

Notes on funds flow:

1. From ADB to the Imprest Accounts. Loan proceeds will be channeled through FGIA opened at
the Central Bank of Sri Lanka to SGIA at a state owned bank. ADB funds will be allocated based on the
annual budget estimates prepared by the RDA. RDA will process all other disbursement requests to ADB,
including direct payment to contractors (above $100,000) and consultant fee. The FGIA will be
replenished according to the ADB's Loan Disbursement Handbook.
2. SGIA will be established at commercial banks acceptable to the Government and ADB. These will
be short-term deposit accounts, with the RDA as authorized signatory.
3. From ADB to contractors as well as consultants. Dollar-denominated payments for
contractors (above $100,000), and consultant fees contracted by RDA, will be paid directly by ADB, which
requires RDA's submission of approved invoices and documentation to ADB in accordance with ADB's
Loan Disbursement Handbook.
 19

[Provincial Roads Component]

First Generation Imprest

Account ($) Asian
(ADF) Development
@ Central Bank Bank
Ministry of Local
Government and
Provincial Councils

Second Generation Imprest Second Generation Imprest

Accounts (SLRs) Accounts (SLRs)
(ADF) (ADF)
@ state owned bank @ state owned bank
Project Coordination Unit Northern Province
Chief Secretary
Project Coordinator
Project Account Project Director
Project Account

Contractors (above $100,000),

consultants, and vehicle suppliers

Note: Cash flow

Reports for reconciliation and replenishment
Direct payment procedure – withdrawal application/payment

NPRDD = Northern Provincial Road Development Department.

Notes on funds flow:

1. From ADB to the Imprest Accounts. Loan proceeds will be channeled through FGIA opened at
the Central Bank of Sri Lanka to two SGIAs – one SGIA to be managed by the PCU and one SGIA to be
managed by NPRDD (under NPC Chief Secretary) at commercial banks acceptable to the Government
and ADB. ADB funds will be allocated based on the annual budget estimates prepared by the MLGPC
and NPRDD. MLGPC will process all other disbursement requests to ADB, including direct payment to
contractors (above $100,000) and consultant fee. The FGIAs will be replenished according to the ADB's
Loan Disbursement Handbook.
2. From ADB to contractors as well as consultants. Dollar-denominated payments for
contractors (above $100,000), and consultant fees contracted by NPRDD will be paid directly by ADB,
which requires NPRDD's submission, through MLGPC, of approved invoices and documentation to ADB
in accordance with ADB's Loan Disbursement Handbook.
20

V. FINANCIAL MANAGEMENT

A. Financial Management Assessment

15. Financial management risks should be considered and updated1 throughout the life of
the project. Risk mitigation measures should also be updated accordingly.

B. Disbursement

16. The Loan proceeds will be disbursed in accordance with ADB’s Loan Disbursement
Handbook (2007, as amended from time to time),2 and detailed arrangements agreed upon
between the Government and ADB.

17. Pursuant to ADB's Safeguard Policy Statement (2009) (SPS),3 ADB funds may not be
applied to the activities described on the ADB Prohibited Investment Activities List set forth at
Appendix 5 of the SPS. All financial institutions will ensure that their investments are in
compliance with applicable national laws and regulations and will apply the prohibited
investment activities list (Appendix 5 of the SPS) to subprojects financed by ADB.

18. Direct payment procedure by ADB will be utilized for progress payments on civil works
(above $100,000), consultant's fees, and equipment (vehicle) supplier. Reimbursement, imprest
fund, liquidation and replenishment procedures will be utilized for progress payments on civil
works (below $100,000), procurement of goods, recurrent costs (project management). Two
separate first generation imprest accounts (FGIAs) and second generation imprest accounts
(SGIAs), depending on its funding sources, will be established and maintained by RDA and
MLGPC, respectively as follows:

Funding Source
OCR
First Generation Imprest (1) account ($) established at
Account the Central Bank of Sri Lanka
in the name of RDA
Second Generation Imprest (1) account (SLRs) established
Account at the state owned bank in the
name of RDA's Project
Implementation Unit
ADF
(1) account ($) established at the
Central Bank of Sri Lanka in the
name of MLGPC
(1) account (SLRs) established at
the state owned bank in the name
of MLGPC's Project Coordination
Unit
(1) account (SLRs) established at
the state commercial bank in the
name of NPRDD

19. The FGIA and SGIA (Imprest Accounts) will be established, managed, replenished and
liquidated in accordance with the Loan Disbursement Handbook. The ceiling for the FGIAs will
not exceed the lower of (i) the estimated expenditure to be financed from the FGIAs for the first
6 months of Project implementation, or (ii) the equivalent of 10% of the loan amount. The
maximum ceiling of each SGIA will be equivalent to 6 months estimated expenditures to be
funded from each SGIA or 10% of the respective loan amount, whichever is lower. The request
1
Available at: http://www.adb.org/Documents/Others/FM-toolkit/Methodology-Note.pdf, and Financial Management.
See also Analysis of Projects Guidelines (2005): http://www.adb.org/Documents/Guidelines/Financial/default.asp.
2
Available at: http://www.adb.org/Documents/Handbooks/Loan_Disbursement/loan-disbursement-final.pdf
3
Available at: http://www.adb.org/Documents/Policies/Safeguards/Safeguard-Policy-Statement-June2009.pdf
 21

for initial advance to the FGIAs should be accompanied by an Estimate of Expenditure Sheet4
setting out the estimated expenditures for the first six (6) months of project implementation, and
submission of evidence satisfactory to ADB that the Imprest Accounts have been duly opened.
For every liquidation and replenishment request of the FGIA, the borrower will furnish to ADB
(a) Statement of Account (Bank Statement) where the imprest accounts are maintained, and (b)
the Imprest Account Reconciliation Statement reconciling the above mentioned bank statement
against the EA’s records.5

20. ADB's statements of expenditure (SOE) will be utilized for reimbursement and liquidation
and replenishment of the imprest accounts for any individual payments not exceeding the
equivalent of $100,000. SOE records should be maintained and made readily available for
review by ADB's disbursement and review mission or upon ADB's request for submission of
supporting documents on a sampling basis, and for independent audit.6

21. Before the submission of the first withdrawal application, the borrower should submit to
ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal
applications on behalf of the borrower, together with the authenticated specimen signatures of
each authorized person. The minimum value per withdrawal application is US$100,000, unless
otherwise approved by ADB. The borrower is to consolidate claims to meet this limit for
reimbursement and imprest account claims. Withdrawal applications and supporting documents
will demonstrate, among other things that the goods, and/or services were produced in or from
ADB members, and are eligible for ADB financing.

22. For the national road component, RDA will be responsible for (i) preparing disbursement
projections, (ii) requesting budgetary allocations for counterpart funds, (iii) collecting supporting
documents, and (iv) preparing and sending withdrawal applications to ADB. For the provincial
road component, MLGPC will be responsible for (i) preparing disbursement projections, (ii)
requesting budgetary allocations for counterpart funds, (iii) collecting supporting documents, (iv)
receiving and sending withdrawal applications to ADB, and (v) processing funds for second
generation impress account to ensure adequate cash flow for NPRDD with respect to recurrent
costs and payments to contractors and suppliers. NPRDD will be responsible for (i) providing
information for preparing disbursement projections, (ii) projection of necessary budgetary
allocations for counterpart funds, (iii) preparing supporting documents, and (iv) prepare and
send withdrawal applications to MLGPC.

C. Accounting

23. The RDA and MLGPC will maintain separate project accounts and records by funding
source for all expenditures incurred on the Project. Project accounts will follow international
accounting principles and practices.

4
Available in Appendix 29 of the Loan Disbursement Handbook.
5
Follow the format provided in Appendix 30 of the Loan Disbursement Handbook.
6
Checklist for SOE procedures and formats are available at:
http://www.adb.org/documents/handbooks/loan_disbursement/chap-09.pdf
http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Contracts-100-Below.xls
http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Contracts-Over-100.xls
http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Operating-Costs.xls
http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Free-Format.xls
22

D. Auditing

24. The RDA and MLGPC will cause the detailed consolidated project accounts to be
audited in accordance with International Standards on Auditing and in accordance with the
Government's audit regulations by an auditor acceptable to ADB. The audited accounts will be
submitted in the English language to ADB within 6 months of the end of the fiscal year by the
executing agency. The annual audit report will include a separate audit opinion on the use of the
Imprest Accounts, and the SOE procedures (as applicable). The Government, MOHRD and
MLGPC have been made aware of ADB’s policy on delayed submission, and the requirements
for satisfactory and acceptable quality of the audited accounts. ADB reserves the right to verify
the project's financial accounts to confirm that the share of ADB’s financing is used in
accordance with ADB’s policies and procedures. For revenue generating projects only, ADB
requires audited financial statements for each executing and/or implementation agency
associated with the project.
 23

VI. PROCUREMENT AND CONSULTING SERVICES

A. Advance Contracting

25. All advance contracting will be undertaken in conformity with ADB’s Procurement
Guidelines (February 2007, as amended from time to time) (ADB’s Procurement Guidelines)7
and ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time) (ADB’s
Guidelines on the Use of Consultants).8 The issuance of invitations to bid under advance
contracting will be subject to ADB approval. The Government, MOHRD, MLGPC, RDA and
NPRDD have been advised that approval of advance contracting does not commit ADB to
finance the ensuing Project.

26. Advance contracting includes tendering and bid evaluation for civil works packages, and
recruitment of consultants. The detailed advance action schedules, which will be updated on
regular basis, are presented below in Table 4, 5, 6 and 7.

Provincial Road Component:

Project Implementation Consultant Recruitment (MLGPC)

No. Activity Days Timeframe Action By Status
1 Prepare Request for Expression of Interest (REOI) 01-Jan-10 MLGPC done
2 Advertise in the newspapers & ADBBO 5 06-Jan-10 MLGPC done
3 EOI Submission 30 05-Feb-10 External done
4 Submission (1) to ADB: Shortlisting/Draft RFP 14 19-Feb-10 MLGPC done
5 ADB's Review & No-Objection 19 10-Mar-10 ADB done
6 Issue Request For Proposal (RFP) 2 12-Mar-10 MLGPC done
7 Proposal Submission 45 26-Apr-10 External on going
8 Submission (2) to ADB: Technical Evaluation 17 13-May-10 MLGPC not yet due
9 ADB's Review & No-Objection 10 23-May-10 ADB not yet due
10 Public Opening of the Financial Proposals 3 26-May-10 MLGPC not yet due
11 Submission (3) to ADB: Financial Evaluation/Ranking 14 09-Jun-10 MLGPC not yet due
12 ADB's Review & No-Objection 8 17-Jun-10 ADB not yet due
13 Invite 1st Ranked Firm - Negotiate/Draft Contract 8 25-Jun-10 MLGPC not yet due
14 Submission (4) to ADB: Draft Negotiated Contract 5 30-Jun-10 MLGPC not yet due
15 ADB's Review & No-Objection 5 05-Jul-10 ADB not yet due
16 Contract Signing & Issue Notice to Proceed 4 09-Jul-10 MLGPC not yet due

7
Available at: http://www.adb.org/Documents/Guidelines/Procurement/Guidelines-Procurement.pdf
8
Available at: http://www.adb.org/Documents/Guidelines/Consulting/Guidelines-Consultants.pdf
24

Procurement - Civil Works: NPRDD (Provincial Roads Component)

No. Activity Days Timeframe Action By Status
1 Finalize Bidding Document 05-Feb-10 NPRDD done
2 ADB Review 17 22-Feb-10 ADB done
3 Final Revisions As Necessary 27 21-Mar-10 NPRDD done
4 Advertise Invitation For Bids in Newspaper/ADBBO 1 22-Mar-10 NPRDD ongoing
5 Preparation of Bids 38 29-Apr-10 External not yet due
6 Submission of Bids/Public Opening 1 30-Apr-10 NPRDD not yet due
7 TEC Evaluate Technical Envelope (Qual./Technical) 14 14-May-10 NPRDD not yet due
8 Review by Procurement Committee 7 21-May-10 NPRDD not yet due
9 ADB Review 14 04-Jun-10 ADB not yet due
10 Public Opening of Financial Envelope 5 09-Jun-10 NPRDD not yet due
11 Evaluate Financial Bid 10 19-Jun-10 NPRDD not yet due
12 Bid Evaluation Report & Recommend Award 10 29-Jun-10 NPRDD not yet due
13 Review by Procurement Committee - appointed by BOM 7 06-Jul-10 NPRDD not yet due
14 ADB Review and No Objection 14 20-Jul-10 ADB not yet due
15 Issue Notice of Award 1 21-Jul-10 NPRDD not yet due

National Road Component:

Project Implementation Consultant Recruitment (RDA)

No. Activity Days Timeframe Action By Status
1 Prepare Request for Expression of Interest (REOI) 01-Jan-10 RDA done
2 Advertise in the newspapers & ADBBO 5 06-Jan-10 RDA done
3 EOI Submission 30 05-Feb-10 External done
4 Submission (1) to ADB: Shortlisting/Draft RFP 50 27-Mar-10 RDA on going
5 ADB's Review & No-Objection 19 15-Apr-10 ADB not yet due
6 Issue Request For Proposal (RFP) 2 17-Apr-10 RDA not yet due
7 Proposal Submission 45 01-Jun-10 External not yet due
8 Submission (2) to ADB: Technical Evaluation 17 18-Jun-10 RDA not yet due
9 ADB's Review & No-Objection 10 28-Jun-10 ADB not yet due
10 Public Opening of the Financial Proposals 3 01-Jul-10 RDA not yet due
11 Submission (3) to ADB: Financial Evaluation/Ranking 14 15-Jul-10 RDA not yet due
12 ADB's Review & No-Objection 8 23-Jul-10 ADB not yet due
13 Invite 1st Ranked Firm - Negotiate/Draft Contract 8 31-Jul-10 RDA not yet due
14 Submission (4) to ADB: Draft Negotiated Contract 5 05-Aug-10 RDA not yet due
15 ADB's Review & No-Objection 5 10-Aug-10 ADB not yet due
16 Contract Signing & Issue Notice to Proceed 4 14-Aug-10 RDA not yet due
 25

Procurement - Civil Works: RDA (National Roads Component)

No. Activity Days Timeframe Action By Status
1 Finalize Bidding Document 31-Jan-10 RDA done
2 ADB Review 47 19-Mar-10 ADB done
3 Final Revisions - pending domestic preference 80 07-Jun-10 RDA pendng
4 Advertise Invitation For Bids in Newspaper/ADBBO 1 08-Jun-10 RDA not yet due
5 Preparation of Bids 45 23-Jul-10 External not yet due
6 Submission of Bids/Public Opening 1 24-Jul-10 RDA not yet due
7 TEC Evaluate Technical Envelope (Qual./Technical) 14 07-Aug-10 RDA not yet due
8 Review by Procurement Committee 7 14-Aug-10 RDA not yet due
9 ADB Review 14 28-Aug-10 ADB not yet due
10 Public Opening of Financial Envelope 5 02-Sep-10 RDA not yet due
11 Evaluate Financial Bid 10 12-Sep-10 RDA not yet due
12 Bid Evaluation Report & Recommend Award 10 22-Sep-10 RDA not yet due
13 Review by Procurement Committee 7 29-Sep-10 RDA not yet due
14 ADB Review and No Objection 14 13-Oct-10 ADB not yet due
15 Issue Notice of Award 1 14-Oct-10 RDA not yet due

B. Procurement of Goods, Works and Consulting Services

27. All procurement of goods and works will be undertaken in accordance with ADB’s
Procurement Guidelines (2007, as amended from time to time).

28. The government will inform ADB on the changes made to the national procurement
regulations if any and carry out a joint review of the NCB Annex if necessary. The procurement
plan should be updated whenever change in the procurement arrangements and/or the NCB
Annex is required and agreed.

29. An 18-month procurement plan indicating threshold and review procedures, goods,
works, and consulting service contract packages and national competitive bidding guidelines is
in Section C (Procurement Plan).

30. All consultants will be recruited according to ADB’s Guidelines on the Use of Consultants
(2007, as amended from time to time).9 The terms of reference for all consulting services are
detailed in Section D.

31. To facilitate project management and implementation, two separate international firms,
as project implementation consultants will be recruited, one for national highways component
(PIC-NH) and one for provincial roads component (PIC-PR). PIC-NH and PIC-PR will assume
the role of the "Employer's Representative" and will supervise respective civil works and provide
on-the-job training to counterpart staff. An estimated 778 person-months (33 international, 745
national) of consulting services are required for PIC-NH. An estimated 815 person-months (35
international, 780 national) of consulting services are required for PIC-PR. Consulting firms will
be engaged using the quality- and cost-based selection (QCBS) method with a weighting of
90% technical and 10% financial as the nature of the assignment requires priority consideration
for quality.
9
Checklists for actions required to contract consultants by method available in e-Handbook on Project
Implementation at: http://www.adb.org/documents/handbooks/project-implementation/
26

C. Procurement Plan

32. The procurement plan is in Attachment A and describes all procurement of good and
works to be undertaken for the Project.

D. Consultant's Terms of Reference

33. The consultant's terms of reference are provided in the following:

Project Implementation Consultant (national road): Attachment B

Project Implementation Consultant (provincial road): Attachment C
Capacity Development Technical Assistance Consultant: Attachment D
 27

VII. SAFEGUARDS

(a) Environment

34. The Project has been classified as Category B and Initial Environmental Examinations
together with Environmental Monitoring Plans (EMPs) were prepared for all road sections as per
ADB's Safeguard Policy Statement, 2009. The requirements of the EMPs and of the conditional
clearance provided by the Central Environmental Authority are being incorporated in the bidding
documents and included as part of the works contract documents. The RDA under the MOHRD
is responsible for ensuring compliance by the contractors with requirements of the EMPs for
national roads. The Environmental and Social Division (ESD) under the RDA, will monitor
environmental compliance by the contractor on behalf of the RDA. The ESD, which has been
established through an ADB funded TA, has been provided with necessary training and is very
familiar with ADB's procedures. However, as ESD's activities required for other on going
projects are expected to increase in short term, the environmental expert included in the PIC-
NH's team, will provide extra on-the-field monitoring support for the ESD. With respect to
provincial roads, the NPRDD will be responsible for ensuring the implementation of the
respective EMPs. Since NPRDD does not have adequately skilled staff to monitor
environmental compliance, the environmental expert in the PIC-PR's team will carry out the
monitoring tasks while providing on-the-job training to the NPRDD's supervision staff.

35. The main environmental concern with respect to this Project is the shortage of suitable
borrow and quarry sites within the Project area. Most of the suitable sites are located outside
the NP. This means that there will be long haulage distances. The IAs will ensure that sites
selected as borrow and quarry sites will have sufficient material to cater to the Project needs
and that haulage will be done along roads approved by respective local authorities to ensure
that the roads have sufficient carrying capacity for such haulage.

(b) Social – Involuntary Resettlement

36. The Project is categorized as category B in accordance with ADB's new Safeguard
Policy Statement (2009). During the project preparatory studies and assessments, project strip
plans, based on cross sections, were prepared which verified the project boundaries and the
limits of the new construction. Based on this, it is envisaged at this time that the improvement
works will be within the existing right-of-way boundaries. However, if land acquisition
requirement is identified during the implementation such as small strips of land adjacent to the
road which could affect some properties, including boundary walls, business establishments,
crops and trees, home gardens, or other resettlement impacts, the following steps will be taken:
(i) assessment to find out whether any type of displacement – physical or economic or both –
will take place because of the project permanently or temporality; (ii) formulation of RP in
consultation with affected peoples and other stakeholders and approval of it by ADB and
disclosure; and (iii) implementation of RP. The construction activities may proceed, after these
requirements are met satisfactorily.

37. If necessary, the RDA under the MOHRD is responsible for the preparation and
implementation of RPs for national highway roads component and the NPRDD for the provincial
roads component. The RP will be required to establish and implement grievance redress
mechanisms for handling complaints, identify categories of impacts, eligibility for compensation,
payment of compensation at replacement cost, income/livelihood restoration measures, proper
28

consultation of the affected people, sufficient budget, monitoring framework and implementation
schedule.

38. Before commencement of construction activities, a due diligence mission will be fielded
to confirm that right-of-way to be handed over to contractors are free of encumbrances and
ready for handover to the civil works contractors, and, as required, inform project authorities and
affected persons of remedial actions if any; and to create awareness among the project
authorities about ADB's social safeguard requirements pertaining to the Project.

(c) Social – Gender

39. The Project does not have substantive gender issues as the impact and benefit will
apply equally among men and women. The project will provide equally positive benefits for both
genders in terms improved access to schools, healthcare institutions and other services. The
contract for civil works will include measure to ensure safe and healthy working environment for
both the mean and women laborers. The civil works contractors will be advised to take
appropriate measures with respect to compliance of equal pay for men and women, health and
safety at construction sites and labor camps and awareness program for the workers on
prevention of HIV/AIDS.

(d) Social – Indigenous People

40. The project has no adverse or significant impact on indigenous people and, therefore, no
specific action is required under the Project. According to the findings of sample social surveys
in the project impact area, there are no indigenous people.
 29

VIII. PERFORMANCE MONITORING, EVALUATION, REPORTING AND

COMMUNICATION

A. Project Design and Monitoring Framework

Design Performance Targets and/or Data Sources and/or Assumptions

Summary Indicators Reporting Mechanisms and Risks
Impact By 2018: Publications of the Assumptions
Balanced and Per capital annual income in Ministry of Finance and Policy directions of
inclusive growth in Northern Province increases from Planning the Government's 10
the Northern Province $952 to $1,688 and percentage of Year Development
national average from 50% to 80% Publications of the Minstry Framework will
of Local Government and remain valid.
Provincial Councils
Outcome By project completion (2015): NPRDD's completion Assumptions
Improved road report The Government
connectivity within Travel time on project roads remains committed
Northern Province reduced by an average of 20% in Road Development to restoring and
and to the southern Northern Province and North Authority, Ministry of sustaining vital
region of the country. Central Province. Highways and Road infrastructure in the
Development Northern Province.
Travel time from Colombo (National
Capital) to Jaffna (Northern Project performance Conflict situation
Provincial Capital) is reduced by monitoring system does not resume.
38% (from 13 hours to 8 hours).

Accident rate (fatalities by vehicle-

km) reduced by 20% from 2010
rate.
Outputs By project completion (2015):
Engineer's progress Assumptions
1. National highways Approximately 170 km of national reports Qualified contractors
are rehabilitated. highways in North Central Province are available.
and Northern Province are Audit reports
rehabilitated.
RDA's and NPRDD's
2. Provincial roads Approximately 140 km of provincial project progress and
are rehabilitated and roads in Northern Province are completion reports
selected bridges links rehabilitated, and selected bridges
are rehabilitated and rehabilitated or replaced.
replaced.

3. NPRDD's offices NPRDD's district offices in Mannar

are rehabilitated. and Vavuniya are rehabilitated.
30

Activities Inputs

1. National Roads Rehabilitation and Improvement

1.1 Contract award of civil works by October 2010 ADB: $154.4 million
1.2 Completion of all construction and maintenance works Government: $18.6 million (taxes/duties)
by June 2015
2. Provincial Roads, Bridges, and NPRDD Offices
Rehabilitation
2.1 Contract award of civil works by July 2010
2.2 Completion of all construction and maintenance works
by June 2015
3. Project Management For 3:
3.1 Engagement of project implementation consultant by ADB: $500,000
July 2010 Government: $60,000 in-kind
3.2 Project management on-the-job training completed by
December 2012

NCP = North Central Province, NP = Northern Province

NPRDD = Northern Provincial Road Development Department, RDA = Road Development Authority
 31

B. Monitoring

41. Project performance monitoring: The achievement of the project performance targets
will be assessed following the design and monitoring framework. RDA and NPRDD,
respectively, assisted by respective PICs, will establish a project performance management
system. Indicators to be monitored include (i) traffic volume; (ii) bus and freight transport fares;
(iii) travel time or riding speed; (iv) vehicle-operating costs; (v) surface roughness; and (vi) road
accidents. In addition, socioeconomic secondary data will be obtained at the divisional secretary
level, including (i) number of businesses; (ii) household income; (iii) vehicle ownership; (iv)
unemployment rate; (v) land value, (vi) average travel time to schools, and (vii) average travel
time to hospitals. These indicators will be monitored before and after construction, both on the
project roads and on some control roads. In addition, every year during the project period,
NPRDD will also monitor the (i) road maintenance budget; (ii) ratio of staff–km of provincial
road; and (iii) road maintenance cost per km. Achievement of the institutional development
program will also be monitored. For civil works, progress will be monitored and reported monthly
by the project implementation consultants. The project beneficiaries' satisfaction will be
surveyed during and after project implementation. Disaggregated baseline data for output and
outcome indicators gathered during project processing will be updated and reported quarterly
through the quarterly progress reports from RDA and NPRDD, and after each ADB review
mission. These quarterly reports will provide information necessary to update ADB's project
performance reporting system.10

42. Compliance monitoring: Compliance with covenants will be monitored through ADB's
Project Administration Missions – including project inception mission to discuss and confirm the
timetable for compliance with the loan covenants; project review missions to review the
borrower's compliance with particular loan covenants and, where there is any noncompliance or
delay, discuss proposed remedial measures with the Government; and mid-term review mission
if necessary to review covenants to assess whether they are still relevant or need to be
changed, or waived due to changing circumstances.

43. Safeguards monitoring: For the national road component, the ESD under the RDA,
assisted by the PIC-NH, will monitor environmental compliance by the contractor on behalf of
the RDA. With respect to provincial roads, the NPRDD, assisted by the PIC-PR, will be
responsible for monitoring the implementation of the respective EMPs. The Project does not
have social safeguards issues, which require actions for preparation or monitoring of RPs,
indigenous people development framework, or Gender Action Plan. For any reason, if social
safeguard action plans become necessary during implementation, RDA and NPRDD will
prepare applicable plans for ADB's review and approval and the project implementation
consultants will assist with implementation and monitoring.

C. Evaluation

44. A project inception mission will be fielded soon after the legal agreements for the Project
are declared effective; thereafter, regular reviews will follow at least annually. As necessary,
special loan administration missions and a midterm review mission will be fielded, under which
any changes in scope or implementation arrangement may be required to ensure achievement
of project objectives. RDA and NPRDD will monitor project implementation in accordance with
the schedule and time-bound milestones, and keep ADB informed of any significant deviations

10
ADB's project performance reporting system is available at:
http://www.adb.org/Documents/Slideshows/PPMS/default.asp?p=evaltool
32

that may result in the milestones not being met. Within 6 months of physical completion of the
Project, RDA and NPRDD will submit a project completion report to ADB.11

D. Reporting

45. The RDA and NPC-NPRDD, through MOHRD and MLGPC respectively, will provide
ADB with (i) quarterly progress reports in a format consistent with ADB's project performance
reporting system; (ii) consolidated annual reports including (a) progress achieved by output as
measured through the indicator's performance targets, (b) key implementation issues and
solutions; (c) updated procurement plan and (d) updated implementation plan for next 12
months; and (iii) a project completion report within 6 months of physical completion of the
Project. To ensure projects continue to be both viable and sustainable, project accounts and the
executing agency audited financial statements, together with the associated auditor's report,
should be adequately reviewed.

E. Stakeholder Communication Strategy

46. Once a year, RDA and NPRDD, respectively, will hold one-day workshop to share
information on project progress, issues, lessons learned, and performance improvement
measures if appropriate. Representation will include members of the national steering
committee and provincial coordinating committee.

47. Various information regarding the Project, including scope, general progress status,
beneficiaries, invitation for bid, and consultant recruitment notices, will be provided to the
general public. The information will be made available and updated through the official websites
of RDA and NPRDD.

IX. ANTICORRUPTION POLICY

48. ADB reserves the right to investigate, directly or through its agents, any violations of the
Anticorruption Policy relating to the Project.12 All contracts financed by ADB shall include
provisions specifying the right of ADB to audit and examine the records and accounts of the
executing agency and all Project contractors, suppliers, consultants and other service providers.
Individuals/entities on ADB’s anticorruption debarment list are ineligible to participate in ADB-
financed activity and may not be awarded any contracts under the Project.13 To support these
efforts, relevant provisions are included in the loan agreements, regulations and the bidding
documents for the Project.

49. The Project incorporates other measures, in addition to the standard ADB requirements,
to deter corruption and increase transparency. The Project will (i) build the EA’s capacity to
comply with ADB and Government procedures; and (ii) establish a project website to disclose
information about project implementation. The project website will provide updated, detailed
information on project implementation. For example, it will include procurement-related
information, such as the list of participating bidders, name of the winning bidder, basic details on
bidding procedures adopted, amount of contract awarded, and the list of goods and/or services
procured. The Project website will be established by MOHRD and MLGPC within 3 months of
loan effectiveness, with the help of the PIC consultants.
11
Project completion report format available at: http://www.adb.org/Consulting/consultants-toolkits/PCR-Public-
Sector-Landscape.rar
12
Available at: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf
13
ADB's Integrity Office web site is available at: http://www.adb.org/integrity/unit.asp
 33

X. ACCOUNTABILITY MECHANISM

50. People who are, or may in the future be, adversely affected by the project may address
complaints to ADB, or request the review of ADB's compliance under the Accountability
Mechanism.14

51. The Project will establish a grievance redress mechanism to ensure greater
accountability. With the assistance of the PIC consultants, the MOHRD and MLGPC will set up
the grievance redress mechanism within 6 months of the loan effectiveness, to receive and
resolve complaints, as well as to act upon stakeholders’ reports of irregularities on project
related matters, including grievances concerning resettlement. The executing agencies will
widely publicize the existence of this mechanism to ensure that stakeholders are aware that a
venue is available to address concerns or grievances relating to fraud, corruption, abuse, and
any other aspects of project implementation.

XI. RECORD OF PAM CHANGES

52. All revisions/updates during course of implementation should be recorded and retained
under this Section to provide a chronological history of changes to implemented arrangements
recorded in this PAM.

14
For further information see: http://compliance.adb.org/.
34

XII. ATTACHMENTS

Attachment A: Procurement Plan

Attachment B: Outline Terms of Reference for PIC (National Road)

Attachment C: Outline Terms of Reference for PIC (Provincial Road)

Attachment D: Outline Terms of Reference for Capacity TA Consultant

 Attachment A 1

PROCUREMENT PLAN

Basic Data
Project Name Northern Road Connectivity Project
Country Sri Lanka
Executing Agencies Ministry of Highways and Road Development
(for National Highways Component) and
Ministry of Local Government & Provincial
Councils (for Provincial Roads Component)
Loan/Grant Amount $154.4 million loan
(130 million OCR and 24.4 million ADF)
Loan/Grant Number
Date of First Procurement Plan 26 January 2010
Date of This Procurement Plan 09 March 2010

A. Process Thresholds, Review, and 18-Month Procurement Plan

1. Project Procurement Thresholds

1. Except as the Asian Development Bank (ADB) may otherwise agree, the following
process thresholds shall apply to procurement of goods and works.

Procurement of Goods and Works

Method Threshold
International Competitive Bidding (ICB) for Works Above $7,500,000
International Competitive Bidding (ICB) for Goods Above $500,000
National Competitive Bidding (NCB) for Works Beneath that stated for ICB, Works
National Competitive Bidding (NCB) for Goods Beneath that stated for ICB, Goods
Shopping for Works Below $100,000
Shopping for Goods Below $100,000

2. ADB Prior or Post Review

2. Except as ADB may otherwise agree, the following prior or post review requirements
apply to the various procurement and consultant recruitment methods used for the Project.

Procurement Method Prior or Post Comments

Procurement of Goods and Works
ICB Works Prior
ICB Goods Prior
NCB Works and Good Post Prior review for the bidding
documents (for first package) and
bid evaluation reports (for all).
Shopping for Works Post
Shopping for Goods Post
Recruitment of Consulting Firms
Quality- and Cost-Based Selection (QCBS) Prior
2 Attachment A

3. Goods and Works Contracts Estimated to Cost More Than $ 1 Million

3. The following table lists goods and works contracts for which procurement activity is
either ongoing or expected to commence within the next 18 months.

General Description Contract Procurement Prequalification Advertisement Comments

Value Method of Bidders Date
(Yes/No) (quarter/year)
Civil Works for National See detail International No Q1-Q2/2010
Roads (8 packages): description Competitive
Individual Bids below Bidding
Civil Works for Provincial See detail National Competitive No Q1-Q2/2010
Roads (6 packages): description Bidding
Individual bids below
DETAIL DESCRIPTION OF WORK PACKAGES
Province Total Estimated Contract Value Contract Procurement
Package / Road No. Road Section Name Length SLRs million ($) Period Mode
District (km) (months)
National Roads
NH-CP1 NCP A009 Dambulla-Thonigala 23.35 1,714.59 14.91 18 ICB
NH-CP2 NCP A009 Thonigala -Galkulama 24.17 1,841.38 16.01 18 ICB
NH-CP3 NCP A020 Anuradhapura-Rembewa 14.50 950.26 8.26 15 ICB
Subtotal: 62.02 4,506.23 39.18
NH-CP4 NP A032 Navatkuli-Keraitivu 17.40 1,640.11 14.26 20 ICB
NH-CP5 NP B268 Manipai-Kaithady 14.02 914.44 7.95 18 ICB
NH-CP6 NP B437 Vallai-Telippalai-Araly 27.40 1,709.30 14.86 24 ICB
Subtotal: 58.82 4,263.85 37.07
NH-CP7 NP A034 Mankulam-Mullaittivu (1/2) 25.00 1,551.14 13.49 18 ICB
NH-CP8 NP A034 Mankulam-Mullaittivu (2/2) 25.00 1,551.14 13.49 18 ICB
Subtotal for National Roads: 170.84 11,872.37 103.23
Provincial Roads
PR-CP1 NP 15.45 256.92 2.23 18 NCB
Mannar NPMAC001 Thalimannar village Road
NPMAC005 Olaithoduvai Road
NPMAC007 Thoddavelli-Malupadi Road
NPMAC010 Pesalai-Vauadipanai Road
NPMAC020 Karisal Road
PR-CP2 NP 26.50 374.19 3.25 24 NCB
Mannar NPMAC029 Veppankulam-Periyamurippu Road
PR-CP3 NP 17.32 298.42 2.59 18 NCB
Mannar NPMAC002 Espalnde Road
NPMAC003 South Bar Road
NPMAC004 Mannar-Thaivupadu-Tharanpuram
NPMAC008 Vankalai-Sirrunavatkulam Road
NPMAC012 Pallimunai Beach Road
NPMAC014 Uyilankulam-Manadkulam-Nanaddan
NPMAC017 Puthukamam Road
NPMAC034 Murungan - Nanaddan
NPMAC044 Approach Road to Public Building
PR-CP4 NP 26.00 426.69 3.71 24 NCB
Vavuniya NPVAC027 Intperiyakulam- Puthoor Road
NPVAC029 Cheddikulam-Thudarikulam
NPVAC034 Pandichurichchan-Andiyapuliyankulam
PR-CP5 NP 28.80 403.59 3.51 24 NCB
Vavuniya NPVAC007 Madhukandai- Iretperiyakulam Road
NPVAC010 Mahiankulan-Pallamadu Road
PR-CP6 NP 27.20 435.40 3.79 24 NCB
Vavuniya NPVAC014 Puthoor- Palamoddai Road
NPVAC032 Mankulam-Maruthamadhu-Mingettigama

Subtotal for Provincial Roads: 141.27 2,195.20 19.08

Total: 312.11 14,067.57 122.31
 Attachment A 3

4. Consulting Services Contracts Estimated to Cost More Than $100,000

4. The following table lists consulting services contracts for which procurement activity is
either ongoing or expected to commence within the next 18 months.

General Description Contract Value Recruitment Advertisement International Comments

Method Date or National
(quarter/year) Assignment
Project About Quality and Cost Q1/2010 International
Implementation $2.7 million each Based Selection firm
Consultants (90:10)
(two packages)

5. Goods and Works Contracts Estimated to Cost Less than $ 1 Million and
Consulting Services Contracts Less than $100,000

5. The following table groups smaller-value goods, works, and consulting services
contracts for which procurement activity is either ongoing or expected to commence within the
next 18 months.

General Description Value of Number of Procurement / Comments

Contracts Contracts Recruitment
(cumulative) Method
Equipment (detailed specification and About To be National
contract packaging will be finalized $0.2 million determined Competitive
during project implementation by the Bidding or
TA consultants) Shopping

B. Indicative List of Packages Required Under the Project

6. The following table provides an indicative list of all procurement (goods, works and
consulting services) over the life of the project. Contracts financed by the Borrower and others
should also be indicated, with an appropriate notation in the comments section.

General Estimated Value Estimated Number Procurement Domestic Comments

Description (cumulative) of Contracts Method Preference
Applicable
Goods $0.20 million To be determined NCB or Shopping Applicable

Works $122 million 14 ICB/NCB Yes for ICB For ICB,

preference
margin of 7.5%
may be
provided when
comparing bids
from eligible
domestic
contractors
General Estimated Value Estimated Number Recruitment Type of Comments
Description (cumulative) of Contracts Method Proposal
Consulting $5.40 million 2 QCBS (90:10) Full
Services International
4 Attachment A

C. National Competitive Bidding

1. General

7. National competitive bidding shall conform to the provisions for "National Competitive
Bidding" as prescribed in the Procurement Guidelines 2006 for Goods and Works issued in
January 2006 by the National Procurement Agency, and the specific procedures prescribed by
the Procurement Manual issued on March 2006, with the clarifications and modifications
described in the following paragraphs required for compliance with the provisions of the ADB
Procurement Guidelines.

2. Registration

(i) Bidding shall not be restricted to pre-registered firms under the national
registration system of the Institute for Construction, Training and Development
(ICTAD), and such registration shall not be a condition for the submission of bids
in the bidding process.

(ii) Where registration is required prior to award of contract, bidders: (i) shall be
allowed a reasonable time to complete the ICTAD registration process; and (ii)
shall not be denied registration for reasons unrelated to their capability and
resources to successfully perform the contract, which shall be verified through
post-qualification.

(iii) National sanction lists or blacklists may be applied only with prior approval of
ADB.

3. Prequalification

8. Post qualification shall be used unless prequalification is explicitly provided for in the
loan agreement/procurement plan. When used for large or complex Works contracts, i.e.
turnkey, design and build, or management contracts; or custom-designed equipment, industrial
plants, and specialized services, prequalification evaluation shall not include the evaluation of
equipment and personnel. This assessment shall be undertaken at the bid evaluation stage.
Irrespective of the procedure applied (whether prequalification or postqualification), no domestic
or foreign contractor shall be precluded from participation.

4. Advertising

9. Bidding of NCB contracts estimated at $500,000 or more for goods and related services
or $1,000,000 or more for civil works shall be advertised on ADB’s website via the posting of the
Procurement Plan.

5. Bidding Documents

10. Procuring entities shall use standard bidding documents acceptable to ADB for the
Procurement of Goods, Works and Consulting Services, based ideally on the standard bidding
documents issued by ADB.
 Attachment A 5

6. Packaging

11. Slicing or splitting of contracts within a package shall not be used to change the contract
sizes and their corresponding methods of procurement as approved in the Procurement Plan.

7. Bid Security

12. Where required, bid security shall be in the form of a bank guarantee from a reputable
bank.

8. Preferences

(i) No preference of any kind shall be given to domestic bidders or for domestically
manufactured goods1.

(ii) Foreign suppliers and contractors from ADB member countries shall be allowed to
bid, without registration, licensing, and other government authorizations, leaving
compliance with these requirements for after award and before signing of
contract.

9. Procurement of Works

(i) Specifications for works may be based on specifications recommended by

ICTAD to the extent possible, but ICTAD approval shall not be required for
adoption of specifications in a particular procurement activity.

(ii) The determination of the financial capacity of a bidder for award of the contract in
postqualification evaluation shall take into account current contract commitments
and shall not be confined, for domestic bidders, to the ICTAD registration.

10. Bid Rejection For Unrealistic Rates

13. Bids shall not be subjected to a test for unrealistic rates. No lowest evaluated and
substantially responsive bid shall be rejected on the basis of comparison to rates, including but
not limited to market, historical, or agency established rates, without prior approval of ADB.

11. Rejection of All Bids and Rebidding

14. Bids shall not be rejected and new bids solicited without the ADB’s prior concurrence.

12. Price Negotiations

15. Price negotiation shall be allowed only where the price offered by the lowest evaluated
and substantially responsive bidder substantially exceeds costs estimates. Approval of ADB is
required prior to any negotiation of prices.

1
Under international competitive bidding, a preference margin of 7.5% may be provided when comparing bids from eligible
domestic contractors.
6 Attachment A

13. Participation by Government-Owned Enterprises

16. Government-owned enterprises in the Democratic Socialist Republic of Sri Lanka shall
be eligible to participate only if they can establish that they are legally and financially
autonomous, operate under commercial law, and are not a dependent agency of the procuring
entity, or the Project Executing Agency or Implementing Agency.

14. Member Country Restrictions

17. Bidders must be nationals of member countries of ADB, and offered goods, works and
services must be produced in and supplied from member countries of ADB.
 Terms of Reference for PIC-NH Attachment B 1-1

Terms of Reference
Project Implementation Consultant for the National Road Component

A. Objectives

1. The main objective is to assist the RDA (the Employer) in implementing the project by:
carrying out the supervision/administration of the civil works contracts; conducting on-the-job
training for the Employer's staff; preparing project performance management system, and
reporting and documenting progress.

B. Scope of Services

2. Construction Supervision and Contract Management. The project implementation

consultant (PIC) shall perform the following tasks:
Task (i) approving contractor's work program, method statements, material sources, etc.;
Task (ii) approving and/or issuing working drawings, approving the setting out of the works,
and giving instructions to the contractor;
Task (iii) reviewing the quality control programs of the contractors;
Task (iv) inspecting materials and works to ensure compliance with specifications and giving
immediate notice to the contractor in the event that such materials and works fail to
comply with the specifications;
Task (v) accepting or rejecting any part or parts of the completed works;
Task (vi) making measurements and keeping measurement records;
Task (vii) maintaining records, correspondence, and diaries;
Task (viii) certifying work volume and interim certificates for progress payments;
Task (ix) assisting the Employer's representative with the maintenance of consolidated
project accounts, and with preparation of financial statements and withdrawal
applications for submission to ADB;
Task (x) certifying completion of part or all of the works;
Task (xi) assisting the Employer in preparing withdrawal applications for contractor
payments;
Task (xii) periodically checking the remaining quantities, and undertaking constant
monitoring of each contract’s costs;
Task (xiii) reviewing and recommending to the Employer variation orders, extensions of time,
claims, and other matters that may come from each contractor;
Task (xiv) negotiating with each contractor and recommending to the Employer the rates for
any unscheduled items of work that may arise;
Task (xv) advising the Employer's representative on all matters relating to the execution of
the works; and assisting the representative with processing the contractor's
possible claims;
Task (xvi) ensuring compliance with the environmental and social impact mitigation
requirements of civil works contracts, and providing information to ADB on those
 1-2 Attachment B Terms of Reference for PIC-NH

processes in the monthly progress reports.;

Task (xvii) preparing, at the completion of the contracts, a consolidated project completion
report in a format provided by ADB;
Task (xviii) checking and certifying as-built drawings for the works prepared by the contractors;
Task (xix) inspecting the works at appropriate intervals during the defects liability period and
certifying the defects liability certificate for issuance by the Employer's
representative;
Task (xx) providing the Employer with complete records, and inception, monthly, and
completion reports; and
Task (xxi) assisting the Employer to provide on-site training where required for the
Employer's field staff on quality assurance and contract administration.
Task (xxii) assisting and training the Employer's staff to monitor and administer the
performance based maintenance portion of the civil works contract (immediately
following the full or sectional transfer of completed works).
Task (xxiii) Supervise the implementation of the Environmental Management Plan (EMP) and
prepare regular monitoring reports to be included in the consultant’s monthly
progress reports.

3. Project Performance Management System. The PIC shall perform the following tasks:
Task (xxiv) undertaking project performance management system in the format acceptable by
the employer and ADB;
Task (xxv) preparing in the initial stage a project performance management system, in
accordance with the ADB's project design and monitoring framework, to monitor (i)
the progress of the overall project implementation, and (ii) the development impact
of the project; and
Task (xxvi) collecting/updating the project performance indicator benchmarks,

4. Other Services. The PIC shall perform the following tasks:

Task (xxvii) Project information on website. The consultant will assist MOHRD and RDA create
a Project website to disclose information about various matters on the Project,
including procurement. With regard to procurement, the website will include
information on the list of participating bidders, name of the winning bidder, basic
details on bidding procedures adopted amount of contract awarded, and the list of
goods/services procured. These Project websites will have links to show both the
national road and provincial road components of the Project.
Task (xxviii) Grievance Redress Mechanism. Within 2 months of commencement of services,
assist MOHRD to prepare a Grievance Redress Mechanism, acceptable to ADB,
and assist establishing a task force at the RDA for MOHRD to receive and resolve
complaints/grievances or act upon reports from stakeholders on misuse of funds
and other irregularities, including grievances due to resettlement and
environmental issues. The task force will (i) make public the existence of this
Grievance Redress Mechanism, through a public awareness campaign, (ii) review
and address grievances of stakeholders of the Project, in relation to either the
Project, any of the service providers, or any person responsible for carrying out any
 Terms of Reference for PIC-NH Attachment B 1-3

aspect of the Project; and (iii) proactively and constructively respond to them.

5. The tentative list of packages and durations are shown below:

Package Road Section Province Length (km) Duration (mon.)
CP1 A009: Dambulla-Thonigala NCP 23.35 18
CP2 A009: Thonigala -Galkulama NCP 24.17 18
CP3 A020: Anuradhapura-Rembewa NCP 14.50 15
CP4 A032: Navatkuli-Keraitivu NP 17.40 20
CP5 B268: Manipai-Kaithady NP 14.02 18
CP6 B437: Vallai-Telippalai-Araly NP 27.40 24
CP7 A034: Mankulam-Mullaittivu (1/2) NP 25 18
CP8 A034: Mankulam-Mullaittivu (2/2) NP 25 18

C. Implementation Arrangements

6. The consulting services will be implemented by a firm of international consultants. An

association with a suitable domestic consultant is encouraged to compliment consultant's local
knowledge and experience. It is anticipated that the following international and local staff will be
required:
 1-4 Attachment B Terms of Reference for PIC-NH

INTERNATIONAL PROFESSIONAL STAFF

Position Qty Number of Total

Person-Months Person-Months
Team Leader/Chief Resident Engineer (CRE) 1 25.00 25.00
Technical Specialists (As-Needed Basis) 1 4.00 8.00
Subtotal 2 33.00

LOCAL PROFESSIONAL STAFF

Position Qty Number of Total

Person-Months Person-Months
Resident Engineer (CP 1/2/3) 1 18.00 18.00
Resident Engineer (CP 4/5/6) 1 24.00 24.00
Resident Engineer (CP 7/8) 1 18.00 18.00
Assistant Resident Engineer (CP1) 1 18.00 18.00
Assistant Resident Engineer (CP2) 1 18.00 18.00
Assistant Resident Engineer (CP3) 1 15.00 15.00
Assistant Resident Engineer (CP4) 1 20.00 20.00
Assistant Resident Engineer (CP5) 1 18.00 18.00
Assistant Resident Engineer (CP6) 1 24.00 24.00
Assistant Resident Engineer (CP7) 1 18.00 18.00
Assistant Resident Engineer (CP8) 1 18.00 18.00
Highway Design Engineer (CP 1/2/3) 1 16.00 16.00
Highway Design Engineer (CP 4/5/6) 1 16.00 16.00
Highway Design Engineer (CP 7/8/) 1 16.00 16.00
Pavement/Materials Engineer (CP 1/2/3) 1 12.00 12.00
Pavement/Materials Engineer (CP 4/5/6) 1 12.00 12.00
Pavement/Materials Engineer (CP 7/8) 1 12.00 12.00
Structural (Bridge) Engineer (CP 1/2/3) 1 15.00 15.00
Structural (Bridge) Engineer (CP 4/5/6) 1 15.00 15.00
Structural (Bridge) Engineer (CP 7/8) 1 15.00 15.00
Quantity Surveyor (CP 1/2/3) 1 19.00 19.00
Quantity Surveyor (CP 4/5/6) 1 24.00 24.00
Quantity Surveyor (CP 7/8) 1 24.00 24.00
Topographic Surveyor (CP 1/2/3) 1 6.00 6.00
Topographic Surveyor (CP 4/5/6) 1 6.00 6.00
Topographic Surveyor (CP 7/8) 1 6.00 6.00
Resettlement Specialist (CP 1/2/3/4/5/6) 1 12.00 12.00
Environmental Specialist (CP 1/2/3/4/5/6) 1 12.00 12.00
Technical Officer - CP1 (2 persons per package) 2 18.00 36.00
Technical Officer - CP2 (2 persons per package) 2 18.00 36.00
Technical Officer - CP3 (2 persons per package) 2 15.00 30.00
Technical Officer - CP4 (2 persons per package) 2 20.00 40.00
Technical Officer - CP5 (2 persons per package) 2 18.00 36.00
Technical Officer - CP6 (2 persons per package) 2 24.00 48.00
Technical Officer - CP7 (2 persons per package) 2 18.00 36.00
Technical Officer - CP8 (2 persons per package) 2 18.00 36.00
Subtotal 44 745.00
 Terms of Reference for PIC-NH Attachment B 1-5

Note:
(i) Resident Engineers and Quantity Surveyors will provide intermittent service during the
Defects and Liability Period.

(ii) Technical Specialist (International) will be mobilized on as-needed basis and subject to
the Client's approval of the CV. CVs are required for inclusion in the technical proposal.

(iii) CVs of Topographical Surveyors and Technical Officers (Local Staff) are not required for
inclusion in the proposal and will not be evaluated. However, CVs must be submitted to
client for approval prior to mobilization.

(iv) The estimated person-months are indicative, and the actual will vary based on actual
duration of works and will be paid on actual time-basis. As common basis for financial
proposal, the Consultants MUST use the staff person-months indicated above.

D. Reports, Deliverables and Time Schedule

7. The consulting services will be implemented over 25 calendar months from the
commencement date. During the defects liability period, the Consultant shall provide assistance
at appropriate intermittent intervals, including reviewing the defects liability certificate.

8. The PIC shall prepare and submit the following reports in the English language (5 copies
for Client and 2 copies for ADB). The final report shall be prepared in hardcopy and in CD-
ROM.

Report Description/Technical Accomplishments Timeframe

Inception Report Initial findings and, if appropriate, updated approach, 1.00 month from the
methodology, and work plan. commencement date
Monthly Progress Brief details of the work carried out during the previous Monthly
Reports month, the problems encountered or anticipated, together (by the 10th day of
with the steps taken or recommendations for their each month following
correction, and financial and physical progress to date. the inception report)
Project Completion In accordance with ADB's format. Within 3.00 months
Report from the completion of
the civil works.

E. Data, Local Services, Personnel, and Facilities to be provided by the Government

9. The RDA will provide the Consultant with the following:

(i) Access to data, records, and other information required to perform the assigned
tasks; and

(ii) Counterpart staff and engineers to work with the consultant.

10. The civil works contracts will provide the consultant with the following:

(i) Office space (including utilities, but excluding furnishings and furniture) for
international and national experts, and other as-needed technical support staff;
 1-6 Attachment B Terms of Reference for PIC-NH

(ii) Housing accommodation for consultant's National expert: Resident Engineers,

Assistant Resident Engineers, Highway Design Engineers, Pavement/Material
Engineers, Structural (Bridge) Engineers, Quantity Surveyors, Topographic
Surveyors, Resettlement Specialist, Environmental Specialists, and Technical
Officers;

(iii) Vehicles for site supervision:

International: TL/CRE

National: Resident Engineers (1 each)

Assistant Resident Engineers (1 each)

(iv) Motorbikes - Technical Officers (1 each)

11. The consultant will be responsible for the following:

(i) Accommodation for international staff (TL/CRE and as-needed Technical

Specialists);

(ii) Office furnishings, communication, and various equipment required to carry out
the assignment;

(iii) Office stationery/supplies; and

(iv) Any other items not provided by the RDA or Civil Works Contracts.
 Terms of Reference for PIC PR Attachment C 1-1

Terms of Reference
Project Implementation Consultant for Provincial Roads Component

A. Objectives

1. The main objective is to assist the NPRDD ("the Employer") in implementing the project
by: carrying out the supervision/administration of the civil works contracts; conducting on-the-job
training for the Employer's staff; preparing project performance management system, and
reporting and documenting progress.

B. Scope of Services

2. Construction Supervision and Contract Management. The project implementation

consultant (PIC) shall perform the following tasks:
Task (i) approving contractor's work program, method statements, material sources, etc.;
Task (ii) approving and/or issuing working drawings, approving the setting out of the works,
and giving instructions to the contractor;
Task (iii) reviewing the quality control programs of the contractors;
Task (iv) inspecting materials and works to ensure compliance with specifications and giving
immediate notice to the contractor in the event that such materials and works fail to
comply with the specifications;
Task (v) accepting or rejecting any part or parts of the completed works;
Task (vi) making measurements and keeping measurement records;
Task (vii) maintaining records, correspondence, and diaries;
Task (viii) certifying work volume and interim certificates for progress payments;
Task (ix) assisting the Employer's representative with the maintenance of consolidated
project accounts, and with preparation of financial statements and withdrawal
applications for submission to ADB;
Task (x) certifying completion of part or all of the works;
Task (xi) assisting the Employer in preparing withdrawal applications for contractor
payments;
Task (xii) periodically checking the remaining quantities, and undertaking constant
monitoring of each contract’s costs;
Task (xiii) reviewing and recommending to the Employer variation orders, extensions of time,
claims, and other matters that may come from each contractor;
Task (xiv) negotiating with each contractor and recommending to the Employer the rates for
any unscheduled items of work that may arise;
Task (xv) advising the Employer's representative on all matters relating to the execution of
the works; and assisting the representative with processing the contractor's
possible claims;
Task (xvi) ensuring compliance with the environmental and social impact mitigation
requirements of civil works contracts, and providing information to ADB on those
 1-2 Attachment C Terms of Reference for PIC-PR

processes in the monthly progress reports.;

Task (xvii) preparing, at the completion of the contracts, a consolidated project completion
report in a format provided by ADB;
Task (xviii) checking and certifying as-built drawings for the works prepared by the contractors;
Task (xix) inspecting the works at appropriate intervals during the defects liability period and
certifying the defects liability certificate for issuance by the Employer's
representative;
Task (xx) providing the Employer with complete records, and inception, monthly, and
completion reports; and
Task (xxi) assisting the Employer to provide on-site training where required for the
Employer's field staff on quality assurance and contract administration.
Task (xxii) assisting and training the Employer's staff to monitor and administer the
performance based maintenance portion of the civil works contract (immediately
following the full or sectional transfer of completed works).
Task (xxiii) Supervise the implementation of the Environmental Management Plan (EMP) and
prepare regular monitoring reports to be included in the consultant’s monthly
progress reports.

3. Project Performance Management System. The PIC shall perform the following tasks:
Task (xxiv) undertaking project performance management system in the format acceptable by
the employer and ADB;
Task (xxv) preparing in the initial stage a project performance management system, in
accordance with the ADB's project design and monitoring framework, to monitor (i)
the progress of the overall project implementation, and (ii) the development impact
of the project; and
Task (xxvi) collecting/updating the project performance indicator benchmarks.

4. Other Services. The PIC shall perform the following tasks:

Task (xxvii) Project information on website. The consultant will assist MLGPC and NPC create
a Project website to disclose information about various matters on the Project,
including procurement. With regard to procurement, the website will include
information on the list of participating bidders, name of the winning bidder, basic
details on bidding procedures adopted amount of contract awarded, and the list of
goods/services procured. These Project websites will have links to show both the
national road and provincial road components of the Project; and
Task (xxviii) Grievance Redress Mechanism. Within 2 months of commencement of services,
assist MLGPC to prepare a Grievance Redress Mechanism, acceptable to ADB,
and assist establishing a task force at the NPRDD for NPC to receive and resolve
complaints/grievances or act upon reports from stakeholders on misuse of funds
and other irregularities, including grievances due to resettlement and
environmental issues. The task force will (i) make public the existence of this
Grievance Redress Mechanism, through a public awareness campaign, (ii) review
and address grievances of stakeholders of the Project, in relation to either the
Project, any of the service providers, or any person responsible for carrying out any
 Terms of Reference for PIC PR Attachment C 1-3

aspect of the Project; and (iii) proactively and constructively respond to the

C. Implementation Arrangements

4. The consulting services will be implemented by a firm of international consultants. An

association with a suitable domestic consultant is encouraged to compliment consultant's local
knowledge and experience. It is anticipated that the following international and local staff will be
required:

INTERNATIONAL PROFESSIONAL STAFF

Position Qty Number of Total

Person-Months Person-Months
Team Leader/Chief Resident Engineer 1 27.00 27.00
Technical Specialists (As-Needed Basis) 1 8.00 8.00

Subtotal 2 35.00

LOCAL PROFESSIONAL STAFF

Position Qty Number of Total

Person-Months Person-Months
Resident Engineer 1 29.00 29.00
Assistant RE (per package) 6 24.00 144.00
Highway Design Engineer (per district) 2 18.00 36.00
Pavement/Materials Engineer 1 27.00 27.00
Structural (Bridge) Engineer 1 18.00 18.00
Quantity Surveyor (per district) 2 29.00 58.00
Resettlement Specialist 1 24.00 24.00
Environmental Specialist 1 12.00 12.00
Technical Officer - Road (3 persons per package) 18 24.00 432.00

Subtotal 33 780.00

Note:
(i) Resident Engineer and Quantity Surveyors will provide intermittent service during the
Defects and Liability Period.

(ii) Technical Specialist (International) will be mobilized on as-needed basis and subject to
the Client's approval of the CV. CVs are required for inclusion in the technical proposal.

(iii) CVs of Technical Officers (Local Staff) are not required for inclusion in the proposal and
will not be evaluated. However, CVs must be submitted to client for approval prior to
mobilization.

(iv) The estimated person-months are indicative, and the actual will vary based on actual
duration of works and will be paid on actual time-basis. As common basis for financial
proposal, the Consultants MUST use the staff person-months indicated above.
 1-4 Attachment C Terms of Reference for PIC-PR

D. Reports, Deliverables and Time Schedule

5. The consulting services will be implemented over 27 calendar months from the
commencement date. During the defects liability period, the Consultant shall provide assistance
at appropriate intermittent intervals, including reviewing the defects liability certificate.

6. The PIC shall prepare and submit the following reports in the English language (5 copies
for Client and 2 copies for ADB). The final report shall be prepared in hardcopy and in CD-
ROM.

Report Description/Technical Accomplishments Timeframe

Inception Report Initial findings and, if appropriate, updated approach, 1.00 month from the
methodology, and work plan. commencement date
Monthly Progress Brief details of the work carried out during the previous Monthly
Reports month, the problems encountered or anticipated, together (by the 10th day of
with the steps taken or recommendations for their each month following
correction, and financial and physical progress to date. the inception report)
Project Completion In accordance with ADB's format. Within 3.00 months
Report from the completion of
the civil works.

E. Data, Local Services, Personnel, and Facilities to be provided by the Government

7. The NPRDD will provide the Consultant with the following:

(i) Access to data, records, and other information required to perform the assigned
tasks; and

(ii) Counterpart staff and engineers to work with the consultant.

8. The civil works contracts will provide the consultant with the following:

(i) Field office space (including furnishing, utilities, and stationary supplies) for following
National Experts: Assistant Resident Engineers and Technical officers, and other
as-needed technical support staff);

(ii) Housing accommodation for consultant's National expert: Resident Engineer,

Assistant Resident Engineers, Highway Design Engineer, Pavement/Material
Engineer, Structural (Bridge) Engineer, Quantity Surveyor, Resettlement
Specialist, Environmental Specialists, and Technical Officers;

(iii) Office stationary/supplies;

(iv) Vehicles for site supervision;

International: TL/CRE (1 each)

National: Resident Engineer (1 each)

Assistant Resident Engineers (1 each)
Consultant's core team (3 pool vehicles)
 Terms of Reference for PIC PR Attachment C 1-5

(v) Motorbikes; Technical Officers (1 each).

9. The consultant will be responsible for the following:

(i) Project office spaces in Vavuniya, Northern Province (including furnishings,

furniture, utilities, communication, stationary, and various office equipment
required to carry out the assignment) for consultant's core team consisting of:

International
Team Leader/Chief Resident Engineer (TL/CRE)
Technical Specialists (As-Needed)

National
Resident Engineer
Highway Design Engineer
Pavement Materials Engineer
Structural (Bridge) Engineer
Quantity Surveyor
Resettlement Specialist
Environmental Specialist
Other Office Support Staff

(ii) Accommodation for international staff (TL/CRE and as-needed Technical

Specialists); and

(iii) Any other items not provided by the NPRDD or Civil Works Contracts.
 Attachment D 1

TECHNICAL ASSISTANCE FOR

CAPACITY DEVELOPMENT OF THE NORTHERN PROVINCIAL ROAD DEVELOPMENT
DEPARTMENT:
OUTLINE TERMS OF REFERENCE FOR CONSULTING SERVICES

A. Objectives

1. The main objective is strengthening the capacity of NPRDD to effectively carryout its
main responsibility of managing and maintaining the provincial road network efficiently and
economically. The primary tasks are

(i) Preparing capacity development plan for improved organizational arrangement,

optimized staffing allocation and assignments, need-based training programs,
and modernized financial and management information system;

(ii) Implementing functional road maintenance management system, consisting of

completing the road/structure inventory of existing conditions, preparing
prioritized 3-year rolling work program including yearly maintenance program and
budget;

(iii) Carrying out need based in-house and oversea training programs in project
management, contract administration, financial management, performance-
based maintenance, and road safety; and

(iv) Implementing functional management information system comprising peer-to-

peer computer network system, office equipment, office software, and basic
financial and accounting software

B. Scope of Services

2. The consulting services will be carried out by individual international and national
consultants with the following terms of references.

1. Team Leader / Road Maintenance Planning and Operation Specialist

(international, 12 person-months)

3. Organization and Management. Responsibilities of the consultant include the following:

(i) Organization and management. Assess and propose necessary improvements

for organizational effectiveness: clear functional responsibilities by department
and district offices, efficient reporting structure and procedure, and staffing
allocation with description of duties and responsibilities for each position. In
consultation with NPRDD management, identify specific improvements to be
implemented within an agreed time frame.
(ii) Training. Conduct a diagnostic needs assessment of the current technical and
management skills and capacity, identifying specific deficiencies and proposing
targeted improvements with a time frame. Based on this, develop and implement
practical training programs consisting of in-house workshops and international
seminars. Recommend an effective setup for the on-the-job training, to be
provided by the project implementation consultant, and monitor progress.
2 Attachment D

(iii) Financial and Management information system. Provide functional

parameters to the national consultant based on NPRDD's operating requirements
(i.e., reporting, budgeting, financial management, accounting, and the new
computerized road maintenance system). Review the national consultant's
assessment and monitor and/or assist in procuring the recommended hardware
and software.
(iv) Capacity development plan. Based on the outputs of tasks (i), (ii), and (iii);
prepare a capacity development plan for NPRDD, consisting of needs
assessment, description of improvement programs with implementation time
frame, and indicators and milestones for measuring progress and achievements.
(v) Office facilities. Assist NPRDD in designing and constructing a modern office
facility to meet current and future requirements.

4. Road Maintenance Management System (RMMS). Responsibilities of the consultant

include the following:

(i) Develop and implement a simple and practical road maintenance management
system (RMMS) to effectively plan and program road maintenance and budget
This includes (a) updating and completing the road and bridge inventory
conditions by adapting simple visual logging and evaluation techniques using
suitable road and bridge maintenance software; and (b) using commercially
available (easy-to-use) software with local base map to store and analyze road
and bridge conditions survey data.
(ii) Prepare annual maintenance program based on expected budget allocation.
(iii) Prepare road maintenance budget applications for all fiscal years during project
implementation in accordance with the government budgeting cycle.
(iv) Prepare 3-year rolling road maintenance plans.
(v) Based on tasks (i), (ii), (iii), and (iv), prepare an operations manual for RMMS,
works programming, and budgeting; describing detailed steps and procedures.
(vi) Train designated NPRDD staff on achieving proficiency in operating the RMMS
and preparing work programs and budgets.

Table 1: Reports, Deliverables, and Schedule

Report Description/Technical Time Frame
Accomplishments (number of months
after commencement)
Inception Report Needs assessment for tasks (3.i), (3.ii),
and (3.iii). Proposes changes, if any, in 1.0
the approach and methodology.
Capacity Development Plan (CDP) Task (3.iv) 3.0

CDP Implementation Progress Task (3.iv) – update CDP as Every 3.0 months after
Report appropriate and report implementation preparing CDP
progress
Road Maintenance Management Task (4.i) 7.0
System (RMMS)
Annual Works Program Task (4.ii) 8.0
Road Maintenance Budget Task (4.iii) 10.0
Applications
 Attachment D 3

Report Description/Technical Time Frame

Accomplishments (number of months
after commencement)
3-Year Rolling Road Investment Task (4.iv) 11.0
Plan
Operation Manual for RMMS, Task (4.v) 11.0
Preparing Works Program and
Budgeting
Final Report Summarize major achievements 12.0
covering all tasks

2. Pavement and Material Specialist (national, 10 person-months)

5. Responsibilities of the consultant include the following:

(i) Assist the team leader in developing and establishing an RMMS.

(ii) Assist NPRDD in updating and completing the database of road inventory and
pavement conditions in support of the RMMS. Provide updated database of road
inventory and conditions survey (within 6 months from commencement date).
(iii) Assist the team leader in analyzing the road conditions survey data and
preparing annual works program, road maintenance budget allocation, and 3-
year rolling road investment plans (within 10-months from commencement date).
(iv) Provide as-needed inputs for preparing the operation manual for the RMMS and
preparing works programming and budgeting.
(v) Provide as-needed inputs and assistance for conducting in-house work shops
and seminars for updating road inventory and condition surveys (intermittent
within 12-months from commencement date).

3. Management Information System Specialist (national, 6 person-months)

6. Responsibilities of the consultant include the following:

(i) In support of the capacity development plan for NPRDD and based on function
requirements provided by the team leader, develop and implement a simple and
practical management information system consisting of peer-to-peer office local
area network, basic office software, and designated website for NPRDD. Provide
as-needed inputs and assistance for conducting in-house work shops and
training related to the management information system (intermittent within
12 months from commencement date.
(ii) Conduct needs assessment and prepare a list of required hardware and software
for procurement (within 1-months from commencement date).
(iii) Assist NPRDD in procuring related goods and services.

7. The consultant will assist in installing and running selected software for the RMMS.
4 Attachment D

C. Cost Estimates and Financing Plan

8. The TA is estimated to cost $560,000 equivalent. ADB will finance $500,000 equivalent
on a grant basis from ADB’s TA funding program (Technical Assistance Special Fund-IV). The
Government's counterpart in-kind contribution will be $60,000 equivalent. A vehicle (a basic
utility double-cap) is required to implement the TA in order to carryout road inventory and
condition survey during the implementation by the Consultant and to update the survey after the
completion by the Government. This vehicle will be purchased as ADB’s property and may be
used only for the purposes of the TA. The Government will make sure that the registration fees
and insurance premiums for vehicles are paid, which will facilitate transferring the vehicles to
the Government when the TA is completed.

Table 2: Cost Estimate

($'000)

Total
Item Cost

A. Asian Development Bank Financing (a)

1. Consultants
a. Remuneration and Per Diem
i. International Consultants 186.0
ii. National Consultants 48.0
b. International and Local Travel 10.0
c. Reports and Communications 1.0
2. Equipment (Vehicles, Portable weigh for axle load, IT hardware/software) (b) 175.0
3. Training, Seminars Abroad, and Workshops 30.0
4. Surveys 15.0
5. Miscellaneous Administration and Support Costs 5.0
6. Contingencies 30.0
Subtotal (A) 500.0
B. Government Financing
1. Equipment (Vehicles, IT hardware/software) (b) 20.0
2. Remuneration and Per Diem of Counterpart Staff 30.0
3. Others 10.0
Subtotal (B) 60.0

Total 560.0
a
Financed by the Asian Development Bank’s technical assistance funding program (TASF-IV resources).
b
Equipment will be purchased, utilized for road condition surveys, and turned over to the Government upon
completion of the technical assistance (to carryout surveys on regular basis).
Source: Asian Development Bank
 Project Classification Summary - Concept clearance (operational department) Page 1 of 2

Partner Country * SRI Subregion - Geographical Area Asia Region South Asia
Project Name: For approval in year 2010
Please indicate Regional project (regional partnership strategy or regional business plan)
2 Filename:
whether the project is V:\Project Classification\1-Operations\SARD\SRI\2010-SRI-
identified as National project (in CPS, COBP) Transport and ICT(Northern Road Connectivity Project)-
LOAN.xls
TA Key project features [Please provide key information on projecrt background and design
Investment
features]:
Project development stage grant loan/debt/equity guarant
The Project is proposed to rehabilitate about 140 km of provincial roads and 108 km of
ee syndica
PPTA CDTA PATA RDTA ADF others ADF OCR others national highways within NP and improve about 62 km of link national highways in the
tion
Concept clearance FALSE TRUE ##### FALSE TRUE TRUE ##### FALSE North Central Province (NCP) including a section of A009 which serves as the backbone
arterial highway connecting to south. The Project is timely and targeted - to help restore
accessibility to essential social services for rural people in NP and to improve its nation
Project Components (products): [Please wide connectivity. It will facilitate economic growth and contribute to reducing disparities
ADB Project Number
note that the whole project is classified; in Sri Lanka, consistent with the key goals of the Government’s 10-Year Development
Finance (Add product Department Division Mission Leader
prodcts of one project are then classified Framework (10YDF, 2007-2016), which emphasizes equitable growth.
(million USD) numbers if applicable)
automatically according to the pro-rated
154.40 42254-01-3 SARD SATC Lee,Dong Kyu
Piggy-backed CDTA 0.50 42254-01-2 SARD SATC Lee,Dong Kyu

Location Impact (%, total project)

If the project is an MFF, provide below the MFF Number and MFF Financing
National Projects
Weight Regional
rural urban national
Project Financing Modalities and Partnerships (in million USD)
[Please show the impact as high,
Please note that classification of MFF products require each subproject to be medium or low]
H L M L
Total project costs 173.56
classified separately. The classification for the first project also comprises the
Government (including contributions of beneficiaries) classification for the road map. However, project cost is for the first subproject For projects where the impact is on the
18.66 only and not for the whole MFF cluster. country: High = 45%-100%, Medium = 50% 10% 30% 10%
and sponsors 25%-40%, Low = 5%-20%

Partnerships 0.00 grants concessional commercial identity of partner (name, amount ADB financial contribution (US$) $77.45 $15.49 $46.47 $15.49
million USD)
Direct Value Added Cofinancing (DVA) under ADB
0.00
adminisration and/or guarantee arrangement
targeting inclusiveness of growth and social
Other Partnerships 0.00
development (more directly addressing)
investment technical assistance MDG related

syndication
guaran tee
loan grant loan
TRUE grant general intervention (GI) addressing geographical social and
income poverty
ADB financing modalities 154.90 dimensions of poverty (TI- environmental

CDTA

RDTA
PATA
equity

PPTA
(TI-H)
G) inclusiveness (TI-
ADF OCR ADF others M)
Country
154.90 24.40 130.00 0.50
Allocation 1
sovereign financing MDG 1a Income Poverty
Regional MDG 1b Hunger
0.00 If MDG, please identify (1 - 8)
Allocations MDG 2 Education
Country Targeting poverty reduction and inclusiveness of growth and social development
0.00
Allocation [Please provide rationale for GI or TI-G or TI-M or TI-H classification] :
non-sovereign financing The Project supports the strategic objective established in ADB's Country Strategy and
Regional
0.00 Program (2009-2011): To improve transport system in Sri Lanka, promoting regionally
Allocations
balanced and socially inclusive economic growth.
Note: DVA = cofinancing under administrative or collaborative arrrangement with ADB. Guarantees and partner financing administered by ADB (trust funds, project grants, syndications) will be refle
both under ADB as well as DVA cofinancing; however they will will be counted only once in the total financing volume, in order to avoid double counting. Only actual amounts in partynership financing
shall be accepted, even if the figures and partners are indicative.

Weight and
Contributions to Strategic Development Results (outcomes, %, based on total project)
Quantification of
Thematic Impact economic social development environmental sustainability regional cooperation (REC) gender equity (GEN) private sector development governance (GOV) capacity development (CAD)
Contribution growth (GRO) (SOC) (ENV) (PSD)

Strategy 2020 pillars (inclusive growth, environmental sustainable growth, regional cooperation and
Strategy 2020 drivers of change
integration)
Choose up to 4 themes (at
least 1 of the 4 has to be TRUE FALSE FALSE FALSE FALSE FALSE FALSE TRUE
GRO, SOC, ENV, RIC)
Indicate (1) one primary
impact contribution of the 1
j t choose any
Please promoting
GRO macroec
(widening human development natural resources conservation crossborder infrastructure gender equity in (human) ca policy reforms economic and financial gov institutional development
CAD (institutional development)
promoting
access to economi
markets indigenous people urban environmental improvement trade and investments gender equity in (economic) private sector investment public administration (natio organizational development
number of subthemes
widening access to other vulnerable groups eco-efficiency money and finance gender equity in empowerm public-private partnerships civil society participation client relations, network, and partner
from the themes intially and economic
knowledge, science involuntary resettlemen global and regional transboundary e other regional public goods regional gender equity initiat privatization anticorruption
marked opportunities) disaster risk manageme environmental policy and legislation promote gender equity
subthemes chosen for If the project addresses environmental impact or disaster risk mitigation, does it address
this project climate change? Please quantify the climate change contribution as percent of total
contribution of environment or inclusive social development field.
Yes, through No
selected themes (and subthemes):
GRO (widening access to markets and economic opportunities); CAD (institutional development);
adaptation mitigation 4
H-High, M-
Medium, L-Low
impact
%(H=45-100, M=25-
40, L=5-20)
 Project Classification Summary - Concept clearance (operational department) Page 2 of 2

Partner Country * SRI Subregion - Geographical Area Asia Region South Asia
Project Name: For approval in year 2010
Please indicate Regional project (regional partnership strategy or regional business plan)
2 Filename:
whether the project is V:\Project Classification\1-Operations\SARD\SRI\2010-SRI-
identified as National project (in CPS, COBP) Transport and ICT(Northern Road Connectivity Project)-
LOAN.xls
ADB Gov't./S Private ODA NGO, Benef. Sub- KTotal (%/USD)
j tf t [Pl id k i f ti j tb k d dd i
ponsor Sector foun sector Key Activity Areas of the project:
Primary Sector: Total Proj Cost: Key Activity Areas:
dation outputs
road transport
Transport and ICT 173.56 (million
USD)
Total OCR ADF ADF Other
ADB Loan/ Loan Grant Grant
Primary Subsector: Total ADB Cost:
Equity/
road transport 154.90 Guarant
ee

Subsectors Key Activity Areas: 154.90 130.00 24.40 0.00 0.50 18.66 0.00 0.00 0.00 0.00 173.56 100%
road transport
Transport and ICT urbantransport
road transport
transport management and policies 154.90 130.00 24.40 0.50 18.66 173.56 100%
Key Activity Areas of ADB finance components (Please choose from the list
0.00 0% above)
road transport

0.00 0%

0.00 0%

0.00 0%

0.00 0%

Location Classification (Please explain the impact chain)

0.00 0%

0.00 0%

0.00 0%

0.00 0%

Total ADB Finance by Total ADB OCR ADF ADF Other

0.00 Sector classification (Please explain the impact chain) Thematic Classification (Please explain the impact chain)
Sector Loan Loan Grant Grant
Agriculture and Natural Resources 0.00 0.00 0.00 0.00 0.00
Education 0.00 0.00 0.00 0.00 0.00
Energy 0.00 0.00 0.00 0.00 0.00
Finance 0.00 0.00 0.00 0.00 0.00
Health and Social Protection 0.00 0.00 0.00 0.00 0.00
Industry and Trade 0.00 0.00 0.00 0.00 0.00
Water Supply and other Municipal
Infrastructure and Services 0.00 0.00 0.00 0.00 0.00
Public Sector Management 0.00 0.00 0.00 0.00 0.00
Transport and ICT 0.00 0.00 0.00 0.00 0.00
User Departments Custodian (RSDD)
Department Division Full Name Tel. Date Division Full Name Tel. Date
SARD SATC Lee,Dong Kyu 4157 8-Mar-2010
 CONTRIBUTION TO THE ADB RESULTS FRAMEWORK
(Sri Lanka: Northern Road Connectivity Project)

No. Results Framework Indicators Targets Methods Used

Transport
1. Expressways built or upgraded (km) none
2. National highways, provincial, district, and rural 310 Actual physical measurement
roads built or upgraded (km) of the output
3. Railways constructed and/or upgraded (km) none
4. Beneficiaries from road projects (number) 339,000 Population in the project
influence area
km = kilometer
Source: Asian Development Bank
 DEVELOPMENT COORDINATION
(Sri Lanka: Northern Road Connectivity Project)

A. Major Development Partners: Strategic Focus and Key Activities

1. In Sri Lanka, the major development partners of the Asian Development Bank (ADB) in
the road transport subsector are the World Bank and Japan International Cooperation Agency
(JICA). The three development partners closely coordinate their strategies and collaborate on
key focus areas. Ongoing coordination includes the following:

(i) Sector Level. The major development partners in the road transport sub sectors
are ADB, WB, and JICA. With respect to institutional and capacity strengthening,
there is a coordinated strategy to focus each partner's activities - institutional
capacity strengthening by ADB, strengthening the capacity of domestic
contractors by JICA, and road maintenance by WB.

(ii) Project. Coordination includes the following:

(a) Project preparation. The Government has utilized the ADB-funded Road
Project Preparatory Facility1 to prepare projects to be funded by ADB as
well as other development partners. Both the World Bank and JICA have
used the Road Project Preparatory Facility to prepare their investment
projects. The arrangement has helped the three development partners to
harmonize project design and implementation arrangements.
(b) Geographic coverage. ADB, the World Bank, and JICA conduct close
consultations to ensure wide geographic coverage, avoid overlap, and
help spread the benefits in an equitable manner. For the provincial roads
under the Northern Road Connectivity Project, ADB closely coordinated
the geographic coverage with the World Bank. The ADB project will cover
two of the five districts in Northern Province (Mannar and Vavuniya); the
World Bank's pipeline project in 2010 will cover one district (Jaffna). The
two remaining districts, Mullaitivuu and Kilinochchi, are expected be
covered under ADB's 2011 program.
(c) Implementation efficiency. ADB, the World Bank, and JICA coordinate
implementation arrangements in line with resource capacity of the
government's implementing agencies in order to maximize use of existing
resources and avoid overloading. ADB and the World Bank also closely
coordinate capacity strengthening programs to ensure adequate
coverage. The associated capacity development technical assistance
under the project will strengthen project management capacity of the
Northern Provincial Road Development Department, which will help
improve the implementation performance of the World Bank's pipeline
project in the Jaffna district, expected in late 2010.

2. While the project does not have any cofinancing arrangements, the World Bank, in
parallel, is expected to finance rehabilitation of about 100 kilometers of provincial roads in the

1
ADB. 2004. Report and Recommendation of the President to the Board of Directors: Proposed Technical
Assistance Loan to the Democratic Socialist Republic of Sri Lanka for the Road Project Preparatory Facility. Manila
(Loan 2080-SRI, for $15 million, approved on 13 April).
2

Jaffna district of Northern Province; this is being prepared by the ADB-funded Road Project
Preparatory Facility.

3. The following table presents the ongoing road transport subsector projects being funded
by the major development partners:

Major Development Partners

Develop-
ment Project Name Duration Amount
Sector and Theme Partner
Transport, and information ADB Eastern and North Central Jun 2009– $70 million
and communication Provincial Road Project Dec 2013
technology (road transport)
Transport, and information ADB National Highways Sector Nov 2005– $150 million
and communication Project Dec 2010
technology (road transport)
Transport, and information ADB Road Project Preparatory Sep 2004– $15 million
and communication Facility Dec 2010
technology (road transport)
Transport, and information ADB Southern Transport Nov 1999– $90 million
and communication Development Project Dec 2010 (original) +
technology (road transport) $90 million
(supplementary)
Transport, and information Japan Provincial/Rural Road Apr 2010– ¥4.0 billion
and communication International Development Project Mar 2013
technology (road transport) Cooperation (Eastern Province)
Agency
Transport, and information Japan Provincial/Rural Road Apr 2010– ¥9.0 billion
and communication International Development Project Jan 2014
technology (road transport) Cooperation (Central and Sabaragamuwa
Agency Province)
Transport, and information Japan Mannar Bridge and Jun 2007– ¥1.8 billion
and communication International Causeway Mar 2010
technology (road transport) Cooperation
Agency
Transport, and information Japan Southern Transport Expecting ¥1.8 billion
and communication International Development Project completion (original) +
technology (road transport) Cooperation I and II in 2011 ¥1.6 billion
Agency (supplementary)
Transport, and information World Bank Provincial Roads Project Dec 2009– $105 million
and communication Mar 2015
technology (road transport)
Transport, and information World Bank Road Sector Assistance Dec 2005– $100 million
and communication Project Sep 2011 (original) +
technology (road transport) $98.1 million
(supplementary)
ADB = Asian Development Bank.
Source: Asian Development Bank.

B. Institutional Arrangements and Processes for Development Coordination

4. The monthly development partner coordination meetings facilitate the development

coordination process for the major multilateral and bilateral development partners. Although
 3

institutional arrangements have not been formalized, the government organizes periodic
meetings to discuss priorities and provide a forum for discussion and coordination.

C. Achievements and Issues

5. ADB has a track record of active development coordination with major development
partners in the road transport subsector. Recent experiences and noteworthy achievements
include (i) the Southern Transport Development Project2 with parallel financing from ADB and
JICA; (ii) the Eastern and North Central Provincial Project3 with parallel financing from ADB, the
World Bank, and JICA.

6. An issue that requires further and more robust coordination is harmonization in the area
of procurement, such as the international competitive bidding threshold and domestic
preference eligibility. The project team has coordinated to closely harmonize, to the extent
possible, with recent and similar projects funded by the World Bank. In this regard, coordination
needs to be continued on a regular basis to ensure a consistent approach by the major
development partners.

D. Summary and Recommendations

7. The project's scope, and implementation arrangement and strategy reflect constructive
development coordination. This should be continued during the project's implementation and
lessons could be utilized in the design of future projects.

2
ADB. 1997. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical
Assistance Grant to the Democratic Socialist Republic of Sri Lanka for the Southern Provincial Roads Improvement
Project. Manila (Loan 1567-SRI, for $30 million, approved on 30 October).
3
ADB. 2009. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical
Assistance Grant to the Democratic Socialist Republic of Sri Lanka for the Eastern and North Central Provincial
Project. Manila (Loan 2546-SRI, for $70 million, approved on 16 September).
 ECONOMIC ANALYSIS
(Sri Lanka: Northern Road Connectivity Project)

1. The economic analysis for the Northern Road Connectivity Project was carried out using
the Highway Development Model 4 (HDM4) with input data on traffic, road geometry, condition,
pavement structure and material characteristics of the existing road, maintenance and road
improvement costs, and vehicle operating cost (VOC) parameters for representative vehicles in
Sri Lanka.

A. National Road Component

2. Base year traffic volume. Traffic volume was obtained from the classified traffic counts
carried out on project road sections for road sections located in North Central Province (NCP)
(A009 and A020) and traffic projections from 2005 (before the start of the escalated conflict)
where available or estimated based on 2005 traffic data from similar road sections. The average
daily traffic obtained as an average of 7 day counts was converted to annual average daily
traffic using seasonal correction factors derived from fuel consumption data. The 2009 traffic
estimates are based on the surveys and assessments are given in Table 1.

Table 1: Base Year Traffic on National Highway Sections

Share of Motorized Vehicles AADT
AADT Two- and AADT
(motorized Goods (nonmotorized
Three-
Road Section vehicles) Cars Buses Vehicles vehicles)
Wheelers
A009:
(i) Dambulla and Thonigala 3,629 41.7 22.9 12.6 22.8 164
(ii) Thonigala and Galkulama 2,848 38.3 27.5 12.8 21.4 160
A020: Anuradhapura–Rambewa 3,170 53.4 17.4 9.3 19.9 192
A032: Navathkuli–Kerativu jetty 3,651 23.1 30.0 9.4 37.5 3,283
A034: Mankulam–Mullaittivu 2,662 23.1 30.1 9.4 37.4 …
B437: Vallai–Araly 4,740 77.0 7.3 6.2 8.5 2,622
B268: Manipay–Kaithady 3,504 82.0 6.9 2.1 9.0 3,491
AADT = annual average daily traffic.
Sources: Road Development Authority

3. Traffic growth forecast. Socioeconomic data as well as vehicle and traffic growth data
available from different sources were collated and analyzed to derive traffic growth rates for the
traffic forecast. Both economic growth and population growth contribute to traffic growth. The
population growth observed in Sri Lanka for 2002–2007 is estimated at 1.04% per annum. The
overall Sri Lankan economy grew at an average 6.2% per annum between 2002 and 2007 in
real terms and maintained a growth rate of 6.0% in 2008. The projected a gross domestic
product growth rate in 2009 is 4.5%1 due to the global slowdown, and projected it to recover to
6.0% in 2010. No reliable traffic data are available for the project roads and hence no
assessment could be made of past traffic growth on these roads. The average annual traffic
growth rates reported for 1991–2006 for all national highways is 8.3%2 (Road Network Master
Plan, 2005).

1
ADB. 2010. Asian Development Outlook. Manila.
2
Road Development Authority. 2005. Road Network Master Plan. Sri Lanka.
2

4. Vehicle registration growth is another indicator of traffic growth. The total number of
registered vehicles in Sri Lanka increased at an annual growth rate of 10.2% from 2003 to 2007.
All registered vehicles excluding two- and three-wheelers show a growth rate of 6.7%.

5. Based on demographic and economic growth and vehicle registration growth, indicative
transport elasticity was derived for various vehicles. Future traffic growth is given in Table 2.
The underlying economic growth considered is 7.0% for 2010–2015, 8.0% for 2015–2020, 7.5%
for 2020–2025, and 7.0% for beyond 2025. During the expected global recovery period of the
next 2–3 years, the Sri Lankan economy as a whole is anticipated to grow at 6.0%. The
economy of the northern provinces will grow at a higher pace of 7% with the accelerated
development and consolidation after the conflict. Further reduced defence spending will help
accelerate economic growth to 8.0% in the following 5 years. This will then moderate slowly to
lower growth rates as the economy reaches a certain scale. An forecast is optimistic. The recent
growth trends in two- and three-wheelers indicate a very high growth rate; this is expected to
continue in the medium term.

Table 2: Growth Rates for Motorized Traffic (%)

Vehicle Category 2010–2015 2015–2020 2020–2025 Beyond 2025
Car 7.2 8.5 7.9 7.2
Three-wheelers 15.4 13.0 12.0 10.8
Motorcycle 11.8 12.4 11.3 9.6
Public bus 3.0 2.9 2.4 2.2
Goods vehicles 8.1 8.8 8.0 7.4
Agricultural tractors 8.4 9.2 8.3 7.6
Sources: Road Development Authority

6. Because all roads are in poor condition, the potential for traffic generation is great. With
improved road and reduced VOC, traffic generation is considered in the range of 20% due to
increased speed and reduced VOC. Further, accelerated development in Northern Province is
expected to induce additional traffic, estimated at 10%. Generated and induced traffic together
is taken as 30%.

7. The traffic forecast for the road sections located in NCP (A009 and A020) was
determined using a similar methodology as that used for national roads. A modified approach
was used for road sections located in Northern Province (A032, A034, B437, B268) to take into
account the local situation. The Jaffna and Mullaittivu districts are still characterized by a clear
lack of potential for physical and social (including confidence building) infrastructure for catch-
up, a lack of closeness to the mainstream economy of the nation, and the protracted civil war.
Through government investment programs, the basic condition for sustained growth is to be
realized. The return to normal traffic as projected for 2009 based on 2005 traffic and further
growth in line with national growth trends is expected to take at least 5 years. Based on these
considerations, traffic on Jaffna Peninsula roads is estimated to gradually reach the projections
as per the growth forecast (Table 2). For the economic analysis, traffic is assumed to reach 60%
of the projected volume by the opening year of 2012, and 100% by 2016.

8. Other input data. Information required to update the main VOC parameters—such as
vehicle prices; crew and maintenance labour cost; and tire, oil, and fuel costs—were gathered
and used for the feasibility study. Vehicle prices and prices of components and accessories are
net of taxes and duties, while fuel prices are at border prices. Value of travel time for
passengers and value of goods in transit were estimated and included in the economic analysis.
The average value of working time was estimated by calculating the income and employment
 3

cost per employed person. The value of time for passengers of various modes were calculated
by assuming a higher value for car passengers as observed in previous and similar studies.
Value of working time used is SLRs199 per hour for car passengers and SLRs124 per hour for
bus passengers. For goods in transit, time value was calculated using the method suggested in
the HDM manual—taking the value of cargo and the opportunity cost. The value of cargo delay
was estimated at SLR107 per hour. Other parameters adopted are given in the Table 3.

Table 3: Other Input Data

Other Input Parameter Value
Analysis period (years) 20
Discount rate (%) 12
Construction period (years) 2
Construction start year 2010
Opening year for traffic 2012
Salvage value (%) 10
Source: Asian Development Bank

9. Economic assessment. Based on the pavement condition and capacity analysis, an

improvement option was defined, which forms the with-project scenario. The without-project
scenario involves minimum maintenance to keep the road in operation, such as routine
maintenance and pothole patching. An economic evaluation was undertaken for each of the
road sections by comparing the with- and without-project scenarios and the output from the
HDM4 analysis (summarized in Table 4) to estimate the economic internal rate of return (EIRR)
and net present value (NPV in SLRs million) for the proposed project improvement option.
Benefits considered include the VOC savings and value of time savings.

10. The results indicate that the proposed improvements of the project roads are
economically viable yielding an EIRR of above 12% in all cases and in most cases it is
significantly higher indicating the high economic rate of return.

Table 4: Economic Analysis Results

NPV NPV/Capital
Road No. Road Name EIRR (%) (SLRs million) Cost Ratio
1 A009: Dambulla–Galkulama 21.8 4,336.7 0.98
2 A020: Anuradhapura–Rambewa 21.7 1,187.2 1.00
3 A032: Navathkuli–Kerativu jetty 20.4 1,541.2 0.84
4 A034: Mankulam–Mullaittivu 22.6 1,019.1 0.97
5 B437: Vallai–Araly 24.1 2,345.5 1.10
6 B268: Manipay–Kaithady 20.1 932.3 0.85
EIRR = economic internal rate of return, NPV = net present value.
Source: Asian Development Bank

11. Sensitivity analysis. Sensitivity analysis was carried out for the base case with respect
to adverse changes in the costs and benefits: (i) base case, (ii) construction cost increased by
15%, (iii) benefits (VOC and travel time savings) reduced by 15%, and (iv) construction cost
increased by 15% and benefits reduced by 15% (Table 5). All roads have EIRRs well above 12%
for the base case and adverse variation of 15% in costs and benefits. Therefore, all six roads
are recommended for implementation.
4

Table 5: Results of Sensitivity Analysis

EIRR (%)
Case Sensitivity Scenario
A009 A020 A032 A034 B437 B268
1Base case 21.8 21.7 20.4 22.6 24.1 20.1
2Construction cost increased by 15% 19.8 19.8 18.6 20.4 21.8 18.3
Benefits (VOC and travel time savings)
3 19.5 19.5 18.3 20.0 21.4 18.1
reduced by 15%
Construction costs increased by 15% and
4 17.7 17.7 16.5 18.0 19.3 16.4
benefits reduced by 15%
VOC = vehicle operating cost.
Source: Asian Development Bank

B. Provincial Road Component

13. Base year traffic volume. At present, traffic volume is low in the project area; on some
roads the current traffic does not provide a good base for predicting future traffic volume.
Classified traffic counts were carried out in late 2009 on three representative roads where
conditions were considered to be normal. For the other roads, estimates were made, based on
the density of population in the area served, assumed resettlement programs, and traffic volume
and composition on similar roads in other provinces.

14. Traffic growth forecast. The traffic growth forecast described for national road sections
in NCP (para. 7) can be applied to the traffic forecast for provincial road sections in neighboring
Mannar and Vavuniya districts of Northern Province. It could be slightly lower in the first few
years but is expected to catch up soon with neighbouring NCP. Projected traffic may not be
realized for a few years. This is accounted for in the economic analysis by assuming 75% of
projected traffic will be realized by the opening year and 100% by 2015. The potential for
generating traffic is significant as all roads are in poor to very poor condition and many are not
even sealed. With improved roads, traffic generation is considered in the range of 20% due to
increases in speed and reduced VOC. Further, accelerated development in Northern Province is
expected to induce additional traffic, estimated at 10%. Thus, the total generated and induced
traffic is estimated at 30%.

15. Economic assessment. An economic evaluation was undertaken for each of the road
sections as well as all road sections together by comparing the with- and without-project options
using the HDM-4 model (Table 6). The EIRR and NPV (in SLRs million) were prepared for the
proposed project improvement option, with benefits including VOC savings and time savings.

16. The results indicate that the proposed improvements of the project road sections
individually are economically viable yielding an EIRR of above 12% in all cases and in most
cases significantly higher, indicating the high economic rate of return. The overall provincial
road component has a high EIRR indicating that the project is justified in social cost–benefit
terms.

17. Sensitivity analysis. Sensitivity analysis was carried out for the base case with respect
to adverse changes in costs and benefits. The following cases were analyzed: (i) base case,
(ii) construction costs increased by 15%, (iii) benefits (VOC and travel time savings) reduced by
15%, and (iv) construction costs increased by 15% and benefits reduced by 15%.
 5

Table 6: Economic Analysis Results

Road No. Road Name EIRR (%) NPV (SLRs million)
1 Thalimannar Village Road 16.5 30.5
2 Esplanade Road 13.9 3.3
3 South Bar Road 15.6 9.8
4 Mannar–Thaivupadu–Tharanpuram 18.2 12.4
5 Olaithoduvai Road 15.3 18.9
6 Thoddavelli–Malupadi Road 13.7 7.3
7 Vankalai–Sirrunavatkulam Road 13.6 5.3
8 Pesalai–Vauadipanai Road 12.8 2.3
9 Pallimunai Beach Road 26.5 25.0
10 Uyilankulam–Manadkulam 19.3 38.0
11 Puthukamam Road 13.8 5.2
12 Karisal Road 14.4 2.3
13 Veppankulam–Periyamurippu Road 16.8 150.1
14 Murungan–Nanaddan 28.9 58.5
15 Approach Road to Public Building 14.5 9.3
16 Madhukandai–Iretperiyakulam 16.8 86.1
17 Mahiankulan–Pallamadu Road 49.9 1,084.4
18 Puthoor–Palamoddai Road 15.9 127.8
19 Intperiyakulam–Puthoor Road 14.5 24.4
20 Cheddikulam–Thudarikulam 21.2 131.9
21 Mankulam–Maruthamadhu 17.8 22.5
22 Pandichurichchan 15.5 23.8
All road sections together 21.3 1,879.0
EIRR = economic internal rate of return, NPV = net present value.
Source: Asian Development Bank

18. The sensitivity analysis was carried out for the provincial road component as a whole
(Table 7). The EIRR is above 12% in all scenarios including the combination of increased costs
and reduced benefits indicating the economic viability. Some of the individual provincial road
sections, which have slightly above the acceptable EIRR of 12% (Table 5), when subjected to
worse case sensitivity scenario of cost increase by 15% and benefit reduction by 15%, may
have an EIRR less than 12%. However, these provincial road sections provide essential
accessibility to the rural and poor population in interior areas. Based on the findings of the
economic assessment, the proposed improvements under the project are economically viable
and sustainable, and are justified in social cost–benefit terms.

Table 7: Results of Sensitivity Analysis, Provincial Road Component

Case Sensitivity Scenario EIRR (%) NPV (SLRs million)
1 Base case 21.3 1,879.0
2 Construction costs increased by 15% 19.1 1,578.5
3 Benefits (VOC and time savings) reduced by 15% 18.7 1,296.6
Construction costs increased by 15% and benefits
4 16.7 996.1
reduced by 15%
EIRR = economic internal rate of return, NPV = net present value, VOC = vehicle operating cost.
Source: Asian Development Bank
 COUNTRY ECONOMIC INDICATORS
(Sri Lanka: Proposed Northern Road Connectivity Project)
(as of 02 Feb 2010)

Fiscal Year
Item 2005 2006 2007 2008 2009
Latest
A. Income and Growth
1. GDP per Capita ($, current) 1,241 1,421 1,617 2,016 2,094 a
2. GDP Growth (%, in constant prices) 6.2 7.7 6.8 6.0 3.5 a
a. Agriculture 1.8 6.3 3.3 7.5 3.3 a
b. Industry 8.0 8.1 7.6 5.9 3.6 a
c. Services 6.4 7.7 7.1 5.6 3.5 a
B. Saving and Investment (current and market prices, % of GDP)
1. Gross Domestic Investment 26.8 28.0 28.0 27.5
2. Gross National Saving 23.8 22.3 23.3 18.2
C. Money and Inflation (annual change)
1. Consumer Price Index 11.0 10.0 15.8 22.6 3.4 b
2. Total Liquidity (M2b) 19.1 17.8 16.6 8.5 18.7 c
D. Government Finance (% of GDP)
1. Revenue and Grants 16.8 17.3 16.7 15.6 15.0 d
2. Expenditure and net lending 23.8 24.3 23.5 22.6 21.9 d
3. Overall Fiscal Surplus (deficit) (8.4) (8.0) (7.7) (7.7) (7.0) d
E. Balance of Payments
1. Merchandise Trade Balance (% of GDP) (10.3) (11.9) (11.0) (14.0)
2. Current Account Balance (% of GDP) (2.7) (5.3) (4.3) (9.3)
3. Merchandise Export ($) Growth 10.2 8.4 12.5 6.5 (14.7) e
(annual % change)
4. Merchandise Import ($) Growth 10.8 15.7 10.2 24.0 (31.9) e
(annual % change)
F. External Payments Indicators
1. Gross Official Reserves (including gold, $ 14.8 13.2 14.8 6.0 25.6 f
million in weeks of current year’s imports of
goods)
2. Gross Official Reserves ($ million) 2,458 2,515 3,063 1,753 5,228 f
3. External Debt Service (% of exports of 7.9 12.7 13.1 15.0 16.9 g
goods and services)
4. Total External Debt (% of GDP) 46.5 42.4 43.2 37.1
G. Memorandum Items
1. GDP (current prices, SLRs billion) 2,453 2,939 3,578 4,411 4,911 a
2. Exchange Rate (SLRs/$, average) 100.50 103.96 110.62 108.33 114.94
3. Population (million) 19.7 19.9 20.0 20.2 20.4
( ) = negative, GDP = gross domestic product. SLR= Sri Lankan Rupees
a
CBSL Projected Figure for 2009
b
Annual average change to December 2009. Year on year change to December 2009 was 4.8%.
c
Annual change to November 2009
d
Based on the revised estimates by the Ministry of Finance and Planning in July 2009
e
January –November 2008/2009 period
f
January – November 2009
g
For the first half of 2009
Sources: Central Bank of Sri Lanka Recent Economic Developments: Highlights of 2009 and Prospects for 2010,
Central Bank Website Weekly Economic Indicators 08 January 2010, Selected Economic Indicators November 2009
 SUMMARY POVERTY REDUCTION AND SOCIAL STRATEGY
(Sri Lanka: Northern Road Connectivity Project)
Country and Project Title: Sri Lanka: Northern Road Connectivity Project

Lending/Financing Department/ South Asia Department/

Project Loan
Modality: Division: Transport and Communications Division

I. POVERTY ANALYSIS AND STRATEGY

A. Link to the National Poverty Reduction Strategy and Country Partnership Strategy
The country was on a track to achieve the Millennium Development Goal by reducing the percentage of total
population living in poverty to 15% in 2008. However, the incidence of poverty in conflict-affected regions in the
northern and eastern areas is estimated at around 37% compared with the national average of 15%. About 300,000
people were internally displaced during 2008–2009. With the end of conflict in May 2009, the Government of Sri
Lanka has given high priority to the resettlement of internally displaced people, and reconstruction and development
of infrastructure in these two regions. The government prepared a development framework under Mahinda
Chintanaya, a Vision for Sri Lanka in 2006, and a special development program, Wadakkin Wasantham or Northern
Spring, from 2009 to 2012 to focus on infrastructure development, resettlement of internally displaced people, and
livelihood restoration. The implementation of projects under these special development programs will strengthen the
investment climate and achieve socially inclusive and regionally balanced economic growth. The development
strategy of the government is aligned with ADB's country strategy and program1, which has a major objective of
developing infrastructure in the northern and eastern provinces. One of the obstacles for reducing poverty is poor
infrastructure, especially the present road network that does not provide adequate transport facilities and connectivity
between the conflict-affected regions and the rest of the country..

The project will improve connectivity in the road transport networks of two conflict-affected provinces: Northern
Province and North Central Province (NCP). The rehabilitation of about 62 kilometers (km) of national roads in
Anuradhapura district of NCP, 108 km of national roads in Jaffna and Mullaitivu districts, and about 140 km of
provincial roads in Mannar and Vavunia districts within Northern Province will improve transport facilities and
contribute to expanding local and export markets. Road network improvements will also support increased agricultural
production and productivity by improving the supply of seeds, fertilizer, and technical services. The improved road
network will reduce local travel costs and travel times, and facilitate regular and timely attendance at schools, health
centers, and other social services. The rehabilitation of national and provincial roads will stimulate the attraction of
investors for establishing new economic enterprises.

B. Poverty Analysis Targeting Classification: General intervention

Key Issues. Sri Lanka ranks 104th of 179 countries according to the United Nations' human development index. The
national poverty incidence in Sri Lanka has been reduced to 15%. Poverty reduction has been slow during the past
decade in the rural and estate sectors. Poverty in rural areas is consistently higher compared with urban areas. The
project will have positive impacts on economic and social development activities for the people as a result of improved
transport networks and improved access to markets and other services.

The total population living adjacent to the roads identified for rehabilitation can be considered direct beneficiaries. The
study team estimates that the project influence area has a total population of about 339,614 that will benefit from the
project (about 74,331 people in Mannar district; 95,608 people in Vavunia district; 15,500 settled people and about
112,000 people to be resettled in Mullaitivu district; about 110,000 people in Jaffna district; and about 44,168 people
in Anuradhapura district). The majority of the total beneficiary population is rural. Their main economic activities, which
will be improved, include agriculture, fishing, livestock, and trade.

The causes of rural poverty are complex and reducing poverty is a challenge. The majority of the rural poor, identified
by the field surveys, are subsistence farmers, agricultural laborers, poor fisherfolk, and small traders. Improved
access to markets to obtain higher prices for products will increase incomes. Improved transport facilities are
expected to promote market expansion, educational attainment, and the availability of basic infrastructure.

The poverty head count index statistics in the project influenced areas of candidate roads are not readily available.
However, based on social assessment studies, about 42% of the total number of families in Mannar district, 36% of
total families in Vavunia district (Northern Province), 23% of total families in Anuradhapura district (NCP), and 34% of
total families in Jaffna district (Northern Province) live below the poverty line. These people are samurdhi recipients
under the poverty reduction program. Other indicators of poverty are the small extent of lands owned and cultivated

1
ADB. 2008. Country Strategy and Program: Sri Lanka, 2009–2011. Manila.
 2

and the ability to cultivate one or two seasons. The road users of candidate roads believe that better transport facilities
will enable them to get higher prices for their agricultural produce and fish production. The road rehabilitation of A34
(49 km) from Oddusudan to Mullaitivu town will largely benefit about 112,000 internally displaced people, now in
welfare camps in Vavunia district. Generally, beneficiary groups are concerned with issues relating to poor road
construction, possible damage to irrigation canals and drainage systems, and delays in completion of project
activities.

Design Features. The project's main pro-poor design feature is the delegation of management responsibilities to the
provincial authorities and provision of assistance for effective project implementation to achieve sustainable and
equitable human development through consultation and participation of beneficiary groups, particularly poor groups,
and good governance and administration.

II. SOCIAL ANALYSIS AND STRATEGY

A. Findings of Social Analysis
Key Issues. A significant number of people in farming and fishing communities in Northern Province and adjacent
areas were economically displaced during conflict periods resulted in the loss of their livelihoods and basic agricultural
and fishing equipment. According to a survey done in Jaffna district in 2002, the unemployment rate was 28%; the
national figure is about 8%. Transport of both agricultural products and inputs, such as fertilizer and agrochemicals, to
Northern Province was restricted during the last three decades. Tourism in NCP was also affected as indicated by the
low number of tourists visiting the historic cities of Anuradhapura and Mihintale. Local visitors to places of religious
significance were also reduced during this period.

Northern Province roads are badly damaged. Because of the conflict situation, no road rehabilitation or regular
maintenance was carried out until May 2009. However, with the political stability in the northern and eastern areas,
quite a number of infrastructure development activities were started. The project will enhance development of three
district capitals, Jaffna, Mannar, and Vavunia. These urban centers are trading and administrative centers with some
industries. In addition, the project area includes small urban centers and commercial towns that will have social and
economic benefits from the project. Project beneficiaries represent major ethnic groups in the country.

Number and Percentage of Population in the Project Influence Area by Ethnicity

District Sinhalese Tamils Moor Population
No. % No. % No. % No.
Anuradhapura 39,205 88 996 2 4,426 10 44,168
Jaffna … … 110,000 100 … … 110,000
Vavunia 15,974 16 72,887 76 6,511 7 95,608
Mannar 46 … 65,339 88 8926 12 74,331
Mullaitivu … … 15,507 100 … … 15,507
339,614
Note: Total population figures include members of other ethnic groups.
Sources: Estimated population in the project influence area of project roads extracted from the relevant divisional secretaries offices
in 2009.

B. Consultation and Participation

1. Provide a summary of the consultation and participation (C&P) process during project preparation.
A sample of about 20% residents and other road users were selected from the immediate vicinity of each road for the
social survey. This was followed by a series of community consultations with groups and interviews conducted with
the grama niladharis (local village officers) and divisional secretaries during the design stage. The consultation
process involved discussion of proposed project activities, benefits, and other impacts. This was also done to increase
awareness of the project, to find out their needs and concerns, and to obtain suggestions for enhancing benefits and
mitigating the negative impacts. All road users mentioned time savings as a potential benefit from the project.

2. What level of C&P is envisaged during the project implementation and monitoring?
Information sharing Consultation Collaborative decision making Empowerment

3. Was a C&P plan prepared? Yes No

The project implementation consultants will assist the respective provincial road departments and Road Development
Authority offices to monitor project impacts through consultations with stakeholders and road users.

C. Gender and Development

Key Issues. The project will not provide any specific gender-related benefits. However, if negative impacts on
vulnerable households headed by women are identified during road rehabilitation, special support will be provided.
 3

Key Actions. Measures included in the design to promote gender equality and women’s empowerment—access to
and use of relevant services, resources, assets, or opportunities and participation in decision-making process:
Gender plan Other actions or measures No action or measure

III. SOCIAL SAFEGUARD ISSUES AND OTHER SOCIAL RISKS

Significant/Limited/ Plan or Other Measures
Issue No Impact Strategy to Address Issue Included in Design
Involuntary Limited. No land A resettlement framework is Resettlement Plan
Resettlement acquisition is expected. included to address unanticipated Resettlement
impacts during road rehabilitation. Framework
Environment and
Social Management
System
No Action
Indigenous Peoples No Imapct. Not Applicable. Indigenous Peoples
Plan
Indigenous Peoples
Framework
Environment and
Social Management
System
No Action
Labor Ensure that all civil works Plan
Employment contractors comply with all Other Action
opportunities applicable labor laws and No Action
Labor regulations of Sri Lanka to (i) not
retrenchment employ child labor for construction
Core labor and maintenance activities;
standards (ii) provide equal pay for men and
women for similar work under the
existing laws; and (ii) provide safe
and healthy working conditions,
including appropriate sanitation
facilities for workers. The project
will monitor the contractors'
compliance with labor provision
and facilities in the contract.
Affordability Action
No Action
Other Risks and/or Sri Lanka has a low As a result of the priority given to Plan
Vulnerabilities prevalence rate of HIV use local workers for civil works Other Action
HIV/AIDS infection and no cases and possible influx of migrant No Action
Human trafficking of human trafficking laborers is very low, the possible
Others (conflict, were reported during spread of sexually transmitted
political instability, social surveys and the diseases and HIV is unlikely.
etc.) interviews conducted. However, awareness and timely
This is indicated by information to construction workers
statistical data available on risks and preventive measures
from Sri Lanka's will be made and contractor's
National HIV Control compliance with the
Agency's website. implementation of existing laws
and labor regulations will be
monitored.

IV. MONITORING AND EVALUATION

Are social indicators included in the design and monitoring framework to facilitate monitoring of social development
activities and/or social impacts during project implementation? Yes No
{Please place footnotes here.}
Source: Asian Development Bank.
 RESETTLEMENT FRAMEWORK
(Sri Lanka: Proposed Northern Road Connectivity Project)

Note: It is envisaged at this time that the improvement works will be within the existing right-of-
way boundaries. However, if land acquisition requirement is identified during the
implementation, the resettlement framework will be utilized as guide for the preparation of
resettlement plan. The framework, therefore, is subject to further refinement as mutually agreed
by the ADB and the Government.

A. Project Background

1. The Project consists of the rehabilitation of about 140 km of provincial roads (Vavuniya
and Mannar districts) and about 108 km of national highways within Northern Province (NP), and
improve about 62 km of link national highways in the North Central Province (NCP). The Project
is designed to use only the existing right-of-way (ROW). All rehabilitation and improvement
components related to roads and bridges such as the carriage way, pavement, and drainage
facilities will be within the existing ROW. The consultant engineers and engineers of provincial
road agencies of each province jointly conducted field assessments to determine road
rehabilitation needs and possible permanent and temporary land acquisition and other
resettlement impacts of selected roads. The assessment process involved measuring the
existing ROW and pavement widths; identifying existing drainage deficiencies; taking
photographs; and measuring bridge dimensions including span length, deck width, and water
level at bridge sites. In the absence of recent land survey drawings and maps prepared by the
provincial road agency or survey department indicating the existing ROW and road boundaries
for each road, consultant engineers and the staff of provincial road agencies determined
whether the existing road corridor of each road is adequate to meet rehabilitation requirements
of selected roads and bridges. In the case of bridges, the Project will not increase the
carriageway width. However, some bridges that are unsafe and cannot be repaired will be
replaced with new bridges. Based on the information available from the engineers' assessments
and using their guidance, resettlement specialists carried out sample surveys, rapid
assessments based on field observations, walk-through surveys and discussions with local
affected people.

2. Although the project feasibility study (October 2009) and detailed engineering study
(January 2010) indicate that no land acquisition is required for the purposes of the Project, exact
actual permanent and temporary impacts from the rehabilitation works will be known only during
project implementation. The rehabilitation works could have some impacts on lands and
buildings adjacent to the boundary walls, drainages, and canals. Moreover, some land
acquisition might be required for the construction of new bridges. The common feature of rural
roads is that pavements, shoulders, and side drains are very narrow or nonexistent in some
road sections so that the implementing agencies may decide to acquire minimum land for
proper rehabilitation works. Services relocation such as shifting of telephone and electricity
transmission lines may require land acquisition. Some road sections in semi-urban and urban
areas may require widening and realignment to ensure road safety and smooth traffic flow. In
such cases, the project implementing agencies will formulate short resettlement plans (RPs)
and submit them to the Asian Development Bank (ADB) for review and approval before any
construction work in the road section is started. The potential number of households or the land
area acquired in such a situation would be small based on field assessments

3. This resettlement framework (RF) was formulated to ensure that if land acquisition
(permanent or temporary), physical relocation, and other impacts are identified during project
2

implementation, appropriate compensation and relocation programs will be prepared and

implemented to meet Sri Lankan laws, National Involuntary Resettlement Policy (NIRP) (2001),
and ADB's new Safeguard Policy Statement (2009) requirement.

B. Scope, Policy Framework, and Entitlements

4. The RF is based on the Sri Lanka NIRP of 2001, involuntary resettlement policy
component of the ADB's new Safeguard Policy Statement (2009) requirement, the Land
Acquisition Act of Ceylon 1960 as amended in 1986. The RF distilled the relevant policy
principles from these sources and they reflect the safeguards policy requirements of the
Government and ADB.

5. The Scope of RF. The RF covers involuntary physical displacement and economic
displacement arising from land acquisition and restrictions on land use. If the proposed project
has to acquire private land for road widening or improvements it is necessary to formulate RPs
to deal with such resettlement impacts following this RF. Any physical or economic
displacement arising from the proposed project will require RPs, formulated by following the
guidelines of the RF.

6. Policy Principle. Sri Lanka NIRP of 2001 lists several policy principles which are
applicable to all development projects. They meet most of Safeguard Policy Statement
requirements for involuntary resettlement.

• Involuntary resettlement should be avoided or reduced as much as possible by

reviewing alternatives to the project as well as alternatives within the project.

• Where involuntary resettlement is unavoidable, affected people should be assisted to re-

establish themselves and improve their quality of life

• Gender equality and equity should be ensured and adhered to throughout the policy
application

• Displaced persons should be fully involved in the selection of relocation sites, livelihood
compensation and development options as early as possible

• Replacement land should be an option for compensation in the case of loss of land; in
the absence of replacement land cash compensation should be an option for all
displaced persons.

• Compensation for loss of land, structures, other assets and income should be based on
full replacement cost and should be paid promptly. This should include transaction costs.

• Resettlement should be planned and implemented with full participation of the provincial
and local authorities

• To assist those affected to be economically and socially integrated into the host
communities, participatory measures should designed and implemented.
• Common property resources and community and public services should be provided to
project-affected people.
 3

• Resettlement should be planned as a development activity for the benefit of the project-
affected people.

• Displaced persons who do not have documented title to land should receive fair and just
compensation and assistance

• Vulnerable groups should be identified and be given appropriate assistance to

substantially improve their income and living standards

• MOHRD/RDA for national component and NPC-NPRDD for provincial component should
bear the full costs of compensation and resettlement

7. In addition to the above policy principles, the following ADB safeguards policy principles
will also apply to the Project.

• Develop procedures in a transparent, consistent, and equitable manner, if land

acquisition is through negotiated settlement in order to ensure that those people who
enter into negotiated settlements will maintain the same or better income and livelihood
status.

• Pay compensation and provide other resettlement entitlements before physical or

economic displacement.

• Prepare a RP elaborating on displaced persons' entitlements, the income and livelihood

restoration strategy, institutional arrangements, monitoring and reporting framework,
budget, and time-bound implementation schedule

8. Modes of Land Acquisition. The land will be acquired under the Land Acquisition Act.
The entitlement matrix reflects Sri Lankan resettlement policy, land laws and regulations, and
requirements of ADB Safeguard Policy Statement of 2009.

9. Entitlement Matrix. If any resettlement impact not listed in the matrix is identified during
project implementation will be added to the entitlement matrix. Entitlement matrix outlines the
categories of resettlement impacts and implementation issues that need special attention of the
EA and implementing agencies (IAs).

ENTITLEMENT MATRIX
Type of Entitled Entitlements Implementation Issues
Losses Person
Permanent Land owner/ • Land-for-land or cash-for-land • Vulnerable persons have
Loss of land Title holder and other assets lost at the priority for replacement
replacement cost. land, based on needs.
• Shifting/moving allowance, if • Special attention to
physically displaced. orphaned children and
• Livelihood/income widows to ensure their
improvement/restoration inheritance rights.
grant/skills and vocational • Land titles may not be
training. available. Provincial and
• Living allowance until livelihood District level land records
or income sources are and owner-identification
restored. processes such as
4

Type of Entitled Entitlements Implementation Issues

Losses Person
• Land registration expenses and community consultations
taxes, if any. will be used in case of land
title is lost.
Loss of Tenant/ • Cash payment for loss of • Entitlements apply equally
agricultural Sharecropper standing crops at their market to both registered and
Land and loss value unregistered
of income • Cash payment for the tenants/sharecroppers.
sources remaining portion in agreement • At least 30-day notice of
/livelihoods with the land owner. land clearance
based on land • Assistance in negotiating a • Department of Agriculture
new sharecropper agreement will determine market value
on another plot of land for of crops and trees.
• Subsistence allowance for six • Subsistence paid in cash
months or until an alternate and assistance to find new
employment is found or given. employment. Special
budget built into
resettlement budget.
Loss of Daily wage • Subsistence assistance until • Identification of daily wage
livelihood/inco worker in alternate employment is found. workers is to done in
me agriculture or • Assistance in obtaining skill consultation with local
in non- training and ‘seed’ money to authorities and village
agricultural restore income/livelihood. leaders.
enterprises • Special budget is required
including • Cut-off date to be
those at publicized early.
business
establishment
s
Temporarily Land • Land rent during the temporary The land will be restored to
affected land owner/title use of land. its previous status or will be
(during holder • If displaced, shifting/moving improved. Rent will be
construction) assistance (as above) decided by MOHRD/RDA (in
case of national road
component) and NPC-
NPRDD (in case of provincial
roads) in consultation with
DS and displaced persons.
Business Owner • Replacement cost of land and • Estimated value of the
establishment commercial establishment business will be included in
without deduction for replacement cost.
depreciation/salvageable • Workers entitlements to be
materials. worked out separately (see
• Shifting/moving costs. above)
Business Non-titled • Replacement cost for • Support to find alternate
establishment (squatter) structures without deduction for land for business and
owner depreciation. settlement by EA/IAs.
• Salvageable materials • Estimated value of the
• Moving/shifting allowance, if business affected will be
physically displaced. included in replacement
cost.
Loss of crops Title owner and • If sown or standing crops are • The value of trees or crops
and trees (both non-titled damaged or uprooted, the that will be affected by a
temporary and owner cultivator of the affected crops subproject will decided by
 5

Type of Entitled Entitlements Implementation Issues

Losses Person
permanent) will be compensated in cash at local agricultural offices in
the mature crop value to be consultation with displaced
assessed on the basis of persons.
current market rates. • Owners will be given at
• Compensation for loss of fruit least 30 day notice before
trees at market value, based removal.
on the present income and
crop bearing capacity.
Loss of Owner – titled • Compensation for
structures and or registered structures/assets at
immovable replacement cost without
assets deduction for depreciation/
(including salvageable materials.
residential • Moving/shifting allowance, if
houses) displaced.
Loss of Non-titled • Replacement cost of structures • MOHRD/RDA (in case of
structures and (squatters) they constructed, without national road component)
immovable deduction for depreciation. and NPC-NPRDD (in case
assets Salvageable materials belong of provincial roads) will
(including to the establishment owner. assist in finding alternate
residential • Moving/shifting allowance, if residential land, especially
houses) displaced. for vulnerable displaced
persons.
• Budget for replacement
Community Community EA/IA will rebuild community Building of structures will be
structures and structures and facilities. done in consultation with the
facilities affected community.

C. Screening and Assessing Impacts and Formulating RPs

10. The EA or IA for each subproject will conduct a socioeconomic survey and a census to
identify all persons who will be physically and/or displaced by the project component or
subproject and to assess its socioeconomic impacts on them1. The EA/IA will establish a cut-off
date for eligibility as early as possible to avoid the arrival of speculators from outside to obtain
resettlement assistance.

1
The EA/IA will use the following checklist to screen subprojects to identify their resettlement impacts in consultation
with ADB:

(a) Will the subproject require land? What is the quantity of land required?
(b) Will the impact be permanent or temporary (during construction)?
(c) Who owns the land? How is land currently used?
(d) If private land, how many landowners/tenants/sharecroppers will be affected?
(e) If state land, is it subject to traditional claim?
(f) If state land, are there any squatters or informal settlers?
(g) Are there any houses, structures, trees and crops that will be affected (whether state or private
land)?
(h) How many households will be physically displaced?
(i) Is there any public or community infrastructure?
(j) Will Veddah communities be affected?
6

11. Formulate a time-bound schedule for RP implementation, procedures for grievance

redress, monitoring and evaluation (both internal and external).

12. The EA will endorse and disclose the draft RP to all displaced persons before submitting
it to ADB for review and approval. Once ADB approves it, the EA will disclose it to displaced
persons and other stakeholders. It will be posted on ADB Involuntary Resettlement Website,
and in the EA/IA's website (if available). The RP, especially its entitlement matrix, budget and
implementation plan and timeframe will be translated into Sinhala and Tamil, and copies of the
translations will be widely distributed among all displaced persons and other stakeholders.
Copies of the RP will be kept at Grama Seva Niladari Offices and public places for public
perusal.

13. The payment of compensation and physical relocation, if required, will be completed
before the award of any construction contracts of a project component or a subproject.

D. Implementation Arrangements

14. The implementation arrangements are as follows:

Aspects Arrangements
3 Project management
3.1 Overall Oversight body National Steering Members: Ministry of Highways and Roads
Committee Development (MOHRD) (co-chair),
Ministry of Local Government and Provincial
Councils (MLGPC) (co-chair), Ministry of
Finance and Planning, External Resources
Department, National Planning Department,
Finance Commission, Northern Provincial
Council, Northern Provincial Road Development
Department (NPRDD)
National Road
Component:
3.2 Executing agency MOHRD
3.3 Implementing agency Road Development
Authority (RDA)
3.4 Project implementation Colombo with district Number of staff proposed: 18
unit (existing PIU for offices in Northern and
ADB L-2080 will be North Central
utilized) Provinces
Provincial Road
Component:
3.1 Oversight body Provincial Coordinating Members: Chief Secretary of Northern Province
Committee (Chair), NPRDD, and Project Implementation
Consultant
3.2 Executing agency MLGPC
(utilizing the existing
Project Coordinating
Unit for ADB Loan
2546)
3.3 Implementing agency NPRDD under
Northern Provincial
 7

Aspects Arrangements
Council
3.4 Project implementation Trincomalee (main Number of staff proposed: 17
unit office) with district
offices in Vavuniya and
Mannar
Source: the Government

15. The IAs will utilize PIC's assistance to formulate RPs for subprojects with resettlement
impacts and to help in implementing the RPs.

D. Grievance Redress

16. A Grievance Redress Committee (GRC) at each Divisional Secretary level will be formed
to deal with land and compensation disputes and grievances, and to facilitate timely
implementation of the project. The GRC will meet as necessary and when grievances are
referred to it for redress. The GRC will examine each complaint within a month and inform its
findings and decisions within six weeks to all parties.

E. Consultation with Displaced Persons

17. The RDA and NPRDD will conduct consultations with displaced persons identified as
having involuntary resettlement impacts. Consultations will begin early in the project preparation
stage and will be carried out on an on-going basis throughout the project life. Through
consultation, the EA and IAs will disclose relevant project information and displaced persons
entitlements and their delivery. Such information will be disseminated through their languages
and such information will be made available for them at public places for easy reference.
Consultation will be carried out in a manner commensurate with the impacts on affected
communities. The RDA and NPRDD will pay particular attention to the need or disadvantaged
and vulnerable groups, especially those who without legal title to land, the elderly, female
headed households, women and children Consultation will be conducted through a stakeholder
consultation process, assisted by nongovernment organizations.

F. Income Restoration and Improvement

18. If the affected persons are vulnerable people or severely affected, specific and detailed
income and livelihood restoration programs need to be included with adequate budgets and
institutional framework.

G. Monitoring and Evaluation

19. RDA and NPRDD will conduct its own internal monitoring of the subproject’s RP
implementation and will submit quarterly reports to MOHRD and MLGPC, and to ADB for review
and information. External monitoring reports will be submitted quarterly reports during the first
year of project implementation and twice a year from the second year.

H. Resettlement Budget

20. Detailed cost estimates for implementing a RP will be prepared by RDA and NPRDD,
respectively, for each RP and will be included in subproject's cost estimates. The budget
8

includes (i) detailed costs of land acquisition, relocation, and livelihood and income restoration
and improvement; (ii) sources of funding; (iii) arrangements for approval of RP cost estimates;
and (iv) the flow of funds and contingency arrangements. All land acquisition, compensation,
relocation and rehabilitation of income and livelihood will be considered as an integral
component of project costs.
 RISK ASSESSMENT AND RISK MANAGEMENT PLAN
(Sri Lanka: Northern Road Connectivity Project)

Assessment Assessment
Risks without Management Plan with
Mitigation Mitigation
Governance
Public financial Medium ADB will finance 89% of the total project investment cost, Low
management: the Government of Sri Lanka will finance taxes and duties
government delay only. This will ease the government's financial burden to
in releasing provide counterpart funding and ensure adequate cash
counterpart funds flow during implementation.
Procurement: Medium A procurement consultant has been engaged (timeline: Low
Implementing started in January 2010 for about 12 months) under the
agency for the Road Project Preparatory Facility,a providing assistance to
provincial road NPC–NPRDD with bidding documents, bid evaluation,
component among others. The executing agency for the provincial
(NPRDD) lacks road component (MLGPC) has adequate experience with
direct experience ADB procurement guidelines and will also provide close
procuring works advisory support to NPC–NPRDD (timeline: throughout
funded by ADB. project implementation).
Procurement: Medium The executing agencies will disclose information about Low
Transparency procurement-related information in their respective
during websites such as invitation for bids and basic details on
procurement bidding procedures adopted. The executing agencies will
process establish a project website (timeline: within 3 months of
loan effectiveness).
Other Risks
Safeguard Medium Before commencing construction, a due diligence mission Low
compliance will be fielded to confirm that rights-of-way to be handed
over to contractors are free of encumbrances and ready
for handover to the civil works contractors, and, as
required, inform project authorities and those affected of
remedial actions, if any; and to create awareness among
the project authorities about ADB's social safeguard
requirements pertaining to the project
Implementation High The Road Project Preparatory Facility is being utilized to Low
delay ensure high implementation readiness. Advance actions
are being taken with the objective of awarding contracts
shortly following loan effectiveness subject to completing
the resettlement activities if any (timeline: ongoing)
Inadequate post- Medium Performance-based maintenance after completion will be Low
project road included in the civil works contracts to secure
maintenance maintenance of the project roads. Through the associated
capacity development technical assistance project, NPC–
NPRDD's road asset management systems will be
strengthened.
Overall Medium Low
ADB = Asian Development Bank, MLGPC = Ministry of Local Government and Provincial Councils, NPC–NPRDD =
Northern Provincial Council–Northern Provincial Road Development Department.
a
ADB. 2004. Report and Recommendation of the President to the Board of Directors: Proposed Technical
Assistance Loan to the Democratic Socialist Republic of Sri Lanka for the Road Project Preparatory Facility. Manila
(Loan 2080-SRI, for $15 million, approved on 13 April).
Source: Asian Development Bank.