INTEGRATED SAFEGUARDS DATASHEET APPRAISAL STAGE

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized I. Basic Information Date prepared/updated: 01/04/2011 INTEGRATED SAFEGUARDS DATASHEET APPRAISAL STAGE Report No.: AC Basic Project Data Country: India Project ID: P Project Name: Second Karnataka State Highway Improvement Task Team Leader: Binyam Reja Estimated Appraisal Date: January 6, 2011 Estimated Board Date: March 24, 2011 Managing Unit: SASDT Lending Instrument: Specific Investment Loan Sector: Roads and highways (100%) Theme: Infrastructure services for private sector development (67%);Other public sector governance (33%) IBRD Amount (US$m.): IDA Amount (US$m.): 0.00 GEF Amount (US$m.): 0.00 PCF Amount (US$m.): 0.00 Other financing amounts by source: Borrower Environmental Category: A - Full Assessment Simplified Processing Simple [] Repeater [] Is this project processed under OP 8.50 (Emergency Recovery) or OP 8.00 (Rapid Response to Crises and Emergencies) [ ] No [] 2. Project Objectives 1. As a follow up to the successfully implemented KSHIP I, the proposed KSHIP II is designed to take the Bank s support for India s highway sector to a higher level by providing assistance for innovative financing, implementing government-owned sectorwide reforms, addressing road safety concerns during road construction and operation, and ensuring effective project implementation (including streamlined land acquisition and environmental clearance and well-managed procurement and FM processing). 2. As such, the project development objective (PDO) is to assist GOK to accelerate the development of the Core Road Network through leveraging public sector outlays with private sector financing, and improve the institutional capacity of the road sector agencies to deliver effective and safe CRN to users. In order to achieve the objective, the proposed project will comprise the following components (a) Highway Financing Modernization, (b) Road Improvement Works, (c) Road Sector Policy and Institutional Development, and (d) Road Safety Improvement. The Project beneficiaries are the road users (business and citizens) living along the roads. A secondary beneficiary is the PWD and KRDCL, whose capacity to manage the road network and provide safe and effective road services is expected to improve.

2 3. Project Description Project components 3. Component 1: Highway Financing Modernization Component (Total Cost: US$10.22 million; IBRD: US$8 million; PPIAF-SNTA Grant US$220,000). This component is designed to assist GOK to introduce innovative financing for the development of the CRN, and facilitate fiscally prudent market borrowing and promote private sector participation in highway financing and management. The component will (a) finance the costs of a CRN Financial Planner to assist GOK to prepare a detailed financing strategy for the state s road network, clearly delineating a range of possible approaches for developing and maintaining state highways and the associated requirements for raising funds, including private and public financing, domestic borrowing and multilateral financing; contract management aspects and tolling strategy. The PPIAF-SNTA financed Financial Advisor has completed the first comprehensive CRN financial strategy for CRN. Further during implementation, the proposed project will support KRDCL to prepare annual and multi-year financial plan, including O&M. The TA is provided to KRDCL to improve better use of its project revenue from tolls and other user charges that are likely to be levied before a full-fledged road fund is established. (b) finance a PPP Transaction Adviser to support GoK market borrowing; provide advisory services to KRDCL/GOK on a range of PPP transaction matters, including financial feasibility analysis, legal documentation and and (c) technical assistance to establish a dedicated road fund, whose revenues would be used for O&M, and to service domestic debt, annuity concession payments and contribution to VGF. 4. Component 2: Road Improvement Component (Total Cost: US$ million / IBRD: US$ million / GOK: US$ million / Private Sector: US$200.1 million). This component will support the improvement of priority state highways under two contractual arrangements: (a) conventional item-rate contracts 269 km and (b) Modified Annuity (Availability Payment) Concessions 562 km. The modified annuity concession are long-term DBFOM contracts whereby upgrading and widening of the roads will be carried out during the "construction phase", and O&M will be done during "operation phase". Unlike the commonly used annuity concession contracts in India where the private sector raises 100 percent of the project cost and gets paid an annuity payment during the concession period, the proposed project would modify this and pay upfront the concessionaire up to 50 percent of the estimated construction cost during the construction phase on achievement of agreed milestones and pay the rest of the project cost (including O&M cost) as annuity payments during the operation phase. This modification would reduce the risk to the concessionaire and should decrease the cost of the annuity contracts. At the same time, the annuity concessions would create a long-term partnership between the PWD and the private sector and ensure efficient maintenance and operation. The annuity concessions would also allow GOK to leverage the proposed IBRD loan with private sector and domestic financing and hence meet the large demand for improving the road network in relatively shorter period. Under this arrangement, the IBRD loan would be used to pay the upfront payment, and government and road fund

3 resources would be used for the remaining 50 percent (see Figure 1 above). If adequate VfM is not there, those roads will be taken upon EPC basis. 5. Component 3: Road Sector Policy and Institutional Development Component (Total Cost: US$10 million / IBRD: US$8 million / GOK: US$2 million). This component will support selected elements of a new medium-term Institutional Development and Strengthening Action Plan (IDSAP) for the period The IDSAP covers the PWD and the KRDCL, and has been established by the GOK in consultation with both the World Bank and the ADB. The major IDSAP fields are as follows: (a) Road Sector Strategy and Sustainability. Updating of policy, legislation, rules and powers to enhance the GOK s capacity for road infrastructure planning, delivery and management. (b) Road Network Planning and Asset Management. Enhanced policies, capacities and IT-based systems applied to state-wide roads development master planning and road maintenance planning, funding, operations and management. (c) Project Management (Preparation, Implementation & Monitoring). Strengthening PWD s and KRDCL s capacity in project management functions, as already implemented in the KSHIP PIU, as well as comprehensively enhancing Environment and Social Management (safeguards) functions and capacity. (d) Governance and Accountability. Within the agreed Governance and Accountability Action Plan (GAAP), strengthening of RTI-compliant public information and communication, quality monitoring and complaints handling, deployment of e- governance tools and completion of PWD-wide Quality Management framework / capacity. (e) Organization, Management and HR Development. Strengthening key elements of the PWD rules and procedure, updating the IT-ICT-MIS strategy to improve PWD functions and governance, implementing a comprehensive IT-based Financial Management system, enhancing staff performance management tools, staff training and HRD capacity, and developing the PWD-linked Karnataka Engineering Research Station as a viable technical training centre. 6. While ADB investment and TA operations in the sector have already started supporting the implementation of IDSAP-linked Planning, Asset Management, Contract Management and engineering-related Road Safety activities, the agreed ADB support in these areas is limited in scope. Accordingly, KSHIP-II funding will also cover "extension" and completion actions in those areas as part of this Project s support to IDSAP implementation, with an overall KSHIP-II emphasis on "final-phase" and operationalisation measures to ensure effective, sustainable capacities and results are achieved in all main IDSAP fields during KSHIP-II. 7. Under this component, the Project will finance consulting services, technical assistance and limited instances of equipment and minor works, where these are required for technical / operational / management capacity building and improvements, IT-ICT- MIS integration and technology upgrades, completion of road information, asset management and planning tools and applications, sector policy and planning studies,

4 final-stage HRM/HRD enhancements, necessary #sustainability# plans and GAAPspecific activities. 8. Component 4: Road Safety Improvement Component (Total Cost: US$11 million / IBRD: US$8.80 million / GOK: US$ 2.20 million). Against the backdrop both of rapidly increasing motorization and a continuing sharp rise in road-related deaths over the last decade in Karnataka, this component will support in a major state-level road safety intervention, aimed at establishing an effective combination of comprehensive results-based GOK road safety management strategy and the necessary supporting institutional capacity. The design of this intervention will build on the road safety management capacity review prepared for GOK in 2008 with Bank assistance, particularly the recommendation therein for a multi-sector demonstration project, and will also take into account of separate Road Safety activities currently receiving ADBfunded technical support. However via the more strategic KSHIP-II intervention the Bank will take the "lead donor" role in this field, as agreed between GOK and its development partners, and future ADB assistance to GOK on road safety will aim to support KSHIP-II facilitated plans and actions. 9. The KSHIP-II support will primarily involve the development, implementation and evaluation of a Safe Corridors demonstration project, and assistance to GOK to establish and implement a comprehensive state-wide road safety management strategy. The findings and results of the Safe Corridors project will inform progressive action on (at least) the following: a) Road Safety Lead Agency Capacity Building. Rapid development of an effective Road Safety Cell in the Transport Department to support the Department s role as lead GOK agency for Road Safety strategy and management in the state. The lead agency will serve as a mechanism for horizontal and vertical coordination, and provide a forum for multi-discipline technical working groups. b) Improving the safety of existing road infrastructure and improving the capacity for "safe roads" design, execution and maintenance. c) Strengthening enforcement and road user compliance on safety rules d) Improving vehicle safety on each road corridor e) Improving emergency medical response system and making them available on site f) Enhancing road safety education, awareness, and training activities 10. Under this component, KSHIP-II funding will support a combination of consulting services, technical assistance, equipment and minor works procurements required for implementation of the Safe Corridors demonstration project, and will provide US$1 Million in "one-off" assistance to GOK (alongside similar ADB assistance) towards the costs of establishing a new Centre of Excellence for Road Safety Training, Education and Research in Karnataka. 4. Project Location and salient physical characteristics relevant to the safeguard analysis 11. Roads selected for KSHIP II are spread across Karnataka with a higher concentration in southern and northern parts, complementing the roads already improved

5 under the previous KSHIP project. The state is known to be a leader in IT industry concentrated in Bengaluru and Mysore. It is also known for its efforts in forestry, water conservation and natural habitat protection. The project will be implemented in 14 out of 27 districts of Karnataka. Out of these, eight are from southern Karnataka and six are in northern Karnataka. These include Bangalore (Urban and Rural), Kolar, Belgaum, Dharwar, Koppal, Gadag, Gulbarga, Mandhya, Dakshin Kananda, Hasan, Haveri, Bellary and Davanagiri. 5. Environmental and Social Safeguards Specialists Mr I. U. B. Reddy (SASDS) Mr Gaurav D. Joshi (SASDI) 6. Safeguard Policies Triggered No Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12) Safety of Dams (OP/BP 4.37) Projects on International Waterways (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60) II. Key Safeguard Policy Issues and Their Management A. Summary of Key Safeguard Issues 1. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts: 12. The project triggered four safeguard policies as indicated above. These include environmental assessment, Natural Habitats, Physical Cultural proprieties and Involuntary Resettlement. 13. Environmental Assessment: The key adverse environmental impacts of the project are removal of roadside trees (about 40,000 for the entire project), acquisition of small area of forest land and its conversion to road (total slightly less than 12 ha, along 4 EPC and 4 Annuity contract roads), increased air and noise pollution adjacent to the road, and risks of pollution and health impacts if proper measures are not taken for managing contractor operations during construction. While short term negative impacts could occur if proper care is not taken during the construction phase by the Contractors - localized increased pollution of air, and water, increased risk to safety for their workers as well as other concurrent road users, no other long term significant irreversible impacts are currently considered likely. 14. Natural Habitats: Initially, the policy was triggered at the PCN stage. However, since then KPWD has followed up with the Forest Department for identifying any natural

6 habitats, and wildlife crossings across project roads identified as potentially sensitive. The Forest Department has confirmed that there are no reports of any wildlife crossings or accidents along the roads initially considered to be sensitive. There are no critical natural habitats known close to the project roads. However, the project has put in place orientation and sensitization of contractors workers to avoid damage to any important flora and fauna found close to the work-sites. 15. Forests: This policy is now being triggered as total slightly less than 12 ha is being requisitioned across 4 EPC and 4 Annuity corridors. The project has already applied for the clearances under the Forest (Conservation) Act, and Karnataka Tree Preservation Act. The project will pay the necessary costs of compensatory afforestation, and Net Present Value of the land to the Forest Department. In addition, the road side spaces, as well as lands along abandoned stretches of roads where short road realignments are proposed, will be planted with trees to compensate locally for the trees being cut for the project. 16. Physical Cultural Resources: There are several locally and regionally important cultural properties - religious as well as community structures that may be impacted by the project. Wherever appropriate, the KPWD will try to minimize adverse impacts on these, exploring among other options, design modifications for particular stretches such as in 2 Annuity Contracts links. The project includes adequate measures to ensure that any unavoidable impacts on such sites are managed properly. Chance-find procedures are also included in the contracts to handle such situations. 17. Involuntary Resettlement: The land acquisition required for the project consisting of 830 Kms is 225 hectares including about 10 hectares of Government land. Because of this land acquisition, about 5,300 families will be affected by varying degrees. More than 50 percent of these impacts are minor in nature losing only narrow strip of land. The major impacts include those who are likely to be physically displaced or those losing their source of livelihood mostly consist of agricultural lands or petty businesses. This category will also include those becoming marginal or land less due to land acquisition to the project. The minor impacts are those who lose only small portion of their asset and are able to continue their livelihood with remaining assets without nay father assistance other than the compensation for the lost assets. These include those who loose only part of their houses or that loose narrow strip of lands. The proposed compensation and assistance will enable the people to resettle their living standards. The project does not anticipate any significant or irreversible impacts due to the land acquisition or displacement. In addition, about 1600communty asserts will be affected which are proposed to be reconstructed in the adjacent places in consultation with the local people 18. Indigenous People (OP/BP 4.10): The project alignment does not pass though any designated Tribal areas. The census surveys confirmed that the project alignment does not pass through any designated tribal villages. The census survey indicates that the few affected scheduled tribe families do not exhibit the distinct charterstics and are scattered throughout the project roads. They have not identified themselves as distinct group during the consultations and are mostly working as agricultural laborers or they are found

7 to be as small and marginal famers and are fully integers with the rest of the population. The Tribal Welfare Department of Karnataka has confirmed in response to the implementing agency s request that the proposed project roads do not pass thorough any designated tribal areas. In view of this, the policy on Indigenous peoples is not triggered for this project. The affected tribal who are scattered will be dealt with in the overall entitlements proposed for the project. 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: 19. The project does not envisage any long-term impacts. On the other hand, the project will have a positive impacts due to improvement in the road network enabling the people to have improved access to basic amenities, markets and thus improve the connectivity with the neighboring villages and nearby towns and thus alleviate development constraints in agriculture, commerce, education, health and social welfare. 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. 20. Realignments were proposed in some the locations such as Huliyidurga, Madhugiri and Koratagere to reduce the impacts on loss of shelter and livihoods by avoiding proposed roads passing through theses small towns. Further, in some towns the corridor of impact has been reduced to minimize the impacts. Where ever possible design changes were made to minimize the physical displacements or loss of livelihoods. 4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described. (a) Measures taken by the borrower to address the safeguard policy issues. (i) Environmental policy issues: KPWD has taken the steps described below to address the environmental safeguards related issues: a) A dedicated cell for environmental management headed by an Executive Engineer is in place within the KSHIP PIU and staff on deputation from the Forest Department is also available to ensure timely co-ordination at GoK level. b) An EA has been carried out which resulted in the preparation of corridor specific EMPs. These have been cleared by the State Environmental Impact Assessment Authority. Applications for permissions for the transfer of Forest land and cutting of roadside trees have been submitted. Further, an Independent Review was also commissioned on the EA process and outputs to confirm that these adequately address the safeguards policies triggered. c) The implementation of some of the key measures identified in the EMP has begun in advance of the road construction works. This includes the provision of noise barriers to protect sensitive receptors which the EMPIU is getting implemented now. Environmental Engineers are likely to be in place in the divisional offices overseeing the project implementation. d) The PIU will be assisted by a Construction Supervision Engineer team which will include suitably qualified environmental specialists. They will be responsible for regular

8 supervision and reporting to the PIU regarding the progress and status of EMP implementation. e) The PIU has agreed to formalize its approach to systematic environmental management with the target of certifying the PIU and at least one field division to ISO during the project implementation period. (ii) Social Safeguard Policy Issues. The borrower has taken the following measures to address the social safeguard policy issues. a) Government has notified the Project Director as "Highway Authority" for land acquisition purpose under Karnataka Highway Act with delegated powers. The Government has provided dedicated land acquisition staff consisting of Special Deputy Commissioner and two (2) Assistant Commissioners to fast track the process of acquiring the private lands. A committee including some of the independent members has been constituted for negotiating the price of private lands with the landowners. b) A Resettlement Action Plan (RAP) endorsed by the Bank is already in place. The compensation and assistance proposed in the RAP is line with the Bank s operational policy on involuntary resettlement and Government of India s new R&R policy, The key entitlements included are: minimum compensation for private land acquisition though direct negotiations (1.5 or 2.0 time of guidance value) with top-up compensation consisting of amount equivalent to stamp duty and registration charges, severance allowance equivalent to 25 percent of basic compensation, rehabilitation assistance for those becoming landless or marginal. The valuation for loss of structure is based on the market value without deprecation with 30 percent top-up additional compensation as well as transitional allowance such as subsistence and shift allowances. In addition, the displaced families will be provided with alternative house sites with construction grants. The non- title holders will be provided with alternative house sites with construction grants and transitional allowance. In case of those loosing livelihood, they will be provided with rehabilitation assistance or alternative sites for reconstruction of affected shops. Vulnerable families such as those with physically challenged persons, widows or aged will be assisted to get Government pensions schemes or provide with lump-sum cash grants to meet the additional financial needs. c) The contracts for Two (2) NGOs and third party M&E consultant services are signed and they have commenced their services; d) Database Management consultants services are procured to mange and track the implementation progress of land acquisition and resettlement; e) Key staff for R&R Implementation are in position (Chief Administrative Officer, Assistant Director, Manager (R&R), and 2 Social Development Officers) are already in position; and, f) The grievance redress committed headed by the Deputy Commissioner who is not associated with the Implemeniton are being constituted in the project districts. This committee some nominated members from the civil society and PAP representatives. (b) Assessment of the borrower s capacity to plan and implement the measures:

9 21. The Project implementation unit (PIU) is fully aware and familiar with the potential environmental and social impacts and the required mitigation measures, as they have successfully implemented the previous Bank supported project. In the previous project, environment and social mitigation plans were satisfactorily implemented and the department has documented some of the good practices and lesson learned. 22. On the social side, the PIU has a dedicated Social Development and Resettlement cell headed by a Chief Administrative Officer to manage the land acquisition and resettlement impacts. He is assisted by a Special Deputy Commissioner and two Assistant Commissioners on the land acquisition side and Assistant Director and Resettlement Officer on the resettlement side. All these key staff is already in place. Two field units are in the process being established. Some of the Social Development Officers are already in place in these field units. The Social Development and Resettlement cell will engaged two local NGOs and Database management consultants to provide Implemeniton support. All these agencies are already in place. A third party independent monitoring consultants (R&R M$E consultants) were also commissioned to oversee the implementation progress and provide advice and guidance on land acquisition and resettlement issues. This M&E consultants will certify the satisfactory completion of preconstruction activities related to land acquisition and resettlement prior to handing over of sites to the contractors. The above measures are adequate to manage the land acquisition and resettlement impacts in this project. 23. The PIU has already put in place an Environmental Management Cell with an Executive engineer already experienced in implementing Bank-supported projects. The cell also includes staff from the Forest Department, on deputation to PWD, to coordinate with this key line department. In addition, field offices overseeing the project implementation are also being staffed with engineers, who have been given orientation training in environmental management. The Construction Supervision Engineer team will also include Environmental Specialists who will be responsible for the day-to-day supervision and reporting on environmental aspects. These arrangements are considered sufficient for managing the anticipated environmental impacts of the project. 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. 24. The key stakeholders include the road users, local people, affected people and the concerned Government departments. A large number of consultations have been held in the project area in about 25 places involving about 1800 people from more than 150 villages. The outcomes of consultations were incorporated in the RAP or designs as appropriate. Some of the outcomes incorporated include: improvements in the entitlements related to structure valuation, provision for replacement of affected irrigated bore wells and realignments in some of the towns. Further, six additional consultations were held to disclose the draft RAP and explain the contents of the RAP and sought their feedback. A number of clarifications related to entitlements and resettlement assistance were clarified during these consultations. The draft RAP has been disclosed by the implementation agency in their web site - other public places accessible to the local people in March The draft RAP was also disclosed in the

10 Bank#s Info shop. During June A brochure containing the details of entitlements in local language is currently under finalization and will be circulated among the projectaffected people. B. Disclosure Requirements Date Environmental Assessment/Audit/Management Plan/Other: Was the document disclosed prior to appraisal? Date of receipt by the Bank 04/27/2010 Date of "in-country" disclosure 11/25/2010 Date of submission to InfoShop 04/27/2010 For category A projects, date of distributing the Executive 10/26/2010 Summary of the EA to the Executive Directors Resettlement Action Plan/Framework/Policy Process: Was the document disclosed prior to appraisal? Date of receipt by the Bank 03/15/2010 Date of "in-country" disclosure 03/12/2010 Date of submission to InfoShop 04/21/2010 Indigenous Peoples Plan/Planning Framework: Was the document disclosed prior to appraisal? Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop Pest Management Plan: Was the document disclosed prior to appraisal? Date of receipt by the Bank Date of "in-country" disclosure Date of submission to InfoShop * If the project triggers the Pest Management and/or Physical Cultural Resources, the respective issues are to be addressed and disclosed as part of the Environmental Assessment/Audit/or EMP. If in-country disclosure of any of the above documents is not expected, please explain why: C. Compliance Monitoring Indicators at the Corporate Level (to be filled in when the ISDS is finalized by the project decision meeting) OP/BP/GP Environment Assessment Does the project require a stand-alone EA (including EMP) report? If yes, then did the Regional Environment Unit or Sector Manager (SM) review and approve the EA report? Are the cost and the accountabilities for the EMP incorporated in the credit/loan?

11 OP/BP Physical Cultural Resources Does the EA include adequate measures related to cultural property? Does the credit/loan incorporate mechanisms to mitigate the potential adverse impacts on cultural property? OP/BP Involuntary Resettlement Has a resettlement plan/abbreviated plan/policy framework/process framework (as appropriate) been prepared? If yes, then did the Regional unit responsible for safeguards or Sector Manager review the plan? OP/BP Forests Has the sector-wide analysis of policy and institutional issues and constraints been carried out? Does the project design include satisfactory measures to overcome these constraints? Does the project finance commercial harvesting, and if so, does it include provisions for certification system? The World Bank Policy on Disclosure of Information Have relevant safeguard policies documents been sent to the World Bank s Infoshop? Have relevant documents been disclosed in-country in a public place in a form and language that are understandable and accessible to project-affected groups and local NGOs? All Safeguard Policies Have satisfactory calendar, budget and clear institutional responsibilities been prepared for the implementation of measures related to safeguard policies? Have costs related to safeguard policy measures been included in the project cost? Does the Monitoring and Evaluation system of the project include the monitoring of safeguard impacts and measures related to safeguard policies? Have satisfactory implementation arrangements been agreed with the borrower and the same been adequately reflected in the project legal documents? No N/A No

12 D. Approvals Signed and submitted by: Name Date Task Team Leader: Mr Binyam Reja 12/06/2010 Environmental Specialist: Mr Gaurav D. Joshi 12/06/2010 Social Development Specialist Mr I. U. B. Reddy 12/06/2010 Additional Environmental and/or Social Development Specialist(s): Approved by: Regional Safeguards Coordinator: Mr Sanjay Srivastava 12/21/2010 Comments: cleared. Please see dated 12/21/2010. Sector Manager: Mr Michel Audige 12/31/2010 Comments: Cleared.