Canadian International Development Agency 200 Promenade du Portage Gatineau, Quebec K1A 0G4 Tel: (819) Toll free: Fax: (819)

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1 Canadian International Development Agency 200 Promenade du Portage Gatineau, Quebec K1A 0G4 Tel: (819) Toll free: Fax: (819) (For the hearing and speech impaired only (TDD/TTY): (819) Toll free for the hearing and speech impaired only: )

2 Executive Summary Introduction This document reports on a field evaluation of two Twin Otter (DHC-6) projects, placing the findings within the context of a total of seven Twin Otter projects that have constituted the Twin Otter Program conducted in Nepal over the past 29 years. The first project reviewed deals with the construction of a hangar in Nepalgunj, (in the western part of Nepal), and the associated training of aircraft maintenance staff, (from 1987 to 1993). The second was a project, (from 1993 to 1999), to refurbish five Twin Otters to extend their lifetime by about years, (the Twin Otter Support Project - TOSP). Fieldwork for the evaluation was carried out in late April of 1999; data for the evaluation were collected through document reviews, key-person interviews, and field-site visits. Overall, some 14 persons in Canada and 34 in Nepal were contacted for this study. Nepal is a landlocked country, roughly rectangular in shape, bordered on the North by China, (and the Himalayan mountains), and by India to the south, west, and east, (see Figure E-1 on page xvi). The capital, Kathmandu, supports about 11% of the population. Nepalgunj (where the CIDA- supported hangar is located) is almost directly west of Kathmandu, very near the India border; (in Figure E-1, it is just above the globe and to the right). Developmental Context According to the 1999 UNDP Human Development Index Report (based on 1997 data), Nepal ranks as 144th in the world with an HDI of This is a significant improvement over the previous report when 1995 data ranked Nepal at 152nd. The Gender-related Development Index in the 1999 report (using 1997 data) ranks Nepal at 121, with a GDI of Key indicators in the infrastructure area include the following: Population (1997): Life expectancy (1994) at birth: 21,424, (male), 53 (female) Gender distribution (1997): Adult literacy rate (1995): male 50.2%, female 49.8% 27.5%; (70% male, 30% female) Transportation Statistics: Railroads 101 km (1994): Roads (1995): 7,550 km., (41% paved); Airports (1999): one major (international) airport; 43 rural/regional airports, (8 are in main tourist areas, 26 are extremely remote, 24 have scheduled flights); Major Ports: Vehicles (1995): Carriers (1999): none cars = 4,949; trucks & buses = National (Royal Nepal Airlines),

3 34 registered others, (four of which are currently active). The social-welfare system consists of village development programs that attempt to provide basic necessities. Health facilities are inadequate in many areas, and inaccessible to most of the rural population. Overcrowding and poor sanitation, and shortages of medical personnel, are common. The government of Nepal moved from a constitutional monarchy, in which the king controlled much of the development, to a form of parliamentary democracy in early Since then there have been several elections, with the government having changed at least seven times in the last four years. According to the UNDP, these changes contribute to problems in managing development aid. External aid, a major factor in Nepal's development for the past four decades, currently finances about 70 percent of the development budget. About 60 percent of the aid is in the form of grants. While the aid comes from a large number of donors, the World Bank and the Asian Development Bank account for about 60% of the total. Japan and Germany lead in other donors. Other significant bilateral donors are Sweden, Finland, and Britain. Canada supplies about 2% of the total aid. CIDA's current Country Development Policy Framework (CDPF) was produced in It significantly reshapes and focuses the program from 15 sectors (during ) to two: sound water and energy management; and good governance through community development. The 1995 CDPF specifically refers to the TOSP as the last infrastructure project. CIDA has been supporting the air transportation infrastructure sector in Nepal since 1970, with an initial purchase of 7 Twin Otters between 1972 and Subsequent projects focused on aircraft maintenance, hangar construction, security facilities at the main airport, and refurbishing the Twin Otters to extend their life by years. The refurbishment project is almost complete. Project Performance Over the past 29 years the Twin Otter Program has had significant achievements: The opening up of rural and remote areas of Nepal not reachable through other modes of transport (other than walking), to provide medical care, material and supplies for building schools and medical care areas, the delivery of food, and the provision of services provided by various individuals such as doctors, nurses, and social workers. Providing a means for developmental efforts of other aid agencies to directly reach the poor in rural and remote areas. Developing a cadre of pilots who were trained to fly in some of the roughest terrain and weather conditions in the world, who have gone on to fly larger aircraft, and some of whom are key stakeholders in the new private sector airlines now being established.

4 Developing a core group of aircraft maintenance engineers and supervisors to be able to meet international standards of quality and safety support for the Twin Otters, many of whom have gone on to provide maintenance services to the new domestic airline carriers. Assisting the aviation policy and regulatory authorities to produce policies and regulations aimed at ensuring safety of passengers, which are now being adopted throughout the region by several countries. Influenced the Government of Nepal to produce policies of low-cost access to domestic air transportation for local Nepalese and Indians, (about $14 US), and which require the new domestic carriers to provide 40% of their services to the more rural and remote airports. Significantly improved airport security at the international airport in Kathmandu by providing security equipment and training, resulting in a safer environment for visitors to Nepal. Provided a means for tourists to conveniently visit remote and rural areas and bring foreign capital to the country; (it was estimated in an "impact" study done in 1990 that tourists using the Twin Otters generated 2.9% of the GDP of Nepal). The existence of the Twin Otters has contributed to the growth of cottage industries to provide crafts and agricultural products from the remote areas to tourists both visiting these areas, and those based in Kathmandu, (as well as providing these goods to those Nepalese located in Kathmandu). Resulted in Canada selling (or leasing) at least 12 Twin Otters to Nepal above those acquired by CIDA in the early 1970's, and allowed Canadian companies to benefit by providing spare parts, servicing of aircraft components, and airport planning and development services By working with local construction firms to build the tarmac and hangar in Nepalgunj, the CEA has received additional construction contracts in Nepal. And, finally, by building up a "good will" factor, the Twin Otter Program has resulted in Nepal trusting Canadians to provide the best people, products and services to meet their growing aviation needs, and approaching Canada first for solutions. While these are indicative of the overall successful achievements of the Twin Otter Program, the evaluation focused on two specific projects: the construction of a hangar at Nepalgunj, and the Twin Otter life-extension (refurbishment) projects. Two negative items were identified in these projects, both of which resulted from forces within Nepal which were beyond the ability of CIDA or the CEA to correct. The first is that the hangar in Nepalgunj is not being used to its full potential. The second is that training of women for the maintenance function (part of both projects) has not happened, even though 10 years have elapsed. The details of these items are provided in the results described below. The Nepalgunj Hangar Project, ( ) Photo 2 on page xvi is of the Nepalgunj hangar taken during the field mission (April, 1999). Photo 3 on page xvi is of the current staff quarters in Nepalgunj that were built by RNAC for use by its maintenance staff. (Only two of the six apartments were being used). The housing facility is nearby the hangar. Output Results - Nepalgunj Hangar:

5 Space for workshops and offices was increased 100% to meet a strategy of RNAC to move all domestic maintenance to Nepalgunj. The budget remained the same by eliminating procurement of Twin Otter spares, since existing spares at Kathmandu could be moved to Nepalgunj. Tools and equipment for the workshop and hangar, and some additional aircraft parts, and other tools were provided. A major training review by RNAC changed the concept of train the trainers of the project to one of training existing end users at RNAC and DCA, who would then be transferred to Nepalgunj. These would form the core group of management and maintenance staff to operate the base. (Since no women were in this core group, none were trained). Purpose-Level Results - Nepalgunj Hangar: By January, 1994, the hangar was functioning as intended. It was handed over to DCA as the landlord in January of 1993, who then leased the facilities to RNAC under a six-year lease ending Jan The lease has not yet been renewed, (as of April, 1999). Instead of training trainers, a change in RNAC s training organization structure resulted in training those who would immediately operate the base. Training was provided in Canada, and was co-ordinated with the opening of the hangar, to ensure an operational site. This training was considered to be a Phase I, with training of trainers to be done in a Phase II. Phase II has not been implemented, mainly because no request has been received to do so. At the end of the project, the staff was operational, and conducting regular maintenance. The trainees are still in Nepal, though some are no longer with RNAC, having joined the private sector. While the hangar was to be a major maintenance site for RNAC, only limited line maintenance is occurring now. Near the end of the project, (and independently from CIDA), the Central Aviation Authority of Nepal (CAAN) changed the domestic scene by allowing competition. As a result, RNAC's concept of providing a western centre for all maintenance changed to one of conducting maintenance at both Nepalgunj and Kathmandu. In addition, the site is not conducive to long-term residence due to the hot climate, and the poor support facilities (e.g., the community, lack of schools, poor power, etc.), for families of the staff to be based there. It has been difficult to retain staff on-site without special bonuses, and other incentives such as free flights to and from Kathmandu on a regular basis for the staff. RNAC had originally proposed that one of its contributions to the project would be the construction of an adjacent staff quarters, capable of housing 30 staff (and family), to be ready in advance of the hangar construction. The housing facility size was reduced to support 6 staff (and their family), and was not completed until after the hangar was in place. Goal Level Results - Nepalgunj Hangar: The hangar was to produce more frequent and reliable flights to most of the "built-up" remote communities in mid-west Nepal. This has happened, but not because of the hangar. The open skies policy is the major reason. Most mid-west flights are by non-rnac carriers, using Kathmandu as a base. RNAC flights have not been decentralized to Nepalgunj, and

6 their flights to the most remote communities are not conducted on a regularly scheduled basis. It was expected that the number of aircraft being serviced in Kathmandu would decrease. The opposite has happened, as a result of the policy to allow private domestic carriers to operate. The hangar facility was used well to refurbish 5 Twin Otters of the RNAC fleet as part of the TOSP. It is now being used for some helicopter maintenance, and limited maintenance. The skills of the maintenance unit of RNAC have increased as a result of the training received. The aircraft maintenance services of some of the private carriers has been increased due to their hiring of CIDA-trained aircraft maintenance personnel. Aircraft maintenance personnel and supervisors have been trained to international standards, and are willing to provide significant "on-the-job" training to new hires. Their families are better off, and their job opportunities have increased as a result of the private sector providing more opportunities. There has been a minor impact on the local Nepalgunj community, (households and individuals), due to the presence of the hangar maintenance staff, and "stop-over" tourists, who interact with the community in terms of obtaining goods and services (e.g., food and lodging). However, most of the trained technical staff are based in Kathmandu, and go to Nepalgunj only for special maintenance needs, usually for a period of a few weeks. The Refurbishment Project (the Twin Otter Support Project - TOSP, ). Photo 4 (on page xvi) is of an RNAC Twin Otter undergoing final refurbishing at the Nepalgunj hangar. Photo 5 is of a Twin Otter, and one of the private sector domestic aircraft (a Beechcraft) being used in competition with the Twin Otters. (Photos taken during the April, 1999 mission). Output Results: All 5 DHC-6 (Twin Otter) aircraft have been refurbished to meet operational specifications. Appropriate workshop and safety-related equipment has been acquired, and installed. Safety equipment was placed at 14 remote air bases, plus equipment incorporated within the TO s. Technical and management services were provided, and are effectively complete. Significant training (maintenance, certification, and management) has been undertaken. Additional training is awaiting the assignment by RNAC of women technicians to the cadre to be trained, and the assignment of personnel by DCA. Purpose-Level Results: Four DHC-6 aircraft are certified as air worthy (and meeting operational safety requirements) in accordance with international standards and are now in service, thereby extending the rural civil aviation infrastructure for up to 25 years. The fifth is awaiting special tail repairs by a New Zealand firm as contracted by RNAC, before final certification. Procedures were established and trained technicians are now in place with sufficient skills and knowledge to provide ongoing maintenance to meet safety and air worthiness requirements to international standards. CAAN s regulatory capability has increased to some

7 extent with training on certification. Regulations comparable to international standards are being developed. (They should be in place by the fall of 1999). Goal Level Results: Since the project is not complete, goal level impacts are anticipated. For example, the fact that the refurbishment provides an additional years usage of the Twin Otters, means that the social services (education, medical care, food for remote communities, etc.), and other impacts described above for the Program will continue to be provided, (on the assumption that RNAC continues to treat this area as a priority). New policies and regulations regarding maintenance and operation of aircraft in Nepal, in accordance with ICAO international standards, are now being finalized, (with CIDA support), to provide a safer environment for the aviation sector in Nepal, ultimately to the benefit of the society as a whole, and the rural population in particular. They are being used as a model for other nearby nations to develop a regional set of regulations. The ability of various aircraft maintenance units to maintain aircraft to international standards has been significantly increased. While the ability of RNAC to maintain their own level has decreased as trained staff are hired by other domestic carriers. No trained staff have left the country, and hence Nepal s overall aviation sector has benefited from this program in terms of ensuring safety requirements for aircraft are met. Key Factors Explaining Project Results Relevance was a key factor in both projects, in that each was directly in support of expressed needs, and in line with both Canadian and Nepalese policies and priorities at the time of initiation of each. However, the Nepalgunj hangar project is no longer relevant, given the change in the enabling environment when the Government of Nepal introduced an "open skies" policy, and the domestic carriers immediately moved to set up maintenance operations for their services in Kathmandu. The Twin Otter life-extension project is directly relevant, given that many of the rural airports (26 of 43) cannot extend their runways to allow modern aircraft to land, and that there are no other aircraft that can duplicate the Twin Otter. RNAC defines 24 airports as social airports which do not have a commercial purpose, but for which the Twin Otters provide basic human needs in terms of food, medicine, and access to other social services. The life-extension offers the potential to service these airports for another years. The Twin Otter was (and is) the right aircraft for Nepal, particularly in its role of providing social services to poorer communities in Nepal. Both projects reviewed were very cost-effective. Actual expenditures closely matched planned expenditures, with administrative costs in both being around 11%, (much better than the typical CIDA project where under 20% is considered to be good). The Nepalgunj hangar project is particularly noteworthy in this area. After the project began, the Government of Nepal decided to expand the office and stores area by 100%, in order to conduct more maintenance in Nepalgunj. The project was able to absorb this change at no increase in the overall budget, by applying good management practices, and trading off additional spares by using those already located in Kathmandu.

8 The appropriateness of the project was evident in the high satisfaction level by the country counterparts in the results of the work done. Both RNAC and CAAN were strongly involved in ensuring that the results were achieved. All requisite goods and services were provided in an efficient manner and at a competitive cost. A major area of concern, however, was the lack of commitment on the part of RNAC to fulfil its own commitments in support of elements related to each project. RNAC had planned to build an apartment complex to house the maintenance staff, in advance of the hangar being built. Five years after the start, RNAC finally completed a limited set of six apartments (of which only two are now being used), much less than was planned. They have also not been able to identify women candidates to meet the gender equity elements of the project. Hence, Canadian sources are not as satisfied with the results. In both cases, however, these components were not critical to the completion of the main purpose of the project. Partnership was also a key success factor. In the Nepalgunj hangar situation, a local construction firm was used to work with the CEA on the final fabrication. The firm continues to work with the CEA on projects outside of the scope of CIDA interventions. In the TOSP, the use of the maintenance unit of RNAC was crucial to complete the life-extension for 5 Twin Otters in the RNAC fleet. Canada supplied supervisory and certification personnel. Many of the RNAC maintenance staff now have progressed to be qualified to certify air worthiness of aircraft to international safety standards. Appropriate human resource utilization was specially important. CIDA was able to provide CEA project managers in both projects with excellent management and human interaction skills, while also providing an appropriate level of knowledge transfer. Both RNAC and CAAN provided competent staff to meet their direct contributions to completing the project, and with relevant skills. At the moment, there is a strong cadre of aircraft maintenance personnel who are ready to continue their work, and provide "on-the-job" training to new hires. One concern raised was that the insistence on a relatively higher percentage of women in a technical field that is greater than that achieved in Canada may be an unrealistic way of promoting gender equity. The project was able to react quickly and well to sudden changes (e.g., the need to double the size of the office and stores area, and the disbandment of a training centre), and provide solutions that would not compromise the purpose and outputs of the project. In this sense, the project management was informed and timely. However, trends in the country (e.g., the introduction of the open skies policy) were not monitored (since it was no-one's responsibility), yet this information was available in government planning documents. Both CIDA and the CEA had the necessary skills to assess the impact of these plans, but the information was not available in a timely manner. If available, and assessed, the hangar project might have been changed when considered in the context of a non-monoply environment. It would be good if the CIDA post officer kept track of such trends, and briefed CEAs on an annual basis on government plans and trends, allowing the CEAs to assess the impacts. The strongest parts of both projects were: a) the project management and financial control elements provided by the CEA; and b) the talented staff from the CEA, the construction firm, and the RNAC maintenance unit, who worked together as a team to meet deadlines and produce

9 quality results. The weakest component was the apparent lack of commitment of RNAC to live up to its obligations regarding providing women trainees, and building staff quarters. At the moment, the sustainability of the RNAC to continue to provide services to the remote and rural communities is at some risk. The domestic competition is removing staff (pilots and maintenance engineers) from RNAC, and the continual changing management at the top of RNAC does not provide for stability. The aviation sector in Nepal, however, will benefit from the skilled core of trained people that have received their knowledge via the Twin Otter projects. Review Themes and Issues Both projects were designed to ensure a reliable and safe air transportation infrastructure with a particular emphasis on providing transportation services to remote and rural areas. As such this infrastructure system allows doctors, nurses, and educators to reach these areas. Food and materials are also brought in. In a country where there are no roads or water transportation to most of these areas, and where "walking" can take days or weeks to reach the community, a system that allows access in hours is essential. To ensure access to this infrastructure, the government has instituted a policy of very low air fares (of about $14 US one-way to Kathmandu), for Nepalese and Indian residents in the country. (The fares for foreigners are about 5 times higher). All these elements support the issues of equity, access, and poverty reduction. Both projects were well designed, using partnership and participation to good effect. Capacity development of the individuals involved, and of the regulatory branches of CAAN and the maintenance unit of RNAC (key institutions) were undoubtedly improved. The Twin Otter refurbishment and the Nepalgunj hangar provide quality components for the transportation infrastructure within Nepal. To ensure that the upgraded Twin Otters remain in service in Nepal, an MOU was signed with RNAC which does not allow RNAC to dispose of the TOs for a period of 10 years, without CIDA approval. The results achieved are notable, and now simply need to be applied. The dilemma for CIDA is that the ultimate sustainability of this infrastructure is now in the hands of RNAC, and to some extent CAAN. Given the domestic competition now in place, and the ability of the private sector to offer salaries and opportunities that provide higher returns to individuals, RNAC is losing key staff in terms of pilots and maintenance crew. RNAC's decision in the early 1990s to disband its training centre is a contributing factor to the potential inability of RNAC to meet its future commitments. The sustainability of RNAC is at risk. RNAC could benefit from some strategic management training at the highest levels, perhaps with assignments to work with senior officials in airlines in Canada. This may help generate options to tackle its own sustainability. With the private sector conducting its maintenance at Kathmandu, and the limited ability of the government to enforce the requirement to conduct maintenance in a hangar, along with the current expansion of the grounds at the international airport at Kathmandu, (which will result in space to construct a hangar there), the sustainability of the Nepalgunj hangar is at risk. CIDA has supported a 1996 study under the TOSP to explore options for the future use of the hangar. The evaluation team suggested some others. Since CAAN is the landlord, they are looking at all

10 suggestions. It may also be possible to dismantle the Nepalgunj hangar (given its prefabricated nature), and reconstruct it at Kathmandu. The costs of this later option were not explored since this was beyond the mandate of the study. Some solution will be needed soon, or the hangar will not reach its full potential. Recommendations A number of specific lessons were evident in the two projects evaluated as described above. The following five recommendations reflect the lessons learned, while providing a more generic format that can be applied to infrastructure projects in general. For Policy: 1. Investments in infrastructure development must be based on a long-term commitment that is informed by a sound understanding of the local socio-economic context and institutional capacities at the management and resource allocation level. This understanding should be based on assessments of the commitment and capacities of all partners involved in the process. For Programs: 2. Consideration must be taken to complement activities of other donor agencies to minimize any overlap, including considering a partnership arrangement to meet the needs. 3. For infrastructure programs, there must be a capacity for the country, (and the supporting institutions/area/district in which the infrastructure is located): - to maintain and support, either immediately or through capacity building, the infrastructure facility, and - to provide an environment compatible with the requirements of any operational staff, (e.g., food, schooling, power, lodging, competitive salaries, etc.) For Projects: 4. The focus on gender equity in technical projects should be extended to organizations directly, (and possibly indirectly), related to supporting project, particularly if their are policies that may limit engaging women in a technical occupation. The benchmark for women's participation in the project should be based on achievements in the developed world, and sound gender analysis. 5. Careful consideration must be given to the ability and commitment of the recipient country to provide the necessary resources, policies, and processes to ensure sustainability of an infrastructure project. Analyses of the countries long-term plans and of government policies that may preclude the use of resources (e.g., policies about women in technical occupations, etc.), need to be conducted in advance of a project as well as during the project. The means by which CIDA may promote sustainability, (e.g., financial penalties such as withholding or cancelling funds for not meeting commitments), should be defined in the project plans.

11 Conclusions The 29-year Twin Otter Program has proven to be an excellent intervention by CIDA, with direct impacts on poverty alleviation, and improvements in life styles (though only in limited communities next to airport locations in Nepal). The infrastructure components evaluated (the hangar, and the life-extension of the Twin Otters) have the potential to serve Nepal well for many years to come. The main risk in the future is the ability of the Government, (CAAN and RNAC in particular), to effectively use these components to support the delivery of development services to the poorer areas of Nepal. The limited use of the hangar at the moment, and plans to construct maintenance facilities at Kathmandu may make this component redundant. The ability of RNAC to maintain the Twin Otters for the next 20 years, and continue service to the social airports is also in question. Hence, while both projects were relevant to the needs expresses by the beneficiaries, well managed, and cost-effective, their sustainability is at risk in the current open skies and privatization environment. Figure E-1: Map of Nepal / Carte du Népal, (Grolier Encyclopedia, 1998)

12 Photo 2: The Nepalgunj Hangar Photo 3: RNAC Nepalgunj Staff Quarters Photo 2 : Le hangar de Nepalgunj Photo 3 : Les logements du personnel d'entretien de la RNAC à Nepalgunj Photo 4: RNAC Twin Otter in the Nepalgunj Hangar Photo 4 : Un Twin Otter de la RNAC dans le hangar de Nepalgunj Photo 5: Beechcraft and Twin Otter in Nepal Photo 5 : Appareils Beechcraft et Twin Otter au Népal