Mr. Woo-Hyun Kwon AH-PreFS-Investment Forum · 2015-01-30 · UNESCAP ASIAN HIGHWAY INVESTMENT FORUM Pre‐Feasibility Studies of Selected Asian Highway Sections Woo-Hyun KWON UNESCAP

UNESCAP ASIAN HIGHWAY INVESTMENT FORUM

Pre‐Feasibility Studies of Selected Asian Highway Sections

Woo-Hyun KWONUNESCAP Consultant

PPP Advisor to DPWH, PhilippinesSr. Manager, KEC, Korea

Bangkok, October 8, 2013

Contents

1. Description of the Study

2. Bangladesh: Jessore-Banpara (AH41)

3. Kyrgyzstan: Bishkek-Chaldova (AH5)

4. Mongolia: Khovd-Uliastai (AH32)

5. Myanmar: Takaw-Kyaintong (AH2)

6. Recommendation

Limitation of the study

1. Description of the study

Investment ForumPre‐Feasibility Studies of Selected Asian Highway Sections

Outlook of Asian Highway (AH) Network

Methodology(Technical & Economic Analysis)

Outlook of Asian Highway Network (32Countries, 141,000km)


UNESCAP Efforts on identifying investment needs

2006: Priority investment needs for Asian Highway (AH)

2007: Pre-Feasibility study of the selected AH routes

Nov 2007: Investment Forum

Nov 2010: Promotion of investment in the selected AH routes(Trust Fund by Korea Expressway Corp.)

2013: Pre-FS of the selected AH in 4 countries

Oct 2013: Investment Forum


Limitation of the study (Recommendations for a formal FS)

Routes selection by recipient countriesin light of their national priorities and strategic contexts (Upfront rationale review may be of help)

Limited resources in budget, time and inputs

Brief field ‘trips’ (1~3 day), ‘secondary’ data usageSafeguarding review (social & environmental)Benefits of improved cross-border connectivity including

lifting obstacles/barriers shall be further explored

Initial evaluation of candidate routes, mainly with low demand, to facilitate the interventions from donors/investors


Methodology


Economic Analysis


Basic Assumptions (Economic Analysis)

Construction: 2 years (Bangladesh, Kyrgyzstan, 2013-14)3 years (Mongolia, Myanmar, 2013-15)

Analysis period : 2015(16) ~ 2044(45) year * 30 years after opening

Discount rate : 12.0% (proposed value of ADB)Basic Price: Market price in 2011

(Economic price converted from market price)

Evaluation CriteriaInternal Rate of Return (IRR) > Social Discount RateBenefit - Cost Ratio (B/C) > 1Net Present Value (NPV) > 0


Strategic Context

Socio-economic characteristics

Economic Analysis

Traffic Forecast

Technical Feasibility

Project Summary



Conclusion and Recommendation

Project summary


Upgrading Jessore-Banpara (148km, 2 lane, AH class 2)

Jessore-Jhenaidah (103KM)Jhenaidah-Jessore (45km)

(Rehabilitation by ADB)

Capacity Building (Apr 26, 2013)

Preparation of proposal(Traffic projection,Economic analysis, Safeguarding, PPP)


Benapole

Mongla

Dhaka

Banpara

Jhenaidah

A part of 6th five-year Plan(2010/2011 to 2014/2015)

Principal N to S corridorin the western region

connecting Mongla sea port and Benapole dry port

to and from India and land-lockedNepal and Bhutan

Strategic context

Socio-economic characteristics (2011)


Population: 150.5 million (Annual population growth: 1.32%)

GDP per capita: US $735 (GDP Growth Rate: 6.7%)

No. of registered vehicles: 0.5 million (Growth rate 6.3%)including Rickshaw and MC: 1.5 million (Growth rate 9.2%)

Road system inventory (RHD)

Road Type Total Length(km) Road Administrator

National Highway 3,492 RHD

Regional Highway 4,268 RHD

Zilla Road 13,280 RHD

Sub-Total 21,040



Field trip: Aug 26-27, 2013 (Dhaka-Banpara-Jessore)

Findings and Recommendations

Alignment: AH Class2, Most sections run through flat terrainCity bypass (Kushita) is recommended

Pavement: 2 lane DBST and AC with overall fair conditionPartial repair based on the current alignment

Bridges: 12 bridges with relatively good conditionsSocial & environmental impact: Kushita bypass onlyRoad safety:

• Integration of 2 close roundabouts (N6 and N705 IC)• Relocation of Bus stops in the IC• Separation of NMT by frontage road and safety furniture


Division of sectionsSection 1 (Jessore-Jhenaidah, 45km): Rehabilitation by ADBSection 2 (Jhenaidah-Paksey, 73km): Kulna Div.Section 3 (Paksey- Banpara, 32km): Rajshahi Div.


Section 2 (Jhenaidah-Paksey, 73km)


Section 2 (Jhenaidah-Paksey, 73km)


Section 3 (Paksey-Banpara, 32km)


Section 3 (Paksey-Banpara, 32km)


Traffic forecast

Current Traffic condition: 4,900~5,900 veh/day (2013)

Traffic Projection: max 13,500veh/day (2044)

Jhenaidah-Dasuria: 6,400 (2015)-13,500 (2044)Dasuria-Banpara: 5,500 (2015)-11,500 (2044)

Improvement Plan

Alt 1(101km): AC overlay(86km) with 2 lane bypass (15km)Alt 2(105km): AC overlay for the whole section (105km)Alt 3(101km): Reconstruction(86km) with 2lane bypass(15km)


Cost estimates

Alternative Contents Quantities Unit cost (US $)

Cost (US $ in thousands)

Alternative-1

a. Construction of the new road 15km 913,593 13,704

b. Overlay of the existing road 86km 139,925 12,034

Total 101km 25,738

Alternative-2 a. Overlay of the existing road 105km 139,925 14,692

Alternative-3 a. Reconstruction of entire section 105km 913,593 95,927

Unit cost estimation (RHD)

Preliminary cost estimation


Economic Analysis

Cost Estimation: Construction, Maintenance (periodic+ routine)Benefits: VOC(Korean Model), TTS(RHD)

Result of Economic Analysis

Content � Alternative 1 � Alternative 2 B/C 1.408 2.761

NPV (USD 1,000) 9,086.8 19,521.8 IRR 16.78% 28.22%


Conclusion

1. Jhenaidah-Banpara section (AH41) shall be the principal N to S corridor in the western region in Bangladesh connecting both nation’s 2nd largest Mongla sea port and Benapole dry port.

2. The improvement of surface, from DBST to AC overlay with Kushita bypass, was proposed with total cost of USD 25.7m.

AC overlay (86km, USD 13.7million)Construction of Kushita bypass (15 km, USD 12.0million)

3. Traffic projection in 2045 is max 13,442 veh/day.

4. Alt 1 and 2 are economically feasible.


Recommendation

1. AC overlay with 2 lane bypass (Alt 2) is found to be the default option as a whole.

2. Reconstruction (Alt 3) is found to be economically infeasible; however, a holistic, instead of demand-driven, approach shall be in place by thorough survey considering:

relatively small cost (USD 95m)enhancing mobility and cross-border connectivityeconomic and social development in the western region of Bangladesh and neighboring land-locked Nepal and Bhutan

Strategic Context


Economic Analysis

Traffic Forecast


Project Summary


3. Kyrgyzstan: Bishkek-Chaldovar (AH5)


Project summary


Upgrading Bishkek-Chaldova(92km, 2 lane, AH class 1 & 2) Bishkek-Karabalta (60km, Rehabilitation by ADB)

Capacity Building (Apr 26, 2013)Preparation of proposal(Traffic/Economic analysis, Safeguard)

1.Bishkek-Kara Balta-Chaldovar section (92km): This east-west corridor is in the GOK’s top priority as well as N-S Bishkek-Torougart (AH61) and Kara Balta-Osh corridors.

2. It is AH Class I and II.

2. Construction of new Bishkek-Kara Balta highway (4 lanes) by PPP: The capacity of Bishkek-Kara Balta corridor could be enhanced significantly with new highway.

Strategic context




GDP per capita: US $880 (GDP Growth Rate: -1.4%)

No. of registered vehicles: 0.31 million (Growth rate 4.1%)

Road system inventory (MOTC)

By Class International National Local Total

Length (km) 4,163 5,678 8,969 18,810

% 22 30 48 100



Field Survey: June 7, 2013


Alignment: Level terrain, straightPavement: 2, 4-6 lane AC with overall good condition

Geology: On the huge alluvial fan from the mountainous region of Tien Shan, which may cause uneven settlement

Social & environmental impact: Several medium-sized cities are dispersed, and also many resident buildings and various markets are located alongside of the road

Division of sectionsSection 1 (Bishkek-Kara Balta, 60km): Rehabilitation by ADBSection 2 (Kara Balta-Chaldovar, 32km)


Section 1 (Bishkek-Kara Balta, 60km)


Section 1 (Bishkek-Kara Balta, 60km)


Rehabilitation: ADB’S CAREC Corridor 3 (Bishkek-Osh Road) Improvement Project, Phase 4

New PPP Road (4 lane, Preliminary design in 1988)• It will run parallel to the project road, approx. 5km northward• Financial viability may be slim in the near term

Toll rate for PPP road (Som)

PPP road travel time (%) in compare to existing road

Traffic Volume (2044, vehicle/day) PPP road Existing Road

free 75.0% 16,174 6,607

10 84.2% 13,441 9,340

20 93.2% 11,163 11,618

30 102.3% 8,429 14,352

40 113.0% 5,695 17,086

50 120.5% 3,417 19,364

Section 2 (Kara Balta-Chaldovar, 32km)


Section 2 (Kara Balta-Chaldovar, 32km)


Built in 1955 (the latest rehabilitation in 1985)The overall surface condition is fairMany potholes/scaling/aggregate separations were identified

Traffic forecast

Current Traffic condition: 2,650~7,200 veh/day (2010)


Bishkek-Kara Balta: 9,600 (2015)-23,200 (2044)Kara Balta-Chaldovar: 3,520 (2015)-8,540 (2044)

Improvement Plan

Alt 1: New PPP road in Bishkek~Kara Balta (MOTC proposal)Alt 2: Widening of Kara Balta~Chaldovar from 2 to 4 lanes

Alt 3: Overlay with partial repairs and improvement for Kara Balta~ Chaldovar section


Cost estimatesUnit cost estimation (Bishkek-Osh Project)Preliminary cost estimation (Alt 3)


Work Name Unit Quantities Unit cost (US $)

Cost (US $ in thousand)

A. Base Cost

1. Civil Works

a. Pavement km 32 168,000 5,376.0

b. Improvement of road1 km 0.96 457,500 439.2

c. Replacement of bearing EA 20 6,100 122.0

d. Installation of wing wall at Pipe EA 2 1,050 2.1

2. Consulting Services 36.5

Subtotal (A) 5,975.8

B. Contingencies

1. Physical Contingency 597.6

2. Price Contingency 280.9

Subtotal (B) 878.5

Total 6,854.3

Economic Analysis

Cost Estimation: Construction, Maintenance (periodic+ routine)Benefits: VOC(Korean Model), TTS(RHD)

Result of Economic Analysis (Alt 3)Alternative 1 (with railway crossing improvement)Alternative 2 (without railway crossing improvement)


Content � Alternative 1 � Alternative 2 B/C 0.746 0.753

NPV (USD 1,000) -2,465.3 -2,302.8 IRR 6.61% 6.59%


Considering relatively low demand (8,600-2,3200veh/day) until year 2044 in Bishkek~ Chaldovar, capacity enhancement could be done as follows:

1. AC overlay with partial repairs (Kara Balta-Chaldovar) is found to be the default option as a whole.

2. However, widening(2->4) of Kara Balta~Chaldovar can be considered to ensure the consistency of the corridor.

3. Secondly, prepare new PPP road in Bishkek~Kara Balta as demand in Bishkek~Kara Balta~Osh corridor grows in the future.


Strategic Context


Economic Analysis

Traffic Forecast


Project Summary




Project summary


Upgrading Khovd-Uliastai (473km, Gravel road, AH class III)

Capacity Building (May 8, 2013)Preparation of proposal(Traffic/Economic analysis, Safeguard)

1. Formulation of the principal E to W corridor in Mongolia by connecting Khovd~Uliastai (473km), a part of AH32.

2. It connects:

Khovd, the capital of Khovd Province, the far western region of Mongolia with 17 ethnicities; and

Uliastai, the capital of Zavkhan Aimag

3. Provision of improved connectivity and mobility in western region will facilitate economic and social development in the regional as well as national level.

Strategic context




GDP per capita: US $1,870 (GDP Growth Rate 6.9%)

No. of registered vehicles: 0.61 million (Growth rate 19.3%)

Road system inventory (MRTCUD)


Administrative Level

Paved Unpaved Total

Con’c AC Gravel Improved Earth Earth

State 56.6 2,007.3 1,508.4 1,312.3 6,282.6 11,136.2 Local 55.0 276.0 498.0 499.0 36,637.0 38,031.0

Total 111.6 2,283.3 2,006.4 1,811.3 42,919.6 49,186.2


Field Survey: May 9-11, 2013 (Ulanbaataar-Khovd-Uliastai)


Alignment: •Mostly flat and rolling terrain in dry steppe and Gobi desert (availability of underground water shall be investigated)• AC surfacing is needed except Khovd and Uliastai section•To avoid freezing and thawing, a proper height of embankment and drainage system shall be in place.

Pavement: Earth/gravel road except Khovd and UliastaiBridges: 7 bridges with good conditions

Social & environmental impact: Khar Us National Park

Division of sections: 8 homogeneous sections


Section 1-3 (Khovd-Sar Khairhan, 174km)



Section 4-5 (Gobi dessert, 134km)

Section 6-8 (Zavhanmandal-Uliastai, 165km)


Traffic forecast

Current Traffic condition: 100~500 veh/day (2011)


Improvement Plan

Sec 1 (39km, Khovd~Myangad): Improvement of AC pavementSec 2~7 (408km): Construction of 2 lane AC pavement Sec 8 (26km, Aldarkhaan~Uliastai): AC surfacing is underway

From Myangad to Sar Khairhan Bridge (Section 2 and 3, 135km), a northern bypass of Khar Us Lake National Park and Har Lake wasproposed.


Cost estimates

Unit cost estimation (Road Masterplan and FS, WB, 2007)Preliminary cost estimation: USD 154~164 million


Economic Analysis

Cost Estimation: Construction, Maintenance (periodic+ routine)Benefits: VOC, TTS (Korean Model)

Result of Economic AnalysisB/C=0.253, NPV=-8.7 million, IRR=1.84%

Previous Study (WB, 2007): IRR = 15.4%

Potential benefits to the regional agriculture GDP (82% of total benefits)

Recommendation

1. 2-lane AC pavement is found to be economically infeasible; however, a holistic, instead of demand-driven, approach may be appropriate for the countries like Mongolia, which represents very low initial values of major indicators for traffic projection including registered vehicles and population.

2. In this regards, improved connectivity and mobility shall be provided in the near term with sustainable financing solutions, which will be vital for economic and social development in the western region as well as whole nation.


Strategic Context


Economic Analysis

Traffic Forecast


Project Summary




Project summary


Upgrading Takaw-Kyaintong (183km, 2 lane, AH class III)

Taunggyi-Takaw, Meiktila-Taunggyi & Kyaingtong-Tachilek: Rehabilitation & maintenance BOTs are in place

Capacity Building (Apr 3, 2012)

Preparation of proposal(Traffic/Economic analysis, Safeguarding, PPP)

1. One of the top priorities in Road Development Plan (3rd

Five Year Plan 2011-16). Takaw-Kyaintong section (183km) is the only link without any rehabilitation plan to date. It connects:

Mandalay, the 2nd largest city of Myanmar; and Taunggyi, the capital of Shan State borders China, Lao PDR and Thailand

2. It completes the E-W corridor of Northern GMS, which leads to Kyaukphyu seaport in Myanmar at its western end and Haiphong seaport in Viet Nam at its eastern end.

3. It can induce ocean freight through the Malacca Strait to theKyaukphyu deep seaport by use of the project especially to and from Guangxi Zhuangzu and land-locked Hunan.

Strategic context


Strategic context



Population: 48.4 million (Annual population growth: 0.69%)GDP per capita: US $399 (GDP Growth Rate: 12.1%)No. of registered vehicles: 0.42 million (Growth rate 5.0%)

Road system inventory (Public Works, MOC)


Road Classification Road Length (km)

Expressway Class 568

Degree I, II, III Class 2,413

Degree IV, V Class 3,142

Degree VI Class 11,067

Total length 17,190


Field Survey: April 4, 2012


Alignment: Frequent steep gradients or sharp curvesPavement: Deterioration in the surface condition of DBST

especially in the steep gradient section, Below AH Class IIIBridges: Single lane, temporal, bridges were used widely. Social & environmental impact: To secure 2 lane width,

additional cutting and embankment are unavoidable.(2 lane ROW is already acquired for future widening)

Division of 3 sections


Section 1 (Takaw-Mongpyin, 79km)


Section 2 (Mongpyin-Tontar, 48km)


Section 3 (Tontar-Kyaintong, 56km)


Traffic forecast

Current Traffic condition: 76 veh/day (2010)

Traffic Projection: max 2,600 veh/day (2045)

25% of the traffic on AH14 Muse-Hsenwi section in China, was assumed to be diverted

Improvement Plan

Alt-1: 2lane DBST pavement, no bridge improvementAlt-2: 2lane DBST pavement, 2 lane bridge replacementAlt-3: 2lane AC pavement, no bridge improvementAlt-4: 2lane AC pavement, 2 lane bridge replacement


Cost estimatesUnit cost estimationPreliminary cost estimation


Alternatives Contents Quantity Unit cost(US $)

Cost(US $,thousand)

Alternative-1

1. Improvement of pavement(DBST pavement) 89 km 210,000 18,690

2. Minor change in road alignment 94 km 550,000 51,700Sub Total 70,390

Alternative-2

1. Improvement of pavement(DBST pavement) 89 km 210,000 18,690

2. Minor change in road alignment 94 km 550,000 51,7003. Reconstruction of existing bridgesto two-lane bridges 3,397 m2 2,070 7,032

Sub Total 77,422

Alternative-3

1. Improvement of pavement(asphalt concrete pavement) 89 km 310,000 27,590

2. Minor change in road alignment 94 km 640,000 60,160Sub Total 87,750

Alternative-4

1. Improvement of pavement(asphalt concrete pavement) 89 km 310,000 27,590

2. Minor change in road alignment 94 km 640,000 60,1603. Reconstruction of existing bridges to two-lane bridges 3,397 m2 2,070 7,032

Sub Total 94,782

Economic Analysis

Cost Estimation: Construction, Maintenance (periodic+ routine)Benefits: VOC, TTS (Korean Model)

Result of Economic Analysis


Contents Alt.1 Alt.2 Alt.3 Alt.4

B/C 1.257 1.152 0.985 0.920 NPV (US 1,000) 14,218.9 9,203.2 -1,077.7 -6,093.5

IRR 14.70% 13.62% 11.83% 11.07%


1. DBST surfacing with reconstruction of existing one-lane bridges to two-lane bridges is recommended with total cost of USD 77.4m.

2. However, AC pavement option (USD 100m) shall be further investigated considering the durability and maintainability of DBST.

3. Significant change in alignment including tunneling may be needed to secure its strategic role as an alternative of ocean freight through the Malacca Strait since the project road shall induce heavy vehicles mainly in this context.


6. Recommendation


Challenges in ‘low demand’ countries

Holistic Approach vs. Project-level viability

6. Recommendation

National Priority vs.Financial Viability

Equitable Developmentof Infrastructure

Network effect

Demand -> Supply vs. Supply -> Demand

Korea in 1960s : $100 GDP per capita

6. Recommendation

Questions, comments?

Contact W. KWON at [email protected]

and/or +63-915-940-3338 (Manila)

+82-10-2378-0305 (Seoul)


Documents

Mr. Woo-Hyun Kwon AH-PreFS-Investment Forum · 2015-01-30 · UNESCAP ASIAN HIGHWAY INVESTMENT FORUM Pre‐Feasibility Studies of Selected Asian Highway Sections Woo-Hyun KWON UNESCAP