Azerbaijan: Road Network Development Program (Tranche 3)

Horizontal Tabs

Lessons

Poor engineering designs can lead to additional costs and implementation delays.

The design and supervision consultant comprehensively revised the initial detailed engineering designs (DEDs) of the project roads, sections B and C of the Masalli–Astara expressway, which were done during the preparation of project 1. Despite the revamp, it became clear after the start of the road works that additional geotechnical surveys had to be undertaken, including to test soils to improve the stability and safety of high embankments. To address this need, a specialized consulting firm was engaged to fully review the designs, undertake geotechnical investigations, conduct testing in high-risk project areas, and advise the contractors on necessary changes to the contracts. The additional activities led to additional cost and implementation delays.

Project Cycle Stage:

Preparation

Implementation

Lack of interagency coordination and project oversight platform weakens problem-solving and the implementation of integrated, cross-sector solutions.

The project steering committee (PSC) had not been established, constraining proactive problem-solving, promotion of the project’s soft agenda, and an integrated approach to infrastructure development. There were several challenges encountered where a properly functioning PSC could have mattered. For example, additional works undertaken on the power transmission poles installed by another government agency after the project had acquired the land for road works, which entailed additional cost, could have been settled had a higher-level oversight committee attended to this. Problems in the implementation of the gender action plan, the installation of the weighing stations, and the construction of a utility duct for the fiber-optic cable along the project road to modernize the telecommunications between central and southern Azerbaijan may also have been addressed, if elevated to the PSC for decision. Overall, a fully operational PSC could have promoted integrated and more accountable project implementation.

Project Cycle Stage:

Implementation

Inadequate coordination of construction and asset management functions could put at risk the sustainability of road sector assets.

Lack of coordination between the executing agency (EA) project implementation unit (PIU) and road maintenance unit resulted in vehicle weighing stations not being installed along the project road. This contrasted with the installation of weighing stations along state-funded roads, and has compromised the need to control axle overloading through the weighing stations. The situation could have been avoided if a coordination mechanism between the PIU and the road maintenance unit had been designed during project preparation and then financed during implementation. As weighing station issues had also been encountered in project 1 and in previous road projects in Azerbaijan, it might be necessary to incorporate in the design of future road projects in Azerbaijan a capacity building component for the road maintenance unit of the Azeravtoyol State Agency, the executing agency.

Project Cycle Stage:

Preparation

Implementation

A 50:50 quality- and cost-based selection method favors the engagement of the most qualified auditors for ADB-financed projects in Azerbaijan.

The two local audit firms, chosen using the least-cost selection method, provided poor reports that required corrections. Submission of the audited project financial statements during 2009–2011 and 2013–2016 were significantly delayed by 6–8 months. In contrast, the quality of the project’s last audit report, covering transactions from the loan closing date in September 2017 to the financial closing date of the Asian Development Fund loan in April 2018 was adequate. This is because the auditor was selected based on a new arrangement adopted in March 2018, that is, auditors were selected from a list of eligible audit firms in Azerbaijan following the 50:50 quality- and cost-based selection method.

Project Cycle Stage:

Implementation

A comprehensive road maintenance program, with adequate and transparent funding, is vital to extending a road network’s productive life.

The transparency and accountability of road maintenance funding must be improved to extend the road network’s productive life. To this end, developing a comprehensive road maintenance program could be considered. The program may cover (i) private sector participation (choice of the most suitable modalities and country areas); (ii) road asset management principles and funding (e.g., performance-based budget allocations to regional maintenance units, road asset inventory, and database); and (iii) enforcement of a vehicle axle load management system (e.g., establishing more vehicle weighing stations along the main roads and setting up an automated overloading control and monitoring system). Subject to the positive test results from the first tolling effort on one of the country’s highway, application of tolling on other roads and transfer to the private sector of tolling operation and maintenance may be explored. Such expansion would free up resources and support the road sector’s long-term sustainability.

Project Cycle Stage:

Preparation

Implementation

Completion and Evaluation

Background

Roads are the most important element of Azerbaijan’s in-land transport network and the country’s vehicle fleet was expected, as of 2007, to rapidly increase over the medium term. To expand the road network, as well as to rehabilitate/reconstruct sections that were in unsatisfactory condition because of inadequate maintenance funding and poor management of axle load control, the Asian Development Bank (ADB) approved in September 2007 a multitranche financing facility for the government’s Road Network Development Program (RNDP) for an aggregate amount of $500 million. In December 2011, ADB approved a $200 million loan for RNDP project 3.

Complementing projects 1 and 2, project 3 aimed to contribute to sustained economic and social development in Azerbaijan by improving the Masalli–Astara section of the Alat–Astara highway connecting Baku, the capital, to the country’s southern border. The project’s expected outcome was development of an efficient, safe, and sustainable transport corridor, linking the country domestically and internationally. It had one intended output: construction of sections B and C of a four-lane expressway between Masalli and Astara in the southern corridor, with access roads rehabilitated. Said sections were originally part of project 1 but were dropped mainly because of insufficient funding under tranche 1.

Despite the almost 2.8-year delay and construction cost about 10% higher than planned, the project achieved its output targets in terms of road length and international roughness index. Project completion was delayed by (i) the slow pace of land acquisition, (ii) the need to move public utility infrastructure (e.g. power transmission poles) installed by another government agency on the already secured and cleared land for the project road; (iii) unforeseen construction site issues such as high water tables; and (iv) extreme weather conditions such as the subtropical rainy season from October 2013 to April 2014.

Along with the completion of section A under project 1, the expansion and improvement of sections B and C of the Masalli–Astara expressway under this project had reduced the average travel time from 90 to 40 minutes. Transport cost consequently declined by an estimated 25%–30%. Traffic volume on the road has been increasing and will eventually expand economic activities in the project area. With travel time reduced, most villagers can go to town centers more frequently, up from 5 to 17 times a year.

Initially, the Ministry of Transport was the project executing agency (EA), and the Azer Road Service (ARS), an open joint-stock company under the Ministry of Transport, was the implementing agency. Following the reorganization of the Ministry of Transport in January 2016, ARS, renamed the Azeravtoyol State Agency (AAY), became the EA. In December 2017, the AAY was restructured into the State Agency of Azerbaijan Automobile Roads, a public legal entity. A project implementation unit within the AAY carried out the project on a day-to-day basis.

Project Information

Project Name:

Road Network Development Program (Tranche 3)

Report Date:

August, 2020

Main Sector:

Transport

Country:

Azerbaijan

Project Number:

39176-043

Report Type: