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Report and Recommendation of the President

to the Board of Directors

Lanka
Project Number: 43322
October 2009

Proposed Asian Development Fund Grant


Democratic Republic of Timor-Leste: Road Network
Development Sector Project
CURRENCY EQUIVALENTS
The currency in Timor-Leste is the US dollar.

ABBREVIATIONS
ADB – Asian Development Bank
DRBFC – Directorate of Roads, Bridges, and Flood Control
EMP – environmental management plan
ICB – international competitive bidding
IEE – initial environmental examination
JFPR – Japan Fund for Poverty Reduction
JICA – Japan International Cooperation Agency
km – kilometer
MOF – Ministry of Finance
MOI – Ministry of Infrastructure
NCB – National competitive bidding
NGO – nongovernment organization
PISC – project implementation support consultant
PMU – project management unit
RMP – road maintenance program
RSIP – Road Sector Improvement Project
TA – technical assistance
TLSLS – Timor-Leste survey of living standards
UN – United Nations

NOTES
(i) The fiscal year (FY) of the Government and its agencies ends on 31 December.
FY before a calendar year denotes the year in which the fiscal year ends, e.g.,
FY2009 ends on 31 December 2009.
(ii) In this report, “$” refers to US dollars.

Vice-President C. Lawrence Greenwood, Jr., Operations 2


Director General S. Hafeez Rahman, Pacific Department (PARD)
Director S. Ra, Pacific Operations Division, PARD

Team leader C. Chen, Infrastructure Specialist, PARD


Team members M. Ahmed, Principal Natural Resources Economist, PARD
I. Ahsan, Counsel, Office of the General Counsel
E. Brotoisworo, Senior Safeguards Specialist, PARD
R. Guild, Principal Transport Specialist, PARD
H. Masood, Head, Project Administration Unit, PARD
O. Nazmieva, Financial Control Specialist, Controller’s Department
H. Noro, Financing Partnerships Specialist, Office of Cofinancing
Operations
S. Tanaka, Social Development Specialist, PARD
A. Woodruff, Young Professional (Economic), PARD

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
GRANT AND PROJECT SUMMARY i
MAP
I. THE PROPOSAL 1
II. RATIONALE: SECTOR PERFORMANCE, PROBLEMS, AND OPPORTUNITIES 1
A. Performance Indicators and Analysis 1
B. Analysis of Key Problems and Opportunities 2
III. THE PROPOSED PROJECT 7
A. Impact and Outcome 7
B. Outputs 7
C. Special Features 8
D. Project Investment Plan 10
E. Financing Plan 11
F. Implementation Arrangements 11
IV. PROJECT BENEFITS, IMPACT, ASSUMPTIONS, AND RISKS 15
A. Economic Analysis 15
B. Poverty Reduction and Social Impact 15
C. Environmental Impact 16
D. Climate Change Adaptation 17
E. Social Safeguards 17
F. Assumptions and Risks 17
V. ASSURANCES 18
VI. RECOMMENDATION 20

APPENDIXES
1. Design and Monitoring Framework 21
2. Road Sector Analysis 24
3. External Assistance to the Road Sector 29
4. Subproject Eligibility Criteria and Selection Procedure 31
5. Road Maintenance Program 34
6. A Linked Project: Our Roads, Our Future—Supporting Local Governance and
Community-Based Infrastructure Works 38
7. Detailed Cost Estimates 39
8. Implementation Schedule 41
9. Procurement Plan 42
10. Summary Poverty Reduction and Social Strategy 46
11. Summary Initial Environmental Examination 52
12. Summary Resettlement Framework 59

SUPPLEMENTARY APPENDIXES (available on request)


A. Medium-Term Road Network Development Program
B. Sample Subproject Document: A11-01
C. Initial Environmental Examination: A11-01
D. Poverty and Social Analysis: A11-01
E. Sample Subproject Document: A03-03 and 04
F. Initial Environmental Examination: A03-03 and 04
G. Poverty and Social Analysis: A03-03 and 04
H. Procurement Capacity Assessment
I. Financial Management Assessment
J. Outline Terms of Reference: Project Management Unit
K. Outline Terms of Reference: Project Implementation Support Consultants
L. Environmental Assessment Review Procedures
M. Climate Change Vulnerability, Impact, and Adaptation
N. Resettlement Framework
GRANT AND PROJECT SUMMARY

Borrower Democratic Republic of Timor-Leste

Classification Targeting classification: General intervention


Sector (subsector): Transport, and information and communication
technology (road transport)
Themes (subthemes): Economic growth (widening access to markets
and economic opportunities); regional cooperation and integration
(cross-border infrastructure); and capacity development (institutional
development)
Climate change: Climate change adaptation
Location impact: Rural (medium impact), urban (low impact), national
(high impact), regional (medium impact)

Environmental This category B project and two sample subprojects have undergone
Assessment initial environmental examination. Selection criteria have been set to
ensure that future subprojects comply with the project environmental
classification. An environmental assessment review procedure, which
has been prepared, will guide the environmental assessment of the
subprojects.

Project Description The Project is sector-based in design. It will finance part of the medium-
term road network development program. At the end of the Project,
(i) about 232 kilometers (km) of national roads will have been improved
to maintainable condition; (ii) a road maintenance program (RMP) will
have been established; (iii) access roads and parking areas of cross-
border facilities will have been built at Mota Ain, Salele, Sakato, and
Oesilo; (iv) national contractors will have gained improved capacity to
implement roadworks; (v) the Ministry of Infrastructure (MOI) will have
improved its ability to administer road projects and the RMP; (vi) road
safety awareness in the project areas will have increased; and
(vii) climate-proofing measures will have become a regular part of road
design and construction.

The selection of subproject roads to be rehabilitated will be guided by


the medium-term road network development program and based on the
selection criteria and procedure agreed on by the Government and the
Asian Development Bank (ADB).

The RMP will first be established under the Project in three pilot districts
in the border region—Bobonaro, Covalima, and Oecussi. Midway
through project implementation, MOI will prepare a strategy for
expanding the RMP to cover the entire road network.

Rationale A medium-term strategic planning exercise is under way to set the key
priorities for the country’s development and sustainable economic
growth. Infrastructure development is among the three predefined
medium-term strategic objectives (the other two are poverty reduction
and private sector development), and roads and water supply
infrastructure are a top priority for 2010. The Government has urged the
ii

line ministries and development partners to align their budgets with


national priorities. The development of road sector is widely recognized
as a key factor in creating jobs, promoting private sector growth,
increasing agricultural productivity, and reducing poverty.

While strategic planning by the Government is making progress, there


is a need for better coordination with development partners. Working
groups with members from government agencies and development
partners coordinate the implementation of the Government’s annual
priority programs. The Ministry of Finance (MOF) has set up the
Directorate for Aid Effectiveness for more transparent and harmonized
external aid flows. Budget and aid information is circulated at the
quarterly meetings of development partners, cochaired by the ministers
of foreign affairs and finance. MOI also plans to meet regularly with
development partners to coordinate the road sector development.

The Project will support the national priorities and development vision of
Timor-Leste by establishing sound and sustainable road network, and it
will strengthen subregional cooperation with Indonesia by improving
border post facilities. The sector-based approach will allow the
Government to lead in formulating and implementing its sector strategy
and development partner coordination. MOI and its road agency, the
Directorate of Roads, Bridges, and Flood Control (DRBFC), can thus
implement the Project in line with the Government’s vision for road
sector development, and more actively absorb the required knowledge
and expertise.

The Project is also consistent with the reconciliation and stabilization


strategy adopted by the United Nations and the Government in the
aftermath of the conflict of 2006. With its comparative advantage in
infrastructure development, ADB has been asked by the Government to
facilitate sustainable socioeconomic development by addressing
physical infrastructure constraints, particularly in the road sector.

Impact and The Project will support road sector development, leading to economic
Outcome growth and poverty reduction in the project areas. It is expected to
make socioeconomic facilities in the project areas more accessible and
cross-border activities more efficient, reduce travel time and costs, and
improve planning and project implementation in the road sector.

Project Investment The investment cost of the Project is estimated at $52.90 million.
Plan

Financing Plan Amount Share of


Source ($ million) Total (%)
Asian Development Bank 46.00 86.96
Government 6.90 13.04
Total 52.90 100.00
Source: Asian Development Bank estimates.
iii

Grant Amount and The Government has requested a grant of $46 million from ADB to help
Terms finance the Project. The Asian Development Fund grant will finance all
foreign exchange cost, local cost for consulting services, equipment,
project management, 95% of cost of civil works for access roads and
parking areas of border posts, 90% of the cost of civil works for the
rehabilitation of about 232 km of national roads, and 70% of the cost of
civil works for road maintenance. Counterpart funds of $6.9 million from
the Government will cover 5% of the cost of civil works for access roads
and parking areas of border posts, 10% of the cost of civil works for
road rehabilitation, 30% of the cost of civil works for road maintenance,
and any taxes and duties, land acquisition and resettlement costs, and
right-of-way costs.

Period of Utilization 1 December 2009 to 31 May 2015

Estimated Project 30 November 2014


Completion Date

Implementation MOI will be the Executing Agency, responsible for overall project
Arrangements management. In view of its still-limited capacity, MOI will operate
through the project management unit (PMU) created for previous
ADB-funded road projects in the country. The PMU will take charge of
day-to-day project management and provide on-the-job training to
counterpart DRBFC staff.

Executing Agency Ministry of Infrastructure

Procurement All procurement under the Project will conform to ADB’s Procurement
Guidelines (2007, as amended from time to time). All contracts over
$1 million for civil works and $0.5 million for goods will undergo
international competitive bidding (ICB). Contracts below those amounts
will go through national competitive bidding (NCB) or, as appropriate for
works contracts up to $100,000, through shopping.

Consulting Services A consulting firm will be hired under the Project to provide
497 person-months of consulting services (141 international and
356 national) for (i) subproject appraisal, (ii) detailed design, (iii) bid
document preparation, (iv) bidding and bid evaluation assistance,
(v) construction supervision, and (vi) project performance monitoring.
The consultants will be recruited through quality- and cost-based
selection, in line with ADB’s Guidelines on the Use of Consultants
(2007, as amended from time to time). Financial audit consultants will
be hired through least-cost selection.

The Project will also finance the cost of project management. PMU staff
will be hired individually through competitive recruitment. As well-
qualified national consultants are difficult to find in Timor-Leste, the
contracts of the financial administrator (national) and the road
maintenance engineer (national) of the PMU for the Road Sector
Improvement Project will be extended.
iv

Project Benefits and Improving access to markets can contribute to poverty reduction by
Beneficiaries increasing farming inputs. According to the June 2007 crop and food
supply assessment mission of the Food and Agriculture Organization
and the World Food Programme to Timor-Leste, 38%–54% of
households suffer food shortages 3–5 months per year in most districts.
The road improvements will lead to increased marketing, and increased
household income. With improved access to local and regional markets
and towns, farmers will be able to expand and diversify their agricultural
production. People can get better prices for their products when they
sell at larger markets or directly to factories rather than through
middlemen.

Better access to health facilities will improve the health of the people—
in particular women and children. The people of Timor-Leste are
vulnerable to respiratory diseases, diarrheal malaria, dengue fever,
tuberculosis, leprosy, and other treatable diseases. Improved access to
health-care facilities will encourage people to seek medical assistance.
Better roads will also ease travel to schools, and help strengthen the
school system by reducing teacher absentee rates and enabling
schools to attract more qualified teachers.

In Timor-Leste, sociocultural factors contribute to low enrollment and


high dropout rates among female students, high illiteracy among adult
females, high female unemployment, sex segregation in the paid labor
force, an emerging gender gap in wages, high maternal mortality, and
domestic violence. About 28% of women suffer from malnutrition; of
these, 7% are in need of treatment. The gender-specific benefits of the
Project are (i) improved access to health-care facilities; (ii) improved
access to schools, social services, and other key facilities; and
(iii) targeted employment opportunities for female laborers, such as
bioengineering.

Risks and The Project makes several assumptions and is subject to various risks,
Assumptions as follows:

Resurgence of conflict. High unemployment and high poverty


incidence are heightening the potential for instability. The Government
is pursuing a significant reform agenda and has made progress in
addressing the causes and consequences of the 2006 unrest.
Displaced people have returned, and the Government has introduced
reforms in the security sector, addressed claims of discrimination raised
by former soldiers, and made social transfer payments to vulnerable
groups. The police force is gradually resuming responsibility for law and
order, while UN police and international forces continue to bolster
security.

Limited capacity of the Ministry of Infrastructure. MOI has both


human resource and budget constraints. The budget allocation for the
road sector in 2009 is only about $11 million, making the 6,000 km road
network severely underinvested. As the road agency, DRBFC has only
12 engineers. The PMU under MOI will therefore be maintained and
v

strengthened to oversee and administer day-to-day matters. ADB is


also implementing a TA to strengthen project management capacity
and improve budget execution.

Lack of road maintenance financing. DRBFC used to rely on a road


maintenance management system developed under a JICA TA project
for road maintenance planning, but there has always been a shortage
of human resources and funds for planned road maintenance. The
Government has given its assurance that it will gradually increase its
road maintenance funding. The Project will support the maintenance of
national roads in the border region.

Deficiencies in border management. How well the border


management agencies, such as the Joint Border Committee, perform
will determine the extent to which the benefits of road improvement
reach across borders and sustain subregional cooperation and
integration. A regional TA project is being prepared by ADB to help
strengthen the institutional capacity of the governments of Papua New
Guinea and Timor-Leste in cross-border matters with Indonesia.

Inadequate capacity of national contractors. To attract international


contractors, road rehabilitation contracts will be designed in larger
packages, and most civil works will be procured through ICB. Joint
ventures between international and national contractors will be
encouraged through consultations and pre-bidding workshops. Most of
the contract packages for road maintenance are expected to be small,
and NCB procedures will be used to encourage national contractors to
participate. Small contractors will be trained in road maintenance
technology, bidding and contracting, and project management.

Lack of legal authority for rights-of-way. Road sector development in


Timor-Leste is constrained by the lack of a law for securing right-of-
way. Although no land is expected to be acquired for the Project, a
resettlement framework for unforeseen resettlement and land
acquisition has been prepared.

Climate change. There are inherent uncertainties in predicting future


climate change, particularly for a “data-poor” country like Timor-Leste. It
is therefore assumed that building capacity to manage current climate
variability, with some forward-looking predictions, will also build
capacity to understand and manage ongoing and longer-term climate
change. Moreover, adaptation options with other important benefits,
such as erosion control, will be emphasized as a way of reducing the
risk of inappropriate investments.
124o 30'E 126o 30'E

TIMOR-LESTE
ROAD NETWORK DEVELOPMENT
Road Maintenance Program
Border Post
SECTOR PROJECT
National Capital
District Capital Atauro Island Strait of Wetar
Town
Port
Maumeta-Atauro
Candidate Project Road Lauten Com
Jaco
Joco
National Road Laivai Island
District Road Baucau Mula Trisulo Tutuala Cape Cutcha
8o30’S Manatuto 8o30’S
River Port Hera Metinaro Laga Luro Los Palos
Tibar DILI Vemasse
District Boundary Liquisa DILI Laklo Laleia BAUCAU
Maubara LAUTEM
International Boundary Remexio Quelicai Baquia
MANATUTO Venilale Lore
Boundaries are not necessarily authoritative. LIQUICA Tokoluli Lequidoe
Lassoralai Iliomar
Fatubess Ermera AILEU Ossu
Aileu Lacluban
Lactula Uato Carabau
Lacluta VIQUEQUE
Savu Sea Atabae ERMERA Turiscai Uatulari
Maubisse
Aituto Solibad
BOBONARO Letetoho Viqueque
Batugade Hato Builico Alas Beacu
Maliana Atsabe
Oeleu MANUFAHI Natarbora
Mota Ain
Ainaro Same
Bobonaro
Aissa
AINARO
Pane Macassar Timor Sea
Sakalo Hatuto
Betano
Zumalai
Fatalulic
OECUSSI COVA-LIMA
Citrana Fohorem Cova-lima
Tumir Oe-Silo 126o 30'E
Suai
Cape Suai
110o00'E
9o30’S Passabe
Salele 9o30’S o
130o00'E
o
10 00'N 10 00'N

South China Sea


PACIFIC OCEAN

HALMAHERA
0o 0o
KALIMANTAN SULAWESI
BANGKA

N SUMATRA BELITUNG BURU SERAM


Java Sea
KEPULAUAN ARU
0 10 20 30 40 50 JAVA BALI FLORES
o o
10 00'S 10 00'S
SUMBAWA
TIMOR
Kilometers SUMBA
09-2553 HR

TIMOR-LESTE
INDIAN OCEAN

124o 30'E 110o00'E 130o00'E


I. THE PROPOSAL

1. I submit for your approval the following report and recommendation on a proposed grant
to the Democratic Republic of Timor-Leste for the Road Network Development Sector Project.
The design and monitoring framework for the Project is in Appendix 1.

II. RATIONALE: SECTOR PERFORMANCE, PROBLEMS, AND OPPORTUNITIES

A. Performance Indicators and Analysis

2. Timor-Leste comprises the eastern half of the island of Timor, the nearby islands of
Atauro and Jaco, and Oecussi, an exclave on the northwestern side of the island, within
Indonesian West Timor. The island of Timor is part of the Malay archipelago and is the largest
and easternmost of the Lesser Sunda islands. The terrain is dominated by Mount Ramelau,
which bisects the island from east to west. The coastal zones in many parts of the country are
narrow, and mostly on steep hillsides.

3. The economy grew by about 10% in 2008 on the strength of a large increase in
government expenditure and growth in agriculture;1 public spending, mainly with revenues from
offshore petroleum production, continues to climb in 2009.2 Rice production increased by 21% in
2008 following an expansion in harvested area, although the total production was still about
60% short of annual requirements. In contrast, about 50% of the population was living below the
poverty line in 2007, up from about 36% in 2001. According to estimates of the Food and
Agriculture Organization and the World Food Programme, 38%–54% of households in most
districts suffer food shortages 3–5 months a year. About 16,000 young people join the workforce
yearly, but in the rural areas many people are chronically underemployed. Outbreaks of civil
strife are a persistent risk, as the heightened tension immediately after the serious wounding of
the President in February 2008 showed.

4. Road is the primary mode of transport, carrying 70% of freight and 90% of passengers.
Land transport services in Timor-Leste are provided competitively by the private sector, with
only minimal interference from the Government, except for licensing and basic vehicle and road
safety requirements. Passengers are ferried by minibuses and taxies in the urban areas, and by
minibuses and light to medium trucks licensed to carry both passengers and freight in the rural
areas, particularly where roads are poor. A small number of heavy trucks, about 90 in all,
transport containers and large equipment, but the narrow roads and difficult terrain severely limit
their road coverage.

5. Timor-Leste has an extensive road network of about 6,000 kilometers (km), half of which
are undeveloped rural tracks. The core network comprises 1,400 km of national roads
connecting the capital, Dili, and 13 districts, and 900 km of district roads linking major population
centers to the national roads. About 80% (1,800 km) of core roads are (or used to be) paved.
Almost the whole core road network needs to be rehabilitated to a maintainable standard, as
many roads have prematurely deteriorated. The poor condition of the roads is compounded by
frequent landslides and road closures caused by intense rainfall and geotechnical instability in
mountainous areas.

1
ADB. 2009. Asian Development Outlook 2009. Manila.
2
The Government spent an estimated $450 million in 2008 and expects to spend $902 million in 2009.
2

6. Timor-Leste’s expected membership in the Association of Southeast Asian Nations in


2012 will significantly boost opportunities for cooperation with Indonesia. The two countries
agreed on 11 June 2003 to regulate border crossings and markets, and the Government of
Timor-Leste, in April 2008, issued a decree law legalizing border pass activities for its citizens
and identifying six locations where border posts were to be built.3 National roads in the border
region are main corridors to Indonesia, giving Timor-Leste access to cross-border activities. But,
according to the 2007 Timor-Leste survey of living standards, the border region and the rest of
the western and central districts, which produce much of the country’s main commercial crop,
coffee, have a poverty incidence that exceeds their share of the population.4

B. Analysis of Key Problems and Opportunities

1. Key Challenges

7. Post-conflict recovery. The democratic consultation on 30 August 1999 led to an


overwhelming vote for independence after 25 years of occupation by Indonesia. In the
campaign of destruction that unfortunately followed, however, about three-quarters of the
people fled their homes. United Nations (UN) Security Council Resolution 1272 of
25 October 1999 placed the country under the UN Transitional Administration in East Timor until
the Government announced its independence on 20 May 2002. A UN Mission of Support in East
Timor replaced the UN transitional administration at that time with plans to withdraw gradually
from the country.5

8. The spate of violence in April and May 2006, triggered mainly by tensions between the
police, the military, and the youths, drove more than half of Dili’s 150,000 residents from their
homes and into overcrowded camps. Damage to property was significant: houses were looted
and burned. The UN Security Council therefore authorized the creation of a new UN Integrated
Mission in Timor-Leste on 25 August 2006 with the priority task of restoring public security. In
the course of recovery, the country was beset from time to time by civil unrest, especially during
the presidential and parliamentary election in mid-2007.

9. Timor-Leste countered the shock of the attempted assassination of the President and
the Prime Minister by military rebels on 11 February 2008 with resilience. Many feared that the
country was reverting to violence, but a stronger government emerged from the incident and its
aftermath. Of the three security challenges identified by the Government, military rebels are no
longer a threat, and progress on the other two difficult issues—the settlement of claims of
discrimination raised by a group of former soldiers (“petitioners”) and the return of internally
displaced persons—has won the Government further credit.6 Since early 2008, political stability
has prevailed.

10. The UN Integrated Mission in Timor-Leste has worked with the Government and
development partners to tackle the security and stability issues and prevent a relapse into
conflict. It has adopted a medium-term strategy with four priority areas: (i) security and stability,
now and in the future; (ii) the rule of law, justice, and human rights; (iii) a culture of democratic

3
The six border posts will be at Mota Ain, Tunubibi, Salele, Sakato, Passabe, and Oesilo.
4
Coffee accounts for over 75% of Timor-Leste exports excluding gas and oil. The inadequacy of road infrastructure
in the western mountainous areas has adversely affected coffee production and rural development.
5
The UN Mission of Support in East Timor was succeeded by the UN Office in Timor-Leste (UNOTIL), with a
much-reduced staff, by UN Security Council Resolution 1599 on 28 April 2005 to support the development of
police, border patrol, and other critical institutions.
6
International Crisis Group. 2009. Timor-Leste: No Time for Complacency. Brussels.
3

governance and dialogue; and (iv) socioeconomic development.7 The Asian Development Bank
(ADB), with its comparative advantage in infrastructure development, has been asked by the
Government to address the constraints on physical infrastructure, particularly in the road sector.
In past ADB projects, damaged sections of road were repaired to facilitate humanitarian relief or
security operations. Now the economy is growing fast, and the road network needs more
comprehensive and sustainable improvements to support socioeconomic development.

11. Road conditions and maintenance backlog. A road sector analysis is in Appendix 2.
According to a road condition survey in 2009, the national road network has almost entirely
deteriorated and is no longer maintainable.8 Journeys are longer, vehicle operating costs higher,
and rural communities more isolated. Significant income from agriculture and other products is
lost and social conditions are worsening. The small and isolated market with poor transport links
is preventing the country from exploiting economies of scale and comparative advantage. About
$110 million (in mid-2009 prices) is needed immediately to restore the priority roads to
maintainable condition, without upgrading or realignment. However, the Government and local
industry have neither the financing resources nor the capacity for quick rehabilitation. Moreover,
the actual investment needs will be significantly higher than $110 million, given the rate of
deterioration during the implementation of a sector development program.

12. Road infrastructure must be preserved through routine and periodic maintenance.
Routine maintenance will clear drainage and small landslips promptly, keep vegetation under
control, and repair surface damage in its early stages. Periodic maintenance to restore road
surfaces damaged by traffic abrasion and wet-season erosion could help to postpone the need
for rehabilitation or reconstruction. The maintenance works should be programmed
systematically to allocate limited resources more efficiently and effectively over the entire road
network. The annual maintenance expenditure for the whole core road network (about
1,600 km) in its present condition is estimated at $25 million. But improving the roads to
maintainable condition will reduce the expenditure to about $10.5 million. In 2009, the
Government allocated only about $3.7 million for the maintenance of all national, district, urban,
and rural roads.

13. Road safety. The Timor-Leste National Police reported 1,656 cases of road accidents in
2008; of these, 50 resulted in fatalities, 215 in serious injuries, and 1,020 in other injuries. Many
less-serious, unreported cases were not included. The actual number of injuries and fatalities is
believed to be higher. Sixty percent of all reported accidents are attributed to human error, 25%
to road conditions, 10% to the weather, and 5% to mechanical failure. The potential for
even-higher accident rates is great, considering the increased number of vehicles, many of
them unprotected motorcycles carrying up to four people, and the increased vehicle speeds
made possible by economic growth and road improvements.

14. Government capacity. The weak capacity of the Government to manage the road
network also constrains road sector development. The Directorate of Roads, Bridges, and Flood
Control (DRBFC) of the Ministry of Infrastructure (MOI), the central agency responsible for
planning, developing, and maintaining road infrastructure, has only 12 engineers—seven at the
headquarters in Dili and five in regional offices. Each regional engineer is assisted by a

7
United Nations. 2009. Report of the Secretary-General on the United Nations Integrated Mission in Timor-Leste (for
the period from 9 July 2008 to 20 January 2009). New York.
8
ADB. 2008. Technical Assistance to the Democratic Republic of Timor-Leste for Preparing the Road Network
Development Project. Manila (TA 7100-TIM).
4

supervisor and three assistant supervisors. DRBFC’s main weakness is the shortage of capable
staff in the districts to program, administer, and supervise roadworks.

15. Capacity of national contractors. National contractors are awarded projects of up to


$1.5 million by the Government but may not always have the technical and financial capacity to
implement these projects properly. The lack of project management expertise and skills
excludes national contractors from large projects. The Government is developing a contractor
registration system, which will classify contractors according to financial, technical, and
management capacity. The classification will be linked to the size and type of contracts for
which a contractor is eligible to bid.

2. Opportunities

16. Government’s strategy. The Government’s vision for the country is contained in the
National Development Plan, which sets targets in governance, culture, economy, environment,
education, infrastructure, and living standards to be achieved by 2020. 9 In regard to the
infrastructure sectors, according to the plan, “people will no longer be isolated, because there
will be good roads, transport, electricity, and communications in the towns and villages, in all
regions of the country.” Recognizing the importance of infrastructure to all sectors of the
economy and society, the Government also calls attention in the plan to the need “to plan for,
provide and manage physical infrastructure that is efficient, cost-effective, and financially
sustainable, and which supports the social and economic development priorities of the people of
Timor-Leste.”

17. The Government is preparing a medium-term strategic plan setting the key priorities for
development, with specific goals and objectives.10 The three medium-term strategic objectives
will be (i) poverty reduction, (ii) private sector development, and (iii) core infrastructure
development. The five core infrastructure sectors will be (i) roads and bridges; (ii) ports and
airports; (iii) dams, irrigation schemes and water supply; (iv) electricity; and
(v) telecommunications. Since 2008, the Government has announced its national priorities
yearly. Future priorities will be guided by the medium-term strategic plan once it is approved.

18. While the strategic plan is still in preparation, the Government announced the national
priorities for 2010 under the plan’s framework on 23 May 2009. The large increase in
government expenditure and growth in agriculture buoyed up the economy in 2008, but the
rising incidence of poverty and high unemployment point to the need for better-targeted
government spending to answer the lack of basic services and the underdevelopment in the
countryside. Roads and water supply infrastructure are top priorities for 2010, reflecting the
major constraint their insufficiency imposes on the country’s long-term development and
sustainable economic growth. The Government has also urged the line ministries and
development partners to align their budgets with national priorities. The development of the road
sector, one of the most important infrastructure sectors, is widely recognized as a key factor in
creating jobs, promoting private sector growth, attracting business investments, increasing
agricultural productivity, and reducing poverty. As the road sector gains high priority in the
development agenda of Timor-Leste, the Government plans to significantly increase its budget
allocation to road sector in the near future.

9
Planning Commission. 2002. The National Development Plan. Dili.
10
Ministry of Finance. 2009. Goodbye Conflict and Welcome Development. Timor-Leste Development Partners
Meeting, Dili, 2–4 April 2009. The medium-term strategic plan was expected to be considered by the Council of
Ministers in September 2009, and then presented to the National Parliament for approval.
5

19. A road sector investment program was developed in 2005.11 Noting the changes that
have occurred since then in traffic volume, road conditions, and financing resources, the project
preparatory technical assistance (TA) consultants surveyed road conditions nationwide and
undertook classified traffic counts and origin–destination surveys from December 2008 to
March 2009. A new medium-term road network development program based on the survey
results and findings of stakeholder consultations is in Supplementary Appendix A.

20. Sector development and external assistance. While strategic planning by the
Government is making progress, there is a need for better coordination with development
partners. Working groups with members from government agencies and development partners
coordinate the implementation of the Government’s annual national priority programs. The
Ministry of Finance (MOF) has set up the Directorate for Aid Effectiveness for more transparent
and harmonized external aid flows. Budget and aid information is circulated at the quarterly
development partners’ meeting, cochaired by the ministers of foreign affairs and finance. MOI
also plans to meet regularly with development partners to coordinate external assistance.

21. Road sector development in Timor-Leste has relied heavily on external assistance, with
ADB leading the development partners since 1999. A joint assessment mission coordinated by
the World Bank was fielded in October–November 1999 to prepare a medium-term restoration
program. Two emergency infrastructure rehabilitation projects were administered by ADB under
the restoration program.12 The two projects facilitated peace, security, and humanitarian relief
aid by attending to immediate infrastructure failures in sectors such as roads, ports, and power.
Meanwhile, an ADB TA grant from 2000 to 2002 supported the first steps in establishing the
institutions and regulatory frameworks for road, port, and airport operation and management.13
A second ADB TA project, for Transport Sector Improvement, prepared a medium-term road
investment program in 2005. The priority roads under the program were included in ADB-funded
Road Sector Improvement Project (RSIP), which was completed in September 2009.14

22. To support the Government’s capital development program and build capacity in the
infrastructure sectors, ADB provided TA for Infrastructure Sectors Capacity Development from
2005 to 2008 at an estimated cost of $600,000,15 and follow-up TA for Infrastructure Project
Management at an estimated cost of $15 million cofinanced by the Australian Agency for
International Development.16

23. Since 2000, the Government of Japan has provided $34.6 million in grants for transport,
54% of this total for road improvements and for project studies and training in the road sector.
The Japan International Cooperation Agency (JICA) funded a TA project for capacity building in
road maintenance, and another TA project for the preparation of guidelines and manuals for
roads. The next JICA-funded TA, for capacity building for road works, will be implemented from

11
ADB. 2001. Technical Assistance to East Timor for Transport Sector Improvement. Manila (TA 3731-TIM). The
work was done in 2005 and the final report was published that same year.
12
ADB. 2000. Report on a Project Grant from the Trust Fund for East Timor to the United Nations Transitional
Administration in East Timor for the Emergency Infrastructure Rehabilitation Project. Manila; ADB. 2002. Report on
Supplementary Funding from the Trust Fund for East Timor to East Timor for the Emergency Infrastructure
Rehabilitation Project: Phase 2. Manila.
13
ADB. 2000. Technical Assistance to East Timor for Transport Sector Restoration. Manila.
14
ADB. 2005. Report and Recommendation of the President to the Board of Directors on a Proposed Asian
Development Fund Grant to the Democratic Republic of Timor-Leste for the Road Sector Improvement Project.
Manila.
15
ADB. 2005. Technical Assistance to Timor-Leste for Infrastructure Sectors Capacity Development. Manila.
16
ADB. 2007. Technical Assistance to Timor-Leste for Infrastructure Project Management. Manila.
6

2009 to 2011. In addition, the JICA-funded improvement of a bridge over the Mola River is
scheduled for completion in 2012. The European Union has also provided about $50 million
through three rural development programs, each one with a rural road rehabilitation component.
Under the second rural development program, five bridges on the road from Viqueque to
Uatucarbau were rehabilitated or reconstructed. A list of external assistance to the road sector
is in Appendix 3.

24. Subregional cooperation and integration. Despite their history, Indonesia and
Timor-Leste are moving in a very positive direction. Cooperation with Indonesia, the main
source of most of Timor-Leste’s imports, including rice, fuel, construction materials, and other
commodities, is expanding. In 2008, Indonesia was the largest source of Timor-Leste’s imports
and its third-largest export market.17 Membership in the Association of Southeast Asian Nations
in 2012 will increase the opportunities for cooperation between these two countries. At an
ADB-hosted workshop for archipelagic Southeast Asia–Pacific subregional cooperation
programs on 19–20 February 2009, senior officials from Indonesia, Papua New Guinea, and
Timor-Leste, discussed the needs and action plans for subregional cooperation. A regional TA
project is being prepared by ADB to strengthen the institutional capacity of Timor-Leste and
Papua New Guinea to improve the cross-border economic corridors.

25. Most households in the border regions of Timor-Leste and Indonesia consider border
trade to be their primary source of income. Family reunions and ceremonies also generate
demand for border crossing since many Timor-Leste citizens have close relatives in Indonesian
West Timor. Among other constraints, the poor cross-border facilities and the poor condition of
border roads in Timor-Leste make cross-border trade and activities more difficult. Roads have
been upgraded and border posts constructed on the Indonesia side, but not on the Timor-Leste
side. To facilitate cross-border commercial or social activities, Timor-Leste must improve its
cross-border facilities and national roads in the border regions. Improved connectivity in the
border areas will create economic benefits, reduce poverty, and promote the country’s
engagement in subregional cooperation and integration.

3. Lessons

26. Several lessons can be drawn from past and ongoing road projects in Timor-Leste:
(i) difficult terrain, geology, and weather conditions require more intensive routine and
preventive maintenance of the road network; (ii) the period of road construction is essentially
reduced by 4–6 months of rainy season every year; (iii) given the crowded community of
development partners in Timor-Leste, regular coordination is needed to avoid repetitive
investment; (iv) the capacity of national contractors must be developed through actual works of
appropriate size and well-targeted training, and (v) while MOI still needs support in
implementing large projects, skills transfer between project management consultants and MOI
staff is important in building the capacity of MOI staff.

27. As the country’s economy grows, more attention should be given to the quality and
sustainability of road infrastructure. Past ADB projects were aimed at restoring accessibility and
centered on repairing only the damaged sections of the road network. While Dili’s connection
with most other areas of the country improved, overall road conditions continued to worsen
because the Government could not meet the maintenance needs. The ongoing RSIP is the first
attempt to move from emergency work to road development. It involves the rehabilitation of
longer stretches of road, labor-intensive maintenance, and community participation in the

17
Source: National Statistics Office, Ministry of Finance, Timor-Leste.
7

development of rural roads. Further efforts, such as high-quality road maintenance and
rehabilitation projects and periodic review of the road sector master plan, are needed to improve
road infrastructure more effectively. The improvement of the core road network, adequate road
maintenance, and community participation in rural road development must be integrated and
progressively expanded in the course of road sector development. To make road sector
investments sustainable, stand-alone maintenance contracts should be avoided. A functioning
road maintenance program (RMP), including institutional setup, policy framework, programming
and implementation capacity, and sufficient budget support, is essential.

4. ADB’s Strategy

28. The Project will support the Government in rehabilitating priority national and district
roads under the medium-term road network development program, and in establishing an RMP
in the border region. It is in line with ADB’s latest country strategy and program (2006–2008),
which identified transport infrastructure improvement as a key area of ADB assistance.18 A new
interim country strategy for 2009–2012 is being prepared and will be aimed at assisting the
Government in reducing poverty by promoting and supporting inclusive growth. The strategy is
expected to focus on improving physical infrastructure, particularly rural connectivity to boost
agricultural productivity growth, generate employment opportunities, and make social service
delivery more sustainable. The Project is included in the country operations business plan
(2008–2010) for Timor-Leste.19

29. The Project will support Timor-Leste’s national priorities and the National Development
Plan by developing and managing road infrastructure, and promote subregional cooperation by
improving border post facilities. Furthermore, the sector-based approach will allow the
Government to lead the way in identifying, prioritizing, formulating, appraising, approving, and
implementing its sector strategy, and direct resources from development partners. MOI and its
road agency, DRBFC, can thus implement the Project in line with the Government’s vision in
road sector development, and more actively absorb the knowledge and expertise needed.

III. THE PROPOSED PROJECT

A. Impact and Outcome

30. The Project will support road sector development and thereby contribute to economic
growth and poverty reduction in the project areas. It will have an impact on (i) poverty reduction,
(ii) direct and indirect job creation, and (iii) cross-border trade.

31. The Project will facilitate access to social and economic facilities in the project areas,
improve the efficiency of cross-border activities, reduce travel time and costs, and make the
road network less vulnerable to severe climate.

B. Outputs

32. The Project will finance a portion of medium-term road network development program.
At the end of the Project, (i) about 232 km of national or district roads will have been improved
to maintainable condition; (ii) an RMP will have been established; (iii) access roads and parking

18
ADB. 2005. Country Strategy and Program Update (2006–2008): Democratic Republic of Timor-Leste. Manila.
19
ADB. 2007. Country Operations Business Plan (2008–2010): Timor-Leste. Manila. The Project was initially listed as
the Second Road Sector Improvement Project.
8

areas will have been built to improve cross-border facilities at Mota Ain, Salele, Sakato, and
Oesilo; (iv) national contractors will have gained increased capacity to implement roadworks;
(v) MOI will have improved its ability to implement road projects and the RMP; (vi) road safety
awareness in the project areas will have increased; and (vii) climate-proofing measures will
have become a regular part of road design and construction.

33. To achieve the foregoing outputs, the following project activities will be carried out:

(i) Road rehabilitation. About 232 km of priority national or district roads will be
rehabilitated to maintainable condition. Each subproject will be selected from the
nationwide core road network, according to the procedure and eligibility criteria
given in Appendix 4. The medium-term road network development program will
guide the selection of subprojects. The feasibility study for each subproject will
provide justification of its eligibility under the agreed criteria, and will conform in
degree of detail and quality with what is required for ADB to assess the viability
and suitability of the subproject. Two sample roads (Liquica–Batugade–Mota Ain
and Ermera–Maliana, about 140 km in total) have been selected for appraisal,
and will serve as models for the technical, economic, social, and environmental
assessments of non-sample roads. The feasibility studies of the two sample
subprojects are in Supplementary Appendixes B–G.
(ii) Road maintenance program. About 302 km of national roads in the border
region 20 will be maintained yearly during project implementation. Contract
packages appropriate for small national contractors are designed to develop the
local contracting industry. Small contractors will be trained in road maintenance
technology, bidding and contracting, and project management. A summary of the
approach for establishing the road maintenance program is in Appendix 5.
(iii) Construction of border post facilities. Roads and parking lots will be built at
the border posts in Mota Ain, Salele, Sakato, and Oesilo. The Government will
finance and administer the design of border post facilities, and procure civil works
for roads and parking lots according to ADB’s Procurement Guidelines (2007, as
amended from time to time).
(iv) Consulting services. Consultants will be hired for project management,
feasibility study, detailed design, the RMP (including the training of small national
contractors), construction supervision, and monitoring and evaluation.

C. Special Features

1. Engaging Weakly Performing Countries

34. Timor-Leste is a fragile, post-conflict country. The small and isolated market with poor
transport links has prevented the country from exploiting economies of scale and comparative
advantage. Management and implementation capacity is very weak. MOI, which is responsible
for all infrastructure activities, cannot function fully because of seriously limited institutional
capacity. The project design draws on ADB’s approach to engaging with weakly performing
countries.21 The approach entails (i) promoting selective and sustained engagement in areas
where ADB has comparative advantage (the road sector in Timor-Leste); (ii) supplementing
investment financing with community-based approaches (to be implemented under a linked
project proposed for Japan Fund for Poverty Reduction [JFPR] financing); and (iii) developing

20
In the districts of Bobonaro, Covalima, and Oecussi.
21
ADB. 2007. Achieving Development Effectiveness in Weakly Performing Countries. Manila.
9

capacity to promote ownership of development processes (reflected mainly in the design of the
training program for national contractors and the RMP to be established by the project
management unit [PMU] and handed over to MOI midway through project implementation).

2. Building the Capacity of the Directorate of Roads, Bridges, and Flood


Control

35. The Directorate of Roads, Bridges, and Flood Control of MOI oversees the road sector.
However, its operation is heavily constrained by its current staff capacity of only 12 engineers—
seven at headquarters and one in each of the five regional offices. The Project will provide
on-the-job training to counterpart DRBFC staff to complement the ADB TA for Infrastructure
Project Management, which was designed to strengthen MOI’s project management capacity
and facilitate budget execution (footnote 16). The PMU will also involve DRBFC in the selection,
appraisal, detailed engineering, and construction supervision of road rehabilitation subprojects
to facilitate the transfer of skills to DRBFC.

3. Building the Capacity of Small Contractors

36. According to DRBFC, there are about 180 small contractors in Timor-Leste with
experience in implementing road maintenance and rehabilitation works. The Project will promote
the growth of a contracting industry for small-scale civil works, which is now underinvested
because of a lack of business opportunities, along with opportunities for training and skills
development. Most national contractors do not have enough knowledge and skills to do road
construction work, prepare bids, or manage a business. The Project will hire consultants to train
small contractors. Participation in the training will be a prerequisite for bidding for road
maintenance contracts.

4. Creating Jobs

37. The Project will create jobs. The civil works, including road rehabilitation and
maintenance and bioengineering, will generate about 22,000 person-months of employment.
There will be long-term business opportunities for contractors, and thus sustainable
employment, under the RMP. In the three pilot districts, the RMP will provide about
8,580 person-months of employment in 4 years. After the Government expands it to all
13 districts, the job opportunities will increase significantly.

5. Facilitating Subregional Cooperation and Integration

38. The rehabilitation and maintenance of national roads in the border region, and the
construction of four border posts on the national road network, will further the progress of
cooperation with Indonesia. The maintenance works on roads linking three districts in the border
areas will also give the rest of the country better access to cross-border activities.

6. Establishing a Road Maintenance Program

39. Delayed and inadequate maintenance is a major cause of premature road deterioration
in Timor-Leste. Proper maintenance is generally regarded as the most effective way of
preserving the value of road assets. The Project will help the DRBFC to establish an RMP,
initially in the border region. MOI is expected to replicate the model in other regions. To set up
the RMP, the Project will coordinate with the team of JICA-funded consultants that will be
engaged in operating the road maintenance management database and equipment.
10

7. Improving Road Safety

40. Poor road safety is the increasing cause of injuries and loss of life and property. As the
economy grows, road travel for social and economic activities will also grow. Most trips are now
made on unprotected motorcycles carrying up to four passengers. Better roads will make higher
vehicle speeds possible and thus heighten the risk of road accidents. Road safety awareness
programs will be conducted for road users and roadside communities. Traffic safety measures
will also be incorporated into the Project, from engineering design to civil works implementation.

8. Adapting to Climate Change

41. Being a highly mountainous, small-island country makes Timor-Leste especially


vulnerable to the impact of climate change. The impact can be far reaching because of the
country’s low level of development and dependence on climate-dependent economic sectors,
and its low capacity to adapt. Some projected changes can intensify drought in some regions
and floods in others, reduce agricultural productivity, and damage coastal roads as the sea level
rises. Much of Timor-Leste’s transportation infrastructure is in highly sensitive areas, where
landslides, land degradation and sedimentation, and even the complete disappearance of
coastal roads are constant risks. The Project will build climate-proofing measures into road
rehabilitation and maintenance by considering future climate data when reviewing engineering
designs and plans and by making adaptation measures part of the environmental management
plan (EMP). The models to be developed through the Project can influence the Government’s
road sector strategy and thus have an impact beyond the Project.

9. Encouraging Community Participation in Roadworks

42. Besides the Project, a linked project—Our Roads, Our Future: Supporting Local
Governance and Community-Based Infrastructure Works—will be proposed for financing from
the JFPR. The linked project will support the Government’s decentralization strategy and
community-based infrastructure works in Timor-Leste. It will (i) extend the socioeconomic
benefits of the national road improvements under the Project to roadside communities, and
(ii) develop a model for sustainable community participation in community infrastructure work
with local government. The linked JFPR project will be implemented in the districts of Bobonaro,
Covalima, and Oecussi, which overlap with the areas covered by the RMP under the Project. A
summary of the linked JFPR project is in Appendix 6.

D. Project Investment Plan

43. The project investment cost, including taxes, duties, and physical and price
contingencies, is estimated at $52.90 million. The cost estimates are summarized in Table 1,
and provided in detail in Appendix 7.
11

Table 1: Project Investment Plan


($ million)
Item Amounta
b
A. Base Cost
1. Road Rehabilitation (232 km of National Road) 27.50
2. Road Maintenance Program 10.00
3. Access Roads and Parking Areas of Border Posts 1.00
4. Project Management 2.10
5. Consulting Services 4.54
6. Equipment (vehicles and office equipment) 0.20
Subtotal (A) 45.34

B. Contingenciesc 7.56
Total (A+B) 52.90
a
The base cost of civil works includes taxes and duties of about 2%, which will be financed with
counterpart funds from the Government.
b
In mid-2009 prices.
c
Physical contingencies computed at about 11% due to the frequent landslides caused by the unstable
geotechnical conditions and intense rainfall. Price contingencies computed at 3% on foreign exchange
costs and 8% on local currency costs; includes provision for potential exchange rate fluctuation under
the assumption of a purchasing power parity exchange rate.
Source: Asian Development Bank estimates.

E. Financing Plan

44. The Government has requested a grant of $46 million from ADB to help finance the
Project. The Asian Development Fund grant will finance all foreign exchange cost, local cost for
consulting services, equipment, project management, 95% of cost of civil works for access
roads and parking areas of border posts, 90% of the cost of civil works for the rehabilitation of
about 232 km of national roads, 70% of the cost of civil works for road maintenance.
Counterpart funds of $6.9 million from the Government will cover 5% of the cost of civil works
for access roads and parking areas of border posts, 10% of the cost of civil works for road
rehabilitation, 30% of the cost of civil works for road maintenance, and any taxes and duties,
land acquisition and resettlement costs, and right-of-way costs. The proposed financing plan for
the Project is summarized in Table 2, and details are in Appendix 7.

Table 2: Financing Plan


Amount Share of
Source ($ million) Total (%)
Asian Development Bank 46.00 87.0
Government 6.90 13.0
Total 52.90 100.0
Source: Asian Development Bank estimates.

F. Implementation Arrangements

1. Project Management

45. MOI will be the Executing Agency, responsible for overall project management. It will
operate through its PMU, which was established under the Emergency Infrastructure
Rehabilitation Project 2 and inherited by RSIP. Assessments of procurement capacity and
financial management recommend this PMU arrangement, considering the weak capacity of
12

MOI (Supplementary Appendixes H–I). The PMU will be responsible for (i) overall project
implementation; (ii) stakeholder consultation and coordination; (iii) the procurement of goods,
works, and consulting services for road rehabilitation and maintenance; 22 (iv) contract
administration; (v) sector development support to MOI; and (vi) on-the-job training of counterpart
MOI staff. (Outline terms of reference for the PMU are in Supplementary Appendix J.) Individual
consultants will be hired for the project management staff through competitive recruitment.23

46. MOI will assign counterpart staff from DRBFC to the PMU to participate in project
implementation, particularly the development and implementation of the RMP. The PMU will
provide these counterpart staff with on-the-job training to enable DRBFC eventually to take over
the RMP and to build DRBFC capacity for regular road project management. At the end of the
Project, the PMU will be integrated into MOI’s permanent institutional setup, and the national
staff of the PMU will be absorbed by MOI.

47. ADB will finance the staff, equipment, and operating expenses of the PMU for
implementing the Project and supporting sector development. ADB financing is justified because
(i) the capacity of MOI for project implementation and sector development is limited and needs
to be strengthened, (ii) the PMU’s performance in previous projects has been satisfactory to
both the Government and ADB, (iii) the PMU’s knowledge of and working experience with
ADB’s policies and guidelines will speed up project implementation, and (iv) the PMU’s
effectiveness in capacity development has been proven by the promotion of the previous project
manager to the position of minister of MOI, and the material engineer to secretary of state for
public works.

2. Implementation Period

48. The Project will be implemented over 5 years, with physical completion by
November 2014. To give MOI enough time to withdraw funds from the grant account, the
Project has been set to close on 31 May 2015, 6 months after physical completion. The
pre-rehabilitation activities—detailed design, preparation of bidding documents, tendering, and
awarding of contracts—will start in January 2010. Civil works for sample roads are expected to
start in September 2010. For non-sample roads, the MOI will start subproject appraisals in
January 2011. An implementation schedule is in Appendix 8.

3. Procurement

49. All procurement under the Project will conform to ADB’s Procurement Guidelines (2007,
as amended from time to time). All contracts over $1 million for civil works and $0.5 million for
goods will undergo international competitive bidding (ICB). Contracts below those amounts will
go through national competitive bidding (NCB) or, as appropriate for works contracts up to
$100,000, through shopping (A procurement plan, including suitable contract packaging to
attract international contractors and promote the national contracting industry, is in Appendix 9.)
The procurement of all contract packages for road rehabilitation, the first five contract packages
for road maintenance, and all contract packages for border post construction will require prior
review by ADB. Other road maintenance packages will be reviewed after procurement.

22
The construction of border post facilities is in the Government's project pipeline for 2009 and 2010. Only the
construction of access roads and parking areas will be funded by the Project. The procurement unit of the MOF will
procure the civil works, and the PMU will administer the construction of the access roads and parking areas.
23
In view of the difficulty of hiring well-qualified national consultants in Timor-Leste, the financial administrator
(national) and road maintenance engineer (national) of PMU, who were competitively recruited in 2003 under the
Emergency Infrastructure Rehabilitation Project 2, will be retained in PMU through contract extensions.
13

4. Consulting Services

50. A consulting firm will be hired as project implementation support consultant (PISC) under
the Project to provide 497 person-months of consulting services (141 international and
356 national). The PISC will support the PMU in (i) subproject appraisal, (ii) detailed design,
(iii) RMP preparation and implementation including the training of national contractors,
(iv) construction supervision, and (v) monitoring and evaluation. (Outline terms of reference for
the PISC are in Supplementary Appendix K.) The recruitment will be made through quality- and
cost-based selection following ADB’s prior review, in line with ADB’s Guidelines on the Use of
Consultants (2007, as amended from time to time). Financial audit consultants will be hired
through least-cost selection.

5. Anticorruption and Governance Measures

51. ADB’s Anticorruption Policy (1998, as amended to date) was explained to and discussed
with the Government and MOI. Consistent with its commitment to good governance,
accountability, and transparency, ADB reserves the right to investigate, directly or through its
agents, any alleged corrupt, fraudulent, collusive, or coercive practices relating to the Project.
To support these efforts, relevant provisions of ADB’s Anticorruption Policy are included in the
grant regulations and the bidding documents for the Project. In particular, all contracts financed
by ADB in connection with the Project shall include provisions specifying the right of ADB to
audit and examine the records and accounts of the Executing Agency and all contractors,
suppliers, consultants, and other service providers as they relate to the Project.

52. An information disclosure system will be established by (i) displaying, on notice boards
outside government offices and important public places in roadside communities, information
regarding contracts, the list of participating bidders, the name of the winning bidder, basic
details on bidding procedures, the contract award, and the list of goods and services procured;
(ii) notifying the communities of the date and location of selected events in the procurement
process (e.g., public bid openings, progress reviews, and handover ceremonies); and
(iii) establishing a grievance redress mechanism at the PMU to receive and resolve complaints
and grievances from communities, contractors, etc.

6. Disbursement Arrangements

53. The grant proceeds for the Project will be disbursed according to ADB’s Loan
Disbursement Handbook (2007, as amended from time to time). To facilitate project
implementation and funds flow, the imprest account will be set up in a bank acceptable to ADB.
The imprest account will be managed by PMU under the supervision of MOI and MOF, and will
be used exclusively to finance ADB’s share of eligible expenditures. MOF, through its
authorization, will ensure that withdrawals from the imprest account are managed by two
signatories, one from MOI/PMU and another from the treasury department of MOF. The
proposed signatories for the withdrawal application and the operation of the imprest account
must have ADB’s prior approval. The initial advance to be deposited in the imprest account will
be based on 6 months’ estimated expenditures to be financed from the imprest account or
$500,000, whichever is less. If needed, the imprest account ceiling may be adjusted during
implementation, subject to compliance with the requirements in ADB’s Loan Disbursement
Handbook. The amount in the imprest account may not at any time exceed 10% of the total
ADB grant. Direct payment and reimbursement procedures will be used for eligible project
expenditures under large contracts. Such an arrangement is supported by a financial
14

management assessment of the MOI’s and the PMU’s performance in previous projects
(Supplementary Appendix I).

54. The Government has asked ADB to approve advance action for the recruitment of
consultants and the procurement of civil works. Advance contracting actions cover
prequalification, invitation of bids, bidding, bid evaluation, and limited contract award. The
advance actions must conform to ADB’s Procurement Guidelines and Guidelines on the Use of
Consultants. The Government has been advised that approval of advance action does not
commit ADB to finance the Project.

55. To meet the implementation schedule, the pre-construction activities will start in 2009.
The Project will provide retroactive financing for project management related consulting
services, and civil works. 24 Retroactive financing will be permitted only if (i) ADB and the
Borrower specifically agree to it in the grant agreement, and only pursuant to the terms of the
relevant agreement; (ii) the goods, works, services, and consultants for which it is requested are
procured in accordance with ADB’s Procurement Guidelines and Guidelines on the Use of
Consultants; and (iii) the amount to be retroactively financed does not exceed 10% of the grant
(a higher amount may be allowed only with ADB’s approval). The expenditure must also have
been incurred before the effectiveness of the grant, but no earlier than 12 months before the
signing date of the grant agreement.

7. Accounting, Auditing, and Reporting

56. MOI, with assistance from the PMU, will maintain separate project records and accounts
adequate to identify (i) the goods and services financed from the grant proceeds, (ii) the
financing resources received from each financier, (ii) all expenditures incurred on the
components of the Project and their financing resources, and (iv) the counterpart funds received
and expended. MOI will hire independent external auditors acceptable to ADB for a yearly audit
of the project accounts, including project expenditures and transactions, imprest accounts, and
counterpart funds. MOI will submit to ADB certified copies of the audited annual project
accounts, as well as the auditor’s report, within 6 months of the end of each financial year
during the implementation period. The audit opinion will cover (i) an assessment of the
adequacy of accounting and internal control systems for project expenditures and transactions
to ensure safe custody of assets financed by the Project; (ii) a determination as to whether the
Government and MOI have adequately documented all financial transactions, specifically
imprest account procedures; and (iii) confirmation of compliance with ADB’s requirements for
project management. A separate auditor’s opinion on the use of the imprest account procedure
will also be part of the audit report. ADB’s policy on the submission of audited accounts, which
covers failure to submit audited accounts and financial statements by the due dates, has been
explained to the Government. If there is more than 6 months’ delay in the submission of an
audited financial statement, ADB may not approve new contract awards. If the delay is more
than 12 months, grant disbursements may be suspended or the grant may be canceled outright.

57. MOI, through the PMU, will prepare and submit to ADB quarterly progress reports giving
(i) a narrative description of progress made during the reporting period, (ii) changes in the
implementation schedule, (iii) projected expenditures in the next 6 months, (iv) problems or
difficulties encountered, (v) an account of the implementation of the resettlement plan (if any),
and (vi) activities to be undertaken in the next reporting period. MOI will prepare and submit to

24
ADB’s management review meeting (MRM) for the Project approved advance actions on 23 July 2009.
15

ADB a subproject completion report within 3 months of the completion of each subproject, and a
project completion report within 6 months after project completion.

8. Project Performance Monitoring and Evaluation

58. ADB and the Government will agree on a set of indicators for project performance in
relation to its impact and outcomes, consistent with the design and monitoring framework in
Appendix 1, and with emphasis on poverty reduction. Consultants will be hired by MOI to
monitor and evaluate the key indicators for road transport characteristics, income patterns,
access to social services, and environmental issues. A baseline survey will establish a database
of existing conditions, and there will be yearly follow-up rounds of data collection.

9. Project Review

59. ADB will review the Project every 6 months. Each review will cover all institutional,
administrative, organizational, technical, environmental, social, poverty reduction, resettlement,
economic, financial, and other relevant aspects that may affect the performance of the Project
and its continuing viability. The Government and ADB will jointly undertake a midterm review of
the Project within about 2 years of its start. The midterm review will focus on (i) project impact,
(ii) implementation progress, (iii) the performance of consultants and contractors, (v) the status
of compliance with covenants in the grant agreement, and (vi) the need for any midcourse
changes in project scope or schedule to ensure full achievement of the intended impact.

IV. PROJECT BENEFITS, IMPACT, ASSUMPTIONS, AND RISKS

A. Economic Analysis

60. Preliminary economic analyses have been prepared for 63 national or district links
(about 1,675 km) in the core road network. The economic analysis used the roads economic
decision model developed by the World Bank, with input derived from the analysis and
assessment of transport and traffic surveys, and road condition surveys, both done in early
2009. Cost and benefit streams with and without the Project over a 20-year period, discounted
at an interest rate of 12%, were analyzed. Thirty-two priority road links (about 972 km) were
recommended for immediate investment.

61. Two road links were selected as sample subprojects for rehabilitation. The work will be
undertaken within the existing road alignments. Detailed economic analyses have been
prepared for the two road links (Liquica–Batugade–Mota Ain and Ermera–Maliana) as part of
the sample feasibility study under the project preparatory TA. The two sample subprojects have
economic internal rates of return of 25% and 26%.

B. Poverty Reduction and Social Impact

62. In Timor-Leste, about three-quarters of the poor live in the rural areas and one-quarter in
the urban areas.25 At the national level, 64% of the poor, and 76% of the non-poor, have access
to all-weather roads. According to the TLSLS 2007 results, 80% of the total poor population and
90% of the rural poor depend on agriculture. Improving access to markets can contribute to
poverty reduction by increasing farming inputs. According to the June 2007 crop and food
supply assessment mission of the Food and Agriculture Organization and the World Food

25
Ministry of Finance and the World Bank. 2008. Timor-Leste: Poverty in a Young Nation. Dili.
16

Programme to Timor-Leste, 38%–54% of households suffer food shortages 3–5 months per
year in most districts. The road improvements will lead to increased marketing, and increased
household incomes. With improved access to local and regional markets and towns, farmers will
be able to expand and diversify their agricultural production. People can get better prices for
their products when they sell at larger markets or directly to factories rather than through
middlemen. A summary poverty reduction and social strategy is in Appendix 10.

63. Better access to health facilities will improve the health of the people, in particular
women and children. The people of Timor-Leste are vulnerable to respiratory diseases,
diarrheal malaria, dengue fever, tuberculosis, leprosy, and other treatable diseases. Improved
access to health-care facilities will encourage people to seek medical assistance. Better roads
will also ease travel to schools, and help strengthen the school system by reducing teacher
absentee rates and enabling school to attract more qualified teachers.

64. In Timor-Leste, sociocultural factors contribute to low enrollment and high dropout rates
among female students, high illiteracy among adult females, high female unemployment, sex
segregation in the paid labor force, an emerging gender gap in wages, high maternal mortality,
and domestic violence. About 28% of women suffer from malnutrition; of these, 7% are in need
of treatment. The gender-specific benefits of the Project are (i) improved access to health-care
facilities; (ii) improved access to schools, social services, and other key facilities; and
(iii) targeted employment opportunities for female laborers, such as bioengineering.

C. Environmental Impact

65. The Project is a category B project, according to ADB’s Environment Policy (2002) and
Environmental Assessment Guidelines (2003), and the Government’s environmental
regulations.26 Accordingly, an initial environmental examination (IEE) has been prepared for it.
Selection criteria have been set to ensure that future subprojects comply with the project
environmental classification. An environmental assessment review procedure has been
prepared in Supplementary Appendix L; it presents the general environmental impact of the
project activities, the selection criteria, and environmental procedures for future subprojects. It
will guide the environmental assessment of the subprojects likely to be financed under the
Project, and the approval of those assessments. The summary IEE is in Appendix 11.

66. The habitats in both subproject areas have been affected by human interference
(anthropogenic influence) and have no legal conservation status. Proper mitigation measures
have been proposed in the EMP to ensure that environmental impact is minimized to acceptable
levels. The EMP will be incorporated into the design of the road subprojects. The EMP will guide
MOI and the contractors in managing environmental impact mitigation and compliance. The IEE
and the EMP for each subproject must be approved by ADB and the National Directorate of
Environmental Services before bidding documents for civil works can be issued. The
environmental management capacity of the DRBFC will be strengthened through on-the-job
training in EMP implementation and compliance monitoring. The training may extend to the
relevant officers of the Directorate of Environmental Services as requested.

26
United Nations Transitional Administration in East Timor. 2003. Guideline 1: Environmental Requirements for the
Development Proposals. Dili.
17

D. Climate Change Adaptation

67. Understanding how climate change may affect the road sector will allow appropriate
measures to be taken to avoid losses due to climate change and to take advantage of
opportunities that arise. Taking into consideration the impact of climate change and formulating
adaptation measures to be incorporated into the project design will minimize the adverse
impact, hence, ensure that the Project achieves its poverty reduction goals. Peak rainfall, the
most important climate parameter in road engineering, will be the focus of the climate analysis.
A “no-regret” approach to climate-proofing will be taken to minimize the country’s vulnerability to
the adverse effects of climate change and minimize risks of road sector investment. The
technical approach of climate proofing is in Supplementary Appendix M.

E. Social Safeguards

1. Land Acquisition and Resettlement

68. The Project is a category B project with respect to involuntary resettlement. The civil
works under the Project will be conducted within existing road alignments; therefore, only
minimal temporary impact on land or resettlement impact is expected. 27 The number of
households that may experience incidental impact from civil works will be small. The two sample
roads have been screened and their impact on involuntary resettlement has been determined to
be minor or insignificant. The impact will be assessed through the screening of each subproject.
A resettlement framework (Supplementary Appendix N) has been prepared for the Project as a
precaution. The resettlement framework is based on ADB’s Involuntary Resettlement Policy
(1995) and relevant sections of the Operations Manual28 and Gender Checklist: Resettlement
(2003),29 as well as the process that has been adopted when land or assets have to be acquired
for civil works in Timor-Leste. The resettlement framework will guide MOI and PMU in preparing
and implementing resettlement plans for subprojects requiring resettlement. A summary of the
resettlement framework is in Appendix 12.

2. Indigenous People

69. In Timor-Leste, ethnic association is bound up with language. Seventeen languages,


derived from one of two broad language groups—Austronesian (Malayo-Polynesian) and
Papuan (Melanesian)—are spoken across the country. The social assessment concluded that
no significant differences in cultural and social identity exist among the people who speak
different languages, and that no ethnic minority groups are expected to be adversely affected by
the Project. Therefore, the Project is a category B project with respect to the ADB Policy on
Indigenous Peoples (1998). If necessary, actions will be taken through resettlement frameworks
and resettlement plans.

F. Assumptions and Risks

70. The Project makes several assumptions and is subject to various risks, as follows:

27
Resettlement, as defined in ADB policy, involves permanent or temporary impact caused by (i) the acquisition of
land or other fixed assets; (ii) a change in the use of land; or (iii) restrictions imposed on land, regardless of
whether it involves actual relocation.
28
ADB. 2006. Involuntary Resettlement. Operations Manual. OM F2/BP. Manila.
29
ADB. 2003. Gender Checklist: Resettlement. Manila.
18

(i) Resurgence of conflict. High unemployment and high poverty incidence are
heightening the potential for instability. The Government is pursuing a significant
reform agenda and has made progress in addressing the causes and
consequences of the 2006 unrest. Displaced people have returned, and the
Government has introduced reforms in the security sector, addressed claims of
discrimination raised by former soldiers, and made social transfer payments to
vulnerable groups. The police force is gradually resuming responsibility for law
and order, while UN police and international forces continue to bolster security.
(ii) Limited capacity of the Ministry of Infrastructure. MOI has both human
resource and budget constraints. The budget allocation for the road sector in
2009 is only about $11 million, making the 6,000 km road network severely
underinvested. As the road agency, DRBFC has only 12 engineers. The PMU
under MOI will therefore be maintained and strengthened to oversee and
administer day-to-day matters. ADB is also implementing TA to strengthen
project management capacity and improve budget execution.
(iii) Lack of road maintenance financing. DRBFC used to rely on a road
maintenance management system developed under a JICA TA project for road
maintenance planning, but there has always been a shortage of human
resources and funds for planned road maintenance. The Government has given
its assurance that it will gradually increase its road maintenance funding. The
Project will support the maintenance of national roads in the border region.
(iv) Deficiencies in border management. How well the border management
agencies, such as the Joint Border Committee, perform will determine the extent
to which the benefits of road improvement reach across borders and sustain
subregional cooperation and integration. A regional TA project is being prepared
by ADB to help strengthen the institutional capacity of the governments of Papua
New Guinea and Timor-Leste in cross-border matters with Indonesia.
(v) Inadequate capacity of national contractors. To attract international
contractors, road rehabilitation contracts will be designed in larger packages, and
most civil works will be procured through ICB. Joint ventures between
international and national contractors will be encouraged through consultations
and pre-bidding workshops. Most of the contract packages for road maintenance
are expected to be small, and NCB procedures will be used to encourage
national contractors to participate. Small contractors will be trained in road
maintenance technology, bidding and contracting, and project management.
(vi) Lack of legal authority for rights-of-way. Road sector development in Timor-
Leste is constrained by the lack of a law for securing right-of-way. Although no
land is expected to be acquired for the Project, a resettlement framework for
unforeseen resettlement and land acquisition has been prepared.
(vii) Climate change. There are inherent uncertainties in predicting future climate
change, particularly for a “data-poor” country like Timor-Leste. It is therefore
assumed that building capacity to manage current climate variability, with some
forward-looking predictions, will also build capacity to understand and manage
ongoing and longer-term climate change. Moreover, adaptation options with
other important benefits, such as erosion control, will be emphasized as a way of
reducing the risk of inappropriate investments.

V. ASSURANCES

71. In addition to the standard assurances, the Government and MOI have given the
following assurances, which are incorporated in the legal documents:
19

(i) Subproject selection. Subprojects will be selected from the medium-term road
network development program. Prior to the detailed design of any subproject, the
Government will obtain ADB’s concurrence on the inclusion of the subproject for
financing under the Project, based on the agreed appraisal and eligibility criteria.
(ii) Project management unit. Within 3 months of the grant effectiveness date, the
Government, through MOI, and assisted by ADB in consultant selection, will
recruit required consultants to ensure the PMU capacity for sector project
implementation. At the completion of the Project, the national staff of PMU will be
offered to join MOI as a regular staff.
(iii) Road safety. The Government will ensure that MOI (a) installs appropriate road
safety facilities during project implementation, including pavement markings,
traffic signs and signals, warning signs, and hazard barriers; and (b) implements
road safety awareness programs in roadside communities.
(iv) Road maintenance. The Government will ensure that its budget allocation for
national and district roads is increased to at least $4 million for FY2010, and
increased by at least 30% per annum in each subsequent year till the road
maintenance needs are fully satisfied.
(v) Project performance monitoring and evaluation. The MOI, assisted by the
consultants engaged under the Project, will monitor and evaluate project impact.
The Government will agree with ADB on the indicators and baseline data
prepared by these consultants prior to the commencement of civil works, and will
ensure that the consultants monitor and compare the data during project
implementation and at project completion. To the extent possible, the indicators
and baseline data will make use of gender-disaggregated data and information.
(vi) Counterpart funding. The Government will ensure that all funds and resources
necessary for construction, operation, and maintenance of the Project are
provided in a timely manner. The Government will take all necessary measures,
including the provision of additional funds, to ensure that the Project is
successfully implemented, managed, and operated after construction is
completed. The Government will also ensure MOI maintains counterpart DRBFC
staffing and support its operations related to the Project.
(vii) Environment. No subproject assessed as category A (significant adverse
impact) will be approved under the Project. The Government and MOI will ensure
that (a) the project implementation complies with all applicable laws and
regulations of Timor-Leste and ADB; (b) the EMP is updated, as required, during
final design; (c) ADB’s approval of the IEE and EMP is obtained before issuing
bidding documents for civil works.
(viii) Land acquisition and resettlement. The Government and MOI will ensure that
all civil works are undertaken within existing rights-of-way. In the event of any
unforeseen land acquisition or resettlement needs, the Government will inform
ADB and prepare and implement a resettlement plan. The Government, through
MOI, will ensure that (a) the resettlement plan complies with all applicable laws
and regulations of the Government and ADB; (b) the resettlement plan is
updated, as appropriate, during final design; (c) civil works do not start until the
resettlement plan has been approved by ADB; and (d) civil works commence
only after land acquisition has been completed.
(ix) Gender and development. The MOI will (a) encourage contractors to employ
30% of women in civil works, and (b) provide equal pay to men and women for
work of equal type.
20

(x) Ethnic minorities. The Government will ensure that the Project does not have
any adverse impact on the livelihood of ethnic minorities living in the project area.
In the event of any unforeseen impact on the livelihood of ethnic minorities,
(a) the Government will inform ADB and prepare a plan according to all
applicable laws and regulations of the Government and ADB; and (b) civil works
will not start until ADB has approved the plan.
(xi) Health risks. MOI will ensure that all civil works contracts include a requirement
to conduct an information and education campaign on sexually transmitted
diseases (STDs), including HIV/AIDS, for construction workers as part of the
health and safety program at construction campsites. In addition, the MOI will
ensure that similar information on the risk of transmission of STDs, including
HIV/AIDS, is disseminated at the worksites and to local communities in the
corridor of influence, in coordination with national agencies working on this issue.
MOI, through the PMU, will strictly monitor compliance.
(xii) Labor laws. The Government, through the MOI, will ensure that civil works
contractors comply with all applicable labor laws and related international treaty
obligations, and do not employ child labor.
(xiii) Auditing. The Government will cause MOI to undertake timely audit of project
accounts according to sound auditing standards by an external auditor
acceptable to ADB.
(xiv) Governance. The Government will ensure that the Project is carried out in
compliance with all applicable anticorruption laws and regulations of Timor-Leste
and ADB.
(xv) Grievance redress mechanism. Within 3 months of grant effectiveness, the
Government shall establish a complaint and problem management mechanism in
PMU.

VI. RECOMMENDATION

72. I am satisfied that the proposed grant would comply with the Articles of Agreement of the
Asian Development Bank (ADB) and recommend that the Board approve the grant not
exceeding $46 million to the Democratic Republic of Timor-Leste from ADB’s Special Funds
resources for the Road Network Development Sector Project, on terms and conditions that are
substantially in accordance with those set forth in the draft Grant Agreement presented to the
Board.

Haruhiko Kuroda
President

29 October 2009
Appendix 1 21

DESIGN AND MONITORING FRAMEWORK

Design Performance Targets Data Sources and


Summary and Indicators Reporting Mechanisms Assumptions and Risks
Impact By 2015: Assumptions
Economic growth and 10% decrease in the National Statistics Office Political stability persists
poverty reduction in the number of people living
Monitoring and evaluation Donors provide continued
project areas below the poverty line in
reports of consultants financial and institutional
the project areas
support
(national average in
2007: about 49%) There are sufficient incentives
for agriculture and industry to
About 22,000 person-
expand in response to improved
months job opportunities
transport
generated in the project
areas, for both men and Risk
women
Deterioration in external
10% increase in cross- conditions constrains economic
border trade (exports to growth and development
Indonesia in 2008: about
$2.12 million)
Outcome By 2014: Assumptions
Improved access to 10% reduction in National Statistics Office Border management agencies
social and economic average travel time to improve their capacity and
Transport survey
facilities in project areas primary schools in performance
project areas, for both Monitoring and evaluation
Timor-Leste maintains and
men and women reports of consultants
improves its relationship with
(national average:
MOI project progress Indonesia
28 minutes for primary
school and 56 minutes report
Road transport service
for secondary school) Border travel unit providers are responsive to
improved road network
10% reduction in ADB review mission
average travel time to assessment MOI keeps building its capacity
clinic in project areas, for for road sector planning and
both men and women project management
(national average:
National contractors are willing
54 minutes)
to invest in human resources
10% reduction in and equipment
average travel time to
bus terminal or stop in Risk
project areas, for both Increasing fuel prices prevent
men and women routes from becoming
(national average: commercially viable
49 minutes)
Reduction in road
closures due to severe
climate
More efficient land
border crossing
(crossing the land border
now takes about 1 hour)
22 Appendix 1

Design Performance Targets Data Sources and


Summary and Indicators Reporting Mechanisms Assumptions and Risks
Outputs By 2014: Assumptions
1. Road rehabilitation
1.1 About 232 km of MOI project progress and Counterpart funding from the
2. Road maintenance
national roads completion reports Government is provided on time
program established
improved to
3. Border posts DRBFC policy framework Counterpart DRBFC staff
maintainable
constructed in and business procedure members are assigned to the
condition
Mota Ain, Salele, Project on time
Sakato, and Oesilo Performance monitoring
2.1 Annual maintenance
4. Improved capacity of reports of consultants National contractors actively
implemented on
national contractors participate in the training
about 302 km of
to implement road program
national roads in the
rehabilitation and three border districts Detailed design of border posts
maintenance works during the Project is completed on time
5. Improved MOI
3.1 Four border posts Risks
capacity to manage
road projects and constructed in Mota
Unforeseen need for land
road maintenance Ain, Salele, Sakato,
and Oesilo acquisition or involuntary
program resettlement delays civil works
6. Improved awareness 4.1 About 80 national
of road safety among Increased material and
contractors trained
communities in in contract construction prices could lead to
project areas administration and a reduction in scope
7. Climate-proofing labor-based road Severe weather causes
incorporated into maintenance additional damage and delays
road rehabilitation civil works
and maintenance 4.2 Road maintenance
civil works
undertaken by
national contractors
completed on time
and accepted by
the Government
5.1 DRBFC staff
capable of planning
and implementing
annual road
maintenance in the
three border districts
6.1 Traffic safety
measures
incorporated into
engineering design
and civil works
contracts
7.1 Climate-proofing
measures
implemented in road
rehabilitation and
maintenance works
Appendix 1 23

Activities with Milestones Inputs


1.1 PMU consultants recruited by March 2010
ADB: $46 million
1.2 Consulting firm recruited by March 2010
1.3 Government proposes subprojects by December 2010 Government: $6.9 million
1.4 Detailed engineering starts by June 2010
1.5 Detailed engineering completed by December 2012
1.6 Civil works for road rehabilitation start by January 2012
1.7 Civil works for road rehabilitation completed by June 2014

2.1 Engineering design and bid documents for road maintenance finalized by
June 2010
2.2 Road maintenance scheme for the border region starts operating under PMU
by January 2011

3.1 Procurement for border posts completed by June 2010


3.2 Civil works for access roads and parking areas in border posts completed by
December 2010

4.1 Annual training for road maintenance and contract administration by PMU,
consultants, and DRBFC provided to small contractors from June 2010
4.2 On-the-job training provided to national contractors by construction
supervision consultants during project implementation

5.1 On-the-job training provided to counterpart DRBFC staff by PMU and


consultants during project implementation
5.2 DRBFC takes lead in implementing the road maintenance program by
September 2012
5.3 Road maintenance program fully transferred to DRBFC by December 2014

6.1 Road safety awareness campaign carried out in project areas during
construction
6.2 Traffic safety measures incorporated into engineering design
6.3 Traffic safety measures incorporated into civil works contracts

7.1 Climate change adaptation assessment tools developed for road project
design
7.2 Climate-proofing measures incorporated into engineering design
7.3 Climate-proofing measures incorporated into civil works contracts

ADB = Asian Development Bank; MOI = Ministry of Infrastructure; DRBFC = Directorate of Roads, Bridges, and Flood Control;
PMU = project management unit.
Source: Asian Development Bank.
24 Appendix 2

ROAD SECTOR ANALYSIS

A. Sector Situation

1. Sector Profile

1. Timor-Leste is a small and mountainous island country, with a population of about


1 million and a land area of 14,609 square kilometers (km2). It is located at the eastern end of
the Sunda archipelago and has a dramatic topography dominated by Mount Ramelau, which
bisects the island from east to west. About 44% of the land area has an elevation of 100–
500 meters (m), and 35% above 1,000 m, making road building expensive and road
maintenance difficult.1

2. In Timor-Leste, roads play a vital role in economic development and country integration.
As the primary mode of transport, roads carry about 70% of freight and 90% of passengers.
Timor-Leste has an extensive road network of about 6,000 km; half of the roads are
undeveloped rural tracks. According to the Ministry of Infrastructure (MOI), the core network
comprises 1,426 km of national roads and 869 km of district roads. The national road network,
linking the 13 districts, comprises two (northern and southern) coastal roads and five roads
traversing north–south connecting the two coastal roads. The district roads link major population
centers to the national roads. The core network is supplemented by 716 km of urban roads in
Dili and several smaller towns and cities, and more than 3,000 km of rural roads providing
access to villages and more remote areas with agricultural potential.

3. The road network was constructed under relatively low standards of design and
materials adapting to the often-severe terrain conditions. Although about 80% (1,800 km) of
core roads used to be sealed, the roads were constructed with two standard narrow pavement
widths—3.2 m and 4.5 m. Even such road widths have often been compromised by actual
terrain conditions, resulting in many very narrow roads. In mountainous regions, the poor
horizontal or vertical alignments of roads limit the traveler’s sight distance, and pose additional
danger to traffic. The rural roads that provide access to villages and communities and connect
to the core network are mostly undeveloped tracks.

2. Road Condition

4. Almost the whole core road network needs rehabilitation to restore the network to a
maintainable condition. The roads have prematurely deteriorated because of lack of routine and
preventive maintenance. The deterioration has been compounded by intense rainfall and
geotechnical instability in mountainous areas causing frequent landslides. According to a road
condition survey of the core network in early 2009, almost the entire road network has
deteriorated and is no longer maintainable.2 As shown in Table A2.1, only about 8% of the core
roads are in fair condition, about 22% in poor condition, and about 70% in very poor condition.

1
World Bank. 2004. The Democratic Republic of Timor-Leste Public Expenditure Review. Washington, DC.
2
ADB. 2008. Technical Assistance to the Democratic Republic of Timor-Leste for Preparing the Road Network
Development Project. Manila.
Appendix 2 25

Table A2.1: General Surface Condition of the National and District Roads

National District Total


Road Condition (km) (%) (km) (%) (km) (%)
Fair 122 9 0 0 122 8
Poor 351 26 9 4 360 22
Very Poor 879 65 249 96 1128 70
Total 1,362 100 258 100 1,610 100
Source: Road Survey under ADB. 2008. Technical Assistance to the Democratic Republic of Timor-
Leste for Preparing the Road Network Development Project. Manila.

3. Traffic and Vehicle Fleet

5. Transport demand and vehicle ownership in Timor-Leste are modest. However, both
have been growing substantially over the last 5 years, particularly where motorcycles are
concerned. Average annual growth of motorized vehicles in 2004–2008 was 8.5% excluding
motorcycles, and 16.2% including motorcycles. The traffic volume is concentrated on the
northern east–west axis, linking Dili and other district centers along the coast. Other than a few
key north–south links, the traffic volume in the southern regions is low. Traffic counts conducted
on the core network in early 2009 indicated that the average daily traffic for motorized vehicles
on national roads is about 215 excluding motorcycles (about 476 including motorcycles), and on
national roads about 42 excluding motorcycles (103 including motorcycles). The heaviest traffic
flows, in excess of 1,000 vehicles per day excluding motorcycles, are on the northern coastal
road.

6. The nationwide classified traffic counts in 2005 and 2009 indicated that traffic volumes
increased significantly over the 4-year period. Motorcycles are now the dominant road vehicles,
and their use and predominance over other vehicle types continues to grow. Private cars, jeeps,
four-wheel drives, pickups, and minibuses are other important groups of road users with rapid
annual growth rates of more than 15%. The use of large buses has been declining because the
narrow, winding mountainous roads are hardly passable. Table A2.2 compares the vehicle fleet
in 2005 and 2009.

Table A2.2: Vehicle Fleet

Estimated Total Estimated Total


Vehicle Type Number in 2005 Number in 2009
Motorcycles 11,012 32,305
Private cars, taxis, jeeps, and 4WD 5,414 15,539
Pickups, vans, and minibuses 3,303 3,123
Medium and large buses 200 155
Light and medium trucks 2,167 2,127
Heavy and specialized trucks 61 89
Total 22,157 44,323
Source: Asian Development Bank estimates.

7. Weather and coffee production are two major factors affecting traffic. The rainy season
has a direct impact on traffic patterns. The duration of the rainy season can vary in different
areas of the country, between an average of 4 months (from December to March) and 8 months
(from November to June). Landslides and flooding, which are common during that season,
cause frequent road closures. Another factor affecting traffic patterns over the year is the coffee
production and harvesting cycle. Five coffee-growing centers are concentrated in the western
26 Appendix 2

area of Timor-Leste. The coffee is picked up by small trucks and first brought to wet factories for
processing, then sent to other factories for drying, and finally to Dili for final processing and
shipping. The coffee harvest season peaks between August and September. During that
season, light and medium truck traffic in the coffee-growing areas and between those areas and
Dili increase significantly.

4. Transport Services

8. Transport services in Timor-Leste, both for passengers and for goods, are provided
competitively by the private sector. There is only minimal interference from the Government,
except for licensing and basic vehicle and road safety requirements. In the urban areas,
passenger services are largely provided by minibuses (and to a much lesser extent, in Dili, also
by taxicabs). In the rural areas, particularly where road conditions are difficult, passenger
services are also provided by minibuses, and by light and medium trucks where passengers
stand or sit on the flatbed. The multipurpose light and medium trucks are licensed to carry both
passengers and freight. Finally, a small number of heavy trucks, about 90 in total, mainly
transport containers and large equipment, but are limited in area coverage by the narrow road
widths and difficult terrain.

9. Currently, land transport services between the Timor-Leste mainland and the Oecussi
exclave are complicated. All people crossing the border through Indonesian West Timor are
required to have passports with valid Indonesian visas, which can be obtained only in Dili. Thus,
the number of people and vehicles crossing is still low at present although it is increasing. A
ferry operates between Dili and Oecussi twice a week, as an alternative to the difficult
land crossing. It has a capacity of about 300 passengers and 170 tons of freight.

5. Regulations and Specifications

10. In the road sector, the Government has established much of the essential framework,
including institutions and laws. The development and management of roads is one of the
several tasks for which the MOI is responsible. The Directorate of Roads, Bridges, and Flood
Control (DRBFC) under MOI plans, implements, and manages the development of road
infrastructure. DRBFC is also responsible for the operation and maintenance of the road
network. It operates through five regional offices (in Baucau, Dili, Maliana, Oecussi, and Same)
covering the entire road network.

11. In 2003, the Government introduced two laws to regulate and manage the road sector:
(i) the Basic Law for Vehicle Transport, and (ii) the Road Code. The former covers rules and
regulations for vehicle registration, road charges, passenger and freight transport services and
passenger fares, and the planning and coordination of public infrastructure provision. The Road
Code covers traffic rules, traffic management, the classification and use of roads, vehicle
categorization, fines, vehicle emissions, accident reporting, and licensing of drivers. In 2008, the
MOI, with assistance from Japan International Cooperation Agency (JICA), developed several
guidelines (pavement guidelines, concrete guidelines, slope protection guidelines, and a
concrete and aggregate testing manual).

B. Key Challenges

12. Poor condition of the core road network. Although the road assets inherited at
independence in 2002 were essentially complete, they were damaged in the conflict period and
are rapidly deteriorating because of the difficult terrain, geology, torrential rains, low design
Appendix 2 27

standards, and neglect of maintenance. The poor road infrastructure hampers people’s access
to economic and social services, and the development of industry and agriculture.

13. Weak planning and implementation capacity. The DRBFC is seriously handicapped
by shortage of technical staff.3 This has affected its operational capacity for strategic planning,
procurement and administration of new infrastructure contracts, and timely maintenance of the
road network. MOI is keen to expand its capacity by hiring more staff, but it is constrained by the
limited availability of skilled human resources and better incentives offered by the private sector.

14. Insufficient road maintenance finance and practices. The road network lacks a
well-planned routine and periodic maintenance program. The annual maintenance expenditure
needs for national roads are estimated at $20–$30 million. However, the Government allocated
only about $3.7 million in 2009 for the maintenance of all categories of roads. DRBFC does not
have a functioning system for setting performance targets and for planning and programming
periodic road maintenance activities. Most road works on the core road network are
implemented reactively by the local communities, through DRBFC, but supervisory guidance
has not been provided sufficiently and on time, leaving the quality of the works in question.

15. Difficult terrain, geology, and weather conditions. Terrain, geology, and weather
conditions considerably increase the cost of providing and maintaining roads. Mountain roads
are prone to erosion and landslides in the rainy season, while coastal plain roads, especially in
the south, are prone to flooding. During the 8-month rainy season from November to June, a
large part of the road network, including large sections of the national road network and a
number of district roads, becomes impassable after heavy rains.

16. Limited capacity of national contracting industry. Private companies have


implemented road projects in Timor-Leste, but they are not ready to undertake large-scale road
projects independently. The main capacity constraints of these contractors are financial
resources and technical and managerial skills. Most of the consulting work for large projects is
performed by foreign companies since the capacity of local consulting firms is still
underdeveloped.

17. Right-of-way. The legal foundation for the right-of-way (ROW) for roads has not been
established in Timor-Leste. When roadworks require additional land, the Government negotiates
with the owners or users on a case-to-case basis. Previously, when land had to be acquired for
civil works, the concerned parties negotiated under the direction of local authorities and reached
agreement regarding compensation rates, the total compensation amount, and the procedures
for compensation and cash transfer. There are no specific laws or guidelines concerning land
acquisition and compensation. The first land law of Timor-Leste (Law No.1/2003) was passed in
March 2003 but does not provide a legal basis for declaring customary land to be public land
belonging to the state. A new land law being prepared by the Government is expected to
address these issues.

18. Road safety. Data on road accidents are scarce and incomplete. Reports on road
accidents seem to substantially underestimate the actual number of road accidents. This is
explained in part by the fact that Timor-Leste does not require car or driver insurance. Thus,
road accidents that do not result in injuries are settled between the involved parties, and not
reported to the police. The Timor-Leste National Police reported that in 2008 there were 1,656
road accidents; of these, 50 accidents resulted in fatalities, 215 in serious injuries, and 1,020 in

3
DRBFC has only 12 engineers—seven at the headquarters in Dili and five in the regional offices.
28 Appendix 2

other injuries. Many less-serious, unreported cases were not included. The actual number of
injuries and fatalities is deemed to be much higher. Accidents are mostly attributed to human
error (60% of all reported accidents), road conditions (25%), weather conditions (10%), and
mechanical failure (5%). The potential for even-higher accident rates is great, considering the
increased number of vehicles, many of which are unprotected motorcycles carrying up to four
people, and the increased vehicle speeds made possible by economic growth and road
improvements.

C. Government Strategy and Vision

19. The Government of Timor-Leste’s current National Development Plan, 4 released in


2002, places high importance on infrastructure development. The objectives for roads, bridges,
and flood control are

(i) identifying the national, district, and rural road networks essential for the support
of economic and social development;
(ii) initiating policies within a legal and regulatory framework to improve the quality of
life, encourage private enterprise, and improve access and safety particularly in
impoverished areas;
(iii) developing roads, bridges, and topologies of flood control that provide
environmental protection and reverse existing ecological damage;
(iv) ensuring development and regulation for the safe circulation of transport;
(v) ensuring transport infrastructure meets national defense imperatives, and
establishing technical standards for a national road network;
(vi) preserving road assets as the first priority through sustainable maintenance and
long-term management plans for support systems;
(vii) establishing an institutional structure and developing the technical and
administrative capacity of East Timorese staff to manage, maintain, and improve
the road network;
(viii) implementing sustainable strategies for maintaining rural access roads; and
(ix) establishing and implementing erosion control measures to prevent damage to
physical infrastructure and economically valuable property.

20. The transport sector is currently faced with managing a degraded road network, which
entails a very high cost for the reactive work needed to keep it functioning. The Government has
set a 10-year vision for the road system to

(i) bring the road network up to a sustainable condition where, with regular
maintenance, life-cycle costs will be minimized, road closures will be reduced
and manageable, and road access will be reliable;
(ii) improve key roads to support regional connectivity and a growing economy; and
(iii) ensure effective capacity to manage the road system, comprising asset
management systems (including risk management), use of the private sector for
cost-effective delivery, and reliable funding and adequate cost recovery from
users.

4
Planning Commission. 2002. East Timor: National Development Plan. Dili. A new medium-term strategic plan is
prepared and submitted to public consultation in September 2009.
Appendix 3 29

EXTERNAL ASSISTANCE TO THE ROAD SECTOR

Grant/TA Amount
Agency No. Project Description ($ million)
Technical Assistance
Transport Sector Restoration, approved on 10
ADB 3401-TIM 1.00
February 2000
Transport Sector Improvement, approved on
3731-TIM 0.50
1 October 2001
Infrastructure Sector Capacity Development,
4609-TIM 0.60
approved on 14 July 2005
Infrastructure Project Management, cofinanced
4942-TIM by the Government of Australia, approved on 4 15.00
June 2007
Preparing the Road Network Development
7100-TIM 0.80
Project, approved on July 2008
Training on Road Engineering and
Japan 0.16
Administration, completed in 2001
Study on Urgent Rehabilitation Plan, completed
-
in 2000
Construction Equipment Training Policy,
-
completed in 2006
Infrastructure Policy Advisor, 2004–2006 -
Road Advisor, 2004–2006 -
Capacity Building of Road Maintenance, 2005–
-
2007
Training and Preparation of Guidelines and
0.90a
Manuals for Roads, 2005–2007
Capacity building of Roadworks, 2009–2011 -
Grant
Road Sector Improvement Project, approved on
ADB 0017-TIM 10.00
9 September 2005
ADB (Trust
Emergency Infrastructure Rehabilitation I,
Fund for 8181-TIM 29.80
approved on 13 April 2000
East Timor)
Emergency Infrastructure Rehabilitation II,
8198-TIM 9.00
approved on 18 May 2002
Rehabilitation of the Dili–Ainaro–Cassa Road,
Japan 4.70
completed in 2001
Urgent Road Rehabilitation Project for Natural
0.09
Disasters, completed in 2002
Improvement of Roads between Dili and Casa,
13.13
2002–2005
Improvement of Mola Bridge, 2006–2010 -
Australia UNDP Rural Roads, completed in 2000 0.31
Emergency Road Repairs, completed in 2000 0.30
30 Appendix 3

Grant/TA Amount
Agency No. Project Description ($ million)
European Access Improvement to Markets in the Eastern
7.62
Union Region, 2004–2008
Rural Development Programme I, 2003–2009 8.0 a
Rural Development Programme II, 2006–2011 40.0 a
Rural Development Programme III, from 2007 2.0 a
Norway Road Repairs, completed in 2002 0.49
ADB = Asian Development Bank, TA = technical assistance.
a
Estimate.
Source: Asian Development Bank.
Appendix 4 31

SUBPROJECT ELIGIBILITY CRITERIA AND SELECTION PROCEDURE

A. Introduction

1. The Road Network Development Sector Project is the first road project in Timor-Leste
using a sector-based approach. The approach allows the Government of Timor-Leste to take
the lead in identifying, prioritizing, appraising, designing, and implementing subprojects. As the
Executing Agency for the Project, the Ministry of Infrastructure (MOI) will propose, on behalf of
the Government, the rehabilitation of priority road links as subprojects for the approval of the
Asian Development Bank (ADB). The approval of subprojects will be based on satisfactory
technical, economic, social, and environmental assessments against eligibility criteria agreed on
between the Government and ADB.

2. The subproject selection criteria given here apply only to the road rehabilitation
component. Other components of the Project will be implemented according to the standard
procedures for ADB-funded projects.

B. Subproject Eligibility Criteria

3. The selection of subprojects will be guided, first of all, by the medium-term road network
development program.1 The project management unit (PMU) will select candidate subprojects
and undertake stakeholder consultations to investigate the relevance of the subprojects to
(i) fostering economic development, (ii) improving the quality of life of residents, (iii) serving rural
and remote areas, (iv) fostering regional development within the country, and (v) creating
employment.2

4. PMU will shortlist the candidate subprojects that satisfy the five criteria. The candidate
subprojects must meet the following eligibility criteria for funding under the Project:

(i) Economic efficiency. The subprojects must be economically viable, and must
demonstrate an economic internal rate of return of at least 12%. The economic
analysis should be conducted in accordance with ADB’s Guidelines for the
Economic Analysis of Projects.3 As a bottom line, the subproject will be assessed
for its contribution to: (a) savings in travel time, (b) reduced vehicle operation
costs, (c) potential for increased agricultural production and marketing due to low
freight costs and more reliable access, (d) employment of local communities and
national contractors for civil works, (e) increased incomes particularly among
poor and rural households, and (f) risk mitigation benefits due to climate change
adaptation measures.
(ii) Environment impact. Subproject environmental selection criteria will exclude
subprojects that are likely to cause major environmental impact (environmental
category A), according to ADB’s environmental guidelines. Environmental
screening will be conducted for all subprojects. In selecting subproject sites,
including extraction sites for materials to be brought into the construction sites,
the following environmental criteria will be used for the first level of screening. If
any of these selection criteria are found applicable to the site, then the subproject

1
The program is subject to regular review and revision by the Government.
2
The five criteria were identified by the Prime Minister of Timor-Leste in October 2008 for the National Infrastructure
Plan.
3
ADB. 1997. Guidelines for the Economic Analysis of Projects. Manila.
32 Appendix 4

will not be approved as part of the Project. Subprojects approved for funding
under the Project must not (a) be classified as category A in accordance with
ADB’s Environmental Assessment Guidelines (2003); (b) result in significant loss
of or damage to natural environments, such as forests, reefs, mangroves, or
other sensitive areas; (c) have a permanent negative effect on a known rare or
endangered species; or (d) cause permanent damage to irreplaceable cultural
relics and archaeological sites.
(iii) Land acquisition and resettlement. No subproject that requires land acquisition
with significant resettlement impact, according to ADB’s Involuntary Resettlement
Policy (1995), will be eligible for funding under the Project. The inclusion of a
candidate road as a subproject for funding under the Project is therefore
contingent on compliance with agreed eligibility criteria. With respect to
minimizing land acquisition (no permanent and only minimal temporary use of
land) and its impact, the criteria are as follows: (i) rehabilitation should require no
land acquisition and no major earthworks or construction of structures; (ii) the
inclusion of the road has local support; (iii) the proposed works avoid the
displacement of residential structures or other, permanent, structures; (iv) the
road is located on state-owned land or there is a negotiated agreement with
affected owners and communities to use customary land; and (v) there is no
other significant adverse environmental or social impact.
(iv) Counterpart funds. MOI will confirm that all funds and resources necessary for
the construction, operation, and maintenance of the subproject are provided on
time.

C. Candidate Project Roads

5. According to the medium-term road network development program in Supplementary


Appendix A, the candidate project roads are as follows:

Table A4: Candidate Project Roads

Road Link From To Length (km)


A02-07 Zumulai Suai 29.8
A03-03/04 Liquica Mota Ain 78.8
A04-01 Tibar Gleno 33.3
A04-02 Gleno Ermera 11.5
A11-01 A04 Junction (Ermera) Maliana 63.9
A19-01 Pante Macassar Sakato 15.0
Source: The medium-term road network development program prepared under ADB.
2008. Technical Assistance to the Democratic Republic of Timor-Leste for Preparing the
Road Network Development Project. Manila.

6. On the basis of consultations with the Government and key stakeholders, two road
links—(i) Liquica–Batugade–Mota Ain, and (ii) Ermera–Maliana—were selected as samples for
subproject appraisal. (The feasibility studies for these two subprojects are in Supplementary
Appendixes B–G.) The road from Liquica to Mota Ain is on national roads linking Dili and the
largest border crossing, at Mota Ain. Another road from Ermera to Maliana provides access to
coffee farmers and processors transporting coffee, the country’s most important commercial
agriculture product, to the market. The rehabilitation works will restore the roads on both links to
maintainable conditions. All civil works will be carried out within the road alignments to minimize
the adverse impact on nearby communities and the environment.
Appendix 4 33

D. Subproject Selection Procedure

7. Figure A4 outlines the subproject selection procedure.

Figure A4: Subproject Selection Procedure

PMU: Stakeholders Consultation for Candidate Subprojects

MOI: Endorsement of Candidate Subprojects

PMU: Subproject Appraisal

MOI: Endorsement of Subproject Appraisal

ADB: Approval of Subprojects

PMU: Subproject Detailed Design and Implementation


ADB = Asian Development Bank, MOI = Ministry of
Infrastructure, PMU = project management unit.
Source: Asian Development Bank.

8. The PMU will conduct stakeholder consultations on behalf of MOI, and report on the
results and propose subprojects for appraisal to the MOI. The minister of MOI will endorse
candidate subprojects for appraisal.

9. With MOI’s endorsement of candidate subprojects, the PMU, assisted by the project
implementation support consultants, will undertake the required appraisal to justify subproject
eligibility. The appraisal will involve collecting and analyzing baseline data to assess feasibility
and expected impact, using methods and tools established for the sample subprojects. Each
subproject appraisal will cover (i) a technical feasibility study, (ii) an economic analysis in
accordance with ADB’s Guidelines for the Economic Analysis of Projects, (iii) a social and
poverty analysis in accordance with the method and procedure used in the sample subproject
feasibility study, and (iv) an initial environmental examination and environmental management
plan in accordance with the environmental assessment and review procedure used in the
sample subproject feasibility study. Each component of the assessment will confirm acceptable
ratings against the criteria, or recommend further works to complete the assessment.

10. MOI will review the appraisal report and endorse the subproject that meets all the
eligibility criteria. The subproject appraisal report with the endorsement of the minister of MOI
will then be submitted to ADB for approval.

11. ADB will review the appraisal report and, if necessary, may request additional materials
and studies to justify the subproject. ADB’s formal approval has to be obtained before the
detailed design of any subproject, and its inclusion for financing under the Project. With ADB’s
approval, the PMU will start subproject detailed design and implementation.
34 Appendix 5

ROAD MAINTENANCE PROGRAM

A. Background

1. Road is the primary mode of transport, which carries 70% of freight and 90% of
passengers. Timor-Leste has an extensive road network of about 6,000 km, half of which are
currently undeveloped rural tracks. The core road network comprises 1,400 km of national roads
connecting the 13 districts and 900 km of district roads linking major population centers to the
national roads. The road conditions of the core road network demonstrate premature
deterioration. Almost the whole network needs rehabilitation works to restore the road condition
to maintainable levels.

2. Lack of road maintenance, severe climate environment, and unstable geotechnical


conditions are the primary reasons for the premature deterioration of road network in Timor-
Leste. Routine maintenance could efficiently protect road assets through timely clearing
drainage and small landslips, regularly removing vegetation, and repairing pavement surface
distresses at early stages. Periodic maintenance to reinstate road surface damage by traffic
abrasion and wet season erosion could help postpone the needs of rehabilitation. The unstable
geotechnical conditions and severe climate environment also contribute to the poor road
conditions, but their impact would have been significantly alleviated if proper maintenance is
undertaken.

3. Insufficient budget allocation and weak executive capacity are the two main constraints
to keeping the road network in a maintainable condition. The needs of annual maintenance
expenditure for national and major district roads are estimated at $20 million – $30 million.
However, the budget for the maintenance works for all categories of roads is only about
$4.8 million in 2009. The directorate of roads, bridges and floods control (DRBFC) of Ministry of
Infrastructure (MOI) is responsible for developing and managing roads, but seriously
handicapped by shortage of technical staff; it only has 12 engineers, seven in the headquarters
in Dili and five in regional offices.

B. Road Maintenance Program

4. The Road Network Development Sector Project will support the MOI to establish a road
maintenance program (RMP). The RMP will firstly be implemented in three pilot districts,
Bobonaro, Covalima, and Oecussi, which are all located at the border to Indonesian West
Timor. The connectivity in border region is of strategic importance as it provides access for most
cross-border activities between Timor-Leste and Indonesia, including trade, travel, and family
reunion.1

5. Timely and adequate road maintenance will proactively protect the roads from premature
deterioration, and effectively reduce road closure caused by heavy rainfall during the wet
season. Providing all-season access to the rural areas also means the social and health
services will not be interrupted and commercial activities will be facilitated.

6. Establishing an RMP will benefit the country through job creation. About 16,000 young
people join the country’s workforce every year, while in rural areas many people are essentially

1
As Timor-Leste expects to join the Association of Southeast Asian Nations in 2012, the opportunities for
cooperation with Indonesia will be increased significantly.
Appendix 5 35

in chronic underemployment.2 An RMP will provide business opportunities to contractors and


thus generate sustainable employment. The generated jobs will be further increased after the
Government takes over the RMP and expands it to all 13 districts.

7. A functioning RMP is also an important indicator of good investment environment for


road sector since it could protect the road assets from premature deterioration. Development
partners are usually reluctant to provide large-scale assistance to the road sector before an
RMP is functioning. More donors and development partners are expected to provide assistance
to road sector development once the RMP is established.

C. Implementation

8. During project implementation, the RMP will be established in three phases (an
implementation framework is in Table A5).

(i) Phase 1: Program establishment. In the first year, an international consultant


will be engaged as the road maintenance advisor of the project management unit
(PMU) and take the lead in developing the RMP operation manual, developing
and conducting a training program for small contractors and DRBFC staff, and
administering the related consulting services and civil works. A road maintenance
engineer (national consultant) of PMU and counterpart DRBFC staff will also be
trained on-the-job for planning and implementing the RMP.
(ii) Phase 2: Pilot implementation. In years 2–3, the road maintenance engineer
will take the lead in implementing the RMP in the three pilot districts. The RMP
operation manual will guide the activities of road maintenance engineer and
counterpart MOI staff. In this phase, counterpart DRBFC staff are expected to
assume responsibility of specific tasks under the supervision of road
maintenance engineer.
(iii) Phase 3: Transition and expansion. In years 4–5, the RMP will be gradually
transferred to the responsibility of DRBFC. In this phase, (i) the DRBFC staff will
take the lead in administering the RMP implementation in the pilot region, (ii)
PMU will provide support, mainly through the road maintenance engineer, to
DRBFC, and (iii) PMU is also responsible for preparing a strategy to expand the
RMP to nationwide core road network, and propose related institutional setup
and financing requirement. MOI will review the expansion strategy, approve it,
and reflect it in its annual budget planning.

9. The training program for small contractors will be reviewed and updated before the
bidding procedure. Participation in the training program will be a prerequisite for contractors to
bid for road maintenance contracts.

2
Ministry of Finance. 2009. Goodbye Conflict and Welcome Development. Timor-Leste Development Partners
Meeting, Dili, 2–4 April 2009.
36 Appendix 5

Table A5: Implementation Framework of Road Maintenance Program

Phase 1 Phase 2 Phase 3


Item Program Establishment Pilot Implementation Transition and Expansion
Period Year 1 Year 2 and 3 Year 4 and 5
Accountability Road maintenance advisor, Road maintenance DRBFC staff, assisted by
assisted by road engineer, assisted by Road maintenance
maintenance engineer, and counterpart DRBFC staff engineer
counterpart DRBFC staff
Activities 1.1 MOI recruits the PMU 2.1 PMU, assisted by 3.1 DRBFC, assisted by
and PISC consultants counterpart DRBFC PMU and PISC,
by January 2010; staff and PISC, administers the
1.2 PMU prepares RMP administers the implementation of road
operation manual by implementation of road maintenance civil
April 2010; maintenance civil works;
1.3 MOI appoints three works; 3.2 DRBFC, assisted by
counterpart DRBFC 2.2 PMU, assisted by PMU and PISC,
staff by May 2010; counterpart DRBFC prepares training
1.4 PMU, assisted by PISC staff and PISC, program to small
prepares training prepares training contractors for road
program to small program to small maintenance and
contractors for road contractors for road contract administration;
maintenance and maintenance and 3.3 DRBFC, assisted by
contract administration contract administration; PMU and PISC,
by May 2010; 2.3 PMU, assisted by conducts annual
1.5 PMU, assisted by PISC, counterpart DRBFC trainings to small
conducts training staff and PISC, contractors;
program to small conducts annual 3.4 PMU, assisted by
contractors and DRBFC trainings to small counterpart DRBFC
staff by June 2010; contractors; staff and PISC,
1.6 PMU, assisted by PISC, 2.4 PMU, assisted by prepares an RMP
prepares detailed counterpart DRBFC expansion strategy,
engineering and tender staff and PISC, including a road
document by June conducts detailed maintenance program
2010; engineering and for the whole national
1.7 MOI awards the prepare tender road network, and
contracts for the document for 302 km of related institutional
maintenance works of national roads by June setup and financing
188 km of national 2012; requirement, by
roads by September 2.5 MOI awards the September 2013;
2010; contracts for the 3.5 MOI approves the
1.8 PMU, assisted by maintenance civil works expansion strategy by
counterpart DRBFC on 302 km of national December 2013, and
staff and PISC, roads by September includes in its annual
administers the 2012. budget planning.
implementation of road
maintenance civil works.
DRBFC = Directorate of Roads, Bridges, and Flood Control, MOI = Ministry of Infrastructure, PISC = project
implementation support consultants, PMU = project management unit, RMP = Road Maintenance Program.
Source: Asian Development Bank.
Appendix 5 37

D. Coordination with Other External Assistance

10. The PMU, on behalf of MOI, will coordinate related activities with the Government and
development partners. In particular, the following need to be coordinated during project
implementation:

(i) JICA-funded TA for Capacity Development of Road Works. The Japan


International Cooperation Agency (JICA) will provide TA for Capacity Development of
Road Works. The TA is scheduled to commence in July 2009 and complete by June
2012. It will focus on building the technical capacity of MOI in (i) operating the
database for road maintenance, which was developed under the previous JICA
assistance; and (ii) improving the skills of operators for road maintenance
equipments. The PMU will consult with the consultants of the JICA-funded TA on
planning road maintenance works, and conducting the training program for small
contractors.
(ii) ADB-funded TA for Infrastructure Project Management. 3 The TA is aimed at
enabling MOI to create and upgrade infrastructure assets in accordance with the
national development plans. The PMU will coordinate with the TA consultants on
conducting the training program and procuring civil works.

3
ADB. 2007. Technical Assistance to Timor-Leste for Infrastructure Project Management. Manila (TA 4942-TIM).
The $15 million TA was approved by ADB in June 2007 and is scheduled to close in July 2011.
38 Appendix 6

A LINKED PROJECT: OUR ROADS, OUR FUTURE—


SUPPORTING LOCAL GOVERNANCE AND
COMMUNITY-BASED INFRASTRUCTURE WORKS

1. A linked project, "Our Roads, Our Future—Supporting Local Governance and


Community-Based Infrastructure Works," is proposed for financing from the Japan Fund for
Poverty Reduction (JFPR). The key objectives of the linked JFPR project are to (i) extend
socioeconomic benefits of the Road Network Development Sector Project to roadside
communities, and (ii) develop sustainable community participation model in community
infrastructure work with the local government. Its Project areas are the districts of Bobonaro,
Covalima, and Oecussi. Those districts were selected from (i) the project areas of the Road
Network Development Sector Project, and (ii) the Government’s pilot districts of the local
development program.

2. The duration of the linked JFPR project will be 48 months. The Executing Agency will be
the Ministry of Infrastructure (MOI). The project management unit (PMU) under MOI will hire
consulting firms, NGOs, and consultants to implement the Project. The linked JFPR project has
the following four components.

A. Improved Quality of Community-Based Infrastructure Work through Rural


Community Roads and Rehabilitation and Maintenance

3. This component will support community participation in rural feeder roadworks and
small-scale community infrastructure, and capacity development of community workers for
basic infrastructure works. It will take a community and local government participatory
approach to select sites, workers, designs, and methods for rural roadworks, small community
infrastructure upgrading and rehabilitations.

B. Skills Development and Community Awareness-Building in Rural Communities

4. This component will support skills development for rural poor and vulnerable groups
(including poor household, disadvantaged women, unemployed youth) through literacy,
numeracy, basic business skills training, and raising community awareness through life skills
program on road safety, primary health care, and gender.

C. Support to Selected Local Government Units for the Rehabilitation and Routine
Maintenance of Rural and Feeder Roads

5. This component will support the pilot implementation to support local government units
for rehabilitation and maintenance of rural feeder roads in three districts: Covalima, Bobonaro,
and Oecussi. Covalima and Bobonaro are part of the local development program and have
administrative staff in place.

D. Project Management, Monitoring and Audit

6. This component will support the project management, monitoring, and evaluation of the
other three components.
DETAILED COST ESTIMATES
(By Expenditure Category and By Financier)

Table A7.1: Detailed Cost Estimates by Expenditure Category

( $ million)
Foreign Local Total % of Total
Item Exchange Currency Cost Base Cost
A. Investment Costsa
1 Civil Works
a. Road Rehabilitation 14.00 13.50 27.50 60.7
b. Road Maintenance Program 1.60 8.40 10.00 22.1
c. Access Roads and Parking Areas of Border Posts 0.60 0.40 1.00 2.2
2 Consulting Services
a. Project Implementation Supportb 3.02 1.47 4.49 9.9
b. Financial Auditing 0.04 0.01 0.05 0.1
3 Project Management 1.57 0.53 2.10 4.6
4 Equipment (Vehicles and Office Equipment) 0.12 0.08 0.20 0.4
Subtotal (A) - Total Base Cost 20.94 24.40 45.34 100.0
B. Contingencies
1 Physicalc 2.30 2.68 4.98 11.0
2 Priced 0.63 1.95 2.58 5.7
Subtotal (B) - Contingencies 2.93 4.63 7.56 16.7
Total Project Cost (A+B) 23.87 29.03 52.90 116.7
a
In mid-2009 prices.
b
Project implementation support consultants will undertake feasibility study, detailed design, road maintenance program,
construction supervision, and monitoring and evaluation.
c
Computed at about 11% due to the frequent landslides caused by the unstable geotechnical conditions and intense rainfall.
d
Computed at 3% on foreign exchange costs and 8% on local currency costs.
Source: Asian Development Bank estimates.

Appendix 7
39
40
Appendix 7
Table A7.2: Detailed Cost Estimates by Financier
($ million)

ADB Government
% of Cost % of Cost
Item Cost Amounta Categoryb Amount Category
A. Investment Costsc
1 Civil Works
a. Road Rehabilitation 27.50 24.75 90.0 2.75 10.0
b. Road Maintenance Program 10.00 7.00 70.0 3.00 30.0
c. Roads and Parking Areas of Border Posts 1.00 0.95 95.0 0.05 5.0
2 Consulting Services
a. Project Implementation Supportb 4.49 4.49 100.0
b. Financial Auditing 0.05 0.05 100.0
3 Project Management 2.10 2.10 100.0
4 Equipment (Vehicles and Office Equipment) 0.20 0.20 100.0
Subtotal (A) - Total Base Cost 45.34 39.54 87.2 5.80 12.8
B. Contingencies 7.56 6.46 85.5 1.10 14.6
Total Project Cost (A+B) 52.90 46.00 6.90
% of Total Project Costs 100 87.0 13.0
ADB = Asian Development Bank.
a
Amount of ADB grant proceeds allocated to the cost category.
b
The amounts disbursed by ADB for eligible expenditures under a cost category will be subject to the ceiling set by the allocation of
grant proceeds for such cost category.
c
Category 1 is tax inclusive and categories 2–4 are tax exclusive; Project-related bank charges will be financed from the ADB grant
proceeds.
Source: Asian Development Bank estimates.
IMPLEMENTATION SCHEDULE

2009 2010 2011 2012 2013 2014


ACTIVITY Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
A Civil Works
1 Sample Subprojects
Design and Bidding Document
Procurement of civil works
Implementation
2 Non-sample Subprojects
Appraisal
Design and Bidding Document
Procurement of civil works
Implementation
3 Road Maintenance Program (2011-2012)
Investigation and Detailed Design
Training for National Contractors
Procurement of civil works
Implementation
4 Road Maintenance Program (2013-2014)
Investigation and Detailed Design
Training for National Contractors
Procurement of civil works
Implementation
5 Road and Parking Lot of Border Posts
Procurement of civil works
Implementation

B Consulting Services
1 Procurement of consulting service
2 Consulting Services

Source: Asian Development Bank estimates.

Appendix 8
41
42 Appendix 9

PROCUREMENT PLAN

A. Basic Data

Country Timor-Leste
Name of Borrower Democratic Republic of Timor-Leste
Project Name Road Network Development Sector Project
Loan Reference To be determined (TBD)
Date of Effectiveness TBD
Amount $52.90 million
Of which Committed $52.90 million
Executing Agency Ministry of Infrastructure
Approval Date of Original Procurement Plan 24 August 2009
Approval of Most Recent Procurement Plan 6 October 2009
Publication for Local Advertisements TBD
Period Covered by this Plan Q3 2009 to Q1 2011
a
General procurement notice, invitations to bid, calls for expressions of interest.

B. Procurement Threshold for Goods, Works and Consulting Services

Procurement of Goods and Works


Method Value To be Used Above
ICB Works > $1,000,000
ICB Goods > $500,000
NCB Works ≤ $1,000,000
NCB Goods ≤ $500,000
Shopping Works ≤ $100,000
ICB = international competitive bidding, NCB = national competitive bidding.
Source: Asian Development Bank estimates.

Procurement of Consulting Services


Procurement Method Value To be Used Above
Quality- and Cost-Based Selectiona $1,000,000
Least-Cost Selection —
Individual Consultant Selection —
— = not applicable.
a
The procurement of goods, works, and consulting services should follow ADB’s Procurement Guidelines (2007, as
amended from time to time) and Guidelines on the Use of Consultants (2007, as amended from time to time).

C. Contract Packages

Expected Date
Estimated of Prior
Cost Advertisement Review
Contract Description ($ million) Method (quarter/year) (Y/N) Remark
Civil Works: Rehabilitationa
Road Length: 63.9
1. Ermera–Maliana 10.30 ICB Q3 2010 Y
km
2. Liquica–Mota Ain 1 0.98 NCB Q3 2010 Y Road Length: 14 km
3. Liquica–Mota Ain 2 0.93 NCB Q3 2010 Y Road Length: 9 km
4. Liquica–Mota Ain 3 0.96 NCB Q3 2010 Y Road Length: 6 km
Road Length: 12.6
5. Liquica–Mota Ain 4 0.97 NCB Q3 2010 Y
km
Road Length: 17.4
6. Liquica–Mota Ain 5 0.97 NCB Q3 2010 Y
km
Road Length: 19.8
7. Liquica–Mota Ain 6 0.98 NCB Q3 2010 Y
km
Appendix 9 43
Expected Date
Estimated of Prior
Cost Advertisement Review
Contract Description ($ million) Method (quarter/year) (Y/N) Remark
Civil Works: Maintenanceb
Road Length: 20.65
1. Batugade–Maliana 1 0.36 NCB Q3 2010 Y
km
Road Length: 20.65
2. Batugate–Maliana 2 0.36 NCB Q3 2010 Y
km
Road Length: 15.50
3. Maliana–Oeleu 0.40 NCB Q3 2010 Y
km
Road Length: 9.80
4. Oeleu–Lourba 0.26 NCB Q3 2010 Y
km
Road Length: 7.00
5. Lourba–Atsabe Bdy 0.20 NCB Q3 2010 Y
km
Road Length: 8.35
6. Oele–Fatululik 1 0.30 NCB Q3 2010 N
km
Road Length: 8.35
7. Oele–Fatululik 2 0.30 NCB Q3 2010 N
km
Road Length: 8.35
8. Oele–Fatululik 3 0.30 NCB Q3 2010 N
km
Road Length: 8.35
9. Oele–Fatululik 4 0.30 NCB Q3 2010 N
km
Road Length: 12.79
10. Lourba–Zumulai 1 0.39 NCB Q3 2010 N
km
Road Length: 12.79
11. Lourba–Zumulai 2 0.39 NCB Q3 2010 N
km
Road Length: 12.20
12. Suai–Tilomar 0.16 NCB Q3 2010 N
km
Road Length 15.00
13. Tilomar–Border 1 0.31 NCB Q3 2010 N
km
14. Oecussi– Road Length: 14.30
0.26 NCB Q3 2010 N
Botiometo 1 km
15. Oecussi– Road Length: 14.30
0.26 NCB Q3 2010 N
Botiometo 2 km
Civil Works: Border Posts—Access Road and Parking Lot
1. Border Posts 1.00 ICB Q3 2009 Y
Consulting Services
1. Consulting services 4.49 QCBS Q4 2009 Y Project Implement
(80:20) Support Consultant
2. Project 2.10 ICSc Q4 2009 Y
Management
3. Financial Auditing 0.05 LCS Q2 2010 N
Equipment
Vehicles and office
0.2 S Q1 2010 N
equipment
ICB = international competitive bidding, NCB = national competitive bidding, LCS = least-cost selection, S =
shopping.
Source: Asian Development Bank estimates.
a
The procurement method of road rehabilitation civil works may be changed based on the cost estimate of detailed
engineering and in accordance with the procurement threshold in section B.
b
The first five contract packages of road maintenance require prior review.
c
Project management staff will be recruited on a competitive basis as individual consultants, except that the current
financial administrator (national), and road maintenance engineer (national), who were competitively recruited in
2003 under the Emergency Infrastructure Rehabilitation Project 2, will be retained in PMU through contract
extensions. The contracts of extensions, including the duration of extensions will be subject to approval of the
Government and ADB. The Government and ADB will review the performance of PMU staff before the end of contract
period and decide if future extensions will be approved.
44 Appendix 9

D. National Competitive Bidding Procedures

1. The procedures to be followed for national competitive bidding (NCB) shall be those set
forth in the provisions on competitive bidding below in order to ensure economy, efficiency and
transparency and broad consistency with the provisions of Section I and as required by
paragraph 3.3 and 3.4 of the ADB Procurement Guidelines (2007, as amended from time to
time).

2. Eligibility. The eligibility of bidders shall be as defined under Section I of the


Procurement Guidelines; accordingly, no bidder or potential bidder should be declared ineligible
for contracts financed by the ADB for reasons other than the ones provided by Section I of the
Procurement Guidelines.

3. Bidders’ participation. Bidders from all eligible member countries shall not be restricted
from offering goods, works, and services under NCB contracts. No limitations shall be imposed
on any bidder as to the number of tenders in which he may participate during a given period of
time. Prior to registration, obtaining a license or an agreement shall not be a requirement for any
bidder to participate in bidding procedures.

4. Advertising, time for bid preparation. Potential bidders shall be allowed adequate
time to prepare bids, which should not be less than 28 days, except for commodities and small
goods contract.

5. Standard bidding documents. Standard bidding documents, acceptable to the ADB,


should be used.

6. Bid security. Bid security may not be required for all procurement activities. However, if
required, it shall be limited to a reasonable percentage of the contract price and should be in the
form of a bank guarantee issued by a reputable bank.

7. Qualification criteria and evaluation criteria. The qualification criteria shall be clearly
specified in the bidding documents and shall be the basis for determining the bidders’
qualification. The evaluation of the bidder’s qualifications shall be conducted separately from the
technical and commercial evaluation of the bid.

8. Bid opening, evaluation and award of contract. Bids shall be opened immediately
after the stipulated deadline for submission of bids. Bids received after the deadline for bid
submission shall be rejected and returned to the bidders unopened.

(i) Evaluation of bids shall be made in strict adherence to the criteria that shall be
clearly specified in the bidding documents and quantified in monetary terms for
evaluation criteria other than price; merit points shall not be used in bid
evaluation.
(ii) The Borrower shall ask bidders for clarification needed to evaluate their bids but
shall not ask or permit bidders to change the substance or price of their bids after
the bid opening.
(iii) Bidders shall not be eliminated from detailed evaluation on the basis of minor,
non-substantial deviations.
(iv) No bidder shall be rejected on the basis of a comparison with the employer’s
estimate and budget ceiling without the ADB’s prior concurrence.
(v) A contract shall be awarded to the technically responsive bid that offers the
lowest evaluated price.
Appendix 9 45

9. Domestic preference. No domestic preference shall be given for domestic bidders and
for domestically manufactured goods.

10. Rejection of all bids and rebidding. All bids shall not be rejected or new bids solicited
without ADB’s prior written concurrence.

11. Publication of the award of contract. Publication of the contract award should include
(i) name of each bidder who submitted a bid; (ii) bid prices as read out at bid opening; (iii) name
and evaluated price of each bid; (iv) name of bidders whose bids were rejected; and (v) name of
the winning bidder; upon request, the Borrower shall inform unsuccessful bidders of the reasons
of their rejection.

12. Complaints by bidders and handling of complaints. The Borrower shall establish an
effective and independent protest mechanism allowing bidders to protest and to have their
protests handled in a timely manner.

13. Fraud and corruption. ADB shall declare a firm or individual ineligible for award of a
contract financed by ADB, either indefinitely or for a stated period, if at any time it is determined
that the firm or individual has, directly or through an agent, engaged in corrupt, fraudulent,
collusive, or coercive practices as defined in para.1.14 of the ADB Procurement Guidelines in
competing for, or in executing, a contract financed by the ADB.

14. Right to inspect and audit. Each bidding document and contract financed from the
proceeds of a loan or grant shall include a provision requiring bidders, suppliers and contractors
to permit the ADB, at its request, to inspect their accounts and records relating to the bid
submission and performance of the contract and to have said accounts and records audited by
auditors appointed by the ADB.
46 Appendix 10

SUMMARY POVERTY REDUCTION AND SOCIAL STRATEGY

Country/Project Title: Timor-Leste: Road Network Development Sector Project


Pacific Department
Lending/Financing Modality: Sector Department/Division:
Pacific Operations Division
I. POVERTY ANALYSIS AND STRATEGY
A. Linkages to the National Poverty Reduction Strategy and Country Partnership Strategy
The Government and ADB signed a poverty reduction partnership in October 2003. The Government’s National
Development Plan incorporates a poverty reduction strategy focusing on (i) promoting opportunities for the poor;
(ii) improving their access to basic social services; (iii) enhancing security, including reducing vulnerability to shocks,
and improving food security; and (iv) empowering the poor. The 2005−2006 country strategy and program update
(CSPU) notes that pervasive poverty and slow social development require a focus on development that will directly
benefit the poor.a The country operations business plan 2008–2010 concluded that assistance provided by ADB over
the preceding period (2006–2008) supported the Government in moving toward four specific National Development
Plan goals, including provision of roads and bridges for the movement of people and goods, orderly and efficient
functioning of markets, and sustainable development.b The Project will continue to provide support to this goal of the
National Development Plan by upgrading, rehabilitating and establishing a strategy for maintenance of 32 priority road
links located across 11 of the 13 districts (the two districts without road sections among the 32 priority links include
Manufahi and Viqueque). The Project will commence with three road links—A03-03 Liquica–Batugade (74.3 km), A03-
04 Batugade–Mota Ain (2.6 km) and A11-01 Ermera–Maliana (63.9 km)—as sample subprojects. Links A03-03 and
A03-04 are located in Liquica and Bobonaro districts and link A11-01 is located in Bobonaro and Ermera districts.
Using the same division of districts as the Timor-Leste survey of living standards (TLSLS), i.e., (i) east includes
Baucau, Lautem and Viqueque; (ii) center includes Alieu, Ainaro, Dili, Ermera, Liquica, Manufahi and Manututo; and
(iii) west includes Bobonaro, Cova Lima and Oecussi, the distribution of the priority links is 49% in the center (covering
88 sucos [villages]), 17% in the east (covering 30 sucos), and 34% in the west (covering 60 sucos). Combined, the 32
priority links will improve access for 178 sucos.
B. Poverty Analysis Targeting Classification: General Intervention
1. Key Issues
Based on the latest TLSLS, the official poverty incidence, is derived from two poverty lines; the lower poverty line
(food/extreme poverty line) is $0.71/person/day and the upper poverty line (minimum basic needs) is $0.88/person/day,
half of the population falls below the upper poverty line and a third of the population falls below the lower poverty line
The characteristics of poverty include the following:
(i) Poverty incidence is higher in rural areas (52%) than in urban areas (45%), and with three-quarters of the poor
living in rural areas.
(ii) Children under the age of 15 years account for 43% of the population but account for 49% of the poor. Young
children (i.e., those aged 5 years or less) represent 19% of the total population but account for 21% of the poor.
(iii) Those with no or only low levels of education account for most of the poor. The poverty rate for people without
education is 58%, with a primary education is 50%, and with a secondary education is 34%.
(iv) Controlling for household size, households headed by women are poorer than households headed by men. Overall,
poverty incidence increases with household size but for any household size the incidence of poverty is higher for
households headed by women.
(v) Poverty is concentrated in the central districts (which includes two of the districts in the sample project area—
Ermera and Liquica). The incidence of poverty in the three districts in the sample project area range from 45% in
Liquica to 55% in Ermera and Bobonaro. Together, these three districts account for 27.4% of the country’s poor.
The household survey undertaken for the Project correlates well with the TLSLS data. Using the upper poverty line of
$0.88/day/person, some 59% of the sample subproject area is poor (compared with 51% in TLSLS) and some 78%
suffer food shortages) compared with 79% in the TLSLS). Taking into account the rural nature of poverty, and that most
of the poor are engaged in low-productivity farming (80% of the total poor and 90% of the rural poor depend on the
agriculture sector), improving access to markets as well as increasing availability and diversity of farming inputs have
credible contributions to make to poverty reduction. At the national level, 64% of the poor, compared with 76% of the
non-poor, have access to all weather roads, in rural areas the proportion of poor with access to all weather roads
decreases further to 58% (compared with 68% of the non-poor).
The poor will be direct beneficiaries of the Project in terms of improving inferior quality roads and accessibility in all
seasons, as well as potentially reducing travel times to the closest all-weather roads for those sucos and aldeias
(communities) included in the linked project Our Roads, Our Future—Supporting Local Governance and Community-
Based Infrastructure Works, which is proposed to be funded by Japan Fund for Poverty Reduction (JFPR). This will
support improvement of selected feeder roads in rural communities in project areas, as well as enhance involvement of
the communities in roadworks and small community infrastructure such as markets.
Appendix 10 47

2. Design Features
The Project incorporates several strategies to facilitate the ability of households and communities to realize benefits
from road improvements and maintenance and, thereby, reduce poverty in the project area including (i) priorities for
employment of local men and women for both civil works and routine road maintenance, particularly for poor
households and those households affected by any minor resettlement impact; (ii) contractor specifications for provision
of HIV/AIDS/STI awareness and prevention programs for construction crews and surrounding communities; (iii) a public
consultation and participation program linked to different aspects of subproject preparation and implementation
(including participation in monitoring), to be undertaken by the executing agency and continue the consultation
commenced during the project preparatory TA; (iv) a JFPR project, refer below; and (v) a long-term participatory social
monitoring study to track benefits among different road user groups and the communities participating in the JFPR
project. The Project includes the JFPR project (approximately $3 million with Government cofinancing) to continue to
take community empowerment approach, which was commenced under the Road Sector Improvement Project (RSIP).c
The key objectives of the JFPR are (i) to extend the socioeconomic benefits of the Road Network Development Sector
Project to roadside communities, and (ii) to develop a model for sustainable community participation in community
infrastructure work with the local government. The proposed JFPR project locations are Bobonaro, Covalima, and
Oecussi. The Project will support (i) community participation in feeder road rehabilitation and maintenance and capacity
development of community workers for future basic community infrastructure works; (ii) skills development for rural
poor and vulnerable groupsd (including poor households, disadvantaged women, unemployed youth) through literacy,
numeracy, basic business skills (agriculture and horticulture) training, and raising community awareness through life
skills program on road safety, primary health and gender; and (iii) support to selected local government units to develop
an implementation and monitoring model (including capacity development and funding arrangement) for rural feeder
roadworks.
II. SOCIAL ANALYSIS AND STRATEGY
A. Findings of Social Analysis
The sector Project will rehabilitate about 232 km of priority national or district road links, and will initially rehabilitate
three road links (sample subprojects); Liquica–Batugade link (74.3 km), Batugade–Mota Ain (2.6 km) and Ermera–
Maliana link (63.9 km). The current population within the catchment of the 32 priority links is approximately 460,000
and is projected to be in the order of 1.01 million at the end of the master plan period, i.e., 2019 (based on continued
growth at the current rate of 5.4% per annum), while the 2019 estimated population within the catchment of the two
sample subproject links is approximately 320,000.
The primary beneficiaries of the Project are the people who currently live in the 178 sucos (catchments of the 32
priority road links) to be upgraded, rehabilitated and maintained under the Project. The current beneficiaries of the two
sample subprojects include about 131,500 people. More specifically, they include the following groups of road users: (i)
existing road users, be they vehicle drivers or passengers and/or nonmotorized transport (NMT) users; (ii) households
living in communities along, and in the catchment areas of, the upgraded and maintained roads links, who grow and/or
sell a range of cash crops and other agricultural produce (including livestock); (iii) passenger and goods (cargo)
transport service providers and commercial truck drivers; and (iv) small businesses and traders including vendors at
local and/or informal markets, trade store owners, coffee and other produce buyers, and small and medium-sized
enterprises in the district capitals and towns. National, district, and local (suco) authorities, and key social service
providers such as in the education and health sector, will also benefit from implementation of road improvements and,
particularly, the ongoing maintenance of roads.
There are 17 languages spoken across the country which can be classified as being derived from one of two broad
language groups: Austronesian (Malayo–Polynesian) and Papuan (Melanesian). In reality, little or no significant
differences of cultural and social identity exist among the people. While they speak different languages, the only real
ethnic (or cultural) minority is the small number (5% of population) of Muslims in an otherwise overwhelmingly Roman
Catholic society. In the area of the 32 priority links, some 14 of the 17 languages are spoken. In the catchments of the
two sample subproject roads, five different languages are spoken.
Average population density across the country is 62 people per km2, with the highest population density occurring
being Dili (473 people per km2). Two of the sample subproject areas, Ermera (135 people per km2) and Liquica (100
people per km2), account for the districts with the second and third highest population densities. Most households are
headed by men (90%). Households headed by women are smaller than households headed by men by an average of
two people (both urban and rural households). The dominant livelihood activities for Timorese households combine
subsistence agriculture, cash cropping and raising livestock. About 84% (93% in rural areas) of the labor force (those
aged between 15 and 64 years) is engaged in agriculture; however, agriculture contributes only 26% to gross domestic
product, indicating a very low level of productivity in agriculture. Nearly all households cultivate food crops to meet
household consumption needs, with the principal cash crop being coffee. Overall, 37% of households grow coffee as a
cash crop, 68% grow maize or cassava (subsistence crops), and 31% grow rice.
Ownership of motor vehicles had not increased significantly between the 2001 and 2007 TLSLS periods (from 1.8% to
2.9%); however, motorcycle ownership had doubled (3%–6.9%) and bicycle ownership remained roughly the same
(5%). People, especially those in rural areas, walk or use passenger transport to most destinations. Nationally, the
average walking time to the nearest motorable road is 14.9 minutes; however, it is significantly longer in the sample
48 Appendix 10

subproject area and it ranges from 19.5 minutes (Bobonaro) to twice as long in Ermera (29.5 minutes). The project
survey data indicates that 60% of the poor and two-thirds of the marginal (15% above the poverty line) are users of
NMT. The beneficiary profile shows that the main mode of transport for children travelling to primary and secondary
school was by NMT (87.8% and 71.1%) while some travelled by bus (3% and 5%) or by other motorized transport (9%
and 23%). The children from poor and marginal households have farther to travel to school than children from non-poor
households. Similarly, a smaller proportion of poor (15%) than non-poor (27%) are located within 0.5 km of a health
clinic while some 43% of the poor compared with 23% of non-poor must travel between 3.5 km and 9 km to reach a
health clinic.
Improving access by increasing all-weather road access, reducing travel time, and improving ease of access (providing
opportunities for improved passenger transport services) will have benefits for key social service providers such as
those in the health and education sectors. A comparison of the 2001 and 2007 TLSLS data indicates that while fewer
people did not seek treatment for illness due to lack of transport availability (a decrease from 4% in 2001 to 2.6% in
2007), the proportion of people not seeking treatment for illness as a result of the closest health facility being too far
and difficult to reach increased from 38% in 2001 to 42.3% in 2007. This was the main reason given, out of five
possible reasons, for people not seeking health treatment in the 2007 TLSLS. The benefits of improving access to
health care facilities can contribute to improving health and welfare by reducing the proportion of people not seeking
treatment (and potentially becoming more ill with consequent economic impact on their households) as well as
reducing the number of days during which activities are disrupted due to illness.
The first HIV/AIDS case in Timor-Leste was detected in 2001, with 43 cases being confirmed in 2007. However, limited
surveillance capabilities and inadequate testing could mean that actual infection rates are higher. Key at-risk groups
include mobile populations such as truck drivers, migrant workers, and commercial sex workers. Overall, 48% of
people in the country are aware of HIV/AIDS. The level of understanding about the causes of HIV/AIDS, and therefore
how to prevent it, varies across the sample subproject areas. The strategies to address social issues and risks
associated with the Project, particularly to enhance benefits for different beneficiary groups, are outlined above in the
discussion of design features of the Project and include a contractor and community STIs and HIV awareness and
prevention program.
Economic benefits include (i) opportunities to establish local markets (both as a result of improved national roads,
greater accessibility to district and regional markets and towns, increased diversity of cash crops, higher production
levels and more direct sales, e.g., to coffee factories; (ii) rehabilitation of abandoned coffee gardens and/or
establishment of new gardens and an expansion of rice cultivation areas; (iii) growth in livestock raising through
improved access to veterinary services and better access to market opportunities; (iv) market vendors expect to sell
more often, have more customers and be able to expand their businesses; (v) trade store owners also expect to
improve and expand their businesses; (vi) increased opportunities to create and/or expand micro, small, and medium-
sized enterprises, especially those developed by women and poor households (with sufficient support). Social benefits
include (i) greater accessibility to schools leading to higher enrollments, fewer dropouts, and better academic
performance; (ii) greater accessibility to health care leading to improved health outcomes for women and children
(including increased numbers of people seeking treatment for illness due to reduced travel times); (iii) increased access
to government services including existing services which currently face access difficulties such as agricultural and
veterinary extension services, as well as new services like electricity; (iv) beneficial impact on food security; and (v)
upgrading and sealing roads will reduce dust and improve health and living conditions in roadside villages. The
availability, frequency, reliability and costs of passenger transport services will improve—for operators and truck
drivers, as well as for people who rely on passenger and other transport services. These benefits will reach people
living in the catchments of the road links, as well as those living directly along the roads. In addition, over the course of
the Project, selected feeder and rural roads will be upgraded and maintained in three districts as part of the JFPR
project, with attendant benefits for those communities.
B. Consultation and Participation
1. Provide a summary of the consultation and participation process during the project preparation.
At the inception stage, a stakeholder analysis was carried out to identify the primary and secondary stakeholders; their
interests in the Project, their perceptions of current problems related to road accessibility, and transport services.
Meetings have been held at the national level with Ministry of Infrastructure (MOI), DRBFC, PMU within MOI,
International Labor Organization (in Dili and at one of their project sites in Bacau), RSIP labor-intensive component
contractors in Manututo, Directorate of Land and Property, Bobonaro District Administration, and CARE International.
A national consultative workshop was held 30 April 2009 which covered all aspects of the Project including the process
for selection of subprojects for inclusion and prioritization in the 10-year master plan, phase 2 technical/engineering,
road condition assessment, economic analysis, environmental, social, community-based labor outputs, establishing a
road maintenance fund, and how the community would be involved. Consultation meetings were organized with district
authorities (district administrators; regional and district works departments; community development, health and
education advisors; and district women’s networks); along with other local stakeholders including representatives of the
community sector (local NGOs, etc.) and the private sector (local business households, bus/truck drivers, etc.).
Participation strategy included focus group discussions as well as a structured methodology through survey tools
(household socioeconomic survey, traffic survey, and passenger transport operator survey).
Appendix 10 49
2. What level of consultation and participation (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


MOI, the executing agency for the Project, will engage staff responsible for safeguards implementation including
environmental and social impact assessment, development of management and mitigation plans, and community
consultation activities. The PMU, with assistance from a project supervision consultant, will establish a consultation
program for each subproject. The purpose is (i) to inform communities about the Project and, in detail, about the
subproject works; (ii) to provide information about the expected benefits and potential adverse impact, as well as
project measures such as compensation, environmental management, community-based initiatives through the JFPR
and labor-based maintenance activities; (iii) to provide a forum for communities to participate in the Project and express
their interests, preferences and concerns; and (iv) to facilitate different aspects of the implementation of the subproject.
Consultations with communities will take place at different points in the planning and implementation of subprojects,
and will be designed not only to inform people about the subproject or specific activities related to its preparation and
implementation, but also to enable people in the community to ask questions, make suggestions, state preferences and
express concerns. Special attention will be paid to the participation of women and any other vulnerable groups.
C. Gender and Development
1. Key Issues
Sociocultural factors contribute to low enrollment and high dropout rates of female secondary school (senior) students:
(i) high female adult illiteracy; (ii) sex segregation in the paid labor force; and (iii) an emerging gender gap in wages,
high maternal mortality rates, and domestic violence. Women have higher unemployment rates (one in four women
compared with one in seven men) and lower labor force participation rates (80% for men and 40% for women). Most
women and men labor in the informal sector, but women tend to be concentrated in the lower income-generating areas
of the informal workforce. More women than men are engaged in activities such as collecting water (79% compared
with 65%) and other chores such as cooking, cleaning, washing clothes (87% compared with 39%), and looking after
elders and/or children (43% compared with 30%), as well as spending more hours per week (in some cases spending
double the amount of time) at each of these activities than men.
The Food and Agriculture Organization/World Food Programme estimates that nearly a third of the population live on
diet which does not provide the minimum daily nutritional needs and that 9 in 10 persons experience some degree of
food shortage at some point during the year. Food shortages result from a combination of factors: (i) low agricultural
output; (ii) high post-harvest cereal losses (up to 50% in upland corn); (iii) distorted food subsidy policies; (iv) limited
market access; and (v) the very limited alternative means of earning incomes in rural areas. The common coping
mechanisms are to consume less food and to alter the quality and variety of food consumed, such as substituting corn
for rice. Another coping mechanism that is ignored is that women forgo food in favor of children and their families.
Some 28% of women suffer from malnutrition, of whom 7% are severely malnourished and in need of treatment.
Gender-specific benefits of the Project include (i) increase their agricultural production and expand into new crops and
other agricultural activities like raising animals, and as a result, increase market sales; (ii) improved (faster, and
perhaps, cheaper) access to health care facilities; (iii) road improvements, including rural and feeder road
improvements under the JFPR project, will mean their children will have improved access to schools and, in general,
their communities will have better access to social services and key facilities; and (iv) targeted employment
opportunities as part of feeder road rehabilitation construction crews (32 priority links) and as workers on the JFPR
project roads. To support these benefits, additional measures can include (i) footpaths along roads, (ii) safe places to
wait for passenger transport services; (iii) upgrading of local market facilities or constructing new markets as part of the
JFPR project; (iv) agricultural extension services that target women’s needs and interests; (iv) training and assistance
to learn new income-generation and business development skills; (v) training to strengthen roles and capacities of
women’s groups including district women’s networks; and (vi) education and awareness programs in communities to
address growing social problems and to target construction workers.
2. 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/measures No action/measure
Gender has been mainstreamed into the design of the Project, as well as into the JFPR project. The resettlement
framework prepared for the Project includes a range of gender-sensitive measures, requirements for consultation, and
monitoring indicators. The PMU will work with contractors and communities to facilitate the participation of women in
paid work opportunities for road rehabilitation, labor-based maintenance, and on rural and feeder roads selected for the
JFPR project; and ensure that all Timor-Leste labor laws are respected, for instance with respect to equal pay for equal
work and no use of child or trafficked labor. HIV/AIDS/STIs awareness and prevention programs will target women as
well as men, including the programs instituted by contractors to reach people in construction camps and surrounding
communities. The JFPR will include a major component to work with women as well as men to provide training and
technical assistance to support income generation and microenterprise creation.
50 Appendix 10

III. SOCIAL SAFEGUARD ISSUES AND OTHER SOCIAL RISKS


Issue Significant/Limited/ Strategy to Address Issue Plan or Other Measures
No Impact
As a condition of eligibility for Subproject design will prioritize
Involuntary funding under the Project, no avoiding or minimizing the need Full Plan
Resettlement subproject will require the for additional land. A land Short Plan
displacement of housing or other acquisition screening will be Resettlement
permanent structures and there completed for each subproject to Framework
will be no land acquisition; there confirm the eligibility of the No Action
must be community support for subproject for inclusion in the
road upgrading; and any Project. Due diligence reports
additional land required must be were prepared for the first sub
state-owned or, if on customary project and the resettlement
land, the community must agree framework was prepared for the
to contribute it voluntarily. Project in accordance with
Affected people may incur losses Government laws and ADB’s
of small amounts of crops, trees policy.
and/or secondary structures. The
Project is classified as category
B with respect to involuntary
resettlement.
Ethnic association is bound up Since the language will be Plan
Indigenous Other Action
Peoples with language. There is no barriers for access to information
significant difference of cultural and consultation process, IP Framework
and social identity. There are 17 resettlement frameworks and No Action
languages spoken across the resettlement plan will address
country. Within the context of necessary actions for ethnically
ethnicity, where all communities minority populations. The linked
that are potentially beneficiaries JFPR project—Our Road, Our
of a subproject, comprise people Future—will consider the cultural
who belong and no adversely aspects of road side ethnic
impact are expected. Therefore, communities in the development
the Project is classified as of community participation model
category B with respect to for rural infrastructure works.
indigenous peoples.

Labor The Project endorses the Civil works contracts for Plan
Employment principle of community-based upgrading, rehabilitation and Other Action
opportunities maintenance of roads, as well as maintenance of roads will No Action
Labor the recruitment of local people to stipulate priorities (i) to employ
retrenchment work on the civil works for local people for civil works, (ii) to
Core labor upgrading and rehabilitation. negotiate contracts with
standards communities for routine
maintenance work, (iii) to ensure
equal opportunities for women
and men for civil and
maintenance work, (iv) to pay
wages promptly, pay equal
wages for work of equal value,
and to pay women’s wages
directly to them; and (v) to not
employ child or forced labor.
Affordability Not relevant No Action
Other Risks The incidence of HIV/AIDS is low The Project will contribute to
and/or in Timor-Leste but insufficient existing programs to increase Plan
Vulnerabilities surveillance and testing mean awareness efforts in two specific Other Action
that reporting could be ways: (i) civil works contractors No Action
HIV/AIDS/STIs underestimated, and risks required to engage qualified
associated with spread as a service providers to raise
Human result of low condom use as a awareness of HIV/AIDS/STIs for
trafficking result of religious practice, lack construction workers, make
of awareness regarding paths of condoms accessible and other
Appendix 10 51
Others(conflict, transmission, and mobility of measures; (ii) the JFPR project
political high risk groups, is high. Road will utilize appropriate methods
instability, etc), improvements that increase to help communities to raise
please specify people’s mobility also increase HIV/AIDS/STIs awareness and
the risk of transmission of identify, organize around and
HIV/STIs among high-risk sustain prevention measures.
groups.
IV. MONITORING AND EVALUATION
Are social indicators included in the design and monitoring framework to facilitate monitoring of social development
activities and/or social impact during project implementation? Yes □ No
The long-term socioeconomic monitoring study will document benefits for communities related to road rehabilitation
and road maintenance. Gender-sensitive monitoring indicators have been proposed for the project performance
monitoring framework.
a
ADB. 2004. Country Strategy and Program Update (2005–2006): Democratic Republic of Timor-Leste. Manila.
b
ADB. 2007. Country Operations Business Plan (2008–2010): Timor-Leste. Manila. The Project was initially listed as
the Second Road Sector Improvement Project.
c
ADB. 2005. Report and Recommendation of the President to the Board of Directors on a Proposed Asian
Development Fund Grant to the Democratic Republic of Timor-Leste for the Road Sector Improvement Project.
Manila.
d
In the context of this Project, the definition of vulnerable population includes: households below the upper poverty
line, unemployed youth, single mothers/female heads of households, widows with young children or no household
members that can provide support, people with disabilities, people living with or affected by HIV/AIDS, and people
directly/indirectly affected by involuntary resettlement under this Project.
52 Appendix 11

SUMMARY INITIAL ENVIRONMENTAL EXAMINATION

A. Introduction

1. This summary initial environmental examination (IEE) has been prepared under the
Road Network Development Project. 1 The Project is a category B project since no major
environmental impact was identified in the screening. The two subproject roads selected are
national roads: (i) Liquica–Batugade and Batugade–Mota Ain (A03-04), and (ii) Ermera–
Maliana. The two subprojects have existed for years and are being used for public transport.
Although the assessed subprojects pass through a potential protected area and important bird
areas (both areas do not have legal protection status at present), they will have no significant
impact on the surrounding forests. An IEE has been prepared for each core subproject in
accordance with ADB’s Environment Policy (2002) and Environmental Assessment Guidelines
(2003). This summary initial environmental examination (SIEE) summarizes the results of the
environmental assessments and describes the potential environmental impact of the two sample
subprojects, the corresponding mitigation measures, and the environmental monitoring program
to be established during project implementation.

B. Description of the Project

2. The subproject road links selected for rehabilitation are important links identified during
the engineering assessments and economic analyses for the medium-term road network
development program, under the technical assistance (TA). They will improve local as well as
regional connectivity. The Project is therefore expected to improve access to markets and social
services for the population, support sustainable development, and reduce poverty.

3. The Project is focused on (i) rehabilitating priority national or district roads, (ii) engaging
national small contractors for national road maintenance works, and (iii) implementing annual
road maintenance in three border districts—Bobonaro, Ermera, and Liquica. At the completion
of the Project, (i) about 143 kilometers (km) of national or district roads will have been improved
to maintainable condition, (ii) a sustainable road maintenance scheme will have been
established, and (iii) the capacity of MOI to implement road projects and the road maintenance
program (RMP) will have been improved. A start date of January 2011 is proposed.

4. The road improvement works will bring the road sections to a maintainable standard by
repairing or replacing road pavements, roadside drains, culverts, culvert inlets and outlets, and
retaining walls as required.

C. Description of the Environment

1. Physical Resources

5. Timor-Leste comprises the eastern end of the island of Timor, plus the exclave territory
of Oecussi and the islands of Atauro and Jaco. Together, these occupy a land area of about
14,609 square kilometers. Timor is the easternmost of the Lesser Sunda Islands, lying 8–
10 degrees south of the equator and about 500 km north of Australia. The country has a
mountainous topography, dominated by Mount Ramelau, which bisects the island from east to
west. The highest point, Mount Tatamailau, is 2,963 meters above sea level and less than
20 km from the sea. The island is a continental fragment, composed largely of limestone and

1
ADB. 2008. Technical Assistance to the Democratic Republic of Timor-Leste for Preparing the Road Network
Development Project. Manila (TA 7100-TIM).
Appendix 11 53
other sedimentary deposits. The island is geologically young, with steep and unstable slopes
and deep valleys, prone to flash floods.

6. In many places on Timor-Leste, extremely steep (>40%) slopes are cultivated, often
through shifting cultivation. High annual rainfall in the central highlands, combined with
deforestation and clearing of land for agriculture on steep slopes without soil conservation,
produces land degradation and frequent landslides. Poor farming practices that exacerbate soil
erosion include cultivation on steep slopes, without mechanical or planted restrictions on water
flow (lack of contour bunds, live fences, etc), and burning, especially in dry zone areas. Burning
the grasslands to flush out game, traditionally practiced in the dry northern coastal areas,
increases the risk of soil erosion. The young geological age and the high rate of tectonic uplift,
combined with the presence of weak, poorly consolidated strata, produce intractable stability,
slope failure, and erosion problems in many areas.

7. The climate of Timor-Leste is hot and humid or tropical, with large variations in rainfall
and temperature over short distances because of the steep topography. Broadly speaking, there
are two annual seasons determined by the monsoon, which varies in length according to
location, the monsoon lasting longer in the south than in the north. The following pattern is
identified: the northern monomodal rain pattern, which produces rain during the 4 months from
December, affects a big part of the north and the east; the southern bimodal rain pattern, which
starts December and in May, totaling 7–9 months per year, affects the southern part of Timor-
Leste.

8. Surface water is scarce as most rivers are not perennial. Extensive and continued
clearing of forests and other ground cover substantially reduces the ability of the soil to retain
water and can also be expected to add to the scarcity of surface water. The majority of rivers
flow only during the wet season, at which time they are very turbid because of the large
amounts of sedimentation washed from the upper catchments. Flooding is a common problem
in Timor-Leste, especially in the low-lying coastal plains along the southern shores. On a
smaller scale, flooding from overflowing rivers can also occur in the project area.

2. Ecological Resources

9. The Malesian region, of which Timor-Leste is a part, is recognized as a region of high


plant biodiversity with an estimated 41,000 plant species, including 70% of species endemic to
that region. From an assessment of other islands in the region, it can be predicted that the flora
of Timor Island should consist of around 2,500 species of vascular plants. The composition of
the flora of Timor is influenced by its location in Central Malesia (Wallacea), a transition zone
between the main rainforest blocks of the Sunda (Peninsular Malaysia, Sumatra, Borneo,
West Java) and Sahul (New Guinea) shelves. The flora of Timor is characterized by low levels
of endemic genera (three); at the species level, endemism is estimated at 10.3%.

10. Some 224 species of birds have been observed in Timor-Leste. Of these, seven species
and two genera are endemic to the island. The non-bird terrestrial fauna of Timor-Leste is poorly
known, with recent surveys discovering new species of bats, frogs, geckos, and skinks, but the
available evidence indicates that there are high levels of endemism in all faunal groups. While
roughly half of the bird fauna originates from Asia and half from Australasia, the mammal,
amphibian, and reptile faunas are dominated by Asian families and species. At least
52 mammal species occur in Timor-Leste, mostly small and mobile species. There are 15–
20 amphibian species and 40 or more reptiles in Timor-Leste.

11. The National Directorate for Forestry under the Ministry for Agriculture, Forestry and
Fisheries has prepared a list of 30 potential protected wild areas (March 2009). All of these
54 Appendix 11

areas are in various stages of biological assessment and planning, and most of them have not
yet been systematically surveyed for lack of personnel and funds. These areas still do not have
legal conservation status. The process of identifying, proposing, and appointing areas as sites
that are protected by law has so far resulted in one area, Nino Konis Santana, at the country’s
eastern extremity being formally recorded as a national park. This area is likely to be managed
in a way to allow activities in accordance with laws and tradition by local communities. BirdLife
International’s important bird area program had identified a total of 16 terrestrial important bird
areas in 2007.

3. Economic Development

12. Timor-Leste has a population of about 1,080,700 (2008 figure, from 2004 census
projection) and an annual population growth rate (2001–2004) of 5.3%. The median age is
18.3 years and life expectancy at birth is 55.5 years, well below the average for East Asian and
Pacific Island countries. On average, seven children are born to each woman, for a very high
fertility rate (2004 census).

13. Timor-Leste is one of the poorest countries in the world. The majority of the rural
population (78%) participates in the subsistence economy. Subsistence agriculture is
characterized by shifting cultivation using the slash-and-burn method. A small amount of income
is generated by selling cash crops such as coffee, vegetables, and fruits. Numerous varieties of
tropical root crops and green vegetables are cultivated in this manner. Most of the harvest is for
home consumption, but part of it is sold at regular local market outlets depending on demand.
Roadside marketing is very common along all roads surveyed. Local residents trade their
produce for cash with locals and the traveling public.

D. Screening of Potential Environmental Impact and Mitigation Measures

14. The subprojects were screened for potential environmental impact, with the help of the
geographic information system and environmental sensitivity mapping tools. The Timor-Leste
environmental sensitivity map was developed through a scoring-based method, where for each
environmental input dataset (land cover, slope class, geological stability, and biological values)
a score (numerical value) was assigned on the basis of a selected set of classes. The score for
each class was assigned by expert judgment, with a score of “1” representing the lowest value
or very low sensitivity and a score of “10” being the highest value, reflecting very high
environmental sensitivity to change.

15. The environmental impact of the Project will be generally minor to moderate as the
works are expected to involve only the rehabilitation and reconstruction of existing roads within
the existing road corridors (pavement plus road shoulders). The potential environmental impact
associated with the subprojects will occur particularly during pre-construction, construction, and
operation, and will typically involve the following.

16. Impact on potential protected areas. During project preparation the necessary
attention will be given to protecting the natural environment in connection with the rehabilitation
and maintenance activities. Improved roads will facilitate access to sensitive areas previously
protected by difficult access. This indirect impact will be experienced after construction and will
be considered in the environmental assessment. In Timor-Leste, the establishment of a
protected area network is ongoing; new protected areas are therefore likely to be announced in
the future.

17. Geological instability and soil erosion. Geological instability on slopes is an


important environmental sensitivity consideration for roadworks, especially in Timor-Leste.
Appendix 11 55
When roads are built in geologically unstable areas, slope failures and shifts will damage or
block roads and make repairs difficult. Lack of proper road maintenance during operations
aggravates environmental impact in geologically unstable zones more than in stable zones.
Very wet conditions especially during the monsoon period, in part of the country (2,500
millimeters of rainfall) can trigger slope failures. In many areas, construction activities are
feasible only during the dry season. Slope stabilization with engineering and bioengineering
solutions and other soil erosion control measures will be undertaken to minimize the problem; at
the same time problems of sedimentation and storm water runoff during road construction and
operation will be addressed. The Project Management Unit (PMU) will strictly enforce the
disposal of surplus soil material from construction at designated, environmentally safe disposal
or fill sites.

18. Quarry selection and management. The Project will require materials extraction sites
for the reconstruction. Granular material is likely to be extracted from rivers where arrangements
for materials extraction are already established. To select and manage quarries appropriately,
the long-term impact of quarrying and gravel extraction will be assessed and mitigated. As part
of the standard project procedures, the contractor can select the quarry site, but the PMU will
need to approve the sites and a quarrying and extraction plan before the start of the extraction,
in line with the regulatory guidelines of by the Government. The approval of the quarrying and
extraction plan will consider both the quality and the suitability of the materials, and also the
environmental impact of the specific quarrying site.

19. Management of stockpiles, spoil heaps, and batters. To ensure that dust and
sediment runoff are minimized, stockpiles, spoil heaps, and batters need to be managed
properly. Suitable sites for stockpiling and disposal of material will be determined in the detailed
design stage and will preferably be a location where any long-term stockpiles of sediment can
be stabilized by vegetation. The chosen disposal sites will be set back, away from
watercourses, drainage lines, and steep or unstable slopes. Any adverse impact will therefore
be minimal and temporary.

20. Air quality. Major earthworks are not expected, but there is possibility of increasing
dust during construction. The impact of emissions is not expected to be significant because
these will be for a very short duration.

21. Noise. Construction activities may cause noise impact for a short duration.
Nonetheless, all mechanical equipment (e.g., excavators, drills, stone crushers, concrete
mixers) will be provided with noise reduction devices such as mufflers where appropriate and,
when deemed necessary, with buffers and other noise abatement measures to minimize
nuisance to nearby sensitive receptors.

E. Environmental Management Plan

22. The environmental management plan (EMP) is designed to ensure that the mitigating
measures recommended to prevent or control the negative impact of the different aspects of the
project on environment, life, and property are properly followed, while the positive impact is
enhanced to gain maximum benefits from the Project. A copy of the EMP is presented in the
IEE report.

1. Pre-construction

23. During the preparation of the detailed design for the road sections, further attention will
be given in protecting potential environmentally sensitive areas and in minimizing negative
impact on sensitive ecosystems or the natural environment through the use of environmentally
56 Appendix 11

sound design. Subproject selection criteria will ensure that the subprojects do not harm any
ecologically or culturally sensitive areas. This is to avoid (i) significant loss or damage to natural
environments, such as lakes, rivers, forests, reefs, mangroves, or other sensitive coastal areas;
(ii) permanent negative effect on known rare or endangered species; and (iii) permanent
damage to irreplaceable cultural relics and archaeological sites. Road construction and
rehabilitation projects can lead to changes in the community or social environment around the
road, influencing various aspects of lifestyles, travel patterns, and social and economic
activities. ADB policies for land acquisition and resettlement will be applied when dealing with
these issues during the pre-construction phase.

2. Construction

24. Construction-related activities include (i) removal and disposal of excess construction
material, spoil material, and debris; (ii) control of erosion; (iii) storage and handling of materials
including fuel and lubricants; (iv) management of construction camps; (v) control of noise and
dust from construction activities; (vi) measures to ensure worker and community health and
safety; and (vii) management of solid and liquid waste. Construction impact will be short term
and can be mitigated by addressing the EMP requirements. Of particular importance in Timor-
Leste are mitigation measures to control slope failure and related erosion, sedimentation, and
polluted storm water impact in areas of high geological instability. In these areas, construction
should be carried out only in dry weather, with revegetation and bioengineering solutions
applied where appropriate.

25. The mitigation measures include (i) proper handling of stockpiles, spoil heaps, and
batters; (ii) proper storage and handling of petroleum products; (iii) provision of on-site sanitary
facilities; (iv) spraying of sources of dust; (v) proper maintenance of all machineries;
(vi) limitation of work hours to the daytime; and (vii) installation of noise abatement measures
where necessary to minimize nuisance to nearby settlement areas. The implementation of the
EMP will be the responsibility of the MOI through the contractor, supervised by the PMU of MOI
with the support of the project implementation support consultants. An international
environmental specialist and a national environmental specialist will be part of the consulting
team, supporting the PMU in the strict enforcement of the EMP.

3. Operation

26. Adequate routine maintenance is required to minimize environmental impact during


operation. This refers to activities such as grading, grass cutting, drain clearing, pothole
patching, and shoulder repairs, which are performed at regular intervals. Periodic maintenance
activities are typically scheduled over several years and include resurfacing and bridge repairs.
Other periodic maintenance activities are seasonal maintenance such as flood repairs,
emergency maintenance to reinstate roads after major failures, and the regular upkeep of safety
features and road signs. Environmental impact from maintenance activities is commonly
insignificant. Noise originating from roads operation cannot be considered a major concern, as
traffic volumes are generally low.

F. Institutional Requirements and Environmental Monitoring

27. The Executing Agency for the Project will be MOI. The overall sector project will be
overseen by the minister of infrastructure. The PMU will be responsible for day-to-day
implementation. A consulting firm (project implementation support consultants) will be engaged
to work with the PMU. The PMU will conduct subproject feasibility documentation, design,
supervision, and other aspects of project administration as described in the report and
recommendation of the President. Its tasks will also include the environmental management of
Appendix 11 57
the Project in compliance with the Government’s and ADB’s requirements, and the training and
capacity building of MOI staff in environmental management and monitoring. Considering MOI’s
staff constraints, existing engineers and officers (3 regional engineers and 13 district
supervisors) will also be trained to handle the environmental management of the Project. They
will be engineer-cum-environmental officers of the Project responsible for overseeing
environmental management at the sites.

28. Monitoring will relate to compliance with construction contracts, the state of health of the
nearby environmental resources, and the effectiveness of mitigation measures and complaints.
The project costs for the subprojects incorporate a budget and the resources needed to
(i) undertake environmental mitigation measures as required, and (ii) monitor the
implementation of EMPs. The responsibility for undertaking the monthly monitoring and
preparing the quarterly monitoring report on the implementation of the EMP will rest with the
person in the PMU/project implementation support consultant team assigned to the
environmental management of the Project. Progress reports will be submitted quarterly to the
National Directorate for Environmental Services of the Government and every 6 months to ADB.

G. Public Information and Information Disclosure

29. A public consultation was held on 30 April 2009. Over 40 participants from various
departments of the Government, international and national nongovernment organizations
(NGOs), international development agencies, and district administrations attended the
workshop. The participants were actively involved in discussions related to poverty reduction,
the Project’s goals, and environmental issues. As the opportunity arose, local stakeholders were
consulted and informed before and during the field visits to proposed subproject roads. They
stated that road deteriorations are mainly caused by poor maintenance of drainage and too-few
culverts and bridges, and expressed their interest in being consulted further during design and
implementation. On the side of the Government, officers from the Ministry of Economy and
Development, the National Directorate for Environmental Services (at the central and district
levels), and the Directorate for Protected Areas and National Parks under the Division of
Forestry of the Ministry of Agriculture, Fisheries and Forestry should be included in this process.

30. The disclosure of environmental assessment documents will follow the procedures of
ADB and the Government, including the provision in ADB’s Public Communications Policy
(2005) requiring the disclosure of the relevant environment information in an appropriate form,
manner, and language and at an accessible location to be understandable to the affected
people and local NGOs.

H. Environmental Assessment Review Procedure

31. An environmental assessment review procedure has been prepared. It presents the
general anticipated environmental impact, subproject selection criteria, and subproject
environmental procedure. It will guide the preparation and approval of environmental
assessments of future subprojects likely to be financed under the Project, in compliance with the
Government’s as well as ADB’s environmental requirements. The MOI as the Executing Agency
will be responsible for the implementation of the environmental assessment review procedure
including the preparation of the subsequent IEE or SIEE, and the implementation of EMP and
the environmental monitoring plan. Public consultations will be carried out during the
preparation of the IEE for future subprojects, and MOI will submit the required documentation to
ADB.

32. The PMU in MOI will prepare an IEE for each future subproject submitted to ADB for
review and clearance prior to contracting or the start of work. The PMU will obtain approval from
58 Appendix 11

the National Directorate for Environmental Services according to the requirements of the
Government before the start of construction. In addition, the PMU will ensure that the EMP and
the required mitigation measures for construction activities are included in the contractors’
contracts, with requirements to update the EMP in response to any unexpected impact. MOI will
ensure that the EMP and all mitigation measures during construction are fully implemented.

33. During the implementation of the Project, ADB will review the environmental
assessment reports for future subprojects submitted for approval, disclose the environmental
assessments where necessary, and monitor the EMP implementation and conduct due
diligence as part of the review of the Project. ADB will assist MOI in carrying out its
responsibilities and building capacity, and ensure that MOI conducts the required consultations
with project-affected groups and local NGOs, providing accessible relevant information on the
Project’s environmental issues according to ADB’s Public Communications Policy.

I. Findings and Recommendations

34. From the IEE, it can be concluded that significant or irreversible impact is unlikely, and
the subprojects assessed comply with ADB’s environmental safeguard policies. All potential
environmental concerns listed in the EMP can be mitigated. Subsequently, the EMP provides
sufficient guidance for the PMU to successfully monitor the implementation of the EMP and
report on environmental compliance.

35. Although the proposed road rehabilitation subprojects are located or pass through
potential protected areas and important bird areas (both areas do not have legal protection
status at present), the road rehabilitation will have no significant impact on the surrounding
forests. This is primarily because the subprojects concern existing roads and minor to moderate
interventions. The works can generally be carried out within the existing road reserve, and no
displacement of people will be necessary. Provided the requirements of the EMP to mitigate
potentially adverse impact during subproject construction are met, there will be no significant or
long-term impact on the forested area, and no additional or special studies are needed. There
will be a replanting program to replace cut trees. No significant associated or cumulative impact
is identified.

36. The alternative option to implementation of this project is not to rehabilitate the roads—
the “do-nothing” option. This option is not acceptable as it will not prevent further deterioration
and collapse of the roads and will potentially have a significant impact on remote rural villages
that rely on the roads for transport and access to markets and social services.

J. Conclusion

37. The results of the IEE indicate that the subprojects will have no major environmental
impact and that all environmental impact can be mitigated to an insignificant level. The costs of
environmental mitigations and monitoring are included in the project budget. Therefore, a more
detailed environmental impact assessment is not warranted, and the IEE will be finalized as the
final environment assessment of the subprojects.
Appendix 12 59

SUMMARY RESETTLEMENT FRAMEWORK

1. A resettlement framework has been prepared for the Project in compliance with the
Government’s law and ADB’s Involuntary Resettlement Policy (1995). These documents provide
guidance to establish the policies and procedures for payment of compensation to affected people
for lost or damaged assets and minor land acquisition. During the preparation of each batch or
group of subprojects, the policies and provisions of the resettlement framework will be reviewed
and, as required, updated to reflect the conditions and requirements for upgrading roads, but
without lowering the standards set out in the present resettlement framework.

2. Assurances. One of the loan assurances for the Project, agreed by the Government and
ADB, states that no subproject may require land acquisition that will incur significant resettlement
impact. Therefore, the Project is categorized as “B” in terms of resettlement impact according to
ADB policy. In case certain subprojects may require temporary land access beyond the existing
pavement, the resettlement framework will set out measures to address such impacts.

3. Existing land tenure and use. Of an estimated 200,000 land parcels in the country as a
whole, less than 25% have ever been formally registered. Origin groups have authority over land
allocations, including permission for the clearing and cultivating of new land. Within the system of
origin group authority, there are highly individuated rights to land. It is not accurate to describe
customary land in Timor-Leste in terms of communal or common property only; residential, garden
and plantation plots are "owned" by families rather than the group itself, and generally these plots
remain under family control.

4. Screening for impact. The criteria noted in Appendix 4 will be used during a subproject
screening process to confirm eligible subprojects among the identified 32 priority links. The
screening process will identify the types and nature of potential impact associated with land
requirements and provide adequate measures to address them so as to ensure that the affected
persons are (i) informed about their options and rights; (ii) included in a consultation process and
given the opportunity to participation in the selection of eligible subprojects; and (iii) provided with
prompt and effective compensation at replacement cost for loss of or damage to affected assets.
The routine and periodic maintenance of roads under the Project will not require the acquisition of
any land; all maintenance will be carried out within the existing roadway.

5. Entitlements. The Project’s entitlement matrix was prepared as a part of the resettlement
framework (Supplementary Appendix N). Affected persons will be compensated for any loss of or
damage to land, crops, trees, temporary structures or other assets, as per the policies of this
resettlement framework. All costs for the Project related to land acquisition, compensation and
allowances, operation and administration costs, surveys, monitoring and reporting will be financed
by the Government using counterpart funds.

6. All people who own crops, trees, temporary structures or other assets on affected land are
entitled to compensation for the loss of or damage to these assets. Compensation will be paid in
cash at replacement cost. In addition to compensation, affected persons are entitled to
assistance, for example, to shift temporary trade shop structures, for disruption of businesses or,
to move personal possessions. Affected persons will also receive priority for employment for civil
works and ongoing maintenance under the Project, as well as participation in the community
empowerment component in three selected districts.
60 Appendix 12

7. Community consultation. The project management unit (PMU), to be established within


the Ministry of Infrastructure (MOI), will organize consultations with each affected community.
Participants will include appointed and traditional leaders in the village, affected landowners and
community people affected by the loss of assets on the affected land. Village leaders will
encourage all other community members to attend including women, elderly people, young people
and ethnically different population; because women and some ethnic groups are often reluctant to
speak in general community meetings, as relevant, separate meetings may be held with them to
understand and discuss their preferences and concerns.

8. The key consultations will occur prior to and/or as part of (i) the subproject screening and
preparation of the subprojects; (ii) carrying out of the detailed measurement survey and social
surveys; and (iii) disclosure and review of the draft resettlement plan. The PMU will consult with
communities and affected people on related issues, as required, throughout the process of the
preparation and implementation of subprojects. Throughout these consultations, the objectives
are (i) to provide timely and complete information about the project, land requirements and impact,
to enable people to make informed decisions; (ii) to ensure that all affected persons and other
interested stakeholders know and understand the policies and procedures related to additional
land required to upgrade the road; and (iii) to build and maintain community support for the Project
by addressing the concerns and preferences of affected persons and other stakeholders. Prior to
disclosure, the resettlement framework will be endorsed by MOI as the executing agency for the
Project. Disclosure of the resettlement framework (or its summary) and resettlement plans will
occur as per ADB policies.

9. Grievance redress. The grievance redress mechanisms for the Project will be established
in MOI to ensure that all affected person grievances on any aspect of land acquisition and/or
compensation for affected assets are resolved in a timely and satisfactory manner. Affected
persons will be made fully aware of their rights (both verbally and in writing) during consultations
about land requirements for the Project. In the event of grievances that cannot be resolved
through local mediation, the matter will be referred to the land court system. In this case, the
project and district land and property officer will hold the compensation amounts in escrow.
Compensation will be paid in full upon final resolution of the case in the courts or other forum, in
accordance with the entitlements of the affected person.

10. Executing agency. The Ministry of Infrastructure (MOI) is the executing agency for the
Project. The PMU will monitor and report semiannually to the MOI and ADB on all activities
associated with the preparation and implementation of resettlement plans including payment of
compensation to affected persons. The scope of internal monitoring includes (i) compliance with
the agreed policies and procedures; (ii) prompt approval, allocation and disbursements of funds
and payment of compensation to affected persons, including supplemental compensation for
additional and/or unforeseen losses; (iii) the availability of other resources and efficient, effective
use of these resources; and (iv) requirements for remedial actions.

11. External monitoring. The MOI will recruit a full-time national social safeguard specialist to
monitor day-to-day resettlement implementation as well as international and national consultants
to monitor resettlement issues for all subprojects. The consultants will be recruited and mobilized
at the beginning of the Project; and will monitor and report to MOI and ADB on all activities related
to impact on land, community consultations, preparation of resettlement plans and payment of
compensation. The purpose of hiring consultants is to focus on the social impact of the
subprojects and whether affected persons are able to restore, and preferably improve, their pre-
project living standards, incomes, and productive capacity.