Project Scope & Financing Plan

A.        Project Scope

1.            Improvement of National Road 56A

Under the Project, 29 km of provincial NR 56 from Sisophon to km 29 will be improved from an existing gravel surface to an all-weather bitumen standard will be constructed. At Sisophon the project road meets with the primary NR 5.

2.        Improvement of the Cross-Border Facility at O’smach

The cross-border facilities at O’smach are inadequate. New facilities will be constructed to meet GMS requirements and will be suitable for one-stop processing.

The site for the facility is approximately 4 ha, extending on both sides of NR 68. Truck and cargo processing will be separated from private vehicle and bus movements. The improvement will also provide new facilities for the border agencies.

3.       Road Maintenance Program

The MPWT manages the primary network of 11,400 km. Recent investments have led to the improvement of 2,500 km of roads in this network to paved road standard. The preservation of these assets brings with it the necessity for improving the capability for road management and maintenance.

The work proposed under this Project will complement the aforementioned intervention through axle load control. An essential element of road management is to increase the capability for axle load control to ensure the planned durability of the network is achieved.

The road maintenance program will include the provision of equipment for axle load control through some permanent weigh stations at strategic locations on the national road network.

4.            Road Safety Program

The Project includes a component to address this problem through the provision of a road safety agency or firm which will develop a road safety program in concert with existing programs in Cambodia.

The road safety program of the Project will mainly include enhancing road user education in the project area and nationwide, public awareness campaigns, the provision of equipment, the engagement of local contractors, and the conduct of minor civil works activities to improve the level of road safety in Cambodia.

5.           HIV Prevention and Anti-Human-Trafficking Program

The proposed Project is located in a region with one of the highest HIV rates in the country.

The Project includes implementation of an integrated prevention and risk mitigation package as part of the road project design.

B.            Investment Plan

The project investment cost is estimated at $47.89 million, including taxes and duties of $4.99 million. The total cost includes physical and price contingencies, and interest and other charges during implementation. The project investment plan is in Table 1.

a    Includes taxes and duties of $4.99 million.

b    In April 2009 prices.

c    Physical contingencies computed at 10% for civil works. Price contingencies computed at 0.7% in

2009, 1.4% in 2010, 0.4% in 2011, 0.5% in 2012, and 0.6% in 2013 onwards on foreign exchange costs and 5.0% in 2009 onwards on local currency costs; includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate.

d   Interest during construction has been computed at 1% for ADB and 0.01% for the Export Import Bank of Korea.

*Source: Asian Development Bank estimates. 

C.        Financing Plan

The Government of Cambodia has requested a loan equivalent to $16.26 million from ADB’s Special Funds resources to help finance the Project. The Government will also request the Government of the Republic of Korea to provide $25.58 million equivalent in cofinancing for the Project, provided through the Export Import Bank of Korea (KEXIM). It is proposed that ADB provide a loan of $16.26 million from its Special Funds resources to cover 34% of the total cost of the Project. ADB will finance rehabilitation of 29 km of NR 56, and the cross-border facility at O’smach, plus the consulting services of DDIS, road maintenance, road safety, and HIV/AIDS and human trafficking programs. KEXIM will finance 53.4% of the total project cost, to cover rehabilitation of 84 km of NR 56 and provision of equipment for the cross-border facility. The Government, from its own resources, will meet the remaining local currency cost of the Project, which is $6.05 million equivalent amounting to 12.6% of the total project cost. This will cover land acquisition and resettlement costs and taxes and duties.

The Borrower will be the Kingdom of Cambodia. For the ADB loan, the repayment period of the proposed loan will be 32 years, including a grace period of 8 years, with an interest charge of 1.0% during the grace period and 1.5% thereafter. This interest during construction will be financed by the ADB loan. The proceeds of the loan will be made available by the Borrower to the MWPT (as the executing agency) through budgetary allocations. The ADB loans will fund ADB-financed civil works, consulting services, and equipment totaling $16.26 million. KEXIM will finance the Project on tied-parallel basis.

This loan will have a fixed interest rate of 0.01% per annum and a 40-year maturity, including a 15-year grace period. After the signing of the loan agreement, the loan amount will be denominated in won not exceeding the equivalent of the US dollar amount. Counterpart funds will be allocated for land acquisition and resettlement, and taxes and duties. The financing plan is presented in Table 2.

*Source: Asian Development Bank estimates.