Road Maintenance Project. The Road Maintenance Project is designed to maintain road quality across the SRN by promoting improved road maintenance practices. The Project will provide technical assistance to the DOR and RBN and hands-on learning through the maintenance of approximately 305 kilometers of roads. Maintenance interventions will include pavement improvement (overlays or surface dressings), safety enhancements, and slope stability improvements to reduce road closures caused by landslides. Roads that will receive periodic maintenance under the Project were selected through a prioritization process that analyzed the economic efficiency of maintenance interventions by road. The selection started with a schedule of approximately 2,000 kilometers of roads proposed by the DOR, all of which are part of the SRN. The economic returns to periodic maintenance of these 2,000 kilometers were estimated using the HDM-4 Model, which estimates the increase in consumer surplus from a decline in transport costs as represented by the decrease in vehicle operating costs and travel time caused by a road improvement. Roads were then ranked by the ratio of economic benefit to cost and those with the highest benefit-to-cost ratio, within the available budget envelope, were selected for Compact-funded maintenance. This prioritization resulted in the selection of five roads in Nepal’s Eastern, Central, and Mid-Western development regions, comprising a total of approximately 305 kilometers. The five roads selected for periodic maintenance currently have relatively high traffic volumes compared to many other roads in Nepal and the road surfaces are in poor condition (high international roughness index (“IRI”) values). However, the roads have not deteriorated to the point where a major rehabilitation is required. The purpose of the periodic maintenance interventions is to prevent further deterioration that would be very expensive to repair. The economic analysis assumes that traffic growth will be the same in the “with Project” and the “without Project” scenarios. In other words, only normal traffic growth is assumed in the HDM-4 models; no assumption is made regarding the Project’s potential to generate additional traffic. Comparing Project cost with the economic benefit of road maintenance over a 20-year period, as estimated by HDM-4, the present value of economic costs comes to US$38,400,000, the present value of benefits is US$158,500,000, and the net present value of the Project is US$120,100,000. The estimated ERR for the Road Maintenance Project is 29 percent.
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Sources: Millennium Challenge Compact, Millennium Challenge Compact, Millennium Challenge Compact