NEW DELHI, May 5, 2010 - The Government of India and the World Bank are restructuring the Bank-financed Lucknow-Muzaffarpur National Highway Project (LMNHP) with the aim of ensuring the speedy completion of this important section of the East-West Corridor of the Government’s National Highways Development Program (NHDP). The restructured Project will primarily focus on improving the quality and the pace of the road construction between Lucknow and the Uttar Pradesh (UP)/Bihar border (a distance of 328 km on National Highway 28), and on helping the National Highways Authority of India (NHAI) improve safety and sustainability of the corridor. The upgrading works on the remaining 155 km stretch of NH28 from the UP-Bihar border to Muzaffarpur in Bihar will be funded separately by the NHAI.
Shared concerns about slow progress on few contracts and poor site safety issues in LMNHP prompted the Ministry of Road Transport and Highways (MORTH), the NHAI and the World Bank to collaboratively draw up a detailed timebound Action Plan in November 2008 to improve the implementation of the Project. The Action Plan included the provision that the contractors needed to maintain a minimum monthly progress rate to ensure that the Project, which then was already about two years behind schedule, could be efficiently completed. However, the contractors working on the four eastern contracts (contract packages 9, 10, 11 and 12) consistently failed to achieve satisfactory progress. NHAI terminated one contract and requested the Bank to allow four contracts to be taken out of the Bank funding so that the loan funds can be put to more productive uses.
In addition to supporting the upgrading of the NH28 between Lucknow and the UP-Bihar border, the restructured Project will also help NHAI strengthen its Road Safety Cell to improve site and construction safety; assist NHAI to launch a pilot on Safer-Greener Highways that seeks to improve road safety measures and reduce the carbon footprints of highway construction and; support NHAI in setting up an Enterprise Resource Planning (ERP) System to improve its internal process controls and financial management systems.
The NHAI, MORTH and the Bank are also working together to prepare a Technical Assistance Project, which will help NHAI strengthen further its institutional capacity and operational efficiency to accelerate the implementation of the NHDP.
The US$ 620 million LMNHP was approved by the Bank’s Board in December 2004 and the original loan was due to close on 30 June 2010. As of 29 April 2010, 78 percent of the loan had been disbursed. Under the restructuring of the Project, approved by the Bank’s Board of Executive Directors on 4 May 2010, the closing date for the loan has now been extended to 30 June 2012.