Closed Compact Report: Moldova Compact | May 2017
Road Rehabilitation Project
- $132,800,000Original Compact Project Amount
- $109,749,558Total Disbursed
|Time||Estimated Economic Rate of Return (ERR) over 20 years||Estimated beneficiaries over 20 years||Estimated net benefits over 20 years|
|At the time of signing||21.1 percent||302,000||$55,600,000|
|At compact closure||Not yet available||Not yet available||Not yet available|
Estimated benefits correspond to $132.8 million of project funds, where cost-benefit analysis was conducted.
Moldova’s transportation infrastructure, consisting of significantly deteriorated roads, represented a constraint to economic growth because it raised the costs of internal and external production and trade. The Road Rehabilitation Project (RRP) worked to alleviate this constraint with investments aimed at:
- increasing the real income of the population by reducing the cost of transport, goods, and services;
- reducing productivity losses to the national economy that resulted from road conditions; and
- decreasing the number of road accidents through improved traffic conditions.
The project rebuilt to international standards a 96 km segment of the M2—an arterial highway connecting Chisinau, the capital of Moldova, to Kiev, the capital of Ukraine. This route serves as a significant link between Moldova and Ukraine for passenger and commercial traffic, and Moldova identified it as a priority for rehabilitation during the development process. The compact specifically rebuilt the critical segment of the M2 that connects Sarateni (outside Chisinau) with Soroca, an agricultural hub at the Ukrainian border.
In addition to rebuilding this key commercial artery, the project introduced higher road safety standards in Moldova and invested $2.5 million in small social infrastructure such as schools and access roads in villages impacted by the construction. MCA-Moldova reinvested cost savings into the project and used them to, among other things, rehabilitate an additional 3 km of road, including paving roads to improve access to schools and a fire and rescue station. The project also piloted—for the first time in Moldova—the use of iRAP, 1 an internationally recognized assessment program designed to enhance overall road safety. The project employed modern standards for road building, road safety, road maintenance, and community engagement. Road improvements included safety features designed to slow traffic in communities, in order to reduce fatalities in areas like schools, markets, and health posts. Curves on the road were properly banked and other sections were straightened in order to reduce accidents. MCC’s design also provided side-roads for farm equipment to avoid collisions. MCA-Moldova incorporated many of these factors into the design after gathering input from local communities.
Higher standards for consultation and social protection were also introduced as part of the project, including the use of social monitoring committees in communities along the road. These community groups included local leaders and required female representation. The groups allowed local community members to have a strong voice in the design and implementation of the road, and provided a platform for improved community safety and communication with construction contractors. Group members received leadership and project management training, and delivered training to community residents and school children on traffic safety and HIV prevention 2 with the help of MCA-Moldova. The groups are expected to play a role in ensuring the sustainability of local road investments.
Finally, the project introduced higher standards for resettlement. Extensive resettlement was required to expand the road right-of-way, affecting 92 plots and 85 landowners who received cash or land as compensation. The resettlement program, conducted in compliance with MCC environmental and social guidelines, cost $850,000 to plan and implement, including all compensation.
A year ahead of the compact’s end, the project was completed with the rebuilding of 96 km of roads—exceeding the originally envisioned 93 km—with roughly $21 million in cost savings.
Evaluation Plans: Road improvement is expected to reduce vehicle operating costs, reduce travel time, decrease maintenance costs, and increase the value of goods moved and the frequency of travel. MCC’s independent evaluation of the this project will (i) determine the post compact ERR using HDM-4 analysis, 3 (ii) assess the road maintenance system, (iii) analyze the composition of road users, and (iv) assess the transportation market structure.
Status of the evaluation:
|Baseline||Baseline conditions of the road, such as roughness and traffic, were collected in 2009 during the development of the feasibility and design studies.|
|Endline||The evaluation is scheduled for 2017, with a final report to be submitted in 2018.|
Key performance indicators and outputs at compact end date
|Activity/Outcome||Key Performance Indicator||Baseline||End of Compact Target||Quarter 1 through Quarter 20 Actuals (as of )||Percent Compact Target Satisfied (as of )|
|Sarateni-Drochia Junction M2 Activity||Average Annual Daily Traffic||3,009||4,270||Pending||Pending|
|International Roughness Index (IRI)
|Kilometers of roads completed||0||93||96||103%|
|Reduced cost for road users (US Dollars)||0||112,000,000||Pending||Pending|
|Road fund allocation (US Dollars||35,800,000||106,000,000||57,199,780||30%|
Explanation of Results: An independent evaluator will gather the data needed to determine some indicator results. The data will also be used to calculate a post-compact ERR.
The Government of Moldova agreed to multi-year road maintenance budget allocations in close cooperation with international financial institutions and the IMF in 2009, and met those obligations consistently from 2010 to 2014. There was a lower final allocation in 2015 that did not meet the commitment. This was the result of the Moldovan currency collapse and the financial and political crisis in Moldova.