Earthquake Insurance: Lessons from International Experience and Key Issues for Developing Earthquake Insurance in the PRC

ADB. This note reviews the earthquake and catastrophe insurance in New Zealand, Japan, United States, Turkey, Taipei,China, Indonesia, and examines the key issues for developing earthquake insurance in the People's Republic of China.

The earthquake that struck Sichuan Province on 12 May 2008 left more than 88,670 people dead or missing, injured 374,000 people, and destroyed 5.5 million buildings. Total property damage from the earthquake is estimated as $20 billion, but only 5% of that damage was insured.

The low rate of insurance and high levels of physical damage has revived interest in earthquake insurance and in catastrophe insurance more generally. Catastrophe insurance refers to a contract sold by insurance companies to people exposed to risks from disasters, to compensate for losses. While disasters can put a huge financial burden on the government to fund relief and recovery of the affected population, catastrophe insurance can help relieve the burden by spreading the risks and hence the costs of disasters. Pricing of catastrophe insurance policies can also provide proper incentives and thus help limit future damage from natural hazards by influencing investment and land development decisions.

Earthquake insurance had an early start in the People’s Republic of China (PRC) but ceased operations in the late 1950s. The Government resumed its earthquake insurance scheme in 1980, motivated partly by the 1976 Tangshan earthquake. That scheme operated until 1996, when earthquake prediction expectations led insurance companies to start excluding earthquake damage from the general terms of property insurance. 1 Since then, disaster recovery has been supported mainly by government funds and donations from the general public including private individuals and entities (hereafter will be referred to as ‘public donations’).

Earthquake insurance already has a basis in law and other policies in the PRC. Earthquake insurance is also important in the Government’s 11th 5-Year Plan. This Plan calls for reinforcing the country’s ability to prevent and reduce disasters, including earthquakes. The “National Plan for Comprehensive Disaster Reduction During the 11th 5-Year Plan” lists the lack of disaster insurance as one of the country’s weak links in the current disaster reduction program. The “National Plan for PRC Earthquake Prevention and Disaster Mitigation (2006-2020)” calls for establishing a cofinancing mechanism that incorporates government funds, public donations, and earthquake insurance.

Despite the country’s previous experience with earthquake insurance, and calls for earthquake insurance over the past 10 years, earthquake insurance has not yet been widely established in the PRC. This note reviews some of the challenges in establishing such insurance, briefly describes international experience, and recommends priority issues for the Government to consider in developing earthquake and catastrophe insurances

Earthquake Insurance: Lessons from International Experience and Key Issues for Developing Earthquake Insurance in the PRC

Asian Development BankPrices $3 Billion 5-Year Global Bond

ADB. 11 January 2012.MANILA, PHILIPPINES– The Asian Development Bank (ADB) returned to the US dollar bond market yesterday with the pricing of a $3 billion 5-year global benchmark bond issue. The proceeds of the Bank's first global bond issue of the year will form part of the Bank's ordinary capital resources and will be used in its non-concessional operations.

The bonds, which carry a coupon rate of 1.125% per annum payable semiannually and a maturity date of 15 March 2017, were priced at 99.866% to yield 1.152%, or 31.1 basis points over the 0.875% US Treasury notes due December 2016.

"We are exceptionally pleased with the transaction and the strong interest from investors reflected in an oversubscribed book of more than $4 billion and over 80 investors," said ADB Deputy Treasurer, Kazuki Fukunaga.

The issue achieved broad primary distribution with about 52% of the bonds placed in Asia, 29% in Europe, Middle East and Africa, and 19% in the Americas. By investor type, around 63% were bought by central banks and official institutions, 20% by fund managers, and 14% by banks. The rest went to a variety of other types of investors.

The transaction was lead-managed by Goldman Sachs, JP Morgan, Morgan Stanley, and RBC Capital Markets. A syndicate group was also formed consisting of Bank of America Merrill Lynch, BNP Paribas, Credit Suisse, Daiwa, Deutsche Bank, HSBC, Jefferies, Mitsubishi UFJ Securities, Nomura, and UBS.

ADB, which carries a AAA credit rating, plans to raise around $14-16 billion from the capital markets in 2012. In 2011, it raised just over $14 billion from a combination of global benchmark issues, opportunistic issues in a variety of global currencies, and private placements.

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Asia Evaluation of Poverty Reduction Innovations Technical Assistance

The Asian Development Bank (ADB) has approved the following technical assistance project.The project will provide an integrated process to increase understanding and application of modern, innovative methods for measuring and evaluating poverty by policymakers in ADB’s Developing Member Countries. The project will include hands-on training, an international conference to exchange results on evaluation methods, and competitively-awarded innovation evaluation grants for member countries to use to deepen impact evaluation on poverty projects.

The TA will improve DMC ability to measure, evaluate, and replicate access to finance and other related poverty reduction efforts by increasing understanding and application of randomized control trials and other modern evaluation techniques. The TA will achieve this result in three ways. First, it will introduce new evaluation techniques to DMC officials and academics in a short, practical training course, with information on how to apply the results to improve policy and practice. Second, the TA will run a three day international conference, where practitioners and researchers from around the globe will present the latest evaluation results of projects in financial access and poverty reduction to policymakers. Gender impact will be an essential aspect of the presentations. Finally, an evaluation implementation grants program to be awarded at the end of the conference will facilitate evaluation benefits and capacity building for DMCs

Project Number:45292- 01

Evaluation of Poverty Reduction Innovations Technical Assistance

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The Revised Social Protection Index: Methodology and Handbook

The publication and adoption of ADB’s Social Protection Strategy in 2001, along with the social protection (SP) strategies adopted by other international organizations and bilateral donors, heralded a growing recognition that the Millennium Development Goals for poverty reduction cannot be achieved purely through the promotion of economic growth and the development of physical and social infrastructure. Interventions are also necessary to address the needs of the poorest and to prevent members of vulnerable groups from falling into poverty following community-wide or household-specific shocks. Until then, few attempts had been made to date to comprehensively assess SP programs in developing countries and quantify the impact of SP activities.

The International Social Security Association maintains a database with basic information on formal social security schemes, and the International Labour Organization (ILO) launched in 2003 the Social Security Inquiry, which provides national and scheme-level administrative data on social security

around the world through a government self-reporting mechanism. Only a few countries in Asia and the Pacific produced high-quality statistics in SP programs.

The Asian Development Bank (ADB) developed a social protection index (SPI) for Asia and the Pacific in 2005−2008. This original SPI was a tool that helped assess, measure, and compare SP programs in each of the study countries. It provided policymakers with a tool to analyze SP programs from the perspective of expenditures on SP, coverage, distribution, and impact on the poor and vulnerable population.

The original SPI was a summary measurement tool that systematically and consistently quantified national SP activities in Asia and the Pacific (Wood 2010). It was a composite index, with four components: a social protection expenditure indicator (SPEXP), a social protection coverage indicator (SPCOV), a social protection distribution indicator (SPDIST), and a social protection impact indicator (SPIMP).

SPEXP showed the percentage of a country’s gross domestic product (GDP) spent on SP programs. SPCOV showed the percentage of the reference population that received SP benefits. SPDIST (called the poverty targeting rate) showed the percentage of the poor that received SP benefits. SPIMP showed the per capita SP benefits going to the poor expressed as a proportion of the national poverty line. A summary SPI was constructed on the basis of normalizing each of these four indicators on a scale of 0 to 1 and adding them

with equal weights.

ADB.January 2012. Type: Guides.ADB administration and governance; Social development and protection. ISBN: 978-92-9092-496-8 (print), 978-92-9092-497-5 (web) 

The Revised Social Protection Index: Methodology and Handbook

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Cambodia Transport Sector Assessment, Strategy, and Road Map

The Southeast Asia Department of the Asian Development Bank (ADB) is systematically updating sector assessments, strategies, and road maps (ASRs)1 to better harmonize program and project planning with member countries and development partners. The preparation of this transport ASR is an integral part of project planning to ensure coordination between Cambodia’s priorities and those of ADB’s Strategy 2020 and the ADB Sustainable Transport Initiative (ADB 2010h). This sector ASR also provided the basis for dialogue between the Royal Government of Cambodia, the ADB Transport and Communications Division, and the ADB resident mission in developing the ADB country partnership strategy for 2011–2013.

The ASR on Cambodia’s transport sector focuses mainly on roads and railways, but also considers urban transport. The important role of airports and water ports is discussed as well. The report was developed primarily through consultations with the Ministry of Public Works and Transport (MPWT), which manages the national and provincial road networks and the railways; the Ministry of Rural Development (MRD), which manages rural roads; and development partners working in the transport sector.

Cambodia currently has four drivers of growth: agriculture, tourism, manufacturing (mainly garments for export), and commercial and residential construction. With the exception of agriculture, each of these sectors suffered a severe downturn during the global financial crisis of 2008–2009, and this likely contributed to an increase in poverty (ADB 2010g). Expansion and diversification of Cambodia’s drivers of growth, especially agriculture, are important development objectives for the government. 

Efficient transport is critical for economic growth. The agriculture sector relies on road and sea transport for exports; the tourism sector relies on international air carriers and road transport; the construction sector relies on water and road transport for delivering construction materials; and industry (primarily garment manufacturing) relies on road and water transport to deliver the materials needed for manufacturing and to export finished products.

The two main transport subsectors in terms of passenger and freight volumes are roads and railways (Japan International Cooperation Agency [JICA] 2006). The ports, both inland (Phnom Penh) and on the coast (Sihanoukville), play an important role in the transport sector, as do the three international airports (Phnom Penh, Siem Reap, and Sihanoukville).2 Rehabilitation and further development of the transport sector are being undertaken to improve access and connectivity, both domestically and subregionally, as part of the Greater Mekong Subregion (GMS) initiative, and regionally, as part of the road and rail connectivity objectives of the Association of Southeast Asian Nations (ASEAN).

The largest subsector is road transport. In 2007, Cambodia’s road vehicles totaled 1,066,192— 273,243 cars and light vehicles such as motorcycles and auto-rickshaws; 4,067 buses; 37,098 trucks; and 511 other vehicles (National Institute of Statistics 2008). Since 2007, the annual growth rate for all categories of vehicles has been an estimated 5.1%.

ADB.December 2011.Type: Country Planning Documents.Country: Cambodia.Subject: ADB administration and governance; Transport and ICT. ISBN:978-92-9092-413-5 (print), 978-92-9092-414-2 (web).

Cambodia Transport Sector Assessment, Strategy, and Road Map

For more information about Projects in Cambodia see SOUTHEASTERN ASIA Projects

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China International Experiences and Suggestions on Post-Disaster Rehabilitation and Reconstruction

The Government of the People’s Republic of China (PRC), through its National Development and Reform Commission (NDRC), has requested further ADB assistance to summarize international experiences and good practice in situations similar to that which PRC is currently experiencing as a result of a great earthquake that struck Sichuan Province on 12th May 2008. This note examines recent large-scale disasters in India, Indonesia, Japan, Turkey,  and the United States (see appendix 1 for disaster sketches) and focuses on generic issues pertaining to  urban development, rural and urban housing construction, infrastructure construction, livelihood rehabilitation, spatial planning (land use), and disaster prevention. 

It is appropriate to place the Sichuan earthquake into perspective, both within PRC and in a global context. In a typical year, up to 200 million people are affected by natural disasters in PRC, and 40 million hectares of crops are damaged. The average annual economic impact from disasters is about 100 billion Yuan ($14.5 billion). While PRC has experienced at least 3,200 destructive earthquakes since BC1931, many of which have resulted in substantial death and destruction, it is typhoons with their heavy rain, strong winds, storm surges and concomitant flooding that cause more casualties and property loss overall than any other kind of natural hazard in PRC,even though earthquakes have accounted for 54% of natural disaster deaths since 1949.Table 1 provides a comparative analysis using the number of people affected in recent natural disasters in PRC.

The Sichuan earthquake has been described by PRC Government officials as the most destructive and widespread earthquake and has posed the most difficulty since the PRC was founded in 1949.The event was an M8 earthquake (with an intensity of 11 at the epicenter) inSichuan Province. This earthquake resulted in 69,146 known deaths, an additional 17,516 persons still missing, and 374,131 injured. The earthquake  caused an estimated direct economic loss of  400-500 billion Yuan ($58-73 billion), affected  an area of 100,000 square kilometers, displaced up to 15 million people,  affected 46 million people overall), severely damaged or collapsed approximately 20 million buildings, damaged over 47,000 kilometers of highway and other critical infrastructure including 69 dams that are in danger of collapse; and created major secondary impacts including the creation of large and unstable ‘quake lakes and possible hazardous materials leakage.

Asian Development Bank. Date:March 2011.Type: Papers.Country: China, People's Republic of; India; Indonesia Subject.Governance and public sector management.Series: Observations and Suggestions

International Experiences and Suggestions on Post-Disaster Rehabilitation and Reconstruction

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Thailand Transport Sector Assessment, Strategy, and Road Map

This sector assessment, strategy, and road map (ASR) represents the current assessment and strategic investment priorities of the Government of Thailand and the Asian Development Bank (ADB) in Thailand’s transport sector. It highlights sector performance, needs, constraints, and present government plans and strategies. The ASR will be linked to the ADB country partnership strategy (CPS) for Thailand, 2012–2016. It is also aligned with the vision and strategies of the country’s draft 11th National Economic and Social Development Plan, 2012–2016.1 This ASR may need to be updated in accordance with any changes in government policy during the finalization of the 11th Plan. This ASR focuses on three transport subsectors: (i) roads, (ii) rail, and (iii) urban transport. It is a working paper that reflects ADB’s experiences and was developed through consultations with government agencies and development partners. Key extracts of the ASR will be included in the next CPS for Thailand.

Thailand’s economy is heavily dependent on external trade, with exports representing over 60% of gross domestic product (GDP) in 2007 (footnote 1). Although economic growth has declined in recent years, from 4.8% in 2007 to –2.7% in 2009, the current global economic recovery has significantly strengthened export trade volumes. The export-dependent nature of Thailand’s economy, with recent structural changes toward a higher share of value-added manufactured goods and level of global trading, requires a strong supportive and integrated transport and trade facilitation system.

Thailand’s transport sector contributes 1% to the country’s economy. Exports contributed over 60% to Thailand’s GDP in 2007, and the transport sector underpins this notable export performance. The road subsector dominated the transport sector with an estimated 95%8 of the freight and 98% of passengers.

In terms of physical development, the road network also dominates, with an estimated total length of 202,000 kilometers (km). The length of the rail network is 4,043 km. The length of coastline is 2,614 km, and navigable inland waterways represent only about 1,750 km. Thus, the road network is the most developed, with about 98% of roads, including village access roads, being paved.

Passenger transport in Thailand is dominated by personal vehicles (primarily cars and pickup trucks) and motorcycles. National personal vehicle ownership (expressed as in-use vehicles per thousand population) was growing at an average of 8%–10% per year from 1999 to 2007, and this trend is expected to continue.

In Bangkok, cars and pickup trucks are the most prevalent, with 388 vehicles per 1,000 population, compared to 220 motorcycles per 1,000 persons. Motorcycles are dominant in areas outside of Bangkok, with 159 motorcycles and 112 cars or pickup trucks per 1,000 population. With the continuing per capita income growth, it is expected that ownership of four-wheel vehicles will grow faster than motorcycle ownership.

ADB.December 2011.Type: Country Planning Documents.Country: Thailand.Subject: ADB administration and governance; Transport and ICT. ISBN:978-92-9092-415-9 (print), 978-92-9092-416-6 (web).

Thailand Transport Sector Assessment, Strategy, and Road Map

For more information about Projects in Thailand see SOUTHEASTERN ASIA Projects

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South Asia Smart Grid Capacity Development Business Opportunities

ADB.PN.45124- 02. In facing the challenges of energy security and climate change, some developing member countries (DMCs) have taken the lead in promoting renewable energy. At the same time, expectations are raised for smart grid technology out of concern that unstable output of renewable energy will adversely affect the power systems which the power from renewable energy will be fed into. In this context, during the second meeting of the Asia Solar Energy Forum in Tokyo, Japan, in December 2010, several South Asia DMCs asked the Asian Development Bank (ADB) to provide capacity development technical assistance (TA) for developing the smart grid. The concept paper was approved on 20 May 2011 and further discussed during the Workshop for Solar Energy and Smart Grid in Jodhpur, India, in September 2011.

ADB will hire a consulting firm to conduct a feasibility study on smart grid development for transmission, distribution, and mini-grid systems. The consulting work will comprise about 15 person-months of international consulting and 22 person-months of national consulting to provide (i) technical support for identification of the necessary smart grid components for transmission (e.g., a renewable energy operation center), for distribution (e.g., HVDS and smart meter), and for the mini-grid (e.g., an integrated control system for a combination of photovoltaic and conventional thermal power; (ii) capacity development for implementing agencies to formulate technical specifications for smart grid components; and (iii) monitoring of and reporting on TA activities and output. The national consultants will work with the international consultants to provide information on local power systems

Smart Grid Capacity Development Business Opportunities

For more information about Projects see South Asia Projects x

China.Beijing Sustainable Urban Transport

The proposed TA is intended to support the BMG in finding suitable and sustainable solutions to its urban transport problems. In so doing, the TA will directly support the emerging urban transport priorities of the PRC s Twelfth Five-Year Plan, 2011 2015 and ADB s country partnership strategy. It is also aligned with the pillars of ADB s Strategy 2020, focusing on inclusive and environmentally sustainable growth. The TA addresses one of the focus areas of ADB s Sustainable Transport Initiative Operational Plan.

Three main types of strategy options will be examined: (i) TDM strategies including (a) past strategies such as restricting vehicle ownership and usage, and parking pricing; and (b) potential new strategies such as charging schemes including congestion pricing, fuel pricing, distance-based pricing, and fee and rebate schemes; (ii) infrastructure improvement strategies, based on a review of Beijing s transport infrastructure development plans and identification of strategy options with potential to contribute to a more sustainable balance between private vehicles, public transport, and nonmotorized transport, including metro development and bus priority lanes; and (iii) traffic operation improvement strategies, based on a study of the relationship between Beijing s road network structure and traffic congestion, and identification of promising improvement options such as on-ramp and off-ramp metering during peak hours.

Asian Development Bank.Project Number 45026- 01.

Beijing Sustainable Urban Transport :  China,People'sRep.of

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Support for Promoting Good Governance in Pacific Developing Member Asian Development Bank’s

This special evaluation study (SES) assesses Asian Development Bank’s (ADB’s) support for promoting good governance in Pacific developing member countries (DMCs) from 2000 to 2010 (study period). It is an input to the forthcoming evaluation of the Pacific Approach 2010– 2014 and provides lessons and recommendations for the next Pacific strategy.

ADB support for governance is included in operations for public sector management (PSM) as well as assistance for other sectors that have governance as a thematic classification (e.g., education, energy, finance, transport, among others). For the purposes of the study the evaluation covers grants, loans, and technical assistance (TA) projects classified under PSM from 2000 to 2010 and governance-related components of a non-PSM subsector where ADB is most active in the Pacific region. The roads subsector was selected as a case study as it is one of the priority subsectors in the Pacific DMCs and it draws from the Pacific region sector assistance program evaluation on transport.

From 2000 to 2010, ADB approved $158 million for 10 loans and grants, and $42 million for 96 advisory TA projects classified under PSM. In addition, ADB has supported numerous sector specific projects and regional TA with governance and institution building components.

Asian Development Bank’s. Evaluation Study.Reference Number: SES:REG 2011-41.Special Evaluation Study.November 2011

Support for Promoting Good Governance in Pacific Developing Member Asian Development Bank’s

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Nepal.Electricity Transmission Expansion and Supply Improvement Project

The project will improve the reliability of energy supply in Nepal and strengthen the transmission infrastructure needed to promote Nepal s capacity for cross-border energy trade. It will provide support in three critical areas in the electricity supply industry, which has experienced severe underinvestment: (i) electricity transmission capacity expansion, (ii) strengthening of distribution systems including those along the Tamakoshi (Khimti) Kathmandu transmission line, and (iii) rehabilitation of selected small hydropower plants.

Asian Development Bank.Project Number

41155- 07

41155- 06

41155- 04

41155- 02

41155- 01

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Bhutan and Nepal.South Asia Road Safety Programs

The South Asia Regional Road Safety Program is a multi-sectoral approach and aims to involve 5 countries; India, Sri Lanka, Bhutan, Bangladesh, and Nepal. The first phase of the project will focus on Bhutan and Nepal, and the second phase will focus on India, Sri Lanka, and Bangladesh. This project aims to identify and prepare for further design and implementation most urgent and cost efficient South Asia Regional Road Safety Program, and improve country road safety capacities and collaboration mechanisms both between the countries and with external organizations/agencies.

Asian Development Bank.Project Number 45281- 01

South Asia Road Safety Programs, Phase 1 :  Regional

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Bhutan.Basic Skills Development Project

Since the 1980s, the economy of Bhutan has grown steadily at more than 5% per annum, which has created jobs. Policy makers kept the high growth rate going by admitting expatriate labor from neighboring countries. At appraisal, it was estimated that 50,000 expatriate workers were employed in Bhutan. Meanwhile, new Bhutanese entrants to the labor market were unable to take advantage of this employment growth, as they did not possess the skills in demanded, causing high unemployment among youths in Bhutan. The inability to meet domestic demand for labor with Bhutanese possessing appropriate skills was identified as a binding constraint on growth. The Government of Bhutan consequently wanted to restrict the inflow of expatriate workers and channel young Bhutanese into private sector employment. The Basic Skills Development Project (BSDP) addressed some of these issues with technical and vocational education and training (TVET).

The BSDP was to provide improved and relevant training in employable skills to new graduates, the unemployed, youths, women, and people living in rural areas; it was expected to reduce urban unemployment of people in the 15–24 age group to the average national unemployment rate plus 2%. However, the report and recommendation of the President (RRP) did not mention a benchmark unemployment rate.

The BSDP was expected to (i) strengthen institutional capacity to ensure the delivery of basic skills training relevant to market needs and commensurate with the capacity of beneficiaries, (ii) increase access to basic skills training by expanding TVET and rehabilitating and establishing facilities, (iii) improve the quality of basic skills training by strengthening links with the private sector, and (iv) promote the use of basic skills by developing employment guidance and job placement services.

Asian Development Bank.Reference Number: PCV: BHU 2011-45.Project Number: 31317.Loan Number: 1830-BHU(SF).November 2011.

Bhutan: Basic Skills Development Project

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Promotion of Capital Market Instruments for Infrastructure Financing in the ASEAN

Enhanced regional infrastructure development in the ASEAN region. through capital market financing, thereby leading to a greater connectivity in the region.An operational mechanism is established to support the ASEAN's regional infrastructure development through a more active use of the capital market instruments for infrastructure financing. Technical analyses and assessments which aim to develop an operational plan for a mechanism (such as the Center of Excellence ) to promote private infrastructure participation in the ASEAN region.

Promotion of Capital Market Instruments for Infrastructure Financing in the ASEANs

Lao PDR.Supporting Decentralized Rural Infrastructure Dev

The TA will focus on strengthening provincial and district capacity in planning and in O&M of rural infrastructure in selected districts included within the scope of the SNRMPEP and the EWEC TA. The TA scope consists of (i) basic training in principles and practice of designing rural infrastructure and associated O&M; (ii) higher-level training in geographic information systems (GIS) for planning and monitoring rural infrastructure investments; (iii) support to train, register and certify WUAs and farmer groups in the target districts for participatory irrigation management under the IMT process, and (iv) training on procurement and financial management associated with rural development planning and investments.

Asian Development Bank.Project Number.45275-01

Supporting Decentralized Rural Infrastructure Dev: Lao People's Dem Rep

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Bangladesh.Railway Sector Investment Program

The projects proposed for financing under the requested PFR are: 1. Financing of the funding gap due to cost overrun in the Tongi-Bhairab Bazar Double Track subproject under the first tranche; 2. Rehabilitation of yards and extension of loops at different stations in the Darsana - Ishurdi - Sirajganj Bazar section; and 3. Upgrading of Signaling at 11 Stations between Ishurdi and Darsana.

1. A framework financing agreement (FFA) for the Railway Sector Investment Program (RSIP) was signed on 7 September 2006 between the Government of Bangladesh and the Asian Development Bank (ADB). The RSIP was approved on 10 October 2006 by ADB s Board of Directors as a multitranche financing facility (MFF) for $430 million. The RSIP is based on the Government s Sector Roadmap and Investment Plan for 2007 2013 and will improve the performance of the railway sector by implementing (i) a reform project of sector policy, organizational, and capacity building reforms to make Bangladesh Railway (BR) more commercially focused, and improve governance and accountability; and (ii) an investment project of infrastructure and rolling stock capacity improvement investments to overcome capacity bottlenecks in sectors where such investments are both economically and financially viable, e.g., the Dhaka Chittagong and the Dhaka Darsana Khulna corridors.

2. The MFF is structured such that the reform project will provide continuous support to implement the agreed reform agenda, whilst the investment program will be supported by a series of four tranches. The reform and the investment projects are integrated as approval of subsequent tranches for investment subprojects is dependent on the implementation of specific reform actions agreed upon in the railway reform action plan in the FFA.

3. The first tranche under the MFF was approved on 13 February 2007 and comprises of two loans: (i) loan 2316 for $100 million from ADB s ordinary capital resources to finance investment projects; and (ii) loan 2317 for $30 million equivalent from ADB s special fund resources to finance the reform project.

4. The second tranche with a loan for $150 million was scheduled for approval in January 2008. It will finance (i) construction of other subprojects in the Dhaka Chittagong corridor and Dhaka Darsana Khulna corridor studied and prepared under the first loan and that satisfy the agreed subproject selection criteria in the FFA, and (ii) construction supervision consulting services for the approved subprojects.

Asian Development Bank.Project Number.32234-04

MFF - Railway Sector Investment Program (Subproject 2) :  Bangladesh

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