Philippines - Second Highway Project

FILE COPY DOCUMENT OF INTERNATIONAL BANK F6R RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Not For Public Uxs Report 'o. 258a-PH PHILIPPINES APPRAISArL OF A SECOND HIGHWAY PROJECT November 19, 1973 Transportation Division Asia Region iThis report was prepared- for ofriCial use only by the Bank Group. It rnay not be published, quoted| |or cited without Bank Group authorization. The Bank Group does not accept responsibility for the laccuracy or completeness of the report.  CURRENCY EQUIVALENTS Currency Unit = Pesos (P) US$1 = P 6.80 P 1 = US$0.15 P 1 million = US$147,059 WEIGHTS AND MEASURES Metric System Metric British/US Equivalent 1 meter (m) = 3.28 feet (ft) 1 kilometer (km) 2 0.62 mile (mi) 1 square kilometer (km) = 0.386 square mile (sq mi) 1 kilogram (kg) 2.205 pounds (lb) 1 metric ton (m ton) 1.1 US short tons (sh tons) ABBREVIATIONS AND ACRONYMS ADB = Asian Development Bank BOC = Bureau of Customs BPH = Bureau of Public Highways BPW = Bureau of Public Works DPWTC = Department of Public Works, Transportation & Communications ER = Economic Return GNP = Gross National Product HSF = Highway Special Fund NDP = Net Domestic Product NEDA = National Economic Development Authority PAL = Philippine Air Lines PNR = Philippine National Railways UNDP = United Nations Develcpment Programme vpd = vehicles per day FISCAL YEAR July 1 to June 30  P:FILIPPINES APPRAISAL OF A SECOND HIGHWAY PROJECT TABLE OF CONTENTS Page No. SUMMI{ARY AND CONCLUSIONS ...................... i-ii I. INTRODUCTION ............... *......... ............. #.. .... 1 II. THE TRANSPORT SECTOR .2.. ................... . 2 A. Economic Setting ..2 B. Transport Modes.. 2 C. Transport Planning and Coordination. 4 III. HIGHWAYS... 5 A. The Network. ...... . 5 B. Highway Traffic ... .... ............. 6 C. Administration... 8 D. Planning and Financing ....................,* 8 E. Design and Construction ..... ..................... 10 F. Maintenance ....... ............................... 10 G. Training ......................................... 11 IV. THE PROJECT .............................................. 11 A. Description ................................... ... 11 B. Cost Estimates and Foreign Exchange Component .... 16 C. Execution ........................................ 18 D. Financing ........ ............................. ... 20 E. Disbursements .............. ....... .......... .. 20 V. ECONOMIC EVALUATION ................................... 21 A. General .......................................... 21 B. Construction of Expressway . . 22 C. Reconstruction and Improvement of National Roads . 25 D. Rehabilitation of Minor Roads ................ .... 26 VI. AGREEMENTS REACHED AND RECOMMENDATION ........ * ...... 27 This report has been prepared by Messrs. H.J. van Helden (Consultant), A;F. Ballereau (Economist), ;7K.V.S.K. Nathan (Engineer) and S.A. Faruqi (Young Professional). Messrs. M.W. Dickerson (Engineer) and G. Morra (Training Officer) assisted the mission on technical assistance and training matters.  -2- ANNEX A. Description of Project Roads TABLES 1. Domestic Freight and Passenger Traffic Data, 1968 and 1971 2. Public Transport Investment Programs, FY 1968-72 and PY 197A-77 3. Public Highway Network, 1972 4. Motor Vehicle Statistics, FY 1962-72 5. Motor Vehicle Fuel Consumption, FY 1962-71 6. Expenditures by Highway Works and Source of Funds, FY 1962-72 7. Expenditures on Highways by Road System, FY 1962-72 8. Highway User Charges, FY 1962-71 9. Highway Design Standards 10. Minor Roads Identified for Rehabilitation 11. List of Roads for Reconnaissance Study 12. Estimated Detailed Project Costs 13. Schedule of Estimated Disbursements 14. Estimated Traffic Growth on Project Roads 15. Traffic Volumes on Project Roads 16. Estimated Vehicle Operating Costs and Savings on Project Roads, 1976 17. Estimated Costs and Benefits Streams for Construction of Expressway 18. Estimated Costs and Benefits Streams for Reconstruction and Improvement of National Roads 19. Economic Returns and Sensitivity Analysis CHARTS IBRD 8045 Department of Public Works, Transportation and Communications IBRD 7890 Organization of the Bureau of Public Highways MAPS IBRD 10674 Luzon Island IBRD 10675 Philippines  PHILIPPINES SECOND HIGHWAY PROJECT SUMMARY AND CONCLUSIONS i. The demand for transport in the Philippines is expanding at a higher rate than the average growth of the economy. However, despite past investments, the transport infrastructure is not satisfactory mainly because of insufficient maintenance and inadequate standards. It is thus unable to cope with present level of traffic. Despite the slower growth of the economy between 1970 and 1972, transport demand is still far from satisfied and is likely to grow rapidly in the future as economic growth picks up. ii. Expenditures in the transport sector are very high, representing about 50% v" the public capital formation. The investment share for highways is over two-thirds of the expenditures in the transport sector, reflecting the dominant role of this mode which carries about 80% of passenger movement and 60% of freight. The recent reorganization of the Bureau of Public Highways (BPH), under the Department of Public Works, Transportation and Communications (DPWTC) will help to improve planning and coordination of highway investments; it will also provide a better data collection together with an improved processing of road transport information. iii. The present highway network is inadequate to carry the level of traffic on national highways. The proposed FY 1974/77 public investment program for roads has almost tripled compared to the previous program and should meet part of the general targets in the highway network. These targets are: (i) the reconstruction and realignment of certain major trunk routes; (ii) the paving and/or strengthening of virtually all national highways, and those provincial highways with high traffic volumes; (iii) the improve- ment of the condition of gravelled and unsurfaced minor roads, chiefly through improved maintenance; and (iv) the institution of an adequate system to maintain paved highways. iv. The Bank has previously &. --* 5ted the Government in the transport sector with a loan of US$8.5 million in 1971 (290-PH) for the purchase of dredging equipment; a loan of US$8.0 million i