Togo - Feeder Roads Project

Document of The World Bank LEt CuDI FOR OFFICIAL USE ONLY Report No. 1944-TO TOGO FEEDER ROADS PROJECT STAFF APPRAISAL REPORT May 2, 1978 Western Africa Projects Department Feeder Road Section, RMWA This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Units: CFA Francs (CFAF) US$1.00 = CFAF 245 CFAF 1 million = US$4,080 Fiscal Year January 1 - December 31 System of Weights and Measures: Metric Metric US Equivalents 1 meter (m) 2 3.28 feet (ft) 1 square meter (I ) 10.76 square feet (sq.ft.) 1 cubic meter (m ) 35.30 cubic feet (cu ft) I kilometer 2 0.62 mile (mi) 1 square kilometer (km ) 0.39 square miles (sq.mi) 1 hectare (ha) 2.47 acres I metric ton (t) 2,205 pounds (lb) Abbreviations and Acronyms CERFER Centre Regional de Formation en Entretien Routier CFT Reseau des Chemins de Fer du Togo CIMAO Ciments de l'Afrique de l'Ouest DGR Direction du Genie Rural (Rural Works Department) EDF European Development Fund ERR Economic Rate of Return FRG Federal Republic of Germany FRU Feeder Road Unit (DGR) ITWG Interministerial Technical Working Group MCT Ministry of Commerce and Transport MEPW Ministry of Equipment, Public Works, Housing, Post & Telecommunications MI Ministry of Interior MRD Ministry of Rural Development MRW Ministry of Rural Works OPAT Office des Produits Agricoles Togolais ORPV Organismes Regionaux de Promotion et de Production des Cultures Vivriere PWD Public Works Department (MEPW) SONAPH Societe Nationale du Palmier & des Huileries SORADs Societes Regionales d'Amenagement et de Developement SOTOCO Societe Togolaise du Coton SRCC Societe pour la Renovation du Cafe et du Cacao TOGOFRUITS Societe Nationale pour le Developement de la Culture Fruitiere vpd Vehicles per Day  FOR OFFICIAL USE ONLY REPUBLIC OF TOGO STAFF APPRAISAL REPORT PROPOSED FEEDER ROADS PROJECT TABLE OF CONTENTS a ........................................................................ Page No. I. THE TRANSPORT SECTOR ....................................... 1 A. Geographic and Economic Setting ....................... I B. The Agricultural Sector ............................... I C. The Transport System .................................. 3 D. Transport Sector Management, Investments and Issues. 4 II. THE HIGHWAY SECTOR ........................ . . ... 7 A. The Road Network. 7 B. Traffic on the Feeder Roads Network. 7 C. The Road Transport Industry. 8 D. Highway Administration and Maintenance. 8 E. Road Planning, Engineering and Construction .10 F. Financing .10 III. THE PROJECT .11 A. General Description .11 B. Feeder Road Program .12 C. Equipment and Materials Purchases .16 D. Technical Assistance and Studies .16 E. Training .18 F. Project Monitoring .18 G. Cost Estimates .19 H. Execution .23 I. Procurement .24 J. Financing and Disbursements .25 IV. ECONOMIC EVALUATION .27 A. General .27 B. Economic Justification .27 V. AGREEMENTS REACHED AND RECOMMENDATION ..30 This report has been prepared by S. Hertel (Engineer) and P. Gyamfi (Economist) based on findings of an appraisal mission in July 1977 and short post appraisal missions in December 1977 and January 1978. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  TABLE OF CONTENTS (Continued) ANNEXES 1. Economic Evaluation of First-Year Roads 2. Selected Documents and Data Available in the Project File CHART Organization of the Rural Works Department MAP IBRD 13221  REPUBLIC OF TOGO APPRAISAL OF A FEEDER ROADS PROJECT 1. THE TRANSPORT SECTOR A. Geographic and Economic Setting 1.01 The Republic of Togo, with a 50 km coastline on the Gulf of Benin, forms a narrow 600 km corridor between Ghana and Benin (see map) and is relatively small (about 57,000 km ). Its population is about 2.3 million growing at about 2.7% p.a. The country is bordered on the north by land-locked Upper-Volta. Except for a long mountain range along the northern border with Benin and a central range along the Ghana border, Togo's terrain is flat and rolling and presents no geographical obstacles to transport. Good road- making soils are generally available throughout the country except close to the coast in the Maritime Region. 1.02 The economy is predominantly rural. About 75% of the active popula- tion is engaged in agriculture which accounts for about 30% of the gross domestic product (GDP) and some 40% of total export earnings. GDP per capita was about US$260 in 1976; rural incomes, however, remained low -- about US$100 per capita. Over the period 1960-75, average growth of GDP was about 6% p.a. in real terms with wide disparities among sectors. Growth over the period 1971-76, was 3% p.a., mostly sustained by mining activities and services while agriculture grew only slightly. The current Third Development Plan (1976-80) aims at a 7% p.a. growth with emphasis on further expansion of the mining sector and restoration and expansion of food and cash crop production. B. The Agricultural Sector 1.03 Practically all agricultural production is carried out by about 300,000 small-holders on farms averaging 2.5 ha using family labor and low- yielding traditional techniques. The main foodcrops are yam, maize, rice and sorghum which account for about 80% of total agricultural output; produc- tion of these crops has increased about 3% p.a. over the last decade, just ahead of population growth. 1.04 The principal export crops are cocoa and coffee, which together contribute about 75% of agricultural exports, and cotton, groundnuts and copra. Over the decade 1966-75, total agricultural exports stagnated at about 60,000 tons p.a., except for 1970 and 1971 when exports peaked at 90,000 and 80,000 tons respectively. This stagnation is attributable to (i) the Government's neglect of the agricultural sector in the 1960's both in terms of investments and establishing effective institutions and (ii) socio-political obstacles such as local overpopulation in some regions, migration patterns and land tenure, and poor roads.  -2- 1.05 The northernmost Savanna region is characterized by an irregular and short-duration rainfall pattern (1,100 mm/year). The overall population density is about 30/km . Principal crops are millet/sorghum, groundnuts, and recently, rice; the area has moderate prospects for livestock development. 1.06 The Kara region, a mountainous region, has adequate rainfall (1,400 mm/year) but low agricultural potential due to overpopulation in part of the region and the 2resultant depletion of soil fertility. Population density averages 53/km but reaches almost 300/km in some areas; about one-fourth of the region is unpopulated due to onchocerciasis. Migration to the south, both seasonal (about 20 percent of the adult male' population) and permanent, is significant. 1.07 The Central region is the least populated region with only about 19/km . Precipitation, which averages about 1,300 mm in a single season, and generally adequate soils can support crops such as cotton, groundnuts, yams, maize, and pulses. However, the absence of an easily accessible aquifer to supply drinking water is a major constraint to settlement and agricultural development. 1.08 The Plateau region, with average rainfall of 1,200-1,600 mm/year (bi-modal), generally good soils and population density of about 30 km , has the best agricultural potential. Cocoa and coffee dominate the wetter, mountainous area to the west, while the eastern part of the region is suited to integrated cotton/food crop development and intensive maize cultivation. 1.09 The Maritime region shares some of the characteristics of each of the other reigons. Rainfall, spread over two seasons, ranges from 700- 900 mm/year near the coast to 1,000-1,200 mm/year in the north. Development of the northern third of the region is hindered by the scarcity of drinking water and the presence of onchocerciasis. The southeast suffers frgm depleted soil fertility due to overpopulation with densities reaching 200/km , bringing the regional average rural population density to 90/km , the highest in the country. Principal crops are maize, cassava, pulses, groundnuts and cotton. The Institutional Framework 1.10 Responsibility for the Agricultural Sector is shared by two minis- tries: the Ministry of Rural Development (MRD) and the Ministry of Rural Works (MRW). The former is essentially concerned with policy formulation and program coordination of production activities. The latter is concerned primarily with infrastructure development and support services and includes a Rural Works Department (Direction du Genie Rural, DGR) and divisions for pedology, plant protection, veterinary services, police of forestry and fisheries, and produce inspection.  -3- 1.11 DGR is being reorganized as shown on the chart. It consists of six divisions: programming and studies, rural works, rural water works, food industries, survey and mapping, and administration and accounting. DGR has an office in each of the five regions headed by a regional director. Under the proposed project a feeder road unit will be created within the Rural Works Division. 1.12 Recently, the Government established autonomous, crop-related agen- cies and corporations with responsibilities ranging from supply of inputs and provision of extension services to rural engineering, credit distribution, marketing and processing. These agencies include five Organismes Regionaux de Promotion et de Production des Cultures Vivriere (ORPV) I/ tor toodcrop development activities; Societe pour la Renovation du Cafe et du Cacao (SRCC) for coffee and cocoa; Societe Nationale du Palmier et des Huileries (SONAPH) for palm-oil; SOTOCO Societe Togolaise du Coton (SOTOCO) for cotton; and TOGOFRUITS for fruit. The Government is also executing and preparing several agricultural/rural development projects mostly with external financing, in- cluding three by the Bank Group: Togo Cocoa/Coffee Development Project (Cr. 503-TO, US$6.0 million, 1974), Maritime Region Rural Development Project (Cr. 638-TO, US$9.5 million, 1976) and Cotton Areas Rural Development Project (Cr. 741-TO, US$14.0 million, 1977). The Government has allocated 22% of investments under the Third Plan to speed up restoration and expansion of agricultural production. C. The Transport System 1.13 Togo's transport system consists of about 7,400 km of roads, 436 km of railway, a deep-water port, a phosphate wharf, one international airport and five airstrips. The main transport system, which is export/import oriented, is focussed on Lome, the nation's capital and economic center, where there are a deep-water port and an international airport. Links to the rest of the country are provided along a main north-south rail/road axis. The extent and density of the main system is adequate for the country's relatively small size, but the feeder road network generally needs expansion, improvement and rehabilitation. Emphasis on transport development to date has been on modernizing the main system. Highways 1.14 Details of the highway sector are discussed in Chapter II. Railways 1.15 The railway network operated by the Reseau des Chemins de Fer du Togo (CFT) comprises three lines originating at Lome: (i) the central line northward to Blitta (276 km), the northwestern line to Palime (116 km), and (iii) the coastal line (44 km) eastward to Aneho through Kpeme, the site of 1/ The ORPV's are replacing the five SORAD's (Societe Regionales d'Amenage- ment et de Developpement) which dealt with all Regional Development.  -4- the phosphate wharf and processing plant. All the existing railway lines are meter gauge and in reasonably good condition. A 40 km line for the CIMAO (Ciments de l'Afrique de l'Ouest) will extend from km 19 on the Lome-Blitta line to Tabligbo, the site of the regional clinker plant being financed by the Bank and a group of other lenders. Seaports 1.16 The autonomous, free port of Lome handled about 590,000 tons in 1976, and port capacity is being increased to 800,000 tons p.a. The port, managed by an efficient, independent port authority, is self supporting. Technical assistance for port operation by the Federal Republic of Germany (FRG) is being phased out. The Kpeme wharf is a modern structure that handles 3 million tons of phosphate per year as well as the petroleum needs of the phosphate mine. Air Transport 1.17 Domestic air transport is unimportant owing to Togo's small size and the good condition of the primary road network. Infrastructure, mostly used by military and general aviation, consists of five airstrips of which two can handle DC-3s. International air transport has been increasing rapidly, from 10,000 passengers and 206 tons of freight in 1962 to 115,000 passengers and 3,300 tons in 1975. The international airport at Lome is modern and capable of handling DC-l0's. The Government's current plans include expand- ing the airport and studying the location and layout for a new airport at Lome. D. Transport Sector Management, Investments and Issues 1.18 The Ministry of Commerce and Transport (MCT) is responsible for transport sector management including screening transport investment proposals of other ministries and public agencies, coordinating transport modes, formu- lating transport policy, and investigating and resolving specific transport sector issues. However, MCT was created as a separate ministry only in 1977 and does not have qualified staff to perform these functions. Under the Third Highway Project, a start is being made to improve the situation through the creation of a separate Transport Planning and Coordination Unit within MCT with substantial technical assistance (72 man-months) to assist in establish- ing it. At the subsector level, highway planning is also being improved with technical assistance under the Third Highway Project. 1.19 During the Second Development Plan (1971-1975) transport sector in- vestments totalled CFAF 15.5 billion (US$63 million equivalent) or about 25% of total public investments. The primary objectives were to improve the north-south primary road axis and to expand the port of Lome. Under the Third  Plan the Government plans to invest CFAF 38.6 billion (US$156 million equivalent) in the transport sector or 14% of total public investments. The plan emphasizes the completion of the north-south primary road axis, further expansion of the port of Lome, the construction and rehabilitation of two railway lines serving the CIMAO clinker plant and a regional fertilizer plant, and improvement of the airport at Lome and five regional airports. The plan's objectives largely reflect the sectors' needs, apart from the apparently excessive airport investments. Investments in the Transport Sector, 1971-1975 (CFAF million) 1971 1972 1973 1974 1975 1971-1975 Road Transport 1,391 1,886 1,132 1,606 2,231 8,246 Construction of primary and secondary roads including supervision 1,212 1,698 1,073 1,461 2,111 7,555 Studies and technical assistance 44 146 57 109 120 476 Equipment purchase 135 42 2 36 - 215 Construction of feeder roads /a n.a. n.a. n.a. n.a. n.a. 515 Port of Lome 302 - - 2,826 2,050 /b 5,178 Air Transport 209 191 29 25 720 /b 1,174 Railway Transport /c 174 - 80 57 41 352 TOTAL TRANSPORT lb 2,076 2,077 1,241 4,514 5,042 15,465 /a Not specifically listed in plan; mission's estimates. /b Excluding air transport and port investments in last six months of 1975. Ic Equipment purchases were financed by Kreditanstalt (1971) and the Invest- ment Budget (1973). Remaining railway expenditures were supposedly fi- nanced from remaining CFT's budget. Source: Data supplied by the Togolese authorities and the EDF.  -6- Planned Investments in the Transport Sector, 1976-1980 (CFAF million) 1976 1977 1978 1979 1980 1976-1980 Road Transport 5,437 5,784 3,380 2,510 1,790 22,921 Roads and bridges 5,137 5,284 3,380 2,500 1,780 18,081 /a Construction of feeder roads /b n.a. n.a. n.a. n.a. n.a. 3,920 Road transport industry 225 225 - - - 550 Buildings PWD Lome and Subdivision 75 275 - 10 10 370 Railway Transport 859 2,523 2,576 1,977 805 8,740 Port of Lome 80 80 80 1,580 2,080 3,900 Air Transport 605 730 340 560 875 3,110 Lome Airport 605 705 275 305 315 2,205 Interior Airports - 25 65 255 560 905 TOTAL TRANSPORT 6,981 9,117 6,376 6,627 5,550 38,571 /a Not including construction of feeder roads. lb The Plan does not list these items specifically. Figures indicated refer to feeder roads known to be programmed, in some cases within agricultural projects. Source: Togo, Ministere du Plan, Troisieme Plan Quinquennal de Developpement Economigue et Social 1976-1980 (en chiffres), Lome, Direction General du Plan et du Developpement 1976. Mission's estimates for feeder roads. 1.20 The Association is helping the Government to achieve the above sec- toral objectives through ongoing projects as well as future projects in an advanced stage of preparation. The ongoing Third Highway Project is assist- ing in constructing two trunk roads. The Association is also assisting in the development and maintenance of the feeder road network through feeder road components of three rural development projects (the Cocoa-Coffee Project, the Maritime Region Project and the Cotton Areas Project) for a total of 1,000 km, of feeder roads. In the Cocoa-Coffee Development Project, the Association is providing funds for constructing about 100 km of feeder roads to faciiitate the evacuation of cocoa and coffee and to connect the local communities to the main road system. The 900 km under the Maritime Region Project and the Cotton  -7- Areas Project will provide efficient transport for inputs into and produce out of the areas as well as provide accessibility for the people within the project areas to health and educational facilities. A German-financed Rural Development Project for the Central Region is in its first year of implementa- tion. No feeder roads are provided for in that project. The proposed project would provide the resources for constructing and maintaining about 1,000 km of feeder roads as additional support to the development projects and on a national scale improve the feeder road network where it is unable to meet the demands of existing and future development projects. In addition, the project would help to establish permanent institutions for feeder road planning, administration and maintenance. II. THE HIGHWAY SECTOR A. The Road Network 2.01 Togo's road network totals about 7,400 km of which about 1,140 km are paved and about 1,000 km are all-weather gravel or laterite roads; the remainder are dry weather roads and tracks. Development of the Road Network Primary and SecondaryRoads 1971 1972 1973 1974 1975 1976 Paved 412 685 735 1,050 1,050 1,155 Gravel or earth 1,588 1,352 1,303 1,118 1,123 1,217 Total 2,000 2,037 2,038 2,168 2,173 2,372 Feeder Roads 5,000 5,000 5,000 5,000 5,000 5,000 The country's two most important roads, which extend from Lome north to the Upper Volta border (717 km) and east to the Benin border (48 km), are paved except the last about 200 km of the road to the Upper Volta border. About 590 km of the secondary roads are also paved. The rest of the primary and secondary network, though generally adequate in extent and distribution for the country's needs, is mostly only in fair or poor condition in spite of improving maintenance. The situation is even worse for the feeder roads, most of which have deteriorated badly due to the compounded effect of low construc- tion standards and practically no maintenance. B. Traffic on the Feeder Roads Network 2.02 Traffic on the feeder roads network consists of (a) agricultural produce destined for local markets, district centers and cooperative centers, (b) small volumes of agricultural inputs and consumer goods, and (c) passen- gers. There are no reliable traffic volume statistics on these roads. In general, however, there is a large variation in the traffic volumes of indi- vidual feeder roads depending on population density and economic activity.  - 8 - Sample traffic counts during the preparation of the proposed project revealed that traffic ranges from about 5 vehicles per day (vpd) on farm-to-market roads to about 30 vpd on roads leading to district or cooperative centers. The typical freight transport vehicles on these roads are three to five ton payload trucks; passenger transport is mostly by small buses and passenger cars. C. The Road Transport Industry 2.03 There are no valid statistics on the volume of the existing motor- vehicle fleet, since the Road Transport Service registers new vehicles but does not collect information on withdrawals from the fleet. However, esti- mates based on reasonable assumptions of vehicle life indicate that the fleet size was about 14,000 in 1974, the most recent year for which registration data are available; about 71% was passenger cars, 26% trucks, vans and buses, and 3% specialized vehicles. During the period 1971-1974, the motor vehicle fleet grew at an average rate of about 8% p.a. almost in pace with the 9% p.a. growth of gasoline consumption. 2.04 Togo's road transport industry comprises many small, Togolese transporters owning one to five passenger cars or trucks; two large foreign companies which handle petroleum tanker traffic; the Togo railway authority which operates six buses on the Lome-Kpalime-Atakpame route; and since 1976, Togo-Route, a joint public-private-company with a monopoly for transit freight traffic to and from neighboring countries. There are no restrictions on vehicle importation or entry into the transport business, but this has not resulted in overcapacity. However, a too rapid acquisition of trucks and trailers by Togo-Route could lead to over-capacity in the trucking industry and subsequent Government protection of Togo-Route from direct competition with private transporters. The Third Highway Project includes a study of supply and demand of surface transport with the object of recommending neces- sary measures to avoid over-capacity in transport fleet investment. 2.05 Transport on the feeder road network is either by small private truckers or, in the case of cash crops, to some extent by a few cooperatives. Supply is generally adequate with sufficient competition in the transport of passengers, foodcrops and consumer goods to ensure that most of vehicle operating cost savings from road improvements will be passed on to the rural communities. For the transport of cash crops, the savings goes partly to a few cooperatives which either provide their own transport or purchase produce directly from the producers at prices fixed independently of transport costs, and partly to private transporters. D. Highway Administration and Maintenance 2.06 The Public Works Department (PWD), within the Ministry of Equipment, Public Works, Housing, Post and Telecommunications (MEPW), through its Road Division is responsible for planning, developing and maintaining the primary and secondary road network. The Road Division has five field subdivisions comprising 18 sectors. All road equipment is maintained by PWD's equipment  -9- Division which has its main workshop at Lome and an annex at Sokode. The Equipment Division has the capacity to service equipment used by other Govern- ment agencies on feeder roads, and the Government will use the Division for major repairs of the equipment to be purchased for GDR under the proposed project. 2.07 Maintenance of the primary and secondary road network has improved considerably following reorganization of maintenance operations, training of PWD staff, purchase of equipment and technical assistance provided under the Highway Maintenance Project and Second Highway Project (Credits 131-TO, US$3.7 million, 1968, and 450-TO, US$8.7 million, 1973, respectively). More improve- ment is expected from additional technical assistance and purchase of road maintenance and workshop equipment provided under the Third Highway Project (Credit 693-To, US$10.0 million, 1977). 2.08 The administration and development of feeder roads is ill-defined. It is shared between the Ministry of Interior (MI) through the Circonscrip- tion, MEPW through the PWD, and MRW through DGR. In addition, other agencies such as the SRCC and SOTOCO (formerly the SORAD's) all build feeder roads. Apart from an inefficient use of scarce manpower and other resources, the proliferation of agencies has resulted in the lack of proper coordination of feeder road development and a clear strategy for their maintenance. 2.09 To remedy the above situation, the Government has adopted the following strategy for feeder roads: (a) to gradually reorganize, strengthen and equip DGR to assume responsibility for feeder road development and maintenance; for that purpose a Feeder Road Unit (FRU) would be created within DGR; (b) in the short-run to permit agricultural agencies executing feeder road works to complete their ongoing programs; once they have been completed, Government intends to transfer these agencies' road equipment to the DGR. Until DGR reaches its full maintenance capacity, agricultural agencies currently engaged in feeder road construction will maintain these roads during project implementation as provided for in the IDA-financed Maritime Region Rural Development Project, the Cotton Areas Rural Development Project, and the Cocoa-Coffee Development Project; (c) to develop a feeder roads maintenance program to be implemented by DGR. This program initially covers about 250 km of feeder roads in a maintainable state, eventually to be expanded by the 1,000 km included under IDA-financed agricultural projects and the project roads; and  - 10 - (d) to establish an Interministerial Technical Working Group to provide overall policy guidance on project implementation and to assist in developing and reviewing annual feeder road programs (para. 3.20). The Government has confirmed that it will set up a Feeder Road Unit within DGR not later than July 31, 1978, and agreed on the staffing of the unit. 2.10 DGR has built or maintained feeder roads, but only under the aus- pices of the regional SORAD's. Its field staff including engineers, road technicians, mechanics and equipment operators will, to the largest possible extent, be retained for the execution of the proposed project. With the technical assistance and training provided under the project, DGR is expected to develop gradually the necessary capacity to undertake overall responsibil- ity for feeder roads. PWD's involvement in the project is expected to: (a) reduce the initial burden on DGR, thus permitting it to develop its capacity at a reasonable pace, (b) provide PWD with funds that will permit full use of its equipment, and (c) assist PWD in increasing its productivity which is currently too low (para. 3.13). E. Road Planning, Engineering and Construction 2.11 PWD is responsible for planning, engineering and constructing roads. Until recently, road projects were selected on a project-by-project basis since the Government's efforts were justifiably focussed on improving the important links in the primary and secondary road network. After this objective was met, longer-term planning became imperative. Under the Third Highway Project, technical assistance is being provided to PWD to strengthen its planning and design unit. 2.12 All major road design is carried out by foreign consultants with PWD's role restricted to supervision and some soil testing. For feeder roads, DGR has adequately executed the preliminary engineering and design for the roads executed by the SORAD's and SRCC. Under the proposed project DGR will be further strengthened to cope with its expanded engineering responsibilities. F. Financing 2.13 Highway investments in the 1971-1975 period were financed from two sources: (a) multilateral and bilateral aid--European Development Fund (EDF), 53%; IDA, 13%; and French FAC, 12%; and (b) the investment budget, 22%. Highway maintenance expenditures are provided almost solely by the general budget, which also finances minor improvements and small equipment purchases. 2.14 Total investments in primary and secondary roads averaged CFAF 1,700 million (US$7.0 million) per year during 1971-1975. Expenditures for maintenance  - 11 - and minor improvements of primary and secondary roads increased at an annual rate of 15%, from CFAF 315 million (US$1.3 million) in 1971 to CFAF 552 million (US$2.2 million) in 1975. 2.15 Expenditures for feeder road improvements are often provided from general government agency budgets and are difficult to isolate because they may be part of agricultural projects. Feeder roads have been financed by OPAT and the EDF. Until recently, only about 50 km of feeder roads were constructed or improved annually at a cost of about CFAF 80 million (US$0.3 million). Maintenance budgets have been small, amounting to about CFAF 30 million (US$120,000) for the circonscriptions, and CFAF 7 million (US$28,000) for SRCC. 2.16 The cost of routine maintenance per km on newly improved feeder roads is estimated to be CFAF 50,000 (US$200) per year for Class I roads and CFAF 30,000 (US$120) for Class II roads (para. 3.02). Since in 1979 DGR should maintain a minimum of 250 km of Class II roads, the cost would be about US$30,000. In the first year after completion of the project and when the feeder roads components of the IDA-financed agricultural develop- ment projects have been completed, a total of 2,250 km of feeder roads would need routine maintenance at an annual estimated cost of US$300,000. At negotiations, Government has agreed to provide DGR with the necessary financing for such maintenance. III. THE PROJECT A. General Discription 3.01 The proposed project consists of: (a) a four-year program for the improvement and main- tenance of about 1,000 km of feeder roads, including (i) purchase of equipment, spare parts and workshop tools, (ii) purchase of materials and supplies, and (iii) construction and repair of culverts and bridges by local contractors; (b) technical assistance, consisting of (i) about 77 man-months to establish the Feeder Road Unit within DGR, to implement the above program, and to train local staff of the unit in planning, implementing and monitoring feeder road improvement and maintenance and (ii) about 10 man-months to improve the effectiveness of PWD's road brigades; and (c) short-term consultant services for studying a follow-up feeder road program.  - 12 - B. Feeder Road Program 3.02 The approximately 1,000 km of feeder roads to be improved and reha- bilitated were selected from about 4,000 km presented by Government to serve various ongoing and planned agricultural projects. DGR will be equipped to improve and maintain 600 km of the project roads while the improvement and initial maintenance of the remaining 400 km of the more trafficked feeder roads will be subcontracted to PWD. The proposed improvement and rehabilita- tion consists of: (a) reshaping, (b) regravelling selected roads sections, and (c) building, repairing and reinforcing drainage structures. The design standards for the roads have been chosen as a function of the expected traffic level over a ten-year period (as shown below): Feeder Road Design Standards 1. Existing feeder roads to be improved under the proposed project are nearly all passable to vehicle traffic during the dry season as are the majority during the rainy season, though at much higher vehicle operating costs. The road formation width varies from 3m to 6m. Under the proposed project, roads would be given a well-defined cross-section, improved (all weather) surface, and adequate drainage. 2. For new or improved roads, two road standards have been deter- mined based on economic criteria taking into account traffic volume (vehicles per day and seasonal variations) and composition. The following standards will be adopted: Table 1 Class I Class II Vehicles per day /a > 20 < 20 Clearing (m) 10-12 7-8 Road formation width (m) 6.5 5 Gravelled surface width /b (m) 5.5 4 Thickness of gravel /b (cm) 15 10 Drainage Lateral ditches, culverts and fords; bridges only where the size of the river or the volume of traffic warrants. /a The figures which refer to opening year are indicative only, representing average conditions. /b Only to be gravelled where it is required.  - 13 - Where existing standards are higher than those proposed, they will be re- tained. Government has agreed to the above standards. 3.03 For the works to be executed by DGR (para. 3.17), a firm work program for the first year and a proposed second-year program (Table 2, page 14) have been established and tentatively agreed upon with the Government. A tentative list of roads to be included in the third and fourth-year program is also shown in Table 2. For the works to be executed by PWD (para. 3.17), a firm first-year work program has been established and agreed upon with the Government (Table 3, page 15). The criteria for selecting of the roads to be included in the first year's program were: (a) a minimum economic rate of return (ERR) of 10% for each road; the ERR was based on road-user savings for those feeder roads with substantial existing traffic and on road-user savings to non-agricultural traffic, net incremental agricultural production and reduced spoilage on existing production for feeder roads with little or no existing traffic but serving areas expected to increase production as a result of the project; (b) the needs of the agricultural projects supported by the roads; and (c) the necessity of geographical coordination to prevent long travel distances by road brigades. For the second-, third- and fourth-year programs, the same criteria will be used.  TABLE 2 Roads to be Improved by DGRi/ Number?! Region Roads Length 1st Year 2nd Year 3rd Year 4th Year km km km km km 4 Savannes RNI (Tanjoare)-Bogou-Nano 11.7 11.7 5 Mango-Tchanaga 15.5 15.5 6 Barkoissi-Loko 10.0 10.0 7 Tanbangou-Dassouti 22.7 22.7 8 Mogou-Mangou 20.0 20.0 11 La-Kara Atalote-Warte 5.2 5.2 13 RN1 (near Niamtougou)-Kpaha 8.0 8.0 14 Sola-Kagnisi-Kpagouda 17.1 17.1 15 Massedena-Siou-Niamtougou 28.8 28.8 17 Centrale Kabou-Namon 27.5 27.5 19 Tchebebe-Bagou 45.5 45.5 21 Jelivo-Passoua 14.5 14.5 23 Bafilo-Soudou-Benin 16.6 16.6 30 Plateaux Kpategan-Glei 13.2 13.2 31 Elevagnon Road-Zongo Road 19.5 19.5 32 a Kouniohou-Djitriame-Kamina 53.8 53.8 32 b DJitriame-Foto 27.0 27.0 32 c Djitriame-Seregbane 16.4 16.4 32 d Afidegniba-Sekondji 24.4 24.4 34 Notse-Atisowe-Atchave 16.6 16.6 35 Kouniohou-Venkounia 8.6 8.6 41 Maritime Alokoegbe-Kpedji 16.0 16.0 42 Kodji-Gape-Dono 25.0 25.0 43 Atiho-Gamelili-Agokope 24.0 24.o 44 Kpedji-Gape Road 13.4 13.4 46 Alokoegbe-Gatible-Medwine 14.5 14.5 47 Aholoukope-Tsingoe-Kpojedi 10.8 10.8 48 Tovegan-Fleuve Sio 14.8 14.8 49 Kouve-Yoto 13.0 13.0 50 Game-Tokpevie-Agbodjekpo 21.6 21.6 51 Agbelouve-Zafi-Akepe 27.2 27.2 TOTAL 602.9 116.2 167.5 163.5 155.7 1/ The first-year program is firm, the following years' programs are tentative. All roads would be improved to standard II (page 12). 2/ Numbers refer to numbers allocated to iddivridual project roads used on map. Source: DGR and Mission estimates January 1978  - 15 - Table 3: Roads to be improved by PWD First-Year Program Number Region des Savannes Standard /a 2 Naki Est - Nagbeni 14 km II Region de la-Kara 9 Elota - Takpamba - Nammpon 26 km II 10 Elota - Nandoudja 6 km Region Centrale 27 Bagou - Goubi - Kambole 39 km I Region des Plateaux 28 Nyamassila - Kpessi - Dagou 19 km I Total 104 km /a Design standard see Chapter III, Table 1. 3.04 The project includes maintenance of the roads listed in Table 3 during the project period. In addition to maintaining the roads after project completion, the Government through DGR will also have to maintain other feeder roads. These are expected to total about 250 km by the start of the project and eventually,be increased by about 1,000 km of feeder roads being improved and subsequently maintained during the implementation period under three IDA-financed development projects (Maritime Region, Cotton Areas and Cocoa-Coffee Projects). The project provides for equipment to maintain the project roads improved to Class II and the additional 250 km of feeder roads. When the feeder road components of the above projects have been completed, the equipment purchased under these will be transferred to DGR. For the roads improved by PWD the Class I roads will be maintained by PWD to the end of the project implementation period while the Class II roads will be maintained by PWD only during the first year after their improvement. Thereafter DGR will maintain these roads. The minimum acceptable maintenance standards will be as follows: (a) roadways will be kept at the width to which they were constructed with adequate camber to ensure that the roadway is basically all-weather; pot-holes and larger corrugations will be eliminated;  - 16 - (b) drainage will be kept without obstructions to original standard or improved to ensure that lateral ditches and cross-drainage structures are able to carry water to out- lets or recipients without causing erosion; and (c) drainage structures (culverts and bridges), retaining walls and slope protection will be maintained or improved to ensure structural soundness and adequate protection against erosion and scour. The Government has agreed to take all administrative, technical and financial steps to maintain (i) the project roads to the defined standard after comple- tion of the project, and (ii) 250 km of feeder roads not included in the project from in 1979 eventually to be increased by about 1,000 km of feeder roads being improved under three ongoing IDA-financed rural development projects. C. Equipment and Materials Purchases 3.05 Since the PWD has sufficient equipment to improve the 400 km that will be subcontracted to it (para. 3.17), PWD will not be provided with additional equipment. DGR, on the other hand, has no road equipment. The proposed project provides for all the equipment and spare parts needed to operate the different DGR brigades as listed in Table 4. The project also provides for purchasing materials such as cement, steel and lumber and sup- plies such as fuel, lubricants and tires. D. Technical Assistance and Studies 3.06 Technical assistance (five experts for about 77 man-months) will be provided under the project to help DGR to: (a) execute the Feeder Roads Project including: (i) assuming responsibility for defining the project's annual construction, improvement and maintenance programs; (ii) preparing detailed implementation plans, including the preparation and evaluation of bidding documents for civil works and equipment; (iii) implementing such programs; (iv) supervising the feeder road program contracted to MEPW; and (v) monitoring the engineering, economic and social aspects of the program;  - 17 - Table 4 Equipment to be Purchased For Improvement and Maintenance of Feeder Roads (CFAF millions, net of tax) No. of Equipment Unit Costs Total Costs Equipment Heavy Brigade Maint. Total Local Foreign Total Local Foreigi Total Bulldozer w/ripper 200 HP 1 - _ 1 3.0 29.0 32.0 3.0 29.0 32.0 Bulldozer w/ripper 140 HP 1 1 - 2 2.5 21.0 23.5 5.0 42.0 47.0 1/ Motorgrader 120 HP 2 2 - 1 5 1.5 16.0 17.5 7.5 80.0 87.5 Wheel loader 80 HP 1 1 - 2 1.2 11.0 12.2 2.4 22.0 24.4 Agricultural tractor 65 HP 1 1 _ 2 0.2 3.3 3.5 0.4 6.6 7.0 Pneumatic tired towed roller lo/12 t 1 1 - 2 0.2 2.5 2.7 0.4 5.0 5.4 Dump truck 5 m3 5 4 2 11 0.5 6.4 6.9 5.5 70.4 75.9 Water truck 6,000 1 3 2 - 5 0.6 7.5 8.1 3.0 37.5 40.5 Service truck 3.5 t 1 1 1 3 0.3 3.1 3.4 0.9 9.3 10.2 Fuel truck 6,000 1 1 1 - 2 0.8 8.5 9.3 1.6 17.0 18.6 Tank towed 3,000 1 1 1 _ 2 0.1 1.1 1.2 0.1 1.1 1.2 Motor pump 50 1/h 1 1 1 3 - 0.4 0.4 - 1.2 1.2 Lubrication unit towed 1 1 - 2 0.1 0.9 1.0 0.2 1.8 2.0 Compressor 4.7 m3/ 1 - _ 1 0.6 7.0 7.6 0.6 7.0 7.6 Concrete mixer 240 1 1 1 - 2 - 0.4 0.4 - 0.8 0.8 Repair truck 1 - - 1 1.6 18.4 20.0 1.6 18.4 20.0 Four wheel drive vehicle 1 - -1/ 1 0.3 2.7 3.0 0.3 2.7 3.0 Light cars 1 2 2 - 5 0.2 1.3 1.5 1.0 6.5 7.5 2/ Station wagon 2 - 2 0.4 2.6 3.0 0.8 5.2 6.0 Radio equipment 3 3 1 7 - 0.3 0.3 - 2.1 2.1 1/ About 80 % of the time the motor grader may be detached from 34.3 365.6 399.9 the brigade to do road maintenance. 2/ Including two vehicles for head office staff.  - 18 - (b) gradually assume responsibility for developing a feeder roads program for the country as a whole by preparing a long-term strategy for the construction and improvement of the feeder roads network, including: (i) determining the appropriate technology to be used; (ii) identifying the agencies responsible for maintenance of particular roads; (iii) estimating the costs of such works and identifying appropriate sources of financing; and (iv) preparing an action program for maintenance. 3.07 The consultants would be employed no later than September 30, 1978. The experts' draft Terms of Reference, qualifications and duration of assign- ments have been discussed and agreed upon with the Government. 3.08 Ten man-months of technical assistance are provided to strengthen PWD's activities for the improvement of 400 km of feeder roads under the project. Funds are also included for short-term consultants (about four man-months) to supplement the efforts of technical assistance to study a follow-up feeder road project. The Government has agreed to attach suffi- ciently qualified local staff and in adequate numbers to the FRU on a full- time basis. E. Training 3.09 The project will provide training for Togolese personnel at all levels in FRU, including engineers, road technicians, mechanics, brigade chiefs, foremen, equipment operators and drivers. An initial training program for the period from September 1978 to beginning 1979 has been prepared by consultants financed under the Third Highway Project. Training for engineers and road technicians will be mainly on-the-job since DGR has sufficient staff in these positions with adequate formal training. Mechanics, foremen and brigade chiefs will be trained by the technical assistance experts in advance of the expected arrival of the project equipment in beginning 1979. Existing DGR equipment supplemented by rented equipment will be used for the training. Equipment operators and drivers will also be trained by the suppliers of the equipment to be purchased under the project; bidding documents for equipment will include this provision. A comprehensive training program will be pre- pared with the assistance of consultants retained under the proposed project. The Government has agreed that this program be submitted to the Association for review and comments no later than December 31, 1978 and thereafter be implemented taking into account such comments. F. Project Monitoring 3.10 The proposed project includes the establishment of a monitoring system within FRU with the following principal objectives:  - 19 - (a) to develop the economic, social and engineering aspects of the project to permit, if necessary, (i) modification of the project during implementation to maximize its output, and (ii) design of the follow-up feeder road project to reflect insights gained from the proposed project; (b) to permit the assessment of the long-term socio-economic impact of feeder road improvement in their areas of influence; and (c) to test some of the assumptions underlying the engineering design of the project, including the productivity of different operations and the appropriateness of the design standards recommended. 3.11 Project monitoring activities will include: (a) measuring traffic flow on statistically selected roads to establish growth and evolution in traffic composition; (b) for the influence areas of the project roads, collecting data periodically on (i) the size of population, (ii) agri- cultural production and the proportion marketed, (iii) evolu- tion in economic and social fields, and (iv) changes in farm-gate prices for different commodities; (c) collecting and updating information on vehicle operating costs and transport charges on project roads; (d) evaluating the productivity and costs of PWD and DGR force account brigades and local contractors mainly engaged in drainage works; (e) evaluating the productivity and costs of using alternative techniques for routine maintenance of feeder road; and (f) evaluating the quality of works and the rate of deterioration of project roads in relation to materials used, rainfall, traffic, and maintenance effort and techniques. FRU will assemble the results of the monitoring operations. The Government has agreed to these arrangements. G. Cost Estimates 3.12 The total cost of the project is estimated at US$9.1 million, including US$0.8 million equivalent in taxes and duties. Project costs, net of taxes and duties, are estimated at US$8.3 million equivalent with a&foreign exchange cost of US$5.9 million (71%). The following shows project costs (de- tails of project costs by year is given in Table 5):  - 20 - Cost Estimates Local Total Local Total Foreign Net of with Net of with Exchange Tax Taxes Foreign Tax/a Tax Taxes Foreign Tax/a Component ---------CFAF million----------- --------------US$ million--------------- Equipment Purchase 34 366 400 0.14 1.49 1.63 92 Equipment Rental 3 11 14 0.01 0.04 0.05 80 Spare Parts 16 161 177 0.07 0.65 0.72 92 Fuel & Lubricants 20 70 90 0.08 0.29 0.37 78 Local Staff 117 117 0.48 0.48 0 Materials 27 54 81 0.11 0.22 0.33 67 Civil Works by -Contracts by PWD (i) improvement 161 130 330 621 0.66 0.53 1.35 2.54 53 (ii) maintenance 8 4 8 20 0.03 0.02 0.03 0.08 40 -Contracts by Contractors 13 10 27 50 0.05 0.05 0.11 0.21 54 Operating Costs for Maintenance by DGR 15 15 30 0.06 0.06 0.12 50 Technical Assistance 31 116 147 0.13 0.47 0.60 79 Studies 2 8 10 0.01 0.03 0.04 80 Subtotal 447 144 1,166 1,757 1.83 0.60 4.74 7.17 66 Contingencies: - physical 41 14 99 154 0.17 0.06 0.40 0.63 65 - price 104 30 180 314 0.42 0.13 0.74 1.29 61 Subtotal 145 144 279 468 0.59 0.19 1.14 1.92 61 GRAND TOTAL 592 188 1,445 2,225 2.42 0.79 5.88 9.09 64  - 21 - Table 5 Project Costs (Net of Taxes) (CFAF Million) 1978 1979 1980 1981 1982 Total L* F T L F T L F T L F T L F T L F T Equipment Purchase 34 366 400 - - - - - - - - - - - - 34 366 400 Equipment Hire 1 3 4 1 2 3 1 2 3 - 3 3 - 1 1 3 11 14 Spare Parts 4 37 41 2 24 26 4 40 44 4 40 44 2 20 22 16 161 177 Fuel Lubricants - - - 4 15 19 5 19 24 5 19 24 5 17 22 20 70 90 Local Staff 5 - 5 26 - 26 29 - 29 29 - 29 29 - 29 117 - 117 Materials - - - 6 12 18 7 14 21 7 14 21 7 14 21 27 54 81 Civil works contracted: - by PWD 10 16 26 42 86 128 42 86 128 42 86 128 33 64 97 169 338 507 - by Contractor - - - 2 5 7 4 8 12 4 8 12 3 6 9 13 27 40 Operating cost for maintenance by DCR - - - 2 2 4 3 3 6 6 6 12 4 4 8 15 15 30 Technical Assistance 2 10 12 16 60 76 12 42 54 1 4 5 - - - 31 116 147 Studies - - - - - - 1 4 5 1 4 5 - - _ 2 8 10 SUBTOTAL 56 432 488 101 206 307 108 218 326 99 184 283 83 126 209 447 1166 1613 Contingencies: - Physical/l 3 26 29 10 21 31 11 22 33 10 17 27 7 13 20 41 99 140 - Price Equipment and Spare Parts: 1978 (1.035-1) = 3.5% 1 14 15 - - - - - - - - - - - - 1 14 15 1979 (1.035X1.065-1) =10.2% - - - - 2 2 - - - - - - - - - - 2 2 1980 (l.035Xl.065Xl.06-1)=16.8% - - - - - - 1 7 8 - - - - - - 1 7 8 1981 (1.035Xl.065Xl.062-I'23.8% - - - - - - - - - 1 10 11 - - - 1 10 11 1982 (l.035Xl.065Xl.063-1=3l.2% - - - - - - - - - - - - - 6 6 - 6 6 Other Items: 1978 (1.04-1) 4.0% 1 3 4 - - - - - - - - - - - - 1 3 4 1979 (1.04X1.075-1) 11.8% - - - 14 22 36 - - - - - - - - - 14 22 36 1980 (1.04Xl.075Xl.07-1) 19.6% - - - - - - 21 37 58 - - - - - - 21 37 58 1981 (1.04Xl.075X1.072-1) 28.0% - - - - - - - - - 27 40 67 - - - 27 40 67 1982 (1.04Xl.075Xl.073-1) 37.0% - - - - - - - - - - - - 38 39 77 38 39 77 SUBTOTAL 5 43 48 24 45 69 33 66 99 38 67 105 45 58 103 145 279 424 GRAND TOTAL 61 475 536 125 263 400 141 284 325 137 251 388 128 184 312 592 1445 2037 * L = Local; F = Foreign; T = Total. /1 5% on equipment and spare parts, 10% on remaining items. March 17, 1978  - 22 - 3.13 Cost estimates for equipment and tools (Table 4) are based on the findings of consultants and bids received in 1977 for similar equipment in Benin. Operating costs of equipment, assuming 180 working days per year, are for works to be executed by PWD based on cost figures observed under similar, previous projects taking into account a small increase in productivity which should be feasible. Slightly lower productivity has been assumed for the first year for the works to be carried out by DGR and for the following years DGR is assumed to have about the same productivity as PWD. Since DGR would pay higher salaries to its personnel than PWD and provide incentives and bonuses related to performance which PWD is not presently able to provide, this assumption takes full account of DGR's learning period. The average costs, net of taxes, but including equipment depreciation and excluding contingencies for road construction and improvement are as follows: Road type Cost per km 5.5 m roads (Class I) US$6,700 4.0 m roads (Class II) US$4,200 Access tracks US$2,500 3.14 Since the employment conditions make it difficult especially for PWD to recruit and retain certain key personnel, Government would carry out a study of employment conditions in PWD, DGR and the private sector. The study would identify and recommend incentives required to retain competent staff in PWD and DGR. It would be presented to the Association no later than June 30, 1979 for review and comments; the recommendations would be implemented taking account of the Association's comments. The Government has agreed to these arrangements. 3.15 Technical assistance is assumed to be provided by consultants. The average man-month cost is estimated at US$7,500 which corresponds to rates charged by firms working in the region. The billing rate for these services is estimated at US$5,000 to US$6,000 per field man-month, depending upon the experts' qualifications, and comprises salaries and overheads (home office expenses, expatriate allowance, social security, etc.). Reimbursable expenses payable to consultants, i.e. housing, travel, etc., are estimated at US$1,500 to $2,000 per month. The cost of short-term consultants is estimated at about US$7,500 per man-month based on the Association's experience with their use during project preparation and assuming that the experts will be provided by a consulting firm. 3.16 A quantity contingency allowance of 5% on equipment and spare parts and 10% on all other items has been included in the cost estimates to allow for increases in quantities. Provision for future price increases has been calculated separately in accordance with Bank Group Guidelines as follows: for equipment and spare parts 7.0% in 1978, 6.5% in 1979 and 6.0% thereafter; for other items, 8% for 1978, 7.5% in 1979 and 7% thereafter. These amount to about 18% of the total base cost in January 1978 prices.  IMPLEMENTATION SCHEDULE Activity 1978 1979 1980 1981 1982 Institution Building - Establish Feeder Road Section (7/31/78) 0 - Establish Interministerial Technical Working Group (11/1/78) Technical Assistance - Recruit Team Leader (8/15/78) 0 - Start Training (9/1/78) 0 Procurement of Equipment - Complete Bidding Documents (3/1/78) Call for Bids (5/1/78) - Evaluate Bids (7/115/78) 0 - Select Suppliers (8/1 /78) - Approve Contracts (9/1/78) 0 - Deliver Equipment (2/1 /79) Program Preparation - Prepare Yearly Programs - Present Program to Interministerial Technical Working Group 0 Program Execution - By Public Works Department III *IIEIhUIIIUIUU *mmuuumIISUBU llUlI - By Rural Works Department IUUEEII33SEI IhhEIhIIEUhIIEU *EIUUUISEEIEUUU UUUhIIhU*hS**II Source: Mission January, 1978 World Bank - 18677   - 23 - H. Execution 3.17 The Ministry of Rural Works, through DGR, will have overall respon- sibility for execution of the project. However, it will conclude arrangements through MEPW, for PWD, to improve about 400 km of selected project roads and to carry out major repairs of the road equipment to be used for the project. In addition PWD will, for these roads, maintain the Standard I roads during the four-year project period and the Standard II roads during one year follow- ing their improvement. Thereafter they will be maintained by DGR. DPW has the necessary equipment and manpower to carry out this maintenance for which MEPW would be paid under their contract with MRW. Signing of a contract between MRW and MEPW will be a condition of effectiveness of the Development Credit Agreement. 3.18 Physical execution of the project is scheduled to commence in October 1978 for the PWD road brigades and March 1979 for the DGR brigades, and be completed by end of 1982 in accordance with the implementation schedule shown below. The Government has agreed to this schedule. Road improvement and maintenance will be carried out by force account; local contractors will be used to construct some drainage structures and supply road-building materials.  - 24 - 3.19 Various mixes of labor and equipment for the improvement of feeder roads have been examined. The conclusion is that the scope for use of labor- based technologies is limited because of little availability of unemployed labor in several areas, the nature of the works, and the higher economist costs. Consequently the road construction under the project will be executed as follows: DGR Roads (600 km): Two feeder road construction brigades will be formed to build these roads: one "heavy" to be used where heavy clearing or signi- ficant earthworks have to be done and one "inter- mediate" to be used elsewhere. DGR will execute the necessary surveys and engineering. PWD Roads (400 km): These will be built by the existing PWD road betterment and regravelling units according to an agreed program with DGR and the Association. DGR will approve the design standards and supervise construction. For the maintenance of feeder roads DGR will establish a maintenance brigade equipped under the project (para. 3.04 and Table 4). As one of its tasks, FRU will define a long-term strategy for equipment-labour utilization in improvement and maintenance works (para. 3.06). 3.20 The roads to be improved during the first year have been agreed upon. The list of roads for the subsequent years will be proposed annually by the DGR and reviewed and approved by an Interministerial Technical Working Group (ITWG) to be organized with representatives from MEPW and the Ministries of Planning, Finance, Rural Works, Equipment, and Rural Development as well as important national and regional agencies with a direct interest in feeder roads. The lists would then be submitted to the Association for approval three months before the scheduled start of works for that year's program. During negotiations, Government has agreed to the above procedure for road selection and to establish the ITWG not later than February 28, 1978. I. Procurement 3.21 Equipment, vehicles, materials, and supplies amounting to about US$2.0 million (net of taxes) will be procured on the basis of international competitive bidding in accordance with Bank Group Guidelines. These items will be bulked to the extent possible to make them suitable for international competitive bidding. Goods manufactured in Togo would be allowed a preference equal to 15% of the c.i.f. price on imported goods or prevailing duties generally applied to imports, whichever is lower. Contracts for equipment, materials and supplies costing under US$50,000 may be awarded on the basis of competitive bidding following local procedures acceptable to the Association. The aggregate amount of such purchases would not exceed US$400,000. Contracts for the construction of drainage structures totalling about US$200,000 will follow local competitive bidding procedures acceptable to the Association. Consultants for technical assistance and for the feeder road follow-up study will be employed in agreement with and under terms of reference and conditions satisfactory to the Association. The above arrangements have been agreed to by the Government.  - 25 - J. Financing and Disbursements 3.22 The proposed credit of US$5.8 million will finance about 69% of total project costs net of taxes, i.e. all foreign costs with the exception of those for maintenance. Government will finance local costs of US$2.4 million and foreign costs of US$0.2 million. Taxes and duties are estimated at US$0.8 million 1/. The financing plan of the project is shown below. Financing of Project Costs (CFAF million) Goveruaent Financing IDA Financing Grand Total IDA Financing Local Tax Foreign Total Foreign Net of Tax (1) Equipment Purchase 34 -- 34 366 400 92 Equipment Hire 3 3 11 14 80 Spare Parts 16 --- 16 161 177 92 Fuel and lubricants 20 --- --- 20 70 90 78 Local Staff 117 --- 117 --- 117 0 Materials 27 --- --- 27 54 81 67 Civil Works by contract: (improvements 161 130 --- 291 330 491 67 by PWD ) (maintenance a 4 8 20 --- 16 0 by contractors 13 10 --- 23 27 40 67 Operating costs for maintenance by Genie Rural 1S --- 15 30 --- 30 0 Technical Assistance 31 --- --- 31 116 147 79 Studies 2 --- --- 2 8 10 80 Sub Total 447 144 23 614 1.143 1.613 71 Contingencies - Physical 41 14 2 57 97 140 69 - Price 104 30 5 139 175 284 66 Sub Total 145 44 7 196 272 424 67 Grand Total 592 188 30 810 1.415 2.037 70 US $ Million 2.42 0.79 0.13 3.34 5.82 8.37 (Rounded) (2.4) (0.8) (0.1) (3.3) (5.8) (8.4) Source: Mission estimate January, 1978 (1) The project is financed net of tax except for Civil Works. 3.23 Credit funds would be disbursed as follows: (a) 100% of the foreign costs of imported equipment, vehicles, spare parts, office equipment materials, rented equipment, fuel and lubricants or 82% of the local costs, net of tax, of these items if purchased locally; 1/ Taxes will only be levied on works executed by PWD and contractors.  - 26 - (b) 54% of the total expenditures for civil works; (c) 80% of total expenditures for technical assistance experts and consultants. Request for disbursements will be fully documented. Based on the foregoing and the project implementation schedule shown on page 22, the estimated schedule of disbursements from the Credit account is as shown in the following table. Estimated Schedule of Disbursements (US$'000) DISBURSEMENTS Cumulative at Undisbursed at IDA Fiscal Year Quarter During Quarter End of Quarter End of Quarter 1979 1 - - 5,800 2 50 50 5,750 3 1,600 1,650 4,150 4 600 2,250 3,550 1980 1 200 2,450 3,350 2 230 2,680 3,120 3 230 2,910 2,890 4 230 3,140 2,660 1981 1 230 3,370 2,430 2 230 3,600 2,200 3 230 3,830 1,970 4 230 4,060 1,740 1982 1 250 4,310 1,490 2 250 4,560 1,240 3 250 4,810 990 4 250 5,060 740 1983 1 270 5,330 470 2 250 5,580 220 3 120 5,700 100 4 100 5,800 0 Source: Mission Estimate March, 1978.  - 27 - IV. ECONOMIC EVALUATION A. General 4.01 Growth in Togo's agricultural sector, which contributes about 30% of GDP and 40% of total export earnings, has stagnated over the past five years due to inadequate investments, lack of effective institutions to program and implement agricultural programs, and to generally poor accessibility to exist- ing and potential production areas. To remedy the situation, the Government has (a) allocated about 22% of total planned investments under the Third Plan to speed restoration and expansion of agricultural production, (b) established several crop-related agencies and cooperatives to implement agricultural investment programs (para. 1.12) and (c) started feeder road improvement as a part of a few specific integrated agricultural projects. However, in existing productive farm areas outside these projects, poor feeder roads and consequent high transport costs and unreliability contribute to low farmgate prices for foodcrops, excessive spoilage and some farmers' reluctance to use fertilizers and insecticides. The planning, development and maintenance of feeder roads, on the other hand, demand an efficient, well-staffed organiza- tion in order to carefully plan and to ensure adequate maintenance of the investments made. This need is not being satisfied under the current piece- meal effort. The objectives of the proposed project are, therefore, (a) to establish an efficient institutional framework for planning, developing and maintaining feeder roads, (b) to train local staff to perform the above functions, and (c) to provide adequate resources for the construction and subsequent maintenance of 1,000 km of high priority feeder roads. 4.02 The institution-building component of the project represents a major, if unquantifiable, benefit. It will create within the DGR the capacity for the proper planning and execution of feeder road improvement and maintenance thereby helping to achieve the project's goals and reducing the waste of resources. The training component will result in increased capacity for local staff at all levels to handle feeder road responsibilities and will decrease the need for technical assistance in follow-up projects. The project will also initiate a coordinated interministerial/interagency approach to planning feeder roads. B. Economic Justification 4.03 The economic justification of the proposed project derives from its role in reducing transport costs and produce spoilage in the areas of the project roads, contributing toward the expansion of agricultural production and in institution-building. Feeder Road Program 4.04 The economic justification of the project roads addresses the following:  - 28 - (a) the justification of the specific roads included in the first-year program; (b) the justification of the entire four-year program; and (c) criteria for selecting roads for the second and later years' programs. In the economic justification economic costs and benefits have been used without shadow pricing of labour or foreign expenditures. 4.05 The road-by-road justification for the first-year program has been analyzed using as benefits (a) road-user savings and (b) reduced produce spoilage. Benefits from induced increased agricultural production were as- sumed insignificant since these roads, even in their present state, provide access between farm areas and the main road network. Estimates of traffic and vehicle operating costs used for calculating road-user savings were based on the findings of a short-term consultant who visited Togo in October 1976 to update a detailed study by consultants BCEOM in 1975. Average traffic on the first-year roads ranges between 11 and 26 vehicles per day (vpd); a reduction in vehicle operating costs ranging between 25% and 50% is expected to result from the road improvements. No direct measurements were made on the reduction in produce spoilage. However, based on suggestions by TOGOFRUITS, SOTOCO and SRCC and depending on current road condition, up to 4% of total annual production has been used. In 1980, the total savings in vehicle operating cost savings would amount to about US$200,000 and the reduction in spoilage to about US$50,000. A population of 48,000 would be directly affected by the first-year road improvements. A sensitivity analysis on the economic rates of return (ERR), assuming no reduced spoilage, indicates that all the first-year roads still have ERR exceeding 11%. A summary of the ERR's for the first-year roads and a sample calculation for a typical road are attached in Annex I. 4.06 The justification for the second-, third- and fourth-year roads followed a similar procedure to the above except that induced increases in agricultural production were important, generally for those roads requiring new construction or considerable reconstruction. Moreover, except for the first-year roads, the data base used for the analysis was very coarse; for each district, recorded average yields per farm for various farm products were used to estimate induced production and reduced spoilage. This is quite acceptable in view of the tentative nature of the road lists beyond the first year of implementation and the high costs and delays inevitable with collect- ing more detailed data which might in any case be useless should the road lists change appreciably. Further, the built-in, more detailed justification for the annual programs and the criteria for selecting roads beyond the first-year (para. 4.07) should eliminate any risk of unacceptable project return. On the basis of (a) road user cost savings to non-agricultural traffic, (b) reduced produce spoilage and (c) induced increases in agricul- tural production, the economic rate of return for the project over its 10-year  - 29 - estimated economic life is 18% 1/. This return should be considered only indicative of a range estimate between 12% and 24% as shown by the following results of the sensitivity analysis: ERR (a) Best Estimate 18.0% (b) Project Cost +20% 13.6% (c) Best Estimate-Induced Agricultural Production 11.9% (d) Project Benefits -20% 11.9% (e) Project Cost -20% 23.9% (f) Project Benefits +20% 22.8% (g) Project Cost +10% and Project Benefits -10% 13.0% Criteria for Selecting Roads after First-Year Project 4.07 The criteria for selecting roads to be included in the second, third and fourth years' programs will be: (a) Economic Rate of Return (ERR): Roads will be ranked according to their ERR. An economic rate of return of at least 10% is required for a road section to be included under the program. The ERR will be based on the following quantifiable benefits depending upon the road type as follows: Category I: This includes roads in areas of existing sub- stantial agricultural activity. The ERR will be based on road-user savings and reduced produce spoilage. Category II: This includes roads other than those in Category I. The ERR will be based on the sum of (i) road-user savings to non-agricultural traffic, (ii) net value-added to incremental agricultural production (considering also the complementary costs on the agricultural side), and (iii) benefits from reduced produce spoilage. (b) Needs of Agricultural Program: Subject to the 10% ERR cut-off rate above, inclusion of roads in the annual programs will consider the needs of agricultural programs being executed or planned in Togo. Thus, for example, a road needed for access to a central seed farm or to an extension center may be included in the program in preference to one with a higher ERR calculated by the methods prescribed under (a) above. 1/ By 1984 the benefits from the road improvements would amount to US$450,000 for (a); US$90,000 for (b); and US$95,000 and for (c).  - 30 - (c) Geographical Coordination of Brigades: Subject to the cri- teria under (a) and (b) above, inclusion of roads in the annual programs will take into consideration the geographical coDrdi- nation of the road brigades to prevent long travel distances. 4.08 The list of roads included in the tentative second-, third- and fourth-years' programs will be used as a basis for selecting roads, but roads not included in these lists will be considered if warranted by government plans for agricultural development. Distribution of Project Benefits 4.09 The distribution of project benefits will depend on (a) the Govern- ment's policy on producer prices for food and cash crops, and (b) the extent of competition in the transport industry. Under prevailing differential between farmgate prices and f.o.b. for various produce (Annex I, Table 2) and the level of competition in the trucking industry (para. 2.04 and 2.05), approximately one-third of the benefits of increased cash crop production -- mostly cocoa, coffee and cotton -- will accrue to farmers OPAT and the Government will share the remaining benefits; the farmers will eventually recuperate some of the latters' benefits through subsidies, improved agri- cultural services and ploughback of feeder road maintenance funds. With regard to food crops, farmers will capture most of the benefits through both selling more and enjoying a higher producer price, given the competitiveness of the trucking industry; transporters and exporters will share the rest. Benefits from reduced transport costs to passengers and non-agricultural goods will be shared by the communities in the project area, the transporters and the traders. Project Risk 4.10 The main risk associated with the project would be DGR's failure to develop the necessary capacity to execute the project on schedule. This makes staff training and retention and the quality of technical assistance critical. The Government's strong commitment to these will be sought during negotia- tions. These items will also be monitored closely during project imple- mentation. A minor risk of political interference with the selection of the roads for the annual programs is expected to be alleviated by the guidelines agreed to by the Government for justifying roads selected in the annual programs (para. 4.07). V. AGREEMENTS REACHED AND RECOMMENDATION 5.01 During negotiations the following items were discussed and agreed upon with Government: (a) the creation of a Feeder Road Unit within DGR no later than July 31, 1978 (para. 2.09); (b) the feeder road design standards outlined in Chapter III, except where otherwise agreed by the Association (para. 3.02);  - 31 - (c) the first year's road program and the arrangements for estab- lishing the subsequent annual programs including the guidelines for selecting individual roads (paras. 3.03, 3.20 and 4.07); (d) the Government will take all administrative, technical and financial steps necessary to maintain (i) the project roads to an agreed and acceptable standard after completion of the project, and (ii) 250 km feeder roads not included in the project and another 1,000 km included in IDA-financed development projects after their completion (paras. 2.16 and 3.04); (e) the Government will employ consultants for technical assistance (not later than September 30, 1978) and studies under terms of reference and conditions acceptable to the Association (paras. 3.06, 3.07, 3.08 and 3.21); (f) the Government will recruit and assign adequate staff to the Feeder Road Unit to be trained by the technical assistance staff (paras. 3.08 and 3.09); (g) a training program will be submitted to the Association for review and comment no later than December 31, 1978, and thereafter implemented taking into account such comments (para. 3.09); (h) a study of employment conditions for key staff in PWD, DGR and the private sector be carried out and presented to the Association no later than June 30, 1979, identifying and recommending incentives required to retain competent staff in PWD and DGR; thereafter taking appropriate action to im- plement recommendations taking into account the Association's comments (3.14); (i) the implementation schedule and the arrangements for monitoring the project (paras. 3.10, 3.11 and 3.18); (j) that Government would create an Interministerial Technical Working Group no later than February 28, 1979 to propose annual lists of roads to be improved; such lists would be submitted to IDA three months before the start of works for that year's program (para. 3.20); (k) that arrangements for procurement will be on the basis of international competitive bidding in accordance with Bank Group Guidelines if not otherwise agreed between the Government and the Association (para. 3.21).  - 32 - 5.02 A condition of credit effectiveness is that a contract is signed between MRW and MEPW. The contract would specify that MEPW improve and main- tain 400 km of project roads and carry out major repair to DGR equipment procured under the project. 5.03 Provided that agreement is reached with Government on the items mentioned in paragraph 5.01, the proposed project would be suitable for a Credit to the Republic of Togo in the amount of US$5.8 million on standard IDA terms.  T 0 f 0 ANNEX. I APPRAISAL OF A FEEDER PmiAr1 PROJErT P 1 SUMMfARY EMN50010 ANALYSIS F-irst Ysar RDaO Prograr Road Narnes Longth Condition Population N' of Total Ann. fotol Ann, Red- .t. Year T,oal VDc TQrtl-~ COostr. FYR-F 5P- EW0 4- Served Fdrns Marketed M1arketed in prod. Tr,ff ic SEvings Senef. Lost rn c,n Product, Proouct. Spoila9e (09640 ir 1980 in',9o (1S (2 (Tons) M$) 1980 M$) l,)) 1 2! Genie Rural Roads Sango-Tnhmnaga 15.5 Poor 3,500 430 950 197,000 3,950 5,505 12,50D 16,740C 95, CC 17. 1 13.0 2 ,3 Mogru-vango .20.0 Poor 1,200 170 400 119,400 2,990 s,10o0 1E,300c 1B,290 9'0,00 17,5 12.1 20,5 Atalot6-Wart6 5.2 V Poor 1,0On 145 110 15E,000 65Q 4.335 4,960 5,l10 26, 30 19.0 15.5 1.7 PNt - Kpaha 8.0 hoor E,200 855 E50 610,3o0 2,56D ?,500 ',WD0 11,560 36,00D 25.0 25.2 32,9 S5la-Klognisi-Kpagouda 7,1 5 Poor 5 00C 715 E70 145,50Q 2,900 6,045 15,51 1e,410 9a,DQr 16.5 13.6 I9,3 Massdr4na-Siou-Niamtrugou 2Q,0 V.Poor 12,000 f ,720 1,a70 262,5C0 6,560 4,352 00,15 25,71C 103,500 1B,5 15.2 16,8 Ga.m&-Tokp6vi6-AgbodJ6kpo 21.6 V.Poor 3,000 500 900 150,D00 2,250 4,ii4 19,550 21,800 86,500 22.E 20.2 22.9 P1(D Roads Naki Est-Nagbeni 14.0 Poor 3,2CQ 4C0 695 9B,4f30 2,4610 7,07C 1O,n'Q 7,,310 9 7,00D 21.2 18.9 22.e Elcte-TTaKpamba-Nammponr 26.0 V.Poor 3,500 920 5 28?,500 3,5f