Malawi - Fourth Highway Project

Document of .J1 E C) The World Bank FOR OFFICIAL USE ONLY Report No. 3019a-MAI MALAWI FOURTH HIGHWAY PROJECT STAFF APPRAISAL REPORT December 22, 1980 Regional Projects Department Eastern Africa Regional Office 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 = Malawi Kwacha (MK) and tambala US$1.00 = MK 0.80 MK 1.00 = 100 tambalas WEIGHTS AND MEASURES 1 foot (ft) = 0.305 meters (m) 1 mile (mi) 2 = 1.609 kilometers (km) 2 1 square mile (mi ) = 2.590 square kilometers (km ) 1 ton (t) = 0.907 metric tons (m ton) LIST OF ABBREVIATIONS AfDB (AfDF) - African Development Bank (Fund) DRIMP - District Roads Improvement and Maintenance Program EDF - European Development Fund EEC - European Economic Community EPD - Economic Planning Division (Office of the President and Cabinet) HDM - Highway Design and Maintenance Model KfW - Kreditanstalt fur Wiederaufbau MTC - Ministry of Transport and Communications MWS - Ministry of Works and Supplies ODA - Overseas Development Administration PVHO - Plant and Vehicle Hire Organization UNDP - United Nations Development Programme voc - vehicle operating cost vpd - vehicles per day GOVERNMENT OF MALAWI FISCAL YEAR April 1 - March 31  FOR OFFICIAL USE ONLY MALAWI FOURTH HIGHWAY PROJECT STAFF APPRAISAL REPORT TABLE OF CONTENTS Page No. I. THE TRANSPORT SECTOR ...........................1....... A. Effects of Geography and Economic Structure 1 B. The Transpcrt System. 2 C. Transport Policy and Coordination. 4 D. Previous Bank Group Involvement in the Sector 6 II. THE HIGHWAY SUBSECTOR ................................. 7 A. The Network ...................................... 7 B. Road Use. 9 C. Administration and Training .14 D. Planning and Financing .16 E. Engineering .18 F. Construction .18 G. Maintenance .19 III. THE PROJECT .20 A. Objectives .20 B. Project Description .21 C. Cost Estimates .26 D. Financing .27 E. Implementation and Procurement .27 F. Disbursements .28 G. Accounting, Auditing and Reporting Requirements 30 IV. ECONOMIC EVALUATION .30 A. Evaluation of Project Components . . 30 1. Upgrading of the Jenda-Mzuzu-Ekwendeni Road 31 2. District Road Improvement and Maintenance Program .34 3. Other Pioject Elements .35 B. Risks . .36 V. AGREEMENTS REACHED AND RECOMMENDATION .36 This report was prepared by S. Sigfusson (Engineer) and M. Mason (Economist), who appraised the project in February 1980. The report was edited by P. Brereton. This document has a restricted distributinn s';A 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 Page No. 1 Transport-Related IDA Projects in Malawi ............ 38 2 Training of Subprofessional Staff of the Ministry of Works and Supplies .... .............. 42 3 Road Design Standards Adopted by the MWS ........... 46 4 DRIMP II: Program for Procurement of Facilities and Equipment 1981-83 .47 5 DRIMP II: Program for District Roads Improvement 1981-84 .57 6 DRIMP II: Government Financing and Accounting of DRIMP Maintenance Expenditure .65 7 Outline Terms of Reference for Technical Assistance for Transport Planning .... ........... 67 8 Terms of Reference for the Maintenance Study ....... 70 9 Project Progress Reporting Requirements .... ........ 77 10 Economic Evaluation of the Jenda-Mzuzu-Ekwendeni Road .81 11 Terms of Reference for the Economic Analysis and Selection Criteria for Improvement of District Roads under DRIMP .82 12 Related Documents and Data Available in the Project File .86 CHARTS 1 Organization of the Ministry of Works and Supplies 2 Project Implementation Schedule MAPS 1 Malawi - Transport Network (IBRD 15069R) 2 Malawi - Project Roads (IBRD 15070)  MALAWI FOURTH HIGHWAY PROJECT STAFF APPRAISAL REPORT I. THE TRANSPORT SECTOR A. Effects of Geography and Economic Structure on Transport 1.01 Malawi is a long, narrow, landlocked country situated in the Great African Rift Valley, with a land area of about 94,300 km and a lake area of 24,200 km (see Map 1). A major escarpment runs the length of the country, separating the Lake Malawi plain from the plateau to the west; altitudes range from about 60 m above sea level in the Shire Valley in the south to over 2,500 m in the northern plateau. Rainfall averages between 750 mm and 1,600 mm, but is much heavier in the high plateau areas of Mulanje, Zomba, Viphya and Nyika (4% of land area). The high rainfall and long rainy season in the mountainous areas, combined with steep slopes and scarcity of naturally available gravels for road construction and maintenance, render gravel roads uneconomic in those areas. 1.02 Gross domestic product increased in real terms at the relatively rapid rate of 6.0% per year over the period 1964-79. Even so, per capita GNP is an estimated US$200, and Malawi is classified by the United Nations as one of the least developed countries in the world. 1.03 With a population of about 5.7 million (1978), growing at an average rate of 2.9% p.a., Malawi has one og the highest population densities per sq km of agricultural land (140 per km ) in Africa. However, development in the country's three administrative regions has been unbalanced. Until independence in 1964, most development was concentrated in the Southern Region, which had the only rail link, most of the all-weather roads, the administrative capital of Zomba and the main commercial center of Blantyre. This fundamental imbalance, aggravated by the still inadequate road access to the north, has caused the Central Region and, even more, the Northern Region to remain isolated and undeveloped, and the latter is still sparsely populated. At present, almost three quarters of the total population lives in the southern half of the country, and one of Government's main socioeconomic objectives, as set out in the Statement of Development Policies (1971), is the promotion of more balanced regional development. To this end, it has moved the adminis- trative capital some 250 km north from Zomba to Lilongwe, and has initiated several agricultural development projects in the northern half of the country, including major projects at Lilongwe, Salima, Karonga and Viphya, and smaller projects around Kasungu and Mzimba. The road network is also gradually being upgraded in the Central and Northern Regions, and further development in these areas is planned under the National Rural Development Program.  - 2 - 1.04 Since almost 90% of the population lives in rural areas, and agriculture contributes over 90% of Malawi's exports, rural development is a primary economic and social objective. In addition to raising agricultural productivity, it is seen as an effective vehicle for the Government's policy of redistributing incomes in favor of the rural poor. Although the most rapid growth in agricultural output in the past has been achieved by private estates and discrete regional projects, since the start of its National Rural Development Program in the mid-1970s, Government has increasingly supported agricultural development through minimum package rural development projects with rather wide geographic coverage. The Bank Group has given considerable support to this Program, and is currently preparing for its third phase. 1.05 About 50% of Malawi's total land area is classified as forest land, about 20% of which consists of forest reserves, administered by the Forestry Department of the Ministry of Agriculture and Natural Resources as protected government land. Malawi's forestry sector produces a limited number of forestry products: sawn timber, veneer, plywood, poles and fuelwood. Annual production 3of industrial roundwood from both state and private forests is about 85,000 m . The wood is locally processed and largely absorbed by the domestic market, as exports of forest products are negligible and some 20% of the softwood requirements are imported. However, the Government is now studying the possibility of developing the wood processing industry, including the potential of the regional export market. B. The Transport System 1.06 Malawi's transport system consists of about 11,300 km of roads, 645 km of railways, 4 lake harbors and a number of landing points served by a lake service, and 4 airfields served by domestic services. The principal features of this system are: a main road network of about 2,900 km, which is fairly well developed south of Lilongwe but undeveloped in the northern half of the country; the rail system which lies entirely in the southern half of the country and is primarily used for export-import and Zambian transit traffic; lake transport which mainly serves the north and compensates to some extent for the undeveloped land transport links; and air transport which is dominated by international passenger traffic. Road transport dominates internal transport while most export-import freight is carried by rail. The main outlet to the sea for Malawi's external trade is by the railway through Mozambique to the ports of Beira and Nacala on the Indian Ocean. Highways 1.07 The highway network is discussed in Chapter II. Railways 1.08 The main railway line extends from Salima through Blantyre, to the extreme southern border (443 km) where it connects with the rail line to the  - 3 - Mozambique port of Beira. Rehabilitation of the southern part of the line within Malawi has been underway during the last few years with British and Canadian aid and is expected to be completed by 1985. A branch line (101 km), offering an alternative route to the sea, extends eastward from Nkaya to Nayuci, and connects with the Mozambique line to the port of Nacala. 1/ An extension westward from Salima to Lilongwe (101 km), financed by a grant from the Canadian Government, has been recently completed and operations commenced in 1979. The Canadian Government is also financing a further extension westward from Lilongwe through Mchinji to the Zambian border (109 km), which is expected to be in operation by 1981-82. The ultimate aim is to link Malawi Railways with the Tanzania-Zambia Railway. 2/ 1.09 In 1978, the railway carried about 1.3 million tons of freight or about 221 million ton-km, about one fifth of which was Zambian transit traffic trucked to and from railheads in Malawi. Traffic in terms of ton-km has been declining by 7% p.a. since 1975 because of the slowdown in imports since 1975 and exports since 1977, decreasing Zambian transit traffic, and to a lesser extent increasing road competition. The railway is run efficiently and earns a modest net operating surplus, although recently it has experienced a shortage of rolling stock which is gradually being corrected with the provision of more equipment. The number of passengers carried on the railway was 1.1 million in 1978, about the same number as carried in 1974; increases in passenger traffic have been absorbed by bus services. Lake Transport 1.10 Freight and passenger transport on Lake Malawi is provided by Lake Services Limited, a subsidiary of Malawi Railways, and principally serves the remote northern areas of the country. Twenty-one centers are served by the Lake Service fleet, which consists of five vessels carrying freight or passengers, six barges and oil pontoons, five tugs and one timber pontoon. Traffic volumes are relatively light, amounting to about 37,000 tons of freight and some 111,000 passengers in 1978. The main products transported by lake are petroleum products, rice and fertilizers. At present, nearly 70% of the traffic is northbound, originating at Chipoka which is served by the railway, but this pattern may change in the future as the impact of ongoing rural development projects in the north is felt. After many years of losses, the Lake Service realized a small operating surplus in 1978 because of freight tariff increases in 1977 and 1978 which enabled the company to improve its financial performance. 1/ The condition of the line and equipment as well as operational problems of the Mozambique railway and at the sea ports have led to frequent interruptions to traffic and severe problems over the importation of essential materials, and particularly fuel, in recent years. 2/ This would require construction of an approximately 320 km link in Zambia.  -4- Air Transport 1.11 Air transport within Malawi is relatively unimportant compared to other modes, and only four airports (Chileka near Blantyre, Lilongwe, Mzuzu and Karonga) have scheduled services. Even air traffic between the north and the south is quite low, despite the poor roads, because most passengers and goods are transported by lake and road. Only the Chileka airport can accom- modate long-range jet aircraft, and it therefore serves as the country's international airport in addition to being the most important for domestic traffic due to its proximity to commercial centers. Chileka accounted for nearly 60% of Malawi's 355,000 recorded passenger movements in 1978 and 80% of passenger movements at Chileka were international. The Government is now constructing a second international airport at Lilongwe at an estimated cost of US$62 million with assistance from the African Development Bank (AfDB) and the Japanese Government. Air Malawi, a Government-owned airline, provides international services and all scheduled domestic services. Four foreign airlines also provide international services, and one local company and Air Malawi provide unscheduled domestic services. 1.12 Passenger traffic declined sharply in 1976 because of the cessation of air services between Malawi and Zimbabwe, and the decreased numbers of migrant workers going to South Africa; in 1978 traffic was only 80% of the 1975 level. Since air traffic between Malawi and Zimbabwe has now resumed, air passenger traffic should increase significantly. Air freight traffic, on the other hand, sizeably increased during the past few years because of the congested ports and poor rail service in Mozambique, and difficulty of using other modes to transport goods between South Africa and Malawi. C. Transport Policy and Coordination 1.13 Since the beginning of the seventies, Malawi-s transport policy has had three broad aims: (a) to improve the administrative, social and economic integration of the country by linking all three regions with reliable all- weather connections; (b) to support rural development by improving access to rural areas; and (c) to provide efficient links with transport routes to the Indian Ocean seaports for exports and imports. Substantial progress has been made on (a) and (c), and work is now underway to realize (b). The Government is undertaking an extensive transport development program; numerous transport studies have been carried out or are in progress, and investments are either planned or underway in all transport modes. 1.14 Government s overall sector priorities are given in its "Statement of Development Policies 1971-1980," and are determined in more detail in a 3-year rolling public sector investment program which is revised annually during budget preparation. Investment in the transport sector has been high during the last four years, representing an average of 44% of total Government capital expenditure. This has been due to investment in the railway exten- sions and in Lilongwe International Airport. Although the Bank Group expressed reservations about these projects, Government has undertaken them with the assistance of external donors, because of its concern about the vulnerability  - 5 - of existing international trade routes, particularly in view of recent events in Mozambique which halted transit traffic for three months. For the same reason, Government has requested financing under the proposed project for upgrading of the North-South road which links Malawi to Tanzania (para. 3.03). In addition, financing has been secured from the European Development Fund (EDF) for a study of the international transport routes available to Malawi; the study will examine the transport constraints to development of the country, future changes in the composition of traffic as well as the direction of trade, and will make recommendations on the future transport development strategy to employ. UNDP/UNCTAD is financing a regional study 1/ of transit transport is eight southern African countries, including Malawi. The study is expected to be completed in 1982. 1.15 The 3-year plan 2/ for FY1979-81 had allocated 40% of total planned capital expenditures to the transport sector (Table 1.1), mainly for the railway from Lilongwe to the Zambian border, the Lilongwe International Airport, and main road construction. Although various donors have expressed interest in most of the new projects proposed to start under the plan, it seems likely that some of these projects will be delayed or scaled down during the 3-year period due to Government s probable inability to provide the required local funds (only 63% of the amount planned for 1979/80 was actually allocated) and the lack of completed feasibility studies for many of the new projects. A cutback in the plan is, in fact, advisable since a significant number of the road projects may be quite marginal (para. 2.22). Table 1.1: Investment in the Transport Sector 1975-1981 (MK million) Financial Year 1975 1976 1977 1978 1979 1980 19811- Transport 10.7 33.2 21.0 31.4 63.8 46.8 86.8 Roads 6.0 11.0 12.3 15.0 21.1 17.1 27.0 Total Investment 40.8 70.0 55.9 76.5 130.5 151.4 216.6 % of Total Investment Represented by Transport 26.7 47 38 41 49 31 40 % of Transport Invest. Represented by Roads 56 33 59 48 33 37 31 1/ Planned. Source: Economic Report 1979 and the Roads Department. 1/ Transit Transport Improvements in the Landlocked Southern African Sub- Region, UNDP/UNCTAD Project RAF/77/017. Countries included are: Zambia, Malawi, Tanzania, Mozambique, Botswana, Lesotho and Swaziland; Zimbabwe and South Africa are expected to be included in the Study in due course. 2/ The 3-year plan will be replaced by a 5-year plan starting with FY1981. Details of the Plan will not be available before March 1981, but a draft summary indicates that, over the 5 years, 35% of total planned capital expenditures will be allocated to the transport sector.  -6- 1.16 Coordination of transport investment plans is the responsibility of the Transport Unit of the Economic Planning Division (EPD) of the Office of the President and Cabinet which reviews proposals put forward by the Ministry of Works and Supplies (MWS) for roads and the Ministry of Transport and Communications (MTC) for all other modes. In practice, however, such coordination has been lacking because of EPD's limited staffing (the Transport Unit is presently staffed by one professional only), and as a result the development of each mode has proceeded almost independently of the others. This is becoming a problem since road transport is beginning to compete with the railways, and coordination of road and lake transport will be increasingly needed. Government has therefore requested assistance in strengthening its transport planning and coordination capability, and accordingly the project would provide EPD with technical assistance for transport planning as well as overseas training for local staff (para. 3.09 (iv)). The technical assistance would, inter alia, help Government to define and establish an adequate system of transport planning and provide on-the-job training for Malawian professional staff. Terms of reference for the technical assistance are given in Annex 7. D. Previous Bank Group Involvement in the Sector 1.17 The Bank Group has been involved in Malawi's transport sector since 1966 when Credit S-2-MAI was approved to help finance detailed engineering of the Zomba-Lilongwe road (290 km). This was followed by the First Highway Project (Credit 112-MAI, 1968, US$11.5 million) comprising the reconstruction and bituminous paving of that road, the refinancing of Credit S-2-MAI, and a consultants' study of road transport licensing regulations and road-rail coordination. A Performance Audit of the Project (No. 946, December 15, 1975) concluded that all of the project's objectives were achieved. Construction costs were within appraisal estimates, although the road was completed about one year behind schedule. 1/ Traffic was about 50% greater than projected at appraisal, and the rate of return was conservatively re-evaluated at 13%, compared with the appraisal estimate of 12%. The consultants' study recom- mended deregulating road transport, raising axle load limits to 9 tons, improving transport statistics, and relating rail tariffs more closely to economic factors, all of which have been implemented, although there is scope for further refinement of rail tariffs. The study expressed misgivings about planned rail projects, but Government did not share IDA-s reservations and proceeded with these investments. Both the consultants' study and the Audit Report agreed that the country might soon have an oversupply of transport services in the Blantyre-Lilongwe-Zambian border corridor. The major recom- mendations of the Audit called for closer project supervision 2/ and rectify- ing the neglect of lower class roads--although the Audit did not question 1/ The first contractor selected for the Zomba-Lilongwe road section was unsatisfactory and had to be replaced, leading to the delay in project completion. 2/ The Audit notes that the first IDA supervision mission was some 18 months after commencement of works, and that an earlier mission could have led to speedier resolution of the problem.  -7- the composition of the First Highway Project, noting that the "Zomba-Lilongwe road . . . is undoubtedly the most important highway in Malawi." Both of the recommendations made in the Audit Report are being addressed under the Second, Third and the proposed Fourth Highway Projects and in the agricultural projects financed by the Bank Goup (para. 1.20). 1.18 The Second Highway Project (Credit 523-MAI, 1974, US$10 million) originally comprised construction of the Lilongwe-Kasungu road (113 km) and a pilot scheme for the improvement and maintenance of district roads serving rural development in the Kasungu District. Both components have been com- pleted, the construction in March 1978, a few months behind schedule, and the pilot scheme in September 1978. Substantial cost savings were made on the construction component which are being used to finance completion of the pilot scheme in Kasungu district and extension of the scheme to three other districts, following the recommendations of a consultants' study which eva- luated the results of the pilot program. The four districts make up the first phase of a District Roads Improvement and Maintenance Program (DRIMP) planned to cover all of Malawi's 24 districts in three phases. 1-.19 The Third Highway Project (Credit 758-MAI, 1977, US$10.5 million) comprised construction of the Kasungu-Jenda road (85 km) and a feasibility study and detailed engineering of the Jenda-Mzuzu road. The road construction was completed in October 1980, a few months behind schedule, and the detailed engineering is complete. 1.20 Finally, transport components have been included in IDA projects in other sectors (Annex 1). Credit S-17-MAI, 1974, provided US$2 million for planning and engineering of infrastructure for the proposed Viphya timber exploitation scheme. In addition, agricultural projects in the Lower Shire Valley (Credits 114, 363 and 823-MAI), the Lilongwe (Credits 113, 244 and 550-MAI) and the Karonga (Credit 282 and Loan 1286-MAI) areas, as well as the more widespread National Rural Development Project (Credit 857-MAI) have included improvement and construction of about 4,000 km of feeder and crop extraction roads, while the Karonga Rural Development Project also includes port improvements at Chilumba and Chipoka on Lake Malawi as well as procurement of a self-propelled barge for the lake service. II. THE HIGHWAY SUBSECTOR A. The Network 2.01 The classified road network totals about 11,300 km (Table 2.1) of which some 2,360 km (about 20%) are paved, and 380 km are of engineered gravel standard; the rest are earth roads and tracks. In addition, there are about 2,000 km of as yet unclassified feeder and crop extraction roads constructed to minimum all-weather standard under agricultural development projects and an undetermined length of unclassified earth roads and tracks, including about 800 km within forestry plantations and reserves and about 800 km within the national parks. Road density is about 140 km per 1,000 sq km or  - 8 - 2.3 km per 1,000 inhabitants, which is above average for East African coun- tries. The coverage of the network is adequate for the country's present needs, but its standards and conditions are not satisfactory. Although some improvement has been made, principally by upgrading roads to paved standard (Table 2.2), low standard roads prevail, resulting in high transport costs. Reflecting the general pattern of regional imbalance, 86% of the paved and improved roads are located in the southern half of the country. Table 2.1: Highway Network by Administrative Classification and Surface Type - 1979 (km) Main Secondary District Other 1/ All Roads Roads Roads Roads Roads % Bitumen 1,591 193 3 574 2,361 21 Gravel 143 111 - 127 381 3 Earth 1,152 2,066 5,065 286 8,569 76 Total 2,886 2,370 5,068 987 11,311 100 1/ Classified as either branch, estate, township or private roads. Source: Ministry of Works and Supplies, February 1980. Table 2.2: Development of the Road Network 1972-1979 (km) 1972 1973 1974 1975 1976 1977 1978 1979 Bitumen 977 1,245 1,271 1,448 1,572 1,749 1,870 2,361 Gravel 747 507 774 616 594 594 594 381 Earth 8,912 9,118 8,846 8,890 8,812 10,267 10,211 8,569 Total 10,636 10,870 10,891 10,954 10,978 12,610 12,675 11,311 I/ 1/ Data for 1979 reflect correction of lengths of classified earth and gravel roads. Source: Economic Planning Division and Ministry of Works and Supplies, February 1980. 2.02 Some 1,590 km, or 55% of the main roads, connecting principal cities and towns, are paved. During the last few years, construction of paved roads has been concentrated on the 1,100 km north-south spine road, the most important road in Malawi, running from Bangula in the deep south  to Karonga in the far north (see Map 1). When ongoing projects are completed in 1981, some 940 km of that road will have been paved to a satisfactory standard. The project would increase this length to about 1,010 km or some 92% of the road. Government has also started reconstruction of old, narrow pavements; over 100 km of main roads were reconstructed during 1976/79, and reconstruction of about 110 km of secondary roads is underway. Further improvements of the secondary network are being prepared (para. 2.21), and the long neglected district roads are also being improved under the first phase of DRIMP (para. 1.18) while the Program-s second phase and preparation of the third are included in the project (paras. 3.07 and 3.09). B. Road Use Vehicle Fleet 2.03 The composition and growth of the vehicle fleet is shown in Table 2.3. In 1978, the fleet (excluding motorcycles, farm tractors, trailers and self-propelled, pneumatic-tired construction equipment) totalled just under 27,000 or 4.8 vehicles per 1,000 inhabitants, which is above average for Eastern Africa but less than half of Kenya's vehicle ownership rate. The fleet includes about 13,500 passenger cars, 300 buses and 13,100 goods vehicles, with the balance made up of 4,200 motorcycles and 7,000 other vehicles (mostly trailers). Reflecting the general pattern of economic development to date (para. 1.03), 75% of all vehicles are registered in the Southern Region. Over the period 1973-78, the total fleet grew at 9.0% p.a. with the number of goods vehicles growing much faster than cars. One positive development with regard to fuel efficiency is that motorcycles have become a popular means of private transportation and have been growing at 10.1% p.a. 2.04 More than two-thirds of the goods vehicles have less than a 3-ton carrying capacity, a large portion of which are 4-wheel drive vehicles. Only 3% of the goods vehicles, mainly owned by companies involved in international movement of freight, have more than a 10-ton capacity, but the number of trailers in Malawi has almost doubled in the last two years, and truck-trailer combinations are common on the main routes. Ninety-seven percent of goods vehicles over 3 tons have a relatively low average capacity of 7 tons, partly because much of the internal freight is agricultural produce, and the load factors and poor road conditions make the use of larger trucks uneconomic.  - 10 - Table 2.3: Motor Vehicle ReRistrations, 1973-1978 1/ Proportion Growth Rate 1973 1974 1975 1976 1977 1978 of Fleet 1973-1978 Passenger Cars 10,218 11,233 10,983 10,222 11,516 13,483 35.4 5.7) Goods Vehicles 2/ 9,036 9,466 9,S00 10,842 12,124 13,088 34.3 7.7) 6.6 Buses 275 290 277 299 335 318 0.8 3.0 Motorcycles 2,614 2,842 2,903 3,557 4,694 4,235 11.1 10.1 Other 3/ 2,614 3,249 3,556 4,64 7,024 18.4 21.9 24,744 27,080 27,219 29,584 34,490 6 100.0 9.0 1/ Including hoth Government and privately-owned vehicles, which are licensed annually. 2i Including trucks, lan8-^"-s and minibuses. 3/ Including tractors, trailers and construction equi!yment. Source: Malawi Statistical Yearbook 1978 and the Economic Planning Division, February 1980 Traffic 2.05 There were no systematic traffic counts in Malawi until 1974 when, following an agreement reached during negotiations of the Second Highway Project, Government instituted a system of automatic counts supplemented by periodic annual counts at a number of strategic points on the road network. The counts are conducted by the Transport Unit of the National Statistical office in Zomba, and a national traffic census has been published annually since 1974. The census indicates that between 1974 and 1978 traffic increased by about 7% p.a. However, the census should be used with caution, since results of the automatic and periodic countings are often inconsistent, indicating a need for improved counting operations. Traffic volumes on main roads vary considerably between the south, where traffic is mostly in the range of 200-600 vehicles per day (vpd) (although parts of the main north- south road and the Lilongwe-Salima road have over 1,000 vpd), and the north with far lower traffic levels, mostly in the 40-130 vpd range. Traffic on secondary and selected district roads averages about 30 vpd. Overall traffic on Malawi-s roads is lower than that in Kenya and comparable to that in Zambia, where traffic on paved roads is about 400 vpd and on earth roads about 20 vpd. Road Transport 2.06 Over the past three years the number of licensed goods vehicles has been increasing by 10% p.a. Altogether there were about 14,200 goods vehicles licensed in Malawi in 1979, of which about 3,250 were Government vehicles, 8,870 were for private use, and 2,080 were public (for hire) vehicles. Little is known about vehicles owned by private companies, but statistics kept on transport companies hiring out their vehicles show that about 470 companies operate a fleet of 1,376 3-ton and over trucks and tankers. Over 60% of these trucks are owned by small operators, and 34% by 9 large operators with over 30 vehicles each. The average size of the for-hire fleet operated by small operators is 3 vehicles with an average capacity of 7 tons, compared to 9 tons operated by the large companies.  - 11 - 2.07 Road transport licenses are awarded by the Road Traffic Commis- sioner's Office within MTC, and are given for specific routes. In theory, freight rates are regulated by MTC, and at present are a minimum of 9.63 tambala per ton-km for paved roads to a maximum of 13.98 tambala per ton-km for earth and gravel roads; a rate of 9.63 tambala per ton-km for paved roads and 12.60 tambala per ton-km for earth and gravel roads is set for ADMARC cargo, the main agricultural marketing corporation. 1/ In practice it appears that these rates serve more as maximum tariffs, since on most routes competition among road transporters leads to charges lower than the regulated rates. However, the setting of maximum rates is necessary since transporters on a significant number of routes are in a monopoly situation. Government tries to ensure that regulated maximum rates are kept at a reasonable level by periodically revising rates, based on costs kept by one of the larger companies, United Transport (Malawi), and research into vehicle operating costs. 2.08 Road passenger services are provided by United Transport (Malawi), and a few small local operators. Of the total fleet of 221 buses, 176 are licensed for public service and these operate on over 150 routes, including urban services. Fares are regulated by MTC, and actual fares generally seem to be close to the regulated level. Vehicle Regulations 2.09 Vehicle dimension and weight regulations are adequate (maximum allowable axle load being nine tons), but enforcement by MTC-s Road Traffic Commissioner's Office and the national police was generally lax up to 1976 when pavement failures noted at that time on the Lilongwe-Zomba road were attributed to overweight Zambian trucks, then carrying considerable freight to and from the railhead at Balaka. IDA missions thereafter emphasized the importance of adequate enforcement, as required under the Credit Agreement for the Second Highway Project. Government subsequently opened three weigh- bridges installed at strategic points, and enforcement has improved consider- ably. While the much reduced Zambian truck traffic now terminates at the new railhead in Lilongwe and will mostly disappear when the railway line to the Zambian border is completed in 1981, Malawian firms are increasingly using large trucks on paved trunk roads. Strong enforcement of axle load limits should therefore continue. Road Safety 2.10 The toll of road accidents in Malawi is heavy and rapidly increasing. Some road accident data, compiled from reports prepared by the Malawi Police Force, are given in Table 2.4. 1/ Special rates apply to transport of fuel; these range from 11.25 to 13.75 tambala per ton-km.  - 12 - Table 2.4: Road Accident Statistics, 1966-1979 1 Road Accidents per 1000 Vehicles Road Accident Statistics licensed vehicles Est. Number of licensed pop.'/ vehicles per 1000 Vehicles Vehicles Year ('000) licensed persons Accidents Deaths Injuries involved Deaths Injuries involved 1966 4040 16,803 4.16 n.a. 153 1283 3066 9.1 76 182 1967 4159 17,687 4.25 n.a 148 1521 3324 8.4 86 188 1968 4281 18,471 4.31 n.a. 149 1525 3788 8.1 83 205 1969 4408 20,230 4.59 n.a. 184 1882 3993 9.1 84 202 1970 4538 21,467 4.73 n.a. 196 2040 4562 9.1 95 213 1971 4672 23,527 5.04 n.a. 185 1894 4660 7.9 80 198 1972 4809 23,903 4.97 n.a. 218 1921 4993 9.1 80 2'2 1973 4951 24,744 5.00 n.a. 269 2191 5118 10.9 89 210 1974 5097 27,080 5.31 n.a. 271 2370 5242 9.9 88 194 1975 5248 27,219 5.19 3844 278 2324 5397 10.2 85 198 1976 5403 29,474 5.46 3957 268 2339 5632 9.1 79 191 1977 5562 34,490 6.20 3991 305 2342 5702 8.8 68 165 1978 5762 38,148 6.66 4601 582 2402 5649 15.7 63 174 19791i 5895 39.407 6.68 4531 661 2488 6522 16.8 63 166 1/ Estimated on the basis of the 1966 and 1977 census. 2/ Preliminary data for 1979. Source: Ministry of Transport and Communications 2.11 The available information on road accidents suggests some inconsis- tencies between the numbers of accidents reported and the numbers which actually occur. The most reliable of these statistics are those for fatali- ties, but even these are likely to underrate the actual situation somewhat. Some general conclusions can be inferred: (a) in relation to population and road use, the number of road fatalities in Malawi is about the norm for the developing countries; (b) generally, the rate of fatalities per 1,000 vehicles decreases with increased vehicle ownership (number of vehicles per 10,000 inhabitants). In Malawi, however,  - 13 - this trend has been reversed, particularly over the last two years; (c) between 1969 and 1979 road use has approximately doubled. Over this period the number of vehicles reported to be involved in accidents has increased by less than 50%. But the number of road fatalities, a somewhat more reliable statistic, has increased by 3-1/2 times; and (d) the ratio of fatalities to injuries, normally 1:10 or more in most developing countries, has increased rapidly over the years; it was about 1 to 10 from 1967 to 1971, increased to 1 to 8 during 1977 and to 1 to 4 during 1978 and 1979. 2.12 The rapid increase in the rate of fatal accidents over the last two years is probably due to the rapidly increasing length of the bituminized road system. This is of considerable concern to Government, which is plan- ning to address the problem by improved education and enforcement of regula- tions as well as identification of "black spots" (short sections of road with high accident occurrence) and the improvement of roads in these areas. 2.13 Road use and traffic regulations are contained in the Road Traffic Act of 1969, with several amendments and expansions of the Act having been made over the years. The Act contains the usual regulations on vehicle sizes and axle loads, speed limits, driving instruction schools and licences, insurance, road service permits, regular inspection and testing. Licensing and vehicle inspection, annually for all goods vehicles over 3 tons and for all other vehicles over 10 years old, are the responsibility of MTC's Road Traffic Commissioner's Office; enforcement of traffic regulations is the responsibility of the Police Force's Traffic Section who patrol trunk roads, but lack capacity for strict enforcement. 2.14 Government established a National Road Safety Council (NRSC) in 1978 to coordinate road safety measures and activities at the national level. Members of NRSC are drawn from the Ministries of Transport and Communications, Trade, Industry and Tourism, Health, Justice, Education and Works and Supplies as well as from non-governmental organizations. Funds allocated to NRSC have been limited, and its activities to date have mainly consisted of twice weekly radio broadcasts on road safety. The Council is planning increased propaganda activities, e.g., seminars and film shows as well as the introduc- tion of traffic education in primary and secondary schools. During supervi- sion of the project, the Association will monitor the situation and maintain a dialogue with Government. If proposed measures do not produce adequate results, we would seek to define more clearly how IDA resources can be use- fully employed in future projects to assist the Government in reducing the toll of road accidents. Road User Revenue 2.15 Road users contribute to Government revenue through taxes and duties on fuel, lubricants, vehicles and spare parts, and through license and registration fees. The pump price of petrol is 70.7 tambala per liter  - 14 - and of diesel, 64.0 tambala per liter; equivalent import prices are 38.0 tambala and 35.6 tambala, respectively. The normal duty on petrol is 5 tambala per liter and on diesel, 2 tambala per liter; however, in 1979 during a period of fuel shortages in Malawi, an additional fuel levy of 14 tambala per liter was imposed on petrol and diesel, and this levy is still in force although the supply of fuel is back to normal. Duties on vehicles range from 5% for buses and trucks up to 40% for high value cars. There is a 24% surtax on fuel and 18% on all vehicles except buses and trucks over 3 tons. Total revenue from road users in 1978 is estimated at about US$15 million. Present expenditures on administering and maintaining the road network, including the costs of the Road Traffic Commissioner's Office, amount to less than US$3.5 million. Thus, in addition to covering maintenance expenditures and long-term marginal costs, including expected increases (para. 2.28), road user revenues make a significant contribution to the capital costs of the network. C. Administration and Training 2.16 MWS is responsible for all classified roads except district roads, which are the responsibility of the District Councils. MWS is also gradually taking over responsibility for maintenance of 2,000 km of feeder roads being constructed under several agricultural development projects; these roads are expected to become the districts responsibility as the District Councils gain sufficient road maintenance capacity. The Ministry of Agriculture and National Resources is responsible for the 1,600 km of forestry and national park roads and tracks. No authority is responsible for the undetermined length of un- classified earth tracks (para. 2.01), but the most important of these tracks are expected to be classified as district roads over the next few years. MWS is organized according to its three functions (see Chart 1): administration is carried out by well-staffed departments for administration, finance, personnel, stores and auditing; engineering is done by departments for design, building and roads; and development, the most recently established department, still has rather vague responsibilities but will increasingly be concerned with planning. Road planning and overall supervision are handled by the headquarters staff at Lilongwe. MWS has divisional offices in each of the three regions, which are directly responsible for field operations for roads and other works. In addition, these regional offices have 4 branch offices, 14 district depots and 48 subdistrict depots for road maintenance. The Ministry has a Plant and Vehicle Hire Organization (PVHO) with workshops in all regions and most districts and a central workshop in Blantyre for major repairs. 2.17 MWS has some 60 professional staff and about 100 subprofessional and supervisory staff; its Roads Department has 11 civil engineers and one transport economist. The Ministry has in the past been administered by senior expatriate staff who are gradually being replaced by Malawians as they acquire the education and experience needed. While the present salaried staff of about 1,200 includes 105 expatriates (in 1977 these numbered 135 and in 1982 the number is expected to be 85), of the 8 most senior posts filled by expatriates in 1977, 5 are now filled by well qualified Malawians; 4 of the  - 15 - Roads Department's 12 professionals are expatriates. While the rate of localization has been slow, it has ensured the long-standing high standard of efficiency of all departments of MWS. However, qualified Malawians are still needed to replace expatriates and to handle the expanded activities of MWS. The Roads Department has recently increased its number of posts for professionals to 25, in preparation for increased emphasis on road maintenance and planning; the new posts are expected to be filled by Malawians graduating from the Malawi Polytechnic during the next few years or temporarily by expatriates. 2.18 Although all of the 24 District Councils have a road foreman on their staffs and a few have a core of road employees, their administration for road improvement and maintenance has been very weak. DRIMP was designed to overcome this problem by providing for the establishment of an organiza- tional framework, training of key staff, and the provision of facilities. The concept was successfully tested under a pilot scheme in Kasungu District (para. 2.29) where the maintenance organization is now fully operational and has been handed over to the District Council. Z.19 The Government has an active program for selecting, educating and training nationals for professional positions, but the program has still not met the demand for qualified personnel, mainly because of the scarcity of qualified candidates. Training abroad is provided with external assistance, mainly from the U.K., the European Economic Community (EEC) and the United Nations Development Programme (UNDP). During 1978 about 220 trainees in all categories returned to Malawi, 25 with professional degrees and 30 from post-graduate training; at the end of 1978 about 600 Malawians were studying overseas, 65 for professional degrees and 95 in post-graduate courses. Opportunities for training overseas are sufficient for the number of suitably qualified candidates, and as the Malawi Polytechnic develops its capacity in the technical fields, the need for overseas training of engineers will gradually diminish except for post-graduate courses. Good progress has also been made in training lower echelon personnel, such as road supervisors, foremen, equipment operators and mechanics, at the Ministry's fully localized Training Branch in Zomba (for details, see Annex 2). While the training program, the quality of training, and the availability of staff to be trained are adequate, the capacity of the Training Branch is now fully utilized. MWS has concluded that the training center should be relocated in Lilongwe because expansion possibilities of the existing center in Zomba are limited and because, subsequent to relocation of MWS's headquarters to Lilongwe, continuous supervision of training activities and the use of MWS's profes- sionals as part-time instructors is impractical and very costly. Relocation would also permit the use of existing facilities (design and surveying divisions, materials and soils laboratory) in Lilongwe for training purposes. Relocation of the center is planned in several steps, starting with the establishment of facilities for training of road construction and maintenance personnel. The project will assist in financing facilities (class- rooms, dormitories, staff housing, teaching aids and equipment) required for the training of about 50 Roads Department staff annually, i.e., 25 trainees for each 6-month training course, which is more than twice the number now being trained (para. 3.10).  - 16 - D. Planning and Financing 2.20 As stated in para. 1.16, MWS is responsible for road planning but has limited capacity for this function. All major projects are, however, preceded by feasibility studies carried out by-consultants. Government's need for assistance in transport planning, including that for roads, will be addressed under the proposed project by the provision of technical assistance and training (para. 3.09). 2.21 A summary of current and planned road projects is presented in Table 2.5. Reflecting Government s general strategy of promoting development in the Central and Northern Regions, over 80% of the projects listed are in those regions. Main road projects, accounting for 55% of current and planned road expenditure, are mainly devoted to improvement of the north-south and lakeshore roads, and roads linking Malawi to Mozambique and Zambia. Road improvements will also be carried out under DRIMP (for district roads), a small Key Rural Road Program (for all classes of roads), and a proposed Upgrading of Secondary Roads Program. The latter, probably to be financed by the Canadian Government, will require a study of the secondary road system, which will assess the condition of the existing system, determine present and future traffic demand, estimate costs of improvement and maintenance, and determine which secondary roads will be economically justified for improvement. The study is expected to begin in mid-1981 and should be completed by early 1982. 2.22 As mentioned earlier (para. 1.15), the transport plan is probably over-ambitious. Although economic analysis for many of the proposed new projects has not yet been completed, it already appears that a significant number of the projects may be found marginal. If the plan is cut back, as seems likely, any marginal projects should be delayed in favor of others found more justified. 2.23 Highway expenditures are financed from the general budget or, for new construction, from the development account which is largely made up of grants and credits from bilateral and multilateral aid programs. Expenditures on construction have averaged about US$19.0 million equivalent annually over the past four years, while MWS's maintenance expenditures have averaged US$2.2 million (Table 2.6). Maintenance funds were adequate in the past but are now insufficient to maintain the aging network (para. 2.28). They will be increased in the future (para. 3.09 (v)).  - 17 _ Table 2.5: Current and Planned Road ProJects Approm. Estimated Cost from Construction Length Total Cost 1979/8011981/82 Period Remarks Current (km) (MK '000) (IWK '000) 1. Lilongwe-Kasungu 113 7,708 1,345 1975/80 Substantially completed 1979 with IDA financing under Cr. 523-MAI. 2. Chiweta-Karongs 106 3,063 150 1976/79 Completed early 1980 with KfW, EDF and local financing. 3. Key Rural Roads (main, secondary n.a. 500/yr. 1,000 1978/81 Under construction with UK finan- and district) cing. 4. District Roads Pilot Project 1,900 3,193 3,000 1979/81 Pilot Schema completed 1978. (Kasungu District) and District Phase I improvements started early Roads Improvement and Mainte- 1980. Financed Cr. 523-MAI. nance Program (DRIMP) Phase I. 5. Rumphi-Chiweta 71 22,810 3,600 1976/80 Feasibility and Engineering studies 1976/77 contract award early 1977. Completion mid-1980 with German financial assistance. 6. Ekwendeni-Rumphi 31 8,403 8,403 1980/81 Started early 1980 under AfDB financing. 7. Blantyre-Chikwawa 42 6,706 1,270 1977/79 Completion mid-1980 with EDF financing. 8. Mangochi-Namwera 23 770 770 1980/81 Reconstruction of selected sections to start early 1980 with AfDB financial assistance as a part of an agricultural project. 9. Nkhotakota-Dwanga 56 5,600 3,720 1978/81 Under construction with UK aid. 10. Kasongo-Jenda 84 10,535 5,000 1978/80 Completion mid-1980 with IDA finan- cing under Cr. 758-MAI. 11. Lilongwe-Dedza Overlays 9 1,550 1,550 1980 Started March 1980 with OPEC Special FPnd financing. Planned 12. Salima-Benga 53 22,800 11,0001/ 1981/83 Feasibility study updated early 1980 with KfW financing, which is also expected to finance construction in 1981/83. 13. Chileka-twanza-Mozambique border 80 n.a. - 1981/83 Feasibility and preliminary engineer- ing studies undertaken in 1980 with EDF financing. 14. Viphya prinary roads 84 50,000 - - Primary roads component of the Viphya Pulp Mill Project. Design financed by IDA Credit S-17-MAI. No cosnitment for construction. 15. Karonga-Chitipa-Zambia border 130 n.a. - - Joint Malawi/Zambia approach in finat cing of feasibility study to include route on to Lake Tanganyika. 16. Dwanga-Nkhata-Bay 137 n.a. - 1981 Feasibility and preliminary engineer- ing studies due to start 1980 with UK financing. 17. Jenda-Mzuzu-Ekwendeni 163 30,000 11,700 1981/83 Feasibility study completed in 1979 and design in 1980. Proposed for IDA financing under Fourth Highway Project being appraised. 18. Liwonde-Nsanama 31 8,850 8,850 1980/82 Feasibility study completion early 1980 with KfW financing which is also expected to finance construction in 1981/82. 19. Kasungu-Nkhotakota 109 n.a. - n.a. Financing of feasibility study being sought through AfDB. 20. Upgrading of Secondary Roads 2,400 20,000 12,000 1980/84 Preparatory road inventories and traffic counts in hand by Ministry of Works and Supplies. Financing under consideration by CIDA. 21. Benga-Nkhotakota 53 5,800 5,800 1981 Upgrading of existing pavement. Study report completed early 1980 with KfW financing. Rehabilitation financing under consideration by RfW. 22. DRIMP-Phase II 1,700 3,500 3,500 1981/83 Proposed for IDA financing under Fourth Highway Project. *Exchange rates approximately Malawi Kwacha 1.00-US51.25. 1/ Rough estirate. Source: Ministry of Works and Supplies, January 1980. October 1980  - 18 - Table 2.6: Annual Highway Expenditures, 1970-79 (MK '000 in current prices) 1/ US$ Million Fiscal Year Administration Construction Maintenance Total Equivalent 1970 240 3,684 564 4,488 5.0 1971 280 7,537 587 8,404 9.4 1972 330 4,855 1,364 6,549 7.3 1973 360 3,876 1,334 5,570 6.2 1974 370 3,959 1,378 5,707 6.4 1975 440 5,995 1,562 7,997 9.0 1976 440 10,988 1,882 2/ 13,310 14.9 1977 520 12,307 2,295 2/ 15,122 17.0 1978 530 14,934 2,003 17,467 19.6 1979 550 21,103 2,763 2/ 24,416 29.3 1/ Estimated on the basis of total MWS administrative expenses. 2/ Includes amounts allocated retroactively for emergency maintenance, mostly because of severe flood damages. Source: Economic Planning Division and Ministry of Works and Supplies, Roads Department, February 1980. E. Engineering 2.24 The Design Department of MWS is staffed by 12 civil engineers and 25 technicians and surveyors. The Department has a well-equipped laboratory for materials and soils testing and is primarily engaged in design of structures; it carries out preliminary investigations and road and bridge designs, but engineering for major road projects is done by consultants. The design standards adopted by the MWS (Annex 3) are appropriate for the country's topographic and traffic conditions. F. Construction 2.25 For major road projects, the Roads Department employs contractors, following suitable prequalification and tendering procedures; contracts are generally let on a unit-price basis. In recent years, the Roads Department has undertaken several force account road construction projects (about US$3 million equivalent annually); the performance of the units has been satis- factory. Labor-intensive methods are employed for construction of culverts, drains and structural excavation, and are being increasingly used in the improvement and maintenance of district roads (para. 2.29). 2.26 The developing domestic contracting industry is fully employed on buildings, small structures, estate and other minor roads, as well as resealing  - 19 - of short sections of main roads and of runways of minor airfields. Domestic contractors lack the capacity for major road works, which are undertaken by foreign contractors who have shown considerable interest in working in Malawi. Private Malawian firms have lately been acquiring holdings (up to 49%) in local branches of foreign contracting firms. Senior domestic contractor personnel are largely drawn from MWS, whose training facilities (para. 2.19) therefore perform a useful function in indirectly training contractor personnel. Construction supervision is carried out by the Roads Department or by consult- ing engineers acting as its representatives. Supervision is satisfactory and payment procedures are prompt, and, in general, the experience of MWS in dealing with contractors has been satisfactory. G. Maintenance 2.27 The Regional Divisions of the MWS are responsible for maintaining the classified road system with the exception of district roads. Each of the regions has a well trained cadre of maintenance personnel. Maintenance operations are largely mechanized, although extensive use is made of labor for routine maintenance. The Roads Department rents equipment from the Plant and Vehicle Hire Organization (also under MWS), which is responsible for procuring and maintaining all Government-owned equipment and vehicles; rental rates are based on the cost of purchasing and maintaining the equipment. Equipment availability and utilization rates are satisfactory. 2.28 Until a few years ago maintenance of main and secondary roads in Malawi was fairly good, much better than in most other East African countries. However, while the funds allocated to MWS for recurrent road maintenance have increased by about 10% annually, the current high inflation rate and the rapid increases in the length of the improved network have now caused the funds to be barely sufficient for routine maintenance. Periodic main- tenance will soon be needed for gravel roads and for about 1,000 km of roads paved in 1970-77; after about 1985 another 1,000 km, paved in 1978-83, will also require periodic maintenance. The problem will soon be compounded by a shortage of staff, especially at the road technician, mechanic and operator levels. The project therefore includes a comprehensive study of maintenance needs, and the technical, financial and manpower resources required to meet those needs (para. 3.09). The study would be coordinated with related efforts by the Canadian International Development Agency (CIDA) (para. 2.21) and other donors. The project also includes some funds to procure equipment for minor repairs of bituminous pavements and to start building a new training center in Lilongwe to facilitate expansion of training of road construction and main- tenance personnel (para. 3.10). 2.29 Although Government has traditionally supplemented the District Councils limited funds for recurrent maintenance by providing an annual light grading to the most important district roads, the major portion of the district roads network was neglected prior to the start of DRIMP in 1974, under the IDA-financed Second Highway Project. Under an initial pilot project in the  - 20 - Kasungu District, an improvement and maintenance unit was established which assumed responsibility for all maintenance operations of the Kasungu District Council and trained its roads staff as well as road foremen from all 24 districts. The pilot scheme was successful and was subsequently extended to three additional districts. This ongoing first phase of DRIMP, also financed under the Second Highway Project, includes the establishment of maintenance units in each district, improvement of about 1,100 km of district roads to a maintainable but minimum all-weather standard, and the training of key District Council staff both on-the-job and at the Zomba training center. It also includes the establishment of three improvement units equipped with heavy graders, which will supplement the maintenance units in each district during the improvement phase. Improvement works are mostly carried out by intermediate technology but labor-intensive methods have been used on a 50 km demonstration project and have proved successful. They will be used in- creasingly as far as is economically and practically feasible. The project would help finance the second phase of DRIMP, extending the program to ten additional districts and improving another 2,600 km of roads (para. 3.07). 2.30 The establishment of DRIMP and the improvement works are being implemented by MWS with some assistance from consultants because of MWS's staff constraints. When this phase is completed the facilities and trained staff will be turned over to the District Councils so that they can improve their maintenance operations, which will be mostly labor-intensive. Recurrent maintenance costs will have to be supplemented by the Government as District Councils revenues are very limited. The proposed project, however, will assist Government in this respect by providing financing on a declining basis for the incremental portion of the recurrent maintenance costs during the project period (para. 3.08). III. THE PROJECT A. Objectives 3.01 The main objectives of the project are to assist the Government in (a) its general strategy of developing the economic potential of the northern half of the country, particularly the Mzimba, Viphya and Mzuzu areas, which are the centers of recently initiated and planned rural development projects; (b) achieving a balanced pattern of economic and social growth by providing for improvements and maintenance of district roads; and (c) promoting mainten- ance of the main and secondary road networks. More specifically, the project aims at: (a) continuing the upgrading of sections of the country-s most important road to paved standard; (b) making a start in redressing the country's deteriorating road maintenance performance; (c) extending DRIMP which was initiated under the Second Highway Project; and (d) strengthening the transport planning capacity of EPD.  - 21 - B. Project Description 3.02 The project consists of: (a) construction of a two-lane bituminous-paved road between Jenda and Luwawa Turnoff (32.2 km), and between Mbowe and Ekwendeni (37.2 km); (b) improvement of the existing road between Luwawa Turnoff and Mbowe (100 km) to a low gravel standard to permit regular maintenance; (c) the second phase of DRIMP; (d) consulting services, and training where required, for: (i) supervision of (a) and (b) above; (ii) assistance to MWS in preparing and carrying out (c) above; (iii) assistance to MWS in preparing the third phase of DRIMP; (iv) assistance to strengthen EPD's transport planning unit; and (v) a study of road maintenance needs and the capacity and resources of MWS and the District Councils to meet maintenance requirements; (e) provision of road maintenance equipment to MWS's Roads Department; and (f) facilities for the first phase of MWS's new training center in Lilongwe. (a) Road Construction 3.03 The road construction component comprises two sections of the country-s main north-south road which will ultimately link the Northern Region with the more developed Central and Southern Regions. The road has, during recent years, been constructed from the south with IDA financing under the First, Second and Third Highway Projects (about 500 km from Zomba through Lilongwe and Kasungu to Jenda), and from the north with financing from the EDF, the Kreditanstalt fur Wiederaufbau (KfW) and the African Development Fund (AfDF) (about 210 km from Karonga through Chiweta and Rumphi to Ekwendeni). Construction of the two sections under the project would leave only about 100 km of unpaved road out of a total distance of about 1,100 km between Bangula in the deep south and Karonga in the far north. Drainage on the existing road is poor, resulting in road closures during the rainy season, and the surface is very rough and costly to maintain under present conditions.  - 22 - 3.04 The alternative of upgrading the road to an engineered gravel standard was considered but was not found technically or economically feasible because of the steep slopes and scarcity of naturally available gravels in the area. 3.05 Detailed engineering for the road construction was carried out by the Malawi Branch of Scott Wilson Kirkpatrick and Partners (U.K.) and is satisfactory. The geometric and structural design standards (Annex 3) are consistent with established standards in Malawi and are appropriate for the terrain and forecast traffic. They are generally based on a design speed of 50 m.p.h. (80 km p.h.) and a maximum gradient of 6.5%. The pavement structure will be a crushed stone basecourse with a double 6.7 m wide bituminous surface treatment and a 1.5 m wide shoulder on each side. (b) Road Improvements 3.06 Paving of the remaining 100 km of road section from Luwawa Turnoff to Mbowe is not recommended at this stage because for the most part it would not be economically justified (see para. 4.10). However, Government is currently studying the possibility of developing the wood resources of the Viphya forest, and for the scope of development likely to be feasible in the area, considerable upgrading of the road, in tandem with intensive subsequent maintenance, would be needed for it to withstand the effects of the forecast traffic over the next few years, until full reconstruction becomes viable. The project will therefore finance improvement of the Luwawa Turnoff-Kalungulu (42.5 km) and Champhoya-Mbowe (47 km) road sections to a low- all-weather gravel standard by widening of narrow sections, highly improved drainage (including new culverting), reshaping of formation and a 15 cm gravel surface. The Kalungulu-Champhoya section (10.5 km) is already in acceptable condition and would need only to be gravelled. This would facilitate the carrying out of routine maintenance and intensive grading over the next few years of forecast traffic. (c) Second Phase of DRIMP 3.07 The project would extend the ongoing first phase of DRIMP to ten additional districts that have already been agreed with the Government. Selection of roads for improvement and planning for the maintenance units in these districts were carried out by Scott Wilson Kirkpatrick and Partners. Facilities to be provided and a list of roads to be improved during the first year of the project have been agreed with the Government; the work program for subsequent years will be agreed not later than four months before the beginning of each fiscal year until completion of this project component (para. 5.01(a)). The project would provide for the establishment of maintenance units in each district including a depot, housing for key staff and light equipment (Annex 4). It would also provide for improvement of about 2,600 km of district roads under the jurisdiction of the District Councils in those ten districts; lists of roads to be improved are given in Annex 5. Improvement works would be carried out by the three existing improvement units established under Phase I and the ten maintenance units to be established under the proposed second phase of DRIMP.  - 23 - Implementation of the second phase should start immediately following comple- tion of the first phase in mid-1981. In order to avoid disruptions in implementing road improvements, construction of depots and housing for key staff in the first three districts of the second phase should be completed at that time. As the construction, carried out by local contractors or, if tendering is unsuccessful, by force account, has a long lead time and the construction period is about 8-12 months, it is proposed that payments since, July 1, 1980, for the construction of depots and housing in the first three districts of DRIMP's second phase, be financed retroactively under the Project up to a maximum of US$350,000. 3.08 Maintenance of the district roads, subsequent to improvements, will be undertaken by the District Councils using the facilities provided, and staff trained, under the project. While Government has provided the District Councils with some assistance for recurrent maintenance (para. 2.29), regular maintenance of the improved network will require substantial and increasing Government assistance. The Government has agreed to assist the District Councils by providing grants to supplement the Councils revenues available for road maintenance, in amounts sufficient to bring the total up to the recurrent maintenance cost for each district as annually assessed by MWS. Government disbursements would be tied to output which in turn requires supervision by MWSs regional offices. Because of the country's difficult economic situation and because Government will concurrently need to increase its allocations for recurrent maintenance of main and secondary roads, it is proposed that during the project period the Credit would provide financing on a declining basis for the incremental portion of the recurrent maintenance costs of roads to be improved under DRIMP. The system of Government assis- tance, and the allocations needed during the project period have been agreed with Government (Annex 6); appropriateness of allocations will be discussed annually by Government and IDA on the basis of MWS's updated estimates of the funds required by the District councils (para. 5.01 (b)). (d) Consulting Services and Training 3.09 The project provides consulting services, and training where necessary, for the following purposes: (i) supervision of construction of the Jenda-Luwawa Turnoff and the Mbowe-Ekwendeni road sections and of improvement of the Luwawa Turnoff-Mbowe section; (ii) technical assistance in planning for and implementing the second phase of DRIMP, the establishment of the maintenance units, the training of local staff, the road improvements and the subsequent maintenance, since MWS lacks sufficient staff for this purpose (para. 2.30). In order for the second phase to start immediately following completion of the first phase in mid-1981, Government has financed the preparation of the second phase, carried out by the  - 24 - consultants Scott Wilson Kirkpatrick and Partners, who also prepared the first phase and are providing technical assistance for its implementation. It is, therefore, proposed that pay- ments since July 1, 1980 for the preparation of the second phase be financed retroactively under the project up to a maximum of US$230,000; (iii) technical assistance in planning for and preparing the third phase of DRIMP since MWC lacks sufficient staff for this purpose (para. 2.30); (iv) technical assistance to strengthen EPD's transport planning unit with one transport planner for about three years and overseas training in transport planning of about three local staff for approximately two years. Terms of reference for the transport planner are given in Annex 7. An agreement has been reached with Government that by December 31, 1981, a transport economist will be appointed with qualifications and experience and under terms and conditions satisfactory to the Association. It has also been agreed that by June 1, 1981, Government will select the first of about three candidates for overseas training and the remaining ones by December 31, 1981; the trainees qualifications and the proposed training program will be satisfactory to the Association (para. 5.01 (c)); (v) in preparation for expanded maintenance operations, a comprehen- sive study of the maintenance needs of all road classes, and of the capacity of MWS and the District Councils to meet mainte- nance requirements on a continuing basis. The study would make specific recommendations covering an initial five-year period, including the expansion of facilities (depots, equipment, etc.), manpower requirements at all levels, and the funding needs for recurrent maintenance. Terms of reference for the study are given in Annex 8 and have been agreed with Government. Agreement has also been reached with Government: (1) on maintenance allocations for the next two years, which will be increased in real terms by 10% each year (a total of 21%); (2) that Government will exchange views with the Association on the findings and recommendations of the maintenance study, which is to be completed by May 31, 1982; (3) that Government will establish a rolling 5-year maintenance program satisfactory to the Association to implement the recommendations of the study; and (4) that thereafter, not later than four months before the beginning of each fiscal year until five years after completion of the project, Government will exchange views with the Association on the 5-year rolling program, including each year's maintenance works and allocations (para. 5.01(d)). (e) and (f) Maintenance Equipment and Training Center Facilities 3.10 While any large-scale effort to strengthen MWS's maintenance depart- ment must await the conclusion of the maintenance study, the proposed project would begin to correct the country's deteriorating road maintenance perform- ance by providing for (i) equipment to complement and expand existing plant for minor repair of bituminous pavements; it has been agreed with Government  - 25 - Table 3.1: Cost Estimates MK million USS million % Local Foreign Total Local Foreign Total Foreign (a) Road Construction (i) Jenda-Luwawa Turnoff 1.83 4.25 6.08 2.29 5.31 7.60 70 (ii) Mbowe-Ekwendeni 2.25 5.24 7.49 2.81 6.55 9.36 70 Subtotal (a) 4.08 9.49 13.57 5.10 11.8f 16.96 (b) Road Improvements (i) Luwawa Turnoff-Champhoya 0.64 1.01 1.65 0.80 1.26 2.06 61 (ii) Champhoya-Mbowe 0.60 0.95 1.55 0.75 1.19 1.94 61 Subtotal (b) 1.24 1.96 3.20 1.55 2.4 4.00 (c) DRIMP, Second Phase (i) Facilities and Improvements 2.45 1.93 4.38 3.06 2.41 5.47 44 (ii) Maintenance Operations 0.88 0.59 1.47 1_ial .0.74 I.R. 40 Subtotal (c) 3.33 2.52 5.85 4.16 3.15 7.31 (d) Consulting Services and Training (i) Supervision of a(i) 0.06 0.31 0.37 0.07 0.39 0.46 85 (ii) Supervision of a(ii) 0.08 0.46 0.54 0.10 0.58 0.68 85 (iii) Supervision of b(i) 0.01 0.05 0.06 0.01 0.06 0.07 . 85 (iv) Supervision of b(ii) 0.01 0.04 0.05 0.01 0.05 0.06 85 (v) Technical Assistance for (c) & training 0.14 0.78 0.92 0.18 0.97 0.15 85 (vi) Preparation of DRIMP, Third Phase 0.03 0.17 0.20 0.04 0.21 0.25 85 (vii) Technical Assistance to EPD & training 0.04 0.25 0.29 0.05 0.31 0.36 85 (viii) Maintenance Study 0.08 0.42 0.50 0.10 0.53 0.63 85 Subtotal (d) 0.45 2.48 2.93 0.56 3.10 3.66 teF Mdinfenance Equipment for MWS 0.01 0.10 0.11 0.01 0.13 0.14 90 (f) New Training Center 0.30 0.20 0.50 0.38 0.25 0.63 40 Subtotal (a-f) 9.41 16.75 26.16 11.76 20.94 32.70 (g) Contingencies (i) Physical (10%) 0.94 1.68 2.62 1.17 2.10 3.27 (ii) Pricel/ 2.08 2.90 4.98 2.60 3.63 6.23 Subtotal (g) am2 4.58 7.60 3.77 5.73 9.50 Total Project Cost 12.43 21.33 33.76 15.53 26.67 42.20 63 Total Project Cost excluding = -- - taxes and duties 10.03 21.33 31.36 12.53 26.67 39.20 68 l/ Expected price increases are the following, expressed as a 1980 1981 1982 1983 For civil works and equipment - foreign component 10.5 9.0 8.0 7.0 - local component 12.0 12.0 10.0 10.0 For consulting services 10.0 10.0 10.0 10.0  - 26 - that the following equipment would be procured under the project (para. 5.01(e)): 3 bitumen minibatch mixers/spreaders, 3 vibrating rollers (hand), 3 small bitumen heaters and 3 pick-up vehicles (1-1/2 tons); and (ii) the first phase of MWS's new training center in Lilongwe; facilities (classrooms and dormitories for 25 trainees, staff housing) to be provided to the center have been agreed with Government (Annex 2, Attachment 1) (para. 5.01(f)). C. Cost Estimates 3.11 The total project cost including contingencies is currently esti- mated at US$42.2 million, with a foreign exchange component of US$26.7 million or 63% of total project costs. Excluding taxes and duties, the total cost is about US$39.2 million. Details are provided in Table 3.1. 3.12 The base costs are estimated as of mid-1980 and have been derived as follows: (a) Road Construction: The cost estimates for construction of the Jenda-Luwawa Turnoff and the Mbowe-Ekwendeni road sections, to be carried out in 1981/82, were derived from consultants' estimates based on final design quantities. Estimated costs average between US$200,000 and US$250,000 per km which appear reasonable in the light of bids recently received for similar works. In a detailed analysis, the consultants estimate the foreign exchange component of construction at 70% of total costs. This component includes depreciation of equipment, imported materials, fuel, spare parts, the foreign expense of expatriate personnel, over- head costs and profits. The local component mainly comprises labor and taxes. (b) Road Improvements: The cost of improvements for the Luwawa Turnoff-Mbowe road section, to be carried out in 1982, is derived from consultants' estimates based on a road inventory. Estimated costs average about US$40,000 per km. (c) DRIMP: The costs of establishing the maintenance units and of improvement works and subsequent maintenance are based on actual costs incurred for such units under DRIMP's first phase. The implementation period would extend from mid-1981 to about mid- 1984. (d) Consulting Services: The supervision of construction and improve- ments will require about 130 man-months of consulting services; the technical assistance for preparation and implementation of DRIMP's second phase will require about 90 man-months; technical assistance for preparation of DRIMP's third phase, about 15 man-months; technical assistance to strengthen EPD's transport planning unit, about 30 man-months; and the maintenance study, about 55 man-months. Estimated total costs are US$1,270,000,  - 27 - US$1,150,000, US$250,000, US$300,000, and US$630,000, respectively. The average man-month cost, including salary, costs, fees, inter- national travel and subsistence is estimated at about US$8,200 for the construction supervision, US$9,000 for the technical assistance to DRIMP-s second phase, US$10,000 for the technical assistance to prepare DRIMP's third phase, and US$9,500 for the technical assistance to EPD and for the maintenance study; these costs are in line with recent experience in Malawi. In addition to these personnel costs, the contract costs include the costs of local transportation, local office operating expenses, printing of reports and some other minor expenses. The estimated costs for the maintenance study, which should be completed by mid-1982, also include the cost of equipment for pavement roughness and strength evaluation. (e) Assistance to MWS Maintenance Operations: Cost of equipment was assessed at US$140,000, on the basis of existing market prices in Malawi. The cost of MWS's new training center was estimated by MWS on the basis of current prices in Malawi. D. Financing 3.13 The project cost net of taxes and duties is US$39.2 million. The IDA Credit of SDR 25.9 million (about US$33.0 million equivalent) will finance 100% of the foreign cost and about 51% of the local cost (about 84% of the total cost net of taxes and duties) of the project. Government will finance the remaining US$6.2 million (about 16% of total cost net of taxes and duties). E. Implementation and Procurement 3.14 MWS will be responsible for project execution apart from the tech- nical assistance for transport planning, for which EPD will be responsible. Road construction and improvements totalling about US$21.0 million, will be executed under two unit price contracts awarded after international competi- tive bidding (ICB) in accordance with Bank Group guidelines. 3.15 Because of the small scope and scattered location of works, the depots and housing for the second phase of DRIMP and MWS's new training center, totalling about US$2.5 million, will be constructed by local con- tractors, following local competitive bidding procedures satisfactory to the Association or, if this proves unsuccessful, by force account as under DRIMP's first phase. In order to train local staff in the ten districts, improvement and maintenance works under DRIMP's second phase, amounting to a total of US$4.5 million, will be by force account, with consultants providing technical assistance in line with experience under the Program's first phase. 3.16 Supervision of road construction and improvements, as well as technical assistance for the second phase of DRIMP, the preparation of  - 28 - DRIMP's third phase, the technical assistance to EPD's transport planning unit, and the carrying out of the maintenance study will be by consultants employed under terms and conditions satisfactory to the Association at a total cost of about US$3.7 million; this has been agreed with Government (para. 5.01(g)). 3.17 In view of the diversity of types and the few numbers of each type of equipment for maintenance of bituminous pavements, costing a total of about US$140,000, procurement of these items will be through local shopping. To maintain standardization and interchangeability between districts as well as with MWS's PVH0, which will undertake repairs and overhauls, equipment for the districts' maintenance units, costing a total of about US$940,000 (including about US$190,000 for equipment to strengthen the existing improvement units) would be purchased either from manufacturers supplying equipment for the first phase of DRIMP, by extending existing contracts if still in effect at the time of Credit signing, or by local shopping. 3.18 An implementation schedule is presented in Chart 2, the details of which have been agreed with Government (para. 5.01 (h)). F. Disbursements 3.19 The Credit funds would be disbursed on the following basis: (a) 80% of total expenditures for construction and improvements on the Jenda-Ekwendeni road; (b) 100% of foreign expenditures and 90% of local expenditures for equipment, vehicles and spare parts; (c) 70% of expenditures on civil works (depots and housing) for DRIMP's second phase and on civil works for MWS's new training center; (d) 60% of expenditures on civil works for district roads' improve- ments under DRIMP's second phase; (e) 85% of total expenditures for consultants' services; (f) for incremental maintenance expenditures on district roads: for each district being brought into the maintenance program, subsequent to completion of road improvements, 75% of incre- mental costs during the first year of maintenance; 50% during the second year of maintenance; and 25% during the third year of maintenance; and (g) 100% of foreign expenditures for overseas training of EPD staff. It is recommended that IDA finance retroactively up to US$350,000 to meet 70% of total costs of depots and housing for the first three districts of DRIMP-s  - 29 - second phase (para. 3.07) and up to US$230,000 to meet the foreign exchange component of consultants' fees for the preparation of DRIMP's second phase (para. 3.09 (ii)). IDA financing of the incremental total cost of maintenance, declining from 75% for the first year of maintenance to 50% for the second year and 25% fozr the third year, would be matched to Government's financial assistance to the District Councils in accordance with targets agreed with Government (para. 5.01(b)). 3.20 All disbursements will be fully documented except for expenditures under force account for civil works included in Parts c and f of Table 3.1 which will be made against certificates of work performed, to be issued by the technical assistance consultants. The documents supporting these state- ments of expenditure will not be submitted for review but will be retained by MWS for inspection by the Association during project supervision missions. 3.21 An estimated schedule of disbursements is given in Table 3.2. Table 3.2: Estimated Schedule of Disbursements IDA Fiscal Year Cumulative Disbursements and End of Quarter at End of Quarter (US$'000) 1981 June 30, 1981 1,000 1982 September 30, 1981 6,200 December 31, 1981 10,600 March 31, 1982 14,900 June 30, 1982 19,500 1983 September 30, 1982 24,700 December 31, 1982 27,600 March 31, 1983 28,500 June 30, 1983 29,600 1984 September 30, 1983 30,500 December 31, 1983 31,900 March 30, 1984 32,400 June 30, 1984 32,700 1985 September 30, 1984 33,000 Closing Date: December 31, 1984 Source: Mission Estimates, December 1980.  - 30 - G. Accounting, Auditing and Reporting Requirements 3.22 Project accounts, including statements of expenditures, will be maintained by MWS with separate accounts for each component. In previous IDA projects, accounts have been audited by the Auditor General; as this arrangement has proved satisfactory, it would also be followed for the proposed project. Government has agreed that all project accounts will be audited by the Auditor General and that the audited accounts together with the auditors' report will be submitted to IDA not later than six months after the end of the fiscal year (para. 5.01(i)). Government has also agreed on progress reporting requirements (Annex 9), which should include indices for measuring implementation, and the submission of a project completion report, in a form satisfactory to the Association, not later than six months after the closing date (para. 5.01(h)). IV. ECONOMIC EVALUATION A. Evaluation of Project Components General 4.01 The Government of Malawi's Statement of Development Policies (1971) lists the following as main socioeconomic objectives: (a) rural development; (b) increasing real GDP through the development of smallholder output, estate agriculture and industry; and (c) promoting development of its Northern Region which had heretofore been isolated from the rest of the country. The proposed project continues the work done under previous IDA projects to assist Govern- ment in attaining these objectives. The project includes upgrading of the Jenda-Mzuzu-Ekwendeni road (169 km), part to paved standard (69.4 km) and part to all-weather gravel standard (100 km); this would only leave unpaved 100 km of the 1,100 km north-south spine road linking the Northern Region with the railway and population centers to the south. In addition, the road sections to be constructed and improved under the project would support Government-s specific development goals for the Mzimba, Viphya and Mzuzu areas, which are the centers of recently initiated or planned rural development projects. At present, access to the north is provided only by air, lake transport and low-standard earth roads. The project component to help improve and maintain the district road network will support rural development efforts by facilitat- ing the provision of agricultural inputs and extension services, and allowing the expansion of distribution and marketing systems. Finally, the project-s maintenance component, which will lay the groundwork for improving Government s highway maintenance organization and execution of works, is a necessary adjunct to all three of the development goals mentioned above. 4.02 The construction and improvement of the road is justified and expected to yield an economic return (ER) of about 19%. District roads  - 31 - to be improved under the project are selected in accordance with socio- economic criteria and have a rate of return of at least 12%. No ER has been calculated for the maintenance study and equipment provided under the project, although if implemented, the study-s recommendations are expected to result in substantial benefits deriving from Government-s increased capacity to maintain the road network. 1. Upgrading of the Jenda-Mzuzu-Ekwendeni Road (169 km) (a) Main Benefits and Beneficiaries 4.03 The main project benefits from these works are related to reduced vehicle operating and maintenance costs. Benefits deriving from the impact of the road on the north in terms of increased agricultural production have only partially been allowed for in estimates of generated traffic in the economic analysis. Benefits from accident reduction have not been included in the computation of the economic returns. 4.04 In the first instance, the major beneficiaries of transport cost reductions will be the local truck owners and operators. However, in view of the competitive nature of the road transport industry (para. 2.07) and the fact that Government-prescribed rates, when observed, take account of road conditions, it can be expected that the savings in operating costs and time will be passed on in the form of lower freight rates to the farmers and other shippers in the zone of road influence. Consumers are also expected to benefit from reduced transport costs, particularly those living in the north where prices are substantially higher than in the south, partly because of transport costs. (b) Area of Influence of the Project Road 4.05 The Jenda-Mzuzu-Ekwendeni road forms part of the Bangula-Karonga highway, the backbone of the country's road network. The main road will have national importance by serving to unify the entire country and will eventually form part of an international route to Dar es Salaam via Karonga-Chitipa- Tunduma. The Mbowe-Ekwendeni section to be constructed under the project will run through Mzuzu, the administrative and commercial center for the whole Northern Region, while the Jenda-Mbowe road section will serve the Mzimba and Viphya areas, which are now either being developed or are planned for develop- ment. Furthermore, the road will provide an outlet for feeder roads carrying cash crops for export, as well as production from estate and smallholder farming. 4.06 A number of development projects have already started within the project road's direct and indirect zone of influence. The Association is involved in two of these projects: the Second Karonga Rural Development Project and a Wood Energy Project to help establish forestry plantation and farmers- woodlots in the districts of Karonga, Chitipa, Mzimba and Rumphi. Tobacco, rice and tea cultivation schemes would also be indirectly served by the road. In addition, Government is presently studying the  - 32 - possibilities for developing the Viphya forest; consultants financed by the Overseas Development Administration (ODA) and KfW are studying various wood processing industries for sawed wood, particle boards, block wood, wood- based energy products, and pulp and paper products. The economic analysis does not take into account the traffic which will be generated by such industries (probably to be situated near the project road), as there are currently no firm plans to develop the wood resources. However, when the plans are finalized and the wood-processing industries established, the economic justification for paving the remaining unpaved sections of the project road should be evaluated, given the substantial benefits expected from savings in vehicle operating and maintenance costs which will arise from the traffic generated by the wood-processing industries. (c) Economic Analysis (i) Traffic 4.07 Traffic on the road is assumed to grow at 7% p.a. in accordance with recent traffic count (Table 4.1). By 1983, when construction of the road is completed, traffic will vary from 83 vpd on the Luwawa Turnoff-Kalungulu section to 395 vpd on the Mzuzu-Ekwendeni section; this includes normal and diverted traffic, plus traffic generated from agricultural projects at the northern and southern ends of the road. Generated traffic equivalent to 10% of the 1983 traffic level has also been included in the evaluation of the paved road sections (Jenda-Luwawa Turnoff and Mbowe-Ekwendeni). Table 4.1: Projected Traffic Levels in 1983 (vpd) Normal and 1/ 2/ 3/ Diverted Generated Agricultural Total Jenda-Luwawa Turnoff (32 km) 105 10 16 131 (55) Luwawa T.off-Kalungulu (42.5 km) 76 - 7 83 (28) Kalungulu-Champhoya (10.5 km) 115 - 15 130 (49) Champhoya-Mbowe (47 km) 83 - 14 97 (26) Mbowe-Mzuzu (17 km) 160 16 1 177 (53) Mzuzu-Ekwendeni (20 km) 353 34 8 395 (133) 1/ Generated traffic benefits are only valued at half the unit rate applied to normal traffic in the economic analysis. 2/ From both ongoing and planned agricultural development projects in area of road and Mazamba sawmill. 3/ Figures in brackets represent heavy traffic, i.e, all trucks and buses. Sources: Scott Wilson Kirkpatrick and Partners, Feasibility Study of Jenda-Mzuzu Road and mission estimates.  - 33 - (ii) Vehicle Operating Costs 4.08 Vehicle operating costs (voc) for the road section to be gravelled (Luwawa Turnoff-Mbowe) were estimated by IDA staff while voc for other road sections were determined by the Highway Design and Maintenance Model (HDM). According to the HDM model, voc will increase significantly on earth (as well as gravel) roads as traffic increases, particularly when traffic exceeds 100 vpd. This occurs even with a modest increase in maintenance expenditures since the roads were not originally designed and constructed for a high level of traffic. Table 4.2 gives voc for representative vehicles on roads carrying about 115 vpd. Table 4.2: Vehicle Operating Costs 1/ (MK per km) Vehicle Type Earth Gravel Bitumen Car 0.37 0.25 0.19 Landrover 0.84 0.53 0.35 Bus 1.19 0.90 0.75 Truck (7 ton) 0.53 0.45 0.41 Truck (14 ton) 1.04 0.96 0.76 Truck (27.5 ton) 1.50 1.19 1.01 1/ Net of taxes and duties in mid-1980 prices. Sources: Derived from Scott Wilson Kirkpatrick and Partner s application of HDM model in Feasibility Study of the Jenda-Mzuzu Road. (iii) Costs of Construction, Improvement and Maintenance 4.09 Annex 10 shows cost estimates of the road construction and improve- ment; these are net of taxes at mid-1980 prices and include the cost of supervision and physical contingencies of 10%. Costs for the Jenda-Luwawa Turnoff, Mbowe-Mzuzu and Mzuzu-Ekwendeni sections cover construction of the road to paved standard, to be built by contract. Improvement costs of the Luwawa Turnoff-Kalungulu and Champhoya-Mbowe sections include costs for widening the road, improving the drainage, and gravelling. Costs for the Kalungulu-Champhoya section only include gravelling as this road is in acceptable condition. (iv) Economic Return 4.10 Economic analysis of the abovementioned costs and benefits shows that upgrading of the Jenda-Mzuzu-Ekwendeni road is well justified. The overall economic return is estimated at 19% under the traffic growth estimate. A separate analysis has also been carried out for each section of the road. On the three road sections to be improved to paved standard the ER ranges from 13% to 30% (Table 4.3), while the three sections to be improved to  - 34 - gravel standard show rates of return between 11% and 55%. Details of the economic evaluation are given in Annex 10. The sections to be paved were also considered for improvement to engineered gravel standard, but this was not found justified due to the very high cost of regravelling (gravel sources in the area are scarce and rock crushing would be necessary) and the eventual need to construct the road to paved standard. The economic analysis of the other three sections showed that paving was not justified at this time, except for the Kalungulu-Champhoya section (10.5 km) which is too short a section to pave. The three sections will be gravelled only once because of the inadequate supply of gravel in the area. The economic viability of paving these three sections should be re-evaluated following establishment of the wood-processing industries. Table 4.3: Estimated Rates of Return Rate of Return Total Project (169 km) 19% Jenda-Luwawa T.off (32 km) 13% Luwawa T.off-Kalungulu (42.5 km) 11% Kalungulu-Champhoya (10.5 km) 55% Champhoya-Mbowe (47 km) 18% Mbowe-Mzuzu (17 km) 16% Mzuzu-Ekwendeni (20 km) 30% (v) Sensitivity 4.11 The various components of the economic evaluation have not been estimated with equal degrees of reliability. To determine the sensitivity of the ER to variations in the estimated costs and benefits, an analysis was carried out, assuming an overall increase in costs and decrease in benefits, both separately and individually. The results of this analysis indicate that with either a 20% increase in costs or only a 5% growth in traffic, the ER would be 16%. A combination of the two would yield an ER of 13%, which is still above 12%, the estimated opportunity cost of capital in Malawi. 2. District Road Improvement and Maintenance Program (DRIMP) (a) Main Benefits and Beneficiaries 4.12 Under the proposed extension of DRIMP to ten additional districts, maintenance units would be established in all ten districts and about 2,600 km of district roads would be improved and subsequently maintained. Benefits from the works to be undertaken are expected in the form of: (a) vehicle operating cost savings to nonagricultural traffic, although traffic will not be sufficiently high to alone justify improvement for many of the roads, and (b) increases in agricultural production made possible by easier access to farms and markets.  - 35 - The economic analysis assumes that improved access to agricultural extension services and marketing facilities will induce farmers not only to increase the productivity of the land already cultivated, but also to put more avail- able land under cultivation. Evidence from the IDA-financed Lilongwe Land Development Program (Crs. 113, 244, and 550-MAI) would tend to support the above assumptions, since the program's success in promoting the use of both improved seeds and fertilizer primarily hinged on the road network, which allowed the timely and adequate provision of inputs. 4.13 Significant benefits are also expected from institution building, since training as well as equipment and depots will be provided to the District Councils so that they may gradually be able to expand their road maintenance capacity. There will also be benefits from reduced spoilage of produce and improved access to health, education and other social and adminis- trative facilities for those residing in the influence area of the project roads. 4.14 Most of the benefits from the reduction in transport costs will accrue to (a) the road transporters, since ADMARC pays them fixed rates for transportation of goods to and from rural markets, and (b) the farmers living within the roads influence area, assuming reduced transport costs are passed on to them. The main beneficiaries from the increased agricultural production and improved access to social amenities will be those residing in the vicinity of the roads. (b) Economic Analysis 4.15 Selection of the district roads to be improved during the 3-year period covered by the second phase of DRIMP will be based on socioeconomic criteria, and all roads will have an estimated rate of return of at least 12%. The economic analysis of the roads include an estimate of benefits not only from vehicle operating cost savings, but also from incremental agricul- tural production, the latter based on farm models representative of the areas of influence of the roads proposed for improvement. Details of the methodology employed are included in Annex 11. The selection criteria and methodology for calculating the rate of return were agreed with Government during appraisal. In May 1980, Government appointed consultants to select all roads to be included in the program. Government and the Association have agreed on roads to be improved during the first year of the program, and roads to be improved in subsequent years will be agreed annually not later than four months before the beginning of each fiscal year (para. 5.01(b)). 3. Other Project Elements 4.16 The remaining project components include the comprehensive study of maintenance needs in preparation for a 5-year maintenance program, tech- nical assistance to prepare the third phase of DRIMP and to strengthen transport planning and coordination, and the provision of some maintenance equipment as well as facilities for MWS's new training center in Lilongwe. All five components will help to reverse the country's deteriorating road  - 36 - maintenance performance and are justified on those grounds; the technical assistance for transport planning will also assist in improving budget management, thus reducing the risk of misallocating scarce funds. The maintenance study is particularly important by assisting Government to _ plan for the technical, financial and manpower requirements for the main- tenance of its rapidly increasing road network and could pave the way for further IDA lending for maintenance. At present the project-funded mainte- nance equipment and training facilities will begin to address some of the country's needs. B. Risks 4.17 Other than the risks already discussed in the sensitivity analysis (para. 4.11), there are no major risks associated with the upgrading of the Jenda-Mzuzu-Ekwendeni road. However, the major risk threatening both DRIMP and the maintenance program to be agreed under the project is the availability of Government's financial resources for maintenance of both the national and district road networks. To minimize the risk, agreement has been reached on Government financing of maintenance costs. The Association would help to cushion the burden by financing the incremental maintenance costs for DRIMP on a declining basis. However, the Government's eventual ability to uphold these agreements will depend on the strength of its economy and its continued responsiveness to the needs of the road subsector. V. AGREEMENTS REACHED AND RECOMMENDATION 5.01 Agreement has been reached with Government: (a) on a list of facilities (depots, housing, equipment, tools) to be provided and on a list of district roads to be improved during the first year of the second phase of DRIMP; the work program for subsequent years will be agreed not later than four months before the beginning of each fiscal year until completion of this project component (para. 3.07); (b) on a system of financial assistance for recurrent maintenance to be provided by Government to the District Councils and the allocations needed during the project period. The appropriate- ness of allocations will be discussed annually, not later than four months before the beginning of each fiscal year, by Government and IDA on the basis of MWS's updated estimates of the funds required by the District Councils (para. 3.08); (c) that by December 31, 1981, a transport economist will be appointed to assist EPD, having qualifications and experience and under terms and conditions satisfactory to the Association. It has also been agreed that by June 1, 1981, Government will select the first of about three candidates for overseas training in transport planning and the remaining ones by December 31, 1981; the trainees quali- fications and the proposed training program will be satisfactory to the Association (para. 3.09);  - 3 7 - (d) (i) on maintenance allocations for the next two years; (ii) that Government will exchange views with the Association on the findings and recommendations of the maintenance study, which is to be completed by May 31, 1982; (iii) that Government will establish a rolling 5-year maintenance program satisfactory to the Association to implement the recommendations of the study; and (iv) that there- after not later than four months before the beginning of each fiscal year until five years after completion of the project, Government will exchange views with the Association on the 5-year rolling program, including each year's maintenance works and allocations (para. 3.09); (e) on the number and types of equipment to be procured for MWS (paras. 3.10 and 3.17); (f) on facilities to be provided for MWS's new training center in Lilongwe (para. 3.10); (g) that consultants will be employed on terms and conditions satisfactory to the Association (para. 3.16); (h) on a project implementation schedule (para. 3.18) as well as progress reporting requirements, and the submission of a project completion report (para. 3.22); and (i) that all project accounts will be audited by the Auditor General and that the audited accounts together with the auditor's report will be submitted to IDA not later than six months after the end of the fiscal year (para. 3.22). 5.02 The proposed project is suitable for an IDA Credit of SDR 25.9 million (US$33.0 million equivalent) to the Government of Malawi on standard terms. December 22, 1980  -38- ANNEX 1 Page 1 of 4 MALAWI FOURTH HIGHWAY PROJECT Transport-Related IDA Projects in Malawi A. HIGHWAY PROJECTS Approximate Status Year Credit Amount Main Purpose LengLh (% complete) (US$ Mil) (km) 1966 S-2-MAI 0.49 Detailed engineering for - 100 main roads. 1968 112-MAI 11.5 Main roads construction; 290 100 study of road transport regulations and road/rail coordination. Refunding of Credit S-2-MAI. 1974 523-MAI 10.5 Main roads construction; 113 100 pilot scheme for the District Roads Mainte- nance and Improvement Program (DRIMP); 300 100 First Phase extension of DRIMP. 1,100 65 1974 S-17-MAI 2.0 Design of infrastructure - 95 requirements for exploit- ation of the Viphya forest resources. 1977 758-MAI 10.5 Main roads construction; 85 100 feasibility study and detailed engineering of main roads. B. AGRICULTURAL PROJECTS 1968 113-MAI 6.0 The Lilongwe Land Develop- 1,900 100 1971 244-MAI 7.3 ment Program included a 1975 550-MAT 8.5 component for construction of feeder roads. 1968 114-MAI 3.7 The Shire Valley Develop- 430 70 363-MAI 10.5 ment Project included a 1978 823-MAI minor component for con- struction and rehabilita- of main, secondary and feeder roads.  -39- ANNEX 1 Page 2 of 4 Approximate Status Year Credit Amount Main Purpose Length (% complete) (US$ Mil) (km) 1971 282-MAI 6.6 Karonga Development 130 50 (roads) 1976 1286-T-MA-i/ 9.2 Project included a minor 100 (ports) component for rehabili- tation of freight services on Lake Malawi, including port facilities. 1978 857-MAI 22.0 National Rural Development 1,600 10 Project includes a road component, cofinanced by EDF, to construct and rehabilitate roads in project areas. 1/ Third Window Loan. Source: IDA appraisal reports and department files. December 1980 \  -40- ANNEX 1 Page 3 of 4 MALAWI FOURTH HIGHWAY PROJECT Status of Government's Compliance with Major Covenants in Previous Credits Credit 523-MAI, Second Highway Project Section of Credit Agreement Commitment Action Section 3.01 (b) Consult with IDA from time to Has been done during all time on the desirability of supervision missions. Construc- using a cement stabilized base tion is complete and no stabili- for highway construction. zation was needed. Section 3.07 By December 31, 1976, discuss Report has been submitted and with IDA, the Borrowers' eva- discussed in connection with luation report on district proposed extension of program to road maintenance pilot pro- other districts. gram. Section 4.01 Keep records to adequately Has been complied with. reflect operations, resources and expenditures of the Project. Section 4.02 Take necessary stps to ensure Weighbridges in three strategic that dimensions and axle loads locations have recently been made of vehicles shall be consistent operative. Existing legislation with structural and geometric is being enforced; amendments to standards of national highways. increase penalties are under preparation. Section 4.03 Establish and maintain a suit- Program of periodic countings able traffic survey system. covering all of the country started in 1974. Continuous counting in selected locations also started in 1974. Section 4.04 Adequately maintain national Maintenance of main and secondary roads in accordance with sound roads has been adequate over the engineering and financial last few years. Budget alloca- practices and provide funds tions have increased by 10% annually and other resources as needed. (grants to District Counc"v.w s for maintenance of district roadS increased by 50% in the 1<978/79 budget), while allocations to public works ir general have been stag- nant or decreased. However, budget for 1980/81 does neither take full account of inflation nor of rapid road development and maintenance, particularly periodic maintenance,. is deteriorating.  Ai aEX P6 a7e 4 o f Z; Credit 758-MAI hi a rt Section of Credit Agreement Comrtmnent Action Section 3.04 (b) Report to Association quarterly Has not been complied with bt. t (revised to semi-annually) on preparation of reports undenwaa^ progress of project including monitoring indices. Section 4.02 Construct Kasungu-Jenda road Design of both roads co;i-. and improve sections of Zomba- with covenant. Const tuct on r. Lilongwe road to standards in Kasungu-Jenda road @%'o Schedule 4 of Agreement. complies. Impyovement-- c , Lilongwe road (85% omp.l Section 4.03 Employ contractors for Has been complied withi.v construction and improvements whose qualifications and terms of employment are satisfactory to the Association. Section 4.04 Take measures to regulate Weighbridges operated ir tharee dimensions and axle loads of strategic locations. Exisrinc vehicles in conformity with legislation being enforcead a-m-, structural and geometric ments to increase perialtis ' standards of road network. preparation. Section 4.05 Maintain suitable traffic data is being complied with on a collection system. continuing basis. Section 4.06 a) Continue to maintain main See under Action for Sectios :> and secondary roads in of Second Highway Projectc. accordance with sound engi- neering practices and provide necessary funds and resources required for that purpose. b) From time to time exchange Is being complied with on a views with Association on continuing basis. programs and budget for main- tenance of other classified roads. Section 4.07 Consult and exchange views with Has been complied witb. Association on results of feasibility study of Jenda- Mzuzu corridor prior to start- ing detailed engineering. December 1980  - 42 - ANNEX 2 Page 1 of 3 MALAWI FOURTH HIGHWAY PROJECT STAFF APPRAISAL REPORT Training of Subprofessional Staff of the Ministry of Works and Supplies 1. The Ministry of Works and Supplies (MWS) currently conducts a variety of training courses for technicians and other subprofessionals at its training center at Zomba. These courses are directed at foremen and supervisors who deal with buildings, roads and equipment; short courses are also offered to drivers and upgrading courses to mechanics and their supervisors. Although MWS is not responsible for water supply services, during the last few years the center has offered a course for water works foremen and a short upgrading course for their supervisors. In the future, the center may also offer courses for draftsmen as well as architectural and landscape assistants. The 1980/81 budget includes MK320,000 for the training center's operating expenses. 2. The training center has two main training methods: (a) Residential Instruction: Trainees reside at the center for the duration of their course and are taught theory and practical work. After successfully completing the course, trainees are presented with certificates and ,re posted to various department of the Ministry according to their specialization. (b) In-Service Instruction: After completing the residential course, trainees are sent to the field for practical training under the guidance of a senior member of the Ministry. 3. The following personnel took residential courses at the training center in 1978 and 1979. Basic Courses 1978 1979 Building Foremen 17 20 Mechanical Foremen 19 21 Road Foremen 9 16 Electrical Foremen 9 - 54 57  - 43 - ANNEX 2 Page 2 of 3 Upgrading Courses Building Supervisors 8 4 Mechanical Apprentices 18 - Refrigeration Apprentices 23 21 Bricklayers and Carpenters 8 5 Mechanical Supervisors 5 8 Forestry Supervisors 4 4 Welders 5 - Plant Operators 47 48 Drivers 66 79 Electrical Foremen 9 - Water Project Staff - 32 Water Plant Operators - 14 193 215 Total 247 272 4. The 15 instructors of the training center are former subprofessional staff who have had a substantial amount of practical experience in the various fields concerned and have been given additional training overseas. The local instructors are also assisted by a team of volunteers under the Japanese Overseas Corporation Volunteers Scheme who teach specialized courses for mechanics. In addition, equipment manufacturers sponsor courses to train operators and foremen in the use of graders, dozers, loaders, etc. 5. Most courses can accommodate a maximum of 15 trainees, although some courses for electrical foremen, mechanical apprentices and upgrading courses in various trades are being included without the provision of extra facilities. 6. The existing training center in Zomba has adequate instructors, training equipment and training aids for MWS's current staffing requirements, but is not expected to meet the future training needs of the various depart- ments, including that for roads. As more main and secondary roads are improved and bituminized and the District Roads Improvement and Maintenance Program is extended throughout the country, road maintenance requirements, and therefore Roads Department staffing needs, will increase appreciably. To provide an expanded staff, subprofessional personnel will have to be trained for higher positions, while more lower-level staff would be trained in high- ways operations. The increased need for staff is also exacerbated by Govern- ment s low retirement age -- 50 years. 7. In preparation for the expanded training effort, the training center building, its equipment and instructors will also need expansion. However, since the existing training center in Zomba is located in the midst of a built-up area, any substantial expansion at the present location is  - 44 - ANNEX 2 Page 3 of 3 impossible. It has therefore been proposed to move the center from Zomba to Lilongwe where the Ministry's main activities are now concentrated (all ministries were previously located in Zomba) and where, because of its greater convenience, the Ministry's professional staff will be able to give supplementary lectures to the trainees. The new training center in Lilongwe would be built on a phased basis, and would comprise a classroom block, student dormitory facilities, and staff housing. As presently con- ceived by MWS, total facilities required for the new center and associated costs, are as follows: Estimated Cost No. Type in MK 6 Classroom 160,000 2 Dormitory 110,000 1 Kitchen 30,000 1 Dining room 41,000 1 Common room 30,000 1 Library 56,000 10 Offices 80,000 2 Workshop 61,000 10 Staff houses 500,000 2 Drawing office 54,000 5 Garage 40,000 1,162,000 Site Works 118,000 Furniture, appliances, utensils, workshop and office equipment and training aids 200,000 Total 1,480,000 The first phase of this development, outlined in Attachment 1 hereto (i.e., facilities to accommodate 25 trainees in road construction and maintenance), would be financed under the project. This would allow the training of about 50 road personnel annually, more than twice the current number. December 1980  - 45 - ANNEX 2 Attachment 1 MALAWI FOURTH HIGHWAY PROJECT STAFF APPRAISAL REPORT Lilongue Training Center: Facilities to be provided under the project: Estimated Cost No. Type in MK 2 Classroom 54,000 1 Dormitory 55,000 1 Kitchen 30,000 1 Dining room 25,000 1 Common room 15,000 1 Library 19,000 40 Offices 40,000 1 Workshop 20,000 30 Staff houses 100,000 358,000 Site Works 42,000 Furniture, appliances, utensils, workshop and office equipment and training aids 100,000 Total 500,000 December 1980  - 46 - ANNEX 3 FOURTH HIGHWAY PROJECT STAFF APPRAISAL REPORT Road Design Standards Adopted by the MS 1. Speed mph Terrain Type of Road Normal Nountainous Desirable Mininum Desirable Minimum Class I 60 50 50 40 Class II 60 50 40 30 Class III Each project treated individually 2. Sight Distance, Minimum Radius, Maximum Gradient Speed (mph) 30 40 50 60 Stopping visibility (ft) 200 275 350 475 Passing visibility (ft) 800 1,300 1,700 2,000 Minimm radius (ft) 239 477 716 1,146 Maximm gradient normal 6% 5.0% 4.5% 4.0% Maximum gradient mountainous 9% 7.0% 6.5% 6.0% 3. Cross Section Type of Road Roadway Width (ft) Carriageway plus shoulders Class I 22 + 2x5 - 32 Class II 18 + 2x7 = 32 Class III 16 + 2x4 = 24 h. Pavement Structure Design TRRL Road Note 31 5. Construction Materials Layer Description Specifications Subgrade Top 6 in depth (cut) Pi - 30, 95% mod. Top 12 in depth (fill) AASHO - Compaction Subbase Natural gravel or 10 < Pi-< 15 crushed stone CBR 25% at 95% mod. AASHO compaction after 48 hrs. soaking Natural gravel Pi<.6 LL -30 CBR 85% at 98% mod AASHO compaction after 48 hours soaking Base Crushed stone Aggregate crushing value< 30 Stabilised gravel PI < 15 LL < 40 Unconfined compressive strength 250 lbs/sq in Surfacing material depends on traffic volume and general conditions. 6. Bridges Bridge width = Carriageway width Footpath = 2 x 2 feet Loading: according to BS 153 with 0.8 HA Source: Ministry of Works and -5pplies, Roads Department, February 1980  MALAWI FOURTH HIGHWAY PROJECT STAFF APPRAISAL REPORT DRIMP II: Program for Procurement of Facilities and Equipment 1981-831/ (Costs in HK '000) 1981 _ _ _ _ _ _ _ _ 1982 __ _ _ _1983 __ _ _ _ _ _ _ _ _ _ TOTAL _ _ _ _ _ Cost of Cost of Cost of Cost of Cost of Coto Cost of COaT f Housing Maintenance Total Housing Maintenance Total Housing Maintenance Total Housing Maintenance Total District and Depots Equipment Cost and Depots Equipment Cost and Depots Equipment Cost and Depots Equipmnt Cost Lilongwe 104.1 82.6 186.7 104.1 82.6 186.7 Chikwawa 146.9 59.7 206.6 146.9 59.7 206.6 Karonga 165.3 59.7 225.0 165.3 59.7 225.0 Mangochi 197.0 60.4 257.4 197.0 60.4 257.4 Chitipa 202.3 59.7 262.0 202.3 59.7 262.0 Dedza 196.6 61.2 257.8 196.6 61.2 257.8 Dowa 148.1 59.7 207.8 148.1 59.7 207.8 Machinga 158.5 59.7 218.2 158.5 59.7 218.2 Thyolo 164.7 59.7 224.4 164.7 59.7 224-4 Ntcheu 132.6 59.7 192.3 132.6 59.7 192.6 416.3 202.0 618.3 595.9 181.3 777.2 603.9 238.8 842.7 1,616.1 622.1 ,238.5 I/ Program for 1982 and 1983 will be revieved with Association not later than four months before beginning of each fiscal year. b c Source: Scott Wilson Kirkpatrick and Partners, December 1980 X 0 4 8  - 48 - ANNEX 4 Page 2 of 10 MALAWI FOURTH HIGHWAY PROJECT STAFF APPRAISAL REPORT DRIMP II: Facilities to be Provided under the Project for the ten District Maintenance Units (a) Summary Number Type Costs in MK '000 11 Tractors 140,800 11 Towed Graders 77,000 10 Four-Wheel Drive Vehicles 130,000 10 Pick-up Vehicles 141,800 10 Tractor Trailers 50,000 27 Motorcycles 21,495 10 Pipe Holds 6,000 10 Workshop Equipment 20,000 10 Vehicle Spares 35,000 Subtotal 622,095 Depots and Housing 10 Depots (Workshops, Stores, Offices) 639,729 16 Sub-Depots 334,053 10 Supervisor's Houses 192,903 12 Foreman's Houses 108,672 10 Operators'/Mechanics' Houses 223,962 Subtotal 1,499,119 10 Fencing and Paving of Yards 55,000 10 Office Equipment 37,700 10 Hand Tools 24,555 Subtotal 117,285 TOTAL 2,238,499  - 49 - ANNEX 4 Page 3 of 10 (b) Lilongwe District Depots and Housing Costs in MK Number Type- 1 Depots (Workshops, Stores, Offices) 11,500 5 Sub-depots 39,300 1 Supervisor's Houses 13,300 2 Foreman's Houses 11,400 1 Operators'/Mechanics' Houses 15,500 Subtotal 91,000 1 Fencing and paving of yards 5,500 1 Office Equipment 3,770 1 Hand Tools 3,878 Subtotal 13,148 Equipment 2 Tractors 25,600 2 Towed Graders 14,000 1 Four-wheel Drive Vehicles 13,000 1 Pick-up Vehicle 14,180 1 Tractor Trailer 5,000 6 Motorcycles 4,710 1 Pipe Molds 600 1 Workshop Equipment 2,000 1 Vehicle Spares 3,500 Subtotal 82,590 Total 186,738 (c) Chikwawa District Depots and Housing 1 Depots (Workshops, Stores, Offices) 54,656 1 Sub-depots 29,253 1 Supervisor's Houses 18,960 1 Foreman's Houses 8,660 1 Operators'/Mechanics' Iouses 24,098 Subtotal 135,627  - 50 - ANNEX 4 Page 4 of 10 Number Type Costs in MK 1 Fencing and paving of yards 5,500 1 Office Equipment 3,770 1 Hand Tools 1,968 Subtotal 11,238 Equipment 1 Tractors 12,800 1 Towed Graders 7,000 1 Four-wheel Drive Vehicles 13,000 1 Pick-up Vehicles 14,180 1 Tractor Trailers 5,000 2 Motorcycles 1,570 1. Pipe Molds 600 1 Workshop Equipment 2,000 1 Vehicle Spares 3,500 Subtotal 59,650 Total 206,515 (d) For Karonga District Depots and Housing 1 Depots (Workshops, Stores, Offices) 86,573 1 Sub-depots 20,000 1 Supervisor's Houses 21,643 1 Foreman's Houses 8,612 1 Operators'/Mechanics' Houses 18,164 Subtotal 154,992 1 Fencing and paving of yards 5,500 1 Office Equipment 3,770 --1 Hand Tools 1,025 Subtotal 10,295 Equipment 1 Tractors 12,800 1 Towed Graders 7,000 1 Four-wheel Drive Vehicles 13,000  - 51 - ANNEX 4 Page 5 of 10 Number Type Costs in MK '000 1 Pick-up Vehicles 14,180 1 Tractor Trailers 5,000 2 Motorcycles 1,570 1 Pipe Molds 600 1 Workshop Equipment 2,000 1 Vehicle Spares 3,500 Subtotal 59,600 TOTAL 224,937 (e) For Mangochi District Depots and Housing Number Type Costs in MK ' 000 1 Depots (Workshops, Stores, Offices) 71,000 2 Sub-depots 56,000 1 Supervisor's Houses 19,000 1 Foreman's Houses 10,000 1 Operators'/Mechanics' Houses 28,000 Subtotal 184,000 1 Fencing and Paving of Yards 5,500 1 Office Equipment (sets) 3,770 1 Hand Tools (sets) 3,372 Subtotal 12,642 Equipment Number Type Costs in MK '000 1 Tractors 12,800 1 Towed Graders 7,000 1 Four-Wheel Drive Vehicles 13,000 1 Pick-up Vehicles 14,180 1 Tractor Trailers 5,000 3 Motorcycles 2,355 1 Pipe Molds 600 1 Workshop Equipment (sets) 2,000 1 Vehicle Spares (sets) 3,500 Subtotal 60,435 TOTAL 257,077  - 52 - ANNEX 4 Page 6 of 10 (f) For Chitipa District Depots and Housing Number Type Costs in MK '0000 1 Depots (Workshops, Stores, Offices) 93,000 1 Sub-depots 33,000 1 Supervisor's Houses 22,500 1 Foreman's Houses 12,000 1 Operators'/Mechanics Houses 30,000 Subtotal 190,500 1 Fencing and Paving of Yards 5,500 1 Office Equipment (sets) 3,770 1 Hand Tools (sets) 2,442 Subtotal 11,712 Equipment Number Type Costs in MK '000 1 Tractors 12,800 1 Towed Graders 7,000 1 Four-Wheel Drive Vehicles 13,000 1 Pick-up Vehicles 14,180 1 Tractor Trailers 5,000 2 Motorcycles 1,570 1 Pipe Molds 600 1 Workshop Equipment (sets) 2,000 1 Vehicle Spares (sets) 3,500 Subtotal 59,650 TOTAL 261,862 (g) For Dedza District Depots and Housing Number Type Costs in MK '000 1 Depots (Workshops, Stores, Offices) 63,000 3 Sub-depots 72,000 1 Supervisor's Houses 19,500 1 Foremen's Houses 9,500 1 Operators'/Mechanics' Houses 20,000 Subtotal 184,000  - 53 - ANNEX 4 Page 7 of 10 Number Type Costs in MK '000 1 Fencing and Paving of Yards 5,500 1 Office Equipment (sets) 3,770 1 Hand Tools (sets) 3,162 Subtotal 12,432 Equipment Number Type Costs in MK '000 1 Tractors 12,800 1 Towed Graders 7,000 1 Four-Wheel Drive Vehicles 13,000 1 Pick-up Vehicles 14,180 1 Tractors Trailers 5,000 4 Motorcycles 3,140 1 Pipe Molds 600 1 Workshop Equipment (sets) 2,000 1 Vehicle Spares (sets) 3,500 Subtotal 61,220 TOTAL 257,652 (h) For Dowa District Depots and Housing Number Type Costs in MK '000 1 Depots (Workshops, Stores, Offices) 63,000 1 Sub-depots 24,500 1 Supervisor's Houses 19,500 1 Foreman's Houses 9,500 1 Operators'/Mechanics' Houses 20,000 Subtotal 136,500 1 Fencing and Paving of Yards 5,500 1 Office Equipment (sets) 3,770 1 Hand Tools (sets) 2,378 Subtotal 11,648  - 54 - ANNEX 4 eage 8 of Io Number Type Costs in MK '000 1 Tractors 12,800 1 Towed Graders 7,000 1 Four-Wheel Drive Vehicles 13,000 1 Pick-up Vehicles 14,180 1 Tractor Trailers 5,000 2 Motorcycles 1,570 1 Pipe Molds 600 1 Workshop Equipment (sets) 2,000 1 Vehicle Spares (sets) 3,500 Subtotal 59,650 TOTAL 207,798 (i) For Machinga District Depots and Housing Number Type Costs in MK '000 1 Depots (Workshops, Stores, Offices) 63,000 1 Sub-depots 30,000 1 Supervisor's Houses 19,000 1 Foreman's Houses 9,000 1 Operators'/Mechanics' Houses 26,000 Subtotal 147,000 1 Fencing and Paving of Yards 5,500 1 Office Equipment (sets) 3,770 1 Hand Tools (sets) 2,214 Subtotal 11,484 Equipment Number Type Costs in MK '000 1 Tractors 12,800 1 Towed Graders 7,000 1 Four-Wheel Drive Vehicles 13,000 1 Pick-up Vehicles 14,180 1 Tractor Trailers 5,000 2 Motorcycles 1,590 1 Pipe Molds 600 1 Workshop Equipment (sets) 2,000 1 Vehicle Spares (sets) 3,500 Subtotal 59,670 TOTAL 218,134  - 55 - ANNEX 4 Page 9 o-f (j) For Thyolo District Depots and HousIng Number Type Costs in MK '000 1 Depots (Workshops, Stores, Offices) 71,000 1 Sub-depots 30,000 1 Supervisor's Houses 20,000 1 Foreman's Houses 11,000 1 Operators'/Mechanics' Houses 22,000 Subtotal 154,000 1 Fencing and Paving of Yards 5,500 1 Office Equipment (sets) 3,770 1 Hand Tools (sets) 1,476 Subtotal 10,746 Equipment Number Type Costs in MK '000 1 Tractors 12,800 1 Towed Graders 7,000 1 Four-Wheel Drive Vehicles 13,000 1 Pick-up Vehicles 14,180 1 Tractor Trailers 5,000 2 Motorcycles 1,590 1 Pipe Molds 600 1 Workshop Equipment (sets) 2,000 1 Vehicle Spares (sets) 3,500 Subtotal 59,670 TOTAL 224,396 (k) For Ntcheu District Number Type Costs in MK '000 1 Depots (Workshops, Stores, Offices) 63,000 Nil Sub-depots - 1 Supervisor's Houses 19,500 2 Foreman's Houses 19,000 1 Operators'/Mechanics' Houses 20,000 Subtotal 121,500  ANNEX 4 - 56 - Page 10 of 10 Number Type Costs in MK '000 1 Fencing and Paving of Yards 5,500 1 Office Equipment (sets) 3,770 1 Hand Tools (sets) 2,670 Subtotal 10,940 Equipment Number Type Costs in 'NI '000 1 Tractors 12,800 1 Towed Graders 7,000 1 Four-Wheel Drive Vehicles 13,000 1 Pick-up Vehicles 14,180 1 Tractor Trailers 5,000 2 Motorcycles 1,570 1 Pipe Molds 600 1 Workshop Equipment (sets) 2,000 1 Vehicle Spares (sets) 3,500 Subtotal 59,650 TOTAL 193,090  _ 57 _KANNEX 5 - 57 - Page 1 of 8 MALAWI FOURTH HIGHWAY PROJECT STAFF APPRAISAL REPORT DRIMP II: Program for District Roads Improvement 1981-19841/ 1981 19821/ 19831/ 19841' TOTAL L Improve- Improve- Improve- Improve- Improve- District Km ment Costs ment Costs ment Costs ment Costs ment Costs Lilongwe 467 174.5 174.5 Chikwawa 190 128.8 128.8 Karonga 128 218.0 218.0 Mangochi 279 295.1 295.1 Chitipa 270 369.5 369.5 Dedza 326 257.8 257.8 Dowa 291 151.9 151.9 Machinga 237 212.9 212.9 Thyolo 180 146.6 146.6 Ntcheu 276 107.1 107.1 Total 2,644 521.3 664.6 622.6 253.7 2,062.2 1/ Program for 1982, 1983 and 1984 will be reviewed with Association not later than four months before beginning of each fiscal year. Source: Scott Wilson Kirkpatrick and Partners, December 1980 December 1980  DR1MP 11: Roads to beImprved (Costsin eK) (a) I Equipment Total 1/ Present Discounted Net Present Road Length Improve- Supervision Depot & Housing Economic .EconomiL Value of Traffic Value at 12% No. Km ment Costs Costs Amortization Costs Cost/Km Benefits Discotint Rate 2/ D20 19 16,800 6,932 1,640 25,373 1,335 3,586 1,302 D21 18 20,438 8,433 2,319 31,190 1,733 15,322 12,640 D22 66 14,884 6,141 3,218 24,244 367 44,662 43,346 D23 17 3,861 1,593 1,020 6,473 381 2,282 952 D24 20 4,983 2,019 1,043 7,955 398 7,498 6,151 D25 26 2,029 837 849 3,715 143 3,912 2,820 D26 28 4,811 1,985 1,426 8,223 294 2,282 1,039 D27 13 1,717 709 520 2,946 227 5,868 4,692 D28 22 3,973 1,639 874 6,486 295 6,846 5,602 D29 17 9,098 3,754 1,414 14,267 839 20,212 18,424 D30 3 145 60 86 291 97 2,608 1,562 D31 24 6,700 2,765 1,260 10,724 447 21,190 19,794 D32 4 1,782 735 376 2,894 724 9,780 8,107 D43 9 2,111 871 434 3,417 380 2,934 1,605 D46 53 4,106 1,694 1,653 7,453 141 3,260 2,170 D55 3 341 141 102 584 195 3,912 2,768 D284 23 819 338 397 1,553 68 1,630 613 m D285 2 1,551 640 233 2,424 1,212 7,172 5,011 3 UD/A 35 34,499 14,235 4,533 53,268 1,522 2,608 137 UD/B 5 3,210 1,324 575 5,109 1,022 8,476 6,505 UD/C 9 3,694 1,524 863 6,081 676 978 UD/D 17 7,086 2,924 1,168 P1,178 658 2,934 1,327 UD/E 11 6,103 2,518 1,186 9,807 892 0 309 3/ LD/F 23 19,844 8,188 3,064 31,095 1,352 2,804 503 467 174,495 72,000 30,253 276,749 593 1>t o xD 0 1/ Economic cost excludes maintenance cost; however calculation of NPV does take the PDV of increased maintenance costs (949 K/km) into account. X 2/ Figures without superscripts denote NPV based on savings in Vehicle ODeratina Costs only , all are per km. 3/ Including induced agricultural benefits.  (b) In Chikwawa District Equipment Total 1/ Present Discounted Net Present Road Length Improve- Supervision Depot & Housing Economic Economic Value of Traffic Value at 12% 2 No. KKm ment Costs Costs Amortization Costs Cost/Km Benefits _ Discount Rate -2 D134 77 59,076 27,514 7,958 94,548 1,228 3,423 1,246 D135 18 10,622 4,947 1,423 16,993 944 2,608 715 D136 15 7,705 3,589 1,090 12,384 826 1,620 3,975 3/ D139 4.5 199 92 130 421 94 978 -65 4/ D14ON 15 1,454 677 395 2,527 168 3,260 2,143 D140S 21 4,788 2,230 1,165 8,183 390 3,390 2,051 D142 22 31,532 13,193 3,569 45,089 2,147 650 284 3/ D143 2.5 834 388 233 1,455 582 330 209 3/ TiD /A 10 11,547 5,378 1,696 18,620 1,862 980 (-231)5/ UD/B 5 1,065 496 372 1,932 386 980 2125 190 128,82 2 58,504 18,031 202,152 1,064 (c) In Karonga District Dl 16 41,382 7,340 2,014 53,798 3,362 1,960 4,489 3/