Guinea - Third Highway Project

Document of The World Bank FOR OFFICIAL USE ONLY ., - ,t Report No. 4507-GUI STAFF APPRAISAL REPORT REVOLUTIONARY PEOPLE'S REPUBLIC OF GUINEA THIRD HIGHWAY PROJECT March 26, 1984 Western Africa Projects Department Transportation Division 1 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 Unit = Syli (GSY) US$1.0 = GSY 23.0 US$1.06013 = SDR 1 FISCAL YEAR July 1 - June 30 SYSTEM OF WEIGHTS AND MEASURES (METRIC) 1 meter (m) = 3.28 feet (ft) 1 square meter (im2) = 10.76 square feet (sq ft) 1 cubic meter (m3) = 35.3 cubic feet (cu ft) 1 kilometer (kin) 0.62 mile (mi) 1 square kilometer (km2) = 0.39 square mile (sq mi) 1 metric ton (t) = 2,205 pounds (lb) ABBREVIATIONS AND ACRONYMS Ehglish French adt average daily traffic trafic journalier moyen AfIDf African Development F nd Fond Africain de Developpement CGPR Maragement Council of the Road Project Conseil de Gestion du Projet Routier COTRA Public Road Transport Compawy Compagnie de Transports Routiers Autonomes CNR National Road Council Conseil National des Routes DIT Division of Works, OPR Division Travaux, OPR ENTRAT National Stevedoring Company Entreprise Nationale de Transit et de Transport ERR Economic Rate of Return Taux de Rentabilite Economique FRIGUIA Fria Mining CoMpany Compagnie Miniere de Fria GTZ (Gesellschaft fur Technishe Societe pour la Coop4ration Zusammenarbeit) Society for Technical Techrique, Republique Federale Cooperation, Federal Republic of Gernany d'Allaemgne HDM Highway Design and Maintenance Standards Modele pour les Normes de la Model Constraction et de 1'Entretien Routiers KfW (Kreditanstal ftir Wiederaufbau); Agence Allemande Bilaterale d'Aide German Bilateral Aid Agency au Developpement ITGAT Ministry of Infrastructure and Major MinistEre de l'Infrastructure et des Works Grands Amrnagements du Territoire m million millior. m-m man-month homme-mois MOT Minri-stry of Trainsport Ministere des Transports NWV Net Present Value Valeur Nette Actualisee O3K Kindia Bauxite Office Office des Bauxites de Kindia OFERGUI Guinean Railway Company Office National de Chemin de Fer de Guin.e OPR Road Project Office Office du Projet Routier PAC Port Authority of Conakry Port Autonome de Conakry PPF Project Preparation Facility Fonds pDur la preparation des prvjets voc vehicles operating cost cout d'operatoin des vehicules  FOR OFFICIAL USE ONLY REVOLUTIONARY PEOPLE'S REPUBLIC OF GUINEA THIRD HIGHWAY PROJECT STAFF APPRAISAL REPORT TABLE OF CONTENTS Page No. I. THE TRANSPORT SECTOR . ...................... . ................. 1 A. The Land and the Economy ......**......... ...............* 1 B. Transport Infrastructure ................................ 1 C. Transport Sector Planning ........... o .................*. 3 D. Bank Group Assistance in the Transport Sector 4 II. THE HIGHWAY SUBSECTOR ............. . .... ... .... ............ 5 A. The Network . 5 B. Recent Road Construction and Maintenance Activities ..... 5 C. Road Planning ......... .. .......... 7 D. Road Administration ....... .......................... 8 E. Traffic and Road Transport ........................... e 9 III. THE PROJECT ........................ ...1............... 11 A. Objectives and Content ................1............... 11 B. Institutional Development and Project Description........ 12 C. Cost Estimates and Financing ................... 17 D. Implementation Schedule and Reporting Requirements ....... 19 E. Procurement .. ....... .. ...... ................ 20 F. Disbursement .......... ..... ....... 21 IV. ECONOMIC EVALUATION ............. ... .... . ................... . 23 A. General ............................... 23 B. Economic Rates of Return ............... ....... .... . 24 C. The Gravel and Earth Roads Rehabilitation and Maintenance Program ... .............. ....... o...... 24 D. Reconstruction of Conakry-Mamou Road .......... o ......... 25 E. Periodic and Routine Maintenance of the Remaining Paved Road Network .........iPa..dk............ 26 F. Project Beneficiaries ........... ...... . .. ............ . 27 G. Project Risks ........ e.................................... 27 V. AGREEMENTS REACHED AND RECOMMENDATION ........................ 27 This report was prepared on the basis of an appraisal mission in February 1983 by Mr. Jaffar Bentchikou (mission leader), Mrs. Brigitta Mitchell, Messrs. Ernesto Henriod and Jean-Michel Verdier. It was typed by Jacqueline Williams. 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.  - 11 - Table of Contents (continued) Page No. ANNEXES 2-1 Regional Distribution of Population and Road Infrastructure, 1982 . ............' . . ............... .. .. * 29 2-2 The Priority Network: Present Status and Proposed Project Works - A. Paved Roads ..30 2-3 The Priority Network: Present Status and Proposed Project Works - B. Laterite and Earth Roads .... ....... 31 2-4 Interventions under First and Second Highway Projects 2.... 2 2-5 Share of Transport Sector in Total Investment Expenditure by Plan Period, 1960-85 ..33 2-6 Total Highway Expenditures and Regional Road Maintenance Allocations, 1978-81 . 34 2-7 Organization Chart for the Ministry of Infrastructure and Major Works (MIGAT) ....... .. ..... 35 2-8 Estimated Vehicle Park, 1974-82 .............. ...... 36 2-9 Total Fuel Imports and Consumption by Province, 1972-80 .37 2-10 Estimated Revenue from Road User Taxes .38 2-11 Economic and Financial Cost of Gasoline and Diesel Fuel ......................... .39 3-1 Outline of the Proposed Organization of the Road Project Office ................................ 40 3-2 Outline Terms of Reference for the Engineering Consultant ......45 3-3 Outline Terms of Reference for the Consultant Contractor ............. .......... . .... 57 3-4 Detailed Project Cost Estimates .71 3-5 Proposed Schedule of Project Implemsntation. 74 4-1 Estimated Vehicle Operating Cost (VOC) 75 4-2 Road Maintenance Strategies for the Unpaved Priority Network: Without and With Project Case ....... 77 4-3 Economic Evaluation of a Program of Periodic Regravelling and Rehabilitation of Laterite and Earth Roads and their Routine Maintenance ............. 78 4-4 Conakry-Mamou Road: Estimated Cost of Reconstruction, Link Characteristics and Traffic, 1980 ................. 79 4-5 Conakry-Mamou Road: Estimated Costs of Road Construction & Road Maintenance (Without and With the Project), and Estimated Savings in the Cost of Vehicle Operation and Maintenance with the Project 80 4-6 Road Maintenance Strategies for the Paved Priority Network: Without and With Project Case ................. 81 4-7 Economic Evaluation of a Program of Paved Road Resurfacing and Routine Maintenance .................... 82 MAP IBRD-17479 Guinea: Highways III  - iii - Guinea Third Highway Project DOCUMENTS CONTAINED IN THE PROJECT FILE File Code No. A. Selected Reports and Studies on the Transport Sector Al. Rapport Sectoriel Portant sur le Transport, Programme de Cooperation Canado - Guineenne, Mars 1982. Doc# 128764 B. Selected Reports Relating to the Project B1. Etude de la Refection de la Route Conakry-Mamou, SETEC International, February 1982. Phase I Etude de Factibilite Doc# 124786 (K1-4) Vol. 1 - Rapport General; Vol. 2 - Plans Vol 3 - Annexes Economiques, Vol. 4 - Annexes Techniques Phase II Projet d'Execution, 7 Vols. Doc# 124786 (N1-6) N31 N6-OVERSIZE B2. Definition et Evaluation d'un Troisieme Projet Doc# 127433 d'Entretien Routier, Louis Berger International, Inc./Tractionel (LBT); November 1981, 2 Vols. B3. Auscultation des Chaussees Bituminees pour la Doc# 128923 (A) Definition du Troisieme Projet Routier, Louis Berger International, Inc., January 1983. B4. Recherche de Sites de Carrieres pour la Production Doc# 128923 (B) de Granulats Routier dans le Cadre du Troisieme Projet Routier, Louis Berger International Inc., January 1983. B5. Dossier d'Appel d'offres - Entretien des routes Doc# 220196 (1-3) revetues, Troisieme Projet Routier. B7. Miscellaneous computer printouts and mag cards Doc# 220197 for Economic Calculations. (6a-e)  - iv - REVOLUTIONARY PEOPLE'S REPU3LIC OF GUINEA THIRD HIGHWAY PROJECT CREDIT AND PROJECT SUMMARY Borrower: Revolutionary People's Republic of Guinea Amount: SDR 26.5 million (US$28.0 million equivalent) Terms: Standard Co-Lenders: African Development Fund (US$14.6 equivalent); BADEA (US$9.0 equivalent) Project Description: The project would continue to assist the Government in the rehabilitation and maintenance of a priority network of roads essential for adequate functioning of the country's productive sectors, and extend the ongoing institution building effort for improving Guinea's civil construction capacity. The project provides financing for the regravelling or rehabil- itation of 1,085 km of unpaved roads by force account; for reconstruction of the country's resurfacing of some 360 km of other paved roads by contractors; and for the technical assistance required to execute and supervise the above works, to intensify training and to define medium term development priorities for Guinea's transport sector as a whole. Benefits and Risks: The project would ensure that essential flows of imports from Conakry to the regions, and of agricul- tural surplus production from the regions to markets of the capital, can be maintained and handled at reasonable economic costs. It thus benefits both the rural and urban populations; most directly road users including vehicle owners and paying passen- gers. Project design minimizes the risk of a repetition of earlier difficulties and exposure to pressures for carrying out non-project works. With the new project organiization and the full support pledged by the GoverrLment these risks are considered minimal.  ESTIMATED PROJECT COST ---------------US$ million------------- Foreign Local Net Taxes Total A-I Labor-based maintenance works - 2.1 2.1 0.1 2.2 A-2 Equipment-based maintenance and rehabilitation works 5.9 6.8 12.7 0.3 13.1 A-3 Equipment renewal, buildings 6.6 0.1 6.7 - 6.7 A-4 Technical assistance, audit, training 6.0 0.5 6.5 - 6.5 A-5 Refunding of PPF advance 1.0 - 1.0 - 1.0 B-1 Rehabilitation Conakry-Mamou 15.8 5.5 21.3 - 21.3 B-2 Resurfacing of paved roads 6.2 2.2 8.3 - 8.3 Base Cost 41.3 17.3 58.6 0.4 59.0 Physical Contingencies 3.1 1.0 4.1 - 4.1 Price Contingencies 7.2 3.3 10.5 0.1 10.5 TOTAL 51.6 21.6 732 0 73. INANCING PLAN ----US$ million-- IDA AfDF BADEA Govemment Total (Foreign (Foreign (Foreigni (Local Costs Costs) Costs) Costs) and Taxes) A-1 Iabor-based maintenance works - - - 2.9 2.9 A-2 Fquiaent-based maintenance and rehabilitation worls 4.4 - 3.0 8.4 15.8 A-3 Bquipment renewal, buditings 1.3 - 6.0 0.2 7.4 A-4 Technical Assistance, Audit, Training 8.2 - - 0.7 8.8 B-1 Rehabilitation of Coakry-Mamou 6.0 14.6 - 7.2 27.8 B-2 Resurfacing of paved Roads 8.1 - - 2.9 11.0 TOTAL 28.0 14..6 9_.0 22.1 7_7 ESIMAE IDA DISBJRSE __ ---Us million--- -- _Y85 ?i6 FY87 PYM Y189 PF90 Arual 3.8 6.7 6.9 5.7 3.5 1.4 Cumulative 3.8 10.5 17.4 23.1 26.6 28.0 Econcnic Rate of Return Package A exceeding 10i; B/C ratio at 12% discount rate: 5.3 Package B 65%; B/C ratio at 12% disoount rate: 4.9 for B-1 and 2.2 for B-2 Tiote: Figures may not add because of rounding.   REVOLUTIONARY PEOPLE'S REPUBLIC OF GUINEA THIRD HIGHWAY PROJECT STAFF APPRAISAL REPORT I. THE TRANSPORT SECTOR A. The Land and the Economy 1.01 Guinea's land area covers some 246,000 km2. The country's population in 1982 was estimated at 5.7 million growing at 2.9% per year; close to 90% live in the rural areas and depend on agriculture for their livelihood. Soils and climate allow cultivation of a wide range of crops and favor the raising of cattle. Potential for hydroelectric power and mining is exceptional: the source of West Africa's largest rivers lies in Guinea, and the country has close to a third of the world's known bauxite reserves; considerable deposits of high grade iron ore; gold and diamond mines; and good geological prospects for uranium and off-shore oil. 1.02 Despite its potential, the country's economic performance, except for the enclave mining sector, has been poor. GNP per capita in 1980 was US$290 equivalent; it grew at only 0.6% per year between 1970 and 1980, while GDP grew at 3.6% per year over the same period. The major concern is the con- tinuing decline in agricultural self-sufficiency: since 1955, the area under cultivation has increased by 30% and population by 115%. With hardly any changes in production technology and yields, local food availability per head of population has declined significantly over the last three decades. The Government is giving high priority to the regeneration of the rural sector and is actively considering the introduction of adjustments in agricultural prices to change the structure of production incentives to smallholder farmers. Transport sector policy has an important supporting role to play in this, since intra- and inter-regional exchange depend on adequately developed and reasonably maintained transport infrastructure. B. Transport Infrastructure 1.03 At present, Guinea's transport infrastructure consists of: - 14,000 km of classified primary and secondary roads, 1,145 km of which are paved; and some 6,000 km of unclassified local roads and tracks; - a public rail line from Conakry to Kankan (660 km); and three enclave rail lines - Conakry-Fria (145 km, for alumina); Conakry-Kindia (105 km, for bauxite) and Kamsar-Sangaredi (136 km, for bauxite); - two deep-water ports at Conakry and Kamsar, and a small secondary port at Benty;  - 2 - an international airport at Conakry, and nine regional airports, only two of which - Faranah and Labe - have serviceable paved runways. While the volume of infrastructure facilities night appear satisfactory for a country of Guinea's size, their adequacy has been considerably reduced by chronic neglect of maintenance. 1. Railways 1.04 The Conakry-Kankan Railroad was constructed before World War I (1900- 1914) and through the mid 1940s carried most o:F the country's agricultural exports to the Port of Conakry. Later paralleLed by a road which is paved up to Mamou (255 km), the railway has been poorly maintained. As the one meter gauge track deteriorated and rolling stock fel:L into disrepair, OFERGUI's (Office National du Chemin de Fer de Guinee) level of service steadily de- clined; by 1981, the railroad carried no more than 10,000 tons of freight and 288,000 passengers, three quarters of whom were suburban commuters. At pre- sent, OFERGUI's revenues barely cover operating expenses with no margin for maintenance and renewal. Government has recently examined the potential for rehabilitating the railway. A detailed study carried out by French consul- tants during 1980/81 concluded that rehabilitation of the Conakry-Kankan line would require US$48 million. 1/ It is highly unlikely, however, that present and projected traffic volumes would justify an investment of this magnitude. To date, not even financing for the proposed first phase of the line rehabili- tation involving 35 km of track from the center of Conakry to Dubreka, which may be economically justified, has been found. However, the recent acquisi- tion of two Alsthom locomotives and eight railcars with French financing has improved long distance passenger service somewhat. A second study of the railway was undertaken December 1982/February 1983 with AfDB financing; its results are to be evaluated under the transport planning element under this project. 1.05 The three enclave mining railway lines, constructed since 1965, all handle major transport flows: the Sagaredi-Kamsar line transports currently about 8 million tons per year (tpy) of bauxite, the Kindia-Conakry line carries some 2.5 million tpy of bauxite and the Fria-Conakry, line 600,000 tpy of alumina. 2. Ports 1.06 Bauxite and alumina provide the bulk of Guinea's exports through the two deep-water ports at Kamsar and Conakry. Kainsar, constructed as part of the Boke Bauxite Project (para. 1.12) in 1973, has a capacity of 9.2 million tpy. Of the current through-put of about 8 million tpy, less than 10% are imports, almost exclusively for the account of the mine. The Port of Conakry has two bulk-handling facilities for export: a 350 m alumina berth and a 390 m bauxite berth. These currently handle about three million tpy reasonably efficiently. Located between these facilities are four general cargo berths, 1/ At January 1981 prices: track repairs, US$11 million; equipment and spare parts, US$25 million; telecommunication equipment, US$4 million; and extensive management and personnel training, US$8 million equivalent.  bulk petroleum handling facilities, and a basin of varying depth to accommo- date fishing, coastal and general service vessels. The condition of the general cargo port had deteriorated to the point of threatening to cause a break in the inflow of essential goods (some 300,000 tpy) into the country. An IDA Port Project, jointly financed with AfDB and the Federal Republic of Germany (KfW and GTZ) was approved in June 1983. At an estimated cost of US$38 million, the project will rehabilitate the existing general cargo port infrastructure and replace floating craft (two tugs), port handling equipment and vehicles. Most importantly, the project has been instrumental in the recent establishment of an independent port authority (Port Autonome de Conakry-PAC) and has provided the necessary technical assistance to ensure that the renewed facilities will provide technically efficient and financially sound port services. 3. Airports 1.07 Guinea's airports at present provide only a minimum level of service. Three of the regional airfields - Macenta, Siguiri and Boke - are currently closed to commercial traffic. Airport facilities in Conakry itself have com- pletely deteriorated. New facilities are being financed by France, including a terminal (US$13 million equivalent), runway improvements (US$10 million) and navigational aids (US$2 million). Works were started in November 1982. Creation of an autonomous airport authority to administer the new facilities is under discussion. International passenger traffic is modest, totalling about 10,000 passengers in 1Q81. In contrast, due to the poor state of road and rail infrastructure and subsidized fares, local air passenger traffic between Conakry and regional centers is very important; demand in fact ex- ceeds capacity, which is at present about 100,000 passengers per year, with some 40% Government officials. Annual air freight traffic is negligible at about 500 tons. 1.08 AIR GUINEE, created as a public enterprise in 1960, has replaced five of its fleet of seven turbo-prop aircraft by B707, B727 and B737 craft in 1980. Government has started discussions with Canada for possible reforms at AIR GUINEE and assistance to domestic aviation, at present handled by one Il- 18 and one AN-12 flight carrier. Although tariffs on local flights which are set by the Government do not cover costs, the company in 1981 showed a profit on books of some GSY 5 million, because all equipment overhauls, personnel training etc., were financed as investments from the Plan budget. C. Transport Sector Planning 1.09 Nominal responsibility for transport planning and coordination lies with the Ministry of Transport (MOT). In the absence of competent personnel, funds and data, however, investment planning in practice is no more than a listing of projects by the various bodies responsible for the different sub- sectors, i.e., the Ministry of Infrastructure and Major Works (MIGAT) for the all-important highway subsector; OFERGUI for the railways; ENTRAT and COTRA for road freight transport; AIR GUINEE for air transport, and, since 1982, the seven Provinces for intra-regional transport and routine road maintenance. Since little or no scrutiny or arbitration takes place, investment proposals for the transport sector in both the 1973/4-1977/8, and the 1981/2-1985/6  - 4 - Five-Year Development Plans have been overly ambitious and poorly focussed, and thus largely unrealized. 1.10 Following independence, the Government's main priorities were to satisfy the transport demand of the enclave m:Lning sector and to pave the major road links from the coast to the interior. Attention over the past five-year period has slowly shifted towards the rehabilitation and maintenance of transport infrastructure which had been al:Lowed to deteriorate. 1.11 Despite the progress achieved, substantial improvements are still needed if the all-important agriculture sector is to be served adequately: rehabilitation of the priority road network to acceptable standards of service should be at the center of the Government's investment strategy in the road subsector. The road transport industry is also hampered by an over-aged and poorly maintained vehicle and equipment fleet, due mainly to a critical lack of foreign exchange for spare parts, lubricants, etc. While it more or less manages to carry current low agricultural and import traffic, plans should be made to allow road transport capacity to be upgraded considerably if Guinea's agricultural production and export objectives are realized. For long distance passenger traffic to remote regions of the country, the relative advantages of road and air transport should be evaluated in a framework of realistic transport sector planning (para. 2.07); the railway improvement is of doubtful justification and certainly of lower priority than those of the other subsectors. D. Bank Group Assistance in the Transport Sector 1.12 The Bank Group has until recently been the principal source of exter- nal financing for transport development. Sincs 1966, it has made three loans and three credits in the sector. The former (Loans SI-GUI, 1966; 577-GUI 1968 and 766-GUI, 1971; US$75.2 million in all) financed the mining town site at Boke and related port and rail infrastructure for the export of bauxite from the mining development and were successfully completed in 1975. The latter have funded the First (US$14 million, Cr. 596-GUI, 1976) and the still ongoing Second (US$17 million, Cr. 953-GUI and EEC-33 GUI, 1979) Highway Projects, and a Port Project (US$38 million, Cr. 1382-GUI, 1983; see para. 1.06). The two highway projects financed extensive road rehabiLlitation and maintenance pro- grams. The First Highway Project was satisfactorily completed in 1980 by a virtually autonomous project unit (PCR No. 4358, March 1983). The Second Highway Project was designed to incorporate the unit into the Ministry of Public Works organization and achieve a wider institution building impact. This objective proved premature under the prevailing conditions (lack of an adequate management structure for planning and controlling equipment and staff and lack of practical construction know-how due to insufficient technical assistance in an advisory role only) and resulted in wide variations of works output due to diversion of project resources and outside interferences. Nevertheless, the project still yields a very satisfactory rate of return. Completion is expected by December 1983, and the lessons learned have been incorporated in the design of the proposed Third Highway Project (para. 3.03).  - 5 - II. THE HIGHWAY SUBSECTOR A. The Network 2.01 The classified road network, which covers the primary and secondary links, has increased only moderately (12%) over the past fifteen years and has been only partially upgraded. Primary road density averages 1.9 km/100 km2, while total road density averages 5.7 km/100 km2 (Annex 2-1). These figures compare to total road densities of 14 km/100 km2 in neighboring Ivory Coast and 7.1 km/100 km2 in Liberia. Guinea - Length of Road Network by Type (km) 1967 1975 1982 Paved roads 188 1,056 1,145 Unpaved roads-primary 4,292 4,941 3,409 Unpaved roads-secondary 8,146 7,266 9,450 Total 12,626 13,263 14,004 At present, there are some 4,550 km of primary roads. However, as this class- ification does not always reflect the state and usefulness of the roads, a priority network has been defined under the present project. It covers about 4,220 km (Annexes 2-2 and 2-3) and its rehabilitation is programmed to be completed under the present project. B. Recent Road Construction and Maintenance Activities 2.02 The only road construction work undertaken since 1975 is the ongoing paving of the Kissidougou-Kankan Road (190 km), which is being carried out by a Guinean-Cuban team at an annual output of 15 km. In early 1982, bids were called for constructing the Gueckedou-Seredou (135 km) Road to paved stan- dards; financing of US$40 million is secured from the Saudi Fund (which had also supported the feasibility and engineering studies), US$10 million from the Islamic Development Fund, US$20 million from the Kuweit Fund and US$5 million from the OPEC Fund. Contractors and supervisory engineers have been chosen. Construction standards for the road are higher than warranted by current traffic levels (60-80 vpd); however this road would link Conakry and the southeastern region, an area which has important agricultural and forestry potential and the medium term prospect of developing the Nimba iron ore deposits. 2.03 Maintenance of the road network had been severely neglected up until the mid-70s. Due largely to IDA involvement, the situation has improved con- siderably since 1977. Under the First Highway Project, five regravelling brigades were set up and carried out rehabilitation works on 927 km of gravel  - 6 - and earth roads; five mobile patching brigades worked on 900 km of paved roads. Labor based routine maintenance on paved and gravel roads was also reinforced: 21 of the 33 subdivisions of the General Directorate of Roads and Bridges (DGRP) were provided with small equipment and trucks. The Second Highway Project continued to support priority road maintenance, (970 km of earth roads expected to be rehabilitated by December 1983, Annex 2-4). A considerable backlog of priority road rehabilitation remains to be done, and routine maintenance capabilities will need be++er organization and further reinforcement to become effective (paras. 3.06, 3.07 and 3.12). Both objec- tives will continue to be supported under the project. 2.04 Public works investment as a proportion of total investments declined by about half under Guinea's Third Plan (FY73-78) to about 15%; it is likely to fall further under the ongoing (FY81-85) Fourth Plan (Annex 2-5). Highway expenditure patterns over the recent years have reflected the shift in priori- ties from new construction to rehabilitation and maintenance of the existing road network: while on average some GSY 370 million (US$18 million) were spent annually on new construction and GSY 70 million (US$3.5 million) on maintenance during the 1970-75 period, investments over the 1978-81 period averaged a low GSY 4 million per year (mostly for minor bridge construction), while GSY 230 illion (US$11 million) were allocated for rehabilitation and maintenance. While financing of new construction in the early seventies was usually done through suppliers credits provided by foreign contractors, minor construction since then has been financed domestically, while rehabilitation and maintenance have been financed both by the Budget and the First and Second Highway Projects (Annex 2-6). Budget financing mostly covers routine maintenance carried out labor-intensively at the regional level. 2.05 Under the Second Highway Project the Government agreed to increase its allocations for routine maintenance operations and earmark some US$1.5 million annually in foreign exchange for renewal of highway maintenance equip- ment and spare parts, but lack of foreign exchange has so far prevented this. The Government has made arrangements to contribute US$1.0 million equivalent for project equipment renewal and US$500,000 equivalent for fuel and spare parts acquisition during the transition period between the Second ard the proposed Third Highway Project. However, in order to ensure that a fair share of scarce foreign exchange is allocated to the Highway sector for subsequent years, a system for financing of foreign exchange costs of highway maintenance should be studied and set-up (preferably revenues directly linked to the highway subsector). The study will be carried out by consultants under the project and the system would be instituted before project completion (para. 3.16). 2.06 At present, there are no private domestic road contractors in Guinea. There have been several attempts in recent years to establish a local road construction firm under mixed ownership, Government with either French or German private partners. These have not been successful, largely because of the lack of a Guinean construction entity able to be the recipient of technol- ogy transfers and thus to become a substantive Guinean partner. The proposed project will develop such an entity by the transformation of the existing force account brigades into a self-contained Road Project Office with a Division of Works run closely along the lines of a construction enterprise (para. 3.06). This is expected to lead, in a second step, to the future establishment of a construction enterprise which could act by itself, or become a domestic partner in a mixed-ownership firm.  -7- C. Road Planning 2.07 The road construction programs included in the last two development plans are good indicators of the lack of effective planning capability for the sector: both programs exceeded available financing for their implementation and both failed to set clear priorities. Of a total road improvement program of some 2,500 km included in the Third Plan, only 20% were actually completed. The current Fourth Plan states as its objective an extension of the national road network from its present 14,000 km to no less than 30,000 km by the end of the Plan period -- without any supporting detail on the sources of financing and the road sections to be upgraded or constructed. It is clearly urgent to set realistic priorities for investments in the medium term and to develop a modest planning capacity for the transport sector. The project finances a transport plan for this purpose (para. 3.16). 2.08 A first step in the direction of more rational investment planning has been made over the past three years, during which a series of preinvest- ment and detailed engineering studies have been carried out by consultants. From these, a clearer picture of the most urgent needs for maintenance, rehab- ilitation and upgrading has emerged, although it has not yet been translated into agreed investment priorities. Clearly the first priority for reconstruc- tion is the country's central highway Conakry-Mamou; it carries the highest traffic of all Guinean roads, since all traffic to and from the capital feeds into it. Preinvestment studies and detailed engineering for the rehabilita- tion of this essential link have been carried out under the Second Highway Project and it is scheduled to be reconstructed under the project. Preinvest- ment studies for five other roads have been financed by the European Develop- ment Fund. These roads were chosen mainly with a view of providing year-round access from the capital to some isolated outlying regions and establishing or improving links to neighboring countries. The studies show that with present and forecast traffic volumes, only one of the roads studied (first section of Dubreka-Bokle) has an economic rate of return above 10% for paved standards. It is therefore clear that the goal of providing the border regions with paved access should wait until the rehabilitation of priority roads has been com- pleted and an effective maintenance program instituted. 2.09 To improve and guide road investment and maintenance planning, a National Road Council (Conseil National des Routes, CNR) has been created in early 1982, following IDA's advice. It includes the Prime Minister, the Ministers of MIGAT, Transport and Finance, the Director General of Plan and the seven General Commissioners of the Revolution. A National Maintenance Coordinator located in MIGAT (in a position somewhat analogous to that of the earlier Director of Maintenance, but without operational authority over the regional divisions) serves as the head of the Secretariat for the Council. He is charged with preparing, in collaboration with the CGR maintenance direc- tors, annual work programs and annual budgets for road maintenance to be reviewed and approved by the CNR. The first such review session was scheduled for January 1983 but was postponed, since neither budget nor maintenance program proposals were ready. The CNR is also responsible for reviewing road investment plans and road classification proposals prepared by MIGAT.  D. Road Administration 1. Organization 2.10 Responsibility for the administration of the road sector in Guinea has recently been reapportioned. Until April 1982, the Directorate General of Roads and Bridges (DGRP) of the Ministry of Public Works had overall responsi- bility for engineering, construction and maintenance of the national road system. DGRP had two subdirectorates - for road maintenance and for equipment - in Conakry, and divisions in each of the seven Province. These in turn were divided into 33 subdivisions, one for each administrative region of the coun- try (Annex 2-1). Each subdivision was headed by an engineer who had about 60 employees to supervise. The main task of these subdivision chiefs was the maintenance of classified roads in their area. They reported to an inspector at Province level who had authority to allocate the Province maintenance budget within his zone. The seven inspectors reported to an Inspector General in the Ministry who, in turn, reported to the Minister. However, despite this organizationally decentralized structure, decision-making regarding all road rehabilitation and maintenance was in practice highly centralized in the Office of the Minister, whose ad-hoc arrangements for the deployment of avail- able equipment and materials often interfered with established maintenance programs. 2.11 In response partly to the concerns of regional authorities, MPW was reorganized into the Ministry of Infrastructure and Major Works (Ministere de l'Infrastructure et des Grands Amenagements dii Territoire, MIGAT) in 1982. The new Ministry is responsible only for the construction of major infrastruc- ture (Annex 2-7) and periodic road maintenance. In an effort to give the regions greater autonomy in the upkeep of their roads, the responsibility for routine maintenance has been transferred to the Provinces, who have also taken over the personnel and equipment of the earlier MPW divisions and subdivi- sions. The practical extent of the Provinces' responsibilities is still in the process of being worked out between MIGAT and the regions. The latter have a potential advantage over a central Ministry in defining priority tasks for labor-based road maintenance (clearing of side drains and shoulders, maintenance of drainage structures and patchirg on paved roads) in their regions and organizing and supervising their execution, provided that a suitable planning capacity and adequate budgetary resources are acquired. As regards more extensive equipment-based operations, however, the Provinces face overwhelming constraints such as insufficient equipment, absence of qualified operators and mechanics, scarcity or non-availability of fuel, spare parts and lubricants on local markets and the absence of adequate workshop facilities in most of the regions. The Government has therefore agreed and confirmed at negotiations that Provinces will limit their responsibilities to labor-based operations for the entire network and only minor equipment-based operations, while the Road Project Office will be responsible for equipment-based periodic and routine maintenance of the priority network (paras 3.03 - 3.12).  -9- 2. Staffing and Training 2.12 Since the recent reorganization, MIGAT personnel is about half that of the previous Ministry's. A total of 46 engineers and 48 assistant engi- neers, and about 1,300 technician and workers have been transferred to the Provinces. Guinea has a relative large number of locally trained civil and mechanical engineers and technicians. The latter follow a three-year course at the Ecole Nationale des Arts et Metiers, and the former are given an additional two years of training at the Conakry Polytechnical Institute. However, the level of training received is inadequate: the subjects covered are not adapted either to road maintenance or to the types of equipment used for road construction; they do not include equipment management systems; and the schools lack both training equipment and teachers with good practical experience. 2.13 Under the First and Second Highway projects a small training program for mechanics was set up and a number of staff have received on-the-job train- ing complemented by short training periods abroad. The output of the training program has been low due to the poor basic education level of the trainee- mechanics. The impact of technical training has been substantial, although lessened by difficulties of general project administration and reassignment of trained staff to other duties. The proposed project will provide more inten- sive and practical on-the-job training complemented by short and custom- tailored seminars coordinated by a training officer (paras. 3.13-3.15). E. Traffic and Road Transport 2.14 Traffic data for most of the country's roads are scarce. The only counts that have been undertaken are on links being improved under the IDA assisted Highway Projects (Annex 2-4) and roads for which feasibility studies have been carried out. In 1980, traffic on the central axis from Conakry to Mamou varied from 3,000 vpd in the vicinity of Conakry to about 400 vpd near Mamou and about 100-75 vpd between Faranah, Kissidougou and Kankan. Traffic on the unpaved network is generally below 50 vpd; only two sections carry more than 100 vpd. The program of traffic counts on the priority network will be improved under the project (para. 3.04(e)) to provide a better basis for effective planning and scheduling of maintenance activities and upgrading of roads. 2.15 Guinea's vehicle fleet is among the most heterogeneous and over-aged in all of West Africa. At the end of 1981, the Vehicle Registration Office of MIGAT registered close to 80 different makes of private cars and about 40 different types of trucks in a presumed total vehicle population of 41,000. The latter figure is greatly overestimated however, since it is arrived at by adding all new registrations since 1975 to the base figure of the most recent (1974) census of motor vehicles. The 1982 licenses for existing vehicles and new registrations represent no more than 16,047 vehicles (Annex 2-8). Allow- ing for a certain amount of under-reporting and for a number of temporarily inoperative vehicles, it is improbable that the vehicle fleet exceeds 21,000 vehicles. Between 1977 and 1980, when Guinea's borders with neighboring countries were opened and many Guinean residents abroad returned home bringing vehicles with them, vehicle fleet growth was about 15% per annum; it is worth  - 10 - noting that as a result the proportion of used vehicles increased from 17% of total imports in 1977 to 76% in 1980, a trend contributing further to a gene- rally over-aged and inefficient fleet. New registrations declined signifi- cantly during 1981/2, when fuel and spare parts were in critically short supply throughout the country. 2.16 Fuel consumption is irregular (Annex 2-9) due to difficulties in financing supplies (severe shortages of foreign exchange), and to the lack of a long-term contract with any oil company (except for aviation fuel stc"L . abroad). These circumstances lead to frequent periods of shortages and sub- sequent rationing of fuel in the country, which affects up-country users disproportionately. 2.17 The road transport industry has undergone a number of changes in recent years. Freight transport is basically a public sector function. In 1975, a state-owned road transport company (Compagnie des Transports Routiers Autonomes, COTRA) was established in Conakry, with subdivisions in each region; they handle 80% of long distance freight with a total fleet of about 400 twelve-ton trucks. In 1980, COTRA transported about 132,000 tons of freight. A separate state agency, Entreprise Nationale de Transit et de Transport (ENTRAT) with about 55 vehicles is responsible for cargo handling within a 30 km radius of Conakry Port. In 1980, ENTRAT distributed 256,000 tons of freight. Responsibilities for public sector transport were also decentralized to the Provinces in 1982. COTRA retains a fleet of some 80 trucks to handle freight beyond ENTRAT's limits of operation. 2.18 For passenger transport the situation is reversed. The bulk of passenger transport throughout Guinea has always been handled by small private transporters. It is estimated that they currently operate some 6,600 vehi- cles in all, 66% of them in Conakry. Thirty-two percent of the fleet consists of trucks modified for passenger transport and 68% of taxis and minibuses. Most of these vehicles are in precarious condition. Access to the industry is open, limited only by the supply of vehicles and the payment of a modest fee (GSY 12,000 to 24,000) for the issuance of a license. However, demand for passenger transport is consistently higher than supply, and transport of passengers by Government vehicles is quite important. Transport workers, grouped in syndicates, organize terminals and distribute scarce fuel and spare parts. The role of public sector companies is confined almost exclusively to the capital. With 28 buses remaining operational in 1982, Urban Transport of Conakry (TUC) output has declined to 15 million passengers transported. A public taxi company, COTAX, provided in-town service with a fleet of 30 new cars in 1983. 2.19 Road transport tariffs are set by the Ministry of Transport. How- ever, actual charges, especially for long distance travel often are a multiple (3-5 times) of official rates, reflecting frequent supply scarcities. In any event, rates seem to be remunerative enough to make passenger transport a popular business for Guineans. In 1982, the official tariff for freight transport was reportedly set at GSY 3.5/ton/km. Official long distance pas- senger tariffs for private transporters range from GSY 1.0/pass/ km for small vans on paved roads to GSY 0.8/pass/km for trucks on earth roads (the lower tariff is due to the higher capacity of the tricks).  - 11 - 2.20 Both freight and passengers transport capacity is fully utilized, while at the same time suffering from significant shortcomings. Besides fuel and vehicle shortages (para. 2.16), the road transport industry also suffers from lack of spare parts, lubricants and trained mechanics. These difficulties result in low vehicle utilization rates and considerable unmet transport demand, which increasingly impedes the country's economic develop- ment. With a view to assisting and improving road passenger transport, German aid agencies have recently studied mass transport demand patterns for Conakry traffic; they evaluated alternative ways of providing passenger transport ser- vices that would ensure acceptable levels of service and minimize foreign exchange requirements through provision of energy efficient vehicles and appropriate vehicle renewal and maintenance facilities for transport opera- tors. The Transport Plan Study should monitor the implementation of these proposals; if successful, this pilot operation should be extended throughout the country and applied to freight transport as well. If the pilot does not prove successful, alternative ways to improve transport industry efficiency should be proposed by the Transport Plan. 2.21 The charges levied from private road users contribute substantially to Government revenues. Through annual vehicle registration and inspection fees, transport licences, import duties on vehicles and taxes on fuel, annual revenues from road users during 1979-81 should have averaged GSY 760 million (Annex 2-10). In May 1981, fuel taxes were raised from GSY 6.10 to 11.10 per liter of gasoline and from GSY 3.49 to 8.49 for diesel fuel and now represent 44% and 42% respectively of the pump price (Annex 2-11). However, since a large part of the fuel is bought by the Government for its own vehicles, and since the full amount of import duties and taxes is not paid on all imported vehicles, actual revenues (statistics not available) probably fell consider- ably short of estimated amounts. Nevertheless, the differential between road expenditures and estimated road user tax revenues is large enough to conclude, that a greater share of these funds could and should be channeled into highway maintenance, once the system for financing the foreign exchange costs of road maintenance works is set up. This question will also be addressed by the consultants under the project and will be an important part of the ongoing sector and country policy dialogue. III. THE PROJECT A. Objectives and Content 3.01 The proposed project is the third phase of a road rehabilitation and maintenance program which the Government began with IDA's support in early 1977. The project addresses four interrelated objectives: (a) to provide continued assistance to Government for the rehabilitation and maintenance of the priority network so that it can adequately fulfill its essential role for the country's economy; (b) to continue and expand the ongoing institution-building effort for improving Guinea's highway maintenance and rehabilitation capacity;  12 (c) to provide more i ntensive and structured training to local staff than under previous projects; and (d) to assist the Government in defining medium-term development priori- ties for the transport sector. 3.02 To achieve these objectives, the project includes the following related elements which, for cofinancing purposes, are divrided into two sepa- rate packages. Package A groups two components which feature important insti- tution-building aspects: (a) a third three-year program of road rehabilitation and maintenance comprising: (i) equipment-based rehabilitation and routine maintenance (in the proportion of 75%-25%) or. the unpaved priority network, to be carried out by luhe Division of Works (Di vsion Travaux - DT) of the Road Project Office (Office du Projet Routier - OPR); (ii) renewal of highway and workshop equipment, and rehabilitation and construction of buildings for the DT; (iii) labor-based routine maintenance ol drainage system and shoulders throughout the priority network, uo be carried out by the Provinces' road maintenance force account staff; (iv) technical assistance: a consultant-contractor to support the DT, and engineering consultants for supervision of packages A and B works and trainring of MI GAT and Province road mainte- nance staff; and (b) a medium-term transport plan, to be carried out with the assistance oft the engineering consultants. Package B consists of discrete and well-defined reconstruction and resurfacing works on the paved network. These are of the highest priority, if pavement failure and more costly reconstruction in the inear future are to be avoided. Works are to be carried out by contractors, and start-up of works does not necessarily have to coincide with that of Package A. The proposed Package B works include: (a) reconstruction of the Conakry-Xaamou Road (255 km); and (b) resurfacing of 360 km of the most trafficked paved roads. B. Institutional Development and Project Description 1. Project Administration, Coordination and Supervision 3.03 The organization of the proposed Third Highway Project has been designed to reflect the recent changes in the administration of the road sector (para. 2.11), and to avoid some of the serious problems experienced for  a time under the Second Highway Fojsc Follo-ving intensive discussions between the Guinean authorities and 1DA, -t haE been agreed that the existing Road Project Directorate in MIGA-T will tra.asformed into an autonomous Road Project Office. OPR will be supervised biy- a Road Project Management Council (Conseil de Gestion du ProJet Routier, CeGFPR pr es ded over by the Secretary of State of the MIGAT, but also including representatives of other Ministries. CGPR's functions are supervisory and at-dsory, wh.4ile OPR will be responsible for carrying out all project tasks OPR d1 operate independently from the Ministry's administration, with diecrc poart-cularly to hire and fire personnel and determine their c.map satE tc procure materi als and spare parts; and to manage Project resources most effici ent marmer. The proposed OPR organizational strauctvaur e -a 3 presented in Annex 3-1 , together with OPR staffing; it was agreed at negoti- a to ns P A.; Pesid`en-tial decree defining project organization has been Loml ished, 3.04 Within OPR there wil.l. bhe cle_ar separation between the unit responsi- ble for the execution of works (para. 3.06) and tlose for other project tasks, which essentially cover the fo-lloTw,TiJIng f-ive areas of respponsibility. (a) administration of all poroject activiti.es, i.ncluding budgetary control, accountcing, and pre-pe.-rf,tio-r of disbursement requests to the different cofinanciers expected to finance t-he project; (b) supervision of works carried 3Ut by contractors on the paved network, including quality and quantity controls f'or reconstruction of the Conakry-Mamou Road anc tfor resurfeaing works on other links; (c) superv4sio, of works carled out b- O?PRs Division of Works; (d) development and supervisior.0_n of training assistance to OPR and CGR maintenance staff and other project personnel; and (e) coordination of transport plaa studies, traffic counts and other road data collection. 3-05 A technical assistance teauL of aldht expe ts will be required to assist OPR for varying periods- of tirde .n thbse tasks. In addition to 29 m-m of extension of the Second H-ighway Fr t Technical Assistance contract under a Project Preparationr Facilit