Senegal - Fifth Highway Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 4330-SE STAFF APPRAISAL REPORT SENEGAL FIFTH HIGHWAY PROJECT February 10, 1984 Western Africa Projects Department Tran Rportati on Di vi si on I 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 = CFA Franc (CFAF) US$1 = CFAF 373 CFAF 1 m = US$ 2,681 ABBREVIATIONS AND ACRtONYMS CCCE - Caisse Centrale de Cooperation Economique DER - Direction de l'Entretien Routier DERM - Direction de l'Entretien Routier et du Materiel DGTP - Direction Generale des Travaux Publics DM - Direction du Materiel BPP - Bureau des Pistes de Production RF - Fonds Routier vpd - vehicles per day FISCAL YEAR July 1 - June 30  FOR OFFICIAL USE ONLY SENEGAL FIFTH HIGHWAY PROJECT STAFF APPRAISAL REPORT TABLE OF CONTENTS Page No. I. INTRODUCTION. . ... .. .. 1 II. THE PROJECT ...... ......... 3 A. Objectives . . ................ .. ........... 3 B. Description .. ................ ............ 4 C. Cost Estimates ............. . . 6 D. Financing .....8 E. Procurement under the Project.... 9 F. Disbursements. . . ..... 9 G. Reporting and Reviews .... ........................ 10 III. EXECUTING AGENCY ....... ............................ 10 A. Organisation ....... ............................ 10 B. Staff .......................................... 11 C. Equipment ............................................. 12 D. Planning and Cost-Accounting ................ ... 12 E. Procurement ............. ...... .......................... 13 IV. ECONOMIC EVALUATION ................................. . 14 A. Traffic .......... ............. 14 B. Road Conditions .. ............ .............. 15 C. Road Maintenance Coats .................... a... 15 D. Vehicle Operating Costs .** ..................... 15 E. Rates of Return and Benefit-Cost Ratios ........ 16 F. Project Risks .................................. 16 V. AGREEMENTS REACHED AND RECOMMENDATION ... ........... 16 This report was prepared on the basis of an appraisal mission in September 1982, by Frida Johansen and Snorri Hallgrimsson. It was typed by Guillemette Rohan. 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.  ANNEXES 1-1 Road Network - Development and Present Distribution, and Summary Road Conditions by Region 1-2 Network Maintained, FY1977-1982 1-3 Road Maintenance Expenditures and Funding, FY1977-1982 1-4 Fuel Price Structure 1-5 Past/Ongoing Bank Group Transport Operations 2-1 Maintenance Program, FY1984-1987 2-2 Previsions Trimestrielles des Depenses 2-3 Road Maintenance Management System - Flow Chart 2-4 Controle Depenses et Renouvellement Caisses d'Avance 2-5 Project Commitments and Expenditures through the Road Fund and Project Account, FY84-87 2-6 Projected Quarterly Disbursements of IDA Credit 3-1 Organigramme de la Direction Generale d.es Travaux Publics 3-2 Systeme de Gestion de Reparation du Xat6riel 3-3 Systeme de Programmation et de Planification de l'Entretien Routier 4-1 Traffic Levels and Growth Rates on Main. Road Sections by 1981 4-2 Network to be Maintained and Expected Condition 4-3 Road Maintenance Program Costs per Task, 1983/87 4-4 Maintenance Program Economic Evaluation MAP Senegal: Fifth Highway Project - Transport Infrastructure 1983 (IBRD Map No.16850)  - iii - Senegal Fifth Highway Project DOCUMENTS CONTAINED IN THE PROJECT FILE File Code A. Selected Reports and Studies on the Transport Sector Al. Plan National de Transport: Rapport Final, June 1981 Doc.#124.520 (F) A2. Inventaire Routier 1981, April 1981 Doc.#125.671 (L) A3. Rapport sur le comptage routier, July 1981 Doc.#120.971 (F) B. Selected Reports relating to the project B1. Campagne d'entretien routier 1981-82: Bilan Annuel, August 1982 Doc.#129.156 (6) B2. Plan quadriennal d'entretien routier 1983-1987, February 1983 Doc.#129.156 (7) B3. Plan de campagne d'entretien routier 1983-1984, June 1983 Doc.#129.156 (10) B4. S6minaire sur la gestion de l'entretien routier, April 1979 Doc.#120.917 (D) B5. Journees d'6tude sur la gestion des caisses d'avances, February 1982 Doc.#125.671   - iv - REPUBLIC OF SENEGAL FIFTH HIGHWAY PROJECT CREDIT AND PROJECT SUMMARY' Borrower: Republic of Senegal Amount: SDR 20.4 million (US$21.5 million equivalent) Terms: Standard Project Description: The primary project objective is to assist the Senegalese Government to carry out urgently needed maintenance operations on its road network so as to avoid a severe deterioration of the network. Related objectives are to keep an adequate balance between maintenance and new road construction and to further improve the efficiency of the road maintenance organization already strengthened under earlier Bank Group operations, including the decentralized financial and cost accounting systems, and planning and monitoring of maintenance activities. The project would support the Directorate of Road Maintenance and Equipment's program over the four-year period 1983/84-1986/87 as follows: (a) routine maintenance of about 9,100 km of roads in the first year, increasing to about 10,500 km by the fourth year, including maintenance of feeder roads; (b) periodic maintenance (repaving and regravelling of road surfaces and rehabilitation of structures) as warranted on roads maintained under (a) above; and (c) deferred periodic maintenance of other paved and gravel roads neglected in recent years because of the Government's inability to adequately fund the necessary operations. The project would also increase the use of regional revolving funds to promote local administration. In the spirit of the Special Assistance Program (SAP) disbursements would be substantially front-loaded. Benefits and Risks: The project would yield high benefits and economic returns to Senegal by delaying the need for new investments in rehabilitation works and by allowing reduced vehicle operating costs, with a consequen-tial overall positive effect on the balance of payments. This latter result is particularly significant at a time when Senegal, after making good progress in recent years in building up the operating performance of its maintenance organization to the point where it has become one of the most efficient in West Africa, now finds itself unable to sustain this progress because of its very tight budgetary situation.  There are no major risks arising from the institutional arrangements for project execution. There is, however, a risk that the Government's budgetary situation may not improve sufficiently over the project period to enable it to assume an increasing responsibility for financing maintenance operations. If this were the case, external assistance would continue to be sought as a priority to ensure an adequate level of maintenance operations. The adequacy of financing will be carefully considered by Government and IDA during a detailed mid-term review of the status of project implementation and its financing. Project Cost Szmary CFAF million US$ thousand Fbreign % of Local Local Foreign Local Local Fore.ign Exchange Base Component Cost Tax Cost Total Cost Tax Cost Total % of Total Cost Road equipment 125 - 2,386 2,511 335 - 6,397 6,732 95 17 Spare parts 5 - 95 100 13 - 255 268 95 1 Workshop equipment 25 - 475 500 67 - 1,273 1,340 95 3 155 - 2,956 3,111 415 - 7,925 8,340 21 Periodic maintenance: Ritmen roads 657 860 1,011 2,528 1,761 2,306 2,711 6,778 40 17 Gravel roads 1,421 772 1,869 4,062 3,810 2,069 5,011 10,890 46 27 2,078 1,632 2,880 6,590 5,571 '4,375 7,722 17,668 44 Routine maintenance: Bitumen roads 719 32B 515 1,562 1,928 879 1,381 4,188 33 10 Gravel roads 1,783 780 867 3,430 4,780 2,091 2,325 9,196 25 23 2,502 1,1c8 1,382 4,992 6,7C8 2,970 3,706 13,384 33 Ferry operation, etc 64 152 184 400 171 4C8 493 1,072 46 2 Sub-total 4,799 2,892 7,402 15,093 12,865 7,753 19,846 40,464 100 Price contingencies 1,387 717 1,422 3,526 3,719 1,922 3,812 9,453 23 Total 6,186 3,6C9 8,824 18,619 16,584 9,675 23,658 49,917 48 123 Financing Plan: The proposed IDA Credit of US$21.5 million equivalent would finance about 43% of project costs of the national road maintenance program as foreseen f'or FY84 to FY87, covering 65% of costs until the end of FY85, 30% in FY86 and 25% in FY87. Further external support f'or the latter years is being sought; however, if funds remain insufficient, program and funding revisions would be made at the mid-term review.  - vi - Estimated Disbursements: -US$ million------ FY84 FY85 FY86 FY87 Annual 2.0 11.3 4.7 3.5 Cumulative 2.0 13.3 18.0 21.5 Economic Return: Over 100% for the project as a whole. For the more costly periodic maintenance elements, the return is estimated at 25% for full regravelling and 86% for resurfacing. The B:C ratio is about 2:1.  I  SENEGAL FIFTH HIGHWAY PROJECT STAFF APPRAISAL REPORT I. INTRODUCTION 1.01 Senegal has a fairly well developed transport system concentrated in the Cap Vert peninsula and the groundnut basin, which are the areas with the largest populations and economic activity. The transport system comprises a 1,032 km railway, 14,000 km of roads including 3,500 km paved; a deepwater, protected port at Dakar and three secondary ports; and an international airport at Dakar and a network of smaller domestic airports. 1.02 Some 95% of all domestic transport in Senegal is done by road. Senegal's road network (Annex 1-1) forms the densest paved network in West Africa; over the last 10 years, with relatively impressive investments, the road network has also become one of the best in West Africa: paved roads increased from some 2,250 km to 3,500 km, and all weather gravel roads increased from some 2,300 km to 5,500 km. Some 20% of the paved roads are less than 5 years old and 40% less than 10 years. This compares to 4,000 km of paved roads in Ivory Coast and 2,000 km in Cameroon, which have GNPs four and two times respectively the size of Senegal's, and larger land areas. In parallel, the vehicle fleet has increased to some 65,000 units at about 7% p.a., and used some 7% more fuel every year. Some 80% of the car fleet and 60% of other vehicles are based in Dakar, where about 75% of all traffic originates or terminates; on the most heavily used road section, joining Dakar to the rest of the country through the Cap Vert peninsula, traffic has reached some 18,000 vpd. The importance of preserving the network and keeping vehicle operating costs to a minimum are illustrated by the fact that no less than 900 million vehicle-km are run per year. 1.03 Given that Senegal has a well developed transport network and that the economy is in a critical situation which does not generate a surplus for investments or create additional demand for services, the first objective is to make the best with what exists, i.e., to maintain assets and improve the efficiency of the system, so that use of scarce available resources can be improved. It is evident that there is scope for improving efficiency and reducing the Government's recurrent budget requirements over the medium-term. 1.04 The institutional capacity for road maintenance has already improved since the early seventies; Annex 1-2 shows the evolution of the network maintained, and Annex 1-3, related expenditures and unit costs since 1976/7. Over that period, however, priority was given to new investments over main- tenance, and many roads were paved despite their carrying less than 100 vpd; road investments absorbed some CFAF 9 billion per year during 1978-80.  1.05 For 1979, as part of its overall policy to streamline investments in the transport sector, the Government announced that it would give priority to road maintenance over new construction. Its Road Fund was thereafter to be exclusively used to finance maintenance of the classified network while new investments and debt services were to be financed by the Equipment Budget and the Caisse Autonome d'Amortissement, respectively. The Government pledged and agreed under a covenant of the Fourth Highway Project to budget CFAF 3 billion per year for the Road Fund (RF), and to delegate CFAF 700 million to the revolving funds of the regional and central Directorate of Road Maintenance and Equipment (DERM) offices, to cover operational expenditures for maintenance. The new RF concept and revolving funds were operative for the first time in 1980. With the exception of salaries of permanent staff, which are paid under the operating budget, all road maintenance expenditures, including salaries of temporary staff, purchases of equipment, spares, fuels, and materials, and payments to contractors for maintenance works are handled under the Road Fund. The new funding concept was to have ensured the con- tinued availability of funds throughout the road maintenance system, and thus remove one of the main obstacles to efficiency in work. 1.06 However, a prolonged and grave shortage of Government funds resulted in the Road Fund being seriously curtailed in the following years. In FY81 the Road Fund was provided with CFAF 2.5 billion, still below the target, of which some CFAF 600 million were counterpart fundls for pavement strengthening. In FY82, the Road Fund allocation was CFAF 1.9 billion; amounts actually spent were even inferior to this: only about CFAF 1 billion, because funds were released with considerable delays and could not be transferred between fiscal years. (The FY82 Road Fund budget was onLy finalized in February 1982 and released in April, after no less than eight changes in as many months). Whereas stocks of spares, fuels and materials carried over from the preceding fiscal year did permit a reduced maintenance effort for some time, complete work stoppage occurred for four months in early 1982, and most of the main- tenance budget was spent on unproductive salaries as staff did not have the means to work with. In FY83, the Road Fund allocation for maintenance was reduced to CFAF 1.8 billion, but liquidity improved and there were no work stoppages due to lack of funds. In FY84, actually available allocation for road maintenance is around CFAF 1.1 billion. During these years of shortage of Government funds, the general budget was in general maintained intact, with salaries of permanent staff paid on time--while the reductions were applied to salaries of temporary staff, and mostly to purchase of supplies. The Govern- ment also became seriously remiss in payments of counterpart funds to contrac- tors under the Bank/IDA-financed Fourth Highway Project. During negotiations, the Government and the Association agreed on a payment schedule for these counterpart funds owed by the Government to contractors; albeit belatedly, these payments have now been made. 1.07 Revenues from road user charges amount to far more than the combined expenditures on road investments and maintenance. Although, by decree, the Road Fund should receive 50% of refinery fuel taxes, this has not been applied due to the insolvency of the Treasury, and all revenues from road user charges have been used for general purposes. Fuel taxes alone, which represent about 50% of the sale price, would generate some CFAF 25 billion per year (Annex 1-4). It does not seem warranted to increase taxes even further,  - 3 - although an axle-load tax for trucks may be required to properly assign maintenance expenditures to heavy vehicles; this is in the process of being addressed by the Government with assistance to be provided under the Fourth Highway Project. 1.08 In this context, the Government requested donor support for the Road Fund. In March 1982, a sectoral aid coordination meeting was held at which the Bank indicated its willingness to support road maintenance in view of Senegal's difficult economic circumstances and the! good cooperation between the Government and the Bank in the sector. The Caisse Centrale de Cooperation Economique (CCE, France), also pledged its support for construction and maintenance of feeder roads, under French exceptional aid. As a result, the CCCE provided emergency aid in the amount of CFAF 500 million for FY82. USAID also adopted a positive attitude towards supporting the country's road maintenance effort. It has since allocated US$5 million under its FY83 Economic Support Fund to finance maintenance costs of rural roads in areas where it is supporting agricultural projects; some local funds generated from this support are expected to be used for road maintenance during FY84 and FY85. USAID is further considering a US$10 million support for road maintenance in FY86 and FY87. 1.09 The Bank Group has had quite a heavy involvement, summarized in Annex 1-5, in Senegal's transport sector, with a total of twelve projects approved since 1966. Sector issues and investment programs have been discussed between the Bank and the Government in connection with the preparation of a national transport plan by the Ministry of Equipment assisted by consultants under the Third Highway Project, and in the context or a 1982 Bank Transport Sector Memorandum. The most important issues are the funding of road maintenance and the role and performance of Senegal Railways. The railway is shortly to be subjected to a detailed study of its operations and efficiency. In the four highway projects approved so far, improvements to road maintenance organiza- tion and execution have featured prominently, and have on the whole been more successful than similar efforts in other West African countries. The ongoing Fourth Highway Project provides for pavement strengthening, studies and a training program for maintenance staff. The proposed Project would address the problem of maintenance funding, and would be the thirteenth Bank Group Project in the tranport sector. II. THE PROJECT A. Objectives 2.01 While the ongoing Fourth Highway Project provides funds for the strengthening of paved roads and training for road maintenance staff, and several sources cover feeder road financing needs, the highest return activity--maintenance--has insufficient financing available. The main purpose of the proposed project is thus to avoid that the road network deteriorates for lack of maintenance requiring subsequent rehabilitation at far higher cost than timely maintenance. Through involvement in these activities, a second objective is to further improve efficiency in the physical operations, uses of  - 4 - funds and monitoring and control. These institutional developments would also improve later use of Government's own funds. B. Description 2.02 The Project consists of a 4-year time slice of the road maintenance program of the Directorate of Road Maintenance and Equipment (DERM) in the General Directorate of Public Works (DGTP). The effort to be undertaken under the program would prevent further deterioration of the paved network, and through the execution of deferred maintenance, return the gravel network to at least the average quality that it had in the late 1970s. The work program (summarized in Annex 2-1) will consist of: (a) routine maintenance of 9,100 km of roads in the first year rising to about 10,500 km in the fourth year, including the extension of proper maintenance to the feeder road network; (b) periodic maintenance (repaving and regravelling of road surfaces, and repair of structures) as warranted on the maintained network; (c) deferred periodic maintenance of paved and gravel roads not carried out in a timely fashion because of the funding problems in recent years. 2.03 To this end, the DERM will continue: (a) to plan yearly work programs in accordarnce with practices established under the Third Highway Project and to improve such practices where required; (b) to operate about 60 field brigades for carrying out all routine maintenance and part of the periodic maintenance (regravelling); (c) to sub-contract remaining periodic and deferred maintenance (repaving and regravelling); (d) to ensure the timely renewal of DERM road maintenance equipment; (e) to complete the modernization of central and regional workshops, and to adequately maintain the brigades' equipment; (f) to maintain and improve the financial and cost accounting systems; (g) to carry out yearly audits of all road maintenance operations and related activities. 2.04 The Ministry of Equipment's eight regional DGTP offices will carry out force account works for routine and periodic maintenance, while their initial work programs will be consolidated, and subsequently monitored, by the Central DERM. DERM headquarters will also deal d:irectly with large periodic maintenance contracts. DERM is able to carry out the Project, as can be seen in Chapter III. There are at present a total of 60 brigades that can be mobilized, if they are given operating funds and supplies.  2.05 In the first year of the program, routine maintenance will concen- trate on the paved network and that part of the gravel/earth network which is in condition "fair" or better. The work consists of spot repairs to asphalt and gravel surfaces, grading of gravel and earth surfaces, cleaning of ditches and drainage structures, and upkeep of road signs and markings. For road sections listed in bad or poor conditions this type of work does not yield much result, and full scale routine maintenance will only be resumed afteg deferred maintenance work has been completed. 2.06 Routine maintenance work is presently predominantly mechanete Ci the average of 8 teams and brigades assigned to each region, 5 are field teams (for grading, regravelling, surface patching, etc), 2 a-r labo teams (hand cleaning and masonry repair), and 1 is a mechanized auri:i[4% brigade. During the Project period, routine maintenance coveMge, of t4& work will increase from 4,500 km to 6,700 km for gravel roads n km to 3,800 km for paved roads. At the end of the period th6re-.4i15 be a coverage of about 70% of the earth/gravel network and one. 2.07 Periodic maintenance work consists in resotoi' design condition after a period (usually 4-5 years for years for paved roads) in which routine maintenance ahs d levels of roads, but in which wearing courses age a-nd wear- aojt. ' covers resealing an entire paved surface, regravelling a gravel re - original wearing course thickness, and rehabilitating drainagwe 4tru3i4rjMw; 2.08 Deferred maintenance is required for those sections that have, through lack of routine and/or periodic maintenance, deteriorated to a state where resumption of regular maintenance activities no longer is sufficient to ensure that the road functions at the originally intended service level. In this case more extensive works are required, such as repair or renewal of base course and reconstruction of drainage structures. Periodic and deferred maintenance will be carried out in part by two regravelling brigades each assigned to a specific region every year (for 1983/84 Casamance and Senegal Oriental) and mostly by DERM contracting with private firms. The yearly program of periodic and deferred maintenance will increase between the first and fourth year of the program from 170 km to 300 km of gravel road, and cover about 80 km of bitumen roads. Altogether, during the Project period, periodic and deferred maintenance will have reached about 1,300 km of roads. The design basis and standard specifications for road rehabilitation and deferred maintenance are available from on-going works and are satisfactory. They are based on observed axle loadings. 2.09 Regular renewal of the DERM road maintenance equipment fleet should resume at the start of the Project. No regular renewal has taken place over the last two years, but equipment utilization has also been so low that systematic renewal has not been warranted. With operational funds readily available under the Project, a regular yearly renewal worth an average of about CFAF 600 million will be required; to account for the existing backlog of renewals, equipment acquisition would be concentrated in FY85 and FY86.  - 6 - 2.10 The financial and cost accounting systems which are by now in place together with the yearly work planning system (Annexes 2-2 and 3) are ade- quate, but surveillance of the way in which they are operated will be required for the first part of the Project period. In February 1983 an expert in financial management started further training of Senegalese for the auditing tasks; his services, financed under the Fourth Highway Project for a period of 15 months, may be extended as needed. 2.11 Much of the effectiveness of the Road Fund can be attributed to the regional revolving fund arrangement, by virtue of which each maintenance region and the central DERM are provided with advances from the Road Fund to pay for immediate expenditures, such as spares and supplies. In the FY83 Road Fund budget these advances amounted to CFAF 625 million or about 1/3 of the Fund budget of CFAF 1.8 billion. However, the regions are still too dependent on the central DERM purchasing of bulk items, and a full autonomy for them to purchase these items should be encouraged now thait satisfactory audits are possible. Altogether, a proper decentralization of road maintenance purchases would require a cash flow through the central and regional revolving funds of about CFAF 1.2 billion yearly. During negotiations, agreement was reached with the Government that it will (i) increase the limit of yearly funding through the revolving funds to some CFAF 1.2 billion in constant 1983 prices, and (ii) in consultation with IDA establish the ye!arly amounts to be channeled through each revolving fund. Increase of the revc,lving fund ceiling is a condition of effectiveness, and has been enacted. 2.12 Regular replenishment of the Road Fund and through it of the regional revolving funds is a prerequisite for proper performance of the Project. The necesary advance payments into the revolving funds would total about CFAF 600 million at the start of each fiscal year. The revolving funds will be replenished from the Road Fund on the basis of purchase documentation for previous expenditures, reviewed by DERM and the Ministry of Finance, as proposed in Annex 2-4. However, as the Road Fund is only a line item in the budget, IDA's contributions will be deposited in a special, separate project account to avoid their being confused with the general treasury funds. C. Cost Estimates 2.13 Cost estimates for the Project are derived from (i) the work program, (ii) the DERM cost accounting system for road maintenance operations, and (iii) recent bids and price quotations for the supply of equipment, spares and materials in Senegal. The project cost is summarized in the following table and detailed in Annex 2-5.  - 7 - Project Cost Sm=nazy CFAF milla Sion$-- - $ thousand Forer % of Local Local Fbreign local Local Fbreig &hange Bse Component cost Tax Cost Total Cost 'Tax Cost Total % of Total Cost Road eiuipnent 125 - 2,386 2,511 335 - 6,397 6,732 95 17 Spare parts 5 - 95 10) 13 - 255 268 95 1 Workshop equipnent 25 - 475 50) 67 - 1,273 1,340 95 3 155 - 2,956 3,111 415 - 7,925 8,340 21 Periodic maintenance: Bitumen roads 657 860 1,011 2,528 1,761 2,306 2,711 6,778 40 17 Gravel roads 1,421 772 1,869 4,062 3,810 2,069 5,011 10,89D 46 27 2,078 1,632 2,880 6,590) 5,571 4.,375 7,722 17,668 44 Routine maintenance: Bitumen roads 719 328 515 1,562 1,928 879 1,381 4,188 33 10 Gravel roads 1,783 780 867 3,430 4,780 2,091 2,325 9,196 25 23 2,502 1,1C8 1,382 4,992 6,708 2,970 3,706 13,384 33 Ferry operation, etc 64 152 184 400 171 4(8 493 1,072 46 2 Sub-total 4,799 2,892 7,402 15,093 12,865 7,753 19,846 40,464 100 Price contingencies 1,387 717 1,422 3,526 3,719 11,922 3,812 9,453 23 Total 6,186 3,609 8,824 18,619 16,584 9,675 23,658 49,917 48 123 2.14 The project estimate covers the operations program of the Ministry of Equipment concerning road maintenance during four years, 1983/4-1986/7, excluding the general budget standard provision for salaries and administra- tion. It also specifically excludes new construction by the Feeder Roads Bureau (BPP); in principle short access roads can be financed under the Road Fund for up to 10% of its total budget, but given the various financial sources available for feeder road construction, the Road Fund is now planned entirely for maintenance. The maintenance of the roads constructed by the BPP is included in the work plan of the DERM, and is thus part of the Project. 2.15 Total road maintenance program cost (including US$6.9 million equiva- lent from the general budget for permanent staff salaries and administration) are estimated at CFAF 21.2 billion or US$56.8 million equivalent including taxes and duties. This also covers US$9.5 million equivalent in price con- tingencies at an annual inflation rate for local costs of 10% throughout the Project period, and for foreign costs of 8% in 1983, 7.5% in 1984, 7% in 1985 and 6% thereafter. Project costs, which exclude the costs of permanent staff salaries and administration, thus amount to US$49.9 million equivalent, of which US$23.7 million equivalent or 48% would be in foreign exchange, US$16.6 million equivalent or 33% local costs net of taxes, and US$9.6 million equiva-  - 8 - lent or 19% would be taxes and duties. Of the total project cost, about 60% can be considered recurrent and 40% capital expenditures. Following the Project period, an annual road maintenance budget of CFAF 3 billion adjusted for inflation should again be sufficient. D. Financing 2.16 Under the Project, IDA would finance a declining share of the Road Fund, from 65% in FYs 84 and 85 down to 30% in FY86 and 25% in FY87. IDA would participate retroactively in the financing of the FY84 program after September 1, 1983, the date when expenditures for the FY84 work season were first incurred. The proposed Credit of US$21.5 million equivalent (SDR 20.4 million) would finance 43% of total project costs as incurred over the Road Fund, excluding any feeder roads construction. This represents 53% of project costs net of taxes and duties. For the current fiscal year (FY84), and in order to support Senegal's difficult budgetary situation, IDA funds would finance, on a retroactive basis, 65% of expenditures eligible under the project and made after September 1, 1983. Such retroactive financing by IDA is estimated not to exceed US$1.5 million equivalent. For the subsequent years of the program, FY85 through FY87, an advance would be made by IDA to the Road Project Account in order to offset the fact that Senegal's budgetary procedures do not allow the Road Fund or the regional funds to be replenished until well into the new fiscal year. Thus, an advance of CFAF 630 million in FY85, and one of CFAF 340 million in FY86 and FY87 would be made by IDA at the start of these fiscal years to the Road Project Account and then channelled to the regional revolving funds. As soon as budgetary procedures allow disburse- ment of domestic resources, the Government would deposit into the revolving funds an amount which would bring the total financing of the funds to be shared in the intended proportion between IDA and the Borrower. Subsequently, the revolving funds would be replenished by IDA (through the Road Project Account) and by the Government (through the Road Fund) in the agreed propor- tions on the basis of documentation reviewed by DERM and the Ministry of Finance. During negotiations agreement was reached with the Government that it will not finance any new construction works of the BPP with IDA funds. 2.17 The financing system requires the Ministry of Finance to undertake: (a) to participate in the yearly budget exercise establishing the road maintenance budget, and to introduce budget proposals in constant 1983 terms of CFAF 1.7 billion in and 1984/85, and CFAF 3.2 billion in 1985/86 and CFAF 3.0 billion 1986/87 in time for their approval before the commencement of each fiscal year; (b) to ensure that amounts required for the operation of the regional revolving funds are released regularly as and when required. Agreements on these points were reached at negotiations. USAID is contemplat- ing to grant US$10.0 million (CFAF 3.7 billion) from its Economic Support Fund to participate in financing the Road Fund in 1985/86 and 1986/87. This would result in the Government's contribution to the Project being limited to expenditures for taxes and salaries.  - 9- E. Procurement under the Project 2.18 Procurement under the Project will follow the Ministry of Equipment procedures, which are in accordance with Bank/IDA Guidelines (see para 3.12). Purchases of new equipment and related spare parts for road maintenance and workshops, and bulk purchases of imported materials will be on the basis of i.c.b. Materials and spares that cannot be conveniently grouped into lots worth more than US$ 60,000 and fuel which is available only from Senegal's single refinery, will be procured on the basis of l.c.b procedures acceptable to the Association up to an aggregate amount not exceeding US$ 0.5 million per year. Minor items of urgently needed spare parts and materials, not exceeding US$5,000 per purchase and US$22,000 per region per year in aggregate, may be procured by local shopping or direct purchase. Contracts for civil works (periodic and deferred maintenance) will be awarded following l.c.b. These arrangements are in accordance with the Senegalese regulations for procurement and within the ceilings that can be approved at the various levels (para. 3.12). During negotiations, the procurement arrangements were reviewed and agreed upon with the Government. 2.19 The relative importance of the various procurement methods are esti- mated to be as follows: i.c.b. US$35.8 million or 72% of project cost; l.c.b. US$11.0 million or 22%; direct purchase US$1 million or 2%. The remaining 4% of expenditures are not subject to procurement (mainly salaries for temporary staff). Procurement will cover some US$7.3 million equivalent worth of equipment, US$10.8 million equivalent for spares and tires, US$9.6 million equivalent for fuel and lubricants, and US$14.1 million equivalent for civil works by contract. Contracts for supply and works estimated to exceed US$60,000 should be reviewed with the Association. F. Disbursements 2.20 The disbursement process for revolving funds is shown on Annex 2-4. As the Road Fund is in fact only a budget line, IDA's disbursements will be made into a special Treasury Project account so as to avoid that the proceeds go into the general Treasury pool. Required documentation for expenditures would be twofold: certified invoices or contrac-tor's statements, and certifi- cates of work actually performed. The annual work program contains estimates of required cash flow and work output over the year, and documentation required for disbursement would be a form that permits comparison between actual and forecast expenditures and work output. The Ministries of Equipment and of Finance will review the statements before replenishing the revolving funds and/or disbursing from the Road Fund and the project account. The Road Fund and the account will be audited every year by auditors acceptable to the Association. During negotiations, agreement was reached with the Government on the form of required documentation and procedures. Based on the disburse- ment rates shown in para. 2.16, and the expected effectiveness date in FY84, IDA's Credit would be disbursed as follows (Annex 2-6):  - 10 - IDA Disbursement Schedule US$ million in year CumuLative FY84 2.0 2.0 FY85 11.3 13.3 FY86 4.7 18.0 FY87 3.5 21.5 However, if further external financing (para 2.17) is not secured, the disbursement rates may be changed so that the Credit is disbursed more evenly over time. Since the Project is a time-slice of a continuous operation, a comparison with disbursement profiles from other projects is not relevant. G. Reporting and Reviews 2.21 DERM prepares quarterly and annual reports, and the Bank normally receives a copy; this practice will be continued under the Project. A major review of the progress in implementing policies for road maintenance and staffing of the Ministry should be held at about mid-point in project imple- mentation; at that time the financial situation and prospects for road maint- enance will also be reviewed. The Government has agreed to discuss its yearly investment programs with the Association. III. EXECUTING AGENCY 3.01 The Directorate of Road Maintenance and Equipment of the General Directorate of Public Works in the Ministry of Equipment will be the executing agency of the Project (Annex 3-1). This Directorate is one of the best of its kind in West Africa, as is evidenced by its recent performance: although in the years between FY77 and FY80 funds allocated to road maintenance did not increase in real terms, the quantity and quality of maintenance works improved significantly (Annex 1-2). In the following years, funding for road mainte- nance declined, and the Directorate decided to concentrate maintenance efforts on the paved network, a sound decision in view of the cost of rehabilitation should the pavements be destroyed. The condition of the paved network there- fore remained stable, whereas the gravel and earth network became increasingly neglected despite that improving work methods and planning did cushion the work volume somewhat from the adverse effects of reduced funding (Annex 1-1, page 2). A. Organisation 3.02 Serious efforts to improve the road maintenance began in the early 1970s with a study carried out under the First Highway Project. It recom- mended a centralization of maintenance activities; these were carried out by the Regional Public Works offices, with somewhat diffuse lines of responsi- bility. The proposed centralization was started in the first years of the Second Highway Project and was not a success. The central units that were established for operations and equipment, respectively, never asserted them-  - 11 - selves sufficiently to gain effective control of the tasks assigned to them. The new organization ran counter to established practices, did not receive high-level support, was not provided with staff of adequate quantity and quality, and turned out to be far tco complex for practical operations. After some three years of generally unsuccessful endeavours, the centralization experiment was abandoned, and since then, increasing emphasis has been placed on improving decentralized maintenance operations restricting the central organization to controlling, planning, budgeting and auditing functions. The first tangible efforts in this direction began in 1977, under the Third High- way Project. Road maintenance is now the responsibility of the Maintenance Division (DER) in the DERM in the General Directorate of Public Works (DGTP) of the Ministry of Equipment. Equipment maintenance is being done by the Equipment Divison (DM), also in the DERM. The actual execution of maintenance works by force account is carried out by the eight Regional Offices of the DGTP. Subcontracted works, mainly for periodic maintenance of gravel roads, are administered by DERM. B. Staff 3.03 The total staff directly engaged in road maintenance numbers about 900. The staff is, compared to other countries in West Africa, at nearly all levels quite well-qualified, and the critical lack of capable manpower so often seen in neighboring countries is not present. There are about 20 engi- neers, 50 technicians, 60 brigade chiefs, 300 drivers, operators and mecha- nics, and,500 laborers. However, the age distribution of the personnel is such that about 1/3 of the permanent staff has retired in the last 2 years, and some 400 more are close to retirement age. This is due to a long freeze on staff hiring that still prevails. There has also been a complete lack of training of field staff since the early 1970s, when the then existing training programs were abandoned. Although the reduction in staff through retirement was desirable it has resulted in an unbalanced work force as the DERM hired "temporary" personnel who in fact may have been employed for up to 10 years, but who have not had formal training. This in turn has resulted in undesir- able disparities within the DERM work force as concerils employment security and benefits. Many other Government agencies find themselves in the same situation and the Government is seeking a solution that could be applied to the entire civil service. It is unlikely that such a solution will be found before the start of the proposed project, but the DGTP has already appointed temporaries to the vacancies left by attrition in 1982 and at negotiations agreement was reached with the Government that it, would endeavor as an interim measure to bring employment conditions for "'temporary" staff in line with those for permanent staff, until new regulations concerning all public employees enter into force. The staffing situation will be part of the criteria for assessing the project's performance at mid-term (para. 2.21). 3.04 Training of the staff has restarted in 1982, under the Fourth Highway Project's training program which would continue through 1985 with an expatri- ate team of trainers and Senegalese counterpart instructors; there is present- ly a shortage of counterparts, but the DGTP is taking measures to fill the posts in question.  - 12 - C. Equipment 3e05 The equipment fleet of the DERM is not quite adequate for the task on hand. There are some 250 pieces of equipment available for road maintenance, and in working condition or requiring minor repairs. About 20 additional units would be required to bring all maintenance brigades up to full strength, and, in addition9 yearly renewals of the equipment fleet should be assured to replace fully depreciated units. 3.06 The Equipment Division plans equipment needs and deployment based on the road maintenance program, specific tasks and type of equipment (Annex 3-2). In conjunction with the periodic equipment inventory, the workshop, repairs and priorities and required budget are determined. Important repairs are done at the Central Workshop, or, when necessary in private workshops, while minor repairs and preventive maintenance are performed in the regional workshops following routine inspections. The system foresees that productivity/outputs be monitored, to further improve planning and costing. The system seems adequate, although it is not always followed as rigorously as desired. Equipment management is probably the weakest link in the process; this is being addressed under the onigoing Fourth Highway Project. 3.07 Equipment maintenance is in present circumstances reasonably adequate, with a downtime of 15% attributed to mechanical failures. However, the frequent work stoppages in recent years due to lack of operating funds or delays in delivery of supplies could mask a maintenance efficiency lower than that indicated. This may come to light once the funding and supply situations are remedied. D. Planning and Cost-Accounting 3.08 Work planning for maintenance has made major progress in recent years. At present a system has been established for (i) collection of data on road conditions, (ii) cost accounting for ongoing operations, and (iii) iterative establishment of work volumes in the light of prevailing budget revisions and constraints. In extension of this, a system for auditing the use of financial and physical resources has been instituted and has given good, although not entirely complete, results for the first periods in which it was employed. 3.09 An outline of the planning and auditing system is given in Annex 3-3. Work plans are established an the assumption that routine maintenance will be done by force account and periodic maintenance mainly by contract. The inventory of road conditions is compared to the physical capacity of the force account brigades and the unit prices of contract works. A final work plan can then be established in iteration with the budget proposal. This planning system had worked increasingly well over the last three years, gain- ing wide acceptance both in the Ministry of Equipment and the agencies concerned with budget preparation and approval. The planning system is now nearly 3ompletely run by Senegalese, and final phasing out of expatriate consultants is planned for late 1985. It was agreed at negotiations that the Bank will have an apportunity to review the final yearly plans and the related budgets.  - 13 - 3.10 The cost-accounting system established in the DERM, is carried out by some 50 "temporary" accountant staff specially trained for the purpose. While the system is a big improvement over the previous lack of accountability and has permitted to pinpoint irregularities, it is still not properly applied at the Equipment Division; better Public Works qualified staff (accountants, controllers, inspectors) is needed as well as a better coordination with the Ministry of Finance's purely financial audit. The first audits of the use of funds released for road maintenance revealed quite serious anomalies in the use of certain goods and supplies, in particular fuel. This led to the replacement of two senior staff in the DERM and a further tightening of accounting practices. 3.11 Consultants have proposed an intensified follow up: each Region should have an accountant (IUT or BTS) with 2 assistant accountants (CAP), one for purely financial records and the other for cost accounting. At Dakar, a chief accountant (DECS) should be assisted by 3 accountants (IUT or BTS), to a) verify regional accounts, b) collate regional accounts, and c) facilitate replenishment at the Treasury. Further, there should be an independent RF senior accountant responsible for financial control within the Ministry of Finance. An expatriate expert in financial management has been recruited for a stay of 15 months to oversee this. E. Procurement 3.12 The Regional Public Works can contract independently up to CFAF 8 million per contract and with the approval of the Regional Contract Committees up to CFAF 20 million per contract. In excess of these limits, and up to CFAF 50 million, contracts are prepared at Dakar, by the DERM, DGTP and/or the Minister of Equipment, and can be approved by the Director General of Finances; contracts between CFAF 50-100 million are undertaken by the Minister of Economy and Finances, and those exceeding CFAF 100 million by the Presidency. Awards are also reviewed by the Commission Nationale des Contrats de l'Administration. Thus, most procurement is done by the DERM, with delivery to the Regions. Delays of 280 days from preparing call for bids to contract notification are common. Delays are compounded when procedures are not well followed and documents are returned for correction. However, it is not clear why new bids are required in the case of repetitive purchases for operations, more so when official uniform prices apply, such as for fuels, and only eventually a minor discount may be obtained. The use of the revolving funds follows general Ministry of Finance 1976 instructions: they are to be used exclusively for temporary staff salaries, travel costs, fuels, materials, spares, tires, maintenance and work site expenses. The amounts given to each region depend on their respective programs and related foreseen quarterly expenses by item and work category, presented to the DERM (Annex 2-2); monthly accounts have to be presented to obtain replenishment. The revolving fund system proved to greatly facilitate timely procurement for regional needs, and, in some cases, better prices were obtained through regional rather than centralized procurement.  - 14 - IV. ECONOMIC EVALUATION 4.01 It is well known that road maintenance is one of the activities with highest returns, both due to the postponement of the need for infrastructure renewal and to the lowering of vehicle operating costs. Despite the need for imported equipment, it also has on overall posit:ive effect on the balance of payments. The main concerns for road maintenance are therefore operating efficiency, including determination of proper levels of maintenance, and adequacy of funding, including timeliness. 4.02 While Senegal had been making progress, slowly and not without diffi- culties, on the operating efficiency to the extent of being now one of the most able in the road maintenance field in West Africa, the funding avail- ability worsened due to the overall Government financial crisis of recent years. While a budget of some CFAF 3 billion is required yearly, only about a third was actually spent recently. With such reduced levels, salaries absorbed a disproportionate amount, and what was left, was properly used for the highest return activities, especially routine maintenance of paved roads. While such choice is effective over 2-3 years, it cannot be sustained as it cannot replace the periodic heavier maintenance tasks, and would allow even the paved roads to deteriorate. Senegal is in the third year of insuf- ficient road maintenance budgets, and it is now imperative to provide proper funding to preserve its infrastructure. 4-03 In this context a "catching up" program was prepared, requiring an average of some CFAF 4 billion per year over the next four years. While rehabilitation/ strengthening of paved roads contiLnues under the Fourth Highway Project, the maintenance program foresees: to expand the network under routine maintenance from 7,600 km in 1981/2 to 10,500 km by 1986/7; to regravel annually almost 1,000 km, that is, a doubling of the "normal" kilo- metrage; and to resurface some 80 km per year. Both the regravelling and the resurfacing are and will continue to be carried out by domestic contractors, at competitive prices, and this will avoid building up the administration to higher than normally required capacity. Although the idea of employing labor- intensive techniques in a depressed economy looks appealing, it is not borne out by other realities in Senegal: the DERM is not overstaffed; people are not "idle", are not readily available along the roads outside the groundnut basin, and mainly, enjoy a high minimum salary by law, of some US$6/day. Further, the need to catch up requires speed, which could not be obtained with labor intensive techniques, and Senegalese equipment operators are more and better than in other West-African countries. 4.04 A glance at the determinants of the estimated rate of return will help explain why it is so high: traffic, road conditions, road maintenance costs and vehicle operating costs. A. Traffic 4.05 The Ministry of Equipment carries out traffic counts routinely; the latest results available cover 1981. On the paved roads traffic ranges from 18,000 vpd (Dakar-Rufisque) to some 100 vpd (Annex 4-1); the average  - 15 - (excluding Dakar-Rufisque) on "national" roads was some 630 vpd, of which 78% light vehicles; the average on surveyed "regional" roads was some 465 vpd (the average for all paved regional roads may be some 300 vpd) with 84% light vehicles. On the unpaved roads, traffic was an average 110 vpd on surveyed regional sections, accounting for some 730 km and 65 vpd average on some 600 km of national roads. The unsurveyed sections carry normally less traffic, and feeder roads, no more than some 20 vpd. On the unpaved roads light vehicles account for some 75% of the traffic. While traffic was increasing faster than 10% p.a. during 1975-79, it had mostly stagnated or slightly decreased by 1981 counts, reflecting the overall economic downward trend caused by draughts and low export prices. It has been assumed that traffic levels would be similar to that of 1981 in 1983 (Annex 4-1), recover thereafter and continue to grow at 5% p.a. B. Road Conditions 4.06 Using a five-tiered rating, of 5 for exceLlent to 1, very poor, the 1982 conditions averaged 3.4 for paved roads and only 1.9 for unpaved roads, for a "maintained" network of some 8,500 km. Should the current shortage of funds continue, the unpaved roads would soon become very poor, some unpassable and the paved roads would also require considerable rehabilitation. With the maintenance program (Annex 2-1), the network maintained would increase to 10,500 km, and the average condition expected would be 3.7 for paved and 2.6 for unpaved roads, which are considered good averages (Annex 4-2). C. Road Maintenance Costs 4.07 The strategy behind the program gives first priority to preserving the paved roads; those having deteriorated to rating 2 would be resurfaced, those worse should await rehabilitation but would as the better ones be routinely patched. Unpaved roads would be regravelled upon reaching index 2, others would be spot regravelled and gravelled and graded as needed. The surface improvements would be supported by routine maintenance of drainage systems, bridges, shoulders, signalisation, etc. Unit costs are at the following levels: CFAF 9.2 m (US$24,700) per km of resurfacing; CFAF 3.5 m (US$9,400) per km of regravelling; CFAF 88,000 (US$235) per km of patching; CFAF 150,000 (US$400) per km of spot regravelling; CFAF 21,500 (US$60) per km of grading (but some roads require several passes of grader per year). Other routine maintenance costs average about CFAF 76,200 (US$200) per km. The common view in Africa that it is cheaper maintaining paved roads than unpaved roads stems from comparing only patching versus spot regravelling and grading costs, while the resurfacing and full regravelling costs ought to be con- sidered as well. Costs of works by task are shown in Annex 4-3. D. Vehicle Operating Costs 4.08 A reduction in vehicle operating costs is the direct benefit of road maintenance. An estimate has been made of the operating costs on good and poor surfaces; interpolations were used for the intermediate conditions. Given the various assumptions above, it is estimated that the public would save in operating costs the equivalent of the Road Fund of CFAF 4 billion over each of the 4 years, stemming from an assumed saving of less than US$0.01 per vehicle-km (Annex 4-4).  - 16 - E. Rates of Returns and Benefit-Cost Ratios 4.09 Based on the preceding discussion of benefits and costs to be derived from a four-year maintenance program defined yearly with the agreed criteria for work scope and selection, the overall economic rate of return is higher than 100%. Separate rates of return have also been calculated for the perio- dic maintenance components, yielding 25% for full regravelling and 86% for resurfacing. The benefit-cost ratios, which are more meaningful for main- tenance projects than the rates of return, are also fully satisfactory: the overall B:C is 2.1; for paved roads it is 3.5:1 eLnd for gravel roads it is 1.6:1, at a 12% discount rate. Naturally, maintenance on higher traffic roads yield the highest returns. Even if traffic growth would not resume as expected (para. 4.05) or the works were to be carried out less efficiently, the maintenance program remains well justified with B:C ratio above 1 (Annex 4-4). F. Project Risks 4.10 The main risk to achieving expected benefit from the Project concerns (1) operating efficiency of the project agency, and (2) adequacy and timeliness of funding. In the first instance, DERM has demonstrated its operational efficiency, so that this risk is considered marginal. There is, however, the possibility that Government's budgetary situation may not improve sufficiently over the coming years to allow it to assume an increasing share, and eventually the full burden of financing the Rzad Fund. In such event, alternative solutions would be considered by Government and IDA during the proposed mid-term review. V. AGREEMENTS REACHED AND RECCIMMENDATION 5.01 During negotiations, agreements were reached on the following: (i) a payment schedule for the counterpart funds that Government owes under the Fourth Highway Project (para. 1.06); full payments have since been made; (ii) raising the global ceiling of the revolving funds to CFAF 1.2 billion in constant 1983 prices (para. 2.11); a decree to this effect has since been issued; (iii) that, yearly with IDA, DERM shall discuss the proposed annual work program, budget and each revolving fund amount and the Government shall discuss its road investment program (paras. 2.11, 2.21 and 3-09); (iv) the Government will endeavour to bring employment conditions for temporary staff in line with those in permanent positions; the Road Fund and the ceiling on revolving funds may be lowered accordingly as the salary burden on the Road Fund decreases (para 3.03);  - 17 - (v) procurement and disbursement procedures, i.e., requisite documenta- tion and that, except for an initial yearly advance, the IDA Credit will reimburse the Road Fund through a Project account (paras. 2.12, 2.16, 2.18 and 2.20); (vi) that no new feeder road construction will be financed with the Road Fund (para. 2.16); and (vii) that a mid-term review will be held between the Government and IDA to review the implementation of maintenance and staffing policies, and of financial resources available (para. 2.21). 5.02 During negotiations, the Government gave assurances that it will provide to the Road Fund, in constant 1983 terms, CFAF 1.7 billion in 1984/85, and CFAF 3.2 billion in 1985/86 and 3.0 billion in 1986/87 (para 2.17). 5.03 Payment to contractors of counterpart fund arrears owed under the Fourth Highway Project (para. 1.06), was a condition of Board Presentation. 5.04 A condition of effectiveness was the issuance of the decree raising the ceiling of the revolving funds to CFAF 1.2 billion (para. 2.11). 5.05 Retroactive financing under the Project of the Borrower's road maintenance program for expenditures incurred after September 1, 1983 is recommended (para. 2.16). 5.06 As agreements on the above items have been obtained, and conditions of Board Presentation and effectiveness have all been met, the Project is suitable for a SDR 20.4 million (US$21.5 million) IDA Credit on standard terms.  ANNEX 1-1 - 18- Page 1 SENEGAL FIFTH HIGHWAY PROJECT' STAFF APPRAISAL REPORT Road Network Development and Present Distribution Development km 1972 1974 1978 1982 Paved roads 2,256 2,586 2,836 3,521 Engineered gravel/earth 654 456 448 325 roads Other all-weather roads 1,640 2,794 5,108 4,787 Total all-weather roads 4,541 5,836 8,392 8,633 Seasonal roads 4,480 7,435 5,350 5,265 Total all roads and 9,C21 13,271 13,742 13,898 trucks Present distribution Paved Gravel/ Area Pop. Earth _ Cap-Vert 7 0 0.3 19 Casamance 18 21 14 15 Diourbel 6 6 17 9 Fleuve 17 16 22 10 Senegal Oriental 7 33 30 6 Sene Saloum 19 17 12 20 Thies 13 6 3 14 Louga 13 2 15 8 Source: Ministry of Equipment, 1982. February 1984  - 19 - ANNEX 1-i Page 2 SENEGAL FIFTH HIGHWAY PROJECT STAFF APPRAISAL REPORT Summary Road Condition by Region A. Percentual Distribution by Region Region Paved Gravel/Earth Index 1 2 3 4 5 1 2 3 4 5 Cap-Vert 2 13 12 14 9 - - - - - Casamance 4 5 24 32 35 77 14 5 4 0 Diourbel 0 14 38 43 5 17 8 72 2 1 Fleuve 0 11 40 28 21 0 76 3 21 0 Senegal Oriental 0 0 4 21 75 22 31 45 1 1 Senegal Saloum 5 9 26 13 47 23 39 25 13 0 Thies 3 13 45 26 13 39 30 23 1 7 Louga 0 10 29 57 4 0 9 1 90 0 Total 2 9 32 29 28 31 34 27 9 1 100 100 B. Average condition indices 1980-1982 Region Paved Gravel/Earth 1980 1981 1982 1980 1981 1982 Cap-Vert 3.5 3.2 3.1 - - Casamance 4.0 3.9 3.9 2.3 1.4 1.2 Diourbel 3.8 3.4 3.5 3.0 2.6 2.9 Fleuve 3.3 3.6 3.4 2.4 2.4 2.1 Senegal Oriental 4.7 4.7 4.0 2.6 2.3 2.3 S'negal Saloum 3.6 3.9 3.1 2.3 2.3 2.1 Thies 3.0 3.3 3.5 2.7 2.1 2.5 Louga 3.2 3.6 3.4 3.0 3.8 3.0 Total 3.6 3.7 3.5 2.5 2.1 1. Road condition indices: 1=very bad 2=bad 3=acceptable 4=good 5=very good Source: Ministry of Equipment, 1982. February 1984  - 20 - ANNEX 1-2 S E N E G A L FIFTH HIGHWAY PROJECT STAFF APPRAISAL REPORT Network maintained, FY1M77-1982 76/7 77/8 78/9 79/80 80/81 81/82 Network maintained, km 5752 5796 6020 6109 7610 3872 Paved 2499 2543 2631 2853 3170 2175 Unpaved 3253 3253 3389 3256 4440 1697 Brigades 35 38 47 42 50 41 Staff 300 517 679 608 737 753 Pieces of equipment 166 183 228 212 235 250 Source: DERM February 1984  - 21 - ANNEX 1-3 SENEGAL FIFTH HIGHWAY PROJECT STAFF APPRAISAL REPORT Road Maintenance Expenditures and Funiding, FY1971-1982 tCPAF million) 1976/77 1977/78 1978/79 1979/80 1980/81 1981/82 a! A. Expenditures (i) Bitumen Roads Recurrent 513 577 674 791 781 240 Periodic 995 1,130 1,203 1,173 1,861 445 Sub-total 1,508 1,707 1,877 1,969 2,642 685 (ii) Gravel/Earth Roads Recurrent 342 437 524 470 557 150 Periodic 140 140 150 - 228 40 Sub-total 482 577 674 470 785 190 (i+ii) All Network Recurrent 855 1,154 1,347 1,261 1,338 390 Periodic 1,135 1,130 1,203 1,178 2,089 485 Total A 1,990 2,284 2,550 2,438 3,427 875 Cost/km Paved .60 .68 .71 .69 .83 Unpaved .15 .18 .20 .14 .18 B. Funding (i) General Budget Operations Budget 811 1,105 1,105 971 957 970 Works Budget 1,179 1,179 1,445 978 - - Sub-total 1,990 2,284 2,550 1,949 (ii) Road Fund - - - 550 2,490 875 Sub-total 1,990 2,284 2,550 2,439 3,427 1,845 (iii) Foreign Funds -/ Second Hwy. Proj. 160 30 30 20 Third Hwy. Proj. 260 280 150 160 100 100 Supplier Credit (for equipment) 2,500 Fourth Hwy. Proj._ _ _ 300 Sub-total 420 310 2,680 180 100 400 Total Funding 2,410 2,594 5,230 2,619 3,527 24 a/ Excluding pavement strengthening programs and equipment depreciation or capital expenses. b/ Excluding pavement strengthening programs. Source: Ministrv of Equipment and World Bank, 1982. February 1984  - 22 - ANNEX 1-4 SENEGAL FIFTH HIGHWAY PROJECT STAFF APPRAISAL REPORT Fuel Price Structure (in CFAF, since July 14, 1982) SUPER GR 8 E KEROSENE DIESEL-OIL I. CIF Price 10,860,85 10.317,18 9.966,34 9.768,61 II. Tax on Oil 868,87 825,37 797,31 781,49 III. Refinery Price 11.729,72 11.142,55 10,763,65 10.550,10 IV. Duties and Taxes 1. Refinery Tax 951,12 935,29 217,73 782,56 2. Specific Tax 3.770,00 2.780,00 1.620,32 2.078,94 Total Duties and Taxes 4.721,12 3.715,29 1.838,05 2.861,50 V. Distribution Margin 1. Warehouse Expenses 133,64 133,64 133,64 87,75 2. Warehouse Losses 108,40 102,97 74,60 73,12 3. Transport Differential 440,00 440,00 440,00 440,00 4. Amortisation & Maintenance 238,64 183,37 124,97 79,41 5. Retailer's Margin 750,00 675,00 675,00 550,00 6. General Expenses 523,00 423,00 365,00 290,00 7. Financial Expenses 519,26 487,38 457,68 453,52 8. Profit 137,00 105,00 105,00 88,00 Total Distribution Margin 2.849,94 2.550,36 2.375,89 2.061,80 VI. Theoretical Price to Consumer 19.300,78 17,408,20 14.977,59 15.473,40 VII. Stabilisation 7-699,22 8.591,80 (977,59) 26,60 VIII. Consumer Price CFAF/HL 27.000,00 26.000,00 14.000,00 15.500,00 CFA/L 270,00 260,00 140,00 155,00 Total tax/l 130 1i3U 17 37 Source: Ministry of Mines & Energy, Dakar, Senegal. February 1984  - 23 - ANNEX 1-5 Page 1 SENEGAL FIFTH HIGHWAY PROJECT STAFF APPRAISAL REPORT Past/Ongoing Bank Group Transport Operations 1. The first Bank transport project for Senegal was approved in 1966 to assist in rehabilitating the railway's infrastructure and equipment (Cr. 96-SE, $9 million, 1966), and was complemented by the First Dakar Port Project (Ln. 493-SE, $4 million, 1967) to improve infrastructure and operations; the First Highway Project followed three years later (Cr. 198-SE, $2.1 million, 1970) for the construction of feeder roads, purchase of maintenance equipment, technical assistance and studies; the First Aviation Project (Ln. 867-SE, US$3 million, 1972) comprised the extension of the runway at Dakar, enlarging aircraft parking aprons and related works. Despite being relatively simple projects, they each took some seven years to complete. A Second Railway Project (Cr. 314-SE, Ln. 835-SE, $9.6 million, 1972) was approved and before the First Highway Project was completed, a second followed based on the First's studies, providing for strengthening of paved roads, further assistance to road maintenance and studies (Cr. 366-SE, $8 million, 1973). The Third Highway Project completed the operations of the Second (which experienced high cost overruns) and also included assistance for transport planning and a study of the domestic contracting industry (Ln. 1222-SE, US$15 million, 1976). A Feeder Road Project was processed in parallel (Ln. 1221-SE, US$6.6 million, 1976). 2. Project Completion Reports were prepared for the 2nd and Feeder Road Projects. The conclusions were that the 2nd project implemented successfully the road strengthening program, but the road maintenance program was less successful and was perhaps an inevitable first step. Lessons learned helped improving road maintenance under the Third Highway Project, with the good results known today. Results from the Feeder Road Project were also mixed; less than foreseen km were built, but the economic return of 14% was still acceptable. The institutional set up gradually improved but upon completion of the project the equipment and staff were integrated into the DERM.  - 24 ANNEX 1-5 Page 2 3. Subsequent projects are still being implemented: The Dakar Fishing Port Project (Ln. 1405-T-SE, US$6 million, 1977) cofinanced by BADEA and CCCE provided for reclamation of 10.5 ha of land, construction of 1,500 m new berth face and ancillary works, technical assistance for management, cost accounting and introduction of a new tariff (ad valorem) structure, and a study for a container terminal; it is almost complete, within the cost estimate, and a balance is being used for a full audit of the Port accounts and establishing an improvecL accounting system. - Implementation of the two railway projects was disappointing with little impact on improving operations; the Third Railway Project (Ln 1518-SE, US$11 million, 1979) was processed with the expectation that the railway operaticns could be improved through track renewal, marshalling yard and telecommunications improvements in Dakar, and provision of spares, maintenance equipment, training and technical assistance. The Project is vir- tually complete, at a 20% cost overrun, and the closing date was postponed from December 1981 to December 1983. In an effort to improve the financial situation of the railway, the Government has negotiated a contract plan with the railway, including an agreement on the investment plan for the next years; the Bank has approved the first phase in the context of the Project and the SAL. The Second Aviation Project (In. 1665--SE, US$7 milliion, 1979) provided for improvement of the Dakar runways; fAavigation aids and runway lighting at Ziguinchor and visual approach aids at Cap Skirring. It is practically completed at 50% of the cost estimate, and use of balance funds has been approved for improvement of the terminal building and new runway lighting at Dakar, and for an audit of the implementing agency. The Fourth Highway Project (Ln. 1810/Cr. 993-SEN, US$38 million, 1980), approved after the Government had taken action on the Road Fund and agreed to a yearly funding of CFAF 3 billion at 1980 prices, provides for a 3-year training program and technical assistance for road maintenance, assistance to the National Soils Laboratory, strenghthening of an additional 200 km of paved roads and construction to paved road standards of the 85 km Louga-Dahra Road. The Project is advancing well; as the dollar appreciated  25 ANNEX 1-5 Page 3 vis-a-vis the FCFA, the lending amount enables expansion of strengthening works. 4. The most recent Project, for the SEFICS rail (Ln. 2025-SE, US$19.3 million, 1981) will upgrade the siding track from the fertilizer factory at M'Bao to the Dakar-Thies, CFS line, and would procure locomotives, wagons, and maintenance facilities. It is expected that such independent operation will be more efficient and economic than the one so far provided by CFS. 5. Thus, over the past 15 years the Bank Group has invested US$138.6 million in the sector under 13 loans/credits (four for railways, US$48.9 million; two port, US$10 million; two aviation, US$10 million; four roads, US$69.7 million), also financed feeder roads under agricultural projects and mobilized considerable cofinancing. The Bank's share of Senegal's transport investments would have been the following, based on an average exchange rate of US$1 = CFAF 230 for 1973/77 and 210 for 1977/81, and separating amounts still to be disbursed under ongoing projects: Bank's Share in Financing Investments 1973/1981 1982/... Percentage Amount to be Disbursed Disbursed of under Existing Projects (US$ m) Sector Investments (US$ m) Roads 37.7 14 32.0 (HIV) Rail 20.6 5 26.3 (RIII, SEFICS) Port 6.0 12 0.7 Aviation 6.4 32 3.6 70.7 22 62.6 February 1984  - 26 - ANNEX 2-1 S E N E G A L FIFTH HIGHWAY PROJECT STAFF APPRAISAL REPORT Maintenance Program, FY1984-1987 (kms) 1983/4 1984/5 1985/6 1986/7 Maintenance on Unpaved Roads Partial Regravelling (force account) 2969 2993 3291 3320 Grading (force account)a/ 5570 (2611) 6440 (2787) 8254 (2966) 9445 (3103) Full Regravelling (force account) 120 120 100 100 Full Regravelling (contractor) 50 90 195 197 Maintenance on Paved Roads Resurfacing (contractor) 64 61 64 60 Patching (force account) 3233 3264 3500 3407 a/ road kms in brackets; several gradings are required yearly on some roads. Source: DERM February 1984  27 ANNEX 2 -2 Direction ie l'Enkretien Routier et du Materiel PRFVI;,lJNS T7W-1tES'.RIELLES DE'S DQcP;iNSES Ge;hon: . -- Budget: .0 ~ ~~ ~~~ltlrlE>^teur fmnal: TOTA'JX MENStUELS TOTAL CMUL .DESIGNATIONSi T07 1 Mois:______ Mss: t Mcis: __ Trimestre debt Mois: - Mcis_________Gestiion PREVISIoN D'ACTIVIT ES _ __ ER 1/3 A Travaux Gene. Mecanique - -_ . ER 1/3 8 Travaux Gene. Manuel __. ___ ER 1/3 C Travaux Gene. Macon * R 0 2 Recharqement partiei _ . ER 0 5 Reprohiage _ _ _ _ _ E R 0 6 Buttage. ER 06BUe_____ ___ __ ______ ____ ER 0 7 Point-a ternps ER __ _ ehrme~ta __ ______ ___._ _____ _______ EP C; I Rechargementr 9iinial EP 0 3 Sianalisation hwrizon!ale Autres activites __ . RURRIQUES DE DEFPENSES Salaire temporaire 0. E. R. laire temporaire O.M. Frais de deplacement E rnusion Gravitlion Pe'inture Parneaux sicnaiisotion Autres materiaux _ Gas-dtl (ErTiretien routier Gas-o'iI 'i! !____ _____ __ LubriFlanrl,ingrediern t . ._ ._ . _ . Fieces de -echange Essence ( vihicule de iaison Essence ( Divers *Entretien (vehicule de -liaison Divers | ~TOT-AL | . ______ li___i.. C.te_._ ....r.. . a ....... ... - yte: j. ,moje rar:. ...... Source: DERM February 1984  SENEGAL ANNEX 2-3 FIFTH HIGHWAY PROJECT STAFF APPRAISAL REPORT ROAD MAINTENANCE MANAGEMENT SYSTEM FLOW CHART AD: tlISTPATI ON PHYSICAL PLA1"ING PERFOBRMANCE BU5DG TING COST ACCOUI?TING PERFCG.''.E E-VALUATITC LEGIS'ATURE A-ND EKECTTrVE BUDGET BLD5ET RAtADCH DOBAE _Ar2ROVAL _ _ _ AUDIT Ministry of Equipment - SPOET General Directorate of Public :NAD., Works ? T G : B D E _ _ _ _ _ _ _ _ _ _ _ -1~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~F 11- I 1 1 Directorate RVAUTBIZ of Road 7RO 9. aMaintenan_e T sld Equipment I I I F~~~~rATES EJIE CZT iI | TE I * i |"--- -| RBegional Public| L1 1| | Works Service ,WOPK |I . A' BOAD |SEIG.ArED. 0 |l FIK Rl:Pa? R Source: DERM February 1984  SENEGAL FIFTH HIGHWAY PROJECT STAFF APPRAISAL REPORT ' CilEM~4A I CONTROLF DEPENSES Ert RENOJVELLDttJT CAIStFS D'AVANCE 'f j.;ae&ff | est accord6 caisse rapport mensuel (A) (factures gardees demande Finances pour executer progr. --->d6tail travaux - a l'Arrondissement) renouvellement agree avec DGTP et detail depenses caisse quand Banque 75S vers8 agree programme et - controle rapports n'approuve paS caisse n6cessaire travaux/d6penses/~-->approuve -4consolidatio pr2visions regions Min. Financea - inspections - feLt audit periodique- j:sz-ie-s1 progranime annuel rapport mensuel (factures gardees demande ment lj' j I agr6c; determine -t >travaux/d2penses b BPP) -> renouve lemen - orenouvelle cais3e rapport tvec a Finane es _ caisses jus- pr6visions qu'a limite controle travaux et an approuve pas consolidaticn (B -oersede rem rapports sg , nignee par Dir. agboursement a approuve DERM, chef compt avec