Burundi - Fourth Highway Project

V -zo-t t ' -- - " '-Be'Th Worild - nk FOR OFMICIAL USE ONLY -CA x . . Report No. 5335-E- STAFF APP-AISAL REPORT BURUNDI FOURTH HIGHWAY PROJECT April 2, 1985 TransportationL Division I Eastern and Southern Afric-an Regioual Office This document has a restricted distribution and may be used by recipients only in the performance of their official dudies. Its emntnts may not otherwise be &dicosed witbout world DBnk authrizaton.  <-eg~~-, - ;--: . . . . *..............*-.- --*- .. - -. *- _ - - - - -- X .....................1 ~~~~- .~----'=.-:-- -- .W c -V F s .. - - - -- - .- *.' U. CURRENCY EQUIVALIS' Cureac lUnit = Bunmdi Franc meBu - - . - US$0.0085. - = FBu I US$1.00 = - FBu 117. US$1.00 = SDR 1.042 WEIGHTS AND MEASURES 1 meter (m) = 3.28 feet 1 kilometer (km) = 0.62 miles I square kilometer (km2) = 0.386 square miles (mi2). 1 ton (t) = 2,204 pounds (lb) FISCAL I!EAR January 1 -December 31 GLOSSARY OF ABBREVIATIONS AB - Air Buruadi BTA _ Buruadi Transport Association (STB) CBAT - Center for Basic and Advamced Traiintg DAF - .Department of Administration and Finance DDC - Department of Design and Comtrol DW - Department of Works EDF - European Development Fund ERR - Economic Rate of Return FAC - Freach Bilateral Aid FRG - Federal Republic of Garmany GDR - General Directorate of Roads GDT - General Directorate of Transport INTRACO - International Transport Company KfW - FR of Germany Bilateral Aid MP - Ministry of Plaaning MPW - Ministry of F.blic Works, Energy and Mines MTT - Ministry of Transport and Telecommunications NLPW - National Laboratory of Public Works NR - National Road (Primary Road) POB - Port of Bujumbura PPF - Project Preparation Facility PWS - Public Works School RGI - Road of General Interest (Secondary Road) TOB - Transport Office of Burundi (OTRABU) UNDP - United Nations Development Program USAID - United States Agency for International Development VOC - vehicle operating costs VPD - vehicles per day  FOR OFMCIAL USE ONLY BURUNDI FOWRTH IEGOWAY PROECT STAFF APPRASAL REIPORT Table of Contents Page No. CREDIT AND PROJECT SU@HKRY .................................. i I. THE TRANSPORT SECTOR ................... .. .....*....**..... 1 A. Geographic and Economic Setting ...... .................. 1 B. The Transport System .... ........... ........ 2 C. The Highvay Subsector .................. ...... .......... 5 (1) The Network ...................................... 5 (ii) Road Use ......................................... 6 (iii) Admiuistration, Staffing and Training ............ 9 (iv) Planning ......................................... 10 (v) Financing ................................ 11 (vi) Engineering, Construction and Maintenance 13 D. Transport Sector Management, Policy & Iss.. 14 e. Past Bank Group Involvement in the Highway Sector ...... 17 I-. THE PROJECT ...........................r , 19 Objectives ..................19 1. Road Program 19 A* Program Description 19 Bd Cost Estimates *---------------------------------------- 23 C. Econonic Justification of the Program 26 D. Program Financing ..............*....................... 26 2. The Project .......................................... 27 A. Project Composition and Financing 27 B. Implementation and Procurement ............. 29 C. Disbursement .........................so ... s.o. 30 D. Accounting, Auditing & Reporting Requirements ........ 31 E. Environmental Aspects ....... 32 III. ECONOMIC EVALUATION ...33....... ... 33 A. General .............. .....a.. ...33 B. Area of Tnfluence of the Program, Benefits and Beneficiaries 33 C. Economic Analysis of the Program ................ 34 D. The Project Components ..... .............* * * * * .......... 36 E. Sensitivity Analysis and Risks 37 IV. AGREEHENTS REACHED AND RECOMMENDATIONS ...... 38 This report was prepared by D. Jovanovic (Sr. Economist), P. Sooh (Highway Engineer) and C. Tran-Luu (Training Specialist) who appraised the project in May 1984. Mr. A. Kassab (Financial Analyst) visited Burundi in October 1984 to review Government's accounting and auditing capacity. T Ihis document has a restricted distribution and may be used by recipients only in the performance of | their offical duties. Its contents may not otherwise be disclosed without World Bank authorization.  ANNEXES I. Transport Statistics II. Mainteuance of Paved Roads - List of Roads III. Maintenance of Earth Roads - List of Rodas IV. List of Road Equipment Requiremeuts and Equipaeut Acquisition V. Terms of Reference for Technical Assistance for Management of Road Operations and Training VI. Training Program and Needs of GDR Staff VII. Terms of Reference for Technical Assistance in the Ministry of Transport and Telecommunications and in the Ministry of Public Works VIII. Terms of Reference for Muzinda-Bubanza Road Studies IX. Project Progress Reporting Requirements X. Economic Evaluation xI. Related Documents and Data Available in Project File CHARTS I. Organization of the Ministry of Public Works, Energy and Mines II. Organization of the Ministry of Transport, Posts and Telecommunications III. Project Implementation Schedule MAPS Buruadi, International Surface Transport Connections (TBRD 15268R1) Burundi, Road System (IBRD 18509R)  ,' (~~~~~~~~~~i) BURUNDI Fourth Highway Project CREDIT AND PR$ECT SUMNARY Borrower: Republic of Burundi Amount: SDR 18.9 million (US$18.1 million) equivalent Terms: Standard Project: Objectives: The project is designed to (a) increase the Ministry of Public Works' capacity to maintain the road networks, (b) --ex- pand road maintenance operations to cover both earth and paved road networks, tc) train local personnel and (d) improve the country's transport planning and management. Components: The project would comprise part of a program to be Implemented over a three-year period (1985/86-87/88); the project would include strengthening/resurfacing of 11 km of paved roads, improvement/regravelling of 81 km of earth roads, routine mainte- nance of the entire paved road entwork (744 km), maintenance of selected earth roads (about 1,100 km); improvement/maintenance of bridges; labor-intensive maintenance of the entire classified road network (about 2,900 km); training and technical assistance, and cons-'ltant services. Benefits: Reduction of road transport costs due to reduced vehicle operat- ing costs, deferred costly road reconstruction and improved road safety. Risks: There are no major risks associated with the project.  Estimated Costs: Local Foreiza Total -US$ milioI: I. Strengtheni g/Resurfacing of Paved Roads (11 km) 0.3 1.4 1.7 II. Improvement/Regravelling of Earth Roads (81 km) 0.8 1.7 2.5 III. Maintenance of Paved Roads (744 k1) 0.2 1.0 1.2 IV. Maiutenance Earth Roads (1,100 km) 0.6 5.0 5.6 V. Maintenance of Bridges 0.3 1.4 1.7 VI. Labor-Iatensive Maintenance 1.8 0.1 1.9 (2,900 km) VII. Training (Techanical Assistance and Fellowships) 0.1 0.8 0.9 VIII. Cousultant Services 0.3 2.4 2.7 IX. Project Preparation 0 0.9 0.9 Total Base Cost 4.4 14.7 19.1 Contingencies Physical 0.2 1.4 1.6 Price 0.5 2.7 3.2 Sub-total 0.7 4.1 4.8 GRAND TOTAL 5.1 18.8 23.9 Total Project Cost Excluding Taxes 4.1 18.8 22.9  : : ~~~~~~~~~~(iii, --.-- P Fi-*ncing Plan: Local Foreign: Total -(UST Mllion)- -Proposed IDA Credit - 18.1 18.1 Belgian Aid 0.7 0.7 Government 4.1 - 4.1 Total Fmlaizaing 4.1 18.8 22.9 Estimated IDA Disbursement: - (US$ million)-- IDA Fiscal Year .1986 1987 1988 1989 Annual 3.3 6.2 7.1 1.5 Cumulative 3.3 9.5 16.6 18.1 Economic Rate of Return: 51 percent Maps: IBRD 15268R1 IBRD 18509R  I. THE TRANSPORT SECTOR A. Geographic and Economic Setting 1.01 Burundi (see Map IBRD 18509) is a small landlocked country situated south of the equator in Eastern Africa between Zaire and Tanzania, about 1,400 km from the Indian Ocean. The country has an area of only 27,800 square kilometers and its terrain is dominated by a hilly central plateau giving way to marshy valleys In the north and east and a low-lying plain in the west. There is sufficient rainfall in most areas to support agriculture. The generally rugged terrain, the scattered settlement pat- terns as well as its landlocked position have contributed to shaping its transport infrastructure. 1.02 With approximately 4.3 million population growing at a high rate of 2.7% p.a.- Burundi is one of the most densely populated countries in the world (155 inhaBitants per sq. km). About 95% of the population live in rural areas as small farmers who depend mainly on subsistence agriculture and on one principal cash crop, coffee, which provides the major source of foreign exchange Sor the country. Almost half of the population is concen- trated in the Bujumbura-Ngozi-Muyinga-Gitega area which produces most of the country's coffee. Gross National Product (GNP) per capita, estimated at US$240 in 1983, is among the world's lowest. Agriculture is the main economic activity contributing about 60% of GNP. Mining and industrial ac- tivity is very limited (about 1OZ of GNP). Burundi export earnings (90% of which come from coffee) are insufficient to cover the foreign exchange re- quirements of the economy and have to be supplemented by substantial exter- nal aid flows. 1.03 Recent economic performance has not been impressive. During the implementation of the Third Development Plan (1978-1982) per capita GNP grew on average at less than 1.0% p.a.; in 1983, the first year of the Fourth Plan (1983-1987), per capita GNP fell in real terms and Burundi has been facing serious economic difficulties. Budgetary funds to finance in- vestment expenditure are becoming scarce, including those for counterpart financing. Financing of recurrent costs has also been affected. The prin- cipal causes of the financial problems are: (a) the deterioration of the external terms of trade (by 75% between 1977 and 1982) reflecting the fall in the international price of coffee which used to represent about 3O0 of Government revenues (in 1982 it fell to less than 5%) and the doubling in import prices; and (b) delayed response of the Government to the changing economic environment.  -2- 1.04 Increased demand for hard currencies for infrastructure projects and for import substitution industries have resulted in large deficits in the external current account. These deficits have only partially been off- set by external aid flows; the rest have been covered by a rundown in foreign reserves. Current expenditures have grown fast and the budgetary surplus, which in 1977 had financed about half of the public investment program, declined in 1981-82 to 10-12% of public capital expenditures. The Government is trying to confront these problems and has requested IMF as- sistance. Nevertheless, both the public finance and the balance of pay- ments problems are likely to remain for several years, as they are caused by internal structural constraints (e.g. scarce resources, small market, weak economic management) and external constraints (e.g. deterioration of the terms of trade, poor prospects for external aid growth) which can only be remedied in the long run. 1.05 The prevailing economic situation in Burundi has been taken into consideration in designing the proposed program and its financing. At a time of financial austerity priorities in the transport sector need to be c0refully determined. Maintenance of existing transport infrastructure has became a very high priority resulting in the road strengthening/maintenAmce program which is included in the proposed program (para. 2.02). B. The Transport System 1.06 The transport system in Burundi consists of about 5,400 km of roads and tracks, of which 2,900 km represent the classified road network, the port of Bujumbura and an international airport at Bujumbura. There are no railways or navigable rivers. Lake Tanganyika is mostly used for inter- national transport .o and from the port of Kigoma (Tanzania). National transport is therefore entirely dependent on the highway network. Being a landlocked country far from ocean ports, Burundi's economic development de- pends to a great extent on its external transport links. External Transport 1.07 Burundi's external trade is mostly with developed countries and to a much lesser extent with its neighbors. The country's external trade has grown markedly in recent years; however, its volumes are still rela- tively small and during the 1980-82 period imports averaged about 175,000 tons p.a. while exports totalled about 32,000 tons (coffee, 26,000 tons) p.a.. The clear imbalance between the in-bound (85Z) and out-bound (15%) traffic and highly seasonal nature of coffee exports affect transport costs. External trade is expected to grow at about 3-4% p.a. and the trade flow will continue to be imbalanced. 1.08 The major transport problem for landlocked Burundi is its dependence on neighboring countries' transport facilities for access to the Indian Ocean ports. Two main corridors are now used: the northern all- road or a road/rail route via Kigali-Kampala to Mombasa (2,022 km by road, or 2,273 km by road/rail); and the southern lake/rail connection via Bujum- bura and Kigoma to Dar-es-Salaam (1,428 km). Historically, four-fifths of  3- Burundi's international traffic had moved along the shorter southern route. However, because of capacity problems and bottlenecks on the Tanza- nia railways and in the port of Dar-es-Salaam, over 50X of Burundi's exter- nal trade has been routed through Mombasa in recent years. The northern route also has problems. Efficient operations are constrained by cumber- some administrative procedures, while the railway through Uganda has not been reliable. Recent improvement ln Tanzanian rail service may attract more traffic; in December 1982 direct trains exclusively carrying Burundi traffic between the port of Kigoma and Dar-es-Salaam were Introduced, al- though not on a regular basis. 1.09 The bottlenecks on the access routes serving Burundi have increased the cost of transport (FBu 24,000-29,000 per ton of general car- go), but Burundi itself cannot improve the efficiency of either route since: (i) only a fraction of the transport infrastructure is within Burundi's control; (ii) the volume of Burundi traffic is too low to give it meaningful leverage in transport decisions on the international routes. In order to further assist Burundi (and Rwanda) in assessing the relevant ad- vantages of their existing and potential routes and in identifying the ac- tions and investments required to improve the performance of those routes, the Bank in 1980 prepared a study of the external transport connections of the two countries. A more extensive study covering turundi, Rwanda, Uganda and eastern Zaire has been carried out by UNCTAD. The findings and recom- mendations of these studies have assisted the countries concerned and donor agencies to agree on 'ction and priority investments. Several bilateral and multilateral mee.ings led, inter alia, to the Northern Corridor Transit Agreement reached in Kampala in September 1984. For the immediate future the agreement will result in significant simplification of customs proce- dures at border crossings. The agreement also created the framework for resolving other matters which would facilitate international transport on the corridor. For Burundi priority attention should now be given to ii- proving operations on the southern corridor. IDA is currently preparing a report which will update and review the actions taken so far and will try to define priority policies and investments in regard to international transport (para. 1.44). Highways 1.10 Details of the highway subsector are given in Subchapter C. Port and Lake Transport 1.11 The port of Bujumbura (POB) is run by a private, mostly foreign- owned, enterprIse. Fixed installations at the port are state-owned while the handling facilities and the warehouses are owned by POB. According to a convention signed by the two parties, the Government is to take over the port in 1997. At present, there are three expatriates in POB (general manager, chief accountant, and workshop head). POB operates under the supervision of the Ministry of Transport and Telecommunications (MTT) and utillzes about 30? of the estimated annual port capacity of 450,000 tons.  -4- In the period 1980-83 the traffic In the port stagnated at the level of 140-150,000 tons p.a. (Annex 1. Table 1). POB is adequately managed aad operating at a profit which was FBu 18 million (US$200,000 equivalent)1/ in 1983, 14% of total port revenue for the year. 1.12 Trarsport on Lake Tanganyika betwpen Bujumbura and ports in Tanzania, Zambia and Zaire is handled by ARNCLAC, a private company 102 owned by the Government. The share of traffic on the lake is as follows: 672 Tanzania, 202 Zambia and 13% Zaire. The fleet is old and unsuited to modern transport; it consists of five tugs (90 h.p. - 700 h.p.) and ten barges with a total capacity of 4,300 tons. ARNOLAC is adequately managed and is operating at a profit which in 1983 reached FBu 23.5 million (US$261,000 equivalent). 1.13 Under the Fourth Development Plan, the Government intends to undertake major livestments In port and lake transport, which would permit greater use of the southern route via Tanzania; the investment program Ia- cludes a ferry boat project, repair of exieting fixed Installations (berths), and contalner/handling facilities, construction of a shipyard and new storage area (Table 1.5). A port master plan study financed by France is expected to be completed In 1985. At negotlations, It was agreed that the Association will be given an opportunity to comment upon the findings of the port master plan study and that the Government will ensure that any investments in the port and lake transport are economically justified (para. 4.01(a)). Civil Aviation 1.14 In view of the small size of the country, air transport primarily serves Burundi's extermal transport needs. There is an international air- port near Bujumbura, capable of handling wide-body aircraft; a new terminal building to replace the existing small one is being completed. Another small airfield is located near Kirundo in the north (tourist area), but there are no scheduled flights. Bujumbura airport is equipped for 24 hour operations and provides service to Europe and the capitals of neighboring African countries. The airport is served by seven European and African airline companies. In the period 1980-1983, passenger traffic has been growing at a modest annual average rate of 4Z, reaching about 44,000 pas- sengers in 1983. Frelght traffic, however, has been increasing at a rate of 11% p.a. and reached 7,500 tons in 1983 (Annex 1, Table 2). Neverthe- less, in absolute terms the volume remains small. 1.15 The international airport Is run by a parastatal company under MTT authority. The company Is assisted by seven expatriates provided under bilateral aid programs from Belgium and France. Air Burundi (AB), the na- tional airline, created in 1977 is owned by the state. AB also operates under MTT authority and owns two Twin-Otters providing service to Kigali (Rwanda), Kalimi (Zaire) and Kirundo. Seat occupancy rate is around 50-602 and is not satisfactory. Nevertheless, AB operates at a profit mostly due to Its monopoly on aviation fuel sales in Burundi. Total profit made in 1/ Rate of US$1 - FBu 90 was applied In SAR for the period prior to the end of 1983.  -5- 1981 and 1982 combined was about FBu 107 million (US$1.19 million equiLva- lent). C. The Highway Subs ector (i) The Network 1.16 The classified road network totals about 2,900 1=, of which 744 km (26Z) are paved and 486 km (17%) -are of low engineered gravel standard; the rest are earth roads and tracks. In addition, there are about 2,500 km of unclassified earth tracks (Table 1.1). During the period 1979-84 due to an Intensive road construction/improvement program the standard of the road network has Improved markedly; the paved road network increased by 2.6 tines while the earth road network was reduced by 870 km or by 34%. Road density Is about 0.2 km/km2 or 1.3 km per 1,000 Inhabitants; the latter is somewhat below the average for East Afrlcan countries. Table 1.1 Development of the Road Network (in kmn) 1979 1984 A. Classified Roads National Roads 545 778 Secondary Roads 1,165 1,009 Provincial Roads 1,200 1,113 Total 2,910 2,900 B. Non-Classified Roads Rural Roads 2,500 2.500 Grand Total 5,410 5,400 lent).~ ~ ~ - Classified Road Network by Surface Type Bitumen 280 744 Gravel 90 486 Earth 2a540 1e670 2,910 2,900 Source: Ministry of Public Works, Bujumbura, May 1984  -6- 1.17 The classified road network, under Ministry of Public Works (MPW) responsibility, is divided into national roads (all paved), roads of gene- ral interest (secondary roads), and provincial roads. The classified net- work has adequate length and coverage but its condition is not satisfacto- ry, varying from poor to good. The network consists of extensive mileage of urengineered earth and gravel roads of varying widths ranging from four to seven meters. The paved road network is relatively new and most of it is presently in fair to good condition; to avoid costly repairs and recon- struction in the future, early attention to road maintenance is required. Due to the country's difficult terrain, geotechnical conditions and heavy rains, construction and maintenance costs are high. To protect past road investments and prevent vehicle operating costs from rising excessively, road maintenance operatioLs should be sustained. Maintenance efforts started under tae Second and Third Highway Projects (paras.1.47-1.47), are to continue on a larger scale under the proposed program (para. 2.02). (ii) Road Use Vehicle Fleet and Traffic 1.18 The motor vehicle fleet reached 15,500 vehicles in 1983, of which about 1,500 were owned by the Government (Table 1.2). In relation to the size of the population, there were 3.6 vehicles per 1,000 inhabitants which is on the low side for East African countries. Over the 1978-83 period the fleet was growing at a high average annual rate of 10.32. The privately owned vehicle fleet in 1983 was dominated by passenger cars, situated mainr ly in Bujumbura, making up 53Z of the fleet, pickups and station wagons 24Z, trucks 102, buses 5Z, while the balance were four-wheel drive vehi- cles. The major increase in the period was recorded for buses which had been in short supply; they increased over eight fold in the five year peri- od.  -7- Table 1.2 Motor Vehicle Fleet (units) Annual 1978 1979 1980 1981 1982 1983 Growth Rate (1978-1983) Cars 5,307 4,197 5,069 5,796 6,462 7,494 7.0Z Jeeps 337 368 462 540 623 1,026 24.9Z Pick-ups and Station Wagous 2,057 1,503 1,914 2,321 2,722 3,301 9.9% Trucks 1,034 589 759 912 1,102 1,438 6.8% Buses 92 103 136 259 494 769 53.8% Total 8,827 6,760 8,340 9,828 11,403 14,028 9.7% - - _ _ Govt. Vehicles 701 644 1,161 1,343 1,460 1,485 16.22 Grand Total 9,528 7,404 9,501 11,171 12,863 15,513 10.3Z Source: Ministry of Planning, Statistical Service, Bujumbura, May 1984 1.19 There were no regular traffic counts until 1982, when under the Third Highway Project systematic traffic counts started on the national and secondary roads. The counts cover about 1,800 km of the classified network and are carried out by the General Directorate of Roads (GDR). The traffic volumes are generally light, rarely exceeding 500 vehicles per day (vpd). The highest traffic levels are found on the paved roads radiating from Bujumbura. A significant part of the network, however, has traffic volumes of less than 200 vpd. Fuel Consumption and Price 1.20 Over the period 1979-83 the consumption of gasoline increased at an average rate of 5.5% p.a., while consumption of diesel fuel grew at a high rate of about 14.4% p.a. (Annex 1; Table 3), mostly due to a major in- crease in the number of buses. Import of fuel is done by foreign-owaed companies (BP, Mobil and FINA) from the refinery in Mombasa (Kenya). Fuel storage capacity in Burundi exceeds 20 million liters and is adequate. 1.21 The retail fuel prices in Burundi are high, mostly due to the high transport cost caused by the country's distance from the ocean ports. The retail price of gasoline (super) is US$0.85 per liter, or US$3.21 per US gallon, and of diesel fuel US$0.76 per liter, or US$2.87 per US gallon (Table 1.3). There are no Government subsidies of the price and its inter- nal taxation appears moderate. Import duties and taxes on fuel, about 32Z of CIF Bujumbura price for gasoline and about 20% for diesel fuel, are im- portant -sources of Government revenue from road users.  Table i.3 Foel Prices 1/ (in FBui per liter) Gasollne Gasoline Diesel Super Reg iar Fuel FOB Nairobi 41.98 40.77 40.17 Transport Cost Nairobi-Bujumbura 24.70 24.70 24.70 Subtotal 66.68 65.47 64.87 Road Tax 5.00 5.00 5.00 Entrance Tax and Other Taxes 21.02 17.23 13.13 Overhead Cost 2.00 2.00 2.00 Wholesale Profit 2.50 2.50 2.50 Wholesale Price 97.20 92.20 87.50 Retail Profit 2.80 2.80 2.50 Retail Price 100.00 95.00 90.00 1/ As of May 1984 Source: Ministry of Commerce and Industry and FINA/BP Bujumbura, May 1984 Road Transport Industry 1.22 The industry is dominated by about 250 small private trucker/ traders carrying mixed loads of goods and passengers. In addition, the Government owned company TOB (Transport Office of Burundi) provides both freight and passenger transport and since 1981 has been undertaking inter- national road transport service as well. Entry in the transport industry is free and routes are not regulated except for TOB. Although the Govern- ment sets official tariffs, those for freight transport are not observed by private carriers and are determined by supply ana deasnd; TOB, however, whose internal freight transport is only a fraction of its aperations, ob- serves the tariffs. 1.23 TOB handles about 25% of passenger transport, 5% of internal freight transport and a part of Burundi's long distance freight transport; the balance is made up by private carriers. TOB also provides in-city bus services in the capital as well as in the second largest town - Gitega - and between several regional centers. Its fleet of 60 buses has an average seat occupancy of about 75L Its passenger transport operations have accu- mmlated losses which in 1983 reached F3u 110 million (US$1.24 million equi- valent), while the internal freight department had a loss of about 28 mil- lion FBu (US$311,000 equivalent); the Government intends to phase out the latter operation. However, in its international transport operations TOB is breaking even. It has 34 truck trailers and 21 tankers; the average age of the fleet is about three years. However, its capacity utilization is. barely over 50 and is not satisfactory.  -9- 1.24 Although low tariffs (from 1981) set by the Ministry of Commerce and Industry are a significant factor in explaining the losses, inefficient operations and other problems (foreign exchange controls, lack of well or- ganized freight forwarding operations in Mombasa, etc.) are also responsi- ble for TOB.s Door financial performance. The international freight de- partment of TrGz is presently assisted by four expatriates (in operations, planning, finance and in workshop management) under an aid program from Germany (FRG); the technical assistance is scheduled to last until 1987. For long distance transport, however, truckers from neighboring countries, particularly Kenya, dominate Burundi's export/import traffic on the northern route. It is est-iated that only about one quarter of the total freight transported on the route is handled by TOB and a dozen private Burundian carriers. The situation in the industry is expected to improve in the future. The Ministry of Commerce and Industry is to revise tariffs for passenger and international long-distance transport. TOB intends to improve its long distance freight transport by establishing a clearing agency In Mombasa. Furthermore, In order to further facilitate its inter- national transit traffic, Burundi will need to continue negotiating appro- priate agreements with neighboring countries. Vehicle Regulations 1.25 There are no major problems with vehicle weight and dimensions in regard to the road network, since trucks tend to be small in size on most roads. Heavier vehicles are used, however, on the Bujumbura-Rwanda border road (RNI) to Kigali and Mombasa which handles Burundi's long distance traffic. To control the weight on that road there is a weighing station. Under the present Road Act the maxlmum permissible load per single axle is 8 tons. New vehicle welght legislation is being prepared in coordination with relevant legislations in Rwanda, Uganda and Kenya which will allow 10 tons per axle. Agreement was reached at negotiations that the Government will furnish to IDA by June 30, 1986 the proposal of new legislation on axle-load limits; the Government also agreed to take measures satisfactory co the Association to enforce the axle load limits approved by the Associa- tion (para. 4.01 (b)). Technical inspection of vehicles is adequate and is under the responsibility of BTA (Burundi Transport Association); a parasta- tal company under MTT authority. The inspection is done annually except for public passenger transport vehicles (taxis and buses) where the inspec- tion is required four times per year. (iii) Administration, Staffing and Training 1.26 The MPW through its General Directorate of Roads (GDR) has full responsibility for design, construction and maintenance of the classified road network and the urban roads in Bujumbura. The GDR has three Technical Departments (see Chart 1): (a) the Department of Design and Control (DDC) in charge of carrying out and supervising feasibility and detailed engi- neering studies and supervising construction works; (b) the Department of Works (DW) in charge of road and bridge maintenance and the improvement and maintenance of urban roads in Bujumbura; and (c) the Department of Admini- stration and Finance (DAF) in charge of finance and personnel. The organi- zational structure of the GDR is sound. The remaining network of approxi- mately 2,500 km of the unclassified earth tracks Is the responsibility of  - 10 - the district authorities. Maintenance and improvements of these roads are carried out on a voluntary basis, with GDR providing some assistance in emergency cases. These arrangements, although not optimfal, are adequate for the existing and foreseen low level of traffic carried by these roads. 1.27 GDR employees number about 2,700 including 1,760 daily unskilled laborers and 936 on contract. Of the latter, about 784 are semi-skilled and unskilled laborers, 134 technicians and 18 managers. There are only five engineers in DGR who occupy managerial positions. CDR is short of qualified staff and needs at least 20 engineers to staff its technical divisions with nationals. To fill this gap in the medium term, GDR uti- lizes technical assistance from France, Belgium, FRG and that provided un- der IDA-financed projects. 1.28 All five engineers and most of the technicians were trained abroad; a few technicians were trained in Burundi institutions such as the Public Works School (PWS) created under the IDA Second Education Project (Credit 1976-BU). The Government is making efforts to overcome the short- age of Burundi nationals for higher level positions by offering scholar- ships abroad to qualified high school students. The Technical Institute at the University in Bujumbura, created in 1982, is scheduled to graduate starting in June 1987 about 10 to 15 engineers a year in each of the fields of civil, mechanical and electrical engineering. Under the three previous highway projects, efforts were made to assist GDR in training its person- nel. Technical staff have been trained in the Rushubi and Gitega training centers,created under the previous projects; about 100 technicians (equip- ment operators, mechanics and drivers) were trained in the Rushubi Center and about 300 semi-skilled laborers in the labor-intensive center in Gitega. In addition, about 50 technicians in civil engineering and land survey graduate each year from PUS. However, these efforts are being ham- pered by the fact that most of the returning engineers and more than half of the personnel trained in Rushubi and Gitega have joined the private sec- tor where salary levels are higher or have set up their own businesses. Therefore, there is still a shortage of trained personnel in GDR, and sus- tained training efforts would thus continue under the proposed project (para. 2.11) to fill the needs of both the public and private sectors of the economy. (iv) Planning 1.29 The Ministry of Public Works, through GDR, is responsible for planning construction and maintenance of the classified road network and of urban roads and streets in the capital. Through its recently established Planning Unit in DDC, GDR is gradually improving its capacity to prepare the road maintenance and construction programs; under the proposed project further assistance would be given. 1.30 Under the Third Highway Project a transport economist was pro- vided in 1983 to assist the Ministry of Transport and Telecommunications in transport planning and coordination. It was agreed that as part of his two-year assignment the expert would also assist GDR in providing economic expertise as required. GDR, however, has no adequate counterpart staff  (economist, statistician). At negotiations the Government agreed therefore to appoint adequate local staff to serve as counterparts to technical as- sistance staff included in the project (para. 2.17). (v) Finaucing 1.31 Revenues from road user charges have been growing at about 14% per annum in the period 1979-83, reaching FBu 888 million (Annex 1, Table 4) in 1983 (US$9.86 million equivalent). The total revenue exceeds actual annual expenditures for road maintenance as well as the recommended in- creased local funding of road maintenance (para. 1.33). In general, the revenues are also sufficient to cover the Government's small participation in funding of new road constructiou. However, with the exr-eption of the Road Fund Tax (para. 1.34) all these revenues go to the Government's gene- ral budget. 1.32 In the period 1980-83, including external aid, about 832 of total expenditures for roads were made for new construction and only 172 for road maintenance. Since the road network is generally well developed, while roads conditions are not satisfactory, a change in empbasis in the Govera- ment's policy towards the road subsector is therefore warrauted; couse- quently, iwvestments in new road construction need to be screened carefully (para. 1.42). The Governmeat agreed at negotiations that it wllI give priority to maintenance over new construction in allocating funds to its highway sector (para. 4.01(c)). 1.33 New road construction, for which a high proportiou of the cost (over 901) is met by external sources, is financed from the capital budget. Routine maintenance of the classified road network is fiuanced from the recurrent budget, while periodic maintenance, construction of workshops and training are funded through the capital budget. Expenditures for highways in the period 1980-84 are shown in Table 1.4. During the period 1983-84, the annual local funding of road maintenance was only about FBu 310-320 million which covered about 50Z of estimated road maintenance needs; additional fundiag was made available from external financing. In 1985 the Government's funding of road maintenance is expected, however, to be markedly increased, siace about FBu 410 million was allocated in the budget for road maintenance. At negotiations it was agreed that in the last quarter of each fiscal year the Borrower will consult with the Asso- ciation oa increasing its annual road maintenance recurrent budgetary allo- cation for the next fiscal year as well as the level of the Road Fund Tax in order to ensure that expenditures for maintenance reach adequate levels with a minimum of US$4.0 million equivalent (FBu 468 million) in 1985 prices and that the minimum amount will be appropriately increased in sub- sequent years. The Association will also be given an opportunity to review GDR annual budgets for the coming fiscal years (para. 4.01 (c)).  - 12 - Table 1.4 Road Maintenance Expenditures (in FBu million) 1980 1981 1982 1983 1984 1/ (i) Recurrent Budget 239.10 211.73 217.54 217.54 102.77 (ii) Capital Budget 164.17 266.20 69.58 101.84 49.00 (iii) Road Fund n.a. n.a. n.a. u.a. 158.50 Total Internal Financing 403.27 277.93 287.12 319.38 310.27 - ~ Share of National Budget 2.62 2.8% 1.5% 2.0% 2.1% (iv) External Financing 91.86 71.30 48.45 367.0 201.0 Grand Total 495.13 349.23 335.57 686.38 511.27 1/ Estimates Source: Ninistry of Public Works, Bujumbura, may 1984 1.34 Routine aud periodic road maintenance is financed by the recur- rent and capital budget and by the Road Fund created in 1979. As of Janua- ry 1, 1984, the financial procedure for channelling the portion of funds given to GDR was simplified. A special account for GDR was created in the Central Bank to directly receive *esenues from the Road Fund tax (FBu 5.0 per liter of fuel). The Road Fund tax is small (about 5% of retail fuel price) and its total annual revenue is about FBu 170 million. To cover the increasing participation of the Government in road maintenance, at negotia- tions the Governmeut agreed that it wlll consult IDA on the level of in- crease of the tax in order to ensure that expenditures for road maintenance will reach adequate levels. The future Road Fund tax increase should not .necessarily affect the retail price of fuel, since restructuring of various taxes on fuel could be carried out. Furthermore, in order to make the use of available funds more efficient, at negotiations the Governmant agreed that all funds for road. maintenance will be chagmelled to the special ac- count opened in the Central Bank and that the proceeds of that account would be used to finance Government counterpart funding of the proposed project (para. 4.0i(d)).  -13 - (vi) Engineering, Construction and Maintenance 1.35 DDC is responsible for road design and is headed by a Burundi en- gineer. Due to the shortage of local engineers and skilled technicians, DDC is supported by technical assistance staff from France, Belgium and FRG and those financed under IDA projects. Its design and supervisory capacity is limited to .raall and medium-scale projects. The studies for large pro- jects as well as construction supervision are carried out by expatria.e consultants. It is expected that the ongoing trainD-g program at the PWS In Gitega will provide DDC with more trained staff. Goverment's National Laboratory of Public Works (NLPW) is now carrying out most soils and mate- rials studies for design and construction supervision of civil works both f-r the public and private sectors. NLPW has been improved under the Second Highway Project (Credit 773-BU) which financed, inter alia, a new soils laboratory, an administrative building and equipment. French aid wbich has funded training of NLPW staff will continue to provide technical assistance and training to NLPW for another three years. 1.36 Road construction Is generally carried out by contract awarded on the basis of competitive bidding. Some improvement and betterment works are carrIad out by DW brigades (para. 1.37). The construction industry is dominated by foreign contractors who carry out most of the building and road works. Domestic contractors carry out some building construction and are involved in supplying materials and constructing minor drainage structures and road protection works. They obtain contracts through either joint ventures or sub-contracting from foreign contractors or DW brigades. This practice would continue under the project. The Government encourages the use of labox-intensive methods for the construction of feeder roads. USAID is providing organization and financing of these works while IDA, un- der the Third Highway Project (Credit 1132-BU), has provided technical as- sistance. So far about 60 km of feeder roads have been satisfactorily built. The USAID is continuing its support under its second project for the execution of another 60 km; the proposed project would fund necessary technical assistance (Para. 2.16). 1.37 DV carries out all road maintenance works by force account except periodic resurfacing of paved roads. Maintenance of earth roads is carried out by four mobile brigades based and managed from Bujumbura. Two of these brigades carry out regravelling and Improvement operations while the other two do routine maintenance, spot regravelllug and improvement and regrading and vaintenance of drainage structures. Most of the equipment for the bri- gades was provided under the three previous highway projects financed by .IDA, Japan Overseas Economic Cooperation and United Nations Capital Deve- lopment Pund. These projects financed operating costs of regravelling/ improvement brigades, while the operating costs of the routine maintenance brigades were funded by the Government. The patching and reseallng works on paved roads are sporadically carried out by an ill-equipped brigade. As the paved road network is relatively new, the previous IDA projects did not  - 14 - provide for its maintenance. However, a study was carried out under the Third Highway Project to assess road maintenance needs. The 3tudy identi- fied the priority road network to be maintained, works to be carried out by contract and by force account, the needs for equipment, materials and sup- plies, the training needs of GDR personnel and technical assistance re- quirements. The study's findings were reviewed by the Government and IDA, and were used to design a three-year program under the proposed project (para. 2.02). The entire road network sporadically receives labor- intensive "cantonnage" routine maintenance works including filling pot- holes, cleaning ditches and culverts, painting bridges, and cleaning shoul- ders. 1.38 The maintenance operations are hampered by: (a) the costly and disruptive practice of basing all the brigades in Bujumbura and dispatching them to the regions; and (b) lack of funds for rperations. The Government has been compelled to reduce by one half the 'cantonnage" labor force. The reduction of materials and supplies has resulted in the rapid deterioration of equipment. Therefore, maintenance of the road network is now insuffi- cient. The proposed project would thus strengthen and expand the efforts begun under the previous projects by permanentlv basing the brigades In the country's four regions, i.e., Bujumbura, Gitegu, Bururl and Ngozi and pro- viding the necessary equipment, materials, supplies and adequate and timely financing. D. Transport Sector Management, Policy and Issues 1.39 Transport sector management in Burundi needs improvement, espe- cially coordination of road, port and lake transrort development. The Ministry of Planning (NP) provides an overview of the development of the country's economy including the transport sector; however, MP lacks ade- quate staff to make a meaningful contribution to sectoral planning. Res- ponsibility for the management of the transport sector is divided between MPW for roads and MTT for other transport modes. Neitcher of the two mini- stries has adequate staff to carry out planning and coordination of trans- port investments and management of the sector. Under the Third Highway Project, a transport economist has been provided to assist both NTT and MPW in: (a) planning future investment needs, (b) advising on policy matters, and (c) reviewing the feasibility of specific projects in the sector. 1.40 Since the capacity for transport planning and coordination has not yet been established, the project would continue assistance to MTT and MPW for another two years starting in 1985/86 (para. 2.17). In addition to institution building in MTT and MPW which will be required for some time, in the mid-term period IDA would concentrate in Improving road maintenance operations in the country through reorganized DW of NPW. In addition, IDA strategy in the sector would include further assistance in training, both locally and abroad, of MPM and NTT staff and in construction of secondary roads needed for the coumtry's economic development.  - 15 - 1.41 The Government policy for the sector is not clearly established. Based on the projects listed in the 1983-87 development plan, however, Government's strategy in the transport sector could be summarized as fol- lows: (i) upgrading the existing road network to support the productive sectors of the economy; (ii) improving road access to the international routes leading to ocean ports; and (iii) improving and expanding transport facilities on Lake Tanganyika for international trassport. 1.42 Although these general objectives for the transport sector appear reasonable, more attention should be given to selection of priorities and the rationale of specific projects. In the five-year period, about FBu 17.5 billion (US$150 million equivalent) in constant 1981 prices has been earmarked for the transport sector (Table 1.5). The share of the sector in the total capital investments to the economy is reasonable (16.3%). Most of the capital investment (79%) was planued for construction/upgrading of ten roads with a total length of about 480 km. During the plan implemeuta- tion construction of five roads totalling about 175 km is being completed (construction of some roads actually started before 1983), while some roads were deleted. In a revised investment program for roads covering the peri- od 1985-88, the pace of new road construction is slowed down markedly. Now, there are only two new road construction projects for which the con- sultants' calculated economic rates of return exceed the estimated opportu- nity cost of capital ia Burundi. Most of the roads included in the program are those whose construction is being completed or those which are to be rehabilitated and strengthened. Specifically, following the Association's advice, the Government postponed the construction of one of the roads (Gitega-Ngozi, 81 km) to paved road standard; a stage improvement was found more appropriate and the road will be improved to gravel standard under the project. The future use of limited resources for the sector needs to be carefully scrutinized. In addition to roads (para. 1.43), that is also re- levant to the projects envisaged il the port and lake transport (para. 1.13).  - 16 - Table 1.5 Investments in the Transport Sector (in FBu million) A. Actual Investments 1978-82 1/ 1978 1979 1980 1981 1982 Roads 1,081.4 1,842.5 2,226.4 2,467.7 2,846.5 Port & Lake Transport 13.6 10.6 24.4 19.4 17.6 Civil Aviation and Air Burundi 826.2 245.4 318.5 179.3 118.5 Road Transport (TOB) 64.3 0 15.8 127.8 0 TOTAL 1,985.5 2,098.5 2,305.1 2,794.2 2,982.6 B. Planned Investments in the Transport Sector 1983-87 2/ 1983 1984 1985 1986 1987 Road Transport 0 271 244 177 168 Roads 2,983 3,698 2,900 2,006 2,284 Port & Lake Transport 7 685 723 933 356 Civil Aviation - 13 17 10 2,990 4,667 3,884 3,116 2,818 I/ In current prices; total investments in the economy were FBu 54.89 billion. 2/ In constant 1981 prices Total '=restmeuts in the economy are envisaged at FBu 107.4 billion. Source: Ministry of Planning, Bujumbura, May 1984 1.43 At a time of financial austerity in Burundi, any new iavestments in roads should be carefully evaluated. During project implementation an updated three-year investment program will be submitted annually to IDA for its ,review ald approval. Furthermore, to monitor Government investments in new road coustruction, the Association will review the economic viability of all proposals for new road projects exceeding US$3 mill-ion equivalent prior to any decision on the construction being made (para. 4.01(e)).  - 17 - 1.44 With regard to the iLssues related to Burundi's access to the ocean, the Association is preparing a review of the lnternatiocal transport of Burundi and Rwanda to help identify action and investments required to improve their performance on international routes. The focus of the report will be to define the future priority policies and investment needs; the report will be completed in FY 1985. E. Past Bank Group Involvement in the Highway Subsector 1.45 The Association's three previous road projects in Burundi have assisted Government in training Roads Department staff, institution build- ing particularly for maintenance activities, and improving the road net- work. The Highway Maintenance Project (Credit 467-BU, US$5.0 million, 1974) had its origin in a 1970 engineering credit (Sll-BU) which financed consultants to carry out a study of Burundi's highway maintenance needs. The project helped fiuance the preparation and implementation of a four- year maintenance program, including the establishment of a labor intensive road maintenance organization C'cantonnage') and one mechanized maintenance brlgade, and the provision of technical assistance for these activities and for the training of local staff. The project also included studies for fu- ture highway development which was carried out under the Second Highway project. The Maintenance Project, completed in September 1980 (PCR dated September 25, 1981) significantly improved the "cantonnage" road mainte- nance organization and also provided an impetus to the Government to allo- cate adequate more funds for road maintenance. 1.46 The Second Highway Project (Cr. 773-BU, US$14 million, 1978) provided for the paving of a major national road, (Bujumbura-Rugombo, 65 kim), the start-up phase of an improvement program for selected secondary roads and bridges, the construction of a new central laboratory, strength- ening of the mechanized maintenance brigade and the provision of technical assistance and road equipment. The project was completed in July 1983 and the road maintenance components of the project have generally met their institution-building objectives in training and organization of road main- tenance operation. The road construction components had cost overruns of over 50% compared to the original estimate; this was caused by serious dis- ruption in international transport in the region during hostilities in Uganda in 1979. 1.47 The Third Highway Project (Cr. 1132-BU, US$25 million, 1981) includes improvement of selected secondary and tertiary roads (360 km), procurement of additional equipment for the existing mechanized brigade and for a second mechanized brigade, the construction to two-lane paved stan- dard of the Ngozi-Kobero road (39 km), and consultants' services to assist in road maintenance operations transport planning and on-the-job training of local staff. This project is about 802 completed and is meeting its ob- jectives in road construction and maintenance and in training of MPW per- sonnel.  - 18 - 1.48 The Association also assisted the Interuational Transport Company (INTRACO), engaged in road transport to and from Mombasa (Kenya), to help reduce Burundi's dependence on the transport route through Tanzania. Under Development Bauk Project (Cr. 731-BU, US$3.4 million, 1978) IDA assisted INTRACO with purchase of necessary trucks. After INTRACO became insolvent in 1980, the Government liquidated the company and the funds provided under the Credit were used by TOB (Transport Office of Burundi), the only para- statal company in road transport. 1.49 The lessons learned in the above projects showed that: (i) road maintenance in Burundi needs further external assistance and a higher level of domestic financiug; (ii) labor-intensive techniques could be very effec- tive in carrying out the road maintenance operations while the teaching of these techniques was institutionalized through the creation of a training center for 'cantonniers' in Gitega; and (iii) in view of the growing need for trained personnel in both the public and private sectors, training pro- grams would have to go beyond the highway sub-sector to cover the transport sector as a whole. The proposed project will thus continue efforts made to: (i) Improve key road links to support the country's economic develop- ment; (ii) expand and improve road maintenance operations; and (iII) train local personnel. 1.50 The proposed project is also geared to improving Institution building in MPW and MTT, transport planning and policy and investment decision-making in the sector. IDA will monitor not only road maintenance expenditures (para. 1.33) but will also review capital Investments in roads (para. 1.43) and in the port and lake transport (para. 1.13). Cousequent- ly, in addition to ugently needed improvement of the road network, the pro- ject seeks to ensure that available resources for the sector are used for investments with the necessary economic justification and prlority.  - 19 - II. THE PROJECT ObJectives 2.01 The road network of Burundi is approaching a size where It can meet the country's general economic and social needs. The Government is now expected to concentrate Its major efforts on malitaining this important national asset. A three-year Government program Was prepared to: (1) con- tinue efforts begun under previous IDA financed projects to Increase MPW's capacity to saintain its road network; (11) expand.road maintenance opera-- tions to cover both -srth and paved road networks; (iII) izprove transport planning and coordiL._ion; and (iv) train local staff. The Government pro- gram is presented under (1.), while Its part to be financed under IDA Cre- dit is presented under (2.). 1. Road Program A. Program Descriptlon 2.02 The proposed program comprises: a) a three-year road maintenance and strengthening program (1985/6 - 1987/88) consisting of: (i) strengthening and resurfacing of 99 km of paved roads, and improvement and regravelling of 135 km of earth/gravel roads; Cii) patching of the entire paved road network (744 km); mainte- nance of about 1,100 km of selected earth roads; improvement and maintenance of bridges; and labor-intensive routine main- tenance of the entire network (about 2,900 km); this will re- quire provision of equipment, spare parts, materials and sup- plies; b) training of GDR and GDT Staff; c) consulting services for: (1) supervision of works under a) (i); (2) technical assistance for management of force account and labor-iatenalve works, training of personnel and for economic analysis, planning and coordination in the trasport sector; and (3) pre-Invtstment studies, and d) project preparation (PPP repayment). (a) Road Maintenance and Strengthening Program 2.03 The three-year road maintenance and strengthening program (1985/6-:987/8) will concentrate on strengthening and maintenance of prio- rity roads for economic development. To reach a double objective of in- creasing GDRt's capacity to carry out road maintenance operations effectlve- ly without undue burden on its organiuzation and to promote the construction Industry, the works will be carried out both by contract and force account.  - 20 - (i) Works by Contract 2.04 Under the Third Highway Project, feasibility and engineering studies were carried out on the 135 km of earth roads and 99 km of paved roads, permitting adequate assessment of the level of Improvements which are economically justifiable. The construction details and bidding docu- ments are being prepared under the Project Preparation FaciiUty (PPF) ex- cept for 88 km of roads to be financed by ED (para. 2.18); they are sche- duled to be completed by September 1985 and would allow the start of the execution of works at the beginning of 1986. 2.05 Strengthening and resurfacing of 99 km of paved roads include N!Ul Bujumbura-Bugarama (34 km), lR2 MIuramvya-Gitega (54 km), lilR4 Bujubura- Katumba (5 km) (PDO to PK5), NR5 Buj umbura-Rigombo including the crossing over River Kaj eke (6 km) (PK16 to PK2Z); the roads were built 24, 11, 27, and 3 years ago respectively. The traffic counts in 1984 show high traffic volumes of about 820 vpd, 435 vpd, 1,505 vpd and 240 vpd respectively. Ihe roads have been maintained sporadically and their present condition is poor and deteriorating. The works would consist of (i) improvement of drainage structures; (ii) rebuilding of some subgrades; (iii) regravelling of shoul- ders; (iv) construction of base courses of 15 an to 20 om of selected mate- rials; and (v) construction of a double surface asphalt treatment. The de- sign is based on a realistic maximum aingle axle load of 13 tons for an economic life of 15 years. It is expected that resurfacing would be re- quired after seven to eight years. 2.06 Improvement and regravelling of 135 km of earth roads include RGI I Gitega-Ngosi road (81 km) and RGI 8 Kigangara-lubanga Road (54 km) located in the north-central and central regions, the most populated and agriculturally productive regions in the country. These roads carry about 85 vpd and 50 vpd respectively and during the rainy season the traffic is seriously impeded due to lack of drainage, steep grades and sharp curves. Works to be carried out include (i) limited alignment and grade Improve- ment, (ii) regrading and regravelling; and (iii) improvement of drainage structures. (ii) Works by Force Account 2.07 DW will carry out (i) patching operations on the entire paved road network (Annex II); (ii) spot improvement, regravelling, regrading and improvement of drainage structuree of 1,100 km of selected earth roads (Annex III) which are located mainly in areas of agricultural and industri- al development and carry mostly between 40 vpd to 100 vpd; and (iii) cantonnage- or labor intensive operations on the entire network (2,900 km) consisting of clearing shoulders, filling potholes, cleaning ditches and drainage structures and maintaining bridges. 2.08 At present, DW runs four mobile brigades from Bujumbura; two bri- gades carry out improvement and regravelling works while the other two car- ry out maintenance of earth roads. DW also runs two ill-equipped patching brigades for the maintenance of paved roads. The dispatching of these bri- gades from Bujumbura to other regions is excessively costly and disrupts supplies and rotation of personnel. Maintenance of equipment is poor for lack of adequate and timely financing of operating costs. To carry out the  - 21 - works efficiently under the proposed program: (i) the brigades would be re- organized and based in four regional road maintenanee centers: Bujumbura, Gitega, Bururi and Ngozi each with a regravelling/regrading brigade for I=- provement and maintenance of earth roads; (ii) two patching brigades would be created for routine maintenance of paved roads and located in Bujumbura and Gitega; and (iii) 52 -cantonnage- teams (corresponding to the subdivi- sion of the road maintenance organization) would be organized with 1,500 laborers for labor-intensive operations and maintenance of bridges. On the basis of projected output and Improved conditions envisaged under tbis pro- gram, it is estimated that each regravelling/regrading brigade would main- tain about 100 km to 150 km of earth roads a year, each patching and re- sealing brigade 400 km of paved roads a year; and each laborer would main- tain about 2 km of roads year round. To stimulate and encourage the deve- lopment of the domestic construction industry, DU would subcontract to domestic contractors some minor works such as materials haulage, simple and limited regravelling, and construction of culverts, ditches and appur- tances. 2.09 Improvement and maintenance of bridges have been carried out by two small DW specialized brigades. KfW (FRG) has provided structural ele- ments of bridge decks and technical assistance for the execution of these works in the past and would continue to do so under this program. These works will be accompanied by an overall maintenance program of bridges. In addition to the bridge element provided by KfW, the program will provide for equipment, spare parts, materials and supplies. 2.10 The proposed program will include rehabilitation of and spare parts for equipment for the regravellinglregrading brigades financed under previous IDA projects, and new equipment, materials and supplies for the maintenance of the road network. The list of equipment (Annex IV) was dis- cussed and agreed upon during negotiations. The equipment will be main- tained in the workshops of Bujumbura, Gitega, Bururi and Ngozi, built and equipped by FRG financing. b) Training of GDR Staff 2.11 IDA's assistance to the Government for training in the highway subsector would continue under the proposed program. GDR's overall train- ing program (Annex VI) was reviewed and agreed upon at negotiations (para. 4.01(f)). The proposed project would provide training for three years of about 100 equipment operators and mechanics, 26 personnel in general admi- nistration and accounting and 14 management level staff in the areas of planning and execution of road maintenance operations, organization and management of work sites, and training organization. The training of the operators and mechanics would be carried out by the specialized Section A3 of the Public Works School (PWS) in Gitega. PWS was built and is being operated under the Second Education Project (Cr. 1979-BU). As the Ministry of Education lacks equipment and operating funds to run Section A3, and to Improve -ne relevance of the training activities, agreement was reached with the 'k -erinent at negotiations for the transfer of Section A3 to the responsibilAty of the Ministry of Public Wbrks by August 31, 1985 (para. 4.01(f)). Section A3 will be provided with a training production brigade including equipment, materials and supplies by the road maintenance  - 22 - center at Gitega with w-aich it will liaise for both field training exer- cises and road maintenance operations in the region. The training in gene- ral administration and accounting will be carried out by the Center for Basic and Advance Training (CBAT) established in Bujumbura with the assist- ance of UNDP, and the training of managers will be carried out in overseas institutions; about 60 man-months of scholarships will be provided for the CBAT and overseas institutions. c) Consulting Services (1) Supervision of Works 2.12 In view of the staff constraints at DDC, consultants will super- vise strengthening, resurfacing and improvement and regravelling works to be carried out by contractors on the 99 km of paved roads and 135 km of earth roads (Para. 2.02 a(i)). (2) Pre-Investment Studies 2.13 The proposed studies are for the improvement of the earth road Muzinda-N'Dora (60 km). This road would improve accessibility to the northwestern province of Bubanza, spur a hydro-agricultural project in the region of East-Mpanda and the agricultural development tn the reglon of Imbo (rice, corn and coffee) and Kifurwe (milk), and facilitate access to the construction site of the hydro-electric plant in Rwegura. The road is a continuation of Bujumbura-Muzinda road (13 km) which is now being con- structed under financing from the European Development Fund (EDF). The proposed program would include the feasibility study of Muzinda-N'Dora road, and if economically justified the preparation of detailed engineering and bidding documents for the road improvement to an all-weather gravel standard including necessary road widening and drainage works. The terms of reference (Annex VIII) were discussed and agreed upon at negotiations (para. 4.01(g)). It 1984 the CDR prepared a preliminary economic analysis of the proposed section which indicated that the economic rate of return for the road improvement is about 15%. (3) Technical Assistance 2.14 As MPW has limited qualified personnel, the program will provide for services of technical assistance experts in staff training and in operations. Terms of reference for the experts (Annex V) were agreed upon at negotiations (para. 4.01(g)). 2.15 GDR needs technical assistance services to carry out the training program. As the Second Education Project lacks funds, the services of the expert running section A3 of PWS in Gitega are financed for one year (June 1984 - July 1985) undsr the PPF (para. 2.18) with a further 36 man-mouths included under the proposed program; in addition, the services (36 man- months) of a training expert would be provided to GDR for planning and co- ordination of training activities as well as the selection, recruitment, promotion and upgrading of the GDR staff.  - 23 - 2.16 To assist DE in the execution of force account works the program would provide technical assistance services including: (i) three road con- struction experts (84 man-months) to manage the road maintenance centers and the brigades; the experts would be engaged under a management contract between the Government and qualified contractors; (ii) two labor-intensive experts (72 man-months) for the planning, organization and execution of labor-intensive construction of feeder roads to complement the financing under USAID, and (iii) one mechanical expert (36 man-months) to run the workshop and warehouse in Bujumbura, while FRG will provide experts to run similar facilities in the other three regional centers: Bururi, Gitega and Ngozi. 2.17 The program also includes technical assistance to GDR in MPW and to the General Directorate of Transport (GDT) in MTT. One economist/finan- cial analyst (20 man-months) would assist MPW in evaluation of road invest- ments, traffic counts analysis and in financial/accounting operations of the GDR. In setting up proper accounts related to the program's implemen- tation, short-term consultants (4 man-months total) will also be engaged. The economist/transport planner (24 man-mLnths) is to assist GDT in plan- ning and coordin&:ing transport investments including advising the Govern- ment on all policy matters regarding external transport routes. Terms of reference for the technical assistance (Annex VII) were agreed with the Government at negotiations; the Government also agreed that the implementa- tion of the technical assistance will be conditioned by appointment of ade- quate local counterparts in both GDT and GDR (para. 4.01(g)). d) Project Preparation 2.18 An advance of US$900,000 from the Project Preparation Facility (PPF) is being used in order to provide continuity in road maintenance and rehabilitation undertaken under the Third Highway Project and in training begun under the Second Education Project and to prepare the necessary con- struction details for the roads included in the proposed project. The fol- lowing items are approved to be financed net of taxes and duties: (i) pre- paration of engineering and bidding documents for road strengthening/im- provement; (Ui) acquisition of necessary spare parts for the road mainte- nance equipment procured under the Third Highway Project Cr. 1132-BU to prevent disruption of maintenance operations until the proposed project be- comes operational; (iii) continuation for one year of technical assistance provided under Cr. 1132-BU for the execution of labor-intensive construc- tion of earth roads; and (iv) continuation for one year of technical as- sistance to Section A3 of the Gitega School. The proposed project includes refinancing the advance from the PPF. B. Cost Estimates 2.19 The total cost of the program (Table 2.1), net of taxes and duties but including contingencies, is estimated at US$42.0 million equiva- lent with a local cost component of about US$7.0 million equivalent (17X) and foreign costs of about US$35.0 million (83Z). The total cost including  - 24 - taxes aud duties is estimated a.t about US$43.9 million. Base costs are In March 1985 prices. Physical contingencies of about 10% have been added to all components except labor. Price contingencies are based on recent esti- mates of international iaflation rates as follows: 5% in 1985 and 7.5% in 1986 and 8% in 1987-88. The same price coutingencies for local cost were calculated on the basis of the FBu exchange rate being adjusted to coupen- sate for the difference between domestic and international inflation. The detailed program costs (the cost of the proposed project is showN in Table 2.2) are shown below:  -25- Table 2.1 toga Cost btimt4a 13 millieu ii'g@ or.gua Local Forelmfn Total Local &oEIzo Tota-l 2 oftol o Paved _o_ Egg leW 240.67 962.68 1,203.35 2,057 8.228 10.285 O0 rth d (135.lcZ 145.55 339.79 485.32 1.244 2,904 4,148 70 IU Xust.uau oe Paved Roads (74' Ru) Bqu1put 5.74 52.18 57.*2 49 446 495 90 Spare parts 3.04 26.91 29.96 26 230 256 90 Tools 0.12 1.52 1.64 1 13 14 90 Iaterials & Supples 3.74 33.58 37.32 32 287 319 90 por_o1m 3.66 0.00 3.66 74 0 74 0 Sub-total 21.30 -1iiT 135.49 TH i7 -i71-0 84 IT. MIaintenance Kartb Road. (1.100 kw) sqipman 26.91 241.72 268.63 230 2.066 2.296 90 Spa" pars 20.12 181.70 201.82 172 1,553 1,725 90 Tools 2.93 26.56 29.49 25 227 252 90 Materials sad Supplies 36.39 327.36 363.75 311 2,798 3.109 90 Personnel 11.58 0.00 11.58 99 0 99 0 Sub-total 97: 777.34 8 7S.27 8i3 6T 7.481 89 v. Uridfl. ProErs A. Naintenane quipment 5.62 50.89 56.51 48 435 483 90 Spare part. 1.29 10.53 11.82 11 90 101 90 Tools 0.12 1.32 1.64 1 13 14 90 Materials and Sfpplies 10.76 96.88 107.64 92 628 920 90 Personul 23.05 0.00 23.05 197 0 197 0 Sub-total -M 15.82 3W i 7 26 so S. Construction 27.50 247.92 275.42 235 2.119 2.354 90 Sub-total 68.34 407.74 476.08 584 3,485 4,069 86 ILabor-latem.ie aintenance (2,900 km) Equipment 4 Supplles 1.05 9.25 10.30 9 79 8 90 Personnl 216.45 0.00 216.45 1.8S0 0 1 850 0 Sub-total 217.50 9.25 Z26.75 1,659 A 1 938 4 VII. S-alin Tecbical Assistance 8.07 72.89 80.96 69 623 692 90 Per dim 1.76 0.00 1.76 15 0 15 0 Fellowships 0.00 17.55 17.55 0 150 150 100 Sub-total 9.83 90.44 100.27 8 773 857 90 VIII. Conultant Services TechnIcal Axsistance 27.03 243.01 270.04 231 2.077 2,308 90 Supervislon of Road Works 18.72 67.63 86.35 160 587 738 80 Pr einestuct Studies 6.32 25.27 31.59 54 216 270 Sub-total 52.07 335,91 387.98 645 287 3,316 17 I%. Project P ration 0.00 105.30 105.30 0 900 900 100 Total Ba^ Co t 833.19 3,142.62 3,995.81 7.292 26,860 34.152 79 .~ - Contnecies Physical 59.09 301.86 360.95 505 2,580 3,085 Price 1/ 128.58 656.37 784.95 1 099 5 610 6 709 Sub-total 1877 958.23 1,14.90 - 1.604 8,190TT GRAND TOTAL 1.040.86 4 100.85 5.141.71 8.896 35050 43,946 Total Projgct Cost Excludilg Taxes 818.88 4R100.5 4.919.73 6.999 35,050 T W049 83 CRounded) (819.00) (4,100.00) (4,919.00) (7.000) (35,000 (42.000) 83  -26- 2.20 Program cost estimates are based on the following: (a) Paved Road Strengthening/Resurfacing: based on engineering stu- dies, unit costs and quantities developed by consultants, taking into consideration current prices of materials, labor and equip- meut, as well as a survey of unit prices on other similar works in the project area; the average cost per km is estimated at US$94,000; the cost of supervision of the works amounts to 5% of civil works costs. (b) Earth Road Improvement/Regravelling: on the basis of engineering studies, the average cost estimate is US$30,000/km; supervision cost amounts to 5% of civil works costs. -The costs are in line with those of similar recent works in the country. (c) Road Maintenauce Equipment, Spare Parts. Materials and Su Plies, Training Equipment: based on consultants' estimates wici re- flect recent bid prices and quotations in Burundi. (d) Consultant Services: includes a total of 312 man-months, at an average of about US$9,600 per man-month which includes about US$7,000 for salaries, firms' overheads (home office expenses, expatriate allowances, social costs, etc.) and profit, and about US$2,600 for reimbursable expenses (international travel, commu- nications, subsistence and other miscellaneous items). These costs are in liue with those for similar and ongoing services in Burundi. Ce) Fellowships: Costs of fellowships for overseas training are estimated at about US$2,500 per trainee per month, including tra- vel, lodging, subsistence, tuition and fees. C. Economic Justification of the Program 2.21 The three-year road maintenance and strengthening program is well justified and yields an overall ERR of about 38L Economic analysis of in- dividual components of the program, including items to be financed under the proposed IDA Credit is presented in Chapter III. D. Progra Financing 2.22 The three-year program would be financed separately by EDF, Kfw, ADB, Japanese bilateral aid, Belgian bilateral aid, IDA and the Govern- ment. The Government has requested EDF to finance strengthening/ resurfacing of two paved roads (NRl, NR2), KfW to finance construction of bridges and Japanese aid to finance one of the four brigades (under IV) in- cluding equipment and ADB to finance improvement of the earth road (RGI8). The financing package for the program has been substantially agreed upon; some of the financing arrangements were already made (KfW and Belgian aid)  27 - while for the remaining the Government is now in the process of finalizing the financing of tbe program with the multilateral and bilateral aid agen- cies. The proposed InA Credit will finance a self-contalued project - part of the program which is presented in para. 2.23. 2. The ProJect A. Project Composition and Financing 2.23 IDA will monitor the implementation of the whole program and under the proposed project will finance part of the program. The project cost including contingencies with base cost calculated in March 1985 prices is estimated at US$22.9 million equivalent net of taxes with a local cost component of about US$4.1 million equivalent (18%) and a foreign cost com- ponents of about US$18.8 million equivalent (82Z). The total cost includ- ing taxes is estimated st about US$24.0 million equivalent. The project would consist of: (i) strengthening/resurfacing of 11 km of paved roads; (ii) improvement/regraveliing of 81 km of earth roads; (iii) mantenance of paved roads; (iv) maintenance of earth roads (three out of four brigades); (v) maintenance of bridges; (vi) labor-intensive road maintenance; (vii) technical assistance and training; (viii) pre-investment studies; and (ix) PPF (Table 2.2). Project financing net of taxes will be as follows: IDA participation will be US$18.1 million equivalent which will cover 96% of the the foreign exchange cost; Belgian aid of US$0.7 million equivalent for road maintenance equipment will cover the remaining 4Z of the foreign cost, while the Government will finance the local cost of the project estimated at US$4.1 million including US$2.0 million equivalent for local labor.  -28- Table 2.2 Prolect Cost Zetlmtes Flu milliou uFoeig as Local TorelEn Total .i. 1 ..z. Total Z of total I. Utrenutbeniu2RsIwearfacing Of Paved loads (11 km) 39.67 158.65 198.32 339 1,356 1.695 s0 Iu IrDro-ve.t/l arav llrs of Eartb load. (81 ka) 87.40 203.81 291.21 747 1,742 2.489 70 UXX. Naintensca of Pawed Roade (744 km Zqutpieut 5.74 5Z.18 57.92 49 446 495 90 Spar- parts 3.04 26.91 29.95 26 230 256 90 Tools 0.12 1.52 1.64 1 13 14 90 Materials & Supplies 3.74 33.58 37.32 32 287 319 90 Persounnl 8.66 0.00 8.66 74 0 74 0 Sub-total 21.30 114.19 135.49 T12 17I6 0T19 84 IV. Maintenance Earth Roads (1.100 km) Equipmuet 20.13 181.35 201.48 172 1.550 1,722 90 Spare parts 15.09 136.31 151.40 129 1.165 1,294 90 ToOLS 2.22 19.89- 22.11 19 170 189 90 Materials and Supplies 27.26 245.58 272.84 233 2.099 -2,332 90 Personesl 8.66 0.00 8.66 74 0 74 0 Sub-total 73.36 S83.13 656.49 627 4j984 5.611 89 V. Brldge Proglra Maintenan ce Equipmet 5.62 50.89 56.51 48 435 483 90 Spare parts 1.29 10.53 11.82 11 90 101 90 Tools 0.12 1.52 1.64 1 13 14 90 Materials and Supplies 10.76 96.88 107.64 92 828 920 90 Personnel 23.05 0.00 23.05 197 0 197 0 Sub-total -40 T54 59.82 200.66 349 1.366 1.715 s0 VI. Lab. c-Intensive Maintesuce M900 rm) lquip nt & Supples 1.05 9.25 10.30 9 79 88 90 Personel 216.45 0.00 216.45 1 8S0 0 1 850 0 Sub-total -Irr.53 9.25 226.7S TMIW *i T 4 VII. Training Tchailcal Assistance 8.07 72.89 80.96 69 623 692 90 Per diem 1.76 0.OD 1.76 15 0 15 0 Fe11ouships 0.00 17.55 17.55 0 1S0 150 100 Sub-total 9.i3 gO.44 ro0.Z7 84 -T73 857 90 JU1l. Consultant Services Technical Asistance 27.03 243.01 270.04 231 2,077 2.308 90 Supervision of Road Wotks 4.91 19.54 24.45 42 167 209 s0 PreinvestunMt Studies 6.32 25.27 31.59 54 216 270 80 Sub-total 38.26 287.52 326.08 3Z7 2,460 2.787 88 rx. Prolect Preparatlon 0.00 105.30 105.30 0 900 900 100 Total Base Cost 528.16 1,712.41 2,240.57 4.514 14,636 19.150 76 Continsencaes Pbysical 27.14 160.76 187.90 232 1,374 1.606 86 Price 54.29 321.52 375.81 464 2,748 3.212 86 Sub-total 81.43 482.28 563.71 696 4.122 4,818 86 GRAND TOMAL 609.59 2;194.69 2 804.28 5 210 18 758 23 968 78 Total Project Cost Excluding Tames VIM. 2.194.69 2.7Z62 4'.1T0 18.758 22.860 f (Rounded) (480.00) (2.195.00) (2,675.00) (4,100)(18,80D) (22,900) 82  - 29 - B. Implementation and Procurement 2.24 The project would be implemented by the Ministry of Public Works through its GDR except for the assistance to transport planning and coordi- nation, which would be implemented by the Ministry of Transport and Tele- communications. 2.25 The proposed implementation schedule for major activities for the project components is shown in Chart III. This schedule was agreed upon at negotiations (para. 4.01(h)). The project will cover a three-year period, starting June 1985. The works by contractors on earth and paved roads should start in January and March 1986 and should take approximately 24 months and 12 months, respectively, to be completed. Equipment for road maintenance should be delivered by June 1986, about six months after noti- fication of contracts to the suppliers. Technical assistance for manage- ment of operations and planning should be provided up to three years start- ing in June 1985. The studies of the Muzinda-N'Dora road are expected to start it January 1986 and take about a year to complete with a review by Government and the Bank in the third quarter of 1986. The project is ex- pected to be completed by June 30, 1988. 2.26 The table below indicates the planned procurement procedures and respective amounts. This distribution may be subject to some revision as the project components and their respective Implementation arrangements are worked out. Table 2.3 Procurement Arrangeuents (US$ million) 1/ Procurement 2/ Not Total Project Element ICB LCB Other Applicable Cost Civil Works 5.1 - - 5.1 (4.5) (4.5) Equipment, Material and Supplies 9.6 - 0.5 - 10.1 (8.0) - (0.4) (8.4) Consultant Services and Fellowships - - - 4.6 4.6 (4.3) (4.3) PPF _ _ _ 0.9 0.9 (0.9) (0.9) Personnel of GDR - - - 2.2 2.2 Total 14.7 0.5 7.7 22.9 (12.5) (0.4) (5.2) (18.1) 1/ Figures In parentheses are the respective amounts financed by IDA. 2/ Local shopping  - 30 - 2.27 Major civil works for the improvement/regravelling of earth roads and strengthening/resurfacing of paved roads would be carried out by con- tractors on the basis of international competitive bidding in accordance with Bank Group Guidelines for procurement after suitable pre-qualifica- tion. For force account works DW would subcontract to domestic contractors for some minor works such as haulage of materials, construction of cul- verts, ditches and appurtances. 2.28 Equipment, spare parts, materials and supplies would be grouped into suitable lots and procured through ICB satisfactory to IDA. Minor items of equipment, spare parts, materials and supplies in lots of less than US$50,000 and totaling no more than US$500,000 may be procured from established suppliers on the basis of quotations obtained locally in accor- dance with the Bank Group Guidelines for Procurement. 2.29 Consultants for supervision, technical assistance and studies would be selected following the 1981 Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency (para. 4.01(i)). The fellowships will be awarded on the basis of the training program (Annex VI) agreed upon at negotiations. The fellowships proposal will include the qualifications and positions of the candidates, type and cost of training as well as the training institutions and an indication of assignments to be given to the trainees on their return to Burundi. 2.30 In order to expedite and facilitate disbursements, the Goverament would agree at negotiations to set up a Special Account in a commercial bank in Burundi with an initial deposit of US$0.5 million to service as a revolving fund for expenditures for road maintenance including purchase of necessary fuel, spare parts aid workshop tools. The account would be main- tained in US dollars. C. Disbursement 2.31 The proposed IDA Credit of US$18.1 million will be disbursed on the following basis: a) 75% of total expenditures for civil works; b) 100% of foreign expenditures for procurement of equipment, spare parts, materials and supplies; 70% of local expenditures if pro- cured locally; c) 100% of total expenditures for fellowships; d) 100% of foreign expenditure for consultant services and technical assistance. All disbursements will be made against full documentation of expenditures. Expenditures for materials and suppies woul-. be made against certified statements by GDR and consultants.  - 31 - 2.32 The estimated schedule of disbursement is shown below (Table 2.4). It is based on the project implementation schedule and the disburse- ment profile of past highway projects in the country. A 6-month delay from the end of the physical execution of the project until the last payment is given to allow for delays in determining price variations in contracts. Table 2.4 Estimated Schedule of Disbursements (US$'000) Bank Group Fiscal Year Cumulative Disbursements and Quarter Ending at End of Quarter 1986 September 30, 1985 1,000 December 31, 1985 1,800 March 31, 1986 2,600 June 30, 1986 3,300 1987 September 30, 1986 4,500 December 31, 1986 5,900 March 31, 1987 6,700 June 30, 1987 9,500 1988 September 30, 1987 11,200 December 31, 1987 12,200 March 31, 1988 14,700 June 30, 1988 16,600 1989 September 30, 1988 17,400 December 31, 1988 18,100 Closing Date: June 30, 1989 D. Acccunting, Auditing and Reporting Requirements 2.33 Accounting practices in GDR have not been satisfactory since GDR does not have the proper capacity to set up and maintain project accounts. In order to enable GDR to maintain separate accounts for each project com- ponent, technical assistance would be provided (para. 2.17). Project ac- counts including special account will be audited annually by independent auditors acceptable to the Association. During negotiations, Government  - 32 - and IDA agreed that aLl project accounts includiag the special account to- gether with the auditor's report will be submitted annually to IDA, not later than six months after the end of the fiscal year. Government and IDA also agreed on progress reporting requirements (Annex IX) and the subuis- sion of a project completion report, in a form satisfactory to the Associa- tion, not later than six months after the closing date (paras. 4.01(j), (k)). E. Environmental Aspects 2.34 None of the project's elements wold adversely affect the envi- ronment. The planned works would not only improve and shorten the existing tortuous alignment, but would also help decrease traffic noise, pollution and accidents in the areas. No land use problem should arise since the road works are to take place in the existing alignments with no encroach- ment to housing and agricultural areas.  - 33 - III. ECONOKIC EVALUATION A. General 3.01 The priority for Burundi's road subsector Is to preserve past In- vestments, particularly when resources available for the sector are limited and the country has financial constraints. The proposed three-year road strengthening/improvement and maintenance program which includes components to be financed under the proposed IDA Credit is designed to meet the above objective. Taking into account traffic volumes and the needs of the coun- try's economy on the one hand, and road conditions on the otber, about 99 km of paved roads are identified as needing urgent strengthening. In addi- tion, 135 km of earth/gravel roads would be improved and appropriate road maintenance would be carried out on the whole network (2,900 km). The pro- gram, including both road works and road maintenance, is expected to yield an overall ERR of about 381. The components to be finauiced under the IDA project (para. 3.13) have, however, an overall ERR of about S1X. 3.02 For the following minor program components: training In PWS and CBAT, fellowships and assistance In transport planning and coordination, maklng up about 3 percent of the total program cost, It is not possible to provide a quantified economic justification. They are, however, necessary for successful Institution building in GDR and NTT and for the achievements of the program objectives. Furthermore, these program components would, in the long run, lead to more effective planning of road works and more effi- cient road maintenance operations. B. Areas of Influence of the Program, Benefits and Beneficiaries 3.03 The roads selected for strengthening (99 km) and for improvement (135 km) directly serve densely populated areas near the capital and In the north/central part of the country. Three of the four identified paved road sectlons make up part of the international road links to Zaire (tN4) and to Rianda (NRI and NR5). Furthermore, most of the selected roads also serve important coffee growing areas. 3.04 The main benefits to be derived from the program would be: (a) savlngs in vehicle operatlig costs (para.3.09) and (b) avoiding costly re- constructlon In the future (for the paved roads) wh_-h would otherwise be necessary to keep the roads usable. Additional benefits would result from improved road safety, reduced freight damage and accidents, and savings in travel time. 3.05 The major dlreet beneficiaries of the reduced transport costs and Improved road safety would be the owners and operators of cars, trucks ard buses. Since the road transport Industry is competitlve, it is expected that producers and consumers alike would also benefit from the resulting reduced road transport costs. Furthermore, improved road conditions would prolong vehicle life and reduce their maintenance/repair needs. Antici- pated reduced fuel consumption should also result in savings in foreign ex- change. The Government would also benefit from savings from deferred, costly road reconstruction and through its vehicle fleet ownership.  - 34 - C. Economic Aualysis of the Program 3.06 -The economic analysis was carried out by comparing 'with- and without' the project cases. Iv the 'without' the -project case, it is as- sumed -that the paved roads would, with inadequate maintenance and repairs, gradually deteriorate, significantly increasing vehicle operating costs (VOC). It bas also been assumed that the condition of the umpaved roads, which are already of low standards, would continue to deteriorate over time, al8o increasing VOC. In the 'with' the project case it is assumed that proposed strengthening/improvements (pavement strengthening, recon- struction of shoulders, widening, Improvement of roadside drains, regrading and regravellIng) would be made not only to protect capital iuvestments in roads, -but also to reduce VOCs over the estimated. economic life of the works. Only savings in vehicle oFeratiug costs are quantified in the ana- lysis. Benefits such as savings in deferred future reconstruction as a re- sult of the proposed maintenance .program (for the paved roads), time savings and reductions in potential freight damage represent substantial benefits which, if quantified, vould enhance the rates of return. There- fore; the rates of return were calculated conservatively. 3.07 Traffic counts on the program roads have been carried out since 1982, after being initiated under the Third Highway Project. In 1984 on the paved road network the traffic volumes were mostly in tbe range between 200-1,000 vvd. On the unpaved road network (for roads included in the re- grading program) the traffic volumes were mainly between 40-100 vpd. Table 3.1 Estimated AADT on the Program oas In 1984 Light Vehicles b/ WHevy Vehicles cl Total 1. Paved Roads NRI 72% 28? 820 NR2 84X 16X 435 NR4 92Z 8X 1,505 NR5 77Z 23% 240 2. Earth Roads RGI 1 85X 15% 85 RGI 8 94% 6X 50 a/ Average annual daily traffic bl Cars and pickups 'I Buses, trucks and heavy trucks Source: Consultants Reports on the Economic Evaluation of the Road Program in Burundi, March and June 1984.  - 35 - 3.08 Since no generated/induced traffic is anticipated to develop on the program roads (the roads have been in- place for many years) the ex- pected traffic growth is linited to the existing normal traffic. The traf- fic is expected to grow at 6 percent p.a. during the economic life of the road works; in the sensitivity analysis, however, a growth rate of 4 per- cent was applied (para. 3.14). The traffic growth was estimated on the basis of several factors, such as past traffic development (when avail- able), vehicle fleet growth (para. 1.18), fuel consumption (para. 1.20) and population growth. The moderate growth rate used in the economic analysis is also influenced by an expected slower pace of future growth of the economy. 3.09 VOCs have been estimated for three different types of terrain (Annex X, Table 1), taking into account the condition of road surface as well as expected deterioration due to dlimate, traffic, and actual road maintenance carried out on the roads. The consultants calculated VOCs for five different vehicle groups (passenger cars, pickups, trucks, heavy trucks and buses). Savings in W)Cs were based on -with- and "without the project scenarios and they range on average between 20-30 percent; for the routine maintenance program the anticipated savings in VOCs were substan- tially lower (Annex X, Table 2). The economic analysis also assumes that during the estimated economic life of works, in the -without- the project case, VOCs are expected to increase further. Road Strengthening/Improvement 3.10 The economic analysis was carried out in mid-1984 prices, net of taxes and duties. The major assumption and inputs in the 15-year (10-year life for the unpaved roads) cost/benefit analysis are presented in Annex IX, Table 2. The cost included in the economic evaluation comprise: (i) civil works (strengthening or improvement) In 1985-1987, (ii) 10 percent physical contingencies, (iii) supervision, and (iv) road maintenance. The benefits considered in the economic analysis include savings in VOCs for the normal traffic growing at 6 percent p.a. during the anticipated econo- mic life. 3.11 The cost/bPnef