Colombia - Second Rural Roads Sector Project

II I t1~~~~~~~~~~~~~~~~  CURRENCY EQUIVALENTS Cuirrency - Peso (Col$) US$1 _ Col$ 378 (End of June 1989) Col$ 1 million - US$ :.,645 WEIGHTS AND MEASURES Metric System ABBREVIATIONS CFT Transport Finance Corporation COLPUERTOS Colombian Port Enterprise CONPES National Council for Economic and Social Policy CORPES Regional Planning Councils DAAC Administrative Department for Civil Aviation DAINCO Department for Intendencies and Commissariats DIMAR General Directorate for Maritime and Port Activitiee DNP National Planning Department ECOPETROL Colombian State Oil Company ERR Economic Rate of Return ESAP Advanced School of Public Administration FEDECAFE Federation of Coffee Growers FNC Colombian National Railways FNCV National Agency for Feeder Roads FONADE National Fund for Development Projects GRANCOLOMBIANA Grancolombiana Merchant Fleet GRT Gross Regi3tered Tonnage INCOMEX Colombian Institute for Foreign Trade INCORA Institute for Agrarian Reform IbPERENA National Institute for Renewable Natural Resources INTRA National Institue for Transport MOPT Ministry of Public Works and Transport PROEXPO Export Credit Agency SATENA National Territories Air Services SENARC Shipping Service of the Colombian Navy SOE Statement of Expenditures FISCAL YEAR January 1 - December 31  FOR OMCIAL USE ONrLY COLOMBIA SECOND RURAL ROADS SECTOR PROJECT LOAN AND PROJECT SUMHARY Borrower and Beneficiary: Fondo Nacional de Caminos Vecinales (FNCV) Amount: $55.0 million Terms: Repayment in 17 years, inoluding 5 years of grace, with interest at the Bank's standard variable rate. Proiect Objectives: The project's main objective is to expand markets and reduce poverty in rural areas by: (a) helping define road management functions and responsibilities of national, regional and local (municipal) authorities, and developing their activities; (b) contributing to implement key policies in the roads sector, including decentralization of decision-making to local governments, maintenance management, and investment programming, coordination and resource mobilization; (c) consolidating positive institution-building advances in road management initiated under the previous project (Loan 2668-CO); and (d) contributing to finance a balanced four-year investment and maintenance program. Project Description: The project is FNCV's 1990-1993 Investment and Maintenance Program. The main components are: (a) maintenance, including resurfacing works on 4,400 km of roads; (b) improvement civil works along 1,650 km of existing dry-weather roads, including completion of bridges and drainage structures; (c) construction civil works for 950 km of rural roads; (d) studies, including the review of road-funding strategies and engineering designs, and supervision of civil works; (e) spare parts to rehabilitate and operate maintenance equipment; and (f) training, technical assistance and other service- The project is based on annually reviewed physical targets, expenditures and financing levels, chosen in accordance with agreed methods and criteria, an approach which provides the flexibility to adapt to changing developmental priorities, especially now that coordination with local governments is mandated under the new dee:euttalization scheme. 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.  Proiect Benefits: The project will directly benefit the rural population and production by improving access to social and market services, and lowering farners' and consumers' transport costs. Fqually Important, it will facilitate the decentralization process in the roads sector, with FNCV, the regional and the local authorities coordinating and jointly be.oming more responsive to rural road needs and priorities. Risks: The ability and readiness of local governments to organize, develop technical capability and effectively manage the local road network is uncertain and carries some risk. The risk will be reduced by (a) drawing up, irmplementing and monitoring annual action programs, tailored to each local administration and acceptable to the Rank, aiming to achieve full-fledged transfer of road maintenance responsibilities; and (b) linking FNC' cofinancing to performance in implementing euch action programs. Estimated Project Costs: Foreign Local Total -$m---------- Million)--------- Civil Works and Maintenance 67.5 59.9 127.4 Engineering Designs and Civil Works Supervision 4.2 5.1 9.3 Training, Technical Assistance and Other Services 0.8 0.9 1.7 Equipment Repairs and Spare Pa-ts 1.0 0.4 1.4 Total Base Cost (mid-1989 prices) 73.5 66.3 139.8 Physical Contingencies 5.0 3.9 8.9 Price Contingencies 5.4 3.0 8.4 Total Project Cost 83.9 73.2 157.1 Financing Plan: Foreign Local Total ---------