Honduras - Western Highway Extension and Supplementary Projects

HLCOPY RESTRICTED Report NO. TO(IDA) 2 This report was prepared for use within the Association. It may not be pub- lished nor may it be quoted as representing the Association's views. The Association accepts no responsibility for the accuracy or completeness of the contents of the report. INTERNATIONAL DEVELOPMENT ASSOCIATION APPRAISAL OF THE HONDURAS WESTERN HIGHWAY EXTENSION AND SUPPLEMENTARY PROJECTS HONDURAS May 3, 1961 Department of Technical Operations CURRENCY EQUIVALENTS U.S. $1.00 = ZLempiras 1 Lempira . = U..S. $0. 50 - 1 Million Lempiras = U. S. $500, 000 APPRAISAL OF THE HONDURAS WESTERN HIGHl,AY EXTENSION AND SUPPLEMENTARY PROJECTS TABLE OF CONTENTS Page SUMMARY AND RECOMMENDATIONS i - ii I. INTRODUCTION 1 II. BACKGROUND 1 A. Western Highway Extension 1 Western Highway 1 Western Region 2 Present Status of Agriculture 3 B. The Maintenance Program 3 C. Highway Planning Survey III. THE PROJECT 4 A. Description 4 The Extension 5 Continuation of the Maintenance Program 6 Feeder Road Program 6 Highway Planning Survey 6 B. Cost Estimates and Sources of Funds 7 C. Administration and Execution 9 D. Economic Justification of the Western Highway Extension 9 E. Conclusions and Recommendations 11 Table 1: Design Standards of the Western Highway Extension Table 2: Cost Estimate of the Project Table 3: Estimate of Increase in Gross Value of Production Map 1: Honduras - Western Highway Extension Map 2: Honduras - Western Region: Land Use APPRAISAL OF THE HCNDURAS WESTERN HIGHWAY EXTENSION AND SUPPLEENTARY PROJECTS SUMMARY AND RECOMMENDATIONS i. The Government of Honduras has asked the International Development Association to assist in financing a highway project consisting of: a) the construction of an unpaved highway 100 In long fran Santa Rosa de Copan to Nueva Octepeque and the El Salva- dor border, known as the Western Highway Extension; b) the continuation of the current maintenance program for two years; c) a feeder road program for the Western Region; d) a planning survey of the highway system of Honduras. ii. The total cost of the project is estimated at Lempiras 27.0 million (US$13,5 million equivalent) of which the equivalent of US$8.0 million will be in foreign currency. Because the location of a substantial part of the Vest- ern Highway Extension is subject to change, the cost estimates contain a re- serve to cover possible increases in quantities, as well as a large contin- gency item. iii. The amount of the proposed development credit to be made available by the Association is US$9 million equivalent. The Government has requested and expects soon to obtain a loan of US$2.5 million from the Inter-American Development Bank. The balance of the funds required would be furnished by budgetary appropriations. iv. Plans for the Western Highway Extension have been prepared for the Government by a firm of consulting engineers; however, the plans may be re- vised as the final location of the alignment has not been established and further soil investigations are required. Studies to determine the alignment and soil conditions are under way and are expected to be completed in time for construction contracts to be awarded by international competitive bidding before the end of the rainy season (November), and construction to start this year--1961. v. Continuation of the maintenance program is necessary to consolidate the improvements made and to make further gains in administration which would help to assure a permanontly sound organization. vi. The Western Highway Extension is economically justified by the ex- pected savings in transport costs on the present volume of agricultural exports from the service area of the existing Western Highway to El Salvador, by the development of the area which the Extension will traverse, and by the enhanced trade with El Salvador that will result from easier access to markets for the - ii - produce of the entire Western Region of Honduras. It is estimated that in 5 to 10 years agricultural production in the Western Region could increase an gross value by Lempiras 23 million, of which a large part, possibly Lempiras 18 million (US$9 million equivalent) would be in products for cash sale. To assure that the fullest practicable benefits will be derived from construction of the Extension, the Government has given assurances that it will promote the agricultural development of the Western Region. A program of feeder road con- struction is also necessary to realization of the Regionts potential, and an allocation for such a program (to be defined when the final route of the Exten- sion has been decided) is included in the project. vii. The objectives of the highway survey would be to provide the Highway Department and the Ministry of Public Works with a long-term guide to develop- ment of the highway system, and to create in the Highway Department a planning office, viii. The firm of consulting engineers that prepared the Extension Project would be retained to supervise its construction, to prepare the Feeder Road Program, and to supervise (as an extension of their existing contract) the maintenance program. Consultants will also be engaged to carry out the plan- ning survey under terns of reference satisfactory to the Association. ix. The Project provides a suitable basis for a development credit of US$9 million to be made available by the International Development Association to the Government of Honduras. I. INTRODUCTION 1. The Government of Honduras has approached the International Develop- ment Association (IDA) for a development credit to finance part of the costs of (i) constructing the Western Highway Extension ("the Extension"), (ii) con- tinuing the maintenance program for a two-year period, (iii) a feeder road program for the Western Region, to be defined when the final route of the Ex- tension is decided, and (iv) a highway planning survey. 2. This appraisal report is based on the findings of an IDA Mission which visited Honduras in December 1960 and on studies made by the consulting engineers, Brown &c Root, Inc., and by the Economic Council of Honduras. II. BACKGROUND A. Western Highway Extension Western Highway 3. The existing Western Highway (see Map 1) extends from the town of Chamelecon on the Northern Highway to Santa Rosa de Copan, a distance of 170 km. From Chamelecon the Northern Highway runs southeastward to Tegucigalpa and northward to San Pedro Sula and Puerto Cortes. Thus in effect the exist- ing Western Highway begins at Puerto Cortes and extends southwest as far as Santa Rosa de Copan. No roads to the south exist beyond this town, so that the area to the El Salvador border is isolated from the rest of the country. Nueva Ocotepeque, a town near the Guatemala and El Salvador borders, is con- nected to them by roads but its only internal transportation connection with the rest of Honduras is by air or mule. 4. For the past five years Honduras has actively considered extending the Western Highway from Santa Rosa de Copan to Nueva Ocotepeque and the El Salvador border, a distance of 100 km. A completed Western Highway would traverse the whole Western Region and thus open up an isolated section of the country, and provide an additional link between the road systems of Guatemala, El Salvador and Honduras. It would also shorten the transportation distance between Puerto Cortes, on the Atlantic, and Salvador's Pacific Coast ports. 5. In 1956 Honduras engaged the consulting engineering firm Pf Upham, Porter-Urquhart Associated to make a study of the Western Highway. The Con- sultants' preliminary engineering report was presented in 1957. The invest- ment required was considered at the time too great by both Honduras and the Bank, and it was agreed to proceed with a reduced program which included: i) Construction of bridges, culverts, approaches and access roads which would provide all-weather service on the existing Western Highway, which was frequently closed during the rainy season; - 2 - ii) Construction of a section of the Northern Highway from Bufalo to San Pedro Sula and Puerto Cortes, which would provide the Western Region with an all-weather outlet to the coast; iii) Completion of the pavement of the Southern Highway from Tegucigalpa to the intersection with the Inter-American Highway; and iv) Completion of final plans on the Western Extension, the preparation of which had been staited the year before. 6. In May 1958, the Government obtained a Bank loan for US$5.5 million and a DLF loan for US$5.0 million for the above program. The contract with the Consultants Upham, Porter-Urquhart .Associated, was not renewed when it expired a few months later and the firm was replaced by Brown & Root, Inc. 7. The construction of the bridges project (paragraph 5(i) above) is nearing completion. As a result, driving time over the existing Western High- way has been cut almost in half and for the first time it has been possible to maintain traffic during the wet season. The Bufalo-Puerto Cortes project (paragraph 5(ii)) is about 60% complete and is expected to be finished by the end of 1961. The Southern Highway (paragraph 5(iii)) is about 501' complete and should be finished this year. 8. Detailed plans for the Extension were completed in 1959, but because of unexpectedly high cost estimates, the Government instructed the Consultants to review the standards and the proposed alignment in an attempt to reduce the cost. The Consultants were also asked to restudy the economic justification. Western Region 9. For the purpose of this report, the Western Region is considered to include the four western departments of Honduras; Cortes, Santa Barbara, Copan and Ocotepeque. The Region is bounded by the Guatemala border on the west, and extends from the El Salvador border on the south to the Caribbean Sea on the north. Puerto Cortes, the principal port of Honduras, is located on the north coast while San Pedro Sula, the second largest city of Honduras, lies about 50 km inland. A number of towns are scattered through the region and serve mainly agricultural interests. 10. The terrain of the Western Region varies greatly, having small pla- teaus and mountain ranges as high as 7,000 feet in the south, through which the Extension would be located, and innumerable hills and small valleys in the center which descend to a large tropical plain in the north. The latter areas are drained by the Chamelecon River; the Rio Jicatuyo, and the Rio Lempa, which has its source in Guatemala and flows into El Salvador, are the principal streams in the south. In this region the soil types vary widely within short distances. Poor, sandy soils, often under pine forests, are interspersed with areas of good agricultural land, mainly on slopes and plateaus. 11. The climate varies with the altitude, ranging from temperate in the mountains and hilly central part to hot and humid in the low coastal area. The rainy season lasts from May through October in the south and from May through January in the north. The annual average rainfall increases south to north from 43 to 61 inches. -3 - 12. The population of the Western Region, estimated at about 500,000 or 25% of the population of the country, is increasing at an estimated rate of 3% per year. The region is one of the most densely populated in Honduras (30 to 35 persons per square km). The rural population is in part Indian and the illiteracy rate is approximately 65%. Industry in the region is mainly con- centrated in San Pedro Sula, while elsewhere the economy is almost entirely agricultural. Present Status of Agriculture 13. Except for a few localities and farms, agriculture is generally on a subsistence level. In the more progressive localities served by the existing Western Highway, oxen-drawn ploughs are used. Elsewhere, the typical farmer has between 3 and 4 ha. of land, cultivated by hand in a 2 - 4 year rotation plan, and about 10 ha. of grazing land or pine forest area; he also has access to community-owned grazing land. The main subsistence crops are corn and beans plus some .'ruit and root crops., The farmer may also grow small areas of coffee or tobacco as cash crcps, and sell some livestock (see Map 2). 14. Mechanization in the area is limited to some 10 or 20 commercial farms along existing roads and the use of fertilizer and improved seed is gen- erally unknown, Unit yield, are extremely low, but could be increased consid- era'.Ly through better farming methods. Government services to farmers in the wes)ern area are limited to five extension service agencies, three small Banco de Fomento credit agencies, and a veterinary station at San Pedro Sula. Be- cause of transportation difficulties, the area served by an extension agent is limited to about a 10 km radius. 15. Available statistics indicate that there are some 30,OCO farm units of a total area of approximately 400,000 ha. along the existing and proposed Western Highway. More than half of the land in farms is "privately" owned, either by individuals or by village communities, and in part is farmed by sharecroppers and tenants; the rest of the land is occupied by settlers and squatters. No detailed breakdown is available. 16. Except for livestock, which moves on the hoof, products sold off the farms are carried on muleback from the fields to small airfields or to the nearest road connection. This may take up to five days in the area of the proposed Extension. Because of these transportation difficulties, the main products marketed are tobacco and coffee, as these have a relatively high value; surplus food crops are seldom sold, but if they are, the return to the producer is small. B. The Maintenance Program 17. In December 1955, the Bank made its first highway loan to Honduras. The program provided for establishing and equipping an effective highway main- tenance organization, a reorganization of the Highway Department, and a pro- gram of maintenance and repair of the existing highway system. During the first three years, progress in establishing and implementing the program was slower than anticipated because of lack of cooperation with the Consultants on the part of the Highway Department and less than satisfactory performance by the Consultants. 18. In 1958, a different firm of Consultants was engaged and a little later a new Minister of Public Works and a new Director of the Highway Depart- ment took office. Since that time considerable progress has been made in im- proving the maintenance of the highway system, and in the operation of the repair shops and accounting offices. Nevertheless, serious problems still remain to be resolved; especially in connection with the supervision of field work and the operations of repair shops. Furthermore, now that roadway main- tenance has improved, the frequent failure of small highway bridges is becom- ing the chief obstacle to normal traffic service. Thus, while substantial progress has been made in implementing the maintenance program, additional effort is needed to insure that the program is soundly carried out and the organization firmly established. C. Highway Planning Survey 19. Thus far selection of the first construction projects for Bank fi- nancing in Honduras has not been difficult as the gaps in the existing highway system were obvious. The selection of new projects is now more difficult both for the 5a)lk and the Highway Department which carries out a sizable construc- tion program each year. Because a long-term construction program is lacking, the determination of roads to be built by the Highway Department is often decided haphazardly by political interests. Work is often started without sur- veys or plans and therefore waste and delays result. If the Department had a long-range program for the development of the road system, it would facilitate resistance to political pressure on the Ministry of Public WTorks to switch from project to project. When projects are selected on an orderly program basis, the preparation of plans, etc., can be done methodically and thus insure readiness at the time required for calling tenders, letting contracts and starting construction. Adequate and timely preparation will become increasing- ly important as the Department follows its intention to use contractors more and reduces force account operations. 20. The National Economic Council in Honduras has participated in the selection of certain highway construction projects. While the Council has economists on its staff, it does not have technical personnel to make prelim- inary engineering surveys and estimates. It is obvious, that if the priorities of projects are to be determined on the basis of economic and engineering studies, both fields must be thoroughly explored and the findings coordinated. The Department has the personnel to make traffic studies and surveys and to prepare plans and cost estimates. If the Department were assisted by an eco- nomic staff, it could assume responsibility for highway planning. The first step would be to have a highway planning survey made by a group of experts to form a long-range program of highway development. To execute the program, a planning division could most suitably be established in the Highway Department. III. THE PROJECT A. Description 21. The project consists of: i) The extension of the existing Western Highway from Santa Rosa de Copan to Nueva Ocotepeque and the El Salvador border. ii) The continuation of the maintenance program. iii) A feeder road program. iv) A highway planning survey of Honduras. The estimated cost of the project is US$13.5 million equivalent. The Extension 22. This project involves the construction of 100 km of new highway from Santa Rosa de Copan to Nueva Ocotepeque and the El Salvador border. At the present time the only direct transportation between the first two points is by air or mule; a low-type road, which is subject to flooding and washouts, exists between Nueva Ocotepeque and the Salvador border. 23. The general alignment of the proposed highway is in mountainous ter- rain over most of its length. It extends from Santa Rosa de Copan, the present terminus of the Western Highway, through the Corquin and Sencenti valleys and over a high ridge into the Rio Lempa Valley, to Nueva Ocotepeque. The line then parallels the Rio Lempa to the El Salvador border where it joins an existing highway to San Salvador, which is now being improved. 24. The design standards as proposed in the Brown & Root report were somewhat below secondary road standards. Traffic studies indicate that the Extension would serve mainly commercial through traffic between the central part of the Western Region and El Salvador, and that a fairly rapid rate of traffic increase can be expected. There has been a slight improvement in the design standards for which the minimum criteria are given in Table 1, and the Ministry of Public Works has assured the Association that the standards will be upgraded as conditions permit and that where feasible a broader cross- section (9 meters) will be us.d. By so doing, and following stage construction practice, a permanent roadway would be built to improved geometric standards, with initially a low-type surface. This would be satisfactory for the rela- tively small traffic volume anticipated during the early years of the Extension and further improvements could be made as traffic increases. The Association will keep in touch with the Ministry regarding the use of better-than-minimum design standards. 25. Plans and specifications have already been prepared for th:! project; however, the Consultants have recently discovered what may be a better route across the most rugged sector, the central section of the project, which would involve the redesign of 40 km of the highway. This is being studied. 26. A number of feeder roads and minor access roads will be required to serve the farms and communities in the area if full benefit is to be gained by constructing the Extension. It is difficult to estimate the size and cost of a feeder road program until the location of the Extension is firmly es- tablished. 27. Support from the Government in providing agricultural research, ex- tension, credit and marketing services, and appropriate regulations for the orderly distribution of government land, together with construction of farm - 6 - access roads, would be needed to take full advantage of the Extension. A mission of the Organization of American States is preparing a general program for technical and other agricultural services in addition to land tenure for consideration by the National Economic Council and the Government. The Coun- cil has recommended that Lempiras 500,000 be provided annually for the appli- cation of a program of technical and other agricultural services within the Western Region. Assurances have been obtained from the Government that it will give special attention to the development and implementation of a program to promote agricultural development of the Western Region. Continuation of the Maintenance Program 28. This would involve an extension of the Consultants' services for two years beyond the present contract which terminates in August 1961, and the purchase of relatively small amounts of equipment, which would be mainly spe- cialized units needed for routine maintenance of new highways to be completed in the next two years, and small quantities of supplies and materials. 29. The Consultants' maintenance staff presently consists of four men full time: one maintenance engineer, one bridge engineer, an equipment man and mechanic; and two men part time, an accountant and a project manager. This staff is primarily engaged in assisting the Highway Department prepare its annual budget and work program, and supervising the implementation of the maintenance program in the head office, in repair shops and in the field. 30. Continuation of the maintenance program would help to perpetuate the progress made in routine maintenance and other operations during the past two years, and also provide the Highway Department with assistance to meet its in- creasing maintenance responsibilities as 300 km of new roads are completed this year, and to resolve certain administrative problems. These require the full cooperation of officials in the Ministry and the Department. The Con- sultants seem to have the confidence of these officials and the way is now clear to tackle the organizational problems that must be resolved if the gains made are to be permanent. The following matters, now under consideration, will require particular attention: (i) the retirement of obsolete equipment, (ii) improvement in purchasing procedures, (iii) the development of a program for construction of small bridges, (iv) the establishment of a planning office, and (v) change over from force account to contract operations for road con- struction. Feeder Road Program 31. Construction of the Extension would make an outlet for new and greater production from the region it traverses, but realization of potential depends also on accessibility to the Extension itself. An allocation has therefore been included in the project so that a start on feeder road con- struction may be made. Highway Planning Survey 32. The objective of the survey would be to provide the Highway Depart- ment and the Ministry of Public Works with a long-term guide for development of the highway system. It should lead to the establishment of a planning office in the Highway Department which would initiate studies to determine the feasibility, priority and cost of proposed projects. The scope of the survey would include a study of the following: a) the priority of investment in improving and expanding the highway network (primary, secondary, feeder and penetration roads), the cost and benefits; b) the need to connect the highway network to the highways of adjoining countries; c) the establishment of a planning office in the Highway De- partment; and possibly, d) the regulation of road transport. 33. The terms of reference for such a survey would emphasize the need to determine priorities of road investment on the basis of the economic justifi- cation for such roads. B. Cost Estimates and Sources of Funds 34. As noted in paragraph 25, revisions may have to be made in the plans and specifications for the Extension. Thus the list of quantities on which the Consultants made the cost estimate cannot be taken as firm. Furthermore, there is doubt as to the amount of rock that may be encountered in con- struction; though surface soil investigations have been made, the Consultants have not completed soil tests. Therefore, the Consultants' estimate for the Extension, though based on unit prices for current work in Honduras and the best data presently available, is subject to major variation, especially if the quantity of rock excavated proves to be substantially greater than the amount assumed. 35. A decision on the alignment and reliable information on soil con- ditions require studies that will take several months to complete. Such studies must be completed beiore the call for tenders for construction con- tracts, if the competition is to produce realistic bids. These studies are under way and should be completed by June 1961 for the two end sections of the Extension. Tenders would be called for September 1961, the contracts let by the end of the rainy season (November),and construction started ohortly thereafter. 36. The revised total cost estimate is US$13.5 million equivalent, of which US$8.1 million equivalent is foreign exchange. The detailed estimate in Table 2 is summarized below: US$ equivalent in millions Western Highway Extension 10.7 Maintenance Program 1.1 Feeder Road Project 1.5 Highway Planning Survey .2 Total - 8 . 37. The Western Highway Extension would represent a major portion of the Governmentrs highway construction program in the next three to four years. The estimate for the Extension includes the cost of depreciation and mainte- nance of construction equipment, imported materials, the cost of foreign per- sonnel, and fees and overhead of contractors and consultants. An allowance of US$1.5 million equivalent, which is approximately 45% more than the Consult- ants' estimate for excavation work, has been included for possible increases in quantities. A contingency item of about 22% has been included as protection against price increases (7%) and to meet any unforeseen conditions that may occur in the 32 year construction period. If, in spite of these generous allowances for increased quantities and contingencies, the funds allocated to the Extension were to be short of the needs, the funds allocated to the Feeder Road Program would be drawn on. On the other hand, if the allocation to the Extension were to be more than required, the balance could be transferred to the Feeder Road Program. 38. The estimate for the Maintenance Program covers mainly the cost of the Consultants, services for two more years; relatively small amounts of for- eign exchange are included in the total for special equipment, as explained earlier, supplies and materials (paragraph 28). The division of foreign and local currencies is US$1 million and L 115,000 (US$57,500). In addition, the High-Tay Department would require substantial annual appropriation of funds from the National Budget to carry out its routine maintenance operations. 39. In 1960 the maintenance budget was L 3.6 million (US$1.8 million) and appropriated funds were made available as needed. A budget of L 3.6 mil* lion for 1961, which has been endorsed by the National Econonic Council, is being considered by the Congress. Budget allocations proposed for the succeed- ing period, 1962 and 1963, are at about the same annual rate, and higher at L 4 million for 1964. These amounts would be increased as resources permit. The Departmentts maintenance activity will be increased by the lengths of com- pleted new roads transferred to its care in 1961 and, accordingly, the desira- bility of increasing the budget allocations will need to be kept under review. The allocation made in the project, and as part of the proposed development credit, which will be in addition to the an-ounts mentioned above, will help the Department meet its enlarged responsibilities. 4O. A tentative allocation for a Feeder Road Program of connections with the Extension is US$1.5 million equivalent. It is impossible at present to make a reliable estimate of the cost of feeder roads as their location has still to be decided and no engineering has been done. The survey and engineer- ing of feeder roads could be undertaken when the final line of the Extension has been determined. The program of feeder roads to be constructed would be subject to agreement between the Government and the Association. Ll. The estimate for the Highway Planning Survey is US$250,000 equivalent. Most of the cost would be in foreign exchange for technical personnel, equip- ment, etc. Actual cost would vary according to the number of personnel and the time required, which is discussed later, and whether the services engaged are those of a consulting engineering firm or a group of experts assembled especi- ally for the task. If there were to be any balance of funds available under this category, it would be desirable to apply them to the feasibility studies of the roads designated as of first priority by the Planning Survey Group. 42. The proposed development credit to be made available by the Associ- ation is US$9 million equivalent, leaving US$h.5 million equivalent to be supplied from other sources. The Government has requested and expects soon to obtain a loan of US$2.5 million from the Inter-American Development Bank. The balance of the funds required would be furnished from budgetary appropri- ations. C. Administration and Execution 43. Construction of the Extension would be carried out under unit price contracts awarded on the basis of international competitive bidding. It is proposed to divide the Extension into three sections. Contracts for the two end sections would be let first while the contract for the center section would be withheld pending final location of the alignment. In any event, this contract would be awarded at such time that its completion would coincide closely with that of the end sections. The Government has assured the Associ. ation that there will be no delay during construction because of late acqui- sition of the right-of-way. The right-of-way for each section is to be acquired before the tenders for the construction contract of the section are called. Construction of the Extension is expected to take 31 years. Lh. The Consultants who are carrying out the design phase of the Ex- tension would be engaged to provide the engineering and supervision services for execution of the Extension and the Feeder Road Program. 45. The same Consultants are advising the Highway Department on mainte- nance and their contract would be renewed for the Maintenance Program. The Consultants' presz:nt staff is considered adequate to carry on the program. Possibly in one to two years this staff could be reduced by one member. Its duties would be similar to those at present, with emphasis to be given to resolving the problems noted in paragraph 30. 46. The Highway Planning Survey Group would probably be composed of at least six experts including a general economist, an agronomist, a forestry expert, a transportation economist, an advisor on road transport regulation and an engineer. The group would be assisted by personnel of the Highway Department and the Economic Council in carrying out economic, agricultural and engineering studies, field surveys, cost estimates and preliminary plans. Such a group would probably take almost a year to complete its task, staying most of the time in Honduras. The group would work closely with the Con- sultants and the Highway Department in guiding the establishment of a planning office within the Department. The terms of reference for the Survey are to be agreed with the Minister of Public Works. D. Economic Justification of Western Highway Extension 47. The construction of the new road (see Map 2) would greatly stimulate the economic development of the regions traversed by the existing Western High- way and to be opened by the planned Extension. a) The present volume of agricultural exports to El Salvador would be carried at large economies of trucking cost be- cause of the availability of a shorter and better route than the present route via Tegucigalpa. - 10 - b) Agricultural production for export would increase materi- ally because of readier accessibility to markets, particu- larly in El Salvador, at reduced transport costs. c) A gradual increase in cash crop cultivation would be induced in the well populated, but hitherto remote and isolated, area to be traversed by the Extension. d) Other benefits would result; among them, the Extension's area could be provided with essential services, the com- mercial and capital activity between Honduras and El Salvador would be encouraged, and an important contri- bution would be made to economic integration in Central America. 48. The service area of the present highway produces about 40% of the total volu.ne of exports from Hcnduras to El Salvador. Approximately 25,000 tons a year of corn, beans, tobacco and timber now move from it to El Salvador markets over a long, roundabout route via Tegucigalpa and the Inter-American Highway, some sections of which are low-standard mountain roads. With the Ex- tension there would be large savings of fuel consumption, tire wear, vehicle life, etc., because of a 700 km shorter round trip to San Salvador, smoother roat', surface, easier curves and grades. The estimated savings for the present vehicle fleet carrying the present volume of export goods and return freight would be approximately L 1.5 million a year. This is about 7% per annum of the estimated construction cost of the Extension without allowance for the normal growth of traffic in the next few years, or for the increased carriage of lower-value goods which would result from the new route. 49. Markets should be available for additional production of cash crops and livestock products. Farmers could vary their products over a wide range according to opportunities on various markets. In addition, the Western Region has an important advantage of proximity in meeting El Salvador's growing food needs which have not been satisfied from domestic production. Food pro- duction in El Salvador has, in general, declined during recent years. Efforts are now being made to increase production, but population is increasing at a rate of 3.7% per annum. As steps toward integration, Honduras and El Salvador have already removed restrictions on movement of people, capital and, except for a limited list of items, on all goods; remaining restrictions are to be removed within five years. About 45f% of El Salvador's food imports are cur- rently being provided by Honduras and, given improved road access, products from the Western Region should find expanding markets in El Salvador. 50. With readier accessibility to El Salvador and reduced trucking costs, production mainly for export in the area along the present Western Highway would increase materially. About 40%O of the agricultural land in this area (i.e., 70,000 out of a total of 170,000 ha.) still remains to be brought under cultivation. Cash crop production, largely for export, would also begin to develop in the mountainous but settled and cultivated area which the Extension would traverse. This area supports a large population, but almost all its production is now subsistence agriculture and only two-thirds of its suitable land (i.e., 45,000 out of 70,000 ha.) is being cultivated. The basic reason for this is that the region is inaccessible by road. Provision of road access should also encourage forestry production, although forest resources within this region are not comparable with those of other parts of Honduras. - 11 - 51. Production in the combined service areas of the existing highway and the proposed Extension is presently increasing at about 3% a year or close to the rate of population growth. Output will probably expand much faster than 3% per annum when the planned Extension is opened to traffic, because of widened marketing possibilities at home and abroad. Assuming that govern- mental measures in support of agriculture (paragraph 27) are applied to an extent which could realistically be expected, it is estimated that the present gross value of the production in the Western Region would increase within 5-10 years from a present L 33 million to about L 56 million a year. About L 18 million of the increase would be in products for cash sale on domestic and export markets. 52. There would be other benefits difficult to assess definitely from the opening of the area directly served by the Extension. For the first time the area could be provided with essential administrative, educational, farm extension and medical services. El Salvador has shown interest in developing commerce with the western part of Honduras and once a direct road connection is provided between the two countries, the movement of capital to Honduras and commercial activity should increase. The increased production of cash crops should result in an expansion of commercial activity in the towns and farming communities of the entire Western Region. The construction of the Extension will be an important contribution to the movement toward economic integration in Central America, particularly as regards the resources of Honduras with El Salvador and Guatemala. 53. The Extension is being planned to suitable standards for the pres- ent and future traffic. The vehicle fleet of Honduras is increasing about 15% a year; truck registrations have multiplied more than four times in the past 15 years, bus registrations more than 20 times and the passenger vehicle fleet has tripled. 54. Traffic density on the Western Highway near Quimistan exceeds 200 vehicles per day at present and has tripled the past four years. It is ex- pected that with the completion of the current bridge project permitting all- weather service and greatly reducing the travel time on the Western Highway, traffic growth will be further stimulated. Additional traffic would be gener- ated by the construction of the Extension. Traffic on the Extension would be relatively small at first, perhaps about 100 vehicles per day, but it is ex- pected to expand rapidly as advantage is taken of readier accessibility to the El Salvador market. It is estimated that this traffic may expand to several hundred vehicles per day over the next 10 years as farm production is switched from subsistence to cash crops which must be transported to market, and commercial activity increases. E. Conclusions and Recommendations 55. The project is technically sound, economically justified and neces- sary, 56. The studies for location of alignment and the soil tests are ex- pected to be completed on time, and construction should start in November 1961 or shortly thereafter under contracts awarded through international competi- tive bidding. The cost estimate for the Extension includes reserves that - 12 - should be adequate to cover the increased costs which might result from these studies and tests. 57. The project is suitable for a development credit of US$9 million equivalent to be made available by the International Development Association. Table I HONURAS WESTERN HIGHWAY EXTENSION AND SUPPLEMENTARY PROJECTS Minimum Desi.-n Standards of the Western Highway Extension For level and For mountainous Design Element rolling terrain For hilly terrain terrain Design velocity 80 km per hour 60 km per hour 40 km per hour Sight distance 100 meters 85 meters 70 meters Type of surface 10 cm. select matl. 10 cm. select matl. 10 cm. select matil. Roadway width 8 meters 8 meters 8, meters Minimum radius of curves 100 meters )7 meters 47 meters Maximum grade 6% 8% 10%) Minimum width of right of way 41 meters 40 meters 40 meters Bridge loading H-15, S-12 E-15, S-12 H-15, S-12 Width of bridges 7.92 meters 7.92 meters 7.92 meters Sub-base and Constructed according Constructed Constructed Sub-grade to specifications for according to according to compaction and humidity. specifications specifications for compaction for compaction and humidity. and humidity. Slopes in fills 1 1/2 : 1 1 1/2 : 1 1 1/2: 1 Table 2 HONDURAS WESTERN HIGHWAY EXTENSION AND SUPPLEMENTARY PROJECTS Cost Estimate of the Project Total Cost in Local currency Foreign currency US dollars Western Highway Extension cost Lempiras cost US dollars Equivalent Right-of-way 90,000 - 45,000 Construction 7,278,000 4,824,000 8,63,000 Design and supervision (Consulting Engineers) 244,000 210,000 332,000 Contingencies (including 2% per year for price increases during execu- tion of the project) 1,600,000 1,062,000 1,862,000 Total 9,212,000 6,096,000 10,702,000 Maintenance Program Engineering services 100,000 550,000 600,000 Special equipment - 150,000 150,000 Materials and supplies - 150,000 150,000 Contingencies 15,000 150,000 157,5oo Total 115,000 1,000,000 1,057,500 Highway Planning Survey Salaries and expenses (and possibly initial contri- bution to feasibility study) 100,000 200,000 250,000 Total 100,000 200,000 250,000 Feeder Road Program 1,290,000 855,000 1,500,000 TOTAL 10,717,000 8,151,000 13,509,500 TABLE 3 HCNDURAS WESTERN HIGhWAY EXTENSION AND SUPPLEMENTARY PROJECTS Estimate of Increase in Gross Value of Production A, Agricultural Land Along the Western Highway. Existing Extension Total .............. 1,000 ha ............ Presently cultivated 100 45 145 Potential agricultural land 70 25 95 Of which would be developed in 5-10 years 25 10 35 Estimated total cultivated in 5-10 years 125 55 180 B. Estimated Increase in Gross Value of Production. Existing Extension Total .......... million Lempiras ........ Present value 25 8 33 Increased Value: From presently cultivated land 10 2.5 12.5 From development of new land 8 3 11 Total increase 18 5.5 23.5 Estimated value in 5-10 years 43 13.5 56.5 ．스 Мар 2 Puerto HONDURAS Cartës WESTERN REG10N �в Sx�,tmg highways � ������� Existrrtg feeder roads ! �� Рго osed Westeгn Highway estension � � �showirtg xltenыte routes) - - - - - Proposed feedec гоздs Р / • �-�-^-�---Г-Г�- Railroad SAN �.�:�;�.'.. � � � EDRO р � '� _ � ` su�a � � г s f :�� :, � : .. . . .. � ,� „ •. �:_�°�',.�:��� : ". . 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