Madagascar - Fifth and Sixth Highway Projects

Docwnent of The World Bank FOR OFFICIAL USE ONLY MICROFICHE COPY Report No. 106174 /AG Type: (PCR) ReportNo. 10617 wECKERLE, / X31708 / T9 102/ OEDD3 PROJECT COMPLETION REPORT DEMOCRATIC REPUBLIC OF MADAGASCAR FIFTH AND SIXTH HIGHWAY PROJECTS (CREDITS 938-MAG AND 1391-MAG) MAY 11, 1992 Infrastructure Operations Division South-Central and Indian Ocean Department Africa Regional Office This document has a restricted distribution and may be used bv recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  ABBREVIATIONS AND ACRONYMS ADB = African Development Bank AF3IN = Africa III Department, Infrastructure Division, World Bank EDF = European Development Fund ERR = Economic Rate of Return IDA = International Development Association IFAD = International Fund for Agicultural Development LNTPB = National Soils Laboratory (Laboratoire National des Travaux Publics et des B;timents GOM = Government of Madagascar MPW = Ministry of Public Works MTST = Ministry of Transports, Supplies and Tourism NSL = National Soils Laboratory PCR = Project Completion Report RN = National Road (Route Nationale) SAR = Staff Appraisal Report SDC = Swiss Development Cooperation Agency VOC = Vehicle Operating Costs U.K. United Kingdom  FOR OFFcIAL USE ONLY THE WORLD BANK Washington. D.C. 20433 U.S.A. Office of Ofrctot-ewal Op.atine EvaIua"Wn May 11, 1992 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT.: Project Completion Report on the Democratic Republic of Madagascar Fifth and Sixth Highwa Projects (Credits 938-MAG and 1391-MAG) Attached, for information, is a copy of a report entitled "Project Completion Report on the Democratic Republic of Madagascar Fifth and Sixth Highway Projects (Credits 938-MAG and 1391-MAG)" prepared by the Africa Regional Office with Part II of the report contributed by the Borrower. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment This document has restricted distribution and may be used by recipients only in the performance of their offcial duties. Its contents may not otherwise be disclosed without World Bank authofization.  FOR OFFMCIAL USE ONLY MADAGASCAR PROJECT COMPLETION REPORT FIFTH AND SIXTH HIGHWAY PROJECTS (CREDITS 938 NAG - 1391 MAG) Table of Contents PREFACE.... .. EVSLUTIONM ....U.M.A........... . . . . . . ii PART Is PROJECT REVIEW FROM BANK'S PERSPECTIVE ... . . . . . . 1 Project Identity . . . . . . . . . . . . . . . . . . . . . 1 Background . . . . . . . . . . . . . . . . . . . . . . . 1 Project Objectives and Description . . . . . . . . .. . . 2 Project Design and Organization . . . . . . . . . . . . . . 4 Project Implementation . . . . . .*. . . . . . . 5 Project Results . . . . . . . . . . . . . . . . . . . . . . 7 Project Sustainability . . . . . . . . . . . . . . . . . . 9 Bank Performance . . . . . ............... . 9 Borrower Performance . ......... * ....... . 10 Project Relationship . .. . . . . . . . . . . . . . . . 10 Consulting Services . . . . . . . . . . . ... .. . . 11 Project Documentation and Data . . . . . . . . . . . . . . 11 PART II : PROJECT REVIEW FROM BORROWER'S PERSPECTIVE . . . . . 12 A. Comments on Parts I and III of PCR . . . . . . . . . . 12 B. Sixth Highway Project: Technical and Financial Results 15 C. General Observations . . . . . . . . . . .# . . . . . . 20 Annex I: Results by Category . . . . . . . . . . . . . . 21 Annex II: Statement of disbursements against SF4-MAG and 1391-HAG . . . . . . . . .. . . .* . . ... 28 Annex III: Schedule of disbursements against SF4-MAG and 1391-MAG . . .............. . 30 Annex IV: Indicative Exchange Rates for Project Period . 32 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.  PART III: STATISTICAL INFORMATION . . . . . . . . . . . . . . . 34 (A) FIFTH HIGHWAY PROJECT Related Bank Loans and/or Credits . . . . . . . . . . . . . 35 Project Timetable . . . . . . . . . . . . . . . . . . . . 37 Credit Disbursements . . . . . ... . .....38 Project Implementation . . . . . . . . ........ . 39 Project Cost and Financing . . . . . . . . . . . . . . . Project Results . . . . . . . . . . . . . . . . . . . . . . 42 Status of Loan Covenants 9 9*999 . ....... . ..... 43 Use of Bank Resources . . .. . . . . . . . . ..... 44 Annex. Project Costs and Financing by Category. . . . . . . 45 (B) SIXTH HIGHWAY PROJECT Related Bank Loans and/or Credits . . . . . . . . . . . . . 47 Project Timetable . . . . . . . . . . . . . . . . . . . . . 49 Credit Disbursements ................. 50 Project Implementation . . . . . . . . . . . . . . . . . 51 Project Cost and Financing . . . . 52 Project Results . . . . . . . . . . . . . . . . . . . . . . 55 Status of Loan Covenants 9.9 . ..9.. 56 Use of Bank Resources . . . . . 57 Annex (i): Road Length Maintained (Fifth and Sixth Projects) . . . . . . . . . . . . . . . . . . . 58 An-ax (ii)s Economic Rates of Return . . . . . . . . . . . 59  . i - PROJECT COMPLETION REPORT DEMOCRATIC REPUBLIC OF MADAGASCAR FIFTH AND SIXTiH HIGHWAY PROJECTS (CREDITS 938-HAG M L t-%AG) PREFACE This is the Project Completion Report (PCR) for the Fifth and Sixth Highway Projects in Madagascar for which Credits 938 MAG - 1391 MAG in the amounts of US$24 million and US$45 million respectively, were approved on June 21, 1979 and June 23, 1983. Credit 938 MAG was fully disbursed in 1986, close to four years behind schedule. Credit 1391 MAG was also fully disbursed, albeit with a delay of over two years by mid-1990. The dates of last disbursement were June 6, 1986 and March 1, 1990, respectively. The PCR was prepared by the Infrastructure Division of Country Department III of the Africa Regional Office. On March 25, 1991 the Bank sent the Borrower Parts I and III with the request to prepare Part II by May 25, 1991. It was received in late June 1991. Preparation of this PCR was based on the Staff Appraisal Reports, the Credit Agreements, supervision reports, correspondence between the Bank and the Borrower, internal Bank memoranda and data collected by recent Bank missions to Madagascar.  - ii - PROJECT CQMPLETION REPORT DEMOCRATIC REPUBLIC OF MADAGASCAR FIFTH AND SIXTH HIGHWAY PRCJECTS (CREDITS 938-MAG A=D 1391-MAG) EVALUATION UMARY Ob ectives 1. The Fifth and Sixth Highway Projects shared the objectives of developing the institutional capacity within the Ministry of Public Works (MPW) to carry out and sustain the maintenance of Madagascar's main road network. The emphasis on technical assistance to develop an ongoing maintenance program and strengthen road maintenance capabilities, and the importance of the road maintenance component within each project are indications of this deliberate intent (para. 3.01). In relative terms the importance of new road construction beyond required rehabilitation (para. 3.02) was intended to decrease with respect to prior country experience. The Sixth Prcject was conceived with a sectoral view to further advance this approach. A sectoral program was appraised and financed by several donors including IDA (para. 3.03). Imrlementation EWxerience 2. The implementation of the Fifth project was delayed from early on by the inability of MPW to follow the implementation program agreed upon during preparation and confirmed during negotiations. It was further affected by: (i) lack of sustained Government commitment to the objectives of the project; (ii) clow contracting due to weak administrative performance; (iii) insufficient counterpart funding; (iv) sizable increased expenditures in new construction and rehabilitation work. The combination of all these factors delayed project execution by almost four years, brought about chE.ges in project scope, and prevented the attainments of several implementation targets (para. 5.01 through para. 5.05). 3. The implementation of the Sixth project shows an improvement which is due in part tot (i) the overlap between supervision of the Fifth Project with the preparation of the Sixth, which facilitated dialogue and incorporation of experience into project design; (ii) the emphasis on addressing a sector wide situation; and (iii) the participation of other donors (para. 5.06). A delay of over two years in disbursements over the appraisal schedule is indicative of progress as well as continuing difficulties (para. 5.06 through part 5.09). Results 4. The projects were only partially successful in meeting their objectives. For instance in the case of the Fifth project: only 49 km out of 500 km of paved roads were resurfaced and there is no evidence that 400 tons of bitumen for road maintenance were procured; the rehabilitation  - iii - instead of resurfacing of sections of RN4 totalling 200 km implied an increase in costs per km which togetbar with economic and traffic growth slower than arnticipated at appraisal give an ERR of about 18%, far different from the 127% eat-.mated in the SAR; the Antsohihy-Ambanja road investments hp.ve a low ERR of about 4%, much less than the 16% estimated in the SAR. Or, the other hand, targets were substantially exceeded in the case of regravellTig of unpaved roads, seven regravelling brigades were constituted and they regravelled 600 km, in addition to 400 km performed by contractors or two and a half times the appraisal tar,et of 400 km (para. 6.02). The maintenance work of the F_fth and Sixth Projects combined had an ERR in - cess of 130% (see para 5 below). 5 The Sixth project obtained a greater proportion of its operational targets. To some extent this was due to a gradual acceptance by the Borrower of the economic priority of maintenance. In this regard, patching and resealing on 2500 km of paved roads is reported as carried out. The same applies to about 1850 km of feeder roads. The rehabilitation of RN4 and RN7 had a rate of return of 25% and 31% respectively. The combined project expenditures in maintenance for the Fifth and Sixth Projects had a combined rate of return in excess of 130%. However, a separate evaluation ex-post was not possible due to the overlap between the projects and aggregation of the data available. Details of these estimates are provided in para 6.03 and in Part III (B), Annex (ii). The physical targets of the project were by and large obtained and disbursement by categories albeit higher, ias proportional to the figures in the SAR. The expanded program carried out is consistent with the successful implementation of the project (paras. 6.03 and 6.07). Sustainabilitv 6. .. The conditions for the sustainability of the efforts in the road sector in Madagascar did not exist in the course of the Fifth Project. Counterpart funds were neither on time nor sufficient for the project to be carried out much less for the whole sector. In the course of the Sixth Project the improvement in the resources flowing to maintenance was more related to the availability of funds from other donors who agreed to cofinance the "program" of MPW than to a stable and reliable source of local finance. Both projects have made sizable contributions to building-up the local technica_' capacity, thus helping to remove deficiencies in the ability to maintain investments in the road sector. However, this progress is likely to remain at risk, if the capacity generated were to go unused due to the financial constraints of the road sector (para. 7.01). In sum, substantial progress in regards to sustainability has taken ?lace during the implementation of the two projects, although the lack of assured finance remains a significant issue to be tackled in future oPerations. Findints and Lessons Learned 7. Substantial progress has been made in the course of these two projects towards a shared view between the Bank and the Borrower on the importance of road maintenance operations, and institution building training and technical assistance have been instrumental in achieving this. The follow-up by both tank and Borrower of the technical assistance made available under the rrojects as documented in the files could have  - iv - benefi-ted from being more aggressive. Studies have not been matched up with locally generated implementation efforts, nor such implementation seems to have figured prominently in the country dialogue during project execution. At the operational level t1 conception of the sixth project as an element of a coherent program has shown advantages over the set of isolated actions making up the fifth. The supervision effort on the part of the Bankl/, as evidenced by the thoroughness of supervision reports in the files, might have decreased in intensity during the ten year period covered by these projects, and at times did not provide a complete view of project implementation. A fall-off in the motivating and leader:ship role of the Bank may have occurred as a result. At the same time, .he overlap of preparation and implementation of the project allow the incorporation of prior experience into project pre;. :ation oven if formal supervision did not fully document the evolution of the situation. The supervision of the Seventh Project currently under way, is paying particular attention to the deficiencies noted above. 8. The weaknesses of MPW in the course of project .= 12mentation were caused bys (i) variabla commitment to project objectives; (ii) some discontinuity in mid-level staff assignments; (iii) shortages in qualified personnel; (iv) cumbersome administrative procedures; and (v) delays in contracting and issuing payments to contractors. To further improve the implementation of projects in the road sector, the following conditions are required: strong commitment to project objectives; timely provision of counterpart funds; streamlining of all administrative and disbursement procedures; and reduction of the scope for political interference in technical decisions as exemplified by the bridges of the Antsohihy-Ambanja road. Uneven progress in these areas took place over the last ten years, and particular attention to them is called for in the preparation and supervision of future projects. Overall Proiect Assessments 9. The projects reviewed show clearly the inception of a process of awareness and evolution on the part of the borrower which can only be described as positive and, by implication, satisfactory. On narrow project grounds, however, the information on record supports an assessment of the Fifth Project as unsatisfactory, and of the Sixth Project as satisfactory. Furthermore, lessons learned to be applied in future operations should contribute to an improvement of the road sector in Madagascar. Finally, it should be noted that the difficulties experienced by the Fifth Project were fully expected by the Bank and were taken as a necessary cost to the continuance of relations with the borrower. 1/ Each supervision mission was intended to supervise several projects. The totals of supervision mission days for the Fifth Project are given in Part III A - Table 8 and for the Sixth Project indicated in Part III B - Table 8, do not reflect actual time spent in supervising them,and a disaggregation could not be made.  PROJECT COMPLETIQN REPORT DEMOCRATIC REPUBLIC OF MADAGASCAR FIFTI AND SIXTH HIGHWAY PROJECTS (REDITS 938-MAG 1 1391-MAG) PART I: PROJECT REVIEW PROM ANK'S PERSPECTIVE 1.0 Project Identity - Project Names : Fifth and Sixth Highway Projects - Credit Numbers: 938 MAG - 1391 MAG - RVP Unit s Africa Region, Country Department III - Countrys Madagascar - Sector s Infrastructure - Subsector: Highways 2 0 Background 2.01 The Primary road network of Madagascar consists of about 4,000- km of paved roads, 300 km of gravel roads and 4,400 earth roads for a total of 8,700 km. The secondary network of close to 6,000 km Is made up of 540 km of paved roads; 5,400 km of earth and gravel roads. Unpaved, tertiary roads and tracks total 13,000 km. In 1978, total-resources allocated to road maintenance reached US$ 14.2 million equivalent. Although inadequate, this represented an improvement from 1972 levels of US$ 8.2 million equivalent. In 1978, investment expenditures at about US$ 20 million equivalent (Appraisal Report Fifth Highway Project, report no. 23556-MAG), almost doubled the level of recurrent expenditures for rehabilitation and maintenance and rehabilitation. A decade later, the level of expenditures in road maintenance had reached about US$ 20 million equivalent out of a reported total of VD$ 27.4 million equivalent. The quality of the work and the identification of maintenanue work to be carried out in priority improved during the period covered by the Fifth and Sixth Highway projects. (The Fifth project was appraised in 1979 and the closing date of the Sixth project was June 1