Papua New Guinea - Road Improvement Project

Document of The World Bank FOR OFFCIAL USE ONLY Report No. 12625 PROJECT COMPLETION REPORT INDEPENDENT STATE OF PAPUA NEW GUINEA ROAD IMPROVEMENT PROJECT (LOAN 2265-PNG) DECEMBER 23, 1993 Infrastructure Operations Division Country Department III East Asia and Pacific Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency Unit CFA Franc (CFAF) US $1.0 = 276.625 CFAF 1 million = US $3,615 SDR 1.0 = US $1.371 ABBREVIATIONS AND ACRONYMS ACCT Agence Culturelle et de Cooperation Technique AfDB African Development Bank BOAD Banque Ouest-Africaine de Developpement CCCE Caisse Centrale de Cooperation Economique CFD Caisse Francaise de Developpement CIDA Canadian International Development Agency DE Department of Energy EdF Electricite de France ESIE Ecole Superieure Interafricaine d'Electricite ESMAP Energy Sector Management Assistance Program FNE Fonds National de l'Energie GOS Government of Senegal MDIA Ministere du Developpment Industriel et de l'Artisanat PPF Project Preparation Facility SAL Structural Adjustment Loan SAR Societe Africaine de Raffinage SENELEC Societe Nationale d'Electricite TEP Tonne Equivalent Petrole UNDP United Nations Development Program  FOR OFFICIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A Office of Director-General Operations Evaluation December 23, 1993 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Papua New Guinea Road Improvement Project (Loan 2265-PNG) Attached is the "Project Completion Report on Papua New Guinea - Road Improvement Project (Loan 2265-PNG)" prepared by the Infrastructure Operations Division, Country Department III, East Asia and Pacific Regional Office, with the Borrower providing Part II. The project substantially met its physical investment objective, albeit with some delay caused by inadequate project preparation. Costs were substantially higher than anticipated at appraisal. The project's principal institution building objective --establishment of an efficient road management system-- was not realized. Only a fraction --less than 10 percent-- of the technical assistance and training foreseen at appraisal was actually engaged, and that with considerable delay. Similarly, assistance to the local construction industry, another institution building component included at appraisal, did not come to fruition under the project. Instead, this is now being addressed under the ongoing Transport Improvement Project (Loan 2742-PNG). The economic rate of return (ERR) of the project is estimated at more than 10 percent --the same as at appraisal-- for the Provincial roads and bridge components; and at eight to 20 percent for the National roads component -- slightly less than at appraisal. Overall, the outcome is rated satisfactory. But its sustainability is uncertain given the uncertainty of future maintenance funding in combination with institutional weaknesses, particularly in the provinces. The institution development impact is rated negligible. The PCR is generally satisfactory. Its economic analysis, however, is poor: no traffic counts were undertaken, the ERRs for the Provincial roads and for the project's bridge component appear to be ex ante rather than ex post ERRs, and the detailed information underlying the overall ERR estimates is missing. The project may be audited. Attaclement 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.   FOR OMCIAL USE ONLY PAPUA NEW GUINEA ROAD MIPROVEMIENT PROJECT (LOAN 2265-PNG) PROJECT COMPLETION REPORT CONTENTS Preface ....................., i Evaluation Summary .i PART T- PROJECT REVIEW FROM BANK'S PERSPECTIVE 1. Project Identity .1 2. Project Background .1 3. Project Objectives and Description ........................ 2 4. Project Design .................................... 3 5. Project Implementation ............................... 4 6. Project Results .................................... 7 7. Project Sustainability ................................ 8 8. Bank Performance .................................. 8 9. Borrower Performance ............................... 9 10. Consulting Services .10 PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE Provincial Roads Improvement .11 Improvement of National Highways .14 Consultant Services .14 Technical Assistance .15 Sunmnary .15 PART III: STATISTICAL INFORMATION 1. Related Bank Loans and Credits .18 2. Project Timetable .20 3. Loan Disbursements .21 4. Project Implementation .22 5. Project Costs and Financing .23 6. Project Results .25 7. Status of Covenants .27 8. Use Of Bank Resources .28 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.   PROJECT COMPLETION REPORT PAPUA NEW GUINEA ROAD IMPROVEMENT PROJECT (LOAN 2265-PNG) PREFACE This is the Project Completion report (PCR) for the Road Improvement Project in Papua New Guinea, for which Loan 2265-PNG in the amount of US$31.0 million was approved on April 19, 1983. The loan was closed on June 30, 1992, following two extensions to the original closing date of June 30, 1989. It was fully disbursed and the last disbursement was made on November 4, 1992. The PCR was prepared by the Infrastructure Operations Division of Country Department III of the East Asia and Pacific Regional Office (Preface, Evaluation Summary, Parts I and III) and by the Borrower (Part II). Preparation of the PCR was based on information contained in the Staff Appraisal Report, Legal Documents, Supervision Reports, Consultants' Progress Reports, Correspondence in Project Files, Internal Bank Memoranda and the findings of a Mission to Papua New Guinea in November 1992.   - ii - PROJECT COMPLETION REPORT PAPUA NEW GUINEA ROAD IMPROVEMENT PROJECT (LOAN 2265-PNG) EVALUATION SUMMARY Project Objectives 1. The project objectives were to (a) improve rural mobility through implementation of a rehabilitation and improvement program for roads and bridges, (b) improve road maintenance through the establishment of an efficient management system and (c) assist in developing the domestic transport and construction industries. In addition, the project was intended to help in establishing a strategy for transport sector development. The project concept was innovative in that for the first time since the Bank's start of highway operations in 1970, the Bank was directing its attention to roads other than the trunk routes and to the strengthening of local government institutions (paras. 2.4 and 3.1). Implementation Experience 2. The provincial roads and national bridges programns were implemented satisfactorily but civil works for the Highlands and Enga Highways did not commence on schedule because of the time taken to carry out final engineering which was longer than estimated. Delays in the commencement of works ranged from about 17 months for the Enga Highway to about 30 months for the Kudjip-Minj section of the Highlands Highway and 60 months for the Watabung-Chuave section. But once the works commenced, the rate of progress was satisfactory. Land acquisition problems continued to affect some of the roads and bridges. Despite the variety of procurement methods employed there were only a few difficult problems (paras. 5.1-5.10). 3. All the studies under the project were executed promptly after loan effectiveness. The training component was delayed through lack of preparation and, due to the very difficult procedures for hiring staff consultants, only a reduced technical assistance component was eventually carried out. The assistance to the local contracting industry is currently being undertaken in the Transport Improvement Project (Loan 2742- PNG) and the Special Interventions project (Loan 3289-PNG) (para. 5.12). Project Results 4. In addition to the improvement of the Highland and Enga Highways, 261 km of provincial roads were constructed, as compared to an appraisal plan of 277 kmn and  - iii - 1,230 m of national bridges compared to a plan of 1,517 m. The project's objective to improve travel conditions on the rural roads and facilitate through traffic on the national road network by the construction of bridges was achieved. The project has contributed to the improvement of the road maintenance and management systems and the development of a more efficient trucking industry. A transport development strategy that governs policy and investment programs in the transport sector has been drafted iparas. 6.1 and 6.2). 5. The road improvements confer immediate benefits to the highway users in the form of lower vehicle operating costs and passenger time savings. Based on the assumptions used at appraisal, the economic returns on the investments in the Enga Highway and a section of the Highlands Highway are 19.6 and 8.0 percent, respectively, compared to an appraisal estimate of 21.2 and 12.2 percent. This reflects the higher costs, and lower than expected traffic at completion. From current experience, the rehabilitation programs for the provincial roads and national bridges are expected to yield economic returns in excess of 10 percent (para. 6.3). Project Sustainability 6. Although the maintenance budget for the national roads was cut sharply in 1990, maintenance continues to be satisfactory on the national roads and funding has been rising, albeit, in modest amounts. There is, however, doubt about the ability of the provincial governments to maintain satisfactorily the provincial roads because of the lack of provincial capability to administer the roads and their dependence on central government for technical assistance. While an attempt was made under the project to assist the provinces through the central government agencies, the Transport Improvement Project that followed did not address the matter of strengthening provincial capability. The risk is very real that the provincial roads improved under the project may not be maintained satisfactorily and that the project benefits may not be sustained (paras. 7.1 and 7.2). Findings and Lessons learned 7. The project achieved a major objective in continuing the improvement of the 600 km Highlands Highway to paved standards. The first attempt at implementing a provincial roads program was also successful and several studies were accomplished that will help planning of future investments. However, a lesson learned from the disruption of the construction schedules for the Highlands and Enga Highways and increases in construction costs is that detailed engineering for trunk roads should be completed during the project preparation stage and not deferred to be carried out during project implementation (paras. 4.4 and 5.1). 8. The Government intends to produce and use standard bidding documents based on the Bank's sample bidding documents in all future Bank-financed projects. It may help in reducing the need for constant reference to the Bank for review. But, there is an irreducible amount of time that will have to be expended by both Bank and Government staff in dealing with referrals to the Bank for its comments and approvals of procurement procedures and documents (para. 9.2).  - iv - 9. Another lesson learned is the need to make a more thorough study of the provincial institutions and to continue the start made in the project to develop the provincial road networks so as to enable project benefits to be sustained. Finally, frequent changes in Bank staffing tend to slow down project preparation and interrupt continuity in sector dialogue with the Government (para. 8.2).   - 1 - PROJECT COMPLETION REPORT PAPUA NEW GUINEA ROAD IlPROVEMENT PROJECT (LOAN 2265-PNG) PART I: PROJECT REVIEW FROM BANK'S PERSPECTIVE 1. Project Identity Project Namne Road Improvement Project Loan Number 2265-PNG Loan Amount US$31.0 million RVP Unit East Asia and Pacific Region Country Papua New Guinea Subsector Transport 2. Project Background 2.1 Unlike many developing countries in East Asia and the Pacific, Papua New Guinea has a very small population (3.8 million) compared to its land area (461,700 km2). It is endowed with abundant mineral and oil resources, good agricultural potential and great natural beauty. However, the country's history, adverse topography and low education and skill levels have conspired to present it with formidable obstacles to economic development. Papua New Guinea continues to be dependent on aid from a variety of sources and on expatriates for the manning of public and private establishments and undertakings. Local skills and capital are not available to exploit fully the country's natural wealth. 2.2 The population is predominantly rural (85 percent) and much of the attention of the Government since the late seventies has been directed at programs to improve the quality of life in the rural areas. More importantly, the Government was taking steps to strengthen local government administration and to decentralize much of the functions that impinge directly on the lives of the rural people. The provision of adequate rural transport facilities became an important component of the Government development strategy which called for greater participation by the provincial governments in the administration of the rural road networks and a capacity at provincial government levels to plan, construct and maintain roads. 2.3 The Government's overall objective was to connect the widely scattered pockets of population, principally along the Highlands Highway corridor, in order to  - 2 - facilitate the marketing of agricultural produce and exportable crops such as copra, cocoa, coffee and cardamon and thereby switch agriculture from a subsistence level to an income earning activity. The linking of population centers would also have the effect of fostering a sense of nationhood in a country of several hundred tribal groupings and dialects and contribute to more efficient administration and effective delivery of government health, education and agricultural extension services. 2.4 The project concept fitted in with Government policy to give priority to the needs of the rural population and was a major shift from the approach of the three earlier Bank-financed road projects which focused exclusively on improvements to sections of the Highlands Highway. Some attention was paid to institutional issues in the Third Highway Project (Loan 1856-PNG) but none in regard to the provincial road systems. The project under review in this report was the fourth Bank-financed road project in Papua New Guinea. The Bank decided to begin looking at the whole road network including the provincial roads and at strengthening the local capability at central government and provincial levels. 3. Project Objectives and Description 3.1 Project Objectives. The project objectives were to: (a) improve rural mobility through implementation of a rehabilitation and improvement program for roads and bridges; (b) improve road maintenance through the establishment of an efficient management system; and (c) assist in developing the domestic transport and construction industries. In addition, the project was intended to help in establishing a strategy for transport sector development which was expected to lead to policy action plans and associated investment programs. 3.2 Project Description. The project consisted of: (a) the rehabilitation or improvement of about 15 provincial road segments totaling approximately 277 km; (b) rehabilitation or replacement of about 32 bridges on national roads having an estimated total length of 1,517 m; (c) improvement of two sections of the Highlands Highway (29 km) and the first section of the Enga Highway (about 25 km); (d) consulting services for feasibility studies, detailed engineering and construction supervision, for transport policy studies and for the preparation of a transport sector development plan and associated investment programs; (e) technical assistance to establish efficient procedures for transport sector development functions in general and highway management and administration in particular, and to assist in the development of the domestic construction industry; and  - 3 - (f) training of highway maintenance personnel. The project also included provisions for a study to investigate potential hydropower resources. 4. Project Design 4.1 From the outset the project was conceived by the Government and Bank as a rural transport project and it led to the commissioning of consultants to undertake a study to prepare investment packages for a selected number of provinces and to train provincial staff in project identification and evaluation. The consultants (Germany/UK) were financed under the Third Highway Project (Loan 1856-PNG/Credit 1030-PNG). The study involved the collaboration of several Government agencies-DTCA, Department of Works and Supply (DWS), Department of Finance, National Planning Office, Provincial administrations and Department of Agriculture-but the agencies were not able to provide counterparts to work with the staff of the consultants. It was quickly realized by the Bank that it would take a long time before the provinces could be staffed by local nationals. As a result, the emphasis of the study shifted instead to improvement of project identification, evaluation and ranking of priorities at the central government level in the DTCA and DWS. 4.2 Five major issues were apparent during project appraisal: (a) project preparation was still at the stage of preliminary studies and engineering and little had been done to assess manpower needs particularly at the provincial level and to prepare a detailed training program for implementation at central and provincial levels; (b) the funds allocated in the lending program were not sufficient to cover the project costs; (c) the Government was opposed to going to ICB for sections of the Highlands and Enga Highways which it proposed to construct by project managed force account I/ (PMFA); (d) acquisition of right-of-way had been a problem in earlier projects and a major cause of cost overruns; and (e) there were concerns about Government compliance with covenants relating to sectoral issues in the ongoing Third Highway Project. Only (b) above was raised as an issue in the issues paper following the appraisal mission and the decision memorandum recorded none. The other issues surfaced during reviews by senior management and were the main topics of discussion at negotiations. 4.3 At negotiation a Bank loan amount of US$31.0 million was agreed and it was proposed that the shortfall of about US$7.0 million would be provided by the Kuwaiti Fund for Arab Economic Development Fund (KFAED). With regard to sector issues, the Government agreed in a side-letter to: (a) reorganize the road maintenance administration; (b) continue its review of transport user charges; and (c) evaluate the impact of modifying the transport regulatory framework with a view to establishing an economic and efficient transport system. 1/ PMFA is the execution of works by a departmental construction team rnansged by a contractor/DWS staff/consulting firm and supervised by another consulting firm. The team operates like a contractor employed to execute works under a contract with the department.  - 4 - 4.4 In retrospect, there is little doubt that the timing of the appraisal was premature in regard to the Highlands and Enga Highways and sufficient time was not allowed for the completion of studies and final engineering in the project implementation schedules. Moreover, as the project was intended to improve the capacity of the central and provincial government agencies in planning, administration, and maintenance of the national and provincial road networks, project preparation may have benefitted from an assessment of manpower levels and the design of a structured training program for implementation under the project. The adoption of a program approach to the rehabilitation of the provincial roads and national bridges enabled a degree of flexibility in adjustment of the scope of the programs and in maximum utilization of loan funds. Unfortunately, the provincial road program was not continued in the Transport Improvement Project (Loan 2742-PNG) that followed and the focus of Bank lending reverted to national roads and central government institutions. 5. Project Implementation 5.1 Overview. In the event, there were long delays of about 17 months and 30 months respectively in the commencement of construction of one section of the Highlands Highway and the Enga Highway and nearly five years in the case of the KFAED-financed section of the Highlands Highway. The construction costs exceeded appraisal estimates by substantial amounts as a result of the delays and increased quantities following detailed engineering. However, the total project cost in dollar terms was only slightly higher than the appraisal estimate as a result of the decline in value of the local Kina vis-a-vis the US Dollar. As for technical assistance to DTCA and DWS for management and operations improvements, design improvements, road and bridge maintenance and development of local contracting industry, the Bank underestimated the complexity and the time required for selection and appointment of individual consultants in staff positions and most of the appointments did not take place. 5.2 Provincial Roads and National Bridges Rehabilitation Programs. Implementation began immediately after loan effectiveness in October 1983 with civil works on three of the roads included in the provincial roads rehabilitation and improvement program and three of the bridges included in the bridges rehabilitation and replacement program for which detailed engineering had been completed by consultants. The programs were divided into three phases and the studies and final engineering for the second and third phases were carried out by the DWS and consultants as civil works progressed on the first phase. Projects selected for each phase had to have an ERR of at least 10 percent. 5.3 The roadworks for the most part were carried out by force account with some local contractors employed in haulage and earthworks and the bridge works by LCB contracts. The start of civil works on many of the roads and bridges in the two programs was about a year or more behind schedule because of delays in carrying out detailed engineering and difficulties encountered in the acquisition of the right-of-way. Land acquisition problems continued to be an obstacle to progress but, overall, the delays were compensated to some extent by faster construction.  5.4 In all, 261 km of provincial roads were constructed compared to an appraisal plan of 277 km and 1,230 m of national bridges compared to a plan of 1,517 m. The original programs were accomplished about a year behind appraisal schedule. Due largely to price escalation, there was a 62 percent cost overrun in this component. Construction of some of the provincial roads and national bridges were supervised by DWS staff. Improvement of Highlands and Enga Highways 5.5 Togoba-Tambul Road. This road is located in the Enga Province and is a part of the road from Togoba to Wapenamanda for which feasibility studies and detailed engineering had been completed at the time of appraisal. The road was divided into two contracts so as to give better opportunity for local contractors and to enable construction to commence on the road section for which the right-of-way had already been acquired. However, there was a delay of about 17 months in the commencement of the civil works for the first contract as a result of the need for additional materials investigations and delays in bidding. The delay on the commencement of the second contract was even longer because of slow progress on land acquisition and design adjustments to the road alignment caused by an error in the setting out of the first contract. 5.6 By the time these problems had been resolved in 1986, the original contractor prequalification which was carried out in 1983 had become outdated but after a lengthy exchange of correspondence the Bank agreed to an update of the original prequalified contractors and to advertising locally for a fresh prequalification. The final road length constructed was 32.5 km, an increase of 7.5 km and the construction cost was about K 348,700 per km, compared to an appraisal estimate of about K 241,280 per km, an increase of about 44.5 percent due mainly to price escalation on the second contract which did not commence until the end of 1987 and increase in quantities. 5.7 Kudjip-Minj Road. This road is located in Western Highlands Province and is part of the Highlands Highway. Detailed engineering had not been carried out at time of appraisal. There was substantial delay in the completion of detailed engineering and bid evaluation was not completed until late February 1986. Further delay occurred when the Government recommended the contract award to the second lowest evaluated bidder because of poor performance by the lowest bidder on another Government contract and the Bank could not approve the award. The contract was finally awarded to the lowest evaluated bidder and signed in June 1986. 5.8 This 13 km section of the Highlands Highway was completed in six months, about seven months ahead of the contract schedule, at a final cost of about K 246,800 per km compared to an appraisal estimate of about K 176,900 per km, an increase of about 39.5 percent reflecting price escalation between 1983 and 1986 and increase in quantities. 5.9 Watabung-Chuave Road. This road is located in the Eastern Highlands Province and is also part of the Highlands Highway. The feasibility study and preliminary engineering was carried out by consultants during project implementation. This formed the basis of an appraisal by KFAED but the loan agreement with KFAED was not effective  until January 1990. Detailed engineering was initially undertaken by DWS and later by consultants who did the final review. Progress on the detailed engineering was made difficult by objections from landowners to soils investigations on their lands and the construction of the road was plagued by problems associated with land acquisition, crop compensation and a breakdown of law and order. 5.10 After a delay of about five years, civil works construction began in late 1989 and was completed in September 1992. The works were carried out by PMFA at a cost of about K 698,800 per kim compared to an appraisal estimate of K 312,500 per kim, an increase of about 123 percent, due to price escalation and increase in quantities. The case for Government's support of PMFA as opposed to ICB is not strengthened significantly by the experience on the construction of this road. Firstly, the costs per km are much higher than the costs per km of the other two roads in the Highlands and Enga Province constructed by contract awarded under ICB even allowing for price escalation in the intervening time. Secondly, PMFA costs may be generally understated in that all costs are not properly accounted for particularly those relating to mobilization and demobilization and suspension of works. PMFA has to face the law and order problem and is not immune to attacks by the local tribesmen but, on the other hand, the attacks are less intense and it allows for the use of a more flexible response by management. Also, this road was completed while its contemporary, the Togoba-Ialibu Road (ICB contract financed under Loan 2742-PNG) is virtually stalled. In addition, it should be borne in mind that the Watabung-Chuave Road was one of the more difficult sections of the Highlands Highway. 5.11 Technical Assistance and Training. In addition to consulting services for feasibility studies, detailed engineering and construction supervision and preparation of future projects, the project included provisions for consulting services to carry out a number of policy studies and to furnish technical assistance and training to DTCA and DWS staff. Five studies were undertaken by consultants originating from the countries indicated: (a) Transport Investment Program (France); (b) Transport Data Base (New Zealand); (c) Provincial Liaison Training (UK); (d) Transport Operations Policy (UK); and (e) Boat Services Feasibility (New Zealand). The Transport Operations Policy Study brought within the scope of a single exercise, the study of (a) airport user charges and aviation pricing and cost recovery issues and (b) an investigation of the regulation of the transport industries with reference to the road freight industry. Originally, these were envisaged as separate studies in the appraisal report. The studies findings are being implemented by the Government. 5.12 The studies were carried out satisfactorily and enabled the Government to comply with the covenants in the loan agreement for the preceding Third Highway Project calling for improvement in highway maintenance planning, levying of appropriate user charges, opening up the trucking sector to nationals and moving towards an efficient transport system including privatizing its freight and passenger and coastal shipping services. While the studies were carried out satisfactorily as scheduled at appraisal, very limited use was made of the technical assistance and training component. Although attempts were made to recruit expatriate staff to work in the DTCA and DWS, they failed chiefly because Government recruitment procedures were not adaptable easily to the  recruitment of individual consultants and enormous delays occurred in resolving the issues they raised. The assistance to the local contracting industry is being carried out under the ongoing Transport Improvement Project (Loan 2742-PNG) and the Special Interventions Project (Loan 3289-PNG) with the establishment of a dedicated construction industry unit in the Department of Trade and Industry. This unit was established because DOW had demonstrated only limited interest in assisting the contracting industry. 5.13 Project Variations. There was no significant departure from the project as appraised, not counting the reduction in the scope of the technical assistance component. Also, near the end of the project, the Bank agreed to transfer payments of a few completed items from Ln. 2742-PNG, so as to use up the funds remaining (US$2.6 million) in the loan. This transfer was restricted to jointly (Ln. 2265/2742-PNG) financed items. 6. Project Results 6.1 Project Objectives. The project's objective to improve travel conditions on some of the rural roads and provide access to the trunk routes was achieved by the accomplishment of the provincial road program. Many of the national roads also benefitted from the construction of bridges which are expected to facilitate through traffic. The project has contributed to the improvement of the road maintenance and management systems by organizing the systematic and routine collection and processing of transport - data and training by consultants. The trucking industry is already showing evidence of the impact of the relaxation of government controls with the movement towards larger trucks. A transport development strategy that governs policy and investment programs in the transport sector has been drafted and is being followed in practice. 6.2 Physical Results. The physical progress of the project varied from the appraisal schedule as a result of the longer than anticipated time taken to complete final engineering during project implementation and was interrupted in some instances by land acquisition problems. But once civil works commenced, the rate of progress of the works was satisfactory. 6.3 Impact of Project. While it is not feasible to deduce the impact, on the country's economy, of the modest improvements of the transport system under the project, the irnprovements confer immediate benefits to the highway users in the form of lower operating costs and passenger time savings. With the increase in competition in trucking likely to develop due to the easing up of the regulatory framework of the industry, it is reasonable to expect that the lower transport costs will be translated into lower consumer prices. The Government has neither provided updated traffic counts nor re-estimated the ERR at project completion. Hence, using revised costs and an estimated 20 percent reduction of the traffic expected at appraisal, the Kudjip-Minj section of the Highlands Highway improved under the project is expected to yield an overall economic return (ERR) of 19.6 percent compared to an appraisal estimate of 21.2 percent and the Enga Highway an ERR of 8.0 percent compared to an appraisal estimate of 12.2 percent. From current experience, the rehabilitation program for the provincial roads and national bridges are expected to yield an ERR in excess of 10 percent. The ERR for the Watabung-Chuave  - 8 - section of the Highlands Highway was not available at appraisal, but it is a central link in the highway and should have similar returns as adjacent sections (about 15 percent). 7. Project Sustainability 7.1 The sustainability of project benefits, which accrue primarily to vehicle operators as a result of improved road driving conditions, will depend on the ability of the Government to maintain the improved road sections and to intervene in a timely manner to strengthen the road pavement or otherwise improve the roads as traffic reaches threshold limits. The planning and programming of national road maintenance has been largely based on standard allocations for different classes of roads and the results of visual inspection. Funding has been good except for 1990 when a big reduction was made, but maintenance on the national roads has continued to be satisfactory. Overall, funding has declined in real terms and funds are also not used efficiently because they are released on a quarterly basis in amounts inconsistent with the actual maintenance needs during a particular quarter. Weaknesses in planning and implementation also play a prominent role. 7.2 There is, however, doubt on the ability of the provincial governments to maintain in good repair the provincial roads because of their limited institutional capacity. The culture of the DWS staff has been to give more attention to the national roads for which the staff has primary responsibility. While the project under review in this PCR noted the weaknesses of the provincial institutions and made an attempt to assist them through the central government agencies, the Transport Improvement Project that followed did not address the matter of strengthening the provincial capability to administer provincial road networks. The risk is very real that the provincial roads improved under the project may not be maintained properly. 8. Bank Performance 8.1 The initial project brief was circulated in the Bank towards the end of 1979 when the preceding Third Highway Project was being readied for negotiations. Despite the early initiative taken in launching the project, the project was not appraised until about three years later and did not reach the Board until 15 months had elapsed. Even then the project had not been fully prepared. Bank staff assigned to the project was constantly changing during project preparation. There is no doubt that the focus of the project and its complexion changed with all of the staff changes and the monitoring of progress on project preparation suffered. Worse still, the start made in the project to develop the provincial roads and address the question of strengthening the provincial institutions was not continued in the Transport Improvement Project that followed. 8.2 The project achieved a major objective in completing the improvement of the 600 km Highlands Highway to paved standards. The first attempts at implementing a provincial road rehabilitation program were also successful and several studies were accomplished that will help planning of future investments. However, some lessons may be learnt from the experience in the project:  (a) Bank appraisal should be scheduled only after evidence that project preparation including detailed engineering would have been substantially completed by that time; (b) the provincial roads study should have included more work on the organization and management of the provincial institutions, an assessment of manpower and recruitment and training needs and the design of a training program for implementation under the project; and (c) frequent changes in Bank staff during project preparation seemed to slow down project preparation and interrupt continuity in sector dialogue with the Government. 9. Borrower Performance 9.1 The Government was reorganized during the project period with the DTCA splitting into two departments, namely, Department of Transport (DOT) and Department of Civil Aviation (DCA). The DWS relinquished its responsibility for supplies and became the Department of Works (DOW). Although the reorganization has enabled DOT and DOW to concentrate on their central functions, the divestment of DOT's planning role - in civil aviation, which is now the exclusive responsibility of the new DCA, may have resulted in less efficient transport coordination. 9.2 Except for the delays in submission of the annual audited project accounts, the Government's overall performance has been satisfactory. The two project implementation agencies, DOT and DOW have generally understood and complied with Bank requirements. Despite a large number of subprojects and a variety of procurement methods, procurement has, for the most part, been free of serious problems. However, the administration of procurement continues to take a heavy toll on staff time in communicating with the Bank for its comments and approvals. The DOW's intention to produce and use standard bidding documents based on the Bank's own sample bidding documents may help in reducing the need for constant reference to the Bank for review. But, there is an irreducible amount of time that has to be expended by both Bank and Government staff in dealing with referrals to the Bank for its comments and approvals of procurement procedures and documents. 9.3 Towards the end of the project, progress was also affected adversely by the budgetary process. Basically, due to financial constraints, the Department of Finance and Planning released funds to the executing agencies in inconsistent and inadequate amounts. This effectively reduced the rate at which the project could be implemented. This situation still prevails to a large extent in PNG but Government has promised to address it.  - 10 - 10. Consulting Services 10.1 The consulting services under the project as implemented fall into three categories: (a) feasibility studies and detailed engineering; (b) construction supervision; and (c) various studies. The performance of the consultants who originated from Australia, Britain, France and New Zealand was satisfactory.  - 11 - PART 11: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE This Project Completion Report is prepared on the basis of the Bank's "Guidelines for Preparing Project Completion Reports". It is being prepared before Parts I and II are received from the Bank. There is also no reference to Economic Rates of Return (ERR) as it is understood that Department of Transport has written to advise the Bank that the Data for preparation of ERRs are not available. It is also understood that a start has been made by Departinent of Transport in the collection of such data but this will be a long process and the information will not be available in time for finalization of this Loan. The Loan Agreement was dated 29 April 1983. The original closing date was to have been 30 June 1989. This was subsequently extended to 30 June 1991 and then to 30 June 1992. For reasons that will be noted where appropriate through the report all funds had not been expended as the closing date for the Loan approached. To enable funds to be applied to the maximum extent possible the Bank was most co-operative and have its "no objection' to certain project groups which are within the scope of both loan agreements and had been completed and initially reimbursed under Loan 2742 to be transferred into Loan 2265. This had the effect of enabling all funds under Loan 2265 to be applied and drawn down and at the same time it partly restored capacity under Loan 2742 for new projects to be introduced for completion within the remaining period of Loan 2742. In this regard it must be noted that, at the time, it was confidently expected that Loan 2742 would be extended for a further period of 12 months to enable such additional work to be done. Advice from the Bank in this regard is at present anxiously awaited. The Bank's injunction to make this document brief (Annex A, Part II, Clause 3) has been noted. However the report does of necessity cover a very wide range of projects carried out under a very wide range of conditions. This report will briefly examine the implementation of projects in general under each of the main categories, referring to particular aspects or problems which arose and the lessons to be learnt from them. The total amount of the Loan, US$31.0 million, has been fully drawn down. The main categories of projects under the Loan were as follows - A - PROVINCIAL ROADS IMPROVEMENT Improvement of a total of approximately 261km (82%) of Provincial Roads was completed out of a projected length of 318km. As would be expected those for which designs were complete, where land matters had been resolved or which presented least difficulty were completed earliest.  - 12 - The works completed serve to improve communication and commerce in their areas either by providing roads where possibly none existed previously or which were very substandard, or by reconstruction of existing provincial roads so that they are less vulnerable to the effects of adverse weather conditions than previously. By the nature of their construction, the nature of the country that they traverse and the generally significant wet periods in PNG, all of these roads present an ongoing maintenance requirement which all provinces are not equally geared up to meet. From time to time, it has been necessary to draw one or other Provincial Government's attention to the need for maintenance work on a road previously improved under the Loan Two projects cali for particular comment - BUNDI ACCESS ROAD This work was originally referred to in the Appraisal Report as the Bundi-Ua road for which the appraisal estimate was K400,000 for a length of approximately 12 km. This portion of the route was located on the southern side of the Imbrum River and incorporation much of the old Ua Road. Because of concerns of construction and maintenance costs on the southern side and the need to service a major cardamon plantation on the northern side which was considered to have considerable export potential, the route was switched to the northern side. Because of the greater length of new road, estimated initially at 23km, the revised estimate for the work became K1.6 million. After much consideration, work was commenced in March 1988. Part of the work was by Force Account, part by Project Managed Force Account. These methods were selected as being most flexible in the difficult terrain which was to be traversed. Detailed engineering was prepared only for the bridge sites of which three were envisaged initially. Construction in very steep side slope in broken to hard rock ground and rainforest did not proceed at anywhere near the rate expected. After completing approximately 10 kilometres and two bridges the cost had reached K2.437 million. Provision of funds in the National Budget ran out in 1990 and work at the site stopped. The Bank subsequently insisted that detailed engineering be provided for the rest of the work and that it be carried out by contract. This detailed engineering is now being prepared under Loan No 2742. At this stage it does appear that construction, when it does re-commence, will be loan funded. MAI-TADJI ROAD This road was not included in the original Appraisal Report. It was subsequently included in Category IlId, (Road Links to be Identified). Construction was by project managed force account. It was divided into three stages. The first section completed traversed lightly undulating rainforest country with reasonable proximity to coronous gravel. The second section ranged from the previous stage to extensive swampland and then ascended into the foothills of the Torricelli Range with designed maximum gradient of 19.9% and elevation up to approximately lOOm. The third section commenced at the southern end and traversed steep undulating country with some heavy timber until it also was to ascend the Torricelli Mountains. The swamp areas required extensive rearend tipping of river gravel hauled in by truck This was slow and  - 13 - expensive. As work into the Torricellis commenced it became clear that the grades encountered were to be much steeper than expected. The whole Torricelli section was covered with heavy rain forest on clayey ground with steep side slopes and unexpected aquifers when isolated sections of calcareous rock were encountered. As these problems were commencing, the Contractor's plant which had then been on the job for approximately two years was becoming less reliable. It is believed that this was in part the result of problems arising from the flow of National funds at various times when payments to the plant contractor were delayed. When the work was commenced the design consisted of a preliminary alignment and longitudinal section. The investigation consultant referred to this as a preliminary alignment which would need to be refined when a final survey was carried out. In the event it was proved that conditions were much more adverse than believed when the work was commenced. Part of the problem was the severe nature of the terrain over the central 12km of the 53km project, the whole of which was generally inaccessible except for local village paths over some sections. A new alignment over the missing section has been located but still needs considerable investigation. The original estimate for the 53km originally intended was K3.499 million, work to date (approx 33km, including construction of two bridges and purchase of the superstructure for two others) has cost K3.309 million. The alternative route for the missing section is expected to be 22km in length. Both of these jobs indicate the need for satisfactory survey and a detailed knowledge of the terrain even if a detailed design is not to be prepared. The difficulties of terrain, weather, plant reliability, communication with remote areas should not be underestimated and estimates for such work must be realistic. Over optimistic estimates not only cause severe budgetting problems in the context of annual expenditures but may upset priorities or the order in which projects should be undertaken, both on a national and provincial level or may lead to work being undertaken on an economic basis which otherwise might not be undertaken at least within the time span proposed. These projects also illustrated the problems which can arise when only one contractor is approved in accordance with the Bank's requirements as a source of hired plant to qualify the work for recoupment under the Loan. Yet even on these roads and particularly the Mai-Tadji road, which they have not been completed as through routes, their construction thus far has led to opening up of new areas to settlement, gardening and in the case of Mai-Tadji road, to local commercial timber getting, mainly of sizes suitable for housing and small business accommodation. B - BRIDGE REPLACEMENT The appraisal report allowed for the construction of 17 bridges (including three river training works) at an estimated cost of K2.8 million. Two of the bridges (est cost K315,000) were deleted and the remaining fifteen bridge works were completed for K2.84 million, an average increase of 14% for those works which were completed. Part III provided for up to 15 further bridges for which K1.4 million was allowed; a total of 11 bridges and a total of nineteen culverts were actually constructed at a cost of K3.64 million which being significantly later in the Loan period would have experienced some inflationary effect. A total of 835m of bridges, three river training works and the nineteen  - 14 - large culverts were constructed under the section covered by the original appraisal report. Thirteen bridges totalling a further 396m in length plus three river training works and one large culvert were subsequently transferred from loan 2742 with a cost of K2.561 million. In the case of each new bridge and large culvert it can be claimed that the road network has been significantly improved either by increased amenity, safety or reliability for road users or by reducing the likelihood of interruption by flooding or washaways. While the total expendiure under this loan was K9.044 million compared with K4.2m originally allowed, it is considered that this has been a worthwhile investment in this country of very high annual rainfalls in most areas. River training is a matter which still requires considerable investigation. It is an activity on which considerable sums can be spent sometimes to great effect, sometimes with considerable apparent effect until particular occurrences render the work again ineffective. Major river training projects should only be undertaken after considerable study, based on as long a history for the site as possible, as well as of current trends and taking into account as wide and as likely a range of solutions as possible. IMPROVEMENT OF NATIONAL HIGHWAYS (Highland and Enga Highways) A 32.5km section of the Enga Highway (Appraisal Estimate 25km - K6.032 million) between Togoba and Tambul was completed at a cost of K11.333 million over a period of four years. As this was an average of four years after the preparation of the appraisal estimate so that increased costs reflect an element of inflation as well as the effect of site conditions. The recent Bank Supervision Mission (November 1992) commented favourably on the condition and maintenance of this section of the road. A 13 km section of the Highlands Highway between Kudjip and Minj was completed for a cost of K3.209 million (Appraisal Estimate K2.3 million). These costs also reflect some inflation plus the effect of site conditions. Construction of the Highlands Highway between Watabung and Chuave was financed by the Kuwaiti Fund (KFAED) and was accordingly deleted from the Loan. The reasonable costs experienced on these works indicate the benefits of carrying out the work by contract when the extent and nature of the project can be adequately defined and documented beforehand. CONSULTANT SERVICES A - ENGINEERING SERVICES FOR DEPARTMENT OF WORKS One project was deleted and one transferred to Loan 2742. The remaining seven were completed with direct application to then proposed future works, most of which have also been completed. The benefits of these projects carried out by consultants selected by procedures conforming to the Bank's requirements have therefore been obtained.  - 15 - B - STUDIES FOR DCTA All of the studies were completed, generally in accordance with the Appraisal Estimate. C - STUDIES FOR WATER RESOURCES This item was not included in the original appraisal but was included later with the Bank's "no objection". Two studies were carried out at a cost of K1.059 million for the Bureau of Water Resources as follows - a) Hydropower Inventory: This study reflects the problems which arise when projects proposed for inclusion in loans are not funded or are only partly funded in National Budgets for the period when it was expected that a project might proceed. Instrumentation was carried out at only about half of the proposed sites and the Bureau reported several times on shortage of funds and of personnel to carry out field work. Such work as has been done will be a useful basis for future work and application, particularly as the need for augmented or new energy sources arises. b) Flood Estimating Manual: This project was successfully completed, the Manual is distributed and is applied in particular design situations. Approaches have been received by the Bureau from several consultants for its agreement to incorporating aspects of the Manual in design software. TECHNICAL ASSISTANCE The Appraisal Report allowed an amount of K1.43 million for this item, but expenditure amounted to only K193,000. Some items were deleted, one was transferred to Loan 2742. Because these generally do not lead directly to visible physical improvements their funding and staff availability appear not always to receive priority. These items do require significant staff input in preparation, but staff concerned is generally fully occupied with matters of more immediate concern. Such items in future loans should be marked for early consideration and allocation of appropriate resources. SUMMARY Based on experience with this Loan the following are matters that should be kept in mind when a future loan is being considered - * Only projects that can clearly be completed within the period of the loan should be listed. For road and bridgework this involves sufficient investigation and detailed engineering having been undertaken and an assurance that land matters have been finalised or are capable of being finalised before work is due to commence. * Consideration should be given at the appraisal stage to national priorities, not just the prerequisites listed above because once a project is listed in a loan it tends to overshadow other, possibly more important, works which are not loan funded.  - 16 - * Development of model tender/contract documents acceptable to the Bank is desirable to facilitate approval of individual projects when submitted to the Bank. * It must be understood that unless a project is funded in the National Budget and where necessary in succeeding Budgets, it can not start or continue in spite of its being scheduled in the loan with funds available under the loan. Bank Missions have often criticised non- commencement or poor rates of progress when this has been the cause. While projects may be listed in budget proposals by participating Departments, inclusion of projects and/or the amounts allowed in the Budget for such projects is determined by NEC. Loan Funded Projects should be identified separately in Budget proposals, along with the name of the Funding Agency, with funds nominated to enable the implementation of each project in accordance with its particular target. Since these funds are reimbursable, suitable procedures should be devised to ensure sufficient cash flow throughout the project lifetime. * While Contract/Consultancy Agreements are usually a sound means of procurement the Bank should accept that at times Force Account/In House Design also have a place when there are particular problems or circumstances associated with a particular project. In both design and construction it is desirable for the Departments/Authorities to develop in-house expertise not only to be able to undertake projects at short notice but also adequately to supervise/direct the operations of contractors and consultants. While Force Account is by no means perfect, examples could also be cited where design or supervision by outsiders has also been found wanting. In this regard, such in-house experience not only provides a sound foundation for the organisation itself but contributes to the private sector when such experienced personnel migrate to the private enterprise organisations., * The Bank's guidelines for selection of design consultants do not allow flexibility so far as preference to locally established consultants or to an even distribution of work among such consultants. This is a matter which could be discussed with the Bank when conditions for future loans are being considered. * Turnover of staff in a relatively small organisation leads to discontinuities which hamper the steady flow of investigations and submissions to the Bank. * Each loan should contain a significant proportion of investigation/detailed engineering so that designs and documentation will be readily available for any following loan. * Technical assistance items require significant preparation and input by client authorities, including National Budget provisions which are often overlooked, even when the project is to be carried out by consultant. This is usually not an immediate priority area for the provision of funds so that such project often fall behind and in some cases are not even commenced before the loan period is complete. These projects generally affect future planning and are thus often relegated to lower priority. Significant client input is required because only the client knows exactly what is required and it is possible for consultants to go off at a tangent if not adequately guided. In such cases the terms of reference is a particularly important document.  - 17 - * The Bank has generally been prompt in replies and approvals although on occasion, delays have occurred, eg with the detailed engineering for Bundi Access Road where approval to the consultancy took a considerable time and eventually the project was transferred to Loan 2742 * Replies also appear to take longer where there is some difference of opinion between the Bank and the participating Authority, eg whether a work should be by force account or extension of the loan period is sought. This may be aggravated when correspondence has to pass through a third authority rather than direct between the Bank and the authority/department concerned. * Generally the Bank has been receptive and helpful, eg in the transfer of completed items from Loan 2742 to Loan 2265 to enable the funds to be applied to the maximum extent possible.   - 18 - PART III: STATISTICAL INFORMATION 1. Related Bank Loans and/or Credits Loan/credit Approval amount Loan/Credit title Purpose (FY) (USS m) Status Commenu First Highway Project Construction and 1970 9.0 Completed. Per- Project costs exceeded by Cr. 204-PNG improvement of formance Audit about 90%. ICB bids Ln. 693-PNG sections of the Report was issued were higherthanhpprmisal Highlands Highway in 1977 estimates indicating that at that time conditions may not have been attractive to foreign contractors. First Port Project Irnprovementsto the 1972 9.2 Completed. A loan condition in re- Cr. 326-PNG ports at Kieta, Lae gard to cost based tariffs and Port Moresby was not complied with. Second Highlands Road Construction and 1977 19.0 Completed. Pro- ICB bids were higher than Improvement Project improvement of ject Completion apprmisal estimates by Cr. 677-PNG further sections of Repont prepared about 759% and the project the Highlands High- together with the was reduced in scope. way Third Highway Project Second Pors Project LAnd reclamation, 1978 3.5 Completed. The Although the project was Ln. 1551-PNG civil works, pro- ProjectCompletion completed satisfactorily curement of pilotage Report was issued below cost estimates, it launches and tech- in 1982. had limited development nucal assistance and impact. About 0.5 training million of loan funds were cancelled. Third Highway Project Improvement of 1980 30.0 Completed. Project Project achieved most of Ln. 1856-PNG further sections of CompletionReport its objectives but, Cr. 1030-PNG the Highlands High- was prepared in disclosed poor detailed way, preparation of 1986. A Perfor- engineering resulting in a road maintenance mance Audit Re- inadequate protection program, procure- port is currently against earth tremors ment of traffic under review, which are frequent in the counters and Highlands. technical assistance for preparation of future projects Road Improvement Improvement of 1983 31.0 Completed Subject of this Project Project n a t i o n a I a n d Completion Repon. Ln. 2265-PNG provincial roads, construction of bridges and tech- nical assistance.  - 19 - 1. Related Bank Loans and/or Credits (cont'd) Loan,credit amount Loan/Credit title Purpose Approvil (USS m) Status Comments Transpon Improvement Construction and 1987 45.5 Ongoing Loan closing date has Project improvement of been extended twice due Ln. 2742-PNG national roads and mainly to construction bridges, resurfacing delays caused by civil of airporn runways, distur-bances. taxiways and aprons, procurement of navigational, meterological and communieation aids and technical assistance and training.  - 20 - 2. Project Timetable Date Date Date Item planned revised actual Identification (Project Brief) 08/--/80 - 091--/80 Preparation 05/-/81 01/--/82 12/--/82 La Appraisal Mission 071--/81 04/--/82 04/27/82 Lk Loan/credit negotiations 01/--/82 10/--/82 02/08/83 Xc Board approval 03/--182 03/29/83 07/19/83 Loan/credit signature - - 04/27/83 Loan/credit effectiveness 07/31/83 /d 11/29/83 /d 10/21/83 Loan/credit closing - - 06/30/88 Loan/credit completion 06/30/89 06/30/92 /a Preparation considered sufficient for appraisal. Lb Departure of appraisal mission. IC Date of completion of formal negotiations. a Latest date for effectiveness. Comments: The project coincided with the Government's decision to decentralize government administration with the formation of 19 provincial governments. The Government was also pursuing a policy of giving priority to establishing an adequate rural road network to link the Highlands Highway, which traverses the relatively more populated central highlands region of the country, with the marketing centers. The initiating brief in July 1979, although citing institutional obstacles to the administration of provincial roads, supported the Government's policy in this direction. The project was initially described as a Rural Roads Improvement Project. Gradually, however, the focus of the project tended to dissipate with the inclusion of improvements to sections of the Highlands and Enga Highways. The focus on rural roads was lost in June 1981 when the project attempted to include provisions to improve other transport modes and was renamed Transport Development Project I. In the end, the project came to be called appropriately the Road Improvement Project and the only issue raised by the appraisal mission was the insufficiency of funds allocated in the lending program. Several sector issues surfaced during review by senior management and they were discussed in detail at loan negotiations and agreements reached on an action program which included a timetable to complete project preparation.  - 21 - 3. Loan/Credit Disbursements Cumulative Estimated and Actual Disbursements (US$ million) FY84 FY85 FY86 FY87 FY88 FY89 FY90 FY91 FY92 FY93 Appraisal Estimate 3.5 8.5 16.0 21.7 27.2 31.0 - - - - Actual 1.3 3.9 8.4 15.2 18.4 22.4 23.3 27.5 28.8 31.0 Actual as % of Estimates Date of Final Disbursement: November 4, 1992  - 22 - 4. Project Implementation Indicators Leos Awrad Ettmi. Rewod E.timt Actual C 4.P.wu AppmWoo AUJl SI.5 C V.a. Swm CorPkw S5 CPr C Cq" A. Prmi Roo" Rnlbition C.tloryr I Silo 1 otk,a 36.0 km 35.0 hu 0C/-/93 03/3144 07/-/Y4 02-/V7 Force Aount T- * - H.4u 13.5 32.0 09/15/93 06/30/14 11/-43 OB/-414 Force A.o5 DoUbs - Kibu 11.0 14.0 09/15313 12/3144 11/-43 07/116 Force Aom MLi - Nsk 21.0 21.0 1I/OM1S3 1011514 11/-13 11/-44 Force Acca. Catcio,y 11 Taizrgora - K .oulor 25.0 25.0 01/0145 06/304/6 03/1-7 11/-/57 LCB for Eanwuarb o.bl M I Kol 35.0 33.0 07M0144 03/-/l7 01-4U6 101-/Il LCB for Earthok only A *CL - Mnyoy 36.0 36.0 01/01/b4 12/3146 12/V-M 03/-M 4 91-46 /a LCB Bmdi Ama. Rd 12.5 37.0 01/MJ44 I12V 031-u 121-,91sT Proj NIt-SIdM Force Aou Kihno - N . 20.0 20.0 04/0134 12/31415 071-_4 07/-197 Force Ac W.ow RJ-, - Ubeigubi 17.0 17 0 10M1/25 03/3117 06/-47 02M-/U LCB Ca,ro, a 50.0 84.0 10/01/5 03/31/N 01/-4 06/-/92 LCB for Ewtbeoke oky/LCB/Fcrcc Aoor 7. Bridse Rebbiliudon and Cotoxory I Kci ) ) 07,0143 06/3045 Dslad fro zeIja Kenp Wck6 001413 04/3O 5 061-IS 07/-44 06t/- LCB Tu I I i 01/014 09/3044 10/-43 0/-,14 Foro A tcooat W -o r 5.0 m }218.0 m OBM 1 /94 04-.5 LCB H4n-i 1 1 07 1 X3 06/30/744 - 09/-44 LCB Gidai } 07143 04/304W5 O4-45 03/-/6 For Aax Sii.r Cmek 0701/33 04/30414 091-/-3 01/-/14 LCB Ubo ) 1 0710113 06130/4 091-/13 01/-/24 LCB Category 1 Ni I ) 05/-44 01/-45 Force Ao Ahwi mE 11/-/24 04/-/5 LCB Waini t 11/-44 ov-/ LCB D or 21/-R7 051/-/16 LCB Aiuyc 1592.0 m 1266.0 m 1L0/014 109/30L16 11/-4S4 11/-45 LCB NeneI cce 04/-44 11/-Y4 Fono A [rcl [ J I 1 11/-45 10/-Y7 For A R.hi& } 1 1 1 11/-/B5 061-47 Forc Aax WoA.I I I DolAd frm Po Ca rory 50C.0 m 1230.0 m 07/01414 06/307 02V-Y6 12/-/91 hch m b*m (396 km) Livasmbod ftum Loan 2742-PNG C I n ...... Of FEHi1Ha Io Enaa LLhryn Ttobe --Te.l 25.0 32.5 01/0144 12/31/56 06/-15 I1/-/ ICB K.djip- Mi 13.0 13.0 01/1414 12V31D5 071-/56 12.-Y6 KCB W.L.luay . Clow 16.0 16.0 03/31/15 06/30W Oll/-Y9 09/-/92 KumxiB fwnad. D. Conolting SeMra. T AsauLacce & T-dul Po.icy Rcvi- 01MI/03 12/3116 0/331413 12-/86 ALI a_cim a&asd and oudaa WiLihm tbil -rk h.IoU- S Ywi4,6 DTCA Prvinil Lu.W. 01014 Ct31/594 DWS bwt. St,a,gU.4g 07,01Y3 12/3116 -/-/k9 061-/91 L- 'iLd to r_ok- d oraoti. epecdL.in D DWS Roud sad Bridp Mr i- Pgroam ind. Trainm 01/1414 32/3145 DzsIad from Phec Do,lopwt of kln K Inustruy 01/0144 1311h4 Trtrvtm to Law 2742-PNO HCv R Sbdy Couple-d 1s Worb I rudo .r i oa  - 23 - 5. Project Costs and Financing A. Project Costs (USS million) Appraisal Estimate Actual Expenditures Local Foreign Total Local Foreign Total Provincial Roads Rehabilitation and Improvement 2.94 4.40 7.34 4.57 6.85 11.42 Bridge Rehabilitation and Replacement Program 1.98 3.67 5.65 3.38 6.28 9.66 Improvement of Highlands and Enga Highways 6.28 11.65 17.93 10.40 19.31 29.71 /a Consulting Services 1.08 5.42 6.50 0.87 3.91 4.78 Technical Assistance and Training 0.30 1.77 2.07 0.03 0.17 0.20 Right-of-Way 0.60 - 0.60 0.46 - 0.46 Subtotal 13.17 26.92 40.09 19.71 36.52 56.23 Contingencies - Physical 1.55 3.03 4.58 - Price 3.18 6.19 9.37 Total Proiect Cost 17.90 36.14 54.04 Front End Fee on Bank Loan 0.23 0.23 - 0.23 0.23 HydroPower Study 0.20 1.00 1.20 - 1.22 1.22 TOTAL FINANCING 18.10 37.37 55.47 19.71 37.97 57.68 /a Includes the cost of construction of Watabung - Chuave Road (US$12.57 million) financed by KFAED.  - 24 - B. Project Financing Lon Fih. A,smm Revised (IBRD) KUWATI Dinic TouJ (13R.DI EEtimia /a lb Fad Fwds F.zm- USS s USS USS USS U4s US (I) Clvil - orb (a) Hizy (K-djp M-i SUi .i 2,00,000 65 2,230,00 65 2,267,000 1,221,OOD 3,488,CD3 (b) Witad 9h;y (Watah .Chbe S.I.MS 4,300,C0 65 - 7,000,000 4,1910,SU 11,I D,000 (C) All dsm 8,900,0D0 65 15,900,000 65 22,544.496 13,313,504 35.S,00. (2) Coi .uls' wrvea, and uwiDng 8,300,000 IC0 5,900,000 100 5,2D0,994 967,0036 6. 168,000 (3) Eq*vAaaiAsl 1,000,01 IC0 756,741 756,741 (4) Fro Ead F_ 230,769 230,769 Am. D- 230,769 230,769 {i) Uahfloosiad 7,269,231 5,769,231 - TOTAL 3 LO. 31.000,C 31 ~0000 7.00 19,681,510 576151 Is Rem.DlocaLin of Lean proc.d. en April 6, 197. A of Api 2D, 1993  - 25 - 6. Project Results A. Direct Benefits Appraisal Estimate at Indicators Estimate Closing Date A. Provincial Roads Rehabilitation 277 km 261 km and Improvement B. Bridge Rehabilitation and 1,517 m 1,230 m Replacement C. Improvement Highlands and 54 km 61.5 km Enga Highways  - 26 - B. Economic Impact Indicators Estimate At Closing Date A. Provincial Roads Rehabilitation > 10 > 10 and Improvement B. Bridge Rehabilitation and > 10 > 10 Replacement C. Improvement of Highlands and Enga Highways - Kudjip-Minj Section 21.2 19.6 - Togoba-Tambul Section 12.2 8.0  - 27 - 7. Status of Covenants Covenant Subject Deadline Status Section 3.05 Acquiaition of land and land rightu including right- Immediately after land Complied with of-way for construction of civil works and furnish acquisition promnptly to the Bank afner such acquisition docurnentary evidence satisfactory to the Bank, all before award of construction contract. Section 3.06 Maintain in good repair roads improved under the - Comaplied with for the proiect. national roads. Further Bank aaisunce will be needed to reorganize naintenance of provincial roads on a systematic basis. Section 3.07 Furnish to the Bank for iu approval the program October 31 of Complied with for the civil works to be carried under Part A preceding year. (Provincial Roads) and Part B (National Bridges) for each year. Section 3.08 Trnspon Sector Development Strategy July 1, 1985 Complied with - furniah for Bank reviewed a Transport Sector Development Stategy - after taking into account Banks' comments, subrit to this National Econonic Council (NEC) Section 4.02 (a) Maintain project records and accounts in Comnplied with accordance with sound accounting practices Section 4.02 (c) ii) Audit project accounts for each fiscal year June 30 Substantial delays: snd furnish to Bank certified copy of audit annually report Date of Report 1983 Nov. 16, 1987 1984 April 21, 1987 1985 April 21, 1987 1986 April 21, 1987 1987 October 5, 1989 1988 October 5, 1989 1989 Sept. 12, 1990 1990 Oct. 30, 1991 1991 Not available  - 28 - 8. Use of Bank Resources Stage of Month/ Days in Specialization Performance Types of project cycle year Persons field represented /a rating status problems Throueh Appraisal Identification 7/80 2 21 2E Preparation 1 2181 2 6 1E,lH Preparation II 6/81 1 7 IE Preappraisal 11/81 2 5 lE,lH Appraisal 5/82 3 28 1E,1H,ISE Board Approval 4/83 Supervision 1 8/83 1 9 1H - Report missing from file II 11/83 2 7 lE,lH 2 III 5/84 1 10 1H 2 IV 8/84 2 9 lE,lH 2 v 2/85 1 10 1H 2 VI 7/86 1 9 1H 2 VII 7/87 1 6 1H 2 VIII 11/87 2 7 2H 2 IX 7/88 2 10 lE,lH 2 X 11/88 1 7 IF 2 Xi 11/89 2 5 lF,lH 2 XII 3/90 2 6 IF,lH 2 XIII 9/90 2 8 IF,lH 2 XIV 6/91 3 6 IF,lE,lH 2 XV 11/92 1 7 IH 2 /a E: Economist H: Highway Engineer F: Financial Analyst