Colombia - Rural Transport Sector Project

Document of The World Bank FOR OFFCLAL USE ONLY Report No. 13452 PROJECT COMPLETION REPORT COLOMBIA RURAL TRANSPORT SECTOR PROJECT (LOAN 2668-CO) AUGUST 17, 1994 Department III Infrastructure Division Latin America and the Caribbean Region This document has a restricted distribution and may be used by recipients only in the performance of their ofricial duties. Its contents may not otherwise be disclosed without World Banki authorization.  FISCAL YEAR January 1 to December 31 CURRENCY EQUIVALENTS Currency Unit = Colombian Peso (Col$) Average Exchange Rates YEAR 1986 1987 1988 1989 1990 1991 1992 1993 RATE 192.3 242.6 299.2 382.6 502.2 693.3 765.0 832.0 WEIGHTS AND MEASURES (Metric system in use throughout report) Abbreviations and Acronyms CGR Office of the Comptroller General of the Republic CORPES Regional Planning Councils DNP National Planning Department EMS Equipment Management System ERR Economic Rate of Return FINDETER National Fund for Territorial Development FNCV National Rural Roads Fund FONADE National Fund for Development Projects GOC Government of Colombia IBRD International Bank for Reconstruction and Development INDERENA National Institute for Renewable Natural Resources MMS Maintenance Management System MOPT Ministry of Public Works and Transportation, Ministry of Transport, as of 01/01/94. PCR Project Completion Report PNR National Rehabilitation and Poverty Alleviation Plan SAR Staff Appraisal Report PO FNCV's Planning Office SENA National Apprenticeship Service  FOR OFFICIAL USE ONLY THE WORLD BANK Washington, D.C. 20433 U.S.A. Office of Director-General Operations Evaluation August 17, 1994 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Colombia Rural Transport Sector Project (Loan 2668-CO) Attached is the "Project Completion Report on Colombia - Rural Transport Sector Project (Loan 2668-CO)", prepared by the Latin American and Caribbean Regional Office. It includes Part II, prepared by the borrower, and it incorporates other borrower-supplied material. The basic objective of the project, the second of three lending operations to date for rural transport, was to support social and economic development in rural areas. The project focused on roads, though it also had a waterways component. Specific tasks were rural roads construction and maintenance, and institutional strengthening of the national government agency (FNCV) in charge of rural roads. Project implementation went well overall, due in part to excellent government support. Implementation of road works proceeded ahead of schedule, and overall project completion was about on schedule. Savings in unit construction costs and increased counterpart funding resulted in a substantial increase of physical works. Actual project costs were close to estimated costs. Compliance with covenants was good. The project made a significant contribution to the physical amelioration of the rural roads network. The PCR estimates the ex-post economic rate of return on investments (ERR) at 25-26%, as compared to an ex-ante ERR of 24-31%. In institution building, the project also met its targets, though the government decided, after project approval to abolish FNCV and transfer its responsibilities to departmental jurisdictions. Overall project outcome is rated as satisfactory. Institutional development is rated as substantial. Sustainability is uncertain, in view of FNCV's planned abolition. The PCR is thoughtful and thorough. No performance audit is planned. Attachment 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 OFFICIAL USE ONLY COLOMBIA RURAL TRANSPORT SECTOR PROJECT (Loan 2668-CO) TABLE OF CONTENTS PREFACE .....................- i- EVALUATION SUMMARY ...................... ii- PART I - PROJECT REVIEW FROM BANK'S PERSPECTIVE . . . - 1 - A. Project Identity .- 1 - B. Background .- 1 - C. Project Objectives and Description .- 2 - D. Project Design and Organization .- 3 - E. Project Implementation .- 5 - F. Project Results . 12 - G. Project Sustainability . 15 - H. Bank Performance and Lessons Learned .......... . 16 - I. Borrower Performance and Lessons Learned .- 19 - J. Bank-Borrower Relationship . 20 - K. Consulting Services . 20 - L. Project Documentation and Data . 21 - PART II - PROJECT REVIEW FROM BORROWER'S PERSPECTIVE .............................. 22 - A. Introduction ............................. 22 - B. Conclusions and Recommendations ..... ......... 22 - PART Im - STATISTICAL INFORMATION ....... ......... 25 - 1. Related Bank Loans ....... ................. 25 - 2. Project Timetable ....... .................. 26 - 3. Loan Disbursements ....... ................. 26 - 4. Project Implementation ...... ................ 27 - 5. Project Costs and Financing ................... 28 - 6. Project Results . ........................... 29 - 7. Status of Loan Covenants .................... 32 - 8. Use of Bank Resources ...... ................ 34 - 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. l   PROJECT COMPLETION REPORT COLOMBIA RURAL TRANSPORT SECTOR PROJECT (Loan 2668-CO) PREFACE This is the Project Completion Report (PCR) on the Rural Transport Sector Project in Colombia financed under Loan 2668-CO for US$62.0 million. Loan 2668-CO was approved on March 25, 1986, and became effective on July 30, 1986. The project was completed by December 31, 1992, the original closing date which was not extended. The loan was fully disbursed, with the final disbursement made on May 13, 1993. The PCR was prepared by the Infrastructure Division, Country Department III, of Latin America and the Caribbean Regional Office. It is based on the Staff Appraisal Report, the Loan and Guarantee Agreements, supplemental letters and amendments to the Loan Agreement, information gleaned from the project files, consultant reports, and materials obtained during project completion mission and discussions with Bank and Fondo Nacional de Caminos Vecinales (FNCV) staff who were associated with the project. This report contains Parts I and III prepared by the Bank and Part II prepared by the Borrower. Part II reflects the Borrower's perspective of the project's implementation achievements and difficulties.   - ii - PROJECT COMPLETION REPORT COLOMBIA RURAL TRANSPORT SECTOR PROJECT (Loan 2668-CO) EVALUATION SUMMARY Objectives i. The Rural Transport Sector Project was the second Bank operation in the rural roads subsector. The project was closely linked with the Bank's strategy for the transport sector in Colombia, which aimed at achieving ,inter alia, a more balanced use of the existing transport infrastructure, reduction of total transport costs, and improved performance of sector agencies (para 1). The project's objectives were to: (a) support the Government's efforts on agricultural development, diversification and export promotion, and integrate less developed areas into the mainstream economy through reducing the backlog of deferred maintenance and expansion of rural roads; (b) improve efficiency and reduce costs of rural transport through adequate maintenance of the rural network; (c) upgrade subsector management through improving the institutional performance of FNCV; and (d) develop, on a pilot basis, more efficient conditions for small-scale water transportation in the Pacific coastal region through rehabilitation and construction of minor canals linking rivers and estuaries in the area (para. 3). Implementation Experience ii. The loan agreement was signed on May 7, 1986, and became effective two months later, on July 30, 1986. The project was completed on December 31, 1992, the original closing date. Upon a slow start during the first year, the pace of project implementation accelerated markedly between 1987 and 1989, when GOC linked the Project with a new social and economic plan, the National Rehabilitation and Poverty Alleviation Plan (PNR), primarily designed to fight poverty in depressed areas. In the last half of 1987, GOC appropriated large amounts of counterpart funds to the project with a view to completing all physical targets by the end of 1990. The Bank agreed to the proposed accelerated implementation schedule. In line with estimated cost savings and GOC's priorities under the PNR, the targets agreed at appraisal for road construction and deferred maintenance financed from loan proceeds were increased by 50 % (1,200 km) and 25 % (1,000 km), respectively, while the waterways pilot component, which was underway, was scaled down from 60 to 7 km in order to give priority to other investments that could be materialized faster in areas covered by the PNR (para. 12). iii. Though by end-1990 the loan was 93.5% disbursed, project completion took till 1992 as initially planned, as a result of budgetary complications stemmed from the implementation of new decentralization and cofinancing policies, more restrictive monetary and fiscal policies  - iii - between 1990 and 1991. In addition, FNCV in 1990 had started implementing the Second Rural Roads Project (Loan 3157-CO, US$ 55 million, approved in November 1989) and some of the investments were carried over under the new project. This follow-on project was designed to continue with the implementation of FNCV's investment program and address issues arising from the new decentralization and co-financing policies introduced in 1989 (para. 21). For two years FNCV carried out both projects simultaneously (para. 13). iv. The Loan Agreement was amended five times to: i) increase the authorized allocation of loan funds deposited in the Special Account from US$4 million to US$9 million, to facilitate managing the financing requirements of a vast number of larger-than-originally planned contracts; ii) provide Bank financing for acquisition of parts for a program to repair FNCV's road maintenance equipment; iii) delete the acquisition and utilization of a helicopter and laboratory equipment, which were deemed unnecessary with the contracting out of the supervision of road works, an activity previously carried out by force account; iv) include a program to upgrade the radio communications system; v) revise the dates for compliance with certain covenants and the list of departments selected for the Departmental Roads Study; and vi) permit direct contracting of equipment repairs (para. 14, 15, 16). v. Most of the variances between planned and actual implementation resulted from the need to tailor the execution of the project to evolving conditions. These variances were introduced with the concurrence of the Bank, and in general were advantageous (i.e., speeding up the execution of the project, incorporating a road equipment repair program, increasing the contracting out of work supervision services, etc). Other undesired variances included (1) the delayed implementation of some key components of the technical assistance program, (2) the phasing out of the waterways pilot component, and (3) the delayed and incomplete execution of the Departmental Roads Study (para. 17). vi. The project called for a quick start of the institutional strengthening program, particularly the road maintenance management system (MMS) component, which was expected to have a great impact in the efficiency of FNCV's operations. However, the consultants were not recruited until December 1987, one year later than planned. This delay was caused in part because FNCV had very little experience in hiring foreign consultants, and its management was more committed to carrying out the investment components of the project. The development of a maintenance management system (MMS) and its implementation in the first pilot maintenance districts took also longer than originally anticipated. Though with delay, the MMS was successfully implemented by 1990. The fine tuning of the system and further training of FNCV staff was achieved in 1991 with the help of local consultants financed under the follow-on Second Rural Roads Project (para. 18). vii. The waterways component was included in the project on a trial basis. FNCV wanted to continue the labor-intensive excavation methods used in the past, since they were deemed as appropriate means to fight poverty in those poor coastal communities; but these methods were ineffective to complete the excavation of the canals to the design levels. As a result, progress  - iv - in the implementation of the pilot program was extremely slow and the excavation works costly. The pilot program was finally phased out in 1990, without completing its first phase (para. 19). viii. The Departmental Roads Study after major delays was carried out only in three of the five departments originally selected. Finalizing the financing arrangements proved to be much more complex than anticipated because of FONADE's reluctance to fully fund the study, as originally planned. The selected departments were also reluctant to participate in the study and least of all to contribute towards its cost. The consultants were deployed three years later than planned. By the time the report became available, GOC was designing a major reform of the transport sector, following further decentralization policies mandated by Colombia's new Constitution, that substantially changed the role of departments in road management. By then, the study had lost most of its value. Two studies funded under the on-going Second Rural Roads Sector and Third National Roads Sector Projects will further address the primary issues, namely, inadequate organization and unreliable, insufficient sources for road maintenance funding in the departments (para. 20). ix. During the project's execution, GOC introduced new decentralization and co-financing policies with notable impact on the way rural road subprojects were selected and the works financed (see Boxes 1 and 2). FNCV was required to start co-financing with local governments all rural road works from January 1, 1989, using a formula for matching grants. The formula was developed with the help of consultants financed under the project. The initial implementation of these policies certainly entailed administrative and budgetary difficulties that could had possibly hampered final completion of the project. Eventually FNCV overcame these difficulties and successfully managed the risks associated to the new framework. To support implementation of such policies, FNCV (1) established new procedures for selecting road works, giving key participation to local governments, (2) increased deconcentration of administrative functions to its regional offices, and (3) developed an intense technical assistance program with local governments to prepare them for participating in the cofinancing scheme and gradually taking over management responsibilities for road maintenance (para. 21, 22). Results x. The project met its intended objectives, with the exception of developing more efficient conditions for small-scale water transportation in the Pacific coast. It provided the foundations for implementing key subsector policies and addressing institutional issues with notable impact on the effectiveness and efficiency of FNCV's operations. FNCV shifted its investment priorities from new construction to a more balanced program with increased emphasis on maintenance and improvement of the existing rural roads network. Key steps to improving FNCV's institutional performance were the decisions made at various stages of project implementation, such as: i) contracting out most detailed engineering and works supervision to local consulting firms; ii) establishing a Maintenance Division to plan and coordinate all maintenance activities; iii) establishing an Environmental Unit to monitor compliance with environmental regulations; and iv) strengthening its regional offices to provide better  - v - coordination between headquarters and field activities. The objective of developing more efficient conditions for small-scale water transportation was not attained (para. 27, 28). xi. The notable acceleration of the project implementation schedule between 1987-1989 resulted in cost savings that allowed FNCV to surpass the physical targets agreed at appraisal, with the sole exception of the waterways component. The Project contributed to achieving the following physical results: i) expanding the rural road network through construction of about 1,160 km (or 45% above appraisal estimate) of new rural roads; ii) bringing up to a maintainable standard, through improvement works, about 1,050 km (or 31 % above appraisal estimate) of roads; iii) improving the condition of the road network through periodic maintenance over about 5,740 km carried out by contractors (or 15 % above appraisal estimate); iv) improving cabotage and navigation safety in the Cauca Region through partial construction and rehabilitation of about 11 km (or 18% of the appraisal estimate) of channels under the waterways pilot program; v) completing equipping FNCV's maintenance fleets through acquisition of 208 equipment units (or 15% above appraisal) and parts for repair of about 43 units under the equipment rehabilitation program initiated in 1989; and vi) improving the efficiency of FNCV's management practices through acquisition of radio and telecommunications equipment and about 80 micro-computers, printers and other office support equipment (para. 29). xii. Most of the goals under the institutional strengthening program were attained. The project contributed to: i) developing improved planning, programming, and budgeting procedures, and implementing a data bank for rural road projects within FNCV's Planning Office (PO); ii) upgrading road design standards and practices; iii) streamlining contract administration and work supervision practices with the use of guidelines established through the technical assistance program; iv) establishing a rural roads inventory, which gives physical details of all rural roads under FNCV's jurisdiction and estimates the work to needed to provide an adequate level of service; v) implementing throughout FNCV's regional offices a Maintenance Management System (MMS) to assist in preparing annual, performance-based maintenance plans, defining maintenance standards, and monitoring force account works, and various components of an equipment management system (EMS) to assist in controlling equipment use and productivity (para. 30). Sustainability xiii. In the short run, the sustainability of the elements of the Project is being assured because FNCV is committed to pursuing the institutional efficiency goals achieved under the project. In addition, the on-going Second Rural Roads Sector Project provides continuity for the investment strategy and institutional efficiency advances initiated under the project. In the long run, however, the sustainability of the project is uncertain due to the liquidation of FNCV by the end of 1995 (see Box 1). The benefits obtained through construction, improvement and maintenance of a large number of rural roads funded by the project may be lost in the future if departments and local governments do not effectively take responsibility for achieving sustainable maintenance. Building the capacity of departments and local governments to plan, organize and  - vi - deliver maintenance services will take time and demand substantial efforts in technical assistance, since most of them are very weak. The phasing out of FNCV does not necessarily mean that the benefits obtained through the institutional efficiency improvement program will be lost, but certainly entails high risks and the three-year time frame allowed by the current legislation may prove too short for addressing them (para. 32, 33). Findings and Lessons Learned xiv. The project became an efficient vehicle for helping GOC achieve the overall rural transport objectives of the PNR. The fact that most of the reformulated investments were undertaken in PNR areas did not hinder the economic yield of the project. Furthermore, the project enjoyed a high priority in GOC's investment strategy so counterpart funds were promptly made available. This commitment allowed the swift execution of most of the project investment components and, subsequently, surpassing the physical targets agreed at appraisal (para. 37). xv. Bank supervision missions between 1988 and 1989 placed a strong emphasis on implementing the recommendations of the technical assistance. This was decisive in getting FNCV's support for the institutional efficiency improvement program, support that grew substantially during project implementation. The involvement of FNCV's staff in the design and implementation of the systems and procedures introduced by the technical assistance was key to the success of the project's institution-building component. Indeed, the only areas where the recommendations could not be implemented (accounting, internal control) were those that lacked this support (para. 31). The project has shown the advantage of teaming staff with seasoned, individual consultants to pursue full implementation of systems and procedures developed through large technical assistance components, and even upgrade such systems on the basis of the experience obtained through their actual application (para. 37, 45). xvi. The project has been a step forward towards establishing a coherent rural road strategy. The first Bank project mainly supported expansion of the rural road network. The Rural Transport Sector Project effectively contributed to reverting FNCV's trend for road construction and supporting a more balanced investment program, with emphasis in bringing up to a maintainable standard, and maintaining, a substantial portion of the rural road network. However, this is still far from establishing a sustainable rural road maintenance strategy. The lack of a clear definition of ownership, functions and responsibilities for rural road maintenance in the past is likely to have contributed greatly to the long neglect of maintenance on secondary and rural roads. The follow on Second Rural Roads Sector addresses this issue and places even more emphasis in road maintenance; building on the results achieved under the institutional efficiency improvement component of the Rural Transport Sector Project, it set specific targets with monitoreable indicators of output to be attained by FNCV. Nevertheless, a network-wide road maintenance strategy, especially routine maintenance, still depends on the commitment and capacity of local governments to deliver basic maintenance. Routine maintenance in rural roads is quite simple but requires continuity. In this context, Bank projects should aim at implementing (1) appropriate arrangements for timely delivery of routine maintenance by local governments, (2) a road maintenance strategy for a well-defined "core" rural road network, with  - vii - targets to be accomplished and implementation arrangements to be used by all of the organizations involved, and (3) appropriate mechanisms for the central agency in charge of developing the strategy to monitor compliance with the programs (para. 41). xvii. FNCV's approach for rural road development has been quite successful and can be used in other Bank rural roads projects, especially when dealing with weak local governments who lack the capacity to manage projects. The cofinancing scheme implemented in 1990 proved to be very effective in mobilizing local participation in planning and implementation of projects and developing a strong sense of ownership in the participant communities. This partially decentralized model for project planning and implementation comes closest to the objective of gradually building self-sustaining institutions at the local level through road programs, and gives the possibility of establishing in one agency a central focal point for policy and strategy formulation and inter-agency coordination. This agency should have the capacity, and enjoy the autonomy, needed to address the overall level of funding for rural roads and the balance between development, improvement and maintenance (para. 42) xviii. Some preliminary lessons can be drawn from the experience gained so far in the decentralization of the rural roads subsector. The deconcentration of responsibilities and cofinancing schemes that followed the 1986-1987 legislation provided an interesting set-up to promote local participation in rural road projects, and certainly have been helpful in preparing local governments for the devolution of roads and full decentralization of the rural road sector. This transition period has shown how difficult it is to mobilize departments and local governments to take responsibility for road maintenance. In outlining the decentralization process, priority should be giving to achieving sustainable maintenance of rural roads. FNCV's experience in this regard stresses the importance of setting a clear legal framework for road ownership, well-established funding mechanisms and accountability systems at both departmental and local levels, and providing adequate technical support (i.e., access to investment planning, engineering and project design, administrative skills) to enable departments and local governments to carry out projects more efficiently and deliver routine and periodic maintenance services in a coordinated manner (para. 46).  COLOMBIA RURAL TRANSPORT SECTOR PROJECT (LOAN 2668-CO) PROJECT COMPLETION REPORT PART I - PROJECT REVIEW FROM BANK'S PERSPECTIVE A. Project Identity Project Name: Rural Transport Sector Project. Loan Number: 2668-CO RVP Unit: Latin America and Caribbean Region Country Department III Country: Colombia Sector: Transportation Subsector: Roads B. Background 1. The Bank has played an important role in the development of the Colombian transport sector since 1950. When this project was appraised, the Bank had lent about US$755 million in 26 loans to the sector. The Rural Transport Sector Project was the second Bank operation in the rural roads subsector. The project shared with the preceding Rural Roads Project (Loan 1966-CO) the same sub-sector development objectives, and was closely linked with the Bank's strategy for the transport sector in Colombia. This strategy aimed at achieving a more balanced use of the existing transport infrastructure, equitable treatment of the distinct modes of transport, reduction of total transport costs, adequate priority to export development, agricultural diversification and energy conservation, and strengthening of the planning, budgeting, financial and personnel management practices of sector agencies. 2. The expansion of rural transport programs to isolated regions was a central item of the Government's efforts to extend public services, integrate less developed areas into the mainstream economy, increase agricultural productivity and raise income levels of small farmers. FNCV, created in 1960 to attend this efforts, was reorganized in 1972 as an autonomous organization under MOPT to spur systematic implementation of rural road programs. Since then, transport accessibility in rural areas increased notably. In 1986, the rural roads sub-sector comprised about 25,000 km. Most of that rural road system had been constructed either totally or partially by FNCV, though departments and local governments remained formally responsible for its maintenance. The project aimed at further developing FNCV's investment planning, programming and implementation capacity, and deepening FNCV's policy focus on enhancing  -2- the productivity of existing infrastructure through adequate preservation of rural transport infrastructure. C. Project Objectives and Description 3. Project Objectives. As described in the SAR and Loan Agreement, the project's objectives were to: (a) support the Government's efforts on agricultural development, diversification and export promotion, and integrate less developed areas into the mainstream economy through reducing the backlog of deferred maintenance and expansion of rural roads; (b) improve efficiency and reduce costs of rural transport through adequate maintenance of the rural network; (c) upgrade subsector management through improving the institutional performance of FNCV; and (d) develop, on a pilot basis, more efficient conditions for small- scale water transportation in the Pacific coastal region through rehabilitation and construction of minor canals linking rivers and estuaries in the area. 4. Project Description. The project consisted of a subsector operation to support FNCV's 1986-1992 Investment and Maintenance Program (FNCV's Program). It comprised the following components: (a) rural roads construction, comprising engineering, execution and supervision of about 800 km, to provide access to isolated agricultural areas; (b) deferred maintenance, comprising engineering, execution and supervision of about 800 km, to restore neglected roads to normal maintenance standards; (c) periodic maintenance, comprising engineering, execution and supervision of about 5,000 km, to bring up the road maintenance backlog to satisfactory standards; (d) waterways improvements, comprising engineering, execution and supervision of works to improve efficiency and safety of small cabotage operations and coastal navigation in the Pacific region, in two phases: about 26 km of minor canals in Phase I in the Department of Cauca, and depending upon its results , another 34 km in Phase II to complete a rudimentary network of protected waterways in the region; (e) procurement of equipment, comprising acquisition of: (i) road maintenance units and spare parts to complete and rationalize the maintenance equipment fleet; a helicopter for supervision of works and surveys in areas with difficult access; and computer units to equip FNCV's Planning Office and Engineering Department; (f) departmental roads maintenance study, to be financed by FONADE, to evaluate road maintenance needs in five selected departments (Atlantico, Boyaca, Cauca,  - 3 - C6rdoba, and Cundinamarca) and propose a plan of action to organize the delivery of maintenance services; and (g) institutional upgrading, comprising technical assistance to: i) develop technical capacity of the Planning Office; ii) implement within the Engineering Department a rural roads maintenance management system (MMS), an equipment management system (EMS), and strengthened contract administration and work supervision practices; and iii) develop on-the-job training for FNCV's staff. D. Project Design and Organization 5. Conceptual Foundation. The project built upon the results achieved under the previous Rural Roads Project (Loan 1966-CO). It was designed to upgrade FNCV's capacity to plan and deliver well-balanced, cost-effective investment and maintenance programs. The project would help the Government in the design and carrying out of a work program capable of reverting the deterioration of the rural road network, while continuing the expansion of rural roads to reach isolated communities and small farmers throughout the country. Whereas the higher average amounts of annual investments in the 1986-1992 program did not represent a dramatic increase, the composition of the Program with less emphasis on relatively more capital intensive construction and a substantial increase in deferred and periodic maintenance works, would demand significantly more planning, management and monitoring capacity on the part of FNCV. It was essential in this process to rationalize the use of FNCV's human, equipment and financial resources, and increase the efficiency of FNCV's operations. Under the preceding Rural Roads Project (Loan 1966-CO), FNCV's overall institutional capacity had proven satisfactory and demonstrated a sound basis upon which to develop further its work execution capacity. 6. The institution building program was conveniently designed to develop in the early years of the project sufficient capacity to carry it through to completion. The training component would develop the skills needed to operate the new systems and fully implement the upgraded practices, providing on-the-job training to key staff. The conceptual basis for the project was clear and shared by the Borrower and the Government (the Guarantor). 7. Innovative Aspects. At the stage of FNCV's development in 1986, the introduction of computerized management systems was an ambitious and innovative endeavor. It implied developing new methodologies, collecting data in a systematic way, massive training of staff in computer skills, and, perhaps more importantly, integrating these systems in to FNCV management's decision-making practices at both central and regional levels. Another innovative aspect was the inclusion of the water channels pilot program, which initially raised issues concerning FNCV's legal jurisdiction. The waterways component would reduce transport costs in coastal areas by improving modal interfaces and making a more efficient use of the transport infrastructure. The program would be implemented in two phases. Phase 1 would be monitored closely to assess the conditions under which phase 2 could be executed and the feasibility of implementing similar schemes in other parts of the country, particularly in the Choco and  - 4 - Amazon regions. Finally, the departmental roads study was the first step to address technical and financial issues constraining the capacity of most of Colombia's departments to deliver road maintenance services. 8. Project Preparation. The project was prepared by FNCV with Bank assistance, between 1984 and 1985, and appraised in July 1985. Preparation focussed on developing a sectoral, rolling 1986-1992 Investment and Maintenance Program. The program included construction, deferred and periodic maintenance of rural roads, construction of bridges and improvement of minor waterways, to be carried out by either contractors or FNCV's force account, and some routine maintenance components to be executed by small labor-intensive associations (i.e., microempresas, peon caminero, pico y pala programs). Cost estimates for the various components were based on data gathered from on-going operations carried out by force account and by contract. Prior to negotiations FNCV completed the screening, economic evaluation and basic engineering of about 490 km of road construction and deferred maintenance subprojects for the first year of the Program. The economic analysis of these subprojects yielded an average ERR of about 23%; the methodology used had been developed in 1980 under the precedent Rural Roads Project (Loan 1966-CO). According to the SAR preliminary designs were available for part of the first phase of the waterways component, with some engineering details to be defined later by FNCV's expert in dredging operations. The equipment acquisition component was defined on the basis of an inventory of the existing fleet and an assessment of future equipment needs to rationalize FNCV regional offices' fleets and deliver the force account program. 9. Agreements reached during project preparation encompassed: i) the scope and physical targets to be achieved under the Investment and Maintenance Program; ii) the scope and timing of the semi-annual reviews of the Program, including the achievement of the Program's targets; iii) criteria and procedures for screening and economic evaluation of capital investment subprojects, and an inventory format for ranking periodic maintenance priorities; iv) timetables for adoption of adequate systems to measure progress of civil works and update the rural road inventory on an annual basis; v) terms of reference and timetables for recruitment of consultants for, and implementation of, the technical assistance component and the Departmental Roads Study; vi) the establishment of a Project Account (revolving fund) in pesos, which should maintain a revolving balance sufficient for three months of project expenditures (this, including an initial deposit equivalent to US$2.5 million, was a condition for loan effectiveness); and vi) the provision of retroactive financing US$0.9 million worth for urgent works on two roads, included in the first year program, which were destroyed in 1985 during the eruption of the Nevado del Ruiz volcano. 10. Roles and Responsibilities. The roles and responsibilities were clearly defined during project preparation, stated in the SAR, and agreed by all parties concerned. The responsibility for financing and carrying out the Departmental Roads Study was levied on FONADE, while DNP would be responsible for its supervision. This arrangement proved not convenient. Since FONADE was not fully committed to the execution of the study, it was unable to complete the financial arrangements and recruit consultants in time (para. 20).  - 5 - 11. Contributions to Success/Failure. The project was approved at the right time. In August 1986 a new administration took office and a few months later launched a new social and economic plan primarily designed to fight poverty in depressed areas. Through this plan, called the National Rehabilitation and Poverty Alleviation Plan (PNR), GOC intended to increase public expenditure in about 30% of Colombia's municipalities, covering an area that accounted for more than 35% of the country's area. GOC perceived that the lack of road infrastructure, particularly the need to improve farm to market access, was one of the major impediments for developing marginal areas, and identified the Rural Transport Project as an appropriate and efficient vehicle to achieve the overall rural transport objectives of the plan. As a result, GOC gave high priority to the implementation of FNCV's Investment and Maintenance Program, and apportioned large amounts of counterpart funding to notably accelerate the project's implementation. This acceleration resulted in cost savings that were applied to surpass the physical targets agreed at appraisal. E. Project Inplementation 12. The loan agreement was signed on May 7, 1986, and became effective two months later, on July 30, 1986. The project was completed by December 31, 1992, the original closing date. Project implementation generally followed appraisal estimates, with minor variations discussed below. Upon a slow start during the first year --mainly due to the change of administration, the pace of project implementation accelerated markedly between 1987 and 1989, when GOC linked the Project with the PNR (para 11). In the last half of 1987, GOC appropriated large amounts of counterpart funds to the project with a view to completing all physical targets by the end of 1990. The Bank agreed to the proposed accelerated implementation schedule. In line with estimated cost savings and GOC's priorities under the PNR, the targets agreed at appraisal for road construction and deferred maintenance financed from loan proceeds were increased by 50 % (1,200 km) and 25 % (1,000 km), respectively, while the waterways pilot component, which was underway, was scale down from 60 to 7 km in order to give priority to other investments that could be materialized faster in areas covered by the PNR. 13. Though by end-1990 the loan was 93.5% disbursed, project completion took till 1992 as initially planned, as a result of budgetary complications stemmed from the implementation of new decentralization and cofinancing policies, more restrictive monetary and fiscal policies between 1990 and 1991. In addition, FNCV in 1990 had started implementing the Second Rural Roads Project (Loan 3157-CO, US$ 55 million, approved in November 1989) and some of the investments were carried over under the new project. This follow-on project was designed to continue with the implementation of FNCV's investment program and address issues arising from the new decentralization and co-financing policies introduced in 1989 (para. 21). For two years FNCV carried out both projects simultaneously. 14. In line with the revised project implementation schedule, procurement of civil works was accelerated, and the Loan Agreement amended on March 11, 1987 to increase the authorized allocation of loan funds deposited in the Special Account from US$4 million to US$6 million. Another amendment dated November 16, 1988, further increased this amount to US$9 million,  - 6 - to facilitate managing the financing requirements of a vast number of larger-than-originally planned contracts in execution. 15. Force account maintenance activities, however, could not followed the same accelerated pace, due to the need to await delivery of road equipment procured under the Project and improvement of procedures for programming such works. Eventually, most of the road equipment arrived before the end of 1989, and FNCV upgraded its maintenance planning and programming practices through the technical assistance in road maintenance carried out between 1988-1989. However, to further upgrade the operational capacity of its maintenance fleet, particularly for regraveling works, FNCV started refurbishing some of its graders replacing their low-powered engines with engines more appropriate for regular maintenance works. Based on cost comparisons between purchasing new graders and refurbishing the low-powered ones, it was concluded that it would be more cost-effective to balance the fleet and raise its overall efficiency by contracting with established dealers the provision and installation of adequate engines in 18 graders. The Loan Agreement was amended on July 26, 1988 to provide Bank financing for acquisition of parts for a program to repair road maintenance equipment. However, it was through another amendment dated October 16, 1989 that the corresponding disbursement category was created in Schedule 1 to finance 100% of foreign expenditures incurred in respect of the road equipment repair program. This new amendment overlooked the fact that imported goods are usually purchased "off the shelf" in the local market rather than imported directly. Hence, the Loan Agreement was amended again on June 29, 1990, to allow Bank financing of 90% for local expenditures under the road equipment repair program. These delays would have hampered the carrying out of the repair program if FNCV had not appropriated additional resources from its ordinary budget to support it. Between 1989-1992 about 43 road maintenance units were repaired under a program US$0.9 million worth, though only US$0.3 million were actually financed out of the loan proceeds. 16. In addition, on July 26, 1988 the Loan Agreement was also amended in respect of the Project description to (1) delete the acquisition and utilization of a helicopter and laboratory equipment, and (2) include a program to upgrade the radio communications system. At that time, the amendment further comprised a revision of the dates for compliance with certain covenants and the list of departments selected for the Departmental Roads Study, and a procurement change so as to allow direct contracting of equipment repairs not exceeding the aggregate amount of US$300,000. The helicopter was deemed unnecessary with the contracting out of the supervision of road works, an activity previously carried out by force account, and the greater involvement of FNCV's 25 regional offices, whose strengthening was being conceived as part of the preparation of the follow-on Second Rural Roads Sector Project to adapt the institution to the country's decentralization policy. The increased contracting out of supervision services and successful use of the engineering departments of many universities reduced the need of in-house laboratory equipment. 17. Variances in the Implementation. Most of the variances between planned and actual implementation resulted from the need to tailor the execution of the project to evolving conditions. These variances were introduced with the concurrence of the Bank, and in general  were advantageous (i.e., speeding up the execution of the project, incorporating a road equipment repair program, increasing the contracting out of work supervision services, etc). Other undesired variances included (1) the delayed implementation of some key components of the technical assistance program, (2) the phasing out of the waterways pilot component, and (3) the delayed and incomplete execution of the Departmental Roads Study. 18. The project called for a quick start of the institutional strengthening program, particularly the road maintenance management system (MMS) component, which was expected to have a great impact in the efficiency of FNCV's operations (para 15). However the consultants were not recruited until December 1987, one year later than planned. This delay was caused in part because FNCV had very little experience in hiring foreign consultants, and its management was more committed to the carrying out of the investment components of the project. The development of the MMS and its implementation in the first pilot maintenance districts took also longer than originally anticipated. Though with delay, the MMS was successfully implemented by 1990. The fine tuning of the system and further training of FNCV staff was achieved in 1991 with the help of local consultants financed under the follow-on Second Rural Roads Project. 19. The waterways component was included in the project on a trial basis, with the execution of phase two of the program contingent upon satisfactory experience under phase one. Local communities in the region had, in the past, dug a number of rudimentary canals on an artisan scale. Though in use, the canals needed to be scoured and rehabilitated to modest engineering standards. FNCV wanted to continue the labor-intensive excavation methods used in the past, since they were deemed as appropriate means to fight poverty in those poor coastal communities; but these methods were ineffective to complete the excavation of the canals to the design levels. This would require the use of dredgers, but FNCV neither purchased the dredger needed (MOPT's dredgers were too large for the works) nor contracted out the works. As a result, progress in the implementation of the pilot program was extremely slow and the excavation works costly. The program was also very demanding in terms of work supervision and canals maintenance. A small unit was established in Guapi (Cauca) to manage the program, but the unit lacked the support needed from headquarters. The disposal of waterlogged materials in brackish water required choosing the proper places to avoid adverse environmental impacts, which often were too far for labor-based transport methods. Canals necessitated continued maintenance to remove sediments brought by tide reflux, hence a well organized maintenance crew to promptly carry out the work. The pilot program was finally phased out in 1990, after partially completing excavation through the Pico y Pala program of about 11.2 km of waterways (though fully achieving the design level in only one canal 0.5 km long), and investing nearly 35 % of the funds estimated for the entire program. The follow on Second Rural Roads Sector Project includes completion of only 2 km of canals which were under construction in 1990. 20. The Departmental Roads Study was carried out after major delays only in three of the five departments. Finalizing the financing arrangements proved to be much more complex than anticipated because of FONADE's reluctance to fully fund the study and the number of institutions that finally were involved. After protracted discussions, it was agreed that FONADE  - 8 - and FNCV would each finance 25 % of the cost of the study, while the participant departments would contribute the remaining 50%, using a reimbursable loan from FONADE (indeed only one department, Antioquia, contributed to the financing of the study). Most of the departments were reluctant to participate in the study and least of all to contribute towards its cost. The Loan Agreement was amended on July 26, 1988 (para. iv, 16) to change the list of selected departments to Antioquia, C6rdoba, Magdalena, Santander, Cundinamarca and Cauca. Despite Bank supervision missions repeatedly insisted on the need to proceed with the study, the consultants were not deployed until December 1989, more than three years behind schedule, to carry out the first phase of the study, which covered the departments of Antioquia, C6rdoba and Magdalena. The consultants produced a very extensive but rather descriptive report, which provided technical recommendations on how to improve design and maintenance practices. Little progress was made in addressing the primary issues, namely, inadequate organization and unreliable, insufficient sources for road maintenance funding. By the time the executive report became available --August 1991-- GOC was shaping up a major institutional reform of the transport sector, following further decentralization policies mandated by Colombia's new Constitution, that would substantially change the role of the departments in road management. Finally, based on the lack of interest on the part of the remaining departments (only Cundinamarca had accepted to contribute with less than 8% of the estimated cost of the study), and the inadequate timing as well (by then the study had lost most of its value), DNP requested the Bank to cancel the second phase of the study. The Bank accepted such proposal in view that specific studies aimed at (1) identifying proper sources of funding for rural and departmental roads, and (2) building the institutional capacity of the departmental road agencies and transferring responsibility over national roads to the departments, were part of the on-going Second Rural Roads Sector Project (Loan 3157-CO) and the Third National Roads Sector Project (Loan 3453-CO, US$266 million, approved in 1992), respectively. 21. Actions Affecting Implementation. During the execution of the project, GOC introduced new decentralization and co-financing policies with notable impact on the way rural road subprojects were selected and the works financed (see Boxes 1 and 2). The initial implementation of these policies certainly entailed administrative and budgetary difficulties that could had possibly hampered the final completion of the project. FNCV was required to start co-financing all rural road works from January 1, 1989, using a formula for matching grants. The formula was developed with the help of consultants financed under the project. However, the availability of FNCV funds for 1989 became known only at the end of 1988, by which time all the mayors had their budgets bills approved by their councils and could not include new provisions for counterpart funds for rural road projects. This delayed the execution of cofinanced works scheduled for 1989-90, which actually started late in 1990. 22. Eventually, FNCV overcame these initial difficulties and successfully managed the risks associated to the new framework. To support implementation of such policies, FNCV (1) established new procedures for selecting road works, giving key participation to local governments, (2) increased deconcentration of administrative functions to its regional offices, and (3) developed an intense technical assistance program with local governments to prepare them for participating in the cofinancing scheme and gradually taking over management  -9 - Box 1 COLOMBIA DECENTRALIZATION AND COFINANCING POLICIES The legal and financial framework Colombia initiated its decentralization efforts in 1983 with the passage of a law (Law 14) granting municipalities greater revenue raising powers. Subsequently, in 1986, another law (Law 12) was passed to increase the municipal share of the national sales tax (IVA) with a formula that explicitly rewards fiscal effort and favors small municipalities, which typically have low fiscal capacity. In 1987 a decree (Decree 77) was passed specifying a staggered timetable for transferring responsibilities from central agencies to municipalities. Construction and maintenance of that part of the country's secondary and tertiary road networks classified as "municipal" was to become the responsibility of local governments. Furthermore, FNCV was transformed into a co-financing agency and required to negotiate matching grants arrangements with local governments for financing of rural road works, though the agency continued executing rural road projects on behalf of the local governments. To comply with this regulation, FNCV established by end-1988 a co-financing formula that set down varying percentage shares for different categories of municipalities based on population differences and the existing formula for transfer of IVA revenues. The investment selection procedure was also modified to include local/regional pre- screening and evaluation of subprojects prior to FNCV's selection. The first phase began with the identification of possible road construction/maintenance subprojects by the local mayor based on requests submitted by his/her constituency; then, FNCV regional offices were required to put together all these proposals in a draft annual road investment plan reflecting regional and local priorities, to be approved by a Regional Technical Committee. The approved plan was then submitted to FNCV's headquarters for final approval. Yet the new Constitution of August 1991 mandated further decentralization and modernization policies. A decree (Decree 2171 of 1992) restructured MOPT into a Ministry of Transport responsible for policy making and planning, created an autonomous agency for management of national roads, and slated FNCV for liquidation by end-1995. Though its good performance was acknowledge by GOC, FNCV's liquidation was seen as a clear sign of GOC's intention to pursue full decentralization, as mandated by the Constitution. Lately, legislation introduced in 1993 (Transport Law) passed on to the departments responsibility over a substantial part of the national road network, including rural roads under FNCV's jurisdiction, and substituted block grants to the departments for the matching grants to municipalities, establishing a new Road Cofinancing Fund; the departments, in turn, are required to make ad-hoc arrangements for co-financing with their municipalities. Fiscal decentralization was accompanied by political decentralization, with a 1986 law (Law 78) requiring that municipal mayors who were appointed by department governors henceforth be elected by their citizens; the first elections were held in March 1988. The new Constitution of 1991 carried popular rule one step further by authorizing the direct election of governors, who were formerly appointed by the central government. responsibilities for road maintenance. These goals, together with implementation of a functional classification and inventory of all road networks other than national, are being pursued with the help of the follow-on Rural Roads Sector Project. So far, cofinancing has proven to be quite positive, and a cornerstone to this success has been the sense of ownership that local governments have developed as a result of sharing the cost of the works, no matter how low this share has been. 23. Another positive factor was the increased environmental awareness that emerged in Colombia during the implementation of the project. Long-standing regulations dating from 1974  - 10- Box 2 COLOMBIA DECENTRALIZATION AND COFINANCING POLICIES Their impact on project implementation * Response to local needs. Direct participation of local governments and NGOs in the identification of candidate projects, and coordination with the Regional Planning Councils (the CORPES) have made the selection process more responsive to local needs. Municipalities agree to cofinance only those subprojects which they perceive are of higher interest for the community or the local government. For better of for worse, this "veto" power is sometimes exercised to change the scope and/or implementation schedule of a project. * Project monitoring. Local governments have developed a marked sense of ownership because of their direct participation in the selection and, more importantly, financing of the projects carried out by FNCV. Directly or through NGOs (i.e., Veedurias Populares), they have been actively involved in overseeing project execution. Deconcentration of responsibilities to FNCV's regional offices has also improved work supervision. * Environmental awareness. Local governments have been very keen in detecting environmental problems and exercising their police right to stop the works until the appropriate mitigatory actions are undertaken. Unfortunately, local governments do not carry out preliminary environmental assessments to screen subprojects. * Planning and budgeting processes. Preparation of FNCV's budget requires reaching an agreement with local goverments on the list of projects to be cofinanced and specific contributions to be made (in monies for works contracted out and in kind for force account works). This has been a demanding task for FNCV, which required key participation of its regional offices. Newly elected majors often want to review the priorities agreed with FNCV by previous administrations. In general, majors are reluctant to grouping works that cover more than one local jurisdiction. Many agencies are involved in the preparation of the budget. * Procurement. Most of the local govermnents have had financial difficulties in making the funds available in a timely manner, despite the very low cofinancing percentages required by FNCV (from about 1 to 15% for the majority of the municipalities). This has caused delays in procuring the works; * Jurisdiction control. Many local governments have required that FNCV undertake additional works on roads other than those strictly under its jurisdiction, in order to agree on the investments to be cofinanced. While this reflects the priorities assigned by local governments to the road network in their area (independently of jurisdiction), it forced FNCV to disperse its resources over an increasingly expanded road network. * Framework for road maintenance planning. Local governments are more interested in cofinancing rehabilitation (roads in poor condition) rather than maintenance works. The 1987 legislation passed on to local governments responsibility for rural road maintenance, but only some municipalities have effectively assumed such responsibility (most of them rely on FNCV to keep rural roads in operating conditions). The continuous expansion of the rural road network to be attended by PNCV (see above), hampers planning of adequate maintenance standards throughout the network, and in turn, since FNCV lacks the resources needed to serve alone such network, achieving sustainable network-wide maintenance. (Code of Natural Resources) required that an environmental study be carried out prior to any action likely to cause deterioration of natural resources or the environment. Rather than carrying out such studies (which are costly because of their broad scope, as defined by INDERENA), FNCV chose in the past to design construction of roads avoiding to the extent possible  - 11 - environmentally sensitive areas. Environmental considerations were not linked to the economic evaluation and selection procedures agreed with the Bank under the Project. 24. It was not until 1988 that a systematic approach was applied to integrate environmental considerations into the project cycle, establishing an Environmental Unit within FNCV's Engineering Directorate as well as guidelines for environmental screening of road subprojects. These guidelines, which were developed with the help of the technical assistance component financed under the Project, provided an analytical framework to assess the environmental risks associated to a particular road project. Since 1989, FNCV has consistently contracted out to consultants the execution of environmental assessments studies and mitigatory plans, and submitted them to INDERENA for approval. Getting an environmental license, however, has often taken longer than desired due to (1) poor quality of the first environmental studies, which necessitated further reviews, and (2) lack of resources for INDERENA to discharge its functions in a timely manner. FNCV completed environmental assessments studies for 30 subprojects out of the 133 subprojects undertaken under the project. Under the Second Rural Roads Sector Project, FNCV has established more stringent procedures for environmental screening, preparation of mitigatory plans and supervision of environmental control measures during work execution; a basic economic-environmental evaluation is conducted for each road construction and improvement subproject selected for financing under the project. 25. Possible avoidance of variances. The delays in implementing the technical assistance component and the Departmental Roads Study could have been avoided with firmer commitment and support from FNCV, DNP and FONADE. Regarding the latter, a clearer and up-front definition of the financing arrangements could have helped. Nevertheless, by the time the study findings became available, GOC was amidst a major reform of the transport sector, including devolution of a large portion of the national roads to the departments, and was not yet clear what role the departments would play in this process. 26. Recognizing FNCV's lack of experience with waterways --it had been included in the project on a trial basis, the outcome of the waterways component could have been better had its preparation not underestimated organizational requirements and construction costs. The execution of the program hinged on an ad-hoc, small unit within FNCV's Engineering Directorate, staffed with an engineer experienced in dredging operations but poorly supported in the field. This was not enough to carry out the pilot program efficiently, and much less to mobilize the support and resources needed within an organization exclusively dedicated to road works. But more importantly, the design of the program overlooked the fact that for the program to achieve its goals it was necessary to move away from the labor-intensive construction techniques, which were not only extremely costly but inappropriate for achieving the design excavation levels. This represented a conflict of interest for FNCV, who was very supportive of these community programs. In retrospect, being a pilot program, it should have not been stated as one of the development objectives of the Project.  - 12 - F. Project Results 27. Project Objectives. In retrospect, the project met its intended objectives. As noted in Part II of this report, the Project effectively contributed to (1) developing agriculture and integrating less developed areas into the mainstream economy, (2) improving the efficiency and reducing costs of rural transport, and (3) upgrading subsector management through improving the institutional performance of FNCV. The Project provided the foundations for implementing key subsector policies and addressing institutional issues with notable impact on the effectiveness and efficiency of FNCV's operations. FNCV shifted its investment priorities from new construction to a more balanced program with increased emphasis on maintenance and improvement of the existing rural roads network. Key steps to improving FNCV's institutional performance were the decisions made at various stages of project implementation to (1) contract out most detailed engineering and works supervision to local consulting firms, (2) establish a Maintenance Division to plan and coordinate all maintenance activities, (3) establish an Environmental Unit to monitor compliance with environmental regulations, and (4) strengthen its regional offices to provide better coordination between headquarters and field activities. 28. The objective of developing more efficient conditions for small-scale water transportation in the Pacific coastal region, however, was not attained. Indeed, the physical results accomplished through the waterways pilot program were poor; but its implementation contributed to deriving basic lessons for the future (para. 19, 38), which perhaps is more relevant taking into account that it was a pilot experience. 29. Physical Results. The actual total project cost was about US$118.7 million, which is within the appraisal estimate range when physical and price contingencies are added to base costs. The notable acceleration of the project implementation schedule between 1987-1989 resulted in cost savings that allowed FNCV to surpass the physical targets agreed at appraisal, with the sole exception of the waterways component (para. 12, 19). The Project contributed to achieving the following results: a) expanding the rural road network through construction of about 1,160 km (or 45 % above appraisal estimate) of new rural roads. All construction subprojects yielded an economic rate of return greater than 12 % (around 29 % on the average) and complied with at least one of the following conditions: (1) link two existing roads, (2) link two population centers, (3) link a population center to a community, and (4) link a rural road with another transport mode; b) bringing up to a maintainable standard, through deferred maintenance, about 1,050 km (or 31 % above appraisal estimate) of roads. These subprojects were selected using the same criteria mentioned above. Though in the economic screening analyses deferred maintenance subprojects yielded economic rates of return significantly higher than those estimated for construction subprojects (about 44% on the average), the ex-post analysis of a sample of subprojects suggests  - 13 - much closer results, in part because the physical targets initially set for deferred maintenance subprojects were often changed during the implementation phase; c) improving the condition of the road network through periodic maintenance of about 5,740 km carried out by contractors (or 15% above appraisal estimate). This effort was complemented with (1) the force account programs carried out with FNCV's own resources, which on the average provided periodic maintenance to about 1,600 km per year and routine maintenance to about 4,000 km per year, (2) the Peon Caminero program, which between 1986-1990 provided labor-intensive routine maintenance to 5,600 km, and (3) a program sponsored by PNR-FNCV, which in 1990 transferred resources to local governments for routine maintenance of about 3,000 km; d) though on a very limited scale, improving cabotage and navigation safety in the Cauca Region through partial construction and rehabilitation of about 11 km (or 18% of the appraisal estimate) of channels under the waterways pilot program. Although the intended excavation levels were only achieved in one channel 0.5 km long (the Currupi channel), the remaining channels still allow small seafaring crafts to make use of protected waters instead of venturing out to the open sea at least 40% of the day (depending on coastal tides); e) equipping FNCV's maintenance fleets through acquisition of: (1) a total of 208 equipment units (or 15% above appraisal), consisting of dump trucks, lubricating and workshop trucks and four-wheel drive vehicles. Bulldozers originally included in the appraisal list were not purchased in line with the adopted policy of giving more emphasis to road maintenance rather than construction; and (2) parts for repair of about 30 graders, 8 front loaders and 5 vibratory rollers under the equipment rehabilitation program initiated in 1989. The repair program continued under the follow on project. Both programs enabled FNCV to rationalize its maintenance fleet and complete equipping its force account brigades; and f) improving the efficiency of FNCV's management practices through acquisition of (1) a radio and telecommunications equipment, and (2) about 80 micro- computers, printers and other office support equipment. These pieces of equipment were installed and put into operation in FNCV's headquarters and regional offices. 30. Institutional Aspects. With a few exceptions (para. 31), the goals under the institutional strengthening program were attained. As a result, FNCV now relies on more technical, well- established procedures and computerized information systems to manage its day-to-day operations. Development of these systems was initiated through the technical assistance for institutional efficiency improvement, and their final implementation pursued through continued participation of FNCV's staff, who building on the experience gained in their actual application  - 14 - and supported by experts financed under the Second Rural Roads Sector Project, effectively contributed to reviewing and upgrading the systems. The institutional strengthening component of the Project contributed to achieving the following results: a) developing improved planning, programming, and budgeting procedures, and implementing a data bank for rural road projects within FNCV's Planning Office (PO). The consultants upgraded the producer's surplus method used for economic justification of road subprojects by incorporating regional socio economic data and more quantitative and efficiency-based selection criteria. PO applied this method to screen and appraise all construction and deferred maintenance subprojects initiated under the follow-on Second Rural Roads Sector Project, and to carry out an ex-post evaluation of a representative sample of 25 subprojects completed under the Project. While this planning system performs well at the "project level", FNCV has yet to strengthen its planning capacity at the "network level"; b) upgrading road design practices. With the help of consultants, FNCV set realistic design standards, conveniently tailored to the various topographic conditions and future use of the roads. The terms of reference for engineering studies were also upgraded, particularly by including a preliminary evaluation phase to analyze possible alternative routes before defining the final road alignment. Though there is still room for improvement, both aspects have contributed to lowering construction costs and long-term maintenance requirements; c) streamlining contract administration and work supervision practices. Through the use of computerized systems and improved organization, FNCV cut by half the time needed to complete bidding and contracting under LCB procedures. Quality and management of works have improved since work supervision is contracted out to local consulting firms under guidelines established through the technical assistance program; d) establishing a rural roads inventory. This computerized road inventory system, which was implemented for the first time in 1988, gives physical details of all rural roads under FNCV's jurisdiction and estimates the work to be done to provide an adequate level of service; e) implementing throughout FNCV's regional offices a Maintenance Management System (MMS). The system makes use of the rural road inventory to assist in preparing annual, performance-based maintenance plans, defining maintenance standards, and monitoring force account works. The system has been adjusted to the specific needs of the cofinancing procedures; and f) implementing, though partially, an equipment management system (EMS). The inventory of equipment units has been implemented throughout FNCV's regional  - 15 - offices. The system, however, is being revised to improve control of preventive and corrective maintenance activities. 31. The technical assistance program failed to improve FNCV's accounting and internal control systems. The consultant's efforts were undermined in part by the lack of support and high turnover of staff assigned to FNCV's accounting department. As demonstrated by the Audit Reports prepared by the Office of the Comptroller General (CGR), this area remained weak throughout project implementation. The auditors found deficiencies in FNCV's accounts that although they did not mean misuse of project funds, led to qualified and adverse opinions on its Financial Statements. FNCV is undertaking specific actions to correct these deficiencies in the context of the implementation of the Second Rural Roads Sector Project. The strategy being followed includes (1) putting together a team of accountants to check the accounting archives, correct faulty accounting entries, and clear all the deficiencies pointed out by CGR, (2) strengthening FNCV's accounting department at headquarters and regional offices through appointment of experienced staff, (3) upgrading the accounting system, and (4) establishing internal control procedures to audit central and regional operations. G. Project Sustainability 32. In the short run, the sustainability of the elements of the Project is being assured because FNCV is fully committed to pursuing the institutional efficiency goals achieved under the project. In addition, the on-going Second Rural Roads Sector Project provides continuity for the investment strategy and institutional efficiency advances initiated under the project. The main objectives pursued under this follow on project are to assist FNCV in putting in place a better, precisely defined institutional framework for implementation of the decentralized decision-making policies in the rural sector, as mandated by the 1988 legislation, and in ensuring, over a realistic time frame, satisfactory deconcentration of road maintenance and investment programming responsibilities, coordination and resource mobilization between agencies at different administrative levels. This on-going project is contributing to the financing of a well balanced four-year investment and maintenance program. It also sets specific targets, with monitorable indicators of work output, for force account routine and periodic maintenance activities that are being carried out with FNCV's own resources. 33. In the long run, however, the sustainability of the project is uncertain due to the liquidation of FNCV by the end of 1995, as mandated by decree 2171 of 1992 (see Box 1). The benefits obtained through construction, improvement and maintenance of a large number of rural roads funded by the project may be lost in the future if departments and local governments do not effectively take responsibility for achieving sustainable maintenance of rural roads. Building the capacity of departments and local governments to plan, organize and deliver maintenance services will take time and demand substantial efforts in technical assistance, since most of them are very weak.  - 16 - 34. Slowly, GOC is making progress in pursuing the decentralization of the road sector, and a variety of efforts aimed at making the transition as smooth as possible are underway. FNCV is currently supporting the transfer of its know-how to departments and local governments through a series of seminars, training programs and technical assistance financed under the on- going Loan 3157-CO. Part of FNCV's staff in both regional offices and headquarters is being recruited by departmental road agencies and the Ministry of Transport. In this sense, the phasing out of FNCV does not necessarily mean that the benefits obtained through the institutional efficiency improvement program will be lost, but certainly entails high risks and the three-year time frame may prove too short for passing on to departments and municipalities FNCV's experience. On the financial side, Loan 3157-CO is also financing a study on road funding strategies, which will identify possible sources of funding for departments and local governments to establish a sound, sustainable policy for road development and expansion at the regional and local levels, consistent with the additional burden that will result from the devolution of national roads. FNCV's experience in rural roads cofinancing is also helping GOC to set the rules under which the recently established Road Cofinancing Fund will operate, especially to ensure that they give the correct incentives to prevent any shifting of priorities from maintenance to expansion of the road network. Another Bank on-going project, the Third National Roads Sector Project, is helping the Ministry of Transport to put in place a revised road functional classification and develop proper models for departments to restructure their road agencies and deliver road services under improved coordination with local governments. At time of preparation of this report it is too soon to assess the outcome of the decentralization process. H. Bank Performance and Lessons Learned 35. Preparation and Appraisal. The project's scope was appropriate for the country's needs. The SAR clearly identified the risks associated to the project (timely availability of counterpart funds, slow implementation of institution-building measures, and FNCV's inexperience with waterways construction) and provided mechanisms to deal with them. The project did not face the difficulties in obtaining adequate and timely counterpart funds experienced during the last four years of implementation of the previous Rural Road Project, because of the high priority assigned to the project by GOC rather than the specific arrangements included in the project (use of a Project Account). A new administration took office in August 1990 and imposed tighter constraints to FNCV's budget. Strict monitoring proved effective in dealing with the initially slow implementation of the measures to improve the institutional efficiency of FNCV, and helping FNCV's management to develop a strong commitment to its objectives as well. The project's successful implementation was predicated on the assumption that the recommended institutional improvements would be made in a timely manner. The original institution building schedule, however, was overly optimistic viz a viz the technical assistance's scope, its impact on work practices, and the lack of experience of FNCV in handling complex consultancy services. FNCV's relative inexperience with construction and rehabilitation of minor waterways could not be dealt with strict monitoring in the absence of a well-defined framework for implementation of this pilot component. Preparation overlooked the technical and  - 17 - organizational issues related to the execution --and sustainable maintenance-- of the waterways component. 36. Supervision. Project supervision was carried out efficiently, closely linked since 1989 with preparation and supervision of the on-going Second Rural Roads Sector. Supervision took about 57 staff weeks during the six-year implementation period from end-1986 to end-1992. Fourteen supervisory missions visited Colombia. The missions comprised transport economists and highway engineers traveling either in teams or individually. At the beginning, the project's overall performance was rated 2, on a scale 1 to 4, denoting moderate problems due to a slow start (which resulted from the enter of a new administration in August 1986). Subsequent missions rated the project in general as 1, denoting no significant problems. It was not until late 1991 that more emphasis was given to addressing FNCV's accounting deficiencies and a financial analyst incorporated to the project's supervision. 37. Bank supervision reacted swiftly to changing situations and emerging priorities. In 1988 the Bank agreed to GOC's proposal for financing road construction and improvement works in designated areas of PNR under an accelerated project implementation schedule (though the Bank judged overly ambitious the proposed project completion date, 1990). Overall, this proved to be a right decision: the project became an efficient vehicle for helping GOC achieve the overall rural transport objectives of the PNR, and the fact that most of the reformulated investments were undertaken in PNR areas did not hinder the economic yield of the project (economic rates of return of PNR-subprojects compare reasonable well with those in non-PNR areas); the project also enjoyed a high priority in GOC's investment strategy and, thus, sufficient counterpart funding. Also, key to the success of the project was the strong emphasis placed by Bank supervision missions between 1988 and 1989 on the need to complete the implementation of the maintenance management systems designed by the technical assistance. 38. The outcome of the waterways pilot program, however, could have been better had the Bank assessed more carefully the implications of continuing with the labor-intensive construction methods at an early stage of implementation. The reformulation of the project led to a substantial reduction of this component and spurred FNCV to concentrate its attention on the road components which could be implemented more expeditiously. 39. The Bank repeatedly urged DNP to recruit consultants for the Departmental Roads study, but with little success because of the complex financing arrangements and, more importantly, the lack of interest of the various institutions involved. Efforts to follow up on the study's findings were certainly hampered by the fact that GOC was designing a major institutional reform of the transport sector. At that stage GOC was not clear on how to proceed with road decentralization and what role departments would play in this process. In this context, the Bank preferred to wait and pursue this objective through other studies included in follow-on operations (Second Rural Roads Sector and Third National Roads Sector), which could be tailored to support specific financing and institutional aspects of the reform and, hence, gain the necessary commitment and support from GOC.  - 18 - 40. Though Bank missions made frequent field trips to assess the quality of on-going works carried out either by contract or by force account, the scope of these visits were necessarily limited because the works were scattered throughout extended areas and access to job sites was difficult and time-consuming due to the prevailing mountainous topographic conditions and inherent nature of rural roads (which are usually short and do not connect with each other). The use of local consultants for field supervision in rural road projects in Colombia should not be overlooked in the future to ensure that field supervision is carried out in a systematic manner. 41. Lessons Learned. The project has been a step forward towards establishing a coherent rural road strategy. The first Bank project mainly supported expansion of the rural road network. The Rural Transport Sector Project effectively contributed to reverting FNCV's trend for road construction and supporting a more balanced investment program, with emphasis in bringing up to a maintainable standard, and maintaining, a substantial portion of the rural road network. However, this is still far from establishing a sustainable rural road maintenance strategy. The lack of a clear definition of ownership, functions and responsibilities for rural road maintenance in the past is likely to have contributed greatly to the long neglect of maintenance on secondary and rural roads. The follow on Second Rural Roads Sector addresses this issue and places even more emphasis in road maintenance; building on the results achieved under the institutional efficiency improvement component of the Rural Transport Sector Project, it set specific targets with monitoreable indicators of output (i.e., performance-based maintenance programs) to be attained by FNCV. Nevertheless, a network-wide road maintenance strategy, especially routine maintenance, still depends on the commitment and capacity of local governments to deliver basic maintenance. Routine maintenance in rural roads is quite simple but requires continuity. In this context, Bank projects should aim at implementing (1) appropriate arrangements for timely delivery of routine maintenance by local governments, (2) a road maintenance strategy for a well-defined "core" rural road network, with targets to be accomplished and implementation arrangements to be used by all of the organizations involved, and (3) appropriate mechanisms for the central agency in charge of developing the strategy to monitor compliance with the programs. 42. All in all, FNCV's approach for rural road development has been quite successful and can be used in other Bank rural roads projects, especially when dealing with weak local governments who lack the capacity to manage projects. The cofinancing scheme implemented in 1990 proved to be very effective in mobilizing local participation in planning and implementation of projects and developing a strong sense of ownership in the participant communities. This partially decentralized model for project planning and implementation comes closest to the objective of gradually building self-sustaining institutions at the local level through road programs, and gives the possibility of establishing in one agency a central focal point for policy and strategy formulation and inter-agency coordination. This agency should have the capacity, and enjoy the autonomy, needed to address the overall level of funding for rural roads and the balance between development, improvement and maintenance.  - 19 - I. Borrower Performance and Lessons Learned 43. Borrower Performance. FNCV's performance has been very satisfactory. Its responsibilities grew significantly and became more complex since 1986. Nonetheless, FNCV was able to manage a comparative large investment program, designed to reach most of the poorest municipalities of Colombia. In this process, FNCV not only implemented key subsector policies and upgraded operational procedures with notable impact in the efficiency and effectiveness of its operations, but also dealt with new decentralization and co-financing policies, which incorporated local government participation in the planning, programming, budgeting, and financing of rural roads works. Furthermore, as no mechanisms were in place to effectively promote and achieve coordination among local and regional governments, other agencies and FNCV, these were developed by the latter to frame its dialogue and cofinancing of mutually agreed investment and maintenance activities. FNCV is now assisting local governments in coping with rehabilitation and periodic maintenance of their own roads. (This, however, has led to a substantial expansion of the road network served by FNCV, from about 24,500 km in 1985 to about 37,000 km by end-1992). 44. FNCV's support for the institutional efficiency improvement program grew substantially during project implementation. At the beginning of the project, it was only marginal since more priority was given to undertaking the physical investments and procuring the road equipment needed to carry out its force account program. Despite initial delays, the consultant services were deployed soon enough to allow completion of their assignments under the project and, more importantly, pursue implementation of their recommendations. 45. Lessons learned. Institution building is a long process. It demands strong commitment from a management who may not remain in place to see the realization of the long-term benefits. For this reason, it is important that technical assistance programs develop products that can be immediately applied to day-to-day operations at the early stages of the program, to show their potential benefits, and, thus, gain management's support. Continuity and participation of the agency's staff are essential. The three Bank projects helped in providing this continuity. The involvement of FNCV staff in the design and implementation of the systems and procedures introduced by the technical assistance has been key to the success of the project's institution- building component. Indeed, the only areas where the systems could not be implemented were those that lacked this support (para. 31). The project, together with Loan 3157-CO, has shown the advantage of teaming staff with seasoned, individual consultants to support full implementation of the systems and procedures developed through large technical assistance components, and even upgrade such systems on the basis of the experience obtained through their actual application. 46. At this stage, it is difficult to assess how the liquidation of FNCV will impact the development of rural roads in Colombia, especially in the poorest municipalities. Some important lessons can be drawn from the experience gained so far in the decentralization of the rural roads subsector. The deconcentration of responsibilities and cofinancing schemes that followed the 1986-1987 legislation provided an interesting set-up to promote local participation  - 20 - in rural road projects, and certainly have been helpful in preparing local governments for the devolution of roads and full decentralization of the rural road sector. However, this transition period has shown how difficult it is to mobilize departments and local governments to take responsibility for road maintenance. In outlining the decentralization process, priority should be giving to achieving sustainable maintenance of rural roads. FNCV's experience in this regard stresses the importance of setting a clear legal framework for road ownership, well-established funding mechanisms and accountability systems at both departmental and local levels, and providing adequate technical support (i.e., access to investment planning, engineering and project design, administrative skills) to enable departments and local governments to carry out projects more efficiently and deliver routine and periodic maintenance services in a coordinated manner. 47. The 1993 legislation mandates the transfer of all rural roads under FNCV to the departments. Though departments will manage the recently created Road Cofinancing Fund, counterpart funding will likely come from "negotiations" with local governments since departments lack other sources of funding. This negotiating process may weaken the framework for implementing a coherent road maintenance strategy (as happens now with FNCV) if appropriate measures are not undertaken to secure the funds required to attend at least the maintenance needs of a well-defined "core" road network. J. Bank-Borrower Relationship 48. During the project implementation period (1986-1992), the Bank-Borrower relationship was appropriate and also productive, as measured by the progress made in accomplishing implementation of the institution building components. Fruitful discussions between FNCV, DNP and the Bank contributed to better understanding the framework needed for implementation of the decentralization and cofinancing policies, which in turn led to preparation of a follow on project to effectively deal with these issues. K. Consulting Services 49. Most of the consulting services for the project were carried out by local consultant firms. The technical assistance for institutional efficiency improvement, the core of the institution building component, was the exception. This assignment was successfully undertaken by an Israeli consulting firm in joint venture with a local consulting firm. Time constraints, however, prevented the consultants from expanding the implementation of the Maintenance Management System from a pilot district to all of the regional offices. This was eventually achieved by FNCV staff conveniently supplemented by individual consultants with skills in relevant areas. Also, SENA provided hands-on-training for the administrative and workshop personnel in all aspects of equipment operations. This training encompassed workshop organization, equipment operation and management, equipment costing and replacement. The training was effective and was appreciated by FNCV personnel.  - 21 - 50. Engineering designs for road construction subprojects were contracted out to local engineering firms. More than 200 contracts were signed for this purpose. The studies included an analysis of alternative routes, final selection of the road alignment, work quantity estimates and identification of road materials sources. To keep costs reasonable, detailed soil investigation was limited to bridge designs. This resulted in frequent variations in work quantities (especially earthworks and drainage structures) during construction. FNCV is satisfied with the quality of the designs produced. Consultancy services for work supervision were provided by eight local engineering firms. To reduce costs, an issue in rural road work supervision, the roads were grouped into regional work packages, whose supervision was awarded to a single firm. Nevertheless, supervision costs were high, averaging 14% of the total cost. FNCV's regional offices were charged with overseeing both, work execution by local contractors and supervision by local consultants. L. Project Documentation and Data 51. Data needed for preparation of the PCR were generally available in Bank files, including the project preparation files, Bank supervision reports, and the quarterly progress reports, all of which were helpful. Particularly helpful was the final report prepared in 1993 by FNCV on the execution of the project, which included data on physical results, actual costs, and an ex-post evaluation of a sample of about 25 road construction and deferred maintenance subprojects.  - 22 - PART II - PROJECT REVIEW FROM BORROWER'S PERSPECTIVE (FNCV completed in 1993 a thorough evaluation of the project's execution. The report, in three volumes, provides data on the implementation of the various components, analyzes the various actions that affected such implementation, and includes an ex-post evaluation of a sample of 25 subprojects completed under the project. A translation of the introduction and chapter 7, with FNCV's conclusions and recommendations is transcribed below) A. Introduction The construction of rural roads is an important factor in the social and economic development of Colombia's depressed regions. The National Government has consequently taken a particular interest in implementation of the projects being carried out by FNCV through its various programs. The present document offers an ex-post evaluation of Loan 2668-CO, signed by FNCV and IBRD on May 27, 1986. This loan resulted in the construction and improvement nationwide of roads that the communities had been wanting for decades. This ex-post evaluation comprises a review of the aspects related to project preparation and identification, project implementation, institutional aspects related to FNCV, the administrative decentralization policy, an economic assessment of a sample of the projects carried out, and, lastly, a number of conclusions and recommendations intended to serve as lessons for similar programs. B. Conclusions and Recommendations The loan achieved the social objective identified in the appraisal report, namely the provision of support for the agricultural sector, especially for small farmers. The works constructed helped to reduce transportation costs, promoted the opening up of new areas for cultivation, increased staple crop yields, and basically contributed to an improvement in the quality of life of the inhabitants settled in the target regions. Generally speaking, the quality of the accepted works was good. The roads visited for the sample were mostly in good condition. For some of them, however, periodic or routine maintenance is essential if they are to continue to provide satisfactory service. The investment in these projects enabled the Government to intervene in other fields, such as education, health, water supply and electrification, resulting in a decline in the number of basic needs remaining unfulfilled. Another noteworthy by-product of the construction and/or improvement of the roads is the increased attention being directed toward the farmers by the technical assistance agencies as certain areas become more accessible.  - 23 - It was noted in the ex-post evaluation that the farmers are availing themselves more of credit facilities, boosting their agricultural and/or livestock activities by expanding their areas of production or introducing mechanical means of cultivation. Collection centers and farmer associations (Juntas de Acci6n Comunal y Cooperativas) have now been set up in the areas of influence of some of these projects; these make for greater coordination of activities and improved conditions of cohabitation within the area concerned, all of which favors the creation of a propitious development climate. One of the major benefits resulting from the opening up of these roads is the reduction in transportation costs as the transition is made from mule-drawn carts to motorized vehicles, which leaves the farmer with a larger profit margin. It was found that despite the fact that some roads were to have been improved, there were many cases where the people were still cut off, since the roads remained in a rudimentary state, unsurfaced, without any structural works. Consequently, they were unsuitable for the regular passage of vehicular traffic and it was necessary to continue to use animal-drawn means to move both passengers and produce. Those roads that were improved can now be used by passenger vehicles and trucks on a year-round and regular basis; this implies a reduction not only in transportation costs but also in trip lengths, enabling the farmers to get their products to market in good time. The lowering of transportation costs has enabled farmers to turn a profit and to improve their living conditions, since in most cases they use the surplus proceeds to purchase market basket staples, including items new to the local communities, such as cleaning products. The construction of new roads or rehabilitation of existing ones has made it possible to embark on other basic infrastructure projects such as electrification, one of the services most sought-after by the members of the community, since it enables them to purchase and refrigerate perishable products different from those produced locally. Electricity is also used to run fans in areas with a very hot climate. It has likewise brought to the people such means of communication as radio and television. This has helped to raise the people's self-esteem, since with permanent access to news of happenings in their own country and in the rest of the world they become more plugged in to sentiments of solidarity, acceptance and/or rejection, and can form their own opinions without feeling that they are being manipulated. In regions that are not yet electrified, access to such multiple sources of information is still not possible, and people's opinions continue to be manipulated by those members of the community who have contact with the more developed regions, and who pass on by word of mouth the news of events in Colombia and in the rest of the world, often coloring their information with their own personal views.  - 24 - Despite the fact that the loan objectives did not provide for attention to the environmental component in the road projects, and being Colombia one of the countries of the world with the greatest biodiversity, care was taken to comply with the country's environmental legislation and with sustainable development criteria. In future projects of this type, these aspects should be included in the loan conditions. In addition, the fact that there were certain "improvement" projects that required environmental impact assessments and mitigatory plans, means that the environmental protection was done in a "curative" way, i.e. after the initial execution of the road where the improvements are carried out, whereas it is recommended that the protection be "preventive". This means that in the future, an evaluation of the environmental impact of the projects should be done at the pre-investment stage, when the technical standards and economic viability criteria for the projects are formulated, and the approval of the projects made conditional upon the outcome of the environmental assessment. Furthermore, if any possible adverse impact is found later at the implementation stage, bidding for those projects should be arranged so that the execution of the environmental management plan or impact assessment are part of the contract or awarded at the same time. The results of the ex-post evaluation of the project sample show that all the roads evaluated continued to show an acceptable rate of return, although some of them turned out to be less attractive than had been hoped. To sum up, the program is complying with the objectives set, generating social and economic development in its areas of influence, to the benefit of the social economy. For successful loan implementation, it is important that unity of opinion be established among all those involved in project administration, development and/or implementation, so that what is relevant for one is also relevant for all, without losing sight of the differences existing in the different areas. Prior to project implementation, it is essential that the executing agency set up reliable information systems that can be accessed as needed. To ensure adequate supervision of the management and development of a loan, it is essential to establish prior to its implementation those supervision mechanisms that will enable the executing agency to keep track of the regularity and effectiveness of the procedures it has to follow; not only as regards execution of the works themselves, but also with respect to the related administrative procedures in the areas of contracting, procurement, accounts and payments control, debt service and in general all project-related activities for which the agency is responsible. To improve the greater reliability of the results of an ex-post evaluation, it is essential to allow adequate time to pass between completion of the actual works and the actual generation of any benefits resulting from the investment, thereby reducing margins of error when the bottom line is finally drawn.  - 25 - PART m - STATISTICAL INFORMATION 1. Related Bank Loans Proiect Name Purpose | Year J Saus J Comments I I appr~~~~~.ovedlll FNCV Rural Roads Sector (First) Rural Support FNCV's 1981-84 Program for March Completed US$33.0 million. Roads Project rural roads construction and 1981 Jun-1986 Fully disbursed. 1966-CO rehabilitation and improve FNCV's managerial performance. Rural Transport Support FNCV's 1986-92 Investment July Completed US$62 million. Sector Project and Maintenance Program and 1986 Dec-92 Fully disbursed. 2668-CO improve FNCV's institutional efficiency. Second Rural Support FNCVs 1990-1993 program, Novem. In US$55 million. As Roads Sector define road management functions, 1989 progress of end-Feb. 1994, Project implement key policies in the rural the loan is 61 % 3157-CO roads sector (decentralization to local disbursed. Closing governments). date Dec-1995. MOPT Hikhwav Sector (First) Highway Upgrade the transport system, adjust April Completed US$152.3 million. Sector Project sector policies, strengthen MOPT's 1982 Dec-1988 98% disbursed. 2121-CO highway management capacity. Second National Improve MOPT's internal efficiency, June Completed US$180.3 million. Highways implement policy reforms in the 1987 Dec-1993 As of end-Feb. 1994, Sector Project transport sector, and upgrade the 99.8% disbursed. 2829-CO condition of the highway network. Third National Reduce cost of transport, improve March In US$266 million. As Roads Sector project preparation capacity within 1992 progress of end-Feb. 1994, Project MOPT, and implement a rollingfive- 25 % disbursed. 3453-CO year investment plan. Clos.Date: Jun-1997 DRI Agriculture Sector 2nd Integrated Provided financing for construction of June Completed US$53 million. Rural Develop. about 700 km of rural roads and 1982 Jun-90 82% disbursed. Project improvement of 400 km. FNCV 2174-CO carried out the rural roads component for the Integrated Rural Development Fund (DRI).  - 26 - 2. Project Timetable Benchmark Date Date Date Identification September 1982 Preparation Mission 1984, 1985 Appraisal Mission July 1985 __July 1985 Loan Negotiations December 1985 - February 11, 1986 Board Approval March 25, 1986 - March 25, 1986 Loan Signature May 27, 1986 __May 27, 1986 Loan Effectiveness July 11, 1986 __July 11, 1986 Project Completion June 30, 1992 - December 31, 1992 Loan Closing December 31, 1992 December 31, 1992 (a) In 1987 the Bank approved an accelerated project implementation schedule which intended to complete all project works by end-1990, but the Project Completion and Loan Closing dates were notformally revised in the Loan Agreement. 3. Loan Disbursements Cumulative Estimated and Actual Disbursements (US$ million) FY 87 88 89 90 91 92 93 Appraisal 6.0 16.0 28.5 40.5 51.1 58.7 62.0 Actual 4.02(a) 20. 41' 41.*7f 53.7 59.3 60.0 62.0( Actual as % of Appraisal Estimate 67.0 127.5 146.4 132.6 116.0 102.1 100.0 (a) Includes deposit of US$4.0 million in Special Account. ' Includes deposit of US$2.0 million in Special Account. "' Includes deposit of US$3.0 million in Special Account. (d) The final disbursement was made on May, 13 1993.  - 27 - 4. Project Implementation |o ADraisal ARcvisedc J Atual A. Investment 1) Civil Works (Kmn) (Km) (Km) - Rural Roads Construction 800 1,219 1,164 - Rural Roads Deferred Maintenance (Improvements) 800 1,049 1,002 - Rural Roads Periodic Maintenance (Project financed) 5,000 4,170 5, 742 - Waterways Construction and Rehabilitation 60 7 IIb) Total Project: 6,660 6,445 7,919 2) Goods (No. Units) (No. Units) (No. Units) - Acquisition of Road Equipment (i) Dump trucks: 90 135 135 (ii) Small Bulldozers 20 - - (iii) Four Wheel Drive Vehicles 32 51 51 (iv) Lubricating Trucks 24 26 26 (v) Workshop Trucks 4 6 6 Total Road Equipment Units: 180 208 208 - Acquisition of Computers/Office Support Equipment Global Global Global - Acquisition of an Helicopter"b) I (C) l - Acquisition of Laboratory Equipmene