Colombia - Second National Highways Sector Project

 Second national highways sector project Report No: ; Type: Report/Evaluation Memorandum ; Country: Colombia; Region: Latin America And Caribbean; Sector: Highways; Major Sector: Transportation; ProjectID: P006810 December 29, 1995 Colombia: Second National Highways Sector Project (Loan 2829-CO) The Implementation Completion Report (ICR) on the Colombia Second National Highways Sector project (Loan 2829-CO, approved in FY88) was prepared by the Latin America and the Caribbean Regional Office, with the Borrower comments incorporated in the body of the report. The Loan for US$180.3 million was approved on October 8, 1987, and closed—fully disbursed—on December 31, 1993, as scheduled. The project objective was to assist the Borrower in the execution of its 1987-1993 Transport Master Plan (TMP) by: (a) financing the execution of technically and economically feasible subprojects; and (b) providing technical assistance in sector organization and policy formulation, resource allocation, and improving internal efficiency at the Ministry of Public Works and Transport (MOPT). The project financed about 11 percent of the TMP; the targets were rehabilitation of 800 kms of paved roads and 3000 kms of gravel roads, paving of 1000 kms of gravel roads, and periodic maintenance of 2400 kms of paved roads. In addition the project included safety improvements, acquisition of road maintenance equipment, and technical assistance. The targets for rehabilitating and maintaining roads were partially met; the deficit in paving gravel roads was offset by achievements in gravel road rehabilitation and periodic maintenance. There were weaknesses in contract administration, engineering design, cost estimation, and contractor capacity. The economic rate of return of the completed project is half of what was calculated during appraisal, but still a solid 23 percent. Under this loan's institutional component, the MOPT's internal efficiency was improved, but managerial and budgetary processes remain cumbersome, and little was accomplished in the area of training. Even though the Bank has been involved in the Colombian road sector for forty years, in the past the emphasis was on physical projects and institutional and capacity development were neglected. This project represents a new start with a distinct emphasis on broad-based institutional development. The Bank contributed to sectoral reorganization initiated independently by the Borrower during the first sector loan. The new Transport Law provided the legal framework for the redistribution of sectoral responsibilities between the Central Government, Departments and Municipalities. Many of the 44 covenants were not complied with, and the Transport Master Plan, that was to serve as the basis for improved resource allocation, was not completed. But the Government made headway in improving cost-recovery, cost allocation, and regulations in the road transport sector. The consequences and the sustainability of these large institutional changes are not yet clear. The ICR rates the project outcome as marginally satisfactory, its sustainability as uncertain, its institutional development as negligible, and Bank performance as satisfactory. The Operations Evaluation Department (OED) concurs with the project outcome and sustainability ratings, but rates institutional development as moderate because, albeit slow, it was comprehensive; OED rates the Bank's performance as unsatisfactory mostly because of shortcomings in project design and project preparation which led to a large number of covenants. The main lesson learned is that institutional change is a lengthy and complicated undertaking which cannot be micromanaged by covenants. Another lesson of long-term importance is the need to develop indicators to gauge the performance of the road administration and sector loans. The ICR is good. It discusses all aspects of the project in a comprehensive manner. A more thorough and disinterested discussion on the value of covenants would have been pertinent. No audit is planned.