Benin - Transport Sector Investment Program Project

Docufient of The World Bank Report No. 15126 BEN STAFF APPRAISAL REPORT REPUBLIC OF BENIN TRANSPORT SECTOR INVESTMENT PROGRAM October 1, 1996 Infrastructure Urban, Water, Energy Africa Region  CURRENCY EQUIVALENTS Currency Unit = CFAF USS1.00 = CFAF 500 FISCAL YEAR January 01 -- December 31 SYSTEM OF WEIGHTS AND MEASURES: Metric ABBREVIATIONS AND ACRONYMS ACDI Agence canadienne de developpement international (Canadian Agency for International Development AGETUR Agence d'execution des travaux urbains (Urban Works Agency) BAD Banque africaine de developpement (African Development Bank) BID Banque islamique de developpement (Islamic Development Bank) BOAD Banque ouest africaine de developpement (West Africa Development Bank) CAS Country Assistance Strategy CDEAO Communaute des etats d'Afrique de l'Ouest CFD Caisse francaise de developpement (French Bilateral Aid) CNCB Conseil national des chargeurs du Benin (National Shippers Council) CNSR Centre national de la securite routiere COBENAM Compagnie beninoise de navigation maritime (Benin Maritime Navigation Company) CPC Cellule de programmation et de coordination (Programming and Coordination Unit) CTN Conseil technique national (National Technical Council for Rural Roads) CU Circonscription urbaine DROA Direction des routes et ouvrages d'art (Roads and Works Department) DANIDA Danish International Development Assistance DMTP Direction du materiel des travaux publics (Directorate of Public Works Equipment) DTT Direction des transports terrestres (Road and Rail Transport Directorate) EAP Environmental Action Plan FED Fonds europeen de developpement (European Development Fund) GDP Produit interieur brut (Gross Domestic Product) ICB International competitive bidding IDA Agence internationale de developpement (International Development Agency) ERR Taux de rentabilite economique (Economic Rate of Return) KfW Kredit fur Wiederaufbau (German Bilateral Aid) MP Ministere du Plan (Planning Ministry) MTPT Ministere des travaux publics et du transport (Ministry of Public Works and Transport) NCB National Competitive Bidding NGO Organisation non gouvernementale (Nongovernmental Organization) NPV Valeur actuelle nette (Net Present Value) OCBN Organisation commune Benin-Niger (Benin-Niger Railway) PAC Port autonome de Cotonou (Benin Port Authority) PIM Manuel de mise en oeuvre (Program Implementation Manual) PIP Programme d'investissement public (Public Investment Program) SAL Prets a l'ajustement structurel (Structural Adjustment Lending) SERHAU-SEM Societe d'etudes regionales d'habitat et d'amenagement urbain (Regional Habitat & Urban Development Studies Bureau) SME Petites et moyennes entreprises (Small and Medium Enterprises) SOBEMAP Societe beninoise de manutention portuaire (Benin Cargo Handling Company) SROAs Services regionaux des routes et ouvrages d'art (Regional Roads and Bridges Unit) TIRP Transport Infrastructure Rehabilitation Project TSS Strategie du secteur des transports (Transport Sector Strategy)  REPUBLIC OF BENIN TRANSPORT SECTOR INVESTMENT PROGRAM STAFF APPRAISAL REPORT Table of Contents Page Nos. Credit and Project Summary .................. iii-v 1. BACKGROUND ............................................................1 A. Introduction ............................................................1 B. Macroeconomic Context ............................................................ 2 C. Development Constraints and Broad Objectives ............ ............. 3 2. TRANSPORTATION IN BENIN ........................................................... 4 A. Transport Sector Context .......................4........................ 4 B. Public and Private Stakeholders ................................................ 7 C. Lessons Learned from Bank Group and Other Donors' Involvement in the Transport Sector ............................................ 11 D. Transport Sector Issues and Strategy ........................................... 12 3. FIVE-YEAR TRANSPORT SECTOR PROGRAM ....................................... 17 A. Program Concept and Objectives ................................. 17 B. Program Description ................................. 17 C. Program Financing ................................. 19 D. Program Implementation ................................. 20 E. Components Supported by IDA Credit ................................. 21 F. Cost and Local Financing of IDA Components ............................ 25 G. Program Implementation ................................. 26 H. Procurement and Disbursement ............. .................... 31 I. Accounting, Auditing and Reporting ................................. 34 J. Supervision plan ................................. 35 4. BENEFITS, IMPACTS AND RISKS ............................ 36 A. Economic Analysis ........................ 36 B. Social and Environmental Aspects ........................ 38 C. Poverty Aspects ........................ 39 D. Program Risks ........................ 39  - 11 - 5. AGREEMENTS, CONDITIONS AND RECOMMENDATION ............. 41 A. Agreements reached before negotiations ...................................... 41 B. Conditions to be met ................................................ 42 C. Recommendation ................................................ 43 ANNEXES A. Government Strategy Letter B. Detailed Program Costs, Schedules and Indicators C. Detailed Program Description D. Environmental Impact Assessment E. Economic Analysis F. Documents in Program File MAPS IBRD 27427 Road Infrastructure IBRD 27428 Cotonou City Roads IBRD 27429 Cotonou Port IBRD 27430 1994 Road Traffic Volumes This report is based on the findings of World Bank missions consisting of Messrs. Bernard Peccoud (Highway Engineer, Leader), Grosdidier de Matons (Port Economist), Hedi Larbi (Urban Transport Specialist), S. Haligrimsson (Principal Engineer), Denise Vaudaine (Municipal Finance Specialist), Vincent Chagnaud (Road Economist), and Jean-Luc Aka-Adjo (Financial Analyst). Mr. Ian Heggie was the Lead Advisor for this project, and Messrs. Michel Loir and J. J. Raoul were the peer reviewers. Ms. Suzanne Snell provided editorial support. Ms. Farida Khan provided support for the compilation of project cost tables. Ms. Elisabeth Herczeg also assisted in the preparation of the report. Mr. Theodore Ahlers and Mrs. Maryvonne Plessis-Fraissard are the Country Director and the Technical Manager, respectively, for the operation.  - iii - REPUBLIC OF BENIN TRANSPORT SECTOR INVESTMENT PROGRAM Credit and Program Summary Borrower: Republic of Benin Beneficiaries: Ministry of Transport and Public Works (MTPT) for US$34.7 M and Port Authority of Cotonou (PAC) for US$5.3 M Poverty: The project does not include specific targeted interventions to reduce poverty. It will however have a significant impact on poverty alleviation through the reduction of transport costs, part of which would be transferred to rural farmers in higher farm-gate prices. The program will also improve access to social services, and will create construction and maintenance jobs in the private sector. Credit Amount: SDR 27.5 million (US$40.0 M equivalent) Terms: Standard IDA terms, with 40 years' maturity Onlending Terms: Two-thirds as standard commercial loan terms (7.1 percent) and one-third as equity to Port Authority. Project Description: Periodic road maintenance is the top priority item in the 1997-2001 Government Transport Program which amounts to CFA franc 247 billion. The main components of the Sector Investment Program are: (a) Paved Road Construction, Rehabilitation and Maintenance: CFA franc 134 billion for paving and CFA franc 51 billion for rehabilitation and periodic maintenance and support for restructuring of the road sector management to insure adequate maintenance; (b) Unpaved Road Rehabilitation and Maintenance: CFA franc 10.5 billion for rehabilitation and CFA franc 8.5 billion for periodic maintenance; (c) Institutional Strengthening for Road Network Management: CFA franc 4 billion for technical assistance and training; (d) Feeder Roads with CFA franc 15.5 billion for road building; (e) Port and Maritime Improvements, with CFA franc 18 billion for port  - iv - operations improvements; and (f) Airport Rehabilitation, with CFA franc 3.5 billion for critical runway rehabilitation. Of the CFA franc 247 billion required to finance the program, CFA franc 140 billion has already been pledged by donors, a further CFA franc 28 billion is currently under negotiation, and CFA franc 63 billion is projected to be secured from donors during the program period. IDA's US$40 M credit, which is included in the CFA franc 140 billion pledged (8 percent of total program) supports important Government policy commitments as well as port and road works and is allocated as follows: Port Operations and Management, US$5.7 M (13 percent of IDA Credit); Road Repair, Maintenance, Safety and Network Management, US$32.1 M (71 percent); Rural Road Rehabilitation and Management, US$3.1 M (7 percent); and Urban Road Improvements and Traffic Management, US$4.3 M (9 percent). Financing Plan: IDA: US$40.0 M Benin: US$5.2 M of which US$2.2 M by the Road Fund, US$0.4 M PAC, and US$0.3 M beneficiaries, and US$2.3 M by the National Budget. Benefits: In the port, improvements in productivity yield shipper savings in road transport cost, incurred when port congestion in Cotonou diverts traffic to Lome, and physical improvements in the port yield cost savings for cargo- handling equipment. On national, rural and urban roads, improved road surfaces yield vehicle operating cost savings. On these bases, estimated cost savings from IDA- supported port improvements yield an economic rate of return (ERR) of 250 percent and a net present value (NPV) of US$74 M. Unpaved road works to be funded under the IDA Credit (52 percent of such works in program) show a cost-weighted ERR of 103 percent and a NPV of US$67 M. Other non-quantified but no less real benefits are expected to flow from program-supported activities which promote improvements in management and planning, effective use of the five-year priority program as an investment tool, development of a community-based, demand-driven rural roads rehabilitation and maintenance strategy, better contract management and better planning based on better road data. Safety and traffic management activities will reduce the cost of traffic accidents, in terms of human life and productivity and damage to vehicles.  - v - Risks: Given that the program has been designed to build on existing positive initiatives and achievements in the sector, IDA component risks are limited to new and innovative activities introduced under the IDA components. These are: (a) inadequate replenishment of Road Fund - ftnding sources to be diversified through road tolls, return of authority for direct collection of funds to Road Fund staff, and gradual reduction of general budget support are measures taken to reduce the likelihood of this risk; (b) slow restructuring of DROA - restructuring has already been accepted and assimilated by DROA staff and has led the design of the reorganization process; (c) involvement of local communities and NGOs - mobilization and effectiveness of local communities will be increased through the support of international NGOs under the close supervision of IDA; and (d) continuous adherence of donors to the priority program - donors agreed on the Transport Sector Strategy and donor round table meeting will be held every other year. Maps: IBRD 27427 Road Infrastructure IBRD 27428 Cotonou City Roads IBRD 27429 Cotonou Port IBRD 27430 1994 Road Traffic Volumes Project ID No: BJ-PA-1 17   1. BACKGROUND A. INTRODUCTION 1.1 This is the first time that an integrated sector-wide investment approach has been adopted for the sustainable development of a sector in Benin. IDA's Credit together with pledges from other donors, would support implementation of the 1996- 2000 Transport Sector Priority Investment Program (the program) developed as part of the Transport Sector Strategy. The sector approach: * covers all the subsectors which still rely on Government financing or guarantees; * makes optimal use of resources in order to achieve a sustainable equilibrium between infrastructure maintenance and conventional capital investment, including rehabilitation and network expansion;