Togo - Highway Maintenance Project

RESTRICTED Report No. TO-b68a This report was prepared for use within the Bank and its affiaioted crganizations. ohey do not accept responsibility for itfs accurucy or t.ompleteness. The report mayT I not 6 published nor may it be quoted os representing their views. INTER-NATIONAL BANK FOR RECONSTRUCTICN AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION APPRAISAL OF A HIGHWAY MAINTENANCE PROJECT TOGO Septemnber 10, 1968 Projects Department  Currency Equivalents: Currency Unit - CFA Franc (CFAF) U.S.$1 = CFAF 247 CFAF 1 = US 0.4 CFAF 1 million US$4, 050 Fiscal Year: January 1 to December 31 Weights and Measures: Metric Metric: British/US Equivalents: 1 Kilometer (km) 0. 62 miles (mi) 1 Meter (m) = 3. 28 feet (ft) 1 Hectare (ha) = 2.47 acres (ac) 1 Liter (1) = 0. 22 imp. gallons 0. 26 gallons (US) 1 Metric Ton (m ton) = 2204 pounds (lbs) List of Abbreviations Used in the Report DPW: Directorate of Public Works PMWA: Permanent Mission in Western Africa DEG: Development Economic Group CFT: Reseau des Chemins de Fer et du Wharf du Togo FAC: Fonds d'Aide et de Cooperation FED: Fonds Europeen de Developpement  TOGO APPRAISAL OF A HIGHWAY MAINTENANCE PROJECT TABLE OF CONTENTS Page SUMARY i 1. INTRODUCTION 1 2. BACKGROUND 2 A. General 2 B. The Transport System 2 C. Transport Policy and Coordination 3 3. THE HIGHWAY SECTOR 5 A. The Highway Network 5 B. Characteristics and Growth of Road Traffic 5 C. Highway Administration 6 D. Highway Financing 7 E. Highway Construction 8 4. THE PROJECT 9 A. Description 9 B. Cost Estimates and Financing 31 C. Execution 13 5. ECONOMIC JUSTIFICATION 15 6. CONCLUSIONS AND RECOMMENDATIONS 17 This report was prepared by Messrs. Awar and Ludwig.  Table of Contents (Continued) Annex: Identification of Roads for Feasibility Studies Tables: 1. Highway Classification in 1967 2. Traffic Composition 3. Vehicle Fleet 4. Motor Fuel Consunption - 1961 - 1965 5. Expenditures for Highways 1960 - 1968 6. Total Road User Charges 7. List of Equipment to be Procured and Cost Estimate 8. Personnel Requirements 9. Cost Estimates 10. Summary Estimates of Incremental Outlays over the Project Life 11. Vehicle Operating Costs 12. Unit Savings in Vehicle Operating Costs Resulting from Improved M1aintenance Chart: Organization of the Directorate of Public Works Map : Highway Maintenance Project  TOGO APPRAISAL OF A HIGHIAY iEINTETANCE PROJECT SUMMARY i. The Government of Togo has asked the Association to help finance a project consisting of (a) a four-year program to improve highway mainte- nance; and (b) feasibility studies of about 450 Im of roads, with subsequent detailed engineering of about 300 km found to be of highest priority. This will be the first lending operation by the Bank or IDA in Togo. ii. The four-year maintenance program, to be implemented with the assistance of consultants, provides for the purchase of maintenance and shop equipment, the improvement of maintenance operations, and the training of local personnel. IDA will finance the foreign exchange component of the capital expenditures, and a small part of the local costs for consulting services, for a total of US$2.7 million. The remaining capital costs of the program amounting to US$450,ooo will be met by the Government, which, in addition, will finance all recurrent costs during the program period. iii. The present condition of the bulk of the highway network is poor and deteriorating as a result of inadequate maintenance techniques and obsolete equipment and workshop facilities. iv. The economic return on the proposed investment is estimated at a minimum of 15 percent, and under less conservative yet reasonable assump- toinscould be of the order of 50 percent. These estimates are based on anticipated savings in vehicle operating costs, and do not reflect other economic and social benefits attributable to the maintenance program. v. The preinvestment studies will be carried out by consultants. IDA will finance the foreign exchange cost of the consulting services estimated at US$1.0 million out of a total of US$1.27 million. The detailed engineering of roads found to be technically feasible and of high priority could lead to a construction project suitable for subsequent financing. vi. The Directorate of Public Works (DPW) will be responsible for the execution of the project and is competent to do so with the assistance of consultants. The consultants Development Economic Group (US) were selected to assist in implementing the maintenance program while the preinvestment studies were entrusted to Dr. Ing. Walter Ingenieurberatung (Germany) and Kez and Associates (Canada). Contracts have been negotiated with all three firms and their signature is a condition of effectiveness of the credit. vii. Contracts for maintenance equipment will be awarded by international competitive bidding. viii. The project is suitable for an IDA credit to the Government of Togo in the amount of US$3.7 million.  TOGO APPRAISAL OF A HIGHWAY MAINTETANCE PROJECT 1. INTRODUCTION 1.1 In September 1967, the Government of Togo submitted a request to IDA for assistance in financing a four-year program to improve road mainte- nance. In January 1968, the Government presented a list of secondary roads to IDA and requested that preinvestment studies of these roads be included in the project. Mr. Duncan from the Permanent Mission in Western Africa (PMWA) visited Togo in February 1968 and identified about 450 km of roads for feasibility studies out of which about 300 km of high priority roads are likely to be economically justified and suitable for subsequent detailed engineering. 1.2 The proposed credit will be the first lending operation by the Bank or IDA in Togo. Of the credit amount of US$3.7 million, US$2.7 million is allocated to the maintenance program and the remainder to the pre-invest- ment studies including detailed engineering. 1.3 The project was appraised by Messrs. Ludwig, engineer, and Awar, economist, who visited Togo in November 1967. The report includes information supplied by the Directorate of Public Works (DPW) and from the "Study on Highway Maintenance Requirements" prepared for USAID in October 1966 by the consultants Development Economic Group (DEG), a member of the Berger Group.  -2- 2. BACKOOETID A. General 2.1 Togo is located on the Bight of Benin and is bounded by Ghana on the west, Upper Volta on the north and Dahomey on the east. It covers an area of 56,000 km2, or about one-tenth that of France. It measures about 600 km from north to south, forming a 50 to 100 km wide corridor between Ghana and Dahomey. It is one of the smallest nations in Africa. 2.2 Most of Togo is flat country, except for two mountain ranges in the west and northeast. These ranges form watersheds for the Volta River Basin in the west and the Mono River in the east. Rains along the coast (about 1,000 mm per annum) fall primarily during April whereas they are heavier in the remainder part of the country from June to September (up to 1,600 mm per annum). 2.3 The population is estimated at 1.7 milUion and is growing at about 2.6 percent annually. The average density is 30 persons per km which is relatively high for West Africa. However, densities vary from 90 persons per km2 in the coastal area to 225 per km2 in the Sokode area while other areas are virtually uninhabited. The capital, Lome, had an estimated popu- lation of 85,000 in 1965; the second largest city is Sokode in the central region with a population of 16,000. 2-.4 About three-quarters of the adult population are engaged in agri- culture, generating about 50 percent of GDP and 70 percent of total exports. The main food crops produced for domestic consumption consist of yams, cassava, corn, millet, sorgum and rice. About 5 - 10 percent of Togo's total agricultural production consists of cash crops for exports, mainly coffee and cocoa and, to a lesser extent, palm products, cotton and peanuts. In recent years, the economy has beccme more diversified, and mining (phosphates), industry (textiles and breweries) and construction together now account for 15 - 20 percent of GDP. Incomes still remain low; despite a real increase in total GDP during the period 1961-1967 of about 6 percent per year, GDP per capita is less than US$100 per year. B. The Transport System a. General 2.5 Togo's transport needs are served mainly by its road network and its small railway. Inland water transport and domestic air transport are economically insignificant. A local airline, Air Togo, serves the interior once a week with a five-passenger aircraft operating from the country's single international airport at Lome. This airport is being improved to accomodate large, modern jet aircraft. A modernseaport at Lone with a .capacity of about half a million tons was completed in April 1968. A wharf located about 45 lar east of Lame serves the phosphate industry.  -3- b. Highways 2.6 The highway network consists of about 4,700 km of roads of all classifications. The present condition of the bulk of the network is poor and deteriorating as the result of an increasing maintenance backlog. Large sections, especially of district roads are closed to trucks after heavy rains (Further details are given in paragraphs 3.1 - 3.3 and 3.12.). c. Railways 2.7 There are two railway systems in Togo, of which one is private, belonging to the phosphate mine. The public railway, "Reseau des Chemins de Fer et du TSharf du Togo" (CFT), operates three meter-gauge lines, totalling about 500 km in length; the lines radiate from Lome to Anecho in the east, Blitta in the north and Palime in the west. CFT's infrastructure and rolling stock are underutilized and the system could handle double the present traffic without further investments. About two-thirds of CFT's revenues are from passenger traffic; at present the railway operations result in an annual defic3t of about CFaF 200 million or US :800,9000 equivalent. d. Ports 2.8 A new deep water port with two berths has been completed at Lome. The total investment amounts to about US$18 million equivalent, financed almost entirely by a soft loan from West Germany. The new port will replace the wharf at Lame which has been operated by CFT. Total seaborne traffic through Lome had reached a peak of 180,000 tons in 1965, but Lome's traffic declined slightly following the opening of port Cotonou in Dahomey in 1965. During the next few years Togo's seaborne traffic (excluding phosphates) is expected to fluctuate between 200,000 and 250,000 tons. As the new port at Lome will be capable of handling about 500,000 tons per year it will have ample reserve capacity for further traffic increases. A wharf at Porto Seguro, near the coastal town of Anecho in the East, is used for the export of about 1.2 million tons of phosphate per year. C. Transport Policy and Coordination 2.9 The major issue of transport policy in Togo concerns competition between the public railway system and road transport. In the past, CFT could cover the deficit arising from railway operations by net earnings from oper- ating the wharf at Lome. However, after completion of the new deep water port, CFT will lose this source of revenue and the Government will have to cover the railway deficit; the new port is expected to operate at a loss during the initial years. 2.10 Utilization of the railway cannot be expected to improve in the future. The Government has had to intervene in the past to keep railway traffic at existing levels. Railway rates are on the average CFAF 9 per ton-km while the average costs as shown in the annual report are about  -L4 - CFAF 23. Trucking rates fluctuate around an average of CFAF 16 while costs, including taxes covering the cost of the road system, are about CFAF 14. Obviously, rail transport could not compete with road transport on the basis of fully distributed costs. However, road transport rates on routes parallel to railway lines are determined by the Marketing Board for agricultural products. "Allowable rates" are fixed as a component of the total purchase price paid by the Board for products delivered in Lome. On routes with parallel rail service these "allowable rates" are identical to railway rates which are much below rail costs; as they are also below trucking costs, traffic is diverted to the railways. In addition, there is evidence that road investment and maintenance allocations are not based on economic crite- ria and tend to discriminate against road transport. Roads paralleling the railways are in particularly bad repair; it would be more economical to maintain these roads and thus to reduce the cost of road transport, which is the more efficient mode. 2,11 In future, competition between road and rail services should be based on rates which reflect economic costs. This would eventually lead to the elimination of the Government railway system, although for several years the railways could compete with rates based on short-term marginal cost as no renewals will be necessary. The Government is partly following this policy and has accepted the principle of eliminating the Lome-Palime and Lome-Anecho lines as soon as the parallel roads have been paved. Confir- mationhas been obtained during negotiations that these two lines will be abandoned upon completion of parallel roads unless the Government demon- strates to the Association that continuation of rail services is econom- ically Justified. The Government appears to be inclined to keep the Lcme- Blitta line., and even to extend it northward on the basis of a highly uncer- tain possibility of an iron ore operation in the Bassari region. The Association obtained assurances from the Government that, unless a feasi- bility study is prepared which establishes an economic justificaticn satisfactory to the Government and the Association, no action to extend the railway will be taken. 2.12 As the railways decline in importance the major issue of transport policy will be to assure efficiency of road transport as the principal mode of transport. The proposed IDA project is a beginning towards a combined program of adequate road maintenance, improvement and construction of secondary and local feeder roads. No changes are required in government policy towards the trucking industry within which competition is permitted to operate as the major determinant of traffic allocation.  -5- 3. THE HIG9IAY 3ECTOR A. The Highway Network (Table 1) 3.1 The total length of the network of national roads in Togo in 1967 was about 1,660 km. In addition to the national roads, there are about 3,000 km of district or local roads, which are graded earth roads and not passable during the rainy season. 3.2 There are about 200 lm of bituminous surfaced roads. About 1,100 km of the national roads have laterite surfacing and the greater part of these are considered all-weather roads, but many are closed to truck traffic after heavy rains. The remaining 360 km of the national roads consist of earthroads which are usable during the dry season only. 3.3 The average density of the road uYstem is about 83 km per 1,000 km2 or 2.7 km perl,000 inhabitants, which is similar to the network density in the neighboring countries of Ghana and Dahomey. Togo's major trunk road consists of a north-south connection between Lome and the border of Upper Volta via Blitta (700 km) and connections from Lome to Palime in the west (120 km) and Anecho in the east (40 km) (see map). The deficiencies of the entire system are mainly due to inadequate design standards and insufficient maintenance. B. Characteristics and Growth of Traffic 3.4 While road transport is by far the dominant form of transportation, traffic levels are still relatively low. The total annual volume is presently about 115 million ton-km of freight and 285 million passenger-km. Vehicle movements per day on most roads are generally in the range of 45-65, de- creasing to less than 20 vehicles per day in the more remote rural areas. Only a few road sections in the coastal region have traffic as high as one thousand vehicles per day. Table 2 provides information on the composition of present traffic by type of vehicle and road type. Load factors are around 65 percent due to the imbalance of commodity movements. Southbound traffic consisting of agricultural products exceeds the volume of north- bound commodities in a ratio of 3:1. In addition, road transport demand is highly seasonal, with cocoa moving between October and January; coffee, peanuts and cotton between January and April. 3.5 lWhile the consultants' study mentioned in paragraph 1.3 provides realistic estimates for present traffic, available data on past growth of road traffic are inadequate. Data on the growth of the vehicle fleet record only cumulative additions, Twhich amounted to about 4,400 units between the end of 1963, and September 1967 (Table 3). In the absence of data on vehicle retirements, it is impossible to calculate the net growth of the fleet. Foreign trade statistics for the years 1960-65 show that passenger cars accounted for the larger part of the additions to the fleet. Measured by value, passenger car imports increased by 13.1 percent on the average per year, while imports of trucks and vans increased by 6.2 percent per annum. Fuel consumption as shown in Table 4 has an increasing tendency  - 6 - to substitute larger diesel trucks for smanller gasoline powTered vehicles; however, the 5-ton truck is still the most widely used vehicle. During the period 1961-1965, total increase in consumption was 69 percent for diesel versus 2 percent for gasoline. 3.6 Future traffic has been estimated by the consultants DEG to grow at an annual rate of 10 percent. However, in view of the delays encountered in the implementation of the five-year development plan it is more realistic to expect a growth rate of 6-8 percent. The available data are not sufficient to estimate future growth of traffic on specific roads. Improvements in traffic statistics are vital as a basis of future planning for the highway sector. Assurance has been obtained, during negotiations that traffic counts and the collection of other essential traffic data such as origin- destination studie, will be undertaken in the future on a regular basis. C. Highway Administration 3.7 The Directorate of Public W4orks (DPW) in the Ministry of Public Works, Mines, Transport, Post and Telecommunications is responsible through its Road Division for the construction and maintenance of the highway system. Its organization is given in the attached Chart. 3.8 The Road Division is headed by a Togolese engineer. Apart from the Director who is a French expatriate, there are no foreign personnel in the DPi. For administrative purposes, the country is divided into four subdivisions. Each subdivision is administered by an engineer who has two assistants,one for roads and the other for buildings. Each road subdivision has a pool of maintenance equipment, workshops and stores, and is responsible for the maintenance of 300 to 600 km of national roads. 3.9 The subdivisions are divided into sectors, headed by inspectors with teams of laborers for each road section. The quality of maintenance depends mostly on the competence and skills of these inspectors. There is a shortage of personnel at this level and, as a result, maintenance suffers fraf a lack of direction in the field. 3.10 Maintenance of the national road system is carried out by the four geographical subdivisions of the DPF. Local authorities are responsible for the district roads, but due to the lack of funds maintenance of these roads is poor. 3.11 Maintenance operations consist of reshaping, regravelling, re- profiling and eliminating "washboard" surfaces and miscellaneous works such as cleaning of culverts and side ditches. One factor inhibiting mechanical maintenance on several road sections is the practice of planting trees, usually kapok or teak, on the shoulders of the road. The Forestry Department has resisted attempts frcm the DPW to have these trees removed. Standards for a right-of-way width do not exist. Assurances have been obtained during negotiations that the Government will introduce an adequate right-of-way policy.  -7- 3.12 Maintenance techniques are poor and hampered by the poor condi- tion of maintenance and workshop facilities. Maintenance funds allocated to the DPW are inadequate and, as a result, the condition of the national road system has deteriorated. The purpose of the maintenance program fi- nanced under the project is to improve and upgrade the efficiency of main- tenance operations, and thus rectify the serious deficiencies noted above. 3.13 The Equipment Sub-Division at Lame is in charge of the adminis- tration of the equipment, the central workshop and the workshops at the sub-divisional headquarters and the maintenance, overhaul and repair of the equipment of the DPW. Major equipment overhauls are carried out at the central workshop at Lome and the regional workshop at Sokode, whereas at the other two sub-divisional workshops only routine maintenance and minor repairs are carried out. The store at the central workshop at Lame supplies the other subdivision with spare parts. 3.14 The operation of the Equipment Sub-Division is not effective. The equipment is obsolete and overage, it lacks uniformity in types and necessitates therefore an unnecessarily wide range of spare parts. Main- tenance installations and shop equipment are insufficient and thus hamper effective repairs. Maintenance personnel have limited skill and ability and large scale training at all levels is required. 3.15 A USAID-financed Regional Heavy Equipment Training Center estab- lished in 1964 in Lome offers training in operation and maintenance of construction equipment. This school has the capacity to train about 50 mechanics and operators per year and partly covers the country's need for trained personnel. D. Highway Financing 3.16 Largely as a result of increased foreign aid, mainly from the Fonds d'Aide et de Cooperation (FAC) and the Fonds Europeen de Developpe- ment (FED) for new construction, total highway expenditures have risen over recent years (Table 5). The 1966/70 Five-Year Plan canls for invest- ments of CFAF 4.1 billion (US$16.5 million equivalent) of which CFAF 2.6 billion (US$10.5 million equivalent) is for new construction and paving of 330 km of national roads, and the remainder is for maintenance. Total ex- penditures in 1968 are expected to amount to CFAF 775 million (US$3.15 million equivalent) of which US$1.0 million equivalent is for maintenance. This is somewhat lower than the allocation of US$1.12 million equivalent for 1967. 3.17 Road maintenance operations of the DPW are financed from two sources: (a) an annual budget allocation; and (b) the Road Fund, into which an earmarked motor fuel tax is channeled. The allocations from the budget are available to the DPW without restriction, whereas withdrawals from the Road Fund require the consent of the Minister of Finance upon the application of the Ministry of Public Works.  - 8 - 3.18 Road users contribute towards highwiay financing by way of taxes, import duties, and fees. At present the charges levied on fuel are as follows: CFAF per liter Gasoline Diesel Road Fund tax 4.oo 3.00 Import Duties 12.50 5.00 Miseellaneous taxes L.U 2.60 20Q94 (USO 8.6) 10.60 (USO I.3) In 1966 total revenue from duties and taxes on fuel amounted to CFAF 485 million; import duties and taxes on lubricants, vehicles, tires and spare parts amounted to CFAF 308 million; revenues from administrative charges, including registration and license fees were CFAF 56 million. 3.19 In 1966 revenues from all charges associated with owning and operating road vehicles amounted to CFAF 850 million (Table 6) while total expenditures for highway maintenance and development were CFAF b60 million (Table 5). Revenues from road user charges are likely to increase by 5 percent per annum during the next few years and would be sufficient to cover future highway expenditures. However, a substantial amount of reve- nues from road user charges passes through the budget and is used for other purposes. E. Highway Construction 3.20 The investment projects included in the Five-Year Plan of about US$10.5 million equivalent are either underway or contemplated to start in the near future. FED has recently agreed to finance the reconstruction and paving of the Lome-Palime Road (120 km) with a grant of CFAF 1,035 million (US$4.2 million equivalent). Construction of this road is expected to start in late 1968. Under the plan the national road system will be expanded by about 450 km by absorbing what is now part of the district roads. This program appears to be reasonable.  -9- 4. THE PROJECT A. Description 4.1 The project consists of: (i) a four-year maintenance program providing for the purchase of maintenance and shop equipment, improvement of the efficiency of maintenance operations and training of personnel at all levels, to be implemented with the assistance of consultants; and (ii) feasibility studies for about 50 km of secondary roads and, if the justification for construction is-confirmed, the conpletion of detailed engineering and bidding documents for about 300 kn of the highest priority roads. 1. Four-Year Maintenance Program (a) Objectives 4.2 The DRI at present maintains about 2,700 km of roads. The present condition of these roads is generally poor; road beds are not properly shaped, ditches and drainage outlets are clogged, and trees have been planted on the roadway thus obstructing ditches and channels and create a safety hazard. Laterite, gravel and selected soil wearing courses are worn away, pot holes and ruts are common. Most of the roads are impassable after heavy rains. Under the present Five-Year Plan 1966/70, the DPW will maintain an increasing mileage annually and would be responsible by 1970 for a network of about 2,100 kn. 4.3 Regular and better maintenance will be carried out with equipment provided under the project. In addition, through the improvement of maintenance operations and the training of maintenance inspectors, operators and mechanics, maintenance will become more efficient and the rdad network will be gradually upgraded during the coming years so that the present entire earth road portion of about 360 km of the national road system would become surfaced with gravel or laterite. All of this work will be carried out with the assistance of consultants. (b) Equipment and Personnel Needs 4.4 Equipment needs for the maintenance organization have been studied by the US consultants DEG. They took into account the volume of traffic on the different types of roads, number of possible seasonal working days, and the output of the equipment under average working conditions. Each sub-division in the field will be reinforced with equipment; two additional work units will be created at the sub-divisions at Lome and Solkode for maintenance works in the northern and southerm sub-divisions where inmediate maintenance is required.  - 10 - 4.5 The major existing and reusable equipment is given in Table 7; it is of US or French origin. The consultants and the DPW have drawn up a list of additional maintenance equipment required which is also shown in Table 7. A spare part stock for the existing equipment amounting to CFAF 40 million (US$0.16 million equivalent) and an initial stock of parts for the new aquipment, amounting to about 10 percent of its value, will also be financed under the project. The estimated requirements at a cost of CFAF 1h8 million (US$1.7 million equivalent) are considered realistic. 4.6 Personnel requirements for the program are listed in Table 8. Training of new drivers, operators, and maintenance personnel will be carried out under supervision of consultants. Also, the USAID-financed Regional Training Center at Lome which offers training in operation and maintenance of equipment, will be used to give operators and mechanics additional training. (c) Improvement of Maintenance Operations 4.7 The structure of the Road Division is adequate for carrying out the project and the hierarchy of duties and responsibilities is correctly established. The Association concurs with the DEG's findings that no major organization changes are needed. However, technical services by consul- tants are required to supervise the execution of the project, to provide general training of local technical and administrative personnel, mechanics and operators, and to set up a cost accounting system. h.8 The DPW will be assisted in implementing the maintenance part of the project by a team of seven experts supplied by a consulting firm. The team will be composed of: 2 Equipment Experts 2 Equipment Inspectors 2 Highway Maintenance Experts 1 Cost Accountant. 4.9 The staffing proposal for the team is satisfactory; one expert will act as head of team. The seven experts will be required for varying lengths of time over a period of four years at a cost of CFAF 190 million (Us$0.75 million equivalent). A contract has been negotiated between the Government and the US consulting firm, Louis Berger; a condition of the effectiveness of the credit will be the signature of the contract between the Government and the consultants. 2. Preinvestment Studies 4.10 About 450 km of roads have been selected for feasibility studies, in agreement with the Government. These studies will include the prelimi- nary engineering and economic evaluations of these roads taking into con- sideration present and expected traffic, the agricultural potential and development of the areas concerned and the present condition of the roads.  - 11 - The following roads have been selected (see HjIap and Annex): 1. Natchamba-Kabou-Awandjelo Road 78 km 2. Lamakara-Ketao Road 35 km 3. Sokode-Kanmbole-Sotouboua Road 156 km 4. Yegueo-Pagala-Langabou Road 47 km 5. Elavagnon-Kouniohou Road 55 km 6. Ghana border-Palime Road 13 km 7. Agou-Nouatja Road 70 km Total: 57 km 4.11 The rest of the project provides for the detailed engineering of about 300 km of roads which will be selected as the highest priority from the feasibility studies mentioned above. The final list of roads for de- tailed engineering will be made by the Government in agreement with the Association. This has been confirmed during negotiations. The detailed engineering is expected to lead to a road construction project of about US$6 million in 2 to 3 years' time. B. Cost Estimates and Financing (1) Four-Year Maintenance Program 4.12 The estimated capital cost of the maintenance program is given in Table 9 and is summarized below. IDA will finance the foreign component of the program and a small amount (US$80,000) of the local expenditures for consulting services. The remaining local expenditures will be borne by the Government. Four-Year Maintenance Program Cost Estimate (Million CFAF) IDA Government Capital Expenditures Participation Contribution Total Equipment and spare parts 460 70 530 Consultants' services 124 46 190 Contingencies 60 - 60 zw E116 7a0 (US$ Million Equivalent) (2.70) (o.A5) (3.15) % 85 15 100 The recurrent expenditure during the program period, estimated at CFAF 1,456 million (US$5.90 million equivalent) will be borne by the Government.  - 12 - The cost for new equipment and spare parts is based on the consultants' estimate. As shown in Table 7, a contingency allowance of about 10 per- cent has been added for price escalation over the two-year supply period. A further contingency of 10 percent has been added to cover additional miscellaneous equipment needs which may become apparent after the new equipment has been delivered. 4.13 The average life of the equipment to be purchased is estimated at eight years. To enable the continuous renewal of existing usable equipment, the cost extimate, Table 9, shows allocations for this purpose under recurrent expenditures. The Government will finance all of the re- current expenditures, both in foreign exchange and local currency. (2) Preinvestment Studies 4.14 The estimated cost of the feasibility studies and detailed en- gineering, based on negotiated contracts with the consultants, Dr. Ing. Walter Ingenieurberatung (Germany) and Kez and Associates (Canada) is given in Table 9 and summarized below: (Million CFAF) IDA Government Participation Contribution Total Feasibility studies of 450 km 1.73 0.45 2.18 Detailed engineering of 300 km 0.74 0.22 0.96 2.47 0.67 3Z (US$ Million Equivalent) 1.00 0.27 1.27 % 79 21 100 4.15 IDA will finance the foreign exchange component, which is about 80 percent of the total cost. (3) Cost Summary 4.16 A summary of the cost estimates of the proposed project, indi- cating IDA participation and the Government's contribution, is as follows: (US$ Million Equivalent) IDA Government Participation Contribution Total (a) Four-year maintenance program 2.70 0.o5 3.15 (b) Preinvestment studies 1.00 0.27 1.27 3.70 0.72 7.42  - 13 - 4.17 Disbursements will be made for 100 percent of the CIF cost of the imported equipment and the foreign exchange costs of the consulting engineers hired both for the maintenance program and the preinvestment studies. In addition, an amount equivalent to the local subsistence allowance of the consultants engaged to implement the maintenance program will be financed out of the credit. If any surplus in the credit occurs it will be cancelled. On the assumption that the credit will be signed at the end of 1968, IDA disbursement will be as follows: Financial Year 1969 1970 1971 1972 Total Forecast IDA disbursements 2.10 1.10 0.40 0.10 3.70 (US$ Million) During negotiations, the Government has confirmed that it will meet the remaining local cost of the capital expenditures and the local cost of the preinvestment studies. C. Execution 1. Four-Year Maintenance Program 4.18 The DPW will be responsible for executing the project. The consultants' team provided for under the program will carry out the training program, draw up bidding documents for the purchase of equipment in cooperation with the DPW and assist the DPW in all matters pertaining to the program. One equipment expert, one equipment inspector and one highway maintenance expert will be stationed at Sokode to supervise main- tenance operations and equipment repairs in the northern sub-divisions of Sokode and Mango. The remaining experts will be stationed at Lome for the southern sub-divisions of Lome and Atakpame. The cost accounting expert will be stationed at the DPW's headquarters at Lome. 4.19 Equipment will be procured on the basis of international compe- titive bidding in accordance with the Bank/IDA Guidelines through separate contracts for each type or each group of similar types of equipment. The contracts will provide for delivering half of the equipment in 1969 and the remainder in 1970. Suppliers will be required to provide an adequate servicing organization and maintain a spare parts inventory. The contracts will be awarded on the basis of the lowest evaluated bids in terms of equipment purchase price as well as spare parts prices with the advantages of standardization on as few additional models as possible also being taken into account. Bidding documents will be submitted to IDA for review to assure that they conform with its procedures. This has been confirmed during negotiations.  2. Feasibility Studies and Detailed Engineering 4.20. As stated in paragraph 4.11 a number of roads totalling about 450 km have been identified for feasibility studies by the Government in agreement with IDA. The final list of roads for detailed engineering will be prepared by the Government in Agreement with IDA. These studies will be carried out by the consulting firms Dr. Ing. Wqalter Ingenieurbera- tung (Germany) and Kez and Associates (Canada). A condition of the effec- tiveness of the credit will be the signature of the contract between the Government and the consultants.  - 15 - 5. ECONOMIC JUSTIFICATION 5.1 The econony of Togo is agricultural and generates relatively modest levels of transport demand. While some gaps exist in the feeder road system, the basic road network is well planned, providing access to most urban and rural population centers. However, the cost of road trans- port is high and rising as a result of prolonged neglect of the road main- tenance. The objective of the present project is to eliminate the backlog of maintenance and to assure that roads can be adequately maintained in the future. 5.2 The various elements of the proposed maintenance program, (purchase of equipment, improvement of maintenance methods, and additional recurrent ex- penditures over and above the present average of CFAF 190 million pew' year (see Table 10))are closely interrelated and benefits must be attributed to the project as a whole. Implementation of the project would in the first instance result in a substantial reduction of vehicle operating costs from present levels. For the purpose of this analysis only these benefits have been taken into account. 5.3 Table U1 shows operating costs per vehicle-Im on different types of roads in their present state of maintenance. The consultants have esti- mated that implementation of the maintenance project would result in savings in operating costs ranging from CFAF 3.1 to 9.3 per vehicle-km., depending on the type of vehicle and the category of road (see Table 12). As an overall average, the reduction of operating costs would be in the order of 20 percent, which is similar to savings attributed to improved maintenance in other iAst African countries. 5.4 1966 is the only year for which detailed estimates are available on traffic, expressed in vehicle-km by type of vehicle and category of road (see Table 2). Assuminnian annual growth of traffic of 6 percent in 1967 and 1968, and further assuming a growth rate of 6-8 percent per annum in traffic volumes thereafter, application of estimated unit savings to expected traffic levels would yield total savings growing from about CFAF 412 million in 1968 to CFAF 657-762 million in 1976. However, reductions in vehicle operating cost will only gradually materialize as implementation of the project proceeds. It has been assumed that no benefits will be realized during the first year, that 50 percent and 75 percent of the savings as calculated above will be realized during the second and third years respectively, and that the fuIl. benefits will materialize as of the fourth year of the project, or 1972. 5.5 The equipment to be purchased is expected to have a useful life of about 8 years. Discounted over this period at a rate of 10 percent which, in other West African countries, is a reasonable measure for investment yields to be required, the present value of the benefit stream would be about CFAF 2.3 billion and that of total costs about CFAF 1.1 billion.  - 16 - Implementation of the project would therefore result in excess benefits over costs of about CFAF 1.2 billion in present values. The benefit-cost ratio is 2.1:1 and the project is therefore amply justified. (The internal rate of return is of the order of 50 percent). 5.6 For purposes of a sensitivity analysis, different and very con- servative assumptions have also been used; i.e. estimates of traffic growth and unit savings were reduced by 17 and 40 percent respectively. Under these assumptions, the project would yield a return of 15 percent. 5.7 While in this analysis reductions only in road user costs fram present levels have been taken as benefits, implementation of the project would also help avoid the further deterioration of the highway network and the resulting increases in vehicle operating costs. In addition, the project would lead to savings in capital expenditures for investments in road reconstruction and improvements, which can be postponed if the present system is well maintained. While these benefits are quantifiable in prin- ciple the necessary data are not available. This is however not a serious shortcoming as the project can well be justified without regard to these additional benefits. Feasibility and Engineering Studies 5.8 As indicated earlier, the project also includes US$1.0 million of DA credits to finance 80 percent of the estimated total cost of feasibility and engineering studies for improvement and development of about 450 Im of secondary roads, The initial feasibility study is likely to identify as eco- nomically justifiable about 300 km for which detailed engineering studies will follow. It is expected that these will consist of about 50 km of new roads and 250 km of reconstruction and improvement of existing roads, and that certain parts of the program may qualify for future international fi- nancing. 5.9 The above roads have been singled out for study by the Government primarily on the basis of the economic significance of the areas they serve. Most of these are rich agricultural regions the development of which has been hindered by inadequate investment in infrastructure, including transport facilities. Furthermore, the proposed road program seems to be consistent with the main objectives of the country's five-year development plan, parti- cularly those pertaining to increased agricultural output such as cotton, coffee and cocoa, and the development of livestock production. This has been confirmed by the Bank's PMWA which suggests the likelihood of satis- factory returns on some of these roads. It is, therefore, recommended that the proposed studies be implemented in order to determine the economic jus- tification and technical feasibility of developing the secondary road system in Togo.  - 17 - 6. CONCLUSIONS AND RECOIREMNDATIONS 6.1 The highway maintenance program under the project will improve road transport in Togo. It is soundly conceived, both technically and administratively. It will yield a satisfactory rate on the investment primarily through lower transportation costs. 6.2 The credit will also provide funds for preinvestment studies for high priority roads which, it is expected, will lead to a future construction project. 6.3 During credit negotiations, the Government agreed to (i) abandon the Lome-Palime and Lome-Anecho railway lines and not to extend the rail- way line Lome-Blitta northward unless satisfactory economic justifications can be shown (para 2.11); (ii) introduce an adequate right-of-way policy (para 3.11); and (iii) select in agreement with IDA the list of roads for detailed engineering (paras 4.l1 and 4.20). 6.4 A condition of the effectiveness of the credit will be the signature of the contracts between the Government and the consultants (paras 4.9 and 4.20). 6.5 The proposed project is suitable for an IDA credit to the Govern- ment of US$3.7 million. September 10, 1968  Annex TOGO HIGHWAY NAINTENAICE PROJECT IDENTIFICATION OF ROADS FOR FEASIBILITY STUDIES 1. & 2. Natchamba - Kabou - Awandjelo and Lamakara - Ketao (78+35 kn) This road links Natchamba, Kabou and Awandjelo and extends 35 km to the Dahomey border beyond Lamakara. Its main immediate purpose is to facilitate travel from the Bassari area through Kabou to the northerly market town of Lamakara. This east-west axis is likely to develop, in the future, into a significant inter-regional link serving the interior and supplementing the existing international coastal highway. A considerable proportion of present agricultural output is diverted to neighboring Ghana. Furthermore, the difficulty of moving output by headload provides little incentive for producers to increase production. 3. Sotouboua Loop, 156 kIm This road assumes the fonm of a horse-shoe extending eastward from Sokode and Sotouboua on the principal North-South artery to Kambole near the Dahomey frontier. The area encircled by this loop is 60 km long and 55 km wide. It is a rich agricultural area, noted for above average yields of cotton and yams, and suited for the production of peanuts. With the assistance of a German technical team, the Government is carrying out an agricultural development program to stimulate the production of cotton and other crops in the area. The northern section of the loop passes through a rich forest region which supplies the North of Togo with timber. While traffic on this road is generally light it is expected to increase considerably as the agricultural development program gets underway. The road is presently in a very poor condition resulting in total stoppage of traffic during the rainy season. 4. Yegueo - Pagala - Langabou Road, 47 km This road is located in the western part of the Central Region, running in an east-west direction. It serves an area which has a considerable agricultural potential. Its rich grazing areas are ideal for the develop- ment of stock-farming and cattle breeding. It also has important forest resources in addition to cocoa, coffee, cotton and peanut production. Togo's five-year plan envisages the development of stock-fanning and the increase of meat production to satisfy the rising urban demand. At the present, Canadian aid is being sought for the establishment of a cattle ranch at Yegueo, at the end of this road. 5. Elavagnon - Kouniohou Road, 55 km This road if constructed would serve one of the richest agricultural areas of Togo, with a population of 220,000 This area accounts for the bulk of  Annex Page 2 coffee and cocoa production. The proposed road would stimulate additional cocoa and coffee production. At the present, a considerable proportion of output is diverted to neighboring Ghana. Furthermore, the difficulty of moving agricultural output by headload provides little incentive for pro- ducers to increase production. 6. & 7. Ghana - Palime and Agou - Nuatja Roads, (13+70 km) This project involves the improvement of the road extending from the Ghana frontier to Palime (13 km) and from Agou eastward to Nuatja, another 70 km. This road will provide an important lateral link feeding the country's principal north-south artery with traffic generated in the rich coffee and cocoa producing region in the west. Like the other proposed projects, this road is also included in the country's five-year development plan, having been recommended by a SEDES transport study of 1962.  Table 1 T 0 G 0 HIGMWAY MAINTENANCE PROJECT Highway Classification - 1967 Road Class (in km) National District Total Class I (paved) 204 _ 204 Class II (laterite) 1,096 - 1,096 Class III (graded earth)Y 359 3,000 3,359 l,659 3.000 h,659 / Not passable during rainy season. Source: Directorate of Public Works. Comparison Km Roads per Km Roads per Country 1,000 km 1,000 Inhabitants Togo 83 2.7 Niger 6 2.3 Ivory Coast 100 7.7 France 1,100 14.3  Table 2 T 0 G 0 HIGHIAY MAINTENi'ICE PROJECT Traffic Composition (1966) A. Total Annual Vehicle km in nillions over Total National Road Network Type of Vehicle Road Type Passenger Pick-up Trucks General Trucks Total Paved * 1U.3 3.8 13.0 28.1 Improved 9.0 3.5 7.5 20.0 Earth 7.2 6.7 7.7 21.6 27.5 14.0 28.2 69.7 * Net of international traffic B. Percentage Distribution of Annual Vehicle km over Total Road Network Road Type Vehicle Type Paved Improved Earth Track Total Passenger 41.1 32.7 26.2 100 Pick-up trucks 27.0 25.0 48.0 100 General trucks 46.1 26.6 27.3 100 Source: DEG Study, Chapter 6  Table 3 T O G O HIGHWAY M4AINTENANCE PROJECT Vehicle Fleet Y 1963 1964 1965 1966 19672/ Passenger cars - 2,653 3,221 3,860 4,535 Vans - 1,194 1,466 1,731 1,916 Trucks 6 tons and less - 428 471 500 514 6.5 tons to 9 tons - 439 454 467 480 more than 9 tons - 220 313 403 476 Buses - 30 37 39 42 Tractors - 109 116 124 124 Trailers - 33 41 50 54 Semi-trailers - 2 4 4 4 Total 3,768 5,lo8 6,123 7,178 8,145 New Registration: - 1,340 1,015 1,055 967 / All figures are cumulative, reflecting additions to the fleet without regard to vehicle retirements as of the end of each year. #/ 1967 figures cover first three quarters ending September 30. Source: Directorate of Public Works  Table 4 T O GO HIGHIWAY MAINTNiANCE PROJECT Miotor Fuel Consumption - 1961-65 (Cubic Mfieters) Year Gasoline Index Diesel Index 1961 11,914 100 6,672 100 1962 10,957 92 6,580 99 1963 lo,948 92 7,338 110 1964 11,435 96 9,486 142 1965 12,180 102 11,249 169  TOGO HIGHWAY MAINTENANCE PROJECT Expenditures for Highways 1960 - 1968 (In CFAF Million) Current and Periodic Maint. New Constrmction Total Expenditures US$ 4l11ijn Year Budget Road Fund Total 2+3 FAC FS) USAID Total 5+6+7 Squivalent (I) (2) (3) (4) (5) (6) (7) (9) (448) (9). (lo) 1960 91.80 - 91.80 60.00 - - 60.00 151.;90 Q.cl 1?61 99.45 7.50 106,95 70.00 - - 70.00 176.95 0.7: .262 108.15 4.00 112.15 98.00 - - 98.00 210.1r5 0. 35 1963 128.21 46.47 174.68 96.00 - 34;.00 130.00 304.66 1.214 1964 130.36 15.72 14L6.08 76.00 11.00 87.00 233.03 0.95 1?55 111.01 60.90 171.91 217.00 760.00 - 977.00 1,148.91 L-.5 1966 14.0.00 45.60 185.60 14.00 260.00 - 274.00 459.60 1.85 1967 140.00 128.06 268.06 - 153.00 - 153.00 421.06 1.72 1968 140.001/ 100o.ooV 240.001/ 285.00Y/ 250.00V/ - 535.00 775.00 3.15 1/ Not yet approved 2/ Commitments Source: Directorate of Public Works  TOGO HIGHWAY MAINTENANCE PRdJECT Total Road User Charges (CFAF Million) 1960 1961 1962 1963 196t 1965 1966 A. Total Taxes on Transport Equipment and Fuel; including Road Fund Taxes Gasoline 179.2 165.0 172.3 158.5 159.3 238.9 283.1L Diesel 52.h 55.8 68.1 69.2 80.3 ILL.1 201.S Motor oil and lubricants 6.0 15.5 8.5 12.0 17.9 24.6 2A.; Tyres 2h.6 22,8 32.8 39.9 39.4 41.l Passenger cars 68.1 99.0 70.1 93.1 119.4 119.5 Tipper tracks 7.0 7.3 8.9 12.6 11.0 ll.ff General trucks and vans 58.2 50.9 46.1 52.9 68.9 7'-.