Cameroon - Highway Project

RESTRICTED Report No. P-776 fILE COPY This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED LOAN AND CREDIT TO THE FEDERAL REPUBLIC OF CAMEROON FOR A ROAD PROJECT January 29, 1970  IWTERNATIOIAL RAi TK FOR EC02STr%TJCTI0IT ^41TD DEVELOPMENT IITIEP.T1O f T., pDEVELOP, T;i"T .XSS0CXA..Tl.ON REPORT AND RECCi,(,,EfDATYON OF THE FPREWSIDE'2 TO THE EXECUTIVE DIRECTORS Oil A PROIPO,ED ILOAIN AMrD CRIEDItT TO TIE FEDERAL RKPU3 TUJ(C OF Cj,,C,}ROOI? FOXi A,. R0, PROJ3cT 1. I submit the follouring report and recomncndation on a proposed loan and credit in anl amount in various eurrencierc equivalent to US$12.0 million and US$7.0 million respectively to the Federal Republic of Cameroon to assist in financing a road project. PART I - HISTORICEL 2. The Governnent of Cameroon has requested the assistncee of the Bank and the Association in fiu=ncing a road project. In 1964 the Bank madc a US$200,000 technical assistanice grant to Camoroon for a feasibility study of the N'Gaoundere-Ga.oua road in northern Cameroon. This was followed in 1968 by a $550,000 engineering, credit for the detailed enginecring of thi.s road and of the Tilko-Victoria road in We-ot Cameroon. These studies have now been completed. 3. The proposed. projOct, which Invrolves the improvement of these tiwo roads and feasibility rnd engineering stut.i&V for two other roads w,a3 ap- praised in March 1969, with a follow-up visit bein!v made in October. Negotiations with a .elegction led by 1Mr. N. A. IMiouliom, Secretetyt General of the Ministry of Finance, were completed in Washington on Docember 18, 1969. 4. The follouing is a sum-mary of Bank loans and IDA credits to Cameroon as of December 31, 1969: Loan or Credit Amount (US$ million) Number Year Borrower Purpose Bank IDA Undishurzed 100 CM 1967 Cameroon CAMDEV - 11.0 5.7 490 CM 1967 CAMDEV CAMDEV 7.0 - 6.9 S3CM 1968 Cameroon Roads - o.6 0.2 593 CM 1969 SoPAyIE Oil Palm 7.9 - 7.8 604 CM 1969 SNEC Water Supply 5.0 - 4.9 161 CM* 1969 Cameroon Education - 10.5 10.5 Total now held br Bank and IDA 19.9 22.1 Total undisbursed 19.6 16.4 36.0 * Not yet effective.  -2- Disbursements for the CAMDEV Project are inevitably slow because of the long period required to complete it. The IDA credit is being disbursed before the Bank loan. 5, The feasibility studies included in the present project my lecA to requests to the Bank Group to finance the construction of the correspond- ing roads. The Bank has just appraised a railwa.y project and is discussing agricultural and po-ts projects. PART II - DESCRIPTION OF PROPOSED FINAINCING 6, The ProJect Purpose: Improvement and engineering supervision of N'Gaoundere-Garoua road (273 km) and Tiko-Viotoria road, (22 km). Engineering study and construction of N'Gaoundere by-pass (4 km). Feasibility and detailed engineering studies of Garoua-Mora road (254 km) ctd Douala-Pont du Nkam road (180 km). Estimated Return: N'Gaoundere-Garoua road: 13 per cent Tiko-Victoria road: 14 per cent 7. The Bank Loan Borrower: Federal Republic of Cameroon Amount: US$ 12.0 million in various currencies Amortization: In 30 years vith a 1.0 year period of grace, through semi-annual installments beginning June 1, 1980 and ending June 1, 2000 Interest Rate: 7 per cent Commitment Charge: 3/4 of one per cent 8. The IDA Credit Borrower: Federal Republic of Cameroon Amount: US$ 7.0 million equivalent in various currencies Amortization: In 50 years beginning June 1, 1980 end ending December 1, 2019 through semi-annual installment.s of one-half of one percent from June 1, 1980 through December 1i 1989 end of one and one-half par cent from June 1, 1990 through December 1, 2019. Service Charge: 3/4 of one per cent  PART III - THE PROJECT 9. The resort 'ADDraisal of the First Highway Project - Cameroon" (PTR33a) is attached. Cameroon's transport system consists of about 630 kilometers of railway-s and 20C,00 kilometers of roads of which only 8,000 kilometers are regularly maintained. The Benoue river is navigable about three months in the year. The Government is givina high priority to transport develonment: the second five-year plan includes investments for improved lin:s with thie sea both to incrcase cornDetitiveness of exports and to intezrate the regions into the national economr. The creation of a new. Transcameroon rail/road route is the Principal manifestation of this Dolicy. 'Fnis involves exDanding the port of i)ouala, increasing the capacity of the railway line from Douala to Yaounde. constructinz a railway from Yaounde to lW'Gaoundere and improving the roads from U'Gaoundere through Garoua and Mora and to Fort Foureau on the Lrontier with Chad. In addition to Bank and IDA assistance, the Government is receivina funds from the United States, France, the Federal ReDublic of Germany, the European Develonment Fund and the Euronean Investment Bank for these projects, and the Government is also making a substantial budgetary contribution. 10. The completion of the Transcarcroon route will also assist the economic develonment of the wider Chad basin area, including the Fort Lamy zone in Cnad. A new road linking Moundou, in that country, directly to xq'Gaoundere is under discussion. 11. The Governvment is also imDroving the historically inadequate trans- nort links with West Cameroon; The road. from Douala to Tiko has recently been rebuilt with French financing, and the oresent project would extend a hirh standard paved route through to Victoria. The Government also wishes to develop the heavily used route from Docoala to Nkongsamba and the Nkam rai.lry in the densely nopulated agricultural area of the Bamileke, as well as other inter-regional links. 12. The Federal Ministry of Planming and Development has overall resnonsibility for tranr,ort olanninfr. Ti'he administration of road transoort is the responsibility of the Departments of Public Works in East and West Cameroon and no single entity is resn)onsible for overall coordination of transnort nolicies. The G.overnment intends to imnrove transport coordina- tion and transport planning services and to strenrrthen the Departments of Public Works. and will exchange views with the Bank about these matters. 13. The N'Gaoundere-Garoua road will connect the currently isolated northern regions of Cameroon and southwestern Chad with the future railway to N'Gaoundere. T'he nroject would imorove the realignment of the existing road and the current low standard gravel 3urface would be upgraded to bituminous nravement, oermitting all-weather transDort and reducing transport costs. Traffic is nxpected to grow rapid ly following the imorovement of thtc road. Tte projetrct is to be completed durinLg 1973, shortly before  the new railway will be opened. The estiomated internal rate of return to the economy is 13 per cent. The project also includes the feasibiliLy and engineering studies of the Garoua Mora road. This road iG the northern extension of the N'Gaoundere-Garoua road, and will be instrumental itl ensuring the growth in traffic on it. 14. The Tiko-Victoria road will link Victoria, tile main port and communication centre in West Cameroon, to the existing Tiko-Douala road. The construction of a stronger foundation, as well as the widening and realignment of the road will increase its capacity. The estimated return on this nart of the nroject is lb per cent. 15. The Douala-Nlcongsamba-Pont du lNkam road carries heavy traffic and the existing pavement is now breaking up. The proposed studies would assess the economic justification and determine the best technical solution for the improvement of that roadl. 16. The overall cost of construction, engineering supervision and feasibility and engineering studies is estimated to be equivalent to about US$ 23.7 million, including contingencies. The Government will contribute US$ 6.1 million and the Bank and IDA about US$ 17.6 million, or approximately 7