Jordan - Highway Project

Cr. 2 2 RESTRICTED Report No. PTR-64a 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 The report may not be published nor may it be quoted as representing their views.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 APPRAISAL OF A FIRST HIGHWAY PROJECT JORDAN May 21, 1971 Transportation Projects Department  Currency Equivalents: Currency Unit - Jordan Dinar (JD) US$1 = JD 0.357 (fils 357) JD 1 (fils 1,000) - US$2.80 JD 1 million - US$2.8 million Fiscal Year: January 1 - December 31 System of Weights and Measures: Metric Metric British/US 1 meter (m) = 3.28 feet (ft) 1 kilometer (km) = 0.62 miles (mi) 1 square kilometer (km2) = 0.386 square miles (sq mi) 1 hectare (ha) = 2.47 acres (ac) 1 liter (1) 0.22 British gallons (imp gal) = 0.26 US gallons (gal) 1 metric ton (m ton) = 0.98 long tons (lg ton) = 1.1 US short tons (sh ton) Abbreviations and Acronyms: US A.I.D. = United States Agency for International Development JDB = Jordan Development Board BPR = Bureau of Public Roads (United States) vpd = vehicles per day vph = vehicles per hour  JORDAN APPRAISAL OF A FIRST HIGHWAY PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS .............. .. ................. i - ii I. INTRODUCTION .................... ................... II. BACKGROUND ......................................... 1 A. General ....................................... 1 B. Transportation ................................ 2 C. Transport Planning and Coordination .... ....... 4 III. THE HIGHWAY SECTOR ...... ............... 5 A. The Highway Network ........................... 5 B. Characteristics and Growth of Road Traffic .... 6 C. Highway Administration ........................ 7 D. Highway Maintenance ........................... 8 E. Highway Engineering and Construction .... ...... 9 F. Financing ..................................... 10 IV. THE PROJECT ........................................ 10 A. General Description ........................... 10 B. Amman-Zarqa Highway ........................... 11 C. Road Maintenance Equipment .... ................ 12 D. Maintenance Consultants' Services .... ......... 12 E. Urban Transportation Study ..... ............... 12 F. Cost Estimate and Foreign Exchange Component .. 13 G. Project Financing and Execution .... ........... 14 H. Disbursements ................................. 14 V. ECONOMIC JUSTIFICATION ............................. 15 A. Amman-Zarqa Highway ............ .. ............. 15 B. Road Maintenance Equipment .......... .......... 16 VI. RECOMMENDATIONS ....................., 16 This report was prepared by Messrs. R. Mulligan (Engineer) and H. Schlechtriem (Economist) on the basis of a preappraisal mission to Jordan in October 1969, followed by an appraisal mission in April/May 1970. It was edited by Mrs. P. Valad.  Table of Contents (Continued) ANNEXES A. Bstimated Sohedule of Disbgreemuts B. Further Inf-ormation on Traffic and Zenefits TABLES 1. Total Lengths of Primary and Secondary Roads, 1965-1,969 2. M6tor Vehicle Fleet 3. Fuel Consumption, 1964-1969 4. Expenditures on National Highway Ne:tork, 1966-1970 5. Design Standards for-Project Road 6. 'Mechanical Equipment Purchases 'Proposed by the Covernment 7. Projected Average 'Daily Traffic, $969-1993 8. Motor iVehicle Operating Costs and Savings CHART Minis try of Ptiblic Works MAP J-ordan First HIghway Project  JORDAN APPRAISAL OF A FIRST HIGHWAY PROJECT SUMMARY AND CONCLUSIONS i. This report appraises the first project in the transport sector of Jordan proposed for Bank Group assistance. The project includes: con- struction of the new four-lane highway between Amman and Zarqa (18 km), including supervision by consultants; purchases of road maintenance equip- ment; technical assistance, if needed, to the Ministry of Public Works; and an urban transportation study of Amman. ii. The Amman-Zarqa road links the country's two largest population centers east of the Jordan River. After the 1967 Arab-Israeli War, the population of these two cities and of the corridor between them expanded rapidly due to a large influx of refugees from the territory west of the river. The resulting increase in traffic, coupled with unplanned ribbon development, has brought the existing road to its capacity much earlier than had been foreseen. Construction of a new highway is clearly of high priority. Investment in this new road is expected to yield a rate of re- turn of 17%. iii. In Zarqa the new road will terminate in a four-lane city street, with sufficient capacity to handle the forecast traffic. At the Amman end, the Municipality proposes a four-lane limited access extension of the new road to an intersection in the center of Amman where better traffic distribution can be obtained. However, some urban planning aspects of this proposal require further investigation. On the basis of available data, the capacity of the six-lane city street, to which the new road will be initially connected, will be reached about 1978, when additional facilities will be required. In the interim,the requisite planning studies can be made and, on the basis of their findings, construction of the most suitable solution for traffic distribution should be undertaken. iv. The mechanical equipment and the possible technical assistance included in the project will help the Government improve the standard of road maintenance in the country, at present considered as only fair. By increasing the effectiveness of personnel and equipment, improvements in maintenance services can be made without significantly increasing mainte- nance expenditures. v. The total project cost, including contingencies, is US$8.7 mil- lion, including a foreign exchange component of US$6.0 million to be fi- nanced by the Association. The award of the construction contract and the procurement of mechanical equipment will be based on international competi- tive bidding. Construction supervision and the other expert services will be carried out by consultants. The Ministry of Public Works will be respon- sible for execution of the road project.  - {i - vi. The cost of the construction element of the project is based on actual bids received April 24, 1971 and this element accounts for about 80% of the total cost. The overall rate of return for the project will be very close to the 17% calculated for the Ahten-Zarqa road. It constitutes a suitable basis fGr an IDA credit of US$6.0 million equivalent to, the Gov- ernmen-t of Jordan on the usual terms.  JORDAN APPRAISAL OF A FIRST HIGHWAY PROJECT I. INTRODUCTION 1.01 The Government of Jordan has requested a credit from the Associa- tion to finance a highway project consisting of: (a) construction of a new four-lane highway between Amman and Zarqa (18 km), including supervision by consultants; (b) purchases of road maintenance equipment identified by con- sultants; (c) technical assistance, if needed, to the Ministry of Public Works for improving administration and methods of road maintenance; and (d) an urban transportation study, by consultants, to determine the best solution for distributing traffic from the project road into downtown Am- man. 1.02 This is the Bank Group's first project in Jordan's transport sec- tor. The highway selected for construction by the Government is clearly of high priority in the sector, serving two of the largest population centers on the territories east of the Jordan River (East Bank). The need for ad- ditional road capacity in the corridor between these two centers has been accelerated by the rapid expansion of the area's population and the steep growth in traffic volumes after the 1967 Arab-Israeli War. 1.03 The United States Agency for International Development (US A.I.D.) is financing a road maintenance study by a United States consultant, Miller- Warden-Western/Frederic Harris, presently engaged on other US A.I.D.-spon- sored work in Jordan. The results of this study are expected early in 1972, and the Government assured the Association that it will implement the study's agreed findings. 1.04 This report was prepared by Messrs.. R. Mulligan (Engineer) and H. Schlechtriem (Economist) on the basis of a preappraisal mission to Jordan in October 1969, followed by an appraisal mission in April/May 1970. It was edited by Mrs. P. Valad. II. BACKGROUND A. General 2.01 The Hashemite Kingdom of Jordan, with an area of about 97,000 km2 (38,000 sq mi), is about the size of Portugal or the State of Virginia. Except for a short coastline on the Gulf of Aqaba, it is landlocked; its neighbors are Syria on the north, Iraq on the northeast, and Saudi Arabia on the east and south. A 600 km truce line separates it from the State of Israel on the west. Jordan's total population is 2.3 million, including about 900,000 refugees, and it is increasing about 3% p.a.  - 2 - 2.02 Natural resources are scarce, therefore, Jordan relies heavily on foreign trade and assistance. Only about 7% of its area is cultivated and the remainder is arid. A small part of this productive area is irrigated, but for the most part agriculture (vegetables, fruits, wheat, and olives) depends on rainfall. Two phosphate mines, a petroleum refinery, a cement plant, and a variety of small factories producing consumer goods form the industrial sector. Various sites of historical and religious interest, and, to a lesser extent, some recreational resorts are the basis of the country's tourist industry. 2.03 Supported by foreign assistance, the economy grew at almost 10% p.a. up to 1967 when per capita income reached a level of JD 93 (US$260 equivalent). The June 1967 Arab-Israeli War, which resulted in the occupa- tion by Israel of the territories west of the Jordan River (West Bank), the influx of new refugees from the West to the East Bank, and the closure of the Suez Canal, disrupted this promising development. The subsequent process of recovery and adaptation to the changed situation on the East Bank was interrupted by the September 1970 Civil War, which again brought the economy to a standstill. Before the Civil War, per capita income of the 1.4 million Jordanians living on the East Bank was about JD 75 (US$200 equivalent). Future economic development depends to a great extent on the settlement of the Arab-Israeli conflict. B. Transportation (a) General 2.04 The major centers of population and domestic production are rela- tively close to each other (Map) and, therefore, only limited domestic transportation is required. The situation is quite different for imports and exports, which generally have to be transported long distances. Jordan's only access to the sea, the port of Aqaba on an arm of the Red Sea, is some 300 km south of Amman. Since the Suez Canal has been closed, most trade with western countries has been through Beirut (Lebanon), about an equal distance north of Amman through Syria. The transport needs are, in general, adequately served by a comprehensive network of national and feeder roads and also, to a limited extent, by the railroad. Air transport is significant only for international passenger traffic. Road transport is by far the domi- nant mode for both goods and passengers. (b) Highways 2.05 At the end of 1969, Jordan's highway network comprised about 2,800 km; in 1968, the last year for which data are available, the motor vehicle fleet numbered some 25,900 units, of which 15,200 were private passenger cars and taxis. Details of the highway sector are given in Chapter 3.  -3- (c) Railroads 2.06 Jordan's railroad was built in the early years of this century as part of the Turkishl Hedjaz railroad, which connected Damascus (Syria) with Medina (Saudi Arabia) before it was partially destroyed in World War I. Now, 366 km of 1.05 m gauge track are in operation by Jordan, linking Dera'a at the Syrian border via Amman to Ras en Naqb, 70 km north of the Port of Aqaba. Traffic on the northern link was about 100,000 m tons in 1969, the major com- modity being phosphate from Ruseifa which was diverted from Aqaba to Beirut. The volume of exports that can be carried on this route is fixed by inter- national agreement because of the limited capacity of the "rack-railroad" in Lebanon. 1/ Also in 1969, about 16,000 passengers traveled on the northern link between Amman and Damascus. Traffic on the southern link fell from about 100,000 m tons in 1966 to 36,000 m tons (mainly Government goods) in 1969. Revenues from traffic declined from JD 159,000 (US$445,000) in 1966 to JD 94,000 (US$263,000) in 1969; the railroad is understood to re- ceive an annual Government subsidy of about JD 50,000 (US$140,000). 2.07 Two major railroad developments now are underway. Following a 1963 agreement between Syria, Jordan, and Saudi Arabia, the Hedjaz railroad to Medina is being rebuilt. Works on the Ma'an-Mudawwara section in Jordan were recently completed, but those on the section in Saudi Arabia are tem- porarily halted. The main purpose of this new railroad will be to handle part of the 500,000 pilgrims to and from Mecca each year during the two-month pilgrimage season. Since a new road parallel to this railroad is now under construction, the railroad will probably have serious competition as soon as it opens. The second development is the construction of a 142 km branch line from Hattiya (between Ma'an and the Saudi border) to Aqaba, for which West German financial assistance is expected. It is planned that the new line will be operated by a separate organization (the Aqaba Railroad Author- ity), and will cater mainly to phosphate exports, now carried by road from El Hassa. The project was fully prepared for implementation, but the 1967 events drastically changed the traffic expectations for this link. The Gov- ernment has decided to have consultants reassess the feasibility of the proj- ect before undertaking construction. (d) Ports and Shipping 2.08 In 1966 the Port of Aqaba reached its highest traffic -- about 600,000 m tons of exports and imports. The closure of the Suez Canal had the greatest effect on import volumes, which dropped to 160,000 m tons in 1968. The volume of exports, mainly phosphate, continued to rise slowly, largely because of the Government's policy of fostering trade with Asian countries. The port capacity of 800,000 m tons p.a. for general cargo and over 2 million m tons for phosphate, now is not fully used, and even under normal conditions would be adequate for many years. 1/ The Chemin de Fer du Liban uses rack and pioion (cog wheel) to surmount the mountain range between Damascus and Beirut.  -4- (e) Air Transport 2.09 In 1966, before the Arab-Israeli War, Jordan's two main airports, Amman and Jerusalem (90 km apart), handled a total volume of 340,000 pas- senger movements. An airport feasibility study for the entire country was carried out by the Batelle Memorial Institute (United States) in 1966/67. In view of the rapid increase in air travel and with particular regard to the requirements of tourist traffic, the study recommended, among other things, a new international airport near Jericho in the western Jordan val- ley and a small airport at Aqaba. The Jericho proposal is no longer practic- able, but the Aqaba project is under construction with British financial assistance. The events of 1967 have had little effect on traffic at Amman airport, where the volume of passenger movements continued to increase from about 137,000 in 1966 to 176,000 in 1968, and some improvements would prob- ably be justified. However, the Government now proposes to construct the first stage of a new airport 30 km south of the capital, reportedly to better accomodate two Boeing 707 aircraft which are being added to the national airline (ALIA) fleet. (f) Pipelines 2.10 Two pipelines pass through Jordan: the Iraq Petroleum Company (IPC) line and the Trans-Arabian Pipeline (TAP). The former was shut down in 1949 and abandoned in 1964. The TAP is considered as an external facil- ity and not a part of Jordan's transport system, although it is the source of crude oil for the Jordan Refinery. C. Transport Planning and Coordination 2.11 The responsibility for administering the transport system is divided between two Ministries: the Ministry of Public Works, responsible for the national road network and, recently, also for the village or feeder road network; and the Ministry of Transport responsible for railroads, Aqaba port, and aviation. Investments in transport, as in other sectors, are coordinated by the Jordan Development Board (JDB). The most recent planning document is the Seven-Year Program for Economic Development of Jordan (1964-1970), which allocated 23% of total public investments (JD 145.7 million or US$408 million) to transport. The major objectives in the trans- port sector were to promote exports by reduced transport costs on improved road, rail, and port facilities and to improve airport facilities so as not to hamper the growth of tourism. Feasibility studies have been made of the projects and it appears that most were well-conceived and economically viable; an exception might be reconstruction of the Hedjaz railroad (para. 2.07), which is religiously motivated. 2.12 The events of 1967 have changed the scene from that existing at the beginning of the plan. Some investments made in its early years cannot be utilized fully, e.g., the expansion of port facilities in Aqaba; others have been suspended, e.g., construction of the Aqaba-Safi road, which was  - 5 - halted when 25% complete because of hostilities in the area. Scill other investment plans, particularly those concerning tourism development, have had to be reconceived, and new needs have suddenly arisen, e.g., the pro- posed Amman-Zarqa road construction, which is the main element of this proj- ect. A new plan is needed to meet the requirements of the changed situation, but under present conditions the Government intends to proceed with short- term planning. 2.13 Planning in Jordan is generally adequate, but some problems exist in project evaluation and selection. The staff at a working level in the JDB are not fully capable of supervising, coordinating, and, finally, eval- uating the various studies carried out by consultants. Decisions are gen- erally made at a higher level and more on an intuitive basis than by a detailed analysis of the economic advantages and disadvantages of the pro- posal. The Government is aware of these deficiencies and has informed the Association that, among other measures, it intends to employ a qualified and experienced transport economist to improve planning and coordination of transport investments as well as to review salient transport policy issues. 2.14 There is little regulation of goods' movements in the transport market; both the railroad and the trucking industry are free to set rates and adapt market policies. The expanding road industry has attracted most of the general traffic from the railroad. So far the railroad has been able to compete successfully for the transport of phosphate; for shipments between Ruseifa and Beirut it now charges slightly less than the trucking rate of JD 1.6 per m ton. On its southern link, pending construction of the Aqaba branch line, the railroad has completely lost this traffic as a result of a boycott by the road industry, which refused to carry the phosphate from the rail terminal at Ras en Naqb to Aqaba. The railroad's rates are understood to cover nll operational costs, including track maintenance and a track depre- ciation charge. Estimates of revenues from r6ad-user taxes during the past few years covered expenditures on the network (para. 3.09). The taxation structure favors heavy vehicles, but it is unlikely that a higher taxation of trucks would have any major impact on the distribution of traffic between road and rail. III. THE HIGHWAY SECTOR A. The Highway Network 3.01 The Ministry of Public Works is responsible for Jordan's national highway system, which comprises 1,760 km of primary roads (1,460 km or 83% paved) and 1,040 km of secondary roads (690 km or 66% paved). The network has grown at about 4% p.a., with a reduction in 1967 due to the loss of the West Bank territories. Table 1 shows the changes in lengths of these categories resulting from new construction and improvements. Village or feeder roads were under the jurisdiction of the Ministry of the Interior's  Department for Municipal and Rural Affairs until 1970 when they were trans- ferred back to the Ministry. The length maintained in 1969 was 1,715 km, of which 1,110 km (65%) were paved. 3.02 In general, this highway system (Map) adequately connects all populated parts of the country. Surfaced roads lead from Amman to Aqaba and the borders of Syria and Iraq. In the seven-year plan (para. 2.11) which allocated about 50% of the highway funds to improvements of the existing network, only two new construction projects were planned: the Aqaba-Safi road to serve the Dead Sea potash development project near Safi (para. 2.12), and the Ma'an-Mudawwara road to provide a link with southern Saudi Arabia (para. 2.07). The latter was completed in 1970. The list of highway projects has since been extended and priorities have changed. Em- phasis is now on expanding the network in the Amman area and improving road connections with Syria and Iraq, and the newly-built road system in northern Saudi Arabia. 3.03 Adequate regulations are in force governing the maximum dimensions and axle loading of vehicles. Weighing stations at Ramtha on the Syrian border, the Port of Aqaba, and the phosphate mines at El Hassa and Ruseifa ensure that vehicles using the major haulage routes are not overloaded. In addition, the truckers' association (para. 3.08) polices its members to ensure that no operator deprives another of livelihood by overloading his vehicles; this control is exercised most effectively. During credit nego- tiations, the Government gave an assurance that it will continue to enforce regulations controlling the dimensions and axle loading of vehicles. B. Characteristics and Growth of Road Traffic 3.04 Jordan's motor vehicle fleet (Table 2) grew at an average annual rate of about 10%, from 12,770 vehicles in 1960 to 24,500 in 1967. Passen- ger cars increased at the comparatively high rate of 15% p.a. over this period, and represented 42% of the fleet in 1967. In 1968 there were about 25,900 vehicles in Jordan, more than two-thirds of which were registered in the Amman district. During the 1967 war, many vehicles on the West Bank were transferred to the East Bank. Statistics on the fleet for the years after 1968 are not reliable. 3.05 The Ministry of Economy regulates motor vehicle importation by issuing import licenses. These licenses have so far been granted freely and are therefore not a means of restriction; import charges amount to about 100% of the vehicle's c.i.f. value. Growth of the commercial fleet is controlled by the number of transport licences established annually by the Traffic Council, in accordance with demand. This Council comprises repre- sentatives from the Ministries of Economy, Interior, Finance, and Public Works, as well as delegates from the interest groups concerned. Licenses are transferable to allow for renewal of equipment.  3.06 The highest traffic is on the access roads to Amnan (8,000-10,000 vpd) and the main road to Syria and Lebanon (2,000-5,000 vpd). Other main roads carry less than 2,000 vpd; most secondary roads, less than 500 vpd. A small amount of traffic still passes to and from the West Bank. Traffic growth over the last five years has been irregular, and has varied widely from road to road; the general range has been about 10% to 15% p.a., roughly in line with the increase in fuel consumption (23% for gasoline and 11% for gas-oil -- Table 3). The higher growth in gasoline consumption reflects the steeper increase in the number and usage of passenger cars (para. 3.04). 3.07 Cheap and efficient public passenger transport is provided by taxis and buses, which serve all towns and major villages in Jordan as well as the main centers in neighboring countries. Fares for taxis, which are restricted by their licenses to a particular route, are about double those for buses. Bus fares are Government controlled and vary between fils 1.5 to 2.5 per km (US40.7 - 1.1 per mi). 3.08 Jordan's trucking industry consists of 20 companies with fleets of more than 10 vehicles, and a large number of small operators. A strong truckers' association controls about 40% (2,500 vehicles) of the country's truck fleet; it negotiates and enters into contracts with clients, and allocates the resulting haulage work among its members. It maintains firm control over the traffic to and from the ports of Aqaba and Beirut. Despite its rather monopolistic position, freight rates on the average (fils 6 - 9 per ton-km or US