Liberia - Third Highway Project

Report No. 805a-LBR Appraisal of a FILE COPY Third Highway Project Liberia August 5, 1975 Western Africa Projects Department Highways Division Not for Public Use Document of the International Bank for Reconstruction and Development International Development Association This report was prepared tor official use only by the Bank Croup. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility tor the accuracy or completeness of the report.  Currency Equivalents US$1.00 = Lib$1.00 Fiscal Year January 1 - December 31 System of Weights and Measures: British/US British/US Metric 1 foot (ft) = 0.305 meter (m) 1 mile (mi) = 1.61 kilometers (km) 2 1 square mile (sq mi) = 2.59 square kilometers (km ) 1 ton (long ton) = 1.016 metric tons (m tons) Abbreviations and Acronyms ADB - African Development Bank MCIT - Ministry of Commerce, Industry & Transportation MNW - Ministry of Public Works NPA - National Port Authority SAUTI - Sauti Overseas (consultants, Italy) UNDP - United Nations Development Programme USAID - United States Agency for International Development vpd - vehicles per day  - LIBERIA APPRAISAL OF A THIRD HIGHWAY PROJECT Table of Contents Page No. SUMMARY .................... i-iii 1. INTRODUCTION ........................................ 1 2. THE TRANSPORT SECTOR ...2 A. Economic Setting ............................... 2 B. The Transport System. 3 C. Transport Planning and Coordination .4 3. HIGHWAYS. .......... 5 A. The Road Network ............................... 5 B. Characteristics and Growth of Road Traffic.. 6 C. The Road Transport Industry. . . 7 D. Administration .................... . ........ 8 E. Financing. 8 F. Engineering and Construction . . . 9 G. Maintenance .................................... 11 4. THE PROJECT ..................................... 11 A. Description .................................... 11 B. Cost Estimates ................................. 17 C. Execution ...................................... 19 D. Financing and Disbursements .. .................. 20 5. ECONOMIC EVALUATION ................................. 21 A. General ........................................ 21 B. Construction of the Mesurado River Bridge and Improvement of UN Drive . ...................... 22 C. Improvement of the Totota-Ganta Road .... ....... 23 D. Construction of Feeder Roads ..... .............. 24 6. AGREEMENTS REACHED AND RECOMMENDATION ..... .......... 24 This report has been prepared by Messrs. P. Gyamfi (Economist/Engineer) and E. Fellinghauer (Engineer), and Ms. A. Galenson (Economist) following an appraisal mission in November/December 1974.  Table of Contents (Continued) TABLES 1. Five-Year Highway M-laintenance and Development Program (1973-77) 2. Development of the Highway Network, 1961-74 3. Vehicle Registration, 1968-73 4. Government Expenditures for Highways, 1970-74 5. Revenues from Road User Charges, 1970-74 6. Design Standards for Project Roads and Bridge 7. List of Equipment to be Procured and Cost Estimate 8. Estimated Annual Operating Costs for Feeder Road Unit 9. Estimated Schedule of Disbursements 10. Income Levels of Beneficiaries of Highway Projects 11. Sensitivity Analysis of Economic Returns 12. Selected Import Duties, Taxes, and Registration Fees 13. Total Consumption of Petroleum Products, 1969-74 14. Typical Road Construction and Maintenance Costs ANNEXES 1. Outline Terms of Reference for Experts to be attached to Planning Division of MPW 2. Details of Economic Analysis MAPS Third Highway Project - Main Road Network (10292 R1) Monrovia - Port Access Roads and Mount Coffee Dam Road (10291 R1)  LIBERIA APPRAISAL OF A THIRD HIGHWAY PROJECT SUMMARY i. Liberia's economy, based largely on the exploitation of natural resources such as iron ore, rubber, and timber, has grown rapidly in recent years, but that growth has had little developmental impact on the rural population. The Government's present policy is to expand the economic base by improving agriculture. As part of this strategy, it is placing considerable emphasis on the improvement of transport facilities. Since roads are the predominant mode of transport for both passengers and non- enclave goods, and since the network is far from adequate, the Government prepared in 1972 a comprehensive Five-Year Road Maintenance and Development Program (1973-77), and convened an aid coordination meeting of bilateral and multilateral donors to seek financing for its implementation. The Bank Group is making two important contributions to this program through the existing Second Highway Project and a third project now proposed. ii. The Second Highway Project which covers the highest priority items of the Five-Year Program, includes: (i) implementation of a four-year road maintenance program; (ii) upgrading the Monrovia Bypass (8.4 mi); and (iii) provision of consulting services for preinvestment studies and for a study of the domestic construction industry. Implementation of the maintenance program is being retarded by delays in equipment procurement and shortage of local funds. Construction work on the Monrovia Bypass is well underway. The preinvestment studies have been satisfactorily completed and form the basis for construction works under the present project. iii. The Third Highway Project covers the remaining high priority construction items in the Five-Year Road Program, and also initiates Bank Group assistance in the important area of feeder road development. The project consists of: (i) construction of the Mesurado River Bridge and the UN Drive (5.4 mi) in Monrovia; (ii) construction and realignment of the Totota-Ganta road (83 mi); (iii) construction of feeder roads included in the IDA-financed Lofa County Agricultural Development Project; (iv) tech- nical assistance to the Planning Division of the Ministry of Public Works (}SW); and (v) consulting services for: (a) supervision of construction; (b) feasibility studies for improvement of the roads Ganta-Tapeta (65 mi) and Ganta-Sanniquellie (25 mi); (c) detailed engineering for the Mount Coffee Dam road (15 mi); and (d) a study of Monrovia's urban development and transport system. Total project costs, excluding taxes, are estimated at about US$46.7 million equivalent, of which about US$33.5 million (72%) in foreign costs, and about US$13.2 million equivalent in local costs. The proposed Loan will finance US$27.5 million of the foreign costs (60% of total costs net of taxes); the African Development Bank (ADB) is expected to finance the remaining US$6 million, and the Government will meet all the local costs.  - ii - iv. MPW will be responsible for execution of the project, with assis- tance provided for the tasks in item (v) above by consultants to be selected in agreement with and on terms and conditions acceptable to the Bank. Construction works are expected to start in early 1976, and to take about three years to complete. Construction contracts will be awarded following international competitive bidding in accordance with Bank guidelines. Separate bids will be called for UN Drive, the bridge, and Totota-Ganta road which will be divided into two sections Totota-Gbarnga and Gbarnga- Ganta, the latter to be financed by the ADB loan. Supervision of con- struction of the Totota-Ganta road will be by the same consultants to be financed by the Bank and ADB in proportion to the cost of their respective sections of the road. v. The proposed feeder road works will be carried out by MPW force account by an independently-financed and managed feeder road unit to be created within the Ministry's Construction Bureau. The proposed Loan will finance the purchase of equipment, spare parts, and materials for the unit, and also the foreign exchange portion of unit operating costs, with provision for funding foreign exchange component of the Team Leader's services if not covered by bilateral assistance. Equipment, spare parts, and materials will be procured on the basis of international competitive bidding in accordance with Bank guidelines. Details of arrangements for execution of the feeder road program (including creation and staffing of the unit, establishment of a revolving fund, and amount of local cost contributions) have been agreed with the Government. vi. The technical assistance to MPW's newly created Planning Division will continue and consolidate the much-needed institution-building effort in sectoral management and highway planning started under the ongoing Second Highway Project. It will improve the capacity of the responsible agencies to evaluate and plan transport investments, and to oversee the various transport industries. vii. The urban study of Monrovia will investigate and analyze urban development policies, and make recommendations for an efficient transport system in the capital city, with due regard to the issue of future land use and its interaction with transport. Because of the important connection between a sound urban transport policy and the proposed civil works on the Mesurado River Bridge and UN Drive, the Bank will assist the Government in preparing terms of reference for the urban study, and consultants for the study will be appointed by January 1, 1976. viii. The direct beneficiaries of the project represent a broad range in terms of income distribution. Construction of the Mesurado River Bridge and improvement of UN Drive will not only ease the present urban congestion, but will also improve access to Monrovia port. Construction of the Totota- Ganta road and the Lofa County feeder roads will provide or improve key sections of the rural transport system, thus assuring better access to market centers combined with increased earning possibilities for the rural population in the service areas of the project roads. In analyzing the  - iii - justification for the project investments, efficiency prices of invest- ments and benefits have been used; on the basis of the quantifiable bene- fits, principally reduced transport costs for existing roads, the proposed investments can be expected to yield an overall economic return of.about 23%. Individual returns for the three major project items are: bridge construction, about 16%; improvement of UN Drive, about 36%; construction of Totota-Ganta road, about 38%. ix. The proposed project is suitable for a Loan of US$27.5 million to the Government of Liberia. An appropriate Loan term would be 25 years including a 5-year grace period.   LIBERIA APPRAISAL OF A THIRD HIGHWAY PROJECT 1. INTRODUCTION 1.01 The Government of Liberia is following a policy to expand the base for the country's economic development, now dependent largely on the enclave mining sector, to agriculture; as part of this strategy, it is placing considerable emphasis on the improvement of transport facili- ties. In 1972, the Government prepared a Five-Year Road Maintenance and Development Program, and in October of that year, convened an aid coordi- nation meeting to seek financing for the program. The Bank Group is making two important contributions to this road development program through its ongoing Second Highway Project (Loan 907/Credit 395-LBR, US$5.6 million, June 1973), and through the Third Highway Project now proposed (paras. 1,04-1.06). 1.02 The proposed project will be the fourth Bank Group operation in the transport sector. A (First) Highway Project (Loan 368-LBR, US$3.25 million, 1964) consisted of construction of about 62 mi of new roads, pro- curement of road maintenance equipment and spare parts, and construction of workshop facilities. Inadequate engineering by the Department of Public Works and Utilities necessitated re-design of the roads, with a resulting two-year delay in project implementation and a substantial cost overrun requiring a supplementary Loan of US$1 million in 1965. The entire proj- ect was satisfactorily completed and the Loan fully disbursed by June 30, 1969. 1.03 A second Loan for transport (617-LBR, US$3.6 million, 1969) helped finance a project for dredging the Port of Monrovia, and for management assistance to the National Port Authority. The project has been completed satisfactorily, and the remaining funds in the Loan Account (about US$330,000) are being used to finance a comprehensive port development study now being carried out by consultants (para 2.06). 1.04 The ongoing Second Highway Project consists of: (i) a four-year road maintenance program; (ii) upgrading of the Monrovia Bypass; (iii) feasibility studies and detailed engineering for about 185 mi of roads; and (iv.) a study of the domestic construction industry. Bank/IDA lending is financing US$5.6 million of the foreign exchange costs of the project; the remainder is being met by a USAID loan (US$4.4 million) for procurement and repair of maintenance equipment, and by a grant from the Federal Repub- lic of Germany (US$1.9 million equivalent) for training of highway per- sonnel. 1.05 Implementation of the maintenance program is progressing only slowly, due partly to delays in equipment procurement, and partly to the Government's failure to provide adequate local funds. The Bank/IDA has  -2- drawn the Government's attention to this latter problem. Discussions have been held on this issue, and the Government has submitted a revised funding program for Bank review. Timely execution of the maintenance program was further threatened by a US$4.0 million cost overrun on the USAID-financed equipment, but that agency has recently confirmed to the Government that it will provide the required supplementary financing; delivery of the equipment will however be delayed by about one year. In the meantime, the Government has started rehabilitation of its existing equipment to permit the start of maintenance operations. The construction contract for the Monrovia Bypass has been awarded to an Italian firm, and work is well underway. The engi- neering studies have served as the basis for construction items included in the proposed third project. Draft terms of reference for the construction industry study have been prepared, and are being reviewed by the Government. 1.06 The proposed Third Highway Project covers the remaining high prior- ity items of the Five-Year Road Program, and initiates Bank Group assistance in the important area of feeder road development. The project consists of: (i) construction of Mesurado River Bridge and the UN Drive (5.4 mi) in Monrovia, the Totota-Ganta road (83 mi), and construction of feeder roads included in the IDA-financed Lofa County Agricultural Development Project; (ii) technical assistance to NPW's Planning Division; (iii) preinvestment studies for about 90 mi of secondary roads; and (iv) a study of Monrovia's urban development and transport system. Total project costs, excluding taxes, are estimated at about US$46.7 million equivalent, including foreign costs of about US$33.5 million (72%) and local costs of about US$13.2 mil- lion equivalent. The proposed project is a large one considering Liberia's population, but is well justified because it is intended to compensate for past shortcomings in highway development, and represents the bulk of Government investments in the mode over the next five years (para. 2.10). The proposed Loan will finance US$27.5 million of the foreign costs of the project, and the African Development Bank (ADB) is expected to finance the remaining US$6 million; the Government will meet all the local costs. 1.07 This report is based on studies carried out by consultants Stanley (US) and Ove Arup (UK), and on the findings of an appraisal mission consist- ing of Messrs. P. Gyamfi (Economist/Engineer) and E. Fellinghauer (Engineer), and Ms. A. Galenson (Economist) which visited Liberia in November/December 1974. 2. THE TRANSPORT SECTOR A. Economic Setting 2.01 Liberia, with an area of about 43,000 sq mi, has a generally flat terrain with no major topographic obstacles to transport. The total popula- tion, estimated at about 1.5 million in 1974, is unevenly distributed, with well over 60% occupying about one-third of the land area in the central regions of the country, and almost 15% in Monrovia alone (population about 220,000). Per capita Gross Domestic product increased over the last decade  -3- at about 3% p.a. to about US$260 in 1973, which is high compared to most African countries. This growth was however based mostly in the enclave mining centers and was not accompanied by much development elsewhere; the economy therefore suffers from a dichotomy between the prosperous modern sector and the underdeveloped subsistence sector. 2.02 Past Government policy has encouraged large-scale (mostly foreign) private investment in iron-mining and rubber, but these investments have created few jobs for Liberians, and have stimulated only a few industries, since products are not processed locally. Recent Government plans, however, accord high priority to rural and agricultural development as a base for future economic growth, and as a means to reduce the differential between the enclave and subsistence sectors. The Bank Group is helping the Gov- ernment realize this goal through an agricultural development project (Credit 306-LBR, US$1.2 million, 1972) and the Lofa County Agricultural Development Project (Credit 577-LBR Us$6 Million, 1975). The proposed project will con- tribute to this development effort through its component for feeder roads, as well as through the planned improvement of the Totota-Ganta road which is part of the major trunk route connecting the country's most populated rural areas to the capital city of Monrovia. B. The Transport System 2.03 Liberia's transport system consists of about 4,500 mi of roads, 300 mi of privately owned railways, four seaports, and five airports of which two provide international service. Roads are the predominant mode of transport for both passengers and non-enclave goods. Coastal shipping is insignificant. Roads 2.04 Details of the highway system and its administration, as well as the characteristics of the road transport industry, are given in Chapter 3. Railways 2.05 The railways are all owned and operated by four mining concessions, and are used almost exclusively for transporting iron ore from the mines to the ports; this traffic increased from about 12 million tons in 1964 to about 25 million tons in 1973. The railways also carry some 10,000 tons of rubber and 6,000 tons of logs annually, and about 150 passengers daily on the line run by the Liberian American Mining Company (LAMCO). Government plans call for more public use of the railways to help develop their surrounding areas. Accordingly, during a recent review of its concession agreements, LAIICO has undertaken to study and implement the integration of its utilities and trans- port system with the surrounding countryside; similar arrangements are ex- pected to be made with the other three concessions.  -4- Ports 2.06 There are four seaports: Monrovia and Buchanan are deep-water ports which handle about 85% of foreign trade; Greenville and Cape Palmas (Ilarper), both shallow-water ports, handle mainly logs (about 150,000 tons p.a.). All four ports are managed fairly efficiently, Buchanan by LAMCO, and the others by the National Port Authority (NPA). The ports of Monrovia and Buchanan have adequate capacity to handle the continuing expansion of traffic. Consultants are now carrying out a comprehensive port development study which will make recommendations for increasing capacity in the south- east ports and other future investments. Airports 2.07 The two major airports, Robertsfield and Spriggs Payne, both near Monrovia, are served by Air Liberia and 12 international airlines. Inter- national passenger traffic, mostly in transit, has been increasing at about 15% p.a. over the past three years, and the growth in overall traffic demand appears high enough to support both airports. Domestic air transport has stagnated over the past six years, mainly due to the opening up of new roads to the interior, and perhaps also to the high accident rate. Domestic serv- ice, however, remains important for transport to remote parts of the country not yet served by road, but there is no prospect of or need for increased airport capacity. C. Transport Planning and Coordination 2.08 Planning responsibilities in the transport sector are shared by several Ministries and Government agencies: the Ministry of Public Works (MPW) for highway planning, the National Port Authority (NPA) for ports, and the Ministry of Commerce, Industry, and Transportation (MCIT) for civil aviation; railway investments are planned by the mining concessions. MCIT is by statute responsible for intermodal coordination of transport investments, and the Ministry of Planning and Economic Affairs is responsi- ble for integrating transport plans with those for other sectors of the economy. This set-up is theoretically adequate, but MCIT has no staff to perform its function properly, "Transport" being only a recent appendage to the already large Ministry of Commerce and Industry. 2.09 Plans for port and airport development are usually made following recommendations by consultants based on their particular financial and oper- ational- capacities. For roads, MPW has only recently begun to pay attention to long-term and integrated planning. The first attempt was the Five-Year Highway Maintenance and Development Program (1973-77), formulated with Bank Group assistance (Table 1). 14PW has since created a Planning Division to perform this task in-house and to update the plan on a continuing basis. The proposed project provides technical assistance to help build up the Division's capacity, and UNDP has agreed to provide three overseas fellow- ships for Liberian graduates to be trained in the disciplines required by the Division. Although MCIT is still weak in planning of transport invest- ments and policy, no significant coordination issues exist; assistance is  -5- necessary at this time to set up a separate planning unit within the Ministry. However, to strengthen its capacity, MCIT plans to attach two of its newly recruited economists to MPW's Planning Division for training by the expert staff; this arrangement for staffing assignments has been confirmed with the Government, and agreement reached on a schedule for its implementation (para 4.17). 2.10 Current priorities in the transport sector are: (i) to improve road maintenance; (ii) to improve road access to the port of Monrovia, a prime center of economic activity; (iii) to upgrade key primary roads and improve and extend the secondary road system in centers of agricultural development activities; (iv) to provide farm-to-market roads to support the Government's efforts in rural development; and (v) to increase port capacity in the southeast. The current Five-Year Road Development Program addresses itself to most of the above priorities (Table 1). Road mainte- nance is being reorganized and improved under the Second Highway Project. Construction of the Monrovia Bypass also under the second project, together with improvement of UN Drive and construction of the new Mesurado River Bridge under the proposed project, will greatly improve access to the port of Mtonrovia; also, the planned paving of the Totota-Ganta road will improve a key primary route. Several agencies are engaged in rural road construc- tion (para. 3.02); the present highway project will make a start of Bank involvement in this area. 2.11 Execution of the Five-Year Road Program, although slightly behind schedule, is proceeding satisfactorily. Implementation of most of the planned investments is already underway, and most of the items (including those under the present project) should be near completion by the end of the plan period in 1977. 2.12 Transport investments beyond 1977 will be identified on the basis of already available data, and from ongoing feasibility studies. The required synthesis of the data and formulation of the new transport plan will be done by MCIT with support from NPW's Planning Division. Perform- ance of this role by MCIT and the Planning Division will provide essential training for local staff, and will also firmly establish the institutions necessary to plan transport investments on a continuing basis. An under- standing in principle has been reached with the Government on this proposed role of MCIT and the Planning Division (paras. 4.15-4.17). 3. HIGHWAYS A. The Road Network 3.01 The public road network totals about 1,880 mi of all-weather roads (of which about 210 mi paved) and 1,260 mi of roads which are serviceable only during the dry season (Table 2). In addition, the rubber and lumber concessions in the country have opened about 1,400 mi of private roads with  -6- laterite surfacing, and an undetermined mileage of tracks in forest areas. The system is still quite inadequate for present needs, with many areas of the country having only poor road connections, and some areas not served at all (Map 10292 R 1). A particular deficiency exists with regard to secon- dary and feeder roads, where the lack of facilities hampers development of many areas with agricultural potential. Most of the feeder roads were built by forestry companies and other private enterprises as short-term low-stand- ard haul roads, and many are merely earth tracks with a minimum of drainage structures; moreover, neither PWD nor the local communities served by these roads have made any efforts to maintain them. Also, many well settled and agriculturally active areas of the country are not yet connected to the main road network, the only means of farm-to-market transport consequently being head porterage. 3.02 To improve the above situation, several Ministries (Public Works, Agriculture, Development Planning, and Local Government) are engaged in rural road construction. Contributions to these road programs are made by several foreign agencies, particularly the United States Agency for International Development (USAID) and Export-Import Bank, the Governments of the Federal Republic of Germany and of the United Kingdom, and the African Development Bank (ADB). All the above agencies are giving special emphasis to feeder road construction, and the Bank Group is becoming in- volved in this area through the present project. The efforts of the var- ious agencies are however not properly coordinated, and this will be one of the principal tasks of the Planning Division recently established within MPW. B. Characteristics and Growth of Road Traffic 3.03 The composition and growth of the vehicle fleet is shown in Table 3. The fleet increased at a high 11% p.a. over 1960-70, but the rate has since declined to about 4% p.a., partly because larger trucks are replacing smaller ones, and because the number of mini-buses is increasing rapidly at the expense of taxis. Of the 22,800 vehicles registered in 1973, almost 40% were trucks and buses. It is difficult to estimate accurately the proportion of the fleet used exclusively in Monrovia, since all vehicle registration is done there, and no informa- tion is kept on where they are actually used; however, a consultants' study carried out in December 1974 indicated that about. 75% of all auto- mobiles, delivery vans, and buses are used predominantly in Monrovia. 3.04 Consultants have conducted traffic counts on roads proposed for major improvements, as well as a one-time survey of the entire primary net- work, but regular and systematic counting is only now being introduced in MPW with the help of technical assistance under the Second Highway Project. Available data indicate that some 200 mi of roads carry over 500 vehicles per day (vpd), and about 1,000 mi more than 100 vpd. The most heavily trafficked road outside the capital is Monrovia-Totota-Ganta, which car- ries about 3,000 vpd near the city, and some 400 vpd nearer the Ganta end. Within Monrovia, traffic levels averaging about 24,000 vpd have been rec- orded on Lower UN Drive. Consultants have estimated future traffic devel- opment on the basis of an analysis of economic trends, and have forecast a  -7- growth rate of about 5% p.a. over 1971-81; data collected so far indicate a slighly higher current growth rate of around 7% p.a. C. The Road Transport Industry 3.05 Regulation of the road transport industry is the responsibility of the Land Transport Division of MCIT. Existing regulations govern only vehicle licensing, registration and inspection; tariffs for inter-city taxi services; and vehicle weights and dimensions and axle-load limits. "For hire" trucking and other passenger transport are free from regulations governing routes, tariffs, or entry into the industry. 3.06 Regulations of vehicle weights and dimensions are adequate, except that the maximum permissible single-axle load of 18,000 lb is rather low, considering the importance of log transport in the country. Heavy overload- ing of trucks is therefore prevalent, and this causes considerable damage to the road network. This problem was brought to MPW's attention during super- vision of the Second Highway Project, and the Government was asked to con- sider increasing the maximum permissible axle-load. However, the Government prefers to protect its road investments by enforcing traffic regulations, since log transport is restricted to only a few roads. Regulations have so far been poorly enforced, but substantial improvement is expected following the recent establishment of a Bureau of MIotor Vehicles within the Ministry of Justice. The Bank/IDA has recently approved the procurement of weigh- bridges for vehicle control with funds from the Second Highway Project, and this should further strengthen the enforcement of regulations. 3.07 The passenger transport industry in Monrovia is dominated by passenger-cars, taxis, and mini-buses, primarily because of the absence of a well-organized bus system, and the inadequacy of private funds to purchase large buses. The density of the vehicle fleet in Monrovia has increased from one per 23 persons in 1953 to about one per 10 persons in 1974. This concentration of traffic in the capital means that its main arteries, particularly UN Drive and the Mesurado River bridge, are heavily trafficked and severely congested. In an attempt to solve this problem, the Government commissioned a study by Daimler-Benz (Germany) to make rec- ommendations on establishment of an efficient bus system which would provide adequate and economical transport to all parts of the city. The scope of the study was limited to determining the required fleet size, and the logistics of its management and operation. It did not address the possi- bility of integrating the existing individually owned mini-buses into the proposed system, and even more importantly, did not consider adequately future land use or the implications of their proposal in this respect. The recommendations are therefore of little use as a basis for planning an efficient system, the need for which is becoming increasingly vital. The proposed project therefore provides consulting services for a compre- hensive urban study of Monrovia, which will include an assessment of and recommendations for an optimal passenger transport service for the city.  -8- 3.08 "For-hire" goods and passenger transport to the interior of the country is largely owner-operated or provided by a few small firms with about 3-5 vehicles each. Individual owners are organized into a motor union, but are still quite independent and unrestricted, and are free to arrange their business and negotiate prices directly with their customers. Competition is keen, and since there is no price regulation or "middle man," a consid- erable proportion of decreases in operating costs is expected to be trans- ferred to producers and consumers. The industry has fared quite well, despite the fact that poor road conditions have considerably slowed down the shift to larger and more economical trucks and buses, and have resulted in short vehicle life and consequent high depreciation rates. D. Administration 3.09 The Ministry of Public Works (MPW) is responsible for administra- tion of the public highway network; it performs its functions through four Bureaus, one each for Administrative Services, Technical Services, Operations, and Construction. Under the four-year maintenance program financed as part of the Second Highway Project, the Bureau of Operations is being reorganized,, and a Planning Division established within MPW. 3.10 A major objective of MPW's reorganization will be the improvement of its staffing situation. The Ministry has experienced great difficulty in hiring qualified personnel, primarily for engineering positions, due to the relatively low Government salaries as compared with those offered by private industry. MPW staff numbers will have to be increased due to intensified maintenance activities and the establishment of the Planning Division, and efforts will have to be made to retain these persolnel in the Government service. The Government has tried to relieve the staffing situation by raising the salaries of engineers, foremen, mechanics and operators in January 1973, and by hiring expatriate staff to fill various engineering positions. Since then, some progress has been made in recruit- ing qualified local personnel, and the German-financed training program for middle-level staff (equipment operators, mechanics, and road foremen) under the ongoing second project, will provide further improvement. Additionally, two of the key positions in the Planning Division (transport economist and planner) will be filled by experts whose services over a two-year period will be financed under the proposed project. The Division will eventually be manned by local MPW staff trained abroad under fellowships provided by UNDP. E. Financing 3.11 Road construction works have been financed largely by foreign lending, with the Bank Group and USAID the principal sources (about US$10 million and US$21 million respectively over the past 10 years). Aid agencies of the Governments of the Federal Republic of Germany and the United Kingdom also participate in financing road construction and maintenance works. More recently, ADB is also becoming involved in these efforts, with US$3 million already committed for engineering and construction, and a loan of US$6 million  -9- currently being considered to help finance work on the Totota-Ganta road under the proposed Third Highway Project. Considering the country's road development program and the limited local funds available, substantial ex- ternal financing will remain necessary for some time. Since the emphasis in the future will be on rural roads, an area in which almost all the aid agencies have expressed interest, it should not be difficult to secure the necessary funds. 3.12 Recurrent annual expenditures from the general budget for all MPW operations (administration, technical services, force account construction, and maintenance) have increased from about US$2.1 million in 1970 to about US$3.2 million in 1974, about 12% p.a. (Table 4). Also during 1970-74, revenues from user taxes on fuel, vehicles, spare parts and tires, and from annual registration fees, amounted to a yearly average of about US$8.1 mil- lion (Table 5), more than enough to cover MPW's yearly average expenditures on administration, maintenance, and new road construction; these funds are not earmarked for road investment, but go into the general budget. The Government has provided assurances that it will furnish adequate funds for highway work, including road maintenance. F. Engineering and Construction 3.13 Engineering studies for major road construction works are carried out by foreign consultants, of which one (Stanley, US) has a branch office in Monrovia. The few local consulting firms are not yet established in road design, and specialize in architectural projects. MPW's Bureau of Technical Services designs minor works such as secondary and feeder roads with assis- tance provided by the Ministry's soils and material testing laboratory, and is reasonably competent in this field. Construction supervision for high- way projects financed with international or bilateral assistance is gen- erally carried out by foreign consultants; however, MPW will supervise construction of USAID-financed secondary roads, the contract for which was recently awarded to a local firm. 3.14 MPW has not yet developed its own road standards, and in prin- ciple follows US design practices; in effect, however, these standards are not applied uniformly. Depending on the preferences of consultants employed for a particular study, different lane and shoulder widths are often selected for roads having similar functions and traffic loads. Design standards for farm-to-market roads constructed by various Govern- ment agencies are chosen without proper consideration of traffic levels or volur4e of goods transported. MPW has been made aware of this shortcom- ing, and agreed at project appraisal that it will develop its own road standards, and ensure their uniform application among the different agencies. The Planning Division will be charged with the responsibility for assuring that this practice is followed. 3.15 All major road contracts are executed by foreign firms; the scope of these works has however been very limited due to the country's small size and scarce resources. Foreign companies have therefore shown only limited  - 10 - interest in Liberia, and when they do bid for works, their mobilization costs are disproportionately high. This problem will be even more severe in secondary and feeder road construction due to the low contract amounts of individual projects. 3.16 Only three domestic contractors have been employed so far for execution of road and bridge construction works. They have only limited finances and small equipment fleets, however, and this has prevented their participation in major road construction. The chances for improving this situation are hampered by the absence of any Government assistance to these firms, as well as by the lack of continuity in civil works. Local con- tractors are all now engaged in USAID-financed rural road construction works which will keep them fully occupied until end-1976. This period should be used to advantage in working out a proposal for assisting the domestic construction industry, and preparing it to compete effectively for larger road projects. 3.17 The Second Highway Project provides for a study of the local construction industry to determine its optimum capacity, to identify measures required to develop the necessary capacity and competitiveness within the industry, and to ensure reasonable continuity of work. The study was prompted largely by the Government's intention to undertake large-scale construction by force account or by a National Construction Corporation. However, after plans to form a corporation were abandoned, the urgency of the study diminished considerably, and the Government lost interest. Its feeling now is that any assistance needed by local contractors could be determined and provided on an ad hoc basis. The study as originally envisaged is however still considered necessary to identify long-range action required in the industry, and the Government has been urged to expedite its decision about implementing it. 3.18 AGRIMECO, a company wholly owned by the Ministry of Agriculture and managed by a staff of six expatriates, is also active in the construc- tion industry. Although its activities are primarily in land-clearing operations, it has built some feeder roads. Depending on the workload assigned to it by the Ministry of Agriculture, AGRIMECO would be able to execute some minor road construction, if its work is properly supervised. 3.19 MPW has long wanted to have its Construction Bureau participate in major road construction, and had expressed an interest in constructing the Monrovia Bypass financed under the Second Highway Project. MPW eventually agreed with the Bank/IDA to concentrate its limited capacity on road main- tenance, but has again raised the issue in connection with feeder road construction under the proposed project. Considering MPW's present finan- cial and operational deficiencies, however, this option would be viable only if feeder road construction were undertaken separately from the Ministry's day-to-day operations. The proposed project provides for the creation of a special feeder road unit which will be independently financed and managed (paras. 4.11-4.14).  - 11 - G. Maintenance 3.20 MPW's Bureau of Operations is responsible for the maintenance of roads and of public properties; it performs this task through six Regional Districts and County Offices, each headed by a resident engineer. Mainte- nance and repair of equipment is done by the Bureau's Mobile Equipment Division which comprises the Central Workshops at Monrovia and five field stations. The 1972 SAUTI study on highway maintenance had stressed the need to reorganize present operations by introducing efficient techniques, training personnel, and rehabilitating and expanding PWD's equipment fleet; these recommendations are being implemented under the Second Highway Project with technical assistance provided by SAUTI. 3.21 SAUTI had also recommended an increase in the budgetary appropria- tions for maintenance, and these have risen to about US$1.6 million in 1974 (Table 4). However, Government funds in that year were short by about US$0.5 million, and this has contributed to delays in the maintenance program during the period. For 1975, budget allocations for recurrent expenditures and the development costs to implement the four-year maintenance program are lower than the consultants' estimates by about US$1.5 million. Subsequent to consultants' estimate, further delays in equipment delivery have occurred (para. 1.05) and the Government has restudied the funding requirements, and has provided satisfactory evidence that adequate funds are available for 1975. The Government has agreed to provide the necessary funds in accordance with budget allocations to be agreed with the Bank for the years 1976 and 1977 (para. 4.32). 4. THE PROJECT A. Description 4.01 The proposed project consists of: (a) construction of a two-lane bridge (1,400 ft) across the Mesurado River in Monrovia; (b) upgrading of United Nations Drive (5.4 mi) in Monrovia; (c) construction and realignment of the Totota-Ganta road (83 mi); (d) a three-year program for construction and improvement of about 150 mi of feeder roads; (e) technical assistance to MPW's Planning Division; (f) consulting services for: (i) construction supervision of items (a), (b) and (c) above; (ii) feasibility studies for improvement of the roads Ganta-Tapeta (65 mi) and Ganta- Sanniquellie (25 mi); (iii) detailed engineering for the  - 12 - Mount Coffee Dam road (15 mi); and (iv) a study of MIonrovia's urban development and transport system. Construction of the Mesurado River Bridge 4.02 The existing bridge is a 790 ft two-lane multi-span I-beam struc- ture, built in 1946 as a haul road for construction of Monrovia port. The bridge was renovated in 1968, and is now in good structural condition. How- ever, its capacity is inadequate to accommodate peak-hour traffic, and long delays result. During most of the day, operating conditions remain close to capacity, far below an acceptable level for urban areas. Traffic is pres- ently about 24,000 vpd, and is expected to grow at about 6% p.a. to about 34,000 vpd in 1980, and to around 45,000 by 1985; unless bridge capacity is increased, this traffic situation, will lead to unmanageable operating conditions. The problem of limited capacity is compounded by inefficient channelling of traffic through the congested market area on to the northern approach to the bridge (para. 5.05). 4.03 The proposed project provides for construction of a new additional bridge (a 1,400 ft post-tensioned concrete girder) with a two-lane roadway, as well as for improvement of the southern approach to the bridges. (Design standards are shown in Table 6.) Construction of the additional bridge, combined with reorganization of passenger transport and effective enforcement of parking regulation especially in the market area, will ensure operation at an acceptable level of service through at least 1990. Proper diffusion of bridge traffic into downtown Monrovia will be made possible by the improve- ment of city streets to be financed by an Italian Government loan. 4.04 Following construction of the new bridge, several complementary actions would be required to derive the maximum benefit from the investment. These include: (i) introduction of an efficient passenger transport system in the Monrovia area aimed at reducing the number of mini-buses and private vehicles; (ii) solving the existing parking problem by effective enforce- ment of parking regulations, especially in the market and industrial area; and (iii) efficient channelling of traffic from the two bridges on to adja- cent streets. The appropriate actions are expected to be determined by the study of Monrovia's urban development and transport system to be carried out under the proposed project (para. 4.23). Upgrading of UN Drive (5.4 mi) 4.05 UN Drive forms the final link of the primary road system to the port of Monrovia, and via the Mesurado River bridge, connects the city with its harbor area (Map 10291 R1). Traffic now averages about 24,000 vpd on the road section nearest the bridge, decreasing to about 3,500 vpd at the other end. The existing 20 ft pavement has many potholes and ravelled edges due to the combined effects of dense traffic, inadequate maintenance, and poor drainage. No walkways are provided for the heavy pedestrian traf- fic, and part of the road becomes flooded during the rainy season. Recent  - 13 - maintenance rehabilitation works done by MPW have not arrested the deteri- oration. Because of the high traffic volumes on Lower UN Drive and the spill-over effects from the adjoining bridge, this section of the road is congested during peak flows on most working days. 4.06 The project provides for improvement of UN Drive to the following design standards which take account of the variations in traffic density, commercial activity, and operating conditions on different sections of the road: Lower UN Drive (1.5 mi) will be built as a four-lane divided highway; Middle UN Drive (2.0 mi) will have two lanes with parking lanes on each side; Upper UN Drive (1.9 mi) will be a two-lane road (Table 6). These standards are considered adequate for present and forecast traffic loads. The design provides for possible conversion of the parking strips into traffic lanes when future traffic warrants this. 4.07 A study of the traffic situation in Monrovia leads to the conclusion that construction of the Mesurado River Bridge, together with improvement of UN Drive, are prerequisites for improving traffic movements in the capital city, and for better access to the port area. This conclusion is borne out by the land use pattern of Monrovia, which stretches in a belt along the Atlantic Ocean, and where inland development is restricted by a swampy area. As the bridges and UN Drive are the only possible road link between Monrovia proper and its harbor area, the proposed construction works are essential to provide additional traffic capacity. They do not foreclose further options for improving M4onrovia's transport system which may result from the proposed urban development study (para. 4.20-4.23) and remains justified, irrespective of whether or not the actions spelled out in para. 4.04 above are undertaken. Construction and Realignment of the Totota-Ganta Road (83 mi) 4.08 This two-lane section is part of the major trunk road linking the northwest and east of the country with Monrovia, and providing the major road connection to neighboring Guinea. Traffic counts in 1973 showed about 670 vpd on the first half of the road and 400 vpd on the second section. Of this, about 250 vpd continue beyond Ganta; the remaining traffic either turns off at secondary roads along the route or is local traffic. Trucks, buses, and pick-ups constitute more than 40% of total traffic. 4.09 The laterite surface of the existing road is badly deteriorated, with numerous potholes and severe corrugation, so that an average travel speed of only about 20 mph is possible on many sections. Driving on the road is-costly and hazardous because of extreme dust conditions during the dry season, a muddy road surface during the rainy season, and inade- quate vertical alignment. 4.10 The proposed project provides for construction of a two-lane paved road. Although the new alignment generally follows the existing road for most of its length, realignment of certain sections will reduce the length of the road by about 1.5 mi. The design standards shown in Table 6 take into consideration the generally flat to rolling terrain, and the high  - 14 - proportion of heavy vehicles in the traffic composition; they are considered adequate. Consultants have proposed a two-inch asphalt concrete surface course on a crushed stone base for the first section, because of the high traffic carried, and also because of the lack of natural base course mate- rial in the vicinity; double surface treatment on a laterite base course has been recommended for the second section. However, contractors will be invited to submit alternative bids for a cement-stabilized base course for the Totota-Gbarnga section (41.5 mi), and the least-cost solution will be adopted. Construction and Improvement of Feeder Roads 4.11 The proposed project provides for feeder road improvements in Lofa County, and will complement investments made under the IDA-financed Lofa Agricultural Development Project. The project area is relatively well served by feeder roads, but they are in poor condition, and many of them require realignment. In order to derive the fullest benefit from invest- ments made under the above agricultural project, provision is made under the present highway project for implementation of a three-year program of construction and improvement of about 150 mi of feeder roads in that area. The improvement works will include realignment and providing proper drain- age structures and laterite surfacing as required. 4.12 Several alternatives for execution of the proposed works were considered and discussed with the Government; these included the use of foreign and local contractors, AGRIMECO, and MPW forces. Experience in Liberia has however shown no response from foreign contractors for such small-scale works, and local contractors are fully employed on USAID- financed rural roads; moreover, the possible scope of work under future similar projects is not sufficiently encouraging to divert building con- tractors from their current operations. AGRINECO is fully booked with projects for the Ministry of Agriculture. Since it was considered desirable for MPW to have some capacity for feeder road construction, the proposed project will be used to establish the institution to do this. 4.13 Accordingly, the feeder road program will be carried out by a separate unit to be established within MPW's Construction Bureau. Construc- tion equipment will be procured with Bank financing; staff for the unit will be recruited by MPW (Table 7). The unit will be independently financed and managed from NPW's day-to-day operations, and will be headed by an expatriate road engineer/technician whose services the UK Government is planning to provide under a technical assistance arrangement. In the event these plans do not materialize, however, the proposed project includes the necessary funds for his services. Table 8 gives details of the estimated annual operating costs of the feeder road unit. 4.14 On termination of the proposed project, the unit will be used for continuing feeder road construction and improvement in other parts of the country. At present, MPW's equipment available for this work is inadequate, and only a very limited program has been carried out so far. Creation of the unit will therefore help fill a gap in MPW's organization.  - 15 - Technical Assistance to MPW's Planning Division 4.15 In addition to the general reorganization of MPW's maintenance operation suggested in the 1972 SAUTI Highway Administration and Mainte- nance Study, one of its principal recommendations on institution-building was the creation within MPW of a Planning Division. The principal func- tions of the Division would include execution of transport sector surveys and analysis of investment priorities; to do this, the Division would collect and analyze the required data on road conditions, traffic, transport costs, etc. 4.16 The Division was created in June 1974, and is staffed by a Director whose functions are purely administrative, and an expatriate transport plan- ner recruited by the Government. To make the Division fully operational in the short term, the key positions of civil engineer and transport planner/eco- nomist must be filled as soon as possible. The proposed project therefore includes financing for the services of two technical assistance experts over two years to fill these posts and train local counterpart staff; outline terms of reference are given in Annex 1. As a longer-term solution, MPW personnel will be trained in disciplines required by the Division under three overseas fellowships which the UNDP has agreed to provide. 4.17 To ensure the proper functioning of the Planning Division, the following items have been discussed and agreed in principle with the Govern- ment: (i) outline terms of reference for the Division;. (ii) the method to be used for selecting the proposed experts, and their terms of reference; (iii) Government plans for selecting counterpart staff; and (iv) a time-table for overseas training of Liberian personnel under the UNDP fellowships, and for their assignment in the Planning Division. Feasibility Studies and Detailed Engineering of Primary Roads 4.18 The project also provides for feasibility studies of the roads Ganta-Tapeta (65 mi) and Ganta-Sanniquellie (25 mi). These two roads are extensions of the Totota-Ganta road, and form part of the main rural network serving major agricultural areas. They each carry traffic esti- mated at 200 vpd. The feasibility studies will determine the improve- ments required. 4.19 A feasibility study on upgrading the Mt. Coffee Dam road (15 mi) is being carried out by consultants Davis/Tecsult (Sierra Leone) and Stanley (US) with Bank/IDA financing under the Second Highway Project. The study is expected to be completed towards end-1975, but the consultants' preliminary conclusion is that paving of only about the first half of the road is justified. The proposed project provides for the required detailed engin- eering of sections whose upgrading is considered feasible.  - 16 - Urban Planning Study of Monrovia 4.20 The master plan for Monrovia's development was formulated in 1960 along the recommendations of the Batell Institute of Germany. The institute had recommended that the first phase of urban development be concentrated along two principal axes, one stretching from downtown east along the Kakata highway, and the other north along UN Drive (see Map 10291 R1); elsewhere in the urban area, development is constrained by the existence of swamps and lagoons, except on a narrow strip along the Monrovia Bypass. 4.21 Development along the Monrovia-Kakata highway axis is fast approaching the limit where incremental cost, in terms of additional public amenities and transport, is uneconomic. A similar situation is expected within a decade along the second axis, where the port and related commercial and industrial activities occupy much of the land area. The Government is therefore concerned about the city's future development, and has created a National Housing Authority as a state- owned corporation, to plan and implement housing programs first in the city, and later in the rural centers. This objective, though sound, can be achieved only if action is based on a rational plan for future land use. No such plan exists for Monrovia, except for the abovementioned Batell Institute plan whose usefulness is limited to the UN Drive axis and will terminate in a few years. For this reason, and also because of the inter- relation between urban land use, the organization of public transport in Monrovia, and the need to determine further infrastructure improvements required on the UN Drive-Mesurado Bridge axis, it was agreed at appraisal that the proposed project would include financing for an urban study. 4.22 One direct result of the restriction of development along the two axes abovementioned is the traffic congestion on the Mesurado River Bridge and on UN Drive, and the associated problems of investments on these routes. Although the improvements proposed under the project would remain necessary even if it is assumed that congestion would be reduced by proper reorganization of passenger transport and enforcement of parking and other traffic regulations, it is essential that these latter actions be taken; otherwise, increasing capacity on the bridge and on UN Drive will only attract more cars, as in the history of most cities, and will perpe- tuate the need for capacity additions. In this regard, consultants Stanley predict that unless steps are taken to shift passenger traffic from taxis and private cars to mini-buses and buses, two additional traffic lanes will be required by 1985 on both UN Drive and the new bridge. Aware of this problem, the Government had commissioned the Daimler-Benz study (para 3.07), but its limited scope did not permit investigation of various policy meas- ures relating to city transport; it is therefore necessary that this prob- lem be considered as part of the proposed comprehensive urban study. It has been agreed with the Government that the Bank would send a mission to Liberia in August/September 1975 to work with the Government in reviewing available urban planning material, and drafting terms of reference for an appropriate study. Detailed terms of reference would then be prepared for the Government's consideration and use in engaging consultants.  - 17 - 4.23 The study is planned for execution in two phases as follows: (i) general urbanization studies will investigate urban development policies, and identify and analyze various options and alternatives for such develop- ment; recommendations will be submitted to the Government for its comments and decisions; (ii) in the second phase, consultants will prepare a detailed structural plan for the urban development option selected, and will recom- mend appropriate steps necessary to solve the city's transport and housing problems. This second phase may also include feasibility studies of high- priority projects suitable for Bank Group financing in the event that the Government has been able to identify such projects on the basis of first- phase recommendations. The additional financing required for these feasi- bility studies could be sought from UNDP, or provided retroactively under the sites and services project that may have been identified. B. Cost Estimates 4.24 The total cost of the project (including contingencies) is esti- mated at US$46.7 million, of which about US$33.5 million are foreign costs, and about US$13.2 million equivalent in local costs, including about US$0.3 million equivalent in taxes. The Government charges no duties or taxes on Bank-financed projects, and will only apply income taxes on local labor. Details of project cost estimates are as follows:  - 18 - Source of Foreign Cost (us$ 000) Foreign ITEM fnancing Local Foreign Total Component 1/ A. RECONSTRUCTION WORKS- (a) Mesurado River Bridge 1k a8o 4,800 5 5 650 3 (b) UN Drive 2,210 3,9L)0 6,150 64 (c) Totota-Ganta Road Bank/ADB 6,340 13,660 19.800 69 Subtotal A 9.200 22.400 33,600 71 El. CONSULTING SERVICES AND TECHNICAL ASSISTANCE , (a) Supervision of Construction Bank/A.B 310 1,900 2,210 86 (b) Detailed Engineering at Coffee Dam Road (15 mi) Bank 8 5 60 86 (c) Feasibility Studies Ganta- Sanniquellie (25 mi) and Ganta-Tapeta (65 mi) roads "o 2)!0 280 86 (d) Technical Assistance to Planning Division 21 129 150 86 (e) Urban Transport Study 28 1.72 200 86 Subtotal B h07 2,493 2,900 C. FEEDER ROAD CONSTRUCTION-/ (a) rquipmentL/ Bank 43 487 530 92 (b) Spare rarts and Tires- 20 220 20 92 (c) Material H 140 445 585 76 (do operating Costs (incl.labor) Bank/Govt. 375 120 495 24 Subtotal C 57-8 1,272 1,870 69 D. CONTINGENCIES (i) Quantities (10f on Items A and C) 480 2,370 3,350 (ii) Price Variations 2,031 .972 7,003 Su 1.ot 1 D 3,011 7,342 10,353 TOTAL 13,196 33,$07 46,703 (rounded) (13,200) (33,500) (46,700) 1/ Based on estimated September 1975 prices. 2/ Based on estimated June 1976 prices (equipment delivery). 3 Based on 15% p.a. of equipment costs (estimdatu June 1976 prices).  - 19 - 4.25 Costs for civil works are based on consultants' estimates follow- ing detailed engineering studies, taking into account bid results received in mid-1974 for similar works, and updated to reflect expected prices in October 1975, the date planned for bid opening. Costs for consulting services and technical assistance are based on current unit prices applied in West African countries. A 10% physical contingency has been provided for construction works to allow for possible quantity variations. Price contingencies have been calculated to take account of inflation rates as follows: (i) for the construction items, 16% in 1975, 14% in 1976, and 12% in 1977-79; and (ii) for the other items, 12% in 1975, 10% in 1976, and 8% in 1977-79. C. Execution 4.26 MPW will be responsible for execution of the project. The Ministry will be assisted by consultants for construction supervision, feasibility studies, detailed engineering and the urban planning study. Consultants and the technical assistance experts to be attached to MPW's Planning Division will be selected in agreement with and under terms and conditions acceptable to the Bank. Consultants required for feasibility studies, final designs, and the urban study will be appointed not later than January 1, 1976, unless otherwise agreed with the Bank. These arrangements have been confirmed with the Government. Construction Works 4.27 Civil works construction is expected to start in early 1976; work on the Mesurado River Bridge and on UN Drive is expected to take about two years to complete, and on the Totota-Ganta road about three years. Speci- fications and bidding documents have been prepared by consultants and approved by the Bank. Construction contracts for the bridge, UN Drive and the Totota-Ganta Road will be bid as separate packages. Construction con- tracts will be awarded following international competitive bidding in accord- ance with Bank guidelines. 4.28 APE has agreed in principle to provide US$6.0 million to finance the construction and supervision of the Gbarnga-Ganta section of the Totota-Ganta road; ADB Board approval for this loan is expected during August 1975, and signing of the ADB loan agreement is a condition of effectiveness of the proposed Bank Loan. Supervision of construction of the entire road (including the ADB-financed section) will be by the same consul- tants. Construction and Improvement of Feeder Roads 4.29 The design standards to be adopted will be selected by NPW's Planning Division in collaboration with the Project Manager for the Lofa County Agricultural Development Project. Selection of standards will take into consideration expected traffic levels, annual volumes of goods to be transported, type of terrain crossed, and availability of road-building materials. MPW's Bureau of Technical Services will execute the required  - 20 - engineering surveys, and provide the technical data and drawings necessary for road construction. 4.30 Procurement of equipment and materials will be on the basis of international competitive bidding in accordance with Bank guidelines. Equip- ment suppliers will be required to provide adequate after-sales services locally. Spare parts may be procured on the basis of locally advertised competitive bidding; major suppliers are represented in Liberia, and compe- tition between them is adequate. Equipment which in the interest of standar- dization it is appropriate to obtain from a specific manufacturer, may be procured following negotiations with suppliers of such equipment on terms and conditions satisfactory to the Bank; the aggregate cost of spare parts and standardized equipment which can be procured without international competitive bidding should however not exceed $300,000. 4.31 MPW will submit for Bank approval the specific scope of each year's work program at the beginning of that year. The program will include a list of roads to be improved or constructed, design standards to be used, and foreign and local cost requirements; on the basis of this information, the amount of Government contributions will be agreed with the Bank. In order to improve liquidity of funds for day-to-day operations and for procurement of spare parts and materials, a revolving fund will be created. The Government will be required to provide adequate funds to cover estimated expenditures for each year's program at the begin- ning of the fiscal year, and the Bank will reimburse these contributions. The team leader, with Government countersignature, will be able to make with- drawals from the revolving fund. 4.32 In accordance with the above proposals, agreements have been reached with the Government on arrangements for: (i) staffing the feeder road unit; (ii) selection of roads to be included in the annual program, and proposed design standards; and (iii) setting up of the revolving fund and Government's annual budget allocations to the fund. D. Financing and Disbursements 4.33 The proposed Loan of US$27.5 million will finance part of the foreign exchange costs of the project, estimated at US$33.5 million and representing about 72% of project costs, excluding taxes. ADB is expected to contribute the remaining foreign costs of US$6.0 million. The Govern- ment will provide all the local costs of the project, about US$13.2 mil- lion equivalent excluding taxes. 4.34 Loan proceeds will be disbursed on the following basis: (i) 85% of total expenditures for Mesurado River Bridge construction contracts; (ii) 64% of total expenditures for UN Drive construction contracts;  - 21 - (iii) 69% of total expenditures for Bank-financed section of Totota-Ganta road construction contracts; (iv) 86% of total expenditures for consulting services and technical assistance, representing the estimated foreign costs; (v) 100% of the c.i.f. costs of imported equipment, spare parts, and materials for the feeder road unit; and (vi) 24% of the operating costs of the feeder road unit, excluding equipment depreciation and spare parts. Table 9 shows the estimated schedule of disbursements from the Loan Account based on the above percentages and on the forecast of project execution. Any funds remaining in the account on completion of the project will be made available for additional preinvestment studies, technical assistance items, or feeder road construction closely related to the objectives of the proposed project. 5. ECONOMIC EVALUATION A. General 5.01 Liberia's economy has grown rapidly in recent years, but that growth has had little developmental impact on the rural population. The Government's present objective is to expand the economic base by empha- sizing improved agriculture, and by so doing spread the developmental benefits beyond the capital city and extend them especially to the rural population which comprises almost 70% of total population. Rural develop- ment efforts are now under implementation or being studied. The success of these efforts will however depend greatly on the availability of effi- cient means of transport, which in turn depends on the existence of trunk roads leading to the ports, and of secondary and feeder roads linking agricultural areas to the main arteries. The road network is presently inadequate for the country's developmental needs, and has been a principal impediment particularly to rural development. 5.02 The proposed project will improve the transport infrastructure where negds are most critical. Construction of the Totota-Ganta road will improve a key portion of the rural transport system. The average income of people in the areas of the road is about US$70 p.a., only about one- quarter of the national a-,,rage and about one-tenth of that in Monrovia. Better access to market centers is expected to contribute to improvement of this situation. Construction of the Mesurado River Bridge and improvement of UN Drive will not only ease urban congestion, but will improve access to Menrovia port. The direct beneficiaries of the proposed project therefore represent a broad range in terms of income distribution. Table 10 shows the approximate income level of each group of beneficiaries, and their  - 22 - expected share of benefits. It is difficult to estimate quantitatively how the effects of these benefits will diffuse to the Government and among the population, but given the country's completely open economy, the dis- tribution is expected to be wide. 5.03 In analyzing the justification for project investments, efficiency prices of investments and benefits have been used. In order to convert market prices to efficiency prices, conversion factors have been applied to domestic prices to remove the effects of distortions, mostly tariffs, and labor has been shadow-priced to obtain its opportunity cost or mar- ginal product, rather than the actual wages paid; the latter may be higher for various reasons, including pressure from labor unions. On the basis of the quantifiable benefits, principally reduced transport costs, the proposed investments can be expected to yield an overall eco- nomic return of about 23%. Detailed information on the project roads and the economic analysis for their improvement are presented in Annex 2. B. Construction of the Mesurado River Bridge and Improvement of UN Drive 5.04 UN Drive and the Bridge together form the principal urban artery for Monrovia proper, and also the terminal link for the most important primary roads feeding into Monrovia port. Traffic on these routes is a mix of large trucks carrying export and import products to and from the port; distribution vans shuttling between the port's industrial/commercial zone and the city of Monrovia; and mini-buses, taxis, and private cars. The resulting high traffic levels average 24,000 vpd on the bridge, about 17,000 vpd on Lower and Middle UN Drive, and some 4,500 vpd on Upper UN Drive. Although only about 30% of total traffic from the congested Lower UN Drive and the bridge goes into the port area, the persistent traffic jams prevent efficient port clearance, and also have other detrimental effects on the rest of the urban traffic. The problem was recognized as far back as 1968 by a Bank mission appraising the Monrovia port project, and the improvements now recommended are based on the findings of a feasibility study financed under that project. 5.05 After considering various ways of improving transport along the UN Drive-Bridge axis, consultants recommended construction of an additional two-lane bridge and improvement of UN Drive. Other recommendations include (i) reorganization of Monrovia's passenger transport system to increase bus usage, and (ii) introduction of better traffic engineering controls and stricter enforcement of parking regulations. The impact of these administra- tive and traffic engineering controls could be a reduction of vpd levels on the Bridge and Lower UN Drive from 31,460 to 26,730 by 1978 (Annex 2), which corresponds to about a 24% reduction in the number of car and taxi trips, and a 15% increase in the practical capacity of the existing bridge and its approa- ches. The proposed urban study of Monrovia is partly aimed at investigating in detail appropriate ways of introducing these controls. In the analysis of the justification of the new bridge and improvements to UN Drive, the reduc- tion in congestion costs has been taken into consideration and the proposed infrastructural works evaluated as the additional action required after all other feasible actions have been taken.  - 23 - 5.06 The main quantifiable benefits from construction of the new Mesurado River Bridge will include: (i) distance savings for some vehicles using the existing bridge; (ii) elimination of waiting time on the bridge and its approaches for present and projected traffic; (iii) elimination of acceleration and deceleration costs; (iv) relief of congestion to downtown traffic, which while not using the existing bridge, is never- theless affected by the heavy traffic situation; and (v) relief of con- gestion on Lower UN Drive which will in turn allow efficient clearance of the port area. The numerical values assigned to the above benefits are presented in Annex 2. 5.07 Construction of approaches for the new bridge will necessitate relocation of some 2,500 inhabitants of the area. Alternative housing must therefore be provided, at an estimated cost of some US$1.2 million. This has been taken into consideration in he economic analysis. 5.08 On the basis of the above assumptions, construction of the new Mesurado River Bridge is estimated to yield an economic return of slightly more than 16% over its expected 30-year economic life, and a first-year return of about 9.4%. A sensitivity analysis was carried out testing the expected returns on the alternative assumptions of increased bridge costs and reduced benefits (Table 11). The analysis indicates that construction of the new bridge would still be economically justified. 5.09 The proposed improvement of UN Drive will result in various types of benefits including: (i) reduced vehicle operating costs and reduced maintenance costs due to the improved drainage system; (ii) reduction in vehicle waiting time; (iii) elimination of acceleration and deceleration costs; and (iv) better clearance of the port area. The estimates used are detailed in Annex 2. On the basis of the quantifiable benefits under. (i), (ii) and (iii) above (item (iv) being significant but difficult to quantify), improvement of UN Drive is expected to yield an overall economic return of about 36% over the expected 20-year economic life of the road. The proposed investments on individual sections yield returns estimated at 19.5% for Lower UN Drive, over 50% for Middle UN drive, and about 24% for Upper UN Drive. The sensitivity of the above returns to reasonable variations in costs and benefits are shown in Table 11. The results indicate that the proposed improvement works would remain justified. C. Improvement of the Totota-Ganta Road 5.10 This road is a section of Monrovia-Ganta, the backbone of the country's road network. It provides the link from Monrovia, the capital city and principal port, to regions in the northwest and southeast, and also connects with the Liberia-Sierra Leone road in the west, and with the Ganta-Harper road in the east; in addition, it is the only direct route to Guinea. The chief traffic-generating activites in the areas most directly served by the road are cash crop cultivation by peasant farmers, rubber production both by foreign companies and Liberian farmers, and exploitation of timber resources; also, planned cooperative develop- ments will soon be making significant contributions to production in the  - 24 - area. These products will all require reliable transport to reach their markets. 5.11 Present traffic on the road averages about 750 vpd on the section Totota-Gbarnga, and about 460 vpd on Gbarnga-Ganta; these traffic levels are expected to increase by about 6% p.a. through 1985, and by about 5% p.a. thereafter. Increases in agricultural and other economic activity attributable to road improvement will generate by 1980 an additional 70 vpd on the Totota-Gbarnga section, and about 30 vpd on the Gbarnga-Ganta road. 5.12 In analyzing the justification for the proposed road construction, the following quantifiable benefits have been taken into consideration: (i) savings in vehicle operating costs; and (ii) savings in road maintenance costs. On the basis of these cost savings and the 20-year expected economic l:fe of the road, construction of the sections Totota-Gbarnga and Gbarnga- Ganta are estimated to yield economic returns of 43% and 33% respectively; the return for the entire road is about 38%, with a first-year return of 26%. The sensitivity analysis in Table 11 shows that even under the worst alternative assumptions on construction costs and expected benefits, improve- ment of the Totota-Ganta road remains economically justified. D. Construction of Feeder Roads 5.13 The feeder roads proposed for construction are included in he Lofa County Agricultural Development Project recently approved by the Board (Credit 577-LBR, US$6 million), and have already been justified in that project. 6. AGREEMENTS REACHED AND RECOMMENDATION 6.01 During Loan negotiations with the Government, the following items were discussed and agreed: (i) the arrangement for staffing assignments in MPW's Planning Division, and a schedule for its implementation (paras. 2.09 and 4.17); (ii) allocation of adequate local funds in the 1975 through 1977 budgets to allow timely execution of the maintenance program (para. 3.21); (iii) an outline of general terms of reference for the Planning Division, as well as for the services of the Transport Planner/Economist and the Civil Engineer to be attached to the Division (paras. 4.15-4.17); (iv) arrangements for Bank assistance in the preparation of terms of reference for consulting services for the urban planning study of Monrovia (para. 4.22);  - 25 - (v) all consultants and technical assistance experts required under the project will be selected in agreement with, and under terms and conditions acceptable to the Bank (para. 4.26); (vi) construction of the Bridge, the UN Drive, and the Totota- Ganta road will be carried out under unit price contracts following international competitive bidding in accordance with Bank guidelines (para. 4.27); (vii) supervision of construction of the entire road Totota- Ganta (including the ADB-financed section) will be by the same consultants (paras. 4.27 and 4.28); (viii) all arrangements for execution of the feeder road program. (paras. 4.29-4.32; and (ix) the Government will provide all the local costs of the project (para. 4.33). 6.02 Signing of the proposed ADB Loan Agreement by the Government and the African Development Bank shall be a condition of effectiveness of the proposed Loan (para. 4.28). 6.03 The proposed project is suitable for a Loan of US$27.5 million to the Government of Liberia. An appropriate Loan term would be 25 years including 5 years of grace. August 1975   Table 1 LIBERIA- THIRD HIGHWAY PROJECT Five-Year Highway Maintenance and Development Program (1973-77) Actual or Expected --- Cost (Us$fooo)--- Source of Project Item FLancing Local Foreign Total A. Maintenance Program 1. Technical Assistance IBRD 245 1,125 1,370 2. Training Program Germany 2,800 GRANT n.a. 3. Equipment and Spare Parts USAID 450 4,400 4,850 4. Paved Road Rehabili- tation IBRD -- -- _- 5. Workshops IBRD 250 750 1,000 Subtotal A 3.745 6,275 10 020J B. Primary Roads (Miles) 1. Port Access Roads and Bridge IBRD 14 3,o60 8,740 11,800 2. Sierra Leone- Ilberia ADB 6 .590 2,430 3,020 3. Totota-Ganta IBRD 83 5,620 11,380 17,000 4. UN Drive- Mt. Coffee IBRD 16 720 1,440 2,160 5. Tubman Bridge - Bomi Hills ADB 45 2,580 5,900 8,480 6. Kakata-Dubli Is. - Totota Germany 38 -- GRANT -- 7. Ganta-Sanniquellie N.C. 25 -- -- __ 8. Ganta-Tapeta N.C. 400 -- -- _ 9. Tafuke-Kaloke N.C. 40 -- Subtotal B 667 12.n70 29.890 42,460 C. Secondary Roads 1. Sagleipie-Bahn_, USAID 60 770 2,320 3,090 Sanniquellie 2. Plibo-Barclayville USAID 45 370 2,045 2,415 3. Brewerville-Bella Yella USAID 100) 4. Bella Yella-Zorzor USAID 65) 1,115 .8,ooo 9,115 5. Buchanan-River Cess USAID 30) Subtotal C 300 2,255 12,365 14,620 TOTAL A, B, and C 899 18,570 482530 67,100 1/ Not including expected grant. N.C.= Not committed. Source: Ministry of Public Works, Planning Division, November 1974 June 1975.  Table 2 LIBERIA THIRD HICI-NAY PROJECT Development of the Highway Network (miles) 1961 1964 1971 1974 A. PUBLIC ROADS PRIMARY ROADS Asphalt Surfacing 129 160 203 208 Laterite Surfacing 615 650 941 968 7m Tl-O 1,144 1,17 SECONDARY ROADS Laterite Surfacing 126 330 487 707 Dry-weather Roads 336 610 1 270 1 265 62- -940 1,757 Subtotal A. 1,206 1,750 2,901 3,148 B. PRIVATE ROADS Asphalt Surfacing 20 30 86 n/a Laterite Surfacing 147 500 1,184 1,394 Subtotal B. 167 530 1,270 1,394 TOTAL 1,373 2,280 4,170 4 542 Source: Transportation Survey of Liberia, Brown Engineers 1963; SAUTI Report 1971; MIW Planning Division 1974. March 1975  Table 3 LIBERIA THIRD HIGIMAY PPOJECT Vehicle Registration Passenger Cars Taxis Tirucks Buses TOTAL 1968 8,919 3,434 4,545 2,785 19,683 1969 9,880 3,853 44,908 2,998 21,639 1970 9,377 4,735 5,234 3,864 23,210 1971 8,996 4,103 5,454 2,521 21,074 1972 10,607 3,384 4,730 2,575 21,295 1973 10,769 3,507 3,589 4,924 22,789 Source: Ministry of Finance, Motor Vehicles Divisipn, December 1974. June 1975.  Table 4 LIBERIA THIRD HIGHWAY PROJECT Govermeont E=enditures for Hi hays, 1970-74 (us$'ooo) Recurrent Maintenance Operations Total Recurrent Personnel Operations Total Expenditures 1970 615 886 1,501 2,051 1971 875 689 1,564 2,607 1972 899 973 1,872 2,983 19731/ 620 716 1,336 2,951 1974 708 880 1,588 3, 245 1/ Reduction in recurrent operatiors due to transfer of staff to GSA Source: Ministry of Public Works, Planning Division November 1974 June 1975  Table 5 LTBERIA THIRD HIGHWAY PROJECT Revenues from Road User Charges (US$1000) "Taxes on Import Duties Fuel & Spare Parts Licensing TOTAL 1970 1,777 5,44o 870 8,087 1971 2,057 5,243 781 8,081 1972 1,974 4,9o6 985 7,865 1973 1,578 5,045 1,684 8,307 197k 1,893 2,027 1,700 5,620_/ 1/ January 1 - June 30, 1974 Source: Annual Budget Reports 1970-74, Ministry of Finance, October 1974. March 1975  LIBERIA THIRD HIGHWAY PROJECT Design Standards for Project Roads and Bridge Upper Middle Lower "otota- Gharnga- Design Element UN Drive UN Drive UN Drive Gbaroga Ganta Road Width of Right of Way (ft) 220 220 220 200 200 Design Speed (mph) 60 60 6n 60O 50 Minimum Stopping Sight Distance (ft) 475 475 3 4)5 Minimum Passing Sight Distance (ft) 2.100 2,100 2,100 2 100 1 800 Minimum Radius Horizontal Curve (ft) 1.150 1.150 1.150 1.150 750 Manimum Gradient (%) 4 44 Pavement width (ft) 2 x 11 2 x 1l 4 x 11 24 24 No. of Lanes 2 2 4 Lanes Divided 2 2 Shoulder/Parking Lane width (ft) 6 11 11 3 3 Crossfall: Pavement (%) 2 2 2 3 3 Shoulders (Parking Lane) (% ) i3 3 4 4 Pavement Type: Base 7R Granular 7' Granular 751 Granular 6" crushed stone 6" hard pan laterite Double Surface 2' asphalt 3" asphalt 3"' asnhalt 2" asphalt surface concrete concrete concrete concrete treatament Shoulder/Parking Lane Pavement Type 2" pavement on 2" pavement on 7"? grentilar 6" Compacted hard pan 6" Compacted hard pan 7R Granular Base 75 Granular Base materinl material laterite Pavement Design Wheel Load 18,000 lb equivalent 18,000 lb equivalent 18,000 1b equivalent 18,000 1b eq--ivalen: 13,000 lb equivalent ,.I1 1tr-c ores ecual roadway width and desiv,ued! on the basis of AASHO H-15 Loading lTe. l.cs,-rado River Brid,c Brid :e "' pe Post - ensi-ned concrete g der Total length (ft) 1.400 5 No. of spans 5 Traffic lanes - width (ft) 2 x 12 Side Clearances - width (ft) 2 x 3 Pedestrian Walk widtl (Ft) 5S Bridge Design Loading AASHO, HS 20-44 Source: lIid, consultanta Stanley & Ove Arup. June 1975.  LIBERIP Table 7 THIFRD HTGWIqY PROJECT List of Equipment to be Proci2red for Feeder Road Unit and Cost Estimate ( Unit Cost Total Costs Item Quantities (US$) (US$) Tractor-Dozer, D7 1 110,000 110,000 liMotor Grader, 125 HP 1 65o0o0 65,000 Front Loader, 80 HP 2 43,000 86,ooo Ccm,pactor, Vibrator Self-Propelled 1 25,000 25,000 DLip Truck, 6 m3 5 25,000 125,000 Wlater Tanker, 9,000 1. 1 4, 000 45,000 Pick Uz 1 9,500 9,500 ,Iorkshop Trailer 1 45.,000 45,000 ToQ ,ed Fuel Tank, 1, 500 1 1 4,, 000 4,000 Service Cer 1 6,000 6,000 Motor Pump, 50 m3/h 1 2,500 2,500 Caravan, 2 Beds 1 5,000 5,000 Concrete Yixer, 250 1 1 3,000 3,000 Total 531,000 Stock of Spare Parts (about 15 d p.a. of equipment costs - included under operating costs in Table 8). 1/ Estimates are in prices at mid-1976, the expected date of equipment delivery. Staff requirements for Feeder road unit Position Number Team Leader 1 Accountants 2 Mechanics 3 Operators 6 Drivers 8 Iaborers 15 Source: PWD and mission estimates June 1975  Table 8 * LIBERIA THIRD HIGHWAY FROJECT Estimated Annual Labor and Operating Costs for Feeder Road Unit Item Cost (US) Foreig Component ( Local Foreign Total Equipment repair, fuel, lubricants, labor, super- vision, miscellaneous 123,900 39,600 163,500 24 Total for 3-year period (rounded) 375,000 120,000 495,000 24 Note: In the event no provision is made under the UK Technical Assistance Program for the Feeder Road Unit Team Leader, funds for the foreign exchange component of his services are included in the above foreign exchange element. Otherwise this foreign exchange may be applied to the purchase of fuels and lubricants which are primarily foreign currency expenditures although covered by the Borrower through local procurement arrangements. Source: MFW and mission estimates. July 1975.  Table 9 LIBERIA THIRD HIGHWAY PROJECT Estimated Schedule of Disbursements IBRD Fiscal Year Cumulative Disbursement and Quarter Ending at End of Quarter (US'OOO) 1975/76 September 30, 1975 December 31, 1975 4 ,000 March 31, 1976 6,600 June 30, 1976 9,100 1976/77 September 30, 1976' 11,600 December 31, 1976 14 ,20n March 31, 1977 14,700 June 30, 1977 19,400 1977/78 September 30, 1977 21,100 December 31, 1977 21,8v00 March 31., 1978 24,.500 June 30, 1978 26.,200 1978/79 September 30, 1978 26,500 December 31, 1978 26,900 March 31, 1979 27,300 June 30, 1979 27,500 Source: Mission estimates. June 1975.  Table 10 LIBERIA THIRD HIGHWAY PROJECT Income Levels of Beneficiaries of Highway Projects Approximate Share of Benefits Approximate Yearly UN Drive & Totota- Beneficiaries Per Capita Income Bridge Ganta Road Car Owners $1,700 20% 15% Taxi Owners 4,000) Taxi Drivers 240) Taxi Passengers: Rural 70) 20% 30% Urban 600) Bus Owners. and Drivers 240) Pick-Up and Bus Passengers: Rural 60) 55% 30% Urban 140) Truck Owners and Drivers 70v% Consumers of Transported Goods 60) National Average $260 1/ Average per capita income for drivers; data for owners not available. Source: SAUTI and mission estimates. March 1975.  LIBERIA THIRD HIGHWAY PROJECT Sensitivity Analysis of Economic Returns Best Estimate of ER with Economic Returns(ER) ER with ER with Cost + 50% & Project Item Cost + 50% Benefits - 15% Benefits - 15% ___________ (%). (~~~~~() (7 2+3) Totota-Gbarnga 43.3 (28.9)* 25.8 30.0 23.4 Gbarnga-Ganta 33.2 (22.4) 21.6 25.0 19.6 Totota-Ganta 38.1 (26.0) 24.0 27.8 21.8 Upper UN Drive 24.3 (17.0) 31 40 27 Middle UN Drive over 50% (43.1) over 50% over 50% over 50% Lower UN Drive 19.5 (11.0) 13.7 17.0 11.6 Entire length of UN Drive 36.0 (21.7) 25.2 31.9 24.6 Bridge w/South approach 16.1 (9.4) 13.3 12.6 10.0 UN Drive + Bridge 21.6 (16.0) 16.0 19.0 14.0 Bridge without Time Savings 12 2 (8.1) 14 18 12 Global 23.0 (17) 14 18 12 * Figures in parentheses indicate estimated first year returns. Source: Mission estimate March 1975  Table 12 LIBERIA THIRD HIGHWAY PROJECT Selected Import Duties. Taxes,and Registration Fees Import Duties on: Vehicles: 28% on value of vehicle Lorry. Bases and other Motor Vehicles: 23% on value of vehicle Tires and Other spare parts: 30% up to April 1974, presently 40% Taxe on: Gasoline: Premium $.12/gallon; Regular $.12/Gallon Gas Oil $.09/Gallon - Entry Fee $.02/gallon Registration Fees: Passenger Cars $3.00 Omnibuses 5.00 Taxis 5.00 Motorcycles, Trailers 2.00 Trucks (Transporting Basiness) 25.25 Other trucks 15.25 Source: Ministry of Finance, MPW Planning Division, November 1974 March 1975  Table 13 LIBERIA THIRD HIGHWAY PROJECT Total Consumption of Petroleum Products ('000 US gal) Gasoline Kerosene Gas-Oil 1969 15,519 3,171 23,139 1970 n.a. n.a. n.a. 1971 19,987 3,695 51,181 1972 16,098 3,i44 14,481 1973 21,374 3,823 80,121 1974 18,891 3,616 30,5