Lesotho - Second Highway Project

Report No. 952-LSO Appraisal of a Second Highway Project Lesotho February 17, 1976 SE 4 Regional Projects Department 0 Eastern Africa Regional Office FOR OFFICIAL USE ONLY tnternato-nal Bank for Reconstruction and Developrnent International Devenopment Association This document has a restrtcted distribution and may be used by recipients onEy tu tl nierforrmance of their official duties. Ils contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Except as otherwise stated, all figures are quoted in U.S. Dollars (US$) Currency Unit = Rand (R) US$1.16 = R 1 US$1.00 = R 0.86 WEIGHTS AND MEASURES 1 meter (m) = 3.28 feet (ft) 1 kilometer (km) = 0.62 miles (mi) 1 hectare (ha) = 2.47 acres (ac) 1 liter (1) = 0.22 Imperial gallon (Img) 0.26 US gallons (gal) 1 kilogram (kg) = 2.2 pounds (lbs) 1 metric ton (m ton) = 2,204 pounds (lbs) 1 sq km (km2) = 0.386 square miles GLOSSARY OF ABBREVIATIONS ADT - Average Daily Traffic BADEA Arab Bank for Economic Development in Africa CIDA - Canadian International Development Agency CMW & PP - Central Mechanical Workshop and 'Plant Pool CRDO - Community and Rural Development Office FAO - Food and Agriculture Organization GDP - Gross Domestic. Product GNP - Gross National Product LCU - Labor-Intensive Construction Unit LTI - Lerotholi Technical Institute MW - Ministry of Works ODM - Overseas Development Ministry (U.K.) RB - Roads Branch RSA - Republic of South Africa SIDA - Swedish International Development Authority UNDP - United Nations Development Programme vpd - vehicles per day KINGDOM OF LESOTHO FISCAL YEAR April 1 - March 31  FOR OFFICIAL USE ONLY LESOTHO APPRAISAL OF A SECOND HIGHWAY PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ........................... i 1. INTRODUCTION .. 2. THE TRANSPORT SECTOR .......................... 2 A. Effects of Geographic and Economic Setting on Transport .............................. 2 B. The Transport System . ....................... 2 - Roads and Road Transpor.. 3 - Air Transport . . 3 - Railways. 3 - Inland Waterways . . 4 C. Transport Policy and Coordination . . 4 D. Previous Projects in the Transport Sector 4 3. THE HIGHWAY SUBSECTOR .. 4 A. The Network. 4 B. Traffic Growth and Characteristics 5 C. Administration. 6 D. Planning. 7 E. Financing. 7 F. Engineering. 8 G. Construction ......... ....................... 8 H. Maintenance. 9 I. Training .10 4. LABOR-INTENSIVE CONSTRUCTION .11 5. THE PROJECT ............... 12 A. The Road Component ., 12 - Objectives ............ 12 - Description ........ .................... 12 - Cost Estimates ....... .................. 13 - Financing . ................................ 15 - Implementation ....... .................. 16 - Disbursements ............ 16 This report was prepared by Gabriel I. Oluonye and Brendan P.' Kennedy (Engineers) and Philip W. Blackshaw (Transport Economist) and edited by Marie Garcia-Zamor. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its coatents may not otherwise be disclo6ed without World Bank authorization.  TABLE OF CONTENTS (Continued) Page No. B. The Labor-Intensive Component .... ........... 16 - Objectives . .16 - Description . .16 - Cost Estimates ................... 17 - Financing . .19 - Implementation . .19 - Disbursements .19 C. The Total Project ............. . ........... 20 - Financing ................ ............ 20 - Disbursements .......................... 21 6. ECONOMIC EVALUATION ........................ .. 21 A. The Road Component .............. .............. 21 - Main Benefits and Beneficiaries 21 - St. Michaels-Mantsonyane .22 - M.antsonyane-Thaba Tseka .22 - Maintenance Facilities .23 - Technical Assistance .23 B. The Labor-Intensive Component .... ........... 23 7. AGREEMENTS REACHED AND RECOMMENDATION ............ 23 TABLES 1. Road Network, 1974 2. Design Standards 3. Vehicles on Register, 1970-73 4. Roads Branch Expenditures, 1970/71-74/75 5. Estimated Government Revenues from Road Users, 1971/72-74/75 6. Vehicle Operating Costs by Type of Road 7. Estimated Schedule of Disbursements 8. Proposed Staffing of Labor-Intensive ConstructiLon Unit 9. Economic Evaluation: St. Michaels-Mantsonyane Road Construction 10. Economic Evaluation: Mantsonyane-Thaba Tseka Road Construction ANNEX Project Progress Reporting Requirements CHARTS: 1. Organization of Ministry of Works and Communications (WB-15004) 2. Implementation Schedule (WB-15700) MAP: Lesotho - Second Highway Project (IBRD-11695)  LESOTRO APPRAISAL OF A SECOND HIGHWAY PROJECT SUMMARY AND CONCLUSIONS i. This project's two major components, a highway component and an experimental labor-intensive component, differ substantively in origin and justification and are discussed separately. li. Lesotho's rugged topography and sparse road network make internal communications very difficult and exclude large areas from the country's national life. The existing road system predominantly serves the western lowlands, where a high proportion of the nation's population and production are concentrated. The only previous Bank Group credit in the transport sector contributed to the construction or reconstruction of 140 km of this lowland road network. iii. As reflected in the Second Development Plan (1976-80), Government's strategy has shifted emphasis from lowlands development to opening up the country. The road construction component of this project was identified as a priority project in the recently completed British Government-financed Lesotho Transportation Study. It is essential to a general program of de- veloping the mountain areas, beginning with a recently initiated Mountain Area Development Project prepared under the FAO/IBRD Cooperative Program. iv. In addition to improvement, reconstruction and construction super- vision of the 147 km St. Michaels-Thaba Tseka road, the road-related component of the project also includes provision of maintenance facilities along the project road and technical assistance to strengthen the Ministry of Works (MW). v. The total cost of these elements is estimated at US$6.9 million (US$7.3 million including taxes), with a foreign component of US$5.45 million, about 79% of net of tax cost. vi. MW will be responsible for executing this component. The road will be improved/reconstructed under a unit-price contract which will be awarded on the basis of international competitive bidding in accordance with Bank/IDA Guidelines. Road construction, which is expected to start towards the end of 1976 and be completed by the end of 1978, will be supervised by consultants whose employment under terms and conditions satisfactory to the Association and the British government is a condition of credit effectiveness. vii. The main benefits from improving the St. Michaels-Mantsonyane section will be significant savings in vehicle operating costs; the estimated economic return is 13%. The other section, Mantsonyane-Thaba Tseka, is developmental and has negligible traffic at present; it must be viewed as part of the Mountain Area Development package, the overall rate of return on which is about 11%. Some important unquantified benefits are better integration of the remote Thaba Tseka region and mountain areas to the east in national political, social and economic development. The maintenance and technical assistance elements  - ii - should produce improved Roads Branch operations and an increase in trained manpower. viii. The other major project component is a provision for implementing the recommendation of the 1974 UNDP/IBRD Migrant Workers Re-employment Mission that Government's labor-intensive construction capabilities be developed. The spectre of Lesotho's migrant workers coming home en masse from the Republic of South Africa (RSA) in the wake of possible labor disorders has prompted interest in a contingency employment plan. The project will estcblish, and operate for 3 years, an experimental Labor-Intensive Construction Unit (LCU) and will strengthen the employment service functions of the Labor Com- missioner's Office. ix. Estimated cost of this componient is US$1.7 million (with a US$1.1 million foreign element). There are no taxes. x. The MW will be responsible for execution of this component, assisted by consultants employed under terms and conditions satisfactory to the Asso- ciation to manage the LCU. xi. The main benefits from the LCU will be an increased ability to cope with any recurrence of the recent unemployment emergency and an indication of the merits of using labor-intensive methods as a long-term employment generating strategy. xii. The combined cost of the road and labor-intensive components is US$8.6 million (US$9.0 million, including taxes), with a foreign component of US$6.5 million, about 76%. The project will be financed by an IDA credit of US$5.5 million, a British Government grant of US$1.5 million and a Lesotho Government contribution of US$1.6 million net of taxes (about 19%). If the Lesotho Government successfully concludes negotiations with SIDA and UNDP for US$0.5 million and US$0.2 million respectively, its contribution would be re- duced to US$0.9 million, or 10% of the total cost. xiii. During negotiations, assurances were obtained that Government will provide required funds for local project costs and adequate road mainte- nance; review Central Mechanical Workshop and Plant Pool procedures and submit a plan for improvement to be discussed with the Association; appoint a local counterpart to the expatriate economist employed by the MW Planning Unit; and employ consultants under terms and conditions satisfactory to the Association. xiv. The project is suitable for an IDA credit of US$5.5 million to the Kingdom of Lesotho on the usual terms, to cover about 64% of total project costs excluding taxes. xv. If the Lesotho Government successfully concludes negotiations with the Arab Bank for Economic Development in Africa for US$2.5 million, a cor- responding amount of the proposed IDA credit will be cancelled.  T _r.S,{2TH'(I APPRAISAL UF SECOiN_L HIGHWAY PROJECT 1 . iT U'RODUCTIO Y 1.01 The Government of Lesotho has requested IDA assistance in financing a highway project. A project suitable ;r Bank Group participation includes the construction of a 147 km road to connect Thaba Tseka in the central miountain region with the capital, Maseru. This road was identified as a priority pro- ject in the recently completed Lesotho Transportatioa Study (para. 3.04). It is essential to the Governiment s recent strategy of developing the mountain regions, commencing with a recently begurk fLirst phase Mountain Area Development Project prepared under the FANUIBRD Cooperative Program (para. 6.03). 1.02 In addition, Covernment and IDA agreed that the project should include consul-ting services to finalize construction documents and supervise road construction, provision of maintenance facilities for the road and technical asssistance to the MW. 1.03 PrGvision has also been made to implement the recommendation of the UNDP/IBRD Migrant Workers Re-employment Mission that Government develop its capabilities fo- labor-intensive construction. Riecause the road-related project elements differ substantively from the labor-intensive component in origin andi justification, the two components are discussed separately throughout this appraisal report. 1.04 Total cost of the road component is estimated at US$6.9 million (US$7.3 million including taxes), with a foreign element of US$5.45 million, about 79%. This component would be financed by IDA, the British Government and the Kingdom of Lesotho. 1.05 Estimated cost of the labor-intensive componenit is US$1.7 million, with a foreigra element of US$1.1 million, about 65%. This component is to be financed by IDA and the Lesotho Government. 1.06 The combined cost of both components is US$8.6 million (US$9.0 million, including taxes), with a foreign component of IJS$6.5 million, about 76%. The project will be financed by an IDA credit of LS$5.5 m.illion, a British Government grant of US$1.5 million and a Lesothio Government contri- bution of USl .6 raillion, net of taxes. If the Lesotho Government successfully concludes negotiations withi STDA und UNDP for US$0.5 million and US$0.2 million, respectiveliv its contribution would be reduced to US$0.9 million. Further, if the Government's negotiations with the Arab Bank for Economic Development in Africa (BADEA) for US$2.5 million are successful, a corres- ponding amount of the IDA credit wil1E be cancelled. 1.07 The project was appraised i?n April 1975 by Gabriel I. Oluonye (Engineer) and Philip W. Blackshaw (Transport Economi