Togo - Third Highway Project

Document of ILE g 0PY The World Bank FOR OFFICIAL USE ONLY Rqpt No. 1333a-TO STAFF PROJECT REPORT THIRD HIGHWAY PROJECT TOGO March 17, 1977 Western Africa Region Projects Department Ths doeument a a d disribto and mnay be mod by redpients _by in the Wfo e f . XIer o dutes. It ets my nt oherwie be diudod w1tho Wodd Dak authrlmton.  CURRENCY EQUIVALENTS Currency Unit CFA Franc (CFAF) US$1.00 CFAF 245 CFAF I million US$4,082 SYSTEM OF WEIGHTS AND MEASURES: METRIC Metric System British/US System 1 meter (m) 3.28 feet (ft) 1 square meter (m2) 10.8 square feet (sq ft) 1 cubic meter (m3) 35.3 cubic feet (cu ft) 1 kilometer (km) 0.620 mile (mi) 1 square kilometer (km2) 0.386 square miles (sq mi) 1 hectare (ha) 2.47 acres (ac) 1 metric ton (t) 2,204 pounds (lb) ACRONYMS AND ABBREVIATIONS BCEOM - Bureau Central d'Etudes pour les Equipements d'Outre-Mer (France) CERFER - Centre Regional de Formation en Entretien Routier CFT - Reseau des Chemins de Fer du Togo CIMAO - Ciments de l'Afrique de l'Ouest DIWI - Dr.-Ing. Walter Kg., Consulting Engineers (FRG) EDF - European Development Fund ER - Economic Return FAC - Fonds d'Aide et de Cooperation (France) FRG - Federal Republic of Germany GDP - Gross Domestic Product KfW - Kreditanstalt fur Wiederaufbau (FRG) MCT - Ministry of Commerce and Transport MEPS - Ministry of Equipment and Postal Services MRI - Ministry for Rural Infrastructure OPAT - Office des Produits Agricoles Togolais PWD - Public Works Department RD - Roads Division (Arrondissement Routes) RMWA - Resident Mission in Western Africa RTS - Road Transport Service SRCC - Societe pour la Renovation du Cafe et du Cacao USAID - United States Agency for International Development vpd - Vehicles per day TOGO FISCAL YEAR January 1 - December 31  FOR OFFICIAL USE ONLY STAFF PROJECT REPORT THIRD HIGHWAY PROJECT TOGO Table of Contents Page No. INTRODUCTION AND SUMMARY . ............. ............ i-ix I. THE TRANSPORT SECTOR ..................................... 1 A. Geographic and Economic Factors Influencing Transport Growth . ..................... ............ I B. The Transport System ........ . . . . . ................................ . 1 C. Transport Policy, Planning and Coordination ....... ... 4 Table 1 - Investments in the Transport Sector and Sources of Financing, 1971-1975 ................. 8 Table 2 - Planned Investments in the Transport Sector, 1976-1980 ........ . . . . ............................... . 9 II. HIGHWAYS ..................................... ...................... 10 A. The Network ........................................ .. 10 B. Traffic ............... .10 C. Road Transport Industry .............................. 12 D. Administration ............. ... ...................... . 14 E. Planning .......................................................... 16 F. Engineering ........ ........................................... 17 G. Staffing and Training . .............................. . 17 H. Construction . ...................... ...... ............... . 18 I. Maintenance ..................................................... .*. 19 J. Financing ......................................................... 20 K. Sector Lending .... .......... ........................ 23 III. THE PROJECT ......... . . ..................... ........................ 23 A. Project Description and History ...................... 23 B. Project Cost and Financing ........................ ... 31 C. Implementation ........ ...................................... 34 D. Procurement ......................... .............*.. 36 E. Disbursements ... ........... . ........................ . 37 Table 1 - Detailed Cost Estimates ....................... .. 38 Table 2 - Cost Estimates for Technical Assistance . ......... 39 IV. ECONOMIC ANALYSIS .......................................... 40 A. General ............... ..................... .......... 40 B. Reconstruction of the Aneho-Tabligbo Road ............ 40 C. Construction of the Agou-Notse Road ....... .. ......... 45 D. Other Project Elements .. ......................... ..... 46 E. Risks ........................................................... 47 Thb document has a restricted distribution and may be usd by recipients only in the performance of their official dutis. Its contents may not otherwise be disclosed without World Bank authorization.  Table of Contents (Continued) Page No. V. AGREEMENTS REACHED AND RECOMMENDATION .................... 47 Attachment: Economic Re-Evaluation of the Construction Items Kept in the Second Highway Project After Cost Increases ......... 49 Annex: Documents Available in Project File .. ............. 53 Map: IBRD 12452 Togo Third Highway Project This report, prepared by Messrs. Philippe Ostenc (Engineer) and Adhemar Byl (Economist), is based on information provided by the Government, the consulting firms DIWI (Germany), Gendron-Lefebvre (Canada) and BCEOM (France), and the findings of a highway appraisal mission to Togo in March 1976 consisting of MIessrs. P. Ostenc, A. Byl and H. Machenaud (Consultant). Additional reports and data related to the project available in the Bank are listed in the Annex.  STAFF PROJECT REPORT THIRD HIGHWAY PROJECT TOGO INTRODUCTION AND SUMMARY Introduction 1. The proposed project would be the third Bank Group operation in the transport sector in Togo. The First Highway Project (Credit 131-TO, US$3.7 million, 1968) consisted of a four-year highway maintenance program and pre- investment studies, among others of the Agou-Notse 1/ road (51 km), one of the roads included in the proposed Third Highway Project. The first project was successfully completed at the end of 1973. The Second Highway Project (Credit 450-TO, US$8.7 million, 1973) comprised construction of one section of the main south-north road axis linking Lome with the Upper Volta border and of two secondary roads, additional technical assistance to PWD for high- way maintenance and to the Road Transport Service for highway transport organization, and preinvestment studies, including the Aneho 2/ -Tabligbo road (45 km), also part of the proposed Third Highway Project. The project is well underway, although construction of one of the secondary roads (Agou- Notse) had to be deleted, because of cost overruns on other project compo- nents. The economic re-evaluation of the two construction items kept in the Second Highway Project shows that both items are still justified: the econ- omic return of Blitta-Sokode is now estimated at 29% (22% at appraisal) and that of Sokode-Tchamba at 14% (16% at appraisal). The proposed Third High- way Project would include reconstruction of the Tabligbo-Aneho road, con- struction of the Agou-Notse road, purchase of highway maintenance and work- shop equipment, technical assistance to the Public Works Department and to the Ministry of Commerce and Transport, and various studies. The esti- mated project cost is US$15.3 million. Foreign exchange costs amount to US$11.0 million or 72 percent of total project cost. A. TRANSPORTATION IN TOGO General 2. Togo is a small country (56,785 km ) with a 50 km coastline on the Gulf of Benin. It forms a narrow, 600 km corridor between Ghana to the west and Benin to the east. Except for a long mountain range in the north along the border with Benin and in the center along the border with Ghana, Togo's terrain is flat and presents no major topographical obstacles to transport. Togo's northern neighbor is Upper Volta. 1/ Formerly Nuatja. 2/ Formerly Anecho.  - ii - The Transport Sytem 3. Togo's transport system is relatively simple. It is geared to meet the country's domestic transport needs and consists mainly of about 7,400 km of roads and of 436 km of railways linking- the new deepwater port of Lome, the nation's capital and economic center, with the rest of the country. There is also a phosphate wharf at Kpeme, which is connected to the railway and road network. Lome has the country's only international airport. Five other small airstrips, mainly in the north, are open to internal general and military aviation. 4. Road transport is the predominant mode. About 1,100 km of the road network are paved; three times more than in 1970. The network is densest in the south. The 717 km, south-north road, running the length of the country from Lome to the border with Upper Volta, forms the backbone of Togo's national highway network and is complemented by an east-west coastal road linking Lome with Accra and Cotonou. EDF is financing the Kante-Mango section (90 km) of the 214 km of the south-north axis that remain to be paved and may also finance the remainder with regional funds. 5. Togolese railway (CFT) operates three lines, Lome-Blitta (276 km) in a south-north direction, Lome-Palime (116 km), northwestward to the Ghana border, and Lome-Aneho (44 km), eastward along the coast. Extension of the network will take place with the construction of a 50 km branch line from the Lome-Blitta trunk to Tabligbo, site of the CIMAO regional clinker plant. 6. The free port of Lome was opened to traffic in 1968. Traffic, which has been increasing at an average annual rate of 13 percent since 1968, reached 590,000 tons in 1975, including some temporary traffic for Nigeria diverted because of the congestion of the port of Lagos. The port of Lome's estimated capacity of about 800,000 tons is expected to be reached in the early 1980's. The port authority is independent, well managed, finan- cially autonomous and basically self-supporting. 7. Air transport in Togo is only important for international traffic via the airport at Lome. Between 1970 and 1975 international traffic almost quadrupled. Interior traffic is marginal and limited to military and general aviation. There is limited need for interior air transport because of the good condition of the primary road network, which puts Lome within eight hours' travel of almost any part of the country. Transport Planning and Coordination 8. The Ministry of Commerce and Transport (MCT) is responsible for overall transport planning and coordination. The coordination between transport modes, particularly between road and rail, was extensively stud- ied in the 1960's before major investments in the sector by EDF, KfW and IDA started. These studies led to the introduction of covenants in the First and Second Highway Projects to the effect that the Aneho and Palime lines should be phased out within 10 years after parallel roads were paved (completed in 1968 and 1971 respectively), and that the Blitta line should not be extended without satisfactory economic justification.  - iii - 9. In 1976, the Association re-evaluated the situation and found out that the Palime and Aneho lines still incurred losses ($400,000 per year), but that the proposed fertilizer plant at Kpeme would generate a substantial volume of phosphate bulk traffic to warrant keeping the Aneho line open. The study also indicated that the Blitta line was incurring the heaviest losses ($1.0 million per year), and that CFT continues to be overstaffed and have low productivity. 10. At negotiations the Government explained that the three railway lines serve a useful role as passenger carriers and that it could not consider closing any of them. The Government pointed out that long-term regional devel- opment could justify the northward extension of the Blitta line in the 1980's. The Government asked that, instead of closing the lines, the Association finance under the proposed project a study for the improvement of railway operations. The Association did not insist that the lines be closed, but required that several conditions be met. First, the Government would carry out a study and implement a program (approved by the Association) to improve CFT's operations before December 31, 1979. Funds are included in the proposed project for that study; consequently the previous covenants requiring the closing of the Aneho and Palime lines were annulled. Second, with respect to the Blitta line, it was agreed that the provisions originally included in the Second Highway Credit, namely that the line would not be extended without satisfactory economic justification and that the Association be consulted prior to any major investment in CFT, were to be reincorporated into the proposed Credit Agreement. 11. Main transport issues, other than rail/road coordination and low railway productivity, discussed with the Government were the imbalance in expenditures for road construction and maintenance between the primary and secondary road network and the feeder road network (paras. 14 and 15) and the rationalization of the transport industry (para. 17). The Government is aware of the fact that Togo's prospective transport demand has evolved to the point where there is a need for strengthening the country's overall transport planning organization. To this effect the proposed project would provide for technical assistance to help set up, in the Ministry of Commerce and Transport, a Transport Planning and Coordination Unit that can give adequate and continu- ing guidance on different transport issues and transport investment needs. This unit would be established no later than March 31, 1978. Transport Investments 12. Togo's transport infrastructure has grown rapidly in the last decade as a result of heavy investment in the sector, financed mainly from abroad (EDF, KfW, FAC, and IDA). From 1971 to 1975, about 25 percent of total public investment was earmarked for transportation, amounting to US$61 million or about US$12 million a year. About 55 percent of this amount was spent in the highway sub-sector, mainly for the construction of the south-north axis, and 35 percent for the expansion of the Port of Lome. For the period 1976-80 the Government plans total investments in the trans- port sector of almost US$143 million, more than half of which would be in the highway subsector. A third of this amount is again earmarked for the  - iv - completion of the south-north road axis. Other objectives include construc- tion or improvement of two small rail sections to serve ongoing industrial projects, completion of the expansion of the Port of Lome, and improvement of the airport at Lome and five regional airports. The Highway Subsector 13. The highway network has been described briefly in para. 4. The size of the motor vehicle fleet is estimated at about 14,000 vehicles or 1 vehicle per 150 inhabitants. Between 1971 and 1975 traffic increased by about 8 percent or nearly twice the rate of increase of the gross domes- tic product. 14. The Roads Division (RD) of the Public Works Department (PWD) of the Ministry of Equipment and Postal Service (MEPS) is responsible for construction and maintenance of the primary and secondary road network. This division has been handicapped in the past by lack of experienced personnel and inadequate office space. The latter problem is being remedied by the construction of a new office building. The Ministry of the Interior, with assistance from PWD, is responsible for the maintenance and improvement of feeder roads. Certain regional and agricultural development agencies also undertake limited feeder road construction and maintenance. SRCC and SORAD Maritime, for instance, are carrying out feeder road construction and improvement programs under the Small-holder Cocoa-Coffee Project and the Maritime Regional Rural Development Project; both are financed by IDA. A feeder road component would also be included in a forthcoming IDA-financed cotton project. However, no adequate overall financial or administrative structure exists for these road programs. The proposed project would provide for a study on organizing feeder road construction and maintenance to be carried out before June 30, 1978. 15. Expenditures for maintenance of the primary and secondary road networks are financed almost entirely from PWD's ordinary budget. PWD's ex- penditures for maintenance of the primary and secondary roads are adequate, while annual expenditures for feeder roads are insufficient ($400,000 per year). Following the conclusion of the feeder roads study (para. 14), the Association would consider a separate feeder road project focusing mostly on organization and maintenance. 16. Short-term planning for primary and secondary road construction and maintenance is done annually in conjunction with the preparation of MEPS's budget. There is no overall coordination of road planning, and until recently there was no systematic long-term highway planning; projects were selected on an ad hoc basis. In order to improve road planning and also to develop the country's capability to undertake preinvestment studies, the proposed project would include technical assistance to strengthen the Road Planning and Design Unit within the Roads Division. Road Transport Industry 17. At present all road transport in Togo is in private hands except for a few bus lines, which are operated by the railway authority, and the newly  v created semi-public national transport organization, Togo-Route 1/. The Government, anxious to develop the traffic of goods through the port of Lome to and from Mali, Upper Volta, Niger and Nigeria, negotiated agreements with these states on the division of international truck traffic among their nationals. To ensure that Togo has enough equipment to carry its share of the goods, the Government established Togo-Route, equipping it initially with 55 trucks and 70 trailers. Too fast a development of Togo- Route might lead to overcapacity in the trucking industry. Therefore, at negotiations, the Government agreed that a study of current and future supply and demand for surface transport would be carried out by the pro- posed Transport Planning and Coordination Unit. 18. In 1969 the Government created a Road Transport Service (RTS) to organize and oversee road transport. RTS activities include inter alia transport licensing, studying costs and preparing transport legislation. This agency has been hampered by lack of qualified personnel. The ongoing Second Highway Project provides for an expert to improve RTS's operations and train its staff. This expert is now being recruited. Highway Sector Financing 19. The Government has pursued a conservative highway sector financing policy, with road user charges covering more than 100 percent of highway expenditures, except in 1975 when investments increased by almost 40 percent and coverage fell to 96 percent of expenditures. Continuing this financial policy, the Government doubled road user taxes in early 1976. The proposed Transport Planning and Coordination Unit would look into optimal economic and financial policies in this matter. B. THE PROJECT Project Description 20. The proposed project has, as its main objectives, the improvement of two important roads serving mainly agricultural areas and the preparation of future projects through pre-investment studies. It would also initiate certain institutional reforms in the transport sector by strengthening the Government's overall transport planning and coordinating capacity through the creation of a specialized unit in the Ministry of Commerce and Transport. In addition it would continue the efforts begun under the two previous highway projects to build an efficient Public Works Department within MEPS by providing technical assistance and highway maintenance and workshop equipment. The main components of the project would be: 1/ Togo-Route is authorized to engage in international and domestic trans- port of both passengers and cargo, but has so far limited its interven- tion to international cargo traffic.  - vi - (a) reconstruction of the Aneho-Tabligbo road (45 km) to two-lane paved standards; (b) construction of the Agou-Notse road (51 km) to two-lane gravel standards; (c) provision of technical assistance and fellowships to the Roads Division for road maintenance, and road planning and design; and to the MCT for overall transport planning and coordination; (d) studies for improving CFT's operations, and for organiz- ing feeder road construction and maintenance; and (e) preinvestment studies of the Bassar-Mango road (137 km). 21. The Aneho-Tabligbo road crosses the densely populated Maritime Region. The road ends at Tabligbo, close to the site of the CIMAO clinker plant. The road was paved between 1957 and 1963 as a low-standard, one- lane road. Several sections, subject to frequent floodings, have dete- riorated. The road would be reconstructed as a two-lane paved road. 22. The Agou-Notse road was to have been constructed under the Second Highway project, but work was postponed for lack of funds resulting from cost overruns on other items. The planned two-lane, 8 m wide gravel road would link two agricultural marketing centers and would help open up an isolated, sparsely populated area to migration and agricultural development. 23. Under the First Highway Project, the Roads Division of MEPS was supplied with new maintenance equipment. The proposed project would finance the procurement of 23 additional trucks, as well as equipment for the Equip- ment Division workshop in Sokode. 24. Technical assistance to the Roads Division would consist of pro- vision for about (i) 77 man-months of expert services to complete the training of road maintenance and central workshop staff and to fill organizational gaps which still hamper productivity; and (ii) 20 man-months for the services of an engineer/economist to the Road Planning and Design Unit. There is also provision in the proposed project to strengthen the soil-testing road labora- tory by closely associating it with the supervision of construction of the two project roads. 25. Technical assistance to MCT would consist of provision of about 72 man-months of consulting services to the Transport Planning and Coordina- tion Unit (TPCU). TPCU would inter-alia assist the Government in solving the main issues in the transport sector and in formulating a national transport policy. In particular, it would supervise the execution of the proposed studies for improving CFT's operations and for organizing feeder road construction and maintenance.  - vii - 26. In the past the main difficulty with technical assistance has been the lack of personnel for counterpart training. The Government has indicated that it would step up its recruitment efforts so as to provide TPCU and the Roads Division with qualified and experienced personnel in sufficient number to enable these units to carry out satisfactorily their respective tasks. The proposed project would also provide fellowships for four young DPW engi- neers to receive two years of supplementary education in Mali. 27. The study to improve CFT's operation would be directed at reducing the railway's losses by reducing operating costs, improving staff training and productivity, increasing tariffs and diversification of activities. The study for organizing feeder road construction and maintenance would define the most appropriate organizational framework and the needs and means to construct and maintain feeder roads in order to allow the Bank to appraise its proposed feeder road project. 28. A preinvestment study would be undertaken of the Bassar-Mango road in the northern part of the country. The area to be served by the road is underpopulated but has good agricultural potential. The study should be completed before December 31, 1979. Project Cost and Financing 29. The total cost of the project, excluding taxes, is estimated at US$12.9 million, of which foreign exchange expenditures are US$11.0 million, corresponding to 85 percent of the total. The proposed IDA credit of US$10.0 million would finance 78 percent of the total project cost (net of taxes). The Government would finance the remaining 22 percent (US$1.0 million of for- eign exchange and US$1.9 million of local cost). Taxes are estimated at US$2.4 million. Project Costs (US$ million) Cost Local Foreign Total Taxes Total Net of Taxes Aneho-Tabligbo 0.7 4.2 4.9 1.4 6.3 Agou-Notse 0.6 3.0 3.6 1.0 4.6 Equipment Purchase 0.1 0.9 1.0 - 1.0 Consultants Services /1 0.5 2.9 3.4 - 3.4 TOTAL 1.9 11.0 12.9 2.4 15.3 /1 Including studies and supervision of the two roads. 30. The cost of reconstructing the Aneho-Tabligbo road has been esti- mated on the basis of unit prices and quantities from the detailed engi- neering, to which 10 percent for physical contingencies has been added. Construction costs for the Agou-Notse road are based on the lowest bid received in November 1974, when the road was originally scheduled for  - viii - construction (para. 22). Due to the generally poor soil conditions found in the area, physical contingencies of 15 percent of the total amount of works have been added. Costs for the road maintenance and workshop equipment are based on consultants' estimates using CIF prices of January 1976. All project base cost estimates have been updated to January 1977 prices and appropriate price contingencies have been added beginning January 1977. Consulting services are estimated to cost an average of $6,900 per man-month. Implementation 31. The Ministry of Equipment and Postal Services, through its Public Works Department, would be responsible for project implementation, except for the Transport Planning and Coordination Unit and the studies for improving CFT's operations and for organizing construction and maintenance of feeder roads which would be the responsibility of the Ministry of Commerce and Transport. The proposed project would take nearly four years to complete (April 1977 to December 1980). Technical assistance for the maintenance program under the Second Highway Project, which was to end early in 1977, would be extended for another two years. Technical assistance for the Plan- ning and Design Unit would also be provided for two years as soon as the new PWD premises are completed in early 1978. Technical assistance for the Transport Planning and Coordination Unit would be provided for three years (1978-80). Procurement 32. The reconstruction of the Aneho-Tabligbo road would be carried out by contract awarded after international competitive bidding in accordance with the Bank's Guidelines for Procurement. International bids for the construction of the Agou-Notse road were called and opened in 1974. The Association would not object to the Government awarding the contract to the bidder with the lowest evaluated bid of 1974, provided that the contractor extends the validity of his bid. Otherwise, bids would be called again on an international competitive basis. Road maintenance equipment would be procured after international competitive bidding in accordance with the Bank's Guidelines for Procurement. Workshop equipment amounting to US$50,000 (includ- ing contingencies) or less in the aggregate would be procured on the basis of local procurement procedures acceptable to the Association. Domestically manufactured goods would be allowed a preference of 15 percent, or the level of applicable duty, whichever is less, when comparing domestic bids with those of foreign manufacturers. 33. Construction supervision contracts would be awarded to the consult- ing firms which carried out the detailed engineering of the roads--Gendron Lefebvre for the Aneho-Tabligbo road and DIWI for the Agou-Notse road. Technical assistance for the continuation of the maintenance program would be procured by mutual agreement between the Government and the consultants Louis Berger International, Inc., who carried out the previous programs under the First and Second Highway Projects. Other technical assistance and study items would be carried out according to terms of reference satisfactory to the Association by qualified consultants.  - ix - Disbursements 34. The IDA credit would be disbursed to cover 57 percent of the total cost (including taxes) of the road construction works and 100 percent of the foreign exchange cost of equipment (or 60 percent of local expenditures for equipment locally procured) and 100 percent of the foreign exchange cost of consultants' services. Benefits and Risks 35. The two roads would serve areas with considerable agricultural potential. The justification for the reconstruction of the Aneho-Tabligbo road is based on vehicle operating cost savings. In 1974 the road carried an average of 362 vehicles per day of which about 40 percent were trucks and the remainder passenger cars. Based on a 20-year economic life and an annual traffic growth of 10 percent p.a. in the first 10 years following reconstruc- tion and 5 percent thereafter, the economic return of the reconstruction of the road is estimated at 26 percent. Even under highly unfavorable assump- tions in the sensitivity analysis, the economic rate of return remains over 11 percent. The Aneho-Tabligbo road would also improve access to the CIMAO clinker plant. 36. A two-lane gravel road between Agou and Notse (51 km) was originally approved by the Board of Directors as part of the Second Highway Project, but cost escalation in other components of that project forced deferral of the road. This road would provide a reliable connection between a food deficit area near Agou and the food surplus area of Notse. Most importantly, it would open a new area for agricultural production, as the middle portion of the existing track is practically missing. Preinvestment studies first carried out between 1970 and 1972 were primarily based on an increase in value added to be produced in the zone of influence of the road. Additional studies in 1976 indicate that the project is likely to have a higher return (18% under conservative assumptions) than was originally appraised. As there are clear indications that enough complementary development is firmly planned for the road zone, it was not considered justified to develop a more elaborate economic justification of the whole rural development package. A large part of the benefits would be linked with immigration into the zone, a phenomenon which is rather spontaneous in this part of Togo, as Cabrais people from the north have a tradition of resettling in the region. 37. The institution building aspects of the project are important but the benefits are, of course, much less tangible. Improving the transport planning capacity of MCT is particularly appropriate since Togo's network has an important role to play in the development of a sound West African regional network serving the interests of landlocked and coastal countries alike. Improvements in the NEPS's capacity with respect to road planning and design are urgently required. 38. The main risk of the project is the continued slow response of the Togolese authorities, under the Second Highway Credit for example, to technical assistance components. Delays in the implementation of the technical assistance component of the proposed project would be serious, and close attention would have to be given to this aspect during supervision.   I. THE TRANSPORT SECTOR A. Geographic and Economic Factors Influencing Transport Growth 1.01 Togo is a small country (56,785 km 2) with A 50 km coastline on the Gulf of Benin. It forms a narrow, 600 km corridor between Ghana to the west and Benin to the east. Except for a long mountain range in the north along the border with Benin and in the center along the border with Ghana, Togo's terrain is flat and presents no major topographical obstacles to transport. Togo's northern neighbor is Upper Volta, a land- locked Sahelian country. 1.02 Togo's population is about 2.3 million. Its gross domestic pro- duct (GDP) per capita, estimated at US$270 in 1975, is one of the fastest growing in Africa (4.4% per annum on the average between 1960 and 1973). However, rural incomes average less than US$100 per capita. In 1974 alone GDP grew by 43%, but this was mainly the result of soaring phosphate prices and substantial gains in prices for coffee, cotton and cocoa which are Togo's major export products. A slump in phosphate exports in 1975 coupled with a step-up in consumer goods imports generated by the 1974 boom resulted in a loss of almost one third of the foreign exchange reserves. B. The Transport System 1.03 Togo's transport system is relatively simple. It is geared to meet the country's domestic transport needs and consists mainly of about 7,400 km of roads and of 436 km of railway linking the new deepwater port of Lome, the nation's capital and economic center, with the rest of the country. There is also a phosphate wharf at Kpeme, which is connected to the railway and road networks. Lome has the only international airport; five other small airstrips, mainly in the north, are open to internal general aviation traffic. (a) Highways 1.04 Details of the highway subsector are discussed in Chapter II. (b) Railways 1.05 There are three railway lines in Togo operated by the Reseau des Chemins de Fer du Togo (CFT): a. The Lome-Blitta central line extending from the capital 276 km towards the north; b. the Lome-Palime line, called the "border line," extending 116 km northwestward to the cocoa and coffee growing area bordering with Ghana; and  -2- c. the Lome-Aneho 1/ coastal line extending 44 km eastward via Kpeme (36 kim), site of the phosphate wharf and pro- cessing plant. All lines are meter gauge and in rather good condition. But they have in- curred financial losses over a number of years; closure of some of them has been under consideration since 1968, when the Association made its first loan to Togo (see para. 1.20). 1.06 A fourth line, the CIMAO line (50 kim), is in an advanced stage of planning; it will extend from km 19 on the Lome-Blitta line to Tabligbo, the site of a regional clinker plant, for which financing was recently secured from IBRD and a group of other lenders. (c) Seaports 1.07 As the coastline on the Gulf of Benin offers no natural protection against the ocean, Togo's port needs could only be solved by recourse to major engineering works. Since 1900 four wharves have been successively constructed at Lome while plans were made for a regional port serving both Togo and Benin. After large phosphate deposits were discovered close to Kpeme, 28 km east of Lome, the Togolese phosphate mining company went ahead with the construction of a phosphate wharf at Kpeme in 1955. It was not until May 1959 that the Government of Togo decided to abandon the regional port idea and to build a Togolese deepwater port 8 km east of Lome. Con- struction started in July 1964 with financing from the Federal Republic of Germany (FRG), and in 1968 the deepwater port opened for traffic. There is no interior waterway traffic in Togo. (i) Deepwater port of Lome 1.08 The autonomous port of Lome is a free port 2/ of some 675 ha with three major berths for ships of a maximum length of 270 m and a 9.5 m draught, and one minor berth for ships with maximum draught of 5.5 m. The port also has about 1,000 ha available for industrial installations. There is a separate, small modern fishing port, sometimes used for loading coastal traffic for Nigeria. A new mole is under construction, which, in addition to an extra berth for general cargo, will provide room for petroleum tankers and mineral ships (for clinker from CIMAO). At present petroleum tankers anchor offshore at a sea-line with a 230-ton per hour capacity. When the new mole is completed the port will be able to handle about 800,000 tons of general merchandise imports and exports per year (a one-third increase). No further extension of the port is planned before 1980. 1/ Formerly Anecho. 2/ Port franc: Goods can enter and leave withouL paying duty, and the port is open to vessels of all nationalities.  - 3 - 1.09 Traffic in the port oL Lome increased from 444 ships and almost 253,000 tons in 1968 to 760 ships and almost 590,000 tons in 1975, which corresponds to an average annual traffic growth rate of about 13%. Most imports are related to the cement industry (100,000 tons), petroleum needs (62,000 tons) and ships' supplies (80,000 tons). A major part of the lat- ter (some 55,000 tons), as well as some 45,000 tons of transit traffic for Nigeria, is related to temporary congestion in the port of Lagos, Nigeria. 1.10 The Port Authority is independent, well managed and basically self- supporting. A Togolese director was appointed in 1976. Technical assistance from the FRG has been progressively phased out on the operating side, and the same will be done later on the planning side. ii) Wharf at Kpeme 1.11 The Kpeme wharf is a modern structure that allows the export of at least three million tons of phosphate per year and the import of the petroleum necessary for the exploitation of the phosphate mine. (d) Air Transport 1.12 Air transport in Togo is only important for international traffic via the modern airport of Lome; interior traffic within the ccuntry is lim- ited to military and general aviation. There is little need for interior air transport, because of the good condition of the primary road network, which puts Lome within eight hours' travel of almost any part of the country. i) International traffic 1.13 Togo is a share-holder in the multinational company Air Afrique. Air Togo still exists as a company, although its activity is limited to representing and servicing other airlines in Togo and to three round-trip flights a week between Lome and Lagos. There is a total of 27 flights a week into and out of Lome. The number of passengers coming through Lome increased from less than 10,000 in 1962 to more than 115,000 in 1975, and freight traf- fic increased from 206 tons in 1962 to 3,284 tons in 1975. 1.14 The airport of Lome has a runway 2,400 meters long and 45 meters wide, with a bearing capacity of 140 tons. The airport is equipped with an instrument landing system (ILS). It has three parking stations for jets and a new airport hall (4,000 m ) which can handle up to 500 passengers at the same time. With minor additional investment, the airport seems able to serve Togo's needs for the foreseeable future. ii) Interior air traffic 1.15 As already mentioned, there is very little air traffic in the in- terior and no commercial flights. There are a:ir strips at Dapaon (formerly Dapango), Lhe northernmost city, Mango, Lama Kara, Sokode and Atakpame, of which Dapaon and Lama-Kara are accessible by DC-3. Most of these air strips are equipped with radio facilities.  -4- C. Transport Policy, Planning and Coordination 1.16 The Government's economic objectives are incorporated into Five- Year Plans for Economic and Social Development prepared by the ministry in charge of planning 1/ in cooperation with the ministries in charge of imple- menting them. Under the Second Plan (1971-1975) the Government's major objective in the transport sector was to pave most of the south-north road axis, providing a hinterland for the port of Lome. The axis has been paved except for the last 214 km (para. 2.01). 1.17 Investment expenditures in the transport sector between 1971 and 1975 amounted to CFAF 15 billion (US$61 million) or about US$12 million per year. This was about 25% of total public investment in all sectors of the economy in that period. About 55% of this amount was spent on the improvement of the highway network (para. 2.29). Some 86% of investment expenditures in the sector was financed from abroad (EDF 34%, KfW 30%, IDA and FAC 7% each, others 8%). The remaining 14% was financed from local sources, mainly the Government's investment budget (Chapter I, Table 1). Under the Second Plan, total spending exceeded financial targets by 3%, but project completion data (in physical terms) are not available. 1.18 The Government has prepared an ambitious draft Third Plan for the 1976-1980 period, but due to a fall in export prices, mainly of phosphates, it was compelled to reduce investments foreseen in its original plan and may have to make further reductions 2/. According to the latest figures avail- able the Government plans to invest a total of almost CFAF 35 billion in the transport sector (US$142 million), more than half of which (nearly CFAF 19 billion or US$77 million) would be in the highway subsector (Chapter I, Table 2 and para. 2.15). 1.19 In the draft Third Plan, the Government identifies transport infra- structure as one of the priority sectors. It specifically lists the following objectives for that sector: a. Completion of the ongoing expansion of the Port of Lome and preparation of the port's industrial zone; b. Construction (50 km) and rehabilitation (60 km) of two small railway lines serving industrial projects of a regional character (clinker and fertilizer plants); 1/ At present the Ministry of Planning, Industrial Development and Adminis- trative Reform. 2/ Figures used in this report are those from Troisieme Plan Quinguennal de Developpement Economigue et Social 1976-1980 (en chiffres) which is a revised version of the figures contained in Plan de Developpement Economigue et Social 1976-1980-Projet. It was published early in 1976 and was still the latest set of figures available when this report was prepared.  -5- c. Reorganization of the Road Transport Service (para. 2.07) to achieve better coordination between road transport and other modes of transport and to reduce transport costs; d. Completion of the road network so that it can adequately serve the whole country; e. Improvement of the existing airport of Lome and a study of the future location and cost of a new airport, farther away from the city, so as not to hinder the city's devel- opment; and f. Improvement of five regional airports and study of a new large national airport in Niamtogou, north of Lama-Kara. These five-year objectives seem to be listed in the right order of priority and are basically sound except for the absence of a major effort for feeder roads and the Government's plans for air transport, which appear too ambi- tious for a small country with a modern international airport, a good pri- mary and secondary road network and with more pressing investment needs especially in the agricultural sector. 1.20 The coordination of transport modes in Togo, particularly between road and rail, was carefully studied in the 1960's before major investments in the sector by EDF, KfW and IDA started. These studies led to the con- clusions that the Lome-Palime line and the Lome-Aneho line should be phased out, and the Lome-Blitta line should be extended by a paved road rather than a railway. An independent study dated April 1973 confirmed these conclusions. Consequently, in the Credit Agreements of both the First and Second Highway Projects (Credit 131-TO, 1968 and Credit 450-TO, 1973), covenants were intro- duced which stipulate that: (i) the branch lines of Lome-Palime and Lome-Aneho should be phased out within 10 years after the parallel roads were paved (completed in 1968 and 1971 respectively) unless a feasibility study establishes to the satisfaction of the Association that continued operation of the branches is economically justified; and (ii) the Lome-Blitta line should not be extended unless the Association is provided with satisfactory economic jus- tification. Furthermore, the Government should consult with the Association concerning economic justification of any major investment in CFT before deciding on its implementation. 1.21 In 1976 the Bank Group re-evaluated the situation and learned that the Lome-Palime line continued to incur losses (US$400,000 per year). The Lome-Aneho line, if the proposed fertilizer plant is built, may require  -6- additional investments rather than closure because a substantial volume of phosphate-associated bulk traffic would be carried on the line. The main conclusions of the study were that the railway continues to be significantly over-staffed, productivity is low and that the Lome-Blitta line has now become the line liable to incur the largest financial deficits (estimated at US$1.0 million per year). It recommended that the Government should give serious consideration to closing the Lome-Blitta line except for the first 19 km, which will be rehabilitated for CIMAO, and that steps should be taken to gradually reduce CFT's staff and to redeploy the railway's younger staff and repair facilities to areas of expanding activity such as the new CIMAO line and passenger bus service. 1.22 The Government feels that the three railway lines, although incur- ring losses, still serve a useful socio-economic role as passenger carriers, and that it would be politically impossible to consider closing them. Further- more, the Government is confident that long-term regional developments would justify the extension northward of the Lome-Blitta railway line in the 1980's and would transform CFT into a profit-making organization. The Government has commissioned consultants to carry out the feasibility study of this extension, which would serve potential mining sites. 1.23 Since there are similar transport development plans in other nearby countries, a consultant was engaged by the Bank Group to evaluate overall transport development in West Africa. The consultant found that, even under favorable assumptions, no extension of the Lome-Blitta line is economically feasible in the foreseeable future. As the closing of the two branch lines of Lome-Palime and Lome-Aneho would not substantially reduce the railway deficit and is no longer the main railway issue, the Association accepted deletion of the corresponding covenant of the First Highway Project (para. 1.20(i)), provided that a study be made on ways to help CFT to improve its operations. The other covenants of the First and Second Highway Projects regarding future investments in the railways (para. 1.20(ii)) were incorporated in the Third Highway Project's Credit Agreement. The Association also agreed to finance the foreign component of the study for the improvement of CFT operations, to be completed not later than December 31, 1978 (para. 3.21). The Government has committed itself to take appropriate measures for the implementation of a program for the improvement of railway operations, as recommended by the study and approved by the Association, not later than December 31, 1979. 1.24 Main transport sector problems, other than rail/road coordination and low railway productivity, are (i) the imbalance in expenditures for road construction and maintenance between the primary and secondary networks and the feeder road network (paras. 2.13, 2.15 and 2.31), and (ii) the need for rationalization of the road transport industry (paras. 2.07 and 2.10). In- deed, the country's economic development and prospective transport demand have evolved to the point where transport sector decisions can no longer be postponed. A consistent and detailed long-term plan of action must be worked out. The Government has agreed to strengthen the overall transport planning  -7- organization by creating a unit that can give adequate and continuing guidance on the different transport issues and transport investment needs. That transport planning and coordination unit would also serve as a nucleus for transport policy making in the new Ministry of Commerce and Transport (MCT). A technical assistance element is included in the project (paras. 3.19 and 3.20) to help set up the unit. The Government has agreed to the terms of reference of the planning unit and also to review, with the Association, the recommenda- tions prepared by the unit.  -8- CHAPTER I TABLE 1 TOGO Investments in the Transport Sector and Sources of Financing, 1971-1975 (in millions of CFAF) 1971 1972 1973 1974 1975 1971-75 ROADS AND BRIDGES 1391 1886 1132 1606 2231 8246 Construction including supervision 1212 1698 1073 1461 2111 7555 Lome-Tsevie-Atakpame-Blitta 681 881 840 349 - 2751 Blitta-Sokode-Kambole - - - 1 624 625 Sokode-Lama Kara 175 464 218 - - 857 Lama Kara-Kante - - - 786 551 1337 Lome-Palime-Atakpame-Badou 283 - - - - 283 Other 73 353 15 325 936 1702 Studies 99 39 71 82 291 Organization of road maintenance 44 47 18 38 38 185 PORT OF LOME 302 - - 2826 2050 5178 - - - = - of which: Extension - - - 2826 2050 a/ 4876 AIR TRANSPORT 209 191 29 25 720 1174 of which: Extension Lome - - - - 700 700 RAILWAY TRANSPORT b/ 174 - 80 57 41 352 Track improvement 12 - - 45 9 66 Equipment purchases 162 - 70 - - 232 Renewal telecommunications - - - - 18 18 Studies (CIMAO) - - 10 12 14 36 TOTAL TRANSPORT c/ 2076 2077 1241 4514 5042 14950 Foreign Financing 1632 1509 1102 4211 3159 11613 European Development Fund 966 881 840 1627 701 5015 German Kreditanstalt 312 - - 2334 1900 4546 International Dev. Assoc. 179 164 37 117 558 1055 French Fonds d'Aide et de Cooperation 175 464 225 133 - 997 Local Financing 235 377 110 278 1163 2163 Govt's investment budget 223 377 100 221 1122 2043 Other (mainly railway auth.) 12 - 10 57 41 120 Unknown (air transport) 209 191 29 25 720 1174 a/ Six months only. - b/ Equipment purchases were financed by Kreditanstalt (1971) and the Investment Budget (1973). The rest of railway expenditures was supposedly financed from the rail- way authority's (CFT) budget. c/ Excludes air transport and port investments in last six months of 1975. Source: Data supplied by the Togolese authorities and the EDF.  -9- CHAPTER I TABLE 2 TOGO t.ai3rfAd investMents in the Transport Sector, 1976-1980 (-n millions of CFAF) 1976 1977 1978 1979 i980 1976-80 ?asJ TtlarFport 543 5784 3380 2510 1790 18901 Ruads and br d5es $087 5234 3380 2500 1780 17981 of which: Kan te-Mango-Upper V,-1: a 1600 1200 1800 1000 - 5600 Sokode-Bassar-Mangc 80C 1100 200 350 500 29n5 Yague-Zangabou - 1000 1100 - - 2100 Agou-Notse-Tohoun 500 535 125 300 30' 1755 Blitta-Sokode-Kambole 1450 - - - - 1450 District roads 155 155 155 155 155 775 Lama Kara-K'etao-Benin border - 600 - - - 600 Nyamassila-Benin 50 200 - 195 200 645 Natchamba-Awandjelo - - - 300 325 625 Lome-Ar.eho protection against erosion - - - 200 300 500 Road Transport Industry 225 225 - - - 550 Buildings PWD Lome + Subdivisions 75 275 - 10 10 370 Railways 859 2523 2576 1977 805 8740 of which: Construction CIMAO line - 2000 1608 1710 - 5318 Renewal Lome-Kpeme line 500 500 850 - - 1850 Port of Lome 80 80 80 1580 2080 3900 of which: Construction 2nd breakwater - - - 1000 1000 2000 Air Transport 605 730 340 560 875 3110 Lome airport 605 705 275 305 315 2205 Interior airports - 25 65 255 560 905 TOTAL TRANSPORT 6981 9117 6376 6627 5550 34651 = _ = Source: Togo, Ministere du Plan, Troisieme Plan Quinguennal de Developpement Economigue et Social 1976-1980 (en chiffres), Lome, Direction Generale du Plan et du Developpement 1976, draft.  - 10 - II. HIGHWAYS A. The Network 2.01 Togo's road network comprises: (a) two primary roads going from the capital of Lome (at the southwestern corner of the country) north to the Upper-Volta border (717 km) and east to the Benin border (48 km); the latter is a section of the important Accra-Lome-Cotonou Lagos coastal road; (b) secondary roads (1,602 km) spreading from the above primary roads; and (c) feeder roads totalling about 5,000 km. The growth of the road network is given below (in km): 1970 1971 1972 1973 1974 1975 1976 Primary and Secondary Roads Paved roads 376 412 685 735 1,050 1,050 1,138 Gravel and earth roads 1,511 1,588 1,352 1,303 1,118 1,123 1,229 TOTAL 1,887 2,000 2,037 2,038 2,168 2,173 2,367 Feeder Roads (estimated) 5,000 5,000 5,000 5,000 5,000 5,000 5,000 The two primary roads and about 587 km of the secondary roads are paved, ex- cept the last 214 km to the Upper Volta border. The remaining secondary roads are either gravel or earth roads (1,015 km). The feeder roads are generally dry-weather tracks. B. Traffic 2.02 There are no valid statistics on the motor vehicle fleet, since the Road Transport Service registers new vehicles, but does not collect informa- tion on the withdrawal of vehicles from the fleet. However, assuming an average life span for each category of vehicle, it is calculated that the size of the vehicle fleet was about 14,000 in 1974, or about I vehicle per 150 inhabitants, which is a lower vehicle density per inhabitant than in the neighboring coastal countries except Benin. The table below lists the new vehicle registrations for the period 1970-1974 and the estimated vehicle fleet at the end of 1971 and 1974:  Estimated Eife Fleet New Registrations Span Fnd- End- 1970 1971 1972 1973 1974 (years, 1971 1974 Passenger Cars 1,399 1,434 1,479 1,567 1323 8 7,400 10.00Q Vans 413 4`9 386 317 333 7 2,230 2,j40 Trucks 2.5-9 tons 62 197 158 6 iOl b ) <. over 9 tons 204 23 __ l 29 5 0 400 /f Road .ractors 5 23 16 3 20 /t 70 Trailers 15 61 12 16 15 7 13u 130 Fi;, -s 0 8 10 4 30 30 ~p-