Argentina - Fourth Highway Project

Report No. 1405b-AR FILE Appraisal of a COPY Fourth Highway Project Argentina March 3, 1977 Latin America and Caribbean Projects Department FOR OFFICIAL USE ONLY U Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Currency Equivalents Currency Units = New Pesos ($a) US$1 = $a 248.0 US$1 million = $a 248 million $a 1 million = US$4,032.3 Fiscal Year January 1 to December 31 System of Weights and Measures: Metric 1 kilometer (km) = 0.62 mile (mi) 1 meter (m) = 3.28 feet (ft) 1 square kilometer (km2) = 0.386 square mile (sq mi) 1 metric ton (a ton) 0.98 long ton 1 metric ton (m ton) = 1.1 US short ton 1 liter = 0.264 gallon Abbreviations and Acronyms AGP - Administraci6n General de Puertos DNPIU - Direcci6n Nacional de Puertos e Intereses de Ultramar ER - Economic Rate of Return FA - Ferrocarriles Argentinos FRA - United States Federal Highway Administration FYB - First Year Benefit GDP - Gross Domestic Product INTA - National Institute of Agricultural Technology LRTP - Long Range Transportation Plan NDSP - National Directorate of Sectorial Planning NTP - National Transport Plan TAMS - Tippetts Abbett McCarthy Stratton (US) Consultants UNSF - United States Special Fund VOC - Vehicle Operating Costs FOR OFFICIAL USE ONLY ARGENTINA APPRAISAL OF A FOURTH HIGHWAY PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ..................... .......... - ii 1. INTRODUCTION ......................................... - 2. THE TRANSPORT SECTOR ..................... ........... 3 A. Surface Transport ................................... 3 B. Railways .............................................. 4 C. Inland Waterways .................................... 5 D. Ports ................................................. 5 E. Transport Planning and Coordination .............. 7 3. THE HIGHWAY SUBSECTOR .................... ........... 9 A. The Highway Network .................................. 9 B. Road Transport ...................................... 9 C. Highway Administration ............................. 10 D. Highway Financing ................................... 11 E. Highway Planning .................................... 11 F. Highway Engineering ................................. 12 G. Highway Construction ............................... 13 H. Highway Maintenance ................................ 13 4. THE PROJECT ......................................... 14 A. General Description .................... ........ 14 B. Road Betterment Program .......................... 14 C. Regional Agricultural Development Study .......... 15 D. National Transport Plan ................ ........ 16 E. Pavement Overlay Study ........................... 17 F. Traffic Safety Program ........................... 17 G. Cost Estimates ................................ 18 H. Disbursements ................................. 18 I. Execution and Procurement ................ ...... 20 This Appraisal Report has been prepared by Messrs. R. Rafloski (Economist), L. Revuelta (Engineer), C.H. Mumme (Economist) and P. Taborga (Economist); it has been edited by Miss V. Foster. This document has a restricted distribution and may be used by recipients only in the performance of their omcial duties. Its contents may not otherwise be disclosed without World bank authorization. TABLE OF CONTENTS (Continued) 5. ECONOMIC EVALUATION ......................... ......... 20 A. General ........................................ 20 B. Road Betterment Program .......................... 20 C. Regional Agricultural Development Study .......... 23 D. National Transport Plan .......................... 23 E. Pavement Overlay Study ................ ......... 23 F. Traffic Safety Program ........................... 23 6. AGREEMENTS REACHED AND RECOMMENDATION ................. 24 TABLES 1. Composition of Highway Network 2. Vehicle Registration 3. Motor Fuel Consumption 4. National Highway Expenditures 5. Geometric Design Standards for National Roads 6. Basic Data Concerning Proposed Road Programs 7. Estimated Schedule for Disbursements 8. Economic Evaluation of Road Betterment Program CHARTS I. Organization of the National Highway Authority (Vialidad Nacional) II. Organization of the Ministry of Economy III. Initial Implementation Schedule ANNEXES 1. Railway Freight Traffic 2. Statistics on Port Traffic Table 1: Total Port Traffic (1971-1975) Table 2: International Traffic Table 3: Domestic Traffic Table 4: Grain Storage Capacity (1976) 3. Road Betterment Program - Description of the Road Works 4. Regional Agricultural Development Study 5. National Transport Plan - Summary of Terms of Reference 6. Pavement Overlay Study - Summary of Terms of Reference 7. Traffic Safety Program - Summary of Terms of Reference 8. Economic Evaluation of the Road Betterment Program - Risk Analysis MAP IBRD 12627R - Argentina - Fourth Highway Project ARGENTINA APPRAISAL OF A FOURTH HIGHWAY PROJECT SUMMARY AND CONCLUSIONS i. Inter-urban transport demand in Argentina is characterized by the movement of traditional grain and livestock production in the Pampa; the flow of goods and services along the important industrial corridor in the east extending from Cordoba through Santa Fe, Rosario, and Buenos Aires to La Plata; and the movement of specialized production of the various geo-economic regions to the consumption centers and ports and the smaller flow of manufac- tured goods in the opposite direction. Most of this demand has been met by road. The road network, which now carries about 3 million vehicles, has been substantially upgraded over the last 15 years. Further upgrading of the highway infrastructure is necessary to support the planned resumption of economic growth, in particular the development of agricultural exports. New development roads are needed to open up untapped agricultural potential. A substantial planning effort is required to update transport sector knowledge and to set policies and prepare investments. ii. The present project is well geared to these objectives. It would provide for: (a) the betterment of about 1,351 km of important primary and secondary links; (b) a Regional Agricultural Development Study; (c) preparation of a National Transport Plan; and (d) a Pavement Overlay Study and a Traffic Safety Program. iii. The proposed project is a followup to previous projects (three projects in 1961, 1969, 1971, total lending US$125 million) which provide for upgrading and construction of 4,090 km of primary and secondary roads, roughly one-third of the total mileage of upgrading undertaken since 1963. Reconnaissance and feasibility studies undertaken under these projects, as well as direct technical assistance, have strengthened the planning function of the National Highway Department (Vialidad Nacional). iv. The cost of this proposed Fourth Highway Project is estimated at US$345.1 million equivalent. The estimated foreign exchange cost is US$124.0 million equivalent, of which it is proposed that the Bank would finance US$105.0 million equivalent. The balance of US$240.1 million equivalent in foreign and local costs would be provided by the Government. - ii - v. Detailed engineering for the Road Betterment Program is completed. The cost estimates have been updated to March 1977; adequate contingencies have been included. Consultants will assist the Government in analyzing bids and supervising construction. Consultants will also assist the Govern- ment in carrying out the Regional Agricultural Development Study, the National Transport Plan, the Pavement Overlay Study, and the Traffic Safety Program. Adoption by the Government of satisfactory measures to ensure participation in the National Transport Plan of concerned agencies and public enterprises will be a condition of disbursement for this project component. vi. Vialidad will be responsible for the Betterment Roads Program, the Pavement Overlay Study and the Traffic Safety Program. The Ministry of Economy, with the coordination and supervision of the State Secretariat of Economic Programming and Coordination, will be responsible for the Regional Agricultural Development Study. The National Directorate of Sectorial Plan- ning, under the Under-Secretary of Transport within the Ministry of Economy, will be responsible for the National Transport Plan. vii. The economic return (ER) on the road betterment sections in the project varies between 16% and 53%, with a weighted average return of 23%; the project is thus well justified. viii. The project is suitable for a Bank loan of US$105.0 million equiva- lent. The term would be 15 years, including a three-year period of grace. ARGENTINA APPRAISAL OF A FOURTH HIGHWAY PROJECT 1. INTRODUCTION 1.01 The first Bank highway loan to Argentina (288-AR, US$48.5 million equivalent, in June 1961) was made to finance the foreign exchange cost of a project comprising the improvement of 2,600 km of national highways, consul- tant services, and procurement of road maintenance equipment. At that time, the Bank was the Executing Agency for a study of Argentina's transport system financed by the United Nations Special Fund (UNSF); the study was,completed in early 1962, and the results were published as "The Long Range Transportation Plan" (LRTP). A number of problems developed in the course of the first Bank project, the most important being a shortage of local funds. After unsuccess- ful efforts by the Government and the Bank to resolve these problems, the amount of the loan was reduced to US$31 million in 1965 to correspond to a more limited scope of work. Subsequent efforts by the then new management of the National Highway Department (Vialidad Nacional) led to completion of the revised project by its extended Closing Date of December 31, 1968. 1.02 In June 1969, the Bank made a second loan for highways (619-AR, US$25 million) to help finance upgrading of 800 km of three national highways and consulting services for construction supervision, for a reconnaissance study of highway investment priorities, and for feasibility studies and detailed engineering. All construction contracts were satisfactorily bid, and construc- tion work was completed by June 30, 1973, one year behind the initial schedule. Performance was generally good. Construction costs were about 20% below estimates. 1.03 After completion of the project works under the second highway project, a sum of US$5.2 million remained unspent. The Bank agreed not to cancel the amount remaining unspent since the saving was mainly due to the fact that the increase of the dollar/peso exchange rate was higher than the increase in construction prices expressed in pesos. Hence, to compensate for this, the Government and the Bank agreed, in early 1974, to include the improvement of two further road sections in the project (Rio Colorado-Cotita 136 km and Pradere-Rufino 125 km). Bids for these sections amounted to about US$11.0 million equivalent; the Bank agreed to finance 40% of this amount, or US$4.4 million, leaving US$0.8 million (7% of construction costs) available for contingencies during construction. Initial progress was hampered by lack of equipment, but works are now proceeding satisfactorily and are expected to reach completion by the end of 1977. 1.04 A Bank transport sector mission in 1968 recommended, inter alia, the preparation of a plan to rehabilitate the Argentine Railways (Ferrocarriles Argentinos FA), a State-owned enterprise. In May 1971, the - 2 - Bank made a loan (733-AR, US$84 million) to help finance the first phase of a comprehensive rehabilitation and modernization plan which complemented total investments of about US$900 million equivalent over the period 1971-1975. The plan entailed introducing economies in the use of staff, facilities and equipment; procuring new, and rehabilitating existing, rolling and motive stock; and introducing a commercially oriented approach. Implementation of the plan commenced in 1971, but suffered a major setback before it could pick up momentum. The combination of declining traffic and failure to main- tain tariffs in real terms led to a worsening financial situation, which, in turn, led to insufficient investment in track renewal, locomotive rehabilita- tion and purchase of other equipment and facilities necessary to provide efficient service. Eventually, the situation deteriorated to such an extent that the Government and FA opted to cancel the loan rather than renegotiate on the basis of new targets (para. 2.05). As a result, US$27.5 million of the loan was cancelled on July 2, 1974, with further disbursement permitted only for orders placed before April 30, 1974. 1.05 A Third Highway Project (Loan 734-AR, US$67.5 million, in May 1971) was based on the reconnaissance study, the feasibility studies and the detailed engineering which formed part of the second project. This project provided for upgrading of 28 sections of national roads totalling 1,128 km and consulting services for construction supervision, preparation of a highway investment program, feasibility studies, and detailed engineering. By the end of 1973, contracts had been awarded for all sections but one, which required supplemen- tary engineering because of unusually complex soil conditions. The latter section was eventually contracted in early 1975. Fifteen sections totalling 556 km, i.e. 53% of the total, have been satisfactorily completed. Construction of the remaining 13 sections totalling 493 km ran into severe problems caused by the very difficult overall economic situation which prevailed in 1975 and early 1976. Delays in payments of up to six months and staggering inflation at about 600% between March 1975 and March 1976 have had a crippling effect on the financial situation of contractors. Most of them had to suspend work. The few firms which remained active were hampered by extreme difficulties encountered in obtaining spare parts for imported equipment. After March 1976, the Government undertook to liquidate pending payments, to amend ongoing con- tracts to include a satisfactory escalation formula, and to negotiate pending claims arising from suspension of work. Work has now resumed at a normal pace on nine sections. A new call for bids is under way for the other four sections. The bulk of the remaining works, representing about 20% of the total mileage included in the project, is expected to be carried out in 1977, with the completion of several contracts extending into the first quarter of 1978. 1.06 Total Bank lending for the three highway projects completed or reaching completion stands at US$124.5 million and provides for upgrading and construction of 4,090 km of primary and secondary roads, roughly one-third of the total mileage of upgrading undertaken since 1963. Reconnaissance and feasibility studies undertaken under these projects, as well as direct technical assistance, have strengthened the planning function of Vialidad Nacional. Upgrading of important roads and improvement in planning will be -3- pursued further under the present project, which also includes a limited program for development roads. 1.07 In June 1971, the Bank carried out a comprehensive review of Argentina's transport sector, which focused on modes not covered in depth in the 1968 mission, such as ports, water transport, civil aviation and pipelines. The review facilitated analysis of the problems faced in implementation of the rail project (para. 2.05) and served as a basis to initiate preparation of the Proposed Fourth Highway Project. The proposed project was appraised for the first time in early 1972. However, in early 1973, processing was suspended pending resolution of issues related to the management of the transport sector. A decision to revive the project was taken in late 1974, which led to reappraisal and negotiations of a project with a somewhat modified content in 1975. Presentation to the Board was postponed on account of general economic management issues related to worsening of the economic situation. After adoption of corrective policies during the second quarter of 1976, the project was reactivated. The Bank and the Government undertook to redefine the project in light of the priority given to the development of agricultural production and exports. The updating and expansion of the project was initiated during the reappraisal mission of July 1976; the final preparation of several key aspects extended until mid- November 1976, particularly the updating of the economic evaluation of the Road Betterment Program and the arrangement for carrying out the proposed National Transport Plan. 1.08 This report is based on the reconnaissance survey and the feasibi- lity and detailed engineering studies carried out by the consultants Ingeneco and Organtec (Argentina); on information provided by the Government; and on the findings of a mission comprising Messrs. R. Rafloski (Economist), L. Revuelta (Engineer), C. H. Mumme (Economist), and P. Taborga (Economist) which visited Argentina to reappraise the project in July 1976. It has been edited by Miss V. Foster. 2. THE TRANSPORT SECTOR 2.01 The highway subsector is described in detail in Chapter 3. This chapter reviews briefly the characteristics and problems of the transport system with special attention to export outlets. A. Surface Transport 2.02 In 1974, total freight movements in Argentina amounted to about 94.5 billion ton-km. Of this, about 40% was carried by road, 37% by coastal shipping and river transport, 11% by rail, and 12% by pipelines. Intercity passenger traffic increased considerably during the last two decades, reach- ing a total of 59.0 billion pass-km in 1974, of which road transport (both public and private) accounted for 88.8%, rail for 8.5% and air transport for the remaining 2.7%. Road transport is dominant; coastal shipping and river transport are specialized in bulk. Railways' share of land transport has decreased continuously over the last 20 years. 2.03 Except for some peripheral areas, the present road system is generally adequate in coverage for the needs of the economy. The numerous interruptions of the road network and the lack of lateral links which earlier hampered communications and transport between urban centers have been largely corrected in recent years by the expansion of the primary and secondary network. Meanwhile, the vehicle/population ratio (para. 3.02) has increased substantially due to the expansion of the local automobile industry, and the relatively high income per capita of the population (US$1,592 in 1975). As the economy expands and road traffic increases, substantial investments are, and will be, required (a) to upgrade the more heavily travelled portions of the network; (b) to open up areas with undeveloped production potential; and (c) to substitute for uneconomic railway services once these are discontinued, as is now being considered (para. 2.06). B. Railways 2.04 Railways played a crucial role in the early economic growth of the country. The relative importance of rail freight transport has decreased, however, particularly during the last 15 years, and the share carried by highways and pipelines has correspondingly increased. Traffic for 1973-1976 is shown in Annex 1. Until 1946, there had been a large number of individual railway systems in Argentina, mostly privately owned. In that year, the Government purchased the private railways and entrusted management of the entire network (44,000 km) to FA. The network was formed into six systems, four with broad gauge, one with standard gauge and one with meter gauge. The Government, however, failed to create a fully unified organization and to discontinue services which could no longer be provided economically in view of the changed demographic pattern, the new distribution of economic activity and the develop- ment of other transport modes. FA suffered severe financial deficits. Produc- tivity was low and services poor. FA's share of the total traffic underwent continuing erosion in spite of heavily subsidized tariffs. 2.05 In 1970, the Government and FA adopted a plan to enable the railways to retain that traffic which they could carry more economically than the other modes. The Bank helped to finance this plan under Loan 733-AR (para. 1.04). By February 1974, the Bank had determined that, despite the measures taken by the Government and FA to improve the operation of the railways, little or no improvement had been achieved in their physical and financial condition during 1972 and 1973 and that performance had fallen below the established targets. As a result, in April 1974, the Bank offered the Government and FA the alter- natives of (a) renegotiating the loan on the basis of including new targets, methods for periodically testing whether such targets would be achieved and specific actions to be taken by the Government and FA; or (b) cancelling the balance of the loan, with disbursements being permitted only against orders placed before the original closing date of April 30, 1974. The Government -5- and FA elected the latter alternative. The situation continued to deteriorate through early 1976. Over the period 1973-1976, personnel increased from about 142,000 employees to about 158,000 while annual traffic decreased from 19 to 16 million tons. 2.06 The new Government which came to power in March 1976 has already taken several steps to check the general deterioration of FA and has recog- nized the need to restructure FA to restore its financial viability. The measures taken so far include substantial tariff increases and a start in the reduction of costly inter-urban passenger services. The Government and FA have undertaken to prepare a plan of action to redefine FA's role in the transport sector, to rationalize operations and to plan investments as neces- sary to enable FA to provide reliable and modern services. Under this plan, the Government is considering, as a first step, the closure of some 4,000 km of lines. The Under-Secretariat of Transport recognizes the need to lessen the social impact of closures with measures to ensure interim compensation for redundant railway personnel and to provide alternate transport where rail is currently the only mode. 2.07 Lack of improvement in railway operations may, in the future, affect the capacity of the transport system to channel exports, particularly from inland cereal-producing areas to Bahia Blanca. Export evacuation will be one of the focal points of the proposed National Transport Plan (para. 2.20). The Government has recently introduced measures designed to alleviate obstacles to free competition between modes. It has, in particular, taken action to limit the role of the National Grain Board in allocating cargo between rail and roads. The Board, which used to purchase from the farmers, now purchases only at the ports. C. Inland Waterways 2.08 The Plata River and its tributaries -- the Parana, Uruguay, Paraguay and Alto Parana Rivers -- form a navigable system of more than 3,000 km. The tributaries, particularly the Parana River, are an important outlet for cereals and other exports and carry about 40% of the total grain exports (total grain exports average 8.0 million tons p.a.). The water depth limits the draft of ships entering the river system and, hence, excludes the larger bulk carriers or restricts their loading capacity. A major project, the dredging of the 50- km Mitre Channel, was completed in December 1976. It shortens the sailing distance between Buenos Aires and the river ports by some 60 km. D. Ports (i) General 2.09 Argentina's ports can be classified into three geographic zones: (a) the Atlantic, whose main ports are Bahia Blanca, Comodoro Rivadavia, and Quequen; (b) the Plata River, whose main ports are Buenos Aires and La Plata; and (c) the Parana River, whose main ports are San Nicolas, San Martin, Rosario and Santa Fe. These nine ports handle about 80% of the total traffic - 6 - (68.6 million tons in 1975), with Buenos Aires accounting for more than one- third. Except in the southern Atlantic areas, natural conditions for ports are unfavorable. Most ports are affected by silting and require costly maintenance dredging. 2.10 Main ports are somewhat specialized: (a) general cargo (Buenos Aires); (b) mineral and petroleum products (Comodoro Rivadavia, San Nicolas, Santa Fe, and La Plata); and (c) grain products (Rosario, Bahia Blanca, Quequen and Santa Fe). Roughly 70% of the total tonnage handled in ports is domestic waterborne bulk traffic, essentially petroleum products, gravel and sand. Selected data concerning port traffic are provided in Annex 2. 2.11 Imports and exports have been averaging about 24 million tons p.a. during the last five years, 1971-1975. Buenos Aires, which accounts for 45% of external traffic, is more or less balanced between imports and exports. San Nicolas handles mainly import traffic, and the four grain ports handle basically export traffic. General cargo, minerals, and petroleum products make up the largest part of the imports, with the latter two commodities showing a marked increase (approximately 15% p.a. between 1971-1975). Grain exports (averaging 8 million tons per year) represent about 60% of export traffic. Beef, representing about 3% of the export tonnage, is handled by Buenos Aires. 2.12 Argentina ports were notorious in the 1950s and early 1960s for their congestion and inefficiency. The situation improved considerably after 1966, and average turnaround time dropped substantially, but low productivity and marketing inadequacies still result in seasonal congestion. Most cargo- handling equipment in Argentine ports is generally obsolete. Administracion General de Puertos (AGP) has a plan for replacement of equipment which would call for an expenditure of some US$40 million equivalent during the 1976-1977 period. Port infrastructre appears adequate and, at the most, may need to be rehabilitated. Grain storage facilities at port terminals have a total prac- tical capacity of 2.7 million tons (grain elevators, 1.2 million tons; sub- terranean silos, 1.5 million tons). This capacity is adequate for present needs but may require some expansion to accommodate large expected increases in grain exports, particularly at Bahia Blanca. (ii) Dredging 2.13 Although general cargo vessels (mainly 12,000-20,000 dwt) -- both Argentine and foreign-flag -- have generally adapted to the shallow draft conditions in Buenos Aires and the Parana River ports, these conditions constitute a handicap for vessels engaged in the grain trade. The average size of grain bulk carrier calling at Argentina's ports is well below the worldwide economic size of 50,000 to 60,000 dwt. An extensive dredging program would be required to enable larger vessels to enter the shallow water ports. Over the period 1971-1975, maintenance dredging has been averaging only about one-half of what AGP considers necessary. - 7 - 2.14 Existing dredging equipment is obsolete and of insufficient capacity. The Government had approached the Bank for assistance and intends to initiate project preparation work with UNDP financing, to determine dredging require- ments, review AGP dredging operations, draw up a rehabilitation program for the dredging fleet and determine the economic and financial viability of the necessary investments. E. Transport Planning and Coordination (i) General 2.15 The policies pursued over the 1973-1975 period left Argentina's transport sector in a state of disarray. Ineffective sector management, overstaffing, inadequate maintenance, and excessive subsidization are among the legacies that the present Government must resolve. The railway, which suffered most, typifies the situation of state-owned transport agencies (para. 2.05). Transport planning and coordination, which had achieved some measure of progress until 1973, came to a halt. The staff of the Planning Office in the Secretariat of Public Works and Transport was disbanded or transferred. Rampant inflation and shortage of funds brought construction projects to a standstill. 2.16 The new Government which came to power in March 1976 had been primarily occupied with immediate macro-economic problems and is still in the process of formulating comprehensive sector policies for transport. It has, however, indicated a number of policies which have direct implications for the transport sector: (a) restricting public investment to high priority projects; (b) restoring the financial integrity of state-owned agencies; (c) developing exports; and (d) opening up new areas for agricultural development. The present project reflects some of these objectives. The measures envisaged for the railway (para. 2.06) suggest that progress will be resumed toward the improvement of transport coordination and planning. The formulation of policies and investment plans for effective sector management will require a thorough review to assess future demand, determine modal distribution and define capacity requirements. The National Transport Plan to be prepared under the project will answer the need for such a review and provide the basis for developing effective management of the sector. (ii) Institutions 2.17 Argentina has been slow in developing effective institutions and policies for transport planning and coordination. A Sectorial Development Office was established in 1968 with the specific objective of improving trans- port coordination and developing transport investment review procedures. The 1969 reorganization of the Ministerial Departments brought all public transport responsibilities except air transport under one Ministry. The staff of the Sectorial Development Office was strengthened, and it assumed responsibility for supervision and coordination of all planning and investment studies involving more than one mode. Specific undertakings concerning the two above points were included as covenants to the Loan Agreement for the Third Highway Project. - 8 - The institutions established at that time remained in place through the 1973- 1976 period, but lost a large proportion of their staff and their effective- ness. In 1974, the Sectorial Development Office initiated a very general transport study, mainly emphasizing rail. The study was never completed. 2.18 The new Government has restructured the institutions responsible for transport matters. The new organization is not a radical departure from the previous one. It suggests a willingness to reinforce the planning function, which is also exemplified by the detailed organizational arrangements drawn up by the Government for the preparation of the National Transport Plan. Another positive development of more importance is the fact that a determined effort has been made to bring back competent staff at decision-making levels in the various agencies dealing with transport matters. 2.19 The Secretariat of Public Works and Transport has two Under- Secretariats for the corresponding functions plus Under-Secretariats for Policy and Coordination, Water Resources, and Environmental Planning. The Under-Secretariat of Transport is the supervisory body for railways and road transport. Its planning and coordinating function is embodied in the National Directorate of Sectorial Planning (NDSP), which will be responsible for the National Transport Plan. Highway infrastructure is under the Under-Secretariat of Public Works which, as such, supervises Vialidad Nacional. All agencies dealing with ports and waterborne transport are under the Secretariat of Maritime Affairs within the Ministry of Economy. Pipelines remain with the Secretariat of Energy. (iii) National Transport Plan 2.20 The gap in knowledge regarding transport facilities and equipment, their condition and age and ability to meet expected demands is serious. Although individual project studies have been undertaken, there has been no real coordination among them over the last five years. There are also serious policy questions and sector management problems which need to be addressed. The Government has decided to undertake a National Transport Plan to be prepared under the direction of the Under-Secretariat for Transport. The NDSP will act as Executing Agency and Coordinator. The main objectives of the Plan will be: (a) to analyze and project transport demand in relation to planned development of the economy; (b) to review existing capacity and operations; (c) to determine the role of each mode in relation to demand; (d) to recommend policies and operational improvements de- signed to make best use of available and future capacity; and (e) to prepare a program of investments necessary to improve and expand capacity as required. The arrangements proposed for preparing the Plan are outlined in Chapter 4. - 9 - 3. THE HIGHWAY SUBSECTOR A. The Highway Network 3.01 Argentina's road system (Table 1) comprises: (a) a national network of about 47,500 km, all primary roads, about 50% of them paved; (b) provincial networks including: -- 68,800 km of primary roads, about 22% paved; -- 94,000 km of secondary roads (2% paved); and -- 792,500 km of tertiary and rural roads (gravel and earth) Additional penetration and development roads are needed in the far north and- the extreme south. Increasing traffic levels will require a continuing program of paving. Primary access roads to larger cities need increased capacity to accommodate present high volumes of traffic. The investment problem is that of ensuring wise timing of improvements complemented by a systematic choice of appropriate standards. The Government has acknowledged the need for careful studies prior to investment decisions. The National Transport Plan will provide, inter alia, the basis to plan future highway investments. B. Road Transport 3.02 Road tranport has expanded rapidly in the last 15 years, and the total vehicle fleet has increased by about 8% per year, reaching 3.3 million vehicles in 1975 (Table 2). This represents a vehicle density of about one vehicle per eight inhabitants, about the level of motorization of Southern Europe. The distribution of the vehicle fleet is similar to the distribution of economic activity: 60% of the fleet is concentrated in the Federal Capital and Buenos Aires province, and another 25% in the provinces of Santa Fe, Cordoba, Corrientes and Mendoza. Details of the composition of the vehicle fleet are given in Table 2 and details of motor fuel consumption in Table 3. Commercial traffic on different roads ranges from 13% to 65% of total traffic, with 30-40% being most usual. Truck transport is used for all commodity types transported in the country, on both long and short hauls. Freight rates are low because of the generally easy terrain, which permits the use of heavy truck trailers with a low power-to-weight ratio. 3.03 Highway accidents are a major problem in Argentina. The design of many road sections does not reflect modern safety considerations. US Federal Highway Administration (FRA) advisers, who were attached to Vialidad between 1970 and 1974, developed a program for the national highway network that included: (a) a road inventory; (b) a manual of sufficiency rating; (c) traffic counting and classification; (d) a vehicle weight study; and - 10 - (e) a preliminary safety study. This safety study estimated that approxi- mately 5,000 people are killed and 50,000 are injured annually in traffic accidents. These figures represent an accident rate of over 20 deaths per 100 million vehicle-miles, a rate over four times higher than that of the United States. The proposed project makes provision for development of a Traffic Safety Program (para. 4.11). C. Highway Administration 3.04 Planning, construction and maintenance of the national highway network is the responsibility of Vialidad Nacional, a semi-autonomous organiza- tion under the supervisory authority of the Under-Secretariat of Public Works (Chart I). Vialidades Provinciales (provincial highway departments) are similarly responsible for provincial networks. 3.05 Vialidad's headquarters in Buenos Aires plans, controls the budget for, and coordinates development of, the national highway network, and is also responsible for economic and engineering studies. Construction supervision and road maintenance of the national network are carried out by Vialidad's 24 district offices, which report to headquarters through four regional offices. The size of Argentina's highway network and its level of development call for a policy of decentralizing several highway functions. Vialidad has delegated maintenance, and in some instances construction, to the stronger provincial highway departments. Some provincial roads, particularly those which have a relevance to the national network, are also maintained and constructed by Vialidad. Vialidad, however, has been extremely cautious in its decentralization efforts, due to the varying degree of confidence it has in the capabilities of the individual provinces. 3.06 Vialidad's staff has been at a level of about 16,900 for the past two years. There are 700 university graduates, 3,300 technicians, 1,250 in administrative functions, 800 service personnel and 10,800 laborers. The work force is more or less adequate in number and qualifications. There is some overstaffing at low or middle echelons at headquarters. Vialidad's effect- iveness over the next few years will depend on its capacity to attract and retain a sufficient number of qualified staff for key managerial and advisory positions. This will require continuity in management and possibly some adjustment in the salary scale. The newly appointed Director General is committed to the strengthening of Vialidad management. 3.07 Regulations governing vehicle weights and dimensions are satis- factory. Axle loads are limited to 10,600 kg for a single axle and 18,000 kg for tandem axles. A good number of weighing units are on hand (26 fixed and 70 portables), and the vehicle weighing program recommended by FRA advisors, which will make it possible to control about 80% of the truck traffic on national roads, is now under way. During negotiations, it was agreed that this program will be in full operation by June 30, 1978. - 11 - D. Highway Financing 3.08 Highway expenditures, comprising road construction, maintenance and administration, have been financed from earmarked and general revenue tax funds and from external sources. Table 4 shows Vialidad's total expenditures and resources for the national and provincial roads. The level of expendi- tures has increased steadily in real terms over the last ten years except for 1975 when, in view of its severe financial problems, the Government diverted a substantial portion of Vialidad's intended allocation to the general budget. This situation was corrected in June 1976, and Vialidad is now receiving adequate resources for current maintenance and administration and for comple- tion of ongoing capital projects. 3.09 The various taxes, levied either directly or indirectly on vehicle ownership and use, make up a complex system. The taxes applying to ownership and use of vehicles were raised in the early 1970s and brought to a point where the level of taxation was considered adequate. The present Government has declared its intention of making each mode pay for itself and thereby is removing elements of subsidy, including those on petroleum products. 1/ The National Transport Plan will provide a detailed assessment of the present situation concerning taxation of road transport. 3.10 The distribution of funds among the 22 provinces for provincial primary roads is based on population, fuel consumption and matching revenue collected by the provinces. The formulas are complicated and do not neces- sarily produce an economically optimum allocation. Consideration of a new system for allocating highway funds is awaiting better definition of the provincial primary road system, which will be based on the road inventory now under way. E. Highway Planning (i) General 3.11 Up to 1968, Vialidad's planning suffered from inadequate data and absence of a central mechanism for reviewing investment proposals. Improvement of highway planning has been one of the objectives of various Bank projects. The Second Highway Project provided necessary electronic equipment for improving compilation of road traffic and inventory data. It also provided for the development of a comprehensive traffic counting system, including 122 permanent counting stations and 2,000 additional locations at which periodic counts are made. FHA advisers (para. 3.03) have helped Vialidad in its drive to improve data collection; the inventory of the national road system has now been com- pleted. The inventory of the provincial primary system is reaching completion. 1/ Gasoline prices are now about US$0.81 equivalent per US gallon (US$0.21/ liter) for super grade and US$0.71 equivalent per US gallon (US$0.19/ liter) for regular. Diesel fuel is now about US$0.44 per US gallon (US$0.12/liter). Taxes account for 50% of retail price for gasoline and 40% for diesel. - 12 - Next Vialidad intends to undertake, over the period 1977-1980, an inventory of the provincial secondary system, which will be essential for improving the funds allocation system and for planning development roads. During negotiations, the Government agreed that Vialidad will complete: (i) by December 31, 1978, the inventory of the provincial primary road system; and (ii) by December 31, 1980, the inventory of the provincial secondary road system; both inventories to be at a level of detail satisfactory to the Bank. 3.12 Over the last ten years, Vialidad has improved procedures for reviewing investment proposals. Consultants TAMS (US) and Ingeneco-Organtec (Argentina) carried out a highway reconnaissance survey under the Second Highway Project. This survey screened the country's national and provincial primary road networks, identified roads having high priority for improvement and construction, and provided information on the technical characteristics and economic justification of all major highway investment projects. This survey was completed in 1970 and formed the basis for Vialidad's 1971-1975 Five-Year Investment Plan. The survey was updated in 1971 under the Third Highway Project and has provided the basis for selecting the road sections included in the Road Betterment Program to be considered under the proposed Fourth Highway Project, which is the main element of the current investment plan of Vialidad for 1977-1979. (ii) Development Roads 3.13 There are many shortcomings in the present method of planning for development roads: poor coordination among agencies, minimal effort to adjust investments to real needs, and too little consideration given to agri- cultural or regional programs. Detailed planning and execution of development roads should be done at the provincial level. It is clear, however, that initiation and preparation of development road projects within the framework of agricultural development programs will require the intervention of Vialidad and central agencies responsible for regional development. The Government has stressed its intention to open up areas with undeveloped agricultural potential and has undertaken consultation with provincial authorities to define the scope and institutional arrangements for implementation of regional programs, including construction of roads. The proposed project includes a Regional Agricultural Development Study (paras. 4.04-4.06). F. Highway Engineering 3.14 Over the last ten years, Vialidad has perfected its design practices by optimization of design standards and introduction of stage construction principles (Table 5). Vialidad will be faced in the coming year with increas- ing requirements for rehabilitation and strengthening of aging pavements and will have to assess pavement conditions and to develop criteria to program overlays. A study to develop such criteria and to initiate systematic pave- ment surveys is included in the project (para. 4.10). 3.15 Vialidad formerly used consultants only for projects financed by external lenders, but it now makes extensive use of local consultants for detailed engineering and const-ruction supervision for all projects. The consulting services provided in the Second and Third Bank Highway Projects - 13 - were valuable in supervising and coordinating the work of other consultants and in issuing guidelines and manuals for contract supervision. The pro- fessional level of many Argentine transportation and engineering consultants is up to international standards. G. Highway Construction 3.16 The quality of construction work in Argentina prior to 1967 was uneven. Construction periods were often twice as long as initially estimated, mainly because of lack of funds and deficient contract administration. After 1967, the combination of adequate funding and better management by Vialidad resulted in a general improvement in contractor performance, more rigorous enforcement of contract conditions, and modernization of specifications. 3.17 Over the last four years, however, a number of factors have caused delays and difficulties in the execution of construction contracts: labor problems, shortage of materials, unusually heavy rains in 1972 and 1973 and an unresponsive price adjustment formula. The situation has now improved. Labor problems seem to be settled. Vialidad has revised the price adjustment formula. The length of construction periods and the level of contingencies for the project roads reflect recent experience. 3.18 The local construction industry has developed considerably. More than 20 local firms -- some of which began as subsidiaries of large inter- national firms -- can handle road contracts of over US$10 million per year. The value of construction contracts awarded by Vialidad averaged US$127 million yearly in 1969-1971. Highway construction is carried out under unit price contracts let after competitive bidding. Prequalification of bidders on the basis of a permanent registry periodically updated is an established practice in Argentina. This system will be used for the prequalification of local firms. In order to provide foreign firms an opportunity to partici- pate in the bidding, Vialidad will carry out prequalification procedures for these firms in accordance with Bank Guidelines. The Bank has accepted this approach. Experience with it under the Second and Third Highway Projects has been satisfactory. H. Highway Maintenance 3.19 The quality of maintenance on the national network, in general, is satisfactory. Recently, however, retiring personnel have not been replaced as necessary to maintain adequate capacity. In addition, field units have run short of equipment for lack of timely replacement and spares. Maintenance works have fallen somewhat behind requirements. Vialidad has undertaken to correct the situation. During negotiations, an assurance was obtained from the Government that it will continue to maintain the national highway network adequately and will provide sufficient resources for the purpose. 3.20 Maintenance of the provincial roads is not as good as that of the national roads. In general, maintenance is more satisfactory in the more developed provinces -- Buenos Aires, Cordoba, Santa Fe, and Mendoza -- than in the less developed ones. Several agreements have been signed between Vialidad and the provincial authorities that will help improve their main- tenance practices. - 14 - 4. THE PROJECT A. General Description 4.01 The proposed project consists of: (i) Road Betterment Program (total length 1,351 km); (a) Paving and improving of 14 earth or gravel sections totalling about 925 km, (b) Repaving and improving of four sections of paved highways totalling about 390 km, and (c) Upgrading of two sections, totalling about 36 km, from two-lane to four-lane. (ii) Regional Agricultural Development,Study; (iii) National Transport Plan; (iv) Pavement Overlay Study; and (v) Traffic Safety Program. The project is expected to take about three years from mid-1977 to mid-1980. B. Road Betterment Program 4.02 The sections proposed for improvement are listed with their essen- tial characteristics in Table 6 and are shown on Map IBRD 12627R. A more detailed description of the roads, and of the proposed works, is given in Annex 3. Specific road sections were id4ntified on the basis of a reconnais- sance survey carried out under the Second Highway Project and subsequently updated under the Third. The road sections included are located in regions which export, and are expected to continue to export, a significant portion of their production. Importance for transport of export was a decisive factor in selecting the sections retained under the project. The specific role of each section in this respect is underlined in Annex 3. The project roads are presently in poor physical condition, mainly because they have been supporting an average daily traffic substantially heavier than the traffic for which they were originally designed. Some sections are obsolete for their present level of traffic and have to be improved in order to become amenable to current maintenance. Other sections suffer from congestion and need expanded capacity. The proposed investments include the upgrading and paving of heavily trafficked earth and gravel roads, repaving and widening of existing paved roads and re- construction, including realignment, of certain road sections to higher stand- ards. In addition to reducing transport costs, these improvements will contri- bute to (i) develop areas which have not yet reached their full agricultural potential; (ii) alleviate congestion on the arterial links leading to main - 15 - export centers; and (iii) facilitate integration and trade with neighboring countries. The roads are located in 14 provinces. The proposed project concentrates on existing roads, and no adverse effects on the environment are expected. 4.03 The road sections in the Road Betterment Program are under the authority of Vialidad, which would be the executing agency for the program. Bidding documents have been prepared by Vialidad through its consultants (Ingeneco-Organtec). Vialidad intends to initiate calls for tenders during the second quarter of 1977. It is expected that these works could begin in the third quarter of 1977 and that they would take about three years to com- plete. During negotiations, the standards to which the roads will be con- structed were confirmed (Table 5) and the timetable for tendering was dis- cussed and agreed. The Government also confirmed that consultants retained for the supervision of civil works, as well as their terms and conditions of employment, will be acceptable to the Bank. C. Regional Agricultural Development Study 4.04 The Regional Agricultural Development Study (Annex 4) will assist the Government in preparing agricultural development programs in regions with development potential where land is presently underutilized and where the lack of secondary and feeder roads is a major constraint for development. Argentina is one of the few countries in the world that still has abundant unutilized lands available that could be brought into agricultural production if adequate road transport and complementary investments were provided. However, past policies in Argentina have provided little inducement for development of this exploitable land. The present Government's policy is to stimulate increases in agricultural production, but, because of the lack of emphasis in land development in prior administrations, there is little specific information regarding the exact potential of these unexploited lands. The proposed study will include identification of the most suitable area in Northern Argentina for intensified agricultural development, including the settlement of farmers to develop crop and/or livestock production; and the preparation of a feasi- bility study for an agricultural development project in the selected area, including recommendations for construction of secondary and feeder roads. 4.05 The Ministry of Economy (Chart II), with the coordination and super- vision of the State Secretariat of Economic Programming and Coordination, will be responsible at the central level for undertaking this project component and ensuring adequate coordination with other agencies at the provincial and central levels. Preliminary estimates show that the proposed study will take approximately 12 months and will require about 175 man-months. 4.06 During negotiations, the Government agreed that, within six months after the date of the Loan Agreement, it will employ consultants whose qualifications, experience and terms and conditions of employment will be acceptable to the Bank to assist in carrying out the study. - 16 - D. National Transport Plan 4.07 The National Transport Plan will provide the basis for future plan- ing ard coordination in the sector and will be carried out with the partici- pation of relevant Government agencies and public enterprises. The National Directorate of Sectorial Planning under the Under-Secretariat of Transport within the Ministry of Economy will be responsible for the management and coordination of studies and investigations to be carried out for the proposed National Transport Plan; it will require about.2,100 man-months with substantial partici- pation of Argentinian firms (Annex 5). 4.08 The preparation of the National Transport Plan will include: (a) a short-term program (1978-1979) that will identify and diagnose the critical problems of the sector; propose a mechanism for coordinating management, operational and investment decisions; and provide a coordinated 1978-1979 investment plan for the sector. Such investments are expected to consist principally of improvements and rehabilitation of the most urgently needed transport facilities; and (b) a detailed five-year action program (1980-1984) which will include (i) a proposed national strategy and set of policies for the devel- opment, management and operation of the transport system; (ii) a program of action for each transport mode that will include, inter alia , required changes in transport pricing based on user's cost, required regulations for each subsector and required improvements in operations; (iii) a proposed system for the future planning and coordination of transport operations and investments; (iv) a determination of the future role of each transport mode on the basis of an analysis and forecast of future transport demand in relation to the expected development of the economy, and, in particular, development of a phased program for the closure of uneconomic railway lines when desirable; and (v) a five-year investment plan (1980-1984), which will include new construction and expansion of capacity, and an indicative ten-year investment plan. In the preparation of these invest- ment plans, particular attention will be given to the investments needed to open up new areas to agricultural production, support the expansion of exports, and achieve greater regional integration with neighboring countries. 4.09 During negotiations, the Government agreed: (a) to carry out the National Transport Plan with the participation of the various concerned agencies and public enterprises and in accordance with a schedule of implementation (Chart III) and terms of reference satisfactory to the Bank; (b) to furnish to the Bank by January 31, 1978 the short-term program referred to above, for an exchange of views thereon; and (c) to exchange views from time to time with the Bank on the program of action for the execution of the recommendations of the National Transport Plan. The Government also agreed that no disbursement will be made for this project component unless measures satisfactory to the - 17 - Bank will have been taken to ensure the continuing participation of the various concerned Government agencies and public enterprises in carrying out the National Transport Plan. The scope of these measures was reviewed and agreed during negotiations. They will be incorporated into a Decree which is now being approved and will expectedly be enacted by April 1977. E. Pavement Overlay Study 4.10 The proposed project includes a pavement deflection study of selected highways (para. 3.14). The study will review the methodologies currently used for the technical and economic evaluation of overlay designs and the current practices for cost estimation and bid document preparation. Recommendations will also be made on the organization, staffing, and equipment necessary to ensure a continuing program of investigation of the asphaltic paved network. The proposed study will take approximately 18 months and will require about 82 man-months. Annex 6 provides an outline of the scope of work, the consulting services and the equipment requirements. During negotiations, the Government confirmed that, within six months after the date of the Loan Agreement, Vialidad will employ consultants whose qualifications, experience and terms and conditions of employment will be acceptable to the Bank to assist in carrying out the study. F. Traffic Safety Program 4.11 The lack of traffic safety is a major problem in Argentina (para. 3.03); however, data on which to base effective programs are scarce. The proposed project envisages the preparation of an action program aiming at: (a) adapting available literature and manuals on the subject to Argentinian conditions; (b) recommending programs for improvement of signs and markings, road design and construction and maintenance practices; (c) educating the public; (d) establishing vehicle safety standards; (e) providing training and licensing for drivers; (f) strengthening police enforcement; (g) effecting improvement of dangerous sections on the most heavily trafficked roads; and (h) establishing a procedure for collecting and analyzing motor vehicle accident statistics. Apart from the inclusion of highway safety engineers in the preparation of the action program, it is envisaged that sociologists and psychologists might participate to investigate driver behavior, and that institutions such as the active Automobile Club of Argentina might be represented. Necessary consulting - 18 - services (about 84 man-months) will be provided under the project. The scope of work and the technical assistance requirements are outlined in Annex 7. During negotiations, the Government confirmed that, within six months after the date of the Loan Agreement, Vialidad will employ consultants whose quali- fications, experience and terms and conditions of employment will be accept- able to the Bank to assist in formulating and initiating a Highway Safety Program. G. Cost Estimates 4.12 The total cost of the project is estimated at US$345.1 million, including contingencies for quantity increase and provision for expected price increases. Details of construction costs for individual road sections are given in Table 6. A summary of the project cost appears on the following page. In view of the high rate of inflation of the national currency and the frequent changes in the rate of exchange, cost estimates were prepared only in US$ at the exchange rate prevailing in October 1976 ($a 248.00 = US$1.00). 4.13 The estimates of construction costs for the Road Betterment Program are based on quantities derived from completed detailed engineering. Base costs represent the best estimate up to March 1977. They take into account the application of a revised and more responsive price adjustment formula (para. 3.17). During negotiations, the Government agreed that a responsive price adjustment formula, already being satisfactorily applied, will be used for the proposed project works. The project includes 4,100 man-months of consulting services for the supervision of the Road Betterment Program. 4.14 The estimate of the foreign exchange component of civil works is 35%, assuming that these would be carried out by local contractors. Under the second and third projects, the Bank financed 50% and 45% of the total costs, assuming higher foreign participation than did, in fact, materialize. The costs of consulting services are based on recent contracts with Argentine firms and their subcontracts with foreign firms. It is estimated that the average foreign exchange component of consulting services for supervision, studies and technical assistance elements would be about 45%. Under the pre- vious projects, the Bank financed 60% and 45% of the cost of consulting services. H. Disbursements 4.15 The foreign exchange component of the project is estimated at US$124.0 million equivalent, of which US$105.0 million equivalent would be financed by the proposed loan. All local costs and other foreign exchange costs would be met by the Government. 4.16 The Bank would disburse at the rate of 30% for road construction works and supervision and 45% for consulting services for studies and tech- nical assistance. The Bank would finance the c.i.f. cost of equipment imported for pavement testing. Construction of the road sections is expected to com- mence during the last quarter of 1977. All project components are expected to be completed by the end of 1980. On this basis, the loan would be dis- bursed as set forth in Table 7. - 19 - Project Cost Estimates /1 and Financing Estimated Local Foreign Bank Participation Currency Currency Total Amount % 1. Road Betterment Program a. Civil Works 161.2 86.9 248.1 74.4 30 b. Supervision (5% of Civil Works) 7.4 5.0 12.4 3.7 30 Sub-Total 168.6 91.9 260.5 78.1 2 . Regional Agricultural Development Study Consulting Services 0.4 0.3 0.7 0.3 45 3. National Transport Plan Consulting Services 2.4 3.6 6.0 2.7 45 4. Pavement Overlay Study a. Consulting Services 0.1 0.2 0.3 0.15 45 b. Equipment -- 0.3 0.3 0.30 100 Sub-Total 0.1 0.5 0.6 0.45 5. Traffic Safety Program Consulting Services 0.1 0.2 0.3 0.15 45 Base Cost 171.6 96.5 268.1 81.7 6. Contingencies a. Physical (Civil Works and Super- vision) (10%) 16.9 9.2 26.1 7.8 b. Price (19% of Base Cdst)/2 32.6 18.3 50.9 15.5 Sub-Total 49.5 27.5 77.0 23.3 TOTAL 221.1 124.0 345.1 105.0 29 /1 Cost Estimates Adjusted from October 1976 to March 1977. /2 Price Contingency Based on Following Estimated Price Increases (per year): 1977-1979, 9%; 1980-1985, 8%. - 20 - I. Execution and Procurement 4.17 Responsibility for the various project components is indicated in paragraphs 4.03, 4.05, 4.07, 4.10, and 4.11. The implementation schedule is shown in Chart III. Construction contracts will be let on the basis of unit prices after international competitive bidding in accordance with the Bank's Guidelines. The estimated value of individual contracts will range from US$2.0 to US$8.0 million, so that small and middle size local contractors will have an opportunity to bid. However, to attract the larger contractors, individual contracts will be grouped, where feasible, into "packages" of two or three lots. Works in each package will be bid simultaneously, and bids will be allowed for any or all lots and packages. During negotiations, details of the packages were agreed upon. The civil works components of the project will have a substantial employment impact, providing jobs for about 4,000 laborers and technicians over a period of three years. Equip- ment for the Pavement Overlay Study (US$300,000) will be procured under negotiated contracts. 5. ECONOMIC EVALUATION A. General 5.01 This economic evaluation concentrates on the Road Betterment Program civil works component of the project (which, including supervision, represents about 97% of the estimated project base cost). Quantifiable benefits are discussed in detail, and an indication is provided of non- quantifiable benefits which will result from the investment. A qualita- tive assessment is made of studies and technical assistance components. B. Road Betterment Program (i) General 5.02 The selection of the roads for the Road Betterment Program is based on the highway reconnaissance study referred to in paragraph 3.12 and updated by consultants Ingeneco-Organtec (Argentina) in 1976. The road sections re- tained under the Road Betterment Program were selected in view of their specific relevance to the upkeep and expansion of agricultural exports. They fulfill one or more of the following functions: (a) linking export outlets with regions which at present produce substantial exportable surplus; (b) improving access to regions in which production potential has been constrained by poor transport infrastructure; and (c) linking productive regions with centers selected by the Government for the establishment of grain storage facilities. All road sections were evaluated following the same methodology and using the Road Analysis Model (RAM) developed in the Bank. The evaluation considered the economic costs of civil works, including supervision and physical contingencies; maintenance costs, vehicle operating costs, and time costs in the "without" and "with project" alternatives, as well as the effects of congestion. The high overall rate of return of the Road Betterment Program presented here (para. 5.09) reflects the selection of road works most urgently needed. - 21 - (ii) Road Works 5.03 The proposed investments include the upgrading and paving of earth and gravel roads, repaving and widening of existing paved roads, and realign- ments of segments at higher standards, with distance savings (Table 6). In addition to reducing transport costs, several of the improvements will contri- bute to: (a) Developing areas which have not yet reached their full potential for agricultural production (Santiago del Estero, Hisiones, San Juan, San Luis and Formosa); (b) Alleviating congestion on the arterial links leading to the main export centers; and (c) Facilitating integration and trade with neighboring countries through improved road transport in the case of sections in Misiones (with Brazil and Paraguay) and Formosa (with Chile and Paraguay). The details of the economic evaluation are given in Table 8. (iii) Traffic 5.04 Traffic volumes on the proposed road sections were estimated in surveys conducted by Vialidad and consultants Ingeneco-Organtec, and, in all cases, were updated with traffic counts made during 1976, which is the base year. Traffic volumes range from 209 ADT (average daily traffic) in the case of Vera-Tostado (Section 13) in the Santa Fe province to 7,830 ADT for Circunvalacion de San Juan (Section 10) in the San Juan province. Projections have been made for the 20-year economic life of the various subprojects from 1980 to 1999. Normal growth rate projections determined on the basis of past trends and economic feasibility studies are shown in Table 8. They range from 3.5% per annum to 9.0%. The estimated growth rates seem reasonable and are in line with the Bank's projection of GDP growth, which is expected to average about 5% p.a. The proportion of trucks and buses on the various sections ranges from 7% to 64% of total ADT (Table 8). 5.05 The road works in the Road Betterment Program will "generate" traffic by reducing passenger and freight costs. The operating cost elasticities for road transport are moderate, ranging from 0.19 to 0.36 with one exception, San Luis-Candelaria, which is 0.49. The estimates for generated traffic range from 3.8% to 22.9% of opening year traffic. Traffic diverted from rail is not significant since there is little or no competition among the modes in the zones of influence of the project roads. (iv) Benefits 5.06 The benefits computed are the following: (a) savings in vehicle operating costs; - 22 - (b) savings in time; and (c) savings in road maintenance costs. Benefits not quantified in the evaluation are reduced accident costs, reduced breakage and spoilage of cargo, reduced inventory costs for goods in transit, and savings from elimination of road closures due to bad weather. The eval- uation performed is therefore conservative. 5.07 Time costs for drivers of trucks and buses were based on their actual wages. Time costs for drivers and passengers of automobiles driving for work purposes were based on the average per capita income of the labor force (persons betweeen the ages of 14 and 65), which is much lower than the income of car owners and users, and approaches the recommendations on the valuation of time given by the Bank Staff Working Paper #199, "A Survey of the Theories and Empirical Investigations of the Value of Travel Time Savings." Time values for bus passengers travelling for work purposes were based on the workers' average income. Developmental effects of the proposed road sections are implicit in the determination of generated traffic and its benefits as a consumer surplus in relation to vehicle operating costs and time costs. The average incidence of time savings on total benefits is less than 10%, well within the boundaries of the risk analysis (para. 5.11). (v) Economic Returns 5.08 The economic evaluation considered the economic cost of initial construction and periodic resurfacing required during the 20-year economic life. Construction of the road sections was projected to commence in 1977. (a) Total Road Betterment Program 5.09 The economic rate of return (ER) was computed on the costs and quantified benefits described above, over the project life period 1977-1999 covering construction period plus economic life. The program has a weighted ER of 23% and a first year benefit (FYB) of 22%. The program is clearly well justified. (b) Individual Road Sections 5.10 The details of the evaluation of the proposed 20 road sections are given in Annex 3 and Table 8; rates of return range from near 16% to 53% and FYB between 12% and 67%. Sensitivity tests applied to the economic evalua- tion consider a 15% increase in costs and a 25% decrease in benefits. The ER ranges between 14% and 48% for the cost increase hypothesis and between 12% and 44% for the benefit decrease hypothesis, indicating that the feasibility of the total program would remain within acceptable limits. (c) Risk Analysis 5.11 A risk analysis was performed for all road sections. The likely variability in project parameters was represented by normal distributions for - 23 - all cost and benefit streams. The analysis shows the virtual assurance of having a rate of return exceeding 10% (the estimated opportunity cost of capital for Argentina) for all sections; furthermore, the same can be said for a rate of return of 15% for all but three sections (Annex 8). C. Regional Agricultural Development Study 5.12 Argentina still has unutilized lands that could be brought into agricultural production. One of the present Government's objectives is to increase agricultural production, particularly exports. The proposed study will identify the most suitable area in Northern Argentina for intensified agricultural development. It will lead to the adoption of improved regional development policies and to the preparation of specific programs to increase agricultural development. D. National Transport Plan 5.13 In addition to the anticipated upgrading and expansion of transport infrastructure, the Government plans, over the next several years, to close uneconomic rail lines (para. 2.06). These investments and disinvestments will cost several hundreds of millions of dollars equivalent and will have substantial effects on both the productive sectors (construction and agricul- ture, in particular) and on employment. The proposed National Transport Plan (paras. 4.07 and 4.09) is expected to consider these impacts and to present a rational investment plan based on economic criteria. It will therefore be the source of substantial economic benefits. E. Pavement Overlay Study 5.14 A large part of the Argentine road network is in danger of deteriorating rapidly because of pavement fatigue. The pavement overlay study (para. 4.10) will help to identify sections for which overlay is economically justified and will provide a basis for developing overlay programs as necessary to prevent the need for more costly reconstruction. F. Traffic Safety Program 5.15 Highway accidents are a major problem in Argentina. A preliminary traffic safety study prepared by an FHA team indicated an accident rate four times higher than that of the United States and an annual loss through high- way accidents of about US$750 million (para. 3.03). The proposed nationwide traffic safety program (para. 4.11) is expected to reduce the accident rates substantially and, thereby, to yield important economic and social benefits to road users. - 24 - 6. AGREEMENTS REACHED AND RECOMMENDATION 6.01 During negotiations, agreement was reached and assurances were obtained from the Government on the following: (a) the agreed vehicle weighing program to be in full operation by June 30, 1978 (para. 3.07); (b) Vialidad to complete: (i) by December 31, 1978, the inventory of the provincial primary road system; and (ii) by December 31, 1980, the inventory of the provincial secondary road system; both inventories to be at a level of detail satisfactory to the Bank (para. 3.11); (c) the Government to continue to maintain the national highway network adequately and to provide sufficient resources for the purpose (para. 3.19); (d) standards for roads included in the Road Betterment Program and timetable for tendering (para. 4.03); (e) consultants for supervision of civil works, as well as their terms and conditions of employment, to be acceptable to the Bank (para. 4.03); (f) the Government, within six months after the date of the Loan Agreement, to employ consultants whose qualifications, experience, and terms and conditions of employment will be acceptable to the Bank to assist in carrying out the Regional Agricultural Development Study (para. 4.06); (g) the Government to: (i) carry out the National Transport Plan with the participation of the various concerned agencies and public enterprises and in accordance with a schedule of pro- gress and terms of reference satisfactory to the Bank; (ii) furnish to the Bank, by January 31, 1978, the short-term program for an exchange of views thereon; and (iii) exchange views from time to time with the Bank on the program of action for the execution of the recommendations of the National Transport Plan (para. 4.09); (h) scope of measures to ensure continued participation in carrying out the National Transport Plan (para. 4.09); (i) Vialidad, within six months after the date of the Loan Agree- ment, to employ consultants whose qualifications, experience, terms and conditions of employment will be acceptable to the Bank to be employed to assist in carrying out the Pavement Overlay Study (para. 4.10); - 25 - (j) Vialidad, within six months after the date of the Loan Agree- ment, to employ consultants whose qualifications, experience, and terms and conditions of employment will be acceptable to the Bank to assist in the Highway Safety Program (para. 4.11); (k) a responsive price adjustment formula, already being satis- factorily applied, to be used for the proposed project works (para. 4.13); and (1) details of the packages for construction works (para. 4.17). 6.02 The following is a condition of disbursement for the National Transport Plan: measures satisfactory to the Bank to be taken to ensure the continuing participation of the various concerned Government agencies and public enterprises in carrying out the National Transport Plan (para. 4.09). 6.03 Subject to the above, the project constitutes a suitable basis for a Bank loan of US$105.0 million equivalent to the Republic of Argentina; the term would be 15 years, including a three-year grace period. March 3, 1977  TABLE 1 ARGENTINA FOURTH HIGHWAY PROJECT Composition of Highway Network A. National Network Portland Cement Bituminous Gravel or or Asphalt Surface Stabilized Earth Year Concrete Treatment Base Earth Tracks Totals 1962 5,025 7,068 8,137 20,176 5,999 46,405 1963 5,444 7,529 8,423 19,004 5,648 46,048 1964 5,782 8,020 8,692 17,851 5,298 45,643 1965 6,144 8,570 8,772 17,277 5,105 45,868 1966 6,592 8,975 8,735 16,966 5,014 46,182 1967 6,622 10,214 8,613 15,804 4,881 46,134 1968 6,693 11,009 8,410 15,390 4,589 46,091 1969 6,693 11,545 8,265 15,587 4,437 46,527 1970 7,315 11,962 7,748 14,358 4,332 45,715 1971 7,550 12,390 7,702 13,866 4,207 45,715 1972 8,295 13,274 7,220 13,146 4,133 46,048 1973 8,514 14,160 7,011 12,558 3,861 46,104 1974 8,941 14,643 7,305 12,247 3,874 47,010 1975 9,559 14,510 7,521 12,102 3,771 47,463 B. Provincial Network Gravel or Earth Paved Stabilized Earth Tracks Totals 1972 Primary 13,687 21,081 24,202 4,845 63,815 Secondary 1,489 35,114 45,875 4,804 87,282 Tertiary 787 1,174 13,261 700,000-L- 715,222 1973 Primary 14,040 21,522 25,100 4,960 65,622 Secondary 1,560 36,200 47,010 4,900 /1 89,670 Tertiary 802 1,225 13,700 725,102 - 740,889 1974 Primary 14,520 22,105 25,600 5,025 67,250 Secondary 1,625 37,150 48,300 5,100 /1 92,175 Tertiary 850 1,275 14,150 750,560 - 766,835 1975 Primary 15,020 22,600 26,100 5,100 68,820 Secondary 1,710 38,200 48,900 5,200 /1 94,010 Tertiary 900 1,310 14,750 775,550 - 792,510 /1 Estimates Source: Vialidad, July 1976 October 1976 TABLE 2 ARGENTINA FOURTH HIGHWAY PROJECT Vehicle Rezistration (in thousands) Private Year Vehicles Buses Trucks Trailers Total 1961 535 14 424 42 1,015 1962 624 16 470 46 1,156 1963 697 17 502 49 1,265 1964 806 19 553 53 1,431 1965 914 20 554 56 1,544 (%) (56%) ( 1%) (40Z) ( 3%) (100%) 1966 1,031 22 599 62 1,714 1967 1,139 22 639 67 1,867 1968 1,241 23 645 70 1,979 1969 1,351 23 682 75 2,131 1970 1,449 25 711 80 2,265 (%) (62%) ( 1%) (33%) ( 4%) (100%) 1971 1,680 29 803 83 2,595 1972 1,853 31 855 87 2,826 1973 2,012 32 890 86 3,020 1974 2,160 34 932 86 3,212 1975 2,228 34 941 86 3289 (%) (66%) ( 1%) (30%) ( 3%) (100%) AVERAGE ANNUAL GROWTH RATES (%) 1960-70 11.7 7.2 6.5 6.9 8.5 1960-65 14.3 9.4 7.0 7.5 8.6 1965-70 10.3 4.8 4.3 7.1 8.0 1970-75 9.5 7.0 6.2 1.6 7.5 Source: Vialidad, July 1976- December 1976 TABLE 3 ARGENTINA FOURTH HIGHWAY PROJECT Motor Fuel Consumption (in thousand cubic meters) Year Gasoline Diesel Fuel 1961 3,119 1,550 1962 3,437 1,920 1963 3,337 2,073 1964 3,727 2,510 1965 4,124 2,751 1966 4,362 2,851 1967 4,739 3,145 1968 4,802 3,468 1969 5,050 3,812 1970 5,288 4,077 1971 5,646 4,365 1972 6,005 4,367 1973 6,348 4,564 1974 6,143 4,854 1975 5,090 5,250 AVERAGE ANNUAL GROWTH RATES (%) Gasoline Diesel Fuel 1961-71 6 11 1961-66 7 13 1966-71 5 9 1971-75 -2 5 Note: Diesel fuel is total sales of diesel fuel for all purposes; road transport use is estimated to he 60% of total consumption. Soutce: Vialidad and Direcci'n Nacional de Energia and Combustibles, July 1976 October 1976 TABLE 4 ARGENTINA FOURTH HIGHWAY PROJECT National Highway Expenditures /1 (millions of $a of 1970)-- Year Construction Maintenance Administration Total 1970 816 98 142 1,056 1971 910 110 174 1,194 1972 974 116 146 1,236 1973 840 157 171 1,168 1974 528 209 426 1,163 1975 349 121 223 693 NATIONAL HIGHWAY RESOURCES (millions of $a of 1970) Road UseY2 National /3 Year Charges- Budget Loans Other Total- 1970 865 35 46 124 1,070 1971 936 35 163 109 1,243 1972 952 7 82 29 1,070 1973 973 - 217 7 1,197 1974 1,115 64 137 57 1,373 1975 468 53 42 2 565 /1 Current exchange value in 1976 $a248.0 = US$1.0 /2 Part of user taxes allocated directly to Vialidad Nacional /3 End-of-year balances are carried over into the next year (this is the reason why the expenditures for one year do not equal resources). Source: Vialidad National, July 1976 December 1976 TABLE 5 ARGENTINA FOURTH HIGHWAY PROJECT Geometric Design Standards for National Roads/i ----------Class of Highway- ay-- I II III 17 Design 5,000- 1,500- 500- 150- ADT 15,000 5,000 1,50 500 Design Speed Flat 130 120 110 100 km/h Rolling 110 100 90 70 Mountainous 80 70 60 L0 Minimum Horizontal Flat 700 600 500 400 Radius, m Rolling 500 400 300 160 Mountainous 220 160 120 50 Maximum Grade, % Flat 3 3 5 6 Rolling 5 5 6 7 Mountainous 6 7 7 8 Sight Distance for Flat 260 220 185 160 Stopping Rolling 185 160 135 90 Mountainous 110 90 75 45 Sight Distance for Flat 860 800 740 680 Passing, m Rolling 740 680 610 470 Mountainous 540 470 400 260 Pavement Width, m Flat 7.50 7.30 7.30 6.70 Rolling 7.50 7.30 6.70 6.70 Mountainous 7.00 6.70 6.70 6.00 Shoulder Width, m Flat 3.00 3.00 3.00 3.30 Rolling 3.00 3.00 3.30 3.30 Mountainous 3.00 2.00 1.50 1.25 Width of Bridges, m Flat 8.30 8.30 8.30 /2 Rolling 8.30 8.30 8.30 Mountainous 8.30 8.30 7.00 /1 These standards were adopted in 1967. Bridges are designed for the German standards "DIN-1075" as modified and set forth in the Vialidad standard design manual (in use 1970) entitled "Bases para el Calculo de Puentes de Hormigon Armado Pavement Armado." Pavement design is based on a 12,000 lb. wheel load equivalent. /2 For structures 10 m long or less, total width generally equals pavement width plus shoulders. Source: Vialidad, 1976 December 1976 ARGENTINA FOURTH HIGHWAY PROJECT Basic Data Concerning Proposed Road Programs Road Betterment Program Route Existing Road Proposed Highway Design Construction Construction No. No. Provinces From - To Surface Terrain Length Distance Surface Speed Cost Cost/km (km) Saved(km) Type Km/h (million US$ equiv.)(thousand US$) 1 157 Santiago del Estero Lavalle-Limite con Tucuman Earth Flat 32 6 A.C. 120 4,471,816 139,744 2 191 Buenos Aires Salto - Chacabuco Earth Flat 41 9 A.C. 120 5,454,632 157,430 3 38 La Rioja La Rioja - Bazan Earth Flat 35 D.S.T. 5,276,680 150,762 4 205 Buenos Aires Saladillo - Bolivar Earth Flat 130 23 A.C. 120 21,757,528 167,366 5 81 Formosa Interseccion R.N.95-Estanislao del Campo Earth Flat 43 A.C. 120 7,829,608 182,084 6 S/No Cordoba Empalme R.N.20-Empalme R.P.55 DST Rolling 4 4 A.C. 100 4,607,008 1,151,750 7 14 Misiones Campo Grande - Dos de Mayo Earth Rolling 35 8 A.C. 100 10,045,080 287,002 8 146 San Luis San Luis - Candelaria Gravel Rolling 160 25 A.C. 90 22,067,736 137,923 9 226 Buenos Aires Carlos Tejedor - General Villegas Earth Flat 66 12 A.C. 100 9,119,696 138,177 10 90 Formosa Villa km 213 - Riacho El Salado Earth Flat 32 6 A.C. 100 4,989,528 155,923 11 S/No San Juan Circunvalacion S.Juan y Accesos (F.L.D.H.) DST Flat 21 6 A.C. 130 24,308,360 1,157,541 12 147 Mendoza, San Juan, and LaValle - Lujan DST Rolling 230 40 DST 110 24,313,600 105,711 San Luis 13 14 Misiones Leandro N. Alem - Obera Earth Rolling 28 A.C. 100 5,980,936 213,605 14 7 Neuquen Empalme R.N.237 - Lago Espejo Earth Mountainous 72 A.C. 19,937,152 276,905 15 S/No Santa Fe Vera - Tostado Earth Flat 123 26 DST. 120 18,677,456 151,849 16 P30 Salta Coronel Olleros - Luis Burela DST Flat 94 6 TST 120 14,135,424 150,377 P5 17 S/No Tucuman Empalme R.N.301-Empalme R.N.9(F.L.D.H.) DST Flat 15 7 A.C. 130 13,519,200 901,280 18 16 Salta 81 Tunal - Empalme R.N.34 Gravel Rolling 65 4 A.C. 110 8,727,744 134,273 19 9 Cordoba Cordoba - Empalme R.N. 60 DST Flat 62 7 A.C. 120 14,351,312 231,473 20 129 Corrientes Paso de Los Libres - Yapeyu Gravel Flat 63 6 A.C. 120 7,516,736 119,472 Sub-Total 1,351 248,097,232 183,640 SST = Single Surface Asphalt Treatment 1/ Civil works rot including contingencies and supervision updated to March 1977 > DST = Double Surface Asphalt Treatment Source: 18RD TST = Triple Surface Asphalt Treatment February 1977 A.C. = Asphaltic Concrete F.L.D.H. = Four-Lane Divided Highway Table 7 ARGENTINA FOURTH HIGHWAY PROJECT Estimated Schedule of Disbursements (US$ m) IBRD Fiscal Year Disbursed Cumulative Disbursment in Quarter at end of Quarter (%) 1978 December 31, 1977 21.0 21.0 20.0 March 31, 1978 2.1 23.1 22.0 June 30, 1978 1.3 24.4 23.3 1979 September 30, 1978 3.3 27.7 26.4 December 31, 1978 5.7 33.4 31.8 March 31, 1979 9.8 43.2 41.2 June 30, 1979 12.3 55.5 52.9 1980 September 30, 1979 12.5 68.0 64.8 December 31, 1979 11.7 79.7 75.9 March 31, 1980 12.3 92.0 87.6 June 30, 1980 9.2 101.2 96.4 1981 September 30, 1980 3.2 104.4 99.4 December 31, 1980 0.6 105.0 100,0 Source: Mission estimates February 1977 ARGENTINA FOURTH HIGHWAY PROJECT Economic Evaluation of Road Betterment Program Route Traf f ic Best Sensitive Test No. No. Province From - To Length Normal 3 of Annual Generated Estimate Cost Savings (km) (1976)! Heavy Growth of as 1 of FYB ER Increased Decreased Traffic Normal Traff. Total . % by 15%;ER(%) by 25%(ER4) ( .) ?/ Traffic3 1 157 Santiago del Estero Lavalle - Limite con Tucuman 32 652 55 4.8 14.0 67.1 53.1 48.3 43.8 2 191 Buenos Aires Salto - Chacabuco 41 558 51 6.0 15.8 54.6 46.5 42.4 38.3 3 38 La Rioja La Rioja - Bazan 35 591 31 6. 9 12.0 36.6 34.7 31.4 34.6 4 205 Buenos Aires Saladillo - Bolivar L30 411 40 5.4 14.2 30.9 31.0 28.0 25.1 5 81 Formosa Interseccion R.N.95-Estanislao del Campo 43 392 45 4.8 11.1 25.5 29.0 26.1 23.2 6 S/No Cordoba Empalme R.N.20-Empalme R.P.55 4 2,429 14 3.0 21.1 27.3 27.1 24.1 21.4 7 14 Misiones Campo Grande - Dos de Mayo 35 439 29 6.2 14.2 23.3 26.8 23.9 21.3 8 146 San Luis San Luis - Candelaria 160 369 44 6.8 22.9 25.2 26.4 23.9 21.2 9 226 Buenos Aires Carlos Tejedor - General Villegas 66 323 24 4.9 12.7 22.1 25.5 22.6 19.8 10 90 Formosa Villa km 213 - Riacho El Salado 32 218 44 6.1 14.6 20.7 24.5 21.8 19.3 11 S/No San Juan Circunvalacion San Juan y Accesos 21 7,830 21 6.2 6.4 19.4 23.7 21.6 19.4 12 147 Mendoza,San Juan, and Lavalle - Lujan 230 444 64 5.9 11.7 21.3 23.5 21.0 18.5 San Luis 13 14 Misiones Leandro N. Alem - Obera 28 439 29 6.2 9.9 19.3 22.9 20.5 18.1 14 7 Neuquen Empalme R.N. 237 - Lago Espejo 72 336 49 6.8 12.6 22.3 22.6 20.4 22.5 15 S/No Santa Fe Vera - Tostado 123 209 41 8.1 17.3 19.1 22.2 19.9 17.6 16 P.30 P.5 Salta Coronel Olleros - Luis Burela 94 393 48 7.3 10.4 18.8 21.9 19.5 17.1 17 S/No. Tucuman Empalme R.N. 301 - Empalme R.N.9 15 6,158 7 4.7 3.8 20.8 21.5 19.4 17.3 18 16 Salta El Tunal - Empalme R.N. 34 65 397 38 6.5 9.2 16.1 19.3 16.8 14.4 19 9 Cordoba Cordoba - Empalme R.N.60 62 3,924 32 3.5 2.7 19.2 18.2 16.2 13.7 20 129 Corrientes Paso de Los Libres - Yapayu 63 300 25 9.0 8.4 12.2 15.6 13.8 11.9 1/ Average daily traffic in vehicles. Source: IBRD February 1977 2/ Annual growth at the completion of the road betterment program averaged over all vehicle types. 3/ Generated traffic as of end of construction (1980) ARGENTINA FOURTH HIGHWAY PROJECT Organization of the National kiRhway Authority (Vialidad Nacioal) DIRECTOR GENERAL S U$ ADMM1 St#^ ro f su..mm 9s~13o ADAMMS1RAft4NCNTO MMtNTENANCE CONSTRUCTION ENGtNEEING MANNING zo z z zaz z z z 24 D1 OC OFFCE; Source: Vialidad Nacional December 1976 ARGLNTI NA EOURT ELGaAAY PLOJEWC gt,lgdion of the Ministry of Econom~y 1[1 ATAI1 CuÑII O T ¯¯ ¯ IELNTA AGRICULTURE PUBLTC WORKS KARITIM , RT-G FIAtDEEOMNTäAD=EC AND COWMU TCT NE RGY M u FAR IATIO2DMTNTTATIO I LVE STOCK TRANSPORT INDUSTRIAL - ORIAIN-- TI EFfTA IRN MINISTRATIB UDGET AGRICULTURE ADMINI POL D 1MISTRATIO AN TFFTC MNE ECNOI TAXATIIn1 AND INDUSTURIAL COMERCIAL. WATER NUCLEAR ADlMINISTRATI FISHING U ADMINISTRATION AMINISTRATION LIVESTOCK SYSTEMS RESOURCES PWER OFFICE AGRARIAN PRODUCT PUBLIC WORKS - - - -CBUSTIRES PRICE CONTROL TRANSPORT ENVIRONMENTAL FLANNING NATIONAL DI- NATIONAL DIRRC- VIALIDAD RECTORATE OF TOR(ATE OF SEC- NACIONAL r lIO.AL TORLAL PLANNING 11 Departments down to the level of Undersecretarlate. are only shown If involved In the project. 12 Vialidad Nacional is a semi-autonomous department. Source: Undersecretariate of rransport December 1976. ARGE(TIA FOURTI HiGHWAY PROJECT InitiAl Implementation Schedule (Nutber of ItDnths After Start "f Impleentation) Civl Works | esoonsible Departent ] 2 - 7 R Ib ilfi3 i T10 11_ 2 2 2 i. 8repare tid documents including contract and .pecificatio and obtain IBHD approval. Construction: Departtent V.N.) 2. Call fx bidas. hitto 3. Selection Of montrators by Vialidad and approved by IBRD. Ditto 4. Opening of bid., Ditto 5. Reomendation for -ward of contract, obtain IRD approval. Ditto 6. Mobillation. Contractors 7. Gonstruction Ditto Construction Super visi on 8. Prepare document. for oal fo proposals and obtain IBD approal. Construction Departent V.N.) 9. Evalute proposald and select consultants and obtain IED approval. Ditto l. Supervision of construction bidding. Ditto 11. Supervsion o constructio works. Ditto National Traneport Plen 12. Prepar. docu-nt. for cll fo proposals and obtain. IBRD pp.r,l. Underoocretariate of Transport 13. EvaIuate proposals end seleet oonsultants and obtain IBRD approal. Ditto 14. Pl.n for 1978-1979 Ditto 15. PLan, for 1980-84 and 1985-94 Ditto 16. Draft Final Report Ditto R Uional cricultaeal uDvetopnt Study 17. Prepare detailed TOR for etudy Secretaria de Programactn y SCoordinacion 18. Prepare documents for cal1 for ptoposa.l- ad obtaO BRD « pproval Ditt. 19. Evaluate propoals and select cosulta nd Ditto obtain IBRD approval 20. Begi. s-Cdy, Phaeo I Ditto 21. continue Stody, Phase II Dit,o Pveent iverlay Stuy 22. Prepare domments fo call for pzopD-los d Planning and Engineering obtain Id8D approal. ~ Department (V.N.) 23. Evaluate proposals and select constulants and obtain IBRD approal. Ditto 26. Inception Report. Ditto 25. Droerim Report. Ditto 26. Final Report. Ditto Traffic Safet, Progre 27. Prepare d.ouent. for cal for proposals a d obtain I0D pprovl Plæning Jepartment (V.N. 28. EVauat pzbpoesl and se]ect consultants and obtin IBRD approval. Ditto 29. Incption Report. Ditto 30. Interin Report. Ditt. 33. Draft Final Report. itto _ -i. Vialidad NaOional Governent Agiences participateboro Consultants go head  ANNEX 1 Page 1 ARGENTINA FOURTH HIGHWAY PROJECT Railway Freight Traffic 1. FA's freight traffic, according to its own statistics, has fluctuated between 1973 and 1976, as follows: ---------- Million Tons---------- Commodities 1973 1974 1975 1976 /1 Wheat, corn and sorghum 4.5 5.7 4.4 2.4 Other agricultural /2 2.4 2.3 2.1 1.0 Construction materials /3 2.7 2.6 2.2 1.1 Petroleum and derivatives 3.6 3.0 2.6 1.2 Others 5.7 5.5 5.0 1.5 Total 18.9 19.1 16.3 7.3 /1 Preliminary figures for the first half of 1976. /2 Includes wine and forestry products. /3 Lime, cement, stone. Source: IBRD 2. Except for a slight increase in traffic between 1973 and 1974, due exclusively to a large grain crop, traffic of all commodities steadily decreased between 1973 and 1976. Total traffic decreased by 14% between 1973 and 1975, and, unless the second half of 1976 shows a sharp recovery, it will continue decreasing. Although the decrease in traffic partly reflects the general decrease in economic activity in Argentina during this period, as well as the fierce truck competition, it seems that it was mainly due to FA's incapacity to handle larger volumes. Because of the very low tariffs during this period, many shippers preferred to ignore the poor service pro- vided by FA, and, reportedly, the above figures reflect the capacity being offered, rather than traffic demand. 3. In terms of ton-km, freight traffic also decreased, by about 15%, from 12.3 billion ton-km in 1973 to 10.5 billion ton-km in 1975. The traffic between January and the end of May 1976 amounted to 4.0 billion ton-km. The average travel distance, however, remained practically stable, from about 651 km in 1973 to some 644 km in 1975. December 1976 ARGENTINA Page 1 FOURTH HIGHWAY PROJECT Statistics on Port Traffic Table 1: Total Port Traffic (1971-75) (million tons) Ports 1971 1972 1973 1974 1975 Buenos Aires 27.1 24.0 24.1 25.7 23.8 La Plata 13.0 13.9 13.4 8.6 7.4 Comodoro Rivadavia 7.8 7.9 7.6 7.5 7.0 San Nicol9s 4.1 3.6 4.4 4.1 5.7 Bahia Blanca 6.8 8.0 7.5 4.5 4.2 San Martin 4.7 4.8 4.1 3.6 2.9 Rosario 3.9 2.4 3.4 3.4 2.7 Santa F4 2.1 1.4 1.7 1.7 1.2 Quequen .6 .7 .9 .7 .9 Others 13.4 14,1 12,7 13,7 13.2 Total 83.5 80.8 79.8 73.5 68,6 Source: Administraci6n General de Puertos December 1976 ANNEX 2 Page 2 Tahlp 2: International Traffic (thousand tons) 1 9 7 1 1 9 7 2 1 9 7 3 1 9 7 4 1 9 7 5 PORTS Imp. Exp. Imp. Exp. Imp. Exp. Imp. Exp. Imp. Exp. BUENOS AIRES - Beef 2 327 10 548 11 587 20 253 0 138 - Cereals 7 3229 17 1470 15 2039 1 2881 0 2100 - Other Agric. 93 541 298 701 437 2141 95 1969 65 1411 - Minerals 604 32 673 58 732 99 612 32 1021 6 - General Cargo 5305 2113 4084 1829 3653 2178 3878 2236 3856 2008 Sub-Total 6011 6242 5082 4606 4848 7044 4606 7371 4942 5663 SAN NICOLAS - Petroleum products 667 2 390 11 831 0 847 8 1153 0 - Minerals 2222 0 1868 66 2420 56 1856 8 3074 0 - Others 71 152 60 143 67 143 21 250 73 260 Sub-Total 2960 154 2318 220 3318 199 2724 266 4300 260 ROSARIO - Cereals 0 3259 0 1808 94 2715 0 2760 0 1980 - Others 86 255 87 183 90 209 89 212 129 331 Sub-Total 86 3514 87 1991 184 2924 89 2972 129 2311 QUEQUEN - Cereals 0 596 0 678 0 849 0 730 0 461 - Others 3 37 2 5 20 0 8 0 0 12 Sub-Total 3 633 2 683 20 849 8 730 0 473 SANTA FE - Cereals 0 929 0 157 0 323 0 461 0 362 - Others 54 19 19 9 28 8 10 10 29 19 Sub-Total 54 948 19 166 28 331 10 471 29 381 . BAHIA BLANCA - Cereals 0 584 0 715 14 2496 0 2029 0 1667 - Other Agric. 0 164 0 149 0 5 0 133 0 110 - Others 9 108 2 85 17 77 898 70 352 7 Sub-Total 9 856 2 949 31 2578 898 2232 352 1784 TOTAL 6 PORTS 9123 12347 7510 8615 8429 13925 8335 14042 9752 10872 TOTAL ALL PORTS 11516 13900 9011 9486 11015 15289 10091 16164 11502 12416 Source: A.G.P. and D.N.P.I.U. December 1976 ANNEX 2 Page 3 Table 3: Domestic Traffic (thousand tons) PORTS 1971 1972 1973 1974 1975 In Out In Out In Out In Out In Out BUENOS AIRES - Petroleum products 5364 1336 5645 1496 5185 1226 4983 1384 3389 886 - Gravel and sand 6974 0 5095 0 5096 0 6560 0 8214 0 - Others 1073 152 1882 166 590 68 696 104 573 106 Sub-Total 13411 1518 12622 1662 10971 1294 12239 1488 12176 992 SAN MARTIN - Petroleum products 953 3174 1414 3127 1098 2508 1165 1948 1055 1338 - Minerals 0 24 0 22 0 26 0 15 0 20 - Others 44 79 14 46 2 32 4 53 6 36 Sub-Total 997 3277 1428 3195 1100 2566 1169 2016 1061 1394 C. RIVADAVIA - Petroleum products 103 7581 147 7643 238 7317 201 7204 205 6717 - Minerals 26 11 26 13 24 15 20 9 20 9 - Others 52 18 49 7 30 5 31 7 45 6 Sub-Total 181 7610 222 7663 292 7337 252 7220 271 6732 BAHIA BLANCA - Petroleum products 673 5235 642 6444 668 4255 839 520 1498 453 - Others 0 7 2 0 3 1 4 0 0 0 Sub-Total 673 5242 644 6444 671 4256 843 520 1498 453 SANTA FE - Petroleum products 770 17 893 23 860 11 686 18 432 9 - Gravel and sand 226 0 292 0 290 0 357 0 302 0 - Others 16 35 19 38 61 125 22 106 17 28 Sub-Total 1012 52 1204 61 1211 136 1065 124 751 37 CAMPANA - Petroleum products 1843 728 2433 914 2033 889 2166 762 1995 641 - Gravel and sand 176 0 214 0 271 0 222 6 253 0 - Others 0 16 3 37 2 23 1 149 22 144 Sub-Total 2019 744 2650 951 2306 912 2389 917 2270 785 LA PLATA - Petroleum products 8628 2355 9615 2844 7598 3340 3817 3200 3668 2511 - Gravel and sand 459 0 409 0 392 0 422 0 396 0 - Others 2 4 1 8 0 2 3 21 4 Sub-Total 9089 2359 10025 2852 7990 3342 4241 3203 4085 2515 TOTAL 7 PORTS 27382 20802 28795 22828 24441 19843 22198 15488 22112 12908 TOTAL ALL PORTS 33034 25026 35585 26714 30766 22778 29578 17713 29519 15164 Source: A.G.P. and D.N.P.I.U. December 1976 ANNEX 2 Page 4 Table 4: Grain Storage Capacity (1976) (tons) Subterranean Sacked Location Elevators Silos l/ Total Storage Bah-a Blanca 223,380 320,000 543,380 - Necochea 93,000 300,000 393,000 18,000 Mar del Plata 25,000 - 25,000 - Buenos Aires 219,400 - 219,400 37,000 V. Constituci6n 123,880 260,500 384,380 18,500 Rosario 347,100 623,200 970,300 111,200 Santa Fe 77,250 - 77,250 23,950 Diamante 20,000 20,000 14,820 C. del Uruguay 23,200 - 23,200 34,500 Total 1,152,210 1,503,700 2,655,910 257,970 1/ These facilities, although under Port Administration, are not necessarily located in the immediate port areas. Sourcez A.G,P. - Subgerente Explotaci6n de Elevadores, December 1976 ANNEX 3 Page 1 ARGENTINA FOURTH HIGHWAY PROJECT Road Betterment Program - Description of the Road Works The 20 road sections (Table 6 of the report), totalling 1,351 km in length, are located throughout the country (except the southern region of Patagonia). All are located in regions which export, and are expected to continue to export, a significant portion of their production; importance for transport of exports was a decisive factor in selecting the sections retained under the project. These roads are presently in poor physical condition, mainly because they have been supporting an average daily traffic substan- tially heavier than the traffic for which they were originally designed. All are two-lane roads if not otherwise stated. Many of the sections are adjacent to works already being carried out under the two ongoing highway projects. A description of each project road follows. 1. Lavalle-Lte. con Tucuman (32 km) This section is located in the province of Santiago del Estero and is part of National Route 157; it runs along a flat terrain around a very underdeveloped area with high agricultural possibilities for development. The present earth surface of this road is in very poor condition due mainly to inadequate designs and heavy traffic. The improvement of this section is particularly important for the long distance traffic transporting sugar products from the Santiago del Estero and Tucuman provinces. With this improvement, the transport costs, mainly of sugar production, will be reduced considerably. Average traffic is presently 652 vehicles per day, 55% being heavy vehicles (a relatively low volume since long distance traffic reaches the main consumption and export markets via another route because of the poor condition of the project road). The road will be improved with an asphalt concrete pavement 6.7 m wide (4 cm thick) with 3.3 m shoulder widths in com- pacted soil. Construction costs will amount to US$142,479 per km. The ER is 53.1%. 2. Salto-Chacabuco (41 km) This section, crossing flat terrain, is located in the province of Buenos Aires about 150 km from the capital on National Route 191. It services an area in the humid Pampa with high agricultural potential. At present, this earth road section is in very poor condition, due mainly to inadequate drainage and heavy traffic. The improvement of this road section will facili- tate the transport of agricultural and cattle production from the Salto, Chacabuco and Indart departments (which are the main areas of influence), to Buenos Aires for local and export markets. Average daily traffic carried by this section is about 558 vehicles per day, 51% being heavy vehicles, a low volume for such a productive area (mainly cereals and livestock). The road ANNEX 3 Page 2 will be improved with an asphalt concrete pavement 7.3 m wide (4 cm thick) and 3.0 m wide shoulders with a single surface asphalt treatment to a width of 1.5 m. Construction costs will amount to US$160,526 per km, mainly because the stone for construction will have to be hauled over a considerable distance. The ER is 46.5%. 3. La Rioja - Bazan (35 km) This section is part of National Route 38 in the Province of La Rioja and the most important link among the Provinces of Cordoba, Catamarca, and La Rioja. Several irrigation works, such as Achavil and El Infiernillo dams, are being carried out in its area of influence, and an increase in agri- cultural production, mainly grain, is being achieved. The section runs over flat terrain. The climate is dry. The present earth surface of this road section is in very poor condition due to the inadequate design and heavy traffic. The simple earth platform has deteriorated beyond repair. The one- lane carriageway is grossly insufficient. Average daily traffic is 591 vehicles per day, 25% being heavy vehicles. Improvements will consist of a double surface asphalt treatment 6.70 m wide (5 cm thick) and shoulders of compact earth 3.0 m wide. Construction costs will average US$150,762 per km. The ER is 34.7%. 4. Saladillo-Bolivar (130 km) This section is located in the Buenos Aires Province, about 200 km from the capital, and is adjacent to the Bolivar-Pehuajo section which was paved under the Third Highway Project. The terrain is flat and is part of the agriculturally rich humid Pampa. The present earth surface of this road section is in poor condition, due mainly to inadequate drainage, heavy traffic and lack of maintenance. With its betterment, transport of agricul- tural and cattle production will be improved, particularly in the Saladillo, Alvear, and Bolivar departments (the main areas of influence), thereby making the markets and port of Buenos Aires more accessible. Average daily traffic carried by this section is about 411 vehicles per day (vpd), 40% being heavy vehicles. Distance saving will be 23 km. The road will be improved with an asphalt concrete pavement 7.30 m wide ( 4 cm thick) and 3.00 m wide shoulders paved with a single surface asphalt treatment to a width of 2.50 m. Construction cost will be relatively high, averaging US$170,644/km, because stone for construction will have to be hauled over a considerable distance. The ER is 31.0%. 5. Int. R.N. 95-Estanislao del Campo (43 km) This road section is part of National Route 81 which is the axis of all surface transportation for the province of Formosa and is adjacent to works carried out under the First Highway Project (Loan 288-AR). The road, currently an earth surface, runs through flat terrain. This road is very important for the regional trade among Chile, northern Argentina, Paraguay, and Southern Brazil. With the -improvement of this road, new agricultural areas may be brought into production since the road is situated in an area that is relatively undeveloped. The main production of cereals, cotton, ANNEX 3 Page 3 and livestock is exported through Puerto Vilelas and down the Parana River. Average daily traffic is around 342 vehicles per day with heavy vehicles averaging 45%. Improvements will consist of a triple surface asphalt treat- ment 6.7 m wide with shoulders 3.3 m wide in compacted soil. Construction costs will average USS185,660 per km. The ER is 29.0%. 6. Emp. R.N. 20-Emp. R.P. 55 (4 km) This road section (without number) in the Cordoba province will reduce congestion on National Route 9 which joins the three most important centers of the nation -- Rosario, Cordoba and Buenos Aires. All of the agricultural production from the northwest goes through Route 9 to the con- sumption and export centers; besides this, an intensive agricultural and touristic development is taking place in its area of influence. The road runs through rolling terrain, currently has a double surface treatment, which is in bad condition, and will be improved to an asphalt concrete pavement 7.30 m wide (5 cm thick) with two 3.0 m wide shoulders with a single surface asphalt treatment. This road section includes an important new concrete bridge 345 m long (seven spans) over the San Roque Lake with 8.30 m wide asphalt concrete pavement (5 cm thick) and 2.10 m wide cement concrete sidewalks. Average daily traffic is presently around 2,429 vehicles, 14% being heavy vehicles. Distance savings will be 4 km. Construction costs will amount to US$1,124,292 per km. The ER is 27.1%. 7. Campo Grande-Dos de Mayo (35 km) This road section has an earth surface and is one of the few unpaved sections of National Route 14, most of which has been, or is being, improved under Bank-financed highway projects. Route 14 is the main artery of Mesopotamia, running from the northern bank of the Plata River opposite to Buenos Aires right up to the border of Brazil. This particular section is located in the province of Misiones; the terrain is rolling and the climate humid. The departments of Campo Grande and Dos de Mayo are the main areas of influence. The project improvement of this road will have a large impact in the transport of soya beans, tea and tung, all of which are exported. Also, it will provide better access for the improvement of reforestation in the area for paper production, saving a large amount of foreign exchange for the country. Average daily traffic is 439 vehicles per day, 29% being heavy vehicles. Improvement will consist of a 7.3 m asphalt concrete pavement (4 cm thick) and 3.0 m wide shoulders paved with a single surface asphalt treat- ment to a width of 1.5 m. Construction costs will average US$292,615 per km. The ER is 26.8%. 8. San Luis-Candelaria (160 km) Situated in the province of San Luis along National Routes 146 and 79, this road section has a gravel surface and runs through rolling terrain. Several irrigation works, such as La Huertita dam, are being carried out in its area of influence and an increase in agricultural production, mainly ANNEX 3 Page 4 grain, is being achieved. The climate is dry. Average daily traffic is 369 vehicles per day, 44% being heavy vehicles. Improvements will consist of asphalt concrete pavement 6.70 m wide (5 cm thick) and shoulders of compact earth 3.0 m wide. Construction costs will average US$140,624 per km. The ER is 26.4%. 9. Carlos Tejedor-General Villegas (66 km) This 66-km section is located in the northwestern Buenos Aires province (part of National Route 226 and about 400 km from the capital); it runs along a flat terrain in the humid Pampa and is adjacent to the Bolivar- Pehuajo work carried out under the Third Highway Project (734-AR). The area has enormous undeveloped agricultural potential. The present earth surface of this road section is in poor condition, due mainly to inadequate drainage and heavy traffic. With its improvement, agriculture and cattle production will also be improved, mainly in the Department of Carlos Tejedor, General Villegas, Rivadavia, and Tres Algarrobos, making the market of Buenos Aires and the port of Rosario more accessible. Average traffic is presently around 323 vehicles per day (24% being heavy vehicles). The road will be improved with an asphalt concrete pavement 7.3 m wide (5 cm thick) and 3.0 wide shoulders in compacted soil. Construction costs will amount to US$140,868 per km. The ER is 25.5%. 10. Villa km 213-Riacho El Salado (32 km) This road section is part of National Route 90 in the province of Formosa and is adjacent to works carried out under the First Highway Project (Loan 288-AR). The road, currently with an earth surface, runs through flat terrain; it is very important for regional trade among Chile, northern Argentina, Paraguay, and Brazil. The main area of influence, the Department of Pirane, is one of the more intensive production areas of quebracho in the world. Products include tannin, a high variation of sub-tropical agriculture, cotton, sorghum and soy beans. Average daily traffic is around 218 vehicles per day with trucks averaging 44%. Improvements will consist of 6.7 m wide, triple surface asphalt treatment and shoulders 3.3 m wide in compacted soil. Construction costs average US$158,976 per km. The ER is 24.5%. 11. Circunvalacion San Juan y Accesos (21 km) This road section will eliminate most of the congestion created by the heavy traffic that must now cross through the city of San Juan and will facilitate the traffic coming from the capital, Chimbas, Pocito and Rawson districts. The section runs over a flat terrain. The climate is dry. The road, currently with a double surface treatment in bad condition, will be improved to a four-lane divided highway with an asphalt concrete pavement 7.30 m wide each way (5 cm thick), two 3.00 m wide shoulders with a single asphalt treatment and a 1.50 m wide median. Average daily traffic is presently 7,830 vehicles per day, 21% being heavy vehicles. Construction costs will amount to US$1,180,247 per km. The ER is 23.7%. ANNEX 3 Page 5 12. Lavalle-Lujan (230 km) This road section, part of National Route 147, is located in the provinces of Mendoza, San Juan and San Luis, and runs through rolling terrain that has undeveloped potential. The present double surface asphalt treatment of the road is in poor condition, due mainly to lack of maintenance and heavy traffic. The improvement of this section is fundamental to the agricultural development of the Cuyo region (Mendoza, San Juan, and San Luis provinces). The main products of this area are fruit, wine, and minerals. The improvement of this area will facilitate the export of these products to Brazil and also overseas through Argentina's Port Rosario. The average traffic is presently 444 vehicles per day, 64% being heavy vehicles. The road surface will be repaved with a double surface asphalt treatment 7.3 m wide and 3.0 m wide shoulders in compacted soil. Construction costs will amount to US$107,784 per km. The ER is 23.5%. 13. Leandro N. Alem-Obera (28 km) This road section has an earth surface and is one of the few unpaved sections of National Route 14. This particular section is located in the Province of Misiones; the terrain is rolling and the climate humid. The departments of Alem and Obera are the main areas of influence, with a high production of Paraguayan tea ("mate") and soy beans. Lumber manufacturing also plays an important role in the economy of the area. Average daily traffic is 439 vpd, 29% being heavy vehicles. Improvements would consist of a road surface 7.30 m wide asphalt concrete pavement (4 cm thick) and stabil- ized shoulders 3.00 m wide with a single surface asphalt treatment to a width of 1.50 m. Construction costs, which average US$217,778 per km are relatively high since the road is almost entirely on a new alignment. The ER is 22.9%. 14. Empalme R.N. 237-Lago Espejo (72 km) This road section is part of National Route "F" and is located in the most scenic area of Argentina, the Department of Los Lagos, province of Neuquen. It is an important inter-regional link providing the only land connection between Central and Southern Chile. The section is adjacent to work carried out under the First Highway Project (Loan 288-AR). The road surface, currently consisting of a deteriorated natural rocky soil, runs through mountainous terrain. The platform was never properly engineered. The climate is humid. Average traffic is 336 vehicles per day, 47% being heavy vehicles. The road will be improved with a 5 cm thick asphalt concrete pavement 6.7 m wide and 2.0 m compacted soil shoulders. Construction costs will amount to US$276,905 per km. The ER is 22.6%. 15. Vera-Tostado (123 km) This road section is part of National Routes 98 and 3. It is situated in the north of the province of Santa Fe in a moderate dry area with high potential for cereals and livestock, but this area remains under- developed due to lack of roads. This road section will be the most important ANNEX 3 Page 6 link of the northern Santa Fe province, carrying products to the port of Reconquista for export via the Parana River. This section, running through flat terrain, has an earth surface pavement in very poor condition due to lack of drainage. Average daily traffic is around 209 vehicles per day with heavy vehicles averaging 41%. Improvement will consist of a road surface 6.7 m wide with double surface asphalt treatment and shoulders 3.3 m wide in com- pacted soil. Construction costs average US$154,820 per km. The ER is 22.2%. 16. Coronel Olleros-Luis Burela (94 km) This section is located in the province of Salta, and its 94 km are part of provincial routes 30 and 5. The road runs along a flat terrain in a dry climate and has a double surface asphalt treatment in bad condition. The improvement of this section is particularly important because the route crosses a virgin forest of more than one million hectares in one of the rich- est areas of quebracho and other valuable timber. Provincial Vialidad in Salta is carrying out a feeder road program to assist in the agricultural development of this area; the initial program is very successful and the production of corn, sorghum, and beans is high. Practically all of the pro- duction of white beans ("alubias") of this area is being exported to the Italian and Yugoslavian markets. Average traffic is presently 393 vehicles per day, of which 48% are heavy vehicles. The road will be improved with a triple surface asphalt treatment 7.3 m wide and 3.0 m wide shoulders in compacted soil. Construction costs will amount to US$153,331 per km. The ER is 21.9%. 17. Empalme R.N. 301-Empalme R.N. 9 (15 km) This road section is situated in the province of Tucuman along National Route 38 and, due to its geographical situation, is the converging point of the different roads linking the northwest of Argentina with Bolivia. Its betterment will improve the transport of Argentine industrial products to Bolivia through La Quiaca, as well as the export of other Argentine primary products. The section runs over a flat terrain. The climate is humid. The road currently has a double surface asphalt treatment in bad condition and will be improved to a four-lane divided highway with an asphalt concrete pavement surface 5 cm thick and 7.30 m wide each way, two 3.00 m wide shoulders with a single surface asphalt treatment and a 1.80 m wide median. Average daily traffic is presently 6,158 vehicles per day, 7% being heavy vehicles. Construction costs will amount to US$916,952 per km. The ER is 21.5%. 18. El Tunal-Empalme R.N. 34 (65 km) This section is part of National Route 16 and is located in the province of Salta in an area with characteristics similar to those of Coronel Olleros-Luis Burela (para. 16). The present gravel surface is in poor condi- tion, due mainly to lack of maintenance. The terrain of this road section is rolling land. The climate is dry. Average traffic is 397 vehicles per day, with 38% being heavy vehicles. The road will be improved with a 5 cm thick asphalt concrete pavement 6.7 m wide and 3.3 m wide compacted soil shoulders. Construction costs will amount to US$136,898 per km. The ER is 19.3%. ANNEX 3 Page 7 19. Cordoba-Empalme R.N. 60 (62 km) This section is part of the main road of the country, National Route 9. National Route 9 channels all the primary products (agriculture, cattle and forests) from the northwest region to the main export and consump- tion centers of the country: Rosario, Cordoba, and Buenos Aires. Also, the section is situated in the frontier area of a zone which has undeveloped agri- cultural potential. The road runs through flat terrain. The climate is dry. The road currently has a double surface asphalt treatment in bad condition and will be upgraded to an asphalt concrete pavement 7.3 m wide (4 cm thick) and 3.0 m wide shoulders with a single surface asphalt treatment to a width of 2.5 m. Average daily traffic is presently 3,924 vehicles, 32% being heavy vehicles. Distance saving will be 7 km. Construction costs will amount to US$236,066 per km. The ER is 18.2%. 20. Paso de Los Libres-Yapeyu (63 km) This section is part of National Route 129 in the Province of Corrientes. It is also part of the main north/south trunk route through the rich agricultural area of Mesopotamia; most of this route has been, or is being, paved under Bank-financed highway projects. In the main areas of influence (the departments of Paso de los Libres and San Martin), agricultural production (mainly soy beans) is expected to increase. Its improvement will also facilitate communications between Paraguay and Brazil. The 63 km of gravel pavement is in poor condition, largely due to indequate drainage on the flat terrain. Average daily traffic is around 300 vpd, with heavy vehi- cles averaging 25%. Improvements will consist of 5 cm thick and 6.70 m wide asphalt concrete pavement and shoulders 3.30 m wide of compacted soil. Construction cost will average US$121,814 per km. The ER is 15.6%. February 1977 ANNEX 4 Page 1 ARGENTINA FOURTH HIGHWAY PROJECT Regional Agricultural Development Study 1. Argentina remains one of the countries which still contain an agri- cultural frontier - large areas estimated to include about 7 million ha and suitable for crop and livestock production. Because of the Government's lack of emphasis on development in prior administrations, there is little factual knowledge regarding the potential of these unexploited lands. However, the present administration has turned the internal terms of trade toward the agricultural sector with the purpose of providing incentives to increase agricultural production and exports. These incentives--low export duties, realistic exchange rates and support prices in line with world price levels-- have resulted in a high supply response in grain and oilseed production for marketing year 1976/77. For example, during that year, production is esti- mated to be about 29 million m tons up from 23 million m tons during the 1970/71-1975/76 period. 2. The Government, through the Secretariat of Agriculture, proposes an ambitious agricultural development scheme for the northern part of the country including the provinces of Chaco, Formosa, Santiago de Estero, and the northern part of Santa Fe. It is thought that this region holds great promise for increased production of grains, oilseeds and livestock. While parts of these areas are already settled and partially cleared, much more land remains virgin and requires technical studies to determine its feasi- bility to support commercial agriculture. 3. The Regional Agricultural Development Study will include a First Phase, the identification of the most suitable areas in northern Argentina for intensified agricultural production, including the settlement of farmers to develop crops and livestock production; and a Second Phase, the prepara- tion of a feasibility study for an agricultural development project in the selected area. 4. The First Phase will include the following tasks: (a) determine the natural resources endowment in northern Argentina for agricultural production, e.g., soils, rainfall, climate; (b) identify areas with outstanding agricultural potential and suggest possible cropping patterns for this exploitation; (c) review the institutions in the areas which provide support- ing services to farmers, e.g., research, extension, credit marketing; ANNEX 4 Page 2 (d) explain the land tenure and ownership situation of privately held and fiscal land as well as farm size and farmers income; (e) estimate the risk of soil erosion in those areas requiring land clearing and its impact on the ecology of the area; (f) prepare the requirements for cadastral surveys; and (g) if found justifiable, compare the strategy to encourage invest- ment in designated areas of the north as opposed to investment in other regions of the country, e.g., Pampas, Northeast, Rio Colorado area. 5. Once the specific areas are selected, the Second Phase will include the following tasks: (a) prepare land capability studies; (b) identify the physical environments and micro-areas suitable for different crops; (c) quantify the total amount of arable land in each of the main areas and determine its likely productivity; (d) determine the areas to be cleared and settled; (e) examine the possible crop and mixed farming production systems from the technical and economic viewpoints; (f) compare alternate methods of production on the basis of levels of yield; (g) estimate the required amount of inputs; (h) prepare enterprise budgets, e.g., corn, sunflowerseed; (i) select the most promising farming system based on criteria such as net returns to capital, labor and land in comparison with existing systems of production, acceptability to farmers, management factors and the levels of risks involved; (j) suggest the land tenure system and farm sizes most appropriate for commercial agriculture in those areas which are not settled; (k) survey the potential settlers and establish objective criteria for their selection; (1) identify a project unit and/or agency which will coordinate all activity in the area and issue land titles; ANNEX 4 Page 3 (m) plan for the improvements required in research, extension services, and credit facilities; in the institutions re- sponsible for agricultural development; and in marketing, processing, storage and other services; (n) plan for required social services, e.g., roads, electrifica- tion, housing, water supply, schools, clinics; (o) present detailed cost estimates of project components, sources of financing, project organization and management and procurement guidelines; (p) derive rates of return from financial and economic analysis; and (q) determine manpower requirements in terms of skills, time and cost for the successful completion of the project. 6. The entire Regional Agricultural Development Study will be carried out by the Ministry of Economy, under the coordination and supervision of the State Secretariat of Economic Programming and Coordination, with the partici- pation of the Secretariat for Agriculture, National Highway Department, INTA, National Bank of Argentina, the National Agrarian Council and the relevant provincial governments, under terms of reference and a progress schedule satisfactory to the Government and the Bank. 7. Once the terms of reference for the Study are clearly defined by the Government, some six months after signing of the Loan, consultants satisfactory to the Bank will be contracted to carry out both phases of the study. February 1977 ANNEX 5 Page 1 ARGENTINA FOURTH HIGHWAY PROJECT National Transport Plan - Summary of Terms of Reference Introduction 1. The Argentine Government is engaged in ongoing planning of the National Transport System, the initial phase being preparation of a National Transport Plan, with the aim of organizing investment and developing the best strategy for the efficient short, medium and long-term performance of the system. The National Directorate of Sectorial Planning under the Under- Secretariat of Transport within the Ministry of Economy will be the responsible agency for this National Transport Plan. Objectives 2. The basic objectives of the study will be to develop an efficient national transport sector that will contribute to the orderly development of the country and the growth of other sectors of the economy; to formulate a package of policies for the sector; to make fullest use of available re- sources and to prepare a program of investments and improvements in the operation and administration of transport in keeping with the predetermined policies. 3. The study will be conducted in accordance with terms of reference satisfactory to the Bank and will include: (i) a short-term program (1978-1979) that will identify and diagnose the critical problems of the sector, propose a mechanism for coordinating management, operational and investment decisions, and provide a coordinated 1978-1979 investment plan for the sector. Such investments are expected to consist principally of improvements and rehabilitation of the most urgently needed transport facilities; and (ii) a detailed five-year action program (1980-1984) which will include (a) a proposed national strategy and set of policies for the development, management and operation of the transport system; (b) a program of action for each transport mode that will include, inter alia, required changes in trans- port pricing based on user's cost, required regulations for each subsector and required improvements in operations; (c) a proposed system for the future planning and coordina- tion of transport operations and investments; (d) a deter- mination of the future role of each transport mode on the ANNEX 5 Page 2 basis of an analysis and forecast of future transport demand in relation to the expected development of the economy, and, in particular, development of a phased program for the closure of uneconomic railway lines when desirable; and (e) a five-year investment plan (1980-1984), which will include new construction and expansion of capacity, and an indicative ten-year investment plan. In the preparation of these investment plans, particular attention will be given to the investments needed to open up new areas to agricultural production, support the expansion of exports, and achieve greater regional integration with neighboring countries. 4. Within these tasks, particular emphasis will be placed on: (a) the determination of transport services and infrastructure needed to support the opening up of undeveloped areas for agricultural production; (b) the transport services and infrastructure required to support the planned expansion of exports, especially the routing of export flows and optimum strategy for the development of port capacity; (c) the future role of the railway system and the development of a phased program for the closure of uneconomic railway lines and the provision, where necessary, of alternate means of transport; (d) the pricing of road transport and the level of road user charges in relation to highway expenditure; and (e) regional integration with neighboring countries, especially the transport services and infrastructure required to serve their external trade efficiently. Scope of the Studies 5. The study will be nationwide and will cover all modes of transport. It will extend beyond national geographical boundaries as necessary to link the national transport system with those of other countries. 6. A diagnosis will be made of the transport sector from the tech- nical, operational, economic, financial, administrative, legal and regulatory aspects. The scope of the basic study and diagnosis will be extended to cover aspects of other economic sectors that affect the transport system. ANNEX 5 Page 3 7. The main focus of attention will be inter-urban traffic; only limited studies will be made of individual urban centers. Whenever projects affect traffic flows or other urban area characteristics, the appropriate authorities will be informed, and such studies as required will be undertaken to support the analysis of affected traffic flows. 8. All technical, economic, financial and administrative studies, field research and other work needed to accomplish the objectives established for this study will be carried out. Estimate of Man-Months Consultants (man-months) Highways 781.5 Railways 45.0/1 Ports and Waterways 272.0 Civil Aviation 25.0 Pipelines 36.0 Sector and Management 936.0 Total Man-months 2,095.5 /1 15 man-months of the 45 man-months are proposed for finan- cing under a UNDP grant, and this cost is not reflected in the total cost. February 1977 ANNEX 6 Page 1 ARGENTINA FOURTH HIGHWAY PROJECT Pavement Overlay Study - Summary of Terms of Reference Objectives The main objectives of this pavement overlay study are: a. To define a work plan for a pavement overlay program; and b. To provide the necessary training for Vialidad's staff to predict the period during which overlay on national and provincial road networks is a viable option to prolong the life of the roads. Scope This study will review methodology currently in use for technical and economic evaluation of overlay designs as well as practices in use for preparing cost estimates and bid preparations. Recommendations will be made on organization, staff, methods, training, and equipment necessary to main- tain an investigative program for the asphalt pavement network. A definitive, exhaustive study will be carried out on several national network road sections as well as on primary, secondary and tertiary provincial road networks. As a result of this study, Vialidad will be able to determine optimum solutions for overlay for asphalt pavement for the whole network. Cost Estimates Total cost of the study will be US$600,000 equivalent (US$120,000 equivalent local component and US$480,000 equivalent foreign component). The total cost is split out in US$300,000 equivalent for personnel and US$300,000 equivalent for equipment. February 1977 ANNEX 6 Page 2 Local Foreien Component Component Total Equipment (US) (US$) (US$) 1 Deflector (Lacroix Type) 70,000 70,000 1 Deflectograph (Dynapac Type) 50,000 50,000 1 Duraflex Equipment 50,000 50,000 1 Jerdho Equipment 70,000 70,000 1 Rugosimeter 60,000 60,000 TOTAL 300,0001/ 300,0001/ Local Foreign Component Number Salary Component Total Personnel of Months US$/Month (US$) (US$) (US$) 1 Highway Engineer and Project Manager 18 5,500 19,000 80,000 99,000 1 Transport Economist 12 5,000 12,000 48,000 60,000 1 Equipment Inspector 18 5,000 18,000 72,000 90,000 1 Surveyor 17 2,000 34,000 ------ 34,000 1 Draftsman 17 1,000 17,000 ------ 17,000 TOTAL 82 100,000 200,OOr2/ 300,0001/ 1/ Bank participation US$300,000 2/ Bank participation US$150,000 ANNEX 7 Page 1 ARGENTINA FOURTH HIGHWAY PROJECT Traffic Safety Program - Summary of Terms of Reference Objectives The main objectives of this study include the formulation of a work program to: (a) Adapt relevant literature available; (b) Recommend traffic control programs; (c) Educate the people; (d) Establish motor vehicle safety standards; (e) Provide training; (f) Strengthen the police role; (g) Improve dangerous road sections; and (h) Establish procedures on accidents. The study will take into consideration the factors involved in accidents (human, automotive and road factors). Scope The Traffic Safety Program would be truly national in scope and should constitute the setting within which the continuous process of planning and ordering traffic safety measures will take place. Cost Estimates Total cost of the study would be US$300,000 equivalent (US$120,000 equivalent local component and US$180,000 equivalent foreign component). February 1977 Foreign Component Number .Salary. Local.Component (Bank Participation) Total Personnel of Months (US$/Month) (US$) (US$) (US$) 1. Traffic Safety Engineer & Study Manager 12 5,000 14,500 45.500 60,000 1. Highway Engineer 12 4,500 13.000 41,000 54,000 1. Mechanical Engineer 12 3,000 8,700 27,300 36,000 1. Psychologist 6 5,000 7,300 22,700 30,000 1. Lawyer 6 4,000 6,000 18,000 24,000 1. Publicity Expert 12 5,000 14,500 45,500 60,000 1. Surveyor 12 2,000 24,000 ------ 24,000 1. Draftsman 12 1,000 .12,000 12,000 84 100,000 200,000.1 300 0001/ 1/ Bank participation US$150,000 >D~ ANNEX 8 Page 1 ARGENTINA FOURTH HIGHWAY PROJECT Economic Evaluation of the Road Betterment Program Risk Analysis 1. The cost and benefit streams used in the risk analysis are the following: (a) construction costs (CI); (b) strengthening costs (C2); (c) road maintenance savings or disbenefits (Bl); and (d) operating costs savings (B2). 2. The distribution of random variations from estimates measured as a percentage of such initial estimates, applicable to all items in each stream, is the following: Sample size: 300 Standard Stream Distribution Mean (%) /1 Deviation (%) /1 Cl Normal 0.0 20.0 C2 Normal 10.0 20.0 B1 Normal -5.0 20.0 B2 Normal -10.0 15.0 /1 All figures give as departures from initial estimates in %, that is, 0.0 means that the normal distribution is centered on initial estimates, etc. 3. Independent random samples were drawn for every distribution and a rate of return computed for 300 samples of each road section in the Road Betterment Program. In spite of all the uncertainties noted, the exposure of the project is almost non-existent (Table 1 of this Annex) as suggested by the results, all projects having a virtual assurance of showing a rate of return exceeding 15% except the last three sections, two of which would be ANNEX 8 Page 2 above 15% with a 60% probability or better. The last section has a probability of about 40% of exceeding the same figure. Under these circumstances, the Road Betterment Program seems certain to exceed the opportunity cost of the capital invested irrespective of possible variations in project parameters. (In Argentina, the opportunity cost of capital is estimated to be 10%.) Table 2 of this Annex shows a sample of the results for the road section with the correct rate of return. January 1977 ARGENTINA FOURTH HIGHWAY PROJECT Risk Analysis of Economic Evaluation - Summary Table ER Based 10th 40th No. Route No. From - To on Initial Mean Standard Per- Per- Estimates Deviation centile centile 1 157 Lavalle - Limite con Tucuman 53.1 50.3 9.4 39.1 47.0 2 191 Salto - Chacabuco 46.5 44.1 8.3 34.4 41.3 3 38 La Rioja - Bazan 34.7 32.8 6.6 25.0 30.4 4 205 Saladillo - Bolivar 31.0 29.2 6.0 22.0 27.1 5 81 Int. R.N. 95 - Estanislao del Campo 29.0 27.3 5.9 20.6 24.9 6 S/N Emp.R.N.20 - Emp. R.P.55 27.1 25.4 5.9 18.6 23.6 7 14 Campo Grande - Dos de Mayo 26.8 25.1 5.6 18.7 23.4 8 146 San Luis - Candelaria 26.4 24.9 5.2 18.6 23.0 9 226 Carlos Tejedor - General Villegas 25.5 23.8 5.9 16.0 21.9 10 90 Villa km 213 - Riacho El Salado 24.5 22.9 5.2 16.7 20.6 11 S/N Circunvalaci6n San Juan y Accesos 23.7 22.3 4.2 17.1 20.9 12 147 Lavalle - Lujan 23.5 22.0 5.1 15.8 20.4 13 14 Leandro N. Alem - Obera 22.9 21.3 4.8 15.6 19.7 14 7 Emp.R.N. 237 - Lago Espejo 22.6 21.2 4.4 15.6 19.8 15 S/N Vera - Tostado 22.2 20.7 4.6 15.1 19.1 16 P.30/P.5 Coronel Olleros - Luis Burela 21.9 20.5 4.7 14.9 18.6 17 S/N Emp. R.N. 301 - Emp. R.N.9 21.5 20.2 4.3 15.0 18.7 18 16 El Tunal - Emp. R.N. 34 19.3 17.4 4.5 11.9 15.6 19 9 Cordoba - Emp. R.N. 60 18.2 16.6 4.2 11.4 15.3 20 129 Paso de Los Libres - Yapeyu' 15.6 14.3 3.7 9.7 13.1 CO ANNEX 8 Table 2 - Page 1 FREQUENCY DISTRIBUTION AND CUMULATIVE PROBABILITY DISTRIBUTION FOR THE INTERNAL RATE OF RF TURN FREG - -CUM. PROB. FREW.---CUM, PROBW (1.ESS THAN VALUE) (LESS THAN VALUE) INERVAL UPPERBOUNDS INTERVAL UPPERBOUND1S 0 0100 5 009 18.900 3 0.01 9 0.92 6060 19.410 2 0)02 5 0.94 7170 19o920 1 0.02 4 095 Y1680 20.430 3 0.03 0 09$ 0.190 20.940 2 0.04 2 0.96 B.700 21.450 5 0.05 5 0.97 9.21 21.960 9 0. 08 0. 97 9.720 22.470 9 0.11 1 0.98 10.230 22.980 15 0.16 0 0.98 17 23.490 12 0.20 1 098 1 150 24.000 12 0.24 0 0.98 11.760 24.510 16 0.30 3 .9 12,270) 25.020 12 0.34 0 0.99 ..270 25.530 19 0.40 1 0.99 W3.20.) .26.040 21 0.4'* 0 0.99 0..000 26.550 .23 0.55 1 1.00 3.1. '1 27.060 15 0.60 0 1.00 27.570 13 0.64 O .00 15.13) 280090 20 0.71 0 1 * 00 L.5, H 4,0 28S. 5 90 14 0 .75 0 1.00 16.35.0 29.100 12 0.79 0 1. C 16.860 29,610 9 0.82 0 1 oC) 17)370 30.120 10 0.86 0 1.00 17.8BO 30.630 5 0.87. 0 1.00 18.190 31.650 1 1 . 00 W FRIBUTION MEAN 1433 afAND6RD DEVIATION 3.70573 CUMULATIVE PROBABILITY DISTRIBUTION PLOT. Table 2 - Page 2 CUMULATIVE PROBABILITY (Y-AXIS) LESS THAN VALUE UPPERBOUND (X-AXIS). (PLOT CAN ONLY BE TO TERMINAL). TOTAL NUMBER OF POINTS PLOTTED - 51 AXIS INFORMATION I VERTICAL I TOP )-) = 1.20 BOTTOM (-) =-0.200 INCREMENT = 0.200 HORIZONTAL. LEFT (') = 5.00 RIGHT (') = 40.0 INCREMENT = 5.00 Poa1+4'4+4++++' +++++++4+++++++' +++++++++ '++++++++4't+++4+'++++ +++++' + + + + +.4 + 10 -******* 0.4 +* ** EROR 70 +* +* ( F t +# + * + EUS + + 0. SAEPRMAGIVIK* - RS F EM*O S +8ERR72s +M RIS IMRPRCM+DNAEHSBE SD *N DAAADO*LCSAENN ETRDATMTCLY UNESNTDOHEilE.HSUPAECAG2alLB ELCE INTE'BAKUE± AULCEES ) DN + ENBRS  l IBRD-12627R 4AEPiCi..-- -,) u T H- A i.- SP U .1 1' - - - *- | L *1 - 1 A.L.. -30° \40 - ¯ 1 - | | ' .*. i T i .i1 E ** - / F UT H Hi-'H hw PROJECT Roads to be improved under Fourt-h Highway Proecr * C(.o"ORO- - RIVADAVIA Project number -@ -Primary roads F7 Roy - Pved or gravel roads Earth roads 3 - r Principal orports J ---Provincal boundories --S -oInternoional boundaries 50 0 200 400 600 8oo so0