Chad - Third Highway Project

Report No. 1834b-CD ChadFIECP Third Highway Project FILE COPY Appraisal Report July 6, 1978 Western Africa Project Department Highways Division FOR OFFICIAL USE ONLY 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 US$1.00 C CFAF 245 Fiscal Year January 1 - December 31 System of Weights and Measures: Metric Metric British/US 1 meter (m) = 3.3 feet (ft) 1 kilometer (km) 2 0.6 miles (mi) 1 square kilometer (km ) = 0.4 square miles (sq mi) 1 metric ton (m ton) = 1.1 tons (short tons) I liter (1) = 2.1 pints (pts) Abbreviations and Acronyms ADF - African Development Fund ASECNA - Agence pour la Securite de la Navigation Aerienne en Afrique et a Madagascar ATEC - Agence Transequatoriale des Communications BDT - Banque de Developpement du Tchad BTCD - Banque Tchadienne de Credits et Depots CTT - Cooperative des Transporteurs Tchadiens DCA - Directorate of Civil Aviation DPD - Directorate of Planning and Development DPW - Directorate of Public Works DT - Directorate of Transport EIO - Equipment Inspection Office ENTP - Ecole Nationale des Travaux Publics FAC - Fonds d'Aide et de Cooperation FED - Fonds Europeen de Developpement ICAO - International Civil Aviation Organization MCWMG - Ministry of Civil Works, Mines and Geology MEPT - Ministry of Economy, Planning and Transport PO - Procurement Office RMA - Road Maintenance Authority RPDO - Road Planning and Design Office SHO - Studies and Hydraulics Office STC - Swiss Technical Cooperation UNCTAD - United Nations Conference for Trade and Development UNDP - United Nations Development Programme UNIDO - United Nations Industrial Development Organization UNSO - United Nations Sahel Office USAID - United States Agency for International Development voc - vehicle operating costs vpd - vehicles per day  FOR OFFICIAL USE ONLY CHAD APPRAISAL OF A THIRD HIGHWAY PROJECT Table of Contents Page No. SUMMgARY ........................................... ...... o............ i-iii 1. INTRODUCTION .... ......................... .................. 1 2. THE TRANSPORT SECTOR .............. ...................... O.. 2 A. The Land and the Economy .................... 2 B. The Transport System . ..................................... 3 C. Investments .......................................... . 5 D. Management and Planning ............................. 5 3. THE ROAD SECTOR .................................................... 6 A. The Network .......................................... . 6 B. Road Transport Characteristics ........................ 6 C. Road Transport Industry ..... ......................... . 7 D. Administration ........................................ 8 E. Staffing and Training ................................. 8 F. Planning ............................................. . 8 G. Financing ............................................. 9 H. Engineering and Construction ..... ..................... 10 I. Road Maintenance ...................................... 10 J. Improvement of Feeder Roads ........................... 11 K. Domestic Contracting Industry ..... .................... 11 L. Appropriate Road Maintenance Technology ........... .... 12 4. THE PROJECT ................................................ 12 A. Description ....... ................................... 12 B. Road Maintenance Program .............................. 13 C. Training Program ..................................... 13 D. Construction of Ferryboats ..... ....................... 14 E. Technical Assistance and Fellowships ............. ..... 15 F. Rural Roads Study ........ ...... .......................... 16 G. Completion of the Improvement and Maintenance Program for Cotton Feeder Roads ..................... 17 H. Cost Estimates ........ .......................... ...... 17 I. Execution ............................................. 19 J. Procurement ..........................................* 19 K. Financing and Disbursement ............................ 20 Frhis 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.  Table of Contents (Continued) Page No. 5. ECONOMIC EVALUATION ......................... 22 A. Introduction ...... .................. 23 B. Road M[aintenance Program ........................ 23 C. Replacement of Ferries ......... . . . . ......................... . 24 D. Distribution of Benefits ................. # ............. 25 E. Project Risks and Sensitivity Analysis .......... . ....... 25 6. AGREEMENTS REACHED AND RECOMMENDATIONS ...................... 26 TABLES 1. Principal External Trade Corridors .......................... 28 2. Public Sector Investment ................................... 29 3. External Assistance: Transport Sector ..................... 30 4. Road Network (1977) .................... .. ......... 5.. 31 5. Traffic on Road Network to be Maintained by DPW ............. 32 6. Growth of t]ne Vehicle Fleet, 1970-76 .......... .. ............ 33 7. Fuel Consumption, 1968-76 ............... .. .................. 34 8. Government Revenues from Road Users, 1969-75 ................ 35 9. Expenditures on Highways, 1971-76 ..... ...................... 36 10. List of Roads to be Maintained ............. .. ............... 37 11. Unpaved Road Maintenance Strategies .... ..................... 38 12. Road Maintenance Equipment and Spare Parts for Existing Equipment; Cost Estimates ................. . . ........ 39 13. Construction of Buildings and Workshops; Cost Estimates ..... 40 14. Network to be Maintained and Maintenance Operations .. ....... 41 15. DPW Personnel Training Requirements ......................... 42 16. Equipment for Training Program; Cost Estimates ........... 43 17. Four Locally-Built Ferryboats; Cost Estimates ....... ..... 44 18. Project Cost: Estimates ................. .. ................... 45 19. Project Implementation Schedule ............ .. ............... 47 20. Estimated Schedule of Disbursements .... ..................... 48 21. Road Maintenance Cost Estimates ............ .. ............... 49 22. Ferryboat Recurrent Costs ............... .. .................. 50 23. Road Maintenance Recurrent Expenditures; Cash Flow .......... 51 24. Vehicle Operating Costs as a Function of Traffic and Road Surface Characteristics ............................ 52 25. Breakdown of Cost Components for Shadow Pricing ............. 53 26. Summary of Economic Evaluation and Sensitivity Analysis ..... 54 This report has been prepared by Messrs. E. Staffini and A. Faiz, following an appraisal mission in March/April 1977.  Table of Contents (Continued) Page No. ANNEXES I. Road Transport Industry ....... ................... ..... 55 II. Technical Assistance for a Training Program - Outline Terms of reference ............................. 72 \III. Exhibit I - Proposed Ferryboat (Plan) ................. 76 Exhibit II - Proposed Ferryboat with Truck (Profile) .. 77 \IV. Plan of Action . ........................................ 78 \V. Technical Assistance for Strengthening Equipment Maintenance Operations of the Directorate of Public Works - Outline Terms of Reference ....... .... 80 VI. Technical Assistance for the Reorganization of the Road Planning and Design Office - Outline Terms of Reference ..................... . 83 VIIl. Transport Economist for the Directorate of Transport Outline Terms of Reference and Qualifications .85 VIII. Trucking Industry Expert to be Attached to CTT - Outline Terms of Reference and Qualifications ....... 87 IX. Rural Roads Study - Outline Terms of Reference .... ... . 89 X. Economic Analysis of the Project ............ 0.......... 91 EXHIBITS I. Directorate of Public Works: Organigramme .... ........ 115 II. Incremental Benefits from Regravelling .... ............ 116 III. Benefits from Grading of Tracks ............... ....... 117 MAPS I. CHAD - Third Highway Project (IBRD No. 13241-R) II. CHAD - Third Highway Project, Main Road Connections (IBRD No. 13242)   CHAD APPRAISAL OF A THIRD HIGHWAY PROJECT SUMMARY i. The Republic of Chad, a vast, landlocked country in the heart of north-central Africa, is counted among the world's poorest 25 countries (Gross National Product in 1975: US$120 per capita, with incomes in rural areas about US$60 per capita). The economy is based on agriculture, which accounts for over 50% of the Gross Domestic Product (GDP); cotton is the prin- cipal export, providing over two-thirds of the export earnings. As Chad's principal economic centers are located about 2,000 km from the nearest ocean port, external transport plays a critical role in Chad's economy. Roads form the backbone of the internal transport system. The road network consists of about 7,300 km of classified roads and tracks, and about 24,000 km of tracks providing access to agricultural areas. Only about 1,300 km are engineered, all-weather roads; of these 253 km are paved. Road distribution is uneven; the major portion is located in the cotton-producing areas in the south, while the sparsely-inhabited northern part is served mainly by desert tracks. Inadequate maintenance, due to shortage of funds, has impaired the service- ability of the road network. ii. Bank Group assistance to Chad's transport sector has been confined to two highway projects and transport components in two other Credits. The (First) Highway Maintenance Project (Credit 125-CD, US$4.1 million, August 1968) was geared to improving road maintenance. It consisted mainly of a five-year maintenance program, and a preinvestment study. The road mainte- nance program was completed in 1973, but physical targets were only partially achieved, due to severe budgetary constraints as reflected in reduced alloca- tions for recurrent expenditures. The Second Highway Project (Credit 490-CD, US$3.5 million, June 1974), including an improvement and maintenance program for cotton feeder roads, an interim program for maintenance of ferries, a training program, preinvestment studies, a program of traffic counts, and a road transport industry study is being implemented with satisfactory results. The project is due for completion in 1980. The training program has been extended to July 1978 to provide continuity with the training envisaged under the proposed project. The extension of this program has increased the project cost by about US$400,000, net of taxes, which would be financed under the proposed project. This amount would be used to finance capital costs and operating expenditures of the remaining part of the cotton feeder road main- tenance and improvement program. Two other IDA-financed projects have small transport-related components: (a) the Rural Projects Fund (Credit 664-CD, US$12 million, December 1976) includes maintenance operations on selected sections of about 1,200 km of feeder roads; and (b) the Sahelian Zone Project (Credit 739-CD, US$1.9 million, October 1977) includes rehabilitation of six airstrips. iii. The Government's objectives in the road sector are to improve communications between the Sahel zone and the agriculturally productive south in order to promote national integration, and to facilitate the export and  - ii - import of essential commodities. In support of these objectives, the proposed Third Highway Project aims to make road maintenance operations more efficient, strengthen road maintenance and planning, and improve the operations of the trucking industry. The Government's increased commitment to road maintenance, despite the continuing critical budgetary situation, reduces the risk that the proposed project will experience the difficulties that hampered execution of the first project. The proposed project would include: (a) a four-year road maintenance program of about 5,300 km of unpaved roads and tracks, in- cluding purchase of equipment and construction of workshops and buildings; (b) a training program for DPW personnel, including a training/production brigade for regravelling about 100 km of roads per year; (c) construction of four ferryboats; (d) technical assistance and fellowships to: (i) strengthen DPW, (ii) provide plaining support for the Directorate of Transport (DT), and (iii) improve the trucking operations of the Cooperative des Transporteurs Tchadiens (CTT); (e) a study to prepare a rural roads project; and (f) completion of the improvement and maintenance program for cotton feeder roads started under the Second Highway Project. iv. The capital cost of the proposed project is estimated at US$21.9 million equivalent, with a foreign component of about US$18.4 million (84%). Taxes amount to US$0.2 million as the Government has agreed to waive all taxes, except those on fuel. Recurrent expenditures over the project period amount to about US$8.1 million equivalent with foreign costs of about US$4.1 million (51%). The cost estimates are expressed in end 1977 prices and in- clude physical and price contingencies during project implementation. All the capital costs (net of taxes) of the proposed project would be externally cofinanced on a parallel basis by the Association (IDA Credit; US$7.6 million), the United States Agency for International Development (USAID grant; US$9.0 million), and the African Development Fund (ADF Credit; US$5.1 million). The Government would provide US$8.3 million equivalent; US$0.2 million to finance taxes on fuel, and US$8.1 million for the recurrent expenditures of the maintenance program for roads and ferries. v. The proposed project provides for about 531 man-months of consulting services and technical assistance: 230 man-months for the training program, 205 man-months to assist in strengthening DPW and improving regional workshop efficiency, 16 man-months to assist in ferryboat construction, 30 man-months to provide planning support to the Directorate of Transport, 15 man-months to improve CTT's trucking operations, and 35 man-months for the rural roads study. In addition, fellowship support would be provided for DPW, DT, and CTT personnel. Consulting services and technical assistance for DPW, building of ferryboats, and the rural roads study would be financed by the Association, while USAID would provide for the remaining technical assistance requirements. vi. The Ministry of Civil Works, Mines and Geology (MCWMG) would imple- ment, through its DPW, the road maintenance and training programs, construc- tion of ferryboats, and civil works. It would also supervise the technical assistance for DPW and administer fellowships for DPW staff. The Ministry of Economy, Planning and Transport (MEPT) would supervise the technical assistance for DT and CTT, and the rural roads study. Building materials  - iii - for ferryboats would be procured under international competitive bidding in accordance with Bank Group guidelines. Procurement of all other goods financed by the Association would be carried out under local competitive bidding procedures acceptable to the Association. Ferryboats would be built under force account, but some of them, or parts thereof, might be contracted to local workshops under local procedures. A small quantity of consumable materials for ferryboat construction and office supplies (up to an aggregate amount of US$60,000) might be purchased through local shopping. Consultant's services for technical assistance to DPW and for ferryboat building would be obtained following procedures, and on terms acceptable to the Association. All other goods and services would be procured following the procedures of respective cofinancing agencies. DPW will prepare bidding documents and supervise construction of buildings. The Association would be responsible for project supervision subject to agreement with all cofinancing agencies. vii. The best estimate of the economic rate of return for routine mainte- nance is about 75%, corresponding to a benefit/cost ratio of 3.25 at a 12% discount rate. Regravelling of about 400 km of roads by the training produc- tion brigade would yield an economic rate of return of about 17% equivalent to a benefit/cost ratio of 1.31 discounted at 12%. The overall economic return for road maintenance operations, accounting for costs of routine maintenance, regravelling, and training, is estimated at 51%. Replacement of the four ferries would produce an overall rate of return of 44%, ranging from 27% to 58% for individual ferries. The overall rate of return for the project, including the maintenance program and the replacement of ferryboats, is about 50%. Improved quality of roads through maintenance would tend to retard the escalation in transport costs and the corresponding multiplier effects, re- sulting in increased prices of consumer goods and reduced net export revenues. As some of the project benefits are expected to filter down to the producers, further expansion of agricultural output and generated traffic could mate- rialize. viii. With the agreement reached on the conditions listed that in Chapter 6, the proposed project is suitable for an IDA Credit of US$7.6 million to the Republic of Chad on standard IDA terms.   CHAD APPRAISAL OF A THIRD HIGHWAY PROJECT 1. INTRODUCTION 1.01 Chad's economic situation has been deteriorating since the late 1960's due to a prolonged drought and internal security problems. Increased demand for Government services, resulting from the drought, and rising military spending, caused budget deficits that rose from CFAF 2.0 billion in 1970 to CFAF 4.1 billion in 1974, leading to accumulated payment arrears of CFAF 11.6 billion by 1976. The Government, therefore, has depended on external assis- tance for most of its investment needs. This fiscal situation presents ser- ious obstacles to transport development as the Government can neither con- tribute to investments nor fully finance recurrent costs. During 1972-75, annual expenditures on road maintenance averaged less than 2% of Government's spending on recurrent expenditures. A properly maintained road network, how- ever, is critical to the growth of the country's economy, particularly in the agriculture and livestock sectors. It would also help to improve communica- tions between many important commercial and administrative centers and reduce the economic and administrative isolation of several prefectures. To help maintain and improve its primary and secondary roads, the Government has requested Bank Group assistance in financing a Third Highway Project. 1.02 To date, Bank Group assistance to Chad's transport sector has been for road maintenance and improvement of cotton feeder roads. The First High- way Maintenance Project (Credit 125-CD, US$4.1 million, August 1968) provided a five-year maintenance program for primary and secondary roads, feasibility studies of the Djermaya-Djimtilo road and lake side facilities, and a country- wide program of traffic counts. Training for road maintenance personnel ini- tially included in the project was largely deferred to the follow-up Second Highway Project, although some training was provided under USAID auspices. 1.03 The project focused the Government's attention on the importance of road maintenance and initiated the process of building a sound maintenance organization. Equipment, spare parts, and materials were purchased and work- shops improved. The shortage of local funds for recurrent maintenance expend- itures, low equipment utilization due to lack of spare parts and inadequate equipment maintenance, and grave internal security problems were the main reasons for the shortfall in annual road maintenance targets (a maximum of 2800 km compared to the appraisal expectation of 4350 km at the end of the project). The shortage of local funds can be generally attributed to the allocation of fuel taxes to the general budget rather than the Road Fund, although from 1972 onwards insufficient Government allocation for road main- tenance was more a result of the Sahelian drought and the political unrest, which caused a steep decline in production and revenues. The Operations Evaluation Department's Project Performance Audit Report (No. 1883) points to the need for provision of increased local funds for maintenance, improvement of equipment utilization, expansion of training for maintenance personnel, and development of Government's ability to plan and execute road maintenance works. The design of the proposed project takes account of these considera- tions.  -2- 1.04 The Second Highway Project (Credit 490-CD, US$3.5 million, June 1974) started in 1975, comprising a five-year program of improvement and maintenance of cotton feeder roads, a three-year interim maintenance program for ferryboats, a training program for Directorate of Public Works (DPW) per- sonnel, a two-year traffic counting program, preinvestment studies of about 120 km of cotton export rpads, a feasibility study for replacement of ferry- boats, and a road transport industry study. The improvement and maintenance of cotton feeder roads is proceeding satisfactorily. The interim maintenance of ferryboats, the feasibility study for replacing ferryboats, and the trans- port industry study have been completed, while the training and traffic counting programs are in progress. Detailed engineering of the two cotton export roads was not undertaken because the proposed investment in one road was not economically justified, and the other was contingent upon the imple- mentation of a soap factory project, which was cancelle4 by the Government. In view of the increased training requirements for the implementation of the proposed Third Highway Project, the training program has been extended to provide continuity in the training activities between the two projects. The use of project funds for extension of the training program would require additional financing to complete the improvement of cotton feeder roads. The resulting cost increase, US$400,000, net of taxes, would be financed under the proposed project (para. 4.14). 1.05 In addition to the First and Second Highway Projects, the Rural Projects Fund (Credit 664-CD, US$12.0 million, December 1976) includes minor drainage works and selective maintenance and improvement of about 1200 km of feeder roads, mainly in the cotton zone. A first step to improve the air transport sector will be taken under the Sahelian Zone Project (Credit 739-CD, US$1.9 million, October 1977) which includes a sub-project for minor rehabilitation works on six airstrips serving regional prefectures. 1.06 The proposed project serves as a logical sequel of the road main- tenance effort initiated under the Highway Maintenance Project and supports the Government's commitment to establish road maintenance on sound technical and financial grounds. Serving as the first phase of a long-term improvement effort in road maintenance in Chad, the primary objective of the project is to preserve the continued serviceability of the road network, so that earth roads and tracks remain trafficable during the dry season and selected roads are regravelled to provide all-weather service. 1.08 This report is based on studies prepared by consultant BCEOM, on information provided by DPW and other Government agencies, and on the findings of an appraisal mission comprising Messrs. E. Staffini (engineer), A. Faiz (economist), P. Sooh (engineer), A. Pappalardo (engineer, consultant for ferryboats) and P. Gueye (transport economist, consultant for the trucking industry), which visited Chad in March-April 1977. 2. THE TRANSPORT SECTOR A. The Land and the Economy 2.01 Landlocked in the heait of north-central Africa, Chad occupies an area of about 1.3 million km , with a population estimated at 4.0 million  -3- in 1976. The population growth rate is about 2.0% per annum. About 85% of the population is concentrated in the southwestern savanna zone, which occupies only 10% of the land area. There, smallholders cultivate millet, sorghum, groundnuts and, more recently, rice as food crops, and cotton as the primary cash crop. As rainfall declines and becomes more erratic, trans- humant pastoralism replaces rainfed farming in the Sahelian region. The vast northern part of the country is a rocky wasteland consisting of southern extensions of the Sahara and Libyan deserts. 2.02 With a per capita Gross National Product (GNP) of US$120 in 1975, Chad is one of the poorest countries of the world and is included among the 25 least-developed member countries of the United Nations. Agriculture repre- sents over 50% of the Gross Domestic Product (GDP) and accounts for nearly all exports, of which cotton, livestock and animal products, and fish are the main commodities. During the past ten years, the pace of development has been slow due to the country's formidable growth problems, namely lack of natural re- sources (with the exception of recently discovered oil deposits), a hostile climate, a literacy rate of 7%, a largely unskilled labor force., atl I .1i- uing political unrest. Between 1967 and 1975, per capita income dropped about 1% per year, and Government budget came under increasing strain with few internally financed investments. Efforts, however, are being made to put Chad's financial house in order; a balanced budget appears possible by 1982 in the judgement of the recent Bank economic mission (Report No. 1340-CD). B. The Transport System International Transport 2.03 The remoteness of Chad's urban centers from ocean ports (1,700 - 3,000 km) and difficult internal communications give rise to high transport costs, which in turn inflate the price of imports and most consumer goods, and have a debilitating effect on the competitiveness of Chadian exports. As land transport costs account for a significant 15-20% of the f.o.b. price, the competitiveness of Chadian cotton exports is becoming increasingly mar- ginal. Relative to imports, a bulk freight rate of about CFAF 34,000 (US$140) per ton from ocean ports adds significantly to the final consumer prices. 2.04 The principal external transport corridors to the sea are: (a) the Nigerian route via Maiduguri to Lagos or Port Harcourt, carrying about 32% of the total freight in 1977; (b) the Cameroonian route via Ngaoundere to Douala, accounting for about 48% of the total tonnage compared with 16% in 1970; and (c) the Transequatorial route via Bangui and Brazzaville to Pointe Noire, carrying about 12% of freight traffic compared with 47% in 1970 (Table 1 and map). Since 1974, transit trade has diverted substantially from the Transequatorial route to the Cameroonian route, following the establish- ment of a railhead at Ngaoundere and the improvement of the road link between Ngaoundere and N'Djamena. This diversion was accelerated by the dissolution of the Agence Transequatoriale des Communications (ATEC) in 1969 and improve- ment of the road link between Sarh and the Cameroonian border via Moundou during 1965-70. It is estimated that the Cameroonian route will continue to attract an even larger share of Chad's transit trade, especially with the  -4- projected increase in capacity at Douala port and the proposed construction of the Moundou-Guidjiba road linking southern Chad with the Trans-Cameroonian axis by a more direct route. Transport Infrastructure 2.05 Road transport is the predominant mode in Chad's transport system, accounting for about 75 million ton,-km? or nearly 85% of total freight traffic. The details of the road subsector are discussed in Chapter 3. Other modes include an air transport network and inland waterways comprising Lake Chad and the Chari-Logone river system. Air Transport 2.06 Chad has 44 airfields and airstrips, including one international airport at N'Djamena for commercial jet traffic. Eleven of the larger air- ports are efficiently managed by the Agence pour la Securite de la Navigation Aerienne en Afrique et a Madagascar (ASECNA), while most of the remaining airfields fall under the jurisdiction pf the Directorate of Civil Aviation (DCA). Most of the airstrips are unpaved, and due to lack of adequate mainte- nance, their serviceability has been impaired. A subproject under the ongoing Sahelian Zone Project will restore six airstrips to their previous condition. 2.07 Total air freight traffic (arrivin$ anid departing) dropped from an all-time high of 29,000 tons in 1970 to 14,500 tons in 1975. This was due primarily to the recession in economic activity in Chad during the drought years. Major commodities exported via air are meat, fish and gum arabic. Domestic transport is handled by Air Tchad, an autonomous corporation which offers scheduled service between N'Djamena and ten interior cities; six major airlines, including the multi-national, ptate-owned, Air Afrique, of which Chad is a member, handle the international traffic. The domestic demand for air transport (0.3 million ton-km of air cargo in 1975) is seasonal, peaking in August-September (the rainy season) when road transport becomes quite difficult and in many cases impossible. Although preliminary studies carried out by United Nations Conference pn Trade and Development (UNCTAD) and Interna- tional Civil Aviation Organization (WCAO) reflect favorably on the potential of air transport development in Chad. supbstantial increase in air transport demand does not appear likely in the near future. Inland River and Lake Transport 2.08 The River Chari is navigable between N'Djamena and Lake Chad year round, and between N'Djamena and Sarh (850 km) from mid-August to mid-December. The Logone river is navigable between N'Djamena and Moundou (1,000 km) from September to late October. Barge traffic on the rivers and Lake Chad is esti- mated at about 15-20,000 tons per year, or about 10-15 million ton-km. Major commodities include beer, timber, sugar, steel, fuel, natron and fish. Pros- pects for river transport development are limited bepause of river regime con- straints, although the outlook for developing barge transport on Lake Chad is more favorable. The local construction of ferries under this project could well serve as the nucleus of a future barge coinstruction industry for lake transport.  -5- C. lnvestments 2.09 Investments in the transport sector (including communications) averaged about CFAF 0.75 billion per annum during 1967-70 (38% of total public sector investments), but declined to CFAF 0.60 billion (6% of total invest- ments) in 1975, due to a shift in government policy toward agricultural development (Table 2). Major investments in the sector since 1970 comprise the construction of the N'Djamena-Guelendeng and N'Djamena-Massaguet roads, the Moundou-Airport road, the Ba-Illi bridge and runway strengthening at the N'Djamena airport (Table 3), in addition to the Bank Group's highway projects (paras. 1.02-1.05). Transport sector investments decreased from 2.4% of GDP in 1967, to 0.5% in 1975. D. Management and Planning 2.10 The primary responsibility for transport planning and coordination rests with the Ministry of Economy, Planning and Transport (MEPT). Within the Ministry, the Directorate of Planning and Development (DPD) determines trans- port investment priorities and coordinates external assistance; the Director- ate of Economic Affairs establishes transport tariffs; and the Directorate of Transport (DT) is responsible for transport policy and regulation of all modes, including international transport agreements. The Ministry of Finance establishes road user taxes, approves budget requests, and proposals for tariff modification. DPW, within the Ministry of Civil Works, Mines and Geology (MCWMG), is responsible for the construction and maintenance of public works. ASECNA, and DCA within MCWMG, administer air transport. 2.11 The basic elements of a hierarchical transport planning process are present in the Government's existing organization. DPW's Studies and Hydraulics Office (SHO) and the technical planning sections of ASECNA and DCA are responsible for data collection, analysis of sectoral trends, and technical evaluation of projects. DT serves as the next operational level in the transport planning hierarchy, liaising between the operating organi- zations (DPW & DCA) and DPD, as well as being responsible for sector policy and regulation. The next level of transport planning occurs in DPD where inter- and intra-sectoral investment priorities are determined. 2.12 The Government has staffed its transport agencies with qualified nationals where possible, and relies on technical assistance experts, mostly supplied by thje Fonds d'Aide et de Cooperation (FAC), to fill other posi- tions. Most management positions are held by Chadians, but there remains a significant shortage of qualified technical staff in most agencies. For example, technical staff of DCA consists of one civil aviation engineer who heads the Air Transport Section, while the position of the director remains vacant. DT is also understaffed; as a result, its activities have been confined to immediate problems concerning the road transport industry and negotiations pertaining to international transport agreements. Owing to the shortage of trained local staff, technical assistance experts in most agencies spend much of their time coping with routine administrative and operational matters. Consequently most planning activity centers on developing a "shopp- ing list" of projects for external financing. Although the Government is in the process of formulating a development plan (1978-81), it is unlikely that more than generalized guidelines and objectives will emerge from the exercise under present constraints.  -6- 2.13 The basic strategy for improving sector planning in this context is seen as a gradual one considering the country's limited absorptive capacity for technical assistance, and other manpower constraints. The first and most important need is to improve the system of data collection and technical anal- ysis, i.e. the lower echelons of transport planning. To this end, technical and financial assistance is included in the project for SHO (paras. 3.12, 4.09, and 4.10) and DT (para. 4.11). 3. THE ROAD SECTOR A. The Network 3.01 The road network consists of about 7,300 km of roads divided into about 4,600 km of national roads and about 2,700 km of prefectural roads; and 24,000 km of unmaintained tracks (Table 4). The network includes 253 km of paved roads and about 1,050 km of all-weather engineered gravel roads; most of the remaining roads and tracks are passable only during 7-8 months of the dry season. The major portion of the network is located in the cotton zone, covering about 10% of the area of the country. The sparsely populated northern part of the country is served mainly by desert tracks. Construction of all-weather roads began in Chad in 1964 with the east-west trunk road from Sarh to Pala; this was followed by the paving of N'Djamena-Guelendeng and N'Djamena-Massaguet roads, completed in 1971. No further extensions or major improvements of the road infrastructure have been made since 1972, except for the paving of the 11 km Moundou-Airport road and the construction of the Ba-Illi bridge. B. Road Transport Characteristics Traffic 3.02 Current traffic levels can only be approximated, since the latest available traffic counts date back to 1970 (Table 5). It is estimated that traffic flow on the network averaged about 25-30 million veh-km per year, and about 70-75 million ton-km per year, during 1970-76. Except for the paved road between N'Djamena and Guelendeng, the classified network carries less than 100 vehicles per day (mainly trucks), varying from 30-60 vehicles per day (vpd) on the most trafficked national roads to under 10 vpd on prefectural roads. Vehicle Fleet 3.03 The operational vehicle fleet is estimated to be about 9,300 vehi- cles (4,500 passenger vehicles, 3,000 pick-up and medium trucks, and 1,800 heavy trucks) on the basis of available Government statistics, adjusted to account for vehicles retired from the fleet (Table 6). The vehicle fleet has increased at an estimated rate of 3-6% p.a. Fuel Consumption 3.04 Fuel consumption appears to have remained constant during 1968-76 (Table 7). This apparent paradox, in the light of an estimated 3-6% annual  -7- growth in the vehicle fleet and a 3% annual increase in total tonnage moved via road transport during the period 1968-74, may be explained in terms of increasing unrecorded fuel purchases in Nigeria where the price of fuel is one-third of that in Chad. C. Road Transport Industry 3.05 The domestic road transport industry (details in Annex I) carries about 470,000 tons of freight per year including about 160,000 tons of import- export traffic. There is no scheduled inter-city passenger road transport in Chad, nor statistics on passengers transported. Except for a few vans and covered pick-up trucks, freight trucks double as passenger vehicles. 3.06 The Cooperative des Transporteurs Tchadiens (CTT), a Chadian asso- ciation of truck owners, has a monopoly of all internal and external public road transport activity in Chad, except for the domestic transport operations of a number of semi-public and Government agencies such as COTONTCHAD 1/. Smal:L shipments on domestic routes are de facto not controlled by CTT. CTT has 350 active members who own about 660 vehicles with an average age of 6-7 years; 65% of the CTT members own only one truck while only 7% own five or more vehicles. Each member manages his own operations, while CTT allocates freight, bills customers, and pays the vehicle owner. When necessary, CTT provides working capital in the form of advances to purchase fuel and helps finance the purchase of new vehicles. For these services CTT charges its members a commission equal to 10% of the freight transport cost. CTT is a financially autonomous private enterprise supervised by DT, and its director general is nominated by the Government. There is no restriction on vehicle imports or entry into the industry, although a licensing system exists. 3.07 A number of factors have impeded the efficient development of the trucking industry. The lack of coordination among shippers, carriers, and transport intermediaries and an imbalance between exports and imports has resulted in low truck fleet utilization (around 50% load factors) and high unit costs. The regulated road transport tariffs, established in 1974, have not kept pace with the escalating cost of transport. Except for a few routes, transport tariffs are lower than transport costs, under assumption of modern business practice. Liberal import policies, coupled with drought relief programs, have resulted in excessive vehicle imports in recent years, while sufficient attention is not paid to the maintenance of the truck fleet. 3.08 The proposed project aims at improving the efficiency of the truck- ing industry by providing technical assistance to existing institutions. On the regulatory side, the institutional support to DT (para. 4.11) would prepare it to undertake normal regulatory functions of the road transport industry and carry out basic planning studies aimed to improve the overall efficiency of 1/ COTONTCHAD is a semi-public company which has the monopoly for processing and marketing cotton, as well as the transport of seed cotton from field to ginnery, in its own fleet of 300 trucks.  -8- the transport sector. On the operational side, the technical assistance to CTT (para. 4.12) would help to improve its transport operations especially in the areas of centralization of freight transport demand, freight allocation, and coordination among shippers, truckers, and transport intermediaries. 3.09 Maximum authorized gross vehicle weight limit in Chad is 38 tons with a maximum single axle load of 13 tons, following the French practice. The movement of heavy vehicles on unsurfaced all-weather roads is forbidden during, and for a few hours after, a heavy rain. The enforcement of traffic reguLations is lax due primarily to a lack of funds and trained personnel. With the provision of portable weighing scales under the proposed project, enforcement of weight regulations is expected to improve. Regulatory func- tions fall under the purview of DPW's Service of Mines, which inspects and licenses vehicles, and the Gendarmerie, which is responsible for enforcement of traffic regulations. D. Administration 3.10 DPW, responsible for about 4,600 km of primary roads and about 2,700 km of seconclary roads, also covers buildings and hydraulics. A fifth subdivision will be created under the project. DPW has central services at headquarters and four regional subdivisions. DPW's organization (Exhibit I) is adequate to maintain the roads under its authority, but is in need of improvements in some offices, additional training for its staff, and improved workshop facilities and equipment. E. Staffing and Training 3.11 Except two, all DPW executive personnel are Chadian. Division and subdivision chiefs are foreign trained graduate engineers, while middle-level personnel have received training in local technical schools. Staffing will improve in 1978 as the proposed DPW budget provides for the hiring of two additional engineers and more than ten middle-level technicians. FAC is pro- viding 14 technical assistance experts to DPW under a long-term agreement with the Government. Training of skilled personnel was initiated in 1970 with USAID assistance. Under the ongoing Second Highway Project, a training program is being implemented for several categories of skilled personnel. To consolidate the results of this program and assure the training of skilled personnel required for the road maintenance program, the proposed project also includes a training program (paras. 4.05-4.06). F. Planning 3.12 Until now, road planning has been carried out on a pragmatic, proj- ect-by-project basis, but with insufficient attention paid to economic con- siderations. Although DPW's SHO is responsible for basic road planning, it has been hampered from undertaking planning activities by lack of personnel, equipment, and funds. To rectify this situation, the Government intends to strengthen its SHO:; the road section of this office would become a Road Planning and Design Office (RPDO, Exhibit I). RPDO would carry out basic highway planning and engineering studies, evaluate road projects, and super- vise road construction. Furthermore, RPDO would collect and process data for  -9- economic analysis of proposed road investments; this would help to establish road investment priorities on criteria which take account of economic consid- erationis. G. Financing 3.13 Annual Government revenues from road users averaged about CFAF 1.1 billion (US$4.4 million) during 1971-75, contributing about 8% to total Government receipts, with about 45% derived from fuel taxes (revenue source for the Road Fund); 45% from custom duties and other taxes levied on import of vehicles, spare parts, and lubricants; and 10% from registration, license, and vehicle inspection fees (Table 8). Total annual highway expenditures (capital and recurrent) during this period, including external assistance for construc- tion, purchase of equipment and technical studies (Table 3) averaged about CFAF 1.0 billion (US$4.1 million). As such, road user charges were commensurate with the Government's financial outlays in the road transport sector. 3.14 Capital expenditures on roads during 1971-75 totaled about CFAF 3.2 billion (US$13.1 million), while expenditures for road maintenance during the same period amounted to about CFAF 1.9 billion (US$7.8 million). About 63% of total expenditures, primarily capital investments, was provided through exter- nal financial assistance, IDA accounting for about one-half of the external financing. The remaining amount (37%), averaging about CFAF 380 million per annum, consisted of Government expenditures for administration and maintenance of roads and ferries (Tables 8 and 9). 3.15 The road maintenance budget prepared by DPW is reviewed by the Ministry of Finance and finally approved by the Council of Ministers. Road maintenance expenditures are financed from different sources: the national budget, the Road Fund, and external donors. The national budget normally finances administration expenditures, building maintenance, and salaries of permanent road maintenance personnel. The Road Fund finances other recurrent road maintenance costs and salaries of temporary personnel. External donors have financed capital expenditures and recurrent costs of ad hoc maintenance projects (e.g. Fonds Europeen de Developpement (FED) and Unitd States Agency for International Development (USAID) for drought relief roads, FED for paved roads, IDA for the Second Highway Project). 3.16 Although legislation establishing the Road Fund stipulates that taxes on gasoline and diesel oil (currently CFAF 18.5/liter on gasoline, and CFAF 1L6/liter on diesel oil) be earmarked for the Road Fund and deposited in a special account in the Treasury separate from general revenue, only about 50% of the estimated fuel taxes were deposited in the Road Fund prior to 1976, in the form of an annual budgetary allocation. In 1974, as a credit condition for the Second Highway Project, the Government agreed with the Association to deposit fuel taxes and ferryboat tolls, earmarked for the Road Fund, in a special account to be opened in the Central Bank. This condition, however, could not be met by the Government as its already impaired fiscal situation was dealt a further blow by rampant inflation during 1974-75, causing severe budgetary strains. In 1976, for the first time, the Government earmarked all fuel tax revenues to the Road Fund (still within the Treasury) and used these funds for road maintenance and related activities. In May 1978, the Govern- ment issued a decree which modifies the original law establishing the Road  - 10 - Fund. This decree provides for (i) the opening, as of June 1, 1978, of a special account for the Road Fund in the Banque Tchadienne de Credits et Depots (BTCD), and (ii) the deposit in the account of Road Fund revenues. 3.17 Budget allocations for road maintenance increased during 1970-72, and then decreased, in real terms, until 1975 (Table 9). These allocations were minimal when compared with total requirements, estimated at about CFAF 785 million in 1975, against expenditures of CFAF 220 million, and were a major cause of the reduced road maintenance output. At times, available funds were just sufficient to provide for salaries of personnel and purchase of some fuel. During project implementation, Road Fund revenues (CFAF 450-500 million per annum) are expected to cover recurrent expenditures, excluding equipment depreciLation and taxes other than fuel taxes for the proposed road maintenance program, maintenance of ferries, and other ongoing road maintenance and improvement projects (paras. 3.20 and 3.21). It is estimated that routine maintenance of the entire road network of about 7300 km, including equipment depreciation and all taxes, would require about CFAF850 million (US$3.5 mil- lion) annually, iLn end 1977 prices. The proposed road maintenance program, however, has been tailored to the expected availability of recurrent mainte- nance funds over the four years of the project for all ongoing road main- tenance and improvement projects (para 4.24). H. Engineering and Construction 3.18 Minor engineering studies are carried put by DPW's Studies and Hydraulics Office (SHO), which also supervises construction works, while all major roads are designed by foreign consultants under DPW's supervision. Design standards are selected on a project-by-project basis as there are no official design standards for roads. RPDO, to be established under the pro- posed project, would define these standards for different categories of roads. Facilities for soil and materials testing are available at the Ecole Nationale des Travaux Publics (ENTP) laboratory in N'Djamena. Improvement and recon- struction of limited sections of road are carried out by force account, as domestic contractors are not yet available for undertaking these civil works. Major road construction projects are executed by foreign contractors and supervised by foreign consultants under DPW's overall charge. I. Road Maintenance 3.19 Road maintenance is carried out by four DPW subdivisions located in N'Djamena, Abeche, Sarh and Moundou. The subdivisions are divided into road sectors, each with jurisdiction over a part of the subdivision's network, but the sectors exist only on paper because of lack of offices, funds and equipment. Minor equipment maintenance is carried out in the small sub- division workshops, while heavy repairs are executed in DPW's central workshop in N'Djamena. Since the area covered by the Abeche subdivision is vast, the Government indicated that it was considering the establishment of a fifth sub- division in Mongo. This would permit more efficient equipment utilization, as much time is now spent in transporting equipment. Funds are therefore included in the project to provide the necessary facilities for the additional subdivision (para. 4.04).  - 11 - 3.20 Under the (First) Highway Maintenance Project, DPW was able to in- crease the maintained network from about 1,800 km in 1970 to about 2,800 km in 1972, but with no equipment renewal since 1972 and recurrent maintenance expenditures averaging about CFAF 220 million p.a., the maintenance output graduaLly decreased to an estimated 1,800 km in 1976. Periodic maintenance (regravelling), economically justified for about 400 km of roads, should be carried out as soon as possible to avoid further deterioration of roads and the loss in invested capital. Other than the proposed maintenance program for unpaved roads, United Nations Sahel Office (UNSO) has undertaken a road improvement and maintenance program for 470 km of unpaved secondary roads and tracks in the Sahel, to be executed over a seven-year period at an estimated cost of US$14.4 million. 3.21 Chad's three paved roads, totalling 253 km, were constructed between 1969-73 under FED financing. Owing to lack of adequate maintenance, some sec- tions of the N'Djamena-Guelengdeng (157 km) and N'Djamena-Massaguet (85 km) roads have deteriorated to the point where reconstruction of the pavement is required. At the Government's request, FED has agreed to finance capital and recurrent costs of about CFAF 750 million (US$3.1 million), for the deferred maintenance and rehabilitation of paved roads, over a two-year period (mid 1978-mid 1980). The Government would pay salaries estimated at about CFAF 53.6 million (US$0.2 million) in end-1977 prices. The equipment procured under the FED program would be used for routine maintenance of paved roads after comple- tion of the program. J. Improvement of Feeder Roads 3.22 The Government, with the assistance of the Association (Second Highway Project and Rural Projects Fund), FED, and bilateral aid agencies has made considerable efforts to improve feeder roads in the cotton zone in the south-eastern part of the country. The Government's objective of producing 200,000 tons of cotton per year by 1980 (compared to 175,000 tons in 1976-77) would require additional cultivation of about 50,000 ha, with related need for feeder roads and probably some connecting secondary roads. Rural roads are also required in support of development projects, in other parts of the country, namely: (i) Lake Chad polders area where the Lake Chad Polders Project (Credit 592-CD) is in progress; (ii) the Lake Fitri area; and (iii) irrigated perimeters along the Chari River under the Rural Projects Fund. A study to define rural road needs and establish implementation priorities for these roads is included in the project (para. 4.13). This study will cover all development areas except the Moyen Chari region, for which a separate Swiss-financed study is envisaged. K. Domestic Contracting Industry 3.23 The domestic contracting industry is at an early stage of develop- ment. About 15 contractors deal mainly with building construction, although an additional number of small contractors carry out building repairs and other minor works. The Government is trying to set up a contractor registration system based on information furnished by the contractors. This operation is being carried out with the assistance of the Office for Industrial Promotion  - 12 - supported by UNIDO. Government efforts to identify domestic contractors should be encouraged and expanded to (i) estimat present and projected demands of the civil works sector, and (ii) study the present structure, capacity and competence of the domestic contracting industry and make recommendations for its improvement, including financial assistance. The possibility of this study being carried out under UNDP financing is being explored and the Gov- ernment will be kept informed of the outcome. L. Appropriate Road Maintenance Technology 3.24 The proposed project includes appropriate labor-based maintenance methods, as a substitute for routine road maintenance solely dependent on equipment (para. 4.03). For regravelling operations, a comparative analysis by a Bank Group consultant, investigating labor-based construction methods, showed by using data obtained from the Sategui-Deressia Irrigation Project (Credit 489-CD) that equipment intensive methods were more economical than methods employing a higher labor content due to the nature of regravelling operations (e.g. need of compaction), the long haul distances for construction materials, and the necessity to transport personnel to work sites. 4. THE PROJECT A. Description 4.01 The proposed project would primarily support the Government's objective to improve road maintenance. The other main objective of the project would be to strengthen transport planning operations. 4.02 The proposed project consists of: (a) a four-year road maintenance program for about 5,300 km of unpaved roads and tracks, including purchase of main- tenance and workshop equipment and spare parts, and reno- vation and construction of workshops and office buildings; (b) a training program for DPW personnel including a training/ production brigade for regravelling; (c) construction of four ferryboats; (d) technical assistance and fellowships to: (i) strengthen the Directorate of Public Works; (ii) provide planning support for Directorate of Transport; and (iii) improve the operations of the trucking industry; (e) a study to prepare a rural roads project; and (f) completion of the improvement and maintenance program for cotton feeder roads, started under the Second Highway Project.  - 13 - B. Road Maintenance Program 4.03 The proposed project supports the routine maintenance of approxi- mately 5,300 km of unpaved roads and tracks, and periodic maintenance of about 400 km of main gravel roads (Table 10). Routine maintenance operations have been tailored to maintenance standards compatible with the road type and level of traffic (Table 11). Other than mechanical grading, compaction, and tractor-drawn dragging operations, 17 road gangs of 25 laborers each covering road sections of 100-200 km under the direction of a sector chief, would be responsible for the maintenance of about 2,400 km of gravel and earth roads and tracks. Specific routine tasks carried out by the road gangs would in- clude filling potholes, clearing ditches and culverts, maintaining shoulders and road furniture, and spot regravelling. For each sector, the project provides for an office with stores, hand tools, a small truck (2.5 tons) for transport of labor and materials, and a motorbike for the sector chief to supervise the maintenance works. Only mechanical grading (in most cases once a year), would be carried out on the remaining 2,900 km of tracks, the objec- tive being to keep the tracks passable; of these, about 1,300 km would be subject to change from one year to another in accordance with the Government's economic priorities. Periodic maintenance (regravelling) of about 400 km of relatively more trafficked roads (over 45 vpd), would be carried out by a training/production brigade (para. 4.05). Economic design standards for regravelling comprise a 6 m wide running surface, 0.5 m wide shoulders, and a 10 cm thickness. 4.04 The proposed project will provide maintenance equipment including an inLtial stock of spare parts, workshop equipment, and spare parts for re- pairing existing equipment (Table 12). About 40% of the equipment procured under the (First) Highway Maintenance Project, deadlined due to lack of spare parts, will be repaired and used in the execution of the proposed maintenance program. The maintenance program also includes the construction of a garage for maintenance equipment; buildings for the equipment inspection office, the procurement office, and a spare parts store; and improvements to the central workshop, all in N'Djamena. In addition, a garage will be constructed and improvements made to office buildings and workshops in each of the existing four road maintenance sub-divisions, 14 small buildings will be built to serve as administrative centers for the road maintenance sectors, and offices, a garage and small workshop will be constructed for the subdivision to be created in Mongo (Table 13). Agreement was reached with the Govern- ment at negotiations on: (i) the maintenance standards to be applied (Table 14); (ii) the core network of about 4,000 km to be maintained annually (Table 10); and (iii) sending to the Association, before October 31 of each project year, the following information on the maintenance program for the subsequent fiscal year: (a) the list of minor tracks (about 1,300 km), other than the core network, and (b) the proposed regravelling program, including actual or estimated traffic on the proposed roads. C. Training Program 4.05 The training program envisaged under the project will provide trained personnel for Chad's road maintenance and improvement works in order to improve the productivity of road maintenance operations. Although only  - 14 - about 75 additional personnel at various levels within DPW are needed to implement the proposed road maintenance program, and other maintenance and improvement projects under FED and UNSO assistance, a total of about 225 mechanics, technicians, and equipment operators need to be trained to ensure efficient DPW operations (Table 15). This estimate allows for a drop-out and turnover rate of 30%. The training program would combine classroom instruc- tion with field training, with greater emphasis placed on the latter aspect. A mechanized brigade will be used for field training, which, in addition to its training functions, is expected to regravel about 100 km of main roads per year. Given the importance attached to routine maintenance to be carried out by road sectors (para. 4.03), appropriate training in road maintenance prac- tice for the sector chiefs is also included. 4.06 Specific project inputs for the training program include additional workshop equipment and teaching materials for the existing training center (established under the Second Highway Project); equipment for the training/ production brigade (Table 16); technical assistance (230 man-months) to imple- ment the four-year training program, including the operations of the training/ production brigade; and operating expenses for the training program. About 20 fellowships will be granted to DPW personnel at all levels, to complement the training program. Provisions for a daily allowance during the training period (additional to the normal salary paid to DPW personnel) and cash prizes for outstanding trainees have been made in operating cost estimates, to serve as incentives to recruit new trainees and attract in-service DPW personnel from the distant subdivisions to participate in the program. The proposed training package under the supervision of expatriate technical assistance is the most cost-effective means of providing trained personnel in the Chadian context, since a major drawback of past training programs was the lack of adequate emphasis on field training. The Government agreed at negotiations to: (i) prepare, and submit to the Association for approval, a detailed traininrg curriculum by December 31, 1978 and (ii) assess, by December 31, 1979, future training requirements in consultation with the Association. D. Construction of Ferryboats 4.07 The project includes the local construction of four ferryboats to replace the existing ferries at Bongor, Lai, Bousso, and Hellibongo, as limited traffic and wide river beds requiring long bridges make these struc- tures uneconomical. The proposed 50-ton capacity ferryboats (Annex III) would be able to carry the heaviest truck-trailer units plying the national roads (38 tons, with full payload). The shallow draft (50-55 cm) ferryboats would be identical in design, leading to standardization in construction (barges, ramps, decks) and future maintenance requirements (spare parts). The new ferrybqats are characterized by simplicity in operation with maintenance requirements kept to a minimum. The proposed project includes funds for the purchase of materials, workshop equipment, labor, preparation of detailed design and specifications, and technical assistance (about 16 man-months) for construction executions (Table 17). The ferryboats would be constructed under force account, at the DPW barge-yard, which has some experience in barge build- ing. Additional skilled labor, however, will be needed to build the ferryboats within the project time schedule. Should all the necessary skilled labor not  - 15 - be available, construction of some ferryboats, in whole or in part, would be contracted to local mechanical workshops. The cost of locally built ferry- boats, including the cost of workshop equipment and technical assistance, is estimated to be substantially lower than the cost of imported ferryboats, mainly due to reduced transport cost of disassembled building materials and less expensive local manpower. E. Technical Assistance and Fellowships 4.08 Other than the technical assistance required for the execution of training program and ferryboat construction, additional technical assistance would be provided under the project to: (i) assist the Government in develop- ing the necessary capability for equipment maintenance, execution of mainte- nance operations, and road planning; (ii) initiate transport planning on a systematic basis; and (iii) provide operational assistance to the trucking industry. The technical assistance is complemented by a total of about 30 fellowhips (including those mentioned in paras. 4.06, 4.10, 4.11 and 4.12) for training abroad so that a cadre of trained Chadian personnel is in place when the proposed technical assistance lapses. The selection of candidates for fellowships would be approved by the Association (Annex IV-C). Strengthening of the Directorate of Public Works 4.09 Technical assistance (205 man-months) would be provided to set up an Equipment Inspection Office (EIO), centralize procurement functions in a Procurement Office (PO), and establish RPDO (para. 3.12). In addition, the project provides for furniture and equipment for these offices to ensure effective utilization of technical assistance. Portable weighing scales for control of vehicles axle loads are also provided. 4.10 EIO would implement a cost accounting system, supervise PO, and inspect equipment maintenance carried out by the sub-divisions. PO will be entrusted with procurement of spare parts and other materials required to maintain DPW equipment, and will also establish and maintain a central spare parts store with proper inventory and book-keeping procedures. The technical assistance for EIO and PO (180 man-months), comprising one mechanical engineer for EIO, one chief mechanic for PO, and four mechanics for the sub-division workshops, 1/ is expected to be in the field for about three years, and will assist in training Chadian staff. To further improve the professional capacity of in-service personnel (particularly the chiefs of workshops and mechanized units), about six fellowships for practical training abroad will be financed from project funds. Appointment of key qualified Chadian staff (one mechanical or road engineer, 2/ one chief mechanic, and three equipment controllers for EIO; and one procurement officer, and one forwarding officer for PO) to be trained by technical assistance specialists, will be a condition of credit effectiveness. To ensure effective operation of EIO, PO, and the workshops, 1/ One mechanic will supervise the Abecht and Mongo subdivisions. 2/ The Government agreed that this position will be filled with a mechanical engineer not later than October 31, 1979.  - 16 - appointment of key personnel (two mechanics, two accountants for EIO; one mechanic, one accountant, and three storemen for PO; five equipment fleet chiefs; and five subdivision workshop chiefs) will be a condition of dis- bursement for construction of buildings and improvement of workshops. RPDO will receive about 25 man-months of technical assistance (one engineer- economist) to help establish this office and train local staff to carry out basic road planning and engineering studies, evaluate projects, and supervise construction. The Government agreed at negotiations on the outline terms of reference for the proposed technical assistance (Annexes V and VI). Institutional Support for the Directorate of Transport 4.11 The proposed project provides for the services of a transport economists for 30 man-months to organize DT and help with: (a) collection of transport data and publication of an annual report on transport statistics, and preparation of technical reports; (b) inter-departmental coordination for transport planning and road traffic regulation and enforcement; and (c) regulation of road transport industry. The Government should agree at nego- tiations on outline terms of reference for the technical assistance to DT (Annex VII). The expatriate transport economist would assist DT's local staff in their operational duties and train them to run DT with minimal external, assistance upon completion of his services. Funds for technical assistance, office equipment, furniture and supplies are included in the proposed project. The project also includes a fellowship for training in transport planning and operations. At negotiations, the Government agreed to appoint a suitably qualified Chadian to serve as a counterpart to the expatriate transport- economist, and other local staff needed to permit the implementation of items outlined in Annex VII. Operational Assistance to the Road Transport Industry 4.12 The proposed project provides for the services of a trucking indus- try expert (15 man-months) to assist CTT in improving its operations. Outline terms of reference for the proposed technical assistance (Annex VIII) were discussed and agreed at negotiations. The project includes a fellowship in transport industry operations and training abroad for CTT's assistant director responsible for transport operations. F. Rural Roads Study 4.13 The Government wishes to improve rural roads in the cotton zone as well as in other areas of the country, including the Sahel. Accordingly, the proposed project includes a three-phase study of rural road needs in relation to rural development in selected areas. The first phase will (a) identify development areas in terms of economic potential and investment requirements, concentrating on transport and rural infrastructure needs, and (b) examine and report on basic and alternative institutional and manpower resources required to execute and maintain a possible rural transport/infrastructure project. The second and third phases will address detailed project description, economic analysis and engineering design under guidelines resulting from discussions between the Government and the Association following the first phase. This  - 17 - study, requiring about 35 man-months over an eight-month period, will also identify a long-term strategy for rural transport development and outline a program for the construction, improvement and maintenance of transport facili- ties. Outline terms of reference for the proposed consulting services (Annex IX) were agreed with the Government during negotiations. G. Completion of the Improvement and Maintenance Program for Cotton Feeder Roads 4.14 The training program under the Second Highway Project has been ex- tended to permit continuity between ongoing training activities and those envisaged under the proposed project, resulting in a cost increase of about US$400,000. As funds from the Credit for the Second Highway Project were reallocated to permit the extension of the training program, the ongoing program for the improvement and maintenance of cotton feeder roads under the same project would have to be reduced without additional financing. The proposed project will, therefore, finance this cost increase through the provision of capital and operating expenditures, to complete the improvement and maintenance program covering about 760 km of cotton feeder roads. H. Cost Estimates 4.15 The total capital cost of the project is estimated at about US$21.9 million, with a foreign cost of about US$18.4 million (84%). As in previous Bank Group financed projects, the Government would waive all customs duties and other taxes on project-related goods and services, except taxes on fuel, which amount to about US$0.2 million. An insignificant amount of taxes on consumable items, procured from existing dealer's supplies, have not been identified separately. Recurrent expenditures during the project period (1979-82) amount to about US$8.1 million equivalent, with a 51% foreign component of about US$4.1 million. Cost estimates reflect prices at end-1977. Detailed cost estimates, including physical and price contingencies, are given in Table 18 and summarized on page 18. During negotiations, the Government confirmed that (a) all contracts for goods or services to be provided under the project will be free of commercial taxes (taxe d'enregistrement, taxe sur le chiffre d'affaires, and similia); (b) the special quarry tax (OFCA, Office des Carrieres) will be waived with respect to construction works; and (c) materials, equipment and spare parts for road maintenance equipment, including that of the training unit, and construction materials will be imported duty- free. 4.16 The cost of equipment and spare parts is based on consultant BCEOM's estimates, updated by the appraisal mission following a survey of local dealers. The construction cost of buildings and workshops is based on the current cost per unit of similar works. The cost of technical assistance and consulting services is based on the cost of similar services rendered in Chad. The average cost per man-month of consulting services is estimated at about US$5,800, including social security, bonuses, annual leave, expatriation allowance, overhead and the firm's fees. Reimbursable expenses, including air trips, airfreight, subsistence and local allowances, field supervision, and vehicle purchase and operation, total about US$2,800/man-month. The for- eign component amounts to US$7,350/man-month, or about 85% of the total cost.  - 18 - SUMMARY OF PROJECT COST ESTIMATES 1/ ll CFAF Million- US$'000- Foreign as Local Foreign Total Local Foreign Total % of Total A. Base Costs (End-1977) l.TMaintenance Program_/ 216,6 1717.5 1934.1 884 7010 7894 89 2.Technical Assistance & Training for DPW 340.6 1246.9 1587,5 1390 5090 6480 79 3.Fellowships - 73,5 73.5 - 300 300 100 4.Construction of 4 Ferryboats3/ 46.5 234.2 280,7 190 956 1146 83 5.Technical assistance for Directorate of Transport 9,0 76,7 85.7 37 313 350 89 6.Technical ass$stance for Trupking Industry (30 man/months) 3,2 29.9 33,1 13 122 135 90 7.Completion of Feeder Road Improvement & Maintenance Program 41,2 66,6 107.8 168 272 440 62 8.Rural Roads Supply 7,3 66,2 73,5 30 270 300 90 664.4 3511.5 4175,9 2712 14333 17045 84 B. Contingencies* 1.Physical 62.4 321,2 383.6 255 1311 1566 2.Price 121 6 669.9 791.5 497 2734 3231 184.0 991.1 1175.1 752 AG45 4797 TOTAL F75 430276 5351.0 3464 18378 2187# RUN$DD 3500 18400 21900 About US$0.2 million of taxes on fuel are included in items A. 2&3. The Government agreed to waive all other taxes, SUMMARY OF RECURRENT COST ESTIMATES - l.Unpaved Road Maintenance 892.7 879,8 1772T5 3644 3591 7235 50 2.Ferryboat Maintenance &Operation 8475 123,5 208.0 345 504 849 59 TOTAL 977.2 1003.3 1980,5 3989 4095 8084 57 ROUNDED 4000 4100 8100 1/ Net of taxes, except taxes on fuel amounting to about US$0.2 million. 2/ Includes an insignificant amount of taxes. 3/ Including contingencies. A Detailed breakdown of cost contingencies: Phys$cal Price Contingencies Contingencies 1976 1977 1978/79 1980/82 Equipment 5% 8% 7.5% 7.5% 7% Construction 10% 10% 9% 9% 8% Technical Assistance 10-15% 8% 7,5% 7.5% 7% Fuel 5% - sZ 5% 5% Labor 5% _ 5% 3% 3%  - 19 - I. Execution 4.17 MCWMG will execute the road maintenance program, the training pro- gram, and the construction of ferryboats through its DPW, and will supervise the technical assistance and fellowships provided for strengthening DPW (paras. 4.09-4.10), while MEPT would have responsibility for the administration of technical assistance and fellowship for DT and CTT, and implementation of the rural roads study. The project is expected to start in the second half of 1978 and be completed by end-1982; the project implementation schedule is given in Table 19. 4.18 Preliminary contacts with USAID indicate that this agency would be willing to let the Association approve the terms of reference for the services they would finance. Agreement will be reached with all cofinancing agencies to ensure the Association's involvement in all project components. 4.19 For the purpose of project monitoring, the Government agreed, at negotiations, to designate a project coordinator, acceptable to the Associa- tion, who will liaise with the Association on matters relating to the progess of the project. He will prepare and send quarterly progess reports to the Association in a format'to be agreed between the Government and the Associa- tion. Eventually, he will prepare a final report to serve as a basis for the preparation of a Project Completion Report. J. Procurement 4.20 Construction and improvement of workshops and buildings under unit price contracts (totaling about US$1.8 million, before contingencies; highest expected contract price about US$365,000); and office furniture, equipment and supplies for EIO, P0, and RPDO (totalling about US$250,000, before contingen- cies), would be procured following local competitive bidding procedures, which permit participation of foreign contractors and suppliers. These procedures are acceptable to the Association, provided bids are opened in public. Bidders for construction and improvement of workshops and buildings will be prequali- fied. DPW will prepare bidding documents for and supervise construction of workship and buildings. Building materials for ferryboats, to be constructed under force account (about US$800,000), will be procured through international competitive bidding, in accordance with Bank Group Guidelines. A small quan- tity of con sumable materials and workshop tools required for ferryboat construction and office supplies will be purchased through local shopping, provided that the aggregate amount does not exceed US$60,000. Should DPW decide to subcontract the construction of some ferryboats or parts thereof to local workshops (para. 4.07), contracts would be awarded following local procedures acceptable to the Association. Materials, fuel and lubricants, and spare parts for the completion of the Cotton feeder roads improvement and maintenance program would be procured folloing local procedures acceptable to the Association. The services of consultants required for technical assistance to EIO, P0 and RPDO, ferryboat building, and the rural roads study (and/or any other services which would be financed by the Association) will be obtained following procedures and on terms acceptable to the Association.  - 20 4.21 Road maintenance equipment, spare parts, and workshop equipment and tools financed by ADF would be procured following ADF procedures. Equipment and spare parts for the training program, inclu4ing phe training brigade, tech- nical assistance for training, DT, and the trucking induptry, and fellowships, financed by USAID, would be procured in accord4nce vith USAID procedures. The signing of loan, credit, and/or grant agreepents with USAID and ADF, and ful- fillment of conditions for initial disbursement under these agreements (except the effectiveness of IDA credit), would be a condition of credit effectiveness. K. Financing and Disbursements 4.22 The capital costs, net of taxes, of the pToject would be cofinanced on a parallel basis by IDA (US$7.6 million), US4ID (US$9.0 million), and ADF (US$5.1 million), under separate agreements for qaq4 agency. These agencies would finance 100% of their respective sharqs qf project capital costs, net of taxes as shown below. In addition to f