Philippines - Fourth Highway Project

Document of The World Bank FOR O]FFICIAL USE ONLY Report No. 2258-PH P:HILIPPINES STAFF APPRAISAL REPORT OF A FOURTH HIGHWAY PROJECT February 20, 1979 Transportation Division Projects Department East Asia and Pacific Regional Office 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 Unit = Pesos (P) US$1.00 = P 7.40 (January, 1979) P 1.00 = US$0.135 *The exchange rate is floating; the rate used in this report is indicated above. WEIGHTS AND MEASURES Metric System Metric British/US equiva lent 1 meter (m) = 3.28 feet (ft) 1 kilometer (km) = 0.62 mile (mi) 1 square kilometer (sq km) = 0.386 square mile (sq mi) 1 kilogram (kg) = 2.205 pounds (lb) I metric ton (m ton) = 1.1 US short tons (sh tons) = 0.98 British long tons (lg ton) ABBREVIATIONS AND ACRONYMS AADT Annual Average Daily Traffic ADB Asian Development Bank ADT Average Daily Traffic BBR Bureau of Barangay Roads of the MPH BCM Bureau of Construction and Maintenance of the MPH BOT Board of Transportation B/C Benefit/Cost Ratio BPW Bureau of Public Works of the MPWTC EMK Equivalent Maintenance Kilometers EMV Equivalent Motor Vehicle ER Economic Return FYB First Year Benefits GNP Gross National Product HSF Highway Special Fund IATCTP Inter-Agency Technical Committee on Transport Planning ILO International Labor Organization MB Ministry of Budget MLGCD Ministry of Local Government and Community Development MPH Ministry of Public Highways MPWTC Ministry of Public Works, Transportation and Communications NDP Net Domestic Product NEDA National Economic and Development Authority NTSS National Transport System Study PAL Philippine Air Lines PCMP Progressive Car Manufacturing Program PDAP Provincial Development Assistance Program PNR Philippine National Railways PPA Philippine Port Authority PPDO/MPH Planning and Project Development Office of the MPH PPDO/MPWTC Planning and Project Development Office of the MPWTC PTS Philippine Transport Survey UNDP United Nations Development Program USAID United States Agency for International Development vpd Vehicles Per Day FISCAL YEAR January 1 - December 31  PHILIPPINES FOR OFFICIAL USE ONLY STAFF APPRAISAL REPORT OF A FOURTH HIGHWAY PROJECT TABLE OF CONTENTS Page No. I. TRANSPORT SECTOR . . . . . . . . . . . . . . . . . . . . . . . . 1 A. General * * *......*... . . .* . * .* . * * * . . * *. . *. .*. 1 B. Transport Subsectors . . . . . . . . . . . . . . . . . ... . . 3 C. Transport Planning and Coordination . . . . . . . . . . . . . 5 II. THE HIGHWAY SUBSECTOR . . ..... .. ..... ........ 6 A. The Network . . . . . . . . . . . . . . . . . . . . . . . . . 6 B. Highway Traffic . . . . . . . . . . . . . . . . 7 C Road Transport Industry .... . . . . . . . . . . . . . . . 8 D. Administration . ..... ........ . . . . . . . . . 9 E. Training . . . . . . . . . . . . . . . . . . . . . . . . . . 10 F. Planni d Cnstruction . . . . . . . . . . . . . . . . . . ... 10 G. Financing . . . . . . . . . . . . . . . . . . . . . . . . . . 11 11. Design and Construction 12 ...a. *..1 I. Maintenance .13 ............1 J. Past Bank Assistance in the Highway Sector . . . . . . . . . 15 K. Sector Lending . . . . . . . . . . . . . . . . . . . . . 16 III. THE PROJECT . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 A. Background . . ... . . . . . . 17 B. Objectives of the Project . . . . . . . . . . . . . . . . . . 17 C. Description of the Project . . . . . . . . . . . . . . . . . 18 D. Cost Estimates and Foreign Exchange Component . . . . . . . . 25 E. Project Implementation . , . . . . . . . . . . . . . . . . . 27 F. Procurement, Implementation Schedule and Right-of-Way . . . . 30 G. Disbursements . . . . . , . . . . . . . . . . . . . . . . 31 H. Environmental Aspects . . , . . . . . . . . . . . . . . . . 32 IV. ECONOMIC EVALUATION . . . . . .. . . . . . . . . . . . . . . . . . 32 A. Main Benefits and Beneficiaries . . . . . . . . . . . . . . . 32 B. Influence Areas of Project Roads . . . . . . . . . . . . . . 33 C. Economic Analysis . . . . .. . . . . . . . . . . . . . . . . . 35 D. Risks . . . . . , 9..39 V. AGREEMENTS AND RECOMMENDATIONS . . . . . . . . . . . . . . . . . 40 This report is based on the findings of Bank missions which visited the Philippines in October/November 1977 and again in October/November 1978. The missions were composed of Mrs. I. Bradfield (Economist) and Mr. L. Schiffman (Engineer). This document has a restricted distribution and rnay be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  -2- ANNEX 1. Related Documents and Data Available in the Project File 2. Procedures for the Implementation of the Road Maintenance and Restoration Components TABLES 1.1 Public Transport Investment Programs and Sources of Funds 1.2 Domestic Freight and Passenger Traffic Data, 1970-85 2.1 Public Highway Network, 1978 2.2 Public Highway Network, 1975-78 2.3 Motor Vehicle Statistics, FY66-77 2.4 Motor Vehicle Fuel Consumption, FY66-77 2.5 Expenditures by Highway Works and Source of Funds, FY66-77 2.6 Revenues From Highway Users, FY66-77 2.7 Expenditures on Highways by Road System, FY66-77 2.8 Highway Design Standards 2.9 Expenditures on Highway Maintenance by Road System, FY72-82 3.1 Road Maintenance Program: Physical Targets and Estimated Costs for the National Road Network, 1977-82 - Normal Road Maintenance 3.2 Road Maintenance Program: Physical Targets and Estimated Costs for the National Road Network, 1977-82 - Road Restoration Program 3.3 Road Maintenance Program: Workshop Construction and Improvement 3.4 Road Maintenance Program: Procurement of Road Maintenance Equipment 3.5 Project Composition and Cost Estimates 3.6 Schedule of Estimated Disbursements 3.7 Axle Load Control Program 3.8 Technical Assistance 3.9 Soils and Materials Testing Equipment 4.1 Traffic Volumes and Growth Rates on Project Roads 4.2 Estimated Vehicle Operating Costs and Savings on Project Roads, 1981 (Excluding Passenger's Time Savings) 4.3 Estimated Vehicle Operating Costs and Savings on Project Roads, 1981 (Including Passenger's Time Savings) 4.4 Economic Returns and Sensitivity Analyses 4.5 National Roads by Surface Type and Condition (1977) 4.6 Pavement Condition Changes without Proper Maintenance 4.7 Composite dl-Values per km for Types of Surface and Condition 4.8 Surface Condition and Life Times of Restoration Works/Composite Savings per Vehicle 4.9 Annual and Discounted Benefits and Restoration Costs CHARTS IA. Ministry of Public Highways Organization Chart (1978) - World Bank Chart 19727(a) 1B. Ministry of Public Highways Organization Chart (as of January 1979) - World Bank Chart 19727(b) 2. Implementation Schedule - World Bank Chart 18557 MAP S 1. IBRD 12320R3 - Construction 2. IBRD 12321R2 - Other Project Elements  PHILIPPINES STAFF APPRAISAL REPORT FOURTH HIGHWAY PROJECT 1. Transport Sector A. General 1.01 In the last decade, the Philippines has made significant advances in the transport field, far exceeding any previous ten-year period both in terms of funds expended and results achieved. Between 1968 and 1978, the total public transport expenditures amounted to P 14 billion (US$1.9 billion) representing over 30% of total pubLic investment outlays. Since 1975, annual public transport expenditures increased rapidly (although only representing about 1.3% of GNP), with highways absorbing about 74% of the total: of the remainder, airports received 10%, ports 9% and railways 7%. These transport expenditures were necessary to expand and improve the hitherto neglected transport system to meet the increased demand for movement of goods and passengers in the seventies, which had resulted from higher income, population and industrial and agricultural production. As a result of the increased investment in highways, the road network expanded from 63,000 km in 1969 to 119,600 km in 1978, and, for the first time, provided access to many important population centers in the interior of the two largest islands, Luzon in the north and Mindanao in the south, which together comprise about 70% of the country's land area /1 and three-qtLarters of the total 45 million population. 1.02 The 1978-81 projections for commodity flows and passenger traffic indicate a larger increase in inter-island movements of freight and passengers between the food deficit areas of Luzon and the agricultural surplus areas of Mindanao than for road transport within the major islands. Accordingly, the 1979-82 investment program allocates a greater share of total public transport expenditures to the expansion of ports and airports: 19% for ports, 14% for airports, 9% for railways, and 58% for highways (Table 1.1). Although the highway sector will receive a reduced share of transport investment funds, highway expenditures are expected to increase by 8% in real terms over the previous four-year plan period. No significant public funds are allocated for shipping investment since it is largely financed by the private sector. 1.03 The total transport investment allocated in the 1979-82 program is P 14,374 million (US$1,942 million); an increase of about one-third over the previous four-year period. However, the transport share of total public investment will decrease from the prevailing level of one-third to about 20% of the total program; the power sector will receive an increased share of the allocation to implement the Government's objective of reducing dependence on imported petroleum by constructing hydro, nuclear, and geothermal power plants as alternative sources of electrical energy. /1 300,000 sq km.  -2- 1.04 Between 1970-76, transport developed somewhat faster than the economy as a whole: freight and passenger movements grew by about 8% and 7% p.a. respectively, while real GNP grew by 6%. Freight and passenger movements by inter-island shipping accounted for much of this increase, at 14% and 8% respectively, with road transport growing at a lesser pace: 4% for freight and 5% for passengers (Table 1.2). The average annual target growth rate of GNP is 7.5% during 1978-85. In the light of the projected growth of the economy, both road freight and passenger transport is expected to grow at 8% during the same period. 1.05 Road transport is the dominant mode within the two major islands of Luzon and Mindanao, accounting for nearly 80% of passenger traffic; but its share of total freight traffic has decreased from 57% in 1970 to 44% in 1976. Privately operated inter-island shipping, serving a population scattered over hundreds of islands, is expected to be the largest transport mode in 1980 accounting for about 54% of freight traffic, and nearly 10% of all passenger travel. The increased share of inter-island traffic has been due to the grow- ing commerce between Luzon and Mindanao. Relatively short inland distances and low traffic volumes have limited railways to a small fraction of total traffic (Table 1.2). 1.06 The Bank Group's assistance in supporting the Government's efforts to modernize and expand the transport sector included the First Port Loan (290-PH) in 1961 amounting to US$8.5 million, which financed procurement of dredging equipment. The implementation of this project was unsatisfactory due to inefficient operation and maintenance of the dredgers: consequently, some US$1.1 million of the loan amount was cancelled. In 1973, a Second Port Loan (939-PH) of US$6.2 million was provided to assist the expansion of two important ports on Mindanao, Cagayan de Oro in the north and General Santos in the south: this project has been implemented satisfactorily. The Bank's First Shipping Loarn (Loan 1048-PH) was provided to help modernize the old inter- island fleet, finance technical assistance to strengthen planning and adminis- trative capabilities in the maritime industry sector and formulate a ten-year investment program for inter-island shipping. Implementation of this project has been delayed by institutional problems, but most of these are now gradually being resolved. A Second Shipping Project is under preparation and is scheduled for appraisal in June 1979. 1.07 The highway subsector has received the bulk of the Bank's lending for transport in the Philippines: three loans totalling US$171 million have been made for the improvement of important sections of national highways and connecting feeder roads, and for a country-wide maintenance organization, including improvement of workshops and procurement of maintenance equipment, spare parts and workshop machinery. These three highway projects have also helped to develop the Philippine contracting industry by providing experience in fulfilling a steadily increasing stream of contracts. Philippine consulting firms have also gained valuable experience through their association with foreign consultants on the design of the project roads.  1.08 In addition to increased transport expenditures and system expan- sion, the GoverfiUeUL iiaS Lakeni major steps to improve the organizational structure of the planning and administrative units responsible for transport. These units have been substantially restructured since the major Government reorganization was initiated in 1972. The resulting reorganization and creation of various transport agencies has led to a strengthening of their planning, implementation and operational capabilities, and to better coordin- ation of planning responsibilities. B. Transport Subsectors Highways 1.09 The Government has attempted to develop a modern highway network since 1970, but the system is still inadequate to cope with the current level of traffic. Vehicle operating and travel costs are generally high, as only 41% of the national highways and 13% of the provincial roads are paved. Added difficulties result from the deteriorated condition of many primary and secondary roads due to inadequate maintenance. Details on the subsector are given in Chapter 2. Railways 1.10 The Government-owned Philippine National Railways (PNR) has a network on Luzon totalling 1,060 km, of which 740 km of main line and 80 km of branch lines and sidings are operating. Most of PNR's track was relaid during the 1960s with Japanese aid; the rest is in very poor condition. Management, maintenance and operations of the railways have been inadequate. With the exception of the Bicol region, the main line is paralleled by highways for most of its length and, as haulage distances for most commodities are relatively short, with commodities being in small shipments, it is unlikely that the railway will become competitive with trucks and buses. 1.11 Since PNR employs a staff of about 8,000, the Government finds it difficult to close down unprofitable lines, and presently aims at improving PNR operations to permit the railroad to cover at least current operating costs. Programs under the 1971-76 Re]habilitation Plan have improved services, and passenger and freight traffic have increased somewhat since 1973. In 1977, PNR obtained a loan from the Asian Development Bank (ADB) to rehabilitate its Southern Line (about 450 km), which serves the area between Manila and Legaspi. A second railway, the privately owned Panay Railway, operates an antiquated 117 km of track on Panay Island: it is presently unsafe but scheduled for minimum rehabilitation to permit limited service on Panay Island. Ports 1.12 There are 18 national ports, about 82 subports and 390 municipal ports throughout the Philippine archipelago, plus numerous private piers and wharves. Most long-established public ports are located where natural  - 4 - protection is available but sedimentation problems occur in many newer ports. More modern private piers and wharves, which handle 80-85% of export ship- ments, are generally located to take advantage of naturally deep water. Many public ports suffer from inadequate work areas and transit sheds, antiquated cargo-handling facilities, disorganized port operations, and poor maintenance. The cumulative effects of these deficiencies are congestion and confusion, which unduly restrict the movement of cargo, slow stevedoring and ship turn-around time. This is particularly true at ports where offshore loading and unloading are frequent. Manila, the largest port, accounts for about 70% of all imports, but only 5% of all exports. 1.13 In the past few years the Government has received assistance from the ADB for improvement of port facilities at Davao and Cotabato, and from the IBRD for the expansion of Cagayan de Oro and General Santos under the Second Port Project (Loan 993-PH)./1 As a part of the project, the Bank supported the establishment of the Philippine Port Authority (PPA) which was mandated to consolidate and assume the port-related functions which had previously been fragmented between the Bureau of Customs (BOC) and Bureau of Public Works (BPW) in the Ministry of Public Works, Transportation, and Communications (MPWTC). Since it became operational in 1976, PPA has taken over the manage- ment and operation of all 18 national ports and 82 subports, expanded its technical staff and improved accounting procedures with the assistance of Bank-financed consultants. 1.14 The Bank's objective in the port sector is to assist the PPA in developing a national port policy, improving management, administration, and operations, and planning for all major national ports. A long-term port investment program now under preparation not only aims at increasing capacity at major ports, but also at consolidating ports of various sizes and functions in outlying areas where improved overland mobility makes economies of scale and efficiency possible. The selection of ports for future improvement is being determined in the context of the traffic patterns of the total transport network; the development potential of the hinterlands, the natural conditions of the harbors; and the existence of over 500 private ports which handle about two-thirds of the total loaded and unloaded cargo tonnage in the country. Inter-Island and Coastal Shipping 1.15 Despite its status as the most important transport mode for freight, the potential of inter-island and coastal shipping has not yet been fully realized, mainly due to inadequate port facilities and the antiquated local shipping fleet. There are about 480 inter-island vessels of over 100 gross tons, and many more smaller ships. In 1976, more than 34% of the inter-island fleet and 41% of the ocean-going fleet were 25 or more years old. Most smaller ships are converted naval or military vessels, and over-loading and prolonged journeys are characteristic. Although there are about 50 Philippine inter-island vessel operators, the majority of the fleet is owned by only ten major operators. /1 All these ports are on Mindanao.  - 5 - In addition to the inter-island fleet, there are smaller craft providing low-cost, short-haul transport of agricultural products for local as well as inter-island markets, and barges are used extensively to move raw or refined sugar, rice, and other produce. Coastal transport is frequently a logical alternative in areas where cross-island road construction is made difficult by mountainous terrain; thus numerous roadsteads and shallow water ports have been developed where land access is severely limited. 1.16 With increasing regional specialization in production patterns and rural development, hitherto neglected inter-island shipping needs to be given a new impetus if it is to play a major role in the Government's plans for increased food production and regional balance in economic and social develop- ment. The growing need for food in deficit areas has to be met by increased production in surplus areas such as Mindanao, which, in turn, requires efficient marine transport of both agricultural inputs and outputs. In recognition of this need to improve inter-island shipping services, the Bank's First Shipping Loan was provided in 1974 and a Second Shipping Project is under preparation (para. 1.06). Civil Aviation 1.17 Manila, the only international airport in the Philippines, is served by 19 international and regional airlines, including Philippine Air Lines (PAL). The latter provides international services, and is the sole carrier for 78 domestic airports operated by the Government. Domestic passenger traffic has increased only by about 12% p.a. over the past six years, while air freight is still insignificant. With the assistance of a US$26 million loan from ADB, the Man:Lla International Airport is being rehab- ilitated and extended to meet the traffic demand expected by 1983. C. Transport Planning and Coordination 1.18 As a result of the Government reorganization in 1972, transport planning is now the joint responsibility of the National Economic and Development Authority (NEDA) and the Ministry of Public Works, Transportation and Communications (MPWTC). As a cerntral planning agency, NEDA has overall responsibility for public capital invrestments through its Infrastructure Program and Project Office, which reviews and approves investments proposed by each transport operating agency. NEDA is assisted in this task by the Inter-Agency Technical Committee on Transport Planning (IATCTP), staffed by representatives from each transport aLgency, including the Ministry of Public Highways, (MPH). IATCTP prepares standards and guidelines for the forma- tion of agency plans for development and coordination of transport programs and projects. It also serves as a forum for the resolution of operational problems of transport agencies. 1.19 Under the MPWTC, the Planning and Project Development Office (PPDO) is responsible for undertaking comprehensive regional planning studies on infrastructure investments and formulating priorities for major infrastruc- ture projects. PPDO maintains liaison with NEDA and provides the bulk of technical input to transport planning. The Board of Transportation (BOT), as  - 6 - a semi-detached unit of the MPWTC, handles the quasi-judicial function of granting routes to transport companies and enforcing rates and regulations for their operations on the basis of IATCTP policy guidelines. PNR, however, is outside the purview of BOT and responsible only to the Office of the President, making it difficult to rationalize transport pricing and inter- modal investment decisions. 1.20 In 1975, the Bank's Transport Planning Mission identified major deficiency areas in the transport sector and recommended a two-year technical assistance program./l As a result, several resident planning advisors began in 1977 to assist the Government under the Manila Urban Development Project (Loan 1282-PH) in completing the Government's National Transport Systems Study (NTSS) undertaken in preparation of a ten-year transport investment program. In connection with this study, the advisors were expected to assist individual line agencies and MPWTC with matters concerning transport policy, coordination, and modal planning. However, completion of the transport study has been delayed due to changes in the advisory staff, a high turn-over among the counterpart team, and the lengthy period required for data collection. Accordingly, the project includes 60 man-months of advisory services to allow completion of the transport study by early 1980. 2. THE HIGHWAY SUBSECTOR A. The Network 2.01 The public highway network (Table 2.1) consists of about 119,600 km of roads: 22,300 km of national, 28,200 km of provincial, 12,500 km of city and municipal, and 56,600 km of barangay (mainly farm to market) roads. National roads include about 121 km of toll expressways with grade separated intersections north and south of Manila./2 On completion of the Pan-Philippine Highway, another 2,000 km of national roadway will extend from the north of Luzon to southern Mindanao. Construction of this road, begun in 1970 with Japanese financing, is about 90% completed. Progress has been slowed by design problems, poor performance of some contractors, and inadequate super- vision by MPH. 2.02 Average road density in 1978 is 0.4 km of road/sq km of land and 2.7 km of road/1,000 inhabitants. This compares favorably with densities in Korea (0.5 km of road/sq km and 1.3 km of road/1,000 inhabitants) and Thailand (0.1 km of road/sq km and 1.3 km of road/1,000 inhabitants). /1 Renewable for another year by mutual agreement at the end of two years (May 1979). /2 About 51 km of two-lane toll road has been completed under the Bank's Second Highway Project (Loan No. 950-PH), and is being expanded to a four-lane toll expressway.  - 7 - 2.03 Major road improvement aclivities began in 1969 following comple- tion of the Philippine Transport Survey (PTS)./1 The latter recommended improvement of about 6,000 km of nalional roads, reorganization of the highway administration, and improvements in road maintenance procedures. Most of the priority roads identified in the PTS have been or are being improved with local resources, supplemented by assistance from Japan, USAID, ADB and the Bank. Between 1969 and 1978 about 4,200 km of national and 4,500 km of provincial roads have been constructed or improved (Table 2.2). 2.04 Despite these road improvement activities, only about 41% of national roads and 13% of provincial roads are paved (as compared with 95% and 20% respectively in Thailand). Most unimproved roads are in poor condition due to: (a) deficient designs resulting in inadequate drainage, embankment and pavements; (b) lack of proper maintenance; (c) damage from frequent overloading (many of the trunk roads were built long ago and mainly intended to carry a small number of vehicles); and (d) insufficient funds to repair flood damage caused during the rainy and typhoon seasons. 2.05 Under the Second and Third Highway Projects, MPH is required to carry out a nationwide road inventory, including collection of condition data, for the purpose of planning road maintenance, restoration, and improvement programs. This task has been completed only very recently: with the Bank's assistance, clearly defined detailed guidelines for recording road condition data have been prepared. These guidelines were issued to the regions and districts which carried out the work. During negotiations, MPH confirmed that it will update road inventory data on an annual basis. B. Highway Traffic 2.06 Between 1966 and 1977, the motor vehicle fleet grew from about 325,000 to about 835,000 vehicles,/2 an increase of about 9.7% p.a. (Table 2.3). There are about 200,000 motorcycles and three-wheeled vehicles. Composition of the fleet in 1977 was 52% passenger cars and jeeps, 30% trucks, 8% jeepneys, 2% buses and 8% other vehicles. About 50% of the total vehicle fleet is registered in Central and Southern Luzon, providing about one vehicle per 60 inhabitants. 2.07 Data on highway traffic growth are not collected and analyzed on a regular basis. However, judging froim increases in the motor vehicle fleet /1 A two-year study conducted under UNDP financing with the Bank acting as Executing Agency. /2 Including motorcycles and pedicabs (motorized three-wheeled vehicles) which constitute about 12% of all vehicles registered outside Metropoli- tan Manila.  - 8 - and the volume of gasoline consumed by road transport, traffic growth between 1966 and 1977 was substantial. Fuel consumption during this period is estimated to have increased by about 10% p.a. During 1973-75, traffic growth was slowed by an increase in oil prices. Beginning in 1976, however, traffic has begun to increase somewhat slowly again with the growth of output and income (Table L.4) . 2.08 To lay the basis for improved planning and maintenance operations, consultants (Kampsax/Berger-Denmark/USA) were appointed under the First Highway Project to recommend improved procedures for collecting and processing traffic data. Under the Second Highway Project the Government moved to implement these recommendations, and the MPH resumed a partial traffic counting program in 1975. Since then, special traffic counts and origin and destination studies have been conducted by MPH and its consultants for various roads proposed for Bank or ADB financing. Under the Third Highway Project the Government is required to implement a national system for collecting, recording and processing traffic data, but progress has been slow. During negotiations, assurances were obtained that MPH will fully implement the annual traffic counting program and data analysis. C. Road Transport Industry 2.09 Motor vehicle manufacturing in the Philippines consists of the assembly of cars and trucks and the production of multi-purpose vehicles./l The industry is protected by high duties and taxes on imported vehicles. Assembly operations are being developed under the Progressive Car Manufactur- ing Program (PCMP), initiated in 1972. Five foreign car manufacturers were selected by the Board of Investments (BOI) to participate in the PCMP, whose aim is to increase the domestically manufactured component ratio from the initial 10% to almost 60% by the end of 1978. As a result of the program, passenger car assembly has risen from about 12,000 units in 1972 to over 30,000 units in 1977. The PCMP also boosted production of low-cost, light, multipurpose vehicles with a large local component, from about 15,000 units in 1973 to 29,000 units in 1977 (Table 2.3). In early 1976, a Progressive Truck Manufacturing Program similar to the PCMP was instituted to expand production of trucks with a gross vehicle weight not exceeding 40,000 lbs. 2.10 Only 10% of all trucking services are carried out by general haulage operators; the rest are provided by enterprises hauling their goods in their own trucks. A major reason for the proliferation of private truck ownership by firms appears to be the favorable tax advantages accorded them. Since privately-owned trucks are not regarded as general haulers, they are neither subject to tariff regulations nor to the taxes and fees levied on commercial truckers. Moreover, private truckers can inflate their trucking costs and charge them against their business operations for tax purposes. Technical assistance advisors apointed to MPWTC and NEDA /1 Light passenger/commercial vehicles known as Asian Utility Vehicles: Ford's Fiera, GM's Harabas, Chrysler's Cimaron and DMG's Trakbayan.  - 9 - (para. 1.20) are reviewing the existing taxes on private and for-hire trucks and the economic nature of their operations with a view towards making appro- priate policy recommendations. 2.11 The growth of efficient commercial trucking is hindered by the unrealistically low rates set by BOT. BOT also sets fares for passenger transport, which is privately operaLted. Taxis and buses are owned by a few large companies, while "jeepneys" (an extended jeep carrying 12-16 people) are mostly driver-owned. The latter are extremely popular, due to low fares and convenience. Most intercity buses are old, with bus companies claiming that low rates prohibit the purchase and profitable operation of new ones. Tech- nical assistance advisers appointed to each transport agency (para. 1.20) are helping the Government review the present tariff structure and formulate realistic trucking and passenger rates. D. Administration 2.11 Responsibility for constructing, maintaining and planning national roads is vested in MPH, which was created in May 1974, from the former Bureau of Public Highways of MPWTC./1 In M,ay 1975, MPH took on the added responsi- bility of supervising construction and overseeing maintenance of barangay roads. Construction and maintenance of provincial, city and municipal roads are in the hands of local and provincial authorities. However, when local roads are constructed with funds from the National Treasury, /2 MPH is required to provide technical assistance and construction supervision. 2.12 MPH is headed by a Minister, assisted by a Deputy Minister, under which there are four Assistant Ministers: one in charge of administrative matters, one handling financial affairs, one responsible for planning and operations, and the fourth responsible for personnel management and development. The organizational structure (Chart No. IA) is based on the recommendations of the technical assistance program financed by UNDP under the First Highway Project and continued with Bank finaLncing under the Second Highway Project, as further modified through consultations between the Government and the Bank. 2.13 Construction and maintenance of national roads are the responsi- bility of 13 MPH Regional Offices, each headed by a Regional Director. Their work has been supervised at headquarters by the Bureau of Construction and Maintenance (BCM), which has been responsible for setting construction and maintenance standards. As a result of an organizational and management study commissioned by MPH and completed in September 1978 under the Third Highway /I Formerly the Department of Public Works and Telecommunications. /2 Refers to national funds appropriated under the Aid to Provincial Road Development Programs.  - 10 - Project, BCM has been split into two separate bureaus, the Bureau of Construct- ion (BOC) and the Bureau of Maintenance (BOM) in order to separate responsibi- lities and emphasize the importance of maintenance (Chart NO. IB). Regions are subdivided into districts or cities whose numbers vary according to the size of the region. There are a total of 149 districts and cities, each headed by a district or city engineer. The city engineers function as MPH district engineers for national roads that pass through city and municipal areas. The Bureau of Equipment (BOE) is responsible for the management, repair and maintenance of road equipment. Equipment is rented to MPH regions and district offices at pre-set rates which are comparable to those in the industry. BOE has its own regional equipment service offices, which directly control 12 base workshops /1 and a number of area workshops and mobile shops. The Bureau of Barangay Roads (BBR) supervises the construction and maintenance of farm-to-market access (barangay) roads. E. Training 2.14 Although ad-hoc training was conducted for many years by the various highway agencies, headquarters and regional training officer posts were only established with the creation of MPH in 1974. The move was intended to meet manpower development and training needs in the Administrative Services, the Bureau of Equipment and the Bureau of Barangay Roads. However, regular training programs in the regions were hindered by insufficient funds and support from headquarters. To address this problem, funds were included in the Second Highway Project for a consultants' study to identify manpower development needs and recommend suitable training programs. In early 1976, the consultanjs, Roy Jorgensen Associates, Inc. (USA), submitted their final report which identified training needs to strengthen various units in MPH. As a result, the Third Highway Project included a training program,/2 implementation of which is now under way. After the completion of the on-going technical assistance-advisory services in July 1979, the newly formed Manpower Develop- ment Service of MPH will continue operation and further development of the permanent training programs initiated with the help of the consultants. F. Planning 2.15 A planning unit (PPDO) has been established in MPH, with responsi- bility for programming the annual allocation of funds and preparing the high- way component of the country's rolling Four-Year Infrastructure Investment Plan. Its tasks also include evaluation and ranking of major road projects. /1 There are only 12 workshops for the MPH's 13 regions as two regions (4A & 4B) share one workshop. /2 The program includes the services of three Training Advisors: two to assist the existing training units in the Personnel Division of the Administrative Services and the Bureau of Equipment, and one to start training facilities in the Bureau of Construction and Maintenance. The latter Bureau has no formal training unit, and has relied on ad hoc seminars conducted in the field by local and headquarters personnel. Services will extend over a two-year period.  - 11 - In July 1976, under the Third Highway Project, an expatriate transport economist was appointed for four years to strengthen both the PPDO and planning capabili- ties at the regional level. Additional assistance is being provided to the PPDO under Loan 1282-PH to help in the preparation of a highway investment plan for the National Transport System Study (para. 1.20). Performance of the PPDO is improving as a result of these efforts. Provision has been made in the present project for the extension of these services for an additional two years. G. Financing 2.16 Under the FY79-82 investment program (Table 1.1), the Government plans to spend a total of about P 8,400 million (US$1,135 million) for highways. This represents an increase of about 8% over the previous four-year period (FY75-78)./1 From 1966 to 1974, total highway expenditures, including administration and maintenance, increased approximately five and one half times in real terms. Expenditures doubled between 1974 and 1975, and increased by 32% in 1976. Construction averaged 60-65% of total expenditures, maintenance about 25%, with the remainder being administrative costs (Table 2.5). 2.17 During the period from 1966 to 1975, revenues increased by 5-10% p.a. through 1973, jumping by 115% in 1974 and 57% in 1975 as a result of the increase in crude oil prices and subsequent tax increases (Table 2.6). A new annual energy tax /2 was introduced in 1975 to discourage private car ownership in line with the recommendations of the technical assistance consultants and the Bank. 2.18 Almost 80% of highway revenues are obtained from fuel oil taxes, with the remainder coming from motor vehicle fees, licenses and other items, including tolls levied on the two expressways north and south of Manila. During 1970-77, total revenues covered only about half of the highway expendi- tures (Tables 2.6 and 2.7). This is primarily because road user charges, despite recent increases, are still comparatively low. These should be revised periodically to cover a larger proportion of highway expenditures. During negotiations, confirmation was obtained from the Government that it would review the sources of highway revenues with a view towards determining the appropriate levels of charges. /1 FY76 extended for 18 months becauase of a change in the Fiscal Year to coincide with the calendar year, so the actual comparative increase is larger. /2 Rates are high, ranging from P 150 per year for a new small car to P 12,000 a year for a new, expensive sports car.  - 12 - H. Design and Construction 2.19 Design and construction of national roads are carried out by MPH, either directly or by employing consultants and contractors. Most large projects art .=; gLed b, _stsultants, ' -"- f-2 '-S:e- -dCrt!-- '- special teams in headquarters and by the regional offices. Design standards appropriate to Philippine conditions were developed by MPH, assisted by Norconsult (Norway), during the first UNDP-financed road feasibility studies in 1971/72. Standards for minor roads were recommended by the general con- sultants appointed under the Second Highway Project, Scott Wilson Kirkpatrick & Partners (U.K.)./1 The design standards are satisfactory and have been applied to the project roads (Table 2.8). Consultants are also used for construction supervision of large projects financed by international agencies, such as the Bank and ADB. About 90% of the construction is carried out by contract and, for Bank and ADB financed projects, mostly under international competitive bidding procedures. The remaining construction work is carried out by force account with local competitive bidding for minor contracts. 2.20 Locally-financed provincial, city and municipal roads are designed and constructed by the respective local governments. Some construction work is carried out by force account using labor-intensive methods and some bridge work is undertaken by contract. Many of these roads are designed and cons- tructed by MPH on an agency basis for the local government unit. 2.21 Improvement and construction of farm to market and similar local roads is receiving a new impetus with the creation of the Bureau of Barangay Roads. Preliminary estimates based on a road inventory now being compiled indicate that total length of these roads /2 may exceed 60,000 km, including a large number of trails. Field work, surveys, provision of equipment and supervision are being handled by the MPH districts, but construction will, in many cases, utilize village labor. 2.22 The local contracting industry has benefited from several Government measures designed to make it competitive with foreign contractors. Local contractors' foreign exchange requirements are met by the Government, and equipment for Bank-financed projects may be imported duty-free. Advances of up to 15% of contract amount are permitted on all contracts, and retention funds have been limited to 5% of sums due to contractors. Contract conditions include an adequate price adjustment clause for basic materials, fuel, labor, and plant. Local contractors have also benefited from experience under Bank and ADB-financed highway projects. As a result of these favorable factors, the local contracting industry is now competitive and in no need of special assistance. /1 The firm supervised the detailed engineering of the roads performed under the Second and the Third Highway Projects. /2 The Bank's Rural Infrastructure Project (Credit 790-PH) includes improvement of about 1,400 km of barangay and rural access roads in various areas, technical assistance to the BBR, and the provision of maintenance equipment to the various districts.  -- 13 - 2.23 A factor in the design and construction of the project roads has been their potential for reducing unemployment. Although contractors are left to choose their own construction methods, substantial employment should be generated by the road construction activities under the project. In addition, local and foreign contractors are expected to employ local subcon- tractors, most of whom use labor-intensive methods. Studies on labor intensive schemes, begun by an International Labor Organization team, are being continued by a special unit of MPH. The Bank will monitor this work, and consider the possibility of applying and improving labor-based technology in the maintenance and restoration works as well as in construction and improvement of feeder roads financed under the project (para. 3.40). I. Maintenance 2.24 The greatest weakness in the Philippines highway sector has been inadequate road maintenance. Since the Bank's involvement in the highway sector in 1970, it has observed a serious lack of attention to road main- tenance in the field. The reasons were many: there was no proper organ- izational set up or staff capable of carrying out the required tasks; funds allocated for maintenance were either grossly inadequate or diverted to road construction or other activities; and maintenance operations and procedures were ill-defined. Essential items of equipment were unavailable when and where needed; hand tools were in short supply; workshop facilities to service and repair equipment were inadequate; and many depots were cluttered with broken-down equipment in scrap condition. Moreover, years of neglected road maintenance have resulted in the deterioration of a large part of the network to a point where it cannot be maintained by normal methods; restora- tion works are needed to put the roads in a maintainable condition. 2.25 In an attempt to improve this situation a maintenance study was initiated in 1972 under the First Highway Project and completed in 1975 under the Second Highway Project by the consultants, Kampsax/Berger (Denmark/ USA). The study recommended a reorganization of the then Bureau of Public Highways and prepared a Five-Year Maintenance Program, which included: (a) target annual budgetary requirements for routine and periodic maintenance; (b) substantial road restoration; (c) procurement and management of maintenance equipment and spare parts to replace or restore MPH equipment; and (d) a highway maintenance manual describing operations and procedures. 2.26 In accordance with the study recommendations, the MPH was upgraded in 1974 from a bureau in the MPWTC t:o departmental status, and has set up a satisfactory organization with field offices for maintaining national roads. Routine maintenance is now performed by the MPH's 13 regions and 149 districts and cities, using their own forces. Periodic maintenance is usually carried out by contractors. 2.27 Moreover, the MPH has taken steps to improve its budgetary proce- dures for routine maintenance by adopting a formula which expresses in Equivalent Maintenance Kilometers (EMK), the actual road lengths as adjusted  - 14 - for surface type, width, traffic levels and length and type of bridges. These new procedures helped to identify annual funding requirements for routine and periodic maintenance on a more systematic basis. According to MPH statistics, the funds allocated for maintenance in 1972 were P 156 million, but the amount sharply increased to P 480 million in 1975, P 709 million in 1977, P 930 million in 1978 and an estimated allocation of P 1,040 million for 1979 (Table 2.9). In 1978, the average maintenance cost per EMK was P 11,342 (US$1,530) which has been increased to P 11,600 (US$1,570) per EMK and which the consultants deemed adequate for routine maintenance. However, the consultants based their recommendation on the adequacy of average mainten- ance cost per EMK on the assumption that MPH would complete an annual program of road restoration each year to return deteriorated roads to an approximately original condition, so that normal maintenance work could be undertaken. Thereafter, the other assumptions were that all the funds allocated for maintenance would be expended in accordance with the procedures recommended by them, and that needed equipment would be available in a timely manner. In practice, these assumptions, which served as the basis for the consultants' recommendations on the appropriate level of EMK expenditures, have not yet been fully realized. 2.28 In order to reinforce the positive steps taken by MPH and to help it implement the first phase of the Five-Year Maintenance Program recommended by Kampsax-Berger, the Third Highway Project included procurement of main- tenance equipment, construction and improvement of workshops, a program to carry out road maintenance and restoration work and technical assistance. Nine experts are presently advising: (i) BCM on the managerial aspects of maintenance; (ii) the regions on the organization of maintenance crews in the field; and (iii) BOE on workshop management, equipment procurement and spare parts control. 2.29 During appraisal of the project in October/November 1977, it was observed that very little work had been done on the road maintenance and restoration work components of the Third Highway Project, although the construction component had started, albeit slowly, some six months behind the implementation schedule. The Bank was also concerned by the poorly maintained condition of the First Highway Project road which has eroded shoulders, clogged ditches and drains, unsealed pavement joints, and in places, signs of failing pavement. Poor maintenance of the recently completed roads under the Second Highway Project was also observed. In view of this, further processing of the Fourth Highway Project was held in abeyance pending tangible progress on road maintenance and restoration work by MPH in order to: (a) give MPH more time to initiate the maintenance and restoration work under the Third Highway Project; (b) make satisfactory arrangements for maintenance work to safe- guard past investments in road construction; and  - 15 - (c) allow MPH to concentrate on maintaining and upgrading the existing road network and strengthening MPH's management./l 2.30 Between October 1977 and October 1978, supervision by the Bank was intensified. As a result: (a) A detailed action program for maintenance and restoration works to be completed by September 1978 was formulated and agreed with the Government. This program sets out specific performance targets and dates for attaining them; (b) Discussions were held with all levels of MPH officials and consult- ants assisting the MPH wit'h the maintenance/restoration works, and the detailed steps necessary for the implementation of the action program were agreed. The emphasis was placed on extending technical assistance by the consultants at the regional and district levels where the actual maintenan,ze work is performed anad maintenance planning is undertaken; and (c) The BCM inspectorate unit was strengthened to monitor more closely the accomplishment of scheduled maintenance/restoration work, and a reporting format containing a performance evaluation system was agreed. Follow-up visits were to be made by inspectors to the areas where performance has been unsatisfactory. 2.31 The concentrated focus on maintenance/'restoration work by the Bank has yielded some positive results; MPH has made an unprecedented effort to fulfill its maintenance obligations under the Third Highway Project, and progress is being made on the action program. However, sustained efforts by MPH will be necessary over a period of years bef'ore substantial physical improvements can be expected. The MPH was requested to prepare a future action program to implement the road maintenance/restoration components under the proposed project in line with MPH's capabilities and available funds. During negotiations, this action program was reviewed and agreed with the Government. J. Past Bank Assistance in the HighLay Sector 2.32 As indicated in para. 1.07, previous Bank assistance in the highway sector has involved three loans: Loan 731-PH for US$8.0 million in 1971, Loan 950-PH for US$68.0 million in 1973, and Loan 1353-PH for US$95.0 million in 1977. The First Highway Loan was completely disbursed in 1976, about 8 months later than forecast although the project road is not yet completely finished. Works had progressed satisfactorily until March 1973, when they were suspended for several months due to civil disturbances which eventually /1 Execution of the maintenance and road restoration components requires much more effort on the part of MPH than implementing a construction program, which is largely in the hands of consultants and contractors.  - 16 - led to the deletion of a section of the road representing about 20% of the project. No portion of the loan was cancelled, as funds were needed to meet increased construction costs for the remaining works. The Government is still in the process of completing the unfinished portion with its own funds. However, due to continuing unrest in the project area, it is uncertain when the unfinished works on the project road will be compieted. A cost ou-i.run of over 50% is anticipated. 2.33 The implementation of the Second Highway Project was generally satisfactory except for the poor performance of one contractor. This con- tractor's unfinished portion of the work was awarded to a number of local firms who are satisfactorily completing the project road. The delay necessi- tated by this rearrangement has resulted in the extension of the Closing Date for the Second Highway Project by 18 months, to June 30, 1979; about 98% of the civil works are completed to date. 2.34 Implementation of the Third Highway Project began about eighteen months ago. The construction component is about six months behind schedule due to a delayed start caused by a lack of local funds (para. 3.30). The implementation of the maintenance and road restoration components began about one year behind schedule but, as noted above, MPH's performance on this aspect of the work is improving. A number of contractors have performed poorly and MPH has terminated several contracts, awarding them to other local contractors. 2.35 The strategy of Bank lending for highways has been to: (i) increase the capacity of the existing infrastructure; (ii) improve project preparation and implementation capabilities; and (iii) develop an institutional framework within which proper maintenance can be carried out. Continued assistance in attaining these objectives through careful sector reviews and project prepara- tion will be needed, so that capacity increases are obtained at the least cost to the economy and efficient use is made of existing capacity before increasing it. 2.36 A further objective of the Bank is to expand its participation in the provision of improved farm-to-market and feeder roads capable of accom- modating motorized traffic in support of the Government's rural road development program to aid increased food production. In the past, the Bank helped to finance the construction and improvement of rural feeder roads through irrigation, multi-purpose and rural development projects. Building upon these efforts, the Bank will assist the Government in implementing its policy of expanding local government responsibility for the construction and maintenance of local roads. For this reason, a technical assistance program is proposed under the project to prepare a national rural roads program and strengthen local capabilities to plan, select, design and implement rural road projects (paras. 3.20-3.22, 3.39). K. Sector Lending 2.37 The institutions dealing with national roads, especially road maintenance, need further strengthening before the sector lending approach can be adopted. The present project will include an action program, successful implementation of which should pave the way for future sector lending for highways in the Philippines. The project should be considered as a transition towards sector lending; it adopts many characteristics of sector lending such as greater emphasis on sector policy issues (e.g. road maintenance) and  - 17 - institution building (e.g. strengtlhening of provincial governments' capabil- ities to plan, execute, and maintain rural roads). The sector lending approach is particularly suitable for rural roads as it is impractical for the Bank to closely supervise short stretches of low standard roads scattered throughout the country. The preparation of a comprehensive rural roads program financed under the Project is intended to pave the way for future sector lending for low cost, local roads. 3. T_E PROJECT A. Background 3.01 The proposed project was identified from two studies carried out by consultants: (i) Road Feasibility StLdies II by Norconsult/Hoff & Overgaard (Norway/Denmark) comipleted in 1975 for the road improvement component; (ii) Highway Maintenance Study (Five-Year Maintenance Program) /1 by Kampsax/Berger (Denmark/USA) completed in 1975 for the maintenance component, and which included road restoration. 3.02 Road Feasibility Studies II recommended a program for improving 1,150 km of national and 500 km of feeder roads, of which 500 km and 300 km, respectively, are being upgraded under the Third Highway Project. The balance of the program was to be included in the Fourth Highway Project along with the second phase maintenance program. However, an updated economic analysis completed in October 1977, based on recent traffic counts and cost estimates derived from detailed engineering, showed that about 325 km of national and 60 km of feeder roads had substantially lower returns than anticipated. The relatively low returns were caused by traffic levels which fell short of, and construction costs which exceeded, feasibility study estimates (whose data base was 1973). Moreover, some of the recommended feeder roads principally served large, privately-owned sugar estates. Con- sequently, the roads that yielded these low rates of return were eliminated from the proposed project (para. 3.06). They are, however, to be considered for inclusion in the road restoration program (para. 3.10). The road main- tenance and restoration components included in the project represent the second phase /1 of the Five-Year Program. B. Objectives of the Project 3.03 The major objectives of the project are: (a) to provide improved transport services to the rural population through reconstruction, restora- tion, and maintenance of deteriorated national and connecting feeder roads; (b) to upgrade maintenance procedures and operations for national and secondary roads; (c) to train MPH staff to carry out the tasks under (a) and (b), and (d) to strengthen planning, administrative, engineering and maintenance capabilities of provincial highway aLuthorities. /1 The first phase (2 years) of the program was included in the Third Highway Project.  - 18 - 3.04 Under previous Bank projects, the road construction industry has been sufficiently improved that it can now begin exporting its services to the world market. In contrast, progress on road maintenance and restora- tion works has been slow. The project therefore addresses this need by aiming to improve the efficiency of road maintenance and restoration works. This task is critical in view of the increase in the road network that needs to be maintained, and the increasing public expenditures needed for major reconstruction of deteriorated highways. Detailed steps are proposed in Annex 2. 3.05 The project will also assist the Government to achieve its goal of strengthening local administrative, planning, and executing capabilities using road planning and construction as a medium for developing operational capability and financial management in the provinces. For this purpose, a technical assistance program is proposed to supplement the ongoing Provincial Development Assistance Program (PDAP) which was initiated with USAID support. C. Description of the Project 3.06 The project consists of the following components: (a) construction and improvement of 8 national road sections totalling 345 km and 6 feeder road sections totalling 63 km; (b) implementation of the second phase (1980-1982) of a Five-Year Road Restoration Program which is part of a Five-Year Road Main- tenance Program. The Five-Year Road Restoration Program comprises restoration of about 13,200 km of deteriorated sections of the national road network to a maintainable condition. The first phase (1977/78-79) of the program was included in the Third Highway Project and covered about 4,800 km of this total. The second phase, included as part of this project, comprises the balance of about 8,400 km with the Bank providing financial assistance for approximately 1,430 km. The Government will fund restoration of the remaining 6,970 km. (c) implementation of the Second phase (1980-1982) of a Five-Year Maintenance Program. The overall program includes: (i) the construction or enlargement of 13 base /1 and 55 area workshops in various parts of the country; (ii) procurement of road maintenance equipment including spare parts, hand tools, workshop tools and machinery; and (iii) procurement of necessary parts and components for existing equipment. The first phase (1977/78-79) of the program was included in the Third Highway Project, but was limited to Luzon. It included 5 base and 23 area workshops as well as procurement of the first tranche of required road maintenance equipment, tools, machinery, parts and components. The second phase will cover all other islands as well and will include the balance of 8 base and 32 area workshops. It will also include the balance of the required equipment, machinery, tools and components. /1 Includes one Central Equipment Depot (Table 3.3).  19 - (d) continuation of the axle load control program begun under the Second Highway Project (Loan 950-PH) with the procurement of additional weighbridges; (e) procurement of soils arid materials testing equipment; (f) advanced technical training overseas for permanent MPH and MLGCD /1 staff; (g) technical assistance to: (i) MPH to help implement an expanded road restoration program; -ii) MLGCD to initiate a program for improved administration, pLanning, design, construction supervi- sion and maintenance of provincial roads; (iii) MPH to assist in making required organizational, administrative and operational improvements; and (iv) MPWTTC to continue the ongoing transport planning advisory services,; and (h) consulting services for construction supervision of project roads, and for detailed engineering and construction supervision of workshop construction. (a) Construction and Improvement of Roads (i) National Roads 3.07 Eight national road sectiorns (Table 3.5), totalling about 345 km in Luzon, Cebu, Negros, Panay and Mindanao, will be constructed and improved mainly on their present alignments tc serve predominantly agricultural areas. The existing roads have rough, narrow pavements which have deteriorated because of bad design, poor maintenance and heavy traffic volumes. Detailed engineering, financed under the Second Highway Project, was carried out by the MPH and four local consulting firms,/2 and was supervised by general consultants Scott Wilson, Kirkpatrick and Partners (U.K.). The work is satisfactory and conforms to MPH highway design standards. (Table 2.8). 3.08 The roads will be upgraded by improving and widening shoulders and pavements to handle increased traffic volumes. Bridges will be re- constructed or replaced where necessary. Various types of pavements will be used according to traffic volumes including gravel, bituminous surface treatment, and asphalt concrete. On some sections embankments will be raised to reduce damage from severe flooding; all road sections will have improved drainage and cross drainage structures; and cement concrete pavement will be used in some highly urbanized areas. (ii) Feeder Roads 3.09 The six feeder road sections (Table 3.5) total 63 km and are located on Cebu, Negros and Mindanao Islands. They connect with the national roads to be improved under thle project and were identified by the /1 Ministry of Local Government and Community Development. /2 Utilizing expatriate experts in key positions who were provided by associated foreign consulting firms.  - 20 - feasibility study consultants and MPH as requiring improvements concurrently with the national roads. The present roads are difficult to negotiate during the wet season because of inadequate drainage, narrow widths and unsatisfactory earth surfaces. Engineering was done in accordance with MPH design standards by MPH and local consultants (Table 2.8). (b) Road Restoration Program 3.10 The Road Restoration Program (Table 3.2) included in this project is the balance (1980-82) of the Five-Year Program recommended by Kampsax/ Berger as modified by MPH in consultation with the Bank. Under this project 8,400 km of badly deteriorated national road sections would be restored to a condition where only routine maintenance will be necessary for their upkeep. The program will also identify and correct deficiencies (e.g. poor drainage) in existing roads without upgrading them in terms of classification or anticipated traffic levels. A simple rating system, based on economic and engineering criteria, will be used to determine specific location and nature of the works (Annex 2). The Bank will provide financial assistance under the Loan for work on about 1,430 km /1 of these roads to be carried out by con- tractors. The Government will use its own resources to restore the balance. 3.11 MPH has agreed to give priority to rehabilitation of the 325 km of national and 60 km of feeder roads recommended for major upgrading in Highway Feasiblity Studies II but eliminated from the present project due to relatively low returns (para. 3.02). Temporary repairs on these roads would yield high returns: when additional traffic develops, the roads could then be recon- structed. However, they will be subject to the same economic analysis as other candidate roads to determine the timing and scope of required work. (c) Road Maintenance Program 3.12 The Road Maintenance Program (Table 3.1) is the balance (1980-82) of the Five-Year Program, the first phase of which was included in the Third Highway Project. In order to assist in carrying out this program, the project includes the following components: (a) Construction or improvement of one Central Equipment Depot, 7 Regional Base Workshops and 32 Area Workshops in various parts of the country (Table 3.3). (b) Procurement and installation of workshop tools, equipment and machinery for these workshops (Table 3.4). (c) Procurement of additional road maintenance equipment, including spare parts, hand tools, and equipment maintenance tools and facili- ties (Table 3.4). (d) Procurement of necessary parts and components for the existing maintenance equipment fleet throughout the country (Table 3.4). /1 Under the Third Highway Project, the Bank provided financial assistance for about 1,100 km of these roads (Table 3.2).  - 21 - 3.13 Two additional Regional Base Workshops not included in the project are being built and equipped with Japanese aid. The workshop equipment, tools and machinery to be included in the project have been identified with the assistance of the technical assistance experts appointed under the Third Highway Project. During negotiations, the list of road maintenance equipment, workshop tools, equipment and machinery to be procured under the project was agreed with the Government. The technical assistance experts appointed under the Third Highway Project are curresntly assisting MPH in reviewing the condition of existing maintenance equipment and a list of necessary parts and components to be procured under the project will be submitted for Bank review and agreement prior to initiating procurement action. (d) Weighbridges and Soils and Materials Testing Equipment 3.14 The project provides funcds for the acquisition of 7 permanent and 32 portable weighbridges. These will supplement the 9 permanent and 50 portable weighbridges procured under the Second Highway Project, now operational, and will thus extend the recently instituted axle load control program to the rest of the country. During negotiations, the location and implementation schedule for these additional weighbridges was agreed with the Government (Table 3.7). 3.15 Soils and materials testing equipment being used by MPH is either obsolete or in short supply. Provision has been made under the project for procurement of the required equipment to permit better soil investigation, testing and analysis, and improved quality control of construction materials. A technical assistance expert, appointed under the Third Highway Project, is assisting the recently reorganized Soils and Materials Quality Control Service of the MPH to identify and operate the necessary equipment. During negotiations, agreement was reached on the list of soils and materials testing equipment to be procured under the project (Table 3.9). (e) Training 3.16 Although the level of technical competence of MPH and MLGCD personnel is satisfactory for ordinary operations, the central organizations responsible for such a large highway network need staff competent to handle the especially difficult and complex problems that occur. To help provide such competent staff, the project includes advanced technical training for selected permanent staff of the central headquarters. The Government has agreed to institute appropriate regulations to ensure that personnel trained under such a program remain with the sponsoring organizaltion for an adequate length of time. During negotiations, detailed arrangements for implementation of this program, including technical disciplines selected and required regulations, were agreed with the Government. A total of eight staff would be trained for one year each, six from MPH and two from MLGCD. In addition, eight of the permanent staff would be sent on three-month study tours overseas, six from MPH and two from MLGCD.  - 22 - (f) Technical Assistance (i) Technical Assistance to MPH 3.17 At the request of MPH, consultants carried out a study under the Third Highway Project to determine the improvements needed in MPH's organization, administration and management. One of the consultants' major recommendations was that the Government's decentralization policy should be further implemented by placing additional responsibility for design and construction supervision on the regions instead of the present practice of carrying these functions out primarily from the center. The Government has accepted the major recommendations contained in the consultant's report and intends to implement them. In order to assist the MPH in making these improvements, the project includes 192 man-months of technical assistance (two experts /1 each for a period of two years) to the four regions where road improvements are planned under this project. In this way, the road improvements included in this project can be used as a means of upgrading the capability of the regional offices in contract administration, construction supervision, monitoring of consultant's services and road maintenance. 3.18 In addition, technical assistance, at MPH headquarters for the various MPH Bureaus is also included, so that the efforts presently being made under the Third Highway Project to improve MPH's technical and management capabilities and increase its operational efficiency, can be continued. For this purpose 180 man-months of technical assistance has been included in the project. 3.19 Technical assistance of 24 man-months will also be provided to specifically assist MPH in proper implementation of the Road Restoration Program (para. 3.10). Another 24 man-months of technical assistance has been included in the project to continue the assistance presently being provided to PPDO, under the Third Highway Project, for carrying out their responsibilities concerning road feasibility studies, axle load control and analysis of traffic data. During negotiations, terms of reference, scheduling and the details of all these technical assistance components were discussed and agreed with the Government (Table 3.8). /1 One highway design and construction expert and one road maintenance expert.  - 23 - (ii) Technical Assistance to MLGCD 3.20 The project will also include 96 man-months of consulting services to provide technical assistance to MLGCD and selected provincial highway authorities in preparation for a future rural road project (Table 3.8). In cooperation with USAID, which has initiated the PDAP program (para. 2.20, 3.05), experts will assist in preparing a provincial and rural road develop- ment program and an action program for improved planning procedures and adequate maintenance of rural roads by the provincial governments. The study is expected to propose an appropriate methodology for project selection and the degree of engineering required to obtain adequate cost estimates for the improvement of rural roads. During negotiations, the arrangements for the study and the terms of reference were discussed and agreed. 3.21 The study will lead to proposals for: (a) the improvement of the institutions dealing with the provincial and other local roads (including barangay roads), and in planning, executing and maintaining provincial and rural roads; (b) a phased ten-year program for improving rural roads and its estimated cost; (c) a rural road maintenance program to identify personnel, equipment, and other resources required, which would include cost estimates, and recommendations on appropriate maintenance methods; and (d) methods of financing both construction and maintenance programs for rural roads. 3.22 The proposed study, to be undertaken at the provincial level, will support the Government's decentralization policy of strengthening local capabilities to plan, select, design, and implement projects on the basis of local leaders' and technicians' intimate knowledge of their region's economy and needs. Expanded local government responsibility for the construction and maintenance of rural roads is a concrete step towards increasing local parti- cipation in rural development programs. The long-term objective of the Government is to consolidate the variLous local road improvement programs operated by the national Government agencies and incorporate them into local programs administered by the provinciLal governments. To achieve this objective, the central government will need to allocate resources annually to the provin- cial governments so that they have a regular flow of funds for improving and maintaining low-cost, low standard roads. (iii) Technical Assistance to MPWTC 3.23 In addition, 60 man-months of technical assistance (Table 3.8) has been included in the project to continue the on-going transport planning advisory services to MPWTC now being financed under the Manila Urban Develop- ment Project (Loan 1282-PH).  - 24 - (g) Consulting Services (i) Construction Supervision 3.24 Construction supervision will be undertaken by the same local consultants and MPH regional offices who carried out detailed engineering of project roads. To strengthen their supervision staff, local consultants will recruit experienced expatriates to fill key positions. During negotia- tions, assurances were obtained from the Government that the qualifica- tions and terms of reference of the supervision consultants, technical assist- ance experts and MPH staff will be satisfactory to the Bank. Agreement was reached with the Government during negotiations on the terms of reference for the consultants. (ii) Workshops 3.25 Design and construction supervision of workshops will be undertaken by local consultants, as under the Third Highway Project. Design work will consist of reviewing MPH plans, revising as necessary, and preparing detailed drawings and bid documents. The consultants will also review prequalification applications and evaluate tenders received, subject to final examination and approval by MPH. The consultants will provide an adequate, full-time super- vision staff for each workshop site and a coordinating control group at their main office. Agreement was reached with the Government during negotiations on the terms of reference for the consultants and assurances were obtained that the qualifications of the consultants to be appointed will be satisfactory to the Bank. D. Cost Estimates and Foreign Exchange Component 3.26 The total cost of the project, including right-of-way, is estimated at about 1,517 million pesos or US$205 million equivalent. This includes physical contingencies of 10% on all items. Overall, physical and price contingencies combined represent about 20% of the total project cost./1 The proposed loan of US$100 million will finance the foreign exchange cost, estimated at 49% of the total project cost, and the local cost of consulting /1 Inflation, during the project implementation period, has been assumed to be 7% p.a. for civil works and 6% p.a. for equipment and machinery. For consulting services and training, 5% has been allowed to account for expected price increases.  - 25 - services; the Government will finance the balance of the local cost of US$105 million equivalent plus taxes. Detailed cost estimates are given in Table 3.5 and are summarized below.  - 26 - Foreign (Pesos Million) (US$ Million) Exchange Item Local Foreign Total Local Foreign Total Component (%) A. Construction and Improvement of: 1. National Roads (345 km) 148.1 178.1 326.2 20.0 24.1 44.1 55 2. Feeder Roads (63 km) 11.4 14.1 25.5 1.5 1.9 3.4 55 Subtotal (A) 159.5 192.1 351.6 21.5 26.0 47.5 55 B. Road Maintenance and Restoration Program 401.1 347.8 748.9 54.2 47.0 101.2 46 C. Weighbridges, Soils and Materials Testing Equipment 1.6 7.3 8.9 0.2 1.0 1.2 83 D. Training 0.7 1.7 2.4 0.1 0.2 0.3 67 E. Consulting Services 27.4 48.8 76.2 3.7 6.6 10.3 64 Subtotal (A to E) 590.3 597.7 1,188.0 79.7 80.8 160.5 50 F. Contingencies 1. Physical 59.0 59.8 118.8 8.0 8.1 16.1 50 2. Price 105.5 82.2 187.7 14.3 11.1 25.4 44 Subtotal (F) 164.5 142.0 306.5 22.3 19.2 41.5 46 G. Land Acquisition 22.5 - 22.5 3.0 - 3.0 - Total Project Cost 777.3 739.7 1,517.0 105.0 100.0 205.0 49  - 27 - 3.27 The average construction cost per km (excluding contingency al.--,w ances and right-of-way) is estimated at about US$130,000 equivalent for national roads, and about US$55,000 equivalent for feeder roads. Construction super- vision for roads by consultants is estimated at about 6% of- construction cost. Consulting services for workshops including design, preparation of contract documents and construction supervision is estimated at about 6.5% of overall workshop construction costs. The man-month rate for expatriate consultants is estimated to be about US$8,300, or US$6,500 if international travel expenses and local costs for housing and local travel is excluded. These costs are considered reasonable and are based on prevrious experience. 3.28 Cost estimates were independently prepared by the consultants who did the detailed engineering and by MPH for the roads designed by that agency. The estimates were checked and assembled by the general consultants and quantities derived from detailed designs. Unit prices were based on an analysis of the cost of labor, materials, depreciation, operation of equipment, and contractors' overhead and profit, taking into account recent bids received for similar projects. A 10% physical contingency allowance for quantity and time overruns is considered adequate. Cost estimates for construction super- vision, detailed engineering and technical assistance have been based on experience during the Second and Third Highway Projects; cost estimates for equipment were based on suppliers' recent quotations. Direct foreign exchange costs are the c.i.f. costs of imported materials, equipment and machinery, construction equipment depreciation, foreign contractors' overhead and profit, and anticipated foreign consulting services. Depreciation costs have been calculated from consultant and MPH estimates of the depreciation on typical inventories of imported construction equipment which foreign and domestic contractors would require for civil works. Indirect foreign exchange costs consist of locally processed materials, such as bitumen, reinforcing steel and cement, for which raw materials or equipment will have to be imported. Estimates of the required quantities and import content of these materials were also prepared by the design consultants and checked by MPH and the Mission. During negotiations, final cost estimates for the project were agreed with the Government. E. Project Implementation 3.29 MPH, assisted by qualified consultants, will be responsible for implementation of the project. The technical assistance component for the provincial roads program will be the responsibility of MLGC]), which will coordinate assistance to the various provincial authorities. MPWTC will be responsible for the technical assistance component for transport planning advisory services. The project, to be executed over a three and one-half year period, should be completed at the end of 1982. A schedule showing the implementation phases for each project component is attached as Chart 2. Road works, and the road maintenance and restoration components will all require three years to execute. During negotiations, the Government confirmed the irnplemleni:aLri- schedule and agreed: (i) to submit regular quarterly progress reports to the Bank; (ii) to monitor overall implementation of the project; and (iii) to prepare a completion report witin six months of the Closing Date.  - 28 - (i) Availability of Local Funds and Budgeting. 3.30 As noted in para. 2.34, implementation of the Third Highway Project suffered in 1977 due to a lack of local funds. The problem was largely due to: (i) delay lj MPH in preparing budget requests; (ii) poor presentation by MPH at budget hearings; (iii) lack of a close working relationship with the Ministry of the Budget (MB); (iv) the poor fiscal position of the Government; and (v) administrative delays in release of budgeted funds. In order to avoid repetition of this problem, improved budgeting by MPH and prompt releases by the MB for already approved programs are necessary. On its part, the MPH has been requested to: (a) undertake detailed budgeting exercises on a three-year rolling basis in cooperation with the staff directly responsible for particular projects, including Bank-funded projects; and (b) improve presentation of budget requests with proper analysis and justification of programmed projects. 3.31 The fiscal position of the national government improved in 1978, but delays in releasing funds still persist. Therefore, the following matters, agreed with MPH, were confirraed with the Government, and have been included as covenants in the Loan Agreement: (a) MPH will perform the tasks outlined in para. 3.30 (a) and (b); and (b) MPH will make specific budgetary provisions for the implementation of all project components. 3.32 The Ministry of the Budget was represented in the loan negotiations and agreed to the budgetary obligations to be assumed under the Loan Agreement. (ii) Road Construction and Improvement 3.33 Implementation of the road construction component of the Second and Third Highway projects was overseen by the IBRD Project Office in MPH. This office, reporting directly to the Minister of MPH, was assisted by a Bank highway engineer seconded to MPH. During the preparation of the Fourth Highway Project, it was foreseen that the same office would supervise, monitor, and coordinate the road construction component. However, upon the return of the Bank engineer in November 1978, MPH decided to incorporate the IBRD Project Office into BCM and have BCM supervise the construction of the project roads as part of BCI's general functions. This proposal was a matter of some concern as the BCM has demonstrated a lack of experience and competence in supervising the design consultants' work for the project roads. This problem was discussed with the Minister of Public Highways who commissioned a short-term (3 months) study on MPH' s organizational structure (Chart LA). The study, undertaken by consultants Roy Jorgensen (USA), was completed in September 1978. Prior to negotiations, the study proposals and recommendations were reviewed and discussed with the Government with a view to agreeing on suitable organizational arrangements which would attain the long-term objective of improving the MPH's capability, while not adversely affecting the imple- mentation of the Project. During negotiations, agreement was reached on the timing and details of implementing organizational changes in MPH. In order  - 29 - to implement the policy of decentralizing authority and responsibility, and to strengthen its central management, MPH has decided to institute certain organizational changes in accordance with the recommendations contained in the organizational and management Study. Some of the more important improve- ments include: (a) delegation of authority and responsibility by the Minister to Deputy and Assistant Ministers; (b) division of BCM into two bureaus, the Bureau of Construction (BOC) and the Bureau of Maintenance (BOM); which would ensure proper attention to aliainternance by separating responsibilities, together with appropriate personnel changes to strengthen both these important bureaus; and (c) transfer of the design and construction supervisory functions from the central office to the Regional offices to the maximum extent possible (Chart lB). 3.34 Road construction and improvement works have been tentatively divided into eigh-: contracts for the national roads and four for minor roads. Cost estimates for individual contracts range from US$3.0 million to US$6.0 million equivalent: for national roads, and from US$500,000 to US$1,300,000 equivalent for minor roads. These amounts assure economies of scale on the larger works, as well as providing opportunities to smaller local contractors. Some 47 contractors, local, local/foreign joint ventures, and foreign contrac- tors have applied for prequalification: evaluation of these applications is now underway./l Local contractors, including those in joint ventures, have won most of the contracts for the Second and Third Highway Projects. It is too early to generalize or to fully evaluate contractors' performance on the Third Highway contract works, but local contractors for the Second Highway project roads (with one exception) have performed satisfactorily. The bidding schedule has been arranged to allow unsuccessful bidders to bid on subsequent contracts. It is expected that contracts for the project roads will be awarded about six months after the Loan Agreement becomes effective. (iii) Road Maintenance and Restoration (Civil Works) 3.35 The road maintenance component will be implemented by the BOM of MPH assisted by expatriate consultants provided under the project. The road restoration component will be prepared by MPH (and regions) but the work financed by the Bank will be executed by local contractors. The procedures MPH agreed to adopt for the implementation of these components are detailed in Annex 2. During negotiations, an action program for the maintenance and road restoration works was agreed with the Government. (iv) Maintenanice Equipment 3.36 The additional road mainteLaance equipment provided under the project, includintg an initial stock of spare parts, should enable MPH to carry out routine uiainteriance on the national road system in an adequate manner up to the er;d of 1982. Procurement of equipment by BOE should not present a problem as BOE has a capab:Le staff which will be assisted by /1 Unsatisfactory performance by certain contractors on the Third Highway Project (Loan 1353-PH) and the Rural Development Project, Mindoro (Loan 1102-PH) emphasizes the need for much more careful evaluation of prequalification applications by MPH. During negotiations, agreement was reached on improved prequalificationl evaluation procedures.  - 30 - consultants. However, some BOE yards and workshops are cluttered with unsalvagable equipment and machinery, and as a consequence, MPH depots and workshops lack working space and room to repair equipment. 3.37 The disposal of obsolete or unrepairable equipment has been a continuing problem to MPH because of the cumbersome procedures required by the Commission on Audit (COA), whereby individual components of each piece of equipment or machinery must be accounted for by an on-site auditor before COA will certify any equipment for disposal. It is unlikely that COA would change its present time-consuming procedures for disposal of equipment in the near future. However, in the interim period MPH could remove its old equip- ment from depots and workshops to a publicly-owned or rented storage area to regain working space. Accordingly, assurances were obtained that M4PH will remove all non-serviceable equipment and scrap parts no later than March, 1979 and that such equipment will be regularly removed thereafter. In addition, during negotiations, an action program for the disposal of such equipment at an increased rate was agreed with the Government. (v) Construction and Improvement of Workshops 3.38 Civil works for the construction of workshops are expected to be carried out by local contractors. The local building industry is both competent and competitive and in view of the experience thus far on the Third Highway Project, no difficulties are expected in receiving an adequate number of bids. Contracts for the various workshops will range from about US$2.5 million equivalent for the larger base shop complexes to about US$800,000 equivalent for the smaller area shops. (vi) Technical Assistance to '41,GCD 3.39 Since MLGCD is a new executing agency which has not dealt with the Bank before, all procedures, responsiblities and reporting requirements were explained to the concerned staff. MLGCD will provide the counterpart staff to the technical assistance team, which will be placed under the supervision of the Deputy M4inister's Office. During negotiations, terms of reference for the consultancy services were agreed with the Government. (vii) Labor Intensive Construction Methods 3.40 In carrying out the roa(l restoration and maintenance components, labor-intensive methods are expected to be applied in clearing ditches, controlling vegetation, and transporting and spreading materials. In order to help improve eft-ciency and identify new areas where improved labor-based methods could be applied, the MPH regions and districts will be assisted by the technical assistance consultants. The Bank's CPS is expected to provide addtio0ia ;v3sistance in determining means, methods, and practices of increas- ing the labor/capital ratio wherever appropriate i rcoad ialo'Cenance and restoration works. F. Procurement, Implementation Schedule, and Right-of-Way 3.41 Contracts for construction and improvement of the national roads, amounting to about US$44 million equivalent, will be awar(led to prequalified contractors on the basis of international competitive bidding in accordance with the Bank's "Guidelines for Procurement". Contracts for the construction and improvement of feeder roads, totalling about US$3.5 million equivalent,  -- 31 - and contracts for the Bank-financed road restoration works, totalling abomli US$30 million equivalent (average size US$0.5-1.5 million equivalent), wiLl be awarded to prequalified contractors cn the basis of local competitive bloing, under procedures satisfactory to the Bank. The balance of the road restoration program (Table 3.2) will be carried out by MPH, with the cost borne entirely by the Government, partly by force account and partly using local contractors chosen on the basis of local competitive bidding. Civil works contracts for the construction and extension of workshops, including installation of workshop equipment, totalling about US$39 million equivalent, will be awarded to prequalified contractors on the basis of locaL competitive bidding under procedures satisfactory to the Bank. Foreign contractors operating in the country will be allowed to participate in all local bidding for Bank-financed project components. 3.42 Weighbridges, workshop equipment and machinery, soils and materials testing equipment, tools, road maintenance equiprient, and parts and components for existing equipment with a total cost of about US$33 million equivalent will be procured on the basis of international competitive bidding in accor- dance with the Bank's "Guidelines for Procurement". A preference limited to 15% of the c.i.f. price of imported goods, or the customs duty, whichever is lower, would be extended to local manufacturers in the evaluation of bids. Procurement of off-the-shelf items, each costing less than US$15,000 equiva- lent and procurement of hand tools for road maintenance may follow normal Government procurement procedures and conditions which are acceptable to the Bank: the total amount of such purchases should not exceed US$500,000 equivalent. 3.43 Civil works contracts for road construction and improvement are expected to be awarded during the fourth quarter of 1979 and are scheduled to be completed within 36 months after start of work. Contractors would be responsible for maintaining their respective works for a 12-month period after completion. The technical assistance component would commence in January 1980 and would be completed by the end of 1981. During negotiations, agreement was reached with the Government on the implementation schedule (Chart 2) and on the arrangements for appropriately timed progress reports depending on the requirements of the various project components. 3.44 The Government acquires right-of-way by negotiation as far as possible, although it has adequate compulsory powers, if needed. There have been cases in previous projects where delay in acquiring rights-of-way has caused disruption of scheduling. Confirmation was obtained during negotiations that the Government will take action to make availablE? the right-of-way on each road section before awarding the contract for its construction and will consult with the Bank prior to award of contracts in cases where other considerations make it desirable to begin work before all right-of-way has been acquired. G. Disbursements 3.45 Disbursements from thie loan account wil:L be on the basis of: (a) 55%, of total construction and improvement costs for roads; (b) 22% of total construction costs for workshops; (c) 30% oi- total costs for road restoration work carried out through contract; (d) 100% of c.i.f. cost of imported equipment, spare parts, tools, machinery and components, if pro-  - 32 - cured directly abroad, or 65% if procured locally;/1 (e) 100% of the exfactory cost of equipment, spare parts, tools, and components produced locally; and (f) 100% of the cost of consulting services, whether expatriate or local. Withdrawals for expenditures on the road restoration works to be carried out by contract over the three years commencing in January 1980 will be made only after the program has been reviewed and agreed to by the Bank for each year. During loan negotiations, agreement on a schedule of estimated disbursements was reached with the Government (Table 3.6). H. Environmental Aspects 3.46 No environmental or ecological problems are anticipated as a result of this project. This conclusion is reinforced by the fact that there will be basically no changes in the alignment of project roads to be improved under the Bank loan. On the contrary, improvement of the various road sections and the institution of proper routine maintenance will improve the environment by keeping down noise and dust. Wider and better constructed shoulders will also contribute to road safety. 3.47 Design of the drainage for the road, including the structures, has been carried out in collaboration with the National Irrigation Authority (NIA) so that the works will not cause or aggravate flooding or erosion. Road construction, improvement, maintenance and restoration will provide better surfacing, making travel much easier and more comfortable for motorists. Moreover, as the project roads will largely follow existing alignments, this will minimize disturbances to property and persons. 4. ECONOMIC EVALUATION A. Main Benefits and Beneficiaries 4.01 The major quantifiable benefits of the project will result from the provision of more economical transportation in areas where an exist- ing or potential transport demand has been identified. Project roads will serve areas which are predominantly agricultural, thus providing the local population with opportunities to: (a) improve their bargaining position vis-a-vis truckers (who tend to follow good roads), thereby obtaining higher prices for their products; (b) improve the quality and quantity of their yields through prompt, low cost delivery of agricultural inputs; and (c) intensify land use. 4.02 The primary and secondary road networks in the project areas although generally adequate in coverage are in a state of bad deterioration. By addressing the need for maintenance and improvement of these roads, the /1 About one fourth of the total is expected to be procured locally.  - 33 - proposed project supports the Government's strategy of reconstructing deterio- rated roads (where traffic warrants), as opposed to building new, high-standard highways. Feasibility studies indicate that, for most road sections, the optimum first stage of improvement would be to pave or gravel the road largely on the present alignment, with the addition of adequate drainage. B. Influence Areas of Project Roads 4.03 The six national road sections proposed for improvement are scattered among the southern islands of the archipelago: two (42 km) are located in Southern Luzon, two (82 km) on Panay, two (79 km) on Negros, one (59 km) on Cebu, and one (83 km) on Mindanao. Three feeder roads (19 km) are located on Negros, one (23.6 km) on Cebu, and another two (20 km) are on Mindanao. The project roads will benefit about 1.8 million inhabitants in the influence area of over 11,000 sq km. (a) Tabaco-Tiwi and Tabaco-Ligao Roads (Southern Luzon) 4.04 These roads, which cross flat rice land, serve the tourist area of Mayon Volcano and the hot springs in Tiwi. The development of geothermal power in the area is expected to generate further economic activity. 4.05 Tabaco is the major market town in the area where local abaca products (straw handicrafts), vegetables, rice and copra are brought for shipment to Manila. The project roads will serve a population of 185,000 whose annual average per capita income is estimated at P 1,100 (US$150). Traffic on the two roads ranges from 500 to 1,000 vehicles per day (vpd), with weighted averages of 470 and 890 vpd respectively. Traffic on both roads is expected to increase at an average rate of 5% per annum. (b) Jaro-Calinog and Sigma-Roxas Roads (Panay) 4.06 The road connecting the towns of Jaro and Calinog will serve the local population who produce mainly sugar cane, corn and rice. Much of the local truck traffic consists of moving sugar cane to a new sugar mill in Calinog. The nearby Panay Railway carries only a small amount of traffic, due to limited capacity and unsafe conditions. The population in the influence area, is estimated at 460,000, is mostly located in Jaro near the city of Iloilo, with an estimated per capita income of P 1,330 (US$180). Traffic ranges from 4,500 vpd near Jaro to 430 vpd near Calinog, with a weighted average of 1,210 vpd. Traffic is expected to increase by 6.6% per annum. 4.07 The Sigma-Roxas road provides access to a number of fishing villages on the north coast of Panay. Some fish products are flown from Roxas to Manila, but most are moved by truck to Iloilo and then shipped to Manila. The road will affect a population of about 110,000 with an annual per capita income of about P 1,550 (US$210). Average daily traffic ranges from 810 to 1,920 vehicles with a weighted average of 1,160, projected to increase at 6.6% per annum.  - 34 - (c) Silay-Fabrica and Fabrica-Escalante Roads (Negros) 4.08 The Silay-Fabrica-Escalante road begins at the end of the Third Highway Project in Silay and continues through several towns. Major economic activities in the area are sugar cane production and related industries for the processing of raw cane. There is a large sugar mill in Fabrica, where severe traffic congestion occurs during the harvest (October-March). Present road conditions are very bad, with poor drainage and cracked surfaces. The improved road sections will benefit about 600,000 local inhabitants who have an annual per capita income of P 1,240 (US$168). Traffic ranges from 1,410 to 2,610 vpd on the Silay-Fabrica section, with a weighted average of 1,920; this is expected to grow by 7% per annum. Traffic on Fabrica-Escalante is somewhat less; it ranges from 910 vpd to 1,240 vpd, with a weighted average of 1,200 vpd. (d) Carmen-San Remegio Road (Cebu) 4.09 The road starts at the market town of Carmen, goes through the densely populated towns of Catman, Sogod and Bogo, and ends at the Hagnaya Port in the town of San Remigio. The area's major economic activities are fishing and agriculture, with significant crops of rice, sugar cane, and corn. Abundant limestone is also found in the area. The proposed road follows the existing alignment except at bridge approaches where the curves are very sharp. In rolling and mountainous areas, only the pavement structure would be added. In the low lying areas, an embankment would be constructed to obtain proper drainage. The proposed pavement would be 6.1 m wide with double bituminous surface treatment. The improved road will serve about 200,000 rural inhabitants whose per capita income is estimated at P 1,130 (US$150). Present traffic on the road is about 470 vpd, which is expected to increase by an annual average rate of 5%. (e) Digos-General Santos Road (Mindanao) 4.10 This road is situated in a rapidly developing area having a high rate of im migration from the Visayan islands. Pineapples and bananas are grown in the influence area and transported over the road for export at the port of General Santos (being expanded under the Bank's Second Port Project). Soil in the area is fertile, and farmers are expanding production of rice, corn and sugar cane by cultivating mountain slopes. The population in the influence area is about 170,000 with an estimated annual per capita income of about P 2,000 (US$270). Traffic is about 1,300 vpd near Digos and 540 near General Santos, with a weighted average of 700 vpd, estimated to grow by 6.8% per annum. (f) Old Sagay and Bolanon Feeder Roads (Negros) 4.11 These are the only access roads serving intensively cultivated sugar cane areas and their surface condition is very poor. The new roads will benefit about 20,000 local inhabitants whose annual per capita income is estimated at P 1,000 (US$135). Average daily traffic is 280 vehicles on Old Sagay and 125 on Bolanon.  - 35 - (g) Escalante-Danao Provincial Road (Negros) 4.12 This road serves as a feeder to the Fabrica-Escalante Road being proposed for improvement under the project, and will provide improved mobility for a population of about 10,000 who inhabit the Old Escalante-Danao Port area northeast of the market town of Escalante. The original asphalt pavement of the existing road has almaost disappeared. The improved road will provide economical transportation to these rural inhabitants in marketing their sugar cane, rice and fish. The volume of traffic is estimated at 500 vpd, and is expected to grow at 4% p.a. (h) Anonang-Daanbantayan Feeder Road (Cebu) 4.13 The road will serve as a feeder to the Carmen-San Remigio Road at the junction of Anonang village located in the municipality of Bogo. It traverses areas of flat and rolling terrain, including several well popu- lated centers, and ends at the commercial and fishing town of Daanbantagan. Sugar cane and corn are grown in the influence area. This road is impassable during heavy rains due to flooding at bridge crossings caused by inadequate cross drainage. Under the project, the present old and dilapidated swing steel bridge will be replaced with a reinforced concrete bridge, and temporary wooden bridges will be replaced with concrete pipe culverts to provide all weather access. The level of existing traffic is in the 100-225 vpd range, with a weighted average of 150 vpd which, after improvement, is expected to grow at 5% p.a. (i) San Vicente-Malalog, Malungon Feeder Roads (Mindanao) 4.14 These two roads feed into the General Santos-Digos road and con- nect with fishing villages and corn and sugar cane farms. The present roads are poorly gravelled and graded tracks, which are motorable only in the dry season. Improved access will open up more areas for cultivation, bene- fitting a population of about 10,000, with an annual per capita income of P 1,200 (US$162). Traffic is about 405 vpd on San Vincente-Malalog and 200 vpd on Malungon. C. Economic Analysis 4.15 Economic analysis of the project roads contained in the feasibility studies completed in mid-1975, was carried out by Norconsult in association with Hoff and Overgaard (Norway/Denmark). An updated economic analysis was carried out in September 1977 and November 1978 by the MPH's planning unit, assisted by an expatriate consultant and the post-appraisal mission. The weighted average economic rate of return for the road construction, main- tenance and restoration components is 50%. (a) Traffic Forecast 4.16 The consultant's estimated traffic assignment, expected volumes and growth rates were based on MPH traffic counts undertaken for the feasi- bility studies. In October-December 1976, additional counts were carried out for all project roads and supplemented by follow-up counts in July-August 1977. Annual growth rates anticipated between 1981 and 2000 vary: from about 7% in Panay, Negros, and Mindanao to about 5% in Luzon and Cebu. Similarly high  - 36 - growth rates are anticipated on the feeder roads in Negros, Cebu, and Mindanao (Table 4.1). 4.17 These rates which are based on past trends have been adjusted for expected increases in GNP, population, and regional per capita income. Generated or induced traffic is expected to increase total traffic by 10-30% with the opening of the new project roads. These estimates were derived from studies of earlier cases which measured elasticity of demand for road transport as a function of reduced operating costs. Rates were adjusted to take account of industrial development potential and activities such as rural settlement, fishing, timber and tourism. Traffic diverted from other roads and from the Panay Railway is not expected to be significant. (b) Construction and Improvement of National Roads 4.18 Benefits from the proposed construction and improvement of the project roads were determined as the difference in road user costs with and without the project, for both normal and generated traffic. Benefits also include travel time savings restricted to working time, and reduction in road maintenance costs. Average vehicle operating costs for each road (Tables 4.2 and 4.3) were assessed for different types of vehicles. Savings on the new improved roads range between 15% and 35%, taking into account road standards, traffic density, speed, and side friction. If passengers' time is included, there are slightly higher savings of 16% to 36%. The savings in working time for passenger vehicles were quantified on the basis of 6.40 pesos/hr. per average car, 3.60 per jeepneys, and 11.80 per buses. Working time savings included in fixed costs were quantified for the driver and helpers of buses and trucks. 4.19 Economic returns (ERRs) and sensitivity analyses are shown in Table 4.4. Economic returns for national roads, calculated over an assumed 20-year service life of the investment, vary between 24% and 32%. Sensi- tivity of the ERRs was tested by varying construction costs by + 15%, and benefits by + 15%. Under the pessimistic assumption of an increase in construction costs concurrent with a decrease in benefits, ERRs would be between 17% and 21%. Exclusion of passenger time savings would reduce the above returns by about 2 to 4 percentage points. The overall rate of return is 25% without time savings, and 27% with time savings. 4.20 For tlle typical road, total benefits following upgrading would be distributed among various users as follows: cars and jeepneys 10% each, buses about 30%, and trucks 50%. The proportion of benefits accruing to road users would gradually change over the project life because light vehicle traffic is expected to grow faster than bus and truck traffic. However, the shift would be gradual, and trucks and buses would still account for 75% of the benefits towards the end of the assumed service life. (c) Construction and Improvement of Feeder Roads 4.21 The six feeder roads included in the Project will help develop rela- tively isolated regions with dense populations (Negros and Cebu), and regions with a potential for new rural settlements (Mindanao). The present condition of the roads is very poor, and deterioration is accentuated by the increase in  - 37 - traffic. Of the assessed benefits, about 65% represent savings in vehicle operating costs due to improved conditions on the newly paved or gravelled roads compared with the existing rough earth or gravel surfaces. About 15% results from reduction in road maintenance costs, and about 10% each from redaction in travel time and generation of new traffic. Average vehicle operating costs take into account road standards, terrain condition, vehicle speed, and passengers' time. Vehicle operating costs per km will be reduced by 20-45%. As the roads will closely follow existing alignments, there will be negligible benefits from distance reduction, but there will be some savings from reduced travel time due to increased vehicle speed. The new roads would also bring other nonquantifiable benefits, including quicker and Improved services and reduction of the heavy dust resulting from increasing traffic on the existing gravel surfaces. Costs and benefits are calculated over an assumed service life of 10 years for the gravel roads and 20 years for the double bituminous surfacing. On this basis, returns range from 16% to 27%, with an overall ERR of 23%. Sensitivity tests showed that returns would be reduced by about two to three percentage points when construction costs were varied by + 15% and benefits by + 15%. Under the pessimistic assumption of a 15% increase in contruction costs concurrent with a 25% decrease in benefits, the overall EIRR would be 16%. The weighted average ERR for both the national and feeder roads is 27% with time savings and 25% without time savings. 4.22 The analysis provides only a partial picture of the benefits that would be gained from the project roads. Improved roads would provide the rural inhabitants with better access to health and educational facilities as well as to off-farm employment in nearby towns during the off-season months. Timely and low-cost delivery of agricultural inputs would provide farmers with opportunities to increase both the quantity and quality of their yields. (d) Road Maintenance and Restoration Works (i) Routine Maintenance (1980-84) 4.23 The economic evaluation of the proposed maintenance program is based on the difference in costs to the economy, assuming that only minimum maintenance is undertaken without thle project, compared to the proposed program being executed with the project. This analysis is based only on routine maintenance: the costs and benefits of periodic maintenance have been included in the economic evaluation of the project's road construction component. The costs of routine maintenance include: (a) the purchase of new equipment, parts, and components; (b) construction or improvement of workshops and workshop tools and machinery; and (c) estimated incremental labor and materials required for the maintenance work under the project. These costs are compared with the more limited maintenance work that would be undertaken without the project. In addition to these costs, 15% of the total costs were assumed to be incurred annually for washout and erosion control. 4.24 The quantified benefits include vehicle operating cost savings that would be derived by highway users through the improvement of road conditions, but in order to assure conservative estimates, benefits do not include passenger time savings obtainable from reduced travel time. Other benefits which were not quantified include time savings associated with vehicle  - 38 - operating costs (wages, interest, insurance, and administration costs) which would be obtainable through the prevention of road closures, and protection of road investment which would accrue through the prevention of premature reconstruction. Procedures for Estimating Vehicle Operating Cost Savings 4.25 About 22,300 km of national roads will be included in the (1980-84) maintenance program. The distribution of the national road network according to surface type and condition has been established with the assistance of consultants on the basis of the inventoried road condition data compiled by MPH (Table 4.5). 4.26 In order to avoid double counting, the physical targets included in the road restoration program (para. 4.30) have been deducted from the total road network included in the routine maintenance program. 4.27 According to the recent MPH study, which evaluated empirically the impact of poor maintenance on pavement condition changes, various types of roads would deteriorate from good to fair, fair to bad and bad to very bad in 2 to 15 years' time if little maintenance is carried out (Table 4.6). Using the results of this study, an assessment was made of the impact of poor maintenance (without the project) on the pavement condition of the recently inventoried road network. The varying degrees of deterioration, assumed to occur without the project, were applied to the dl value system (established for various types of road surfaces, conditions, and vehicles) in order to calculate the vehicle operating cost savings that would accrue from improved maintenance with the project (Table 4.7). 4.28 Existing traffic volumes on the inventoried road network were obtained from traffic surveys conducted in 1976 and 1977 in connection with the National Transport System Study, and from various feasibility studies. Traffic growth rates for passenger cars, jeepneys and buses were estimated on the basis of expected population and real income growth and from passenger transport demand-income elasticities derived from the household surveys of 1971 and 1976. Truck growth rates are based on the past trends as adjusted for projected GDP rate of increase. 4.29 The internal rate of return related to the maintenance of national roads over the next five-year period is estimated at 68%. A 10% increase in benefits would yield an ERR of 87%, while a 10% increase in costs would reduce the ERR to 53%. The most pessimistic assumption of a 20% reduction in benefits together with a 20% increase in costs would still yield an ERR of 38%. This indicates that road maintenance, at a low cost per km, is a highly rewarding investment deserving the highest priority in the road development program. Furthermore, without a maintenance program, considerable resources would be required in a few years to rehabilitate the road network. The savings of these resources, not taken into account in calculating the benefits of the proposed program, make the maintenance program even more necessary. (ii) Road Restoration (1980-82) 4.30 The road sections included in the road restoration program (Table 3.2) have "bad" and "very bad" road surfaces which would further deteriorate until they become impassable and eventually require complete reconstruction. To  - r39 - estimate the benefits of road restoration, it was assumed that the project would improve road sections from either "bad" or "very bad" to "fair" condi- tions. It was further assumed that the impact of road restoration would last two years for gravel roads and three years for DBST/l or AC/2 roado if no maintenance is carried out. To avoid double counting benefits, rather short project lifetimes were assumed for different types of road restoration work (Table 4.8). 4.31 The major quantifiable benefits are savings in vehicle operating costs due to improved road conditions. The results of ERR calculations are shown in Table 4.9. The proposed road restoration program is well justified, with an ERR of 43% with time savings, and 25% without time savings. Even under the most pessimistic assumptions, the ERR would not fall under 20%. The weighted average ERR for the road maintenance and restoration components is 61%. (e) Weighbridges 4.32 The weighbridge element of the project was not quantified; however, it will have an important impact on preserving past and future highway investments by helping to avoid a rapid deterioration of the highway network through use of overloaded vehicles such as mineral ores and log trucks, thereby preserving past and future highway investments. D. Risks 4.33 The risks, in terms of potential economic benefits, are normally in the estimates of traffic growth rates and savings in vehicle operating costs and have been accounted for. The main risk in the proposed project concerns the quality of implementation performance of MPH in carrying out the mainte- nance and road restoration programs. The project provides for organizational changes, technical assistance, training and agreed action programs which should help to ensure that performance continues to improve. /1 Double bituminous surface treatment. /2 Asphalt concrete.  - 40 - 5. AGREEMENTS AND RECOMMENDATIONS 5.o1 During loan negotiations, it was agreed with the Government, and included as covenants in the Loan Agreement, that the Government will: (a) annually update the nationwide national road inventory which includes detailed road condition data (para. 2.05); (b) continue the collection and analysis of traffic data on national roads (para. 2.08); (c) review the sources of highway revenues with a view towards deter- mining the adequacy of road user charges levied (para. 2.18); (d) employ qualified and experienced consultants, acceptable to the Bank, to: (i) supervise road construction and improvements, (para. 3.24); and (ii) design and supervise construction of workshops (para. 3.25); (e) dispose of, by sale or other appropriate manner, all non-serviceable equipment, scrap parts and components by not later than December 31, 1979 and thereafter dispose of periodically all items of equipment as they reach the end of their economic life in accordance with an annual program satisfactory to the Bank. As an interim measure, thte Government will remove and suitably store such equipment and parts away from its active workshop areas to relieve and/or prevent congestion. This removal will be completed no later than March 31, 1979 (para. 3.37); (f) continue to implement its Five Year Road Maintenance Program, including the road restoration component, in accordance with a time-bound action program satisfactory to the Bank and continue to furnish to the Bank by October 31 of each year beginning in 1979 and continuing until the completion of the Road Maintenance Program, an annual program satisfactory to the Bank of physical targets and budget requirements for implementation of the Road Maintenance Program, including the road restoration component, for the following year (para. 3.35); (g) complete the road restoration component of its Five Year Road Maintenance Program not later than June 30, 1983 providing adequate funds for the purpose, including that portion not financed by the Bank (paras. 3.35, 3.41); (h) continue to provide the Bank with a comprehensive semi-annual progress report on its Road Maintenance Program including the Road Restoration component (para. 3.43); (i) continue to implement and expand coverage of its vehicle dimension and axle load control program and take necessary steps to strictly enforce the appropriate laws and regulations (para. 3.14);  - 41 - (j) undertake detailed budgeting exercises on a three-year rolling basis, improve budget presentation, and make specific provisions for the implementation of all project components (para. 3.31); (k) arran,e for timely acquisition of land, for right-of-way for each road section and workshop site prior to awarding contracts or consult with the Bank in advance in cases where it is desired to proceed before all right-of-way has been acquired (para. 3.44); and (1) utilize evaluation methocds, standards and procedures satisfactory to the Bank in determining the list of contractors to be pre- qualified to bid on project components (para. 3.34). 5.02 During loan negotiations, agreement was reached with the Government on: (a) an action program for the implementation of the road maintenance and restoration components of the project (paras. 2.31, 3.35); (b) road maintenance and workshop equipment, tools and machinery, parts and components for existing equipment, (paras. 3.12, 3.13), weigh- bridges (para. 3.14), and soils and materials testing equipment (para. 3.15) to be procured under the project; (c) terms of reference and scheduling for consulting services to be provided to MPH for technical assistance in improving its operations (para. 3.19); (d) terms of reference and scheduling for consulting services to be provided to MLGCD for the study of a rural road development program (para. 3.20, 3.39); (e) the cost estimates for the project (paras. 3.26-3.28) and the schedule of estimated disbursements (para. 3.45); (f) the timing and details of implementing organizational changes in MPH (para. 3.33); (g) a project implementation schedule, and arrangements for reporting progress including preparation of a completion report within six months of the Closing Date (para. 3.29; 3.43); (g) an annual program for removal and disposition of all nonserviceable equipment and spare parts from depots and workshops (para. 3.37); (h) the location of the weighbridges to be procured under the project, and an implementation schedule for the vehicle dimension and axle load control program throughout the country (para. 3.14); and (i) detailed arrangements for implementation of the overseas technical training program, including technical disciplines selected and regulations governing the program (para. 3.16).  - 42 - On the basis of agreement on the foregoing matters, the project is suitable for a Bank loan of US$100 million equivalent (representing about 49% of the total cost) for a period of 20 years, including a five-year grace period. The Borrower would be the Republic of the Philippines.  -43- ANNEX 1 Page 1 PHILIPPINES FOURTH HIGHWAY PROJECT Project Related Documents and Data Available in the Project File A. General Reports and Studies on the Transport Sector A-1 Ten-Year Infrastructure Development Programs, 1977-86, two volumes I. Physical Targets II. Capital Investment Requirements, March 1976, by PPDO of MPWTC. A-2 Physical Perspective Plan for the Philippines, 1976, by PPDO of MPWTC. B. General Reports and Studies Relating to the Project I. Studies B-1 Road Feasibility Studies II, two text volumes and six appendix volumes, June 1975, by Norconsult AS and Hoff & Overgaard (Norway/Denmark). B-2 Five-Year Maintenance Program, 1976-80, text volume and two appendix volumes, April 1975, by Kampsax/Berger (Denmark/USA). B-3 Highway Maintenance Manual, May 1975 by Kampsax/Berger (Denmark/USA). B-4 Organization and Management Study, September 1978 by Roy Jorgensen Associates, Inc. (USA). II. Detailed Engineering Reports B-5 IBRD Highway Projects Guidelines, June 1976, by Scott Wilson, Kirkpatrick & Partners (SWKP), General Consultants (UK). B-6 General Specifications for Roads and Bridges in the Philippines, 1976, by SWKP. B-7 General Conditions of Contract, 1976 by SWKP. B-8 Tender Documents, June 19715, by SWKP. B-9 Design Drawings, Tender Documents, and Engineers Estimates for 5 base and 23 area workshops being constructed or improved under the Third Highway Project. B-10 Design Drawings, Tender Documents, Price Analyses and Engineers Estimates for the Project Road Construction Contracts. Sept./Oct. 1977 by F.F. Crluz/Sauti (Philippines/Italy), Certeza/ Kampsax (Philippines/Denmark), EDCOP/Berger (Philippines/USA), Trans-Asia (Philippines) and MPH Regions V, VI and XI.  -44- ANNEX 1 Page 2 III. Government Reports B-11 Updated General Data Required for Appraisal (Philippines Highway Projects), July 1977, by MPH. B-12 Economic Re-evaluation of Road Component for Fourth Highway Project, September 1977, January 1978 and January 1979 by PPDO of MPH. C. Selected Working Papers C-1 Draft Terms of Reference for Consultancy Services (a) Construction supervision of project roads. (b) Design and construction supervision of workshops. (c) Technical Assistance advisory services to MPH. (d) Technical Asssitance advisory services to MLGCD. (e) Technical Assistance advisory services to MPWTC. C-2 Estimated Cost and Benefit Streams for the Project Roads C-3 Estimated Cost and Benefit Streams for the Five Year Maintenance Program C-4 Detailed List of Required Soils and Materials Testing Equipment C-5 Five Year Road Maintenance Program (a) List of road maintenance equipment being procured under Third Highway Project (Loan 1353-PH); (b) List of workshops being constructed or improved under the Third Highway Project; (c) List of spare parts, workshop tools and machinery, hand tools, and parts and components for existing equipment being procured under the Third Highway Project; C-6 Road Restoration Program (a) List of road restoration projects completed in 1977/78 under Third Highway Project; (b) List of road restoration projects being undertaken in 1979 under the Third Highway Project. January 1979  _. 45 _ ANNEX 2 Page 1 PHILIPPINES FOURTH HIGHWAY PROJECT Procedures for the Implementation of the Road Maintenance and Restoration Components 1. The tasks to be performed by the Bureau of Maintenance (BOM) at MPH Headquarters are as follows: (a) assign a high priority to normal maintenance works in its budgetary allocations; (b) issue annual guidelines on maintenance procedures, techniques, and targets in accordance with Kampsax/Berger recommendations as modified in consultation with the Bank; (c) establish selection criteria and a priority rating system to determine road restoration works by the Regions; (d) review and approve regional maintenance and road restoration programs; (e) expedite the release of funds and equipment to Regional Offices; (f) help strengthen manageria.l capabilities by providing staff, funds, and training; (g) strengthen and expand the inspectorate within MPH, by inviting representatives of the Budget Commission, NEDA, regions and districts to monitor implementation of the region' s maintenance and restoration programs and to evaluate MPH performance based on road inventory information; and (h) provide performance incentives through the advancement of main- tenance staff, and increase of funds for road construction in areas where maintenance and restoration work has been performed satisfactorily. 2. At the local level, the Regional Offices should: (a) obtain staff in sufficient: number and caliber; (b) annually update road inventories and traffic counts and use them as a guide to performance; (c) prepare annual maintenance programs, including required equipment, material, personnel and budgets. A three-year maintenance program to be executed during the project implementation period as agreed with the Bank during negotiations should be adequately funded and properly implemented.  - 46 - ANNEX 2 Page 2 (d) prepare detailed annual programs giving physical targets and budget requirements for road restoration works to be implemented in 1980-82. Such programs should be submitted by October 31 of the previous year for the Bank's review after approval by MPH headquarters, and should include a list of road sections to be restored with details of location, length, traffic data, standards and cost estimates. The first report should be submitted by October 31, 1979; (e) organize, execute and supervise the maintenance and road restoration works; and (f) limit the responsibility of district offices to maintenance.  FHIL1PPlNES FOURTH HilGHdWAY PROJECT Public Transport Investment Programs and Sources of Funds la FY68-82 (P million) Actual cash releases Planned /f PY7 -7 8 Y5Y68-78 FY79-82 Proga Progrsm Program Trunsoort Mode FY68 FY69 FY70 FY71 PY72 FY73 FY74 FY75 FM76/n FY77/f FY78 Total S Tonal z FY79 FY80 FY81 FY02 Total X Highways 235.9 183.8 414.4 231.2 354.1 530.7 609.4 1,339.5 2,879.7 1,618.5 1,946.0 1,723.7 72.2 10,343.2 73.7 2,000.0 2,050.0 2,100.0 2,250.0 8,400.0 58.4 Local /b 193.1 180.6 346.8 215.7 303.9 473.1 546.2 1,120.5 2,470.6 1,545.0 1,281.1 1,312.9 1,392.4 1,621.6 1,777.4 Foreign /c /d 42.8 3.2 67.6 15.5 50.2 57.6 63.2 219.0 409.1 73.5 664.9 687.1 657.6 478.4 472.6 Airport 4 Navigation 11.4 33.3 48.5 33.4 72.7 56.5 87.0 57.1 307.6 211.8 473.0 1,049.5 9.7 1,392.3 9.9 468.0 491.0 500.0 500.0 1,959.0 13.6 Locul 10.2 32.1 33.3 16.6 32.1 56.5 21.1 24.4 178.2 136.8 368.0 361.5 328.2 349.6 266.8 Foreign 1.2 1.2 15.2 16.8 40.6 - 65.9 32.7 129.4 75.0 105.0 106.5 162.8 150.4 233.2 Port Works 34.6 22.3 18.7 35.7 15.9 42.7 88.3 149.7 245.0 243.8 399.0 1,037.5 9.6 1,295.7 9.2 505.0 600.0 750.0 900.0 2,755.0 19.2 t Local 27.0 22.3 18.7 35.7 13.9 41.4 72.2 109.0 181.2 202.2 305.5 398.5 437.2 599.6 666.8 Foreign 7.6 - - - 2.0 1.3 16.1 40.7 63.8 41.6 93.5 106.5 162.8 150.4 233.2 FOall=svn - - 6.9 _ 6.9 1.1 27.6 46.9 272.4 249.0 242.0 911.9 1,006.4 7.2 290.0 300.0 320.0 350.0 1,260.0 8.8 Local - - 6.9 - - 13.1 27.6 36.7 162.2 164.9 158.9 10,782.6 8.5 254.0 244.0 269.2 275.8 torelgn - - - - - - - 10.2 110.2 84.1 [23.1 84.1 123.1 36.0 56.0 50.8 74.2 Total 281.9 239.4 488.5 300.3 1,310.1 455.8 657.5 831.6 3,704.7 2,323.1 3,100.0 14,037.6 100.0 3,263.0 3.441.0 3,670.0 4,000.0 14,374.0 100.0 Local 230.3 235.0 405.7 268.0 1,139.0 363.0 598.6 676.0 2,992.2 2,048.9 2,113.5 2,326.9 2,401.8 2,840.0 2,986.8 Foreign 51.6 4.4 82.8 32.3 171.1 92.8 58.9 155.4 712.5 274.2 986.5 936.1 1,039.2 830.0 1,013.2 Ia tn 1978 pesos, cash releases represent replenishment of the -ommne fund acco-nt or issued treusury wurrants either as dir-ct paymeot to the creditnr nr deposit to the account of a disbursing officer of the implementing agency. Dishbrsement of cash expendioure represents actual payment to the creditor and is made from either or both the common account and treasury warrants. lash releases .ay be curried nose fra. one fiscol year to the en.t before disbursemeot is made and hence is not esactly the same as actunl onFendtiure during the fiscal year. However, because o. some balancing effect of disburnement made against cash releases during previous ype.s and because year-end balances of undisbursed funds do not vary much in siee, cash releases are approximstely equal to sctual expenditure. /b Repre-ents empenditures from 1-ca1 resources in pesos and foreign exchange reserves, includes commodity assi stano /c Represents expenditures from foreign bnrrowings, project loans, reparationa and graots. /d Converted at same exchange rates as are used by Infrastrncture Operations Center; FY1967-70: P4.0 = US0; FY1971: P6.0 = USSI; FY1972-73: P 6.7 = USSI: FY1973-74: P6.8 = US$1; FY1975-76: f 7.64 = US01. From FY1977 to FY1982: f7.5 = US01. /e 1976 figuren cover the period from July 1, 1975 to December 31, 1976. l 7f From 1977 to 1982 fiscal yesrs covee the perind fron January to December each year. The 1978 figures are provisional. Source: Notional Eco.noic and Development Authority (N8DA) ano PlannIng and Project Development Office (MPWTC); Infrastruc- tre Operation Center, "Implementation of the Infrantructure Program," "Teo-Y.er Infrastructure Prograo - 1976-1985," and NEDA's 1978 Iof..stroctore Program. January 1979  PHILIPPINES FOURTH HIGHWAY PROJECT Domestic Freight and Passenger Traffic Data 1970-85 1970 1976 1970-76 1980 1976-80 1985 1980-85 Ton-Km Ton-Km Average annual Ton-Km Average annual Ton-Km Average annual (million) ( (million) ( increase CX) (million) ( increase (Z) (milllon) (X) increase (%) Frelght Road 3,520 57 4,438 43.6 3.9 7,170 44.0 8.3 11,200 46.5 9.4 Inter-Island 2,510 41 5,433 53.4 13.7 8,740 53.7 8.2 11,900 49.4 6.3 1 Shlipping Railway 150 2 286 2.8 11.3 360 2.2 3.9 970 4.0 22.0 X Aviation 10 - , 13 0.2 4.5 23 0.1 10.0 39 0.1 11.1 Total 6,190 100 10170 100.0 8.4 16,293 100.0 8.2 24,109 100.0 8.2 Pass-Km Pasa-Km Average annual Pass-Km Average annual Pass-Km Average annual Passenger (million) (%) (million) (Z) increase (X) (million) (x) increaee (%) (million) ( I) lncrease (Z) Road 15,650 82 20,562 79.4 4.7 31,440 78.2 7.3 46,000 77.7 7.9 Inter-Island 1,570 8 2,462 9.5 7.8 3,740 9.3 7.2 5,080 8.6 6.3 Shipping Railway 1,210 6 1,261 4.9 0.7 1,710 4.3 5.2 3,050 5.1 12.3 Aviation 780 4 1,610 6.2 12.8 3,290 8.2 12.7 5,085 8.6 9.1 Total 19,210 100 25 895 100.0 6.5 40,180 100.0 7.6 5 100.0 8.1 Source: 1970 and 1976 - Government and Consultants Estimates. 1980 and 1985 - National Economic Development Authority. October 1978  - 49 - Table 2.1 PHILLIPPINES FOURTH HIGHWAY PROJECT Public Highway Network 1978 (km) Total Paved Category and type length Concrete Bituminous % Gravel % Earth % National Roads Expressway 121 121 - 100 - - - - Other 22,184 3,880 5,138 40 12,584 57 582 3 Subtotal 22,305 4,001 5,138 41 12,584 56 582 3 Secondary Roads Provincial 28,224 425 3,347 13 18,285 65 6,167 22 City 3,004 306 1,526 61 968 32 204 7 Municipal 9,526 1,210 1,275 26 4,998 52 2,043 22 Subtotal 40,753 1,940 6,148 20 24,251 60 8,414 20 Barangay Roads/a Municipal 51,362 474 363 2 24,149 47 26,376 51 City 5,157 60 423 9 3,300 64 1,374 27 Subtotal 56,489 534 786 2 27,449 49 27,720 49 Total 119,578 6,475 12,071 15 64,284 54 36,716 31 Road Density in 1978 Road km/sq km 0.4 Road km/1,000 inhabitants 2.7 /a Some of these roads are little more than trails. Source: Ministry of Public Highways. November 1978  - 50 - Table 2.2 PHILIPPINES FOURTH HIGHWAY PROJECT PUBLIC HIGHWAY NETWORK 1975-1978 (kmn) National Provincial City Municipal Barangay Roads Year Roads Roads Roads Roads City Municipal Total 1978/a 22,305 28,224 3,004 9,526 5,157 51,362 119,578 1977 21,852 29,189 2,826 9,128 5,075 47,811 115,881 1976 21,255 28,872 2,775 11,018 23,432 28,410 115,762 1975 21,260 28,431 2,462 8,257 4,506 27,580 92,496 1969 18,095 23,775 5,408 16,315 - - 63,593 /a Based on 1978 Road Inventory. Source: Ministry of Public Highways November 1978  Table 2.3 -51 - PHILIPP:INES FOURTH HIGHWAY PROJECT MOTOR VEHICLE STAT]:STICS, FY66-77/a Year Cars /b Jeepneys /c Buses Trucks EMV /d Total Registrations 1966 165,744 31,969 14,218 98,701 13,433 324,065 1967 209,199 35,339 12,028 105,483 21,608 383,657 1968 235,676 40,418 14,402 114,195 26,727 431,413 1969 261,968 48,874 14,215 123,994 28,072 477,123 1970 268,260 43,262 13,506 152,664 30,530 488,322 1971 276,547 43,739 13,018 140,850 32,184 506,338 1972 301,992 44,940 15,870 152,413 42,593 557,808 1973 318,022 57,729 17,532 175,582 50,328 614,292 1974 371,334 59,268 19,199 204,791 54,569 709,581 1975 388,890 56,901 18,325 207,758 58,917 7:30,791 1976 391,800 59,183 18,721 223,143 59,274 752,121 1977 433,837 69,008 19,485 246,060 66,974 835,364 Average Annual Change (%) 1966-76 9.4 6.5 3.1 10.2 17.5 9.7 1966-70 12.6 7.8 - 11.5 22.8 10.8 1970-72 6.1 2.0 8.4 - 18.1 6.9 1972-74 10.9 14.8 10.0 15.9 13.1 12.8 1974-76 2.7 - - 19.6 4.3 3.0 1976-77 10.7 16.6 4.1 10.2 12.9 11.1 Changing Composition (%) 1966 51 10 4 31 4 100 1976 51 8 2 31 8 100 1977 52 8 2 30 8 100 Motor Vehicles Assembled in the Philippines, 1971-76 Year Passenger cars Commercial vehicles Total 1971 9,447 11,219 20,666 1972 11,994 9,522 21,516 1973 16,737 15,534 32,271 1974 21,844 22,303 44,147 1975 27,497 23,768 51,625 1976 29,434 26,154 55,588 1977 30,126 29,326 59,452 /a Excludes trailers with no power units. /b Includes Jeeps (noncommercial). /c Jeepneys and Jeeps converted for passenger transport. /d EMV - Equivalent (4 wheels) Motor Vehic:Le for Motorcycles (3 motorcycles = 1 EMV) Source: Land Transport Commission. November 1978  - 52 - Table 2.4 PHILIPPINES FOURTH HIGHWAY PROJECT MOTOR VEHICLE FUEL CONSUMPTION, FY66-77 Year Gasoline Diesel fuel ------- (Million liters) ------- 1966 1,450 1967 1,771 1,402 1968 1,877 1,578 1969 2,205 1,629 1970 2,280 1,919 1971 2,481 1,721 1972 2,710 1,902 1973 2,839 2,320 1974 2,570 2,181 1975 2,294 1,994 1976 2,335 2,201 1977 2,313 2,330 Average Annual Change (%) 1966-73 10.1 9.8/a 1973-75 -11.0 -7.8' 1975-76 1.8 9.4 1976-77 - 1.0 5.8 /a FY67-73. Source: Ministry of Public Highways; Oil Industry Commission. November 1978  PHILIPPINES FOURTH HIGHWAY PROJECT EXPENDITURES BY HIGHWAY WORKS AND SOURCE OF FUNDS, FY66-77 (P million) Item 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976/f 1977 Administration /a Highway special funds 24.0 19.1 24.5 29.6 30.9 26.0 26.6 12.5 101.0 119.2 - - Other funds 5.7 ).2 7.8 11.4 24.1 26.5 43.6 93.1 78.4 165.2 104.0 i5u.4 General funds - - - - - - - - - - 130.5 88.5 Subtotal 29.7 25.3 32.3 41.0 55.0 52.5 70.2 105.6 179.4 284.4 234.5 238.9 Maintenance /b Highway special funds 83.7 72.4 126.0 125.5 103.5 121.3 155.6 130.8 209.1 430.2 - - Other funds 0.5 0.6 1.0 0.2 0.5 0.3 - 85.3 50.7 50.0 - - General funds - - - - - - - - 10.1 53.3 795.9 874.9 L Subtotal 84.2 73.0 127.0 125.7 104.0 121.6 155.6 216.1 269.9 533.5 795-9 R74b9 Construction /c Highway special funds /d 32.7 103.7 104.3 88.7 148.2 89.8 116.2 114.9 66.3 94.5 - - General funds 25.9 7.4 22.7 18.8 149.5 112.8 178.7 321.8 463.5 1,018.5 2,470.6 1,545.0 Bond funds 7.7 60.8 64.6 70.2 45.8 3.0 1.1 1.2 - - - - Other funds 0.7 1.4 1.5 2.9 3.3 10.1 7.9 35.2 16.4 7.5 - - Foreign sources /e - - 42.8 3.2 67.6 15.5 50.2 57.6 63.2 219.0 409.1 73.5 Subtotal 67.0 173.3 235.9 183.8 414.4 231.2 354.1 530.7 609.4 1,339.5 2,879.7 1,618.5 Total 180.9 271.6 395.2 350.5 573.4 405.3 579.9 852.4 1,058.7 2,157.4 3,910.1 2,732.3 /a Includes loan amortization for FY66-77. lb Includes routine & special maintenance and emergency repairs. /c Includes construction of buildings. Id Expenditures are for road improvement works only. /e Exchange rates used: FY74: US$1.00 = P6.80; FY75: US$1.00 = P7.00; FY76: US$1.00 = P7.64; FY77: US$1.00 = P7.50. If Expenditures from July 1, 1975 - December 31, 1976. Source: Ministry of Public Highways. x November 1978 s-nl  PHILIPPINES FOURTH HIGHWAY PROJECT REVENUES FROM HIGHWAY USERS, FY66-77 (Pesos million) Item 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 Fuel oil taxes /a 123.5 145.1 152.8 181.3 189.0 198.5 207.6 185.8 466.7 804.9 1,171.6 1,512.1 Motor vehicle fees /b 63.5 68.5 81.6 84.9 96.7 101.8 109.9 98.9 145.4 155.7 458.1 577.6 Motor vehicle registration 56.2 55.2 72.2 74.4 85.2 88.5 } 308.4 211.8 Licenses and plates 3.7 4.3 4.4 4.5 4.8 5.8 } No breakdown available 21.9 14.0 Miscellaneous 3.6 9.0 5.0 6.0 6.7 7.5 ] 58.0 62.9 Special revenues 69.8 288.9/e Total 187.0 213.6 234.4 266.2 285.7 300.3 317.5 284.7/c 612.1 960.6 1,629.7 2,089.7 Annual increase (%) 9.6 14.2 9.7 13.6 7.2 5.1 5.7 10.3 114.9 56.9 69.6 28.2 4n Earmarked for Highway Special Fund /d 169.2 193.5 213.1 241.0 258.5 271.1 287.3 258.4 585.6 931.8 - - /a Fuel oil taxes include taxes on gasoline, diesel fuel and lubricants. /b Motor vehicle fees include registration fees, drivers' and conductors' licenses, fees on plates and miscel- laneous, (e.g., fines, penalties, surcharges). Details of breakdown data not available for FY72-75. /c Books had been closed earlier and the remaining accruals were transferred to next fiscal year as reported by Board of Internal Revenue. /d Abolished in 1975, revenues now are placed in the general fund. /e Emergency Ad Valorem Tax, Legal Research Fund and Special Revenue Tax. Source: Ministry of Public Highways. November 1978  PHILIPPINES FOURTH HIGHWAY PROJECT EXPENDITURES ON HIGHWAYS BY ROAD SYSTEM, FY66-77/a (P million) System 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 National highways 112.2 196.2 288.4 241.6 441.5 291.0 432.0 691.9 910.8 1,868.1 3,516.8 2,324.4 Provincial/City roads 34.5 43.7 62.4 61.8 76.8 67.5 91.3 51.1 53.4 145.0 208.8 179.7 1 Municipal roads 16.8 20.1 29.4 29.3 34-6 31.7 42.6 28.7 16.2 66.0 184.5 228.2 Loan amortization 17.4 11.6 15.0 17.8 20.5 15.1 14.0 80.7 78.3 78.3 - - Total 180.9 271.6 395.2 350.5 573.4 405.3 579.9 852.4 1,058.7 2,157.4 3,910.1 2,732.3 /a Expenditures of National Government only. Source: Ministry of Public Highways. November 1978 ct  PHILIPPINES FOURTH HIGHWAY PROJECT HIGHWAY DESIGN STANDARDS Flat Rolling (Hilly) Mountainous Terrain: Minor Express- Minor Express- Minor Express- Class of road:/a roads /b 2 3 4 5 way roads /b 2 3 4 5 way roads /b 2 3 4 5 way Parameter Design speed (km/h) 60 60 80 80 100 120 40-50 50 60 70 90 100 30 40 50 60 70 100 Pavement width (m) 6.0 6.1 6.7 7.0 2x7.3 2x7.3 6.0 6.1 6.7 7.0 2x7.3 2x7.3 5.5 5.5 6.0 6.7 2x7.0 2x7.0 Median width (m) - - - - 4.0 12.0 - - - - 4.0 12.0 - - - - 2.0 4.0 L Shoulder width (m) 1.5 1.5 2.0 2.5 3.0 3.0 1.0-1.5 1.5 2.0 2.0 3.0 3.0 1.0 1.0 1.5 1.5 3.0 3.0 Right-of-Way (m) 30 30 60 60 60 60 30 30 60 60 60 60 30 40 40 50 60 60 Stopping sight distance (m) 70 70 110 110 180 260 60 60 70 90 150 230 50 50 60 70 90 190 Passing sight distance (m) 350 350 450 450 600/c 800/c 275-300 300 400 400 525/c 700/c 275 275 300 350 450/c 600/c Maximum superelevation (%) 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 Minimum horizontal radius (m) 125 125 240 240 400 750 50-90 90 200 200 350 550 25 50 80 125 180 400 Structural Design: "Standard Specifications for Highway Bridges" adopted by the American Association of State Highway and Transport Officials (AASHTO). Loading: HS 20-44 & HS 15-44 Pavement Design: Based on an equivalent standard 8-ton single axle load. /a Class I (not shown) is intended to cover rehabilitation of an existing road of any class, such as improvement of pavement, reshaping of shoulders, repairs to drainage, etc. H /b Standards of minor roads may be relaxed where terrain and other physical conditions necessitate lower standards. /c Only to be applied if constructed as an undivided highway in the initial stage. X Source: Ministry of Public Highways November 1978  PHILIPPINES FOURTH HIGHWAY PROJECT Expenditures on Highway Maintenance by Road System, FY72-82 (P million) Actual Planned /a 1972 1973 1974 1975 1976/c 1977 1978 1979 1980 1981 1982 I. Routine Maintenance lb National roads 94.7 72.1 150.5 263.6 354.1 356.2/d 404.5/d 425.0 447.0 472.0 497.7 Provincial roads 39.5 34.8 42.4 100.6 182.5 143.4 201.3 211.4 222.0 233.1 255.0 Municipal & City roads 21.4 23.9 16.2 66.0 25.5 35.7 37.5 39.4 41.4 44.3 Barangay roads - - - } 158.8 114.4 152.4 160.0 168.0 176.4 186.0 Subtotal 155.6 130.8 209.1 430.2 695.4 639.5 793.9 863.9 876.4 922.9 983.0 II. Periodic Maintenance National roads /e - - 7.0 37.3 74.7 40.0 109.7 150.0 200.0 260.0 332.0 Provincial roads - - I Municipal & City roads - - } 3.1 16.0 25.8 29.4 27.7 29.1 30.5 32.0 35.0 Barangay roads - - I Subtotal - - 10.1 53.3 100.5 69.4 137.4 179.1 230.5 292.0 367.0 Subtotal (I and II) 155.6 130.8 219.2 483.5 795.9 708.9 931.3 1,043.0 1,106.9 1,214.9 1,350.0 III. Emergency Repairs Calamity fund - 85.3 50.7 50.0 - 166.0 153.0 161.8 170.6 179.4 195.0 Total /f 155.6 216.1 269.9 533.5 795.9 874.9 1,084.3 1,204.8 1,277.5 1,394.3 1,545.0 /a 1979-82 estimates assume that routine maintenance requirements will increase at a growLh rate of 4% to 5% p.a., the same as the network. /b Financed from the Highway Special Fund until 1975 when the Fund was abolished. /c Includes expenditures from July 1, 1975 to December 31, 1976 due to a change in the Fiscal Year. /d Amount budgeted. Actually only P 339.9 million was released in 1977 and P 389.9 million in 1978. /e From 1977 to 1982, represents the road restoration program being undertaken (Table 3.2). /f Costs shown are actual for 1972 to 1978 and are estimated at 1979 prices for 1979 to 1982. Source: Ministry of Public Highways. January 1979  PHILIPPINES FOURTH HIGHWAY PROJECT ROAD MAINTENANCE PROGRAM: PHYSICAL TARGETS AND ESTIMATED COSTS FOR THE NATIONAL ROAD NETWORK, 1977-82 Normal Road Maintenance Total Basic cost Year Unpaved roads /a Bituminous roads Concrete roads Length Estimated costs /b Total EMK /d per EMK -- ((km) ------------------ - -- ---- (km) (P million) (km) (Pesos) 1977 13,020 4,950 4,183 22,153 339.9/c 32,252 11,033 1978 13,221 4,968 4,642 22,831 389.9/c 35,668 11,342 1979 13,016 5,491 5,236 23,743 425.n 36,630 11,600 1980 12,169 6,010 5,981 24,160 447.0 37,410 11,950 1981 11,570 6,450 6,680 24,700 472.0 38,190 12,360 1982 10,963 6,910 7,480 25,353 497.7 39,126 12,720 /a Gravel surface. /b Costs are actual for 1977-78 and are estimated at 1979 prices for 1979-82. /c Actual amount released. P 356.2 million had been budgeted for 1977 but only P 339.9 million was actually released. For 1978, P 404.5 million had been budgeted but only P389.9 million was actually released. Shortfall was therefore only 4 to 5% for these years, not a very significant amount. /d Equivalent maintenance kilometer. Source: Ministry of Public Highways. January 1979  PHILIPPINES FOURTH HIGHWAY PROJECT Road Maintenance Program: Physical Targets and Estimated Costs for the National Road Network, 1977-82 Road Restoration Program Drainage and shoulder Unpaved roads /a Unpaved roads /a Bituminous roads rehabilitation only (By force account) (By contract) (By contract) (By force account) Total Year Length Cost /b Length Source of financing Cost Length Source of financing Cost Length Cost /b Length Cost /c By Bank Entirely By Bank Entirely & Govt. by Govt. & Govt. by Govt. (km) (P million) (km) -- (P million) --- (P million) (km) -- (P million) --- (P million) (km) (P million) (km) (P million) 1977/78 639 35.7 329 41.7 - 41.7/d 293 49.6 - 49.6/d 1,967 22.7 3,228 149.7 1979 167 15.0 662 45.0 45.0 9o.07Wd 170 30.0 5.0 35.0/d 595 10.0 1,594 150.0 1980 222 20.0 884 45.0 75.0 120.0o7 223 30.0 16.0 46.07Te 849 14.0 2,178 200.0 1981 289 26.0 1,156 45.0 112.0 157.0/ 291 30.0 30.0 60.0/e 1,020 17.0 2,756 260.0 1982 367 35.0 1,455 45.0 153.0 198.0/e 377 30.0 47.0 77.0/e 1,318 22.0 3,517 332.0 Totals 1,684 131.7 4,486 221.7 /f 385.0 606.7 1,354 169.6 /f 98.0 267.6 5,749 85.7 13,273 1,091.7 Summary Length Estimated cost Estimated cost Portion of program partly financed by Bank (km) Local Foreign exchange Total Local Foreign exchange Total cost cost cost cost (P million) ------ (US$ million) Under Third Highway Project (1977/78 to 1979) 1,100 107.1 59.2 166.3 14.5 8.0 22.5 Under Fourth Highway Project (1980 to 1982) 1,430 155.4 66.6 222.0 21.0 9.0 30.0 Total 2,530 262.5 125.8 388.3 35.5 17.0 52.5 /a Gravel surface. /b To be financed by the Government using its own resources. /c Costs shown are actual for 1977/78 and are estimated at 1979 prices for 1979 to 1982. /d Partly financed by the Bank under the Third Highway Project. /e To be partly financed by the Bank under this project. If Total cost of portion of program for which the Bank is providing financial assistance. Source: Ministry of Public Highways. January 1979  - 60 - Table 3.3 PHILIPPINES FOURTH HIGHWAY PROJECT Road Maintenance Program: Workshop Construction and Improvement Location Total cost /a Region Shop Island City Status P (million) US$ (million) Headquarters-Central Equipment Depot, Manila New 8.25 1.11 IVB Area 20 Mindoro Calapan New 6.46 0.87 Area 21 M4indoro Mamburao New 6.46 0.87 Area 22 Palawan Puerto Princesa New 6.88 0.93 V Area 23 Luzon Virac New 6.74 0.91 Area 24 vuzon Masbate New 6.33 0.85 VI Base Panay Iloilo New 17.60 2.38 Area 29 Panay San Jose New 6.19 0.84 Area 30 Panay Roxas City New 6.19 0.84 Area 31 Panay Pototan New 6.46 0.87 Area 32 Negros Bacolod New 6.19 0.84 VII Base Cebu Cebu City Existing 8.94 1.20 Area 33 Cebu Lahug New 5.78 0.78 Area 34 Cebu Talisay New 5.78 0.78 Area 35 Bohol Tagbilaran New 6.33 0.85 Area 36 Negros Dumaguete New 6.19 0.84 VIII Base Leyte Tacloban Existing 10.45 1.41 Area 37 Samar Catarman New 6.05 0.82 Area 38 Samar Catbalogan New 6.05 0.82 Area 39 Samar Borongan New 6.33 0.85 Area 40 Leyte Maasin New 6.33 0.85 Area 41 Leyte Ormoc New 6.33 0.85 IX Base Mindanao Zamboanga New 17.88 2.41 Area 42 Mindanao Zamboanga New 6.74 0.91 Area 43 Mindanao Dipolog New 7.15 0.97 Area 44 Mindanao Pagadian New 7.29 0.98 Area 45 Sulu Jolo New 8.25 1.11 X Base Mindanao Cagayan de Oro Existing 10.45 1.41 Area 46 Mindanao Oroquieta New 6.05 0.82 Area 47 Mindanao Malaybalay New 6.05 0.82 Area 48 Mindanao Butuan New 6.05 0.82 Area 49 Miridanao Surigao New 6.60 0.89 XI Base Mindanao Davao Existing 9.49 1.28 Area 50 Mindanao Mati New 6.88 0.93 Area 51 Mindanao Tagum New 6.33 0.85 Area 52 Mindanao Digos New 6.88 0.93 Area 53 Mindanao Koronadal New 6.88 0.93 XII Base Mindanao Cotabato New 18.70 2.53 Area 54 Mindanao Iligan New 6.88 0.93 Area 55 Mindanao Cotabato City New 6.33 0.85 Estimated Total Cost 309.19 41.73 /a Includes the Cost of land acquisition and installation of machinery and equipment. Cost of procurement of machinery and equipment is not included (see Table 3.4). Total cost of land acquisition is estimated as P 17.5 million. Source: Ministry of Public Highways. January 1979  PHILIPPINES FOURTH HIGHWAY PROJECT Road Maintenance Program: Procurement of Road Maintenance Equipment. Including Spare Parts Quantity for Quantity for Description Total Unit cost procurement Total cost /a procurement Unit cost Total cost Quantity for Total cost quantity (CIF, Manila) under Fourth (CIF,Manila) with local (CIF,Manila) (CIF,Manila) procurement (CIF,Manila) required (US$) Highway (US$) funds p p after 1981/b (US$) Project (1979-81) 1. Air compressor, 250 CFM 20 12,000 0 20 90,000 1,800,000 0 2. Air compressor, 125 CFM 40 6,500 0 40 50,000 2,000,000 0 3. Asphalt distributor, 6,000 liters 20 92,000 15 1,380,000 0 5 460,000 4. Asphalt kettle, 800 liters 30 4,500 0 30 35,000 1,050,000 0 5. Front end loader 20 34,500 20 690,000 0 0 6. Road grader, 120 HP 100 52,325 100 5,232,500 0 0 7. Water pump, 3" x 3" 100 600 0 100 5,000 500,000 0 8. Paint spray outfit 30 1,500 0 30 12,000 360,000 0 9. Sand blasting machine 30 1,500 0 30 12,000 360,000 0 10. Water tank, trailer, 2,500 liters 100 3,000 0 100 24,000 2,400,000 0 11. Road roller, tandem, 8-10 tons 10 36,800 10 368,000 0 0 12. Pneumatic roller, 6-8 tons 130 34,500 50 1,725,000 0 80 2,760,000 13. Vibratory plate compactor 50 800 0 50 6,000 300,000 0 14. Pavement breaker and maintenance tools 150 1,500 0 150 12,000 1,800,000 0 15. Chip spreader 15 5,000 0 15 37,000 555,000 0 1 16. Lane marker 50 4,000 0 50 30,000 1,500,000 0 ol 17. Vibratory roller, hand guided 60 3,450 60 207,000 0 0 18. Pick-up truck 270 11,200 0 270 84,000 22,680,000 0 19. Stake truck 40 25,760 40 1,030,400 0 0 20. D--p truck (6.5 cu. yd.) 300 39,790 100 3,979,000 0 200 7,958,000 21. Fuel truck, 6,000 liters 70 37,375 50 1,868,750 0 20 747,500 22. Water truck, 6,000 liters 80 37,950 50 1,897,500 0 30 1,138,500 23. Rotary broom 10 55,000 0 0 10 550,000 24. Crane, truck mounted 5 140,000 0 0 5 700,000 25. Bulldozer, 140 HP 15 229,000 0 0 15 3,435,000 26. Asphalt plant 5 290,000 0 0 5 1,450,000 27. Washing & screening plant 15 162,800 0 0 15 2,442,000 Subtotal 18.378,150 35.305.000 21,641,000 Plus 20% spare parts for new equipment 3,723,350 7,061,000 4,328,000 Total 22.101,500 42.366,000 25,969,000 (US$5.7 million) Estimated total cost for procurement of new maintenance equipment to be financed under Fourth Highway Project: US$22, 101,500 Hand tools: 287,500 Workshop tools, machinery and equipment (6 base and 23 area shops) /c: 4,887,500 Parts and components for existing maintenance equipment fleet: 4,530,000 Total /d US$31,806,500 /a Does not include costs of transport and delivery of equipment within the Philippines. /b Not included in this project. /k Procurement of workshop tools, machinery and equipment f or 2 additional base and 9 other area shops is to be Japanese-financed. Installation of this machinery and equipment is included in the project (see Table 3.3). /d All costs are estimated at 1979 prices. Source: Ministry of Public Highways. January 1979  - 62 - Table 3.5 PHILIPPINES FOL'RTH HIGHWAY PROJECT Project Composition and Cost Estimates Land Pesos (million) US$ (million) 2 Construo- acqoi- Local Forsign Total Loosi Poreig. Total Pocrisn tion cost nition Width (ml Item Description Length cast exchangs cost cost etchamoS cost emchangs per km cost And type of surface (km) (US0 ?I) (P I) A. CONSTRUCTION & IMPROVDliNT OP ROADS Notioo.l Roads 1. Tabaco-Tiwi (Lteon) 15.1 5.35 5.33 10.68 0.72 0.72 1.44 50 0.095 0.04 6.1 AC 2. Tabaco-Ligeo (Loeon) 26.5 7.32 7.33 14.65 0.99 0.99 1.98 50 0.075 0.06 6.1 AC 3. Jaro-Celin.g (Pansy) 54.7 26.53 32.41 58.94 3.58 4.38 7.96 55 0.146 1.50 7.0 CC - 6.1 AC/6.1 DBST 4. Sigma-Ronas City (Panay) 27.3 10.06 12.28 22.34 1.36 1.66 3.02 55 0.111 0.01 6.1 AC 5. Silay-fPbtica (Negroe) 62.7 33.33 40.63 73.96 4.50 5.49 9.99 55 0.159 0.35 7.0 CC - 6.1 AC 6. Fabrioa-isralaooe (Nenros) 16.0 7.85 9.62 17.47 1.06 1.30 2.36 55 0.148 0.88 6.1 AC 7. C.amnn--Sn Ramaglo (Cobh) 59.3 24.59 29.97 54.56 3.32 4.05 7.37 55 0.124 0.57 6.1 D0ST 8. Digos-Ge.er-l Sonton (Mindanoe) 83.3 33.08 40.48 73.56 4.47 5.47 9.94 55 0.119 0.50 6.1 AC/6.1 D85T Subtota1 344.9 148.11 178.05 326.16 20.00 24.06 44.06 55 0.128 3.91 Fyeder Reads 9. Old Samgy Road (#2033) (Negroo) 5.6 1.33 1.63 2.96 0.18 0.22 0.40 55 0.071 0.03 6.1 DBST 10. Netional Road Jct.-Bolaoo. (f2034) (Ngros) 4.8 0.58 0.74 1.32 0.08 0.10 0.18 55 0.038 0.02 6.0 GR 11. E-alaotn-D.n.o Port (#2038) (N.gros) 9.0 1.62 1.92 3.54 0.22 0.26 0.48 55 0.053 0.05 6.1 DBST 12. Anononi-Lenbantoyae (Cobh) 23.6 4.41 5.48 9.89 0.60 0.74 1.34 55 0.057 0.63 6.0 GR 13. San Viconte-Malalag (#9012) (Mindanso) 7.1 1.69 2.15 3.84 0.23 0.29 0.52 55 0.073 0.04 6.1 DBST 14. San Miguol-MiLoegoo (99014) (Riodanao) 12.7 1.79 2.15 3.94 0.24 0.29 0.53 55 0.042 0.07 5.0 GR Subtotl 62.8 11.42 14.07 25.49 1.55 1.90 3.435 5 0.055 0.84 S.btioa1 (A) 407.7 159.5 192.1 351.6 21.5 26.0 47.5 55 0.116 4.8 B. ROAD MIAINTENiANCE & REST0ATION PROGRAIM Conotroction of vonkahope (8 bone and 32 area shops) (Tablo 3.3) 225.0 66.6 291.6 30.4 9.0 39.4 22 17.5 Procorer ent of road oaitenanoo oqoipoeni inclodlog opare par o hondtool, uorkohop tool. & -orkchoyp acbhiory (Tabls 3.4) 17.7 184.3 202.0 2.4 24.9 27.3 91 yartr & ro"ponocto for eait- ing oqoipenot fleet including equipno.t caintrto-ce tools & facilitie- 3.0 30.3 33.3 0.4 4.1 4.5 91 Road reotoroti.o or-ks 155.4 66.6 222.0 21.0 9.0 30.0 30 SObtotal (B) 401.1 347.8 748.9 54.2 47.0 101.2 46 17.5 C. noTle QOUIPOEOT 7 PErcaee.t eighbridgno (inclodino .ivil tooko), 32 portable loadmetero. spare parts and testing eqoipne.t 1.5 4.4 5.9 0.2 0.6 0.8 75 0.2 Seils A otorialo testing eqoipment 0.1 2.9 3.0 - 0.4 0.4 98 Subtotal (C) 1.6 7.3 8.9 0.2 1.0 1.2 83 0.2 D. TRAINING Adv-nosd techniool troiti=g ovrcanas for MPH and IILGCD permanent staff (10 mao-yearn) 0.7 1.7 2.4 0.1 0.2 0.3 67 Subtotal (D) 0.7 1.7 2.4 0.1 0.2 0.3 67 E. CDNSULTING SERVICES Construction oapervioioo of roads in "A" above 8.9 13.3 22.2 1.2 1.8 3.0 60 Derign & oonstooctionnnUpnrvioion of woriksopt 11.1 7.4 18.5 1.5 1.0 2.5 40 T.chnIcal .s.istance to MpH for operation improvet nots (420 c/n) 5.2 20.7 25.9 0.7 2.8 3.5 80 Sthhnlcal assiote.c. for proniocia2 roads program (96 c/n) 1.5 4.4 5.9 0.2 0.6 0.8 80 technIcal edSit-oce to IPWTC for coo- tioa tio of treosport planning advisory ssrvi... (60 c/c) 0.7 3.0 3.7 0.1 0.4 0.5 80 Subtotal (E) 27.4 48.8 76.2 3.7 6.6 10.3 64 Subtotal (A to E) 590.3 597.7 1,188.0 79.7 80.8 160.5 50 22.5 F. CONTINGENCIES Phyoi-al (10%) 59.0 59.8 118.8 8.0 8.1 16.1 50 Price Eqoipoent (8%) 1.4 17.8 19.2 0.2 2.4 2.6 92 Civil serks (19?) 102.6 62.2 164.8 13.9 8.4 22.3 38 Co.noltiog services and training (5%) 1.5 2.2 3.7 0.2 0.3 0.5 60 Sobtote1 (P) 164.5 142.0 306.5 22.3 19.2 41.5 46 Total (A te F) 754.8 739.7 1,494.5 102.0 100.0 202.0 50 22.5 C. LASS ACOUISITION 22.5 - 22.5 3.0 - 3.0 - Total Project Coot 777.3 739.7 1,517.0 105.0 100.0 205.0 49 Not: Price -ootigency repre-eetg empected price i-creases and in booed on syringe Legend: CC - cenent Concrete Pyvecent iflatloe rots per anon for both foreign and i-oal costs of 73 for civil ormk AC - Asphalt Cncrtt Paeent and 6% for nqoipmee.. For F .ns.lta.cy ye-vi-e and tr,sinig, a total of 5% bos 0a0oBS Double ittinoo Sufaer T-t..et been o_lcod no scoonot for pnpented prone i- ereanen. Overall, co-tingeny GR - Crushed Gravl Strfacing allotmoces. including 100 for physical coetionecies, r-prese-t about 20% of total project cost. Jenuary 1979  - 63 - Table 3.6 PHILIP?PINES FOURTH HIGHWAIY PROJECT Schedule of Estimated Disbursements Bank fiscal Cumulative year and disbursements quarter (US$ million) 1979/80 September 30, 1979 - December 31, 1979 0.1 March 31, 1980 0.5 June 30, 1980 3.0 1980/81 September 30, 1980 7.0 December 31, 1980 12.0 March 31, 1981 18.5 June 30, 1981 28.0 1981/82 September 30, 1981 38.0 December 31, 1981 49.0 March 31, 1982 59.5 June 30, 1982 68.0 1982/83 September 30, 1982 78.0 December 31, 1982 85.0 March 31, 1983 91.0 June 30, 1983 95.5 1983/84 September 30, 1983 98.5 December 31, 1983/a 100.0 /a Loan closing date. Source: Government/mission's estimates. January 1979  - 64 - Table 3.7 PHILIPPINES FOURTH HIGHWAY PROJECT Axle Load Control Progra- Suspect SAA.T Heavy commdity orTotal cost Sto. Rugto Location (1978) vehicles activity Status P U8$ 1. Finaced aeder Second Highway Project Permanent Weigh Stations 1. III Pun PhilippiC Hwy 4,000 20 Logging Approaches 471,000 63,650 hntupen Cbhasru. s ..ot yet paved. City h Sta. Rosa Scheduled for 3/1/79 2. III Manila North Road 9,400 42 Logging, mining, Operational 437,000 59,050 (n.ath-hoa.. traffic) soara-.- con- sinc near Tabang structitn mate- 12/16/78 tials, cement 3. IVA Manila North Road 6,800 42 Logging Operational 285,500 38,580 (sooth-hound traffic) since ne arRlintawak 12/6/78 4. IVA Manila Soth Enp- traf,9) 35 Logging, mining, Construction 277,000 37,430 (o...th-hbo...d traffic) nuacn . co- coplete hut at Nitchls Itterchange stroction mate- nor tet opera- rtials, cement tional. Shed- uSed for 3/1/79 5. IVA Sta. Tou-Rot-ngan Rd, 7,900 47 Logging, nining, Opertional 692,260 93,550 tear Clamh.a sugarcane, ton-slats structito mate- 1/15/79 rials, cement 6. XII Cotahata-Digan ad, 830 25 Logging oiperational 235,000 31,760 nertobtuht City niece 1/3/79 7. Xl Cotabato-Digno Rd, 980 60 Logging Approaches 250,000 33,780 na Signs not yet paved. Scheduled for 3/1/79 8. X hutuan-fl.D Rd, 550 55 Logging Operational 286,000 38,650 nou Bt... City since 11/3/7B 9. I Nhagila id, n 1,970 55 M1ining Operational 243,500 32,900 Rogoio city since 12/1/78 Porahble Loudo-eterr 50 units Various locations FPr surveys and Surveys and 379,570 51,290 (02 assigned to spot chocks spat check regional offics, .o -going 8 to Hqs) Sobtotal 3,556,830 480,640 II. To be Financed inder Fourth Highway Project Per anent Weigh Stations Ii. IVA Manila Etut Rd (M-aikini - Road ns der Logging Scheduled for 900,000 121,620 Infatia Rd) near MaKikina cons trution 1980/81 (wet-houd traffic) 11. VS Ililo Eaut Coast Rd 9,000 24 Construction Scheduled foe 700,000 94,600 Ks 6.5 maeia1 980/81 brown sugar, miolasses 12. VI Racolod North Rd 5,800 27 Songrcune, Scheduld f 650,000 87,840 Ke 11 contruction 1980/81 aterials 13. VS Rotn.od Sooth Rd. 4,800 27 Sug-rcane. Scheduled for 650,000 87,840 Kts 12.5 co-t-ucino 1980/81 materials 14. VII Cbh Soth Rd 7,800 33 Const-rtion Scheduled far 750,000 101,350 Tu1isay matrils 1980/81 15. X Cagayanb-Btoan Rd, 4,800 26 Lggineg, ScheduLed for 900,000 121,620 nea Puerto pineapples 1980/81 16. V Manila iSuth Scd 2,700 35 Construction ma- Scheduled for 950,000 128,380 near Ligao terial, refined i980/81 sugar, soft drinks Portablh Loudmeters 32 units Various locations ari spot checks ad ScheduLed for 400,000 54,050 verification 1980/81 Subtota1 5,900,000 797_300 Total Program 9,457,000 1,278,000 SVmmry Financed onder Second High-ay Project (5) US$480,640 To be financed under Fo-rth Righway Project (II) USS797,300 nay US$0.8 million Source Ministry of Phblic Highways. January 1979  - 65 - Table 3.8 PHILIPPINES FOURTH HIGHWAY PROJECT Technical Assistance Advisor Man-months A. Ministry of Public Highways 1. Office of the Minister Organization and Management Expert (Team Leader) 24 2. Bureau of Construction Highway Design and Construction Expert 24 Bridge Construction and Rehabilitation Expert 24 3. Bureau of Maintenance Highway Maintenance Expert 24 Road Restoration Expert 24 4. Bureau of Equipment Workshop Construction and OperatiLons Expert 24 Maintenance Equipment Expert 24 5. Soils and Materials Quality Control Service Soils and Materials Testing Expert 24 Geologist/Geotechnical Expert 12 6. Regional Offices Highway Design and Construction Experts (4 @ 24) 96 Highway Maintenance Experts (4 @ 24) 96 7. Planning and Project Development Office Transport Economist/Highway Planning Expert 24 Subtotal 420 B. Ministry of Local Government and Community Development 1. Transport Economist/Planning Expert (Team Leader) 24 2. Highway Engineer (rural roads) 24 3. Agricultural Economist 12 4. Financial Analyst/Organization and Management Expert 12 5. Highway Maintenance Expert 24 Subtotal 96 C. Ministry of Public Works, Transport and Communications 1. Transport Systems Analyst 24 2. Transport Pricing Expert 24 3. Transport Regulation and Organization Expert 12 Subtotal 60 Total Technical Assistance 576 Total Cost: US$1.0 million equivalent local costs + US$3.8 million foreign exchange = US$4.8 million equivalent Source: MPH and Mission Estimates, January 1979.  - 66 - Table 3.9 PHILIPPINES FOURTH HIGHWAY PROJECT Soils and Materials Testing Equipment Including Spare Parts Total cost CIF Manila Item/description (US$) Testing Apparatus and Spare Parts Central Laboratory 62,510 Regional laboratories (5 regions) 107,300 Field test apparatus 38,040 Field exploration equipment 183,000 Subtotal 390,850 Quality Control Training Equipment Audio visual equipment 16,000 Books and publications 6,000 Subtotal 22,000 Total Cost 412,850 Source: Ministry of Public Highways, November 1978.  - 67 - Table 4.1 PHILIPPINES FOURTH FIIGHWAY PROJECT TRAFFIC VOLUMES AND GROWTH RATES ON PROJECT ROADS (1977 and Projections for 1981-2000) Average Annual Daily Traffic Average Estimated 1977 Weighted Forecast Traffic Growth in % Range Average 1981 1990 2000 1977-81 1981-2000 A. Major Roads Luzon 1. Tabacco-Tiwi 785-995 890 1,130 1,780 3,000 4.9 5.3 2. Tabaco-Ligao 450-580 470 570 820 1,210 3.9 4.0 Panay 3. Jaro-Cal.inog 430-4,520 1,210 1,610 2,790 5,440 5.9 6.6 4. Sigma-Rcxas 810-1,920 1,160 1,540 2,670 5,160 5.8 6.6 Negros 5. Silay-Fz.brica 1,410-2,610 1,920 2,620 4,720 9,430 6.4 7.0 6. Fabrica-' Escala,nte 910-1,240 1,200 1,510 2,560 4,580 6.0 6.0 Cebu 7. Carmen-San Remigio 470 470 590 930 1,540 4.9 5.2 Mindanao 8. Digos-Gen. Santos 540-1,300 700 970 1,750 3,410 6.7 6.8 B. Minor Roads Negros 1. Old Sagay Road 280 360 590 1,010 5.2 5.6 2. National Road- Bolanon 125 160 230 340 5.1 4.1 3. Escalante-Danao 500 610 860 1,290 4.1 4.2 Cebu 4. Anonang- Doanbantayan 100- 225 150 190 290 460 4.8 4.8 Mindanao 5. San Vicente- Malalag 405 560 1,040 2,090 6.7 7.2 6. National Road- Malungon 180 230 350 580 - 5.0 Source: MPH and consultants' estimates. October 1978  PHILIPPINES FOURTH HIGHWAY PROJECT Estimated Vehicle Operating Costs and Savings on Project Roads, 1981 (Pesos per km, excluding taxes) C a r s Jeepneys B u s e s Trucks Impr. Exist. Impr. Saving Exist. Impr. Saving Exist. Impr. Saving Exist. Impr. Saving level road road per km X road road per km % road road per km X road road per km X Excluding Passengers' Time Savings A. Major Roads Luzoi 1. Tabaco-Tiwi 6.1 AC 0.40 0.29 0.11 28 0.42 0.28 0.14 33 1.03 0.65 0.38 37 1.24 0.79 0.45 36 2. Tabaco-Ligao 6.1 DBST 0.54 0.37 0.17 31 0.55 0.35 0.20 36 1.63 0.99 0.64 39 1.96 1.28 0.68 35 Panay 3. Jaro-Calinog 7.0 CC/ 6.1 AC/DBST 0.47 0.33 0.14 30 0.48 0.32 0.16 33 1.27 0.83 0.44 35 1.53 1.01 0.52 34 4. Sigma-Roxas City 6.1 AC 0.43 0.33 0.10 23 0.46 0.32 0.14 30 1.17 0.86 0.31 26 1.42 1.05 0.37 26 Negros 5. Silay-Fabrica 6.1 CC/ 6.1 AC 0.41 0.35 0.06 15 0.40 0.31 0.09 23 1.03 0.78 0.25 24 1.26 0.95 0.31 25 6. Fabrica-Escalante 6.1 AC/DBST 0.46 0.32 0.14 30 0.45 0.30 0.15 33 1.18 0.78 0.40 34 1.45 0.93 0.52 36 1 a, Cebu o0 7. Camen-San Remigio 6.1 DBST 0.51 0.31 0.20 39 0.51 0.31 0.20 39 1.37 0.79 0.58 42 1.68 0.97 0.71 42 Mindanao 8. Digos-General Santos 6.1 AC/DBST 0.49 0.35 0.14 29 0.48 0.34 0.14 29 1.33 0.84 0.49 37 1.62 1.07 0.55 34 B. Feeder Roads Negros 1. Old Sagay Road 6.1 DBST 0.52 0.29 0.23 44 0.58 0.29 0.29 50 1.48 0.67 0.81 55 1.74 0.81 0.93 53 2. National Road-Bolanon 5.0 Gravel 0.48 0.33 0.15 31 0.50 0.33 0.17 34 1.27 0.78 0.49 38 1.55 0.97 0.58 38 3. Escalante-Danao 6.1 DBST 0.42 0.29 0.13 30 0.42 0.29 0.13 31 1.04 0.67 0.37 36 1.27 0.81 0.46 57 Cebu 4. Anonang-Daarbantayan 6.1 DBST/G 0.50 0.34 0.16 32 0.51 0.33 0.18 36 1.31 0.85 0.46 35 1.60 1.00 0.60 38 Mindanao 5. San Vicente-Malalag 6.1 DBST 0.47 0.29 0.18 38 0.46 0.29 0.17 37 1.18 0.67 0.51 43 1.46 0.81 0.65 44 6. National Road-Malungon 5.0 Gravel 0.60 0.34 0.26 43 0.65 0.34 0.31 48 1.67 0.83 0.84 50 1.99 1.00 0.99 50 February 1979  PHILIPPINES FOURTH HIGHWAY PROJECT Estimated Vehicle Operating Costs and Savings on Project Roads, 1981 (Pesos per km, excluding taxes) C a r s Jeepneys B u s e s Trucks Impr. Exist. Impr. Saving Exist. impr. Saving Exist. Impr. Saving Exist. Impr. Saving level road road per km % road road per km % road road per km % road road per k'm % Including Passengers' Time Savings A. Major Roads Luzon 1. Tabaco-Tiwi 6.1 AC 0.59 0.40 0.19 32 0.53 0.34 0.19 36 1.40 0.86 0.54 39 1.24 0.79 0.45 36 2. Tabaco-Ligao 6.1 DBST 0.79 0.49 0.30 35 0.69 0.42 0.27 39 2.19 1.35 0.84 38 1.96 1.28 0.68 35 Panay 3. Jaro-Calinog 7.0 CC/ 6.1 AC/DBST 0.68 0.45 0.23 34 0.60 0.38 0.22 37 1.68 1.08 0.60 36 1.53 1.01 0.52 34 4. Sigmna-Roxas City 6.1 KC 0.61 0.45 0.16 26 0.54 0.39 0.15 28 1.56 1.12 0.44 28 1.42 1.05 0.37 26 Negros a 5. Silay-Fabrica 6.1 CC/ 6.1 AC 0.56 0.44 0.12 21 0.48 0.37 0.11 23 1.23 1.03 0.20 16 1.26 0.95 0.31 25 6. Fabrica-Escalante 6.1 AC/DBST 0.64 0.43 0.21 33 0.55 0.36 0.19 35 1.55 1.01 0.54 35 1.45 0.93 0.52 36 Cebu 7. Carmen-San Remigio 6.1 DBST 0.71 0.42 0.29 41 0.62 0.37 0.25 40 1.77 1.03 0.74 42 1.68 0.97 0.71 42 Mindanao 8. Digos-General Santos 6.1 AC/DBST 0.68 0.46 0.22 32 0.58 0.40 0.18 31 1.74 1.12 0.62 36 1.62 1.07 0.55 34 B. Feeder Roads Negros 1. Old Sagay Road 6.1 DBST 0.87 0.41 0.46 53 0.78 0.36 0.42 54 2.15 0.89 1.26 59 1.74 0.81 0.93 53 2. National Road-Bolanon 5.0 Gravel 0.71 0.45 0.26 37 0.63 0.39 0.24 38 1.72 1.00 0.72 42 1.55 0.97 0.58 38 3. Escalante-Danao 6.1 DBST Mindanao 3. San Vicente-MalaLag 6.1 DBST 0.64 0.41 0.23 36 0.56 0.36 0.20 36 1.51 0.89 0.67 41 1.46 0.81 0.65 44 4. National Road-Malungon 5.0 Gravel 0.95 0.48 0.47 49 0.85 0.42 0.43 51 2.34 1.10 1.24 53 1.99 1.00 0.99 50 February 1979  - 70 - Table 4.4 PHILIPPINES FOURTH HIGHWAY PROJECT Economic Returns and Sensitivity Analyses Economic returns and sensitiviy analyses (x) Passenger time Best High /a Low /b savings excluded estimate estimate estimate from benefits A. Major Roads Luzon 1. Tabacco-Tiwi 26 32 21 22 2. Tabaco-Ligao 26 33 20 22 Panay 3. Jaro-Calinog 24 30 20 21 4. Sigma-Roxas 23 29 18 20 Negros 5. Silay-Fabrica 32 31 17 22 6. Fabrica-Escalante 25 31 20 22 Cebu 7. Carmen-San Remigio 22 28 17 19 Mindanao 8. Digos-Gen. Santos 25 31 20 23 B. Minor Roads Negros 1. Old Sagay Road 19 24 16 15 2. NR-Bolanon 16 22 13 15 3. Escalante-Danao 20 25 15 17 Cebu 4. Anonang-Doanbantayan 17 23 13 16 Mindanao 5. San Vicente-Malalag 27 37 20 26 6. NRoad-Malungon 21 28 15 20 /a Assumes 15% lower cost and 15% higher benefits than in the best estimate. /b Assumes 15% higher cost and 15% lower benefits than in the best estimate. February 1979  - 71 - Tab> 4.5 PHILIPPINES FOURTH HIGHWAY PROJECT National Roads by Surface Type and Condition (1977) Su r f a c e C o n d i t i o n Bad & Good Fair very bad/b Total (km) (%) (km) (%) (km) (%) (km) ) Surface type Gravel 826 3.7 5,472 24.5 6,968 31.2 13,266 59.4 DBST/BST 558 2.5 759 3.4 290 1.3 1,607 7.2 Asphalt concrete 625 2.8 1,094 4.9 692 3.1 2,411 10.8 Cement concrete 4,131 18.5 581 2.6 334 1.5 5,046 22.6 Total 6,140 27.5 7,906 35.4 8,284 37.1 22,330/a 100.0 /a National roads which are included in the annual maintenance program. /b Estimates made on the basis of road inventory data collected for the Third and Fourth Highway Projects showed that 25% of these roads were bad and 75%, very bad. February 1979  - 72 - Table 4.6 PHILIPPINES FOURTH HIGHWAY PROJECT Pavement Condition Changes without Proper Maintenance Type Good --> Fair Fair --> Bad Bad --> Very bad Gravel 2 3 2 Paved DBST 4 3 3 AC 7 .5 3 CC 15 6 3  - 73 - Table 4.7 PHILIPPINES FOURTH HIlGHWAY PROJECT Composite dl-Values per km for Surface and Condition Surface Condition Light vehicles Heavy vehicles Composite vehicles Paved Good 0.00 0.00 0.00 Fair 0.20 0.30 0.24 Bad 0.40 0.60 0.47 Very bad 0.60 0.90 0.71 Gravel Good 0.15 0.20 0.17 Fair 0.30 0.50 0.37 Bad 0.60 0.90 0.71 Very bad 0.90 1.30 1.04 February 1979  - 74 - Table 4.8 PHILIPPINES FOURTH HIGHWAY PROJECT Surface Condition and Life Times of Restoration Works R e s t o r a t i o n W o r k s Unpaved & Ditches and shoulders bituminous roads Without With Without With project project project project Opening year Bad Fair Very bad Fair Year 2 Fair " " Year 3 Bad if " Year 4 Bad Year 5 " " Very bad The Composite Savings Per Vehicle (in dl values) Very bad to fair Very bad to bad Bad to Fair - (dl savings) ----------- Shoulders & ditches - - 0.34 Gravel 0.67 0.33 Bituminous 0.47 0.24 February 1979  PHILIPPINES FOURTH HIGHWAY PROJECT Annual and Discounted Benefits and Restoration Costs (July 1979 Pesos) B E N E F I T S I n c 1 u d i n g t i m e s a v i n g s E x c I u d i n g t i m e s a v i n g s Ditches & Unpaved Bituminous Ditches & Unpaved Bituminous Economic shoulders roads roads shoulders roads roads restoration Year 1980 1981 1982 1980 1981 1982 1980 1981 1982 Total 1980 1981 1982 1980 1981 1982 1980 1981 1982 Total costs 1980 194 1981 26 76 19 121 20 58 14 92 252 1982 27 31 80 100 20 25 283 21 24 61 76 15 19 216 319 1 1983 32 39 86 105 126 21 26 32 467 25 30 66 80 95 16 19 25 356 1984 41 45 112 133 11 27 33 402 33 35 86 101 9 20 26 310 1985 58 142 15 35 250 45 107 12 27 191 1986 74 20 94 57 15 72 Present values 15% 1,092 835 701 at January 1981 25% 876 670 668 50% 558 427 609 IRR 43% 25% B/C Ratio at 15% p.a. 1.56 1.19 February 1979 H0  PHILIPPINES: FOURTH HIGHWAY PROJECT MINISTRY OF PUBLIC HIGHWAYS ORGANIZATION CHART Prior f December 31. 1978 Deputy tt,rttr , ^" eI^nl*er , r l . ,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~h : stDtselopment l 0 MitnGement l 1 1 { 3 -| Monitoring and 1 -| Pro ramming loprrrnt Ast tartt DiO,i- w~~~~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~~ici-iO Orher Forer