Morocco - Fourth Highway Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 4266-MOR STAFF APPRAISAL REPORT MOROC CO A FOURTH HIGHWAY PROJECT March 2, 1983 Projects Department Europe, Middle East and North Africa 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 = Dirham (DH) DH 1 = US$0.164 US$1 = DH6.1 WEIGHTS AND MEASURES Metric System British/US System 1 meter (m) =3.28 feet (ft) 1 kilometer (km) =0.62 miles (mi) 1 sq. kilometer (km2) =0.386 sq. miles (mi2) 1 metric ton (t) =0.984 long ton (lg ton) ACRONYMS AND ABBREVIATIONS CED - "Contr8leur d'engagements de depenses" CIF - Cost, insurance and freight CNAC - "Centre National d'Auscultation des Chaussees" ER - Economic return HDM - Highway Design and Maintenance Model LPEE - "Laboratoire Public d'Essais et d'Etudes" MOT - Ministry of Transport MPW - Ministry of Public Works ("Ministere de l'Equipement") ONT - "Office National des Transports" RTD - Roads and Traffic Department TOE - Tons of oil equivalent VOC - Vehicle operating cost vpd - vehicles per day, (This report uses the acronyms of the French titles in those cases where the Moroccan practice is to refer to the agency in question by its acronym.) KINGDOM OF MOROCCO FISCAL YEAR January 1 - December 31  FOR OFFICIAL USE ONLY MOROCCO APPRAISAL OF A FOURTH HIGHWAY PROJECT Table of Contents Page No. I. THE TRANSPORTATION SECTOR............................. 1 A. Introduction. 1 B. Government Involvement in the Sector. 2 C. Road Transportation. 2 D. Railways ................................................. 2 E. Ports and Shipping ...................................... 4 F. Previous Projects ....................................... 4 II. THE ROADS SUBSECTOR .......................................... 7 A. Road Transportation Demand .............................. 7 B. Organization of Road Transportation Services ............ 7 C. The Road Network ........................................ 9 D. Administration .10 E. Planning .10 F. Financing .11 G. Budgetary System and Financial Control .11 H. Engineering ................ 12 I. Construction ............................................ 13 J. Road Maintenance and Improvement ........................ 13 K. Training ................................................ 15 III. THE PROJECT .................................................. 16 A. Objectives .............................................. 16 B. Project Description ..................................... 16 C. Cost Estimates .21 D. Financing .23 E. Implementation .24 F. Reporting .26 G. Procurement .27 H. Accounting and Auditing .28 I. Disbursements .29 J. Environmental Impact .30 This project was appraised by Messrs. Graham Smith (transportation economist) and Edgardo Staffini (highway engineer) on the basis of missions to Morocco in June and October, 1982. 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.  Table of contents (continued) Page No. IV. ECONOMIC EVALUATION ........................ 30 A. Main Benefits and Beneficiaries ......................... 30 B. Pavement Strengthening .................................. 31 C. Reconstruction of Bridges ............................... 32 D. Pilot Program of Provincial Road Improvement ............ 32 E. Completion of the Casablanca-Rabat Expressway ........... 36 F. Freight Market Study .................................... 37 G. Project Risks ........................................... 37 V. AGREEMENTS REACHED AND RECOMMENDATIONS ............................ 38 ANNEXES I. Budgeting, Accounting and Auditing Procedures ........... 39 II. Bridges to be Reconstructed ............................ 45 III. Mechanical Workshops Construction and Equipment ......... 46 IV. Road Maintenance Equipment Needs ........................ 47 V. Road Maintenance Equipment To Be Procured ............... 48 VI. Schedule of Estimated Cumulative Loan Disbursements ......................................... 49 VII. Fuel Pricing ............................................ 50 VIII. Related Documents and Data Available in the Project File ................................... 51 FIGURES IBRD 24464 - Organization Chart of Roads and Traffic Department IBRD 16783R - MAP  I. THE TRANSPORTATION SECTOR A. Introduction 1.01 Morocco has a well-developed transportation system, consisting of 26,300 km of paved roads, a railway system of 1,760 km linking most of the larger cities, six ports serving international trade, and 14 airports handling scheduled flights. Roads are the dominant mode of inland transportation, accounting for about 95 percent of total passenger-km and about 60 percent of freight ton-km. Transportation services are operated variously by wholly private, wholly government-owned or mixed capital enterprises in a framework of government regulation of pricing and service levels. 1.02 The system provides a satisfactory level of service in many respects, but there remains considerable potential for reducing transport costs and improving service levels in particular localities and for particular segmernts of the transportation market. Furthermore, much of the basic transportation infrastructure was completed twenty or thirty years ago, and is now in need of renewal or upgrading to meet the evolving needs of the 1980's. During the short-lived phosphate boom of the mid-1970's, large-scale investments in new ports and railway lines were begun, whose completion has imposed a heavy financing burden on the State in the conditions of austerity that have prevailed since 1978. At the same time, most of the public-sector transportation companies are operating in deficit, adding to the demands on government funds. 1.03 Efforts to remedy particular weaknesses in the system and to accommodate growth in demand therefore have to rely, in the short term at least, on a minimum of new infrastructure. This can best be done by: (a) concentrating available investment funds on the maintenance and rehabilitation of the existing capital stock; and (b) raising the system's productivity through changes in the organization, management and regulation of transportation services. For the longer term, the Government's investment priorities in the transportation sector are: (a) to provide facilities required by development projects in industry and agriculture; (b) to help raise the productivity of the rural population; and (c) to limit investments in new major facilities to projects with high and quick returns. 1.04 The proposed project addresses several of the above issues, in that it aims to: - lend support to the priority given to maintenance; - help meet the rural needs; - strengthen the institutions responsible for the analysis of transportation investments; - provide financing for an important section of new highway that has satisfied rigorous analysis as to its likely economic return; and - focus attention on the productivity of transportation services.  - 2 - B. Government Involvement in the Sector 1.05 Several branches of Government are involved in the transportation system, the main ones being the "Ministere de l'Equipement" (Ministry of Public Works - MPW), which is responsible for road construction and maintenance and for the ports, and the Ministry of Transportation (MOT), which regulates private road transportation and supervises the railway, civil aviation, the state-owned bus company and the state-owned freight forwarding agency. The Ministry of the Interior is responsible, through the local communities, for local roads and urban bus companies. Transportation infrastructure planning is coordinated by the Ministry of Planning. The MOT was set up in 1977; many of its functions were previously carried out by the MPW. 1.06 The 1981-85 Development Plan provides for a substantial increase in transportation investments compared with the two previous plans, even allowing for inflation (see Table 1.1). It proposes public sector investments at a level of about DH3.6 billion (US$590 million) per year in 1980 prices. It seems likely that shortage of financing will limit actual expenditures to between one half and two-thirds of this level. C. Road Transportation 1.07 Road transportation in Morocco, as in most countries, plays an important and multipurpose role in the economy. About half of all intercity passenger travel is by bus, and more than five-sixths of all freight other than phosphate moves by road. Many industries rely heavily on road transportation for supplying their markets, and the agricultural sector is almost entirely dependent on it for distributing production to markets in the urban areas and to the ports. Details on the sub-sector are given in Chapter II. D. Railways 1.08 The Moroccan railway "Office National des Chemins de Fer" plays an important role in the phosphate industry, in transporting phosphate rock from the mines to Casablanca and Safi for export. Beyond that the railway's role is limited, due partly to the structure of freight flows, which are predominantly over distances too short for a railway to compete successfully with road transportation. Furthermore, government intervention to hold down rates and fares and to provide discounts to specific interest groups has pushed the railway into serious deficit, thereby depriving it of the means to upgrade services and attract new customers. 1.09 A major investment has been made in double-tracking the Casablanca - Rabat line without adequate economic analysis. It was not required to meet a cost of capital criterion and it appears that here, as in recent proposals for new lines in other parts of the country or double-tracking the existing line from Rabat to Fes, the economic advantages of rail vis-a-vis competing road services have been overstated.  -3- Table 1.1: INVES2ENIS IN THE TRANSPORTATION SECITOR, 1973-85 (DH million in current prices for 1973-77 and 1978-80 Plans, 1980 prices for 1981-85 Plan) 1973-1977 Plan 1978-80 Plan 1981-85 Plan Planned Actual (Revised % of as % of % of % of Actual as X of in 1975) Actual Total Planned Planned 1/ Total Actual Total of Planned Planned Total Roads Roads 1,339 1,243 13 86 849 10 538 7 63 3,537 13 Terminals, etc. - - - - 27 0 15 0 56 81 0 Vehicles: Public - 45 - 384 5 316 4 82 98 0 PrivateJ - 4,200 3/ - - 3,600 3/ 43 3,600 4/ 48 - 7,000 3| 25 Sub-total 5,443 58 - 4,860 58 4,469 59 - 10,716 39 Rail Infrastructure 1,267 693 7 55 958 11 6'1 9 68 8,898 32 Rolling stock (public) 614 445 5 72 140 2 175 2 125 598 2 Sub-total 1,881 1,138 12 1,098 13 826 11 75 9,496 34 Air Infrastructure 386 257 3 67 229 3 219 3 96 584 2 Aircraft (public) - 466 5 - 200 2 200 4/ 3 - 484 2 Sub-total - 723 8 429 5 419 6 - 1,068 4 Ports & Shipping Infrastructure ) ) 1,495 18 1,381 18 92 2,104 8 Cargo handling, etc. ) 775 688 7 89 ) 223 3 169 2 76 699 2 Ships, public sector - 1,045 11 - 166 2 166 4/ 2 - 574 2 Ships, private sector 271 3 70 1 70 4/ 1 - 2,837 10 Sub-total 2,004 21 - 1,954 23 1,786 24 - 6,214 22 Miscellaneous (studies, trainimg, buildirgs) - 138 1 - 43 1 36 0 84 166 1 Total, public 4,975 53 - 4,914 56 3,866 51 82 17,823 64 Total, private 4,471 47 _ 3,670 44 3,670 49 - 4/ 9,837 36 GRAN TOTAL - 9,446 3/ 100 8,384/ 100 7,536 3/ 100 -27660 3/ 100 Cost of living index 63 91 100 (1980 = 100) (for 1975) (for 1979) Expenditures per year (1980 prices) public 1,580 1,420 3,560 private 1,420 1,340 1,970 Total 3,000 2,760 5,530 - No information available. 0 Less than 0.5 percent 1/ Ircludes carry-over frcxn previous Plan period. 2/ Includes passenger cars. These are not considered investments, but are included for coniparability with railway passenger car expenditures. 3/ Approximation estimated by Bank staff; possible error of estimate as to private road vehicles also applies in absolute teTms to total (though relative error in total is of course less). 4/ No information available by which to differentiate between plarned and actual. Source: Plan docuiaents, Decenber 1981  -4- 1.10 The Bank has brought this matter to the Government's attention in its review of the Five-Year Plan ("Priorities for Public Sector Investment", green cover, November 1982). On the commercial side, it is hoped that a study of railway operating costs to be carried out for the MOT under the Bank's Third Highway Project will provide a basis for aligning tariffs more closely with costs. Also, a survey of the freight transportation market under the proposed fourth project should help identify those segments of the market for which the railway has the most to offer. E. Ports and Shipp2ing 1.11 More than half of all traffic through Morocco's ports is phosphate, in the form of either rock or phosphoric acid. For example, in 1979 18.1 million tons of phosphate rock were exported from Casablanca and Safi and another 0.8 million tons of acid from Safi, out of a total traffic (imports and exports combined) of 33.6 million tons. The second largest commodity category in Morocco's international trade is oil: 6 million tons were handled in 1979, most of it crude oil imported through Mohammedia. The use of containers for general cargo is growing rapidly; in 1979 0.6 million tons of imports and exports were containerized, about a quarter of all potentially containerizable cargo. As in many developing countries, the number of containers arriving far exceeds the demand in the outbound direction. A ports master plan now nearing completion foresees that the volume of container traffic will double in about six years, and account for about 40% of containerizable cargo by 1986. About half a million tons of citrus are exported each year, mostly through Casablanca and Agadir. The traffic puts a strain on port facilities because of its highly seasonal and perishable nature; a fourth of the yearly total is exported in the peak month. 1.12 Casablanca has traditionally been the country's principal port, handling about three-fifths of all traffic. The construction from scratch of new ports at Jorf Lasfar, Tan Tan and Tarfaya, begun in the mid-1970's and now nearing completion, was motivated by a desire to draw traffic away from Casablanca and thus reduce congestion there. However, for general cargo, particularly container traffic, Casablanca will retain a significant advantage because of its proximity to major hinterland markets and because of technical and administrative economies of scale. 1.13 The Government is therefore now preparing a project for possible Bank financing in FY84 that would involve expanding container handling and roll-on/roll-off facilities at Casablanca, rehabilitating various other facilities and providing technical assistance aimed at raising port productivity. F. Previous Projects 1.14 The Bank has financed the construction or improvement of main roads under three previous highway projects and of rural feeder roads under ten agricultural projects (see Table 1.2). While the latter have met specific  -5- Table 1.2: PREVIOUS LENDING FOR TRANSPORT SECTOR A. Highway Projects Project Name Date Signed Loan Amount (US$ mn) First Highway (Loan 642-MOR/ 11/69 14.6 Roads Credit 167-MOR) 14.3 Transport Planning 0.3 Second Highway (Loan 955-MOR) 1/74 29.0 Roads 27.0 Transport Planning 0.7 Urban Traffic 1.3 Third Highway (Loan 1830-MOR) 5/80 62.0 Road Infrastructure 60.9 Transport Planning 1.1 B. Rural Roads Constructed or Improved under Agriculture Sector Projects Date Road Loan Amount Total Loan Project Name Signed Length (km) for Roads Amount ($ inn) ($ inn) Sebou II Development 6/74 420 6.9 32.0 Meknes Agricultural Devt. 6/75 485 2.5 14.0 Souss Groundwater 6/75 150 1.1 18.5 Doukkala Irrigation 2/76 193 5.4 42.0 Doukkala II Irrigation 6/77 222 5.0 46.5 Fes-Karia-Tissa Agriculture 9/78 414 24.5 65.0 Vegetable Production and Marketing 11/79 250 2.0 67.4 Loukkos Rural Devt 12/80 122 7.5 34.0 Middle Atlas Agricultural Devt.03/82 331 6.0 29.0 Forestry 04/82 180 2.7 27.5 Oulmes-Rommani Agri. Devt. -/83 291 3.7 30.0 TOTAL (rounded) 3,058 67 406 Source: IBRD Appraisal Reports January 1983  6 needs as part of agricultural development "packages," the former have more generally encouraged the allocation of resources to high-return projects, particularly maintenance and rehabilitation, and helped build up the staffing and organization of the agencies responsible for road construction and maintenance and for transport coordination. These processes require continuing support of key institutions if earlier progress is to be consolidated, an important consideration in determining the composition of this project. 1.15 The First Highway Project, for which a combined loan and credit totalling US$14.6 million equivalent was signed in November 1969 (Loan 642-MOR/Credit 167-MOR), included construction of a new highway linking Marrakech to Agadir, a program of localized improvements on selected primary roads, and the purchase of maintenance equipment and spare parts. The project was completed in a timely way in 1975 with only minor cost overruns. Institutional benefits included the good performance of local contractors and efficient construction supervision undertaken by Moroccan engineers of the MPW (see Project Performance Audit Report of April 1977). 1.16 A transportation survey also carried out under the First Highway Project laid the ground work for the Second Highway Project five years later, for which a US$29 million loan (955-MOR) was signed in January 1974. This consisted of; (a) construction of part of the Casablanca-Rabat expressway; (b) a further program of localized road improvements throughout the country; (c) renewal and some expansion of maintenance equipment; (d) traffic studies for Casablanca and Rabat; and (e) technical assistance for setting up a transportation planning office. The loan was closed in June 1980, three years later than planned at appraisal, due principally to a problem with the contractor for the Casablanca-Rabat expressway. Nonetheless, the quality of work was good and the project achieved its objectives of improving traffic conditions on a number of main roads, improving highway maintenance, and helping to set up a transportation planning organization (see Project Performance Audit Report of July 1982). 1.17 To draw more attention to the need for maintenance and rehabilitation, the Third Highway Project, begun in 1980, is financing a portion of the RD's program of resurfacing and pavement strengthening over 3 1/2 years, purchase of road maintenance and pavement evaluation equipment and a study into the organization of road maintenance. For this purpose loan 1830-MOR of US$62 million equivalent was signed in May 1980. The project also includes a set of studies into the pricing and organization of various transportation services under the aegis of the MOT, the purchase of vehicle weighing scales to aid in the enforcement of weight limits, and a study on how to improve the road maintenance organisation. 1.18 After a slow start, contracts for almost all the civil works had been awarded by the end of 1982. The annual maintenance action plan required by a loan covenant has helped the MPW to limit the reduction in the real value of its budget allocation for maintenance, despite budget stringency elsewhere. The MOT components are about 18 months behind schedule because of delays in hiring consultants for the pricing and  - 7 - organization studies and in procuring the weighing scales. Disbursements from the loan have lagged behind appraisal forecasts, partly because contractors have been slow in starting the works, partly because the RD has been slow in submitting withdrawal applications. The appreciation of the dollar has also reduced the dollar value of disbursements. In keeping with the time-slice concept of the project, the Government and Bank have therefore agreed to increase the amount of pavement strengthening and road maintenance equipment, while adding vehicles for transporting maintenance crews, and studies that have helped prepare the Fourth Highway Project. The RTD has now taken steps to speed up disbursements, and the project is still expected to be completed by the originally scheduled closing date of June 30, 1984. 1.19 These three highway projects have focussed exclusively on primary and secondary roads, on the grounds that, as a general rule, roads carrying the most traffic deserved priority. Tertiary roads have been allocated fewer resources, concentrated in areas selected for integrated rural development projects or other agricultural projects. The Bank's involvement in financing such roads has encouraged the Ministry of Agriculture and Agrarian Reform and the MPW to cooperate more closely and consistently in determining appropriate design standards and in making arrangements for maintenance of these lower-level roads. II. THE ROADS SUBSECTOR A. Road Transportation Demand 2.01 Morocco has a relatively high level of vehicle ownership compared to other countries at its income level, in the range 15-20 per thousand persons (exact data on the number of vehicles in use are not available). Traffic volumes on the main highways are also high: some 5,000 km out of the total paved network of over 26,000 km carry more than 1,000 vehicles per day. Trucks commonly account for 20-30% of all traffic on roads. During much of the 1970's traffic grew vigorously, at 6-10% per year on many roads. This growth trend has been interrupted since 1978 by the difficult economic conditions and the 1980-81 drought. The amounts that road users spend on vehicle operation are nonetheless considerable, on the order of DH 10-15 billion (US$1.6-2.5 billion) per year, of which taxes (fuel taxes, customs duties and vehicle licenses, etc.) account for 25-30%. 2.02 The number of road accidents is a cause for serious concern. In recent years there have been at least 24,000-28,000 accidents per year, and 2,200-2,700 persons killed. The death rate in relation to the amount of traffic is at least double that in several countries of southern Europe. Statistical analysis of the causes is not yet available; the MPW is making efforts to improve the reporting of accidents, as a first step toward identifying appropriate preventive measures. B. Organization of Road Transportation Services 2.03 Most interurban bus and truck services are operated by small private companies or co-operatives. Buses are licensed as to routes and  -8- service frequencies and must apply fares set by the Ministry of Transportation. A nationalized bus company operates first-class services on main intercity routes; it accounts for about 10% of the market. The trucking market is divided into three segments: (a) trucks below 3.0 tons capacity, i.e. 5.5 tons gross vehicle weight (GVW); (b) own-account vehicles over 5.5 tons GVW; and (c) common-carrier trucks over 5.5 tons GVW. The purchase and operation of small trucks is unregulated, whereas licenses for the purchase of large own-account trucks are restricted to companies who can demonstrate that their sales and transportation requirements exceed certain thresholds. Applicants for common-carrier licenses similarly have to prove a community need for their services; applications have to go through a cumbersome procedure of approval by first provincial then national governmental license commissions. 2.04 The operators of large common-carrier trucks have to be affiliated to their local branch of the "Office National des Transports" (ONT), a public agency which has a monopoly of freight forwarding services. The ONT acts as a marketing and billing agency, applying standardized ton-km rates set by the MOT and charging 6% of the freight rate as its commission. It also makes sure that carriers have appropriate insurance coverage. All licensed carriers are required to use these services, except in Casablanca, where they may negotiate business directly with customers up to certain limits. The ONT dispatchers distribute shipments among their affiliated truckers in proportion to each carrier's capacity, and reserve a portion for out-of-city truckers seeking back-hauls. Those for whom no back-haul load is available receive a compensation payment funded out of an additional 8% levy on all freight charges. Each ONT terminal has a small warehouse for consolidating and distributing less-than-truckload shipments. Its 6% commission allows ONT to make a modest profit. 2.05 The ONT therefore seeks to capture for shippers and truckers the economies of scale inherent in a unified marketing system. To its customers it offers the advantages of advertised rates, standardized billing procedures and guaranteed insurance coverage, and to the trucker it provides overhead services that most operators could not afford to provide for themselves (most have fewer than five trucks). But the system also has disadvantages compared to a market where private freight forwarders compete for business and where truckers and customers are free to negotiate directly if they prefer. Firstly, the system of distributing shipments evenly among carriers gives them little incentive to improve their performance by running a greater distance each year, raising their payload factor or minimizing empty backhauls. Secondly, the Government's control over rates and its reluctance to raise them to keep up with inflation have allowed truckers insufficient profits to renew their fleet. As a result many ONT trucks are old models overdue for replacement and costly to keep operating. Thirdly, many unpaved roads are accessible only to small trucks, but since small trucks are allowed no access to the ONT terminals, any long-distance haul whose origin is off the paved network has to be performed entirely by the small trucks, even though a large-capacity truck might be half as costly for the line haul. 2.06 Overall, the disadvantages of the system appear to outweigh the  -9- advantages. The breakdown of truck traffic suggests that much of the market prefers not to use ONT's services, for reasons which have not been clearly established. An origin-destination survey in 1977 under the Bank's Second Highway Project found that the trucks under 5.5 tons were performing as much as 39% of all ton-km and large own-account vehicles 40%, leaving the ONT trucks only 21%. In principle, large common-carrier trucks have a significant cost advantage over small trucks because of their higher ratio of payload to deadload and their access to ONT's marketing services. They also have an advantage over own-account trucks because of their opportunities for more intensive utilization. One would therefore expect them to have a considerably larger market share. The cost to the economy of this misallocation of traffic is considerable. A very rough estimate is that a shift to larger, more intensively used trucks could reduce total trucking costs by US$40-80 million per year net of taxes (see para. 4.22). 2.07 The Government is eager to improve the distribution of traffic, but opinions are divided as to whether responsibility lies with the operators of small trucks, who practise widespread overloading, or with the licensing system, or with ONT. To assist it in resolving this issue, the project will include a survey of the freight market and review of trucking organization, licensing and regulation (para. 3.19-20). Outside the project ONT intends to arrange vocational training for staff of the terminals and affiliated trucking cooperatives, and to construct three new freight terminals. C. The Road Network 2.08 The road network is adequate in density in most parts of the country to satisfy the demand that we have briefly described. The road classification system is being revised, but the present breakdown is as follows: Table 2.1: ROAD NETWORK BY CLASSIFICATION, 1982 (km) Paved Unpaved Total Primary 8,739 1,709 10,448 Secondary 6,077 2,556 8,633 Tertiary 11,478 27,256 381734 TOTAL 26,294 31,521 57,815 % of Total 45 55 100 Source: Ministry of Public Works, June 1982 2.09 Over the past five years, additions to the paved network have averaged only 325 km per year, or 1% of the existing paved length. The corresponding figure for unpaved roads is 190 km. Between 80 and 90% of all traffic runs on the paved primary and secondary roads. The geometric design standards of the classified roads are generally satisfactory, but the  - it - pavements, commonly a surface dressing on a crushed stone base, are increasingly becoming inadequate to carry present traffic. 2.10 The maximum authorized gross vehicle weight limit is 38 tons, with maximum axle loads set at 13 tons. The National Highway Master Plan prepared by consultants in 1976 found that trucks exceeding 10 tons in gross weight account for about 11-13% of total traffic. The spectrum of axle loading is not well known, as only one survey of axle loads has been carried out. This survey, made between July 1977 and May 1978, showed that the average heavy vehicle nas 2.3 axles and a load factor of 0.94 equivalent standard axles (8.2t). This result indicates that the current traffic has a relatively low impact on road deterioration, as is demonstrated by the fact that a need for pavement strengthening has been felt only in recent years. 2.11 Enforcement of axle-load limits or total vehicle weights is almost nonexistent, because of a lack of weighing equipment. This situation is expected to improve in the near future since the Third Highway Project is financing the purchase of portable scales and fixed weighbridges. Overloading of trucks is widespread but generally confined to trucks with a gross weight tip to 5.5 tons, as these trucks are unregulated and the truckers often load all the freight they can find. Larger trucks, in contrast, get their freight mostly through the ONT, which can exert a degree of control over the payloads. D. Administration 2.12 The MPW's Roads and Traffic Department (RTD), whose organization is shown on the attached chart, is responsible for the design, construction and maintenance of the classified road network. The headquarters, however, deals only with matters of general planning, coordination and supervision, since the district offices have a large degree of autonomy in planning, contract award and administration, and supervision of works. The field organization has been expanded recently and now consists of 35 provincial offices, grouped under seven regional offices, with 70 subdivisions. There is continuous contact between the headquarters and the engineers in charge of the district offices, which allows problems to be identified and solved quickly. 2.13 RTD's organization is quite adequate to deal with the road network under its authority, but it could improve its efficiency by organizing its services better and introducing new techniques. The RTD has already taken a first step in this direction with the study into the organization of road maintenance being financed under the Third Highway Project. The next steps planned are the strengthening of the economic studies, management systems and maintenance staff. The RTD has asked the Bank to provide technical assistance for this purpose under the proposed project (para. 3.22). E. Planning 2.14 The final proposals for investments to be included in a five-year plan are based on a process which involves all levels of RTD's offices down to the subdivision, taking into account both economic analyses and consideration of the wishes of the population. The proposed investment program approved by  - 11 - RTD's management is then sent to the Ministry of Finance for review in the light of financial constraints, then to the Parliament for final approval. The road-related items in the proposed project are included in the 1981-1985 Development Plan with the possibility of transferring unspent amounts to subsequent years. 2.15 Road maintenance is planned by the regional offices through the subdivisions on the basis of maintenance standards prepared by the central Road Maintenance Division. These standards are adequate to keep the roads in satisfactory condition, but budget constraints generally reduce the planned operations. The selection of priority roads to maintain is then made on the basis of economic evaluation, where the primary consideration is the traffic level. 2.16 The National Center for Pavement Evaluation ("Centre National d'Auscultation des Chaussees" - CNAC), which is being equipped under the Third Highway Project and receives technical assistance from the Belgian aid program, will shortly start to collect information on road deterioration, which will help improve the planning of road maintenance, including pavement strengthening. F. Financing 2.17 Funds for road investment and maintenance on the classified network are allocated out of the MPW's budget, which is included in the Government's yearly general budget. The current five-year plan has set optimistic objectives for roads, allocating them DH 3.5 billion (US$574 million). Table 2.2 shows the amounts spent for road investment during 1978-1980, and the amounts provided in the Plan for 1981-1985. The latter are based on end-1980 prices and may be revised for price inflation according to the current financial situation. During 1981, the first year of the Plan, only 65% of the allocated amount was committed. The current budgetary constraints suggest that this trend will continue during the remaining years of the Plan. 2.18 Based on an early estimate of the proposed project's cost, the Plan includes DH 678 million for the road-related components during the years 1982-85, and DH 100 million in 1986. These amounts are in line with the estimated cost of the project as shown in Table 3.2 (DH 802 million). The amount for the freight market study is not provided for in the Plan, but the RTD has agreed to make the required amount available from its own budget. G. Budgetary System and Financial Control 2.19 The main features of the Moroccan budgetary system, as applicable to the proposed project, are given in Annex I. The capital budget comprises multi-annual commitment authorizations, which cover award of contracts to be carried out over more than one year, and corresponding annual payment authorizations to cover invoices received during the fiscal year. This technique is well suited for the proposed project. Another favorable feature is that the capital budget covers the totality of project costs without regard to the financial sources; thus, even if external financing is not forthcoming, the budgetary instrument exists to start implementing projects.  - 12 - Table 2.2: ROAD INVESTM4ENTS, 1978-1985 Primary and Secondary Tertiary Feeder Tourist Special Roads Roads Roads Roads Equipment Projects Total -DH million ---------------------- Actual 1978 55 15 27 16 n.a. 1 114 1979 69 21 15 - n.a. 7 112 1980 115 21 43 25 n.a. 52 256 Planned 1981 286 50 67 13 40 41 496 1982 356 120 78 6 170 66 796 1983 555 170 47 9 38 45 864 1984 570 170 37 8 18 10 812 1985 366 170 29 - - - 565 TOTAL, 2132 680 258 35 265 162 3533 1981-85 Source: RTD and 1981-85 Five-Year Development Plan, June 1982 2.20 Each investment project (or group of projects) is identified by a line ("ligne budgetaire") in the capital budget and in the utilization program ("programme d'emploi") agreed upon between the Ministry of Finance and the technical ministries. In June 1982 it was agreed between the Government and the Bank that each Bank-financed project component would be identified by a line for easy reference and monitoring of counterpart funds (para. 3.36). 2.21 The accounting system in the MPW and MOT and the related internal and external control procedures are also described in Annex I. Although cumbersome, these procedures are considered suitable for the purposes of the proposed project. H. Engineering 2.22 The RTD's Studies Division is responsible for preparing major highway projects. The division's staff is well qualified, particularly in engineering, but is insufficient in number to carry out much design work in-house. The long-term goal of RTD's management is to increase the staff by employing newly graduated engineers and enhance their experience on the job. The technical staff in the field is also satisfactorily qualified and is able to prepare minor engineering designs.  - 13 - 2.23 Several domestic consulting firms are now available for medium-sized projects. Designs and feasibility studies for major roads and bridges are generally prepared by foreign consulting firms, some of which have established local branches. 2.24 Highway design standards were prepared in 1978; explanations and examples have been added for easy interpretation by the field staff. These standards, which are satisfactory, cover four different categories of roads whose design speed ranges from 60 km/h to 120 km/h. In exceptional cases, however, such as the Casablanca-Rabat expressway, special standards are adopted. 2.25 The domestic engineering capability is complemented by the semi-public soil tests and studies laboratory ("Laboratoire Public d'Essais et d'Etudes" - LPEE) which can carry out all soil and material tests required for civil works, as well as engineering studies such as road strengthening and pavement design. The LPEE's staff is well trained and has acquired experience by preparing all road strengthening studies for the earlier Bank-financed highway projects and some preparatory studies for this project. I. Construction 2.26 Construction, improvement and strengthening works are undertaken by contract. There is a sufficiently equipped domestic road contracting industry, including about eight major firms capable of carrying out relatively large works and of implementing the amount of road works planned. For this reason, foreign contractors have not participated in bidding for road construction in the past several years. Contracts are awarded after competitive bidding. 2.27 The supervision of construction is carried out by RTD's regional staff, assisted by the LPEE for the necessary soils and materials' tests. The LPEE also undertakes some specialized parts of the supervision if the technical staff in a given region is unable to fulfill all tasks. For major road construction, the RTD establishes a special supervision office with engineers and other specialists permanently assigned to the supervision of the road. The combined capability of RTD and LPEE in supervising road construction is adequate to deal with contracts as large as those included in the project. J. Road Maintenance and Improvement 2.28 Road maintenance needs are reviewed yearly or every second year, and comprehensive instructions are issued to the regional offices. The field staff plans the maintenance works on the basis of these instructions and a general maintenance program is prepared at the headquarters. Road maintenance is generally limited to paved roads, the unpaved roads receiving attention only when urgent repairs are needed. Because of the lack of sufficient facilities, the district offices undertake only minor repairs of the road equipment fleet. Private workshops carry out large-scale repairs, but the major overhauls require specialized workshops which are available only in the principal cities.  - 14 2.29 Road maintenance equipment is not used as fully as it might be, the maior reasons being: (i) the long trips that, in many cases, it must do to reach the sites of maintenance works; and (ii) the extended idle periods required for major repairs because of the lack of suitable workshops. The former obstacle has been partially removed by increasing the number of field offices (para. 2.12) and is expected to be fully removed with the purchase of additional equipmernt uinder the proposed project. To reduce the idle time because of repairs that cannot be done in the field workshops, the RTD envisages building and equipping a central workshop, two major regional workshops and minor ones in those districts which still have no facilities. The project will finance construction and equipment of the central and regional workshops (para. 3.12). 2.30 Until 1979 funds for road maintenance were sufficient for only a limited level of maintenance. In the following years, however, the budgeted amounts increased noticeably tc satisfy the commitment the Government undertook at the negotiations for the Third Highway Project (Table 2.3). Although the amounts budgeted for road maintenance even exceeded the agreed amounts, the executed maintenance programs could not always reflect the agreed quantities oecause of inflation, which increased the cost of materials, Table 2.3: ROAD MAINTENANCE EXPENDITURES 1977-1982 Primary and Secondary Tertiary Tourist Roads Roads Roads Salaries 1/ Total Average er Km