Tanzania - Sixth Highway Rehabilitation Project

Document of The World Bank FOR OFFICALL USE ONLY Report No. 14641 IMPLEMENTATION COMPLETION REPORT UNITED REPUBLIC OF TANZANIA SIXTH HIGHWAY REHABILITATION PROJECT (CREDIT 1688-TA) JUNE 20, 1995 Energy and Infrastructure Operations Division Eastern Africa Department 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 - Tanzanian Shilling (T Sh) Year Exchan!e Rate Appraisal Year Average (1986) US$1 = T Sh 16.415 US$1 = SDR 1.155840 1990 Average US$1 = T Sh 200 US$1 = SDR 0.78 Completion Year Average (1994) US$1 = T Sh 450 US$1 = SDR 0.72 WEIGHTS AND MEASURES (Metric System) 1 meter (m) = 3.28 feet (ft) 1 square meter (m2) = 10.76 square feet (sq. ft) 1 cubic meter (m3) = 35.3 cubic feet ( cu. ft) 1 kilometer (Iam) = 0.62 mile (mi) 1 square kilometer (km2) = 0.39 square mile (sq mi) 1 metric ton (mt) = 2,205 pounds (lb) FISCAL YEAR OF BORROWER Julyl- June 30  FOR OFFICIAL USE ONLY ABBREVIATIONS AND ACRONYMS AfDF African Development Fund AGC Attomey General Chambers CODAP Coordination Office for Donor Assisted Projects CTB Central Tender Board DANIDA Danish Intemational Development Agency ERR Economic Rate of Retum GOT Govemment of Tanzania ICR Implementation Completion Report FY Fiscal Year ICB Intemational Competitive Bidding IDA Intemational Development Association IRP Intergrated Roads Project IRP II Second Integrated Roads Project MCTI MCW's Morogoro Training Institute MCW Ministry of Communications and Works MOE Ministry of Education MOW Ministry of Works MWCT Ministry of Works, Communications and Transport NCC National Construction Council NORAD Norwegian Agency for Development Corporation NTC National Transport Corporation PEHCOL Plant and Equipment Hire Company SAR Staff Appraisal Report SOE Statement of Expenditure TANZAM Tanzania Zambia Highway TAZARA Tanzania Zambia Railways Authority THA Tanzanian Harbour Authority TRC Tanzanian Railway Corporation voc vehicle operating costs vpd vehicles per day This document has a restricted distribution and may be used by recipients only in the performance of their ofricial duties. Its contents may not otherwise be disclosed without World Bank authorization.   TABLE OF CONTENTS Page No. PREFACEA -- EVALUATION SUMMARY------- --- ii PART I - PROJECT IMPLEMENTATION ASSESSMENT --1 A. STATEMENT/EVALUATION OF OBJECTIVES 1 Objctdves 1 Project Implementation and Organization. 2 Project Restring 3 B. ACIEEVEMENT OF PROJECT OBJECTIES 3 Physical Objectives 3 C. IMPLEMENTATION RECORD AND MAJOR FACTORS AFFECTING THE PROJECT 4 D. PROJECT SUSTAINABILITY 6 e BANK PERFORMANCE 7 F. BORROWER PERFORMANCE 7 G. ASSESSMENT OF OUTCOME 8 K FUTURE OPERATION 8 L KEY LESSONS LEARNED. 8 PART II - STATISTICAL TABLES--------------- -------------------10 TABLE 1: SUMMARY OF ASSESSMENTS 10 TABLE 2: RELATED BANK LOANS/CREDITS 11 TABLE 3: PROJECT TIMETABLE 12 TABLE 4: CREDIT DISBURSEMENTS 12 TABLE 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION 13 TABLE 6: KEY INDICATORS FOR PROJECT OPERATION 13 TABLE 7: STUDIES INCLUDED IN PROJECT 14 TABLE 8A: PROJECT COSTS 15 TABLE 8A-1: PROJECT COSTS FUNDED BY IDA 16 TABLE 8B: PROJECT FINANCING (UJS$M) 17 TABLE 9: ECONOMIC COSTS AND BENEFITS 17 TABLE 9A: ECONOMIC RATES OF RETURN (ERR) 18 TABLE 10: STATUS OF LEGAL COVENANTS 19 TABLE 11: BANK RESOURCES: STAFF INPUTS 22 TABLE 12: BANK RESOURCES: MISSIONS -23  APPENDICES A- Mission's Aide Memoire B. Borrower's Contribution to the ICR C. Map  i IMPLEMENTATION COMPLETION REPORT UNITED REPUBUC OF TANZANIA SIXTH HIGHWAY REHABIUTA TION PROJECT (Credit 1688-TA) PREFACE This is the Implementation Completion Report (ICR) for the Sixth Highway Rehabilitation Project in Tanzania, for which Credit 1688- TA in the amount of SDR 43.3 million (US$ 50 million equivalent) was approved on June 25, 1986 and made effective on December 4, 1986. The credit was closed on June 30, 1994, compared with the original June 30, 1992 closing date. It was fully disbursed, and the last disbursement took place on October 31, 1994. Parallel financing for the project was provided by grants from the governments of Denmark (IJS$ 2 million) and Norway (US$ 17.1 million), and a loan from the African Development Fund (US$ 17.45 million). The total financing of the project, including the Government contribution (US$ 22 million) was US$ 117.15 million. The ICR was prepared by Mr. Yitzhak Kamhi, Task Manager, and Mrs. Aoufa Ezzine, Consultant, Energy and Infrastructure Division of the Africa region, and reviewed by Mr. Stephen Weissman, Division Chiet and Mr. S.K. Agarwal, Project Advisor, AF2DR.. Preparation of this ICR was begun during the Bank's final supervision/completion mission in November 1994. It is based on materials in the project file. The borrower contributed to preparation of the ICR by preparing own evaluation of the project's execution (Appendix II).   ii EVALUATION SUMMARY Introduction 1. Tanzania is a large country (945,000 km2) with a widely dispersed population of 28 million, most of whom live in rural areas. Agriculture is the key sector, accounting for over 60 percent of GNP, 90 percent of employment and about 85 percent of foreign exchange eamings. Transport plays a vital role in this sector for intemal distribution and marketing of inputs and food crops, including export of cash crops. The transport infrastructure also serves as an important corridor for the extemal trade of Tanzania's land-locked neighbors- Zambia, Burundi, Rwanda, Uganda, Zaire and increasingly, Malawi. Roads are predominant means of transport in all sectors, with railways carrying a major share of the important import/export traffic. 2. The transport system is comprise of five sectors: (i) a road network of about 82,000 kms; (ii) two railway systems totaling about 3,610 kms of track (2,640 kms operated by the Tanzanian Railway Corporation (TRC) and 970 kms within Tanzania by the jointly owned Tanzania/Zambia Railway Authority (TAZARA)); (iii) ocean ports managed and operated by the Tanzanian Harbours Authority (THA); (iv) two international airports and over 60 smaller airfields (mostly unpaved); and (v) a pipeline conveys crude oil products from Dar-es-Salaam to the Zambian border. 3. The basic road network links all the main production centers but with varying degrees of efficiency. At the time of project appraisal, only about 3,000 kms (30 percent) of the trunk roads were paved and most had deteriorated due to lack of maintenance. The two rail systems were also in varying degrees of disrepair due to poor maintenance of tracks, locomotives and wagons. The transport sector in general suffered from a shortage of trained and experienced personnel, weak management, and an acute scarcity of foreign exchange to meet the costs of spare parts and imported materials. 4. The Bank Group has extended credits and loans to help finance five highway projects, one trucking project, two railway projects, and five port projects. Prior to this credit, and during the earlier years of lending, the projects concentrated on financing of construction and equipment. The focus later shifted to the strengthening of local institutions with provisions for technical assistance and training. While experience with the execution of physical components has generally been satisfactory, the technical assistance and the training objectives have been difficult to achieve mainly because of (i) delays in the appointment of technical assistance staff, (ii) cultural and language adjustment problems of technical assistance staff, (iii) lack of effective administrative commitment by Government, (iv) lack of suitable local counterparts, and (v) unrealistic targets. Experience also showed that technical assistance staff should be more carefully chosen to ensure their suitability.  iii 5. An important lesson learned from the fourth and fifth highway projects was the high cost of undertaking civil works by force accounts. Efforts should be made to develop the local contracting industry so that much of the road maintenance and rehabilitation works could be let out to contractors. The Sixth Highway project included a component to promote the execution of road maintenance works by contract. 6. This project was prepared and appraised in 1985 under a very different economic environment than when implemented in 1986. The macroeconomic reform started in 1986 when the Government launched the Economic Recovery Program (ERP). The measures initiated at that time included significant exchange and interest rate adjustments, increases in producer prices for export crops, and reduction of the number of price-controlled items. These actions were followed up with trade liberalization measures including export retention accounts and the Open General License facility (OGL), gradual dismantling of administrative controls over prices and distribution, and progressive devaluation of the currency. The economic response to these reforms was positive, with Gross Domestic Product growing at between 4 and 5 percent per annum. Agricultural production also increased substantially. The volume of road traffic, transport of crops out of the rural areas and transport of consumer goods into the rural areas increased despite the deterioration of the road infrastructure. Roads were deteriorating faster than they were rehabilitated. Project Objectives 7. The objectives of the project, were to: (i) reduce the transport costs by rehabilitating the most important sections of the highway network; (ii) improve the system of road maintenance works by increasing contractors rather than by force account; (iii) assist and expand the capacity and efficiency of the trucking industry; and (iv) increase the availability of trained engineers in Tanzania. 8. The project provided for: (i) a road rehabilitation program consisting of 295 kms of the TANZAM Highway and 700 kms to 1,000 kms of gravel roads; (ii) an equipment rehabilitation program for the inoperable equipment and vehicles bought under the Fourth and Fifth Highway projects; (iii) technical assistance to the Ministry of Communications and Works (MCW) in project coordination, road maintenance, and equipment management; (iv) general training to MCW staff, (v) assistance to the local contracting industry;, (vi) assistance to the trucking industry; and (vii) consulting services to carry out an agricultural feeder road study, various feasibility studies and detailed engineering for several roads. 9. The project had to be restructured as a result of the increased scope of work, e.g. widening of unpaved roads and asphalt chip sealing of pave road shoulders. The number of kilometers of gravel roads had to be reduced from 1,000 kms to 130 kms. Since preparation of the Integrated Roads Project (IRP) was well underway, the work not contracted under this project was rolled over to IRP. NORAD increased its contribution from USS 6.9 million to US$ 17.1 million to finance an additional section of Tanzam  iv Highway, increasing the total length of the road sections to be rehabilitated from 295 kms to 370 kms. Imnplementation Experience and Results 10. While the project as restructured met substantially its objectives for the road rehabilitation components, it partially achieved its objectives for the technical assistance and training components, and it failed its objectives for equipment rehabilitation component. 11. The vehicle operating costs were reduced in average by at least 30 percent for all the rehabilitated roads. The Economic Rate of Return now is 41 percent for Tanzam Highway, compared to 39 percent at appraisal, and 37 percent for the gravel roads, compared to 27 percent at appraisal. The data provided by MWCT indicated an increase of traffic in the Tanzam Highway (almost three times more than the appraisal estimates), which is due to higher economic activity as a result of the improvement of the roads. 12. The project as a whole was completed two years behind schedule, in 1994, with considerable delays and variations for the various project components. 13. Procurement delays were the main cause of slow start-up of the project. This prompted the inclusion, under IRP, of a comprehensive study to overhaul the Government's procurement and supply management system, preceded by agreement between GOT and IDA of interim procurement regulations, standard procurement documents and more realistic procurement decision-making limits at ministry and regional levels. 14. The roads works proved to be a major source of delays, due to inadequate and poorly documented engineering designs. As a result, significant changes occurred in the field and the actual costs of roads works had been increased well above appraisal estimates. As result of this cost overrun, the project scope had to be amended and the road rehabilitation was concentrated on Tanzam Highway, by expanding it to 370 kms. The scope of the gravel road rehabilitation was reduced from about 1000 kms to 130 kms and the remaining work was rolled over to IRP. 15. The equipment rehabilitation component started 2 years behind schedule. The delay was caused by weak management within the MWCT, lack of proper planning of plant maintenance and utilization of spare parts, and delays in procurement decisions. These problems remain to date. 16. The training and technical assistance components had a slow start up due to delays in the completion of the training facilities. 17. The initial project cost at appraisal was estimated at US$107.7 million. The final project cost rose to US$ 117.15 million primarily due to (i) due to the inclusion of the  v equipment rehabilitation component (US$2.9 million), (ii) the increased component for the feasibility studies (US$ 7.4 million), and (iii) the exchange rate fluctuation (US$8.6 million). Funding of the total project costs was provided by IDA (US$ 58.6 million), grants from NORAD (US$17.1 million) and the government of Denmark (US$2 million), loan from the African Development Fund (US$17.45 million) and a government contribution of US$22 million. 18. The project outcome was satisfactory since the project substantially met its objectives for the paved road rehabilitation component. With this project providing invaluable experience to MWCT, the ministry is better prepared to manage and contract IRP's massive investments. Additionally, with regards to institutional development, the project increased the availability of trained engineers in Tanzania. Further, the assistance to the Local Contracting Industry enabled the Borrower to improve the local construction industry. Local contractors acquired training in project management, budgeting, and preparation of bidding documents. Some of these contractors are now undertaking civil works under IRP. The assistance to the trucking industry constituted technical assistance especially accountants and mechanics, and the provision of spare parts, tires and workshops tools for the Regional Trucking Companies (RETCOs). Summary of Findings, Future Operations and Key Lessons Learned 19. As noted, this project helped in the preparation of the IRP, in the sense that the lessons learned during implementation of the Sixth Highway project were taken into account in the preparation of IRP. The two ongoing IRP projects, which provided for rehabilitation works and institutional support to MWCT, will provide support to the Government by giving priority to road maintenance, improving transport sector administration through policy and institutional reforms, expanding the domestic roads construction industry; improving management and procurement practices, and mobilizing and coordinating the substantial resources required to support these actions. Key Lessons Learned 20. Lessons from the project are: e Undertake main institutional changes prior to project effectiveness. The structure of road administration has been subject to frequent changes during the implementation of the project. The result of these changes was confusion, poorly organized planning administration and ineffective long-term institutional and work force development. Therefore, main institutional and policy changes, including reorganization and institutional reinforcement of roads administration, as well as changes in the procurement regulations should be undertaken prior to project effectiveness.  vi * Phase policy changes with implementation progress. Physical progress is often needed to highlight the needed changes. It would be appropriate to annually review the program and to phase it with implementation progress, using subsequent fund releases based on continuing institutional reforms and strengthening. * Re-evaluate the engineering design of the roads works before commencement of project. Inadequate engineering design of roads works and weak documentation caused substantial changes in the field, delays in the implementation, and cost overruns. A careful reevaluation of the engineering design prior to actual commencement of works would avoid such delays and cost overruns. * Condition the approval of roads works contracts financed by IDA on the Government agreed annual road budget. Road networks are deteriorating faster than the level of investments to rehabilitate and to maintain them. Therefore, the Government should invest more in timely periodic road maintenance works, while IDA's contribution should be for road rehabilitation and upgrading projects. - Establish a maintenance strategy for the roads. No project can be sustained without policy and institutional reforms for proper maintenance strategy for the roads network. - Improve the regulatory environment to stimulate the development of the private sector. An important objective of the project was to carry out major maintenance and rehabilitation works by contract rather than by force account. Strengthening the Government's contract management capacity and capability would promote private sector participation in road maintenance. * Public sector based equipment rehabilitation programs do not work. The failure of the various efforts of the Government to implement this component have led to a decision to leave this to the private sector.   PART I - PROJECT IMPLEMENTATION ASSESSMENT A. STATEMENTIEVALUATION OF OBJECTIVES Objectives 1. The objectives of the project, which formed part of the Borrower's Transport Sector Investment Program (FY1986-FY1988) were to: (a) support the Borrower's efforts towards improvement in the efficiency of its transport operations and maintenance; and (b) expand the effective capacity in its territory in order to assist the Borrower in its efforts to rehabilitate its economy, particularly the agricultural sector. The project consisted of the following components: (i) Road rehabilitation program (a) Rehabilitation of six sections of the Tanzam highway totaling 295 kms; (b) Rehabilitation of 700 kms to 1000 kms of gravel roads; and (c) Provision of technical assistance for the supervision of construction of the above works. (ii) Equipment rehabilitation program: (a) Rehabilitation of inoperative road maintenance equipment and vehicles; and (b) Provision of technical assistance for the supervision of the above activities and reorganization and strengthening of six zonal workshops and the central workshop at Morogoro. (iii) Technical assistance to MCW: (a) Strengthening the capabilities of the Borrower's Ministry of Communications and Works by the provision of technical assistance in project coordination, training, road maintenance, and equipment management and service. (iv) Training: (a) Provision of fellowships for training abroad of engineers, planning officers and other professionals of MCW; (b) Establishment of a three-year highway technicians course for about twenty- five highway technicians at the Dar-es-Salaam Technical College;  2 (c) Training of existing field supervisory personnel at the Morogoro Training School; and (d) Preparation and supervision of annual in-service training program for MCW staff, (v) Assistance to Contracting Industry: (a) Training of local contractors, in the areas of cost estimation, preparation of bids, site management, methods of execution of roadwork and contractual obligations; and (b) Technical assistance to local contractors in carrying out periodic maintenance and rehabilitation works. (vi) Assistance to Trucking Industry: (a) Strengthening of public regional trucking companies by the provision of technical assistance in the areas of management, accounts, vehicles maintenance and vehicles repair, and in assisting in the execution of Part 2 below; and (b) Provision of spare parts, tires and batteries for both public and private truck operators; (vii) Studies: (a) Carrying out of feasibility studies and detailed engineering of sections of the Chalinze-Segera-Mkumbara, Tanga-Segera and Arusha-Moshi roads; and (b) Carrying out an agricultural feeder roads study. 2. Given the deteriorated state of the country's high priority trunk road, the complete lack of maintenance on the rural/feeder roads and the urgent need to alleviate constraints in the movement marketing and export of agricultural products, the project objectives were clear and important for the sector, and in line with the Association's country strategy. Project Implementation and Organization. 3. The Department of Roads under the MWCT was in charge of the project's implementation. The assistance to the local contracting industry was implemented by the National Construction Council (NCC) under the direction of the MWCT. Similarly, the assistance to the trucking industry was implemented by National Transport Corporation  3 (NTC) under the direction of MWCT. A project coordinator from MWCT was responsible for overall coordination of the various project elements and disbursements of the credits funded by IDA and AfDF. IDA managed NORAD funds through a trust fund agreement. Project Restructuring 4. In November 1989, the Bank and the Government agreed to the following substantial changes: (i) revise the financial participation of IDA in rehabilitating road maintenance equipment and civil works, in order to reduce Government participation in the project costs to about 10 percent (from 20 percent as appraised), and to bring the cost share in line with the subsequently appraised Integrated Roads Project (IRP); (ii) increase scope of works, by widening unpaved roads and asphalt chip sealing of paved roads shoulders. With increased IDA participation in roads works to a more realistic percentage for a country in Tanzania's economic situation, and increased scope of works, the number of kilometers of gravel roads had to be reduced, from 700 kms-1,000 kms to 130 kms. Since the preparation of IRP was well underway, those works not contracted under this project were rolled over to IRP. (iii) increase the total length of the sections of TANZAM Highway to be rehabilitated, from 295 kms to 370 kms. This was result of the additional financing provided under this project by the Government of Norway; for rehabilitation of section 5 of the TANZAM Highway; (iv) increase from $500,000 to $1,000,000 the upper limit amount for contracts used for training of domestic contractors in road works; (v) provide MCWT with greater flexibility in the procurement procedures to carry out the equipment rehabilitation component; and (vi) permit direct contracting of equipment repairs with local garages. B. ACHIEVEMENT OF PROJECT OBJECTIVES Physical Objectives 5. The project initiated a program to help reduce transport as a constraint facing the Tanzanian economy, through the rehabilitation of the most important sections of the  4 highway network. The economic recovery could not be sustained unless the transport costs are reduced and accessibility to the primary agricultural areas are improved. 6. The project, as restructured, substantially met its objectives for the road rehabilitation component, especially the part funded by IDA and NORAD. However, it only partially achieved its objectives for the technical assistance and training components. Further, it failed to meet its objectives for the equipment rehabilitation component. 7. The rehabilitation of 370 kms of Tanzam Highway restored a portion of the principal artery of the country to a maintainable condition. The vehicle operating costs were reduced in average by at least 30 percent for all the rehabilitated roads. The Economic Rate of Return is calculated at 41 percent for Tanzam Highway, compared to 39 percent at appraisal, and at 37 percent for the gravel roads, compared to 27 percent at appraisal. Section 1 of Tanzam Highway, was in better condition than the others and has therefore the highest rate of return (75 percent). The data provided indicated a high traffic increase on Tanzam Highway (almost three times more than the appraisal estimates), which is due to the observed higher economic activity and to the improvement of the road sections (Tables 9 and 9A). 8. With respect to institutional development, major improvements were achieved: (i) the Ministry was able to fill the vacant positions identified at the appraisal of IRP; and (ii) the project increased the availability of trained engineers in Tanzania. About 80 undergraduate engineers were trained, 20 of which obtained academic degrees at M.Sc level. These engineers were added to the pool of engineers needed to implement the Integrated Roads Project. A study on agricultural feeder roads provided the basis for successful institutional restructuring of the organization of the MWCT, creating a new rural roads division with a task of supervising the Core Rural Roads Program (CRRP). 9. The assistance to the Local Contracting Industry enabled the Borrower to strengthen the local construction industry. Local contractors acquired training in project management, budgeting, and preparation of bidding documents. Some of these contractors are now undertaking civil works under IRP. 10. The project continued the effort started under the previously successful IDA- financed project (Cr 743-TA); to expand the capacity and to improve the efficiency of the trucking industry. The assistance to the trucking industry was comprised of technical assistance, especially accountants and mechanics, and the provision of spare parts, tires and workshops tools for the Regional Trucking Companies (RETCOs). C. IMPLEMENTATION RECORD AND MAJOR FACTORS AFFECTING THE PROJECT 11. All the components commenced with delays ranging from 5 to 24 months. Initial delays were mainly caused by slowness of MWCT, MOF, A.G. Chambers and Central Tender Board (CTB), in the engagement of consultants and in procuring goods and  5 works. This led to the inclusion under IRP of a comprehensive study to overhaul the Government's procurement and supply management system, preceded by agreement between GOT and IDA of interim procurement regulations, standard procurement documents, and more realistic procurement decision-making limits at ministry and regional levels. 12. The roads works proved to be a major source of delays, due to inadequate and poorly prepared engineering designs. As a result, significant changes occurred in the field and the actual costs of roads works were above the appraisal estimates. To deal with this cost overrun and actual needs of the transport sector, the project scope was amended and the road rehabilitation was concentrated on Tanzam Highway; which was expanded to 370 kms. The scope of the gravel road rehabilitation was reduced from about 1000 kms to 130 kms, while the remaining components were transferred to the subsequent appraised Integrated Roads Project (IRP). The economic rationale behind this choice of giving the priority to Tanzam Highway over the gravel roads is neither clear nor documented. Alternatively, a total of total 370 kms of Tanzam Highway and 110 kms of gravel roads were rehabilitated. The rehabilitation of gravel roads started about 32 months behind schedule. The main causes of delays were i) scarcity of equipment, ii) weak local contractor performance, iii) lengthy period to contract consultants, and iv) under- estimation of time needed for preparing detailed engineering. 13. There was a delay of about 24 months in the commencement of the rehabilitation of inoperative road maintenance equipment and vehicles. The delay was caused by weak management within MWCT and delays in procurement decisions. Specifically, the Attorney General's Chambers (AGC) and the Central Tender Board (CTB) delayed in approving negotiated contracts with private garages for repair of MWCT's road maintenance equipment. Based on the agreed amendment to the credit agreement, in November 1989, which allowed negotiated contracts, as well as IDA funding 100 percent of the equipment transport and repair costs, agreement among AGC and MWCT was obtained to facilitate procedures for repair contracts and spare parts purchases. However, CTB rejected MWCT's appointment of a procurement agent selected through procedures agreed with IDA. This task is now managed by the Government owned Plant and Equipment Hire Company (PEHCOL). 14. DANIDA financed the strengthening of the capabilities of MWCT through the provision of technical assistance, consisting of 4 advisors in project coordination, training, road maintenance equipment management, and road maintenance programming. 15. The training program at the Morogoro training School had a slow start up due to delays in the completion of the training facilities. The training component is being continued under IRP with IDA funding for a further two years. 16. The assistance to the trucking industry sector had three components: (i) supply of spare parts, (ii) supply of tires and batteries; and (iii) technical assistance. Procurement of 4,800 batteries and 8,500 sets of tire tubs and flaps has been completed and distributed to transport operators by the local supply agents.  6 17. The assistance to the local contracting industry faced slow initial implementation because the trainees did not have any experience in roads works, maintenance and project budgeting. 18. All the studies were completed on time and more studies emerged from the implementation of the project including: (i) a feasibility study for trunk roads covering 3,000 kms of gravel trunk roads; (ii) pavement management study on Tanzam Highway; (iil) bridge and ferry crossing study covering all trunk road bridges and ferry crossings in the country; (iv) Tanzania Railways Corporation (TRC) study; and (v) Chalinze-Arusha Road feasibility study. The agricultural feeder roads study (financed by DANIDA) was completed on time and has identified some 1,300 kms of Core Rural Roads to be rehabilitated under IRP. The above study has been succeeded by the Core Rural Roads Study as part of a DANIDA-financed O&M study which has provided engineering design for 622 kms of rural roads and training of local consultants in rural road rehabilitation design. 19. Delays were also caused by the rejection by the Ministry of Finance of negotiated contracts with international consultants for short-term studies, because the firms would not be subject to Tanzanian taxes. An agreement was reached with the Ministry of Finance to exempt foreign consultants from taxation. 20. The MOF's regulations did not allow local contractors to receive foreign currency for importing parts, materials and contracted works. This affected local firms when competing against foreign firms, and severely hampered efforts to develop the local industry. 21. There was lack of agreement with the Bank on the method of application of import duties and taxes for road contracts awarded through ICB. 22. The project had to be restructured as a result of the increased scope of work, e.g. widening of unpaved roads and asphalt chip sealing of paved road shoulders. The number of kilometers of gravel roads had to be reduced from 1,000 kms to 130 kms. Since preparation of the Integrated Roads Project (IRP) was well underway, the work not contracted under this project was rolled over to IRP. NORAD increased its contribution from US$ 6.9 million to US$ 17.1 million to finance an additional section of Tanzam Highway, increasing the total length of the road sections to be rehabilitated from 295 mns to 370 kms. D. PROJECT SUSTAINABIUTY 23. The project, as restructured, achieved its purpose by beginning the rehabilitation of Tanzania's trunk roads as a forerunner to the massive road rehabilitation program under subsequent IRP, as well as by providing the mechanism for implementing studies to support IRP and the Railways Restructuring Projects. Actions taken by the Government under the IRP, will deternine the sustainability of the system established for maintaining  7 the main road network. The rapid increase in traffic volumes and loads since IRP, that commenced in the 1990s, will require special attention by MWCT in implementing the periodic reshaping and regravelling of unpaved roads and resealing and overlays of paved roads; especially for the highly trafficked Tanzawn Highway. If the maintenance system improvements are successful, the achievements generated by the Sixth Highway project are likely to be maintained. E. BANK PERFORMANCE 24. The project was identified, prepared and appraised at the time when the country's transport system was in disarray. The Association helped develop a program for the rehabilitation/strengthening of the country's vital trunk roads and institutional strengthening of various Government agencies. The Association's performance in project identification, as well as in the project preparation was satisfactory. It also assisted the Government in mobilizing donors to finance other components under the project. The Bank's supervision performance was generally satisfactory. The number of staff weeks required for the supervision of the project was doubled from the estimates given at the appraisal stage. The Association's supervision effort was adequate in spite of the lack of continuity in project supervision due to frequent changes in task management responsibilities. Five task managers and three Division Chiefs were involved during the implementation of the project. However, project implementation progress reporting was adequate and the performance rating given in Forms 590 appropriate, although in the last stages of project implementation when IRP started, supervision efforts were shifted from this project to IRP. F. BORROWER PERFORMANCE 25. The Borrower's performance in project preparation was satisfactory. During implementation, general progress was behind schedule because of lack of experience of the contractors and because of constant changes in scope of works as a result of inadequate design documentation. Starting 1991, implementation performance has been improved as a result of the parallel implementation of IRP. The Government showed its resolve in addressing problems facing both projects. On the institutional side, trunk and regional roads have been brought under common management of the Director of Roads and Aerodromes. Regional Engineers Offices have been firmly established and staffing has been adequate. On resource mobilization, a Road Fund was established in July 1991 to finance road maintenance and rehabilitation with revenues derived from a levy on fuel sales. These improvements have encouraged private sector provision of transport services and facilitated the movement of freight and passengers throughout the country. The Project Coordination Office ensured a successful coordination among donors, and managed effectively and timely payments from IDA Special Accounts, disbursement applications, project progress and auditing reports.  8 G. ASSESSMENT OF OUTCOME 26. The project outcome was satisfactory since the project substantially met its objectives for the paved road rehabilitation component. With this project providing invaluable experience to MWCT, the ministry is better prepared to manage and contract IRP's massive investments. Additionally, with regards to institutional development, the project increased the availability of trained engineers in Tanzania. Further, the assistance to the Local Contracting Industry enabled the Borrower to improve the local construction industry. Training of contractors and local engineers was important and essential and is being utilized under IRP. H. FUTURE OPERATION 27. The Integrated Roads Project, which is in two phases, IRP I and IRP AL is a radical new approach for improvement of transport sector in the country. The supervision of both projects is in progress. The objective of IRP in general is to restore Tanzania's trunk and regional roads network and to strengthen the MWCT's institutional capacity to properly maintain the networks. IDA continues to support this objective under IRP I by giving priority to road maintenance, expanding the domestic construction industry, improving management and procurement practices in the roads subsector, and mobilizing and coordinating the substantial resources required to support the program. X. KEY LESSONS LEARNED. 28. Lessons learned from the project are: * Undertake main institutional changes prior to project effectiveness. The structure of road administration has been subject to frequent changes during the implementation of the project. The result of these changes was confusion, poorly organized planning administration and ineffective long-term institutional and work force development. Therefore, main institutional and policy changes, including reorganization and institutional reinforcement of roads administration, as well as changes in the procurement regulations should be undertaken prior to project effectiveness. * Phase policy changes with implementation progress. Physical progress is often needed to highlight the needed changes. It would be appropriate to annually review the program and to phase it with implementation progress, using subsequent fund releases based on continuing institutional reforms and strengthening. * Re-evaluate the engineering design of the roads works before commencement of project. inadequate engineering design of roads works and weak documentation caused substantial changes in the field, delays in the implementation, and cost  9 overruns. A careful reevaluation of the engineering design prior to actual commencement of works would avoid such delays and cost overruns.