Madagascar - Seventh Highway Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 16054 IMPLEMENTATION COMPLETION REPORT MADAGASCAR SEVENTH HIGHWAY PROJECT (Cr. 1905-MAG) September 30, 1996 Transport Eastern and Southern Africa Africa Region This document has a restricted distribution and may be used bv recipients only in the perfornance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  ii CURRENCY EQUIVALENTS End of Pleriod Figures Malagasy Francs (FMG) Year per SDR per US$ 1988 2054 1 1526.4 1989 2 014. ) 1532.5 1990 208 .4 1465.8 1991 2T21. 5 1832.7 1992 2 626 5 1910.2 1993 2695. 8 1962.7 1994 5651.2 3871.1 June 1995 6920 (. 1 4411.2 Sources: International Financial Statistics, 1994 and February 1995 Note the ;-NIG startecd floatinei on May 1, 1994 WEIGIHT'S & MEASURES NMetric System GOVERNMENT OF MADAGASCAR FISCAL YEAR January 1 - December 3 1 ABBREVIATIONS & ACRONYMS DAF Direction Ain,inislicitive' ei P,,ai?c itre (Administrative and Financial Directorate) DG Direcleur (GLneral (Director Gener-al) DPDS )irection de Ia 1'rogramnaoallon el DeveloppementS ectoriel (Directorate of Programming and Sectoral Development) DR Directiotn de.v Routes (Dlirectorate of Roads) DM D)irect:on dle la 'laXfainctnalc'e (Directorate of Maintenance) FMG MalatasN, Franc GOM Government of the Republic of Madagascar ICR Implementation Completion Report IDA International Developinent Association [NINFRA Inst7itut Nat ioua/l de.s Infrastlructre. (National Infrastructure Institute) MOF AiwistL're des 1- tinalccs (Ministry or Financc) MTM A'inisitere dic', el da.'/)rI.v Cicd a 1ktLorologie (Ministry of Transport and Meteorolot,N) MTP Aintislere dccs Trcraux P'ub/WAlr - (M-inistir-' of Public Works) PEP Public Expenditure Program RN iRoute Nwtionale (National Roacd) SAR Staff Appraisal Report SDR Special Drawing Riglhts SMEN Small and Medium Enterprise SOLIMA Public Fuel Supply Company TA Technical Assistance  FOR OFFICIAL USE ONLY iii CONTENTS PREFACE v EVALUATION SUMMARY vii A. Summary of Implementation Experience and Results vii B. Achievement of Project Objectives vii C. Future Operations, Summary of Findings, and Key Lessons Learned ix PROJECT IMPLEMENTATION ASSESSMENT 1 A. Statement/Evaluation of Project Objectives 1 B. Achievement of Project Objectives 2 C. Major Factors Affecting the Project 5 D. Project Sustainability 6 E. Bank Performance 6 F. Borrower Performance 7 G. Assessment of Outcome 7 H. Future Operations 8 I. Key Lessons Learned 8 STATISTICAL ANNEXES 11 This document has a restricted distributon and mnay be used by recipients only in the performance of their iofficial duties. Its contents may not othernise be disclosed without World Bank authorization.   IMPLEMENTATION COMPLETION REPORT REPUBLIC OF MADAGASCAR SEVENTH HIGHWAY PROJECT (Cr. 1905-MAG) PREFACE This is the Implementation Completion Report (ICR) for the Seventh Highway Project, for which a credit in the amount of SDR 28.9 million equivalent to the Republic of Madagascar was approved on October 5, 1988. The credit became effective on January 31, 1989. The credit was closed on June 30, 1995, after being extended twice from the original closing date of December 31, 1992. Final disbursement took place on October 31, 1995, and 98 percent of the credit was disbursed. The report was prepared by Mr. Goolam Moreea, Consultant, and reviewed by Alain Labeau, Senior Highway Engineer and Task Manager for the project. The selection of Mr. Moreea, who is a Chief Engineer of the Ministry of Works in Mauritius, was done with a view to contributing to regional cross-fertilization. Preparation of the report began during the Bank's final mission in May 1995. The report is based on material in the project file and data provided by the Government of the Republic of Madagascar (GOM). Despite more than one invitation to contribute to this report, the Borrower did not submit its own evaluation of the project.   EVALUATION SUMMARY A. Summary of Implementation Experience and Results i. IDA has associated itself extensively with the transport sector of the Republic of Madagascar, supporting eleven transport projects between 1966 and 1987. The Seventh Highway Project was intended to improve the quality of the road network, which had deteriorated into a major obstacle to the country's economic growth and social development. The project sought to repair and improve the road network as well as the country's capacity to maintain it, thus preserving its assets. ii. The eight objectives of the project as stated in the April 1988 SAR were to: (a) strengthen the capacity of the Ministere des Travaux Publics (MTP), especially in policy formulation, planning, budgeting and supervision, (b) facilitate agricultural development, thus promoting food security and agricultural exports and reducing poverty, (c) shift most maintenance operations from force account to private contractors already active in the sector, (d) develop local human resources and the domestic construction industry, (e) improve public expenditure practice in the road sub-sector through a three year rolling Public Expenditure Program (PEP); (f) improve road safety and enforce traffic regulations; and (g) optimize donor assistance through financing of high-priority works. iii. The project objectives were relevant and essential to the development of the road sector but were too numerous to be encompassed under a single investment operation. iv. The main project components were rehabilitation and resurfacing of paved roads, rehabilitation and regraveling of engineered earth roads, rehabilitation of feeder roads, and routine road maintenance. Other components included the development of small and medium enterprises involved in road contracting, the training and development of the MTP and private construction industry personnel, the use of consultant services, and improvement of traffic regulations and safety. B. Achievement of Project Objectives v. Strengthening MTP's Capacity. Weakness in project management, aggravated by an excessive workload generated by many concurrent ambitious projects resulted in delays in the execution of the project. To improve MTP's management capacity, the project included a training component. Some MTP staff did follow short-term courses, but the program was not comprehensive and staff were not always assigned to positions corresponding to the training received. The project also provided for the procurement of vehicles and equipment, but no deployment scheme existed to maximize their use. Some construction materials were never procured because non-compliance with Bank guidelines  viii and long delays in following Bank procedures caused the validity of the tenders to lapse. The improvement of ten regional MTP buildings was implemented and it is expected that the purpose--improved working conditions and better efficiency--will be achieved. In 1992, the MTP instituted a project coordination unit, Direction de la Programmation et D&veloppement Sectoriel (DPDS), which provided a better framework in which to manage projects than before. The project did not achieve a great deal in strengthening the overall capacity of MTP, except in the areas of programming road maintenance works and maintaining a road inventory. vi. Physical Objectives and Poverty Reduction. Fifty-one percent of the planned rehabilitation and periodic maintenance works was executed. Included in these works at project appraisal were 650 km of feeder roads, selected to improve access to agricultural areas, thus increasing food production and reducing poverty. Five-hundred-thirty km (or 81.5 percent) of these feeder roads were rehabilitated and maintained, thus contributing to an increase in rice production. These should generate the expected benefits: (i) increased rural mobility and access to food crop areas, improved food security and reduced rural poverty, and (ii) easier circulation of goods and people between consuming and producing centers and international ports and airports. vii. Private Sector Development. Developing the private sector's capacity for road maintenance did not see global improvement. Tender procedures were too complicated and technical specifications were not adapted to simple routine maintenance works. Contracts were too small to encourage contractors to invest in equipment and lengthy procurement procedures and delays in effecting payment did not provide them any incentive. The shift of road maintenance operations from force account to private contractors was partially achieved-- 40 percent of the works are now awarded to small contractors. On the whole, however, the result was not satisfactory. viii. Public Expenditure. MTP prepared three-year rolling PEPs annually throughout project implementation and IDA reviewed each PEP prior to the preparation of the National Budget. This practice helped improve the PEP. IDA assessed the relevance of each investment operation with the Borrower and thus progressively improved the quality of the portfolio. However, the budget allocation mechanism for the counterpart funds was too rigid. Consequently, MTP rarely disbursed more than 50 percent of its annual investment program. The best result was obtained in the field of public expenditure practices, in part because of the Bank's overall effort in Madagascar in this field. ix. Road Safety. The project included the construction of three vehicle weigh-in stations to help enforce maximum axle weight regulations. Construction was delayed considerably because other ministries were involved and because the initial contract had to be terminated and a new contractor selected. x. Donor Coordination. MTP failed to coordinate, organize frequent working sessions, or share progress gained under various donor-financed operations. This lack of coordination led to divergent courses of action amongst donors.  ix C. Future Operations, Summary of Findings, and Key Lessons Learned xi. The next road operation in Madagascar should be part of a Transport Sector Project under preparation, with a Board date planned for December 1996 for the road subsector. This project should deal with maintenance and safety only. The funding of road maintenance should be secured through a slightly different Road Fund mechanism than in the Seventh Highway Project design. A road management unit should be installed within MTP to carry out systematic surveys of pavement condition and traffic and calculate the road user charge necessary to cover the optimum maintenance costs. xii. Encouraging steps have been taken recently in the use of service contracting agencies for the management of small contracts and the development of SMiEs, and the setting up of a new generation Road Fund administered by a Board open to representatives of road users and operators. These developments reveal that although further efforts must be made to sustain the project with regard to the maintenance of roads, the project's conditions of sustainability are beginning to materialize. xiii. Involving five executing agencies without setting up a strong steering committee to coordinate led to implementation delays and confusion. The eventual set-up of the DPDS coordination unit with qualified staff proved instrumental in managing the heavy workload assigned to MTP. The capacity of executing agencies must be carefully assessed. xiv. Procurement arrangements based on the use of sample bidding documents should be spelled out in the SAR, and detailed engineering studies of large contracts should be carried out before credit effectiveness. Moreover, MTP is not equipped to deal with a rehabilitation/maintenance program on secondary, rural and smaller feeder roads. Numerous small simple contracts require management skills and responsiveness. An autonomous agency managed along private lines and acting as an enabling interface between public administration and nascent enterprises is a preferable option. xv. Improving the flow of information among executing agencies is crucial: a lack of reproducing equipment and withholding of information hampered project performance. The wide circulation of a regularly updated progress report (Bulletin de Liaison) on all MTP operations was very valuable. A more constructive TA review process, agreed on during project negotiations, and a smaller TA team, would have helped in disseminating information. xvi. Technical adjustment during implementation, discussed among the Borrower, technical experts, and IDA substantially improved the quality and benefit to cost ratio of the project. xvii. Complex issues like enforcement of axle load regulation and traffic safety improvement need to be addressed through a full-fledged component rather than in an ad hoc fashion.   PROJECT IMPLEMENTATION ASSESSMENT A. Statement/Evaluation of Project Objectives 1. IDA has associated itself extensively with the transport sector of the Republic of Madagascar. Between 1966 and 1987, IDA supported eleven transport projects totaling over US$200 million, including six in roads, two in ports, and three in railways. The Seventh Highway Project was intended to improve the road network. The poor condition of the network had become a major obstacle to the country's economic growth and social development. The project sought to repair and improve the road network as well as the country's capacity to maintain it, thus preserving its assets. 2. The objectives of the project as stated in the April 1988 SAR were to: (a) strengthen MTP's capacity, especially in policy formulation, planning, budgeting and supervision; (b) facilitate agricultural development, thus promoting food security and agricultural exports and reducing poverty, (c) shift most maintenance operations from force account to private contractors already active in the sector; (d) develop local human resources and the domestic construction industry, (e) improve public expenditure practice in the road sub-sector through a three year rolling PEP, (f) improve road safety and enforce traffic regulations, and (g) optimize donor assistance through financing of high-priority works. 3. Objective (a) was essential, as experience had shown MTP's weakness in project implementation. For example, the Sixth Highway Project suffered considerable delays and cost escalation due to weak management and a lack of coordination among the different sections of the Ministry. Objective (b) was to be achieved by the rehabilitation of feeder roads, thus improving access for agricultural products, and by the rehabilitation of main roads, thus helping to improve links between regions. Objectives (c) and (d) were to be achieved through the development of local small- to medium-scale contractors to carry out road maintenance. This would shift road maintenance from force account to private contractors. Objective (e) called for well-planned investment in the road sector, in line with national development policy. Objective (f) was to provide the necessary infrastructure to enforce axle load limits, and to improve road safety concurrently with road network infrastructure. As loans and grants were expected from other donors, objective (g) aimed at ensuring rational use of those funds.  2 4. The project objectives were relevant and essential to the development of the road sector, but were too numerous to be encompassed under a single investment operation. 5. The main project components were rehabilitation and resurfacing of paved roads, rehabilitation and regraveling of engineered earth roads, rehabiliation of feeder roads, and routine road maintenance. Other components included the development of small and medium enterprises involved in road contracting, the training and development of the MTP and private construction industry personnel, the use of consultant services, and improvement of traffic regulations and safety. B. Achievement of Project Objectives Institutional Development Objectives 6. MTP Reorganization. Prior to 1992, MTP included a Direction Generale de V 'Equipement which had under its responsibility three directorates: the Direction des Routes (DR), the Direction de la Maintenance (DM), and the Direction Administrative et Financire (DAF). The DR was responsible for project management, including the preparation of tender documents and supervision, the DM for the maintenance of the network, and the DAF the administration and finance of the MTP. 7. In 1992, the MTP eliminated the position of Directeur General (DG). The new organization consisted of four divisions, namely the Direction de la Programmation et du Developpement Sectoriel (DPDS), the Direction des Ressources, the Direction de l 'Appui aux Unites Regionales, and the Direction Centrale Technique de I 'Infrastructure. The DPDS assumed responsibility for project management. It provided a better framework in which to manage projects, especially the ongoing Seventh Highway Project, than had the DR. 8. Training. In order to improve MTP's management capacity, the project included a component for training MTP staff Although some MTP staff did follow short-term courses abroad and locally at the public training center ININFRA, the program was not comprehensive and trained staff were not always assigned to positions corresponding to the training received. As a result, the project did not contribute effectively to improving the management capacity of MTP. 9. Public Expenditure. MTP prepared three-year rolling PEPs annually throughout project implementation and IDA reviewed each PEP prior to the preparation of the National Budget. This practice helped improve the PEP, especially when multi-sector field missions gave IDA' s annual reviews added emphasis. In addition to figure correction and basic clean-up, IDA assessed the relevance of each investment operation with the Borrower and thus progressively improved the quality of the portfolio. However, the budget allocation mechanism for the counterpart funds was too rigid and did not allow reallocations: Lagging projects were not executed, and active ones were constrained by  3 the limitation of local funding. Consequently, MTP rarely disbursed more than 50 percent of its annual investment program. 10. Donor Coordination. During project implementation, many sources approved grants and soft-term loans to finance road projects. Donors included the European Union, the African Development Fund, and the governments of Norway, Japan, France and Switzerland. 11. In some instances, miscommunication or differing approaches amongst donors confused the donors' common sectoral assistance strategy. Reaching agreement on steps to disengage the public service from commercial and productive activities and transfer them to private companies was especially difficult. MTP failed to take control of donor coordination, organize frequent working sessions, or share progress gained under various donor-financed operations. As a result, all of the projects experienced execution delays. 12. Procurement of Equipment. The project provided for the procurement of two road rollers, 33 trucks, 10 pumps, five tractor-trailers, one patching unit, 30 manually operated road rollers and twenty 4x4 vehicles. All vehicles and equipment except the two road rollers and patching unit were procured, although with considerable delay. Furthermore, no deployment scheme existed to maximize use of the equipment. 13. Procurement of Construction Materials. The project provided for the procurement of essential construction materials: 2000 meters of metallic drains, 6960 meters of angle bars, 1140 gabions, 3714 meters of galvanized pipes, 17,000 kg of steel reinforcement bars, 2000 corrugated iron sheets, 500 tons of bitumen and 300 tons of cement. The project also called for 9600 meters of steel reinforcement bars, 3480 meters of flat steel bars, 1686 iron sheets, and 3000 kg of paint to repair the sub-offices of MTP. These, however, were never procured because non-compliance with Bank guidelines and long delays in following procurement procedures caused the validity of the tenders to lapse. The unused funds were reallocated to the rehabilitation of the RN 6, a major project component jeopardized by cost underestimates. 14. Road Safety. The project included the construction of three vehicle weigh-in stations to help enforce maximum axle weight regulations. These centers were to be located at Brickaville, Maevatanana and Ambatolampy, and operated by highway patrol units. Construction was delayed considerably because other ministries were involved. Furthermore, the initial contract had to be terminated because of the contractor's poor performance and a new contractor selected. The construction of the centers was finally completed with substantial delay by June 30, 1995. 15. Improvement of Sub-offices. In order to improve the working conditions, and thereby achieve better efficiency, the improvement of MTP buildings in ten regional units was included in the project. This was implemented and it is expected that the purpose will be achieved.  4 Poverty Reduction Objective 16. At project appraisal, 650 km of feeder roads were selected for rehabilitation and maintenance in order to improve access to agricultural areas to increase food production, and thereby reduce poverty. Under both IDA and Swiss cofinancing, 530 km of feeder roads was rehabilitated and maintained in the Antananarivo, Toamasina and Fianarantsoa areas, thus contributing to an increase in rice production. Private Sector Development Objective 17. Developing the private sector's capacity for road maintenance did not see global improvement. Only routine maintenance of earth roads, and cleaning and constructing drains, tasks which did not require major equipment, were entrusted to private contractors. Activities such as the patching of potholes were still handled by MTP. Tender procedures were too complicated and technical specifications were not adapted to simple routine maintenance works. Training was ill-organized and an attendance certificate was basically the only technical criterion required to qualify. Contracts were too small to encourage contractors to invest in equipment and lengthy procurement procedures and delays in effecting payment did not provide them any incentive. On the whole, the result was not satisfactory. 18. To develop the capacity of local contractors, a pre-selection procedure with well- defined criteria--such as experience and competence of staff, and availability of equipment--was needed. These procedures would categorize contractors according to their qualifications. Timely payments and contracts large enough to give some incentive to contractors to equip themselves would also encourage the development of the SMEs. Physical Objectives 19 Physical Objectives. Fifty-one percent of the planned rehabilitation and periodic maintenance works was executed as follows: Type of Road Name Km Planned Km Executed Paved RN6 339.7 237 Paved RN34 338 0 Feeder Antananarivo Region 100 67 Feeder Fianarantsoa Region 200 194 20. RN 6 had continued to deteriorate since effectiveness, and the actual cost of rehabilitation exceeded the estimate. For similar reasons, IDA and GOM decided to remove the rehabilitation of RN 34 from the project and the funds were used on RN 6 and on a feasibility study for the strengthening of a key coastal link between the Highlands and the SE coast (RN 12, 25 and 45), two strategic producing areas.  5 21. The discrepancy between planned and executed for feeder roads is mainly due to cost underestimates carried out at the preliminary design stage, and to the further deterioration of the roads. 22. Economic evaluation of the project after completion was not possible because the data and calculation notes from 1988 could not be retrieved, traffic data for July 1995 are not yet available, and data about non-road investment and agricultural production along feeder roads were not collected. IDA plans to conduct an in-depth economic post- evaluation of the Seventh Highway Project with a new road management unit within MTP as soon as the unit is operational in mid-1997. The results will be used in the continued policy dialogue with the Government and sector stakeholders. 23. Environmenial Concerns. Since the project concerned mainly rehabilitation and maintenance of the existing road network, environmental concerns were given relatively little consideration at the time of appraisal. However, during implementation, provisions regarding the preservation of environmental wealth were added to the specifications of major road works. The rehabilitation works had a positive impact on environment because of the improvement to the road drainage system. C. Major Factors Affecting the Project 24. Lengthy administrative procedures for tendering exercises and failure to respect Bank guidelines caused serious project delays. In the case of procurement of materials for example, the whole tender exercise had to be canceled as the bid validity had expired and the contractors who offered tenders refused to maintain the price. 25. Weakness in project management, aggravated by excessive workload generated by many concurrent ambitious projects and combined with a substantial backlog, resulted in delays in the execution of the project. For example, although the Credit Agreement became effective in January 1989, tenders for the rehabilitation of RN 6 were invited in January 1992, and the order to start work issued in December 1992. The delay gave rise to further deterioration of the project roads and, to a lesser extent, to cost escalation. This resulted in the reduction in the scope of work. 26. MTP's difficulties in project implementation were compounded in 1991 by a major political crisis, with an onerous transition to a new political regime, accompanied by civil service strikes and staff rotation. 27. The cost price of fuel rose above the selling price soon after May 1994 because the fall in the exchange rate after the effective floating of the Malagasy currency was not followed by a price adjustment. To cover its losses and the substantial arrears accrued by GOM on its fuel bill, the Public Fuel Company, SOLIMA, retained the proceeds of the fuel tax, and no longer made adequate deposits to the Road Fund to cover road maintenance.  6 D. Project Sustainability 28. Further efforts have to be made to sustain the project with regard to the maintenance of roads, but MTP is now on the right track after a period of retrenchment. Encouraging steps have been taken recently towards the use of service contracting agencies for the management of small contracts and the effective development of SMEs, and the setting up of a new generation Road Fund administered by a Board open to representatives of road users and operators. The Road Fund will provide a constant flow of resources for road maintenance operations. These resources will come from a road user charge levied on motor fuel. Arrangements to set up the above system are being designed as part of the preparation of a forthcoming IDA operation and a concurrent supportive European Union-financed operation. These developments reveal that the project's objectives are beginning to materialize and that the project is likely to be sustainable. E. Bank Performance 29. Identification. The project was a follow-up to previous highway projects, and the length of roads identified formed part of a global strategy to improve the network in Madagascar. 30. Preparation. The project was prepared by the World Bank and officers of MTP in May 1987. The roads to be rehabilitated were identified by studies financed under the Sixth Highway Project, and the estimates were based on the preliminary design. IDA participated fully in the preparation of the project and provided the necessary guidance and advice. 31. Appraisal. IDA' s performance was satisfactory from the historical perspective and given the then optimistic mood of the donors which concurrently appraised and financed ambitious projects in the sector. The project was appraised in November/December 1987, and estimates were based on the preliminary design, which led to a substantial difference when tenders were received. Consequently, and despite provision for contingencies, the scope of work had to be reduced and the physical objective of the rehabilitation works could not be fully achieved. The appraisal team did not accurately assess the capacity of MTP, which was overwhelmed by the substantial backlog of operations and the concurrent heavy load of projects financed by other donors. The team was presumably misled by the euphoria among donors generated by a sudden upturn in long-depressed economic indicators and excessive self-confidence of MTP high ranking staff The team designed a complex and challenging project which quickly bogged down in cumbersome administrative rules and political turmoil. 32. Supervision. Under such difficult circumstances, IDA's performance in supervision was satisfactory. The credit became effective in January 1989, but since the preparation of detailed engineering and tender documents took much longer than initially expected, progress was slow. Disbursements in the first three years were much lower than expected, but the rate of disbursements picked up substantially in FY93.  7 33. With regard to compliance with credit agreement covenants, the follow-up was satisfactory. Although there was difficulty in complying with the covenant relating to the funding of a Road Fund, IDA and GOM wisely found a solution by agreeing to obtain the funds for road maintenance through budget allocation rather than relying on elusive deposits from SOLIMA. Between 1992 and 1995, the allocation increased from FMG20 billion to FMG50 billion. During the last two years of the project, substantial progress was made, mainly due to the constant monitoring by IDA. At completion, a number of project outputs were achieved thanks to appropriate course corrections during project implementation, timely decisions to cancel unfeasible operations and reallocate the balance, and adjustment of technical solutions to improve the quality of the project, or make uncompromising savings to compensate overruns. F. Borrower Performance 34. GOM participated in the preparation of the project, which was carried out by IDA. Detailed engineering and tender documents were not done during preparation and had to be prepared during the implementation period, thus slowing progress on road works. However, following IDA's advice, GOM set up an efficient coordination unit which proved instrumental in expediting project implementation. This was beneficial to the projects financed by other donors as well, although its action was often impeded by the tedious reviewing procedures of MTP, and a lack of communication between the ministry's divisions. Furthermore, some other components, such as procurement of equipment and materials for road maintenance, were also delayed, and the latter even canceled. The construction of the highway patrol centers was also delayed. This small component, because it involved three executing agencies--MTP, Ministere d'Urbanisme et de 1 'Amenagement du Territoire, and Minislere de la Defense Nationale--waded through unproductive discussions, preventing enforcement from commencing. It took almost four years to execute and was finally completed in June 1995. With regard to training of MTP staff to improve the capacity for project implementation, there was no proper planning and hence, not much benefit was obtained. Although donors made commendable efforts to communicate, there was little real coordination of activities mainly because MTP failed to take the leadership in that effort. G. Assessment of Outcome 35. The project substantially achieved its physical objectives. These should generate the expected benefits: (i) increased rural mobility and access to food crop areas, improving food security and reduced rural poverty, and (ii) easier circulation of goods and people between consuming and producing centers and international ports and airports. 36. As for the direct outcomes of the project, the results are mixed. The best result was obtained in the field of public expenditure practices which improved over the project life. This credit must be shared however, with the Bank's overall effort in Madagascar to improve public expenditures. The gradual shifting of most road maintenance operations from force account to private contractors was partially achieved. In real terms, 40 percent  8 of the workload is now awarded to small contractors. This might have been higher but for the acquisition of new road equipment for force account activities in 1994 through a bilateral grant. This demonstrates that efforts to improve donor coordination and optimize donor assistance in the road sub-sector were not fully successful, although recent evidence points to a more positive attitude and concerted approach for policy formulation, and to improved donor coordination. The project did not succeed in developing local human resources and the domestic construction industry in a sustainable manner. Finally, the project has not achieved a great deal in strengthening the overall capacity of MTP, mainly because of frequent rotation of staff. However, in some areas, such as programming of road maintenance works and maintaining a road inventory, the project made significant achievements. H. Future Operations 37. Discussion on IDA's involvement in future projects in the road sector began as early as 1991. It took a long time to agree on policy issues and the need, although underscored by the Seventh Highway Project's performance, to use a service contracting agency to get substantial results in developing the private construction industry and managing road maintenance operations on rural roads. Differences were resolved in early 1996 and the next road operation should be part of a Transport Sector Project under preparation, with a Board date planned for December 1996. The road subsector of this project is expected to deal with maintenance and safety only. 38. The funding of road maintenance should be secured through a slightly different Road Fund mechanism than in the Seventh Highway Project design. Whereas the proceeds from motor fuel taxes should go to the Treasury's general budget, a specific road user fee should be directly deposited into the Road Fund account, opened in a commercial bank and managed by an independent Board including representatives of the stakeholders. The price structure of the motor fuel at the pump is now automatically adjusted to the import price, thus protecting the distributors against foreign exchange losses. Today, SOLIMA is still the only distributor, but other private companies are expected to compete soon as a result of the recent liberalization of the sector. As part of the future IDA-financed road operation, a road management unit should be installed within MTP. This unit should carry out systematic surveys of pavement condition and traffic and, along the recent HDM development, should calculate the road user charge necessary to cover the optimum maintenance costs. I. Key Lessons Learned What did work and why. 39. The set-up of a coordination unit in 1992 staffed with qualified people proved instrumental in managing the heavy workload assigned to MTP.  9 40. The wide circulation of a regularly updated progress report (Bulletin de Liaison) on all operations undertaken by MTP was useful in that it constituted a rare piece of aggregated and reliable information. 41. Technical adjustment during implementation, discussed among the Borrower, technical experts, and IDA, substantially improved the quality and benefit to cost ratio of the project. What did work partially and why. 42. Project outcome could be maximized by improving the circulation of information inside and outside the executing agency. The flow of information within public administrations was limited for two main reasons: lack of reproducing equipment and withholding of information. This not only hampered the task of the project coordination unit, but might have substantially reduced the success of the project by not disseminating the findings of the many surveys and studies to the relevant units of the ministry. 43. MTP failed to organize frequent donor coordination meetings and limited them to a handful of formal events. This led to divergent courses of action, sometimes exacerbated by conflicting personalities among donor representatives, or the excessive influence of in-house long-term consultants. What did not work and why. 44. Involving five executing agencies without setting up a strong empowered steering committee to coordinate led to implementation delays and sometimes confusion. 45. The project's workload forced MTP to spread its limited resources thin. Routine bureaucratic hurdles quickly became a serious handicap. Staff were unable to provide enough input to push through the work program. The limited capacity of the executing agency was not carefully assessed. 46. Because the detailed engineering studies and the bidding documents were carried out during project implementation, tedious procedures coupled with onerous discussions on procurement rules delayed the project from the start. Procurement arrangements based on the use of sample bidding documents should be spelled out in the SAR, and detailed engineering studies of large contracts should be carried out before project approval. 47. Issues like enforcement of axle load regulation and improvement of traffic safety need to be addressed through a full-fledged component rather than an add-on. In particular, axle load regulation enforcement requires careful organization because of political sensitivity, finer policy aspects, and the risk of fraud. 48. Public services are not the right instrument to foster effective development of the local construction industry, key to a program of public disengagement from commercial and productive activities. The project relied on MTP and ININFRA to achieve this goal  10 and they failed. An autonomous agency managed along private lines and acting as an enabling interface between public administration and nascent enterprises is the preferable option, as demonstrated with the Antananarivo Urban Works Project. 49. MTP is not equipped to deal with a rehabilitation/maintenance program on secondary, rural and smaller feeder roads. Numerous small simple contracts require management skills and responsiveness. Such a program is best managed by an autonomous service contracting agency. 50. The project provided a large multi-skilled team of consultants to assist MTP on many fronts, ranging from human resources to maintenance of mechanical equipment. The team was deployed in various decentralized units and at Headquarters, and placed under the responsibility of a mission team leader. The organization was such that the various experts reported to the mission leader, who in turn reported to the TA supervisor. The TA supervisor failed to disseminate all of the information, review all progress reports, or implement recommendations. A more constructive TA review process, agreed on during project negotiations, and a smaller TA team, would have helped in disseminating information.  11 STATISTICAL ANNEXES Table 1: Summary of Assessments Achievement of Objectives Substantial Partial Negligible Not z ~~~~~~~~~~....... .. .. ........................ ...................._ Macro Policies ] ntttoa eeomn... . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . , . . . . . . .................................... ............................. ................................ ..... . . . . . . . . . . .. . . Sector Policies_______ " Financial Objectives ______ _____ ______ ______ Institutional Development i Physical Objectives y ....................... ........... ...................................................... ................................. +... .............. ......... Poverty Reduction . V Gender Issues X Other Social Objectives Other Social Ob.............. ............I .s., . ....,,. ..,... ...... .................................... . . . . . .. ............. ............. . . . . . .. . . .. . . . . . . . .. . . .. . .. Environmental Objectives Public Sector Management ______ Private Sector Development Other (specify) .. .............. )................................................... ............... ............................... ................... Table 2: Related Bank Loans/Credits Ei!;/L*> dt T;itle Purpose Year of Statuts Alpproval ............................ ......................... ............................... ......... ........... . . . .......... Preceding Operations .................. ..... . 1. Sixth Highway Project Maintenance and rehabilitation 1983 Completed . ~~~~of majoqr roads. ......................................................................... ......... . . . . . . . .. . ............of.mjor.oads ............. . .. . ..,. . .. . . ... . .. . .... . .................................. 2. Fifth Highway Project Resurfacing works and 1979 Completed construction of bridges ......................................................................... ....................contrutio.of..r...........id..es.. . ... .. .. .. ... .. .. .. . ..,. .. . .. .... .. . .. .,.. ................................... 3. Fourth Highway Project Construction of secondary and 1976 Completed ____________________ primary roads ______ _____ Following Operations ................. O p r ti n .......................................................................................................... .................................... ................................... 1. Transport Sector Strengthen the financial Under Development Project* management and operations of preparation road maintenance and road ___________________ a y_________ __safety * Road component of TSD  12 Table 3: Project Timetable _ 1 _ Idetfcto (Eeutv Prjc Suma Arl 7-10|, 1987 Pre arationMa 17-28 198 Appraisal ' Nov./Dec. 1987 Negotiations April 8-.13 1988 > ~~~~~~~~~~. . . . . . ............................................................... ..................... .................... .... ...... .. ... . ............ ............ ?.. Board Presentation _ May 10, 1988_ ,,,,Si,gni,,ng.,,,,,,,..,,.,,, ......,,,,., ,,,,.,. July 18, 1988 Effectiveness . Januay 311989 Project Completion December 31, 1992 June 30, 1995 ..........O .....................p ......................................................................... . . . ... . . . .. .. .. .. .. .. ........................ . . .. . . .. . . .. . . Credit June 30, 1993 June 30, 1995 _ Table 4: Loan/Credit Disbursements: Cumulative Estimated And Actual (US$ Thousands) ,Appraisal Estimate 2.3 12.1 23.7 33.5 40'. ................................................................. :............................ ...................... ..................... ...................... ......................... .......................... ........................................... . Actual - 0.88 5.9 8.84 16.83 31.1 39.19 Actualas%ofEstimate - 9 43 30 122 . . -  13 Table 5: Key Indicators For Project Implementation A. Rehabilitation & Resurfacing of Paved Roads RN 3 COFIDA* 61 km 86 km RN 3a COFIDA 1043 km 0 RN 6 IDA 339.7 km 237 km RN 34 IDA 338 km 0 V.D. Toamasina COFIDA 250 km 136.8 km V.D. Antananarivo IDA 100 km 67 km V.D. Antananarivo COFIDA 100 km 131.8 krm V.D. Fianarantsoa IDA 200 km 194.2 km B. Road Safety Construction of vehicle weigh-in stations IDA 3u 3u u C. Procurement of Road Maintenance Equipment Road Rollers IDA 2 u Trucks IDA 33 u 33 u Pumps IDA I 10u I 10u Tractor/Trailer IDA 5 u 5 u Patching Unit IDA lI u . Manually Operated Rollers IDA 30 u 32 u 4 x 4 Vehicles IDA 20 u 20u D. Construction Materials3 Metallic Drain . IDA 2000 m 0 Steel Reinforcement Bars IDA 9600 m 0 Flat Steel Bars IDA 3480 m 0 Angle Bars IDA 6960 m 0 Gabions IDA 1140 u 0 Iron Sheets IDA 1686 u 0 Galvanized Pipes IDA 3714 m 0 Steel Reinforcement Bars IDA 17000 kg 0 Paint IDA E 13000 kg 0 Corrugated Iron Sheets IDA 2000 u 0 Bitumen IDA 500 t 0 Cement IDA 300 t ._0 E. Routine Maintenance I Works executed by small & medium IDA 1440 km contractors COFIDA 650 km F. Building Improvement Improvement of Sub-offices . IDA IOu I0uO . ..................................................................................... .......................................................... ............................................ ............................................................................................. * Swiss cofinancing. 1 Corresponding funds transferred to Swiss bilateral project 2 Costs exceeded funds which were used for (i) feasibility study, and (ii) works on RN 6. 3 Borrower did not respect Bank guidelines and procurement was suspended.  14 Table 6: Studies Included In Project Detailed engineering Road improvement Completed Works completed for 237 and tender document for. km RN 6/3a (481 km) ................................. .......................... ................ .. ........ ....... .. . .. .. . ....... . ... .... .. ... .. . ...... ........ ............ ............... . . . . . - - - - -- - - -- - - - -- - - - .................. ............. ........ ... Feasibility study for Not applicablc Completed To identify priority RN 12-25-45 sections for future projects. Preparation of a master To prepare an action plan Completed Action plan for short, plan on the transport on various modes medium and long term sector .wiII be completed by December 1996. Table 7a: Project Costs _~~~. __ ___ __3 _ Item .Local .Foreign .Total Local .Foreign Total : Cos CoCost Cost E Paved roads RN 6, RN 34 2.73() 8 180 10.91 2.955 I 8.589 11.544 ~~~~ . . 0 ___ __ _ __ ._... .. _ _ .. .__ Feeder Roads 1.474 . 3.439 4.913 1.825 2.901 4.727 ..... ............................................................ . . . . . . . ... .. . ........ . .. ..... .. . . . . . . . . . . .. ... . . . . . . . . ............................................. ..........4 Maintenance bv contract 0.434 0.650 1.084 1.000 0 1.000 Procurement of materials, equipment 0(434 3.901 4.335 0.183 2.059 2.242 spare parts. . .. ... . . .....___ Impprovement of 10 sections 0.072 0.289 0.361 0.156 0 0.156 Road Safety Construction of three centers, including equipment (0101 0.909 1 010 0.679 0.191 0.870 Consultancy Detailed Eng. and Tender document 0.00( 0.000 0.000 0.331 . 0.641 0.972 Supervision 0(318 1.272 1.590 0.844 f 1.041 1.885 Maintenance 0434 1.734 2.168 0.362 1.754 2.116 Transport Study 0.072 0.289 0.361 0.135 0.549 0.684 Training 0.434 1.734 2.168 0.222 1.915 2.137 Miscellaneous Co-ordination Auditing 0 000 0 000 0 000 0 128 0 286 0 1414 TOTAL . ..  15 Table 7b: Project Financing Item Local Cost Foreign Cost Total Local Cost Foreign Cost Total IDA 6.503 22.397 28.900 8 821 19.926 28.747 Table 8: Status of Legal Covenants 2.02 (c) Opening of two special accounts one in US$, and one in Swiss In compliance Francs, at the central bank 3.02 Procurement of goods, works and consultant's services to bc in Partial compliance accordance to schedules. ............................................ to ...................................... ..................................................... 3.03 (a) Approval of public expenditure for years 1990 and 1991 Partial compliance 3.03 (b) . Approval of three year rolling public expenditure program bv Partial compliance . August 31 st 1990 and each August 31 st of the following vears. ............................... D.................. .... ~ P ...................................... ........... ........ . ................ ........................................... ........... ...... ............ .................................. 3.03 (c) Review and update of the National Transport Plan (1989-90). In compliance 3 04 (i) Maintain at the Central Bank a Road Fund Account In compliance (ii) Cause SOLIMA to deposit into the Road Fund revenues from Non compliance taxes and duties. (iii) Ensure that the deposit in the Road Fund does not fall belo , In compliance _________ SDR3,600,000 for any.year.______ *DIti 000 9'10 Sol a11s N *~~~~~~~~~~~~.1 .. .. .... .............Non.... compliai. ,. (iv) , Maintain at the Central Bank a Caisse D 'Avance Noncompliance 3.05 Review the adequacy of the fuel tax revenues to cover road Partial compliance maintenance needs. .. .............................. ............................ ;,................................... .. .............. ... ........ ......... . ....... - - - - - - - - - - - - -- - - - - - - -- - 3 3.06 To ensure that private participants pay tuition fees adequate to Non compliance cover at least the average cost per trainee of salaries of local teachers and consumable goods. ~~~~~~~~~~~~~~~~~~~~~~~~................. ............. 4......................................... . .......... . . .............................; 3.07 (a) By December 31, 1989, to carry out a review of the legislation In compliance and eilu rtanijjto road passenger tran ortation. . ________ ........... _...p_ _ ------------ 3.07 (b) By June 30, 1990, to take adequate to liberalize road passenger In compliance . transportation. 3 3.08 (a) Approval of training courses by IDA. .I c. mpliance 3.08 (b) iApproval of Bank before awardingfll In compliance 4 01( Accounting requirements In compliance ...~~~~~~~~~~~~~ ~ .. .. . . . . . . . . . . . . . . . . . . . ... . ... . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......... . ... ...... .. . . . . . . . . . . . . . . p . . . . . . . . . . . . . . 6. 01 (a) Borrower to promulgate the chartc routire. In comliance .............................. ............................... . .............. . ............................. ................................................ .................... .................. ............................ 6. 01 (b) Borrower to upgrade the CATP to the status of INIFRA. In compliance 6.01 (d) Borrower to publish the decree and the two arretls relating to In compliance traffic regulation and road . safet  16 Table 9: Bank Resources: Staff Inputs 8 8- . 24.0 Total _____47.2 Total _____ .................~~ .-.--------- .- -- --- - - -----------------------~ Appraisal/Board 86 - 29.3 Supervision 88 0.3 89 12.6 90 41.84 91 23.2 92 13.6 93 13.6 94 12.1 95 12.0 Total 129.2 * Not available. 4 The high staff input raises the question of its reliabilitv (18.1 weeks were given as unidentified.)   IMAGING Report No: 16054 Type: ICR