Colombia - Second Rural Roads Sector Project

 Second rural roads sector project Report No: ; Type: Report/Evaluation Memorandum ; Country: Colombia; Region: Latin America And Caribbean; Sector: Highways; Major Sector: Transportation; ProjectID: P006856 Colombia: Second Rural Roads Sector Project (Loan 3157-CO) The Second Rural Sector Project, supported by Loan 3157-CO for US$55.0 million, was approved in FY90. The loan was closed almost fully disbursed in FY96 as scheduled. The Implementation Completion Report (ICR) was prepared by the Latin America and the Caribbean Regional Office and the Borrower’s report is appended. The project objectives were: (a) to help define functions and responsibilities of national, regional and local road authorities; (b) to develop the capacity of these organizations to manage the roads; (c) to ensure satisfactory implementation of key road sector policies; and (d) to support a four-year road investment and maintenance program. The project components included: (i) a large number of small road building and road improvement subprojects scattered (mostly) throughout the poorest municipalities; (ii) the implementation of a cofinancing system that required local governments to select subprojects and participate in their financing; and (iii) more stringent environmental guidelines for the execution of the road works. The project’s institutional and physical objectives were substantially achieved. About 775 km of rural roads were built (97 percent of target) and 1050 km of roads were improved (81 percent of target). These works were completed about one year behind schedule. The overall physical targets for rehabilitating and maintaining roads were also met; though they lagged for some types of road works and were exceeded for others. During the project’s implementation the Government’s priorities changed, and the transport sector was restructured and decentralized so that the implementing agency of the project, National Rural Roads Fund (FNVC) was to be abolished and its functions to be taken over by regional and local authorities. While the decision to abolish the FNVC was later reversed the decentralization of its core operational functions was carried out. These changes caused difficulties in developing the organization’s institutional capacity as envisioned at appraisal. Nonetheless, a new road classification system and cofinancing system were put in place, institution and capacity building efforts were quite successful, and the new environmental regulations were satisfactorily instituted. The economic rate of return of a sample of completed subprojects are lower than calculated during appraisal, but still over 12 percent. The Operations Evaluation Department (OED) rates the project outcome as satisfactory, its institutional development as substantial and sustainability as uncertain, pending the final outcome of the institutional restructuring. Bank performance is rated as satisfactory. These ratings are consistent with those in the ICR. The main lessons learned are that institutional change is a lengthy, complicated and unpredictable undertaking, and that transferring responsibility for public facilities such as roads from the central government to regional and local governments needs to be accompanied by appropriate financing mechanisms and sustained institution building programs. The ICR is of good quality. It discusses all aspects of the project in a comprehensive manner. No audit is planned.