Somalia - Highway (supplementary Credit) Project

RETURN TO RESTRICTED REPORTS DESK FLE COPY Report No TO 655a WITHIN ONE WEEK This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may It be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION APPRAISAL OF A SUPPLEMENTARY CREDIT FOR HIGHWAY CONSTRUCTION SOMALIA June 13, 1968 Projects Department  CURRENCY EQUIVALENTS Unit - Somali Shilling (Sh So) 1 Somali Shilling = US$0. 14 7. 14 Somali Shillings = US$1. 0 1 million Somali Shillings = US$140,845 FISCAL YEAR January 1 - December 31 UNITS OF WEIGHTS AND MEASURES: METRIC Conversion Metric: British/US 1 kilometer (km) = 0. 62 miles (mi) 1 meter (m) = 3. 28 feet (ft) 1 metric ton (m ton) = 2, 204 pounds (lb)  SOMALIA APPRAISAL OF A SUPPLEii4ENTARY CREDIT FOR HIGMHAY CONSTRUCTION Table of Contents Page No. SUMMARY i 1. BACKGROUND 1 2. THE PROJECT 7 A. Description 7 B. Cost Estimates 7 C. Execution of the Project 8 D. Finance 8 E. Disbursement 8 3. ECONOMIC JUSTIFICATION 10 4. CONCLUSIONS AND RECOMMENDATIONS 12 TABLE: Credit 74-30 - Estimated Costs CHART: Present Organization of Public Works Department MAP: Republic of Somalia: Highway System This report has been written by Messrs. N. S. Parthasarathi, economist, and F. D. T. Reid, engineer, on the basis of an appraisal mission in March/April 1968 and should be read in conjunction with Report No. TO-431b dated December 10, 1964.  SOMALIA APPRAISAL OF A SUPPI?IENTARY CREDIT FOR HIGHWAY CONSTRUCTION SUMIARY In March 1965 the Association, the UIDP and FED jointly financed a road project in Somalia consisting of: (i) the engineering and construc- tion of a 200 km new road between Afgoi and Baidoa, (ii) the purchase of road maintenance equipment, (iii) the construction of a highway office building, (iv) technical assistance to strengthen the highway organization, (v) feasibility studies of two high priority roads, (vi) a study to coordinate transport investment, and (vii) the training abroad of Somali staff for the highway organization. The total cost of the project was estimated at US$14.2 million, of which U5$8.0 million was for road construc- tion. Of the total project cost, FED is providing US$5.15 million equivalent, UNDP US$2.15 million equivalent and IDA US$6.2 million equivalent for road construction under Credit 74-SO; and the Somali Government is providing US$0.7 million equivalent. The Association is the executing agency for the project as a whole. ii. The lowest bid received for the Afgoi-Baidoa Road was US$9.7 million equivalent, excluding contingencies. A reduction in the design standards of the road was considered in an effort to reduce costs further but was found impractical for technical reasons. The inclusion of con- tingencies would raise the cost to about US$10.8 million, approximately US$2.8 million equivalent greater than funds provided under the original project. The bid was accepted in January 1968 and work was started in March. iii. Of the additional US$2.8 million equivalent required to complete the construction of the road, the Somali Government is able to provide an amount of only US$0.5 million equivalent. It has requested a supplementary IDA credit of US$2.3 million to finance the remainder. iv. Disbursements under the proposed supplementary credit will not take place until 1970 after the first credit has been fully disbursed. v. The completion of the Afgoi-Baidoa Road would provide all-weather access to an important agricultural area; even with the higher costs, the economic return is satisfactory at about 10 percent. vi. Performance under the present credit is satisfactory, but progress has been slow, due in part to the closing of the Suez Canal. vii. The project provides a suitable basis for a supplementary credit of US$2.3 million equivalent to the Government of Somalia.  SOMALIA APPRAISAL OF A SUPPLUNENTARY CREDIT FOR HIGI4AY CONSTRUCTION 1. BACKGROUND 1.01 On March 20, 1965, the Association provided the Somali Republic with a development credit (Credit 74-So) of US$6.2 million to assist in financing a road project which consisted of: Part A - The engineering, construction and supervision of a new road approximately 200 km long between Afgoi and Baidoa and a 20 km feeder road linking Uanle Uen with the new road. The engineering and supervision are being financed by a FED grant and the construction is being shared by IDA (78 percent) and a FED grant (22 percent). Part B - The purchase of road maintenance and shop equipment, and the building and equipping of new offices for the Highway Department. This part of the project is being financed by a FED grant. Part C - A technical assistance program including: a) the organization, staffing and operation of the Highway Department by a firm of consulting engi- neers for a period of 4 to 5 years with special emphasis on highway maintenance; b) a reconnaissance study to coordinate short term transport investment in Somalia; c) the feasibility studies of two high priority roads, Berbera-Hargeisa and Berbera-Burao in the north of Somalia; d) a technical training program abroad for about 15 Somalis selected for future service in the Highway Department. This part of the project is being financed by a UNDP grant. The project was appraised in 1964 (see Report No. TO-43lb dated December 10, 1964). The details of the financing are shown in the attached Table. The credit became effective on September 16, 1966, and the Closing Date is June 30, 1969.  - 2 - Execution of the Project financed under Credit 74-so (a) The Construction of a Two-Lane Road Between Afgoi and Baidoa 1.02 The project included the construction of a road, 200 km long, between Afgoi and Baidoa together with a feeder road, 20 km long, link- ing Uanle Uen with the new road. The cost was estimated at US$8.0 million equivalent, based on preliminary engineering studies carried out by ITALCONSULT, an Italian consulting firm, and included an allowance of 18 percent for contingencies. 1.03 In January 1966 the alignment of the road was altered, at the Government's request and with the Association's agreement, to pass through Uanle Uen thereby eliminating the need for the feeder road but extending the new road by 16 km. The cost was estimated to remain about the same as the original project proposal due to the elimination of the link feeder road and the shorter distances to quarries and wells. Noti- fication of the change in alignment was made in a report to the Executive Directors, No. R65-195 dated December 23, 1965. 1.04 Under the joint financing agreement with the Fonds Europeen de Developpement (FED), the detailed engineering was carried out by KOCKS, a German firm of consulting engineers. The consultants estimated, on the basis of final engineering, that the cost of the road, including a contingency item of about 2 percent, would be about US$8.4 million equivalent, an increase of US$0.4 million over the appraisal estimate. Not