Senegal - Second Transport Sector Project

Document of The World Bank Report No. 19023- SE PROJECT APPRAISAL DOCUMENT ONA PROPOSED CREDIT IN THE AMOUNT OF SDR 64.3 MILLION (US$90 MILLION) EQUIVALENT TO THE REPUBLIC OF SENEGAL FOR A SECOND TRANSPORT SECTOR PROJECT March 10, 1999 Transport 2 Country Department 14 Africa Region  CURRENCY EQUIVALENTS (Average Exchange Rate Effective as of February 22, 1999) Currency Unit CFA Franc CFAF 1= US$0.0017 US$ 1 CFA Franc 550 FISCAL YEAR January 1 - December 31 WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS ASECNA Agency for Air Security in Africa and Madagascar (4gence pour la SecuriteAerienne en Afrique et Madagascar) CAS Country Assistance Strategy CELCO Project Coordination Unit (Cellule de Coordination du PST II) CEREEQ Center for Road Research and Quality Control DAC Civil Aviation Department (Direction de lAviation Civile) DTP Department of Public Works (Direction des Travaux Publics) DTT Land Transport Department (Direction des Transports Terrestres) GIS Geographical Information System GOS Government of Senegal LSPl/2 Policy Letter for the Transport Sector I or 2 LSS Leopold Sedar Senghor Airport (Dakar Airport) MEFP Ministry of Economy, Finance and Plan (Ministere de I 'Economie, des Finances et du Plan) MPTM Ministry of Fisheries and Maritime Transport (Ministere de la Peche et des Transports Maritimes METT Ministry of Equipment and Land Transport (Ministere de I 'Equipement et desTransports Terrestres) MTTA Ministry of Tourism and Air Transport (Mnistere du Tourisme et des Transports Ariens) PAST Transport Sector Adjustment Program (Programme d Ajustement Sectoriel des Transport) PEM Project Execution Manual PST2 Second Transport Sector Project (Deuxieme Projet Sectoriel des Transports) SETI International Rail Operating Company (Societe d'Exploitation de Trafic International) SONAPAD National Port Company (Societe Nationale du PortAutonome de Dakar) SNCS National Railroad Company (Societe Nationale des Chemins de Fer du Senegal) RMRP Three-Year Rolling Road Maintenance and Rehabilitation Program RFARB Road Fund Advisory and Review Board WPB Annual Work Program and Budget Vice President: Jean Louis Sarbib Country Director: Mahmood Ayub Sector Manager: Maryvonne Plessis-Fraissard Task Team Leaders: Emmanuel Mbi & Jaffar Bentchikou  REPUBLIC OF SENEGAL SECOND TRANSPORT SECTOR PROJECT (PST 2) CONTENTS Project Appraisal Document 1 A. Project Development Objective 2 1. Project development objective and key performance indicators (see Annex 1) 2 B. Strategic Context 2 1. Sector-related Country Assistance Strategy (CAS) goals supported by the project (see Annex 1) 2 2. Government Strategies and Main sector issues 3 3. Government Strategy 3 4. Main Sector Issues, Issues to be addressed by the project and strategic choices 4 C. Project Description Summary 9 1. Project components 11 2. Key policy and institutional reforms supported by the project 14 3. Benefits and target population 14 4. Institutional and implementation arrangements: 15 D. Project Rationale 17 1. Project alternatives considered and reasons for rejection 17 2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned) 18 3. Lessons learned and reflected in the project design 18 4. Indications of borrower commitment and ownership 20 5. Value added of Bank support in this project 21 E. Summary Project Analysis 21 1. Economic (supported by Annex 4) 21 2. Financial (see Annex 5) 23 3. Technical 24 4. Institutional 25 5. Social and Poverty Impact (see Annex 4F) 25 6. Environmental assessment (see Annex 2C) 26 7. Participatory approach 26 F. Sustainability and Risks 27 1. Sustainability 27 2. Critical Risks 28 3. Possible Controversial Aspects 29 G. Main Loan Conditions 29 1. Effectiveness Conditions 29 2. Other 29 H. Readiness for Implementation 31 I. Compliance with Bank Policies 32  ANNEXES Annex 1 Project Design Summary Annex 2A Project Description Annex 2A bis Description of Project Financed by IDA Annex 2B Annual Work Program and Budget Planning and Review Process Annex 2C Environmental Evaluation/Action Plan Annex 3A Estimated Project Costs Annex 3B Project Financing Plan Annex 4 Cost-Benefit Program Analysis Annex 4A Cost Benefit Analysis Summary - Road Maintenance, Rehabilitation & Construction Annex 4B Cost Benefit Analysis Summary - Railways Component Annex 4C Cost Benefit Analysis Summary - Ports Subcomponent Annex 4D Cost Benefit Analysis Summary - Civil Aviation (Airports/Safety Subcomponent) Annex 4E Economic/Impact/Risk Assessment Summary - Land Transport Annex 4F Social and Poverty Impact Summary Annex SA Financial Summary for Revenue Earning Project Entities: Port Autonome de Dakar Annex 5B Financial Summary for Revenue Earning Project Entities: AANS (Airports Mgmt.) Annex SB Privatization of Airport management: Timetable of Actions Annex 5C Financial Summary for Revenue Earning Project Entities: Air Senegal Annex 5C bis Privatization of Air Senegal: Timetable of Actions Annex 5D Financial Summary for Revenue Earning Project Entities: CEREEQ Annex SE Financial Summary for Revenue Earning Project Entities: SNCS Annex 6 Procurement and Disbursement Arrangements Annex 6: Table A Project Costs by Procurement Arrangements Annex 6: Table B Thresholds for Procurement Methods and Prior Review Annex 6: Table C Allocation of Loan Proceeds Annex 7 Project Processing Budget and Schedule Annex 8 Documents in the Project File* Annex 9 Statement of Loans and Credits Annex 10 Senegal at a Glance Annex 11 Senegal Transport Sector at a Glance (Highlights) APPENDIX Appendix 1 Letter of Sector Policy MAP  REPUBLIC OF SENEGAL SECOND TRANSPORT SECTOR PROJECT (PST II) Project Appraisal Document Africa Region - Country Department 14 Date: March 10,1999 Cluster LeademWTask Managers: Emmanuel Mbi & Jaffar Bentchikou Country Director Mabmood Ayub Sector Manager Maryvonne Plessis-Fraissard Project lD:SN-PE-2366 Sector. Transport Program Objective Category: ESSDIPSD Lending instrument SIL Program of Targeted Intervention: [xi Yes r I No Project Financing Data [] Loan [xl Credit [1 Guarantee f I Other [Specfy] For LoanslCredits/Others Amount (US$m/SDRm): US$90 million/SDR 64.3 million Proposed terms: [x I Multicurrency fi Single currency: specify Grace period (years): 10 [] Standard Variable [x] Fixed [] LIBOR-based Years to maturity: 40 Commitment fee: Standard IDA Service charge: 0.75% Financing plan (USSm): Source Local Foreign Total Goverunent 133.2 - 133.2 Cofinanciers 54.5 278.5 333.0 1BRD N/A N/A N/A IDA 8.5 81.5 90.0 Other: -(Public Enterprises-SNCS, PAD, ASECNA) 24.8 - 24.8 Total 221.0 360.0 581.0 Borrower: Govemment of Snegal (GOS) Guarantor NA Responsible agency(ies): Overight: Ministry of Finance (MEFP) in collaboration with Ministries of Equipment and Land Transport (MET), Tourinsm and Air Transport (MrTA), Fisheries and Maritine Transport (MPIT), PM's Office . Day-o-dy Coonlinafion: Program Coordination Unit (CELCO). Execuffon of Components/Activities. Department of Land Transport (DTM; Department of Public Works (DTP)Road Works Authority (AAGTR-4o be created), Vocational Training Center of MEUT (CFP-METI); Road Research and Quality Control Laboratory (CEREEQ); Port of Dakar (PAD); Dept of Merchant Marine (DMM); Civil Aviation (DACX Meteorological Dept (DMA); AANS (ASECNA- S&ndgal), SONATRA (Air Senegal); CELCO (rural trans.& environ. components);, MEFP &METT (Road Fund rest.); State Portfolio Management Unit-CGCPE-MEFP (privatizations); Prime Mnister's Office with CELCO support (process of creation of Road Agency) Estinated disbursements (Bank FYIMSSM): 2000 2001 2002 2003 2004 2005 Annual 10.00 15.00 20.00 20.00 13.00 12.00 Cumulative 10.00 25.00 45.00 65.00 78.00 90.00 For Guarantees: [] Partial credit [] Partial risk Proposed coverage: N/A Project sponsor Nature of underlying fnancing: Terms of financing: Principal amount (USS) Final maturity Amortization profile Financing available without guarantee?: [1 Yes [ No If yes, estimated cost or maturity: Estimated financing cost or maturity with guarantee: Project implementaton period: 5.5 years. Expected effectiveness date: July 1, 1999. Expected closing date: June 30,2005 1  A. Project Development Objective 1. Project development objective and key performance indicators (see Annex 1) 1.1 The Development Objective of the Second Transport Sector Project (PST2) in Senegal is to obtain a sustainable improvement in the supply and performance of transport infrastructure (including services), in order to create an environment for improved economic growth through exanded access and reduced transport costs. This objective will be pursued by supporting further institutional reforms and policy enhancements in the sector and by removing major physical constraints, allowing for the consolidation and further development of those achievements realized under the Transport Sector Adjustment/Investment Program (PAST--IDA Cr. 2266-SE). The proposed project has the following specific objectives: * stabilize and improve the condition of the priority road network, reducing the long-run economic costs for road maintenance and rehabilitation in order to enhance regional competitiveness and attain sectoral financial sustainability; * increase the number of district capitals with access to all-weather roads; * strengthen institutional capacity, financial viability and operational efficiency of the agencies of the sector; * encourage more direct private sector involvement in investment and management of the sector; and * reduce transport cost for the poor. 1.2 Key performance indicators are: (i) reduction in freight rates and vehicle operating costs; (ii) reduction in goods delivery time; (iii) improvement in the overall condition of the roads network as reflected by the IRI (international roughness index); (iv) increase in the number of district capitals with access to all-weather roads; (v) mainstreaming of better planning and programming tools for road maintenance and rehabilitation works (e.g. three-year rolling plan); (vi) creation of a Road Works Management Agency; (vii) operation of a Road Fund Mechanism under a new structure and procedures; (viii) further improvements in financial performance and efficiency gains (e.g. reduction in work force, declining ratio of wage bill to revenues) and management capacity of parastatals; (ix) improved competitiveness vis-A vis other ports and airports of the region; (x) adoption of a new Maritime Code in line with intemational standards; (xi) increased traffic to the secondary ports of Ziguinchor and Kaolack, as well as reduced transport cost and travel time savings from the Dakar region to Ziguinchor; and (xii) successful privatization of the operation of international rail services on the Dakar-Bamako corridor, Air Senegal, and airport management. B. Strategic Context 1. Country Assistance Strategy (CAS) CAS document number: 17269 - SE Date of latest CAS discussion: 1/29/98 Goal Supported by the Project (see Annex 1) 1.1 The proposed project is consistent with the Country Assistance Strategy (CAS) discussed by the Board on January 29, 1998. The overarching objective of the CAS is to reduce the incidence of poverty and to create gainful employment opportunities based on a two-pronged 2  approach: (i) support for policies and programs aimed at more rapid and sustained growth; and (ii) ensuring social sustainability of programs. Within the investment portfolio the majority of operations focus on alleviating key infrastructure bottlenecks, especially in the transport, energy and water sectors as well as in the rural areas. The project will support the CAS in two ways. It will increase Senegal's competitiveness in foreign trade and promote linkages in domestic markets - crucial factors for rapid and sustained growth. It will also improve the degree and decrease the cost of access by the poor to social services, markets and economic opportunities, thereby contributing to social sustainability. 2. Government Strategies and Main Sector Issues 2.1 The transport sector plays a strategic role in the economy of Senegal. It accounts for approximately 10% of GDP and generates a significant share of the total budgetary revenues of the State. As a center of French colonial administration in the 1950's and following independence in 1960, Senegal, and in particular its capital Dakar, acquired a relatively good infiastructure base. However, economic crisis and decline during the 1970's and early 1980's, and weak institutional capacity, led to a deterioration in the infrastructure network and its operations and left it with the inability to expand services to a larger segment of the population. 2.2 Presently the transport infrastructure network consists of the following: 14,500 km in the classified road network (4,200 km paved, 10,300 km unpaved), of which about 5,500 km are rural earth roads. The rail network consists of 1,058 km of track. (906 km main track, 152 km branch lines). The Port of Dakar is the country's main international seaport with the capability of handling container as well as other cargoes. There are also three secondary and several tertiary ports and harbors. In addition, Senegal has one main international airport (Leopold Sedar Senghor, Dakar), 16 regional airports (the large 3 of which also handle international traffic related to neighboring countries, tourism and agricultural exports) and one wholly-owned national airline. It participates as a shareholder in the multinational carrier Air Afrique, which Senegal has designated as its flag carrier in international matters. Annex 11 provides highlights on the transport sector. 2.3 Since 1992 the Government has deployed, within the framework of the PAST and supported by twelve donors/international financial institutions, major efforts to remedy sectoral imbalances. Policy, institutional and physical shortcomings were or are being addressed. Much has been achieved under the PAST, notably in policy and institutional reform, in particular since the devaluation of the CFA Franc in January 1994. One of the key underlying factors for these achievements has been the Government's commitment to reform and development of the sector. The Government's approach as outlined in its Ninth Economic and Social Development Plan, Medium Term Strategy Paper for the Transport Sector (MTSTS--June 1997), and Letter of Sector Policy (LSP2-January 1998) aims to consolidate and build on earlier achievements, while continuing to address shortcomings and emerging issues. This, it is expected, will contribute to rapid and sustained economic development in a socially sensitive manner. This approach will require the GOS to deal with several critical issues, the key ones of which are identified below. 3. Government Strategy 3.1 In the late 1980s the GOS initiated a wide range of new approaches to develop and improve the infrastructure network and services. Private participation was considered for service contracting, road maintenance and the concessioning of infrastructure management. In 1991 the Government adopted a Policy Letter for the Transport Sector (LSP1). The overriding objectives included the improvement of the state and efficiency of transport infrastructure and services, 3  reducing operating costs and making the sector more competitive. The LSP1 also called for the restructuring of sector parastatals (railways, port and air transport) to enhance their performance, provide them with full autonomy and effectively transform them into commercially viable companies. The Public Works Department's (DTP) role was transformed to focus on planning, programming, contract management, supervision of works and the establishment of regulations. To assist the GOS in translating its sector policies into operational reality, the PAST was prepared with the support of the Bank and several donors (EEC, ADB, CIDA, BOAD, etc.). 3.2 Under the PAST project most of the government's sector policy objectives were addressed, with varying degrees of success. Specific issues and achievements are detailed in the Board Document "Senegal: Transport Sector Adjustment/Investment Credit - Release of the Second and Third Tranches (Waiver of Conditions)" dated June 11, 1996 (summary presented in matrix on pages 5-9). In the Ninth Economic and Social Development Plan, the GOS reiterated that efficient management, maintenance, and development of the infrastructure sectors, including the transport sector, are critical to Senegal's future economic development, poverty alleviation objectives, domestic competitiveness, and regional integration. In line with this a joint Government-Bank MTSTS was issued in June 1997. The MTSTS, molded by the lessons from the PAST project (see Section D.3) and with the active participation of a wide spectrum of sector stakeholders, has recommended a strategy and agenda for further reform and improvements in the sector. The proposed project (PST2), supported by a new Letter of Sector Policy (LSP2), will pursue reforms and consolidate past and ongoing efforts. 3.3 The principles underlying the Government's policies and proposed reforms and regulatory interventions in the sector uider the LSP2 include: (i) adapting transport infrastructure to the needs of economic growth and of regional integration; (ii) further strengthening sector institutions and the Administration to improve capacity to perform the essential functions of planning, coordination, regulation, and supervision; (iii) extensive stakeholder involvement in the decision- making process regarding the management and development of the sector; (iv) adoption of regulatory and fiscal frameworks designed to induce competition and promote private sector participation in the development and management of the sector; (v) continued promotion of local private contractors to develop technical and management capacity to efficiently carry out increased shares of maintenance works for road, rail and port infrastructure; (vi) continued emphasis on maintenance and rehabilitation, while pursuing selective infrastructure expansion (encompassing all transport modes); (vii) development of rural transport including the definition of a coherent policy, preparation of an appropriate strategy and definition of an action plan for the provision and maintenance of rural roads (including a pilot priority program of rural roads rehabilitation); and (viii) ensuring environmental and social sustainability in the sector. Consistent with the above, a detailed list of objectives and plans of action back up LSP2 with the proposed PST2 supporting efforts to further the principles outlined, as well as the objectives and implementation of the plans of action. GOS commitment to the principles of LSP2 is one of the key elements for attainment of the PST2's development objective. (see Section D.4). 4. Main Sector Issues, Issues to be Addressed by the Project and Strategic Choices 4.1 The project is designed to support a five and a half year time slice of the GOS' sector maintenance and investment program (SMIP) including institutional and policy development support. A number of important sector issues have been identified during the supervision of the on-going PAST project with more than 21 studies conducted by both national and international consultants on key transport areas during the PST2 preparation. These studies have also identified a number of key issues that need to be addressed. 4  4.2 Donors and other multilateral and bilateral institutions will finance about 51% of the project, with the Government (including public enterprises) financing about 27% of total project costs; the private sector 7%; and the Bank covering the remainder, about 15%. Annex 3B outlines the financing plan for the project. The following matrix summarizes the main sector issues identified both through PAST supervision and PST2 preparation. In addition it presents the main PAST project accomplishments in these areas, and outlines proposed project solutions, both in terms of institutional and policy reforms as well as physical improvements. A. Institutional and Policy Issues PAST Project Proposed Project Solutions Accomplishments Sector Planning, Management, Sector Planning, Sector Planning, Management, Supervision & Policy Development Management, Supervision, & Policy Development - Sector-wide there is weak institutional Supervision & Policy Capacity in policy-making and regulation capacity in management, policy and Development in civil aviation, maritime transport, and decision-making, planning, preparation * Efforts were made to the railways will be developed. Users and and implementation of regulations, establish reliable stakeholders will participate in policy programming, as well as contracting management systems and dialogue to ensure transparency and and the supervision of works. In databases in the rail, accountability. Planning, and cost- addition, specifically in roads, there are maritime and road effectiveness measures will consider weak financial controls and inadequate subsectors. However, safety, accessibility, and land-use issues. records, insufficient technology capacity issues with Sound database and modeling systems transfer under past projects, a poor respect to middle and will be implemented and capacity in road database, modeling and analysis lower level technicians programming and quality control of capability, a lack of road maintenance were not adequately works improved. A 3-year rolling road planning and programming, and targeted. As a result large maintenance and rehabilitation program inadequate budget preparation. long-term expatriate TA (RMRP) was has been prepared with did not leave lasting training for two key technical staff of improvements. METT, both in Senegal and at a Canadian * All periodic, routine engineering school. Support will be road maintenance works provided for yearly update the RMRP. and rehabilitation are now An autonomous entity will replace DTP to carried out by private manage the road sector with TA and contractors. training provided. A manual of * Economic criteria for procedures will be prepared to include a selection of works to be catalogue of works, pricing and carried out has been recruitment principles and procedures, introduced. and guidelines for the preparation of * Full autonomy granted annual work programs and budgets to sector enterprises to (WPB). Coordination will be emphasized operate on commercial and strengthened and a rural transport principles; cessation of all policy developed. Skills of middle and operation subsidies; and lower level technicians will be upgraded. Establishment of Both the Center for Professional Training compensation principles of the Ministry of Equipment (CFP- for public service METT), and the Center for Road obligation. Business Research and Quality Control (CEREEQ) Plans and corporate will be restructured to give greater strategy principles have commercial relevance and autonomy. been introduced in the management of enterprises. 5  Land Transport Administration Land Transport Land Transport Administration - DTT to Inadequate institutional and financial Administration introduce road safety campaigns including resources have been provided by the Issues concerning DTT development of information systems. Administration to effectively carry out were addressed but not as Equipment and materials to be provided the basic functions of the Land vigorously as envisioned. to strengthen, integrate and standardize all Transport Department (DTT). In However, action plans land transport administration systems and addition road safety has been have been developed for databases. An internet server will be inadequately addressed. implementation. established. DTT's regional offices in Fatick, Kaolack, St. Louis and Diourbel, and vehicle testing centers to be rehabilitated & upgraded. Road Maintenance & Financing Road Maintenance & Road Maintenance & Financing. - A 3- Funds allocated by the GOS for road Financing - Adequate year rolling annual maintenance program maintenance have not always been funds were allocated and will be introduced with budgetary targets disbursed, or when disbursed not disbursed for road based on need, as will short-medium term always used for intended purposes. In maintenance from 1994 reform of the Road Fund, establishment addition there has been seriously onwards. The backlog of of basis for long-term reform, and inadequate management of the Road maintenance has been restructuring of Fund management to Fund with poor fund transparency, significantly reduced by ensure transparency by instituting clear poor documentation of transactions strict adherence to a ratio financial management and accounting and inadequate application of financial of funds use: 75% for procedures and a system of regular audits. management and accounting principles maintenance and 25% for An Advisory and Review Board and procedures. Overall road new works. However, (RFARB) will be established with maintenance has suffered due to functioning of the Road representation from road subsector inadequate programming and frequent Fund remains inadequate, stakeholders, supported by a technical staffing changes. The Road Fund with the absence of secretariat. Progress will be reviewed and continues to finance activities proper programming, reforms implemented as necessary after a unrelated to road maintenance. There is financial planning and 2-3 year period. The GOS to continue to continued poor management due to a controls. replenish the Fund from its consolidated lack of training and insufficient investment budget (BCI) at a minimum technology transfer under previous level of CFAF 15 billion/year (confirmed projects. Finally, provisions of legal in the LSP2) and will ensure timely texts are out of line with reality. availability of resources. Private Sector Involvement in Further Private Sector Further Private Sector Involvement - Management, Development and Involvement - Overall Project to support efforts to increase Financing of Transport Sector - There extensive involvement of private participation in the management, is continued financial and technical private sector in transport development and financing of the sector, weakness in the local small and maintenance, specifically, the privatization of the medium public works companies; a construction and the operation of international services on the continued over-dependence on public provision of key services, Dakar-Bamako corridor; promotion of the and donor funds for transport sector in particular, road technical, financial and management financing with limited private sector maintenance; the railroad development of the local SMEs for road participation in the financing of is being prepared for maintenance work; assistance to better transport infrastructure. The Franc privatization of prepare for the privatization of Air CFA devaluation of 1994 greatly international transport Senegal and management of the airports; inflated the indebtedness of sector services; private mobilization of private participation in enterprises, with hard currency operators are heavily the Dakar-Ziguinchor maritime route, and denominated loans making their involved in port assess potential for increased private financial structures inadequate. operations; feasibility participation in road construction and study for private airport maintenance financing. It will also assist management with the GOS to restructure the balance sheets detailed inventory of of transport sector companies to clean up 6  assets of entity, the devaluation induced debt overhang. reconstitution and audit of accounts, completed. Environnental Sustainability Environmental Environmental and Social Sustainability There is inadequate attention paid to Sustainability - - The project will assist in strengthening environmental impacts in the transport * Environmental the capacity for environmental and social sector; no systematic approach to the awareness introduced in impacts evaluation. It will finance development of suitable mitigation transport. environmental assessments for individual measures or the creation of * A detailed sector-wide sub-projects and support implementation environmental awareness and staff environmental impact of the Environmental Action Plan (Annex training. assessment developed 2C). Relevant staff will be trained. and an action plan to mitigate negative effects prepared. Efficiency and Competitiveness of the Efficiency and Efficiency and Competitiveness of the Railway - There remains a number of Competitiveness of the Railway - The project will assist SNCS to uneconomic routes which continue to Railway - Institutional implement a new corporate strategy operate without government reforms, with a change of (Annex 8) designed in light of the compensation. There is poor physical legal status increased rail operation of international services on the infrastructure, chronic overstaffing autonomy. Service has Dakar-Bamako corridor. It will help with inadequate attention to funding of improved with increased finance the severance packages of about employment separation packages wagon availability. New 550 redundant staff resulting from the where needed. management tools and above privatization, a refocus of SNCS computerization strategy and business operations, as well introduced. A staff as the 314 redundancies resulting from the reduction plan was 1996 closure of the Tivaouane-St. Louis negotiated with 814 staff, and Guingeneo-Kaolack passenger 500 of whom departed. services. Lack of funds blocked full implementation. Civil Aviation Management- There is CivilAviation Civil Aviation Management - The project weak institutional capacity in overall Management Some will support more systematic and a better management, airport operations, internal management prepared privatization program for Air reporting and accounting procedures. improvement measures Senegal as well as airport management. Also, there have been a number of implemented for Air Restructuring of DAC and DMA and the failed privatization attempts for Air Senegal. Improvements development of regulatory capacity and Senegal. attained in financial tools to adapt to demands of globalization results. will be introduced. Ports, Maritime and River Transport Ports, Maritime and Ports, Maritime and River Transport - - Limited competitiveness of ports due River Transport - Long- The project will support improvements in to weak maritime transport policy and term masterplan institutional and policy development. decision-making capabilities, developed which Pricing policies and other incentives for inadequate management capacity and underpins future needs. private operators to be introduced to regulations, marketing problems, and increase the use of river transport and overstaffing. Specific secondary port coastal shipping. Revision of maritime problems include: accessibility issues legislation in line with intemational in St. Louis; Kaolack's under norms. utilization; and need for a strategic and marketing plan. Rural Transport - There is absence of Rural Roads - Due to Rural Transport - The project will a coherent policy for the sub-sector pressing needs and GOS support the definition of a national policy 7  with no institutional, financial and resource constraints, rural and strategy for rural transport including technical framework for rural roads. In roads were excluded from assigning overall ministerial addition there is inadequate reliable the project. responsibility for rural roads. It will information on essential rural transport assess reform requirements for infrastructure with the network being decentralization and begin discussions to too rudimentary for improved determine resource mobilization needs at agricultural production, marketing and the central and local levels. Decentralized access to services. decision-making is supported with a full- time program coordinator (within CELCO). B. Physical Constraints and Issues Related to the State of Infrastructure Roads - Road network performance Roads - The most urgent Roads - About 60% of project funds will (costs imposed on users) is bridge repairs have been be committed to cover roads works, unsatisfactory, specifically as concerns carried out under the including road maintenance, rehabilitation earth roads which are poorly project. In addition road and other expansion. Maintenance and maintained. Targeted investments in links to Mauritania, rehabilitation to be within the framework rehabilitation and maintenance are Gambia and Guinea of the rolling 3-year RMRP, updated urgently needed. Several critical Bissau have been annually and reviewed by IDA and donors bridges are in need of significant repair upgraded. Technical as part of PST's Work Program and or replacement. Finally, the inter- audits were regularly Budget (WPB -- see Section G) annual regional links and axes to Mali and carried out in conjunction review. Project to affect more than 9,000 Guinea remain poor. with financial audits. kms of the road network, at least 10 bridges, and a number of specific road sections. Works will be selected in accordance with agreed economic, technical and/or other specified criteria as stipulated in the LSP2. Technical audits to be separated from financial audits and done more frequently. Railways - The Dakar/Bamako Railways - Track Railway - Rehabilitation of major corridor, in particular the rehabilitation expected economic rail infrastructure to a Tambacounda-Kidira link (175 km) is under the project did not maintainable level of service, at an a major infrastructure bottleneck which occur due to the acceptable cost is a critical objective. has adversely affected operations. Rail withdrawal of support by Track rehabilitation of the Tambacounda- workshops remain in poor condition the Italian financiers. Kidira and Thies-Tivaouane lines will and need to be modernized. There is IDA funds were receive priority. For safety and also a significant amount of existing reallocated to finance the operational efficiency reasons and to meet rolling stock which is in poor condition rehabilitation of nearly 65 projected demands for phosphate and needs to be replaced. Line km of Tamba-Kidira transport, a third track will be constructed profitability is adversely affected by track. The rail telecom between Thiaroye and Hann near Dakar, overstaffing and the telecom system system has been and the Kidira train station upgraded to needs to be upgraded and made upgraded, and equipment facilitate transit operations between Mali compatible with the Malian system. provided to computerize and Senegal. Telecommunication operations (including equipment will be purchased. Additional financial management). rolling stock will be financed by the Modern locomotives private operator of the international were acquired. services on the Dakar-Bamako corridor. Airports and Civil Aviation Airports and Civil Airports and CivilAviation - First Traffic management including aid to Aviation Main runway priority will be given to the supply of navigation and safety equipment is constructed; air terminal equipment, and rehabilitation and inadequate; maintenance facilities improvements underway; expansion of infrastructure for air 8  rundown and transit facilities modem communications navigation and safety, followed by dilapidated; handling equipment system purchased as well facilities upgrading, modernization, and obsolete and in short supply; cargo as ground safety handling equipment designed to facilitate aircraft parking in poor condition; equipment for business and transfornation of LSS safety equipment for secondary Tamnbacounda airport. Airport into a regional hub. airports in short supply or non-existent; But, investments did not and runways in need of rehabilitation address key constraints or lengthening. sufficiently. Ports, Maritime and River Transport Ports, Maritime and Ports, Maritime and River Transport - The ratio of storage space/quay in the River Transport - Many Rehabilitation and expansion works will port of Dakar is insufficient and needs infrastructure bottlenecks be undertaken in Dakar to improve the to be significantly increased. The removed (e.g. increased capacity of the container terminal and physical layout issues associated with storage/quay space, public facilities, as well as the Ports of the port of Dakar need to be addressed. modern handling Kaolack and Ziguinchor. Appropriate equipment). Entire levels of equipment (navigation aids, physical bottlenecks and signaling, etc.) will be provided, and evolving business needs improvements to infrastructure related to could not however be the development of domestic passenger addressed. and freight lines, in partnership with the _____________________________ __ private sector, explored. Rural Roads Rural Roads - Rural Roads - For improved accessibility There is urgent investment required to Due to pressing needs of isolated areas with agricultural improve accessibility of certain areas. and GOS resource potential, a priority pilot program of rural constraints, rural roads road rehabilitation will be undertaken. were excluded from the This will be preceded by a defined and project. implementable rural road policy with clear responsibility for financing and maintenance for the different levels of the _____________________________ __ feeder road network, defined C. Project Description Summary 1. A detailed list of the preparatory studies undertaken for the PST2 to further strengthen the quality of project design as well as contribute to the definition of appropriate strategic choices is found in the Project File (Annex 8). As noted in Section 2 (b), more than 21 studies were conducted to identify those institutional and policy issues upon which the proposed project would need to focus to ensure that physical improvements are sustainable and GOS objectives for the transport sector met. For illustration purposes, the following briefly summarizes some of the main conclusions reached by one of the studies - on the Dakar-Ziguinchor maritime-river route - which was instrumental in designing part of the port/maritime component. (i) road transport between Dakar and the Casamance is a poor alternative because of the bad state of the roads which result in high transport costs, the poor state of the vehicles, harassment from customs and police officials, the lack of safety and security, and the physical territorial incontinuity caused by the Gambia's geographical situation; (ii) the demand for low-cost transport of both passengers and goods between Dakar and the Casamance by ship far outstrips existing supply, however, basic on-land infrastructure to support the operations of ships is grossly inadequate; the draft in key portions of the routes used by boats is shallow and a major restrictive factor; and the only boat used for low-fare transport needs basic repair and maintenance that has been consistently neglected; 9  (iii) the fares set by the Government, regardless of their social justification, are leading to increased operational losses while still not making it possible to meet demand either in terms of quantity or quality; and (iv) overall, no incentives are being provided to allow the private sector to assist in making up for the supply-demand imbalance. 1.1 As shown elsewhere, the project will address most of the problems/issues identified above through support for institutional development, policy definition and design/refinement of regulatory frameworks to promote private sector involvement and the financing of essential physical investments in works (limited dredging) and infrastructure. 1.2 On a broader front, the project has been divided into 11 components which cover all of the main transport sectors in Senegal. The first 5 concern mainly institutional and policy strengthening, with the remaining 6 consisting of a combination of technical assistance and physical works. Each of the components is further divided into sub- components with a specific development focus. The following table presents the project components in a summary form with Annex 2 providing a more detailed description and cost breakdown. 10  1. Project components Comnonent Cateeorv Costs wth Of Bank % of Catgaories ContineencV Total financina Bank AnneS 6 ______ t1SSn) __