Mauritania - Highway Maintenance Project

RESTRICTED FILE COPYRESTRICTED Report No. P-719 This report was prepored 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 The report may not be published nor may it be quoted as representing their views.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 DEVELOPMENT ASSOCIATION REPORT AND RECOMMENDATION OF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT TO THE ISLAMIC REPUBLIC OF MAURITANIA FOR A HIGHWAY MAINTENANCE PROJECT June 4, 1969  INTER3IATIONrAL DEVELOPMENT ASSOCIATION REPORT AND RECCQvfIENDATION OF TIE PM'SIDENT TO THE, EXECUTIVE DIRECTORS ONl A PROPOSED CREDIT TO THE ISLA1IIC REPUBLIC OF AIAURITANIA FOR, A HIGHIAY ilAIINTENANCE PROJECT 1. I submnit the following report and recaT'nendation on a proposed develop- ment credit in an amount in various currencies equivalent to US$3.0 million to the Islamic R'epublic of M4auritania to assist in financing a highluray maintenance project. PART I - HIISTOIICAL 2. In 1964, IDA extended a $6.7 million credit to ;Iauritania for the engineering and construction of the ;'fouakchott-RIosso road and for the preparation of a road maintenance study. Ti-is study, carried out by the French consulting firm, BCECM, was completed in 1967. In Septenber 1968, the Government requested IDA assistance in financing a 4-Year program to improve highway maintenance. * he project was appraised in December 1968. 3. Ilegotiations on the proposed credit wzere completed on May 16, 1969, with a delegation of the Government led by .Ir. 1. Limam, Director of Tech- nical Services, Ministry of Equipment. 4. The followring is a sumnary statemont of Bank loans and IDA credits to Mauritania as of April 30, 1969: lm'olunt (US $ imillion) Loan or Credit hNumber Year Borrower Puropose Banlc IDA Undis:.ursed 249 -FR 1960 I4IFER IA Iron 66.0 mining 69- iAU 1964 Republic of .Loads 6.7 *-lh.6 Ielauritania 66.0 7 Total (less cancellations) of whiich has been repaid to Bank and others 15.6 Total now- outstanding 50.4 Amount sold: 63.4 of which has been repaid 15.6 47.8 Total now held by Bank and IDA 2.6 6.7 * Execution of the road project was delayed because the original technical specifications had to be modified. The project is now proceeding in accordance with a revised schedule, with ccmpletion expected by the end of 1969.  - 2 - 5. I1 1968, IFC agreed to invest US`20 million (14AU-132), US$3.45 million in equity funds and US$16 55 million in a loan, in Societe Miniere de Mauri- tanie (SCKJT1A), the company which will cperate a copper mine at Akjoujt. The amount disbursed on these investments as of April 30, 1969 was about $3.5 million. 6. There are no other projects ready for consideration by the Bank Group in Mauritania in the near future but a livestock project and an agricultural pilot project have been identified and arrangements are now being made to assist in their preparation. PART II - DESCRIPTION OF THE PROPOSED CPZDIT 7. Borrower: Islamic Republic of Mauritania. Amount: Various currencies equivalent to $3.0 million. LI_Tose: To assist in financing a four-year road improvement and maintenance program. Amortization: In 50 years including a 10-year period of grace, through semi-annual installments of 1/2 of 1J frcr. December 1, 1979 through June 1, 1989 and of 1-1/2i from December 1, 1989 through June 1, 2019. Service charge: 3/14 of JHo per annum on the principal-amount of the credit disbursed and outstanding. Estimated economic return: 11,. PART III - THE PROJECT 8. A report entitled "Appraisal of a Highway Ma_intenance Project - MIauritania" PTR-9a,dated June 4, 1969 is attached. 9. The IMauritanian road system, aside from dirt tracks serving local needs, comprises about 3,200 kms, mostly in poor condition. This includes two im- portant laterite roads which are being upgraded to bituminous surface: the 200 kas Nouakchott-Rosso road, partly financed by the 1964 credit and ex- pected to be completed by the end of 1969, and the 300 kms Nouakchott-Akjoujt road, presently being built to provide a year-round link with the copper mining site and expected to be completed in 1971. Otherwise, there are only 600 ikms of all-weather laterite roads, the remaining 2,100 Ins of the national road network consisting of rudimentary earth roads. Road transport in the relatively densely populated southern part of the country, where most of the population is concentrated, is interrupted from July to November, after heavr rain or during seasonal flooding by the Senegal River.  -3 - 1.0 Under the proposed project which will be carried out over 4 years, the national road netwiork wiill be improved to a condition where it can be properly maintained. In addition, more substantial betterment works will be started, including the surfacing with laterite of some 500 kas of the eorth road nEtt'ork. The project provides for: (i) the purchase of maintenance and shop equipment; (ii) improvement of the efficiency of maintenance operations; and (iii) training of personnel at all levels. 11. The Department of Public Works, assisted by consultants acceptable to the Association,, ill be responsible for the execution of the project. A contract between the Iblazaic Republic of Hiauritania and the French consulting firm BCEOI was negotiated in May 1969, the effectiveness of the Credit Agreement being subject to signature of the contract. 1?. Of the $3.8 million dollars total cost of the project, $3.0 million (79%) would be financed out of the-proposed IDA credit, representing all the foreign exchange cost of the project and some $160,000 of local subsist- ence costs for the consultants. The balance of the local expenditure including duties and taxes on imported equipment and parts and all recurrent expenditures during the program period estimated at $L4.8 million would be borne by the Govern-ment. All procurement wiould be on the basis of inter- national competitive bidding in accordance with standard procedures. 13. Substantial benefits would result from a general improvement and regular maintenlance of the unpaved road network, particularly in the southern part of the country. About 85% of the proposed expenditure on equipment and tec'bnical services can be directly related to these objectives, the balance being applied to the requirements for maintenance of the paved Nouakchott-Rosso road after its ccmpletion at the end of 1969. The quantifiable benefits from the proposed investment, based on savings on vehicle operating cost alone, would yield an economic return of about ll% over the eight-year life expectancy of the equipment. PART IV - LEGAL INSTRU1=14TS AND AUTHORITY 1h. The draft Development Credit Agreement between the Islamic Republic of hauritania and the Association, the Recommendation of the Committee provided for in Article V, Section 1 (d) of the Articles of Agreement and the text of a Resolution approving the proposed Credit are being distributed to the Executive Directors separately. 15. The provisions of the draft Development Credit Agreement follow the usual pattern in similar projects.  -h1 - PAIRT V - TIE EC0UMHY 16. A report entitled "Guidelines for a Four-Year Development Program" S3C-iI 69-2, has been distributed to the Executive Directors on January 3, 1969. This report was prepared by a Banic technical assistance mission which visited the country in 1967 at the Government's request to assist in preparing the next four-year development plan. 17. In the early sixties, Mauritania experienced extremely high GDP grow