Tanzania - Second Highway Project

D RETURN TO RESTRICTED Report No. TO-690a ~P6I~1DSKFILE COPY 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 The report may not be published nor may it be quoted as representing their views.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 TANZANIA APPRAISAL OF THE SECOND HIGHWAY PROJECT January 15, 1969 Transportation Projects Department  CURRENCY EQUIVALENTS Currency Unit: Tanzanian Shilling US$1 = T Sh 7. 14286 T Sh I US$0. 14 T Sh 1 million = US$140, 000 FISCAL YEAR July 1 - June 30 UNITS OF WEIGHTS AND MEASURES: BRITISH 1 mile 1.6 kilometers 1 foot = 30. 5 centimeters 1 acre - 0.41 hectares 1 imperial gallon 1. 20 US gallon 4. 54 liters 1 ton 1. 12 US sh ton = 1.02 metric tons 1.00 US long ton = 1.016 metric tons ABBREVIATIONS - ACRONYMS RAD - Roads and Aerodromes Division ZTRS - Zambia-Tanzania Road Services Ltd. UDI - Unilateral Declaration of Independence by Southern Rhodesia USAID - United States Agency for International Development P4 O X Zz,  TANZANIA APPRAISAL OF THE SECOND HIGHWAY PROJECT Table of Contents Page SUtIARY i 1. INTRODUCTION l 2. BACKGROUND 2 A. Economic Setting 2 B. Transport System 2 3. THE HIGMHAY SECTOR 6 A. Higlhi: y System 6 B. Road Transport 6 C. Highway Administration 7 D. Design Standards, Engineering and Construction 8 E. 14aintenance 8 F. Highway Expenditures and Investment Planning 8 4. THE FPROJECT 10 A. Description lO B. Design Standards 11 C. Cost Estimates ll D. Execution 13 E. Financing and Disbursement 13 5. ECONONIC EVALUATION 15 A. Introduction 15 B. Traffic 16 C. Unit Savings in Vehicle Operating and Road Maintenance Costs 17 D. Probability Analysis of Economic Rate of Return 18 6. CONCLUSIONS AND RECO11MENDATIONS 20 This report was prepared by Messrs. E. Jaycox and L. Pouliquen, econo- mists, and F. Soges, engineer.   Table of Contents - Page 2 - AMJ'EX A. Zambian Access to the Sea and the Current Transport Crisis B. Probability Analysis of the Economic Rate of Return TABLES 1. Central Government Road Expenditures 2. Design Standards . Estimated Tanzanian Traffic on Project Road Sections 4. Estimated Vehicle Operating Costs (1967-1968) 5. Estimated Vehicle Operating Costs on Project Road Sections 6. Estimated Vehicle Operating Costs - Kitonga Gorge MA PS Mlap 1 - East & Central African Transport Links - IBRD-1253R8 Map 2 - Tanzania Highwa,r System - IBRD-2266Rh   TANIZA4IA APPRAISAL OF THE SECOND HIGHWAY PROJECT SUM14ARY i. A large part of Tanzania's road network was built to rudi- mentary standards, but due to recent development of traffic it has become economical to upgrade progressively the primary roads and to improve and extend the other parts of the road system. The project forms part of this national progran, and also of a larger international program to improve the entire Tan-Zam Highway linking Dar es Salaam, the capital of Tanzania on the Indian Ocean, with landlocked Zambia to the south-west. The proposed project consists of the reconstruction of the Morogoro-Iyayi section (310 miles) of the Tan-Zam Highway. The Zambian sections of the highway are all under reconstruction partly financed by Bank loans (469-ZA and 563-ZA); reconstruc- tion of the section from the Zambia-Tanzania border to the project section has begun and is being financed by USAID. ii. The cost estimate of the project is US$38 million equivalent, with a foreign exchange component of about US$25.8 million equivalent. The esti- mates are based on completed detailed engineering for the whole project section. The proposed amount of external financing is US$30.0 million equivalent, which is about 80% of the total cost and would cover the foreign exchange requirement and a part of the local cost; the balance of the local cost would be covered by the Government. Financing of part of the local cost is recommended on overall economic grounds as explained in the report "Prospects for Economic Development in Tanzania" of August 31, 1967. The external financing would be provided by the Bank Group and Sweden. The Bank has agreed to act as executing agency for the Swedish credit. iii. Execution of the project is the responsibility of the Roads and Aerodromes Division of the Ministry of Communications, Labour and Works. The detailed engineering has been carried out by consultants satisfactory to the Association, partly under USAID financing. Construction will be by contrac- tors, under unit price contracts awarded on the basis of international com- petitive bidding, and will be supervised by consultants. The project is expected to be completed by the end of 1971. iv. While the project forms part of a larger international program, it is economically justified on the basis of Tanzanian needs alone. It is ex- pected to yield an economic rate of return of 15% from Tanzanian traffic only, and an overall rate of return of 20%> from Tanzanian and Zambian traffic combined, which is satisfactory. v. This would be the second highway project in Tanzania by the Bank Group. The first project is being financed under a US$14 million credit (45-TA) made in 1964, and a US$3.0 million supplementary credit (115-TA) made in 1968. Execution of this first project, after a difficult start, is now proceeding satisfactorily; it was about 75% complete as of November 1968 and is expected to be fully completed by the end of 1971.  vi. The project constitutes a suitable basis for financing by the Bank Group and Sweden in a total amount of US$30.0 million equivalent. The pro- posed financing would comprise a US$8 million equivalent IDA credit and a US$15 million equivalent Swedish credit, together with a US$7 million equiv- alent Bank loan on a 30 year term including a 10 year grace period.  TANZANIA APPRAISAL OF THE SECOND HIGHWAY PROJECT 1. INTRODUCTION 1.01 The Government of the United Republic of Tanzania asked the Association in January 1968 to help finance the reconstruction of the Morogoro-Iyayi section (310 miles) of the Dar es Salaam-Tunduma (Zambia border) primary road. The application resulted from earlier discussions (1966-67) involving the Governments of Tanzania and Zambia, USAID and the Association on the subject of developing a reliable road link from land- locked Zambia to the sea at Dar es Salaam. The cost estimate of the project is US$38.0 million equivalent; financing by the Bank Group and Sweden in a total amount of about US$30.0 million equivalent is recommended, which would cover the estimated foreign exchange requirement of US$25.8 million equiv- alent and a part of the local costs. The completion of the project is expected by the end of 1971. The reconstruction of other portions of the Dar es Salaam-Zambia road link are being financed by USAID in Tanzania, and by a UK grant and Bank loans (469-ZA and 563-ZA) in Zambia. 1.02 An IDA appraisal mission visited Tanzania in April 1968, with a representative of the Swedish International Development Authority. The mission found that certain design problems regarding the choice of adequate pavement standards and the definition of the scope of the works had to be resolved, and sufficiently reliable cost estimates established before the appraisal could be completed. The design problems were resolved in July 1968, and cost estimates, based on completed detailed engineering for all sections, were received in October 1968. 1.03 This appraisal is based on detailed engineering of the project road sections by consultants, and on the findings of the IDA appraisal mis- sion consisting of Messrs. E. V. K. Jaycox and L. Pouliquen, economists, and F. Soges, engineer. Mrs. J. Comer, programmer analyst, contributed substantially to the probability analyses. 1.04 This would be the second highway project and the third lending for highways by the Bank Group in Tanzania. The first credit of US$14 million (Credit 48-TA) was granted to the Republic of Tanganyika (now United Republic of Tanzania) in 1964 for the construction of eight road sections totalling 739 miles. This original project was revised, and a supplementary credit of US$3 million (Credit 115-TA) was granted on March 21, 1968 for the revised project, which includes the construction of six road sections totalling 533 miles, the detailed engineering of a 142-mile section of the project road (Morogoro-Mahenge) and of 208 miles of secondary and tertiary roads, and a staffing and training program for the Roads and Aerodromes Division of the Ministry of Communications, Labour and Works. Implementation of the first highway project was difficult at the start because of shortage of staff in the Roads and Aerodromes Division and increases in construction costs, but performance is now satisfactory. The project was about 75% comolete as of November 1968 and is expected to be fully completed by the end of 1971 (see Report No. TO-600a).  -2- 2. BACKGROUND A. Economic Setting 2.01 Tanzania lies a few degrees south of the equator in East Africa. It has a land area of 341,150 square miles, roughly about the size of France and Spain combined, a large part of which consists of a high, arid plateau in the center. Agricultural production is concentrated in the more fertile areas on the periphery where rainfall is also more abundant: the Lake Victoria region, the highlands around Kilimanjaro, the Southern Highlands, and the Northern Coastal district. 2.02 Tanzania's population is about 12 million according to the 1967 census and is growing at the rate of about 2.8% annually. The population is predominantly African, with less than 1% being Asians and Europeans. With a density of about 35 persons per square mile, the country is sparsely popu- lated; however, population pressures exist in some of the more developed agricultural areas. 2.03 Gross domestic product per capita is very low at an estimated us$65 in 1967. In the period 1962 to 1967, GDP at constant prices grew at the rate of about 5% per annum, and real per capita incomes rose at an average of only 2.2% per annum. Agriculture is the principal economic activity. Crop production, animal husbandry, forestry and fisheries together account for about 52% of domestic production. About half of total agricultural production is consumed for subsistence. The main cash crops are cotton, sisal and coffee A small but rapidly growing industrial sector accounts for some 6% of the GDP. Mining of gold and diamonds is important for exports, but exploitation of other known mineral deposits is as yet insignificant, partly due to remote- ness from markets. B. Transport System General 2.04 The basic transport system is extensive in relation to the volume of traffic it is called upon to handle because population and production centers are widely dispersed around the periphery of the country. It con- sists of three main seaports, about 1,500 miles of long haul railway lines through the center and to the north, about 10,000 miles of primary and secon- dary roads with low standards but of suitable geographical distribution, relatively few lower type roads feeding into the above roads, 20 airports handling scheduled flights, and coastal and lake shipping services. Seaport and railway services are provided by statutory corporations and form part of the East African Community system of common services to Tanzania, Kenya and Uganda. 2.05 The main flow of traffic and, conseauently, the orientation of the country's trunk transport system, run roughly east-west to and from the seaports, mainly Dar es Salaam and Tanga. This pattern reflects the economy's  - 3 - dependence on exports of primary products and the reverse flow of manufac- tured goods and fuel distributed throughout the country from the coast where they are either imported or produced. The transport system of Tanzania is also utilized by the neighboring landlocked states, Zambia, Rwanda and Burundi, and the eastern part of the Congo, which rely on it in varying degrees for access to the sea. Extraordinary burdens have been placed on the Tanzania transport system by Zambian requirements arising from Southern Rhodesia's unilateral declaration of independence (UDI) in November 1965 and the subse- quent large-scale diversion of Zambian traffic from Southern Rhodesian to Tanzanian routes. The Zambian problem of access to the sea, the present transport emergency, and the plans for long-range solutions are discussed briefly below; for more detail see Annex A. The Zambia-Tanzania Transport Problem (See Map 1) 2.06 Since Zambia gained independence in October 1964, a major long-term policy objective has been to reduce its almost complete dependence on Southern Rhodesia for access to the sea and for many of its vital supplies. Zambia wishes to develop alternative transport capacity to the sea for its mineral (principally copper) exports and a wide variety of imported goods. Its objec- tive is to divert traffic from existing facilities in Southern Rhodesia and Mozambique in order to ensure overall long-run transport reliability and to place competitive pressure on existing facilities so as to keep the prices for its external transport services at reasonable levels. Zambia also wishes to develop new and closer trade relations with neighboring countries to the northeast forming the East African Community, and thus modify its inherited and somewhat arbitrary pattern of international traffic. Pursuant to this policy, Zambia has applied for membership in the Community and, together with Tanzania, is planning to develop new transport links to the sea via Tanzania. 2.07 UDI transformed Zambia's long-term aims into an immediate problem. A series of U.N. Security Council resolutions 1/ following UDI placed increas- ingly strict economic sanctions on Southern Rhodesia, beginning with an inter- national embargo on the shipment of petroleum and other products to or through Southern Rhodesia; most recently (May 1968) a complete embargo on all normal trade was imposed. These measures necessitated the emergency transport of liquid fuels and other imports to Zambia and the backhaul of some copper ex- ports over the most immediately available alternative route to the sea, the 1,200 mile road from Kapiri Mposhi, Zambia to Dar es Salaam, Tanzania - now commonly known as the Tan-Zam Highway. 2.08 The Tan-Zam Highway has been the principal route for the traffic diverted from Rhodesia, primarily because of the greater flexibility inherent in trucking operations as compared to the alternative rail routes. An impor- tant limiting factor on traffic movement has been the condition of the mostly 1/ Resolutions 216 (1965) of 12 November 1965; 217 (1965) of 20 November 1965; 221 (1966) of 9 April 1966; 232 (1966) of 16 December 1966; and 253 (1968) of 29 May 1968.  - 4 - earth/gravel surfaced road, although the combined problems of traffic control, trucking organization, goods storage, commercial arrangements and border formalities have also formed operative constraints on traffic. The emergency operation of about 120 heavy trucks per day over the highway, in addition to normal traffic, required extraordinary maintenance expenditures of about US$3 million equivalent in Zambia and about US$2 million equivalent in Tanzania during 1966/67. Even so, the road has often been closed at one or more points for several days at a time due to broken structures or mired or wrecked vehicles. Over 100 drivers have been killed hauling emergency traffic over the road since early 1966. 2.09 To handle these emergency transport requirements, a set of rela-- tively short-term and expensive solutions were undertaken (including air-lifts). These have failed to reduce appreciably Zambia's dependence upon the Rhodesian transport system. With the continuation of the emergency, longer-term trans- port solutions are being sought that are relevant both to long-term policy goals and to meeting present needs more effectively. 2.10 The most advanced of these is the just completed oil pipeline from Dar es Salaam to the copper mining area (Copperbelt) in the northern part of Zambia. Reconstruction of the full length of the Tan-Zam Highway to modern two-lane bituminous paved standard is also in an advanced stage of planning and partly under execution. The Zambian sections are all under construction; the 122-mile section from Kapiri Mposhi to Serenje is part of the project under Bank Loan 469-ZA and the 235-mile Mpika-Tunduma (on the Tanzania-Zambia border) section is being financed under Bank Loan 563-ZA. In Tanzania, reconstruction of the 150-mile section from Tunduma to Iyayi is being finan- ced with the assistance of USAID. The 310-mile section from Iyayi to Morogoro is the subject of this appraisal report. The remaining section from Morogoro to Dar es Salaam (123 miles) is already paved; its adequacy to serve probable future traffic is currently being assessed by consultants financed by USAID. In addition to the pipeline and improved road connection, the Zambian and Tanzanian Governments have announced their intention to construct a 980-mile rail link from the vicinity of Kapiri Mposhi on the Zambian Railway system to the Kidatu railhead of the East African Railway system in Tanzania. The idea of this link predates the emergency by many years, and has been the sub- ject of a number of engineering and economic investigations. The detailed engineering of the link is now underway with the assistance of Mainland China which, according to press reports, has also given some assurances with res- pect to financing of eventual construction. Traffic Prospects on the Tan-Zam Highway 2.11 The future volume and duration of Zambian export/import traffic over the Tan-Zam Highway is uncertain. Once the pipeline is fully operational and oil traffic over the road ceases, the Zambian Government's intention is to increase the trucking of copper exports and general goods imports over the road. While the trucking capacity now carrying oil could be converted with relative ease to copper and general cargo, the increased volumes of dry cargo create capacity problems at the port of Dar es Salaam. That is, new deep- water berths are required for any additional Zambian goods traffic beyond the approximately 190,000 tons of copper exports and 70,000 tons of general cargo  -5- imports handled in 1967. Three berths are now under construction at the port, with financing from the Bank (Loan 428-EA), and will be in operation by the end of 1969. A further two berths are planned to be in operation by 1971 to handle the expected increase in Zambian traffic as well as the normal growth of Tanzanian traffic. The possibilities of containerization of cargoes at Dar es Salaam in general and of Zambian import cargoes particularly are being investigated. This could significantly increase the capacity of the entire Tan-Zam Highway transport system. If and when the Tan-Zam railway is built, it is probable that most, if not all, Zambian import/export traffic using the road would be diverted to the railway. Regardless of its economic characteristics, the railway would have to haul the bulk of available traffic to be financially viable. In these uncertain circumstances, the forecasts of traffic over the project road take into account the probabilities of future traffic levels and trends as they are affected by the main foreseeable con- straints on the physical system and the timing of other major transport in- vestments (see Section 5, Economic Evaluation, and Annex B).  - 6 - 3. THE HIGHWAY SECTOR A. Highway System (see Map 2) 3.01 The road network comprises about 10,400 miles of primary and secondary roads, about 10,700 miles of tertiary or district roads, and an unknown mileage of unclassified minor roads and tracks for which there is no established public responsibility. Only about 900 miles are bituminous paved and 800 miles are engineered gravel; the remaining 19,400 miles are low- standard gravel or earth roads. The road system is most developed in the hinterlands of the three main seaports and along the shore of Lake Victoria. 3.02 Provision of a serviceable road system at reasonable cost has been a problem in Tanzania because the density of traffic is low and population centers are widespread. Historically, the Government has met the problem by constructing an extensive but very low-standard, low-cost network of all- weather roads which, with a few gaps, was capable of meeting road transport requirements with reasonable efficiency. However, with traffic development it has become economical to upgrade progressively the primary roads, including major realignment and reconstruction to fully engineered standards, and to improve and extend the secondary and tertiary road network feeding into the primary system. This nesct stage of development of Tanzania's road system to higher standards, which is already underway, will be much more expensive than providing the present all-weather facilities. B. Road Transport 3.03 While the road system is fairly extensive, traffic volumes are relatively low except in the vicinity of the major coastal centers and in the Lake Victoria area. The main function of internal road transport lies in the delivery and collection of goods to and from rail lines and terminals. For the most part, these are short-haul services, but the southern highland agricultural areas, and the port of Mtwara, both of which are not served by rail, require long-haul road transport. The recent increases in industrial goods consumption have created demand for a greater range of transport serv- ices, particularly for inter-urban road transport even in areas served by rail. The sudden demand for a substantial volume of international through traffic of Zambian exports/imports on the Tan-Zam Highway has undoubtedly further increased the importance of roads in the transport system. On the basis of very fragmentary information, it is estimated that local primary road traffic is increasing at about 7-8% annually, or about 50% above the recent growth of the GDP. 3.04 The vehicle fleet is growing at an estimated annual average rate of 7.5%. In 1966 there were about 55,000 registered motor vehicles, or about one vehicle per 190 inhabitants compared with 180 in Uganda and 100 in Kenya. About 20% of the fleet consists of trucks, buses and tractor-trailers. Over 70% of the total fleet has been registered during the past five years, indi- cating that the fleet is not over age, and has probably been growing in capa- city and efficiency more rapidly than in numbers.  - 7 - 3.05 While the road transport industry has been growing rapidly, it is still not highly developed. The industry consists primarily of owner- operator truckers and small rural bus companies; there are a few large firms offering long-distance services on main routes. The largest trucking firm, the newly formed Zambia-Tanzania Road Services Ltd. (ZTRS), owned by the Zambian and Tanzanian Governments (35% each) and Italian vehicle supply and financial interests (30%), is engaged exclusively in the movement of Zambian import/export traffic through Tanzania. By mid-1968, the ZTRS fleet numbered 442 truck-trailer units of thirty-ton capacity. In general, the carriage of goods and passengers for hire is restricted by route-licensing and area- licensing regulations designed primarily to protect the railway's differen- tial tariff from road competition. 3.06 In connection with Bank Loan 428-EA for development of East Africa's railways and harbors, the Governments of Tanzania, Kenya and Uganda undertook to carry out a transport coordination study, which is being financed by the UNDP with the Bank as executing agency. The study is being carried out by consultants and is expected to be completed by February 1969. The object of the study is to provide each of the three Governments with a sound basis for formulating its transport regulation, pricing and investment policies. De- tailed review of the effects of the administrative restrictions on the road transport industry forms a specific part of the study. The work of the con- sultants is being closely supervised by the Bank. While there were serious theoretical and methodological difficulties at the outset the study now appears to be progressing satisfactorily. C. Highway Administration 3.07 The Roads and Aerodromes Division (RAD) of the Ministry of Communi- cations, Labour and Works is responsible for the administration of the road system. The Division is directly responsible for the primary and secondary roads, and provides technical assistance to the District Councils which are in charge of the tertiary roads. The organization of the RAD is sound; how- ever, performance is limited by the shortage of competent staff. The staff shortage reached its peak in 1965; since then, it has been slowly easing due to intensive recruitment of new staff. The staff situation of the RAD is discussed in detail in Report No. TO-600a of January 18, 1968, entitled "Tanzania, Appraisal of a Revised Highway Project." The Association found the Government's efforts to improve the capacity of the RAD commendable and agreed, under the supplementary credit for the first highway project (115-TA dated March 1968), to provide assistance in obtaining additional foreign ex- perts and to finance a part of their costs. The recruitment of the experts, who will take executive positions and will train national counterparts, has been delayed because of the long time involved in obtaining clearance to proceed from all interested government offices. The recruitment advertise- ment was published on December 14, 1968, and it is expected that a first team of six experts will report to work within six months.  - 8 - D. Design Standards, Engineering and Construction 3.08 A large part of the road network was constructed to rudimentary standards; only a few roads have been properly engineered. The design stand- ards for new construction are selected on a case by case basis. The RAD is planning to adopt uniform guidelines for the design of roads, divided into four classes from low type gravel surfaced to asphalt paved roads. This more systematic approach to road design represents a substantial improvement over earlier trial and error methods of building roads, and will help to make more effective use of the large investments presently being made in the develop- ment of the highway sector. Consultants and contractors are used extensively for all major construction projects. Contracts are usually awarded on a competitive basis, and the bidding procedures followed have encouraged par- ticipation by international contractors. Local construction firms are small; the only firm qualifying for major works is semi-public, with 60% of its capital being owned by a Government agency, the National Development Corpo- ration. E. Maintenance 3.09 The 10,400 miles of primary and secondary roads are maintained by the RAD with central Government funds, and the 10,700 miles of tertiary roads by the District Councils with locally-collected funds supplemented by Govern- ment grants. The bituminous paved roads are reasonably well maintained, but the gravel and earth roads, particularly those which are under the District Councils, are often left in poor condition. Under Credit No. 115-TA, the Government gave assurance that it would adequately maintain the country's whole road system. The (Government is now considering a five-year program to place all roads under the direct responsibility of the RAD, and to provide the necessary additional equipment and funds for road maintenance. The Bank regards this program as appropriate to improving the maintenance of the country's road system. F. Highway Expenditures and Investment Planning 3.10 Total Central Government highway expenditure including administra- tion, maintenance and construction has risen from about T Sh 60 million (us$8.4 million) in 1962/63 to an estimated T Sh1 176 million (US$24.6) in 1967/68, including funds received from foreign sources (See Table 1). The increase has not been gradual; it dates from and is for the most part a re- flection of the implementation of the first IDA highway project which effec- tively got underway in 19R65/66. A large rise in maintenance expenditure due to the imposition of Zambian transit traffic on the Tan-Zam Highway in 1966/67 also contributed to the substantial rise in total highway expenditures. This rise in expenditures was appraised by the economic mission to East Africa in 1966 (see Report AF, 58a, Volume III, Annex D, dated August 31, 1967) and found to be economically appropriate, given the backlog of highway needs in Tanzania. Highway expenditures will continue to rise over the next three years to a level of about US$32 million per year (including about US$9.2 mil- lion for administration and maintenance), with the continuation of the IDA  - 9 - trunk road program now underway, implementation of works on the Tan-Zam high- way and the start of some new works now in the planning stage. This level of expenditure is considered feasible, since most major capital works are now, or are about to be, put in the hands of consultants and contractors. 3.11 The Five-Year Plan (1964/65-1968/69), published in 1964, seriously underestimated the cost of road works and overestimated the capacity of the RAD to carry out the planning and preparation of road investments. The Bank/ IDA economic mission recommended immediate measures to strengthen the RAD's project planning elements, and to set up an economic planning unit for trans- portation investments. These measures are now being implemented, and work now underway on the next five-year plan is on a much more satisfactory basis. The next plan will place more emphasis upon agricultural feeder roads and secondary roads of local importance.  - 10 - 4. THE PROJECT A. Description 4.01 The project consists of: (i) The realigniment and reconstruction to two-lane asphalt paved standard of the existing earth/gravel sections of the Tan-Zam Highway from a point 38 miles west of Morogoro to Mahenge (a length of 102 miles) including the Ruaha River bridge at Mbuyuni, and from Iringa to Iyayi (a length of 125 niles); (ii) The reconstruction to two-lane asphalt paved standard of the existing paved but low standard sections of the Tan-Zam Highway from Morogoro to a point 38 miles to the West (a length of 38 miles) and from Mahenge to Iringa (a length of 45 miles); (iii) Consultants' services for the engineering supervision of the above works. 4;02 The Tan-Zam Highway is a primary artery connecting Dar es Salaam, the capital city on the Indian Ocean, with the high plateau in the center and the fertile highlands in the southwest of Tanzania. It also provides a link to the sea for landlocked Zambia further to the south (see Maps 1 and 2). From Morogoro to Mikumi the road crosses flat lowlands; it then enters into very rugged terrain, passes through the narrow, deep gorge of the Great Ruaha River and, ascending ar abrupt escarpment at Kitonga, emerges on the high plateau near. Iringa. From there the road runs to Makumbako and Iyayi in rolling terrain. 4.03 There are two bituminous paved stretches on the existing road, a 38-mile section from Morogoro-to the west, and a 45 mile section from Mahenge to Iringa which includes a 5-mile stretch through the Kitonga escarpment. Although paved, these stretches are poorly aligned and, in places, are so narrow that traffic is restricted to a single lane. The pavement structure over these two sections is rapidly disintegrating under present traffic vol- umes. These sections wiLl be upgraded and reconstructed to improved two lane asphalt paved standards. In general, the construction plans call for the existing road and pavement structure to be salvaged to the maximum extent possible. 4.04 Except for the short paved sections discussed above, the rest of the project road is at present no more than an improved track, poorly aligned, with obsolete structures, and weak earth or gravel surfacing. Since the Zambian import/export traffic was imposed in 1965, these earth/gravel sections have been kept under intensive maintenance, but nevertheless, the traffic has reached a level where maintenance cannot keep pace with use, and riding con- ditions on the already poor road are deteriorating rapidly. These earth/ gravel sections will be realigned and fully reconstructed to two-lane asphalt paved standards.  B. Design Standards 4.05 The appraisal mission found that certain design features origi- nally proposed by the consultants were chosen somewhat arbitrarily and were not supported by an adequate analysis. In particular the mission re-examined, with the cooperation of the consultants and the Government, the possibility of lowering the pavement standards and of salvaging certain parts of the already paved sections of the road, with a view to achieving savings through optimization of the designs. As a resuit of this investigation substantial savings were achieved. The design standards which were finally agreed upon were selected with regard to the functions of the road as a primary artery in Tanzania, and as an alternative access route to the sea for Zambian ex- ports and imports (see Table 2). They are sufficiently flexible to permit the road to be built economically under the various physical conditions encountered. Design speeds range from 70 to 40 mph, gradients from 4 to 7 percent, and roadway width from 34 to 28 feet, according to terrain. Excep- tional design features, such as a 25 mph design speed, 12 percent gradients and roadway width reduced to only 23 feet, have been accepted to meet the extraordinary difficulties of the terrain on the Kitonga escarpment. The standards are considered appropriate to provide an efficient facility for the expected economic life of the road. 4.o6 Depending on the volume and duration of the Zambian export/import traffic, the pavement over some sections will probably require strengthening in stages. The pavement design provides for an initial strength at the out- set, which can be reinforced in later stages by asphalt overlays as required by traffic growth. This method of stage construction of the pavement has been appraised from an economic viewpoint and clearly yields the most favor- able (i.e. the least cost) solution. The appropriate time for strengthening is estimated at about ten years after completion of this reconstruction, but would depend on the amount of traffic and would have to be determined on the basis of the observed behavior of the pavement. During negotiations, the Government gave assurance that the condition of the road will be kept under observation, and the pavement strengthened if and when required. Pavement performance is sensitive to excessive axle loadings, therefore the project provides for the installation of a weigh station to control vehicle weights. The Government also gave assurance that the weigh station will be properly manned, and that the present legal limitations of axle loads, which are sat- isfactory, will be properly enforced. C. Cost Estimates 4.07 The cost estimate of the project and the estimated foreign exchange component thereof are as follows:  - 12 - Foreign Exchange - - Cost Estimate - - - Component, T Sh US$ Equivalent US$ Equivalent