Argentina - Road Maintenance and Rehabiliation

 ICRR 10840 Report Number : ICRR10840 ICR Review Operations Evaluation Department 1. Project Data: Date Posted : 04/19/2001 PROJ ID : P006003 Appraisal Actual Project Name : Road Maintenance and Project Costs 756.0 614.6 Rehabiliation US$M ) (US$M) Country : Argentina Loan/ US$M ) 340.0 Loan /Credit (US$M) 329.0 Sector (s): Highways Cofinancing US$M ) (US$M) L/C Number : L3611; LP145 Board Approval 93 FY ) (FY) Partners involved : Closing Date 06/30/2000 06/30/2000 Prepared by : Reviewed by : Group Manager : Group : 2. Project Objectives and Components a. Objectives The project objectives were to : (a) Maintain and/or Rehabilitate non-concessioned National Roads (b) Strengthen quality and financial supervision of maintenance in concessioned roads (c) Support institutional reform of National Highway Department (NHD) (d) Assist in establishing an optimal distribution of road works by provincial government, privatization, and national budget (e) Assist with creation of a unit for the preparation and monitoring of environmental assessments b. Components (i) A 4-year tranche rehabilitation and maintenance program for the non -concessioned network (ii) Flood emergency works (iii) Technical assistance for reorganizing NHD (iv) Management training and technical assistance (v) Implementation of action plans in pilot provinces The project was revised in 1996 to include financing of 5-year term, performance-based contracts (CREMAs) that include initial rehabilitation and subsequent maintenance of a road sub -network on a lump-sum basis. c. Comments on Project Cost, Financing and Dates Project costs were lower than estimated despite the fact that more works than expected were done . 3. Achievement of Relevant Objectives: The project achieved all its objectives . 9,940 km of roads were rehabilitated, exceeding appraisal targets by 22%. Supervision of maintenance in the concessioned roads is adequately carried out . A number of institutional reforms were carried out, including a drastic increase of the private sector in the maintenance of the network, diversifying modalities for maintenance, including toll concessions, CREMAs, and mandates from the Federal to the provincial governments. At the same time, highway agency personnel was reduced from 4,000 to less than 3,000 over the project period. An Environmental Unit was set up in the Highway Department and is implementing satisfactory environmental standards and guidelines . A comprehensive training program was carried out . 4. Significant Outcomes/Impacts: -A major increase in the role of the private sector in the maintenance management of the system through the introduction of the CREMA contracts . - The risk of cost overrun has been drastically reduced, since contracts are fix price . - A dramatic improvement in the quality of the network, as paved roads in poor condition, as percentage of the national network, decreased from 35% at appraisal to 10% at completion. - Private participation in the management of the maintenance of the 29,000 km non-concessioned national network increased dramatically: from no role at the beginning of the project to doing 80% of the maintenance work by project completion. - A significant increase in highway management efficiency, as the number of kilometers per highway staff in non-concessioned roads increased from 7 to 11. 5. Significant Shortcomings (including non-compliance with safeguard policies): No major shortcoming 6. Ratings : ICR OED Review Reason for Disagreement /Comments Outcome : Highly Satisfactory Highly Satisfactory Institutional Dev .: Substantial Substantial Sustainability : Likely Likely Bank Performance : Satisfactory Satisfactory Borrower Perf .: Satisfactory Satisfactory Quality of ICR : Satisfactory NOTE: NOTE ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness. 7. Lessons of Broad Applicability: -Performance contracts for road maintenance (such as CREMAs), combining road rehabilitation and maintenance provide strong incentives for high quality work -Strong government ownership and commitment can bring about significant changes in highway management policies and approaches in relatively short time - An economic crisis (stemming from Mexico's Tequila effect crisis ) can be turned into an opportunity for : (i) emphasizing the need for stable financing mechanisms and improve efficiency and public accountability in road maintenance operations, (ii) introducing the highly successful CREMA contracts, a project instrument not originally conceived in the initial project design . This lesson is of general applicability during financial /political crises. 8. Assessment Recommended? Yes No Why? To learn from innovative CREMA contracts and other institutional reforms likely to be valuable for many Bank borrowers. The strong role of private sector should be an important input to OED review of privatization in the transport sector. 9. Comments on Quality of ICR: The ICR is satisfactory