Sierra Leone - First Highway Project

RESTRICTED Report No. PTR-58a 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 The report may not be published nor may it be quoted as representing their.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 FIRST HIGHWAY PROJECT SIERRA LEONE October 12, 1970 Transportation Projects Department  Currency Equivalents: Currency Unit - Leorne (Le) Le 1.00 - US$1.20 US$1.00 = Le o).833 Le 1.0 million = US$1.2 million Fiscal Year July 1 to June 30 Weights and Measures: British S,ystem Metric: British equivalents 1 kilometer (km) = 0.62 miles (mi) 1 meter (m) - 3.28 feet (ft) 1 square kilometer (km2) = 0.386 square miles (sq mi) 1 hectare (ha) = 2.47 acres (ac) 1 liter (1) = 0.22 imp. gallons 0.26 US gallons 1 kilogram = 2.205 pounds 1 ton - 2,205 pounds Abbreviations and Acronyms ADT - Average Daily Traffic DELCO - Sierra Leone Development Company MOW - Ministry of Works SLR - Sierra Leone Railway  SIERRA LEONE APPRAISAL OF A FIRST HIGHWAkY PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ..................................... i 1. INTRODUCTION ................................................ 1 2. BACKGROUND .................................................. 2 A. General ................................................ 2 B. The Transport Sector ................................... 3 C. Railways ............................................... 3 D. Ports ................. ,, 4 E. Air Transport .................., 4 F. Transport Policy and Coordination ...................... 4 3. THE HIGHWAY SECTOR ......................... 6 A. The Highway Network .................................... 6 B. Characteristics and Growth of Road Traffic .... ......... 6 C. Highway Administration ................................. 6 D. Highway Planning and Engineering ....................... 7 E. Highway Construction ................................... 8 F. Highway Maintenance .................................... 8 G. Highway Financing ...................................... 9 4. THE PROJECT ..... ........................................... 11 A. General Description ........................ 11 B. Construction ........................ ,, 12 C. Detailed Engineering ................. .................. 12 D. Feasibility Study ...................... 13 E. Mechanical Equipment for Highway Maint:enance .... ....... 13 F. Technical Assistance ................................... 13 G. Cost Estimates ......................................... 13 H. Financing ............. 16 I. Project Execution, Procurement, and Disbursement ....... 16 This report was prepared by Messrs. Morris (engineer), Rowat and Wouters (economists), and Kesson (railway consultant), on the basis of an appraisal mission in February-March 1970.  TABLE OF CONTENTS (Continued) Pae No. 5. ECONOMIC EVALUATION ....................................... ] .8 A. General .................................................. 18 B. Construction of the Bo-Kenema Road ..................... 1.8 C. Highway Maintenance .19.... ].9 D. Feasibility Study and Detailed Engineering ..... 20 6. RECOMMENDATIONS ................ e . . . . 21 ANNEX Sierra Leone Railway (S]R) TABLES 1. Sierra Leone Railway: Traffic Data, 1950-1968/69 2. Sierra Leone Railway: Revenue and Expenditure, 1950-1.968/69 3. Sierra Leone Ports AuthorLty: Port Traffic, 1965-69 4. Motor Vehicle Registration and Distribution, 1960-69 5. Composition of Goods Hauled by Road in 1968 6. Highway Development Program, 1970/71-1974/75 7. Design Standards for Class I Highways (Rural) 8. Highway Expenditures, 1965/66-1969/70 9. Highway Maintenance Program: Current Expenditures, 19I71-76 10. Highway Maintenance Program: Capital Expenditures, 1971-75 11. Highway Program: Total Expenditures and Financing, 1970/71-1974/75 12. Mechanical Equipment and Vehicles to be Purchased 13. Estimated Cost of Project 14. Estimated Schedule of Dis'bursements 15. Bo-Kenema (New Road): Estimated Average Daily Traffic, 1969-1993 16. Motor Vehicle Operating Costs and Savings Per Mile 17. Highway Maintenance Program: Economic Evaluation CHART Ministry of Works: Existing Organization MAP Sierra Leone Road Network  SIERRA LEONE APPRAISAL OF A FIRST 1HIGHIAY PROJECT SUMMARY AND CONCLUSIONS i. This report appraises the first highway project proposed for Bank/IDA assistance in Sierra Leone. The project consists of: Part I which includes construction of the Bo-Kenema Road (43 mi), detailed en- gineering (already carried out) of the road and of the rural section of the Freetown-Waterloo Road, and purchase of mechanical equipment for high- way maintenance; and Part II, which includes a feasibility study and de- tailed engineering study of the urban section of the Freetown-Waterloo Road and technical assistance to the Ministry of Works (MOW) for improving the organization, administration and methods for highway maintenance. Only Part I is proposed for Bank/IDA financing. For Part II, the UNDP has made an advance allocation towards estimated expenditure through June 1971, when the Governing Council is scheduled to consider financing for the balance; the Bank has agreed to act as Executing Agency. ii. Transport demand has increased steadily in recent years as a result of the growth of the economy which has averaged about 5% p.a. At the same time, demand has shifted from rail to road transport. Develop- ment of the transport system has not kept pace with the increase and shift in transport requirements. As a first step tohards improving the trans- port system, the Government in 1966 commissioned Italconsult to carry out a Land Transport Survey, under UNDP financing and with the Bank acting as Executing Agency. The main recommendations of the Survey are: (a) to close down the Sierra Leone Railway by the end of 1972; (b) to improve the country's two main trunk roads from Freetown, via Mile 47 to Kenema and to Sefadu; and (c) to implement a comprehensive program for improv- ing highway maintenance.. iii. The Government has accepted these recommendations and has agreed to close the railway by the end of 1972. The branch line (Bauya-Makeni) has already been closed and is being dismantled. Furthermore, construc- tion of all but one of the unpaved sections of the country's two main trunk roads is underway, or should start soon, wvith bilateral financial assistance from the Federal Republic of Germany and the United Kingdom. Construction of the one remaining section between Bo and Kenema has been included in the project. The Government is recruiting additional engi- neers for the Highway Division, and has increased the highway maintenance budget for 1970-71 by about 40%. iv. The Freetown-Waterloo-Bo-Kenema road is expected to carry most of the railway traffic, after the railway is close(d down. Construction of the Bo-Kenema section would replace a circuitous low standard road, which is occasionally impassable during the rainy season. The investment in the new road is expected to yield a rate of return of 21%. The feasibility study of the urban section and the detailed engineering of the urban and rural sections of the Freetown-Waterloo road would prepare a project for  - ii - improving the access to the business and administrative center of the capital; a feasibility study of the rural section was carr:Led out under the Land Transport Survey. The urban section of the route consists of narrow city streets and the rural section is a low standard paved road, with a poor alignment, sharp curves and steep gradients. The urban sec- tion, and part of the rural section, of the Freetown-Water:Loo road area congested. v. The provision of technical assistance and mechanical equipmenat under the project would help the Government to implement the comprehen- sive program recommended by Italconsult for improving highway maintenance. This program will involve a major reorganization of the llighway Division of the Ministry of Works, a large increase in the budget for highway main- tenance and new investment in equipment and workshops. The proposed in- crease in capital and current expenditure in the program would gradually improve road conditions to reasonable standards. The addit-ional expendi- ture would yield a satisfactory rate of return of over 30%, as a result of savings in vehicle operating costs. The Government has agreed on de- tailed arrangements for implementing the program, including a time sched- ule and the provision of local funds. vi. The total cost of the ptoject, including contingencies, is esti- mated at US$11.4 million equivalent. The total cost of Part I is estimated at US$10.0 million, including a foreign exchange component of US$7.2 mil- lion equivalent to be financed by the Bank Group. The award of construc- tion contracts and procurement of mechanical equipment wil:L be based on international competitive bidding. Feasibility studies, detailed engi- neering and supervision of construction will be carried ouit by consultants. The inclusion of detailed engineering for the Bo-Kenema road and the Freetown-Waterloo road (rural section) would involve retroactive finaac- ing, not exceeding US$350,000. The Ministry of Works would have overall responsibility for executing and administering the project. vii. The project as a whole would yield a weighted average rate of return of about 24%. It would corstitute a suitable basis for an IDA credit of US$3.5 million equivalent on the usual terms, together with a Bank loan of US$3.7 million equivalent, for a term of 22 yeaars, inclulding a grace period of four years. Disbursements will be made from the credit until it is exhausted, and thereafter from the loan. The Credit and Loan would be made to the Government.  SIERRA LEONE APPRAISAL OF A FIRST HIGHWAY PROJECT 1. INTRODUCTION 1.01 This would be the First Highway Project to be financed by the Bank Group in Sierra Leone. The Bank has however been involved in the transport sector since 1966, when it agreed to act as Executing Agency for the UNDP financed Land Transport Survey carried out by Italconsult (Italy). The main objectives of the Survey were to examine the feasibi- lity of rehabilitating the Government-owned Sierra Leone Railway (SLR), to review the road transport system, and to prepare programs for highway improvement and maintenance. 1.02 The principal findings of the survey, which have been accepted in principle by the Government, include: (i) the closing down by the end of 1972 of the Sierra Leone Railway, which has been incurring losses of about Le 1.0 million (US$1.2 million) annually; (ii) an investment pro- gram for improving the more important roads; a-ad (iii) a comprehensive program for improving highway maintenance. Thie recommended highway in- vestment program gave first priority to the improvement of four sections (Bo-Kenema, Taiama-Bo, Lunsar-Matotoka and Freetown-Waterloo) of the two main trunk roads from Freetown into the interior. As part of the Survey, Italconsult prepared feasibility studies of the four sections, except for the urban section of the Freetown-Waterloo road for which no funds re- mained under the UNDP allocation. The recommended maintenance program would involve reorganization of the Highway Division of the Minsitry of Works, including its field offices, an investment program for mechanical equipment and workshops, a substantial increase in budgetary allocations for highway maintenance, and technical assistance to the Ministry of Works for carrying out the program. Italconsult is setting up a training pro- gram for supervisory and technical staff. 1.03 The project would be in line with the recommendations of the Land Transport Survey and would comprise under Part I: construction of the Bo-Kenema Road (43 mi.); the detailed engineering, with retroactive financing, of the Bo-Kenema road and of the rural section of the Freetown- Waterloo Road (18 mi); and the purchase of mechanical equipment for high- way maintenance; under Part II: a feasibility study of the urban section of the Freetown-Waterloo road, to be followed by detailed engineering (if found to be justified); and the provision of technical assistance for the reorganization of the Highway Division of the Ministry of Works and the improvement of highway maintenance. Part I is proposed for Bank/IDA fi- nancing, and UNDP has provisionally agreed to finance Part II. 1.04 This appraisal is based on the studies and engineering referred to above and on the findings of a Bank Group aplpraisal mission to Sierra Leone consisting of Messrs. Morris (engineer), Rowat and Wouters (econo- mists), and Kesson (railway consultant), in February/Uarch 1970.  - 2 - 2. BACKGROUND A. General 2.01 Sierra Leone, an independent country within the British Conr- monwealth since 1961, is situwted on the west coast of Africa, between Guinea to the west and north, and Liberia to the south. With an areaL of 28,000 sq. mi., it is one of t:he smaller West African countries, roughly equal in size to Panama or Ceylon. The terrain presents no special bar- riers to transport. Nearly 70% of the country has an elevation of less than 1,000 ft., though the north Ls more mountainous with peaks rising to 8,000 ft. The coastal areas have higher humidity and temperatures than the interior plateaus and mountainious regions. 2.02 The population of 2 .5 mLllion is growing at about 2% p.a., somewhat lower than the West African average. It is faiLrly evenly dis- tributed except for the more sparsely populated nothern region. About. 10% of the total live in towns of 10,000 or more people, including about 180,000 in Freetown, while three-quarters of the working population is engaged in agriculture. 2.03 The land, although not of exceptional quality., is for the mCost part arable; the northern regions offer good grazing grounds for catt].e. Production is mostly in the hamds of individual farmers on a smallholder basis; only a few large plantations have been developed.. Production is rudimentary, and mostly limited to subsistence crops. Agricultural pro- duction accounts for about one-th:Lrd of GDP and about 10% of total exTorts, mainly palm kernels, cocoa, coffee, cassava and ginger. 2.04 Sierra Leone has sonie valuable minerals, principally diamonds, mostly of gem quality, rutile (titanium dioxide), iron ore and bauxite. Diamonds alone account for about 60% of total exports. Mineral producc- tion as a whole accounts for 20% of GDP and almost 90% of total exports. Manufacturing is still in an i nfant stage, consisting mainly of assembly and simple processing carried out in small shops. 2.05 Although Sierra Leone has an open economy, trade relations with other African states are limit:ed principally because their economies are non-complementary. The country's most important trade partners are the United Kingdom and other industrial countries. 2.06 During the past decade, the economy has developed at an average rate of about 5% p.a., primarily as a result of a rapid expansion in nLin- ing while agricultural production has barely kept pace with the increase in population. Transport has been a dynamic sector of the economy. In- flation, which was prevalent in previous years, has been curbed as a re- sult of the successful implementation of a stabilization program prepaLred with the assistance of the IMP. At present, GNP per capita is estimated at about US$135. Because of the dual nature of the economy, a dynamic  -3- mining sector on the one hand and a large undeveloped agricultural sector on the other, this figure exaggerates the living standard of most of the population. B. The Transport Sector 2.07 The focal point of the transportation network is Freetown, the capital and most important administrative and commercial center as well as the country's main port. From Freetown, the network radiates into the interior to the most important population and production centers. Traf- fic up-country consists primarily of manufactured goods, building mate- rials and fuels, principally to the mining areas in the east. Freight traffic from the interior towards Freetown consists mainly of agricultural produce for export (palm kernels, coffee and cocoa). 2.08 The transport network consists of about 5,000 mi of roads (ex- cluding tracks), a few inland waterways which are navigable during the three month rainy season, the Sierra Leone Rai:Lway (SLR), and a short, privately-owned mineral railway. The network has serious deficiencies. The waterways are of very limited use, the SLR has outlived its useful economic life, most of the road network is unplanned, suffers from poor maintenance, and many roads are below standard for present needs. 2.09 Following the recommendations of the Land Transport Survey and related studies, (paras. 1.01 and 1.02), the Government has decided to phase out the SLR, to improve the country's main highways, and to raise highway maintenance to a reasonable level. The! Government is already looking beyond the Survey and has recently commissioned, from its own resources, consultants to carry out further feasibility studies to de- termine additional road improvements needed for the country's develop- men t. C. Railways 2.10 Sierra Leone has two railways: (i) tlhe Sierra Leone Railway (SLR), owned and operated by the Government and (ii) the Sierra Leone Development Company (DELCO) railway (56 mi long), privately owned and operated by the company for transporting iron ore from its mine near Lunsar to the company port at Pepel. 2.11 The SLR is operated as a Government department within the Min- istry of Transport and Communication. In 1968/69, the SLR employed about 2,000 people, and carried 620,000 passengers and 40,000 tons of freight. (Annex ; and Tables 1 and 2). A recent supplementary study under the Land Transport Survey proposes a more detailed program for closing the main line and disposing of all assets by the end of 1972; the Government is arranging to alleviate the effect on staff byt re-training, re-employ- ment and special severance benefits. During negotiations the Government gave assurances that it would close down the SLE' by the end of 1972 in accordance with this program and an agreed time schedule.  -4- 2.12 The SLR will require technical assistance to help implement the phasing-out program, especially to prepare in detail and to direct: (i) severance arrangements for personnel; (ii) the disposal of assets; and (iii) the closing of accounts., The British Government has agreed in principle to provide this technical assistance. D. Ports 2.13 The Sierra Leone Port Authority, which is a public corporation established in 1964, controls and manages the country's main port, in Free town, and two smaller ports, one at Bonthe, about 80 miles south of Freetown, and thle other at Su]ima, near Liberia. DELCO manages its own port at Pepel, about 15 miles up the Sierra Leone River from Freetown, for the export of iron ore (para. 2.10). This enclave port is capable of handling ore carriers of up to 100,000 tons. Its annual oul:put is 2.0 - 3.0 million tons. 2.14 The Port Authority is completing a major expansion of quay facil- ities in Freetown port, at a cost of Le 10.8 million (US$13.4 million equiv- alent), with contractor financing. The port handles a variety of goods; it now has seven berths, with modern cargo handling equipment, including facilities for palm kernel oil and grains, an oil jetty,, and a jetty for handling frozen fish. About ],500 vessels dock annually; total cargo handled averages between 0.8 -C 0.9 million tons p.a. (Table 3). 2.15 Bonthe is a small lighterage port, mainly for exports of palm kernels, piassava and some girbger. An anchorage nearby in the Sherbrc river channel is used for loacding rutile and bauxite brought 18 miles downriver on barges. The port: of Sulima consists of an open roadsteadL; loading is carried out by surfboat:s. Its importance has been steadily declining and the present volume of cargo is very small. 2.16 As a result of increased port charges and the introduction of cost accounting in 1967, the Authority has been able to reverse previous deficits; it earned a profit of LA 0.9 million during the 18 months enrd- ing June 1969. E. Air Transport 2.17 Sierra Leone is served by 12 international carriers, mainly for passenger service; air cargo amounts to only about 500 tons annually. The international airport is situated at Lungi, about two hours travel by car and ferry on the opposite side of the estuary from Freetown. A small do- mestic carrier provides air connections from Hastings, near Freetown, to a few points in the interior. F. Transport Policy and Coordination 2.18 The Ministry of Tralnsport and Communications is primarily re- sponsible for initiating and iLmplementing transport policy; it also nmn- ages the SLR and the country's airports, and exercises overall supervision  - 5 - of the Freetown Port Authority and the Road Transport Corporation. The latter is a public corporation, with an autonomous budget and management, operating bus and other road transport services in the greater Freetown area. The Ministry exercises control of road transport through the Road Traffic Act of 1964, which provides in a satisfactory manner for vehicle registration, licensing and the highway code. The Act also determines specific responsibilities and jurisdictions of other public agencies or Government departments. 2.19 Following the recommendations of the Land Transport Survey, Sierra Leone has recognized the importance of road transport for the country's economic development, and is prepared to allocate larger re- sources for new highway investments as well as for highway maintenance. Closure of the SLR will eliminate a source of subsidized competition for road transport. Entry into road transport is relatively free and compe- tition is keen. For these reasons, road transport is expected to be a dynamic growth sector. 2.20 Revenues from road user charges are rnot clearly identifiable but are roughly estimated to exceed the Le 5.0 million p.a. currently being spent on highway construction, administrattion and maintenance. They are expected to continue to exceed future maintenance requirements and the local expenditures of the Government on road construction and improvement. The Government has agreed that, in order to improve the quality of data, it will review the level and structure of road user charges as part of its general obligation to collect and record basic data for highway planning. 2.21 One major policy issue, which will have to be settled soon, concerns the Road Transport Corporation (para. 2.18). The Corporation has continuously incurred substantial losses since its establishment in 1964 and does not have the necessary financial resources to renew urgent- ly needed equipment to continue operations. The Government will have to decide whether the Corporation should continue to exist and, if so, whether the scope of its activities should be reduced, maintained, or expanded. A suggestion has been made to expand the Corporation's services to upcountry areas as a means of employing a large number of laid-off railway personnel. Such an expansion does not appear to be justified, at least not until the Corporation gives evidence that it can compete effectively with the private sector. The Government recognizes that: (i) the Corporation needs reorganization and strengthening; and (ii) comprehensive technical, commercial and economic studies should be under- taken before a decision is made to expand the activities of the Corpora- tion into new areas; to assist the Corporation hn these tasks, the Gov- ernment has obtained technical assistance from the Federal Republic of Germany.  -6- 3. THE HIGHWAY SECTOR A. The Highway Network 3.01 The main highway network (Class I), consisting oE 330 mi of paved roads and 1,400 mi of gravel roads, carries about 90% of total traffic. This network has Freetourn as a focal point and ruans in a gen- erally east-west direction, linking Freetown with the principal areas of agricultural production and diamond mining. The paved roads are mostly located in the greater Freetown area, but the Government iS currently carrying out a program of constructing with a bituminous, surface the un- improved sections of the country's two main trunk roads, from Freetown, via Mile 47, to Kenema and to Sefadu. 3.02 The country also has a secondary road network (Class II) con- sisting of 3,400 mi of low standard gravel or earth roadcs. This second- ary network carries only 10% cf total traffic. B. Characteristics and Growth of Road Traffic 3.03 Sierra Leone had approximately 16,000 vehicles in circulation at the end of 1969, having quadrupled its vehicle population in 10 years; over half are registered in Freetown (Table 4). About 50% of total ve- hicles belong to medium and large firms (mining companies, etc.). The principal goods moved by road are: palm kernels, petroleum products, rice, and firewood, which combinecd account for over half of total road tonnage (Table 5). 3.04 The Road Traffic Regulat:ions, issued tnder the 11960 Road Traffic Act, limit the gross weight of vehicles to 5-1/2 tons and the maximum axle load to 4 tons. The Government is not strictly enforcing these limits as it recognizes that they are unduly restrictive, and has undertaken to review and revise the Road Traffic Regulations and implement them in ac- cordance with an agreed time schedule. C. Highway Administration 3.05 The MOW is responsible for the construction, maintenance and administration of the main network and for advising the District Councils and certifying their work on secondary roads. The MOW is also responsi- ble for Government buildings and other public works. In headquarters, separate divisions are responsible for the main activities: roads, build- ings, and water supply. They rely jointly on other divisions for auxiliary services such as personnel, accounts, mechanical equipment and stores. In the field, the MOW has six offices, each headed by an Area Engineer (see Chart), who is responsible to headquarters for carrying out maintenance and minor construction. Execution of major construction is handled by headquarters with the assistance of consultants.  -7- 3.06 As part of the Land Transport Survey, Italconsult has undertaken a study of the MOW organization, operations, and administration concerned with roads. Its report reveals deficiencies, chiefly concerning highway maintenance, and recommends a number of remedial measures, of which the following are the most important: (i) increasing the engineering staff, mainly in the Area offices; (ii) improving the Area organizations for highway maintenance; (iii) improving financial control by setting up specific budget subheads and accounts for roads (separating them from those for other activities of the Ministry), and their subdivision into items for maintenance (routine, periodic and special), minor improvements and construction; (iv) preparing and executing detailed programs for highway maintenance and increasing budgetary provisions to finance them; (v) replacing worn-out mechanical equipment and improving mechanical workshops and road maintenance depots; (vi) setting up an "Equipment Pool" to imqrove the management and utilization of MOW mechnical equiLpment, including the financing of repairs and replacement from funds derived from hire charges; and (vii) providing technical assistance to the MOW. 3.07 The Government has undertaken to implement the above recommenda- tions in accordance with an agreed program and timetable. It has already recruited additional highway engineers in the MOW headquarters, and in- creased its highway maintenance budget for 1970-71 by about 40%. 3.08 Under the Land Transport Survey, Italconsult is assisting the MOW to set up an in-service training program for supervisory and techni- cal staff in the Ilighways and Mechanical Divisions. Instructors are presently being trained and the courses are expected to start late in 1970. D. Highway Planning and Engineering 3.09 Proposals for highway projects are drafted initially by the MOW and considered by an inter-ministerial commitee, (which includes repre- sentatives of the Ministries of Finance, Development, Transport and Communications, Works, and the Economic Advisor as chairman). Agreed programs are then presented by the Minister of Finance to the Cabinet, and eventually to the House of Representatives.  - 8 - 3. 10 The Government has prepared a Five-Year Road Development Pro- gram, 1970/71 - 1974/75 (Table 6).! totalling Le 31 million (US$37 mil- lion). This program is based largely on the traffic analyses and other studies and the recommendations of the Land Transport Survey. Feasibil- ity studies and detailed engineering by consultants have been completed on four of the road sections in the program, and are in progress on a fifth. The Government is also commissioning consultantEs for the prepara- tion of the remaining section in the program, as well as some other roads identified in the Land Transport Survey as part of a second Five-Year Program. 3.11 Traffic counts are taken by the MO1W twice a year on main roa,ds. The counts are not reliable because they are taken by largely untrained staff, in places where traffic: may not be representative for the entire road section in question. Furthermore, the processing and analysis of these counts has been neglected and they have been of little value in planning maintenance and investment. One of the purposes of the techni- cal assistance to be provided under the project, with UNDP financing, (paras 4.02 and 4.12) is to inmprovre the collection and processing of basic data for highway planning. 3.12 The design standards usebd by the MOW and their consultants for Class I roads in rural areas are shown in Table 7. These are reasonable for the roads currently being considered by the Government for construc- tion, including the project roads. E. Highway Construction 3.13 No domestic contractors are capable of undertaking substantial works. Major road construction projects are carried out: by foreign firms under unit price contracts, usually awarded after competitive bidding. German, French, British, and Lebanese contracting firms are working in Sierra Leone; other foreign contracting firms are registered with the Government but not currently operating. Mechanical equipment and vehi- cles are admitted duty free for ime on Government contracts, but if not reexported or handed over to the Government at the end of the contract, duty must be paid on the deprecial:ed value. The MOW undertakes mainte- nance and minor road improvement works with its own staif. F. Highway Maintenance 3.14 Road maintenance is presently inadequate. Most of the existing paved roads are due, or overdue, Eor resealing; some sections have marly potholes and extensive failures w:Lll develop unless resealed soon. Gravel roads are becoming increasingLy suinken and badly drained and the need. for their substantial reshaping and regraveling is becoming more acute. Very little such periodic maintenance has been carried out in recent years. 3.15 Engineering supervision will be improved by introducing spe- cialist highway engineers under the Area Engineers. Field supervisors are adequate in number but they are not sufficiently trained and should  - 9 - attend the relevant in-service training courses when established (para. 3.08). The labor force will be organized in gangs on a district and sub-district basis. 3.16 Budgetary allocations for road maint:enance have declined from Le 1.2 million in 1963-64 to Le 0.7 million in 1969-70, whereas they should have increased to take account of rising costs and increasing traffic volumes (Table 8). The Land Transport: Survey recommends that the annual allocations should be increased to Le 1.4 million in the first year, and to Le 1.8 million in the fifth year, of a five-year pro- gram for improving highway maintenance (Table 9). These budget estimates are based on a detailed assessment of maintenance requirements on four road sections, typical for the main road network. These estimates are reasonable but will be refined when the detailed annual maintenance pro- grams are prepared (para 3.06). 3.17 The mechanical equipment of the MOW, though sufficient in quan- tity, is largely worn out; 90% is over 5 years old and 50% over 10 years old. Financing for its replacement is dependent on annual provisions in the Development Budget; these have been inadequate for many years. There has also been insufficient provision (in the Recurrent Budget) for purchase of spare parts. The Land Transport Survey recommends investing Le 3 mil- lion, over a 4 year period, in essential equipment, with an initial stock of spare parts, and in workshops and depots (Table 10). G. Highway Financing 3.18 Table 8 shows the funds allocated during the past seven years for road construction and maintenance. The figures for maintenance are estimates, because the allocations, and accounits, for this purpose have not been separated, since 1963-64, from those for maintenance of other public works. No complete information is avaiLable on the funds being allocated to the District Councils (through the Ministry of the Interior) for maintenance of Class II roads, but they are estimated to be presently a maximum of Le 150,000 annually. 3.19 The Government expects that total expenditure on highway main- tenance and construction during the period 1970/71 - 1974/75 will amount to about Le 40 million (US$ 48 million), practically double the amount spent during the previous five years (Tables 8 and 11). This increase is based on the recommendations of the Land Transport Survey. 3.20 The Government expects to secure Le 18 million (US$21 million) in foreign financing and to finance the remainder of Le 22 million (US$26 million) from local resources. Provided the proposed project is approved for Bank Group financing, the prospects are that the above total of for- eign financing could be obtained. In recent years a major part of highway construction was covered by bilateral financial assistance from the Federal Republic of Germany and the United Kingdom, and by contractor financing. The latter has been discontinued, but the Federal Republic of Germany has already agreed to help finance construction of the Lunsar-Makeni road with  - 10 - a loan of DM 14 million (US$3.8 million), and the Unitecd Kingdom construc- tion of the Taiama-Bo road wit.h a loan of up to El.8 nillion (US$4.3 mil- lion). Foreign financing remains to be found for construction of the Freetown-Waterloo and Makeni-Matol:oka roads, to be started later in the program. 3.21 The local resources reqiuired for financing the program appear to be within the financial capacity of the country, although they are about twice as large as those spent on highway maintenance and construction during the previous five years. As explained in the Bank's report entitled "The Current Economic Position and Prospects of Sierra Leone"' (AW20A, paras 41-52) Government finances have shown a Large surplus on current account since mid- 1968. The Government has given assurances that it will allocate adequate funds for highway maintenance and for carrying out the investment program for equipment, workshops and mDaintenance depots (Table 11).  4. THE PROJECT A. General Description 4.01 The project (see Map) consists of: Part I. Items to be financed by the Bank/lIDA: (a) The Construction of a new primary highway, with two-lane bituminous paving, inc]Luding supervision by consultants: Bo-Kenema 43 mi (b) The Detailed Engineering, by consultants of the following sections of primary highways: (i) Bo-Kenema 43 mi (ii) Freetown-Waterloo (rural section) 18 mi (c) The Purchase of Mechanical Equipment, and Spare Parts, for highway maintenance. Part II. Items to be financed by UNDP: (d) A Feasibility Study, to be followed by Detailed Engineering (if found to be Just:Lfied), by consul- tants, of the following section of primary highway: Freetown-Waterloo (urban section) 5 mi (e) Technical Assistance, by consultants, for the re- organization of the Highway Division of the Ministry of Works and the improvement of highway maintenance operations. 4.02 Only the items included in Part I of the project are proposed for Bank/IDA financing. For Part II of the project, the UNDP has made an advance allocation of US$250,000 to help finance expenditures through June 1971, when the Government's application for financing the balance of this part of the project is scheduled to be considered. The Bank has agreed to act as Executing Agency for the UNDP. The items to be financed by UNDP have been included in the project because they are essential for carrying out the part to be financed by the Bank/IDA (paras 4.11 and 4.12).  -- 12 - B. Construction 4.03 The proposed new highway would provide a more direct route be- tween Bo and Kenema, the second and third largest towns in Sierra Leone. It will also complete the main trunk road between Freetotwn and Kenema since the remaining unpaved link between Taiama and Bo is to be construct- ed, also on a new direct alignment, with UK financial assistance (para. 3.20). 4.04 The existing Bo-Keneima road (61 mi) follows a roundabout route via Koribundu. It is narrow, sunken, poorly drained, and in a number of places badly aligned. For most of its length (38 mi) it is unpaved, mluddy in wet weather, particularly in a number of low lying areas, and corrugated in dry weather. The remaining length (23 mi) has received a thin bitu:ia- nous surfacing, but it has inadequate strength; it has many potholes re- quiring constant maintenance and some sections are likely to disintegrate rapidly. 4.05 The new Bo-Kenema alignment is parallel with the SLR, which is to be closed down (see Annex). Between Bo and Blama it follows an entire- ly new route, forming the third side of a triangle with the existing road via Koribundu; between Blama and Kenema it will replace the existing road. The project includes 17 new bridges, the largest being 578 ft long over the Sewa River. The new highway wrill be 18 mi shorter than the existing route. Table 7 shows the principal design standards, which are satisfac- tory. C. Detailed Engineering 4.06 Feasibility studies of the Bo-Kenema road (43 mi) and the rural section (18 mi) of the Freetown-Waterloo road were undertalken by Italconsult in 1967-68 as part of the Land Transport Survey. To enable a proposed con- struction project to be prepared quickly, the Bank agreed to consider in- cluding retroactive financing of t:he detailed engineering in a possible Bank loan or IDA credit for cconstruction. The Government then engaged two consulting firms, accepted. by the Bank, Italconsult (Italy) for Bo-Kenema and the joint venture Walter-Davies (Germany/'Sierra Leone) for Freetown-Waterloo (rural section),, The amount of retroactive financing would be limited to a maximum of US$350,000. 4.07 On the Bo-Kenema road the detailed engineering has been satis- factorily completed and the estimates of construction cost appear reasona- ble. For the Freetown-Waterlc'o road (rural section), however, a substan- tial reduction in construction cost could be achieved, without significantly reducing the benefits to road useirs, by varying the alignment. The Gcov- ernment has been advised that the Bank would consider financing the for- eign exchange cost of the detailed engineering of the Bo-Kenema road and also of the Freetown-Waterloo road provided the designs for the latter are satisfactorily revised. The Government has arranged for the consultants to revise the detailed engineering as suggested by the Bank.  - 13 - D. Mechanical Equipment for Highway Maintenance 4.08 The mechanical equipment for highway maintenance is in very poor condition and most is already beyond its economic life (para. 3.17). Table 12 shows the main items of new equipment to be purchased under the project, to enable highway maintenance to be carried out at an adequate level. 4.09 The estimated cost CIF Freetown, all in foreign exchange, would be Le 1.2 million (US$1.5 million), including an initial stock of spare parts. In addition, there would be a small local currency cost for han- dling, assembly and delivery. The purchases would be made over a period of three years, but about half of the equipment should be available by mid 1972, when the proposed Equipment Pool is scheduled to be in operation (para. 3.06). E. Feasibility Study (and possible Detailed Engineering) 4.10 The feasibility study of the Freetown-Waterloo road, carried out as part of the Land Transport Survey, did not cover the urban section of about 5 miles from the central administrative/business district of Freetown to Kissy. The first half of the urban route is through narrow, largely un- planned streets which are very congested. The second half (to Kissy) is a poorly aligned two-lane road which is also congested, carrying between 8,000 ADT (at the start of the downtown area) and 5,000 ADT (at Kissy). 4.11 The project includes a feasibility study, by consultants, of the urban section to consider alternative locations for constructing a new road, including the possible use of parts of the right-of-way of the SLR, which will become available after the railway is cloised down. The consultants will update the study of the rural section and integrate it with their study of the urban section. If the study indicates thai: subsequent construction would be economically justified, as is expected, the detailed engineering of the best alternative route would also be carried out by consultants as part of the project. This feasibility study/detailed engineering has been included in the project not only because the irnprovement appears necessary but also because it is essential to obtain optiLmum benefits from the improve- ment of the rural section, the detailed engineering of which is included in Part I of the project. F. Teclnical Assistance 4.12 The project includes the provision of technical assistance to the Ministry of Works for implementing the recommendations in the Land Transport Survey (para 3.06). Five experts would be provided by a consulting firm, for periods of between two and three years. This assistance has been in- cluded in the project because it is needed to ensure optimum utilization of the mechanical equipment to be purchased under Part I of the project. G. Cost Estimates 4.13 The cost estimates for construction have been prepared by consul- tants on the basis of quantities calculated after completing detailed en- gineering, and of unit prices obtained from contracts awarded for similar  - 14 - work after international bidding in 1967, adjusted to cover cost increases to early 1970. 4.14 The cost estimates for consultants' services for: (i) the de- tailed engineering of the Bo-Kenema and of the Freetown-Waiterloo Road (ru- ral section), and (ii) the supervision of construction of ithe Bo-Kenema Road, have been derived from existing contracts between the consultants and the Government. The cost estimates for consultants' services for. (iii) the feasibility study, and subsequent detailed engineering if found to be justified, of the Freetown-Waterloo Road (urban section), and (iv) tehinical assistance to the Ministry of Works, have been based on esitimated man-months of work. 4.15 The cost estimates for the purchase of mechanicaL equipment 'have been prepared by consultants after assessing the equipment needed by the Ministry of Works for highway maintenance and the size and condition of the existing mechanical equipment fleet; their assessment, and cost estimates, are considered reasonable. 4.16 The total cost of the project is estimated at Le 9.6 milliona (US$11.4 million). The total cost of Part I, to be financed by the Bank/ IDA, is estimated at Le 8.4 million (US$10.0 million), including a foireign exchange component of Le 6.1 million (US$7.2 million). Table 13 shows the cost estimates in detail; they are summarized below:  - 15 - Le (millions) US$ (millions) Foreign Local Foreign Total Local Foreign Total Exchange Part I. Items to be financed by Bank/IDA 1. Construction 1.7 3.1 4.8 2.0 3.8 5.8 65 2. Consultants' Services for: (a) Supervision; and 0.1 0.4 0.5 0.2 0.4 0.6 70 (b) Detailed Engineering 0.2 0.4 0.6 0.2 0.5 0.7 70 3. Purchase of Mechanical Equip- ment for Highway Maintenance /1 1.3 1.3 /1 1.5 /2 1.5 100 (of cif price) 4. Contingency Allowances: (a) On Item 1, 20% 0.3 0.7 1.0 0.4 0.8 1.2 65 (i) 10% quantity (ii) 10% price escalation (b) On Item 2, 10% /3 0.1 0.1 /3 0.1 0.1 70 (c) On Item 3, 10% /1 0.1 0.1 71 0.1 0.1 100 Total of Items to be financed by Bank/IDA 2.3 6.1 8.4 2.8 7.2 10.0 Part II. Items to be financed by UNDP 5. Consultants Services for: (a) Feasibility Study and detailed en- gineering 0.1 0.4 0.5 0.2 0.4 0.6 70 (b) Technical Assistance 0.2 0.4 0.6 0.2 0.5 0.7 70 6. Contingency Allow- ance on Item 5, 10% /3 0.1 0.1 /3 0.1 0.1 70 Total of Items to be financed by UNDP 0.3 0.9 1.2 0.4 1.0 1.4 Total Project Cost 2.6 7.0 9.6 3.2 8.2 11.4 /1 A small amount for local handling, assembly and transport. /2 CIF Freetown. /3 A small amount for local costs.  -- 16 - 4.17 Contingency allowances of 20% for construction and 10% on con- sultants' services are considered. reasonable. The 20% for construction comprises 10% for quantities of work and 10% for price increases; the latter represents an increase of about 4% p.a. for the 2-1/2 years be- tween March 1970, when the estimates were prepared, and the anticipated mid-point of the 3-1/2 years construction period; equal price increases are expected for foreign and local costs. The 10% for mechanical equip- ment is for price increases of about 4% p.a. for the average period of 2-1/2 years between early 1970, when the estimates were prepared, and the shipment of the equipment. Ihe 10% for consultants' services is for increases in the man-months of work in design and supervision. 4.18 The foreign exchange component of the constructi'on cost is esti- mated to be 65%; this assumes that the work would be carried out wholly by foreign contractors since no domestic contractors are adequately quaLified. The estimated foreign exchange component of consultants' services is 70%. H. Financing 4.19 The proposed Loan/Credit would be used to meet the estimated foreign exchange cost of Part I of the project. The local costs would be met by the Government and no difficulties are expected in making ade- quate provision in the budget. The UNDP has agreed to help finance Part II of the project (para 4.02). I. Project Execution, Procurement, and Disbursement 4.20 The Ministry of Works will be in overall charge of the exec:u- tion and administration of the project, which will be carried out with the assistance of contractors and consultants as explained below. 4.21 Construction will be carried out through contracts awarded on the basis of international comapetitive bidding. Feasibility studies, engineering, and supervision of construction will be carried out by con- sultants acceptable to the Baik. The mechanical equipment will be pur- chased on an international competitive basis. 4.22 The work included in the project is expected to take about 3-1/2 years and, allowing for the arardLng of contracts and making final pay- ments on completion, disburseraent would take about 4-1/2 years. The f'ore- cast schedule of disbursements for the individual elements of Part I of the project is indicated on a quarterly basis in Table 1L4 and is summarized on an annual basis below: (in US$ million) Year 1 Year 2 Year 3 Year 4 Year 5 Total 1.4 2.2 2.0 1.2 0.4 7.2  - 17 - 4.23 Disbursements for construction would be made on the basis of: (a) 65% of the cost of construction works (para. 4.18), (b) the CIF cost of imported mechanical equipment, and (c) the actual foreign exchange costs of consultants' services. These disbursements will be made from the credit, until it is exhausted, and thereafter from the loan. 4.24 Right-of-way for construction of the Bo-Kenema Road would be acquired by the Government, which has adequate powers for the purpose. The Government has agreed to secure adequate right-of-way in time for construction to proceed as scheduled. 4.25 The Non-citizens (Trade and Business) Act of August 20, 1969 prohibits non-citizens of Sierra Leone from opening a new business or trade without prior written approval of the Government, and requires non-citizens to cease to operate or participate in certain existing busi- nesses, including road transport (even for own business), and supply of stone or sand. The Government has amended the Act so that it does not apply to contractors, consultants and suppliers of equipment under Bank/ IDA financed projects and has undertaken to make this clear when inviting bids.  - 18 - 5. 'ECON(MIC EVALUATION A. General 5.01 Sierra Leone is becomning increasingly dependent on road trans- port as a prime mover of peoplea and goods (paras. 2.08 and 2.09). An ef- ficient and reliable system of low cost road transport services is, there- fore, vital for the country's economic development. Such a system does not now exist, mainly because the roads are generally below standard for the traffic they have to carry. However, the authorities are now making great efforts to improve the road network, by both new construction and better maintenance. The proposed project would support these efforts, in particular by enabling the Government to complete construction and improve- ment of the country's main trunk road, Freetown-Waterloo-Bo-Kenema, and to implement a major program for improving highway maintenance. The weighted average rate of return on the project would be about 24%, which is satisfactory. B. Construction of the Bo-Kenema Road 5.02 The Bo-Kenema road would be the last section to be completed of the country's main trunk highway between Freetown and Kenema. Bo (30,000 population) and Kenema (20,000 population) are the second and third largest towns in Sierra Leone; both are important administrative and commercial centers. 5.03 The road would serve a relatively densely populated area of about 500,000 people, largely dependent for their livelilhocod on the exc- port of diamonds and agricultural products. The area to be! served by t:he road produces nearly all of the country's cocoa and coffee exports, and 20% of total palm kernel exports, as well as some timber for domestic use. All of these exports, and a large proportion of the timber, are transported to Freetown. The reverse flow of goods into the area, mainly from Freetown, consists largely of fuel and other supplies needed in dia- mond mining, some construction materials, and about 5,000 tons of rice p.a. 5.04 The SLR provides the only direct route between Ba and Kenema, but this route will cease to exist when the railway is clos-ed down, about the end of 1972. Since there Ls no bridge for road traffic to cross the Sewa river between Boama and Blama, all road traffic between Bo and Kenema must take a circuitous road, vLa Koribundu to the south. This circuitous road is in poor condition (para. 4.04); traffic is sometimes interrupted, occasionally for several days, during the rainy season. Engineering anid economic studies show that the project road would be a better alternat:Lve than the improvement of the exLsting road mainly because most of the traffic on the existing road is through traffic for Bo and Kenema and the proJect road would shorten the distanca between these two cities from 61 miles to 43 miles. The project road would also benefit the villages along the railway, now being served by low standard roads.  - 19 - 5.05 Table 15 indicates the expected traffic on the proposed road. The estimates are based on past trends, recent origin and destination studies, and projections of production of goods and services, and per capita income, in the zone of influence. In crder to take diverted and generated traffic into account the estimate for 1969, an average of 400 vehicles per day, assumes that the road had been built, and the railway closed. The forecasts for later years assume that traffic growth will gradually decline from about 10% p.a. in the first 10 years to about 7% in the last ten years of the economic life of the project. 5.06 For calculating the return on investment, only savings in vehi- cle operating costs and in road maintenance costs are counted as benefits. The expected unit savings in vehicle operating costs range from 31% for landrovers to over 40% for passenger cars and heavy trucks (Table 16). These are consistent with Bank experience in other countries. The above unit savings do not include any time savings for drivers and passengers of passenger cars, nor of passengers in buses. Similarly, benefits on account of greater comfort in travelling and possible reductions in in- ventory requirements have been disregarded in calculating the rate of return. 5.07 Based on the most probable estimates of construction costs, vehicle operating costs, initial traffic and traffic growth, the project would yield a rate of return of 21%. A sensitivity analysis shows that this rate would be 18% assuming an increase of 5% in construction cost combined with a decrease of 10% in the savings of vehicle operating costs, initial traffic and traffic growth; or 24% assuming a reduction of 5% in construction cost combined with an increase of 10% in the savings of vehicle operating costs, initial traffic and tr-affic growth. These rates indicate that the proposed project would yield satisfactory economic bene- fits. In view of the expected closure of the railway within the next two years, the project road ought to be undertaken as soon as possible. C. Highway Maintenance 5.08 The recommended program for improving highway maintenance (paras 3.14-3.17), including the increase in maintenance budgets (Table 9) and the investment program for equipment, workshops and depots (Table 10), are expected to yield considerable savings in vehicle operating costs. These savings would accrue gradually as the program is being implemented by: (i) preventing further deterioration of the road network and consequent further increases in vehicle operating costs; and (ii) gradually improving road conditions and reducing vehicle operating costs. Table 16 shows the unit vehicle operating cost savings expected in the seventh year; they range from 10% on paved roads to 28% on gravel roads. These units savings correspond to Bank experience elsewhere for sinmlar projects. 5.09 Based on the most probable estimates of maintenance costs and benefits, the proposed maintenance program would yield a rate of return of 31%, or a Benefit/Cost ratio of 1.23 using a discount rate of 12%, and assuming that the average economic life of ithe equipment is 7 years  - 20 - (Table 17). A sensitivity test indicates that a 10% increase in costs combined with a 10% reduction in benefits would reduce the rate of return to 14% and the Benefit/Cost ratio to 1.02. Alternatively, assuming a 10% decrease in costs combined with a 10% increase in benefits rate of return would be 51%, with a Benefit/Cost ratio of 1.52. 5.10 Thus, even on very conservative assumptions, the recommended program would yield satisfactory benefits. Furthermore, if the program is not implemented, the country would have to devote considerable resources in a few years to rehabilitate the network; otherwise the roads would be- come impassable. These rehabilitation expenditures, which would be avoided if the maintenance program is implemented, have not been counted as bene- fits in calculating the above rates of return and benefit/cost ratios. The recommended program is, therefore, amply justified. D. Feasibility Study and Detailed Engineering 5.11 The project includes a feasibility study and detailed engineer- ing for improving the Freetown-Waterloo road (paras. 4.06, 4.07, 4.10 and 4.11). Italconsult, in the Land Transport Survey, recommenlded the improve- ment of this road as being of high priority. The road carries the heaviest traffic in the country and serves the capital and main port, as well as the country's foremost industrial area, which is rapidly developing. The urban section of this route, from the administrative/business center of Freetown, consists of narrow, heavily congested city streets. The! ruaral section con- sists of a poorly aligned, two-lane paved road, parts of which are also congested. Preliminary investigations suggest acceptable rates of return on construction of these sections of roads, and the proposed studies and engineering for completing the preparation of a project aplpear fully jus- tified.  - 21 - 6. RECOMMENDATIONS 6.01 During loan negotiations, the Government gave assurances that it will: (i) close down the SLR by the end of 1972, in accordance with an agreed program and time schedule (pars. 2.11); (ii) review the level and structure of road user charges as part of its general obligation to collect and record basic data for highway planning (para. 2.20); (iii) review and revise road traffic regulations, and im- plement them in accordance with an agreed time schedule (para. 3.04); (iv) implement the principal recommendations for improving highway administration and maintenance in accordance with an agreed program and timetable (paras. 3.06 and 3.07); and (v) provide adequate funds for highway maintenance and investment in highway maintenance equipment, workshops and depots (para. 3.21). 6.02 With the assurances indicated above, the project constitutes a suitable basis for an IDA credit of US$3.5 million equivalent, on the usual terms, and a Bank loan of US$3.7 million equivalent, for a term of 22 years, including a 4-year grace period.  I , . . I .  ANNEX SIERRA LEONE - FIRST HIGHWAY PROJECT Sierra Leone Railway (SLR) 1. The main line of the SLR was built between 1896 and 1908 to open up the interior of the country. The SLR is a single track system with an overall length of 310 miles, consisting of a main line 227 miles from Free- town to Pendembu in the east, with a branch line 83 miles long, running in a northerly direction (see Map). The lines were built with narrow gauge, (0.76 m; 2'-6"), and have sharp curvature and steep gradients to follow the old caravan routes and for cheapness of construction. The SLR is operated as a Government department within the Ministry of Transport and Communica- tions. It has been the largest employer in the country with a staff in 1964/65 of 3,100, now reduced to about 2,000. 2. Traffic volume reached a peak in 1960/61, but has since declined by about 75% due to declining efficiency and increasing road competition. In 1968/69, the SLR carried 620,000 passengers and 40,000 tons of freight (Table 1). At present, the output in traffic units per employee is about 10,000, which is extremely low. 3. Until 1950, SLR revenues were on average sufficient to cover oper- ating expenses, but not depreciation or capital, costs (Table 2). There- after, operating expenses each year exceeded revenues, despite new invest- ments of about Le 7.0 million (US$8.4 million) by the Government in track and equipment during the period 1954-1964. The ratio of operating expendi- ture (excluding depreciation) to revenue has increased from 105 in 1950 to 357 in 1968/1969. Personnel expenses, which currently average about Le 1.2 million per year (US$1.4 million equivalent) are almost three times as high as total revenue. The SLR has received in recent years a Government subsidy averaging Le 1.0 million p.a. (US$1.2 million). 4. The Land Transport Survey (paras. 1.01 and 1.02) included a fea- sibility study to determine whether the SLR should be retained. The study concluded that over the next ten years road transport would be more eco- nomical than rail transport, even assuming: (i) technical reorganization of the SLR; (ii) reduction and retraining of ra:Llway personnel; (iii) min- imum new investment in railway equipment; and (iLv) maximum recapture of traffic. Discounted total transport costs by eiLther road or rail indicated that railway transport would cost about three tiLmes as much as road trans- port. The study, therefore, recommended that the SLR should be closed, and that the country should concentrate on improving the road network and road transport in the area served by the railway. 5. The Government decided in 1967 to phase out the railway over a number of years, not then precisely defined. The branch line to the north (para 1) was closed to public traffic in 1969 and is being dismantled. Meanwhile, the consultants for the Land Transport Survey have completed a further study, outlining a more detailed program for closing the main  ANNEX Page 2 line and laying off staff and dispoosing of assets by the end of 1972. The Government has accepted the consultants' recommendat:ions and aims to mitigate the effects on railway staff through re-employment in other branches of Government, retraining, and the provision of special sever- ance benefits. To implement the phasing out program, the SLR will re- quire technical assistance, especially in providing for. (i) severance arrangements for personnel; (ii) t:he disposal of assets; and (iii) the closing of accounts.  SIERRA LEONE - FIRST HIGHWAY PROJECT Sierra Leone Railw2yj Traffic Data,. 135 -968/69 Year 1950 1960/61 1961/62 1962/63 1963/64 1964/65 1965/66 1966/67 1967/68 1968/69 Passenger Nos. (mill) 1.0 1.9 1.8 1.6 1.3 0.9 o.6 0.5 0.7 0.6 Passenger Miles (mill) 24.7 66.0 59.3 54.0 42.0 26.9 14.8 19.6 18.3 16.4 Average Journey (miles) 24 34 34 34 33 30 27 36 28 26 Freight-Tons (thousands) 100 128 120 102 82 67 54 47 45 40 Freight-ton miles (mill) 14.4 20.0 15.5 13.4 11.9 9.7 8.2 6.9 6.5 5.9 Average Haul (miles) 144 155 129 131 144 143 151 1146 145 146 Traffic Units (pass. miles & ton miles mill) 39.1 86.o 74.8 67.4 53.9 36.6 23e0 26.5 24.8 22.3 No. of employees 3100 2075 Traffic units per employee (thousands) 17.14 10.8 Source: Sierra Teone Railways-  SIERRA LEONE - FIRST HIGHWAY PROJECT Sierra Leone Railway: Revenue and Expenditure ,-1950-1968/69 (in million of leones) 1950 1960/ 1961/ 1962/ 1963/ 1964/ 1965/ 1967/ 1968/ 61 62 63 64 65 66 68 69 REVENUE Passengers 0.22 0.65 o.66 0.59 0.56 0.42 0.23 0.30 0.22 Freight 0.59 0.80 0.83 0.73 0.60 0.48 0.40 0.34 0.21 Sundries 0.03 0.04 0.04 0.09 0.05 0.07 0.07 0.04 0.03 TOTAL 0.84 1.49 1.53 1.41 1.21 0.97 0.70 0.68 0.46 EXPENDITURE 2 Operating Expenses 0.87 2.11 2.32 2.21 2.16 2.10 1.97 1.68 1.64 OPERATING DEFICIT 0.03 0.62 0.79 0.80 0.95 1.13 1.27 1.00 1.18 Non-Recurrent Expenditure n.a. 0.07 0.05 0.02 0.05 0.04 0.01 - - Loan Charges 0.09 0.04 0.04 0.04 0.04 o0o4 0.04 - - TOTAL GOVERNMENT CONTRIBUTION n.a. 0.73 0.88 0.86 1.04 1.21 1.32 1.00 1.18 Operating Ratio 2/ 105 16 152 167 178 217 280 251 357 j- 2/ Figures for 1966/67 are not available 2/ Without allowance for depreciation Source: Sierra Leone Railway  Table 3 SIERRA LEONE: FIRST HIGHWAY PROJECT Sierra Leone Ports Authority: Port Traffic, 1965-69 Year 1965 1966 1967 1968 1969 Volume (thousand tons) Imports 383 387 340 342 389 Petroleum products discharged 260 243 247 292 164 Exports 78 79 58 76 87 Bunkers 170 214 223 143 160 TOTAL 891 923 868 853 800 No. of Vessels 1,614 1,531 1,584 1,h81 1,332 Source: Sierra Leone Ports Authority  Table 4 SIERRA LEONE - FIRST HIGHWAY PROJECT Motor Vehicle Registration and Distribution, 1960-59 Year Cars & Light Vans Trucks and Total Anntial Buses Rate of Griowth (% 1960 2,847 1,317 4,1i6L 1961 3,483 1,402 14,885 17-7.3 1962 4.,260 1,486 5,746 17.6 1963 5,205 1,581 6,786 1.8.0 1964 6,366 1,683 8,C049 1.8.6 1965 7,786 1,791 9,577 1.8.9 1966 9,001 2,078 11,079 1.5.7 1967 10,406 2,4411 12,817 1.5'.7 1968 12,030 2,797 11,827 15.7 1969 1 13,900 3,100 17,000 1.5.0 Geographic Distribution in 1968 Cars & Light Trucks and Vans Buses Total Freetown 58% 46% 56% Kenema 12% 17% 13% Kono 14% 15% 14% Bo 12% 17% 13% Makeni 4% 5% 4% Estimates Source: Ministry of Works.  Table 5 SIERRA LEONE - FIRST HIGHWAY PROJECT Composition of Goods Hauled by Road in 1968 Percent of Goods total freight Palm Kernels 14.4 Rice 11.8 Firewood 10.6 Motor Spirit 8.1 Diesel-gas-oil-furnace-oil 6.0 Cement 5.5 Edible Oils 5.2 Sugar 5.0 Other 33.4 TOTAL 100.0 Source: Italconsult, Land Transport Survey.  SIERRA LEONE; FIRST HIGHWAY PROJECT Highway Development Program, 1970/71 - 1974/75 (in millionsof leones) Total Item zaa 1/ 1970/71 1971/72 1972/73 1973/74 1974/75 1975/- 1. Taiama-Bo 5.2 3.1 0.7 0.7 0.5 - _ 2, Bo-Kenema 6.3 0.8 1.8 1.8 1.2 o.6 3. Lunsar-Makeni 4.9 1.3 1.8 1.7 - _ _ 4. Makeni-Matotoka 4.1 - - - 1.1 1.4 1.4 5. Freetown-Waterloo (Rural) 708 o.5 2.3 2.3 2.3 - 6. Freetown-Waterloo (Urban) 3.0 0.2 0.1 0.1 0.8 0.9 0.9 7. Feeder Roads 2.7 0.5 0.5 0.7 0.9 _ _ Total 34.0 6.4 7.2 7.3 6.8 2.9 2.3 1/ Includes small amolnts previously incurred. So-urce: Mlinistry of Finance. L  Table 7 SIERRA LEONE: FIRST HIGHWAY PROJECT Design Standards for Class I Highways (Rural) Design Speed 50 mph Minimum Radius of Curvature 1,000 ft Maximum gradient 6% Maximum length of grade at 6% 800 ft Right-of-Way on each side of center line 100 ft Pavement width 22 ft Shoulder width (not paved) 5 ft Axle load 20,000 lbs Structures Design Loading B.S. 153, HA Source: Ministry of Works  TABLE 8 SIERRA LEONE: I13T HIGHWAY PROJECT Highway E22n,ditUresj 1963/64-1969/70 (in millions c,f leones) Highway 1/ Highway Year Construction Maintenance Administration Total 1963/64 0.9 1.2 0.2 2.3 1964/65 1.2 1.0 0.2 2.4 1965/66 3.1 o.8 0.2 4.1 i966/67 5.6 0.9 C1.2 6.7 1967/68 2.0 0.8 0.1 2.9 1968/692( 2.1 0.8 0.1 3.0 1969/70-2/ 4.3 0.7 0.1 5.1 1/ Includes foreign financing. 2/ Budgetary appropriations; data on actual expenditure are not yet available. Source: Ministry of Works  SIERRA IEONE: FIRST HIGHWAY PROJECT Highway Maintenance Program: Current Expenditures, 1971-76 ANTICIPATED MAINTENANCE PROGRAM BUDGET ESTIMA1TES Minor Existing Improvements Paved Gravel all Roads & Paved Gravel Roads Roads Routine Periodic Special Existing Year Roads Roads Resurfaced Sealed Maintenance Maintenance Maintenance Gravel Roads TOTAL ----------(approximate mileage)------------- -------------------(in thousands of leones)--------------------- 1971/72 329 l,0O0 30 - 587 667 63 63 1,379 1972/73 339 1,390 35 10 599 681 64 107 1,451 1973/74 354 1,375 40 15 610 697 66 131 1,504 1974/75 374 1,355 45 20 622 712 67 146 1,547 1975/76 528 1,335 45 20 679 830 76 166 1,752 1/ The above budget estimates include materials, fuels, equipment depreciation and maintenance; and also salaries and other charges, except for supervisory Highway Staff which are estimated to be 17% of the maintenance budget. The External Aid element of expatriate staff salaries X has also been excluded., Source: Italconsult - Land Transport Survey  TAB1J: 10 SIERR. LE0Ei E:IRST HIGHWAY PROJECT Highway Maintenance Progtram: Capital Expenditures, 1971-75 (in thousands of leones) Expenditures: L971-72 1972-73 1973-74 1974-75 Road Depots 271 281 202- New Central Mechanical Workshops 100 700 130 New Office for Workshops - 13 14 uoentral and Sub-Plant Pool Yards and Offices 26 3 - 2 Improvements to Provincial Mechanical Workshops 12 Vehicles for Road Maintenance 10 151 1.78 84 Equipment for Road Maintenance 412 71 1.02 - Special Maintenance on Equipment 28 - - Unit Spares 10 7 7 - Total :L,0o49 1,226 633 86 Source: Italconsult, Land Transport Smuvey  SIERRA LEONE: FIRST HIGHWAY PROJECT Highway Program: Total Expenditures and Financing, 1970/71 -_1974/75 (in millions of leones) Expenditures- Financing 2/ Foreign Local Year Constructioni lighway Maintenance Total Resources Resources Current 3/ 4/ Expenditure- Investment 1970/71 6.4 1.0 0.1 7.5 4.3 3.2 1971/72 7.2 1.4 1.0 9.6 h.0 5.6 1972/73 7.3 1.5 1.2 10.0 4.2 5.8 1973/74 6.8 1.5 0.6 8.9 4.0 4.9 19714/75 2-9 1.5 0.1 4.5 1.2 3.3 Total 30.6 6.9 3.0 40.5 17.7 22.8 1 Excluding expenditure on highway administration, amounting to Le 0.1 million to ;e 0.2 million per year. 2/ See Table 6 3/ See Table 9 4/ See Table 10 Source: Ministry of Finance and Italconsult, Land Transport Survey.  TABLE 12 SIERBA LEONE: FIRST HIGHWAY PROJECT Mechanical EquipmenLt and Vehicles to be Purchased Description No. Estirnulled Cost ( leonleeL Motor gradera 14 270,000 Front end loaders 1J3 0O(O,C(s Traotora (with dozera) 4 80,'OU0 Rollers 5 20,000 Miscellaneous small. items 10,ODO Tip trucks 100 500,000 Pick-up trucks 50 120,000 Spare parts 50,000 Total 1,250,000 Equivalent, to US$1,500,000 1/ CIF Freetown Source: Italconsult, ].and Transport Survey  TABLE 13 SIERRA LEONE: FIRST HIGkAY PROJECT Estimated Cost of Project leones (millions) US$ (millions) Foreign Local Foreign Total Local Foreign Total Exchange PART I. Items to be financed by the Bank/IDA A. Construction 1. Bo-Kenema (43 mi) 1.7 3.1 4.8 2.0 3.8 5.8 65 B. Consultants' Services for: 1. Supervision of A.1 above 0.1 0.4 0.5 0.2 0.4 0.6 70 2. Detailed Engineering of: (a) Bo-Kenema (43 mi) & (b) Freetown-Waterloo (Rural Section, 18 mi) 0.2 0.4 0.6 0.2 0.5 0-7 70 Subtotal 0.3 0.8 1.1 0.4 0.9 1.3 C. Xechanical Equipment for Highway Maintenance 1 l.3?/ 1.3 v 1.5?/ 1.5 100 (of CIF price) D. Contingency Allowance: (a) On Item A 20% 0.3 0.7 1.0 0.4 0.8 1.2 65 (i) 10% quantity (ii) 10% price (b) On Item B 10% 0.1 0.1 0.1 0.1 70 (c) On Item C 10% V 0.1 0.1 0.1 0.1 100 ___ - ( of CIF nricon Subtotal 0.3 0.9 1.2