Tanzania - Highway Maintenance Project

Report No. 457a-TA FILE COPY Appraisal of a Highway Maintenance Project Tanzania July 19, 1974 Regional Projects Department Eastern Africa Regional Office Not for Public Use Document of the International Bank for Reconstruction and Development International Development Association This report was prepared for official use only by the Bank Group. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibility for the accuracy or completeness of the report.  CURRENCX EQUIVALENTS Currency Unit = Tanzanian Shilling (T Sh) T Sh 1 = US$0.14 US$1.00 = T Sh 7.14 T Sh 1 million = US$140,000 WEIGHTS AND MEASURES: METRIC 1 meter (m) = 3.28 feet (ft) 1 kilometer (km) = 0.62 miles (mi) 1 square kilometer (kIm2) = 0.386 square miles (sq mli) 1 hectare (ha) = 2.47 acres (ac) 1 liter (1) = 0.22 British gallons (IMg) = 0.26 US gallons (gal) 1 kilogram (kg) = 2.2 pounds (lbs) 1 metric ton (m ton) 2,204 pounds (lbs) GLOSSARY OF ABBREVIATIONS CIDA - Canadian International Development Agency COMHORKS - Ministry of Communications and Works PAC - East African Community FARC - East African Railways Corporation GNP - Gross national product NRHC - National Road Haulage Company TAZARA - Tanzania-Zambia Railway Authority USAID - United States Agency for International Development vpd - vehicles per day GOVERNKENT OF TANZANIA FISCAL YEAR July 1 - June 30  TANZANIA HIGEWAY MAINTENANCE PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ...... .................... i - ii 1. INTRODUCTION ................... .., ..... 1 2. THE TRANSPORT SECTOR . . 2 A. Economic Setting . . 2 B. The Transport System. . 3 C. Transport Policy and Coordination. 4 3. HIGHWAYS ............. 6 A. The Network . . 6 B. Traffic Growth and Characteristics. . 6 C. Administration . . 7 D. Expenditures and Financing . . 8 E. Planning ............ 9 F. Engineering and Construction . . 9 G. Maintenance ............................ .... 10 4. _TE PROJECT ...................................... 11 A. Description ....... .......................... 11 - The First Stage Highway Maintenance and Rehabilitation Program .................. .. 11 - Construction of Road Camps, Workshops and Offices ............................... 12 Road Maintenance and Workshop Equipment ... 12 -- Training and Technical Assistance ......... 13 - Review of the Road Transport Industry 14 B. Cost Estimates and Financing .. ............... 14 C. Disbursements .............................. 15 D. Execution .................................. 16 5. ECONOMIC EVALUATION .............................. 16 6. ACTION TAKEN AND RECOMMENDATION ................. . 18 This report was prepared by Mr. G.I. Oluonye (Engineer), Miss F. Johansen (Economist), Mr. N. Fostvedt (Economist) and Miss J. Murphy (Editor).  TABLE OF CONTENTS (Continued) TABLES: __ 1. Highway Network 2. Vehicle Fleet 3. Central Government Hi.ghway Expenditures 4. Composition of Secticn Crews and Special Crews 5. Road Maintenance Equipnqent to be Purchased 6. Technical Assistance to be Provided Comworks 7. Capital and Recurrent P:.toject Cos ts 8. Estimated Schedule of Disbursements 9. Inventory of Road Sections Included in the Project 10. Estimated Vehicle Operating Costs on Roads in Good Condition 11. Economic Costs and Bemefits of the Maintenance and Rehabilitation Program (Areas I and IV) ANNEXES: 1. Draft Terms of Referernce for Recruitment of Technical Assistance for Implementing Malntenance Program 2. Draft Terms of Reference for Technical Assistance to Review the Trucking Industry 3. Maintenance Program Implementation Schedule CHART: Proposed Organization of Highway Administration, Ministry or Communications and Works MAP: Tanzania - Transport Network  TANZANIA APPRAISAL OF A HIGWAY MAINTENANCE PROJECT SLUIMARY AND CONCLUSIONS i. An efficient road network is essential to Tanzania which relies on roads to connect its widely scattered rural popuilation with markets, health and education facilities, and other Government services. Despite the Govertment's efforts over the past decade to upgrade the network, only about 10' of the roads provide reliable, all v'eather service most are little more than earth tracks, impassable during the rainy season. Proper maintenance of the network is essential if access to rural areas is to be assured and previous investments are to be safeguarded. ii. Since 1970, when the Ministry of Communications and Works (Comworks) took over responsibility for a large number of inadequately maintained rural roads and lost, soon afterward, many of its expatriate staff, maintenance of the entire network has deteriorated. In 1971 the Government commissioned a highway maintenance and organization sttxdy (USAID-financed) which made recom- mendations on equipment, staffing and otganization designed to restore main- tenance of the network to an adequate level. On the basis of these recoTrmen- dations, Comworks decided to undertake an extensive maintenance program con- centrating initially on primary roads which carry the greatest traffic volumes and oll building up an appropriate maintenance organization. It was decided to impleinent this program in two stages because of limited staff resources and to ga:tn experience in identifying the proper balance of equipment, labor and oTher needs. iii. The project comprises t-ie first stage of the road maintenance program (with a total estimated cost of US$20.1 million equivalent) and also inclu(es a study of the road transport industry in which a capacity shortage has recently developed. The two areas with the highest priority of the four into xwhich the country has been divided were selected for inclusion in this stage of the program. Over the four-year project period, 3,300 km of primary roads in these two areas will be rehabilitated and maintained through the es- tablishment of 30 section crews for routine maintenance and six special crews for periodic maintenance and rehabilitation. The project will provide (i) the road -amps and road maintenance equipment for the maintenance crews; (ii; workc- shop !'acilities for the upkeep of this equipment (iii) the training of highway maintenance personnel at all levels, and (iv) technical assistance to CcmWor-k. The total capital cost of the project 'S estimated at about USS12.5 million equivilent of which IDA will finance the foreign exchange comiponent of US$10.2 million (82%). The Government will finance all remaining costs including some JS$7.6 million of recurrent costs.  - ii - iv. Comworks, assisted by the technical experts to be provided, will be responsible for the execution of the project. Procurement will be on the basis of international competitive bidding in accordance with Bank/IDA guide- l- es except for contracts of US$50,000 or less and for construction of the many scattered regional workshops, offices and road camps which will be awarded after local competitive bidding. The first year of the project will be largely devoted to preparing procurement documents, building road camps and drawing up a training program. The improved maintenance procedures and rehabilitation works will commence in the second year as personnel are trained and new equipment arrives. By the end of the fourth year, the roads will have been rehabilitated and be receiving regular maintenance. v. The main quantifiable benefits expected to accrue as a result of the p:oject are savings in vehicle costs for projected traffic. Data con- cerning user costs, traffic and road conditions are based on the maintenance and o-ganization study updated by Comworks and the Association. A comparison of costs and benefits over an eight-year economic life indicates that the project is sound, yielding an economic return of 22%, a first-year benefit of 16%' and a benefit-cost ratio of 1.42:1. vi. The project is suitable for an IDA credit of US$10.2 million to the Government of Tanzania.  TANZANIA APPRAISAL OF A HIGHWAY MAINTENANCE PROJECT 1. INTRODUCTION 1.01 At the time of independence, the highway network was relatively undevaloped and Tanzania undertook a bold program of road construction and improvement. Over the past decade, some 2,000 km of primary roads have been rebuilt, largely with Bank Group assistance. In recent years emphasis has also been given to the development and maintenance of roads serving agricul- ture and, since 1970, the Ministry of Communications and Works (Comworks) has taken over responsibility for some 17,000 km of rural roads from the District Councils which were unable to maintain them properly. 1.02 The greatly increased workload and subsequent departure of a number of expatriate staff strained Comworks' capacity considerably, and a substantial backlog of maintenance developed. So in 1971, the Government commissioned consultants, Lyon Associates, Inc. (U.S.), with financing pro- vided by the United States Agency for International Development (USAlD), to undertake a highway maintenance and organization study. The study, completed in August 1972, outlined a program for rehabilitating the entire highway net- work '33,400 km) over a five-year period at a total cost of US$140 million equivalent. 1 .03 Comworks considered the program recommended by the consultants to be too ambitious in view of the human and financial resources that could be made available but, using the consultants' recommendations as a base, designed a program for rehabilitating and maintaining the country's primary roads (those classified either as trunk or territorial main roads) at an estimated total cost of US$50 million. Subsequently, the Government and the Association agreed that the program should be carried out in two stages, both because of the limitation in staff resources and so that the second stage could profit from -he experience which would be gained in determining the proper balance of equipment, labor and other needs. The proposed four-year project with capital and recurrent costs totalling US$20.1 million comprises the first stage of the longer-term program. 1.04 This will be the fourth highway project financed by the Bank Grou in Tanzania. The first such project was financed by IDA Credit 48-TA (US$i4 million) in 1964, supplemented by Credit 115-TA (US$3 million) in 1968; it consir-ted of (a) construction of six road sections totalling about 860 km, (b) dc!tailed engineering of a 230 km section of what is known as the Taa-.'ami highw. y linking Dar es Salaam and the copper belt in Zambia and of 335 km of secon.;ary roads in the Geita cotton-growing district, and (c) technical assis ance to Comworks. After initial delays and cost overruns, the project was satisfactorily completed in 1970. The second highway project was financed by IDA Credit 142-TA (US$15.5 million), Bank Loan 586-TA (US$7.0 million), and a Swedlish credit of US$7.5 million equivalent, all made in 1969. The project consi' ted of the reconstruction of a 510 km section of the Tan-Zam highway,  -2- satislactorily completed in 1972. Excep t for a snort section ir. Tanzania being reconstructed with financiag from USAID, reconstruction of the entire Tan-Zu= highway has been complet2d, sections in Zambia having been financed by a `i.K. grant and Bank Loans 439-ZA and 563-ZA. The third highway project, being financed by Credit 265-TA (US$6.5 million) made in 1971, consists of (a) inprovement to bituminous paved standard of approximately 200 km of an existing gravel road between Mtwara and Masasi, (b) betterment of approximately 475 krn of agricultural feeder roads, (c) prelnvestment studies for the improve- ment of about 250 km of roads, ard (d) technical assistance .o Comworks. Progress was very slow because of delays 4n entering into contracts with con- sultants for supervising betterment units and in tender arrangements for the impro-ement works and the project is about two years behind schedule. Equip- ment for the betterment units has now arrived, consultants have been retained, and a contract has been awarded for the improvement works. Substantial cost overruDns are expected, for which the Government is seeking bilateral financing. 1.05 Other Bank loans for transportation include two (110-EA of US$24 million in 1955 and 428-EA of US$38 million in 1965) for the improvement of equipnment and facilities operated by the former East African Railways and Harbours Administration, owned jointly by Tanzania, Kenya and Uganda as members of the East African Community (EAC). More recently, the EAC's East African Harbours Corporation has -eceived two Bank loans (638-EA in 1969 and 865-EA in 1972) totalling US$61.5 million, partly for expanding facilities at the port of Dar es Salaam; work. is somewhat behind schedule but proceeding satisfactorily. And, in 1970, a loan (674-EA) of US$42.4 million was made to the East African Railways Corporation (EARC), also Community owned. This project has encountered serious dJfficulties due to financial, operational and mrnagerial problems being experienced by the railway. The Bank and the EARC are exploring ways of rectifying the situation. 1.06 This report is based on data contained in the above-mentioned Lyon's study, on Comworks' proposal for primary road maintenance, and on the findings of a mlssion comprising Mr. G.I. Oluonye (engineer), Miss F. Johansen and Mr. N. Fostvedt (economists) which visited Tanzania in December 1973. The report was edited by Miss J. Murphy. 2. THE TRANSP0RT SECTOR A. Economic Setting 2.01 Tanzania, situated a few degrees south of the equator on the eastern coast of Africa, has a land area of about 940,000 km2, a large part of which is high, arid plateau. The population of about 14 million is con- centrated in the areas near the thrae main Indian Ocean ports of Dar as Salaam, Tanga and Mtwara, and In agricultural regions located on the peri- phery of the country, i.e., the Lak. Victoria region, the highlands around Kilimaajaro and the southern highlaads near Lake Nyasa. Only 7% oL the pop- ulationa live in towns, but the urba>i population is increasing much faster than t'ie national average of 2.8% p.a.  - 3 - 2.02 Agriculture is the main economic activity, accounting for almost 40% ok GNP. About half of agricultural production is coulsumed domestically; the main export crops are cotton, coffee, sisal and cashew nuts which together account for 50% (1972) of export trade. The small but growing industrial sector accounts for 10% of GNP. Improved transport facilities and services are essential to the country's economic growth and particularly to continued development of its agricultural sector. 2.03 Tanzania's socialist development philosophy aims at reducing in- equalities in income distribution through emphasis on rural development and through state control of large-scale agricultural enterprises and important industries and services, including those related to transport (para. 2.13). To facilitate rural development and to improve its overall efficiency, the Government in 1972 decentralized a number of its administrative activities, giving the country's 20 regions substantial power to control planning and budget provisions in their respective jurisdictions, particularly those ac- tivities concerned with development at the local level. Implementation of this decentralization policy as it affects transport is still at an early stage (para. 3.08). B. The Transport System 2.04 The transport system comprises about 33,400 km of roads, about 3,500 km of railways, three ocean ports, coastal and lake shipping, 21 airports, and a 900 km pipeline, which is used exclusively for conveying oil to Zambia. Development of the system has been dictated by the need to service scattered areas of productive activity and to provide access to the sea for neighboring landlocked countries. Because of the priority need to develop long-distance transport, emphasis was initially on the railways and only in recent years has attention been given to developing a reliable road network. Traffic moves primarily in an east-west direction, to and from the ocean ports. 2.05 Despite the Government's efforts over the past decade to upgrade the road network, only about 10% of the network provides reliable, all- weather service. Most are little more than earth tracks impassable during the rainy season, 2thus, in effect, decreasing the already low road density of 36 km/1,000 km or 2.4 km/1,000 inhabitants. Road density differs con- siderably from one region to another and, except for the Tan-Zam highway, most of the engineered roads are located near Dar es Salaam and Tanga and in the Arusha and Lake Victoria areas. Details concerning highways and their administration are given in Chapter 3. 2.06 Two separate rail systems serve the country: the East African Railway, owned by the EAC and administered by its EARC: and the Tan-Zam Railway, administered by the Tanzania-Zambia Railway Authority (TAZARA) and Jointly owned by those two countries. The East African Railway, serving the northern half of the country, has two main lines within Tanzania: one from  - 4 - Kigoria on Lake Tanganyika to Dar es Salaam (1,256 km), with an important branch to Mwanza on Lake Victcria (380 km); and the second from Tanga to Arusha (440 km), which also ccnnects with the Kenyan port of Mombasa. A 188 km rail link along the coast connects these two lines. Burundi, and to some extent Rwanda, use the Kigoma-Dar es Salaam line for the transport of exports and imports. 2.07 The Tan-Zam Railway, which is a dif.erent gauge from the East African Railway, extends about 1,000 km from Dar es Salaam to the Zambia border at Tunduma. Construction, financed by the People's Republic of China, started at Dar es Salaam, extends well into Zambia, and is expected to be completed as far as Kapiri Mposhi in 1975. The completed section has recently been opened for the limited transport of Zambian import-export traffic, supplementing available road transport. Though basically designed to serve Zambian transit traffic, the railway will, together with the Tan-Zam highway, help to develop the potentially productive areas of southern and western Tanzania. 2.08 The three Tanzanian ports of Dar es Salaam, Tanga and Mtwara, as well as Mombasa in Kenya, serve Tanzania and most of its landlocked neighbors' export-import traffic. The tonnage handled through the Tanzanian ports in 1971 was about 3.3 million tons, with Dar es Salaam handling about 86% of the total and Tanga about 9%. All the ports are managed by the EAC's East African Harbours Corporation. Although coastal shipping is in general playing a de- clining role, it remains important in the area between Dar es Salaam and Mtwara due to the lack of an all-weather land connection. Shipping on Lakes Victoria and Tanganyika also plays a valuable role in moving goods to railheads at Mwanza and Kigoma. 2.09 Passenger transport by air is important, especially to remote areas, but air freight has not yet developed to any significant degree. The East African Airways Corporation, owned by the EAC, provides regular service to 21 airports within the country. There are two international airports, one at Dar es Salaam and the other near Arusha. C. Transport ?olicy and Coordination 2.10 For many years, transpcrt policy was directed almost exclusively toward the requirements of external trade and emphasis was therefore on rail- way development, with roads seen primarily as feeders to the rail system and to the ports. The growing need, as well, to accommodate transit traffic is reflected in the recent construction of the Tan-Zam highway, railway and pipeline and the expansion of Dar es Salaam port facilities. While the move- ment of export-import traffic remains important, transport policy is increas- ingly giving emphasis to regional development, both by upgrading and extending the main road network and by building roads to serve agriculture development. 2.11 While, in the past, competition between modes was limited to a few routes, the potential for competition is increasing with the recent construc- tion of road, rail and pipeline facilities between Dar es Salaam and Zambia;  and planning investments in transport will more and more require complex analyses of the trade-offs betwgen competing modes. The Government recognizes this need and is giving increasing atteittion to the development of its planning capacity in this sector. The Planning tnit of Comworks, established in 1970, has primary resDonsibility for transport planning- its staff consists of four engineers and an economist, three of whom are provided by the Canadian Inter- national Development Agency (CIDA). Due to its limited staffing, the Unit has tended to provide ad hoc support rather than systematic sectoral planning, but the Government intends to strengthen the Unit's capacity to enable it to pro- vide ectoral economic analysis and to coordinate transport planning more fuiLy with the needs of other sectors by recruiting more staff and extending its ditties and powers. 2.12 The railway historically enjoyed protection from road competition through the Government's licensing and pricing policies. The East Africa Transport Survey (1969) financed by the United Nations Development Programme with -he Bank as executing agency, recommended that restrictive road licensing practices and differential railway tariffs be abolished and that the EARC be given authority to alter its rates and methods of operation so as to have the commercial flexibility required to meet road competition. Under the terms of the 1970 Bank loan (674-EA) to the EARC, the Governments of Tanzania, Kenya and Uganda agreed to implement these recommendations. The railway has since made good use of its new freedom to reduce tariffs to meet road competition, but the EAC has allowed virtually no increases in charges, even though the railway has documented a strong case for such increases, based on traffic costing and tariff studies undertaken by a CIDA-financed team. The tariff issue, however, is now only one of a range of problems affecting the railway's financial and operational soundness. 2.13 In Tanzania, the question of liberalizing the road transport industry has been approached cautiously by the Government which believes that this may confl4ct with its policy of socialism and state control of important services. In 1969, the National Transport Corporation was established to develop "land, sea and inland waterways and air" transportation means for passengers and goods. So far, four subsidiaries have been formed: (i) the Dar es Salaam Motor Transport Company, Ltd. which provides bus service within Dar es Salaam and between the capital and other urban centers; (ii) the Zambia-Tanzania Road Services Company (jointly owned with Zambia and Fiat of Italy) which provides transport for Zambia exports and imports; (iii) the National Road Haulage Company, Ltd. (NR{C) which provides long-distance freight haulage within the country: and (iv) the Tanzania Coastal Shipping Line, Ltd., which provides service between the ports of Dar es Salaam and Mtwara. Establish- ment rf a national airline is also contemplated. 2.14 The long-term objective is for NRHC to have main responsibility for long-distance road transport, while encouraging regional and interregional trans')ort cooperatives for the shorter hauls. Licenses are issued freely to priva-e carriers hauling their own goods, but licenses to carriers offering for--htre transport are restricted, with the NE.C and transport cooperatives given first priority. Also, as of March 1974, haulage rates have been\re- structured and maximum rates established for both long-distance and local trips  -6- which, however, do not appear tc, cover total operating costs. These measures are pioving a disincentive to irdependent truckers, and a serious shortage of trucking capacity, particularly for short hauls, has developed (para. 3.06). 3. HIGHWAYS A. The Network 3.01 Of the approximately 33,400 km of roads (Table 1), only about 2,600 km (87-) are paved. and 1,100 km (3%) ale engineered gravel. The remainder are urengineered earth and gravel roads suitable only for dry-weather move- ments, Roads classified as either trunk roads (6,008 km) or territorial main roads (1,155 km) make up the primary system linking the country's 20 regional capitals with each other and with neighboring countries. They vary in standard from two-lane paved roads to unimproved earth tracks. Roads classified as local main roads (9,242 km) make up the secondary system link- ing other centers of economic acAvity with the primary network, while those classified as regional roads (about 17,000 km) form the tertiary system. B. Traffic Growt:h and Characteristics 3.02 The pattern of traffic flow on the country's road network has been estab:ished from regular counts ftaken by Comworks' Planning Unit, supplemented by dat:a from its regional offices and from various consultants' studies. Traff-.c volumes are generally low, averaging well under 50 vpd on mosi: roads. .Uighest traffic volumes are found on the Tan-Zam highway (varying from 700 vpd near Dar es Salaam to about 200 vpd at the Zambia border) and on other roads radiating from the country's ports (100-500 vpd). Traffic overall has been growing at 3-4% per annum. 3.03 In 1972, there were abcut 94,000 vehicles in circulation (Table 2) or one motor vehicle per 145 inhabitants as compared to Kenya with about one vehicle per 80 inhabitants. Growth of the vehicle fleet has slowed in recent years dropping from an average growth rate of 8.9% p.a. during the 1962--66 perio( to only 3.5% p.a. in 1970-72, with the Government-owned vehicle fleet growilg three times as fast as the privately-owned fleet. In 1972, passenger cars -epresented about 40% of the privately owned vehicle fleet; light commer- cial rehicles, about i77- and heavy vehicles and btuses, about 22%. Since 1973, annual licensing of vehicles 'ns been discontinued because of the high cost *f collecting fees. During negotiations, the Government confirmed that it wi I collect data on traffic fl'ows and maintain up to-date records of vehicLes as necessary for sound tzansport planning. 3.04 In public hauiage, the vast majority (96%) of licensed operators are s-ill1, independent carriers, 1,Jwith one to four vehicles, who together accouit for 68% of the cormnercial trucking f'eet. Cooperative transport compa'iies account for about 18% o- the remaining trucking capacity, and Goveriment-owned compar-ies, aDout 14%.  -7- 3.05 Most trucks are of 6-ton capacity, but in recent years there has been E trend toward larger and heavier trucks and buses. Vehicles with capacities of 30 tons or Twre and with single axle-loads of well over the 18,000 lb (8,200 kg) legal limit have appeared in significant numbers on the Tan-Zem highway and along the coastal road between Chalinze and the Kenya border. The roads, not built to handle such heavy loads, have begun to suffer from overloading. The Government, following recent discussions with the Association on the matter, has repaired its weighbridges and is taking steps to enforce its regulations on axle loading. During negotiations, the Goverrment confirmed that vehicle weight regulations will be rigorously enforced. 3.06 Due to Government policies regulating the industrv (para. 2.14) in- depeneent carriers are discontinuing their operations and truck renewal. While sufficient capacity presently exists to meet the increasing demand for long-distance haulage, local movements are being hampered by a shortage of carriers who apparently do not find the activity profitable. This io tvr) is hampering agricultural activity since crops sometimes spoil while awaitirr transport. In view of the repercussions being felt in other sectors of the econony, the project includes the financing of expert assistance to review the functioning of the road transport industry and Government regulations affecting it and to recommend ways of improving the situation (para. 4.12). C. Administration 3.07 Until very recently, Comworks had, among its many functions, respon- sibility for all roads in the country. Several divisions within the Ministry dealt with the various aspects of highway administration: the Planning Unit established priorities among road projects; the Roads and Aerodromes Divis-on designed, constructed and maintained the network; the Materials Laboratory did all soils and materials testing; and the Electrical and Mechanical Division maintained and renewed the equipment fleet. Field operations were carried out through the Ministry's 17 regional offices. 1/ The lines of authority within Comworks, however, were often unclear with the result, for instance, that road maintenance equipment was not always available wher. needed by the work crews and priorities set at headquarters were sometimes not followed. Also, the fact that these units served all of Comworks tent to dilute the time devoted to roads, especially when an extreme staffing shortage developed. 3.08 The Government has recently decided to reorganize the adrnlnst--.- tion Df roads within Corworks and, in line with its decentralization po_: y, to allocate more responsibility to the regions. The proposed organizat-.oa has 1/ Each of three regional offices presently serves two regions: that d ; '4twara serves both Mtwara and Lindi regions:- Dar es Salaam serves X se T)ar es Salaam and Coast regions, and Mbeya serves both Mbeya and `Ialcwa regions.  evolved from both the recommendations of the highway maintenance and organiza- tion study carried out by Lyon Associates Inc. in 1971-72 and those of the consultants McKinsey and Company, Inc. (U.K.) who were engaged specifically to review the implications of decen:ralization on the functions of Comworks. Under the reorganization, all road-related activities within Comworks (except the road transport industry) will come under the jurisdiction of a nevw Roads Division (see Chart), which will have responsibility for planning, bucgetary controls, execution of works and administration of all primary roads. Comworks will also give overall guidance and assistance to the regional administration which will take over similar responsibilities for secondary and tertiary roads. Field operatiDns will continue to be carried out through the regional offices, each headed by a Regional Engineer under a Regional Development Director. Implementation of the reorganization is just being initiated and it is too early to judge its effectiveness. The recommended reorganization of Co=works appears to be suitable for undertaking its functions and for project execution. However, during negotiations, the Government agreed to discuss the actual implementation with the Association to see whether any adjustments might be required in the event that the project be adversely affected. 3.09 One of the major constraints on Comworks' highway activities has been the shortage of qualified staff both at headquarters and in the regions: only 16 of the existing 63 highway engineering posts are presently filled, and over two-thirds of the approximately 180 technical positions (inspectors, foremen, laboratory assistants, etc.) remain vacant. The Government has recent- ly recruited 35 engineers from India with erperience in highway administration and maintenance who are scheduled to take up their posts before the end of 1974. The Government is also financing the studies of a number of Tanzanian students to overcome the shortage in the longer term: some 90 students are presently enrolled in engineering courses at Nairobi University and the Poly- technic in Nairobi and another 60 have entered Dar es Salaam University where an engineering curriculum was recently inaugurated. Provided the Government can attract these students to the civil service upon graduation, the situation should be greatly alleviated within five to ten years. D. Expenditures and Financing 3.10 During the last decade, the Government has made substantial invest- ments in the highway sector. Total expenditure on roads rose from T Sh 66 million (US$9.2 million equivalent) in 1965/66 to a peak of T Sh 246 million (US$34.5 million equivalent) in 1968/69 (Table 3). This significant increase reflects both the bold highway construction and improvement program undertaken by the Government, particularly the first and second highway projects financed by the Bank Group, and the increased maintenance required on the Tan-Zam high- way prior to its reconstruction necessitated by the large volumes of Zambian transit traffic since 1966. Expenditures have averaged T Sh 200 million (US$28 million) per annum during the 1970--72 period, the decline reflecting completion of construction under the first highway project and reduction of maintenance expenditures on the Tan-Zam highway as reconstruction progressed.  - 9 - 3.11 Highway investments are financed from the Government's general bud- get. To the extent funds are available, allocations for minor works are based on per kilometer estimates prepared by Comworks. For major construction, esti- mates are based on detailed engineering. Annual maintenance estimates have been based upon set rates which range between US$140 and US$420 per kilometer depending on the road classification and taking no account of traffic; these rates are too low for adequate maintenance of the road network. Moreover, the Ministry has, during the past few years, been unable to utilize fully even the available funds because of its manpower constraints. Comworks is now develop- ing a more realistic method for estimating maintenance requirements, based on traffic, surface type, terrain and availability of materials. 3.12 Road users contribtute to general revenues in several ways. Taxes on vehicle ownership and use are levied through import duties, vehicle regis- tration charges, fuel taxes and, until 1973 when they were discontinued, annual vehicle license fees. Annual revenues collected from road users have been ,about equal to expenditures on roads, with such revenues amounting to about US$27.8 million equivalent in 1971/72 and expenditures totalling about US