Jamaica - Third Highway Project

FILE COPY Report No. 441a-1M Jamaica: Appraisal of a Third Highway Project June 24, 1974 Latin Anmerica and Caribbean Projects Department 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 It may not be published, quoted or cited without Bank Group authorization.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.  Currency Equivalents Currency Unit = Jamaican dollar (J$) US$1.00 - J$ 0.91 J$ 1 = US$1.10 J$ 1 million = US$1.1 million Fiscal Year April 1 to March 31 System of Weights and Measures British/US Metric Equivalent 1 foot (ft) = 0.305 meter (m) 1 mile (mi) 2 1.609 kilometers (km) 2 1 square mile (mi2) = 2.589 square kilometers (km2) 1 pound (lb) a 0.454 kilogram (kg) Abbreviations and Acronyms ADT -- Average Daily Traffic CIDA - Canadian International Development Agency DC - Directorate of Construction DENS - Directorate of Electrical and Mechanical Services DM - Directorate of Maintenance DMP - Directorate of Major Projects DTS - Directorate of Technical Services GDP - Gross Domestic Product GNP - Gross National Product JRC - Jamaica Railways Corporation LVI - Lamarre Valois International Ltd., Consulting Engineers MOW - Ministry of Works NEC - National Economic Council NPA - National Planning Agency TPOS - T. P. O'Sullivan and Partners, Consulting Engineers TRRL - Transport and Road Research Laboratory UNDP - United Nations Development Program USAID - United States Agency for International Development  JAMAICA APPRAISAL OF A THIRD HIGHWAY PROJECT TAB2E OF CONTENTS Page No. SUMMARY AND CONCLUSIONS .... .......................... i - ii 1. INTRODUCTION ........ ............................ 1 2. THE TRANSPORT SECTOR ............................ 3 A. The Country and its Economy ............. 3 B. The Transport Modes .................. 3 C. Transport Policy, Planning and Coordination 6 3. THE HIGHWAY SUBSECTOR ........................... 7 A. The Road System and Road Transport ......... 7 B. Road Administration: The Ministry of Works. 8 C. Road Planning and Financing ............... . 9 D. Engineering and Construction ............... 10 E. Maintenance ............... ................. 10 4. THE PROJECT ......... ............................ 11 A. Project Description ..... ................... 11 B. Cost Estimate, Financing and Disbursements . 14 C. Execution ........... ....................... 16 5. ECONOMIC EVALUATION ............................. 17 A. General ............. ....................... 17 B. Arterial Road Construction Program ........ * 17 C. Technical Assistance ..... ................. 19 6. AGREEMENTS REACHED AND RECOMMENDATION ........... 20 This Appraisal Report has been prepared by Messrs. S. Hertel (Engineer) and B. Chatelin (Economist) and has been edited by Hiss V. Foster  TABLE OF CONTENTS (Cont'd) TABLES 1. Road Investment Program 2. Expenditure on Roads, 1965-1973 3. Road User Charges 4. Design Standards for Arterial Roads 5. Cost Estimate 6. Schedule of Disbursements 7. Traffic Forecast 8. Vehicle Operating Costs 9. Economic Return CHART Structure of the Ministry of Works MAP Jamaica - Third Highway Project - IBRD 10989  JAMAICA APPRAISAL OF A IHIRD HIGHWAY PROJECT SUMMARY AND CONCLUSIONS i. The prime traffic modde in Jamaica is road transport. The highway network, comprising about 9,500 miles, is generally adequate in extent, although of low geometric standard even for the arterial roads with very heavy traffic. The railway network, totaling about 210 miles, carries all the bauxite-alumina traffic, a negligible part of other freight, and a small percentage of passenger transport. Air transport has only limited importance for domestic traffic. ii. During 1968-1970, the Canadian consultants Lamarre Valois Inter- national Ltd. (LVI) carried out a countrywide transportation survey, followed in 1971-1972 by feasibility studies for 320 miles of main roads and, in 1973, by final engineering for about 70 miles of high priority arterial roads. LVI's services were financed by the Canadian International Development Agency (CIDA). iii. The main element of the proposed project has been developed from LVI's studies and comprises the first phase of the Government's 1974-1979 arterial road construction program, i.e., the improvement, mainly in the form of new construction, of about 16 miles of two-lane arterial road sections between Spanish Town and Mandeville and one four-mile two-lane arterial road section between Spanish Town and Dcho Rios. The existing narrow and winding roads on these sections pass through many smaller towns and carry from 4,000 to 6,000 vehicles per day; the new arterial roads would bypass the towns. The road construction works would be supervised jointly by the Ministry of Works (MOW) and consultants. iv. The proposed project provides also for the provision and installation of vehicle weighing stations and the procurement of a small amount of geotech- nical equipment. Technical assistance for transport planning for aid to local contractors and for pavement evaluation and design is also included. v. Execution of the project would be the responsibility of MOW and would extend over a period of about three years. This period is determined by the time required for the civil works; these, in turn, have, in the Government's construction program, been phased to restrict the load on the budget and on MOW to acceptable levels. vi. About 86% of the construction works would be procured by international competitive bidding in compliance with Bank Guidelines. This construction would consist of a number of contracts, and bidders would have the opportunity to bid for one or several contracts according to their capacity. The remaining 14% of construction, comprising the earthwork and pavement base of about four  - ii - miles of road, would be executed by HOW on force account. MOW has the re- quired construction equipment, staff and expertise to carry out such works efficiently. The weigh bridges for the vehicle weighing stations would be procured by international competitive bidding; the geotechnical equipment would be procured by negotiated contract. vii. Quantifiable benefits from the construction elements of the project would derive from savings in vehicle-operating costs. On conservative assump- tions, the economic return from the construction of the road sections would be 17% tc6 24%, and the economic return of the project as a whole would be 20%. In adcition, the new road sections would reduce pollution and noise levels in the many built-up areas that would be bypassed. viii. The project is estimated to cost US$23.6 million equivalent, with a foreign exchange component of US$13.7 million. The Government is seeking tech- nical assistance from UNDP and the British Government, amounting to about US$0.1 million each, toward the foreign exchange co8ts; the project would pro- vide a satisfactory basis for a Bank loan to cover the remaining foreign ex- change costs of US$13.5 million equivalent; an appropriate term would be 25 years, including a four-year grace period.  JAMAICA& APPRAISAL OF A THIRD HIGHWAY PROJECT 1. INTRODUCTION 1.01 The Government of Jamaica has requested the Bank to assist in fi- nancing a project consisting of: (a) the construction, including supervision, of 20 miles of two-lane arterial road and about four miles of main access roads comprising the first phase of the arterial road investment program for 1974- 1979; (b) establishment of permanent vehicle weighing stations and procurement of geotechnical equipment; and (c) technical assistance for transport planning, for aid to the local contracting industry and for a study of pavement design, evaluation and performance. 1/ The total cost of the proposed project is estimated at about US$23.6 million equivalent. The total foreign cost com- ponent, estimated at US$13.7 million equivalent, would be financed by the proposed US$13.5 million equivalent Bank loan and assistance being sought from UNDP and the British Government, in the amount of US$0.1 million each; the balance of US$9.9 million equivalent in local costs would be provided by the Government. 1.02 This would be the third highway project financed by the Bank in Jamaica. 2/ The first (Loan 408-JM, US$5.5 million, 1965) was made for de- tailed engineering and construction, including supervision, of the Kingston- Spanish Town road (15 miles of four-lane road) and the Moneague-Crescent Park road (four miles of two-lane road). Initially, that project also included construction of the Spanish Town-Bog Walk road (eight miles), but this, with the Bank's approval, was subsequently deleted as a result of increased costs. Execution of the project was delayed. because of difficulties in right-of-way acquisition, unsatisfactory performadce of subcontractors, problems in re- location of public utilities and inter-union labor disputes, resulting finally in abandonment of work by the contractor after 90% completion, the contractor claiming frustration of contract; his claims have now been settled througn arbitration. The work was satisfactorily completed by force account. The loan is fully disbursed. 1.03 The Second Highway Project (para. 1.04) originated from a National Transport Survey which the Government mounted in 1968. The consultants for that survey, Lamarre Valois International (LVI, Canada), with financing from the Canadian International Development Agency (CIDA), were required to (a) establish and analyze costs of transportation by rail, road, coastal shipping 1/ The Government has applied for: (a) UNDP financing for aid to the local contracting industry; and (b) British Government financing for the tech- nical assistance to study pavement design, evaluation and performance. 2/ It would also be the third project iln the transportation sector as a whole, since the Bank Group has not financed projects elsewhere in the sector, although an airport project has recently been appraised.  -2- and air; (b) examine the capital investment proposed in each mode over the next 10 years; and (c) project capital and recurrent costs through 1979, rec- omending appropriate policies and measures for the most economical devel- opment of the country's transportation system during that period. LVI's report was issued in 1970; the main recommendations relating to roads were that: (a) a major resurfacing program of paved roads should be undertaken to prevent further deterioration of pavements and to reduce road-users' operat- ing costs; (b) the structure and procedures of the road maintenance organiza- tion should be improved; and (c) early construction/reconstruction of certain high-priority roads identified in the report should be undertaken. 1.04 In 1972, acting orn the LVI recommendations relating specifically to the resurfacing program and improvement of maintenance, Government retained the UK consultants T.P.O'Sullivan and Partners (TPOS) to carry out a road maintenance study; the study was partially financed by the United Nations Development Program (UNDP), and the Bank acted as executing agency. The consultants' recommendations formed the basis of the Second Highway Project, the Road Improvement and Maintenance Project (Loan 899-JM, US$9.3 million in 1973), which comprised: (a) resurfacing of 440 miles of roads with an asphaltic carpet and resealing of 250 miles of roads with a double surface treatment; (b) procurement of maintenance equipment; and (c) technical assistance by consultants to supervise the resurfacing and resealing works, assist in the procurement of maintenance equipment, introduce rational costing and better planning of maintenance operations, and provide training to staff of the Directorate of Maintenance within the Ministry of Works (MOW). The project is progressing satisfactorily. 1.05 This proposed Third Highway Project also originates from the rec- ommendations of the 1968 National Transport Survey. In 1971, the Governmtent commissioned LVI, again financed by CIDA, to carry out the recommendation relating to high-priority roads, specifically, feasibility studies for about 320 miles of high-priority roads and detailed engineering for 40 miles of secondary main and Parish roads 1/ and 70 miles of arterial roads. The work was completed in March 1974. The arterial road construction in the proposed project is based on this detailed engineering. 2/ 1.06 This proposed Third Highway Project was appraised by Messrs. S. Hertel (engineer) and B. Chatelin (economist) in December 1973. The report has been edited by Miss V. Foster. 1/ The administrative unit of Jamaica is the "Parish" (of which there are 13). The Parish roads are also "public" roads in the normal sense. 2/ Other work recommended in the National Transport Survey is being financed by other agencies (for example, the Inter-American Development Bank is financing reconstruction of secondary main and Parish roads, and USAID is financing feeder roads).  -3- 2. THE TRANSPORT SECTOR A. The Country and Its Economy 2.01 Jamaica, with an area of 4,410 square miles, is the third largest island of the Caribbean. Its greatest length (east-west) is 146 miles, and its greatest width (north-south) is 51 miles. A mountain ridge up to about 2,500 feet high runs east-west, separating the island into northern and southern coastal areas. The island's natural resources include bauxite and other mineral deposits in various locations in the central area; a pleasant tropical climate and beaches suitable for tourism, primarily along the north coast; fertile soils for agriculture; and fishing and forest reserves. Jamaica's population of about two million has grown in the last ten years at a net annual rate (allowing for migration) of about 1.5%; its population density, about 420 persons per square mile, is one of the highest among the Latin American and Caribbean countries. Kingston, the capital, situated on the southern coast, is the main market for the country's agricultural produce and imported goods. Montego Bay, on the north coast, is the most important tourist resort. 2.02 The per capita GNP of Jamaica was US$720 in 1971. 1/ In real terms, the growth rate of GDP has reached an average of about 5% p.a. over the last five years. The mining sector, which accounted for about 13% of GDP in 1972, and tourism are the most important contributors to the rapid growth of the economy. Agricultural output has stagnated over the last decade, but the Government expects that, following implementation of a major investment pro- gram, it will stabilize in coming years at a higher level. Considering also the output of substantial investments in mining, increases in industrialization and the projected expansion in tourism, a growth in GDP of 6%-7% p.a. in real terms could be attainable over the next few years. However, the attainment of the rate of growth will depend very largely on Jamaica's ability to over- come its foreign exchange constraints. 2.03 In spite of Jamaica's satisfactory growth rate in the past years, unemployment remains high at about 15% of the labor force. The high level of unemployment is explained, inter-alia, by the age distribution of the labor force (biased toward the younger age groups), the low rate of growth of the agricultural sector (the traditional labor-intensive sector), the high proportion of unskilled labor among the unemployed, and the distorted wage structure due to the very high salaries paid by the bauxite companies. B. The Transport Modes (i) General 2.04 Because of Jamaica's relatively small size and the proximity of its population centers, average haulage and travel distances are short. The trans- port requirements of heavy exports are modest, since these are normally moved by the shortest route to the ports located around the island. Practically 1/ Bank Atlas, 1973 Edition.  -4- all bauxite and alumina exports are handled by the public or private railroads, and petroleum products by pipeline; otherwise, roads carry the largest part of freight transport (mainly import products from Kingston to the Taain popu- lation centers and local agricultural produce) and practically all passenger traffic. Basically, the transport system consists of about 9,500 miles of arterial and secondary raain roads (together called "pubiic" roads) 1/ and Parish roads, a 180-mile Government-owned railway, a few private railway lines, five airports (two of them international), 13 ports, and petroleum pipelines. The system is generally adequate in extent, although deficient in condition and capacity. (ii) Roads 2.05 Details of the road system and its administration are given in Chapter 3. (iii) Railways 2.06 The public railway system is operated by the Jamaican Railway Corpor- ation (JRC). The system consists of a main line running diagonally across the island from Kingston to Montego Bay (112 miles) and a branch line from Spanish Town northward to Annotto Bay and then eastward along the coast to Port Antonio (62 miles). The bauxite mining companies own and operate their own railway lines, but they also utilize the public system to the extent that bauxite, aluminum and materials associated with that industry represent about 98% of JRC's total freight. This freight traffic has increased at about 7% per annum during the last five years and is principally carried on the trunk line (Montego Bay-Kingston). This trunk line also carries more than 70% of total rail passenger traffic 2/; the rest of the network has very low density traffic with few possibilities for development. 2.07 The National Transport Survey (para. 1.03) recommended, as first priority, that the public railway's rates and fares should be revised to help solve its deficit position and that uneconomic lines should be abandoned, or, alternatively, that the Government should subsidize the cost of services pro- vided by the railway for social reasons. The Government has since increased its contract rates, and they now cover the capital and operating costs, includ- ing overhead, of moving the mining traffic. In addition, in 1972, the Frankfield-May Pen line (about 25 miles), one of the uneconomic lines, was closed. M!ost of the relatively small loss of JRC (about US$550,000 p.a.) is now incurred on the line to Port Antonio. However, this line serves many poor areas, and the Minister of Public Utilities, Communications and Transport is reluctant to deprive them of the service, especially between Bog Walk and Annotto Bay, where the road system is deficient. JRC is currently preparing a five-year rehabilitation program and is negotiating technical assistance under bilateral aid from Canada. 1/ See footnote 1/, page 2. 2/ Passenger traffic has increased slightly during the last five years to reach about 40 million pass-miles in 1972.  (iv) Air Transport 2.08 Jamaica has two international airports, at Kingston and Montego Bay, served by 11 foreign airlines and the national carrier, Air Jamaica. Internal flights between these and three domestic airports at Ocho Rios, Port Antonio and Tinson Pen (Kingston) are provided by a local airline, Jamaica Air Services. In addition, there are four small public airports which accommodate general aviation and over 30 private landing strips owned by the mining and sugar companies. All public airports are operated by the Civil Aviation Department of the Ministry of Public Utilities, Communications and Transport, although it is intended that a Jamaica Airports Authority, soon to be created, will operate the two international airports. Revenues from landing fees, rentals, concessions and licenses, but excluding those from the passenger departure tax, rose from US$730,000 in 1962/63 to an estimated US$1.7 million in 1972/73. Operating expenditures increased during the same period from some US$510 p000 to US$1.7 million. 2.09 The sharp increase in tourism in recent years has had a major impact on Jamaica's international air traffic. Passenger movements at the inter- national airports increased between 1967 and 1972 at an average of about 12% per annum to about 720,000 passengers per year in Kingston and 907,000 in Montego Bay. Freight movements and general aviation traffic also increased considerably. The sharp traffic increase has led to congestion in aircraft ground operations and traffic handling at both international airports. Based on a scheme prepared by Canadian consultants (Kates, Peat, Marwick and Com- pany, and Montreal Engineering) financed by CIDA, the Government requested Bank financing for an airport development project to improve facilities at both Montego Bay and Kingston Airports. A loan to help this development is being considered by the Bank. (v) Ports 2.10 Jamaica has 13 active ports. Two of them, Kingston and Montego Bay, are primarily general cargo ports and handle most of the country's imports; the other 11 are specialized and handle mainly exports. Kingston handles over 80% of the island's imports (4.0 million metric tons total in 1970) and about 7% of its exports (13.0 million metric tons total in 1970). Among the other ports, there are five efficiently handling the mining companies' export needs; the largest, Port Rhoades on the north coast, handles five million tons of bauxite annually. The other six ports are used to export agricultural products such as sugar, molasses and bananas, although some agricultural products are also handled through the mining companies' ports. All ports are presently privately owned and operated. However, a strengthened port authority will eventually own all the piers and wharf facilities for all the ports of the island except the five mining ports. As a first stage, the port authority will take over the Kingston port facilities and lease or rent them to private companies. The port authoritv will se responsible for tariff policy and will be required to operate on a self-financing basis.  -6- (vi) Pipelines 2.11 Pipelines owned and operated by the private sector carry fuel from the ESSO refinery in Kingston to various major consumers, to the railway loading station and from some ports to the bauxite mines and aluminum plants. C. Transport Policy. Planning and Coordination 2.12 Transport policy is the responsibility of several Government depart- ments and agencies. The Ministry of Public Utilities, Communications and Transport is responsible for overall policy formulation for aviation, ports and railways, while the MOW is in charge of formulating policies for public roads. Parish roads are under the jurisdiction of Parish Councils which, at the national level, are the responsibility of the Ministry of Local Government. The Ministry of Commerce and Tourism deals with policy formulation on shipping matters. 2.13 Planning of public investments, inicluding investment in the trans- portation sector, has, up to now, been perfcormed by the National Planning Agency (NPA) under the guidance of the National Economic Council, a ministerial body. NPA was established in 1972; previously, overall economic planning was carried out by the Ministry of Finance. The National Transport Survey (para. 1.03) is presently used by the various Ministries as a basis for preparing transport investment programs. Unfortunately, there is no transport economist in Government, and no one is updating the findings of the Survey. This may not be too serious in the very short term since the findings of the Survey, issued about four years ago, are probably still valid. However, they may not remain valid for long as conditions change, and, in view of Government's plans for sizable investments in the transportation sector (about US$160 million equivalent 1/ over the next four or five years), a continuous review of the plans for the sector should be made. This review should preferably be made by Government rather than by consultants, and this need, coupled with the magnitude of the investment plan, would justify the creation of a capability to analyze and coordinate the modal investment programs. During negotiations, the Government informed the Bank that it was in the process of establishing a transport committee in charge of defining and reviewing transport policy and investment. The transport committee would, inter-alia, include represent- atives of the Ministry of Finance; the Ministry of Works; the Ministry of Public Utilities, Communications and Transport; and NPA. This. committee will be assisted by a special working unit to be located in the Ministry of Works, which already has a traffic unit, comprising at least one economist/engineer specializing in transport, whom the Government agreed, during negotiations, to recruit before June 30, 1975. The negotiating team reviewed, and agreed on, the terms of reference proposed for technical assistance to be provided by one or two transport specialists when the above transport planning unit is set up. 1/ Approximate figures are US$100 million for roads, US$10 million for railways, US$20 million for ports and US$25 million for airports.  -7- 2.14 Presently, the users of roads, ports,and airports meet the capital and operating costs, including overhead, of these services; some of the rail- way users pay only part of the costs of the services they receive. For high- ways, users are not treated equally, e.g., diesel fuel is lightly taxed, gasoline heavily taxed. Government policy on taxation of transport users has not been defined in terms of specific goals, and available information does not provide a basis on which to judge the adequacy of existing taxation policies in relation to the efficient use of the transport system. However, little competition exists among modes. Each mode is highly specialized, and diversion from one to another has occurred only on a small scale. 3. THE HIGHWAY SUBSECTOR A. The Road Szstem and Road Transport 3.01 The road network of Jamaica is, for the size of the country, rel- atively extensive, totaling about 9,500 miles. Of this mileage, 7,200 miles are suitable for vehicular traffic (about 2,700 miles, 75% paved, of arterial and secondary main roads and 4,500 miles of parish roads); the remaining 2,300 miles are little more than bridle paths. Because of the rugged interior of the country, the road system developed initially in the coastal zone; today, the main road system can be characterized as a coastal ring road together with three roads crossing the mountainous spine connecting the northern and southern coasts directly (see Map). 3.02 The road network developed from horse-drawn carriage and bridle roads by gradual improvement and adaptation to the motor vehicle; hence, the geometric standards are, by modern criteria, only modest. Nevertheless, over much of the network, such standards are adequate for the low traffic volumes, although the pavement structures tend to be in need of resealing or strengthen- ing. The ongoing Road Improvement and Maintenance Project (para. 1.04) is helping to improve some 690 miles of such roads, the work being largely con- fined to pavement improvement, with only essential improvement of geometrical features. However, for a few arterial roads carrying heavy traffic volumes, the geometric standards and the poor state of the pavements are resulting in dangerous conditions and congestlon. The major element of this proposed proj- ect is directed toward reconstruction of some of the most heavily trafficked sections. 3.03 Road transport has expanded rapidly In recent years. Traffic counts at about 50 points on the road network, carried out by MOW between 1964 and 1972, indicate that traffic volumes grew at an average rate of 8.5X per annum for the network as a whole, with growth rates on individual roads varying between 4% and 13% per annum. Traffic growtn has been part