Ecuador - Fourth Highway Project

Report No. 925a-EC Ecuador: Appraisal of a FIE Opy Fourth Highway Project March 15, 1976 Latin America and Caribbean Projects Department FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Currency Equivalents Currency Unit = Sucre (S/) US$1 = Sucre/ 25.00 Fiscal Year January 1 - December 31 System of Weights and Measures: Met,ric 1 meter (m) = 3.28 feet (ft) 1 kilometer (km) = 0.62 mile (mi) 1 square kilometer (kin2) = 0.386 square mile (sq mi) 1 metric ton (m ton) = 0.98 long ton (lg ton) = 1.1 US short ton (sh ton) Abbreviations and Acronyms AADT - Annual Average Daily Traffic CEDEGE - River Guayas Basin Development Commission ER - Economic Return FONADE - Fondo Nacional de Desarrollo FONAPRE - Fondo Nacional de Preinversiones FYB - First Year Benefit JUNTAPLAN - National Planning Board MOP - Ministry of Public Works and Communications  FOR OFFICIAL USE ONLY ECUADOR APPRAISAL OF A FOURTH HIGHWAY PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ....... ................. i-ii 1. INTRODUCTION .. ....................................... 1 2. THE TRANSPORT SECTOR ............................ *... 2 A. General ............ ....... ............. 2 B. The Transport Modes ............ ...... .. . 2 C. Action Required for Sectoral Infrastructure 3 D. Transport Policy, Planning and Coordination ...... 4 E. Ir.vestments and Finance .. ................... . 6 3. THE HIGHWAY SUBSECTOR ..7 A. The Highway Network . 7 B. Characteristics and Growth of Road Traffic.. 8 C. Highway Planning and Financing 9 D. Highway Administration . .......................... 11 E. Highway Engineering and Project Preparation .. .... 11 F. Highway Construction ................... . ............... 11 G. Highway Maintenance ...... ........................... 12 H. Feeder Roads ................ ....... 14 4. THE PROJECT ..................... 14 A. General Description ................... . . 14 B. Improvpment of the Babahoyo-Balzapamba Road ...... 15 C. Maintenance Program .................. .1. ......... 15 D. Programs to Improve MOP's Planning and Engineering Capabilities and to Improve the Capability of the Local Civil Works Construction Industry .... 17 E. Technical Assistance in Establishing a Transport Planning and Coordinating Agency ............... 17 F. Integrated Rural Development Study .........O...... 18 G. Technical Assistance for Project Coordination .... 18 H. Cost Estimates, Financing and Disbursements ...... 18 I. Execution and Procurement * 20 This Appraisal Report has been prepared by Messrs. Varallyay (Engineer) and Veniard (Economist) and has been edited by Miss V. Foster. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  TABLE OF CONTENTS - Continued Page No. 5. ECONOMIC EVALUATION ................... 21 A. General .......*.....******.***.*******ee* *..... 21 B. Improvement of the Babahoyo-Balzapamba Road 21 C. Other Project Elements ........................... 25 6. AGREEMENTS REACHED AND RECOMMENDATION ................. 25 TABLES 1. Estimates of Transport Sector Expenditures 2. Highway Network 3. Vehicle Fleet by Categories 4. Highway Expenditures and Road Users' Contributions 5. Design Standards 6. Disbursement Schedule 7. Babahoyo-Balzapamba Highway Traffic Flows 8. Summary of Vehicle Operating Costs 9. Economic Evaluation Results ANNEXES 1. Technical Assistance to Improve MOP's Capability for Highway Planning and Preinvestment Studies 2. Technical Assistance for Highway Maintenance 3. Technical Assistance for Highway Engineering 4. Assistance to Domestic Road Construction Industry 5. Factors for Post Completion Monitoring of Domestic Construction Industry 6. Terms of Reference for Transport Planning and Coordination 7. Integrated Rural Development in the Area of Influence of the Puerto Ila-Garrapata Road 8. Technical Assistance for Overall Project Supervision and Coordination 9. Project Implementation schedule 10. Project Indicators MAP IBRD l1882Rl - Fourth Highway Project - Ecuador Transport Network  ECUADOR APPRAISAL OF A FOURTH HIGHWAY PROJECT SUMMARY AND CONCLUSIONS i. This report appraises a project for: (a) improving an existing road of the national highway network of Ecuador between Babahoyo and Balza- pamba; (b) instituting a pilot maintenance program in one of the four mainte- nance districts of the Ministry of Public Works and Communications (MOP); (c) improving planning at both sectoral and highway levels; (d) improving the capabilities of the local civil works industry; (e) providing technical assistance for an integrated rural development study in the area of influ- ence of the Puerto Ila-Garrapata road; and (f) providing technical assis- tance for overall project supervision and coordination. ii. Ecuador has benefited considerably from the discovery and develop- ment of petroleum in the Amazon, necessitating a close scrutiny of all aspects of the economy, including infrastructure elements such as transportation, to ensure that each will be capable of playing its part in the general upsurge of economic activity. As a result of this need, the Bank sent a mission, in 1974, to examine the transport sector in depth. The mission concluded that: (a) the transport system is generally adequate for the current demand, but that expansion and improvement will be required to meet future needs; and (b) there are serious institutional deficiencies related to the sector, mainly in the areas of sectoral planning and coordination among plans for the individual modes. The proposed highway project emerges logically from the findings of the mission since it would, inter alia, improve the service provided by a segment of the national highway netwuork and would help planning both at sectoral and highway levels. iii. Present deficiencies in planning in Ecuador are so serious that the Government should, as a matter of urgency, set up an adequately staffed cen- tralized unit which would be charged with: (a) ensuring the collection and analysis of statistics relative to all transport modes and (b) planning for the transport sector as a whole and coordinating such planning among the indi- vidual modes. Technical assistance to help the Government in setting up such a unit is included in the proposed project. iv. Project execution would be the responsibility of MOP, but thie rural development study would be carried out in coordination with the 'linistrv of Agriculture and the Fondo Nacional de Preinversiones (FO-APRE). Civil works for road construction and improvement would be carried out on the basis of unit price contracts awarded after international competitive bidding in accordance with the Bank's Guidelines. The works would be divided into lots for bidding purposes, and prequalified firms would be allowed to bid for any lot or combination of lots.  - ii - v. The civil works element of the proposed project, i.e., the works on the Babahoyo-Balzapamba road, including supervision, represent about 62% of the estimated project cost and have an economic return of about 14%. Quantifiable benefits would derive from savings in vehicle operating, mainte- nance and time costs. vi. The total project cost is estimaited at US$21 million equivalent with a foreign exchange component of US$10.5 mi:Llion equivalent. This foreign ex- change component represents about 50% of total project costs and assumes that improvement of the Babahoyo-Balzapamba roacd would be executed by local con- tractors and that technical assistance wou:Ld be provided by foreign con- sultants. vii. It is proposed that the entire foreign exchange cost of the project be covered by a Bank loan of US$10.5 million equivalent; local costs would be financed by the Government. An appropriate term would be 25 years, including a five-year grace period.  ECUADOR APPRAISAL OF A FOURTH HIGHWAY PROJECT 1. INTRODUCTION 1.01 The Bank Group involvement in highways in Ecuador dates from 1954. In that year, a loan (94-EC) was made to help finance a project which comprised improvement of trunk roads in Guayas, the important province in which Guayaquil, the country's largest city, is located. A further loan (176-EC) was made in 1957, and then, in 1964, a third project was financed by the Bank (Loan 379-EC), the Association (Credit 51-EC), IDB and USAID in consortium, which helped to finance improvement of trunk roads, acquisition of maintenance equipment and consulting services. 1.02 The economy of Ecuador has benefited in recent years from the discovery and development of petroleum in the Amazon region. This, in turn, necessitated a close scrutiny of all aspects of the economy, including infra- structure elements such as transportation, to ensure that each should be capable of playing its part in the general upsurge of economic activity. Although the Bank Group has maintained contact with the transport sector through the Consortium Highway Project, the Bank, in 1974, considered that a thorough analysis was warranted, particularly since it had been 10 years since the sector had been reviewed comprehensively. Thus, in September 1974, at the invitation of the Government, the Bank sent a mission comprising specialists in all relevant modes to examine the transport sector in depth. 1.03 The report of that transport sector survey mission, completed in mid-1975, concluded essentially: (a) that the transport system was generally adequate for the current demand, but that expansion and improvement of the system would be required to meet future needs; and (b) that there are serious institutional deficiencies related to the sector, mainly in the area of sectoral planning and coordination among the individual modes. 1.04 This proposed highway project emerges logically from the findings of the 1974 sector mission since it would help rectify some of the short- comings, both in physical and institutional terms, identified by the sector mission. Physically, it would improve the service provided by two sections of the national highway network, including the approach to Guayaquil; insti- tutionally, it would help planning at both sectoral and highway levels and would also examine the problems of the local civil works construction in- dustry. In addition, it would address the problems of highway maintenance, through a two-year program, and of feeder road development. The project is estimated to cost about US$21 million equivalent, and the proposed loan would finance the foreign exchange component amounting to US$10.5 million. 1.05 The project was appraised by Messrs. Varallyay (Engineer) and Veniard (Economist) in March 1975. The report has been edited by Miss V. Foster.  - 2 - 2. THE TRANSPORT SECTOR A. General 2 2.01 Ecuador has an area of 271,000 km . Its geographical configuration has been a determining factor in the location of its population and economic activities, as well as in the development of iLts transport network. Two principal mountain chains, the western and eastern ranges of the Andes, run from north to south and divide the country into three natural and distinct regions: the coastal region (Costa), the mountain region (Sierra) and the Amazon region (Oriente). Transport among theese three regions is difficult, particularly access to the Oriente. 2.02 The principal land transport flows are to be found (a) in the two corridors which extend from the Colombian border in the north to the Peruvian border in the south - one following the Central Valley of the Andean chains and servicing the capital, Quito, and the other following the Costa, from Esneraldas, the chief port in the north, through Guayaquil, the country's major port, to Puerto Bolivar in the south; (b) in the most important corridor of the country, between Quito and Guayaquil; (c) between the Oriente region and Esmeraldas - mainly crude oil transported by pipeline; and (d) in the environs of the major urban areas. B. The Transport Modes 2.03 Five modes of transport are important in Ecuador; they are - in decreasing order of importance - highways, shipping, pipelines, aviation and railways. Highways and their administration are discussed in Chapter 3, and the other modes may be summarized as follows. (i) Shipping 2.04 Foreign and coastal shipping is handled through eight maritime ports with widely varying natural, technical and operational characteristics - GuayaquiL, Puerto Bolivar, Manta, Esmeraldas, San Lorenzo, Bahia de Caraques, and the petroleum terminals of La Libertad in S;alinas and Balao in Esmeraldas. The Bank is currently considering a project for expansion of the Port of Guayaquil. (ii) Pipelines 2.05 A pipeline for refined petroleum products extends from Duran, close to Guayaquil, to Quito (358 km), and a crude oil pipeline extends from Lago Agrio, in the Oriente, to the Port of Balao, in Esmeraldas (503 km). Smaller feeder lines connect these pipelines to the oilfields, such as the Lago Agrio to Shushufindi (16 km) and to Sacha (52 km),  -3- (ili) Aviation 2.06 Thirteen airports are served by scheduled services; two of these airports - Quito and Guayaquil - are also served by International carriers. (iv) Railways 2.07 The rail network has a total length of 971 kb. The main line is between Quito and Guayaquil, and there are branch lines south to Cuenca and northwest to the port of San Lorenzo, C. Action Required for Sectoral Infrastructure 2.08 The present transport system of Ecuador is generally adequate, in the inhabited areas of the Costa and Sierra, to the extent that it permits the movement of passengers and freight within those areas. However, in many cases, this transport is costly and the level of service is low, resulting in systems which would be inadequate to meet the demands of increased regional trade, the transport of export crops and the handling of the growing volumes of imports. Furthermore, as the need to open new lands for productive use becomes more pressing, the provision of adequate transport facilities to those areas becomes an important objective. The Bank's Transport Sector Survey Mission, after reviewing future traffic levels, including demands that may be generated by investments in regional development and in specific sectoral projects (notably, agricultural, rural development, and irrigation and colonization projects), concluded that the Government's objectives in the next few years should include at least: (a) Expansion of the main road network, including further integration of the Oriente, improvement of the major north-south corridors (Pan-American Highway), etc.; (b) Improvement of road access to major cities, especially Quito and Guayaquil; (c) Improvement of the capacity of seaports and rationalization of the interface between maritime and land transport; (d) Expansion of secondary and feeder road systems, complementing high priority regional and rural development programs; (e) Definition of the future role of state-owned railway lines; (f) Expansion and improvement of air transport services in general, and specifically for passengers, on both domestic and international routes; (g) Improvement in maritime shipping and greater use of inland waterways, especially in the Oriente; and  - 4 - (h) Expansion of the pipeline system for crude and refined petroleum products. The proposed project includes elements designed to help action in (a) preceding. D. Transport Policy, Planning and Coordination 2.09 Five ministries and the National Planning Board (JUNTAPLAN) cur- rently share authority in matters of transport policy in the country, with the additional intervention of provincial governments at the local level. Although JUNTAPLAN attempted the fornulation of national policies (for its National Development Plan of 1973-1977), the effective policy-making has remained for the most part a prerogative of the - often competing - agencies indicated, which carried out their policies separately with little or no control and coordination by JUNTAPLAN. 2.10 With regard to planning, in 1974, the Bank carried out an in-depth survey of the transportation sector (para. 1.02). The report resulting from the study indicated, inter alia, the following deficiencies: (a) No one Government agency is responsible for overall sectoral planning (efforts by JUNTAPLAN to play this role have not been successful beyond defining. the general objectives of the sectpr and formulating a list of policies for the National Economic Plan 1973-1977. This has been due in part to JUNTAPLAN's lack of efficient control over all the agencies dealing with the different transport modes and in part to limitations of its present organization and staffing); (b) Sectoral statistics are not collected, processed and retrieved centrally, due, in part, to a lack of uniformity in the methods of statistical work in the different modal agencies; (c) There is no coherent pricing policy for the sector as a whole; this leads to an extemely variable performance in the individual modes, e.g.: (i) of all the modes, only ports and pipelines cover expenditures from revenues; (ii) motor fuel prices have been fixed for several years, and Government is foregoing large revenues by maintaining the price level below the current world market level 1/; and 1/ The Sector Mission estimated that, by so doing, the revenue foregone in 1974, for example, was about SI 1,100 million.  - 5 - (i<8) fixed tariffs on the railways, maintained in the face of increasing operating costs, are aggravating the already chronic railway deficit. (d) Preparation of transportation projects at the planning stage and at the level of pre-investment studies is slow, and quality of the results is generally not good enough to meet the standards necessary to attract external financing (a current example of inadequate project preparation is the simultaneous preparation of a Quito-Guayaquil expressway project and a study of the future of the railway without coordination between the two efforts, although they both relate to the same transport corridor 1/); (e) The essential issues of intermodal planning for meeting the long- term demand projections of transport are not being adequately addressed. As a result, either directly or indirectly, important issues remain unresolved, including: (i) integration of the Oriente with the Sierra; (ii) establishment of priorities for main trunk roads and for upgrading secondary and feeder roads; (iii) formulation of development strategy for seaports in harmony with other modes of transport, such as highways and railways; (iv) definition of the appropriate future role of the railway system; and (v) definition of the appropriate role of civil aviation and, specifically, of the infrastructure and fleet re- quirements. 2.11 The deficiencies are serious, and the absence of action to correct them is potentially damaging to the economy. The Government should, as a matter of urgency, set up and adequately staff some centralized unit which would carry out sectoral planning and coordination in order to eliminate the deficiencies through action in, but not limited to, the following areas: (a) ensuring the collection, on a comparable basis, of statistics relative to all transport modes and the analysis of such statistics in a manner appropriate to the needs of the sectoral and modal planners; (b) critically reviewing the scope and desirable extent of revision of existing modal regulations, including, particularly, road transport regulations (para. 3.08); (c) making uniform the budgeting procedures and financial reporting standards for all modal agencies (para. 2.14); (d) reviewing pricing in each mode of transport, establishing a sectoral policy, and examining, in such a broad context, the fuel price levels (para. 3.13); and 1/ The 1974 Bank Transport Sector Survey was instrumental in bringing this need for an integrated (road and rail) approach to the Government's attention.  - 6 - (e) planning for the sector as a whole to determine and implement adequately justified investment priorities, as well as to create a sound basis for intermodal coordination. 2.12 A two-stage approach has been adopted to ensure that sectoral plan- ning and coordination be Implemented effectively, for the following reasons: (a) it offers a practicable institutional framework; (b) it is politically more acceptable to the Government in view of the existing fragmentation within the sector; and (c) it minimizes complications that may arise from deficient executive capacity of existing institutions. Therefore, an assurance was obtained during negotiations for the proposed loan regarding the timetable of the two stages which would, in fact, gradudally build up the sectoral plan- ning and coordinating effort, first covering Land transport and thereafter extended to all modes of transport. More specifically, the following two major events were agreed during negotiations, including the terms of reference for each: (a) establishment, not later than one year after the date of the loan agreement, of an appropriate and adequately staffed unit within MOP by decree for planning and coordinating all land transport, including administration and regulation of road transport; and fb) establishment, not later than two years after the date of the loan agreement, of an appropriate and adequately staffed unit for planning and coordinating all modes of transport with such organization and functions as shall be required for the purpose. Technical assistance to help the Government in setting up the above units and in carrying out their terms of reference during the first three years after loan agreement is included in the proposed project (para. 4.10). 2.13 Regarding the goal of permitting investment only in sound and proven projects, the Government advised the Bank of the establishment, in 1975, of the Sistema Nacional de Proyectos, an organization entrusted to JUNTAPLAN for, inter alia, proposing investment programs and projects in transportation, participating in interministerial working grouaps on project identification, preparation, appraisal, promotion and ImpleenLtation, and for cooperating with JUNTAPLAN and sectoral planning units on overall coordination of public investment programs. Furthermore, ithe Government gave assurances to the Bank during negotiations that the functions of the Sistema, with regard to land transport, would be the responsibility of the agency to be established within MOP as under (a) above. E. Investments and Finance 2.14 Government investment in transport infrastructure is made through the various modal agencies, but, bec:ause of the lack of uniform procedures in budgetary and financial statements and in the preparation of balance sheets of the modal agencies and semiautonomous corporations, it is extremely diffi- cult to establish an accurate picture of total investment in the sector. An  attempt has been made, however, to reconstruct total sectoral expenditures, including investments, in Table 1. Technical assistance for transport plan- ning and coordination (para. 4.10) would address the problem of uniform budgetary procedures and financial statements. 2.15 Government investments have been stimulated in the past by the rapidly increasing revenues from petroleum exports. The Fondo Nacional de Desarrollo (PONADE) received a substantial portion of revenues from oil exports for financing high priority development projects, whereas the Fondo Nacional de Preinversiones (FONAPRE), set up in 1973, received foreign exchange from the same source for financing preparation of such projects. However, the recent slowing down of petroleum exports has reduced these funds considerably. Expected increases in export earnings may not be sufficient to finance FONADE's share of planned public sector investments without resorting to foreign financing. 3. THE HIGHWAY SUBSECTOR A. The Highway Network 3.01 As may be expected in a country with terrain as varied as that in Ecuador, highway development has been greatly influenced by geographical and climatic conditions; these differ widely among the three major regions of the country: the Costa, the Sierra and the Oriente. The highway network expanded considerably during, and since, the 1960's, increasing by 50Z between 1963 and 1973 to reach a total of 22,500 km (Table 2). The increase in paved roads during the last three years reflects the continued improvement of the main road network. 3.02 In spite of continued expansion and improvement, the general condi- tion of the main road network is not adequate to assure a satisfactory level of service even for existing traffic volumes, The Ministry of Public Works and Communications (MOP) is currently working on close to 2,200 km of roads, including trunk road improvement and secondary and feeder road construction. A highway project, being financed by IDB, is under way, which will add 333 km to the paved network, principally in the Oriente and in the Guayas and El Oro provinces. All seven roads included in this project are under construction, and five are expected to be completed by 1976. 3.03 The Bank Group has participated in development of the highway network through three projects (para. 1.01). The first, in 1954 (US$8.5 million, Loan 94-EC), comprised construction and improvement of about 586 km of trunk roads in the province of Guayas; the second, in 1957 (US$14.5 million, Loan 176-EC), comprised construction and improvement of a further 533 km of trunk roads; and the third, in 1964, was a consortium project with finance from the Bank (US$9 million, Loan 379-EC), the Association (US$8 million, Credit 51-EC), IDB and USAID. The project financed road construction, a five-year maintenance program and consultant services for supervision of construction  and preparation of future projects. The complexity of a four-agency partici- pation inevitably led to some initial delays, but progress eventually improved and the project was generally satisfactory; it: was closed in December 1974 with a small balance of the credit being cancelled., B. Characteristics and Growth of Road Traffic 3.04 Most goods (approximately 80% of all freight) and passengers are moved by road. A national transport survey inT 1964 and a highway master plan prepared in 1973 (under the consortium project, para. 3.03) provided useful information on road traffic, but otherwise inf'ormation is scant and unrelia- ble. The highway master plan study revealed that traffic volumes exceeded 2,500 vehicles per day (Annual Average Daily Traffic - AADT) only on the access roads to Quito and Guayaquil and that, otherwise, even on the major roads, traffic rarely exceeded 500 AADT. 3.05 Vehicle registration, by categories, since 1951, is indicated in Table 3. The fleet more than doubled in the period 1966-1973, reaching close to 90,000 vehicles in the latter year. The importance of the two major urban centers in the country, Quito and Guayaquil, is shown by the fact that about 62% of the total vehicle fleet is registered in the provinces of which they are the principal cities (Pichincha and Guayas). At the same time, the Oriente region registered only about 1% of all vehicles in the country. This unbalanced growth pattern in the highway subsector, however, is indica- tive of most other sectors in the economy, and demgraphic data show the same imbalance. 3.06 Overloading of commercial vehicles appears to continue, although some efforts have been made by MOP to improve this situation. Weighbridges were installed at four sites along major trunk roads of the network after 1964 under the consortium highway project, the last one becoming operational in 1973. It is doubtful, however, whether adequately trained personnel are available at the stations; also, collection of data and sampling techniques are deficient. To protect the considerable investment in highways, the Bank should again encourage action on the part of the Government to enforce legal axle loadings. This would require appropriate staffing of the four weigh- bridges and training of this staff in techniques such as vehicle sampling and vehicle weighing. An assurance was obtained during negotiations that the Government would take all the necessary action to keep the dimensions, axle-loading and weight limits of the vehicles in operation within the limits provided by law and to ensure permanent enforcement of the Ley de Caminos. The technical assistance included irn this proposed project (para. 4.06) would assist the Government in carrying out this law, and, specifically, in training the required staff. 3.07 Import duties on vehicles and spare lparts have been high and, until 1974, revenues from such duties constituted a substantial part of road user charges; in 1973, for example, they made up 38% of the total, while fuel taxes contributed 52%. Under these conditions, only one-half of the revenues de- pends upon the vehicle fleet's use of the network. The high import duties tended to restrict new vehicle entries, and those levied on commercial  - 9 - vehicles caused financial problems for truckers; the net result is a vehicle fleet characterized by too wuch old and inefficient equipment. 3.08 Road transport is regulated and administered by a variety of Govern- ment agencies, including MOP, the Ministry of Labor and Social Welfare, and the Interior Ministry, the latter supervising the National Transportation Council which, in turn, is responsible for road transport regulation. For trucking, existing regulations are too detailed, so much so that, if rigidly enforced, they would be an impediment to the development of a healthy industry. However, since the Government has never acted with full force to implement existing laws, trucking, in effect, is largely unregulated and there is strong competition for traffic; this has resulted in the existence of many unregistered truckers (independent owner/operators). In contrast to trucking, passenger traffic is more effectively regulated; intercity passenger tariffs are con- trolled, as are entry permits, routings, and frequency of service. The technical assistance to be provided for setting up a sectoral planning agency (para. 4.10) should also critically review, and make recommendations on, the scope and desirable extent of revision of the existing vehicle regulations. A useful input to this critical review would be the report of the 1974 Bank mission (para. 1.02) which, inter alia, specifically dealt with the problems of the trucking industry. C. Highway Planning and Financing 3.09 Highway planning has not been, and still is not, a continuous pro- cess in Ecuador. After eonsiderable expansion of infrastructure in the 1950's, and later under the impetus of oil exploration that began in 1967, the pressure mounted on MOP to define action In the highway subsector for supplementing overall development strategies. Convinced of the inportance of a comprehen- sive plan, MOP contracted a highvay master plan to consultants (TAMS/USA) in 1973; the foreign exchange costs of the work were financed under the con- sortium highway project (para. 3.03). This master plan was completed by mid-1974. It served as a basis, in its early stage, for selection of some eight road projects for detailed feasibility study; one of the most viable roads is included in the proposed project. The next viable project, a road between