El Salvador - Coastal Highway Project

-AKe ;i 6 fK / . RETURN TO T.O. 49,-b tp~YRS DESK RESTRICTED ONE WEEK cn This report is restricted to use within the Bank. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT TECHNICAL REPORT ON :L SALVADOR COASTAL HIGHWAY PROJECT FILE COPY October 5, 1954 Department of Technical Operations  CURRENCY EQUIVALENTS (Selling Rates) U.S. $1 * 2.50 colones 1 colon a U.S. $0.40 1 million colones = U.S. $400,000  TABLE OF CO1TENTS Pages IL Summary 1- 2 11. Background Introduction ....................... 2 - 3 Agricultural Background of Project ............ . 3 - 5 Potential Benefits from Adequate Roads ............... Etisting Highvays and Traffic ........ 6 Existing Highway Organizations ...... 6 - 8 III. Description of Project Route and Standards .............,.. 8 - 9 Estimated Costs and Timing of Expenditure ........ ...... 9 - 11 Proposed Construction Procedures.... 11 Strengthening of Highway Department.ll - 12 IV. Conclusions and Reco r-n.endations ...... 12 - 13 V. List of Conditions . a. ... *#...l4 - 15 Annex A. Recommended Design Standards for Coastal Higlway " B. Estimated Construction Costs of Coastal Highway by Class of ork " Co Estimated Construction Costs of Coastal Highway by Class of Expenditure D. Estimated Construction Costs of Coastal Highway by Section of Route " E. Proposed Program and Budgeting of Highway Department Work, 1955 - 1958 Schematic Map  C.L SALVADOR COASTAL HIGIi4AY PROJ.MT I. SUIfVLARY lo The Government of El Salvador is planning to complete the construction of an all-weather highway along the country's Pacific Coast and has requested a Bank loan to finance the foreign exchange costs of the w,rork0 2. Out of an aggregate planned length of 306 km., contiguous sections totalling )0 km. are completed and open to traffic, This leaves a balance of 266 km. which the Government proposes to build or improve to a'll-weather standards in 1954-58 (See Schematic 1,vTap)o 3. The loan request includes all the sections, totalling 238 km.3 for which construction contracts have not yet been awarded but excludes a 28 km, section wh^ich is committed to construction under an exsting contract6 4. The Coastal Highway is intended to develop a region vwith large agricultural resources which are under-utilized at present because of inadequate roads. In particular, the Government wishes to stimulate crop cultivation, livestock raising, and dairy farming in the coastal plains extending Last-iuyest from the Gulf of Fonseca to the Guatemala border. 5. The proposed route promises to bring about increases in agri- cultural production and income on a scale which would amply justify its cost. Fuller utilization of the Coastal Zone's resources would help to improve tile present balance betwreen El Salvador's food requirements and food production and would also provide an outlet for settlement from over- populated areaso 6. The project is technically feasible, has been planned to suitable standards, and is a justifiable extension of the existing highway system to the only important region lacking adequate all-weather roads. It should take about four years to complete, including at least 12 months of design work and at least 30 months of actual construction. All the preliminary engineerinig necessary to locate the route has been carried out, and pro- visional cost estimates based on approximate quantities of -materials have been prepared. 7. The Government is engaging competent consulting engineers to prenare detailed plans, designs and specifications for the sections com- prising the loan request; to advise on the award of contracts, and to supervise construction, Furthermore, the Governiment intends to have the actual construction of these sections done by pre-qualified contractors chosen through international competitive bidding on the basis of unit- price contracts, 8. The Highway Department, which wfould be responsible for the ultimate upkeep of the new route:is well-organized and wrell-ad-ministered but needs additional trained techrical personnel. The existing main roads are maintained in a satisfactory state of repair although maintenance of local roads could be iaproved,  -2 p., Based or. the engineersl preliminary estimates, the construction anid improvement of the 238 IlQ4 comprising the loan request should cost about /40 million (116 million equivalent). Approximately $11.1 million equivalent would be foreign exchange expenditure to be financed out of the loan proceeds and A12.2 million ($4.9 million equivalent) would be local currency expenditure to be financed out of budget appropriations. 10. The construction and improvement of the 28 Im. outside the loan request is provisionally estimated to cost about /5 million, thus increasing the total outlay for completion of the Coastal High-way to /45 million (,18 million equivalent)O 11. Feeder roads exterding the Coastal Highway will eventually have to be built and some existing all-weather roads which connect the Coastal Zone with the Central Plateau may eventually have to be improved at a roughly estimated cost of $3 - t4 million eqeivalent. The ultimate outlay on the project may thus reach 221 - $22 million equivalent, or twice the a-mount of the proposed loan. 120 The Government is prepared to budget sufficient appropriations for Highway Department purposes (a) to cover the balance of the project costs beyond the Bank-financed portion; (b) to improve and expand the road netlwork as needed outside the coastal plains; and (c) to provide adequate main'enance of the entire system of main and local roads. These appropri- ations could be made available without overstraining the public budget or delaying other essential public works, 13e The Governr,ment is prepared to meet all the necessary conditions for ensuring the successful execution of the project ircluding (a) suitable procedures for effectuating the constr.ction of the entire Coastal Higuway; (b) satisfactory assurances regardlng the construction of feeder roads and the imprcvem.ent of branch roads; (c) an adequate program to strengthen the Highw;ay Department's road maintenance facilities, methods, and staff; and (d) the provision of an extraordinary budget for 1955-1958, voted in advance, to cover the Governmzent's portion of the Coastal Highway's cost. 14 The proposed route appears to be a suitable project for Bank financing to the amount of the loan request, 411.1 million equivalent* 15. Based on comparable recent loans and with allowance for the required construction period, the appropriate terms might be 12 years with a 4-year period of grace. ILI. BACKGROUID Introduction 16. Construction of the Coastal Highway started several years ago on the basis of provisional plans and specifications prepared by the Highway Department, and has proceeded intermittently up to the present4 The sections constructed to date have been built partly by local contractors and partly by the Department's forces.  -3- 17, UIith only a small portion of the route built or under contract, tlhe Government decided about a year ago to request a Bank loan for financing the foreign exchange costs of the work still to be done. At this time, field surveys had not been completed on a substantial portion of the route mileage, including the most difficult sections of mountainous terrain, and incomplete determinations had been made of the required large structures over most of the route. 18. The project in its incomplete state was examined in the field in late 1953 by a Bank mission which included highiway engineers and an agricultural expert. They found the proposed highway to be technically feasible and economically sound and recomended prompt execution of the -norkX 19. A preliminary assessment of the project (TO-49, February 17, 1954) concluded that the Coastal Highluay promised to shape into a suitable project for Bank financing but that loan discussions should be deferred pending further engineering studies to develop firmer cost estimates8 Shortly thereafter, the Government engaged K'nappen-Tippetts-Abbett-IAcCarthy to carry out the required studies, an assigmnent which took about three months, After study of the engineers' report, dated Auglst 21L. 1954, the Bank invited the Government to initiate loan discussionso 20, If the loan is granted, Knappen-Tippetts-Pbbett--licCarthy will act as consulting engineers for the planning, design, and execution of the 238 km. comprising the loan request. A contract to this end which will become effective upon ratification by the National Assembly, has recently been negotiated. The Government also intends to make supple- mentary arrangements withthe consulting engineers to have them participate in supervising construction on 28 Rnm outside the loan request. Agricultural Background of oj ect 21. El Salvador is an agricultural country with liLmited possibilities of industrialization whose main economic problem is the pressure of population against developed resources. PopulatJon density is high (98 persons per square !an.) and population growth is rapid (2,5 - 3% per annum). 22. The land in agricultural use includes 392,000 hectares under cultivation, 15h,000 in tree crops (mainly coffee), and 685,000 in pasture. The acreage devoted to crops is small for a Salvador's area (21,000 square km,) and population (1.9 million), while the pastures have low feeding value because of the climate, Nost of the arable lard, moreover, particularly in the Central Plateau and the Northern Hills, has already been brought under intensive cultivationo 23. The coastal plains--three plains of unequal size, separated by hilly stretches--are the only area where sizeable amounts of fertile land are still available for settlement. Furthermore, the rich, flat lands  -4 - along the coast can yield larger returns under proper cultivation methods than the poorer, hilly lanids of the North. The Coastal Zone is thus '1 Salvador's last major land reserve for improving the present balance between food production and food requirements. 24. Although the Coastal Zone is, on the whole, underdeveloped and sparsely populated, exploitation of its resources is already under way, particularly in the Central Plain. The developed resources include 86,ooo hectares under cultivation, 22,000 in tree crops, and 173,000 in pasture. IMIuch of the forest cover has been cleared; there are large pastures inter- spersed by farms all along the coast; and the Central Plain is a wide expanse of cotton fields. 25. i"ost of the exploited land is in large haciendas up to several thousand hectares ihich produce cotton and other cash crops such as sesamne by extensive farming methods or which mpaintain large herds of cattle, mairnly for beef. The rest is in small holdings, predominantly subsistence farms, Jhich produce miiaize, sorghum, rice, and other staple foods and a limited output of cash crops. The small-owner cultivators also keep some cattle, pigs, and poultry0 26. About 70%O of E1 Salvador's cotton Production and 60% of its sesame output comes from the Coastal Zone. It also produces 20 - 30% of the country's maize, rice, and sorghum ard has about a third of the cattle. Coffee Droduction, aggregating only 9 - 10% of the national total, is a minor factor. 27. The region's potential resources are under-utilized at present des-pite substantial progress in the Central Plain. First, the cultivated acreage could be doubled by bringing into production some 80,000 hectares, conservatively estimated, of good arable land not now in use. Lhis would increase the national crop acreage about 20%, apart from larger yields per acre because of better soil and terrain. Second, the coastal pastures are producing a fraction of the beef and milk that could be obtained with more intensive methods of livestock raising and pasture managemernt. Third, the existing small farms could greatly expand their production of food crops if favorable conditions were created for the replacement of subsistence farming by market-orient ed agricultureo 28. The development of the coastal plains began 10 - 15 years ago -with cotton cultivation. 11rogress to date traces largely to the con- struction of a fevw penetration roads and to the application of health measures for bringing malaria under control. A.lthough malaria is no longer a deterent to settlement, only the cotton-growing districts of thae Central Plain have all-weather roads at present. -lsewhere, there are oxcart trails. 29. Owing to inadequate roads, transport costs are highl in most of the region, access to markets is difficult, and prices at the farm are low, Considerable -uaste arises from the slow haulage of crops, the movement of livestock on the hoof, and the stoppage of transport during the rainy season,  -5- As a result, the hacienda owners concentrate on producing a few cash crops of sufficient value to support expensive transport while the owner-culti- vators find it difficult to advance beyond subsistence fannrng0 30. An adequate road system is an essential condition for developing full use of the region's resources Such a system should include: (a) an Fnst-West trunk route traversing the entire area--i.e., the planned new higwvay; (b) an eventual network of short access roads feeding into the arterial route; and (c) all-weather roads, which already exist, connecting the coastal plains with the Cenitral Plateau. Potential Benefits from Adequate Roads 31. Vidth good roads, providing year-round access to -;iidened markets at lownrer transport costs, agricultural production in the Coastal Zone migfht be expected to increase by a mini--num of 410 million equivalent per anrumq Increased output of maize, rice, and other food crops because of additional cultivated acreage and more commercialized farming practices should yield at least $6 million a year. Increased output of beef and milk because of more intensive miethods of livestock raising and pasture management sholid yield an additional $3 million a year. Income from the sale of the lDresent crops ought to expand at least 41 million a year due to better nrices at the farm made possible by cheaper transport and year- round marketing. There would be additional large earnings, which cannot be definitely assessed, because of curtailed wastage in crop and livestock rarketingo 32, bven more important are certain benefits which cannot be measured financially0 Denser settlement of the Coastal Zone vrould help to relieve population press-ure elsewhere in hl Salvador and thus promote sounder land use in the country as a whole. Fuller utilLzation of the regionts capa- bilities for producing food crops, meat, and milk would contribute materially to meeting the food requirements of 2. Salvador's growing population. A larger volume of crops sold for better prices at the farm would create favorable conditions for the gradual emergence of small ouner- cultivators practising commercial agriculture instead of subsistence farming. 33. The benefits described above cannot, of course, be expected to mraterialize fully from road construction alone. The Government will have to continue its present efforts to improve health conditions in the coastal plains; to promote better land use, soil conservation, and production methods through enlarged agricultural extension services; and to facilitate the establishment of more adequate processing, storage. and credit facilities. The Government is awrare of the necessity of such action and is preparing to take appropriate steps. 34. An East-aest highwvay across the Coastal Zone would thus be a sound invlestment from the viewpoint of m Salvador's agricultural needs and possibilities. Furthermore, the measurable benefits (at least $10 million a year, as calculated above) viould corprise an ample return on the project costs (about $21 - $22 million, as shown later)c  -6- Existing Highways and Traffic 35. For its size, M Salvador has the largest and most complete system of all-weather roads in Central America. It totals about 1, 60 km. including 580 krm. of paved roads built to the general standards of the Inter-American Hi7ghway, and 1,060 km. of all-weather gravel roads built to lower standards, 36. The existing system is a well-planned network which, extended by the planned arterial route along the coast, would penetrate and connect all the main productive areas (see Schematic TSap). Its backbone is the paved Inter-American Highway, extending 273 km. across the Central Plateau from the Guatemala border to the HIonduras border. This route joins Santa Ana, San Vicente, San M;!Tiguel, and other population centers with San Salvador, the capital. Branching out from it are paved and gravel roads which lead to the producing regions ard the ports. 37> The bulk of ja Salvador's internal trade is road-hauled despitle the anistence of some railway lines which carry ex-ort-import goods between ithe market centers and the ocean ports. iaize, rice, beans, cotton, and coffee are the main commrodities on the all-weather roads; harvest workers to and from the coffee districts, the main Lorm of passenger transport. Goods traffic is highly concentrated in the dry season while passenger traffic increases considerably before and after the coffee harvest. 38. Fotor vehicles are the principal means of transport on the all- wrfeather roads. As of early l953, about 6,300 automobiles and jeeps, 1,900 buses,and.3,100 trucks were o0.erating, and the fleet has since increased. ilven on the best roads, however, including the inter-American HighTay, oxcarts are used extensively and large numbers of cattle are driven to market on the hoof. 39. Motor vehicle traffic on the improved highways is dense by Central American standards in all parts of the country4 The maximum densities, ranging from 1,000 to 2,000 vehicles a day, are reached on certain sections of the Inter-American Highway near San Salvador. Traffic volumes elseilere vary betvween 150 and 400 vehicles a day. 40e &cept in the immediate vicinity of the large taarns, the traffic is predominantly commercial in the ratio of three trucks and buses to each automobile. Truck laulage charges are in line with those in other tropical countries at a comparable stage of development, averaging about 6 - 7 US cents a ton-mile on the all-weather routes. They are only a fraction of the prevailing costs of oxcart transport which have been estimated as roughly 30 cents a ton-mile, Existing Hignway Organization 41. Responsibility for the maintenance, improverent, and construction of the road system is centralized in a Highwvay Department which is part of the Iinistry of Phblic Wi,orks. This Departmernt is headed by a Director General to whoma report 13 functional di-vision chiefs. It inicludes a head- quarters staff of about 200 men and a field organization, divided into six  -7- zones, totalling several thousand men of whom 2,300 are employed in road maintenance. There are three shops for the repair of equipment, a main shop at San Salvador and branch shops at Santa Tecla and San 11iguel. 42. From 19147 through 1953, the Highway Department expended about /A3 million ($`17 million equivalent) for various road purposes. Approximately 92 6 million went for the construction of new roads other than the Inter- American Highway and 114 million for the maintenance and improvement of the entire road system0 The Inter-A1merican Highway, largely completed before 1947, has taken only 93 million for newi construction since then. 43. The Highway Department's financial resources are provided by annual budget appropriations. Although gasoline, lubricants, and motor vehicles are taxed, none of the proceeds is earmarked for the Department's use, earmarking of taxes being prohibited by the Constitution. The Depart- ment's annual expenditures in recent years have increased from an actual 9:606 million in 1951 to an expected $9,1 million in 1954, and are pro- visionally budgeted at 993 million for 1955 as followvs: Item o 000 Administration and studies 600 MTaintenance except shops and stores 1,800 Shops and stores 1,300 Construction and improvement 2,600 Coastal ighway 3,000 9,300 44. Part of the Departmernt's construction work is let to contractorso enti-rely local contractors at present, and part is accomplished by its ovn forces. All of the road and equipment maintenance is done by the Departrent itself. As a normal policy, the Department concentrates its personnel on maintenance and uses contractors for the bulk of the road-building0 45. The Department's basic organizational structure is sound and in accordance with generally accepted principles of highway administration. vJithin the limitations imposed by a lack of sufficient technical personnel, the existing staff is competent and its work is well-administered. The main weakness is a shortage of experienced engineers which hampers co-ordinated programming of the road system, clear-cut project planning, and the formulation of firm administrative policies. 46. The planning, supervision, and construction of an arterial highway across the coastal plains would seem to be beyond the unaided technical and administrative capabilities of the Highway Department and the local con- tracting industry. The enployrnent of consulting engineers from abroad and the use of some foreign contractors appear to be necessary.  -8- 47. Although the Department is maintaining the main roads in a satisfactory state of repair, most of the secondary and local roads are poorly maintained. This is partly due to the use for road improvement work, of some of thle funds nominally allotted to routine maintenance. Other contributory factors are under-staffing with technical personnel and lack of sufficient shops and equipmento III. DESCRIPTION OF PROJECT Route and Standards 48a The immediate project is completing the construction of an all- vweather highmray to extend 306 km. along the Pacific Coast from the Guatemalan border to near the port of La Union on the Gulf of Fonseca. Sections totalling 40 km. have been built and are open to traffic, leaving a balance of 266 kmI for future construction. Of this, a 28 km. section is committed to construction under an existing contract, leaving a balance of P,1 km for which contracts have to be awfarded. 49. Lventually, the project will also include: (a) the construction of some 250 km. of short feeder roads along the route of the Coastal Highway and (b) the improvement of existing all-weather roads which connect the ccastal plains with the Central Plateau. Part of this work, some of which is already under way, w-vill be carried out concurrently with the construction of the Coastal Highwiay, and the remainder mill be carried out as soon as practicable thereafter. 500 The proposed route is well-located and adequately designed for its basic purposa--promoting the agricultural development of the coasual plains. It could also searve as an eventual alternate to the Inter-AImerican Highway for the carriage of international through-traffic betwaeen Guatemala and Honduras, but its use for this purpose would require supplementary road building in Guateriala. 51. The projected road runs roug&ly parallel to the inter-Amzer- can Highway 20-30 km. to the North. It is separated from the latter by a mountain range whicli would make it extremiely costly to try to develop the Coastal Zone by building a large number of additional North-South arteries. 52. Beginning at La Hachadura on the Guatemala border, the proposed highvway runs near the coast or close inland for a distance of 252 km. to El Delirio, crossing the Rio Lempa en route by a recently-completed bridge. From ml Delirio it makes a wide loop for the remaining distance of 5h km, to La Union, Over most of its length, the route traverses flat or gently rolling land with abundant resources pointing toward a high traffic potential, A fewv short sections, however, particularly a 26 km. stretch betwveen Rio Mizata and Rio 1l Zonte, traverse momntainous terrain, while the El Delirio - La Union section crosses an area of limited resources. Allowance has been made for these factors by designing the Rio M,zata - Rio E1 Zonte stretch to lower standards of width, curves, and grades than the rest of the route and the Ea Delirio - La Union section as a crushed rock rather than an asphalt road.  -9- 53. All the preliminary engineering has been completed including provisional estimates of quantities of materials. The entire route has been located, including a recommended alignment for 26 km. of mountainous terrain wzhere the heaviest and costliest construction would be encountered. Field surveys have been made over the total length but the recommended Rio MNlizata - Rio El Zonte alignment varies from the line of the actual field survey in this area. 54. Design standards have been chosen (Annex A) rwhich generally conform as regards grades and curves, with the specifications for secondary roads set forth by the American Association of State Highway Officials and 1)hich slightly exceed, as regards roadway and roadbed, the specifications to which most sections of the Inter-American Highway have been built. Broadly, the Coastal Highway has been designed as a two-lane, all-weather road wNith moderate curves and grades throughout and with a light bituminous surface treatment except where traffic is expected to be exceptionally dense (as- phaltic concrete surface) or exceptionally light (crushed rock surface)a 55c The standards chosen seem well-suited to the terrain, the traffic density, and the types of vehicles. They call for a somewvhat better road than the Inter-American Highway but do so with good cause, considering probable traffic growth vwith further development of the region, the recognized need of wvdening and strengthening the more heavily travelled sections of the Inter-American Highway, and the fact that widening the road- way and reinforcing the pavement support later on would be much more costly than original construction to adequate standards. Finally, the initial use of a light bituminous surface treatment instead of a thick pavement is a desirable form of stage-construction since the pavement can gradually be built up as needed to a depth consistent with traffic requirements. Istimated Costs and Timing of xkpenditure 56. According to the engineerst preliminary estimates (Annexes B, C, and D), the construction of 238 km. comprising the loan request should cest about /40 million ($16 million equivalent). This includes $111 million equivalent in foreign exchange costs (foreign component of payments to con- struction contractors and consulting engineers) and /12*2 million in local currency costs (colon component of such payments plus administrative expenses incurred by the Higbway Department). The required currencies for the foreign exchange costs cannot be determined until construction contracts are awardedS but most of the requirement is expected to be in dollars, 57. The construction of 28 km. outside the loan request may cost an additional $5 million, based on provisional estimates, while the future netwvork of feeder and branch roads may require an outlay of the order of y8-10 million, The costs of the Coastal Highwiay alone thus total /45 million ($18 million equivalent) while the eventual costs of the entire project may reach 021 - $22 million equivalent.  - 10 - 58. The cost estimates for the sections comprising the loan request are provisional in the absence of actual bids. They, nevertheless, seem realistic because: (a) they are the result of actual field surveys by competent technicians, (b) reflect clear-cut specifications giving rise to definite quantities of materials, (c) give appropri^ate weight to the various factors involved in formulating unit-price bids, and (d) include adequate allowances for ocean freight, spare parts, and construction contingencies3 59, The foreign exchange component appears to be a conservative eacti- mate. It has been computed e.g. on the extreme assumptions that: (a) the contractors will quote unit prices calculated to amortize the full value, bought new, of all the equipment they bring to the job; and (b) all of the work will be let to foreign contractors requiring foreign exchange teo pay for overhead, profit margins, and supervisory personnel. 60. Interest during construct.ion to the approximate amount of $1 million on the loan request is excluded from the cost estimates: first) because the project is not of a self-liquidat,ing nature, and second, because no question of capitalizing such interest has been raised by the Government. 61, Based on the engineersT preliminary estimates, the timing of expenditures on the sections comprising the loan request might be expected to approximate the following pattern: Foreign ihkchange, Local Currenlcy, Year 01? Ikillion $ .illion - 1954 0,2 06 - 1955 l 3 2, - 1956 2.4 2.2 - 1957 3*9 3e8 - 1958 3,4 365 Total 11.1 12.2 62. The Government wishles to borrow the foreign exchange costs - about $11,1 million - from the Bank and proposes to cover the local currency costs - about /12.2 mills on - out of aporopriations. Additionally, the Government would provide