Colombia - Seventh Highway Project

Report No. 1557b-CO V%& Colombia: Appraisal of a FILE COPY Seventh Highway Project June 16, 1977 Latin America and the 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 - Peso 4(C9l$1 US$1 (June 1977) = Col$ 36.80 US$1 million = Col$ 36.8 million Col$ 1 million = US$27,174 Colombian Fiscal Year January 1 to December 31 System of Weights and Measures: Metric Metric British/US Equivalent 1 kilometer (km) = 0.62 mile (mi) 1 meter (m) = 3.28 feet (ft) 1 metric ton (m ton) = 0.98 long ton (imperial) - 1.10 short tons (USA) 1 liter = 0.22 gallon (imperial) = 0.26 gallon (imperial) Abbreviations and Acronyms ER - Economic Rate of Return FONADE - Fondo Nacional de Desarollo Economico FYB - First Year Benefit GDP - Gross Domestic Product IDB - Interamerican Development Bank MOP - Ministerio de Obras Publicas (up to January 1976) MOPT - Ministerio de Obras Publicas y Transporte (after January 1976) NPO - National Planning Office UNIDO - United Nations Industrial Development Organization VOC - Vehicle Operating Costs  1-0k OFFICIAL USE ONLY COLOMBIA APPRAISAL OF A SEVENTH HIGHWAY PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ........... ..................................... . i 1. INTRODUCTION AND BACKGROUND . ................. a. ... ............. 1 A* General .......................................................... 1 B. Past Highway Projects ......... . . . . . . .............................. .... . 1 C. The Sixth Highway Project .......... . . . ...................... . 2 D. The Maintenance Problem ........ . . . . . . ............................. .. . 2 E. Preparation of the Proposed Seventh Highway Project ..... 3 2. THE TRANSPORT SYSTEM ........................................ 5 A. General ............... oo . . 5 B. Highways ............ 0000*0. . ... 00..... 5 C. Railways ..oooo............ 5 Do Inland Waterways ... ......... .. . .0..-.00 .6 E. Ports.. ..................... 6 F. Civil Aviation .... ........... o.o... .oo.o.oo... 7 G. Investments, Regulation and Coordination .................. 7 3. THE HIGHWAY SUBSECTOR .. .....o ...... ......... ... . 8 A. The Network ..........-.................................... 8 B. Road Transport and Traffic oo.....o ............ ..... 10 C. Highway Administration . ..... . . .................. . . . . . .. . . 10 D. Highway Planning ... ... ............. .. . . . .. 11 E. Highway Financing and Road User Charges ....... . 12 F. Highway Engineering . ... ..o..oo. . ...... .. . .. . . .. .......... 13 G. Highway Construction . -.-. . . . . . . . . . . .. . . . .... o. . ...... .. 13 H. Highway Maintenance ............... o.. ... . ... 14 I. Future Level of Highway Maintenance Expenditures ....o..... 15 This Appraisal Report has been prepared by Messrs. Schulz (Economist) and Morris (Engineer), and has been edited by Miss Virginia Foster. This document h as retricted distribution and may be used by recipients only in the perfomance of their official dutie. Its contents may not otherwie be disclosd without Wofid Bank authoriztion.  TABLE OF CONTENTS (Continued) Page No. 4. THE PROJECT ................................................... 17 A. Objectives ............................................... 17 B. General Description ...................................... 17 C. Road Rehabilitation Program .............................. 18 D. Vehicle Weight Control Program .............eg ...........r.. 20 E. Highway Maintenance Program ....... ....................... 21 F. Transport Sector Management .............................. 23 G. Logistic Support for Project Execution ................ ... 23 H. Cost Estimates and Financing ............................. 24 I. Disbursements ............................................ 26 J. Execution and Procurement ................................ 26 K. Project Risks ......................................... 28 5. ECONOMIC ASSESSMENT .......................................... 28 A. General ............................................... 28 B. Road Rehabilitation Program ............................. 29 C. Highway Maintenance Program ....... ...................... 31 D. Vehicle Weight Control Program .......................... 32 6. AGREEMENTS REACHED AND RECOMMENDATION ................ ...... 33 TABLES 1. IBRD-IDA Involvement in Colombia Transport 2. Public Sector Investment in Transport (1966-1975) 3. National Highway Network (1965-1975) - Total Road System (December 1975) 4. Road Vehicle Fleet (1963-1976) 5. Estimated ADT at Select Points of the Road Network (1971-1975) 6. National Highway Fund - Revenues (1970-1976) 7. National Highway Fund - Revenues and Expenditures (1970-1976) 8. National Highway Fund - Expenditures (1970-1976) 9. Estimate of Future Revenues and Expenditures (1977-1981) 10. Evolution and Composition of Regular Gasoline Prices (1975-1977) 11. History of Construction and Periodic Maintenance on Sections for Rehabilitation 12. Road Rehabilitation Program - Economic Costs, Financial Costs and Execution Schedule 13. Preliminary Four-Year Equipment Replacement Program 14. Estimated Schedule of Disbursements 15. Details of Road Rehabilitation Program 16. Economic Vehicle Operating Costs 17. Economic Evaluation of Road Rehabilitation Program 18. Highway Maintenance Program - With and Without Program Maintenance and User Costs of Network 19. Highway Maintenance Program - Summary of Economic Assessment 20. Estimated Yearly Maintenance Expenditures (1978-1987)  TABLE OF CONTENTS (Continued) ANNEXES 1. Terms of Reference for a Vehicle Weight Control Study 2. Road Rehabilitation Program 3. Outline Terms of Reference for the Technical Assistance Programs 4. Terms of Reference for a Study of Locally Available Road Construction and Maintenance Materials 5. Project Indicators 6. Details of the Economic Assessment CHART S 1. MOPT Organization Chart 2. Consulting Services and Technical Assistance Programs 3. Project Implementation Schedule MAP IBRD 12553 - Colombia - Seventh Highway Project   COLOMBIA SEVENTH HIGHWAY PROJECT SUMMARY AND CONCLUSIONS i. Colombia's transport system carries not only traditional primary sector production but also a heavy load of non-traditional agricultural as well as manufactured products. These goods are the mainstay of interregional trade in the country, but, most importantly, its exports. Increasingly, manufactured goods--primarily textiles, chemicals, pharmaceuticals, mechanical and electrical equipment--are playing a larger role in the country's exports along with agricultural products, of which coffee represents the largest share of total merchandise exported. To move these goods both to internal consumption centers and to the ports, a system of primary trunk highways has been developed over the last two-and-one-half decades along with a rail and inland shipping network. It is the highways, however, which form a truly national integrated network; the railways are truncated, and inland shipping operates mostly along the Magdalena River. The trunk highway network, which covers the populated area of the country, has reached a stage of development where a shift from expansion to conservation is necessary. Most of the roads in the trunk network were paved in the 1950's and are now reaching the point where rapid deterioration is either already occurring or about to happen if a program of overlays and strengthening is not instituted. The need for improved mainte- nance is evident, and great losses would affect both internal and export trade if it is not brought about within the next few years. ii. Recognizing the extent of the situation, the Government of Colombia has requested the Bank to help finance a project that would include (a) a Road Rehabilitation Program, comprising about 978 km of trunk paved roads; (b) a Vehicle Weight Control Program, comprising the installation of about 20 weigh- ing stations; (c) a Highway Maintenance Program, comprising the purchase of equipment and spare parts and technical assistance to improve the management of the maintenance fleet and the programming of road maintenance operations; (d) technical assistance to improve sector management; and (e) provision for logistic support for the execution of the project. iii. The project would provide for the rehabilitation of important sections of the trunk highway network, with traffic in the 1,200 to 6,000 vehicles-per-day range, where the level of deterioration is beyond repair with normal maintenance operations. The Vehicle Weight Control Program would pre- vent further acceleration of pavement deterioration due to truck overloading. In addition, the project also includes a number of corrective measures aimed at the most obvious deficiencies of the present maintenance system. It would provide for systematic renewal of the maintenance fleet and improved fleet management and maintenance procedures, thereby increasing the availability of equipment, which is a basic condition for increased efficiency. iv. Although the project is aimed primarily at a more efficient use of the resources devoted to maintenance, it would have to be accompanied by sub- stantial increases in budgetary appropriations for spare parts, equipment  - ii - renewal, materials and periodic overlays and strengthening of the national highways. These increases have been discussed with the Government and were agreed upon during negotiations. They are well justified compared with the increases in transport costs and future rehabilitation requirements which would arise if the present situation is allowed to persist. Based on vehicle operating cost savings, which is the only quantified benefit against which project investments have been assessed, the proposed project is well justified, with an average weighted rate of return of over 90%. v. Total project cost is US$153.75 million equivalent, of which US$90.75 million (59%) is the foreign exchange component and US$90.0 million is to be financed by the proposed Bank loan. The balance of project costs and interest during construction, as well as agreed increases in recurrent highway mainte- nance expenditures, would be financed by the National Highway Fund supplemented, as necessary, by Government contributions. vi. Project execution would extend over the period 1977-1981 under the responsibility of the Ministry of Public Works and Transport (MOPT). Consul- tants would assist MOPT in construction supervision. Advisory services would be provided under the project to assist in the Maintenance Program and in transport sector management. The Vehicle Weight Control Program and the accompanying enforcement measures would be defined on the basis of a study now under way. vii. Detailed engineering designs for the Rehabilitation Program have been completed and were the basis for cost estimates. Cost estimates for equipment renewal and consulting services are based on recent experience and reflect current market conditions. Cost estimates for the weighing stations reflect ongoing experience with similar works in Brazil adapted to Colombian conditions. viii. Procurement of civil works, equipment and spare parts will be through international competitive bidding in accordance with Bank Guidelines. Spare parts of specific makes for existing equipment would be procured directly from established dealers in accordance with a purchase program acceptable to the Bank. ix. Retroactive financing of up to US$1.0 million equivalent would be pro- vided for advance works carried out since April 1, 1977 for the stabilization of critical sections along two roads. x. The project, which would represent a major effort to improve road maintenance, is technically sound and economically well justified and is suit- able for a Bank loan of US$90 million. The loan would mature in 17 years, including a three-and-one-half-year period of grace.  COLOMBIA APPRAISAL OF A SEVENTH HIGHWAY PROJECT 1. INTRODUCTION AND BACKGROUND A. General 1.01 The Bank's involvement in Colombia's transportation sector dates back to 1949 when a General Sector Mission visited the country and found the system to be in bad condition, actually beyond repair with normal main- tenance procedures. Since that time, the Bank has lent about US$255 million in 13 loans to the sector (Table 1); these investments accelerated the cre- ation of an integrated highway network and contributed to the construction of over 670 km of main railway lines as well as the rehabilitation of existing ones. Highway projects have contributed to the maintenance, reconstruction and construction of a national highway network (21,000 km) and to the devel- opment of an improved, but not yet fully effective, highway organization. Railway investments have provided for the construction of the Atlantic Rail- road from La Dorada near Bogota to Fundacion near the port of Santa Marta; the Bank has also supported the creation of the organizational and institutional framework of the Colombian National Railways. B. Past Highway Projects 1.02 The Bank's contribution to highways falls into two distinct time periods: the first, from 1951 to 1961, covering, in general, the execution of the First Highway Plan and encompassing the first three highway loans; and a second, running from 1961 to the present. The First Highway Project, which was originally intended to be completed in three years as an emergency program, eventually extended beyond ten years. Successive loans financed unfinished parts of the preceding ones and included some new works for which only prelimin- ary engineering was available. Since 1961, feasibility studies, including engineering, have preceded the execution of projects, and international bidding for unit priced contracts was introduced. Although project preparation is now generally adequate, project implementation still suffers from managerial weak- nesses and financial constraints. 1.03 The first four projects eventually resulted in the construction or upgrading of 3,200 km of trunk roads. They contributed to the develop- ment of Colombia's trunk road system and to the emergence of road transport as the main means of communication. In 1965, as a condition for extending the Closing Date of the Loan and Credit for the Fourth Highway Project, the Government agreed to employ management consultants (Comec/Harris-Mexico/USA) to reorganize the Ministry of Public Works (MOP). 1.04 The fifth loan (550-CO, US$17.2 million) was made in 1968 for (a) the construction or reconstruction (with paving) of about 510 km of four national highways; (b) the construction of a major highway bridge at La Virginia; (c) consulting services for supervising (a) and (b) above, for preinvestment studies, for detailed engineering of further priority roads, and for assisting the reorganization of MOP based on the Comec/Harris report;  -2 - and (d) the purchase of equipment needed to effect the reorganization. The greater length of the reconstruction works was located on the western trunk road between the industrial center of Medellin and the Atlantic ports. The seven sections included in the project completed the paving of the road from Cali to the north coast. Progress was slow due to: (a) unusually heavy rains during the years 1969 to 1972; (b) the awarding of contracts to inexperienced and financially weak local firms; and (c) the fact that drainage and earthworks were underestimated because of inadequate design. The resulting cost overruns caused two contracts to be rebid because the legal ceiling of 150% of the bid price had been reached. Another section had to be rebid after the initial contract was terminated for lack of progress. All works were eventually com- pleted in 1975, three years after the original completion date. The overall construction cost exceeded the appraisal estimate by 70% and averaged US$83,000/ km, which, nevertheless, was reasonable considering the type of terrain and conditions encountered. The assistance provided under the project for re- organization of MOP had little success. In January 1976, however, MOP was reorganized into the Ministry of Public Works and Transport (MOPT). Only a few of the recommendations of the Comec/Harris report were acted upon, the most notable being the proposed staffing of the road maintenance organization in the districts. The Fifth Highway Project, despite its shortcomings, was an important phase in the development of Colombia's trunk road system and contributed to the establishment of better engineering practices and improved contractural procedures. C. The Sixth Highway Project 1.05 The sixth highway loan (680-CO, US$32.0 million) was made in 1970 for a project consisting of bridge and road construction and the paving of main roads. The bridge over the Magdalena river at Barranquilla and the final link of the new road from Cali to the port of Buenaventura have both been completed. The paving program, however, has suffered lengthy delays and large cost overruns. In January 1975, the Bank agreed to reduce its scope from the original 1,618 km to about 874 km. Seven sections out of the 33 remaining in the program are still under construction, and about 200 km still have to be paved. The entire program, which was expected to be completed in early 1974, will now continue to mid-1979. Design revisions to allow for stronger pave- ments have caused substantial increases in quantities and in costs. Delays in execution have been due to lack of local funds, poor contract management and slack supervison and coordination by MOP. In order to improve the performance of the local consultants engaged in the supervision, a coordinating group was set up in 1973 within MOP. This improved the situation, but MOP terminated employment of the group in December 1974. The functions of the group have recently been undertaken by MOPT's Special Highway Programs Division, which, although understaffed, is slowly gaining some measure of effectiveness. The proposed project includes strengthening of this Division. D. The Maintenance Problem 1.06 During the 25 years in which it has been associated with Colombian highways, the Bank has been greatly concerned with the maintenance problem. The First Highway Project (Loan 43-CO, 1951) was a road improvement and maintenance project; the Second Highway Project (Loan 84-CO, 1953) provided  for the purchase of road maintenance and shop equipment and for the appoint- ment of maintenance experts to act as consultants to the Ministry. It was evident that the benefits of the construction works being undertaken could not be achieved unless an effective maintenance program for the whole system was in place. Due to the high turnover of Ministry staff, the weakness of the field organization, and the low priority and funding given to maintenance, the improvements introduced under the Second Project were short-lived. The Third Highway Project (Loan 144-CO, 1956) provided for the execution of asphalt overlays on some roads built under previous Bank projects. However, because of the rapid deterioration of the highways toward the end of the 1950's, provision was made in the Fourth Highway Project (Loan 295-CO and Credit 5-CO, 1961) for the purchase of a large fleet of maintenance equipment and for a reassessment, by consultants, of the Ministry's maintenance organiza- tion and procedures. During negotiations of the Fifth Highway Project (Loan 550-CO, 1968), the Government committed itself to implementing the recommen- dations of the Comec/ Harris Study. The present field organization, which is basically adequate, was established, and, initially, road maintenance improved. However, by the time that the Sixth Highway Project (Loan 680-CO, 1970) was being prepared, the decline had already begun. Under that loan, the Government confirmed previous undertakings to carry out proper maintenance and to provide adequate funds. 1.07 Today's assessment of the maintenance of Colombia's highway network follows the familiar pattern: it is still generally inadequate, and a chronic lack of funds prevents it from being improved. An analysis of MOPT's budget allocation reveals that about 30% of it is devoted to maintenance, but over 80% of this allocation is used up in fixed personnel and administrative expen- ditures, leaving a meager US$280 per km per year for running the equipment and for the purchase of materials and spare parts. Equipment replacement is usually not included in MOPT's budget allocation but is financed out of general Government funds. The appraisal mission estimated that adequate maintenance would require about US$1,200 per km per year over and above personnel and administrative costs. This amount would cover the three major deficiencies that now prevent an adequate maintenance from being carried out, namely: (a) renewing equipment on an annual, recurrent basis; (b) purchasing spare parts to keep the maintenance fleet operational; and (c) purchasing materials (bitumen, fuel, cement, etc.) necessary to execute maintenance works. The required increase in the budgetary allocation would be from the present US$41 million to about US$67 million per year, including the additional effort now necessary to make up for past shortages. The proposed project is mainly geared to help finance this additional effort. E. Preparation of the Proposed Seventh Highway Project 1.08 The rehabilitation component of the project developed out of a survey carried out in 1973 by INGEROUTE (France) under the Fifth Highway Project, which showed that about 1,700 km of the then 6,500-km asphalted national high- way network required urgent rehabilitation. Detailed engineering designs were prepared by Colombian consultants between 1973 and 1975, but results were of uneven quality and many had to be redone. While revised designs were being  - 4 - prepared, this time in closer cooperation with the Bank, it became apparent that, because of financial constraints imposed by increasingly higher cost estimates, the scope of the project had to be reduced. Roads in comparatively better condition and roads with lower priority were taken out of the program. Final designs were eventually produced for 978 km, which have been included in the program. It is evident, however, that there is a need for more than can be accomplished through the project. Steps to prepare a second rehabilitation program would be reviewed with MOPT once the proposed program is under way. 1.09 The vehicle weight control component of the project evolved from the assessment by MOPT and the Bank of the major factors causing the need for road rehabilitation. The extent of truck overloading and the damage caused to the roads have been well known in Colombia; enforcement of weight control regulations was an explicit covenant of successive highway loans since the Fourth Highway Project in 1961. Some steps toward vehicle weighing were taken in the 1960's, but the effort was not pursued. More recently, the magnitude of the rehabilitation requirements has triggered renewed interest for weight control, and an enforcement program has been included under the proposed project. MOPT's Planning Office has done preliminary analysis on the number and location of the weighing stations required to effect the proposed control, and a three-phase study to develop a comprehensive enforcement program is now in progress (see Terms of Reference, Annex 1). Specific loan covenants are proposed to ensure that the study is completed and that it will be used to develop effective enforcement. 1.10 The Highway Maintenance Program of the project includes introduction of improved equipment, workshop and store management procedures; purchase of equipment and spare parts; and technical assistance. The emphasis on equipment utilization and management of workshops and stores is a development of the work of a UNIDO 1/ team (financed by UNDP) that has assisted MOPT since 1973 in equipment maintenance and utilization. The equipment and spare parts purchase program is based on an assessment of MOPT's equipment fleet carried out by a Bank consultant as part of the appraisal. The technical assistance component would be an extension of the ongoing UNIDO program and reflects a joint assessment, by MOPT and the Bank, of the advisory services required to effect needed improvement in equipment and store management and in the programming and execution of maintenance operations. Rather than concentrating on general analysis of road maintenance procedures, the technical assistance is oriented to on-the-job training through direct involvement in all critical aspects of maintenance operations, especially those for paved roads. 1.11 This report has been prepared by Messrs. Renato Schulz (Economist) and Peter Morris (Engineer) following an appraisal mission, which also in- cluded Mr. Andrew Mackie (Consultant on equipment maintenance), in September 1976 and a post-appraisal mission by Messrs. Schulz and Morris in February 1977. The report has been edited by Miss Virginia Foster. 1/ United Nations Industrial Development Organization.  - 5 - 2. THE TRANSPORT SYSTEM A. General 2.01 It was not until the early 1950's that Colombia's largely regionally oriented transport system began to evolve into a national system. For a long time, the Magdalena River was the only workable transport route between the central region and the Atlantic coast. Since 1961, the Atlantic Railroad, which was constructed with Bank assistance, has provided an all-weather con- nection to the north to the port of Santa Marta. Colombia was developing its trunk highway system at the same time. By the early 1960's, construction and upgrading of the Western Trunk Road (Cartagena-Medellin-Cali-Pasto), the Eastern Trunk Road (Santa Marta-Bucaramanga-Bogota-Neiva) and the two main transverse roads that connect the eastern and western trunk roads in the central region were substantially complete. The highway system has since been a catalyst of national integration. Road transport developed rapidly over the last two decades and now is unquestionably the most important and key means of moving about the country for both passengers and freight. 2.02 The Colombian economy has become highly dependent on the year-round availability of roads and their capacity to bring products to its ports and imports to their inland destinations. This dependency is reflected in the high share of traffic moved by road. In the early 1950's, roads accounted for about 43% of total freight movements; in the mid-1960's, that share had risen to about 53%, and, in 1974, although no adequate statistics exist, the share was estimated to be close to 70% of all interregional and international traffic. River transport and coastal shipping, which are largely confined to the movement of petroleum products, account for about 15% and railways for another 15% of total traffic. 2.03 Overall total domestic freight traffic has grown in the last decade at rates close to that of GDP, 6% to 7% p.a. While rail traffic has grown very slowly, about 2.5% p.a., and inland shipping has grown at about 5% p.a., road traffic has been growing faster than the average, around 8% p.a. B. Highways 2.04 The highway system and its administration are discussed in detail in Chapter 3. C. Railways 2.05 The Pacific (Medellin-Cali-Buenaventura; 651 km) and the Atlantic (Bogota-Santa Marta; 969 km) rail systems were connected to one another in 1961. Since then, however, erosions along the Cauca and Dagua rivers have caused interruptions of traffic from Medellin to the south for, at times, several months. In 1970, a huge landslide caused a rail viaduct to collapse just south of Medellin, disconnecting the two systems. Despite efforts to reestablish services, success has been limited, and, in 1976, the Government decided to abandon attempts to connect the two systems. The general condition  - 6 - of the track, particularly that of the Pacific system, is poor; this, together with the difficult geomorphological conditions, has resulted in the need to give priority to emergency winter repairs over routine track maintenance. There is a high incidence of derailments and accidents which has lessened the railways' capacity to provide reliable and timely services in the face of growing competition from road transport. Important shifts in traffic from rail to road have thus occurred as the road network was being completed. Between 1966 and 1973, rail traffic remained relatively constant at around 1.1 million ton-km moved per year; in 1973-1974, there was an increase to about 1.3 million ton-km, but, in 1975-1976, it decreased again to the 1.1 million ton-km level. Passenger traffic dropped steadily from about 500 million pass-km in 1966 to about 260 million in 1972 because the railway was unable to compete with the improved road services. Since 1973, passenger traffic has picked up and is now again around 500 million pass-km, mainly as a result of the comparatively low rates charged by the railway. The levels of traffic and tariffs for freight and passengers indicate continuing financial support from the Government. 2.06 In recent years, the long-term viability of the railway has come under close scrutiny, partly as a result of the conclusions of the Magdalena River Basin Transport Study (Netherlands Economic Institute, 1974) and partly as a consequence of the decline in freight traffic since 1975. Studies are under way, under the direction of the Sectoral Planning Office of MOPT, to reassess the role and future prospects of the railway, particularly that of the Atlantic Railroad (Bogota-Santa Marta and the Medellin branch). D. Inland Waterways 2.07 Although the traditional importance of inland shipping has decreased due to the development of rail and of road transport, it is still of some significance. Both the Magdalena and the Cauca rivers are navigable, and they account for almost all inland shipping. The Magdalena river carries over 95% of the traffic and, although of difficult navigation, is quite dependable in all seasons down-river of Gamarra (about 470 km from the Barranquilla river-sea terminal); up-river as far as Salgar (930 km from Barranquilla), navigation is only seasonal. Bulk goods, especially petroleum products, constitute the main freight movement, but there is stiff competition for this traffic from other modes. Total traffic in 1974 was about 3.0 million tons, of which 74% was petroleum products. Passenger traffic on the river is almost non-existent. Inland shipping has complemented rail traffic to some extent, particularly for goods originating from and destined to the port of Cartagena, which is connected to the Magdalena river by a man-made canal (Canal del Dique). Transshipments to both rail and road can be effected at Cienaga and a number of river ports further upstream; yet, the comparative advantage of road transport vis-a-vis the ccmbined river-rail or river-road movements makes these combinations viable for just a few products. E. Ports 2.08 The principal seaports of Colombia are Cartagena, Barranquilla and Santa Marta on the Atlantic Coast and Buenaventura on the Pacific coast.  -7 - Between 1966 and 1972, the traffic in the four main ports increased from 2.1 million tons to 2.6 million tons (about two-thirds for imports and one-third for exports). With the improvements of the transit storage and cargo-handling facilities carried out with IDB financing, the four main ports are now able to handle over 4 million tons of general cargo per year. Consequently, there should be no overall capacity problem in the foreseeable future. Neverthe- less, the connections with inland transport have not been adequately analyzed, and bottlenecks may occur for certain products requiring specialized handling and storing facilities, e.g., in Cartagena, for the handling of fertilizer. F. Civil Aviation 2.09 Colombia's difficult terrain has encouraged the development of air transport as an important means of domestic travel. There are about 650 landing facilities in the country; seven of these handle international traffic, and there are at least 25 others with volumes of domestic traffic upward of 1,000 passengers a month. In view of technological improvements in the aviation field and the inherent difficulties of surface transport, aviation is most likely to continue to have an increasing role in the country, especially in the movement of passengers and in the more remote areas of the Colombian Amazonas. G. Investments, Regulation and Coordination 2.10 The effort to complete the basic transport network required a con- siderable proportion of the country's total investment. Transport represented between 10% and 15% of domestic investment and about half the Central Govern- ment's investment in the late 1950's. When the trunk highway system and the Atlantic Railways were being completed, that proportion rose to more than 60% of Central Government investment. More recently, however, the proportion has been declining; in the late 1960's, it was about 35% and, since 1970, it has been about 25% of total public investment. In 1975, Col$ 3,200 million were invested in the transportation sector (around US$107 million); of these, about 60% went to road transport, 18% to rail transport, 11% to aviation, 8% to ports and marine transportation and 3% to inland waterways and shipping. On the whole, this distribution reflects the present economic importance of the different modes of transport (Table 2). 2.11 Road-rail competition, the most important area for transport co- ordination, has developed largely in an unregulated environment. Several studies, the last of which was the "Magdalena River Basin Transport Study" (Netherlands Economic Institute, 1974), have not had a significant impact on creating a framework for improved transport coordination. Until 1966, when Decree 3160 attempted to tie in the various entities reponsible for transpor- tation with MOP, no form of central control was imposed. Before that, respon- sibility for the administration of the transport system was divided among a number of agencies and decentralized organizations, the largest being MOP itself. Decree 3160 made the Minister of Public Works an ex-officio member of the boards of all these agencies. Yet Ministerial control remained limited, and the lack of central coordination of the different modes persisted.  - 8 - 2.12 More recently, however, coordination of the modes has been tightened up considerably. Decree 154 of January 27, 1976 restructured MOP and turned it into the Ministry of Public Works and Transport (MOPT). The objectives, functions and structure of many of the Departments, Divisions and Offices within MOPT and some of the decentralized institutions were redefined. Article 12 of the Decree refers specifically to the planning and coordinating functions of the restructured Planning Office in MOPT and assigns to it all of the functions necessary to effect intermodal planning and coordination for the transport sector as a whole. Moreover, expanded Ministerial powers now include approval of the budget and investment programs for all modes except aviation. 2.13 Experience with the new MOPT organization has been short, and no as- sessment of its effectiveness can be made yet; however, there is now a reason- able expectation that improvements in intermodal planning will come about in the future. Since June 1976, the Government of the Netherlands has been providing technical help to MOPT's Planning Office in defining its activities, in on-the- job staff training and in initiating the preparation of a National Transport Plan. This should provide the basic setup for proper planning. The ongoing technical assistance program is expected to be completed in 1978. The project would contain provision for further assistance for specific transport studies to be identified as the technical assistance progresses (para. 4.18). 2.14 Now that the role of the Planning Office of MOPT has been expanded, it is expected that this Office will become the main coordinating agency for the whole transport sector. For the time being, however, it still has highway planning responsibilities. The Bank has, on several occasions, called atten- tion to the need to separate sector planning from highway planning, shifting the responsibility for highway planning to another division within MOPT. This suggestion has been accepted by the Government, and MOPT has agreed to set up an advisory unit attached to the Vice-Minister's Office for highway planning. During negotiations, the Government confirmed that MOPT would establish this separate unit by December 1, 1977. 3. THE HIGHWAY SUBSECTOR A. The Network (i) General 3.01 Colombia has a road network totalling about 51,000 km (Table 3): 21,000 km form the national highway system under the jurisdiction of MOPT; a further 27,500 km are under the responsibility of the Departments; and the balance are municipal, community and private roads (e.g., to oil concessions). About one-third (7,000 km) of the national system is paved, against about 3% (780 km) of the departmental roads; the remainder are gravel or unsurfaced roads. Over the past five years, the national road network has expanded about 1,000 km. In this period, 2,000 km of national roads were paved, about half of them under the Fifth and Sixth Highway Projects. The departmental  - 9 - system includes about 6,000 km of low standard feeder roads built under a program financed by the National Feeder Roads Fund, which is under the author- ity of the Minister of Public Works and Transport. 3.02 The national highway system comprises the primary road network which connects the main economic centers among themselves and with the ports, and secondary roads linking smaller towns to the primary network. The two major transport corridors run north-south along the Cauca and Magdalena valleys and are connected by two paved roads in the central region, one via Ibague-Armenia and the other via Honda-Manizales (Map IBRD 12553). The national network is adequate in coverage, although its general condition is poor and deteriorating. At least half of the paved roads need asphalt overlays or strengthening to preserve the pavement structure. The rehabili- tation program proposed in this project would restore the most highly traf- ficked trunk roads. In the next few years, the areas of priority concerning the paved road network would be (a) improved maintenance; (b) strengthening, rehabilitation and upgrading of selected sections; and (c) limited expansion as needed to support the development of new regions. (ii) Departmental and Feeder Roads 3.03 Other than MOPT, there are two major organizations in charge of con- struction and maintenance of secondary and rural roads: the Secretariats of Public Works of the Departmental Governments and the National Feeder Roads Fund (Caminos Vecinales). The National Feeder Roads Fund is dedicated exclusively to the construction of feeder roads. It was created in 1960 and, to date, has been instrumental in the construction of about 6,000 km of low standard roads. Most feeder roads constructed by the Fund are transferred, once completed, to the Departmental Secretariats for maintenance; therefore, these roads are mostly accounted for as departmental roads (Table 3). 3.04 The Feeder Roads Fund is autonomous. It is managed by a Board presided over by the Minister of Public Works and Transport and in which the Minister of Agriculture is also represented. It is operated by a Director General through two departments--Administration and Engineering--with a staff of about 300 distributed between headquarters in Bogota and 25 field units, one in each department. Three programs are currently being carried out by the Fund: (a) the Ordinary Program, under which feeder roads are built either by contract or by force account financed with allocations from the Highway Fund (para 3.11); (b) the "Pick and Shovel Program," under which roads are built with labor-intensive methods, in areas of high unemployment, with a minimal budget; and (c) the IDB Program, which includes construction of 46 roads. Under this last program, the Fund has been required to extend its activities to maintenance of feeder roads, an area which has been completely neglected. The Feeder Roads Fund is Executing Agency for the road components of some Bank-financed rural development projects; experience with it has been satis- factory. It is expected that this working relationship would lead to the identification of further programs for improvement and, possibly, maintenance of feeder roads.  - 10 - B. Road Transport and Traffic 3.05 There are about 500,000 motor vehicles in Colombia, of which roughly three-quarters are passenger vehicles, mainly automobiles, and the rest are freight trucks. The fleet has grown at a rate of about 9% p.a. over the five years 1970-1975. The increase in the number of automobiles has been slower than that for trucks, 7% p.a. versus about 12% p.a. (Table 4). There are no reliable statistics on the composition of the fleet, but a survey carried out in 1973 by the Transport Finance Corporation, a Government agency, showed that 60% of the trucks in the fleet have payload capacities of less than 7 tons, 30% have between 7 and 10 tons and only 10% have capacities of over 10 tons. The ongoing study on the implementation of a Weight Control Program would review the steps necessary to effect changes, if any, to this composition. The fact that almost 90% of the trucks have single rear-axle accounts largely for the gravity of overloading, since these trucks are the most likely to be overloaded. The Weight Control Program is a key element to improving highway maintenance policies which would be introduced under the project (para. 4.08). 3.06 Colombia has had vehicle weight control regulations since 1955 (Decree 102 of January 9, 1955); these regulations allow for a maximum loading per single axle of 8.2 tons, increasing to 14.5 tons for tandem axles and up to 27.2 tons for multiple axle groups. Decree 1051 of February, 1971 updated such regulations by allowing for a wider variety of axle combinations, which resulted in the upper limit for multiple axle groups being raised to 31.4 tons. These limits contrast with those used in most other Andean countries where considerably higher loads per axle have been accepted; in Bolivia, Ecuador and Peru, 11.0 tons per single axle and 14.5, 19 and 18 tons respec- tively per tandem axle are accepted. In Chile, 12 and 20 tons for single and tandem axles are allowed, and, in Venezuela, 13 and 20 tons respectively are permitted. Colombia, being a signatory to Decision 94 of the Cartagena Accord (1970), which specifies maximum admissible loads of 11 and 16 tons for single and tandem axles, will need to review its axle load regulation. This aspect is covered in the Terms of Reference of the study currently being carried out by MOPT (para. 4.08). 3.07 Traffic growth on the main trunk network of the country has averaged 8% p.a. over the past years (Table 5). Traffic volumes on most paved roads are in the 1,000 to 2,000 vehicles-per-day range, except around the major urban centers of Bogota, Cali and Medellin, where about 4,000 to 6,000 vehicles per day are counted. The average composition of the traffic flow is about 30% to 40% automobiles, 10% to 20% buses and 40% to 60% trucks. Truck traffic on the roads in the Rehabilitation Program is generally above 45% and often in the 50%-60% range (Table 15). C. Highway Administration 3.08 MOPT, through the Directorates of Construction and Operations (Chart 1), is responsible for constructing and maintaining the national highway network. The Vice-Minister, for all practical purposes, manages the highway subsector under delegated authority of the Minister. The Directorate  - 11 - of Construction is divided into five divisions: Studies and Designs, Construc- tion Materials, Contracts, Contract Supervision and Special Highway Programs. The Directorate of Operations is made up of the districts and two central divisions, one for Road Maintenance and the other for Equipment and Workshops. These divisions coordinate with the 19 districts (due to increase to 26 later in 1977) located throughout the country. Each district is headed by an engineer who is responsible for the maintenance of the highways (250 to 2,250 km of road per district). The districts also maintain the plant and equipment assigned to them under the guidance of the Equipment and Workshop Division at Headquarters. 3.09 The two directorates are reasonably well staffed, and their senior personnel are experienced and capable. The Construction Directorate has about 125 civil engineers and 50 technicians, and the Operations Directorate about 130 civil engineers, 40 mechanical engineers, 160 technicians, and 540 mechanics. In the early 1970's, after the recommendations of the Comec/Harris report were implemented (para. 1.04), the districts were generally well staffed. However, over the years, as wages and salaries increased, a freeze was imposed on hiring new staff. Because of the drift into seniority, there is now a relative im- balance between field labor and supervisory and managerial staff. The Ministry is aware of this imbalance, and the districts have been circumventing the shortage of field hands by contracting out many routine maintenance operations. Corrective measures would be developed under the project (para. 3.23). D. Highway Planning 3.10 Strategic planning for highways, as opposed to operational program- ming which is carried out by the Directorate of Construction, has tradition- ally been the responsibility of the Planning Office of MOPT. However, the overall effectiveness of the Planning Office has been limited, and, too often in the past, overly ambitious programs have been undertaken without relation to expected levels of resources or consideration of the capability and capac- ity of the country's construction industry. The Planning Office of MOPT has recently been restructured, as described in paragraph 2.12, and highway plan- ning will be taken over by a separate unit operating in an advisory capacity to the Vice-Minister (para. 2.14). The main tasks of the new Highway Planning Unit would be to: - coordinate, assemble and maintain statistical information concerning traffic; - initiate and maintain an inventory and a condition survey of the national highways; - advise on the preparation and implementation of the highway subsector projects and programs in the National Transport Plan (para. 2.13); - determine, in coordination with the Directorates of Construction and Operations, and on the basis of a consistent set of criteria, the requirements for highway resealing, upgrading, strengthening and rehabilitation;  - 12 - - develop specific programs for the above works, taking into account expected level of resources; and - initiate and supervise preinvestment studies for highway development or conservation programs. The above terms of reference as well as the staffing requirements and the specific measures for the establishment of the proposed unit have been pre- pared by MOPT and were discussed and agreed upon during negotiations. E. Highway Financing and Road User Charges 3.11 The National Highway Fund (Fondo Vial) was set up in 1966 for the purpose of channeling all resources devoted to the highway subsector. The Fund, which has no staff of its own, is administered by the Minister of Public Works and Transport. In constant terms (Table 6), the Fund's revenues reached a peak in 1971 and have since fallen back to pre-1970 levels. Over the past few years, the gasoline tax (Table 7) has accounted for over 80% of the Fund's revenues (85% in 1976). Gasoline taxation, during the period from 1970 to 1976, averaged about US$45 million in constant 1967 monetary terms. The Fund's other revenues include foreign financial assistance from IBRD and IDB, and some own resources as well as direct Government contributions, which are being phased out since increases in gasoline prices (and taxation) began in 1975. Over the period from 1970 to 1976, an average of 88% of the Fund's expenditures was for the national highway network, 8% was devoted on average to the National Feeder Roads Fund (to which a legal maximum of 10% of the Highway Fund's reve- nues can be devoted) and the remainder was spent on maintaining waterways. Of highway expenditures, about 30% is used for maintenance, 50% for construction and 20% for other current expenses. In constant monetary terms (Table 8), expenditures for maintenance decreased relatively less from 1970 to 1976 than did expenditures for construction. MOPT's projection of the Fund's future revenues and expenditures (Table 9) assumes a gradual increase in total reve- nues of about 10% per year. This is based on planned contributions from IBRD and IDB programs, a 33% increase in the price of gasoline (about Col$ 3 per gallon on current prices of Col$ 10 per gallon) before the end of 1978, a further 6% (about Col$ 0.75) increase in 1980, and a 6% increase in gasoline consumption. These assumptions are reasonable vis-a-vis past experience and recent developments in the evolution of gasoline pricing (para. 3.12) and would yield conservative estimates of future levels of revenues for the Fund as further increases in gasoline prices beyond the above assumptions are expected (para. 3.12). 3.12 Since August 1975, the Government has been following a policy of gradually increasing the price of gasoline. The price structure for regular, low octane, gasoline is in Table 10. It reflects net taxation accruing to the National Highway Fund as well as other taxes and distribution margins. Increases took place monthly from August 1975 to August 1976, and a further increase was decreed in January 1977, after which prices reached a level of Col$ 13.50, Col$ 10.00 and Col$ 5.50 per gallon for high octane gasoline, regular gasoline, and diesel fuel respectively, equivalent to US$0.37, US$0.28 and US$0.15 per gallon. Further increases are expected to be implemented in the future until prices reach international comparable levels. These have  - 13 - been partially (but not fully, given the uncertainties on the exact timing of future increases) taken into account in MOPT's projections of the Fund's future revenues (para. 3.11). The Fund's revenues in the next five years are expected to sustain adequately the increased level of maintenance expenditures proposed under the project, but may not be sufficient to cover all programmed highway expenditures, i.e., including construction. Therefore, additional funds may have to be contributed by the Government from general revenues should gasoline prices and taxation not increase within the time frame of the projections indicated in paragraph 3.11 (Table 9). The Government confirmed, during negotiations, its intention to supplement the Fund's revenues as necessary, through the project period 1978-1981, to achieve the agreed level of maintenance expenditures (para. 3.23) and to finance its share of the project costs. F. Highway Engineering 3.13 MOPT's Directorate of Construction is responsible for the technical preparation of highway projects. MOPT itself has a limited in-house design capacity and often uses consultants for this purpose. Geometric design stand- ards for new highways were introduced in 1967 and are generally satisfactory. These standards are often relaxed, however, because of the difficult terrain and/or particular conditions such as paving or strengthening of existing roads. Design standard changes for the Paving Program under the Sixth Highway Project (Loan 680-CO) usually fell into this last category. Only limited improvement to geometric design would be provided in the Rehabilitation Program. The overall evaluation of past Bank projects, conducted in 1971, stressed the need to adapt the design of highway projects to the specific circumstances at hand. The selection of design standards under the Sixth Highway Project and the determination of the scope of the rehabilitation works under the proposed project are in line with this recommendation. 3.14 In 1975, a new Special Highway Programs Division was formed to coor- dinate studies and construction projects financed by international lending agencies. The division coordinates the work of MOPT's specialized divisions and is responsible for the preparation of specifications and contract documents for such projects; it also prepares progress reports for the agencies. The division has positions for 15 engineers (four vacant) and one economist (vacant) and presently coordinates about 60 projects. The number of positions has been recently increased to provide stronger coordination for the Rehab- ilitation Program (para. 4.07). 3.15 The civil engineering consulting profession is now well established in Colombia, and over 200 firms are registered with MOPT. In the past, pre- qualification of consultants for design and supervision works was lax, which allowed the awarding of contracts to inadequately qualified firms, leading to poor performance. This was especially the case for the supervision of the Paving Program (Loan 680-CO) and the initial design work for the Rehabilita- tion Program. The procedures for selecting consultants were modified in 1976 and are now satisfactory. G. Highway Construction 3.16 Modern methods of highway construction were first introduced to Colombia in the early 1950's, when experienced foreign contractors were employed on the First Highway Project. There are now about 25 local firms,  - 14 - each capable of handling an annual turnover of over US$1.0 million worth of asphalt road construction. Ten of these firms have the capacity to handle contracts of at least US$2.0 million annual turnover. Few foreign civil con- tractors are presently working in Colombia, and, except for the Barranquilla bridge, all civil work contracts under the Fifth and Sixth Highway Projects were awarded to local firms. 3.17 Several construction contracts under the Fifth and Sixth Highway Projects suffered setbacks and cost overruns for a variety of reasons, includ- ing lack of qualification or insufficient financial capacity of contractors. This prompted MOPT to initiate studies to review contract documents and procedures for prequalifying contractors. In 1975, the Bank contracted a consultant to review the status of the road construction industry. His report and recommendations were of assistance to MOPT, and, in 1976, MOPT introduced more rigid procedures. A permanent register of firms, showing their technical and financial capacity, is now maintained and updated annually. Each firm's capability to undertake a particular contract is reviewed after presentation of bids on each competition. Decree No. 150, passed in February 1976, also improved the basic contractural conditions. Colombia now has a strict and equitable basis for contracting road works. H. Highway Maintenance 3.18 Current MOPT budgetary practices separate road maintenance into two categories: routine and special maintenance. The latter covers periodic maintenance which should be planned and programmed systematically on a revolv- ing basis, and betterment and reconstruction works which, although requiring systematic planning, are capital expenditures which should be undertaken on an ad hoc basis after economic studies and detailed engineering. To effect an improved maintenance policy, periodic maintenance activities should be iden- tified and budgeted separately. Specific recommendations on the improvement in programming and budgeting procedures would be established through the Highway Maintenance Program (para. 4.17). During negotiations, assurances were obtained that, from the year 1978 onward, routine periodic and emergency maintenance activities would be identified and budgeted separately from other non-maintenance activities. 3.19 Periodic maintenance of paved roads (asphaltic seal coats and over- lays) is not planned systematically; such work is usually carried out after pavement surfaces have deteriorated to such an extent that rehabilitation or considerable strengthening should be executed. Table 11 shows the history of construction and periodic maintenance of roads included in the rehabilitation program; only about 40% of the roads have ever received an asphalt seal coat or overlay although 75% of them were paved in the 1950's. Nearly all reseals were carried out after 1968, but, due to the pavements already being in weak condition, many lasted only a short time. In the past five years, about 1,000 km of roads were paved under the Fifth and Sixth Highway Projects; a program of seal coats and overlays is therefore now required for these roads if problems similar to those being encountered today are to be avoided. During negotiations, the Government confirmed that, starting in 1978, MOPT would plan and implement a program of periodic maintenance on a continuing basis, to include, over the project period (1978-1981), an average of at least 400 km annually.  - 15 - 3.20 MOPT has not replaced its equipment fleet systematically. Purchases have been sporadic and on a stop-go basis. The last significant purchase of equipment was in 1971/72, financed with US and UK credits worth about US$21 million equivalent. MOPT presently has about 4,200 units 1/ in its fleet, which would seem excessive for the needs of the network, were these units in good condition. The average age of the fleet is over 10 years, and its general condition is critical; about 25% of the units are obsolete and cannot be economically repaired, and a further 35% are out of order or in need of a major overhaul. The proposed project is designed to help MOPT in renewing the fleet over a four-year period 1978-1981. MOPT would need to continue system- atic renewal on an annual basis. Assurance to this effect was obtained during negotiations. Specific minimum requirements for the project period are estimated in paragraph 3.23. 3.21 The districts suffer a permanent lack of funds for spare parts, and make do by buying spare parts on credit from local suppliers. These debts are usually cancelled with the following year's budget, which is again invariably insufficient for current needs, let alone paying past debts. This precarious existence severely hinders programming of road maintenance activities and permits only urgent works to be carried out. The project would provide spare parts to initiate improved equipment maintenance procedures and to carry out necessary repairs. During negotiations, assurance was obtained that the Government would fund and carry out purchase of spare parts on an annual basis to maintain the fleet at an adequate level of availability. Specific minimum requirements for the project period are estimated in paragraph 3.23. In order to restore effective purchasing practices, the Government will cancel or refinance the existing backlog of unpaid suppliers' bills by March 31, 1978. 3.22 In the 1960's, two studies were carried out, both of which recom- mended implementing improvements in the organization of MOPT's maintenance function. Workshop facilities and staffing were strengthened, and a pilot program was established in one of the districts. However, little attention has been paid to the management of the equipment fleet. From 1973 to 1976, UNIDO had a group of experts assisting MOPT's equipment and workshop division in the programming of equipment maintenance. UNIDO recommended the reorganiza- tion of the purchasing, warehousing and distribution of spare parts and the installation of a preventive maintenance system for the fleet. The system, which would be established under the project, would require the stocking of fast-moving spare parts in the districts, with automatic reordering at pre- determined levels. Preventive maintenance, together with an equipment replacement program, should help improve equipment availability considerably (presently estimated at only 40-50%) and, consequently, allow for a reduction in the number of units needed to maintain the highway network adequately. I. Future Level of Highway Maintenance Expenditures 3.23 The lack of funds for purposes other than personnel and administra- tive expenditures is the single most important cause of the ineffectiveness of 1/ Excluding jeeps and workshop equipment.  - 16 - the present road maintenance organization. Success of the corrective measures proposed under the project relies largely on increases in the resources devoted to maintenance. In view of the importance of this matter, the Bank requested the Government to confirm that sufficient funds would be made available for routine, periodic and emergency maintenance of the national network. Minimum requirements for the four years of project execution, 1978 to 1981, are esti- mated as follows: 1977 /1 1978 1979 1980 1981 -(US$ million equivalent, Dec. 1976 values)- Personnel and administration 30.00 30.00 30.00 30.00 30.00 Equipment-total 5.00 /2 15.00 15.00 10.00 10.00 - Bank financed (9.00) (9.00) Spare Parts-total 2.50 6.20 5.00 5.00 5.00 - Bank financed (3.60) Materials /3 3.50 10.00 10.00 10.00 10.00 SUBTOTAL 41.00 61.20 60.00 55.00 55.00 - Bank financed (12.60) (9.00) Contracted Overlays /4 0.00 4.40 8.00 12.00 12.00 GRAND TOTAL 41.00 65.60 68.00 67.00 67.00 - Bank financed (12.60) (9.00) /1 Year-end estimates. /2 Imputed annualized expenditure. /3 Including contracted field labor. /4 Estimated overlay of an average over the period 1978-1981 of about 400 km per year (para. 3.19). The above schedule of minimum requirements was reviewed and confirmed during negotiations. The Government also confirmed that: (a) during the project period, MOPT expenditures for personnel and related overhead would not exceed 50% of the aggregate total of expenditures net of Bank contributions; (b) annual reviews of the adequacy of the above figures would take place in consultation with the Bank, and funds, as necessary, would be allocated for the fiscal year subsequent to the review, for the purposes of funding routine, periodic and emergency maintenance as shown in the schedule; and (c) MOPT would exchange views with the Bank before June 30, 1978 on measures to adjust the composition of the personnel attached to the districts in relation to their needs (para. 3.09).  - 17 - 4. THE PROJECT A. Objectives 4.01 In line with the Government's policy to protect past highway invest- ments in the national highway network, the proposed project would: (a) rehabilitate parts of the main trunk highways; (b) eliminate the damaging effects of overloading vehicles; (c) improve the condition and availability of the highway maintenance fleet; (d) improve efficiency of road maintenance operations; and (e) improve intermodal transport planning. B. General Description 4.02 The project consists of: I. Road Rehabilitation Program Rehabilitation of about 978 km of trunk asphalt paved roads compris- ing improvement of terrain stability and drainage, strengthening and widening of the roadway, where necessary, and overlaying the existing pavement. To this end, the project would provide: (a) civil works to be carried out by contractors; (b) supervision of the civil works by consultants; and (c) coordination of the Rehabilitation Program by an individual expert working in MOPT's Special Highway Programs Division. 1/ II. Vehicle Weight Control Program Installation of about 20 weighing stations on main trunk roads for enforcement of vehicle weight regulations. To this end, the project would provide: (a) complementary studies to define the program and the preparation of detailed engineering; (b) weighing equipment and training in its use; (c) civil works and the installation of the weighing equipment to be carried out by contractors; and 1/ This expert would also coordinate a countrywide study to produce an inventory of road materials (para. 4.19).  - 18 - (d) supervision of the civil works and equipment installation by consultants. III. Highway Maintenance Program Introduction of improved methods for the maintenance and utilization of MOPT's highway maintenance fleet. To this end, the project would provide: (a) about 800 units of equipment for highway maintenance; (b) spare parts for repair of about 1,230 units of equipment which are under 15 years of age; (c) spare parts to initiate a preventive maintenance program for about 1,060 units of equipment purchased after 1970; (d) expansion of existing workshop and store facilities; and (e) technical assistance, including training for: - the supply, distribution and warehousing of spare parts, - programming of preventive and corrective maintenance of equipment, - improving programming, costing and execution of all road maintenance activities performed by the districts. IV. Transport Sector Management Assistance to MOPT's Sector Planning Office for carrying out studies to be determined on the basis of the recommendations of the ongoing bilateral technical assistance provided by the Government of the Netherlands. Also, the Fondo Nacional de Desarrollo Economico (FONADE) is expected to help finance a countrywide study to produce an inventory of locally available road construction materials. V. Logistic Support for Project Execution (a) vehicles to support the execution of the Rehabilitation and Maintenance Programs; (b) road marking equipment for MOPT; and (c) laboratory and drilling equipment for MOPT. C. Road Rehabilitation Program (i) General 4.03 As indicated in paragraph 1.08, the Rehabilitation Program developed out of a survey carried out in 1973 by INGEROUTE (France). The Program was  - 19 - eventually trimmed to 978 km of paved trunk roads, including the most heavily trafficked roads in the country. About 75% of the roads included under the Pro- gram were paved in the 1950's (some under Bank-financed projects); they are now failing because of obsolescence, pavement fatigue accelerated by overloading of trucks, and inadequate maintenance. The selection of roads and the construc- tion schedule (Table 12) take into consideration economic priorities and a concern for achieving a balanced distribution of project expenditures among the country's regions, in line with stated Government policy. The construction schedule also takes into account the capacity of the local construction indus- try and is designed to allow a firm's participation in more than one batch of contracts (para. 4.29). The Program is also large enough to attract foreign firms, five of which have already been prequalified. A summary description of each road section and an outline of the scope of the proposed works is given in Annex 2. The anticipated 1978 traffic volumes and the estimates of economic costs for the various sections are shown in Table 15, and financial costs are shown in Table 12. 4.04 Bridges were generally not considered under the Rehabilitation Program. However, along four road sections, some of the bridges are inadequate for present-day traffic and need repair or reconstruction. The scope of these works is not defined with sufficient detail to include them in the project; however, during negotiations, agreement was reached on the need to rehabilitate these bridges concurrently with the rehabilitation of the roads. (ii) Civil Works 4.05 Civil works would be carried out in 33 road lots over a four and one-half year period starting mid-1977. In addition to strengthening and paving, the works include installation of proper drainage to stabilize the terrain and protect the pavement; widening the pavement, where necessary, to 7.0 or 7.2 meters, but not necessarily widening the shoulders since this would often produce unjustifiably high costs; and provision of complementary works such as retaining walls, erosion control, and signs to protect the roadway and improve the safety and continuity of traffic. On nine lots (including those marked A on Table 12), urgent stabilization and drainage works are being carried out under separate contracts in advance of pavement rehabilitation proper (para. 4.28). (iii) Supervision of Construction 4.06 Under Colombian law, supervision of civil works may not be carried out by the project's designer. For supervision purposes, therefore, the 33 construction lots have been divided into six geographical groups, and MOPT will invite proposals from 35 registered and prequalified consultants. 4.07 Overall supervision of the contracts would be carried out by the Supervision Division of the Construction Directorate, but coordination of the Program would be the responsibility of the Special Highway Programs Division within the same directorate. This Division would require strengthening to provide the necessary control for the project's execution. Six experienced engineers, one for each supervision group, would be hired or recruited within the Ministry for this purpose. In addition, the services of a senior Engineer  - 20 - (Coordinator) would be provided under the project to advise the Division on technical issues and to help coordinate the activities of consultants super- vising the Rehabilitation Program and carrying out a study on road materials (para. 4.19). Outline terms of reference for the Coordinator are given in Annex 3. His professional qualifications and conditions of employment should be acceptable to the Bank. During negotiations, agreement was reached on the staffing (qualification and timetable for recruitment) of MOPT's Special Highway Programs Division for the coordination of the Rehabilitation Program. Recruitment of the Coordinator and at least four of the coordinating staff would be a condition of disbursement for civil works and the construction supervision. D. Vehicle Weight Control Program (i) General 4.08 For some time now, the Ministry has been aware of the extent of the damage that overloaded vehicles have inflicted on the highways of the country. A preliminary selection of suitable locations for weighing stations was carried out by MOPT's Sector Planning Office, and a three-phase study to develop a detailed enforcement program was begun in February 1977 by Tecnoconsulta (Colombia) under the supervision of MOPT's Sector Planning Office. Terms of Reference for the study (Annex 1) were reviewed by the Bank and found satis- factory but in need of several additions which were discussed and agreed during negotiations. Phase I, which should be completed by May 1977, would assess the adequacy of existing regulations on weights and dimensions of heavy vehicles and relevant regulations in neighboring countries (para. 3.06). On the basis of the consultants' recommendations, agreement would be reached with the Bank on the legal and administrative measures needed to carry out and enforce the program, and the scope and focus of the subsequent phases of the study. Phase II would determine the most suitable system of weight control and enforcement and define the equipment most suited to the system, taking worldwide experience into consideration; Phase II would also review the compo- sition of the truck fleet and related import regulations as well as ways of developing the support of the trucking industry. Phase III would consist of the preparation of engineering designs and bid documents for procurement of the civil works and weighing equipment. Financial assistance for Phases II and III of the study would be provided under the project. This would include visits of Colombian consultants and MOPT staff to countries with experience in latest techniques in vehicle weighing. Phase II of the study is expected to be completed by the end of 1977 and Phase III in mid-1978. 4.09 The study would provide the basis for defining a plan of action for coordinated Government actions concerning the regulatory and legal framework, institutional arrangements and development of public awareness. During nego- tiations, the Government undertook to develop such a plan in consultation with the Bank no later than February 28, 1978. Before disbursing for construction of the weighing stations, the Government would have to show, to the Bank's satisfaction, that (a) adequate legal provisions have been enacted to put into effect the enforcement program; (b) the institution chosen to carry out the weighing programs has been properly staffed, equipped and funded; (c) the general public has been apprised of the aims, objectives and nature of the  - 21 - enforcement program; and (d) the trucking industry has been associated with the development of the program. Furthermore, during negotiations, it was agreed that funds in this particular category of the loan would not be trans- ferred to any other category and, if not disbursed, would be cancelled. (ii) Weighing Equipment Installation and Civil Works 4.10 The most suitable type of weighing equipment would be determined by the study. The suppliers would be required to install and maintain the equipment for a satisfactory period and would provide manuals and on-the-job training for its operation and maintenance. It is envisaged that the civil works would include housing for the equipment, buildings and a parking area for overloaded vehicles. Supervision would be carried out by two or three Colombian consulting firms selected according to procedures in Decree 150 of 1976. E. Highway Maintenance Program (i) General 4.11 The objectives of the Highway Maintenance Program are: (a) to improve the availability of the road maintenance fleet from the present low level of 40 to 50% to about 70% over the four-year period 1978-1981; and (b) to assist the districts in making better use of their resources for road maintenance operations, including the equipment. Increased equipment availability would allow a reduction in the size of the fleet from the present 4,200 units to about 3,740 units, which is estimated to be the need of MOPT. 1/ (ii) Equipment Replacement 4.12 The Equipment Replacement Program to be carried out between 1978 and 1981, together with its annual financial requirements, is shown in Table 13. This program is aimed not only at reducing the average age of the fleet but also at adjusting its composition to the districts' needs. Equipment replace- ment should be accompanied by orderly scrapping of units which would no longer be economical to maintain. Total financial requirements are US$50 million in 1976 prices, of which US$18 million would be financed by the Bank and the remaining US$32 million by the Government. Highest priority equipment suit- able for international procurement has been included in the project (see list in Table 13). During negotiations, the Government confirmed that, over the four years 1978-1981, it would provide MOPT with sufficient funds in accordance with the schedule in paragraph 3.23 to complete the Equipment Replacement Program. The Government also confirmed that MOPT would complete the ongoing scrapping program by December 31, 1978 and continue thereafter to dispose systematically of aged equipment. 1/ Excludes jeeps and workshop equipment.  - 22 - (iii) Spare Parts for Repair of about 1,230 Units of Equipment 4.13 The project provides for the purchase of spare parts for the over- haul of about 1,230 economically repairable units. A preliminary list of equipment to be repaired has been drawn up by MOPT. This list would be reviewed when the detailed spare parts requirements are known, the age and utilization of each unit checked, and the extent of the repair work assessed. No equipment older than 15 years (except plant) would be included in the program. During negotiations, agreement was reached on procedures for assess- ing the equipment to be included in the repair program. (iv) Spare Parts to Initiate a Preventive Maintenance Program for About 1,060 Units of Equipment 4.14 Under the project, a Preventive Maintenance Program would be in- corporated in all districts. UNIDO experts have prepared preventive mainte- nance schedules for all equipment and have demonstrated their function to the districts. To fulfill the objectives of a Preventive Maintenance Program, the districts need to retain a stock of fast-moving spare parts. The project would help MOPT in setting up the initial stock of spares for the 1,060 units, identified by UNIDO, which have been purchased since 1970. Reorganization of MOPT's stores and supply procedures began under UNIDO supervision in six districts and is being continued throughout the country. The reorganization of procedures would have to be completed before initiating the Preventive Maintenance Program. During negotiations, agreement was reached on (a) the details of the Preventive Maintenance Program and (b) the reorganization of MOPT's purchasing, warehousing and distribution procedures. Funds allocated for purchasing spare parts for preventive maintenance would not be disbursed until such reorganization has been completed. (v) Extensions to Workshops and Stores 4.15 The project would provide for extensions to existing stores and work- shop facilities, including installation of necessary equipment, to facilitate the execution of the Preventive Maintenance Program. During negotiations, the scope and timetable of such extensions were discussed and agreed. (vi) Technical Assistance 4.16 The technical assistance would mainly be on-the-job training for engineers, mechanics, storemen and field personnel, with special emphasis being given to day-to-day activities in the districts. Twelve engineers and techni- cians would be provided by consultants over two to three years (total of 280 man-months, Chart 2). Their Terms of Reference, outlined in Annex 3, were reviewed and agreed during negotiations. The Government confirmed that the consultants selected for this program, as well as their terms and conditions of employment, would be acceptable to the Bank. The ongoing UNIDO/UNDP program would continue to provide one equipment utilization expert to MOPT until 1978. The activities of the expert would be adequately coordinated with the technical assistance under the project.  - 23 - 4.17 MOPT's Directorates of Commerce and Finance, and of Operations would be required to assign full time counterparts to the technical assistance team. These counterparts will be experienced in their respective fields and will form a permanent training group in MOPT. During negotiations, agreement was reached regarding the composition and qualifications of MOPT's counterpart staff for the Highway Maintenance Program. The appointment of consultants for technical assistance and MOPT's compliance with the agreed counterpart staff- ing for the Highway Maintenance Program is a condition for disbursement for equipment, spare parts and workshop and store extensions under the Maintenance Program. F. Transport Sector Management 4.18 The recently created Sector Planning Office is receiving technical assistance from the Netherlands Economic Institute to help it set up a proper organization for itself and initiate studies leading to the preparation of a National Transport Plan for the country. Many of the basic activities required for these purposes are well under way, a regionalization of the country has been prepared, products for flow analysis have been grouped into categories, initial modal studies have been started and an intensive staff training program has been carried out over the last year. Yet, in order to accomplish the final goal of designing a National Transport Plan, specialized technical studies may be needed. The project would help finance such studies. Specific requirements would be agreed with MOPT as they arise (para. 2.13). 4.19 MOPT needs a comprehensive inventory of locally available road con- struction materials and has requested FONADE to help finance a countrywide study to produce such an inventory. This study would not only fill the gap in the knowledge of available materials and their uses, but should also permit substantial economies of time and cost for future engineering designs and eliminate the utilization of unsuitable materials for road maintenance. The study is expected to last two years and cost about US$1.0 million. Outline Terms of Reference are given in Annex 4. The Government confirmed, during negotiations, its intention to initiate the proposed study by October 30, 1977. G. Logistic Support for Project Execution 4.20 MOPT and local consultants lack mobile laboratories for testing road construction, especially asphalt works. To overcome this shortcoming, six equipped mobile laboratories would be purchased by MOPT under the project for use by consultants supervising the Rehabilitation Program. Two sets of drilling equipment would also be provided to augment MOPT's aging stock and would be utilized initially for the FONADE-financed material resources study. Few paved roads have traffic control lines in Colombia, due primarily to the lack of adequate painting equipment. Two sets of truck-mounted road marking equipment would be purchased for use by MOPT. The equipment would also be hired out to contractors working on the Rehabilitation Program. The project would provide liaison vehicles for MOPT staff and consultants directly involved in its implementation.  - 24 - H. Cost Estimates and Financing 4.21 The total cost of the project is estimated at US$153.75 million equiv- alent, of which US$90.0 million (about 58%), representing the estimated foreign exchange component, would be financed by the Bank. The remaining project cost as well as necessary increases in MOPT's budget over the project period 1978-1981 (estimated at US$246.0 million) would be financed by the Government (para. 3.23). The latter include expenditures for spare parts and periodic maintenance, which, although essential for the success of the project, have not been considered as project expenditures because of their recurrent nature. The amount also includes capital expenditures of US$32.0 million for replace- ment of equipment, most of which would be procured bilaterally by the Govern- ment. Details of costs for the road rehabilitiation program (70% of the project) are given in Table 12. A summary of project costs is given on the following page. 4.22 Construction cost estimates for the Rehabilitation Program are based on detailed engineering prepared by Colombian consultants, the reviews carried out by MOPT's Special Highway Programs Division and on unit prices for similar works recently contracted. The average estimated construction cost is US$75,000 per km, excluding supervision and contingencies. This is reasonable considering that about one-third of the costs are for stabilization, drainage and protec- tion works. Cost estimates for the vehicle weight control program are based on typical layouts for similar schemes in Brazil adapted to Colombian conditions and prices. As mentioned in paragraph 4.08, detailed engineering for these items would be available in 1978. Since the proposed weighing stations repre- sent only a small part of the project cost, this does not entail an unacceptable risk. 4.23 Cost estimates for supervision by local engineering consultants are based on past experience in Colombia and amount to about 10% of construction costs. The cost of the technical assistance to MOPT has been based on the average of US$50,000 per man-year. Most of this assistance is expected to be provided by international firms or expatriate individuals. A total of about 230 man-years of professional services would be required for construction supervision and technical assistance. 4.24 Estimates for spare parts and the items for logistic support for the project have been based on detailed analyses of the requirements by UNIDO and MOPT and recent quotations obtained in Bogota. Nearly all goods would have to be imported and the estimates are based on c.i.f. prices at port of entry. 4.25 A contingency of 10% of civil construction costs has been included to allow for increases in quantities. Although allowance has been made in the engineering designs for further deterioration of the pavement in the period between the site investigations and construction, some design modifications will no doubt be required as the works proceed. Provision for future price increases has been calculated separately for all items following recent trends in Colombia. Price escalation rates for civil works are greater than those given in the most recent Bank guidelines due to the Government's policy of increasing the market price of petroleum products to parity with international levels (para. 3.12). Specific price escalation rates are shown at the bottom of the following page. The total price contingency provision amounts to an average of 26% of total base costs. The bulk of this provision relates to the four-and-one-half-year Rehabilitation Program.  - 25 - pla= COST ESTDXAL3S AND rDn ICZ Bank Us$ U illio- Porticiltion (June 77 (USS) Local Poreiga TotAl Locol Fored Totd Killi I. Road Rebhbilitation ProXr_ Civil Works 1,368.96 1,368.96 2,737,92 37.20 37.20 74.40 37.20 50 Supervision 136.16 136.16 272.32 3.70 3.70 7.40 3.70 50 Coordination (specialist) 1.84 7.36 9.20 0.05 0.20 0.25 0.20 80 II. Vehicle Weight ContrOl Program Phase II and III of ongoing study (consult.) 1.84 7.36 9.20 0.05 0.20 0.25 0.20 80 Civil Works 92.00 92.00 184.00 2.50 2.50 5.00 2.50 50 Weighing Equipment - 36.80 36.80 - 1.00 1.00 1.00 100 Supervision (consult.) 11.04 11.04 22.08 0.30 0.30 0.60 0.30 50 III. Highway Maintenance Program Store and Workshop Extensions 29.44 29.44 58.88 0.80 0.80 1.60 0.80 50 Maintenance Equipment - 662.40 662.40 - 18.00 18.002, 18.00 100 Spare Parts for Repairs - 82.80 82.80 - 2.25 2.25 2.25 100 Spare Parts for Preventive Maintenance - 49.68 49.68 - 1.35 1.35 1.35 100 Technical Assistance 11.04 44.16 55.20 0.30 1.20 1.50 1.20 80 IV. Transport Sector Management Sector Studies 1.84 7.36 9.20 0.05 0.20 0.25 0.20 80 Inventory of Road Construction Materials 7.36 29.44 36.80 0.20 0.80 1.00 0.00 0 3/ V. Logistic Support for Prolect Execution Vehicles - 3.68 3.68 - 0.10 0.10 0.15 100 Road Marking Equipment - 5.52 5.52 - 0.15 0.15 0.15 100 Laboratory and Drilling Equipment _ 16.56 16.56 - 0.45 0.45 0.45 100 Base Cost (June 1977) 1,661.52 2,590.72 4,252.24 45.15 70.40 115.55 69.65 VI. Contingencies Physical (10 of Civil Works) 149.04 149.04 298.08 4.05 4.05 8.10 4.85 50 Price Eacalation 507.84 599.84 1,107.68 13.80 16.30 30.10 16.30 (26X of base cost) 4/ - - __- Total Estimated Project Cost 2,318.40 3,339.60 5,658.00 63.00 90.75 153.75 90.00 58 1/ Estimated Col$ June 1977 value; rate of exchange Col$ 36.8 - US$1; local currency estimtes "aSu that devaluation will be in line with domestic inflation via-a-vis USS. 2/ Government to procure an additional US$32.0 million for equipmet largely fs bilateral sources. 3/ Financing has been requested from POMADE (Fondo Naciomal de Daarrollo Economico) 4/ Price contingencies based on the following astimted _ a1 price increases: - civil works: 1977-1979. 12X; 1988 end beyond, 1O0 - equipmeat and spare parts: 1977-1979, 8X - consultants and specialists: 1977 ad beyo d; 1O0  - 26 - 4.26 The estimates of the foreign exchange component of the various items are based on detailed analyses made by MOPT and reviewed by the Bank. The foreign exchange component of civil works amounts to 50%, assuming that all contracts would be awarded to local contractors, as was the case for the Fifth and Sixth Highway Projects. The estimated 50% foreign exchange component of the cost of local engineering consultants for supervision reflects the overall state of development of the industry and the fact that it still has a degree of reliance on specialized foreign technical expertise. The 80% foreign exchange component for advisory services reflects the assumption that most of it is expertise not readily available in Colombia. I. Disbursements 4.27 Disbursement of the loan would be made as follows: (a) 50% for civil works and related supervision; (b) 80% of local expenditures or 100% of foreign costs for advisory services by consultants or individuals; and (c) 100% of the foreign expenditures for direct imports or 80% of the total cost for imported goods locally procured or 90% of ex-factory costs for locally manufactured equipment, spare parts and logistic support items. The estimated schedule of disbursements is indicated in Table 14. 4.28 Retroactive financing of up to US$1.0 million equivalent would be provided for civil works carried out since April 1, 1977 for the stabiliza- tion of critical sections of the Versalles-La Pintada, Pereira-La Felisa and Ibague-La Linea-Armenia roads. These works should be completed before rehab- ilitation of the roadway commences. Early execution of the stabilization works, which require dry weather, will permit advancing the rehabilitation proper by at least six months. The stabilization works have been divided into nine lots (including those marked A in Table 12), and some have already been contracted by MOPT (para. 4.30). J. Execution and Procurement 4.29 The execution of the project would be the responsibility of MOPT. The project implementation schedule, covering all project elements and indi- cating Bank involvement, is in Chart 3. Construction contracts for the Rehabilitation Program (except urgent stabilization and drainage works, para. 4.30) would be procured by international competitive bidding in accordance with Bank Guidelines. The Rehabilitation Program has been grouped for bidding purposes into six time-spaced batches, each containing 4 to 10 lots (Table 12). This would enable firms awarded contracts in the early batches to partic- ipate in later batches without overextending their capacity. The estimated value of individual contracts would range from US$2.0 to US$4.0 million so that middle size contractors would qualify to bid; large firms could bid on more than one lot per batch. During negotiations, details of the batches and a schedule for bidding for the Rehabilitation Program were discussed and agreed. 4.30 The stabilization and drainage works (para. 4.28) are being contrac- ted under conditions and specifications similar to those for the rehabilita- tion works. The works are in relatively isolated zones, are concentrated and are comparatively small in size (lots under US$1,100,000). Foreign contractors,  - 27 - unless established in Colombia, would therefore not have been interested in the works. For this reason, and in order to allow for an early start of work, bids were advertised locally only. 4.31 Extension works to stores and workshops in the districts are esti- mated at 5,000 sq. m. (about US$1.6 million) and the work would interest only small local contactors. Bids would be advertised locally. 4.32 Contracts for construction and installation of the weighing stations would be procured by international competitive bidding, in accordance with Bank Guidelines, in two or three packages, depending on geographic location. The packages would be between US$1.5 and US$3.0 million and, although of greater interest to local firms, might be attractive to foreign contractors. The weighing equipment would be procured by international competitive bidding, in accordance with Bank Guidelines, and would most probably be of foreign manu- facture. In order to provide continual maintenance of the equipment, the supplier would be required to set up local representation. During negotiations, details of qualification requirements and contract conditions for the weighing station works were reviewed and agreed. 4.33 The civil works component of the project would have some impact on employment, providing jobs for up to about 3,000 skilled and unskilled workers over the four- to five-year period during which the project is being executed. 4.34 Procurement of spare parts, the maintenance equipment and the logis- tic support items would be carried out by international competitive bidding in accordance with Bank Guidelines. Provision for about one year's supply of spare parts would be included with the equipment purchases. The supplier would present with his bid for equipment a priced scaling list of spare parts which would be guaranteed for one year after delivery of the equipment. Spare parts for specific makes of existing equipment would be procured directly from established dealers in accordance with a purchase program acceptable to the Bank. 4.35 The Bank would review and approve ex-ante all bid documents and specifications for civil works, equipment, spare parts and logistic support items. However, given the very strict basis for contracting contained in Decree 150 (para. 3.17), contract awards for (i) civil works and (ii) equip- ment, spare parts and logistic support items amounting to less than US$3,000,000 and US$1,500,000 respectively would be reviewed on an ex-post basis, with the Bank retaining the right to exclude from financing such contracts not awarded according to Bank Guidelines and to cancel the respec- tive amount from the loan. Procurement procedures were reviewed and agreed during negotiations. 4.36 Indicators by which the project would be monitored are given in Annex 5. The purpose of project indicators and the specific indicators to be used for this project were agreed during negotiations as well as the arrangements for collecting information during and after the implementation stage.  - 28 - K. Project Risks 4.37 The Rehabilitation Program presents no special risk. Particular attention was given during pruJecL pieparation to the major sources of imple- mentation problems encountered in past highway construction projects. All road sections have been engineered in detail and are ready for bidding. Localized stabilization of select sections is already under way. The streng- thening of MOPT's capacity to administer and coordinate the Rehabilitation Program is a condition for disbursement (para. 4.17). The financial require- ments of the program have been measured against conservative estimates of future revenues of the Highway Fund, which would be supplemented as necessary by contributions from the general budget (para. 3.23). 4.38 Past attempts to improve maintenance have been only partially successful and short-lived. The main reasons for this have been a lack of permanent Government commitment and a piecemeal approach. Every effort has been made in the preparation of the proposed Program to develop a coherent framework for upgrading highway maintenance; corrective measures aimed at major deficiencies have been formulated into specific covenants with deadlines and quantified minimum requirements, particularly increases in maintenance expenditures (para. 3.23) which are the foundation of the proposed maintenance program. Upgrading a public service institution such as MOPT, involving dozens of field units, is an undertaking which clearly entails higher risks than, say, a construction contract. In the case of the proposed maintenance program, these risks have been reduced sufficiently to allow reasonable hope of success. 4.39 Past efforts to strengthen enforcement of vehicle weight control in Colombia have failed to have a long-lasting impact. This has been due not only to inadequate physical facilities, but to lack of continuing commitment and, possibly also, lack of specific targets and organizational arrangements. The study included under the project would provide a basis for developing (a) Government commitment and public support, in particular, by associating the road transport industry to the objectives of the program; and (b) specific implementation measures. The disbursement conditions in paragraph 4.09 would provide adequate protection against the risk of building physical facilities without a firm and broadly based commitment to enforce weight limitations on a permanent basis. 5. ECONOMIC ASSESSMENT A. General 5.01 A detailed economic assessment has been made of the three main components of the project for which quantifiable benefits could be estimated. These are the Road Rehabilitation Program, the Highway Maintenance Program and the Vehicle Weight Control Program. These three programs account for about 99% of the estimated project base costs. Non-quantified benefits which may accrue as a result of the investments are discussed as each program is reviewed. Included among these non-quantified benefits is that of keeping  - 29 - the roads open to traffic at all times, an all-important factor given that the roads involved are the trunk highways, the backbone of the transport system. Also not quantified is the fact that all the roads involved in the Rehabilita- tion Program, by virtue of being the trunk system of the country, are roads leading to ports and, therefore, are key links in the country's exports. Their continuing deterioration and eventual interruption would affect the country's capacity to export and would disrupt domestic economic activities. The "with- out project" alternative has, therefore, much higher costs or disbenefits than have been allowed for. 5.02 Benefits of the proposed project would accrue to the economy at large in the form of avoided further increasing vehicle operating costs, which would eventually affect the prices of exports and internally consumed goods. Financially, the immediate impact of the execution of the project would be first appreciated by the road transport industry. The industry, being reason- ably competitive in Colombia, would, in the long run, have to pass on these financial benefits to the rest of the system, thereby ensuring an equitable distribution of the effects of the project. Because the income distribution effect of the project is estimated to be limited, the social rate of return of the project, had it been accurately assessed, would likely have been close to, or slightly lower than,the economic return. 5.03 In carrying out the economic assessment of the different components of the proposed project, adjustments have been made, insofar as practicable, to eliminate the influence of taxes and subsidies. The adjustment factor was estimated to be 0.8, which is in line with similar estimates made for the economy as a whole where a value of 0.84 has been determined. Economic costs net of taxes and subsidies have been estimated for construction and investment costs, vehicle operating costs, maintenance costs, etc. However, no correspond- ing adjustment has been attempted to counterbalance distortions in the exchange rate. The use of a shadow exchange rate would make little difference to the results obtained because the structure of costs and benefits in the economic analysis is similar insofar as it is made up of essentially the same elements, e.g., petroleum products (fuel, asphalt), equipment, spare parts etc. Both sides of the equation being affected by a similar proportion, the results remain largely invariant. Similarly, no attempt was made to shadow price the cost of labor. Implementation of the Rehabilitation Program has rather limited employment effects because paving works are capital intensive in nature. Similarly, the Weight Control Program is of such comparatively small scale that shadow pricing labor would have a negligible influence. The Maintenance Program would use no more labor than presently employed by MOPT (para. 3.23), and shadow pricing it would only increase the returns of the program which are already estimated above 100%. Finally, implementation of the project involves negligible expropriation of land and, therefore, no shadow price has been used for it. B. Road Rehabilitation Program (i) General 5.04 All 33 road lots in the program were evaluated using the same methodology. Each lot is independent of all others and was therefore analyzed separately; there is, however, a joint assessment of the Program as an entire  - 30 - entity (para. 5.08). The analysis compares economic costs of civil works, including supervision and physical contingencies, and maintenance costs (Table 15) with the benefits arising from vehicle operating cost savings (Table 16) of the alternatives of not rehabilitating the roads, the "without" project case, -Ad and that of doing so, the "with" project case. Details are given in Annex 6. (ii) Analysis and Returns for Each Individual Section 5.05 Results of the evaluation for each lot are given in Table 17; rates of return based on the best estimates of the intervening variables (being the mean value of the variable) vary from about 14% to well over 50%; on this basis, all subprojects would yield returns above the opportunity cost of capital, which is estimated for Colombia at 11%. Table 17 also shows the results of a risk analysis performed for each lot and the variations from the best estimates (mean of the distribution) used for this analysis. The mean and standard deviations of the probability distribution of the rate of return for each lot, as well as the probability of the rate of return being less than the opportunity cost of capital, 11%, are indicated. There is a virtual assurance that yields higher than the opportunity cost of capital will be obtained on all lots. On four lots (10, 11, 22 and 28), returns above 50% can be expected; such high returns occur because many of the rehabilita- tions are long overdue. 5.06 There are a few lots with comparatively lower rates of return despite the fact that the least cost alternative has been considered. These cases occur because, as in the road from Fundacion to La Ye (Lots 17, 18 and 19)--part of the Eastern Trunk Highway--the rehabilitation involves not only bringing the existing road surface up to standard but also some improvement of the currently underdesigned road. In this specific case, shoulders are being added, curves are being made safer and, in general, the same design standard which has been used throughout the Eastern Trunk highway is being followed. In other instances such as the road from Carreto to Cartagena (Lots 20, 21 and 22)--part of the Western Trunk Highway--costs are comparatively high because the pavement requires more than average streng- thening due to poor soil conditions. In some other cases, particularly those in mountainous areas with highly unstable terrain, the rehabilitation includes carrying out expensive complementary stabilization and protection works which are not reflected in vehicle operating cost savings but in the avoidance of the roads being periodically closed to traffic, a benefit which has not been assessed. 5.07 In general, in designing the least cost alternative, the point of view was taken that there should be a high degree of confidence that the structure would remain in place for the length of its estimated life, 10 years. This implies that, especially in mountainous regions, expensive protection and stabilization works had to be considered. All the roads in the program are paved roads, and instability of the roadbed cannot be tolerated because it causes cracking and breaking up of the pavement. Execution of the stabilization and protection works is not only essential for having a paved road, but also has the effect of limiting, if not eliminating, the occasions when the road is closed to traffic. A simple estimate of the number and duration of occasions when the road would be closed is difficult and clearly not enough to determine the effect of these occasions as increased costs  - 31 - associated with the "without" alternative. The return on some lots is there- fore understated, particularly for roads crossing difficult and unstable terrain such as Oiba to Piedecuesta (Lots 23, 24 and 25), Ibague to Armenia (Lots 12, 13 and 14) and Medellin to Pintada (Lots 1 and 2). To compensate for this understatement of benefits, a special landslide removal cost has been assessed against the "without" project alternative on these mountainous roads (Table 15). (iii) Analysis and Return for the Full Program 5.08 Based on the best estimate of the variables described above for each individual lot (column 1 of Table 17), the economic return for the full Rehabilitation Program was computed. The program has a weighted economic return of 36% and first year benefits of 23% and is therefore well justified. C. Highway Maintenance Program (i) General 5.09 To appraise the economic return of the highway maintenance invest- ments proposed in the project, a combination of a newly developed highway design and maintenance (HDM) model and the Bank's traditional return analysis model (CBPACK) were used. The HDM model was used in its simplest form to estimate the total cost of transport, including vehicle operating costs and maintenance costs, for the total Colombian national highways network in two sets of conditions: the existing maintenance policies in the country, "with- out" project case, and those that would be made possible by the implementation of the project, "with" project case. 5.10 A typical run of the HDM model starts with the maintenance submodel, which estimates total maintenance cost in each year of the analysis given the deterioration of the road caused by the specified traffic and climate. Vehicle operating costs are estimated using the details obtained from the road deterior- ation submodel together with the geometry of the road. Fuel consumption, tire wear, vehicle maintenance and depreciation costs are calculated and are used in conjunction with traffic forecasts to give a total vehicle operating cost for each year analyzed. Maintenance and user costs thus derived are used to estimate project appraisal criteria such as the economic rate of return, benefit/cost ratio and net present value of the proposed Program. (ii) Analysis and Return of the Program 5.11 The economic evaluation, details of which are in Annex 6, was based on comparing the total incremental economic maintenance costs with the incre- mental economic user benefits generated by the program. A 10-year analysis period was considered appropriate since policy changes are liable to occur over longer periods of time. 5.12 Based on unit maintenance costs, the estimated present condition of the network and the maintenance policies ("with" and "without" project) which are described in Annex 6, the cost streams shown on Table 18 were calculated for two mutually exclusive alternatives. The first considers that only a limited amount of rehabilitation is done beyond the Rehabilitation Program  - 32 - included in the project. 1/ The second alternative assumes that a fairly large rehabilitation program is carried out, particularly during the initial years of Program implementation. Table 19 summarizes the economic appraisal criteria of the two alternatives; both of them generate rates of return well over 100%, suggesting that whether limited or extensive rehabilitation is carried out as a matter of maintenance policy, implementation of the Highway Maintenance Program is highly beneficial to the country. However, the alter- native in which rehabilitations are carried out when ideally required (which, because of the present condition of the network would occur in the first few years of Program implementation) produces a higher net present value than the alternative in which only limited additional rehabilitation (about 1,000 km in the 10-year analysis period) is done. This suggests that, in the absence of budgetary or other constraints, it would be advisable for the Government to rehabilitate the paved network, particularly surface treated roads, as soon as possible. Constraints exist, however, both on the budget and on the capacity of the contracting industry to carry out such an extensive program, and, therefore, the program with limited additional rehabilitation would seem more appropriate. 5.13 Implementation of the Highway Maintenance Program with limited addi- tional overlays and rehabilitations would demand additional Government re- sources in line with those stated in paragraph 3.23. In the period 1978-1981, an average increase of US$32.0 million over the 1977 budgetary appropriation and about US$26.0 million over the estimated 1977 effective outlay for highway maintenance (Table 20) would be required. D. Vehicle Weight Control Program (i) General 5.14 Enforcement of weight control regulations would significantly reduce, if not eliminate, overloading of trucks. Its major impact would be to lessen pavement fatigue, thereby reducing routine maintenance requirements (pot-hole filling and patching), as well as the need for early overlays and/or eventual reconstruction. The program would prevent increases in vehicle operating costs caused by rapid pavement deterioration. The elimination of systematic over- loading would also result in safety on the roads being improved. The effect of the controls on the trucking industry, specifically the efficiency in the utilization of its vehicles, has not been taken into account in the analysis; an attempt will be made to assess this impact as part of the ongoing study of weight controls (para. 4.08). Most of the benefits of the Program are dif- ficult to quantify; recent studies in Brazil and Australia suggest, however, that the savings from improved weight control are quite high compared to the relatively small cost of an enforcement program. (ii) Analysis and Return of the Program 5.15 The economic evaluation, details of which are in Annex 6, compares the costs of the program against an estimate of the benefits arising only from deferral of overlays on that part of the paved network with traffic presently above 1,000 vehicles per day. Both in the "with" and "without" cases, it 1/ It was assumed that the Rehabilitation Program included in the project would be carried out irrespective of the Highway atintenance Program.  - 33 - has been assumed that overlays would be carried out when economically justi- fied. If this were not the case, the increased vehicle operating expenses would lead to higher estimates of the benefits. The determination of the time at which overlays would be economically justified was based on Colombian design standards (1970). The costs of overlays were derived from estimates prepared for the Rehabilitation Program. In the absence of detailed truck loading surveys, existing overloading was estimated on the basis of judgment reflecting familiarity with Colombia's trunk road network. It is asumed that the effect of the enforcement program would be to eliminate all loading in excess of 10% over the legal limit. These assumptions lead to a rate of return of about 46% considering an economic life of 10 years. Due to the Program, requirements for overlays would be reduced from about US$28 million annually to about US$17 million. The above estimates confirm the high priority of the enforcement of weight control. 6. AGREEMENTS REACHED AND RECOMMENDATION 6.01 During negotiations, agreement was reached with the Government on the following: (a) establishment within MOPT of a separate unit for highway planning by December 1, 1977 (para. 2.14), together with its terms of reference, staffing requirements and specific measures for its establishment (para. 3.10); (b) intention of the Government to supplement the National Highway Fund's revenues as necessary through the project period 1978-1981, to achieve the agreed level of maintenance expenditures and to finance its share of the project costs (para. 3.12); (c) starting in 1978, MOPT to plan and implement a program of periodic maintenance, on a continuing basis, to include, over the project period (1978-1981), an average of at least 400 km annually (para. 3.19); (d) schedule of minimum requirements for routine, periodic and emergency maintenance of the national network (para. 3.23); (e) during the project period, MOPT expenditures for personnel and related overhead to be not more than 50% of the aggregate total expenditures (net of Bank contributions) for routine, periodic and emergency maintenance (para. 3.23); (f) MOPT to consult with the Bank before June 30, 1978 on measures to adjust the composition of the personnel attached to the districts in relation to their needs (para. 3.23); (g) the need to rehabilitate bridges along four road sections concurrently with the rehabilitation of the roads (para. 4.04);  - 34 - (h) staffing of MOPT's Special Highway Programs Division for coordination of the Rehabilitation Program (para. 4.07); (i) additions to the Terms of Reference for the study to develop a detailed enforcement program for vehicle weight control (para. 4.08); (j) development, not later than February 28, 1978, of a plan of action to implement the regulatory and legal framework, institutional arrangements and development of public awareness relating to vehicle weight control (para. 4.09); (k) funds for the weighing station program category of the loan not to be transferred to any other category and, if not disbursed, to be cancelled (para. 4.09); (1) Government to provide MOPT with sufficient funds to complete the Equipment Replacement Program and MOPT to complete the ongoing scrapping program by December 31, 1978 and continue thereafter to dispose systematically of aged equipment (para. 4.12); (m) procedures for assessing the equipment to be included in the repair program (para. 4.13); (n) details of the Preventive Maintenance Program and the reorganiza- tion of MOPT's purchasing, warehousing and distribution procedures (para. 4.14); (o) scope and timetable of extensions to workshops and stores (para. 4.15); (p) consultants to be selected for the Highway Maintenance Program, as well as their terms of reference and conditions of employment being acceptable to the Bank (para. 4.16); (q) composition and qualifications of MOPT's counterpart staff to the technical assistance for the Highway Maintenance Program (para. 4.17); (r) intention of the Government to initiate the FONADE-financed study of locally available road construction materials by October 30, 1977 (para. 4.19); (s) details of the batches and a schedule for bidding for the Rehabilitation Program (para. 4.29); (t) details of qualification requirements and contract conditions for the weighing station works (para. 4.32); (u) procurement procedures and the Bank's review of procurement for civil works and equipment, spare parts and logistic support items (para. 4.35); and  - 35 - (v) the purpose of project indicators, the specific indicators to be used for the project, and the arrangements for collecting informa- tion during and after the project implementation stage (para. 4.36). 6.02 During negotiations, assurances were obtained from the Government on the following: (a) routine, periodic and emergency maintenance activities would be identified and budgeted separately from other non-maintenance activities from 1978 onward (para. 3.18); (b) MOPT would continue systematic renewal of the fleet on an annual basis (para. 3.20); and (c) purchase of spare parts on an annual basis would be funded and carried out to maintain the fleet at an adequate level of avail- ability, and the existing backlog of unpaid suppliers' bills would be cancelled or refinanced by March 31, 1978 (para. 3.21). 6.03 The following are conditions of disbursement for the corresponding parts of the project: (a) recruitment of the Coordinator and at least four of the agreed coor- dinating staff for MOPT's Special Highway Programs Division would be a condition of disbursement for civil works and the construction supervision (para. 4.07); (b) before disbursing for construction of the weighing stations, MOPT would satisfy legal, staffing, funding and public relations requirements and assure that the trucking industry has been associated with the development of the vehicle weight program (para. 4.09); (c) the reorganization of MOPT's supply and distribution procedures would be accomplished before purchasing spare parts for preven- tive maintenance (para. 4.14); and (d) the appointment of consultants for technical assistance on the Highway Maintenance Program and MOPT's compliance with the agreed counterpart staffing would be a condition for disbursement for equipment, spare parts and workshop and store extensions under the Maintenance Program (para. 4.17). 6.04 Subject to the above, the project constitutes an adequate basis for Bank lending of a total amount of US$90 million equivalent to the Republic of Colombia; the term would be 17 years, including a three-and-one-half-year grace period. June 16, 1977   TABLE 1 COLOMBIA SEVENTH HIGHWAY PROJECT IBRD-IDA Involvement in Colombia Transport Highways Loan 43-CO 1951 US$ 16.50 First Highway Project Loan 84-CO 1953 US$ 14.35 Second Highway Project Loan 144-CO 1956 US$ 16.50 Third Highway Project Loan 295-CO 1961 US$ 19.50 ) Fourth Highway Project Credit 05-CO 1961 US$ 19.50 Loan 550-CO 1968 US$ 17.20 Fifth Highway Project Loan 680-CO 1970 US$ 32.00 Sixth Highway Project 135.55 Railways Loan 68-CO 1952 US$ 25.00 First Railway Project Loan 119-CO 1955 US$ 15.90 Second Railway Project Loan 267-CO 1960 US$ 5.40 Third Railway Project Loan 343-CO 1963 US$ 30.00 Fourth Railway*Project Loan 551-CO 1968 US$ 18.30 Fifth Railway Project Loan 926-CO 1973 US$ 25.00 Sixth Railway Project 119.60 GRAND TOTAL 255.15 Source: IBRD March 1977  TABLE 2 COLOMBIA SEVENTH HIGHWAY PROJECT Public Sector Investment in Transport (1966-75) (Millions of currpnt Pesos) YEAR ROAD_/ RAILk' MARINE INLD. WATER AIR TOTAL 1966 760 90 157 17 19 1,063 1967 887 135 163 26 108 1,319 1968 1,174 195 100 24 113 1,606 1969 1,367 119 83 33 104 1,706 1970 1,555 185 119 42 114 2,016 1971 1,956 185 88 44 168 2,441 1972 2,146 143 51 65 172 2,618 1973 2,062 210 61 79 211 2,623 1974 2,360 150 222 100 436 3,268 1975 1,908 570 240 112 350 3,180 a/ Does not include investments by departments, municipalities, regional authorities, or private entities. Refers only to infrastructure and not to vehicles, which are included in other modes except air. Also, includes maintenance which is treated as an investment although a very high proportion of expenditures are current expenses and not investment. b/ Investment in local currency only, does not include foreign loans or credits except 1975 when the comparatively high figure includes disbursementsunder Bank's Sixth Railway Project. Source: National Planning Office March 1977  TABLE 3 COLOMBIA SEVENTH HIGHWAY PROJECT National Highway Network (1965-75) (km) PAVED UNPAVED TOTAL % PAVED 1965 3,497 13,982 17,479 20 1966 3,572 13,992 17,564 20 1967 3,853 14,144 17,997 21 1968 4,235 14,607 18,842 22 1969 4,499 14,768 19,267 23 1970 4,821 15,094 19,915 24 1971 5,023 14,994 20,017 25 1972 5,957 14,319 20,276 29 1973 6,446 13,692 20,138 32 1974 6,768 14,075 20,843 32 1975 6,947 14,007 20,954 33 Total Road System (December 1975) (km) PAVED UNPAVED TOTAL % PAVED National 6,947 14,007 20,954 33 Departmental 780 26,774 27,554 3 Municipal and Community - 2,&79 2,479 0% Total 7,727 43,260 50,987 18% Source: MOPT March 1977  TABLE 4 COLOMBIA SEVENTH HIGHWAY PROJECT Road Vehicle Fleet (1963-76) (Annual reRistrations) PASSENGER FREIGHT TOTAL 1963 131,832 81,568 213,400 1964 135,726 85,691 221,417 1965 139,892 88,352 228,244 1966 156,034 95,073 251,107 1967 166,957 98,037 264,994 1968 195,843 106,724 282,567 % growth 1963-68 8.2% 5.5% 5.8% 1969 219,827 77,652 297,479 1970 238,499 83,500 321,999 1971 283,839 91,380 375,219 1972 306,201 103,733 409,934 1973 296,209 137,637 433,846 1974 321,974 143,749 465,723 % growth 1969-74 7.9% 13.1% 9.4% 1975 342,732 150,629 493,361 1976!' 352,254 153,681 505,935 % growth 1970-75 7.5% 12.5% 8.9% 1/ To September 1976 Sources: 1963-1968 DANE 1969-1973 INTRA March 1977  TABLE 5 COLOMBIA SEVENTH HIGHWAY PROJECT Estimated ADTIJ at Select Points of the Road Network-.' (1971-75) % growth Station (road from - to) 1971 1972 1973 1974 1975 1971 - 1975 Caqueza (Bogota-Villavicenio) 1.051 1.046 1.152 1.115 1.184 3.02 Cajamarca (Ibague-Armenia) 1.530 1.568 1.734 1.874 1.991 6.81 Fusagasuga (Bogota-Girardot) 3.751 3.787 4.380 4.709 5.117 8.07 Chusaca (Bogota-Girardot)3/ 2.605 2.903 3.402 4.025 4.506 14.68 Guacari (Palmira-Buga) 4.183 4.373 4.797 5.099 5.317 6.18 Villeta (Bogota-Honda) - - 1.338 1.398 1.422 3.09 Hatillo (North of Medellin) 1.179 1.179 1.320 1.523 1.609 8.08 Versalles (South of Medellin) 1.445 1.581 1.831 1.752 1.912 7.25 Choconta (Bogota-Tunja) 2.589 2.754 2.882 3.089 3.173 5.22 Moniquira (Tunja-Barbosa) 955 1.066 1.125 1.217 1.225 6.42 Santander (Cali-Popayan) 1.248 1.414 1.514 1.681 1.803 9.63 Arroyo Piedra (Cartagena-Barranquilla) 1.361 1.385 1.558 1.606 1.800 7.24 Cienaga (Sta. Marta-Fundacion) 1.352 1.525 1.563 2.080 2.329 14.56 Neiva (Neiva-Espinal) - - 993 1.092 1.183 4.15 Pamplona (Bucaramanga-Cucuta) - 982 1.040 1.069 1.204 7.03 Weighted average growth (1971-1975) 8.13 1/ Average Daily Traffic unadjusted for seasonal variations when based on less than full year count. 21 Where automatic counters are installed. 3/ via new Silvania road Rource: MOPT October 1976  TABLE 6 COLOMBIA SEVENTH HIGHWAY PROJECT National Highway Fund Revenues 1970-1976 (nominal and constant denomination in millions) Total Gasoline Tax Ot-herll Current Constant Current Constant Current Constant2/ Col$ 1967 Col$j/ Col$ 1967 Col$-2 Col$ 1976 Col$- 1970 1,555 1,191 767 589 787 604 1971 1,957 1,359 933 648 1,024 711 1972 2,146 1,293 1,200 723 946 570 1973 2,182 1,213 1,189 661 993 552 1974 2,676 1,250 1,207 564 1,468 686 1975 2,725 970 1,654 589 1,071 381 1976 3,687 940 2,615 667 1,072 273 1/ Mainly Government contributions, foreign loans and own resources (see Table 7) 2/ Deflated by means of a composite highway construction cost index 1967 = 100 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 100.0 111.9 121.8 130.2 143.9 165.9 179.9 213.9 281.6 392.3 Source: MOPT, Mission nlarcn 1977  UASLE 7 COLO9OIA SEVENTH HIGUWAY PROJECT vational Hishvav Fund Revenues 1970-1976 tnouMa t 9 ..o. 1970 1971 1972 1973 1974 1975 1976 Gasoline Tax 767,382 932,700 1,200,400 1,188.927 1,207.394 1,654,494 2,614,785 Government coutribution 313,641 280,249 101,870 94,759 55,013 684,251 178,017 1BRD Projects 53,739 200,686 163,828 93,958 22,426 19,996 230 'DB Projects 60,970 131.841 179,963 143,601 128,737 23,657 35,526 FONADE contracts - - 1.303 18,292 28,317 29,136 15,602 US Government donation for Interasarican Highway - - - 1,580 253 - 3,014 Own Resources 47,737 49,800 98,795 67,068 78,229 111,848 117,845 Previous Balance carry-ovwr 125,140 45,886 - 278,325 266,459 43,583 - Dutch Government credit - - - - - 111,642 SUB-TOTAL 1,368,609 1,641,162 1.746,159 1,8i6,510 1,786,828 2,566,965 3,076,661 Unappropriated Revenues 1/ 186,044 315,643 400,139 295,129 888,759 155,103 610,568 T 0 T A L 1,554,653 1,956,805 2,146,298 2,181,639 2,675,587 2,725,068 3,687,229 ISweralitres 1970-1976 (ro TOf S1 1970 1971 1972 1973 1974 1975 1976 Studies and Technical Serviceas 26,759 27,301 27,921 55,837 85,123 60,508 119,261 Bridges 67,062 86,475 72,850 84,844 86,124 132,688 100,841 Trunk Highways (North-South) 461,577 492,101 500,724 486,628 482,047 410,160 696,871 Trunk Higibays (last-Weat) 132,236 187,630 214,446 288,018 367,134 368,829 379,506 Other Highways 107,608 103,273 131,953 153,646 196,508 233,148 164,515 Access to cities 21,052 47,992 57,982 57,936 107,868 23,918 53,232 Paving Progrs 133,023 220,526 277.295 178,680 207,782 223,348 414,182 Hidraulic Works 42,118 44,740 65,552 78,671 123,868 162,732 277,416 Rshabilitation - - - - - - 92,792 Highway Maintenance 425,788 515,210 561,354 538,984 780,225 871,8U7 966,112 Other expenditures 13,930 62,865 32,117 8,129 56,246 39,564 249,141 SUB-TOTAL 1,431,153 1,788,114 1,942,194 1,932,173 2,492,925 2,526,782 3,513,869 Contribution to National leeder Roads Fund 123,500 168.691 204,104 209,466 182,662 198,286 173,360 1,554,653 1,956,805 2,146,298 2,181,639 2,675,587 2.725,068 3,687,229 / Difference between aopropriated revenues snd actual expenditures;normally financed with subsequent year's budgetary appropriations. Source: MoT March 1977  TABLE 8 COLOMBIA SEVENTH HIGHWAY PROJECT National Highway Fund Expenditures 1970-76 (nominal and constant denomination in millions) Total Construction Maintenance Other Current Constant Current Constant Current Constant Current Constant Col$ 1967 Col$1/ Col$ 1967 Col$- Col$ 1967 Col$- Col$ 1967 Col$- 1970 1,555 1,191 904 694 427 326 224 172 1971 1,957 1,359 1,090 757 515 358 352 245 1972 2,146 1,293 1,197 721 561 338 388 234 1973 2,182 1,213 1,193 663 538 299 451 251 1974 2,676 1,250 1,340 626 780 365 556 260 1975 2,725 970 1,368 486 872 310 485 172 1976 3,687 940 1,756 448 966 246 965 246 1/ Deflated by means of a composite highway construction cost index 1967=100, see Table 6. Source: MOPT, Mission March 1977  TABLE 9 COLOMBIA SEVENTH HIGHWAY PROJECT National Highway Fund Estimate of Future Revenues and Expenditures 1977-1981 (Millions of Col$) Revenues 19771/ 1978 1979 1980 1981 Gasoline Tax 4,200 4,600 5,400 5,80U 6,000 Government Contributiors-2/ 400 1,300 970 695 485 Other 3/ 200 320 290 315 335 TOTAL 4,800 6,220 6,660 6,810 6,820 Expenditures 19771' 1978 1979 1980 1981 Studies and Technical Services 70 105' 115 125 135 Construction 2,780 3,381 3,385 3,175 2,700 Maintenance 1,400 2,200 2,600 2,900 3,300 Other 510 534 560 610 685 TOTAL 4,800 6,220 6,660 6,810 6,820 1/ Expected Revenues and Expenditures at end of year. 2/ Mainly foreign loans by IBRD and IDB. 3/ Includes own resources, which are the product of a rudimentary toll system, the sale of scrap equipment and obsolete materials and domestic borrowing. Source: MOPT March 1977  COLOMBIA SEVENTH HIGHWAY PROJECT Evolution and Composition of Regular Gasoline Prices (1975-77) (Col $ per gallon) Highway Refinery Fund Sales Deptl. Wholesale Retail Price Tax Tax Tax Transport Distrib. Distrib. Price 1975 Jan.-Aug. 1.31 1.44 0.16 0.04 0.13 0.20 0.19 3.47 Sept. 1.44 1.59 0.21 0.04 0.17 0.30 0.25 4.00 Oct. 1.53 1.69 0.22 0.04 0.21 0.31 0.25 4.25 Nov. 1.61 1.78 0.24 0.04 0.25 0.33 0.25 4.50 Dec. 1.69 1.87 0.26 0.04 0.29 0.34 0.25 4.75 1976 Jan. 1.77 1.96 0.28 0.04 0.48 0.35 0.27 5.15 Feb. 1.87 2.08 0.30 0.04 0.52 0.36 0.28 5.45 Mar. 1.97 2.19 0.32 0.04 0.57 0.37 0.29 5.75 Apr. 2.05 2.28 0.33 0.04 0.62 0.38 0.30 6.00 May 2.16 2.41 0.37 0.04 0.77 0.39 0.31 6.45 June 2.28 2.54 0.39 0.04 0.93 0.40 0.32 6.90 Jul. 2.38 2.66 0.42 0.04 1.11 0.41 0.33 7.35 Aug. 2.50 2.79 0.42 0.04 1.25 0.42 0.38 7.80 Aug.-Dec. 2.67 2.99 0.50 0.04 1.48 0.44 0.38 8.50 1977 Jan. 3.03 3.39 0.60 0.04 2.06 0.47 0.41 10.00 Source: MOPT March 1977 H CH  TABIE 11 COLaDHIA SEVE8TI HIGHWAY PROJECT History of Csoatruction and Periodic Hainteacoce on Sectioet for RehabilitatiOn YEARE P A V E M E N T PERIODIC MAINTENAN1CE ROAD LOT LENGTH PAVED TYPE I/ . WIDTH TYPE YEAR MedelOO,s-P,nt.d. Tao lot. 76 1952 AC 6.20 C 0.75 3 c, sea1 (51 km) 1968 Pereir.-La Pinctd. P-ri-a-Ai.a (K. 4-4) 41.6 1957 AC 6.70 + 0.00 - 0.50 3 s,A.C. (14 km,) 1970 Asi.-E,s 79 35 1957 AC 6.60 * 0.00 - 0.50 F.s 79 -1V. 100.5 21.5 1957 AC 6.60 .0.00 -0.50 3 cA.C. (I Ik,) 1970 Es. 100.5 - L. Pelisa 30.5 1957 AC 6.70 * 0.00 - 0.50- C-rta8e-O... ri Five lots 100 1953 M-acdm 6.40 * 1.00 - 1.50 5 ccA.C. (78 ks,) 1972-1974 lb.q.e-Aeseeia is 56-Es, 135 82.3 1953 Siacdee 6.50 + 0.00 - 0.50 5 ceA.C. (16 ks,) 1970-1972 B.g.t.a-H.nd. Faat.ti-e-Villet. 42.5 1957 AC 7.00 * 0.50 4 ...sea (10 ks,) 1972 Villet.-Kscda 30 1957 AC 7.00 * 0.50- Fuedac-Lo-. Ye Three I... 63 1952 AC, 5.80-6.50r0.50-1.O00 Cerrete-C-ragea ~ Thre- lot. 68 1954 AC 5.60-6.7040.50-1.00 3 ra sea (68 Ins) 1969 Oiba-Pi.d--,,et. Thre l.ts 100.6 1953 DST 6.30-7.20+0.00-1.00 D.S.T. (5 ks,) 1972 1962 AC (23 kns) 7Cs A.C. (1.0 ke) 1970 1961 DST (13 kcm) 4 c A.C. (50 ks,) 1960 Bun-r,ea,,a-Ei Pisyon One It 25 0966 AC 6.80 - 7.20 + 1.00- Pmplcee-1.a D-njua Do. lot 44 1954 AC (17 Icm) 7.00 4. 0.00 - 1.00 seal (25 kne) 1970 DST (26 ice) seal (9 ke) 1972 C-UCta-Zulla Es, 2-ia, 12 10 1962 DST 7.00 4 1.00 Cu-ta-Vills del Rosar~i. Es, 0-i,, 7 (4-lac) 14 0964 5 Ce AC 217.00 + 0.00- 3.00- Vect.queaeda.-Pope V-~tq.qvad.-Tcm3. 9.7 1965 AC 7.00-3.69+1.00-1 .50 TueJ.-P.ipa 37 1970 DST 6.70-7.40,1.10-1.40 3 cc A.C. (18 ks,) 1969 3 c. seal (6 ks,) 1973 Paipa.B.Bl.s,ct. One lot 41.6 1967 1 i,sa 7.00 . LOG0 - 1.50 D.S.T. (25 kcc) 1971 Ceetilla-Helva Th-e lets 106 1966 AC 7.00 + 0.00 - 0.50 Seal (70k.1) 1974 it AC - Asphalt conc..ete pave,et lDST 11 - Double aurf.ee treated asphalt pavecet Sore: DPT March 1977  TAM 12 COLCs load 1 LUb6 lttio. inn (4oos_dc Cost. s Drc. IS/l o 04. sg so3tC; hind.1 t In t 2. of J-e 1977 US) I-or as. soya Ri/~~~~3&j7ifl -1/ Fl taco 8 8 N 8f as 33i 1.0T mM C o OT TOOIL 1977 197 1879 1988 11 _~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~U US _ _1 I I I 18/ M.2.14L-Yu....H..a SW 7,533| 228.3 328.1 328.1 2A Vs.-Slncada 66 13,235 4 01.1 576.5 1 9.2.11 1-rl.. 38.0 76,231 2,204 2,310.0 3,320.3 996.1 1,328.1 996.1 2 .sr...11-.Plnt.d. 38.0 82,055 2,508 2,466.5 3,574.0 1,072.2 2,501.6 38 .--a_l(K 44) 4,011 121.5 174.6 174.6 43 t.t.1K 44)-K 79 S. 23,985 726.8 2,044.7 522.3 522.3 59 6 39-, 1OO.5 S. 10,925 603.8 867.9 433.9 433.9 60 K 6ID.5-K 231 lF.lsa 3 18,387 557.2 800.9 400.4 400.4 3 5/ Irl.osls(K 44) 41.6 99,250 2,458 2,977.3 4,279.5 1,283.8 2,711.8 1,283.8 4 0.9.9644)-K 79 35.0 56,811 2,308 1,721.5 2,474.4 742.3 ,7132.1 5 6 79_1 100.5 21.5 SL,004 3,299 1,545.6 2,221,6 666.5 1,555.1 6 100.3-K 131 18.11-)1 30.5 65,94, 2,767 1,995.3 2,968.0 860.4 2,007.6 7 Cor6so.K 25 25.0 46,803 1,872 1,418.3 2,038.6 611.6 6l5.4 6L1.6 6 6 35-6 52.5 19.5 49,303 2,528 1,494.0 2,147.4 6444.2 1,503.2 9 6 52.2-Ur8b.(K 66.5) 14.0 49,488 3,535 1,499.6 2,155.5 646.6 1,506.8 10 Ur.16.2 66.51.Ao2slotl 12.5 72,862 1,829 692.0 995.8 298.7 398.3 296.7 1 9., 8.d,o-Ov.c,., 29.0 47,90Z 1,65i 1,451.6 2,086.5 625.9 834.6 625.9 116 1459oa1 (. 561i-K 5 0s 18,520 261.2 806.4 606.6 ls y 9554. Li,es7K 119) S K 18,415 558.0 802.0 902.0 | 142 L1,,..-Ar.,L. S. 5,620 170.3 244.8 244.8 12 16*go.R 56)_- 85 29.0 69,295 3,006 2,099.8 3,018.2 603.6 1,207.3 7,Z07.3 13 K 85-L. Ln...(K 119) 34.0 65,110 2,457 1,973.0 2,935.9 567.2 1,104.4 1,134.4 14 L 11n.-os.,t 19.3 42,092 2,472 1,275.5 1,733.4 550.0 1,283.3 15 FoKato.-0111.6. 42.5 03,333 1,961 2.525.2 3,629.6 1,088.9 1,451.8 1,088.9 16 V