Tanzania - Fifth Highway Project

Document of The World Bank FILE COPY FOR OFFICIAL USE ONLY Report No. 2187b-TA TANZANIA FIFTH HIGHWAY PROJECT STAFF APPRAISAL REPORT December 27, 1978 Highways Projects Division Eastern Africa Regional Office 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 Tanzanian Shilling (T Sh) US$1.00 = T Sh 8.00 T Sh 1 = US$0.125 WEIGHTS AND MEASURES 1 meter (m) 3.28 feet (ft) 1 kilometer (km) 0.62 miles (mi) 1 square kilometer (sq km) 0.386 square miles (sq mi) 1 kilogram (kg) 2.2 pounds (lbs) GLOSSARY OF ABBREVIATIONS CIDA - Canadian International Development Agency EAC - East African Community EDF - European Development Fund ICB - International Competitive Bidding MAJI - Ministry of Water, Energy and Minerals MCT - Ministry of Communications and Transport MFP - Ministry of Finance and Planning MOW - Ministry of Works NEDCO - National Estates and Design Company ODM - Overseas Development Ministry (UK) ORT - Organization for Rehabilitation through Training SIDA - Swedish International Development Authority TCSL - Tanzania Coastal Shipping Line, Ltd. USAID - United States Agency for International Development VOC - vehicle operating costs VPD - vehiclas per day ZTRS - Zambia-Tanzania Road Services GOVERNMENT OF TANZANIA FISCAL YEAR July 1 - June 30  TANZANIA FOR OFFICIAL USE ONLY FIFTH HIGHWAY PROJECT STAFF APPRAISAL REPORT Table of Contents Page No. I. THE TRANSPORT SECTOR ........................................ 1 A. Geographic and Economic Setting and its Effect on Transport ...... .............. . ... . ....... 1 B. The Transport System .......... ........1 C. Transport Policy, Planning and Coordination .3 D. Previous Bank Group Projects in the Transport Sector 6 II. THE HIGHWAY SUBSECTOR. 6 A.* The Network ..... . 6 B. Traffic Growth and Characteristics . . . 7 C. Administration .. . . 9 D. Staff and Training .. ....... . ... ... & . 10 E. Planning ............... .......... 12 F. Expenditure and Finance .............. . .13 G. Engineering . . .16 H. Construction.. .. . ........ 17 I. Maintenance o ........o...... .. 17 III. THE PROJECT . ......... .........20 A. Background . ..... 20 B. Objectives .... .....-. ......... 20 C. Project Description .21 D. Cost Estimates .... 0.......... 29 E. Financing . .......... ......... . . .32 F. Execution. ........ .... 32 G. Procurement ................ . . 32 H. Disbursements . ............. . ..... 34 I. Environmental Aspects . ..35 IV. ECONOMIC EVALUATION ................. .36 A. Introduction ..... ......... . .36 B. Benefits and Beneficiaries . . .36 C. Economic Analysis .... ..............37 D. Risks ...39 V. AGREEMENTS REACHED AND RECOMMENDATIONS ...... 40 This report was prepared by Messrs. K. Clare (Economist), J. de Weille (Economist) and S. Carapetis (Engineer) who appraised the project in April 1978. The report was edited by Miss P. Brereton. lThis document has a rstricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Table of Contents (Continued) Page No. ANNEXES 1. Road Inventory and Vehicle Operating Cost Savings 43 2. Equipment to be Purchased 45 3. Composition and Equipping of Units 46 4. Project Progress Reporting Requirements 47 5. Related Documents and Data Available in Project File 50 CHARTS 1. Organization Chart - Ministry of Works (IBRD 19349) 2. Implementation Schedule MAP Tanzania - Fifth Highway Project - Road Maintenance (IBRD 13777)  TANZANIA FIFTH HIGHWAY PROJECT STAFF APPRAISAL REPORT I. THE TRANSPORT SECTOR A. Geographic and Economic Setting and its Effect on Transport 1.01 Tanzania, situated a few degrees south of the equator on the eastern coast of Africa (see map), has a land area of about 945,000 sq km, a large part of which is high, arid plateau. The population of about 15 million is concentrated near the three main Indian Ocean ports of Dar es Salaam, Tanga and Mtwara, and in the Lake Victoria region, the highlands around Kilimanjaro and the southern highlands near Lake Nyasa. Less than 10% of the population lives in towns, but the urban population is increasing much faster than the national average of 2.7% p.a. 1.02 Agriculture is the main economic activity, accounting for about 40% of the GNP and 80% of exports (mainly cotton, coffee, sisal, tobacco and cashewnuts). The small but growing industrial sector includes textile and sugar mills, tobacco processing, an oil refinery, and diverse other small plants. However, poor road conditions and lack of adequate transport seriously constrain the country's economic growth, especially the marketing of agricultural products and the delivery of agricultural inputs. 1.03 Tanzania's development philosophy aims at reducing inequalities in income distribution through rural development and through state control of large-scale agricultural enterprises and important industries and services, including those related to transport. To facilitate rural development and to improve overall efficiency, the Government in 1972 decentralized various administrative activities, giving the country's 20 administrative regions substantial power to control planning and budget provisions in their respec- tive jurisdictions, particularly those activities concerned with development at the local level. With regard to roads, this decentralization policy is reflected in Government's decision to make all roads other than trunk roads the responsibility of regional administrations (para. 2.11). a B. The Transport System The Network 1.04 Tanzania's transport system comprises roads (about 45,000 km), two railway systems (totalling 3,570 km of track), three main ocean ports and some minor ocean and lake ports, two international airports and over 50 smaller airfields. A pipeline carries oil between Dar es Salaam and Zambia; in addition, one of the railways, TAZARA, and a major road, the Tan-Zam  - 2 - Highway, were built mainly to carry Zambian traffic. Since the collapse of the East African Community (EAC) in 1977, Tanzania has become wholly respon- sible for management of its transport system. Highway Transport 1.05 Details of the highway subsector are discussed in Chapter II. Railways 1.06 Two railway systems serve Tanzania: the Tanzanian Railway Corpora- tion (TRC) and the Tanzania-Zambia Railway Authority (TAZARA). TRC was established as a corporate entity in 1977 to operate that part of the East African Railway Corporation (EARC) located within Tanzanian territory. Although not all issues involved in this transfer have yet been fully re- solved, TRC now manages and operates the 2,600 km, 1.00 m gauge railway in northern Tanzania. Linking Dar es Salaam and Tanga with Arusha, Tabora, Mwanza, Kigoma, and Dodoma, the railway is particularly important for long- distance transport. TRC moves a wide variety of Tanzanian exports and imports, and its Dar es Salaam-Kigoma line handles transit traffic for its landlocked neighbors, particularly Burundi and Zaire. TRC's operations and services are not satisfactory because of low availability of locomotives and wagons and lack of workshop facilities as well as the deteriorated con- dition of equipment and track. Large investments are required, and the Canadian Government has agreed to provide substantial financial assistance. 1.07 TAZARA, financed by the Peoples Republic of China and owned jointly by Tanzania and Zambia, commenced operations in 1976 and consists of 1.067 m gauge track extending 970 km from Dar es Salaam to the Zambian border and continuing another 890 km into Zambia. The principal traffic at present is, and for some years will continue to be, Zambian exports of copper and Zambian imports. Future growth of Tanzanian traffic on the line will depend on development of the country's southern regions. Maintenance of locomotives, turn-around time of wagons and coordination with the port of Dar es Salaam are poor; Government is currently making efforts to improve this situation. Ports and Shipping 1.08 The principal Indian Ocean ports of Dar es Salaam, Tanga and Mtwara are organized under the Tanzania Harbours Authority created in 1977 to take over operation of ports from the defunct East African Harbours Corporation. Dar es Salaam, with 11 alongside general cargo berths for ocean-going ships, handles nearly 4 million tons of traffic annually or about 85% of the total for the 3 ports. Tanga has no deep-water berths and requires use of lighter- age facilities; Mtwara has two deep-water berths. Nearly half of the tonnage through the Dar es Salaam port is Zambian traffic. Recent planning studies of the Tanzanian ports have concluded that fairly sizeable investments for expansion of facilities and improvement of the entrance channel are needed for the Dar es Salaam port. 1.09 The Tanzania Coastal Shipping Line Ltd. (TCSL), established in 1971, is a parastatal corporation with a monopoly of carrying freight and  - 3 - passengers between various coastal and island ports south of Dar es Salaam. Traffic between Dar es Salaam, Mtwara and Lindi is highly seasonal with heavy traffic in the rainy season when alternative road transport is unreliable, circuitous and costly. Until an improved coastal road including a costly bridge over the Rufiji River can be built (which appears unlikely for many years), the TCSL will play an important role in transport to and from south- eastern Tanzania. 1.10 Some transport services are also provided on Lake Victoria and Lake Tanganyika. The principal ports on Lake Victoria are Mwanza, Bukoba and Musoma. On Lake Tanganyika, Burundi-owned ships transport considerable cargo between Bujumbura and Kigoma, the western terminus of TRC. Air Transport 1.11 Of the more than 50 officially designated airfields in Tanzania, only a few are built to standards high enough to permit operation of jet air- craft; of the remainder, many are dirt and grass strips used only occasionally. International airports are located in Dar es Salaam and Kilimanjaro; Mtwara, Tabora, Dodoma, Mwanza, and Zanzibar also have paved runways. The national air transport company, Air Tanzania, was established in 1977 following ter- mination of operations of the East African Airways Corporation. Mainly using Fokker F-27 aircraft, the airline provides services to major centers within the country and limited services between Tanzania and certain neighboring countries. No regular air service is available from any carrier between Tanzania and Kenya; all road, rail and air traffic between the two countries was suspended in February 1977. Pipeline 1.12 A pipeline financed by the Italian Government and operated by the Tan-Zam Oil Pipeline Company was completed in 1968 from Dar es Salaam to Ndola in Zambia. Initially, the 1,705 km line of 20.3 cm pipe principally carried gasoline to Zambia, but following construction of a refinery at Ndola, the line transports crude oil. Design capacity exceeds 700,000 tons p.a., and traffic flow has generally been at about that level. C. Transport Policy, Planning and Coordination 1.13 Before independence, the transport infrastructure was developed to serve Tanzania's external trade, but since the late 1960s, expansion of transport infrastructure has been directed towards providing neighboring landlocked Zambia with rail (TAZARA), pipeline and road access (the Tan-Zam Highway) to the Dar es Salaam port. More recently, Government's development policy (para. 1.03) has led to an increasing emphasis on rural road develop- ment, strengthening road maintenance capabilities and decentralization of the road administration.  - 4 - 1.14 In spite of the major investments undertaken in recent years in Tanzania to accommodate Zambia's import/export traffic, this traffic, for the following reasons, currently experiences considerable delays which seriously affect the Zambian economy: (a) Zambia's connection with the Atlantic Ocean - via the Benguela railway and the port of Lobito - has been closed since the outbreak of the Angolan Civil War, adding further pressure on the Tan-Zam corridor, but was reopened for limited traffic in October 1978; (b) the transport capacity of Zambia-Tanzania Road Services (ZTRS), a large trucking company operating between Zambia and Dar es Salaam, was deliberately reduced in anticipation of TAZARA's services; TAZARA, however, has not lived up to expectations and carries considerably less than planned; (c) partly as a result of TAZARA's inefficiencies, Dar es Salaam port is congested, and ships calling on Dar es Salaam experience waiting time of up to a month and sometimes more; and (d) operational coordination between ZTRS, TAZARA, and the port of Dar es Salaam is poor and adversely affects the utilization of available capacity of the Zambia/Dar es Salaam transport corridor. To improve Zambia's overall transport situation, the Zambian Government recently reopened its southern border to enable transport to pass through Rhodesia. In addition, the Consultative Group for Zambia is taking an active interest in the transport problem, and in July 1978 the Zambian Govern- ment requested Bank assistance in determining how best to mitigate the trans- port constraints in the Tan-Zam corridor. Furthermore, the Benguela railway may shortly become fully operational again; this would decrease the delays in the transport of goods to and from Zambia and considerably reduce the pressure on the Tanzanian transport links with Zambia. 1.15 Tanzania's transport situation has also been complicated by the dissolution of the EAC. Because of basic disagreements within the EAC, its railway, ports and air organizations have ceased operations and are in the process of being formally disbanded. New national organizations were estab- lished in 1977 to take over these responsibilities within Tanzania, and these now face serious problems, particularly the need for large capital investments from the national budget and the recruitment and training of additional skilled manpower. Planning 1.16 The Ministry of Works (MOW) is responsible for planning highway investments while the Ministry of Communications and Transport (MCT) over- sees planning for other transport modes. The Ministry of Finance and Plan- ning (MFP) has the principal responsibility for financing transport invest- ments and recurrent expenses. MFP prepares investment programs based on proposals from MOW, MCT, and the District Councils, after preliminary review by the Office of the Prime Minister. Transport planning capability is weak in all ministries, and data for planning are not systematically collected; hence little meaningful transport planning has taken place. Bank Group staff have been advising both MCT and MOW on preparation of a project-specific national transport plan which would define priorities and programs for in- vestments in the sector. Thus far, neither Ministry has been able to commit significant resources to this exercise and MCT recently decided that a National Transport Study should be undertaken by consultants covering all modes of  -5- transport. In October/November 1978 a three-man team, financed by the Swedish International Development Authority (SIDA), visited Tanzania to draw up terms of reference for the Study. 1.17 Government capital expenditures (in current prices) for development of transport and communications during 1970/71-1975/76 were as follows: Inland and Roads and Coastal Fiscal Year Bridges Waterways Other Total -------------------- T Sh millions ----------------- 1970/71 163.1 19.7 42.0 224.8 1971/72 128.5 23.4 180.4 332.3 1972/73 73.3 16.1 204.1 293.5 1973/74 119.4 2.6 24.7 146.7 1974/75 174.4 7.1 34.9 216.4 1975/76 219.2 3.4 14.9 237.5 Source: Ministry of Finance and Planning and mission estimates, 1978. Total development expenditures for transport and communications over the period declined as a proportion of Government's overall development expendi- tures. 1.18 Issuance of the 1976/77-1980/81 development plan was delayed until mid-1978 in order to make revisions necessitated by the 1974/75 economic crisis and, later, to gain Parliamentary approval of the plan. Government has, however, acknowledged that the transport plan may be further revised in view of the collapse of EAC transport organizations. A major emphasis of the transport plan as it now stands is development of the recently established transport organizations and their operation. Coordination 1.19 Coordination of investments within the transport sector is almost nonexistent, largely because of the lack of planning capability and partly as a result of various difficulties faced by EAC transport organizations in the recent past. These problems have not led to serious misinvestments though there is a growing need to give this issue more attention; this matter should be addressed in the National Transport Study referred to in para. 1.16. Coordination of investments among transport and non-transport sectors has also been less than satisfactory as can be seen in southwestern Tanzania where the benefits to date realized by Tanzania from heavy transport investments in the Tan-Zam corridor appear minimal, indicating an urgent need for general development of the area in Tanzania served by corridor transport. Recently, however, Government has given higher priority to the development of this area, and certain projects being prepared should result in substantially increased benefits to Tanzania from the transport investments.  - 6 - D. Previous Bank Group Projects in the Transport Sector Previous Projects 1.20 A number of projects concerned with roads and road transport have been financed by the Bank Group: (a) US$14 million, IDA Credit 48-TA in 1964 for construction of various road sections totalling 860 km; supplemented by a US$3 million Credit in 1968 (115-TA); (b) US$15.5 million under IDA Credit 142-TA and US$7.0 million under Bank Loan 586-TA supplemented by a US$7.5 million Swedish credit in 1969 for reconstruction of part of the Tan-Zam Highway; (c) US$6.5 million, IDA Credit 265-TA in 1971 for construction of a main road in the southeast and betterment of selected feeder roads; (d) US$10.2 million, IDA Credit 507-TA in 1974 for improving the maintenance of primary roads and for carrying out a study of the road transport industry; and (e) US$15.0 million, IDA Credit 743-TA in 1977 for a trucking industry rehabilitation and improvement project, arising out of the road transport industry study under the previous credit. Rail and port improvements in Tanzania have been financed by the Bank Group through loans amounting to US$166 million to the EAC organizations concerned; the loans assisted with improvement, modernization and expansion of the EAC railway and the ports of Dar es Salaam and Tanga. Lessons 1.21 A Project Performance Audit Report on the revised First Highway Project (Report No. 791, June 26, 1975) found that implementation of the project's technical assistance and training programs aimed at improving Tanzania's highway administration was subject to unusual risks because of slowness and reluctance in recruiting expatriates, cultural and language problems experienced by the expatriates and an absolute shortage of local staff. Similar problems were experienced during the Second and Third Highway Projects. These problems as well as a severe shortage of housing for expatri- ates have also been handicapping implementation of the ongoing Fourth Highway Project (Credit 507-TA). As the proposed project depends heavily on the success of technical assistance and training, the experience gained from these earlier projects has been drawn upon, and the proposed project has been designed to make efficient use of the technical assistance provided. II. THE HIGHWAY SUBSECTOR A. The Network 2.01 The road network in Tanzania totals approximately 45,000 km, of which 7% are paved and 93% are gravel or earth as shown below:  -7- Tertiary Primary Secondary Regional Trunk Local and District Roads Main Roads Roads Total Bitumen 2,660 364 - 3,024 Gravel or Earth 6,656 7,330 27,990 41,976 9,316 7,694 27,990 45,000 Source: Ministry of Works, 1978. Only about 900 km of the gravel roads have been engineered while the remain- ing unengineered gravel or earth roads normally become impassable during the wet season. Roads classified as Trunk Roads (9,316 km) link the country's 20 regional capitals and connect Tanzania with neighboring countries; they vary in standard from two-lane paved roads to unimproved earth tracks. Roads classified as Local Main Roads (7,694 km) link other centers of economic activity with the trunk road network while those classified as Regional and District Roads (about 28,000 km) form the balance of the system. The 9,316 km trunk road system includes about 2,100 km of Local Main Roads and Regibnal Roads recently reclassified to Trunk Roads. B. Traffic Growth and Characteristics Traffic Counts 2.02 MCT is responsible for undertaking traffic counts. A good traffic counting system existed in the past, and fairly reliable and detailed traffic count information is available for the entire trunk road network up to 1974 and for specified stations since then. However, the system has deteriorated, and traffic counts are now undertaken only sporadically or on an ad hoc basis, primarily because of serious budgetary limits but also because of administra- tive constraints. Given the fundamental importance of traffic counts for transport planning, Government agreed to make regular and systematic traffic counts on its trunk road system (para. 5.01 (a)). Traffic and Traffic Growth 2.03 Data on the growth of traffic are incomplete. However, traffic growth has been estimated at only 2 to 5% p.a. during the past 5 years, much below the annual rate of 7 to 8% which prevails in other East African coun- tries. The relatively low estimated growth rate is based on scattered traffic counts and the probable effects of reduced agricultural production due to tWD years of drought, a rural population resettlement program, and restrictions on vehicle imports to conserve foreign exchange.  - 8 - 2.04 Of the 9,316 km of trunk roads, 29% are bitumen surfaced with relatively high traffic volumes, averaging 350 vehicles per day (VPD) but ranging as high as 1,400 VPD. Bitumen roads are mostly in fair condition and carry about 75% of the total annual traffic flow of 400 million vehicle-km on the trunk road system. The rest of the trunk road system consists of gravel or earth roads, mostly in poor condition. Traffic volumes on these roads average 55 VPD, while the most heavily trafficked 4% carry between 150 to just over 200 VPD. 2.05 As indicated in the following traffic composition table, bitumen roads carry higher percentages of passenger cars than do non-bitumen roads, whereas there are higher percentages of pickups, landrovers and trucks on gravel and earth roads. Trunk Pickups/ Trucks Buses Roads Cars Landrovers (9-tons) (50 pass.) Total