Honduras - Sixth Highway Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 4255 PROJECT COMPLETION REPORT HONDURAS: SIXTH HIGHWAY PROJECT (LOAN 896-HO) December 30, 1982 Latin America and the Caribbean 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.   FOR OFFICIAL USE ONLY HONDURAS PROJECT COMPLETION REPORT SIXTH HIGHWAY PROJECT (LOAN 896-HO) TABLE OF CONTENTS Page No. Preface ....................................................... i Basic Data Sheet .............................................. ii Highlights .................................................... v PROJECT COMPLETION REPORT I. INTRODUCTION ........ ................................ 1 II. PROJECT PREPARATION, APPRAISAL AND NEGOTIATIONS ...... 1 III. PROJECT IMPLEMENTATION ...... .................. 5 IV. COST ESTIMATES, FINANCING AND DISBURSEMENT ........... 12 V. ECONOMIC RE-EVALUATION ........... ............... . 14 VI. PERFORMANCE OF THE BORROWER . . 15 VII. ROLE OF THE BANK ..................................... 17 VIII. CONCLUSIONS ................ 18 Annexes 1. Civil Works Other than Tegucigalpa-Talanga Road - Comparison between Appraisal and Revised Economic Returns ............................................. 19 2. Feeder Roads to the Tegucigalpa-Juticalpa Road Studied under the Project . . 20 3. Comparison between Appraisal and Final Costs ....... .. 21 4. Tegucigalpa-Talanga Road - Comparison between Fore- cast and Actual Traffic Volumes .................... 22 5. Tegucigalpa-Talanga Road - Comparison between Appraisal and Final Costs and Economic Returns..... 23 6. Borrower Comments .... 24 MAP IBRD 10395 (PCR) - Honduras - Main Highway Network 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.   HONDURAS PROJECT COMPLETION REPORT SIXTH HIGHWAY PROJECT - LOAN 896-Ho PREFACE The following is a Project Completion Report on the Sixth Highway Project in Honduras for which Loan 896-HO in the amount of US$18.8 million .was approved by the Board on May 30, 1973. The Loan was closed on June 30, 1980 and final disbursement was made on July 29, 1980. This Completion Report was prepared by the Bank's Latin America and the Caribbean Regional Office and is based on information obtained from the file of the Bank's Record Center, the LAC Information Center, Appraisal and Supervision reports for Loan 896-HO and on the final project report dated January 1979 prepared by the Secretariat for Communication, Public Works and Transport (SECOPT). In accordance with the revised procedures for project performance audit reporting, this completion report was read by the Operations Evaluation Department but the project was not audited by OED staff. The draft Completion Report was sent to the Borrower, who expressed conformity by a telex dated November 24, 1982, annexed to the Report.   - ii - HONDURAS PROJECT COMPLETION REPORT SIXTH HIGHWAY PROJECT - LOAN 896-HO Basic Project Data Appraisal Item Expectation Actual Total Project Cost (US$ million) 25.8 25.8 Loan Amount (US$ million) 18.8 18.8 Disbursed as of December 31, 1979 (US$ million) - 18.6 Repaid as of October 31, 1979 (US$ million) - 0.340 Date Physical Components Completed 12/76 3/80 Economic Rate of Return 13% 19.7% Financial Performance - Better Institutional Performance - Same Other Project Data Original Item Plan Actual First Mention in Files or Timetable - 9/69 Negotiations 4/73 4/2-4/5/73 Board Approval 5/73 5/24/73 Loan Agreement - 5/30/73 Effectiveness 8/28/73 8/27/73 Closing Date 6/30/77 6/30/80 Borrower Republic of Honduras Executing Agency Secretariat for Communications, Public Works and Transportation (SECOPT) Fiscal Year of Borrower January 1 - December 31   HONDURAS PROJECT COMPLETION REPORT SIXTH HIGHWAY PROJECT - LOAN 896-HO Mission Data No. of No. of Date of Item Month/Year Persons Weeks Report Identification 10/69 2 1 10/69 Preparation 1/ 2/70-10/72 Appraisal 11/12/72 3 2 5/73 Missions No. of Date of Type of Mission Member of Missions Weeks Mission Supervision Paraud 1 6/73 Supervision Chatelin/Paraud 1 1/74 Supervision Paraud 1 6/74 Supervision Paraud 1 12/74 Supervision Paraud 1 5/75 Supervision Paraud/Woltman 1 8/75 Supervision de Castro/Paraud 1 1/76 Supervision Burns 1 5/76 Supervision Paraud 1 1/77 Supervision Burns/Pinilla/Paraud 1 7/77 Supervision Paraud 1 1/78 Supervision Burns/ Doyen/Pinilla 2 5/78 Supervision Pinilla 1 8/78 Supervision Pinilla/Nordin 2 6/79 1/ Project preparation carried out for the most part during supervision for the Fifth Highway Project.   - iv - HONDURAS PROJECT COMPLETION REPORT SIXTH HIGHWAY PROJECT - LOAN 896-HO Country Exchange Rates Name of Currency = L Lempira Appraisal Year Average: US$1.00 = L 2.00 The rate of exchange of US$1.00 = L 2.00 has not changed during the project implementation period.   HONDURAS PROJECT COMPLETION REPORT SIXTH HIGHWAY PROJECT - LOAN 896-HO HIGHLIGHTS The Sixth Highway Project achieved its main objectives of improving the Tegucigalpa-Talanga Road and feeder roads as well as of increasing SECOPT's capabilities in the areas of transport planning and road maintenance at a cost of almost 20% below that estimated at appraisal (para 4.01). Such savings were largely due to the Government's decision, early in the project implementa- tion stage, to carry out a thorough review of the previously prepared engineering of the Tegucigalpa-Talanga road, claiming that the average cost per km was unacceptably high (para 3.02). The Government's view, although originally not fully shared by the Bank, proved to be sound. The Loan included a special contingency allowance because of uncer- tainties in the bidding outcome for the Tegucigalpa-Talanga road (para 2.04). Although the funds were not needed for the original purpose, their availability proved to be very fortunate since they were later allocated, on an emergency basis, to repair the damages caused by Hurricane Fifi, which devastated the Northern part of Honduras in September 1974 (para 3.06). Surplus funds resulting from the 'low' cost of the Tegucigalpa-Talanga road (para 3.04) and the lower design standard of the Bridge over the Ulua River (para 3.12) were used for new and/or increased project elements. These included: a) additional works to complete the reconstruction of sections of the Comayagua-La Libertad road which was not included in the original project (para 3.10). b) inclusion in the project of the reconstruction of the most critical sections (17 km) of La Ceibita-Santa Barbara Road (para 3.26). c) assistance in implementing a feeder roads demonstration project utilizing labor-intensive construction techniques (para 3.27). The loan included financing of technical assistance to the three Government agencies involved in transport planning and a training program for maintenance personnel (para 3.22, 3.23, 3.24 and 3.25). These institution building aspects of the project proved to be well chosen and resulted in long-term improvements in the areas mentioned above, in spite of shortage of qualified personnel and frequent changes in staff assignments (para 6.02). The completion report identifies one lesson to be learned from this project, and that is the importance of the Bank maintaining a flexible and cooperative attitude toward changes in project elements resulting from significantly changed circumstances.   HONDURAS PROJECT COMPLETION REPORT SIXTH HIGHWAY PROJECT - LOAN 896-HO I. INTRODUCTION 1.01 Since the early 1950's when road development in Honduras began to receive priority attention, road transport has been the primary land traffic mode. The highway network, totalling about 5,600 km at the time of the project's identification, was basically well developed but many primary routes needed upgrading and new feeder roads were required to achieve full development of selected areas. 1.02 The Government's Six-Year Investment Program for 1972-77 totalled about US$560 million equivalent with about 26% or US$145 million allocated to the transport sector and 80% of that amount designated for highway upgrading and construction. The Government assigned first priority to improving the Tegucigalpa-Talanga-Juticalpa road which passes through very mountainous terrain and carried up to 600 vehicles per day including a substantial volume of logging trucks from adjacent forest areas. Also considered as high prior- ity was the construction of feeder roads to assist in the development of forestry and agricultural areas served by the Tegucigalpa-Talanga-Juticalpa road. Construction and studies of selected sections of these high priority investments comprise the main elements in this project which is the sixth in a series of Bank-financed highway projects designed to assist the Government in its efforts to provide needed improvements and expansion of the road network. 1.03 This completion report is based on information obtained from the file of the Bank's Record Center, the LAC Information Center, Appraisal and Supervision reports for Loan 896-HO and on the final project report dated January 1979 prepared by the Secretariat for Communication, Public Works and Transport (SECOPT). II. PROJECT PREPARATION, APPRAISAL AND NEGOTIATIONS Preparation 2.01 Project preparation started in 1968 when, with financing provided under the Fifth Highway Project (Loan 495-HO), feasibility studies of the Tegucigalpa-Talanga-Juticalpa Highway (195 km) and for feeder roads to the Western Highway were carried out by consultants. A draft report was submitted to the Bank in mid-1969 and finalized in January 1971 incorporating the Bank's and Government's comments. 2.02 Detailed engineering of the Tegucigalpa-Talanga-Juticalpa Road was financed jointly by the Central American Bank for Economic Integration (CABEI) and the U.K. Government. A contract for these engineering works, including  terms of reference acceptable to the Bank, was awarded in December 1971 to a UK consultant who prepared the feasibility study with detailed engineering for the highest priority section (Tegucigalpa-Talanga) to be expedited so that it could be considered for the proposed Bank loan. At the same time the Government was preparing, through other consultants and with other sources of finance, the engineering of several secondary roads which they planned to propose for inclusion in the project. Appraisal 2.03 Project appraisal was carried out in November/December 1972. During appraisal a change of government led to the removal of many of the senior SECOPT officers and the mission was left to deal directly with consultants who, of course, were unfamiliar with the position of the new government. Although officials of the new government negotiated the loan, subsequent further changes in SECOPT staff contributed to project delays resulting from a review of the main road design (para. 3.02) and addition of a new road (para. 3.26) and changes in feeder roads for detailed engineering work (para. 3.20). Highlights of the appraisal were: (i) The economic and engineering studies for the Tegucigalpa-Talanga road were practically completed. The consultants, at CABEI's suggestions, had included about 16 km of climbing lanes which were deleted at the Bank's request because of insufficient economic justification. (ii) Although the engineering for secondary roads was incomplete and feeder road costs were estimated by consultants on a per km basis without any surveys and plans, the information was considered adequate for appraisal. (iii) As a result of discussions during the preparation missions, it was agreed to include in the project two institution-building compo- nents: (a) technical assistance for transport planning; and (b) training for engineers and technicians. 2.04 The Issues Paper was circulated on December 29, 1972 and a decision meeting held on January 15, 1973. As a result, agreement was reached on the major issue identified which was the recommendation to include a 15% special contingency allowance because of uncertainties in the outcome of the interna- tional competitive bidding for the Tegucigalpa-Talanga road. No major contract. for highway construction had been recently awarded in Honduras and it was difficult to judge the response of the market to the international tender. It was also agreed that the special contingency would be cancelled in total if the lowest evaluated bid did not exceed the appraisal estimate for the road (excluding normal contingencies) and cancelled prorata if the bid was higher.  -3- Negotiations and Approval 2.05 Negotiations took place in Washington between April 2 and 5, 1973 and on May 24, 1973 the loan amounting to US$18.8 million was approved by the Executive Directors. The loan was signed on May 30, 1973 and became effective on August 27, 1973. Project Description and Costs 2.06 The agreed project, as described in the Loan Agreement, is as follows: Part A - The construction of a two-lane paved road between Tegucigalpa and Talanga (55 km). Part B - Reconstruction to all-weather, gravel standards of the road between Comayagua and La Libertad (45 km). Part C - Construction of a 200 m long bridge over the Ulua River. Part D - Improvement to gravel standards of about 80 km of feeder roads according to an agreed list. Part E - Feasibility studies of about 330 km of feeder roads according to an agreed list, and engineering studies of the technically and economically feasible roads. Part F - Review and improvement of the Borrower's transport planning operations, including, inter alia: (i) review of the Six Year (1972-1977) Transport Investment Program; (ii) improvement of traffic data collection and evaluation; and (iii) updating of the road inventory. Part G - A training program in the fields of highway design, construction and maintenance as well as in management, operation and mainte- nance of highway construction and maintenance equipment. The project was expected to be completed by December 31, 1976.  - 4 - 2.07 The cost table as shown in the Appraisal Report is: US$ Million Equivalent % Foreign Local Foreign Total Exchange A. Civil Works (i) Construction of the Tegucigalpa- Talanga Road (55 km) 3.40 10.30 13.70 75 (ii) Reconstruction of the Comayagua- La Libertad Road (45 km) 0.40 1.30 1.70 75 (iii) Construction of a bridge over the Ulua River (200 m) 0.20 0.60 0.80 75 (iv) Improvement of about 80 km of Feeder Roads 0.50 0.50 1.00 50 Subtotal 4.50 12.70 17.20 B. Consulting Services for (i) Supervision of construction of works under A above 0.64 0.96 1.60 60 .(ii) Engineering studies for Items A(ii), (iii) and 45 km of (iv) above 0.08 0.12 0.20 60 (iii) Feasibility studies and, if feasible, detailed engineering for about 330 km of feeder roads 0.20 0.40 0.60 60 (iv) Technical assistance for transport planning - 0.10 0.10 100 Subtotal 0.92 1.58 2.50 C. Training Program for engineers, supervisors and technicians - 0.15 0.15 100 D. Contingencies (i) Physical (about 10% of A) 0.45 1.27 1.72 (ii) Escalation (about 11% of A & B) 0.60 1.57 2.17 (iii) Special 1! (about 15% of A(i)) 0.53 1.53 2.06 Subtotal 1.58 4.37 5.95 Grand Total 7.00 18.80 25.80 73 1/ See paragraph 2.04.  - 5 - III. PROJECT IMPLEMENTATION Construction of the Tegucigalpa-Talanga Road 3.01 Project implementation started even before loan negotiations, when, in March 1973, SECOPT initiated prequalification of contractors. Ten firms submitted prequalification documents and six were prequalified. The procedures followed and the results of prequalification were agreed with the Bank. 3.02 In early June 1973, shortly after loan signing, SECOPT decided to carry out a thorough review of the previously prepared engineering for the Tegucigalpa-Talanga road claiming that the average cost per km (about US$250,000) was unacceptably high. This decision caught the Bank by surprise since the design consultant's work had been closely supervised by SECOPT and CABEI staff during preparation and had been accepted as reasonable by the Bank and Government as a basis for appraisal and loan negotiations. The review decision caused protests from CABEI (who financed the engineering) and from the design consultant who wrote numerous letters to the Bank and SECOPT dis- agreeing with the latter's contentions and maintaining that the engineering prepared by them was the most suitable for the difficult topography encoun- tered. Although the Bank felt that SECOPT had not revealed fully the reasons behind the design review, it had no choice but accept their decision and express its concern about the delays in project implementation which might result. 3.03 SECOPT engaged two local consulting firms to carry out a preliminary review of the design and determine what further action was needed. In August 1973 the firms submitted their report recommending the study of alternative alignments along some sections and proposing a review of the cross section and the drainage systemS The report stated that earthworks could be reduced by as much as 876,000 m . SECOPT then appointed three local individual design engineers to carry out the detailed review which they completed in February 1974. They proposed alignment changes along 65% of the road length, including bypassing the city of Talanga, which would sho5ten the road by about two kilo- meters, reduce earthworks by about 1,000,000 m and lower the total estimated cost by about 16% or nearly US$2.2 million. The Bank agreed with the proposed changes. 3.04 The plans were revised by SECOPT staff under the direction of the three appointed engineers and international bids were invited in February 1974. Because of the time lag between the date of prequalification (March 1973) and the date of the invitations to bid, three of the six firms previously prequalified (para. 3.01) indicated no further interest. The invitation was, therefore, issued to the remaining three firms plus an additional firm which prequalified later. Only two bids were received on the mid-May tender date: one for US$9.9 million equivalent by a Honduran/US joint venture; and one for US$14.3 million equivalent by a US contractor. The Government estimate was US$11.5 million equivalent.  In view of the comparatively low bid, the Bank suggested a further investi- gation of the joint venture's prior performance and its financial and tech- nical capabilities. All information available indicated that the joint venture was made up of good and responsible firms and, on that basis, the Bank agreed to the contract award. Works proceeded smoothly and were satisfactorily completed on schedule in February 1977 only about 3 months later than the completion date estimated at appraisal. The quality of work was very good and final costs, including escalation and supplementary works, was US$11.2 million, about 11% over the original bid and some US$2.5 million (18%) below the appraisal estimate of US$13.7 million, without contingencies. The difference of US$3.8 million between the low bid (US$9.9 million) and the appraisal estimate (US$13.7 million, excluding contingencies) created a "surplus" of project funds which was used later in part for carrying out additional works. The very good results from both a cost and time standpoint showed that SECOPT's decision to review and revise the original design was sound. 3.05 Initially, SECOPT intended that the original design consultant be retained to supervise construction. However, when the decision to review and revise the designs was taken, it was also decided to appoint a different consultant for the supervisory task. The Bank agreed to award of the supervi- sion contract to a joint venture of Honduras/Costa Rica/Nicaragua firms whose performance was generally satisfactory. Special Contingency Allowance 3.06 As mentioned in paragraph 2.04, the special contingency of 15% (US$2.06 million) should have been cancelled in view of the fact that the lowest bid was well below the appraisal estimate. However, it was agreed to defer the cancellation for several months until construction work was well under way as a guard against any unusual and unexpected cost increases. This turned out to be a fortunate decision since it left funds available to allocate to repair of damages caused by Hurricane Fifi, which devastated the northern coast of Honduras in September 1974, flooding roads and bridges and creating chaos in the region. The Minister of Public Works asked the Bank to provide emergency funds for the repair works and the Bank agreed to the use of US$1.53 million of the special allocation for this purpose. By letter of December 4, 1974 the Loan Agreement was revised accordingly and emergency procurement procedures were established. In June 1975 the Government asked the Bank to include two additional roads to the list of roads to be repaired with the emergency funds to which the Bank agreed and later formalized in its letter of February 5, 1976 addressed to the Minister of Finance. The following four roads (including major bridges) with a total length of about 360 km were repaired:  -7- Western Highway San Pedro Sula-Puerto Cortes San Pedro Sula-Tela Tela-Ceiba Repair works comprised mainly the reconstruction of road sections washed out by the floods, resurfacing and bridge protection; works were carried out by local contractors and by force account. All works were satisfactorily com- pleted in May 1978 at a total cost of about US$2,865,000. Reconstruction of the Comayagua-La Libertad Secondary Road (45 km) 3.07 The feasibility study and preliminary engineering for this road was prepared in 1970 by a US consultant with financing by the Inter-American Development Bank (IDB). Reconstruction costs were estimated at US$2.9 million and the benefit cost ratio was very favorable; average daily traffic (ADT) at that time was 65 vehicles. 3.08 In July 1973 the Highway Department (CAMINOS) invited consultant proposals for detailed engineering to gravel standards and, with Bank agree- ment, appointed a local firm who was later retained for construction super- vision. The cost estimate on the basis of completed detailed engineering was US$2.9 million, the same as for the feasibility study, but ADT in 1974 had increased to 190 vehicles. Thus, the economic justification of the road, as required by the Loan Agreement (para. 6.05) was easily confirmed. 3.09 However, since the Bank loan was based on an appraisal estimate of only US$2.05 million on the basis of reduced design standards (including contingencies) CAMINOS, with Bank agreement, decided to improve only the most critical sections (totalling about 25 km) and to construct all bridges and the drainage system to ensure year-round traffic on the entire road. This first phase construction was estimated at US$2.1 million. International bids were invited in April 1975 with the road divided into two sections and bidders given the option to bid individual sections or both as a "package." Three bids were received and contracts were awarded to two local contractors who were the lowest bidders for each section: Section I - for US$1,180,000; and Section II - for US$949,000. The total of US$2,129,000 for both contracts was only slightly higher than the Government estimate. 3.10 In late 1975 when the contracted works were well underway, SECOPT requested that about US$900,000 of the "surplus" funds from the low Tegucigalpa- Talanga Road bid (para. 3.04) be allocated to complete reconstruction of the road sections not included in the previous contracts (about 20 km). The economic evaluation of this additional work was favorable and, with Bank agree- ment, two contracts amounting to about US$440,000 each were negotiated with the same contractors.  - 8 - 3.11 All work of generally good quality was completed in August 1977, about six months behind schedule. The final cost was US$2.94 million, slightly less than the contracted amount. Construction of a Bridge Over the Ulua River 3.12 The design of the bridge over the Ulua River was prepared by an individual consultant seconded to SECOPT by the IDB. The bridge, as designed, was 150 m in length and two lanes wide; it was estimated to cost US$970,000. However, a two-lane structure could not be justified because of low projected ADT volumes and, in order to meet the requirements for economic justification specified in Section 3.01(b) of the Loan Agreement, the bridge was redesigned for one lane only. Bids were invited in February 1974 and in May 1974 a contract for US$321,500 was awarded to the lowest bidder, a local contractor, and a local consulting firm was selected for construction supervision. 3.13 The contractor was issued a notice to proceed in November 1974. Unusually heavy rains in late 1975 raised the river level to the top of the nearly completed abutments and piers which prompted a design revision result- ing in some time delay and increased costs. 3.14 Bridge works were completed in October 1976, about six months behind schedule. The final cost, including supplementary works and escalation, was US$450,000, about 40% over the original contract amount but well below the appraisal estimate of US$800,000 which was based on a two-lane bridge. The quality of work was good and the consultant's supervision was entirely satis- factory. Improvement of about 80 km of Feeder Roads 3.15 Feasibility studies for the 80 km of feeder roads to be improved under the project were prepared by a consultant with financing provided by IDB. The roads are: Length Km (i) Casa Quemada-Macuelizo-Azacualpa 11.5 (ii) Western Highway-Pinalejo 7.0 (iii) Choluteca-Apacilagua 28.0 (iv) Comayagua-La Paz 19.5 (v) La Ceibita-San Nicolas 14.0 Total 80.0 3.16 At appraisal and negotiations it was agreed that detailed engineer- ing for 45 km of the above roads would be financed under the loan while engineering for the remaining 35 km would be financed from other sources available to Government at that time. After the loan was signed, SECOPT informed the Bank that financing from other sources was no longer available and requested Bank financing for the engineering of the entire 80 km. The  -9- Bank agreed, and design contracts were awarded to two consultants: A US firm for the first four roads totalling 66 km and a local firm for the last road of 14 km. It was agreed at negotiations that, as the feeder roads were to be constructed to fairly low standards, the normal level of detailed engineering would be inappropriate and only "light" 1/ engineering would be done which would provide a reasonable estimate of average cost per km and a suitable basis for preparing contract documents. The engineering for the feeder roads was prepared on that basis. 3.17 Bids from prequalified contractors were received in March 1975 for roads (i) through (iv) and in late 1975 for road (v). In all cases the con- tracts were awarded to the lowest bidder and construction supervision was provided by the design consultants. Roads (i) through (iv) were completed on schedule in early 1977 and road (v) in early 1978. The quality of all construction and the consultant's supervision was satisfactory. Final cost of works on the five roads was US$1,351,000, about 12% over the appraisal estimate of US$1,210,000 (including contingencies). The increase was caused mainly by construction of additional drainage structures and selected improve- ments of design standards. Annex 1 shows a comparison between the costs, traffic and rates of return for each road as estimated during appraisal (1972) with the same data after completion. Feasibility and Engineering Studies for Feeder Roads 3.18 The project included feasibility studies for 14 feeder roads total- ling about 330 km serving the areas north of the Tegucigalpa-Juticalpa road and engineering for those roads proven feasible. On the basis of expected development and estimated traffic volumes, it was agreed at negotiations that only "light" engineering (para 3.16) would need to be prepared for nine roads totalling 143 km but that normal detailed engineering would be required for the remaining five roads totalling 190 km. The list of roads studies and grouped by type of engineering is shown in Items A and B, Annex 2. 3.19 With Bank agreement a contract for the studies and the "light" engineering was awarded to a joint venture of US/Honduras consultants, and work began in mid-1974. All work was completed by mid-1975 and showed rates of return for individual roads ranging from 7.9% to 50% with only three roads having returns below 10% (Annex 2). Although it had a relatively lower rate of return than several other roads studied, the Government assigned high priority to the improvement of the Juticalpa-Catacamas road (41 km) and requested that detailed engineering be prepared immediately so that its construction would be considered for inclusion in the then proposed Seventh Highway Project. The Bank agreed and the study consultant's contract was extended to include this work. The road is presently under construction as part of that Bank project. 1/ "Light" engineering means a reconnaissance only to identify principal improvements needed, earthwork quantities based on minimum field surveys, standard designs and plans for drainage facilities together with speci- fications and bid documents.  - 10 - 3.20 Unexpected delays were encountered in starting detailed engineering for the remaining 150 km. This was partly the result of several changes in sernior SECOPT officials but was mainly caused by Government uncertainty about relative priorities for feeder and developmental roads in the general area of the Tegucigalpa-Juticalpa road. In an effort to clarify the situation the Bank agreed to SECOPT's proposal that feasibility studies be prepared for two additional roads; 88 km road serving the area south of Juticalpa, and a second bypass of the city of Tegucigalpa, about 16 km in length (Item C, Annex 2). The work was carried out in 1977 by the same consultant who prepared studies for the originally agreed 330 km (para. 3.19). 3.21 Finally, in mid-1978 SECOPT proposed and the Bank agreed that detailed engineering would be carried out for the following three roads total- ling about 158 km: Telica-San Francisco de la Paz-Gualaco 58 km Gualaco-San Esteban 50 km Talanga-El Provenir 50 km These roads include substantial portions of roads originally proposed with extension to open new areas and connect with roads being constructed with assistance from IDB. The engineering work was carried out by three local consultants and completed in mid-1980. The first and third roads listed above are included in the ongoing Eighth Highway Project and the IDB is financing the construction of the second road. Technical Assistance for Transport Planning 3.22 The project provided for technical assistance to the three govern- ment agencies involved in transport planning: the Central Planning Office (CONSUPLANE) and the General Directorate for Transport and the Sectoral Planning Office, both in SECOPT. Staff in all these agencies lacked training and experience in transport planning and there was little or no basic data with which to work. In April 1974 SECOPT invited proposals from consulting firms to carry out the assistance on the basis of terms of reference agreed with the Bank. The joint venture of Honduras/US firms was selected and a contract was signed in September 1975. 3.23 The General Director of Transport in SECOPT was appointed as coor- dinator of the program and the consultant provided 40 man-months of assis- tance. Their project manager and transport economist remained in Honduras for the full contract period (10 months) and 8 experts in various fields were assigned for shorter periods as required. In addition to providing much needed training to staff of the three planning agencies, the consultant prepared manuals for feasibility studies, analysis of vehicle operating costs and bus route studies and made recommendations on tariffs, traffic regulations, a transport master plan and a program for data collection including computer processing of selected information.  - 11 - 3.24 The Government was favorably impressed with the consultant's perfor- mance and asked the Bank to extend the original contract which, in fact, was extended three times until May 1978 (the second and third extensions were financed under the Seventh Highway Project). The consultant's services during the contract extension were carried out by a full time transport economist and were limited to the General Directorate of Transport. In addition to follow-up on the tasks initiated during the original contract period, the consultant provided additional training for transport planning as well as advice and assistance for the preparation of a much-needed new transport law together with implementing regulations. The new law was enacted in February 1976 and was the basis for a November 1976 decree establishing regulations for enforce- ment of vehicle weights and dimensions. With the assistance of CABEI, SECOPT built and equipped 13 weight control stations located at strategic points along the most heavily trafficked roads. The stations began operations in January 1977 and, after a short adjustment period, are working satisfactorily. Training Program 3.25 The project helped finance a training program for maintenance personnel which was carried out with assistance by a US consultant under a 15-month contract and that was later extended by an additional five months. Originally a total of 29 courses were listed for consideration with 15 selected for preparation and use on the basis of priority and considering the time, funds and staff available. The selected courses consisted of both audio-visual and field training and were presented in each maintenance district which were supplied with audio-visual equipment and other necessary training aids. A training department was formed within SECOPT and two engineers were trained as instructors in the consultants' home office. The ongoing Seventh Highway Project includes financing of additional technical assistance and training for maintenance staff and the same consultant has been retained to aid in implementation. Additional Project Road 3.26 In late 1974 SECOPT requested the Bank's agreement to use about US$3.0 million of the US$3.8 million "surplus" funds (para 3.04) to help finance reconstruction of the most critical sections (17 km) of the 60 km La Ceibita-Santa Barbara Road. The economic justification for the proposed improvement was prepared by SECOPT's Sectoral Planning Office with detailed engineering carried out by a local consultant. The Bank found the economic and engineering information to be satisfactory but suggested delaying bids for the work until construction of other project items was further advanced so that a more accurate estimate of available loan funds could be made. In February 1976 the Bank agreed to the additional road improvement and bids were immediately invited from prequalified contractors. Two contracts totalling about US$2.93 million were awarded to the lowest bidders; US$2,744,831 for highway works and US$187,582 for construction of two bridges. The inclusion of this new project component required extending the closing date from June 30, 1977 to December 31, 1978. All work was of good quality and construction was completed on schedule in late 1978. Supervision of construction was carried out by a local consultant whose performance was satisfactory.  - 12 - Development of Labor Intensive Technologies 3.27 In 1975 the Government requested the Bank's assistance in implement- ing a feeder roads demonstration project utilizing labor-intensive construction techniques. Although this item was not included in the original project, the Government requested, and the Bank agreed, that US$200,000 of the "surplus" loan funds (para 3.04) be allocated to this effort; this amount was matched by the Bank from its research funds. Work started in April 1976 with assis- tance by a two-man consultant team and a new unit was created within SECOPT to manage the program. 3.28 The program has progressed well and Bank support and assistance was extended via a special allocation of US$1.0 million from savings in construc- tion costs realized under the Seventh Highway Project. For further details reference is made to a report issued by the Bank's Transportation Department entitled "The Study of Labor and Capital Substitution in Civil Engineering Construction" dated September 1978. IV. COST ESTIMATES AND DISBURSEMENTS 4.01 A comparison between appraisal and final cost estimates (including contingencies) is shown in Annex 3. The final cost of original project items will be about US$19.2 million, some US$4.5 million (19%) less than the appraisal estimate, including normal contingency allowances. As explained in preceding paragraphs, all remaining loan funds, including the special contingency allowance, were used for emergency damage repairs or for new and/or increased project elements. The original disbursement percentages were retained throughout implementation and, therefore, the Bank's participation in the total project was the 73% estimated at appraisal. 4.02 Disbursements lagged behind appraisal estimates as shown in the following table. The initial lag was caused by Government's decision to undertake a thorough revision of the engineering and cost estimates for the Tegucigalpa-Talanga road which delayed commencement of project works for about one year. Decisions on use of the special contingency and "surplus" funds resulting from the initial low bid were not taken until later in the implemen- tation period which also contributed to disbursement delays. Appraisal Actual as % of FY Estimates Actual Appraisal --(US$'000 Equivalent)-- 1974 3,600 0 0 1975 9,000 3,500 17 1976 16,500 9,100 55 1977 18,800 14,200 75 1978 18,800 17,500 93 1979 18,800 18,400 98 1980 18,800 18,672 1/ 99 1/ On November 7, 1980, undisbursed funds amounting to US$127,925.12 were cancelled.  - 13 - 4.03 The allocation of loan proceeds was revised six times as shown below to provide for emergency repair works, reconstruction of a new road and other project revisions. -----------------Revisions-------------------------- Original 1st 2nd 3rd 4th 5th 6th Categories 5/30/73 12/4/74 1/14/76 6/10/76 2/16/77 10/4/77 6/30/80 -----------------------US$000 Equivalent---------------------- I. Road Construction 12,700 14,230 14,230 14,230 14,785 16,230 16,500 II. Consultant Services (a) for parts A, B, C and D of the project 1,080 1,080 1,080 1,080 1,080 1,300 1,450 (b) for part E of the project 400 400 400 400 400 650 564 (c) for part F of the project 100 100 200 270 270 270 267 III. Training Program 150 150 350 350 350 350 341 IV. Unallocated 4,370 2,840 2,540 2,470 1,915 - - 18,800 18,800 18,800 18,800 18,800 18,800 18,672 1/ 4.04 The closing date was extended five times, as follows, for a total of three years: Original Closing Date June 30, 1977 1st Extension (18 months) December 31, 1978 2nd Extension (6 months) June 30, 1979 3rd Extension (6 months) December 31, 1979 4th Extension (6 months) June 10, 1980 5th Extension (20 days) June 30, 1980 1/ See footnote on preceding page.  - 14 - V. ECONOMIC RE-EVALUATION Performance of the Economy 5.01 During the period 1967-1976, the real Gross Domestic Product (GDP) of Honduras grew at a slow annual rate of 3.5%. The economic situation improved after 1976 and the real GDP increased by about 7.6% per year. The rate of inflation averaged 8% between 1973 and 1976. GDP and General Price Changes - 1966-1976 in Percent 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 Real Growth GDP - +5.4 +6.3 +0.8 +3.7 +3.5 +3.7 +5.1 +1.6 +0.7 +4.5 +7.0 +8.2 General Prices - - +1.9 +1.2 +3.6 +2.3 +3.4 +4.6 +13.0 +8.1 +5.0 +8.5 +5.7 Construction Prices - - - - - - - - +5.9 +6.6 +13.0 +8.0/1 +8.0/1 /1 Assumptions made for the reevaluation. Sources: Memorandum on recent economic development and prospects of Honduras, January 10, 1978, through 1975, and Central Bank of Honduras for 1976-78. Plan Maestro Vial de Honduras, December 1977. Construction of the Tegucigalpa-Talanga Road 5.02 The traffic evolution along the Tegucigalpa-Talanga road reflects the general economic trend. Traffic growth on the old road was significantly lower than expected during the economic recession from 1972 to 1976 but opening of the new road in 1977, coinciding with the economic boom, generated increased traffic. As a result, the ADT in 1977 was 10% higher than estimated at appraisal (Annex 4). Marked changes in the composition of traffic also occurred between 1973 and 1978: light vehicles, buses and light trucks increased their share of traffic compared to heavy trucks. 5.03 The appraisal economic rate of return (ERR) resulting from a probability analysis, amounted to 13%. The major benefits were vehicle operating costs and time savings, the latter representing 14% of total benefits. A SECOPT study in 1979 yielded a revised ERR of 13.6% by considering: (a) the final  - 15 - construction and supervision costs, which were lower than expected; (b) the actual traffic; (c) the traffic growth rates predicted in the Appraisal Report; (d) the vehicle speeds measured on the new road, which are higher than expected; and (e) lower vehicle operating costs savings than estimated because of the change in the composition of the vehicle fleet (Annex 4). Time savings were not included as a benefit in SECOPT's study. Consideration of these savings would have given an even higher rate of return. This shows that the investment was well justified (Annex 5). Improvement of Secondary and Feeder Roads 5.04 The Appraisal Report considered a traffic growth rate of 5% p.a. for these roads. Recent counts show that, on the average, traffic has grown at higher rates (about 12% p.a.). For the 1978-1980 period, the 12% rate was adopted consisting of a 5% rate of growth for normal traffic with the remainder composed of induced traffic. Between 1981 and 1985, no induced traffic is assumed and normal traffic is projected to grow at 5% p.a. similar to the appraisal forecast. 5.05 The revised ERRs were computed using vehicle operating cost savings calculated by SECOPT in December 1978. Following a conservative approach, no time value for passengers and freight was taken into account and the vehicle composition used was that obtained from the latest two day manual traffic counts. The resulting revised ERRs for the feeder roads averaged about 26% indicating that, on an aggregated basis, investments in feeder roads were sound. Should the value of time savings and/or residual value been considered, the ERR would be higher. VI. PERFORMANCE OF THE BORROWER 6.01 The performance of the Borrower was mixed but, under the circum- stances, can be rated as generally satisfactory. 6.02 One of the main causes for occasional less than satisfactory perfor- mance by SECOPT was a chronic shortage of qualified technical personnel and frequent changes in staff assignments. Low salary scales is the underlying cause and effort to focus Government's attention on the problem is being made under the ongoing Seventh Highway Project where a covenant requires furnishing the Bank a detailed program of actions proposed to recruit and retain qualified key personnel. The program was prepared in late 1979, but the government has not yet acted upon it. As an interim measure SECOPT was allowed to strengthen its capability by contracting advisors at higher than civil service salary scale.  - 16 - 6.03 There were frequent delays by the Borrower in processing payments to contractors and consultants. These resulted from the Borrower's overly complex procedures and documentation, particularly in the Ministry of Finance. Efforts to improve the situation are being made under the Seventh Highway Project where an "Executing Unit" has been established in SECOPT to streamline and expedite this and other aspects of project implementation. 6.04 The Borrowers compliance with the major loan covenants was good except for road maintenance. Following are the major covenants and the Borrower's efforts to comply. 6.05 "Section 3.01(b) Without limitation upon the foregoing, the Borrower shall: (i) improve or cause the Municipalidad de Tegucigalpa to improve, in a manner satisfactory to the Borrower and the Bank, about 800 meters of a suburban avenue to provide the road included in Part A of the Project with access to and from the streets of Tegucigalpa and to complete such improvement prior to, or concurrently with, Part A of the Project; and (ii) not start execution of Parts B and C of the Project, except as the Borrower and the Bank shall otherwise agree, before furnishing to the Bank evidence satisfactory to the Bank, based upon detailed engineering studies therefore, that the carrying out of such Parts is technically feasible and economically justified." The avenue designated in Item (i) was improved to four-lane standards in mid-1975, about 1-1/2 years before the Tegucigalpa- Talanga road was completed. The Borrower complied fully with Item (ii) and all information needed to establish feasibility of the proposed roads was furnished the Bank (para 3.08). 6.06 "Section 4.03(a) The Borrower shall: (i) cause all national roads of the Borrower to be adequately maintained and cause all necessary repairs thereof to be made, all in accordance with sound engineering practices; (ii) cause all road maintenance equipment and workshops of the Borrower to be adequately maintained and cause all necessary repairs and renewals thereof to be made, all in accordance with sound engineering practices; and (iii) provide, promptly as needed, the funds, facilities, services and other resources required for the foregoing." Item (iii) was the subject of a Supplemental Letter dated May 30, 1973, which specified annual amounts to be budgeted for road maintenance during 1974 and 1975. Compliance with Items (i) and (ii) was not entirely satisfactory due mainly to shortages of equipment and inadequate maintenance of what equipment was available. As the loan did not provide financing for equipment or workshop improvements, the Bank was unable to exercise much leverage for improvement. However, the ongoing Seventh Highway Project includes equipment financing which is helping improve the situation. As for Item (iii), the yearly allocations for maintenance have exceeded the amounts specified in the Supplemental Letter.  - 17 - 6.07 "Section 4.03(b) Without limiting the generality of the foregoing, the Borrower shall take all necessary action to: (i) cause the dimensions and weight of the vehicles using the national roads of the Borrower to be kept within the limits provided by the laws and regulations of the Borrower; (ii) ensure permanent and consistent enforcement of the Borrower's laws and regulations governing inter alia the dimensions and weight of vehicles; and (iii) exchange views with the Bank on any proposal to amend or supplement such laws and regulations." The Borrower has complied satisfactorily with this covenant. Thirteen permanent weighing stations have been established and regulations on vehicle weight and dimensions are being enforced (para. 3.24). VII. ROLE OF THE BANK 7.01 The Bank contributed significantly to project identification and preparation by inclusion of feasibility studies under the preceding Fifth Highway Project and by participation in review of subsequent designs and studies which were financed by others. The project's scope and size were appropriate for SECOPT's capacity although shortages of key technical staff were a problem throughout implementation. The original implementation schedule was reasonable but unexpected major changes in project scope required several extensions of the closing date. 7.02 The institution building aspects were well chosen and have resulted in some important improvements in road maintenance operations and transport planning. In spite of some staffing problems, the Government actively supported and participated in these efforts and assistance in these and other areas is being continued under the Seventh Highway Project. At the Bank's suggestion, SECOPT encouraged and received much greater participation of local consultants under this project than in the past. Eight local firms either working alone or in association with foreign firms, were engaged for construction supervision or for feasibility or engineering studies; in the past such services were provided solely by foreign firms. 7.03 There were 14 supervision missions during the approximately six-year implementation period. The type and timing of these missions was appropriate in view of the several changes in project scope effected during implementation. The working relationship between the Borrower and the Bank was good throughout the project and this resulted in no small degree from the Bank's willingness to consider use of "surplus" loan funds for new and/or revised project elements and the Bank's quick response to Government's request to use the special contingency allowance for hurricane damage repairs.  - 18 - VIII. CONCLUSIONS 8.01 The project was successful and met its main objectives of upgrading the highest priority section of the Tegucigalpa-Juticalpa road and feeder roads and improving SECOPT's planning and road maintenance capacity. The advances made are being consolidated and extended under the follow-up Seventh Highway Project, although the main problem encountered in project imple- mentation, shortage of key local staff, still persists. Through a fortunate set of circumstances, loan funds were available to help repair roads and bridges damaged during a 1974 hurricane and to participate in reconstruction of an additional secondary road. 8.02 There are no particular lessons to be learned from this project except possibly to emphasize the importance of the Bank's maintaining a flexible and cooperative attitude toward changes in project elements resulting from significantly changed circumstances.  HONDURAS PROJECT COMPLETION REPORT SIXTH HIGHWAY PROJECT (LOAN 896-HO) Civil Works other than Tegucigalpa-Talanga road Comparison Between Appraisal and Revised Economic Rates of Return Costs in current Lempiras Costs in Lempiras of year of Appr. ADT Year (including all contingencies) (including physical contingencies) ERR% Length Appr. Final of Appraisal Final Appraisal Final Increases or Project Component Km 1/ 197821 Completion L'OOO L'OOO L'OOO L'OOO Decreases % Appr. FinaLe/ A. Comayagua-La Libertad 45 125 231 1977 4,120 5,870 3,740 4,284 +15 14d/ 134/ 10;/ (Secondary road) B. Feeder Roads 1. Casa Quemada-Azacualpa 11.5 105 141 1976 278 686-6 253 540 +113 18 0 2. Western Highway Quimistan-Pinalejo 7.0 269 360 1975 194 212 165 181 +10 29 45 3. La Ceibita-San Nicolas 14.0 130 174 1977 378 82G=' 330 598 +81 29 8 ' 4. Choluteca-Orocuina Apacilagua 28.0 120 161 1976 882 440 803 346 -57 10 42 5. Comayagua-La Paz 19.5 273 366 1976 688 544 627 428 -32 29 53 Sub-total 80.0 2,420 2,702 2,178 2,093 - 4 C. Bridge over the Ulua River - - - 1977 1,940 900 1,760 657 -63 12 20 D. La Ceibita-Santa Barbara 17.0 187 249 1978 5,000 5,780 5,000 4,379 -12 16 20 1/ ADT 1972; (except for item D- ADT 1975). 2/ Appraisal estimates of ADT.because no new traffic counts are available (except for ADT 1978 of item A based on a 1974 ADT estimate). 3/ VOC savings according to appraisal report adjusted for inflation to years of completion of the different works. 4/ With time savings representing 20% at total benefits. 5/ Without time savings. 6/ Substantial cost increases on roads Nos. 1 and 3 were caused mainly by the need of additional drainage structures. In addition, the original design for road No. 3 was for an improved track but in view of the growing traffic demand, the construction was carried out on the basis of upgraded design standards.  - 20 - ANNEX 2 HONDURAS PROJECT COMPLETION REPORT SIXTH HIGHWAY PROJECT - LOAN 896-HO Feeder Roads to the Tegucigalpa-Juticalpa Road That Were Studied Under the Project A. Roads Requiring "Light" Engineering Studies Rates of Length (km) Return % 1. Cedros-San Ignacio 13.7 18.0 2. Coyol Solo-El Porvenir 7.1 50.0 3. El Porvenir-El Terrero 5.2 50.0 4. San Francisco-San Luis 13.7 7.9 5. Access to Orica 28.3 18.5 6. Access to Concordia 13.7 29.4 7. Access to Salama 32.5 8.8 8. Salama-Silica 3.8 8.8 9. San Francisco de La Paz-Manto 25.0 21.8 143.0 B. Roads Requiring Detailed Engineering Studies 10. Talanga-Cedros 24.5 23.1 11. Cedros-Minas de Oro 44.8 20.0 12. Juticalpa-Catacamas 40.7 22.0 13. Catacamas-Dulce Nombre de Culmi 58.9 31.5 14. Telica-San Francisco de La Paz 21.1 21.8 190.0 Sub-Total 333.0 C. Studies of Additional Feeder Roads Also B/C Ratio Carried Out 15. Santa Maria-Seale-Azacualpa-Juticalpa 88.0 1.7 16. Guangalolo-Rio del Hombre 16.0 1.1 104.0 Total 437.0 km  HONDURAS PROJECT COMPLETION REPORT SIXTH HIGHWAY PROJECT (LOAN 896-HO) Comparison Between the Appraisal and Final Costs (Listed in the Same Order as Shown in the Appraisal Report) Project Components Total Costs Increases (Including Contingencies) or A. Civil Works Appraisal Final Decreases Comments (US$ Thousands) (i) Construction of the Tegucigalpa- Talanga Road 16,600. 11,200 -35% (ii) Reconstruction of the Comayagua- La Libertad Road 2,060 2,936 +42% (iii) Construction of a Bridge Over the Ulua River 970 450 -54% (iv) Improvement of About 80 km of Feeder Roads 1,210 1,351 +11% Details in Annex 1. (v) Reconstruction of Sections of the La Ceibita-Sta. Barbara Road - 2,891 - New project component. Sub-Total 20,840 18,828 -10% B. Consulting Services (i) Supervision of Construction of Works Under A (except item v) 1,760 1,929 +10% (ii) Engineering Studies for Item A(ii) and 45 km of A(iv) above 220 166 -32% Engineering was prepared for the (iii) Feasibility Studies for about 330 km 80 km mentioned in A(iv). and,if feasible, detailed engineering. 660 916 +38% Feasibility Studies for 434 km and (iv) Technical Assistance for Transport detailed engineering for 190 km. Planning 110 314 +185% Additional consulting services were (v) Supervision of Construction of work required. under A(v) - 406 - C. Training Program 150 141 -6% 1 D. Special Contingency 2,060 2,865 +39% The special contingency was allocated to carry out emergency repair workc on roads and bridges destroyed by hurricanes. E. Hand Labor Studies and Works - 200 25,800 25,765 . b~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.  - 22 - ANNEX 4 HONDURAS PROJECT COMPLETION REPORT SIXTH HIGHWAY PROJECT (LOAN 896-HO) Tegucigalpa Talanga Road Comparison Between Forecast and Actual Traffic Volumes Appraisal Report: 1/ Years ADT Estimate Actual ADT - Old Road New Road Old Road New Road 1972 460 0 460 0 1976 57 627 495 0 1977 60 671 50 2/ 737 1978 63 718 - 3/ 900 1/ Source: SECOPT 2/ Rough Estimate 3/ No maintenance is provided to the old road; traffic is almost nil. Traffic Projection (According to the Appraisal Report) Annual Traffic Growth Rate Years % 1976-1981 + 7 1981-1986 +10 1986-1995 + 7 Estimated Vehicle Operating Costs Savings VOC Savings (in centavos per vehicle - km) Traffic Composition Appraisal Report SECOPT % 1973 1978 3/ Appraisal Report SECOPT With Time Without Time Without Time 1973 1978 Savings 1/ Savings Savings Private Cars and Pick-ups 8.9 6.8 8.3 39.0 44.0 Buses 28.0 19.6 18.3 5.6 9.0 Trucks II 36.3 30.8 18.2 8.2 35.0 Trucks III 47.3 40.2 40.4 47.2 12.0 Weighted 2/ 29.38 25.43 16.52 100.0 100.0 1/ The cost of time represents 23% of the total cost for private cars, 30% for buses and 15% for trucks. 2/ Weighted by the corresponding traffic composition. 3/ In centavos of 1978: 1 centavos 1978 = 0.68 centavos 1973  - 23 - ANNEX 5 HONDURAS PROJECT COMPLETION REPORT SIXTH HIGHWAY PROJECT (LOAN 896-HO) Tegucigalpa Talanga Road Comparison Between Appraisal and Final Costs and Economic Rates of Return Costs (Lempiras Millions) Appraisal Final Decrease Inflation Decrease (1973) (1978) % (1973-1978 in Real Terms Total Costs (including physical contingencies and supervision) 32.7 22.4 -32 +49 -54 Economic Rates of Return Appraisal Final Estimate (SECOPT) Average vehicle operating cost savings: Lempiras per vehicle and km 0.2938 0.1652 Economic Return % 13 -/ 13.6 -/ 1/ Including time savings. 2/ Excluding time savings.  - 24 - ANNEX 6 NOVE,TlER 24, 1982 IIR. SHIV S. i' ,1'UR ACTTIG DlRElCT'OR-CLElERAL OPErATION.S EVALUATION INTBAFRAD WASHINGTON DC REFERENCE YOUR LETTERS 01' SEPTEtSER ;7 AND 10 1982, REGArDING PROJECT PERI'ORI'IANCE REPrCT OF HONDURAS SIXTHI-IIGIIWAY PROJECT (LOAN IB-896-HO) A,ND PROJECT PERFORI',ANCE REPORT ON HONDURAS SECOND PORTS PROJECT (LOAN IB-76 7-HO) WISHi TO INFOR1i YOU 17E AIRE I.. AGrEElMNT WITHl THEM. REGARDS, RODOLFO HIATA 'OROS SUBSECRETARIO DE HACIEND' Y CREDITO PUBLICO (UNDER-SECRETARY OF FINANCE AND PUBLIC CREDIT)  IBRD-10395(PCR) RD9 T8'7 oo* TRIO MAP IS BASED ON IBRD 10395, MARCH 1973 DEOCEMBER