D_cumcat of The World Bank FOR OMCIL USE ONLY Report No. 5714 PROJECT COMPLETION REPORT BOLIVIA AVIATION DEVELOPMENT PROJECT (LOAN 1423-BO) June 18, 1985 Latin America and the Caribbean Regional Office ITs docummea bam a reucmki _ sbsw* and may he wi by epenft ly in the pefommee f ther Umea dutil esa ma nelterwise be 1 dosd withot World Bak auatheoztioma FOR OFFICIAL USE ONLY BOLIVIA AVIATION DEVELOPMENT PROJECT (LOAN 1423-BO) PROJECT COMPLETION REPORT TABLE OF CONTENTS Page No. Preface e......... i Basic Data Sheet.................................................. ii Highlights.................................................... v I. INTRD T RO ..OD..................w*..N. 1 II. PROJECT PREPARATION AND APPRAISAL....................... 2 III. PROJECT IMPLEMENTATION AND COSTS ....... .......... 3 IV. FINANCIAL PERFORMANCE OF AASANA....................... 9 V. TRAFFIC DEVELOPMENT.................................. 13 VI. ECONOMIC REEVALUATION.............. .............O... 14 VII. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT............... 16 VIII. CONCLUSIONS...... ................. 17 TABLES 1. Appraisal Cost Estimates .20 2. AASANA: Balance Sheets 197 78-1 2.. 21 3. AASANA: Statements of Income and Expenses . .22 4. AASANA: Statements of Cash F l o w 23 5. Changes in the Level of Rates, 1975-1984 . . 24 6. AASANA: Actual and Projected Level of Changes, 1975-1984 ...25 7. Actual and Projected Income Statements, 1978-1982 26 8. AASANA: Actual and Projected Balance Sheets, 1981982.......................... 27 9. Bolivia Air Traffic, 1975-1982 ......... ............ 28 10. Actual and Forecast Traffic at Project Airports......... 29 11. Aviation Development Project - Economic Returns......... 30 ANNEX Compliance with Covenants .... .......... ....... 31 MAP IBRD 12654 (PCR) This document has a resticted disuibution and may be used by recipients only in the performance of their offical duties. Its contents may not otherwise be discosed without World Bank authorization. BOLIVIA AVIATION DEVELOPMENT PROJECT (LOAN 1423-BO) PROJECT COMPLETION REPORT PREFACE The following is a Project Completion Report on the Bolivia Aviation Development Project for which a loan in the amount of US$25.0 million was approved by the Executive Directors on Kay 12, 1977. Because of cost overruns and a shortage of local counterpart funds early during project implementation, the size and scope of the project were substantially revised. The loan is 90Z disbursed, and loan funds are fully committed. This Completion Report was prepared by the Bank's Latin America and the Caribbean Regional Office and is based on information obtained from the Minutes of the Board Meeting, LAC Information Center, Appraisal Report, staff supervision reports, consultants' reports, and information gathered by Bank missions that visited Bolivia in May and October 1984. In accordance with the revised project performance reporting procedures this report has been read in the Operations Evaluation Department (OED) but the project was not audited by OED staff. The draft Completion Report was sent to the Borrower for comments: however, none were received. - ii - BOLIVIA AVIATION DEVElOPMENT PROJECT (LOAN 1423-BO) PROJECT COMPLETION REPORT BASIC DATA SHEET Key Project Data Appraisal Item Expectation Actual Total Project Cost (USS million) 39.46 29.96 1/ 2/ Loan Amount (US$ million) 25.0 25.0 Disbursed - 22.50 3/ Date Physical Component Completed 09/82 09/85 4I Proportion of Time Overrun (x) - 75 Original Component - Added Components - - Estimated Economic Rate of Return 19% 15% Institutional Performance - Marginal Accumulated Disbursements (US$ millions) FY78 FY79 FY80 FY81 FY82 FY83 FY84 FY85 Expected at Appraisal 3.8 6.9 14.6 22.6 24.8 25.0 - - Actual - 0.1 2.0 4.0 5.0 11.3 14.0 22.50 Actual as x of Expected 1.4 13.7 17.7 20.2 45.2 - - 1/ Estimated final cost. 2/ Comparison between appraisal estimate and final cost is not meaningful since the size and scope of the project was substantially revised during the implementation period. Cost overruns for specific project items are discussed in the text. 3/ As of December 19, 1984. 4/ Estimated date of project completion. - iii - BOLIVIA AVIATION DEVELOPMENT PROJECT (LOAN 1423-B0) PROJECT COMPLETION REPORT Original Actual or Item Plan Est. Actual First Mentiol in Files or Timetable - 13 June 74 Government's Application - Negotiations 30 March 77 Board Approval - 12 May 77 Loan Agreement Date - 9 June 77 Effectiveness Date - 29 Sept. 77 Closing Date 30 June 83 30 June 85 Borrower AASANA 1/ AASANA Executing Agency AASANA AASANA Fiscal Year of Borrower 1 Jan.to 31 Dec. 1 Jan.to 31 Dec. Follow-on Project Name 1/ Administracion de Aereopuertos y Servicios Auxiliares a La Navegacion Aerea. Mission Data Month/ No. of No. of Staff Date of Year Weeks Persons weeks Report Pre-ID Nov.74 1 1 1 12 Nov.74 Pre-ID Feb.75 1 2 2 30 Apr.75 Pre-ID Aug.75 2 2 4 23 Sept.75 Preappraisal Mar.76 2 3 6 11 May 76 Preappraisal Jun.76 I 1 1 26 Jul.76 Preappraisal Aug.76 2 3 6 _ Preappraisal Aug.76 1 1 1 _ Appraisal Nov.76 2 3 6 28 Apr.77 Supervision I May 77 1 2 2 1 Jun.77 II Dec 17 1 2 2 19 Dec.77 III May 78 1 2 2 15 Jun.78 IV Aug.78 1 2 2 15 Sept.78 V Feb.79 1 2 2 19 Mar.79 VI Jun.79 1 2 2 15 Jun.79 VIT Nov.79 1 2 2 5 Dec.79 VIII May 80 1 2 2 16 May 80 IX Oct.80 1 2 2 17 Oct.80 X Dec.80 .4 2 .8 6 Jan.81 Xi Apr.81 1 2 2 8 May 81 XII Jul 81 1 2 2 7 Aug.81 XIIi Nov.81 1 1 1 4 Dec.81 XIV Feb.82 1 2 2 14 May 82 XV Jun.82 1 2 2 30 Jan.82 XVI Nov.82 1 2 2 29 Nov.82 XVII May 83 1 3 3 20 May 83 XVIII Oct.83 1 2 2 28 Oct.83 Completion I Apr.84 1 3 3 - Completion II Oct.84 1 1 1 I 31.4 65.8 .4 - - iv - BOLIVIA AVIATION DEVELOPMENT PROJECT (LOAN 1423-BO) PROJECT COMPLETION REPORT Currency Exchange Rates Name of currency (abbreviation) $b. - Peso Year: Appraisal fear Average (1976) US$ Sb. 20.00 Intervening Years Average 1977 - 20.00 1978 - 20.00 1979 - 20.00 1980 - 21.82 1981 - 25.00 1982 - 42.33 1983 - 272.10 Completion Year Average (1984) 1st Quarter US$ = Sb 500.00 2nd Quarter USS = Sb 800.00 3rd Quarter US$ = $b2000.00 v BOLIVIA AVIATION DEVELOPMENT PROJECT (LOAN 1423-BO) PROJECT COMPLETION REPORT 1. The objective of the project was to improve air transport within Bolivia, especially from the western populated areas of the country to the eastern bucolic regions, in order to facilitate the flow of meat and other agricultural goods from the east to the west, and from the south, through the completion of the reconstruction of the Tarija airport. In addition, air safety was to be improved by installing new air navigational aids, communications and lighting systems. The aviation authority was to be strengthened through the provision of technical assistance and training, and its ability to maintain its various airstrips (unpaved airports) was to be improved through the acquisition of civil works maintenance equipment. The project also included a final engineering study for a new runway at Cochabamba (paras 2.04 and 3.01). 2. At the time of appraisal, the project consisted of five parts: (a) design and construction of three airports in the Beni province (Riberalta, San Borja and Santa Ana) and completion of the reconstruction of Tarija airport by providing an asphaltic concrete running course and a lined drainage canal; (b) installation of air safety equipment consisting of a countrywide air navigational aid system, three segments of the four-part countrywide aeronautical fixed telecommunications network (AFTN) system and approach glide slope guidance lighting at various airports; (c) provision of a five-man technical assistance team for five years and 30 specialized man-years of training identified by the team as being necessary; (d) provision of heavy civil works construction equipment to assist in maintaining unpaved runways at airports throughout the country; and (e) provision of final engineering for a new runway at Cochabamba capable of accepting 24-hour all weather flights (para 3.01). The Administracion de Aeropuertos y Servicios Auxiliares a la Navegacion Aerea (AASANA) was the Borrower, and the Government guaranteed the loan. AASANA was the executing agency and was to provide the local counterpart of the project from internally generated funds. 3. The engineering contracts for design of the three Beni airports and Cochabamba were awarded under international competitive bidding (ICB) procedures. The construction contracts at Tarija and the navaid, communications, Lighting anc maintenance equipment contracts were issued under Bank ICB guidelines (paras 3.02, 3.03 and 3.05). 4. Because of delays encountered in awarding the engineering contracts, further delays in the development of the final engineering designs, possibly over-optimistic cost estimates for the feasibility - vi - studies,and political and financial problems then develuping in the country, the anticipated costs for construction of the three Beni airports rose to about 77Z above the appraisal estimate. The strain on 'vailable loan funds was further exacerbated by contract awards for the nava--ds and communications systems of about five times above the amount expected aL project appraisal. Since AASANA was unable to generate funds to cover che anticipated shortfall in airport construction funds and since the Government was directing almost all of its available transportation funds to the constrnction of Santa Cruz airport I/ (construction running about two times the or,ginal estimate), it was decided to delete construction of the Beni airports from the project. In April 1982, the Bank's Board of Directors approved this change in the project description which, among other things, increased airport maintenance equipment at the expense of airport construction (paras 1.03 and 3.02). 5. Almost all of the contracts which were awardec were delayed at some point because of Bolivian Government procurement review or late initial payments, mostly brought about through lack of counterpart contributions on the part of AASANA (para 3.14). Although delayed, the final engineering designs for the three Beni airports and Cochabamba were completed successfully (para 3.05). This was true also for the construction of the runway surface course and drainage canal of Tarija and the installation of rhe radio navaid and glide slope lighting systems (paras 3.06 and 3.10). The original batch of airport maintenance equipment was purchased according to schedule and delivered in 1978 and 1979 before the major financial problems of AASANA arose (para 3.07). The contracts for the second batch (following the project description change) were awarded in early 1983, but,because of Governmental procurement review, were not signed until late 1983 (para 3.08). The completion of the AFTN system installation was delayed by disagreements between AASANA and the contractor on engineering and financial details concerning the installation (para 3.09). When these problems had been resolved (after about a year), disbursements of Bank loans to Bolivia were suspended (November 1983). This affected the AFTN contract as well as the finally approved contracts for the airport maintenance equipment and navaid flight inspection (FFI) safety equipment (also included in the project description change). Delivery of the airport maintenance equipment is expected during the first quarter of 1985, and the FFI equipment will be delivered by the third quarter of 1985. Final acceptance of the AFTN contract will take place by December 1985 (paras 3.08, 3.09 and 3.10). After the loan suspension was lifted, the closing date was extended from December 1983 to December 1984. However, because of all these delays, the loan closing date was again extended to June 30, 1985. 1/ Desire by the Government for the new Santa Cruz airport had been expressed during appraisal and negotiations, but neither the timing nor the method of financing its construction had been determined. The Bank had recommended that the existing Santa Cruz airport be upgraded rather than that a completely new airport be constructed. The Bank's recommendat-ons were ignored. - vii - 6. Dutring preappraisal and appraisal, after the identification of a general weakness in the administration of AASANA, AASANA reached an agreement with the Airports Departmenr of the Mexican Secretaria de Asentamientos lumanos y Obras Publicas to supply a group of five experts in various disciplines for five years as a technical assistance team. It was felt that a team comiag from a single currently operational system would be better than a collection of individual experts from various systems and countries. After loan signing, when AASANA attempted to implement this agreement, the administration in Mexico had changed, and it was no longer willing to second the team of experts. AASANA turned to the International Civil Aviation Organization (ICAO) as an alternative since AASANA already had a UNDP-funded ICAO mission in Bolivia. To minimize administrative problems, UNDP simply revised the existing projert agreement to include the new advisers. However, ICAO was never successful in supplying all five experts deemed necessary, and only two of the four supplied were really effective in providing the assistance called for. Help in the financial area was never forthcoming, primarily because ICAG dealt with the technical side of aviation rather than the financial. In addition, the training component was handled as if it were part of a normal ICAO technical type aviation project. As a result, the Bank had ao direct part in the selection of training candidates nor in the types of training provided, an omission which greatlv hindered implementing improvements in the financial department of AASANA (para 3.11). 7. Appraisal projections indicated that AASANA operating revenues would increase by 115Z between 1978 and 1982. In actuality, in constant 1976 values, operating revenues in 1982 were 99% of those in 1978. The principal reasons for the failure in reaching the projections were lower-than-expected international air traffic and erosion of the value of the Bolivian peso (Ob). The continued decrease in the value of the peso greatly distorts comparisons between projected and achieved financial performance. Despite this, however, if tariffs had been adjusted to keep pace with inflation, AASANA's financial condition would have shown significant improvement as a result of increased air traffic in Bolivia (para 4.03). 8. AASANA took all the actions within its power to comply with the various financial covenants of the loan, but the Government failed to support the Borrower's obligations in regard to user charges. Furthermore, the Government did not comply with the covenants in the Guarantee Agreement regarding project priority and the timely provision of counterpart funds (para 4.09). 9. The institutional development of AASANA was a significant matter of concern during the preparation and appraisal of the project. Attempts to introduce advisers in five of the vital administrative areas, engage external auditors, upgrade technical personnel by providing specialized training, establish a commercial cost accounting system and normalize payments and collections, among other things, failed to produce the results desired for various reasons. Foremost of these were the Government's laws or regulations which resisted procedural changes, misunderstanding between the Bank and IC&O regarding the need for Bank-oriented technical assistance and training, and, since late 1982, the intervention of the unions (and subsequent departure of - viii - high level technical staff) in personnel management and day-to-day operations. On top of all other problems, the devaluation of the peso and associated inflation substantially eroded the Government-regulated salaries of AASANA staff, making it almost impossible to retain qualified professionals (paras 7.01 and 7.02). 10. The re-estimated economic return for the revised project is 15% rather thaa the 19% forecast. This is the result of lower-than-forecast traffic brought about by the worldwide recession and the reduction in economic activity in Bolivia that reduced incomes. Traffic expectations were met at the one airport which was paved, and flight cancellations decreased at airports which received runway maintenance. Returns on che navaid component are highly satisfactory despite lower traffic and higher costs. The return on the AFTN component is marginal at this time, partly because of lower traffic and partly because of extremely high cost. The f ombination of these might now suggest that the scope of the communications camponent was too large at the first stage. However, since the system is indivisible, that scope could not have been smaller, and a modest upturn in traffic would raise the return from marginal to adequate (paras 3.02 to 3.06). 11. The Bank project was instrumental in helping the Borrower to focus upon the need for the very important safety items of navigational aids, communications and airport maintenance which probably would have been ignored otherwise in favor of more politically visible aviation projects (i.e., Santa Cruz and Cochabamba airports). As it developed, the Bank project was not successful in all it attempted, primarily because of events beyond the control of either the Bank or AASANA. N'evertheless, it was successful in one important aspect - the safer and more reliable delivery of meat from Beni to La Paz and the other mountain towns (paras 8.05 and 8.06). 12. Major questions during Board presentation were whether, in a country like Bolivia, with such a large proportion of its population desperately poor, a higher priority use for the money could be found and whether the improvements in air freight might not benefit only the larger ranchers. The answers lie in the topography of the country. The meat is produced in an area east of the mountains which has only unimproved roads because of the extensive flooding each spring. The greater proportion of the poor population lives in the mountains. Because of the distances and the high mountains, most meat coming to La Paz and the other mountain towns co-- by air which, in view of the high cost of road construction, is the most cost-effective way of transporting meat over long distances. In addition, short distance feeder roads did not prove to be needed because the cattle walk to the airports where slaughter takes place. If the aircraft do not fly, there is no meat in the markets.2/ The provision of food to all the mountain population, not only the poor, is considered of substantial priority and well justified for Bank participation (para 8.07). 2/ In October 1984, the absence of spare parts (because of lack of foreign exchange) for the air cargo fleet caused fewer than normal flights and resulted in a scarcity of meat in La Paz. BOLIVIA AVIATION DEVELOPMENT PROJECT (LOAN 1423-BO) PROJECT COMPLETION REPORT I. INTRODUCTION 1/ 1.01 Bolivia is one of the two land-locked countries of South America. It is bordered by five other countries, four of which have ocean ports, and the fifth a river port, but mDst of Bolivia's external trade (other than natural gas) goes via just one of them, Chile. The Chilean ports of Arica and Antofagasta are at a distance of about 520 km and 1,800 km respectively from the capital city of La Paz. The problems of Bolivia's transport links for external trade are compounded by the geography of the country itself and the uneven distribution of its meager population. With an area of 1.1 million km2 and a population of about 5.9 million, Bolivia is the least densely populated country in Latin America. 1.02 Until the mid-1970s, the aviation subsector had received a relatively low priority for public sector investment. Airports were difficult and costly to maintain, and the communications and navigational equipment had become old, unreliable and inadequate for the demands made upon it. Other airport facilities (buildings, roads, power plants, etc.) had received little maintenance or improvement. By the mid-1970s, the appalling accident record of civil aviation, the development of an agricultural industry in the northeast of the country which was totally dependent upon air transport, and the unprecendented growth in demand for scheduled passenger services all contributed to a dramatic change in attitude. The Aviation Development Project, subject of this report, was a consequence of the new interest of the Bolivian Government in the subsector. 1.03 Unfortunately, the Government became over-ambitious in trying to atone for previous lacks of maintenance, to upgrade existing airports and to build new ones, all at the same time. By 1982, aviation infrastructure investment was five times greater than in the mid-1970s, and even this level was insufficient to enable continuation of the many projects that had been started. The most ambitious project of all, the new international airport at Santa Cruz (Viru Viru), was absorbing more than 752 of the total air transport infrastructure investment and over 25% of total transport investment. The high priority given to the Santa Cruz airport affected the implementation of the Aviation Development Project considerably. 1.04 Bolivia has a total of over 600 airfields and airports, about 40 of which have commercial significance. A few are under the control of local authorities, but 33 are under the jurisdiction of AASANA (Administracion de Aeropuertos y Servicios Auxiliares a la Navegacion Aerea). At present, only six airports have paved runways, and only two have instrument landing facilities suitable for international aircraft movements. In the most restricted investment environment of the mid-1980s, efforts in the subsector should be geared toward maintenance of existing facilities rather than their extension or improvement. 1/ This chapter draws heavily upon the recently issued Transport Sector Memorandum, December 1984. - 2 - 1.05 This completion report is based upon information obtained from the Minutes of the Board meeting, LAC Information Center, project appraisal and supervision reports and completion missions that visited Bolivia in May and October 1984. II. PROJECT PREPARATION AND APPRAISAL 2.01 The possibility of a development loan for aviation in Bolivia was first identified by a subsector analysis following a programs mission in late 1974 and a projects identification mission in early 1975. The specifics of this project were developed in late August 1975 and refined during 1976. 2.02 The project was prepared by the Administracion de Aeropuertos y Servicios Auxiliares a la Navegacion Aerea (AASANA) and was based upon original studies prepared by them, their consultants and advisors from the International Civil Aviatioa Organization (ICAO). This material was reviewed by the Bank, and the project was developed using (a) additional information supplied by the Government and AASANA; (b) the findings of preappraisal missions in March, June and August 1976; and (c) an appraisal mission in November 1976. 2.03 AASANA is a Governmental entity with operational autonomy for its specific administrative functions. The most important of these are to administer, plan, maintain, operate and improve the network of national airports for regular public use as well as related services to aircraft flying between airports. All airports in the project are under the control of AASANA. 2.04 The project was designed to enable larger, more efficient aircraft to use the various project airports, thus lowering the cost of air transport to and from these airports, and to improve the general reliability and level of safety of flying throughout the country. The provision of paving and navaids at these airports would increase their utilization throughout the rainy season, and the en-route navaids and communications would increase flight reliability over the mountains and potentially lower the general aviation and meat flights' accident rate. 2.05 The project was divided into three basic parts: (a) final engineering; (b) airport construction; and (c) equipment procurement and installation. The last two were subject to Bank ICB guidelines. An ancillary part covered technical assistance and training. 2.06 The total project cost at the time of appraisal was estimated to be Sb 789.2 million, including about 24.5% for contingencies. The foreign component was estimated at $b 473.4 or about 60%. At the November 1976 exchange rate of USS1.00 = $b 20, the equivalent dollar total cost was US$39.46 million, with r US$23.67 foreign component. In May 1977, the Board of Directors approved a loan for US$25.0 million. 2.07 The main covenants and targets contained in the loan and guarantee agreements, together with comments regarding compliance with them, are listed in Annex 1. - 2... III. PROJECT IMPLEMENTATION AND CO.-TS A. Project Composition 3.01 The project consisted of final engineering and construction of three Beni province airports (Riberalta new location, San Borja new location and Santa Ana same location), completion of constructioa at Tarija airport by provision of surface paving (contract possibly to be awarded prior to signing of the loan) and a drainage canal around the end of the runway, construction supervision for the preceding, final engineering and corntract documents for a new runway at Cochabamba airport suitable for instrumenL landings, provision of air navigational aids and communications at the proj Lct airports and throughout the country, provision of airport maintenance equipment for AASAN': and specifically for Santa Ana and provision of technical assistance and training. 3.02 Because of higher-than-expected costs for the navaid and communications equipment, high expected construction costs for the proposed airports2/ and lack of local counterpart funds, the three Beni airports were deleted from the project. However, the engineering for this work was completed, and contract documents were prepared. The project description was changed in April 1982. The new description left out construction of the three airports and substituted additional airport maintenance equipment and flight inspection equipment for the navaids. The intention was that the continual use of this maintenance equipment could improve the existing airports (and keep them improved) to the point where more efficient aircraft could be used even if the runways were not paved. The flight inspection equipment (FFI) became necessary when Argentina (which had been doing the flight tests of navaids) indicated that it could no longer provide flight inspection services to Bolivia. 3.03 The engineering for Cochabamba was completed, and contract documents were prepared. The construction proposed for Tarija was completed. The countrywide radio navaids project was completed as well as the installation of the visual aid glide path indicators. The original list of aiiport maintenance equipment was procured and distributed within the airport system. B. Timing 3.04 The loan agreement was signed on June 9, 1977, and the loan became effective three months later, on September 29, 1977. The loan agreement had included retroactive funds for the construction proposed for Tarija, but this financing was not needed since the work contemplated was not carried out 2/ More definitive costs might have been available for appraisal if final engineering had been done prior to the loan, as is now regular practice. However, at the time, no local funds were available, nor was the PPF as yet available for that purpose. In any case, the Bank was able to offer useful advice and to reduce the original scope of the airports design. 4~~~~~~~~~~~~~~~~~~~~~~~~~~~~ until after loan effectiveness, even though the contract had been signed previously. The advertising for the other contracts moved ahead satisfactorily, and AASANA made timely tentative selections for award. However, in most cases, a year or more elapsed before these awards were approved by the Government Procurement Review Board and contracts could be issued. 3.05 The engineering contracts for the Beni airports were completed in March 1981, over two years later than the appraisal schedule, because of an initial one-year delay in contract award and a second year's delay in accommodating AASANA and Bank comments and obtaining final approval. The engineering for Cochabamba, completed in February 1981, was also delayed by about two years for the same reasons. In this case, the design of a terminal building was added to the scope of work through a change in the Project Description approved in January 1978, but this did not contribute to the delay. 3.06 The paving contract at Tarija, awarded in May 1978, was finished in December 1980. The drainage contract was originally awarded in May 1975, but the contractor declared bankruptcy in April 1979. The new contract was issued in May 1980 and completed in December 1983, after many delays because of AASANA's lack of local funds. These contracts covered the only civil works contracts completed under the project. 3.07 The original airport maintenance equipment contracts were advertised in August 1977. The Bantk gave the original non-objection in July 1978 and again in November 1978 after the Procurement Review Board had revised AASANA's selections. The contracts were completed generally in September 1979 with the arrival of the equipment in Bolivia. 3.08 The contracts for the second batch received no-objection by the Bank in February 1983, but award of contracts was delayed until December 1983, by which time initial payments required by the contracts were held up pending Bank relaxation of the disbursement suspension imposed upon all loans to Bolivia in mid-December 1983. 3.09 The contract for the communications equipment was finally awarded in October 1981 after initial implementation delays. Approval of the engineering portions of the contract was further delayed by disagreements between the contractor and AASANA for over one year. When finally approved, fabrication of equipment proceeded rapidly. However, shipment was even further delayed by another disagreement, this time regarding the question of who was responsible for payment of consular invoice charges. After resolution of the problem, the equipment was shipped, only to arrive in Bolivia as the Bank's suspension went into effect and civil unrest over Government economic policies caused massive countrywide work stoppages. This contract has still not been completed, although, under normal conditions, installation should have been completed six months after arrival of equipment in the country. 3.10 The radio aid contract awarded in March 1981 suffpred only minor delays, mainly caused by AASANA's failure to obtain suitable land for some of the navaids' installation. The contrpct was completed in December 1983. The visual aid contract was awarded in August 1982 and was completed by January - 5 - 1984, but the equipment for the outlying airports was held in storage until December 1984 because of lack of security at those airports. The FFI equipment contract was ready to be issued in December 1983 when the Bank's suspension went into effect. It was finally issued in October 1984, with delivery expected by September 1985. 3.11 Four technical assistance advisers arrived in Bolivia in August 1978 and remained through December 1983. They provided advice and training in airport engineering, electronic and visual navaids, communications and planning. The fifth adviser, for finance, was never engaged because no suitable candidates could be found. The four advisers were successful in their respective fields, but were greatly hampered by the continual change in administration and nie flight of the training personnel from AASANA. The training scholarshi s began in August 1978, but no further scholarships were approved after December 1981 for two reasons: one, three out of four trainees left AASANA very soon after receiving their training; and two, the Bank was unsuccessful in getting AASANA to assign personnel for financial training. A special extra technical assistance expert from the US FAA was engaged for a short mission in August 1978. He surveyed the pavement deterioration problens at four major airports and recommended remedial action In his report. Unfortunately, AASANA, to date, has been able to implement corrective action at only one of the airports, Cochabamba. 3.12 The loan was about 60X disbursed when the suspension of disbursements came into effect in mid-December 1983. At that time, all but US$882,301.85 had been contracted, and US$6,316,808.88, which had been contracted, was caught 'in transit." After the loan suspension was lifted, the closing d;.te was extended from December 1983 to December 1984, and then again to June 30, 1985. 3.13 To the extent completed, the project was timely and met its objectives. The paving of the three domestic airports and the strengthening of AASANA was never fully achieved, but, with the provision of the airport maintenance equipment, at least a part of the benefits which would have been achieved with the airport paving are accruing to the project. C. Procurement 3.14 International competitive bidding under Bank guidelines was used for all of the project contracts with the following two exceptions: one, the contract for engineering supervision of the Beni airport construction was restricted, with Bank approval, to local engineering firms (the contract was never issued); and, two, the contract for the FFI equipment was approved by the Bank for sole source procurement. Two minor procurement problems were encountered. AASANA first tried to award the chainlink fence contract in Tarija to a firm with other than the lowest evaluated bid. After Bank objections, award was made to the lowest evaluated bid. In the other case, AASANA's evaluation of bids for the original batch of airport maintenance equipment was overruLed by the Government procurement review board, with awards presented, in some cases, to other than the lowest evaluated bidders. When the Bank objected, the Government dropped those items from the request for Bank participation, and, in actuality, the items were never procured. Throughout the project, the Government procurement review board added delays of about one year to each contract and, in several cases, reversed decisions made by AASANA upon which the Bank had agreed. - 6- D. Design and Construction Supervision 3.15 Design of civil works was carried out by engineering consultants following feasibility studies prepared by other consultants. Outline design of the communications and navaids contracts was done by AASANA, with the belp of its ICAO advisers. The detailed design was done by the manufacturers and installers. Construction at Tarija was to have been supervised by an engineering consultant, but the selected candidate refused to accept the contract terms offered by AASANA. AASANA then decided, with Bank approval, to provide its own supervision. This was successfully done and helped to strengthen the engineering department of AASANA. Supervision of the communications and navaids contracts was done by AASANA, assisted by its ICAO advisers. E. Construction, Installation and Delivery 3.16 As it developed, there was only one airport on which construction took place; the three contract types issued covered paving, fencing and drainage. From the onset, the contractors had financial problems. The paving contractor was unable to finance the import costs of the asphalt required for the airport paving. AASANA was also without funds. The Bank provided the funding. Local component payments throughout the duration of this contract were late in coming and contributed to construction delays. While the fencing was financed by the Bank, the local funds for its installation came from AASANA, and the instalLatlon was delayed. The fence material was purchased in 1978, but the installation was not completed until late 1983. 3.17 The original contractor for the construction of the drainage canal declared bankruptcy when the work was about 25% complete. This work was lost during subsequent rainstorms before a new contractor could start work. However, the time period between the two was excessive (five years) and, again, reflected the scarcity of local funds within AASANA. 3.18 At the time of appraisal, it was recognized that AASANA did not have the capability to install the navaids and communications equipment called for by the project. To overcome this deficiency, and to assure engineering compatibility of the various system components, it was intended to issue these items as turnkey contracts. However, this type of contract was illegal in Bolivia, and specifications were changed to read supply and install contract. The installation of the visual and radio navaids was completed satisfactorily by their contractors (except for the installation of lighting fixtures, held up at some airports because of the lack of security). Installation of the communications equipment began in June 1984 and is expected to be completed in early 1985. 3.19 Delivery of the first batch of airport maintenance equipment was made with no difficulties. Delivery of the second batch and the FFI equipment was delayed by the Bank's freeze on disbursements. This element of the project is expected to be completed by the third quarter of 1985. F. Costs 3.20 The costs for the engineering contracts were as estimated at the time of appraisal, as were those for the construction at Tarija and for the original batch of airport maintenance equipment. The _ontract for the radio navaids was 215% over appraisal estimates, and that fo: the communications equipment was 910Z over. The visual navaids contract, as originally planned, would have been 1200% over estimates, but the type of -quipme - was changed to a recently ICAO-approved, less expensive system which resulted in costs only 300% over estimates. A combination of factors coatributed to these extremely high costs, the most important of which was zhe recognition, by the supplier/contractors, that the repeated delays within AASANA, and the emerging fiscal problems within the Government, would he costly for them. For self-protection, they bid high. With these overages, the contents of the project had to be revised in order for it to stay within available funds. Deletion of the civil works at the three Beni airports followed since equipment contracts awarded by then had already committed about US$21.0 million, and the Government and AASNA did not have tht necessary resources to finance their resulting higher share of the airport construction. The decision was based both upon the fact that the much higher-than-appraisal expected cost of the Beni airports reduced their economic merit and upon the evidence that only those project components requiring a minimum of local funds would be implemented in a timely fashion. Furthermore, a Bank reevaluation found that even the much-higher-than-originally-estimated investments in navaids and aeronautical communications were still well justified. The main reason was that savings in cost per aircraft hour had increased rapidly (for an F27, the cost per block hour in Bolivia was USS1,240 in 1981 as compared to US$427 in 1976). 3.21 After the project description change, the actual number of items added (second batch of airport maintenance equipment and the FFI equipment) was dependent upon their actual bid prices and the remaining uncommitted funds in the loan. 3.22 While world inflation had relatively no effect upon the loan, local inflation and political and financial problems did. The availability of local funds to AASANA almost ceased, thus forcing AASANA to delete local cost items from its program and attempt to use the loan to finance only items with 100% foreign costs. The reformulation of the project accomplished this purpose. 3.23 A summary of estimated cost data and comparison with the appraisal cost estimates is given in Table 1. G. Comparison of Disbursement Schedules 3.24 The appraisal mission took place in November 1976, and the loan was approved by the Board in May 1977. The loan became effective in September 1977. The original closing date of the loan, June 30, 1983, was extended until June 30, 1984 and, after lifting the suspension of disbursements (June 1984), until December 31, 1984, and, then, to June 30, 1985. 3.25 At the time of the appraisal, it was expected that most of the contract documents would be completed and go to bid directly after loan approval. It was anticipated that the engineering contracts would take about a year and that civil works contracts for the three Beni airports would be advertised directly thereafter. The various delays of from three to five - 8 - years for the major components (all more or less caused by Government interference with the bidding and evaluation process) affected the costs significantly since they placed the bidding and execution of the contracts lnto the unstable political and financial period of the country and delayed disbursements correspondingly. 3.26 It is doubtful that any additional study at the time of appraisal could have foreseen the disbursement delays caused by these implementational, political and financial problems. R. Major Problems 3.27 There were two major problems. One related to the procurement delay and (sometimes) decislon reversals caused by the Government procurement review board which insisted upon reviewing AASANA's bid evaluations. The second related to the financial condition of AASANA and all of its interrelated factors (i.e., inability to raise tariffs, dollar/peso exchange rate, lack of funds in Government, etc.). I. Performance of Consultants, Government and Contractors 3.28 The engineering design consultants engaged for the three Beni airports were slow in the execution of their work, in part because the foreign partner of each consortium left most of the work in the hands of the local partner. In the case of one of the airports, the draft final documents were not found adequate by the Bank and AASANA. The foreign partner redid all of the construction drawings, which caused further delays, but which resulted in suitable documents. 3.29 The work of the consultant for the Cochabamba design was satisfactory, but delays were caused by misunderstandings between the consultant and AASANA's engineering department (probably due to lack of experience within AASANA and other differences of opinion). 3.30 The only construction supervision was carried out by AASANA at Tarija and was satisfactory. 3.31 The performance of the Government was unsatisfactory in that it failed to allow necessary tariff increases and failed to provide counterpart funds, when needed, to implement the project properly. 3.32 The performance of the maintenance equipment suppliers was satisfactory as was the work of the visual and radio navaids contractors although delays, not necessarily caused by them, were encountered. Problems were encountered with the communications equipment contractor. Failure to establish good working relationships between the communications contractor and AASANA and its ICAD advisors contributed to delays. Finally, a contract dispute regarding who was responsible for payment of Bolivian consular invoice charges added another six months to the delays and resulted in the equipment being delivered in Bolivia at the end of 1983, just as the Bank suspension of disbursements went into effect and the rainy season started. Following the rains, field installation work could not begin because of work stoppages and countrywide labor disputes protesting the Government's emergency economic measures put into force in April 1984. The contractor was able to get into the field only on Ju.:e 19, 1984, and installation was expected to be completed in December 1984. -9- IV. FINANCIAL PERFORMANCE OF AASANA A. Financial Performance of AASANA 4.01 The financial performance of AASANA was affected by the hyper-inflation in Bolivia and the almost continuous devaluation of the Bolivian Peso, both in the official and the parallel exchange markets (Sb 2,000 and Sb 3,800, as of April 13, 1984, compared to $b 20 per one US dollar at the time of appraisal), during the term of the project. The economic conditions of the country, together with the political instability, made it practically impossible to meet the financial targets projected during appraisal. The principal targets, actual and projected, are su-arized below: Working Ratio Operating Ratio Year Appraisal Actual Appraisal Actual 1978 76 n.a. 106 106 1979 61 96 85 104 1980 58 84 98 89 1981 54 86 99 92 1982 46 138 84 141 1983 44 79 80 82 4.02 The financial statements of AASANA, in current values, are not comparable to the statements projected in the appraisal report since the appraisal statements were in constant 1976 Sb. Nevertheless, these statements and a table showing the levels of rates in current Sb are shown in Tables 2 through 5. Table 2 shows the balance sheets; Table 3 shows the income and expenses; Table 4 shows the cash flow; and Table 5 shows the changes in the level of rates. For comparative purposes, these statements have been deflated to show them in constant 1976 Sb, using the general consumer price index for La Paz, published by the Instituto Nacionai de la Estadistica; however, their usefulaess is very limited since they are more a reflection of the dramatic price distortions brought about by the Bolivian hyper-inflation than a tool to assess the financial and operational performance of AASANA. B. AASANA's Operating Revenue 4.03 Appraisal projections indicated that AASANA's operating revenues would increase from $b 105 million to Sb 225.6 million (a 115Z increase) between 1978 and 1982. In constant 1976 values, operating revenues in 1982 were 99Z of those in 1978. The principal reasons for not reaching the appraisal projections were the continued inflation in the country and inability of the tariff increases to keep pace with the erosion in the purchasing power of the $b. - 10 - 4.04 Appraisal estimates assumed that, between 1978 and 1982, tariffs would increase about 45% in real terms. Table 6 shows the actual and projected level of rates for 1975-1984. The charge in effect at the beginning of 1984, in real terms, compared to the projected rates for the year, shows the following: Actual as X of 1984 Charges Appraisal Projected Actual Projected Item 1. Landing Fees a. International (US$/ton) 4.7 0.65 I/ 13.8 b. Domestic (Sb/ton) 40.2 28.21 70.2 c. Meat (Sb/ton) 107.3 18.96 17.7 d. Air taxis ($b/landing) 76.7 111.6G 145.5 2. Airport User Fees a. International (USS/pass.) 9.6 1.01 1/ 10.5 b. Domestic ($b/pass.) 19.2 14.40 75.0 3. Message Fees a. International (Sb/mess.) 57.5 11.02 19.1 b. Domestic (Sb/mess.) 38.3 10.19 26.6 4. Parking Fees (Sb/vehicle) 3.9 3.60 92.3 1/ Figures shown use consumer index and official dollar/peso exchange rate. Actual dollar charge was US$9.00 and US$14.00 respectively; see Table 5. 4.05 The devaluation of the $b on April 13, 1984 would have further distorted the relation between the projected forecasts and the actual in 1984. If the actual increases in fares had kept pace with the erosion in the purchasing power of the $b, AASANA's financial condition would have shown significant improvement. C. AASANA's Operating Expenses 4.06 Appraisal projections indicated that AASANA's working costs would increase annually by about 2%. Working expenses, in real terms, in 1982 reached $b 143.6 million, an increase of 37.6% over the Sb 104.3 million forecast for that year (Table 7). The increase occurred in working expenses, - 11 - other than personnel and maintenance, which jumped from Sb 9.7 million in 1981 to $b 92.0 million in 1982. The distortions introduced in the accounting of the expenses by the continued inflation and the devaluation of the $b make comparisons between actual and forecast mepningless. For example, salaries and wages were 62Z of forecast without any d"crease in personnel, but with substantial upward adjustments in the level of nominal salaries. 4.07 Appraisal estimates indicated 1982 depreciation charges of $b 86.0 million. Actual charges were $b 3.9 million. The project has been kept on the books as work-in-progress, and the assets have not been revised. D. Balance Sheets 4.08 AASANA's latest available balance sheet is for December 31, 1982. Table 8 shows actual and projected balance sheets for the years ending December 31, 1978 through 1982. Because of the distortions in the figures introduced by the effects of the devaluation of the $b and the continued inflation, comparison between actual and projected figures would be meaningless. E. Financial Covenants 4.09 The loan included standard financial covenants and targets for the first five years of the project (1978-1982) covering record-keeping, annual audits, revaluation of fixed assets, normalization of collections and payments tariffs, financial ratio targets, capital expenditure and debt limitations. These covenants were suited to the project, but the Bank never took the measures necessary to enf-rce them since, given the difficult political and economic situation the country, the Government was, most of the time, too paralyzed to be pressed for any meaningful action. A summary of the Borrower's and Guarantor's compliance with the main financial covenants follows: (1) Loan Agreement a. Record Keeping and Accounts (Section 5.01) AASANA has maintained its records in an appropriate public sector fashion, but they are not suitable for the management and control of the operations of an entity such as AASANA. b. Independent Annual Audits (Section 5.02) During appraisal of the project, it was agreed that AASANA would hire independent auditors. It could not hire outside auditors because of the economic conditions in the country and the restrictions imposed upon expenditures by the Government. The Contraloria General de la Republica audited the years 1978 through 1981. Because of the auditors' limited capacity, their reports for the years 1978 and 1979 were submitted to the Bank two years after they were due. Audit reports for 1980 and 1981 are being processed, but, because of the lack of resources of the Contraloria, it was not possible to obtain a release date. - 12 - c. Tariff and Financial Ratio Targets (Section 5.04) This section obligates the Borrower to consult periodically with the Bank on the structure and level of rates and to achieve certain financial rate targets at given dates. Although the Borrower consulted the Bank on the structure and level of rates, the Goverment never approved AASANA's proposed increases to keep up, in real terms, with the increases agreed to at appraisal and, thus, was unable to reach the proposed financial ratio targets. d. Normalization of Receivables and Payments (Section 5.05) The Borrower agreed to take any necessary action to ensure that receivables would be collected and payables would be paid within 90 days. Working expenses are paid in about 10 days, but it has been impossible to normalize receivables within the structure of this covenant. It takes an average of 228 days to collect the receivables. (2) Guarantee Agreement a. Payment of Debt Service (Section 2.01) The Guarantor unconditionalLly guarantees the due and punctual payment of the principal, interest and other charges on the loan. The Guarantor, from time to time, did not comply with this covenant. b. Provision of Funds to AASANA (Section 2.02) The Government has consistently fallen short on its obligation to allocate sufficient funds to AASANA to carry out its investment plan, which includes the Bank project. c. Viru-Viru Airport (Section 3.02) The Guarantor was covenanted to not transfer to the Borrower the assets of any proposed new airport at Santa Cruz. The Guarantor has complied with the letter of this covenant. However, the covenant did not achieve its main purpose of preventing the increase of the financial burd-n of AASANA that would result from the inclusion in its operations of a deficit generating project, since the guarantor gave the operation of the airport to the Borrower when it was put into service and, in addition, decreased its contribution to the Borrower's budget by the amount that the Government provided for the construction of the airport. d. Increase in User Charges (Section 3.03) The Guarantor has not complied with this covenant. - 13 - V. TRAFFIC DEVELOPMENT 5.01 As indicated in Table 9, air traffic in Bolivia showed rapid growth until late 1980. It has since declined, largely as a result of adverse economic conditions. Traffic at each project airport (Table 10) has developed differently. At Tarija, where jet aircraft services began in 1980/81, passenger traffic has grown more rapidly than forecast, despite the general poor economic conditions. At the other project airports (which were not improved), traffic has largely declined, mostly because of the adverse airport conditions. For Riberalta, this was also partly because Guayaramerin (95 km away) in certain years had more passenger traffic (reflecting Brazilian trans-border traffic to points within Bolivia or vice-versa). If a new Riberalta airport had been built as planned, much of this traffic would have been captured and added to traffic growth induced by better services. 5.02 Freight traffic and landings at project airports have generally declined in line with traffic development in Bolivia. Apart from the airport conditions, the continuously deteriorating condition of the fleet of cargo aircraft has contributed to this trend. Such deterioration was recognized by the Government, in April 1984, when it authorized a special mission to purchase almost US$1.0 million of aircraft spare parts. 5.03 Despite the disappointing traffic development since 1980, some positive features can also be noted. The aircraft utilization of Lloyd Aereo Boliviano (LAB) has generally improved, as follows: Average hours per aircraft per year (No. of aircraft) 1975 1983 B7227-100 1634 (3) 1576 (3) B727-200 only 2 months (1) 2184 (3) FH-227 1402 (4) 1574 (2) 5.04 As will be noted in Chapter 'il, a marked reduction in the number of days closed because of runway conditions has occurred where improved maintenance has been assisted by the introduction of project-supplied airport maintenance equipment (Riberalta, Guayaramerin and Santa Ana de Yacuma). Traffic delays and other canceled flights because of weather conditions have also been reduced. A gradual shift by LAB from turbo-prop aircraft to more efficient jet aircraft for passenger traffic has taken place. In addition, the traffic share for the two air-force-operated airlines, TAM (passengers) and TAB (air cargo), has grown. The latter, Transportes Aereos Bolivianos, - 14 - with two L-130 Hercules aircraft, has partially filled the gap caused by limitations in the services provided by the cargo airlines in Bolivia (primarily meat carriers). VI. ECONOMIC REEVALUATION 6.01 Air traffic, despite a very adverse economic situation in Bolivia, has continued its earlier growth since the project was approved in 1977 (see Chapter V). For the proposed project airports, however, the tendencies observed are contradictory. The project was apprcoved during a period of a few years of relative economic stability in Bolivia. During implementation, this stability deteriorated into economic conditions which affected both traffic and the Government's ability to provide necessary counterpart funds for project implementation. This led to the change in the project composition as discussed in Chapter III, which reduced the civil works component and increased funds for equipment. The project for reevaluation has been restructured accordingly (the navaids which were part of specific airports were retained despite the deletion of the civil works). An economic reevaluation of the proposed changed project composition was carried out prior to Bank approval of the change. This evaluation follows the same project distribution, i.e., Tarija airport, visual and radio navaids, aeronautical communications and runway maintenance equipment as major components. 6.02 Since the reformulation was undertaken, actual traffic development at the three small deleted airports seems to support the decision for their deletion. This is largely a result of undercapitalized air cargo operators as a long-term effect of too low freight tariffs, for meat in particular, and of very limited availability of foreign exchange for the purchase of spare parts in recent years. No clear reevaluation is possible, however, since substantial traffic generation would have occurred as a result of the much better airports, and subsequently, the much improved aircraft services. The deletion of improvements at Riberalta airport, in particular, has, unfortunately, meant that one of the main project objectives, breaking some of the isolation of this remote area, could not be accomplished. Upgrading of Riberalta, or Guayaramerin in the same area, would still be worthwile as soon as traffic and economic conditions in Bolivia become more normal. Provision of additional runway maintenance equipment is a valuable interim solution for the Beni province airports, as explained in the following paragraph. It can also improve the condition of San Borja, which continues to be important as an alternate airport for many of the smaller airstrips for meat traffic from the province. In recent years, virtually no structural change occured in this trade. Meat prices in La Paz and the Altiplano of Bolivia increased only gradually during this period. 6.03 As indicated in Table 11, the economic returns for the completed project components - Tarija airport, navaids and runway maintenance equipment - are highly satisfactory despite substantial cost increases. The paved runway for Tarija has permitted the replacement of turbo-prop aircraft by the jet B727-200, at substantial cost savings to the main airline LAB, and better service for this growing community. The savings for LAB per passenger was about US$76 at the cost level of 1982. Some of these savings have been - 15 - passed on to the passengers in the form of relatively cheaper air fares. Passenger tariffs from Cochabamba to Tarija, for example, were unchanged, at US$38 from 1980 to 1984 after project completion, whereas the fare from Cochabamba to Trinidad increased from US$21 to US$28 in the same period. 6.04 In Riberalta, San Borja and Santa Ana de Yacuma, about 974 aircraft hours per year, for F27/C46/CV-440 twin-engined aircraft, were anticipated to be saved at the time of appraisal by installation of navaids. In reality, for LAB alone, some 400 hours were saved on completion of the project navaids for these and other airports, at a cost per hour of aircraft time of US$3,170. 6.05 The original batch of runway maintenance equipment was to alternate among smailer airstrips in order to gradually upgrade those in the Beni province. In reality, the equipment has so far been based, in part, in Trinidad-Santa Ana, and part in the Guayaramerin-Riberalta area in the Northeast. The effect of work carried out by this equipment is that these airports have been kept open, in the rainy season, for increasingly long periods. The number of days closed for these airports (Trinidad already has a paved runway) developed as follows: Guayaramerin Riberalta Santa Ana 1978 28 31 52 1979 32 39 48 1980 20 27 55 1981 11 13 19 1982 7 17 14 1983 8 12 16 Furthermore, the improved condition of the presently unpaved runway at Guayaramerin now permits the use of a modified jet aircraft (B727-100 with gravel protection) during 6-8 months of the dry season. Weekly trial flights were,carried out for a month in 1983. It is expected that additional procurement of runway maintenance equipment will give returns similar to those achieved by the first equipment batch at other airports, such as San Borja and Magdalena. 6.06 The development of benefits for the major remaining project component, aeronautical communications upgrading, is uncertain since installation of the equipment is not yet complete. The cost of the equipment was substantially higher, both in nominal and real terms, than expected at appraisal, and, because of lower traffic growth than anticipated, savings in better aircraft utilization are less. In addition, a microwave network, recently installed in Bolivia, has, by default (because of delays in the installation of the aeronautical communications equipment), taken over some of the airline communications requirements, particularly for LAB. On the other hand, the accident situation for the airline industry, and the cargo carriers in particular, is as bad as in the early 1970s, partly because of inadequate aeronautical communications and associated inaccurate weather reporting and forecasting. On the basis of the original appraisal methodology, this project component, under the existing conditions, gives a marginal estimated ex-post return. - 16 - VII. INSTITUTIONAL PERFORMANCE AND DEVELOPMENT 7.01 The need for improved institutional development of AASANA was of significant concern during the preparation and appraisal of the project. The appraisal report notes that -...despite a more progressive management, much remains to be done in order to improve the efficiency of the Borrower." Also, the Loan Agreement specifically states, in Section 4.01, that '...the Borrower shall at aLl times carry on its operations, manage its affairs, maintain its financial position and plan its future expansion, all in accordance with appropriate business, financial, engineering and civil aviation practices, under the supervision of experienced and competent management, and with the assistance of adequate, qualified, experienced staff.' In Section 4.05, it establishes that ...in order to be able to recruit and retain the qualified and experienced technical staff required for its operations, the Borrower shall from time to time adjust the salaries of such staff and maintain them at competitive levels.- In Section 4.06, the Borrower agrees to introduce a three-year staff training program. 7.02 The institutional development of AASANA has been thwarted completely by the instability of, and the disruption within, the Government during the deterioration of the country's political and economic situation. Since the first year of the loan (1978), there has been a change in AASANA's top management at least every six months, and in some cases, even more frequently. In addition, professional and other trained personnel have been leaving AASANA in greater and greater numbers, while, since late 1982, the intervention of the unions in day-to-day management and technical operations has practically stopped AASANA's aormal institutional development. 7.03 The Bank's goal was to develop AASANA into a commercially oriented entity through the introduction of a series of covenants covering items such as normalization of payments and collections, accounting capacity, tariffs, investment decisions and debt size. A review of these issues yields the following comments: (a) Normalization of Collections and Payments. The project intended that receivables from operating revenues would be collected, and payables for working expenses would be paid, within ninety (90) days. For the year 1982, receivables were outstanding an average of 228 days, and payables were outstanding an average of 10 days. (b) Accounting Capacity. The project foresaw the need to strengthen AASA's administration and maintenance capabilities and, thus, provided funds for the engagement of five Spanish-speaking experts. The expert for the position of Chief oF the Budget and Accounting Division was never engaged, and, despite various efforts to do so, no suitable candidate could be found. The lack of assistance from this expert, coupled with the dismissal or retirement of the more able staff and a cumbersome manual system, left AASANA without meaningful information in time to manage and control its financial operations. The present accounting system does not generate management reports on a monthly or quarterly basis; - 17 - it only produces a detailed balance sheet at the end of the year, and it takes about six months to close the books for that year. Income and expense statements do not provide a sufficient basis for timely cost analysis and control of the operations. (c) External Auditors. The project required AASANA to hire external auditors to examine its books of accounts-. AASANA did not engage external auditors in the early years of the project and was unable to do so later because of Government policies to curtail expenditure of budget funds, which required the use of Government auditors. However, external audits were made by the Contraloria General de la Republica on a rather tardy basis. The audits for the years 1980 and 1981 were completed in December 1983, but no reports have been issued since because of the limited capacity of the Contraloria General. (d) Tariffs. The project intended that tariffs would be adjusted to ensure coverage, to the extent possible, of the cost of services and to achieve certain working and operating ratios. Tariffs are established by the Ministries of Finance and Planning without consideration of the cost of services or AASANA's cash needs. AASANA's role in setting tariffs has been reduced to making requests for tariff increases to cover its working expenses. (e) Investment Decisions. AASANA does not play an important part in making investment decisions. All investment decisions are made by the Central Government through the Ministries of Planning and Finance. AASANA's role in the investment decision processes has been reduced to p-esenting proposals for priority capital investment or maintenance programs and to executing the projects approv--1 once it receives the funds from the Government to do so. (f) Salaries of Technical Staff. Inflation and the almost continuous devaluation of the peso have eroded the salaries of the staff to a level which make it almost impossible to retain professionals in AASANk. At the present time an engineer is earning the equivalent of about US$30 per month. The Government's policy of freezing new employment has kept the number of employees at about the same level that it was at the time of the appraisal, but at a lower technical capability. VIII. CONCLUSIONS 8.01 The original project was well selected, and the reformulated one, brought about by substantial cost overruns and the lack of priority given to the project for the allocation of scarce local funds, was acceptable. The project succeeded only partially in attaining its intended objectives, mostly because the implementation period coincided with a dramatic deterioration of - 18 - the political and economic situation of Bolivia. Measures to alleviate the problems encountered during project implementation were mostly beyond AASANA's control. However, the failure of the limited Bank efforts to curtail investments in Viru Viru, and the deficiencies of the technical assistance arrangement with ICAO, contributed toward reducing the benefits to be derived from the project. 8.02 The technical assistance provided, while acceptable, could have been more productive, at least as far as the financial management was concerned. Rather than relying upon a technical aviation organization to provide an expert from outside its specific sphere of competence, the Bank should have proposed a candidate of its own. The lack of success in the training area resulted from a basic misunderstanding between UNDP, ICAO, the Government (AASANA) and the Bank regarding the type of training the Bank was considering for that component of the loan. This confusion occurred when the original technical assistance team from Mexico became unavailable. The UNDP/ICAO Project Agreement did not mention any special requirements for training or for Bank clearance of proposed training. The Bank missed this omission. 8.03 Implementation of the reformulated project was hampered by delays which, in almost all cases, were caused by the Government's slow procurement procedures and contradictory interventions; many times, reevalutaions of initially correct procurement actions by AASANA were required. The Bank was never able to get the Government to live up to its agreement with the Bank that all procurement of material or services on Bank-financed projects wculd be subject to World Bank procurement guidelines only. Such a position should be firmly pressed in any future loans. 8.04 Two other problems encountered involve the financial condit,on of AASANA, but can be traced directly to Government policies. The first was the requirement that AASANA not be allowed to keep the foreign exchange it earned and apply it against its foreign expenditures, but instead was required to bank it in the Central Bank for $b at the official exchange rate and then repurchase foreign exchange at the floatirng rate which, during the greater part of the project, varied from the official rate from 1:3 to 1:7. The second was the reduction of AASANA's budget by the amount that the Government spent on the construction of the Santa Cruz airport. The first problem was not foreseen during appraisal, but consideration should be given to include, in similar future projects, a covenant that the project entity be allowed to retain its earned foreign exchange for use on its approved budget. The second problem was foreseen, but the solution adopted was not sufficiently broad to prevent the Government from circumventing the intent of the covenant. In this or similar cases in the future, when the Bank does not agree that a certain project within the sector is justified (as in the case of Santa Cruz airport), the Bank should covenant the Government not to carry out projects which require investments above a certain amount without Bank agreement. 8.05 The Bank served a useful role both as a catalyst and as a restraint against project overdesign. However, the influence of the Bark was limited to the project and could not restrict the mainly foreign investments in Viru Viru. Although the Bank thought that those investments were unjustified, the Government went ahead with them, mainly because the Viru Viru project had a - 19 - strong internal political support, and also because the Government was able to secure a loan from the Japanese Government at highly concessional terms and with generous cost-sharing and cost-overrun provisions. 8.06 Without the financial support provided by the Bank, it is doubtful that money for this relatively low visibility project could have been obtained from the national budget, and, as a result, the increased reliability and safety of the domestic aviation system could not have been achieved. In addition, close Bank supervision during the design stage resulted in more realistic designs for the three Beni airports and particularly Cochabamba. It also restricted the lengthening of the Tarija runway from the original desire of 3,500 meters to the technically required 2,800 meters and reduced the cost of the visual aids by two-thirds by suggesting a cheaper but acceptable type of lighting system. 8.07 Major questions during Board presentation were whether, in a country like Bolivia, with such a large proportion of its population desperately poor, a higher priority use for the money could be found and whether the improvements in air freight might not benefit onlv the larger ranchers. The answers lie in the topography of the comntry. The meat is produced in an area east of the mountains which has only unimproved roads because of the extensive flooding each spring. The greater proportion of the poor population lives in the mountains. Because of the distances and the high mountains, most meat coming to La Paz and the other mountain towns comes by air which, in view of the high cost of road construction, is the most cost-effective way of transporting meat over long distances. In addition, short distance feeder roads did not prove to he needed because the cattle walk to the airports where slaughter takes place. If the aircraft do not fly, there is no meat in the markets.3/ The provision of food to all the mountain population, not only the poor, is considered of substantial priority and well justified for Bank participation (para 5.07). 3/ In October 1984, the absence of spare parts (because of lack of foreign exchange) for the air cargo fleet caused fewer than normal flights and resulted in a scarcity of meat in La Paz. - 20 - BOLIVIA Table 1 AVIATION DEVELOPMENT PROJECT (LOAN 1423-BO) PROJECT COKPLETION REPORT Appraisal CrCt Esti sates Actual Costs US$ (000) (US$ (000) Local Foreign Total Local Foreign Total Civil Works Riberalta 2,314 3,902 6,216 - - - San Borja 2,224 3,011 5,235 - - - Santa Ana 2,312 1,852 4,164 - - - Tarija 1,945 2,493 4,438 2,292 2,918 5,210 Subtotal 8,795 11,258 20,053 2,292 2,918 5,210 Eng. Design & Supervision 1,605 401 2,006 288 671 959 Equipment Lights, YASIS & Tower Equip. 116 1,155 1,271 95 948 1,043 Navaids & 409 4,089 4,498 Communicats. 473 2,365 2,838 884 9,515 10,399 Maintenance Equip.(lst Batch) 79 788 867 82 818 900 2nd Batch - - - 219 2,190 2,409 FFI Equipment - - - - 1,580 1,580 Subtotal 668 4,308 4,976 1,689 19,140 20,829 Contingencies on Construction & Equipment Physical 10% 1,008 1,696 2,704 - - - Price 22.8% 2,484 4,303 6,787 - - - Tech.Assist. & Training 389 1,363 1,752 307 1,382 1,689 Subtotal 389 1,363 1,752 307 1,382 1,689 Contingencies TA & Training 10% 39 137 176 - - - Cochabamba Design 800 200 1,000 381 889 1,270 Total 15,788 23,666 39,454 4,957 25,000 29,957 Source: IBRD Missions February 1977 April 1984 - 21 - Table 2 BOLIVIA AVIATION DEVELOPMENT PROJECT (LOAN 1423-BO) PROJECT COMPLETION REPORT AASANA: Balance Sheets 1978 - 1982 (In Current $b Million) Item 1978 1979 1980 1981 1982 (1) (2) (3) (4) (5) (6) ASSETS Current Assees Cash 9.5 42.3 40.2 18.2 43.4 Receivables 44.3 41.4 61.2 7Z.3 405.3 Total Current Assets 53.8 83.7 101.4 90.5 448.7 Fixed Assets property and Equipment 361.9 383.4 392.7 767.5 1,159.0 Less Accucilated Depreciation 57.2 66.1 77.0 97.0 110.6 Net Fi-ed Assets in Use 304.7 317.3 315.7 670.5 1,048.4 Construction in Progress 206.8 270.8 738.7 1,042.4 3,264.3 Other Assets 94.1 104.1 123.3 183.5 207.8 Total Assets 659.4 775.9 1,279.1 1,986.9 4,969.2 LIABILrTE AND EQUm Current Liabilities Trade Creditors 49.5 60.4 61.9 61.2 108.8 Other Current Liabilities 9.7 10.3 10.3 10.3 10.3 Total Current Liabilities 59.2 70.7 72.2 71.5 119.1 Long Term Debt IBRD Loan 1423-BO 0.0 22.3 362.6 917.3 3,761.6 Equity Original Investment 97.3 97.3 97.3 97.3 97.3 Additional Gov't Investment 528.3 617.1 771.8 911.9 1,257.4 Retalned Earnings (Deficit) (25.4) (31.5) (24.8) (11.1) (266.2) Total Equlty 600.2 682.9 844.3 998.1 1,088.5 Total LiabilitLes and Equity 659.4 775.9 1,279.1 1.986.9 4,969.2 Source: AASANA Un-audited Financial Statements BOLIVIA AVIATION DEVELOPMENT PROJECT (LOAN 1423-BO) PROJECT COMPLETION REPORT AASANA: Statements of Income and Expenses (In Current Sb Million) 1|^ 1Z75 ~~~~~~~~~~1978 1971 0 191 1 t2 I" {T>- {2) (3) , 16F- 156- s6 w - 1. Otpr9tina Revenues a. Lending Fees 29.3 50.3 59,3 108,0 105.5 339.6 764.3 1,862.2 b. Airport User Fees 11.9 22.6 27,17 5217 56.6 125.3 510.4 1,355,1 c, Other Operating Revenues 14.8 20,8 26,4 53.6 54.3 180 2 299 4 694.2 d. Total Operating Revenues 56.0 93.7 113,4 214,3 216. 6 1,574.1 ;1631T 2. Ogerating expenses a. Peronnel 42.7 n.a. 46.0 150.4 147.0 234.5 835.4 2,069.5 b. Malntenance 2.4 na, 4.1 7.4 12.6 35,7 205.6 517.0 a. Other Operating Expenses 6.9 n,n 58.4 21.2 27,0 57117 210.0 88.1l d. Working Expenise 52.0 n,*. 1D8.5 119.0 186 6 891.9 1,2if.0 3,474.6 e. Deprecietion 7.6 .e, 9.2 10.9 13.4 24.3 36.8 123.- t. Total Operatin, Expenses MEN JJA 17.7 189. 200.0 9162 . 3.598.0 3. Net Operating Revenues (Deficit) (3.6) (5.7) (4,3) 24.4 16.4 (268,1) 286,3 313.1 4. Net Hon-OpererLng Revenues 0.0 23.8 16 10.5 6.5 37.8 129.7 J 266.1 S. Net Income before Interest (3.6) (2,9) (0,7) 34,9 24.9 (230.3) 416.0 519.6 6. Interest 0.0 0.0 0I0 22.5 a/ */ *t 7. Net Income (DeficLt) (3.6) (2.9) (0.7) 24,4 2.4 (230.3) 416.0 579.6 6. Ratiom a. Working Ratio 93 n.e. 96 84 86 138 79 89 b. Operating RatLo 106 106 104 69 92 141 62 92 9. Official ExchanRe Rates USS1 equal to Sb (end of year) 20 20 20 25 , 25 200 500 sOrd/ a/ Debt servico paid or to be paid by the National Government. b/ lamed on the actual budget results G/ Based an the 1984 Operations sudget. It excludcs oporating budget for Viru-Viru Airport la Olet. Ctu eoxpeelAd to open on 7/01/84. 2/ Budrot baoced an an exchanco rato of Sb500 olual to WS1. On Aprl 13. 1904 the oficial exchaaro rate bcame lb 2,000 ailual to USSI. There.!or, an a result of the above plus vry ttrl"at oeaoa.e mamuros talu by the QeOInt s that date, the 1984 budget mst be revised. Sourcet MIANM PlaLag Dcpartmant Aprl 1984 f , F~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. BOLIVIA AVIATION DEVELOPMENT PROJECT (LOAN 1423-BO) PROJECT COMPLETION REPORT AASANA: Statements of Cash Flow (In Current Sb Million) Item 19W 1921 U T1r Tn A. SOURCES OF FUNDS 1. Internally Generated Cash a. Net Incoom Defore Interest (0.7) 34.9 24.9 (230.3) 416.0 579.6 b. Depreciation 9.2 10.9 13.4 24.3 36.5 123.4 c. PrLor Years Adjustments (5.4) (17.7) 11.3 (24.8) n.e. Dma d. Decrease In UorkLng Capital rx 4.4 0.0 0.0 0.0 0.0 0.0 CoaLs and in Other Assets a. Total 7.5 28.1 49.6 (230.8) 453.6 703.0 2. Capital Contrlbutions a. National Treasury 63.0 154.7 124.1 345.5 639.1 1,026.8 b. Special Natlonal Treasury CoOL. 3.2 0.0 0.0 0.0 0.0 0.0 c. Other Special Contributions 22.6 0.0 16.0 0.0 30.0 3 980.0 Total 88.11 147 140.1 345.5 669.1 I OOo. 3. External Financing a. 18RD Loan 1423-BO 22.3 340.3 554.7 2,844.3 4.625.4 3 925.0 Total Funds Available 118.6 523.1 744.4 2,959.0 53748.1 9 634.0 B. APPLICATION OF FUNDS I. Capital Inv.utmnt Program 85.8 477.2 673.3 2.624.1 5,677.7 9,564.4 2. Debt Service 0.0 10.3 22.5 0.0 0.0 0.0 3. Increase in Working Capital ax 0.0 37.5 70.6 309.2 70.4 70.4 Cash and in Other Assets 4. Total Funds Used 85.8 525.2 766.4 2.933.8 5.748.1 9M34.$ C. CASH SURPLUS (DEFICIT) 32.8 (2.1) (22.0) 25.2 - - D. CASH ON KAND BEGINNING OF yEuR 9.5 42.3 40.2 16.2 43.4 43.4 I. CASH ON HAND END OF YEAR 42.3 40.2 18.2 43.4 43.4 43.4 F. EXCHANGE RATES uu;i equal to lb (End of Year) 20 25 25 200 SO soOS/ a/ Estl'ated based on actual results of 1983 budget b/ Estimated based on 1984 budget 1/ 1984 budget based on an exchange rate of $b 500 for USI. On 4/13/84 official aicheoge rate changed to $b 2,000 for US$1. Sources MEAKA PlaWng DpQCtwat BOLIVIA AVIATION DEVELOPMENT PROJECT (LOAN 1423-BO) PROJECT COMPLETION REPORT Changes in the Level of Rates, 1975-1984 (In Current Values) z tern 1975 1977 1980 1981 1982 1983 1984 1984b/ 1) 3(4) 1 T- UT T1 1 1. Landing Fees a. International (US$/Ton) 2.40 3.40 6.00 6.00 9.00 9.00 9.00 11,688.OOS/ be Domestic ($b/Ton) 21,00 35.20 53.00 58.30 87.45 156.80 391.80 509.10 a. Heat (Ob/Ton) 56.00A/ 18.00 27.00 29.70 44.50 102.50 263.30 342.30 d. Alr Taxis (Sb/Landing) 40.00 58.00 87.00 96.00 200.00 950.00 1,550.00 2,325.00 2. Airport User Fees a. International (US$/ Passenger) 5.00 6.00 10.00 lOpO 14.00 14.00 14.00 15.00 b. Domestic ($b/Pa.aenger) 10.00 12.00 18.00 25.00 40.00 200.00 500.00 500.00 3. HeaSagRs a. InLarnAtional ($b/ message) 30.00 60.00 102,00 102.00 153.00 153.00 153.00 1,500.00 b. Domestic ($b/Heeaage) 20.00 25.00 37.50 41.00 61.50 141.50 141.50 1,200.00 4, Parking (Gb/Vehicle) 2.00 2.00 5.00 5,00 5S00 10.00 50.00 100.00 5. Approved by Decree No. 686 2017 2779 043 604 19829 040 6. Date of Decree 07/21/75 04/26/78 02/05/80 01/|3/81 02/06/82 10/13/83 01/20/84 7. One USS Equal to $b 20.00 20.00 25.00 2S.00 200.00 200.00 500.00 500.00 a/ Per landing instead of per ton b/ Increase requested in March 1984; it was being processed when the Sb was devalued to $b 2,000 per one US$. T'La request has to be adjusted c/ In *b instead of US$. It is equivalent to US$23.38 at the thea official raetoo excharge ($b500 to U8$1) Source AMASNA Planning Department April 1984 .1 F~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ; BOLIVIA AVIATION DEVELOPMENT PROJECT (LOAN 1423-BO) PROJECT COMPLETION REPORT AASANA: Actual and Projected Level of Charges, 1975-1984 (In Constant 1976 Values) Actual 1977 1979 1960 19t2 IM Ieon Unit 1975 Prol Projected Actual frojectI4 Actuacl PFroe project Actuiwa TIT TW 4) (5) (6) P (9) (10) l- 1. Landins Fees A. IntornatncLna USS/Ton 2.40 2.90 3.15 3.50 2.38 3.9 2.65 4.2 1.45 4.7 0.65 b. Domestic Sb/Ton 21 00 25.20 32 56 30.20 24.64 33 2 25,20 36.5 14.06 40.2 2U.21 c. Hmost b/Ton 56 00 / 67.20 16,65 jo06W 12.60 tt78i 12.64 97,5 7.16 107./ 1U.ff 4. Air Taxis $b/Landing 40.00 46.00 S3,65 17,60 40.61 63.4 41.36 69.7 32.20 76.7 111.60 2. Airport User Fose S. Intern.tional USS/PFe.ung.r 5.00 6.00 5.55 7,20 4.20 7.9 4.76 6.7 2.25 9.6 1.01 b. Donestic $b/Passenger 10.00 12.00 11.10 Ii,40 6.40 15.6 6.56 17.4 6.44 19.2 14.40 3. Hessases; a. International b/MHesage 30.00 36.00 55.50 43.20 42.00 47.5 48.50 52.3 24.63 57.5 11.02 b. Domestic Ib/Hessags 20.00 24.00 23.13 24,60 17.50 31.7 17.63 34.6 9.90 36.3 10.19 4. Parkint Sb/HNessag 2.00 2.40 1.85 2,90 1.40 3.2 2.36 3.5 0.60 3.9 3.60 a/ Tariff unit in 1975 was $b/Landing. It was changed to $b/Too an 04/26/77. Prejected ad Actual rates are not comparable. k/ 1964 rates were put In effect on 01/20/64. Therefore, they were deflated at the 1963 rate. atal Fees and charges In US Currency were deflated at the sawe rae aen the chuage i tonatioal currecy becase AAMM mest delier forega currency collected to the Central aga at tho official late ot echasnge. laurcea ASAMA Flamning Deparea ne I pril 1W4 BOLIVIA AVIATION DEVELOPMENT PROJECT (LOAN 1423-BO) PROJECT COMPLETION REPORT Actual and Pro scted Income Statements. 1978 - 1982 (In Constant 1976 $b Million) 1978 1979 It" 1961 1902 Ira. . dPro beet A ctual projected Actual Actual project A cecual Tyr- (2) -1n7 iur --I- -{R -7 ( qa _ Z--xwr 1. OneratinA Revenues a. Landing Fes 52.6 42.2 71.2 41.5 86,8 51.3 95.8 38.0 115.4 54.7 b. Airport User Fees 24.8 18.9 33.5 19.4 41.3 25.1 45.8 20.4 5S.4 20.6 G. Other Oparating Revenues 27.6 17.4 36.0 16.5 42.6 25.5 46.2 19.5 54.5 29.0 4. Total Operating Revenues IOS O 785 140.7 r79. 170.7 1.01 9 181 8 1.9 22S.6 101. 2. ODeratina Ejcpen.ei a. Personnel 56.3 noan 57,4 32,2 58.6 71.5 59.7 52.9 60.9 1.6 b. Naintenaneo 17.1 n.e. 21.2 2.9 32.2 3.5 34.) 4.6 35.5 13.6 a. Other Working gxpenses 7.3 na, 7.5 40.9 7.6 10.1 7.8 9 7 ,7,9 92.0 4. Total Working Expenmes 80.7 nW-. 86.1- 76.0 9-.4 65 1 102.2 62 104l 3 TU. I e. Depreciation 32,9 n.a, 32.9 6.4 69.3 5.2 842 4.a 66.0 3.9 t. Total Operating Espenses 113.6 E6. 119 82.4 1T777 903 E ,. 1-9 14.5 3. Net Operating Revenues (DetliLt) (8.6) (4.8) 21.7 (3.0) 3.0 11.6 1.4 5.9 35.3 (43.2) 4. Not Moo-Opera ting Avaues 11 2.4 0 0 2.5 0 0 5_jo 0.0 3 __0A 1j 5, met Inco" Before Interest (8.6) (2.4) 21.7 (0.5) 3.0. 16.6 1.4 9.0 35.3 (37.1) 6. Interest 7.8 0.0 1-.7 oQ aLJ. 5.0 36 4 6.1 Jl9 . L 7. Not Incoa (Deficit) (16.4) (2.4) 9.0 (0.5) (18.6) 11.6 (35.0) 0.9 (4.2) (371.) it Ratios a. Uorking Ratio 77 nac 61 96 56 64 54 86 46 13 b. Operating Ratio 106 106 Is 104 9 9 99 92 64 141 .I Debt ervice paid by the Covenant EsLuIct A63 Planang Depargin .t BOLIVIA AVIATION DEVELOPMENT PROJECT (LOAN 1423-HO) PROJECT COMPLETION REPORT AASANA: Actual and Projected Banlance Sheets 1978-1982 (In Constant 1976 $b) 1978 1979 19W L|1 11W Item ProJected Actual ProAictua l Proected t rrgo;tg4 t Current Assets Cash 13.7 9.2 14.6 32.1 16.7 31.1 17.4 23,2 17.7 27.3 Recoivables 26.3 43.4 35.2 41,4 42.7 50.8 47.0 54.8 56.4 Oa Total 40 0O S2. Xiti 73.5 -ii 31,9 64.4 7iW.*. 15 Fixed Asscet Property, Plant and Equipment 934.9 351.4 1,379.1 366.4 2,056.0 370.8 2,415.5 505.7 2,585.2 560.7 Less Accumulated Depreciation 113.8 55.2 146.7 61.4 216,0 66.6 300.2 73.8 386.2 76.0 Net Flxed Assets Ln Use 821.1 296.2 1,232.4 305.0 1,840.0 30 0,1S. 431.9 tIiI2,199.0 T Conrtructlon ln Progress 86.5 197,0 253.3 241.8 217.5 464.3 129.3 573.6 0.0 931.3 1%3 Other AsseLs 0.0 90.9 0.0 97.9 0.0 107.0 0.0 128.7 0.0 132.6 Total Assets WI7T Ur.77 1,31M73 Tr M114 71T171 W. I 1,j17 TM r. T 1,1T177 Liabilities and Equilty Current LiablILties Trade Credltors 20,2 36.1 21.5 43.7 24.6 44.4 25.6 44.2 26.1 51.9 Other Current Liabilities 0.0 8.1 4.8 8.5 0.0 8.5 64.7 8.5 0.0 8.5 Total Current Liabilities 0.2 44.2 26. 52.2 24.6 52.9 . 90.3 52.7 21 0 keiLirera Debt t6RDLoan 1423-80 99.8 0.0 188.1 15.6 436.8 177.4 489.5 377.0 466.5 6344i Equity Capital 01/01/78 525,5 97.3 525.5 97.3 525.5 97.3 525.5 97.3 525.5 97.3 Additional Government Investment 357,3 527,6 841.8 589.8 1,195.0 663.3 1,303.7 713.8 1 359.2 769,4 Retained Earninos (Deficit) (55.2) (24.2) (46.2) (28,5) (65.0) (25.3) (100.0) (20.4) .104.2) (61.5) Capital earnings (Loaces) 0,0 (_.2) 0.0 (0, ) 0 0 J. ) 0.0 (8.2) 0.0 O62, Total Cquity 827,6 592.5 1 ITFT 650.4, , 6S5 5 727,1 1,729,2 W5I 782 5 7r Total LiabilLties and Equity 947.6 66 T1iTX S 71U,222116.9 957, 2, * 0 i 1 2 ; 2 7 .11T Sourcat AhUM Planing Departasut April 1984 _jI. - 28 - Table 9 BOLIVIA AVIATION DEVELOPMENT PROJECT (LOAN 1423-BO) PROJECT COMPLETION REPORT Bolivia Air Traffic 1975-1982 Domestic Traffic International Traffic to and from Bolivia Scheduled Traffic Non-Scheduled Passengers Cargo/tons Cargo/tons Passengers Cargo/tons 1975 395655 4550 32093 195229 4822 1976 455560 4768 29458 231717 6101 1977 551403 5115 32739 257018 9212 1978 696841 5520 38455 274984 6703 1979 820345 6058 35977 300565 6646 1980 1083846 6340 30999 397712 6538 1981 970628 5187 32451 381159 5964 1982 949139 7102 18218 284612 5235 Source: AASANA, Direccion de Transporte Aereo May 1984 -29 - Table 10 BOLIVIA AVIATION DEVELOPMENT PROJECT (LOAN 1423-BO) PROJECT COMPLETION REPORT Actual and Forecast Traffic at Project Airports SAR SAR SAR Forecast Actual Forecast Actual Forecast 1977 1980 1980 1983 1985 Passengers Riberalta 17500 15297 38300 14512 57400 Santa Ana de Yacuma 12000 3388 18900 4361 32400 San Borja 6100 6857 8800 5139 14600 Tarija 24300 43435 41500 63114 69950 Freight (tons) Riberalta 2650 531 4197 243 6759 Santa Ana de Yacuma 1360 842 1983 621 3483 San Borja 5489 2979 8003 2171 14060 Tarija - 353 - 353 - Landings Riberalta 3023 5385 2118 8725 Santa Ana de Yacuma 6730 8344 5626 11547 San Borja 1946 7402 4108 12018 Tarija 666 1937 593 3530 Source: AASANA May 1984 -30- Table 11 BOLIVIA AVIATION DEVELOPMENT PROJECT (LOAN 1423-BO) PROJECT COMPLETION REPORT Aviation Development Project Economic Returns Construction Project Appraisal Estimate Costs + 15Z Completion Airports 1/ Tarija 15 14 40 Riberalta 24 22 not San Borja 24 21 carried Santa Ana de Yacuma 12 10 out Aeronautical communications 18 15 10 Navaids, radio aids + visual aids - - 16 Runway maintenance equipment 16 11 20 Total project 19. 17 15 I/ Including navaids. May 1984 - 31 - Annex Page 1 of 5 BOLIVIA AVIATION DEVELOPMENT PROJECT (LOAN 1423-BO) PROJECT COMPLETION REPORT . ComplIance with Covenants Loan Agreement Covenant j Compliance Section 3.01. The Borrower shall carry out the Complied with except Project with due diligence and efficiency and in for financial improve- conformity with appropriate administrative, finanr- ments. However, pro- cial, engineering and civil aviation practices. I curement and installa- tion was very slow. Section 3.02. In order to assist the Borrower Complied with. in (i) the des-ign work included in Part D of the I Project, and (ii) the supervision of construction of; Parts A to C of the Project, the Borrower shall employ engineering consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Bank. 1 Section 3.03. (a) The Borrower undertakes to Complied with. insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a cur- rency freely usable by the Borrower to replace or repair such goods. I (b) Except as the Bank shalL otherwise agree, I Complied with. the Borrower shall cause all goods and services financed out of the proceeds of the Loan to be used exclusively for the Project. -32- Annex Page 2 of 5 Section 3.04. (a) The Borrower shall furnish Complied with. to the Bank, promptly upon their preparation, the plans, specifications, reports, contract documents and construction and procurement schedules for the Project, and any material modifications thereof or additions thereto, in such detail as the Bank shall reasonably request. (b) The Borrower: (i) shall maintain records adequate to record progress of the Project Complied with. (including the cost thereof) and to identify the goods and services financed out of the proceeds of the Loan, and to disclose the use thereof of the Loan, thereof in the Project; (ii) shall enable the Bank's accredited representatives to visit the facilities ard construction sites included in the Project and to examine the goods financed out of the proceeds of the Loan and any relevant records and documents; and (iii) shall furnish to the Bank all such information as the Bank shall reasonably request concerning the Project, the ex- penditure of the proceeds of the Loan and the goods and services financed out of such proceeds. Cc) The Borrower shall enable the Bank's repre- Complied with. sentatives to examine all plants, installations, sites, works, buildings, property and equipment of the Borrower and any relevant records and docu- ients. Section 3.05. The Borrower shall take or cause Except for three small to be taken all such action as shall be necessary to (less than one hectare acquire as and when needed all such land and rights each) plots, all land in respect of land as shall be required for the con- was acquired when re- struction (and operation) of the facilities included quired. No evidence In the Project and shall furnish to the Bank, was presented to the promptly after such acquisition, evidence satisfac- Bank nor requested. tory to the Bank that such land and rights in res- pect of land are available for purposes related to the Project. Section 4.01 The Borrower shall at all times Not adequately com- carry on its operations, manage its affairs, main- plied with, see Chap- tain its financial position, and plan its future ex- ter VI. pansion, all in accordance with appropriate business, financial, engineering and civil aviation practices, under the supervision of experienced and competent management, and with the assistance of adequate, qualified and experienced staff. - 33 - Annex Page 3 of 5 Section 4.02. The Borrower shall at all times Being complied with at operate and maintain its facilities, property and present. equipment and make all necessary renewals and repairs th .--of, in accordance with appropriate engineering and civil aviation practices. Section 4.03. The Borrower shall at all times Within the boundaries maintain its right to carry on its operations, and allowed by the Govern- take all steps necessary to acquire, maintain and ment, this is being renew all rights, powers, privileges, concessions I complied with. and franchises which are necessary or useful in the conduct of its business and the operation of its facilities. Section 4.04. The Borrower shall take out and The Borrower self- maintain with responsible insurers, or make other I insures as an agent provision satisfactory to the Bank for, insurance I of the Government. against such risks and in such amounts as shall be I consistent with appropriate practice. Section 4.05. In order to be able to recruit Not complied with, see and retain the qualified and experienced technical Chapter III. staff required for its operations, the Borrower I shall from time to time adjust the salaries of such staff and maintain them at competitive levels. Section 4.06. The Borrower shall, not later I Not complied with. than October 1, 1978 or such later date as the Bank shall agree, introduce a three-year staff training program satisfactory to the Bank. Section 5.01. The Borrower shall maintain Commercial accounting records adequate to reflect, in accordance with con-l methods intended were sistently maintained appropriate accounting prac- j never developed. tices, its operations and financial condition. Section 5.02. The Borrower shall, commencing External auditors were with fiscal year 1978: (i) have its accounts and never engaged. Audits financial statements (balance sheets, statements of that were done were income and expenses and related statements) for eachl made by Government fiscal year audited, in accordance with appropriate i Controllers. Audits auditing principlee consistently applied, by inde- were years late. pendent auditors acceptable to the Bank; (ii) fur- nish to the Bank as soon as available, but in any - 34 - Annex Page 4 of 5 case not later than four mnths after the end of each such year, (A) certified copies of its finan- cial statements for such year as so audited and (B) the report of such audit by said auditors, of such scope and in such detail as the Bank shall hrel have reasonably requested; and (iii) furnish to the -Bank such other information concerning the accounts and financial statements of the Borrower and the audit thereof as the Bank shall from time to time reasonably request. * Section 5.04. (a) The Borrower shall consult I Complied with but periodically with the Bank on the structure and agreed tariffs never level of its user charges. implemented because (b) Except as the Bank shall otherwise agrse, of lack of Government the Borrower shall take or cause to be taken all approval. action necessary to achieve the following: (i) annual aggregate revenues sufficient to Not achieved. produce a working ratio of not greater than 75% in fiscal year 1978 and 60% during fiscal years 1979-1982; (ii) an annual rate of return on the net Not achieved. value of fixed assets in operation of not1 less than 2% in fiscal-years 1983-84 and of not less than 4% thereafter; and (iii) a combined working ratio for the airports No longer applicable. included in Parts A, B and C of the Pro- ject not greater than 85% by fiscal year 1985 and thereafter. (c) The Borrower shall: (i) before November 1 I Done by Bank in conjun- in each fiscal year, review on the basis of realis- tion with Borrower tic traffic forecasts the adequacy of its user during each Mission. charges to achieve, in the next following fiscal year, the ratios and rates of return set forth in paragraph (b) of this Section; and (ii) furnish to the Bank a copy of such review promptly upon its _ completion. Section 5.05. The Borrower shall, before under-I Complied with. taking or executing any project for the expansion orl improvement of any of its facilities other than the the Project whereby capital expenditures in excess of the equivalent of one million dollar ($1,000,000) per annum are expected to be iocurred, afford the Bank a reasonable opportunity to comment thereon. - 35 - Annex Page 5 of 5 Section 5.06 The Borrower shall take all action1 Complied with regarding * necessary to insure that receivables from operating I payables but unable to revenues will be collected, and payables for workingl comply regarding expenses will be paid, within ninety (90) days. I rece-vables. Guarantee Agreement Covenants I Compliance Section 2.01. Without limitation or restrictionI Not complied with, al- upon any of its other obligations under the Guaran- though AASANA was assi- tee Agreement, the Guarantor hereby unconditionally duous in its payments guarantees, as primary obligor and not as surety t O the Government, the merely, the due and punctual payment of the prin- G Government failed ro cipal of, and interest and other charges on, the forward these payments Loan, and the premium, if any, on the prepayment of to the Bank in many the Loan and the punctual performance of all the I instances. other obligations of the Borrower, all as set forth in the Loan Agreement. Section 2.02. Without limitation or restric- Not complied with. tion upon the provisions of Section 2.01 of this Agreement, the Guarantor specifically undertakes, whenever there is reasonable cause to believe that the funds available to the Borrower will be inade- quate to meet the estimated expenditures required t for the carrying out of the Project, to make arrangements, satisfactory to the Bank, promptly to provide the Borrower or cause the Borrower to be provided with such funds as are needed to meet such expenditures. Section 3.02. The Guarantor covenants that it I Complied with except will not transfer to the Borrower the assets of any i that the Borrower has proposed new airport at Santa Cruz, or require the I been charged with the Borrower to service the outstanding debt for such operation of, and asso- assets, until it has been demonstrated to the satis-I ciated costs of, this faction of the Bank that the transfer of such assetsl new airport, thereby will not prevent the Borrower from achieving the adding to its net rate of return specified in Section 5.04 (b) (ii) expenses. of the Loan Agreement. Section 3.03. The Guarantor shall take all I Not complied with. steps necessary to allow the Borrower promptly to increase its user charges to achieve the targets set forth in Section 5.04 of the Loan Agreement. IBRD 12654tPCR lb. 41r ~J BRAZIL r.r..rX~LIt BOLIVIA A>-.- ,,? AVIATION PROJECT PROJECT AIRPORTS , ~---- .ri R,i8oR . - A RPORTS DELETED FROU tHE PRJECT X __ \ -nt _ . -5a04 A + f5 CMJA 0T.C. %^~~~~~~~~~~~~~~OfESAAtA, A'AFlRT - _ PsabanTE Al , ur - SEw1oAnY~~~~~~~~~~~~~~~~m ROADS , P RAILA YS * *.~~~.-... - - VI~~TERPIATICIAl. EoL*O*A,efS . 4 ! Cl. N r* RIVERS rt - \ %W. _ ~no- - r -_, '4' ' ,,,} < t; Sm,-_tC-_ SIAMAS ' 4Ik Z tE , < Fx r-s> \ <m 0 ~~~~~B RA ZI L PE U -s . - I. T ,._ ._ no ..000 .*f r r- RI"0 \[, P E. R U r AGUAr ( taGoto . A=- :~~~~~~~~~~~~~~~~~~~~AcI.n 10.0."0.E cacwcmicqn Son 1985 T. LA PAZ Tahln.j/ PA AGU Y 6 1.~~~~~~~n. -v~~~~~~~~~~R ) j''-V~~~~~~~ YOcwbo / **LO~~~~~5 - 10 noMO TO~~~~~~~~~~~~lI I / A~~~~~R GE NA FEBRUARY 1985
Группа Всемирного банка · Project Completion Report
Bolivia - Aviation Development Project
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Основные сведения
Организация
Группа Всемирного банка
Тип документа
Project Completion Report
Страна
Боливия
Источник
Всемирный банк