Rwanda - Fourth Highway Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 6209 PROJECT COMPLETION REPORT RWANDA FOURTH HIGHWAY PROJECT (CREDIT 769-RW) May 21, 1986 Transportation Division Eastern and Southern Africa Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  COUNTRY EXCHANGE RATES Appraisal year average 1977 US$ = 1.0 FRW 92.84 Intervening year average 1978 92.84 1979 92.84 1980 92.84 1981 92.84 1982 92.84 1983 98.54 Completion year average 1984 104.36 Final disbursement year 1984 104.36 Average for Project Implementation Period (1978-1984) 95.0 ABBREVIATIONS AND ACRONYMS ADT Average Daily Traffic ERR Economic Rate of Return FR' Federal Republic of Germany FRW Rwandese Franc [CB International Competitive Bidding ll)A International Development Association IlCB Local Competitive Bidding PCR Project Completic Report PPAR Project Performance Audit Report RB Road Branich UNDP IJnited Nations Development Program VOC Vehicle Operating Costs VPD Vehicles per Day WFP World Food Program  FOR OMCIL USE' LY THE WORLD BANK Washington, D.C. 20433 U.S A. Ohmew of Dv.cIt.Genotal OptatmftEA. Iv*iuU May 21, 1986 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Rwanda Fourth Highway Project (Credit 769-RW) Attached, for information, is a copy of a report entitled "Project Completion Report on Rwanda Fourth Highway Project (Credit 769-RW)" prepared by the Eastern and Southern Africa Regional Office. Under the modified system for project performance auditing, further evaluation of this project by the Operations Evaluation Department has not been made. Attachment This document has a restricted distribution and may be used by recipients only in the perfomance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  FOR OFFICXUL USE ONLY PROJECT COMPLETION REPORT JKWAIN1DA FOURTH HIGHWAY PROJECT CREDIT 769-RW Table of Contents Page No. Preface .................................. i Key Project Data ........... ................. ....*... ....*...*..** 1i Highlights .................................. iv-v Io INTRODUCTION I.ee ..... ..............e..........e 1 II. PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL ......... 3 III. PROJECT IMPLEMEWTATION AND COSTS ......................... 5 IV. INSTITUTIONAL DEVELOPMENT 9..................*.... ...... 9 V. ECONOMIC REEVALUATION ..o........c ..........e.... 10 V-I. THE ROLE OF THE GOVERNMENT ..*........... .......* 13 VII. THE ROLE OF IDA ................... ....................... 14 VIII. CONCLUSIONS ...*.............. ...... ............ 15 ANNEX IT Road Maintenance Program .. ..... ... .. ...................... 17 II. Procurement of Equipment ........ . . . . ...... ...0..-. . . ........ . .. 18 III. Costs and Financing . .................................... 20 IV. Credit Disbursement ....**............*...*.. o.......... .... 21 V. Status of Compliance with Credit Covenants ................ 22 VI. Average Vehicle Operating Cost Savingg ..... ............. 23 VII. Economic Reevaluation ..... .................................. 24 VIII. Comparison of Rates of Return ............................ 25 IX. Comments from Kreditanstalt fur Wiederaufbau .... .......... 26 X. Comments from Ministerie Van Buitenlandse Zaken, Buitenlandse Handel En Ontwikkelingssacenwerking .......... 27 MAP IBRD 12936R (PCR) This document has a rstrited distibution sod may be usd by recipents only In the performance of their olciW duties. Its contents may not otherwise be discled without World Bank thoriation.  PROJECT COtIPLETION REPORT RWAN4DA FOURTH HIGHWAY PROJECT CREDIT 769-RW PREFACE 1. IDA provided US$15.0 million for the financing of the Fourth Highway Project. The Credit Agreement (Credit 769-RW) was signed on April 25, 1978 and became effective on August 4, 1978. The project was implemented in six years instead of four, due to delays in procurement of equipment and construction of the training center. The closing date of the Credit Agreement was extended from July 1, 1982 to June 30, 1984 to accommodate the two-year delay in project execution. The credit was fully disbursed. 2. This Project Completion Report (PCR) was prepared by the Transportation Division of Eastern and Southern Africa Projects Department, on the basis of the appraisal report, project files, supervision missions reports, and Government's project evaluation report prepared by consultants. 3. The project was cofinanced by the Government (US$6.76 million), UNDP (US$1.3 million), FRG (US$2.32 million), Belgium (US$460,000), and WFP (US$1.94 million). The total external financing covered 100% of the foreign costs and about 18% of the local costs of the project. The remain- ing 82% of the local costs were financed by the Government. The Government also met the recurrent costs of road maintenance amounting to US$10.75 million for the six-year project implementation period. 4. In accordance with the revised procedures for project performance audit reporting, this Project Completion Report was read by the Operations Evaluation Department (OED) but the project was not audited by OED staff. Copies of the draft report were sent to the Borfower and Co-financiers for comments. rhe Co-financiers' comments are shown as Annexes IX and X.  - ii - PROJECT COMPLETION REPORT RWANDA FOURTH HIGHWAY PROJECT (CREDIT 769-RW) BASIC DATA SHEET KEY PROJECT DATA Appraisal Actual or Item ExMectation Current Estimates Total Project Cost (US$ million) 23.7 27.8 Overrun (2) - 17.0 Credit Amount 15.0 15.0 Disbursed (12/31/81) 15.0 9.9 (06/30/84) - 15.0 Cancelled -- - Date Physical Components Completed 12/81 12/83 Proportion Completed by: Appraisal Completion date (Z) 100 70 Actual Completion date (%) - 95 Economic Rate of Return (%) a) Improvement Program 195 147 b) Rehabilitation and Upgrading 35 163 Overall (a + b) +100 155 OTHER PROJECT DATA Original Actual or Item Plan Est. Actual First Mention in Files or Timetable 04/17/74 Government's Application -- Negotiations 11/14/77 12/22/77 Board Approval Date 02/21/78 Credit Agreement Date 04/25/78 Effectiveness Date 08/04/78 Closing Date 07/01/82 06/30/84 Borrower Republic of Rwanda Ministry of Public Works Fiscal Year of Borrower January 1 - December 31 Follow-on Project Name Fifth Highway Project Credit Number 1250-RW Amount (SDR million) 23.3 Credit Agreement Date June 9, 1982  - iii - MISSION DATA A. Preparation and Appraisal Month Number of Man Date of Item Year Weeks Persons Weeks Report Preparation 8/74 1/ 1.4 1 1.4 09/25/74 Preparation 6/76 2/ 1.7 2 3.4 06/24/76 Appraisal 2/77 3.0 2 6.0 02/06/78 Subtotal 6.1 10.8 B. Supervision Supervision I 04/78 3/ 2.4 2 4.8 05/01/78 Supervision II 06/78 4/ 1.2 1 1.2 07/12/78 Supervision III 12/78 4/ 1.2 1 1.2 02/02/79 Supervision IV 03/79 T/ 2.6 2 5.2 05/18/79 Supervision V 06/79 4/ 1.6 1 1.6 07/30/79 Supervision VI 10/79 4/ 1.8 1 1.8 12/18/79 Supervision VIT 02/80 5/ 1.6 3 4.8 03/26/80 Supervision VIII 06/80 6/ 1.0 1 1.0 06/26/80 Supervision IX 06/81 6/ 1.6 1 1.6 07/24/81 Supervision X 02/82 1.0 1 1.0 03/31/82 Supervision XI 12/82 6/ 1.4 1 1.4 01/26/83 Supervision XII 07/83 7/ 1.4 1.4 09/12/83 Supervision XIII 03/84 1.0 1 _1.0 04/23/84 Subtotal 19.8 28.0 Total 25.9 38.8 1/ In conjunction with the Highland Crop Improvement and Development Project and Settlement/Mixed Farming Project Preparation. 2/ In conjunction with supervision of the First, Second and Third Highway Projects and preparation of the Transport Sector Memorandum. 3/ Combined supervision of First, Second and Third Highway Projects. 4/ Combined with supervision of the First Highway Project (Cr. 196-RW). 5/ Combined with supervision of First Highway Project (Cr. 196-RW) and Preparation of Fifth Highway Project (Cr. 1250-RW). 6/ Combined with preparation of Fifth Highway Project. 7/ Combined with the Fifth Highway Project and Cr. 1283-RW, Feeder Road Component.  - iv - PROJECT WUMPLETION REPUoWr RWANDA FOURTH HIGHWAY PROJECT CREDIT 769-RW LIGHLIGHTS 1. The Fourth Highway Project was the second IDA financed road projects to emphasize road maintenance. It was designed to sustain the efforts begun under the Second Highway Project (Credit 299-RW) - the first phase of road maintenance program - to expand and strengthen maintenance operations and the capabilities of the Road Branch (RB). To achieve these objectives the project included: (i) a four-year road maintenance program consisting of: (a) betterment works on about 500 km of gravel roads; (b) rehabilitation and upgrading works on about 1000 km of earth roads to gravel standards; (c) resealing of about 100 km of paved roads; and (d) routine maintenance on about 3,500 km earth and gravel roads and 350 km of paved roads; (ii) strengthening and expansion of RB's capacity by providing equipment, spare parts, materials, supplies, tools, work- shops and technical assistance; and (iii) a four-year training program for maintenance personnel at all levels. 2. The implementation of the road maintenance program was carried out by force account. The execution of the program was carried out in six years instead of four due to delays in procurement of road maintenance equipment (para. 3.03). Despite these delays, 100% of the be.terment works were properly completed; 70% of the rehabilitation and upgrading and 90% of the resealing works were acceptably completed, and labor-intensive routine maintenance works ("cantonnage") were carried out and continue to be carried out satisfactorily (para. 3.05). 3. The overall ERR for the betterment and rehabilitation and upgrading programs, is about 155%, compared with the appraisal estimate which is in excess of 100%. If a sensitivity analysis with a reduction in benefits of 50% is carried out, the recalculated ERR would be about 80% which is still satisfactory (para. 5.12). The results of the first year returns show that these operations were overdue and points to the importance and urgency of having undertaken the maintenance works in these roads much earlier (para. 5.14). 4. The training program was completed two years behind schedule due to delays in construction of the training center (para. 3.07). The train- ing program succeeded in training lower level technicians, but no managers (para. 3.08), with a consequence that technical assistance is still needed in the medium term to carry out effective road maintenance operations.  - v. - 5. Despite the two-year delay in project completion, the actual costa, US$27.78 million, only moderately increased by 17%, compared to appraisal estimates of US$23.7 million. These cost overruns were financed by a greater participation of the Government, US$6.76 million instead of the original pledge of US$2.6 million. The financing of the remaining costs was shared by IDA, US$15.0 million; UNDP, US$1.3 million; FRG, US$2.32 million; Belgium, US$460,000; and WFP, US$1.94 million. The dis- bursement of the IDA credit closely followed project execution and was thus totally disbursed in six years instead of four. 6. The project succeeded in strengthening the road maintenance organization, institutionalizing the labor-intensive "cantonnage"works and establishing training on a permanent basis as part of RB's regular opera- tions. The project, however, fell short of training goals as only lower level technicians were trained and no managers (para. 3.08). 7. The performance of the Government and IDA contributed to the achievement of the project objectives. Both institutions collaborated in designing and executing a project which emphasized improvement of road con- ditions and strengthening of RB's capacity to carry out proper road main- tenance operations. However, the Government could have been firmer in managing the construction of the training center (para. 3.07). 8. The Government complied with most of the major credit covenants, in particular, the institutional organization and provision of adequate funds for recurrent costs of road maintenance operations (para. 4.02). However, the traffic regulations and safety were not complied with and the Government is preparing appropriate legislations to comply with this covenant (para. 4.02).  PROJECT COMPLETION REPORT RWANDA FOURTH HIGHWAY PROJECT (Credit 769-RW) I. INTRODUCTION 1.01 Rwanda is a small, densely populated land-locked country, bounded by Burundi, Tanzania, Uganda and Zaire. The main transport flows are bet- ween the capital Kigali and the exterior and between Kigali and regional centers. External transport is assured essentially by two main surface transport corridors to the Indian ocean ports and to a much lesser degree air transport between Kigali and Mombasa. The Northern Corridor (1,740 km) which comprises the all-road and road/rail routes via Kampala and Nairobi to Mombasa, and the central corridor (1,720 km) which consists of the road/lake (Tanganyika)/rail via Bujumbura and Kigoma to Dar-es-Salaam. External transport, however, has been unreliable, slow, and expensive be- cause these routes have been subjected to many problems, the most important of which have been political upheavals in Kenya, Tanzania and Uganda and traffic congestion in Mombasa and Dar-es-Salaam ports. Also the rugged topography of the country makes road construction and maintenance costly. Rwanda has concentrated its efforts in improving to paved standards the major road links between Kigali and neighboring Uganda, Burundi, and Tanzania, and between its major regional centers; the Government has also started to pay more attention to improving the maintenance of the road network and its organization. 1.02 The present transport system consists of: (a) about 4,060 km of classified roads of which 627 km are paved, and 274 km are being improved from earth and gravel roads to paved standards; (b) about 6,000 km non-classified earth and gravel communal and feeder roads; (c) Lake Kivu for local transport between Gisenyi, Kibuye and Cyangugu; and (d) an international airport at Kigali, a regional airport in Cyangugu, and four grass airports in the interior to handle small aircrafts. There are no railways or navigable rivers. 1.03 Bank Group lending to the road subsector has amounted to US$71.4 million for five projects. The objectives of these projects have been to assist this land-locked country in: (i) improving major road connections with its neighbors and between its regional centers and the capital and (ii) improving its Institutional capabilities to carry out efficient road maintenance operations. 1.04 The First Highway Project (Credit 196-RW, US$18.8 million, 1970), the Third Highway Project (Credit 475-RW, US$6.3 million, 1974) and the Fifth Highway Project (Credit 1250-RW, US$25.9 million, 1982) primarily financed road construction. They contributed respectively to improvement to paved standards of the Kigali-Gatuna road (80 km), the Ruhengeri-Gisenyi road (60 km), and the Butare-Kitabi road (53.5 km). Excessive delays and  - 2 - cost overruns occurred in the construction of the Kigali-Gatuna and Ruhengeri-Gisenyi roads. The difficulties were due to inadequate engineering and construction techniques, and political instability in Uganda causing interruption in the supply of equipment and materials. The PPAR of both projects (dated June 13, 1979), however, concluded that the improvement works on both roads were still justified, as the increases in construction costs were offset by higher than anticipated traffic growth and greater savings in vehicle operating costs. The Kigali-Gatuna road has deteriorated to the point where reconstruction is necessary; some maintenance works to keep it passable are being carried out under the ongoing Fifth Highway Project, and reconstruction works would be carried out under the proposed Sixth Highway Project. In view of the difficulties encountered in the first two road construction projects, the improvement of the Butare-Kitabi road (Fifth Highway Project) was designed with particular attention to soil conditions, alignment, grades and drainage; contractors were prequalified carefully and the supervision team was provided with an expert in soils engineering. Construction of this road is progressing satisfactorily and within estimated costs. 1.05 The Second Highway Project (Credit 299-RW, US$5.4 million, 1971) and the Fourth Highway Project (Credit 769-RW, US$15.0 million, 1978) contributed to improvement of road maintenance operations and institution building. The Second Highway Project provided equipment, materials, supplies, rehabilitation of workshops, technical assistance and training of personnel. It was designed to carry out periodic and routine road maintenance Aperations on the entire road network. At the closing of the Credit, on December 31, 1978, only about 50% of targeted works were completed successfully. The PPAR (dated June 13, 1979) concluded that, although the targets set at appraisal were overly optimistic, the project objectives were largely achieved. The RB organization was improved, technical personnel increased, training of personnel initiated, workshops and offices constructed and equipped, road maintenance equipment purchased and deployed, and maintenance operations were improved and better road conditions achieved. 1.06 The Fourth Highway Project was thus designed, taking into consideration the limitations of RB, to consolidate and expand the achievements of the Second Highway Project.  - 3 - II. PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL 2.01 The Fourth Highway Project was a second phase of an 8-year highway maintenance program designed in 1971. The first phase, the Second Highway Project, Credit 229-RW, was completed in December 1977 (PPAR dated June 13, 1979). 2.02 The project was prepared in November 1976 to January 1977 by the Government, assisted by FRG consultants. It was appraised by the Association from February 26 to March 19, 1977, and the Credit w-s negotiated in Washington from December 12 to 15, 1977. The Credit Agreement was signed on April 25, 1978. 2.03 The project, consisted of: (i) a four-year (1978-1981) periodi^ road maintenance program to be executed by force account includ.ng: (a) betterment of about 500 km of gravel roads (Annex I(a)); (b) rehabilitation and upgrading of about 1,000 km of earth roads to gravel standards (Annex T(b)); and (c) the resealing of about 100 km (Annex I(c)) of paved roads; (ii) a four-year (1978-1981) routine road maintenance program including routine maintenance of 3,500 km of earth and gravel roads, and 350 km of paved roads; the works were to be carried out by labor-intensive methods, "cantonnage"; (iii) strengthening and expansion of RB capacity including (a) procurement of equipment (Annex II), machine and hand tools, spare parts, materials and supplies; (b) extension and improvement of the central workshop in Kigali and construction of two small workshops in Butare and Cyangugu; (c) provision of technical assistance (607 man-month! j to assist in the management and execution of works, maintenance of equipment and training of personnel; and (d) tr.nsforming RB's Workshop and Warehouse Department into a division of RB's Works Department; and (iv) a four-year (1978-1981) training program to train RB maintenance personnel at all levels including: (a) a gradual staffing of RE with sufficiently qualified local personnel to replace the extensive technical assistance (iii (c) above); (b) class-room instruction, on-the-job training and scholarships for the training of about 300 road workers, 60 mechanics, 30 administrative staff and 20 traffic counting technicians; (c) construction of class-rooms and procurement of teaching aids, materials and supplies; and (d) provision of 84 man-months of consultants services for class-room instruction. Project Cost Estimates and Financing 2.04 The total project capital costs, net of taxes but including physical and price contingencies, were estimated at US$23.7 million (detailed in Annex III), with a foreign cost component of US$17.6 million  - 4 - (74%) and a local cost component of US$6.1 (26%). The Government exempted the project from all taxes and duties. The recurrent costs of the four-year road maintenance program were estimated at US$6.7 million. 2.05 The external sources of financing were to provide US$21.1 million or about 90% of the estimated total costs, of which US$17.6 million were to cover 1002 of the estimated foreign costs and US$3.5 million to cover about 57% of the estiamted US$6.1 million local costs; the Government was to provide US$2.6 million or 43X of the total local costs. The US$21.1 million of external financing were to be provided by IDA: US$ 15.0 million (Credit 769-RW); UNDP: US$1.3 rillion; FRG: US$2.3 million; Belgian Aid: US$0.5 million; and WFP: 2.0 villion for food for road workers and trainees. As one condition of effectiveness of the IDA Credit, the Government had to secure the financing of the other donors. The recurrent costs were to be borne by the Government. To ensure the financing of recurrent costs the Government was to provide not less than US$1.8 million during FY1978 as one condition of Credit effectiveness, and for the subsequent years at least US$1.6 million annually as a major covenant of the Credit Agreement (para 4.02, Annex V).  - 5 - III. PROJECT IMPLEMENTATION AND COSTS A. Credit Agreement 3.01 The Credit Agreement, which was signed on April 25, 1978, became effective on August 4, 1978, only 10 deays past the original deadline of July 25, 1978. The Government fulfilled the general conditions and all additional conditions, including the efficient reorganization of RB (para. 3.06), securing financing from other donors and providing required PY 1978 funds for the routine operations of road maintenance (para. 2.05). 3.02 During the project execution, the Credit Agreement was amended only once. The closing date was extended from July 1, 1982 to June 30, 1984 td accommodate a two-year delay iii project execution (para. 3.05). B. Procurement of Equipment, Spare Parts, Materials and Supplies 3.03 The project provided for equipment (Annex II) to replenish and expand the equipment fleet provided under the first phase of the road main- tenance program (the Second Highway Project, Credit 299-RW). The delivery of this equipment took longer than was foreseen at appraisal. This was principally due to delayed preparation of bidding documents by consultants and delay in contract awards because of complaints by suppliers on Government's bid evaluation. Bids were called on May 30, 1978 and suppliers were given 107 days to prepare the bids. Bids were opened on September 15, 1978. The bid analysis and award were completed by November/December 1978, and 22 separate contracts were approved between January and December 1979; the bulk of the equipment was delivered by end of March 1980. The equipment procured under the project was augmented by Japanese aid (Annex II). The procurement of materials and supplies followed local competitive bidding procedures (LCB), and spare parts, fuel and bitumen were provided by established suppliers on the basis of negotiated and competitive prices as allowed by the Credit Agreement. The delivery was made on schedule except for two periods, February - March 1978 and February - May 1979, when the delivery of fuel was interrupted by political instabilities in Uganda. With consultants assistance, the inventory of spare parts was carried out, identifying necessary stocks to maintain the equipmeait fleet, thus rationalizing procurement and minimizing waste and pilferage. C. Execution of Road Maintenance Works 3.04 The execution of works was carried out by force account as planned with: (') two brigades for betterment works on about 500 km of gravel roads on which base courses were to be rebuilt, grades of about 12% reduced,dangerous curves widened, and drainage improved; (ii) two brigades for rehabilitation and upgrading of about 1000 km of earth roads on which regravelling and improvement of drainage structures were to be carried out; (iii) one brigade for resealing about 100 km of paved roads which were more than 10 years old and carried out traffic volumes of about 500 vpd; and (iv) 256 'cantonnage" teams (road gangs) composed each of one foreman and twelve laborers for labor-intensive routine maintenance on the 3,500 km of earth and gravel roads and 350 km of paved roads. Due to delays in  - 6 - procurement of equipment, only the two brigades for betterment works, one brigade for rehabilitation and upgrading and the 256 cantonnage teams operated in 1978 and 1979. All brigades became fully functional by mid 1980. The brigades were staffed by local personnel, and managed by consultants. Consultants were assigned local counterparts for training (para. 3.08). 3.05 Due to delays in procurement of equipment, works were completed in Decomber 1983 instead of December 1981, thus two years later than planned. At the completion of the project, about 100% of betterment works had been properly completed, 70% of rehabilitation and upgrading and 90% of resealing works acceptably completed, while cantonnage teams did and continue to do very satisfactory routine maintenance works. This labor-intensive effort is keeping the road network passable all year round. The original road itineraries (Annex I) were modified with IDA agreement to reflect the evolution of traffic and economic development in different regions of the country. An impediment to the performance of the brigades was the lack of good construction materials within the roads' right-of-ways, the existing borrow pits having been exhausted. To alleviate this problem, the Government's soils laboratory was requested, and did carry out soils surveys well in advance of the brigades to identify borrow pits which could be readily exploited. To better manage the works, the consultants introduced cost accounting procedures as a road improvement and maintenance tool. D. Improvement of Workshops 3.06 The project provided for the improvement and expansion of the central workshop in Kigali and the constitution of two small workshops in Butare and Cyangugu. Works on the central workshop were carried out by force account, and satisfactorily completed in December 1982. Following a review of the expansion of the road network and the equipment fleet, it was found superfluous to build the two small workshops in Butare and Cyangugu. It was thus agreed to build only one, but in Kibuye. The construction contract was awarded to a local contractor following LCB. The works started in August 1983, and were satisfactorily completed in April 1984. With the rational system of procurement of spare parts put in place by consultants (para. 3.03), the equipment was properly maintained in the field and workshops in Kigali, Kibuye and Ruhengeri. Also the Workshop and Warehouse Department, which had been too autonomous and poorly managed was placed under the authority of RB for efficiency in carrying out road and equipment maintenance operations. E. Training 3.07 To carry out the training program, the project provided for, inter alia, the construction of classrooms and procurement of equipment and tools. The equipment and tools were procured at the same time as the equipment, materials and supplies for road maintenance (para. 3.03). The construction of the classrooms, however, was completed only in March 1981 or two and one half years behind schedule compared to appraisal estimates. The delay was caused by the lack of performance of one local contractor. Following LCB, this local contractor won the contract and sta ted the works in September 1977. He could not complete the construction in February 1979 l  as planned, and abandoned the site on April 11, 1980, due to financial difficulties. The Government cancelled the contract and rebid the works. Another local contractor was awarded the contract. He started the works in November 1980, and satisfactorily completed the construction of the training center in March 1981. 3.08 Due to the delays in the construction of the training center, the training started in temporary shelters. It was carried out at only about 60% of the anticipated rate for the first two and one half years, and was completed in December 1983, two years later than planned. On-the-job training was carried out in the central workshop in Kigali and in field brigades. Training was carried out by consultants (para. 3.09). At the conclusion of the program, about 410 technicians (same number as planned but of different qualifications) had been trained. The trained personnel includes: 40 foremen, 135 equipment operators, 5 workshop superintendents, 20 store keepers, 15 electricians and 195 mechanics. Of the trained technicians, 54 best qualified have left the Government services for the private sector. The program also trained three instructors, including one mechanic, one equipment operator and one office specialist. However, the project did not succeed in training higher level technicians and managers. The lack of training of higher level staff was due to (i) consultants concentrating more on the execution of works; (ii) lack of qualified candidates; and (iii) qualified local staff preference to work for the private sector where pay and conditions are much better. 1/ Although Government assigned counterparts to consultants, the results are not encouraging as exemplified by the fact that during the 1984/1985 road maintenance season, when the consultant's contract ran out, the operations of the road maintenance brigades deteriorated. F. Technical Assistance 3.09 To carry out the road maintenance program, the maintenance of the equipment fleet and the training program, the Government was assisted by technical experts. FRG provided 227 man-months of technical assistance services for the management and the execution of workshop operations. Belgium provided 43 man-months of technical assistance for road design and management of workshop and warehouse operations. To compensate for the two-year delay in project execution, technical assistance provided by IDA and UNDP was increased from 348 man-months to 524 man-months for the execution of the road maintenance works, and from 84 man-months to 137 man-months for training. The FRG consultants who provided services for the execution of the road maintenance under the Second Highway Project (Credit 299-RW) continued to provide the same services under this project. Swiss consultants provided assistance for the training program as subcontractors to FRG consultants. The consultants satisfactorily assisted RB in carrying out the road improvement and maintenance program, the maintenance of equipment and the training of low level technicians. However they did not succeed in training high level technical staff and managers (para. 3.08) with the result that technical assistance is still needed in the medium term to carry out effective road maintenance operations. 1/ The training program for the proposed Sixth Highway Project has been designed with these lessons in mind.  -8- G. Project Costs, Financing and Disbursement 3.10 The actual capital cost of the project was US$27*78 million (Annex III) with foreign costs component of US$19.56 million (70%) and a local costs component of US$8.22 million (30%). These costs are about 17% more than the appraisal estimates of US$23.7 million including contin- gencies. These costs overruns were due to the two-year delay in the execu- tion of the road maintenance and training programs. The recurrent costs were US$10.75 million for the six year period (1978-1983). 3.11 The external sources of financing provided US$21.02 million or about 76% of the costs, of which US$19.56 million covered 100% of the foreign costs and US$1.46 million covered about 18% of the US$8.22 million local costs; and the Government provided US$6.76 million or 82% of the local costs. The Government participation thus increased from US$2.6 million as originally pledged, to US$6.76 million. The greater Government participation thus absorbed the project's cost overruns. The IDA (US$15.0 million) and UNDP (US$1.3 million) contribution were sufficient to complete the project. FRG (US$2.32 million), Belgium (US$460,000) and WFP (US$1.94 million) contributed to the financing of the project. The Government also provided the US$10.75 million equivalent for recurrent costs of routine maintenance operations or about US$1.8 million yearly, (FY78 to FY83) about 13% more than the US$1.6 million requested by the Credit Agreement (para. 4.02). The financing details are in Annex III. The credit disbursement (Annex IV) followed the pace of project execution, reflecting its two-year delay. The credit was thus totally disbursed in six years instead of four as originally projected. H. Performance of Consultants, Contractors and Suppliers 3.12 Consultants financed by IDA and UNDP satisfactorily assisted the Government in the execution of the road maintenance operations and the training of low level staff. However they did not succeed in training high level staff and managers. The reasons for this failure are given in paragraph 3.08. With regard to technical assistance, it is clear that giving consultants responsibility for both operation and training resulted in their giving inadequate priority to higher level sltaTf training. This lesson has been taken into account in designing future training programs. 3.13 Two local contractors satisfactorily completed the construction of the Kibuye workshop and training center respectively. While one local contractor, the first lowest bidder for the training center, caused a two-year delay in the construction of this facility due to financial difficulties (para. 3.07). 3.14 Suppliers satisfactorily delivered on time and at contracted reasonable prices, the equipment, materials and supplies.  - 9 - IV. INSTITUTIONAL DEVELOPMENT A. Institutional Performance 4.01 As a second phase of the road maintenance program, the Project consolidated the initial institutional achievements of the Second Highway Project (Credit 299-RW). The road organization was strengthened by placing the Workshop and Warehouse Department, which had been too autonomous and poorly managed, under the authority of RB. The brigades and teams were expanded and strengthened, and most of all, the labor-intensive "cantonnage' organization was put in place and has succeeded in maintaining the road network passable all year round. Also the Project put in place a permanent training organization, which succeeded in training low level technical staff. However one of the aims of the project - to put local staff in responsible positions - was not achieved, as high level staff and managers were not trained (para. 3.08). The result is that technical assistance is still needed in the medium term to carry out effective road maintenance operations. Under the proposed Sixth Highway Project, a training program will be implemented to allivate this deficiency. B. Compliance with Credit Covenants 4.02 The experience with credit covenants has been satisfactory (Annex V). The Government complied with the the major covenants. In particular the revised organizational improvements were put in place early by Presidential decree; and the Government provided as required resources for prompt execution of the project including, funds, facilities and services. Its yearly budgetary allocations were 13% more than required by the Credit Agreement or US$1.8 million versus US$1.6 million. However, traffic regulations and road safety were not enforced, even when weighing scales were procured under the ongoing Fifth Highway Project (Credit 1250-RW). One impediment has been the lack of adequate unified traific laws. The Government has prepared a new traffic code covering vehicle weight and dimension regulations which are in line with the design specifications of roads built in recent years as well as the regulations in force in neig.boring countries, primarily Kenya and Uganda, the major transit countries for this land-locked country. The Government has agreed during the negotiations of the proposed Sixth Highway Project that this traffic code will become law by December 1985, and to start its enforcement in early 1986.  - 10 - V. ECONOMIC REEVALUATION 5.01 According to the appraisal report, "the objective of this project is to continue improvement of road betterment and maintenance operations throughout the country and to strengthen the capabilities of the Road Branch". The two programs for which a rate of return had been calculated it appraisal were: (a) betterment of about 500 km of gravel roads; and (b) rehabilitation and upgrading of about 1,000 km of earth roads to gravel standards. "The aims of these programs are to improve interregional connections in Rwanda and to develop a network of efficient and reliable routes for the transport of imports since the monetary part of the economy is very dependent on external trade. The principal beneficiaries are expected to be the producers in the agricultural sector, which by reducing transport costs are expected to stimulate production, and so generate greater returns." 5.02 The economic reevaluation was done comparing the 'with' and 'without' the project scenarios. The analysis is based on findings of the final and economic reevaluation reports prepared by the Government as well as data included in the buff cover SAR of Rwanda Sixth Highway Project. The economic reevaluation was done in 1984 prices, using an early 1984 exchange rate of 97 FRW to the US dollar. The appraisal report used 1977 prices and an exchange rate of 92 FRW to the US dollar. 5.03 The reevaluated project components are: (a) betterment of 495 Km of gravel roads (compared with 490 km planned at appraisal); (b) rehabilitation and upgrading of 682 Km of earth roads to gravel standards (compared with about 1,000 Km planned at appraisal); and (c) resealing of 87 Km of paved roads (compared with 100 Km planned at appraisal). 5.04 The quantified benefits used in the reevaluation, are vehicle operating cost (VOC) savings (Annex VI) and maintenance costs savings (Annex VII). Actual costs were used for the recalculated ERR. Vehicle operating cost unit savings were computed for two types of vehicles: light and heavy, following the presentation of the appraisal report. 5.05 At appraisal the traffic growth rate assumed during project implementation was 5%, and 4% thereafter. The Government's report in its economic reevaluation used a 10% growth rate. However, a comparison of traffic growth rate between 1976 and 1983 for the roads mentioned at appraisal and which were also kept in the implementation stage shows that for the appraised roads where betterment and rehabilitation and upgrading works were carried out, the weighted average growth rate was about 7%. For the purpose of the present analysis a more conservative growth rate of 6% was applied to all roads. The economic life of the betterment program is  - 11 - considered to be 10 years as assumed in the text of the appraisal report (see Annex VII), while 7 years has been assumed for both the rehabilitation and upgrading, and the resealing programs. 5.06 On the basis of the inputs mentioned above the ERR for the individual components is as follows: Betterment 5.07 The reevaluated ERR for this component is about 147%, as compared with about 195% a. appraisal. The discrepancy between the ERR at appraisal and the reevaluated ERR could be explained by the higher cost of works. A comparison between estimated and actual direct costs shows that for the betterment works the average cost per Km is about 29% higher than the appraisal estimate. 5.08 Although the investment for this component is expected to last at least until 1993 it is still possible that the expected benefits may not fully materialize. Therefore, if in the sensitivity analysis an unlikely reduction in traffic of 50% is applied, it still would yield an ERR of about 74%, which is considered satisfactory (Annex VII). Reducing the benefits by 90%, yields a threshhold of 17 vpd, and an ERR of 12% which is equal to the assumed opportunity cost of capital, still making the program economically justifiable. Kirambo-Kidaho is the road with the lowest economic rate of return: 57%. An unlikely reduction in benefits of 50% would yield an ERR of 28%. Rehabilitation and Upgrading 5.09 The original road itineraries were modified with IDA's agreement during the execution fo the project to reflect the evolution of traffic and economic development in different regions of the country. The ADT thus changed from 44 vpd in 1976 to 159 vpd in 1983, or an increase of about 260%. The reevaluated ERR for this component is about 163% as compared with 35% at appraisal. The discrepency between the ERR at appraisal and the reevaluated ERR could be explained by the fact that the increase in actual average cost per km of about 39% was totally offset by the 260% traffic increase. Also the growth rate of the traffic is higher than assumed at appraisal (see para. 5.05). 5.10 Although the investment for this component is expected to last at least until 1990, it is still possible that benefits may not fully materialize. A sensitivity analysis assuming an unlikely reduction in traffic of 50%, provides a reevaluated ERR of about 85%, which would still make this component economically justified (Annex VII). Reducing the traffic by about 90%, yields a threshhold of 16 vpd and an ERR of 12% which is equal to the assumed opportunity cost of capital, still making this program viable. Munyinga-Gasoro and Gisha-Gishyita are the roads with the lowest ERR: 69Z. An unlikely reduction in benefits of 50% would yield an ERR of 32%.  - 12 - Resealing 5.11 This component was not evaluated at appraisal. However, an attempt has been made to quantify it using an economic life of 7 years. The traffic level excludes urban roads and the road to the airport. The ERR for this component is about 150% or 78% if benefits are reduced by 50% (Annex VII). Reducing the benefits by 90% yields a threshhold of 89 vpd and an ERR of 12% whtch is equal to the assumed opportunity cost of capital still making this program viable. Kigali-Rusumo is the road with the lowest ERR: 111%. An unlikely reduction in benefits of 50% would yield an ERR of about 55%. Conclusions 5.12 The overall ERR for the betterment and rehabilitation and upgrading programs, excluding resealing, is about 155%, compared with the appraisal estimate which is in excess of 100%. If a sensitivity analysis with a reduction in benefits of 50% is carried out, the recalculated ERR would be about 80%, which is still satisfactory. 5.13 Regarding the rehabilitation and upgrading program, the fact that after appraisal many roads with low level traffic were excluded and other roads with higher traffic were included, does not allow us to directly compare the reevaluated ERR with the appraisal data, because the reevaluated program is substartially different from the one described at appraisal. Nonetheless the program, if anything has improved by these shifts from low to high volume roads. 5.14 Regarding the timing of the project the first year returns of the three reevaluated components exceed the assumed opportunity cost of capital of 12% (Annex VII) which indicates that these works were overdue, and points to the urgency and importance of having undertaken the maintenance works on these roads much earlier. 5.15 Notwithstanding certain limitations of the recalculation, such as the economic life of the project that has not yet been completed, the project is still well justified.  - 13 - VI. THE ROLE OF THE GOVERNMENT 6.01 The Government performance contributed to the achievement of the project objectives. It promptly complied with credit conditions of effectiveness, put in place organizational improvements resulting in better managed road operations, and promptly provided as needed funds, facilities and services for the execution of the road maintenance operations. The Government has been commendable in organizing, operating and maintaining labor-intensive operations "cantonnage" which are keeping the road network passable all year round. It succeeded in establishing training as one of the permanent functions of RB. But only its lower level staff were trained, as consultants concentrated their activities more in execution of works than training, and Government could not induce or recruit high level staff to be trained as managers to replace the extensive technical assistance. The Government also could have been more diligent in the preparation of bidding documents, evaluations and awards of contracts for the procurement of road maintenance equipment; it could also have been more forceful in the implementation of the contract for the construction of training center. This laxity caused a two-year delay in the implementation of the project.  - 14 - VII. THE ROLE OF IDA 7.01 IDA contributed to the development of the road subsector. Particularly, a road maintenance program which took into consideration the country's limitations in skilled personnel and financial resources was prepared. It succeeded in focussing the Government's attention more on road maintenance, resulting in establishment of better organized road maintenance operations and improvement of road conditions. Its insistence on labor-based maintenance operations induced the Government to put in place, and on a permanent basis, a very efficient labor-intensive (cantonnage) organization for routine road maintenance operations which is keeping the road network passable all year round. It also assisted in establishing training as a permanent feature of RB operations.  - 15 - VIII. CONCLUSIONS 8.01 The project was a logical continuation of the efforts started under previous projects to improve the road network and the road main- tenance organization and operations. The project was properly designed, taking into consideration RB's limitations in qualified personnel, the country's financial constraints, and conditions of the road network. 8.02 Although originally planned to cover a four-year road maintenance and training programs (1978-1981), it actually was executed in six years (1978-1983), mainly due to a two-year delay in procurement of road main- tenance equipment and construction of the training center. This delay caused US$4.1 million cost overruns; but did not totally compromise the project execution as financing was adequate to allow the project achieve its objectives reasonably well. 8.03 The project satisfactorily achieved its physical objectives as 100% of betterment works were properly carried out, 70% of rehabilitation and upgrading and 902 of resealing works acceptably completed, while the road gangs ("cantonnage") did and continue to do very satisfactory works which are keeping the road network passable all year round. The training program succeeded in training lower level staff, but did not train man- agers, with a consequence that technical assistance is still needed in the medium term to carry out effective road maintenance operations. This con- cern will be properly addressed under the proposed Sixth Highway Project. 8.04 The overall ERR for the betterment and rehabilitation and up- grading programs, is about 155X, compared with the appraisal estimate which is in excess of 100%. The results of the first year returns show that these operations were overdue and point to the importance and urgency of having undertaken the maintenance works on these roads much earlier (para. 5.14). 8.05 Under the project, the road maintenance organization was con- solidated and labor-intensive routine maintenance operations institu- tionalized. The Government and IDA performances contributed to a better design.of the project and its implementation. However, both institutions could have been more diligent in processing procurement of the equipment, and the Government firmer in managing the construction of the training center, thus avoiding two years delay in project execution. 8.06 The project achieved its objectives in improving the conditions of the road network, and increasing RB capacity to plan, execute and control proper road maintenance operations. The project achievements con- stitute a basis for the implementation of the third phase of road main- tenance program, the proposed Sixth Highway Project, which will assist this land-locked country in pursuing its double objective of: (i) improving major road connections with its neighbors and between its regional centers and the capital and (ii) improving its institutional capabilities to carry out efficient road maintenance operations. The Sixth Highway Droject will put priority on training in general and in particular the trailing of man- agers to gradually replace the extensive technical assistance provided to RB. To avoid the shortcomings highlighted in this report (paras 3.08 and  - 16 - 3.12), the program will set specific targets to train managers, and will be carried out by consultants whose sole job will be training. In addition to the training program itself, a number of accompanying measures would be taken to firmly establish training and manpower development within RB. These include the strengthening of RB's Personnel Bureau, the setting up of a Training Unit and of a Training Coordination Committee to provide a functional link between training and personnel management on the one hand and training and the technical services on the other.  -17 A k PROJECT COMPLETION REPORT RWANDA FOURTH HIGHWAY PROJECT (Credit 769-RW) A. Bettezt ~~~gmd ~~~~p1aumd BooA TrfficO P~~~~~~~~~~~ob) (1976) tl93) I. KWdrawwd bordar 52 2. Q_ 3gwo-ta 28) 3. 31Itr- a3g 4. Ne z _952X0 121 290 5. igwS1fa 27 27 178 150 6. QiuhI`.sWM 10 10 9g 1o0 7. Glr r_q_ 54 61 M 140 S. cpAw*ywubAw 37 - 9g WaUs -~~ 78 - 10. Qh1rv4"o so58 58 65 150 11. QaLhyLt*iura 20 - 12. attarIC1uye - 93 LOD 13. Nta*&i-Kbi- 9 so 14. ftrambAD- 37 60 ("Cfxagt dus laos") Total B. Misb12