Madagascar - Fourth Highway Project

Docum_ of The World Bank FOR OFFICIAL USE ONLY Report No. 6148 PROJECT COMPLETION REPORT MADAGASCAR FOURTH HIGHWAY PROJECT (CREDIT 641-MAG) April 18, 1986 Transportation Division I Eastern and Southern African 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.  Madagascar Fourth Highway Project (Credit 641-MAG) Project Comz.etion Report WEIGHTS AND MEASURES I meter (m) 3.28 feet (ft) 1 kilometer (km) 0.62 miles (mi) I hectare (ha) 2.47 acres (ac) 1 kilogram (kg) = 2.2 pounds (lbs) 1 metric ton (m ton)= 2,204 pounds (lbs) 1 sq km (km2) = 0.386 sq miles (mi2) ABBREVIATIONS AND ACRONYMS BADEA Arab Bank for Economic Development in Africa CATP Centre d'Application des Travaux Publics CCCE Caisse Centrale de Coop ration Economique FAC Fonds d'Aide la Coop ration Economique GFR Germany Federal Republic ICB International Competitive Bidding MOW Ministry of Public Works PCR Project Completion Report voc vehicle operating cost vpd vehicles per day Democratic Republic of Madagascar Fiscal Year January 1 - December 31  THE WORLD SANK FOR OFmFCIAL USE ONLY W&shington. DC 20433 Office at ovectnt.Gonuc Owatwt EvIuttK April 18, 1986 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Madagascar Fourth Highway Project (Credit 641-MAG) Attached, for information, is a copy of a report entitled "Project Completion Report on Madagascar Fourth Highway Project (C.-edit 641-MAG)" 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 performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  FOR oMlCaL USE ONLY MADAGASCAR FOURTE HIGHWAY PROJECT CREDIT 641-WAG PROJECT COIIFLETION REPORT TABLE OF CONTENTS Page No. Preface .. (i Basic DataShe ...... ,(i Highlights ....................................................... (v) I. INTRODUCTION ..................1 II. PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL .......... 2 IUI. PROJECT IMPLEMENTATION AND COST.* ................. 4 IV. INSTITUTIO.NAL. DEVELOPMEN'To..*....*......4............ * ........ 9 V. THE ROLE OF THE GOVERNME.NT ................ ...... 10 VI. ECONCMIC REEVALJATION ..................................... 11 VII. THE ROLE OF IDA ............................................ 14 VIII. CONCLUSIONS ................4444*4* 444 *44444444 44444444444 15 ANNEXES 1. Contract Awards ........................................... 16 2. Compliance with M.jor Credit Covenants .-.-.-.-.-17 TABLES 1. Disbursement by Category ..........- .. ........... 18 2. Record of Credit Disbursements .............................. 19 3. Traffic Data: Arivonimamo-Analavory (RNI) .................. 20 4. Traffic Data: Tsiroanomandidy-Maintirano ..... ............. 21 5. Economic Reevaluation ...................................... 22 6. Comparison of Economic Rates of Return ..................... 23 Map: IBRD 11744 R This document has a rtricted distribution and may be used by recipients only in the perfomance of their officalduties. its contents may not otherwise be dislosed without World Bank authorization.  (i) MADAGASCAR Fourth Highway Project - Credit 641-MAG Project Completion Report PREFACE The Fourth Highway Project was financed with a credit of US$22.O million, which was approved on June 15, 1976, was signed on June 23, 1976 and became effective on August 19, 1976. The closing date was extended several times and finally set at December 31, 1983. The credit was fully disbursed. This Project CGmpletion Report (PCR) was prepared by Transiortation Division 1, Eastern and Southern African Projects Department. The PCR is based on data collected during the October 1984 project completion mission in Madagascar, updated traffic counts, vehicie operating costs and investment costs provided by the Government and info,mation contained in the Staff Appraisal Report, and a review of Bank files including correspondence and supervision reports. The project had two cofinancers: a) the Arab Bank for Economic Development in Africa (BADEA) and b) the Federal Republic of Germany. (i) BADEA contributed a USS5 million loan. This loan was to finance about 16% of total project cost, net of taxes and was earmarked specifically for the foreign cost of the Tsiroanomandidy- Maintirano earthworks, or 53% of these works' total cost, including taxes. (ii) Germany (FR) provided DM2.0 million (about US$800,000) for procurement of workshop tools and equipment and part of the training equipment for the Ministry of Works Training Centre (Centre d'Appl.cation der Travaux Publics). In accordance with the revised procedures for project performance audit reporting, this Project Completion Report was read by the Operations Evaluation Department (OED) but the project was not audited by OED staff. The draft report was sent to the Borrower for comments; however, none were received.  (ii) MDAGASC&R Fourth Mighvay Project - Credit 641-1MG Project Cozpletion Report KEY PROJEC DAT& Appraisal Actual or Item Expectation Current Estimate Total Project Cost (U;S$ million) 38.4 36.1 Underrun (X) 6% Credit Amount (US$ Million) 22.0 22.0 Disbursed 22.0 22.0 Cancelled - - Date Physical Canpcnent Completed 10/79 10/83 Proportion completed by: Appraisal completion date (%) 100 51% Actual completion date (%) - 100% Economic Rate of Return(X) 12.8 15 OTuR PROJCT DATA Original Actual or Plan Revision Estimated actual First lention in Files 09/05173 or Timetable Government's application Negotiations 03/29/76 Board Approval date 06/15/76 Credit Agreement Date 06/23/76 Effectiveness Date 08/19/76 Closing Date 12/31/80 12/31/82 12/31/83 Borrower Government of Madagascar Ministry of Public Works Executing agency Ministry of Public Works Fiscal year of Borrower January 1 - December 31 Follow on project Fifth Highway Project Credit number & amount (US$ million) Cr. 938 (IDA): 24.0 m Cr. 22 (EEC SAC) 10.0 m Credit Agreement Date July 30, 1979 (for both agreements)  (iii) MADGASCAB yourth HLi live Project - Credit 641-HA Project Completion Report MISSION DATA Number of Number of Staff Date of Item Date Weeks Persons Weeks Report Identification 09/09/73 1/ 2.2 3 6.6 10/05/73 Identification 01/14/74 1.2 2 2.4 01/29/74 Prepararion 08/05/74 2.4 2/ 3 7.2 09/23/74 Appraisal 03/19/75 4.0 4 16.0 06/03/76 9.8 32z2 Supervision I 12/07/76 2.0 1 2.0 12/17/76 Supervision 11 02/26/77 1.2 1 1.2 04/11/77 Supervision III 05/23/77 3.4 3/ 2 6.8 05/10/77 Supervision IV 04/13/78 2.6 2 5.2 06/14/78 Supervision V 02/26/79 2.2 1 2.2 05/03/79 Supervision VI 10/01/79 2.4 2 4.8 11/06/79 Supervision VII 05/31/80 2.0 1 2.0 06/27/80 Supervision VIII 10/21/80 2.4 1 2.4 12/01/80 Supervision IX 06/16/81 1.8 1 1.8 07/24/81 Supervision X 02/20/82 2.6 1 2.6 04/23/82 Supervision XI 06/13/82 1.4 1 1.4 07/27/82 Supervision XII 09/23/82 2.6 1 2.6 11/11/82 Supervision XIII 04/11/83 1.4 1 1.4 06/17/83 Supervision XIV 07/24/83 2.0 1 2.0 09/08/83 Supervision XV 11/06/83 2.0 1 2.0 12/16/83 Supervision XVI 03/12/84 1.4 1 1.4 04/23/84 Completion Mission 09/27/84 2.0 4/ 2 4.0 12/21/84 Sub-total Supervision 35.4 45.8 Total 45.2 78.0 1/ In conjunction with supervision of the First, Second and Third Highway Projects. 2/ Includes supervision of the Third Highways Project. 3/ In conjunction with preparation of a PCR on the Third WHghway Project, a Transport Sector Memorandum and preparation of the Fifth Highway Projeet. 4/ Ir, conjunction wi h supervision of Fifth and Sixth Highway Projects.  (iv) COUNTRY EXCHANGE RATES Year Appraisal year average 1975 1 US$ = 214.32 Lntervening years 1976 238.98 1977 245.67 1978 225.64 1979 212.72 1980 211.30 1981 271.73 1982 349.91 Completion year average 1983 430.45 Final Disbursement Year 1984 (Estimate) 615.00 Average for implementation period 273.30 (1976-1983)  (v) MADAGASCAR Fourth Uigh8ay Project - Credit 641-MAG Project CompleTeon Report HIGHILIGHTS The Fourth Highway Project was the sixth of nine projects financed by IDA in the transport sector. The project was designed to assist the Madagascar Government in reduwing transport costs on a heavily trafficked road, in opening up for development areas with high agricultural potential, and in improving overall road maintenance quality. This Project was the first that emphasized the shift from expansion of the road network to road maintenance and institution building. The overall implementation could be divided in two parts. The first consisted of the construction of RNI and bridges on the Tsiroanomandidy-Maintirano road and the second largely covered road maintenance assistance. The implementation of IDA-financed civil works generally went very well with limited delays after initial start-up and at less overall cost than expected in US dollars (but higher in current FMG). The delays in the equipment procurement were largely responsible for the delay in completing the project from 1980 to 1984. The construction of the secondary gravel road (Tsiroanomandidy- Maintirano) started in October 1978 and was initially expected to be completed by October 1981 at a cost of about US$7.0 million. In August 1979 the V_,vernment changed the road design from a secondary gravel road to a primary gravel standard road. The construction costs would have been US$35.0 million making the improvement uneconomical. The Association did not approve the change, and in 1983 the Minister of Public Works reverted the scope of remaining work (after some 60 km had been constructed to higher standards, financed by the Government) to the orig!.nal standards. The construction of the training center and procurement of training equipment were hampered by Government inexperience and procedures which interrupted the contractor's work schedule and delayed pasments. An additional probiem that caused the delay in the construction was the lack of imported construction materials. The contractor was finally li'ensed by the Ministries of Finance and Commerce to import directly the necessary construction materials and supplies. Points of particular interest arising out of this project are: (i) Disbursement almost continuously fell short of expected performance. By end-1980, the original closing date, only 51% of the IDA funds ha' been used and an four years were needed to  (vi) complete disbursements. The delays in the equipment procurement were largely responsible for the delay in completing the project from 1980 to 1984. The reason for this problem was largely institutional. (para. 3.16) (ii) Institutional development has been slow but positive. In part, this has been due to very difficult economic and political conditions over the last several years in MLadagascar. As a result of the persistence of the Association under this project (and the subsequent one" a road maintenance organization is now beginning to become operational again after the loss of key staff (mostly expatriates) in the beginning of the 1970s. Due to the strong emphasis on institutional development under this project, clear results have been achieved. (para. 4.01). (iii) During the implementation of the project the Malagasy Government faced serious limitations of resources, both human and financial. This has clearly been reflected in project implementation, where the project components most dependent on government (and in particular Ministry of Public Works) action, have been slow to complete. Purchase of equipment as an example, is normally rapidly undertaken in a highway proje't but in this pLtject has taken a long time largely due to Government procedures (para. 5.01). (iv) The working relationship between IDA and the borrower was generally good. In the last few years joint solutions were found to expedite the procurement of equipment and coordinate the activities under this project. (para. 7.03) (v) The credit covenants were not effective since they did not address the underlying causes of non-compliance. The covenants were unrealistic mostly because of the very difficult economic and political situation. These two factors at the time of appraisal and the subsequent implementation, largely explain the ineffective compliance. At appraisal these conditions were considered of limited duration, whereas in fact the economic conditions worsened. (paras. 8.02 & 4.02) f~  MADAGASCAR Fourth HiRhway Proiect (Credit 641-MAC) Project Completion Report 1. INTRODUCTION 1.01 The main long-term objective of the Malagasy Government for the transport sector has been to build a system of highways radiating from the central plateau and going around the coaz,t of Madagascar. Due to the size of the island, the road system that has evolved, responded mainly to immediate needs of a largely rural economy. This has been supplemented by two railways, coastal shipping and air transport. Nevertheless the present Government's "Charter of the Revolution" dated August 1975 indicates that it was considered essential to: a) cnnnect regional capitals gradually by all-wt.ather roads; b) complete the main Antananarivo-Moramanga-Toamasina road; c) maintain the road network effectively; and d) review transport orgenizations to improve services. 1e02 The present transport system consists of about 50,600 km of roads, of which about 4,890 km are paved roads, 5,260 km are engineered earth and gravel roads and the remainder feeder roads and tracks mostly in poor condition. There are four ports with international traffic: Toamasina, Mahajunga, Antsiranana (Diego Suarez) and Toitara and another 16 ports mainly for coastal traffic. Some of these ports are connected to the populated highland area by all-weather roads but most are not. This is also the reason for a continued dependence on air transport from some 10 major airports and 45 airstrips. Two separate rail-lines total about 860 route-km. one of which handles most of the imports from Toamasina to An tananarivo. 1.03 The Bank Group began assisting transport activities in the country in 1966. The first three projects (Credit 903-MAG of 19b6, Credit 134/Loan 570-MAG of 1968 and Credit 351/Loan 876-MAG of 1973) in the highway sector focussed on helping the Government pursue its objective of providing better road access to regional economic centers. In totel these projects financed the construction to paved standards of 708 km of roads. Two railway projects (Credit 488-MAG of 1974 and Credit 903-MAG of 1979) financed a modest increase in capacity and improvements in management and railway operations. The Second Railway Project also included replacement of outdated equipment, track renewal and improvement of telecommunications and workshops. Up to now the only port project was for tOe extension of the main port of Toamasina and the creation of a port authority to operate it (Credit 200-MAG of 1970).  -2- II. PROJECT IDENTIFICATION, PREPARATION AND APPRAISAL Identification and Preparation 2.01 The Fourth Highway Project (referred to as Highways IV in this report) was identified in September 1973 during the implementation and supervision of the previous (Third) Highway Project (Credit 351-MAG and Loan 876-MAG). Initially the project focussed on road construction including the missing link on RN6 between Ant3ohihy and Ambanja (See Map 11744R). The RN6 is the only land connection between Antananarivo and Diego Suarez (Antsiranana) in the north. Relatively early in the discussions sections of the road Tsiroanomandidy- Maintirano were added. Studies for RN5 on the east coast and Antananarivo-Toamasina Road were also considered for inclusion as a result of these early contacts but were finally deleted. As project preparation advanced, road maintenance was included in the project in addition to the Antsohihy-Ambanja road and parts of the Tsiroanomandidy-Maintirano secondary road (through assistance to local contractors). 2e02 Since lack of trained manpower and maintenance had been evident since the Third Highway Project, the Association's attention began to shift from expansion of the road network to road maintenance and institution building. This project was the first of three subsequent projects where this policy has been adopted. As a result of the first substantial oil price increase in 1973 the Third Highway Project needed additional funds. The reconstruction of about 67 km of RNl (Arivonimamo- Analavory) previously in the Third Highway Project, with realignment shortened to 60 km was added to Highways IV. Appraisal and Negotiations 2.03 After appraisal in April 1975 the main components of the project were (a) the Arivonimamo-Analavory section of RNI; (b) the upgrading of Antsohihy-Ambanja Road (RN6); (c) minimum standard improvements to the Tsiroanonandidy-Maintirano road and (d) technical assistance and training of MPW's personnel. Limited traffic gave a low economic return for the missing link on RN6 if constructed to as high geometric standards as proposed by Government. The construction of the missing link was dropped and bridges on the road were eventually finaticed under the Fifth Highway Project. The decision meeting on this basis recommended a project comprising the RNI, Tsiroanomandidy-Maintirano Road and technical assistance and training, and studies. For the Tsiroanomandidy-Maintirano road cofinancing from the Arab Bank for Economic Development in Africa (BADEA) was sought and obtained (for US$5 million) in November 1975. 2.04 During preparation of the Staff Appraisal report in the Fall of 1975 it became evident that highway maintenance suffered because of the lack of equipment. Therefore spare parts and road maintenance equipment were added to the project, and assurances concerning future maintenancebudget levels were obtained from the Malagasy government. Negotiations were held between March 29 and April 2, 1976 and the credit amount was increased from US$20 million to US$22 million to include weighing stations, portable scales and additional equipment and spare parts  for road maintenance. At negotiations, the amount of the maintenance budget for 1976 for the main highway network was established and it was agreed that previous delays in payments to contractors under the Third Highway project be settled up to December 31, }975. These were the two conditions for Board presentation, and were met without delay. 2.05 The final composition of the project, as approved by IDA on June 15, 1976 was as follows: I rinancint _ tIto"MSI M1111ftln Forteign s nsillion Itas LecaL Fortci loca-l Local Foreign Total Costs DA SAO Gov't S. Coetiatnion: 6) UP 1 722 1.178 1,900 3.36 5.48 8.84 62 6.15 - 2.69 b) Tstroaaoadidy- aulattrano Rad: 1) Btidges 380 620 1,000 1.77 2.88 4.65 62 3.25 - 1.40 it) tertbAwoJ 664 798 1,462 3.09 3.n 6.80 55 - 3.60 3.20 I S. inearlog d Super- vLston of ConsCnuction* 64 256 320 0.30 1.19 1.49 80 1.19 - 0.30 flI. Road Haineaence a) Study of Tralan8g Needs 2 18 20 0.01 0.08 0.09 90 0.08 - 0.01 b) impla1ntation 40 360 400 0.19 1.67 1.86 90 1.67 - 0.19 c) Study of Equipment ad Space Part Needs 2 20 22 0.01 0.09 a.l0 9