Peru - Highway Maintenance and Improvement Project

RETURN TO R E S T R I C T E D REPORTS DESKIC WITHIN Report No. TO-293b ONE WEEK This report was prepord for use within the Bank. It may not he published nor may it be quoted as representing tho Bank's views. The Bank accepts no responsibility for the accuracy or completeness of the contents of the report. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT APPRAISAL OF A HIGHWAY MAINTENANCE AND IMPROVEMENT PROJECT PERU October Z6, 1961 Department of Technical Operations  CURRENCY EQUIVALENTS 1 US dollar = 27. 50 soles 1 Sol = 0.0364 US dollar 1, 000 US dollars = 27, 500 soles 1, 000 soles = 36.40 US dollars  jiPP'ATISA OF A HIGHWAY MAINTENANCE AND IMPROVEvIENT PROJECT PERU Table of Contents Page No. SUMI1fARY i I. INTRODUCTION 1 II. BACKGROUIND 2 A. General 2 B. The First Maintenance Loan 2 C. Continuation in Improving Maintenance Operations 3 D. Present Status of the Roads 4 E. Control of Vehicle Loads 4 F. Future Road Development 4 III. THE PROJECT 6 A. Technical Description 6 B. Execution of the Project 6 a) Maintenance of Roads 6 b) Repaving of Roads 7 c) Replacement of Bridges 7 C. Cost of the Project 7 a) Foreign Currency 7 b) Local Currency 8 D. Economic Justification 9 IV. CONCLUSIONS AND RECOIMMENDATIONS 11 TABLES 1. Registered Vehicles in Peru from 1951 to 1960 2. Foreign Exchange Cost of Maintenance 3. Details of the Yearly Budgetary Appropriations 4. Estimated Annual Loss Caused by Poor Road Maintenance 5. Budget for Ministry of Roads CHART - State of Construction of Workshops and Garages MAP - Roads and Maintenance  APPRAISAL OF A HIGIfjAY ITLUNTEThAJCE AND IMPROVEIIENT PROJECT PERU SUII4ARY The Bank has been approached by the Peruvian Government for a high- way maintenance and improvement loan in the amount of US$10.0 million equiv- alent to finance (a) the import of additional maintenance equipment and spare parts and the services of consultants to enable the Highway Department to further strengthen and improve its maintenance operation; (b) part of the cost of a 200 km paving program and the replacement of some obsolete bridges on the Pan-American Highway; (c) the purchase and installation of traffic counters and scales for the regulation of road traffic; and (d) part of the cost of a highwTay and transport commission study. -i. In 1955 the Bank made a maintenance loan to Peru of US$5 million to help start the reorganization of its maintenance operations, the loan was a first step to place maintenance on a mechanized basis, but it was not intended to be sufficient for all roads. The program was slow to start and financial difficulties among others wTere encountered during its execu- tion. However, as a result of this loan road conditions in Peru today are better than they were five years ago. iii. The present project should be regarded as the continuation and fur- ther development of the program started with the earlier loan. It would enable the Government to place all roads which are the responsibility of the Highway Department progressively under proper maintenance, the results of which would be a much improved road system, considerably lower costs of goods transport from reduced operating costs because of better roads, and protec- tion of the country's very substantial investment in roads. Increasing awareness of the importance of road maintenance is evidenced by the Govern- ment?s larger appropriation of funds in 1961, and its willingness to make available greater sums in future years. Satisfactory assurances have been obtained that the Peruvian Government will provide the local funds needed for tihe expanded maintenance operation, for the pavement program and for the replacement of bridges. iv. The project would be executed by the Highway Department of the 'Ministry of Development assisted by foreign consultants who would be engaged for this purpose. v. As a condition of the loan, the Borrower shall enact legislation aria promulgate regulations giving to the Transport Commission adequate powers to regulate internal transport. vi. The project is sound and suitable for a Bank loan of US8)l0.0 million equivalent. A term of nine years including a three-year period of grace would be appropriate.  APPRAISAL OF A HIGHWAY MAINTENANCE AiD IMPROVENENT PROJECT P E R U I. INTRODUCTION 1. The Peruvian Government has approached the Bank to provide financial assistarnce to meet foreign exchange costs in the amount of US$10.0 million for the following purposes: a) to finance the import of maintenance equipment and spare parts and to pay for consulting engineers' services; b) to finance the paving of road sections to a length of about 200 km, mainly on the Pan-American Highway, and to replace some obsolete bridges on that Highway; c) to finance the purchase and installation of traffic counters and weighing devices; and d) to finance part of the cost of a highway and transport commission study for Peru., which is presently being carried out by a firm of foreign consultants. 2. This appraisal of the project is based on the original study for an expanded maintenance operation made by the Maintenance Division of the Highway Department and comments thereon presented by the consulting firm Brown & Root. This firm was recently engaged by the Government to assist with the reconstruc- tion of the Aguaytia-Pucallpa road (Loan 271-FE) and to help the Highway Depart- ment solve its maintenance problems. A Bank mission visited Peru in June this year to clarify and finalize the information contained in the reports by the Maintenance Division and the Consultants.  - 2 - II. BACKGROUND A. General 3. The unique topographic conditions of Peru, with the Andes mountains running north-south parallel to the coast and dividing the country into three distinct zones, the dry and desert-like coastal strip to the west, the vast undeveloped tropical jungle to the east and the high mountainous plateaus in between, has made highway construction and maintenance in Peru a difficult ar.d costly task. It has prevented the development of an integrated railway system, making transport still more dependent on a good and properly maintained road network. 4. The road network in Peru consists today of about 41,000 km of high- ways, roads and trails, which according to the type of surfacing can be listed as follows: Paved roads (asphalt pavement) 3,600 km Gravel roads with base 9,900 " Dirt roads without base 10,500 tt Trails 17,200 " Total 41,200 km The main network of roads is shown in the general map attached. 5. The number of trucks and cars has more than doubled during the last ten years (Table 1). The trend is towards a further sharp increase in the coming years, which makes proper road maintenance all the more important. 6. Maintenance, construction and improvement of roads in Peru are the responsibility of the Highway Department of the lMinistry of Development. Sep.. arate divisions within the Highway Department are in charge of maintenance, planning and design, and construction. For maintenance purposes the country is divided in 25 districts, each under a district engineer and staff, for operations in the field. B. The First Maintenance Loan 7. On August 5, 1955, the Bank made a loan (127-PE) of US5 million equivalent for a maintenance program for Peru's highways and roads, which en- abled the Government to purchase equipment and spare parts, tools and machin- ery for workshops, and to pay for consultants' services. The allocation for equipment in the loan was not intended to be sufficient for maintaining a'l roads, but was an initial amount for maintaining the most important roads iJi the network. The loan became effective on September 8, l955, but maintenance operations in the field did not start until the beginning of 1957, mainly because of delays in providing the necessary amounts of local funds. 8. The funds allocated each year since 1957 have steadily increased in amount, but never reached the level required for proper operation of the equip- meent purchased. Shortage of local funds has also caused depletiTn of the  - 3 - original stock of spare parts and tires, bought with the loan funds, to such an extent that today about 4b0o of the equipment is idle due to lack of parts. Ihe erection of repair shops in the districts was delayed until 1959,, and is still not fully completed; the main reason was difficulties encountered in obtaining title to land sites in some districts. (See chart attached for present construction status.) 9. This loan was a first step to organize routine maintenance operations on a mechanized basis. It enabled the Highway Department, with the assistance of consultants, to improve the operation of the Illaintenance Division at Lima headquarters, especially for equipment and accounting; the latter has naw been fully mechanized by the introduction of accounting machines. However, main- tenance operations in the field did not develop satisfactorily, partly because local funds were not provided as needed, and partly because the reorganization of the districts' maintenance procedures from hand to mechanized operations was not pursued to completion. The program of this first loan did not achieve the full measure of results exDected, but in spite of the many problems, there has been an improvement in road conditions compared with five years ago. 10. In 1961 the Government has increased the amount of local funds to continue the maintenance program, and theerection of repair shops is now progressing. Furthermore, the importatce of road maintenance is now more fully realized in Peru. Therefore, the conditions for implementation of the second step in maintenance by a loan at this time appear to be favorable. The proposed maintenance loan must be regarded as a continuation of the efforts made previously, and the purpose is to further strengthen and expand the main- tenance operations to obtain eventually adequate maintenance of all roads un- der the Ilinistry's jurisdiction. C. Continuation in Improving Ptaintenance Operations 11. The closing date of the first maintenance loan was December 31, 1959; the service of the consultants ceased a month earlier. iWhen, therefore, during the latter half of 1960 the Loan 271-PE for reconstruction of the Aguaytia- Pucallpa section of the Central Highway was being negotiated by the Bank, the Government undertook to improve maintenance operations and to seek again the advice and assistance of consul-ting engineers for two years. 12. As the decree authorizing the loan for the Aguaytia-Pucallpa project did not permit the Government to borrow for maintenance purposes, the Govern- ment said it would provide funds equivalent to US$700,000 in its 1961 budget for the purchase of urgently needed spare parts, some supplementary equipment, and to pay the consultants' fees. 13. The consulting firm of Brown & Root, which was engaged for the Aguay- tia-Pucallpa road, was also retained to advise on maintenance for a period of two years. Since the beginning of 1961 two engineers have been assigned to this task and they have helped the ilaintenance Division prepare a list of spare parts and equipment for which orders are now being placed. They appraised the Highway Department's proposal for an expanded maintenance operation, which prepared the ground for the Government's request for a second maintenance loan.  - 4 D. Present Status of the Roads 14. Although the condition of roads in the country has improved as a result of the first maintenance loan, too many are still in an unsatisfactor,r condition and the maintenance operation in the field must improve and expand considerably to become fully effective. 15. The main highway in Peru, the Pan-American Highway, running north to south along the coast, has during recent years been improved in many sections by widening and repaving where the old road was too narrow and the asphalt carpet had cracked because of lack of preventive maintenance. There are still about 150 kmi which urgently need repaving and a further 450 km where a seal coat is required. 16. The Central Highway from Lima to Pucallpa is in bad condition, except for the first 150 km from Lima to Mlorococho which has been recently rebuilt and paved. Bank Loan 271-PE will help finance the reconstruction of the Aguaytia- Pucallpa section and engineering of the Hlorococho-Aguaytia section, which will be rebuilt at a later date. 17. As to the other roads, mostly gravel and dirt roads penetrating the Andes mountains in a west-east direction, lack of proper maintenance has left the roads with rough surface, potholes, clogged ditches and culverts (if any), making a ride over such roads time-consuming and costly. Most of the roads need deferred maintenance work to re-establish the minimum standards to which they were constructed, before they can be placed under routine maintenance. 18. Resurfacing such roads by the placing of additional gravel is the first requirement. Cleaning of shoulders, ditches and culverts should also be done. In many sections ditches and culverts do not exist and must there- fore be built. 19. A number of bridges on the Pan-American Highway are still one-lane and too weak for the present traffic load. A number have been replaced in recent years by wider and stronger structures but many still have to be rebuilt. E. Control of Vehicle Loads 20. With the increased number of trucks operating each year, the control of vehicle loading has become important. There is a strong tendency among the truck operators to overload their trucks, which, if not curbed in time, will be detrimental to the condition of the roads. The Peruvian Congress has re- cently passed a law setting up a Transport Coimmission to regulate inland trans- port. The reglamentos which will implement this law set out specifically the manner in which the control of vehicle loading would be undertaken. F. Future Road Development 21. To provide a basis for decisions with respect to future investments for highway development, the Government has hired the firm of Coverdale and Colpitts to help prepare an over-all highway program for Peru. The consultant3'  - 5 - report will be available by the end of 1961 and will include recommendations for a highway program for the next ten years, taking into account, among other things, the technical capacity of the Highway Department of the M4inistrj of Development and Public Works to administer and carry out road planning, construction and maintenance. The report also includes recommendations for the administration of the Transport Commission which has recently been created to regulate inland transport. The Bank is already financing half of the foreign exchange cost of the study as a technical assistance grant; the bal- ance is to be financed from the loan.  - 6 - III. THE PROJECT A. Technical Description 22. The project is: a) The continuation of the expansion and strengthening of the Highway Department's Maintenance Division so that the coun- tryfs road network, which is the responsibility of the High- way Department, can gradually be placed under proper routine maintenance after the roads, where needed, have been rehabil- itated. b) The repaving of about 200 km of roads in different parts of the country, consisting of scarifying present bituminous pavement, strengthening of base where necessary, and applying a double-surface treatment to the carriageway; and the replace- ment, on the Pan-American Highway, of bridges which are too weak to carry the expected load of traffic. c) The installation of traffic regulation devices; and d) Consulting services for the highway and transport commission study. B. Execution of the Project a) Maintenance of Roads 23. The continuation of the maintenance program and its expansion -in volume of work would be undertaken by the Maintenance Division of the Highway Department. As sufficient experience in proper maintenance operations is still lacking, the Government shall continue to use the services of a qualified consulting firm with broad experience in road maintenance for a period of two years. 24. The task of such consultants will be to advise the Maintenance Division on the further strengthening of its headquarters office in Lima, on continuation of the reorganization of the district offices in the field, in- cluding the actual maintenance of the roads, the operation of repair facilities (shops and garages) for equipment, and the improvement of local administration. Manuals describing the maintenance operational system should be provided, emphasizing the need for proper planning of operations in the field, and they should include an adequate cost accounting system. 25. To help establish work costs, a rental charge system shall be in- troduced for equipment based on depreciation and the costs of maintenance, repair, fuel, etc. The introduction of such charges for equipment will faciL- itate accurate costing for different types of maintenance works, and make available essential data for the forecast of future maintenance budgets.  - 7 - b) Repaving of Roads and Replacement of Bridges 26. About 200 km of paved roads, mainly the Pan-American Highway, urgently need resurfacing because the existing asphalt carpet has cracked beyond repair due to neglected maintenance. The old pavement is to be scari- fied and the base strengthened by applying a new 15-cm base course before the new pavement is applied. Contrary to the past practice of applying an expensive two-inch hot carpet pavement, it is now proposed, at about half the cost, to apply a double-surface treatment, which should be sufficient to carry the increased traffic in the near future. 27. Due to the size of the work involved (200km), the placing of the pavement will be done under contract, instead of being executed by the Mainte- nance Division's own forces. 28. About 30 of the present bridges on the Pan-American Highway (13 north and 17 south of Lima) have become obsolete. They are one-lane bridges of too weak capacity and it has been necessary to restrict the loads of the trucks using them, which is a hindrance to the free flow of traffic. The Ministry is therefore planning to replace these bridges with two-lane struc- tures capable of carrying increased loads. c) Installation of Traffic Regulation Devices 29. The usefulness of new regulations limiting vehicle weights and axle loads would be greatly reduced if no adequate means to enforce such regulations were provided. Accordingly, it is proposed to procure weighing devices and policing facilities. Traffic counting devices will also be provided. d) Highway and Transport Commission Study 30. As previously mentioned, this study will give a pattern for future highway development and regulation of transport (paragraph 21). C. Cost of the Project a) Foreign Currency 31. The foreign exchange cost of the project is estimated at US$10.0 million equivalent, broken down as follows: 1. Road maintenance equipment, spare parts and supplies US$7,015,000 2. Repair shops and garages 216,0C0 3. Consultants' fees 700,CCO 4. Paving of road sections 420,000 5. Reconstruction of bridges 600,0C0 6. Traffic regulation devices 100,000 7. Highway study 175,000 8. Contingencies 774,000 Total UTS$10,0001,0CO  -8- 32. The attached Table 2 contains details of the foreign exchange tost of the maintenance program (items 2 and 3 above). 33. During the negotiations for Loan No. 271-PE it was intended that a sum of US$700,000 would be included for the purchase of spare parts needed to put into operating condition the now idle equipment bought with the proceeds of the first maintenance loan (Us$500,000), and to provide for consultants' services (US$200,000). As the Peruvian legislation authorizing the Government to contract for Loan No. 271-PE did not specifically permit borrowing for road maintenance purposes, the amount had to be omitted from that loan, but the Government undertook to make the equivalent available in the national budget for 1961. This has been done, and the Government is fulfilling its undertaking. However, in view of the circumstances in whicha it was given, and of new legislation having been passed to enable the Government to borrow for road maintenance, it is proposed to provide coverage of the US$700,000 in the presently proposed loan. Allocation has been made accordingly in items 1 and 3. 34. For the services of a consulting firm over a two-year period, esti- mating a team of four or five foreign experts, US$500,000 has been included as the foreign exchange cost. 35. The cost of 200 km paving program, including a 15-cm base course, has been estimated at US$1.4 million (US$7,000 per km), of which 30,o or US$L20,000 would be foreign exchange. 36. The cost of replacing the 30 obsolete bridges on the Pan-American Highway by bridges of the reinforced or prestressed concrete type would be about US$2.5 million; about 24% or US$600,000 would be needed in foreign exchange for the import of steel and some accessories. However, the final type and cost estimate of the new bridges have not yet been determined and will be agreed later on between the Bank and the Borrower. 37. An amount of US$100,000 has been included for the procurement of traffic regulation devices and the training of the personnel to be responsible for the installation and operation of such devices. 38. In January this year, a contract was signed between the Peruvian Government and the consulting firm of Coverdale and Colpitts for a highway and transport commission study of Peru. The study was sponsored by the Bank, which will finance up to US$175,000 equivalent as a technical assistance grarnt. The remainder of the cost is to be paid by the Government, which has asked for the sum of US$175,000 to be included in the proposed loan. 39. The allowance for contingencies, US$77L,000 equivalent or about 9% of the estimated cost of the principal items is intended to cover possible variations in the price of the equipment and supplies required for the mainte- nance program and in the ultimate cost of the imported materials for the briages" b) Local Currency 40. The estimated annual local currency requirements for execution of the expanded maintenance operation, for paving 200 km of roads, and for the reconstruction of obsolete bridges on the Pan-American Highway, are shown in1 the table below:  - 9 - 1962 1963 1964 1965 1966 Total - (n -milli T S oles) Maintenance 160 164 172 185 195 876 Paving 13 13 - - - 26 Bridges 10 15 15 15 - 55 Total 183 192 187 200 195 957 41. Included in the allocation for maintenance is an allowance for depreciation of equipment (in the first year the allowance would be about S/. 34 million of S/. 160 million, and would increase slightly thereafter), which from now on can be accumulated and the balance carried forward at the end of each fiscal year., The indicated increase in the funds needed for maintenance operations in coming years bakes account of new roads that will be transferred to the IIaintenance Division each year for service, and an increase in the standards of certain roads necessitated by greater traffic. l2. The appropriation for maintenance in the budget is clearly desig- nated to insure its use for this purpose only. It should be noted that the amount of S/. 160 million and later years' allocations for maintenance, do not include overhead or salary costs for technical and managerial personnel in the field (see Table 3). 423. The budgetary allocation for the Directorate of Roads for the next four years, as proposed by the Ministry, and tentatively accepted by the Government, is shown in Table 5. It will be noticed that the revenues from gasoline taxes and the "Timbre Unicol", which are earmarded for execution of the national highway plan 1958/63, do not fully cover the proposed expenditureE, The deficit of about S/. 50 million in 1962, increasing to S/. 80 million in 1965, would have to be met from the regular budget. 44. The Peruvian Government has indicated its willingness to undertake such additional allocation in order to balance the Directorate's income and expenditures, for as long as the construction of new roads and debt service make this necessary. 45. The allocation for maintenance amounts to about 36% of total expendi- tures. The amount for maintenance includes depreciation of equipment based on the straight-line method, and this amount can be carried over from one budget- ary year to the next. The local funds for the pavement program and the re- placement of obsolete bridges would be made available from the total amount indicated for road construction. D. Economic Justification of the Project 46. Road transport is of special importance to Peru because of the topography of the country, which creates obstacles to an extensive railroad network and makes the roads the main means of transport in the country.  - 10 - 47. The importance of roads in Peru is reflected in the sharp increase in the registration of motor vehicles during recent years. The increases during the last 10 years have been considerable, registered cars increasing from 34,000 in 1951 to nearly 80,000 in 1960, trucks from 26,000 to 57,000, and buses from 3,200 to 7,000. 48. The condition of the roads has not improved satisfactorily in relation to traffic growth because of lack of maintenance. Although improve- ment resulted from the first highway maintenance loan in 1955, the present condition of most of the roads causes umdue wear to vehicles, the effect of which is indicated by the great variation in freight rates with the condition of the roads to be traveled. This variation can be as much as 100% for individual commodities. 49. An improvement of road conditions by proper maintenance would induce a decrease in trucking rates and in the cost of goods transported because of the reduced cost of upkeep for trucks, savings in fuel and operating costs, the longer useful life of vehicles and more rapid turnabout. There would,of course, be substantial benefits for the general economy from savings in the production of goods, reduced inventories, resulting from the ability to move things faster over better roads throughout the year. It is not feasible to give a figure for such savings. It is possible however, to estimate roughly what the savings would be for trucks and passenger cars and tires if their service life were prolonged because of better roads. We have made such an estimate on the con- servative assumptions, a) that tires would last three years instead of two, passenger cars ten years instead of eight, and trucks six years instead of five, and b) that one-third of the car-miles and one-half of the truck-miles are currently being made over bad roads (see Table No. 4), with the result of an annual saving of $7 million. This calculation does not take account of savings in actual operating costs which concern normal maintenance, fuel and lubricants consumption, and conceivably wages. The possibility of using lighter vehicles on better roads, with attendant savings in prime cost and operations, is a further consideration. 50. There can be no question that the savings to be obtained from adequate road maintenance are greater than current expenditure for such maintenance. At the anticipated level of S/.160 million (US$5.8 million equivalent) maintenance cost in Peru, which would be adequate to maintain the road system in good condition, provide for some deferred maintenance and allow for equipment depre- ciation, the expenditure is much less than the savings that would result alone from the increased service life of vehicles and tires, as indicated above. 51. Today a substantial part of the expenditure on Peruvian roads is due to past lack of proper maintenance, which has allowed deterioration that for some time heavy or deferred maintenance will be necessary to overcome. It ie self-evident that the investment in new roads and in works of restoration must be protected. 52. The first maintenance loan (US$3.8 million for equipment) was the initial step in essential mechanization of the maintenance operation of the Highway Department. The proposed loan is the necessary second step which will enable the Maintenance Division, by properly planned expansion, to achieve maintenance of the entire road network under its 2urisdi-otion,  - 11 - IV. CONCLUSIONS AND RECOh1EINDATIONS 53. Assistance to the Peruvian maintenance organization is essential to further strengthen and improve the maintenance operation of the Highway Department, in order to bring all roads under proper maintenance. 54. Proper maintenance of roads will considerably lower the cost of transportation of goods and also protect the country's investment in roads. 55. The program for repaving 200 km of asphalt roads is necessary to re-establish the original standards on sections of the primary road network. 56. The replacement of obsolete bridges on the Pan-American Highway would assure the free flow of traffic. 57. Satisfactory assurances have been obtained that the Peruvian Government will provide the local funds needed for the expanded maintenance program, for the paving, and for the replacement of bridges. 58. As a condition of the loan, the Borrower shall enact legislation and promulgate regulations giving to the Transport Commission adequate powers to regulate inland transport. 59. The project is sound and suitable for a Bank loan of US$10.0 million ecuivalent. A term of nine years including a three-year period of grace would be appropriate.  Table _ HIGEWAY MAINTENANCE AND IMPROVEMENT PROJECT PERU Registered Vehicles in Peru from 1951 to 1960 Year Cars Trucks Buses Total 1951 34.427 26.191 3.231 63.849 1952 37.526 28.985 2.943 69.454 1953 49.373 36.103 4.324 89.800 1954 51.471 39.940 4.945 96.356 1955 54.415 43.616 5.530 103.561 1956 54.64o 44.180 5.645 1o4.465 1957 62.120 45.930 5.834 113.884 1958 69.704 51.507 6.413 127.624 1959 73.230 53.546 6.657 133.433 1960 79.822 56.908 7.050 143.780  Table 2 HIGHWIAY MIGNTENANCE h\D DIPROVEIENT PROJECT PERU Foreign Exchange Cost of Maintenance Program Road 14aintenance Equipment, Spare Parts and Supplies New equipment US$5,609,400 Spare parts for new equipment 56o,6oo Spare parts for existing equipment 500,000 Tires (large sizes) 100,000 Blastirg caps, anvils, picks and shovels 80,000 Bailey bri-dges for emtergencies 135,000 Cor-rugated metal pipes (large sizes) 30,000 Total US$7,015,000 Repair Shops and Garages Tools and machinery for Lima, Cuzco, Lambayeque and Arequipa shops 110,000 Prefabricated build:ings and tools for garages at Abancay and Milagro shops 36,000 Prefabricated buildings, tools and equipment for six newi garages 70,000 Total US$ 216,000 Consultants' Fees Fees committed 200,000 New allowance 500,000 Total US$ 700,000 Grand Total US$7,931,000  Table -3 HIC-GHaY NaINTE.'lCE 1.NID IIP-CVP'E 1hT PRCJECT PERU T;Mical Form of Annual Bud at (in Soles) A) Annual oncratine Cost of EauQirmnt - Operators,6% of total value 16,000,000 Fuel and lubricants, 8i; of total value 22,000,000 Sparc parts, 85 of total valuo 22,000,000 Maintonance and ropair (labor), 5% of total valuo 14,0oc,00o Depreciation, 12.5% of total value 34,000,000 Sub-total 108.000,000 B) Labor and Material Cost Labor cost 24,000,0OO IMatorial cost 289000,000 Grand-total 160,000,000 Note: Total value of equipment available (new and old) USO$l0,200,000.  Table 4 HIGHW,A1LY HAI NITENCE AM1D Ii'PROVEINT PROJECT PERU Estimated Annual Savings Caused from Better Road ilaintenance Passenger Carsl/ Assuming tires wear out in 2 years instead of 3 years 80,000 x $6o = $4,800,000 1/3 (4,800,000 -42800,000)= 800,000 = 3 250,000 2 3 3 Assuming cats wear out in 8 years instead of 10 years 80,000 x ;$3,000 = $240,000,000 1/3 (240,000,000 - 240,000,000) = 6,000,000 = 2,000,000 8 ~~10 3 Trucks-/ Assuming tires wear out in 2 years instead of 3 years 60,o00 x j150 = p9,CCO,O0O z (9,000,000 - 9,000,000 = 1,500,000 = 750,000 2 3 2 Assuiming trucks wear out in 5 years instead of 6 years 60,000 x 44,0O0 = 4240,000,000 (240,ooo,ooo - 2h0,000,000) = 8,00o,o0o = 4,000,000 5 6 2 _ Total estimated saving for both cars and trucks i 7,000,000 g/ On the basis that 1/3 of the car-miles are estimated to be made on bad roads. 2g On the basis that 2 of the truck-miles are estimated to be made on bad roads.  Table 5 HIGHWAY MAINTENANCE AND INPROVEMENT PROJECT PERT Budget for Direccion de Caminos 1962 1963 1964 1965 (in million soles) Income Gasoline taxes 267.5 281.5 294.7 310.1 Timbre Unico 106.1 111.4 117.4 122.9 Budgetary allocations 49.9 69.0 72.2 80.0 Total 423.5 461.9 484.3 513.0 ExPenditures Debt service, repayment loans, etc. 119.7 91.0 94.5 75.5 Administration 40.0 45.0 50.0 55.0 Maintenance 160.0 164.0 172.0 185.0 Construction 103.8 161.9 167.8 197.5 Total 423.5 461.9 484.3 513.0 Percentage of maintenance cast related to total revenues 38% 36% 36% 36%  PERU DIRECTORATE OF ROADS MECHANICAL EQUIPMENT DIVISION STATE OF CONSTRUCTION OF WORKSHOPS AND GARAGES As of June 15, 1961 0' 0 .0~~~~~~~~~~~~~ X. r - D S >. .f 0 0 ~ ~~~~ ~~0 Or 0*..0 6 - o C).2 - C -0 ~ - 0 ~ ~ -C U~ 0 0 0.- o 0o E m* ~ ZZmOJ 2j~u ~ - CO cno w CL o- _ wu TRUJ I LLO B-C__ _ __ _ _ I C AI B-C ====== PIURA - ----- TUMBES B-C ====== MUARAS A CAJAMARCA A CHICLAYO B-C _ ____ H UANCAYO B-C__ _ _ _ _ _ HUANUCO B-C ___ AREQUIPA In B - C Negotlatio_ B-C PUNO B-C = - = I F__ TACNA B-C__ _ MADRE DE DIOS = = = = - = A AYAC U C HO = = = = = = = = A-GARAGE 8 C-WORKSHOPS AUGUST 1961 IBRD 867R  B ~~~~~~~~E C U A D O R wi8 C O L O M BI Aj __- ECUAORj T6uMS gos Ve,des 4 N urimoguas ________ ~ ~ ~ ~ ~ ~ ~ ~ ~ %' ~~~ Juan ui OCTOBER A961 D EIWDRKZ ario~=!on cdi OCT0ER 961IBR-91