Haiti - Sixth Highway Project

Document of The World Bank FOR OFIlCIAL USE ONLY MICROFICHE COPY Report No. 10547-HA Type: (PCR) COUKIS, B./ X31708 / T9 102/ OEDD3 PROJECT COMPLETION REPORT HAITI SIXTH HIGHWAY PROJECT (CREDIT 1220-HA) APRIL 17, 1992 Infrastructure and Energy Division Country Department III Latin America and the Caribbean Region 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.  Fiscal Year October 1 - September 30 CURRENC' EOUIVALENTS January 1991 Currency Unit = Gourde (G) Official Exchange Rate: US$1 = G 5 Free Rate: US$1 = G 7.5 ABBREVIATIONS CCCE - "Caisse Centrale de Cooperation Economique"' (Central Economic Cooperation Fund) IDA - International Development Association IDB - Inter-American Development Bank HTPTC - "Ministere des Travaux Publics, des Transports et des Communications" (Ministry of Public Works, Transport and Communications) PCR - Project Completion Report PPAR - Project Performance Audit Report SAT - "Service Autonome des Transports" (Autonomous Transport Service) SEPRRN - "Service D'Entretien Permanent du Reseau Routier National" (National Permanent Road Maintenance Service) SCS - "Service de Construction et Supervision" (Construction and Works Supervision Department) UNDP - United Nations Development Programme USAID - Uaiited States Agency for International Development  THE WORLD BANK FOR OMCIA US OnL Washington, D.C. 2iL33 U.S.A. OUit* of Oitr.cw.Gnuai Opmt.tm. IVehaWwNi April 17, 1992 NINUA1SDUN TO THE EXECUTIVE DIRECTORS DTHE PRESID* NT SUBJECT: Project Completion Report on Haiti Sixth Highway Project (Credit 1220-HA Attached, for information, is a copy of a report entitled "Project Completion Report on Haiti Sixth Highway Project (Credit 1220-HA)" pvipared by the Latin America and the Caribbean Regional Offico. No audit of th.'s project has been made by the Operations Evaluation Department -at this tme. Attachment This docunent bu a restricted distribution and may be used by recipin only In the performance of their officil duties. It contents may not othefwis be discosd without World Bank autborisetion.  FOR OFmFCIAL USE `LY =QJECT COMPLETION REPORT HAITI SIXTH HIGHWAY PROJECT (CREDIT 1:20-HA) TABLE OF CONTENTS Paoe No. Preface Evaluation Summary ii I . PROJECT REVIEW FROM BANK'S PERSPECTIVE A. Project Identity B. Background 1 C. Project. Rationale 3 D. Projeot Objectives and Description 3 E. Project Design and Organiz&tion 5 F. Project Agreements Reached 5 G. Projeit Implementation 7 H. Project Results and Sustainability 9 I. Borrower Performance 11 J. IDA Performance 12 K. Lessons Learned 12 II. PROJECT REVIEW FROM BORROWER'S PERSPECTIVE 15 III. STATISTICAL INFORMATION 16 A. Related Bank Projects 16 B. Project Timetable 17 C. Credit Disbursements 18 D. Project Implementation and Results 19 E. Project Costs and Financing 21 F. Studies 22 G. Compliance with Covenants 23 H. Staff Inputs and Missions 25 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.  - i - PROJECT COMPLETION REPORT HAITI SIXTH HIGHWAY PROJECT (CREDIT 1220-HA) PREFACE 1. This is the Project Completion Report (PCR) of the Sixth Highway Project, for which Credit 1220-PA in the amount of USS14.0 million was approved on April 1, 1982. The credit account war fully disbursed on July 12, 1988, more than three years behind schedule. 2. The PCR was prepared by the Infrastructure and Energy Operations Division of the-Latin America and Caribbean Regional Office. It is based, inter alia, on the Staff Appraisal Report; the Credit and Project Agreements; supervision reports; correspondence between IDA and the Borrower; and internal IDA memoranda. On April 20, 1990, IDA sent the Borrower Parts I and III. Since then, they have been continuously requested to prepare Part II, but as of May 30, 1991, no reply had been received.  - ii - PR-OJECT CONPLETION REPORT HAITI SIXTH HIGHWAY PROJECT (CREDIT 1220-HA) EZLATION SUI(ARk' ob1ectives Li The Project was the sixth in a seriea designed to foster the execution of high-priority road and bridge maintenance and rehabilitation works, and to continue IDA's long-term program of institution building in the transport sector. It was based on an agreed five-year Road Investment and Maintenance Program (1981-1986), and aimed at complementing on-going USAID and IDB-supported programs. Implementation Experience Li. Various problems plagued both the project and the whole road maintenance program of the Government almost immediately after effectivnness. USAID assistance to the national road maintenance department of MTPTC, ceaeed one year after Credit 1220-HA became effective. The lack of counterpart funds for the project, exacerbated by the unwillingness of the Government to increase diesel fuel taxes, affected project implementation, despite IDA's agreement to establish a special action program to front-load disbursements. Social unrest and riots began to occur in Haiti in early 1984. Cabinet reshuffles and staff changes occurred regularly from then on. Disputes with the contractor on major rehabilitation works further delayed project Implementation. The Credit Closing Date was extended by three years (from June 30, 1985 to June 30, 1988). Even so, results by 1988 cannot be compared with plans set out in the 1982 Credit Agreement, largely because most of the planned outputs had to be either modified drastically or dropped altogether. ILL. The country's problematic situation during project implementation impacted powerfully upon the civil service. The Ministry of Transport, Public Works and Communications (MTPTC) not only lost large volumes of external assistance but also suffered repeated turnover in its management. As a result, works undar the project were implemented suboptimally, records leave much to be desired, and many tasks which had been planned to be done under Highways VI were postponed to the follow-on project. At appraisal, total project cost was estimated at US$19.2 million; actual project cost is US$17.9 million, but the two sums are not comparable because of the drastic modifications of the project scope that occurred in the meantime. Also, lack of traffic data on the main components precludes the possibility of calculating economic rates of return that might claim to be reliable. Since road rehabilitation work was completed under the follow-on project (Transport  - iii - VII) the most meaningrul time to reestimate ERRS will be when the PCR for that project is prepared, some time in 1992. Results and Sustainability iv. The technical and financial aspects of project preparation were thorough, but little attention was paid to institution building, especially of the MTPTC's maintenance department, which was performing well at the time of appraisal but was heavily dependent on USAID technical assistance and financial sup-ort. An a result of (i) existing unattended weaknesses within MTPTC, (ii) th. withdrawal of USAID's financing, and (iii) frequent staff changes, within both the Government and IDA, little sustainable institutional strengthening has occurred as a result of the project. As to its physical achievements, the project prevented further transport bottlenecks by rehabilitating priority bridges and culverts, but the major road to be rehabilitated under the project deteriorated markedly due to delays in completing the rehabilitation works and generally poor maintenance. The flow of benefits from the project's physical components is therefore unlikely to be sustainable unless adequate maintenance funding is reestablished quickly. Findings and Lessons Learned V. The project was implemented during a particularly turbulent period in the history of Haiti (1981-1988), marked by frequent changes in administration, the withdrawal of foreign aid, tight budgetary constraints and civil unrest. This situation clearly unsettled the overall working environment and the institutional set-up in the country, and accounted for part of the failure of the project. The distressing conclusion of the PCR is that the project did little to maintain the institutional capacity of the Ministry during that period. vi. This raises a question as to whether IDA was right in continuing to disburse the credit and extending the closing date repeatedly, in the face of widespread non-compliance with major covenants. Should it not have suspended disbursements, or at least cancelled the undisbursed balance at the original closing date? While this may be debatable in the country context of the time and in view of the large cost involved in interrupting rehabilitation and maintenance operations, in general, a more important question is why, at a minimum, project priorities were not revised in the light of drastically changing circumstances in the country and the sector. vii. In general, both the project experience and the present situation call for: (a) simple project objectives in line with the limited capacity of the Ministry;  (ivj (b) flexible project design (i.e. several small components) so that the project can be adapted to changing circumstances, and/or making procurement in the later years conditional on satisfac'.ory performance in the prior ye'rs; (c) increased focus on instituticinal building, entailing especially a close review of the Ministry's future role in road maintenance activities and exploration of a possible stronger participation of the private sector, coupled with necessary reinforcement of MTPTC's supervision capacity; (d) a close review of fiscal and budgetary mechanisms to enable adequate funding of road maintenance by the Government; (el integration of any project within a realistic c /1 program of Ministry, in line with the Government's e. , priorities and '=^ncing cc istraints; and (f) t. t superv `on by IDA.  PROJECT COMPLETION REPORT HAITI SIXTH HIGHWAY PROJECT (CREDIT 1220-HA) PART I: PROJECT REVIEW FROM IDA'S PERSPECTIVE A. Proiect Identity 1. Sixth Highway Project Cradit 1220-HA Latin America and the Caribbean Haiti Tvansport Sector Highway Subsector B. Background 2. Up to the 1960's, Haiti's road network was rudimentary, efforts having been concentrated on a few primary roads such as the Northern and Southern Roads, linking Port-au-Prince with Cap Haitien and Les Cayes. As the population grew and the poor roads serving the secondary towns and rural communities became an obstacle to the development of an integrated national economy, the Government decided to maintain and reconstruct the existing network and strengthen local road maintenance capacity. In the course of the 1970's, some progress was made to improve road transport conditions, but major shortcomings persisted in the areas of maintenance and the institutional environment of the sector. 3. The first Five-Year Development Plan (1971-76) gave priority to the development of the productive sectors of the economy, particularly agriculture, but also prepared the ground for economic and technical studies for the reconstruction of the transport infrastructure. Starting in 1972, the country received substantial assistance from multilateral agencies for (i) reconstructing the road network; and (ii) upgrading road maintenance and improving port infrastructure. Major road reconstruction projects, focussing mainly on the rehabilitation of the Northern Road and major bridges, and supported by IDA and IDB, were launched in 1974. Between 1975 and 1977, the Government, with a UNDP grant of US$600,000, contracted a National Transport Study with a consulting firm. IDA acted as an executing agency. The study recommended a transport policy which would give priority to: (a) improved maintenance and selected upgrading and rehabilitation of existing roads; and (b) improved coastal shipping to achieve a more even distribution of economic activity between Port-au-Prince ind the provincial towns. Those recommendations were adopted in the second Five-Year National Development Pla-  (1976-1981), which provided a basis for three IDA projects, including the Sixth Highway Project under review in this report. 4. Over the past 25 years, the Bank Group has extended one loan and seven IDA credits to Haiti for its transport sector. The first operation in the sector was Loan 141-HA (US$2.6 million) for a Maintenance and Rehabilitation Project, involving about 1,000 km of roads, which became effective in 1956. The second operation (Credit 32-HK-. USS350,000, in 1962) was an Interim Highway project to complete works undertaken under the first project. The completion reports of these projects concluded that their timAly implementation was hampered by political and managerial problems. The Third and Fourth Highway Projects (Credit 478-HA, US$10 million, 1974 and Credit 556-HA, US$20 million, 1975) included the reconstruction of the Northern Road and the rehabilitation of a number of bridges. The projects achieved their main objective of providing all-weather access between the principal port in the Northern Region, Cap Haitien, and the capital, Port-au-Prince, as well as linking the Artibonite Valley to the most important food-consuming centers. The PCR for these projects presented reestimated economic returns of 25 and 41% respectively, as oppc...d to 20 and 35% estimated at appraisal. The PPAR indicated differences of opinion between the Government and IDA on the design standards to be used for reconstruction, particularly regarding the bearing capacity of the pavement. In view of the limited funds available, the Association insisted that the Northern Road be rebuilt to modest standards, conforming to the needs of traffic anticipated in the near future. The Government undertook to install and operate weigh scales to check overloading between Port-au-Prince and Cap Haitian, but full implementation of this undertaking was severely delayed.' Following the road's completion, traffic (particularly of trucks) increased much more rapiely than anticipated and the excessive axle loads precipitated the need to strengthen certain sections of the road only a few years later. 5. The Fifth Transport Project (Credit 807-HA, US$15 million, 1978) comprised a road and bridge component and a coastal shipping component. The road and bridge component provided for the upgrading and repaving of 54 km of roads in the Northern Plains region, a feeder road to the port of Jeremie, and the reconstruction of two major structures, the Hyppolite and the Three Rivers Bridges. The coastal shipping component included a pilot port project to provide new terminals for shallow draft vessel1- at Port-au-Prince, Port-de Paix and Jeremie at a total cost of USS3.5 m liton. The PCR highlighted weaknesses in project supervision throughou- execution and noted that no IDA mission visited the project for one whole year. It judged 'hat most of the road construction deficiencies could have bean avoided by ti..ely monitoring by the consultants in charge of supervision. A more assiduous attention to supervision might have helped to avert increasing delays in the rehabilitation I Haiti was the first country in LAC to agree to implement a graduated scale for overloading. When the time came to follow through, the Government faced considerable opposition to the plan and never fully implemented the program.  -3- of several kilometers of road under the road component. The P' concluded that the success of future projects in the sector would depend .o a large extent on tight supervision. C. Pro,ect Rationale 6. The Sixth Highways Project (Credit 1220-HA) formed a logical continuation of this series of projects designed to address basic infrastructural development needs to support Haiti's economic growth and social objectives. The project was based on an agreed country-w4de t-ansport development plan, derived from the National fransport Study (pa.. 3), which served as the framework for program coordination among the major a-.tors involved in the sector (USAID, IDB and IDA). Its main objectives were -he intensification of the road maintenance effort, the upgrading or rehabilitation of almost 1,000 kilometers of gravel roads to paved standards, and the improvement of another 1,000 km of secondary roads to acceptable, all- weather, gravel.standards. In addition, the plan provided for the rehabilitation and upgrading of a large number of aging steel and concrete bridges. 7. Within this rlan, IDA would concentrate on the areas of maiatenance and rehabilitation and would reinforce its long-term program of institution building in the transport sector. IDB would support the construction of secondary roads and the upgrading of primary roads. The USAID program focused on road maintenance through continued assistance to SEPRRN, the road maintenance agency under the MTPTC. D. Proiect objectives and Description 8. The main objectives of the project were to foster execution of high priority road and bridge maintenance and rehabilitation works identified in the Government's 1981-1986 Five-Year Plan, and prepared under on-going IDA and other externally financed lending, and to continue IDA's lorg-term program of institution building in the tr.isport sector. The project comprised: (a) acquisition of equipment to expand SEPRRN's fleet to carry out routine and periodic road maintenance and rehabilitation in accordance with the 19e 1986 Maintenance Program; (b) a program of weight and dimension control for vehicles, includs.ng the procurement and operation of weighing equipment and the diligent enforcement of laws and regulations governing such control; (c) rehabilitation of 57 bridges and other drainage structures; (d) rehabilitation and strengthening of 100 km of the Northern Road; (e) a technical assistance component for studies of maintenance  technology and of the domestic construction industry and for auditing of the project accounts kept by MTPTC and SEPRRN in particular. 9. To implement the project, IDA assisted in financing the following items: (a) Main 2nance - Road maintenance, workshop equipment and spare parts; - Vehicle weighing equipment. (b) Bridges and Other Drainage Structures - Engineering design and civil works for the repair of existing bridges, culvert. and concrete fords and for the construction of a number of new bridges; - Consultancy services for the detailed design of structures to be included under the project. (c) Road Rehabilitation - Civil works, engineering, supervisicen and technical assistance for the rehabilitation of specific sections of the Northern Road, totalling 94 km. (d) Technical Assistance - A study to determine whether it would be better to increase rehabilitation and carry out minor betterments and develop labor- intensive activities rather than continue relying on SEPRRN brigades for routine and periodic maintenance. - A study on the domestic construction industry to formu2ite specific proposals for basic and vocational training for industry managers and skilled workers, and the training of technicians; - Annual auditing of project accounts. 10. The project, including capital and recurrent costs, was estimated to cost US$19.2 million. The credit of US$14.0 million was to finance 96% of the foreign exchange cost amounting to 73% of the total cost (100% of the foreign exchange cost and 73% of the base cost net of contingencies). The Government was supposed to finance the remainder (including about 2% of taxes) and tiAe expenditures required to carry out the agreed Five-Year Maintenance Program in the amount of some US$68 million at 1981 prices. These expenditures included US$26 million in routine maintenance, US$24 million in periodic maintenance and US$18 million in rehabilitation works necessary to make roads maintainable.  E. Prolect Deoion and Organization 11. Overall responsibility for the project rested with the Ministry of Public Wou:ka, Transport and Communications (MTPTC) and specifically three of its departments, namely: (a) The "Service d'Entretien Permanent du Reseau Routier National" (SEPRRN - National Permaient Road Maintenance Service) for equipment procurement, including spec..ficationo for the bidding documents and deployment of newly pur:hased equipment, in accordance wich the agreed road maintenance program and for the study of road maintenance technology; (b) The "Service Autonome des Transports" (SAT - Autonomous Transport Service) for the preparation of enginee._.ing designs for the bridge and road strengthening and rehabilitation programs and for the Construction Industry Study; (c) The Construction and Works Supervision Department (SCS) for the execution and supervision of construction, rehabilitation and strengthening works to be carried out under the Bridges and Roads Programs. 12. The project's basic design constituted a logical step in furthering the sector dialogue on: (i) policies (cost recovery and axle weight controls); (ii) priorities (maintenance and priority investments); and (iii) institutional strengthening (technical assistance). The project was also designed to foster local private-sector participation in road rehabilitation activities. The rehabilitation works were indeed later contracted to a Haitian-American joint venture whose main partner was the local construction firm. 13. As described in the SAR (1.15 and 2.14 to 2.19), the organizational and human resource shortcomings of MTPTC were identified during project preparation, including poor planning and budgeting capacity, inefficiencies in SEPRRN's maintenance technology and operations, and general absence of coordination among MTPTC's departments. The technical assistance planned under the Project was deemed the best way to address these important shortcomings and was to be closely coordinated with the USAID-financed strengthening program of SEPRRN. F. Proiect Agreements Reached 14. The appraisal mission (May 1981) identified the following issues and pending actions: (a) that the Government should increase taxes on diesel sales to the level of those for gasoline; that no special compensatory measures should be recommended for public transportation and industrial consumers, but that IDA should be flexible on the deadline for the final phasing out of the tax differential; that the Government  should reduce the tax differential vis-a-vis gasoline by 30 percent prior to negotiations and present, during negotiations, a program for the elimination of the differential by mid-1993; (b) that the Government should enforce its existing li.mits on axle loads, and not allow them to be exceeded until it could be proven that the road network could support higher loads; that the Government should, prior to negotiations, confirm its intention to enforce the legislation; (c) that the Government should allocate US$300,000 from the Fifth Transport Project for studies and repairs of the Hinche Suspension Bridge; also, IDA granted a Proiect Preparation Facility of US$300,000 to finance studies of drainage structures and of road rehabilitation works to be executed under the project; (d) that vroiect accounts be audited yearly by independent auditors, the audit to be paid for under the credit; (e) in view of the involvement of both USAID and IDB in supporting labor-intensive road construction nroiects. that IDA convene a tri- partite meeting to discuss issues of coordination; that IDA should seek bilateral cofinancina of about US$7-10 million for additional high-priority bridge, drainage and road pavement works not to be included in the project; and (f) that a study be carried out under the project to update that part of the 1977 National Transport Study covering the construction industry; the main objective of the study would be to prepare a detailed action plan for supporting the industry with particular reference to training at all levels. 15. During negotiations in February 1982 the Government and IDA agreed on the following actions: (a) a detailed work program for SAT over the project period; (b) an agreement that no revisions, suspensions or exemptions to existing regulations on axle load limits would be made without IDA's prior agreement; (c) that annual consultation would take place between Government and IDA on the success of coordination among units responsible for planning or constructing feeder roads; (d) the elimination of the tax differential between gasoline and diesel by 1993; (e) conditions for the utilization and maintenance of SEPRRN's equipment fleet and the auditing of its accounts, and the quarterly  reporting to IDA on implementation of its weight and dimension program; (f) that no disbursements would be made under the second traniche of the equipment component until after completion of the road mdintenance technology study; (g) availability of sufficient counterpart funds and an agreement to review .with IDA the staffing and coordination of MTPTC to adequately meet project implementation needs; and (h) outlines for the project's procurement program, bidding documents and model contracts and terms of reference for consulting services for engineering designs, supervision of works and related technical assistance. 16. IDA also required as a condition of effectiveness the adoption of a system af sanctions for axle load violations, providing for fines proportional to the extent of the violation, as part of the weight and dimension control program. Standard IDA conditions were appropriate for the credit. G. Proiect Implementation 17. The IDA Board approved the project on April 1st, 1982. The original effectiveness date of July 26th, 1982, was first deferred to August 26th, then to October 26th, and finally to December 17th, 1982. The loan became effective on December 16, 1982, following the enactment of legislation regarding axle load violations which was a condition of effectiveness but which had encountered initial political resistance. The project was supposed to be completed by December, 1984. 18. The first two supervision missions (March and October 1983) highlighted both strengths and weaknesses in the initial phases of project implementation. In general, most project activities were begun during the first year of the project, although with some delays. On the policy front the Government increased the price of both diesel and gas by March 1983, Lut the effective differential between them remained at about 70 US cents, prompting IDA to continue its pressure on the Government to reduce the gap. 19. In late 1983, about one year after Credit 1220-HA became effective, USAID withdrew its support to Haiti, including its long-.standing assistance and financing to SEPRRN. Although IDA subsequently stepped in by providing a small amount of financing to SEPRRN, this was not sufficient to fully maintain Haiti's road maintenance capacity, especially in the wake of the pervasive deterioration in Haiti's economic and social fabric which affected the whole implementation period of the project. In retrospect, although the project files attest to the thoroughness of the project preparation in terms of technical and financial criteria, it is also clear that the project did not address the basic institutional weaknesses of MTPTC, as the already strong technical assistance provided by USAID to SEPRRN was not expected to be discontinued.  20. By the time the next mission took place, in March of 1984, all project components were officially underway, but the most important issues and problems to dog the project for the rest of its effective life began to emerge. While the implementation status indicators on the Form 590 elicited no cause for special concern, the overwhelming issue facing the Government was the lack of counterpart funds. To respond partially to this situation, IDA agreed to front-load credit resources under a special action program due to terminate at the end of 1984. There was, however, no assurance from the Government that they would be able to mobilize additional funds in thp future. The 1984 budget allocation for road maintenance and rehabilitation fell far short of the targets agreed to at negotiations. Unforeseen time lags, increased costs of consulting services, and the clear need for technical assistance to bolster the road maintenance program, all exacerbated the shortfall in credit for financing the bridge rehabilitation originally included under the project. While the lack of counterpart funds could have been addressed had the Government increased diesel fuel taxes sufficiently, their failure to do so prompted IDA to advise the authorities that they were contravening the Credit Agreement. 21. Under the Road Rehabilitation Program, the contractor failed to produce a satisfactory work program and staffing to carry out its tasks. IDA raised the possibility with the Government that the contractor might have overestimated his capabilities when accepting the contract, which proved to be true and the reason for major delays in starting works. IDA intervened directly with the US partner in the consortium, who gave assurances that the work would be underway without further delay. With time, however, another reason for the contractor's failure to perform proved to be thp Government's inability to pay for the limited services which they had Lctually rendered. 22. Rising social unrest and riots began to occur in Haiti in early 1984 mostly due to: (i) the growing unpopularity of the regime ; (ii) the extermination of the Haitian pig, which had contracted swine fever, and was the main source of savings and protein for peasant households; (iii) the reduction in public expenditures, including counterpart funds, for investment financed by foreign donors; and (iv) the drought conditions in many parts of the country. A major cabinet reshuffle took place in 1984, which brought about the replacement of the Minister of Works and many of his key staff. 23. By the end of 1984, the technical and financial problems thwarting project implementation led the Government to request an extension of the credit closing date (initially June 30, 1985). The financial problems were caused by: (i) a 13% reduction in the US dollar vis-a-vis the SDR; (ii) the termination of the Special Action Prograrm on December 31, 1984; and (iii) the dearth of counterpart funds. 24. The lack of funds was slowing down progress on the rehabilitation of the Northern Road, and delaying the launching of the second phase of the bridge construction program and the upgrading of tools and equipment under SEPRRN's rehabilitation program. In view of these delays, IDA approved an extension of the closing date to June 30th, 1986.  -9- 25. By April 1985, the only significant advance in project implementation was the elimination by the Government of the tax differential between diesel and gasoline. Major lags in the Road and Bridge Rehabilitation and Road Maintenance Programs had developed, which would necessitate a further extension of the closing date to December 1986. Another reshuffle in the Ministry, including the nomination of a new minister of works, had caused the neglect of project implementation schedules. At this point, IDA started discussions with the Government on a Seventh Transport Project mainly dew gned to complete the works unaccomplished under the Sixth Project and deal wi-.. issues unaddressed under it, including local funding availability. A mission in July 1985, however, confirmed little progress on any front, mainly due to the prevailing local instability. 26. By mid-1986, physical progress was estimated at 36% while the disbursement lag on the project was estimated to be about 29%. The delay in execution of physical works related mainly to the rehabilitation of the Northern Road, which was suffering from the contractor's poor organization, management and capacity, and lack of local funds. IDA agreed to a second Government request to extend the Closing Date to June 1987, and made arrangements to reduce the Bridge Rehabilitation Program from 57 to 21 bridges and culverts and to increase IDA's disbursement percentage on the civil works for the Northern Road from 55% to 85%. An outbreak of civil unrest in mid- 1986 again compromised the severely delayed project implementation. IDA recommended to Government an amicable gettlement and termination of the contract with the contractor on the Northern Road ccntract, and the Government subsequently called for new bids to continue the rehabilitation works. The project Zlosing Date was extended for a third and last time to June 1988, with the understanding that works remaining incomplete under the credit would be continued and finished under the Seventh Transport Project (Credit 1756-HA). The last disbursement was finally made on July 12, 1988. H. Project Results and Sustainability 27. The original contract for the Road Rehabilitation component was award3d to a contractor in November 1983, for an amount of USS 8 million. The contractual completion date of the works was December 1985 but execution was beset by difficulties due to late payments by the Government and security risks resulting in frequent work stoppages. Ultimately the contractor abandoned the job at the beginning of 1986. 28. In these circumstances, only 36% of the works were carried out, though for a total cost of US$10.2 million, including US$1.5 million of indemnities paid to the contractor by the Government. In addition, due to these delays in the rehabilitation works and lack of maintenance, moet sections of the Gonaives-Cap Haitien Road had to be rehabilitated under the following project. The full rehabilitation of this section of the Northern Road was finally completed in 1990, at a total cost of about US$19.4 million, including more than US$2.0 million for indemnities. Of this, US$10.2 million was financed under the Sixth Project (Credit 1220-HA), US$5.7 million under the Seventh Project (Credit 1756-HA), and UsS3.5 million through an additional  - 10 - grant from Caisse Centrale de Cooperation Economique (CCCE), the French development agency. 29. As for the bridges component, the project was designed to rehabilitate 4 bridges and 20 culverts and to construct 6 bridges and 27 culverts for a total cost of USS3.4 million (appraisal estimates). As implementation of this component was delayed and IDA resources needed to be reallocated to complete other components, the construction of new drainage structures war postponed (and completed) under the Seventh Project, and only minor repairs of 24 bridges and culverts were carried out under The Sixth Project, for a total amount of about USS 0.3 million. 30. Data are not aveilable to recalculate ex-post ERRs for the road rehabilitation component, the main investment of the project. However, the traffic on the GonaLves to Cap Haltien Northern Road sectior. increased considerably during the past decade, certainly due in part to the eventual rehabilitation of this section of this road. Within 10 years, the traffic increased from 270-410 (SAR 5.13) to 300-1070 (1Xt90 traffic counts). The rehabilitation of the bridges and culverts, the only part of that component to be implemented, had very high rates of return, the final ERRs being close to the appraisal estimate, since there were no overruns for these very small works (UZ$ 0.3 million). 31. In summary, the Physical components of the Sixth Project were finally completed under the Seventh Project and the additional CCCE grant. However, in the meantime, the overall road network has deteriorated due to lack of maintenance activities for the last five years. These physical achievements will not therefore be sustainable unless MTPTC's capacity to execute or contract maintenance works is strengthened and the issue of counterpart funding for these works is addressed. The preparation of the proposed Road Rehabilitation and Maintenance Project (possibly effective in late 1991) is focussing on these two issues. 32. Results of the technical assistance component highlight the need for future assistance to be prepared with a clearer definition of realistic targets and, in particular, of performance indicators for use in measuring its effectiveness throughout project life. As a result, it is difficult to assess the effectiveness of the technical assistance provided, especially in view of the overall deterioration of MTPTC's administrative structure. Overall, however, the project failed to address the continuous weakening of the project implementing agency during the project period. The net result is that IDA and/or other donors will face an increasingly difficult situation when designing follow-up operations. To a large extent, however, addressing the issue of institution- building was beyond IDA's supervision capability as the whole administrative and social structures in hait. were undergoing major changes during this period. 33. The project's legal covenants were well designed and focused on selected priority sector policies. As in many similar sector projects, however, the general covenant on adequate provision of maintenance funds was not complied with. However, in view of the high priority of the project  - 11 - rehabilitation works and the tightening budgetary constraints of the country, the Bank chose to front- load credit resources and lower local financing requirements rather than stop credit disbursements. The issue at stake here is mostly one of realism in designing sector programs and targets and of project design. In the context of Haiti -- a small country with a limited road network, weak institutional base, and changing country circumstances -- a sector approach with (i) annual disbursements linked to actual implementation performance over the previous year and (ii) Bank support to review and imple...ent fiscal 4nd budgetary mechanisms designed to raise funds for maintenance may be more appropriate than traditional investment projects with regular covenants. I. Borrower Performance 34. Project management and implementation by the Government was generally poor throughout the life of the project, as to both the operational performance of MTPTC's agencies themselves and the monitoring of the performance of contractors selected to execute major portions of the work. These weaknesses can be attributed partly to a high turnover of decision- making staff involved with the project, including ministers, and to dwindling Government funds for action. Other problems which hampered effective project implementation included the volatile political and economic environment, low technical competence of middle-level management and poorly qualified technical crews, and inefficient management monitoring tools throughout MTPTC. 35. A serious shortcoming affecting the long-term objectives of the project was MTPTC/SEPRRN's inability to account for and maintain its road equipment and to ensure the effective execution of rehabilitation works which, in turn, delayed progress on routine and periodic maintenance by departmental crews throughout the life of the project. In part, the deterioration in SEPRRN's efficiency was due to the steady decline in budget allocations throughout the project implementation period. However, SEPRRN's budgetary problems were compounded by an increase in unproductive personnel expenditures and a continuous deterioration in road maintenance management following the departure of USAID-financed technical assistance. Under these circumstances, project experience points to the advisability of contracting out more simple road maintenance works, equipment overhaul and maintenance in order to reduce the volume of tasks assigned to MTPT' workshops, while increasing the supervision capability of the Ministry over local and foreign contractors. 36. The most serious violations of the credit agreement were: (a) availability of budget funds to SEPRRN (Section 3.06). Not complied with. (b) axle load limits (Sections 3.07 and 4.04). Partial compliance due to technical difficulties in applying higher French-based norms than those proposed by IDA.  - 12 - (C) elimination of tax differential bet*een diesel and gas (Section 4.03). Some action taken in March 1985 but rescinded later due to political difficulties. (d) annual audits (Section 4.01 (b)). Qualified audit report received only in 1986. A clarification report requested by IDA was never received. J. IDA Performance 37. Both at the project preparation stage and during implementation, IDA faced a difficult set of social, economic and political circumstances in Haiti. In designing and dimensioning the project, the wisdom of hindsight suggests that less emphasis should have been given during preparation to the potential improvement of infrastructure and more to strengthening the institutional capability of Government agencies (especially MTPTC's supervising capability) and the technical expertise of the local construction industry to implement the proposed activities. Closer attention to the financial constraints of Government and a review of maintenance funding levels and mechanisms might also have enabled IDA to anticipate and probably forestall difficulties, including the delays in project execution. The availability at the outset of USAID technical assistance and financial support to SEPRRN can however explain why IDA was little concerned with short-term aseds for institutional strengthening, as USAID withdrawal was totally unexpected. Furthermore, at the time of preparation of the Sixth Highway Project, the political climate had taken a clearly optimistic turn. In good faith, IDA assessed the improving situation to merit continued assistance. 38. Proiect-supervision was less regular than it should have been, with less attention being paid to important indicators of project implementation such as the annual audit covenant, the monitoring of contractor performance, and the need to adjust the technical and financial disbursement targets and, possibly, the project priorities, in line with the changing circumstances in the economy. A thorough review by IDA of maintenance methods used by MTPTC during supervision might ideally have led to making release of the second tranche for maintenance conditional on the introduction of more labor- intensive technology, and the introduction of maintenance works by contract. Though the Government violated a number of credit covenants, IDA at no time threatened suspension of suspension of disbursements in view of Haiti's increasing economic difficulties overall and the high priority of the road to be rehabilitated. IDA's inadequate supervision of the project was however mainly due to the high turnover of staff assigned to task management and to the fact that social unrest often made it unsafe to travel to Haiti. K. Lessons Learned 39. While the project's technical and financial preparation seems to have been thorough, project implementation was affected both by project- related weaknesses --e.g. contractor delays on the Northern Road-- and by country-related problems --lack of counterpart funds, civil unrest, and frequent changes in administration. In retrospect, it is difficult to assess  - 13 - whether, in the unforeseen circumstances of Haiti, a different course of action by IDA would have produced a better outcome. The Bank appears to have taken too little action in two key areas: (i) it took little action in maintenance and counterpart funding, even though major donors had discontinued their support to high priority maintenance activities; and (ii) it paid little attention to the institutional strengthening efforts needed to reinforce MTPTC's capacity to manage road rehabilitation and maintenance. In respect of (i), the front-loading of disbursements agreed during project executior was ineffective, as there were little prospects that the Government could increase its own financing later on; .nstead, it would have been advisable to either reduce the project scope, or finance a higher percentage all along, at least for priority components of the project. 40. This raises a qunstion as to whether IDA was right in continuing to disburse the credit and extending the closing date repeatedly, in the face of widespread non-compliance with major covenants. Should it not have suspended disbursements, or at least cancelled the undisbursed balance at the original closing date? The case of the Bolivian Highway Maintenance Project, carried out in the economic and political crisis of 1980-85, is similar. The latter is instructive, in that the Bank did suspend disbursements. The outcome was that the Bolivian roads deteriorated even more rapidly, the few highway engineers knowledgeable and concerned about road maintenance left the government, and upon resumption of Bank activity the government had to allocate much larger sums to road rehabilitation. The only way to interpret this experience positively would be to argue that only by touching rock bottom could the Bolivian people make the radical change of mentality that led to the subsequent transformation of their political conduct and economic policies. Our judgment is that in both cases the particular nature of maintenance and rehabilitation cpierations makes an interruption of financing exceptionally damaging, both to the existing physical assets and to the human capital invested in the agency responsible. 41. In the case of Haiti, the judgment call at the time was even harder as (i) the project financed rehabilitation of the most important road link in the country; and (ii) it constituted the only source of external financing in the sector after the withdrawal of most bilateral assistance. A more important question, however, is whether the project's priorities should not have, at a minimum, been revised in light of the changing circumstances in the country; there is little evidence from the files that this was seriously considered despite the continuing non-compliance with credit covenants and the overall deterioration in the sector. 42. In general, both this project experience and the present (1991) situation in Haiti call for the following in future road projects in Haiti: (a) simple objectives in line with the limited capacity of the Ministry; (b) flexible design (i.e. several small components) so that the project can be adapted to changing circumstances, and/or, possibly, making  - 14 - procurement in later years conditional on satisfactory performance in prior years; (C) increased focus on institutional building, entailing especially a close review of the Ministry's future role in road maintenance activities and exploration of a possible stronger participation of the private sector, coupled with necessary reinforcement of MTPTC's planning and supervision capacity; (d) a close review of fiscal and budgetary mechanisms to enable adequate funding of road maintenance by the Government; (e) integration of any project within a realistic overall program of the Ministry, in line with the Government's economic priorities and financing constraints; and (f) tight supervision by IDA.  - 15 - PROJECT COMPLETION REPORT HAITI SIXTH HIGHWAY PROJECT (CREDIT 1220-HA) PART II: PROJECT REVIEW FROM BORROWER'S PERSPECTIVE No comments, nor any contribution on Part II, were received from the Government on the report. The request to prepare a PCR was made repeatedly by the supervision missions on the Seventh Highway Project during 1989. The draft PCR was discussed with the Government in December 1989, and again in March 1990, during a visit of MTPTC's officials to IDA. A copy of the PCR and of the guidelines to prepare Part II of the report were sent officially in early April 1990, with a request to provide comments to the next IDA mission, scheduled to visit Haiti in early May. No comments were received either during that missi. n, or subsequently.  - 16 - PROJECT COMPLETION REPORT HAITI SIXTH HIGHWAY PROJECT (CREDIT 1220-HA PART III: STATISTICAL INEFORMATION A. RELATED BANK PROJECTS Year of Credit Title Purpose Approval Status Third Highway Project Reconstruction of the 1974 Closed 3/31/79 Cr. 478-HA Northern Road (250 km), including bridges, under FQurth Highway Project Cr. 478-HA ($10 M) and 1975 Closed 5/31/79 Cr. 556-HA Cr. 556-HA ($20 M) Flfth Highway Project Upgrading and paving of 1978 Closed 6/30/83 Cr. 807-HA 54 km of the Northern Road, including bridges reconstruction totalling $15 M Seventh Highway Project Completion of the works 1987 Closing date: 6/91 cr. 1756-HA begun under Cr. 1220-HA and strengthening of MTPTC agencies  - 17 - B. PROJECT TIMETABLE Item Date Planned Date Revised Date Actual Identifica iton 1977 Appraisal May 1981 Negotiations February 1982 Board Approval April 1, 1982 Credit Agreement April 27, 1982 Effectiveness July 1982 August 1982 December 17, 1982 October 1982 Project Completion December 31. 1984 Closing Date June 30, 1985 June 30, 1986 June 30, 1988 June 30, 1987  - 18 _ C. CREDIT DISBURSEMENTS SDR Millions (1 SDR 1.148 US$) IDA F/Y Cumulative Disburs. as and Actual Appraisal Interim Final 7 of appraisal Semester Total Estimate Estimate Estimate Estimate FY 1983 Dec. 1982 ,.3 0.4 75 Jun. 1983 0.3 3.1 10 FY 1984 Dec. 1983 1.1 8.0 14 Jun. 1984 4.4 9.1 48 FY 1985 Dec. 1984 5.7 11.2 51 Jun. 1985 7.3 12.2 7.0 60 FY 1986 Dec. 1985 7.9 12.2 10.5 51 Jun. 1986 9.1 12.2 11.5 75 FY 1987 Dec. 1986 9.7 12.2 12.2 80 Jun. 1987 10.6 87 FY 1988 Dec. 1987 10.8 10.8 100 Jun. 1988 12.2 12.2 100  - 19 - D. PROJECT IMPLEMENTATION AND RESULTS Indicators Appraisal Estimates PCR Estimates Road Rehabilitation component: Rehabilitation 94 km 36Z (including 23 km of Gonaives to Cap. rehabilitated) Haitien Paved road 1/ Bridges and other Drainage Structures component: Construction of bridges 6 0 Z/ Construction of culverts 27 0 2/ Rehabilitation of bridges 4 4 Rehabilitation of culverts 20 20 1/ The initial description of the works to be carried out consisted of the rehabilitation of a 55-km montainous section and the periodic maintenance of the remaining 39 km. Road rehabilitation works not accomplished under Cr. 1220-HA were completed under Cr. 1756-HA and additional CCCE financing (French development agency), but the final scope of the works far exceeded the 1981 appraisal estimates since the Northern Road continuously deteriorated during the whole decade due to delays in the rehabilitation works and general lack of maintenance. 2/ Only the rehabilitation part of the bridges and culvert program was carried out under Cr. 1220-HA. The bridges and culverts construction program was implemented and completed under Cr. 1756-HA, together with an additional drainage structures rehabilitation component.  - 20 - E. PROJECT COSTS AND FINANCING A. Project Costs: 1. Appraisal estimates l/ (US$ million) Local ForeiRn Total Road Rehabilitation 2 4.6 6.6 Bridges Rehabilitation and Construction 1 2.4 3.4 Equipment Maintenance equipment 3.8 Spare parts 0.7 Vehicle weighing 0.2 Total equipment 0.3 4.4 4.7 Final engineering. supervision, T.A., studies 0.4 1.0 1.4 Contingencies 0.9 2.2 3.1 Total 4.6 14.6 19.2 2. Actual costs: (US$ million) 1220-HA 1756-HA CCCE Total Road Rehabilitation 10.2 5.7 3.5 19.4 Bridges Rehabilitation 0.3 and Construction Equipment Maintenance equipment 2.9 2/ Spare parts 0.2 Vehicle weighing 0.1 Total equipment 3.2 Final engineering, supervision, T.A., Studies 3.9 PPF 0.3 Total 17.9 1/ according to Credit Agreement dated April 27, 1982. 2/ less maintenance equipment vras purchased than estimated at appraisal, especially for bulldozers (from 4 to 1) and graders (from 13 to 5).  _ 21 - B. Project Financing 1. Appraisal estimates 1/ (US$ million) Government IDA Total Road Rehabilitation 2 4.6 6.6 Bridges Rehabilitation and Construction 1 2.4 3.4 Equipment 0.3 4.4 4.7 Final engineering, supervision. T.A.. studies 0.4 1 1.4 Contingencies 1.5 1.6 3.1 Total 5.2 14 19.2 2. Actual costs (US$ million) Government IDA Total Road Rehabilitaticn: 3.9 21 6.3 10.2 Drainage Structures Component: 0.3 0.3 Equipment: 3.2 3.2 Final engineering, supervision, T.A.. studies: 3.9 3.9 PPF: 0.3 0.3 Total 3.9 14 17.9 1/ 702 of civil works and 1001 of foreign expenditures for equipment and consultant services. In total, IDA was to finance 73? of the total project costs. 2/ including USS 1.5 million for indemnities paid to the local construction firm. Total indemnities for the Northern Road rehabilitation (whose final cost was US$ 19.4 m'llion) amounte to VS$ 2.2 million, including US$ 720,000 paid to the French construction firm in charge of the road rehabilitation works under Credit 1756-HA.  - 22 - F. STUDIES Purpose as Defined at Title Appraisal Status Road Maintenance To determine whether to Done. Technology Study increase rehabilitation and labor-intensive activities or continue financing expensive routine and periodic maintenance by force account. Study of the To formulate proposals Done. Domestic Construction for training of industry Industry managers, technicians and skilled workers.  - 23 - G. COMPLIANCE WITH COVENANTS Section 3.06. In order to ensure the adequacy of the road maintenance operations of the Maintenance Department, the Borrower shall: (a) make available to the Not complied with. Maintenance Department promptly as needed such funds SEPRRN's 1987/1988 as shall be required for Road Maintenance Budget of carrying out its work US$ 4.4 million was only half of the program in accordance with a US$ 8.8 million agreed by the schedule satisfactory to the Government and IDA. Association; (b) ensure that the Maintenance Complied with. Department equipment be used only for works of maintenance or rehabilitation; (c) cause the availability and Complied with. utilization of the equipment fleet of the Maintenance Department and the percentage of the total network to be maintained in each year to be monitored at all times and be reassessed annually; (d) use its best efforts to obtain Complied with. and maintain such technical assistance as shall be necessary to ensure the sound and efficient management of the Maintenance Department: (e) exchange views with IDA on IDA supervision mission compliance with a, b, c and d above discussed with MTPTC road and on SEPRRN's management of its maintenance related problems equipment, planning of renewals, and requested improved overhauls and scrapping; compliance with pertinent Credit Covenants. (f) S :tion 3.07. Furnish to IDA Complied with. quart rly reports on the status and progress of the program to control  - 24 - weights and dimensions of vehicles incl. in Part B of the project: (g) Section 4.1(b) the Borrower Not complied with. shall cause SEPRRN, SAT and SCS to: (i) have the accounts and financial Qualified audit report was received statements related to the Project only in 1986. audited for each fiscal year, by independent auditors satisfactorily to IDA; (h) Section 4.02. Ex^'hange views Complied with. annually with IDA concerning coordination among units charged with planning or carrying out construction of feeder roads. (i) Section 4.03. Beginning in Complied with on March 8, 1985; 1982, increase the tax on diesel subsequently, a newly installed fuel so as to eliminate the Government reduced the tax difference between such tax and the on diesel. tax on gasoline by the end of 1983. (j) Section 4.04. Take steps to Not complied with. ensure enforcement of regulations This was due to the lack of concerning axle load limits and suitable equipment and police vehicle dimensions and not to support and to technical modify, suspend of grant exemptions difficulties in applying higher to any such regulations without a French-based norms than those prior exchange of views with IDA. proposed by IDA.  - 25 - H. STAFF INPUTS AND MISSIONS Item Month/ Number Mission Staff Date of Performance Type of Comiposition Year Persons _ Weeks B,eoort atina Problem 1/ Identification 06/80 2 ECN/EGR 3.3 7/80 Pre-Appraisal/ praisal/Post Lppraisal 06/81 3 ECN/EGR 54.5 ;upervision 1 03/83 1 EGR 3.0 04/83 1 2 10/83 2 ECN/EGR 4.0 11/83 1 3 03/84 2 ECN/EGR 4.0 05/84 2 MA,AF 4 07/84 2 ECN/EGR 3.0 07/84 2 MA*AF 5 10/84 2 ECN/EGR 4.0 12/84 2 AF 6 03/85 2 ECN/EGR 6.0 04/85 2 AF 7 07/85 2 ECN/EGR 4.0 07/85 2 AF 8 05/86 1 ECN/EGR 2.0 05/86 3 AF 9 07/86 2 EGR 2.0 09/87 3 AF 10 05/87 2 ECN/EGR 1.0 07/86 2 AF 11 04/88 1 EGR 0.5 06/88 12 11/88 1 EGR 0.5 No Report ZI 13 05/89 1 EGR 0.5 No Report V AF = Availability of funds ECN = Economist EGR = Engineer MA = Project management By that time, the Highway VI super"ision reports were subsumed into the Transport VII supervision reports.