Madagascar - Antananarivo Urban Works Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 12587-NAG STAFF APPRAISAL REPORT AZDAAASCAR ANTANANARIVO UXBAN WORKS PROJECT FEBRUARY 25, 1994 MICROGRAPHICS Report No: 12587 MAG Type: SAR infrastructure Division Country Department III Africa-Soath Central & Indian Ocean This docment has a restrided dstibudoa and may be used by recipients only in the performance of their officiil duties. Its contens may not otheinse be disclosed without World Bank authonzation.  CURRENCY EOUIVALENTS Currency Unit = Malagasy Franc (Fmg) US$ 1.00 = Fmg 1,962 (Dec 31, 1993) SDR 1.0 = US$ 1.38107 (Dec 31,1993) WEIGHTS AND MEASURES Metric System MIALAGASY FISCAL YEAR Januaxy 1 - December 31 ABBREVIATIONS AND ACRONYMS (Enghjh/French Translation) AGETIP Agency for the Execution of Public Agence dExa- Lion des Travaux Works and Employment d'Iteret PubhL. et pour l'Emploi AGETIPA Agency for the Execution of Agence dEx4cution des Travaux Infrastructure Works in d'Infirastructure d'Antananarivo Antananarivo AMEXTIPE Mauritanian Agency for the Agence Mauritanienne dExecution Execution of Public Works and des Travaux dnter& Public et pour Employment l'Emploi AUWP Antaanarivo Urban Works Project Projet des Voires Urbaines dans l'Agglomeration dAntananarivo CETE Technical Studies Center of Centre dEtudes Techniques du the Ministry of Equipment Ministere de lEquipement CNFTP National Council for Technical Conseil National de Formation and Professional Training Technique et Professionnelle CTNDU National Technical Committee Comite Technique National for Urban Development pour le Developpement Urbain FAC French Cooperation Fund Fonds d'Aide et de Cooperation FMG Malagasy Franc Franc Malgache GNP Gross National Product Produit National Brut (PNB) GOM Government of Madagascar Gouvernment de Madagascar WASO Inter-Agency Procurement Agence d'Achat des Nations Services Office Unies IDA International Development Association Internationale de Association Developpement (IDA) MAT Ministry of National and Ministere de rAmenagement du Regional Development Territoire MTP Ministry of Public Works Ministere des Travaux Publics PIP Public Investment Program Programme des Investissements Publics PPF Project Preparation Facilitation Avance de Prdparation de Projet SMATP Malagasy Company of Public Societe Malgache de Travaux Publics Works SMEs Small and Medium Enterprises Petites et Moyennes Entreprises (PME)  FOR OMFCIAL USE ONLY TABLE OF CONTENTS CREDIT AND PROJECT SUtMMAY ............................ iii Project Objecdves. iii Project Description. iii Project Benefits .iv Project Risks .iv Project Cost Summary .v Project Financing Plan. v Projected Disbursement Schedule .vi SECTORAL BACKGROUND.. 1 Population and Urbanization .......................1 Macro-Economic Background .1 The Case of Antananarivo. 2 Institutional Arrangement. 2 Roads Management ................................................................. 2 Transport Conditions ........................3 The Construction Industry ....................... 4 IDA's Previous Role and Lessons Leared. 4 Rationale for IDA Involvement. 6 THE PROJECT. 7 Project Objectives .7 Main Project Objective .7 Development Objectives. 7 Associated Objectives. 7 Project Description. 7 Program of Sub-projects.s 3 Package of Technical and Managerial Assistance, Training & Information 9 Technical Studies .11 Status of Project Preparation .12 Project Cost and Financing Plan .12 Project Implementation .14 Disbursements .15 Accounting, Auditing and Reporting .16 Procurement .17 Supervision Plan .19 Environmental Impact. 19 Social Impact .20 This report is based on the findings of a Bank apprais mission which visited Madagascar in July 1993, compising Messrs. Alain Labeau (Senior Highway Engineer). Hugues CasWainz (Consultant, expert in SMEs development). Philip Moeller (Consultant, expert in institutional building and environmental issues). Ms. Mernaz Teymourian is the Financial Analyst for this project. Mr. Leslie Pan was Lead Advisor, and Mr. Govindan Nair was Peer Reviewer. Mr. Marc-Antoine Saglio (Research Assistant) and Ms. Maria Dreyfus made major coutributions to the preparation of the Manual of Procedures. Ms. Brdnagh Murphy also provided support in the prepamtion of the report and manual. Ms. Maryvonne Plessis-Fraissard and Mr. Francisco Aguirre-Ssa are, respectively, managing Division Chief and Deparment Director for the operation. This document has a nstricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclted without World Bank authorization.  ii MADAGASCAR Antananarivo Urban Works Proic Economic Analysis ........................................... 21 Onership .21 Capacity Building .21 Benefits andRisks .lRk 21 AGREEMENTS REACH3ED AND RECOMIMENATION ................................ 24 Prior to Negotiations ......................................... 24 Legal Documents ......................................... 24 Board Presentation ......................................... 25 Effectiveness ........................................ 25 BIBLIOGRAPHY ........................................ 27 Participation ......................................... 28 Tran ........................................ 29 Environment ........................................ 29 Institutionlal and Other ......................................... 29 TABLES IN THE MAIN TEX 1. Project Cost Summary ......................................... v 2. Foreign/Local/Taxes by Financiers ......................................... v 3. Disbur nt by Sester .....................v................................. vi 4. Activities by Source and Target ..................... 11 5. Local and Foreign Inflation Rates ..................... 12 6. Plroject Cost Summary ..................... 13 7. Financing Plan ..................... 13 8. Progressive Contributions to Counterpart Funding and Maintenance Cost Requirements. 15 9. Disbursements by Category ..................... 16 10. Prcurement .18 11. Key Performance Indicators. 20 12. Compirison Between Disbursement as Scheduled Vs. the Standard Disbursement Profile 23 ANNEXES A. Madagascar : Economic Data. 3 1 B. Institutional Setup. 32 C. Project Costs. 34 D. Disbursement Profile Comparison .41 E. Extracts of the Maumal of Procedures'. .42 F. Status of Project Preparation. 86 G. Studies. 90 H. Training for local SME's and Consultans in the Constuction Industry .94 I. Audits. 110 J. Supervision Plan.115 K. Sub-Projects Summaries .118 L. List of D ncuments in the Project File. 119 M. Environment .121 tThe Manuel of Procdure ('wl de Procdww) is hereto attced as a seif-contained document  Credit and Project Summary ii CREDIT AND PROJECT SUMMARY Bofrower: Republic of Mad 'gascar Implementfng Agency: Ministry of Fi anal and Regional Development Credit Amount: SDR 13.3 million (US$ 18.3 million equivalent) Tenns: Standard IDA terms, with 40 years maturity Cofinancing: France (US$ 170,000 equiv.) contributed to project preparation. Project Objectives The main objective of the Antananarivo Travaux d'Infrastrucure Publique Urban Works Project (AUWP) is to d'Anananvo (AGETIPA), the execution demonstrate the merits of using a of sub-projects for improving the contracting-out approach for the inhfsucture in Antananarivo, a training management and mantenance of program for SMEs and public institutions, infrastructure works. The project will serve and the provision of services to inform the as a model for subsequent broad use, and as public about the approach of the project and a means of familiarizing the govermment the work program. The sub-projects will be with the efficiency of this new instrument. ideified by the municipality and other public agencies, will be revieweed by the There are two central development execting agency according to clear objectives - to rapidly bring the eligibility criteria, and packaged for infrastructure of Antananaivo to a incorporation into an annual work program. satisfactory level, and to develop formal Sub-projects wil include primarily urban domestic Small and Medium Enterprises road and street repair, as well as the (SMEs) in the construction and engineering rehabilitation of public areas. AGETIPA industry. will oversee the contracting of about 25 sub- projects a year with an average value of The associated objectives are: to strengthen about US$ 200,000. the management capacity of the municipality, to create jobs by encouraging The Agency will be headed by a broadly the use of labor-intensive technologies, empowered General Manager to be recruited whenever economically efficient, and to from the private sector, whose stimulate growth in the construction industry responsibilities will be clearly defined in the and in the economy as a whole. The project Statutes of the Agency (Manue de will use participatory methodology to Procedures, Annexe 6; also in Amnex E). increase the voice of users and stakeholders He/she wil report to a General Assembly in maintenance planning and better link the including representatives of the municipality municipality to popular interests. F of Atananarivo, the water and electricity company, associations of domestic Project Descilption contractors and consultants, road transporters, and labor unions. User and The project will include the creation of an stakeholder ownership will be promoted executing agency, Agence d'Exkution de  iv MADAGASCAR Antananarivo Urban Works Proiect through participatory methodology. The out of infrastructure maintenance; (ii) the government and AGETIPA wiAl sign a development of about one hundred finns in convenLon whereby AGETIPA will have the the constuction industry in Anltnanarivo; full and exclusive responsibility to: (i) (iii) the rehabilitation of about 300 kn of review and approve proposed sub-projects essential urban roads; (iv) the creation of for execution; (ii) invite tenders from jobs in an amount of about 70,000 man- domestic SMEs; (iii) evaluate tenders and months, and (v) the building of the capacity award contracts (engineering studies, works of the municipality. and supervision); (iv) administer contracts efficiently and in a timely manner; and (v) Pioject Risks provide technical assistance to SMEs and consult with public institutions. These There are five potential risks: (i) the risk of responsibilities will be carried out according insufficient funding will be addressed by the to a detailed Mamnal of Procedures, requirement that govermnent provide its acceptable to IDA, including sample bidding contribution up-front and progressively documents, and will be verified on the basis increase the proportion of its cost sharing of of monthly progress reports and technical works during project implementation-the and financial audits carried out by external overall issue of resource allocation in the auditors-acceptable to IDA-every quarter transport sector will be dealt with under a for the first six months and bi-annually concurrent transport sector project; (ii) the thereafter. risk of government interference in the management of AGETIPA witl be reduced The traning program for SMEs will cover by establishing adequate procedures for execution of sub-projects and basic business decision making early in the praject's life; management; it will be coordinated with the (iii) the risk of poor performance by the newly established National Center for executing agency is negligible as a track Technical and Vocational Training (CNFTP) record will have been established at all steps and the ongoing APEX project. Promising leading to credit effectiveness; (iv) the risk consulting firms will be trained to become of failure to maintain works already future executing agencies in their own right, undertaken under the project will be who will be entrusted with similar mitigated by making such maintnance a responsibilities. The provision of condition for the approval of subsequent information services will mainly consist of annal work program; and (v) finally, the using mass media. prompt payment for works and services by the agency will reduce the risks of poor Project Benefits performance from small firms in the constuction and civil engineering industry. The benefits would be: (i) the availability of a tested model for the efficient contracting-  Credit and Project Sumary v Project Codt Sumnmay Table 1: Project Cost Smmaqy (net of taxes and dufties) (US$ million) Rzpeniiture Accounts Breakdown For. Local ToWa % Exeh (ExoL Tases) 1. Costs A. Cii Worba 0.00 15.32 15.32 76.4% B. Goods 0.00 0.05 0.05 0.3% C. Conulte_ny Services 1. Local Consultnt 0.00 1.66 1.66 8.3% 2. Local & Forein Consuta 0.22 0.22 0.44 2.2% 3. Poreign Consultant 0.49 (..06 0.55 2.7% Subtotal Conlta SevIes 0.71 1.94 2.65 13.2% Total hnestnt Cust 0.71 17.31 18.02 89.9% IL Recurnt Costs A. AGETIPA Operatig Costs 0.00 0.96 0.96 4.8% B. Opermting costs under PPF 0.00 0.23 0.23 1.2% C. Technical & Financiel Audits 0.19 0.08 0.27 1.4% D. Monitoring of Socia Impact 0.00 0.20 0.2P 1.0% E. Monitor. of Bay. Ip. 0.00 0.02 0.02 0.1% Total RecuWnte Costs 0.19 1.49 1.68 8.4% IIL(&u