Morocco - Highway Sector Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 16057 IMPLEMENTATION COMPLETION REPORT KINGDOM OF MOROCCO HIGHWAY SECTOR PROJECT (LOAN 3168-MOR) December 11, 1996 Private Sector Development, Finance and Infrastructure Maghreb and Iran Department Middle East and North Africa Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currencv Unit = Moroccan Dirham EXCHANGE RATES Appraisal Year Average US$1 = DH 8.49 Intervening Year Average US$1 = DH 8.71 Completion Year Average US$1 = DH 8&73 FISCAL YEAR January 1 - December 31 January 1 - June 30, 1996 ABBREVIATIONS AND ACRONYMS AfDB - African Development Bank CNEHA - National Center for Vehicle Testing and Certification (MOT) CNER - National Center for Highway and Traffic Studies (MPW) DEPCT - Directorate of Transport Studies, Planning and Coordination (MOT) DPTP - Provincial Directorate of Public Works (MPW) DRCR - Directorate of Highways and Traffic (MPW) DTT - Directorate of Surface Transport (MOT) ERR - Economic rate of return ICR - Implementation Completion Report MOF - Ministry of Finance MOT - Ministry of Transport MPW - Ministry of Public Works PMP - Pavement Management Program SDNT - National Transport Master Plan Study  FOR OFFICIAL USE ONLY KINGDOM OF MOROCCO HIGHWAY SECTOR PROJEC'T (LOAN 3168-MOR) TABLE OF CONTENTS Preface Evaluation Summary ..........................................................i PART 1: Project Implementation Assessment from the Bank's Perspective .1 A. Statement/Evaluation of Project Objectives ....................................................1 B. Achievement Of Objectives .................................................... 2 C. Major Factors Affecting The Project ....................................................4 D. Project Sustainability ....................................................7 E. Bank Performance ................................................... 7 F. Borrower Performance ....................................................8 G. Assessment Of Outcome ...................................................9 H. Future Operation .....................................................9 I. Key Lessons Learned .................................................... 10 PART II: Statistical Tables .......................................................... 12 Table 1 Summary of Assessment ......................................................... 12 Table 2 Related Bank Loans/Credits ........................ ................................. 13 Table 3 : Proj ec t Tim etable ......................................................... 14 Table 4 Loan/Credit Disbursements - Cumulative Estimated and Actual ..................... 15 Table 5 Key Indicators for Project Implementation .................................................... 15 Table 6 Studies Included in Project ......................................................... 16 Table 7A: Project Costs ......................................................... 17 Table 7B Project Financing .............................................. . ......... 18 Table 8 Economic Costs and Benefits .......................... ............................... 18 Table 9 Status of Legal Covenants ..................... .................................... 20 Table 10 Bank Resources - Staff Inputs .............................. ........................... 23 Table 11 : Bank Resources - Missions ......................................................... 23 APPENDIX: Borrower's Contribution to the ICR Vice President Mr. Kemal Dervis Director Mr. Daniel Ritchie Division Chief Mr. Amir Al-Khafaji Responsible Staff Mr. Archambault, Transport Specialist Mr. Bentchikou, Sr. Highway Engineer Mr. Tollie, Sr. Highway Engineer This document has a restricted distribution and may be used by recipients only in the performanc tir | official duties. Its contents may not otheruise be disclosed wi.hout World Bank authorization.  KINGDOM OF MOROCCO HIGHWAY SECTOR PROJECT (LOAN 3168-MOR) IMPLEMENTATION COMPLETION REPORT PREFACE This is the Implementation Completion Report (ICR) for the Highway Sector Project in the Kingdom of Morocco, for which Loan 3168-MOR in the amount of US$ 79.0 million was approved on February 8, 1990, made effective on July 12, 199C, and had an original closing date of December 31, 1994. The Loan was actually closed on June 30, 1996. Final disbursement took place on September 12, 1996, and an undisbursed balance of lJS$ 816,877.27 was canceled on the same date at the request of the Ministry of Finance. This report was prepared by Claude Archambault, MN1PI, in conjunction with Jaffar Bentchikou, MN1PI, and reviewed by Amir Al-Khafaji, Division Chief, MNIPI, and Rene Costa, Projects Advisor, MN1DR. Preparation of the report began during the final supervision mission of September 27 to October 8, 1995. Findings were discussed with the Borrower during the March 20 to April 3, 1996 ICR mission. Comments on the report have been received from Jacques Tollie, the Task Manager who appraised the operation, and from other staff, and were incorporated in the report. The Borrower has prepared its own evaluation: it is included in an appendix to this ICR.  KINGDOM OF MOROCCO HIGHWAY SECTOR PROJ1ECT (LOAN 3168-MOR) IMPLEMENTATION COMPLETION REPORT PART 1: PROJECT IMPLEMENTATION ASSESSM[ENT FROM THE BANK'S PERSPECTIVE A. STATEMENT/EVALUATION OF PROJECT OBJECTIVES Objectives at Appraisal 1. The main objective of the Highway Sector Project in Morocco as defined in the Staff Appraisal Report of January 8, 1990 was to assist the Government in bringing sector investments in line with economic priorities, primarily by: (i) concentrating resources on the preservation of existing roads; (ii) strengthening the overall institutional framework by optimizing the use of funds for road resurfacing and maintenance within a comprehensive PMP; (iii) pursuing efficiency improvements in the road transport market through gradual deregulation of the trucking industry and related adjustments in road user taxation; and (iv) pursuing efficiency improvements in the construction industry, in line with the Bank's efforts in the Maghreb region.. Two ministries were to be directly involved in the project implementation, the Ministry of Public Works (MPW) and the Ministry of Transport (MOT). 2. Total project costs of US$ 553.6 million were to be financed by the Bank (US$ 6.6 million under the then on-going Fourth Highway Project, and US$ 79.0 million under the proposed Highway Sector Project), by AfDB (US$ 110.1 million), and by the Government (US$ 182.5 million from the general budget, and US$ 155.4 million from the Road Fund). 3. The Highway Sector Project had two main components, an Investment component, and an Adjustment and Institutional Development component. The Investment component comprised civil works and the provision of equipment related to these works. The civil works program included rehabilitation of about 1,000 km of roads, resurfacing of some 1,300 km of roads, shoulder restoration on about 500 km of roads, pavement rmarking on some 5,000 km of roads, reconstruction of seven bridges, construction of highway maintenance workshops facilities and of the National Center for Vehicle Testing and Certification (CNEHA) in Casablanca. Equipment for road maintenance, traffic counting, highway maintenance workshops, and road safety was to be purchased. 4. The Adjustment and Institutional Development component included studies and action programs to: (i) define and implement a strategy to improve the organization and efficiency of the road transport industry, based on the National Transport Master Plan Study (SDNT) initiated during the Fourth Highway Project; (ii) reclassify the road network to properly allocate responsibilities between the various governmental authorilties responsible for investment and maintenance; (iii) strengthen the institutional capabilities of 'MPW through the development of a  -2 - suitable PMP, the development of suitable strategies for road maintenance, and the strengthening of technical and research capabilities; (iv) strengthen the institutional capabilities of MOT in the fields of road transport planning and management, and traffic safety; (v) develop transport in rural areas; and (vi) increase the efficiency of the construction sector. The Directorate of Highways and Traffic (DRCR) personnel was to receive training in the fields of operation and maintenance of heavy equipment for public works, and of road maintenance activities. Evaluation of Objectives and Risks 5. The Highway Sector Project was definitely warranted under the conditions prevailing at the end of the 1980s. Road transport accounted for 90 percent of passenger travel, and 70 percent of freight transport, but the road sector had received only 33 percent of total transport investment during the period 1980-1987. This ratio had climbed to 47 percent in 1990, but it was still insufficient for the road network to accommodate growing traffic needs. There had been minimal improvement in the condition of paved primary roads between 1983 and 1988, and barely one fifth of the total paved road network was in good condition over that period. In spite of a stagnant economy, road traffic was increasing at an annual rate of 4 to 5 percent, thus exacerbating the problems caused by a shortage of investment in the sector. From an institutional point of view, the sector was handicapped by the lack of planning tools and the counterproductive transport regulations, especially concerning road freight transport: there was a potential to reduce transport costs and to increase levels of service. Finally, after having experienced a boom in the 1970s, the construction industry had been curtailed by the budgetary constraints of the 1980s, and its operations disrupted by the structural adjustment program. 6. Actions to ease transport regulations had already been identified and discussed under the Third Highway Project, closed in 1987. However, MOT requested more studies before they would take the required actions. The consensus at appraisal was that: (i) the National Transport Master Plan Study (SDNT) would be the last major transport study financed by the Bank, since the course of action had been properly charted in previous projects; (ii) completion of SDNT had been delayed during the Fourth Highway Project, and issuing its final report would have been more a matter of editorial corrections than substance changes; and (iii) SDNT should be published as early as possible in the Highway Sector Project, since it would need to be updated from time to time, hence the dated covenants. It should be added that the SAR had properly identified the risk of insufficient MOT's commitment to the project. B. ACHIEVEMENT OF OBJECTIVES Sector Policy and Financial Objectives 7. By and large, the project has achieved its stated objectives. However this assessment does not apply uniformly across all the numerous components of the project: MPW has accomplished most of its objectives, while the performance of MOT has been a disappointment. This outcome reflects the respective shares of both Ministries in the project, with MPW claiming close to 95  -3 - percent of the total budget, and MOT the balance. Four executing agencies' participated in the project. The lack of coordination between the various executing agencies, and between those and the Ministry of Finance (MOF), hampered the institutional development component, which did not achieve its stated objectives. Institutional Development 8. Various studies contributed to the institutional development of MPW, and were highly successful in that regard. Other studies were instrumental iin establishing a dialogue between various governmental agencies concerned with the procurement of constiuction materials. The operation of CNER has been strengthened with the help of technical assistance. This component of the project was very successful, and CNER now supports M[PW's road maintenance program through traffic counts, and pavement surface evaluation and structural analyses. However, the rural transport study undertaken by MOT has drawn up an investment program in rural roads, but it did not achieve its stated objectives of assessing the organization of rural transport services, defining the needs of rural municipalities in terms of transport services, and making recommendations on the appropriate institutional organization. Also SDNT was only published in March 1995, after a delay of five years. Its major accomplishment has been to support changes in the deregulation of road transport, but its data base was mostly out of date the day the report was issued, and many of its conclusions and recommendations are Inow obsolete. Physical Objectives 9. Table 5 in Part Two of the Report illustrates Key Performance Indicators for various components of the project. Civil works have achieved, and in some cases surpassed their initial objectives, albeit in a time frame that was longer than originally anticipated: bridge reconstruction was to be completed by July 1992, and road works by the end of 1993, while the actual works extended through April 1996. Another achievement was the construction of CNEHJA, an automotive test center built to control the work of the private motor vehicle test centers. Equipment for traffic counting and road maintenance workshops have been purchased, but no vehicles were purchased under the project. All the studies under the jurisdiction of MPW have been completed, but only one major study under the jurisdiction of MOT has been initiated. No Bank-financed overseas training has taken place, even if bothl MPW and MOT had expressed a need for it, mainly because of lack of counterpart funds and a decision by the Directorate of Highways and Traffic (DRCR) to favor local training. 10. A major achievement of the Highway Sector Project was the improvement in the quality of paved road surfaces. For the whole network, the percentage of paved roads in good condition has increased from 20 to 44 percent between 1983 and 1994, while the percentage of roads in average condition has decreased from 36 to 31 percent. All classes of roads have benefited from The four executing agencies are the Directorate of Highways and Traffic (DRCR) and the Directorate of Technical Affairs (DAT) at the Ministry of Public Works, and the Directorate of Transport Studies, Planning, and Coordination (DEPCT) and the Directorate of Surface Transport (DTT) at the Ministry of Transport. The Ministry of Transport Directorate of Air Bases (DBA) was responsible for the construction of CNEHA.  -4 - the program2. Primary roads in particular have seen their percentage in good condition increased from 33 to 51 percent between 1983 and 1994. Impact on the Environment 11. Civil works financed through the Highway Sector Project had minimal impact on the environment, since there was no modification to the alignment, profile, or width of the roads that were part of maintenance or rehabilitation contracts. Construction materials such as sand, gravel and crushed stone came from existing quarries, without any incremental impact on the environment. On the other hand, no effort was made to improve drainage facilities: future projects should include provisions for rehabilitation or maintenance of all roadside features where required. Economic Evaluation 12. Ex ante economic analyses calculated expected economic rates of return (ERR) for three major components of the project. For pavement strengthening, the SAR proposed a three-year program involving 1,067 km of roads divided into 49 sections, each one having an ERR equal to or greater than 20 percent. For periodic maintenance, a three-year, 1,320 km program was proposed, with a detailed economic evaluation of the first year program involving 208 km of roads divided into 18 sections, each one having an ERR equal to or greater than 24 percent. Six of the seven bridge rehabilitation projects were evaluated, each one having an ERR greater than 40 percent. The actual lengths of pavement strengthening or periodic maintenance, while not much different from the appraised project, involve sections that are much different, so that only half of the sections that were evaluated have actually been completed, and less than one third of the periodic maintenance sections that were evaluated have actually been improved. The ex post economic analyses show that all works have positive ERR, with only 2 percent of the pavement strengthening sections and 7 percent of the periodic maintenance sections having an ERR inferior to 12 percent. A comparison between the initial and the final analyses shows that traffic flows were often overestimated in the case of periodic maintenance, while cost overruns are the main reason for lower ERR in pavement strengthening. Of the five bridges for which an ex post economic evaluation was performed, one showed an ERR of 24 percent, and the other four an ERR greater than 40 percent. C. MAJOR FACTORS AFFECTING THE PROJECT Factors not Generally Subject to Government Control 13. The Borrower has taken advantage of the Gulf Assistance Program put in place by the Bank to attenuate the effect of the Gulf Crisis of 1990, and the disbursement schedule was accelerated from September 1, 1990 to December 31, 1991, with the percentage of Bank-financed expenditures for works increased during that period from 64 to 80 percent. 2 This is partly due to the establishment in 1989 of a Road Fund that spends about half of its receipts for road maintenance: in 1995, DH 560 million were used for such purposes, out of total receipts of DH one billion.  -5 - Factors Generally Subject to Government Control 14. Two major factors have influenced the course of the project: the on-going budgetary crisis, and cumbersome internal disbursement procedures. In its first years, the project was hindered by the lack of counterpart funding. The GovernrrLent needed to reduce its budgetary deficit, and chose to reduce its capital expenditures rather than its social expenses. However the establishment in 1989 of a Road Fund was instrumental in accumulating much needed financial resources for the construction and maintenance of the road network. The Road Fund now contributes about one third of the total expenditures in the road sector, including infrastructure (highways and local roads) and transport (carriers and other agencies). 15. Internal disbursements followed a complex route, from the payment of an invoice by the Provincial Treasurer, its reimbursement by the General Treasurer, who in turn was reimbursed the Budget Directorate. The Budget Directorate drew funds from the Special Account set up by the Bank, and made application for its replenishment. To add to the delays, surface mail was generally used for communication within the country, and occasionally with the Bank. Factors Generally Subject to Implementing Agency Control 16. Identification of road sections. Projects were sel]ected by DRCR, which prepared a three-year investment program, updated annually on the basis of studies performed by CNER on pavement conditions and traffic flows. DRCR in turn informed the Provincial Directorates of Public Works (DPTP) of the broad contents of this national program. DPTP were given the amount of works to be financed through various sources (national budget, international financial institutions) one year in advance, so that they could plan the various studies required to prepare the work packages and tender documents. However DRC:R did not associate the DPTP in the planning process itself Since the actual surface conditions of a road section could differ from DRCR's modeled network, DPTP often needed to change the contents and/or limits of a project between its identification and its execution, without informiing DRCR of those changes. Such a practice, if it were extended to all works, would render the economic analyses meaningless and would cast doubts on the efficiency of the works. There is a need for effective two-way communication and feedback between DRCR and DPTP. A Project Coordinator was nominated near the end of the project to improve the coordination between the various agencies, but he came too late to be really effective. 17. Project Contents. A few road rehabilitation or resealing projects were as short as 1.0 km3: at the planning stage, projects should be analyzed within the framework of a total itinerary linking two towns or villages, as is now being done in the follow-up project. Another problem stemmed from the fact that projects too often were limited to the rehabilitation or maintenance of the pavement, to the exclusion of the roadside components: only occasionally were shoulders and traffic markings improved as part of a larger project. Field observations have shown that drainage problems in many locations should have been addressed at the design stage. In general, a In some cases those short sections were part of a larger project involving several contracts. For instance road rehabilitation on RP24 in Fes was financed by the Bank between PK6 and PK20. Resealing was financed by the Bank between PK25 and PK26, and by other sources between, PK20 and PK25.  -6 - rehabilitation or a maintenance project should not be limited to the pavement, but should include roadside components, lateral and transversal drainage, small bridges, and correction of black spots that experienced a higher than usual number of accidents. To program all the works within a single contract would have the additional advantage of minimizing total costs, disturbances to motorists, and non productive investments. 18. Studies and Technical Assistance. In spite of a number of successes, mainly for the studies conducted under the aegis of MPW, this component of the Highway Sector Project has experienced many failures, mostly because the implementation schedule was too optimistic: the SAR assumed that most of the requests for proposals would be sent within five months from the project inception date, which did not leave time enough to define the contents of the studies and to prepare terms of reference that reflected the major governmental orientations4. The studies should have been released in a sequential fashion, to help the Borrower managing them properly and supervising their execution. However, delays by themselves do not explain failures, which were due to the lack of interest shown by MOT for that component. 19. Disbursement Procedures. Every supervision mission has commented on the slowness of the disbursement procedures. Three major factors have been identified to explain the problem and propose solutions: (i) MOF requires that the project directors prepare two payment requests for each invoice from a contractor or a vendor, one for the portion of the works, goods acquisition or consulting services5 that is financed by the Bank and one for the portion that is not, with as many different payment requests as there are currencies involved; (ii) regional treasurers have no interest in accelerating the transfer to the Central Treasurer of supporting documents that they received from the regional DPTP; and (iii) regional treasurers, and for that matter MOF personnel, have no idea of the actual works on the field, and there is barely any communication between the regional DPTP and MOF Multilateral Financing Service. 20. During the course of the project, actual disbursements lagged behind SAR projected disbursement schedule by about one year, as shown on Table 4 in Part Two of this report. This partly explains why the closing date had to be postponed twice, first from December 31, 1994 as initially projected in the Loan Agreement to December 31, 1995, and then to June 30, 1996. This last extension was requested by MOF because expense justification for US$ 3.2 million had not been released by the provincial treasurers, sometimes more than a year after having been incurred, preventing the central treasurer to claim those expenses to the Bank. In spite of these postponements, the Ministry of Finance has requested the cancellation of about one percent (US$ 0.8 million) of the original loan amount (US$ 79.0 million). 4 Preliminary terms of reference had been discussed during project appraisal but much work remained to be done before they could be sent out to consultants as RFPs. 5 Consultants services were only financed for 80 percent of their total costs, rather than 100 percent as is the case in other Bank-financed projects.  -7 - D. PROJECT SUSTAINABILITY 21. Project sustainability is likely for all works. Site visits made during the various supervision missions and interviews with DPTP directors during the ICR mission confirmed the general quality of the works and the adherence to sound construction and maintenance practices. The Borrower and the Bank made a constant effort during the course of the project to ensure systematic identification of required improvements and to seek proper solutions whenever a problem was identified, and MPW is committed to ensure an adequate level of maintenance of its road network. Construction of CNEHA and of maintenance shops was successfully completed within budget, and in the former case, a program is in place to ensure its continuous operations through MOT's annual operation budget. 22. Project sustainability is also likely for MPW adjustment and institutional development program. Commitment by MPW personnel to transfer the recommendations of the various studies it commissioned into its normal operations is a clear indication of the success of this component. For instance, the development of a PMP at CNER led to the preparation by DRCR of its annual road maintenance and rehabilitation program. T:he reverse is true of MOT, where the objectives of some studies are far from having been achieved, and their outcome, in the case of SDNT in particular, is of little value to guide future actions. E. BANK PERFORMAN[CE Project Identification and Preparation 23. The project was identified as a sequel to the Fourth Highway Project, and indeed the financing plan showed on-going contributions of the Bank and AfDB. It also proposed a sectoral approach, in line with the increasing competence of executing agencies to plan and implement sector-wide investment programs, and with the need for emphasis on sectoral policy and institutional issues, thus introducing a much broader approach to the development of the highway sector. However, a more thorough preparation would have identified the major pitfalls in that approach, namely that it requires a high level of coordination between executing agencies, and that each agency is equally committed to the success of the project. The project should have been identified as a Highway Project, not a Highway Sector Project, and collaboration of AfDB should have been enlisted and confirmed at the on-set of the project Project Appraisal 24. At the appraisal stage, the respective shares of the cofinanciers were 21.7 percent for the Aff)B and 16.0 percent for the Bank. However this financing plan did not work as intended, and no record exists to support a comparison between the project as appraised and the actual project. The Loan Agreement itself had to be modified twice at the inception of the project because the AfDB own loan effective date was postponed twice. Also the EBank overestimated the Borrower's capacity to mobilize counterpart funds, especially in the first years of the project and to initiate and manage complex studies.  -8 - Project Implementation 25. The SAR's financial plan showed that AfDB would contribute a major share of the financing, but no attempt was made during the course of the project to evaluate its participation, nor to coordinate its activities with the Bank. 26. During supervision missions, the following issues were frequently raised: (i) procurement issues, in particular pre- and post-qualification and bid evaluation procedures; (ii) disbursement procedures and the mechanism of the Special Account; (iii) institutional and financial issues, namely, who should manage the various road networks, and what should be the budget for adequate maintenance; and (iv) MOT's failure to implement most components under its jurisdiction. Disbursement procedures have been greatly improved, and most contractors and vendors were paid in time during the second half of the project. However internal disbursement problems have not been solved, in spite of the Bank's insistence on the need to simplify the disbursement channels. With regards to MOT's performance in particular, the Bank could hardly have been more compelling when asking MOT for a clear commitment regarding its participation in the project, and for a detailed Action Plan: any suspension of disbursements would have been counterproductive by unduly penalizing MPW, without having much impact on MOT. F. BORROWER PERFORMANCE 27. The Borrower performance mirrored the successes and failures of the project. MPW supported its share of the project with utmost attention to the results, while MOT was only interested in a few components of the project, namely the construction of CNEHA and the study on rural transport. In particular, MOT was to prepare an action program to introduce reforms in the organization of the road transport sector based on the results and recommendations of SDNT. This action program had not been drafted under the present project. However, it is now included in a new law being discussed by the Government. Similarly a decree defining the new road classification, in preparation since 1985, should have been published in June 1991, but it has encountered major delays and is now scheduled to be finalized in 1997 for the rural sections. On the other hand, audit reports and other financial data were submitted in a timely manner and appropriate format. 28. Technical Assistance. Technical assistance was designed to assist the Borrower in establishing a PMP system and a road maintenance investment program: both were successfully implemented by DRCR, and are an important measure of the success of the Highway Sector Project. However it was different for MOT, where an absence of proper focus can explain the disappointing results of this component. 29. Procurement. The Borrower delayed implementing Bank's procedures for procurement of works, goods, and consultants services, in spite of a provision in the Loan Agreement to use such methods. Unfamiliarity with the Bank's procurement procedures, the need to protect the local market, and existing detailed local procurement operations that had been in place for a long time but were not compatible with the Bank's, were all cited as arguments to explain the Borrower's reluctance. Many such difficulties would have been prevented had the Borrower prepared a Project Implementation Manual, with one section detailing the proper procurement  - 9- procedures to put in place in all regional DPTP that were involved in Bank--financed projects. It should be added that procurement issues have been solved during the course of the project. 30. Very few foreign contractors showed an interest in the projects, probably because the contracts were too small to justify large set up expenses. 31. Inadequacy of Financial Controls. The financial controls put in place by MOF were not adapted to road maintenance projects. Once bids were opened, MOF needed one to two months to examine the contract and give its approval, but this verification was not warranted, since MOF had already approved the budget before DPTP called for tenders. And when a contractor sent an invoice, MOF would take two to three months to process it and transfer funds to the contractor's bank account. MOF should confine its involvement during the execution of a project to exercising ex post controls, without interfering with its actual implementation. 32. Dialogue with the Bank. Whilst invoices approved by the Borrower were reviewed for eligibility by the Bank before being processed for disbursement, this review did not include an appreciation on whether the works or services provided were satisfactory. This was of no immediate consequence for works, since the Borrower was responsible for their supervision. However, in the case of studies, there was a lack of continuous supervision by the executing agencies and the Bank was not systematically sent the differeni: reports: this became an issue when the Borrower was not satisfied with the performance of a consultant. G. ASSESSMENT OF OUTC'OME 33. In terms of physical realization, the results of the project are satisfactory, both in terms of actual implementation and expected sustainability. The project achieved, and exceeded in certain cases, its key physical objectives. In addition, main results of the project can be regarded as sustainable, in view of the increased awareness of the importance of allocating adequate road maintenance funds and the acquisition of the tools and know-how to earnark maintenance funds to economically viable projects. On the other hand, the results of the adjustment and institutional development components are unsatisfactory. The Borrower has not made use of technical assistance as it should have, and it has missed an opportunity to improve the transport sector. Many studies were not initiated, and when they were, their results were often not satisfactory, and their reports of little use. 34. Visits to several DPTP regional offices during the preparation of this ICR have confirmed the importance of the Bank's contribution to the road miaintenance program. In the past, decisions to implement projects were based on projections of future traffic, and greater emphasis was put on new construction than on existing road rehabilitation or maintenance. More coherent procedures have been put in place to take into account the quality of the pavement surface, traffic safety, and operations costs. H. FUTURE OPERATION 35. The Highway Sector Project lessons have already 'been applied to the Sixth Highway Project that became effective in October 1995. DRCR mnust maintain its capability of using  - 10- HDM-III software in programnming maintenance and rehabilitation works. DPTP should become more familiar with the use of SIGER and other software packages to analyze and control projects. All executing agencies have to pay closer attention to the definition and supervision of studies, and to become involved in their execution. Accident data should be analyzed within the context of project preparation. CNER has to update on a continuous basis its database on surface condition and traffic on paved roads. It should consider a continuous traffic count and pavement evaluation program, to replace the existing practice of evaluating traffic and road surface conditions every other year and measuring deformation every three years. 36. MOT needs to accelerate the liberalization of the transport sector, especially regarding passenger transport. To that effect, they should commission the studies that had been appraised as part of the Highway Sector Project, but never realized. SDNT must be updated. MPW should put in place training programs on new construction and management techniques: aggregate/ bitumen emulsion, landslides protection, drainage, and works planning and programming. L KEY LESSONS LEARNED Development Objectives 37. Seek Borrower ownership at the appraisal stage and throughout the project. There is no substitute to the Borrower's full commitment towards a project to ensure its success, and the IIighway Sector Project has clearly demonstrated that all components taken in charge by the Borrower experienced satisfactory outcome, whether they were civil works, equipment procurement, or consultants services. 38. Maintain dialogue with the Borrower. Studies cannot replace sectoral dialogue. Comprehensive transport studies such as SDNT create great expectations that can hardly be met for a number of reasons: planning tools may not be sufficiently refined, all required data may not be available to model a large network such as Morocco's, and the Borrower may have a hidden agenda that prevents him from agreeing with the study's main conclusions and recommendations, especially when they call for fundamental changes in policy, regulations, or procedures. 39. Establish rational basis for project evaluation. Greater attention should be paid to traffic flow projections and to the scope of projects. Smaller project components that do not have a clear relation to the main thrust of the project should be eliminated at the appraisal stage. Implementation 40. Assess Borrower capability to implement the project. In scheduling major studies, it is important to take into account the physical capacity of the Borrower to prepare requests for proposals, including a clear definition of the mandate, to evaluate the proposals, and to supervise the consultants' work. The Borrower has to participate actively in all phases of the studies, if they are to be of any future use. 41. Prepare comprehensive work packages. Contracts for road rehabilitation or maintenance should not be limited to improving the pavement performance, but should consider roadside  components, drainage and erosion problems, soils stability, and correction of black spots. A larger diffusion of the Bank's publications on economic analysis and on road rehabilitation and maintenance procedures would help executing agencies in planning projects and preparing contractual documents. 42. Delineate responsibilities between various agencies, Overlapping responsibilities and limited cooperation between MPW and MOT hindered the clevelopment of transport planning. On the other hand, the decentralization of operations within DPTP was a major factor towards the success of the civil works program. 43. Streamline control procedures. MOF's cumbersome procedures delayed project development, not to mention interventions by local financial comptrollers in the preparation of tender documents and specifications. Disbursement procedures should be streamlined: it is of little consolation that MOF states that the Highway Sector Project showed a much better performance from that point of view than any other road project in the courntry. 44. Establish two-way dialogue between central and provincial agencies. There is a need to sharpen ex-ante economic analyses to ensure a direct relation between the projects that are evaluated as the most economically feasible and the ones that get realized.  - 12 - HIGHWAY SECTOR PROJECT (LOAN 3168-MOR) STATISTICAL TABLES TABLE 1: SUMMARY OF ASSESSMENTS ........................................................................................................................................................................................................................................... A Achievement of Ob-ectives Substantial Partial Negligible Not applicable Macroeconomic policies FLI LI L Sector policies [ Financial objectives [ ] LI Institutional development L L LI Physical objectives LI LI Poverty reduction L CIl Gender concerns I LI LI Other social objectives L L LI L Environmental objectives L L L L Public sector management Private sector development I] LI LI L Other L LI [= O B Proiect sustainabilitv Likely Unlikely Uncertain ............. i~..... ................................................................ ............................................................I......................................................................... C.Bank nerformance Highly satisfactory Satisfactory Deficient Identification L E L Preparation assistance L E L Appraisal L E L Supervision L E L  - 13 - ........................................................................................................................................................................................................................................... D Borrower verformance Highly satisfactoly Satisfactor y D.eficient .......................................................................................................... . ....... ............................................................... ...... ..... ....................... ...... .................. ....... Preparation Zz I Implementation C II Covenant compliance Operation L m ........................................................................................................................................................................................................................................... ............................ ............................................................................................................................................................................................................. E Assessment of outcome Highly Highly tisafactory Satisfactr Unsatisfactor unsatisfactory ..................................................................................................... .............. ........................................ ................. ............ .y.......... ............................................. ...... .............. .. ........................................................................................................................................................................................................................................... TABLE 2: RELATED BANK LoANs/CREDTrs Loans/Credits Year of and Title Purpose Approval Status Preceding Operations Credit 167-MOR Road construction and improvement on two long 70 Completed First Highway road sections; road strengthening, reconstruction PPAR Project and improvement on shorter sections; bridge #1565 construction; maintenance equipment and parts; 4/77 transport survey of Atlantic Coastal Region. Loan 955-MOR Construction of part of Casablanca-Rabat 74 Completed Second Highway expressway; improvements on shorter sections of PPAR Project primary and secondary roads; maintenance #4019 6/82 equipment; traffic studies in Casablanca and Rabat; establishment of a transport planning office in Ministry of Transport; detailed engineering of part of Casablanca-Rabat expressway. Loan 1830-MOR Pavement strengthening and preservation on short 80 Completed Third Highway sections; maintenance equipment; study of 80 road PPAR Project maintenance organization; economic feasibility #7015 studies and engineering work for pavement 11/87 strengthening under Fourth Highway Projects; assistance to Ministry of Transport on transport planning and coordination; weighing scales.  - 14 - Loans/Credits Year of and Title Purpose Approval Status Loan 2254-MOR Major emphasis on repair and maintenance of the 83 Completed Fourth Highway existing road equipment, road strengthening and PPAR # Project pavement repair; a limited amount of construction on 12081 a new major expressway; a new pilot component (about 22% of Project costs) in support of rural roads was added; financing for a study of the impacts on agriculture of irnproved rural roads; the Project also sought to generate a process to reformn Morocco's restrictions on road transport, and a study of the regulatory scheme for road transport. Following operations Loan 3901-MOR Improvement of about 1,133 km of priority 95 Ongoing Secondary, unpaved rural roads, 2,219 km of paved branch Tertiary and Rural roads (maintenance backlog resealings, structural Roads Project overlays and/or widening works) and network management (technical support, planning and programming, improvement phasing and training); streamlining of the road safety organization. TABLE 3: PROJECT TIMETABLE Date actual/latest Steps in project cycle Date planned estimate Identification 2/88 2/88 Preparation 6/88 6/88 Appraisal 12/88-4/89 5/89 Negotiations 4/89-9/89 12/89 Board presentation 7/89 2/90 Signing 11/89 March 15, 1990 Effectiveness 2/90 July 12, 1990 Project completion Dec. 31, 1993 April 30, 1996 Loan closing Dec. 31, 1994 June 30, 1996  - 15 - TABLE 4: LOAN/CREDIT DISBURSEMENTS: CUMULATIVE ESTIMATED AND AcTuAL (US$ millions) 120 E 100 1 80 o .360 4O- T t CD a. 0) 0) 0) 0) ) 0) ) 0) ) 0) 0) 0 0) 0 C C0 C 0 C 0 C 0 C 0 C O C 0) C 0 C) ) 0) C : 0) o SAR Profile o Actual A Revise( FY91 FY92 FY93 FY94 FY95 FY96 FY97 Appraisal estimate 12.6 36.0 56.9 71.5 79.0 Actual 5.4 19.8 49.7 60.6 74.7 76.4 78.2 Actual as % of 42.9 55.0 87.3 84.8 94.6 96.7 99.0 Estimate Date of final disbursement September 12, 1996 TABLE 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION Key implementation indicators in SAR Estimated Actual a) Civil works i Road rehabilitation, km 1,000 756 ii Pavement resurfacing, km 1,300 1,752 iii Shoulder rehabilitation, km 500 1,052 iv Pavement markings, km 5,000 2,823 v Bridge reconstruction, unit 7 6 vi CNEHA construction, unit 1 1 vii Workshop construction, unit 2 2 .................................................- ................................................ .......................................................................................... ....................................................................... b) Equipment i Road maintenance, vehicles unspecified none ii Traffic counting, units unspecified 80 iii CNEHA, tool kit 1 1 iv Workshops, tool kit 4 4 v Road safet,y unspecified  - 16 - Key implementation indicators in SAR Estimated Actual c) Consulting services i Narrow roads study done ii Rural transport study done iii Construction industr survey done ....................................... ..................................................................... ~R ~ ~ r . . Y ............. ............. ............................................................................................................................... d) Overseas training i Ministry of Public Works 66 man-months none ii Ministry of Transport 30 man-months none TABLE 6: STUDIES INCLUDED IN PROJECT Study Purpose Status Impact of Study National Transport Master To establish a planned program of Completed Deregulation of Plan Study investments in the main transport trucking industry corridors, and the need for greater liberalization in the road transport .........................I...............................................................................................................I.............. .......................................................................................................................................................... Action plan To follow up on National Not yet Included in Transport Master Plan Study published follow-up project l .......................................... . . .. ...... ... ......... .... .. ... . . ......... ......................................................................................... ......................... ....................................... Diesel vs. standard fuel To update an existing study on Part of prices road user taxation rural roads ............................................................................I............................................. ................................................... .. .. ............................................................................................................. Road classification To redistribute responsibilities Final Included in over rural road network to MPW decree not follow-up project and local authorities yet published ............................................................................I............................................................................... .............. ............................................................................................................................. Development of a To provide DRCR with an Completed Results used to pavement management improved management tool prepare the system annual road rehabilitation program .......... ............................................................................................................................................................................... .............. ............................................................ ......... Technical Assistance to To strengthen CNER Done CNER evaluate CNER road pavement conditions Study of narrow roads To provide DRCR with a rational Done . ....policy on widening rural roads Study of classified rural To provide DRCR with a rational Done Results are roads policy on maintaining and limited to rehabilitating rural roads detailed program of maintenance and rehabilitation .................................. I................................................................................................................................................................................................ Road maintenance training To provide technical assistance Partly and training to trainers done  - 17 - Study Purpose Status Impact of Study Technical assistance and overseas training: (i) DEPCT To promote modem tools and No action techniques applied to econornic taken analysis and transport planning (ii) DTT To computerize and improve No action reliabiLity of vehicle fleet database taken (iii) CNEHA To help in starting up the center No actionl Center is .......................................................................................................................................................................... ................... Rural transport study To assess rural services, define Done needs, and make recommendations ................................................................................................o,,n,, ,in,s,,ti,,t,,u,,t,,io,,n,al ,,s,,,e,t-,,u, p , Construction industry To improve the efficiency of the Done construction industry TABLE 7A: PRoJEcT COST3 Appraisal estimate (US$ million) Latest estimate (US$ million) Local Foreign Local Foreign Item costs costs Total costs costs Total Civil Works Road rehabilitation 23.6 23.9 47.4 42.5 42.5 85.0 Pavement resurfacing 19.1 19.3 38.4 9.3 9.4 18.7 Other periodic maintenance 6.7 6.8 13.6 1.7 1.8 3.5 Bridge reconstruction 3.7 3.8 7.5 2.7 2.7 5.4 CNEHA construction 0.5 0.3 0.8 0.7 0.4 1.1 Workshop construction 0.6 0.3 0.9 0.6 0.3 0.9 Eguiument 1.4 3.2 4.5 0.5 1.3 1.8 Consultin2 services Studies, TA 1.4 5.7 7.]. 1.1 4.6 5.7 Overseas training 0.0 0.5 0.5 0.0 0.0 0.0 TOTAL COSTS 57.0 63.8 120.9 59.1 63.0 122.1  - 18 - TABLE 7B: PROJECT FINANCING Appraisal Estimate (US$ million) Latest Estimate (US$ million) Local Foreign Local Foreign Source costs costs Total costs costs Total IBRD/IDA 15.2 63.8 79.0 15.2 63.0 78.2 Domestic contribution 41.9 0.0 41.9 43.9 0.0 43.9 TOTAL 57.1 63.8 120.9 59.1 63.0 122.1 TABLE 8: ECONOMIC COSTS AND BENEFITS A,ppraised Program As-built Rough Costs Rough Costs DPTP # Length Traffic ness DH ERR Traffic ness DH ERR km veh/day mm/km million % veh/day mm/km million % .......................................................................................................................................................................I........................................................................... Road Rehabilitation ........ .... ..................... ..................... ........ ...... ....................................................................................................................................................................................... ........... Chefchaouen 28 12.0 700 3500 3.40 40 1224 3568 14.72 35 El kelaa 7 14.0 2800 2500 10.60 21 15020 2015 14.44 >100 7 28.0 3200 2500 12.20 65 3941 1524 28.87 36 Essaouira 10 17.0 1000 3500 6.20 43 531 3470 10.89 23 Fes 20 11.0 2300 3000 7.80 24 4903 2950 8.13 >100 24 14.2 1650 3000 5.50 39 3116 2316 10.5 34 26 44.0 1300 4500 14.10 >100 1625 4145 32.52 84 Kenitra 3 8.0 4300 3000 6.80 74 2826 3027 12.51 14 4 12.6 1900 4500 7.00 89 2606 5015 19.70 77 Khemisset 22 72.0 1000 4000 28.50 53 550 4170 27.18 57 Marrakech 9 13.8 1150 3500 5.10 68 940 3500 14.23 12 Rabat 22 13.0 1000 4500 2.10 >100 1158 4443 5.05 >100 Sidi kacem 6 8.0 2600 3000 6.50 31 2854 3323 3.81 100 28 18.0 900 3500 5.40 37 1262 3366 8.58 77 28 6.0 700 3000 1.60 31 1160 3234 2.86 60 Taounate 26 18.4 500 4000 6.70 36 512 4216 6.68 61 26 5.0 500 4500 1.90 58 594 5156 1.82 >100 Taza 1 14.0 3800 2500 17,50 25 3847 1674 10.35 52 312 13.0 1500 4000 3.90 >100 1593 4119 9.61 63 Tetouan 28 13.00 5700 2500 20.40 27 10842 2220 15.79 >100  -19- Appraised Program As-built Rough Costs Rough Costs DPTP # Length Traffic ness DH EbR Traffic ness DH ERR km vehlday mm/ln million