Bolivia: Appraisal of an Aviation Development Project

ReportNo. 1458b-BO FILECopy Bolivia:Appraisal of an Aviation DevelopmentProject Public Disclosure Authorized

April 28, 1977 Latin America and the CaribbeanProjects Department FOR OFFICIALUSE ONLY Public Disclosure Authorized Public Disclosure Authorized

Public Disclosure Authorized Document of the World Bank

This document hasa restricteddistribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosedwithout World Bankauthorization. Currency Equivalents

1 Bolivian Peso ($b) = US$0.05 US$1.00 = 20.0 Bolivian Pesos ($b) 1 million Bolivian Pesos ($b) = US$50,000

System of Weights and Measures

Metric US Units

1 kilometer (km) = 0.62 mile (mi)

1 meter (m) 5 3.28 feet (ft) 1 liter (1) = 0.26 US gallon 1 kilogram (kg) = 2.20 pounds (lb) 1 ton = 2,205 pounds

Fiscal Year

January 1 to December 31

Abbreviations and Acronyms

AASANA Airports and Air Navigation Services Administration AGA Aerodromes and Ground Aids ATC Air Traffic Control COM Communications CNA National Aviation Council DGAC Directorate General of Civil Aviation DGTTA Directorate General of Air Transport and Aerial Work DME Distance Measuring Equipment ECLA Economic Commission of Latin America FAB Bolivian Air Force HF High Frequency ICAO/OACI International Civil Aviation Organization ILS Instrument Landing System ISB Independent Side Band LAB Lloyd Aerea Boliviano LRB Locating Radio Beacon MTCCA Ministry of Transport, Communications, and Civil Aviation NAVAID Navigational Aid NDB Non-Directional Radio Beacon RX Receiver SAC Under-Secretary for Civil Aviation SSB Single Side Band TX Transmitter UNDP United Nations Development Programme VASI Visual Approach Slope Indicator VHF Very High Frequency VOR Very High Frequency Omni-Directional Radio Range Aircraft Nominal B-727-100 Boeing three-engine jet 119 seats 2 tons belly load B-727-200 140 seats 4.5 tons belly load CV-580 Convair twin-engine turbo propeller 8 tons pay load F-27 Fokker twin-engine turbo propeller 40 seats or 5 tons pay load C-46 Curtiss twin-engine piston propeller 5.5 tons pay load DC-3 Douglas twin-engine piston propeller 28 seats 3 tons pay load FOR OFFICIAL USE ONLY

BOLIVIA

APPRAISAL OF AN AVIATION DEVELOPMENTPROJECT

TABLE OF CONTENTS

Page No.

SUMMARY AND CONCLUSIONS ...... i-ii

1. INTRODUCTION ...... o...... 1

2. BACKGROUND ...... 1

A. General ...... 1 B. The Transport Sector ...... 2 C. Transport Planning and Coordination ...... 3 D. Development Plan ...... 4

3. BOLIVIAN AVIATION ...... 5

A. Existing Air Transport ...... 5 B. Present Air Traffic ...... 6 C. Traffic Forecasts (Project Airports) ...... 7

Passenger Forecast ...... 7 Cargo Forecast ...... 8 Aircraft Movements ...... 8

D. Existing Organizations ...... 8 E. The Borrower - AASANA ...... 9

4. THE PROJECT ...... 10

A. Objectives ...... 10 B. Description ...... *...... 10

Airport Construction and Improvements ...... 11 Design and Supervision of Construction ...... 11 Design of Cochabamba Runway ...... 12 Provision of Equipment ...... 12 AASANA Technical Assistance and Staff Training ... 13

C. Special Components of the Project ...... 13 D. Ecology ...... 13 E. Cost Estimate ...... 14

This Appraisal Report has been prepared by Messrs. B. Bostrom (Aviation Economist), J. Bowlin (Financial Analyst) and W.B.R. Zetterstrom (Aviation Engineer) and Ms. V. Foster (Editor).

Thisdocuwmnt has a retnctoddistribution and may be usedby recipientsonly in theperformance of theirofficial dutie. Its contentsmay not otherwise be disclosdwithout World Bank autmrlaaton. TABLE OF CONTENTS (Cont'd)

Page No.

F. Execution ...... 15 G. Procurement ...... 15 H. Disbursements ...... 16

5. ECONOMIC EVALUATION ...... 16

A. General ...... 0.. *.*...... 16 B. Economic Analysis ...... 17 C. Cost Savings ...... 18 D. Project Return ...... 19

6. FINANCIAL EVALUATION ...... 19

A. Existing Situation ...... 19 B. Financial Objectives ...... 20 C. Financial Plan ...... 21 D. Financial Projections ...... 21

7. AGREEMENTS REACHED AND RECOMMENDATION ...... 24

TABLES

1. Total Freight Movement in Bolivia 2. Comparative Economy Air Fares, 1976 3. Names and Abbreviations of Airports 4. Forecast Passenger and Freight at Project Airports 5. Forecast Aircraft Traffic 6. Cost Estimates 7. Disbursement Schedule 8. Estimated Aircraft Cost Savings in 1981 9. Quantified Project Benefits 1978-1998 10. Sensitivity Analysis of Economic Rate of Return 11. Balance Sheets 1970-1974 - AASANA 12. Statement of Revenues - AASANA 13. Projected Operating Statements - AASANA 14. Projected Project Airport Operating Statements - Riberalta Airport 15. Projected Project Airport Operating Statements - Santa Ana Airport 16. Projected Project Airport Operating Statements - San Borja Airport 17. Projected Project Airport Operating Statements - Tarija Airport 18. Project Cash Flow - AASANA 19. Projected Balance Sheets - AASANA 20. Schedule of Selected Financial Indicators TABLE OF CONTENTS (Cont'd)

ANNEXES

1. Bank Group Projects in the Transport Sector 2. Bolivia Aircraft and Airport Inventory 3. Aircraft Accidents in Bolivia 4. Traffic Forecast Methodology 5. Existing Airport Conditions and Proposed Improvements 6. Location List for Equipment Included in the Project 7. Regional Maintenance Equipment 8. Draft Technical Assistance Job Descriptions 9. Special Components of the Project 10. Project Progress Monitoring Indices 11. Summary and Conclusions of Bolivia Transport Sector Report 12. Details of the Economic Evaluation 13. Financial Assumptions

CHART

1. Organization Chart

MAPS

IBRD 12654 - Project Airports IBRD 12655 - Telecommunications Network

BOLIVIA

APPRAISAL OF AN AVIATION DEVELOPMENT PROJECT

SUMMARY AND CONCLUSIONS i. This report appraises a project comprising:

(a) the construction of two new domestic airports (Riberalta and San Borja) and major improvements at two others (Santa Ana and Tarija);

(b) the design and supervision of construction in (a);

(c) the provision of air navigational aids (Navaids) and communications (Com) equipment at the project airports and new countrywide Navaid and Com systems;

(d) the provision of general maintenance equipment and runway maintenance equipment;

(e) the provision of technical assistance and staff training to the Borrower; and

(f) the design of a new runway, aprons and related works at the Cochabamba Airport.

ii. The difficulties for surface transport created by topography and population distribution are reflected in high infrastructure costs. Given the scarcity of surface transport and the low population density in the lowlands, the Government is emphasizing the development of aviation for this and other isolated parts of the country.

iii. The project, to be administered by Administracion de Aeropuertos y Servicios Auxiliares a la Navegacion Aerea (AASANA), will enable the domestic airlines and, in particular, the almost wholly Government-owned Lloyd Aereo Boliviano (LAB), to use larger, more productive aircraft, which already exist in their fleets, at a higher daily utilization rate with correspondingly lower unit costs. The project will also reduce the delays, cancellations and diversions for aircraft through improved aeronautical communications, navigational aids and runway maintenance equipment. The technical assistance and training element are intended to strengthen the planning, maintenance and construction units responsible for civil works and equipment of the borrower. The inadequate length and poor orientation of the present runway at Cochabamba, the main base of LAB, make it advisable to construct a new runway. It is desirable to support the project by providing funds for its detailed design. How- ever, it is not possible at this stage to include the construction of the new runway in the present loan because of limited funds. - ii - iv. The proposed US$25.0 million Bank loan represents the 60% foreign exchange componentplus 8.4% of the local cost component (expendituresfor local consultants)of the US$39.5 million required for the project. The remaininglocal costs will be financed by an equity investment from the Government,which will exempt project items from taxes and duties. v. Contractswould be awarded through internationalcompetitive bidding in accordancewith Bank Guidelines. Retroactivefinancing would be required for design and supervisionat three airports as well as paving and supervision at one airport (Tarija). Such amounts should not exceed US$1.7 million. vi. The main project benefits are cash savings to LAB from better uti- lized, more efficient and productive aircraft. The transport to or from isolated communitiesby non-scheduledBolivian cargo airlineswould also be assisted by the provision of better communications,air navigationalaids and runway maintenance. In addition,unquantified benefits include time savings to passengers and prevention of spoilage of air cargo, improved air safety and better inter-regionalintegration of the country. The quantifiedeconomic return ranges from 12% to 24% for individualproject items, with an average of 19% for the project as a whole. vii. The financialevaluation is based on the assumptionsof tariff increasesto cover operatingcosts for AASANA's entire system by 1980 and to give a return on fixed assets of 4% from 1985 onward. Even with these tariff increases,substantial benefits will still accrue to LAB, which, however, will be required for its continued fleet modernization. viii. This report is based on economic and engineeringstudies made by the proposed Borrower and its consultants. It would be the fourth Bank Group transportationproject in Bolivia and the first in aviation development. ix. The proposed project is suitable for a Bank loan of US$25.0 million to AASANA, with a Government guarantee. The term would be 20 years, including a grace period of four and one-halfyears. BOLIVIA

APPRAISAL OF AN AVIATION DEVELOPMENT PROJECT

1. INTRODUCTION

1.01 The Government of Bolivia has requested Bank Group financial assistance in upgrading its air transport system to meet domestic transport needs more adequately. The project selected as the most appropriate concentrates on construction or reconstruction of four airports in isolated parts of the country: Riberalta, Santa Ana de Yacuma and San Borja in the northern department of Beni and Tarija in the south. The project also includes design for a new runway, taxiways and apron at Cochabamba; aeronautical communications and air navigational equipment; and runway maintenance equipment and technical assistance and training for the operating agency, Administracion de Aeropuertos y Servicios Auxiliares a la Navegacion Aerea (AASANA), the proposed borrower.

1.02 This would be the first Bank Group aviation project in Bolivia. Annex 1 gives details of previous Bank Group loans and credits for Bolivian transportation projects (railways and pipelines).

1.03 Project cost is estimated at US$39.5 million (net of taxes and duties) with a US$23.7 million, or 60%, foreign exchange component. The proposed loan of US$25.0 million would cover this foreign exchange requirement plus US$1.3 million equivalent to cover a part of the costs of consultant services for detailed engineering design (paras. 4.08 and 4.10).

1.04 This report is based on the technical and economic studies prepared by AASANA and its various consultants and on the findings of a Bank appraisal mission comprising Messrs. B. Bostrom (Aviation Economist), W.B.R. Zetterstrom (Aviation Engineer) and J. Bowlin (Financial Analyst), which visited Bolivia in November 1976. The report has been edited by Ms. V. Foster.

2. BACKGROUND

A. General

2.01 Bolivia has an area of 1.1 million km 2, which can be roughly divided into the barren highlands "Altiplano" in the western part of the country, where most of the country's population lives; the central valleys in the midwest, and the lowlands to the east and the north. The departments of Pando, Beni and Santa Cruz are in the latter area and represent more than half the territory of the country, but contain only a small part (19%) of the population. Because of topographical barriers and long distances, transportation's role of encour- aging overall economic development through an interchange of production among regions is unusually difficult. The provision of adequate transportation is further complicated by low traffic densities.

2.02 The difficulties caused by topography and population distribution are reflected in high transport infrastructure costs, necessitating a very careful analysis of the most appropriate modes of transportation and potential projects for investment. After such an analysis, the Government is emphasizing the development of aviation for isolated parts of the country. Of the total transport projects in the five-year plan 1976-1980, an allocation of 21% has been made to investments in civil aviation.

B. The Transport Sector (See Table I for comparison of traffic by modes)

Railways

2.03 The railway is a very important transport mode as a result of the focus on mining as the prime activity for the modern sector of the economy. The system consists of about 3,400 km of meter-gauge Government-owned single track line (Map IBRD 12654). The most important route is the line con- necting the mining areas and La Paz with the Chilean ports of Arica and Antofagasta. This western network is not directly connected to the eastern lines linking Santa Cruz with the Argentine and Brazilian meter-gauge networks; the only connection between the two networks is through Argentine territory. Although less important in terms of traffic, the line between Brazil and Santa Cruz is vital since it is the only surface mode of transport in this area and the natural import route for this rapidly growing part of the country. As a result of improvements in management and operation through two Bank-financed projects and tariff increases in 1975 and 1977, the railway is presently operating at a profit. A third railway project is being considered for Bank financing.

Highways

2.04 The present road system consists of about 38,000 km, of which 3% (1,166 km) are paved, 17% (6,559 km) are gravel surfaced and the remainder, 80% (29,831 km), are unimproved earth roads. The most important part of the network is located in the highlands and valleys, where 84% of the population is concentrated in 34% of the territory. In contrast, the lowlands of the northern and eastern regions, which have twice the area of the other two regions, are insufficiently serviced by a few low standard roads. The road network generally is laid out in the form of a "Y" with Oruro as center; the main stem pointing to the south toward Sucre, Potosi, Tarija and through Villazon and Bermejo into Argentina; the left arm stretching through La Paz into the Titicaca and Yungas regions; and the right arm leading through Cochabamba into the lowlands of Santa Cruz. In view of the road conditions, road transport is primarily important only on relatively short hauls.

Waterways

2.05 The river transport system is made up of an extensive network of inland waterways located in the eastern and northern parts of Bolivia, measuring about 1,600 km. Minimum channel depths vary from 1.0 to 3.5 m, with seasonal variations of up to 9.0 m. The system consists of five main waterways, as shown on Map IBRD 12654. These rivers represent the only available transport mode for commodities whose value is too low to justify movement by air. As such, they perform a vital function even though the quantities moved are small. - 3 -

2.06 Lake transport is limited to Lake Titicaca, the highest navigable lake in the world. Its primary function is that of an alternate transport corridor to the Pacific Ocean through the Peruvian lake port of Puno, by rail and road to the seaports of Matarani and Mollendo. In terms of ton-km of freight traffic, lake traffic is more important than river traffic.

Pipelines

2.07 The state oil company operates 2,462 km of oil pipelines and 754 km of gas pipelines. The oil pipelines allow access from the major production fields to the Pacific seaport of Arica and to the Argentine border. The Bank-financed natural gas pipeline (Loan 635-BO) conveys gas to Argentina. Depending on the success of intensive exploration efforts now under way and the confirmation of identified reserves, significant new pipeline construction may be undertaken.

Aviation

2.08 The aviation sector is discussed in Chapter 3.

C. Transport Planning and Coordination

2.09 Important issues related to transport planning and coordination in Bolivia need attention. As an example, during the next 20 years, there is little doubt that Bolivia will have to construct and improve a substantial number of roads. This program, which could cost several hundred million dollars, must be carefully defined and evaluated against the alternatives offered by the other transport modes.

2.10 A National Transport Survey for Bolivia, financed by UNDP, was completed in 1969, with the Bank acting as Executing Agency; it proposed a program for integrated transport development over the following ten years. One of its main recommendations was that a Directorate of Planning and Coor- dination should be created. The Directorate was created and, for a time, was attached to the Ministry of Coordination and Planning, but is now in the Ministry of Transportation, Communications and Civil Aviation (MTCCA).

2.11 For achieving better planning and coordination, the Bank, in 1972, assisted in the preparation of terms of reference for a UNDP-financed technical assistance program to strengthen this Directorate. This program, with ECLA acting as executing agency, was cancelled in 1976 due to lack of funds after only partial implementation (a consultant worked for a few weeks at MTCCA and assisted in the preparation of projects to be included in the National Five-Year Investment Plan, 1976-1980).

2.12 The gap in knowledge regarding transport facilities and equipment, their condition, their age and their ability to meet expected demands is serious. Although individual project studies have been undertaken, there has been no real coordination among them. The Government has decided to update its National Transport Plan again under the direction of the Directorate of Planning and Coordination. The main objectives of the Plan would be to: -4-

(a) analyze and project the transport demand in relation to planned development of the economy;

(b) review existing capacity and operations;

(d) recommend policies and operational improvements designed to make best use of available capacity; and

(e) prepare a program of investments necessary to improve and expand capacity to meet projected demand.

2.13 Due to the limited funds available, UNDP and the Government have requested that financing of the program be taken over by the Bank. Funds for the needed updating of the National Transport Plan and for a technical assistance contract for its implementation are being recommended in the Third Railway Project now under consideration (para. 2.03).

D. Development Plan

2.14 The Government's main transport strategy (except for pipelines, planned by the Ministries of Mines and Industry), for the five years 1976- 1980 can be summarized as follows:

(a) extend and improve the road network to meet national and regional development related to high priority sectors in the economy;

(b) continue the rehabilitation of the state railway;

(c) modernize air transport through improvement and reequipment of infrastructure, ensuring permanent availability of smaller airports, particularly in the north and northeast;

(d) extend the river and lake fleet and improve port facilities and river navigation; and

(e) achieve an efficient operation of each transport mode in such a way that costs are low and services satisfy the demand.

2.15 The present MTCCA plan calls for investment, during 1976-1980, in projects already under execution totalling US$475 million in transport, excluding pipelines; of this total, US$266 million is for highways, US$107 million is for railways, and US$102 million is for aviation. In addition, projects of US$439 million are under study, with an aviation share of US$111 million and the rest for highways. This may be compared to total public sector investment of US$2,436 million, or almost 20%. Productive sectors (industry, mining, hydrocarbons and agriculture) will use about 60% of the public sector investment, and energy and public services will use the rest. About 62% of the transport investment is in foreign exchange and is likely to require external financing. Continued sector planning and coordi- - 5 -

nation are required to ensure that the projects under study are justified in their overall context and are well-timed. Of the US$102 million 1976-1980 investment for aviation, the major part is for airport improvement and aircraft purchases for the national airline, Lloyd Aereo Boliviano (LAB). This planned investment is ambitious, but seems achievable.

2.16 In addition to the proposed project and other Government investments in the five-year plan above, it became apparent during appraisal that, because of a recent aircraft accident at Santa Cruz, a great deal of public pressure was being exerted to relocate the existing airport to a site some 15 km north of the town. However, various Government officials (notably in finance and planning) raised serious reservations to this proposed construction, primarily due to the 1976 completion of a new terminal building at the existing airport, the high interest rates and short payback period for the money to be borrowed, and the probable necessity to have the airport designed, constructed and financed by a consortium of firms as a turnkey project with its inherent risk of over-design and high construction costs. Since the probability of construction of this proposed airport is unknown, as well as its likely timing, costs of construction and financing, such costs have not been included in the financial projections for the project. It is assumed that, if such an airport were constructed, AASANA would be the operator of the airport only, not the owner. Assurances were obtained during negotiations that assets for a new Santa Cruz airport would not be transferred to, nor debt service cost borne by, AASANA until it can be demonstrated that such a transfer will not prevent AASANA from complying with the relevant financial covenants of the Loan Agreement (para. 6.08).

3. BOLIVIAN AVIATION

A. Existing Air Transport

3.01 Civil aviation in Bolivia is, to a considerable degree, a relic of the 1940's (Annex 2). The communications (Com) equipment and navigational aids (Navaids) and some of the airfields date from that era, and the backbone of the domestic flying industry has basically consisted of aircraft of about 1945 vintage, relatively low in capital cost and operated with a minimum of maintenance. Airports have been difficult and costly to build; the electronic equipment, although good in its day, is now old, unreliable, and difficult and costly to maintain. Operating costs, as well as availability, of the older aircraft and spare parts are becoming a matter of concern. Runways, buildings, roads, power plants, radios, beacons and other components have received very limited maintenance and improvement. The Government, in view of other demands on its resources, did not, in the past, feel that expenditures in the field of air transport were of high priority since the system, under the conditions and with the aircraft types in use, presumably would continue to function to some degree. The high (reported) accident rate (Annex 3) and other unreported incidents, however, have led to a change of view. The Government is aware of the vital role of civil aviation in the country and is anxious to improve the existing situation. Some progress has been made, and air transport within Bolivia is now in a state of transition. LAB is completing a change in aircraft -6- which involves an upgrading of service so that certain airports previously served by piston-engined Douglas DC-3 aircraft will change to turbo-propeller- driven Fokker F-27 and certain F-27 airports will be served by jet aircraft (Boeing 727). Comparative airline economy tariffs are shown in Table 2.

3.02 About 30 airports are managed by AASANA and served regularly by LAB flights (Table 3). The four major cities--La Paz, Cochabamba, Santa Cruz and Trinidad--account for more than 80% of the regular passenger and 70% of the cargo traffic. All of these airports, with some weight restrictions, are used by jet aircraft such as the Boeing B-727-100. The other airports are in poor condition and can accept only small propeller-driven aircraft. During the wet season, several of these airports are closed for considerable periods. This can be a serious limitation since it coincides with the time when all other modes of transport, except limited river transport in certain areas, are also out of service.

3.03 Air transport is a vital means of communication, despite its relatively high cost, and is likely to remain so due to the topography of the country. The areas where the greatest potential for development could be assisted by improved air transport are northeast of the mountain area and in the south. The departments of Beni and Pando are accessible only by river, and then for only part of the year. At present, air transport is the only practical mode for passengers and high-value or perishable goods. This may gradually change when penetration roads from La Paz are built. Nevertheless, the quality of the roads that can be built at reasonable cost in this area is likely to be such that air transport will remain dominant for many years. In addition, the sparse population would make air transport the most economical mode. Trinidad, the capital of Beni, has the only airport of the two departments which is usable regardless of weather conditions.

B. Present Air Traffic

3.04 The traffic of LAB has developed substantially since 1965 with the most rapid growth occurring over the past five years. Domestic passenger traffic has increased at a yearly rate of 14.5%, as a result of improved air services responding to the demands of a rapidly growing economy. Domestic air cargo, on the other hand, has been almost stable for the country as a whole because of airport and aircraft limitations.

3.05 Scheduled cargo and passenger traffic is monopolized by LAB, but unscheduled cargo service is split among several private operators. These private cargo operators are normally engaged in transporting meat from the Beni area and are owned by meat wholesalers, cattle owners' associations, and slaughterhouse companies. Conditions under which these flights are operated present major problems. The availability and low capital cost of old second-hand cargo aircraft have been attractive in the short run, particularly in view of the airport limitations and the ability of these aircraft to operate successfully from them. Of about 50 aircraft (Annex 2), only two are less than 20 years old. The most typical is the 30-year old C-46, which - 7 - carries 5 to 6 tons fairly efficiently on short flights; however, its operational capabilities are marginal for the high mountains which have to be passed to and from Beni.

3.06 About 250 small aircraft are operated by air taxi companies and individuals and, although the number of passengers and cargo transported is small, these aircraft do provide vital services to the large areas of the country which lack all-weather roads. A comparison of traffic of the various types of carriers follows:

Traffic by Carrier Type in 1975

Passengers Cargo (tons)

LAB 396,000 4,300 Air Taxi Operators 30,000 1,600 Transportes Aereos Militares 16,500 200 Government Oil Company 11,700 - Non-Scheduled Cargo Airlines 9,000 32,000

The air passenger traffic of 463,200 may be compared to the railway traffic of 832,000 passengers for the western system and 317,000 for the eastern system in 1975; the highway traffic to the eastern sections was negligible.

C. Traffic Forecasts (Project Airports)

3.07 The passenger traffic forecasts for the project airports, prepared primarily by AASANA, Oficina de Planificacion, and its consultants Ingenieria Politecnica Americana (Bolivian), in consultation with the Bank, took two factors into consideration: (a) the general traffic trend, based on such matters as future population and income growth; and (b) the additional growth as a result of service improvements at the individual project airports. For the latter purpose, an analysis was made of previous traffic development at other airports in Bolivia after the introduction of jet service.

Passenger Forecast

3.08 The AASANA passenger forecast growth rates, based on historical traffic adjusted by the Bank to reflect 1975-1976 actual traffic, generally reflect the current traffic trend. This methodology was also used for transit traffic at all airports. At the time of completion of the project airports, the number of transits will reduce at Riberalta, Santa Ana de Yacuma and Tarija. At the same time, in Riberalta, the origin and destination traffic will be increased by a diversion of one-half the forecast traffic from Guayaramerin. These two towns, which are only 95 km apart, are connected by a good all-weather gravel road. The actual average growth rate has been about 15% per year. The forecast tapers this rate to about 6% between 1985 and 1990 to reflect a more mature market. For details of passenger and cargo forecasts, see Table 4 and Annex 4. -8-

Cargo Forecast

3.09 Cargo traffic is of comparatively minor importance on a system basis. However, it constitutes a significant and growing portion of traffic at three of the project airports (Riberalta, Santa Ana de Yacuma, and San Borja). AASANA's cargo forecast growth rates were used, with an adjustment to consider 1975 traffic. Until completion of the improvements at the project airports, the growth is generally based on the current traffic trend. The forecast cargo growth for the three project airports is 14% through 1980, reducing gradually to 8% between 1985 and 1990.

Aircraft Movements

3.10 Aircraft movement forecasts (Table 5) were developed primarily by AASANA and its consultants. These were adjusted by the Bank in line with the traffic forecasts and with consideration of the impact of larger, more efficient aircraft types.

D. Existing Organizations

3.11 The present organization of civil aviation in Bolivia is relatively complex for the size of the country (Chart 1). Overall control is exercised by MTCCA, in consultation with the National Aviation Council (CNA). The latter--which consists of the Commander of the Bolivian Air Force (FAB), the Minister of Foreign Relations and the Minister of MTCCA--is primarily concerned with the approval of new national airlines, operations, establishing of the level and structure of national passenger and freight tariffs, bilateral agreements for international carriers operating in and over the country and the conditions under which airlines may operate in Bolivia. The Under- Secretary of Civil Aviation (SAC), the entity primarily concerned with ongoing operations of aviation in Bolivia, is supported by the Directorate General of Civil Aviation (DGAC), the Directorate General of Air Transportation and Aerial Works (DGTTA) and AASANA. The principal responsibility of DGAC is the setting of safety standards for the airports and those airlines which use them, in addition to the licensing of pilots and certification of aircraft airworthiness. DGTTA deals with the applications for establishing new national airlines, setting the level and structure of national passenger and freight tariffs and arranging bilateral agreements. AASANA is the entity concerned with the planning, construction and operation of the airport and navigation facilities to support the air transport system. LAB, the national airline, and other non-scheduled airlines are the principal users of these facilities. A total of about 2,000 people are employed in the aviation sector, not counting those in associated activities such as customs, air cargo handling, and catering. AASANA has about 550 employees, compared with 750 for the almost totally Government-owned airline, LAB. The remaining personnel are spread over several small charter airlines and the two directorates (DGAC and DGTTA). The Bolivian Air Force has long been engaged in civil air transport and, although its civil activities have been curtailed, it continues to provide a service on some of the uneconomic, low-density routes. -9-

E. The Borrower - AASANA

3.12 AASANA was created by Law No. 08019 in 1967 and formally established on April 17, 1968 as a Government entity with operational autonomy for its specific administrative functions. The most important of these are to administer, plan, maintain, operate and improve the network of national airports for regular public use as well as related services to aircraft flying between airports. To perform these functions, AASANA may enter into all types of agreements and contracts in accordance with established legal requirements; AASANA is exempt from taxes and duties. The legal domicile is in La Paz, but AASANA may establish offices in other parts of the country as required. In accordance with the Law of Public Institutions, AASANA has a Board of Directors, but the direction and decisions regarding AASANA's daily operations are the full responsibility of the Executive Director and the Technical Director of AASANA.

3.13 As detailed in Chart 1, the main functions are carried out at the headquarters, with regional airports divided into four groups. I4ore than half of the staff is located in La Paz. The effect of an extensive reorganization in 1975 has left AASANA with an essentially well structured organization. However, inherent in this reorganization is the reliance on a limited number of qualified staff members, such as the Technical Director and Department Heads of Administration, Operations, Civil Works and Electronics. These staff members--together with the Chiefs of Auditing, Planning, Legal and Personnel offices--comprise the Council of Executive Coordination, which is presided over by the Executive Director. In view of the responsibilities of the Technical Director (described in Annex 8), an advisor is being proposed to assist in daily operations. With these improvements, it is felt that AASANA will be able to implement the proposed project.

3.14 Present assets of AASANA are very modest compared to the needed investment. They consist mainly of the old assets transferred from LAB as part of the Bolivian Government equity at the time of the creation of AASANA, USAID capital assistance totalling US$7.3 million (the last part committed in 1968), with Bolivian Government counterpart contributions and operating sub- sidies for several years thereafter (para. 6.04). These limited funds con- stitute one cause of the present constraints of the borrower, which have been partly remedied by substantial tariff increases in 1975.

3.15 Another factor is that of the limitations on staff and organization, which again were subject to internal changes and significant salary increases in 1975 in order to retain qualified staff in an improved administration. Despite a more progressive management, much remains to be done in order to improve the efficiency of the proposed borrower. Some essential technical training has been provided by International Civil Aviation Organization (ICAO) experts, but management experience, particularly in implementing a large scale investment program of civil works and electronics, is still very limited, and it has not been possible to recruit or retain certain individual technical staff members. It was agreed during negotiations that salaries for technical - 10 - specialists will be continually adjusted by AASANA in order to be competitive with alternate employment in Bolivia. It is still too early to evaluate the results of the reorganization, but it is clear that more experienced staff at certain levels are required.

3.16 The operations of, and maintenance by, AASANA are closely related to the requirements of air transportation. In the general shortcomings explained above (para. 3.01), the lack of functioning aids and equipment for civil aviation plays a significant part. AASANA has been slow in catching up because of obsolete equipment. The provision of inadequate services, particularly for domestic flights, is due to managerial problems, to the lack of sufficient numbers of specialized technical staff, and to difficulties in- volving weather and topography. It is expected that the combination of assistance by the Bank project and ICAO will continue to improve substantially the maintenance of both airports and equipment.

4. THE PROJECT

A. Oblectives

4.01 The Bolivian Government is attempting to integrate the widely dis- persed and sometimes isolated communities of the department of Beni into the economic and social life of the country by developing a dependable air transport system. To help meet this objective, the project aims at providing a nucleus of airports in Beni which can handle larger and more efficient aircraft than at present; developing rational countrywide systems of Navaids and air/ ground and point-to-point Com equipment; and providing technical assistance for the administration, maintenance and operation of the airport system. The Government wishes to improve the inadequate airport runway at Tarija, to establish a ground maintenance capability and also to realign the runway at Cochabamba.

B. Description

4.02 The project would consist of:

(a) the construction of two new domestic airports (Riberalta and San Borja) and major improvements at two others (Santa Ana and Tarija);

(b) the design and supervision of construction in (a);

(d) the provision of general maintenance equipment for AASANA and runway maintenance equipment for Santa Ana Airport; - 11 -

(e) the provision of technical assistance and staff training for AASANA; and

(f) the provision of final design for the construction of a new runway, apron and taxiways for the Cochabamba Airport.

Airport Construction and Improvements

4.03 A detailed description of existing conditions at the four project airports and Cochabamba as well as the proposed construction and improvements are given in Annex 5. Improvements are summarized in paragraphs 4.04 through 4.07 following.

4.04 Riberalta. The construction of a new medium range jet (B-727) airport at Riberalta would include earthworks; drainage; paved 2,000 x 45 m runway; lead-in taxiway; apron; fuel farm; terminal building; control tower; a maintenance/crash fire, rescue vehicle shed; fencing, access and ancillary roads and all necessary utility systems.

4.05 San Boria. The construction of a new turbo-prop (F-27) airport at San Borja would be similar to that at Riberalta except that the paved runway would be 1,800 x 30 m.

4.06 Santa Ana. The construction of a new (F-27) runway at Santa Ana would include earthworks; drainage; a sealed 1,800 x 30 m runway; lead-in taxiway; apron; fuel farm; renovation of existing terminal building and tower; a maintenance/crash fire, rescue vehicle shed; fencing and necessary access road improvements.

4.07 Tarila. The construction of a new (B-727) runway at Tarija would include paving of the newly constructed 2,800 x 45 m runway, a lead-in taxiway and apron, construction of a drainage canal around the southeast end of the runway, and fencing. Since the base course of the new runway would be completed by February 1977, the paving and drainage should be done as soon as possible to avoid weather damage to the new construction. Thus, the contract for the paving is likely to be let prior to signing of the loan.

Design and Supervision of Construction

4.08 AASANA plans to engage local consultants to do the final engineering and supervision of construction of the three Beni airports. The engineering at Tarija has already been done, but AASANA will engage a local consultant for the construction supervision. It is expected that the work of these consultants will be satisfactory. To assist in further developing this newly emerging local industry, as a substitute for the estimated foreign component cost if a foreign consultant were hired, the project will provide 70% of the total costs of design and the subsequent supervision of construction of the three Beni airports and 70% of the cost of supervision of the construction at Tarija Airport. Because these contracts are to be let before the proposed loan will be presented to the Board, costs incurred for consultant services after December 31, 1976 (estimated at US$0.7 million) are proposed to be included in the loan. - 12 -

4.09 Supervision of construction would be required through the last quarter of calendar year 1981. For the sake of continuity, it would be desirable that the consultants selected for the design work be retained for the supervision of construction.

Design of Cochabamba Runway

4.10 The runway at Cochabamba Airport, the home airport for LAB, is so oriented that obstructions impose weight restrictions on the larger aircraft now being flown by LAB. Such restrictions have become an operational and financial burden for LAB, and they will become more serious as operations increase and larger aircraft are acquired. To alleviate this problem, a new runway, oriented about 90 degrees from the existing one, was proposed by a feasibility study prepared last year. A preliminary analysis by Bank staff indicated that such a runway would be justified in the early 1980's. Con- struction at Cochabamba is included in AASANA's program for 1979-1980. Since it is difficult for AASANA to obtain other than operational funds from either its revenues or the Government, 70% of the estimated costs of the detailed final engineering design for this high priority item have been included in the project.

Provision of Equipment

4.11 Air Navigational Aids and Communications Equipment. At each of the project airports except Santa Ana, Navaids (VOR/DME) 1/ would be installed as approach and enroute aids. At all project airports, locator beacons (NDB) 2/ would be installed. New VHF 3/ air/ground and HF-SSB 4/ point-to-point voice and teletype communications would be installed between the project airports and system hubs at La Paz, Cochabamba and Trinidad. Other Navaids and Com equipment would be installed at selected points to fill out complete systems for the country (Map IBRD 12655), except for those air traffic areas con- trolled from Santa Cruz, omitted because of lower priority and fund limitations. Lists of this equipment and its locations are given in Annex 6. Engineering for the systems would be performed by the ICAO technical assistance personnel now assigned to AASANA. Design and installation of certain teletypewriter systems would be done by the equipment manufacturer, selected through international competitive bidding (para. 4.26).

1/ Very High Frequency Omni-Directional Radio Range/Distance Measuring Equipment

2/ Non-Directional Radio Beacon

3/ Very High Frequency

4/ High Frequency Single Side Band - 13 -

4.12 Visual Aids. Runway, taxiway and apron lighting would be installed at all project airports. At San Borja, the runway lighting would be spaced for a 45 m wide runway rather than a 30 m one in order to allow for the expected early widening of the runway to B-727 standards. Rotating beacons and obstructionlights would be provided at each project airport. VASI's 1/ would be installed at project airports as well as certain other selected airports in the country. Each of the project airports would be provided with basic runway marking (Annex 6).

4.13 Maintenance Equipment. For AASANA to maintain the various airports under its control properly, equipmentwould be required which would have to travel on a planned basis around the system. Since most of the airports are unpaved, the greater portion would consist of earth moving, compactionand grading equipment. Light asphalt spraying equipmentwould be stationedat Santa Ana to maintain the sealed surface which would be provided at this airport. Lists of both sets of equipment are given in Annex 7.

AASANA TechnicalAssistance and Staff Training

4.14 To strengthenits airport administrationand maintenancecapabil- ities, AASANA would engage a team of five Spanish-speakingexperts for the following positions for a five-yearperiod: Technical Director Advisor, Chief Budget and Accounting Division, Chief TelecommunicationsMaintenance Division, Chief Navaids MaintenanceDivision and Chief Airport Constructionand Mainte- nance Combined Divisions. Draft job descriptionsfor these various positions are given in Annex 8. In addition, 30 man-years of training for AASANA personnel outside Bolivia would be provided. The foreign exchange costs of the experts and the training would be financed from the Bank loan.

C. Special Components of the Project

4.15 These special project items of a minor but essential support nature are to be financed by the proposed loan, except as indicated in Annex 9.

D. Ecology

4.16 The ecologicaland environmentaleffects of the developmentof the project airports and the proposed reorientationof the main Cochabambaairport were taken into account during the siting and preliminarydesign studies. Two of the airports (Riberaltaand San Borja) are being relocated to remove them from the immediatevicinity that they serve, thus making more remote the noise, fumes and safety problems associatedwith the approach and departure paths of aircraft. Land being released at Riberalta and San Borja would become available for further expansionof the two towns; the land being taken in the one place is unused rain forest between river banks and, in the other, is low lying grazing land. The Santa Ana and Tarija developments are on existing airport land. Drainage improvementsat all four airports would reduce the possibility of stagnant,insect breeding pools.

1/ Visual Approach Slope Indicators - 14 -

4.17 The reorientationof the main runway at Cochabambawould relocate the heavy aircraft flight paths from over the city to over agriculturalland. The obvious effect of this is the reductionof noise for the city population, but more importantis the reductionof risk associatedwith the existing requirementfor aircraft to make low level turns above the city because of high ground obstructionsin the normal flight pattern. Zoning restrictions for the new runway would be developed by the Government. A copy of a suggested regulationwill be provided to the Government.

E. Cost Estimate

4.18 The total project cost, including contingencies,is US$39.46 million. The foreign exchange component is US$23.67 million, or 60% of the total project cost. This project is exempt from taxes and duties (para. 3.12).

4.19 The cost estimate shown below (in prices expected at the end of June 1977) is categorizedby type of work. A detailed itemizationof the project components is given in Table 6.

% of $b (million) US$ (million) Project Local Foreign Total Local Foreign Total Content

Civil Works 175.9 225.2 401.1 8.80 11.26 20.06 50.8 EngineeringDesign and Supervision 32.1 8.0 40.1 1.60 .40 2.00 5.1 Aviation Equipment 11.8 70.4 82.2 .59 3.52 4.11 10.4 MaintenanceEquipment 1.6 15.8 17.4 .08 .79 .87 2.2 TechnicalAssistance 7.6 22.7 30.3 .38 1.14 1.52 3.9 Training .2 4.6 4.8 .01 .23 .24 .6 CochabambaDesign 16.0 4.0 20.0 .80 .20 1.00 2.5

Contingencies: Physical 10% 20.9 36.7 57.6 1.05 1.83 2.88 7.3 Price 22.8% 49.7 86.0 135.7 2.48 4.30 6.78 17.2

Total 315.8 473.4 789.2 15.79 23.67 39.46 100.0

4.20 The cost estimates were developed originally by the engineering consultants responsiblefor the feasibilitystudies. They were updated during the appraisalby AASANA engineersusing known costs in the various localities. These costs are considered reasonable. Constructionat Tarija and Santa Ana would take place on the existing airport property. The land at Riberalta has already been transferredto AASANA by the town at no cost, and the land at San Borja would be purchased by AASANA. This is not expected to delay the project. Land cost is included in the estimatesof local costs.

4.21 Physical contingenciesamounting to 10% have been included in the cost estimate. An additional item for price contingencies,of an average of - 15 -

7.70% on the local component and 7.75% on the foreign component, compounded quarterly, has been included to allow for anticipated increases in labor and material costs, which, in this case, are approximately equal. Foreign component contingencies are slightly lower than those in the Bank guidelines because of expected lower equipment cost escalation.

F. Execution

4.22 The project would be executed by AASANA. The civil works contracts for Tarija are expected to be awarded prior to signing of the loan. The civil works contracts for Riberalta, San Borja and Santa Ana are expected to be awarded by October 1978. The work is expected to take about one and one- half years at Tarija and to provide employment for about 150 men. The work at the other three airports would take about three years and would provide employment for about 500 men each at Riberalta and San Borja and 250 at Santa Ana. Tarija is expected to be completed by January 1979, followed by Riberalta, San Borja and Santa Ana by December 1981. The technical assistance portion of the project would run through September 1982.

4.23 AASANA would handle all Navaid and Com equipment procurement without assistance from consultants. Part of this equipment would be installed by AASANA and part by the equipment manufacturers.

4.24 AASANA would administer the 25 man-year technical assistance portion of the loan and also the 30 man-year training component. During negotiations, job descriptions for these positions were agreed upon (para. 4.14 and Annex 8). A training program should be prepared by AASANA and its technical experts, after their engagement, to begin no later than October 1978 and to last for a period of three years.

4.25 During negotiations, a project implementation schedule was agreed. The estimate of project execution is given in Annex 10.

G. Procurement

4.26 Contracts for civil works (earthworks, paving, drainage, water and electrical supply and distribution, sewerage, buildings, etc.) at Riberalta, San Borja and Santa Ana airports, and visual aids, Navaid and Com equipment and installation would be awarded after international competitive bidding by prequalified contractors. Since equipment is not produced locally, no local suppliers are expected, but local bidders would be granted a margin of prefer- ence by adding 15% to the CIF value of foreign bids (or the applicable customs duties, whichever is lower).

4.27 Although the paving contract at Tarija would be awarded prior to the signing of the loan documents (para. 4.07), it would be awarded in accordance with the Bank "Guidelines for Procurement," but after only limited advertisement because of the urgency of the work and the remote character of the project location. Foreign contractors are not excluded. The drainage contract was added to the existing civil works contract proper at unit costs established in April 1975. The original contract was awarded in accordance with Bank "Guidelines," but after only local advertisement. In view of the urgency of the work, the relative smallness of the contract and the favorable prices, - 16 -

Bank financing for this contract would be justified. Because these contracts were or will be let before the proposed loan will be presented to the Board, costs incurred after February 28, 1977 (estimated at US$1.0 million) are proposed to be included in the loan. The engineering contract (an estimated 40 man-years at US$50,000 per year) for the design and supervision of the construction of the four project airports would also be awarded, prior to signing of the loan, to local Bolivian engineers. The award of the estimated 20 man-year contract (at US$50,000 per year) for the engineering for Cocha- bamba would be similar, except that it would not be awarded until after signing of the loan. Consultants' terms of reference and contracts should be acceptable to the Bank.

4.28 A negotiated contract for 25 man-years at an estimated US$50,000 per man-year would be executed by AASANA for the provision of the five-man technical assistance team. Training would be arranged individually through UNDP/ICAO or technical training schools at rates not exceeding approximately US$6,000 per year per candidate.

H. Disbursements

4.29 Disbursement of funds from the loan would be on the following basis:

(a) 100% of foreign expenditures for equipment and its installation;

(b) 100% of foreign expenditures for technical assistance and training;

(d) 70% of total expenditures for engineering services.

A schedule showing the estimated rate of disbursement is given in Table 7. Retroactive financing of civil works undertaken after February 28, 1977 up to US$1.0 million and of engineering services after December 31, 1976 up to US$0.7 million, for a total of US$1.7 million, is proposed.

5. ECONOMIC EVALUATION

A. General

5.01 In Bolivia, the need for air transport is greatly reinforced by the topography of the country. The summary and conclusions of the latest transport sector report for Bolivia are given in Annex 11. The presence of flat lowlands partly flooded and isolated for several months each year, separated by high mountain ranges from the most populated part of Bolivia, creates formidable obstacles for any development of transport. These lowlands, particularly in the northeast, will have to be developed over an extensive period in order to relieve the population pressure on the barren Altiplano. A main solution has been attempted in the development of the present road - 17 - from La Paz to the Yungas (eastern valleys), crossing over one of the highest passes in the Andean mountain range (4,600 meters). Despite heavy investment, it will be many years before this road can penetrate into more than a small part of the department of Beni, and, more important, be reliable under all- weather conditions.

5.02 To integrate this part of the country, the primary transport modes would have to continue to be river transport for bulk goods and air transport for passengers and for valuable and/or perishable goods. Air transport to this area has not changed character in many years due to the infrastructure limitations. Only one airport in the area, Trinidad (since 1975), is capable of receiving more cost-effective jet aircraft. The most important part of the proposed project, therefore, addresses the problem of improving air transport to the main centers by providing better airports. When making agricultural loans, the Bank has recognized the lack of adequate airports as a limitation to the growth of the cattle industry.

5.03 A similar, but not quite so serious, situation exists in the south, where Tarija is the main town, 935 km from La Paz, with poor road connections.

5.04 Another main part of the proposed project is the improvement of the general infrastructure for air navigation in Bolivia, where obsolete navigational aids and aeronautical communications create not only hazardous safety conditions but also high costs in the form of low aircraft utilization, many cancelled and delayed flights and other indirect effects of unreliable services.

5.05 The proposed project responds to the most urgent needs of a relatively large program of well justified aviation infrastructure improvements (para. 6.13).

5.06 The areas in Bolivia which will be served primarily are the towns of San Borja, Santa Ana de Yacuma and Riberalta - Guayaramerin in the northern part with a total population of about 50,000 and Tarija in the south with about the same population. These are both relatively poorly developed agricultural areas which have suffered from isolation from the rest of Bolivia. The main activities are cattle raising in Beni (Santa Ana and San Borja), exploitation of rubber and nuts at Riberalta and grains, vegetables and vineyards around Tarija. Of these four towns, only Tarija is connected by road to other parts of Bolivia. The road under construction from La Paz to San Borja and Trinidad will probably be usable only part of the year until it can be upgraded to an all-weather road--an undertaking which may take a long time. Santa Ana and Riberalta are likely to be without road connection to the rest of Bolivia for at least another 15 years.

B. Economic Analysis

5.07 Details of the economic analysis are set forth in Annex 12 and are summarized below. Since air transport is clearly essential for the development of these isolated areas of Bolivia, the economic case for the project depends on its ability to provide transport capacity more efficiently than do the existing air services. The construction and equipment costs, as well as the physical contingencies, have been included as an economic cost of the project. - 18 -

5.08 The major source of quantifiable benefits for the project airports is the much lower operating cost of more efficient aircraft, already in the fleet, which these airports would allow after the improvement. Other factors which have been considered are aircraft delay savings and values of released urban land where the airport has been moved to a new site. These are very small portions of the justification since the most important factor - increased reliability of services - can be quantified only with respect to improved utilization of aircraft. Without the project, higher aircraft operating costs could lead to airline tariff increases or service deterioration. No passenger or cargo time savings have been included.

C. Cost Savings

5.09 Transport cost savings over the routes from each airport were cal- culated per passenger or ton based on the unit cost differential between better aircraft and presently used aircraft (Annex 12 and Table 8). This situation differs among the airports. In the cases of Riberalta and Tarija, the aircraft are now F-27, to be replaced by B-727-100 for passengers and 50% of the air cargo. For San Borja and Santa Ana, the situation is more complex. Presently, passenger traffic has been handled by F-27 and DC-3 aircraft and cargo by a variety of aircraft, with the predominant being DC-3 and Curtiss C-46 piston-engine aircraft carrying 3 to 6 tons per trip. The most appropriate replacement aircraft for future cargo traffic, in particular, is difficult to establish in view of the fragmentation of the air cargo trade into 25 different companies with an attendant lack of long-term planning. It is expected, however, that the existing piston aircraft will be replaced by small jet or turbo-prop aircraft for passengers and a turbo-prop aircraft, such as the CONVAIR CV-580, for cargo. For the economic evaluation and traffic forecasts, this aircraft has been used for providing cost character- istics and capacity.

5.10 A serious problem for Bolivian aviation is the lack of a reliable aeronautical communications network and air navigational aids. This lack, together with the runway conditions at the project airports, has caused very poor regularity for both scheduled and non-scheduled air services. In 1975, as an example, more than 1,500 hours of aircraft time were lost for LAB DC-3 and F-27 aircraft in delays and cancelled flights; this is almost equivalent to a requirement for one additional aircraft. Some of these delays would still continue as a result of weather conditions, but a significant reduction of hours lost to the level now achieved by B-727 aircraft at the four main airports should be possible.

5.11 A similar limitation exists, particularly for the airports in Beni, because of the lack of a properly-equipped unit for runway preventive maintenance. In the rainy season, a number of AASANA airports are out of service because of the condition of their runways. Some closures during heavy rains or inundation are unavoidable, but certain aircraft delays and cancellations would be avoided by improved runway maintenance. This type of savings could be quantified only for LAB scheduled flights and, thus, underestimates these benefits considerably in view of the present large volume of non-scheduled flights in Beni. - 19 -

D. Project Return

5.12 Excluding any savings of passenger time or cargo spoilage, the total return of the project is 19% (for project benefits, see Table 9); this approxi- mates the discounted cash flow financial return for the combined airport- airline system as far as these airports and airway facilities are concerned. For San Borja and Santa Ana, part of the savings accrue to private cargo airlines, but, for the major part of the project investment, the main bene- ficiary is the Bolivian Government, through its almost complete ownership of LAB. Since, without the project, it would probably be necessary to make larger fare increases, some of the benefits would be passed on to the Bolivian users.

5.13 Based on quantified benefits, the best estimate of economic return for San Borja and Riberalta is 24% for each, for Tarija 15%, and for Santa Ana de Yacuma 12%. There are substantial unquantified benefits, for Santa Ana in particular. This community is, and for many years will remain, isolated except by river. The present closures of the airport have serious effects on the unscheduled flights, but, because of lack of adequate data, only delays to scheduled flights have been quantified. The return for the aeronautical communications and electronic aids is 18%, and, for the runway maintenance equipment, the return is 16%.

5.14 The results of the sensitivity analysis for all the project components are shown in Table 10. Cost increases are considered the most significant risk. However, even if costs increase by 15%, the overall rate is still 17%. The effect of road improvements to San Borja has been tested under various assumptions. The most serious, but unlikely, assumption of no air cargo at all after 1985 still gives an economic return of 14% at this airport. The first year return of the total project is almost 17% and is satisfactory for the individual project components.

6. FINANCIAL EVALUATION

A. Existing Situation

6.01 AASANA has essentially been a breakeven entity in recent years, covering only working expenses. It operates under a budgetary system whereby a general budget of anticipated revenues and working expenses is developed and submitted to the Ministry of Finance for approval. Any unusual expenditures outside the budget must receive prior Government approval.

6.02 AASANA maintains control over revenues and operating expenses. Revenues collected are deposited in the AASANA account, and checks for payment are drawn against this account. Any excess of revenues remains with AASANA. - 20 -

6.03 Accounting records of the revenue and expenditure items are kept at AASANA headquarters. The records are not maintained so that revenues and expenses can be readily identified by airport and type of service but, rather, for the system in total. However, the Bank staff was able to obtain a reasonable breakdown of revenues and expenses for the project airports for 1975.

6.04 Capital items are supplied for the most part directly by the Government as equity inputs, with additional assistance by USAID. However, the receipt of assets from LAB, approximately eight years ago, and subsequent investment, as reflected in AASANA's books, may be understated to some extent. Due to this fact and to the inconsistent treatment of assets and liabilities from one year to the next in the balance sheets, it is currently difficult to make a proper assessment of AASANA's financial posture. After analyzing available information, the Bank staff prepared balance sheets for 1970 through 1974 (Table 11). A high percentage of the assets at small airports have been in service beyond what is normally considered the economic life for such items and should be replaced in the immediate future.

6.05 The accounting system is inadequate and should be redesigned to supply information by individual airports and by classifications necessary to formulate and review user charges. Following these improvements, the structure and level of airport tariffs should be reviewed. The accounting system should also include provision for the proper valuation and disposal of assets. AASANA realizes these deficiencies and needs assistance for improvement in this area. This assistance would be provided by a foreign expert to be engaged as Chief of the Budget and Accounting Division (para. 4.14). It was agreed during negotiations that AASANA would consult periodically with the Bank on structure and level of airport tariffs.

6.06 The accounts are currently subject to review by the Government at irregular intervals. During negotiations, an agreement was reached with AASANA that certified copies of the audited annual accounts beginning with the year ending December 31, 1978 would be furnished to the Bank, not later than four months after the end of each calendar year, by independent auditors satisfactory to the Bank.

B. Financial Objectives

6.07 Government policy has been to maintain AASANA's tariffs at a low level in order to assist aviation development. However, in 1975, landing fees were increased for LAB and foreign carriers by 60%; for non-scheduled carriers and general aviation, they remained at previous levels. At the same time, salaries of AASANA personnel were increased by an average of 60% to compensate for the cumulative effect of inflation and in accordance with reorganization efforts to maintain qualified personnel. These circumstances have made it barely possible for AASANA to cover working expenses. As a result, the new infrastructure requirements would have to continue to be met by the Government and outside sources. In the future, any surplus resulting from AASANA operations could be applied to acquisition of capital assets. Agreement was - 21 - reachedwith the Governmentand AASANA regardingmore specificfinancial objectivesof a k-nd typical for a prudentlymanaged independentpublic agency,as furtherdescribed below. The financialprojections contained in the followingparagraphs reflect these objectivesand assumptions.

6.08 AASANA revised its scheduledservice landingfee tariffs in 1975, and the Bank has discussedwith AASANA the need for a prompt increase in user charges. However, the current level of tariffswill not be sufficientto cover the operatingexpenses for the project period (1977-1981). Therefore, it has been assumed in the projectionsin this report that future tariff increaseswould result in total revenuesbeing increasedby 20% in 1977, 20% in 1979, 10% in 1980, 10% in 1982 and 10% in 1984. It was agreed during negotiationsthat, before November 1 of each fiscalyear, a review of user chargeswill be made on the basis of realistictraffic forecasts,and such adjustmentsas are necessarywill be applied in order to attain an overall working ratio of no more than 75% in 1978, 60% in 1979-1982,and a return on revalued net fixed assets no less than 2% in 1983-1984and no less than 4% in 1985. Due to the scale of investment in a few years, the project airports cannot meet the rate of return covenant, but it was agreed that the combined working ratio for the project airports would be no more than 85% in 1985.

C. FinancialPlan

6.09 The total cost of the project is estimatedto be US$39.46 million, of which approximately64% of the financingwould be in the form of a Bank loan to AASANA. The balance, includingany cost overruns,would be equity provided by the Government.

US$ $b Million Million

a. Bank loan to AASANA 500.00 25.00 b. GovernmentEquity 289.20 14.46

789.20 39.46

6.10 It was agreed during negotiationsthat the Bank will be consulted before any investmentin any of AASANA's facilitiesof over US$1.0 million, in any one year, is undertaken.

D. FinancialProlections

OperatingResults

6.11 AASANA operatingrevenues by category for 1975, and projected through 1990, are set out in Table 12, and the projected operatingstatements are given - 22 -

in Table 13. Financialassumptions are detailed in Annex 13. Summarized forecast results for 1977, 1980, 1985 and 1990 are as follows:

1977 1980 1985 1990 ------$b Million ------

Revenue 93.7 170.7 311.5 419.9 Expenses 75.7 98.4 112.0 124.5 Operating Surplus 18.0 72.3 199.5 295.4 Depreciation 32.9 69.3 94.5 101.3 Operating Income/(Loss) (14.9) 3.0 105.0 194.1 Interest - 21.8 32.3 19.1 Net Profit/(Loss) (14.9) (18.8) 72.7 175.0

Throughout the projection period, revenues cover all working expenses, including depreciation,with the exception of 1977 and 1978. The years of 1980 and 1981 barely meet this goal. This occurs because three of the four project airports and other Government investmentsare completed in these years, and the increase in the depreciationprovision is not immediatelycompensated by comparable trafficand tariff increases. However, depreciationexceeds debt service, and the financialobjectives would be met in all years of the project (para 6.08).

6.12 The projected operating results of the four project airports are set out in Tables 14, 15, 16 and 17. All project airports develop sufficient traffic to generate revenue greater than working expenses by 1984; however, none of the airportswould be able to cover operatingexpenses after project completion. Non-project airports would receive increased revenues in the form of increased landing and navigational fees, as a result of the project. The financial objectives for the project airports would be met after 1984 (para. 6.08).

Cash Flow

6.13 A projected cash flow for AASANA, based on the assumptionscontained in paragraph 6.09, is shown in Table 18. Provision has been made for the replacementof assets included in the project, when required,and for the addition of other necessaryitems (para 6.04). A summary of the cash flow for the constructionperiod is set out below: - 23 -

1977 1978 1979 1980 1981 1982 …S_____-----$b Million------

Source of Funds

From Operations 13.5 22.7 47.0 67.9 82.3 112.4 Loan - World Bank 26.8 73.0 88.3 248.7 52.7 9.2 Government Equity - Project 50.0 42.0 103.0 67.6 25.2 1.3 Government Equity - Non-Project /1 157.2 59.9 348.0 285.6 83.5 54.2 Government Equity - For Cash Requirements 48.2 - 33.5 - - -

Total 295.7 197.6 619.8 669.8 243.7 177.1

Application of Funds

Capital Investments A1 282.8 189.0 606.2 645.9 206.6 105.1 Loans - Principal - - - - - 32.2 Interest - 7.8 12.7 21.8 36.4 39.5

Total 282.8 196.8 618.9 667.7 243.0 176.8

Cash Surplus 12.9 .8 .9 2.1 .7 .3 Opening Balance - 12.9 13.7 14.6 16.7 17.4

Closing Balance 12.9 13.7 14.6 16.7 17.4 17.7

/1 Includes airport investments in addition to proposed project which are as follows for 1977-1980 ($b million): La Paz 303.2, Cochabamba 273.5, Cobija 221.3, Sucre 155.0, and others 56.4. The difference from the total for Government Equity, Non-Project, is the result of equity inputs from AASANA due to its favorable cash position in 1978 and 1980- 1982.

Since current receivables and liabilities are relatively high (Table 11), it was agreed, at the time of negotiations, that receivables from operating revenues will be collected, and payables for working expenses will be paid, within 90 days.

Balance Sheets

6.14 Projected balance sheets for 1977-1990 have been prepared and are included in Table 19. Financial indicators are shown in Table 20. - 24 -

7. AGREEMENTS REACHED AND RECOMMENDATION

7.01 During negotiations, agreement was reached with the Government regarding the following:

(a) assets for a new Santa Cruz airport not to be transferred to, nor debt service cost borne by, AASANA until it can be demonstrated that such a transfer will not prevent AASANA from complying with the relevant financial covenants of the Loan Agreement (para. 2.16);

(b) salaries for technical specialists to be continually adjusted by AASANA in order to be competitive with alternate employment in Bolivia (para. 3.15);

(d) project implementation schedule (para. 4.25);

(e) AASANA to consult periodically with the Bank on the structure and level of airport tariffs (para. 6.05);

(f) certified copies of the audited annual accounts beginning with the year ending December 31, 1978 to be furnished to the Bank, not later than four months after the end of each calendar year, by independent auditors satisfactory to the Bank (para. 6.06);

(g) before November 1 of each fiscal year, a review of user charges to be made on the basis of realistic traffic forecasts, and tariffs to be adjusted as necessary to produce a working ratio of no more than 75% in 1978, 60% in 1979-1982, and return on revalued net fixed assets no less than 2% in 1983-1984 and no less than 4% in 1985 and thereafter (para. 6.08);

(h) combined working ratio of the project airports to be no more than 85% by 1985 and thereafter (para. 6.08);

(i) the Bank to be consulted before any investment in any of AASANA's facilities of over US$1.0 million, in any one year, is undertaken (para. 6.10); and

(j) receivables from operating revenues to be collected, and payables for working expenses to be paid, within 90 days (para. 6.13). - 25 -

7.02 Retroactivefinancing for the foreign costs (estimatedat US$1.0 million) for the paving and the constructionof the drainage canal at Tarija done after February 28, 1977 and for local and foreign costs for engineering services at the three Beni airports and Tarija incurred after December 31, 1976 (estimatedat US$0.7 million) is included in the proposed loan.

7.03 The proposed project constitutesa suitable basis for a Bank loan of US$25.0 million to AASANA, with a Government guarantee. The term would be 20 years, includinga grace period of four and one-half years.

April 28, 1977

BOLIVIA

AVIATION l)EVELOPMENT PROJECT Total Freight Movement in Bolivia

1967 1974 Ton-Km % % Ton-Km % % Sources 10 Subtotal Total 10 Subtotal Total Data for 1967 based on the DMJM ROAD TRANSPORT Study for the Ministerio de Trans- portes y Comunicaciones. Vata for Minerals 46 500 4.9 1.5 - 1974 came from the following Other Cargo 549 700 58.1 18.1 - - - sources: Mini. de Transportes y Total 596 200 63.0 19.6 896 464 65.1 16.3 Comunicaciones Estimate

RAIL TRANSPORT

Minerals 84 900 9.0 2.8 45 300 3.3 0.8 Other Cargo 208 700 22.1 6.9 342 700 24.9 6.2 ENFE

Total 293 600 31.1 9.7 388 000 28.2 7.0

RIVER TRANSPORT 11 400 1.2 0.4 24 480 1.8 0.5 Min. de Transportes y Comunicaciones Estimate LAKE TRANSPORT 31 400 3.3 1.0 31 700 2.3 0.6 Min. de Transportes y Communicaciones Estimate AIR TRANSPORT 13 300 1.4 0.4 35 378 2.6 0.6

Subtotal 945 900 100.0 31.1 1 376 022 100.0 25.0

PIPELINE TRINSPORT

Crude Oil 1 923 000 - 63.1 3 747 000 - 68.2 Petroleum Products _ 176 000 5.8 376 000 - 6.8 YPFB

Total 3 044 900 100.0 5 499 022 - lOo.0 Average growth rate 1967/1974, 08.8? yearly

Source: IBRD Mission February 1977 1 BOLIVIA TABLE 2

AVIATION DEVELOPMENT PROJECT

Comparative Economy Air Fares, 1.976

US$ Route Distance US$ Per Mile (Miles) Bolivia

La Paz - Santa Cruz 343 40.00 .117 Cochabamba- Tarija 303 27.00 .089 La Paz -- Trinidad 257 18.00 .070 Cochabamba- Trinidad 204 15.00 .074 Cochabamba- Santa Cruz 198 20.00 .101 Cochabamba- La Paz 150 20.00 .133 San Borja - Trinidad 130 6.00 .046 Santa Ana - Trinidad 87 5.00 .057 Cochabamba- Oruro 74 8.00 .108

Brazil

Rio de Janeiro - Sao Paulo 237 28.90 .1219 Rio de Janeiro - Belo Horizonte 214 27.60 .1280 Rio de Janeiro - Porto Alegre 697 84.60 .1214

Canada

Fredericton- Montreal 350 68.00 .194 Edmonton - Peace River 253 37.00 .146 Calgary - Medicine Hat 164 22.00 .134

C31-bia

Bogota - Cartagena 409 29.00 .0709 Bogota - Medellin 145 14.00 .0965 Bogota - Leticia 675 60.00 .0889

Peru

Lima - Pucallpa 307 31.80 .1036 Lima - Tingo Maria 206 21.00 .1019 Lima - Cuzco 357 37.70 .1056

United Kingdom

Glasgow - London 349 60.00 .172 East Midlands - Jersey 254 49.00 .193 Aberdeen - Edinburgh 98 26.10 .266

United States of America

Cincinnati- Atlanta 374 48.15 .129 El Paso - Tucson 269 38.89 .145 New York - Washington 203 34.26 .169 Bangor - Presque Isle 136 25.00 .184 Albany - Rutland 70 24.07 .344

Source: ABC World Airways Guide, March 1976 November 1976 TABLE 3

BOLIVIA

AVIATION DEVELOPMENTPROJECT

Names and Abbreviations of Airports

Apolo AP Ascencion de Guarayos AS Camiri CA Cobija CO Cochabamba CB Concepcion CP Charafia CN Guayaramerdn GY La Paz LP Magdalena MG Oruro OR Puerto Suarez PS Potosl PO Riberalta RI Robore- RB Rurrenabaque RQ San Borja SB San Ignacio de Moxos SM San Ignacio de Velasco SI San Javier JV San Joaquin Jo San Jose de Chiquitos JE San Ram6n RA Santa Ana SA Santa Cruz CZ Sucre SU Tarija TJ Trinidad TR Yacuiba YA Bermejo BJ (X) Puerto Rico PR (X) Reyes RY (X) San Matlas TI (X) Santa Rosa SR (X) Villa Montes VM (X)

(X) Airports which will be under AASANA Jurisdiction.

Source: IBRD Mission

February 1977 TABLE 4

BOLIVIA

AVIATION DEVELOPMENTPROJECT

Forecast Passengers (Embarkingand Disembarking)and Freight at Project Airports

Airport Pc Passengers Percent Average Annual Actual Forecast Growth 1970 1975 1977 1980 1985 1990 1975-1990

Riberalta 7,600 13,600 17,500 38,300 57,400 76,700 12

Santa Ana de Yacuma 4,400 9,000 12,000 18,900 32,400 43,600 11

San Borja 1,700 5,100 6,100 8,800 14,600 19,600 10

Tarija 8,500 18,200 24,300 41,500 69,900 96,300 12

Airport Freight (tons) Percent Actual Forecast Average Annual Growth 1970 1975 1977 1980 1985 1990 1975-1990 Riberalta 5604'5-1,840 2,650 4,197 6,759 9,931 12

Santa Ana de Yacuma 1,6504/ 1,166 1,360 1,983 3,483 5,118 10

San Borja 2,935 4,706 5,489 8,003 14,060 20,659 10

Tarija3/

1/ Apparent abnormal growth at Riberalta from 1977 to 1980 results from the introduction of jet aircraft and diversion of one half of the projected normal traffic growth from Guayaramerin. 2/ Includesnon-scheduled traffic. Scheduled trafficwill move in passenger aircraft. 3/ No significantfreight traffic is anticipatedat Tarija. 4/ 1971. 5/ LAB flights only. Source: AASANA and its consultantsand IBRD Mission December 1976 TABLE 5

BOLIVIA

AVIATION DEVELOPMENTPROJECT

Forecast Aircraft Traffic

Annual Landings 1975 1980 1985 1990

Riberalta

Passenger1/ 607 407 611 816 Cargo-4 251 187 302 404 5/ Other-- 2,386 4,791 7,812 10,457

Santa Ana de Yacuma

Passenger2/ 333 638 604 813 Cargo-4 162 177 311 416 Other-51 4,688 7,529 10,547 13,458

San Boria

Passenger- 189 156 260 260 Cargo-1 917 715 1,255 1,679 Other-/ 3,259 6,531 10,503 13,752

Tariia Passenger-/ 570 575 968 1,334 Other-/ 655 1,362 2,562 4,681

1/ Based on passenger growth and on changes from DC-3 and F-27 to B-737 and B-727. 2/ Based on passenger growth and on changes from DC-3-and F-27 to F-27 or similar aircraft type thru 1984 and B-737 and F-27 thereafter. 3/ Based on passenger growth'and on changes from DC-3 and F-27 to B-737 and F-27. 4/ Based on freight growth and on changes from C-47 and C-46 to CV-580. Assumes 50% of Riberalta freight will move on passenger jet aircraft by 1980. 5/ Includes Air Taxi, Private, TAM, FAB and Flying School Landings. Source: IBRD Mission December 1976 TABLE 6

BOLIVIA AVIATION DEVELOPMENTPROJECT Cost Estimates

$b (000) US$ (000) Local Foreign Total Local Foreign Total

Civil Works

Riberalta 46,280 78,040 124,320 2,314 3,902 6,216 San Borja 44,479 60,221 104,700 2,224 3,011 5,235 Santa Ana 46,231 37,049 83,280 2,312 1,852 4,164 Tarija 38,903 49,857 88,760 1,945 2,493 4,438

Subtotal 175,893 225,167 401,060 8,795 11,258 20,053

Eng. design & Supervision 32,096 8,024 40,120 1,605 401 2,006

Equipment

Lights, VASIS & Tower Equip. 2,310 23,110 25,420 116 1,155 1,271 Navaids and Communications 9,460 47,300 56,760 473 2,365 2,838 Maintenance equipment 1,376 13,724 15,100 69 686 755 Santa Ana equipment 204 2,036 2,240 10 102 112

Subtotal 13,350 86,170 99,520 668 4,308 4,976

Contingencieson Constructionand Equipment

Physical 10% 20,157 33,923 54,080 1,008 1,696 2,704 Price 22.8% 49,672 86,068 135,740 2,484 4,303 6,787

Tech. Assistance 7,582 22,727 30,309 379 1,136 1,515 Training 200 4,545 4,745 10 227 237

Subtotal 7,782 27,272 35,054 389 1,363 1,752

ContingenciesTA & Training 10% 778 2,728 3,506 39 137 176

Cochabamba design 16,000 4,000 20,000 800 200 1,000

Total 315.728 473.352 789,08,0 15,788 23,666 39,454

Price Contingencies,Rates per Year 1978 1979 1980 1981 Foreign 10.0% 8.0% 7.0% 6.0% Local 8.4% 8.0% 7.5% 7.0% Source: IBRD Mission February 1977 TABLE 7

BOLIVIA

AVIATION DEVELOPMENT PROJECT

DisbursementSchedule

FY78 13US$(000)

December 1977 1,342 March 1978 2,904 June 1978 3,781

FY79

September 1978 4,370 December 1978 4,992 March 1979 5,669 June 1979 6,877

FY80

September 1979 8,496 December 1979 9,408 March 1980 10,628 June 1980 14,633

FY81

September 1980 18,875 December 1980 21,842 March 1981 22,440 June 1981 22,586

FY82

September 1981 22,669 December 1981 24,475 March 1982 24,563 June 1982 24,811

FY83

September 1982 24,874 December 1982 24,937 March 1983 25,000

Source: IBRD Mission

February 1977 TABLE 8 BOLIVIA

AVIATION DEVELOPMENT PROJECT

Estimated Aircraft Cost Savings in 1981 Savings Per Passenger Cost Saving Passenger Aircraft Passengers US$ US$

Tarija 31,600 20.55 649,380 Riberalta 41,500 15.39 638,685 San Borja 9,770 7.29 71,223 Santa Ana de Yacuma 22,600 6.27 141,702

Cargo Aircraft Tons Savings Per Ton Cargo US$ Riberalta 2,200 309.36 680,592 San Borja 8,960 120.51 1,079,770 Santa Ana de Yacuma 2,380 83.10 197,778

Delays/Diversions Cost Per Hours of Hour US$ Aircraft Time

Tarija 427 122 52,094 Riberalta 427 312 133,224 San Borja 407 526 214,082 Santa Ana de Yacuma 427 136 58,072

Aeronautical Communications 337 1,089 366,993 Runway Maintenance Equipment 337 587 197,819

4,481,414

Source: LAB, AASANA, DGTTA, Mission Estimates

February 1977 BOLIVIA AVIATION DEVELOPMENT PROJECT

Quantified Project Benefits 1978-1998 US$ (000)

Riberalta Santa Ana de Yacuma Aeronautical Runway Tarija Aircraft Land Value San Borja Aircraft Maintenance Communications Maintenance Total

1978 421 421 1979 526 - - - - 526 1980 632 1,330 - 1,220 - - 334 90 3,606 1981 701 1,452 600 1,365 398 100 367 198 5,181 1982 779 1,586 - 1,527 444 100 404 222 5,062 1983 864 1,731 - 1,709 494 100 445 248 5,591 1984 959 1,891 - 1,912 552 100 489 278 6,181 1985 1,065 2,064 - 2,139 615 100 538 312 6,833 1986 1,134 2,209 - 2,306 658 100 592 - 6,999 1987 1,208 2,364 - 2,485 704 100 651 - 7,512 1988 1,286 2,531 - 2,679 754 100 716 - 8,066 1989 1,370 2,709 - 2,887 807 100 788 - 8,661 1990 1,459 2,900 - 3,113 864 100 866 - 9,302 1991 1,553 3,104 - 3,356 925 100 - - 9,038 1992 1,655 3,324 - - 990 100 - - 6,069 1993 1,762 3,559 - - 1,061 100 - - 6,482 1994 1,877 3,811 - - 1,136 100 - - 6,924 1995 1,999 4,082 - - 1,216 100 - - 7,397 1996 2,129 4,372 - - 1,303 100 - - 7,904 1997 2,267 4,683 - - 1,395 100 - - 8,445 1998 2,415 5,017 - - 1,495 100 - 9,027

Source: MissionEstimates, AASANA December 1976 'IC BOLIVIA

AVIATION DEVELOPMENT PROJECT

Sensitivity Analysis of Economic Rate of Return

Best Construction Costs Benefits First years Estimate -15% +15% -25% +25% return

Tarija 15 18 14 12 19 13 l/

Riberalta 24 28 22 19 29 20

San Borja 24 28 21 18 29 20

Santa Ana de 1/ Yacuma 12 14 10 9 15 12

Aeronautical communications 18 23 15 10 26 13

Runway maintenance equipment 16 22 11 6 24 24

Total Project 19 22 17 15 24 17

1/ First year return has been adjusted to take into account the effects of generated traffic.

Source: IBRD Mission H|

April 1977 I1

BOLIVIA

AVIATION DEVELOPMENT PROJECT

AASANA

Summary Balance Sheets as of December 31 ($b 000)

Assets 1970 1971 1972 1973 1974

Current Assets

Cash 259 240 2,037 4,219 3,666

Short Term Invest-4ients 356 50 20 13 478

Prepaid Items 130 265 225 235 288

Subtotal 745 555 2,282 4,467 4,432

Receivables 5,253 7,315 8,479 15,123 25,407

Inventories 4,760 7,221 7,755 15,907 26,971

Total Current Assets 10,758 15,091 18,516 35,497 56,810

Fixed Assets - Gross 61,253 60,728 61,091 106,450 145,226 Less Accumulated Depreciation 4,528 5,778 9,120 12,909 16,578

Net Fixed Assets 56,725 54,950 51,971 93,541 128,648 Construction in Progress - 6 - 568 3,941

Total Fixed Assets 56,725 54,956 51,971 94,109 132,589

Total Assets 67,483 70,047 70,487 129,606 189,399

Liabilities

Current 2,712 4,653 4,981 5,792 13,937 Deferred 1,480 2,151 2,738 3,447 4,581

Capital and Reserves (Closing - December 31) 63,291 63,243 62,768 120,367 170,881

Total Liabilities 67,483 70,047 70,487 129,606 189,399

Source: IBRD Mission

February 1977 BOLIVIA

AVIATION DEVELOPMENT PROJECT

AASANA Statement of Revenues ($b Million)

Funds 1/ Passenger from National Treasury" Year End Landing Airport Overflight Navigational Landing Navigational December 31 Fees Tax Fees Fees Messages Other Fees Fees Total Revenue

1975 27.5 11.9 4.5 2.7 2.9 3.9 1.8 .8 56.0 1976 34.1 15.8 4.6 2.7 4.4 4.6 2.0 .9 69.1 1977 46.6 21.8 5.9 3.8 6.0 5.9 2.6 1.1 93.7 1978 52.6 24.8 6.2 4.2 6.7 6.4 2.9 1.2 105.0 1979 71.2 33.5 7.9 5.7 8.7 8.4 3.7 1.6 140.7 1980 86.8 41.3 9.2 6.7 10.3 10.0 4.4 2.0 170.7 1981 95.8 45.8 9.8 7.4 11.2 10.8 4.8 2.2 187.8 1982 115.4 55.4 11.4 8.9 13.2 12.9 5.8 2.6 225.6 1983 125.4 60.4 12.1 9.7 14.2 13.9 6.3 2.9 244.9 1984 148.6 71.7 14.1 11.5 16.8 16.6 7.6 3.5 290.4 1985 159.5 76.8 15.0 12.3 17.9 17.9 8.3 3.8 311.5 1986 169.2 81.6 15.9 13.1 18.9 19.4 8.9 4.1 331.1 1987 179.3 86.5 16.8 13.9 20.0 20.9 9.5 4.5 351.4 1988 189.9 91.7 17.8 14.7 21.1 22.6 10.2 4.8 372.8 1989 201.2 97.2 18.9 15.6 22.2 24.4 11.0 5.2 395.7 1990 213.1 103.0 20.1 16.5 23.4 26.4 11.8 5.6 419.9

1/ Reimbursementfrom the Government for exempt services.

Source: AASANA and IBRD Mission December 1976 BOLIVIA

AVIATION DEVELOPMENT PROJECT

AASANA

Projected Operating Statements ($b Million)

Working Operating Net Year End Operating Working Expenses Surplus/ Income/ Profit/ December 31 Revenue Maintenance Wages Other Total (Deficit) Depreciation (Loss) Interest (Loss)

1975 1 56.0 2.4 42.7 6.9 52.0 4.0 7.6 ( 3.6) 19761/ 69.1 4.5 54.1 7.0 65.6 3.5 23.8 (20.3) 1977 93.7 13.3 55.2 7.2 75.7 18.0 32.9 (14.9) (14,9) 1978 105.0 17.1 56.3 7.3 80.7 24.3 32.9 ( 8.6) 7.8 (16.4) 1979 140.7 21.2 57.4 7.5 86.1 54.6 32.9 21.7 12.7 9.0 1980 170.7 32.2 58.6 7.6 98.4----- 72.3 ------2,1_...... 3_Q ...... 218 .iLA_ 1981 187.8 34.7 59.7 7.8 102.2 85.6 84.2 1.4 36.4 (35.0) 1982 225.6 35.5 60.9 7.9 104.3 121.3 86.0 35.3 39.5 ( 4.2) 1983 244.9 36.5 62.1 8.1 106.7 138.2 88.5 49.7 37.5 12.2 1984 290.4 37.5 63.4 8.2 109.1 181.3 91.0 90.3 34.9 55.4 1985 311.5 38.9 64.7 8.4 ----- 112.Q…----122J5_------9_4…5…------1,Q_5Q ------32-3 72.7 1986 331.1 39.8 65.9 8.6 114.3 216.8 96.4 120.4 29.6 90.8 1987 351.4 40.8 67.3 8.8 116.9 234.5 98.9 135.6 27.0 108.6 1988 372.8 41.8 68.6 8.9 119.3 253.5 101.4 152.1 24.3 127.8 1989 395.7 42.8 70.0 9.1 121.9 273.8 103.9 169.9 21.7 148.2 1990 419.9 43.8 71.4 9.3 124.5 295.4 101.3 194.1 19.1 175.0

1/ Unaudited 2/ Estimated

Source: AASANA and IBRD Mission

April 1977 BOLIVTIA

AVIATION DEVELOPMENT PROJECT

Riberalta Airport

Projected Operating Statements ($b 000) Working Year End Operating Working Expenses Surplus/ Operating Profit/ December 31 Revenue Maintenance Wages Other Total (Deficit) Depreciation (Loss)

1975 646.0 177.7 454.6 42.6 674.9 ( 28.9) 200.0 ( 228.9) 1976-= 707.0 140.7 531.8 43.5 766.0 ( 59.0) 200.0 ( 259.0) 1977 955.0 143.5 593.4 44.3 781.2 173.8 200.0 ( 26.2) 1978 1081.0 146.4 605.3 45.2 796.9 284.1 200.0 84.1 1979 1462.0 149.3 617.4 46.1 812.8 649.2 200.0 449.2 1980 1902.0 1022.4 629.8 47.0 1699.2 202.8 3109.0 . .906_2 1981 2157.0 2044.8 642.4 48.0 2735.2 (578.2) 6218.0 (6796.2) 1982 2579.0 2044.8 655.2' 48.9 2748.9 (169.9) 6218.0 (6387.9) 1983 2804.0 2044.8 668.3 49.9 2763.0 41.0 6218.0 (6177.0) 1984 3316.0 2044.8 681.7 50.9 2777.4 538.6 6218.0 (5679.4) 1985 3578.0 2044.8 695.3 51.9 2792.0 786.0 6218.0 _-54__ 0 1986 3776.0 2044.8 709.2 53.0 2807.0 969.0 6218.0 (5249.0) 1987 3994.0 2044.8 723.4 54.0 2822.2 1171.8 6218.0 (5046.2) 1988 4220.0 2044.8 737.9 55.1 2837.8 1382.2 6218.0 (4835.8) 1989 4448.0 2044.8 752.6 56.2 2853.6 1594.4 6218.0 (4623.6) 1990 4711.0 2044.8 767.7 57.3 2869.8 1841.2 5479.0 (3637.8)

1/ Unaudited 2/ Estimate

Source: AASANA and IBRD Mission

December 1976 BOLIVIA

AVIATION DEVELOPMENT PROJECT

Santa Ana Airport

Projected Operating Statements ($b 000) Working Year End Operating Working Expenses Surplus/ Operating Profit/ December 31 Revenue Maintenance Wages Other Total (Deficit) Depreciation (Loss) I/ 1975-= 452.0 86.8 382.6 39.5 508.9 ( 56.9) 50.0 ( 106.9) 1976-, 496.0 93.6 489.6 40.3 623.5 (127.5) 50.0 ( 177.5) 1977 658.0 95.5 499.4 41.1 636.0 22.0 50.0 ( 28.0) 1978 730.0 97.4 509.4 41.9 648.7 81.3 50.0 31.3 1979 965.0 99.3 519.6 42.8 661.7 303.3 50.0 253.3 1980 1291.0 101.3 529.9 43.6 674.8 616.2 50.0 566.2 1981 1449.0 1406.7 540.6 44.5 1991.8 (542.8) 4629.0 (5171.8) 1982 1739.0 1406.7 551.4 45.4 2003.5 (264.5) 4629.0 (4893.5) 1983 1882.0 1406.7 562.4 46.3 2015.4 (133.4) 4629.0 (4762.4) 1984 2233.0 1406.7 573.6 47.2 2027.5 205.5 4629.0 (4423.5) 1985 2593.0 1806.7 585.1 48.2 2440.0 153.0 5629.0 --- (---A Q) 1986 2745.0 1780.1 596.8 49.1 2426.0 319.0 5097.0 (4778.0) 1987 2902.0 1780.1 608.8 50.1 2439.0 463.0 5097.0 (4634.0) 1988 3059.0 1780.1 620.9 51.1 2452.1 606.9 5097.0 (4490.1) 1989 3226.0 1780.1 633.3 52.1 2465.5 760.5 5097.0 (4336.5) 1990 3402.0 1780.1 646.0 53.2 2479.3 922.7 5099.0 (4176.3)

1/ Unaudited > 2/ Estimate M

Source: AASANA and IBRD Mission -

December 1976 BOLIVIA

AVIATION DEVELOPMENT PROJECT

San Borja Airport

Projected Operating Statements ($b 000)

Working Year End Operating Working Expenses Surplus/ Operating Profit/ December 31 Revenue Maintenance Wages Other Total (Deficit) Depreciation (Loss)

19751/ 444.0 484.6 418.6 33.1 936.3 (492.3) 50.0 ( 542.3) 1976.= 498.0 194.0 535.7 33.8 763.5 (265.5) 50.0 ( 315.5) 1977 672.0 197.9 546.4 34.4 778.7 (106.7) 50.0 ( 156.7) 1978 756.0 201.8 557.3 35.1 794.2 ( 38.2) 50.0 ( 88.2) 1979 1007.0 205.9 568.5 35.8 810K2 196.8 50.0 146.8 1980 1435.0Q 872.2 579.9 36.5 1488.6 .…….. . 233.0 . .(.286.6 1981 1605.0 1744.4 591.5 37.2 2373.1 (768.1) 5467.0 (6235.1) 1982 2019.0 1744.4 603.3 38.0 2385.7 (366.7) 5467.0 (5833.7) 1983 2209.0 1744.4 615.4 38.0 2398.6 (189.6) 5467.0 (5656.6) 1984 2664.0 1744.4 627.7 39.6 2411.7 252.3 5467.0 (5214.7) 1985 3007.0 1744.4 640.2 40.4 2425.0 582.0 5467.0 (4885.0) 1986 3180.0 1744.4 653.0 41.2 2438.6 741.4 5467.0 (4725.6) 1987 3360.0 1744.4 666.0 42.0 2452.4 907.6 5467.0 (4559.4) 1988 3555.0 1744.4 679.4 42.8 2466.6 1088.4 5467.0 (4378.6) 1989 3762.0 1744.4 692.9 43.7 2481.0 1281.0 5467.0 (4186.0) 1990 3990.0 1744.4 706.8 44.5 2495.7 1494.3 4728.0 (3233.7)

1/ Unaudited 2/ Estimate

Source: AASANA and IBRD Mission December 1976 BOLITVIA

AVIATION DEVELOPMENT PROJECT

Tarija Airport

Projected Operating Statements ($b 000) Working Year End Operating Working Expenses Surplus/ Operating Profit! December 31 Revenue Maintenance Wages Other Total (Deficit) Depreciation (Loss)

19 7 5 392.0 95.2 346.5 35.4 477.1 ( 85.1) 100.0 ( 185.1) 1975w 465.0 72.5 443.5 36.1 552.1 ( 87.-1) 100.0 ( 187.1) 1977 649.0 1946.6 452.4 36.8 2435.8 (1786.8) 4867.0 (6653.8) 1978 740.0 1946.6 461.4 37.6 2445.6 (1705.6) 4867.0 (6572.6) 1979 1257.0 1946.6 470.6 38.3 2455.5 (1198.5) 4867.0 (6065.5) 1980 1666.0 1989.7 480.1 39.1 2508.9 . 842.9) 5298.0 (6140.9) 1981 1880.0 2032.8 489.7 39.9 2.7 ( 682.4) 5729.0 Z4ILZY 1982 2317.0 2032.8 499.5 40.7 2573.0 ( 256.0) 5729.0 (5985.0) 1983 2575.0 2032.8 509.4 41.5 2583.7 ( 8.7) 5729.0 (5737.7) 1984 3136.0 2032.8 519.6 42.3 2594.7 541.3 5729.0 (5187.7) 1985 3438.0 2032.8 530.0 43.2 2606.0 832.0 5729.0 (4897.0) 1986 3732.0 2032.8 540.6 44.0 .6i757 1 14.6 5729.0 ------1987 4021.0 2032.8 551.4 44.9 2629.1 1391.9 5729.0 (4337.1) 1988 4307.0 2032.8 562.5 45.8 2641.1 1665.9 5729.0 (4063.1) 1989 4613.0 2032.8 573.7 46.7 2653.2 1959.8 5729.0 (3769.2) 1990 4949.0 2032.8 585.2 47.6 2665.6 2283.4 5300.0 (3016.6)

1/ Unaudited 2/ Estimate

Source: AASANA and IBRD Mission

December 1976 BOLIVIA

AVIATION DEVELOPMENT PROJECT

AASANA Projected Cash Flow

($b million)

Source of Funds 2/ Application of Funds Goverimnent Debtors Cash World Government Government EqUity for Total Capital Loan Year Ended Operating 1/ Less from Repayment Total Annual Cumulative Bank Equity Equity Non- Cash Cash Invest- December 31 Surplus Creditors Cash Cash Cash Operations Loan Project Project Requirements Available ments Principal Interest Required Surplus Balance 1977 18.0 4.5 13.5 26.8 50.0 157.2 48.2 295.7 282.8 - - 282.8 12.9 12.9 1978 24.3 1.6 22.7 73.0 42.0 59.9 - 197.6 189.0 - 7.8 196.8 .8 13.7 1979 54.6 7.6 47.0 88.3 103.0 348.0 33.5 619.8 606.2 - 12.7 618.9 .9 14.6 1980 72.3 4.4 67.9 248.7 67.6 285.6 - 669.8 645,9 - 21.8 667.7 2.1 16.7 1981 85.6 3.3 82.3 52.7 25.2 83.5 - 243.7 206.6 - 36.4 243.0 .7 17.4 1982 121.3 8.9 112.4 9.2 1.3 54.2 - 177.1 105.1 32.2 39.5 176.8 .3 17.7 1983 138.2 4.2 134.0 1.3 - 34.8 - 170.1 100.0 32.2 37.5 169.7 .4 18.1 1984 181.3 10.8 170.5 - - - - 170.5 100.0 32.2 34.9 167.1 3.4 21.5 1985 199.5 4.6 194.9 - - - - 194.9 100.0 32.2 32.3 164.5 30.4 51.9 1986 216.8 4.3 212.5 - - - - 212.5 138.8 32.2 29.6 200.6 11.9 63.8 1987 234.5 4.5 230.0 - - - - 230.0 102.8 32.2 27.0 162.0 68.0 131.8 1988 253.5 4.7 248.8 - - - - 248.8 100.0 32.2 24.3 156.5 92.3 224.1 1989 273.8 5.0 268.8 - - - - 268.8 100.0 32.2 21.7 153.9 114.9 339.0 1990 295.4 5.5 289.9 - - - - 289.9 100.0 32.2 19.1 151.3 138.6 477.6 2,169.1 73.9 2,095.2 500.0 289.1 1,023.2 81.7 3,989.2 2,877.2 289.8 344.6 3,511.6 477.6

1/ From Table 13 / Cash requirements to cover lag between disbursements by AASANA or the Government and reimbursement by the required annual cash balance. World Bank, interest payments and

Source: IBRD Mission

April 1977 BOLIVIA

&VIATION D1ELOPMEN)qTPROJEC.T

prltoected B6e1e,ncmSheete ce of Deceffmber 31

6$etillions}

1977 1978 1979 1980 198L 1982 1983 1984 1985 1986 1987 1968 3989 3890 Aeset s

trent Assets:

Lab 1/ 12.9 13.7 14.6 16.7 17.4 17.7 18.1 21,5 51.9 63.8 131.8 224.1 339.0 477.6 eceiv bles 23.4 26.3 35.2 42.7 47,0 56.4 61.2 72.6 77.9 82.8 87 9 93.2 98.9 105.0 36.3 40.0 49.S 59,4 66.4 74.1 79.3 94.1 129.8 146.b . 219.7 317.3 437.9 562.6 Fixed Assets - Gross 718.9 934.9 1,379.1 2,036.0 2,415.5 2,585.2 2,685.2 2,785.2 2.885.2 3,024.0 3,126.8 3,226.8 3,325.9 3,425.9 Accueulated deprecialaon 60.9 113.6 146.7 216.0 30 386.2 474.7 565.7 1 60 756.6 835.5 956.9 : set fixed asaset ln, uee 638.0 1,060.8 821.t 1,232.4 1,840.0 2,115.3 2,199.0 2,210.5 2,219.5 2,225.0 2,267.4 2,271.3 2,269S9 2,265.1 2,263.8 Coc,strc,ctioc,in ptosres t113.5 86.5 253.3 217.5 129.3 - - - - 751.5 907.6 i,485.7 2,357:S' 2,244.6 Z,199T6 5T~ 2,219.5 2,225.0 2,267.4 2,271.3 2,269.9 T2265.1 2,263,8 787.8 947.6 2116.9 _ 2.309.a 2 2733 2,289.8 2,313.6 2,354.8 2,414.0 2,491.0 2,587.2 2,703.0 2,846.4 Liabilities

Current liabilities:

Trade creditors 18.9 20.2 21.5 Iloldbacks 24.6 25.6 26.1 267 27.3 26.0 28.6 29.2 29.8 30.5 31.1 - 4.6 64,7 -- 18.k9 2 26.3 -- 24.6 90.'3 26.1 26.7 27.3 26. 28.6 29.2 2 30.S8 31.1

Long-term debt - 8.2% 26.6 99.8 168.1 436,8 489.5 466.5 435.6 403.4 371.2 339.0 306.8 274.6 241.5 209.3 Ceeltal:

Present investment 525.5 525.5 525.5 525.5 525.5 525.5 525.5 525.5 525.5 525.5 525.5 525.5 325.5 525 3 New Govermeent equity 235.4 357.3 841} 1 1950 1,303.7 1359.2 1 394.l 1,394,0 1,394.0 1394,0 1 394.0 1 394.0 1 394.0 1 394.3 882.98 1,397:3 J18 1, 7,919 .5 T,915-Tg3 1,919.5 t§T5 Belainad earnisgcusL tddefiit

(23.9) (38.8) (55.2) (46.2) (65.0) (100.0) (104.2) (92.0) (36.6) 36.1 t26.9 235.5 363.3 511.5 Profit,i(Ions) (14.9) (16.4) 9.0 (18.8) (35.0) (4.2) 12.2 55.4 72.7 90.8 108.6 127.8 148.2 175.0 01,0510S (38.6) (55.2 4 (65.0) (104.2) (59202) (36.6 36.1 126.9 235.5 363.3 511.5 6w86,3 Total Cai,ittl 742.1 827.6 1,321.1 1,655.5 1,729.2 1,780.5 1,827,5 1,882.9 1,955.6 2,046.4 2,155.0 2,282.8 2,431.0 2,606.0 Total_ iabllities 787.8 947.62 3,333.5:j 2,30. 9 2,273.t 2.313.62 2.354,6 2.49 2,587,2

1/ Table 18 Somrtt: IBRD Mission

April 1977 TABLE 20

BOLIVIA

AVIATION DEVELOPMENTPROJECT

AASANA

Schedule of Selected Financial Indicators

Annual Return on Combined Working Ratio Working Ratio Net Fixed Assets in Use Project Airports AASANA AASANA (%) (%) (%) 1977 158 81

1978 142 76 -

1979 101 61 2.1

1980 101 58 .2

1981 136 54 .1

1982 112 46 1.6

1983 103 44 2.3

1984 87 38 4.1

1985 81 36 4.7

1986 77 35 5.3

1987 72 33 6.0

1988 69 32 6.7

1989 65 31 7.5

1990 62 30 8.6

Source: IBRD Mission

April 1977 ANNEX 1

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Bank Group Projects in the Transport Sector

Loan or Effective Amount Present Credit No. Date (US$ million) Works Status

635-BO November 2, 1971 23.3 CIA YACIBOL - Completed Loan BAGOC TRANSPOR- in 1972 TADORES Gas Pipeline

346-BO February 21, 1973 8.0 Bolivia Railways Completed Credit (ENFE) in 1977

1121-BO August 6, 1975 28.7 Bolivia Railways Under Loan (ENFE) 1975/76 execution investment plan

April 1977 ANNEX 2 Page 1

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Bolivia Aircraft on Register 1975

NO. OF AIRCRAFT

Lloyd Aereo Boliviano BOEING 727-100 3 BOEING 727-200 1 FAIRCHILD F-27 4 DOUGLAS DC-3 3

Non-Scheduled Airlines DOUGLAS C-54 4 DC-7B 1 C-53 1 C-47/DC-3 10 FAIRCHILD F-27 2 CURTISS C-46 20 CONVAIR 440 5 OTHERS 5

Yacimientos Petroliferos AERO COMMANDER 2

Fiscales Bolivianos D.H. BEAVER 1 D.H. TWIN OTTER 2

Air Taxi Companies and Private VARIOUS SMALL 170

Aerial Work on Training AIRCRAFT 86

TOTAL 320

Source: DGAC January 1977 .4 H >4 -0 000oo0ooooo >4 >4 0 0 >4 '0 0 0 >4 r C,C, C, CO C, C, >4 >4 No zcz-s.. 0>'N - '0 028§82* 00-a 0 o 0 88888OOO OOC, 28 §8 o 8.3oo >4 0 Ci 0. a 0' - 0 0 0 - >4 3 C-' 0 0 >3' >3. 0 0 0 0 >4 0 C. C, C, 0 N '1 1 'C 0 C, C, 0 0 0 0 - 0 0 0 '-0 0 -1 N0 0 -N 0. 0 N o 0 0 0 on on 0 0 N 0 0 0 0 - - N Ci 'o 0' N" 0 3, >4 C, CO 0 0 C . '1 0 - > 0 0

C, .4 4 0 0 0 0 0 N 0 - Ct C, C-C 0 roN0'nC, 0N 0 N 0 0 C-'0 0 0 .0 'CN oCC0> '1 0 0 0 8 04>400 - 0 >4 ."N 0. 0 0 a N

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>4 >4 >4 >4 >4 >4 C, >4 >4 C, C, >4 >4 C, >4 >4 >4 C, >4 >4 >4 >4 >4 >4 >4 >4 >4 >4 >4 >4 >4 no >4 C, zc8 1>3

0448' 8' >300 >3>3C3000>C-3' - 0

>3 >3>30 >300>3>30>4>300>30 000050>3000 - >3>3fl 0 0>300 000 030000 a 8' '000-0 >4 000 0 0 0 0 0 0 3 o o o a o o a o 3 3 >4 >3>4 o >4 04 0 N 0 0 N CC >4 N N >4 CC 4 CC CO CC CC CC 0 CC 0 N CC >4 0 0 04 N 0 0 N >3 >3 0 0>3 058' 8' 00000 o o 8' 8' 8' >3>3 >3 05 Z 0' >3 53 8 2W3 0 0 0 OC 0 0 >3 >3 0 0' .0 0 0 0

I 83 § '0 >3>3000' 8' CO 55 4 - ' - - 0.0>4 0' 0 >3 >3 >3 >3 >3 >3C-'>3>3C-" , - 000.4 8' 55000t '-'8

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I >3 >4 >30'000 00 0' >40'00 - >3 - >3*0 CO 0 0 0' C-i>4 0 >3 . >3. 0. -. ..- >3'3N*>3>3>3>3. . . . 0' . >3 .>3 >3 0 >3 * >3>3 0 >3 >3 >3C" C >30 0>35 >4 >3C'0>300 00 03 0 00 '0 0 0 2 8' 5 3 0 00 0 00 0 § o o 0000 C, Ci >4 0. 00 00 0 000 18 Ct

38' >4

C' '0 >4 >4 '0 0 0 >4 >4 0 >4 >4 0 0 0 0 >3 0 C, >4 0 C, 0 >4 a a a 0 >4 0 >4 0' - I ' "'C a-r a o noon -- r - - - 3ow ow…--3, 8' ow N *fl- 000' 2 0 0. 8 8 330 8'0>3 I-C - -- 0'--- - C, - - Ia 0 '0 0 '00 '00 0 O 0 0' 0 OC 0'' 0 * .- ... -. 2 0 0 0 IX - 0' o po < < < 400 ioN , 8'- 0 040 o no o'4'4 o 82 V 004 N CO N C, N 4 0 N N 0 004 08' 4 0 I-t '4 4 00. N N N 0 - ONNONNOo 0 N a 0 0 0> 0 0 0 0 0 1 0 0 N S N 0 0 4 04 - 8.0. 0-NC 0.00.0.0- 0 0. ;> ?. 8.8.8.8.8. 8. 8.8. 4o 0' N' C00'0' 8' 8' 8'8. 8 8 0 0 0 0 0 0 >4p. >41 040 0 00000 0 33 >3 a C, RXXX%XxXgx 3 33XXR X XXX.. >3 - I' CCCCCC,i,, C *CCCC>IC I ' >3 >3>3>3>30>3>3 >3 >3 >3 >3 0"O 0 0 0 0 0 no 0 0 0 0 .0100

>4 '0 X >4 a a a a >4 a a a >4 a a >4 >4 >4 a aao 0 C aCCCCC,,C,. a 'o ' . I S S C COO >4 >30 >3 0>3>3 o o>3>3>3>3>3>3>3>3>3>3 o 0 0 0 0' 0 0 0 0>3 0C3>3>3>3C, 0 0 0 >3>4 >3 3.0>3 >3>3,05 >3 >3 >4>3>3 >3>3>3>3>3>34>3>3>3 >3 >3"J"4>3I"3 >3>0 >3 >3>3>30>" >3 - >3 - -…0 >3 0>4 0 >4 o 0 0 0 0 >4 0 0 a 0 >4 0 o o a >4 0 0. A

0 040>0 §4

>3 I-tO ANNEX 3

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Aircraft Accidents in Bolivia

1. The statistics for 1972-1974 were alarming: 112 accidents, of which 54 were major, the aircraft being either destroyed or seriously damaged. Of these, 11 were fatal. Relating this to the approximately 320 or so aircraft on the Bolivian Register evidences a very high rate.

2. The rate was particularly disturbing in the transport aircraft category: 36 accidents within three years with only 50 aircraft on the Register as of 30 October 1974. All but one occurred on non-scheduled operations, and 70% involved total loss or major damage to the aircraft.

3. Of the accidents to transport category aircraft, 56% were Curtiss C-46 piston-engined old-vintage aeroplanes, recognized as difficult to maintain and to fly. Also, general aviation recorded a high rate: 76 accidents, with 154 aircraft on the Register as of 30 October 1974.

4. The statistics were similar in 1975 with 76 accidents, of which 27 involved transport-type aircraft (Douglas DC-3, Curtiss C-46, etc.) on non- scheduled operations. This may be related to about 300 aircraft on register that year. In 1976, the situation improved as a result of improved control of airworthiness and flight standards. The airport and enroute conditions, however, continue to limit the achievable safety of operations.

5. Some 22 transport-type aircraft were written off completely as a result of accidents during 1972-1975, which, even if the aircraft are old, represents a significant loss and increases insurance premiums substantially.

January 1977 ANNEX 4

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Traffic Forecast Methodology

Passenger Forecasts

1. The basic forecasts of passengers and cargo traffic were developed in the feasibility studies for the different airports carried out during 1974- 1976 by several entities. The forecasts for Tarija and San Borja were done by the Bolivian consultant IPA, the one for Santa Ana de Yacuma by a consortium of IPA and the Brazilian firm Hidroservicio and, finally, AASANA's own staff prepared the forecasts for Riberalta. For passengers, two methods were employed: one based on previous traffic trends, the other on a multiple regression analysis based on urban population and per capita income. The results of these methods were similar.

2. These basic forecasts were revised by the Bank staff in consultation with AASANA, Oficina de Planificacion. In this revision, two adjustments were made, first to update the base year for traffic development to a common year 1975, and, second, to account for additional traffic growth as a result of better services on completion of the project. This additional traffic is due primarily to presently suppressed demand and, to a very limited extent, is the result of cost reductions for travelers. To determine the additional traffic growth, comparisons were made with recent experience with jet aircraft introduction at airports such as Trinidad and Sucre where, despite un- changed or increased passenger fares, accelerated traffic growth has been experienced as a result of more reliable services. For traffic development prior to project completion, LAB detailed traffic forecasts for the next five- year period have served as a guide to check the validity of the assumptions made. For Riberalta, it has been assumed that 50% of the normal traffic at Guayaramerin would be diverted to the new airport. Despite these adjustments, the average growth rate for the 1975-1990 period is less than the actual achieved over the past five-year period.

Cargo Forecasts

3. For cargo, the same entities as mentioned above made the basic traffic forecast. For Tarija, air cargo is so limited that no special cargo flights would be required. The forecasts for the other airports were based on a continuation of previous traffic trends and the relationship of air cargo with GNP for Bolivia and the province of Beni. These were reviewed against tendencies in the economic development of the region and, in particular, the cattle industry. The result was the adoption by the Bank staff of lower growth rates for the years after 1985. No factor of inducement by better services was included since the majority of air cargo is assumed to continue to be carried by propeller-type aircraft.

April 1977 ANNEX 5 Page 1

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Existing Airport Conditions and Proposed Improvements

A. Existing Airport Conditions

(i) Riberalta

The existing airport is located at the southwest edge of the town on a plain between the Rio Beni and an ancient river bed and about 20 meters above the river. The airport has an elevation of 171.0 m and consists of two dirt, lime and gravel runways sparsely covered with grass. The main runway is 1,800 x 50 m on an alignment of 9/27 and has an effective gradient of 0.45%; the second runway, 1,100 x 50 m on an alignment of 15/33, is rarely used. The airport has a small terminal building served by a partially asphalt paved apron of 26,800 m 2. Although relatively well drained, the operational surfaces of the airport suffer during the wet season, and constant maintenance is required to repair soft spots.

There is small control tower with old communications equipment adjacent to the terminal. The airport does not have lights, but has an NDB.

Between the threshold of R/W 09 and the river are two residential blocks. Since all except the lightest aircraft must use this runway, the houses are continually subjected to dangers relating to low flying aircraft during critical periods of their operation as well as attendant noise, fumes, etc. Expansion of the runway would necessitate demolition of these houses and would separate from the town the remaining flat land to the south of the runway, without the construction of a costly road along the river edge. Expan- sion of the runway at the opposite end would require excessive fill due to the close proximity of the ancient river bed (between 15 and 20 meters lower than the runway elevation).

The short runway alignment is even more critical as far as the location of the town is concerned. Flights to R/W 15 must pass over the central portion of the town. Expansion of the runway in this direction would not be practical since it would split the town in half. Expansion in the opposite direction would be restricted, in the same manner as the other runway, by the ancient river bed. However, even if the costs for this extension were acceptable, the necessity for flights over the town would not be accepted.

(ii) San Borja

The existing airport is located directly adjacent to the northeast side of the town, between the town and the Rio Rapulo. It is at an elevation ANNEX 5 Page 2

of 193.6 m and consists of a single 1,800 x 50 m dirt and lime runway covered with grass on an alignment of 15/30. The runway has an effective gradient of 0.06%. A small terminal building with a 13,500 m2 apron and three slaughterhouses are located on the town side of the runway. The grass has been worn thin in many places, and, during the wet season, the airport must be closed for extended periods because of excessive softness of the runway.

There is a small control tower near the terminal which contains some old communications equipment, and there is also an old NDB located at the airport. The runway is not provided with lighting, and no operations are allowed during the hours of darkness.

(iii) Santa Ana

The existing airport is located about 2 km to the southwest of the town at an elevation of 220.0 m. It consists of a single 1,500 x 50 m dirt and lime runway covered with grass on an alignment of 14/32, which has an effective gradient of 0.21%. There is a small terminal building with a control tower on the northeast side of the runway, served by a 1,200 m2 apron. A slaughterhouse has been built on the side opposite the terminal at the edge of the flight strip. Everywhere except directly on the runway are large chimney- type ant hills.

The runway is flooded during the wet season and, for a considerable time after recession of the water, must remain closed because of soft operating surfaces.

The tower has some old communications equipment, and the airport has an NDB; the runway is not provided with lighting, however, and all operations cease at dusk.

(iv) Tarija

The existing airport is located about 3 km to the east of the town across the Rio Bermejo at an elevation of 1,861.0 m. It has two runways. The longer, originally 2,000 x 45 m with an effective gradient of 0.72%, is in the process of being strengthened and lengthened to 2,800 x 45 m to accommodate Boeing B-727 aircraft. The second, 1,220 x 80 m of dirt, lime and sand, is being regraded at the intersection of the two runways near the terminal area. The alignment of the main runway is 15/33.

The terminal building is modest but suitable, with an apron of 3,520 m2 and an attached control tower. The tower contains old communications equipment, and the airport has an NDB but no runway lighting. ANNEX 5 Page 3

The river passes close to the northwest end of the runway and along the southwest side. A deep arroyo crosses the extended centerline of the runway at the southeast end. The northwest end of the river has been pro- tected with riprap, but the southeast end is badly in need of similar protec- tion to prevent erosion of the runway end.

When completed in the spring of 1977, the prime runway will be serviceable in most weather conditions, but will require heavy maintenance to remain so.

(v) Cochabamba

The existing airport is adjacent to the southwest side of the city at an elevation of 2,547.0 m in a mountain valley which runs roughly northwest/ southeast. The airport has two runways, only one of which is in use. The main runway, 04/22, is 2,500 x 45 m with a gradient of 0.22% and is asphalt- paved, but it is aligned so that all operations pass over the center of the city. The closeness of the mountains on the northeast city end requires low- level turns either on final approach or just after takeoff. A hill which penetrates the obstruction clearance zones just south of the extended center line at this end further complicates operations. At the southwest end, the mountains, while providing more clearance, still force low-level turns during both operations.

The second runway, 1,500 x 30 m on an alignment of 13/31, was asphalt-sealed at one time, but has now mostly deteriorated and is seldom used.

The terminal area is on the north side of the northeast end of R/W 22. The terminal building is overloaded during periods of heavy traffic. A control tower is attached, which contains the major weather station for Bolivia. All equipment is old. The apron is 20,000 m2 asphalt paved. A paved taxiway extends to the maintenance base of LAB near the intersection of the two runways.

The airport has an NDB, and a VOR has been purchased but not yet installed. Edge lighting has recently been installed on R/W 04/22, its taxiways and the apron.

B. Proposed Project

(i) Riberalta

A new airport will be constructed at a site about 5 km northeast of the town. Approaches to the single runway will be entirely clear of built-up areas. The runway will be 2,000 x 45 m paved with asphaltic concrete and will be stressed for a Boeing B-727-200. A terminal building designed for a peak hour of 200 passengers will be constructed near the middle of the ANNEX 5 Page 4 north side of the runway. It will be served by an apron sized for three B-727 aircraft. The apron will be connected to the runway by short lead-in taxiways. The terminal area will be provided with a paved access road from the main highway which passes the airport site on the west. Adequate automobile parking areas will be provided as well as a fuel storage area. A control tower and a shed for emergency equipment will be built. All necessary utilities will be provided. A perimeter chain link fence will be provided. The entire area will be suitably drained.

The aircraft operational areas will be provided with edge lighting. New VHF and HF communications equipment will be installed. A VOR/DME and a 50W NDB will be installed, as well as a VASI system at one end of the runway.

(ii) San Borja

A new airport will be constructed at a site about 4 km northwest of the town. Approaches to the single runway will be entirely clear of built-up areas. The runway will be 1,800 x 30 m paved with asphaltic concrete and will be stressed for a Fokker F-27. A terminal building designed for a peak hour of 100 passengers will be constructed near the middle of the east side of the runway. It will be served by a paved apron, sized for three F-27 aircraft, which will be connected to the runway by a short paved lead-in taxiway. The terminal area will be provided with a gravel access road from the nearest tow.n road. Adequate automobile parking areas will be provided as well as a fuel storage area. A control tower and a shed for emergency equipment will he built. All necessary utilities and a perimeter chain link fence will be p,o- vided. The entire area will be suitably drained.

The aircraft operational areas will be provided with edge lighting. However, the runway edge lighting will be spaced for a 45 m runway rather than for the 30 m being constructed. New VHF and HF communications equipment, a VOR/DME and a 50 W NDB will be installed, and there will be a VASI system at one end of the runway.

Because of the major meat air cargo business, a multiple position gravel aircraft apron with gravel lead-in taxiway to the runway will be provided beyond the terminal area on the same side of the runway to accommodate the reconstruc Lon of exisLing slaughterhouses.

(iii) Santa Ana

A new runway will be constructed at the existing site parallel to the existing runway but about 300 m from the face of the existing terminal building. Approaches to this single runway will be entirely clear of built- p areas. The runway will be 1,800 x 30 m crushed rock with double sand asphalt seal, and will be stressed for a Fokker F-27. The terminal building will be renovated for a peak hour of 100 passengers. It will be served by a sealed apron sized for three F-27 aircraft and connected to the runway by ANNEX 5 Page 5 a short sealed lead-in taxiway. The terminal area will be provided with a gravel access road from the nearest road in town. Adequate gravel automobile parking areas will be provided as well as a fuel storage area. The existing control tower will be renovated, and a shed for emergency equipment will be built. All necessary utilities will be refurbished. A perimeter chain link fence will be provided. The entire area will be suitably drained.

The aircraft operational areas will be provided with edge lighting. New VHF and HF communications equipment will be installed. A 50W NDB will be installed in addition to a VASI system at one end of the runway.

Because of the major meat air cargo business, a multiple position gravel aircraft apron with gravel lead-in taxiway to the runway will be provided on the opposite side of the runway from the terminal building to accommodate the reconstruction of existing slaughterhouses.

(iv) Tarija

The new 2,800 x 45 m crushed rock runway will be overlayed with 10 cm of asphaltic concrete for its entire length. The two lead-in taxiways and the three B-727 position aprons will also be paved. The second runway will not be paved, but grade transitions between the two runways will be provided. The runway, apron and taxiways will be provided with edge lighting and a VASI will be provided at one runway threshold.

The existing terminal building and control tower are adequate, but new VHF and HF communications equipment will be provided as well as a VOR/DME and a 50W NDB.

Chain link fencing will be provided around the entire perimeter of the airport. The arroyo passing the southeast threshold of the runvay will be diverted and armored with riprap, and the portion within 150 m of each side of the extended runway centerline will be covered.

C. Engineering

Design and construction supervision for the above airport work will be provided.

Design of a new runway for Cochabamba will also be provided. This runway will probably be aligned on 13/31, which parallels the major axis of the Cochabamba valley. The position of the runway will be about 500 meters to the southwest of the existing R/W 13/31. Such a location will require a new taxiway sy2Le.iand a relocation of the terminal area. It is also probable that the maintenance base of LAB will be relocated. A feasibility study carried out in 1975 proposed such positioning. ANNEX 5 Page 6

D. Other Project Components

Various special components and communications, navaid, lighting and maintenance equipment proposed for inclusion in the project are listed in Annexes 6, 7 and 9.

February 1977 ANNEX 6 Page 1

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Location List for Equipment Included in the Project

Airport Lighting (R/W, T/W, Apron, Obstruction and Beacon) Riberalta, San Borja, Tarija and Santa Ana

VOR's Riberalta, San Borja, Tarija and Robore, Caranavi

DME's Riberalta, San Borja, Tarija and Trinidad, Caranavi

NDB's 1KW Trinidad, Cobija, Robore, Sucre and Yacuiba

NDB's 50W Riberalta, San Borja, Tarija, Santa Ana, Apolo, Ascencion, Magdalena, San Ignacio de V., San Jose, San Javier, Guayaramerin

L 50W La Paz, Guayaramerin, Sucre and Trinidad (2)

VASI La Paz, Cochabamba (2), Trinidad (2), Santa Cruz (2) and Sucre (2), Riberalta, San Borja, Santa Ana and Tarija

TX HF ISB IKW Trinidad (4), Cochabamba (2), La Paz (2)

TX HF SSB 150W, 4 channel (2 at each total 36) Cobija, Riberalta, Guayaramerin, Santa Ana, San Joaquin, San Ramon, Magdalena, San Ignacio de M. - Sucre, Potosi, Camiri, Yacuiba, Tarija - Apolo, Rurrenabaque, San Borja, Oruro, Charana

RX HF SSB 4 channels (4 at each of above, total 72)

RX HF ISB 4 channels Cochabamba (4), Trinidad (8)

Tower Equipment (VHF, tape recorders, met., etc.) Riberalta, San Borja, Santa Ana and Tarija ANNEX 6 Page 2

Teletypewriter equipment Terminal and Control Equipment La Paz, Cochabamba, Santa Cruz and Trinidad

Transmitter Group (6 circuits each) La Paz (3), Cochabamba, Santa Cruz and Trinidad

Receiver Group (6 circuits each) La Paz (3), Cochabamba, Santa Cruz and Trinidad

Teletypewriters RO La Paz (18), Cochabamba (6), Santa Cruz (6), and Trinidad (6)

Teletypewriters ASR La Paz (8), Cochabamba (2), Santa Cruz (2), and Trinidad (2)

Teletypewriters KSR La Paz (8), Cochabamba (6), Santa Cruz (6) and Trinidad (6)

Portable TD La Paz (2)

Power Supply La Paz (5), Cochabamba (2), Santa Cruz (2) and Trinidad (2)

Reperforator La Paz (18), Cochabamba (6), Santa Cruz (6) and Trinidad (6)

January 1977 ANNEX 7

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Regional Maintenance Equipment

D-6 Tractor Front End Loader MotSrgrader 5 mJ Dumptruck .(3) Dual Wheel Self-Propelled Sheeps Foot Roller with Blade Hand Compactors (2) D-24 Scraper 1,500-Gallon Tank Truck

Santa Ana Airport Maintenance Equipment

Asphalt Mixing Plant 8T/Hr Bitumen Boiler/Sprayer 500 gals Asphalt Cauldron 500 kg Direct Drum Hand Sprayer Tandem Vibratory Roller 1,140 kg Compressor, Breaking Tools and Hoses, 125 cfm, 100 psi Garage Compressor, 100 psi Oxy-Acetylene Burning Gear Welding Transformer and Tools Carpenter's Tool Kit Electrician's Tool Kit Diesel Fitter's Tool Kit Vehicle Mechanic's Tool Kit Pavement Maintenance Hand Tools

January 1977 ANNEX 8

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Draft Technical Assistance Job Descriptions

1. Advisor to the Technical Director

The Advisor to the Director, who is the immediate assistant of the Executive Director, must have a university degree and experience in aviation infrastructure. He must also have the same qualifications as are required for the position of the Executive Director.

The Advisor shall advise the Technical Director in his daily responsibilities to:

(a) Direct, coordinate, supervise and evaluate the work of the operational divisions in accordance with the policy and/or plans of action adopted;

(b) Assist the Executive Director in the study and preparation of the Institution's policies and also help him with the tasks of direction and coordination with specific functions within his field of competence and with other matters for which his assistance is needed;

(d) Supervise the progress of programs, projects and works, and, together with the heads of technical departments, study any actions or measures for effecting corrections or changes;

(e) Comply with and enforce resolutions, rules, procedures and all other provisions governing technical operations at airports or at enroute stations;

(f) Substitute for the Executive Director and exercise his authority in accordance with the general rules, in the latter's absence;

(g) Represent the Executive Director and exercise his authority in such official activities as the latter may indicate to him, and perform all such tasks as he may delegate to him; and

(h) Perform all other functions pertinent to his position. ANNEX 8 Page 2

2. Accounts Division Chief

The Accounts Division Chief shall be responsible on a day-to-day basis to:

(a) Ensure that the financial records are kept in accordance with regulations as established by the Government and in a manner compatible with generally accepted accounting principles. This shall encompass AASANA Headquarters, Regional Offices, Airports and enroute stations managed by AASANA by location and Cost Center;

(b) Ensure that recommendations are presented to management for the setting of structure and level of tariffs, as may be required, in accordance with a review of cost data in (a) above.

(c) Ensure that monthly financial status reports of investment undertaken by AASANA by location and Cost Center are prepared;

(d) Ensure development of manpower, operating and capital budgets by location and Cost Center annually displayed by month for the operating year, and also the preparation of annual budgets for a projected period of five years;

(e) Ensure that accounting data are provided for planning and decision-making purposes;

(f) Ensure that AASANA's monthly budgeted and actual financial status reports are prepared;

(g) Direct the taking of inventory for general balance sheet purposes;

(h) Supervise the general balance sheet preparation;

(i) Centralize operating and other expenditures on the basis of a cost accounting plan and the programs budget;

(j) Ensure that summary accounts to be sent to debtors are prepared, and summary accounts sent by creditors are checked;

(k) Ensure that year-end adjustments or corrections for the accurate determination of the Institution's financial, economic and assets situation are made;

(1) Supervise the implementation of a coordinated costs system;

(m) Ensure that vouchers used for the recording of transactions are properly filed;

(n) Analyze and act on financial reports from the regional offices; and

(0) Perform any other functions assigned by the Department Chief. ANNEX 8 Page 3

3. Construction and Supervision and Maintenance Combined Divisions Chief

The Chief of these combined Divisions shall:

(a) Inform and advise the Department Chief on the work of the Division, proposing the most appropriate measure and methods for performing its functions;

(b) Direct supervision of construction, improvement and/or maintenance of runways, taxiways, parking aprons, drainage, access roads and other civil works carried out at airports and enroute stations managed by AASANA;

(c) Direct supervision of construction, improvement or expansion and/or maintenance of airport buildings and other architec- tural or service facilities at airports and enroute stations managed by AASANA;

(d) Be responsible for the preparation of, review and approval of, progress payment certificates.

(e) Be responsible for the preparation and approval of work change orders;

(f) Be responsible for the preparation and updating of the technical specifications required for works construction, and enforcement of compliance therewith;

(g) Be responsible for the quantitative calculations and unit prices, budgets, work schedules and construction methods for the work of the division;

(h) Supervise the different tests required to ensure the proper execution of works;

(i) Coordinate with the Studies and Projects Division in deciding on work changes, in issuing orders for such changes and in performing any corrections to the work done by the division;

(j) Direct the corresponding technical inspections and recommend acceptance of the works;

(k) Monitor supervision of the construction works when such supervision is carried out by third parties;

(1) Supervise the preparation of programs, budgets and technical specifications related to airport and enroute station maintenance; ANNEX 8 Page 4

(m) Schedule and evaluate execution of the maintenance works carried out by the different regional centers;

(n) Periodically direct the inspection of the different airports and enroute stations within the AASANA network, to ensure compliance with the maintenance program;

(o) Direct studies and propose the purchase and replacement of machinery and equipment required for airport and enroute station maintenance;

(p) Supervise the establishment and updating of unit prices for maintenance work, by region; and

(q) Perform other duties as assigned by the Department Chief.

4. Air Navigational Aids Division Chief

The Chief of this Division shall:

(a) Ensure that the level of standard approved for the facility is implemented and the radio navaid systems are maintained so that the safe operation of aircraft is guaranteed;

(b) Supervise the preparation and implementation of the rules and regulations necessary for the proper maintenance and conservation of radio navaid equipment, installations and components;

(c) Supervise the preparation of technical instructions and publications for the optimum use of the facilities installed and/or maintained;

(d) Ensure that the operation of the equipment and facilities for which the Division is responsible are continually monitored and periodically evaluated;

(e) Ensure that systems for recording adjustments, operating reports and flight test reports are systematically analyzed and evaluated;

(f) Coordinate the Division's activities with the Operations Department, regional airport managers and companies operating aircraft in order to provide the assistance required to improve service;

(g) Cause all pertinent frequencies to be monitored and recommend the use of specific frequencies for aeronautical radio navaid services in accordance with the regulations; ANNEX 8 Page 5

(h) Study and make recommendations on requirements for specialized personnel; and

(i) Perform other duties as assigned by the Department Chief.

5. Telecommunications Systems Division Chief

The Chief of this Division shall:

(a) Supervise the installation and maintenance of all communications equipment and systems necessary to ensure the optimum provision of air traffic control and information services in accordance with the approved operating regulations;

(b) Study and make recommendations on requirements for specialized personnel;

(c) Ensure that the performance of the equipment for which the Division is responsible is adequately monitored and periodically evaluated;

(d) Ensure that the systems for recording adjustments, operating reports, flight test reports, etc., are systematically analyzed and evaluated; and

(e) Perform other duties as assigned by the Department Chief.

February 1977 ANNEX 9 Page 1

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Special Components of the Project

Airport Access Roads

The new airport at Riberalta would be constructed southeast of the town along an existing highway. The project would include an access road from this highway to the terminal area (1 km).

The new airport at San Borja would be constructed 4 km northwest of the town. The project would include an access road from an existing main road at the outskirts of the town to the terminal area of the airport.

The existing access road at Santa Ana would be regraded and spread with gravel from the town to the terminal area (2 km).

No road work is necessary at Tarija.

Electric Power Supply

The project would provide prime and standby engine generators for the three Beni airports. Power-generating equipment necessary at Tarija and other locations for Navaid or Com equipment is being provided under a grant from the UK (next page).

Potable Water Supply and Sewage Disposal

Water for the project airports would come from wells. It would be treated before entering the distribution system. Sewage would be disposed of by means of septic tanks and leaching fields.

Slaughterhouse

Because of the location of the proposed new runway at Santa Ana, an existing slaughterhouse would have to be demolished. A new slaughterhouse would be constructed under the project in a more suitable location relative to the runway and terminal area. ANNEX 9 Page 2

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Engine Generator Sets - Grant Aid from United Kingdom

All engine generator sets will be dual, rated for elevation, air cooled diesel with electric starting equipment and automatic transfer switches and isolation switches.

Size Location

10 KW Apolo 10 KW Ascension de G. 10 KW Camiri 10 KW Concepcion 10 KW Magdalena 10 KW Rurrenabaque 10 KW San Ignacio de M. 10 KW San Ignacio de V. 10 KW San Javier 10 KW San Joaquin 10 KW San Jose 10 KW Charana 25 KW Guayaramerin 25 KW Oruro 25 KW Potosi 25 KW Puerto Suarez 25 KW Robore 25 KW Yacuiba 25 KW 2 sets Spare 35 KW Cobija 35 KW Sucre 35 KW Tarija

NOTE: One of the spare 25 KW sets should be installed at Caranavi for the proposed VOR.

Januarv 1977 ANNEX 10 Page 1

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Project Progress Monitoring Indices

Date Accomplished Construction or To Be Met

Completion of draft construction working drawings for Tarija. February 1977

Completion of draft contract documents for Tarija. February 1977

AASANA and Bank review of draft drawings and documents. February 1977

Advertisement for interested contractors for Tarija paving. April 1977

Completion of final contract drawings and documents for Tarija. April 1977

AASANA and Bank review of final civil works contract documents and drawings for Tarija. April 1977

Advertisement for prequalified consultants for Riberalta, San Borja and Santa Ana. April 1977

Invitations to bid issued for Tarija. May 1977

Selection of consultants for Riberalta, San Borja and Santa Ana. June 1977

Bids opened for Tarija paving. July 1977

AASANA and Bank review of awards. August 1977

Award of contract at Tarija. September 1977

Notice to proceed at Tarija. October 1977

Completion of draft construction working drawings for Riberalta, San Borja and Santa Ana. March 1978

Completion of draft contract documents for Riberalta, San Borja and Santa Ana. March 1978

Solicitation of pre-qualification information. February 1978

AASANA and Bank review of Draft drawings and documents. March 1978 ANNEX10 Page 2

Review of pre-qualification information. March 1978

Completion of final contract drawings and documents for Riberalta, San Borja and Santa Ana. May 1978

AASANAand Bank review of pre-qualified list and final civil works contract documents and drawings for Riberalta, San Borja and Santa Ana. May 1978

Invitations to bid issued for Riberalta, San Borja and Santa Ana civil works. June 1978

Bids opened for Riberalta, San Borja and Santa Ana civil works. September 1978

AASANA's recommendation for awards. October 1978

AASANAand Bank review of awards. October 1978

Award and notice to proceed at Riberalta, Santa Ana and San Borja civil works. December 1978

Completion of Tarija civil works contract. January 1979

Final acceptance of Tarija civil works contract. January 1980

Completion of Riberalta, Santa Ana and San Borja civil works contracts. December 1981

Final acceptance of Riberalta and San Borja civil works contract. December 1982 ANNEX 10 Page 3

Riberalta, San Borja and Santa Ana Airports Final Engineering

Short list of potential consultantsprepared by AASANA. February 1977

Short list of consultantsapproved by Bank. February 1977

Draft Terms of Reference for the Riberalta, San Borja and Santa Ana Airports Final Engineering prepared by AASANA. March 1977

Draft Terms of Reference for Contract reviewed by Bank. April 1977

Fir.alTerms of Reference prepared by AASANA. April 1977

Final Terms of Reference approved by Bank and Invitation to propose sent to approved short list by AASANA. April 1977

Proposals for design opened. May 1977

AASANA's recommendationfor award. June 1977

Bank review of proposed award. July 1977

Award of Contract. August 1977

Notice to proceed. September 1977

Consultants'draft designs. March 1978

AASANA and Bank review of preliminary designs. March 1978

AASANA and Bank approval of preliminary designs. April 1978

Consultants'final designs and contract documents. May 1978

Acceptance of final designs and contract documents by AASANA and Bank. June 1978 ANNEX 10 Page 4

MaintenanceEquipment

Advertisementfor interestedcontractors for airport maintenance equipment. July 1977

Completionof draft contract documents for maintenance equipment. August 1977

Solicitationfor pre-qualificationinformation for maintenanceequipment manufactures. September 1977

AASANA and Bank review of draft contract documents for maintenanceequipment. October 1c77

Consultants'review of pre-qualificationinformation for maintenanceequipment manufacturers. October 1977

Consultants'recommendation of pre-qualifiedmaintenance equipment contractorlist. November 1977

Completion of final maintenanceequipment contract documents. November 1977

AASANA and Bank review of pre-qualifiedlist and final contract documents for maintenance equipment. December 1977

Invitationsto bid issued for maintenance equipment contract. February 1978

Bids for maintenanceequipment contract opened. May 1978

Consultants'recommendation for award of maintenance equipment contract. May 1978

AASANA and Bank review of award for maintenance equipment contract. June 1978

Award and notice to proceed with maintenance equipment contract. July 1978

Delivery of maintenanceequipment. October 1980 ANNEX 10 Page 5

AASANA Technical Assistance and Training

AASANA to prepare Terms of Reference for technical assistance positions for AASANA. May 1977

Review of Terms of Reference for TA positions by Bank. June 1977

Search for grant funding for training by AASANA. June 1977

Search for TA experts by AASANA/Bank or others. June 1977

Review of candidates and selection of experts for TA positions by AASANA and Bank. August 1977

Mobilization of TA experts in Bolivia. December 1977

Preparation of training plan by AASANA and its TA experts. September 1978

Review of training plan by Bank. October 1978

Selection of trainees-by AASANA. October 1978

Review of training candidates by Bank. November 1978

Placement of trainees in training facilities. December 1978

Completion of TA Training End 1982 ANNEX 10 Page 6

Navaids, Com. and Tower Equipment

Advertisement for interested contractors for navigational aids, communication and control tower equipment manufacture and installation. December 1977

Completion of draft construction drawings and contract documents for navaids and communications. February 1978

Solicitation for pre-qualification information for navaids and communications contractor. February 1978

AASANA and Bank review of draft navaids and communications drawings and contract documents. April 1978

AASANA's review of pre-qualification information for navaids and communications contractors. April 1978

AASANA's recommendation of pre-qualified navaids and communications contractor list. May 1978

Completion of final navaids and communications contract drawings and documents. May 1978

Bank review of pre-qualified list and final contract documents and drawings for navaids and communications contract. June 1978

Invitations to bid issued for navaids and communications contract. July 1978

Bids for navaids and communications contract opened. October 1978

AASANA's recommendation for award of navaids and communications contract. November 1978

Bank review of award for navaids and communications contract. November 1978

Award and notice to proceed with navaids and communications contract. December 1978

Completion of navaids and communications contract. June 1980

Acceptance of navaids and communications contract. June 1981 ANNEX 10 Page 7

CochabambaAirport EngineeringFinal Design

Draft Terms of Reference for the CochabambaAirport EngineeringFinal Design prepared by AASANA. October 1977

Draft Terms of Reference for Contract reviewed by Bank. November 1977

Short list of potential consultantsprepared by AASANA. November 1977

Short list of consultantsapproved by Bank. December 1977

Final Terms of Reference prepared by AASANA. December 1977

Final Terms of Reference approved by Bank and invitationto proposed sent to approved short list by AASANA. February 1978

Proposals for design opened. May 1978

AASANA's recommendationfor award. June 1978

Bank review of proposed award. July 1978

Award of contractand notice to proceed. July 1978

Consultants'preliminary design. December 1978

AASANA and Bank review of preliminarydesign. February 1979

AASANA and Bank approval of preliminarydesign. February 1979

Consultants'final design and contract documents. July 1980

Acceptanceof final design and contract documents by AASANA and Bank. September1980

April 1977 ANNEX 11 Page 1

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Summary and Conclusions of Transport Sector Report

Bank Group Operations in the Transport Sector

1. The Bank's first involvement in Bolivia's Transport Sector was as executing agency for a UNDP-financed National Transport Survey (1967); this was followed by the financing of a Pipeline Project (Loan 655-BO, September 1971, US$23 million) and two Railway Projects (IDA Credit 346-BO, November 1972, US$8 million, and Loan 1121-BO, June 1975, US$32 million). At present, the Bank is appraising a Third Railway Project (proposed loan of US$35 million), which would include funds for updating the National Transport Survey and for subsequent technical assistance to the Directorate of Planning and Coordination, as well as an Aviation Development Project (proposed loan of US$25 million). To date, there has been no Bank involvement in the highway sector.

Sector Knowledge

2. The Bank's knowledge of railways and aviation is good and that of pipelines is reasonable. There is a gap in knowledge regarding the overall traffic demand as well as the ability of highways and waterways to meet the expected demand. The overall knowledge, therefore, is not sufficient to establish the future role that each mode should play or to provide a base for the formulation of a comprehensive transportation policy.

The Transport Sector

3. Bolivia, as a land-locked country with adverse geography and climate and a scattered population, presents serious resource allocation problems with respect to the role of transport in its development. Its major commodities, oil and gas, are transported fairly efficiently by pipelines, but its other foreign exchange earning commodities must rely on facilities with high investment and high maintenance costs. In 1974, total freight movements in Bolivia amounted to about 5.5 billion ton-km. Of this total, 75% was carried by pipelines, 16.3% by road, 7.0% by rail, 1.1% by waterways, and 0.6% by air.

4. Early development of the Bolivian transport network was based on the construction of railways to serve the needs of foreign trade and the mining sector in particular. The road network was developed later to meet the needs of internal communication and to fill the gaps left by the railway. Air transportation, which has grown rapidly in the last 10 years, serves long-distance passenger traffic and gives access to extensive isolated areas. The two principal river routes in Bolivia, the Ichilo-Mlamore and the Beni, are a means of supplying the vast areas in the north and northeast, especially for heavy and non-perishable goods, and Lake Titicaca serves as a navigable link with the ANNEX 11 Page 2

southern Peru railway and the Pacific port of Matarani. Pipelines is the latest mode that became developed.

Transport Modes

5. By far the most important individual transport mode in Bolivia is the pipeline, which accounts for a very high share (75%) of freight transport (in ton-km). This reflects both the importance of the petroleum industry and the relatively low level of development of the rest of the economy. The state oil company operates 2,462 km of oil pipelines and 754 km of gas pipelines. Compared with this system, the road network of about 38,000 km is much larger, but only 1,166 km are paved and 6,559 km have gravel surface. The railway system is about 3,400 km long, and the river system measures about 1,600 km. The national airline, LAB, has a route network of about 27,800 km, of which 11,000 km are within Bolivia.

6. Most of the country is accessible by only one transport mode; for large areas of the country, access is available only at high transport cost or with poor service, or both. Topography and the quality of the transport infrastructure place serious restrictions on the vehicles that can be used, i.e., 5-6 ton trucks on most roads, 25-40 ton barges on the rivers, turbopro- peller aircraft of 5 tons payload at most airports and relatively short trains. Although improvements, particularly for railways and aviation, are being made, many of the vehicles (e.g., trucks, barges and aircraft) have not been maintained properly and are clearly overaged. Bolivia has about 17,500 trucks with a carrying capacity of 88,000 tons. The river barges have a total capacity of some 3,000 tons; 50 aircraft, about 300 tons; and 1,950 railway wagons, about 43,000 tons. These numbers are only roughly indicative, due to the number of vehicles out of service, e.g., about 40% for the railway wagons and a similar, but less serious, situation for both aircraft and barges. Other factors are the speed of the vehicles (25-30 km/hour for trucks) and the amount of idle time since vehicles are used for storage. These differences would have to be taken into account in any estimate of productivity by transport mode. Passenger traffic is served by some 50,000 light vehicles, 4,000 buses, eight aircraft in scheduled air services, 188 railway passenger cars and hydrofoils on Lake Titicaca.

7. Traffic data are incomplete, particularly for intercity road transport. Apart from the specialized role of pipeline transport, road transport accounts for 65% of the remaining transport effort as compared to 28% for the railways and small contributions by river, lake and air transport (about 2% each). Intercity passenger transport by railway in 1975 totalled about 832,000 passengers for the Western System and 317,000 passengers for the Eastern System; this may be compared to 463,000 domestic air passengers. Intercity road transport is probably more important than other modes of transport, but very uncertain in view of the large number of unaccounted-for travellers by truck. ANNEX 11 Page 3

8. A common major problem for all transport modes (except possibly lake) is the lack of supporting infrastructure coupled with poor maintenance of existing infrastructure. This is a serious matter since it limits the use of larger, more economical vehicles and decreases average utilization.

Transport Planning and Coordination

9. The Ministry of Transport, Communication and Civil Aviation (MTCCA) is responsible for formulating, directing and executing policy. The investment proposals of MTCCA are reviewed by the National Economic and Planning Council (CONEPLAN) to determine the overall level of investment in light of national priorities. At present, only four of the five transport modes are fully under the jurisdiction of MTCCA: highways, railways, aviation and waterways. Pipelines are under the jurisdiction of Yacimientos Petroliferos Fiscales Bolivianos (YPFB), which, in turn, reports to the Mlinistry of Energy and Hydrocarbons.

10. A National Transport Survey for Bolivia, financed by UNDP, was completed in 1969, with the Bank acting as Executing Agency. It proposed a program for integrated transport development over the following ten years, and those projects which were justified in the Survey have mostly been started or are included in the 1976-1980 National Development Plan. One of the Survey's main recommendations was that a Directorate of Planning and Coordi- nation (DPC) should be created. The Directorate was created and, for a time, was attached to the Ministry of Coordination and Planning, but is now in MTCCA. As a means of achieving better planning and coordination, the Bank, in 1972, assisted in the preparation of terms of reference for a UNDP-financed technical assistance program to strengthen this Directorate.

11. This UNDP-financed program of technical assistance to the Direc- torate of Planning and Coordination, with ECLA acting as executing agency, was begun and cancelled in 1976, due to lack of funds, after only partial implementation.

12. The gap in knowledge regarding transport facilities and equipment, their condition, age and ability to meet expected demands is serious, especially for highways and waterways. Although many individual project studies have been undertaken, there has been no real coordination among them. Accord- ingly, the Government has decided that DPC, with the help of consultants, should update the National Transport Survey. The main objectives of this National Transport Survey would be to:

(a) analyze and project the transport demand in relation to planned development of the economy;

(b) review existing capacity and operations; ANNEX 11 Page 4

(d) recommend policies and operational improvements designed to make best use of existing and future capacities;

(e) prepare a program of investments necessary to improve and expand capacities to meet projected demands;

(f) recommend measures for the strengthening of DPC under MTCCA and develop a new organization and staffing plan for it;

(g) ensure that a maximum amount of working knowledge is imparted to the counterpart personnel, and assure that the organization of traffic counts and other data collection exercises will be undertaken in such a way that they can most easily be incor- porated in the future routine work; and

(h) indicate the method of implementation for the major policy recommendations that might serve as terms of reference for a subsequent two-year technical assistance to DPC.

Export-Import Transport

13. Bolivia relies heavily on exports and imports for the development of its economy. The main exports are minerals via Peru and Chile, crude oil to Argentina and Chile, gas to Argentina, and agricultural commodities, especially cotton and wood, to Argentina and Brazil. Recently, major sugar exports to Chile also took place. Imports are mainly wheat and flour from Argentina and, via Peru and Chile, iron and steel, mechanical equipment, vehicles and other durable goods.

14. The main carrier (except pipelines) is the railway, which, in 1975, carried 350,000 tons of imports and 153,000 tons of exports by the western network (mainly through Arica and Antofagasta) compared to imports of 167,700 tons and exports of 89,600 tons by the eastern network.

15. External transport facilities assume special importance in the economy of the nation since most imports and the exports of high-bulk ores and certain farm commodities depend on efficient, low-cost transportation and, especially, on access to the Pacific ports of Antofagasta, Arica and Matarani. Another related problem is that Bolivia's potentially most significant export markets in South America--represented by such cities as Lima, Santiago, Buenos Aires, Asuncion, Montevideo, Sao Paulo and Rio de Janeiro--are located at great distances from La Paz, ranging from 1,100 to 2,800 km by air and even farther by overland and river routes. ANNEX 11 Page 5

Sector Objectives and Strategy

16. The Government's present Five-Year Plan (1976-1980) includes, as major goals, the expansion of the main export sectors--hydrocarbons and minerals and agriculture and agro-industries--in order to break the foreign exchange constraint to development. The plan recognizes that infrastructure such as transport and communications is basic to the country's development and is given high priority. The latest Economic Memorandum on Bolivia (March 23, 1977) concurs with this view. The targets for transport call for investments in projects already started of about US$475 million, excluding pipelines: 56% for highways, 23% for railways, and 21% for aviation. Some 62% of these investments are in foreign exchange. In addition to these projects already under way, the Government has under study some US$439 million in possible projects. The Five-Year Plan does not include capital investments for waterways, which are relatively minor.

17. From the Five-Year Investment Plan (1976-1980), it appears that the Government's major objectives for the Transport Sector are:

(a) Roads: extension of the road network;

(b) Railroads: rehabilitation and modernization of the National Railroad System to allow more efficient operation and to continue its financial viability; and

(c) Air Transport: improvement and construction of airport facilities and improvement of the air navigation system to provide all-weather availability of most airports.

18. The pipeline subsector has proposed new investments for 1976-1980 of some US$799 million, which would extend the pipeline network and increase throughput over existing lines.

19. The Five-Year Plan addresses itself primarily to new construction with no added emphasis being given to rehabilitation and maintenance of the existing network (para. 20), particularly in the road subsector. Since the transportation investments are large, and may even be excessive, continued sector planning and coordination are required to ensure that the projects under study are justified in their overall content and are well-timed. Since even the transport investments already' committed are ambitious, it is likely that most of these projects under study cannot be carried out in the 1976-1980 period. In considering the development needs of the country, it should be recognized, however, that not all the perceived investments will necessarily be economically justified, but each should be a least-cost solution. In particular, duplication of services, i.e., parallel road and rail lines, should be avoided. ANNEX 11 Page 6

Bank Group Contribution

20. The Transport Sector Mission identified several maintenance and investment requirements (particularly for rehabilitation) in the Bolivian transport sector; it has also pointed out the need for updating the National Transport Survey and for strengthening the Directorate of Planning and Coordi- nation under MTCCA. The Bank's main objective is to assist in high priority infrastructure projects and to guide in the selection of a future investment program as yet only partly defined, i.e., projects under study estimated to cost US$439 million. This two-part objective would not only deal with overall transport coordination, but to be effective, would also approach, at the same time, the most important of the individual transport modes. The Bank's previous involvement with railways and pipelines will now be broadened by projects in aviation and, possibly, in roads. A focus will be put on the selection of projects meeting the development strategy, rehabilitation and maintenance of the present system with emphasis on the Government-provided infrastructure and upgrading of managerial capability to perform these tasks.

21. The Bank's immediate measures to assist the Government in reaching these objectives in the transport sector should be the provision for financing the foreign exchange component of:

(a) the updating of the National Transport Survey and subsequent technical assistance to the Directorate of Planning and Coordination under the proposed Third Railway Project (para. 21 (c)) at an estimated cost of US$1.5 million equivalent;

(b) the technical assistance for highway maintenance funded under the proposed Third Railway Project (para 21 (c)) at an estimated cost of US$0.5 million equivalent (para. 22);

(c) investments included in ENFE's Five-Year Investment Plan (1977-1981) which are to be committed in 1977 and 1978, and the continuation of the ongoing program of technical assistance to ENFE with an estimated cost of US$32.9 million equivalent also in the proposed Third Railway Project;

(d) assistance to AASANA for airport construction; provision of technical assistance to AASANA; electronic equipment; construction equipment for runway maintenance; design of works at Cochabamba. The estimated total cost is US$39.5 million, with a Bank contribution of US$25.0 million equivalent in the proposed airfields project.

22. During discussions with the Transport Sector Mission, the Government authorities requested Bank assistance in the field of highway maintenance. The proposed initial project is a Pilot Project in three separate districts (La Paz, Cochabamba and Santa Cruz) of the Servicio Nacional de Caminos (SNC).

April 1977 AlNNEX 12 Page 1

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Details of the Economic Evaluation

1. The most important economic benefits are derived from the use of more efficient aircraft or from more efficient utilization of existing aircraft. The basic costs are derived from current aircraft used by Lloyd Aereo Boliviano and the major non-scheduled cargo airlines. These data have been compared with cost experience in other countries, particularly the United States. The costs have all been referred to 1975 price levels. Similarly, the traffic composition and route lengths have been the latest available. For each airport, passengers and air cargo were multiplied by weighted averages of travel distances and by the differential in aircraft costs.

2. These estimates are based on conservative assumptions. First, relative costs for old aircraft will increase overtime when spare parts become more difficult to obtain and maintenance and fuel consumption increase. Second, the benefit data all relate to price levels of 1975 whereas the project economic costs are mid-1976. Third, with improved aircraft and better services, the average stage length for passengers and, to a certain extent, for air cargo, will increase.

3. The basic direct operating cost data for the main types of aircraft are the following:

Boeing Fairchild Douglas Curtiss Convair B-727-100 F-27 D-C3 C-46 CV-580 …------____ US$-

Block hour cost 1,032 427 357 400 482

Cost per ton-km used for performed .2012 pass. only 1.1357 .3300 .2754

Cost per pass- km performed .0243 .0664 .0978 used for cargo only

4. The average distances used are the following in km:

Tarija Riberalta San Borja Santa Ana de Yacuma

Passengers 488 365 232 209

Cargo 488 752 232 440 ANNEX 12 Page 2

5. Present delays can be caused either on the ground or enroute. Diverted flights normally mean additional time enroute, whereas cancellations normally mean non-productive time for an aircraft on the ground. For delays, cancellations or diversions in this economic evaluation, the benefit-per-hour for better electronic equipment for communications and navigation or runway maintenance equipment has been assumed as the average revenue per block hour less variable costs for an F-27 (i.e., US$700-US$363 = US$337). For diversions or delays caused by airport conditions, the block hour cost for F-27 (US$427) or C-46 (US$400) has been used.

6. The differentials in cost between expected future aircraft and current (1975) aircraft use have been converted to an average cost per passenger or ton of cargo for each airport. Average costs for aircraft include depreciation to reflect more accurately the gradual changes from one type to another of aircraft which are in the present fleet. No new aircraft are expected to be needed only for the relatively limited traffic at project airports. Without the project, additional second-hand aircraft may have to be purchased. The effect of this is likely to understate benefits more than the slight overstatement due to generated traffic by the project.

7. These have been multiplied by forecast passenger volumes or cargo tonnages. The delays, cancellations or diversions have been estimated from LAB and AASANA daily records for 1975. For non-scheduled aircraft, only the diversions from San Borja have been possible to ascertain. These delays have been assumed to grow in the same proportion as traffic over the project period.

8. The economic life of the airports has generally been assumed at 19 to 22 years, with the exception of San Borja at 12 years due to the possibility of competition from improved road connections from this community, which may change the character of the airport. The physical life of the electronic equipment and the runway maintenance equipment has been assumed at 11 and 5.5 years, respectively. No residual values have been assumed.

9. For Riberalta, the site of existing airport land close to builtup parts of the town is expected to yield US$600,000 in today's prices and is included as a benefit in 1981. For Santa Ana de Yacuma, the yearly avoided cost of maintaining the airport has been estimated at US$100,000 based on works carried out in 1975-1976 which, in the absence of the project, would have to be carried out annually.

April 1977 ANNEX 13 Page 1

BOLIVIA

AVIATION DEVELOPMENT PROJECT

Financial Assumptions

1. Revenues, expenses and capital costs are stated in constant values (1976), but include price contingencies for project capital costs.

2. Tariffs used are in accordance with the revised User Charges of AASANA, which became effective in August 1975. Commencing with the year 1977, the date of project implementation, total revenues have been increased as follows based on expected tariff increases (para 6.08);

Individual Increase Cumulative Increase

1977 20% 20% 1979 20% 44% 1980 10% 58% 1982 10% 74% 1984 10% 92%

3. Wages were increased at 2% per year to allow for increased requirements resulting from greater traffic.

4. Other expenses were increased at 2% per year to allow for the requirements resulting from increased AASANA operations.

5. Depreciation employed is in accordance with the depreciation policy established by the Government.

(a) Civil works (runways, buildings, access roads, fences) - 2.5% commencing when the facilities are expected to be in use.

(b) Aviation equipment (communications, navigational aids, lights) - 10% commencing when the facilities are expected to be in use.

6. Maintenance:

(a) Civil works after 1976 - 1% of replacement cost per year.

(b) Aviation, ground maintenance, and firefighting equipment - 5% of replacement cost per year.

7. Terms of the Bank loan:

Repayment over 20 years, including a grace period of four-and- one-half years at an interest rate of 8.2%.

January 1977 BOLIVIA AVIATION DEVELOPMENTPROJECT Organizationof AASANA and RelatedGovernment Entities

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| Sub-SecretLrA

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ca l eeorologY

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