Document of The World Bank

FOR OFFICIALUSE ONLY Public Disclosure Authorized ReportNo. 9362-TU

STAFF APPRAISAL REPORT Public Disclosure Authorized REPUBLIC OF TURKEY

STATE AND PROVINCIAL ROADS PROJECT

APRIL 29, 1991 Public Disclosure Authorized

Public Disclosure Authorized Country Department I InfrastructureDivision Europe, Middle East and North Africa Regional Office

This documenthas a restricteddistribution and maybe usedby recipientsonly in the performanceof their officialduties. Its contentsmay not otherwisebe disclosedwithout World Bank authorization. CURRENCY EOUIVALENTS (as of end November 1990)

Currency Unit - Turkish Lira (TL)

US$1.00 TL 2750 US$364 - TL 1 Million

FISCAL YEAR

January - December 31

MEASURES AND EQUIVALENTS

m e meter (3.281 feet) km - kilometer (0.621 mile) tkm - ton kilometer (0.621 ton-mile) pkm = passenger-kilometer(0.621 pass mile)

PRINCIPALABBREVIATIONS AND ACRONYMS USED

AADT = Average Annual Daily Traffic AC - Asphaltic Concrete ERR - Economic Rate of Return FHWA - Federal Highway Administration(U.S.) FY Financial Year FYR - First Year Return GDP = Gross Domestic Product HDM - Highway Design Model ICB InternationalCompetitive Bidding KGM General Directorateof Highways LCB Local CompetitiveBidding MOT - Ministry of Transport

MOPW e Ministry of Public Works and Settlements

NTMP e National TransportMaster Plan p.a. per annum

PCR e Project Completion Repor: pcu - passenger car units pkm = passenger kilometers PT - Project Team RAM - Road Analysis Model SEE - State Economic Enterprise SPO = State Planning Organization tkm ton kilometers

TCDD e Turkish State Railways

TSE G Turkish Standard Institute UNECE = United Nations Economic Commission for Europe FOROMCAL Use ONLY REPUBLICOP-TMRK STATEAMD PROVgIAL ROAD PROJEC

STAl APPASLROR

Table of Contents

pagg No.

LOANAND PROJECT SUMMARY ...... -

I. THE TRANSPORTSECTOR ...... 1 A. Sector Overview ...... 1 B. Transport Demand and Capacity ...... 1 C. Efficiency of Operations and Transport Costs ...... *2 D. Institutional Setting ...... 3 E. Sector Issues . . . . . 4 F. Previous Bank Experience inthe Sector... G. Role of the Bank and Lending Strategy ...... 5

II. THE HIGHAY SUB-SECTOR ...... 6 A. The Network ...... 6 B. Road Transport ...... 7 C. Road Safety ...... 8 D. Highway Administration and Organization ...... 9 E. Engineering, Construction and Maintenance ...... 10 F. Highway Planning and Design ...... 11 G. Highway Expenditures ...... 11 H. Highway Financing ...... 13 :. EnvironmentalAspects ...... 13

III. THE PROJECT ...... 14 A. Objectives . ; ...... 14 B. Project Description ...... 14 C. Cost Estimates ...... 17 D. Financing ...... 18 E. Implementation,Monitoring and Auditing ...... 19 F. Procurement .1.9...... 19 G. Disbursements ...... 21 H. Project Supervision ...... 21 I. Environmental Impact ...... 22

IV. ECONOMIC EVALUATION ...... 22 A. Benefits and Beneficiaries ...... 22 B. Costs and Benefits ...... 23 C. Overall Evaluation and Risks ...... 24

V. AGREEMENTS REACHED AND RECOMMENDATIONS.. . 4......

Thls document is based on the findings of an appraisal missLon to Turkey in November 1990, consisting of Mr. Jacques Yenny (Task Manager), Mr. Jeremy Lane (Highway Engineer) and Mr. Ahmet G6kce (Engineer).

This document has a restricted distributionand may be used by recipientsonly In the performance of their oMcialduties. Its contents may not otherwise be disclosedwithout World Bank authoration. Table of Contents (Cont'd) Page go, AMiU

Selected Documents and Data in the Project File ...... 25

1.1 Freight and Passenger Traffic by Mode ...... 26

2.1 Works Completed by KGM, 1980-89 ...... 27

2.2 Motor Vehicle Fleet,1970-89 ...... 28

2.3 Traffic on State and Provincial Roads ...... 29

2.4 Accidents on State and ProvincialRoads ...... 30

2.5 KGM Personnel 1985-90 ...... 31

2.6 Breakdown of Work Equipmentby Type and Age ...... 32

2.7 Highway Expenditures1980-90 ...... 33

2.8 KGM 1991 Budget ...... 34

3.1 List of Roads for the Project ...... 35

3.2 List of Equipment to be Procured under the Project ...... 36

3.3 List of Road Safety Materials to be Procured under the Project ...... 38

3.4 Estimated Schedule of Disbursements ...... 39

3.5 ImplementationSchedule ...... 40

4.1 Basic Vehicle Operating Costs ...... 41

CHART

General Directorate of Highways ...... 42

ME IBRD 22758 - TURKEY: State and ProvincialRoads Project REPUBLIC OF TURKEY

STATE AND PROVINCIALROADS PROJECT

Loan and Project Summary

Borrower: Republic of Turkey.

Beneficiary: General Directorateof Highways.

Loan Amount: US$300 million equivalent.

Terms: Seventeenyears, including 5 years grace, at the standard variable interest rate.

Proiect Obiectives The objectives of the proposed project are to (i) keep and Descri2tion: transport costs low in Turkey by ensuring adequate renewal and maintenance of the road network; (ii) reduce the backlog of road strengthening;(iii) continue the downsizing,modernization and improvement of the management of KGM's equipment fleet; (iv) strengthen and modernize the planning and design capabilitiesof KGM; and (v) improve the management and safety of the road system through reforms, modernizationand training.

The project includes:

(a) strengtheningof high priority sections of existing state roads;

(b) improvementof selected provincial roads;

(c) procurementof equipment and materials for road maintenance,research, planning, survey and design, reorganization,computerization and training;

(d) improvementof road safety;

(e) training for KGM's staff; and

(f) consulting services. i{i -

Benefit The proposed project will facilitate the efficiency of and Risks: the road transport sector by reducing overall transport costs. Benefits will be in the form of reduced vehicle operating costs. The improvementof provincial roads will facilitate all weather access and transport in predominantlyrural areas, which are presently isolated by the poor condition of existing roads. Also the present value of road expenditureswill be reduced by road strengtheningnow and avoiding more expensive reconstructionat a later date. Road maintenance expenditureswill also decrease on newly paved provincial roads. The benefits will accrue to a large and widespread number of beneficiaries. Private users such as individual car owners, bus passengers and own account transporterswill capture benefits directly. Benefits accruing to common carrier trucks and buses will be passed on to producers and consumers in the form of lower freight rates and fares, given the very competitivenature of the road transport industry in Turkey. The provincial roads included in the project will provide access to lower income rural populations and directly contribute to mitigating the effects of poverty in these areas. The road safety componentwill contribute to the reduction in accidents. The principal risk is any unanticipatedshortage or delayed availabilityof counterpartfunds which may delay disbursementsand lengthen the project execution period. Past performance in this regard, even under severe macro-economicpressures, has been quite good. - iii -

Estimated Prolept Cost: Local Forei Total ------US$ million------

Civil Works State Roads 100.00 100.00 200.00 ProvincialRoads 38.00 38.00 76.00 Bitumen 11.20 44.80 56.00

Equipment 7.60 68.40 76.00

Road Safety 1.30 11.70 13.00

Training 0.00 1.00 1.00

Consultant Services 0.00 1.00 1.00

Sub-total 158.10 264.90 423.00

Price Contingencies 21.90 35.10 57.00

Grand Total 180.00 300.00 480.00

Finan=cing

Government 180.0 180.0 Bank 300.0 300.0

Total 180.0 300.0 480.0

Estimated IBRD Disbursemnqts:

IBRD Fiscal Year 1992 1993 1994 1995 1996 1997 ------US$ million------Annual 15 35 50 80 90 30 Cumulative 15 50 100 180 270 300

Economic Rate of Return: 30X REPUBLIC OF TURKEY STATE AND PROVINCIALROADS PROJECT STAFF APPRAISAL REPORT

I. THE TRANSPORT SECTOR

A. Sector Overview

1.01 Transport is vital for the economic developmentand integrationof a country as large as Turkey. With population and activities widely spread, people and goods have to travel long distances over difficult terrain under severe climatic conditions. While Turkey has a very long sea coast of 8,400 km from the Mediterraneanto the Black Sea, the large Anatolian land mass makes for long distancesbetween the ports and interior cities. For instance, Ankara is over 400 km from any of its nearest ports i.e. Samsun, Istanbul and Mersin. Turkey is also the major transportbridge between Europe and the Middle East. Again the distances are long, 1,750 km from the Bulgarian border to Iran and 1,900 km to Iraq.

1.02 The backbone of Turkey's transportsystem is the 360,000 km of roads (60,000km state and provincial roads and 300,000 km of rural roads) and to a lesser extent the 8,200 km rail network. Private and state owned internationaland coastal shipping serve some 70 ports and 100 other facilities,ranging from open roadsteadsto small jetties. Airports and pipelines complete the transport infrastructure.

B. Transport Demand and Capacity

1.03 Turkey's freight transportdemand includes not only domestic freight and import/exporttraffic, but also transit traffic between Europe and the Middle East. The domestic traffic amounts to some 70 billion tkm of which some 80X are carried by road and the rest by rail (111) and coastal shipping (91) (Table 1.1). In addition some 9 billion tkm of crude oil and products move by pipeline. Major bulk commoditiesare coal and lignite, iron ore, cement, fertilizer and grain. Imports amount to some 35 million tons (includingover 20 million tons of oil and oil products), exports total nearly 15 million tons. Transit traffic increasedrapidly in the early 80s but in 1989 was down to only half of its 1985 peak of 5 million tons mainly due to unrest in neighboringcountries. About two thirds of this transit traffic passes through Turkish ports, while the other third goes by road all the way from Europe to the Middle East. In addition, Turkish ports have been shipping almost 45 million tons of mostly Iraqi crude oil and products annually in recent years.

1.04 Demand for intercityPassenger services is approaching 150 billion pkm. About 95% of this demand is handled by buses. Intercity rail passenger services have become insignificant. Mainline passenger traffic has not increased since 1955, while bus traffic has been booming, increasing over five fold in the last twenty-fiveyears. Since 1983, private car registrationhas increased dramatically,exceeding GNP growth rates by almost 501.

1.05 Cagacity of the TransRort System - Domestic freight increased faster than GNP between 1984 and 1988, at 6.71 p.a. Public intercitypassenger - 2 - trafficgrew only at 5.1X p.a. duringthe same period,which may be explained by the rapid growthin automobileownership. Generally,the capacityof the transportsystem has been sufficientto handlethe growingdemand without major bottlenecks.A large increasein transportinvestment took place after publicationof the firstNational Transport Master Plan (NTNP)in 1983. Road transport services for freight and passengers are deregulatedand highly competitive and the market responds quickly to demand. For instance, privately operated buses run frequently to virtually every point of the country,offering different levels of serviceat differentprices. Internationaltrucking also developedrapidly in the 1980s and Turkeynow has the largestfleet of trucksoperating between Europe and the Middle East, generatingsubstantial foreign exchange earnings (US$600 million in 1989). Recentderegulation of air transporthas seen a flourishof new companies, competingwith the nationalsirline. C. Effliiencyof Operationsand TransDgrtCosts 1.06 Road transport,operated entirely by the privatesector, handles over 80X of the freightand 951 of the passengerdemands and thereforesets the stage for competitionby the other modes. Its costs are low in comparison with those in other countries. In early 1990, truck chargesranged from TL 80/tkmto TL 300/tkmdepending on the regionand road characteristics,with a medianaround TL 100/tkm(US 4.3 cents/tkm). This compares with truck costs in Germanyof about 11 US cents/tkm. On average,railway costs for freight are about the same as truckingcosts, because of the low averagedensity of trafficon the rail network(less than a millionton-km per route km). 1.07 Given Turkey'ssize and correspondinglong transportdistances, there is an economiccase for more bulk movementsby rail. Indeed,major rail customerstypically require more rail transportthan they can obtainfrom TurkishState Railways(TCDD). A shift of some 4 to 5 milliontons p.a. or about 2 billiontkm from road to rail would make economicsense and reducethe overalltransport bill. A rough estimateindicates that such a shiftwould save US$28 millionequivalent p.a. Recentexperience indicates that indeed rail costs can be reducedsubstantially when volumeincreases. Between 1981 and 1989, rail freightincreased 35X, thus recoupingtraffic losses sustained in the late 1970s,and unit costs per tkm, in constantterms, came down to almosthalf their earlierlevel. There is an urgentneed for the railwaysto concentratetheir resourceson the movementof bulk freightand cut down eia operationof poorlypatronized passenger trains, but realistically,this is expectedto take considerabletime and effortto achieve. 1.08 Even more importantthan this relativelysmall shift in trafficto the more economicrail mode is the need to maintainroad vehicleoperating costs low, since trucksand buses will continueto handlemost of the transportdemand in Turkey. This would requirethat resourcesallocated to maintenanceand strengtheningof the road networkbe kept at adequatelevels to preventdeterioration of the network. A 20X increasein vehicleoperating costswould engender,each year, a US$570million equivalent increase in the transportbill of intercitytrucks and buses alone. -3.

1.09 Other operatingcost savingsin the sectorcould resultfrom improvementsin port productivitywhich usuallyresults from unitization, includingcontainerization, of break bulk generelcargo. At present,less than 20X of generalcargo trade is containerized;although the numberof containershandled at Turkishports is now increasingrapidly. Approachesto increaseport efficiencyare under study. D. InstitutionalSetting 1.10 There are two main institutionsresponsible for the transportsector at the centralgovernment level, the Ministryof PublicWorks and Settlements (MOPW)and the Ministryof Transport(MOT). The MOW, throughits Directorate of Roads (KGM),is responsiblefor the developmentand maintenanceof state and provincialroads, a networkof about60,000 km. The MOT is responsible for developingthe infrastructureof the rail, maritimeand air transport modes;the regulationof transportoperations in the variousmodes and the supervisionof state economicenterprises (SEEs) in the transportsector, exceptfor the two pipelineSEEs which come under the Ministryof Energy. In addition,the Ministryof Agriculturedeals with rural roads,through its Directorateof VillageServices. 1.11 The sevenmajor state economicenterprises in the transportsector are:

TCDD - operatingthe railwaysand most major ports

THY - the national airline

DHMI - operating the civilian airports

TDI - operatinga varietyof maritimeservices such as ferries,passenger ships, rescue and salvage vessels,pilotage and the remainingmajor ports D.B. DENIZ NAKLIYAT - the nationalshipping cargo line

BOTAS - operatingpipelines

DITAS - operatinga varietyof petroleuz.transport services,including oil tankers 1.12 Planningunits within the variousmodal agenciesand SEEs are responsiblefor identifyingand proposingcapital investments and operating budgetestimates. They providethe technical,economic and, in the case of SEEs, financialfeasibility studies for investmentprojects. The State PlanningOrganization (SPO) has the responsibilityfor reviewingthe agencies investmentproposals and establishingthe medium-termas well as the annual investments programs. - 4 -

1.13 There is considerablescope for institutionaland organizational changes in the overall transport sa tor; however, this is a slow and particularlydifficult process. On one hand, KOM, under the Ministry of Public Works is well organized and effective; on the other, the Ministry of Transport and the SEEs under its jurisdictionsuch as railways, ports and civil aviation need to modernize their structuresand operations.

E. iSetorlsaues

1.14 Due to macro-economicpressures and budgetary constraints,the allocations for the state and provincial road network decreased in real terms between 1984 and 1988. As a result, the backlog of road sections needing strengtheningand improvementincreased to a point where maintenance costs were becoming excessive. Recognizingthe importance to build on existing KGM strength and ensure protection of ts major asset base, thus avoiding costly road failures In the future, budgetary allocationswere increased in recent years (para. 2.20). The proposed project is highlightingthe need to focus on this issue. The project would also give impetus to the shift from force account work to contract work being gradually implementedby KGM as all civil works under the project will be carried out by contractors.

1.15 The most important issue in the sector, from a budgetary perspective,concerns the future role of the railways. Like in most other countries, Turkish railways have lost their monopoly in the face of road competitionand their share of the market has decreased considerably. Deficets are large and TCDD losses constitute the dominant sectoral problem in macroeconomicterms. Revenues from freightbarely cover marginal costs while those from mainline passengers cover less than 301 of total costs. The drain on public funds from the railways has reached the equivalent of almost half a million US$ per day. The losses are covered by Government subsidies and by port operating profits and proceeds of the wharf tax from TCDD ports. Government controls tariffs, and increasesare granted late, lagging behind inflation. Tariff increases are however only one side of the problem as they are constrainedby the very competitivetruck charges. Another way to reduce deficits is by reducing costs through increasedefficiency and productivity, and by focusing operations on the more profitable aspects of the business, i.e. freight rather than passengers.

1.16 This would require the railways to move away from the traditional "production-driven"operation toward a more "customeror market-driven" operation. This would also imply that the railways should be fully compensated for operating services (particularlypassenger) deemed necessary by the Government for social reasons. Similar reforms in Europe and Japan have taken some twenty years to bear fruit and some are still continuing. Therefore, while Government and TCDD are pursuing some reforms in these areas, progress is expected to be slow as many difficult issues have to be tackled such as discontinuingcertain services, reducing and relocating staff and profoundly changing the ways of conductingbusiness and operations.

1.17 Another issue concerns the ports. The present organizationof the sector should be improved to be more conducive to modern efficient operations and responsive to the needs of Turkish freight traders and transit customers. Also, trade facilitatiorn,including streamlining of customs procedures,has not yet followed internationaldevelopments. Therefore, the full benefits of modern logistics, includingdoor to door movement of containers,are not available in Turkey. As with railways,a more market oriented approach is needed in the maritime and foreign trade sector. Some larger degree of privatization,of port activities in particular,would be helpful in achieving the shift to greater market responsiveness. The Government is launching a series of studies in the port sector with Bank assistance, to address the above issues (para. 1.21).

F. Previous Bank ExRerience in the Sector

1.18 The Bank's involvementin the transport sector has been small and sporadic. In thirty years, the Bank has made only seven loans to the sector; three for ports and two each for railways and roads. Project implementation, although experiencingdelays, has generallybeen satisfactoryin achieving physical targets, but implementationof policy reforms has been less satisfactory. For instance,the Project PerformanceAudit Report (PPAR) of the first railway project of 1973 concludes that "the far reaching railway and transport sector reforms were either not accomplishedat all or fulfilled only in minor parts, and the railway's transformationinto a modern enterprise functioning in a commercial environmenthas not come about". The report however recognizes that the scope of intended changes was over-ambitious. The second railway project of 1986 took those findings into account and set more modest targets, which are showing a mixed performance. While some operational targets are being reached, financialones remain unmet. The absence today of a clear definition of the future role of the railways, a weakness which is expected to be rectified in the coming few years, has greatly hampered railway efficiency.

1.19 In February 1991, OED issued the PPAR for the Ports Rehabilitation Project (Loan 1741-TU) of 1979 and the Highway RehabilitationProject (Loan 2137-TU) of 1982. Regarding the port project, the main conclusionsare that all physical components were executed, albeit with delays due to unfamiliarity with the Bank's procurementguidelines; but that little progress was made in strengtheningplanning and operations. Regarding the highway project, the conclusionsare, again, that physical implementationwas successful,but little institutionalchanges could be attributed directly to the project. However, KGM has actually sought to implementmanagement and analytical techniqueswhich Bank staff brought to their attention in the course of supervision. The Second Highway Project (Loan 2439-TU) of 1984 is almost completed and 93X disbursed. Institutionalstrengthening of KGM has been addressed and considerableprogress is being made (para. 2.13).

G. Role of the Bank and Lending Strategv

1.20 With four projects in the 80s against three in the previous 30 years, the Bank's strategy has beer.to introducegreater continuity into our involvementin the sector by more careful planning of our lending operations and by focussing on those areas which'can yield the highest returns in the -6- shortest time. Since the highway subsectorhandles most of the freight and passenger traffic, ensuring its efficiency will have the greatest economic impact and warrants particular emphasis. Also, the implementingagency (KGM) is responsive and progressive,has developed feasible investmentand maintenance programs but requires Bank support to ensure their effective implementation.

1.21 At the same time, by monitoring the transport sector as a whole, the Bank hopes to identify areas of potentiallymajor economic gains notably in the railways and ports subsectors. For the railways, we are continuing to advise the Government and TCDD to define the future role of the railways in the sector and the conditionsunder which the railways should perform certain social services mandated by the Government. For ports, we are discussing a broad set of studies of the sub-sector involvingmaster planning, institutionalreforms includingpossibilities for privatization,costing and financing, trade facilitationand marketing. However, in light of the difficult political and social issues raised by necessary reforms, progress in these areas is expected to continue to be slow. The Government is acutely aware of the economic costs of the inefficienciesin these areas and, some important rationalizationhas been undertaken when the authoritiesjudged that the timing was opportune, eg. rail station closures, discontinuingof certain passenger trains and staff reductions in both railways and road subsectors.

1.22 In summary, therefore,we propose to continue our involvementin the sector through continuedmonitoring of the sector and studies, identifyingand pressing for key policy changes entailing major economic gains and selective project lending, with suitable support to sustain strong performanceand worthwhile reforms undertaken by the agencies themselves. The proposed project is consistentwith this strategy

II. THE HIGHWAY SUB-SECTOR

A. The Network

2.01 Public roads in Turkey are classified in a four-tiersystem: motorways (multi-laneaccess-controlled highways), state roads, provincial roads, and village roads. The General Directorateof Highways (KGM) of the MOW is responsiblefor the administrationof motorways and state and provincial roads. The Directorateof Village Services of the Ministry of Agriculturehas jurisdictionover village and forest roads. In addition, there are tourism, irrigationand power project roads. Although not included in KGM's network, constructionand maintenanceof these roads is, from time to time, entrusted to KGM by the relevant Ministries.

2.02 In 1989, the road network totalled over 350,000 km compared to 270,000 km in 1980 and 160,000 in 1970. In the last decade, all the increase in length occurred in rural roads, the network of state and provincial roads remaining constant at some 60,000 km. Work on the latter concentratedon their maintenance and some upgrading to handle rapidly increasingtraffic. Shortage of funds, however, prevented the carrying out of the full strengtheningand upgradingprogram included in the 1983 NTNP. The 10-year plan had recommendedthe laying of over 1,000 km of new asphaltic concrete -7-

(AC) surfacing, to reinforce all roads with more than 500 heavy vehicles/day and 1,500 km of new surface dressing per year. Actually, due to the Government's inability to fully fund the program, only some 1,400 km of new AC pavement were laid during the entire decade. Progress was somewhat better with new surface dressing, adding about 1,000 km/year (Table 2.1).

TheHighwav Network (km) Paved Unpaved Asphaltic Surface Categorv Concrete Dressed Gravel Earth Total ...... km.------Notorways 284 - - 284 State 4,13? 24,815 1.738 459 31.149 Provincial 124 18,521 7,065 2.269 27.979 Rural - 19.869 150.771 126.939 297.579 Total 4,545 63,205 159,574 129,667 356,991

Source: KGN

2.03 The need for pavement strengtheningis becoming acute. Almost 10,000 km of state roads have an average annual daily traffic (AADT) exceeding 2,000 vehicles, of which over 1,000 are heavy vehicles. Under increasing traffic volumes and heavier truck loadings, all these roads are candidates for pavement strengtheningincluding AC surfacing. At present only about 4,300 km of state and provincial roads have an AC surface.

Length of Roads without AC

With heavy vehicles KM per day exceeding Without AC

1500 3000 1000 5200 500 12200

Pavement strengtheningis the highest priority item in KGM's capital investmentprogram, as the current practice of very frequent surface dressings is likely to prove a less economical option than AC surfacing,when assessed in terms of total life cycle costs, inclusiveof user costs. Asphalt concrete surfacing i) brings a greatly reduced surface roughnesswith consequent lowering of vehicle operatingcosts, ii) has a considerablylonger life than surface dressing and iii) is better able to resist the surface stress caused by high axle loads. As already noted, AC has lagged significantlybehind desired levels in the past due to shortages of funds. The proposed project is focusing on this priority.

B. Road Transport

2.04 Road transport is deregulatedand both the trucking and bus industries are mainly privately owned. Road transportcompanies, both domestic and international,vary greatly in size and many are grouped into - 8 - associationsand cooperatives. Competitionbetween operators keeps tariffs low, but they at least cover operating costs.

2.05 There were 2.4 million motor vehicles registered in 1989, compared to 1.1 million in 1979; i.e. an annual growth rate of over 8% (Table 2.2). Commercial vehicles--busesand trucks--accountfor 35X of the fleet with cars comprising the remainder. Cars are concentratedin the urban areas, and so traffic on major intercity roads often consists of over 50X heavy vehicles.

2.06 Annual vehicle-kmson the state and provincial road network amount to about 26 billion and have been growing at an average rate of about 8.61 p.a. since 1985 (Table 2.3). Traffic counts are conducted regularly on all state roads, but only occasionallyon provincial roads. KGM will introduce more systematic traffic counting and other studies on provincial roads. Average daily traffic densities are highest (over 20,000 vehicles/day) in the vicinity of large cities such as Istanbul,Ankara and Izmir, and in a few major corridorswhere motorways are now under construction.

2.07 In 1984, the legal axle-loadswere increased to 13 tons for single axle and 19 tons for tandem-axle. The maximum gross weight is 19 tons for two-axle trucks, 26 tons for three or more axle trucks and go up to 42 tons for five or more axle semi-trailers. Sample data from loadometersurveys indicate that 5-10 of single axle loads are in the 10-13 ton range, while less than 31 exceed the revised 13-ton limit. At present, KGM operates over 200 portable weigh-bridges,some of them financed under a previous Bank loan. They operate as mobile teams stopping vehicles at random and fining the overloadedvehicles. Their primary purpose is the policing of vehicle loading capacity and only incidentallyto provide data on axle loads for pavement design purposes. The proposed project will include weighbridgesfor the planning department in order to improve data collection for pavement design. KGM is in the process of soliciting private sector bids for the establishment of 54 fixed weighing stations throughout the country. The developmentand operation of these stations will be done by contract. Overloaded trucks will be channeled into a parking area where they will have to unload the excess weight before being allowed to proceed.

C. Road Safety

2.08 Road traffic accidents are a serious socio-economicproblem in Turkey. In 1989, there were 104,000 accidents injuring 80,000 people and causing 6,300 deaths. The incidenceof fatalities on Turkish highways is about 6-10 times higher than in other European countries,but comparable to rates found in other developingcountries. The fatality rate on state and provincial roads has been falling and is now less then half its level in the early 1970s (Table 2.4). Over the last few years Governmenthas begun to address the road safety problems through education, enforcementand engineering. Traffic safety is being introducedin the school curriculum,the traffic police is being trained under bilateral assistance,and KGN is emphasizing the technical aspects of road safety, which are supportedby this project. - 9 -

2.09 For instance, in the mid-80s, KGM started a program of guardrail constructionwhich resulted in 300 km of hazardous sections being equipped with guardrails. Guardrails are installedwhen traffic is in excess of 500 vehicles per day and where warranted by road conditions,for instance where embankments are more than 3 m high. Due to lack of funds, the program slowed down considerablyin recent years. Unless the pace of recent years is speeded up, it would take some 10 years to complete the remaining 200 km of critical sections. Vertical signs are deficient on about 501 of provincial roads, and the current material used for horizontal markings is not very durable, requiring frequent renewal. Provision is made in the proposed project to assist with development in the above areas.

D. Highway Administrationand Organization

2.10 KGM is a mature organizationand has proved to be a satisfactory agency of the borrower with respect to implementationof the physical and institutionalaspects of the projects. The KGM present organizationis shown in Chart 1. In 1990, KGM employed a total of 35,000 persons down from 44,000 in 1985 (Table 2.5). The work force consists of 5,000 technical and administrativestaff and 30,000 laborers (801 permanent). About 201 of technical and administrativestaff and 31 of labor are stationed at headquartersin Ankara. The headquartersstaff is organized in 11 departments with 33 divisions. The number of people reportingdirectly to the Director Genral is excessive. This problem is now being addressed (see below).

2.11 The field organizationconsists of 17 regional divisions (b8lge) and 112 sub-divisions(sube). A division comprises4-9 sub-divisions,each one covering about 500-600 km of the state and provincial road network. Within each sub-divisionare based an average of seven maintenance teams. There are 730 maintenance teams in all; each team has a crew of 5 to 8 with responsibilityfor 50-100 km of road. There are in addition three equipment and workshop groups at Maltepe (Istanbul),Iskendurun, and Akkopru (Ankara). Winter maintenance is a major activity of KGM, to keep the roads free from snow and landslides. None of the roads included in the winter maintenance program are allowed to remain closed to traffic for more than two days. During 1987/88, 55,300 km or 941 of the state and provincial road network was covered by the winter maintenanceprogram.

2.12 The division Directors of KGM exercise a large measure of executive authority. They are accountable to the Director General for operational matters and to the various departmentheads for technicalmatters. Constructionand periodic resurfacingworks are managed from the divisional offices while routine maintenancework is done at sub-divisionallevel. Equipment is allocated to the 17 divisionaloffices according to the constructionand maintenanceprograms of the divisions. The workshops and stores organizationin each division are under the divisional director for day-to-day operations. The Head of the EquipmentDepartment in Ankara is responsible for the overall inventory control of the fleet and the operation of central stores and equipmentpools in Ankara, Istanbul and Iskendurun,and through divisional directors for the provision and maintenance in running order of sufficient equipment for KGM's road maintenanceand construction activities. - 10 -

2.13 With the assistance of the U.S. Federal Highway Administration (FHWA), KGM has begun a process of reorganizationand modernizationof its structure to adapt it to the greater emphasis on contract work at all levels. KG4 intends to continue reducing its force of permanent laborers. At the same time, the quality and number of the technicaland administrativestaff has to be strengthenedto assume the supervisionof the contractors. This process has only commenced in the past 2 years. It is estimated to require between 5 and 10 years and is fully endorsed by the Bank. Provision is made in this project to cover some of the expenses of implementingthe reorganization.

E. EngineriLng.Construction and Maintenance

2.14 Engineering,construction and maintenance functions for state and provincial roads are performed to satisfactorystandards by or under the supervisionof KGM. Road design standardsare appropriateto traffic flows and physical characteristics. In 1980, about 25X of covstructionwork was carried out by contract, this has now increased to over 60X and the long term target is 751. For maintenancework over 30X is now also done by contract. Force account operations have been greatly reduced in the western and coastal areas, with the 751 target already achieved in Istanbul and Izmir regions. KGM is now making a concerted effort to increase the share of work done by contractors in the interior and eastern regions. KGM's force account operations and training have proved beneficial to the economy by providing trained personnel for the constructionindustry. KGM remains the primary source of trained highway personnel in the country with a fairly high turnover of professionaland skilled staff from KGM to private contractors. The forthcomingopening of a new training center on the outskirts of Ankara, which will, in addition to training KGM staff, offer courses to the private sector and to foreign highway personnel, will further respond to the demand for better trained road specialistsin the public as well as private sectors. The proposed project will finance equipment and technical staff training for this new training center.

2.15 Maintenance is always given top priority by KGM. When funds are short, as in recent years, investmentshave been deferred so that more funds could be used for maintenance includingperiodic resurfacing. As a result, the surface condition of the state road network is rated as 801 good, 151 fair and 51 poor. Condition ratings are not available for provincial roads, but conditions have improved since 1980. The percentage of bituminous surfaced provincial roads increased from 351 in 1980 to 641 in 1989.

2.16 KGN's equipment fleet consisted of some 14,000 units in mid-1990 with a replace.mentvalue of US$600 million including $79 million for 1,760 units in scrap condition. About 201 of the fleet is over 15 years old and some 501 is over 10 years old (Table 2.6). In 1982, by comparison,the equipment fleet included 18,700 units with a replacementvalue of $555 million (at that time), including $184 million for scrap units. About 341 of the fleet was over 15 years old. KGM is actively pursuing a policy of reducing the size and age structure of its fleet, consistentwith its policy of reducing the role of force account work. Considerablemodernization of the fleet was accomplishedwith financingunder the Second Highway Project. Under - 11 - that project, KGN is also implementinga computerizedequipment management system to control the use of the fleet and spare parts, i.e., to decide when to repair, when to scrap, what stocks of spares to hold and the level of rental charges to cover the cost of owning, maintaining,and repairing equipment. Further reduction of the fleet will continue,with another 4,000 units to be retired over the next 2-3 years. Unlike many agencies, KGM has good procedures for the sale of surplus equipment. Fleet modernizationand improvementsto its managementwill be continuedunder this project.

F. Highway Planning and Design

2.17 Planning for the state and provincial roads is the responsibilityof KGM, with virtually all the work carried out "in house" by the planning department. Methods for evaluating the economic feasibilityof road investmentprojects have been developedby KGM on the basis of Bank models. In the early 1980s, the Bank's Road Analysis Model (RAM) was used for project evaluation and over the last few years, KGM has been adapting parts of the Bank's Highway Design Model (HDM3), particularlyits vehicle operating cost module. Large numbers of projects are analyzed and ranked according to their economic rate of return. This approach is satisfactoryand places KGM in the forefrontof Turkish organizationswith a country-wideapproach to investment planning based on sound economic criteria. One problem is that there are far more economicallyjustified projects than resources available to carry them out. Therefore, KGM, like many other agencies in Turkey, has a tendency to start too many projects at the same time and extend their execution over too many years. A benefit of this project will be to concentrateresources on road sections which can be improved within a normal contract period of 2-3 years.

2.18 Under the ongoing project, the concept of pavement management was introduced,and some experimentalsections of highway were built on the Ankara-IzmirRoad. Further developmentand refinement of the planning process will be obtained by the introductionof a more formal pavement management system (PMS). This will be phased in parallel with the reorganizationand furtfer improvementof staff qualificationsthrough training which are prerequisitesto the introductionof a more systematicpavement management system. Under the proposed project, a range of specializedequipment will be procured for acquiring the comprehensivedatabase needed for a fully developed computerizedPMS, and monitoring of the experimentalsections will be continued. Initially, this data will be fed into the HDM3, but it will be suitable for KGM's own system when it comes on line.

G. Highwav Expenditures

2.19 The total volume, as well as the composition,of highway expenditures,have fluctuated substantiallyduring the last decade in Turkey. After being rather constant over five years somewhat above TL 3 trillion p.a. in constant 1990 terms, expendituresdropped dramaticallyin 1985 and 1986, regained their earlier level in 1987 and quickly increased in 1988 and 1989 as the constructionof motorways gained momentum. In 1985, the Government initiated an ambitious motorways' program along 1,200 km of the most heavy transport corridors of Turkey; namely from the Bulgarianborder through - 12 -

Istanbul (includingthe Second Bosphorusbridge) to Ankara; in the South between Mersin and Iskenderunthrough Adana; and around Izmir. All motorway sections under constructionhave acceptableeconomic rates of return, although some of them might have been deferred for a few years in order to lower public expenditures. Notorways are financed by extra-budgetaryfunds and external borrowings.

ExDend!tureson Roods1980-1990 TL billion / US S million

State and Provincial Village Motorways Total TOTAL Roads Roads In Constant1990 Prices

------C--currentTL.------TL USS

1980 49 13 62 3,045 1240 1981 78 24 102 3,512 1277 1982 80 23 103 2,974 835 1983 116 34 150 3,284 843 1984 180 45 225 3,176 750 1985 224 72 297 2,924 673 1986 273 94 367 2,435 627 1987 370 230 143 743 3,296 968 1988 558 225 640 1,423 3,604 1,081 1989 998 385 1,184 2,567 4,086 1.254 1990 1,758 704 2,055 4,517 4,517 1,737

Actual Expenditures through 1989 and BudgetedExpenditures for 1990

Source: KO and SPO 2.20 Budget allocations for state and provincial roads decreased continuouslyin real terms between 1984 and 1988, and in that year amounted to only two-thirds of their level in the early 1980s. As a result, strengthening and upgrading programs included in the 1983 NTMP fell further and further behind. Only a few investmentprojects were started on state and provincial roads over the last years, as scarce funds were wisely concentratedon maintenance. While the frequent surface dressing of roads has maintained them in reasonable condition, many sections built in the 1950s and 60s were not designed for today's axle-loads. Therefore, catching up on the deferred strengtheningprogram has now become a major priority to avoid deterioration and postpone major reconstruction. The importanceof this point has been recognized by SPO and higher allocationswere granted for state and provincial roads both in 1989 and 1990; with the 1990 allocationbeing 24X above that of 1988 in real terms (Table 2.7).

2.21 In the next few years, until the hump in motorway expenditureshas passed, annual allocations for state and provincial roads are expected to remain at their 1990-91 level of about US$700 million; of which about US$200 million are from the recurrentbudget and US$500 million from the investment budget (Table 2.8). KGM's five-yearprogram (1991-95) indicates its intention to use this 241 increase in allocation to accelerate its program of strengtheningof state roads to some 500 km per year while continuing with about 1,000 km of new surfacingof state and provincial roads every year. This project supports this objective. Meanwhile, the periodic resurfacingof roads with bituminous surface treatmentwill continue at around 7,000 km annually, giving an average resurfacingcycle of 6 years. The overall - 13 - criteria for applying KGM's budget is satisfactoryand they consistently allocate their resources to priority items in their work program.

H. Highway Financing

2.22 State, provincial and village roads are financed primarily through the budget; motorways have been financed from extra-budgetaryfunds and foreign borrowings. It is Government policy that road users shall pay the cost of roads by means of road user charges and tol4a. The revenues from road user charges in recent years are as follows:

Revenues from Road User Charges TL billion

Vehicle Annual Total Expenditures Taxes Purchase License State, Prov. & on Fuel Tax T ax Tolls Other Total Village Roads

1985 87 17 21 21 1 147 297 1986 335 50 49 28 7 469 367 1987 340 58 83 49 7 537 600 1988 1,070 121 127 83 11 1,412 783 1989 1,163 133 214 168 23 1,701 1383

Source: MOF and Bank Estimates

In most years, the road user charge revenues exceed the total of capital and recurrent expenditureson state, provincial and village roads. Motorways, when completed, will be tolled and therefore generate their own revenues, in addition to common road user charges.

2.23 Fuel prices are basically deregulated in Turkey and exceed border prices by a substantialmargin. For instance, fuel prices were rapidly adjusted after August 1990, and in November, the pump prices of gasoline and diesel were TL 2,162 and TL 1,796 per liter (about US$3.1 and US$2.6/gallon). The substantialmargin previously existing between gasoline and diesel prices has been reduced and a recent study of road user charges by KGM indicatesthat all classes of vehicle now pay at least the cost of the damage they impose on the roads.

I. EnvironmentalAsgects

2.24 Turkey has establishedgeneral laws and regulationsfor the protection of the environment,which provide a framework for the specific guidelines and institutionaldevelopment measures now being devised and implementedby sector ministries. In 1989, a regulationwas approved giving the authority to KGM to introduceproper technical inspection of road vehicles, with adequate equipment to measure various technicalparameters includingvehicle emissions. A decision was made to have the private sector invest, build and operate the testing stations. Since then, KGN has built two experimentalstations, with the assistance of Germany, for demonstrationto potentially interestedprivate sector groups. - 14 -

2.25 The standards adopted for emission control are those of the United Nations Economic Commission for Europe (UNECE)which have been accepted by 21 European countries (regulation15.00, 4th revision). There is some concern that these standardswould have to be considered only as targets since the average age of vehicles in Turkey is high and the quality of vehicle constructionand maintenanceand of fuels, lower than in other European countries. One of the immediateobjectives is to reduce the sulphur content of diesel fuel; originally around 1%, it has already been reduced to about 0.6% and will be down to 0.3% by 1993. Unleaded gasoline is also being introduced. Turkey is also planning to retrofit its refinerieswhich would assist in achieving the above targets.

2.26 KGM is also taking measures to minimize the impact of road work on the environment. These are discussed in relation to the project (para. 3.22).

III. THE PROJECT

A. Objectives

3.01 The objectives of the proposed project are to (i) keep transport costs low in Turkey by ensuring adequate renewal and maintenance of the road network; (ii) reduce the backlog of road strengthening;(iii) continue the downsizing, modernizationand improvementof the management of KGM's equipment fleet; (iv) strengthen and modernize the planning and design capabilitiesof KGM; and (v) improve the management and safety of the road system through reforms, modernizationand training.

B. Project Descrigtion

3.02 The components of the proposed project are:

(a) strengtheningabout 650 km of high priorit::sections of existing state roads;

(b) improvementof about 300 km of selected provincial roads;

(c) procurementof equipment and materials for road maintenance, research, planning, survey and design, reorganization, computerizationand training;

(d) improvementof road safety;

(e) training for KGM's staff; and

(f) consulting services.

Strengtheningand Rehabilitationof State Roads

3.03 Sections of state roads, totalling about 650 km, will be reconstructedand improved,including asphalticconcrete paving. The road sections to be financed under the project will be selected based on the following criteria: - 15 -

- road sections with around 1,000 heavy vehicles/dayplus road sections with particular features such as selected sections on the northern TETEK-Jroad (the designated trunk road in northern Turkey, used by TIR, internationaltraffic to Iran). See Map IBRD 22758.

- Economic Rate of Return (ERR) greater than 15%.

These criteria were reconfirmedat negotiations

3.04 Sections selected will generally follow the existing alignment,but with minor improvementsof curves, widening of the roadway in some cases to dual standard and/or shoulders, and improvementsto drainage being included where required to meet current Class I design standards. In a few cases, short realignmentmay be included to shorten the route length or improve the alignment. Works will includewidening or replacementof bridges and structures and intersectionredesign appropriateto traffic levels. A list of roads meeting the above criteria has been prepared by KOM (Table 3.1). The first-year program of road strengtheningand rehabilitationhas been identified. It includes 8 sections located along the Black Sea coast, in the west of Turkey and along the northern TETEK alignment. Most sections will have two lane pavements of 7 m width and partly paved shoulders of 2.5 m. Design standards are generally acceptable. Detailed engineeringis complete for 7 road sections totalling over 550 km and is underway for the remaining sections.

Improvementof ProvincialRoads

3.05 Sections of provincial roads, totallingabout 300 km will be improved to all weather standards, including asphaltic surface dressing. The road sections to be financed under this project will be selected according to the followingcriteria and designed generally to KGN's Class II standards:

- For roads with existing traffic: The projects will consist mainly of paving existing gravel roads plus minor improvements. Economic Rate of Return greater than 12%.

- For new roads: Design standardswill be the minimum necessary to provide access in good weather, accepting road closures in winter where snowfall is severe. Design standardswill be reduced in areas of severe terrain to KGM's service roads (Cl. III standards). Economic Rate of Return greater than 10%.

These criteria were reconfirmedat negotiations. Typically, the level of quantifiablebenefits of improved and new provincial roads is lower than for state roads as the traffic level is much lower. Nevertheless,these roads provide access to lower income rural populationsand directly contribute to mitigating the effects of poverty in their service areas. They also improve

1/ Trans Turkey Highway. - 16 - access to a number of public services. Therefore, the threshold for acceptance under the project is lower than for state roads. The design standards will be adapted to the traffic volumes. A list of roads meeting the above criteria has been prepared by KGM (Table 3.1).

Equipment

3.06 Road Maintenance Equipment. KGM is continuing to restructure and modernize its equipment fleet to concentrateon routine and emergency maintenance as constructionand periodic maintenanceactivities are gradually shifted to contractors. Turkey's climate and terrain, particularly in the East, result in the need to respond immediatelyto reasonably frequent land slides, avalanches,heavy snowfalls, etc. Because of the emergency nature of these events, which often occur in sparsely settled areas, interventionby contractors is not feasible. As a consequenceKGM needs to have an emergency response capability. Under this project, KGM will acquire some 300 multi- purpose 4-wheel drive maintenancetrucks, together with attachmentsfor these trucks and similar trucks acquired under the previous project, and 100 dump trucks. These 400 new trucks will replace some 1,400 overaged trucks and increase the efficiency of the maintenancecrews. Other main items to be procured are 50 front end loaders and 30 dozers to replace respectively106 and 199 overaged items. The new loaders and dozers will be deployed mostly in Eastern Turkey. For routine asphalt resealingworks, the project will finance 16 asphalt distributors,replacing overaged and outmoded ones, and one slurry seal plant. KGM will use the latter to experimentwith slurry technology, which if successful will be introducedinto the private sector. A list of equipment to be procured under the project is in Table 3.2 .

3.07 Research. Planning. Survey and Design Equipment. The project will provide equipment to assist KGM in upgrading the capabilitiesof certain HeadquartersTechnical Departments. As part of its program to introducemore sophisticatedmanagement of its road system, KGM plans to acquire equipment for its Technical Research Department which will enable it to monitor the condition of its pavements. Data collection equipmentwill also be acquired for the Planning Department for building a database on road geometry, axle load spectra and traffic counts. In particular.KGM confirmed at negotiations that traffic counts will be extended to grovincial roads. To modernize its Survey and Road Design Department,KGM will acquire through the project some modern photogrametricplotters and surveyingequipment to replace obsolete models, as well as software for bridge design and management. The introductionof this equipment will enable KGM to improve the quality of its planning decisions and enhance the technical and cost effectivenessof its design work. A list of equipment to be provided under the project is given in Table 3.2.

3.08 Reorganizationand Computerization. As mentioned above, KGM has sought the assistance of US FHWA for the reorganizationand computerizationof its management systems. Provision is made in the project to acquire equipment for implementationof the recommendationsof the KGM/FHWA reorganization study.

3.09 training. Equipmentwill be procured for KGN's new training center in Ankara. It will include laboratory equipment and visual aids (Table 3.2). * 17 -

Improvementof Road Safety

3.10 KGM is making a serious effort to improve the engineeringaspects of road safety. The project will cover: a) the procurementand installationby contract of guardrailson about 150 km of hazardous road sections; b) materials for traffic signs and markings; and c) portable weighing devices (Table 3.3). The project would finance new signing materials and modern line marking materials for use by KGM's traffic teams and signs factory. There are some 400,000 traffic signs on the 60,000 km of roads under KGM; 250,000 are standard traffic signs and 150,000 are informationsigns. Each year about 100,000 signs are renewed, of which half are manufacturedby KGM and half by the private sector. Thermoplasticpainting will double the life of horizontal marking on the 4,500 km of asphaltic concrete roads which are the ones with the densest traffic. The new markings will be more visible, longer lasting and reflectorized,and will greatly enhance road safety. Portable weighing devices would complement the program of fixed weighing stations now being developod (para. 2.07 ). The project would finance the replacement of some 50 of the existing 200 portable weigh-bridgeswhich are no longer functioning effectively. Trainingof KGM staff

3.11 In addition to equipment for the new training center, the project will finance fellowshipsto train trainers for the center, and KGM staff. The fellowshipswill provide training opportunitieswith contractors,consultants, highway departments and universitiesabroad. The program will be arranged by the Training Department. Detailed programs will be reviewed by the Bank.

Consulting Services

3.12 The project includes a provision for KGM to retain consultants to advise in such fields as (i) pavement research and management; (ii) improvementof highway safety; (iii) general management of the organization;and (iv) training and operation of the training center.

C. Cost Estimates

3.13 The total project cost is estimated at US$480 million equivalent. The proposed Bank loan of US$300 million, to be disbursed over a six-year period, would finance only about 12X of KGM's total investmentprogram over the period. The cost estimates are given below: - 18

(Jan. 1991price.)

-...... Total...... TotaL...... - Local Foreign Total Local Foreign Total Foreign *.C(TL million) .. .USS mIllion)...- CivitWorks

a. Stato Roab 270.00 270.00 540.00 100.00 100.00 200.00 50X b. ProvinclolRoads 102.60 102.60 205.20 38.00 38.00 76.00 50X c. Sitean 30.23 120.97 151.20 11.20 44.80 56.00 80X

Equipmant 20.52 184.68 205.20 7.60 68.40 76.00 90X

Roa Safety 3.50 31.60 35.10 1.30 11.70 13.00 90X

Training 0.00 2.70 2.70 0.00 1.00 1.00 100l

Consultant Services 0.00 2.70 2.70 0.00 1.00 1.00 100l

Su-totat 426.85 715.25 1,142.10 158.10 264.90 423.00

PriceContingaences 690.65 1,157.25 1,847.90 21.90 35.10 57.00

Grand Total 1,117.50 1,872.50 2,990.00 180.00 300.00 480.00 631 MOMuIuIuuRWUNAMAIMI suumaUuu OMAN.. mum... cunmu=

3.14 The cost of the civil works for state and provincial roads have been estimated on the basis of average cost per km for similar works at US390,000/km for strengthening of state roads and US$290,000/km for improving provincial roads. Base cost estimates reflect January 1991 prices including taxes. Because of the program nature of the civil works component, no physical contingencies have been included. Price contingencies have been applied to base costs following the Bank guidelines as follows:

IBRD FY 22 29 94 95 96 97

Local X 50 40 35 30 25 25 Foreign X 9.5 3.3 1.2 1.8 2.7 3.2

The foreign exchange component for civil works is based on estimates of the direct and indirect foreign cost. Prices for equipment and materials are based on those obtained recently through international bidding for similar equipment or direct enquiries. The cost estimates and contingencies are considered reasonable and have been confirmed during negotiations.

D. Financing

3.15 The total cost of the project is estimated at about US$480 million equivalent. The foreign exchange cost of US$300 million (631), will be financed by the loan, and the remaining US$180 equivalent (371) financed by the Government. - 19 -

Flnancin Plan (US$ Million)

Foreign X Local X Total X

Government 180S 180 37 IBRD 300 300 63

I/ Including taxes estimated at US$50 million equivalent

E. Implementation.Monitoring and Auditing

3.16 KGM will be responsiblefor implementingall components of the project and for the overall loan and project administration.To ensure co- ordination of activitiesunder the Loan between the different depa;tments and regions of KGM, KGM will appoint a Project Coordinatorwith appropriate staff, and convene, as necessary, an ad hoc committeeunder a Deputy Director General to guide the implementationof the project. These arrangementsand their timing were confirmed at negotiations. The project will be implementedover the period necessary to complete civil works contracts let primarily during the calendar years 1991 and 1992. The cut-off date for the signature of civil works contracts is June 30. 1993. Contracts signed after this date will not be eligible for financing. The project comnletion date. confirmed at negotiationsis December 31. 1996 and the logn closing date June 30. 1997. An implementationschedule is given in Table 3.5.

3.17 Proiect monitoring and reportingprocedures include the preparation by KGM of: a) a detailed program for contracts to be let in 1992, to be available to the Bank before the end of 1991; b) semi-annualprogress reports on Bank financed project components; c) feaeibilitystudy reports as required for the road sections to be financed by the Bank; bid evaluation reports; and d) audit reports prepared by Treasury controllerson Bank-financedelements of the project. For the proposed project KGM will follow a reporting format agreed upon at negotiations. Within six months after the project closing date, KGM will prepare and submit to the Bank a project completion report. All the above arrangementshave been reconfirmedduring negotiations.

F. Procurement

3.18 Procurement of Bank financed project elements will be carried out as shown in the table below: - 20 -

ProcurementMethod (US Millions) A/ groject Element Other Total

CivL 'Wok State roads 230.0 230.0 (115.0) k (115.0) Provincial roads 82.0 82.0 (41.0) (41.0) Bitumen 65.0 65.0 (50.0) (50.0) Eauioment 78.5 6.0 / 84.5 (71.0) (6.0) (77.0) BRod Saf4ety 15.0 1.5 L/ 16.5 (13.5) (1.5) (15.0) Training 1.0 2/ 1.0 (1.0) (1.0) Consulting Services 1.0 A/ 1.0 1.QO) (1.0) TOTAL 470.5 9.5 480.0 (290.5) (9.5) (300.0)

Note: A/ Including contingenciesand taxes. / Figures in parenthesis indicate loan proceeds. _/ International shopping or sole source. b/ LCB or force account for installation. s/ In accordance with Bank Guidelines.

3.19 Civil works cortr.ctswould be let through ICB among prequalified contractors in accordance with the Bank's Guidelines for Procurement. Some contracts may be let in a&-ance of Board Presentationto take advantage of the 1991 constructionseason (sn'epara. 3.20). Bitumen would be procured in bulk on the internationalmarkes. under ICB rules by KGM, which operates a chain of port and regional heated st'oragedepots, continuingan arrangementmade under the Second Highway Project. Most items of equipmentand road safety materials would be procured under ICE, though certain specializeditems for research and road design, manufacturedby only a few suppliers,may be purchased by internationalshopping, on tL basis, normally, of three invited quotations. Guardralls and thermoplastic Line marking will be procured through ICB supply and install contracts. If iu is not possible to assure supply and installationunder one contract, supply would be through ICB and installation may exceptionallybe through LCB or force account. Consultants for training and studieswould be appointed on the basis of proposals invited from agreed shortlistsof appropriate specialists,under the Bank's guidelines for the engagement of consultants. All civil works and the bitumen contracts will be subject to prior review by the Bank. For equipmentand materials purchases exceeding US$300,000, all specificationsand award will be subject to prior review. - 21 -

G. Disbursements 3.20 The proceedsof the Bank loan amountingto US $300 millionwill be disbursedas follows:

Percentageof expenditures Category Item Allocation to be financed (USSMillion) 1 Civil works 150 50X 2 Bitumen 50 100% of foreign 3 Equipmentand 85 100% of foreignor Materials 100% of local (ex-factory net of taxes and duties).

4 Trainingand 2 100% Consulting Services 5 Unallocated =13 Total: 300 A scheduleof estimateddisbursements has been preparedbased on historical profilesof transportprojects in Turkey (Table3.4). Since KGM's past disbursementperformance has been aboveaverage, actual disbursements may be fasterthan shown in Table 3.4. In order to facilitatedisbursements., a SpecialAccount would be openedin the CentralBank of Turkey,with an authorizedallocation of US$20 million. The Loan Agreementprovides for retroactivefinancing of eligiblecontracts entered into by KGM afterApril 1, 1991, in an amountnot to exceec.$25 million. Disbursementshave been handled well by KGM throughoutthe previousprojects and the CentralBank has operated the SpecialAccount in a satisfactorymanner. H. ProjectSupervision 3.21 Two Bank supervisionmissions per year duringthe five years of projectimplementation (July 1991 to June 1996)would be adequateto supervise projectactivities. The missionsare expectedto be longerin 1991 and 1992 when reviewand clearanceof road sectionsto be contractedunder the project will be necessary. Thesemissions should consist of a highwayengineer and an economist. Sufficienttime shouldbe allowedalso to reviewcontract documentsand specifications,particularly for the variedequipment to be procuredunder the project. Duringthe constructionphase 1993 to 1996, missionscan be shorter,particularly for the economist. In sum, project supervisionwould requireabout 16 staffweeks in 1991 and 1992 and 12 staff weeks after 1992. - 22 -

I. EnvironmentalImpact

3.22 This project has been classified as "B" for purposes of OD 4.00, Annex A on EnvironmentalAssessment, meaning that only limited environmental review is required. Proposed ^ivil works are inostlyimprovements of existing roads including improved side and cross drainage, overlays on old pavements, and bituminous surfacing on gravel roads, all of which will improve conditions along the roads through reducing dust, noise, water ponding and erosion, and eliminating safety hazards. Requirementsfor additional land are minimal and there are no resettlementissues. KGM, who is directly preparing or supervisingdetailed design for these projects, applies acceptable design criteria for erosion control and drainage. Contractorsare responsiblefor maintainingworksites pollution free and returning sites to their original conditions. The new bidding documentscover these points specifically. In particular, the contract documents specify that asphalt plants be equipped with dust collectors. The Undersecretariatfor Environmenthas issued guidelines for the emissions of asphalt plants and crushers. KGM has introduced these guidelines in its bidding documents for this project. The contract documents also contain adequate protection for any archeological sites discovered during excavations. The road safety componentwill help to reduce accidents at black spots.

IV. ECONOMIC EVALUATION

A. Benefits and Beneficiaries

4.01 The proposed project will improve the efficiencyof the road transport sector by reducing overall transport costs. Quantifiablebenefits will be in the form of reduced vehicle operatingcosts (VOC), i.e. lower fuel consumption,tire wear and general vehicle maintenance costs, time and wage savings. Also, the present value of road expenditureswill be reduced by undertakingroad strengtheningnow and avoiding more expensive reconstruction at a later date. Road maintenanceexpenditures will also decrease on newly paved provincial roads. The improvementof provincial roads will facilitate all weather access and transport in predominantlyrural areas, which are presently isolated by the poor condition of existing roads. The road safety component will contribute to the reduction in accidents.

4.02 The benefits will accrue to a large and widespread number of beneficiaries. Lower road transport costs and time savings will benefit vehicle owners as well as users. Private users such as individualcar owners, bus passengers and own account transporterswill capture benefits directly. In the case of trucking and inter-citybus services, the benefits accrue first to the vehicle owners, but will be passed on to producers and consumers in the form of lower freight rates and fares, given the very competitivenature of the road transport industry in Turkey. The service areas of provincial roads to be improved will benefit from the employment generated from works, increasedopportunity to market their products at competitiveprices; also the living conditions of the populationsserved by these roads will improve and the effects of poverty will be mitigated. - 23 -

B. Costs and Beneflts

4.03 KGM has preparedfeasibility studies for over 20 road sections meetingthe criteriato be financedunder the project. All costs and benefits were evaluatedin constant1990 prices. Financialcosts and priceshave been convertedto economicprices. Trafficgrowth rates have been assumedat 5S p.a. for freightvehicles and 61 p.a. for cars and buses which is conservative.VOC have been estimatedusing the Bank'sHDM model;the unit VOCs are summarizedin Table 4.1. Road roughnesscoefficient have been estimatedbased on engineer'sevaluation of the road surface. KGM has agreed to purchasea bump integratorwith the remainingfunds of the SecondHighway Project(Ln 2439-TU)in order to improvethe qualityof inputsto the model. Time savingswere valuedat the predominantwage rates for drivers,no time savingsvalue was inputedfor passengers.At negotiations.KGM' confirmed that it will preRareor updatesimilar feasibility studies for any additionalroads which may be submittedfor Bank financing. 4.04 The economicrates of return(ERR) for roads identifiedby KGM and calculatedover an assumed15 year servicelife, range from 17X to 671 for state roads and from 10% to 39X for provincialroads (Table3.1) . The weightedaverage return for all roads is 30X. The lower rates acceptedfor provincialroads are justifiedgiven the substantialunquantified benefits to improveaccess in less developedregions. 4.05 The proposedlist of equipmentto be procuredwas agreedbased on an evaluationof the totalequipment required for KGM's maintenanceoperations. These requirementshave been comparedwith the presentfleet, its condition and the need to scrap overagedequipment. All the proposedequipment is for the maintenanceprogram. The procurementof modernmaintenance trucks with multi-purposeattachments will greatlyenhance staff productivity and enable KGM to continueits very commendableprogram of staffreduction. The new truckswill enableKGM to reducestaffing of its basic maintenancecrews from 6 to 8 personsat presentto 3 to 5 personswith the new equipment. Combined with lower operatingcost, these personnelreductions will generatetotal savingsof some US$25,000per annum per unit, i.e. annualsavings equal to 20X of the purchaseprice of a new maintenancetruck. Similarsavings will accrue to the other equipmentto be acquiredby the project.

4.06 It is more difficultto estimatethe economicreturn of road safety components,but it is proventhat guardrails,for instance,save lives. Althoughtheir installationin Turkeyis too recentto show statistically meaningfulresults, some typicalsections where guardrailswere installedin 1987 and 1988 clearlyprove theirusefulness. On five such sections,the numberof deathswere cut in half after the installationof guardrails.In other countries,the usefulnessof lateralmarking in reducingaccident frequencyhas been demonstrated.Since 1986,the MiddleEast Technical Universityhas been engagedin a long-termcontract with KGM to monitor accidentson state roads,with a view to identifyingblack spotswhere remedialmeasures should be taken. They are also monitoringthe resultsof varioustypes of improvementsbeing implementedby KGM. This activitywill continuein the future. - 24 -

C. Overall Evaluation and Risks

4.07 The prospects for satisfactoryproject implementationare good considering that KGM has the capacity to meet the proposed expansion of its activities and contractorsare avidly looking for work after some lean years. The principal risk is any unanticipatedshortage or delayed availabilityof counterpart funds which may delay disbursementsand lengthen project execution periods. Past performance in this regard, even under severe macro-economic pressures, has been quite good.

V. AGREEMENTS REACHED AND RECOMMENDATIONS

5.01 During loan negotiations,the Government confirmed:

(a) the cost estimates for the project (para. 3.13);

(b) the implementationschedule (para. 3.16); and

(c) the disbursementschedule (para. 3.20).

5.02 During loan negotiationsagreement was reached on the following:

(a) the criteria for selecting the road sections to be improved under the project (paras. 3.03 and 3.05);

(b) that KGM will extend traffic counting to provincial roads (para. 3.07);

(c) that KGM will appoint a Project Coordinatorand an ad hoc Project CoordinatingCommittee (para. 3.16);

(d) the reportingprocedures for the project (para. 3.17);

(e) that the Governmentwill prepare the required audit reports (para. 3.17);

(f) the procurementprocedures, including the bidding documents for civil works (para. 3.19);

(g) the disbursementprocedures for a special account (para. 3.20); and

(h) that appropriatefeasibility studies for road sections to be improved under Bank financingwill be submitted to the Bank by KGM for review before constructionbids are invited (para. 4.03).

5.03 Based upon the above assurances and agreements,the project is suitable for a Bank loan of US$300 million equivalent to the Republic of Turkey for a 17-year term includinga 5-year grace period. - 25 -

ANNEX

REPUBLIC OF TURKEY

STATE AND PROVINCIALROADS PROJECT

Selected Documents and Data in the Project File

Sel,ectedReRorts Related to the Project

1989 Traffic Counts by Division

KGM's 1991 Budget

KGN's 1990 and 1991 Investment Programs

1990 Divisional Meeting General Report

KGM Equipment Fleet by Age Groups

Road User Charges Study, KGM 1989

Selected Working PaDers

Economic Feasibility studies of Project Roads

Draft Instruction to Bidders

Conditions of Contract - 26 -

N00TRAF REPUSLICOF TURKEY Table 1.1 01/30i91 ...... STATEAND PROVINCIALROADS PROJECT

Freightand PassengerTraffic by Node ...... Average Anusal Growth 1961 1964 1965 1986 I98? 1988 1984-88

Freight Ton kI Ton km X Ton k X Tokm Ton km IX Tonkm

(mtlifon) (militon) (Cflion) (million) (miltion) (mtilion)

High"as 39007 75.90 42559 79.6X 44961 78.5X 4*752 79.92 52948 61.78 55225 79.6" 6.72 Ral ays 6091 11.92 7532 14.1X 7748 13.52 7219 12.1X 7258 11.22 8005 11.52 1.52 Seaway, 628 12.12 3290 6.22 4504 7.92 4691 7.91 4541 7.0o 6040 8.72 16.42 Afrwas 54 0.11 69 0.12 66 9.12 73 0.11 U 0.11 100 0.11 9.72

Total 51380 100.01 53450 100.02 S7299 100.02 59735 100.01 64835 100.01 69370 100.02 6.72

Pipelines Domestie 766 3200 3913 526^5 7413 9322 30.61 Tr fnsit 33825 24340 28020 27153 32928 43497

Average Growth 1981 1984 1985 1986 1987 1988 1984-8s

Passengers Pnaskmb Psskm 1 pass bk 2 Pns nk I Passkm X Peassk

(mitlion) (million) Cmillion) (mtilion) (million) (miLlion)

Highw"ys 76491 94.7n 76159 94.52 79715 94.72 84116 95.31 67959 95.22 93237 94.9s 5.22 Railways 3460 4.31 3489 4.3X 3S55 4.22 3248 3.72 3343 3.6X 3802 3.92 2.2X Seawys 131 0.22 119 0.12 144 0.22 139 0.21 156 0.21 189 0.22 12.32 Airways 670 0.81 796 1.01 722 0.92 791 0.92 954 1.01 1012 1.02 6.22 ...... Total 80752 100.01 80563 100.01 84136 100.01 88294 100.01 92412 1OO.OX 98240 100.01 5.12

GNPgrowth over prev.year 5.9X 5.11 8.1X 7.42 3.42 6.0X

Source : 1981 Transportetion and Road Traffle Accidents Stetistics 1983-84. State Institute of Statistics. 1984-88SP0 6th Five Year Plan Document, Nay 1989

Note t Statistfis vary significantly by source; for instance for 1964: ton-k. 1984 pass-km 1984 P`O 42559 76159 KOM 39890 79580 SSI .43878 87539 - 27 -

UJEPSLJ REPUBLICOF ILRKEY Table I.1 12/21/90 ...... STATEAND PROVINCIAL ROADS PROJECT ...... Works Culetted by KOK 1950-89

Surface TreoatmentProgrm

Total km NewST ST ST With ST + strenth only R"urfacing K1 0 K K0+K Cycle km km Iln X km In X km In In y*srs

1960 32,004 1,29? 4.11 4.263 13.31 5,560 17.41 5.8 1981 33,36s 1,361 1,167 3.5X 5,433 16.31 6,600 19.81 .LI 1962 34,670 1,662 1,368 3.91 5,196 15.01 6.564 16.91 5.3 1983 35.924 1,451 1,714 4.81 5,308 14.81 7,022 19.51 5.1 1964 37,037 1.942 2,410 6.51 5,992 16.21 8,402 22.71 4.4 1965 38,511 1,131 2.022 5.31 5,204 13.51 7,226 16.81 5.3 1966 39,479 1,649 2,116 5.41 4,546 11.51 6,662 16.91 5.9 1967 41,030 1,S06 2,169 5.31 5,569 13.61 7h758 18.91 5.3 196u 41,247 672 2,280 5.51 4,104 9.91 6,384 15.51 6.5 1969 42,038 1,001 2,252 5.41 4,737 11.31 6,989 16.6X 6.0

TOTAL 12,595 18,815 50,352 69,167 YeartyAverag 1.399 1,882 5,035 6,917 5.5

Increae in lenth 10,034

Note: The total network wes reduced from 60,761 km In 1980 to 58,552 km In 199, i.e. 2,209 km

Ashalttc ConcretePavemnt Program ...... Totalkm AC Total Cold Nix with AC New AC Resurfacing 13 K2

1980 2822 0 0 801 1961 2900 76 78 671 1982 2m37 37 37 681 l963 2937 0 0 S63 1964 3176 239 239 S56 1965 3368 192 192 241 1966 3851 483 483 236 1967 3972 121 121 23 1966 4161 169 13 202 21 1969 4266 105 105 0

TOTAL 1,444 13 1,457 3,795 YeartlyAvereg 14 I 4 360

Increse In lteth 1,441

SourcesKON - 28 -

VENFLEET Toble 2.2 12/21/90 ...... REPUBLICOF TURKEY ...... STATEAND PROVINCIAL ROADS PROJECT ......

Notor Vehtcte Fleet 1970-89 ...... (in 000'.)

Totl Aual Car Nlnibus But Pick-p Truck Growth Motorcycle ...... , .. v......

1970 138 21 16 52 71 298 61 1971 154 22 17 57 73 324 8.81 68 1972 187 26 19 63 79 373 15.2X 74 1973 235 31 20 70 90 44S 19.41 80 1974 304 34 21 78 97 535 20.01 84

1975 383 39 23 93 109 647 21.0X 89 1976 471 47 25 112 125 77 20.4X 95 1977 S60 52 27 134 138 912 17.01 102 1978 624 57 29 145 147 1001 9.8X 110 1979 689 62 31 1S5 157 1093 9.2X 120

1980 742 65 33 166 165 1170 7.11 138 1981 776 67 34 172 172 1221 4.41 161 1962 811 70 35 179 181 1276 4.51 183 1963 856 74 38 186 190 1345 5.41 217 1984 920 81 44 198 198 1440 7.01 256

1985 983 88 47 213 205 1536 6.71 289 1986 1087 98 51 225 217 1678 9.21 327 1987 1193 106 54 233 226 1812 8.01 370 1988 1406 124 65 225 371 2191 20.9X 411 1989 1590 135 71 240 392 2428 10.81 471

Growth p.a.

1970-89 13.71 10.31 8.21 8.41 9.41 11.71 11.41 1970-75 22.71 13.31 7.51 12.31 9.01 16.81 7.81 1975S80 14.11 10.61 7.41 12.31 8.71 12.61 9.21 1980-85 5.8X 6.31 7.51 5.11 4.51 5.61 15.91 1984-89 11.61 10.81 10.21 3.91 14.71 11.01 12.91

Source: Statistics of Motor Vehicles and KOK - 29 -

ROADTRAF REPUBLICOF TURKEY Table 2.3 12/21/90 ...... STATEAND PROVINCIAL ROADS PROJECT ......

Trafficon Stateand ProvincialRoads ...... Veh.km Pass.km Ton km (million) (billion) (billion)

1965 3,394 24.93 8142 1966 3,838 25.96 10.07 1967 4,617 32.05 11.72 1968 5,807 41.34 14.84 1969 6,045 39.57 15.70

1970 6,477 41.31 17.45 1971 7,071 43.90 l1.n 1972 8,113 50.21 18.78 1973 9,389 5?.44 21.16 1974 11,515 61.34 25.87

1975 13,432 68.40 29.42 1976 15,127 74.10 33.81 1977 17,610 85.68 38.01 1978 18,416 88.60 41.40 1979 15,878 75.77 37.12

1980 15,343 73.13 37.51 1981 15,957 76.49 39.01 1982 16,595 80.01 40.57 1983 17,260 83.69 42.19 1984 17,949 87.54 43.89

1985 18,667 91.57 45.63 1986 20,849 93.59 54.02 1987 23,016 112.03 58.83 19J8 24,43 123.24 62.48 1989 25,983 131.00 66.42

1990 forecast 27,500 139.70 70.40

1RO1THRATESIn X p.a.

1965-89 8.91 7.2X 9.01 1965-70 13.8X 10.6X 15.7X 1970-75 15.7X 10.6" 11.0X 1975-80 2.7X 1.3X 5.0X 1980-85 4.0X 4.61 4.0X 1985-89 8.61 9.4X 9.81

Source: KON,eased on traffic counts nd estimates of average loads - 30 -

REPUBLIC OF TURKEY Table 2.4 ...... STATE AND PROVINCIALROADS PROJECT

Accidentson Stateand Provincial Roads Total ...... - --.------Fatalltles Accidents Fatalities Nonfatal-injury Per mio. Per mlo. Per mfo. Incl.urban No veh-km No veh-km No veh-km area

1973 8,687 0.93 3,162 0.34 10,364 1.10 5,116 1974 9,487 0.82 2,992 0.26 9,824 0.85 4,699 1975 12,652 0.94 3,792 0.28 13,565 1.01 6,054 1976 11,954 0.79 3,285 0.22 10,974 0.73 S,389 1977 13,719 0.78 3,709 0.21 12,422 0.71 6,983 1978 13,816 0.75 3,067 0.17 11,812 0.64 5,417 1979 11,031 0.69 2,555 0.16 9,886 0.62 4,368 1980 10,420 0.68 2,643 0.17 10,04U 0.65 4,100 1981 11.419 0.72 2,704 0.17 11,175 0.70 4,327 1982 12,977 0.78 3,081 0.19 14,447 0.a7 4,832 1903 15,134 0.88 3,341 0.19 17,217 1.00 5,200 1984 15,694 0.87 3,224 0.18 18,089 1.01 5,684 1985 16,083 0.86 3,292 0.16 21,614 1.16 5,477 1966 19,268 0.92 4,097 0.20 28,395 1.36 7,315 1987 23,070 1.00 4,138 0.18 31,600 1.37 7,s53 1988 21,741 0.89 3,562 0.15 30,294 1.24 6,846 1989 6,332

Source:State Institute of Statistics:Road Traffic Aceident Statistics, 1987wod KM - 31 -

STAFF REPUBLICOF TURKEY Table 2.S 01/30/91 ...... STATEAND PROVINCIAL ROADS PROJECT ......

KONPersonnoel 1985-90

HEADOUARTERS DIVISIONS TOTAL

Technical Other Total Technical Other Total Technical Other Total Staff Staff Staff

1985 406 458 664 1,602 762 2.364 2,008 1.220 3,228 1986 464 381 845 1.737 722 2,459 2,201 1,103 3,304 198I 533 442 975 1,814 1,219 3,033 2,347 1,661 4,008 1988 548 423 971 2,075 1,313 3,388 2,623 1,736 4,359 1989 S1S 446 961 2,254 1,374 3,628 2,769 1,620 4,569 990 478 443 921 2,240 1,487 3,727 2,718 1,930 4,646

HEADQUARTERS DIVISIONS TOTAL TOTAL PERSONNEL ...... Permanent Temp. Total Permannt Temp. Total Permanent Top. Total In S. of 1985

1985 908 121 1.029 30,040 9,729 39,769 30,948 9,850 40,M79 44,026 100X 1986 910 134 1,044 29,036 9,807 38,8643 29,946 9,941 39,867 43,191 96X 196 e66 106 992 28,369 9,287 37,656 29,255 9,393 38,6U 42.656 97r 1988 611 101 912 26,712 8,106 34,818 27,523 8,207 35,730 40,089 91X 1989 766 127 893 24,921 7,839 32,760 25,687 7,966 33,653 38,242 673 1O99 no 140 660 24,461 5,249 29,710 25,181 5,389 30,570 35,218 a0n

Sources KOM REPUBLICOF TURKEY

STATEAND PROVINCIALROADS PROJECT

Breakdoun of Work Equipment by Type and Age

(as of mid-1990)

-...... ----...... -...... Age Groups ------1-5 years 6-10 years 11-15 years 16-20 years 20 + years

Number X Total Equipment Type Nu ber X Nurber X Number X Number X ----- ...... ------...... ------...... --- ...... ---..---

10 0.5 2036 Truck 300 14.7 1083 53.2 622 30.6 21 1.0 10.1 1234 Pick-up Truck 486 39.4 118 9.6 181 14.7 324 26.3 125 8.9 436 Tractor 52 11.9 32 7.3 313 71.8 0.0 39 9 18.0 50 Excavator 20 40.0 17 34.0 4 8.0 0.0 68 29.2 233 Cowpressor 19 8.2 60 25.8 86 36.9 0.0 32 60.4 53 Crusher 0.0 20 37.7 1 1.9 0.0 40 100.0 40 Scraper 0.0 0.0 0.0 0.0 12 2.5 472 Roller 106 22.5 31 6.6 318 67.4 5 1.1 4 1.0 420 Loader 69 16.4 0.0 347 82.6 0.0 59 8.8 672 Grader 326 48.5 28 4.2 6 0.9 253 37.6 0.0 217 Naintenance Grader 25 11.5 111 51.2 73 33.6 8 3.7 5.6 780 Snow Removal Equipment 415 53.2 90 11.5 126 16.2 105 13.5 44 3.9 1004 Various Asphaltic Laying Equipment 308 30.7 172 17.1 251 25.0 234 23.3 39 17 18.7 91 Service Vehicles 1 1.1 43 47.3 12 13.2 i8 19.8

6.4 7738 Sub-total 2127 27.5 1805 23.3 2340 30.2 968 12.5 498

847 13.2 6405 Various Auxiliary Equipment 1385 21.6 1361 21.2 2277 35.6 535 8.4

9.5 14143 Total 3512 24.8 3166 22.4 4617 32.6 1503 10.6 1345

Source: KGN 33 -

ROADEXP REPUBLICOf TURKEY Table 2.7 O1/30j91 ...... STATEAND PROVINCIALROADS PROJECT ...... U;...... HighwayExpenditure 1960-1990 ...... TL billion

State and ProvincialRoads Village Motorways TOTAL ...... ----Roads ...... Investment Recurrent Total Budget Budget

...... ------..------Current TL ......

1980 32.2 16.4 48.6 12.9 61.5 1981 46.8 31.2 78.0 23.5 101.5 1982 48.2 31.6 79.8 23.4 103.2 1983 73.1 42.7 115.8 34.3 150.1 1984 105.7 74.5 180.2 45.0 225.2 1985 146.2 77.9 224.1 72.4 296.5 1986 170.0 102.6 272.6 93.9 366.5 1987 231.6 138.2 369.8 230.0 143.2 743.0 1988 355.6 202.0 557.6 225.3 640.1 1423.0 1969 565.0 433.0 998.0 385.0 1184.0 2567.0 1990 1219.7 538.1 1757.8 704.0 2054.7 4516.5

Sector ------Constant1990 TL------.Deflator

1980 1594.1 811.9 2405.9 638.6 3044.6 0.0202 1981 1619.4 1079.6 2699.0 813.1 3512.1 0.0289 1982 1389.0 910.7 2299.7 674.4 2974.1 0.0347 1983 1599.6 934.4 2533.9 750.5 3284.5 0.0457 1984 1490.8 1050.8 2541.6 634.7 3176.3 0.0709 1985 1441.8 768.2 2210.1 714.0 2924.1 0.1014 1986 1129.6 681.7 1811.3 623.9 2435.2 0.1505 1987 1027.5 613.1 1640.6 1020.4 635.3 3296.4 0.2254 1988 900.7 511.7 1412.4 570.7 1621.3 3604.4 0.3948 1989 899.3 689.2 1588.4 612.8 1884.5 4085.6 0.6283 1990 1219.7 538.1 1757.8 704.0 2054.7 4516.5 1.0000

Actual Expenditures through 1989 and Budgeted Expenditures for 1990

Source: SPO - 34 -

UDOET91 REPUBLICOF TURKEY TabLe 2.8 01/30/91o ...... STATEAND PROVINCIAL ROADS PROJECT

KON 1991 Budget ...... In milLionTL

TL NIll. US S NILL. Persomet Service SupplIos EquipmentConstr. Othor 100 300 400 600 700

101 _mnamt 108,601 30 102,600 3,743 1,629 429

111 PLamenn 131,430 36 73,300 36,300 7,350 10,100 4,380

112 Irnetment 1,667,070 459 447,400 48,250 131,250 63,350 859,600 117,220 27K Notorays 15,200 4 12,000 2,500 350 350 S & P roadb 1,166,790 321 348,750 20,300 89,450 700 702,800 3,790 Tourist.Roads 75,000 21 3,000 72,000 0 Bultdings 27,650 8 900 300 120 26.300 30 3SI Roads 57,000 16 57,000 0 Land Aculf. 110,300 30 110,300 EquIpment 216,130 59 85,750 22,150 41,330 62,650 1,500 2,750

113 Haontwnwnco 759,905 209 492.400 2,185 95.150 0 169,7G0 470 65K Road Nalnt. 678,330 187 411,200 1,810 95,150 169,700 470 BuIldings 475 400 75 0 EquIpment 81,100 22 80,800 300 0

900 Transfers 16,680 5 16,680

999 ForesgnCradits 73,900 20 73,900 0

TOTAL 2,757.586 759 1,115,700 90,478 235.579 73,4501,103,200 139,179

IN X 100l 40X 3X 9X 3K 40K 5X

H ofotpLoyso at endM99O 35,218 Cost per *aployeeIn N.TL 32 in US S 8,718 1 US S a TL 3,634 SoureetKON REPUBLICOF TURKEY STATE AND PROVINCIALROADS PROJECT

List of Roads for the Project

Type of Leth Traffic Data lAADT) 1999 llR Description of the Road District No Control Section Road (Ki.I Existing PavementCondition Car Bus Tnxdc Trailer Is)

Zana Kcprisu-Erbaa 7 100-19,100-20 State 61 Surface Treatment (Poor) 504 596 45? 50 19

Erbaa-16.Bl .i1d. 7 100-20,100-21 State 101 Surface Treatnent (Poor) 451 70 451 50 23

Sawmixn-nye 7 010-16,010-17 State 82 Surface Treatnent (Poor) 6691 863 1855 206 42 (hye-Pirazlz 7 010-17,010-18 State 6? Surface Treatnent (Poor) 1985 446 1270 141 26

Sal ikesir-Susurluk-Karacabey 14 573-01,565-06 State 87 Surface Treatnent (Poor) 2608 417 2796 310 60

Sivrihisar-Ezirdaig Ayr. 3,4 260-02,260-03 State 49 Surface Treatnent (Poor) 1400 523 1281 142 33

6nirda3 Ayr.-Afyon 3 260-01 State 71 Surface Treatnent (Poor) 664 286 781 86 25

U,ak-Xula 2 300-04,300-05 State 76 Surface Treatment (Poor) 1109 442 1727 192 42 Kula-AIasehir Ayr. 2 300-04 State 31 Surface Treatment (Poori 1590 520 1701 189 57 W tlala Ayr.-Kulu Ayr. 4 750-08 State 68 Surface Treatwent (Poor) 1805 675 2205 245 17

Kulu Ayr.-Cihanbeyli 3 715-01 State 62 Surface Treatment (Poor) 784 224 533 59 IS

Cihanbeyl i-Kanya 3 715-02,715-03 State 98 Surface Treatment(Poor) 1793 281 1686 187 42 Espiye-4ar*obapu 10 010-19,0t-20,010-21 State 64 Surface Treatnwtt (Poor) 1908 234 889 98 27

UIak-Afyon 2,3 300-06,300-07,300-08 State 110 Surface Treatment (Poor) 1934 506 1966 197 67

Kozolcahaifn-Gl-Aya§ 4 06-82,06-77 Provincial 84 Stabilized (Poor) 226 16 190 21 16

(Adana-Kozan)Ayr.-4bnsurlu-6.81.Hd. 5 01-02,01-21 Provincial 104 Stabilizied (Poor) 212 11 135 15 17

Yahyalo-5.ai.Hd. 6 38-25 Provincial 35 Stabilized (Good) 465 34 452 SO 39

Yesilhisar-Yahyal. 6 38-52,38-29 Provincial 25 Surface Treatment (Poor) 1013 34 724 81 19

Yozgat-8o§azl yan 6 66-25 Provincial 90 StabiIIzed (2oor) 1'7 14 85 9 12

%ayseri-,"bae-Ponarbago Ayr. 6 38-25 Provincial 47 Stabilized (Poor) 491 69 192 21 27

Xeles-Womni -Tav,anl Ayr. 14 16-50,43-80 Provincial 48 Stabilized (Poor) 98 17 33 3 10 tS

Bartn Ayr.-Ulus-PonaMa*u-Azdavay- 15 67-05,37-78,37-77 Provincial 101 Stabilized (Poor) 121 5 32 4 11 t A3l1 Ayr. - 36- Table 32 REPUBLIC OF TKEY

STaTE AND PROVINCIALRAD PROJ=C

distof Rgouigmentto be ProcuredUnder the Proiect

Road Maintan eOO

1. 300 - 4x4 Multipurposeroad maintenance 39,200 vehicleswith attachments

2. 104 - 6MK Dump Trucks 14,700 of which 5 with front and side snow plough and 5 with 4000 ton/h rotary snow plough

3. 50 - 100-120HP WheeledLoaders 4,000

4. 32 - 200-220HP CrawlerTractors 5,700

5. 16 - AsphaltDistributors 2,400

6. 1 - Slurry Seal Plant 500 7. Spare parts for existingfleet 1.20

Sub-total 67,700

ResearchEcuiement

1. 1 - APL (LongitudinalProfile Analyser) 160 includingtowing vehicle,software etc.

2. 1 - Braked wheel Skid ResistanceTester 300 includingtowing vehicle,software etc.

3. 2 - Upgrade/modernizationkits for existing 150 LacroixDeflectographs

4. 1 - Pavement Rutting Tester 50

5. 1 - FallingWeight Deflectometer 100

6. 17 - MechanizedSoil Mould Compactors 100

7. 1 - Rolling Straightedge for pavement 5 acceptancetesting

8. 1 - Towed Bump Integrator 80

9. 1 - TransversalProfile Device 5

10. 1 - Truck mountedwell-drilling rig completewith bits, rods and casing 4 for holes up to 200 m deep and 150 mm diameter

Sub-total 1,600 -37 Table 3.2 page 2

Planning Equigment

Road Research Vehicle 500 Traffic Counters and Weighbridges AN

Sub-total 1,150

Survey and Design EguiDment

2 PhotogrametricEquipment 1,500

50 Survey stations 500

20 Plotters 400

1 Plan Printer lo

Sub-total 2,500

Bridge Software 200

Reganizatiip and ComguterLzatio 3,000

Training EquiDment

Material Research LaboratoryEquipment 120

Bituminuous LaboratoryEquipment 150

Soil Mechanics LaboratoryEquipment 120

Field and Traffic Testing Materials 210

Language Laboratory Equipment 100 General Training Equipments lSQ and materials (T.V., Video, Overhead Projector screen, camera etc.)

Sub-total 850

TOTAL 77,000 - 38 - Table 3.3

REPUBLIC OF TURKEY

STATE AND PROVINCIALROADS PROJECT

List of Road Safety Materials to be Procured Under the Project

SOOO

Guardrailing,Support posts, and accessories 3,600 150,000 m (Supply and Installation)

Reflective sheeting overlays for vertical traffic 3,500 signs (about 75,000 units)

Reflective sheeting,various colors - 2000 rolls 3,300

ThermoplasticRoad line marking materials to cover 3,900 about 300,000 ma (supply and installation)

Portable Vehicle Weighing Devices - 50 units 700

Total 15,000 - 39 - Table 3.4

REPUBLIC OF TURKEY

STATE AND PROVINCIALROADS PROJECT

Estimated Schedule of Disbursements

Cumulative Disbursements Bank Fiscal Yr. Ouarter Ending USS million Equivalent

92 September 30, 1991 0 December 31, 1991 5 March 31, 1992 10 June 30, 1992 15

93 September 30, 1992 20 December 31, 1992 30 March 31, 1993 40 June 30, 1993 50

94 September 30, 1993 60 December 31, 1993 70 March 31, 1994 80 June 30, 1994 100

95 September 30, 1994 120 December 31, 1994 140 March 31, 1995 160 June 30, 1995 180

96 September 30, 1995 200 December 31, 1995 230 March 31, 1996 250 June 30, 1996 270

97 September 30, 1996 280 December 31, 1996 290 March 31, 1997 295 June 30, 1997 300

The Loan Closing Date will be June 30, 1997.

Source: Mission Estimate, January 1991.

Based on EMENA TranspertationDisbursement Profile dated April 25, 1990. REPUBLICOF TURKEY

STATE AND PROVINCIALROADS PROJECT ImplementationSchedule

YEARS 19__1 3992 - - - 41996 ACTIvIrf/CoMRTE 4 1 2 13 14 -11 2 3 4 r i TF I j ]I E z 2 3 ~ I 2

.01 .*Vpprisal . -

1.03 baerd Pr.sentatlm -- .-...- 1.04 loan SiWnatui-e .-.-..

sCoe1e1in-. Date -- -.

3.07 ClosIng Sate -- , .O

2 H1G3Ay3ENAILITATION...- .

2.OL-prequalitlcatiofl - - .. 2.02.EfgiP-JVn2.And POe. 2.03 Did and Aard* . - 4 2.04. ESC3Itt*Oof Coua0--

3--EQUIflUT Am SPARES

3.01.Advertlsneaet .. .- ______

_3.p3 Bid audiAwards --- _-- _ 3.04 Sapgi, ______

4 0*5*5SAFE-.TY.- - ..-

4.01 d -rtAanent

d.02~~~~~~~ocu~~~~~9~~~tiOS- - .- - - --.-.-. . . -... -~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-

NO3 1i-~.~..- - __

.Table.3.4. - 41 -

VEHOPCOS REPUBLICOF TURKEY Table4.1 01/30/91 STATEAND PROVINCIALROMS PROJECT

BasicVehiclo Operating Costs ...... Jan. 1990Prices

Truck Truck Unit Prices Car 8us 12/15Ton 28/32Ton

CasolineTL/Liter 1.197

DieselTL/Liter 1.193 1,193 1.193

LubricatingOlt TL/kl 3.500 3,500 3,500 3,500

MaintenanceLabor/hr 5.440 6,269 6.269 6.269

Tyres 140,600 673,550 476,900 750.000

Crew WagesTL/hr 0 7,386 7,386 7,386

Vehicle Prices 21.666.000 307,731.110 147,963.408 220.000,000

Annul km 15.000 150.000 80.000 80.000

Average Age 10 8 8 8

Basic Vehicle Operating Cost on LevelTangent Road (Roughnessa 2) in TL/km ......

Fuel 115.7 375.8 474.2 583.4 Lubfecants 6.5 11.8 11.8 19.1 Tires 8.4 161.0 168.1 348.3 Crew wages 53.5 114.3 133.7 108.3 Maintenance 44.1 362.7 301.0 563.0 Depreciation 175.4 393.4 245.1 337.5

Total 403.6 1.419.0 1,333.9 1,959.6

in US cents 17 61 57 84 at It a 2330 TL Note: Fuel prices In November1990 were 2.162 TL/l for gasoline and 1.796 TL/l for diesel

Source: KOK REPUBUCOF TURKEY STATEAND PROVINCIAL ROAD PROJECT GENERALDIRECTORATE OF HIGHWAYS OrganizationChart 1990

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