World Bank Document

Dowmsnz Of The World Bank

FOROMCLFCL USE ONLY Public Disclosure Authorized Report No. P-4290-CD

REPORT AND RECOMMENDATION

OF THE

PRESIDENT OF THE

Public Disclosure Authorized INTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE

EXECUTIVE DIRECTORS

FOR A PROPOSED DEVELOPMENT CREDIT

OF SDR 17.1 MILLION

TO THE

REPUBLIC OF CHAD Public Disclosure Authorized FOR A

HIGHWAY MAINTENANCE PROJECT

June 2, 1986 Public Disclosure Authorized

This document has a restricted distribution and may be used by recipients only in the performance of their officialduties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS

Currency Unit = CFA Franc US$1.00 CFAF 360

FISCAL YEAR

January 1 - December 31

WEIGHTS AND MEASURES

1 kilometer (km) 2 = 0.6 mile (mi) 2 l ssuare kilometer (km ) = 0.39 square miles (mi ) I m = 1,000 liters (1) = 6.37 barrels = 267.54 gallon

ABBREVIATIONS AND ACRONYMS

AfDF - African Development Fund BDEAC - Banque de Developpement des Etats de l'Afrique Centrale BIAT - Banque Internationale pour l'Afrique au Tchad BTCD - Banque Tchadienne de Credit et des Depots CARE - Cooperative for American Relief Everywhere CCCE - Caisse Centrale de Cooperation Economique CFAF - Communaute Financiare Africaine (CFA) Francs CFDT - Compagnie Frangaise pour le Developpement de Textiles CTT - Cooperative des Transporteurs Tchadiens DGT - Direction Generale des Transports DPW - Department of Public Works EDF - European Development Fund EEC - European Economic Community ENTP - Ecole Nationale des Travaux Publics ERR - Economic Rate of Return FAC - Fonds d'Aide et de Cooperation FAO/OSRO - Food and Agriculture Organization/Officeof Sahelian Relief GDP - Gross Domestic Product IBRD - International Bank for Reconstruction and Development IDA - International Development Agency LBF - Live Aid/Band Aid Foundation LENTP - Laboratoire d'Etude National des Travaux Publics MPWHUD - Ministry of Public Works, Housing and Urban Development MCT - Manufacture de Cigarettes du Tchad MTCA - Ministry of Transport and Civil Aviation NGO - Non Governmental Organization OFNAR - Office National des Routes SDR - Special Drawing Right SIMAT - Societe Industrielle de Materiel Agricole SME - Small and Medium Scale Enterprise SONASUT - Societe Nationale Sucriare du Tchad STEE - Societe Tchadienne d'Energie Electrique _ STT - Societe Tchadienne du Textile ND?P - United Nations Development Program UNDP/OPE - UNDP/Office of Project Execution USAID - United States Agency for InternationalDevelopment vpd - Vehicles per day WFP - World Food Program FOR OMCAL USE ONLY CHAD

HIGHWAYMAINTENANCE PROJECT

CREDIT ANDPROJECT SUMMARY

Borrower: The Government of Chad

Beneficiaries and Implementing Agencies: The Ministry of Public Works, Housing and Urban Development; The Ministry of Transport and Civil Aviation. Amount: SDR 17.1 million (US$20.0million equivalent).

Terms: StandardIDA terms.

ProjectDescription: This project is an emergencyoperation in the road transportsector which is a top priorityin Chad's post-war reconstruction effort. It would assist the Ministries of Public Works and Transport to rebuild their capacity to rehab- ilitate and maintain the country's high priority network, address important institution building objectives in the transport sector, help resolve constraints on the efficiency and competitiveness of the road transport industry, and coordinate and complement other donors' activities in the sector. The principal components of the project are: (a) routine maintenance of up to 2,000 km of high priority roads; (b) rehabilitation and routine maintenance of a road linking the industrial center of N'Djamena with the country's primary road network; (c) rehabilitation of the ferry at Moissala and replacement of the ferry at Onoko, and construction of short access roads; (d) reconstructionof the bridge at Lere and constructionof accessroads; (e) provisionof buildingsand equipmentto support the priorityprogram for routinemaintenance; and (f) studiesand technicalassistance to supportproject implementationand preparation of a follow-upoperation in the sector.

Project Benefits and Risks: The projectwould help to re-establishnormal trade flows and would supportrestructuring of the cotton sector. It would reduce transport costs on 2,000 km of priorityroads, and avoid higher costs that would be incurredif recently rehabilitatedroads were allowedto deteriorate. Rehabilitationand maintenanceof the N'Djamena

| This documenthas a restricteddistibution andmay be usedby recipientsonly in the performance of their officialduties Its contents may not otherwisebe disclosedwithout World Bank authorization. - ii -

industrial road would significantly reduce transport costs and relieve urban congestion. Rehabilitation of the bridge and ferries would improve internal and external communications and effect significant operating cost savings. The project would have a substantial institutional impact on the Ministries of Public Works and Transport, OFNAR, and the trucking industry by developing the management and technical skills necessary for managing the road sector and by increasing productivity and competitiveness in the road transport industry.

The physical components of the project are located in areas unlikely to be affected by political unrest. Although the general economic situation and depressed cotton prices could constrain the rate of recovery in economic activity, the most important risks would be an increase in project costs and inadequate absorptive capacity. Even with a 20% increase in total project costs, including technical assistance, the project would still be justified. The risks arising from possible limits on administrative capacity are addressed through technical assistance and on-the-job training and through possible recourse to private contractors. Nevertheless implementation of the project will require intensive monitoring and supervision by IDA staff.

Rate of Return: The overall economic rate of return is 21%, covering about 82% of project costs. The rates of return for individual project components vary from 12% for the bridge and access roads and 16% for the N'Djamena industrial road, to 46% for routine maintenance of rehabilitated roads and 59% for the ferries. os

-no INTERNATIONALDEVELOPMENT ASSOCIATION

REPORT AND RECOMMENDATIONOF THE PRESIDENT TO THE EXECUTIVE DIRECTORS ON A PROPOSEDDEVELOPMENT CREDIT TO THE REPUBLIC OF CHAD FOR A HIGHWAYMAINTENANCE PROJECT

1. I submit the following report and recommendation on a proposed development credit to the Republic of Chad for SDR 17.1 million (US$20.0 million equivalent) to help finance a Highway Maintenance Project. The credit would be on standard IDA terms.

PART I. THE ECONOMY11

2. The last economic report on Chad (Report No. 1340-CD) was distri- buted to the Board on June 30, 1977. Bank activities,including economic and sectorwork, resumedin May 1985 after several years of interruptiondue to civil war. A new Country EconomicMemorandum is scheduledfor FY87. Annex I contains country data.

Background

3. Chad is a landlocked,sahelian country with an area of 1,284,000 kM2 and three climaticzones. In the northern saharan zone, where rainfall is less than 300 mm per annum, the dominant activity is nomadic and transhumant livestock herding. Agricultural production is undertaken infre- quently and is only possible in oases and in lowlands during periodic flooding. In the middle sahelian zone, one finds transhumant and sedentary livestock herding as well as extensive rainfed cultivationcentered on mi,let and sorghum. Because of the dependence on rainfed cropping, this zone is particularly vulnerable to climatic variability. The southern sudanian zone makes up a quarter of the country's area. The region receives rainfall ranging from 600 mm to 1,200 amper year, allowing the production of cotton as a cash crop and cereals, tubers, and groundnuts as major food crops.

4. The populationof Chad was estimatedat approximately5 million in 1985, with about 40% in the southernsudanian zone, 57% in the middle sahelianzone, and only 3% in the northern saharan zone. Approximately 80% of the population lives in rural areas, although the urban population has

1/ Parts I and II are substantially the same as those in the President's Report for the EmergencyCotton ProgramCredit, which was presented to the ExecutiveDirectors on June 24, 1986. - 2 -

been growing at an annual rate more than three times faster than that of the total population (6.4%compared to 2.1%). The capital city, N'Djamena, is estimatedto have about 400,000 inhabitants.

EconomicConstraints and Potential

5. With an estimatedper capita income of about US$130 in 1985, Chad is one of the poorest and least developed countries in the world. It ranks at or near the bottom of the low-income economies with respect to life expectancy,literacy and health-relatedindicators. Moreover, in recent years, political conflict has disrupted economic activities and social servicesand has discouragedinvestment. Developmentis constrainedby: (i) the country'slandlocked position, which creates high transportation costs; (ii) internal distances,which hinder politicaland economic integration; and (iii) climaticvariability, which leads to fluctuationsin agriculturalproduction. Chad does have, however,a number of factors in its favor. The economic system is liberal and has produced a dynamic informalsector. The country is also blessedwith considerableagricultural potential, thanks to its extensive areas of arable land, two perennial rivers (Logone and Chari), and low population density. Some five million hectares of land have potential for irrigation,and in years of normal rainfall,agricultural production already reachesself-sufficiency levels. In this respect,Chad is among the better-off countries of the Sahel. In addition,Chad has significant,but under-exploited,livestock resources. Ongoingpetroleum exploration has revealedsignificant oil reserves in Chad, although it is too early to assess when and under what conditionsthey can be efficiently exploited. There are also indications of mineral reserves which have not yet been carefully evaluated.

Structureof the Economy

6. Agriculture,broadly defined to include livestockand fishing, dominatesthe Chadianeconomy, providing the livelihoodfor the majorityof the population,absorbing 85Z of the total labor force, and generating nearly half of GDP. Food crops are the principal output and, in 1985, contributed23% of GDP, while cash crops other than food (mostly cotton) accountedfor 4%, and livestockand fishing,together, for 17%. The sector, on the whole, is extremelyvulnerable to climaticfluctuations. The "secondary" sector, comprisingindustry and energy, is relativelyweak, accounting for only about 20% of GDP in 1985. Productionderives mainly from six enterprises: MCT (cigarettes),SONASUT (sugar), Brasseries du Logone (beer),STT (textiles),Cotontchad (cottonlint, oil and soap), and STEE (electricityand water). Small- and medi 1-scaleenterprises (SMEs) are still quite underdeveloped. The "services" sector, consisting largely of formal and informalcommercial activities, generated about 35% of GDP in 1985.

7. The Chadian economy has two predominant features. The first is the dynamic nature of the informal sector which helped assure the survival of the country throughout the war period. However, the extensive use of informal channelstoday deprives the State of an importantsource of revenue. The second feature is the dominance of the cotton sector in the economy, accounting for approximately80% of export earnings, 25% of -3 -

governmentrevenues and 13% of agricultural production. The cotton sector is a source of cash income for two-fifthsof Chad's populationand absorbs more than 50% of domestic credit. Sector activitiesare organizedby Cotontchad, a majority-government-owned companywhich is solely responsible for purchasing,processing and marketingChad's cotton.

The Civil War (1979-82)

8. The Chadian economy reached its peak productionlevel in 1977, just prior to a devastatingthree-year civil war. GDP attained CFAF 162 billion (US$157 per capita) that year, fueled by a record cotton crop of 174,000 (metric)tons in 1975/76. At the time, Chad had four domestic banks, some large-scaledomestic manufacturing industries, an estimated 80-100 small and medium scale enterprises (SMEs), and an active informal sector.

9. Little reliable data exist from the civil war period, but one can hardly overestimatethe negativeeffects of the war, which producedwide- spread destructionof property and considerablehuman loss. Economic activity was seriously disrupted, leading to a reduction of at least 30% in aggregate output. Formal, modern sector activitieswere the hardest hit, with most industries severely reducing or totally suspending operations. The expatriate sector, always limited in Chad, withdrew completely. The banking sector shut down entirely, as did the Central Bank for a two-year period. Only the cotton industry continued to operate, overcoming great logistical difficulties, although production of cotton seed averagedonly 80,000 tons per annum (65% of the average production during 1973-77). More than half of the known SMEs were destroyed or temporarily shut down. The population of N'Djamena fell to less than a third of its pre-war level of 300,000,and the city was largelydestroyed. Politicaladministration, at all levels, ceased to function, and public utilities and government services were abandoned. Much infrastructureand physical capitalwere destroyed, disappeared,or simply deterioratedfrom neglect. The road network, in particular, deteriorated severely, crippling internal trade and producing economic fragmentation.

Post-War Developments

10. Hissein Habre, now President of the Republic, took control of N'Djamenain June 1982. His governmenthas since gained effectivecontrol of the territorysouth of the 16th parallel,which contains 97Z of the country'spopulation. In 1983, opposition forces with foreign support occupied a large part of the northern zone. The continuedoccupation of this barren zone has no significantdirect impact on Chad's economicsitua- tion, but it representsa constant political threat which discourages potentialinvestment in the country. Recentrebel incursionsbelow the 16th parallel have been reversedby Governmentforces. In the remainder of the country, the Government launched a program of national reconciliation in 1983 in a successful effort to rally exiledpolitical opponents and former southern combattants to the Habre regime. In January 1986, the last remaining rebel leader in the south rallied to the Habre Government, raising hopes of lastingpolitical stability in the sudanianzone. - 4 -

11. Since 1982, the Habre Government has worked quickly and effect- ively to reconstitute key ministries and develop municipal administrations, and has been successful in establishing a core government. With the resto- ration of relative political stability, the economy began a period of recovery, with real GDP growing by 5.5% in 1983, to reach 78% of the 1977 level. Considerable reconstruction ensued and the population of N'Djamena has risen rapidly to far surpass its pre-war peak. Economic recovery was stalled, however, by the unprecedented drought of 1984-85, and is now threatened by a crisis affecting the cotton sector.

12. The Drought. The 1984-85 drought had lmmediate, severe and widespread effects. It caused Lake Chad to shrink to one-tenth of its normal size and dried up segments of the Chari River. Food production dropped from an average of over 600,000 tons/year for the 1975-80 period to only 310,000 tons, leading to a deficit of about 300,000 tons, or half of total requirements. The northern sahelian zone was particularly affected, creating an influx of refugees to the south. A vell-coordinated international relief effort, led by the UNDP and carried out with full cooperation from the Government, averted widespread famine and avoided the establishment of refugee camps through the relocation and resettlement of displaced popu- lations in productive agricultural zones. Economic recovery ground to a halt, however, with a 4.5% drop in real GDP in 1984. Good rainfall in 1985 allowed food production to recover significantly, approaching self-sufficiency levels. The situation remains fragile, however, because of: Mi) the constant threat of drought; (ii) the risk of a premature return of the nomadic population to traditional but ecologically unstable areas in the northern Sahel region; (iii) the dilapidated road network, vhich continues to frustrate commercial activity; (iv) the lack of resources for agricultural support services; and (v) the potentially disruptive effect of the past season's massive food distribution and the remaining food aid stocks on normal production patterns and local market operations.

13. The Cotton Sector Crisis. A severe disequilibrium in the world cotton market caused the world price of this commodity, in dollar terms, to drop by 40% between mid-1984 and mid-1985. In conjunction with the depre- ciation of the dollar, this fall has brought about a drop in the CFAF price of Chad's cotton exports from nearly CFAF 800/kg (F.O.B. Douala) to less than CFAF 400/kg. The hitherto profitable Cotontchad company is now operating at a loss, with a cumulative deficit of CFAF 23 billion (US$64 million) as of February 1986. This deficit surpasses estimated Government revenues for 1986 and is, therefore, beyond the ability of the company or the Govern- ment to support or correct, given market prospects. Owing to the high level of world stocks, no rapid price recovery is expected.

Progress Towards Recovery

14. Despite the negative impact of drought and continued political difficulties, the Chadian Government and people have made progress towards economic recovery. As previously noted, reconstruction and resumption of economic activities were facilitated by exceptionally good cotton production and exports in 1983/84. These, together with favorable world market conditions, helped to replenish foreign exchange reserves and boost government revenues. 15. Reestablishment of the administration and the growth of revenues allowed the resumption of government services on a limited scale. In the education sector, schools have reopened, teachers are being trained, and enrollments, in absolute terms, are higher than pre-war levels. The average elementary school enrollment ratio remains low, however -- an estimated 30% -- a figure which masks wide variations by gender and by region. The health sector has benefitted considerably from foreign assistance. The number of public health facilities has surpassed pre-war levels, although the quality of facilities varies greatly. In 1982, the National School of Public Health reopened, and a village-level basic health care program was launched. Despite considerable progress, health status in Chad is quite low, with an estimated infant mortality rate of 184 per 1,000 births and a life expectancy of only 43 years. Both the education and health sectors face severe financial constraints and suffer from a lack of personnel, training programs, equipment and supplies.

16. In general, with the exception of the drought year, Chad's economy has recovered rapidly since 1982. Given a good harvest, real GDP in 1986 is expected to surpass its 1977 peak. Because of population growth, however, real per capita income will remain below its 1977 level. Modern sector activities have largely recovered. The Central Bank reopened in 1983, and two banks, BIAT (Banque International pour l'Afrique au Tchad) and BTCD (Banque Tchadienne de Credit et de Depots), have resumed operations. Recovery in the subsistence sector and in small-scale entrepreneurial activities has also been impressive, despite the often complete lack of public services and domestic credit.

17. The resurgence of economic activity and the resulting growth in GDP allowed1the Government to more than double revenues between 1983 and 1985: from CFAF 9 billion to CFAF 21 billion (US$47 million). New tax measures and improved tax collection should permit the Government to maintain revenues at this level, despite the loss in cotton export tax proceeds. Although expenditures continue to outstrip revenues, the size of the fiscal deficit relative to revenues fell from 48% in 1983 to 22% in 1984 and 1985. Public expenditures remain relatively low compared to current needs, thanks to the restraint exercised by the Chadian authorities, particularly regard- ing the size of the civil service. Despite a recent pay increase, civil servants are still receiving only 60% of their 1977 wages in nominal terms.

18. Bank credit has expanded rapidly in the last three years, with credit to the public sector declining to the point where it represented only 5% of total domestic credit outstanding by the end of 1985. The expansion of credit, along with a balance of payments surplus (discussed below), led to a 60% increase in money and quasi-money in 1984. However, the cotton crisis and the recent deterioration of the balance of payments caused the growth in money supply to slow to an estimated 11 in 1985. No consumer price index has been compiled in Chad since 1979. On the basis of limited information available on selected commodities, the average annual inflation rate over the 1979-85 period was on the order of 8-10%.

19. Chad's balance of payments, like most economic indicators, has varied with the fortunes of cotton. The large increase in cotton exports and the high level of external financial assistance in 1983 and 1984 - 6 -

producedsurpluses in both the current account and the overall balance in those years. In 1985, a relativelysmall cotton crop led to a lower volume of cotton exportswhich, at a lower world price, severelyreduced export earnings. At the same time, continuedeconomic growth inducedan expansion in imports and contributedto bring about a current account deficit of approximately CFAF 40 billion (US$89million), equal to 13% of GDP. The deficit was financed by a combination of increased capital inflows for oil exploration and larger drawings on medium and long-term loans. The overall balance moved into deficit for the first time in severalyears. In recent years, even during periods of reserve build-up, Chad continued to accumulate external arrears because of the budgetary difficulties experienced and the statutory limit on the outstanding credit available to the Government from the Central Bank for Central African States.

20. The Chad Government is committed to resuming debt service payments and has worked with its major creditorsto reconstructits debt records, settle arrearswith multilateralorganizations, and begin repayment on a limited basis of arrears and currentdebt-service obligations. The recon- structed records show an end of 1985 stock of debt outstandingand disbursed of US$136 million, or a debt-to-GDPratio of only 21%, among the lowest in Af;ica. Debt service was US$7.8 million in 1985, implying a debt-service ratio of just 14%. The Chadian Governmentearmarks revenues for a Debt Amortization Fund (CAA), about one-third of which have come from Cotontchad's cotton production and exports. Despite the loss of an estimated CFAF 600 million (US$1.7 million) in earmarked cotton revenues, CAA's total resources are expected to rise from CFAF 1.3 billion in 1985 to over CFAF 1.8 billion (US$5 million) in 1986, thanks to new tax measures and increasedrates on other goods (e.g.,beer, cigarettes). This level of resources,however, will permit Chad to pay only two-thirdsof its estimated 1986 debt serviceof US$7.5 million. The Governmentintends, therefore, to seek Paris Club negotiationsto reduce its 1986 debt serviceobligations to the level of CAA's availableresources. In addition,the Governmentand its creditorsmust develop a plan to begin settlingarrears estimatedin late 1985 at US$61 million (US$44million in principal,US$17 million in interest), a portionof which can be addressedat the Paris Club negotiations.

GovernmentObjectives

21. With the restorationof relative political stability and the alleviation of last year's drought situation, Chad is ready to begin the transition from ad hoc emergency operations to longer-term development planning. Last year, the Government prepared, with UNDP assistance, an Interim Plan for 1986-88, which was presented to the donors at a UNDP- sponsored Round Table Conference held t n December 1985. In that document, the Government identified the following broad objectives: achieving food self-sufficiency on a national and region-by-region basis; resettling the populationdisplaced by the drought; reconstitutingthe livestockherd; improvingrural water supply and combattingdesertification; rehabilitating the transportsystem; rebuildingthe industry sector and exploiting the country's -petroleum resources; intensifying and diversifying export production; rehabilitating the commercial and financial structures; and providing basic health care. In pursuing these objectives, the Government aims to follow two basic principles: (i) engaging in limited public sector - 7 -

intervention,and (ii) encouragingprivate, mostly small-scaleand tradi- tionally-rootedinitiat*ives.

22. The InterimPlan includeda list of nearly 200 project proposals which require further study. The Government'sgoal this year is to work with the donors to define appropriatesector strategiesand to transform this list of projects into a realistic public investment program - one which takes into account Chad's financial constraints (which are heightened by the cotton crisis) and limited administrative capacity. Chad has not producedan investmentbudget since 1975; it will use this 1986 exerciseas a learning process, leading to more systematicinvestment programming in subsequentyears. At the Round Table Conference,the donor community pledgedto help build the Government'scapacity for developmentplanning and investmentprogramming. In particular, the donors and the Government requestedIDA to insuredonor coordinationin the transportsector.

PART II. BANK GROUP OPERATIONSIN CHAD

Evolution of External Assistance and IDA Operations

23. Before the civil war, Chad received a significant, although not exceptional, amount of external assistance. From 1971 to 1975, aid disbursements averaged US$57 million per annum, with the yearly total rising from about US$11 per capita to over US$20 per capita over the five-year period. An estimated 30% of this consisted of technicalassistance and approximately 80% was grant aid. Although the absolute annual amount of grant aid more than doubled in this period, the share of grants feli from 86Z in 1972 to 77% in 1975 as a result of increased borrowing. Neverthe- less, Chad's external indebtedness has remained fairly low and on favorable terms. Annex II contains a summwry statement of Bank Group operations in Chad as of March 31, 1986.

24. Since 1968, Chad has received 16 IDA credits totaling US$79 million. Ten of these (amountingto US$30 million)have been fully disbursed; four (amountingto anotherUS$30 million)are still disbursing;and two, totalingUS$19 million,were cancelleddue to the disruptioncaused by the civil war. Of the 14 disbursedor disbursingcredits, six were for agriculturalor rural development,five for education,two for highways,and one for livestock development. All Bank Group operationsin Chad were officiallysuspended in July 1979 because of accumulatedarrears on IDA credits. Escalatinghostilities had alreadyhalted project activitiesand led to considLrabledamage to project assets. Most official donors and non-governmental organizations (NGOs) withdrew from Chad during the war, although many returned in 1982 and 1983, soon after PresidentHissein Habr6 gained control of N'Djamena. 25. The donor communityhas since been quite active, contributingan averageof US$117million per annum in the 1983-85period, 2/ 90Z of which was grant aid. More than half of the total (US$61million per annum) took the form of emergencyassistance, including large amountsof food aid; US$11 million per annum consistedof budget support (mostlyfrom France and the U.S.), and US$45 million per annum was project-relateddevelopment assistance, comprisingthe entiretyof Chad's developmentbudget. Key areas of interventionhave been: reestablishmentof the administration(France); technical assistanceto ministries (France, UN); road rehabilitation (France,EDF, U.S., Italy);non-cotton agricultural development (U.S., EDF, France,UN, Switzerland);cotton production (France, EDF); livestockdevel- opment (France, EDF); health planning and care (U.S., France, EDF, UN); and drought relief (U.S., UN). NGOs have also been very active in Chad's relief and developmentefforts throughsmall, independentprojects. In addition, officialdonors have channeledfunds through NGOs duringperiods when, or in areas where, Chad's own administrativecapacity was particularlyweak. The proliferationof donor and NGO activitiesfollowing the war has accentuated the need for improvedaid coordination- a problemwhich was raised at the Donors'Round Table Conferencelate last year.

Relationswith the IMF

26. In September 1985, Chad purchased SDR 7.0 million under the compensatoryfinancing facility in respectof a merchandiseexport short- fall. This shortfallwas relatedpredominantly to the effects of dis- cussionswith the Fund on a possibleadjustment program that could be supportedby the Fund. In Februaryi986, a Fund mission conductedArticle IV consultationdiscussions with Chad and continueddiscussions on a possible Fund supported program. At this time, the dialogue on an adjustment program is still actively continuing. An appropriate program could be supported with the resources of the Structural Adjustment Facility. Under this Facility,Chad would be able to make drawingsof 20%, 13%, and 13.5% of its quota over the next three years (Chad'squota in the Fund is SDR 30.6 million). During the last two years,Chad has also receivedseveral technical assistancemissions from the Fund. These include a resident general fiscal advisor,who has been in place since June 1985, for a two-year period,and a residentadvisor in the area of domesticand externaldebt for one year from August 1985.

Bank Group Strategyand Future Operations

27. Bank effortsto resumeIDA activitiesin 1982 and 1983 were foiled by renewed hostilities, although periodic supervision missions were undertaken. In 1983, the suspendedprojects were redesignedto fund priority activitiesin agriculture,education and institutionbuilding. Disbursementson these redesignedprojects did not resumeuntil September 1984, when Chad made its first paymenton a plan to sectleUS$1.9 million in IDA arrears.By May 1985, the arrearssituation was settled,paving the

2/ Using the 1984 averageexchange rate of 437 CFAF/US$. - 9 -

way for new IDA lending. An identificationmission in October 1985 began to outlinethe Bank's strategy in Chad and also alertedthe Governmentand the internationalcommunity to the impending financialcrisis in the cotton sector.

28. The Bank's current strategy supports the objectives of Chad's InterimPlan (para. 21), and focuses on helping to coordinateactivities within the Government'spriority program relatedto: (i) achievingregional and national food self-sufficiency;(ii) overcomingthe cotton crisis; (iii) rehabilitatingand improvingessential infrastructure,especially reconstructionand maintenanceof the road network; (iv) diversifyingeconomic production,especially by increabingofftake in the livestock sector and exploitingoil resources;and (v) strengtheningadministrative, development management,and policy analysis capabilitiesthrough institution building. These goals will be pursued throughpolicy dialogue,lending, and economic and sector work in the transport,agriculture, petroleum, and education sectors,as well as through interventionin the critical cotton subsector. In addition, the Bank has agreed to take the lead in coordinatingdonor assistancefor transport,petroleum and cotton. Appraisal missions in Februaryand March 1986 prepared projects in agriculturalrehabilitation, cotton,and the one presentedhere, while petroleumand educationactivities are in the process of identifi_ation.The operationsproposed for these sectorsare intendedto fit into "sectoral action programs"which have been definedto take into accountChad's priorityneeds as well as constraints. These action programs are briefly described below.

29. The Road Transport Sector Action Program. As part of a five-year comprehensive transport program, the Bank will coordinate donor efforts to rehabilitateexisting roads and eliminate key bottlenecks in the road network;lay the foundationfor routine and periodicroad maintenance,to be financed increasinglyfrom domestic resources;help finance maintenance operationsover an extendedperiod; assist in establishingan efficient, competitivetransport industry;and strengthenthe Government'sinstitu- tionalcapacity for planning,maintenance, and supervisionin the transport sector. The proposed emergencyHighway MaintenanceProject, scheduledto begin in FY87, will complementand coordinateefforts undertakenby other donors and will include: (i) investmentand recurrentcost financingfor routinemaintenance, gradually increasing to cover 2,000 km of roads over a two-yearperiod; (ii) rehabilitationof one criticalroad link and replacement of a key bridge; (iii) provision of ferriesand reconstructionof access roads; (iv) technical assistance and training to support transport institutions; and (v) resources for follow-up studies on road rehabilitation,cost recovery,and the transport industry. A follow-on project is plannedfor FY89.

30. The AgriculturalSector Action Program. An agriculturalrehabilitation project is planned for FY87 primarily as a technical development project consisting of: (i) a large technical assistance component to help define development policies and implementation strategies in areas such as research and seed production,extension and training,and rural engineering and agriculturalplanning; (ii) pilot schemes for smallholder crop production using supplementaryirrigation (i.e.,natural wadis and appropriate riversidesites with pumped water); (iii) initiationof a national scheme - 10 -

for organizing locally-autonomous maintenance of rural water points; and (iv) important subsector studies of crop diversification potential, rice productionstrategies, irrigation potential and national licencingauthor- ity, livestockprocessing and marketing,soil conservationand afforesta- tion, and rural credit needs.

31. The PetroleumDevelopment Action Program. The Bank is having a 1983 study of petroleumpotential in Chad revisedand updated to analyze the costs and benefits of alternativeoptions for petroleum developmentand identify a project suitable for Bank Group financing. The report became available in May 1986, and possible project componentsare now being specified. Any eventual petroleum project will require a large amount of cofinancing,the active participationof the private sector,and technical assistance to strengthen the Government'smanagement of the sector.

32. The Education/Training Sector Action Program. The program for this sectorhas three components: (i) to mount (possibly under UNDPfinanc- ing) a training program aimed at increasing efficiency in the Ministry of Educationand possibly in the Human ResourcesDivision of the Ministry of Planning; (ii) to provide operational training in the sectors identified as top priorityfor the reconstruction of the country; and (iii) to prepare,on the basis of sectorwork to be conductedin FY87, a projectaimed at restor- ing the basic educationsystem and developingflexible training approaches in order to respond speedily to emerging employment needs, especially in the productivesectors.

33. The Cotton SubsectorAction Program. The problemsconfronting the sector are currentlybeing examined through two complementarystudies, one supportedby the French Government (CCCE/CFDT) and one executed by the Bank with UNDP financing. The former aims at identifyinga set of immediate measures to be undertaken while the latter will identify the longer term needs. These two studies will determine how and when the sectorcan achieve financialviability and under what conditions. They will also define a detailedset of measures to reduce costs and improveefficiency, along with a precise schedulefor implementationand a projectionof the results.The Bank executed study includes: (i) a financialand technicalaudit of Cotontchad,and (ii) a review of all phases of the cotton industry(agricultural production,transport, storage, ginning, price and incentivepolicies. and ongoing and planned investment). The Bank will also reassess the overallmacroeconomic framework in which Cotontchadoperates, and will work to secure financingto meet short- and medium-termneeds in the sector and reestablish Cotontchad on a viable long-term basis. An emergencycotton sector rehabilitationprogram has been prepared,to be supportedby an IDA credit. - 11 -

PART III. THE TRANSPORTSECTOR

General

34. Chad's survival and future development as a landlocked country almost 2,000 km from the sea, with vast distances between the main urban centers,depends on adequatetransportation capacity and reduced transport costs. Most of Chad's domesticand internationaltransport is providedby road, althoughair servicesare importantfor some isolatedregions. River and lake transport are highly uncertain under Chad's climatic conditions and do not play a significant role at the present time. There is no railroad in Chad. To encourage national economic integration, Chad must develop the most efficient road transportation possible, focusing on road rehabilitation and maintenance, and the promotion of a competitive road transport industry. Given the additionalneed to establish internaltransportation links which will enhance political integration and stability and facilitate commodity distribution, the transport sector is a top priority in Chad's post-war reconstructioneffort.

35. Chad is heavily dependent on external trade routes through Cameroon,Central African Republic,the Congo and Nigeria. The opening of the Trans-Cameroon route in 1973 by extensionof the CameroonRailroad to N'Gaoundere and the paving of the highway from N'Gaoundere northwards to Kousseri on the frontierwith Cameroonhas profoundlychanged the distribution and cost of importedgoods traffic. However, Chad has not yet enjoyed the full benefits of these developments,nor the even greater benefit to be obtained by full use of the Nigerian route. The development of the internal transport system has been handicapped by difficult soil, climaticand hydrologicalconditions combined with a lack of suitableroad buildingmaterials. These have contributed to high construction and maintenance costs for roads which are difficult to justify in the light of the limited resource potential of the country and the limited traffic demands.

36. While construction and maintenance of Chad's road network has always been severely hampered by internal distances, difficult conditions, and insufficient resources, road construction and maintenance ceased alto- gether with the advent of civil war in 1978, and most of the maintenance fleet disappearedor fell into disrepair in subsequentyears. Despite rehabilitationefforts by several donors since 1983, the road network is still in a very poor state, with average speedsof 20-30 km per hour or less. Vehicle operatingcosts have doubled in real terms since 1980.

37. The transportindustry lost over half its fleet during the war. Since the war ended,however, local transportershave proven resilient,with the number of trucks and level of activity increasing significantly since 1983. The fleet, however,is old and inefficient,and there is an almost complete lack of garages,spare parts, and formal credit to purchasenew vehicles. Operatingcosts are extremelyhigh due to poor road conditions and low capacity utilization, arising primarily from the imbalance between import and export traffic.

38. The decline of Chad's road network, transportindustry, and transport administration became critical when the 1984-85 drought created - 12 -

the need for a massive food distribution effort. The subsequent mobi- lization of domestic and international resources succeeded in averting widespread famine, and has improved prospects in the transport sector as well. A number of donors (e.g. EDF, FAC, USAID, UNDP) have completed or committed themselves to rehabilitation of some of the principal roads and, starting in early 1988, to an important contribution to maintenance. The U.N.-coordinated relief operation brought in a fleet of over 300 vehicles, managed a well-equipped garage, provided some training for mechanics and maintenance teams, and organized private transporters to assist in the effort to move 150,000 tons of food aid in the short but critical period of April-September 1985. Now, as the emergency situation subsides, the UNDP fleet should in principle be turned over to the Government. However, this should only happen following the development of a plan for its efficient use and maintenance, probably including the privatization of at least part of the fleet. Assistance will be needed to evaluate present proposals and to prepare and implement an action program that will limit government responsibility for providing transport services and move towards more efficient organization of the sector.

External Links

39. Since 1974, traffic has been concentrated more and more on the Ca-meroonroute, which now carries about 95% of total external traffic, other than petroleum. The external route through Central African Republic and the Congo is mainly used today to keep open this strategic option. Use of the Nigerian routes, which should provide many material and commercial advan- tages, has been handicapped by lack of transit agreements with the Nigerian Government, and by Nigerian Government actions in closing its frontiers. On both the Cameroon and Nigerian routes, there exists the possibility of using modern ports with adequate capacity, rail transport over much of the dis- tance, and paved roads up to Kousseri near the Cameroon border, about 7 km from N'Djamena.

40. For external traffic serving the south, including most cotton- related trade, there exists a direct and considerably shorter route from Douala to Sarh and Moundou via Lere on the Cameroon frontier. At Lere a slow-operating ferry presently replaces a bridge destroyed by erosion. There is a reasonably good road between Lere and N'Gaoundere. Reconstruc- tion of the bridge at Lere would greatly speed up traffic on this route.

Road Network

41. Road transport is the predominant mode in Chad's transport system, accounting for over 95% of total freight traffic. The road network consists of over 7,300 km of roads, including about 4,600 km of national roads and 2,700 km of prefectural roads, and some 24,000 km of unclassified tracks. Of the 4,600 km of national roads, approximately 2,300 km comprise the principal axes, mainly in the cotton growing areas and more populated areas of the southwestern savanna region; of these, some 1,000 km are all-weather engineered roads and 253 km were originally paved. Most of this network has fallen into disrepair, and is still in urgent need of rehabilitation. - 13 -

42. The major part of the viable network,represented by the roads linking N'Djamena and the southern agricultural regions, is locatedin the southwest savanna region, covering about 1OZ of the country, falling largely in the triangle of N'Djamena-Lere-Sarh. The links between N'Djamena and the south are cut during the rainy season (June-October) by flooding. The sparsely populated north and the Sahel region, containing about one-half the population of the country, but with a density of less than 5 persons per kW2 , is covered mainly by desert tracks and earth roads. To develop the agricultural and livestock potential of isolated areas in the Sahel region, the Government attaches considerableimportance to bringingsome 2,800 km of tracks, comprising the principal axes in that region, up to the level prevailing in the savanna network.

43. Traffic on the main road network depends on a number of ferries, the most important of these being: N'Djamena, Bongor, Lai, Bousso, Hellibongo, Onoko, Noissala, Ere, Baibokoum, Panzangue, and Niou. The first five of these ferries have been or are being replaced with finance provided by UNDPand BDEAC. The other six remain in a rundown condition, inoperable or continually breaking down or obsolete. The feasibility of providing replacements with spare parts and suitable access roads was studied as part of the preparation of this project. This project would provide for replacement of one ferry and rehabilitation of a second ferry which are related to the ongoing road rehabilitation program and are economically justified at the present level of traffic.

44. N'Djamenais the focal point for the networkof roads serving the north and south and is an important distributioncenter for petroleum imports, growing traffic in consumer goods, and the redistribution of domestic food surpluses. At present external traffic (including flows destined for southern Chad), comprising 30-40 ton trucks and fuel tankers, arrives at the outskirts of N'Djamena and passes along the single main road through the center of the town. A former paved road built on a dike, bypassing much of the town, exists between the Logone bridge in the south and the Abeche road and industrial areas to the north of the town. This road has been seriously damaged by lack of maintenance and is now largely unusable. Reconstruction of this road would be included in the present project. Another important bottleneck in the transport network is the river crossing at Lere, on the important external supply route from Douala to southern Chad. A 90 meter bridge, constructedin 1955, has been destroyed by erosion. Presently traffic across the river is being assured by two ferries for food aid and general traffic respectively. Replacement of this bridge is included in the present project. The principal remaining gap in the economically important triangle N'Djamena-Lere-Sarh is the Guelengdeng-Bongor-Doba road, which is presently impassable. This route needs to be rehabilitated, possibly on a new alignment, to provide an all weather link between N'Djamena and Moundou, the industrial center of the south. A feasibility study and detailed design of the selectedalignment for this link would be done under this project, and construction would be considered for financing under the follow-on project. - 14 -

Road Planning and Investments

45. Since 1983, EDF has completed the rehabilitation of the Sarh- Moundou-Lere road (623 km), at a cost of some US$7 million, and has provided technical assistance for construction supervision. EDF has also agreed to finance the rehabilitation of the N'Djamena-Guelengdeng-Sarh road (535 km) at an estimated cost of US$8.8 million; work started in 1985. In addition, EDF plans to finance spot improvements on the Ngoura-Mongo-Am Timan road for about US$2.5 million. France has committed itself to the rehabilitation of the N'Djamena-Abeche axis (756 km); work commenced in April 1983, and is continuing at an estimated annual cost of US$1.8 million. Italy plans to finance construction of a road around Lake Chad from Massaguet to the Niger border, and associated secondary roads, for about US$11 million. A USAID grant of US$27.5 million was approved in June 1985, for strengthening road maintenance in the N'Djamena region and for rehabilitation of a 63 km road from Djermaya to Dandi, to the north of N'Djamena (US$5.5 million). This project is designed to give the Office National des Routes (OFNAR) the capability of maintaining 1,600 km of road per year by 1990. but is limited in its geographical application to the immediate area of N'Djamena.

46. The Government has recently completed its first post-war planning cycle (1982-85) and envisages an expanded investment program for the next plan period (1986-88). In transportation, this program would include the ongoing projects listed above and the rehabilitation and maintenance activities planned under the present project. Total committed financing for road investments over the three-year period, including this project, is estimated at US$77.2 million. Combined with a proposed air sector investment program of US$24.3 million and about US$2 million for rehabilitation of the Nationa'l School of Public Works, the total transport sector investment program appears likely to exceed US$100 million over the three-year (1986-88) period.

47. The sector expenditure program and financing plan will need to be revised in 1988 to take account of the progress reached and the priority to be attached to further road rehabilitation, maintenance, equipment purchase. and training respectively at that time. The Government has asked the World Bank to take the lead in donor coordination for the sector. It is proposed to establish a project management team to assist with donor coordination and to provide technical assistance for road management in the Ministry of Public Works.

Institutional Capacity

48. The Department of Land Transport of the newly created Ministry of Transport and Civil Aviation is responsible for overall transport sector planning and policy formulation in consultation with the Ministry of Plan- ning. The Department presently has very limited staff and resources with which to carry out its functions. Technical assistance is needed to reestablish basic information systems and to enable this Department to play a more active role in the sector planning and project evaluation process.

49. The Ministry of Public Works provides the official oversight of OFNAR and remains responsible for the planning and programming of road - 15 -

works. This Ministry has a Division of Studies and Hydraulics which includes a subdivision for Road Studies and Highway Design. This subdivision should be strengthened to develop a capacity for road planning, design and the development, supervision and evaluation of pre-investment studies for highways, the technical preparation of road plans, and the monitoring of work execution, subject to guidelines and priorities determined in the Ministry of Plan and the Ministry of Transport. The Ministry of Public Works is also responsible for the field organization of traffic counts and analysis of traffic flows. Technical assistance will be required to enable the Ministry to carry out this responsibility. Facilities for soil and materials testing at the Ecole Nationale des Travaux Public (ENTP)'s laboratory in N'Djamena need to be rehabilitated and assisted to provide appropriate services to the Ministry of Public Works and OFNAR. Repair, operating costs and technical assistance are being provided by several donors, including a proposed contribution from IDA for technical assistance.

The Office National des Routes and Road Maintenance

50. The Office National des Routes (OFNAR) was created in 1984 with responsibility for the construction, rehabilitation and maintenance of the national road network of 7,600 km. OFNAR has taken over the divisions of the Department of Public Works (DPW) formerly responsible for highway development and maintenance. It has central services at headquarters in N'Djamena and four regional subdivisions at N'Djamena, Moundou, Sarh, and Abache. A subdivision was legally established at Mongo in 1979 but never materialized in the field. As a result of the war, serious gaps exist in regard to offices, road maintenance equipment, workshops and workshop equipment, spare parts, and training facilities, particularly in the regions. Road maintenance is to be carried out by the five subdivisions which will also be responsible for minor equipment maintenance in the small subdivision workshops, while heavy repairs will be executed in central workshops in N'Djamena and Sarh. OFNAR's organizational structure needs to be modernized to separate the functions of financial control, execution and inspection, and measures are needed to improve management efficiency and accountability. These problems would be studied under the proposed project.

51. The central management of OFNAR is receiving assistance under the USAID Highway Maintenance Project approved in June 1985. The technical assistance personnel are already in place and the training program/production brigade which is a central feature of the USAID project will eventually provide for basic and on-the-job training of all of OFNAR's managerial and technical staff and equipment operators. However, the annual output of this unit is limited by the one-year length of the course and by its operation in the geographical vicinity of N'Djamena, and it will take many years to provide fully trained staff for all subdivisions. The proposed IDA project would complement the USAID contribution by providing for the rehabilitation of offices, equipment, and workshops in the subdivisions which would be fully mobilized during the period of the proposed project, as well as technical assistance for on-the-job training and operation in three of the four regional subdivisions outside of N'Djamena. It is expected that technical assistance to the N'Djamena subdivision will be provided by FAC. - 16 -

52. The Governmenthas agreed on 3,800 km of high priorityroads to be coveredby the proposedroad maintenanceprogram. For most of these roads agreementshave been reachedwith externaldonors on provisionfor rehabilitation,which is a prior conditionfor their inclusionin the maintenance program. Some donors have also agreed to provide external finance for routine maintenance, but this will not become available to assist in financing the priority program until after January 1, 1988. The USAID project's emphasis on formal and on-the-job training means that it will not make any contribution to routine maintenance outside the work performed by the training brigades, which will not become operational until early 1988. EDF plans to provide two operationalbrigades and operational expenses for three years to maintain the roads it is currently rehabilitating,but again no effective contribution can be expected before January 1, 1988. The proposed IDA project would provide for financing the regional capacity for maintenance of up to 2,000 km per year through1988, when other sourcesof financemay become available to assist in expanding the program to cover the 3,800 km of priorityroads.

Staffingand Training

53. The ongoing USAID Project for Strengthening Highway Maintenance is designed to provide trained personnel for Chad's road maintenance and improvement works. Five expatriates will direct the recommissioning, equipping and operation of the OFNARequipment maintenance units and will conduct on-the-job training for their Chadian counterparts and progressively for all other workshop personnel. Two expatriates will create, equip and operate a Road Maintenance Training Brigade with a 12-month training cycle for on-the-job training of 25 personnel at a time. The technical assistance program proposed under this project would complement the USAID program by giving practical experience to staff not immediately scheduled for training by USAID, and by insuring that road maintenance is carried out during the interim period. Use of force account brigades would be complemented as needed by use of contractors during the period of building up a minimum capacity.

54. The full manpower needs of OFNARfor its high priority program have still to be established. The Government would submit to the Asso- ciation within six months of credit effectiveness a detailed assessment of current personnel and personnel needs, and within six months thereafter an assessment of training requirements, in consultation with the USAID project team and the Association.

Traffic

55. Starting from the latest available traffic counts, dating back to 1970 and 1977, current traffic levelshave been estimatedusing an analysis of administrativeand police records in 1985 supplementedby a short period count in February1986 over a limitedarea. On this basis, traffic levels have been estimatedfor each of three groupsof roads: (i) paved or formerly paved main roads, (ii) unpaved main roads, and (iii) secondary roads and tracks. Traffic levels in 1986 are estimated to be lower than the levels recorded in 1970 and 1977 for each of the three groups, which were about 100 vpd, 30-60 vpd, and less than 10 vpd respectively. The volume of goods - 17 -

carriedappears to be somewhathigher in 1985 than the average for 1970-77, due to the unusual volume of food aid and high cotton output. If a lower assumptionis made for trafficin 1986, reflectingimproved self-sufficiency in food productionand a more normal output for cotton, then the present volume of freight traffic is estimatedto be less than the average in the pre-war years. However, it is reasonableto expect that trafficwill grow by at least 2-3% per year from 1986 onward, in line with populationgrowth and assuming a normal output of cash and food crops. A growth rate of 6Z per year is assumed from 1990 on.

Road User Charges and Cost Recovery

56. During the period 1971-1975, the last period for which it has been possible to find meaningful statistics,revenues from road user charges averaged about CFAF 1.1 billion per year and were commensurate with the Government's financial outlays in the road transport sector. Following several years of inaction due to war and its aftermath, the Government in 1984 established OFNARand endowed it with road related revenues, including its principalsource of revenue,a tax on petroleumof CFAF 26.5 per liter. OFNAR revenue is significantly less than might be expected due in part to exemptions granted to several state companies, international food aid operations, donor aid operationsand embassy activities,in part to a low rate of tax in relation to other sub-Saharan countries, and in part to the ready availability of fuel through unofficial channels.

57. In 1985, instead of the CFAF 1 billion expected by Government, OFNARrevenues from petroleum taxes amounted to about CFAF 500 million, and total OFNAR revenuesto about CFAF 577 million. It is expectedthat about the same amount will be receivedin 1986. Of this amount,CFAF 190 million in 1986, CFAF 228 million in 1987, and CFAF 334 million in 1988 are committed as counterpart financing for the USAID project. OFNARwill also contribute about CFAF 235 million per year to the IDA-financed project. In addition, there is a possibility that OFNARmay have to finance operating costs for the FAC brigade maintaining the N'Djamena-Abeche road. The annual operatingcosts for routinemaintenance of the 2,000 km prioritynetwork to be maintainedby 1988 are estimated at around CFAF 700 million in 1985 prices.

58. By 1990 the annual cost of routine and periodicmaintenance and equipment replacement will amount to about CFAF 3 billion in 1985 prices for the priority network of some 3.800 km (para. 52). Even if external donors continue to finance the main burden of periodic maintenance and equipment replacement, OFNARshould be expected to assume full responsibility for routine maintenance and to make some contribution towards the cost of periodic maintenance and equipment renewal before 1991. This calls for a substantial increase in OFNAR's revenue.

59. The recent dramatic decline in world market prices for petroleum means that the Government should be in a position to capture a larger share of the retail price. The Government has already taken some steps in this direction but is presently assigning the increased revenues to a price stabilization fund rather than to road maintenance. However, the existence of an unofficial market (estimated to account for 75% of total fuel - 18 -

consumption) and inadequacies in the system of tax administration in regard to fuel taxes may handicap the Government's ability to benefit from the recent decline in the absence of suitable measures to improve the system. It will also be necessary to re-establish basic data on the size of the vehicle fleet, total fuel consumption, the true incidence of road user taxation, and the rates of tax needed to provide for future expenditure needs. The issue is complicated by the possibility that Chad may develop domestic petroleum resources and by the need for revenues to support the general economy as well as the road sector. Under this project, the Govern- ment would raise OFNARrevenues to CFAF 800 million for 1987, and would consult with IDA on measures to increase revenues further in the following years. Progressively improving enforcement of existing legislation should be sufficient to raise OFNAR revenues from. the earmarked petroleum tax alone to CFAF 1 billion by 1990. A study would be conducted to determine what further measures would be appropriate, and the issue would also be addressed during the preparation and execution of the follow-on sector project.

Road Transport Industry

60. There is no scheduled intercity passenger road transport in Chad nor statistics on passengers transported. In general, intercity passengers travel atop freight transport vehicles under hazardous conditions but at very low costs; mixed passenger-freight vehicles (taxis-brousse) also operate over short distances in the more densely populated partb of the country. There are four main groups of transport operations: the Coopera- t1-,e des Transporteurs Tchadiens (CTT), the Compagnie Cotonniare du Tchad (Cotontchad), the UNDP managed transport fleet of the Emergency Food Program (para. 38), and a small number of enterprises which provide for their own limited needs. The last group is not significant.

61. The Cooperative des Transporteurs Tchadiens (CTT), an association of private truck owners, has a de jure monopoly of all internal and external public transport activity in Chad, except for the domestic transport operations of Cotontchad and a small number of other enterprises. Small shipments on the domestic market are de facto not controlled by CTT. Following the war, the activities of CTT have improved with the number of active members of CTT rising from 247 in 1982-83 to 382 in July 1985, and the number of vehicles from 210 (with a capacity of 6,200 tons) at the end of May 1982, to 581 trucks (with a capacity of 16,700 tons) and 108 tankers (with a capacity of 3,427 m3 ) at the end of July 1985. Tonnage transported has increased in the same proportions, with an estimated 150,000 tons of dry cargo moving in 1985. Because of the aging, rundown truck fleet, and the difficult, almost impassable road conditions in the interior, most of CTT's operating capacity has been concentrated on external transport over the paved roads of the Cameroon route from N'Gaoundtre to N'Djamena in 1984 and 1985. The present system does not provide efficient or equitable transport services to meet the needs of Chad's population. Under this project, action would be taken to analyze the CTT monopoly and to restructure the regulatory system, with special attention to systems of pricing and freight allocation.

62. Cotontchad is a majority-government-owned company providing exclusive services to cotton farmers in the southwest, carrying most import- ed inputs, and arranging for the collection of raw cotton, delivery to the - 19 -

ginneriesand cottonseedprocessing plants, and then shipment to the export and domesticmarkets. It is a relativelyefficient, self-contained operation with its own workshops in Moundou, Sarh and Pala, and a spare parts inventory. Cotontchad presently operates 130 15-ton trucks, 30 25-ton tractor-trailers,and 60 25-ton trucks. Under the proposedrestructuring program for the cotton sector, Cotontchadwill soon divest itself of at least part of its fleet.

63. The lack of organizationand transportcapacity of the Government after the yar, and of CTT with its limited and 3bsolescenttruck fleet, prompted the U.N. EmergencyProgram to undertake increasedresponsibility for the management,transport and distributior.of emergencyfood aid. By the end of December 1985, the truck fleet of UNDP/OPEand FAO/Italyavail- able for the emergency food aid program included approximately 191 trucks of 15 to 35-ton capacity, and 150 trucks of 8 to 12-ton capacity, all new and well maintained, with a supporting network of workshops and stores, and an organization to provide spare parts and replacements, with recourse to air freight where needed. These trucks are provided by various independent organizations (UNDP/OPE, FAO/OSRO, CARE TCHAD, WFP), but services are co-ordinated by UNDP. This fleet of trucks, supplemented by vehicles made available by CTT, Cotontchad,CARE, etc., worked in conjunctionwith CameroonRailways to supply an average of over 20,000 tons of food aid per month betweenApril and August 1985. Cameroon Railwaysprovided two block trains of 30 wagons delivering600 tons from Douala to N'Gaoundereevery other day. The effectivecarrying capacity of these groups is now estimated at 30,000 tons per month between N'Gaound6r6 and N'Djamena,including distributionin Chad.

64. A number of factorshave impeded the efficientdevelopment of the trucking industry. The lack of coordinationamong shippers,carriers, and transportintermediaries and an imbalancebetween exports and imports has resulted in low truck fleet utilization(around 50Z load factors)and high unit costs. The regulated road transport tariffs, established in 1974 and revised only in 1984, do not correctlyreflect road operating costs on individualroutes. Liberal import policies and generous,provision of transportfor emergency food aid have resulted in excessivevehicle imports in recent years, while insufficientattention is paid to the maintenanceof the truck fleet and its distribution.

65. A wide range of issues remain to be resolved relating to the dispositionof the U.N. transportfleet and the Cotontchadfleet, the role of CTT, governmentregulation of the industry,and the provisionof credit and technicalassistance. In addition, the role of the Government in monitoringthe system of freightallocation, in tariff determinationand in internationalnegotiations, and in traffic and vehicle legislationand enforcementraises serious issueswhich have been recognizedfor many years, but are not yet resolved. A study to be conductedunder the proposed project (para. 84) would systematicallyexamine these issues,specifically includingpricing and freightallocation, and technicalassistance would be provided to start implementingagreed measures to resolve them. These issues would also be addressedunder the follow-onproject. - 20 -

Domestic Contracting Industry

66. The domesticcontracting industry is at an early state of development. A small number of contractorsdeal mainly irithbuilding construction,although an additionalnumber of small contractorscarry out building repairs and other minor works. During the proposetdproject, effortswould be made to determine the willingnessand capacity of small contractors to do road maintenanceworks with labor-intensivemethods and to evaluatethe need for possible trainingand technicaland financialassis- tance to enable small contractorsto participatein road rehabilitationand maintenanceworks under the follow-onproject.

Experiencewith Past Lending

67. Bank Group assistance to Chad's transport sector thus far has been confined to three highway projects and transport componentsin two other credits: (a) the Rural Fund Project (Credit 664-CD, US$12 million, December 1976) included maintenance operations on selected feeder roads sections, and (b) the SahelianZone Project (Credit 730-CD,US$1.9 million, October 1977) included rehabilitation of six airstrips. The First Highway Project (Credit125-CD, US$4.1 million,August 1968) was geared to improving road maintenance but was only partially successful due to severebudgetary constraints. The Second Highway Project (Credit490-CD, US$3.5 million, June 1974) included: (a) a five-year program of improvement and maintenance of cotton feeder roads; (b) a three-year interim maintenance program for ferries; (c) a training program; (d) a program of traffic counts; and (e) pre-investment and road transport industry studies. The project was not fully implemented due to the severe economic and political difficulties with which the countrywas confrontedin the late 1970s. Taking into account the initialdelays in startingthe project,the Government'sgeneral performance under the project was regardedas satisfactoryat least until the end of 1978, i.e. until the beginningof the civil war.

68. The Third Highway Project (Credit 840-CD, US$7.6 million, Septem- ber 1978) was initially estimated at US$52 million but was reduced to US$21.9 million by the elimination of a road construction component and a reduction in operating costs of the road maintenance program. The project's main components were: support of a four-year maintenance program covering approximately 5,300 km of unpaved roads and tracks; regravelling of about 400 km of main roads by a production brigade, which was to serve as a vehicle for on-the-job training; a training program for staff of the Directorate of Public Works; construction by force account of four ferry boats; technical assistance and fellowships to strengthen: (a) the Direc- torate of Public Works, (b) transport planning in the Directorate of Trans- part, and (c) operations of the trucking industry; a study to prepare a rural roads project; and completion of the improvement program for cotton feeder roads, started under the Second Highway Project. Because of the political situation the project, appraised in April 1977, and signed in September 1978, never became effective. Credit 840-CD lapsed in October 1980 when the limit date for effectivenesswas not furtherextended. - 21 -

PART IV. THE PROJECT

Background

69. This project is designed to implement an emergency program for highway maintenance, following rehabilitation of roads in the priority network. It has been designedto complementthe efforts of other donors in the sector and to lay the foundationfor effectivedonor co-ordination. It covers the first two years of a five year program intendedto establishan ongoingmaintenance capacity covering the priorityroad network,and should be followed up by a second project in FY89. In addition to high priority civil works to fill gaps in the network, and the two year maintenance program, the project would support studies and technical assistance for restructuring OFNARand strengthening and training staff in OFNARand other agencies associated with policy formulation and the development, management and operation of transport infrastructure, in particular the Ministries of Public Works and of Transport. The goal of the project is to develop, at least in nucleus form by 1988, the physical and financial capacity to plan, manage and implement a continuing program of rehabilitation and maintenance of the high priority network. Negotiations were held in Washington on May 22-23, 1986. The Governmentdelegation was led by Mr. Ahmed Kerim Togol, SecretaryGeneral of the Presidency. Since the project has been identified and appraised on an emergencybasis, no Staff AppraisalReport has been prepared; however, the project file contains all Important background and vorking papers, including draft terms of reference for technical assistance and studies, and details of co-financing. A supplementary Project Data Sheet is given in Annex III.

Objectives

70. The project's specific objectives are:

(a) to develop the logistical (material and managerial) capacity within the Office National des Routes (OFNAR) to maintain and manage a reduced high priority road network;

(b) to safeguardthe road rehabilitationworks already completed by foreign aid and for the maintenanceof which no provision has been made;

(c) to overcome the most important obstacles to the normal use of the road network, namely a damaged bridge, dilapidated ferries, and an unserviceableindustrial road serving N'Djamena; and

(d) to assist in organizingthe transportsector as a whole and, in particular,the road transportsector.

71. To pursue the above objectives, the project would finance an emergency program covering: (a) rehabilitationand equipmentof the OFNAR subdivision offices and workshops in N'Djamena, Moundou, Sarh and Mongo; rehabilitation of existing road maintenance equipment and supply of new equipment; technical assistance zo the Ministry of Public Works (MPW) and OFNARsubdivisions; studies covering ;-etroleum marketing and pricing and road user cost recovery, an organizatiLmal study of OFNAR, use of local materials and lo,cal contractors, and preparation of follow-on projects; (b) - 22 -

a routine maintenanceprogram for the roads recentlyrehabilitated by foreignaid, includingemergency maintenance works by contracton the 623 km Lere-Moundou-Sarhroad; (c) reconstructionand maintenanceof a road linking N'Djamenalsindustrial district with the Cameroonborder and the country's primary road network; (d) reconstructionof one bridge and one ferry and rehabilitationof a second ferry servingthe cottonarea; and (e) technical assistance to the Ministry of Transport, including an organizational study of the trucking industry and implementation of its recommendations.

Project Components

72. Rehabilitation of the Logistical Capacity of OFNARand its Subdi- visions: The OFNARroad maintenance su'odivision offices and workshops were badly damaged during the civil war. The OFNAR 1985 and 1986 budgetsmade provisionfor the most urgentlyneeded repairs to these facilities. The project would provide for the completerehabilitation and re-equipmentof these buildingsin the subdivisionsof N'Djamena,Moundou and Sarh, and for the constructionand equipmentof new buildingsin the subdivisionof Mongo.

73. Most of the existingroad maintenanceequipment located in the N'Djamena,Sarh and Moundou Subdivisionsis still recuperable. Spare parts for repairs will be purchasedpartly under the USAID project. The IDA project would provide the remaining spare parts, workshop equipment and tools, two man-years of technical assistance in the subdivisions of Moundou and Sarh for rehabilitation and further maintenance of the equipment, and supply of new equipment in order to complete at least one maintenance brigade per subdivision. A description of the different types of road maintenancebrigade and an estimate of their annual operatingcosts are includedin the projectfile.

74. In addition to the technicalas-sistance for repairs and maintenance of road c-juipment,the projectwould providea technical-adviser for two years to each of the subdivisionchiefs of Moundouand Sarh, and for one year for the subdivision chief of Mongo, and one field engineer for one year in each subdivision of Moundou and Sarh to train the operators, drivers and field mechanics on the job after reconstitution of the two maintenance brigades. Technical assistance to the Ministry of Public Works would also be provided under this project, consisting of two man-years of a Project Manager/Sector Coordinator as technical adviser to the General Director of Public Works Administration,two man-yearsof an EngineerAdvisor to the Division Chief of the Division of Studies and Hydraulics in the Ministry of Public Works, who would be responsiblefor timely executionof the project, and one man-year of a geotechnical expert in order to implement a laboratory study on the use of local soils in road construction and maintenance works.

75. A study of the role and structure of OFNARwould be started immediately following project effectiveness. This is designed to identify measures to improve the technical efficiency and managerial capacity of OFNARand to separate the functions of financial control, execution of works and inspection. The recommendations of the study would be reviewed with IDA by September 1987. The proposed project would also provide technical assistance to begin implementing the agreed recommendations, and further assistance would be provided under the follow-on sector credit. Provision - 23 -

is also made for updatingand implementingseveral engineering and laboratory studies and updating other studies, includingfurther proposalsfor highwayrehabilitation and possibleconstruction works.

76. The financialcapacity of OFNAR is entirely dependent on the Government'scapacity to transferto OFNAR revenuesfrom earmarkedtaxes on fuels and some other products related to road transport. During negotiations, the Governmentagreed to increase OFNAR revenues from CFAF 577 million in 1986 to CFAF 800 million in 1987 with appropriatefurther in- creasesin succeedingyears. Immediatelyfollowing credit effectivenessa study would be undertakento analyze fuel prices,marketing and taxationand to evaluate the prospectsfor increasingrevenue from petroleum taxes as well as from other sources,and to formulatemeasures to increaseOFNAR revenue in order to cover the needs for 1988 and later years. These pro- posalswould be reviewedwith IDA before September1987. Technicalassis- tance would be providedto assist in implementingthe necessarymeasures, to be completedby March 1988.

77. Routine and EmergencyMaintenance of the PriorityRoad Network: Under the EDF and FAC financedprojects initiatedin 1983, about 900 km of roads have been rehabilitatedand other work is in progress. There has been no provision for an immediate follow-up maintenance program. This project would assist the Government in establishing a routine maintenance capacity on rehabilitated parts of the priority network. The Government has agreed that all rehabilitation and mechanical maintenance works during the project implementationperiod would be concentratedon the priority network of 3,800 km, and that prior rehabilitationwould be a conditionfor including roads in the mechanized maintenance program.

78. Of the 900 km of presently rehabilitated roads, about 100 km on the Sarh-N'Djamena road are still under the contractor'sresponsibility and about 200 km on the N'Djamena-Abeche road are being maintained by FAC. However, rehabilitation of the 623 km Lere-Moundou-Sarh road was completed more than two years ago on severalsections and emergencymeasures are now needed to avoid the destructionof the works completed. To take advantage of favorableconditions toward the end of the rainy season, maintenance works should start in August 1986. In light of the limited capacityof OFNAR these works, for an estimated cost of US$1.7 million, can only be carriedout by a privatecontractor. The tenderdocuments were preparedin early April and bids will be submittedin June 1986 followingacceptable local competitive bidding prccedures. These procedures do not excl].e foreign contractors,and the process is expected to attract proposals from several firms operating in neighboring countries. Due to the pressing time constraints, international competitive bidding is not recommended in this case. In the interest of continuity,it may be proposed LO appoint the consultantsin charge of the preparatory study to supervise the works. The Governmenthas agreed that, if necessary, OFNAR, which has the required liquidityof funds, would pre-financeinitial outlayson the civil works. The credit agreementprovides for reimbursing retroactively the disbursement percentage of these expendituresup to US$1,000,000.

79. Meanwhile reconditioningof the maintenanceequipment fleet and purchase of new equipment and technical assistance would be undertaken in - 24 -

order to organize a routine maintenance program by force account in the subdivisions of N'Djamena, Sarh, Moundou and Mongo. Detailed estimates of the annual maintenancecosts for the prioritynetwork are included in the project file. The needs for new equipmenthave been estimatedtaking into account the fact that periodic maintenance works would be carried out mainly by private contractors and that OFNARmay ledse equipment to small local contractors for routine maintenance.

80. Overcoming the Main Obstacles to the Normal Use of the Road Network: The Live Aid/Band Aid Foundation, presentlybased in London, has agreed to finance the reconstructionof the Lere bridge and contractshave already been awarded for the civil works and their supervision. However, the access roads to this bridge remain to be financed for an estimated amount of CFAF 200 million. These roads would be financedby IDA under the project. Of the six ferries for which the Governmentrequested financing, replacement or rehabilitation of two is economically justified at present levels of traffic. The proposed project would therefore provide for the supply of one 40 ton ferry at Onoko and spare parts for the overhaul of a second ferry at Mbissala, and construction of ferry access roads.

81. It is proposed under this project to improve the passage of heavy commercial traffic linking the industrial district of N'Djamena with the CGameroonborder and the priority road network. Two possible solutions for this improvement have been considered, either by rehabilitating and strengthening the urban route presently used by a high volume of traffic, or by rehabilitating a bypass road which is now completely out of service. The bypass road would be less costly and could be completed In a shorter timeframe. The Government confirmed at negotiations the choice of the bypass alignment. Engineering design of the selected solution and implementation of the works would be part of this proposed project.

82. The project would also include a detailed technical and economic study of rehabilitation works for the Guelengdeng-Bongor-Moundou Road, in preparation for the next highway project. The Government confirmed at negotiations that the Terms of Reference for these and all other studies to be carried out with project financing would be agreed with IDA and that the Government would consult with IDA on actions to be taken to implement study rewommendations.

83. ImprovingNational Capacityto Manage and Operate the Transport Industry: To address the need for strengtheningthe technicalcapacity of the General Directorate of Transport (DGT) in the Ministry of Transport, the Project provides for both technical assistance and technical upgrading of local staff. A Transport Economist assigned as Adviser to the General Director for a two-year period and a Systems Analyst for one year to create a sector databank would constitute the permanent technical assistance staff. Provision is also made for twenty additional man-months for short-term specialists in analysis of vehicle operating costs, tariff determination, legal aspects of transport, regulations, transit operations, technical inspectionsof vehicles,and other specializedtasks. Several fellowships for trainingabroad of the medium-levellocal staff and computerspecialists are also includedin the project. - 25 -

84. The Government has agreed to review in July 1986 with UNDPand IDA representatives the recent UNDP-financed study of the options for transfer to Chadian control of the UNDP-uanaged fleet of trucks used for the emergency food aid program. These options could include: (a) sale to the private sector in Chad; (b) sale to the private sector outside of Chad; and (c) transferof all or part of the fleet to governmentinstitutions with justified needs. This review should lead to a program to turn the agreed recommendationsinto action. Existingstudies concerning the operationsof the truckingindustry and civil aviationwould be updatedand/or reviewed by the technicalassistance provided to DGT. In addition, to improve the structural organization of transport services, the proposed project would finance a study of the role, managerial structure and procedures,including freight allocation and pricing, and logistical needs of the trucking industry. The purpose of this study would be to liberalize sector operations in order to make them more efficient. The Government agreed at negotiations to undertake such a study within three months of credit effectiveness,to review its recommendations with IDA by March 1988, and to prepare promptly an Action Plan for implementation of the agreed recommendations. Technical assistance would be provided to assist in implementing the most urgent recommendations of this study, and full implementation of the agreed Action Plan would be an integralpart of the follow-onsector project.

85. Donor Coordination: In additionto its supervisoryrole, IDA has been asked by the Governmentand the other donors to take the lead in coordinating investment planning and maintenancein the transportsector. Consequently the Project Manager/Sector Coordinator (para. 74) would exchange information on a regular basis with all foreign missions in Chad developingprograms in the transportsector. The Sector Coordinatorwould submit to the General Directorof Public Works and to IDA an annual report containingfindings and recommendations to improve the general efficiency of foreignaid in the road sector. The report would review progress over the past year, identifyneeds and suggest changes where necessary in project design or implementation. The Sector Coordinator would also review the annual budget and work program of OFNARin order to ensure that all the Government's obligationsresulting from donor financedprojects are taken into account in forward planning.

86. The Government plans to convene a donor meeting in early 1987 to discuss progressin its road sector program of rehabilitationand maintenance. This meeting would be held as soon as possiDlefollowing completion and internalGovernment review of the preparationreport for the follow-on Road Rehabilitationand MaintenanceProject. The Governmentwould distri- bute at the same time, for discussion,a transportsector memorandum, and it is expectedthat a first report of the ProjectManager/Sector Coordinator might also be available. Subject to experiencewith the first sector review, this meeting might be repeated at yearly intervals.

Project Costs

87. Project costs have been estimatedin end-1985 prices based on preliminaryestimates made by the Consultantsin charge of the preparatory study. - 26 -

Project Cost Estimates

CFAF Million US$ million Foreign Local Total Foreign Local Total

A. RestoringRoad Maintenance Capacity

Buildings 403 217 620 1.1 0.6 1.7 Equipment& Spare Parts 907 101 1,008 2.5 0.3 2.8 TechnicalAssistance (MPW) 866 96 962 2.4 0.3 2.7

B. Road Maintenance Operations

Emergency (contract) 281 151 432 0.8 0.4 1.2 Routine (force account) 515 277 792 1.4 0.8 2.2

C. ClosingCritical Gaps in the Network

Lere Bridge & Access Roads 325 175 500 0.9 0.5 1.4 Ferries& Access Roads 141 60 201 0.4 0.2 0.6 N'DjamenaIndustrial Road 1,388 463 1,851 3.8 1.3 5.1

D. InstitutionalDevelopment

TechnicalAssistance (MTCA) 357 40 397 1.0 0.1 1.1 Studies 764 85 849 2.1 0.2 2.3 Training 49 5 54 0.2 0.0 0.3

Total Base Costs 5.996 1,670 7,666 16.6 4.7 21.3

PhysicalContingencies 899 251 1,150 2.5 0.7 3.2

PriceContingencies 1,232 666 1,898 3.5 1.8 5.3

Total ProjectCost 8 127 2 587 iO^714 22.6 7.2 29.8

On this basis the cotal cost of the project is estimatedat US$29.8 million equivalent. Of this, approximatelyUS$22.6 million (76%)would be foreign exchange costs. The Governmentwould exempt from local taxes all construction, purchase, consultantand technical assistance contracts exceeding US$300,000equivalent each. A 15% allowance has been made for physical - 27 -

contingencies;price contingencieswere calculated on the basis of the followingschedule:

Price Contingenci-s(in 2) 1986 1987 1988 i989 1990 1991 1992

Local 10 9 9 9 9 9 9

Foreign 7.2 6.8 6.8 7.0 7.1 4.0 4.0

88. Live Aid/Band Aid Foundation (LBF) has already committeditself for the financingof the Lere Bridge,a contractorhas been selected,and constructionis under way. Therefore,no cross-effectivenessis needed. The final cost of the bridge has been estimatedat US$0.97million equivalent plus contingencies;LBF will thus participatein project financing 'for a total amount of US$1.3 million equivalent. The AfricanDevelopment Fund (AfDF)has been asked to contributeUS$7.2 million to finance the constructionof the road linkingthe N'Djamena industrialdistrict to the Cameroonborder and the main road network. While this road would contribute significantlyto the reductionof transportcosts, it is not directlylinked to the rest of the project and a delay in implementation would have no significant effect on execution of the rest of the project. Consequently, cross-effectivenessis not required in this case either. LBF and AfDF participationwould be parallelfinancing. AfDF creditsare made on terms equivalent to IDA's, and the LBF participationis grant funding. The Government of Chad would contributeto project costs an amount of CFAF 235 million in each of two calendaryears for a total of US$1.3million equivalent, representing5% of the building constructionand workshopequipment costs, 20% of the road maintenanceequipment rehabilitation and maintenance costs,and 20% of the road maintenance operating expenditures. The remaining components,including road and bridge construction,equipment purchase, access roads, ferries, technical assistance and studies, would be 100% externally financed.

89. Total external financing would amount to US$28.5 equivalent, of which IDA would contribute US$20.0 million. A portion of the external financingwould be used to help cover local costs. The financingplan is summarizedin the table below (in US$ millionequivalent): - 28 -

Local Foreign Total

LBF 0.3 1.0 1.3 AfDF 2.0 5.2 7.2 Government 1.3 - 1.3 IDA 3.6 16.4 20.0 7.2 22.6 29.8 =mm

At negotiations,the Governmentagreed to these financingarrangements.

ProjectImplementation and PresentStatus

90. Given the fragilityof Chadian institutionsin the transport sector, this project would be implemented largely through technical assistance, consultants and contractors. Considerableprogress has already been made on implementation of critical components such as the Lere Bridge (already under construction) and emergency maintenance of Sarh-Moundou-Lere (tender documents prepared and bids to be submitted in June). Terms of reference for technical assistance to OFNARhave been prepared, and through the proposed prefinancing arrangements, additional work could be undertaken before the credit becomes effective. The execution of routine maintenance works by force account would begin in early 1987. Tender documents for a replacement ferry would be ready by March 1987 and the ferry should be in place by mid-1988. The preliminary study of the N'Djamena industrial road conducted in preparation for this project would be complemented by a full engineeringdesign study,which would be completedby June 1987. The actual works (coveringless than 15 km) would be completedby the end of 1988. A project implementation schedule is shown in Annex IV. This schedule was discussed and agreed with the Government at negotiations.

91. The emergency actions and studies to be undertaken under this project are also intended to lay a firm foundation for a follow-on sector project, currently scheduled for FY 89. The technical assistance to OFNAR, the Ministry of Public Works, and the Ministry of Transport would assess and to the extent possiblestrengthen the capacityof these institutionsfor long-rangeplanning and managemantof the road network. The specialstudies on cost recovery and organization of the transport industry would address key issues which should form part of the policy dialogue associated with the forthcoming sector credit. The road maintenance program itself has been conceived as the first part of a longer term program enabling OFNARto assume responsibility for the entire priority road network. Successful execution of the rest of this longer term program would be the principal feature of the follow-on project.

92. Becauseof the presentweakness of both sector institutionsand sector knowledge,this project includesa high proportionof technical assistance. The projectprovides for 11 staff-yearsof technicalassistance in three OFNARsubdivisions to repair equipment, supervise workshop construction, and build up routine road maintenance capacity; five staff-years of technical assistance to the Ministry of Public Works to develop road - 29 -

network planning and management capacity and to assure donor coordination; and the equivalent of six staff-years (part of which is in short term expertise) to the Ministry of Transport to develop a data base and to address sectorpolicy issues. To supportthis, the projectcontains specific studies to investigateand quantifymajor issues in the sector. An important feature of this technical assistance input is the supportit would give to training of Chadian staff, both by releasing some staff for training abroad (for which fellowships are provided under the project), and by on-the-job training provided to counterparts who remain in place. Although technical assistance costs are expected to be high in Chad because of the difficultiesof logistics,use of volunteersis not recommendedfor this project, because of the major management and training responsibilities assignedto the technicalassistance staff. Volunteertechnical assistance, however,may well be suitablefor the follow-onproject. A detailedlist of planned technical assistance and studies is given in Annex V.

Procurement and Disbursement

93. Procurement arrangements are summarized in the following table (amountsinclude contingencies). Amounts in parenthesesrepresent IDA financing:

ProcurementArrangements (US$ million)

ICB LCB Other Total

A. Buildings -- 2.4(2.3) -- 2.4(2.3) B. Bridge,ferries, access roads -- 0.4(0.4) 2.3(1.0) 2.7(1.4) C. Paved roads 7.2(0.0) - 7.2(0.0) D. Road maintenance 1.7(1.3) 3.1(2.5) 4.8(3.8) E. Equipmentand spare parts 2.7(2.7) -- 1.2(1.0) 3.9(3.7) F. Studies, TA & -- -- 8.8(8.8) 8.8(8.8) Training 9.9(2.7m 4. 5 15 132. 29.85O0)0

Technicalassistance, consulting services, and all contractsfor works and suppliesfinanced with the proceedsof the IDA credit would be procuredin accordancewith Bank guidelines. Since this is an emergencyproject, the - 30 -

contractfor initial emergencyroad maintenance(US$1.7 million) would be awardedthrough local competitivebidding (LCB) proceduresacceptable to IDA and would be pre-financedby the OFNAR budget if there is any delay in credit effectiveness. Construction/rehabilitationof buildings and ferries, works which are small and scattered,will also be procured through LCB. Routinemaintenance works will be carried out by force account as OFNAR's capabilitiespermit; should OFNAR output fall short of requirements,the balancewould be made up throughworks by contractawarded throughLCB. The IDA-financedcontracts for major purchasesof equipmentand spareswould be awarded through internationalcompetitive bidding. Minor items of spares, and fuels and lubricantsfor force accountworks, would be procured locally through shopping. The Government will submit to IDA for prior review all contract documents and awards of a value exceeding US$100,000; this would cover at least 80Z of IDA financing for the project.

94. A revolving fund of US$2,000,000 equivalent is proposed to cover project disbursementsfor IDA financing. The Governmentagreed at negotiations to open and maintaina specialaccount in CFAF for this purpose. The revolvingfund would be replenishedupon submissionof withdrawalapplica- tions by the Government. The minimum withdrawal application amount would be US$100,000 equivalent. Disbursements would be made against full documenta- tion for civil works executedby contract,equipment purchase, and consultant services, and against statementsof expendituresfor force account works. The Governmentalso agreed to establisha specialaccount for the Governmentshare of investmentcosts for the project. An initial depositof CFAF 50 million in this accountwould be a conditionof credit effectiveness. The special accountwould be replenishedquarterly by Government.

95. IDA funds would be disbursedto cover 80% of eligibleexpenditures for equipment rehabilitation,road maintenanceoperating costs by force accountor road maintenanceworks by contract;95% of eligibleexpenditures for buildingconstruction, furnishings, and workshop equipment;and 100% of eligibleexpenditures for access roads, road maintenanceequipment purchase, technical assistance,and studies. During negotiationsthe Government confirmed that 20% of the equipment rehabilitationand road maintenance operating costs and 5% of building costs will be financedby OFNAR. The disbursement profile shown in this report (p. iii) represents experience with highway projectsin West Africa.

Reporting and Auditing

96. The Ministriesof Public Works and of Transportwould submit for IDA review in April and Octoberof each year reportson project expenditures and progress,annual reportsby October of each year on sector expenditures and planned investments,and a final report on the implementationand experienceof the projectwithin six months after the credit closing date. The project accounts would be audited annually by auditors acceptable to IDA whose report would be submitted to IDA within six months following the end of each fiscal year. Statementsof expenditureswould be subject to the standard semi-annual auditing requirements and would be submitted to IDA by April and October of each year. - 31 -

EconomicEvaluation

97. The dilapidatedcondition of the road network and the lack of physical and organizationalcapacity for road maintenanceare serious constraintsto Chad's post-war recovery and the regenerationof economic growth. Reduced road transportcosts are a vital preconditionfor restored health in the agriculturalsector. External donors funded the civil works and technicalassistance needed to rehabilitateover 900 km of high priority roads which have been completedand a further 1,300 km of roads on which works are in progress. However,no maintenancehas yet been undertakenon 600 of the 900 km of completedroads, which are now deteriorating,and proposals for maintenanceoperations financed by other donors will not become effectiveuntil 1988. The prime object of this project is to fill the gap as an emergencymeasure, and to complementand supportthe institution and capacity-buildingactivities of other donors.

98. The overall economic rate of return for the project is 21%. This rate underestimatesthe true value of the project,which would establisha foundationfor significantadditional economic improvementsin subsequent years. The analysis takes into account the quantifiablebenefits from vehicle operatingcost savings and costs avoided in subsequentrehabilita- tion and periodic maintenance. Project costs include directly related technicalassistance on the main physicalcomponents of the project,50% of the costs of offices,buildings, workshops and workshop equipment (a very conservativemeasure of the amortizationof these assets in the two-year time slice of the project), and 50% of the remaining technicalassistance. Purchaseof new road constructionequipment and spare parts is not included in the ERR calculationas these are reflected in the unit costs of rehabilitationand routine maintenance. With a 20% increasein project costs and a l0 reduction in benefits, the ERR remains an acceptable12%. Each componentis economicallyjustified by itself,as shown below:

Percent Component ERR

RoutineMaintenance of 2,000 km 46 (includingTechnical Assistance to OFNAR and 50% of Building and EquipmentCosts)

Rehabilitationand Maintenance of N'DjamenaIndustrial Road 16

Bridge and Access Roads 12

Ferriesand Access Roads 59

Studiesand TechnicalAssistance non- (excludingOFNAR) and 50% of Building quantifiable and EquipmentCosts - 32 -

ProjectBenefits

99. The project would help to re-establish normal trade flows and would support restructuring of the cotton sector through significant re- ductions in transport costs. The Government would also be an important beneficiary of the project, as the routine maintenance of rehabilitated roads would reduce subsequentcosts of rehabilitation and periodic maintenance, thus minimizing future demands on external aid resources and domestic funds. Vehicle operating cost savings would accrue predominantly to private transport operators, and to the future owner/operators of the UNDPEmergency Program transport fleet. However, the benefits would only be fully realized when the majority of the priority road network is brought to the same minimum standards. These savings should be passed on to producers and consumers as the local transport industry becomes more competitive. The project would have a substantial institutional impact on OFRAR, on the Ministries of Public Works and Transport, and on the trucking industry, by creating the management and technical skills necessary for managing the road sector and increasing productivity and competitiveness. Finally, the project would be an important vehicle in further strengthening coordination among donors and improving future investment choices in this important sector.

Project Risks

100. The threat of military activity in the north and some political unrest in isolated spots in the south continues but has been largely contained. The 2.000 km of high priority roads and the other physical components of the project are located in areas unlikely to be affected by political unrest. Although the general economic situation and depressed cotton prices could constrain the rate of recovery in economic activity and thus in the volume of traffic movements, the levels of traffic postulated for 1986 and the expectedgrowth of 2.5% per year have been set well below the average levels of pre-war years and benefits have been conservatively estimated. The most importantrisks would be an increase in project costs and/or shortfalls in the projected absorptive capacity of the institutions concerned, resulting in delayed project implementation.However, even with a possible increase in total project costs of 20%. including technical assistance, the ERR would remain above 15%. The risks arisingfrom possible limits on administrative and executive capacity are addressed through technicalassistance, job trainingprovided under the project, and possible recourse to private contractors. Nevertheless,implementation of the projectwill requireintensive monitoring and supervision by IDA staff. - 33 -

PART V. RECOMMENDATIONS

101. I am satisfiedthat the proposed IDA Credit would complywith the Articles of Agreement of the Associationand recommendthat the Executive Directorsapprove the proposedcredit,

Attachments A. W. Clausen June 2, 1986 President Washington,D.C. - 34 - ANNEXI

T A A L S 34 PACK I Page I,of 6

CHAD - SOCtIALIDICATORS DATA SNHlT CHAD Br&Mlic GRiours (CUMUOD AWRSS 1i mHDST (tMOT khECk? SST4Atl) fl I_CSIN? LOW INCOM AFRICA l£U0D 1006 i960! I STINAr SUUTHOF SANANA AFRICA S. uF-SAhARA A (ToBA. El. -) ToTAL 1234.0 1214.0 1254.0 ACRICULTURAL 440.0 479.U 411.O

GN FU CAPITA (UU) ...... 238.8 lu3.S

I3INT ODUSTIOflE MURCAPITA (KILfRAfh Of OIL EQUIVALENT) b.0 16.0 22.0 62.3 S6u.S

POPULATION.HID-YEAR(THOUSANDS) 30b4.0 3052.0 *7S9.0 URBANPFULATIUN (I OP TOTAL) 7.0 11.4 20.1 20.1 32.0

POPULATIONPROECTIONS POPULATIONIN YEAR2000 (MILL) 7.3 STATIONARYPOPULATION (KILL) 22.0 POPULATION !0ItEJUNl L.a

POPUIATIONDENSITY PER SQ. 10. 2.4 2.8 3.7 33.2 05.1 PER SQ. IOt. ACRI. LAND 6.4 7.6 9.7 112.J 124.1

POPULATIONAGE STRUCTSRE(C) 0-14 IRS 39.8 41.3 40.2 46.0 45.0 15-64 YRS Sb.7 55.1 56.l 50.8 5.5 65 AJNDABOVE 3.4 3.5 3.5 2.9 2.?

POPULATIONGROWrH RATE (Z) TOTAL 1.4 1.8 2.1 2.8 2.9 URBAN 6.5 0.6 b.4 6.4 5.1

CRUDEBIRTH RATE(PER THUUS) 40.0 40.9 42.4 47.2 e7.0 CRUDEDEATH RATE (PER TNOU5) 26.5 24.6 20.6 17.8 lS.0 GROSS REPRODUCTIUNRATE 2.5 2.b 2.7 3.3 3.2

FAKlLY PLANNING ACCEPTORS,ANNUAL (THOUS) .. USERS (Z OF HRRIED WSN) .. .. 1.0 e 3.3 6.4

-W SAD UImTC INDEC OP FOODPROD. PER CAPITA (1969-71-100) 117.0 98.0 93.0 63.3 82.9

PER CAPITA SUPPLYOP CALORIES(I UP RZQUIHMNTS) 98.0 91.0 68.0 87.7 95.5 PROTEINS(CRAM PER DAY) 76.0 69.0 51.0 51.9 55.4 OF IWICK ANDIALAND PULSE 22.0 19.0 18.0 IC 13.7 16.5

CHILD (ACGS 1-4) DEATHRATE 52.0 42.0 29.0 23.1 lb.6

REALSE LIFE EXPECT.AT BIRTH (YEARS) 39.2 40.1 43.2 47.8 52.0 INFANT HDRT. RATE(PER THOUS) 194.5 172.5 142.0 119.5 108.5

ACCESSTO SAFE WATEe(170) TOTAL 27.0 30.0 Id 27.1 42.4 URBAN .. 47.0 30.0 72 63.5 67.3 RURAL .. 24.0 3U.U Id 19.3 35.6

ACCESSTO EXCINETADISPOSAL (Z OF POPULATION) TOTAL .. 1.0 .. 26.5 2.9 URAN .. 7.0 *- 65.4 57.7 RURAL ...... 20.8 20.7

POPULATIONPER PHYSICIAN 72950.0 61900.0 47640.0 /a 27901.7 11791.7 POP. PER NURSI.G PERSON 5840.0 If 5360.0 3S60.0 330S.4 2459.8 POP. PER HOSPITALBED TOTAL 1430.0 760.0 1270.0 I. 1273.6 wSl.L URBAN 220.0 It 280.0 390.0 7 428.2 3b6.8 RURAL 1320.0 77 1870.0 1900.0 7 3292.5 4371.9

ADMISSIONS PER HOSPITALRED .. 17.1 .. .. 27.2

Noggin AVERAE SIZE or HOUSEHOLD TOTAL .. .. URBAN .. 4.5 .. RURAL .. 5.6 j .

AVERSE NO. OP PERSONSIROCK TOTAL .. .. URBAH .. .. RUAL .. ..

PRCENTAGEOF SIELLIN WITH ELECT. TOTAL .. .. UrBA .. ... RURAL .. .. -35 - ANNEXI Page 2 of 6 T A L C UA PACE 2

CHAD - SOCIAL INDtCATORSOATA SHmCT CRAD BPrrNNCE GROUPS(WCIGHTED AVERACES)/a MOST (MOST RECENT ESTUIATE) /b 1RECENT LOW IIOUNC AFRICA MIDOLE INCOME 19 6n/b i b197ESTIMAT,/b SOUTa' OF SAHARA AFRICA S. OF SAHARA DUCAtTWU ADJUSTED CNROLLMENTRATIOS PRIMARYt TOTAL 17.0 35.0 35.0 lh 67.8 95.7 HALE 29.0 52.0 51.0 7F 77.6 100.0 FEMALE 4.0 17.0 19.0 7w 54.9 83.2

SECONDARY: TOTAL 0.4 2.0 3.0 /h 13.5 17.3 MALE 1.0 4.0 6.0 r7 17.9 25.0 PFMALE 0.1 0.3 1.0 W 9.1 14.8

VOCATIONAL (2 OF SECONDARY) 21.0 9.7 3.3 lh 13.2 5.9

PUPIL-TCACHER RATIO FRIMARY 86.0 /f 65.0 61.0 lh 44.9 41.1 SECONDARY 21.0 24.0 - 27.4 25.5 coa_rr PASSENGER CARSITNOUSANDPOP 0.6 - 1.1 3.8 20.8 RADIO RECEIVERS/TROUSANDPOP 2.0 16.4 25.6 55.8 107.8 TV RECEIVERS/TROUSANDPOP 2.6 20.8 NEWSPAPER (DAILY GCENTRAL INTEREST") CIRCULATION PER THOUSAND POPULATION 0.2 0.2 0.3 5.0 18.4 CINEMA ANNUAL ATTENDANCEICAPITA 0.1 0.4 Ii 5.8 /c 0.5 0.4

LA - TOTAL LABOR FORCE(THOUS) 1197.0 1377.0 1805.0 FEMALE(PERCEMN) 23.2 22.8 23.7 34.2 36.2 AGRICULTURE (PERCENT) 95.0 90.0 85.0 /d 77.5 54.5 INDUSTRY(PERCENT) 2.0 4.0 7.0 7Wd 9.7 18.3

PAR ICIPATION RATE (PERCENT) TLTAL 39.1 37.7 37.7 39.3 36.8 MILE 61.4 59.3 58.6 50.9 47.1 uEtALE 17.8 16.9 17.6 28.1 27.2

ECONOMIC DEPENDENCY RATIO 1.1 1.2 1.2 1.3 1.3

KC13 DISERISTIOr PERCENT OF PRIVATE INCOME RECEIVED BY HIGHEST 52 OF HOUSEHOLDS 21.5 HIGHEST 22 of HOUSEHOLDS 44.8 LOWEST 202 OP HOUSEHOLDS 7.7 LOWEST 402 OF HOUSEHOLDS 19.3

Urn ROM ESTIMATEDABSOLUTE POVERTY INCOME LZEVL (USS PERCAPITA) URB.. 68.0 /I 165.5 590.7 RURAL 56.0 We 95.0 275.3

ESTIMATED RELATIVE POVERTY INCOME LEVEL (USS PER CAPITA) URBAN 113 1 545 6 RURAL 48.0 Is 67.6 201.1

ESTIMATED POP. BELOW ABSOLUTe POVERTY INCOME LEVEL (:) URBAN 30.0 /a 36.6 RURAL .56.o W 61.8

NOr AVAILABLE NOT APPLICABLE N O T E S la The group enrages for each indicator are population-weighted arithmetic mens. Coverage of countri-e smong the indrcator, depends on availability of data and is not uniform.

/b Unless otherwise noted. "Data for 1960' refer to any year between 1959 and 1961; "Data for 1970" between 1969 and 1971; and data for "Moat Recent Estimate" between 1981 and 1983.

/c 1977; /d 1980; /a 1978; /f 1962; Ig 1965; /b 1976; i 1968.

JUNC, 1985 - 36- ANNEX I Page 3 of 6

| 1 1nwmo~sou SOCIAll WNIICA1N NoamAlinBtINdtlaamdrn l mommaWIyjmdpdhmt. tauhtaivemadbkhodmebobsotedthtbteymy matheifwfaualy compaale bam lafthad _mdudddom ad umpswsd by dlUkt omari. incoltln tin dat. Ih da am mnaenm ul so dasibsem of m_iu4d.ladlca. mmd. ad chactvamtein majordilmume bovwom coumtuIu. Thw do-mm P09 Ua (I) th -mo ui y pomPof the subm cavutrysad (2)a ceoutrySwup with oonewr*thiabel bvmp me the couoty Prupoaltheub heaovotny(puptfar iIi lamOdapanmpawbw 'Midde tameNNnth Ahrica. WMiMeEmischasm ha woraqr aCkIoml laln.th Ie o- da sh avO 6 ampopea_e w_Utd uil_hedemem for mci ldoor and _m onlywhen mawaty ofth covaiesin a Vouph1 da farta Il-aw. S1m thenove ag efot_ris aoeo the indkua d_odakm e avalb of dru andFa sot uniann cautionmumt ecawdd Inratg alewe oam inediawrto amother Thee avrm mmnly umfin emparIg dI valueof ae indiator astaune amas sg oumy *nd ofream goPL

AtEA (thousandsq.kin.) CArdkh Ran (par tShwmd)-Number of live birthsi the year TetL-Total surfacearea compniingland ara and inand watr Perthousnd of mid-yearpopulation; 1960.1970. and 1983data. 1960,1970 and 1983data. Chr D.ah Rae (perth..mO-Number of deathsin the year Agvfeuha-Estimate of agcutural arse used tenporrily or per thousnd of mid-year population; 1960. 1970. and 1983 data. pemanently for crops, putreau market and kitchen prdens or to GCh Rep_dwuo. Ra.--Average numberof daughters a woman lie farlow. 1960. 1970 and 1982data. will bear in her normal reproducive pciiod if she exprences praent age-specificrertiity rmte usually five-yearaverage ending GNP PER CAPITA (USS)-NP per capita estimates at current in 1960, 1970,and 1983. market pnes, calculted by sne conversionmethod as World rsAccan,A_ (th.indt)-Annual num- B,ank Atlws(198143 basis): 1983 data. ber of accptorn of birth-control devices under auspices of national ENERGYCONSUMTIlON PER CAPITA-Annual apparent familypling progam. consumption of commercial prnmary energy (coal and lignite, FWI* Ph=*o4ii (pirceni(fmwi*d oinim -The pereen- petroleum,natural aSand bydro-, nudear and geothermal edec tage of marriedwomen of child-bearing agewho ar prcticing or tricity) in kilograms of oil equivalent per capita; 1960. 1970. and whose busbans arepracting any form of contracepton. Women 1982data. of child-bearing ageare generly women aged 15-49.although for some countris contraceptive ue is ne asured for other age POPULATION AND VITAL STATISTICS groupL TendP.p.Iiea, Mid-Yew(thosaa)-As ofJuly 1; 1960. 1970. FOOD AND NUTRITION and 1983data. 1adx .f&oeAFreiuie Pff Ce*a (1160-7Z- 1W0)-Index or per Urban (p.t.w of rwada-Ratio of urban to total capita annual production of all food commodies.Producion population;different definitions of urbanareas may affect compar- excldesanimal feed and seed for asriculture.Food comnmodities ability of data am countries 1960,1970. and 1983 data. include primay commodities(e.g. sugrcane instead of sugar) hpaaims P,#ecd.m which are edible and contain nutrients (eg. coffee and tea are Ppdarion in year 2000-The projection of population for 200D. excuded): they comprise cereals, root crops. pulses, oil seeds. made for eacheconomy separtely. Starting with information on vegetables, fruits. nuts. sugane end sugar bee livestock,and total population by ageandsx, fertility rat mortality rate and livesock products. Aggepte production of each country is based international migraion in the bae year 1980, these pmeter on national averageproducer price vieights; 1961-65, 1970. and were projected at five-year itervals on the basis of generaized 1932 data. assumptions until the population became stationary. Aw CWeGp SWp of CaWrs tfpfwqmw M)u-Cormput- Sraiumarypopuadrtn-Is one in which age- and sex-speoficmor- ed from calorie equivalent of net food supplies available in country tality rates havenot changed over a long period, while age-specific per capita per day. Available supplies comprise domestic produc- fertility rates havesimultaneously emmainedat replaement klvel tion, imports les exports and changes in stock. Net suppLies (net reproduction rate- 1). In such a populati the birth rate is exclude animalfeed, seedsfor use in agriculture,quantities used in constant and equal to the death rate, the age structureis also food processing. and loss in distnribution. Requirements were constant, and the growth rate is zero. The stationary population estinated by FAO based on physiokgacal needs for normal activity size was estimated on the basis of the prjected charactdisticsof and bealth considering environmental temperature, body weights, the population in the year 2000, and the rate of decline of fertility age and sx distribution orpopulation, and allowing 10 pecent for rate to repiacemnentlevd. waste at household keveL1961, 1970 and 1912 data. PopudarinMomentnn-Is the tendency for population growth to PhrCapita So*, of Pted. (pgo perday)-Protein content of continuc beyond the time that repbcement-level fertlity has been per capita net supply of food per day.Net supplyof food is defined achieved:that is. even after the net reproductionrate has reached as above. Requirements for all counties establshed by USDA unity. The momentum of a population in the year is measurd as provide for minimum allowances of 60 gramsof total protein per a ratio of the ultimate stationarypopulation to the population in day and 20 grams of animal and pulse protein, of which 10 grams the year tr gven the asumption that fertility remaLinsat replace- shouldbe animal protein. Thesestandardsare lower than those of ment levelfrom year t onward. 1985 data. 75 grams of total protein and 23 grams of animal protein as an Populo Dhamsry averge for the world, proposed by FAO in the Third World Food Persqtm.-Mid-year popuation per square kilometer (l00 hw- Supply, 1961 1970 and 1982 data. tares) of total area; 1960, 1970, and 1983 dat Pr CaWhaProIa SapipyFrm Axa eadPrle--Protein supply Per sq.kg. agrkwituralland-Computed asabove for agricultual of food derived from aninub andpulse in grams per day; 1961465. land only. 1960. 1970,and 1982 dat. :970 and 1977 data. hP.utaim Age Snuctw (pireoru)-Children (0-14 yenrs), work- CNN (qa 1-4) Det Rate(per h.uand)-Number of deaths of ing age(15-64 years). and retired (65 yeas and over) percentae children aged 1-4 years per thousand children in the same age of mid-yearpopulation; 1960. 1970, and 1983 da group in a given year For most developing countries data deived PopuleiSm wh RAe (perce u)-wal-Annua growth rtes of from life tbles 1960.1970 and 1983data. totl mid-year populaon for 1950-60. 1960-70,and 197083. HEALIH Popuadi GrowthRae p )wm-Annual--- growth rates e Expectwy a Alh (ywsp-Number of years a newborn of urban population for 195060. 1960-70.and 1970-83data. infant would live if preailig panerns of mortality for al people - 37 ANNEXr Page--jrrof 4o 6 at the timeof of its birth wereto staythe samethroughout its lire; PIfteacher Ratio - primary. and sreondar-Toual studentsen- 1960,1970 and 1983date, rolled in primaryand secondarylevel divided by numbersor Itu M o*ftRate (per teheaud$-Numberor infantswho die teashenin thecorresponding levels beforereaching one )ar of ageper thousnd live birth in a given year,1960, 1970 and 1983data. CONSUMPIION Aces to Se We (rem of ppt -ti' h ad Asegr Can (per thosad p.pulationj-Passenger Lars com- rira-Number of peope(t urb andrural) with resonable prisemotor cars seating less than cight persons:excludes ambul- accss to safewater supply (includes treated surface water or ances.hearses and military vehices. unttated but uncont ilnatedwater such s that from protected *a Receivr (per thousadpopalatn-All typesof receivers borehols,springs and sanitary wells) as percentages of their resc- for radiobroadcasts to generalpublic per thousand of population: tivepopulations. In an urbanarea a publicfountain or sandpost excludesun-licensed receivers in countriesand in yearswhen loatednot or than200 mneters from ahoue mnaybe con idered registrationof radiosets was in effect;data for recentyearn may asbeing within reaonableacoass of that house.in rur l areas not becomparable since most countries abolished licensing. reasonableaccss would imply that the housewfie or memberof thle TRclun(.tae e l a- eevr o racs houselbolddo not tutvetO spend a disproportionatepart of a ThVRecraers (pr thesiipousn-TV receiv,ersfor broadcast in fetchid thefarvtyps water aedi to generalpublic per thousand population: excludes unlicensed TV ineasfethingrthe family's flte5 toens.of oq~J-r receiversin countricsand in yearswhen registation of TV sts was Accessto ExvcreraDiypnal (percenofpap.latianl --total, wham,. i fet ad vmS-Numberof people(total, urban, and rural)served by excretadisposal as percentagesof their respectivepopulations. iespqperCircwlatia (per rhusmd poaput)u-Shows the aver- Excretadisposal may include the collection and disposaL with or agecirculation of -dailygenea interestnewspaperC' defined as a withouttreatmenL of humanexcreta and waste-waterby water- periodicalpublication devoted prim.ily to recordinggeneral news. bornesystems or the useof pit priviesand simiar installations. It isconsidered to be tdaily'if it appearsat leastfour times a week. Popuon per PfysicP-Fopulationdivided by numberof prac- CGNemAmad Anedate per Capitaper Year-Basedon the ting physiciansqualified from a medicalschool at universityvel. numberof ticketssold during the year includingadmissions to Popalaie per NorAV Pers-Fbpulation dividedby numberof drive-incinemas and mobile units. practicingmale and femalegraduate nurses assistant nurses. practicalnurses and nursingauxilaries. LOR FORCE P.pulso per Hosital Bed-tar4 wram, d rrPal-obpulation Ttal Labor Force frhousasnd-Economicallyactive persons. in- (total,urban, and rural) dividedby their respectivenumber of cludingarned forcesand unemployedbut excludinghousewives. hospitalbeds available in publicand pivate genaltand specialized students.etc.. coveringpopulation of all ages.Definitions in hospitalsand rehablitationcenters HospitI areesmblishment variouscountries are not comparblec1960. 1970 and 1983data. permanentlystaffed by at leastone physicia Establishments prov- fma (per.mr-Fernalelabor force as percntage of total labor idingprincipally custodial care are not included.Rural hospitals force. however,include health and medical centers not pemanently staffed Agriculsare(percrot4-Labor forcein farming.forestry. hunting by a physician(but by a medicalassistant. nurse midwife, etc.) andfishing as percentageof total laborforce; 1960. 1970 and 1980 whichoffer in-patient accommodation anad provide a limitedrange data. or medicalfaciltiesm Imn y (percer)-Labor rorcein mining.construction. manu- Admissionper Hospitalled-Total numberof admissionsto or facturingand electricity, water and gas as percentage of totallabor dischargesrom hospitals divided by the numberof beds. force;1960. 1970 and 1980data. Aeticpatim Rat (erc oa . , dfu -Parficpation HOUSING or activityrates are computed as total, male.and female labor force Avre SbE of Hou (persW per househlfd-tretda. whaa as percentagesof total maleand femalepopulation of all ages as rorol-A householdconsists of a groupof individualswho share respectively;1960. 19; (. ind 1983data. These are based on ILO's livingquarters and their main meals. A boarderor lodgermay or- participationrates reflecting age-sex structure of the population.and maynot beincluded in thehousehold for statiscl purposes. longtime trend. A fewestimates are from nationalsources. Avea Numberof Pron per Rom-e-taal, srhe. ad rural- Eenomic DependewyRadi-Ratio of populationunder 15. and Averagenumber of personsper roon in all urban.and rural 65and over, to the workingage population (those aged 15-64). occupiedconventional dwellings, respectively. Dwellings exclude non-permanentstructures and unoccupied parts. INCOMEDISTRIBUTION Pecentagof DweMngswith Ekdricity-toral, urban,ad real- Peremageof ToralDipsablncost (both inerh ad ki.dj-1 Conventionaldwellings with electricityin livingquarers as peacn- Accruingto percentilegroups of householdsranked by total house- tageof total urban.aid rual dwellingsrespectively hold incone. EDUCATION POVERTYTARGET GROUPS Adsted "Mwl fiRati Thefollowing cstimates are very approximate measures of poverty Prhnary sdco - toid. mae and femal-Gras total maleand levels,and should be interpreted with considerablecaution. femaleenrollment of aDages at the prirnary levelas percentagesof Estiaed AbsolutePoverty Income Level USSper capia k-u_ban respectiveprimary school-age popuations. While many countries and ruraL--Absolutepoverty income level is that incomelevel considerprinary schoolage to be6-11 years. others do not. The belowwhich a minimalnutritionally adequate die plusessential differencesin countrypracties in theages and duration of school non-foodrequirements is not affordable. arereflected in the ratiosgiven. For somecountries with universal Estmed RelativePoerrty Incom Level(U percapita -uban education,gnss enrollmentmay eceed100 percnt sincesome and rural-Rural relativepoverty income klvel is one-thirdof pupilsare below or abovethe country's standard primary-school averageper capita personal ineome of thecountry. Urban level is agt derivedfrom the rural levelwith adjustmentfor highercost of Secondayschoo - total, male andfemal-Computed as above: living in urbanareas. secondaryeducation requirs at last four yearsof approvedpri- EstimatedPbpultwi RelawAbsolute Poverty Inome Levd (per- maryiostmction provides genral. vocational. or teadiertraining centj-uarba_ad rral- tPrcentof populationturban and rural intructionsfor pupilsusually of 12 to 17years of agc;correspond- whoare absolutepoor.A enc coursesare generaly excluded. VocadonaEroleni (percentqfsecondrUv)-Vocational institu- ComparativeAnalysis and Data Division tionsinclude technical. industriaL or otherprograms which operate EconomicAnalysis and ProjectionsDepartment indepedentlyor as departmentsof secondaryinstitutions. June 1985 - 38 -

ANNEII

Page5 of 6

ECONOMICINDICATORS *

6ROSSNATiONAL PRODUCT IN 1995 ANNUALRATE OF BROhTH (l, constant 1977pricesl

USSMin. 1 1977-1982 1983-1984 1994-1995 GDPat MarketPrices 646 100 Currentkcount Balance -96.7 -13 -4.9 0.4 19.9 Exportsof Goods,IFS 57.8 9 Importsof 6oods,NFS 124.0 19

OUTPUTIN 1985 GOVERINENTFINANCE Central Government Value Added CFAFbin. I of 6DP US$Iln. I __ _ _ 1985 19B5 1975 Agriculture 284 44 Industry 136 21 CurrentReceipts 21.0 7.0 14.u Services 226 35 CurrentExpenditures 26.0 9.4 16.0 CurrentBalance -5.0 -1.7 -2.0 Total 646 100

HONEYAND CREDIT (billions of CFAFI 1992 1983 1984 1985

Moneyand Quasi-money 34.6 42.4 67.9 71.9 BankCredit to Public Sector 11.9 11.0 10.5 3.6 BaniCredit to Private Sector 30.0 32.5 45.9 65.0

Honeyand Quasi-money as Z SDP 15.0 18.0 23.0 24.8 Annualpercentage change in: BankCredit to Public Sector -6.8 -4.5 -65.7 BankCredit to Private Sector 8.3 42.2 41.6

* Fiquresfor 1985 are preliminary estimates. Becauseof the disruptive effects of the civil waron Chad'sstatistical services, the figures in this annexare incompleteand should be interpreted with caution. - 39 -

ANNEXI

Page6 of 6

TRADEPAYMENTS AND CAPITAL FLOWS

BALANCEOF PAYMENTS HERCHANDISEEXPORTS (AVERAGE 1902-95) 1983 1584 1985 US$Kin. Z [millionsof USS) Cotton 60.5 B0 Exportsof Goods,NFS 73.1 111.7 57.5 TotalMerchandise Exports 74.9 100 Importsof Goods,IFS -115.7 -129.4 -124.0

ResourceGap (deficit = -I -42.6 -17.7 -66.5 EXTERNALDEBT, DECEMBER 31, 1985 Interest Paymentsand USSKIn. OtherFactor Payoents (net) -52.6 -62.4 -101.2 NetTransfers 96.6 95.9 B1.1 Public & Pub.Guaranteed Debt 136 ------Non-guaranteedPrivate Debt n.a. Balanceon CurrentAccount -8.6 5.9 -06.1 Total Debt, Outstanding& Disbursed 136

Direct Foreign Investment -1.1 7.5 51.6 DEBTSERVICE RATIO for 1985 Net lLT DorroNing -1.8 -1.0 12.2 1 Short-termCapital, Errors and Omissions 20.1 2.6 -B.7 Public & Pub. GuaranteedDebt 14 ExchangeGuarantee 3.2 4.9 3.6 Non-guaranteedPrivate Debt n.a.

------Total------Debt, Outstanding& Disbursed 14

Overall Balance 11.8 19.7 -29.0

IBRDIIDALENDING, December 19B5 (Kln, of US$1 IRD IDA RATEOF EXCHANGE 1983 15B4 1985 Outstanding& Disbursed 0.0 39.9 Undisbursed 0.0 15.5 CFAF/USS 391.06 436.96 449.2b ----- Outstanding,incl. Undisbursed 0.0 55.4 - 40 - ANNEX II

CHAD

HIGHWAYMAINTENANCE PROJECT

STATUS OF BANKGROUP OPERATIONS

A. Statement of Bank Loans and IDA Credits (as of March 31, 1986)

Amount (less cancellations) - USS Millions

Credit IDA Undisbursed Number Year Borrower Purpose

Twelve credits fully disbursed 29.58

489-1 1976 Chad Irrigation 8.00 1.10 664 1976 Chad Rural Project Funds 12.00 5.54 739 1977 Chad Sahelian Zone 1.90 0.52 811 1978 Chad Third Education 8.30 7.70

TOTAL now held by IDA 59.78 14.86 of which has been repaid 4.49

Total now outstanding 55.29

Amount sold 3.3 of which has been repaid 3.3

Total now held by Bank and IDA 55.29

Total undisbursed 14.86

1/ Prior to exchange adjustments. - 41 - ANNEX III Page 1 of 2

CHAD

HIGHWAYMAJNTENANCE PROJECT

SUPPLEMENTARYPROJECT DATA SHEET

Section I - Timetable of Key Events

(1) Time taken to prepare project: 3 months

(2) Projectprepared by: Government,Consultants and IBRD.

(3) Identification: Through SectorWork.

(4) Appraisal Mission February1986. (5) Negotiations May 1986

(6) Planneddate o; effectiveness: October 1986.

Section II - SpecialBank ImplemenLtationAction None.

SectionIII - SpecialConditions

1. Conditionof Effectiveness: (a) The Governmentshall establisha special accountfor the Governmentshare of investmentcosts for IDA-financedcompo- nents, and shall depositCFAF 50 million therein;this accountshall be replenished quarterly (para. 94); (b) the Government will open and thereafter maintain a special account in CFA Francs with a commercial bank to permit promptdisbursement of IDA funds (para.94).

2. Other Conditions:

(a) The Governmentwill initiatea study by Consultants on the role and structureof OFNAR accordingto terms of reference agreedwith the Association,will review with the Association by September1987 the recommendationsarising from the study, and will consultwith the Associationon the program of action to be implementedduring the project (para.75);

(b) The Governmentwill increaseOFNAR revenue to CFAF 800 million in 1987, will initiatea study of road user chargesto evaluate the prospectsand means to be adoptedfor increasingroad user revenues,and will consultwith the Associationby September1987 on the action programfor cost recoveryto be implementedduring the project; and will assign increased revenuesto OFNAR for 1988 and subsequentyears (para.76);

(c) The Governmentwill initiatea study on the organizationand managementof the truckingindustry, will review its - 42 - ANNEX III Page 2 of 2

recommendationswith IDA by March 1988,and will preparean Action Plan for implementingagreed recommendations (para.84); and

(d) The Governmentwill contribute470 million CFAF to the cost of the project (para.88).

During negotiations,among others,the followingwere also discussedand confirmedwith the Government:

(a) Definitionof the priorityroad network,restriction of rehabilitationand mechanicalmaintenance works to this network, and rehabilitationas a prior conditionfor mechanizedmaintenance (para. 77);

(b) Prefinancing by OFNARof emergencymaintenance works on the Sarh-Moundou-Lereroad, to be executedby contract,and retroactivefinancing by IDA (para.78);

(c) The Governmentwill agree with the Bank the terms of reference for all studiesto be carriedout under the Projectand, in consultation with the Bank, take action to implementthe acceptedrecommendations of these studies (para.82); and

(d) The Government will review with UNDPand IDA representatives the UNDP report on transfer of the UNDP truck fleet to Chad, and will developan Action Plan to implementthe agreed recommendations(para. 84). - 43 -

H16HI1

'Projectelement Activity : ResponsibilityI

I ______I __ I BoardApproval CreditEffectiveness ; tA. BUILDIN6S 1. Studies .OFNAR 2. TenderProcess :OFNAR 3. Implementation JCONTRACTORS

;3. LERE-BRIUSE 1. Impleaentation :UNDP/DPE " 2. AccessRoads :OFNAR I . , :C. FERRIES 1. TenderProcess 'DFNAR 2. Implementation :Contractor

:D. INDUSTRIALROAD 1. Studies :Consultant' 2. TenderProcess :DFNAR 3. Implementation Contractor

!E. ROADMAINTENANCE I. TenderProcess OFNAR 2. BvContract Contractor 3. By Forcekcount :OFN4AR

:F. EQUIPMENTANDSPARE PARTS 1. TenderFrocess IOFNAR 2. Delivery :Supplier 3. Rehabilitation :DFNAR

IG. CONSULTANTSERVICES : 1. finistryoiPublic borks-OFNAR IConsultant 2. MinistryofTransport: ta) TenderProcess Min.Transport (bi Implementation 'Consultant a ------. --- a I a S~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ - 44 -

ANNEX V

CHAD

HIGHWAYMAINTENANCE PROJECT

LIST OF TECHNICALASSISTANCE EXPERTS AND STUDIES FOR WHICHTERMS OF REFERENCEARE REQUIRED

1. Technical Assistance to OFNAR(11 staff-years)

TechnicalAdvisor for two years in the Subdivisionsof Moundou and Sarh and for one year in the Subdivisionof Mongo Field Engineerfor one year in Moundou and Sarh Workshopand EquipmentAdvisor for two years in Moundou and Sarh

2. TechnicalAssistance to Ministryof PublicWorks (5 staff-years)

ProjectManager/Sector Coordinator EngineerAdvisor (Roads)to Studies and Hydraulic Divisionof MTP Soils Expert for SoilsLaboratory of ENTP

3. TechnicalAssistance to Ministryof Transport(6 staff-years)

Economist SystemsAnalyst Short Term Experts

4. Studies:

DetailedDesign of N'DjamenaIndustrial Road DetailedDesign of Guelengdeng-Bongor-DobaRoad Study of Role and Structureof OFNAR Cost RecoveryStudy TruckingIndustry Study

5. TrainingFellowships (15 staff-years) * . . - - -: ..

'N,

1~~~~~~~~~~~~~~~L I BYA IA.R.E. -22"i \ Ni -

[ _ ____;_*____X

.* | , . | HIGHWAY MAINTENANCE "! PROJECT

ANFR I CKA

NF I G E RjIi

/~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~PVJC''R'OA, ''IS

| / , i , _ ( _ * i ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~OE U^ l dTAI U ^N W0ujRER / * - I 12 ..r ~~~EDUNDER

.& Q/otAUd Sl '1 riO4THER )rODd IN THE PRIORITY

\N";+ =- ¢ .1PeDn.f' { NEfliz RicotdsTWORK_ t.

14j _n r IAvI+/j,$i, / ,-- FERRIES TO BE REPLACFO

'--.' E -lim . aR TO*A AECOPiSTRCT Er; '- _ _. #' '" C - ' - _ ,, - ~~~~PO-- se Get, ' - -PvZ

-140~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

%~ ~ ~~~ 1.'-- ". ,,,,,. , 0.'t E ;1"i+ Ie\ ,._,

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mZ V -~V zS ~. '> / , C E N T N R EPUBLICACA¾ ' ' " * * i I I