DOCUMENTOF INTERNATIONALBANK FOR RECONSTRUCTIONAND DEVELOPMENT INTERNATIONALDEVELOPMENT ASSOCIATION Not For PublicUse Public Disclosure Authorized FILECOPY

ReportNo. 238a-AF

APPRAISAL OF

A SECOND ROAD IMPROVEMENT AND MAINTENANCE PROJECT Public Disclosure Authorized

AFGHANISTAN

November 26, 1973 Public Disclosure Authorized

Regional Projects Department Europe, Middle East, and Public Disclosure Authorized North Africa Regional Office

This report was preparedfor official use only by the BankGroup. It may not be published,quoted ot cited withoutBank Group authorization. The BankGroup does not accept responsibilityfor the accuracy or completenessof the report. CURRENCYEQUIVALENTS

Currency Unit = Afghani (Af) US$0.0192 = Af 1.00 US$1.00 = Af 52 US$19.230 Af 1 million

SYSTEM5 OF WEIGHTS AND MEASURES: METRIC

Metric System British/US System

.1 meter (n) = 3.28 feet (ft) 1 kilometer (km) = 0.62 mile (mi) 1 square kilometer (km2) = 0.387 square mile (sq mi) 1 metric ton (m ton) = 2 205 pounds (lb) 1 cubic meter (m)) = 2th.2 gallons (gal)

ACRONYMSAND ABBREVIATIONS c.i.f - Cost, insuranceand freight included ECAFE - Economic Commission for Asia and the Far East GrTD - General TransportDepartment ICAO - InternationalCivil Aviation Organization Kamnsax - Kampmann, Kierulff & Saxild PDD - Provincial Development Department RCD - Road ConstructionDirectorate ROND - Road Construction and Maintenance Department RED - Road Maintenance Directorate RMFD - Road MaintenanceFirst Directorate UNDP - United Nations DevelopmentProgramme UNOTC - United Nations Office for Technical Cooperation US - UnitedStates of America USSR - UThior,of Soviet Socialist Republics

REPUBLICOF AFGHANISTAN FISCAL YEAR

March 22 to March 21 APPRAISAL OF A SECONDROAD IKPROVEMENT AND MAINTENANCEPROJECT

AFGHANISTAN

CONTENTS Page No.

SUMMARY AND CONCLUSIONS * . . * ...... *...... i-iii

Is INT1DDUCTION...... ************* ...... 1

II. THE TRANSPORTATIONSECTOR .,...... *...... *. 1

A. The Country and-itsEconomy ...... 1 B. The Modes ...... 1 C. Planning, Financing and Coordination ...... 3 ITT. HIGHWAYS, ...... ,,...... 5

A. The Network **e***...... *.*.e*s*5 B. Characteristicsand Growthof Traffic...... C. AdPinnistration...... 7 D. Fiancing* ...... 8 Eo Fintancing ...... 08 F. Engineering...... 9 G. Ponstruction...... 9

IV* THE PROJECT 12

As Description ...... 12 B. Cost Estimates ...... *...... 14...... 1l C. Execution ...... 16 D. Procurement ...... * ...... 16 E. Financing ...... I...... 17 F. Disbursements ...... 17

V. ECONOMIC EVALUATION ...... 20

A. Main Benefits and Beneficiaries ...... 20 B. Road Improvementand Maintenance ...... 20 VI. RECOMMESDATIONS...... 22

This report was prepared by Messrs. Snorri Hallgrixsson (Engineer) and Nielo Erik Krogh-Poulsen (Economist). CONTENTS (Continued)

TABLES

1. Air Traffic on International and Main Domestic Airports, 1970-72 2. Expenditures in National Development Plan, 1957-76 3. Length of Highway Network, 1957, 1967 and 1972 4. Motor Vehicle Fleet, 1967 and 1970 5. Traffic through Selected Count Stations on Major Roads, 1966-71 6. Highway Revenues and Expenditures,1967-71 7. Standards for Road Classes B, C, and D 8. Estimated First Year and Economic Returns of Roads in Road ImprovementProgram 9. Estimated Economic Returns of the Road Maintenance Program 10. Estimated Economic Returns of the Road Improvement Program 11. Estimated Economic Returns of the Road Improvement Program at Altermative Labor/Equipment Mixes

ANNEX

A. Previous Transportation Projects B. Estimated Schedule of Disbursements C. Basic Data and Assumptions used in the Economic Evaluation

CHART

Present Organization of the Road Maintenance First Directorate

MAP Transportation Infrastructure APPRAISALOF

A SECONDROAD IMPROVEMENT AND MAINTENANCE PROJECT

AFGHANISTAN

SUMMARY ANDCONCLUSIONS

i. Afghanistan'stransport system compriseshighways, airports and rivers. The main mode is highways. The roughly circular road linking the main towns of Kabul in the east, Baghlan and Mazar-i-Sharif in the north, Herat in the west and Kandaharin the south is the main ar- tery. Trunk roads radiate from these towns into neighboring countries. Air transport serves all main towns and some isolated communities with no alternative means of transport. River transport is limited to the Amu Darya, which forms part of the border between Afghanistan and the Union of Soviet Socialist Republics (USSR). A 600 m rail line extends between the USSR border and Torghundiin Afghanistan.

ii. The highway network, comprisingabout 20,900 km, has more than trebled over the last 15 years, and in terms of location and length is now largely adequate to serve expected land transport demand for the near future. However, many roads have substandardcharacteristics, lack- ing the capacity to handle traffic at reasonablecost. In addition, poor maintenancehas caused many roads of originallyadequate standards to deterioratewith resulting increasesin transport cost. Improvement and proper maintenanceof the network is essentialif present and future transport requirementsare to be met economically.

iii. The Fourth Five-YearDevelopment Plan (1972-76)includes an allocation of Af 2.6 billion for the transport sector, or about 6% of total proposed expenditures over the period. About Af 2 billion has been allocatedto highways of which Af 0.9 billion, or about 47%, will be for improvementand maintenanceworks.

iv. In early 19711 the Governmentasked the Associationto help finance a road improvement and maintenance project for Eastern, Western and Southern Afghanistanidentified through economic and engineering studies by the Danish consultantsKampmann, Kierulff & Saxild A/S (Kampsax). lhe studies were financed by the UNDPwith the Bank as 1Sxecuting Agency. The project was appraised in May 1973. It will serve the most urgent needs of the highway sector by providing for improvementof a number of high priority roads; proper maintenanceof the network; and strengthen- ing the capabilityfor highway administrationin the Ministry of Public 'Works(MPW). As unemploymentis considerable,the project has been designed with a large labor input. - ii -

v. The proposed project would be the second credit for highways in Afghanistan and an extension of the first credit (158-AF, June 26, 1969, us$5.0 million) for an initial road maintenance project in Eastern Afghanistan, which provided finance for purchases of highway maintenance and workshop equipment, vehicles, spare parts, tools and materials. The first credit suffered delays from the Government's failure to ensure timely release of local funds, to provide qualified local counterparts and also from cumbersome local procurement methods. The severe droughts in 1970 and 1971, followed by a severe winter in 1971/72, aggravated the situation. Since early 1973, the situation has improved significantly with the appoint- ment of a capable manager of the Road Maintenance First Directorate (EMFD), the executing department.

vi. The objectives of the project are to improve 35 road sections, totalling 1,832 km and to properly maintain an additional 2,233 km.. Main project items are: (a) purchase of equipment, spare parts and materials for improvement and maintenance; (b) construction and improvement of work- ahops and acquisition of workshop equipment; (c) technical assistance to the MPW and the Provincial Development Department (PDD), (d) training of personnel; and (e) programming of highway improvement and maintenance works and studies of priorities for Government-proposed highway construction works for the Fifth Five-Tear Development Plan Period (1977-81).

vii. Including contingency allowances, taxes, and duties, the project cost is estimated at US$20.1 million with a foreign exchange component of US$10.9million or 54%. The Association will finance US$9.5 million of the foreign cost 1/ and US$2.0 million of the local cost on the usual terms; the Government wiil finance the balance. The project cost was estimated on the basis of cost experience from similar works carried out by MPWduring 1972-73. A project revolving fund to ensure availability of local financing will be established and replenished regularly by the Government; formal establishment of the fund is a condition of credit effectiveness.

viii. The MPWwill be responsible for carrying out the project, through the RNFD; it will be assisted by consultants and internationally recruited specialists, who will fill posts in the IMFD for which qualified Afghan staff is not available at present. The road improvement and maintenance program and the improvement of district workshops, which will be carried out by RMFD's own forces, is expected to start in March 1974. Purchases of foreign produced materials, except fuel, will be subject to international compe- titive bidding ir. accordance with the Bank Group's "Guidelines for Procurement"i. Constructionof a regional workshop at Kabul will be awarded after local competitive bidding as the size (about US$1 million equivalent) and type o'Lconstruction is not appropriatefor internationalcompetitive bidding. Purchases of fuel and locally produced materials will follow the MNW's current procurement regulations. Training of RMFDstaff will take place throughout the project period.

1/ Most fuels are ^|mported from the USSR and will not be financed by the credit. - iii - ix. The economic analysis of the project was carried out with the ¢ost of unskilled labor estimated at a shadow price of Af 30 per man-day, which represents 50% of the current Government salary for unskilled labor and is the lowest salary for which unemployed labor has been shown willing to work. On this basis, the overall Economic Return on improvement works on the 35 road sections is estimated at 29%, with returns on individual sections ranging from 10% to 62%; the road improvement works have an estimated benefit/cost ratio of 3.7. The analysis thus indicates that the project is well justified and should be undertaken without delay. The immediate and principal beneficiaries from the project will be road users and residents in the influence areas of the project roads. Of the road user benefits, about 70% will accrue to buses and trucks, 20% to taxis and the remainder to private cars. x. The project is suitable for an IDA credit of US$11.5 million equivalent to the Republic of Afghanistan on the usual terms. Estab- lisbment of a project revolving fund and the initial payment into it are a condition of credit effectiveness.

APPRAISAL OF

A SECONDROAD IMPROVEMENT AND MAINTENANCEPROJECT

AFGHANISTAN

I. INTRODUCTION

1.01 The Government of Afghanistan has asked the Association to help finance a road improvement and maintenance project in the Eastern,Western and Southern Regions of the country. This would be the third credit in the transportationsector and the second in the highway subsector of Afghanistan; it is an extensionof the First Highway Credit (158-AF, June 26, 1969, us$5.o million) which was an initial project for improving road maintenance in the Eastern Region. Earlier delays relating to local funds, counterpartpersonnel, and local procurementprocedures have been largely overcome and project performance has improved significantly since early 1973. Details of that project and a recent credit for aviation are given in Annex A.

1.02 This appraisal is based on proposals and information received from the Ministry of Public Works, Kabul; economic and engineering studies prepared by the Danish consulting firm, Kampmann, Kierulff and Saxild (Kampsax); and the findings of a Bank appraisal.mission to Afghanistan in May 1973, consisting.of Messrs. Snorri Hallgrimsson (engineer) and Niels Erik Krogh-Poulsen(economist).

II. THE TRANSPORTATIONSECTOR

A. The Country and Its Economy

2.01 Afghanistanis located in Central Asia with the Union of Soviet Socialist Republics (USSR) to the north, Iran to the west, Pakistan to the south and east, and the People's Republic of China to the extreme northeast. It covers an area of about 635,000 km', of which nearly half is more than 1,800 m above sea level with several peaks exceeding7,000 m. The mountains of the Hindu Kush range extend for some 725 km from the northeast to the southwestand, together with the lesser mountain ranges extendingfrom it separate the north from the south. 2.02 Most of Afghanistan's population and economicactivity is located in the eastern part of the country which is dominated by Kabul, its capital and economic center. The populationof Afghanistanis estimatedat about 15 million, of which about 2 million live in towns of more than 20,000 inhabitants. Only three towns have more than 100,000 inhabitants: Kabul in the east with 513,OOO, Kandahar in the south with 131,000, and Baghlan in the northeast with 104,000. The major economic sectors are agriculture, commerce and services;together they contribute about 77% to the gross domestic product. -2-

B. The Modes

2.03 Highways are the main mode of transport. Mountainous terrain in the center of the country and the need to link the principal agri- cultural areas, in which the major population centers are located, has led to the development of a roughly circular main highway system, linking Kabul in the east with Baghlan and Mazar-i-Sharif in the north, Kandahar in the south and Herat in the west. From these main towns, through which most of Afghanistan's international trade is routed,. trunk roads radiate Into the neighboring countries. While some extensions are needed to Afghanistan's present highway network, the principal need is for improve- ment and better maintenance of the existing roads and tracks. This is reflected in the Government's Fourth Five-Year Development Plan (1972-76) in which almost half of the highway expenditures have been allocated to improvement and maintenance works. Details of the highway sector are discussed in Chapter III.

2.o4 River transport takes place on the Amu Darya River for interna- nional traffic between Afghanistan and the USSR with all commercial vessels owned and operated by the latter. The three main river ports and the cargo handled through them in 1971 are Sherkhan (125,000 tons), Taj Guzar (83,000 tons) and Kleft (18,000 tons). The ports are administered by the Port Department under the Ministry of Commercel /An 800 m long combined road and railway bridge across the Amu Darya River at Hairatan will be constructed with assistance from the USSR during the Fourth and Fifth Five-Year Development Plans. Construction cost is estimated at AF 503 million. When completed, the bridge is expected to carry most of the traffic between Afghanistan and the USSR presently being handled by the river.

2.05 Afghanistan has 92 km of pipeline running from the gas fields around Shebergan to the Russian border at Kleft. In 1971, throughput of gas was about 2.5 billion m3, representingan export value of about AF 1.2 billion. A second pipeline of 88 km from Shebergan to a chemical fertilizerplant at Mazar-i-Sharifis being constructed.

2.06 Afghanistanhas international airports at Kabul and Kandahar. In addition, it has four main domestic airports and 25 local airports and airstrips. Traffic on the international and main domestic airports in 1972 amounted to 149,000 passengers and 5,100 tons (Table 1). The airports are admirnsteredby the Afghan Air Authority which is an autonomous Government organization. With increasingtraffic volumes, improvements in the air navigation services for internationaland domestic civil aviation have become necessary. An IDA credit (374-AF) of US$2.5 million will help finance the design, constructionand equipmentof a Flight Information Center at Kabul, and technical assistancefor its operation. The Credit also finances studies of a possible new internationalairport at Logar, 40 km south of Kabul. Details of this project are in Annex A.

j As river serv-;e on the Amu Darya will diminish sharply with completion of the Hairatan Bridge, there are no plans for new port expansion. -3-

2.07 Air services are being provided by two companies: Ariana Afghan Airlines and Bakhtar Afghan Airlines. Ariana is jointly owned by the Government and Pan American World Airways; it serves international and main domestic routes with two Boeing 727 aircraft. Total 1971 transport amounted to 85,000 passengers and 3,600 tons of freight. Delays and cancellations of scheduled flights due to maintenance problems are frequent at present, but should be reduced when a recently ordered Boeing 720 aircraft enters service. In 1971, the airline showed a small operating loss of Af 18,5 million compared to operating expenses of Af 366.7 million. Bakhtar is a fully Government-owned airline and provides only domestic air services. Total 1971 transport amounted to 17,900 passengers and negli- gible amounts of freight. Bakhtar is receiving operational and technical assistance and training provided by UNDP and ICAO. In 1971, the airline operated at a loss of Af 36.1 million with operating expenses of Af 47.1 million. As the airline serves many communities with no alternative means of transport to Kabul and other parts of Afghanistan, the services are maintained for social and administrative reasons.

2.08 Except for 600 m of railway between Torghundi and the USSR border, there are no railways in Afghanistan.

C. Planning,Financing and Coordination

2.09 The Ministry of Planning is responsible for overall economic planning and for allocation of economic resources to the various sectors of the economy. Planning in the transport sector is being carried out by the Ministry of Public Works (MN) and the Provincial Development Depart- ment (PDD) for highways, the Afghan Air Authority for civil aviation and the Ministry of Commerce for ports. The Road Construction and Maintenance Department (RCMD), under the MPW, is responsible for administration of the main highway network; planning of road improvement and maintenance works under this Ministry is being carried out on the basis of technical and economic studies by consultants financed under the First Highway Project. The PDD under the Prime Minister's office is responsible for constructing and maintaining low class rural roads. Planning of roadworks under this department is ad hoc, with non-economic considerations often playing a dominant role. ThreAfghan Air Authority is responsible for administration of the country's airports and two commercial airlines; planning of invest- ments under the Authority is based on economic, social and administrative considerations. Because transport modes complement rather than compete with each other, Afghanistan has no transport coordination problem and none is expected to arise in the foreseeable future.

2.10 A national developmentplan covering the five-year period 1972-76 was submittedto Parliament in early 1973, but was not approved before the dissolution of Parliament following the July 17, 1973 change in Government. Total proposed public expenditure under the plan amounts to AF 46.7 billion or on the average, Af 9.3 billion annually (Table 2). Total planned expenditures in the transport sector amount to Af 2.6 billion, of which Af 2.0 billion are allocated to highways and Af 573 million to civil aviation. -4 -

2.11 From 1957 to 1971, considerable expenditures totalling about Af 16.7 billion were incurred for primary highway construction. Particularly during the First and Second Plan Periods, 1957-66, highway expenditures were substantial, amounting to an average of 38% of total plan expenditures. Since the Second Plan, however, the emphasis of the development budget has been shifted from transport infrastructure to agriculture, and the share of transport expenditures in the Third and Fourth Plans were reduced to 9% and 6% of total plan expenditures respectively. At the same time, expenditures on highway improvements and maintenance have increased from 21% of total highway expenditures at the end of the Third Plan to an average of 47% through the Fourth Plan. This shift from construction to improvement and maintenance reflects the increased Government emphasis on protecting the considerable investments made in the highway system. -5-

III. HIGHWAYS

A. The Network

3.01 The length of the road network is about 20,900 kin, of which about 2,500 km (12%) are paved (Table 3). The network has been tripled since 1957 and its extent, including works scheduled in the Fourth Five- Year Development Plan (1972-76), is largely adequate for immediate land transport needs. Additions to the present network will be required mainly for specific purposes such as feeder and development roads for agricultural schemes. The circular highway connecting Kabul, Kandahar and Herat, and its branches into Iran and Pakistan represent the trunk roads of the highway network. Road density is highest in the east where more of the population and economic activity is located (para 3.18).

3.02 The condition of the network is not uniform due to the different construction standards used in the past. About half of the paved network is in good condition, whereas the rest of the paved and most of the unpaved network require improvement and better maintenance. Because of the works carried out under the First Highway Project in the Eastern Region, and because of the extensive technical assistance and financial aid provided by the USSR to road maintenance in the Northern Region, roads in these two regions are generally in better condition than those in the rest of the country.

3.03 For road administration purposes, the Ministry of Public Works (MPW) divides Afghanistan into four regions: the Northern, Eastern, Southern and Western Regions (Map). Of these, the Northern Region is not covered by this project since it already receives substantial technical and financial assistance from the USSR.

B. Characteristics and Growth of Traffic

3.04 In 1970, the vehicle fleet was estimated at about 58,000 vehicles, of which passenger cars accounted for 59%, trucks for 35% and buses for 6% (Table 4). Between 1967 and 1970 the vehicle fleet increased at an estimated annual rate of 2.4%. Considerable uncertainty, however, is attached to these figures, which are derived from generally inaccurate licensing records. The vehicle fleet represents an average of one vehicle per 500 persons, compared to one per 330 persons in Pakistan and one per 600 persons in India.

3.05 Traffic counts on the main roads show an average 7% annual increase in Average Daily Traffic (ADT) from 1966 to 1971 (Table 5). ADT of 200 vehicles are common on rural sections of trunk roads reaching levels of 500 vehicles on the trunk road between Kabul and the Pakistani border. Average composition of traffic in interurban and rural transport is 40% cars and 60% buses and trucks. Average seating capacity of buses is 30 passengers; average utilizationis about 95%. Average load capacity of trucks is 6 tons, ranging from 4.5 tons to 12 tons; average utilization is about 50%. Over- loading of trucks occurs, but is not a serious problem. The existing bus and truck fleet appears adequate for the present transport demand. -6-

3.o6 There is no Government regulation of urban commercial trucking nor of private trucking (transport of a company's own goods). The General Transport Department (GTD) under the Ministry of Commerce is responsible for regulating commercial interurban truck transportation. For transport of Government-owned goods, freight rates are fixed on the basis of estimated operating cost including the operator's profit. The rates are revised annually, and at present range from Af 1.8 per ton-km to Af 2.3 per ton-km. They appear reasonable. Rates for commercial non-Government interurban traffic are not regulated. For all commercial interurban goods transport, an operating permit is required stating the amount and type of load and the route to be used. For this permit, which must be obtained for each transport, the GTD collects a transport commission, which is calculated as a percentage of the fixed freight rates for Govern- ment transports. For non-Government transport, the commission amounts to 5% of the fixed freight rates of which one-half is paid by the truck owner and the other half by the owner of the goods. For Government transport, the commission amounts to 2.5% which is paid by the truck owner. Although the system of issuing operating permits gives the GTD control of all inter- urban commercial truck operations, thus enabling it to establish priorities if transport demand should exceed supply, the main objective of the system seems to be collection of the transport commission. The system, however often causes delays in transports. Improvements in this system were to be -undertaken under the First Highway Project, but although the problems have been studied, legislation to deal with them has not been prepared. During negotiations, assurances were obtained from the Government that it will review and improve the procedures for obtaining truck trip permits in accordance with a timetable agreed upon with the Bank.

3.07 The Traffic Department under the Ministry of Interior is responsible for regulation of public passenger transportation in Afghanistan. Its provincial agencies issue permits for commercial bus transportation. These do not contain detailed time schedules; only the days of operatian are indicated. There is no Government regulation of interurban bus fares. Urban bus fares are regulated; present rates are unrealistically low and are under review by the Government.

3.08 For international goods transport, all incoming, outgoing and transit goods must be transported on Afghan trucks. Similarly, neighboring countries do not allow Afghan trucks to enter or pass through their territory. Exceptions to these regulations, however, are found on the Afghan-Iranian border between Herat and Meshed and on the Afghan-Pakistan border between Kabul and Peshawar where trucks belong to one nation are allowed to enter the neighboring country as far as the next town. Afghanistan has recently joined the Transport International Routier (TIR) Convention. Effective membership of TIR will eliminate the nationality restrictionon trucking and allow the Herat Livestock Development Corporation to export meat products directly to Iranian markets beyond Meshed and is a covenant to the Livestock Development Project, financed under Credit 275-AF. The Government has taken adequate steps to comply with the covenant. -7-

3.09 There is no regulation on vehicle weights and dimensions,and present legislatioaon right-of-wayis limited to proceduresfor acquisition of land for public use. Introductionof the necessary regulationsand legislationwere to be undertakenby the Governmentunder the First Highway Projectl/ Consultantsunder the project carried out the necessary studies and drafted a proposal for legislationlimiting permissibleaxle loads to 8 tons single axle and 13 tons for tandem axles and also a proposal for legislationon highway access and adjacent land use. The proposals appear adequate for the country's needs and are presentlyunder Governmentconsideration. During negotiations,assurances were obtained that the Governmentwould, not later than September 30, 1974, submit for Cabinet approval proposed measures satisfactoryto the Association to regulate vehicle weights and dimensions and highway access and adjacent land use.

C. Administration

3.10 The RCMD under the MPW is formally responsiblefor maintenanoe, improvementand constructionof all roads outside municipalitiesand project areas of various developmentauthorities, such as the Helmand Valley Authority and the Paktia DevelopmentAuthority both under the Ministry of Agriculture and Irrigation. Since 1970, however, the PDD under the Prime Minister's Office (para. 3.13), has been responsiblefor the establishmentthroughout the country of low class rural developmentroads, constructedand maintained by local authoritiesunder PDD supervision. The ProvincialAdministrations also carry out some road maintenance works in those parts of the country wherethe absence of centrally organized road maintenance is felt. As traffic grows, the PDD constructedroads will require improvementand maintenance to higher standards;RCMD will be better suited to carry out these works. The consultantsunder the First Highway Project have already prepared a road classification to serve as a basis for the Government's undertaking under the project to define the road network under MPW responsibility. Under the project, this classification will be updated to include PDD constructed roads with traffic volumes exceeding a certain level and adequate procedures will be establishedfor the transfer of these roads to the RCMD.

3.11 The RCMD is subdividedinto two directorates,the Road Construction Directorate (RCD) and the Road MaintenanceDirectorate (RMD). The RCD, with a total staff of about 180 employees, serves as a design and super- vision office; equipment and labor for its constructionworks are provided by the Army Labor Corps. This arrangementhas caused administrativedelays in work execution but quality of work is generally adequate. As the requirement for new constructionis limited, improvementsin RCD organization and operationsare not required at this time. However, under the project a review of existing contract procedureswill be made with a view to determining if and to what extent domestic contractorscould be employed for these works (para. 4.12).

3.12 The RMD was establishedin 1967 to be responsiblefor maintenance of the country'smost important roads. However, it is inadequatelystaffed.

/ This was not done before dissolutionof Parliament following the July 17 change in Government. - 8-

Under the First Highway Project, the Road Maintenance First Directorate (RMFD) was established as a special unit in the RMD to execute road maintenance and improvementworks in the Eastern Region and on selected roads in the Southern and Western Regions-(chart). The RMFD is conceived as a pilot -unitintended ultimately to expand its activitiesto the entire country to carry out RMD's force account works. The First Highway Project materially helped to establish the RMFDthrough financing purchases of equipment, spares and materials, and providing extensive technical assistanceby UNDP-financed consultants (Kampsax) for which the Bank is executing agency; UNDP has recently granted funds for continuing this technical assistance until mid-1974.

3.13 The PDD, under the Prime Minister's Office, was established in 1970 to survey, design and supervise small scale rural works. These projects ordinarily cover minor irrigationand roadworks,and construction of public buildings and schools. The works are mostly carried out by labor- intensivemethods designed to alleviateunemployment. Labor is frequently paid in kind with wheat provided under the UN Food and Agriculture Organi- zation (FAO) "Food for Work" Program. Specific road construction standards are not employed and the quality of work supervision is often low. Nearly all the roads constructed or improved by the PDD carry very little traffic, but some have considerablelocal developmentimpact.

D. Planning

3.14 Modern highway constructionstarted with the First Five-Year DevelopmentPlan in 1957. That and the two subsequentFive-Year Plans formed the basis for the expansion and improvement of the highway network. The USSR assisted the Government in preparing the development plans which list specific road constructionprojects. Other long-term planning of individual road construction project is not being undertaken. Planning of improvement and maintenance works for the 1972-76 period is being carried out by the RMFD, presently assisted by the consultants Kampsax. To obtain the best use of available funds and resources, planning of and proper co- ordination between new construction, improvement and maintenance is required. The project includes provisions for consultants' services to annually update the improvementand maintenance program during the proposed project period; to prepare highway imaprovementand maintenanceprograms for the period 1977-81; and,to study proposed highway constructionprojects.

3.15 PDD's roadworks are not subjected to planning; project selection and timing are determinedad hoc, based on requests from local authorities. Although detailed planning methods cannot be applied to the great number and small size of its projects, some evaluationof proposed PDD road projects to ensure technical and economic viability should be undertaken. The project includes provision for consultants'services to provide technical assistanceto the PDD for this purpose.

E. Financing

3.16 Total highway user revenue collected during the Third Plan Period (1967-71)amounted to an estimatedAf 4.6 billion; the main contri- butions were taxes and duties on fuel (63%),vehicles and spare parts (27%), -9-

highwaytolls (5%) and transportcommission (5%). During the same period total highway expenditures amounted to Af 2.9 billion (Table 6). The toll stations are operated by the army and serve mainly as adminis- trative and security checkpointsrather than for revenue collection. The main foreign aid donor countries for highway projects were the United States of America (US) and the USSR during the Third Plan Period. In the Fourth Plan Period, the US has not financed any further expenditure,but the USSR continued to finance maintenance and construction works in the Northern Region and on the main roads from the north to Kandahar and Kabul. Foreign aid presently provides about 40% of total highway expenditures.

F. Engineering

3-17 The ROD is responsiblefor preparing designs for new highways and bridges being constructed by the MPW. Design standards adopted in 1968 by the MPW did not cover lower-class roads, some of which have therefore been built to unnecessarily high standards. The First Highway Project included establishmentof standardsfor road improvementworks better adapted to different types of terrain and traffic volumes, especially standards:Lor low traffic roads (Table 7); they are acceptable and have been agreed to by the Government. In the absence of Government-established standards, road projects financed by bilateral aid from the US and the USSR have been designed with different design standards. The Government is now beginning to control design on the basis of the established standards.

G. Constrixction

3.18 Responsibilityfor constructionof new roads is divided between the RCMD, various developmentauthorities and the PDD (para. 3.10). During the Third Five-Year Plan (1967-71),a total of 350 km of asphalt road and 250 km of gravel road were constructed by the RCMD and various development authorities. In addition, the PDD has built an estimated 400 km of low- class rural roads since 1970. The Fourth Five-Year Development Plan (1972-76) includes a road construction and improvement program of 210 km of asphalt and 510 km of gravel roads, to be built by RCMD partly with foreign aid. This includes improvementand constructionof about 266 km of roads in the Upper Helmand Valley to be financed by a credit from the Asian Develop- ment Bank of US$15 million equivalent.

3.19 There are at present no road contractors in Afghanistan,although there are no legal restrictionson contracting,apart from an administrative requirement for registration. Constructionof larger projects financed by foreign aid has been carried out by contractorsfrom the donor countries; constructionof smaller works has been carried out by force account with extensive employment of labor and equipmentprovided by the Army Labor Corps; minor roadworks for municipalitieshas been carried out by the Afghan ConstructionUnit, a Government Authority and primarily a building contractor. Participationby local contractorsin road constructionhas in general been limited to trucking and supply of materials, such as hewn stone and timber. The Government wants to increase local contractor participationand consultantsunder the proposed project will study the - 10 -

local contractingindustry and recommend on its possible role in the constructionof civil works (para. 4.12).

H. Maintenance

3.20 The RMD is responsiblefor maintenance of the highway network. The RMFD pilot project, assisted by the First Highway Project covers all RMD maintenance and improvement operations in the Eastern Region and on selected roads in the Western and Southern Regions. In the Northern Region and on the Torghundi-Herat-Kandahar and the Kabul-Kunduz roads, the USSR provides extensive technical assistance and financial aid to road maintenance.

3.21 Maintenance on roads in the Southern and Western Regions not presently served by the RMFD is uncoordinatedand haphazard; it is carried out by the Provincial Administrations,which do not have the organizational basis for undertaking this work. There is an urgent need to expand the operations of the RMFD for road improvementand maintenanqe to cover all *roadein the Southern and Western Regions for which RCMD is to be responsible; the proposed project will provide this.

3.22 Creation of the RMFD, originally scheduledto start operations in 1969 was considerablydelayed due to difficultiesin local cost financing, lack of managerial talent, and the drought emergency 1970-71. In addition, the inefficiencyof a storekeepingsystem outside the authority of the MW and cumbersome procurementregulations caused serious delays in the execution of works. The consultantsunder the First Highway Project recommended improve- ments of storekeepingand procurementprocedures, some of which have been implemented. During negotiations,the Government stated that the storekeeping system will be revised and improved and agreed to keep the Association informed on progress with the improvementsand to take the Association'sviews on the subject into account.

3-23 During 1972-73, the management of RMFD was strengthenedand its performance improved considerably although still hampered by a shortage of skilled labor (foremen and mechanics) and administrative personnel (account- ants, clerks, procurement officers and storekeepers),and the inefficient storekeepingsystem. Permanent staff, excludinglabor, numbers about 370 but about 80 key positions remain vacant. Under the First Highway Project, the Governmentundertook to reorganize the organizationand operations of the RIM. Although progress has been made and operationalimprovements have been achieved, the Government has not yet been able to significantlyimprove employment conditions for highway maintenance staff. The main problem is that RMFD salaries follow the Government wage scale for civil servants, which is low and not competitivewith the private sector. Consultants under the First Highway Project have recommnended transforming the RMF into a Road Impr?ovementand Maintenance Authority which would not have to follow Government employmentpolicies and salaries. This proposal is being reviewed by the Government. An improvementin salaries could enable the REKEDto fill some of the vacant posts, but for others it is unlikely that qualified applicants can be found in Afglanistan. Under the proposed project, - 11 -

these posts will be filled with internationallyrecruited specialists until training programs have developed.the needed local talent (paxa. 3.26). Duringnegotiations, the consultants'recommendations for improvingRMFD's employment.conditions were reviewedwith the Government,which indicated that the problem was under intensivereview by the Cabinet; no concrete proposalshad as yet been formulatedbut the Governmentagreed to keep the Association informed on the situationand to take the Association's views into account.

3.24 RMED road maintenanceequipment is generallyin good condition. Most of it was purchasedunder the FirstHighway Project, and the rest has undergone or is scheduled for extensive rebuilding. There are eight highway maintenance equipment district workshops, of which those in Kabul and' Kandahar are the most important.The workshopin Kandaharis adequate for future requirements, but the Kabul workshop needs to be expanded for increased maintenance operations. A maintenance center in Kabul and improve- ments to existing district workshops will be providedunder the project. The other workshops are, except for minor shortcomings,adequate for the present'andfuture'equipment fleet when expandedto servethe entireEastern, Southernand WesternRegions.

3.25 The consultantsunder the First HighwayProject have drawnup detailedwork programsfor maintenanceand improvementfor the 1974-76period in the Eastern,Western and SouthernRegions. The programs,which have been approvedby the Government,are reasonableand will consolidatethe resultsobtained in the EasternRegion and providethe necessarymaintenance and improvementworks in the southand west. Due to the possibilityof unevengrowth in trafficand the introductionof new developmentschemes, the programsshould be updatedannually; the projectprovides technical assistance by consultants for this purpose. I. Training

3.26 Due to a shortageof skilledRMFD personnel (para. 3.23), training is needed,in particularfor mechanics,field foremen, electricians, store- *keepers,accountants and othermiddle management personnel. This will be providedunder the project. A pilotprogram for trainingof mechanicsis being carriedout under the FirstHighway Project; the resultsof this will be availableby late 1973,and the experiencesgained will be used to formulatea detailedtraining program. - 12 -

IV. THE PROJECT

A. Description

4.01 The project is a continuation and expansion of the First Highway Project; it will consolidate results obtained and expand the geographical area where proper road maintenance is carried out. It consists of:

(i) execution of a three-year (1974-76) road improvement and maintenance program for selected high priority roads in the Eastern, Southern and Western Regions of Afghanistan;

(ii) procurement of equipment, spare parts-and materials for the execution of the improvement and maintenance program;

(iii) improvement of existing workshops, construction of a high- way maintenance center in Kabul and purchase of equipment, spare parts, tools and materials as required therefore;

(iv) technical assistance to RMFD by internationally recruited. specialists and consultants for carrying out the road improvement and maintenance programs, updating of road improvement and maintenance programs for the years 1974-76, establishing a road improvement and maintenance program for the period 1977-81, and carrying out priority studies of road constructionprojects proposed by the Government.for inclusion in the Fifth Five-Year Plan;

(v) vocational training of RMED staff, and

(vi) technical assistance to PDD by consultants in planning, * design and supervision of roadworks.

(a) Road Improvementand Maintenance

4.02 The RMFD 1974-76 road improvementand maintenanceprogram covers 4,o65 km of selected high priority roads and tracks in the Eastern, Southern and Western Regions. The program was drawn up by Kampsax (para. 3.12)on the basis of a study of all roads and tracks intended ultimately to become the responsibility of the RMFD, except those located in the Northern Region and the main highways Torghundi-Herat-Kandahar and Kabul- Kunduz, which will cantinue to be improved and maintained under bilateral technical assistanc6 provided by the USSR. The MPW work units and main- tenance districts raBuired for the program in addition to those established under the First HigHay Project will be established gradually over the three year period 1 < -76 covered by this project, as staff training and organizational improvements permit.

4.03 Improvement works of 1,832 km of road will be carried out under the program to consolidate and upgrade the road network. The roads will be improved to three geometric standards (Table 7); 158 km of gravel surfaced highways (B2-roads); 657 km of medium-standard gravel roads (C-roads); and 1,017 km low-standard rural gravel roads (D-roads). Improve- ment to asphalt surfaced standards (B1) was not found to be justified in the program period. - 13 -

4.04 Routinemaintenanee works are plannedfor the 1,832km of roads after completionof the improvementworks and for 2,233km of otherroads. Includedin this is a prograxmof deferredmaintenance of 80 km of asphalt roadswhich will stop furtherdeterioration of the country'smain east- west highway from Kandahar throughKabul to the Pakistan border.

(b) Purchases of Equipment, Spares and Materials for Road Improvement and Maintenance

4.05 Purchases of road improvement and maintenance equipment amounting to aboutUS34.o million are necessary to supplement the existing equipment. The new equipmentwas identifiedby Kampsaxand is appropriate,The proposed purchases also include US$1.3 million equivalent for spare parts: US$0.5 million as stocks for new equipment and US$0.8 million for existing and rebuilt equipment.

4.06 Kampsax is presently preparing detailed plans for the Kabul Mainten- ance Center. Preliminary plans and cost estimates were reviewed and agreed duringnegotiations; estimated cost, including equipment, is US$1.4million. Dlistrictworkshops will requireonly very minor improvementsand thesewill be identifiedby consultantsduring the project period, estimated expenditures are US$100,000.

4.07 The 1974-76 road improvement and maintenance program prepared by Kampsax identified needed construction materials. The main items are bitumen, fuel, lubricants, steel, timber, cement and gravel. The project includesUS$5.9 million for the importand/or local procurement of these materials.

(c) Technical Assistance to RThD

4.08 The project will provide technical assistance in the form of: (i) consulting services to advise and assist the RNFD management in project execution and supervision; and (ii) the service of about 30 internationally recruited specialists to fill posts in the RME3 for which qualified Afghan staff is not available at present.

4.09 The technical assistance to the RMFD management, through a consulting firm,will continue to be financed by UNIP until July 31, 1974; thereafter, its financing will be covered under the proposed project; the consultant would help the RMFD to; (i) consolidate the administration of the RMFDheadquarters and the regional office for the Eastern Region; (ii) establish regional and district offices in the Southern and Western Regions; (iii) establish and supervise execution of the road improvement and maintenance programs; (iv) improve purchasing procedures; (v) train local staff; and (vi) recruit expatriate specialists to fill posts in the RMFD. The specialists will provide field and administrative staff services necessary to carry out the program, as well as on-the-job training for RMFD staff. The detailed scope of the technical assistance was discussed and agreed during negotiations.

4.10 The consultants providing technical assistance to the RMFDwill assist the Government to recruit and select the 30 specialists. During nego- tiations, it was agreed that all specialists will be employed by July 1, 1974. - 14 -

(d) Training

4.11 The project will provide training programs in specialized skills for RMFD staff such as accountants,mechanics, electricians and field fore- men, who eventuallywill replace the internationallyrecruited specialists (para. 3.23). About 300 employees will be trained during the program period. The technical assistance consultantswill define the exact scope and content of the program after the results of the pilot training scheme (para. 3.26) have been evaluated in late 1973.

(e) Highway Studies

4.12 The road improvement and maintenanceprogram for the Fifth Five-Year Plan Period (1977-81)will be prepared with the assistanceof consultants. These consultants will also undertake priority studies of highway constructionprojects that may be under considerationat that time, assist the Government in the preparation of the investmentprogram for the plan period (para. 3.14) and advise on the possible role of the local contracting industry in the constructionof civil works during the planiperiod and the measures recommended to support or develop this industry.

(f) Technical Assistance to PDD

4.13 The project will provide technical assistancein the form of consultingservices to advise and assist the PDD management in planning, design and supervisionof roadworks under its responsibility(para. 3.15).

B. Cost Estimates

4.14 The total project cost is estimated at US$20.1 million equivalent, including taxes, duties and a 20% contingency allowance. A summary of the estimated costs is given on page 15.

4.15 The cost of the road improvement and maintenance program, including purchases of equipment, spares and materials are estimated by Kampsax, based on cost experiencegained under the First Highway Project; they are reasonable. The costs of consulting services and technicalassistance have been estimated by the Association on the basis of costs for previous services of similar nature in Afghanistan. The cost estimates for workshop improvementand for constructionof the Kabul Maintenance Center are based on estimatesprepared by Kampsax. During negotiations,all cost estimates were discussed and agreed with the Government.

4.16 The 20% contingencyelement in the cost estimate comprises10% for increased quantitiesand 10% for price escalation,averaging 5% annually over the project period for both local and foreign currency. These are in line with recent trends in Afghanistan.

4.17 The foreign exchange component of the project is estimated at US$10.9 million equivalent, representing the foreign cost of imported materials and equipment, spares, tools, consultingservices and technical assistance; these include about $1.4 million towards fuel, normally procured from a non- Bank member country. Local costs are estimated at US$9.2 million equivalent and represent: - 15 -

Foreign Af Million US$ Million Exchange Pro.iectElements Local Foreimn Total Local Foreign Total Componen

A. 4ighwayWorks

ImprovementWorks 119 0 119 2.3 0 2.3 .0 MaintenanceWorks 39 0 39 0.7 0 0.7 0 Equipment & Spare Parts - 206 206 0 4.0 4.0 100 Materials 154 149 303 3.0 2.9 5.9 49 Workshop Equipment & Tools 0 6 6 0 0.1 0.1 100

Subtotal 312 361 6.0 7.0 3L0- 54

B. Kabul Maintenance Center and Workshop Improvements 5]. 28 79 1.0 0.5 1.5 35

C. TechnicalAssistance by Consultants 16 47 63 0.3 0-9 1.2 75

D. TechnicalAssistance by Internationally Recruited Specialists 28 36 64 0.5 0.7 1.2 56

E. ContingencyAllowance a/ 95 168 1.4 1.8 3.2 7

Total Project Cost 480 567 1047 9.2 10.9 20.1 54

a/ About 10% physical and 10% price. - 16 -

(i) cost of labor and locally purchasedmaterials; (ii) administrativeover- heads related to the operation of the RMFD; (iii) the local subsistenceand operating cost of consulting services and technical assistance;and (iv) the local cost of constructionworks for the Kabul MaintenanceCenter, and workshop improvements.

C. Execution

4.18 The project will be executedby the RMFD, assisted by consultants and internationallyrecruited specialists. Road improvementworks, deferred maintenance and reinforcement of asphalt highways, will be carried out by special mobile units. Routine and periodic maintenance, including maintenance of the improved roads, will be carried out by permanent RMFD staff assigned to nine maintenance districts, and by mobile gravelling and asphalt patching units.

4.19 The RMPD is responsible for the supervision of works. However, as it lacks sufficientlyexperienced staff, the consultantswill continue to assist in supervision until the results of the training program and on-the-job training permit permanent RMFD staff to take over this function.

D. Procurement 4.20 Purchases of foreign produced equipment, spares and materials, except fuels and spares for existing equipment, for the road improvement and maintenance program will be undertaken following international competitive bidding in accord- ance with the Bank Group's "Guidelines for Procurement". The purchase will not be influenced by any preferentialtariff agreements, as Afghanistan has no such arrangement with other countries. Fuels will be purchased through the only importer in Afghanistan, Afghan Monopolies. Spares for existing equipment will be purchased from the manufacturer of the equipment. Because of its relatively small size and proposed use of simple,local building techniques, construction of the Kabul Maintenance Center is not considered suitable for international bidding and the contract will be awarded through local competitive bidding, following bid invitation in two local newspapers of wide circulation. Several domestic building contractorsare expected to compete for this contract. Foreign firms will not be precluded from bidding. Local procurement of materials and fuel, which would not be financed by the proposed credit, will follow procure- ment regulationspresently in force in the MPW; cement will be procured locally from the Government-ownedfactories, at prices which would be subject to the Association'sreview and approval. During negotiations,the bidding and procure- ment procedures were reviewed and agreed with the Government (para. 3.22).

4.21 The road improvementand maintenanceworks, includingthe purchase of materials and lubricants,will start about March 1974 and be completed by March 1977. Purchase of equipment and related spare parts, including spares for existing equipment,and workshop tools, workshop equipmentand related spare parts will also begin about March 1974 and will be completed by the end of 1976. Constructionof the Kabul MaintenanceCenter should be oompletedby the end of 1976.

4.22 Because of unemploymentin the country and the availabilityof unskilled labor, the work program prepared by the consultantsand approved by the Government comprisesa comparativelyhigh labor component. The - 17 -

Governmenthas approved the consultantsrecommendations for this composition, and during negotiations, confirmation was obtained from the Government that the mobile units and district foroes will be composed as recommended, and that the Government will assign the necessary number of staff and labor to each unit and district as the work program may require.

E. Finanoing

4.23 The table on page 18 shows the funds required under the project and their sources: the proposed credit of US$11.5 million equivalent (representing about 57% of total-projectcost) will finance all foreign currency expenditures, except fuels most of which are imported from a non-member of the Bank Group (USSR), and 80% of the-total expenditure for construction of the Kabul Maintenance Center excluding cost for right-of-way, taxes and duties. 80% of the cost of local procurementof cement for the road improvement works and district workshop improvements(representing total cost exclusive of taxes) will also be financed by the credit. It will also finance the cost of the consulting service-toRMD after July 31, 1974 and the entire cost of the other consulting services and technical assistance,since UNDP financing, which would have been suitable for these last two items, is not available as the UNDP IndioativePlanning Figure for the 1972-76 period is already fully committed../

4.24 The Government will finance the remaining costs of US$8.6 million equivalent (US$7.2million equivalent in local currency and US$1.4 million equivalentin foreign currency for fuels). During negotiations,assurances were obtained from the Government that it will provide the necessary funds for the project.

F. Disbursements

4.25 Disbursementswill be made on the basis of:

(a) lO0F of total costs c.i.f. Kabul of:

(i) road improvementand maintenanceequipment and related shares, including spares for existing equipment;

(ii) imported materials for road improvement,except fuels and lubricants;and

(iii) workshop tools and equipment and related spares.

(b) 100% of.total cost of:

(i) technical assistanceby consultants;

(ii) technicalassistance by internationallyrecruited specialists;and

(c) 80%oof total cost of:

civil works for the Kabul MaintenanceCenter; and

I/ The UMDPis financing the cost of the consulting service to RMF through July 31, 1974. - 18 -

US$ million equivalent % Government IDA Total IDA Project Elgaat_s Local Po 'Tot6n a LoCal Fore4in Total Financing

A. Highway Works: ImprovementWorks 2.3 0 2-3 0 0 0 2.3 0 MaintenanceWorks 0.7 0 0.7 0 0 0 0.7 0 Equipment& Spare Parts 0 0 0 0 4.0 4.0 4.0 100 Materials 2.8 1.,2a/ 4.0 0.2 1.7 1.9 5.9 32 WorkshopEquipment & Tools 0 0 0 0 0.1 0.1 0.1 100

Subtotal 5.8 1.2 7.0 0.2 5.8 6.0 13.0 46

B. KabulMaintenance Centerand Workshop Improvement 0.2 0 0.2 0.8 0.5 1.3 1.5 87 C. TechnicalAssistance-by Consultauts 0 0 0 0.3 0.9 1.2 1.2 100

D. TechnicalAssistazqo by Internationally RecruitedSpecialists 0 0 0 0.-5 0.7 1.2 1.2 100

E. Contingency Allowance 1.2 0.2i/ 1.4 0.2 1.6 1.8 3.2 56

Total Project Cost 7.2 1.4 8.6 2.0 9.5 11.5 20.1 57

a Estimatedcost of fuel and lubricantsmost of which are imported from a non-memberof the Bank Group (USSR). 22/ Estimated cost for right-of-way acquisition, and looal taxes. - 19 -

(d) 80%oof local cost of:

cement for road improvementworkB and for improvement of districtworkshops.

Based on the foregoing and in accordance with the schedule of project execution (para. 4.21) an Estimated Schedule of Disbursements has been prepared (Annex B). Surplus funds remaining in the Credit Account after project completion will be used for additional road improvement and maintenance work as agreed between the Government and the Association.

4.26 To avoid delays in the release of local project funds, as experiencedunder the FirstHighway Project, a project revolving fund for local financingwill be established.It will be initiallyfunded with Af 25 millionto cover expendituresin the first quarterof 1353 (April- June 1974), and thereafterbe replenishedat 3-monthlyintervals with such local funds as are requiredfor projectexecution during the followingthree months. Establishmentof the fund is a conditionof crediteffectiveness. - 20 -

V. ECONOMIC EVALUATION

A. Main Benefits and Beneficiaries

5.01 A reliable road system is an essential element in the Government's strategy of increasing agricultural production. The present road network does not fulfill these requirements adequately; many roads have substandard geometric and technical characteristics and lack the capacity to handle the traffic they carry at reasonable cost. In addition,poor maintenance has caused many roads of originally adequate standards to deterioratewith resuIting increases in transport cost. Improvementand proper maintenance of the road network is necessary to meet present and future transport re- quiremenibeconomically. This project will help attain this by providing for improvementand proper maintenance of selected roads in the Eastern, Southern and Western Regions and by strengtheningthe institutionalcapability for highway administration. Costs of transport as well as of road maintenance and improvementwould increase if the project were not undertaken. The immediate and principal beneficiariesfrom road improvementand maintenance will be road users and residents in the influence areas of the project roads. Of the road user benefits about 70% will accrue to buses and trucks, 20% to taxis and the remainder to private 6ars.

B. Road Improvement and Maintenance /

5.02 The road network studied comprises all roads under the responsi- bility of the MPW located in the Eastern, Southern and Western Regions with a total length of about 10,000 km. A detailed inventory of these roads, prepared by Kampsax in 1968, was updated and used as basis for the calculation of vehicle operating oosts and improvementand maintenancecosts to the four different road standardz studied (Table 7). The improvementand maint- enance programs were adjusted to the funds availableunder the Fourth Five- Year Plan and include only the highest priority projects.

5.03 In 1971, ADT on the project roads ranged from 10 vehicles for low class gravel roads to 540 for asphalt roads, -withseasonal variations of 15% above and below these figures. The traffic was composed of about 40%cars, 20% buses and 40%trucks. Average annual traffic growth has been estimated at 7% (Annex C).

5.04 Benefits from improvement works were quantified only as savings in vehicle operating costs. No benefits from savings in passenger travel time, reduction of accidents or increased comfort of travel were included, nor were any benefits from generated traffic taken into account. Benefits for improvementwere assumed to start immediatelyafter completion of the improvementworks. Benefits from maintenancewere quantified as avoided increase in vehicle operating costs. The costs of project preparation and supervisionare included in the estimated improvementcosts, the costs of the Kabul MaintenanceCenter and workshop improvementswere allocatedin full

li Basic Data and Assumptionsused in the Economic Evaluation are shown in Annex C. - 21 -

to the maintenanceworks. The costs of consultingservices and technical assistanceand training have been allocated in relation to project costs (25% to improvementand 75% to maintenance works). All costs and benefits were estimatednet of taxes.

5.05 The economic analysis of the improvement and maintenance works was carried out with the cost of unskilled labor estimated at a shadow price of Af 30 per man-day, which represents 5$0%of the current Government salary for unskilled labor and is the lowest salary for which unemployed labor has been shown willing to work. No adequate information existed for estimating the shadow cost of skilled labor, foremen and administrators; the actual Government salaries for these positions are thereforeused.

5.06 Economic evaluation shows that the improvement works would be well justified and appropriately timed. Based on an economic life of 10 years and a constructionperiod of one year and on the estimated economic costs of improvement and supervision,the Economic Return (ER) of the improvementprogram has been estimated at 29o with a first year return of 23% (Table 8). If the actual wage rates for unskilled labor had been taken, the ER and the first year return of the improvementprogram would have been 26% and 22% respeotively. Based on a period of 10 years and on the estimated costs of periodic and routine maintenance, the benefit/cost ratio of the maintenance works has been estimated at 3.7, indicating that these works are also well justified (Table 9).

5.07 To determine the sensitivity of the ER to variations in the estimated improvement costs and vehicle operating cost savings, an analysis was carriedout assumingan increaseor decreaseof 15% in improvementcosts and 25% in benefits. The results,presented in Table 10, show that even under the most pessimistic circumstancesthe improvementworks would still yield an ER of 17% (ranging from 15%oto 22%), with an increase in maintenance costs of 15% and a decrease in benefits of 25%o, the maintenance works would still have a benefit/costratio of 2.4.

5.08 As unemploymentof unskilled labor in Afgharistan is considerable, the project has been designed for comparativelyhigh labor input (para. 4.22). An analysis was carried out to determine whether further substitutionof unskilled labor for equipment could be carried out practically and economically for the improvementworks under the project. It showed that for the improve- ment works, this would increase the labor force from about 1,300 to about 1,700. This increase would be counter-balancedby only limited reductions in equipment,mainly due to the increased turn-around time required for transport equipment. The combined effect would be an overall cost increase of about Af 50 million or 18% of total improvement costs, if labor costs are valued at the shadow rate, and about Af 135 million or 43% of total improve- ment cost if the actual wages of labor are taken. In addition, the larger labor force would necessitate increased supervisionand administration,with consequentadditional requirements of already scarce managerial talent. Finally, the labor substitutionwould reduce the estimated ER from 29% to 84 or,-iM - t

24% (Table 11). The above analysis confirms that ½e selected labor/ equipment mix is appropriate. Since maintenance operations are already highly labor intensive, only small variations i- the labor/equipment mix would be possible; no additional analysis was bherefore carried out for these works.

VI. RECOMKENDATIONS

6.01 Agreement having been reached and the Government having given assurances on the principal issues discussed in Chapters III and IV, the proposed project constitutes a suitable basis for an IDA credit of US$11.5 million to the Governmert of Afghanistan on thle usual terms. Establishment of a project revolving fund and the initial payment into it are a condition of credit effectiveness.

November 26, 1973 Table 1

APPRAISAL OF

A SECONDROAD IMPROVEMNT AND MAfINENANCEPROJECT AFGHANISTAN

Air Traffic on Internationaland Main Domestic Airports, 1970 - 1972

Passengers Freight (thousands) (tons)

Airport-/ 1970 1971 1972 1970 1971 1972

Kabul 82.3 89.0 115.8 3,649 4,035 4,,950 Kandahar 13.7 13.8 11.6 379 202 112

Herat 7.4 2.9 9.7 16 3 10 Kunduz 1.4 1.2 3.2 0 1 6 Faizabad 0.4 1.4 3.6 25 25 55

Mazar-i-Sharif 5.7 2.0 5.5 n. a. 0C/ O-/

Total 110.9 110.3 1_49.4 4069 4,266 $23

1/ Kabul and Kandahar airports serve international and domestic traffic; the other airportsonly domesticflights. 2/ Less than 500 kgs.

Source: Digestof Air TrafficStatistics, 1970-1971 and 1971-1972,Afghan Air Authorityand DirectorateGeneral of Civil Aviation,Kabul, March 1972 and 1973

November26, 1973 Table 2

APPRAISALOF

A SECONDROAD IMPROVEMENT AND MAIlNTAXCEPROJECT AFGHIS TAN

ft2anitures in National Develoment Plans 1957 - 176 (Af Million)

1st Plan 2nd Plan 3rd Plan .4th Plan 1957_1961 162-1966 1967-1971 1972-1976 (ActiiaI7Y .(Actual) (Actual) (Plan) Total Plan 14.676 21,660 33,620 46.740 Capital 8,371 8,540 9,580 12,660 Recurrent 6,305 13,120 24,040 34,080 TransportSector 417Qo 9.370 3,117 2.595

HighWys 4,600 9,240 2v867 2,022 CivilAviation 155 130 250 573 River Ports 35 n.a. n.a. n.a. Transort Sectorin % of Total Plan 33 43 9 6

Sources:1957-1961: Second Five Year Plan 1962-1966,Ministry of Planning, Kabul, 1963

1962-1976: Fourth Five Year Plan 1972-1976 Draft, Ministry of Planning, Kabul, 1972

November 26, 1973 Table 3

APPRAISALOF

A SECOND ROADIMPROVEMENT AND MAINTENANCEPROJECT

AFGHANISTAN

Length of Highway Network, 19574 1967, and 1972

Road Surface 1957 1967 1972

Concrete 0 680 680

Asphalt 0 1,305 1,778

Gravel ) 3,661 3,911 ) 3,700 Improved Earth ) 5,628 8,724

Earth 2,500 5,776 5.776

Total 6,200 17.050 20.869

Sourceg: 1957: Survey of Progress 1959-1960,Ministry of Planning, Kabul 1960.

1967: Highway MaintenanceStudy, Kampmann,Kierulff and Saxild, May 1967.

1972: MPW, Kabul, 1973.

November 26, 1973 2able 4

APPRAISALOF

A SECONDROAD IMPROVEMENT AND MAINTENANCEPROJECT AFGHANISTAN

Motor Vehicle Fleet, 1967 and 1970

Number of Vehicles ('000) 1967 1970 Vehicle Rest of Rest of Type Kabul Country Total Kabul Country Total

Cars 29.2 2.9 32.1 31.9 2.6 34.5

Buses 2.3 0.9 3.2 2.6 1.0 3.6

Trucks 15.5 3.3 18.8 15.9 4.1 20.0

Total 47.0 7.1 54.1 50.4 ,7 7-. 58.1

Average Distribution Average Annual Growth of Fleet 1967-1970()_ of Fleet 1967-1970( Vehicle kIestor - Reszof T."* Kabul Country Total Kabul Country Total

Cars 62.7 37.2 59.3 3.0 .3.5 2.4

Bases 5.0 12.8 6.1 4.2 3.6 4.0

Trucks 22.3 50.0 34.6 0.9 7.5 2.1

Total 100.0 100.0 100.0 2.4 2.7 2.4

Sources: (a) Survey of Progress 1971 - 1972, Departmentof Statistics, Kabul, November 1972

(b) Statistical Pocketbook of Afghanistan 1971, Department of Statistics, Kabul, August 1972

November 26, 1973 Table 5

APPRAISAL OF

A SECONDROAD IMPROVEMENTAND MAINTENANCEPROJECT

AFGHANISTAN

Traffic Through Selected Count Stations on Major Roads 1966-1971

(t000 vehicles)

1966 1971 Total Buses- Buses- Annual Road/Count Station Cars Trucks Total Cars Trucks Total Increase

Kabul-Sher Khan South Salang 17.4 58.3 75-5 24.0 43.3 67.3 -1.9 Khinjan 16.4 58.3 74.7 24.0 39.9 63.9 -3.1 Baghlan 4.1 13.6 17.7 12.7 29.4 42.1 SIL.9

Kabul-Kandahar Chowki Arghandi 21.3 18.5 39.8 40.0 36.2 76.2 13.9 Shishgaw 12.1 10.5 22.6 24.2 27.4 51.6 16.0 Qarabagh Ghazni 5.1 8.2 13.3 10.0 20.1 30.1 17.8 Share-Safa 4.4 9.5 13.9 10.8 20.1 30.9 17.3

Kabul-Torkham Darunta 31.1 47.4 78.5 62.1 75.6 137.7 11.9 Kaji Aziz Khan 32.0 48.9 80.9 50.7 47.5 98.2 4.0

Kandahar-Herat Dilaram 2.7 9.3 12.0 7.3 19.2 26.5 17.2 Adriskan 3.4 12.2 15.6 6.7 17.0 23.7 8.7

Kandahar-Spinboldak Takhtapul 2.5 10.7 13.2 1.6 9.3 10.9 -3.8 Spinboldak 2.3 9.6 11.9 1.6 9.2 10.8 -1.9

Herat-Trughundi Kamarkalagh 1.7 5.9 7.6 2.5 8.0 10.5 6.7 Rabat Sangi 1.8 5.8 7.6 2.4 6.4 8.8 3.0

Weighted Average 7.2

Sources: (a) Survey of.Progress 1969-1970, Department of Statistics,Kabul, October 1970.

(b) Survey of Progress 1971-1972, Department of Statistics,Kabul, November 1972.

November 26, 1973 Table 6

APPRAISAL OF

A SECOND ROADIMPROVEMENT AND MAINTENANCEPROJECT

AFGHANISTAN

Highway Revenues and Expenditures, 1967 - 1971 (Af million)

Revenues 1967 1968 1969 1970 1971

Import duties on vehicles and spare parts!/ 235.0 240.0 246.0 252.0 258.0

Import duties and taxes on gasoline and diesel oil 91 557.0 544.0 604.0 590.0 644.0 Vehicle licence fees - 0.1 0.1 - -

Highway tolls 31.1 33.2 42.8 54.2 58.6

Transport Commission 43.6 41.4 58.0 47.3 55.8

Total 866.7 858.7 950.9 943. 1016.4

EKPenditures

Constructionand Improvement 617.4 306.4 713.9 284.4 368.0

Maintenance 41.9 42.6 81.4 105.8 270.2

Administration 6.2 3.5 3.5 10.6 10.7

Total 6. 798.8 40.88 648.0

1/ Estimate for the yearsl9 6 7, 1968, 1970 and 1971 are based on annual growth in vehicle fleet.

2/ Estimate for the yearsl967, 1968, 1969 and 1971 are based on annual growth in traffic.

Source: Highway Cost and Revenue Analysis, SupplementaryStudies No. 3, Kampmann, Kieralff & Saxild, September1972

November 26, 1973 table 7

APPRAISALOF A SECONDROAD IMPROVEMENT AND MAINTEMANCE PROJECT

AFGHANISTAN Standardsfor Road GlassesB. C. and D

Type of Terrain Flat Rolling Mountainous Road Class B. No of Trafficlanes 2 2 2 Pavementwidth (m) 6.0 6.0 6.o Shoulder width (m) 1.5 1.5 0.75 Minimum horizontalradius (m) 20 Designspeed (km/h) 60 60 40 -Pavementtype 1~/ . 2 coat surfacedressing ~12 cm stabilizedgravel

Road Cl8as B2 No. of Traffic lanes 1 1 1 Pavementwidth (m) 4.0 4.0 4 ° Shoulder width (m) 1.5 1.5 1.0 Minimum horizontalradius (m) 15 Designspeed (km/h) 60 40 . 30 (7 cm mechanicallystabilized gravel Pavement type I/ i7 cm selectedgravel

Road Class C

No of Trafficlanes 1 1 1 Pavementwidth (mi 4.0 4.0 3.5 Shoulder width km) 1.0 1.0 0.75 Minimum horizontal radius (m) 10 Designspeed (km/h) 50 3.0 20 Pavement type - 7 cm selected gravel Road Class D

No of Traffic lanes 1 1 1 Pavement width (m) 4.o 4.0 3.0 Shoulderwidth (m) 0.5 0.5 0.5 Minimum horizontal radius (m) -

Design speed (km/h) 30 30 - Pavement type - 7 cm selected gravel

1/ Singleaxle load:8 t Source: HighwayMaintenance Program, Stage II, FinalReport, Kampmann,Kierulff and Saxild,August 1972.

November26, 1973 Table 8

APPRAISALOF

A SECODDROAD MROVEMENTAND NA,DTEW CE PROJECT

AFGHANISTAN

Estimated First Year and Economic Returns of Roads in Road Improvement Program Improve- First First Traffic Road nent Year Year Economic 1975 Length Costsa Benefits Return Return Roads and Road Classes Region ADTJ/ km Af 4000 Af '000 % X Road Class B2, C, D Total 45 1,832 288,070 74,303 23 29

Road Class B2 Total 145 jJ8 40,442 12,662 28 35

Ghazni-Sharan East 130 56 13,139 5,832 40 50 Jalalabad-KamaBridge East 125 11 2,581 925 33 41 Gardez-SaydKaram East 130 20 11,238 3,261 26 33 Jabal Serai-Ghorband East 160 25 4,106 1,122 25 31 Nahr-i-Serai-Lashkargah South 170 46 9,378 1,522 15 16 Road Class C Total 55 657 164.106 39,206 22 26

Sayd Karam-Hansankhel East 105 30 7,754 4,303 50 62 Qarabaghroad East 80 12 2,833 1,306 42 52 Panjwai road South 65 20 4,575 1,797 36 44 Hasankhel-.Jaji East 65 20 4,751 1,744 33 41 Ihost-Ourbas East 70 38 9,091 3,183 32 40 Sharan-Sultani East 80 26 6,733 2,o69 28 35 Kandahar-Dahla South 15 25 2,546 761 27 34 Herat-Ghoryan West 65 81 14,429 4,065 26 32 Istalefroad East 100 13 4,329 1,220 26 32 Doab-Banyan East 50 52 18,476 4,890 24 30 Kotae Ashro-Sarchashma East 90 11 3,267 864 24 30 Sarchashma-Gardendewal East 5o 25 7,977 1,839 21 25 Zurmat-Gardez East 60 14 1,026 237 21 25 Ghorband-Banmyan East 80 30 9,971 1,873 17 20 Kama Bridge-Kama East 45 15 1,994 357 16 18 Herat-Obe Wdest 40 97 23,579 3,703 14 15 Qalai Naw-Karukh West 35 148 40,775 4,995 11 10

Road Class D Total 2 1,017 83,522 22,435 24 30

Pashtun-Zarghun West 35 50 4,106 1,892 ' 42 52 Mahbud Raqi-Tagab East 50 50 4,106 1,823 40 50 Sultani-Urgon East 40 38 3,120 1,146 33 42 Debala road East 60 42 3,449 1,265 33 41 Ghormach-Balamurghab West 20 66 5,420 1,805 30 38 Ghazni-Zurmat East 35 76 6,217 1,964 29 36 Doshi-Doab East 20 100 8,211 2,313 26 32 Bamyan-BandeAmir East 40 75 6,159 1,577 23 29 Balamurghab-QalaiNaw West 20 116 9,525 2,358 23 27 Dahla-Tarinkot South 15 141 11,613 2,775 22 26 Harkul-Chaghcharan West 20 164 13,467 2,299 16 17 Panjab-Herkul East 25 49 4,024 688 16 17 Gardendewal-Bamyan East 15 50 4,105 530 12 11

1/ Totalsare weighted averages. / Costs inclusive of projectpreparation, supervision, consulting services, technical assistance and training; unskilled labor cost Af 30 per man-day. Source: Highway Maintenance Program, Stage II, Final Report Kampmann, Kierulff and Saxild, August 1972 and Mission Estimates November 26, 1973 Table 9

APPRAISALOF

A SECONDROAD IMPROVEMENT AND MAINTENANCEPROJECT

AFGHANISTAN

Estimated Economic Returns of the Road Maintenance Program-/

Average Road Present Value 1975 Benefit/ Maintenance Traffic 1975 Length Af million Cost Road Surface Tr!e ADT Km Costs Benefits Ratio

Asphalt Routine/Periodic 440 964 536.5 2,206.0 4.1

Gravel Routine/Periodic 200 115 49.3 145.4 2.9

Gravela' Routine/Periodic 55 250 27.4 63.3 2.3

Gravel Routine 20 904 46.5 55.o 1.2

Total 2,233 659.7 2,469.7 3.7

I/ Road Class B2 (see Table 7). 1/ Road Class C (see Table 7). 2/ Road Class D (see Table 7).

Source: Highway MaintenanceProgram, Final Report, Stage II, Kampmann,Kierulff and Saxild, August 1972, and Mission Estimates.

November 26, 1973 Table 10

APPRAISAL OF

A SECON1DROAD IMPROVEMEIT AND MAIWNTENACEPROJECT AFGHANISTAN

Estimated Economic Returns of the Road Improvement Program

Road Classes Assumptions: All B2 C D

Best Estimate of Improvement Costs, and

Most likely value of benefits 29 35 26 30 25% increase in benefits 36 44 34 38 25% decrease in benefits 20 26 18 22

Assumed Increase in Improvement Costs (15%), and

Most likely value of benefits 25 31 22 26 25% increase in benefits 32 38 29 33 25% decrease in benefits 17 22 15 18

Assumed Decrease in Improvement Costs (15%), and

Most likely value of benefits 34 42 32 36 25% increase in benefits 43 52 40 45 25% decrease in benefits 25 31 23 26

/ The economic analysis was based on improvement costs and traffic costs at the time of appraisal, May 1973, using unskilled labor cost at Af 30 per man-day.

Source: Mission Estimates, June 1973

November 26, 1973 Table 11

APPRAISALOF

A SECOND ROAD IMPROVEMENTAND MAI)AENANCEPROJECT

AFGHANMISTAN

Estimated Economic Returns of the Road InDrovement Program at Alternative Labor/Equipment Mixes

Improve- First First Labor/ Road ment Year Year Economic Equipment Road Length Costs&/ Benefits Return Return Mix / Class km Af 'O00 Af '000 % %

I . All 1 832 288,070 74'303 23 29 I B2 158 40,4h2 1-2-6 2 3 I C 657 164,106 39,206 22 26 I D 1,017 83,522 22,435 24 30

II All 1 832 339,623 74 303 20 24 II B2 24 30 II C 657 210,596 39,206 17 19 II D 1,017 81,384 22,435 25 31

v/ Labor/EquipmentMix I is the on'eproposed by the consultantsand accepted by the Government. Labor/EquipmentMix II contains the maximum possible labor input.

2/ Costs inclusiveof project preparation, supervision, consulting services, technical assistance and training;unskilled labor cost of Af 30 per man-day.

Source: Mission Estimates, June 1973

November 26, 1973

ANNEXA Page 1

APPRAISAL OF

A SECOND ROADIMRQOVEMENT AND MA.ThAENMCEPROJECT

AFGHANISTAN

Previous Transportation ProJects

Highway Maintenance Project - Credit 158-AF

Amount of Credit : US$5.0 million Date of Credit Agreement : June 26, 1969 Effective Date : June 10, 1970 Closing Date : December 31, 1973

1. The project comprises the first stage of a two-stage highway maintenance program and includes (i) the organization of the Road MaintenanceFirst Directorate (RMFD) in the Eastern Region and (ii) the introductionof improved maintenance and improvementson selected paved highways and high priority unpaved roads in the Eastern Region. The project provides for the purchase of highway maintenance and workshop equipment, spare parts, and materials, and the services of consultants to implement the organization, to train personnel and to study the improvement of highway traffic regulations. While the Credit provides the funds to cover the capital cost of equipment and materials required to carry out the project, the consultants'services are beirg provided under a grant from the UNDP, for which the Bank is Executing Agency. The grant was originally in the amount of US$1.7 million to cover con- sulting services for 3-1/2 years, but has later been increased to a total of US$3.0 million equivalent to cover a 5-year period ending in August 1974.

2. The Credit only became effective in June 1970, due to delays in parliamentaryapproval. Until about mid-1971, execution of the project was in general satisfactoryalthough scmewhat delayed. The principal reasons for delay were: (a) Government'sfailure to ensure timely release of local funds (b) cumbersome procurement methods and (c) Government's failure to provide qualified local personnel as counterparts for the project. The delays were much aggravated during the second half of 1971 due to severe droughts which required considerable diversion of Government resources for relief operations.

3. A reorganization of the RMFDwas approved by Government in early 1972. The reorganizationwas not implementedimmediately; release of local funds and organizationimprovements were delayed throughout1972. However, in early 1973, a capable manager was appointed president of the RCND, and necessary funds were released; project performance then improved rapidly. The Association agreed to extend the Credit Closing Date to March 31, 1975 to accommodate purchases and works under the delayed RMFD work program and fully utilize the Credit proceeds.

2/ Extension to March 31, 1975 being processed. ANNEX A Page 2

Aviation Project - Credit 374-AF

Amount of Credit : US$2.5 million Date of Credit Agreement : May 15, 1973 Effective Date : Estimated at Oct.l, 1973 Closing Date : June 30, 1979

4. The project consists of: (i) design, construction and equipment of a Flight InformationCenter at Kabul, to serve internationaland domestic civil aviation in Afghanistan; (ii) organizational changes in the Afghan Air Authority and technical assistanceto the Air Navigation Service to ensure the provision of adequate air navigation services; and (iii) pre- liminary engineering, economic studies and final engineering of new airport facilities near Logar to serve the Kabul area. The project provides for the purchase of communications equipment and an air traffic control simulator; the services of consultants to assist in the implementation of organizationalchanges, and to provide advisory services and training of personnel;and the services of consultantsfor technical and economic studies, final engineering and architecturaldesign of the first phase of developing Logar airport.

November 26, 1973 Annex B

APPRAISALOF

A SECONDROAD A'ANDPROVEMENT MAINTENANCE PROJECT

AFGHANISTAN

Estimated Schedule of Disbursements

IDA Fiscal Year Cumulative Disbursements and End of Quarter At End of Quarter (US $'000 Equivalent) 1973/74

June 30, 1974 230

1974/75 September 30, 1974 400 December 31, 1974 1.,200 March 31, 1975 2,800 June 30, 1975 6,000

1975/76

September 30, 1975 6,500 December 31, 1975 7,000 March31, 1976 8,000 June 30, 1976 9,500

1976/77

September 30, 1976 10,100 December 31, 1976 10,500 March 31, 1977 10,900 June 30, 1977 11,100

1977/78

September 30, 1977 11,300 December 31, 1977 11,500

Source: Mission Estimates, May 1973

November 26, 1973

ANNEXC Page 1

APPRAISALOF

A SECOVDROAD nVROVEMEDT AND MAn=IIEAXCEPROJECT

AFGHANISTAN

Basic Data and Assumptions used in the Economic Evaluation

Traffic

1. Traffic volumes on the highway network were estabilished on the basis of: (i) a countrywide origin-destination(O-D) survey of road traffic carried out in July-August1970 by the RCMD, (ii) a detailed 0f-Dsurvey of road traffic to and from Kabul carriedout in July-August 1970 by the RMFD, assisted by Kampsax; (iii) annual volume traffic counts carried out by the BMFD; and (iv) statisticsprepared by the Mini'stryof Finance on trafficon major roads. During the period 1966-71, traffic on the main highway network increasedat an average annual growth rate of about 7% (Table 5). There was, however, a considerablevariation in traffic growth between differentareas of the country (from negative on a few roads to 18% on the main road from Kabul to the Southern Region). The average annual traffic growth rate measured on count stations in areas where road improvementworks will be carried out under this project was about 11, ranging from 5% to 18%. Based on this and on traffic project- ion studies carried out by Kampsax and the RMFD, traffic on the project roads was conservatively estimatedto grow at an averageannual rate of 7% for the period 1973-85.

Improvement and Maintenance Costs

2. The estimated improvement costs exclusive of taxes for the selected road improvement levels are shown in Table 8. They are prepared by Kampsax and cover project preparation, improvement works and super- vision; and are based on experience from improvement works carried out by RMIFDin 1972-73 using a high labor component. The averagemaintenance costs per kilometerof road exclusiveof taxes are shown in Table C-1. They are based on experiencefrom maintenanceworks carried out by RMFD during 1972-73. ANNEX C Page 2

Transport Costs

3. Transport costs are based on owning and operating typical vehicles. On the basis of information on type and composition of traffic from the O-D surveys, two vehicles were assumed typical: (i) a passenger car, roughly correspondingto a Volga Sedan; and (ii) a bus/truck, roughly correspondingto an InternationalHarvester. Table C-2 shows the charac- teristicsof each of these vehicles; and their operating costs on a level, tangent,paved road in good condition. The influence on the operating costs of road surface condition,alignment and structureswere estimated by Kampsax and the resulting average vehicle operating costs on the various road classes are shown in Table C-3; the estimatesare reasonable. Benefits

4. Benefits from imlprovementworks quantifiedonly as savings in vehicle operating costs, excludingbenefits from savings in passenger travel time, reduction of accidents generated traffic and increased comfort of travel. Benefits from improvementwere assumed to start immediately after completionof each improvementwork. Benefits from maintenance were quantified as avoided increases in vehicle operating costs.

EQonQmic Calculations

5. For the economic calculationsa time horizon of 10 years was used for both improvementand maintenancework. For simplicityreasons the improvementworks were assumed to be carried out in 1974, the first year of this project and completed in 1975, the mid-point year of the project after which maintenancewould commence and continue for 10 years. This assumption results in a slight underestimation of the benefits. The labor/equipment mix used for the analysis was that proposed by Kampsax with labor costs at shadow price.

November 26, 1973 ANNEXC Table C-1

APPRAISAL 0'

A SECOKD ROAD IMPROVEM¢NTAND MAINENANCE PROJECT

AFGHIANISTAN

Road Maintenance Costs (Af/km/year)

Road Traffic MaintenanceWorks Surface ADT Routine Periodic Total

Asphalt 150 10,180 21,140 31,320 Asphalt 400 10,180 25,420 35,400

Gravel (B2) 50 6,500 14,820 11,320 Gravel (B2) 100 7,220 7,460 14,680 Gravel (B2) 150 8,020 8,980 17,000 Gravel (B2) 200 9,380 10,260 19,640 Gravel (B2) 300 14,100 12,340 26,440 Gravel (B2) 400 16,020 14,020 30,040 Gravel (C) 50 5,160 3,400 8,560 Gravel (C) 100 5,80o 5,800 11,600 Gravel (C) 150 7,160 7,560 14,720 Gravel (C) 200 10,520 9,320 19,8)0

Gravel (D) 25 3,700 - 3,700 Gravel (D) 50 4,180 _ 4,180 Gravel (D) 75 4,850 2,1301/ 6,980 Gravel (D) 100 7,,010 4,2101/ 11,220

J1/ Estimated.

Source: Highway YiaintenanceProgram, Stage II, Final Report Kampmann, Kierulff and. Saxild, August 1972

November 26, 1973 A*NNEXC Table C-2

APPRAISAL OF

A SECONDROAD IMPROVEMENT AND MAITENAINCE PROJECT

AFGHANISTAN

Average Characteristicsand Operating Costs of Typical Vehicles Y

A. Average Characteristics

Item Car Bus/Truck

Price of vehicle (Af) 150,000 321,000

Price of tires and tubes (Af) 1,500 4,600

Number of tires 4 6

Vehicle life (years) 7 10

Tire life (km) 40,000 40,000

Annual vehicle Kilometrage 40,000 50,000

B. Operating Costs (Af/km)

Item Car Bus/Truck

Depreciationand Interest .77 1.04

Fuel .39 .78

Maintenance .31 .93

Tires .15 .69

Oil and Lubrication .02 .02

ProfessionalDriver .53 .90

Overheads .06 .17

Total 2.23 4.74

1/ All costs are exclusive of taxes. 7/ On a level, tangent, paved highway in good condition,at average speeds of 75 ka/h for cars and 60 kmh for buses and trucks. Source: Highway Maintenance Program, Stage II, Final Report, Kampmann, Kierulff and Saxild, June 1973, and Mission estimates.

November 26, 1973 ANN=XC Table C-3

APPRAISALOF

A SECONDROAD IMPROVEMENT AND MAITENANCEPROJECT

AFGHANISTAN

Average Vehicle Operating Costs for Different Road Classes (AfYlkn

Road Class Car Bus/Truck

Ideal / 2.23 4.74 B1 2/ 2.34 4.99

B2 2.76 6.09

C 2/ 3.27 7.31

D 2/ 3.63 8.88

Track 1.214 11.07

1/ On a level tangentpaved highway in good condition,at average speeds of 75 km/h for cars and 60 km/h for buses and trucks.

2/ Standards are shown in Table 7.

_/ These roads are normally no more than unimproved earth tracks.

Source: Highway Maintenance Program, Stage II, Final Report Kampmann, Kierulff and Saxild, June 1973, and Mission Estimates.

November 26, 1973

APPRAISAL OF A SECOND ROAD IMPROVEMENT AND MAINTENANCE PROJECT AFGHANISTAN PRESENT ORGANIZATION OF THE ROAD MAINTENANCE FIRST DIRECTORATE

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