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World Bank Document Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 23330 IMPLEMENTATION COMPLETION REPORT (CPL-36850) ON A LOAN Public Disclosure Authorized IN THE AMOUNT OF US$65 MILLION EQUIVALENT TO THE REPUBLIC OF PARAGUAY FOR THE EIGHTH HIGHWAYS PROJECT Public Disclosure Authorized FEBRUARY 20, 2002 Finance Private Sector and Infrastructure Department Country Management Unit - LCC7C Latin America and the Caribbean Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their I official duties. Its contents may not otherwise be disclosed without World Bank authorization. Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective November 27, 2001) Currency Unit = Guarani I Guarani = US$ 0,000214 US$ 1 = 4660 Guaranis FISCAL YEAR January 1 to December 31 ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy CONAVI National Housing Council CORPOSANA Municipal authority of sewage and water services in Asunci6n DINATRAN National Transportation Directorate DPP DRH's Department of Planning and Projects DRH Directorate of Highways EU MOPC's Environmental Unit FONPLATA Fondo para la Cuenca de la Plata GoP Government of Paraguay HDM Highways Design&Maintenance Standards Model IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding IDB Inter-American Development Bank IERR Internal Economic Rate of Retum IRI International Roughness Index JBIC Japan Bank for International Cooperation MOPC Ministry of Public Works and Communications MTR Mid-term Review OPIT Transport Planning Office PPF World Bank's Project Preparation Facility SAR Staff Appraisal Report SETAMA Metropolitan Transportation Secretary SIAMV Integrated Road Maintenance Management System USecPWC Undersecretariat of Public Works and Communications UsecT Undersecretariat of Transport UsecA&F Undersecretariat of Administration and Finance Vice President David de Ferranti Country Manager/Director: Myrna L. Alexander Sector Manager/Director: Jose Luis Irigoyen Task Team Leader/Task Manager: Paulus A. Guitink PARAGUAY HIGHWAYS VIII CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 4 5. Major Factors Affecting Implementation and Outcome 11 6. Sustainability 13 7. Bank and Borrower Performance 14 8. Lessons Learned 16 9. Partner Comments 18 10. Additional Information 19 Annex 1. Key Performance Indicators/Log Frame Matrix 20 Annex 2. Project Costs and Financing 24 Annex 3. Economic Costs and Benefits 26 Annex 4. Bank. Inputs 27 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 28 Annex 6. Ratings of Bank and Borrower Performance 29 Annex 7. List of Supporting Documents 30 Annex 8. Log Frame: Mid-Term Review 31 Annex 9. Map of Project Components 34 Annex 10. Project Evaluation by the Borrower 35 Project ID: P007913 ProjectName: Eighth Highway Project Team Leader: Paulus A. Guitink TL Unit: LCSFT ICR Type: Core ICR Report Date: February20, 2002 1. Project Data Name: Eighth Highway Project LIC/TFNumber: CPL-36850 Country/Department: PARAGUAY Region: Latin America and Caribbean Region Sector/subsector: TH - Highways KEY DATES Original Revised/Actual PCD: 01/30/1990 Effective: 07/20/1994 Appraisal: 06/12/1992 MTR: 06/23/1997 Approval: 12/21/1993 Closing: 06/30/1999 06/15/2001 Borrower/lmplementingAgency: GOVERNMENT/MOPC Other Partners: STAFF Current At Appraisal Vice President: David de Ferranti Shahid Javed Burki Country Manager: Myma Alexander A. Sanchez Sector Manager: Jose Luis Irigoyen Ping-Cheung Lok Team Leader at ICR: Paulus A. Guitink William Matthey ICR Primary Author: Paulus A. Guitink 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability:UN InstitutionalDevelopment Impact:M Bank Performance:S BorrowerPerformance: S QAG (if available) ICR Quality at Entry: S Projectat Risk at Any Time: Yes 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 OriginalObjective: The project was the first Bank-assisted operation in Paraguay's Transport Sector since 1982. Its development objectives aimed to: (a) strengthen the Ministry of Public Works and Communications organization; (b) improve its capacity to construct roads and to maintain them; (c) relieve urban problems or reduce the environmental hazards and the nuisance caused by the frequent flooding along Asunci6n's ringroad; (d) facilitate the use of the ports of Villeta and San Antonio to increase exports; (e) reduce the transportation costs of exporting soybeans to Brazil; (f) improve environmental assessment skills of MOPC's Environmental Unit (EU); and (g) assist MOPC in establishing a National Vehicle Registry. 3.2 Revised Objective: Project objectives were not revised during implementation. However, project impact, outcome and output were detailed specifically during the preparation of a logical framework at project mid-term review to monitor project performance and risks. The project matrix is presented in the annexes. 3.3 OriginalComponents: To achieve the objectives described above, the project included the following components: 1. Road Improvement. This component comprised the improvement of key national road links: (i) 58.6 km of roads of Route 1 in the southern access to Asunci6n from Paraguari to Ita and from Ita to Cuatro Mojones; (ii) 12.3 km of the Asunci6n's ringroad from Cuatro Mojones to Route 9 widened to four lanes, including construction of three overpasses, rehabilitation of three main at-grade intersections, and improvement of two main storm-drain canals; and, (iii) 17 km of roads of Route 3 paved in the northern access to Asunci6n from Limpio to Emboscada; 2. Road Rehabilitation. This included the resurfacing of 100 km of Route 6 from the junction with Route 7 to km 100 South of the junction; 3. Pilot Soil Stabilization Program. The program consisted of the improvement of approximately 28 km of unpaved rural roads by applying various types of soil stabilizers to such roads and monitoring and evaluating the performance of these products; 4. Consulting Services. This included the provision of consulting services to assist MOPC in the supervision of civil works, preparation of engineering designs, a study to devise alternatives to handle the increased flow of water carried by the Ytay and Lambar6 creeks, and a study to improve accesses to the greater Asunci6n area. The project also included technical assistance aimed at: (i) strengthening MOPC's organization and management capacity; (ii) establishment of MOPC's Environmental Unit; (iii) strengthening of the Directorate of Roads and Highways Department of Planning and Projects; and, (iv) implementation of a National Vehicle Registry. The project also included provision of equipment required for the implementation of various technical assistance components. 3.4 Revised Components: The loan was amended in April 1999 and August 2000, but the original project components were maintained throughout implementation. The first amendment included: (i) a downward adjustment of the percentage of loan disbursements for civil works to secure Bank financing throughout the project implementation period; (ii) an actualization of local counterpart funds required to complete the project and the amount of funds stipulated for road maintenance; (iii) broaden the scope of the unpaved roads stabilization pilot program by "applying stabilizing agents -2- to test sections along such roads" and allow direct contracting with qualified suppliers; and (iv) update project implementation indicators. The second amendment intended to provide incentives to improve project implementation and included a redefinition of the paripasso and a reallocation of the loan proceeds to reflect financing demands from different categories. 3.5 Quality at Entry: Quality at entry is marginally satisfactory. The project objectives were consistent with the CAS, which focused on improving the conditions to attract private investment and improving the efficiency of the public investment to achieve long-term sustainable growth that would enable Paraguay to remain competitive within the context of MERCOSUR. Because of the long distances to deep-water ocean ports, transport efficiency is critical to maintain the competitiveness of Paraguay's exports. The project addressed major transport issues to reduce congestion to Asunci6n Port, including the diversion of exports to alternative ports such as Villeta and San Antonio and improving traffic flows along trunk routes providing access to Asunci6n from the North and the South. In doing so, the project is very relevant to the transport sector of Paraguay and to the economy as a whole. However, project design failed to make adequate provision for a number of elements crucial to successful implementation: * Insufficient attention to risk assessment and consequences of risks identified. Although weak implementation and management capacity for such a large and complex investment program and shortage of counterpart funds were recognized by the SAR as constituting a major risk in the short and medium-term, the project design did not incorporate any strategies for mitigating those risks. While the project included very stringent safeguards to ensure proper
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