Document of The World Bank
FOR OFFICIAL USE ONLY
Public Disclosure Authorized Report No: 47324-GH
PROJECT APPRAISAL DOCUMENT
ON A Public Disclosure Authorized PROPOSED CREDIT
IN THE AMOUNT OF SDR 150.5 MILLION (US$225.0 MILLION EQUIVALENT)
TO THE
REPUBLIC OF GHANA
FOR A
Public Disclosure Authorized TRANSPORT SECTOR PROJECT
May 20, 2009
Transport Sector Country Department AFCW1 Africa Region
Public Disclosure Authorized
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
CURRENCY EQUIVALENTS
Exchange Rate Effective: March 3 1,2009
Currency Unit = Ghanaian Cedi (GH$) US$1 = GH61.41 US$1 = SDR0.66864
FISCAL YEAR January 1 - December31
ABBREVIATIONS AND ACRONYMS
AADT Annual Average Daily Traffic AFD Agence Frunpise de De'veloppement (French Development Agency) AIDS Acquired Immune Deficiency Syndrome BAS Beneficiary Agencies BADEA Arab Bank for Economic Development in Africa BP Bank Procedure CIDA Canadian International Development Agency DANIDA Danish International Development Agency DfID Department for International Development DFR Department of Feeder Roads DP Development Partner DUR Department of Urban Roads DVLA Driver and Vehicle Licensing Authority EA Environmental Assessment EC European Commission EIA Environmental Impact Assessment EMP Environmental Management Plan EO1 Expression of Interest EOP End of Project EPA Environmental Protection Agency EIRR Economic Internal Rate of Return ERR Economic Rate of Return ESMF Environmental and Social Management Framework FBS Fixed Budget Selection FMT Financial Management Team FYRR First Year Rate of Return GACL Ghana Airports Company Limited GCAA Ghana Civil Aviation Authority GEF Global Environment Facility GHA Ghana Highway Authority GIMPA Ghana Institute of Management and Public Administration GIS Geographical Information System GMA Ghana Maritime Authority GOG Government of Ghana GPHA Ghana Ports and Harbors Authority GPRS Growth and Poverty Reduction Strategy GRCL Ghana Railway Company Ltd. GRDA Ghana Railway Development Authority GTTC Government Technical Training Center HDM Highway Development and Management Model HIV Human Immunodeficiency Virus IAs Implementing Agencies IC Individual Consultants ICB International Competitive Bidding ICAO International Civil Aviation Organization IDA International Development Agency IFR Interim Unaudited Financial Report IRI International Roughness Index ITP Integrated Transport Plan KIA Kotoka International Airport KNUST Kwame Nkrumah University of Science and Technology LCS Least Cost Selection MDAs Ministries, Departments, and Agencies MIC Middle-Income Country MMDAs Metropolitan, Municipal, and District Assemblies MRH Ministry of Roads and Highways MOFEP Ministry of Finance and Economic Planning MOT Ministry of Transport MTR Mid-Term Review NCB National Competitive Bidding NMT Non-motorized Transport NPV Net Present Value NRA National Roads Authority NRSC National Road Safety Commission NRSS National Road Safety Strategy NTP National Transport Policy OP Operational Policy PAD Project Appraisal Document PDO Project Development Objectives PFM Public Financial Management PIM Project Implementation Manual PIT Project Implementation Team PPP Public Private Partnership PSC Project Steering Committee PSP Private Sector Participation PT Procurement Team QCBS Quality and Cost Based Selection RAI Rural Accessibility Index RAP Resettlement Action Plan RPF Resettlement Policy Framework RMU Regional Maritime University RSDP Road Sector Development Program SBD Standard Bidding Document SDR Special Drawing Rights SIA Social Impact Assessment SIL Sector Investment Lending TOR Terms of Reference TSDP Transport Sector Development Program TSP Transport Sector Project us United States VLTC Volta Lake Transport Company voc Vehicle Operating Cost
Vice President: Obiageli Katryn Ezekwesili Country ManagerDirector: Ishac Diwan Sector Director: Inger Andersen Sector Manager: C. Sanjivi Rajasingham Task Team Leader: Ajay Kumar GHANA
TRANSPORT SECTOR PROJECT
CONTENTS Page
A . STRATEGIC CONTEXT AND RATIONALE ...... 1 1. Transport and the Country’s Growth Agenda ...... 1 2 . Sector Issues ...... 3 3 . Rationale for Bank Involvement ...... 7 4 . Higher Level Objectives to which the Project Contributes ...... 8
B. PROJECT DESCRIPTION...... 9 1. Lending Instrument...... 9 2 . Project Development Objective (PDO) and Key Indicators., ...... -9 3 . Project Components...... -9 4 . Lessons Learned and Reflected in the Project Design ...... 13 5 . Alternatives Considered and Reasons for Rejection ...... 14
C. IMPLEMENTATION...... 14 1. Partnership Arrangements ...... 14 2 . Institutional and Implementation Arrangements ...... -15 3 . Monitoring and Evaluation of OutcomesResults ...... 16 4 . . Sustainability ...... 16 5 . Critical Risks and Possible Controversial Aspects ...... 17 6 . Credit Conditions and Covenants ...... -19
D . APPRAISAL SUMMARY ...... 20 1. Economic and Financial Analyses ...... 20 2 . Technical ...... 21 3 . Fiduciary ...... 21 4 . Social ...... -...... 22 5 . Environment ...... 23 6 . Safeguard policies ...... 24 7 . Policy Exceptions and Readiness ...... 24 Annex 1: Country and Sector Background...... 25
Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ...... 34
Annex 3: Results Framework and Monitoring ...... 35
Annex 4: Detailed Project Description ...... 38
Annex 5: Project Cost ...... 43
Annex 6: Implementation Arrangements...... 44
Annex 7: Financial Management and Disbursement Arrangements ...... 51
Annex 8: Procurement Arrangements...... 63
Annex 9: Economic Analysis ...... 77
Annex 10: Safeguard Policy Issues ...... 86
Annex 11: Project Preparation and Supervision ...... 90
Annex 12: Documents in the Project File ...... 91
Annex 13: Statement of Loans and Credits...... 92
Annex 14: Country at a Glance ...... 94
Annex 15: Map ...... 96 IBRD Map No. 36913 GHANA
TRANSPORT SECTOR PROJECT
PROJECT APPRAISAL DOCUMENT
AFRICA
AFTTR
Date: May 20,2009 Team Leader: Ajay Kumar
Country Director: Ishac Diwan Sectors: Roads and highways (75%); General Sector Director: Inger Andersen transportation sector (1 5%); Central Sector Manager: C. Sanjivi Rajasingham government administration (10%) Themes: Rural services and infrastructure (P);Other urban development (P);Public expenditure, financial management and procurement (S) Project ID: P102000 Environmental screening category: Full Assessment Lending Instrument: Specific Investment Loan
[ ]Loan [XI Credit [ 3 Grant [ 3 Guarantee [ ]Other:
For Loans/Credits/Others: Total Bank financing (US$m.): 225.00
Total: 130.00 95.00 225.00
Borrower: Republic of Ghana, Ministry of Finance and Economic Planning Accra Ghana
Responsible Agency: Ministry of Roads and Highways (MRH) and Ministry of Transport (MOT) Accra Ghana
1 Project implementation period: Start: June 30,2009 End: December 3 1, 20 14 Expected effectiveness date: December 3 1, 2009 Expected closing date: June 30,20 15 Does the project depart from the CAS in content or other significant respects? [ ]Yes [XINO Ref:.P PAD A.4. Does the project require any exceptions from Bank policies? [ ]Yes [XINO Re$ PAD D. 7. Have these been approved-_ by Bank management? [__ ]Yes [ IN0 Is approval for any policy exception sought fiom the Board? [ ]yes [~INo Does the project include any critical risks rated “substantial” or “high”? [ X]Yes [INo Re$ PAD C.5. Does the project meet the Regional criteria for readiness for implementation? [XIYes [ ]No Re$ PAD D. 7. Project development objective Re$ PAD B.3., TechnicalAnnex 3 The project development objective (PDO) is to improve mobility ofgoods and passengers through reduction in travel time and vehicle operating cost, and to improve road safety standards. This objective will be achieved through strengthening the capacity oftransport institutions in planning, regulation, operations and maintenance, and through infrastructure investment. Project description [one-sentence summary of each component] Re$ PAD B.4., Technical Annex 4 The project components are:
Component A - Support to Ministry ofRoads and Highways (MRH): This is targeted at carrying out feasibility studies, developing a geographical system, strengthening management information system, and participation in training courses.
Component B - Support to Road Sector and Educational Entities: This component will support the activities offour agencies: Driver and Vehicle Licensing Authority (DVLA), National Road Safety Commission (NRSC), Kwame Nkrumah University of Science and Technology (KNUST), and Government Technical Training Center (GTTC).
Component C - Improvement ofTrunk Roads: This will be implemented by the Ghana Highway Authority (GHA) and consist ofrehabilitation ofa major trunk road from Ayamfuri-Asawinso, including provision oftechnical assistance for the supervision ofthe works and related environmental and social safeguards measures, capacity building and equipment
Component D - Improvement ofUrban Roads and infrastructure: This component will be implemented by Department ofUrban Roads (DUR) and consist ofrehabilitation ofarterial roads (Burma Camp Road and Giffard Road) and public transport infrastructure, including provision oftechnical assistance for the supervision ofthe works and related environmental and social safeguards measures, and capacity building. This component would also finance preparation ofa public transport management plan for central Accra. .. 11 Component E - Improvement of Feeder Roads: This component will be implemented by DFR working towards improving rural access through feeder roads rehabilitation and spot improvement program. This component will be implemented in two phases. During phase 1, to be implemented in the first year, a total of 48 feeder road sections will be rehabilitated (minor) and improved (spot improvement) in all regions of Ghana. During phase 2, to be implemented in the second year, focused road improvements will be financed in selected regions to support commercial agriculture around growth poles.
Component F - Support to Ministry of Transport (MOT) and Other Transport Sector Entities: The support being provided to the MOT will benefit: Ghana Airports Company Limited (GACL), Ghana Railway Development Authority (GRDA), Ghana Civil Aviation Authority (GCAA), Ghana Ports and Harbors Authority (GPHA), Regional Maritime University (RMU), Ghana Maritime Authority (GMA), and Volta Lake Transport Company (VLTC). The support is targeted at conducting feasibility studies, training.
Component G - Project Management: Provision of technical assistance, vehicles, equipment and other operational support to the Implementing Agencies to carry out coordination, administration, monitoring, evaluation and audit of the Project.
Which safeguard policies are triggered, if any? Ref: PAD D.6., TechnicalAnnex 10 The project has been assigned the Environmental Category A. The safeguards policies that have been triggered are OPBP 4.01 (Environmental Assessment), OP 4.1 1 (Physical Cultural Resources), and OPBP 4.12 (Involuntary Resettlement).
The civil works to be carried out in this project include the upgrading and rehabilitation of existing roads, which will be carried out in accordance with the Environmental Management Plans (EMPs) and Resettlement Action Plans (RAPS) prepared by Government of Ghana (GOG) for this purpose.
In addition, there are minor civil works (construction of teaching facilities, laboratory, hostel, feeder road improvements, workshops and offices) which will be carried out in line with the Environmental and Social Management Framework (ESMF) and Resettlement Policy Framework (RPF). The planned civil works will not have irreversible negative impacts during project implementation. This is especially the case for the road upgrading works, which will not require road re-alignments and will require only, limited land acquisition. The potential adverse environmental and social impacts identified will be limited and site specific; they will be mitigated in accordance with the Bank's safeguard policies. Significant, non-standard conditions, if any, for: Ref: PAD C.5. Board presentation: None. Loadcredit effectiveness:
(i)The Recipient has adopted the Project Implementation Manual, in form and substance satisfactory to the Association; and
... 111 (ii)The Implementation Agreements have been duly executed by the Implementing Agencies (IAs).
Covenants applicable to project implementation:
0 Standard financial management, procurement and implementation covenants as tailored to the project; and
Project-specific covenants relating to: (i)maintenance of the Project Steering Committee (PSC), Project Implementation Team (PIT) and IAs; (ii)execution and compliance with an implementation agreement among the IAs and with the project implementation manual; (iii)preparation of annual work plans and budgets for approval by the Bank; (iv) implementation of the project in accordance with the ESMF/RPF/EMPs/RAPs; and (v) key outcome indicators.
iv A. STRATEGIC CONTEXT AND RATIONALE
1. Transport and the Country’s Growth Agenda
1. Ghana’s vision of achieving middle-income country (MIC) status by 2015 within a decentralized, democratic environment means doubling the size of Ghana’s economy within a decade. This requires that gross domestic product grows by six to eight percent per annum and per capita income rises from around US$400 to US$l,OOO per annum. The government’s policy objective is to strengthen the provision of infrastructure services and improve the business environment to sustain broad-based growth.
2. The importance of transport infiastructure was highlighted in Ghana’s Growth and Poverty Reduction Strategy (GPRS 11) as an enabler for economic growth and poverty reduction. The transport sector is critical in providing access to jobs and markets, and plays a strategic role in the economy of Ghana, accounting for about five percent of gross domestic product and generating a significant share of government revenues. It is increasingly recognized that the transport sector serves and facilitates other sectors. Available international evidence suggests a strong positive correlation between road investment, growth, and poverty reduction. An assessment of the impact of investments in road infrastructure in Ghana’ conducted over the period 2005-2008 reveals the following:
0 improved roads result in (a) a 20 percent increase in the number of trips to hospitals; (b) a 23 percent increase in the price of maize received by farmers; (c) a 65 percent lower cost of traveling to market; and (d) a 41 percent lower cost of traveling to welfare facilities; a direct positive correlation exists between the incidence of poverty and road condition; and 0 improvements in regional corridors reduce delays in cross-border movement of goods, people and services, waiting time at ports, and promote economic activities.
3. The country has a fairly developed transportation system. The road network as of December 2008 consists of 13,367 km of trunk roads, 42,093 km of feeder roads, and 12,450 km of urban roads. Roads are the predominant mode of transportation, currently accounting for 94 percent of freight and 97 percent of all traffic movements in the country. The transport of bulk commodities is suited to transport by rail from existing central collection centers and mining areas to the ports. The 947 km railway network length has limited coverage (Accra-Kumasi- Takoradi) and serves only the southern part of the country, excluding the largest port of Tema.
4. Ghana’s two ports handle seven million tons of import and export traffic annually. This figure can increase over the coming years if Ghana is able to capture a larger share of shipments to and from neighboring landlocked countries, particularly Mali, Burkina Faso, and Niger, which can use competing corridors through C6te d’Ivoire, Senegal, Benin, and Togo. Ghana’s inland water transportation is under-utilized. Most bulk hauling of petroleum products is done by roads but a small percentage is transported on the Volta Lake.
“Baseline Studies ofthe RSDP”, Ministry of Roads and Highways (2006), Ghana 1 5. Ghana has implemented a Road Sector Development Program (RSDP) starting in 2001 with a total investment cost of US$l.2 billion, of which about 75 percent was contributed by the Development Partners (DPs)~,and the balance funded by the Government of Ghana (GOG). The Bank supported the RSDP with a credit of US$220 million which closed in June 2008. Since the initiation of the RSDP strategy in 1996, considerable progress has been made in expanding the role of the private sector, strengthening the capacity in planning and management, and improving financing for road maintenance.
Box 1: Achievements of RSDP Improvement in the quality of road network from 29 percent good, 27 percent fair, and 44 percent poor (in 2002) to 39 percent, 29 percent, and 32 percent, respectively (in 2007), with a recorded 40 percent increase in road length; 0 Improvement in the operations of an independent road fund, supported by a dedicated fuel levy, which increased fiom GH$O.O23/liter (US2.5 cents) to GH$O.O60/liter (US6 cents) over the project period, as agreed in the Letter of Sector Policy; Increase in maintainable network of feeder roads from 11,500 km to 30,000 km; 0 Decline in accident fatality rate from 27 per 10,000 vehicles to 22; and 0 Completion of a number of policy studies and action plans to improve sector strategy, financing, management, delivery, and private sector participation.
6. While the RSDP has provided “an integrated ap roach to road maintenance, construction and management” by the mid-term review (MTR) 2005 P, the program is focused on the road sub- sector. Under the RSDP, sector priorities were decided by short term imperatives without an integrated and coordinated approach to multi-modal planning. There are very few examples of integrated planning throughout the sector and the government’s long standing objective “to foster effective modal integration and economic assignment of traffic to modes through the market mechanism in order to minimize over-all transport costs to users” (2001)4 remains unfulfilled.
7. With a national vision of attaining MIC status by 2015, democratic, multi-stakeholder engagement in policy formulation and implementation, increasing reliance on market-based regulation and enhanced human resource capacity, it is noticeable that Ghana’s governance framework is undergoing a significant change. Yet the laws, regulations, institutions, decision making, and financing mechanisms affecting the transport sector remain uncoordinated often creating significant barriers to performance-improvement and restricting opportunities for increased sub-regional trade as well as the much sought-after inter-sectoral and inter-modal coordination. With the road sub-sector receiving approximately 100 times the budget received by the rail, harbors, and ports (as evidenced by the figures in the annual budget statement), there is
The transport sector DPs in Ghana include: African Development Bank (AfDB), French Development Agency (ADF), Arab Bank for Economic Development in Africa (BADEA), Danish International Development Agency (DANIDA), U.K. Department for International Development (Dff D), Japan International Cooperation Agency (JICA), Kreditanstalt fur Wiederauflau (KfW), Millennium Challenge Corporation (MCC), Netherlands, Saudi Fund, United States Agency for International Development (USAID), European Commission (EC), and the World Bank Mid-Term Review (2005) Road Sector Development Program 4 m.ghana.gov.gh 2 always a concern that this funding imbalance may lead to uncoordinated inter-modal planning and dominance of one mode over others.
8. It is recognized that Ghana’s policy framework is changing and this change impacts on the governance and institutional framework for the transport sector. In practice it means that the way decisions and priorities are made, and the way performance is measured and reported, is changing. As a result, new institutional arrangements are required to provide conditions in which policy can be properly formulated and coordinated and in which the new governance requirements can be satisfied.
9. Currently, there are two ministries responsible for the transport sector: (a) Ministry of Roads and Highways (MRH), which is responsible primarily for roads; and (b) Ministry of Transport (MOT)’ responsible for airports, railways, and harbors. The critical issue is how the institutional and organizational arrangements could be improved to increase the overall effectiveness and efficiency of transport infrastructure provision and maintenance within a national policy and institutional framework for the sector.
2. Sector Issues
10. The key policy and institutional issues in the transport sector are:
0 Need for coordination of policy formulation and planning. Inter-sectoral co- ordination among all ministries involved in the transport sector does not take place with sufficient regularity;
0 Need to clarify mandates among existing agencies with a focus on possibly creating: (a) a National Roads Authority (NRA) to act as asset manager for Ghana’s national road network to include the current role of the road fund; (b) trunk roads agency to be contracted to the NRA to provide network management services for the defined trunk roads in Ghana; and (c) local roads agency to be contracted to the NRA to provide network management services for the defined local roads in Ghana; Need for a prouer regulatory environment in the rail sector with the focus on establishing a strong Ghana Railway Development Authority (GRDA) (now that the Railway Act has been passed);
0 Strengthen management and financing of road maintenance with a clear focus on striking a better balance between maintenance and expansiordrehabilitation; Need to Implement the Axle Load Control Policy Action Plan, which includes the adoption ofthe Road Traffic Regulation necessary to strengthen controls; and Promote private sector involvement with a focus on: a) developing a conceptual framework to strengthen private sector participation; b) setting up a specialised unit
The new government has realigned some ministries to reduce their numbers ftom 27 to 23. The ministries in the transport sector have been reduced from three to two-with a Ministry of Roads and Highways (the earlier Ministry of Transportation) and a Ministry of Transport (including rail, ports, and harbors, combining earlier ministries of aviation and rail and harbor). 3 within a Transport Sector Ministry to drive the reform process and carry out specialist tasks; and c) strengthening domestic construction industry capacity in planning and delivering commercially successful operations.
11. Roads: The specific issues affecting the road sub-sector are as follows: (a) a weak connection between the overall government strategic objectives for economic growth and actions on the ground (as measured by investment prioritization, network expansion, etc.); (b) inadequate attention to maintenance and lack of balance between “maintenance” and “development”; (c) weak management capacity in planning and monitoring ofproject works; (d) over-loading of commercial vehicles, typically of the order of 10- 15 percent, leading to accelerated deterioration of roads; (e) issues related to local construction capacity, including capacity of the contractor (management, manpower, equipment and access to credit), employer (contractor classification, implementation, supervision), engineer and the markethusiness environment; and (f) a large proportion (over 45 percent) of the rural population remains inaccessible (lives beyond 2 km ofall season roads).
12. The MRH would also like to increase the efficiency and effectiveness with which the management and maintenance of the road network is carried out. Currently, public works contracts are numerous and are characterized by delays in payments and weak project management procedures. This is typically caused by short duration of contracts, weak link between performance and payment, inability to bundle related services (particularly construction and maintenance), ineffective payment procedures, and weak monitoring. The ministry would like to examine new concepts and instruments for the management and maintenance ofroads.
13. Railways: About 250 km of the current rail network of 947 km carries some traffic, of which 93 percent is mine-related on a 63 km stretch. The Bank’s experience to-date with railway privatization in sub-Saharan Africa shows that while historically railways have played a crucial role in the economic integration and development of African economies, the continuous expansion ofthe road network since about 100 years ago means that today, railways’ competitive position has been reduced to a few niche markets such as dedicated lines for mineral exports that enjoy extremely high volumes (Le., several million tons per km of main trunk line) or to long distance traffic (over 500 km) where it can enjoy a relative competitive advantage over road traffic for some high value product such as oil and containers. Such advantage, however, is predicated upon the ability ofthe railway to price its services below that oftrucks (on average at least 50 percent to 60 percent less) and usually implies that long term financial sustainability of rail operators in Africa relies on the fact that the government, not private operators, finance track rehabilitation as overall market demand is not large enough to generate revenue levels large enough to make railway operations financially self-sufficient.
14. Aviation: The key issue facing the aviation sub-sector relates to promoting private sector involvement in the investment and management of aviation infrastructure and equipment with the objective to improve security and safety oversight.
15. Need for Sector Policy Formulation and Coordination. There is a need for effective policy formulation and coordination of the transport sector within the framework of a National
4 Transport Policy (NTP) and the proposed Integrated Transport Plan (ITP)6. This is necessary to ensure proper attention to strategic, sub-regional, national (growth and poverty reduction), inter- sectoral, inter-modal and urban issues including creating an enabling environment for their effective and efficient implementation by government, civil society and the private sector. The focus of the coordinated sector approach is expected to be on: (a) policy formulation, planning and coordination, with a clear definition of the roles and functions of the transport ministries; (b) financial accountability to enable a sustainable and sound financial basis for the provision and maintenance of road infrastructure; effective use of resources; provision of an acceptable and transparent structure for the management of funds and strengthening financial controls; (c) decentralization, to ensure participation of the metropolitan, municipal, and district assembly levels in the planning, management, financing and monitoring of road infrastructure; (d) commercial operation, with appropriate costing and management requirements; (e) human resource principle, with a need to motivate staff, and provide encouragement to develop and reward for achieving good results based on clearly defined performance targets; (f) operational and planning principles, with long-term transport planning framework that prioritizes activities, matches operational needs with funding, coordinates inputs of various agenciedauthorities, separates service procurement from service providers, with clearly defined responsibilities, independent technical and financial auditing, coordinated planning, management information system, and financial management system in place; (g) effective monitoring, focused on undertaking regular progress assessments against uniform performance measurements to ensure relevant and reliable management information as the basis for corrective action; and (h) empowerment and participation, entitling stakeholders to participate in road financing and management decision making, service delivery and monitoring by ensuring access to decision making and consultation on key decisions.
16. Government Strategy. The government has undertaken a number of steps to strengthen delivery and management of the transport sector, in particular:
The NTP has been approved by the Cabinet7; Developed a draft sector institutional restructuring approach, with a view to harmonize planning, development and monitoring approaches; Developed draft Regulations to Road Traffic Act, with a view of enforcement of axle load control and implementation of axle load policy and action plan; Increased road maintenance funding and improved financial. management of the sector; Developed an approach to strengthen private sector participation in the sector through public private partnerships (PPPs) and support to local construction industry; and Developed and successfully implemented the first phase of their National Road Safety Strategy (NRSS I2001 - 2005).
European Commission (EC) is supporting prepafation of a sector ITP to develop a range of decision making tools to formulate more effective investment plans and strategy. The ITP, when finalized, is supposed to take over fiom the Transport Sector Project (TSP). ’ This NTP has also undergone a Strategic Environment Assessment as required by the Second Growth Poverty Reduction Strategy (GPRS 11). The term “Environment” as spelled out in the Strategic Environmental Assessment (SEA) of the Growth Poverty Reduction Strategy (GPRS) “includes natural resources, social, cultural, and economic conditions and the institutional environment in which decisions are made”. 5 17. The NTP heralds a change of approach, setting out a blueprint for the sustainable development of the country’s transport system within the context of a coordinated strategy for growth and poverty reduction and working towards the goal of MIC status by 2015. The objectives of the NTP are to: (a) establish Ghana as a transportation hub for the West Africa sub- region; (b) create a sustainable, affordable, reliable, effective, and efficient transport system that meets user needs; (c) integrate land-use, transport planning, development planning, and service provision; (d) create a vibrant investment and performance-based management environment that maximizes benefits for public and private sector investors; (e) develop and implement comprehensive and integrated policy, governance, and institutional frameworks; and (9 develop adequate human resources and apply new technology.
18. The NTP establishes goals for which the transport sector, as a whole, will strive to achieve over the next 5-10 years. Work has already started on the development of the ITP which will set out measures required by the sector to achieve NTP goals. On completion, the ITP will become the long-term policy implementation document for the development of the country’s transport system.
19. As part of the government’s Public Sector Reform Agenda, wide-ranging improvements have been identified. Progress is being made in the aviation, railways and maritime sub-sectors, where a common institutional framework is already emerging based upon the creation of organizations mandated to carry out separated functions. For example, Ghana Maritime Authority (GMA) has been created as the regulatory body for maritime and inland water services, Ghana Airports Company Limited (GACL) has been created to manage airport assets and the role of Ghana Civil Aviation Authority (GCAA) has been adapted to focus on sector regulation.
20. As follow-on to the RSDP, which closed in June 2008, the government has prepared a Transport Sector Development Program (TSDP) to guide investments in the sector during the period 2008-2012. The TSDP represents the evolution of short and medium-term transport planning from a roads perspective towards a comprehensive transport perspective, working towards a full ITP that operationalizes the strategic objectives set out in the formative NTP. The estimated cost of the TSDP is US$4.8 billion, of which US$255 million is for the aviation sub- sector, US$1.4 billion for the maritime and railways sub-sector, and US$3.1 billion for roads sub-sector. The government has secured funding for US$2.4 billion and is looking at options to finance the funding gap.
21, The MRH has completed an institutional study with the objective to:
Focus the Ministry’s activities on policy formulation and coordination; Create an NRA to act as asset manager for Ghana’s national road network to include the current role of the Road Fund. The NRA would be responsible for administering road-sector finances, setting development and performance standards and planning for the long-term development and maintenance of Ghana’s road assets to meet strategic objectives set out in the NTP; and
6 Create a trunk roads and local roads agency to be contracted to the NRA to provide network management services for the defined trunk roads and local roads, respectively. These agencies will receive their funding from the NRA on the basis of annually reviewed performance agreements. Their core functions are to develop five year strategic plans and annual business plans for their road networks including annual programs ofworks and procurement ofrequired services.
22. The study recommendations support the decentralized management of feeder and urban roads by creating a roads agency operating in a zonal/regional/area office arrangement to manage local roads through a service level agreement with individual Metropolitan, Municipal, and District Assemblies (MMDAs).
23. The MRH has also developed a conceptual framework for Private Sector Participation (PSP) focusing on: (a) improving the legal framework; (b) increasing access to finance; (c) identifying suitable projects; (d) improving the structure of contracts; and (e) strengthening institutions. With the objective of further developing the PSP framework, the MRH proposes to set up a specialized PSP unit, with a core staff to focus on: (a) driving the reform process and lobbying at a high level in government for the creation of an enabling environment; (b) acting as a “one stop shop” for private investors; (c) liaising with other departments to move PSP projects forward, and keep investors informed of progress; (d) carrying out specialist tasks, such as drafting of concession agreements and monitoring of operator performance; and (e) formulating a communications strategy to inform the public about PSPs.
24. The MRH is keenly aware that road safety issues are best tackled with a multi-sectoral approach, encompassing health, education, security and transport. Together with the National Road Safety Commission (NRSC), the ministry has launched its second five year NRSS I1 (2006-20 10). This strategy recognizes key challenges they faced in reducing fatalities, which include amongst others, inadequate enforcement and weak stakeholder coordination. The new strategy seeks to address these areas. The focal areas of the strategy are: (a) the road user, (b) pedestrian facilities, (c) vehicles, (d) enforcement, and (e) emergency service and care. The ministry is seeking support from the Global Road Safety Facility in conducting a country capacity review, assisting in the creation of a more multi-sectoral approach to the delivery of positive road safety outcomes.
3. Rationale for Bank Involvement
25. The Bank has financed a number of transport operations in Ghana over the past three decades which has provided it an opportunity to establish a substantive dialogue with GOG on major issues in the sector. The Bank is a major development partner and has played a key role in improving, coordinating, and promoting a harmonized approach in the sector. The Bank has also supported building a knowledge base through a number of studies financed by Public-Private Infrastructure Advisory Facility, the RSDP and the Ghana Urban Transport Project approved in FY07. The proposed project provides an opportunity to implement the recommendations emerging from the studies.
7 26. The Bank’s involvement would also support: (a) the dialogue on the need for a comprehensive approach in considering multi-sectoral issues (impact on health, education, social services, agriculture) and measuring the impact on the Millennium Development Goals; (b) reinforcing the need for integrated policy, governance and institutional frameworks to ensure that appropriate institutional and regulatory measures are established for effective policy, planning and delivery of transport services; (c) assisting the GOG in implementing the recommendations of institutional restructuring study and other strategies through both policy dialogue and analysis, investments and direct analytical support to GOG during implementation; and (d) utilizing technical expertise for policy analyses and project formulation, coordinating and leveraging financing from other development partners (aid harmonization); and e) utilizing the experience gained from the Sub-Saharan Africa Transport Policy Program and other regional initiatives to support the reform agenda.
4. Higher Level Objectives to which the Project Contributes
27. The Africa Action Plan spells out the need to close the continent’s infrastructure gap in order to stimulate growth, reduce poverty, and ultimately achieve the Millennium Development Goals. To accomplish the seven percent growth rate needed to halve poverty, Africa will have to invest about five percent of gross domestic product in infrastructure investment and four percent to cover operation and maintenance, an amount equivalent to around US$20 billion per year, which is twice as much as was invested in the past years. The proposed investments in this project would help leverage additional resources and contribute to bridging the infrastructure gap.
28. The Country Assistance Strategy identified Ghana as one of the few countries in sub- Saharan Africa with a chance of meeting the Millennium Development Goals. The strategy for meeting the Millennium Development Goals is rooted in the Strategic Framework for IDA’S assistance in Africa and rests on three pillars: (a) sustainable growth and job creation; (b) human development and service provision; and (c) improved governance and empowerment. The project supports all three objectives by: (a) increasing Ghana’s competitiveness in foreign trade by reducing internal transport costs and by promoting linkages in domestic markets which are crucial factors for rapid and sustained growth; (b) improving governance through clarifying roles and responsibilities in transport sector and encouraging wider and more meaningful participation of stakeholders in the decision making process; and (c) enabling and supporting the decentralized planning, management, finance and regulation of transport infrastructure and services and creating appropriate local institutions and capacity to fulfill responsibilities.
8 B. PROJECT DESCRIPTION
1. Lending Instrument
29. A Specific Investment Loan (SIL) instrument is proposed for the financing ofthis project, based on discussions with government. The roads sub-sector remains the primary beneficiary of the proposed financing, though the project would support developing a strategic context for a coordinated sector strategy and preparing building blocks for other sub-sectors (aviation, maritime, rail) by financing capacity building activities, feasibility studies and a few targeted investments.
2. Project Development Objective (PDO) and Key Indicators
30. The PDO is to improve mobility ofgoods and passengers through reduction in travel time and vehicle operating cost, and improvement in road safety standards. This objective will be achieved through strengthening the capacity of transport institutions in planning, regulation, operations and maintenance, and through infrastructure investments. The achievement of the PDO will be monitored using the following performance indicators to be achieved by the end of project:
(a) Average travel time reduced by at least 20 percent on project-financed roads; (b) Average vehicle operating cost (in real terms) reduced by at least 10 percent on project-financed roads; (c) Fatality rate reduced from 22 per 10,000 vehicles to 19 per 10,000 vehicles; (d) Rural Accessibility Index (MI8)increased from 53 percent to 57 percent; and (e) Trunk road network in good and fair condition improved from 83 percent to 88 percent, for urban roads from 36 percent to 50 percent, and for feeder roads from 72 percent to 85 percent.
31. The project would also support a number of intermediate outcomes and outputs, which are listed in Annex 3. In the aviation, maritime, and railways sub-sectors, the project will finance institutional strengthening and feasibility studies in support of the GOG’s transport sector program. The intermediate outcomes and output indicators are also shown in Annex 3.
3. Project Components
32. The total cost of the proposed project is estimated at US$225.0 million which will be financed by IDA at 100 percent. The MRH and MOT will participate in the project. In addition to the ministries, the various agencies and entities which will benefit from the IDA credit are:
Road sub-sector: Driver and Vehicle Licensing Authority (DVLA), National Road Safety Commission (NRSC), Kwame Nkrumah University of Science and Technology (KNUST), Government Technical Training Center (GTTC), Ghana
Rural Accessibility Index measures the proportion of population within 2 km of an all weather road. 9 Highway Authority (GHA), Department ofUrban Roads (DUR), and Department of Feeder Roads (DFR); and
Aviation, Maritime and Railway sub-sector: Ghana Civil Aviation Authority (GCAA), Ghana Airports Company Limited (GACL), Ghana Railway Development Authority (GRDA), Ghana Ports and Harbors Authority (GPHA), Regional Maritime University (MU), Ghana Maritime Authority (GMA), and Volta Lake Transport Company (VLTC).
33. A substantial portion of the project is devoted to institution and capacity building, preparation of feasibility studies, advisory support, and monitoring and supervision. These activities will be managed and coordinated by the two ministries. The project has the following seven components.
34. Component A - Support to MRH (US$4.2 million): This is targeted at: (a) carrying out selected feasibility studies related to its investment program; (b) integrating trunk, urban, and feeder road networks and associated service activities into a geographical information system, strengthening road operating and safety standards and axle load control, strengthening the management of road financing, and capacity building including carrying out other road sector policy and institutional reforms; (c) strengthening its management information system and prepare a human resource development strategy; and (d) participating in national and international training courses relevant to its functions.
35. Component B - Support to Road Sector and Educational Entities (UM6.5 million): This component will support the following activities:
Driver and Vehicle Licensing Authority (DVLA) includes actions to: (i)develop improved driver and vehicle licensing methods and standardize licensing procedures, permits and collection of associated revenue; (ii),develop improved procedures for enforcement of driver and vehicle licensing regulations; and (iii) develop improved ground facilities for driver testing;
National Road Safety Commission (NRSC) includes actions to: (i)obtain road safety equipment; (ii)produce and distribute handbills, information and publicity material to raise awareness ofroad safety; (iii)provide facilities and equipment for emergency response services; and (iv) organize related road safety and emergency response training activities for selected NRSC personnel;
Kwame Nknunah University of Science and Technology (KNUST) includes actions to: (i)construct and equip teaching and laboratory facilities; and (ii)develop and deliver post-graduate training courses on the efficient and effective management of the transport sector; and
Government Technical Training Centre (GTTC) includes: (i)develop and expand its facilities for artisans’ training in the road sector, including the construction and furnishing of lecture halls, lodging and workshop facilities; and (ii)set up, in
10 collaboration with NRSC and DVLA a pilot driving academy; and (iii)educate mechanics on vehicle maintenance standards.
36. Component C: Improvement of Trunk Roads (US64.0 million): This will be implemented by the GHA and consist of rehabilitation of a major trunk road from Ayamfuri- Asawinso to establish a South-North transport corridor in the west of Ghana, linking the timber and mineral rich areas and neighboring countries located west and north of Ghana, to the deep water port of Takoradi. Support to GHA will also include supervision of construction, environmental and social safeguards, environmental and social safeguard training, and to strengthen the technical capacity of GHA for improvement of trunk roads and the provision of axle load equipment.
37. Component D: Improvement of Urban Roads and Infrastructure (IDA: US$78.0 million): This component will be implemented by DUR and consist of rehabilitation of arterial roads and public transport infrastructure as follows:
0 Rehabilitation of the Burma Camp Road;
0 Rehabilitation of Giffard Road; 0 Financing urban transport infrastructure in Accra (including investments along tributaries to the Bus Rapid Transport corridor under implementation in the urban transport project, bus stations, terminals, depots, and studies; and Financing the preparation of a public transport management plan for central Accra.
38. The component would also cover cost of consultancy for construction supervision, supervision of environmental and social safeguards and to strengthen the technical capacity of DUR for improvement of the urban road network.
39. Component E - Improvement of Feeder Roads (UW50.5 million): The roads to be financed in the first year are identified based on criteria outlined in paragraph 69. A total of 48 feeder road sections will be improved in all regions of Ghana at a cost of about US$20.0 million.
40. The roads to be financed as part of the second year program, with an additional US$27.5 million, would be identified during the first year of implementation. The investments will be focused in selected regions to support commercial agriculture around growth poles, in collaboration with the Ministry of Agriculture. Support to DFR will also include US$2.5 million for consultancy for supervision of construction (including supervision of environmental and social safeguards), and US$0.5 million to strengthen the technical capacity of DFR for improvement of the feeder road network.
41. Component F - Support to MOT and Other Transport Sector Entities (US13.5 million): This component would finance:
Support to MOT to: (a) make the Ghana Railway Development Authority (GRDA) operational; (b) carry out studies on the development of public-private partnerships in the sector; and (c) build its capacity in transport planning, procurement, financial, project, and safeguard management; 11 Support to GACL to: (a) carry out detailed design, environmental and social studies for the adaptation of Takoradi airport for civilian purposes; and (b) prepare a master plan for development of regional airports;
Support to GCAA to develop regulations for the aviation industry and carry out studies on aviation sector development;
Support to GPHA to carry out a feasibility study for the dualization of the Meridian Road in Tema;
Support to GMA to carry out a feasibility study for the improvement of transportation on Volta Lake;
Support to VLTC to carry out feasibility studies for the development of landing stages and reception facilities along the Volta Lake; and
Support to RMU to improve its training capacity to provide maritime training services for the West Africa Region.
42. The Takoradi Airport is currently a military airport and controlled by the Ministry of Defense. The airport is to be developed to cater for civilian use. The military and civilian facilities will exist separately but in close proximity to each other, similar to the arrangement between the Ghana Air Force and GCAA at the Kokota International Airport (KIA) in Accra. The government’s objective is to have the military cede air traffic control to the GCAA, who will provide service to the military and civilian operations alike.
43. Component G - Project Management (US$8.3 million): This component would include support for provision of technical assistance, vehicles, equipment and other operational support to the Implementing Agencies (IAs) to carry out coordination, administration, monitoring, evaluation and audit of the project.
Table 1: Project Costs
G Project Management 8.3 TOTAL 225.0* 4. Lessons Learned and Reflected in the Project Design
44. The advantages of a participatory design process: The implementation of the RSDP has provided an excellent opportunity to establish a substantive dialogue with the GOG on major issues in the transport sector. One of the key thrusts during the program was to be all inclusive and to provide a platform for exchange of information among all stakeholders. A transport sector policy was prepared with the support ofall transport ministries and involvement ofregion based agencies, private, and public sector. The process was slow, taking over two years, but the policy has ownership of all concerned and has been more effective than a less inclusive process. The proposed Transport Sector Project (TSP) builds on the participatory design process and reflects a broad acceptance ofthe strategy and investment priorities.
45. The need for donor coordination and consultation: All Development Partners (DPs) active in the transport sector of Ghana including the African Development Bank (AfDB), French Development Agency (ADF), Arab Bank for Economic Development in Africa (BADEA), Danish International Development Agency (DANIDA), U.K. Department for International Development (DflD), Japan International Cooperation Agency (JICA), Kreditanstalt far Wiederaujbau (KfW), Millennium Challenge Corporation (MCC), Netherlands, Saudi Fund, United States Agency for International Development (USAID), European Commission (EC), and the World Bank) have been providing support through commitments to RSDP, under coordination and full ownership of government. The practice of regular consultations (through regular joint missions, monthly and annual meetings), has demonstrated the advantage ofregular contact between all actors and interested parties. This coordination will continue during the implementation ofTSP.
46. The need for comprehensive sector management support: One of the lessons emerging from implementation of RSDP is that meaningful sector-wide management is difficult without adequate coordination and financial discipline. There is a need to coordinate activities of the two transport ministries in support of a common agenda and within an agreed financial envelope. The TSP has been prepared in a common framework and is expected to guide decision making in the future. It is also proposed to set up a Project Steering Committee (PSC) as an inter-ministerial oversight body, composed of representatives from the two transport ministries and the Ministry of Finance and Economic Planning (MOFEP) to develop and implement an integrated approach to achieve the objectives ofthe TSDP.
47. The importance of accompanying stable maintenance funding with better programming: Ghana set up a road fund in 1998 and has succeeded in successive increases in the fuel levy as agreed in the letter of sector policy. The total contribution to the road fund in 2007 was about US$130 million, ofwhich more than 90 percent was from fuel levy. However, a secure and dedicated funding for road maintenance is not by itself a sufficient condition that maintenance needs are met and addressed in a prioritized manner. It is equally important to develop a clear work program and planning and management capacity to ensure that maintenance needs are addressed as a first priority and users get value for money. As part ofthe MRH capacity building component, the planning and management capacity ofthe road fund will be strengthened. 13 48. A need to provide a common basis for evaluating alternative investments: Experience world-wide suggests that it is important to provide a level playing field for effective multi-modal competition and regulation. This would require that different alternatives are evaluated using a common basis before making specific investment decisions. It is expected that the ITP under preparation, would develop a prioritized investment program for all transport modes.
49. A good project monitoring system is necessary for effective management: A detailed monitoring and evaluation component, including collection of all baseline data, has been designed and built into the project. The performance indicators will be monitored annually with extensive consultations and presented during the annual DPs’ meeting.
5. Alternatives Considered and Reasons for Rejection
50. . The Bank has been involved in the road sector in Ghana for a long time. While substantial progress has been made and both the quantity and quality of roads in Ghana have improved, donor assistance in the road sector is likely to be required for quite some time. During the preparation of this project, therefore, consideration was given to whether an Adaptable Program Loan (APL) might be more appropriate. The GOG has expressed a distinct preference for a Specific Investment Loan due to some difficult experience in the past with an Adaptable Program Loan in another sector. It was also felt appropriate to develop a long-term investment support program after completion and adoption ofthe ongoing ITP.
5 1. A large share of the proposed financing will be committed to the roads sub-sector. The project is also financing capacity building and technical assistance of MOT, and multiple other agencies and entities in rail, ports and harbors sub-sectors, which adds to the institutional complexity of the project. However, there is clearly a need to coordinate strategic framework of different transport sub-sectors to develop harmonized laws and institutional framework and support investment planning decisions. The government has prepared the NTP and TSDP through a highly participatory and consultative process. This is Ghana’s first comprehensive NTP and, as such, marks a new era in establishing strategic objectives and performance standards for transport infrastructure and services. It is critical to continue this collaboration and the proposed project involves working with the different ministries in defining priorities and strategies that serve the national development goals.
C. IMPLEMENTATION
1. Partnership Arrangements
52. Although the project is not being co-financed jointly or in parallel with any other development partners, it is part of a broad program prepared in close coordination with all of the other active development partners in the Ghana transport sector. It is expected that each of the development partners will finance components of the government’s five-year program. Specifically, the EC will provide about US$7.5 million to the railways and harbor, US$8.0
14 million to aviation and US$95 million to GHA. The modalities of how these funds will be provided are under discussion between EC and GOG.
2. Institutional and ImplementationArrangements
53. The project will be implemented by MRH, which will have the overall responsibility for its coordination and management. Implementation will be carried out on the basis of an Annual Work Plan and Budget prepared by the MRH, with inputs from the IAs and Beneficiary Agencies (BAS). The IAs are: MRH including Department of Urban Roads (DUR) and Department of Feeder Roads (DFR), Ghana Highway Authorities (GHA), MOT, Ghana Airports Company Limited (GACL), Ghana Civil Aviation Authority (GCAA), Ghana Ports and Harbors Authority (GPHA); the BAS are: Driver and Vehicle Licensing Authority (DVLA), Kwame Nkrumah University of Science and Technology (KNUST), Government Technical Training Center (GTTC), National Road Safety Commission (NRSC), Regional Maritime University (RMU), Ghana Maritime Authority (GMA), Volta Lake Transport Company (VLTC). The IAs will be involved in procurement of goods, works, and services, contract management and financial management. In contrast, the BASwill be responsible for providing technical inputs for the carrying out by the IAs of their respective components. The details on fiduciary responsibility and process flows under the project are provided in Table 1 (Annex 6).
54. All components will be managed in line with Bank fiduciary and safeguard . , requirements. In those areas where expertise is lacking or not fully developed, short-term consulting specialists (management, engineering, procurement, financial management) will be employed to enhance performance and project implementation. The short-term specialists would be financed as part of the capacity building component of MRH and MOT.
55. Implementation will be carried out on the basis of an Annual Work Plan and Budget prepared by the MRH, with inputs from participating MDAs and entities. A Project Implementation Manual (PIM) will be prepared by GOG for: (a) institutional coordination and day-to-day execution of the project; (b) disbursement and financial management; (c) procurement; (d) environmental and social guidelines; (e) monitoring, evaluation, reporting and communication; and (9 such other administrative, financial, technical and organizational arrangements and procedures as may be required for the project.
56. To facilitate project implementation, the following Committees and Groups will be set up and detailed as part of the PIM:
(a) A PSC as an inter-ministerial oversight body; (b) A PIT for coordinating implementation of project activities and reporting; (c) A Finance Management Team (FMT), as part of the PIT, for the overall financial management and reporting; and (d) Procurement Team (PT), as part of the PIT, with direct responsibility for procurement activities and to provide quality control.
57. The following reports will be prepared and consolidated by the PIT on a quarterly basis: (a) Quarterly Financial Reports will consist of sources of funds, statement of uses of funds by 15 project activity, project cash withdrawals, special account reconciliation statement and a six- month project cash forecast; (b) Quarterly Project Progress Reports will consist of an output monitoring report on contract management, project management and monitoring; and (c) Quarterly Procurement Management Reports will consist of procurement process monitoring for goods, works and consultants’ services, and contract expenditure reports for goods, works and consultants’ services.
58. Quarterly progress reports will summarize activities of work progress achieved in the previous three months and submitted by the 30th ofthe first month ofthe following quarter. The quarterly report will be prepared by the PIT and cover the status of each civil works contract, funds committed against budgets by project, and funds disbursed by projects. The quarterly reports will contain the detailed program activities for the next 12 months, updated at the end of each quarter. The quarterly reports will be discussed by all the IAs and matters arising treated accordingly. PIT will lead the preparation of mid-term review report and the Implementation Completion Report (ICR) with assistance from the Ministries, Departments, and Agencies (MDAs) and the Bank.
3. Monitoring and Evaluation of OutcomesDtesults
59. Monitoring and evaluation of the overall project will be the responsibility of the PIT. However, each participating ministry and its agencies will be responsible for collecting information on their respective components. The Quarterly Project Progress Report will report and monitor the outcomes of activities related to: (a) progress in civil works, services, institutional support, and procurement activities; (b) progress in achieving project development objectives and intermediate outcomes.
60. The MRH has a Department of Monitoring and Evaluation, with the responsibility to monitor key outcome indicators. A set of outcome indicators to monitor progress in each of the transport sub-sectors (road, rail, harbors and aviation) were developed in 2005 in discussions with the development partners, and is being reported on an annual basis. As part ofthe proposed project, the efforts will be further strengthened and studies will be conducted to monitor progress on a regular basis.
4. Sustainability
6 1. Sustainability will be the cornerstone of the overall project strategy for ensuring quality, continuity and reliability of the institutional, regulatory and infrastructural improvements carried out under the project. While each one of the project sub-components has been designed with sustainability in mind, the extent to which all the achievements under the project are sustained will depend on a number of factors including: (a) continuing attention to maintenance issues in general and committing sufficient resources to it; (b) the government’s willingness to create a rational institutional structure for the sector and create an incentive framework to attract and retain suitable technical manpower to address sectoral issues in a comprehensive manner; and (c) strengthening the local construction industry and strengthening the role of the private sector in the management oftransport sector activities.
16 62. The project has been designed with a clear focus on maintenance, capacity building, and improving the governance of all stakeholders in the transport sector. On the particular issue of road maintenance, road fund currently supports about 60 percent of periodic maintenance and 80-90 percent of routine maintenance; as part of the TSP, management of the road fund would be strengthened and government is committed to making maintenance a first priority. As a result of the initiatives, road fund is expected to cover 100 percent of routine maintenance and over 75 percent of periodic maintenance. On strengthening the capacity of domestic construction industry, the government has prepared an action plan with a focus on building management capacity of private contractors and employers, strengthening the business environment, and packaging the contracts in small lots (especially for feeder roads) to enhance local participation and employment. The action plan will be implemented as part of the TSP.
5. Critical Risks and Possible Controversial Aspects
63. Key risks associated with the project and corresponding mitigation measures are as follows:
17 Table 2: Risks and Mitigation Measures
~ ~~~~ Residual Risk Rating Mitigation measures Risk Rating Weak commitment of GOG to S MRH has prepared an Institutional Restructuring S institutional reforms in the Study, with extensive stakeholder participation and transport sector. consultations. Study recommendations were discussed during DPs Annual Meeting in April 2008. As part of the proposed project further support will be provided to develop specific instruments to implement the study recommend- dations, including legislative and regulatory frameworks. The project involves two S Key measures include: (a) the primary project M ministries and a number of executing agency will be MRH with a centralized agencies, departments and FM system and operating a single Designated entities. While MRH has long Account; (b) setting up of a Finance Management experience working with the Team of Heads of Accounts of IAs, headed by Bank, MOT is a relatively new Director of Finance (MRH), for coordination and ministry. As a result, MOT has effective project management; (c) set up a limited capacity in managing Procurement Team in MRH, headed by Director Bank’s procurement and Procurement, for overall coordination, financial procedures which may management and quality control of all project adversely impact project related procurement activities. implementation and increase risk. The risk of funds not being used S a) the MRH will prepare Annual Work Plan and M for intended purposes, Budget, with details of expenditures by each economically and efficiently. component; b) conduct procurement, financial and technical audits on an annual basis; c) arrange- ments have been established with KNUST and GIMPA to provide training in the use of Bank’s procurement procedures. GOG does not enact and S Discussions on-going with GOG on arrangements S implement tariff increases for the to meet the maintenance needs and develop a road fund to keep pace with prioritized maintenance program. MRH has inflation and maintenance needs. initiated a review of road hnd management and is committed to implement study recommendations. The investment programs of S The investment program has been developed in M different sub-sectors are not well accordance with the agreed NTP and has been coordinated and lead to sub- vetted extensively by all DPs. The government is optimal investments. also preparing an ITP to develop a prioritized investment program, considering the different modes and their complementarities. A consultation and participationmechanism is being put in place to strengthen quality control and oversight. Inadequate performance of the M MRH has already commenced a contractor M local construction industry and reclassification process and will be creating quality assurance of contract specific programs to strengthen capacity of local works. contracting and consulting industry. Also a training program will be designed for the MRH and its agencies specifically geared to improve management capacity and accountability. 18 Residual Risk Rating Mitigation measures Risk Rating Failure of GOG to create an S Road maintenance and construction activities in M enabling environment for private the country are almost entirely carried out by the sector investment in transport private sector. The MOFEP has set up a unit to infrastructure and services. evaluate private sector proposals and is exploring options to leverage private sector financing including road construction. Increased supply of improved M Road designs will be developed to minimize traffic L roads may lead to higher traffic accidents and particular attention will be paid to accidents and fatalities. black spots. Ghana NRSC is one of the most effective organizations in sub-Saharan Afi-ica; it has developed action plan, built capacity in road safety committees and developed and implemented weekly media programs targeted at various road users. Under the proposed project, support will be provided to further strengthen road safety activities.
Overall Risk Rating IS M
H=High; S=Substantial; M=Moderate; L=Low
6. Credit Conditions and Covenants
64. By effectiveness:
0 The Recipient has adopted the PIM, in form and substance satisfactory to the Association; and
0 The Implementation Agreements have been duly executed by the IAs.
65. Covenants applicable to project implementation
0 Standard financial management, procurement and implementation covenants as tailored to the project; and
0 Project-specific covenants relating to: (a) maintenance of the PSC, PIT and IAs; (b) execution and compliance with an implementation agreement among the IAs and with the project implementation manual; (c) preparation of annual work plans and budgets for approval by the Bank; (d) implementation of the project in accordance with the ESMF/RPF/EMPs/RAPs; and (e) key outcome indicators.
19 D. APPRAISAL SUMMARY
1. Economic and Financial Analyses
66. The civil works, including.contingencies, represent about 75 percent of project costs. Economic analysis was not conducted on capacity building, policy reform, studies, and project management sub-components. The investments in feeder road network (which includes spot improvements and minor rehabilitation at a cost of about US$100,000-US$300,000 per road section) were selected on the basis of cost-effectiveness analysis. An economic analysis was conducted for the civil works, which consist of reconstruction, rehabilitation, and upgrading of the: (a) Ayamfuri-Asawinso (GHA sub-component); and (b) urban road network (DUR sub- component).
Table 3: Economic and Financial Analysis
Sub-Component NPV (@ 12%) ERR FYRR (US% million) GHA road (Ayamfuri-Asawinso) 55.0 17.9% 22.4% DUR Roads - Giffard Road 2.5 20% - Burma Camp Road 2.7 15%
67. For the GHA road, the main benefits resulting from improving the road section to asphalt concrete standard include reduction in vehicle operating cost to existing traffic and transport cost savings for diverted freight traffic. The economic analysis was undertaken using the road planning model, the Highway Development and Management Model version 4 (HDM 4). The initial economic analysis was undertaken in 2006 which was updated in July 2008 to take into account a major change in input costs. The switching value analysis shows that construction costs would have to rise by 44.8 percent before the project becomes marginal (i.e., has a 12 percent rate of return). Similarly, traffic benefits would have to fall by 34.6 percent to achieve the same result. The first year rate of return (FYRR) is 22.4 percent (well above the opportunity cost of capital of 12 percent) indicating that the project is timely. The proposed sub-project would induce positive socio-economic impacts by facilitating trade between communities and regions. A majority of households engaged in horticulture (Le., pineapples), vegetables and legumes farming (Le., tomatoes and the like) would benefit from improved road conditions resulting in reduced post-harvest losses. The resulting benefits have not been quantified.
68. The potential benefits from improvements in Accra East corridor (Giffard road and Burma Camp road) were computed based on vehicle operating cost, travel time and road maintenance savings. Traffic was simulated based on 30 year life using the Questor model. The economic rate of return (ERR) for the Giffard road is estimated at 20 percent and Burma Camp road 15 percent.
69. For the investment in feeder roads, given the small nature of individual investments in phase 1, the selection of specific feeder roads is based on cost-effectiveness criteria in the 20 following manner: First, feeder roads already included in the existing national network but of low standard were considered. Second, feeder roads were prioritized according to their existing condition; the poorest quality roads were given top priority. Against this screening, roads were selected, by region, on the basis of maximizing population given all-year accessibility to the primary and secondary road network. Finally, this selection was screened against availability of social services, including health clinics, schools, markets, and extension services.
2. Technical
70. The project is a part of an integrated program of development activities for Ghana’s transport sector from 2008 to 2012. The main road (Ayamfuri-Asawinso) would establish a south-north transport corridor in the west of Ghana, linking the timber and mineral rich areas, and neighboring countries located west and north of Ghana, to the deep water port of Takoradi. Currently, the road section consists of poor gravel and sealed road surface, which will be improved to asphalt concrete standard. The urban and feeder roads have been selected for upgrading and periodic maintenance on the basis of sound technical, economic, and environmental analyses. The feeder roads have been selected taking into consideration the improvements in connectivity, agricultural output, and access to socio-economic services. Taking into consideration the rapidly increasing road construction costs in sub-Saharan Africa, particular attention will be paid to managing the quality, costs, and delays. Effective supervision monitoring mechanisms are being developed to ensure that the physical works are completed within the agreed contractual time.
7 1. The second year program for the feeder roads will be prioritized to support commercial agriculture around growth poles, in coordination with the Ministry of Agriculture. The procedures for maintenance of feeder roads will also be reviewed and updated.
3. Fiduciary
72. Financial Management: The primary executing agency for the project will be the MRH, which will coordinate activities of the various IAs and BASunder the project. To ensure proper coordination and effective financial management (FM) arrangements in the project, including adherence to service standards on uniform reporting, meeting deadlines for submission of payments vouchers, processing procedures, etc., all Heads of Accounts of the IAs have formed a FMT headed by the Director of Finance (MRH), as part of the PIT. The IAs will be responsible for contract management and implementation, while the respective ministries will be undertaking this task on behalf of the BASwithin their sub-sectors. The responsibility of the FMT is to ensure that throughout implementation there are adequate financial management systems in place which can report on the use of project funds. The responsibility for final verification and authorization of payments for all contracts and activities, maintenance and operation of the project’s designated account, and make payments to contractors and service providers will be the responsibility of MRH. As part of the project financial management arrangement it has been agreed by all IAs to adopt a centralized financial management arrangement under the MRH which will operate a single Designated Account.
21 73. Assessment of the financial management arrangements at MRH concludes that there are systems in place that satisfy the Bank's minimum requirements under OPBP10.02, and overall financial management arrangement is rated as moderate.
74. Procurement: An assessment of the capacities of the two Ministries and other IAs to implement procurement actions for the Transport Sector Project (TSP) was carried out by the Bank in January 2009. The assessment reviewed the organizational structure for implementing the project and the interaction between the IAs and their staff responsible for procurement and relevant central unit for administration and finance. The assessment established that the ministries and other IAs: (a) were responding to Ghana's Public Procurement Law; (b) had entity tender committees and review boards in their permanent organizations; (c) had adequate internal technical and administrative controls and anti-corruption procedures; and (d) had satisfactory appeal mechanisms for bidders.
75. The assessment showed that the road sector IAs (MRH including, DUR and DFR, and GHA) have handled Bank projects in the last six years under the RSDP and have, as institutions, gained significant experience to handle procurement under the project. However, the capacities of other BASincluded in the road component (KNUST, GTTC, DVLA, and NRSC) were found to be inadequate because they have only participated in relatively few and simple procurement activities, using the Bank's procedures and guidelines.
76. The assessment of the MOT identified that MOT itself has limited capacity and experience in procurement using the Bank's Guidelines. In contrast, the other transport sector IAs (GCAA, GACL, and GPHA) have relatively strong procurement units, headed by qualified procurement staff that have also been trained in the use of the Bank's procurement procedures at Ghana Institute of Management and Public Administration (GIMPA). Further, the other BAS included in the transport component (MU, GMA and VLTC) also have limited or no experience in the use of Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004, revised October 2006; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004, revised October 2006.
77. Based on the above, each of the IAs will be responsible for procurement for their components, and MRH and MOT will handle procurement for the BASwith the technical input of the BAS.To strengthen the procurement arrangements and improve quality control, MRH and MOT have agreed to take advantage of the overall project coordination role assigned to the MRH. A Procurement Team would be set up prior to effectiveness as part of the PIT, comprising of key procurement staff of all IAs and headed by the director of procurement in MRH. The key function of the Procurement Team will be to coordinate the work of different Ministries and IAs and provide quality control for all procurement related activities. The residual overall project risk for procurement will be moderate.
4. Social
78. Social Benefits. The proposed road rehabilitation works, particularly feeder roads and the Ayamfuri - Asawinso trunk road which traverses rural areas and resource rich western region, are expected to contribute to income generation, savings in travel time, and reduced transport burden. This would result in improved access to public services, schools, health clinics, and 22 agricultural inputs such as fertilizers, which will contribute to the achievement of Millennium Development Goals. The urban roads will contribute to enhanced mobility and access to social services, and improve competitiveness ofthe city.
79. Gender issues. The road projects will benefit women and other vulnerable groups (children, elderly and poor) by responding to their mobility needs through the provision of better access to basic social services, safe and enhanced access to these facilities, both in rural and urban roads. Small cereal drying platforms will be provided in selected villages along the Ayamfuri - Asawinso road corridor, which traverses rural areas, and along selected feeder roads. Likewise, road side markets to benefit village women traders will be supported. Gender issues were assessed in the Social Impact Assessment (SIA) and the Resettlement Action Plans (RAPs).
80. Human Immunodeficiency Virus/ Acquired Immune Deficiency Syndrome (HIVIAIDS) prevention. The practices (policy, strategy, operations documentation), established in combating HIV/AIDS in ongoing projects will be continued. Road specific HIV/AIDS prevention action plans will be prepared in accordance with the Ministry's framework during mobilization. The target groups of the plans will include: road contractors and their staff, supervision consultants, and their staff, local communities along the roads, and professional drivers and passengers. Sexually transmitted infections (STIs) and HIV/AIDS prevention clauses will be incorporated in the works contracts.
5. Environment
81. The civil works to be carried out in the first year work program for this project include the upgrading and rehabilitation of existing roads. The planned civil works will not have irreversible negative impacts during project implementation. This is especially the case for the road upgrading works, which will not require road re-alignments and will require only limited land acquisition. The potential adverse environmental and social impacts identified will be limited and site specific; they will be mitigated in compliance with the Bank's safeguard policies. An Environmental and Social Management Framework (ESMF), and a Resettlement Policy Framework (WF) were prepared for the road sector in 2006, and re-disclosed for this project in December 2008. Environmental Impact Assessments (EIAs), Environmental Management Plans (EMPs), and Resettlement Action Plans (RAPs) for the first year's road projects (four roads) have been prepared and disclosed in-country and at the InfoShop in March 2009. Additional works to be carried out in the second year include: a) minor civil works (construction of classrooms, laboratory, hostel, workshop and offices); and b) feeder roads improvements. These works will be subject to the Environmental and Social Management Framework (ESMF) requirements and site specific Environmental Impact Assessments (EIAs)/Environmental Management Plans (EMPs) and RAPs, if need be. The cost for the implementation of the mitigation measures as identified in the RAPs will be covered by GOG while the cost for HIVIAIDS prevention and EMP civil works operations related to project investments and capacity building will be financed by the Bank.
23 6. Safeguard policies Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) [XI [I Natural Habitats (OP/BP 4.04) [I [XI Pest Management (OP 4.09) [I [XI Physical Cultural Resources (OPBP 4.1 1) [XI [I Involuntary Resettlement (OPBP 4.12) [XI [I Indigenous Peoples (OP/BP 4.10) [I Ex1 Forests (OP/BP 4.36) [I [XI Safety of Dams (OP/BP 4.37) 11 [XI Projects in Disputed Areas (OPBP 7.60) [I [XI Projects on International Waterways (OP/BP 7.50) [I [XI Piloting the Use of Borrower Systems to Address Environmental and Social Safeguard Issues in Bank- [I [XI Supported Projects (OP/BP 4.00)
7. Policy Exceptions and Readiness
82. No policy exceptions are planned. The proposed project meets all quality at entry criteria and it is at a high level of implementation readiness. The detailed engineering designs and bidding documents are ready for the first year’s work. The EIA and RAP for the first’s work have been disclosed and an action plan has been developed to address the key issues prior to contract mobilization.
24 Annex 1: Country and Sector Background Ghana: Transport Sector Project
The Transport Sector in Ghana
1. The transport sector plays a strategic role in the economy of Ghan accountin for about four-five percent of gross domestic product. The country has -a well developed transportation system consisting of two large deep-water ports, a 947 km railway network, a 68,000 km road network, one international airport and eight regional airports and airstrips throughout the country. Ghana’s two ports handle seven million tons of import and export traffic annually. This figure will increase over the coming years if Ghana is able to capture a larger share of shipments to and from landlocked countries, particularly Mali, Burkina Faso, and Niger. Roads are the predominant mode of transportation, currently accounting for 94 percent of freight and 97 percent of all traffic movements in the country.
2. There are no available alternatives to roads other than for movement of bulk commodities for export, which are suited to transport by rail from central collection centers and mining areas to the ports. The railway system has limited coverage (Accra-Kumasi-Takoradi) and serves only the southern part of the country, excluding the largest port of Tema. It is presently operating at low efficiency under parastatal management, and options for granting concessions on infrastructure and operations are under consideration.
3. In the past, Ghana had a relatively healthy infrastructure base. However, economic crisis and decline during the 1970s and 1980~~combined with a weak institutional capacity led to deterioration in the quality of the infrastructure network and its operation. This left transporters and producers without the ability to expand services to a larger segment of the population and unable to compete effectively in regional markets.
4. Since 1990, the government has developed, within a framework of projects supported by the development partners, major efforts to remedy deficiencies in the transport sector. In 1997, the Government of Ghana (GOG) reformed its role and functions in the sector, increased private sector involvement particularly in port operations, maritime trade, and road maintenance. A Road Fund was also set up with a dedicated source of funding for road maintenance.
5. The importance of transport services and infrastructure was highlighted in the Second Growth and Poverty Reduction Strategy (GPRS 11) as an enabler for economic growth and poverty reduction. It is increasingly recognized that the transport sector serves and facilitates other sectors. Also, Ghana’s location at the cross-roads of several trade corridors in West Africa makes it an important player in the regional integration and trade facilitation programs of Economic Community of West African States and West African Economic and Monetary Union.
6. Available international evidence suggests a strong positive relation between road investment, growth, and poverty reduction. In Ghana, studiesg conducted during 2004-2005 reveal that:
Baseline Studies ofthe RSDP, Ministry of Roads and Highways (2006), Ghana 25 0 improved roads results in (a) a 20 percent increase in trips to hospitals; (b) a 23 percent increase in the price of maize received by farmers; (c) a 65 percent lower costs oftraveling to markets; and (d) a 41 percent lower costs oftraveling to welfare facilities; 0 a direct positive correlation exists between the incidence of poverty and road condition; and 0 improvements in regional corridors reduce delays in cross-border movement of goods, people and services; reduce waiting time at ports; and promote economic activities.
Expectations for the Transport Sector and Growth
7. The role oftransport infrastructure and services in economic growth has also been widely recognized and the GPRS I1 sets out broad policy objectives for the transport sector as follows:
0 To ensure the provision, expansion and maintenance of appropriate transport infrastructure, which strategically links the rural production and processing centres to the urban centres, and while ensuring the provision of an affordable and accessible transport system that recognizes the needs ofpeople with disabilities.
8. The government’s other stated objectives for the transport sector include:
0 ensuring provision of affordable, safe and accessible transportation system that recognizes needs ofthe people and business enterprises including farmers; and
0 developing and strengthening appropriate legal, institutional and regulatory framework to regulate all modes oftransportation to ensure an efficient transportation system.
9. Recognizing the importance of trade to Ghana’s growth, a long-standing policy objective for the transport sector is to establish an efficient, modally complementary and integrated transportation network for the movement ofpeople and goods at the least possible cost within the country, as well as to and fiom the country, both regionally and internationally. The government’s recent Transport Sector Growth Workshop (May 2006) resulted in a matrix of indicators and strategies aimed at achieving the following outcomes for the transport sector:
Integrated and adequately funded transport system; Improved transport infrastructure and facilities; Reduced transport costs for users and operators; and Effective policy formulation and coordinatiordregulation to support an efficient transport system.
26 The Strategic Context \ 10. Ghana’s national policy framework is changing. For policy makers and practitioners throughout the transport sector, it means that the way decisions and priorities are made, and the way performance is both measured and reported is changing. For example, due to the demands of globalization and the global pursuit for sustainable development, the government is required to develop polices that manage Ghana’s international relations in areas such as trade, investment and environmental impacts. The same goes for laws and regulations that apply to the transport sector. Compliance with international conventions and harmonization of laws and regulations throughout the West Africa sub-region will facilitate more trade and reduce costs and uncertainties for producers, passengers and service providers.
11. The national development policy framework has also evolved over the last five years. The GPRS (2002) and its successor, GPRS I1 (2005), set out a coordinated program for the economic and social development of Ghana. GPRS I1 incorporates the priority Millennium Development Goals, and, as confirmed by the priorities in the annual budget statements, GPRS I1 determines the annual priorities for allocating government resources. GPRS I1 and the Millennium Development Goals also provide the primary focus for the Development Partners (DPs) funding in Ghana. Furthermore, the importance of transport infrastructure is highlighted in GPRS I1 as an enabler for economic growth and poverty reduction. The transport sector serves and facilitates other sectors such as trade, private sector development, agriculture and tourism.
The current state of Transportation in Ghana
12. Table 1 below gives a good indication of government’s investment in the transport sector where about 99 percent of this investment is dedicated to the road sub-sector, including statutory funds received through the Road Fund. It should also be noted that state owned enterprises such as Ghana Ports and Harbors Authority (GPHA), Ghana Civil Aviation Authority (GCAA), and Ghana Railway Company Limited (GRCL) generate income through sales and licenses and receive some investments from the private sector. These figures are not included in this table. There may be the need to review the current trends in allocating government funds if some impact is to be made in other modes of transportation.
Table 1: Government’s investment in the transport sector (in Trillion Cedis)
2008 4.748 0.316 ~ 0.229 j 61.687
Note: Budget is in old Cedis ($lO,OOO= GH61)
27 Road Transport
13. Road transport is by far the dominant carrier of freight and passengers in Ghana’s transport system. It carries about 94 percent of freight traffic and reaches most communities, including the rural poor. Ghana’s road network was about 38,000 kilometers in 2000. Since then there has been rapid increase to 49,000 km in 2001 and to 60,000 km by the end of 2007. In the meantime, improvements in road condition have been gradual. For example, the road condition in 2004 was 36 percent good, 36 percent fair, and 28 percent poor as compared to 39 percent good, 29 percent fair, and 32 percent poor in 2007. Deferred maintenance of roads also has cost implications. Apart fiom increasing vehicle operating cost to service providers, rehabilitation cost to government could be as much as 8 - 10 times higher when carried out at a future date. Improvement in road condition could be achieved through planned expansion of the network, effective maintenance and financial management and improvement in the local construction industry.
14. There has been a rapid growth of vehicles in recent years. The effect is congestion in urban areas, resulting in slow and unreliable journeys. Congestion is also being observed in towns located along main highways. Moreover, based on the experience of other developing countries, there is likely to be a rise in accidents, fatalities and injury rates. This trend may already be emerging in Ghana. Safety issues also emerge due to ineffective control and enforcement of speed limits on trunk and urban roads. The situation is worsened when considering the additional traffic generated by growing freight movements through the cities and along the highways. Maintenance, improvements and implementation of traffic control devices are inadequate. There is unsafe behavior of road users and insufficient enforcement of traffic regulations.
15. Urban areas need special attention. Traffic congestion in the city leads to pollution, health related problems, wasted time and excess fuel consumption. Currently, the roads are packed yet there is the need to create greater carrying capacity. Public transport is not regulated and no mechanism currently exists for its effective regulation. Land use and spatial planning are not integrated with transport planning. Development is taking place without consideration of transport needs or impacts. Unplanned and uncontrolled development has resulted in an urban sprawl pushing out the boundaries of the cities and making demand for transportation more complex. As a result, travel distances have become longer, travel times and costs have increased considerably, marginalizing the poor. Retail and industrial developments are carried out with inadequate transport provisions such as parking and public transport linkages. Major facilities such as large markets are planned and developed with little consideration for transport implications. These poorly planned facilities result in a worsening situation regarding road congestion.
16. Enforcement of existing laws and regulations, safeguarding transport infrastructure, services, and users is weak or inconsistently applied. Axle load control is ineffective leading to excessive damage to road pavements. Poor traffic management, especially in the cities compounds the congestion problem. Unrestrained encroachment of physical development of
28 buildings, people and traders along transport infrastructure corridors causes severe restrictions in traffic movements and resulting congestion.
17. There are no standards for controlling vehicle condition or emissions. Emissions from passenger vehicles account for 70 percent of total emissions in Ghana. Standards and laws regulating vehicles and their operations also vary throughout the African sub-region, creating non-physical barriers to trade with neighboring countries.
18. Since 1961, it has been increasingly difficult to provide adequate funding from the consolidated fund to maintain the road network. A first generation road fund was established in 1985 to help solve this problem. In 1997, the Road Fund Act (Act 536) was promulgated to provide a legal framework for road maintenance. This has resulted in great improvements in funding of road maintenance. The current level of the road fund is about 60 percent of the projected level ofmaintenance costs.
Table 2: Road Fund - Fuel Levy for the period 2002-2007
I Year Fuel Levy (per liter) ~ Actual ; Actual Revenue - )-_ I_ I -- L __ - - .-I___-I --- -r------I cedis Exchange , Equiv. US ' consumption ~ Billion ; US$ i rate 1 cents (billion liters) 1 cedis I Million
2002 : 230 ' 8013 ' 2.87 i 1.62 ' 371 46 " " 111 - I - ,* I l_l__l_j _I- --...I I __ - _I- -
2003 400 8695 ~ 4.60 1.61 I 628 72 - -e-- " - _I__- - I_ - - -_- - _- _II -
2004- I I400 , 9060- ' 4.42 I 1.78 1710 78 ------___" - __ r -- .x xI1 - - I--
2005 400 ~ 9li4- 6.12- 1.31 i728- I ~ 80 4- ___ 2006 ' 600 9204 6.52 1.71 1086 118 2007 600 9391 6.39 1.83 1098 117 Source: 2007 Review Report, Ministry of Transportation Note: Budget is in old Cedis ($lO,OOO= GH$1)
Railway
19. Ghana's railway network has a length of 947 kilometers of mostly single track rail of 1.067m (3' 6") gauge located in the southern part of the country. In 1965, it carried 2.3 million tons of freight and 8 million passengers at a time when the GRCL was financially viable. By 1985 however, due to a number of factors, including ineffective management, the changing world economy, sharp drops in commodity prices, and competition from the road sector, among others, the rail sector's position as a prominent transport mode has diminished. With lower revenues and increasing labor costs, rail operations could not support modernization and sustain its maintenance program. The worsening financial situation of the railway resulted in the usual vicious cycle faced by many railroads: default on loan payments --$ poor maintenance - drop of service quality - loss ofcustomers - more drops in revenues. 20. There have been some improvements in rail sector performance after support from development partner assistance programs. This allowed Ghana to undertake some rehabilitation
29 works and acquire new rolling stocks. Additionally, Ghana Bauxite Company and Ghana Manganese Company (which critically depend on rail exports of their products), advanced money for track maintenance. As a result of these investments, there has been a general increase in demand for rail freight and passengers. But service performance and financial risk are still overriding concerns.
21. The rail system has the potential to become a vital part of Ghana’s transport system, carrying a larger portion of travelers and freight on the busiest transport corridors. As the economy grows, there will be increasing demand on the transport system, and rail can become a viable alternative to road transport, provided costs are kept under control, efficiency and reliability are imflroved, and ongoing investments are secured for development and maintenance of the system. The GOG is actively considering private sector participation as a means of supporting rail sector improvements and future development.
22. A GRCL concession process actually began in August 2002 but collapsed in August 2005 when arrangements for divestiture could not be successfblly completed. Currently, attempts are being made to enter into a public-private-partnership arrangement with current and potential users.
Civil Aviation
23. Civil aviation functions in Ghana comprises of policy formulation, technical (safety) and economic regulation; airport (asset) management; and air space management. Service providers consist of international and domestic airlines that operate to and from Kotoka International Airport (KIA) to various international destinations as well as Kumasi, Takoradi, and Sunyani in Ghana. A maintenance bay has been established at KIA to service domestic operator aircrafts.
24. General aviation development is being encouraged because of economic benefits for the country in the areas of agriculture spraying and medical evacuation, among others. A private assembly plant of small aircrafts has also been established.
25. The responsibility for management of the aviation sector is with the Ministry of Transport (MOT). Institutionally, all these functions are being performed by the GCAA. Under the Civil Aviation Act, 2004 (Act 678) the government plans to separate airport management from other functions. KIA, as the country’s only international airport, handles all of Ghana’s international flights. Four other airports with paved runways in Kumasi, Takoradi, Sunyani, and Tamale handle domestic flights. Apart from Way which is a paved airfield, there are other airstrips with short unpaved runways at Yendi, Paga, Obuasi, Ho, Tarkwa, Kete Krachi, Bimbilla, Saboba, Mole Game Reserve, and Salaga which provide for medical and other emergency services.
26. KIA handles about 800,000 passengers and 50,000 tons of freight annually. Passenger traffic has increased in recent years, growing at an average of seven percent annually over the past five years. The growth in passenger and airline traffic is a reflection of Ghana’s economic growth in recent years. KIA is being renovated as part of a phased rehabilitation program funded from internal and external sources. The program includes extending the runway and installing 30 modern navigation and communication equipment. Boarding lounges will be renovated in the next phase. Other airports in Ghana need investment for improving infrastructure and navigation equipment.
27. Ghana controls the entire Accra Flight Information Region, which includes the upper air space of Ghana, Togo, and Benin. The government has adopted a liberalized open skies policy that allows for competition and cross-border investments and lifts restrictions on ownership and control while still keeping some limits on flight frequency. Compared to other parts of the world, air fares for both passengers and airfreight to and from Ghana are high and in some cases seat availability and air cargo space are limited. This discourages business travel, tourism, and foreign investment.
Maritime and Inland Water Transport
28. Ghana’s two sea ports are in Takoradi and Tema. Although they handle growing cargo volumes, performance of the ports is challenged by an increasing amount of congestion outside the port gates, inefficient intennodal interchanges and hinterland movements, and long cargo dwell times.
29. The relatively low productivity at Tema’s container berths should soon be a condition of the past. In 2005, three new gantry cranes were installed in Tema’s container berth resulting in an increase of berth productivity from six to eight moves per crane hour, where ships’ cranes were used, to a productivity rate of about 25 moves per crane hour with the new gantry cranes. The investment in the cranes as well as in a new modern terminal was made possible through a concession agreement with a global terminal operator. It is anticipated that productivity gains will extend throughout the terminal area as a result of the new investment.
30. The improved efficiency in Tema will raise the likelihood of the port becoming a regional trans-shipment hub and enhance its role as a transit hub serving neighboring countries. This will generate more traffic in port-urban areas including Accra, as well as along transport corridors. To alleviate the congestion created by the increasing cargo volumes, there is the need to look at alternative arrangements, such as the establishment of a network of inland terminals and truck staging areas and other modal options.
31. There has been greater private sector participation in other cargo handling services. Today, 70 percent of cargo in Tema is handled by private stevedoring companies. Though the port authority in Tema continues to handle a guaranteed 30 percent of the cargo, it is expected that there will be a transition towards competition for all cargo handling activity to liberalize the market and make it easier for other firms to compete. As other concession opportunities arise, open competitive tendering could be encouraged. An appropriate regulatory system must be put in place to monitor anticompetitive behavior of port service providers.
32. The Volta Lake Transport system spans about 450 kilometers from the south to the north with ports at Akosombo, Buipe and Yapei and major ferry crossings at Yeji, Keta Krachi, Dambai and Kpandu. This important inland waterway transports petroleum products, cement, and agricultural commodities. It also provides many passenger services, mostly for the rural 31 population living along the lake. The operations started off well many years ago, but to be successful a number of challenges need to be overcome. Periodic drops in the level of the lake inhibit longitudinal movement and expose Debre shoal, making it difficult to reach Buipe. Cross- lake services are also affected as a result of inability to access properly constructed landing stations. Other challenges include aging equipment, underwater obstructions to safe navigation, lack of navigational aids, and lack of regulation for canoe construction, use, and operations. Improving lake transport will complement land transport and offer certain economic advantages to users. Barge transport has distinct advantages over other modes. Greater use of lake transport will also divert some truck movements, reducing overloading on roads, traffic congestion and road maintenance costs.
33. While inland water transport does not constitute a significant part of Ghana’s transport system, some routes are critical to small communities. Small boats and canoes operate on Ankobra, Pray Oti, Black Volta, White Volta, Volta south of Akosombo and Lake Bosumtwi. Private small owners operate in these areas moving foodstuffs with virtually no control or regulation.
Non-motorized Transport (NMT)
34. NMT includes all forms of non-motorized transport including walking, bicycles, push carts, wheelbarrows and animal drawn carts. Currently, only one to three percent of urban dwellers in the south use NMT. In the north, NMT is more extensively used. Motorists’ failure to recognize and respect cyclists makes cycling dangerous. Infrastructure for NMT in urban centers is inadequate. There is also a lack of control and safety measures for operators, hawkers and others who encroach on the few facilities such as bicycle paths that are available. There is a lack of appropriate legislation for NMT operations.
Inter-modal Transport
35. Ghana’s planning and decision making in the transport sector continues to focus almost exclusively on improving individual modes, with very little attention paid to how improvements in one mode affects others. Road agencies, for example, focus only on roads. As a result, lack of attention to providing effective interfaces between road, rail, and ports has contributed to truck congestion outside port gates.
36. The Volta Lake is one example where some form of inter-modalism has been developed. This involves the transfer of freight from truck-barge, and pipeline-barge. Bus-ferry transfer facilities were also considered in the design.
37. A pipeline transports oil 50 km from Tema to the Volta Lake port in Akosombo. Petroleum products are then transferred by barges from Akosombo to the port of Buipe in the Northern Region, and then transferred into trucks for transport to Tamale and other places in the north. The pipeline from Buipe through Tamale to Bolgatanga has just been completed. It will reduce road deterioration caused by petroleum tanker trucks. This intermodal arrangement for transporting petroleum products to the north will cut transport costs, congestion, and accidents while lessening any negative impact on the environment. 32 38. The establishment of an inter-modal framework where road, rail, inland water and pipeline transport and logistics services co-exist and complement each other will provide a broader range of options to shippers and users.
33 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies Ghana: Transport Sector Project
PROJECT IP DO SECTOR ISSUES ADDRESSED RATING RATING
- Urban infrastructure, decentralization, 2157-GH) improved fiscal management
Local Government Development - Urban infrastructure, decentralization, Project - Closed (Cr. No. 2568-GH ) improved fiscal management
Urban 5 Project -Phase l-Closed S Urban infrastructure, decentralization, (Cr.3 3 30-GH ) improved fiscal management
Road Sector Development Program - S Main, urban and feeder roads, studies, Closed (Cr. No. 3554-GH) traffic management
Urban Transport Project (with AFD S Transport infrastructure in Accra and and GEF) -ongoing (Cr. No. 4334- several other cities GH)
West Africa Transport and Trade S Rehabilitation of the main north-south Facilitation Project -ongoing- -. (Cr. inter-regional road NO.4439-GH) OTHER DEVELOPMENT AGENC ES AFD: Road rehabilitation in Urban roads Kumasi-ongoing
AfDB: Rehabilitation of Sections of Trunk Roads the Central and Coastal Corridor Trunk Roads I CIDA (Canada): (i)Local (i)Adopting budgeting and expenditure Government Reform Study-ongoing; management reforms undertaken at the (ii)Fiscal Decentralization central level to the local level; (ii) Implementation offiscal decentralization DfID (UK): Performance Improvement Program-ongoing Support civil service reform for the entire public sector (ministries, DANIDA departments and agencies)
EC: Rehabilitation of Eastern Trunk Roads
Corridor Trunk Roads I
Implementation Completion Report (ICR), when available.
HS-Highly satisfactory, S-Satisfactory, U-Unsatisfactory, HU-Highly unsatisfactory 34 Annex 3: Results Framework and Monitoring Ghana: Transport Sector Project
Table 1: Results Framework I PDO Use of Project Outcome Information Improve mobility of goods and 0 Average travel time reduced by at YR1-YR5: Use to monitor results passengers through reduction in least 20% on project-fmanced roads, closely; lower values may flag travel time and vehicle operating 0 Average VOC (in real terms). high expectations or poor cost, and improvement in road safety reduced by at least 10% on project- enforcement and trigger standards. financed roads. appropriate actions. 0 Fatality rate reduced from 22 per 10,000 vehicles to 19 per 10,000 vehicles.
0 Rural Accessibility Index (MI) increased from 53% to 57%. Condition of trunk road network in good and fair condition improved from 83% to 88%, for urban roads from 36% to 50%, and for feeder roads from 72% to 85%. Intermediate Outcomes Use of Intermediate Outcome Monitoring 0 Enacted Road Traffic Regulation YRl-YR5: lower levels would and implement Axle Load Control flag possible problems in Policy Action Plan. implementation of the reform
0 Funding for road maintenance program for necessary action. increased from 60% to 75% of the planned maintenance needs. YR3-YR5: information will be
0 Road fund management used to study the impact of road strengthened. investments on growth and I poverty alleviation. 0 Length of road network (trunk, urban, and feeder) rehabilitated. Length of feeder road network improved (spot improvement).
Aviation, Maritime, and Railways 0 GRDA made operational. YR2-YR3: Data to feed into
0 Completion of Master Plan for preparation of follow-on projects. Regional Airports.
0 Completion of detailed design and YR5: Results to feed into broader safeguard reports for Takoradi Airport. government and development partners’ programs. 0 Completion of Feasibility Studies for development of landing stages and reception facilities along the Volta Lake.
0 Completion of feasibility study for dualization of Meridian road in Tema.
0 # of courses offered by RMU.
35 z2 z2 E ."0 vl 'E !3 v1 t
mloo \D*m
0 0 0- 2 .-E b va 3 2 E E
h
C C rc
m0 I a\-
0 0 11-
0 I Im Annex 4: Detailed Project Description Ghana: Transport Sector Project
1. The overall objective of the project is to support the National Transport Policy (NTP) in meeting strategic national development goals for growth and poverty reduction. The project development objective (PDO) is to improve mobility of goods and passengers through reduction in travel time and vehicle operating cost, and to improve road safety standards. This objective will be achieved through strengthening the capacity of transport institutions in planning, regulation, operations and maintenance, and through infrastructure investment.
2. The Ministry of Roads and Highways (MRH) and Ministry of Transport (MOT) will implement the project. In addition to the ministries, the various departments and agencies which will benefit from the IDA Credit are:
Roads sub-sector: Driver and Vehicle Licensing Authority (DVLA), National Road Safety Commission (NRSC), Kwame Nkrumah University of Science and Technology (KNUST), Government Technical Training Center (GTTC), Ghana Highway Authority (GHA), Department of Urban Roads (DUR), and Department of Feeder Roads (DFR); and
Aviation, maritime and railways sub-sector: Ghana Civil Aviation Authority (GCAA), Ghana Railway Development Authority (GRDA), Ghana Airports Company Limited (GACL), Ghana Ports and Harbors Authority (GPHA), Regional Maritime University (RMU), Ghana Maritime Authority (GMA), and Volta Lake Transport Company (VLTC).
3. The Transport Sector Project (TSP) envisages a total investment of US$225.0 million to be funded by IDA at 100 percent. A substantial portion of the project is devoted to institutional and capacity building, preparation of feasibility studies, advisory support, and monitoring and supervision. These activities will be managed and coordinated by the two ministries. The various project components covered by the IDA credit are detailed below.
4. Component A - Support to MRH (US$4.2 million): This is targeted at: preparation of feasibility studies to support MRH’s program, policy and institutional reforms (including integration of Geographic Information System (GIS) representing trunk, urban, and feeder roads network and associated service activities, development of operating and safety standards and axle load control, strengthening management of road fund); capacity building (strengthening management information systems, development of human resource development strategy, supporting a donor coordinator, participation in national and international training courses, technical support to develop legislative and regulatory frameworks to support implementation of institutional restructuring study recommendations). The details are as follows:
38 Table 1: Support to MRH
I Item I US$ million I Preparation of feasibility studies 2.5 Integration of Geographic Information Systems (GIS) of Road Agencies 0.4 Capacity Building 1.1 Organization of Development Partner Conferences 0.2
5. Component B - Support to Road Sector and Educational Entities (US$6.5 million): This component will support the following activities:
Driver and Vehicle Licensing Authority (DVLA) includes technical advisory services to develop improved licensing methods, standardization of licensing procedures, permits, and collection of associated 'revenue, improving enforcement procedures; development of test grounds, operations support (including supervision vehicles, equipment, etc.);
National Road Safety Commission CNRSC) includes (i)provision of road safety equipment, production of handbills, production and distribution of road safety information materials, information and publicity material to raise awareness of road safety issues; (ii)provision of facilities for emergency response services; and (iii)training of staff in identifying black spots, conducting road safety audits, etc.;
Kwame Nkrumah University of Science and Technology (KNUST): This component would finance laboratory equipment, computers, construction of class rooms, visit of specialists and scholars to support training programs; and
Government Technical Training Center (GTTC) to develop and expand its facilities to enhance training of artisans for the transport sector including the construction and furnishing of modern class rooms, hostel and workshop. In collaboration with NRSC and DVLA set up a pilot driving academy and educate mechanics on vehicle maintenance standards.
Item US$ million I DVLA I 1.2 I NRSC 2.0 KNUST 1.5 GTTC 1.8 I Total I 6.5 I
39 6. Component C: Improvement of Trunk Roads (US$64.0 million): This will be implemented by the GHA and consist of rehabilitation of a major trunk road from Ayamfuri- Asawinso (52 km) to establish a South-North transport corridor in the West of Ghana, linking the timber and mineral rich areas and neighboring countries located West and North of Ghana, to the deep water port of Takoradi. Support to GHA will also include supervision of construction, implementation of environmental and social safeguards, environmental and social safeguard training, and strengthening the technical capacity of GHA for improving trunk roads and providing axle load equipment.
Table 3: Improvement of trunk Roads
I Item I US$ million I
~ ~~ Construction of Ayamfuri - Asawinso Road 58.5 Supervision 3 -0 Capacity Building and axle load equipment 2.5
7. Component D: Improvement of Urban Roads and Infrastructure (IDA: US$78.0 million): This component will be implemented by DUR and consists of rehabilitation of arterial roads and public transport infrastructure as follows:
Rehabilitation of the Burma Camp Road; Rehabilitation of Giffard Road; and Financing urban transport infrastructure in Accra.
8. The first two sub-components form part of the Accra East Corridor which constitutes part of the network of arterials that link the suburban areas of Accra to the Central Business District. This component would also finance provision of public transport infrastructure in Accra, including along the bus rapid transport corridor and tributaries in Accra, including bus stations, junction improvements, terminals, depots and preparation of public transport management plan for central Accra, and including the provision of technical assistance for the supervision of the works and related environmental and social safeguards measures. The details are as follows:
Table 4: Improvement of Urban Roads
Item US$ million Urban transport infrastructure 24.0 Rehabilitation of Burma Camp 36.5 Rehabilitation of Giffard Road 13.0 Supervision (including environmental and social safeguards) 4.0 Capacity Building 0.5 Total 78.0
40 9. Component E - Improvement of Feeder Roads (US$50.5 million): This component will be 'implemented by DFR working towards consolidating the achievement under the RSDP and further improving rural access through efficient and sustainable feeder roads rehabilitation, maintenance and cost effective feeder roads improvement. The roads to be financed in the first year have been identified based on criteria outlined in paragraph 69 in the main text. A total of 48 feeder road sections with a length of 163 km will be rehabilitated (minor) and 21 1 km improved (spot improvement) in all regions of Ghana at a total cost of about US$20.0 million.
10. The roads to be financed with an additional US$27.5 million under this component would be identified during the first year of implementation. The investments will be focused in selected regions to support commercial agriculture around growth poles. Support to DFR will also include US$2.5 million for supervision of construction (including supervision of environmental and social safeguards).
Table 5: Improvement of feeder roads
I Item I US$ million I Improvement and rehabilitation of feeder roads to support agriculture and growth 47.5 Consultancy for supervision 2.5 Capacity Building 0.5 Total 50.5
11. Component F - Support to MOT and Other Transport Sector Entities (USN3.5 million): This component would finance support to:
MOT to: (a) make the GRDA operational; (b) carry out studies on the development of public-private partnerships in the transport sector; and (c) build its capacity in transport planning, procurement, financial, project, and safeguards management;
GACL to: (a) carry out detailed design, environmental and social studies for the adaptation of Takoradi airport for civilian purposes; and (b) prepare a master plan for development of regional airports;
GCAA to develop regulations for the aviation industry and carry out studies on aviation sector development;
GPHA to carry out a feasibility study for the dualization of the Meridian Road in Tema;
GMA to carry out a feasibility study for the improvement of transport on Volta Lake;
41 0 VLTC to carry out feasibility studies for the development of landing stages and reception facilities along the Volta Lake; and
0 RMU to improve its training capacity to provide maritime training services for the West Africa Region.
Table 6: Support to MOT and Other Transport Sector Entities
I Item I US$ million I Capacity building and technical assistance to MOT 4.0 Detailed design and EMP/RAP for Takoradi airport, Master Plans (GACL) 2.0 Aviation Industry regulations study (GCAA) 1.5 Feasibility Study to improve transportation on Volta Lake (GMA) 1.5 Feasibility for development of landing stages and reception facilities along the Volta Lake (VLTC) 3.0 Feasibility for dualization of Meridian Road in Tema (GPHA) 0.5 I Upgrading of Training Capacity (RMU) I 1.0 1 Total 13.5
12. Component G - Project Management (US%8.3 million). This component would include support for provision of technical assistance, vehicles, equipment and other operational support to the IAs to carry out the coordination, administration, monitoring, evaluation and audit of the Project.
42 Annex 5: Project Cost Ghana: Transport Sector Project (US$ million) AgencyIActivity Base Cost Total Cost A Ministry of Roads and Highways (MRH) Integrationof GIS of Road Agencies 0.4 0.4 Organization of Development Partners’ Conference 0.2 0.2 Preparation of feasibility studies 2.5 2.5 Capacity Building 1.1 1.1 Sub-total 4.2 4.2 B Support to Road Sector and Educational Entities DVLA, NRSC, KNUST, GTTC 6.5 6.5 Sub-Total 6.5 6.5 C Improvement of Trunk Roads Construction of Ayamfuri-Asawinso Road 41.5 58.5 Supervision (including environmental and social 2.5 3 .O safeguards) Capacity building and equipment 2.5 2.5 Sub-Total 46.5 64.0 D Improvement of Urban Roads and infrastructure Urban Transport Infrastructure 16.5 24.0 Rehabilitation of Burma Camp Road 26.5 36.5 Rehabilitation of Giffard Road 9 13.0 Capacity building 0.5 0.5 Supervision (including environmental and social 3 .O 4.0 safeguards) Sub-Total 55.5 78.0 E Improvement of Feeder Roads ImprovementIRehabilitation of Feeder Roads 39.5 47.5 Supervision (including environmental and social 2.0 2.5 safeguards) Capacity building 0.5 0.5 Sub-total 42.0 50.5 Sub-Total MRH, Department, Agencies & Entities 154.7 203.2 F MOT and Other Transport Sector Entities F1 Support to MOT 4.0 4.0 F2 Support to GACL 2.0 2.0 F3 Support to GCAA 1.5 1.5 F4 Support to GMA 1.5 1.5 F5 Support to VLTC 3.0 3.0 F6 Support to GPHA 0.5 0.5 F7 support to RMU 1.o 1.o Sub-Total 13.5 13.5 G Project Management 8.3 8.3 Sub-total 8.3 8.3 Sub-total MOT and Other Transport Sector 21.8 21.8
GRAND TOTAL* 176.5 225.0
43 Annex 6: Implementation Arrangements Ghana: Transport Sector Project
1. The project will be implemented by Ministry of Roads and Highways (MRH), which will have the overall responsibility for its coordination and management. The MRH will be responsible for preparing quarterly and annual reports in formats to be established and agreed upon in accordance with procurement and disbursement arrangements agreed between the Bank and the Government of Ghana (GOG), with inputs from participating Ministries, Departments, and Agencies (MDAs) and beneficiary entities.
2. All components will be managed in line with Bank conditions and guidelines. In those areas where expertise is lacking or not fully developed, short-term consulting specialists (management, engineering, procurement, financial management) will be employed to enhance performance and project implementation. The short-term specialists would be financed as part of the capacity building component of MRH and the Ministry of Transport (MOT).
3. Implementation will be carried out on the basis of an Annual Work Plan and Budget prepared by the MRH, with inputs from the Implementing Agencies (IAs) and Beneficiary Agencies (BAS). The IAs are: MRH including Department of Urban Roads (DUR) and Department of Feeder Roads (DFR), Ghana Highway Authorities (GHA), MOT, Ghana Airports Company Limited (GACL), Ghana Civil Aviation Authority (GCAA), Ghana Ports and Harbors Authority (GPHA); the BAS are: Driver and Vehicle Licensing Authority (DVLA), Kwame Nkrumah University of Science and Technology (KNUST), Government Technical Training Center (GTTC), National Road Safety Commission (NRSC), Regional Maritime University (RMU), Ghana Maritime Authority (GMA), Volta Lake Transport Company (VLTC). The IAs will be involved in procurement of goods, works, services, contract management and financial management, and safeguards management. In contrast, the BASwill be responsible for providing technical inputs for the IAs to carry out their respective components. The details on fiduciary responsibility and process flows under the project are provided in Table 1. A Project Implementation Manual (PIM) will be prepared by GOG for: (a) institutional coordination and day-to-day execution of the project; (b) disbursement and financial management; (c) procurement; (d) environmental and social guidelines; (e) monitoring, evaluation, reporting and communication; and (9 such other administrative, financial, technical and organizational arrangements and procedures as may be required for the project.
4. To facilitate project implementation, following Committees and Groups will be set up and detailed as part ofthe PIM.
(a) A Project Steering Committee (PSC) as an inter-ministerial oversight body; (b) A Project Implementation Team (PIT) for coordinating implementation of project activities and reporting; (c) A Finance Management Team (FMT), as part of the PIT, for the overall financial management and reporting; and (d) A Procurement Team (PT), as part of the PIT, with direct responsibility for procurement activities and to provide quality control.
44 Project Steering Committee (PSC)
5. A PSC will be set up, chaired by the Chief Director, MRH, and comprising of representatives of the Ministry of Finance and Economic Planning (MFEP), MOT, MRH, and the Heads of the IAs. The PSC shall be responsible for, inter alia: (a) facilitating and coordinating project activities among the entities represented in the PSC; (b) approving Annual Work Plans and Budgets; and (c) reviewing annually or more if required, progress made towards achieving the project’s objectives.
Project Implementation Team (PIT)
6. A PIT will be constituted headed by the Director, Policy and Planning, MRH and comprise: (a) a PT consisting of selected procurement staff from IAs; (b) an FMT consisting of heads of accounts of IAs; (c) safeguard staff from the IAs; and (d) technical staff from IAs for project management and monitoring. The Team will be responsible for coordinating management and reporting of all project related activities. Specifically, PIT will be responsible for, inter alia:
(a) facilitating and coordinating administration of procurement, financial management, project management, safeguards and other implementation arrangements; and
(b) preparing and submitting quarterly and annual reports on all facets of the project to GOG and the Bank.
Finance Management Team
7. To ensure proper coordination and effective financial management (FM) arrangement of the project, and adhere to service standards on uniform reporting, meeting deadlines for submission of payments vouchers, processing procedures etc., Heads of Accounts of the IAs have formed an FMT headed by the Director of Finance (MRH). The Team will have responsibility with regards to ensuring compliance with financial covenants such as submitting interim unaudited financial reports (IFRs), and maintaining internal controls over project expenditure.
Procurement Team (PT)
8. A PT will be set up, headed by Director of Procurement (MRH) and made up of procurement specialists from the IAs with sound knowledge of Bank’s guidelines. The team would be the focal point for overall monitoring, evaluation, and reporting on procurement related activities.
45 Role of Ministries and Other Related Entities
(a) The project will be implemented by the Implementing Agencies", which are: MRH (including DUR and DFR), GHA, MOT, GACL, GCAA, and GPHA. The project will also benefit a number of agencies and entities, including: DVLA, KNUST, GTTC, NRSC, MU, GMA, and VLTC. The BAS" will be responsible for providing technical inputs to the IAs for carrying out their respective parts of the project. The detail on specific fiduciary responsibilities and process flows by the IAs and BASis listed in Table 1.
Role of the Bank
The Bank will monitor the procurement process and the progress of the works and services throughout the duration ofthe project;
The Bank will undertake regular meetings with the PIT to discuss general and specific issues in relation to the progress of the project;
The Bank's in-country team will collaborate with the PIT to organize field trips and meetings with the implementing agencies to deal with specific issues arising during the implementation ofthe project;
During a review mission, the Bank will endeavor to assist in resolving outstanding issues affecting progress ofthe project; and
The Bank will advise the PIT on addressing issues to ensure that all the project components are being executed according to the implementation plan.
Project Monitoring and Reporting
9. Reporting on the overall implementation of the project will be the responsibility of the PIT. However, each participating ministry, agency, and entity will be responsible for providing inputs on their respective components to PIT. The reporting will highlight issues that are obstructing smooth execution of the various components of the project. The quarterly project progress reports will cover civil works, consultancy services, institutional support, procurement, contract details, financial management reports, safeguard issues and project progress issues.
10. The report will comment on the implementation schedule in the areas of progress and delays. The reports will be in accordance with the requirements ofthe Bank's report format.
loThe components to be implemented by the IAs are: A (MRH), C (GHA), F1 (MOT), F2 (GACL). F3 (GCAA), and F6 (GPHA) I1 The components B, D, and E will be implemented by MRH; components F4, F5, and F7 will be implemented by MOT.
46 11. Meetings will be scheduled among the MDAs, entities and the PIT to discuss issues affecting the progress of the project. The following reports will be prepared and consolidated by the PIT on a quarterly basis:
12. Financial Reports will consist of sources of funds, statement of uses of funds by project activity, project cash withdrawals, special account reconciliation statement and a six-month project cash forecast.
13. Project Progress Reports will consist of an output monitoring report on contract management and on unit of output by project activity.
14. Procurement Management Report will consist of procurement process monitoring for goods, works and consultant services, and contract expenditure reports for goods, works and consultants' services.
15. Quarterly progress reports will summarize activities of work progress achieved in the last three months and submitted by the 30' of the first month of the following quarter. The quarterly report will be prepared by the PIT and cover the status of each civil works contract, funds committed against budgets by project, and funds disbursed by projects. The quarterly reports will contain the detailed program activities for the next 12 months, updated at the end of each quarter. The quarterly reports will be discussed by all the implementing agencies and matters arising treated accordingly.
16. PIT will lead the preparation of mid-term review report and the Implementation Completion Report with assistance from the Bank.
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'1 f 3 i i i 3 2 E k I I a,0 5Y 3 C td E .-C 9 3 L 4 ru s0 0 3 E L L .I s 8 a 3 0 3 ka, E 3 s 5 b 2 3 B 4 u a, s 5 0i 9 ii cc 0 3 L 83L 3 -3 b 2 il g? 8. Annex 7: Financial Management and Disbursement Arrangements Ghana: Transport Sector Project
Introduction
1. In line with the guidelines as stated in the Financial Management Practices Manual issued by the Financial Management Sector Board on November 3, 2005, a financial management assessment of the Ministry of Roads and Highways (MRH) was conducted. The objective of the assessment was to determine: (a) whether MRH has adequate , financial management arrangements to ensure that the project funds will be used for purposes intended in an efficient and economical way; (b) the project’s financial reports will be prepared in an accurate, reliable and timely manner; and (c) the entities’ assets will be safe guarded.
2. Unlike the recently closed IDA funded project - Road Sector Development Project (RSDP), the current project involves two ministries [MRH and the Ministry of Transport (MOT)] and a number of other agencies and entities. As a result, major departure will be in the design of funds flow and accountability mechanisms. Under the proposed project there will be a single Designated Account managed and operated by the MRH using a central payment processing account. The rationale for this is to ensure that MRH has adequate oversight and control over the use of project funds and can effectively monitor budget implementation. The MOT, which is also implementing the project, was created by the new government in January 2009 by merging the previous Ministries of Aviation, and Rail and Harbors. In view of the relative newness of MOT, the responsibility for preparing quarterly and annual financial statements, maintenance of internal financial controls, managing the Designated Account, preparing and authorizing withdrawal applications remain the responsibility of MRH.
3. An assessment of the financial management arrangements at the MRH concludes that there are systems in place that satisfy the Bank’s requirements under OPh3P10.02, and overall risk of financial management arrangements is rated as moderate.
Country Issues
4. Ghana’s fiduciary environment for utilizing both budgetary funds and donor funds is considered adequate. The June 2007, External Review of Public Financial Management (ERPFM) noted that the government continues to make encouraging progress in implementing its wide ranging program of strengthening public financial management (PFM) through adoption of the Short-Term and Medium-Term Action Plan. Budget formulation has been improved by revising the budget timetable to enable earlier tabling of the estimates and thus the passage of the Appropriations Bill prior to the start of the new financial year, to facilitate a more orderly implementation of spending plans. There is now increased consultation with stakeholders in budget formulation, more comprehensive information in budget documents, and encouragement of Ministries, Departments and Agencies (MDAs) to undertake procurement planning for use as basis for financial planning and budgeting.
51 5. Recent Public Financial Management (PFM) review notes the government’s continuing efforts to improve the commitment control system, to strengthen cash management, and to facilitate payments through decentralized treasuries. These actions aim at leading eventually to a Treasury Single Account, and to further implementation of the Budget and Public Expenditure Management System. Key challenges remain in the predictability of flows to Metropolitan, Municipal, and District Assemblies (MMDAs) and release by the Controller and Accountant General’s Department and these have an impact on the pace of budget execution. Financial statements of the Consolidated Fund and of MDAs are current and audited, but delays continue with regard to public enterprises and other statutory bodies, as well as that of other statutory funds. The Internal Audit Agency was established by the Internal Audit Agency Act 658, 2003 with the objective to co-ordinate, facilitate, and provide quality assurance for internal audit activities within MDAs and MMDAs.
6. Concerning external audit, the Ghana Audit Service (GAS) continues to show progress in clearing the backlog of audits and submitting the audited annual accounts prior to the statutory deadline of30 June, with the final 2007 Consolidated Fund accounts completed on time.
7. In sum, as part of the overall public sector reforms, the Government of Ghana (GOG) aims at strengthening central government structures and institutions by introducing programs to make them more efficient and effective through legislation and other reforms. Recent PFM laws including the Financial Administration Act 654 (2003), the Internal Audit Agency Act of 2003 and the Public Procurement Act 663 (2003) have been enacted to help regulate the use of public funds. GOG has also demonstrated its commitment to continue its PFM reforms by developing more efficient public financial management systems and ensuring transparency by strengthening state oversight institutions including the Public Accounts Committee of Parliament which has recently been holding public hearings on instances of financial irregularities and allegations of fraud and corruption.
Project Financial Management
8. The primary executing agency for the project will be the MRH, which will coordinate activities ofthe various Implementing Agencies (IAs) and Beneficiary Agencies (BAS)under the project (see paragraph 4, Annex 6 for a definition of ‘IAs and BAS). To ensure proper coordination and effective financial management (FM) arrangements in the project, including adherence to service standards on uniform reporting, meeting deadlines for submission of payments vouchers, processing procedures etc., all Heads of Accounts of the IAs have formed a Finance Management Team (FMT) headed by the Director of Finance (MRH). The IAs will be responsible for contract management and implementation, while the respective ministries will undertake this task on behalf of the BASwithin their sub-sectors. The responsibility ofthe FMT is to ensure that throughout implementation there are adequate financial management systems in place which can report on the use ofproject funds. MRH will be responsible for final verification and authorization ofpayments for all contracts and activities under this project, maintenance and operation of the project’s designated account and making payments to contractors and service providers. As part ofthe project financial management arrangement it has been agreed by all IAs to adopt a centralized financial management arrangement under the MRH which will operate a single Designated Account.
52 9. The details on specific responsibilities for contract management, financial management, and disbursements are listed in Table 1 in Annex 6. The functions, responsibilities and mandate of the FMT will be detailed in the Project Implementation Manual (PIM).
10. The justification for adopting this centralized payment processing system includes:
0 allowing MRH to have an oversight of the budget and funding for the Transport Sector Project (TSP);
0 providing broader responsibility to MRH and FMT for coordination, contract management and disbursements;
0 preparing uniform reporting of project activities and single interim unaudited financial reports (IFRs) and annual audit report for all components of the project; and
0 strengthening reporting and coordination among the IAs and BAS involved in the TSP.
11. The assessment recognizes that the use of a centralized single designated account may result in bureaucratic and other delays if the administration is not well coordinated. However, it is expected that the regular meetings of the PIT and FMT will help address any potential bottlenecks. The major challenge is the ability of the financial, management system at the MRH to track and report on various expenditures by the IAs and BAS.To help address this challenge the MRH is currently far advanced with the procurement of a suitable accounting software to help in accounting and reporting.
Project Risk Assessment and Mitigation
12. Table 1 below shows the results of the risk assessment and identifies key risk mitigation measures. The risk assessment is informed by the assessment of the MRH and discussions with FMT.
Table 1: Risk Rating Summary Table
Risk Risk Mitigating MeasureslKeniarks
I
Country Level Weaknesses in the S Strengthening the role of the MMDAs in M effective use ofpublic FM capacity building through ongoing funds, weak oversight reforms in the public financial regarding transparency management. This has resulted in a set of and accountability. Poor new legislationto guide public frnancial linkages between strategic management practices. planning and long term budgeting at the sector levels.
53 Risk
Country level risk as M reported in the last Public Accountability assessment is at the country Expenditure and Financial level as a result of issues with internal Accountability is rated as control in districts and regions. However, C for internal control and this project is being implemented at the as D+ for internal audit central government level and over 90 effectiveness, percent of the credit is being implemented by MRH, which has satisfactorily implemented the recently closed RSDP. The FM assessment of the Ministry and its agencies, GHA, DUR, and DFR is rated as satisfactory.
Entity Level MRH may have challenges S To address and minimize this risk, the M in effectively monitoring project has set up a PIT, PT and FMT to support implementation. As part of the the activities of other IAs and BASto ensure capacity building component, technical compliance with the assistance will be provided to strengthen Financing Agreements. both human and technical capacity in the ministry.
Project Level Coordination among s As part of the Implementation Agreement M different MMDAs and to be executed among all IAs, a Project other entities in financial Implementation Team and a Finance management and reporting may be difficult to achieve. Challenges in complying I The PIM and the Implementation with timelines for financial Agreement will provide guidelines on roles covenants such as and responsibilities of various agencies and submission of financial units. reports including external audits. The Director of Finance (MRH) working with the PIT will be responsible for overall FMmonitoring and reporting.
Overall Inherent Risk S M Budgeting Risk of cost overruns and S Budget execution to be monitored through M adverse variations in quarterly reports and IFRs by IDA. expenditure due to poor In addition the FMT will monitor budget budgeting techniques and execution and implementation to help slow implementation control any adverse variations and delays in caused by inadequacy in budget execution. predictability ofbudget releases.
54 Risk Risk Mitigating Measures/Remarks
Risk associated with The detailed procurement plans for the fust delays in budget execution year work have been finalized in due to weaknesses in discussions with the Bank, bidding preparing procurement documents have been prepared, reducing plans, annual work plans. the potential impact of delays in work execution.
Accounting Accounting and reporting S The use ofa central accounting and M challenges due to the reporting function at the MRH will help in project having different streamlining the preparation ofaccounts IAsiBAs where and other reports; during the first year expenditure will be capacity ofthe IAs will be strengthened in initiated and incurred. financial management and procurement.
Internal Controls Inadequacy ofcontrols in S All IAs and BAShave their internal control M the preparation and processes guided by the Financial approval oftransactions, Administration Act (FAA) and Financial payments, cash and bank Administration Regulation (FAR). These transactions. GOG financial regulations and manuals are adequate for operational control and they document the approval and authorization hierarchies applicable for processing financial transactions. Risk ofnon compliance to The MRH has a functioning Internal Audit internal control processes. Department.
Possibility of weaknesses Regular IDA supervision missions and in governance and anti- reviews will help ascertain level of corruption systems compliance and identify any possible GAC (transparency in weaknesses. processes) particularly in procurement and contract PIT oversight and the use of Bank’s awardinglexecution. procurement and fiduciary compliance procedures will help to minimize corruption risk. Funds Flow Delays in processing M This risk is minimized through the use of a M withdrawal applications. central payment processing unit at MRH. Delays in payment Also, staff in MRH have satisfactorily processing due to managed IDA projects and are familiar verification by MRH of with processes for disbursement. expenditure incurred by IAs and BAS.
Financial Reporting Delays in processing and S MRH will be responsible for coordinating M submitting IFRs and other and preparing financial reports on behalf of
55 Risk Risk Mitigating Measures/Remarks
financial monitoring all IAs and BASand submitting them to reports. IDA. Delays in complying with submission deadlines as per Finance Agreements.
Auditing The risk that audits will S The TOR for engagement will be reviewed M not be submitted on time and cleared by the fiduciary team of the to ensure compliance with Bank to guarantee that the scope of works covenants. is satisfactory. Continuous engagement by the IDA’SFM specialist with the Director of Finance (MRH) will follow up on the accounting through the audit program. Overall Risk Rating S M
H - High S - Substantial M - Moderate L - Low
Strengths and weaknesses of the Financial Management System
Strengths
13. The project financial management is strengthened primarily by the involvement and experience of the accounting staff of departments under the MRH in earlier and ongoing IDA funded projects. The Ghana Highway Authority (GHA), Department of Feeder Roads (DFR) and Department of Urban Roads (DUR) have also been involved in Road Sector Development Program, the Urban Transport Project, and West Africa Transport and Transit Facilitation Project. Personnel ofthese IAs have benefited from regular training in bank fiduciary procedures and are familiar with IDA financial management and procurement procedures and this will help ensure smooth implementation.
14. Under the RSDP, part of the financial management function of the IAs were mainstreamed with the establishment of the Roads Project’s Office and over time has led to a pool of skilled staff and the development of a reliable accounting and internal control system capable of recording and reporting accurate project expenditure. During the RSDP, the GHA, DFR, and DUR satisfactorily operated separate designated accounts.
Weaknesses
15. The project design is complex due to the number of MMDAs involved, and this can have a potential bearing on financial management. The most likely weakness in financial management will be challenges in collaboration and coordination among the IAs and BASand the MRH since the project will be relying on MRH for processing of all payments transactions. In addition, since
56 transaction initiation, authorizations and approval will be primarily at the implementing agency level there is the need for strong internal controls and oversight to prevent any possible lapses or potential fraud and corruption. It is to address these potential weaknesses that the project has in place implementation arrangements including the PIT, Procurement Team (PT) and the FMT.
Time Bound Action Plan
16. The action plan below indicates the actions to be taken for the project to address the weaknesses that have been identified to ensure the FM system is robust and strengthened.
Table 2: Action Plan
17. A summary of the key finding of the financial management assessment is presented as follows:
Budgeting Arrangements
18. The MRH and MOT as government ministries follow the budget preparation guidelines as per the Financial Administration Act, 2003 (Act 654), the Financial Administration Regulation, 2004 (LI1802) and also the annual budget guidelines issued by the Ministry of Finance and Economic Planning (MOFEP), The budget for the project will be prepared by the Planning and Policy unit of the MRH in conjunction with the IAs. The budget is part of the overall Transport Sector Development Plan (2008-20 12) agreed between the government and donor partners.
19. The assessment indicates that budgeting processes at the MDA level are satisfactory and can be relied upon to reflect the various components to be implemented by the different agencies The current budgetary control processes used mostly for the government’s discretionary budget, which are being adopted to support project implementation are capable of monitoring commitments and outstanding balances and this helps to reduce risk of multiple payments and expenditure overruns.
57 Accounting Arrangements
20. The director of finance at the MRH will be responsible for overall fiduciary aspects ofthe project. The director, a staff of the Controller and Accountant General’s department, is a qualified chartered accountant and involved in donor funded operations. In addition the Finance and Accounting Department of MRH has a dedicated unit handling donor funded project activities; the unit is headed by a project accountant and supported by two officers who report to the Director of Finance. The staff has had relevant experience during the implementation of the RSDP and other IDA financed projects and are familiar with IDA policies and procedures.
21. The technical capacity of accounting staff and work load challenges of the MRH will be regularly assessed by the Bank during project implementation and if necessary the staff will be provided with training to update their skills and mitigate any skills gaps.
Information Systems
22. The assessment of the Finance and Accounting Department of the MRH indicated that currently accounting and financial reporting is done using a combination of manual processing and spreadsheets. This may pose a challenge during implementation since the accounting and information systems should be robust enough to report on the different IAs, expenditure by categories and different components. To address this weakness, the MRH has initiated the process for installing suitable software that will be used by all departments and agencies under the ministry. The Bank has been involved in providing technical assistance in the design and implementation ofthis software.
Internal Control and Internal Auditing
23. The project’s internal controls will to a large extent rely on the government established accounting and internal control guidelines as documented in the respective Internal Audit Manuals ofthe ministries. The internal audit functions ofall MDAs are informed by the Internal Audit Agency Act, 2003 (Act 658). The credibility of the project’s internal controls and general control environment including responsibilities for approvals and authorization processes for recording and safe-guarding of assets will be in line with the GOG guidelines as documented in the Financial Administration Act (FAA) and the Financial Administration Regulation (FAR). In addition, the internal controls will be further strengthened and complimented by compliance to the guidelines ofthe project implementation manual (PIM). The MRH has a functioning internal audit unit which helps to ensure a sound control environment for transaction processing and enforcing compliance. The mandate of the internal audit unit includes auditing discretionary budget funds, internal generated funds and donor funded activities. The Bank’s assessment notes that even though expenditure initiation is at the IA and BA levels, these agencies are guided by procedures documented in the FAA and FAR which clearly spell out the roles and responsibilities within the agencies. To further ensure compliance, the internal audit unit at the MRH will also be part of the control processes for verifying payment request from the IAs and BASprior to payments by the Director ofFinance ofthe MRH.
58 24. The assessment indicates that the internal audit and control environment at MRH is adequate for project implementation. The role ofthe internal audit unit at MRH will be regularly assessed during supervision missions by reviewing their reports and management responsiveness to their findings. It has been agreed that the periodic supervision reviews by the internal audit unit will cover the project activities and their findings shared and discussed with the Bank.
Funds Flow Arrangements
25. The proposed arrangement is to use a single Designated Account (denominated in US dollars) managed and operated by the Chief Director, MRH who will be assisted by Director of * Finance, MRH in preparing and submitting acceptable withdrawal applications.
26. This arrangement to use a central account is important to ensure that the MRH has oversight responsibility over all the transfers and payments related to the implementation of project activities. However, in order to facilitate payment of some small expenditure, the MOT, GHA, DUR, DFR will operate “Project Accounts” on an imprest system. The ceiling for the imprest will not exceed US$0.2 million (or the cedi equivalent) and will be monitored and reported on by the Director of Finance at MRH. These funds will be released in the form of an imprest account and subsequently replenished, and used for specific expenditure such as supervision, field visits, operating costs, etc. The procedures and modalities for operating the designated account and the types of expenditure to be paid out of project accounts will be outlined in the PIM and reflected in the Implementation Agreement.
59 Figure 1: Funds Flow Arrangement
...... Designated ...... Account @A)
i...... j ...... *......
Funds Flow ...... Reporting
Notes: i. There will be only one Designated Account maintained by the Ministry of Roads and Highways ii. The MOT, GHA, DFR, and DUR will each operate an imprest accounts referred to as ‘Project Account’ for payment of small value local expenses. These project accounts will be run on an imprest based arrangements with a maximum ceiling of US$0.2 million (or the cedi equivalent). iii. The MRH will be responsible for payments from the Designated Account on behalf of the MOT and all other IAs.
27. Borrower and credit amount. This operation is an IDA Credit of US$225 million. Disbursement arrangements agreed during appraisal with the Borrower are summarized below.
28. The project will use transaction Statement of Expenses (SOE) based disbursements for reporting on the uses of project funds and for withdrawals for subsequent funds. The initial disbursement and the ceiling of the Designated Account will be based on the aggregate expenditure forecast for the first three months. Subsequent withdrawals will be made on submission of satisfactory SOE returns plus a forecast of expenditure and cash flow needs for the next three months. It is likely that the first year budget and disbursement will be low and may not reflect actual forecast of fund utilization throughout implementation. To address this, there is a clause in the Disbursement Letter for a review of the ceiling during implementation.
60 29. Disbursement arrangements and use of funds. Disbursement of the proceeds of the financing will follow standard Bank procedures for investment lending, for use by the Borrower for eligible expenditures as defined in the Financing Agreement and the Annual Work Plans and Budgets. Disbursement arrangements have been designed in consultation with the Borrower after taking into consideration the assessments of Borrower’s financial management and procurement arrangements, the procurement plan, cash flow needs of the operation and the Borrower’s prior disbursement experience. Additional instructions for disbursements will be provided in a disbursement letter issued for this project.
30. Disbursement methods. This credit will be disbursed through various disbursement methods, including advances, direct payments and special commitments. Advances will be disbursed into a single Designated Account, to be managed by the MRH. The Designated Account will be denominated in US Dollars and will be segregated from other financing partners.
3 1. Reporting on use of Financing. Supporting documentation will be requested along with withdrawal applications as specified in the disbursement letter. This will comprise summary reports by category and details of transactions (Statement of Expenses returns) for payments made by the Borrower from the Designated Account. Copies of original documents or records will be requested only for certain categories of expenditure above financial thresholds specified in the disbursement letter.
Financial Reporting Arrangements
32. The Director of Finance at MRH is responsible for generating quarterly Interim Unaudited Financial Reports (IFRs). Financial reporting under the project will be transactions based and the MRH will maintain adequate filing and archival system of all relevant supporting documents for review by the Bank during supervision missions and also for audit purposes. IFRs for the project are expected to be submitted not latter than 45 days after the end of each quarter. The financial reports will be designed to provide relevant and timely information to the project management, IAs, and various stakeholders monitoring the project’s performance.
Auditing
33. The Auditor General (Ghana Audit Service) is primarily responsible for the auditing of all government and donor funded projects. However, due to capacity constraints, it is usual for the auditor general to subcontract the audit ofdonor funded projects to private firms. Under TSP, the MRH would be responsible for auditing in liaison with the Auditor General, subject to the Bank’s necessary procurement and technical clearance of the terms of reference (TOR) for the engagement of an audit firm. The Director of Finance at the MRH is responsible for ensuring that the project funds are audited on time and the audit report submitted to IDA as per the financing covenants stated in the Finance Agreement. To ensure compliance, it has been agreed that external auditors must be recruited not latter than six months after project effectiveness.
61 Conclusion of the Assessment
34. The financial management arrangements as assessed show concluded that the project’s financial management risk is rated as moderate.
Supervision Plan
34. Based on risk rating ofthe project and the current financial management arrangement it is planned that in the first year of implementation there will be one onsite visit to ascertain adequacy of systems supplemented by desk reviews of IFR and audit report. The financial management supervision mission’s objectives will include ensuring that strong financial management systems are maintained for the project throughout project tenure. In adopting a risk based approach to financial management supervision, the key risk areas of focus will include assessing the accuracy and reasonableness of budgets, their predictability and budget execution, compliance with payment and fund disbursement arrangements and adherence to internal controls, and assessing the continuing ability of the MRH to effectively to generate credible reports. The contract and financial management arrangements agreed as part of the PIM will be reassessed during mid-term review (MTR).
62 Annex 8: Procurement Arrangements Ghana: Transport Sector Project
A. General 1. Procurement of goods and works and selection of consultants will be carried out in accordance with (i)the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits ” dated May 2004, revised in October 2006; (ii)“Guidelines: Selection and Employment of Consultants by World Bank Borrowers ” dated May 2004, revised in October 2006; and (iii) the provisions stipulated in the Financing Agreement. The various items under different expenditure categories to be financed are described below. For each contract to be financed by the Credit, the different procurement methods or consultant selection methods, the need for pre- qualification, estimated costs, prior review requirements, and time frame are agreed between the government and the Bank project team in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.
2. Procurement of Works: A total ofabout US%175.0million ofworks would be procured under this project. These would include rehabilitation of the Ayamfuri-Asawinso trunk road, construction of Burma Camp and Giffard Road in Accra rehabilitatiodimprovement of selected feeder roads, the development of vehicle testing grounds, and construction of educational facilities including offices, libraries, transportation laboratory, classrooms, and workshops.
3. The procurement will be done using the Bank’s Standard Bidding Documents (SBD) for all International Competitive Bidding (ICB) and for all others, National SBD’s as agreed with or satisfactory to the Bank. Contracts below US$5,000,000 but equal to or above US$lOO,OOO equivalent per contract will be procured under National Competitive Bidding (NCB). In spite of this, relevant NCB works contracts, which are deemed complex and/or have significant risk levels will be prior-reviewed and such contracts will be identified in the tables and also in the procurement plans. Again, under NCB, it shall be ensured that: a) foreign bidders shall be allowed to participate in National Competitive Bidding procedures; (b) bidders shall be given at least one month to submit bids from the date ofthe invitation to bid or the date ofavailability of bidding documents, whichever is later; (c) no domestic preference shall be given for domestic bidders for works; and ’(d) in accordance with paragraph l.l4(e) of the Procurement Guidelines, each bidding document and contract financed out of the proceeds of the Financing shall provide that: (i)the bidders, suppliers, contractors and subcontractors shall permit the Association, at its request, to inspect their accounts and records relating to the bid submission and performance of the contract, and to have said accounts and records audited by auditors appointed by the Association; and (ii)the deliberate and material violation by the bidder, supplier, contractor or subcontractor of such provision may account to an obstructive practice as defined in paragraph l.l4(a)(v) of the Procurement Guidelines. Contracts estimated to cost less than US$lOO,OOO equivalent per contract would be procured using shopping procedures based on a model request for quotations satisfactory to the Bank. Direct contracting may be used where necessary, but will be subject to Bank’s no objection.
63 4. Procurement of Goods: A total of about US$7.4 million of goods would be procured under this project. These would include axle weighing equipment, vehicles, computers, printers, and facilities for emergency response services to support road safety activities. The procurement will be done using the Bank’s SBD for all ICB and National SBD agreed with or satisfactory to the Bank. Contracts below US$500,000 but equal to or above US$50,000 equivalent per contract may be procured under NCB. In spite of this, relevant NCB goods contracts, which are deemed complex and/or have significant risk levels, will be prior-reviewed; such contracts will be identified in the tables and also in the procurement plans. Again, under NCB, it shall be ensured that: a) foreign bidders shall be allowed to participate in National Competitive Bidding procedures; (b) bidders shall be given at least one month to submit bids from the date of the invitation to bid or the date of availability of bidding documents, whichever is later; (c) no domestic preference shall be given for domestic bidders and for domestically manufactured goods; and (d) in accordance with paragraph 1.14(e) of the Procurement Guidelines, each bidding document and contract financed out of the proceeds of the Financing shall provide that: (a) the bidders, suppliers, contractors and sub-contractors shall permit the Association, at its request, to inspect their accounts and records relating to the bid submission and performance of the contract, and to have said accounts and records audited by auditors appointed by the Association; and (b) the deliberate and material violation by the bidder, supplier, contractor or subcontractor of such provision may account to an obstructive practice as defined in paragraph 1.14(a)(v) of the Procurement Guidelines. Contracts estimated to cost less than US$50,000 equivalent per contract would be procured using shopping procedures based on a model request for quotations satisfactory to the Bank. Direct contracting may be used where necessary, subject to Bank’s no objection.
5. Procurement of Non-Consulting Services: Procurement of non-consulting services will follow procurement procedures similar to those stipulated for the procurement of goods, depending on their nature. The applicable methods will include NCB and shopping.
6. Selection of Consultants: Consultancy services valued at about US$24 million would be provided under the project and includes the following categories: financial, technical and procurement audits, economic feasibility and design studies, supervision of construction works, institutional studies, monitoring and evaluation studies and technical assistance to the implementing ministries and agencies.
7. Contracts for consulting services, each estimated to cost US$l00,000 equivalent or more, will be awarded following the procedure of Quality and Cost Based Selection (QCBS). Consulting services estimated to cost less than US$lOO,OOO per contract under this project would be procured following the procedures of Selection Based on Consultants’ Qualifications (CQS). Selections under Fixed Budget Selection (FBS) and Least Cost Selection (LCS) methods will be applied in the circumstances as respectively described under paragraphs 3.5 and 3.6 of the Consultants Guidelines. For all contracts to be awarded following QCBS, LCS, and FBS the Bank’s Standard Request for Proposals will be used. Procedures of Selection of Individual Consultants (IC) would be followed for assignments which meet the requirements of paragraph 5.1 and 5.3 of the Consultant Guidelines. LCS procedures would be used for assignments for selecting the auditors. Single-Source Selection (SSS) procedures would be followed for
64 assignments which meet the requirements of paragraphs 3.10-3.12 of the Consultant Guidelines and will always require the Bank’s prior review regardless of the amount.
8. Short lists of consultants for services estimated to cost less than US$200,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. Consultancy services estimated to cost above US$200,000 per contract for firms, and contracts for individuals for assignments estimated to cost above US$lOO,OOO and single source selection of consultants (firms and individuals) will be subject to prior review by the Bank.
9. Capacity Building and Training Programs, Conferences, Workshops, etc.: A total amount of US$4.6 million would be provided for these activities which will be geared towards building capacity and improving management and staff skills within the ministries and agencies. All training and workshops will be carried out on the basis of the project’s Annual Work Plans and Budget which will have been approved by the Bank on a yearly basis, and which will, inter alia, identify, (a) the training and workshop envisaged, (b) the personnel to be trained, (c) the institutions which will conduct the training, and (d) duration ofthe proposed training.
10. The procurement procedures and SBDs to be used for each procurement method, as well as model contracts for works and goods procured will be presented in the Project Implementation Manual (PIM).
B. Assessment of the Capacity of the Ministry of Roads and Highways (MRH), Ministry of Transport (MOT) and their Departments and Agencies to Implement Procurement
11. Under Ghana’s Public Procurement Law, the MRH, departments and related agencies, Le., Ghana Highways Authority (GHA), Department of Urban Roads (DUR), Department of Feeder Roads (DFR), Driver and Vehicle Licensing Authority (DVLA) and National Road Safety Commission (NRSC) are procurement entities. Also recognized as procurement entities are the Kwame NhmahUniversity of Science and Technology (KNUST) and Ghana Technical Training Centre (GTTC) which are project beneficiaries linked to the MRH. In a similar manner, the Ministry of Transport and related entities, i.e., Ghana Civil Aviation Authority (GCAA), Ghana Airports Company Ltd (GACL), Ghana Ports and Harbors Authority (GPHA), Regional Maritime University (RMU), Ghana Maritime Authority (GMA), Ghana Shippers Council and Volta Lake Transport Company (VLTC) are also procurement entities. Therefore, these two Ministries and other participating beneficiary entities, like GTTC and KNUST have legal responsibilities in Ghana to undertake procurement on their own. However, given the inexperience of the Beneficiary Agencies (BAS) in working directly with the Bank’s procurement guidelines and procedures, it has been agreed that the Procurement Team within the Project Implementation Team (PIT) will be undertaking procurement for Bank financed components. As part of the project, capacity of the BASwill be strengthened in procurement of goods, works, and services and this arrangement will be revisited during the mid-term review.
12. For the above reason, an assessment of the capacities of the two Ministries and other implementing agencies (IAs) to implement procurement actions for the Transport Sector Project
65 (TSP) was carried out by the Bank procurement specialists in January 2009. The assessment reviewed the organizational structure for implementing the project and the interaction between the IAs and their staff responsible for procurement and relevant central unit for administration and finance.
13. The assessment established that the ministries and other IAs (a) were responding to Ghana’s Public Procurement Law; (b) had entity tender committees and review boards in their permanent organizations; (c) had adequate internal technical and administrative controls and anti-corruption procedures; and (d) had satisfactory appeal mechanisms for bidders. Following this, the capacities of these agencies to implement procurement under Bank’s Guidelines and procedures were determined as below.
Ministry of Roads and Highwavs (MRH) and Related Implementing Agencies:
14. The assessment showed that MRH, GHA, DUR and DFR have handled Bank projects in the last six years under the RSDP and have, as institutions, gained significant experience to handle procurement under the project. In GHA, the departments of (a) planning, (b) contracts, and (c) stores and plant and equipment have respective responsibilities for the conduct of procurement for services, works and goods. The respective responsibilities are assigned to the departments, and no one individual has dedicated responsibility in each case. In DFR, the Chief Quantity Surveyor has additional responsibility for procurement; the same applies to the DUR where officers responsible for other schedules have been assigned additional responsibility for procurement. In effect, focal persons with dedicated responsibility for procurement are missing in these agencies. For these reasons, there have been quality assurance issues that have caused delays sometimes in project implementation. Further, the capacities of KNUST and GTTC, which are project beneficiaries, were found to be inadequate. Again, the capacities ofDVLA and NRSC to handle Bank procurement procedures were also found to be inadequate because they only participated in relatively few and simple procurement activities, using the Bank’s procedures and guidelines. Based on the above assessment, each of the IAs will be responsible for procurement under their own components, while MRH and MOTwill handle procurement for the BASwith the technical input ofthe BAS.
15. In addition, given that the work load on the Ministry and the other IAs continue to increase, without a corresponding increase in the delivery of efficient procurement for goods, services and works, under the Bank’s Guidelines, the quality of procurement has been affected over the last few years. To strengthen the capacity ofthe ministries and agencies, the following mitigations actions were identified.
66 Table 1: Mitigation Actions for MRH
No 1 Key risks Mitigation Actions By Whom By When 1 I Lack of relevant Procurement will be Procurement Team After project experience of KNUST, undertaken on behalf of under supervision of effectiveness. GTTC to undertake KNUST and GTTC by MRH. the Project procurement under The actions will include Implementation Bank’s Guidelines. guidance and coaching. Team. 2 Limited experience of Procurement by NRSC and Procurement Team After project DVLA and NRSC to DVLA will be guided and under supervision of effectiveness. conduct procurement supported by MRH. the Project under Bank’s Guidelines. Implementation
Ministry of Transuort (MOT) and Related Imdementinn Agencies:
16. The assessment of the MOT and other related IAs (GPHA, GCAA, and GACL) identified that MOT itself has limited capacity and experience in procurement using the Bank’s Guidelines. In contrast, GCAA and GACL have relatively strong procurement units headed by qualified procurement staff who have also been trained in the use of the Bank’s procurement procedures at Ghana Institute of Management and Public Administration (GIMPA). This observation also applies to GPHA, which is currently participating in the implementation of the West Africa Trade and Transport FacilitationProject (WATTFP). Further, the BAS(MU, GMA, and VLTC) also have limited or no experience in the use of Bank’s Guidelines. Based on the procurement assessment, GCAA, GACL and GPHA will undertake their own procurement, while the MOT will undertake both its own procurement and procurement for the BAS(with support from the Procurement Team) subject to the risk assessment and mitigation measures below.
17. To strengthen the procurement arrangements and improve quality control, MRH and MOT have agreed to take advantage of the overall project coordination role assigned to the MRH. A Procurement Team is being set up as part of the PIT (for details see paragraph 5 in Annex 6) to coordinate the work of different ministries and entities and provide quality control for all procurement related activities.
67 Table 2: Mitigation Actions for MOT - No Key risks Mitigation Actions By Whom By When 1 The issue of MOT, RMU, MOT will appoint a Procurement MOT Within three GMA and VLTC having Specialist td bffer support to the months of limited or no experience in Ministry and, in addition, build capacity project procurement using the and provide first line support, in Bank effectiveness. Bank’s Guidelines. procedures, to officers selected from the Beneficiary Agencies. During the initial years, while the capacity in MOT and other entities is being strengthened, support will be provided by the - Procurement Team. 2 Inadequate number of For procurement quality enhancement, MRH, Within three qualified and dedicated staff there is need for the Ministries and their MOT and months after for procurement in the agencies to appoint and or designate their project Ministries and Agencies. qualified staff or focal persons to be Agencies effectiveness. dedicated to the conduct of procurement - in the agencies. 3 Lack of resources to The Ministry and the Bank will ensure MOT and Before undertake the critical that provision is made to cater for MRH effectiveness, to responsibility assigned. necessary logistics to support the PT. be identified in the PIM.
18. The Procurement Team (PT) will be composed of selected procurement focal persons drawn from the Ministries and their Agencies with sound knowledge of the Bank’s guidelines and relevant experience in procurement of goods, works and services. The Director of Procurement of MRH will coordinate the activities of the Procurement Unit and receive procurement processed documents from agencies’ and departments’ procurement focal persons. He/She will, in addition, be the contact person for all Bank related procurement issues, and will ensure that all contracts are awarded and signed by officials ofthe relevant Ministries, unless this responsibility is delegated. The terms ofreference ofthe PT will be detailed out in the PIM.
19. Further, to enhance and build the capacities of the Procurement Unit and the other procurement focal officers, it was agreed that MRH would work with GIMPA to develop an appropriate training program, which will involve Bank procurement specialists. The program will aim at preparing staff selected from the two Ministries and their agencies, in the medium to long term, to effectively manage goods, works and services procurement in all donor-funded projects.
20. The assessment also reviewed key procurement processing areas subject to delays on both the Bank and the Borrower sides, by comparing the standard time frame for the conduct of procurement for services, and also for goods and works as identified in the procurement plans formats, with the corresponding estimated time frames that practically arise from the required ‘internal processes that have become necessary in order to respond to the Public Procurement Law. The procurement processing experience of the DFR, an IA, was used as the benchmark in identifying the areas of delays and bottlenecks, with a view to recommending mitigation measures.
68 21. For services, it was found that delays occurred in: (a) preparing request for proposals (RFPs), (b) advertising and evaluating / assessing expression of interests (EOIs) for shortlists, (c) evaluating technical proposals, and (d) awarding contracts. For goods and works, the delays occurred in: (a) the preparation of bidding documents, (b) bid evaluations, and (c) contract award. Two other areas that contribute to delays were identified as: (a) lack of relevant procurement delivery capacity, and (b) the assumption that implementation of the procurement plans would follow the logic of the sequential steps, whereas it is significantly affected by the competing demands of time for implementation of other activities. The key delays identified in the critical areas and mitigation measures and/or actions are identified below:
69 ob ,-2 .-2 S 0 %I I*% 0k
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m N 3 N C. Procurement Plan
22. The government, at appraisal, drafted a 12-month procurement plan for project implementation which provides the basis for the procurement methods. This plan was concluded and agreed on by the government and the project team at negotiations. It will also be available in the project's database and in the Bank's external website. The Procurement Plan will be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity.
Table 4: Thresholds for Procurement Methods and Prior Review I , , Contract Value I
Expenditure ~ Procurement ' Contracts Subject to Prior Threshold** No Method Review l Category ~ (US$ ) (US$).. I ."". i_. _" 1.- _^I__" .~--I-. I I >=5,000,000 ICB ! Allcontracts ! , 1 .._____...I__.----..-"- I I 100,000 = I c<100,000 Shopping t None I ~ Direct All Contracts All values Contracting ._ Goods and C>=500,000 ICB All Contracts Services (other than ".# ___ I__------Specified contracts as would Consulting NCB UN Agencies i be indicated in the I Services Procurement Plans I 2 (UNOPS) I Shopping 1 None ."....l_.-.I.-... -- -I--- . Direct \ All Contracts : Allvalues Contracting ,-1 . . .. . I ...... _ - ... . QCBS , All Contracts Consulting c>=200,000 firms Services I (International) 1..I __. 3; ' CQS c<100,000 I 3 _I_- __ - - - C>=50,000 individuals 1 All contracts IC -" --- C < 50,000 individuals TOR IC 72 I -r - _- I - ~ - I_~ ------,__ - __ - - - __ - , I ingle sourie-TAiContra& All Values I Selection i ~ ---- - __I_- - __ _--llI___I_ _II_I_-- - -4 - __I___--___-I- - - - Training, I i To be based on 4 ~ Workshops, All Values i Annual Work , Study Tours ’ Plan & Budgets ~ _-I- - -- I _I- 1 - I I_I- , **These thresholds are for the purposes of the initial procurement plan. The thresholds will be revised periodically based on re-assessment of risks. D. Frequency of Procurement Supervision 23. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment of the IA has recommended three supervision missions each year to visit the field to carry out post review of procurement actions. The procurement post-reviews should cover at least 20 percent of contracts subject to post-review. In addition, post reviews of in- country training will be conducted from time to time to review the selection of institutions/ facilitators/ course contents of training, and justifications thereof, and costs incurred. E. Details of the Procurement Arrangements Involving International Competition 24. Works, Goods and Non Consulting Services (a) List of contract packages to be procured following ICB and direct contracting: Table 5: Works Domestic Review by ExpectedBid Contract Estimated Procurement No* cost P-Q Preference (Description) Method Bank Opening (%Million) (yesho) (Priodpost) Date Rehabilitation of 1 Ayamfuri-Asawinso 60.5 ICB Yes Yes Prior 09/28/2009 Road Construction of 37.5 ICB Yes Yes Prior 09/17/2009 Construction of bus 4 terminals, depot, 25.0 ICB Yes Yes Prior 04119/20 10 tributaries facilities (b) ICB works contracts estimated to cost US$5 million and above per contract and all direct contracting will be subject to prior review by the Bank. 73 Table 6: Goods Expected Domestic Review by Bid Contract Estimated Procurement No' cost Preference Bank (Description) Method P-Q Opening ($Million) (yedno) (F'rior/post) Date MRH and Various, 1. agencies: 2.00 ICB No 1 No 1 Prior starting Vehicles 11/23/2009 DFR: Supply of Various, 1 40D-Cabin 1.14 1 ICB 4WD Pick-Ups 09/24/2009 Axle Load 2 Weighing 1.oo ICB No 1 No 1 Prior 09/24/2009 Machine MOTJagencies 3 and entities: 2.00 ICB No Prior 09/17/2009 No 1 Vehicles I GCAA: 2 VHF Direction 4 Finders for 0.60 ICB No NO Prior ~ 07/13/2009 Accra & Tamale 1 1 Airports (c) ICB goods contracts estimated to cost US$500,000 and above per contract and all direct contracting will be subject to prior review by the Bank. 25. Consulting Services (a) List of consulting assignments with short-list of international firms. Table 7: Consulting Services 12 3 4 5 6 Estimated Review by Expected Selection Bank (Prior No. Description of Services cost Proposals Method ($ million) /Post) submission Date Baseline and monitoring studies of 0.7 QCBS Prior 09/28/2009 I 1 TSDP I 1 1 1 Financial, Technical and 1.5 QCBS Prior 12/15/2009 I procurement audit of TSDP . Integration of Geographical 3 Information Systems (GIS) of road 0.4 QCBS Prior 09/02/2009 Agencies Develop regulations for the aviation 4 industry and studies on aviation 1.5 QCBS Prior 11/14/2009 sector development Institutional studies to 1.5 QCBS Prior TBD operationalize GRDA Feasibility study for the 6 improvement of transport on the 1.5 QCBS Prior 11/23/2009 Volta lake 74 I Feasibilitv Studies into the Table 8: List of International Individual Consultants (IC) 1 2 3 4 5 6 Estimated Selection Review by Expected EO1 No. Description of Assignment cost Bank (Prior Method /Post submission Date ($Million) Technical assistance for 1 development ofPPP in Fansport 1.o IC Prior 09/01/2009 sector (MOT) Technical assistance to aviation IC Prior 09/01/2009 directorate 0.7 Technical assistance to Ministry of 0.5 IC Prior 12/06/20 10 Roads and Highways 4. Transport Sector Donor Coordinator 0.3 IC Prior TBD 25. All contracts not subject to prior review will be post reviewed. 75 Table 9: Complex or significantly risky NCB contracts to be prior-reviewed ~~ 1 12 3 14 1-5 Expected Estimated Domestic Review by Bid Contract Procurement No. cost Preference Bank (Description) Method P-Q 0 peni n g ($Million) (yes/no) (Prior/post) Date Minor Rehabilitation: Wute-Sasekpe- 1.16 No Prior 11/09/2009 Amegakope- Kutime Road (VR) I NCB lNo Minor Rehabilitation: Prior 11/09/2009 Luagri - Prima Road (NR) Minor Rehabilitation: 3 Namase- 0.84 NCB No No I Prior I 11/09/2009 Brohani Road (BAR) spot Improvement: 4 Asawinso - 0.30 NCB No No Prior 11/09/2009 Mmrewa Road (WR) 76 Annex 9: Economic Analysis Ghana: Transport Sector Project 1. An economic analysis was conducted for the civil works, which consist of reconstruction, rehabilitation, and upgrading of the: (a) Ayamfuri-Asawinso (Ghana Highway Authority (GHA) sub-component); and (b) urban road network (Department of Urban Roads (DUR) sub- component). The investments in feeder roads are small (about US$25,00O-US$75,000 per km), and spread all over the country because of which they were subjected to cost-effectiveness analysis. Summary 2. The civil works, including contingencies, represent about 75 percent of the project cost. Economic analysis was not conducted on the capacity building, policy reform, studies, and project management sub-components. The economic analysis focused on the cost-benefit analysis of GHA road and a sample of roads from DUR, and a cost-effectiveness analysis of a sample of feeder roads. Table 1: Summary of Economic Analysis Sub-Component NPV (@ 12%) ERR FYRR (US$ million) GHA road (Ayamfuri-Asawinso) 55.0 17.9% 22.4% DUR roads - Giffard Road 2.5 20% - Burma Camp Road 2.7 15% 3. For the GHA road, the main benefits resulting from improving the road section to asphalt concrete standard include reduction in vehicle operating cost to existing traffic and transport cost savings for diverted freight traffic. The economic analysis was undertaken using the road planning model Highway Development and Management Model version 4 (HDM 4). The initial economic analysis was undertaken in 2006 using data collected in 2005/2006. In 2008, the analysis was updated to take into account a major revision of costs. The DUR component was evaluated by comparing the “with project” case of upgraded road and widening with the “without project” case of keeping the existing road alignment in passable condition. The costs included investment costs based on updated design, resettlement cost and utilities relocation cost. The benefits were computed based on vehicle operating cost (VOC) savings, time savings and maintenance cost savings. GHA sub-component 4. The Ayamfuri -Asawinso Junction road section (52 km) forms part of the 350 km South- North corridor route selected by the government for improvement. The route is located in the Western Region, Brong Ahafo and the borders of central and Ashanti regions. The Ayamfuri - 77 Asawinso Junction section consists of poor gravel and sealed road surfaces. However, other sections of the route have recently been constructed, to a good sealed road standard, including 60 km from Axim to Tarkwa and Asawinso Junction to Gambia No. 2. To complete the route a further 176 km would need to be reconstructed and improved. 5. The traffic volume along the 350 km route varies considerably with over 2,000 vehicles on the recently constructed part and lower traffic volumes on the poorer sections that have been identified for improvement. Much of this traffic is local in nature, long distance traffic tends to take other routes (for example from Takoradi to the North and West of Ghana via Kumasi) rather than use the corridor. As can be seen from Table 2 below, passenger vehicles account for a high proportion of current traffic. Apparent traffic growth along the corridor has been high in the period 2000-2005, ranging up to 30 percent per year for the Asawinso-Bibiani section. Table 2: Traffic Composition and Annual Growth 1 Traffic composition in 2005 Light/ Heavy Annual medium truck growth truck% % 2000-2005 8 10 14% 9 19 18% 9 6 3 0% 6. The area directly served by the project route has a population of about 800,000 people but there are a further 670,000 people in areas that are indirectly served through connecting feeder roads. The main economic activities in the project area are cocoa and food production, logging and timber processing and the mining of gold, bauxite and manganese. 7. Development of the route is expected to help further stimulate economic development of the resource rich western area of the economy and improve its economic integration with the rest of Ghana’s economy. The road will provide an alternative north-south link for transit traffic. The main economic benefits calculated to arise from the investment are reductions in vehicle operating costs to existing traffic as well as substantial transport cost savings for diverted freight traffic. 8. Future Traffic Growth and Potential for Diversion: A wide range of commodities, with different growth characteristics use the route and may be expected to divert to the improved road corridor. Bauxite is currently mined at Awaso (close to Asawinso) and is exported via Takoradi port. In recent years output has been around 500,000 tons but the company is committed to 78 increase production to 1.5 million tons within five years. Currently, about 60 percent production goes by rail and 40 percent by road to the port. However there are capacity constraints on the railway, and the Bauxite Company has invested in road transport to complement movement by rail. Other minerals mined in the area will only have a marginal impact on traffic using the new project road. 9. The Western Region accounts for 57 percent of Ghana’s cocoa production and Brong Ahafo Region (to the north of Western Region) a further 10 percent. Overall, about 60 percent of the national cocoa crop is exported via Tema while the remaining 40 percent is exported via Takoradi. With the improved road, it is anticipated that there would be substantial scope to take advantage of the reduced transport costs and ship cocoa by road direct to Takoradi rather than by moving the crop first to Kumasi and then on to Tema. 10. Ghana’s forestry and timber processing is concentrated in the south-west of the country. Timber processing is concentrated in Kumasi, Takoradi, and within the project area; these have respectively 40 percent, 30 percent, and 20 percent of national capacity. Through reduced transport costs on the improved route, there is believed to be scope for traffic diversion, particularly from alternative routes to the south fkom Kumasi. 11. So far, very little transit traffic uses the project route. However, there is potential for diversion to this route, with the improvement of the corridor. 12. It has been assumed that population and income growth will provide the basis for traffic growth forecasts. As can be seen in Table 3, light vehicle growth is assumed to be 7.1 percent in the period 2005-2015 and 6.5 percent in the period 2015-2025. Lower estimates have been made for minibuses and buses. Table 3: Forecast Annual Growth Rates for Passenger Vehicles i 2005-2015 1 2015-2025 - __ - __ _I_^I - _____ 1_-__llll , - - __I_- Project area Population Growth I 2.9% j 2.9% _” I I __-^- - - __ -___-_ __ I-I- - - __ . Growth in income per capita 2.7% 2.7% Light vehicle expenditure elasticity 1.5 1.3 __ _-_ __ _- - __ -I_ _~. ____ . Light vehicle traffic growth 7.1% ~ 6.5% - __ - -__--_1- Minibus-expenditure elasticity , 1 0.8 Minibus growth 5.7% i 5.1% Large bus expenditure elasticity 0.5 0.5 _I___I_ 111 l_lI -_- ““..I - - - I - Large bus growth -1 -- 4.3% I 4.3% 13. Distance Saving: The potential distance saving via the route naturally varies along its length. The maximum distance saving to the port of Takoradi is 171 km fkom Awaso, providing a distance saving of 41 percent of the current predominantly used route. Awaso is important because it is the location of the bauxite mine which is close to Asawinso Junction the northern end of the proposed IDA funded project component. Bibiani (a center for timber processing) has 79 a distance saving of 116 km to Takoradi, a saving of 31 percent of the route length. Berekum at the far north of the project corridor has a distance saving of 35 km representing just eight percent of the current route length. 14. Generated Traffic; Generated traffic was not a major feature of the traffic analysis. It was felt-that the volume of freight traffic would not be that sensitive to transport cost reductions. In general, passenger traffic can be expected to be more sensitive to transport cost savings and road improvements. Economic Analysis 15. An economic appraisal of the three project links (Tarkwa- Ayamfuri, Ayamfuri- Asawinso, and Gambia No. 2 to Kyeremaso) was undertaken using the road planning model HDM 4. Each road link was to be improved to asphalt concrete standard. The approach adopted was to estimate transport cost user savings from improving the road. Savings were calculated for both existing traffic using the route and savings from diverted traffic. The latter, arising principally fiom the diversion of freight transport movements from other routes, amounted to 37 percent of the benefits. A small volume of generated traffic (amounting to less than 1 percent of the savings) for passenger traffic movements was included in the analysis, and most of this was associated with the final project link Gambia No. 2 to Kyeremaso. 16. An initial economic analysis was undertaken in 2006 using data collected in 2005/2006, which was later updated in 2008 to take into account a major revision of costs. Vehicle operating cost and road maintenance cost data used in the appraisal are given in Tables 4 and 5. Table 4: General Economic Input data in US$ PetroVltr 0.43 DieselAtr I 0.48 -~,I - - - -- Passenger time value 015 hr _I^ __ __^_____I_I__ I Overheads small 500-1000 I Commercial vehicles Overheads large ' 0.05 per km commercial vehicles j 80 Table 5: Maintenance Unit Costs and Assumed Intervention Levels Economic Maintenance unit Costs j Maintenance intervention US$ I ______I"_I___-_ _A_ _ - _- -_I_ ------I- patching /m2 8.7 , Without project 1 With project Reseal /m2 4.4 i 30% damaged area _ I I I__ - i _-- -_ - ._- I__ I __ __ .+ __ ___ ~ __ Edge repair /m2 ~ 8.7 100% 100% __ _ _ - __ - - I_ - - __ - __ ___I-r-- -_ -- ~ Grading /km ! 310.6 -' At 121k ~ __-_ .%-- ".i- ^I_ - Regravelling /m3 10.9 150 Imm when below 50 - mm 17. The assumptions made in the 2008 update of the economic analysis includes the construction costs, in US Dollar terms, which was estimated to be 56 percent higher (for the three links) than previously estimated. To account for the rise in oil prices, vehicle operating costs were assumed to be 20 percent higher than previously estimated. This was based on an assumption that long term oil prices would be US$lOO per barrel in the long term. (The 2006 vehicle operating costs were based on international oil prices at US$50 per barrel. Since then oil prices have risen dramatically, reaching a peak of US$147 per barrel in July 2008 with many estimates suggesting that long term price will be well over US$lOO per barrel. Assuming that long term oil prices are at US$l00 per barrel, using the HDM 4 analysis, raises average vehicle operating costs by 20 percent, with no increase in other component prices.) 18. The revised economic analysis indicated that the overall project (Le,, including the three sections) is still economically viable with an economic internal rate of return (EIRR) of 17.9 percent. The switching value analysis shows that construction costs would have to rise by 44.8 percent before the project becomes marginal (Le., has a 12 percent rate of return). Similarly traffic benefits would have to fall by 34.6 percent to achieve the same result. The first year rate of return (FYRR) is 22.4 percent (well above the opportunity cost of capital) indicating that the project is timely, i.e., there would be no economic gain for postponing the project. 19. Because diverted traffic accounts for 37 percent of total project benefits, and the extent of diverted traffic is heavily dependent upon the first two sections being completed, there is no completely satisfactory way of analyzing each section individually. However, an analysis was carried out to see the overall effect of omitting the isolated Northern link (link 7, Gambia No. 2 - Kyeremaso) from the appraisal. The results show that the two remaining southern links are much more economically viable if this latter link is omitted, or postponed, from the project. In this case the EIRR rises to 24.4 percent. The switching values are 64.2 percent and -44 percent respectively for construction costs and traffic benefits. 81 Table 6: Results of 2008 Revised Economic Analysis Link , LinkName ~ Length 1 Financial 1 EconomicCost , No. I Kyeremaso Total ~ 176.9 173.8 I 160.0 ______. -_I- - __ll-. - 0-7 Total Project Results NPV at 12% : $55.0 M NPVK : 0.34 EIRR: 17.9% FYRR: 22.4 Switching Values (assuming a discount rate of 12%) I Construction Costs: 44.8% 1 Traffic Benefits: - 34.6% j - III______I_III _I I__ 0-6 -' Total Project Excluding Link 7 (Gambia No.2 to Kyeremaso). ~ NPV at 12% : $70.1 M NPVK : 0.53 ' EIRR: 24.4% ~ FYRR: 25.5% ~ Switching Values (assuming a discount rate of 12%) Construction Costs: 64.2% Traffic Benefits: -44.0 % Department of Urban Roads (DUR) Roads Sub-Component 20. Project Description: The proposed project roads consist of 8.96 km of Burma Camp road, starting from Giffard Road to Teshie Link; and 5.8 km Giffard road from Akuafo Circle to Tema Road. Table 7: Description of DUR Project Roads Item Road Name Length (km) Cost ' (US%million) I_ 1. Burma Camp Road 8.96 33.7 2. ' Giffard Road , 5.8 ~ 11.7 2 1. Methodology: The methodology follows the conventional approach to evaluating project costs and benefits by comparing the "with project" case, which is that of the upgraded improved 82 road involving widening options or new road link, to the “without project” case, which is that of the existing road alignment. The emphasis lies on analyses of road user vehicle operating and travel time costs in the “with” and “without” situations using established quantitative methods, together with road construction and maintenance costs. 22. The analytical process involves a comparison between the different cost streams over the project twenty year evaluation period. The principal cost components in the analysis comprise those costs incurred in the form of maintenance costs, both recurrent and periodic, associated with maintenance and upkeep of the existing and project roads, as well as the capital construction costs associated with the new links and widening options of the project roads. The other major cost component refers to road user costs, which are those costs associated with vehicle operation and travel time. The composition of overall net benefits derives principally from these two road user cost elements in which vehicle operating and time cost savings are applied to the projected traffic flows over the duration of the thirty year project appraisal period. 23. Traffic Characteristics: To obtain an idea of the traffic flow on the two roads traffic studies were conducted in late December 2008. The count stations were made to coincide with locations of previous counts in the corridors, and the data obtained analyzed to obtain the peak hour traffic flow for each road. The traffic was assumed to grow at three percent between 20 10 and 2016; four percent between 2017 and 2029; and two percent between 2030 and 2035. For the roads under consideration both generated and diverted traffic from the original study have been adopted. It is observed that peak period is four hours, two hours in the morning and two in the evening. 24. Project Costs: For the project roads, investment cost streams were obtained from design estimates and include civil works; resettlement expenses including costs associated with demolition of properties and relocation of utilities; cost of environmental mitigation measures; relocation of public utilities in the right of way; and escalation in prices of materials. To obtain economic costs for project appraisal, certain adjustments factors, “shadow pricing”, was used. The exercise yielded an overall modification of the initial investment figures by an average of seven percent for works undertaken by foreign-based contractors, and about 11 percent for works undertaken by local contractors. 25. Project Benefits: The benefits were computed using vehicle operating cost savings, time savings as a result of reduced congestion, and maintenance cost savings. 26. Economic Rate of Return (ERR): The estimation of ERR for the various sub-projects indicate very robust rates of return (see Table 8 below). The Giffard Road has an ERR of 20 percent; and Burma Camp Road at 17 percent. Sensitivity analysis undertaken for the roads yield weighted ERRSof: (ii)10 percent for 50 percent decrease in benefits; and (iii)13 percent for 50 percent increase in costs. 83 Table 8: Economic Rate of Return AADT NPV 50% decrease in 50% decrease in Name of road (2009) ERR US$ million benefits (ERR YO) benefits (ERR YO) Burma Camp Road 8930 17% 2.67 9% 11% Giffard Road 20862 20% 2.44 11% 14% Department of Feeder Roads (DFR) Roads Sub-Component 27. The investments in this component are divided into two phases. Under phase 1, the focus is on improving non-engineered feeder road links in the country to provide all-weather access to people. The total cost of such works is estimated at US$18 million. The total length of the road network to be improved is about 350 km at an average cost of US$25,000 to US$75,000 per kilometer. Under phase 2, an additional amount of US$15 million has been allocated and the exact nature and location of the improvements to be carried out will be developed during the first year of project implementation, following an agreed selection criteria. 28. Given the small nature of individual investments in phase 1, the selection of specific feeder roads is based on cost-effectiveness criteria in the following manner: First, feeder roads already included in the existing national network but of low standard were considered. Second, feeder roads were prioritized according to their existing condition; the poorest quality roads were given top priority. Against this screening, roads were selected, by region, on the basis of maximizing population given all-year accessibility to the primary and secondary road network. Finally, this selection was screened against availability of social services, including health clinics, schools, markets, and extension services. 29. Table 9 shows the estimated cost-effectiveness range of selected projects within the region. The cost effectiveness indicator is the number of people given all weather access to the national trunk road network per US$2,500 invested. It should be noted that, in addition to access, each US$2,500 investment is also expected to create roughly 15 person-days of employment. Broadly, regions to the south, central, and west have higher population density resulting in a higher cost effectiveness index; while regions in the north and upper west have low population densities resulting in a lower cost effectiveness index. 84 Table 9: Cost-Effectiveness Index for Select Feeder roads Ashanti I 10-29 85 Annex 10: Safeguard Policy Issues Ghana: Transport Sector Project A. Environmental Assessments and Resettlement Action Plans 1. Components CyD, and E of the project include significant civil works (road rehabilitation and upgrading) to be executed in the first year work plan. In addition, there are minor civil works (construction of classrooms, laboratory, hostel, workshop and offices) related to components B. The project therefore triggers OPBP 4.0 1, Environmental Assessment (EA). Consequently, OP 4.11 , Physical Cultural Resources has also been triggered, as the policy applies whenever OP 4.01 applies, i.e. whenever there is likely to be significant civil works. Also Involuntary Resettlement (OPBP 4.12) has been triggered. The project has been assigned the Environmental Category A. 2. An Environmental and Social Management Framework (ESMF), and a Resettlement Policy Framework (RPF) were prepared for the road sector in 2006, and re-disclosed for this project in December 2008. Environmental Impact Assessments (EIAs), Environmental Management Plans (EMPs), and Resettlement Action Plans (RAPS) for the first year's road projects (four roads) have been prepared and disclosed in-country and at the InfoShop in March 2009. Those roads are: Ayamfuri - Asawinso highway, Giffard Road, and Burma Camp Road. One EIA and one RAP cover the highway, and one EIA and likewise one RAP cover the three urban roads. The analyses and the census are, however, road specific, likewise the mitigation measures. 3. Additional works to be carried out in the second year include: (a) minor civil works (construction of lecture hall, laboratory, hostel, workshop and offices); and (b) feeder roads rehabilitation and maintenance. These works will be subject to ESMF/RPF requirements and site specific EIAs/EMPs and RAPS, if required. 4. Funding for Safeguard Mitigation Measures. The cost for implementation of the mitigation measures as identified in the RAPs will be covered by the Government of Ghana (GOG); the cost for Human Immunodeficiency VirudAcquired Deficiency Syndrome (HIV/AIDS) prevention and EMP will be covered by civil work contracts; and cost related to capacity building and training will be financed by the Credit 5. Environmental Assessment. No salient adverse environmental impacts have been identified in the EIAs. Adverse impacts are restricted in scope and limited to the execution of the following civil works operations: (a) establishment of base camps for contractors and resident engineers; (b) road construction operations resulting in dust, noise, and temporary loss of flora; (c) opening or re-opening of borrow pits and solid rock quarries, which could result in soil erosion and pollution and aesthetically undesirable alterations of the landscape; (d) opening of diversions; and (e) dumping of construction waste and accidental spillage of machine oil, lubricants, etc. Environmental management plans (EMPs) have been prepared for each project road, as part of the EIAs, mitigation and monitoring measures have been established and costed. 86 6. Social Assessment. Social Impact Assessments (SIAs) were carried out as part of the road project’s feasibility studies. The findings of the SIAs identified adverse, but not salient, social impacts. Adverse social impacts to be induced by the civil works include: (a) land acquisition (resulting in involuntary resettlement), loss of strips of land, and (b) dislocation of social values induced by the influx ofmigrant workers (resulting in the spread ofHIV/AIDS). To mitigate the adverse social impacts of project operations, two individual RAPS have been prepared and reviewed by the environmental desks of DUR and GHA and cleared by Ghana’s EPA and by the Bank. One RAP is covering the Ayamfuri - Asawinso highway, and the other is covering the three urban roads, with respective census and analyses for each project road. The RAPSidentified 33 1 households to be adversely affected, ofwhich 87 will permanently lose their properties and 244 will be partially affected. The EIA and SIA teams included both social scientists and environmentalists. The socio-economic data collected through review of existing documentation, public consultations, and field studies, covered issues related to land tenure, land acquisition, involuntary resettlement, road safety, HIV/AIDS, vulnerable groups, indigenous peoples and cultural property. B. Alternatives Considered to Minimize Adverse Safeguard -related Impacts 7. Drawing from experiences of the Road Sector Development Project (RSDP), the road designs were required to take into account the potential environmental and social impacts of the road alignments, with the aim to reduce adverse safeguards related impacts. Social protection clauses will be incorporated in the works contracts, including HIV/AIDS prevention. In the detailed designs, the right of way requirements have been reduced in town sections, where adverse impacts on properties were presumed to be severe. During contract mobilization, the supervision consultants will undertake a design review of the road alignments, and submit a right-of-way report, to confirm the design, construction obstacles, and suggest changes to the design in the aim to improve not only engineering efficiency, but also road safety and reduce adverse social impacts. C. Consultations with Various Stakeholders and Affected Groups 8. The design of the Transport Sector Project (TSP) is participatory on several levels: (a) at national level; (b) at regional level; (c) at district level; and (d) at donor community level. At the level of districts, public consultations were held in local communities along the selected road projects throughout the EIAs and SIAs processes. The stakeholders included district administrations, community based organizations, community based facilitators, non- governmental organizations, sector administrations, and villages. The consultations focused on assessing the viability of the project roads, identifying potential areas of conflict between stakeholders, and defining areas ofcollaboration. 9. The result of the public consultations carried out in the SIAs and the EIAs confirmed support for implementation of the road projects. To further improve stakeholders’ participation, the following actions will be undertaken as part of the project implementation: (a) sustain consultations with district administrations, local communities and project affected persons (PAPS); (b) conduct training with the aim to strengthen the culture of public consultations as a normal planning tool to sustain maintenance of the road transport network; and (c) carry out repeated consultations with local communities during implementation at all stages of the civil 87 works, to minimize conflicts, enhance cooperation, and improve social benefits and performance of the works contracts. Recurrent consultations, through public hearings and information, will provide opportunities for stakeholders (particularly rural areas), to express their concerns, provide suggestions and thereby strengthen social inclusion in future road planning, design, implementation and maintenance operations. D. Capacity Assessment of Institutions Responsible for Safeguard Management 10. Mitigation of adverse environment and social impacts of development projects is supported by national laws. The Land Valuation Board provides the executive instrument for any expropriation of land or property for development projects (private or public), after receiving detailed designs and carrying out its own field inspections. The Board has both the human capacity and the logistic resources requested for the work. As part of the RSDP initiatives, environmental desks were established at DUR and GHA. Review ofboth environment and social safeguards documents, and monitoring of compliance at supervision stage, have been the core tasks of the desks. The main challenge has been human capacity. RSDP was the first training ground. The first safeguards documents to be prepared and implemented in the road sector in Ghana were under RSDP. The environmental desks are constituted of two highway engineers with masters in environmental management (team leaders), and supported by young highway engineers in DUR and three sociologists in GHA. 11. There is a need to further strengthen the social safeguards management capacity. The proposed TSP will support the environmental desks of both DUR and GHA with the aim to: (a) train more staff; (b) strengthen the analytical capacity; and (c) facilitate the implementation and monitoring of the EMPs and the RAPs prepared for each of the proposed road projects. In addition, TSP will work with other Bank funded infrastructure projects in Ghana, in view of creating synergies and a pool ofnational experts. E. References to Mitigation plans in the Project Legal Arrangements 12. The mitigation of adverse environmental and social impacts identified have been incorporated into the Financing Agreement and will be included in the contract documents. F. Mechanisms to Monitor the Implementation of Agreed Mitigation Plans 13. The mandates ofthe environmental desks are supported by national environmental laws. TSP will support the environmental desks to ensure compliance with the implementation of the EMPs and the RAPs prepared for the proposed road projects. The EMPs and the RAPSinclude both internal and external monitoring arrangements. The internal monitoring will be carried out by the supervision engineers and the environmental desks of DUR and GHA. The external monitoring will be conducted by the Environmental Protection Agency (EPA) of Ghana and the departments of civil works of the districts. Supervision and monitoring will be a continuous process. The day to day field supervision will be conducted by the construction supervision engineers and captured in the monthly and quarterly progress reports, which are subject to review by the environmental and social specialists of the environmental desks. The environmental desks will continuously take stock of all expropriation, and compensation reports and discuss them on 88 regular basis. The environmental desks will produce quarterly progress reports on environmental and social performance. The reports will be part of the overall project monitoring system. Monthly project progress reports usually prepared by the supervising consultants will report progress on EMP implementation and social safeguards outcomes, including HIV/AIDS. 89 Annex 11: Project Preparation and Supervision Ghana: Transport Sector Project Planned Actual Project Concept Note review November 11 , 2007 February 5,2007 Initial Project Identification Document February 12,2008 February 13,2008 to PIC Initial Integrated Safeguards March 7,2008 March 7,2008 Datasheet to PIC Appraisal February 23,2009 March 19,2009 Negotiations March 10,2009 April 22,2009 Board/RVP approval June 30,2009 Planned date of effectiveness August 3 1, 2009 Planned date of mid-term review December 15,2012 Planned closing date June 30,2015 Key institutions responsible for preparation of the project: Ministry of Roads and Highways Ministry of Transport Bank staff and consultants who worked on the project include: Name Title Unit Ajay Kumar Lead Transport Economist (Team Leader) AFTTR Tawia Addo-Ashong Senior Transport Specialist AFTTR Antoine Lema Social and Environment Specialist AFTTR John Hine Senior Rural Transport Specialist ETWTR John Richardson Transport Specialist AFTTR Anthony Mensa-Bonsu . Procurement Specialist AFTPC Robert Degraft-Hanson Fin. Mgmt. Specialist AFTFM Rajiv Sondhi Senior Finance Officer LOAFC Manush Hristov Senior Counsel LEGAF John Stewart Senior Environmental Specialist AFTEN Arun Banerjee Consultant AFTTR Jean-Francois Marteau Peer Reviewer AFTTR Henry Kerali Peer Reviewer ECSSD Imogene Jensen Peer Reviewer EASOP Anne Njuguna Program Assistant AFTTR Charity Boafo-Portuphy Program Assistant AFCWl Estimated Approval and Supervision costs: (i)Remaining costs to approval: us$lo,ooo (ii)Estimated annual supervision cost: US$l00,000 90 Annex 12: Documents in the Project File Ghana: Transport Sector Project 1. Transport Sector Development Programme (TSDP) 2008-20 12, Ministry of Transportation, Ministry of Aviation, Ministry of Harbours and Railways 2. National Transport Policy of Ghana 3. Road Sector Development Programme, 2007 Review Report, Ministry of Transportation. 4. Environmental and Social Management Framework, EPA, Ghana 5. Resettlement Policy Framework, EPA, Ghana 6. Feasibility Study and Design and of Arterials and Local Roads in Accra East Corridor, June 2008, DIWI Consult in Association with Municipal Development Collaborative Ltd. 7. Detailed Design Report on the Rehabilitation of Tarkwa-Bogoso-Ayamfuri-Asawinso and Gambia No. 2-Kyeremaso Roads, October 2007, Carl Bro Intelligent Solutions 8. Implementation Completion Report for the Road Sector Development Programme, 2007, World Bank 9. Independent Procurement Review (1PR)-Road Sector Development Project, April 2005, Global Procurement Consultants Ltd 10. Institutional Study of the Transport Sector, Draft Final Report, 2006, WSP International in association with Crown Agents, UK. 11. Report on the Comprehensive Regional Implementation Plan for Aviation Safety in Africa Gap Analysis on Ghana 30 June - 4 July, 2008 12. ICAO Universal Safety Audit Action Plan of 24th April, 2007 13. Revised Axle Load Control Policy and Action Plan, MOT, April 2005. 14. Urban Transport Planning and Traffic Management Report for the Greater Accra Metropolitan Area (GAMA), Sekondi-Takoradi, Cape Coast and Koforidua, Draft Final Report, DHV, 2005. 15. Evaluation of the Management and Financing Arrangements for Road Maintenance, MOT/DANIDA, 2003. 91 Annex 13: Statement of Loans and Credits Ghana: Transport Sector Project Difference between expected and actual Original Amount in US$ Millions disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev’d P105092 2008 GH-Nut. & Malaria Ctrl Child Surv (FYO8) 0.00 25.00 0.00 0.00 0.00 18.18 2.09 0.00 P101852 2008 GH-Health Insurance Project (FYO8) 0.00 15.00 0.00 0.00 0.00 13.60 9.64 0.00 PO74191 2008 GH-Energy Dev & Access SIL (FY08) 0.00 90.00 0.00 0.00 0.00 72.92 -8.71 0.00 P100619 2007 GH-Urban Transport Project SIL (FY07) 0.00 45.00 0.00 0.00 0.00 41.08 2.81 0.00 PO93610 2007 YGH-eGhana SIL (FY07) 0.00 40.00 0.00 0.00 0.00 35.89 15.33 0.00 PO92986 2006 GH-Economic Management CB 0.00 35.00 0.00 0.00 0.00 16.85 -3.94 0.00 PO88797 2006 GH-Multi-SectHIV/AIDS - M-SHAP 0.00 20.00 0.00 0.00 0.00 9.81 5.41 3.46 (FY06) PO85006 2006 MSME Initiative 0.00 45.00 0.00 0.00 0.00 40.49 19.70 0.00 PO56256 2005 GH-Urban Water SIL (FYO5) 0.00 206.00 0.00 0.00 0.00 69.52 51.54 0.00 PO84015 2005 GH-Small Towns Water Sply & Sanit 0.00 36.00 0.00 0.00 0.00 10.75 -0.59 0.00 (FYOS) PO81482 2005 GH-Com Based Rural Dev (FYOS) 0.00 82.00 0.00 0.00 0.00 24.07 -0.37 0.00 PO71157 2004 GH Land Administration (FY04) 0.00 20.50 0.00 0.00 0.00 6.88 4.86 0.00 PO82373 2004 GH-Urban Env Sanitation 2 ( FY04) 0.00 62.00 0.00 0.00 0.00 41.13 23.70 0.00 PO50620 2004 GH-Edu Sec SIL (FY04) 0.00 78.00 0.00 0.00 0.00 34.08 26.95 0.00 PO00970 1999 GH-Trade Gateway & Inv SIL (FY99) 0.00 50.50 0.00 0.00 0.00 3.76 1.04 -1.21 Total: 0.00 850.00 0.00 0.00 0.00 439.01 149.46 2.25 92 GHANA STATEMENT OF IFC’s Held and Disbursed Portfolio In Millions of US Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. 1990 AAIL 0.00 2.55 0.00 0.00 0.00 2.55 0.00 0.00 1998 AEF NCS 0.00 0.00 0.53 0.00 0.00 0.00 0.53 0.00 1997 AEF PTS 0.00 0.00 0.3 1 0.00 0.00 0.00 0.3 1 0.00 1994 AEF Shangri-la 0.93 0.00 0.00 0.00 0.93 0.00 0.00 0.00 1996 AEF Tacks Farms 0.43 0.00 0.00 0.00 0.37 0.00 0.00 0.00 2006 Barclays Bnk GHA 30.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1989 CAL Bank Ltd 0.00 0.87 0.00 0.00 0.00 0.87 0.00 0.00 200 1 Diamond Cement 2.50 0.00 0.00 0.00 2.50 0.00 0.00 0.00 2000 ELAC 0.00 0.10 0.00 0.00 0.00 0.10 0.00 0.00 1991 GHANAL 0.00 0.22 0.00 0.00 0.00 0.22 0.00 0.00 2006 Newmont Ghana 75.00 0.00 0.00 50.00 0.00 0.00 0.00 0.00 2005 Scancom 40.00 0.00 0.00 0.00 20.00 0.00 0.00 0.00 2005 School Fin Facil 1.03 0.00 0.00 0.00 0.25 0.00 0.00 0.00 Total portfolio: 149.89 3.74 0.84 50.00 24.05 3.74 0.84 0.00 Approvals Pending Commitment FY Company Loan Equit Quasi Partic. Approv Y al 2005 Scancom 0.00 0.00 0.00 0.00 2004 Takoradi I1 0.06 0.00 0.00 0.00 Total pending 0.06 0.00 0.00 0.00 commitment: 93 Annex 14: Country at a Glance Ghana: Transport Sector Project Ghana at a glance 9124108 Sub- Key Development Indicators Saharan LOW Ghana Africa inwme Age distrlbutlon, 2007 (2007) Male Female Population, mid-year (millions) 23.5 800 1,298 75-79 I Surface area (thousand sq. km) 239 24,242 21.846 60.64 Population growth (Oh) 2.0 2.4 2.1 Urban population (% of total population) 49 38 32 45.48 GNI (Atlas method, US$ billions) 13.9 762 749 30.34 GNI per capita (Atlas method, US$) 590 952 578 15-18 GNI per capita (PPP, international $) 1,330 1.870 1,500 04 GDP growth (Oh) 6.3 8.2 6.5 20 10 0 10 20 GDP per capita growth (%) 4.2 3.7 4.3 percent (most recent estimate, 200&2007) Poverty headcount ratio at $1.25 a day (PPP. %) 50 Under-6 mortality rate (per 1,000) Poverty headcount ratio at $2.00 a day (PPP, %) 72 Life expectancy at birth (years) 60 50 57 Infant mortality (per 1,000 live births) 78 94 85 200 Child malnutrition (Oh of children under 5) 1s 27 29 $50 Adult literacy, male (% of ages 15 and older) 66 69 72 Adult literacy, female (% of ages 15 and older) 50 50 50 100 Gross primary enrollment, male (% of age group) 98 99 100 Gross primary enroliment, female (% of age group) 97 88 89 60 Access to an improved water source (% of population) 80 58 88 0 1880 1886 2000 2006 Access to Improved sanitation facilities (% of population) 10 31 39 0 Ghana 0 Sub-Saharan Africa Net Aid Flows 1880 I890 2000 2007 (US$ millions) Net ODA and official aid 191 560 600 1,176 IGrowth of QDP and GDP per caplta (%) Top 3 donors (in 2006): United Kingdom 35 22 80 187 Netherlands 5 25 28 97 18T United States 19 13 63 88 Aid (Oh of GNI) 4.3 9.7 12.4 9.3 Aid par capita (US$) 17 36 30 51 Long-Term Economic Trends 95 w 05 Consumer prices (annual % change) 50.1 37.3 25.2 9.4 I eo GDP implicit deflator (annual % change) 51.1 31.2 27.2 14.8 I +GDP -GDP per capita Exchange rate (annual average, local per US$) 9.6 326.3 5,455.1 9.339.3 Terms of trade index (2000 = 100) 83 100 64 1880-90 1880-2000 200047 (average annual gmwth %) Population, mid-year (millions) 11.4 15.8 20.1 23.5 3.1 2.6 2.2 . GDP (US$ millions) 4,445 5,888 4,977 15,248 3.0 4.3 5.5 (% of GDP) Agriculture 57.9 44.8 35.3 36.3 1.o 3.4 3.9 Industry 11.9 16.8 25.4 25.3 3.3 2.7 7.5 Manufacturing 7.8 9.8 9.0 8.2 3.9 -4.5 Services 30.2 38.4 39.3 38.4 5.7 5.6 6.2 Household final wnsumption expenditure 83.9 85.2 84.3 77.5 2.8 4.1 5.7 General gov't final consumption expenditure 11.2 9.3 10.2 12.7 2.4 4.8 -7.0 Gross capital formation 5.6 14.4 24.0 32.9 3.3 4.3 14.7 Exports of goods and services 8.5 16.9 48.8 36.2 2.5 10.1 3.9 Imports of goods and services 9.2 25.9 87.2 59.3 0.6 10.4 7.2 Gross savings 4.5 7.0 15.7 27.6 Nota: Figures in italics are for years other than those specified. 2007 data are preliminary. .. indicates data are not available a. Aid data are for 2006. Development Economics, Development Data Group (DECDG). 94 Ghana : Balance of Payments and Trade 2000 2007 Sovernance Indlcators, 2000 and 2007 (US$ miiiions) Total memhandisaexports (fob) 1938 4,P5 Total merchandise imports (cif) 3,031 8,091 Voice mnd accouniabllity Net trade in goods and services -922 -3,444 POlitICel stability Mrkers' remittances and Regulatory quality compensation of employees (receipts) 32 a5 Ruleof law Current account balance -4 8 -725 asa%ofGDP -8.4 -4.8 Control of wrruption Reserves. including gold 284 2,398 0 25 50 75 100 2007 Central Qovernment Finance Country's percentile rrnk (0-MO) 0 2000 higher vdoeolmply befterrnfrnps (%of GDP) Currant revenue (including grants) 8.8 24.5 owc. Ksurmllnn-Kr..y-M.aru2ri,VIbrld8.nk Tax revenue 8.3 7.3 Current expanditura 8.5 8.1 Technology and Infrastructure 2000 2007 Overall surplus/deficit -8.7 -8.0 Paved roads (%oftotal) 29.6 l79 I Highest marginal tax rate (%) Fixedlinaandmobiie phone Individual 30 25 subscribers (per 1000 people) 2 34 ' Corporate 33 22 High technologyaxports (%of manufactured exports) 19 02 External Debt and Resource Flows E nv lro nme nt /US$ rniiiions) Total debt OUtStandinQand disbursed 8,18 3,82 Agricultural land (%of land area) 84 65 Total debt service 388 267 Forest area (%of land area) 28.8 24.2 Debt relief (HIPC,M DRI) 2,742 1938 Nationally protected areas (%of land area) .. 8.2 Totaidebt (%ofGDP) -2.9 25.7 Freshwater rasources par capita (cu. meters) .. I345 Total debt service (%of exports) 15.7 5.6 Freshwaterwithdrawal (%of internal resources) 3.2 Foreign direct investment (net inflows) 88 435 C02 emissions percapita (mt) 0.31 0.33 ' ! Portfolio equity(net inflows) 0 0 GDP per unit of energyusa (2005 P P P $ per kg of oil aquivalent) 2.6 2.9 i Composition of total external debt, 2006 i Energyuse per capita (kg of oil equivalent) 392 397 1 IBRD.0 I rlDA.810 Short-term 1,143 (US$ rniiiions) iMF 158 IBRD Total debt outstanding and disbursed 9 Disbursements 0 Principal repayments 8 Interest payments 1 IDA Total debt OUtStanding and disbursed 3,t30 Disbursaments 204 Prlvate Sector Development 2000 2008 Total debt service 47 Time required to start a business (days) 34 IFC (fiscal year) Cost to start a business (%ofGNI percapita) 32.7 Total disbursed and outstanding partfolio 24 Time required to register property (days) 34 of WIich IFC own account 24 Disbursements for IFC own account 0 Ranked as a majorconstraint to business 2000 2007 Portfolio sales, prepayments and (%of managers surveyed WIo agreed) repayments for IFC own account 7 n.a. n.a. M IGA Qross exposure 15 Stock market capitalization (%ofGDP) T3.1 15.6 New guarantees 0 0 Bank capital to asset ratio (%) I18 R.4 Note Figures in italics are for years otherthan those specified 2007 data are preliminary 9/24/08 j indicates data are not available -indicates observation is not applicable ~ Development~EconomicsDavelopmen!pataGro-Lp(DECDG) - __ -_ I__-___ I_ I- - - - I__ 95 GHANA MAURITANIA TRANSPORT SECTOR PROJECT MALI DUR ROADS NIGER WORLD BANK FUNDED ROAD BURKINA FASO EUROPEAN COMMISSION FUNDED ROAD NATIONAL CAPITAL Area of map REGIONAL HEADQUARTERS N13 NATIONAL ROADS GUINEA BENIN IR10 DISTRICT AND SUB-DISTRICT HEADQUARTERS INTER-REGIONAL ROADS NIGERIA TOGO REGIONAL ROADS OTHER MAIN TOWNS CÔTE GHANA D'IVOIRE 07 ROAD SECTION IDENTIFICATION REGION BOUNDARIES LIBERIA RAILROADS INTERNATIONAL BOUNDARIES Accra PORTS Gulf of Guinea Red Volta White 3° 2° 1° Volta 0° 1° 11 BURKINA FASO Kulungugu Mogonori N2 N11 01 BawkBawkuu 01 11° 13 10 Kamsorio Paga N2 11° Hamale Gbal Gwallu N16 Pina Kayoro N10 02 Zebilla TTumuumu NaNavrongovrongo Bongo N12 12 12 N11 N13 N10 Binaba Zuarungu 03 N13 02 03 JeffisiJeffisi 01 BolgatangaBolgatanga Datoko N13 Sandema GHANA N13 Hian Tongo Nakpanduri LawrLawraa N18 Naga REGION 02 IR10 Sisili IR11 Jirapa Sabuli EAST 11 UPPER 11 GambagGambagaa 01 N12 02 Fumbisi N10 UPPER WEST IR11 IR11 NNadawliadawli Gbangdaa 04 01 N18 REGION 05 WalewaleWalewale 02 IR11 IR11 N2 Yawgu N12 10 IR11 03 09 01 IR10 Nasia Wenchiki N14 01 Felin 10 07 02 Cherepon Kulpawn N10 BENIN Dorimon IR11 Wa Mankarigu Janga 10° IR11 White Volta N14 10° 06 Karaga Tanina Bulenga Diari Gushiegu 01 Wechiau 10 N2 N10 Yepalsi 09 Saboba Nawuni SaveluguSavelugu N12 09 Tijo Tuna N2 TTolonolon 08 YYendiendi 01 IR10 TTamaleamale Nyankpala Sambu Sawla N10 N9 Zabzugu Larabanga NORTHERN REGION N2 Sabari Chache N7 Busunu 09 01 Gbung 02 07 N7 Damongo Daka Oti Bole 01 Fufulsu Sorri Juo Nakpali 9° Seripe Mankpan 9° Wangasi-Turu N2 08 IR4 Bimbila N12 06 06 Woribogu Mpana Black Volta Nakpayili CÔTE 06 SalagaSalaga N2 D´IVOIRE Gbulumpe Kimabui Jombo IR4 TOGO ChibrungoChibrungo N10 Kpandae 05 Teselima 08 MakongoMakongo NkwantNkwantaa Bui Zongo-Markyeri New Longoro Yeji IR9 03 IR4 IR9 Kintampo 01 IR9 04 Buafri 02 Dambai Brewaniase IR9 IR9 8° 03 Ohiamankyene 05 8° 04 N12 Abease N2 Nsawkaw Jema IR4 Dodo BRONG-AHAFO Kwadwokurom 07 07 03 Kete-KrachiKete-Krachi 05 WWenchienchi N10 AtAtebubuebubu Ahamasu IR9 REGION AsukawkawAsukawkaw Tuobodum BaantBaantamaama Kwame Danso Lake Volta NeNeww Drobo 09 Pru IR7 08 IR4 TTechimanechiman IR7 Nkoranza REGION Kotuo Namasua 02 Sene KadjebiKadjebi 06 N12 IR7 Berekum 08 Hiawoanwu N6 Jasikan 09 N6 SunSunyaniyani IR7 07 EjurEjuraa Kute 10 Akontaanim 06 N6 Teekyere Baaglo N6 Dormaa-AhenkrDormaa-Ahenkroo N12 Afram 05 N10 IR4 N2 IR8 06 04 07 Abofoo 02 Gambia No.2 Bekyem IR7 05 05 Mampong Obosum Hohoe KKenyasienyasi 04 02 KwadwonkrKwadwonkromkuromomkurom IR7 Golokuati NNo.1o.1 OdonkawkromOdonkawkrom IR7 7° TTepaepa ASHANTI REGION IR7 7° Kwakwanya N6 AAgonagona Kpandu Ofinso 01 Dayi Siekabenkuram 06 Barekese EfEffiduasefiduase Agogo EASTERN Kpedze N10 IR4 Yamatwa 04 Goaso Mankranso 05 Shia 01 N12 IR8 Ejisu Anfoeta KKumasiumasi Aduamoa Kwahu Tafo N6 05 New-Debiso 04 NkawieNkawie 04 N2 Juaso Obo 02 IR3 Ho Adwumadiem Nyinahin N10 N5 03 IR5 01 IR5 Manso KKonongoonongo 04 IR3 Mpraeso Boso 03 02 IR5 Dominase Kpetoe Ateso NkwantNkwantaa KKuntanaseuntanase Amua 03 N5 Benchema Ofin 04 IR3 REGION IR3 Abutia- IR2 Obogu N6 Asesewa 01 Kloe Buaka Bibiani Bekwai IR3 Akoasi BegoroBegoro 02 IR8 03 Krokosue N10 Ntronan 05 Sekasua Juabeso 03 Sefwi Anhwiaso IR3 IR3 N2 03 AbiremAbirem Asawinso Bodwesango 01 02 Shi Awaaso 05 AmoAmoyaya Obuasi IR3 Birim Oterkpolu Senchi Wute Bodi IR3 Ajuafo Kibi 04 N12 Sefwi Diaso 07 N8 N3 06 Akokoaso N4 N3 VOLTA Dadeeso Bekwai N10 Odumasi Krobo 01 03 IR8 01 02 Adansi02 KadeKade 02 AAdidomedidome Akatsi Akwantonbra Jabo NewNew Adubiase KKoforiduaoforidua 01 SomanSomanyaya N1 Aflao 02 Akrofuom 01 Battor N1 IR2 Suhum 03 N2 02 6° 03 N4 Anyako Denu IR8 Edubia Akropong 6° Dwokwaa 02 N6 SogakofeSogakofe WESTERN Ayamfuri DunkwaDunkwa Asaman Oda Akim Asamankese 01 N4 GREATER KKetaeta Achiasi 02 DodowaDodowa N1 03 REGION Asankranguaa 01 Swedru 02 Anyanui Enchi IR6 IR2 Adaiso IR1 N2 N10 Pra IR1 02 Atobiase Akoroso 02 NsawamNsawam Akplabanya FFosooso N6 N4 01 ACCRA AAdada N12 Ataase Agyempama Amasaman 01 01 01 IR2 N1 Prampram 02 N8 IR1 05 01 Esikuma Kwanyaku Samreboe Insu TTwifowifo Praso 04 TTemaema Bogoso N1 Tano 03 Huitimbo CENTRAL IR2 SwedruSwedru 06 ACCRA Prestea 01 N10 TTumfokuroumfokuro Bortianor N12 Huni 01 N1 07 Bandae IR6 Valley REGION AjumakuAjumaku 01 Esaaman 01 DunkwDunkwaa Senya Bereku This map was produced by the TTarkwaarkwa 01 N8 WinnebaWinneba Elubo Dwokwa N1 Apam Map Design Unit of The World Bank. 12 Nsuta N1 Heman Abrem 08 Akra The boundaries, colors,denominations and Daboasi 09 Saltpond anyother information shownon this map Alenda Ankobra IR6 01 N1 do not imply, on the part of The World Jewi Whorf 10 Cape CoasCoastt Half Assini Ayiem N1 Elmina Bank Group, any judgment on the legal 5° 5° Apataim status of any territory,or any endorsement Eikwe Sekondi-Takoradi N1 Gulf of Guinea or acceptance of such boundaries. AAgonagona Axim 11 Takoradi Junction IBRD 36913 APRIL 2009 Prince´s 050100 150 Town Akwidaa KILOMETERS 3° 2° 1° 0° 1°