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Filelvfij REYSRESTRICTED Report No FILELVfiJ REYSRESTRICTED Report No. PTR=36a Public Disclosure Authorized This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracyor completeness.The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized APPRAISAL OF A SECOND HIGHWAY CONSTRUCTION PROJECT BRAZIL Public Disclosure Authorized March 17, 1970 Public Disclosure Authorized Transportation Projects Department Currency Equivalents(July 1969) Currency Unit - New Cruzeiro NCr US$1.00 - NCr 4.1 US$1 million - NCr 4.1 million NCr 1 million - US$243,900 Fiscal Year January 1 to December 31 Units of Weights and Measures: Metric Metric: British/USEquivalent 1 Kilometer (km) - 0.62 miles (mi) 1 Meter (m) 2 - 3.28 feet (ft) 1 Square Kilometer (km ) - 0.386 square mile (sq. mi) 1 Metric ton (m ton) - 0.98 lg. ton 1 Metric ton (m ton) - 1.1 US short ton Totals may not add up because of rounding BRAZIL APPRAISAL OF THE SECOND HIGHWAY CONSTRUCTION PROJECT Table of Contents Page No. SUMMARY ......................................... 1. INTRODUCTION ................................... 1 2. BACKGROUNI) ...................................... A. General ........ ............................ 1 B. Transport Policy ........................... 2 3. 'THEHIGHWAY SECTOR .............................. 6 A. The llighwayNetwork; Characteristics and Growth of Highway Traffic and the Vehicle Fleet ................................ 6 B. Highway Administration ..................... 6 C. Highway Engineering ........................ 8 D. Highway Construction ..... ............. 9 E. IlighwayMaintenance ..... ............. 9 F. Highway Financing and Planning .............. 10 4. THE PROJECT ........ ............................. 11 A. General Description ..... ................... 11 B. Highways to be Constructed and/or Paved 12 C. Consulting Services for Design and Construction Supervision .... ............. 12 D. Cost Estimates and Financing .... ........... 13 E. Execution of the Project ..... .............. 17 F. Disbursement ............................... 18 5. ECONOMIC EVALUATION ............................. 19 A. Introduction ............................... 19 B. The Project Roads .......................... 20 C. Benefits from the Project .... .............. 23 6. RECOMMENDATIONS .................. ............... 24 This report has been prepared by Messrs. Schaefer (Engineer), Siret (Engineer/Economist) and Kanaan (Economist) who appraised the project in September-October 1969. TABLES 1. Freight Transport by Mode of Transport (1961-1968) 2. Passenger-Kilometers, Percentage Shares and Average Annual Growth Rates of Total and Selected Items by Mode of Transport 3. Federal Investment in Transport by Modes 4. Classification of Highways -- Lengths According to Type of Jurisdiction, December, 1968 5. Relations Among Area, Population and Length of Highways, 1968 6. Relations Among Area, Population, and Number of Vehicles, 1967 7. Vehicle Registration, by State, 1967 8. Vehicle Fleet, 1967 9. Highway Design Standards for New Roads 10. Admissible Highway Design Standards for Improvement of Existing Roads 11. Forecasts of Annual Investment Expenditures for High Priority Road Construction and/or Paving Works. 12. Tentative Financing Plan -- Federal and State Highways (1970-1973) 13. List of Roads for Construction and/or Paving 14. List of Roads for Detailed Engineering 15. List of Roads for Feasibility Studies 16. Average Daily Traffic on Project Roads 17. Estimated Vehicle Operating Costs 18. Average Daily Traffic -- Selected National Highways, 1968 19. Internal Rates of Return for Roads Proposed for Construction and/or Paving CHIARTS I. National Highway Department (DNER) IT. GEIPOT III. lHighwayDepartment of Maranhao IV. State H-lighwayDepartment - Recommended Standard Organizational Structure ANNEX A. Transport Survey I - Main Recommendations II - Consultants Engaged in the Transport Survey B. First Plan of Action (PA-1) Progress of Implementation C. Second Plan of Action (PA-2) Outline of Measures and Objectives D. Reorganization of the Highway Administration E. The Project Roads F. Consultants Engaged in the Preparation of the Second Highway Construction Project MAPS 1. General Highway Map 2. Transport Survey - Phases I and II 3. Maranhao, Piaui, Ceara 4. Rio Grande do Norte, Paraiba, Pernambuco, Alagoas 5. Bahia, Sergipe 6. Espirito Santo, Rio de Janeiro 7. Minas Gerais 8. Mato Grosso, Goias 9. Parana 10. Santa Catarina 11. Rio Grande do Sul ABBREVIATIONS GEIPOT - Transport Study Group DNER - National Highway Department DER - State Highway Department RFFSA - National Railways DNPVN - National Port Organization UNDP - United Nations Development Programme USAID - United States Agency for International Development USBPR - United States Bureau of Public Roads ADT - Average Daily Traffic IUCL - Sole Tax on Fuels and Lubricants PA-1 - First Transport Plan of Action PA-2 - Second Transport Plan of Action BRAZIL APPRAISALOF THE SECOND HIGHWAY CONSTRUCTIONPROJECT SUMMARY i. The growing integrationof Brazil's various regions requires continued improvementof transport facilitiesas well as additions to the existing network. At the same time, there is a need for better utilization of the facilities,more effective coordinationof the dif- ferent modes and the eliminationof railway deficits, one of the major causes of Brazilian inflation. ii. Hiighways have assumed the dominant role in meeting the coun- try's needs for transport services. In 1968 highway transport accounted for over 70% of total freight ton-km and 90% of passenger-km. iii. Highlway administration is undergoing major changes with regard to the distribution of responsibilities. Many of the activities of the National Highway Department (DNER) are over-centralized and there is duplicationof services between National and State Highway Departments, especially in more developed and populated states which have adequate state highway organizations. To remedy this situation the Government has decided to transfer all maintenance and construction functions to State Highway Departments and leave the National Department to concen- trate on planning, regulation and overall supervisionof the road net- work. iv. Since 1964 the Bank has had a continuing exchange of views with the Government of Brazil regardingthe improvementand extension of the transport system. Following the Bank's recommendationsa Trans- port Survey was launclhed in 1965 and carried out in two stages. Phase 1, for which a US$1.5 million Bank grant was provided, covered highway transport in four states, railway transport, coastal shipping and port operations for three of Brazil's principal ports. Phase II was initiated in 1967 with financial assistance from UNDP and USAID and with the Bank acting as executing agent. It covered highway transport in fourteen states and is now nearing completion. Prior to the First Highway Project (Loan 567 BR - see paragraph viii below) the Government submitted a Plan of Action (PA-l) summarizing its transport objectives and giving schedules for action on highways, railways and ports. This Plan has been satisfac- torily implemented. Before negotiating the proposed loan, the Government submitted to the Bank a new Plan of Action (PA-2) outlining the measures required to bring about further improvements in the transport sector. This is a suitable basis for a further loan for highways. v. This project will be the second for highways in Brazil based on the Transport Survey recommendations. It consists of: (a) the con- struction and paving of 872 km of primary and secondary highways, (b) - il - the improvementand paving of 1,267 km of primary highways, (c) the de- tailed engineeringand supervision of constructionfor the proposed works, and (d) additional consultingservices for detailed engineeringof about 2,300 km of highways and feasibilitystudies on another 3,800 km, to re- inforce planning in the National Highway Departmentand to improve super- vision of highway construction. The total cost of the project is estimated at US$255.1 million equivalent. The Bank loan of US$100 million equiva- lent will finance 40% of the costs of construction and consulting services rendered by Brazilian consultants and the foreign exchange component of the costs of foreign consultants. Total foreign exchange costs of the project will be US$53.1 million, or about 53% of the amount of the loan. Retroactivefinancing will be provided to cover the foreign exchange com- ponent (US$300,000)of costs incurred for the detailed engineeringof one project road designed by foreign consultants (X.Dorsch- Germany). vi. About 50% of the roads included for construction and/or paving are located in the Northeast, one of the poorest regions of Brazil. The constructionprogram proposed under this project will meet this region's most urgent highway needs. The program of feasibilityand detailed en- gineering studies included in the project emphasizes the developmentof Brazil's western region,where the main barrier to developmentis the lack of transportation to distant markets. The proposed studies will cover the region's most important trunk roads. vii. Detailed engineering is complete for all project roads and is satisfactory. viii. The first highway construction loan (Loan 567-BR, US$26 million) was signed in 1968 and despite initial delays in making it effective, is proceedingsatisfactorily.
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