Document of The World Bank Public Disclosure Authorized Report No: ICR0000712 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-34320 IDA-3432A) Public Disclosure Authorized SPECIFIC INVESTMENT LOAN IN THE AMOUNT OF SDR 51.20 MILLION (US$ 66.50 MILLION EQUIVALENT) TO THE REPUBLIC OF HONDURAS FOR THE ROAD RECONSTRUCTION AND IMPROVEMENT PROJECT Public Disclosure Authorized December 18, 2007 Sustainable Development Department Central America Country Management Unit Latin America and Caribbean Region Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective September 30, 2000) Currency Unit= Lempiras LC LC 1.00 = US$ 0.067 US$ 1.00 = LC 15.00 FISCAL YEAR [January 1 – December 31] ABBREVIATIONS AND ACRONYMS CABEI Central American Bank for Economic Integration CAS Country Assistance Strategy DGC General Roads Directorate (Dirección General de Carreteras) DGCCA General Road Maintenance Directorate (Dirección General de Conservación de Carreteras y Aeropuertos) ECLAC The Economic Commission for Latin America ERR Economic Rate of Return GDP Gross Domestic Product GNP Gross National Product GOH Government of Honduras HDM Highway Design and Maintenance Model IADB Inter-American Development Bank ICR Implementation Completion Report IDA International Development Association IRI International Roughness Indicator JICA Japanese International Cooperation Agency LAC Latin America and the Caribbean Region LACI Loan Administration Change Initiative MCA Millennium Challenge Account NPV Net Present Value PAD Project Appraisal Document PCU Project Coordination Unit PDO Project Development Objective PMRTN Master Plan for National Reconstruction and Transformation (Plan Maestro de la Reconstrucción y Transformación Nacional) PRRI Remedial Involuntary Resettlement Plan (Plan Remedial de Reasentamiento Involuntario) SEFIN Ministry of Finance (Secretaría de Finanzas) SOPTRAVI Ministry of Public Works, Transport and Housing (Secretaría de Obras Públicas, Transporte y Vivienda) TSRP Transport Sector Rehabilitation Project UGA Environmental Management Unit (Unidad de Gestión Ambiental) UPEG Planning and Evaluation Unit (Unidad de Planificación y Evaluación de Gestión) USAID U.S. Agency for International Development Vice President: Pamela Cox Country Director: Jane Armitage Sector Manager: Jose Luis Irigoyen Project Team Leader: Stephen Brushett ICR Team Leader: Stephen Brushett HONDURAS Road Reconstruction and Improvement Project CONTENTS Data Sheet ............................................................................................................................ i A. Basic Information..................................................................................................... i B. Key Dates................................................................................................................. i C. Ratings Summary..................................................................................................... i D. Sector and Theme Codes ......................................................................................... i E. Bank Staff................................................................................................................ i F. Results Framework Analysis ................................................................................... i G. Ratings of Project Performance in ISRs .................................................................. i H. Restructuring............................................................................................................ i I. Disbursement Graph................................................................................................ i 1. Project Context, Development Objectives and Design................................................... 1 2. Key Factors Affecting Implementation and Outcomes .................................................. 6 3. Assessment of Outcomes .............................................................................................. 11 4. Assessment of Risk to Development Outcome............................................................. 18 5. Assessment of Bank and Borrower Performance ......................................................... 19 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners............... 24 Annex 1. Project Costs and Financing.............................................................................. 26 Annex 2. Outputs by Component...................................................................................... 28 Annex 3. Economic and Financial Analysis..................................................................... 31 Annex 4. Bank Lending and Implementation Support/Supervision Processes................. 33 Annex 5. Beneficiary Survey Results ............................................................................... 36 Annex 5. Beneficiary Survey Results ............................................................................... 36 Annex 6. Stakeholder Workshop Report and Results....................................................... 37 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ......................... 38 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders........................... 46 Annex 9. List of Supporting Documents .......................................................................... 47 MAP.................................................................................................................................. 48 A. Basic Information HN ROAD RECONSTRUCTION Country: Honduras Project Name: AND IMPROVEMENT Project ID: P057538 L/C/TF Number(s): IDA-34320,IDA-3432A ICR Date: 12/18/2007 ICR Type: Core ICR REPUBLIC OF Lending Instrument: SIL Borrower: HONDURAS Original Total XDR 51.2M Disbursed Amount: XDR 51.2M Commitment: Environmental Category: B Implementing Agencies: SOPTRAVI Fondo Vial Cofinanciers and Other External Partners: B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 09/07/1999 Effectiveness: 11/06/2001 11/06/2001 Appraisal: 04/10/2000 Restructuring(s): 01/29/2007 Approval: 11/07/2000 Mid-term Review: 08/20/2004 10/22/2004 Closing: 03/31/2006 09/30/2007 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Highly Satisfactory Borrower Performance: Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Highly Satisfactory Government: Satisfactory Implementing Quality of Supervision: Satisfactory Satisfactory Agency/Agencies: Overall Bank Overall Borrower Highly Satisfactory Satisfactory Performance: Performance: i C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry No None at any time (Yes/No): (QEA): Problem Project at any Quality of No None time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status: D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 10 10 Roads and highways 90 90 Theme Code (Primary/Secondary) Natural disaster management Primary Primary Rural services and infrastructure Primary Primary E. Bank Staff Positions At ICR At Approval Vice President: Pamela Cox David de Ferranti Country Director: Makhtar Diop D-M Dowsett-Coirolo Sector Manager: Jose Luis Irigoyen Danny M. Leipziger Project Team Leader: Stephen J. Brushett Guillermo Ruan ICR Team Leader: Stephen J. Brushett ICR Primary Author: Oswaldo Patino F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The objectives of the Project were: (a) to restore roads damaged by Hurricane Mitch, which struck Honduras in October 1998; (b) to improve trade corridors; and (c) to establish a sustainable and accountable financial and institutional set-up for the road sub- sector. The performance indicators to measure the achievement of the project#s objectives were: (i) verification that traffic volumes and vehicle operating costs on the upgraded roads meet those projected in the feasibility studies; (ii) implementation of the road ii maintenance pilot project through micro-enterprises; (iii) verification that the Road Fund is financing the maintenance of at least 70% of the national network by the end of the project (main, secondary and feeder roads); (iv) kilometers of main and rural roads and meters of bridges to be reconstructed / rehabilitated Revised Project Development Objectives (as approved by original approving authority) There were no revisions to the project development objectives (PDO). The project was restructured January 29, 2007 without changes in the PDO. Project key indicators were not revised with the following exception: As part of the first amendment to the credit agreement countersigned December 2005, GOH agreed to the following changes to the Implementation Letter: (A) (i) funds were to be allocated to the Road Fund sufficient to meet at least respectively of 40% in 2001, 55% in 2002, 65% in 2003 and 70% in 2004 of the maintenance needs on the national network; (ii) maintenance on the main road network will be prioritized to ensure 100% of the requirements are met from 2006 onwards; (iii) further actions will be taken to assure 100% of national road network requirements are met by 2010. (B) (i) number of micro-enterprises providing routine maintenance