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Document of The World Bank Public Disclosure Authorized Report No. 13439-AL STAFF APPRAISAL REPORT Public Disclosure Authorized DEMOCRATICAND POPULAR REPUBLIC OF ALGERIA SIXTH HIGHWAY PROJECT Public Disclosure Authorized JANUARY 6, 1995 Private Sector Development, Finance and Public Disclosure Authorized Infrastructure Operations Division Maghreb and Iran Department Middle East and North Africa Regional Office EXCHANGE RATE Currency Unit: Algerian Dinar (DA) = 100 Centimes Eguivalency of I US$ in DA since 1985 1985 5.03 1986 4.70 1987 4.85 1988 5.92 1989 7.46 1990 8.60 1991 17.35 1992 22.49 1993 22.00 1994 (DECEMBER) 43.70 FISCAL YEAR January I - December 31 GLOSSARY OF ACRONYMS AND ABBREVIATIONS ANA : Agence Nationale des Autoroutes APC : Assemblee Populaire Communale APW : Assemblee Populaire (le Wilaya BAD : Banque Algeriennc de Developpement CC : Chemins Communaux CNAN : Compagnie Nationale Algerienne de Navigation CNP : Conseil National de Planification CTTP : Organisme de Contr6le Technique des Travaux Publics CW : Chemins de Wilaya DEER : Direction de I'Exploitation et de l'Entretien Routiers' DRHR : Direction des Ressources Humaines et de la Recherche DPAE : Direction de la Planification et des Affaires Economiques DR : Direction des Routes DTP : Direction des Travaux Publics EPA : Entreprise Publique Administrative EPE : Entreprise Publique Economique EPIC : Etablissement Public Industriel et Commercial ERL : Economic Rehabilitation Loan FPC : Fonds de Participation "Construction" IMF : International Monetary Fund MEAT : Ministere de l'Equipement et de l'Amenagement du Territoire MIRP : (Ministry of Infrastructure and Regional Planning) MF : Ministere des Finances MICLERA : Ministere de l'Interieur, des Collectivites Locales, de l'Environnement, et de la Reforme Administrative PCD : Plans Communaux de Developpement PW : Public Works RN : Routes Nationales SAETI : Societe Algerienne d'Etudes d'Infrastructures SNTF : Societe Nationale de Transport Ferroviaire WILAYA : Province I/ The French word "entretien routier" connotes routine and periodic maintenance only, while the English word "maintenance" includes road rehabilitation. ALGERIA SIXTH HIGHWAY PROJECT STAFF APPRAISAL REPORT TABLE OF CONTENTS Loan and Project Summary ................... i - iv I. COUNTRY AND SECTOR BACKGROUND . A. Country Background .1 B. Recent Economic Performance. 2 C. Medium Term Economic Outlook. 2 D. The Transport System. 3 Overview .3 Transport Institutions. 4 Status of Transport Deregulation. 5 Transport Investments in Recent Years. 5 E. Transport Sector Issues. 7 F. Previous Bank Involvement and Strategy in Transport. 8 II. THE HIGHWAY SUB-SECTOR ....................... 11 A. The Road Network ............................. 11 B. Road Administration .12 C. Planning and Programming .13 D. Engineering and Controls .14 E. Human Resources Development .15 F. Implementation Capabilities .16 G. Road Budgeting and Financing .17 The Projectwas prepared on the basis of an appraisalmission in June 1994 led by MichelRay (Pr. HighwayEngineer) and comprisingMichel Loir (SeniorTransport Economist) Luc Cosyn, MohamedAyadi, Claude Fevre, CharlesParey. Bernard Heritier, PatrickMorissey, Jean-Luc Delorme(Consultants). Peer Reviewerwas Luis Pinilla(Senior Highway Engineer). Secretarial assistance was provided by Amelia Williams. The processing of the project was supervised by A. Amir Al-Khafaji, Chief, Private Sector Development, Finance and Infrastructure Operations Division (MNIPI) and Daniel Ritchie, Director, Country Department (MN1DR). III. THE PROJECT .................................. 21 A. Background and Objectives ....... ................. 21 Rationale for Bank Involvement .... ............ 21 Project Objectives .......... .. .. .. .. .. .. 21 B. Project Description ............. ... .. .. ... .. .. 22 Pavement Strengthening of High-Traffic Roads ..... 22 Policy .................. .... .... .... 22 Objectives ............... .. ... ... ... .. 23 Description .............. ... ... ... ... .. 23 Rehabilitation of Medium-Traffic National Roads ..... 23 Rehabilitation of Priority Bridges ........ 24 Periodic Maintenance of National Roads ...... 25 Rehabilitation and Maintenance of Saharan Tracks and Purchase of Equipment for Traffic Counting ..... 26 Pilot Program for Municipal Roads ....... 27 Audit of Enterprises from the Public Works Sector ..... 29 Technical Assistance and Studies for ANA ...... 30 Modernization and Training Actions ....... 31 Studies, Research and the Ministry's Access to Foreign Technical Expertise ........ .. 33 Urban Transport Study ........... .. .. .. .. .. .. .. 33 C. Cost and Financing ............. ... .. .. ... .. .. 35 D. Procurement ................................ 37 E. Disbursements .................. .... ... .... 39 F. Reporting and Auditing ........... .. .. .. .. .. .. .. 41 G. Environmental Impact ............ .. .. .. .. ... .. 42 IV. ECONOMIC EVALUATION .............. ... ... .. ... 44 General ................................... 44 Project Benefits .............................. 44 Non -Quantified Benefits ............. .. .. ... .. .. 45 Sustainability ............................... 46 Risks ................................... 46 V. AGREEMENTS AND RECOMMENDATION ....... 47 Tables Estimated Project Cost.. iii Financing Plan.. iii Estimated Disbursements .. iv Transport Investment Expenditures over 1990-1994 .. 6 Structure of the Algerian Highway Network in 1992 .. 11 Paved Road Condition - Evolution between 1987 and 1992 .12 Evolution of Road spending in Recent Years .. 18 Cost and Financing .. 35 Procurement Method .. 38 Allocation and Disbursement of the Bank Loan .. 39 List of Annexes 1. Detailed Project Costs .................................. 48 2. Project Implementation 2.1 Implementation and Procurement Time Schedule .. ........ 49 2.2 Preparation of Project Implementation Volume .. ......... 56 3. Letter on Road Sector Policy ........... ................. 58 4. Action Plans on "Quality", "Public Works Laboratories" and "Acceleration of Payments and Disbursements" . .65 5. Action Plans on "Bitumen Supply and Quality" and "Granular Materials" . 67 6. List of Studies on Road Sector Policy and Technical Guidelines . ....... 69 7. Coordinated Action Program for the Modernization of the Ministry in Charge of Infrastructure ....... ............ 70 8. Economic Evaluation ........... .. .. .. ............... 76 - and list of road sections for strengthening/rehabilitation 9. Maintenance Strategy and Development of Network-Based Maintenance . 84 10. Funding of Municipal Road Maintenance ....... ........... 90 11. Technical Background on Road Strengthening and Rehabilitation ............ .. .. .. ................ 92 - Strengthening/Rehabilitation/Maintenance Handbooks - Pavement Evaluation Measurements 11(a) Maintenance and Rehabilitation of Unpaved Roads in Southern Algeria . 95 12. Organization Chart of Ministry of Infrastructure and Regional Planning . 104 13. Key Performance Indicators ......... ............ .. 106 14. Status of Road User Charges ............................. 108 15. Environment Mitigation and Monitoring Plan .................. 114 16. Supervision Plan . 115 17. Previous Bank Involvement in Transport ....... ............ 116 18. Selected Documents and Data Available in Project Files .. ....... 119 19. Map - IBRD 26124 ALGERIA Staff Appraisal Report Sixth Highway Project LOAN AND PROJECT SUMMARY Borrower: Democratic and Popular Republic of Algeria Beneficiary: Ministry of Infrastructure and Regional Planning Amount: US$ 130 million equivalent Terms: Seventeen years, including a five-year grace period, at the Bank's standard variable interest rate. Objectives: The objective of the Project is to enhance the capabilities of the Borrower to manage its road sector by: (i) reducing the backlog of roads and bridges in need of rehabilitation and maintenance; (ii) strengthening the Borrower's agencies responsible for the management and maintenance of roads; (iii) providing sustainable solutions to finance road rehabilitation and maintenance works; and (iv) creating an environment conducive to the efficient utilization of human and financial resources in the Borrower's road sector, in particular through increased competition, participation of the private sector and implementation of a quality improvement strategy. Project Description: (a) road rehabilitation works (44% of project costs): (i) strengthening high-traffic basic economic network pavements (ii) rehabilitating medium-traffic national roads with appropriate low- cost technologies (iii) rehabilitating priority bridges (iv) related design and supervision (b) road maintenance (41% of project costs): (i) periodic maintenance by contract for national roads (ii) purchasing of equipment for current and emergency maintenance of Saharan tracks and for traffic counting -ii- (iii) providing technical assistance for and executing a pilot program for maintenance of municipal roads (iv) related supervision, general studies and training (c) Training. Technical Assistance and Studies (15% of project costs): (i) auditing road enterprises (ii) providing technical assistance to the National Agency for Motorways (ANA) (iii) launching economic, financial, environment and engineering studies for motorways (iv) supporting the Ministry's modernization and training of road administration professionals (v) financing road related studies, research of general interest, and urban transport rehabilitation study (vi) facilitating the access of Ministry's Directorates to