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World Bank Document FILE COPY! - R E S T R I C T E D Re po r t N 0. TO (IDA) loa Public Disclosure Authorized This report was prepared for use within the Association. It may not be pub- lished nor may it be quoted as representing the Association's views. The Association accepts no responsibility for the accuracy or completeness of the contents of the report. INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized APPRAISAL OF THE ASUNCION (PARAGUARI) TO ENCARNAGION ROAD CO.NSTRUCTION AND MAINTENANCE PROJECT Public Disclosure Authorized PARAGUAY October 16, 1961 Public Disclosure Authorized Department of Technical Operations CURRENCY EQUIVALENTS Unit Guarani (a) US$1 = ¢126 ¢1 = US$0.008 ¢1, 000 = US$7. 94 ¢1, 000, 000= US$7,936.50 PARAGUAY APPRAISAL OF THE ASUNCION (PARAGUARI) TO ENCARNACION ROAD CONSTRUCTION AND PiAINTENANCE PROJECT TABLE OF CONTENTS Page SUTMARYi I. INTRODUCTION II. GENERAL BACKGROUND 2 A. Transport in Paraguay 2 B. Present Condition of Highway No. 1 Asuncion-Encarnacion h C. Road Administration 4 III. THE PROJECT 6 A. Technical Description 6 B. The Improvement of the Paraguari-Encarnacion Highway 6 C. The Reorganization of the Maintenance Division 7 D. Execution of the Project 7 E. Cost of the Project 7 F. Financing of the Project 9 IV. ECONOMIC JUSTIFICATION OF TIME PROJECT 10 V. CONCLUSIONS AND RECOMMENDATIONS 13 APPENDICES Table 1 - Design Standards Table 2 - Engineering and Construction Schedule Table 3 - Breakdown of Total Cost in Foreign and Local Currency Table 4 - List of Goods Table 5 - Breakdown of the Local Cost Over the Four-Year Construction Period Table 6 - Estimated Vehicle Ownership and Operating Costs in Paraguay Table 7 - Registered Vehicles in Paraguay MAP I - 7ap of Primary Highway System MAP II - Detailed Road Map Southern Paraguay PARAGUAY APPRAISAL OF ThrIE AS UNCION (PARAGUARI) TO ENOCARI'IACION ROAD COiNSTRlCTION AND AAINTENAiJCE PROJECT SUIPThARY i. The Government of Paraguay has asked for assistance to finance (a) the rehabilitation and reconstruction of the Asuncion-Encarnacion Highway Nlo. 1, and (b) equipment for road maintenance operations of the Directorate of High- ways. ii. The cost of the project has been estimated at US97.5 million equiv- alent including the full cost of construction, engineering services and con- tingencies. The foreign exchange component is US~$5.5 million with an addi- tional US;500,000 for urgently needed maintenance equipment, and it is proposed that the International Development Association make available to Paraguay a development credit of US%6 million for this expenditure. iii. This project appraisal is based on a report supplied by the consult- ing firm of TAvS Ingenieria, S.A., who made an investigation of the project at the beginning of tlhis year. iv. The Asuncion-Encarnacion Highway is the maost important in Paraguay, connecting the capital of the country with its second largest town, Encarnacion. The road is today in poor condition, with sections impassable after heavy rain. A good all-weather road is essential to serve the triangular area between the Paraguay and Parana rivers. It is the most densely populated and most produc- tive area of the whole country. Improvement of the road would stimulate pro- duction and the sale of food, grains, sugar, meat, cotton, etc., and secure a constant flow of such products to the rnarkets and to the ports for export. v. 'The railroad bet;ween Asuncion and Encarnacion will be kept in service by the Government with a minimum amount of expenditure. The Government has as- sured the Association that it would not build a highway following thle alignment of the railroad until such construction would be economically justified. It is therefore the Government's policy to retain Highway No. 1 as the principal con- nection between Asuncion and Encarnacion. vi. The poor condition of the existing roads in Paraguay is evidence of inadequate maintenance, and there is need for improvement in both administra- tion and operation. Technical assistance is requested in this sphere and also to complete the planning and to supervise execution of reconstruction of High- way No. 1. Therefore, consulting engineers will be engaged to help the Gen- eral Directorate of Highways. Appropriate provision has been made in the cost estimates and in the amount of the proposed development credit. vii. The local currency cost of the construction would be about US$2 mil- lion equivalent (X 245 million) over a four-year period. In addition, local funds will be required for proper maintenance of all roads under the Directo- ratet s jurisdiction; the amount of such funds should be determined by the Di- rectorate, working with the Consultants, on the basis of a plan for expanded maintenance operations drawn up and agreed upon by them. The Government has undertaken to provide budgetary appropriation sufficient to cover the local costs. viii. Execution of construction work will be done under contract, to be awarded by international competitive bidding, The purchase of maintenance equipment will also be based on international competitive bidding. ix. The project is suitable for a development credit of US$6 million from the International Development Association. I. INTRODUCTION 1. The Government of Paraguay has asked for assistance to finance part of the cost of (a) the improvement of the Asuncion - Encarnacion road, and (b) equipment for the road maintenance operations of the Directorate of Highways. 2. The cost of the construction project is estimated at US$7c5 million equivalent, including the full cost of equipment, engineering services and adequate contingency allowance. The foreign exchange compo- nent is US$5.5 million, and in addition US$500,ooo is required for maintenance equipment. It is proposed that the International Development Association make available a development credit of US$6 million which would cover the foreign exchange needs. 3. This appraisal report is based on information supplied by TAPiS Ingenieria, S.A., a firm of consulting engineers engaged by the Bank/ Association to assist in preparation of the rehabilitation project, and discussions with the Paraguayan representatives during September 1961. The consultants' staff was in Paraguay from January to April 1961; their report of May 1961 has been submitted to the Bank/Association and to the Government of Paraguay. II. GEYERAL BACKGROT,1TD A. Transport in Paraguay 4. Paraguay is a landlocked country, surrounded by Argentina, Bolivia and Brazil, and has an area of about 407,000 sq,km.; it is approximately the size of California. The Paraguay River divides the country into two distinct parts; the Eastern Section is the smaller, with an area of approximately 160,000 sq.km. but it is the most developed, contains over 90% of an estimated total population of 1.6 million, and includes the two principal towns, Asuncion the canital (population 210,CCO) and Encarnacion (34,000); the W4estern Section (Chaco) is sparsely settled and is undeveloped. Annual precipitation ranges from 1,200 to 1,800 millimeters; the rainy season is liarch to Mlay. 5. Transportation is characterized by the country's inland position, and the rivers, Parana and Paraguay, give natural access to the Atlantic Ocean. The sailing distances on these rivers are great, going for hundreds of miles beyond Asuncion and Encarnacion; they are said to be the best unimproved rivers for inland navigation in the world. Practically all of Paraguayis foreign trade is carried by river. In i957, for instance, of the total trade volume of 500,000 tons only 15,000 tons were carried by rail, and only a fragment re- presented cross-border trade with Brazil. 6. The main highway network in Paraguay has developed in the Eastern Section south and east of Asuncion (see MIaps I & II). In this region the topo- graphy is mostly flat to rolling land wiith low mountain ranges of 300 to LOO m in the east, and it is well suited to highTway transportation. Road develonment has, however, been slow with the result that today Paraguay has a total netwTork of only 3,200 km of first-and second-class roads, an insignificant amount for a country of its size, and more and better roads are essential to develop the national economy. 7. Three main trunk roads branch out from Asuncion, of which the most important is Highway No. 1, from Asuncion to Encarnacion, the projoct in this renort. Another important road, Highwfay lNo. 2, leads east toward the towfn of Puerto Stroessner on the Parana River. A contract for improvement of the section Col. Oviedo to Puerto Stroessner was recently awarded, the financing based on a loan from the Development Loan Fund. A third important highway that penetrates the Chaco, northwest of Asuncion, is now under construction and is expected to be completed this year. It is being built to very lolwf standards, much as a dirt road, and would not be passable during the rainy season. 8. Most other roads are located in the triangle between Asuncion, En- carnacion and Puerto Stroessner, traversing the most densely populated areas of Paraguay, where the predominant occupations are farming and cattle raising. The condition of the roads is, in general, poor. Except on the main trunk roads, bridges and culverts are usually timber structures in various states of decay. Drainage conditions are in many cases unsatisfactory, causing erosion of embankment and ditches. Lack of proper maintenance has resulted in deterio- ration of road surfaces, and the riding qualities of the roads are rough. Due -3 - to the poor condition of the roads, man, of' them, including those main trunk roads whi4ch have no asphalt pavement, are closed to traffic for days and some- times weeks after heavy rainfall in order to prevent "heir destruction. 9. Road traffic has doubled during the last ten years; the total numrber of registered vehicles has increased from 5,000 in 1950 to about 11,000 in 1960.
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