RETURN TO RESTRICTED REPORTS DESK p"J ReportNo. TO-33Za WITHIN 4 J JA ONE WEEK Public Disclosure Authorized This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTIONAND DEVELOPMENT INTERNATIONAL DEVELOPMENTASSOCIATION Public Disclosure Authorized APPRAISAL OF A HIGHWAY PROJECT URUGUAY Public Disclosure Authorized October 9, 1962 Public Disclosure Authorized Department of Technical Operations CURRENCY EQUIVALENTS 1 US dollar = 11 Pesos 1 Peso = 0. 091 US dollar 1, 000, 000 US dollars = 11,000,000 Pesos 1,000,000 Pesos = 91, 000 US dollars Uruguayan Fiscal Year January 1 - December 31 URUGAY -2- 3. Vehicle operating costs. 71. "On the basis of rather incompletecost data supplied by the Highway Department and some private companies,the average operating cost of a 5-6 ton truck (the representativesize of trucks in Uruguay) over Route 5 in its present condition, with the exception of Pro- gresso-Florida section (75 km) is estimated to be in the order of 20 U.S. cents per km. After improvement of the highway to the pro- posed standards,the cost is estimatedto be reduced by about one third. 4. Maintenancecosts. 75. t',. The current levels of maintenancecost per kilometer for gravel roads and asphalt roads in good conditionin Uruguay are 6,000 pesos ($550) and 4,500 pesos (4400) respectively." 5. Economic basis of justification. a) road user savings b) road maintenance savings c) reduction in accident and fatality rates (para. 76); opening up channels for an increased flow of products to marketing and export centers and a reverse flow of investment (para. 77), diversification of production (para. 78) etc. URUGUAY APPRAISAL OF A HIGHUTAYPROJECT Table of Contents Page SUPIaERY i I. INTRODUCTION II. BACKGROUND 1-6 A. General 1 B. Transport in Uruguay 2 C. Coordinationof Transport 3 D. Road Administration 14 Organization 4 Financing and Planning for Road Development and Improvement 4 Execution of Road Construction 5 Road \i4aintenance 6 III. THE PROJECT 7-12 A. Description 7 The Improvementof Route 5 7 Xaintenance Program 7 Highway Planning Survey 8 B. Status of Engineering; Role of Consultants 8 C. Cost of the Project 10 D. Financing of the Project 11 E. Execution of the Project 12 IV. ECONONIICJUSTIFICATION 13-17 A. Introduction 13 B. Competition between Road and Rail 13 C. Road-User and HIaintenance Benefits 14 D. Development Benefits 16 V. CONCLUSIONSAND RECOlN1IENDATIONTS 18 APPENDIX Tables 1 - 10 Figure 1 HIap URUGUAY APPRAISAL OF A HIGHIAY PROJECT SURYfARY i. The proposed loan will finance the improvement of National Route 5, a first phase of a maintenance program and other related items. The total cost of the project is estimated at about US$31.4 million equivalent of which the foreign currency requirements would amount to about USt18.5 million equiva- lent; this would be the first Bank loan to Uruguay for transportation purposes. ii. Local flooding frequentlycauses sections of the important Route 5 to be closed to through traffic and isolates affected areas for varying periods. Traffic volumes are sizeable, but only less than one-fifth of the road is paved and maintenance is generally inadequate. iii. Extensive improvementworks are required to provide adequate facil- ities for present and future traffic. The proposed project provides for: a) the improvementof about 485 km of National Route 5, including the widening and replacemlent of some bridges; b) the preparationof a maintenance program, includingthe procurementof mechanicalequipment spare parts, labor- atory equipment,etc., and c) a highway planning study of the country. iv. All the projectworks will be executed by unit-pricecontracts on the basis of intermationalcompetitive bidding. The total time required for design and constructionwill be about four years. Road maintenanceequip- ment would also be purchased after internationalcompetitive bidding. v. The responsibleexecutive agency is the Highway Departmentunder the hinistry of Public l'orks. The firm of consulting engineersthat prepared the preliminary feasibility report for the project,will be retained to pre- pare the final designs and supervise the construction of the improvement works, and carry out the preparation of a maintenance program. The Highway Planning Survey shall be carried out separatelyby a team of economic and technical experts under terms of reference satisfactoryto the Bank. vi. The projectwould provide a sound all-weatherroad traversing the main livestock and agriculturalproduction areas of central Uruguay, and as a consequence,may lead to the developmentof these and other industries. The savings arising from reduced vehicle operating costs would yield a satis- factory return on the investment. vii. The project is considered suitable for a Bank loan of US"'18.5million equivalentto the Government;an appropriateterm would be 15 years including a four-year period of grace. I. INTRODUCTION 1. The Uruguayan Government asked the Bank to finance the foreign ex- change costs of a highway project consistingof the construction of two roads: Route 5 from hontevideo to Rivera, and Route Inter-Balnearia (coastal route between ihontevideo and Ghuy on the Brazilian border). 2, in discussions with the Government in February, 1962, a Bank mission recommended that the project include a maintenance program. The Plission also recommended that a highway planning study be initiated. 3. The information furnished on Route Inter-Balnearia has not been sufficientto justify financingthis road. 4. The project, the foreign exchange cost of which is estimated at US1ol8.5million, therefore consists of: (a) the improvementof about 485 km of R.oute 5 (Progreso-Rivera) including the replacement and widening of some bridges; (b) the preparation of a maintenance program including the purchase of maintenance equipment, spare parts, engineering and laboratory equipment, weighing scales, etc,, and (c) an overall highway planning study related to other means of transport. 5. The appraisal of the project is based upon findings of a Bank mission to Uruguay in February 1962, information obtained from the Uruguayan Government and other sources at that time and during loan negotiations, and a preliminary feasibility study prepared by a firm of foreign consultants engaged by the Government. II. BACKGROUIDINFORI'ATION A. General 6. Uruguay (IMap) is the smallest of the South American republics, covering an area of about 187,000 sq. km (almost twice the size of Cuba). The country is flat and is bordered on the north by Bragil; on the west by the navigable Rio Uruguay and Argentina; and on the south-east by the Rio de la Plata and the Atlantic Ocean, l4ore than half of its national boundary is navigable coastline. Uruguay lies in the temperate zone and has a mild climate devoid of snow or frost; yearly rainfall averages about hO", with occasional heavy rainfalls. The estimated population of 2.8 million is very unevenly distributed over the country. About 1.6 million people (almost 6050 of total) are concentrated in the most southerly part of the country (12% of total area) with 1ontevideo accounting for about 1.0 million. About hO of the population is engaged in animal husbandry and agriculture, the remainder being divided equally between manufacturing, private trade and services, and Gove rwn'ent. -2- B. Transport in Uruguay 7. The countryjsmain domestic transportationsystems are rail and road (Map) which serve the countryts main domestic transportation needs, water and air transport playing a linited role. Road System 8. Uruguay's road network comprises about 8,000 km of national highways (Map) and about 68,ooo ion of departmental highways. Although few statistical data are available, the highway system is the principal facility for trans- porting passengers and freight. Highway traffic has been increasing more rapidly than railroad traffic, as may be evidenced from the increase in both gasoline consumption and estimated number of vehicles for a recent five-year period. The country's short distances and low density of populationoutside of Ilontevideolends itself well to highway transport. 9. The highway system gradually developed as a series of radiationsout- wards from hontevideo,the traditionalcenter of political and economic activ- ity, major routes following in mmy cases the existing railway network. Over 90% of the national hlighways are all-weather. Occasionalflooding due to heavy rains, inundates a number of sections and bridges of many highways, preventingthe passage of through traffic and isolating the affected areas for periodlsof a few days up to many weeks. lOo Few roads, mostly located around I.-ontevideo,have asphalt or concrete paving. The total length of paving is about 1,500 km (Table 1), representing about 18% of the national system and 2% of all highways. Other unpaved nat- ional roads have some form of a base or surfacing constructed of so-called tosca (disintegrated granite). Departmental roads are usually earth roads. High speed travel on the highways,which is common because of their gentle alignmentand the countryts flat and open terrain, is destructiveto unpaved roads, calling for expensive, continuous maintenance. I'oreover, although maximum axle loads are establishedby law, there is no proper enforcement. 11. Some sections of the major routes are well maintained, but road maintenance is generallybelow standard due mainly to inadequatemaintenance organization and equipment. 12. Statistics on motor vehicles are poor. A 1960 national vehicle census (Table 2) indicates a total number of about 191,000 motor vehicles; many of them overage and in a bad state of repair. The bulk of the vehicle fleet is made up of passenger cars, taxis and light trucks of the "pick-up" type with a load capacity of about 3/h - 1 ton. Larger trucks probably comprise about 25do- 30/%of the total number of vehicles (excludingmotor- cycles), the average types of truck being one of around 5 - 6 ton capacity.