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World Bank Document FILECOPY Report No. 532a-PA Paraguay: Appraisalof a Public Disclosure Authorized FourthHighway Project ,November25, 1974 Latin America and CaribbeanProjects Pepartment Not for PublicUse Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of the InternationalOank for Reconstructionand Development InternationalDeveloprent Association Thisreport was preparedfor officialuse only by the BankGroup. It maynot be published,quoted or citedwithout BankGroup authorization. The Bank Group does not acceptresponsibility for the accuracyor completenessof the report. CurrencyEquivalents CurrencyUnit = Guarani () US$1.00 = 126t ML = US$0.008 Vl,000,000 = US$7,936.50 Fiscal Year January 1 - December 31 System of Weights and Measures Metric 1 meter (m) -= 3.28 feet (ft) 1 kilometer (km) = 0.62 mile (mi) 1 square kilometer (sq km) = 0.386 square mile (sq mi) 1 metric ton (m ton) = 0.98 long ton (lg ton) = 1.1 US short ton (sh ton) Abbreviations and Acrortvms ADT - Average Daily Traffic ANNP - AdministracionNacional de Navegaciony Puertos DGV - DireccionGeneral de Vialidad IDB - Inter-American Development Bank JV - Juntas Viales (Local Councils) MOPC - Ministerio de Obras Publicas y Comunicaciones OCIPT - Office of Coordination and Integral Planning of Transport PCAL - Presidente Carlos Antonio Lopez (railway) SAE - Sociedad Argentina de Estudios (consultants, Argentina) UNDP - United Nations Development Programme USAID - United States Agency for International Development PARAGUAY APPRAISAL OF A FOURTHHIGHWJAY PROJECT TABLE OF CONTENTS Page No. SUMMARY AND CONCLUSIONS ................ ...................i - iii 1. INTRODUCTION .............................................. 1 2. BACKGROUND ..... ......................................2 A. General ...... ...................................2 B. The Transport Sector ................. 2 C. Transport Policy and Coordination ..........O..*. 5 3* HIGHWAYS ......................................... 6 A. The Highway Network .......... ....................6 B. Characteristics and Growth of Road Traffic ...... 7 C. Highway Planning and Financing ................. 8 D. Highway Administration ..................... ..... 9 E. Highway Engineering ...... .......................10 F. Highway Construction ...... ......................10 G. Highway Maintenance ........................... 11 4. THE PROJECT ..........................................13 A. General Description ...... .......................13 B. Cost Estimates, Financing and Disbursement ...... 15 C. Execution .......................................17 5. ECONOMIC EVALUATION ....... ......................... 18 A. General .........................................18 B. Description of the Roads and the Areas They Serve *..........18...... C. Traffic ........................................19 D. Benefits from the Project ..... ..................20 E. Economic Evaluation ........ .................... 21 F. Other Project Elements ...... .............. 1 6. AGREEMENTS REACHED AND RECOMMENDATION ............... 21 This Appraisal Report has been prepared by Messrs. R. Paraud (Engineer) and R. Rafloski, A. Soto and Miss I.W. Pastor (Economists), assisted by Mr. George Aithnard (Economist) of the African Development Bank; it has been edited by Miss V. Foster. TABLES 1. PCAL Railway - Freight and Passenger Traffic - 1950-1973 2. Development of the Highway Network - 1950-1973 3. Vehicle Registration in the Country - 1970 4. Gasoline and Diesel Oil Consumption - 1965-1973 5. Highway Expenditures and Road User Contributions - 1965-1973 6. Road User Contributions - 1965-1973 7. Design Standards for Project Roads 8. Breakdown of Construction Cost Estimates 9. Average Daily Traffic Forecast on Project Roads - 1974-1997 10. Vehicle Operating Costs 11. Sensitivity Analyses of Economic Returns ANNEXES 1. Bank/IDA Projects in the Transport Sector and other External Assistance for the Sector 2. Schedule of Disbursements CHART IBRD 6342(R) - Organization Chart of the Directorate of Highways MAPS IBRD 3770R1 - Paraguay Highway Network Southern Region IBRD 3769 - Paraguay Highway Network (overall) PARAGUAY APPRAISAL OF A FOURTH HIGHWAY PROJECT SUMMARY AND CONCLUSIONS i. Developmentof the transportsystem in Paraguay is being under- taken by the Governmentwith three primary objectivesin mind: (a) to foster output of productive areas through better transport facilities;(b) to dis- tribute the population more evenly in the country and to integratescattered centers of productioninto the national economy; and (c) to improve inter- national links with neighboringcountries. The transportsector, in recent years, has received the largest share of public investments,and the basic system now exists. With particularreference to roads, the Government's policy of upgrading and improvementover the last ten years -- a policy in which the Bank and IDA have played a role -- has resulted in reasonable standards and improved maintenance. As a consequence,road transporthas become increasinglyimportant, particularly in view of the decline in effi- ciency of the railway system over the last 20 years, and roads are now the principal mode for domestic freight and passengers. A wide domestic air service network complements the surface system. River transportis un- important domestically,but the bulk of Paraguay's foreign trade is carried by river craft and small freightersalong the Paraguay-Parana-Riode la Plata system (about 1,600 km). ii. Continuedimprovements in the transport sector will be a major factor in facilitatingfurther developmentof the economy, and, if there is to be internal colonizationas the Governmenthopes, better access will be needed to induce this development and to permit transportof agricultural products at reasonable cost. Apart from the Trans-Chacoroad, being financed by the Inter-AmericanDevelopment Bank (IDB), the main emphasis will be in the southeasternregion of the country where economic activity is centered, and where topographicaland soil conditionsand river communications are favorable for agriculturaldevelopment. The project roads are located in potentially rich areas within this region; their constructionwill ensure all-weather connectionsand will facilitate the developmentof this "Plan Triangulo" area. iii. There is continuing and active external assistance in the transport sector in Paraguay. Between 1961 and 1970, the World Bank Group provided four loans and one credit, totallingUS$16.3 million, for studies and con- struction and maintenanceof highways, and one loan, amounting to US$2.8 million, for improvementof port facilitiesin Asuncion. In 1956, the Export-ImportBank provided US$1.12 million for constructionof the runway of the internationalairport of Asuncion. Thereafter,in 1968, USAID pro- vided US$4.7 million for financinga new and larger runway. In 1960 and 1967, USAID provided two loans totallingabout US$10 million for the recon- struction and pavement of the Asuncion-PuertoPresidente Stroessner road (330 km). USAID provided a further loan of US$4.7 million in 1970 for the rehabilitationof a section of the same road. Between 1964 and 1972, UNDP also provided financial assistance totallingUS$1.0 million for highway - ii - studies, trainingprograms, and a transportsurvey; the Bank has been the executing agency for UNDP-financedstudies. Finally, in 1971, the IDB provided US$26.4 million for financingthe engineeringand constructionof the Trans-Chacohighway. The latter is the largest single road project ever undertaken in Paraguay. iv. The proposed project will provide for (a) the constructionand reconstructionof two high priority roads (Encarnacion-Pirapo,about 76 km, includinga short spur and a bypass; and Mbocayaty-ColoniaIndependencia, about 26 km, including a short access road); (b) purchase of spare parts, tires and batteries as a followup of the current highway maintenanceproject (Loan 652-PA);and (c) consultingservices for supervisionof construction, for highway maintenanceservices and studies, and for assistancein transport planning and aid to the local constructionindustry. The two project roads under (a) precedingwere among 450 km of roads identified by a UNDP-financed feasibilitystudy carried out during 1964-1967which determined the agri- cultural potential and road requirementsof southeasternParaguay. Feasibility studies and detailed engineeringfor some of these roads (260 km) were later performedunder the Bank's Second Highway Project (Loan 443-PA, 1966, US$2.1 million). v. Execution of the project is expected to take about three and a half years and would be the responsibilityof the Ministry of Public Works and Communications(MOPC) through its Directorateof Highways. Consultants contractedunder terms and conditionsacceptable to the Bank will assist in prequalifyingbidders and in evaluatingbids and will supervise construction. Constructioncontracts will be awarded on a unit price basis after inter- national competitivebidding in accordancewith Bank Group "Guidelines". The purchase of tires and batterieswill be made through competitivebidding in accordancewith the Bank's "Guidelines";spare parts orders not in excess of US$50,000 may be awarded directly to the dealers of the equipment. For carrying out the highway maintenanceservices and studies, MOPC proposes to engage the same consultantsthat are currentlyassisting in maintenance operations. vi. Constructionand improvementof the project roads are expected to provide benefits by reducingboth vehicle operating costs and maintenance costs, by meeting expected
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