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Documentof The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. 11305-PA STAFF APPRAISAL REPORT PARAGUAY Public Disclosure Authorized EIGHTH HIGHWAYPROJECT NOVEMBER 24, 1993 Public Disclosure Authorized Infrastructure and Energy Division Country Department IV Public Disclosure Authorized Latin America and the Caribbean Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EOUIVALENTS Currency Unit: Guarani (G) 1 US$ = G/. 1,800 (October, 1993) WEIGHTS AND MEASURES Metric system FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS ANNP - National Ports and Navigation Administration CAPECO - Chamber of Paraguayan Grain and Seed-oil Exporters CIF - Cost, Insurance and Freight CGN - Comptroller General of the Nation DPS - Department of Property and Supplies DE - DRH's Department of Execution DM - DRH's Department of Maintenance DEC - DRH's Department of Evaluation and Control DRVR - Directorate General of Village Roads MMD - Merchant Marine Department DPP - DRH's Department of Planning and Projects DRFR - Directorate of Forest Resources DRH - Directorate of Highways FCCAL - President Carlos Antonio L6pez Railway FEC - Foreign Exchange Component FLOMERES - The State Merchant Marine Fleet GDP - Gross Domestic Product HDM - Highways Design and Maintenance Model ICB - International Competitive Bidding IDB - Inter American Development Bank JICA - Japanese International Cooperation Agency LCB - Local Competitive Bidding MAG - Ministry of Agriculture and Livestock MOF - Ministry of Finance MOPC - Ministry of Public Works and Communications OECF - Japanese Overseas Economic Cooperation Fund OPIT - Transport Planning Office PPF - World Bank's Project Preparation Facility SOE - Statement of Expenditure USecPWC - Undersecretariat of Public Works and Communications USecT - Undersecretariat of Transport USecA&F - Undersecretariat of Administration and Finance PARAGUAY FOR OFFICIALUSE ONLY EIGHTH HIGHWAY PROJECT STAFF APPRAISAL REPORT Table of Contents LOAN AND PROJECT SUMMARY .... .. .................... iII 1. THE TRANSPORTSECTOR ...... 1...................... A. Background .. *.*. 1.......I B. Organizationof the Transport Sctor .................... 2 C. Transport Sector Investments ....................... 3 D. Highway ............ ........................ 3 E. Ports and Waterways ............................ 4 F. Railways ............ ........................ S 0. Air Trawport ......... ....................... S H. Sector Planning ......... ....................... 5 !. Previous Bank Experiencewith Transport Projects .... ...... 6 J. Prospctive Bank Actions .......................... 7 2. THE HIGHWAYSSUBSECTOR ................. 9 A. The HighwaysSystem ........................... 9 B. Highway Administration .......................... 9 C. Highway Planning .............................. 12 D. Highway Expdtrs, Financg, Cost Recvry, Future Expdtrs .... .. 13 E. Highwaysand the Environment ...................... 16 F. TheRoadTransportIndustry ....................... 17 3. THE PROJECT..................................... 19 A. Background .......... ........................ 19 B. Project Objectives .............................. 20 C. Project Description ............................. 21 D. Project Preparation ............................. 23 E. Project Costs .......... ....................... 24 F. Project Financing ............................... 26 G. Project Implementation ........................... 26 H. Procurement.......... ........................ 27 I. Disbursements . 28 J. Special Account, Disbursementsand Auditing .29 K. Reporting Requirements,Project Monitoringand Consultations . 29 L. Socio-EnvironrentalImpact .......... .. ............ 30 4. ECONOMICJUSTIFICATION ........... .. .............. 34 A. EconomicAnalysis ............................. 34 B. Project Rism ................................. 37 S. AGREEMENTSAND RECOMMENDATION....... .. ......... 39 This document has a restricteddistribution and may be used by recipientsonly in the performance of their officialduties. Its contents may not otherwisebe disclosedwithout World Bankauthorization. Iamm Project Costs ............... .. .. ... .. ... .. ... 25 Financing Plan ......... ......................... 26 Procurement.................................... 28 1.1 Public Investmentin Transport ..................... 41 1.2 Expected Public Investmentin Transport (1992-1996)....... 42 1.3 Ports Traffic (1990) ............................ 43 1.4 ShippingFleet ............................... 44 2.1 NationalHighway Network (1991) ................... 45 2.2 MOPC BudgetaryExecution by Type of Expdtre (1985-1993) 46 2.3 MOPC BudgetaryExecution by Source of Fincg (1985-1993) . 50 2.4 MOPC Maintenanceand InvestmentExpdtre (1985-92, 1993-98) 54 2.5 Taxes Collected from Road Users ................... 55 2.6 MOPC Highway InvestmentProgram (1993-1998)......... 56 2.7 Road Transport Companies ....................... 58 3.1 Cuatro Mojones - Rt.9 Traffic at Main Intersections .... .... 59 3.2 Road Improvements - Cost Summary ................. 60 3.3 Civil Works Financial ExecutionSchedule .... ......... 61 3.4 ImplementationSchedule ......................... 62 3.5 EstimatedSchedule of Disbursements ................. 63 4.1 Paraguarf- Ita AverageDaily Traffic ................. 64 4.2 Paraguarf- ItACost/Benefit Streams .................. 65 4.3 Ita - Cuatro Mojones Traffic Estimates ................ 66 4.4 Ita - Cuatro Mojones Cost/BenefitStreams .... .......... 67 4.5 Cuatro Mojones - Rt.9 Traffic Estimates ............... 68 4.6 Cuatro Mojones - Rt.9 Cost/BenefitStreams .... ......... 69 4.7 Cuatro Mojones - Rt.9 Storm Drainage Cost/BenefitStream ... 70 4.8 Limpio - EmboscadaTraffic Estimates ................ 71 4.9 Limpio - EmboscadaCost/Benefit Streams .... .......... 72 Annexes 1. External Assistanceto the Highway Sub-sector .... ........ 73 2. Detailed Descriptionof Project Works ................. 77 3. Pilot Earth-RoadStabilization Program ................. 81 4. Terms of Reference Improvements Ytay and Lambare Creeks . .. 83 5. Terms of ReferenceAsuncidn Transport Master Plan Study .... 91 6. Terms of Rcference TA to Strengthen MOPC's Management . .. 95 7. StrengtheningMOPC's EnvironmentalUnit .... .......... 97 8. StrengtheningDH's Planningand Projects Department .... ... 99 9. Terms of ReferenceNational Vehicle Registry .... ........ 101 10. Paraguayanvs. Bank ProcurementPractices ...... ....... 105 11. EnvironmentalImpact Assessment........ .. .......... 109 12. Selected Documentsin the Project File ...... .. ......... 129 Organizationof the Ministry of Public Works as of June 1993 ..... 131 IBRD 24199 Eighth Highway Project .................... 132 PARAGUAY EIGHTH HIGHWAYPROJECT LOAN AND PROJECT SUMMARY Borrower: Republicof Paraguay ExecutingAgency: Ministry of Public Works and Communications(MOPC) Loan Amount: US$ 65.0 million equivalent Tams: Repaymentin 20 years, including5 years of grace, at the Bank's standard variable interest rate. ProjectObjectives: The proposed project is principally aimed at strengthening MOPC's organization and promoting team-work at its highest level, thus, improving its capacity to deliver good roads and a well maintainednetwork. This objectivewould be accomplished through the financingof selectivetechnical assistanceand train- ing and of civil works. The latter would, in addition, ease the problems of rapid urbanization, and: (a) reduce environmental hazards and the nuisance caused by frequent floods along Asun- ci6n's ringroad; (b) expedite exports by facilitating the use of alternativeports, (c) lower the costs of trucking soybeanexports to the Brazilian border; (d) enhance DH highway design and roadworks planning capability, (e) improve environmentalas- sessment skills at the ministry; and (f) assist in establishinga National VehicleRegistry. The proposed project is framed within the Bank's country assis- tance strategy of addressingthe physical constraints and social pressures arising out of the rural-urban migration that results from the high rural populationgrowth of Paraguay and a declin- ing agriculturalfrontier. The strategy calls also for support to exports by upgrading the transport infrastructure. After a seven year lending gap in Paraguay, Bank activitiesmust also be cognizantof, and blend in with the activitiesof other do- nors. The proposed project would complementthe considerable assistance included in parallel IDB and OECF projects: these deal with improvingthe nationalhighway network and improving maintenance, and are based on developing stronger in-house capabilities at MOPC to carry them out (Annex 1). The tech- nical assistance in the project would move in a different direc- tion, however, namelyto help MOPC organize itself to contract with the private sector the maintenance,construction, planning, engineering services, and other tasks MOPC has to carry out. This approach would allow MOPC staff to coordinateand man- age the program rather than do it themselves. An initialstep in the new direction is to develop stronger internal team work and coordinationin the decision making and implementation,while at the same time ensuring that systems are in place that allow efficient and effective performance. - iv - Project Description: The proposed project would include: A. Civil Works road improvements:improving the road sections between
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