Document of The World Bank t*lE OPY FOR OFFICIAL USE ONLY Public Disclosure Authorized

ReportNo. 3388b-PAN

STAFF APPRAISAL REPORT Public Disclosure Authorized

ROAD REHABILITATIONPROJECT

PANAMA

Public Disclosure Authorized May 21, 1981 Public Disclosure Authorized

Projects Department Latin America and the CaribbeanRegional Office

This documenthas a restricteddistribution and may be used by recipientsonly in the performanceof their official duties. Its contentsmay not otherwisebe disclosed withoutWorld Bank authorization. Currency Equivalents

Currency Unit = Balboa US$1.00 = B/. 1.00

Fiscal Year

January 1 - December 31

System of Weights and Measures: Metric

1 meter (m) = 3.28 feet (ft) 1 kilometer (km) 2 = 0.62 mile (mi) 1 square kilometer (km ) = 0.386 square mile (sq mi) 1 metric ton (ton) = 1.1 US short ton (sh ton)

Abbreviations and Acronyms

AADT - Annual Average Daily Traffic AASHTO - American Association of State Highway Transportation Officials APN - National Port Authority (Autoridad Portuaria Nacional) BNP - National Bank of Panama (Banco Nacional de Panama) CLCR - Chiriqui Land Company Railway COPA - Panamanian Aviation Co. (Compania Panamena de Aviacion, S.A.) CPA - Directorate of Pan-American Highway of Engineering within MOP DAC - Direccion de Aeronautica Civil (Civil Aviation Authority) DDI - Directorate of Design and Inspection within MOP DET - Directorate of Equipment and Workshops within MOP DI - Directorate of Fixed Plant within MOP DMV - Directorate of Highway Maintenance within MOP DPE - Directorate of Special Projects within MOP DTLT - Directorate of Transit and Land Transport within MOP DV - Directorate of Valorization within MOP HDM - Highway Design and Maintenance ICB - International Competitive Bidding IDB - Inter-American Development Bank IGN - National Geographic Institute within MOP ILO - International Labor Organization LCB - Local Competitive Bidding MIPPE - Ministry of Planning and Economic Policy (Ministerio de Planificacion y Politica Economica) MOP - Ministry of Public Works (Ministerio de Obras Publicas) NTS - National Transport Survey ORP - Price Regulation Office PCR - Panama Canal Railway Ro-Ro - Roll-on/Roll-off SENAFORP - Servicio Nacional de Formacion Profesional UNDP - United Nations Development Program VOC - Vehicle Operating Cost vpd - Vehicles per day FOR OFFICIALUSE ONLY

STAFF APPRAISAL REPORT

ROAD REHABILITATION PROJECT

PANAMA

TABLE OF CONTENTS

Page No.

I. THE TRANSPORT SECTOR ...... 1

A. General ...... B. The Transport System ...... 1 C. Sectoral Coordination, Planning, Financing and Regulation ...... 4

LI. ROAD TRANSPORT ...... 5

A. General ...... 5 B. Characteristics and Growth of Road Traffic ...... 5 C. Operation and Organization of the Industry ...... 6 D. Regulations of Weights and Dimensions ...... 7

II. THE ROAD SUBSECTOR ...... 8

A. The Network ...... 8 B. Administration ...... 9 C. Planning ...... 10 D. Financing ...... 11 E. Engineering ...... 11 F. Construction ...... 12 C. Maintenance ...... 12 H. Workshops and Equipment Maintenance ...... 13 I. Training ...... 14

IV. PAST AND ONGOING BANK ASSISTANCE FOR ROADS ...... 15

A. General ...... 15 B. Ongoing Highway Maintenance Project ...... 15

V. THE PROJECT ...... 17

A. Objectives and General Description ...... 17 B. MOP's Maintenance and Rehabilitation Program (1981-1985) 17 C. The Project's Road Rehabilitation Program ...... 19 D. Upgrading of Maintenance Capacity under the Project ... 21

This report is based on the findings of an appraisal mission which visited Panama during December 1980. The mission comprised Messrs. W. Matthey (Engineer), Martin Staab (Economist) and A. Byl (Economist). The report has been edited by Miss V. R. Foster.

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. TABLE OF CONTENTS (Continued) Page No.

V. THE PROJECT (Continued)

E. Technical Assistance for Transport Planning ...... 22 F. Cost Estimates, Financing and Disbursement ...... 23 G. Execution, Procurement and Monitoring ...... 25 H. Project Risks ...... 26

VI. ECONOMIC EVALUATION ...... 27

A. Formulation of the Program ...... 27 B. Traffic ...... 28 C. Benefits ...... 28 D. Economic Return and Sensitivity ...... 29 E. Benefit Distribution ...... 29

VII. AGREEMENTS REACHED AND RECOMMENDATION ...... 30

TABLES

1.1 Domestic and International Freight Traffic by Mode in Selected years, 1967-1980 ...... 32 1.2 Passenger Traffic by Mode in Selected Years, 1967-1980 .. 33 1.3 International Port Traffic in Selected Years, 1970-1980.. 34 1.4 Public Investment Expenditures in the Transport Sector, 1970-1980 ...... 35 1.5 Transport Investment Budget, 1981, and List of Possible Transport Projects, 1981-1985 ...... 36 2.1 Road Traffic on Sample Links ...... 37 2.2 Consumption of Petroleum Products ...... 38 2.3 Vehicle Imports and Vehicle Fleet 1960-1980 ...... 39 2.4 Road Vehicle Operating Costs ...... 40 3.1 Past and Projected Development of the Highway Network, 1969-1985 ...... 41 3.2 Financing of Road Investments 1970-1980 ...... 42 3.3 Road Expenditures and Receipts, 1974-1985, Selected Years ...... 43 3.4 MOP Highway Design Standards ...... 44 5.1 MOP Five-Year Physical Road Maintenance and Rehabilitation Program, 1981-1985 ...... 45 5.2 Projected Expenditures for Maintenance and Rehabilitation Program 1981-1985 ...... 46 5.3 Roads to be Rehabilitated during First, Second and Third Phases of Project ...... 47-49 5.4 List of New Equipment and Spare Parts to be Procured .... 50 5.5 Implementation Schedule ...... 51 - 11ll -

TABLE OF CONTENTS (Continued) Page No.

ANNEXES

1. Completed Bank-Financed Highway Projects ...... 52 2. Outline of Proposed Technical Assistance ...... 53 3. Selected Documents and Data Available in the Project File ...... 56

CHARTS

World Bank 22582 - MOP Organization ...... 57 World Bank 22583 - Proposed DET Organization ...... 58

MAP

IBRD 15638 - Panama Road Rehabilitation Project

I. THE TRANSPORT SECTOR

A. General

1.01 Panama is divided lengthwise by a mountain range and across by the Panama Canal. As a result, the country has developed on two main axes: one north-south along the Panama Canal, and the other east-west along the Pacific Coast in the south of the countrv and west of the Colon-Panama City Corridor. To the southeast of the Colon and Panama provinces lies the relatively unexplored Darien province with the narrow Comarca of San Blas to the north. These two areas of dense rain forests are relatively undeveloped, sparsely populated and without land transport facilities; air travel and coastal ship- ping are almost the only means of transportation available.

B. The Transport System

1.02 The transport system in the developed areas of the country is broadly adequate; road transport is the basic mover of domestic freight and passengers. About 97% of all domestic freight traffic and 99% of passenger traffic is carried by road (Tables 1.1 and 1.2).

1.03 The most important international transport facilities are the Tocumen International Airport, the Panama Canal, the Canal ports of Cristobal (near Colon) and Balboa (near Panama City) and the Pan-American Highway. The Panama Canal, its ports and ancillary facilities, including a trans-isthmian railway and a small oil products pipeline, carry an important part of the international cargo traffic, while the canal ports handle most of Panama's general imports. The Pan-American Highway, although handling only 5% of the international traffic, is playing a growing role in the development of inter- regional commerce. International passenger traffic is mainly by air (some 80%).

(i) Roads and Road Transport

1.04 The transport industry is dealt with in Chapter II and road infra- structure, for which the Ministry of Public Works (MOP) is responsible, in Chapter III. Some expansion and upgrading, especially for secondary and feeder roads, would be necessary to meet growing requirements and to give access to areas presently isolated and undeveloped. Maintenance and rehabili- tation of the existing network are the highest priorities in the subsector.

(ii) Ports and Shipping

1.05 Panama has two major general cargo port complexes around the cities of Colon and Panama and two major oil port facilities. Colon, on the Atlantic Ocean, handles most goods. Its main facilities are at Cristobal, one of the two former Canal Zone ports, Bahia Las Minas, Pier 3 and Folks River. Bahia Las Minas has recently been adapted to serve the fast growing roll-on/roll-off (Ro-Ro) traffic originating from Miami. The Panama City area on the Pacific - 2 - has one main port, Balboa, and a minor "fiscal pier," mainly used by fishing vessels. In 1980, a new fishing port facility, built with financial support from the Bank (Loan 1114-PAN, US$24.0 million, April 1975), was opened at Vacamonte, south of Panama City. Cristobal and Balboa operate as ports for vessels in-transit through the Canal, but also as ports of entry for Panama. More than 13,000 ocean-going and about 4,000 small vessels per year have passed through the Canal in the past ten years, or between 35 and 40 vessels per day. Because of this central location on the world's main ocean routes, Panamanian ports receive a larger number of calls by ships than other ports in the world, but calls are sometimes made for small amounts of cargo to be loaded or unloaded. Panamanian oil port terminals move a considerable amount of oil because the two major facilities, Charco Azul near Armuelles and Bahia de Parita near Aguadulce, are mainly used for transshipment of Alaskan oil into smaller vessels, to allow passage through the Canal.

1.06 In 1979, Panamanian ports moved some 35.4 million metric tons of imports and exports, 2.1 million tons of general cargo and 32.1 million tons of oil; 53% of the general cargo was accounted for by the Colon and Panama area ports. Almirante and Armuelles, primarily banana ports, took a further 35%, and the remainder was shared by five smaller ports which are important only for coastal shipping (Table 1.3).

1.07 The shipping companies serving Panama are all foreign-owned. Panama is a flag-of-convenience country, and the ocean-going fleet registered in Panama is quite large (2,875 vessels in 1979). Most of this fleet does not operate in Panama. The Government's receipts from this registration equaled US$5.9 million in 1979.

1.08 Panama has approximately 2,900 km of coastline. While the initial development of the Chiriqui province and along the Azuero Peninsula was made possible by coastal shipping, the relative importance of this mode regressed after the advent of the Pan-American Highway. Cabotage traffic statistics, although not complete, indicate that traffic, after declining in 1977, increased from about 60,000 metric tons to almost 80,000 tons in 1979. The number of ships calling in the different ports has also increased. This is attributed to the advent of faster ships and the increased cost of road transport due to the increased cost of fuel.

1.09 At present, the number of ports in the country is adequate in the sense that there are no hinterlands which remain underdeveloped for lack of a port outlet. The main areas that require attention are the maintenance and normal replacement of structures and equipment at existing ports, especially at the ports of Balboa and Cristobal, and the rationalization of the port system serving coastal shipping, to reduce congestion at the cabotage docks in Panama and Colon. The Autoridad Portuaria Nacional (APN), the autonomous port authority, also needs strengthening in order to be able to modernize and administer effectively the Panamanian port system. APN is completing the preparation of a modernization program related to the above objectives and is seeking Bank support for its financing. -3-

(iii) Airports and Aviation

1.10 Air transport is under the administration of the Civil Aviation Authority (Direccion de Aeronautica Civil-DAC), which was created in 1969 and is responsible for all aspects of airport planning, operations, traffic control and regulation. The relative importance of domestic aviation has declined in recent years following the upgrading and paving of the road system. After the second World War, Panama had a total of over 200 landing strips, of which only 140 remained listed by DAC on December 31, 1979 and of which only eight handled a significant volume of commercial traffic.

1.11 Total air passenger traffic grew to almost 2 million in 1979. Tocumen, the only airport which handles regularly scheduled international traffic, now on the order of almost 1.3 million international passengers per year, including some 350,000 transit passengers, has a new terminal and runway, partly financed by the Bank (Loan 783-PAN, US$20 million, August 21, 1971). In spite of the decline in relative importance, domestic passenger traffic has grown steadily to a total level of over 660,000 yearly arrivals and departures.

(iv) Railways

1.12 There are three small railway companies in Panama with a total of about 400 km of rail: the Panama Canal Railway (PCR); the Chiriqui Land Company Railway (CLCR), which is completely integrated into the Standard Brands banana production system; and the Chiriqui National Railway (FNC), which is gradually being phased out and has only 30 km of track remaining. The most important of the three is PCR, the ownership of which recently reverted to Panama and is now under the management of APN, although there are plans to create a separate railway authority. In 1979, PCR carried about 600,000 passengers and about 200,000 tons of cargo on its 76-km line between Panama and Colon. Passenger traffic has been steadily decreasing while freight traffic has remained fairly constant. APN has recently signed a contract with a consortium of Japanese and local consultants for a study, financed from the recently approved Colon Urban Project (Loan 1878-PAN, US$35 million, August 7, 1980), to determine the economic role of this railway.

(v) Pipelines

1.13 The prospect of transporting petroleum products across the isthmus from the tanker transshipment terminal at Puerto Armuelles on the Pacific to a new terminal to be built near Bocas del Toro on the Atlantic has been considered for some time. Today, that traffic is carried mostly by smaller tankers through the Canal. The Government and Petroterminal de Panama (PTP), a joint venture in which the Government has a 25% interest (reportedly to be increased to 40%) have recently announced plans for the construction of a 130-km trans-isthmian pipeline near the border with Costa Rica at a cost of roughly US$250 million, with completion by the mid-1980s. This pipeline not only should decrease the congestion in the Panama canal, but also should reduce the cost of shipping Alaskan crude to the eastern seaboard of the United States. The pipeline will reportedly have a capacity of 700,000 barrels per day. This project, although nominally a transport project, would net affect dometic t-Ansport demand and would be financially self-supporting (para 1.16). - 4 -

C. Sectoral Coordination, Planning, Financing and Regulation

1.14 Overall coordination and planning for the sector is the responsibility of the Ministry of Planning and Economic Policy (MIPPE). There is no Ministry of Transport. While this system could work effectively and may have certain advantages in Panama, MIPPE has not, so far, carried out the coordinating role nor is it organized to do so. Modal agencies (MOP, APN and DAC) submit their investment plans to MIPPE for review and approval. MIPPE, however, does not have the staff or appropriate comparable data to screen these proposals effectively with relation to priorities and sectoral policies, which themselves need better definition. The Office of Sectoral Planning within MIPPE is being reorganized to enable it to coordinate sectoral planning and budgeting. This effort would be supported by the project (para 5.20).

1.15 Public investments in the transport sector, which accounted for 22% of the total public investment in 1970-1973, accounted for only 15% in 1974-1980. Road investments have consumed the major portion (62%) of transport investments in the past decade, even in those years in which heavy port investments were undertaken (1977-1979). Airports, mainly Tocumen (1975-1977), consumed 21% and ports 17%. Road investment's share of total public investment spending was about 9% between 1973 and 1980 after having averaged as much as 20% during the three previous years. Overall, the transport sector was surpassed only by Power and Telecommunications, and by Social Services in the Government's investment effort (Table 1.4).

1.16 The list of transport investment projects for the period 1981-1985, which is still under review, now includes projects for a total of some US$427 million, with roads under MOP's jurisdiction accounting for 77% (paras 3.08-3.09); ports under APN for 18%; and airports under DAC for 5.0%. This project-by- project list of roads with subtotals for the other subsectors is presented in Table 1.5 and summarized by subsector below. The list does not include the recently announced investment of US$250 million for a trans-isthmian oil pipeline (para 1.13). The Government will not have to contribute to the financing of this investment and will become a shareholder by foregoing taxes and royalty payments until its shares have been paid.

Transport Investment Budget, 1981, and Subtotals by Subsector of Possible Transport Investments, 1981-1985 (in millions of 1981 US dollars for the Budget and 1980 US dollars for the Plan)

Budget Plan 1981 1981 1982 1983 1984 1985 Total

MOP (Roads) 63.8 63.9 99.3 83.1 65.8 21.5 328.6 Initiated Projects 61.0 63.9 82.3 56.1 35.3 2.1 239.7 New Projects 2.8 - 12.0 27.0 30.5 19.4 88.9 APN (Ports) 16.6 12.9 12.7 18.5 23.9 10.7 78.7 DAC (Airports) - 1.8 6.4 4.3 5.6 1.9 20.0

Grand Total 80.4 78.6 113.4 105.9 95.3 34.1 427.3

Source: Table 1.5 - 5 -

1.17 User charges in the transport sector, during the period 1970-1980, have fallen short of covering total expenditures. While the port subsector as a whole and most of the individual ports have been financially self-sufficient, net receipts at Tocumen airport have become insufficient to cover the deficits at the country's other smaller airports. In the road subsector, total expenditures for investment and maintenance have regularly been higher than road user charges, but rarely have these expenditures been substantially out of line (para 3.11), and, with some relatively modest increases in road and airport-related user taxes, financial self-sufficiency in these subsectors and, hence, in the whole sector, could be achieved.

1.18 Regulatory controls for the country's port system and aviation industry are administered by the two Government-owned autonomous institutions-- Autoridad Portuaria Nacional (APN) and DAC. Both institutions set their own tariffs, operating practices, safety and other standards. Coastal shipping is, for all practical purposes, unregulated and works quite well, with no persistent complaints from users. The road freight transport industry is also basically unregulated (para 2.05). The structure of urban passenger transport, which has been heavily regulated with unsatisfactory results, is being studied (para 2.08).

II. ROAD TRANSPORT

A. General

2.01 The development of road transport followed the improvement and extension of the highway network. The main traffic flows are found on the Panama-Colon road and on the Pan-American Highway. Petroleum products (about 1.2 million tons per year) constitute the largest single commodity moved by highway, followed by construction materials and cement. Among the freight carriers, the international traffic between Central America and Panamanian ports using semitrailers and containers represents the most modern and sophisticated segment of the industry. This traffic is operated mostly by foreign transport companies. Beer and soft drinks also account for important flows, usually carried by single-vehicle operators. Finally, there is the large flow of agricultural products (grain, cereals, fruits and sugar) transported mostly by single vehicle operators or farm-owned vehicles. For passengers, two distinct bus services are offered: long distance and inter- rational services by well established companies and local services by owner- operators.

B. Characteristics and Growth of Road Traffic

2.02 Traffic counts have been carried out by MOP in a systematic way since 1966. In spite of the many changes in the locations of counting stations and in the criteria for vehicle classifications made over the years, the total number of survey stations and the general usefulness of the counts on primary roads, especially paved, have consistently improved. - 6 -

Traffic data on secondary, gravel and earth roads still need improvement since counts on these roads have not been systematic. The latest MOP surveys indicate that the Annual Average Daily Traffic (AADT) ranges from more than 21,900 on paved roads near Panama toward Colon to about 100 on secondary roads at the lower end of the scale (Table 2.1). On the Pan-American Highway, traffic varies between 313 vehicles per day (vpd) near Chepo (east of Panama City) and 9,939 vpd near Chorrera (west of Panama City). This relatively high traffic level indicates the degree of development of road transport in Panama.

2.03 Traffic composition, by vehicle type, is fairly uniform on the several types of roads, with light vehicles accounting for about 54% of the traffic, trucks 33% (about 20% heavy trucks) and buses about 13%. Analysis of traffic count data, over a number of years, at specific census stations on paved roads, indicates a typical growth rate of about 4% p.a. On gravel and earth roads, information is scant and unreliable, but, based on similar analysis of available data and general indicators, traffic appears to have been growing at an average of about 5% p.a. General indicators, such as annual growth of vehicle fuel consumption and vehicle registration, show rates that are consistent with the estimated traffic growth rates, in particular for the last six-year period (Tables 2.2 and 2.3).

2.04 The total vehicle fleet grew at about 8.7% per annum between 1970 and 1979: passenger cars and trucks grew at about 7.9% and 9.1% respectively and are concentrated in Panama Province, which, having only about 17% of the highway network, accounts for 50% of all trucks and 75% of all buses. The major part of the heavy vehicle fleet (85% of trucks and 93% of buses) is used to provide public transport services, while the rest is owned by commercial and industrial enterprises or farmers. In general, average vehicle utiliza- tion rates, measured in terms of annual kilometers, are quite low for buses (28,000 km) and for light, medium and heavy size trucks (22,000, 25,000 and 36,000 km respectively), which results in high operating costs. Estimates of road vehicle operating costs for different vehicles on different road surfaces and conditions were made with the Bank's Highway Design and Main- tenance Model (HDM) and are given in Table 2.4.

C. Operation and Organization of the Industry

2.05 Both the truck and the bus industries are divided into single-vehicle owners on the one side and multi-vehicle companies on the other. In the trucking industry, single-vehicle owners account for about 70% of the fleet, but only about 30% of the capacity. The markets served by the single-vehicle owners and the trucking companies are clearly divided, the former handling agricultural products and serving rural communities and the latter dominating the more lucrative import-export markets and, especially, the distribution of manufactured products. The trucking companies use the larger and newer vehicles with capacity of over 20 tons, while the vast majority of the single- vehicle owners use much older and smaller vehicles with an average capacity of six tons. Truck tariffs, with the exception of those for petroleum products, are not regulated, which has worked to the advantage of both the users and the industry. - -7-7 -

2.06 In the trucking industry, there is a large discrepancy in managerial and financial resources between small domestic truckers and large international operations. National companies have limited access to international traffic, wlhich is controlled by foreign firms providing integrated intermodal services. Three of these firms provide container services and two more carry out Ro-Ro operations through Panamanian ports with destinations in Panama and in-transit to Central America.

2.07 Single--vehicleowners are associated in coooperatives and syndicates. The oldest cooperative was organized by the Government in 1972 to answer the need for improved passenger urban transport services. It operates in competi- tion with other cooperatives formed by operators. The syndicates, which include most urban passenger and freight transport operators, are grouped in the Central Panamena de Transportes. Rural passenger transport is mostly conducted by simultaneously transporting both passengers and small loads, often using old special-body vehicles called "chivas," which offer a low quality of service. They subsist mostly as a result of the limitations to modernization and renewal arising from: (a) the low economic capacity of the less developed rural areas they serve, substantially limiting the financial possibilities of the bus owner; and (b) the poor maintenance of the rural road system, particularly during the rainy season, which discourages the entry of more modern vehicles on these routes.

2.08 Bus tariffs are regulated by the Price Regulation Office (ORP), an autonomous Government agency. Two distinct types of passenger services are offered: long distance and urban services, the latter being offered mostly by owner-operators, running from one to at most four or five minibuses. Minibuses with an average seating capacity of 12 passengers comprise about 66% of the total bus fleet, while the larger buses, with an average seating capacity of 45 passengers, account for the remainder. The Directorate of Transit and Land Transport (DTLT) favors the small operators by granting only one license per individual on the presumption that these individuals would otherwise be unemployed. In addition, the Government exempts cooperative members from paying certain vehicle import and other taxes. These licensing practices, combined with the regulation of fares, have prevented potentially more efficient companies from entering the industry, which has had the effect of reducing competition, lowering the quality of service and maintaining high bus operating costs. The shortage of buses and the unsatisfactory operation of the system in the Metropolitan area have prompted the Government to under- take, with Japanese aid, a study of public transport problems in Panama City. The Bank has commented on the terms of reference for this study, and the Government intends to have the Bank participate in the discussion of the short-term and long-term recommendations.

D. Regulations of Weights and Dimensions

2.09 Vehicle weights and dimensions are regulated by Law 23 of January 1967, which complements Decrees 75 and 159. This law regulated weight and size for all cargo vehicles. However, in 1974, the Government, in the midst of the recession that was affecting the industry, and at the request of the trucking unions, suspended enforcement of Law 23. Overloading became - 8 - widespread. Enforcement of the existing law has been resumed since 1979. The law allows heavier axle loads (10 tons) on the Pan-American Highway than on the rest of the network (8.5 tons), and does not provide effective sanctions. MOP, aware of this problem, has prepared a new draft law which specifies sanctions and which would limit the axle load to 10 metric tons for single axles, 16.4 tons for double and 22.5 tons for triple axles on all public roads in the country.

2.10 MOP operates four stations which weigh trucks on a routine basis; however, two of the stations are not suitable for weighing individual axles. New stations are needed on the Colon-Panama City road and on the Pan-American Highway east of Panama City. The proposed project would include the moderniza- tion of selected weighing stations, the installation of new ones, provision of mobile weighing equipment and the organization of an awareness campaign to pre- pare the public, the police and the traffic judges for effective enforcement. At the time of negotiations, the Government confirmed that it would improve permanent and consistent enforcement of vehicle weight regulations.

III. THE ROAD SUBSECTOR

A. The Network

3.01 Panama's highway network totals some 8,400 km, of which about 2,714 km are paved, 3,168 km have gravel surfacing and 2,518 km are earth feeder roads. Road development has been concentrated, in the last decade, on paving and improving the more heavily trafficked roads. While the road system grew by 25% between 1969 and 1980, the paved and gravel road networks grew by almost 77% and 167% respectively. Earth roads, in turn, decreased from a 60% share of the total network to 30% at present. This trend is expected to continue. The execution of the projects contained in the proposed 1981-1985 road investment plan, which may take up to a decade to complete, would further increase the network total by almost 5% (to 8,680 km) while increasing paved and gravel road lengths by 28% (to 3,480 km) and 24% (to 3,930 km) respectively, leaving only 15% of the projected network unsurfaced (Table 3.1).

3.02 The distances between developed regions are relatively short in Panama. The longest one, between the Costa Rican border and Panama City, is only about 480 km. The route used for this journey is the Pan-American Highway. It crosses the country from west to east with a few unfinished sections in the Darien region to the east of the Canal. The Pan-American Highway is the main trunk road in the system, from which the rest of the network radiates. The longest "feeder" to this road, about 110 km, is located in the Azuero Peninsula, the widest part of the country. Most of the road network traverses flat and rolling terrain that is suitable for agriculture and cattle raising. The network located to the north of the Pan-American Highway runs through mountainous terrain where heavy rainfall is normal. On these roads, the resulting high construction and maintenance costs make improvement difficult to justify economically. - 9 -

3.03 Average road density is just above 100 km per 1,000 km2 or about 5 km per 1,000 inhabitants, which, although low compared with that of more densely populated neighboring Costa Rica, is well above the average for Latin America. Furthermore, given the large uninhabited areas in the country, these average density figures can be misleading. Coverage of the present network is basic- ally adequate, but increasing traffic volumes and insufficient maintenance over the past 15 years resulted in an increased need for paved roads, as well as in much of the network falling into poor condition.

P.. Administration

3.04 MOP is responsible for practically all highway work in the country. It is also responsible for the construction and maintenance of urban streets, urban drainage and maintenance of national buildings. MOP was formed, over a period of time, from a number of separate offices. In recent years, it has been in a state of gradual reorganization, culminating in 1978 with passage of a law to sanction the new organization. MOP, as shown in Chart 1, now consists of four headquarter sections (planning, internal audit, legal and public relations), two headquarter divisions (administration and engineering), nine provincial directorates, two metropolitan offices (one for streets and drain- age and one for public buildings) and one office for the Chiriqui National Railway. The Engineering Division comprises eight directorates: Design and Inspection (DDI); Special Projects (DPE); Pan-American Highway (CPA); Highway Maintenance (DMV); Equipment and Workshops (DET); Fixed Plant (DI); the National Geographic Institute (IGN); and Valorization (DV). Recently, the design, inspection and construction functions were consolidated at the national level. DDI will henceforth be responsible for all studies and design, CPA for all inspection and DPE for force account construction. The necessary legisla- tive changes to formalize this decision are being prepared.

3.05 MOP's total staff consists of some 6,500 employees, of whom about 100 are professionals and about 1,550 are technicians. MOP's senior engineer- ing personnel are generally experienced and capable. MOP's directorates have relative freedom to contract additional engineering and technical staff for specific projects provided that they are paid from the investment budget. Regular staff can be transferred readily between directorates or provinces, which has facilitated strengthening the maintenance organization. However, the Ministry has problems in retaining high-caliber staff in view of the more attractive conditions offered in the private sector.

3.06 The increased effectiveness expected from the reorganization has been slow in coming. Until very recently, each of the major technical direc- torates occupied separate quarters, scattered throughout Panama City, and DMV and DET have their headquarters in David, some 400 km to the west. The Panama-based directorates have now been regrouped in new quarters; however, the centralization of administrative control was not followed by corresponding revision of procedures and reassignment of staff. Improved management pro- cedures and staff allocation are being addressed under the ongoing Highway Maintenance Project (Loan 1565-PAN), which is providing expertise to help form an Organization and Management Office and to assist in reclassification of - 10 -

positions during budget preparation (which determines the approved establish- ment). The new consolidated organization will provide a framework to streamline MOP's activities and review its modus operandi, in particular the possibility of contracting out some of the work presently carried out by force account.

C. Planning

3.07 MOP's Department of Planning was created in 1971 to carry out overall planning for highway investments and to prepare feasibility studies, loan applications, and the Ministry's annual budget application. The Department was later put in charge of coordinating MOP investment programs within the broader national plans of MIPPE. The Department of Planning has not yet established itself in its principal function of determining economic invest- ment priorities. The National Transport Survey (NTS), published in 1975, still is the main framework for investment planning. The planning process is dominated by the'availability and timing of external financial assistance. The Department has been engaged principally in annual programing and budget administration. Its effectiveness has also been limited by lack of clear cut definition of its functions and lack of coordination with other directorates.

3.08 MOP's inventory of investment projects for 1981-1985 (Table 1.5) foresees investments of US$329 million in the road sector. More than half, US$240 million, is for projects which have already been initiated, of which 72% are accounted for by two projects which, at the given standards and costs, may have low economic priority. One is totally, and the other to a considerable extent, financed from abroad, and the Government does not plan to forego or redirect this financing. Two projects make up 71% of the US$90 mil- lion planned for new projects. One is the proposed road rehabilitation project, which is of high priority, and the other is the Chiriqui-Bocas del Toro road, whose economic feasibility study will be reviewed by the Bank. The continuation of the Pan-American Highway through the Darien province, which alone accounted for some US$60 million, has been eliminated. This project was initiated with US Government co-financing, but the US has withheld its participation since 1978 on environmental grounds. The project had limited economic justification at this stage and was therefore identified by the appraisal mission as the major candidate for postponement.

3.09 The Government, recognizing the need to cut down MOP's inventory of investment projects, approved an investment budget of US$64 million for 1981, i.e., 20% less than MOP's original request. Should further cutbacks be necessary, it would not be justified to cut down on maintenance and rehabili- tation to allow completion of new projects. An important objective of project preparation has been to ensure that MOP's highway program would achieve a proper balance between maintenance and rehabilitation on the one hand and construction on the other. Minimum estimated requirements for main- tenance and rehabilitation have been reviewed and agreed. The Government confirmed during negotiations that new road projects would not be undertaken without a prior assessment of their economic and technical feasibility, and that it would furnish to the Bank, upon request, the conclusions of its studies with respect to any new road involving expenditures of X3S$l mitlion or more. The Government would also exchange views with the Bank annually by September 1 on implementation, progress and the updating of its five-year road investment plan. These consultations would allow the Bank to raise the issue of deferring implementation of projects with low rates of return and low priority. - 11 -

D. Financing

3.10 All road expenditures are financed through the general Government budget mainly under MOP allocations, although occasionally feeder roads are financed under allocations for agriculture. Expenditures for the period 1970-1980 and the sources of financing are shown in Table 3.2. The level of total annual expenditures averaged US$30 million over this period. Highway maintenance and rehabilitation accounted for about 20%, a level that was inadequate. Over the same period, more than 50% of total highway expenditure was financed by external sources, mainly IDB and the US Government through USAID, the Federal Highway Administration and Eximbank (Table 3.2).

3.11 Estimated contributions from road user charges are shown in Table 3.3. On the average, road user revenues for the period 1974-1980 have been sufficient (US$28 million equivalent in 1974 rising to US$51 million equivalent in 1980) to cover about 80% of all road expenditures. Only in 1976 were expenditures substantially out of line with revenues, in part due to large investments (about US$20 million) on the Pan-American Highway, two-thirds of which were financed through a US Government grant. It is estimated that, in the future, proceeds from road user charges will continue to adequately cover administration, maintenance, and rehabilitation expenditures, but will fall short of covering all road expenditures by some 25%. The Government has agreed to follow this matter carefully and take action if necessary. For the period 1982-1985, road user charges as projected in Table 3.3 will still cover 74% of all projected road expenditures for the period.

3.12 The prices of locally consumed fuel, particularly gasoline, are high in comparison with levels in the US and most Latin American countries. As of February 16, 1980, the retail price for gasoline ranged between US$1.98 per gallon (95 octane) and US$1.86 (87 octane), and the price for diesel was US$1.15 per gallon. 1/ These prices include 50.5, 43.2 and 2 cents of taxes, respectively. CIF import prices for these fuels are 98 cents per gallon for gasoline (87 octane) and 95 cents for diesel. The margin between retail and import prices is amply sufficient to cover distribution and other costs in the case of gasoline; it is smaller (18 cents) in the case of diesel, suggesting the possibility of some amount of cross-subsidy between car users and truck and bus users. The Government was, in the past, giving a discount on fuels consumed for public transport, but this discount was eliminated in 1980 as a step toward the rationalization of fuel pricing. 2/

E. Engineering

3.13 MOP's DDI will henceforth be responsible for studies and design. Supervision of roadworks by contractors will be the responsibility of CPA, and DPE will be responsible for force account construction. DDI, previously,

1/ In early 1981, gasoline prices (87 octane) were further increased to US$2.04 and those of diesel to US$1.26 per gallon.

2/ Panama, Energy Sector Memorandum, Report No. 3109-PAN, August 21, 1980, p. 9. - 12 - was generally responsible for the technical preparation and supervision of all highway projects that did not have external financing. Road standards have, in the past, often been adopted in conjunction with lending agencies, e.g., current secondary and feeder road standards were developed for USAID and IDB-financed road projects (Table 3.4). MOP also follows American Association of State Highway Transportation Officials (AASHTO) geometric standards for main roads and bridges with some minor adjustments for Panamanian conditions and slightly modified American Asphalt Institute procedures for pavement designs.

3.14 MOP sometimes contracts consultants for engineering and supervision of road projects, usually for projects financed externally. More often MOP supplements its own staff, when necessary, by contracting individual engineers and technicians for a specific task with relation to a particular project. According to MOP's assessment, there are 15 local consulting firms which can undertake roadwork, four of which can conduct soils and materials studies.

F. Construction

3.15 Major highways such as the Pan-American Highway and roads in the former Canal Zone were built, and in some instances maintained, by foreign contractors. The rest of the network was built by MOP either by force account or through negotiated contracts. More recently, however, MOP policy changed to contracting most new highway construction on the basis of competitive bidding. Satisfactory bidding practices have been adopted, following examples set under IDB-financed projects and reflecting the experience gained with construction of the Pan-American Highway. The capability of the local con- tracting industry has expanded so that there are currently some 15 domestic contractors experienced in roadwork. Panama should, in the future, be able to rely upon domestic capacity for most of its requirements.

3.16 Minor highway improvements, particularly for small local roads and streets in provincial towns, are still carried out by the provincial directorates through force account. Until 1980, there were special budgets provided for these politically important road projects called "the Representative's prog- rams." The budgets were small and usually insufficient so that, directly or indirectly, some maintenance resources were diverted to these projects; even so, construction quality was often inadequate. In 1980, these programs were no longer officially budgeted. An important objective being pursued under the ongoing Maintenance Project is to introduce measures for programing, controlling and accounting for any road improvement works by the provinces, in order to ensure their separation from recurrent maintenance activities.

G. Maintenance

3.17 Maintenance of the whole road network is the responsibility of MOP's Maintenance Directorate (DMV), which, together with the Equipment Directorate (DET), is headquartered in David. DMV operates through nine provincial directorates, including one in charge of maintaining streets in Panama City. Xtaintemance iof s5ai 1xi. the ixmeT, Canal Zo'Lne is conducted in coopexaraor with the Canal Commission. Highway maintenance planning and supervision are handled from the headquarters in David, while the provincial directorates - 13 - carry out work with their own forces. Each of the provincial directorates is headed by an engineer, who has an assistant engineer (recently appointed) responsible solely for maintenance.

:3.18 Road maintenance organization and procedures in Panama are currently being improved under the ongoing Maintenance Project. Testing of the upgraded organization and procedures for preparation, execution and control of the annual maintenance program was started in the two pilot provinces of Panama and Los Santos during 1980. Evaluation of recorded resource utilization and costs, in the light of resulting road conditions, is beginning. The pilot provinces were supplied with some additional equipment and staff to implement the pilot programs; however, shortages of spare parts and fuel hampered progress considerably because equipment remained idle or inoperative for a cumulative period of several months.

3.19 The remaining provinces are being brought into the program over the coming years. The 1981 maintenance budget is, for the first time, based on systematic road maintenance programs for each province, reflecting a complete road inventory and standard schedules of operations depending on road types, traffic volumes, and local conditions. However, the approved 1981 maintenance budget showed a shortfall of funds for spare parts and fuel. The Government is ready to provide supplemental allocations at mid-year based on MOP's program (para 5.06). Under the ongoing maintenance program, all provinces should progress, by the end of 1981, to the status reached at present by the pilot provinces. By 1984, MOP should be able to provide adequate maintenance to all roads.

3.20 The provinces have hired, or can hire, adequate numbers of fairly well qualified road maintenance workers. They have, in addition, qualified superintendents with practical experience, a supervisory class not found in most developing countries. Major problems are severe shortages of qualified mechanics, a substantial proportion of underqualified equipment operators and road-gang chiefs, and virtually non-existing workshop administration. Stone aggregate production capacity is also insufficient to sustain a full maintenance demand in addition to other road work and some commercial demand. Both of these problems would be remedied under the project.

H. Workshops and Equipment Maintenance

3.21 The management and maintenance of MOP's equipment and vehicle fleet are the responsibility of DET. In 1980, the fleet consisted of about 1,800 units, of which about 37% were broken down and 42% were operating in substandard condition. The average age of this fleet is currently estimated to be close to ten years, and, in 1980, the fleet utilization was estimated to be about 45% of availability, due to a large extent to lack of funds to purchase fuel.

3.22 Under the ongoing project, 415 new units of equipment and vehicles for road maintenance have been ordered. Deliveries started in November 1980 and are expected to be completed by mid-1981. Spare parts for major repairs and overhaul of 41 newer units of the existing equipment fleet are also being ordered, with overhaul expected to start by July 1981. In all, it is envisaged that about 110 such units will be placed back in service during 1981. Purchases of both equipment and spare parts were seriously delayed during 1980 because - 14 - of cumbersome Government procedures, ill suited to relatively large scale procurement. Specific measures to improve procurement have already been imple- mented by MOP and further measures are being prepared and would be reviewed by and discussed with the Bank by December 1981.

3.23 Removal of accumulated scrap equipment from provincial workshops, to make space for repairs, has advanced well, and scrapping of units, too old to be economically repaired, continues. The Government confirmed, during negotiations, that a program of equipment replacement and renewal would be prepared, annually, by September 1 starting in 1982. Improvements needed in a number of provincial workshops would be undertaken in 1981 under the ongoing maintenance project.

3.24 The creation of DET (then called DINE) in 1978, as a single organ- ization for equipment and workshop management, did not concurrently provide the organization with the required qualified managerial and mechanical staff. Technical assistance in this field has been of limited effectiveness because of the lack of qualified counterparts, and the two experts at hand have been involved in procurement of new equipment, as well as assessment of equipment condition and preparation of spare parts requirements for the overhaul program.

3.25 MOP's management, recognizing the deficiencies in its mechanical branch, obtained approval, in the 1981 budget, for 162 additional mechanical, administrative and managerial positions, including seven engineers. However, it is a problem to find qualified staff at MOP's pay scale, with competition from other private and public agencies. Up to four years may be required to fully build up DET's capacity. The proposed project provides for technical assistance and training to bridge DET's management gap. This is particularly necessary because contracting out equipment maintenance is not practicable because of limited facilities in the private sector for equipment of this size and in these quantities.

I. Training

3.26 Between 1972 and 1977, the DMV (then DNM) conducted some short-term courses for equipment operators on an occasional basis (13 courses providing training for some 300 operators and mechanics). From 1978 until late 1980, no operator training took place, but about 20 mechanics were provided training, conducted by local equipment suppliers, on specific makes of equipment, in anticipation of the start of equipment overhaul. Currently, all suppliers of new equipment, under the ongoing project, are providing training and familiari- zation courses, to selected provincial staff, covering the use and maintenance of the new equipment. The technical assistance and provincial maintenance supervisors are engaged in evaluating and rating the on-the-job performance of highway and mechanical staff and outlining additional training needs and/or a scheme to use existing private maintenance facilities on a regular basis.

3.27 The ongoing project provides for expert assistance in evaluating MOP's total training requirement and planning the establishment of a permanent training ana quaXliEcation organization. 1MOP is currently negotiating with SENAFORP (an established training center supported by ILO) for the required services. SENAFORP has recently performed similar tasks for other organiza- tions in Panama. - 15 -

IV. PAST AND ONGOING BANK ASSISTANCE FOR ROADS

A. General

4.01 To date, the Bank's involvement in the road subsector consisted of three projects and the provision of technical assistance as executing agency under the UNDP-financed National Transport Survey (NTS). The First Highway Project (Loan 123-PAN, US$5.9 million, July 1955) was for highway rehabilitation, the Second Highway Project (Loan 264-PAN, US$7.2 million, August 1960), was for feeder roads and the third project was a Highway Maintenance Project (Loan 1565-PAN, US$12.0 million, June 30, 1978). In 1972 the Bank assisted Panama in the transport sector by helping to prepare terms of reference for the UNDP-financed NTS and acting as its executing agency. Annex l provides details on completed projects.

4.02 Although the Bank did not actually finance any highway projects between 1960 and June 30, 1978, it was well advanced in the appraisal of a US$6.4 million highway construction and maintenance project in 1966, at which time the loan application was withdrawn by the Government. In 1975, after successful completion of the NTS in 1974, a project to finance modernization of the Panama-Colon Highway and the purchase of highway maintenance equipment was prepared to a point at which appraisal could have taken place. This project was not carried out because of financing constraints in the Bank, resulting from the higher priority of another project in Panama. The project which finally re-established a working relationship between MOP and the Bank in highways was the 1978 Highway Maintenance Project. Its objectives were kept well focused and simple, and the Bank has collaborated closely with MOP in its preparation and execution. The proposed rehabilitation project would complement the maintenance program now under way.

B. Ongoing Highway Maintenance Project

4.03 The ongoing Highway Maintenance Project provides coordinated measures to build up MOP's capacity as necessary to carry out adequate annual programs of routine and periodic maintenance. The project was based on a four-year maintenance program (1979-1982) defining scope and frequency of main activi- ties, type of road and classes of traffic. The program also contained an agreed estimate of funding requirements for recurrent and non-recurrent items. The non-recurrent items are the object of Bank financing including:

- new equipment, spare parts to build up inventory and to carry out overhaul of existing salvageable units;

- workshop tools and equipment;

- technical assistance to advise and introduce improvement planning and control methods; to support the management of the equipment fleet and, finally, to assess MOP's training needs. - 16 -

The project also provides for identification and preparation of a rehabilita- tion and strengthening program which gives the basis of the proposed new project.

4.04 The start of the project was delayed about 18 months by the Govern- ment's objection to contracting a consulting firm to provide technical assis- tance services. Although it was initially intended to obtain such services through a firm, the new Government, in late 1978, elected instead to seek individual experts. The Bank agreed to this solution and subsequently assisted MOP in recruiting individual consultants (international and national). Six members of the planned ten-man team have been at work since the second half of 1979, mostly in two pilot provinces and assisting with procurement. Recently, MOP strengthened its own maintenance management, and the composi- tion of the team was modified accordingly. Several new experts, satisfactory to the Bank, have been contracted to fill vacancies resulting from contract expiration and to fill previously unstaffed positions. MOP's management recognizes the need for technical assistance, including the use of foreign experts and firms. Future requirements for technical assistance to achieve the objectives of the ongoing and of the new project have been carefully reviewed and agreed (Annex 2). The positions calling for Civil Engineers would be filled by qualified Panamanian Engineers acceptable to the Bank. Positions requiring Mechanical Engineers may have to be filled by staff provided by international consulting firms. Some of these requirements would be financed under ongoing Loan 1565-PAN and some would be met under the new project. During negotiations, the program for extending the duration of ongoing technical assistance services and the corresponding contractual arrangements for experts were reviewed and found satisfactory.

4.05 Procurement of equipment and spare parts has also been slow, delayed largely by cumbersome procurement procedures. Bids on 24 items of equipment were received in January 1980, with four items subsequently rebid in July 1980. Evaluation and subsequent cabinet approval took until August 1980. Deliveries started in November 1980 and are expected to be complete by mid-1981. The first order for spare parts for equipment overhaul was prepared in December 1980, but, because of change in MOP management, orders have not yet been placed.

4.06 Although the program has progressed more slowly than was scheduled, progress in instituting improved maintenance management and improved practices in the pilot provinces has been steady. The second phase of nationwide implementation began in January 1981 with the appointment of Maintenance Engineers to five of the remaining seven provinces. Equipment overhaul is also scheduled to be finished in early 1982. Ongoing technical assistance would continue, however, through 1982 in most specialties in order to assist in the process of modifying standards on the basis of actual feedback from the field and to monitor management of a complete national program. During negotiations, the plan of action for implementation of the measures mentioned above was confirmed. - 17 -

V. THE PROJECT

A. Objectives and General Description

5.01 The project would support a comprehensive maintenance policy covering the period 1981 to 1985 and would pursue and complement the efforts initiated under the ongoing Highway Maintenance Project (Loan 1565-PAN). Its main objectives are:

(a) to eliminate the backlog of regraveling, resealing and overlays;

(b) to upgrade MOP's maintenance organization and increase its efficiency; and

(c) to support improvement in transport planning.

5.02 The proposed project comprises three components:

(i) a Road Rehabilitation Program (1982-1985) consisting of resealing, overlay and reconstruction of about 400 km of paved roads and regraveling of about 50 km of secondary roads. The roads to be included annually under the project have been selected in agreement with the Bank, and any changes would have to be on the basis of agreed economic and engineering criteria and procedures. For these items, the project provides detailed engineering, civil works and related supervision.

(ii) a Road Maintenance Program (1981-1985) consisting of complementary measures to build'up MOP's maintenance capacity already started under the ongoing Maintenance Project, more specifically: (a) pur- chase of equipment and spare parts to increase production of crushed aggregates for base course repairs, asphaltic concrete, and surface treatment; (b) workshop improvements; (c) vehicle weight control equipment to expand and improve axle load control; and (d) technical assistance for equipment repair and fleet management, training of road and equipment maintenance personnel and organizational improve- ments in MOP.

(iii) Technical assistance for strengthening of transport planning within MIPPE.

The Road Rehabilitation and Road Maintenance components of this proposed project are part of MOP's Maintenance and Rehabilitation Program described below.

B.. MOP's Maintenance and Rehabilitation Program (1981-1985)

5.03 The Program would extend countrywide the maintenance policies introduced in 1980 in two pilot districts. The physical targets of the program and the related funding requirements have been updated, reflecting the experience gained so far. As shown in the table following, MOP would be able to meet 100 of the requirements for routine maintenance (as defined - 18 - under the First Maintenance Project) by 1984. By 1985, MOP would be able to meet its periodic maintenance requirements as well.

Percentage of Maintenance Requirements to be Met by MOP (R = routine, P = periodic)

Road Surface 1981 1982 1983 1984 1985 Type R P R P R P R P R P

Cement Concrete 90 90 100 95 100 100 100 100 100 100 Asphalt Concrete 80 55 90 90 95 100 100 100 100 100 Surface Treated 80 55 90 90 95 100 100 100 100 100 UnDaved/Improved 70 55 80 90 90 100 100 100 100 100 Unimproved 60 80 70 90 80 90 90 iOO 100 100

5.04 During 1981 and 1982, routine maintenance of the most heavily trafficked paved roads, which are now in poor condition, would require an above-normal percentage of maintenance resources and funds. As the main roads receive intensive repairs, resealing or rehabilitation and strengthening under the proposed project, their claim on maintenance resources would diminish, allowing DMV to extend maintenance to all roads by 1984, without substantial increase in current budgetary requirements. The Rehabilitation Program includes repairs, overlays and strengthening, over and above MOP's "normal" periodic maintenance activities, which would be conducted in parallel. DMV's "normal" periodic maintenance program would include mostly repair and resealing of paved roads and regraveling and reshaping of unpaved roads. The physical targets of MOP's Maintenance and Rehabilitation Program in terms of length of roads treated are indicated below (details are in Table 5.1).

------km ------Roads Restored 1981 1982 1983 1984 1985

Paved:

DMV Periodic Maintenance 170 278 309 309 309 Rehabilitation Program /1 - 115 182 93 18

Sub-Total Paved 170 393 491 402 327

Unpaved:

DMV Periodic Maintenance 230 378 420 420 420 Rehabilitation Program /1 - 28 14 - -

Sub-Total Unpaved 230 406 434 420 420

TOTAL 400 799 925 822 747

/1 Financed under this project. - 19 -

5.05 Annual recurrent expenditures required for road maintenance would average about US$13 million (1981 prices) broadly in line, in real terms, with levels agreed under the ongoing project. Additional capital expenditures of about US$2.5 milLion annually would be required for equipment renewal and workshop improvements. This figure would need to be reassessed, as the program progresses, to reflect actual equipment utilization and MOP's policy regarding equipment rebuilding as an alternative to renewal. The Rehabilita- tion Program would require annual expenditure averaging about US$6 to 7 mil- lion over about four years. Projected expenditures for the Maintenance and Rehabilitation Programs (1981-1985), including capital expenditures under the ongoing and the proposed projects, are summarized in Table 5.2. The Program as shown in Table 5.2 would average about US$22 million annually, i.e., between 20% and 30% of planned total road expenditures.

5.06 During negotiations, the Government confirmed that MOP would implement its Maintenance and Rehabilitation Program (1981-1985) and that MOP would exchange views annually with the Bank on progress made and on plans for completion. In addition to the usual commitment to fund local project expendi- tures, the Government would undertake:

(a) to provide adequate funds through its recurrent and capital budgets to implement MOP's Maintenance Program 1981-1985 (Tables 5.1 and 5.2). The Government has confirmed that the initial 1981 allocations for fuel, oil and lubricants and for materials would be supple- mented as necessary to allow the full implementation of the MOP Program. It would be a condition of effectiveness of the proposed loan that these supplementary appropriations have been made avail- able to MOP; and

(b) to give priority in planning highway capital expenditures to the implementation of MOP's Rehabilitation Program over other capital expenditures.

C. The Project's Road Rehabilitation Program

5.07 The project provides for placing new asphaltic concrete surfacing on about 125 km of the most heavily trafficked paved roads (ADTs ranging between 1,136 and 7,000 vehicles per day). Most of this, would be overlays, averaging about 2 inches in thickness, of existing asphaltic concrete surfaces. Ihe overlays would substantially improve the riding qualities of the surface, but, more important, would provide the added strength required to accommodate increases in traffic. Average cost would be about US$80,000 per km.

5.08 About 135 km of aged (20 to 30-year old) and badly deteriorated pavement would be scarified and would have additional base course added before receiving a new double surface treatment. Some of these roads were constructed with only 10 to 15 cm of base material, frequently with no sub-base, and are now obsolete. The cost of this work would range between US$35,000 and US$55,000 per km. - 20 -

5.09 The remaining 140 km of paved road rehabilitation would consist of patching and even reconstruction of short deteriorated sections of pavement followed by resealing (an overdue periodic maintenance activity) of the entire length (US$12,000 to US$18,000 per km). Most of these roads also are presently surface dressed and show no apparent signs of widespread structural distress. Testing and engineering studies would be undertaken to confirm satisfactory structural condition and to design remedies for repair of localized deteriora- tion.

5.10 Finally, the project includes regraveling and drainage improvements for about 50 km of the more heavily trafficked (ADT>100 vpd) unpaved roads (at a cost of US$8-10,000 per km) to complement DMV's periodic maintenance program.

5.11 The Rehabilitation Program would include about 28 sections with lengths ranging from 3 to 55 km, which have all been screened and evaluated. The Program would be carried out in three annual phases to be initiated in 1981, 1982 and 1983. The selection of roads, for the first phase, takes into consideration economic priorities, reasonable distribution of project expenditures among the country's regions, detailed engineering requirements and demands of the trucking industry. The second and third phases include those of the remaining roads requiring most repair or strengthening. This arrangement would allow more time to prepare detailed engineering. Table 5.3, page 1 provides a summary description of the eight roads, totaling 184 km, selected for implementation in 1981-1982. Detailed engineering for these roads was started in February 1981, and tendering would be undertaken in August 1981, with completion scheduled by mid 1983. The list of roads to be rehabilitated during the second and third phases (Table 5.3, pages 2 and 3) would be furnished for review and agreement by the Bank, not later than February 1, 1982 and February 1, 1983 respectively.

5.12 The selection and preparation of specific sections included in the second and third phases would take into account updated estimates of funding remaining available for the program after completion of the first phase and would be made according to the criteria and procedures indicated below, which are adequate and which were confirmed during negotiations:

(i) Eligibility: Roads meeting the following critera:

(a) that of being a DMV maintenance responsibility (i.e., included in DMV's inventory; annual maintenance program and related budget); and

(b) that of being located in the provinces covered by the maintenance program (this excludes Panama City and the former Canal Zone).

(ii) Confirmation of priority and construction standard. MOP would update the economic evaluation through the use of the HDM model. On the basis of priority ranking thus attained and a reasonable regional distribution, MOP would confirm or revise the list of roads to be rehabilitated during the year ahead:

(a) the construction standards selected would accommodate expected traffic, without further strengthening, for the following periods: - 21 -

- overlays and reconstructed pavement - at least 10 years;

- intensive repairs and resealing - until next scheduled periodic maintenance resealing;

(b) selected roads would have traffic levels of at least 170 vpd for paved roads and 100 vpd for gravel roads.

(iii) Preparation by MOP and/or consultants of engineering designs as appropriate for individual sections. Design plans would show and locate field test data (deflections and soils) and would locate special pavement repair, typical pavement sections, additional drainage works and material sources to a surveyed reference line.

(vi) Review by the Bank of economic feasibility, detailed engineering, bidding documents for roads or sets of roads and proposed arrange- ments for bidding.

D. Upgrading of Maintenance Capacity under the Project

(i) Equipment Support

5.13 The project would provide workshop tools and minor additions and improvements to selected workshops to facilitate maintenance of equipment. Two provinces currently have no workshop installations and need none because of the limited number of roads. Others are seriously deficient, while three workshops need minor improvements. The tentative list of tools to be procured and of the improvements to be made to the workshops would also be reviewed and confirmed by the technical assistance consultants retained under the project.

(ii) Fixed Plants for Production of Road Maintenance Materials

5.14 The few commercially operated quarries and plants are concentrated near metropolitan areas while MOP operates similar installations in the pro- vinces to provide for its own work and, when possible, for the small demand from the private sector. The Industrial Directorate (DI) of MOP was estab- lisned, at the time of the 1978 reorganization, to manage these operations. In 1980, through improved management, DI substantially increased its produc- tion at various plants and instituted cost accounting. An internal study and analysis of its operations has concluded that the capacity of equipment supplying quarry materials to its plants is insufficient.

5.15 The project would provide spare parts for major repair and over- haul of crushing plants and related equipment at about 13 quarry and gravel pit sites, three asphalt plants and four yards for culvert pipe manufacture. DI has identified a tentative list of equipment and parts. The list would be reviewed by the equipment consultants provided under the project as part of a general review of quarry operations. The project would also replace about 27 pieces of equipment for extraction and transport of materials. Table 5.4 presents the tentative list of equipment to be procured. This list was reviewed and confirmed during negotiations.

(iii) Enforcement of Axle Weight Control Regulations

5.16 Another small but significant component of the proposed project is the replacement of obsolete weighing scales and commissioning of new weighing stations (Map IBRD 15638) to control overloading more efficiently. - 22 -

MOP has recognized that enforcement of vehicle weight regulations is a necessary component of sound maintenance policy. To provide additional protection, about six new stations would be installed and five extra mobile scales would be procured for use on branch roads leading away from the Pan- American Highway, on which it would not be economic to install fixed stations.

(iv) Technical Assistance for Equipment Management and for Training

5.17 The need for technical assistance to DET and DI and for establish- ing a permanent training program within MOP has been noted. Specifically, the project would provide technical assistance by a specialized international firm. MOP's equipment fleet and workshop system has grown to be the largest in the country, but its availability and utilization are very low. DET has so far not been able to develop and retain the experienced mechanical engineers that it needs. Under the project, the consultants would supply three to four foreign experts for a total of about 68 man-months and about six experienced local mechanical/industrial engineers for a total of 144 man-months. The hiring of the experienced local engineers would be a stop-gap measure, the Government being unable to get those people with the existing salary scales. MOP would retain more junior engineers as counterparts to be trained in equipment management. Annex 2 provides summary job descriptions for the consultants.

5.18 In order to develop DET equipment managers, the project would also provide scholarships for post-graduate engineering students who would engage themselves for a tour of duty with MOP upon graduation. The proposed project also includes short-term training overseas and some local training for key MOP staff dealing with road maintenance and equipment management. MOP would present, for review by the Bank, a program and list of candidates for scholar- ships and short-term training by September 1, 1982. Assurances to this effect were obtained at negotiations.

5.19 Training of road foremen, drivers, heavy equipment operators and mechanics and training or familarization courses for support staff and superin- tendents would require the establishment of a training facility, with an officer to manage the program, and instructors to be selected and trained from among MOP's more experienced staff. The program, which is being developed under the ongoing Highway Maintenance Project, would utilize the existing training capability of SENAFORP, reinforced by contracted specialists in road and equipment maintenance training and also arrangements with equipment suppliers to provide specialized training. At negotiations, the Government provided the Bank with the terms of reference agreed with SENAFORP for MOP's training program, which were satisfactory, and agreed to establish, before June 30, 1982, a Staff Development Unit within MOP responsible for training programs as well as scholarships and short-term training and the provision of adequate staff and funds for its operation.

E. Technical Assistance for Transport Planning

5.20 The proposed program also includes about two man-years of technical assistance to MIPPE in transportation planning. Panama has no transporta- tion ministry and needs assistance to develop staff economists with suffi- cient background in the transportation sector. - 23 -

F. Cost Estimates, Financing and Disbursement

5.21 As shown in the table on the following page, the total project cost, including an estimated 9% in taxes and an appropriate contingency allowance estimated jointly with MOP, is approximately US$31.7 million. The proposed loan would finance the foreign exchange costs of the project, estimated at US$19.0 million or 60% of project cost. The Government would finance the local compo- nent of project costs (including taxes and transfers) and the recurrent and other capital costs required to carry out the agreed Maintenance Program (1981-1985). The Bank's contribution to MOP's Maintenance and Rehabilitation Programs under Loan 1565-PAN and the proposed loan would total 23% of overall program expenditures.

5.22 Cost estimates for the asphaltic overlays, sealing and resealing are based on MOP estimates, which were prepared using quantity estimates from detailed road condition inventories and current contract rates in Panama for similar work. Estimates of parts and components for the equipment overhaul program are based on condition inventories of existing equipment. The costs of replacement equipment and workshop tools are based on lists prepared by DET and DI together with manufacturers' quotations and recent purchases. The estimate for workshop improvements is based on preliminary plans prepared by consultants assisting DET. Technical assistance costs are estimated on the basis of recent contracts for similar services by local and foreign firms. This amounts to an average rate of about US$9,000 equivalent per man-month (including transportation) for foreign experts and US$2,500 per man-month for local engineers. Overseas training for MOP staff was estimated to cost US$7,000 per man-month including tuition and travel.

5.23 The 60% foreign exchange component of civil works has been estimated from unit price analyses with execution by local contractors, reflecting the dependence on imported equipment, fuel and bitumen. For spare parts, workshop tools and replacement equipment, the foreign exchange component has been estimated on the basis of CIF prices at the port of entry. The foreign exchange component for workshop improvements and other buildings which would be carried out by local contractors or by force account, is estimated at 30%. The foreign exchange component for technical assistance reflects the projected participation of foreign and national staff.

5.24 Disbursements would be made against normal documentation for (a) 100% of foreign expenditures for equipment, spare parts and tools, which are mostly imported and (b) 57% of total expenditures for all other items. This averages out to 100% of the foreign exchange component or 60% of total cost. Disburse- ments for civil works carried out by MOP's own forces would be made against Statements of Expenditures (SOE) certified by supervisory consultants and based on agreed unit prices related to ongoing contracts for similar works. The esti- mated disbursement schedule reflecting the implementation schedule as well as recent experience with similar projects is as follows (in US$ millions):

1982 1983 1984 1985

Annual 3.5 6.0 6.0 3.5 Cumulative 3.5 9.5 15.5 19.0 - 24 -

PANAMA - ROAD REHABILITATION PROJECT

Project Cost Estimates (In millions of US dollars at January 1981 prices) Bank Item Local Foreign Total Participation Amount % of T Amount % of T

I. Road Rehabilitation Program 8.55 10.90 19.45 11.09 57

- Detailed Engineering 0.55 0.29 (35) 0.84 0.48 - Civil Works 6.56 9.84 (60) 16.40 9.35 - Supervision and Support Items 1.44 0.77 (35) 2.21 1.26

II. Upgrading Road Maintenance Capacity 0.82 3.88 4.70 3.60

(a) Equipment 0.15 2.35 2.50 2.35 94 1/ - Quarry, Maintenance, Weighing Equipment and Tools 0.10 1.95 (95) 2.05 1.95 - Spare Parts for Quarry Equipment Overhaul 0.05 0.40 (89) 0.45 0.40

(b) Civil Works 0.25 0.50 (67) 0.75 0.43 57 - Workshop Improvements 0.15 0.40 (73) 0.55 0.31 - Weighing Stations 0.10 0.10 (50) 0.20 0.12

(c) Technical Assistance 0.42 1.03 1.45 0.82 57 - Advisory Services for DET, DI and Training 0.35 0.85 (71) 1.20 0.68 - Training and Scholarships 0.07 0.18 (72) 0.25 0.14

III. Technical Assistance for Transport Planning 0.03 0.12 (80) 0.15 0.09 57

IV. Base Cost (I+II+III) 9.40 14.90 24.30 14.78

V. Contingencies 3.30 4.10 7.40 4.22

(a) Physical Contingency (12% of I) 1.00 1.31 2.34 1.31 (b) Price Contingency (19% of IV and Va) 2/ 2.30 2.79 5.06 2.91

GRAND TOTAL 12.70 19.00 (60) 31.70 19.00 60

1/ 100% of foreign cost.

2/ The 19% price contingency was arrived at by applying the following annual rates of increase over 1981 base prices: 1981, 9%; 1982, 8.5%; and 1983 and 1984, 7.5%. These rates are suitable both for the local and for the foreign components of cost. - 25 -

G. Execution, Procurement and Monitoring

5.25 MOP would be responsible for project execution through its Engineering Division and the various directorates of that Division as indicated below:

- DDI for the design, engineering and preparation of contract documents;

- CPA for construction supervision;

- nine provincial Directorates for execution of the maintenance program, including periodic maintenance, with technical guidance and assistance being furnished by DMV and DET.

The capacity of the various staff and line units to perform satisfactorily the roles assigned to them in execution of the project is considered to be adequate, with the use of local consultants to supplement the resources available in MOP for engineering, supervision and inspection of civil works.

5.26 As shown in the schedule presented in Table 5.5, the project would be implemented within the period 1981 to 1985. Project expenditures related to the maintenance program (equipment and spares procurement, training program and technical assistance) would mostly take place over the period 1982 through 1983. Execution of the first batch of rehabilitation and reconstruction subprojects would begin in late 1981 and would continue through 1983. The last batch would be initiated in late 1983 and would be completed in 1985. The project implementation schedule was reviewed and agreed during negotiations.

5.27 Procurement under the project would be in accordance with the Bank's "Guidelines for Procurement" (March 1977). Civil works would be procured in accordance with international competitive bidding procedures for all contract amounts over US$1,000,000, while smaller contracts would be bid with local competitive bidding procedures which are acceptable to the Bank. For bidding purposes, road sections in the same general area would be combined into lots of a size which would be attractive to prequalified contractors. Firms would be prequalified to tender for one or more lots according to their capacity. The lots would be of sufficient size to justify the mobilization of special equipment for asphalt paving. The procurement arrangements for rehabilitation works were confirmed during negotiations. Only award decisions for amounts over US$1,000,000 would have to be submitted to the Bank for its prior approval. Other award decisions would be reviewed ex post. If the Bank should determine, after consultation with the Government, that the award was inconsistent with the Guidelines, it would have a right to refrain from financing the resulting contract and to cancel from the loan an amount cor- responding to its scheduled participation therein. It is anticipated that previous award review would cover about 50% in number and 75% in value of construction contracts. Civil works contracts for workshops, weighing stations or minor rehabilitation works would be contracted out or, if contract- ing is not practicable, would be carried out by force account, with prior approval of the Bank. The value of such force account work would not exceed an aggregate of US$800,000.

5.28 The procurement program for equipment and parts, indicating lot size, estimated cost and proposed exceptions to ICB, would be subject to prior apprz-va22 by the Bazzk. A draft program was reviewed and agreed at negotat ions. Contracts with an estimated cost below US$50,000 and within an overall ceiling of US$500,000 would be advertised locally in accordance with local competitive - 26 - bidding procedures, which are satisfactory. Spare parts for specific makes of equipment would be procured directly from established dealers under the same regulations for individual orders of less than US$50,000 within an over- all ceiling of US$500,000. During negotiations, bidding documents and model contracts for procurement of equipment were reviewed and found satisfactory.

5.29 Technical assistance for DET would be provided by a consulting firm specialized in equipment management acceptable to the Bank. The consultants would be contracted by MOP on terms and conditions acceptable to the Bank and would mobilize and be ready to begin work by the end of 1981. Outline terms of reference for these services were reviewed and agreed at negotiations.

5.30 The progress of the project would be monitored against the agreed implementation schedule and financing requirements established at appraisal. In addition, the following indicators would be monitored to assess advances made toward the project objectives:

(a) availability and utilization of maintenance equipment;

(b) programing and execution of MOP's annual maintenance programs with scope and composition defined in accordance with the comprehensive system of maintenance management being implemented under the ongoing project;

(c) expenditures planned and incurred for the maintenance and rehabilitation program as compared to the agreed schedule;

(d) number of trainees participating in the Personnel Training Program;

(e) traffic volumes on project roads upon their rehabilitation; and

(f) road roughness before and after rehabilitation on a sample of project roads.

The purpose of the project indicators and the scope of related reporting requirements were discussed and agreed at negotiations.

H. Project Risks

5.31 The maintenance and rehabilitation components of the project address high priority requirements which are recognized as such by planning authorities outside the subsector as well as by MOP personnel throughout the organization. The economic justification of these components is well established even under unfavorable hypotheses concerning project cost and future traffic growth. The technical solutions adopted for rehabilitation works, as well as maintenance, are based on adequate engineering analyses and reflect the experience gained in Panama and other countries. These areas do not entail special risk.

5.32 The scope of MOP's programs for maintenance and rehabilitation was defined after careful evaluation of the capacity of MOP, local consultants and the local contracting industry. The local funding requirements of MOP's overall highway program (1981-1985) are in line with recent level of expendi- tures. The risk of more stringent than anticipated restrictions on public - 27 -

expenditures has to be recognized. Should such restrictions arise, the project has adequate flexibility to accommodate them since the timing and scope of the rehabilitation subprojects included in the second and third annual phases could be adjusted. Since individual subprojects are small and have a relatively short implementation period (about one year), the risk of lengthy interruptions of contracted subprojects due to lack of funding is also small. Delays in procurement of spare parts for equipment overhaul could adversely affect MOP's capacity to execute periodic maintenance. Special attention is being devoted to monitoring progress on this point by the ongoing technical assistance.

VI. ECONOMIC EVALUATION

A. Formulation of the Program

6.01 The need for this program became evident during the early months of implementation of the ongoing Highway Maintenance Project (Loan 1565-PAN). There is a considerable amount of backlog periodic maintenance, mainly on paved roads, but also on gravel roads, which can, with difficulty, be eliminated by the regular periodic maintenance forces. In addition, routine maintenance becomes very expensive and gives poor results if roads are not in adequate maintainable condition. From observations during field inspections made during regular supervision of the ongoing project, it was determined that road conditions regarding roughness of the surface could be fairly accurately rated by MOP with the assistance of consultants hired under the ongoing project, without doing actual roughness measurements. A system was set up to make an inventory, kilometer by kilometer, of the road network with sections up to the nearest 50 or 100 meters categorized by surface type and condition.

6.02 The road inventory led to the preliminary identification of 78 road sections for a total length of about 1,000 km as candidates for rehabilitation. On the basis of traffic data, investment and maintenance costs, and estimates of vehicle operating costs (VOC) developed with HDM's VOC submodel, approximate and very conservative internal rates of return were calculated for a represen- tative sample of 42 of the 78 roads, and a rate of return of at least 14% was obtained for 34 of the 42 roads tested; 40% of the roads had rates of return of at least 40%. Three basic alternative rehabilitation procedures were tested for the paved roads: intensive patching and single surface dressing; adding base course and double surface dressing and bituminous concrete over- laying (about 5 cm).

6.03 Based on the preliminary calculations, 400 km of roads were elimi- nated as not being of high priority. The remaining 510 km of paved roads and 80 km of gravel roads were then grouped into 18 subgroups according to initial road condition and level of traffic. The calculated rate of return for each one of these subgroups exceeded 25%. Finally, between appraisal and negotia- tions, mainly for budgetary reasons, the road length remaining in the project was reduced to 407 km and 42 km of paved and gravel roads respectively.

6.04 Out of the whole program, eight roads with traffic levels of, and ranging between, 102 vpd for the only gravel road and 229 vpd to 1,735 vpd for the paved roads were then selected for rehabilitation during the first - 28 - year. These roads were selected based on rates of return, convenient imple- mentation packages, and a reasonable spread of the required works over the different provinces, and they need relatively less engineering preparation. Programs for the following years include roads requiring the most repair or strengthening. These would be reviewed annually and their rates of return tested in the HDM model, for which preparations are now under way in MOP. The remaining roads have been listed as reserve roads in Table 5.3, page 2 because MOP is considering reconstructing the Divisa to Las Tablas road as a separate project. In this case, 64 km of relatively costly work, now scheduled for rehabilitation in the third phase, would drop out and be replaced by other priority road sections.

B. Traffic

6.05 Adequate traffic volume and composition data were available in MOP for the highways included in the Road Rehabilitation Program being inves- tigated. Traffic in vehicles per day on the selected roads ranged from 100 to 6,995 and averaged over 1,000 vehicles per day. A summary presentation of the roads being selected, their condition and traffic follows:

ADT in Number of Vehicles 2000 and in km 100-199 200-399 400-599 600-799 800-999 1000-1999 above

Paved - 122.7 30.7 36.8 63.0 89.7 64.1 Gravel 41.7 ------

448.7 41.7 122.7 30.7 36.8 63.0 89.7 64.1

Truck and bus traffic is about 33 and 13% respectively of the total traffic.

6.06 Future traffic was forecast using regression analyses on the basis of expected population and production growth in 22 regions for which data were available and in which some of the roads were located. The forecast traffic growth levels varied between zero and 11.6% and averaged out to about 4.2%. No generated traffic was taken into account.

C. Benefits

6.07 The only benefits used for appraisal of this project are vehicle operating cost savings by highway users and a reduction in annual maintenance costs. Vehicle operating cost savings were determined by comparing the cost of operating on each road link without, and with, the alternative rehabilita- tion or improvement measures considered. Estimated per-km operating costs were developed with the Bank's HDM model for paved and gravel roads for up to six representative vehicles (passenger car, minibus, bus, light, medium and heavy truck) for three geographic regions of the country (western, central and metropolitan) and for three representative topographical conditions (flat: average rise and fall one meter per km and curvature 15 degrees per km; ondulating: average rise and fall 25 m per km and curvature 60 degrees per km; and mountainous: average rise and fall 50 m per km and curvature 150 degrees per km). Representative roughness for paved roads and roughness, with depth and looseness indicators for gravel roads, are as follows: - 29 -

Condition Paved Roads Unpaved Roads

Roughness Roughness Rut Depth Looseness (in mm/km) (in mm/km) (in mm)

1 2,000 4,000 - 2 2 3,000 6,500 15 2 3 4,000 9,000 30 2 4 5,000 11,500 45 2 5 6,000 14,000 60 2

A summary of representative basic vehicle operating costs is presented in Table 2.4.

6.08 Passenger time savings and accident savings were not taken into account in the economic analysis. In many cases of rehabilitation or improve- ment of paved and gravel roads, time savings may be a substantial portion of the total road user savings because of the relatively high running speed which the road improvement would permit. Nevertheless, since the time saved per trip may be small, and since it is difficult to demonstrate how much of the time saved would be put to productive use, these savings have not been taken into account. Annual maintenance costs with and without the project have been compared, and the cost difference of about 7% between the two maintenance costs on the average was taken as a benefit.

D. Economic Return and Sensitivity

6.09 The proposed road rehabilitation and improvement program is amply justified. It has an internal or an economic rate of return greater than 50% and rates of return on each one of the 28 roads range between 12 and over 150%. The economic return (ER) for the first year's program (1981-1982) is over 30% (Table 5.3). Tentative programs for subsequent years have rates of return above 50% but, because of their preliminary nature at this stage, they will be re-run with the use of the HDM model each year when programs are firmed up at budget preparation time. Since the majority of the subprojects involve rehabilitation of existing roadbeds (only in a few cases is a new base course added), rates of return below 25% will be reevaluated and reviewed with the Bank group before implementation. Sensitivity analyses applied to the principal evaluation parameters show that, even under adverse conditions of increased costs or decreased user savings or traffic growth, the ER will remain entirely acceptable.

E. Benefit Distribution

6.10 The greater part of the benefits resulting from savings in vehicle operating costs are expected to be transferred ultimately to the producers and consumers of the goods which are transported, because of the highly competitive nature of the road transport industry in Panama. The road transport industry is characterized by a large number of single-owner operators, many with small vehicles. Since freight tariffs are not regulated, the combination of greatly improved roads and intense competition should result in significant - 30 - reductions (at constant prices) of transport charges, part of which should be passed on to the producers and consumers. Reduced transport costs would have a direct impact on the economic activity of the areas of influence of the various project roads since most of the traffic is related to agricultural and manufacturing activities and commerce, while facilitating the expansion and improvement of public health, education and other social services to rural areas.

VII. AGREEMENTS REACHED AND RECOMMENDATION

7.01 During negotiations, agreement was reached with the Government on the following:

(a) vehicle weight regulations to be enforced on a permanent and consistent basis (para 2.10);

(b) uninitiated projects not to be undertaken without a prior assessment of their feasibility, and views to be exchanged with the Bank annually by September 1 on the implementation, progress and updating of its road investment plan (para 3.09);

(c) specific proposals to improve procurement to be reviewed by and discussed with the Bank by December 1981 (para 3.22);

(d) a program of equipment replacement and renewal to be prepared annually by September 1 starting in 1982 (para 3.23);

(e) contractual arrangements for the extension of experts now retained by MOP (para 4.04);

(f) a plan of action for the implementation of the ongoing highway maintenance project (para 4.06);

(g) MOP to provide adequate funds through its recurrent and capital budgets to implement MOP's Maintenance and Rehabilitation Program (1981-1985) and to give priority to implementation of MOP's Road Rehabilitation Program over other capital expenditures (para 5.06);

(h) furnishing, for review and agreement by the Bank, the list of roads to be rehabilitated under the second and third phases of the project by February 1, 1982 and February 1, 1983 respectively (para 5.11);

(i) criteria and procedures for selection and preparation of specific sections included in the second and third phased (para 5.12);

(j) tentative list of equipment (para 5.15 and Table 5.4);

(k) MOP to present, for review by the Bank, a program and list of candidates for scholarships and short-term training by September 1, 1982 (para 5.18); - 31 -

(1) the terms of reference agreed with SENAFORP for MOP's training program (para 5.19);

(m) establishment, before June 30, 1982, of a Staff Development Unit within MOP responsible for training programs as well as scholarships and short-term training and provision of adequate staff and funds for its operation (para 5.19);

(n) project implementation schedule (para 5.26 and Table 5.5);

(o) procurement arrangements for rehabilitation works (para 5.27);

(p) outline terms of reference for technical assistance (para 5.29); and

(q) project indicators and scope of related reporting require- ments (para 5.30).

7.02 The approval of supplemental allocations for spare parts and fuel at mid-year based on MOP's program would be a condition of effectiveness for the proposed loan (para 5.06).

7.03 Subject to the above, the project provides a suitable basis for a Bank loan of US$19 million. The terms would be 17 years, including a four-year grace period.

May 21, 1981 - 32 - TABLE 1.1 PANAMA

ROAD REHABILITATION PROJECT

Domestic and International Freight Traffic by Mode in Selected Years, 1967 - 1980 (in millions of ton/kilometers and in thousands of tons)

Domestic (Million Tons-Km) Year Highways Railwaysl/Aviation Water Total

1967 466 0.2 0.7 55 522 1970 590 0.3 0.9 55 646 1973 775 0.4 0.9 54 830 1976 805 0.2 0.7 50 856 1977 850 0.2 0.7 44 895 1978 903 0.2 0.6 38 942 1979 959 - 0.5 32 992 1980 1,015 - 0.5 30 1,046 Annual Average Growth (%) 1967-1980 6.2 - - - 5.5 1970-1980 5.6 - - - 5.0

International (Thousand Tons)2/ Highways Airports-/ Ports9/ Total

1967 10 20 962 992 1970 15 27 1,257 1,299 1973 39 35 1,297 1,371 1976 56 40 1,476 1,572 1977 69 40 1,552 1,661 1978 83 43 1,628 1,754 1979 101 50 1,707 1,858 1980 123 54 2,015 2,192 Annual Average Growth (%) 1967-1980 22.0 3.0 5.8 6.3 1970-1980 24.0 7.2 5.0 5.5 1/ Excludes Chiriqui Land Company railway traffic 2/ Total Imports and Exports 3/ Includes cargo in-transit 4/ Excluding petroleum products (4.2 million tons/year average)

Source: MOP, APN and DAC

April 1981 - 33 - TABLE 1.2 PANAMA

ROAD REHABILITATION PROJECT

Passenger Traffic by Mode in Selected Years, 1967 - 1980

Domestic (Million Pass-Km) Year Highways Railways Aviation Water Total

1967 2,424 4.8 29 1.7 2,457 1970 2,956 7.6 33 1.7 2,998 1973 3,572 6.0 37 1.7 3,617 1976 4,284 4.4 50 2.0 4,340 1977 4,567 8.0 53 2.0 4,630 1978 4,868 6.7 57 2.1 4,934 1979 5,189 7.0 60 2.1 5,251 1980 5,531 7.2 64 2.1 5,604 Annual Average Growth (%) 1967-1980 6.6 3.1 6.4 1.6 6.6 1970-1980 6.5 - 6.9 2.3 6.5

International (Thousand Pass) Year Highways Airportsl/ Ports Total

1967 30 289 15 434 1970 42 479 15 536 1973 95 641 9 745 1976 186 723 5 914 1977 228 770 5 1,003 1978 279 848 4 1,131 1979 342 929 4 1,275 1980 419 1,022 3 1,444 Annual Average Growth (%) 1967-1980 21.0 10.2 - 9.7 1970-1980 25.0 7.9 10.5

1/ Excluding passengers in-transit

Source: MOP, APN and DAC

April 1981 - 34 -

TABLE 1.3 PANAMA

ROAD REHABILITATION PROJECT

International Port Traffic1 / in Selected Years, 1970-1980 (in thousands of metric tons and in number of ships)

1970 1972 1974 1976 1978 1979 1980 Total Total Total Total No.of Total No.of Total No.of Total No.of Cargo Cargo Cargo, Cargo Ships Cargo Ships Cargo Ships Cargo Ships

General CL_go 1,279 1.383 1,309 2,097 7,638 1,964 7 617 2,053 7.802 2 054 7.672

Colon Arei: 314 402 451 688 4,022 641 4,698 732 4,867 666 Cristobal 257 286 307 509 n.a. 494 3,630 482 3,779 434 2,643 Bahia Las Minas 36 88 108 134 170 112 168 210 170 182 218 Muelle #3 20 25 32 40 687 35 749 40 838 43 817

Folks River 1 3 4 5 325 - - - 4 - 1 Bahia de Colon n.a. n.a. n.a. n.a. n.a. n.a. 151 n.a. 76 n.a. 155

Panama Area: 114 125 191 381 2,945 296 2,463 363 2,535 473 3,163

Balboa 103 112 171 342 n.a. 293 2,374 352 2,167 420 2,034

Muelle FLscal 11 13 20 39 1,225 3 89 11 368 11 257

Vacain,nt2 ------n.a. 100

Almirante 364 410 265 395 329 357 149 360 147 404 163

Armuelles 412 354 276 369 202 462 179 361 142 278 118

Aguadulce 64 73 110 200 97 160 88 196 93 155 84

Other2/ 11 19 16 64 43 48 40 41 18 5E 27

Oil Cargo 4,490 4,594 3,190 2,82o 194 68,374 1,046 32,135 543 44,u51 807

Charco AzuLI - - - - - 39,945 509 19,466 258 41,9335/ 669

Bahia de Oarita3/ - - - - - 26,1584/ 339 10,469 154 n.a. n.a.

Bahia Las Minas 4,490 4,594 3,190 2,820 194 2,271 198 2,200 131 2,11EŽ/ 138

Total 5,737 5,282 4,499 4,917 7,832 7 34,188 8.345 46.105 8,479

1/ Import3 and Exports. 2/ Pedregil, Bocas del Toro, La Palma, Samba Bonita in 1979. Pedregal only in previous years. 3/ Began operations in 1977, Charco Azul is close to Puerto Armuelles and Bahia de Parita close to Agladulce. 4/ August 'o August figure 1977-1978. 5/ Asumingi 1 mgtric ton = 8 barrels of fucl

Source: Panama-Canada Consorttumv,colo ,'o-ytCotat S t, atcn V919 and SP'.

April 1981 - 35 -

TABLE 1. 4

PANAMA

ROAD REHABILITATION PROJECT

Public Investment Expenditures in the Transport Sector. 1970-1980 (in millions of Current US Dollars)

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980

Transport Sector

Roadsl/ 14.2 10.4 17.6 11.8 18.3 28.5 35.9 31.6 44.0 39.1 53.6

Railways ------

Airports 0.6 1.4 2.5 2.1 9.0 16.5 25.0 17.4 6.3 4.8 0.5

Ports 0.1 - 0.2 - - 2.3 3.4 13.8 21.6 25.6 5.1

Sub-Total 14.9 11.8 20.3 13.9 27.3 47.3 64.3 62.8 71.9 69.5 59.2

Telecommunications and Power 6.5 8.3 8.2 21.1 41.3 78.8 92.1 63.9 100.5 85.9 114.2

Other Sectors2/ 8.0 13.4 26.9 50.7 68.0 104.4 158.3 135.5 97.8 120.3 131.2

Social Services3/ 17.8 26.6 28.9 82.8 96.6 106.5 78.3 114.9 113.9 95.6 120.5

Public Adminis-4 / tration and Others 9.0 6.8 7.7 6.6 8.4 6.2 12.0 31.9 15.2 21.2 26.1

Grand Total 56.2 66.9 92.0 175.1 241.6 343t2 405.0 409.0 399.3 392.5 451.2

Transport as % of Total 27% 18% 22% 8% 11% 14% 16% 15% 18% 18% 13%

Roads as % of Total 25% 16% 19% 7% 8% 8% 9% 8% 11% 10% 12%

1/ Excludes urban streets under the Valorization Program through 1979. In 1980, this US$1.1 million item was transferred from the Ministry of Housing to the Ministry of Public Works and, therefore, is since then included under roads.

2/ Agriculture, Commerce, Industry, Mining and Tourism.

3/ Health, Education and Housing.

4/ Includes investments in municipal areas and urban streets through 1979.

Source: MOP, APN, DAC and Ministry of Planning and Economic Policy April 1981 - 36 -

TABLE 1.5 PANAMA

ROADREHABILITATION PROJECT

Transport Investment Budget, 1981 and List of Possible Transport Projects, 1981-1985L/ (in current millions of 1980 (Plan) and 1981 (Budget) US Dollars)!_

Budget Plan 1981 1981 1982 1983 1984 1985 Total I. Ministry of Public Works (MOP) 63.8 63.9 94.3 83.1 65.8 21.5 328.6

A. Initiated Projects 61.0 63.9 82.3 56.1 35.3 2.1 239.7

1. Road Access and Bridge over Panama Canal 26.0 26.0 25.0 25.0 24.0 - 100.0 2. Development Roads (IDB-IV) 1.0 1.0 35.0 26.0 9.5 - 71.5 3. Rural Access Roads (AID) 4.0 4.0 5.0 1.9 - - 11.7 4. Roads Maintenance (IBRD3/ 7.2 7.2 3.2 0.3 - - 10.7 5. Traffic Circulation Improve- ments (Panama City) 2.0 3.0 6.0 - - - 9.0 6. Development Roads (IDB-III) 6.0 6.0 1.7 - - - 7.7 7. Drainage Works 0.5 0.5 1.4 1.4 1.8 2.1 7.2 8. Rehabilitation Colon-Cativa 6.3 6.3 0.1 - - - 6.4 9. Panamerican Highway (Darien) Rio Escobal-Mamoni-Quebrada Aguacate-El Llano 1.4 1.4 1.5 1.5 - - 4.4 10. Widening San Miguelito- Alcaldediaz 1.5 1.5 2.6 - - - 4.1 11. Arraijan-Chorrera Highway (IDB) 2.9 2.9 - - - - 2.9 12. Valorization (widening Via Porras) 1.8 1.8 - - - - 1.8 Other 0.4 2.3 - - - - 2.3

B. New Projects 2.8 - 12.0 27.0 30.5 19.4 88.9

1. Road Rehabilitation (IBRD) - - 5.8 10.0 10.0 55.9 31.7 2. Chiriqui-Bocas del Toro (120 km) - - 0.5 10.0 10.5 10.0 31.0 3. Special Projects4/ - - 4.2 3.0 - - 7.2 4. Cativa-Sabanitas - - - - 3.5 3.5 7.0 5. Guabito-Changuinola (24 km) - - - 2.0 4.0 - 6.0 6. Reconst. Coronado-Rio Hato - - 1.5 2.0 2.5 - 6.0 7. Other 2.8 ------

II. Autoridad Portuaria Nacional (APN) 16.6 12.9 12.7 18.5 23.9 10.7 78.7

III. Direccion de Aeronautica Civil (DAC) _ 1.8 6.4 4.3 5.6 1.9. 20.0

Grand Total 80.4 78.6 113.4 105.9 95.3 34.1 427.3

1/ Draft prepared by Ministry of Planning and MOP. Figures include amounts for Administration and Supervision. 2/ Substantially (about 60%) based on current prices, but on some items estimates of price increases were not taken into account by the agencies and constant 1980 prices were used. 3/ Includes technical assistance-equipment and spare parts purchases. 4/ These projects include the Torrijos-Carter Road in Panama, the coastal road to Vacamonte and several urban roads. 5/ Balboas 41,600 only

Source: Ministry of Planning and Economic Policy

May 1981 - 37 - TABLE 2.1 PANAMA

ROAD REHABILITATION PROJECT

Road Traffic on Sample Links (1979)

Road VPD A B C D

Pan American Highway

Near Paso de Canoa 1,797 49 23 10 18 Near David 4,824 71 10 5 14 Near Chiriqui 1,345 50 13 5 32 Near San Lorenzo 1,162 56 12 2 30 Near San Felix 456 72 12 3 13 Near Tole 418 68 8 18 6 Near Santiago (West) 3,955 54 14 15 17 Near Santiago (East) 2,093 46 19 12 23 Near Nata 3,614 63 13 4 20 Near Penonome (East) 3,750 57 18 18 17 Near La Chorrera (West) 5,126 57 17 3 21 Near La Chorrera (East) 9,939 68 16 3 13 Near Chepo (West) 313 44 23 5 28 Near Chepo (East) 726 68 9 6 17 Panama-Colon Road -Near Panama (North) 21,919 73 11 2 14 Near Colon (South) 5,942 69 9 2 20 R. Sereno-La Concepcion (North of P.A. Highway near Costa Rica) Near Volcan 896 63 4 14 19 Near Cuesta de Piedra 1,551 77 3 9 11 La Esperanza-Pto. Armuelles 914 60 13 10 17 North of David, near Dolega 2,777 68 11 9 12 South of David, near Pto Pedregal 1,334 60 25 2 13 Guarumal-El Tigre de San Lorenzo 157 68 16 2 14 South of Santiago 1,123 63 20 4 13 Azuero Peninsula Near Ocu 563 46 20 8 26 Near Pese 380 76 7 5 12 Near Sabana Grande 1,021 62 10 13 15 Near Tonosi 226 55 15 14 16 Near Valle Rico 712 69 16 3 12 Near Las Tablas 2,804 76 5 8 11 Near Pocri 361 73 3 15 9 Near Chitre 5,240 70 9 9 12 Calobre-Jaquito 339 38 18 9 35 North of Penonome near Tambo 101 61 30 - 9 North of El Espino on Pan American Highway near Sta. Rita 473 b3 15 9 13 Off Panama-Colon Highway Near Sardinilla 173 46 18 22 13 Pto La Canitana near Cheno 394 32 24 is 6

1/ VPD-Vehicles per day A=% of private autoimobiles B=% of buses C=% of light trucks D=% of heavy trucks Source: MOP, Planning Department February 1981 - 38 - TABLE 2.2 PANAMA

ROAD REHABILITATIONPROJECT

Consumptionof Petroleum Products!/ (i.nmillions of US Gallons)

Grand Road Vehicles Year Total Gasoline Diesel Total Electricity Other

1968 n.a. 46.5 24.0 70.5 n.a. n.a. 1969 n.a. 55.1 34.0 89.1 n.a. n.a. 1970 n.a. 65.0 33.1 98.1 n.a. n.a. 1971 n.a. 72.5 44.2 116.7 n.a. n.a. 1972 259.1 75.7 51.1 126.8 91.9 40.4 1973 287.0 78.9 53.1 132.0 105.5 49.9 1974 303.5 76.0 64.4 140.4 106.2 56.9 1975 333.4 81.1 73.4 154.5 109.4 69.5 1976 331.8 85.0 76.7 161.7 117.9 52.2 1977 324.7 n.a. n.a. n.a. 110.5 n.a. 1978 307.6 89.3 79.5 168.8 83.7 55.1 19792/ 275.8 n.a. n.a. n.a. n.a. n.a. 1980 n.a. n.a. n.a. n.a. n.a. n.a.

Annual Rates of Growth in percent3/

1968-1978 n.a. 7.0 12.5 9.0 n.a. n.a.

1972-1978 3.0 3.0 7.5 5.0 - 5.5

1/ Includes gasoline, diesel, fuel oil, refinery gas, LPG, kerosene and non-energitics.

2/ Preliminaryfigure

3/ Rounded to the nearest whole or half number

Source: Ministerio de Planificacion y Politica Economica and IBRD, Report No. 3109-PAN

February 1981 - 39 - TABLE 2.3 PANAMA

ROAD REHABILITATIONPROJECT

Vehicle Imports and Vehicle Fleet 1960-1980

Vehicle Private Vehicles Official Total Passenger Years Imports Cars Trucks Buses Otherl/ Vehicles Fleet

1960 4,975 17,572 4,729 1,607 476 n.a. 24,384 1961 4,419 20,371 5,590 1,651 278 n.a. 27,890 1962 4,601 22,403 6,425 1,807 243 n.a. 30,878 1963 5,063 24,992 6,755 1,862 172 n.a. 33,781 1964 4,971 27,259 7,463 2,038 208 n.a. 36,968 1965 6,249 30,065 8,290 2,162 115 n.a. 40,632 1966 7,290 33,686 8,933 2,306 525 n.a. 45,450 1967 7,263 34,969 9,275 2,361 328 n.a. 46,933 1968 7,561 40,449 10,218 2,513 253 n.a. 53,433 1969 8,964 42,055 10,478 2,495 92 n.a. 55,120 1970 10 !C46 45,526 11,716 2,818 293 n.a. 60,353 1971 12,252 52,545 14,081 3,096 207 n.a. 69,929 1972 10,660 53,629 14,498 3,253 104 n.a. 71,484 1973 11,930 58,067 15,446 3,225 149 5,ooo 2 / 81,917 1974 11,308 62,569 14,158 4,196 83 5,365 86,371 1975 7,097 66,193 15,994 3,806 150 6,965 93,108 1976 6,921 67,859 17,305 3,452 164 7,010 95,790 1977 6,974 71,003 17,689 4,150 166 7,309 100,867 1978 8,224 75,429 20,883 3,769 159 7,233 107,473 1979 n.a. 90,176 25,703 4,571 134 7,100 127,684 1980 n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Average Growth Rate in %

19601979_/ 2.8 5.0 9.3 5.7 _ n.a. 9.1

1970--19793/ - 7.9 9.1 5.5 - n.a. 8.7

1974-1979-/ - 4.5 12.7 1.8 10.0 5.8 4.0

1/ Special vehicles 2/ Estimate 3/ 1978 whenever 1979 data are not available

Source: Direccion de Estadisticasy Censo de la ContraloriaGeneral and Guardia Nacional, DireccionNacional de Transito y TransporteTerrestre, Estadisqtica Vehicular. April 1981 - 40 - TABLE 2.4

PANAMA

ROAD REHABILITATION PROJECT

Economic Cost of Operating Road Vehicles on

Paved and Gravel Surfaces, 1/ September 1980 (in US$ cents/veh-km)

Surface Condition -/

Excellent - Good-/ Average -/ Bad / Very Bad -/

Passenger Cars Paved 13.12 13.62 14.63 15.60 16.53 Unpaved 14.51 16.87 19.63 21.87 24.07 Mini Bus Paved 38.49 38.75 39.08 39.37 39.64 Unpaved 35.29 36.56 37.87 39.83 40.56 Bus Paved 43.68 50.03 60.59 60.82 66.44 Unpaved 52.79 70.36 85.30 100.65 116.70 Light Truck Paved 18.74 22.12 25.40 85.70 31.65 Unpaved 26.27 33.89 42.39 51.06 59.99 Medium Truck Paved 36.80 39.12 41.30 43.46 40.99 Unpaved 42.11 48.66 56.19 63.25 70.14 Heavy Truck- Paved 81.63 86.73 101.62 111.53 121.39 Unpaved 102.72 129.87 156.87 183.42 211.09

1/ Average of Western, Central and Metropolitan regions. 2/ Average terrain (average of rise and fall of 10 m, 25 m and 50 meters per km and curvature of 15, 60 and 150 degrees per km). 3/ Refers to 2000 mm roughness for paved road and 4000 mm roughness, 0 mm rut depth and 2 mm looseness for gravel roads. 4/ Refers to 3000 mm roughness for paved roads and 6500 mm roughness, 15 mm rut depth and 2 mm looseness for gravel roads. 5/ Refers to 4000 mm roughness for paved roads and 9000 mm roughness, 30 mm rut depth and 2 mm looseness for gravel roads. 6/ Refers to 5000 mm roughness for paved roads and 11800 mm roughness, 45 mm rut depth and 2 mm looseness for gravel roads. 7) ReieTs to b600 mm roughness LoT paved toaas ana 14000 mm roughness, 60 mm rut depth and 2 mm looseness for gravel roads.

Source: Mission estimates based on data supplied by MOP and HDM relationship. April 1981 - 41 - TABLE 3.1

PANAMA

ROAD REHABILITATION PROJECT

Past and Projected Development of the Highway Network, 1969-1985 (in kilometers)

1981 2/ Surface Type 1969 1971 1973 1975 1977 1980 1985-

Cement Concrete 635 636 637 6373/ 526 535 785

Asphalt Concrete - - - - 168 249 315

Surface Treatment 900 1,273 1,599 1,672 1,814 1,930 2,380

Sub-total Paved 1,535 1,909 2,236 2,309 2,508 2,714 3,480

Gravel or Improved 1.186 1.043 1,844 2,086 2,615 3,168 3,930 Earth Unimproved or Earth 4,045 3,90 3,036 2,920 2,732 2,518 1,270

Grand Total 6X717 6,854 7,116 7,315 7,855 8,400 8,680

1/ Based on maintenance inventory made during 1980. 2/ Assumes completion of MOP's list of possible transpqrt projects for l981-1985 by 1985, it will, however. probablv take more time to complete (1Q90). 3/'MOP Planning Section statistics included as cement concrete, asphalt concrete overlays on cementconcrete roads. DMV's maintenance inventory lists these overlays as asphalt concrete.

Sources: MOP Planning Section (1965-1975) DMV Statistics 1977 and 1980 and mission estimates

April 1981 - 42 - TABLE 3.2 PANAMA

ROAD REHABILITATIONPROJECT

Financing of Road Investments1970 - 1980 (in millions of current ITSDollarn) Foreign Other Private Fxternal Year Government UNDP IBRD ID&4/ USAi2 USAID EXIMBANK Banksl' Sources Total

1970 17.4 - - 2.1 - 2.0 - 6.0 - 27.5

1971 17.5 - - 0.3 - 1.8 - 6.0 - 25.6

1972 16.3 - - 10.1 1.1 0.1 0.4 - 0.43/ 28.4

1973 15.8 0.4 - 2.9 2.3 - 1.3 - - 22.7

1974 21.2 0.1 - 3.9 5.2 - 2.6 0.3 - 33.3

1975 27.9 - - 4.0 8.9 - 7.5 - - 48.3

1976 24.5 - - 8.0 13.1 - 3.5 - - 49.1

1977 29.9 - - 3.8 5.4 - 0.3 - - 39.4

1978 12.2 ------12.2

1979 16.1 - - 1.4 - i.O5/ 1.4 - - 19.9

1980 18.4 - 2.2 0.1 - 3.55/ 0.1 - - 24.3

1981 (budget) 17.1 12.3 5.3 - 2.8 - - 26.0.6/ 63.9

1/ Several Banks (1970 and 1971) and Consolidatedand Cleveland (1974) 2/ Federal Highway Administration 3/ Allis Chalmer 4/ Projects plus Pre-investmentFund. 5/ Refers to fiscal years. 6/ Refers to financingby Venezuelaof a new bridge over the Panama Canal and the approacheson the Arraijan-PanamaCity road. Source: Deoartamentode Planificacion,MOP and ContraloriaGeneral de la Republica

March 1981 - 43 -

PANAMA TABLE 3.3 ROAD REHABILITATION PROJECT

Road Expenditures and Receipts, 1974-1985 Selected Years (in millions of current US dollars)l/

Actual Projection 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 A. Road Expenditures incl. bridges (a) Investments 18.3 28.5 35.9 31.6 44.0 39.1 53.6 62.8 92.3 83.6 E4.0 19.4

1. New Roads2/ 11.6 10.1 24.2 15.7 30.2 22.0 32.7 33.6 30.7 39.5 ,4.5 10.0 a) National 2.9 4.3 20.7 9.6 16.4 17.6 19.1 30.3 26.5 26.5 24.0 - b) Secondary 6.9 2.9 - 3.8 - - - 0.2 - 10.0 10.5 10.0 c) Feeder - 2.9 1.9 - 13.3 4.6 8.4 - - - - - d) Urban3/ 1.8 - 1.6 2.3 0.5 0.2 5.2 3.1 4.2 3.0 - -

2. Upgrading 2.4 9.0 8.6 11.4 13.3 7.0 3.8 11.6 51.2 29.9 13.5 - a) National - 2.0 4.2 0.6 10.4 - 3.8 5.3 10.4 - - - b) Secondary 1.7 4.0 - 6.8 2.4 - - 0.9 10.0 22.0 13.5 - c) Feeder 0.7 3.0 4.4. 4.0 0.5 7.0 - 5.4 30.8 7.9 - -

3. Rehabilitation4/ 1.1 2.0 0.8 1.1 0.5 4.6 5.1 10.0 10.4 14.2 1t.u 9.4 a) National 1.1 2.0 0.2 1.1 n.a. 3.3 2.8 9.5 4.6 2.3 1(.O 3.5 b) Secondary - - 0.2 - - 1.0 2.3 .4 5.8 11.9 t.0 5.9 c) Feeder - - 0.4 - n.a. 0.2 - - - -

4. Feasibility Studies 0.4 0.4 0.6 0.6 r.a. 0.6 - .4 - - _ -

5. Equipment purchases.S/ 0.3 4.8 - 0.5 n.a. 7.3 9.5 7.23 9

6. Interest payments 2.5 2.2 1.7 2.3 n.a. 2.2 2.5 3.0 n.a. n.a. 3.8 n-a-

(b) Maintenance (incl. some rehabilitation!6/ 6.2 9.3 13.2 10.0 11.6 13.3 7.0 11.6 12.7 13.4 1_37 14-n

Total 24.5 37.8 49.1 41.6 55.6 57.0 6o.6 74.4 105.0 97.0 7707 334

B. Road Receipts 1. User Taxes 28.2 29.2 34.4 37.4 43.0 49.0 51.5 51.3 51.7 54.1 55.6 57.1 a) Import duties on vehicles, tires and parts 7.3 6.5 6.5 7.3 9.7 12.9 13.5 11.8 12.2 12.7 13.2 13.7 b) Sales tax of petro products for motor vehicles 17.9 19.7 24.8 27.0 29.0 32.3 34.0 35.0 35.8 36.6 37.4 38.2 c) Vehicle registra- tion and license charges 7/ 3.0 3.0 3.1 3.1 3.3 3.8 4.0 4.5 4.7 4.8 5.0 5.2

2. Valorization Charges8/ 1.2 1.3 1.5 1.2 1.0 1.3 1.6 1.7 1.8 1.9 2.0 2.1

3. Tolls on Arraijan- Chorrera Road ------8 .9 1.2 1.5 19

Total 2Q.4 30.5 35.9 3R.6 44.0 50.3 53.1 53.0 55.4 57.2 59.1 61.1

B as % of A 120% 81% 71% 93% 79% 88% 88% 78% 53% 59% 76% 171%

1/ Based on currently proposed investment plan at 1980 prices. 2/ Includes upgrading in years no figure for upgrading is available. 3/ In 1980, under the valorization program, the responsibility for urban roads was transferred from the Ministry of Housing to the Ministry of Public Works. 4/ Includes Maintenance in years no figure for maintenance is available. 5/ Includes Technical Assistance operations and workshop improvements. 6/ If not available amount is included in items 1, 2 and 3. 7/ Includes Inspection tag (revisado), Pegistration tag (placa) and drivers license fees (licencias). 8/ Charges paid to the Government by owners of land who benefit from the increased land values resulting from road access or improvement.

Source: MOP Planning Department 'fay l')81 - 44 - TABLE 3.4

PANAMA

ROAD REHABILITATIONPROJECT

MOP Highway Design Standards

Primary Roadsi/ Secondary Roads Local Roads

Design Speed (km/h) 80 50 40

Minimum Radius (m) 130 30 30

Stopping Distance (m) 85 40 40

Maximum Gradient % 5 8 12

Width of Surfacing (m) 6.1 6.0 5.0

Width of ONe Shoulder (m) 1.5 0.6 _

Bridge Loading AASHTO HS15-44 AASHTO HS15-44 AASHTO HS15-44

1/ Basically for the Panamericanand Panama-Colonhighways.

Source:MOP

February 1981 TABLE 5.1

PANAMA

ROAD REHABILITATION PROJECT

MOP Five-Year Physical Road Maintenance and Rehabilitation Program, 1981-1985 (in kilometers)

1981 1982 1983 1984 1985

Network Road Length by Surface Type 1/

Cement Concrete Pavement 561 565 565 589 589 Asphalt Pavement 2,247 2,312 2,370 2,464 2,498 Unpaved/Improved 3,303 3,471 3,561 3,572 3,629 Unpaved/Unimproved 2,322 2,089 1,958 1,898 1,817

Road Length Constructed 223 237 148 129 91

Cement Concrete Pavement 26 4 - 24 - - Cumulative (26) (30) (30) (54) (54) Asphalt Pavement 62 65 58 94 34 - Cumulative (62) (127) (185) (279) (313) Unpaved/Improved 135 168 90 11 57 - Cumulative (135) (303) (393) (404) (461)

Road Length Restored by Periodic Maintenance or Rehabilitation 400 799 925 822 747

Asphalt 170 393 491 402 327 by DMV Periodic Maintenance Program 170 278 309 309 309 by RehabilitationProgram2/ - 115 182 93 18 - Cumulative (170) (563) (1,054) (1,456) (1,783)

Unpaved/Improved 230 406 434 420 420 by DMV Periodic Maintenance Program 230 378 420 420 420 by Rehabilitation Program2/ - 28 14 - - - Cumulative (230) (636) (1,070) (1,490) (1,910)

Cumulative Total Road Length with Pavement Constructed or Restored 623 1,659 2,732 32683 4,521

Cement Concrete - length 26 30 30 54 54 - as percent of total 5% 5% 5% 9% 9%

Asphalt - length 232 690 1,239 1,735 2,096 - as percent of total 10% 30% 52% 70% 84%

Unpaved/Improved - length 365 939 1,463 1,894 2,371 as percent of total 11% 27% 41% 53% 65%

1/ Estimate assuming 8-year period for execution of all projects in MOP's list of Table 1.5. 2/ Financed under this project. Source: MOP and mission estimates May 1981 - 46 -

TABLE 5.2

PANAMA

ROAD REHABILITATIONPROJECT

Projected Expenditures for Maintenance and RehabilitationProgram, 1981-1985

(in millions of US Dollars at January 1981 prices)

148 1982 1483 1984 1985 Recurrent budget 1/ 11.63 12.67 13.42 13.73 13.97 Personnel and administration2/ 7.40 7.49 7.84 7.99 8.09 Central administration 2.57 2.57 2.57 2.57 2.57 Provincial administration 0.60 0.60 0.60 0.60 0.60 Laborers 4.23 4.32 4.67 4.82 4.92 Materials and supplies 4.23 5.18 5.58 5.74 5.88 Fuel, oil and lubricants 1.94 3/ 2.33 2.58 2.60 2.66 Spare parts 1.39 1.66 1.80 1.86 1.90 Materials 0.90 3/ 1.19 1.26 1.28 1.32

Bank financed (0.96)4/ (-) (-) (-) (-) Government financed (10.67) (12.67) (13.42) (13.73) (13.97)

Capital budget 8.22 12.97 12.20 8.09 3.93 Ongoing project (Loan 1565-PAN) 7.45 3.74 2.86 2.33 2.38 Installation and tools 0.07 0.40 0.35 0.10 0.10 New equipment 5.88 1.86 2.02 2.08 2.13 Spare parts for overhaul program 0.99 0.45 -- -- Technical assistance 0.51 1.03 0.49 0.15 0.15

Bank financed (6.58) (3.23) (0.74) (-) (-) Government financed (0.87) (0.51) (2.12) (2.33) (2.38)

Proposed project 0.77 9.23 9.34 5.76 1.54 Road rehabilitation 0.70 6.80 7.05 5.70 1.54 Equipmentand spare parts 0.02 1.73 1.50 -- - Technical assistance 0.05 0.70 0.79 0.06 -

Bank financed (0.44) (5.77) (5.75) (3.28) 0.87 Government financed (0.33) (3.46) (3.59) (2.48) 0.67

TOTAL PROGRAM 19.85 25.64 25.62 21.82 17.90

Bank financed 7.98 9.00 6.49 3.28 0.87 Government financed 11.87 16.64 19.13 18.54 17.03 Source: MOP and mission estimates 1/ Excludes the metropolitan region,provincialtown streets and former canal-zone for which separate accounts will be kept. 2/ Includes 18% social security benefits which are paid from source outside MOP's budget. 3/ Including initial allocations and planned supplementaryappropriations as follows: Initial 1981 Budget Planned SupplementarYApproRr-ations Yuel, oil and lubricant 1.49 0.45 Materials 0.75 0.15 4/ Spare parts.

April 1981 - 47 - TABLE 5.3 Page 1 PANAwMA

ROAD REHABILITATION PROJECT

Roads to be Rehabilitated in First Phase of Project (Length in kilometer, IRR in percent)

Sur- Condi- Type 4/ Topo-5 / No. 1' Name of the Road face2! tion 3/ Rehab- graphy Length AAD 6/ IRRZ/

- 3.6 Gatun-Rio Indio GR 4 4 F 41.7 102 12

01- 4.11 Paso Canoa-Progreso SD 3 1 F 13.0 1334 35

02- 4.12 Progreso-Pto. Armuelles SD 3 1 F 30.0 914 35

06- 7.6 Central-Sabanagrande SD 3 1 F 4.9 1200 65

18- 7.8 Macaracas-Llano de Piedra SD/GR 5 2 0 7.6 324 21

19- 7.9a Llano de Piedra-Tonosi SD 5 2 M 12.4 229 20

08-8.6 Chorrera-8/-Pto.Caimito AC 4 2 F 11.8 1735 59

-- 8.16 CPA9/- Pto. Coquira AC/SD 4 2/3 F 8.0 700 13

09/23-9.1 Santiago-Sona AC 5 3 F 55.0 1136 28

184.4

1/ First number is number of H. D. M. analysis sheet. First digit of second number refers to the province (2=Cocle, 3=Colon, 4=Chiriqui,6=Herrera, 7-Los Santos, 8=Panama, 9=Veraguas), while subsequent digits are sequential identification numbers. 2/ SD=Surface dressing, AC=Asphalt concerte, CC=Cement concrete, GR-Gravel 3/ 3=Roughness 4000 mm per km, 4=Roughness 5000 mm per km, 5=Roughness 6000 mm per km. 4/ 1=Intensive patching and resealing of entire length, 2=new base course and SD 3= asphalt concrete overlay or replacement 4=regraveling. 5/ F=Flat terrain, average altitude 20 meters above sea level, average rise and fall 11 meters per kilometer, curvature 15 degrees per Kilometer, average road surface width 5 meters, OOndulating, average altitude 20 meters, average rise and fall 25 meters per km, average curvature 60 degrees per km, average road surface width 5 meters, M=Mountainous, average altitude 20 m, average rise and fall 50 m per km, average cur- vature 150 degrees per km and average road surface width 5 m. 6/ Average annual daily traffic 7/ Internal Rate of Return 8/ From the Autopista intersection 9/ Nearest intersection with the Panamerican Highway (Carretera Panamericana or CPA)

Source: MOP

May 1981 - 48 - TABLE 5.3 Page 2 PANAMA

ROAD REIHABILITATION PROJECT

Roads to be Rehabilitated in Second Phase of Project (Length in kilometer, IRR in percent)

Sur- Condi- Type Topo-j/ No. j/ Name of the Road facel' tion 3/ Rehabgraphy Lgth AADT'/ TRRIR

10-2.3 Penonome-Churuquita Grande SD 4 2 0 18.8 662 l8

11-2.13 Penonome-La Pintada SD 3 1 F 15.0 936 58

15-4.1 CPA-Alanje SD 5 2 F 10.0 667 37

16-4.2 CPA-Veladero SD 5 2 F 7.0 509 66

17-4.3 Veladero-Gualaca SD 4 2 F 12.0 578 26

'1-4.6 CPA-Remedios SD 4 1 F 5.0 294 '-

32-4.8 CPA-Las Lomas-Quiteno SD 4 1 F 6.7 581 152

33-4.13 San Lorenzo-Horconcitos SD 3 1 F 5.0 1162 -

36 -7.9b Llano de Piedra-Tonosi SD 5 2 M 34.5 229 20

21-8.4 CPA-Utive SD 5 1 F 9.2 398 150

39-8.5 CPA-Utive Inter.-San Miguel SD 4 1 0 14.0 299 60

22-8.7 CPA-Santa Rita SD 4 1 F 5.0 434 21

24-9.2 Santiago-San Francisco SD 4 2 F 18.0 972 18

40-9.4 Atalaya-Ponuga SD 5 1 0 23.0 203 - 183.2

Roads to be Rehabilitated in Third Phase of Project

25-2.2 CPA-Ola SD 4 1 F 17.0 336 16

03-6.1 Divisa-Chitre AC 3 3 F 36.2 5091 55

04-6.2 Chitre-Los Santos AC 3 3 F 2.6 6995 73

05-7.1 Los Santos-Guarare AC 3 3 F 19.3 3926 36

34-7.2 Guarare-Las Tablas AC 3 3 F 6.0 2585 133 p1.1

1/ See Footnotes on page 1 of this table

Source: MOP

May 1981 - 49 - TABLE 5.3 Page 3

PANAMA

ROAD REHABILITATION PROJECT

Reserve Roads for Possible Rehabilitation under Project* (Length in kilometer, IRR in percent)

1/ Sur- Condi- Type4 Topo-5 6 No. - Name of the Road face2./tion3/ Rehat graphy Length AADT./ IRR_

41- 2.1 CPA-Jaguito SD 4 1 F 3.3 604 40

42- 2.4 CPA-Salitrosa SD 4 1 F 2.5 217 -

27- 2.7 Nata-El Cortezo GR 5 4 F 10.0 108 94

28- 2.9 Pocri-Villarreal GR 4 4 F 16.6 159 192

29- 3.5 Bateria 35-Escobal GR 4 4 F 12.3 100 4C

43- 4.7 CPA-Boqueron SD 4 1 F 3.3 401 -

35- 7.4 Santo Domingo-Pocri SD 3 1 0 16.4 1096 36

- 7.10 Los Santos-La Colorada SD 4 1 F 17.5 461 -

44- 7.11 Central-La Espigadilla SD 4 1 F 4.7 415 -

38- 7.14 Canas-Tonosi SD 4 1 F 22.0 339 1'

45- 8.3 CPA-Pacora SD 4 1 F 2.0 730 -

- - Sabanagrande-Macaracas SD 3 2 F 26.2 562 -

- - Chorrera-Nuevo Emperador SD 4 2 0 15.8 868 -

In case Divisa-Las Tablas or other roads are dropped from project

1/ See footnotes on page 1 of this table

Source: MOP

May 1981 - 50 -

TABLE 5.4

PANAMA

ROAD REHABILITATIONPROJECT List of New Equipment and Spare Parts to be Procured

(in US Dollars at January 1981 prices)

(A) New Equipment and Spare Parts for Quarries and Borrow Pits

Number Estimated Cost ($) (a) New Equipment of Items Unit Total

Front End Loader-wheel (3 cy) 6 75,000 450,000 Frond End Loader-track(3 cy) 3 100,000 300,000 Shovel (2 1/2 cy) 1 250,000 250,000 Retroexcavator 2 130,000 260,000 Air compressor (750-800cfm) 1 45,000 45,000 Track drill 1 25,000 25,000 Pick-up (1 1/2 ton) 5 9,000 45,000 Water-pump (4 ins.) 2 3,500 7,000 Electric Generator (75 KVA) 1 12,000 12,000 Welding Plant (225 kv) 2 5,000 10,000 Tractor Dozers (180 hp) 3 120,000 360,000

Subtotal (a) 27 1,764,000

(b) Spare Parts for Quarry and Borrow Pits (10%) 176,400 Subtotal (A) 1,940,400

(B) Spare parts for overhaul and rehabilitationof existing quarry equipment 450,000

(C) Weighing Equipment-fixed and mobile 7 109,600

Total Equipment and Parts Cost (A+B+C) 2,500,000

Source: MOP and mission estimates

April 1981 PANAMA

ROAD REHABILITATION PROJECT

Implementation Schedule

Year 1981 1982 1983 1984 1985 Item & Quarter lst 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4th 1st 2nd 3rd 4th

Road Rehabilitation Works:

Detailed Engineering i 4x Xx4 Xx x Tendering (t) & Award (a) lm a X _ X t aa.a X Execution & Supervision - Phase 1 - Phase 2 - Phase 3

Upgrading Road Maint. Capacity: Equipment & Spare Parts

- Preparation Tender Documents x - Tendering (t) & Award (a) x - Delivery

Civil Works

- Detailed Engineering + 4 X - Tendering (t) & Award (a) .t x tL a4 X - Execution & Supervision

Technical Assistance (Consultant) Selection (s) & Execution (e)

- Assistance to DET & DI X __e4u - Training & Scholarships s lX 1- e I

Technical Assistance for Transport Planning

Consultant Selection (s) & - 4 -X- e - Execution (e)

X Signifies scheduled review by the Bank

Source: MOP and mission estimates

May 1981 - 52 - ANNEX 1

PANAMA

ROAD REHABILITATION PROJECT

Completed Bank-Financed Highway Projects

The Bank's First Highway Project included: (a) organization of the Highway Department of MOP; and (b) reconstruction of approximately 650 km of primary roads. The project provided five foreign experts to fill senior executive positions in the MOP directorate responsible for highways. This provision became a source of friction, and the experts were eventually replaced by local officials. In 1958, the Government elected to prepay the loan, and most of the works to be executed under the project were carried out later with the Government's own resources.

The Second Highway Project included: (a) engineering and construction of about 300 km of feeder roads serving agricultural areas of high potential: and (b) improvement and paving of 138 km of roads connecting some of the above feeder roads with the Pan-American Highway and the Divisa-Las Tablas road. As a result of cost overruns, two of the proposed feeder roads, totaling 78 km, were eliminated from the project. CAM's performance as executing agency was weak. The 138 km of roads requiring improvement and paving were not surveyed and designed in detail before execution of the work, and, as a result, they took nearly five years to complete.

The National Transport Survey (NTS), for which the Bank was executing agency, was supported by a UNDP grant of US$400,000. The Bank helped to prepare terms of reference and supervised the execution. The survey, carried out by consultants N.D. Lea (Canada), had the following main objectives: (a) the formulation of a detailed transport investment program for the period 1974-1979; (b) the formulation of a tentative transport investment program for 1980-1990; (c) recommendations for the improvement of the organization, manage- ment, operations and planning of each transport mode; and (d) recommendations for the improvement of Government transport policy and coordination. The survey was instrumental in improving transport sector organization and in helping the Government to focus attention on priority projects.

March 1981 - 53 - ANNEX 2 Page i

PANAMA

ROAD REHABILITATION PROJECT

Outline of Proposed Technical Assistance

A. Completion of Ongoing Technical Assistance (Loan 1565-PAN)

Agreed Estimated Period Consultant's Specialization Action From To

Project Coordinator Extend 12/81 10/81 Organization and Management Contract 2/81 10/81 Road Maintenance Systems Terminate 1/ 2/81 Road Maintenance (Field) Extend 4/81 5/82 Equipment Fleet Management Extend 2/81 10/81 2/ Workshop Procedures (Field) Extend 1/81 1/82 3/ Supply and Storage Systems Extend 1/81 8/81 Management Accounting Contract 2/81 10/81 4/ Training Program Preparation Contract 2/81 10/81 5/ Transport Economist (MOP) Continue 12/80 6/81

1/ Deputy Chief of DMV would continue system refinement. 2/ Until new consulting team (see below) arrives. 3/ To be integrated with new consulting team after completing equipment overhaul. 4/ MOP reviewing proposals of five locally established, international accounting firms. 5/ MOP receiving proposal from SENAFORP. - 54 - ANNEX 2 Page 2

B. Technical Assistance under Proposed Project

1. A consulting engineer, experienced in management of design and construction supervision of civil works projects, to act as project coordinator for the Ministry of Public Works (MOP) and for Certification of Statements of Expenditures for civil works carried out by force account.

2. Technical assistance to MOP by a consulting firm specialized in equipment management for a total of about 68 man-months of foreign experts (including four man-months of short-term specialists) and 144 man-months of local engineers.

(a) Equipment management specialist for 24 months (from 9/81 to 9/83) to do the following:

- Preventive maintenance control; - Equipment availability and utilization records; - Actual equipment operating and repair costs; - Plan equipment renewal (including criteria for scrapping); and - Equipment specifications and procurement.

(b) Workshop and spare parts management specialist for 20 months (from 10/81 to 6/83) to do the following:

- Field control of preventive maintenance (by workshops); - Inspect and do mechanical evaluation and on-the-job training; - Establish training curricula; - Establish maxi-minimum spare part stock levels; and - Implement field control on spare parts requisitioning, supply and accounting.

(c) Equipment and plant operations specialist for 20 months (from 10/81 to 6/83) to do the following:

- Assist DET and DMV in operator evaluation systems; - Provide assistance to DI on improving crusher and other plant operations; - Establish operator qualification criteria and systems; - Establish operator training curricula; and - Implement field control of preventive maintenance (by maintenance superintendents).

(d) Six local mechanical and industrial engineers with experience in equip- ment and spare parts management for 144 man-months to fill vacancies in DET organization until MOP develops suitably qualified staff.

3. Training specialists for MOP and/or SENAFORP 24 months (from 9/81 to 9/83) to:

- Commission a training center for MOP; - Instruct training staff; and - Develop an evaluation system. - 55 - ANNEX 2 Page 3

4. Transport planning assistance to Ministry of Planning and Economic Policy (MIPPE)by a transporteconomist to be recruited individuallyto assist MIPPE for about 24 months (from 3/82 to 2/84).

May 1981 - 56 -

ANNEX 3

PANAMA

ROAD REHABILITATION

Selected Documents and Data Available in the Project File

A. General Reports and Studies on the Sector or Subsector

1. Panama, National Transport Survey, N.D. Lea and Associates, 1974.

2. Panama, Transport Sector Brief, 1981.

3. Panama, Memoria Ministerio de Obras Publicas, 1978-1979.

4. Organizacion de los Estados Americanos, XIII Congreso Panamericano de Carreteras, Caracas, Dic. 1979, Carretera de Darien, Sector de Panama, Informe sobre el Progreso de la Construccion al 31 de octubre de 1979.

5. Panama, Informe Anual 1979, Autoridad Portuaria Nacional.

6. Panama, Autoridad Portuaria Nacional, Compendio Estadistico, Anos 1976-1978.

7. Panama, Guardia Nacional, Direccion Nacional de Transito y Transporte Terrestre, Estadistica vehicular 1980.

8. Panama, Direccion de Aeronautica Civil, Memoria, 1978-1979.

9. Panama, Direccion de Aeronautica Civil, Boletin Estadistico de Transporte Aereo, Anos 1977-1979.

B. Legislation

10. Especificaciones Generales sobre Soldadura, Pintura e Inspeccion de Obras, Gonzalo Cordoba, December 1976.

11. Anteproyecto de Ley Organica del Ministerio de Obras Publicas MOP Departamento de Asesoria Legal, March 1975.

12. Ley 23 del 30 de enero de 1967 por la cual se dictan medidas sobre dimensiones y peso de los vehiculos de carga en circulacion por las vias publicas.

13. Modificaciones a la Ley No. 23: Ley Numero de de 1979 por la cual se dictan medidas sobre Pesos y Dimensiones de los vehiculos de carga en circulacion por las vias publicas.

C. SXes 4esiworkit-, Papers Prepared by Bank Staff and MOP

14. Project Brief, Road Rehabilitation Project, November 10, 1980.

15. Panama, Ministerio de Obras Publicas, Direccion Nacional de Mantenimiento Vial Mapa de Aforo de Transito. 1979.

March 1981 PANAMA ROAD REHABILITATION PROJECT MOPOrganization

Min ster

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|Technical Committee } -| Audit

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Professional Committee - Public Relations

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Board of Director

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/ Programming, Evaluation and Control. V Responsible for street improvements which lead to higher property taxes.

World Bank - 22582 PANAMA ROAD REHABILITATION PROJECT ProposedDET Organization

Director

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Administration Technical

Spare Parts Workshops Personne Accounting Purchasing General Equipment Prentative Management Management andPayroll Services Management Maintenance

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Chiriqui Del Toro Veraguas Code Herrera

WVorldBank - 22583 'BRD -15638

PANAMA: C A R / r A NVA S A ROADREHABILITATION PROJECT 7

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