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World Bank Document C.3 RETURN TO RESTR IECT ED REPORTS DE FILE COPY Report No.TO-650a WITHIN ONE WEEK This report was prepared for use within the Bank and its affiliated organizations. Public Disclosure Authorized They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized APPRAISAL OF FIFTH HIGHWAY PROJECT COLOMBIA Public Disclosure Authorized July 8, 1968 Public Disclosure Authorized Projects Department Currency Equivalents Currency Unit = Peso (Ps.) US$1.00 = Ps. 16.30(June 1968) US$1 million Ps. 16.3 million Ps. 1 million = US$61,350 Fiscal Year: January 1 - December 1 Units of Weights and Measures: Metric Metric: British/U.S. Equivalents 1 m = 3.28 ft. 1 km2 0.62 mi. 1 km2 0.386 sq. mi. 1 m ton = 0.98 lg ton = 1.1 US short ton C OLOi 511. APPRAISAL OF FIFTH HIGHWAY PROJECT TABLE OF CONTENTS Page SUMMARY 1. INTRODUCTION 1 2. BACKGROUND h A. General 4 B. Transportation Sector h C. Transportation Coordination 7 3. THE HIGHWAY SECTOR 8 A. Highway Administration 8 B. Highway Planning and Financing 9 C. Highway Engineering 10 D. Highway Construction 11 E. Highway Maintenance 12 F. Characteristics and Growth of Traffic 12 4. THE PROJECT 14 A. General Description 14 B. Highways and Bridges to be Constructed or Reconstructed 14 C. Design and Consulting Services and Equipment 17 D. Cost Estimates and Financing 20 E. Execution 23 5. ECONOMIC JUSTIFICATION 25 A. General 25 B. The Project Roads and Bridge 25 6. CONCLUSIONS AND RECOMMENDATIONS 30 This report has been prepared by Messrs. North (Engineer) and Park (Economist), members of the Bank identification and appraisal missions of December 1967 and April 1968, respe4ctiveay. Table of Contents - continued A TiT o n c COnr:½'Jqcti 0? Con~ ci^.ctF, .t.'rdo d TABLES 1. Traffic to and from the principal ports 2. Highway lengths, all systems 3. National highway system 4. National highway system, design standards 5. Project design standards 6. Vehicle registration, 1958-1966 7. Motor fuel consumption, 1958-1967 8. Vehicle operating costs on average paved roads CHARTS 1. Existing Ministry of Works organization 2. Proposed Ministry of Works organization MAP Location of project COLOTMIA APPRAISAL OF THIE FIFTH HIGLH-V PROJECT SUII2AS rFY The Bank has been closely associa-ted with highway development in Colombia since 1951, and in 1967 the Government asked the Bank for a further loan to continue expanding and upgrading its national trunk highway system. The proposed project would include the construction or reconstruction, in- cluding paving, of about 510 km of highway, the construction of a major bridge, consulting services for construction supervision, for assisting the implementation of the reorganization of the Ministry of Public Works, and for preinvestment studies and detailed engineering of further priority highway projects. Some equipment would also be included. ii. The total cost of the project, including contingencies, is esti- mated at US$39.5 million equivalent. The Bank loan of US$17.2 million equivalent would finance the estimated foreign exchange cost of construc- tion (about 45 percent) and the actual foreign exchange cost of consultants and equipment. There would be retroactive financing of construction costs and of some consulting services both from May 1, 1968. The remaining funds would be provided by the Government through the lational Highway Fund. iii. The project would be the fifth highway project financed by the Bank in Colombia since 1951. Bank/IDA financing has totalled US$86.35 million equivalent. The Bank has also been active in the railway field in Colombia, having provided loans totalling US$76.3 million equivalent over the same period. A project for a further loan of US$18.3 million equiva- lent has recently been appraised. iv. Detailed engineering has been satisfactorily carried out or is now being completed by consultants who would assist the Government in pre- qualifying contractors, analysing bids and supervising construction. The cost estimates are considered accurate and adequate contin;encies have been included. v. The project is technically and economically sound. The economic rates of return for the different works range from 11 percent to 21 percent. vi. Six contracts have already been let following acceptable proce- dures. The remaining contracts would be let on the basis of international competitive bidding. Execution of the project would be the responsibility of the Ministry of Public Wlorks. vii. The project provides a suitable basis for a Bank loan of US$17.2 million equivalent. An appropriate term for the loan would be 24 years, including four years period of grace. COLOMBIA APPRAUISAL OF THE FIFTH HIGHWAY PROJECT 1. INTRODUCTION 1.01 The Government of Colombia has requested a loan of US$17.2 million equivalent to help finance a project costing about US$39.5 million equivalent including (a) the construction or reconstruction (with paving) of about 510 km of four national highways, (b) the construction of a major highway bridge, (c) consulting services for supervising (a) and (b) above, for preinvestment studies and detailed engineering of further priority roads, and for assisting the reorganization of the M'inistry of Public Works, and (d) the purchase of equipment needed for effective reorganiza- tion of the Ministry. 1.02 The Bank has been closely involved with the improvement of Colombia's transportation facilities since 1951, when it made a loan for the emergency rehabilitation of an important part of the national highway system. It has since made three other loans and IDA has made one credit for highways; in all US$86.35 million has been provided for this purpose, as follows: Loan/Credit Date Signed Amount Loan 43-CO 1951 $16.5 million Fully disbursed Loan 84-CO 1953 $14.35 million Fully disbursed Loan 144-CO 1956 $16.5 million Fully disbursed Loan 295-CO 1961 $19.5 million Fully disbursed Credit 5-CO 1961 $19.5 million Balance of about $1.4 million being applied to completion of feasibility studies, management study and transport investment survey. Total $86.35 million 1.03 The first loan was for the emergency rehabilitation of some 3,000 km of the most important trunk roads - basically to establish a continuous all-weather main road system where no modern highways worthy of the name had previously existed. The program was highly ambitious and the difficulties which were to be encountered in carrying it out (climatic, - 2 - geophysical, personnel and institutional) were seriously under-estimated. With rudimentary engineering and project preparation, construction costs increased drastically and work progressed very slowly. The second and third loans were made to enable the original program to be continued and amplified by the addition of other important roads; also the original construction standards were improved. 1.04 The fourth project (Loan 295-CO and Credit 5-co) was for the completion of certain parts of the original project (still unfinished after ten years), the construction of another 450 In of road and the upgrading of other roads (many of which had been constructed originally to relatively low standards under the earlier loans) to meet the require- ments of the rapidly increasing traffic volumes. This project also provided funds for purchasing a large fleet of maintenance equipment in recognition of the need to improve highway maintenance practices. In 1965, as a condition for extending the Closing Date of the loan and credit, the Government agreed to employ management consultants to reor- ganize the M.O.P. 1.05 In 1964 the Bank stationed in Colombia an engineer with long experience of Latin American highway problems to provide closer supervision of the Bank project. This arrangement has been of much value in identify- ing and correcting problems as they arise and the arrangement is still in force. 1.06 Financing of the construction and reconstruction program from Loan and Credit funds ceased in 1967 with about 80 percent of the program completed; Loan funds were by then exhausted and the Credit Closing Date was extended to December 31, 1968 to enable certain important studies to be carried out. The proposed loan would finance the completion of part of the construction work still remaining from the Fourth Highway Project while the Government is financing the rest entirely from its own resources. 1.07 During the period of its final extension from July 1967 to December 1968, Credit 5-CO is financing the completion of the following studies: (i) Completion of feasibility studies and detailed or preliminary engineering for three trunk roads.(Medellin-La Dorada, Bogota-Villavicencio and Pcpayan-Pasto) and the Barranquilla Bridge; (ii) The first phase of the management study of the Ministry of Public Works; and (iii) The first phase of the transportation investment survey. These are all expected to be completed before the Closing Date of the Credit. - 3 - 1.08 While the improvement in road coTmunications resulting from the Bank's lending has no doubt contributed to the encouraging economic development of the country and to closer integratiori of its traditionally independent regions, the physical execution of these projects has been difficult, due to inadequate provision of local funds, to slowness in adopting modern engineering techniques, and to reluctance to abandon archaic and time consuming procedures and modernize Government organiza- tions. These obstacles have been attacked and many of them removed, but many problems still remain to be overcome. The most pressing problem at present is an institutional one - the reorganization of the authority responsible for the national highway system - and is now being tackled by the Government Assistance to this end would be given by.the proposed loan.
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