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World Bank Document T.O.- l0b RESTRICTED RETURN TO REPORT<T mSx< WITHIN ONE WEEA l Public Disclosure Authorized This report is restricted to use within the Bank. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Public Disclosure Authorized APPRAISAL OF REVISED HIGHWAYPROJECT Public Disclosure Authorized in COLOMBIA September 2, 1953 Public Disclosure Authorized Technical Operations Department EXCHANGE RATE One U.S. dollar : Z. 5 Colouibiaa Peso* One Colombion Peso - U.S. $0.40 TABLE OF CONTENTS Page Sumnary and Conclusions I. Darpose and Scope of this Report 1 II. The Present Situaticn 1 III. Descriptionof the Revised ConstructionFro4ect 3 IV. Troposed 1KaintenancePro'ram 5 V. Suniraryvof the Total Fund Requirements 7 VI. Justificationof' the Project 8 VII. Reconrmendations 9 Appendices. APPRAISAL OF REVISED H?IGHT..AYI;ROJECT - COLOLIBIA Summary and Conclusions The Government of Colombia in 1951 began a three-year emergency construction project for rehabilitating about 3,061 kilometers of the countryts principal highways. On April 10, 1951, the Bank made a loan of 416.5 million to Colombia for this purpose. This was the first step in a larger highway program recommended by the Colombian Economic Development Committee. The urgent need for improved roads did not permit making surveys, plans, detailed estimates and construction schedules before beginning work. Experience has shown that both the time required for completing the project and necessary equipment were substantially underestimated. Therefore, additional equipment should be provided in order to complete the project to adequate standards, and to cut down the time required for completion. Addi- tional foreign exchange of about S7.L4 million would be needed for this purpose and for related costs. In June 1952 the Bank agreed to increase the percentage of paved roads in the project from 155 to 50%. The higher dollar requirement of .>860,000for this change was transferred from the contingency item in the List of Goods. Further experience has shown that it would be desirable that the percentage of roads to be paved should be further increased to about 82 g and that some new roads should be added to the project. This additional work will require about .3.57million in foreign exchange. These above changes would increase the original foreign exchange estimates of the project by 410.71 million (from 46.5 million to "27.21 million) v;ith a corresponding increase in local currency requirements of about 67 million pesos. It has been increasinglyevident that there must be a drastic reorganization of Colombiats highway maintenance facilities and practices. To implement this reorganization,it is proposed that any additional high- way loan include an amount to provide additional road maintenance equipment, shops, shop equipment and, for an initial period of at least tlTo years, trained and experiencedoutside engineers. The amount of foreign exchange required lor this purpose wrould be .,jl0.l million, of iwWhichthe Bank is asked to provide 2.1J1million in the proposed loan, The above foreign exchange estimates, with the addition of an amount for contingencies, would total 421.35 million, of wjhich '4.35 million is nowv requested by Colombia as a supplementary highasy loan. The project is sound and it is recommended that the Bank favorably consider an additional highvray loan to Colombia in the amount of "lh4.35 million. This loan would have a term of 10 years ';ith a grace period of two years on amortization payments. A?PLATSj1 OF REVrSED HIGHWAY PROJECT - COLC131A I. Purpose and Scope of this Report 1. The Goverrment of Colombia has requested a supplementaryloan of J1I.35milion for the followingpurposes: (a) to complete the uroject financed by Loan i3 CO to adequate standards; (b) to provide additional equipment to accelerate cornstruction, to add new roads, and to increase the percentage of roads to be paved; (c) to establish a comprehensivemaintenance program for the entire nati'onalhighaay system. 2. The proceeds of the supplementaryloan vrouldbe used to purchase additional constructionequipmr.ent and materials, to meet increased administra- tive costs and contractors,fees and maintenance and shop equipment, and to empioyforeign personnel todirect the planning of the maintenanceprogram and to assist in carrying it out. 3. T"hepurpose of this report (wrhichsupplements the previous technical report of lMarch20, 1951)is to appraise the proposals of the Colombian Goverrment. II. The Present Situation 4. The original loan, made April 10, 1951 in the amount of y0l6.5million, was for the purpose of enabling the Government of Colombia to proceed .;ritha three-year emergency project for the rehabilitationof Colornbia'sprincipal highigays,as the first step in a larger program recommendedby the Colombian Economic Committee. The total cost of the project was originallyestimated to be 103.6 million pesos, of -which70.6 million pesos (includinga contingencyallowance) was to be in local currency. The project consisted of: (a) the construction of arproximately 155 kilometers of nevw high- w-ays to provide connecting links in the trunk highwnay system; (b) the actual reconstructionand rehabilitationof about 2,834 kilometers of existing trunk highways; and (c) the establishmentand maintenance of repair shops for ser- vicing the constructionequipment to be purchased with the proceeds of the loan and for training Colombian personnel in the repair and use of the equipment and in the function of highw.ay maintenance. 1/ The original project included, by designation,an additional 72 Km of roads which did not require construction,reconstruction or rehabilitation. (See Table II, index). -2- 6. The urgent need to provide improved highway service did not allow time, before initiatingwork, to make detailed surveys and prepare plans, speci.ficationsand constructionschedules for the project. The general speci- fications agreed upon required the construction of roads of good standards and fitted to Colombian needs. Provision was made for carrying on final surveys, preparing plans and revising cost estinates as work progressed. The initial cost estimates wvere based on the best available information and, with the inclusion of a 15% contingency allowance, were considered sufficiently reali- istic. The Bank therefore proceeded wvith the Loan in the expectation that the semi-annual revisions of the estimates which the contractors were required to make would provide progressively better cost estimates as construction advanced. To provide the peso requirementsfor the project, the Colombian Government agreed to appropriate23.5 million pesos each year for three years beginning in 1951, Five (now reduced to four) foreigncontractors have been carrying out the project, including the training of Colombians in the operation and maintenance of the equipment. 7. In June 1952, the Colombian Government requestedand the Bank agreed, that the Loan Igreement be amended to increase the amount of paving from 15% to 50% of the total roads in the proiect. Such an increase was considered technicallydesirable. As a result of this change, and a change in the exchange rate from 1.95 to 2.50 pesos per dollar, the total cost of the project expressed in pesop increased from 103.6 million pesos to 142.8 million pesos. The local currency requirementsincreased by 31 million pesos from 70.6 million to 101.5 million which the Government agreed to appropriate. The higher dollar requirementsof :G6o,ooo for the additionalwork were obtained from the contingency item in the List of Goods. 8. Soon after the original loan was signed, the Bank employed and stationed in Colombia a resident highway engineering consultant. The original Consultant,and his successor,have advised and otherwise assisted the 11inistryof Public '$orksand the contractorsin carrying out the project and have reported to the Bank on the progress of the vrork. Early this year the Consultant reported that the contractorswere running into unexpected diffi- culties. These resulted from difficult terrain and the lack of sufficient heavy equipment to meet the problems encountered, particularly in slide removal. The consultant advised the Bank that, if the entire project mss to be completed, the contractors would either have to make a drastic reduction in engineeringstandards or obtain a substantialincrease in dollar and peso funds. He therefore recornmendedthat the Bank consider a supplementalloan for the purchase of the necessary additional equipment. The Iiiinistryof Public lorks had also requested that the percentage of highwvaysto be paved be increased from 50 to about 80. 9. In April conferenceswere held in Colombia with the then Iiinisterof Public li;orks and with the contractors. It vrasclear that additional equipment was needed and that the requested increase in paving would add greatly to the value and life of the roads. In addition, the M.linister agreed that a compre- hensive program for maintenance of the national highwvaysystem of Colombia should be adopted. Shortly after these conferences,a new Government came into power, including a new IMlinister of Public ' 4orks. This caused delay and necessitated additional conferences in Bogota. Considerable additional -3- exper-ence wisasthen available particularlyin paving, and the loss of a dry season since the first conferencesnecessitated a review of equipment needs. A new study was therefore made of constructionstandards, additional equip- ment reeded to meet those standards, and the amount and types of paving best suited to the roads and the traffic. The project wvasthen revised to reflect the results of the study and to incorporatemutually acceptable revisions proposed by the new Minister of .'ublicl,orks who indicated full accord with the project as revised. 10. Taking into account the difficultieswhich have been encountered, progress of work on the project has been satisfactory. As of J-uly1, 1953, grading work had been completed on 0o%of the roads in the original project. Although this is somewhat behind the original schedulq the work completed in terms of Quantities of earth moved and materials used has been much greater than the original estimates. ill All wYork,including paving, has been completed on 224 km of roads.
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