Document of The World Bank

FOR OFFICIAL USE ONLY

Report No.7848-BU Public Disclosure Authorized

STAFF APPRAISAL REPORT

REPUBLIC OF Public Disclosure Authorized

TRANSPORT SECTOR PROJECT

FEBRUARY 28, 1990 Public Disclosure Authorized

Infrastructure Operations Division South-Central and Indian Ocean Department Africa Region Public Disclosure Authorized

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Currency Eqauavlent Currency Unit Burundi Franc (F6u) USS 1 FBu 156 !ejjhte and Measures

1 kilometer (km) = e.62 mile 1 quare kilometer(k*2) a e.a86 sq.ile Oloeary of Abbreovtiotnsand Acronym AfDB Aft Scan Development Baitk AGCD Adm.nistration GAn6rale de la Coop6ration au D6veloppoment (Belgian Aid Agency) BEI Budget Extreordinaire et d'Inveetistsment (Investment Budget) sO Budget Ordinaire (Recurrent BudGet) BRB Banque de la R&publique du Burundi (Central Bank) CCCE Caisse Centrale de Coop6ratton Economique (French Aid Agency) CGR Cellule do Gestion Routire (Road Planning Unit) CIF Cost Insurance Fret DAF Direction Administrative et Financi4re(Department of Administration and Finance) DOR Direction G6n6raledes Routes (General Directorate for Roads) DOT Direction On6raledesTransports, Postes etT4l6communications (Gerkeral Directorate for Transport, Posts and Telecommunications) DSm Dar-es-Sa leam DTE Direction Technique do I'Exploitation (Department of Maintenance) DTEC DirectionTechnique dos Etudes et Contr8l- (Department of Design and Control) EEC European Economic Comiimunity EF Entreprise publique (public enterprise) EPI1 Explo;tation du Port do FAC Fonds d'Aide et de Coop6ration (French Aid Fund) FED Fondo Europeen do Development(European Development Fund) GTZ Aid Agency of the Federal Republic of Germany 14DM Hlghway D"ign and Maintenance Model INTRACO International Transport Company kfW Kreditanstalt fuer Wiederaufbau (Federal Republic of Germany Aid Fund) LNTP Laboratoire National dee Travaux Publics (National Laboratory of Public Works) MAE Ministhre d I Agriculture et de I 'Elevag (Ministry of Agriculture and Livestock) MTPDU Minist&r- dos TravauxPublics et du Dlveloppent Urbain (Ministryof Public Works and Urban Development) MTPT Ministbre dos Transports, Postes et T&lIcommunicotions (Ministry of Transport, Posts and Telecommunications) NCTA Northern Corridor Transit Agrement OTRABU Office des Transports du Burundi (Freight Transport Company) OTRACO Office dos Transports en Commun(Passenger Transport Company) PEP Public Expenditure Program FIU Project Implemntation Unit PTA Pr-fereni.ial Trade Agreement SAL Structural Adjustment Lending SETEtU Municipal Technical Services SME Small- and Medium-Scale Enterprise SOE Statementof Expenditure SRD Soci6ti R6gionale de DHveloppsment (Regional Development Company) TRC Railways Corporation VOC Vehicle Operating Cost vpd Vehicle per day Fiscal Year JanuaryI - December31 FOR OMCIAL USE ONLY BURUNDI Transport Sector Proiect

STAFF APPRAISALREPORT Table of Contents

Page No.

Credit and Project Sunmmary

I. THE TRANSPORT SECTOR

A. Geographic and Economic Setting ...... B. The Transport Sector ...... 2 (i) Main Policy Issues and InstitutionalConstraints.. 2 (ii) The TransportSystem...... 3 C. The Road Sector...... 7 (i) The Network...... 7 (ii) Road Use...... 9 (iii) OrganizationalStructure, Staffing, Training .... 11 (iv) Financingand Road User Charg es . . 12

(v) Planning. r...... 13 (vi) Engineering,Construction and Maintenance ...... 14 D. Past Bank Group Involvementin the Transport Sector .... 15

TTI THE PROTWVT

Objectives...... 18 A. Transport Component ...... 18 B. Road Component .* ...... 19 (a) Road Rehabilitatioaand MaintenanceProgram ...... 20 (b) Rehabilitationand Maintenanceof Coffee Roads ... 21 (c) InstitutionalStrengthening ...... 22 (d) FeasabilityStudy for an Equipment-RentingPool ... 25 C. Cost Estimates ...... 25 D. Economic Justificationof the Project ...... 2: E. Project Financing ...... o ..... 27 F. Implementationand Procurement ...... 28 G. Disbursement...... 30 H. Accounting,Auditing and Reporting Requirements...... 31 I. EnvironmentalAspects ...... o...... 32 J. Poverty AlleviationAspects ...... 33

This report is based on the findings of an appraisalmission which visited Burundi in January/February1989; members of the missions were J.J. Raoul (HighwayEngineer), E. Bidaux (ResearchAssistant), B. Bostrom (Sr.Transport Economist), J.M. Lantran (Sr. Construction Industry Specialist),C. Lyle (Financial Analyst) and P. Taborga (Sr. Urban Economist). C. Tran-Luu (Consultant - Training Specialist) and J. Bui (Research Assistant) also contributedto the report. B. Chatelin (Sr. Economist)was lead Advisor for the appraisal team.

This documenthas a restricteddistribution and may be used by reciDientsonly in the performance of their officialduties. Its contents may not otherwisebe disclosedwithout World Bank authorization. - ii -

PasteNo. III. ECONOMIC EVALUATION

A. General ...... oo 34 B. Area of Influenceof the Project, Benefitsand Beneficiaries...... * ...... ***...... 34 C. EconomicAnalysis of the Project ...... 35 D. Risks o*oo.***o. o**.o***...... o...... o..o.- 36

IV. AGREEMENTSREACHED AND RECOMMENDATIONS...... 38

Annexes

I. Transport Statistics 1. Distributionof InternationalTraffic by Route 2. Traffic in the Port of Bujumbura 3. Traffic of and at the BujumburaInternational Airport 4. StatisticalMotor Vehicle Fleet 5. Fuel Consumptionand Prices 6. EstimatedRoad TrafficVolumes II. Regional Distributionof the Road Network III. TransportSector Expenditures 1. Expendituresin the Highway Subsector 2. Expendituresin the TransportSector (Roads excluded) 3. TransportSector Debt vs ExternalPublic Debt 4. Public ExpenditureProgram for the Highway Subsector (1989-1991) IV. Revenues from Road User Charges V. Rehabilitationof Earth/GravelRoads - List of Roads VI. Periodic Maintenanceof Paved Roads - List of Roads VII. List of Road EquipmentRequirements and Acquisition VIII.TORs for Technical Assistance for Management of Road Operations and Training in DGR IX. TORs for TechnicalAssistance in DGT X. TORs for the Road PlanningUnit XI. TORs for TechnicalAssistance to the ControlUnit XII. TOREsfor the FeasabilityStudy of an Equipment-RentingPool XIII.TORs for studies in DGT XIV. EconomicAnalysis 1, EstimatedVehicle Operating Costs .. SummaryTable of the EconomicEvaluation of the Road Project XV. Project ProgressReporting Requirements XVI. Statementof SectoralPolicy XVII.RelatedDocuments and Data AvailableIn Project File

Charts

1. Organizationof MTPDU 2. Organizationof MTPT 3. Project ImplementationSchedule

Mapn

IBRD 21189: Great Lakes Region InternationalSurface TransportConnections IBRD 21660R Burundi, Transport Sector Project, Road System - iii -

BURUNDI

TRANSPORTSECTOR PROJECT

Credit and Project Summary

Borrower: Republic of Burundi

Beneficlaries: Ministry of Public Works asid Urban Developmerst (MTPDU) and Ministry of Transport,Posts and Telecommunications(MTPT)

AMunt:s SDR 32.7 million (US$ 43.2 million)

Termss Standard IDA Terms

Prolect Objectives:

The project'l objectives are to: (i) reform transport sector policies to promote greatercompetition and price liberalization; (ii) develop planning capabilitieswithin MTPDU and MTPT; (iii) consolidate,expand and improvemaintenance practices, institutions and funding in the road sector includingsupport for starting up the participation of the private sector in road maintenance activitiesand upgrading a selected road to paved standards;and (iv) provide support to coffee productionen-d marketing through re-hablitnt4tnar"d maintenance of acces& roads to the coffee productionareas. These objectivesare fully consistentwith the Government'sadjustment program implementedwith IDA support. Proiect Description:

The projectwill cover roads and transport,the responsibilityof which is split between two ministries: MTPDU and MTPT. At appraisal,a four-yearproject (1990-1993)was designedto meet the country's prioritieswith pledges confirmed by donors during a Round Table held in Bujumburain April 1989. It would have two componentsas follows:

(i) institutionalsupport to the GeneralDirectorate for Transport (DGT)including (a) technicalassistance to assist in creating a transport data base, monitoring internationaltransport, preparing adequate sector policies and reforming transport parastatals;(b) training;and (c) subsector-relatedstudies and a provisionto financepriority transportinvestments to be identifiedduring the above studies.

(ii) a four-year road rehabilitationand maintenance program including(a) periodicand routinemaintenance of paved roads; (b) limited upgrading, rehabilitationand maintenance of unpaved roads of the main network, an increasingportion of which will be contracted out; (c) rehabilitation and maintenanceof coffee roads; (d) subsector-relatedstudies; and (e) institutionalstrengthening through the creation - iv -

within the General Directorate for Roads (DOR) of a Road Planning Unit and of a Control Unit for MaintenanceWorks, technicalassistance and training.

The proposed Transport Sector Project supports the Government's macroeconomic development strategy and structural adjustment program and conforms to its Public Investment and Public ExpenditurePrograms defined in coordinationwith IDA. It is also consistentwith and supportiveto IDA's followingoperations: the Small Scale Enterprises/APEX Project (Cr. 1889-BU), the AgriculturalServices Sector Project (Cr. 2024-BU) and the Coffee Project under preparation.

Benefits:

Improvement in road maintenance and upgrading of selected main roads would facilitatetransport of goods and persons countrywide, reduce vehicle operating costs and the need for costly rehabilitationin the future. Improvementof coffee roads would support coffee production and marketing, and contribute to the increase in foreign exchange earnings and farmers' revenues. Improvingthe institutionalframework would ensure better planning and management practices in the sector. Improving external transport conditions through better road access and transport policies would lower overall transportcosts for both imports and exports. The promotion of small-and*-medium-scaledomestic contractorswho will mostly carry out labor-basedroad maintenance operationswould provide employmentto the rural poor.

Risks:

Possible risks include the limited capabilitiesof the private sector for executingroad maintenanceworks and possible shortage of local counterpart funds for the road maintenance components. These risks will be minimized by (i) the project providing for support to and gradual involvementof the private sector and (ii) the sectoral PEP review mechanism.

Proiect Cost:

The total cost of the project is estimated at USS 90.8 million equivalentwith foreign costs of about US$ 57.5 million and local costs of US$ 33.3 million. The detailed cost and financingplan are in the followingtable. - V -

B5RIJNDI Transport Sector Project

PROJECTCOSTS ESTIMATES AND FINANCINGPLAN (US$ million)

Project Cost Estimates 11 Fozreign as Local Foreign Total X of total

A. TRANSPORTCONPONENT 0.4 4.5 4.9 92%

I. InstitutionalStrengthening 0.4 2.4 2.8 87% II. Investments 0.0 2.1 2.1 100%

B. ROAD COMPONENT 25.5 38.6 64.1 60%

I. Road Upgradingto Paved Standards 1.9 4.3 6.2 70% II. Road Rehabilitation 4.0 3.7 7.7 48% III.PeriodicMaintenance 4.6 9.3 13.9 67% IV. Routine Maintenance 8.4 10.9 19.3 57% V. Coffee Roads 4.4 0.2 4.6 5% VI. InstitutionalStengthening 2.3 10.0 12.3 81%

TOTAL BASE COSTS 25.9 43.1 69.0 62% ======;. ===-

Contingencies(32% base costs)

Physical (10% base costs) 2.6 4.3 6.9 62% Price 4.8 10.1 14.9 68%

GRAND TOTAL 33.3 57.5 90.8 63%

Financina Plan IDA 7.7 35.5 43.2 48% AfDB 0.8 6.0 6.8 8% AGCD 2.9 2.1 5.0 6% GTZ - 1.8 1.8 2% FAC - 1.4 1.4 22 OPEC, Japan, Italy 0.7 6.3 7.0 8% Government 21.3 4.3 25.6 28%

Total 33.3 57.5 90.8 100%

1/ Costs are net of taxes which are estimatedat FBu 473 million (US$ 3.05 million equivalent). I. THE TRANSPORTSECTOR

A. G§oraphic and Economic Setting

1.01 Burundi (see Map IBRD 21660) is a small landlockedcountry on situated south of the equator in Eastern Africa between , Tanzania and Zaire, about 1,400 km from the Indian Ocean. The countrycovers an area of 27,800 square kilometers (of which 25,000 sq.km of land) and the country's terrain is dominated by a hilly central plateau giving way to marshy valleys in the north and east and a low-lyingplain in the west. The generally rugged terrain, the scattered settlementpatterns as well as the country's landlocked position have contributed to shape its transport infrastructure.

1.02 With a populationof approximately5.1 million growing at the high rate of 3.1! p.a., Burundi is the second most densely populated country in Africa (204 inhabitantsper sq.km of land). Abcut 942 of the population lives in rural areas as smll farmers who depend mainly on subsistence agriculture and on one main cash crop, coffee, which provides the major source of foreign exchange for the country. More than half the population is concentratedin the Bujumbura-Muramvya-Gitega-Kayanza-Ngoziarea which also produces most of the country'scoffee. Gross National Product (GNP) per capita, estimated at US$ 240 in 1987, is among the world's lowest. Agriculture is the main economic activity contributingabout 60Z to GNP. Mining and industrial activity is limited (about 132 of GNP).

1.03 After a period of relativelygood performanceand growth, partly due to the coffee boom in the mid-1970s and increased foreign aid, Burundi faced serious econmiic and financialdifficulties in the early 1980s. The deteriorationin the terms of trade (452 betweer.1978 and 1981), mainly due to the decline in coffee prices and the increase in oil prices and to a lack of adjustment policies, has led to a worsening of the balance of payments and large budget deficits. Administrativecontrols were imposed on imports and foreign exchangeand price controlswere enforced,aiming at controlling the increasirg deficit in the balance of payments. The resultingslowdown in economic activityhighlighted Burundi's major structuralconstraints: the extreme dependence on coffee revenues (coffeestill accounts for about 80% of the country'sexports), the weak role of the private sector and the leck of incentives for a sustainedgrowth of agricultureand industry.

1.04 In 1986, the Governmentundertook a major adjustmentptogram, the objectivesof which are to restorefinancial equilibria in the short-termand to initiatemedium- and long-termstructural change in the economywith more reliance on market forces and a greater outward orientation. The new Government in place since September 1987 has committeditself to pursue and strengthen the adjustment program under SAL II, which became effective in November 1988. It will continue to address the structural issues through ongoing measures aimed at (i) improving macro-economicmanagement; (ii) stimulating exports; (iii) developing the private sector; (iv) reforming parastatals; (v) improvingpublic expendituremanagement; and new measures aimed at (vi) increasing the efficiency of the financial sector; (vii) liberalizingthe labor market; and (viii) alleviatingpoverty. Under the first phase of the adjustmentprogram, the Government implementeda strict budgetary policy and reduced public expenditure. After the expansionary - 2 - policy of the 1970* and early 1980s, the public investment program was reduced to make it compatiblewith the overall macroeconomicand financial program. A three-yearpublic expenditurerolling program (PEP) is now being prepared; it will be the basis for a unified system of budget preparation. This three-yearPEP is expectedto lead to more efficientresource allocation between recurrent and capital expenditures, namely to give priority to maintenanceof infrastructureover new capital expenditures. The transport sector represents about 202 in the PEP. Improvementin this part of the public sector has therefore an importantimpact.

1.05 The prevailing economic and financialconditions in Burundi have been taken into considerationin designing the proposed Transport Sector Program and its financing. The project is seen as an integral past.of the structuraladjustment and economicdevelopment process and, therefore,calls for appropriatepolicy actions within the transport sector. These actions will aim at more emphasison maintenanceof infrastructure,more relianceon the private sector for executingroad maintenanceworks, better planning and improvementof cost recovery mechanisms as well as more liberalizationof transport operations and enhanced dialogue with the transit countries in order to make exports more competitive and reduce costs of imports and internal transport.

B. The Transport Sector

(i) Main Policy Issues and InstitutionalConstraints

1.06 The sectoral policy issues referred to hereunder constitute bottlenecksto improvementof overall efficiencyof the transportsector and its contribution to the adjustment policy and, therefore, need to be addressed adequately under the proposed project. First, the country's economy needs greater flexibilityin internationaltransport (para. 1.12 to 1.15) for choice of both modelroute and transportoperators to better adapt to external transport conditions on these routes and thus benefit from competition between routes and between operators. Secondly, transport operationsneed to be liberalizedto allow the harmonious developmentof the private sector and alleviate the financial burden on the state's budget caused by subsidiesto parastatals(para. 1.29-30). Lastly, there is a need for more emphasis on maintenance of transport Infrastructure(versus new capital investments) and especially roads in order to protect the infrastructureassets from deterioration,keep transport costs as low as possible and avoid new capital investmentswith poor economicjustification.

1.07 Responsibilitiesfor the transportsector at the central level are shared between two differentministries: the Ministry of Public Works and Urban Development(MTPDU) is responsiblefor managementof the main roads and the Ministry of Transport, Posts and Telecommunications (MTPT) for establishing and enforcing transport regulations,and for monitoring the transport parastatals. This split of responsibilitieswould require close coordinationbetween the two ministries as far as planning is concerned. However, both ministries do not have the staff needed to carry out - 3 -

appropriateplanning; technical assistance has been providedrecently to NTPT to help develop appropriateplanning skills. The project would further address the need to strengthenplanning functionsof these ministries (para. 2.02 and 2.15). .

(ii) The TransportSystem

1.08 The transportsystem in Burundiconsists of about 6,300 km of roads and tracks (of which 4,100 km are under responsibilityof the General Directorate for Roads - DGR), the port of Bujumbura and the international Bujumbura airport. There are no railways or navigable rivers. Laik Tanganyika is mostly used for internationaltransport to and from the vorts of (Tanzania)and Mpulungu (). Internal transportis therefore entirely dependent on the road network. As a landlockedcountry far from ocean ports, Burundi relies heavily on its external transport links for its economic development.

External transport

1.09 Burundi'sexternal trade is mostly with developedcountries and to a lesser extent with its neighbors. It has grown markedly in volume in recent years: 11% p.a. for exports and 4% for importo over the 1980-1986 period. However, the externaltrade volumesare still relativelylows during the 1985-1988period, importsaveraged about 225,000 tons p.a. while exports totalled about 50,000 tons p.a. (of which coffee represented30,000 tons). The annual external trade growth rate is expected to be in the 5-6% range p.a. in the coming years and the trade flow will remain imbalanced.

1.10 As a landlockedcountry, Burundi is dependent on transit through neighboring countries. Three main corridors (see Map IBRD 21189) are now used for external trade: (i) the Northern Corridor (all-road route) to Nairobi and Mombasa (2,050 km) via and Kampala; (ii) the Central Corridor 1/ (lakelrailroute) to Dar-es-Salaam(DSM) via Kigoma (1,430 km); and (iii) the Southern Corridorto Lusaka and Harare via Mpulungu (about600 km by lake from Bujumbura). The Northern Corridor route now accounts for about 28% (mainly petroleum products) of total internationaltraffic to Burundi, the Central Corridorroutes 34%, the SouthernCorridor route 36% and air transport 2% while most of the internationaltraffic from Burundi is routed to DSM throughKigoma (Annex I-1). Owing to the long distancesto the transit ports on the Indian Ocean, transportcosts are high even in the best conditions. These are supplementedby other factorsincluding the conditions of transport infrastructure, cumbersome transit procedures, the poor efficiency of transport operators and highly imbalanced import (80% of the traffic volume) and export (20%) flows. Overall transport costs are estimated to add about 30-40% to the cost of imports and exports.

1/ An all-road alternati1vein the Central Corridor to DSM via Kobero is also now being increasingly used (Annex I-1). Another future alternative is a roadirailvariation of the Central Corridor, by road to in Tanzania and then railroadto DSM (para. 1.12). - 4 -

1.11 in the lete 19708, the Northern Corridor suffered disruptionsin transit from turmoil in Ugan.da.Sine then, the situationhas Improvedwith the exception of further disruptionsIn 1986 due to political troubles in Uganda. In most ccuntries through which the Northern Corridor passes (Burundi, Rwanda, Uganda and Kenya), investments were made to improve maintenance and extend infrastructure.Direct transportcosts are estimated to have decreasedin the Northern Corridor from US$ 340/ton in 1979 to US$ 200/ton in 1988. Indirect costs have also fallen: transit times fell from 35-45 days to 20-30 days in the Northern Corridor and from several months to 40-60 days in thr.Central Corridor. In the Central Corridor (Port of Bujumbura-Kigoma-DSM), the presently chef !est alternativefor Burundi, where unit transport costs are about US$ 100/ton lower than via Mombasa, further improvements are necessary on the Tanzania Railways Corporation (TRC) 2/ while DSM port has improved significantly over the past few years and is now being preferredto Mombasa. To improve transport conditions on this route, the Government has undertaken a rehabilitationproject for the port of Bujumbura (however not a real bottleneck)financed by CCCE (France)and a shipyard construction project in Bujumbura with funding from AfDB is in an advanced preparation stage. Further reductions in costs are both possible and necessary but will require the full and effective implementationof multicountry agreements to facilitate transit procedures (such as the Northern CorridorTransit Agreement(NCTA) signed in 1985 but not yet fully effective).

1.12 Reliabilityof transportroutes is a matter for concern. One of the main Governmentobjectives is to increase revenues from coffee exports through better quality of coffee exported and higher volumes. Therefore, the reliabilityof coffee transpor;has become a very importantobjective both within Burundi and on export routes. Security of international transport has traditionallybeen an acute issue: alternativeoptions are needed to providethe Governmentwith rapid solutionswhen disruptionsoccur. Such options include:air transportand the Isaka route (1,630km), with the TRC railroad or road transport from DSM co Isaka (where a new rail/road terminal for Rwan1a has been financedby EEC) and road transportfrom Isaka to Burundi. The Governmentis consideringinvestments in the construction of two alternativeroad connectionsbetween Burundiand Isaka. The northern alternativevia Kobero has better economic justificationthan the Cankuzo one since a substantialportion has already been paved. EEC has agreed to finance the Kobero alternative and the works will begin in 1990. Consequently,new investmentson the second alte. &t ve (via Cankuze)should be considered as a much lower priority.

The Great Lakes Corridor Study

1.13 The problems of external transport access to Burundi have a lot in common with the problems of other landlocked countries, such as Rwanda, Uganda and the eastern part of Zaire. The Great Lakes Corridor Study, which was carried out by the Bank in 1988, analyzes the international transport problems in the Great Lakes area around the lakesVictoria and Tanganyikaas well as in the main transit countries,Kenya and Tanzania,and defines the

2/ EEC is envisagingthe fundingof block trains for Burundi traffic, to be operated by TRC. tssues and policils required to develop a coherent internatior;ltransport- transit strategy for East and Central Africa. After reviewingthe existing and proposed main routes, the study identifiedthe major issueoswithin the Northern and Central Corridors (infrastructure problems, transport facilitation and transit regulation); reviewed how each national policy affects the efficiency of internationaltransport; reviewed the costs and revenues for the transit countries resulting from internationaltraffic; identified factors affecting routing decisions; and described a possible scenario of traffic flows in 1995 that could result from these factors.

1.14 Burundi is in a relativelyfavored position in that it has several practical access routes to both Dar-es-Salaam and Mombasa. Given the availabilityof charter air-freightand the over-capacityof the region's trucking fleet, it is clear that more transit routes will not solve the transit problem. For Burundi this means that over-investment in infrastructure,at least within the country, is probably more of a danger than inadequateinfrastructure. Additional road links (other than the more direct route via Kobero to the new rail/road terminal at Isaka uaing the paved road from Rwanda)would only be a long-termrequirement.

1.15 The main scope for reducing transport cost is by improving efficiency of external routes and changing some of the institutional arrangements. This can be achievedby offeringshippers more flexibilityfor the choice of route and mode through a reform of the import licence system of the Central Bank (BRB); the current system gives little lee-way for changes while goods are in transit, does not consider total cost in case of urgent requirementsand provides a certain level of price protectionto the local more expensive truckers (para. 4.01 (k)). For the Northern Corridor from Mombasa, Burundihas proportionallymore transitdocumentation costs and delays than either Rwanda or Uganda, and. therefore, has most to gain by effective implementationof the NCTA. This is another reason to prefer the Central Corridor which only goes through Tanzania. The need for a flexible approach also applies to the exports (high value coffee in particular)for which the most advantageousroute and mode at any given time should be allowed. Recent trial shipmentsby road through Tanzania is a step in the right direction. The availabilityof more customs clearance facilities, other than Bujumbura,would also lead to lower transport costs for imports and exports. This also ought to include the handling of 2ontainers, particularly for exports, from Gitega or Kayanza (para. 4.01 (o)). In addition to improvementsto physical infrastructuresfinanced by EEC to improve Burundi's internationalaccesses (para. 1.11-12),the projectwould assist Burundi in its dialogue with the transit countries through the provisionof technical assistanceaimed at improvinglocal planning skills, data collectionand processing (para. 2.02).

Roads

1.16 The road subsectoris presented in subehapterC.

Port and Lake Transport

1.17 The port of Bujumbura is run by a private, partly foreign-owned company, Exploitation du Port de Bujumbura (EPB). Fixed installations at the port are state-owned Aile the handling facilities are owned by EPB. At - 6 - present, the only remaining expatriate is EPB general manager and EPB is adequatelymanaged, operating at a profit even though port tariffs have not changed since 1980. EPB operates under MTPT supervisionand utilizes about 402 of the estimated annual port capacityof 450,000 tons.

1.18 After two years of sustainedgrowth in 1984 and 1985, the traffic in the port droppedsteeply from its 220,000tons p.a. level to stabilizenow at the level of 180,000tons p.a. (Annex I-2). Transporton Lake Tanganyika between Bujumbura and ports in Tanzania, Zaire and Zambia is handled by ARNOLAC, a 901 foreign-ownedprivate company. The share of traffic on the lake is as follows: 561 Tanzania (including international traffic via Kigoma), 371 Zambia and 7% Zaire. Most of the fleet is old and unsuited to modern transport; it consists of five tugs (90 hp - 700 hp) and ten barges with a total capacity of 4,300 tons. Nevertheless,ARNOLAC is adequately managed and is operating at a profit. Other vessels are owned by private operatorsand the railwaysof Tanzania and Zaire providinga total lake fleet of about 30 units. Tariffs of Burundian lake transport are currently controlledby the Government.

1.19 In the 1984-1985period, the Governmentdecided to undertakemajor investments in the port , which were designed on high growth traffic forecasts; these new investments now seem overdimensionedconsidering the actual traffic. The works in the port financed by CCCE (US$ 13.3 million equivalent),began in 1988, consisting of (i) repair of tbrtexisting fixed installations (berths); (ii) installation of new container/handling facilities;and (iii) constructionof a new storage area. Following these heavy investments, the Government now intends to revise the current concessionstatus of EPB, even before 1997 when the concessionagreement is scheduled to terminate. Also here it is importantto retain a policy of flexibilityto respond to the rapid changes of the transportindustry. This is best achieved by continuingto grant the operatingconcession of the port to a private operator,while clearly retaining the right of the Government to intervene under certain circumstancessuch as by requiring a certain financialperformance. The works on the shipyard project, the other heavy investment (US$ 7.5 million equivalent),which has been curtailed by the Government in place since 1987, are scheduled to begin in 1990 and will ccasist of the constructionof a slipway and a fully-equippedworkshop. The Government is in process of awarding a contract for the operations of the future facilitiesto a private operator (para. 4.01 (n)).

Civil Aviation

1.20 In view of the small size of the country, air transportprimarily serves Burundi's external transport needs. The internationalairport near Bujumbura can handle wide-body aircraft and a new terminal building was completed in 1984. Another small airfield is located near Kirundo in the north. Bujumbura airport is equipped for 24-hour operations and provides service to Europe and the capitals of neighboringAfrican countries. The airport is served by seven European and African airline companies. In the period 1985-1987,passenger traffic has been growing at a reasonablyhigh annual average rate of 9.51, reachingabout 49,000 passengersin 1987, while freight traffic has been decreasingsince 1985 at an annual average rate of 16% and only reached 6,400 tons in 1987 (Annex I-3). - 7 -

1.21 The internationalairport is run by a public company under MTPT authority. The company is assisted by expatriatesprovided under bilateral aid programs from Belgium and France. Air Burundi,the national airline,was created in 1977 and is a public companyoperating under the authorityof both the Ministry of Defense and MTPT. It owns two Twin-Otteraircraft providing services to Kirundo, Kigali (Rwanda),Goma and Kalemie (Zaire). Since May 1988, it has also been leasingfreight space on Air France and Sabena flights from Europe to Bujumbura,mainly in order to play a price regulatingrole in the air freight business to Burundi. Air Burundi is operating at a profit which reached FBu 60 million in 1987 (US$ 450,000 equivalent) for a total turnoverof FBu 850 million,which increasedto FBu 1,100 million in 1988 due to its new freight operations.

C. The Road Sector

(i) The Network

1.22 The main road network (nationaland provincialroads under the new classification 3/) now totals about 4,100 km, of which 1,011 km are paved (25%) and 963 km (23%) are gravel of a low engineeringstandard; the rest are earth roads and tracks (Table 1). This network has adequate length and reasonable coverage even though the east and north regions of the country have a much lower proportion of paved and gravel roads than the other regions. During the 1984-1988period, due to an intensive improvementand construction program, the standard cf the road network improved significantly:the paved road network increasedby 36% while the gravel road network nearly doubled (Annex II).

3/ A new classificationof roads, which better meets the administrative structure of the country, has been prepared to replace soon the former classification (National roads, Secondary roads, Provincial roads as classified roads plus Rural roads as non-classifiedroads). There are now three types of roads: National roads, Provincial roads and Communal roads. National roads link provinces to each other as well as to the capital city and to the border countries (Rwanda,Tanzania and Zaire). Provincialroads link the districtsto each other within the same province as well as to the surroundingprovinces. Communal roads representall the other roads. Table 1

Developmentof the Road Network 4/ (in km)

1979 1984 1988 A. Main Road Network

National Roads 545 778 1,949 Provincial Roads 2.365 2,122 2,150

Total 2,910 2,900 4,099

B. Communal Roads 2,500 2,500 2,189

GRAND TOTAL 5,410 5,400 6,288

C. Main Road Network by Surface Tvpe

Bitumen 280 744 1,011 Gravel 90 486 963 Earth 2,540 1.670 2,125

Total 2,910 2,900 4,099

Sources DGR, MTPDU, Bujumbura,February 1989

1.23 By regional standards, the main road network is quite good followingheavy investmentsin the last decade and substantialmaintenance effortsundertaken under the Third and Fourth Highway Projects. However,the nountry'sdifficult topography, poor soil conditionsand heavy rains make it more difficult and costly to maintain the road network adequatelythan for other African countries. To prevent costly repairsand reconstructionin the futurewill requiresystematic periodic maintenance of the paved networkover the life span of these investments. Lastly, the conditionof the secondary road network needs to be improved to lower transport cost and facilitate movement of goods countrywide. Therefore, road maintenance and rehabilitationefforts have to be increased in response to the increasing needs and to better serve the country'seconomy.

41 This table is using the new classification,i.e. roads which were labeled Secondaryand ProvincialRoads in 1979 and 1984 have been grouped under the name ProvincialRoads so as to make a comparisonpossible. -9-

(ii) Road Use

Vehicle Fleet and Traffic

1.24 The statisticalmotor vehicle fleet reached 20,000 vehicles in 1987, of which about 2,700 were owned by the Government (Annex 1-4). There were 4 vehicles per 1,000 inhabitants which to low for East African countries. Although the annual growth rate has been decreasing since 1982 and now r-aches about 8.4 X, the fleet was still growing at a high average annual rate of 9.3 Z ovor the 1981-1987period. In 1987, th, fleet was dominated by passenger cars, situated mainly in Bujumbura, making up 56X, with pickup trucks and station wagons at 182, buses 11%, trucks 82, four- wheel drive vehicles,tractors and specialvehicles making up the difference. The mijor increases in the period were recorded for buses and four-wheel drive vehicles.

1.25 Systematic traffic counts started on the former national and secondarynetwork in 1982 under the Third Highway Project. They now cover about 3,000 km of the road network (mainlynational and provincialroads) and are carried out by DGR. The currentstructure will be reinforcedunder this project with the creation of a Road Planning Unit financed by French aid (FAC), IDA and the Government. The traffic volumes rarely exceed 500 vehicles per day (vpd). The highest traffic volumes are found on the paved roads radiatingfrom Bujumbura. A significantpart of the network (about500 km), however, has traffic volumes of more than 200 vpd.

Fuel Consumationand Price

1.26 Over the period 1983-1988the consumptionof gasoline increasedat an average rate of 7.62 p.a. while consumptionof diesel fuel followed an erratic evolution, increasing one year, decreasing the other year (Annex 1-5). In 1988 for the first time, gasoline consumptionsignificantly surpasseddiesel fuel consumption. Fuel is mostly importedby foreign-owned companies (BP, Mobil and FINA) from the refineryin Nombasa or alternatively Dar-es-Salaam(DSM), dependingon the reliabilityof TRC from OSM to Kigoma. Puel storage capacity in Burundi exceeds 20 million liters and is adequate (representingapproximately a five-monthconsumption reserve).

1.27 Retail fuel prices in Burundi are high due to high transportcosts and to a relativelyhigh level of taxation. The retail price is US$ 0.65 per liter or US$ 2.48 per US gallon for gasoline (super) and US$ 0.60 per liter or US$ 2.28 per US gallon for diesel fuel (Annex 1-5). The FBu price for gasolinehas not changed since 1984 and has only been increasedby FBu 2 (an increase of about 2%) for diesel fuel. There are no Government price subsidiesand the internaltaxation on fuel is high. Import duties and taxes on fuel are important sources of Goverrment revenue from road users representing about 611 of CIF B;jumbura price for gasoline coming from Nairobior 1362 from DSM and about 461 of CIF Bujumburaprice for diesel fuel coming from Nairobi or 1021 from DSM (para. 1.37). - 10 -

Road Transport Industry

1.28 Road transportin Burundi is dominatedby private operatorswhose tariffs are in principle controlledby Governmentbut the legal provisionto that effect is not currently enforced. At the same time, as a result of improved road conditions, there has been a ,ubstantialincrease in the vehicle fleet. Between 1982 and 1987 the number of trucks increased from 1,223 to 1,589 and buses from 1,267 to 2,278. Only about 10% of the trucks and 15Z of the buses are owned by parastatalsand the remainderis privately- owned. Private vehicles tend to be smaller than publicly-ownedones. The typical vehicle for passengertransport is a minibus, which has proven to be faster and more mobile and economical for private operators. Of 434 buses used for public transport in 1987, 243 were minibuses of which 183 had becween 15 and 26 seats. This is largely the consequenceof a countrywith short distancesand a homogenouspopulation. A similar situationexists for freighttransport within Burundi. Entry into the transportindustry is free and routes are not regulated except for urban transport. Tariffs are regulated for urban passenger transport and have not been increasedsince 1980. The governmentowns two parastatalsfor road transport,OTRABU, mainly for external freight transportand OTRACO for internal passengertransport.

1.29 With regard to parastatals,tariffs for OTRACO have been kept unchanged for too long and as a result the revenue collected does not cover operating costs. The Government thereforehas to subsidizeoperations. A performance contract between OTRACO and the Government was signed late in 1988 but would need to be substantially amended to provide for more transparency in OTRACO's management and consistency with the general objective of reducing subsidies to parastatals. For both urban and interurban routes, a clear separation needs to be made between services requiring Government subsidy for social or other reasons and services for which the resources from revenue collection should cover their costs. Moreover,OTRACO is working where private operatorsensure the largest share of passenger transport services. Whereas interurbantransport is virtually free of rate regulations,OTRACO tariffs also apply to private operatorsfor urban transport in Bujumbura. Therefore, a tariff increase to compensate several years of inflationarycost changes is essential. Subsequentlythese tariffs should be liberalized(para. 4.01 (1)).

1.30 As part of the structuraladjustment program and of the reform of parastatalsthe governmenthas agreed to privatizeOTRABU. A recent study, carried out under a program of reform of parastatals,has shown that OTRABU is potentiallyviable. OTRABU ought to be in a position to operate freely in a very competitive industry on similar terms as other operators. An effective way of beginning to achieve this is by increasing the private ownership in the company to a point where 49% or less is owned by the Government (para. 4.01 (m)).

Vehicle Regulations

1.31 Vehicle weight and dimensions are not yet major problems with regard to domestic trucking. Developmentof the road network and increased domestic cargo flows may encourage the use of heavier vehicles. The Government intends to monitor changes in loading patterns by the use of mobile weight-scalesurveys. Internationaltrucking, however uses vehicles capable of carrying payloads in excess of 40 tons and imposing axle loads - 11 - well above the present NCTA 10 ton-limit. Strict enforcementof this limit for internationaltraffic is not in Burundi's interest and the Government should seek to obtain more flexible arrangementswith transit partners, accepting if necessaryhigher transit tolls. Fixed weight scales have been installedon RNI and RN5 (as well as in the Port of Bujumbura,where all the customs clearance is still done) and these should be used to monitor the flow of vehicles and provide the data necessaryfor such negotiations(para. 4.01 (j)). (iiL) Orp.nisationalStructure, Staffing. Training

1.32 MTPDU has full responsibilitythrough DGR for design,construction and maintenanceof the national and provincialroad network. DGR has three technical departments (Chart 1): (a) the Department of Design and Control (DTEC) in charge of contractingout and supervisingfeasibility and detailed engineering studies, and construction works; (b) the Department of Maintenance (DTE) in charge of road and bridge maintenance; and (c) the Department of Administrationand Finance (DAF) in charge of administrative matters, finance and personnel. DGR's organizationalstructure is overall sound. The urban roads in Bujumbura are under the responsibilityof the MunicipalTechnical Services Corporation (SETEMU) within MTPDU, but funds for their maintenance are provided by the Municipalityof Bujumbura. However, SETEMU is expected to be transferredto the Municipalityof Bujumburaunder the Second Urban Project (Cr. 1968-BU). The remaining network of approximately 2,200 km of earth tracks is under the responsibilityof district authorities(Administrations Communales); this was confirmedin the law on municipalitiesdated April 1989. Maintenanceand improvementof these roads are carried out on a voluntary basis, with DGR providing some assistancein emergencycases. These arrangementsare adequatein most cases for the low level of traffic carried by these roads, with a few exceptions such as the access roads to the coffee-washingstations, hereunder referred to as "coffee roads' (para. 2.11 to 2.13).

1.33 DOR has about 3,170 employeesincluding about 2,380 unskilledday laborers and 790 permanent staff who are civil servants or under contract. Of the latter 32 are high-level staff, 63 supervisors and 695 skilled and unskilled workers. Between 1984 and 1988, high level staff increased by about 60% and supervisors nearly trebled, showing a substantial improvement in the quality of DGR's staff. Local staff are now fully responsiblefor operating road production units without any direct participation from expatriates. Severalmanagers in technicaldepartments are very good. But, these significantachievements could be hampered by serious problems faced by DGR. More and more qualified staff have been attempting to joi!n the private sector where salary levels are higher. The status of the Civil Service is far from being attractiveenough to retain techniciansin sp.cific areas. As part of third tranche conditionalitiesin the SAL, the Government will be formulatingan action program designed to deal with the problem of providing sufficientincentives to civil servants. In the meantime, there is an acute shortage of well-trainedmechanics, accountants and computer operators. In addition, staff are reluctant to go to the field for site inspectiondue to the unreasonablylow rate of daily allowance,resulting in a severe constraintto effectivesupervision of works. DGR's personnelunit within DAF has not so far developeda long-termpersonnel management policy. - 12 -

The project will address these issues by hiring (i) local engineers and techniciansunder short-term contracts for carrying out specific tasks and supervisionof works (para. 2.16-17) and (ii) a consultantto assist DGR in setting up a personnelmanagement system and a long-termpersonnel policy.

1.34 Training has proven to be more and more efficientand relevant to DGR's activities. DGR's field brigades are now able to operate satisfactorilywith only local staff including engineers, foremen and equipment operators. But, logistics, accounting, administrative and managerial tasks st'll require expatriateassistance to a large extent. For the period 1985-88, about 300 semi-skilledlaborers were trained in the training center of Gitega and the first 16 equipment operators graduated througha three-yeartraining program in 1988. In addition,training covered many critical areas, such as accounting, management, organization, coumunicationand quality control;with respect to this, 34 techniciansfrom production units and 29 administrativestaff received additionaltraining. A special trainingprogram has also been implementedfor 16 engineershaving graduated from the University since June 1987. In addition, overseas training for 27 techniciansand high-levelstaff has produced good results. In spite of this progress, the impact of training has been limited for two main reasons: (i) low salaries in the Civil Service and (ii) lack of a manpower developmentpolicy for the public sector. More specifically,losses after training have critically affected mechanics; out of 120 mechanics trained by the technicalassistance financed by GTZ over the past ten years, nearly two-thirdshave left for the private sector (howevernot necessarily a loss at the country level). Sustained training efforts will have to be continuedunder the project (para. 2.18-19) to fill the needs of both public and private sectors and progressivelybuild up a competent labor force for road maintenance in the private sector.

1.35 Te_hnicalassistance has also evolvedfavorably along with progress in training. Future needs for technical assistancewill be in managerial and sophisticatedareas such as informationsystems, management, organization and personnel management, planning, budget programing, procurement of contracted out maintenanceworks, cost analysis and quality control rather than in the productionsector (para. 2.14 to 2.17).

(iv) Financiniand Road User Charges

1.36 Programmingof road expenditureshas been included as a priority in the PEP mechanismand startingin 1989 is subjectto a yearly joint review and agreementbetween the Government and the Association. Road maintenance is mainly financed from the investment budget (BEI) while the only contribution of the recurrent budget (BO) is to pay salaries of DGR personnel. The investment budget also covers the Government's small participation for externally-financednew constructionor rehabilitation projects. External sources essentially finance new construction and rehabilitationbut also some maintenance. In the 1985-1988period, about 68% of total expenditures(Annexe III-1) includinglocal and external financing for roads were devoted to capital investment(including road rehabilitation) and 322 for road recurrentmaintenance (includingtechnical assistance)vs 83S and 17% in the 1980-1984period, reflectinga slight improvementunder - 13 - the Fourth Highway Project. Since the road network is generally well developed while road conditions are not fully satisfactory and require increased maintenance, the Government has committed itself to give a higher priority to maintenance over capital expenditures in allocating funds to its highway sector, which was formally confirmed at negotiations (para. 4.01 (a)). This is already reflected in the road program for the forthcoming years (para. 2.04).

1.37 Revenues from road user charbes have been growing at about 4Z per annum in constant terms during the 1984-1988 period (see Annex IV), reaching FBu 2.0 billion (US$ 11.6 million equivalent). Total revenues exceed actual annual expenditures for road maintenance as well as the recommended increased local funding of road maintenance (para. 1.38). The revenues are also sufficient to cover the Government's small participation in externally- financed projects. However, most revenues from road user charges (except the tax for the National Road Fund the earmarking of which was confirmed by the Government in 1989) traditionally go to the recurrent budget which has made very limited contributions to road maintenance. Since it is not desirable to reduce the general budget's revenues from road users, the Government is expected,to revise the road users taxation on a regular basis to cover the BEI and National Road Fund requirements for road maintenance in addition to maintaining the contribution to the recurrent budget at its present level (para. 4.01 (g)).

1.38 During the 1984-1988 period, the annual local funding of road maintenance was only about FBu 450 million (see Annex III-1) which covered about 602 of the estimated road maintenance needs, with some additional funding made available by IDA. The annual local financing requirements for road maintenance and rehabilitation are estimated at about FBu 800 million in 1989 prices (about USS 5.2 million), of which FBu 700 million from the investment budget (BEI) and the National Road Fund and FBu 100 million from the recurrent budget (B0). Taking into account the ressources channelled through the National Road Fund (Fonds Routier National), the Government will have to allocate the proper additional ressources required in the BEI and B0 for road maintenance. The Association would be given the opportunity to review DGR's budgets for the coming fiscal years (para. 4.01 (a) and (g)).

(v) Pi

1.39 MTPDUis responsible through DGR for planning, construction, and maintenance of the main road network and submits multiyear programs and yearly budget proposals to the Ministry of Planning. DGR's planning capacity remains relatively weak. Even though the balance between road maintenance and capital expenditures has improved under the Fourth Highway Project (para. 1.36), a very substantial increase in maintenance funding is still required to meet the country's needs. There is also a need within DGR for staff with better planning skills who would be able to influence the design of road program by focusing more on maintenance needs and thus materialize the commitment of Government to road maintenance, as expressed in a recent policy statement by MTPDU. A Road Planning Unit (Cellule de Gestion Routiere - CGR) will be set up within DGR under the project to strengthen MTPDU's - 14 - planning capacity (para.2.15). The new Road PlanningUnit, as well as a new Control Unit for maintenanceworks (para. 2.16), will be given a permanent legal status within DGR. The Road Planning Unit will fulfill the planning functionsof MTPDU for the road sector.

(vi) FnRineerinR. Construction and Maintenance

1.40 DTEC is responsiblefor road design with9n DGR. Its staff totals 29 employees,including seven Burundianengineers among whom DTEC manager and four expatriatesprovided under bilateralaid. Engineeringstandards follow those developed by the French Ministry of Public Works with appropriate adaptationto conditionsin Africa regardingpavement design. DTEC's design capacity is limited to small projects. Studies for larger projects as well as constructionsupervision are contractedout by DTEC to foreign consulting firms. The Government's National Laboratory of Public Works (LNTP) is carrying out most soil and material tests for design and construction supervision of civil works but has now to compete with the university laboratory for works for the private sector. French and Belgian aid is expected to continue to provide technicalassistance and training to LNTP in the next few years.

1.41 Most road constructionis carried out by contract awarded on the basis of internationalcompetitive bidding (ICB). The constructionindustry is dominated by foreign contractorsusing mostly equipment-basedmethods while domestic contractorscarry out some building constructionand minor road works, sometimesthrough joint venture and subcontractingarrangements. An IDA-financedproject (Local ConstructionInctustry, 1982-1987) to assist the developmentof the building constructionsector has had limited results because the market of building constructionwas constrainedby the economic conditions and the road maintenance market was still reserved to force account teams. The Government has now decided to open this market to domestic private contractors,which will be strongly supported under the project and may also get assistance from the ongoing Small-Scale Enterprises/APEXProject (Cr. 1889-BU). Labor-basedmethods have been used at times for constructionof low traffic roads with mixed results. The results have been rather disappointingwith roads in mountainousareas built by force account with USAID and IDA assistance under the Third Highway Project,whereas they are presentlyencouraging uneer a UNDP project carried out with ILO support on the central plateau. It is expected that recourse to small and medium local constructionfirms would stimulate the increased utilizationof labor in the constructionindustry.

1.42 So far, virtuallyall road maintenanceworks except resurfacingof paved roads are carried out by force account by DTE. Regravelling and rehabilitationwith spot improvementof earth roads are carried out by four production units (heavy brigades) based respectivelyin Bujumbura, Ngozi, Gitega and Bururi. Four light brigades carry out resurfacingworks on earth roads. The equipment for the brigadeswas provided under financingby IDA (under the Third and Fourth Highway Projects),the OPEC Fund, Japan Overseas Economic Cooperation,United Nations Capital Development Fund and Italy. Patching and resealingworks on paved roads are carried out by two brigades equipped under the Fourth Highway Project. Routine maintenance,including - 15 - cleaning ditches, culverts and shoulders is carried out unevenly through labor-based cantonnage supervised by the 15 provincial supervisors installed by DGR in 1987. Bridge maintenanceis carriedout by a bridge brigade. Each brigade is headed by a Burundian engineer. Road maintenance is overall carried out reasonablywell, but improvementsare still needed:

(i) utilizationof equipment remainsvery low, mainly due to lack of skilledmechanics and delays in supply of spare parts, and should be increased;

(ii) procurement of materials, especially bitumen, should be better planned and monitored;

(iii) fuel consumption,although recentlyimproved, remains too high and needs to be better controlled;

(iv) quality of work is uneven and needs to be improved;

(v) grading on gravel roads should receive a greater priority than in the past and should be carried out systematically;and

(vi) routinemaintenance ( 0cantonnage")needs to be reorganizedto cover the main network and to be better monitored.

These operational issues will be addressed under the project through (a) recourse to gradual contractingout of road activities;(b) assistanceto DGR in planning, cost accounting and setting up appropriate management information indicators; (c) creation and operation of a Control Unit for Maintenance Works for supervision of works by force account and under contract; and (d) increasedbudgets for road maintenance.

D. PAST BANK GROUP INVOLVEMENTIN THE TRANSPORTSECTOR

1.43 The .sRociation has already financed one engineering and four highway projects and has helped develop the country's trucking operations through an IDA credit. The First Highway Project (Cr. 467-BU, 1974), which had its origin in an engineering credit (S.11-BU, 1970), was completed successfully in 1980 and provided US$ 5.0 million for a road maintenance project. The project was an initial effort to establish adequate road maintenancepractices.

1.44 The Second Highway Project (Cr. 773-BU, US$ 14 million, 1978) provided financingfor the paving of a major national road, Bujumbura-Rugombo (RN5: 65 km), the commencement of an improvement program for selected secondary roads and bridges, the constructionof a new central laboratory, strengthening of the mechanized maintenance brigade and provision of technical assistanceand road equipment. The projectwas completed in July 1983. The road maintenance components of the project have generally met their institution-building objectives whereas the road construction components had cost overruns of over 50X due to technical problems and serious disruption in international transport in the region following hostilitiesin Uganda in 1979. - 22 - operatingby the end of 1990 and their number should increase furtherunder the proposed Coffee Sector Projectand may total close to 200 units by 1994. Most of the washing stationshave to use a communal road before they reach the main network; these access roads are generallyin poor conditionand are not regularlymaintained. So far the washing stationsused to be built and operated by public entities, the Regional Development Companies (SRD - SocieteRegionale de Developpement).The SRDs have traditionallybuilt the access roads and maintainedthem on an ad hoc basis, generallyusing funds provided by externally-financedprojects. They also used to intervene occasionallyon the main networkto keep it passable for the trafficto and from the coffee-washingstations whenever DGR was not able to do so. This system has not been the most cost-effective. Besides, it can no longer be maintained because the SRDs will be reorganized in the medium-term and subsequently the coffee-washingstations will be privatized under the proposedCoffee Project. Hence, there is a need to set up a new organization to address the specific needs for rehabilitationand maintenanceof these roads and to provide for their financing. It is envisaged that DGR be utilized as a planning, contractingand supervisingentity for these roads whereas works would be carried out by contractors. Since these roads are presently under the responsibilityof the Ministry of Agriculture and Livestock(MAE), an agreementbetween MAE and MTPDU is needed to defineDGR's role and responsibilities(para. 4.01 (d)). A cess on coffee revenueswill be collected (tentativelyestimated at about FBu 4 per kg of coffee) to providethe local financingneeded to maintain these roads (para.4.01 (e)).

2.12 The projectwill graduallyimprove the access roads to the existing washing stationsand establisha maintenancesystem for the networkof access roads to all coffee-washingstations 1/. The gradual improvementof the existing access roads will concernabout 500 km of tracks (an averageof 6.5 km per station). It will consistof:

(i) focusingon drainage and black spots;

(ii) setting a labor-basedmaintenance system; and

(iii) subsequentlysystematically improving the trafficabilitythrough localizedembankment and spot regravelling.

2.13 These works will be carried out under contract by local SMEs essentiallyusing labor-basedtechniques, under DGR supervision. Training will be organizedfor the SMEs (para.2.19).

1/ The access roads to the coffee-washingstations to be built in the future are expected to be financed under the proposed Coffee Project, like the coffee-washingstations and built by the same contractor. However, the proposed project would set up a maintenanceorganization availablefor these roads too. - 17 - high priority to training both in MDTPUand MTPT, (ii) shifting maintenance works from force account to the private sector and developing a market for the domestic constructionindustry which is expected to become in the long term a significant actor in influencing the country's sectoral policy regardingroad maintenance,(iii) increasingemphasis on the need to improve the overall sector performance through more liberalization, reform of transport psrastatals and of the regulatory framework, better planning at the sectoral level throughthe PEP mechanismsand strengtheneddialogue with the neighboringcountries to improve the conditionsof transport operations on the Import routes. - 18 -

II. THE PROJECT

Ob1ectives

2.01 The Transport Sector Project would support, at the sector level, the general macroeconomic policy of the Government and its efforts of structuraladjustment. Its main specificobjectives are the following:

(a) reduce overall transportcosts for the country;

(b) ensure a better economic integrationof the sector, in particular by encouraging the domestic private sector, both transport operators and constructionfirms, and liberalizingthe transport sector through appropriatereform of the regulatoryframework;

(c) make a positive contribution to the financing of Government expendituresand a balanced budget;

(d) support the development of coffee exports, the main source of foreign exchange income for the country;

(e) consolidateand improve road maintenancepractices, institutions and funding, and achieve a better balance between maintenanceand new construction; and

(f) developplanning capabilitiesfor the transportsector within both MTPDU and MTPT.

These objectiveswill be addressed through (i) specific project components and subcomponentsdescribed hereafter and (ii) transportpolicy improvement measures (para. 4.01). One out of the two project componentswill address the needs of DGT for institutionalsupport and financingof transportstudies and subsequentpriority investmentswhile the other will provide support to a multiyear road maintenanceand rehabilitationprogram.

A. TransDort Component

2.02 This component will provide DGT with institutionalsupport and assistance to carry out transport-related studies and will have a provision for transport investment needs to be identified under these studies. In addition, a Road TransportDirectorate would be establishedwithin MTPT to monitor the performance contract of OTRACO (see para. 1.29), as well as passenger and freight traffic. The overall objectivesof the institutional support to DGT are to (i) create a transport data base and strengthenDGT's planning capacity; (ii) assist in monitoring international transport and preparing adequate sector policies especiallyaiming at diversifyingexport routes for coffee and lowering global transport costs; (iii) assist the country in its dialogue with transit countries through better knowledge of relevant data in complement to other donor's actionswhich aim essentially at improving the physical transit infrastructure; and (iv) assist in - 19 - reforming the transportparastatals. Support will be provided through (i) technicalassistance (48 man-monthsof transporteconomist, 24 man-monthsof an expert for managementof transportparastatals, 12 man-monthsof experts for short-termassignments and 48 man-months of junior transport economilt to be recruited locally) which will continue the technical assistance financed under the Fourth Highway Project since November 1988; and (ii) training for DGT staff including tne organizationof training seminars in Bujumbura and overseas training (60 man-months),to be financed under the project. Outline TORs for these activitiesare in Annex IX.

2.03 The project will finance a number of transport-relatedstudies includingstudies ons

(i) road safety and traffic regulations and traffic conditions in Bujumbura;

(ii) conditions and safety of navigation on the lake and development of small fishingport facilitiesalong the shore; and

(iii) air transport includingmanagement of the Bujumbura International Airport and operatiorsof Air Burundi;

Outline TORs for these studies,which amount in total to about 24 man-months of experts, are in Annex XIII. A provisions.f funding for additionalstudies to be agreed upor later has also been included (14 man-months)as well as a provisionto financepriority investmentsto be identifiedunder the studies, such as airport equipment renewal and devices for the improvementof lake navigation safety.

B. Road Component

Description

2.04 A comprehensive program of road activities and institutional strengtheninghas been prepared by the Governmentand submittedto the donor community. The project comprises:

(i) a four-year road rehabilitation,upgrading and maintenance program (1990-1993)consisting oft

(a) rehabilitationof 75 km and .esurfacing(single- or double- surface treatment) of 413 km of paved roads, upgrading to paved standardsof 26.4 km of gravel road and rehabilitation of 565 km of earth/gravelroads;

(b) patching of the entire paved road network (1,011 km); regravellingof selectedearth roads (1,200km in four years); grading of the main earth/gravel roads (8,000 km in four years); labor-basedmaintenance on the whole main network (about 4,100 km); and bridge maintenanceand rehabilitation; - 20 -

(iL) rehabilitationand maintenanceof the coffee roads by local SME8 using mostly labor-basedtechniques;

(iii) institutionalsupport to DGR throughthe creationof a Control Unit and of a Road Planning Unit, technical assistance and training for its staff and for small- and medium-scaleroad maintenancecontractors; and

(iv) feasibilitystudy of an equipment-rentingpool.

(a) Road Rehabilitation, Uwaradintand Maintenar.ceProgram

2.05 The four-year road maintenanceand rehabilitationprogram (1990- 1993) will focus on maintenance,rehabilitation and improvementof priority roads for economic development, and on the extension of appropriate maintenance practices to the whole main road network. To meet the double objective of increasing DGR's capac'ty to carry out road maintenance operations efficiently without undue burden on its organization and to promote the private domestic construction industry, the works will be carried out both under contract and by force account. The projtct would be a first phase of a gradual shift of activities from force account to the private sector. Since the project will provide support to increase maintenance operations, it is not intended to reduce force account activities but to utilize a share of the increased road maintenance activities to create a permanent market for private domestic contractors. It is not envisaged to increase the equipmentfleet to carry out force account activitif-;however these activitiesmay be increasedthrough improvedefficiency, wk a is also one of the project'sgoals.

Works by Contract

2.06 Rehabilitationand resurfacingof paved roads as well as upgrading to paved standardsof a gravel road will be carried out by contractorswith the assistanceof consultantsfor the supervisionof works. Such contractors have traditionally been major foreign firms with or without a local subsidiary. A key objective of the project is to increase the national capacity for unpaved road maintenanceby involvingdomestic contractorsin this field, which was in the past reserved for DTE's brigades. A handfulof contractors can undertake equipment-basedperiodic maintenance works on unpaved roads. Other contractors specialized in housing, businesses or collectivitiescan be involved in drainage and bridge construction,repairs and maintenance. Finally, the lengthman system (cantonnage) for labor-based routinemaintenance, so far carried out by direct labor, can be contracted out to individuals(single-contractor scheme as in Ghana),small contractors, businessmen or collectivities(as in Zaire). Contractingout these works will open new fields for growth of the domestic private sector and employment in the construction sector. It will also enhance the cost-effectiveness of road maintenance because firms or workers will be paid on the basis of works actually done and not on the basis of time spent. The goal of this promotion program is to establish a capacity for equipment-based raintenance in the domestic private sector equivalent to that of DTE's brigades with a - 21 - production capacity of 1,000 km of grading and 150 km of regravellingper year.

2.07 A consultantpreviously involved in the Local ConstructionIndustry Project reviewedthe capacitiesof contractorsand draftedan action plan for providing them with technical assistance on site and training through seminars when they start carrying out road works.

Works by Force Account

2.08 DTE will continue to carry out (i) patcling operations on the entire paved road network; (ii) a large share of improvementworks (58Z), regravellingand grading (651) on earth/gravelroads; and (iii) the portion of "cantonnage'or labor-based routine maintenance on the entire network (4,100 km) for which it will not be possible to contract out works due to lack of potentialcontractors immediately available. It is expected that the portion of the works to be contractedout will increaseover the years.

2.09 To carry out these works, DTE will continue to run (i) its four heavy brigades (for regravellingand improvementof unpavedroads) which will require mechanical and logistical support from the regional workshops in Bujumbura, Ngozi, Gitega and Bururi (already built and equipped with GTZ financing); (ii) its four light brigades for grading the unpaved network; (iii) its two brigades in charge of patching and resealingpaved roads; and (iv) its brigade in charge of bridge maintenance. In addition to this, DTE will hire labor for labor-basedroutine maintenance under the supervisionof the 15 provincial supervisors,with the objectiveof progressivelyreducing the directly-hiredlabor over years and increasing contractedout works as indicated above. DTE will receive technical assistance support under the project to carry out its tasks (para 2.16-17) and the regionalworkshops as well as the bridge maintenancebrigade will receive financialand technical assistance from GTZ. One heavy brigadewill be used as a permanenttraining unit for both DTE and private contractors'staff. By the end of the project, it is expected that the production capacity for equipment-basedroad works of the DTE's brigades and of the domestic contracting industry will be equivalent. Accordingto the cost-efficiencyreached by these two production groups, DGR will decide whether and at which pace it will be appropriateor not to reduce the share of direct labor and increase that of contractorsin the followingyears.

2 10 The proposedproject will includerehabilitation of and spare parts for existing equipment and a limited amount of equipment replacement for DTE's brigades as well as materialsand suppliesneeded for the program. The project also includes a feasibility study of a commercially-oriented equipmert-rentingpool (para 2.20).

(b) Rehabilitationand Maintenanceof the Coffee Roads

2 11 A program of rehabilitationand maintenance of access roads to coffee-washing stations ("coffee roads") has been designed to support productionof the highest grade of coffee ("fully-washed')which is processed through a number of washing stations. There will be 110 washing stations - 22 - operatingby the end of 1990 and their number should increase furtherunder the proposed Coffee Sector Projectand may total close to 200 units by 1994. Most of the washing stations have to use a communal road before they reach the main network; these access roads are generallyin poor conditionand are not regularlymaintained. So far the washing stations used to be built and operated by public entities, the Regional Development Companies (SRD - Societe Regionale de Developpement). The SRDs have traditionallybuilt the access roads and maintained them on an ad hoc basis, generally using funds provided by externally-financedprojects. They also used to intervene occasionallyon the main network to keep it passable for the traffic to and from the coffee-washingstations whenever DGR was not able to do so. This system has not been the most cost-effective. Beaides, it can no longer be maintained because the SRDs will be reorganized in the medium-term and subsequently the coffee-washing stations will be privatized under the proposedCoffee Project. Hence, there is a need to set up a new organization to address the specific needs for rehabilitationand maintenance of these roads and to provide for their financing. It is envisaged that DGR be utilized as a planning, contractingand supervisingentity for these roads whereas works would be carried out by contractors. Since these roads are presently under the responsibilityof the Ministry of AgricLtltureand Livestock (MAE), an agreementbetween MAE and MTPDU is needed to define DGR's role and responsibilities(para. 4.01 (d)). A cess on coffee revenueswill be collected (tentativelyestimated at about FBu 4 per kg of coffee) to provide the local financingneeded to maintain these roads (para.4.01 (e)).

2.12 The projectwill graduallyimprove the access roads to the existing washing stationsand establisha maintenancesystem for the network of access roads to all coffee-washingstations 1/. The gradual improvementof the existing access roads will concernabout 500 km of tracks (an average of 6.5 km per station). It will consist oft

(i) focusing on drainage and black spots;

(ii) setting a labor-basedmaintenance system; and

(iii) subsequentlysystematically improving the trafficabilitythrough localizedembankment and spot regravelling.

2.13 These works will be carried out under contract by local SMEs essentiallyusing labor-basedtechniques, under DGR supervision. Training will be organized for the SMEs (para. 2.19).

1/ The access roads to the coffee-washingstations to be built in the future are expected to be financed under the proposed Coffee Project, like the coffee-washingstations and built by the same contractor. However, the proposed project would set up a maintenance organization available for these roads too. - 23 -

(c) InstitutionalStrengthening

2.14 The multiyear road program has a significant component for supporting institutionaldevelopment in the sector, including technical assistanceand traini:'fg.Two new units: a Road Planning Unit (Cellule de Gestion Routiare-CGR) and a Control Unit will be createdwithin DGR with a permanent legal status (para.4.01 (c)). Technicalassistance and training programs have been conceivedglobally in order to coordinatethe various donors' interventions. The technicalassistance program has been designed to support developmentof the planning,subcontracting and quality control functionsof DGR, and to strengthenmanagerial capacities of DGR in areas where it remainsdifficult to recruitand/or retain localskilled staff. The trainingprogram is basicallya continuationof the actionsundertaken under the Fourth Highway Project (para. 1.34) and also addresses the new needs resulting from the private sector's involvement in road maintenance activities. IDA is expected to finance 340 man-months of international experts and 144 man-montrhsof junior locally recruitedexperts under the project (see details in Annex VIII) whereas FAC, AGCD and GTZ would finance 44 man-months,44 man-monthsand 220 man-monthsrespectively. Technical assistance

2.15 FAC will provide financial assistance and two expatriatestaff to help create the Road Planning Unit to set up and operate a road management system (TORsin Annex X). The paved networkwill be coveredin a firstphase and the unpaved network in a second phase starting after one to one-and-a- half years of operations. The unit will install and run the HDM-Illmodel and two local engineerswho have alreadybeen trainedin its utilizationwill be appointed to the unit as counterpart staff. This unit, which will report directly to the Director General, will be in charge ofs

(i) collecting data and establishing a data base comprising road geometric and physical characteristics,road constructionand maintenance operations, unit costs for road activities and vehicle operations, and traffic counts; data collection campaigns to be financed under the project will be carried out with the assistance of consultants;

(ii) updating those data on a systematic basis;

(iii) operatingthe HDM-IIImodel to formulateoptimal policies for road maintenance,upgrading and construction,and to preparea multiyear road expenditureprogram;

(iv) assistingMTPDU and DGR in preparingtheir sectoral proposal for a multiyearPublic ExpenditureProgram (PEP) in coordinationwith the Ministry of Plan; and

(v) providing advice to DTE and DTEC on the formulation of their respectivework programs. - 24-

2.16 A Control Unit will be createdwithin riTECto contract out road maintenanceworks to the private sectorand to monitor implementationof all road maintenanceworks whethercarried out under contractor by forceaccount (TORs in Annex XI). D'EC is already in charge of supervising the implementationof new constructionand major rehabilitationworks under cont.e&*t,with the assistanceof three expatriateengineers (one providedby AGCD and two by FAC, but the two latterpositions were canceled in 1989 due to a decrcasein the volume of new constructionand a reorientationin French technicalassistance). The new unit will need the supportof an expatriate engineer financedby IDA in addition to the two positionsmaintained and/or to be created by AGCD and will have local counterpartengineers already working in DTEC. The unit will hire local consultantswhen needed to superviseworks and prepare bidding documents. The consultantin charge of assisting contractorson training sites (para. 2.19) will also assist the Control Unit in preparingthe contractdocuments, selecting the contractors and will also review the currentregulation for classifyingcontractors with regard to road constructionand maintenanceworks.

2.17 In addition to the above, DGR will continue to need technical assistance to strengthenits managerial capacities. While the number of expatriates on site will decrease, technical assistance will still be greatly needed to assist DGR in carrying out its traditional activities in the following areas: (i) accountingand financialmanagement (one expert); (ii) procurement of spare parts and materials (one expert); (iii) management of force account works and cost control (one expert); (iv) operationsof the workshop and warehouses in Bujumburaand the regionalworkshops in Bururi, and Gitega (four experts provided by GTZ); and (v) operationof the bridge maintenance and rehabilitationbrigade (one expert provided by GTZ). In addition to permanent experts, DGR will have recourse to short-term expatriateand local experts under fixed-termcontracts for assistancein specificareas, especiallyto compensatefor the difficultiesmet by DGR for recruiting and/or retaining skilled staff in certain specialties (particularly accounting, computer operating, project design and onsite work supervision). This should not be seen as an attempt at turning around the civil service constraints but rather as an attempt at developing the capabilities of local private consultants, the availabilityof which is currentlyvery limited.This is part of the overall efforts to strengthen private sector capabilitiesfor road works. Training

2.18 The trainingprogram designed for the 1990-1993period will address the needs at all staff levels for DGR's traditionalactivities and the needs resulting from the promotion of the private sector in road maintenance activities. It will requiretwo full-timetraining specialists (one of them will assist DGR in developing a personnel management system) plus one trainingspecialist during one-and-a-half years for assistanceto the private sector (para. 2.19). Regarding DGR staff, the objective is to train or providecomplementary training to: (i) 260 skilledlaborers; (li) 40 worksite managersand supervisors;(iii) 120 assistantmechanics and engine operators; (iv) 36 equipmentoperators; (v) 15 accountants,secretaries and storemen; and (vi) 27 higher level technical,administrative and financialstaff. The training plan also includesoverseas training (60 man-months)for about 20 staff (five to six per year for one- to three-monthperiods) in specific - 25 - techniques of management, operations and transport-related environmental issues, for which local trainingwould be difficultand costly to provide. With respect to implementationof this program, the followingaspects have been taken into account:(i) full use of availabletraining facilities of the Gitega Training Center, and (i$) coordinationof human resources from the various technical assistance programs. On-the-job training of mechanics and electricians at the central workshop in Bujumbura will be provided by bilateralaid from GTZ, while specific training in project design and road work control will be carried out by experts financed by IDA, FAC and AGCD through seminars and on-the-jobtraining. In addition to this, a number of accompanying measures will be taken to firmly establish manpower development within DGR. lheseinclude the strengthening of DAF's Division of Personnel, the setting up of a personnelmanagement policy by the end of the first year of the project implementation, the reorganization of the Training Unit and the setting up of a Training Coordination Comittee to provide a functional link between training and personnel management, and the technical departments (DTE and DTEC).

2.19 To address the needs of the privatesector involvedin road works, the project will also help domestic contractors enhance their technical skills. First, trainingseminars on road techniques,equipment management, site managementand contractmanagement will be given to managers,engineers and technicians;operators and mechanics will also receive refresher training in the DGR's training center in Gitega. Then, training works will be organized to train construction firms on road techniques; a technical assistant will assist them in carrying out the %orks satisfactorily with regard to quality and cost effectivenessduring the implementationof the training works. When training works are completed, the successful contractorswill be graduatedto road contractorqualification and will be allowed to participateto relevantLCB. The local componentof the cost of this technicalassistance will be charged to contractorsbenefiting from it accordingto billingrates to be publishedat the time candidatecontractors are preparing their proposalsfor the trainingworks.

(d) FeasibilityStudy of an Eguipment-RentingPool

2.20 A study will be carried out analyzing the appropriatenessof settingup an equipment-rentingpool, in charge if rentingroad construction equipmentto DGR's brigades and to domesticcontractors (TORs in Annex XII).

C. Cost Estimates

2.21 The total cost of the project, net of taxes and duties but includingcontingencies, Is estimatedat US$ 90.82 million equivalentwith a foreigncomponent of US$ 57.49 million (632) and local costs of US$ 33.32 million (372). Taxes are estimated at US$ 3.05 million. Base costs are expressedin prices as of mid-1989. Physicalcontingencies of 102 have been added to base costs. Price contingencieshave been added to base costs plus physic.l contingencies. Price contingenciesare based on recent estimates of (i) internationalInflation: 7.22 in 1990 and 4.42 from 1991 onwards;and ($$) local inflation:4.52 in 1990 and 42 from 1991 onwards. The detailed project costs are shown at Table 2.1. - 26 -

Table 2. 1

Proiect Cost Estimates 2/

USiS*illion) ff8u million Foreign as A. i al For iOn Tot local Foreign Tott t vf total 1) T chnieal itne 0.14 1.2s 1.42 22.0 16.6 220.8 90t (2 Trining 0.04 0 U 0.42 6.v 8.0 Ui.1 90i (8) Study Fund 0.l0 0.75 0,81 98.1 112.4 140.65 W0 (4) Tsnert Investment 0.00 2.10 2.10 0.0 825.5i 825.5i 100t TOTAL 6858 CASTS TiRAP98T CU0IT 0.87 4.48 4.65 56.6 694.6 751.4 926 m. _ I. iid Rehabi I I tlont;rdina /Ime rov7nt irora

(12 hablitaton 4 (78 h-) 0.70 2.11 2.81 109.0 826.9 435.6 76: Urdine lewinda-Subanan (26.4 ha) 1.6 4.5 65 .21 2t8.6 673.8 962.6 701 (8 Improvesant Gravel Ronds (268 ha7 Force Account (885 he) 1.56 1.56 8.16i 44.6 244.6 489.6 W6s Labor-On Works under Contract (No ia 1.78 0.00 1.78 267.4 0.0 267.4 Ot Sub-total 5.I7 6.04 13.91 0.6 1,248.44 21*5.3 863 XI. Periodic Meintengiep Pr8ora2 ) Reurfacng Paved Roeds (413 ia) 2.05 6.16 6.21 816.2 954.3 1272.6 78) (2) RegravoIIInol Er t/Ora vl Road- iFore Account f:760 h) 00.91 1.86 2.26 140.4 210.6 851.0 60i Under Contrat (420 ha) 0.87 1.83 1.9O 68.2 205.6 294.0 70i (8) Bridge lbintenance and Rehabilitation 1.06 0.46 1.58 168.0 72.0 240.0 0S

u b-tot l 4.61 9.381 13.92 714.78 1,442.85 2,157.60 6 70 III. Rautina #ilntsnancs Prooram *0 Patching Paved Road 0.61 0.S5 aiJ1. 126. 54.0 180.0 (2) Crading Earth/Cravel Roads Force Account (5.200 ki 2.16 2.18 4.86 8s.o0 86.0 676.0 i Under Contract (2.600 he) 1i.0 1.98 8.26 201.6 302.4 504.0 602 8 Lord intenane 2.69 0.48 6.85 448.8 71.5 520.0 142 ( Emergenies 0.82 0.00 o02 s6.o 0.0 60.o 0o (5) EuipmentA Spare Parts 0.:67 6.01 6.68 106.6 981.8 104. 906 Sub-totel 6.87 10.9s 19.82 1,297.16 1,697.20 2,994.78 671 IV. Was Rod Pro- Cl) Impr_rovnt (emisting station onlj) 8.57 0.19 8.75 52.7 29.1 861 81 (2) eihntenance (including future st tiono) 0.62 0.04 0.68 s26.9 69.7 1.61 4.8 0.28 4.62 679.7 85.6 715.4 Si5 V. Inatitutional Davlaoon_nt Cl) Control Unit 0.89 0.1S 0.54 60.4 22.6 68.0 27m (2) Road Planning Unit 0.43 0.64 1.06 66.0 99.0 165.0 606 8) Technical WAristance 0.62 5.59 6.22 96.4 667.2 968.5 90e ) chanical WAornhopsfTA included) 0.29 1.15 1.44 48.1 176.6 228.7 60m Tr) inin (TA included) 0.7 1.77 2.14 s8.0 274.0 832.0 ans Study(6) Fund 0.19 0.76 0.95 29.4 117.5 148.9 No0 Sub-total 2.29 10.06 1.85 8.2 1,656.9 1,914.1 614

TOTAL amE CoStSa iiT 25.ti 86.86 54.11 8,987.1 5,960.2 9,937.2 60T

UTiKL IMPIDRM11 25.69 48.06 68.96 4,013.7 6,674.9 10o,t66.7 6M6

ContiAencies (8261 bass costs) -ical (ll05 base cots) 2.89 4.81 6.90 401.4 667.5 1,068.9 626 PrIc 4.64 10.12 14.98 780.2 1,569.0 2,819.2 6s8 Onim m 3OS3.82 s7.49 90.62 8,165.8 6,911.4 14.076.7 685

2/ Coete arn netof taxe whichare estiated at Flu 470million (USS8.06 quivalent). - 27 - 2.22 The costs of works ci paved roads are estimatedat US$ 20,400/km for periodic maintenance (resurfacing). The costs of improvementworks on earth/gravelroads are estimatedat USS 15,000/kmfor equipment-basedworks and USS 7,500/km for labor-based works under contract (including coffee roads). The cost of road upgrading to paved standards are based on a feasibilitystudy by a consulting firm and actual cost of similar works in the country. Periodicmaintenance costs on earth/gravelroads (regravelling) are estimated at USS 4,500/km. Routine maintenancecosts are estimated at USS 1,000/km for paved roads (patching)and US$ 1,200/km for earth roads (grading). Basic routine maintenance ("cantonnage")on the whole main network is estimatedat US$ 200/km per year. These unit costs are based on those of similar recent and ongoing works in the country. Costs of equipment,spare parts, materialse-v suppliesare based on recent bid prices and operations in Burundi. The costs of works by force account shown in table 2.1 do not include equipment depreciation nor spare parts since equipment and spare parts costs are shown separatelyin the table. The man- month cost of technicalassistance services has been estimatedin line with those for similar and ongoing services in Burundi. The costs of fellowships for overseas training are estimated at US$ 6,000 per trainee per month, includingtuition and fees, housing, travel and subsistence.

D. Economic Justificationof the Prolect

2.23 The proposed project is well justified and yields an overall ERR of about 32%. An economic analysis of individualcomponents of the project is presented in Chapter III.

S. Prolect Financing

2.24 Five institutionshave alreadypledged a total of US$ 65.2 million equivalentof ready financing,including IDA (US$ 43.2 million credit),AfDB (US$ 6.8 million from existing balances of past credits), AGCD (US$ 5.0 million of which US$ 2.1 million in grant and FBu 450 million - US$ 2.9 million equivalentof counterpartfunds generatedunder balance of payments' aid), FAC (USS 1.4 million) and GTZ (US$ 1.8 million). The contributionsof the Governmentand the Coffee cess yield are estimated respectivelyat about US$ 23.7 million and US$ 1.9 million. The Governmentparticipation will be provided by (i) the recurrentbudget (BO) - for salaries and operation of offices, and (ii) the capital budget (BEI) and the National Road Fund - for all other locally-financedexpenditures (para. 4.01 (a)). The Coffee cess will provide the local counterpartfinancing for the access roads (para. 4.01 (e)). The National Road Fund contribution and a portion of the BEI contributionare to be credited to DGR on a quarterly basis in a special account opened in the Central Bank (para. 4.01 (b)). The remainingelements for new equipment and spare parts amountingto US$ 7.0 million are expect- to be financedby Italy, Japan and/or OPEC. These supplieswould be required to replace existing equipment towardsthe end of the project implementation period to allow DGR to continue its activitiesbeyond the project period. Hence they are not high priority project items but have been left for donors - 28 - who are in early stages of discussionswith Governmentfor possible financing of such items.

P. Iualementationend Procurement

2.25 The project will be implemented by MTPT through DGT for the transport component and by MTPDUthrough DGR for the road component. The expected implementation schedule for major activities of each project component is shown in Chart 3. This schedule ha been discussed and agreed during negotiations. The project will in principlecover a five-yearperiod starting July 1990 due to the time needed to carry out the works. The works by contractorson paved and gravel roads should start in March 1991 and take 48 months to be completed. Equipmentfor road maintenanceto be financed by the IDA credit should be delivered by June 1991, about six months after notificationof contracts to the suppliers. Technical assistance for road maintenancemanagement and planningwill be provided for four years starting June 1990. The implementationof the transport investment is expected to begin in 1991 dependingon the results of the sectoral studies to be carrid out in 1990. The project is expected to be completedby June 30, 1995.

2.26 Procurementarrangements are summarizedin Table 2.2.

Table 2.2 ProcurementArranRements 3/ (US$ million) Non Total ProloetElement ICB LCB Other AsDlic. Costs CivilWorks 22.7 15.1 18.3y 56.1 (12.6) (9.1) (21.7) VehleIs, EquI_pmnt, 6.6 a.8 6/ 17.4 Materials & Supplies (8.6) (0.5)3 (9-1) ConsultantServices 18.9 V/ 13.9 IncludinoStudies (9.8) (9.3) Tr InIng/FellowshI 8 4 8.4 l8 1) ft,l) Tot I 81.8 16.1 2081 19.8 90.$ (21.2) (9.1) (12.9) (48.2)

3/ The figuresIn parenthesisare amunts financedby IDA.

4/ Forceaccount works: Includes DOM staffsalaries and suppliTsfinanced from localsources and procuredunder localrules.

51 Procurementrules of other donors.

6/ Internationalor localshopping on the basls of at leastthres quotations.

7/ IDAguide Ines (August1901) will be applledfor US$9 8mlllon. Th remaining consultant servicesfinanced by the otherdonors will be procuredunder their respectiveguidelines for USI 4.6 ml II on. - 29 -

2.27 Major civil works for upgrading a gravel road to paved standards and resurfacingof paved roads totalling about US$ 22.7 million would be carried out by contractorson the basis of internationalcompetitive bidding (ICB), in accordancewith the 1985 Bank Group Guidelinesafter suitablepre- qualificationprocess.

2.28 Works smallerand dispersedall over the countryon paved or gravel roads costing less than USS 500,000each and totallingabout US$ 15.1 million will be carriedout by contractorson the basis of local competitivebidding (LCB) proceduresadvertised locally with a bid submissionperiod of at least 60 days. Adequate competitionwill be generated in LCB since there is a reasonablenumber of foreigncontractors (about five) who have an established base as well as a few local contractors (about four). LCB procedureswill be applied according to Burundian procedures provided that (i) foreign contractorsare not precluded from participatingand their registrationin the Registry of Commerce is not required;(ii) no procurementis made on the basis of selected tenderingor direct contracting;(iii) 3 bids at least are receivedand bids are opened in public i.e. bidders or their representatives should be allowed to attend; (iv) no special preference is given to local bidders in the evaluation of bids; and (v) a provision will be made for paymentof the foreignexpenditures whenever applicable. First documentsfor LCB will be approved by the Association. In addition to these, works estimated to cost about US$ 1.2 million (out of the US$ 15.1 million mentioned above) will be subdivided into small lots of about US$ 50,000 to US$ 100,000, which small domestic civil works contractorswill execute as part of field training. These contractorswill be prequalifiedon the basis of assessed capacity to undertake these works and will be selected through LCB for which detailed bidding documents will include calculations of indicative unit prices; the bidders will be asked to bid indicating their prices in percentageabove and below the same with due justification. After completion of the training works, the successful contractors will be classified as road construction contractors and will be allowed to participate to regular LCB. The production capacity of the domestic contractors for equipment-based road works is estimated at about US$ 2 million per year at the end of the project.

2.29 Equipment, spare parts, materials and supplies would be grouped into suitable lots and procured through ICB in general on a year-by-year basis. Miscellaneous items of equipment, spare parts, materials and suppliers in lots of less than US$ 50,000 and totalling no more than US$ 500,000 may be procured by internationalor local shopping on the basis of at least three quotations.

2.30 Consultants for technical assistance, studies and supervision will be selected following the 1981 Bank Group Guidelines; their terms of reference and conditions of employment will be discussed and agreed upon during negotiations. Before awarding the fellowships, the Government will furnish a detailed training program to IDA for approval. The program will includethe qualificationsof the candidates,types and costs of training as well as the train4 ng institutionsand an indication of assignments to be given to the trainees on their return to Burundi. - 30 -

2.31 IDA's prior review of invitations to bid will be limited to contracts estimated to cost US$ 35,000 equivalent or more. These undertakingshave been agreed during negotiationsand are a part of the covenantsof the credit.

G. Disbursement

2.32 The proposed IDA Credit of SDR 32.7 million (US$ 43.2 million) would be disbursedon the followingbasis:

(i) 85Z of total expendituresfor civil works carried out under contract for resurfacingof paved roads, road upgrading to paved standards,rehabilitation of coffee roads, regravelling and gradingof earth/gravelroads;

(ii) 1001 of foreignexpenditures and 802 of local expendituresfor equipment,vehicles, spare parts, materialsand supplies;

(iii) 1002 of foreign and 801 of local expendituresfor consultant services and technicalassistance; and

'iv) 1002 of foreignand 80Z of localexpenditures for trainingand fellowships.

All disbursementswill be fullydocumented, except for contractscosting less than US$ 35,000 equivalent. These expenditureswould be made against statementsof expenditures(SOEs) certifiedby the project implementation units (PIUs). Supportingdocumentation for SOEs would be retainedby PIUs and made availablefor IDA review during supervisionmissions. In the case of prefinancingfrom Governmentcounterpart funds, the reimbursementrequests should not be less than US$ 50,000 equivalent. To ensureprompt availability of funds for the project, a special account would be established in US dollars at a banking institutionacceptable to IDA, with an initial deposit of US$ 750,000to be made by IDA at credit effectiveness,representing about two months of expendituresfor the project. The special account would be used to pay all expendituresof the project. Requests for replenishmentof the special accountwould be submittedto IDA each month.

2.33 Disbursementsfor the access roads to the coffee-washingstations will be subject to confirmationof an agreement between MAE and MTPDU to define the role and responsibilityof DGR (para.4.01 (d)) and to the setting up of appropriatefinancing mechanisms (coffeecess) for the local funding of maintenanceof these roads (para 4.01 (e)).

2.34 The estimatedschedule of disbursements,given below, is based on the project implementationschedule and the disbursementprofile of past highway projects in the country. It also allows for one year delay from the end of the physical executionof the project and the last payment to allow for delays in determiningprice variationsin contracts. - 31 -

Estifmt-dSchedule of Disbursements (US$ '000)

Bank Group Fiscal Year Cumulative Disbursements and Semester Ending at end of Semester as 2 of rotal

1990

June 30, 1990 750 2Z

1991

December 31, 1990 1,300 32 June 30, 1991 4,200 102

1992

December 31, 1991 7,200 17S June 30, 1992 12,300 282

1993

December 31, 1992 17,500 412 June 30, 1993 22,500 522

1994

December 31, 1993 27,500 642 June 30, 1994 31,700 732

1995

December 31, 1994 36,100 842 June 30, 1995 40,200 932

1996

December 31, 1995 43,200 10oo

Closing Date: December 31, 1995

H. Accountina.Auditing and Re2ortingReauirements

2.35 Project accounts will be maintained by DGR and DGT in accordance with generallyaccepted accounting principles, to record all project revenues and expenditures,assets and liabilities. Separate accountswill be kept for each componentand will be availablefor inspectionby the Associationduring project supervision. As DGR's accounting performance has not been fully satisfactoryin the past, technicalassistance will be necessaryto closely - 32 - monitor such accounts. Project accounts includingthe Special Account and SOEs will be audited annually in accordance with internationalauditing guidelines by independeut auditors acceptable to the Association. The auditor'sieport togetherwith the projectaccounts will be submittedto the Association not later than six months aftet the end of each fiscal year (para. 4.01 (h)). The Borrower will prepare a Project Completion Report (PCR) submittedin a form satisfactoryto the Associationnot later than six months after the closing date (para. 4.01 (i)). The foregoing,detailed in Annex XV, has been agreed at negotiationsand is part of the covenants in the Credit Agreement.

2.36 Every year, concurrentlywith the preparationof the annual budget, DGR will prepare a detailed road maintenancework program for the following year, taking into considerationthe overallmaintenance targets set for the program period and likely budgetaryallocations. This programwill describe the type of activitiesto be carried out by each brigade and by contractors; indicate the estimated output of the contractors and of the brigades, equipment utilization, fuel and lubricants, materials and spare parts. To establish the work program on a sound basis, DGR will introduce an appropriatepermanent road conditioninventory system based on the progress reporting requirements described in Annex XV. Subsequentannual work programs will be furnishedto the Associationand other donors for their coments by October31 of each year and will be finalizedupon determinationof the final budget taking into considerationcomments received (para. 4.01 (a)).

2.37 Progress of implementation will be reported by DGRon the basis of the same indicators used in the preparationof the work program. DGR will prepare a quarterly Progress Report showing targets and main achievements by major activity and explaining significant discrepancies. An annual implementation report will consolidate this informationand provide details on inputs used in the execution of the program, productivi%y developments and unit costs of the various activities (Annex XV).

I. Environmental Aspects

2.38 The projectwill have a positive impact on environment by repairing road drainage, currently in bad shape, which increases erosion risks. Otherwise, improvement and rehabilitation works will follow the existing alignmentand will have littleor no effect on current land use. The project will developand enforce standardsfor limitingthe potentialnegative impact of road works on the physical environment. Technicalassistance to DGR will assist in developing local capacity to review and evaluate the potential environmentalimpacts of road works either carried out under contract or by force account (TORs in Annex VIII) and to design appropriate remedies if needed. In addition to this, suitable safeguardswill be incorporatedin bidding documents aud contracts to minimize potential environmentaldamage caused by road works especially regarding drainage facilities, risks of erosion, compaction of earth roads, treatment of quarries and borrow pits after construction, anti-erosion plantation and camps and workshops. - 33 -

[, Poverty Alleviation Aspects

2.39 By improvingroad conditionsIn the rural areas and making markets for agriculturalproducts more easily accessible,the project would have a beneficialimpact on the rural poor throughhigher farm gate prices (at least in the medium tenm) and lower prices for inputs and consumer goods. Since the labor-based routine maintenance is undertaken over the entire network, largely in low-income areas, the project will contribute to poverty alleviationin these areas. Finally the increased utilization of local SMEs in road maintenanceoperations is expectedto substantiallyincrease overall employment In road activities by a gradual shift from equipment-based activitiesto labor-basedtechniques. - 34 -

III. ECON(MIC EVALUATION

A. General

3.01 An important part of the general macroeconomic policy of the Government aims at an adjustmentof the economy, reducing import costs and increr,sing export earnings. The main aim of this is to improve the balance of trade, which now has to be supportedby a substantialinflow of external aid. Reducing overall transport costs, for external trade as well as for internal movement of goods and passengers, would have an important role in this structural change. Other general policy objectives are to ensure better economic integration of the country and to provide more cost-effective services by encouraging the private sector through both transport operators and construction firms. This would lead to a reduction of Government expendituresand a more balancedbudget. Nevertheless,the overall reduction of transport costs is potentiallythe most importantof these aims and also the most directlyperceived effect of improved transportinfrastructure and policy.

3.02 The priority for the transport sector in Burundi is to maintain past investmeats,particularly when the resources available for the sector are scarce, and to alleviate constraints in the movement, marketing and export of agriculturalproduce (mainly coffee). The proposed project has been designed to meet the above objectives. The first section of RN3 (Bujumbura-Mutambarat75 km) has been identified as needin& urgent rehabilitation whereas the periodic maintenanceprogram for paved roads (413 km) would allow the saving of greater rehabilitationcosts in the medium-term. In addition, 1,050 km of earth/gravelroads, including about 500 km of coffee roads would be improvedand adequate road maintenancewould be carried out on the whole main network (4,100 km). Finally, the gravel road betweenMuzinda and Bubax&ja(26.4 km), whose upgradingwas studiedunder the Fourth Highways Project (Cr. 1583-BU) and found to be economically justified,would be upgradedto paved standards. The project, includingboth road rehabilitationand maintenanceworks, is expected to yield an overall ERR of about 32X (see Annex XIV).

3.03 Three features in this transportproject are more emphasized than in the previous highway projects. One is the setup of a program of systematic periodic and preventive maintenance of the paved network, the second is an increasedreliance on private contractorsfor road maintenance and the third a strong institutionalstrengthening within both DGR and DGT. The economic evaluationdoes not cons;der the last two aspects individually and separately from the overall evaluation. Neverthelessthe institutional strengtheningwould provide advantages in addition to those traditionally measured by the economic evaluation.

B. Area of Influenceof the Project. Benefits and Beneficiaries

3.04 The roads selected for upgrading (26 km), rehabilitation(75 km) and for improvement (1$050 km) directly serve densely populated areas near - 35 - the capital city, in the northern and central parts of the country and the main coffee-growingareas. The maintenance program will have a positive impact on virtuallyall parts of the country. The main immediatebenefit of the rehabilitationand maintenance program will be its impact in reducing vehicle operating costs (VOCs). Improved road conditionswould also allow better access to productive areas, provide cheaper and more reliable transport, arrest deterioration of road conditions and improve DGR's maintenance capability. Importantbenefits not quantified in the economic evaluationinclude reduced freightdamage, accidentsand travel time as well as better access to social and medical facilities. Except for the two institutional strengthening components and for basic routine maintenance operations for which no separate rate of return has been calculated,all the other project components (covering about 75 Z of the project) have been subjectedto economic analysis.

3.05 The major direct beneficiariesof reduced transportcosts will be the owners and operatorsof cars, buses and trucks. Since internal freight transport is essentially free of regulation,it is expected that transport users and consumersalike would benefit from the resultingreduced transport costs. Avoiding rapid deteriorationwill prolong the lives of both vehicles and roads. Reduced fuel consumptionwould also result in savings,mostly in foreignexchange. The Governmentwill also benefit from (i) savings through its ownershipof vehicles and deferredcostly reconstructionand repairs,and (ii) additional foreign exchange earningswith improvementof coffee roads allowing the countryto commercializeand export more fully-washedcoffee at better prices. Lastly, the increased utilization of local SMEs in road maintenance activities is expected to substantiallyincrease the overall employmentin road activities.

C. Economic Analysis of the Project

3.06 For upgrading to paved standardsof a gravel road, rehabilitation and periodicmaintenance (resurfacing)of paved roads and for rehabilitation of earth/gravelroads (exceptfor 230 km of main roads financedby AGCD which will be determined by a study scheduled to start in January 1990 and for coffee roads), all road sections have been analyzed individually. Each one of the other componentshas been analyzed as a whole.

3.07 The economic analysis of the main road program is based on an assessment of costs and benefits "with" and "without"the proposed works. Both "with" and "without" project cases assume basic routine maintenance is adequately carried out. The paved roads cases take progressive deterioration of the road surface into account, resulting in an increase in VOCs (though at a slower pace in the "with" project case). The earth/gravel roads analysisassumes the currentpoor conditionof the road wouid remain the same in the "without"project case and that the project will upgrade the road conditionand then protect it against further deterioration,reducing VOCs by 10 to 252 depending on the present road condition and terrain. Only savings in VOCs have been quantifiedfor the analysis,except for the coffee roads (para. 3.08), followingthe general methodologyof the HDM-III model. Benefits not quantifiedsuch as savings in time and reductionsin potential freight damage represent substantialbenefits which, if quantified,would - 36 - increase the rates of return. The economic evaluation therefore underestimatesthe expected rates of return. 3.08 The economic analysis of the coffee roads is based on a different methodology. It assumes that in the "without"project case the production of fully-washedcoffee would be 502 lower and more lower-gradecoffee would be exported instead than in the "with" project case. The benefits are then estimated as the additional earnings provided by "fully-washed"coffee as compared to lower-gradecoffee on the internationalmarket. Due to the lack of data on potential non coffee-relatedtraffic for the coffee roads, no savings in vOCs have been quantified in the analysis. These savings would represontsubstantial benefits which, if quantified,would increase the ERR of this component,which is already at 202.

3.09 In 1988, trafficvolumes were mainly in the 200-1,000vpd range for the paved network and in the 20-100 vpd range for the earth/gravelnetwork. Traffic growth has been estimated at 42 p.a. for the road sections on the main road system, on the basis of past traffic, vehicle fleet growth (Annex I-4), fuel consumption (Annex I-5) and population growth. However, in the sensitivity analysis, a growth rate of 32 was applied. For three components, generated traffic is expected to develop the first year after completionof works, providingan additional15% traffic growth for the road to be upgraded, 42 for earth/gravelroads to be rehabilitatedand 22 for roads to be regravelled.

3.10 The economic analysiswas carried out with costs in 1989 prices, net of taxes and duties. It was carried out on a 20-year period for the new paved road, a 15-yearperiod for rehabilitationas well as for resurfacing, a 6-year period for regravelling and a 3-year period for patching and grading. The costs included in the economic evaluationcomprise civil works, supervisionand 10% physical contingencies.

3.11 The cost/benefitanalysis which is detailed in Annex XIV and based upon the above assumptionsshows that the proposed project is economically justified. The ERR for rehabilitationof the first section of RN3 is about 382 and the combined ERR for resurfacingof the paved roads is about 50Z with the lowest ERR fur an individualsection at 352 while the patching component is expected to yield a 512 ERR. The combined ERR for rehabilitationof earth/gravelroads is expected to be in the 202 range (20Z for the coffee roads) with the lowest ERR for an individual section at 102 while regravellingis expected to yield a 27Z ERR and grading 492. The ERR for the road to be paved is expected to be about 152. Various sensitivitytests have been carried out, with returns ranging from 15 to 472 for the various componentswhen expected trafficgrowth is loweredto 3% p.a. and investment costs increasedby 102. For coffee roads, a decrease of 202 in the expected benefits would result in a ERR decreasing from 202 (para . 3.08) to 122, savings in VOC still not considered.For the road to be paved, a decreaseof 2J 2 in the expected benefits (e.g. an expected generated traffic of 52 instead of 152 and an expected traffic growth of 32 instead of 7Z) and an increase of the investmentof 102 would result in an ERR of 10.22. - 37 -

D. Risks

3.12 While the project is designed to reduce as much as possible risks associated with implementation,the possibility nevertheless exists that implementationcould be delayed due to the lack of potential contractorsto carry out the works to be contractedout. However this risk is minimizedby the provision of support to the SMEs through the project. Other risks involve the p2ssible shortageof local resourcesfor maintenancewhich to,the extent possible could be preventedthrough adequate allocationsof resources in the three-year rolling PEP (para. 4.01 (a)). - 38 -

IV. AGREEMENTSREACHED AND RECOMMENDATION

4.01 At negotiations,a draft statementof sector policy (AnnexXVI) was i presentedby the Governmentto IDA and the followingactions and arrangements have been discussedand agreed upon:

| (a) the Government will give priority to maintenance rather than new construction in allocating funds to the transport sector and especially to the road subsector (para. 1.36); the three-year investment and maintenance program (i.e. Public Expenditure Program) for the transport sector will be updated and submitted annually to IDA for approval; IDA will also review the economic viability of all new transport projects exceeding US$ 2 million equivalentprior to the decisionon their inclusion in the three- year program being made; in the third quarterof each fiscal year, the Governmentwill consultwith IDA on the budget allocationsfor the transport sector for the followingyear (para. 2.24); budget allocationsfor the road sector in 1990 will be at least US$ 5.2 million equivalentin 1989 terms; the amount will not be lower in real terms in subsequent years (para. 1.38); in case these requirementsare not fulfilledfor a specific year, the level of credit funds to be made availablefor force account operationsfor that year would be adjusted to take account of the resulting estimated absorptivecapacity of DGR.

(b) local funds to be made available to DGR for road operations except civil servants' salaries will be channeled to a project account opened in the Central Bank to be replenishedquarterly which will be used to provide counterpartfunding of the project (para.2.24);

(c) a Road Planning Unit and a Control Unit will be createdwithin DGR with a permanentlegal status;two and three Burundiancounterparts will be appointedto the units respectively(para. 2.14 to 2.16);

(d) an agreement between MAE and NTPDU will define the role and responsibilityof DGR for the rehabilitationand maintenanceof the coffee roads (para. 2.11 and 2.33);

(e) the Governmentwill put in place adequate funding mechanisms for the coffee roads including local counterpart funding for rehabilitationand total fundingfor maintenance;this fundingwill be channelled through a special account to be establishedand to be managed by DGR; for 1990 the correspondingamount should be no less than US$ 350,000 equivalent; the amount will be adjusted appropriatelyin subsequentyears to take into account the unit costs and the extensionof the networkof coffee roads (para.2.11, 2.24 and 2.33);

(f) procurementproc'edures for works, goods and services and award of fellowships financed under the proposed project (para. 2.27 to 2.31); - 39 -

(g) revising annually the cost recovery mechanism for road users charges to cover the cost of routine and periodic maintenanceof roads, including revising the fuel taxation and prices (para. 1.37); based on a study of the conditionsof petroleum imports, Government will (i) take measures to increase competition among importersand (ii) subsequentlyrevise the cost recovery mechanism for road use to provide the budget with a minimum level of resourcesof US$ 5.2 million per year (para. 1.38);

(h) the project accounts includingthe SpecialAccount will be audited annually by independentauditors acceptableto IDA; the Government will ensure the submission to IDA of the project's accounts togetherwith the auditor'sreport within six months after the end of the fiscal year (para. 2.35);

(i) the Government and IDA shall agree on progress reporting requirementsand on the submissionof a Project CompletionReport (PCR) in - format suitable to IDA no later than six months after the project closing date (para. 2.35);

(j) the Government will a) put into operation the existing weight- scales on RN1 and RN5 and monitor axle loads to prepare the basis for furtherdialogue regardingregulations within the NTCA; and b) introducemobile weight-scales to monitor truckingmovements (para. 1.31);

(k) foreign currency allocation for transport operation by BRB to transport operators should progressively be made on the basis of economic criteria (para. 1.15);

(1) a revisedperformance contract suitable to IDA should be set up for OTRACO, includinga schedule and program for tariff revision and liberalization;tariffs of privateoperators in passengertransport should also be liberalizedsimultaneously (para. 1.29);

(m) a plan for privatization of OTRABU suitable to IDA should be adopted by the Governmentbefore presentationto the Board and be made effectivewithout delay accordingto a scheduleto be defined in agreementwith IDA (para. 1.30);

(n) the port of Bujumburaand the shipyard if built shall be operated accordingto principlesto be agreed upon by the Governmentand IDA (para. 1.19);

(o) customs clearancefacilities in Kayanza and Gitega in addition to Bujumburawill be commissionedby December 31, 1990 and December 31, 1991 respectively(para. 1.15); and

(p) tariff liberalizationfor transport of goods by road and tariff revision for transportby lake should be implementedby mid 1990 (para. 1.28 and 1.18). - 40 -

4.02 The Governmenthas already taken the followingmeasures:

(a) submitted to IDA the statement of sectoral policy agreed during negotiations(see Annex XVI) (para. 4.01);

(b) approved a PEP for the transport sector and road subsector for 1990-92 acceptable to IDA (para. 4.01 (a)) and made appropriate budgetary allocationsfor 1990;

(c) taken measures to give incentives to importers of petroleum products to use the most economicmodes of supply;

(d) approved revisions of OTRACO's passenger transport tariffs and adopted a schedule for tariff liberalization for passenger transport (para. 4.01 (1));

(e) submitted to IDA a draft directive to BRB to clarify the role of BRB in foreign exchange allocationto the transport sector (para. 4.01 (k));

(f) adopted a privatizationplan for OTRABU (para. 4.01 (m)); and

(g) decided on operations of the port of Bujumbura according to principles agreed upon at negotiations(para. 4.01 (n)).

4.03 The followingwill be conditionsfor credit effectiveness:

(a) implementationof a cost recovery mechanism to recover from road users the costs of periodic and routinemaintenance, including the implementationof a taxation and pricing policy for petroleum products acceptable to IDA (para. 4.01 (g));

(b) appropriatebudget allocationfor road activitiesfor DGR in 1990 (para. 4.01 (a)) and initial deposit credited to project account (para. 4.01 (b));

(c) admendment to performance contract between borrower and OTRACO dated December 28, 1988, liberalizationof tariffs for passenger transportof the privatesector (para. 4.01 (1)) and of tariffsfor goods transport by road and revision of lake transport tariffs (para. 4.01 (p));

(d) appointment of local counterpart staff to the Road Planning Unit and Road Control Unit (para. 4.01 (c));

4.04 The followingwill be conditionsfor the disbursementsof specific provisions of the credit:

(a) agreementbetween MAE and MTPDUfor management of coffee roads and setting up a mechanism to finance their maintenance and local counterpart for their rehabilitation before commencing disbursements on the coffee roads component (para. 4.01 (d) and (e)); and -41- (b) agreementby the Association on and implementationby Government of the recommendationsof the sectoralstudies to be financedunder the project before commencing disbursements on the transport investment component (par-. 2.03). 4.05 Subject to the above terms, the proposed project qualifies for an IDA Credit of SDR 32.7 million (USS 4392 million equivalent), on standardIDA terms AnnexI-1

Transport Sector Proeoct

DISTRIBUTIONOF INTERNATIONALTUAFFIC BY ROUTE (thousande of tons)

1986 1901 1922 19iU 10614 lN" 196 106? 1966 (196) t IIPORTS I 101.1 165.9 299.9 M2.2 216.6 231.4 229.1 223.1 219.7t 1 9.96 I I I I NorthernCorridor (Mesho Road) I 36.5 63.6 68.6 6O.4 08.6 0.5 46.7 4.3 d9.9 1 27.71 of which : POL I 18.4 31.4 29.1 86.0 4E.0 32.7 28.7 45.4 43.9 1 Dry CargoI 17.J $2.5 64.4 40.9 41.8 *6.0 ff.1 1U.9 17.9 1 I I Il I CentralCorridor (Tanzania) I 91.2 C6.0 65.0 54.2 $1.3 57.7 94.7 77.3 74.4 1 WO. I OSh-KigomaRoute (Lake/Rail) I 96.5 64.7 59.4 52.1 57.9 78.9 *3.0 61.7 61.9 1 29.11 l of which2 POL I 18.9 8.2 4.9 6.4 1.4 11.6 1J.4 C.2 4.21 Dry Cargo 1 71.9 51.5 66.5 C1.5 SO.5 67.0 60.6 61.4 60.6 9SI OSM-Icske Route (Road) I 9.4 1.9 4.4 2.1 8.4 6.6 11.7 10.7 1l.5 1 4.6X I~ I I I Airport 1 2.9 2.6 3.4 3.9 2.3 3.7 3.4 3.2 3.5 I 1.86 I I I Other Routes 1/ I 36.6 46.7 6U.8 91.7 62.1 76.5 61.2 I 36.91 of which : POL l 2.8 *.9 0.5 1.6 9.7 1.4 4.5 0.7 4.31 I Dry Cargo I 34.8 09.6 60.3 W.? 61.4 75.1 76.7 6n.6 76.7 I I I I

EXPORTS2/ 1 3.1 *1 48.5C .7 56J22 .9 I I of which Coffee1 24.0 20.7 34.1 36.7J 7.1 25.0 t

Source: EPS BNo, Dujua_ra, February and July 1969

1/ Mainly the Southern Corridor lako rout, through Mpulungu(Zambei). 2/ Most of the exports take the 0S5-Ki9gomroute. _ 43 -

Annex 1-2

DURUNDI Transort Sector Prolect

TRAFFIC IN THE PORT OF BUJWIURA (thousands of tons)

10o 1961 1982 198 1964 1935 1906 1967 1989 (1966) I. IWIT Zmports/Tanzanlt 99.4 66.9 67.6 69.0 71.7 161.1 91.0 609.9 68.1 44.6X Imports/Zembia 15.9 26.6 27.6 27.7 41.8 62.6 61.6 74.1 63.6 46.4X Zaporta/Zair. 18.1 19.Ot 13.9 29.8 17.1 16.1 26.6 18.2 12.9 9.1X Total 116.4 107.1 114.0 116.0 1IS.0 179.9 181.9 157.2 141.7 166.O1 nx. sS Exports/Tenzxnto 81.4 84.6 29.6 86.4 88.9 86.o 87.6 S8.9 87.4 97.61 Exports/Zambia 6.: 6.6 o.o 0.2 0.6 0.2 6.6 6.5 6.7 1.91 Exports/Zair, 0.1 0.3 6.2 0.0 6.0 8.4 1.8 6.6 6.38 .71 Total 81.5 84.9 29.2 80.5 88.9 86.5 89.2 81.4 83.4 166.61 ZU. TOTAL Tanzania 126.7 96.4 96.6 96.4 165.6 137.1 126.9 166.7 126.5 55.6X Zambia 16.9 26.6 27.6 27.9 41.8 62.8 06.6 74.0 66.5 86.9X Z ire 18.2 26.0 19.1 20.8 17.1 16.5 26.4 18.2 18.1 7.8x GRANDTOTAL 149.6 142.0 148.8 146.6 168.9 216.4 221.0 166.0 16O.1 166.6X

Annual GorowhRat - -5.3X 0.9X 2.3X 11.1 82.MM 2.11 -14.71 -4.65

Source:EPS, Sujuemura,f bruary1989 - 44 -

Annex I-3

Trvansort Sector PKro_ict

I. TRFFIC OF AIR BURUINI 1/i

PassenAer Traffic Dooortutt Arrival 1964 260,4 1,791 19U 1,11 1,661 low 2,685 1,4W 1967 2,288 1,961

Friaght Traffic (tons) 2/

10o 201.6 278.2 1961 296.6 295.0 1962-1967 - - 1967 227.;

II. TRAFFIC AT BUJMIUR INTURATIONUL AIRPORT 3/

IAWOERTRAFFIC I PREISITTRAFFIC (tons) I I Totl I Total I TOTAL I I Arrval Departure Passwger. I Arrival Departure Froight I LANDDGS I 162 i 28,967 24,656 43,618 1 4,649 3,682 6,181 1 1,200 1 1968 1 21,764 21,884 48,655 I 4,645 2,074 7,519 1 1,446 I 1964 1 19,6C 10,601 36,141 1 6,281 8,201 6,482 1 1,892 I 1065 I 26,202 20,379 40,681 I 6,464 8,648 0,647 I 1,259 I 1066 I 22,682 22,874 44,406 I 5,478 8,336 3,660 I 1,461 2 1067 I 28,711 24,947 48,658 I 4,226 2,166 6,396 I 1,625 I Annual Growth Rate (1986-1987) a 90.5 Pasengor Traffic Annual Growth Rate (1906-1987) * -15.09 Freight Traffic

Source: SNES (ServiceNational dee Etudes et Stotiatiques),Ministry of Planning Air Burundi, Bujumbura, February 1969

1/ Only two Twin-Otters have been operating since 1983.

2/ All Air Burundi freight traffic ceased in 1982 (with the end of operation of the Caravel). However, the company recently started (May 1988) leasing space on Air France and SABENA flights from Europe to Bujumbura.

3/ International flights only. - 45 -

Annex 1-4

BURUNDI Trauort S_ctor Prolect

STATISTICAL }MTOR VEHICLB LET 1982-1987 1/ (units) Annual Growth Rate VEHICLETYPE 19t2 1901 1914 165 1 J 1ME7 (1902-1907) Care 7,6 7,570 6,28 6,795 9,571 10,56 6.631 Four-Wheel Orlve Vohicloe 62 1,992 1,140 1,88 1,542 1,694 18.73 Ptik-upeand StationWagon* 2,849 2,e66 2,915 8,155 8,446 8,615 10.1U Trucks 1,228 1.861 1,51 1,651 1,68 1,5W9 5.411 Buses 1,287 1,519 1,6e9 1,647 1,909 2,276 12.43 Tractors andSpectal Vehicles 28U 254 265 278 26 32 5.6 TOTAL 12,967 14,849 15,66O 17,69 16,07S 20,284 9.83 Ot whitchprivately owned 11,697 12,716 18,721 14,9JJ 16,819 17,577 6.6x publicly owned 1,40 1,68 1,944 2,129 2,854 2,067 12.7X AnnualGrowth Rate - 10.7X 9.2X J6.0 96.6 .43

Source:SNES (Service National des Etudeb Statietiquo.), Ministry of Planning, February 19J9

1/ Except military, vehicles. - 46 -

Annex 1-5

BURUNDI Trea.aort Sector Pro4ect

I . FUEL IR!ORTS (millionsof lit-r.) Annual GrowthRate lossS 06 1016 11 1o7 9 3m (1988-19631 PremiumGosolino 16.35 10.3" 21.99 22.12 24.83 26.58 7.65 ReoularGasolIne 2.94 1.12 *.98 9.85 9.09 .9 - DieselFuol 28.76 22.46 24.78 21.29 24.54 22.94 -4.71 TOTAL 46.39 48.47 46.75 44.66 43.90 49.47 1.0X AnnualGrowth Rate - -8.65 7.61 -4.51 9.71 1.01

Soure: SEP (Soc6t6 d'CntrepoeasePftrolier au Burundi) FINA/BP,Bujuaburs, February 1999

II. FUEL PRICES 1J (FBuper liter)

Premiumaseoline Diesl Fuel NmO V DSM 3/ NBO DSM FOT Nairobior FOB Kigome 26.74 84.96 27.16 86.68 TransportNairobi/Kigoma-Bujuabura 27.66 0.9. 27.60 1.02 Coulageand Insurance 9.45 ,.26 0.46 0.25 CIF Xuuburf 54.69 86.97 55.11 88.19 Importdust" and othertaxes 4.11 8.27 2.51 1.74 Road Fund S.00 6.00 5.00 6.00 OtherFunds 24.48 46.81 17.61 82.29 OverheadCoete 1.77 1.65 1.77 1.87 Wholesle Profit 7.09 10.00 7.00 1."9

WholosalePrice * 97.0e 97.00 89.09 69.00 RetailProfit 8a.39 3.00 8.39 83.0 RetailPrice 13o.3 lo.3 92.30 92.00 - Ma_u**

Source:Ministry of Coe_erceand Industry,Bujuabura, February 1989

1/ As of February 1989. This price structure is being applied since July 2, 1988.

2~I NBO means imported by truck from Nairobi.

3/ DSM means imported by rail and lake through Kigoma from Dar-es-Salaam. - 47 -

Annex 1-6

BURUNDI Trensoort Sector Pro1-ct

ESTIMATID ROAD TRAFFIC VOLUitS (vehiclesper day - vpd)

Cumulative Traffic Averazi Daily Traffic TVD- of Road L*nath (t) (vpd) (km) Maximum Average Minimum

National Roads (RN) Paved 1,000 682 2,500 350 100 Unpaved 950 812 150 75 5

Provincial Roads (RP) 2,150 98S 100 40 0

Local Roads 2.200 10O 10 5 0

TOTAL 6,300

Sourest DGR, Bujumbura, February 1989. - 48 -

Annex I1

BURUNDI Transport Sector Prolect

REGIONAL DISTRIBUTIONOF THE ROAD NHTWORK (km)

Classification 1/ Road Surface Type 21 PROVINCE RN RP RC REV GRA TER Total I. WEST REGION 1. Bubanza 82 57 65 21 61 122 204 2. Bujumbura 166 127 154 166 17 .264 447 3. Cibitok- 197 57 95 190 0 159 349 4. Mursmvya 108 234 226 79 29 460 568

Sub-total 553 475 540 456 107 1,005 1,568 II. EAST REGION 5. Cankuzo 105 64 169 0 53 285 338 6. Gitega .231 133 235 74 157 368 599 7. Karuzi 67 165 160 0 67 325 392 8. Ruyigi 169 192 115 0 86 390 476

Sub-total 572 554 679 74 363 1,368 1,805 III. NORTH REGION 9. Kayanza 78 189 117 78 0 306 384 10. Kirundo 63 186 130 0 84 295 379 11. Muyinga 110 143 Z'.& 38 39 389 466 12. Ngozi 125 154 136 72 30 313 415

Sub-total 376 672 596 188 153. 1,303 1,644 IV. SOUTH REGION 13. Bururi 198 258 134 127 264 199 590 14. Makamba 127 66 154 89 56 202 347 15. Rutana 123 125 86 77 20 237 334

Sub-total 448 449 374 293 340 638 1,271

GRAND TOTAL. 1,949 2,150 2,189 1,011 963 4,314 6,288

S total mileage 31.0% 34.2% 34.8% 16.1% 15.3Z 68.6% 100.0%

Source: DGR, Bujumbura,June 1988

1/ RN means National Roads, RP Provincial Roads and RC Local Roads.

2/ REV means paved roads, GRA gravel roads and TER earth roads. BURtWI Annex111-1 Transport Sector Project EXPENDITURESIN THENHIUAY SURSECTOR (F9u milion) ------Actual Expendituree ------) Pla _ ed upoediturou (-I 1985 l966 1967 19o 1969 19o 1991

(I) Recurrent Budget 97.9 65.9 96.4 119.O 110.2 121.7 125.4 (ii) InvestmentBudget 618.2 268.6 172.0 911.2 (ITl) 40.7 756.8 756.9 Road Fund 208.8 2MS.9 216.1 -- - - Total InternalFinancing 919.9 U44.4 666.C 929.6 6U.9 673.0 376.2 of which: maintenance 4U9.1 415.9 467.1 479.6 515.4 716.8 749.7 rehabilitation C.6 6.6 6.6 212.1 147.2 142.8 125.1 RatioMaintenance/National Budget 1.7S 1.75 2.6S 1.60 1.85 1.75 1.75 (iv) ExternalFinancing 1,827.? 1,796.9 2,016.8 2,231.2 4,018.82/ 3,720.62/ 6,932.62/ of which: maintenance1/ 185.0 212.6 822. 666.9 1,124.0 1,866.7 1,545.9 rehabilitation 0.0 9.J 6.0 825.6 1,748.0 8,546.7 2,219.C CRANDTOTAL 2,247.6 2,189.4 8,296.9 8,211.9 6,197.2 9,604.6 6,969.J of which: maintenance 644.1 627.9 779.8 1,181.6 1,689.4 2,625.6 2,296.6 rehabilIttion 9.J 6.0 6.6 587.6 1,699.6 J,6JO. 2,SU.6 Ratio (Maintenance* Rohabilitation)/Crand Total 24.25 26.9S 28.65 52.6S 07.95 69.5iS 67.6S

1j Includingtechnical assistance. 2/ The inci ase in 1989-1991is "minlycaused by road rehabilitatioa and construction operations finanoed by grant from EEC.

Source: OCR,Buju burs, February 1969 Debt and International Finance Division, World Bank, May 1969 BURUNDI Annex111-2 Transport Sector Project EXPENDITURESIN THE TRANSPORT SECTOR (ROADS EXCUUED) (Flumillion)

------> Actual Expenditures <--)I Planned ExpendItures (-I

1986 1906 1too 190 1066 1981 1991

745.6 47.5 4581.2 1,388.6 2,533.4 2,181.5 1,1096. (i) Recurrent Budget 347.2 868.8 872.9 46U.1 1. 474.2 496.4 (it) InvestmentBudgot 210.0 37.8 69.7 96.6 276.8 $21.6 163.6

Total InternalFinancing 557.2 446.1 442.64 7h.9 7". 7095.9 60.6 of which public enterprise n.e. n.e. n.c. 126.9 115.9 91.J 70.6 (I;i) ExternalFinancing 1U8.1 1.4 10.6 727.7 1,795.4 1,364.7 539.2 of which public onterprise. n.. n.. Die. m.nn 410.2 361.3 337.2 GRANDTOTAL 746.8 407.6 465.2 1,866.6 2,563.4 2,181.5 1,1998. of which public enterprises 9. 9.4 0 0.6 126.0 525.2 452.8 467.2 Source:National Budgete (1986-1988) Debt and IntornatibnalFinance Division, World Bank, Deceber 1066 DGR,Bujumbura, February 1989

.0 JUQK ~~~~~~~~~~~Amon,111-8 Transport Sector Project

TRAWIIRTr SiR DEW vs EXTEUNALPULIC DET (USI million)

------> ActuJal C------l Planned--- -

1982 1968 194 lUIS 196 1980 lUS IgW 1it0 1991 low is" 16

I. Outstanding Tranaport Sector Debt

Roads 42 60 72 87 10 139 la? 1U0 174 172 US 140 Port *nd Lake Transport 0 0 0 0 0 0 2 * 12 17 to n1 t1 Civil Aviation and Air Burundi 10 is to 20 21 28 20 19 17 s is a a

TOTAL Ss 78 s 107 124 1C2 180 19 20m 204 201 l Id18

Ratio Transport Sector Dobt/ 26.1i 25.5 2.411 25.71 28.51 22.8E 22.95 25.511# .65 2.8.6 24.06 246 3 5.1T Eaternal Public Debt

1I. Traneport Sector Debt Service

Roads 1.1 1.5 2.0 1.8 3.5 4.9 5.7 5.2 7.1 8.1 *.8 8.2 0.8 Port and Lake Trneport 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.2 0.4 0.6 0.6 1.1 0.9 Civil Aviation and Air wBrundi 0.4 0.8 1.1 1.5 2.9 8.2 8-. 1.6 2.7 2.6 2.S 2.8 2.8

of which U Principal 0.? 1.0 1.1 1.4 8.6 4.0 8.8 4. 6.4 7 .0 0.4 6.2 Intoreat 0.9 1.1 2.1 2.0 2.9 8.2 a.6 8.0 8.6 8.6 8.8 8.2 2.S

TOTAL 1.8 2.1 8.1 8.8 6.5 0.0 9.2 *.8 10.8 11.4 11.8 11.6 11.8

Zource. Debt and Internationel inance Division. World S nk, dec.1966 SURUIPI Anex 111-4 Transport Soctor Project PllLIC EXPENDITUREPROGRAM FOR THE HIGHWY SU1SECTOt (lon-1991) (FBu million)

19im 1#9 190 1991

A. Recurrent Expenditures

1. Fourth HighwayProject 868.6 189.2 9.9 9.J 2. Transport Sector Progrm .9 6.9 1,8U9.6 1,467.4 D. Capital Expenditure 1. Fourth High,y Project 618.2 1,181.9 9.9 9.9 2. Transport Sector Progrm 9.0 6.6 21,7.* 1,766.6 8. Rehabilitation RNI 14. I 6. 1,622.6 1,872.6 4. RehabilitationRN2 _.6 419.6 216.8 9.8 S. RehabilitationUrban Rods Dujmbura 0.6 9C6.9 1,249.C $87.9 6. Construction RN18Rugombo-ayanao 1,469.9 9077. 602.5 6.6 7. Construction AccessRoad to R_eura plant 6.6 846.6 9.9 9.6 6. Construction RNS (NyanzaLac-Butmbera) 867.7 211.9 6.0 8.J 9. Construction RHO(luyinga-Iobero) 5.6 9.2 766.5 M.$ 16. Construction Mo" Road 17.0 11.9 1,866.6 1,92. 11. Bridge Construction 426.0 461.9 247.6 6.6 12. Feanbillty Studies C.9 122.4 97.1 9.9 Total 8,211.9 5,197.2 9,664.6 *,9". FINDNCINGPUN Governmet 929.6 568.9 9112. 96U.9 IDA 6t1.4 1,197.5 1,192.9 1,265.1 Nt9 0.0 81.0 9.6 6.6 EDF 36.4 1,2. 5,462.1 8,161.6 AfOB 0.6 15.6 541.4 114.9 6ADEA 175.8 167.0 mc.# 6.6 ADF 681.5 519. 55.9 52.1 OPEC 889.6 125.9 O.6 .99 AGCD .0 9.6 2.6 245.4 FAC 0.6 9.9 72.8 76.6 FRO 89.$ 85.6 449.5 2n.7 Italy 9.9*. 519.6 441.9 Saudi Arabia 22.9 212.9 0.6 0.9 Komelt Fund 54.2 In.6 9.6 9.9 Japan, Italy, Opec (euipmet) 9.9 6.6 151.8 819.7 AnnexIV

RUNDI Transport Sector Project Revenues from Road User Charge (1969 FBemillion)

1966 "191 1902 196 1964 196 106 1967 1#6 1#9

2J6.9o 1. National Road Fund 1/ 275.9 814.7 246.6 286.1 236.9 247.9 245.9 285.9 288.6 2. BorderTransit Vehicle Tax 17.5 16.4 26.9 28.4 27.8 82.5 29.8 19.S 18.6 66.6* a. VehicleRegistration Tax 2/ C7.6 U6. 67.9 128.6 19t.8 166.0 114.6 111.8 10$.7 146.6 0 4. Importduties and taxes 8/ 616.7 676.4 713.1 594.2 541.6 686.6 766.4 746.1 4J6.9 961.6 Gasoline 106.2 123.7 164.1 94.4 11.1 112.6 69.6 190.8 96.1 96.9 DieseIFuel 812. 42.6 U8.2 s6.7 6.9 s6.6 44.4 46.2 89.6 J6.9 19.1 10.8 14.6 29.6 17.0 26.0 40.4 26.6 46.6 49.6 Lubrifiants 446.1 Vehicleo 269.6 296.2 887.2 215.1 262.4 211.4 276.1 *81.8 54.4 Parts 122.4 125.2 185.2 126.0 121.1 147.8 140.9 155.4 149.1 167.1 Spare 68.2 76.9 Tiresn4.4 64.9 96.7 66.7 42.8 6U.5 111.1 78.9 S. TechnicalInspection 2.8 2.6 4.4 5.4 4.5 8.9 2.2 8.8 8.0 8.0 *29.4 6009.6 6. Special Fuel Fund 4/ - - - 88.5$ 66.0 445.8 1,89.6 791.0 TOTAL 970.0 1,U.6 1,660.4 1,822.1 1,021.4 1,478.6 t,497.7 1,96.6 1,0O.5 1,989.6 | - - ~ - w - -n -num asmem m 2.63 -2.43 Annual Growth Rat - 16.63 -1.515 2C.9 22.63 -. 13 6.53 -1.43 Average Annual Growth Pnte (1904-106) 65.23 o budget previsions * staff estimates 1/ Flu 5.6 per liter 2/ Tariffs were increasedIn January19U. 8/ Import duties and taxes are 263 for spre parts,830 for car ires,215 for bus andtrck tires, 163 for buse and trucks, d U or 1665for care according to hos pwe (ffective Augut 190). 4/ The tax wascreted ln Jue 19U raggig betweenFrR 10.48 an Flo 84.61 per liter of gasoline ead and betwen Fbu 11.61 nd FS. 216.2per literof dieselfuel depending n the iportng route. Source: St viceEtudes et Statistiqu",Central Bank DirectioraGnrale des Dooane (Custom), Ministry of Flns_ Ministryof Com_erco*J Industry Servicede Trasport* do Burundi (51) - 54 -

Annex V

BURUNDI Treuasort Sector Prolect

RUS!BLITATION OF EARTHIGRAVELROADS List of Roads

Designation Lentth

1. Eouiuaent-DaaedWorks by Force Account 1l

RN9 (ex-RIG9) : Bubanaa-Ndora 56 km RP112 (ex-RP32) s RN2-Kibimba-Mwaro 31 km RP103 : CarrofourGakara-Ruhororo 28 km RC127 : RNK-Hubimbi-Musinda-RN9 16 km RN15 (ex-RP57) s Ngosi-RwandaBorder 23 km RN19 (ex-RIG13) t Cankuso-Muyinga 58 km RP307 (ex-RP51) t Bukeyc-Gahombo 39 km RP115-211 :RN7-Vyuya-Nyangwa-RN16 30 km RP312 (ex-RP64) s Ntega-Nyange 24 km RP451 aMakyaso-Mpinga-Nyana- Lac 30 km

Total Forc Account 335 km

2. Labor-BasedWorks Under Contract 21

RP201 s Gakoke (RN12)-PSTPMubuga 17 km IP 116 (ex-RP33) s RN18-Gisozi-RN7 30 km RP304 (ex-RP52) RNl-Kayanza-Muhanga-Ruyange 38 km RPIlO t RN2-Muramvya-RNl 8 km Other 137 km

Total Under Contract 230 km

1/ Rehabilitationworks by force account will be partly financed by IDA (252 of costs). All the roads in this category have been submitted individuallyto economic analysis.

21 AGCD will finance 852 of labor-based rehabilitationunder contract. All the roads in this categorywill be identifiedunder a study financed by AGCD starting January 1990 (in collaborationwith the Road Planning Unit) which will take into account specific conditionsof labor-based works in additionto economic analysis. However four roads have already been identifiedas economicallyfeasible. The study will also include the coffee roads (to take into account specific conditions of labor- based works). The final program will be submitted to IDA for approval. -55 -

Annex VI

NURUNDI Tranauort Sector Pro1ect

PERIODIC MAINTiMANCEOF PAVED ROADS

List of Roads 1J

Desianation Longth

RN3s Mutambara-Nyanza Lac 2J 47 km

RN4: Bujumbura- Zaire Border 13 km

MNtsRugombo-Luhwa 9 km

RN6: Kayanza-Ngozi-Muyange-Muyinga 112 km

RN7: Bujumbura-Kato 129 km

RN8: Gitega-Gitaba-Gihofi 90 km

RN9: Bujumbura-Muzinda 13 km

TOTAL 413 km

i/ AfDB will finance RN3 and RN6 (a total of 159 km), and IDA RN4, RN7, RN8 and RN9 (a total of 245 kn).

2/ AfDB will finance the rehabilitationof 75 km of RN3. - 56 -

Annex VII

BURUNDI Transuort Sector Pro ect

LIST OF ROAD EOUIPNENTACQUISITION

UNIT PRICE TOTAL COST EQUIPMENT QUANTITY (USS '000) (USS '000)

Dump Truck 15 52 780 Water-Tank Truck 4 52 208 Trailer Truck 2 116 232 Flatbed Truck 3 58 174 Car 1/ 20 13 260 Motorcycle 11 15 2 30 Mechanical Shovel 7 58 406 Compactor 10 52 520 Compressor 10 16 160 Mechanical Broom 2 13 26 Generating Set 6 13 78 Vibrating Plate 8 13 104 Dismountable Housing 18 10 180 Lift Tractor I/ 3 42 126 Removable Tank 1/ 20 19 380 Mobile Home 2 32 64 Bulldozer (D6) 6 90 540 Grader 11 77 847 Concrete Mixer 1 6 6 Motor Pump 5 8 40 Hand Compactor I/ 15 12 180

TOTAL COST 5,341

Spare Parts (252 of total cost) 1,335

GRANDTOTAL SPARE PARTS INCLUDED 6,676

1/ Item financed by IDA. _ 57 - Annex VIII

BURUNDI Tranagort Sector Prolect

TECHNICAL ASSISTANCE FOR MANAGWIENT OF ROADOPERATIONS AND TRAINING IN DGR O4tlina Terms of Reference

Oblectives

1. The objectives of the technical assistance to DGR are to assist DOR in:

i) accounting, financial and personnel management;

ii) procurementof equipment, spare parts and mat-rials needed for road maintenance activities;

iii) developing and operating management information systems;

iv) management of road maintenance brigades and setting up of * cost control system;

v) designing and implementinga training program for DGR staff and for the domestic private contractorsinvolved in road maintenance activities; and

vi) setting up and operate the road works control unit (see TORs in Annex XI).

Composition of the Team

2. The teem of consultants to be providod by the project for DGR is described hereafter: man-months A) Road Operations Manaiement

(a) senior highway engineer, team coordinator, advisor to DGR: 36 (b) expert for 'procurementof equipment, spare parts, materials and warehouse management: 22 (c) highway engineer to assist in management of road brigades and set up a price costing system, advisor to DTE's Directort 36 (d) technician for maintenanceof paved roads: 12 (e) highway engineer for the Control Unit responsible for contracting out maintenance works and supervising works under contract, advisor to the DTEC's Director: 44 - 58 - Annex VIII

B) Financial Management. Personnel Management and Training

(f) financial advisor to DAF: 30 (g) personnel management expert responsiblefor coordinationand organizationof training activities, advisor to DAFt 24 (h) instructor for the Gitega training center: 24 (i) expert advisor for private contractors: 20

Sub-total A+B 248

C) provision of Ex"erts for Specific Tasks to be determined in the course of project implementationt 92

Total 340

In addition to these experts, who are supposed to be recruited internationally,the consulting firms would have to provide two or three junior staff who may be recruited locally for the positions of data processing experts and accountants.

While the provision of T.A. in the project is maintained at 340 man- months, the mandate of the technical assistance to be recruited will be a short term one and the methodology proposed by the consulting firms to build local capacity and measure their efficiencywith regard to this objective will be a criteria for the technical evaluation of their proposals. A number of technical assistantswould no longer intervene full- time after the first two to three years but would return for short time assignments to evaluate the activities of their former cont-rparts and provide additional support.

Qtualificationsand Job Description

3. Each expert should have:

i) fluency in spoken and written French;

ii) training experiencein his field in order to facilitate professional and technical instruction;

iii) work experience in a developing country; and

iv) education commensuratewith the position to be occupied.

Particular qualifications and job descriptions of the team members are given hereafter: - 59 - Annex VIII

A) Road Onerations Manaae nt (a) SeniorHithwav Enaineer. Team Coordinator.Advisor to DGR

4. He shouldhavo a good experience(about 10 years) in road maintenance activities, preparing and budgeting maintonance programsand planning maintenance operations, manpower planning and personnel management. His duties will include: i) coordinatingand monitoringthe activities of the consultants' team; iI) coordinating with DGR, DTE, DTECand DAF as needed to ensure a good working relationship between consultants and DGR management team as well as their counterparts; iII) advising DGR's managementteem on planning, budgeting, personnel management and procur ment issues as nooded; iv) reporting to DORon progress made In project Implementation on a quarterly basis and proposing any corrective measureas the need may arise; v) preparing and updating (after discussing with DGRm&.agement team) objectives for phasing out of short-, medium- and long- term technical assistants and training of their counterparts.

(b) Expert for Procurement of Goods and Warehouse Manat_ment - ,* ge should have experience In warehouse managoment and procurement of *pareparts and basic knowledge of general mechanics. His duties will lnclude: I) planningDGR's needs for suppliesof spare parts for its road maintenamceequipment and variousmaterials for road operations by force account; II) preparingbidding documents and assistingin bid analysis; iii) managementof inventoryand distributionof spare parts and materials,management of warehouse,Implementation and operation of a specificcomputerized management system; iv) followingup on supplycontracts in coordinationwith DAF;

v) In-house training of his counterpartand of staff Involvedin procurement and warehouse operations.

(c) HiXhwav Entineer - Road Britades. Advisor to DTE

6. He should have experience in operation and maintenance of roads and road equipment, price costing in road maintenance activities. His duties will include: - 60 - Annex VIII 1) assistingDTE in progreaming activities of the road brigades; ii) settingup a price costingsystem for activitiesof brigadesend training his counterpartto operate it; iii) advisingDTE managementteam a needed, especially on prograsming, planning, resources menagementand trainingissus.

(d) Technician for Maintenance of Paved Roads 7. He should have experiencein maintenance of paved roads, operationof road equipmentand training. His dutieswill includes i) coordinatingthe activitiesof patchingand resealingbrigades for paved roads; ii) planning, execution and supervisionof works; and iii) assistance in field training. (e) Highwav Engineer - Control Unit. Advisor to DTEC 8. He should have experience in road maintenance activities, in supervision andlor implementation of road works under contract and in labor-based civil works. His duties will includes i) preparing sample contracts for the various road maintenance operations to be contractedout and preparingwith DTE thb annual road work program (Including the coff-e roads) to be contracted out. Appropriate emphasi will be put In the contractson reductionor alleviationof possible negative environmentalimpact of road works (drainage,borrow pits, erosion camps, workshops, disposal of scrapand waate materials); ii) organizing bidding procedures and ssisting in bid evaluation; iii) organizingthe monitoringof worksby contractorsand by force accountwith appropriateemphasis on qualitysnd environmental impactcontrol;

iv) hiringlocal engineersand techniciansunder contractif and when neededto assistin preparingbidding documents and. supervisionof works;

v) preparingdocumentation for contractors'payment and following up on actualpayments to ensuret 4imelypayments (in coordination with DAF); vi) settingup a managementinformation system for the unit's activitieswhich will also cover operationson the ceffeeroads. - 61 - Annex VIII

3) FinPncal Nanane_ent* ersonnelManatme_nt and Traini-

(f) FinancialAdvisor, Advisor to DAF

9. Ho shouldhave a mini-suof ten-yearexperience in financial managment end accounting,and have a good xperience in data processing and management of information syste. He will assistDGR in: I) Improving costing, accountlng and reporting system and proceduresfor all DGRdepartments Li) maintaining project accounts, with separate accountsfor the coffee roads; iii) setting up and operating appropriate management information systems; iv) preparing financial statements, cost accounting and budget program procedures; v) training the personnel assigned to these tasks. (g) Training and Personnel Management Eswert. Advisor to DAP a10. He should have experiece In personnel mangement and training. He willt i) assist DGR in formulating a long-term training strategy, and preparing and updating the tralinig program for Its staff (including In-house, on-the-job and abroad training) and for the private sector involved in road activities (In-house ond on-the- job training); LI) participate in DOR's training coord$natlon comudtt--l iii) asist the Personnel Unit in setting up a personnel management system and develop a long-term personnel manager-nt policy by the end of the first year of project implementation (he will coordinate with the general effort under the SAL and ongoing actions supported by the Agriculture Services Project); iv) organizethe training sessions and supervise their implementation; v) asist in selection,recruitment, promotion and upgradingof the staff. Overalltraining objectives are indicatedin para, 2.18-19of the SAR. - 62 - Annex VIII

(h) Training Instructor

11. The instructor for the Gitega training sector should be a mechanical xpert in road equipment with at least 10 years of experience, and be familiar with the major types of heavy equipment used by DGR. He will train and give refresher courses to operators of various types of road machinery both from DGRand the private sector.

(i) Expert-Advisorfor the Private Contractors

12. He should be a civil engineer with experience with the private sector, preferably with small-scale enterprises. He will, in close coordinationwith the Control Unit:

Before the trainint works start:

$) assist in preparing bidding documents and in the bidding process for the training works organized for the private sector;

ii) assist in informing the contractorson their role and duties in view of the training works;

iii) organizing seminars for the contractors'staff on the following: (a) analysis of bidding documents, preparation of submissions; (b) preparation of works; (c) organizationand monitoring of works (cost accounting,price costing, programming supplies and activities);and (d) quality targets, reduction of harmful envirovmental impact in civilworks.

During the trainint workes

iv) provide assistance to the contractors upon their request for preparation of works, monitoring and adjustment of production rates, quality and costs.

v) assist contractorsIn drawing lessons from their experience in training works to be better prepared for the next phasel and

vi) based on the xperience acquired during the training works, assist DGR in planning the works to be contracted out, including nature, location and size of lots, and in preparing bidding documents.

C) Experts for Snecific Taks

13. It is expected that needs or adjustments to the technical asssistance and training programs and/or for additional short-term assistance in specific areas will occur during project implementation. Therefore, the project will provide for 36 man-months of short-term experts whose profile and job description will have to be defined with DGR in coordination with IDA as the need for these services arises. -63-

Annex IX Page 1 of 3

BURMNDI TransportSector Prolect TECHNICG&ASSISTANCE TO DGT Outline Termsof Reference

Obiectives 1. The objectivesof the technicalassistance to DOT are to (i) expand and Improve its transport planning capability by creating and operating a transport data base (this action has been initiated underthe FourthHighways Project)I (ii) assist in monitoringinternational transport and preparingadequate sector policies; (iii) assist in reformingthe transportparastatals; and (iv)train DOT staff.

Technical Assistance and Trainint Program

2. The technical assistance will consist of: man-months (a) transportplannerleconomist 48 (b) expert for management of transport parastatals 24 (c) short-term experts 12

In addition to thse expertswho are supposed to be recruited internationaly, the consulting firm would have to provide one junior economist who may be recruited locally. The training program will consist of abroad training for MTPTstaff (60 man-months) and seminars organized in Bujumbura for MTPTstaff, transport parastatals and private operators. Qualifications and Job Description 3. Each expert should have: i) fluency in spoken and written french; ii) training experience; and iii) work experience in a developing country (preferably landlocked). The descriptionof the assigNmentsof the consultantsare given hereafter: (a) TransportPlanner/Economist

4. He should have at least 10 years of experience in transport planning, a substantialportion of which in dealing with transit issues in a developing country. He will have to provide assistance to DGT to: - 64 -

Annex IX Page 2 of 3

1) *et up and operate a tronsportdata base on international and domestic transport activities with data on transport fleet, characteristics of vehicles, operational costs, transit time, etc...;

Li) evaluate and follow ur, on investmentprojects In the transport sector;

III) prepare sectoral PIPs and PEPs in coordination with the Ministry of Planning;

iv) analyze transport conditions on the various International routes and prepare appropriate transport policies In order to reduce the cost of being landlocked and Increase flexibllity especially for coffee export routes; and

v) develop adequate cost recovery policies in the transport sector; He will also have to (a) train two local counterparts; (b) organize the transport seminars and the training program for MTPTstaff described hereunder; and (c) preparequarterly progress reports on the proj-et's transportcomponent. (b) Expertfor Manazementof TransportPrastatals

5 *He shouldhave at leastten yearsof experiaeceIn m at of transport parastatals.He will assistDGT Ins

I) supervising parastatals and following up on implementation of the reform of parastatals and performance contracts; and ii) establishing cost-accounting system for parastatals. (c) Short-Tenm Experts

6. The project will provide for 12 man-monthsof short-ternm experts who will mostly be needed to assist MIPT in the reorganization of MTPT departments.Their profile and job description will be prepared with the assistanceof th expertsabove at the end of the firstyear of project implementation. Traininsprosram

7. Fellowshipsfor trainingabroad will be awardedto stafffrom MTPT to help Improvetheir working skills as the organizationof such trainingin Burundiwould not be feasibleor wouldbe too costly. Staffto be trainedwould includet - 65 - Annex IX Page 3 of 3

1) the General Director of DOT (2 months):tranport planning, international transportissues, cost recovery. it) the two counterparts of the transport planner within DGT Planning Unit (6 months each): transport planning, transit end corridor issues, urban transport, cost recovery. iII)three staff from the Department of Lake Trasport (6 months each): infrastructuremaintenance, dredging, signalling, hydrographic surveys. iv) three staff from the Department of Civil Aviation(6 months each)s infrastructure maintenance, airport operation. v) one staff from the Department of Govermnnt vehicle fleet (2 months): mangmOentof vehicle fleet, privatization of vhicle maintenance, pricing policy. vi) two staff from OTRACO (4 monthseach)s management of a passenger transport parastatal, price costing, logistics. 6. Throe two-to-three-day seminars on transportissues will be organixed in Bujimbura with the assistance of the transport planner above for MTPTstaff, staff from other ministries interested in transportlsue, transport parstatals end the private sector. They will focus on the following themeas (a) role of transport In the country's economy; (b) International tramnport transit issues; (c) comparison with other corridors; end (d) role of the privatesector. - 66 - AnnexcX Pago 1 de 3

Prol-ctSector1el Transport CIRLUMEDE CISTIONROUTIERU Reumm des Termesd- Reference

1. La creationd'une Cellulede Gestionrouti-r- pr&vue dans 1- cadre d'un finsncement du FAC eat un *laemnt cl; de la future politique routire du pays, outil indispensablea une planificationsatisfaiasnte des oparationsdans le secteur. A ce titre,le projetconditionna par la mise en place effective de la colluleapportera tout 1. soutienncessa-iro a c-tte initiative, notsent an finan9snt certsans coata do fonctionnement et d'installation sL necessaire dens le cadre de l- composante Renforcement. Institutionnel. Obiectifsde 1a C-llule

2. L'objectif principal do la cellulesera d'assisttrla DGR dens la programmationpluriannuelle des travauxt'entroti-n routier, la dafinition de politiquesd'entretien courant et periodiqueappropriies en fonction du trafic at l'analyse technico-4conomiquedes projetc d' amnagoment futurs.

3. Los missions finales de l1 colluleseront de: (i) proposerdes smeliorations; la politiqu d'entretiencourant (frequencedes reprofilages)*t d'entretienpiriodique (o-nuis-ge,renforcement, rechargement) compatibles avec les ressources disponibles ou envisageables;

(ii) raviser et standardiserla methodologie d'evaluationeconomique des projets routiers en liaison avec l Plan et la DOT (Cellule de Planification); (iii) *valuerla rentabilitieconomique des projetcpr-par-s ; la DGR ot eventuellementsuggerer des variantespour p-rvenir* une meilleurerentabiliti;

(iv) tenir& jour un recueildes donn&esutilos (en liaison avec la DGT) dont comptagos de trafic,coats de travauxtypes, donnies du reseau;et

(v) dis quo la cellule sera opirationnelle (en fait un an do rodage sera certainementnicessaire pour collector suffisammentde donnies et caler les diffirents paramitres du mod&le HDM-III), elle devrs etre associee i la priparation des programes de travaux du projet sectoriel transport. - 67 -

Annex X Page 2 do 3

4. La c-llule *or& un outil d- prograsmtion at de suivi de l'ontrotien du risesu bituai. A co titre, *ll sora chargie de: j (i) collector l'enseibl. d-s donnses descriptive, g-ometriqu*set constitutivesdes chaussaos, ev-luor l'-tat de degradationot mesurorl-s trafics;

(ii) tenir * jour les coats d'ontr-tioncourant, periodique et de ronforcomontpar l'entroprisoou on regio;

(iii) constitueruno banquedo donn.esinformatise, pour g&rer et traiter ces informations et susceptible d'etre *tendue a l'onsemble du reseoug

(iv) adaptor1- mod-elHDM au reseau du pays &fin de disposerd'un outil d'ovaluationaconomique fiable; et

(v) mettre en place un outil informatiquede prograwmetion et de suivi do l'entretiendes routesbitumaes. 5. La couverturedu r-seau des rout-s non revetuos (principales d'abordpus secondairosonauit-) devrait *tre assureeau cours de la deuxiameou la troisime *annod'alxistnce de la cellule.

Position de la Cellule au cein do la DOR 6. L'oxistoncedo la colluledevrait *tre offici$lleountreconnue au sein de la DGR de facon; assurerca p;rennite.La collulo devra ;tre un outil intagre ; la DGR et travaillant*vec et pour ses deux directions techniques.La personneldo la colluledevra pour cola passerboeucoup de temps a expliquorla nature,la mithodologie et l'utilit;de sea activites et s'assurer quo sa production *st utilis-o par los diffirents services destinataires,en effectuant les adaptationseventuellement necossaires. La collulo sera diroctementrattschee au DGR et oeuvrerado concertavec les servicesconcernes de la DGR pour recueillirles donniesnecessaires. Movensde la Cellule

7. Le FAC prevoit'd'affecter; la celluleun inganieurroutier, avec uno formationcompliment-ire d'aconomisto, de la cooparationfran$aise qui seraitresponsable do la mise en place de la celluledurant une periode do 2 ens, second-par un inganieur routior avec des bonnes connaissances en informatique. 8. Deux inganieursBurundais homologues seront affectes ; la cellule,leur formation devantetre assureepar les coop;rantsci-dessus. Les deux ingonieursBurundais ; affecter ; la celluledevront etre ceux qui ont assiste au stage de formation i l'utilisationdu modele HDM-III en septembre 1988 sur financementdu Quatriime Projet Routier IDA. - 68 - &nnex.X Page 3 de 3

9. En outr- le personnel complewantafre nec-ssarre (secratariat, dessinateur, technicion) *ara eg-alment affect. a 1- cellul-. Des locaux (3 ; 4 bursaux) *cront ais a i- dloposition do ia collulo et scublis et iquip;s par lo cridit FAC. Du uatiriel specifique (inforoatiqu*, mat;riol de arure do l'UNI do chausses, de masures de deflxion, comptage at pesage)et *a miss an route sont igalemnt prevus par 1c FAC dans le cadre do son finsncment. Par contreles v;hieulesn&cessalres aux aesures,; i- collectedes donnieset au fonctionnementde la cellule doiventZtre fournispar la DGR, sauf 2 v;hlculasde chantiaret un vhiheulel-ger fournlspar 1- criditFAC.

10. Le finsnciennt du FAC so compose approxImativsmsntcome suit pour les deux premlers annkesdu projet) Mateirel pour l cellulede gestionroutlere t 1,5 WF Vehleulespour ia cellule a 0,3 WF Enveloppo pour missions d'experts t 0,2 HF? Miss ; disposition de 2 coop;rants s P.M. ii. L'IDA financera partiellement is mlse en placse do is cellule at son fonctionnement, par oxemple on assurant le financoment do v;hlcules ou materiel complementairesat des campagnes de mesures ou comptags. La celluledisposera d'une enveloppe budgitalre annuelle pour passer cosande au laboratoire des mesures qui lui seront n&cessaires, definios en fonction de objectlfs fixes annuellement. Lea coats de fonctionn ment de ia collule, y compris carburant et fonctionnement des vihbcuies et frais do mission seront assures por ia DGRour ligne budgetaire spaciEfique. - 69 - Annex XI Page 1 of 2

Trna ort Sector Prolet TECHNICALASSISTANCI TO THE CONTRDLUNI OutlineTerms of Reference

1. MTPDU intendsto set up a ControlUnit for Road MaintenanceWorks within DGR. The Control Unit will first focus on works carried out under contractbut it will also later on control works carried out by DGR's brigades. 2. Objectives. The objectives of he Control Unit are to (i) control the qualityof works and enforce technical specifications;(ii) enfore general and special conditions of contracts; and (iii)check claims of contractors for payment of works. 3. Assistance to the Control Unit. The technical asistanee to the Control Unit will consist of two experts (one full-time expert financed by IDA, one half-tim expert financed by ACCD)during an Implementation period of four years as well as short-term experts fmiliar with quality control of road maintenance works In tropical countries and contract maagement of road maintenance works. They wil have to provide assistance to: (i) prepare standard format documents for contract preparation and supervisionof orks; and

(ii) prepareand carry out a training program for the Burundianstaff of the Control Unit. 4. Pregaration of Standard Format Documents. The two expatriate experts would assist in designing standard documents and procedures to help the Control Unit monitor works and costs, and evaluate contractors' performances (in order to update the national register of contractors). As unit costs for road maintenance are muh lower than for new construction, control costs would have to be reducedin proportion. Preparationof the standard format documents will help maintain low costs for preparation and supervision of works. Such documents will be suitable for computerizeddata collectionand includes (a) a sheet for identification/localiaztionof works; (b) a set of road cross sectionsand drainagedrawings; (e) a unit price list; (d) a bill of quantities; (e) simpletechnical prescriptions; - 70 -

Annex XI Page 2 of 2

(f) simpleconditions of contract; (g) samplecontracts (including the lengthmansystem); (h) variation order; (i) monthlycontractors' claims; and

(j) samplemonthly site reportand globalreport to DGR.

4. Trainintfor Burundian Staff. The consultants will organize a trainingseminar for their Burundiancounterparts of the ControlUnit to preparethem to fulfilltheir technical and administrativeduties. Technical duties consist of (i) monitoring quality of works (impacton road span, quality tests, impacton the environment);(1$) check quantities of works actuallycarried out; (1i1) makE any on-sitedecision to addressworks' completionissues; and (iv) controlthe potentiallynegative environmental impact of works (such as borrow pits). Administrativeduties consistof contractmanagement for road maintenance and its Impact on costs of works (such as delayed payments meaning additionalcosts to contractorscaused by the owner not complying with the contract). The seminar will familiarize participants with the use of standard technical and administrative documents referred to in pars. 4. Participants with past experience of direct road maintenance works or supervision of construction works under contract will be welcome to explain difficulties they encountered and how they addressed them, and to what extent issues and solutions could be similar for road maintenance orks.

5. The seminar will last four full-time weeksor equivalent time split over appropriate periods. Two weeks will be devoted to technical aspects and the two remaining weeks to the administrative aspects of supervision of road maintenance works. The detailed training program will first be submitted to DGR and IDA for approval. - 71 -

Annex XII Page 1 of 2 DURMNDI Transmort SectorProject

FSIBILITY STUD! FOR AN Ms HKN-RBTN POOL Outline Terms of Reference

1. MTPDU intends to proceed with a study on an efficient organizationalscheme to meet the needs of DGR and of national contractors for road construction and maintenance equipment. 2. The existing equipment management systemwithin DGR had not proven to be effectiveduring the past yearstthe averagerate of utilizationhas been low due to numerousbreakdowns (less than 400 workinghours per machine per year). The two main reasons of this poor perfonrmnceares (i) difficultiesin DGR's recruitingand keepingqualified mechanicsl and (1i) cumbersomeand ineffectiveprocurement procedures for spareparts. 3* The TransportSector Projectincludes a large road componontto be carried out by the national road construction industry such as regional DGR'sbrigades and domestic contractors who will be encouragedto enter this activity. One way to help them undertakethis shift is to rent them road constructionmachinery. Both DGR's brigadesand domesticcontractors will fail to carry out theirduty if the efficiencyof equipmnt managementdoes not improve.

4. The designof a more effectivescheme for equipmentmanagement Is thereforea key element of a successfulImplementation of the Trasport Sector Project. Before the project starts,the study should providethe Ministrywith solutionto trnsform the existingDGR's equipment department into an adequateorganization, hereafter called plant pool, to meet the needs efficiently.

5. The study will consist of (i) reviewing the domestic industry's demand for road construction equipment, and design of a fleet of machines; ($$) cost-analysis of managing this fleet; (1,$) study of an appropriate organizationalsetup to managethe fleet;and (iv) analysisof contractual relationshipbetween DGR, the priv&tesector and the proposedorganization. 6. Review of the Demand. The study will identifythe respective expectedshares of works by DGR's brigadesand domesticcontractors in the projectand take into accountsimilar works programmedby otherministries for the same periodof time to be carriedout with same equipmentby brigades or contractors. The study will analyze to what extent domestic contractors should rent or purchase their equipment. Finally, the study will propose an appropriatefleet of machinesto be gatheredinto the plantpool to meet the needsof DGR's brigadesand contractors.

7. Cost-analysis. The study will estimates(i) the annual costs deriving from equipmentownership (depreciationof capital and related interests);(ii) periodic maintenance costs of equipment;(iii) annual costs of the central workshop, and if relevant, of regional workshops; - 72 - AnnexXII Page 2 of 2 (iv)general overheadsincluding financial costs; (v) risk and profitmargin and taxes, assuming that the plant pool may hav, to pay taxes. The study will determine the mount needed for either equity and working capital, and will set up previsionalbalance shets.

8. Organizationalsetup. The study will review several options 1/ to be proposed to decision-makers, such as: i) a Departmentof Equipmentintegrated to DOR as it is now; Ui) an autonomousplant pool,independent from DGR, but not from the Ministry;

iii) a commercially-orientedPublic Office;

iv) a "socitt d'oconomi mlixteo,with the majority of the share belongingto the Government;

v) a private firm with or without the Governmentbeing a minority shareholder.

The study will review the pros and cons of each option with particular emphasisto efficiencyand the legal Issues raised by the options, In particularwith the equipmenttransfer from the Ministryto the plantpool, and will proposeappropriate ways to addressthese issues. If the study recommends participation of the privatesector to the plant pool'sequity, It will include a prelminary Identification of the espected private shareholders.

9. ContractualRelationships. The studywill review the conditions under which the plant pool will rent equipmentto DGR's brigades and contractors and draft a samplerenting contract,and design a procedurefor DGR's procurement for these renting services. It will also review the conditionfor a privateshareholding and designa competitiveprocedure for the selectionof the privateshareholders, set up a biddingdocument format, and proposecriteria for evaluationof proposals.

10. The studyi estimatedto three man-monthsand will be carried out by a foreign expert familiar with management of equipment-renting organizations,and by a national/foreignlegal expert familiar with Burundian laws.

1/ A managementcontract with a privateoperator may be consideredfor the firstfour options. - 73 - Annex XIII Page 1 of 2

BUIUNDI SransuortSector Pro lct 7RASPORT-MLATKD STUDIES Outline Term of Reference

Road Safety/TrafficRegulations and Traffic Conditions in Bujumbura

1. Obiectives. The objectives of the study are to define appropriate saaeuresto improve(i) road safetyIn Burundiand (1i) trafficconditions in Bujumbura. 4 2. Road safetyand trafficreeulations. The consultant will firsthave to analyze the present situation: (a) identify adminitrative responsibilities;(b) analyzecurrent traffic regulations (driving licnsue, road ode, technical inspection of vehiclel, signalization, law enforcement); (c) collect any data available on accidents; (d) define a typology of accident.; and (c) estimate the costs of accidents (insurance costs, administrativeresources devoted to accidents). wig l then propose a flve- year actionplan for road safetydefining measures In order to reducethe number of accidents and victim. His recommendations will iclude (a) design, equipment and use of road infrastructures; (b) training of road users; (e) technical inspection; (d) traffic regulations ; and (e) law enforement He will also evaluate the costs of the different measuresto be undertaken and proposean imple.entatiorschedule. Finally an econamic analysis of the action plan will be done. 3. Traffic Conditions in Bulumbura. The consultant will carry out the relevantinquiries and trafficcounts (to be defined by the consultant) in order to (i) establish a matrix origin-destination of transport flows including determination of seasonality coefficients and (ii) demonstratethe phenomenon of peak hours. The study will then analyze peat trends and forecastfuture trends concerning Bujumbura urban development,vehicle fleet, and freight and passengertraffic. A typologyof the urban road networkwill finally be defined(traffic volumes, geometric characteristics). After this analysis,his recomendationswill include:(a) truck traffic (itinerary, hour, azle-loadlimits); (b) generaltraffic plan; (c) improvement of black spots;(d) signaliastion (traffic lights, right-of-way, speed lim4t); and (e) side improvements(bus and taxi stops).

4. Qualifications and Job Descrintion. Both studies are eachestimated to 6 man-months and will be carried out in parallel. The consultants to be provided for the studies includes a transport engineer with extensive experience in road safety policieswithin a State administrationor a researchcenter. He will be assistedby an economistfor the firststudy and by a trafficengineer for the secondstudy. - 74 _

Annex XIII Page 2 of 2

Lake Navitationand Developmentof Sm-llFishing Facilities on the Lake

5. Obiectives. There are three ports along the Burundian shore of L-ke Tanganyika: Bujumbura (the most tmportaint), Rumonge and Nyanza Lac. The objectives of the study are to (i) dWine what are the necessarydredging works for the port of Bujumbura;(ii) proposea developmentplan for the ports of Rumongsand NyanzaLac; and (iii)evaluate the feasibilityof three small fishingfacilities along the lake'sahore.

6. Dredgina works in the Port of Buiumbura. The consultantwill analyse all the documentation concerning dredging and reference levels(a well as lake level)in the port of Bujumbura.He will then make bathymetricmeasures in ord-r to determine areas, volumes and nature of materials to be dredged, and evaluate the cost of dredging. He will take into account the environmental issues which may be associated with the dredging works to be envisaged. He will take into accountprogress in the shipyardproject and make propositions to harmonize works to be undertaken with works under way in other neighboring countries around the lake. 7. Develoomentof the portsof Rumon.ean4 NvanzaLac. The study will definewhat are the necessaryworks to be undertakento lmprovenavigation and safety in these ports includingprotective and dredgingworks through adequatehydrographic mesmure. 8. Developmentof small fishinafacilities alona the lake9sshor-. T h e consultant will analyzethe feasibilityof threefishing facilities along the shore: traffic forecats and repartition between the three ports, quantity of works necessary,economic analysis. He will in particularmake adequate bathymetricand topographicmeasures, design the proposedworks and estimate their costs.

9. Qualificationsand Job Description. The studyis estimatedto 8 man- months. The consultantsto be providedwill be a port engineerwith extensive experiencein dredgingworks and designing port facilities, assistedby a transporteconomist. - 75 -

Annex XIV-1

NUlRINDI rensport Sector Prolect KOCOICCIVAWATION 3stiated Vehicle Operatia Costs 11 (in nulveicle.ba)

Road Too and Conditeon <- Tosoarephy ------prTYDOOf VehilCe flat undulatina mountainous A^.Pi_ _ rn Ca. 1. Iimim¶IewedTrack 3 "Inthgood eeonodkition 94.4 6J.9 114.9 In faircondition 112.1 121.1 187.7 tn poor condition 132.2 141.3 101.7 2. ImprovedTrawc in good condition 74.9 79.4 sU.$ In faircondition n.4 95.3 106.4 in poor condition 144.8 111.1 123.0 S. Paved Roa in good condition 40.1 40.0 44.9 In fair condition 48.1 49.9 53.9 In poor condition U6.2 67.2 62.9

1. Uai.POeed Trsck in good condition 192.2 244.9 312.8 in foir condition 26.6 M. 076.4 382 In poor condition 261.6 341.6 437.9 2. mprovedTrock In good condition 165.1 190.4 249.2 In fair condition 188.1 228.4 299.0 In poor condition 217.1 266.5 849.7 S. Paved Road In good conditon 77.8 63.3 107.7 In fair conditlon 3.4 99.9 129.3 In poor condition 16.9 116.0 160.8

C. ThzestlCE 1. Ulmimpreed Track in good condition 265.4 $17.6 401.' In foir condition $66.4 389.4 431.7 In poor condition 35T.5 443.0 1S2.0 2. Iproved Track In good condltion 294.0 24?.1 320.7 In faircondttton 245.7 290.5 804.0 In poor condition 286.7 U46.9 448.9 S. PavedRoad In good condition 166.6 113.9 144.1 In faircondition 127.J 136.6 172.9 In poorcondition 149.1 158.2 281.7

1/ Not of Tax** In mid-1989Prices Source: Tokhno(Bolgian Consulting Firm), RIG 13 FeasibilityStudy, January 1988 Traoamort Sector Projecl

IStNIIIC lVALUTiAT

Improvement Coffee Rtgravellini Patching Grading1" rading to Paved Typo of CiviI Work Raii Periodic Seinteeoao PawedRoad" (404 ha) barth ade "ade brth bade" Pved Reed., frm bade Standards

1. Length (in ) Is 47 is 112 129 90 18 415 a00 10 1.011 ,000 26

2. Traffic (AT) in 1968 aZn 274 411 3 t 164 1 24 10 s0 no s0 140

8. Firat Year Benefits 1" 20 241 80 29111 161 8 1i6 U s7 571 461 121 (125 discount rate)

4. Econcoic Rte of Return

a) Seat Eatilto 8 40 44t1 691 an m 171 2m1 2m 13i 491 li

b) Saneitivity:

(i) Traffic Groti p.m 81 Ji 413 411 84 so 8 Ua 171 - 241 471 481 1U1 (ii) Costa: * 101 311 402 411 Ni 491 82l ok5 l 173 1in 413 8o1 141 (Mii) Combined (i) a (;i) 8 dS m 1 473 an 81o an - 16l - - 1tB

c) Ecomic Rate of Return for the Projctb 121.0 - 77 - Annex XV Page 1 of 3

BURUNDI Transport Sector Prolect

PROGRESSRWPO sT

Prolect ProErm Rorts 1* The Borrowor wili prepar- quarterly and annual progres reports to b- submitted to the Association.The quarterly report will be submitted not later than one month after the end of the period and the annual report three monthsafter the end of the year. 2. The progressreports *hall contain the informationdescribed below: (a) the physicalprogress accomplished to tL& date of reportend during the reportingperiod including: (i) th main activitiesto be programed andmonitored (both force account and under contract,to 3 shown separately):raved road maintenance (m2), Lravolling (m3), spot fmprovem_entlarthworks (m3), surfacegrading (ki),manual maintenance (km and m3 of selectivematerial), culvert maintorAnce (units)and bridgemaintenance (units). (11) the inputsrequired/used to achievethe activitytargets by brigade or unit include peronnoel (by qualification), equipment(units and utilization),fuel (liters),spare parts (Fnu)and materials(m3). (iii) efficiencyindicators such as availabilityrates (ln I) and utilizatlonrates (ln hours or km) of major equipment categorles(graders, bulldozers, trucks, plck-ups, loaders). The combinationof lnput and output indlcatorswill a.2o providemeasures of productivityand unlt costs; (iv) workshopactlvity 1ndLcators such as repairsby major type, overhaulsby major type and spare partsconsumptlon (FBu); (v) training Indicators such as numer of traineesand average length of trainlng for both standard trallng seslons and special training semlnar; and, (vi) other key informationwhich is not provlded by the quantitativeindlcators; (b) progresson procurementof goods,materials, equipment and servlces (status of procedure, contracts, mpleimentatlonrates of contracts); _ 78 -

Annex XV Page 2 of 3

(c) progress on procurement of civil works (number of contracts, smounts, rate of completion,payments);

(d) actual or expected deviations from the implementationschedule;

(e) informationon difficulties encountered and unforeseenevents which have a bearing on the implementationof the program;

(f) explanation as to deviationsfrom the targets set and description of the corrective measures which have been taken or are being prepared;

(g) expected changes in the completiondate of the project;

(h) information on key staff changes in DGR, consultants or contractors;

(i) financial informationon the execution of the budget or on budget revision;

(j) financial information on each project component indicating the original estimated cost, the revised cost if appropriate, the actual expenditure, the planned expenditures, and the actual and planned withdrwals from the Credit Account; and,

(k) status of action on each covenant of the Credit Agreement.

Proftet Comuletion Reuort

3. The Borrower will prepare a Project Completion Report (PCR) to be submitted to the Association not later than six months after the closing date.

4. The primary objective of the PCR is to reinforce the self- evaluation capacity by the Borrower and the Association's operating departments and to facilitate disseminationof lessons learned through the project. The PCR will examine and assess:

(a) the performance by the Borrower and the Lasociation of their respectiveobligations undwr the Credit Agreement and whether the Association could have been more helpful;

(b) the results that can be expected from the project, as compared with expectations at appraisal and whether the original expectations were realistic; and,

(c) whether in retrospect the project was worth doing or could have done better. - 79 -

Annex XV Page 3 of 3

5. For those componentsof the project for whieh a rate of return was estimatedduring appraisal, the PCR shouldcontain a new estimat of the return the project is now likely to yield and analyze the resons for physicalor economicdeviations. However, the new rate of returncalculation shouldbe as simple as possibleunder the circumstancesand shouldabsorb only a minor portionof the tim devotedto the preparationof the PCR. An *nnex wlth the relevant informationsupporting this analysis should be included.

6. The basic documentsto be referredto are-

- credit appllcation - preappraLsalreport and projectbrief - staff appraisalreport (SCAR) - CreditAgroement document and supplementaryletters - supervlslonreports - quarterlyand annualprogress reports - correspondencefiles - miscellaneousevaluation reports. -80 - Annex XVI

Draft Atreed at Negotiations

STATEMENTOF TRANSPORT SECTOR POLICY

1. In Burundi,a mountainouslandlocked country, maintaining a reliable and cost-effectivesystem for moving goods and people has always been of capital importance for the nation's development. In accordance with the broad orientationsof the Fifth Five-YearPlan (1988-92),the transportationsector's role is that of supporting food security and other primary developmentgoals. A dense network of well-maintainedroads will promote both intensificationand regional specializationof agriculture. Similarly, improved management of internationaltransportation routes and systems will help bring down the high cost of moving goods and people and promote access to external markets.

2. These considerations mandate the development, within the transportationsector, of strategiesbased on principlesof transparency,to be applied within a rapidly changing economic context. The need to ensure that transportationpolicy is fully integratedinto the nation's economy as a whole requires periodic re-examinationof strategicobjectives and of the actions to be undertakenwithin the sector. The presentdocument sets forth the principles that the Government intends to follow, together with its medium and long term objectives and the concretemeasures that are to be taken.

Principles

* Promote the provision of efficient and reliable transportation services on dynamic free-market principles, with the Central Government seeking to create a favorable environment and limiting its actions to safety concerns and monitoring of the sector's performance.

* Encouragethe developmentof a local privatesector not only to construct, maintain and manage transportation infrastructure but also to operate transportationservices.

* Recover costs from users either in the form of an appropriatepricing system or in the form of taxes.

* Assign priority to the maintenance and rehabilitation of existing infrastructure,and limit new capital investmentto projects offeringa positive economic rate of return.

* Continue the process of consultation with neighboring, transit and landlocked countries with a view to improving transportationservices on a commercial basis by providing appropriate remuneration for services rendered.

* Step up the development and use of appropriate technologies employing domestic resources. -81 - Annex XVI

Obiectives

Mi) For a landlockedcountry like Burundi, lower transportationcosts representa fundamentalobjective, as these costs account for almost 25 percent of the retail selling price of imported goods. Transportationcosts includenot only direct costs (a sizable portion of which are in foreign exchange) but also such indirect costs as freight waiting costs (financing costs) or even the cost of equipment downtime waiting for spare parts to arrive. The Goverrment will be introducing measures designed to cut the total ccst of transportation. As far as internationaltransportation is concerned, tLe Governmentwill seek to lower transportation costs by striking a balance between more flexible rules governing transportation and competition between modes and access routes and between public and private operators, while at the same time working to promote domestic transport operators.

(ii) The national and regional road network has seen considerable construction and improvement over the past decade. With some exceptions, the paved network is in satisfactory condition, and now requires constant attention to maintenance, both routine (manual 'cantonnage' and patching of holes) and periodic (restoration of the wearing course and bridge maintenancelreconstruction).The Governmentwill introduce a program for the systematic periodic maintenance of the paved network with assistance from its foreign partners designedto preserve its infrastructure capital, complementing the routine maintenance that it intends to continue in order to maintain an acceptable level of service at all times.

(iii) As far as unpaved roads are concerned, their maintenance in sound operating condition is extremely important for the regional and local economy. Systematic maintenance (reshaping and manual "cantonnage') and periodic regraveling will be undertaken. In addition, improvements will be made to unpaved roads where trafficis sufficientlyheavy to justifythis, upgradingthem into up-to-date earth roads or, in certain cases, paving them. Bridges on this network will be built or improvedas needed. All operationswill be guided by considerationsof economic return.

(iv) Local farm-to-market roads will be maintained through local human and financial resources.

(v) In order to expand the productionof fully washed coffee, a program for the improvement/constructionand maintenance of roads serving the coffee washing stationswill be undertakenas part of the program for developingthese washing stations.

(vi) In an effort to developthe private sector'sability to maintain and rehabilitatethe road network, the Government will endeavor to ensure that, starting in 1995, at least 65 percent of such work is carried out by private contractors.

(vii) The Governmentwill implement a program of training and technical assistanceto develop the human resourcesrequired to plan, manage and monitor transportationand infrastructureservices.

(viii) Given that limitingand reducingthe budget deficitis an overriding -82 - Annex XVI national objective, it is vitally important to lessen the impact of the transportationsector in general, and of the public enterprisesin the sector in particular,on the national budget. Effortswill accordinglybe directed to improvingthe recoveryof infrastructurecosts and enhancingthe performanceof the public enterprises in order to reduce, and even to eliminate, their dependence on budgetary funds.

(ix) The Government is concerned at the growing number of traffic accidents and wishes to take measures to improve road safety and the safety of infrastructurefacilities. Among these measures, priority will be given to updating the rules and regulationsgoverning road vehicles.

ACTION PROGRAM

(i) Vehicle reRulations

In order to increase road safety and reduce the damage caused to roadways by excessiveaxle loads, the Governmentwill prepare and implementnew axle load regulations for the internationalnetwork and for the national and local network, together with regulationsgoverning other parameters having a bearing on road safety. An axle weight inspectionsystem will be institutedat the border crossings on RN-1 and RN-5, together with a system of flying inspectionteams on other highways. The procedures for driver instructionand issuance of driving licenses also need to be revised.

(ii) Transportationprices

Charges for transporting both freight and passengers will be deregulated. Road freight chargeswill be freed immediately.

In order to encourage capital investment and promote competition among lake transportoperators, the Governmentproposes to graduallyderegulate the prices that may be charged for lake transportoperations. This will be made possible in the medium term by the recent revisionof the relevantprice schedule and the presenceof real competitionamong the four existingBurundian operators.

In regard to passenger traffic, the Government'sobjective is to encouragethe operationof efficientpublic and private transportationsystems at the lowest possible cost. Growth of the private sector will be encouraged by progressivederegulation of fares for urban and interurbanservices.

(iii) Passenger transport

In order to allow people to travel both within and between urban areas at the least possible cost, the Governmentwill encouragethe coeKistence of, and competition between, a dynamic private sector and an efficientpublic sector. Certain categoriesof the p pulation may qualify for sulsidiesfor their home/workand home/schooltravel under a socialpolicy geared to the country'scapabilities.

OTRACO, which has just signed a performrnce contract with the Government, needs to substantially improve its technical and financial performancein order to maintain a level of servicecomparable to that currently -83 - Annex XVI being obtained with the recently delivered new buses. Implementationof the performancecontract -- which will, incidentally,need to be amended to bring it fully into line with the proposed objectives -- will be systematically monitored by government authorities. In return, the Government will be authorizingOTRACO to graduallyraise its fares in order to cover its operating costs properly; an initial 50/percent fare increase will be implemented i4mediately. OTRACO'sperformance will be evaluatedannually and, dependingon the results, the Governmentwill decide on appropriateactions vis-a-vis the company (extensionof the performancecontract; reorganizationwith amendment of the performancecontract; or awardingof a concessionto a privateoperator). The private sector may benefit from ccmmercial leasing arrangements for transportationequipment donated to Burundior purchasedwith the aid of foreign loans.

In addition, it is desirable for the Government to have a better knowledge of the urban transportationsector so that it can identify possible areas where coordinationis needed betweenpublic and private services,and the most effective mechanisms for delivering subsidies for services of a social nature. A passengertransportation study will be carriedout for this purpose.

(iv) Lake transportation

With regard to lake transportation services, the Government has investedconsiderable sums in recent years in modernizing the Port of Bujumbura, as water transport is expected to continue to play an extremely importantrole in supplyingthe countrywith needed goods and shippingout Burundianproducts: lake transport remains the cheapest in terms of direct costs.

The Governmentintends to turn these capital investmentsto account and to maximize the return to the economy; it also wishes to encourage lake transportoperators to make investments. In addition,the Governmentwill limit capital investment that would be likely to reduce the rate of return or add excessivelyto the debt burden.

As regards the Port of Bujumbura, the Government will assign its operationto a mixed-economy(semi-public) company constitutedunder private law and operatingunder a new concessionagreement where paymentof a fee would cover part of the cost of servicing the debt contracted by the Government for constructionof the port. The concessionnairewill be guaranteedmanagement autonomy that will enable him to achieve a maximum level of performance.

For several years now the Government has been planning to supplement the lake transport installations by building a shipyard at Bujumbura that would allow vessels to be maintained there and permit the development of a shipbuilding industry. The Governmentstill plans to implementthis project, but only after ascertainingthat it will be possible to award a concession to a.&operating companywith the obligation to servicethe correspondingdebt.

(v) Air transport

Air transport is destined to play an increasing role in carrying passengers throughout the region and also for carrying freight. The Government plans to encourage the development of this potential market and enhance the competitiveness of this sector by improving the return on existing -84 - Annex XVI infrastructure, which is currently underutilized.

A study will be made of the developmentof air transportand of t}e conditions and regulations governing it. This is intended to lead to a plan of action that will extend to air transport the deregulation measures adopted for the remainderof the economy,more particularlythe transportation sector.

(vi) International transport

The Government will maintain an active policy of dialogue with neighboringcountries, transit countries and other landlockedcountries with a view to improving conditionsfor movement through the Northern Corridor,more particularly with use of the DTDR (Document de transit douanier routier - Customs Road Transit Document) in accordance with the Preferential Trade Area (PTAIZEP) recommendations, and also through the Central Corridor,where the movement of road vehicles to the Isaka terminal, and possibly on to Dar-es-Salaam, is expected to increase. Lastly, the southern route via Mpulungu will also be the subject of discussions with Zambia, in view of its growing importance for import traffic. To support this dialogue, the Administration des Transports will establish a system for the statistical monitoring of traffic flows and costs with a view to improving knowledge of the conditions governing international transport.

In order to reduce the overall transportationcosts of Burundi's imports and exports over the medium term, the Government will seek to liberalize the conditions governing international transport. The choice of transportation mode and of transport operators (carrier, insurer, forwarding agent) will generally be left to the importer's discretion, and the impact of BRBI's involvementin the allocationof foreignexchange on selectionof trasportation mode and operator will be progressively eliminated. In like manner, international transportation rates will be deregulated by law, and negotiation between importer and operator will become the rule.

The Government is intent on maintaining a domestic transportation capacity, with OTRABUforming an important element in this. The Government will accordingly seek to make this enterprise more competitive in the face of competitionfrom a dynamic privati sector by opening up a majority of OTRABU's capital to the private sector and installinga private-sectormanagement.

The Governmentwishes to encourageuse of the Central Corridor for part of the country's importsof petroleumproducts as a means of reducing the cost of these imports. To this end, the price structurefor petroleumproducts will be reviewedperiodically to encourage importersto make use of this route. In addition, importersshould be in a position to negotiate the purchase of motor fuels at Kigoma and thus counter competition. The MTPT will endeavorto establish,jointly with the Comite National de l'Energieet de l'Eau (NationalEnergy and Water Committee),a system of informationon transportation networks to cope with the possibilityof a supply crisis involvingpetroleum products or other essentialcommodities.

(vii) Institutionalstrenathenint and training

Implementation and monitoring of the programs defined above will be the responsibility of the Ministry of Transportation, Posts and -85 - Annex XVI

Telecommunications (MTPT) for measures falling within the realm of transportation,and of the Ministry of PublicWorks and Urban Development(MTPDU) for measures pertaining to highway infrastructure. For each subsector,a plan of action will indicate the specific measures the Governmentintends to carry out. The timetable for these measures is indicative in nature and will be adjusted periodicallyin consultationwith Burundi'spartners in this sector.

Severalof the actions to be undertakenrelate to the establishment of modalities for the applicationof sectoral policy. Inasmuch as relates to the MTPT, institutionalstrengthening will be implementedas follows$

(a) Establishmentof a Road TransportDirectorate (Directicldes Transports Routiers)charged with monitoringOTRACO's performance contract, passenger traffic and freight traffic. The MTPT will thus be responsible for supervision(tutelle) of OTRACO and OTRABU.

(b) A technicalassistance program in support of the foregoingobjectives.

(c) A training program for MTPT staff to provide them with the knowledge and experience required to carry out their increasedresponsibilities.

Programmingof governmentand public enterpriseinvestments in the infrastructureand transportationsector will be carried out in accordancewith the Five-Year Plan objectives under a yearly exercise for the preparation of a three-yearpriority investmentprogram and a public expenditureprogram drawn up in consultationwith Burundi'sexternal partners, in order to mobilize the necessaryresources, both domesticand external. For the transportationsector, this programmingwill be prepared by the DirectorateGeneral for Transportation in conjunctionwith the DirectorateGeneral for Planning and the Directorate General for Roads. As regards the highway sector,a Road PlanningUnit (Cellule de Gestion Routiere)will be establishedwithin the MTPDU's DirectorateGeneral for Roads and providedwith the necessarytools for programminginvestments and road maintenance in conjunction with the Directorate General for Planning. As a general principle, the Government will undertakecapital investments only where these are economicallyjustified and servicing of the resultant debt will not impose an intolerableburden on the public finances. In addition,the Government will limit the execution of any investmentslikely to reduce the return on existing investments.

A study fund for the infrastructureand transportationsector will be set up with the aid of foreign partners in order to prepare for the years ahead and ensure that future measures are designed and progrsmmed sufficiently in advance. This will also enable the authoritiesto better diagnose problems and to make the necessarycorrections in good time.

In the highway infrastructuresector, implementationof the policy set forth above will be supported by a totally restructured technical assistance program and by a training program aimed not only at the staff of DGR but also at the domestic firms it is hoped to promote.

(viii) Infrastructuremaintenance and rehabilitation

The Governmentwill develop a periodic maintenanceprogram for the entire paved road system and for the network of priority earth roads. It will -86 - Annex XVI also arrangefor satisfactoryroutine maintenance of this network. In addition, RN-1 and RN-2, which are already in an advancedstage of deterioration,will be the subject of a rehabilitationprogram and the Governmentwill undertake the constructionof a paved road from Muyinga to Tanzania via Kobero.

To accomplishsuch a program, the Governmentwill have to come up with local financingestimated to be on the order of FBu 800 million a year, to which would be added external contributions. To generate the local resources required, a policy of cost recovery from road users will be followed. At this time, a large proportion of the money for road maintenance comes from the National Road Fund (Fonds Routier National - FRN) and the remainder from the Ordinary Budget (which receives all the taxes collected for use of the roads except for the FRN levy) and the Investmer.tBudget (Budget Extraordinaireet d'Investissement- BEI). To date, the Ordinary Budget's contributionto road maintenancecosts has been limitedto paying the salariesof civil servants and the cost of operating the DGR office. Pending an upcoming budgetary reform, following which the Ordinary Budget will be called upon to finance road maintenancecosts as a complementto the NationalRoad Fund, it is the Investment Budget that will have to provide the needed additionalcontribution.

As regardsthe Road Fund, the Governmentplans to review the amount of the FRN levy on motor fuels periodicallyin order to at least maintain the volume of resourcesgenerated in real terms. The remainingdomestic resources required for road maintenanceoperations and for counterpartcontributions to investment operations financed by other countrieswill come from the national budget. To this end, the MTPDU w"U11show its budgetaryrequirements in a unified manner, i.e. the budget estimateswill reflect an annex budget for the National Road Fund. FRN's resources,however, will be made directlyavailable to the DGR in the form of a bank account.

The cost of maintaining the access roads tGothe coffee washing stations will, in principle, be financed as coffee production costs, i.e. by withholding from the proceeds of coffee sales. However, in cases where the coffee market situation does not allow this, these costs will be borne by the governmentbudget.

As regardsworks needed to be carried out on these roads, the DGR will serve as consulting engineer or project manager for the Ministry of Agricultureand Livestock (MAE) under an agreementto be concludedbetween MAE and MTFDU.

A large and growing proportion of the road maintenance works traditionallyexecuted on forcn accountby DGR staff will in future be entrusted to p.Tvate contractorsin order to strengthenand graduallydevelop the domestic road building industry. In this way it is also hoped to develop the use of labor-intensivetechniques to replacethe highly mechanizedand foreignexchange intensive methods currently employed most of the time. This policy will, therefore, also seek to promote employmentin the sector.

ANNEX: Action Program and Timetable -87 - Annex XVI

BURUNDI

GENERAL POLICY FOR THE TRANSPORTATION

AND TRANSPORTATIONINFRASTRUCTURE SECTOR

ACTION PROGRAM AND TIMETABLE

A. PROGRAMINGOF INVESTMENTAND PUBLIC EXPENDITURE

December 31 Adoption of a three-year Prosramme des DePenses each year Publiques (PDP - Public ExpenditureProgram) for the Transportation and Ronds sectors in conformity with the principles of general policy for the Transportationsector, having regard to the agreementssigned with donors.

B. LAKE TRANSPORT

(i) Port of Bu1umbura

February 20, 1990 Confirmation by the Government of the principle of issuing a concession for operation of the port to a mixed-economy (semi-public) company constituted under private law.

February 20, 1990 Submissionof a schedule for establishmentof the concession.

June 30, 1990 Introductionof a pricing structureallowing recovery of costs (cost of operationand maintenance,provision for capital investment,fee payable to the Governmentas contributiontoward repaymentof a portion of the debt, corporationtax, and after-taxprofit).

December 31 Yearly pricing review. each year

(ii) Lake transport

June 30, 1990 Review of pricing arrangementsin the form of a bracket rate guaranteeinga minimum rate of return on operations, allowing the possibilityfor identicalremuneration of services on all the lines served,while opening up the market to competitionamong lake transport companies.

December 31 Yearly pricing review. each year

June 30, 1992 Deregulationof lake transportcharges except where an oligopolysituation has been established,in which case considerationcan be given to maintainingthe bracket rate system. - 88 - Annex XVI

(iii) Shipvard

September 30, 1990 Technicaland financialupdating of feasibilitystudies (completion).

Decision on possible Implementationonly after a contract has been signed with a private operator for the management and operation of the shipyard,on the basis of assigment of the relevant debt service to the operator.

C. PASSENGERTRANSPORT

February 20, 1990 Approval of increase in urban fares from FBu 20 to FBu 30 for OTRACOand private operators (phase 1).

February 20, 1990 50 percent increase in interurbanfares for OTRACO.

February 20, 1990 Establishmentof a fare ceiling for the private sector.

May 30, 1990 Audit of OTRACO. Establishment of a technical assistance mission within OTRACOcharged with establishing a system of cost accounting and computerizing services.

May 30, 1990 Comprehensive study of mass transit (completion): * reorganization of the sector; * OTRACOfare system; * institutions.

June 30, 1990 Application of sector reorganization measures (start) aimed at coordinating public and private sector activities. Definitionof populationgroups qualifyingfor subsidiesand modalitiesfor introducingthis subsidy.

June 30, 1990 Review of OTRACO's performancecontract. Preparationof a set of specifications(cahier des charges) for servicesof a social nature provided by OTRACOand preciso definitionof the process for calculating the subsidy provided, with a view to svlbsequentupdating.

June 30, 1990 Review of OTRACO fares (phase 2).

June 30, 1990 Deregulationof private sector fares. Evaluationof OTRACO's performancecontract: September 30 * Quarterlymonitoring December 31 u March 31 of June 30 * Yearly evaluation.

December 31, 1991 Review of OTRACO fares (phase 3). each year Yearly review of OTRACOfares. -89 - Annex XVI

D. INTERNATIONALTRANSPORTATION

February 20, 1990 Draft directivofrom the Government to BRB to clarify the role of BRB in the allocationof import licenses in order to make this procedure more transparent. Publication in the national press. Periodic publication of BRB rejections of import licenses with indications of reasons.

June 30, 1990 Decentralixation of customs clearance procedures at Kayanza.

June 30, 1991 Decentralization of customs clearance procedures at Gitega.

E. AIR TRANSPORT

December 31, 1990 Completion of study on development of air transport.

June 30, 1991 Implementatlon of action plan adopted by the Governmanton the basis of the recommendationsstemming from the study.

F. ROAD FREIGHT TRAFFIC

June 30 Yearly review of tariff and pricing structurefor motor each year fuels and of the mechanism for recoveringcosts from road users to ensure that costs of routine and periodic maintenancewill be corered.

June 30, 1990 Introductionof vehicle weighing scales at RN-1 and RN-5 border crossings.

June 30, 1990 Introductionof new regulationsfor motor vehicles (axle load, total permitted live load, dimensions)and of measures for verifying compliance with these regulations.

June 30, 1990 Abrogationof Ordinanceof 1983. Deregulationof internationaland domestic freight rates. Publicationof indicativetransport co-itsg to be updated annually.

December 31, 1989 Adoption of program for privatizationof OTRABU.

June 30, 1990 Start of privatizationprocess (sale of shares).

G. ROAD MAINTENANCE

December 31, 1989 Confirmationof the Government'sdecision to finance (a) road msintenance through the DGRwith the aid of funds from the National Road Fund, the Ordinary Budget and the Investment Budget, in the amount of FBu 800 million a year (in 1989 terms), over the period of executionof the i TransportationSector Project (1990-94);(b) rehabilitation of access roads to coffee washing stations ("coffee roads") in an annual amount in FBu representing15 percent of the - 89 - Annex XVI

D. INTERNATIONALTRANSPORTATION

February 20, 1990 Draft directive from the Government to BRB to clarify the role of BRB in the allocationof Import licenses in order to make this procedure more transparent. Publication in the national press. Periodic publicationof BRB rejectionsof import licenses with indic&tionsof reasons.

June 30, 1990 Decentralizationof customs clearanceprocedures at Kayanza.

June 30, 1991 Decentralizationot customs clearanceprocedures at Gitega.

E. AIR TRANSPORT

December 31, 1990 Completionof study on developmentof air transport.

June 30, 1991 Implementationof action plan adopted by the Governmenton the basis of the recommendationsstemding from the study.

F. ROADFREIGHT TRAFFIC

June 30 Yearly review of tariff and pricing structure for motor each year fuels and of the mechanism for recovering costs from road uaers to ensure that costs of routine and periodic maintenancewill be covered.

June 30, 1990 Introductionof vehicle weighing scales at RN-1 and RN-5 border crossings.

June 30, 1990 Introductionof new regulationsfor motor vehicles (axle load, total permitted live load, dimensions) and of measures for verifying compliance with these regulations.

June 30, 1990 Abrogation of Ordinance of 1983. Deregulation of internationaland domestic freight rates. Publicationof indicativetransport costs, to be updated annually.

December 31, 1989 Adoption of program for privatizationof OTRABU.

June 30, 1990 Start of privatizationprocess (sale of shares).

G. ROAD NAINTENANCE

December 31, 1989 Confirmationof the Government'sdecision to finance (a) road maintenancethrough the DGR with the aid of funds from the National Road Fund, the Ordinary Budget and the Investment Budget, in the amount of FBu 800 million a year (in 1989 terms), over the period of executionof the TransportationSector Project (1990-94)s(b) rehabilitation of access roads to coffee washing stations (*coffeeroads") in an annual amount in FBu representing15 perceut of the -90 - Annex XVI

cost of the works to be carried out by the Governmentunder the TransportationSector Project and the cost of project management providedby DGii.

Relevant budgetaryappropriation for 1990 effectuated.

June 30, 1990 Conc.usionof an agreementbetween the Ministry of Agricultureand the MHPDU to define the role of the DGR in the program for constructionof roads serving the coffee washing stations.

June 30, 1990 Establishmentof a local financingmechanism for maintenance of the roads serving the coffee washing stations.

June 30, 1990 Confirmationof the principleof transferringto DOR, in quarterly installments,50 percent of the funds allocated for road maintenanceby DGR and 100 percent of the funds allocatedfor rehabilitationof the 'coffee roads," in two separate bank accounts,with effectivepayment of the first tranche.

Each quarter Effectivepayment of the relevanttranche.

December 31 Budgetaryallocation for the followingyear of the each year amounts requAred for maintenanceof roads by DGR and for rehabilitationof roads serving the coffee washing stations, in accordancewith the objectivesand provisionsof the TransportationSector Project.

H. INSTITUTIONALASPECTS

Ministry of Transportation. Posts and Telecommunications (MTPT)

June 30, 1990 Strengtheningof MTPT's capacityto exercise supervision (tutelle) over the sector by establishing within the DirectorateGeneral for Transpottation(DGT) a Directorate for Road Transportationwith its own operatingbudget.

June 30, 1991 Establishmentof a Directoratefor Land Transportationand strengtheningof the Studies and Planning Unit, each with its own operatingbudget.

June 30, 1990 Assignment of a TechnicalAssistant to DGT with responsibilityfor monitoringthe departmentsand companies under the riinistry's supervision.

December 31 Budgetary allocation to DGT of the budget required each year each year to finance the counterpartfunds needed for executionof the transportation component of the Transportation Sector Project.

July 1990 - June 1993 Under the Transportation Sector Project, definition and implementationof a trainingprogram for Goverment -91- Annex XVI

employeesto provide them with the knowledge and experience required to carry out their increasedresponsibilities for executionand monitoring of the action program set forth above.

Ministry of Public Works and Urban Development

June 30, 1990 Establishmentby ministerialdecree within DGR of: * a road managementunit, * a unit to monitor road maintenanceworks carried out by contractorsand on force account.

Assignmen_ of two qualifiedBurundian counterparts to the road managementunit.

Assignment of three Burundiancounterparts, either already qualifiedor capable of receivingappropriate supplementary training on the job, to the monitc.ing unit.

Implementationof the planned technicalassistance for executionof the road componentof the TransportationSector Project.

Start-up of a training program for governmentemployees and employeesof the sectoral enterprisesfor implementationof the TransportationSector Project. Annex XVII

BURUNDI Transport Sector Prolect

S.CTED DOCM T tJID DATA AVALALE IL PROJECT FILE

1. Proposal by DGR for a Fifth Highway Project, October 1987.

2. Evalus-ion Economique Provisoire des Composantes du Projet, DGR, May/November 1988.

3. Benefit/CostStream Data for the Road Program

4. Document de Politique Sectorielledu MTPDU, March 1988.

5. Document de Politique Sectorielledu MTPT, 1988.

6. Aide-mimoire mission de pr;vahluation du Projet Sectoriel Transport, October 1988.

7. Aide-memoire mission de preparation du Projet Sectoriel Transport, December 1988.

8. Aide-memoire mission do priparation du Projet Sectoriel Transport, February 1989.

9. Projet de programe pluriannuel route et fiche* do projets, November 1988.

10. Note concernant 1. financement des depenses routieres recurrentes et lVentretiendes pistes cafe (J.P.Diehl- consultant),December 1988.

11. Pistes do desserte dos usines de lavage .u cafe de la SRD de Buyenzi - Evaluation des travaux de rehabilitation,DGR, 3 et 13 janvier 1989.

12. The Great Lakes Corridor Study, World Bank, November 1988.

13. Etude de faisabilit doeha RIG 9 Muzinda-Ndora,April 1988. BURUNDI TRANSPORTSECTOR PROJECT Ofgankaion of Ministryot PublicWorks nd UrbanDlop nt (MTPDU) [411

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