Honduras Multiphase Program for Road Rehabilitation of Sections of the Ppp Tourism Corridor - Phase I (Ho-L1013)
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DOCUMENT OF THE INTER-AMERICAN DEVELOPMENT BANK HONDURAS MULTIPHASE PROGRAM FOR ROAD REHABILITATION OF SECTIONS OF THE PPP TOURISM CORRIDOR - PHASE I (HO-L1013) LOAN PROPOSAL This document was prepared by the project team consisting of José Agustín Aguerre (INE/TSP), Project Team Leader; José Francisco Demichelis (ICF/CMF); Trinidad Zamora (COF/CHO and procurement specialist); Javier Jiménez Mosquera (LEG/SGO); Roberto Suárez Nicolini (consultant), Raúl Campos Montero (environmental consultant); and Caterina Vecco (ICF/CMF) and Giselle Apat (INE/TSP), who helped to produce this document. CONTENTS PROJECT SUMMARY I. FRAME OF REFERENCE ..................................................................................................... 1 A. Socioeconomic framework.................................................................................... 1 B. The road sector....................................................................................................... 1 C. The country’s sector strategy................................................................................. 7 D. The Bank’s sector strategy..................................................................................... 7 E. Program strategy .................................................................................................... 9 II. THE PROGRAM................................................................................................................ 10 A. Objectives............................................................................................................. 10 B. Program description............................................................................................. 12 C. Cost and financing of phase I of the program..................................................... 16 D. Evaluation of phase I and eligibility of phase II of the program ....................... 17 III. PROGRAM EXECUTION ................................................................................................... 18 A. Borrower and executing agency.......................................................................... 18 B. Program execution and administration ............................................................... 18 C. Revolving fund and audits................................................................................... 19 D. Procurement.......................................................................................................... 20 E. Monitoring and evaluation................................................................................... 20 F. Execution period and disbursement schedule..................................................... 21 G. Program readiness................................................................................................ 22 IV. VIABILITY AND RISKS..................................................................................................... 22 A. Institutional and financial viability...................................................................... 22 B. Technical and economic viability........................................................................ 23 C. Environmental and social viability...................................................................... 25 D. Benefits and beneficiaries.................................................................................... 28 E. Risks ..................................................................................................................... 28 - ii - ANNEXES Annex I Logical framework Proposed resolution Electronic Links and References Basic socioeconomic data http://www.iadb.org/countries/home.cfm?id_country=HO&Language=English Status of loans in execution and loans approved http://ops/approvals/PDFs/HOen.pdf Tentative lending program http://opsgs1/ABSPRJ/tentativelending.ASP?S=HO&L=EN Information available in the INE/TSP technical files http://idbdocs.iadb.org/WSDocs/getDocument.aspx?DOCNUM=1113590 Procurement plan http://idbdocs.iadb.org/WSDocs/getDocument.aspx?DOCNUM=1113598 - iii - ABBREVIATIONS AADT Annual Average Daily Traffic CABEI Central American Bank for Economic Integration CESI Committee on Environment and Social Impact DGC Dirección General de Carreteras [Road Administration] EIA Environmental impact assessment EIRR Economic Internal Rate of Return ENPV Economic Net Present Value ESMP Environmental and social management plan ESMR Environmental and social management report FSO Fund for Special Operations GGPE Grupo Gerencial de Proyectos y Ejecución [Projects and Execution Management Group] HDM-IV Highway Design and Maintenance Standards Model IDB Inter-American Development Bank IRI International Roughness Index MCC Millennium Challenge Corporation OC Ordinary Capital PPP Puebla-Panama Plan RICAM International Mesoamerican Highway Network SINEIA National Environmental Impact Assessment System SOPTRAVI Ministry of Public Works, Transportation, and Housing UGA Unidad de Gestión Ambiental [Environmental Management Unit] PROJECT SUMMARY HONDURAS MULTIPHASE PROGRAM FOR ROAD REHABILITATION OF SECTIONS OF THE PPP TOURISM CORRIDOR - PHASE I (HO-L1013) Financial Terms and Conditions Loan conditions: 1 Borrower: Republic of Honduras OC financing FSO financing Executing agency: Ministry of Public Works, Transportation, and Housing Amortization period: 30 years 40 years (SOPTRAVI) Grace period: 5.5 years 40 years Disbursement period: 5 5 Source Amount (US$) % Phase I Phase II Interest rate: Adjustable 0.25% IDB (OC)2 28,000,000 37 43,000,0003 46,000,0003 Inspection and 0% 0% supervision: Local (FSO)2 12,000,000 16 18,000,000 19,000,000 Credit fee: 0.25% 0% Other/Cofinancing 35,000,000 47 46,000,000 117,000,000 Currency: US$, FU US$ Total 75,000,000 100 107,000,000 182,000,000 Project at a glance Project objective: The general objective of the multiphase program is to improve the efficiency and safety conditions of the San Pedro Sula – Trujillo road corridor (Highway CA-13), which will contribute to the sustainable economic development of the country’s northern region. The specific objectives include facilitating fluid, safe, predictable transit of the road in any season of the year, while reducing transportation costs and travel times, by improving the capacity and rehabilitating the primary road connecting the country’s commercial hub with the Caribbean zone, which has the best conditions in Honduras for investment in tourism infrastructure. Special contractual conditions: The first disbursement for activities to improve the El Progreso-Tela road is subject to delivery by SOPTRAVI, to the Bank’s satisfaction, of the final designs for the works, a document identifying the affected properties, and a plan of action for transacting the land purchases necessary to carry out the works (paragraph 3.15). Exceptions to Bank policies: None. Retroactive recognition of expenditures : Expenditures of up to US$50,000 incurred after 1 July 2007, but prior to the date of approval of the loan by the Board of Executive Directors, to contract consultants to support the Environmental Management Unit (UGA) and procure a vehicle may be recognized retroactively against the Bank’s loan (paragraph 3.15). Project consistent with country strategy: Yes [ X ] No [] Project qualifies as: SEQ [ ] PTI [ ] Sector [ ] Geographic [ ] Headcount [ ] Procurement: See paragraph 3.10 and Annex II. Verified by CESI on: 25 May and 3 August 2007 Environmental and social review: See paragraphs 4.23 to 4.27 and the environmental and social management report The interest rate, credit fee, and inspection and supervision fee mentioned in this document are established pursuant to document FN-568-3 Rev. and may be changed by the Board of Executive Directors, taking into account the available background information, as well as the respective Finance Department recommendations. In no case will the credit fee exceed 0.75%, or the inspection and supervision fee exceed 1% of the loan amount. With regard to the inspection and supervision fee, in no case will the charge exceed, in a given six-month period, the amount that would result from applying 1% to the loan amount divided by the number of six-month periods included in the original disbursement period. 2 Within the framework of the Bank’s approval of debt relief for countries that qualify for resources from the Fund for Special Operations (FSO), and in the case of Honduras, new loans during the 2008-2009 period will be financed with a blend of resources from Ordinary Capital (OC) and the FSO, in a proportion of 70% and 30%, respectively. 3 The amount of the Bank’s loans for phases II and III is subject to availability of resources. I. FRAME OF REFERENCE A. Socioeconomic framework 1.1 In recent years, the Honduran economy has performed strongly, compared with the modest growth of the 1990s. In 2006, figures showed growth of approximately 6%, and the projections for 2007 and 2008 are between 5.5% and 6%. This growth has been achieved with historically low inflation (5.3% in 2006, the lowest rate in 18 years). Under these conditions, increased fiscal revenues can be expected, which would boost investment spending in the near future. Despite a sizeable trade deficit, the external sector of the economy remains strong, due to growth in international remittances and exports. In 2006 exports grew 11.3%, and the Honduran Central Bank’s net international reserves climbed to the equivalent of 4.2 months of imports. 1.2 In fiscal terms, although there have been improvements, vulnerabilities persist.