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World Bank Document Document of The World Bank FILECC7Y1 FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. 4147b-UR STAFF APPRAISAL REPORT URUGUAY Public Disclosure Authorized THIRD HIGHWAY PROJECT Public Disclosure Authorized January 20, 1983 Public Disclosure Authorized Projects Department Latin America and the Caribbean Regional Office 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 Equivalents (November 1981) (July 1982) (December 1982) 1 New Peso (Np) = US$0.08726 US$0.0786 US$0.0400 US$1.00 = Np 11.46 Np 12.73 Np 25.00 Fiscal Year January 1 - December 31 %Units and Measures 1 meter (m) = 3.28 feet (ft) 1 kilometer (km) = 0.62 mile (mi) 2 1 square kilometer (km ) = 0.386 square mile (sq mi) 1 metric ton (m ton) = 1.1 US short ton (sh ton) Abbreviations AFE Administracion de los Ferrocarriles del Estado ALADI (formerly ALALC) Latin America Free Trade Association ANCAP National Petroleum Company ANP Administracion Nacional de Puertos CATIDU International Transport Confederation of Uruguay CUTA Uruguayan Miotorcar Transport Confederation DGAC Direccion General d.eAviacion Civil DGIA Direccion General de Infraestructura Aeronautica DINAI AC Direccion Nacional de Aviacion Civil DNT National Directorate of Transportation DODE Directorate of Economic Development Works FALPRO United Nations Document Facilitation Program HDM Highway Design Model Intendencia Municipal Administration of each District IRU International Road Union MTOP Ministry of Transport and Public Works PLUNA Primeras Lineas Uruguayas de Navegacion Aerea SEPLACODI Secretaria de Planificacion, Coordinacion y Difusion TAC Transport Advisory Council TAMU Transportes Aereas Militares Uruguayas TIR Transport International Routiers Convention TPU Transport Planning Unit of DNT Vialidad National Highways Directorate FOR OFFICIAL USE ONLY STAFF APPRAISAL REPORT THIRD HIGHWAYPROJECT URUGUAY TABLE OF CONTENTS Page No. I. THE TRANSPORT SECTOR ........................................ 1 A. General ...... 1........................................ B. The Transport System ................................. 2 C. Transport Planning and Coordination .............. 4 II. THE ROAD TRANSPORT INDUSTRY ....... ......................... 6 A. General ............................................... 6 B. Regulatory Framework ......... ............... .... 6 C. Tariffs and Costs .................................... 6 D. The Vehicle Fleet .................................... 7 E. Organization of the Industry ..... ....................7 F. Marketing Practices and Fleet Utilization ............ 7 G. Potential Development of Intermodal Transport Services 8 III. THE HIGH1WAY SUBSECTOR ..................................... 9 A. The Highway Network .. .................. 9 B. Highway Administration ..................... .......... 9 C. Highway Planning . ....................................10 D. Highway Engineering ...... ............................11 E. Highway Construction ....... ..........................11 F. Highway Maintenance ...... ............................12 G. Feeder Roads of the Intendencias .. ...................12 H. Highway Financing ............. 13 I. Auditing ...................... 14 IV. PAST BANK ASSISTANCE TO THE TRANSPORT SECTOR .... ..........14 V. THE PROPOSED PROJECT ...................................... 15 A. Objectives and General Description . ..................15 B. Cost Estimates, Financing and Disbursements .......... 21 C. Execution and Procurement ....... .....................24 D. Semi-Annual Consultations and Project Monitoring ..... 25 E. R-isks ........................................................26 This report is based on the findings of an appraisal mission which visited Uruguay in February 1982 and August 1982. The mission comprised Messrs. A. van Dijck (Senior Highway Engineer) and B. Bostrom (Senior Transport Economist). The report has been edited by Miss V.R. Foster. This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. TABLE OF CONTENTS (Continued) Page No. VI. ECONOMIC ANALYSIS ............................ 26 A. General ..................... 26 B. Road Selection ..................... 27 C. Traffic Development .28 D. National Feeder Roads Program .28 E. Project Returns ...................... , ., . 29 F. Sensitivity Analysis .29 VII. AGREEMENTS REACHED AND RECOMMENDATION .30 TABLES 2.1 Vehicle Fleet 1976 and 1980 .32 3.1 Highway Network 1976 and 1981 . .33 3.2 Ministry of Transport and Public Works -- Income .34 3.3 Ministry of Transport and Public Works -- Expenditures 35 3.4 Gasoline and Gas-Oil Consumption . .36 5.1 Five-Year Highway Investmient Plan 1983-1987 ... 37 5.2 Detailed Cost Estimates for Civil Works . .38 5.3 Estimated Schedule of Disbursements . .39 5.4 Tender and Construction Schedule . 40 6.1 Traffic on Project Roads 1982 and Traffic Growth .41 6.2 Economic Costs and Benefits for Main Roads Reconstruction 42 6.3 Economic Costs and Benefiits for Road Rehabilitation 43 6.4 Economic Returns and Sensitivity Tests .44 ANNEXES 1 Outline Terms of Reference for a Study of Trucking and Intermodal Services .45 2 Outline Terms of Reference for Technical Assistance to Establish a Cost-Accounting System for AFE .46 3 National Road Evaluation - Methodology . .................47 4 Related Documents and Data Available in the Project File. 49 MAP IBRD 14225R -- Uruguay - Third Highway Project I. THE TRANSPORT SECTOR A. General 1.01 Uruguay is a small fertile country with a population of less than three million. Bordered by the two largest countries in South America, Argentina on the west and Brazil on the north, and with more than half of its national boundary consisting of navigable coastline on the south and east, the country, geographically, is unusually well endowed for the export-oriented development strategy which it is pursuing. The concentra- tion of Uruguay's commercial activity and population in the capital of Montevideo is reflected in the country's transport system. The interior, with relatively flat terrain, main rivers at boundaries and low density agricultural production, offered no obstacles to the development of radial roads and rail networks, extending north, east and west from the metropol- itan region around the seaport of Montevideo (Map IBRD 14225R). This port, strategically located at the mouth of the La Plata River, is the country's focal point for foreign trade and also serves inland and coastal naviga- tion. 1.02 Of total freight in 1980, 85% was carried by road, 12% by rail and 3% by river transport. Since 1976, the share of traffic by road in- creased, and both river and rail traffic decreased. The share of road transport also increased for inter-urban passenger traffic, with buses carrying 62% in 1980, private automobiles 28%, rail only 9% and domestic air transport a remaining small portion. The transport sector of Uruguay, in 1980, provided a total of about Np 4 billion (US$437 million), or 5.2% of the GNP. Employment in the sector was some 67,000, or about 6% of the economically active population. These percentages are high for a country with short transport distances and few terrain limitations, and they reflect the major limitations for the sector as a whole, i.e., relatively low productivity and high operating costs. Improving productivity is, therefore, important for the economy, not only directly, but also indirectly, because such improvement would stimulate Uruguay's role in transit traffic to neighboring countries. 1.03 Much of the existing transport system in Uruguay is antiquated and inadequate for future needs. To define key development issues in the sector, a comprehensive survey of the national transport system was under- taken, with UNDP assistance, in 1976-1978, followed by technical assistance starting in 1980 (para 1.18). This survey established a general framework for transport investment and identified four areas of highest priority need: (a) strengthening of national transport planning; (b) improvements in road rehabilitation and reconstruction; (c) reductions in railroad operations and deficit; and (d) port modernization. -2- B. The Transport System (i) Highways 1.04 The principal problem of the road subsector as a whole is its aged and seriously deteriorated naLtionalnetwork, notably its main interna- tional connections. Road transport and the highway subsector are reviewed in detail in Chapters II and III. (ii) Railways 1.05 Up to 1949, Uruguay's ra,ilwayshad been owned and operated by a British company for about 65 years. The concession terms promoted con- struction of a large 3,000-km network, radiating from Montevideo in five lines. In competition with the railways, the Uruguayan Government con- structed roads paralleling many of the rail lines, and the British company ceased further investments after 1926. Consequently, the Uruguayan Govern- ment purchased an obsolete railway in 1949. The Administracion de los Ferrocarriles del Estado (AFE), a semi-autonomous Government agency, was set up in 1952 to operate the railways. AFE began replacing steam locomo- tives with diesel-electrics, but did not improve the obsolete permanent way and equipment. The intervening years have seen a further deterioration in the condition of the railways through lack of maintenance and replacement investment.
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