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PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: 49522 TRANSPORT SECTOR SUPPORT PROJECT Project Name Public Disclosure Authorized Region AFRICA Sector Roads and highways (56%); Aviation (26%); Railways (16%); Ports, waterways and shipping (1%); General transportation sector (1%) Project ID P055120 Borrower(s) Government of Tanzania United Republic of Tanzania, Ministry of Finance and Economic Affairs P.O. Box 9111 Tanzania Tel: +255 22 2112854 Fax: +255 22 2117090 / 2110326 Implementing Agencies TANROADS, Public Disclosure Authorized P.O. Box 11364 Dar es Salaam Tanzania Airports Authority (TAA) P.O. Box 18000 Dar es Salaam Dar Rapid Transit (DART) P.O. Box 724 Dar es Salaam Public Disclosure Authorized Reli Assets Holding Company (RAHCO) P.O. Box 76959 Dar es Salaam Tanzania Ports Authority (TPA) P.O. Box 9184 Dar es Salaam PRIME MINISTER’S OFFICE - REGIONAL ADMINISTRATION & LOCAL GOVERNMENT (PMO-RALG) P.O. Box 1923 Dodoma Public Disclosure Authorized MoID P.O. Box 1516 Dar es Salaam MoCT-Zanzibar P.O. Box 266 zanzibar Environment Category [X] A [ ] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared June 25, 2009 Date of Appraisal November 16, 2009 Authorization Date of Board Approval March 9, 2010 1. Country and Sector Background 1. A first PCN review for the Transport Sector Support Project (TSSP) was held on September 9, 2004. The TSSP was planned to assist Tanzania’s transport sector jointly with other development partners (DPs) in a sector-wide framework. However, due to the lack of an agreed sector investment plan, on-going major reforms, and donor coordination being in its infancy, it was determined to postpone TSSP and to first prepare a follow-on project (CTCP-2) to the on- going Central Transport Corridor Project (CTCP) to implement some of the components prepared under CTCP, while working on the framework necessary for a sector wide project. 2. Meanwhile the Government of Tanzania (GoT) has prepared a 10-year Transport Sector Investment Program (TSIP) and based on its three-year rolling investment plans commensurate with the Medium Term Expenditure Framework (MTEF). Planned annual investments and operating costs in the sector amount to about US$1 billion per year (seven percent of GDP), of which about US$300 million per year would be operational (maintenance) costs to be financed from user charges, and US$700 million are planned investments, including US$100 million envisaged to be financed by the private sector through public private partnership (PPP) arrangements. About US$300 million equivalent of the investment needs annually is expected to be financed from GoT budget resources and a further US$300 million per year is needed from Development Partners (DPs). Although ambitious, it is assessed that such investments are required to achieve the Millennium Development Goals (MDGs) for poverty reduction. 3. Through in-depth consultations, GoT has prepared its second poverty reduction strategy called the “National Strategy for Growth and Reduction of Poverty” or MKUKUTA, covering years 2005-2010. The strategy identifies three clusters of broad outcomes: (i) growth of the economy and reduction of income poverty; (ii) improvement of quality of life and social well- being; and (iii) governance and accountability. The World Bank jointly with the other DPs has prepared a FY07-FY10 Joint Assistance Strategy for Tanzania (JAST) in support of MKUKUTA. Within that strategy TSIP, and therefore TSSP, would support cluster I of MKUKUTA which strives “to further improve prospects of growth, especially improvement of the investment climate, through better informed choices and better financed programs in agriculture, forestry, environment, and mining; reduced infrastructure bottlenecks, notably in transport and energy; a stronger focus on improving labor force skills; deepening reforms in the financial sector and enabling environment for private sector activities; and increased regional integration.” 2. Proposed Project Development Objectives and Key Indicators 4. A preliminary development objective of the project is to improve the performance of the transport sector in Tanzania in order to enhance economic growth and reduce poverty. Key indicators proposed are: (i) the portion of rural population with access to all-season roads; (ii) the quantity of National Roads in good or fair condition; (iii) the number of scheduled flights offered to secondary airports proposed for rehabilitation; (iv) the average time from ship readiness to unload to final (selected) destinations for an imported container in the Central and TANZAM corridors; and (v) man-months of employment generated during project implementation. 3. Proposed Project Components 5. TSSP is proposed to assist the financing of a three year program (FY11-13) of TSIP with an IDA credit of US$250m. Additionally, US$10m is expected as a contribution to the aviation component from the Tanzanian Airport Authority (TAA) through equity or debt financing. Co- financing of TSSP is being considered by the Nordic Development Fund (NDF) and the European Investment Bank (EIB). TSSP will also have to cover the financing gap of CTCP-2 estimated at about US$100m (being part of the US$250m and hence leaving only a balance of US$150m for new sub-projects). TSSP is intended to be followed on by a series of similar projects (e.g. TSSP-2) each supporting an individual three-year program of the TSIP. TSSP is proposed to have eight components, as follows: (A) Rehabilitation of Paved Trunk Roads (US$100m): There are currently about 1,200 kilometers (km) of paved trunk roads (out of the 6,000 km total paved) that urgently need rehabilitation. Under TSIP it is planned to rehabilitate about 600 km of these during FY11-13 for which design and bidding documents exist (through GoT, EC, DANIDA, Dutch and IDA financing). TSSP plans to finance the rehabilitation of (part of) the Mwanza – Musoma road, and, additionally: (i) the supervision of these works; (ii) the preparation of bidding documents for the estimated 600 km balance of the paved trunk roads that need rehabilitation, for which currently there are no bidding documents, and which would be executed during the next three program; (iii) US$2m of support to TANROADS for its role as project implementing entity and to generally enhance its capacity; and (iv) the financing of the financing gap for the Korogwe – Same rehabilitation works financed under CTCP-2 (estimated at US$40m). (B) Improvement of Secondary Airports (US$60m of which US$50m IDA and $10m from TAA): Design and bidding documents have been prepared (with CTCP finance) for the improvement/upgrade of the following seven airports: Arusha, Bukoba, Kigoma, Mafia, Shinyanga, Sumbawanga and Tabora. The total estimated costs for these works are US$212m, the bulk of which is for runway improvements. Out of these Bukoba, Kigoma and Tabora have been selected for joint IDA/TAA financing, due to their high economic return and due to the low likelihood for them to get other financing, be it from the private sector through PPP arrangements, GoT budget or other DPs. To promote PPP arrangements and private sector finance for the viable airports (Dar es Salaam, Arusha and Mwanza) it is proposed to finance the services of airport transaction advisors under this component. (C) Continued Support to Dar es Salaam Rapid Transit (US$35m): This component is proposed to finance (i) the financing gap of CTCP-2 financed works; (ii) the preparation of bidding documents for Phase II and III of the Dar es Salaam Rapid Transit (DART) agency (in the airport and Kilwa road corridors); and (iii) further capacity building assistance to the DART agency after the exhaustion of such financing from CTCP-2. (D) Improved Performance of Tanzania Railways Limited (TRL) Railways (US$40m): Reli Asset Holding Company (RAHCO) has requested financing of the replacement of rails and sleepers between Tabora and Kigoma (410 km of very old 56 lb/yd rails) with new 80 lb/yd rails estimated to cost US$80m. IDA may consider at least part of this request for financing under TSSP. (E) Dar es Salaam (DSM) Port Efficiency Improvement (US$3m): The Tanzania Port Authority (TPA) needs to take up its role as landlord and concession the operations of the various port activities under its responsibility to private operators as stipulated in its founding law.. It is therefore suggested that TSSP would support TPA through the financing of port transaction and operation advisors. Once transactions have been carried out, there might be residual costs that cannot be borne by the private sector for the financing of which GoT could then request assistance from IDA under a follow-on sector project. (F) Improved Management of Local Government Roads (US$4m): A local government transport program (LGTP) has been prepared jointly by GoT and DPs and was launched by the Prime Minister in August 2008. Under TSSP, IDA is proposing to assist the Prime Minister’s Office, Regional Administration and Local Government (PMO-RALG) with capacity building programs including: (i) assistance to create urban transport authorities (starting with DSM); (ii) preparation of urban transport master plans in (some) cities other than DSM; and (iii) support to Local Government Authorities to make use of local consultants for the preparation, procurement and supervision of their road programs. (G) Enhanced capacity at Ministry of Infrastructure Development (MoID) (US$2m): The key requirement for assistance to MoID, identified during the recent joint sector review, is capacity
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