World Bank Document

Document of The World Bank

FOR OFFICIAL USE ONLY FlE CO?P Public Disclosure Authorized Report No. 4717-GUB

GUINEA-BISSAU Public Disclosure Authorized SECOND ROADS PROJECT

STAFF APPRAISAL REPORT Public Disclosure Authorized

APRIL 10, 1984 Public Disclosure Authorized West Africa Projects Department Transportation Division II

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

Currency Unit = Guinea-Bissau Peso (GP) Until Dec. 23, 1983 US$1.0 = GP 41 GP 1 million = US$24,400

After Dec. 23, 1983 US$1.0 = GP 82 GP 1 million = US$12,200

FISCAL YEAR

January 1st - December 31st

ABBREVIATIONS AND ACRONYMS

BNG - Banco Nacional da Guine Bissau DGAT - Direca9o Geral de Assuntos T6cnicos (Directorate General of Technical Affairs, MOPCU) DGC - DirecgEo Geral da Construcao (Directorate General of Construction, MOPCU) DEP - Direcgo das Estradas e Pontes (Roads and Bridges Directorate) DTT - Direcgao de Transportes Terrestres (Land Transport Directorate) ENG - Estaleiro Naval da Guine (National Shipyard) FED - Fonds Europ6en de Developpement (European Development Fund of the Common Market) FNI - Fondo Nacional de Investimiento (National Investment Fund) GUINEMAR - National river passenger transport company LIA - Linheas A6reas da Guine-Bissau MEF - Ministerio da Economia e Finangas (Ministry of Economics and Finance) MOPCU - Ministerio de Obras Publicas, Construcao e Urbanismo (Ministry of Public Works, Construction and Urban Development) MTT - Ministerio de Transportes e Turismo (Ministry of Transport and Tourism) SOCOMIN - Sociedade Comercial e Industrial SR - Servico Regiao (Regional depots of MOPCU) v.p.d. - Vehicles per day p.c.u - Passenger car unit (iii) FOR OFmFCIALUSE ONLY

GUINEA-BISSAU

SECOND ROADS PROJECT

STAFF APPRAISAL REPORT

TABLE OF CONTENTS

DOCUMENTS AVAILABLE IN THE PROJECT FILE...... *...... (v)

CREDIT AND PROJECT SUMMARY ...... (vii)

I. THE TRANSPORT SECTOR ...... ** ... ** ...... 1

A. Economic Setting ande...... td...... Background...... 1 B. The Transport System ...... 2 C. Administrationand Planning...... 3 D. Public Investments...... 3 E. Oil Products Pricing ...... *...... 4 F. ID InvolvementA in the Sector...... 5

II. HIGHWAY SUBSECTOR ...... 6

A. General ...... O...... 6 B. Traffic...... 7 C. Public Management,Road Maintenance and Finances...... 9 D. The Action Plan ...... 0.0...06 ...... 14

III. THE PROJECT...... 14

A. Objectives ...... * ...... 0. 14 B. Project Description...... *...... 16 C. Project Implementation ...... 22 D. Cost Estimates ...... *..... 22 E. Financing Plan...... 23 F* Procurement ...... 23 G. Disbursement...... 25 H. Reporting and Auditing...****...... 27

This report has been prepared by C.J.D. Lane, Senior Highway Engineer, J. Pelletey, Economist,and A. Covindassamy,Economist/Financial Analyst, WAPT2, on the basis of an appraisal mission in March 1983. Most secretarial work was done by Ms. Griest and M. Kashyap.

This document has a restricted distributionand may be used by recipientsonly in the performance of their officialduties. Its contents maynot otherwise be disclosedwithout World Bankauthorization. (iv)

Table of Contents (continued)

IV. ECONOMIC EVALUATION ...... 28

A. General ...... 0...... 28 B. Road Rehabilition and Maintenance Program ...... 29 C. Routine Maintenance ...... O-#...... 30 D. Ferries Component ...... 31 E. Maintenance Expenditures Recovery ...... o ...... 31 F. Distribution of Project Benefits ...... 32

V. AGREEMENTS REACHED AND RECOMMENDATIONS...... 33

ANNEXES

2-1 Ministry of Public Works, Construction and Urban Development (MOPCU) - Future Organization Chart 2-2 An Action Plan 2-3 Training Program

3-1 Road Rehabilitation Program 3-2 Design Standards 3-3 List of Equipment 3-4 Equipment to be Purchased 3-5 Draft Terms of Reference for Technical Assistance Team 3-6 Project Costs 3-7 Estimated Schedule of Disbursements

4-1 Average Vehicle Operating Costs by Road Category and Conditions 4-2 Annual Comparison of Condition of the Roads with and without the Proposed Project 4-3 Paved Roads Rehabilitation Program - Basic Assumptions 4-4 Gravel Roads Rehabilitation Program - Basic Assumptions 4-5 Earth Roads Rehabilitation Program - Basic Assumptions 4-6 Cost Benefit Analysis - Rehabilitation Program 4-7 Cost Benefit Analysis - Routine Maintenance Program 4-8 Cost Benefit Analysis - Ferry Rehabilitation Component 4-9 Recurrent Expenditures Recovery 4-10 Distribution of Benefit Flows

Map IBRD 17300R (v)

GUINEA-BISSAU

SECOND ROADS PROJECT

STAFF APPRAISAL REPORT

Project File Code/ Ref. No. DOCUMENTS AVAILABLE IN THE PROJECT FILE Bank Document No.

1 Transpo-t6nctor Memorandum WAPT2, Report 3942-GUB June 1982 (TransportSector Bank Reports)

2 Road Rehabilitationand Maintenance Doc # 128.444(B) Program, Techno-EconomicStudy, Louis Berger International, December 1982

3 Second Roads Project, Planning Doc # 128.444(C) Budgeting and Organisationof Works, Louis Berger International,April 1983

4 General Transport Study, Lavalin Doc # GUB 800 International/Delcanda,August 1980

5 Equipment Needs Evaluation, Louis Doc # 128.444(D2) Berger International,June 1983

6 Bissau Port Project, Staff Appraisal GUB-CR 1392, Bank Rpts. Report (No 4311 GUB, May 1983)

7 Guinea Bissau: An Introductory GUB-LEAP Bank Rpts. Economic Report, IDA, June 1981 (Report No. 3529 GUB)

8 Notes on Road and Ferry Traffic Docs # 128.444 (E & F) (AppraisalMission, 1983)

9 Notes on Economic Evaluation Docs # 220.034 (Q, to Q5) (AppraisalMission, 1983)

WAPT2 Mar. 84

(vii)

REPUBLIC OF GUINEA-BISSAU

SECONDROADS PROJECT

CREDIT AND PROJECT SUMMARY

Borrower: Republic of Guinea-Bissau

Beneficiary: Ministry of Public Works, Construction and Urban Develop- ment (MOPCU) and Ministry of Transport and Tourism (MTT)

Amount: SDR 3.9 million (US$4.00 million equivalent) from IDA. SDR 3.9 million (US$4.00 million equivalent) from the Special Fund administered by IDA

Terms: Standard

On-lending Terms: None

Project Description: The project would assist MOPCU to build up its new organization and continue the rehabilitation of its road network begun under the ongoing First Roads Project (Cr. 878-GUB, approved in January 1979) and address important institution building objectives in the transport sector. The principal components of the project are: (a) rehabilitation of about 500 km of roads; (b) establishment of a routine maintenance service; (c) training; (d) improvement of the ferry service at key crossings; and (e) assistance with management of the sector to MTT and MOPCU.

Project Benefits and Risks: The project would benefit the country by reopening roads neglected since independence, and by reducing transport costs on 500 km of roads. The project would also postpone future rises in vehicle operating costs and future costs for expensive reconstruction by assuring effective routine maintenance. Improvements to the ferry service would reduce the severe disruption to internal and external communications caused by frequent breakdowns.

The project is a direct follow up to IDA's First Roads Project (Cr. 878-GUB) during which three rehabilitation brigades were equipped and trained, and the supporting administrative and workshop facilities built up, so the physical components present few risks. The fiscal and administrative reforms to be set up to improve management of the sector may be hampered by a general lack of administrative experience in this country. Even with 95% donor financing there is a risk that Government will have difficulty with counterpart financing. This risk would be (viii)

addressed by requiring, as a condition of effectiveness, that the government deposit its first year's contribution into a special account.

Estimated Project Costs (US$'000):

Local Foreign Total

Road Rehabilitation 1,310 5,240 6,550 Routine Maintenance 198 2,190 2,388 Training 9 200 209 Ferries 12 364 376 Assistance to DTT 3 61 64 Assistance to MOPCU 59 1,395 1,454 Total Base Cost 1,591 9,450 11,041 Physical Contingencies 147 956 1,103 Price Contingencies 228 1,463 1,691 Total Project Cost 1,966 11,869 13,835 Rounded 2,000 11,800 13,800

Financing Plan (US$'000)

Local Foreign Total L Special Fund Administered by IDA 1,222 2,778 4,000 (29) IDA 28 3,972 4,000 (29) Kuwait Fund 50 5,050 5,100 (37) Government 700 -- 700 (5) 2,000 (15%) 11,800 (85%) 13,800 (100)

Estimated Disbursements from the IDA Credit (US$ million)

FY85 FY86 FY87 FY88 FY89 FY90 FY91

Annual 0.42 .88 1.01 0.82 0.53 0.29 0.05 Cumulative 0.42 1.30 2.31 3.13 3.66 3.95 4.00

Estimated Disbursements from the Special Fund administered by IDA (US$ million)

FY85 FY86 FY87 FY88 FY89 FY90 FY91

Annual 0.42 0.88 1.01 0.82 0.53 0.29 0.05 Cummulative 0.42 1.30 2.31 3.13 3.66 3.95 4.00

Economic Rate of Return: 37%

Staff Appraisal Report: Report No. 4717-GUB, dated April 12, 1984

Map: IBRD 17300R

WAPT2 Apr. 1984 GUINEA-BISSAU

SECOND ROADS PROJECT

STAFF APPRAISAL REPORT

I. THE TRANSPORTSECTOR

A. Economic Setting and Background

1.01 The Governmentof Guinea-Bissauhas requested a second IDA credit to continue the road rehabilitationbegun under the First Roads Project. The project would include the rehabilitationof a further 500 km of roads, improve vital ferry crossings and address a wide range of basic institutionalobjectives. The project grew out of the ongoing project as a logical "next step," as a result of a continuing dialogue between IDA and the Government since 1978. It was appraised in March 1983 by an IDA team consisting of Jeremy Lane, Senior Highway Engineer and Jean Pelletey,Economist. IDA has been involved in the country's transportsector since our first visit there after Guinea-Bissaujoined the Bank, in FY1978, when the sector was identified as crucial to post- war recovery. Other donors have financed individual projects but IDA remains the only donor making a serious attempt at rehabilitationof the existing network and the creation of an institutionalframework for management of the sector and the maintenance of its infrastructure. The rationale for IDA's continuing involvementis that the first project only began the task and there remains much work of a clear and undisputed priority to be done; continuity is essential, and IDA has extensive experience in this field and region. The Kuwait Fund for Arab Economic Developmenthas agreed to co-finance the project for 37%. The proposed IDA credit of US$4.0 million equivalentwould finance 29% of the project, and the proposed Special Fund credit for US$4.0 million would also finance 29% of the project. The Governmentwould finance the remaining 5% (para. 3.21).

1.02 Guinea Bissau is a small nation of about 810,000 inhabitants located on the West African coast between Senegal and Guinea Conakry. Together with the archipelagoof Bijagos, the country covers an area of 36,135 km2 . The territory is generally flat with a few hills in the eastern region. The western coast of the country is deeply indented by seven estuaries,making road and river transport highly interdependent.

1.03 With a per capita GDP of about US$190 (1982 estimate),Guinea Bissau is one of the 20 poorest countries in the world. Its main resource base is agriculture(50% of GDP), mostly rice in the south and groundnuts in the northeast, supplementedby livestock, cotton, and palm kernel in the islands and the north. In the past the economic situationhas been - 2 -

difficult; the country suffered from the lack of economic infrastructure, partly destroyed during the struggle for independenceand also from a lack of administrativecapacity, mainly at the middle level, following the exodus of the Portuguese.

1.04 Guinea-Bissau'sexternal payments position remains difficult. Between 1977 and 1981, imports of goods and services grew by as much as 20% per annum, while exports grew by an average of 8% per annum only, leading to a resource balance gap equal to 30% of GDP. The country is confronted with a persistent shortage of foreign currency,making savings on imports (as well as export stimulation)a major concern for the Gov- ernment.

B. The Transport System

1.05 The country's transportnetwork comprises:

(a) 2,300 km of roads, of which 485 km are paved, some 412 km are all-weatherlaterite roads, and the remainder are earth roads and rural roads (para. 2.01), plus 95 km of paved town streets;

(b) a deepwater port at Bissau and about 27 small coastal and river ports located in the islands and along the main estuariesand rivers; and

1.06 Bissau Port handles about 140,000 tons per year, of which 90,000 are internationaltraffic. It plays a central role in the domestic transportsystem handling a large part of the commercializedagricultural production for about 50,000 tons per year, including, for about 25,000 tons, rice from the south to supply Bissau and agriculturalexports such as groundnuts,palm kernels, cashews, etc. A total of about 73,000 passengers uses the coastal shipping lines annually, of whom about two- thirds pass through Bissau.

1.07 Although there was neglect and damage during the war of independence, and maintenance is still inadequate, the nature and extent of the transport network is in general sufficient for the present needs of the country; details of the transportationsystem are given in the Trans- port Sector Memorandum dated June 11, 1982 (ref. 1), and in the Bissau Port Project Staff Appraisal Report (Report 4311, Cr. 1392 (ref. 6)). 1'

1/ Documents available in the Project File are listed in page iv and are referred to in this report by their number on that page. - 3 -

C. Administration and Planning

1.08 Transport planning up to now has been hampered by a lack of qualified staff and is characterized by poor co-ordination between the ministries and public bodies concerned. This has resulted in serious difficulties in recent years in the transport of agricultural products to Bissau, and in the distribution of import goods to the regions, including food relief during the drought. However, the Government is now strongly committed to undertaking the necessary reforms to improve transport efficiency.

1.09 A significant step has been made with the completion in 1980 of the General Transport Study (ref. 4), financed by the African Development Bank (AfDB) and executed by consultant Lavalin-Delcanda (Canada). The study identified investment priorites in the sector, and provided useful recommendations on institutional reforms necessary to increase efficiency. While in the past Government priorities were aimed to a large extent at rehabilitating and upgrading the transport network (mainly roads), the present objectives are more diversified: Government policy now empha- sizes the reconstruction of Bissau Port, the development of a more efficient bi-modal road/river transport system in the south, and of road transport in the north and east. The ongoing 1983-86 four-year Develop- ment Plan includes:

(a) concentration of capital investment in the most urgent rehabilitation works, i.e., the Port of Bissau, the river ports, and the continuation of the road rehabilitation program;

(b) development of the force account maintenance capability of the Ministry of Public Works, Construction and Urban Development (MOPCU);

(d) modification of the existing inadequate institutional framework of the sector by the creation of a National Transport Company and increasing the role of independent transporters;

(e) rehabilitation of the ferry system, and improvement of its operations; and

(f) improvement of road user cost recovery and road maintenance funding.

D. Public Investments

1.10 In recent years the Government has given high priority to the expansion and rehabilitation of the transport infrastructure and renewal - 4 -

of transport equipment. The table below shows that during the 1978-81 period an annual average of about GP 930 million, representing about 27% of the total investment budget, was allocated to the sector.

Public Investment (GP million)

1978 1979 1980 1981

Total Investment Budget 2,271 3,283 5,521 3,173 of which Transportasion 832 710 1,441 772 Dollar equivalent a/ (millions) 24.5 20.8 43.7 22.7 as a percentage of total 37% 22% 26% 24%

Source: GUB Economic Report, 1981 (ref. 7).

a/ Current dollars.

About 99% of these investments were financed by foreign aid. About 50% of total public investment in the sector was spent on road development, 33% on sea and river transport, mainly for the purchase of transport equipment, and 15% on air transport. The distributionof these investments reflects the needs of the country. The major problem encountered in the execution of the investmentprogram has been the shortage of technical and medium-levelmanagement staff capable of administeringproject implementationand undertaking the necessary maintenanceworks required after project completion. The second area of concern has been the financing of recurrent costs of the projects. In order to overcome the country's limited capacity for administeringprojects, technicalassistance and training are important. Since both require continuityand time to become effective, the Government'sand IDA's strategy to implementa succession of follow-on projects of limited size, rather than fewer large-scaleones, is appropriate.

E. Oil Products Pricing

1.11 Until 1978, retail prices for petroleum products generally moved in line with CIF import costs and domestic inflation. Increases in sub- sequent years were insufficientto match the large increases in import costs which took place in 1979-80. Following a 20% increase in March 1983, retail prices of petroleumat present are above the CIF import cost plus delivery cost, with the exceptionof diesel fuel which still receives a very small subsidy. However, fuel taxes are still insufficient. They do not cover road user costs (Annex 2-3, Tables 2 and 3), because of insufficienttaxation level and widespread tax exemption for the public sector. In addition, insufficientfuel price for road users may cause non-optimalmodal allocation between roads and rivers. Following the December 23, 1983 devaluationof the GP by 100%, urgent action is needed to increase proceeds from fuel taxes. The Government is taking action in three steps: (a) in the short run, all tax exemptions have been suppressed;(b) as agreed during negotiationsfuel prices will be increased and taxes doubled up to GP 15 per liter on gasoline and GP 15 on diesel fuel, by September 30, 1984; (c) in the long run, fuel prices will be adjusted to the economically optimal level, following the completion of a study on fuel price financed under the Second Petroleum Exploration Project and a study on fuel taxation and administrative organizatior of tax collection, financed under the Bissau Port Project.

F. IDA Involvement in the Sector

1.12 IDA strategy in Guinea Bissau is focussed on helping to create the conditions necessary for the long-term development of the economy. The IDA lending program for 1982-86 includes five projects, of which two are in the transport sector. IDA's First Roads Project and Port Project have been very useful, concentrating on urgent rehabilitation works, and assisting the Government in formulating policy and in undertaking much needed institutional reform.

1.13 IDA's First Roads Project (Cr. 878-GUB, signed February 9, 1979, US$ 9 million) is still under disbursement. It is to provide for the rehabilitation and maintenance of 564 km of roads (226 km of asphalt roads and 338 km of gravel roads), plus equipment, spare parts and technical assistance. Presently three operating brigades are in the field, supported by adequate stores and workshop services. By February 1983, 384 km of rehabilitation had been completed, and another 100 km will probably have been completed by the time funds are exhausted.

1.14 The experience drawn from the the execution of the First Roads Project are:

(a) Due to very difficult local conditions for document preparation and international communication, procurement is more lengthy than normal;

(b) Because of the acute foreign currency shortage, all payments abroad are subject to cumbersome clearance procedures. To ensure that spare parts for equipment are read- ily available, it is necessary to establish a revolving fund in an internationally accepted commercial bank;;

(c) Skilled labor and intermediate level staff are in very short supply, in the public sector and in the country in general, and the local formal training system is under- developed. Therefore it is necessary to continue and expand the successful training component of the First Roads Project for vocational training. For higher level staff, training must combine courses abroad, and most of all, on-the-job training for management and task organization with expatriate experts; (d) Local staff shows an exceptionallyhigh motivational level, which led to good results in the organizationof the maintenancebrigades; and

(e) Because of the very difficult local conditions,selection of consultantsand technical assistance selectionmust be conductedvery carefully,and only people with previous experience in the country should be retained. There were several resignationsin the consultant teams during the First Roads Project.

1.15 IDA's Bissau Port Project (Cr. 1392-GUB, signed July 19, 1983, SDR 14.9 million) was presented to the Board in June, 1983. It provides for rehabilitationof the existing T-shaped pier which is seriouslyda- maged and deteriorating,the building of five small river ports to serve coastal shipping, and repairs to four ferry ramps which will greatly improve intermodal efficiency. The project also includes major institution building components for port operation and management,transport industry reorganizationand transport planning. Under this project, the Port Au- thority was given, in June 1983, a legal status with commercial accounting and management systems. The Port project also requires Govern- ment to make a study of road user taxation, the results of which will be used in implementingthe Action Plan.

II. HIGHWAY SUBSECTOR

A. General

2.01 The road network (see map) is more than adequate in extent and the percentageof paved roads in the network is quite high.

Road Network (km)

Primary Regional Tertiary Total

Paved 485 -- -- 485 Engineered Gravel -- 95 317 412 Gravel or Earth -- 1,403 1,403

Total 485 95 1,720 2,300

Source: General TransportStudy.

The focus of present Government policy is to concentrateon upgrading this network to provide all-weatherlinks from the provinces to Bissau, and to Senegal and Guinea (Conakry)and to eliminate the maintenance backlog. On completion of the proposed project, 1,122 km, i.e. all the - 7 -

paved and gravel roads and 16% of earth roads, will have been rehabilitated.

2.02 The only major road improvementsmade since Independence(1974) have been (a) the reconstructionand paving of the Jugudul-Bambadinca Road (58 km) financed by the African DevelopmentBank; and (b) the highway to Bissau airport (8 km) financed by the Dutch Government. The first project rebuilt the missing link in the east-west spine of the country and was well justified. The airport highway is of questionablejustifi- cation; started in 1978, it was not complete by the time of appraisal of the proposed project. Major works planned at present are the upgrading of the Mpack (Senegal)- Sao Vicente Road (70 km, US$5 million) and the reconstructionof the bridge over the Rio Camposa (US$3 million) at the entrance to Bambadinca,both projects of strategic and economic importance, and being financed by FED.

B. Traffic

2.03 Traffic volumes are low even on trunk roads, and because of fluctuatingagricultural production, growth is modest. However, there is a large traffic between outlying areas and neighboring countries carrying unrecorded trade. Tne section of the main east-west spine of the network included in the proposed project (i.e. Bambadinca-Gabfu)carries more than 200 vehicles per day (v.p.d.);a similar number of vehicles take the Joao Landim ferry to reach the fertile Cacheu region. Other main distributors carry 50-100 vpd, but traffic on rural feeder roads is generally below 25 vpd, except at harvest time. Details of traffic on the project roads and growth rates assumed are given in Chapter IV.

Vehicle Fleet

2.04 Latest vehicle registrationstatistics show the total fleet as follows:

NationalVehicle Fleet in 1981 (Number of vehicles)

Cars 1,617 Pick-ups 574 Trucks 760 Buses 158 Mini-buses 237 3,346

Recent vehicle registrationshave been as follows: - 8 -

Annual New Vehicle Registrations (Number of vehicles)

Minibuses, Pickups & cars Trucks Buses Total 1977 136 11 4 151 1978 116 23 - 139 1979 80 16 - 96 1980 166 65 36 267 1981 660 98 19 777

Source: For both tables, Anuario EstatisticoMTT, February 1982e

The variation in these figures is partly due to productionlevels in the national Citroen assembly plant which in turn is dependent on Govern- ment's success at obtaining financing for the assembly kits. The big increase in 1981 is also due to a recent growth in the number of diplomatic and aid personnel,whose vehicles accounted for about one third of new registrationsin 1981. land Transport

2.05 In 1981, passengermovements by land were almost 3.7 million passengers. The national bus company for passenger transport,Silo- Diata, which transported2,5 million passengers in FY1981, of which 1,6 million were within the metropolitanregion of Bissau. Severe management problems were encounteredin 1982, leading to the closing down of the firm in 1983. Several possible rehabilitationschemes are being examined by the Government, including partial or total privatization. There is also a private sector for which only a vehicle and an operator's licence are necessary to go into business. The last three years have seen the introductionand significantgrowth in the "bush taxi" business; based on a 1-ton pickup with canopy, licensed for mixed goods and passengers.

2.06 At present, freight moved by land is in the hands of the two state trading companies,Armazens do Povo and SOCOMIN, and the private sector, which accounts for 40% of freight movements. Road transport accounts for about 45% of the total freight moved, or an estimated42,000 tons in 1981. A report prepared by CADIC-HarrisConsultants (Belgium) on the creation of a National Transport Company is under review by MTT which favors its early creation. The report is in agreementwith the Action Plan for Sector InstitutionBuilding included in IDA's Port Project. It proposes to give the current transport function of Armazen do Povo, SOCOMIN and other haulers within Government to a National Transport Com- pany to be created (the trading companies would henceforth concentrateon trade), and to strengthen the private sector so as to increase its market share in the long run. This will be achieved through improved taxation of own account trucking and private truckers, creation of a professional board of transportersto facilitateimport of spare parts. This is addressed under the IDA Port Project. The National Transport Company would also inherit GUINEMAR's coastal and river transport functions. - 9 -

C. Public Management,Road Maintenanceand Finances

Planning

2.07 Transport planning is the function of MTT and subsidiarilyof MOPCU, with the Secretariatof State for Planning fulfillinga coordi- nating role. MTT needs more support at the middle level and with equipment. Proper coordination,however, has been lacking and potential donors have found it difficult to obtain a coherent picture of what investment or assistance was actually needed.

2.08 Both MTT and MOPCU are now better organized and better staffed than they were at the time of negotiationsfor the first project in 1979. A Department of Planning and Studies has been created in MTT as a pre- requisite to the technicalassistance to be supplied under the Port Proj- ect in 1984. A similar unit has been created in MOPCU. In order to ensure that the amounts allocated to road maintenanceare used in a manner consistentwith sound pavement management principles,and that maintenance funding is not prejudiced by incommensuratecapital investments, the Government agreed during negotiationsto present to IDA for its comments by May 31, 1985 and annually by July 31 thereafterits road investment and maintenance program, and its annual budget proposal and maintenance program for the following fiscal year.

Directorateof Land Transport

2.09 The Directorateof Land Transport (DTT), a part of MTT, is responsible for administrationof the subsector; its duties cover vehicle licencing and inspection,driver licencing, licencing of public transport operators, policing load regulations,road safety and signing, and the keeping of records on all these activities. Many of these activitiesare in practice pursued in a very rudimentary fashion, and the project will help DTT address three tasks more efficiently- axle load control, road safety and signing, and record keeping (para. 3.15).

The Ministry of Public Works, Constructionand Housing (MOPCU)

Past and Present Organization

2.10 MOPCU is a large, sprawlingministry responsiblefor urban development, housing, road maintenance and construction,and civil engineering works. It has a large number of employees (1,750) but little working equipment or recurrentbudget. Concerning road maintenance,the organizationwas weak at the time of execution of the First Road Project. Hence, a special department in MOPCU was created on an experimentalbasis under IDA's first project to run three Road Rehabilitationbrigades operating for road rehabilitationand periodic maintenance. This unit created many of its own procedures,paid its own employees,had its own workshop but had little contact with MOPCU's Roads and Bridges Direct- orate (DEP). However, good counterpartstaff and eminently trainable employeeswere transferredfrom elsewherewithin the Ministry or re- cruited from outside, to staff the unit and man the brigades. - 10 -

Envisaged Reorganization

2.11 The Government has undertaken an extensive reorganizationof MOPCU (Annex 2-1), including the reorganizationof the Road and Bridges sector, which is included in the project Action Plan (Annex 2-2). The reorganizationis geared toward (a) improvingmanagement, accounting and administrativeprocedures; (b) developing urban planning activities,in order to handle the obvious urban problems in Bissau; (c) developing a national legislationand standards for house construction;and (d) pursu- ing the reorganizationof road maintenance,through improved efficiency and better funding. The reorganizationplan for road maintenancepre- sented by the Government at negotiationsis in three stages. Firstly, the Road Rehabilitationbrigades created under the First Roads Project (para. 2.10) will be integrated in the DEP. Secondly, the present Directorate of Roads and Bridges (DEP), which has a rather low level in the present organizationalsystem of MOPCU in view of its staff number and expenditurelevel, will be upgraded into a General Directorate, directly under the Secretary General of MOPCU by December 31, 1985. This move comes as confirmationof the growing importanceattributed by the Government to road maintenance. In a third step, the DirectorateGeneral for Roads and Bridges would be transformedinto an autonomous Highway Authority, in the interest of improved managerial efficiency and flexibi- lity. This plan was considered satisfactoryand compatiblewith the Action Plan (para. 2.22). Hence, the proposed projectwill finance technical assistance for the reorganizationas a whole, and more particularly for road maintenance (para. 3.16).

Staffing and Training

2.12 MOPCU was establishedafter independencein 1975 with more than 3,500 employees,most of whom were either civilian workers of the Portu- guese military engineers or people promised a government job for their part in the independencestruggle. The Ministry has succeeded in reducing this number to 1,750 employees. After the reorganizationreferred to in para. 2.11, there will be 464 employeesworking on roads in Guinea Bissau (350 from the First project and 114 currentlyworking for DEP). As the backlog of rehabilitationis reduced, this number will be too high for a permanent force and the Government agreed during negotiationsto review staffing levels with IDA by October 31 of each year and gradually reduce the staff of the newly organized DEP to 400 by June 30, 1988. The transfer of the administrationof all project personnel to MOPCU's personnel division by December 31, 1984 is included in the Project Action Plan (para. 2.23).

2.13 Almost all staff need training. The project provides for training for the staff of existing brigades, and all existing DEP staff will receive ad hoc training for their new positions in the routine maintenance structure (paras. 3.11, 3.12 and Annex 2-3). The previous project included a successful training component for mechanics, and created and equipped a small training center which will be sufficient for the proposed project. There is a possibilitythat FED could independently - 11 -

finance four man-years of mechanical instructors (two men for 2 years) at about the same time as the proposed project. This could be done in co- operationwith the IDA-financedcomponent, but it is not critical to the achievementof project objectives.

Routine Maintenance

2.14 At the start of the first project, routine maintenancewas limited to patching of bitumen roads and small stretchesof regraveling, many so badly in need that it was becoming a losing battle. As a result of low equipment availabilityand a lack of funding for little other than salaries,maintenance on gravel roads was negligible and thus few roads were in a state that made routine maintenance feasible. There was also a lack of middle-levelmanagers to maintain a regional MOPCU presence, and most of the best people in DEP were transferredto the first project, under which they have received management and operationaltraining but in a somewhat "enclave"type of organization. The first project also established a depot at Buba, a central point in the Quinara/Tombaliregion, consisting of a workshop building with stores and offices, and housing for senior and junior staff. Under the proposed project, similar facilities will be built at Gabu (for the Gabui/Bafataregions) and at Farim (for the Cacheu/Oio region). The depots will also serve the three Reha- bilitation Brigades when operating for periodic maintenancein the vicinity.

Road Rehabilitation

2.15 The road network needs to be put in a maintainablecondition. The major componentof the project is the continuationof the road rehabilitation program begun under the previous project. Three rehabilitation brigades have been formed and trained, and they have built up momentum, esprit de corps and experience;furthermore, something that is often intended but not always achieved in projects of this nature--the brigades are all headed by qualified Guineans and have been so for at least a year.

2.16 With a modest component of equipmentreplacement and the filling of obvious gaps, the brigades will remain substantiallyas before: one for bitumen resurfacingand two for laterite roads. The 500 km program will require three seasons of constructionwork by the three brigades.

Ferries

2.17 The territoryof Guinea Bissau is intersectedby seven rivers with wide estuaries,along the margins of which live much of the population. This means that ferry crossings are an important factor in the continuity of the road network. Until January 1983, all river ferries were operated by the provincial administrationsin which they were situ- ated. Two ferries operating over 15 km of open water (Bissau-Enxudeand Cacheu-Sgo Domingos)were in the hands of GUINEMAR, the national maritime agency under MTT. This system worked very poorly and resulted in ferries being out of service for months at a time, obliging vehicles to make long - 12 -

detours. In January 1983 the Government transferredto MOPCU responsi= bility for the operation and maintenance of the four major river ferries: Joao Landim, Sao Vicente, Farim, and Ch6-Ch6. 1/ The two sea crossing ferries will be transferredto the National Transport Company when it is created (para 2.06).

2.18 Joao Landim, Sao Vicente, and Farim are important crossings: for example, if either of the first two ferries are not able to function, the detour to reach Zinguinchorin Senegal is some 270 km, compared to 130 km by the direct route. To ensure continuity of these crossings, MOPCU has set up an autonomous organizationto operate and maintain the ferries. The project will help by providingmaintenance faci'litiesand technical assistancc for management. Repairs to the landing ramps Will also be made (para. 3.13 and 3.14).

2.19 These measures will vastly improve over the present situation, but by no means constitute a final solution. There remains the question of the creation of some reserve capacity, for which there are short and long-term solutions. For the long term, a study of the appropriate organizationand ferry fleet requirements,including reserve vessels and engines, will be financed by the project. For the short term, the project will provide an emergency capacity in the form of a ferryboat carrying up to six cars or two lorries.

Road Maintenance Financing and Road User Charges

2.20 MOPCU's operations are financed through the central administration budget, which covers salaries of civil servants and general admin's- tration expenses and a very small budget for fuel, spare parts and machinery. The National Investment Fund (FNI) covers salaries of non- civil servants and certain specified direct labor works or small contracts. 2/ Total past highway expendituresare given on the next page.

1/ In May 1983, they carried 235, 39, 105 and 9 p.c.u.'s daily respectively. 2/ The FNI investment budget for roads has been unchanged at GP60 million (US$0.7million) for four years. - 13 -

Total Government Expenditure for Highways (GP million)

Maintenance 1979 1980 1981 1982 Salaries 15.5 20.2 28.5 28.5 Equipment 7.5 11.2 4.9 4.9 Fuel 5.0 6.7 5.5 5.5 Overhead 2.3 3.8 3.8 3.8 Sub-total 30.3 41.9 42.7 42.7

Rehabilitation& Construction 126.8 217.7 330.5 320.0

Total 157.1 259.6 373.2 362.7

Source: MOPCU and mission estimate.

Expendituresfor rehabilitationand new constructionwere mostly financed by foreign aid and adequately reflect the importance of transport among the nation's other priorities;maintenance expenditures,on the other hand, were inadequate and will be increased followingimplementation of the Action Plan (Annex 2-2 and para. 2.21).

2.21 In order to ensure that funds for road maintenanceare available in a timely and regular manner, that the funds are utilized efficiently, that payments to local suppliersand contractorsare promptly made, and in the longer run, that local private firms have access to public contracts in the sector, in competitionwith MOPCU, the Governmentagreed during negotiationsto establish a Road Fund on conditionsacceptable to IDA by January 1, 1985. Its operation is detailed in the Action Plan (Annex 2-2, paras. 9 & 10). The Road Fund will also be a preparatory step for the creation of an autonomous Highway Authority (para. 2.11). The Road Fund will be responsiblefor collecting earmarked taxes on fuels and vehicle imports as well as proceeds from ferries operation, managing the funds collected,allocating funds to MOPCU for the executionof the annual road maintenance program,and financing some of capital investments (including their financialcost) in the road sector. It will also finance the operationand maintenanceof the ferries operated by MOPCU, make payments for road maintenanceon behalf of MOPCU, and be responsible for monitoring the proper utilization of its funds for road maintenance. The Road Fund being essentiallya financial entity, its staff will be limited to a dozen employees. Its legal status will be that of a public firm, with managerial and financialautonomy, organized on a commercial basis. Its staff should be hired under private contracts. The resources of the Road Fund will be channeled directly from the sole importer-distributerof fuels, DICOL, to the banking account of the Road Fund in BNG, with control over DICOL's monthly sales, and from the ferry operating departmentin MOPCU. - 14 -

D. The Action Plan

2.22 To put maintenance funding and cost recovery from road users on a rational footing, an Action Plan has been prepared (Annex 2-2). The Plan is annexed to the Credit Agreement and Government agreed to it during negotiations. The plan establishes a road network to be maintained, growing in step with progress of the proposed project within an established timetable. It also provides for a minimum budget required to maintain this network, and thus, the minimum revenue required from various road user charges by the dates specified. Underpinning the fea- sibility of the Plan is the fact that if agreed upon tax levels (para. 1.11) were applied to current fuel import levels, a sizeable revenue (Annex 2-2, table 3 and para. 8), adequate for all routine and periodic maintenance would result. The Plan calls for improving tax collection and maintaining a level of tax revenue from all sources equal to the cost of road maintenance, both routine and periodic. If available funds were to exceed needs for road maintenance, the Government should agree annually with the Association, beginning in FY1985, on tax revenue to be transferred directly to the treasury (Annex 2-2, para 10 and para. 4.12-4.13).

2.25 In order to ensure an efficient utilization of the funds for road maintenance, the DEP in MOPCUwill be reorganized under the Action Plan as indicated in para. 2.11, and personnel administration for road maintenance will be reorganized (para. 2.12 and Annex 2-2, para. 11).

2.24 Significant improvements are also needed in record keeping, cost accounting and budgeting in MOPCU. Tnis was not covered in the First Roads Project. In order to establish a simple cost accounting and budgeting system, two years will be necessary: one for implementation and one for testing, with training for the accountants being conducted in parallel. On the basis that consultant can be in Bissau by January 1985, the cost accounting and budgeting system will be effective by June 1987 (Annex 2-2, Action Plan, para. 11). The technical assistance team proposed to assist MOPCU with the implementation of the project (para. 3.17) comprises two accountants who will institute and operate new procedures in step with training efforts. As experience with the first project has shown, dramatic progress should not be expected, but by the end of 1987 an accurate breakdown of actual expenditures should be possible together with the establishment of a framework for budgeting.

II. THE PROJECT

A. Oetv

3.01 The proposed project is largely a follow-up to the current First Roads Project, and its objectives are to continue the road rehabilitation program, establish a routine maintenance capacity within the MOPCU and address other institution-building objectives. The project also aims to establish an adequate system of road user charges and road maintenance financing. - 15 -

To meet these objectives the components of the project are as follows:

(a) the rehabilitationof about 200 km of paved roads and about 300 km of unpaved roads;

(b) the establishmentof a routine road maintenance capacity based in Bissau and in the Buba, Farim and Gabu regions;

(d) equipment and assistance to MOPCU for its ferry operations;

(e) assistance to MOPCU for general management,public accounting,and urban planning; and

(f) assistance to the DTT of the Ministry of Transportand Tourism (MTT).

3.02 The project will finance:

(a) the purchase or rehabilitationof road constructionmachi- nery and vehicles together with spare parts for three years of operations;

(b) road-buildingmaterials: bitumen, steel, cement, culverts, etc.;

(c) road maintenanceequipment and contracts,equipment for DTT, and civil works for the training center for road maintenance;

(d) fuels and lubricants;

(e) wages and salaries;

(f) the supply of a 20-ton ferry boat with its spare parts, a mobile workshop, and spare parts for four existing ferries;

(g) technicalassistance to MOPCU and DTT for project execution and training,a study of the long-termneeds of the ferry services;and

(h) technicalassistance to MOPCU for general organization, public accounting and urban development. - 16 -

B. Project Description

Road Rehabilitation

3.03 Three brigades were establishedunder the first project, two of which have been operating since November 1980 and one since December 1981. It is now proposed to repair and strengthen the equipmentfleet for a further three years' work. About 500 km of roads will be rehabilitated under the proposed project of which about 200 km are paved and 300 km laterite or earth. The program (Annex 3-1) has been drawn up following consultationwith the Secretariat of State, the Ministries of Rural Development,Transport and Tourism, and Commerce,and with other aid agencies involved in agriculturaland rural development. From a preli- minary list totalling920 km, selectionof the 500 km program was made using economic criteria,based on a report prepared by consultantLouis Berger International(USA) (Ref. 2). Design standardsare shown in Annex 3-2. The work is expected to take three dry seasons. It should be under- stood that the 500 km figure is a target figure, and that as many kilometers may be rehabilitatedas funds permit. However, the road rehabilitationprogram will be subject to the Association'sapproval and any section to be rehabilitatedwill be subject to an economic evaluation showing an ERR of at least 12%, which is the approximateopportunity cost of capital in Guinea Bissau, to ensure the selection of high-priority roads. However, the envisaged sections had a much higher ERR. The Government agreed to these conditions during negotiations.

3.04 Rehabilitationwas executed by force account in the first project because, at the time (1978), there was very little chance of attract- ing foreign contractorsto the country for such work and there was no local contractor capable of executing the job. There is still no local contractor to whom rehabilitationor periodic maintenancecould be con- tracted under the proposed project. However, new equipment for the existing brigades is being kept to an absolute minimum to avoid building up a permanent fleet too large for routine maintenanceneeds, that would have to be used for rehabilitationor periodic maintenance,once the bulk of the rehabilitationbacklog has been completed,by the end of the project. Therefore,the project will create a market in the country for future local contractors,and a financial organizationwhich will permit them to enter this market in the longer run (para. 2.20).

Paved Roads

3.05 Existing bituminous surfacings consist of double surface treat- ments made with a laterite nodule aggregate. Although of low crushing strength, these nodules perform well and the alternative,crushed basalt, would require heavy investment in establishinga quarry, at a much higher cost. The 200 km of road to be rehabilitatedvary in present condition from poor, with extensive patching and sections breaking up, to fair. The work to be done in all cases consists of a single or double surface dressing with cutback bitumen and laterite nodules or sand (for only mildly distressed roads). The average cost for a single surface dressing is US$19,000 per km. The nodules will be produced from two screening - 17 -

plants set up during the first project; where necessary, short lengths of base reconstruction and making up of shoulders will be included. There is also some bridgework, mostly re-decking of timber bridges, for which MOPCU has the necessary skilled men. The bitumen brigade, if properly supported with equipment and materials, can average one kilometer of 6m road per day. Small improvements to the equipment of the brigade are proposed (Annexes 3-3 and 3-4). Some personnel and equipment will be detached to form routine maintenance brigades.

Laterite Roads

3.06 The 144 km of laterite roads to be rehabilitated were built to engineered standards but have since suffered from extensive neglect. Since 1970-73, most have received almost no maintenance. Depending on the climate, terrain and natural materials, some lengths need to be re- claimed from the bush and almost totally rebuilt whereas others require re-establishment of the formation and regravelling. Culverts will be installed or repaired as necessary; no large structures are needed. Con- struction standards are shown in Annex 3-2, and the average cost per kilometer is estimated at US$15,000.

Earth Roads

3.07 Design standards (Annex 3-2) for this class of road will be low, in keeping with the light traffic expected. A formation will be raised and compacted, but there will be no earthworks as such, except for valley crossings, and no systematic gravelling. Over about 25% of sections in the south of the country, paving with imported material will be needed but in most places compacted natural soils will suffice. The expected cost per km is US$5,000.

Equipment

3.08 The equipment needed by the periodic and routine brigades is shown in Annex 3-3 and is already largely available. Some additional equipment beyond that available from the first project is being found by rehabilitation of items of the existing MOPCU fleet with the assistance of a mechanical engineer consultant financed under the first project. The project is already financing spare parts for the rehabilitation of the worthwhile items under a PPF advance. The MOPCU headquarters, workshops, warehouses and parking lots contain large quantities of machinery and vehicles which will never run again, but which clutter up the working spaces to the detriment of what still works. Government confirmed during negotiations its intention to sell or otherwise dispose of this scrap by December 1984. New equipment to be purchased is shown in Annex 3-4.

Routine Maintenance

3.09 Under the project, depots will be established at Gabu and Farim consisting of workshops, stores, offices and some housing, similar to the depots already established at Buba and Bissau. At each of these depots, a Routine Maintenance Brigade will be established. The depots will be - 18 -

the headquartersof the Regional Services (SR) from which work teams will operate. Equipment and vehicles for the maintenance teams, together with office equipment, furniture, an initial stock of spare parts for the depot, etc. will be provided under the project. Staff will be chosen from among the existing employees of DEP and the first project's Rehabilita- tion Brigades. Technicalassistance, particularlyon the administrative side, will be provided (para. 3.17). By the end of the proposed project (1987) all roads rehabilitatedup to that date should be receiving routine maintenance.

3.10 Paved road routine maintenance will be run from Bissau but patching gangs of the Routine Maintenance Brigades will be stationedat the SRs when necessary. The patching load will be quite heavy in the first year particularlyin Bissau, and the RehabilitationBrigade will help with this task. Thereafter,the work load should drop sharply, and be manageable by the teams equipped with a 1,500 liter towed motorized bitumen sprayer and two hand operated emulsion sprayers. The services of the bitumen trainer will be available for training the new teams and "refreshing"the knowledge of the existing bitumen brigade.

Training

3.11 Training in the first project concentratedon the mechanical side. Under the proposed project, there will be a concentrationon civil engineering,management, administration, and cost accounting. The major effort will be "on the job," in the process of setting up the SRs and the routine maintenance organizationin DEP. Training will essentiallygive the worker what he needs to know to do his new job. In addition, courses will be arranged during the rainy season for team and brigade chiefs and their opposite numbers in the workshops and stores (Annex 2-3). The existing training center (two rooms totalling 42m2 with furniturefor 24 students plus some teaching aids) will be adequate for the purpose, but some improvementsare envisaged. The administrativespecialist (para 3.17) will divide his time between setting up the SRs, training the various staff needed and running ad hoc courses in the center. Courses during the rainy season will also be given by other members of the T.A. team and their counterparts.

3.12 Two additional elements complete the training component in DEP: six months refreshervisits by a bitumen specialist and six months by a driver/operatorinstructor; and short courses in Portugal for the chiefs of the existing brigades and workshops. The bitumen sprayer crew has achieved a good level of performanceand teamwork during the first project, based on an initial six months' training. Before starting the next project, it is appropriate to give a refresher course to tighten up on quality control, and introduce new materials and techniques. The courses for the brigade and workshop chiefs are being arranged through the Minis- try of Public Works in Lisbon. The project will finance travel, attend- ance and subsistence,and the Government agreed during negotiationsto submit details of courses and CVs of candidates to IDA for approval prior to their commencementand to commit students to remain with the Govern- ment for a minimum of three years on completion of their courses. - 19 -

Ferry Operations

3.13 The project will provide technical assistance and training for the administrativeand financial side of the operation of the four river ferries (paras. 2.17 and 2.18). On the technicalside, the project will provide a mobile workshop, and an initial supply of spare parts, paint and other materials. Three of these ferries were supplied under FED financing and some US$200,000 equivalent is available for overhauls. These FED funds will be committed before IDA's funds.

3.14 At present, there is no reserve ferry capacity. As it would be at least three years before the recommendationsof the study could be implemented,the project will also finance supply of a small reserve ferry to carry six passenger cars, to be purchased by ICB. Minor repairs to landing ramps will be executed by direct labor.

TechnicalAssistance to DTT/MTT

3.15 The DTT (para. 2.09) lacks the physical means and know-how to implement its road safety and axle load control plans. The project will help DTT by providing (a) assistance for road signing and marking, spare parts and paint for the line marking machine, (b) two Tapley decelero- meters for testing of vehicle brakes, (c) office equipment for record keeping, and (d) a vehicle for general field studies. The Government showed at negotiationsthat it has made available a sufficientbudget to support these activities at least during FY1984, and it will submit by November 30 of each year a detailed work program for DTT acceptable to IDA. It will also present by December 31 of each year DTT's budget for project executionunder a separate budget line for an amount satisfactory to the Association. DTT is also responsiblefor axle load control, using equipment supplied under the first project. Unfortunately,when the equipmentwas delivered, the vehicles for their transporationwere no longer available. This is being remedied under the proposed project. The Government agreed during negotiationsto enforce by January 1st, 1985 its axle load regulationswith a maximum authorized load of 10 tons per axle, as decided by the Government in 1980, and to make the necessary controls to ensure effectiveness.

TechnicalAssistance to MOPCU

3.16 MOPCU is presently undergoing a comprehensivereorganization, of the Road Maintenance,Urban Planning and Development,and Civil Works Supervision directorates. The Government has requested the Association to extend its technicalassistance beyond the road maintenance sector to MOPCU's general organizationand all directorateswhich are being jointly reorganized. Since one of the targets of the project is to transform the existing enclave-typeorganization of the road maintenance unit into a normal directorate in MOPCU, and the success of this transformation depends on the effectivenessof MOPCU's general management,the Govern- ment request has been accepted. Technical assistance comprises: - 20 -

(a) Technicalassistance for reorganizationof MOPCU's financial and accounting system (includingbudgeting and cost accounting for road maintenance),and administrativeprocedures:

Technical Assistance for Public Management (in man-months)

Expert in Public Management 20 Experts in Public Accounting and Cost Accounting 40

Total 60

(b) Technical assistance for urban developmentfor: (i) undertakingurban developmentstudies in Guinea Bissau's major urban centers, (ii) updating and comple- menting constructionand land use regulations,(iii) esta- blishing the framework for the implementationof an urban cadastral system including basic topographicalsurveys and preliminaryland valuation exercises, and (iv) extending appropriatetraining to MOPCU staff:

TechnicalAssistance for Urban Planning (in man-months)

Expert in urban cadastral system 20 Expert in urban planning 20

Total 40

This component will be supervisedby the Association's Urban Division.

(c) Technical Assistance for strengtheningof MOPCU's laboratory for road maintenance and constructionand civil works directorate:

Technical Assistance for MOPCU's Laboratory and Civil Works Directorate (in man-months)

Expert Geotechnician 20 Expert in Construction standards 15 Legal Expert 10

Total 45

(d) Technicalassistance for road maintenance: - 21 -

In spite of the good performance of local staff at brigade chief level, during the current project, assistance is still needed for administration, accounting and procurement. Short-term assistance is also required for training (para 3.11). A team of six has been agreed upon with the Government and project estimates are based on 105 man- months spread over three years as follows:

Technical Assistance for Road Maintenance (in man-months)

Adviser to Project Director (Civil Engineer) 23 Project Administrator (organization specialist) 33 Chief Mechanic/Equipment Inspector 33 Bitumen Instructor 6 Driver/Operator Instructor 6 Storekeeping Specialist 4 Total 105

These periods may be varied as experience dictates. The Government agreed during negotiations to employ such a team by September 30, 1984, selected in accordancewith IDA guidelines and under terms of reference acceptable to IDA and to discuss any changes to these periods with IDA before action.

3.17 Outline terms of reference for technical assistance for road maintenance are given in Annex 3-5. It will be noted that the civil engineer member of the team is described as "adviser to the project director". The Guinean director of the present project has proved to be an energetic and able manager, and it is intended that he shall remain as director of the proposed project, assisted by an expatriate adviser who will spend much of his time in the field or on-the-job training. In addition to project management, the organizationspecialist will be responsible for establishinga functioningadministration in each of the regional depots (SRs), and training staff from the current project and DEP to fill the posts in the SRs.

3.18 The project will also finance a longer term study of nationwide ferry needs, both river and maritime, and will recommend the best form of organizationfor meeting these needs, and report on what additional facilities - civil, marine or mechanical- are necessary. Terms of reference for this study will be prepared by MTT following a decision on the structure of the National Transport Company (para. 2.19). - 22 -

C. Project Implementation

3.19 Responsibilityfor project execution will be entrusted to an in- terministerialcommission, comprising MEF, MOPCU, MTT and the Ministry of Justice. This was agreed during negotiations. Technical, accounting, financial, and administrativecontrol will be the responsibilityof the DirectorateGeneral of Technical Affairs (DGAT) which is part of MOPCU, but MTT will be responsiblefor the implementationof the component deal- ing with assistance to DTT. Within MOPCU, technical control of roadworks will initially remain with DGAT, which has been responsible for implementation of the first project. However, responsibilitywill pass increas- ingly to DGC, with DGAT maintaining financialcontrol only. MOPCU has agreed in principle to turn over salary administrationfor all project staff to MOPCU's personnel payroll department,which will be strengthened by transfer of staff from the present project management.

D. Cost Estimates

3.20 The total cost of the project net of taxes, including contingencies is estimated at US$13.8 million, of which 85% are foreign cost. An outline of project costs is given below. A detailed cost table appears as Annex 3-6.

Summary Project cost (Us$'000) Local Foreign Total Road Rehabilitation 1,310 5,240 6,550 RoutineMaintenance 198 2,190 2,388 Training 9 200 209 Ferries 12 364 376 Assistanceto DTT 3 61 64 Assistanceto MOPCU 59 1,395 1,454 Total Base Cost 1,591 9,450 11,041 PhysicalContingencies 147 956 1,103 Price Contingencies 228 1,463 1,691 Total ProjectCost 1,966 11_869 13,835

Rounded 2,000 11,800 13,800

Cost estimates are based on the experience of the first project or from the cost of similar recent purchases in the vicinity. The consultants man-month rate is expected to be about US$10,600, with a further US$1,900 for local subsistenceand travel costs. Physical contingencieshave been included at a rate of 10%. Price contingenciesare calculated on the followingannual rates: 1984 : 8%; 1985 : 7%; 1986 et seq. : 6%. Actual contingenciesare shown in the detailed cost table (Annex 3-6) and over- all account for US$2.8 million or 20% of the total cost. - 23 -

E. FinancingPlan

3.21 The financingplan is shown in the following table:

Financing Plan (Uss'oo0) Local % Foreign % Total _ Special Fund Admin. by IDA 1,222 2,778 4,000 (29) IDA 28 3,972 4,000 (29) Kuwait Fund 50 5,050 5,100 (37) Government 700 -- 700 (5) 2,000 (15) 11,800 (85) 13,800 (100)

The project will be jointly financed by the Special Fund administeredby IDA, IDA, the Kuwait Fund and the Government. The proposed IDA and Special Fund Credits would finance 58% of the net of tax cost of th project, the Kuwait Fund 37%, and the Government the remaining 5% -t plus taxes which are levied only on fuel and local salaries. Of the proposed US$8.0 million contributionof the Association,US$4.0 million would be Special Fund administeredby IDA, and US$4.0 million, IDA. The Government confirmed during negotiationsthat the project will be exempted of taxes and duties.

F. Procurement

3.22 The project will be financed in parallel with the Kuwait Fund. Procurementarrangements are summarized in the table below.

1/ In addition to its existing current expenditureon routine maintenanceunder all heads. - 24 -

Amountsand Methodsof Procurement a/ (US$ mi iiions) Kuwait World BankGroup procedurs Fund Tbtal Items ICB ICB Other N.A. predure Project COot

(1) Civil Works 0.2 0.2 (0.1 /0.1)

(2) Equipmentand Spares 2.0 0.1 0.2.b/ 2.9 5.2 (0.7/1.3) (0/0.1) (0.1/0.1)

(3) Yaterials 0.2 0.l b/ 1.1 1.4 (0/0.2) (0.1/0)

(4) Fuelsand lubricants 0.3 c/ 1.0 1.3 (0.2/0)

(5) Wbges 1.6 1.6 (0/1.2)

(6) Ebrrywith spares 0.3 0.3 (0/0.3)

(7) TechnicalAssistance 3.6 dJ 0.2 3.8 (2.8/0.7)

Total 2.3 0.5 4.2 1.6 5.2 13.8 of whichIA 0.7 0.1 3.2 0 4.0 of whichSpecial Furd 1.6 0.4 0.8 1.2 4.0

*7 Amountsinclude contingencies; amnts in parenthesesshow part finEnced by IrA (firstfigure) and by the SpecialFund (second figure). b/ Part of whichwill be financed through special accounts in Dakarand Lisbon. Frm sole source national supplier DIOOL. _/ By consultation via agreed short list.

For items of categories number 1, 2, 3, 5, 6 and 7 to be financed by the Special Fund (SF) administered by IDA (US$4.4 million), procurement would be limited to goods produced in, or services from, countries eligible for procurement under the rules of the Special Fund Credit. Items financed in parallel by the Kuwait Fund will be procured according to this institution's procurement guidelines.

3.23 Bidding documents for all major purchases are being prepared and bidding has started. All purchases and contracts above $50,000 will be subject to prior review. Equipment contracts have been prepared on the basis of a price for the basic equipment, for spares and consumables to - 25 -

be delivered with it, and for spares to be purchased as and when required from a priced list which will form part of the contract and which will be secured by a letter of credit. Other spare parts and items not covered by contracts will be procured through local or international shopping, using normal IDA procedures, partly using the revolving funds established in Dakar and Lisbon (para. 3.25).

G. Disbursement

3.24 A disbursement schedule for Special Fund administered by IDA and IDA's contributions is shown in Annex 3-7, based on the West Africa "IDA Highways" Profile. The project is expected to be substantially disbursed by March 1990 and the envisaged closing date for both credits is June 30, 1990. The Special Fund and IDk credits would be disbursed on the following basis: - 26 -

Allocation and DLsburseet of Ill and Special Flmd Credits

DA______Special Eud Fbreign iLcal breign Local Categories Allocation E ipenditues Expeitxres Allocation penxlittres xprditbares (it7ax)5 __ % % (Taxx) % %

(1) Equipnmt for road construc- 258 100 50 tion and wrkshop, vehicles and smire psrts

(2) Road maintemnce equipimet, 1,485 100 50 eqgipnt for DIT, rebEbilita- tion of eqtiipmtby contzact

(3) Road construction nrterials 12 103 50

(4) Fuels and lubricants 127 85 of total

(5) bges 909 0 74

(6) rryboat, enginsnireand 48 100 50 243 100 50 parts

(7) Tecbnical assistance for road 597 100 50 566 100 50 maintenanc,auditing, study of ferry needs

(8) Technical assistance to KIPU 1,394 100 0 forurben developmeat and re- orgniation

(9) Refindingof PPF 650

(10)Initial paymnt intorevolv- 100 ing fmd

(11)Unallocated 814 794

Total 4,0X) 4,1Mx

Disbursement requests will be fully documented for categories (1) except for spare parts to be procured through the Revolving Fund, (2),(3), (4) except for special lubricants to be procured through the Revolving Fund, (6), (7) and (8). For category (5), spare parts in (1) procured through the Revolving Funds and special lubricants in (4) procured through the Revolving Funds, disbursements would be against statements of expenditure; detailed documentation will be retained by the Borrower and available for inspection by the Association. In addition, all project - 27 -

accounts will be audited annually (para. 3.27). As a special condition, IDA reserves the right to suspend disbursementsif the Kuwait Fund loan is not effective by October 1, 1985, or any other date that the Associationmay agree, and if the Government has not received from an alternativesource adequate financing to fill the financialgap.

3.25 Disbursementrequests have been prepared in the recent past by the project administratorfor countersignatureby DGAT and the Ministry of Economy and Finance (MEF). This system was introduced to replace one whereby withdrawal applicationswere prepared by MEF, which was too slow. Applications still have to be signed by the Minister of Economy and Finance. This has occasionallycaused delays and during negotiations, Government agreed to designate other signatories to sign in the Minis- ter's absence. The previous project experienceddifficulties in making the numerous small purchases that are an unavoidable part of the running of a force account project for two reasons: (a) the very limited range of goods, materials and spare parts, etc. available in Bissau; and (b) the difficulty and slowness of making these purchases in neigboring Senegal. To resolve these difficulties,it is proposed to open accounts in correspondentbanks of BNG in Dakar and Lisbon. IDA would deposit US$50,000 equivalent in each account, which would be disbursed through a chequebook,cheques being signed jointly by MOPCU and MEF. Reimbursement would be made through IDA's Procedure 1. The Government agreed during negotiationsto these arrangements.

3.26 MEF will establish a revolving fund in the form of an account at BNG in local currency, through which its own contributionto the project, chiefly wages, will be handled, as in the past. This account is operated via a checkbook,with checks signed within MOPCU, and is reimbursed by the MEF out of FNI on presentationof justification. Items purchased in local currency but financed by either donor will, as in the past, be reimbursed to FNI under Procedure 1. Government agreed to open this account. Replenishmentof the revolving fund will be subject to full documentation on earlier disbursements. During negotiationsGovernment agreed as a conditionof effectivenessto show that it has made provision in its budget 1/ for FY1984 of GP 20 million (approx. US$250,000),being its estimated contributionto the first year of the Project.

H. Reporting and Auditing

3.27 MOPCU and the technical assistance team will prepare within four months of the signing of the team's contract, an inception report giving the detailed planning and programmingproposed for the project. This report, after being approved by the Government and IDA, will be used as the project plan. One chapter of this report will show the proposed routine maintenance organization,its operating procedures and its work program. Thereafter,the consultant will prepare quarterly reports, and

1/ In FNI and recurrent budgets. This amount is already inscribed,but not yet voted. - 28 -

MOPCU will prepare and forward to the Associationfor information,a quarterly report on all the activities of the project, giving details of physical progress and financial and cost accounting details of each component. It will also prepare quarterly reports on the proceeds of the Road Fund, and on DICOL's sales of gasoline and diesel fuel. A draft final report will be prepared by the consultant at the beginning of the third year of the project, to be used by the Government for the preparation of a draft Project CompletionReport, to be forwarded to the Associ- ation. Government agreed at negotiationsto prepare and forward these reports to IDA in a timely manner. It also agreed to have all project accounts and associated bank accounts and revolving funds audited annually by independentauditors with whose choice IDA shall have agreed and on terms of reference acceptable to the Association. The first audit shall be made after at least twelve months of operations,at a time mutu- ally agreable between the parties, but in any event not later than Decem- ber 31, 1985.

IV. ECONOMIC EVALUATION

A. General

4.01 The economic analysis comprises three components:(a) a road rehabilitationcomponent; (b) a routine maintenance componentassociated with (a); and (c) a ferry improvement component. The benefits claimed for the proposed works, which differ of course from road to road section are based on the differencesbetween executing the proposed works "now" (with case) as opposed to "later" (without case). Assumptionsused in the analysis are given in Annexes 4-1 to 4-5. The global economic rate of return (ERR) is estimated at over 37% (ERR's of each component are given in Annexes 4-6, 4-7 and 4-8).

4.02 Road rehabilitationand maintenanceworks will contribute to a reduction in vehicle operating costs and avoid higher Government expenditure which would result, were the proposed repairs to be delayed and carried out later. Benefits will accrue directly to vehicle owners and to the economy as a whole through reduced maintenance expenditure,all largely in foreign exchange, lower fuel consumption,fewer break downs, increasedvehicle life, etc., due to better driving conditionswhich will result from improved road condition. The routine maintenance component will contribute to reduce vehicle operating cost for the same reasons as above, and generate savings for the Government through permittingit to postpone more costly periodic maintenanceworks. The ferry component will generate benefits through enabling the number of detours caused by ferry breakdowns to be reduced. Consumerswill also benefit from reduced transport costs of basic goods, and all-weatheraccess in some areas. Because of lack of adquate supporting statistics,this latter benefit could not be quantified. The proposed program will constitute the major part of the MOPCU investment program of the 1983-86 Four-Year Plan. - 29 -

B. Road Rehabilitation and Maintenance Program

4.03 This component accounts for about 70% of the total project cost, consisting of the resurfacing and local strengthening of 205 km of paved roads, the rehabilitation of 144 km of engineered gravel roads and the rehabilitation of about 148 km of ordinary earth roads. The selection of roads included in the project was made in two phases; a list of 35 roads totalling 1,010 km, for which rehabilitation was judged necessary, was screened by the agencies involved (para. 3.03). Final selection was made on the basis of economic criteria.

Benefits from Reduction of Vehicle Operating Cost (VOC)

4.04 Basic vehicle operating costs (Annex 4-1) have been calculated from Guinea-Bissau data; the variations due to different road surface conditions have been estimated by the consultants, based on their extensive experience in Senegal. Road traffic projections by road section and by type of vehicle are given in Annexes 4-3 through 4-5. Over the 1983- 1989 period, the annual traffic has been assumed to increase by an average 4.5% corresponding to a GNP elasticity of transport demand of about 2, which is normal by regional standards, and to an annual GNP growth of 2.25%. The vehicle operating cost benefit will result from the progres- sive improvement of the road surface on the sections included in the project. It was assumed that road traffic volume would not be affected by the condition of the road, because over most sections there is no alternative route, and therefore, no traffic diversion. Some traffic generation may be possible but was not quantified. The resulting benefits are given in Annex 4-6.

Benefits from Periodic Maintenance and Rehabilitation Reduction

4.05 The timely execution of rehabilitation and maintenance works would reduce rehabilitation costs by about US$1.2 million over the 1984- 1997 period, and modify the timing of execution of the works. It would also reduce routine maintenance cost by US$0.7 million over the same period, due to cheaper routine maintenance works (Annex 4-6).

Costs of the Component

4.06 Rehabilitation costs are based on the cost experience of the first project, a review of the terrain and materia s through which the proposed roads run, and the consultant's report. I!

4.07 Investment costs considered in the analysis are net of taxes, but include physical contingencies, construction supervision and technical assistance. They also include expenditures for recurrent routine maintenance in both the "with" and "without" project cases. The aggre- gated streams of costs and benefits are presented in Annex 4-6. For the economic evaluation, it has been assumed that the average life of roads

1/ Consultant's report, Project File Ref. 2. - 30 -

is about 20 years for paved roads, 15 years for engineered gravel roads, and 13 years for earth roads. The time interval between periodic maintenance works has been taken as 7 to 8 years for paved roads, and 5 years for laterite roads. These figures have been adopted as the maximum period of postponementof periodic maintenanceworks in the "without" project case. In consideringspecific roads, the time interval has been varied to take into account its strength, surface condition, traffic composition,etc.

Sensitivity

4.08 Switching values were calculated to determineby how much costs could increase or benefits decrease to still maintain a 12% rate of return. The sensitivityanalysis made on individual roads indicates that the rehabilitationof paved roads with lower traffic such as Buba-Quebo, Bula-Binar and Bula-SaoVicente are critically sensitive to changes in rehabilitationcosts. However, the rehabilitationcost for these three roads represents less than 10% of the total cost of the rehabilitation program.

4.09 The economic rates of return and switchingvalues for the three categories of roads are estimated as follows:

ERRs for the Three Road Categories

Traffic, 1983 Economic SwitchingValues Growth Cost Rate of Return Costs Benefits km v.p.d. (% p.a.) (US$'000) %) (% ()

Paved roads 205 140 4 4,185 32 20 22

Gravel roads 147 50 4.5 2,392 26 15 31

Earth roads 148 17 5 910 31 40 32

All roads 500 76 4.5 7,487 29 21 26

C. Routine Maintenance

4.10 The routine maintenance progam covers the roads rehabilitated under the first project and will progressivelytake over those rehabilitated under the proposed project. The analysis covers a six-year period, its start ng point is the road condition revealed by the consultant's report. 1 Economic benefits from the routine maintenance program consist of (a) savings in vehicle operating costs due to avoidanceof degra- dation of roads (US$.135 million over the 1984-1991 period,Annex4-7) and (b) significantsavings resulting from the postponementof periodic

1/ Project File ref. 2. - 31 -

maintenance works and/or reduction of these periodic maintenance costs for a total amount of US$.845 million over the 1984-1991 period. The economic rate of return of the proposed routine maintenance program would be about 130%, a high but normal rate of return for works of this nature.

D. Ferries Component

4.11 The procurement of a reserve ferry will allow MOPCU to undertake regular periodic maintenance of the whole national ferry fleet (five units) at the main shipyard of Bissau. The creation of a mobile maintenance unit and procurement of spare parts will improve the quality of routine maintenance and so reduce risks of equipment break-downs. These improvements are expected to reduce the suspension of service at three major ferries (Joao Landim, Farim and Sgo Vicente) by at least one month per year each. This will reduce the unnecessary kiloeters driven during the closure period by about 23% for long distance trips and 97% for local trips. In addition, since detour routes involve the use of roads in worse condition, the average vehicle operating cost per km will be reduced by about 5% for long distance journeys and 18% for local traffic. For a reduction in the closure period of each ferry by about one month per year, the economic rate of return of the proposed investment is 48% (Annex 4-8). The sensitivity analysis indicates that even if the benefits are reduced by 50% (reduction of the closure period by only two weeks per year), the economic return of the ferries component will still be 31%, which is satisfactory. In addition, technical assistance to the Ferry Management Unit will contribute to a reduction of ferry operating costs and an improvement in the recovery of ferry user charges.

E. Maintenance Expenditures Recovery

4.12 Forecasts of the Government's expenditures for road maintenance and its revenue from fuel taxes, expected to remain virtually the sole source of road user cost recovery for a number of years, are shown in Annex 4-9. Road maintenance expenditures include routine maintenance expenditures, normal periodic maintenance expenditures and backlog on periodic maintenance expenditures to be caught up over the FY1985-87 period (Annex 2-2, Table 2). Periodic maintenance expenditures could be considered as capital expenses, but being recurrent annually, they have to be covered from the budget for recurrent expenditures.

4.13 In FY195, periodic maintenance expenditures included 60% backlog on past maintenance. This share will decline gradually down to 40% in FY1987, with the backlog decreasing in absolute value, and normal periodic maintenance increasing with the number of kilometers maintained. Backlog of past maintenance will be eliminated by FY1988. Total recurrent expenditures will increase from US$2.2 million in 1985 to US$2.8 million in 1987. After 1987, they will reach their normal level corresponding to an adequate maintenance standard, and increase more slowly up to US$3.3 million in 1991, largely due to inflation. User charges will remain significantly below expenditures until 1987. The Action Plan - 32 -

(Annex 2-2) will be gradually implemented during this period (see graphs below).

GUINEA BISSAU- Road MaintenanceCosts, Fuel Tax Yield and Financial Equilibrium

4000 GP 1000 GP 1000 GP 1000

3000 /'N

RTaint. 2000 oa&' b: Cost

Data fron Annex 4-9 and Annex 2-3 Table 2

With the new taxation level of GP 26 per litre on gasoline and GP 15 per litre on diesel fuel (para 1.11), tax proceeds will increase gradually, thanks to improved tax recovery, from US$0.6 million to US$1.9 million. The financial shortfall in the years until 1987 will be offset by disbursements from the proposed project. From 1988 onward, cost recovery through taxes, increasing with petroleum products consumption (4.5% per annum) and with petroleum products prices (6% per annum), will suffice to cover adequate maintenance and expenditure and the small debt service. There will be a small surplus of revenues over expenditures, this assuming that the Action Plan is successfully implemented.

F. Distribution of Project Benefits

4.14 The distribution of Project benefits, based on very tentative estimates because of the poor statistical coverage in Guinea-Bissau, are shown in the Chart in Annex 4-10. M4ost of the benefits of the project will be vehicle operating costs savings (VOC),accruing to transporters. About 40% of all vehicles are private and 60% belong to state enterprises. Hence, 40% of VOC savings would accrue to the private sector, of which about 60% are expected to be passed on to consumers, and 40% be - 33 -

retained as additionalprofit by vehicle owners. The other 60% of VOC savings would accrue to state enterprises. Since most of them suffer from serious financialdifficulties, it is likely in the short term that most of these savings will remain with the public firms with only a limited amount, if any, being passed on to farmers and consumers,through price reductions. However, under the new National Transport Company, improved service and consequent productionincentives can be expected.

4.15 Savings on Government expendituresfor road maintenanceand rehabilitationwill benefit taxpayers. Presently,most of Government resources come from taxation on imports of consumer goods and other lev- ies on consumption for an estimated 90%. Only about 10% are levied on vehicle owners. Hence, the benefit on cost savings will accrue mainly to consumers.

4.16 Savings on trip length induced by better ferry operationwill accrue primarily to retailers and local traders, through reduced transportation costs. It is assumed that 60% of these benefits would be transferredto consumersthrough price reduction, and 40% would be kept by retailers and traders as additional profit.

4.17 Savings on induced traffic for the ferry component,although limited, will accrue to local producers. Under the same assumption in paragraph4.16, 40% of these benefits would be transferredto retailers/ traders, part of which may finally reach consumers,and 60% would be kept by producers.

4.18 Total benefits from the project in year 1991 for example, expressed in 1983 constant US$, will accrue mainly to public firms (US$670 thousand),to local consumers (US$546 thousand),and marginally,to private vehicle owners (US$194 thousand), as well as retailers and traders (US$101 thousand).

4.19 Furthermore,a liberalizationof transport policy is envisaged, leading to a competitivemarket for transport services and an extension of the role of private transportation. This new policy is expected to stimulate competitionbetween transport operators, and thus ensure in the longer run that more of the benefits of the project reach farmers and consumers.

V. AGREEMENTSREACHED AND RECOMMENDATIONS

5.01 At negotiations,the Government provided to IDA evidence of an adequate FY1984 budget for DTT (para. 3.15), and confirmed its intention to exempt all goods and services imported for the project from all taxes and duties (para. 3.21).

5.02 During negotiations,the Government agreed:

(a) to increase the tax on gasoline to GP 26 per litre and the tax on diesel fuel to GP 15 per litre (para. 1.11); - 34 -

(b) to present to IDA for its comments by May 31, 1985, and annually thereafter not later than July 31, MOPCU's road investment and maintenance program and its annual budget for the following fiscal year (para. 2.08);

(c) to review annually by October 31 with IDA MOPCU's staffing level sc as to reduce staff number to 400 by June 30, 1988 (para. 2.12);

(d) to establish a Road Fund on conditions acceptable to IDA by January 1, 1985 (para. 2.21);

(e) to implement the agreed Action Plan (para. 2.22 and Annex 2-3);

(f) to obtain IDA's approval for its road rehabilitation program before starting work, with a minimum ERR of 12% on any section of road proposed (para. 3.03);

(g) to submit details of any proposed overseas study courses, and CVs of students to IDA for approval prior to their commencement and to commit students to remain with the Government for a minimum of three years on completion of their courses. (para. 3.12);

(h) provide by November 30 of each year a work program for DTT acceptable to IDA, present arnually by December 31 DTT's budget for project execution under a separate budget line and for an amount satisfactory to the Association, and cause DTT to enforce legal axle load limits by January 1st, 1985 (para. 3.15);

(i) to hire consultants under terms of reference and under selection procedures acceptable to IDA by September 30, 1984 for road maintenance (para. 3.16);

(j) create a interministerial commission for project implementation, comprising MEF, MOPCU, MTT and the Ministry of Justice (para. 3.19);

(k) to open in suitable correspondent commercial banks of BNG in Lisbon and Dakar respectively, accounts for the management of a cash advance to be furnished by IDA, and to allow the operation of these accounts jointly by designated officials of MEF and MOPCU (para. 3.25);

(1) to open in BNG in Bissau an account for management of Government contribution to the project and to allow the operation of this account by designated officials of MEF and MOPCU (para. 3.26); - 35 -

(m) to prepare and forward to the Associationquarterly reports on project execution, proceeds of the Road Fund and fuel sales by DICOL and to forward to the Association a copy of consultants'reports (para. 3.27); and

(n) to have all project accounts,bank accounts and revolving funds audited annually on terms of reference and by qualified auditors acceptable to the Association (para. 3.27).

5.03 As a special condition IDA will suspend disbursementsif the Kuwait Fund Loan Agreement has not become effectiveby October 1, 1985, and the Governmenthas not secured from an alternativesource adequate financing to fill the financialgap on conditions satisfactoryto the Association (para. 3.24).

5.04 As conditions of effectiveness,the Government must demonstrate

(a) it has provided at least GP 20 million for its contribution to the first year of project (para 3.26); and

(b) it has opened the bank account refered to in para 3.25 and 3.26.

Based on the above agreement, the project is suitable for an IDA credit to the Government of Guinea-Bissauof SDR 3.9million (US$4.00million equivalent)on standard IDA terms, and a Special Fund Credit to the same Government of SDR 3.9 million (US$4.00 million equivalent),on standard Special Fund terms.

WAPT2 Apr. 1984

- 37 -

ANNEX2-1

CUINEA-BISSAU

SECONDROADS PROJECT

MINISTRY OF PUBLIC WORKS,CONSTRUCTION, & URBANDEVELOPMENT (MOPCU)

PRESENTORGANIZATION CHART

Bureau of Planning Directorate General of Directorate General Directorate General for and Studies (GEP) Ulrban Development (DGU) of Conistruction (DGC) Technical, Administrative t _e aFinancial Affairo (DGAT)

De,Roadsard e| r AdmRnisttrationa CivilEngnern (DE aoatr okhp Br (DEP | rjea nd Finance.

PROPOSEDORGANIZATION CHART (by December 31, 1985)

A Minit Bter

E[ GD 7U WLRoads -+ Bridges (DPBM!A/|

I m_! I : I rS~~~~~~~~~~~~~~~~~~~~~~~Studie s and|

| Pojets |an Finance |

Brigade 1 Farim Store Brigade 2 Buba Workshop Brigade 3 Gabu Equipment Bissau

a/ In the longer run, DPBMwill become an autonomous Roads and Bridges Maintenance Authority, supervised by MOPCU.

WAPT2 Mar. 1984

- 39 - ANNEX 2- 2 Page 1 of 5

GUINEA-BISSAU

SECOND ROADS PROJECT

AN ACTION PLAN FOR RAISING REVENUE FROM ROAD USERS AND ASSURING ADEQUATE ROAD MAINTENANCEFUNDS

Purpose

1. This action plan is to give recognitionand practical effect to two fundamentalprinciples of transport policy, namely:

(a) that road user charges should at least equal the cost of road maintenance,and

(b) that adequate funds for road maintenance should be made available to the responsibleauthority in a timely manner.

This document sets forth a program for achieving the purpose behind these principles, and a timetableof necessary actions. Certain of its provisionsare incorporatedinto the Credit Agreement; and the Government has agreed in a side letter to implement the remaining provisions in close co-operationwith IDA.

Definitions

2. Road User Charges comprise all duties, fees and taxes levied on the road user or the motor vehicle operator which accrue to the revenue of the state, and include taxes and duties on fuels and lubricants,on the import or sale of vehicles, spare parts, tires, batteries, etc., fees charged for vehicle or driver registrationand traffic fines.

3. Road Maintenance Costs may be divided into those for:

(a) routine maintenance which comprises surface patching and crack sealing, or grading and reprofilingin the case of laterite roads, cleaning of side drains and culverts and cutting of vegetation,and other operations conducted throughoutthe year; and those for

(b) periodic maintenance which consists essentiallyof renewal of the running surface of the road--resurfacingwith bitumen and stone, or for laterite roads, the replacementof the wearing course, and is carried out at a frequency typicallyof between five and ten years. - 40 - ANNEX 2- 2 Page 2 of 5

The Network to be maintained

4. The national network consists of some 2300 L/ kilometers of roads and tracks as follows:

Paved 485 km Engineered Gravel 412 km Tracks 1403 km 2300 km

At the present time, little of this network receives regular maintenance, nor is much of it in a condition which allows regular maintenance. But with the start of the Second Roads Project, roads which have already been rehabilitated will begin to receive regular routine maintenance. Recog- nizing the need for a gradual build-up of the extent of the network receiving regular maintenance, in keeping with the growth of revenue from the road user, and of capacity of the Ministry of Public Works, Construc- tion and Housing to provide the service required, the following time table is agreed:

Table 1

Maintained Network Kilometers to be maintained by the end of Fiscal Year

By end of FY Bitumen Gravel Earth Total

1985 280 210 240 730 1986 350 260 290 900 1987 420 310 340 1070 1988 440 340 370 1150 1989 460 370 400 1230 1990 485 412 433 1330 b (1990 total as percentage of class) (100%) (100%) (31%) (58%)

a/ Earth roads with very low traffic outside this total may receive summary regrading subject to equipment availability, or village level labour-based maintenance. b/ Makes no allowance for upgrading.

5. These totals are based on the expected progress of the two IDA- financed projects until the end of FY87 and a modest extension thereafter, so that by the end of the decade, the entire paved and engineered gravel network and 30% of the earth roads network will be under regular routine maintenance.

1/ A further 700 km of tracks exist but many largely on paper only, plus 95 km of paved towship roads. Network density in km/sq. km = .064, cf Togo, Benin = 0.042, Sierra Leone =.1 - 41 - ANNEX 2- 2 Page 3 of 5

Maintenance Funds Required

6. Using typical costs from the first road project and from similar countries in the West Africa region, the following amounts (expressed in 1983 prices) have been determined to be reasonable for the periodic and routine maintenance of the network defined in table 1.

Table 2

Road Maintenance Funds Required (in 1983 prices) $000's

Fiscal Backlog on Normal Total Year Routine Periodic Periodic Periodic Total (1) (2) (3) (4) (5) (6) 1985 257 1,012 685 1,697 b/ 1,954 1986 401 853 844 1,697 b/ 2,098 1987 496 694 1,003 1,697 b/ 2i193 1988 591 0 1,087 1,087 1,678 1989 635 0 1,154 1,154 1,789 1990 679 0 1,218 1,218 1,897

a/ Based on an exchange rate of GP 82 per US$1, 85% of maintenance cost in foreign currency, and a 50% salary increase in FY1984. b/ Met by IDA project.

Revenue

7. Table 3 shows the approximate levels of fuel imports consumed by road users, the taxes in force and the theoretical revenue yield of those taxes were they to be uniformly and effectively enforced:

Table 3

Gasoline Consumption and Taxation ('000 tons)

FY Premium Regular Diesel Fuel 1980 2.2 2.2 (5.0)a/ 1981 1.8 1.8 (5.0)a/ 1982 1.5 1.4 5.0 Average 1.8 1.8 5.0 Tax per litre (GP) 13.6 13.0 1.8 Tax Yield b/ (GP millions) 34.7 32.8 10.8

Total annual yield GP 78.3 million (US$0.95 million, at GP 82 per US$1) Total yield if Diesel tax increased to GP 7.5 per 1 = GP112.5 million = (US$1.4 million, at GP 82 per US$1 rate) a/ Estimated. b/ Assuming 1,400 1. of gasoline and 1,200 1. of diesel per ton. - 42 - ANNEX 2-2 Page 4 of 5

8. Making allowance for further revenue derived from vehicle import duties, vehicle and driver registration,etc, there is insufficient revenue-generatingpotential with existing tax rates and import levels at the revised exchange rate to fund all road maintenance. In addition, the majority of potential revenue does not at present reach the Treasury. The Government, therefore,will increase the level of fuel tax to about GP 26 per liter on gasoline and GP 15 per liter on diesel fuel, by Sep- tember 30, 1984, in order to compensate for the effect of the exchange rate variation, and reduce or abolish a sufficientnumber of the existing tax exemptions or preferentialprices now in force by January 1, 1985, to produce from 1986 on at least 50% and from 1988 on at least 100% of the amounts shown in Table 2, Column 6 (after allowing for inflation). How- ever, necessary changes shall1 e subordinatedto the recommendationsof the Road User Taxation Study - and the Petroleum Products Pricing Study, should they call for higher levels of taxation.

The Road Fund

9. Revenues collected from road users, and in particular taxes on the importationand sale of petroleum products shall be transferred directly from the collecting agency, presently the Department of Customs, to the Road Fund being establishedunder the Project. They shall be used by the Road Fund exclusivelyto finance routine and periodic maintenance to adequate standardsof the network described in Table 1 of this Action Plan.

10. The total revenue collected from road users may in certain years exceed the funds required for road maintenance,i.e. the amounts shown in Table 2 after adjustment for inflation. Also, funds for road maintenance may be available from other sources, such as direct Government contributions to the proposed project, the proposed IDA Credit for this project, and possibly funds provided by other donors for road maintenance. To the extent, therefore, that total funding for road maintenancewould exceed reasonable levels as shown in Table 2, excess should be transferredto the Treasury. Beginning in 1985, the Government shall agree annually with the Associationon the amounts of road user tax revenue to be transferred directly to the treasury.

11. In order to assure an efficient utilization of funds channelled through the Road Fund for road maintenance, the Government will:

(a) Reorganize by December 31, 1985, the Road and Bridges Directorate (DEP) in MOPCU to the effect that:

(i) the existing Project Unit for road rehabilitation and maintenance,created under the First Roads Project will be merged with the DEP and will be

1/ Being made as part of the IDA-financedPort Project and Petroleum TechnicalAssistance Project respectively. 2/ Or such other sources as may be agreed. - 43 - ANNEX 2-2 Page 5 of 5

reorganizedinto one administrativeunit incorpo- rating four regional depots, each including a Routine Maintenance Brigade, and three Rehabilita- tion brigades;

(ii) the authority of the DirectorateGeneral of Tech- nical Affairs over non-financialaspects of road maintenancewill be gradually phased out by December 31, 1985;

(iii) the staff of the new DEP, after the reorganization will receive adequate training in Guinea-Bissau and abroad, to be financed under the Second Roads Project; and

(iv) Personnel administrationfor all staff involved in road maintenancewill be transferredto the Personnel Department of MOPCU by December 31, 1985.

(b) Establish and make effectiveby June 30, 1987, with the assistance of the experts financed under the Second Roads Project:

(i) a cost accounting system for calculatingthe cost of the main categories of maintenanceworks per- formed on each section of road; and

(ii) a budgeting system for road maintenancebased on unit cost of maintenanceoperation.

WAPT2 Apr. 84 - 44 -

ANNEX 2-3

GUINEA-BISSAU

SECOND ROADS PROJECT

TRAINING PROGRAM

SPECIALIST COURSES

Type of Number of Course Length Course a/ Students Weeks

1. Bitumen Instructor

B Brigade & Team Chiefs 8 3 R Bituminous Equipment Operators 8 2 R Resealing Team 2x15 I B Routine Maintenance Crews 2x12 1 70

2. Equipment Operator Instructor

R Loader and Dozer Operators 2x12 1 R Grader Operators 6 2 R Vehicle & Truck Drivers 2x12 1 B Grader Operators 6 3 B Vehicle Drivers 12 1 B Equipment Operators 6 2 78 a/ R=Refresher, B=Basic; after four weeks for selection of candidate and preparation of courses.

The formal courses will be combined with an equal amount of field work/on the job training by trade and by work team. The first two weeks will be timed to coincide with the last weeks of the working season and the experts' observations during this period will be addressed in his courses.

GENERAL COURSES

1. Administrative, Workshop & Civil Engineering Staff

No.of Course Students Length Course Name (weeks)

Brigade Chiefs & Section Heads 2x9 3 Works Planning & Management Brigade & Regional Depots's Clerical Staff 2x9 2 Record Keeping & Cost Accounting Workshop Foremen & Deputies 8 2 Preventive Maintenance Record Keeping and C st Accounting Routine Maintenance Staff 2x20 1 Maintenance Techniques, Materials and Equipment

WAPT2 Mar. 1984 - 45 -

ANNE, 3-1

GUINEA-BISSAU

SECOND ROADS PROJECT

ROAD REHABILITATION PROGRAM

Bitumen Roads - Class I km

Bula - Canchungo 10 Canchungo - Cacheu 32 Bula - Sao Vicente 20 Bula - Binar 10 Mansoa - Bissora 25 Bambadinca- Gaba 88 Buba - Quebo 10 Bissau streets 10 Sub-Total 205

Engineered Gravel Roads - Class II

Buba - Quebo 22 Enxude - Tite 7 Farim - Dungal 20 Binar - Bissora 24 Mampata - Cacine 74 Sub-Total 147

Earth Roads - Class III

Gabu - Che Che 42 Bigine - Galomaro 32 Bafata - Gamamudo 15 Canchungo - Caio 30 Nemataba - Paunca 29 Sub-Total 148

Total 500km

WAPT2 Apr. 1984 - 46 - ANNEX 3-2

GUINEA-BISSAU

SECOND ROADS PROJECT

DESIGN STANDARDS

Bitumen Roads

Surfacing: Single Surface Dressing or Double Surface Dressing or Sand Seal depending on existing surface condition, using screened laterite aggregates or river sand and MC 3000 cut back bitumen, 6m wide.

Associated Works: Pre-sealing patching, bridge and culvert repairs, ditch cleaning,making up and regrading shoulders where necessary.

Engineered Gravel Roads

Earthworks:

Earthworks are to be limited to sections where the existing vertical and/or horizontal alignment limit safe travelling speed below 60km/h.

Formation:

Width: 9m Paved width: 6m Pavement thickness: 15cm minimum Minimum height of road crown above invert of side drain: 45cm -

Earth Roads

Earthworks:

Consistent with 40km/h safe travelling speed.

Formation:

Width: 8m Pavement: only as and where soil conditions require. Normal height of road crown above invert of side drain: 30cm

WAPT2 Mar. 1984 - 47 - ANNEX 3-3 Page 1 of 2

GUINEA-BISSAU

SECOND ROADS PROJECT

LIST OF EQUIPMENT

Bituminous Brigade - Periodic maintenance

1 Screening Plant 1 1 Screening Plant 2 1 Bitumen Distributor 5,000 1. 2 Chip Spreaders 5 Dump Trucks 5 cu. m 1 Front End Loader, Type FA FL10 2 Front End Loaders, Type FA 545 2 Service Passenger Cars 1 Fuel Tanker, 8,000 1. (shared with recurrent maintenance crews) 1 Lubrication Truck I Grader (for ditches and shoulders (part-time)) 1 Bulldozer 105 HP (quarry) 1 Water Tanker 8,000 1. (part-time) 1 Roller Albaret PF 2 1 Roller VA 10 (for shoulders, part-time) 1 Bitumen Heater 3 Dump Trucks, 8 cu. m (transport quarry to stockpiles) 1 Flat Bed Truck SG2 1 Low Bed Truck (for all brigades) Miscellaneous Equipment - Vibrators, pumps, etc

Bituminous Crew - Recurrent Maintenance

1 Towed Distributor 1,000 1. 2 Emulsion Distributors 200 1. 1 Dump Truck 1 Flat Bed Truck 1 Vibrating Roller, Pedestrian Controlled Miscellaneous Equipment

Regravelling Brigade No. 1 (Buba)

1 Bulldozer 200 HP 1 Bulldozer 150 HP 1 Front End Loader 2,5 cu. m. 2 Graders 100 HP 2 Vibrating Rollers Drum/Pneumatic 7 Dump Trucks 8 cu. m 1 Water Tanker 8,000 1. - 48 - ANNEX 3-3 Page 2 of 2

1 Fuel Tanker 8,000 1. 2 Service Passenger Cars 1 Four-Wheel Drive Vehicle MiscellaneousEquipment

RegravellingBrigade No. 2 (Gabu)

1 Bulldozer200 HP 1 Bulldozer 150 HP 2 Front End Loaders 1,5 cu. m 2 Graders 100-150 HP 2 Vibrating Rollers 5 Dump Trucks 5T 2 Dump Trucks 8 cu. m 1 Workshop Truck 8 cu. m 1 Four-WheelDrive Vehicle 2 Service Passenger Cars i AgriculturalTractor 65 HP 1 Fuel Tanker Trailer 2,500 1. MiscellaneousEquipment

Equipment for Routine MaintenanceCrews for Each Region

1 Grader 100 HP i AgriculturalTractor, 60-80 HP with Backhoe and Loader 2 Dump Trucks 5T 1 Flat Bed Truck SG2 2 Service Passenger Cars 1 ConcreteMixer 501 1 LubricationTrailer 1 Roller MiscellaneousEquipment

Equipment in Reserve

1 Grader 1 Front End Loader 1,5 cu. m 1 Bulldozer 140-150 HP 2 Dump Trucks 5T

WAPT2 Apr. 1984 - 49 - ANNEX 3-4

GUINEA-BISSAU

SECOND ROADS PROJECT

EQUIPMENT TO BE PURCHASED

Number Item Approximate Cost al $ 000

1 Bulldozer 300 HP 290 1 Bulldozer 200 HP 175 4 Graders 130 HP 300 3 Tyred loaders 1.5 m3 210 2 Vibrating rollers IOT 140 2 Vibrating rollers (pedestrian) 40 10 Tipper lorries 7 m3 410 2 Water tankers 8,0001 90 1 Fuel tanker 8,0001 45 1 Greasing lorry 45 2 Tipper lorries 2m3 46 1 Towed bitumen sprayer 1,0001 16 2 Farm tractors 60 HP 34 7 Pickups 84 3 Landrovers 60 1 Mobile workshop 45 1 Excavator/loader/farm tractor 60HP 40 2 Manual Emulsion Sprayers 8 1 Low loader and tractor 40T 60 Total 2,138

a/ CIF Bissau

Source: Reference No. 5.

WAPT2 Mar. 1984

- 51 - ANNEX 3-5 Page 1 of 4

GUINEE-BISSAU

DEUXIEME PROJET ROUTIER

MINISTERE DES TRAVAUX PUBLICS, CONSTRUCTIONET URBANISME

ASSISTANCE TECHNIQUE POUR L'EXECUTIONDU PROJET ROUTIER

TERMES DE REFERENCE

Introduction

1. La2Guin6e Bissau est un pays de superficie peu etendue (36.125km ) insere entre le Senegal et la Guinee-Conakry. La population compte environ 800.000 habitants et la langue officielle est le portugais. Le territoiredu pays est decoupe par sept longs estuaires,dont la traversee s'6ffectue a bord de bacs. A l'interieur,la topographie est relativementplate et le climat varie du type savane, au nord, au type foret tropicalehumide, au sud.

2. Le r6seau routier du pays est assez bien developpe et s'etend sur 2240 km, dont 485 km sont rev^tus, mais il est mal entretenu. Le service d'entretienvient d'etre cre6. L'Administrationguineenne, grace au financementde l'AssociationInternationale de Developpementest sur le point d'aborderla phase finale de son Premier projet routier. Dans le cadre de ce projet, le Ministere des travaux publics, de la construction et de l'urbanisme(MOPCU) a cree trois brigades de remise en etat du reseau routier, dont une affectee aux routes revetues-etdeux aux routes en terre; le Ministere a egalementmis en place les structures physiques, humaines et administrativesnecessaires. A la fin du premier projet, soit vers decembre 1983, ces brigades auront remis en etat environ 475 km de routes.

3. Le deuxieme projet routier, dont l'assistance technique fait l'objet du present appel d'offres, comportera les volets suivants :

(a) Refection de 500 km des routes (200 km bitumees) en regie par les brigades, pendant trois saisons seches.

(b) Creation et financementdes depenses de demarrage de l'ex- ploitation de trois services regionauxpour l'entretien courant du r'seau dans chaque region.

(c) Creation et financementdes d6penses de demarrage de l'ex- ploitation d'un service d'exploitationdes quatre princi- paux bacs traversiersdu pays.

(d) Formation du personnel affecte aux activit6s (a) - (c) ci- dessus. - 52 - ANNEX 3-5 Page 2 of 4

Tache du consultant

4. Le consultant doit mettre a la dispositiondu MOPCU une equipe de sept experts ayant la compositionsuivante pour aider le MTPCU a exe- cuter le projet et passer les marches de fournituresnecessaires

hommes-moisa! Ing6nieur routier 23 Administrateur/Specialiste en organisation 33 Inspecteurdu materiel/ Chef mecanicien 33 Instructeurconduite des engins 6 Formateurbitume 6 Expert magasinier 4 105

a/ A titre indicatif.

Qualificationset Attributions

Generalites

5. II sera tenu compte pour l'attribution des services au Consul- tant, de l'acceptationpar le personnel des difficultesde vie propres a la Guin'e Bissau. Chaque membre de l'equipe doit avoir une connaissance du portugais parle. Au moins un membrede l'equipe doit etre capable d'etablir des documents et rediger des manuels ou des rapports en langue portugaise. Tous les membres de l'equipe doivent avoir l'experiencedes travaux publics dans un pays en developpement,et de preference en ce qui concerne les travaux en regie. Tous les membres de l'equipe,doivent etre en mesure de jouer un role dans le volet formation,soit sur le tas, soit dans le cadre des stages speciaux qui se deroulerontpendant la saison des pluies.

6. L'Ingenieur routier sera un ing'enieurdiplome du genie civil ayant au moins sept ans d'experiencedes travaux routiers. E1 devra egalement avoir travaillepour une administrationdes travaux publics et avoir des connaissancesen matibre de :

(a) gestion des services d'entretien routier;

(b) enduits superficiels;

II aura la responsabilited'assister le Directeur du Projet dans ses taches de controle de la bonne execution du projet, de suivi de la mise en place de la nouvelle organisationpour l'entretiendes routes, de direction, ainsi que de gestion de la nouvelle organisation. - 53 - ANNEX 3-5 Page 3 of 4

7. Administrateur/specialisteen organisation. Il sera titulaire d'un diplome reconnu en gestion et aura au moins sept ans d'experience generale, acquise de preference dans une organisationde genie civil, industrielleou commerciale. I1 sera responsable,avec son homologue guin&en, de la gestion administrativedu projet, de la passation du mar- che de fourniturespour le projet. L'expert sera responsablede :

(a) la conception et mise en place du systeme de gestion des services regionaux d'entretienroutier, ainsi que de la formation des agents dans ce domaine;

(b) l'assistance a la creation d'un service d'exploitationdes quatres bacs traversiers.

(c) I1 examineraaussi le fonctionnementdu Fonds Routier qui sera cree dans le cadre de ce projet et proposera les amenagementseventuellement n'cessaires.

8. L'Inspecteurdu materiel/Chefmecanicien. I1 sera titulaire d'un diplome de niveau au moins equivalent a celui de techniciensupe- rieur. I1 sera responsabledu bon fonctionnementdu materiel des trois brigades, y compris le mat6riel des 'quipes d'entretiencourant, de l'entretien et de la reparationdu materiel, de la gestion des ateliers et des magasins, et de l'achat des pieces d'tach'es. I1 sera 'galement responsablede la creation et la gestion d'une equipe d'entretiendes quatre bacs traversiers(dont trois seront des bacs motorises de 40 ton- nes). I1 devra par ailleurs etre en mesure de participerau depouille- ment des offres de fournituresde materiel de genie civil et de pieces de rechange, a l'analysedes offres et a l'etablissementdes commandes, a la r'ception techniquedu materiel de genie civil et des pieces de rechange, a l'affectationdu materiel et a sa mise en route industrielle.

9. L'Instructeurde conduite des engins aura une experienced' au moins sept ans, dans 1'exploitationet a 1'entretiendes engins et camions de travaux publics, et au moins un an d'experienceen formationdes conducteurset chauffeurs d'engins et camions. I1 sera charge, pendant son sejour de six mois, de :

(a) diagnostiquerles besoins en recyclaged'environ 50 conducteurs et chauffeurs existants,de formuler et de donner les cours de formation sur le tas necessaires;

(b) inculquer une formation de base a environ 30 conducteurs et chauffeurs sans formation prealable.

10. L'Instructeurbitume aura au moins cinq ans d'experienceen matiere d'rexecutiondes enduits superficielset d'entretiendes routes revetues en pays en d'veloppement. I1 sera charge, pendant son sejour de six mois, de : - 54 - ANNEX 3-5 Page 4 of 4

(a) diagnostiquerles besoins en recyclage de la brigade bi- tume existante, de formuler et de donner les cours n'eces- saires de formation sur le tas, en introduisantdes techniques nouvelles appropriees;et

(b) former deux equipes de point a temps.

L'Expert Magasinier

11. Il aura au moins cinq ans d'experiencegenerale en gestion des magasins, control de stocks et tenue de fichiers (Kardex,KINIMAX, ABC) etc. Durant son sejour de quatre mois il sera responsablede l'organisation des inventaires,la tenue des magasins, le stockage des pieces detachees et des materiaux d'atelier et de constructionacquis par MOPCU pendant le premier projet routier. Il sera egalement reponsable du recyclage des agents de MOPCU en charge de la future gestion des magasins et stocks du deuxieme projet.

Autres taches

12. Le consultant doit

(a) preparer un schema directeur pour l'entretiencourant et periodique du reseau, jusqu'a l'annee 1990, et d6terminer les ressourceshumaines, mecaniques et financieresa mettre en oeuvre pour sa realisation;

(b) aider l'Administrationdans la mise en place et le demarrage d'un Fonds routier pour le financementdes activites & entretien;

(c) preparer 'ventuellementun troisieme projet routier pour faire suite au deuxieme projet routier, et poursuivre le developpementdu reseau et des organismes charges de sa gestion et de son entretien.

Rapports

13. Quatre mois apres l'arrivee des premiers membres de l'equipe un rapport initial sera presente a l'Administrationguineenne. Ce rapport servira de planning general pour la gestion du projet. Apres l'accep- tation de ce rapport par l'Administrationet apres avoir requ l'appro- bation de l'Association,le consultant etablira un rapport d'activit's tous les trois mois. Le consultant redigera un projet de rapport final au debut de la troisieme annee du projet.

WAPT2 Apr. 1984 - 55 -

ANNEX 3-6

GUINEA-BISSAU SECOND ROADS PROJECT

PROJECT COSTS a/

Local Foreign Total Foreign Local Fppin Total Foeig 1oooT------(o millions) ------1. Road Rehabilitation Periodic Mtaintenance (500 km)

a. Equipment, vehicles & spare parts,etc 27 2,700 2,727 99 2.21 221.40 223.61 98 b. Fuel & lubricants 109 665 774 86 8.94 54.53 63.40 86 c. Road building materials, including 9 868 877 99 0.74 71.18 71.92 99 bitumen, culverts d. Salaries 1,125 - 1,125 0 92.25 - 92.25 0 e. Technical Assistance (71 r/r) 40 807 847 95 3.28 66.17 69.45 95 f. Equipment rehabilitation by contract - 200 200 100 16.40 16.40 100 Sub-total 1,310 5,240 6,550 107.42 429.68 537.10 Contingencies Physical 10% 122 533 655 10.74 42.97 53.70 Price 14.2% 190 833 1,023 15.60 68.27 83.88 Total 1,622 6,606 8,228 133.76 540.92 674.68

2. Routine Road Maintenance

a. Buildings & furniture inc. housing 8 94 102 92 0.66 7.71 8.37 92 b. Workshop & depot equipment 1 44 45 98 0.08 3.61 3.69 98 c. Road maintenance equipment and 11 1,078 1,089 99 0.90 88.39 89.29 99 vehicles & spare parts d. Fuel and lubricants, etc. 38 220 258 86 3.11 18.04 21.15 86 e Materials & supplies 12 276 288 96 0.98 22.63 23.61 96 f. Salaries 105 0 105 0 8.61 - 8.61 0 g. Technical Assistance (42 r/r) 23 478 501 95 1.88 39.19 41.07 95 Sub-total 198 2,190 2,388 16.52 179.59 196.09 Contingencies Physical 10% 17 222 239 1.39 18.22 19.61 Price 14.2% 26 347 373 2.17 28.45 30.62 Total 241 2,759 3,000 20.07 227.24 246.31

3. Training

a. Technical Assistance (12 rn/n) 6 137 143 96 0.49 11.23 11.72 96 b. Civil works 2 26 28 93 0.16 2.13 2.29 93 c. Teaching materials 1 14 15 93 0.08 1.15 1.23 93 d. Scholarships for overseas study - 23 23 100 - 1.89 1.89 100 Sub-total 9 200 209 0.73 16.40 17.13 Contingencies Physical 10% 1 20 21 0.07 1.64 1.71 Price 14.2% 1 31 32 0.11 2.56 2.67 Total 11 251 262 0.91 20.60 21.51

4. Ferries

a. Supply of 20t river ferry boat 2 147 149 98 0.16 12.05 12.21 98 b. Spare parts for 4 ferry boats 1 78 79 99 0.08 6.39 6.47 99 c. Pick-up truck, tools, etc. 1 16 17 4 0.08 1.31 1-39 94 d. Civil works to landing ramps 4 46 50 92 0.33 3.77 4.10 92 e. Study of ferry system 4 77 81 95 0.33 6.31 6.64 95 Sub-total 12 364 376 0.98 29.83 30.81 Contingencies Physical 10% 1 36 37 0.09 2.98 3.07 Price 7.5% 2 30 32 0.15 4.66 4.81 Total 15 430 445 1.22 37.47 38.69

5. Assistance to DTT

a. Vehicles 1 21 22 95 0.08 1.72 1.80 95 b. Equipment for vehicle testins 1 28 29 97 0.08 2.29 2.37 97 and signing c. Office equipment 1 12 13 92 0.08 0.98 1.06 92 Sub-total 3 61 64 0.24 5.00 5.24 Contingencies Physical 10% - 6 6 - 0.49 0.49 Price 7.5% - 5 5 0.41 0.41 Total 3 72 75 0.24 5.90 6.14

6. Assistance to MOPCU

Technical assistance 59 1,395 1,454 96% 4.83 114.39 119.15 96% Contingencies Physical 10% 6 139 145 0.49 11.40 1.19 Price 14.2% 9 217 226 0.74 17.79 18.53 Total 74 1,751 1,825 6.07 143.58 149.65

Grand Total 1,966 11,869 13,835 162.27 975.71 1,137.98

(Rounded) 2,000 11,800 13,800 164.00 967.60 1,131.60 a/ Rate of Exchange: GP 82 - US$1.00

WAPT2 Xar. 1984 - 56 - ANNEX3-7

GUM2E-BISSAU

SBXFDRCakt PJ2T

ELt'lFATEDSC}I1 OF DISRS3 a/

lIA's Special Rrd IDA Total isceal Year Quarterly Omnulative Quarterly Cunulative Omalative Percentage and Calendar Disbureement Disburaetent Disbursment 0isbursmnat Disbursement of total Quarter loding at Mad of Quarter at Eht of Quarter at dt of Quarter Credit

FY85 September 1964 44 44 44 44 81 t December '964 104 148 104 148 296 4 MarchIt95 170 252 170 252 504 6 June 1905 170 422 170 4Z2 844 10

FYE6 Settember 1985 170 592 170 592 1,184 15 Dacenher 1985 226 818 226 8t8 t,636 20 March 1986 26 1,044 226 1,044 2,08' 26 Jume t9E6 254 1,298 254 t,296 2,596 32

FY87 Septsber Io 254 1,552 254 1,552 3,104 39 Deca,iber 1te6 258 t,810 258 1,81O 3,620 45 March 19f7 257 2,067 257 2,067 4,134 52 Jime 1967 241 2,308 241 2,308 4,616 58

FY88 September 1967 240 2,548 240 2,548 5,096 64 December 1987 208 2,756 208 2,756 5,512 69 March 1988 208 2,964 208 2,964 5,928 74 June 1988 174 3,138 174 3,138 6,276 78

FY89 September 19E8 166 3,304 166 3,304 6,608 82 December 1995 131 3,435 131 3,435 6,870 86 March 1599 133 3,568 133 3,568 7,136 99 June 1989 96 3,666 98 3,666 7,332 91

FY90 September 1989 98 3,764 96 3,764 7,528 94 December1999 70 3,834 70 3,834 7,668 96 March 1990 70 3,904 70 3,904 7,8D8 97 Jime 1990 96 4,00 96 4,a0C 8,000 100

The project is expected to be substantially complete by March 31, 1989 and the credit to be closed on June 30, 1990. a/ Disbursmnt estimates are based on the historical profile for "est Africa, Hi*oays, IDA projects".

WA.20' Mar. 84

I~~~~~~~~~~~~~~~ i.

. ~ ~ ~ ~ ~ 6 ______orptf1

t C / 70 F e = / / t ed~~~60cicrul.tv / 60 ; :/ for Irhpropo5ed pjroet.! 4~~~~~~ 50+ ~r / X / / OeW, AfrIoo R.91O. i 40 fcr road.projrt,.

30 - /ot0-0 o=t=o1i- di.-

R11d. 10

1909 1980 1981 1982 1083 1984 1985 1986 1987 1988 1889 1990 1991 - 57 -

ANNEX 4-1

GUINEA BISSAU

SECOND ROADS PROJECT

AVERAGE VEHICLE OPERATING COSTS BY ROAD CATEGORY AND CONDITION (1983 US cents/km a./)

Paved Roads Gravel Roads Earth roads Roads condition b/ Fair Med. Poor Fair Med. Poor Fair Med. Poor

Passenger cars 29 35 40 35 38 44 44 51 61

Vans, pick-ups, taxis 24 26 29 29 32 36 36 40 49

Buses 44 46 54 53 57 68 60 68 83

Trucks (7t) 49 62 70 69 76 89 83 92 102

a/ Taxes excluded. b/ Fair correspondsapproximately at a roughness index of 2000 mm/km, and poor to 13,000 mm/km.

Source: ConsultantsLouis Berger International,Ref. No. 2 - Mission Estimates, Ref. No. 8.

WAPT2 Mar. 1984 - 58 - ANNEX4-2

GUINEA-BISSAU

SECONDROADS PROJECT

ANNUALCOMPARISON OF CONDITIONOF THE ROADS WITH AND WITHOUTTHE PROPOSEDPROJECT (km)

With Project Without Project a/ Road Conditions Road conditions Good Fair Poor Good Fair Poor

Paved Roads

1984 82 123 _ 10 195 - 1985 205 - - - 150 55 1986 185 20 - - 88 117 1987 123 82 - 108 10 87 1988 98 97 20 205 - -

Gravel Roads

1984 101 29 24 - 29 125 1985 132 - 22 - 7 147 1986 154 - - - - 154 1987 127 27 - - - 154

Earth Roads

1984 59 89 - 101 47 - 1985 76 72 - - 148 - 1986 148 - - - 91 57 1987 76 72 - _ 29 119

a/ Rehabilitationwork postponed until 1987/1988.

Source: Mission estimate.

WAPT2 Mar. 1984 GUINEA-BISSAU

SECONDROADS PROJECT

PAVED ROADS REHABILITATIONPROGRAM BASIC ASSUMPTIONS

Bissau Bula Canchungo Bula Bula Mansoa- Bambadica- Buba Streets Canchungo Cacheu Sao Vicente Binar Bissora Gabu Quebola Traffic - Length (km) 10 10 32 20 10 25 88 10 - Traffic (1984) Total v.p.d. 426 125 103 54 67 73 215 41 (of which Trucks %) (15) (11) (14) (18) (31) (17) (20) (40) - Traffic Growth (% p.a.) 6.5 4 4 6 4 4 4 4

Maintenance and RehabilitationCosts, 1984/1990

A. With Proposed Project

- Road quality index before rehab.b/ 1-5 2.5 2.3 3.0 3.2 3.0 2.5 2.8 - RehabilitationCost (MOO)0 316 135 560 320 155 488 1936 215 - Cost/km (SOOO) 31.6 19.5 17.5 16 15.5 19.5 22 21.5 - Assumed date of execution 1984 1984 1984/85 1985/86 1985/86 1985 1985/86 1986 - Date of next periodic maintenance 1990 1991 1991-92 1991 1992 1992 1992 1993

B. Without Proposed Project

- Road quality index before rehab.b/ 3.5 3.7 3.7 4.2 3.9 4.5 3.2 3.5 - RehabilitationCost ($000) 380 237 677 444 258 732 2664 288 - Cost/km (SOOO) 38.0 23.7 21.1 24 25.8 29.2 30.2 28.8 - Assessed date of execution 1987 1986 1987 1988 1988 1987 1987/88 1988 - Vehicle operating costs(US cents/km) 32 34 31 33 38 35 33 38 a/ 22 km of the road are being declassed to gravel road standard. b/ For the economic evaluation, roads have been classified into five categories,where cat. 1 corresponds to a roughness index of X< about 2,000 mm/km, and 5 to a roughness index of approximately13,000 mm/km. 4-

Source: Consultant's report, Project File, Ref. No. 3 and mission estimate, Project File, Ref. No. 9. L

WAPT2 Mar. 84 GUINEA-BISSAU

SECONDROADS PROJECT

GRAVELROADS REHABILITATIONPROGRAM (154 km) a/ BASIC ASSUMPTIONS ('000 Dollars)

A. Vith Proponed Project

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994

Road quality index (before rehab.A 2.3 1.4 1.5 1.9 2.4 2.9 t .7 2.2 2.3 2.4 3.1 Total V.O.C. 521 612 823 918 1009 1049 1027 1010 1141 968 1068 Rehabilitation Cost 1447 780 165 Periodic Maintenance Cost 140 370 248 Routine Maintenance Cost - - 22 61 117 108 48 10 3- 52 101 Total Annual Rehabilitation and Maintenance Cost 1447 780 187 61 257 478 296 10 37 52 101 Cumulative Rehabilitation and Maintenance Cost 1447 2227 2414 2475 2732 3210 3506 3516 3553 3605 3706

0 B. Vithout Proposed Project c/

Road quality index (before rehab.Al 3.4 3.8 4.2 4.3 2.9 1.2 1.5 1.7 2.3 2.8 2.1 Total 1.O.C. 738 Q60 1277 1317 1060 920 979 1103 1177 1025 915 RehabilitationCost - - - 498 1320 1500 Periodic MaintenanceCost 140 240 240 Routine MaintenanceCost 43 69 102 113 61 10 25 57 67 104 20 Total Annual Rehabilitation and MaintenanceCost 43 69 102 611 1381 1510 25 57 207 344 260 CumulativeRehabilitation and MaintenanceCoat 43 112 214 825 2206 3716 3741 3798 3005 4349 4609

a/ Detailed estimates by section are available in Project File, Ref. No. 9. F/For roads quality, indexes defined in Annex 4-3 c/ Works postponed until after 1987/88.

Source: Consultant'sreport, Project File, Ref. Ro. 3 and mission estimates.

WAPT2 Mar. 84 - 61 - ANNEX 4-5

GUINEA-BISSAU

SECOND ROADS PROJECT

EARTH ROADS REHABILITATION PROGRAM (148 km) a/ BASIC ASSUMPTIONS ('000 Dollars)

A. With Proposed Project b/

1984 1985 1986 1987 1988 1989 1990 1991

Road Quality Index (in points) 2.6 1.9 1.5 2.3 2.7 3.0 3.2 3.5 Total V.O.C. 318 254 554 641 697 742 803 856 Rehabilitation Cost 454 456 13 Maintenance Cost 13 89 66 70 75 80 Total Annual Maintenance/ Rehabilitation Cost 13 454 456 102 66 70 75 80 Cumulative Maintenance/ Rehabilitation Cost 13 467 923 1025 1091 1161 1236 1316

B. Without Proposed Project /

Road Quality Index (in points) 2.6 2.9 3.2 3.5 3.7 1.5 2.0 2.5 Total V.O.C. 318 338 694 766 843 626 690 781 Rehabilitation Cost 108 1116 Maintenance Cost 13 39 82 92 89 5 34 64 Total Annual Maintenance/ Rehabilitation Cost 13 39 82 42 197 1121 34 64 Cumulative Maintenance/ Rehabilitation Cost 13 52 134 226 423 1544 1578 1642

a/ Detailed estimates by section are available in Project File, Ref. no. 9. b/ For roads quality, indexes defined in Annex 4-3. c/ Rehabilitation/upgradingworks posponed until 1987/1988.

WAPT2 Mar. 84 CUINEA-BISSAU

SECONDS ROADS PROJECT

COST BENEFIT ANALYSIS REHABILITATION PROGRAM

All Roads (in US$,OO

…------With Project ------Without Project ------Rehabil. Periodic Routine Rehabil. Periodic Routine Cost Maint. Cost Naint. Coat V.O.C. Cost Maint. Cost Maint. Cost V.O.C. Benefit on Benefit on wenefit on

Ci C2 C3 C4 B1 B2 B3 B4 (Bj-C45 (ct fehabi

1984 2,838 - 448 4,320 - - 688 4,680 360 240 -2,838

1985 2,713 - 40 4,644 - 878 5,522 878 838 -2,713 1986 1,936 - 165 5,374 - - 1,001 6,765 1,391 936 -1,936 1987 - - 412 6,031 2,120 - 637 6,427 396 225 2,120 1988 - - 816 6,400 4,350 - 165 6,087 -313 -651 4,350 1989 - 140 877 6,896 2,222 - 78 5,964 -922 -939 2,222 2 1990 - 590 821 7,350 - - 517 6,509 -841 -894

1991 - 952 595 7,787 - - 751 7,279 -508 -796 1992 - 1,695 193 7,082 - 140 849 8,109 1,027 -899

1993 - 120 223 6,627 - 220 837 7,878 1,051 714

1994 - - 702 7,530 - 2,120 304 7,254 -275 1,722 1995 - - 375 1,949 - 1,017 - 1,477 -472 642

1996 - - 336 1,836 - - 25 1,449 -387 -311 1997 ------

Total 7,487 3,497 6,003 8,692 3,497 6,730

Economic Rate of Return 29%

Detailed data for each category and section of roads are available in Project File, Ref. No. 9.

Source: Consultant's report, Project File Ref. No.3. Mission estimate.

WAPT2 Mar. 84 GUINEA-BISSAU

SECOND ROADS PROJECT

COST-BENEFITANALYSIS ROUTINE MAINTENANCE PROGRAM

All Roads (in USS'OOO)

…------With Project ------W---Without Project ------…-____ Routine Periodic Residual Routine Periodic Residual Maint. Cost Maint. Cost Value V.O.C. Maint. Cost Maint. Cost Value V.O.C. Net value

c1 C2 c3 C4 B1 B2 B3 B4

1984 265 - 3,790 140 - - 3,845 -70

1985 300 - - 4,120 165 - 4,255 - ' 1986 225 - - 4,350 135 - - 4,585 145 14R7 270 620 - 4,640 175 740 - 4,925 310 1988 245 145 - 5,140 40 1,675 - 4,700 884 1989 230 1,340 - 4,820 65 1,750 - 4,640 65 1990 140 1,120 - 4,840 80 - - 4,795 -1,225

1991 255 - -2,091 5,040 135 - -2,238 5,130 -177

Economic Rate of Return = 137%

Detailed estimatesby category and section of roads are available in Project File, Ref. No. 9.

Source: Consultant'sreport, Project File Ref. No. 3.

WAPT2 Mar. 84 - 64 - ANNEX4-8

GUINEA BISSAU

SECONDROADS PROJECT

COST-BENEFITANALYSIS a/ FERRY REHABILITATIONCOMPONENT (US$ 000's)

Economic Economic Economic Capital Recurrent Benefits Benefits Benefits Investment Costs JAO LANDIM FARIM SAO VICENTE 1985 430 1986 8 142.0 24.65 34.55 1987 8 152.9 25.26 35.39 1988 9 156.0 26.76 38.42 IGQQ 10 164.1 27.86 39.66 1990 50 171.0 29.67 42.39 1991 11 178.2 31.07 45.44 1992 11 189.6 32.77 46.78 1993 12 199.1 34.28 49.62 1994 12 209.6 36.98 50.97 1995 60 220.0 38.38 54.32 1996 -100 13 230.5 38.48 57.07

Economic rate of return * 48%

a/ Detailed calculationsare available in the Project File, Ref. No. 9.

Source: Consultant'sreport, Project File, Ref. No. 3. Mission estimate, Ref. No. 9.

WAPT2 Mar. 84 GUINEA-BISSAU

SECOND ROADS PROJECT

RECURRENT EXPENDITURES RECOVERY (in US '000)

Cost and Revenue Components

Recurrent Expenditures a/ Fuel Tax Yield Balance Routine Periodic Total Recurrent Theoretical Percentage Actual Year Maintenance Maintenance Expenditdres Yield c/ of Recovery d/ Yield

1985 287 1,900 2,187 1,909 30 573 (1,614) 1986 471 2,019 2,490 2,114 50 1,057 (1,433) 1987 624 2,138 2,762 2,342 80 1,873 (889) 1988 791 1,456 2,247 2,394 95 2,274 27 1989 895 1,627 2,922 2,874 98 2,816 294 1990 1,045 1,876 2,921 3,183 100 3,183 262 1991 1,202 2,138 3,340 3,576 100 3,576 236

------01%~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~Ul a/ Based on figures in the Action Plan, Annex 2-3 Table 2, in US$ at current prices, with assumed annual inflation of 6%. b/ Periodic maintenance is recurrent capital investment, but has to be covered in the long run by tax revenue. This is one of the targets of the project. c/ 1985 theoretical yield is based on fuel consumption level equal to the average of the 1980-82 period, with the existing tax level. From 1985 onward, theoretical yield projections are based on a 4.5% annual incrase in fuel consumption, and inflated 6% per annum. Under the assumption that the inflation differential between Guinea-Bissau and USA will be compensated by exchange rate adjustments. d/ Assuming gradual improvements in enforcing tax laws and eliminating exemptions. Shortfalls in these actions must be offset by higher tax rates.

WAPT2 Mar. 84

tz GUINEA-BISSAU

SECOND ROADS PROJECT

DISTRIBUTION OF BENEFIT FLOWS- (in percentage and in US$ '000)

Rood maintenanceand rehabilltation I~~~~~~~ Ferries Savingson Savings on Govt. Savingson trip Savingson VOC expenditure/road length(cost) Inducedtraffic maintenance 11117 148 . 2 F 1

Primarybeneficiaries Transporters Tax Payers Retareers( Producers

/ 16~~~~irs \TSraS/6S der 4%/0 Finalbeneficiaries 1oducer Retailers/

194 Benefitfor a standardyear (1991),In thousandUSS.

a/ Distribution of benefItsfor averageyear 1991,expressed in constantUSS at 1983 prices. W1 Averageover the 1984-1997period.

WAPT2 Mar. 84 ' 30L tnlaxJ< Idi Fo Dpo. j< fJ ? - .J ) ls 30 ISi0O 430 0o i4' IBDECEMRER1730CR

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0>.i•t Mopopr' SECOND ROADS PROJECT | 3C § ? ,

MAOOiTNIA JeoeAhood ' i D t~>5>/

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:~ ~. ~ < (b; c:>.JK,: i L AivbYC; A r obi; A C2frEJCri A)iit '0"'fy / >'g S -N Red tee Reb oanabyitted rverC : MAO,,'<< @ '( AX " :"':' zL <'5< ) 0 ® Ferries~QLAM Cvb- sVrt i;c /< ,-- m . $ 5v Fe Seces RoeedsPrortest 9 A, , 7 , -,p: > \ i f e :J2 9 I / 9 Geior U N E A/ Fernes Mfonged bPorfC tEISS~~At~ ' GUINEA '0 ( ,r,'rernr"frsr '~~~~~~< < ~$>Lr >GUINwo-pS SA CARsv,VEerr 1 L~~~~~~~~)s i a -(~k c,s oroc ) 4y * ;' LI |MOCU Dk/MepQots <½~~~ '0">"~~~~ OrrrovooeOrmeoOOS CONmROAS4PR JEC >0 C' ~z2rorrrver>Ab 50 Ž0)s, OHIO pt ~ SIERRA LPOt46 _± """jo1: ' An C'''< . Reg errol~hbdtwd Pooneor en~~~~~~~~~~~~~~~~~~~~~~~~~~R.d,de . -, e=oo,onrordo,oev=o , 30 40 5- ~~"'t COASTor;: rresre>noreer IOrAIMETERO' 0 ~~~~~~~ - '- niernoriosoth Boosoor.d,POse OOrrOroOeIAroroAo''N'! M t W 0 RCvrbvroro. dCiteS LLBEEiA n '> K1 inox,ir sooioar~~~~~~~~~~~~~~~~~~~~~~~~~~~~~on op AC t I~~~e ec,dR.& ,. c '''rrnnnrrrvernen~~~~~~~~~~~~~~~!,I s AA~~~~~~q.d by MCPCU~~~~~~~~~0 : ./ t CCA~~~~~~~~~" 000 0 50 iT ') OnhiL nr~ed: P, G dlm-^TR030 I° Nt;;;a 5' 1000'~~~~~~~~~~~~~

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