World Bank Document

RESTRICTED Report No. PTR-2b Public Disclosure Authorized This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracyor completeness.The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Public Disclosure Authorized APPRAISAL OF THE SECOND HIGHWAY PROJECT COSTA RICA Public Disclosure Authorized March 18, 1970 Public Disclosure Authorized Transportation Projects Department CURRENCY EQUIVALENT Unit of Currency in use: Costa Rican colones (C) Official Exchange Rate 1 - US$0.150 C 6.65 - US$1 ¢ 6.650 million - US$1 million C 1 million - US$150,000 Fiscal Year: January 1 to December 31 Units of Weights and Measures: Metric Metric: British/USequivalents 1 meter (a) m 3.28 feet (ft) 1 kilometer (Km) 2 - 0.62 mile (di) I square kilometer (Km ) - 0.386 square mile (sq. si) 1 metric ton (m ton) - 0.98 long ton 1 metric ton (a ton) - 1.1 US short ton ABBREVIATIONSUSED IN THE REPORT BPR - United States Bureau of Public Roads CABEI - Central American Bank for Economic Integration CACM - Central American Common Market DGV - Direccion General de Vialidad (Costa Rica Highway Department) FEP - FerrocarilElectrico al Pacifico IDB - Inter-American Development Bank JAPDEVA - Junta de Adoinistracion Portuaria y de Desarrollo Econoinco de la Vertiente Atlantica LACSA - Lineas Aereas Costarricenses S.A. TCI - TransportationConsultants, Inc. (US) TSC - TSC Consortium (US) - Consultants TAMS/DYPSA- TANS IngenieriaS.A. (US), Disenos y ProyectosS.A. (Costa Rica) - consultants USAID - United States Agency for International Development COSTA RICA APPRAISAL OF THE SECOND HIGHWAY PROJECT TABLE OF CONTENTS SUtMMARY........... i 1. INTRODUCTION .................................. ... 2. BACKCROUND INFORMATION . .1........... ,...1 A. Geographic and Demographic ........................ * 1 B. The Transport Sector........... ..***.... v ... 2 C. Transport Coordinatio. .... 5 3. THE HIGHWAY SECTOR ............................. ..... 6 A. Highway Administration. .......................... 6 B. Highway Engineering. ......................... 7 C. Highway Construction .. .. D. HighiwayMaintenance . ..........................8 E. Highway Financing and Planning.... 9 4. THE PROJECT ............. .. so . 11 A. GeneralDescription . 11 B. The Siquirres-Limon Highway . 11 C. Design and ConsultingServices . 12 U. Cost Estimates.... ........ ..... 13 E. Disbursement . .15 F. Execution of the ...........................Project 16 5. ECONOMIC EVALUATION .. ... ........ .... 17 A. Background . ........ 17 B. Project Area . ................. 17 C. Future Traffic and Transport Capacity.. 18 D. Economic Analysis of Project Road . .19 E. Feasibility Study .. 20 6. RECOMMENDATIONS.... 20 This report is based on the findings of a Bank appraisal mission in August, 1968, consistingof Messrs. Schaefer (engineer)and Bronfaan (economist). The project was re-appraisedin February, 1970, by a mission consistingof Messrs. Schaefer (engineer),de Navacerrada (engineer)and Ahlstrand (economist) . TABLE OF CONTENTS - Page 2 - ANNEX 1. Methodology for Economic Analysis Annex 1 - Table 1 Atlantic vs. Pacific Annex 1 - Table 2 Total Demand for Transport in the San Jose-Limon Corridor and Traffic to be Moved on the Road Annex 1 - Table 3 Siquirres-LiwonHighway - Costs and Benefits Annex 1 - Table 4 SensitivityAnalysis - Siquirres-LimonHighway TABLES 1. Classificationof Highways 2. Vehicle Fleet 3. Design Standards for Project Road 4. Highway Maintenance Expenditures 5. Highway Revenues and Expenditures1962-1973 6. Highway Income and Expenditure Account: Current and Capital 7. Highway Investment 1962-1973 8. Siquirres-LlmonHighway - Estimate of ConstructionCost 9. Traffic Projections - Atlantic Coast Corridor 10. Vehicle Operating Cost on Paved Roads CHARTS I OrganizationChart of the Ministry of Transportation II OrganizationChart of the Ceneral Directorate of Highways MAP Costa Rica - Highway Network (IBRD-2377R) COSTA RICA APPRAISAL OF TUE SECOND HIGHWAY PROJECT SUMMARY 1. The Governmentof Costa Rica has asked the Bank to help finauce a highway project comprising (i) the constructionof a new hiighwaybetween Sliuirres and Limon (57 km) and (ii) consultingservicee 4vz e feesPihility study for an improved road connectionbetween San Jose and Siquirres. ii. The total cost of the project, including contingencies,as well as interest and other charges during construction,is estimated at US$22.2 million equivalent. The Bank will finance the foreign exchange element of the project estimated at US$15.7 million. The balance will be provided by the Government. iii. This would be the second Bank highway project in Costa Rica. In 1961 a joint Bank/IDA/ Loan/Creditof US$11.0 million was made to help finance the National Highway Progran (Plan Vial). Progress on the project lagged behind schedule due, among other factors, to periodic shortages of local currency funds and the problems of carrying out a large number of small works with local contractors. The Loan and Credit Closing Date was December 1967 when 85% of a reduced program was completed;the Government is continuingwith the remainder of the program. iv. The project will be executed by the Ministry of Transportatiou through the Direccion General de Vialidad (DGV)which has carried out the feasibilitystudy and detailed engineering. The US Bureau of Public Roads (BPR) has provided technical assistancefor preparing the project and will help to supervise the construction. Contracts for the construction works will be let on the basis of international competitive bidding. v. The San Jose-Siquirres-Limon road (already built from San Jose to Siquirres) will provide the first highway connection.between the densely populated Central Valley and the port of Limon on the Atlantic Coast. It will be part of the basic transport infrastructureof the country and of the Central American Common Market (CACH). The economic rate of return on the constructioninvestment for the Siquirres-Limonsection will be about 17X. vi. The project also makes provision for a feasibilitystudy of the existing San Jose-Siquirressection of this highway connection,as this is in need of improvement and will reach capacity shortly after the Siquirres- Limon section has been built. vii. The project provides a suitable basis for a Bank loan of US$15.7 million equivalent. On the basis of the economic life of the Siquirres- Limon highway and its constructionperiod, appropriateterms are 30 years, including a 6 year period of grace. COSTA RICA APPRAISAL OF THE SECOND HIGHWAY PROJECT I. INTRODUCTION 1.01 The Government of Costa Rica has requested a Baiik loan to help finance (a) the construction of a new highway egtweenSiquirtes and Limon (57 km) and (b) consulting services to conduct a feasibility study for the improvement of the San Jose-Siquirres road link. 1.02 A joint Bank/IDA Loan/Credit (Loarn299-CR/CrediL 10-CR) of US$11.0 million was granted in 1961 to assist in financing the first stage (630 km) of the National Highway Program (Plan Vial) together with construction and maintenance equipment. The US Bureau of Public Roads (BPR) provided technical assistance for the project. Progress on the project lagged behind schedule and the program was reduced to 513 km; about US$950,000 was even- tually cancelled from the Credit in December 1967, after the Closing Date had been postponed twice. At that time about 85% of the reduced program was completed and the remainder is now being completed gradually by the Government with its own resources. Delays were due to lack of local currency funds and to the inability of the local construction industry to handle efficiently the large number of small contracts involved, international contractors having shown little interest. However, the project served, among other things, to help develop a local road construction industry, although not yet to the point where it can handle large contracts such as are envisaged in the proposed project. 1.03 This report is based on a feasibility study prepared by the Government of Costa Rica, with the assistance of BPR experts, and on the findings of a Bank appraisal mission in August 1968, consisting of Messrs. Schaefer (engineer) and Bronfman (economist). The project was re-appraised in February 1970 by a mission consisting of Messrs. Schaefer (engineer), de Navacerrada (engineer) and Ahlstrand (economist). 2. BACKGROUNDINFORMATION A. Geographic and Demographic 2 2.01 Costa Rica, with an area of 51,000 km , is somewhat larger than Switzerland. Its main cities, and nearly half its population, are in the elevated and climatically equable Central Valley, where most of the emerg- ing industrial activity is located and the bulk of the country's coffee is produced. The mountainous terrain surrounding the Central Valley has made communication difficult oetween it and the rest of the country, where, in a very hot and generally very wet climate, Costa Rica's main crop, bananas, is grown. These tropical areas have potential for timber and cattle pro- duction, as yet largely untapped for lack of comaunication. - 2 - 2.02 The populationof Costa Rica in 1969 was about 1.7 million. The populationgrowth rate averaged over 3.5% p.a. over the period 1958-1967, but fell to 3.1% during 1968 and 1969. 2.03 Costa Rica borders with Nicaragua in the north and Panama in the south. It is a member of the Central American Common Market (CACM)which also

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