IEG ICR Review
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Report Number ::: ICRRICRR1283612836 ICR Review IEG Independent Evaluation Group 1. Project Data: Date Posted ::: 02/12/2008 PROJ ID ::: P057538 Appraisal Actual Project Name ::: Road Reconstruction Project Costs (((US$M(US$MUS$M):):):): 106.8 118.2 And Improvement Country::: Honduras LoanLoan////CreditCredit (((US$M(US$MUS$M):):):): 66.5 73.2 Sector Board ::: TR Cofinancing (((US$M(US$MUS$M):):):): 32.0 31.0 SectorSector((((ssss):):):): Roads and highways (90%) Central government administration (10%) ThemeTheme((((ssss):):):): Natural disaster management (50% - P) Rural services and infrastructure (50% - P) LLL/L///CC Number::: C3432 Board Approval Date ::: 11/07/2000 Partners involved ::: Spain, Nordic Closing Date ::: 03/31/2006 09/30/2007 Development Fund Evaluator ::: Panel Reviewer ::: Group Manager ::: GroupGroup:::: Kavita Mathur Peter Nigel Freeman Alain A. Barbu IEGSG 2. Project Objectives and Components: a. Objectives: The objectives of the project were to: (a) to restore roads damaged by Hurricane Mitch; (b) to improve trade corridors; and (c) to establish a sustainable and accountable financial and institutional set-up for the road subsector. b.Were the project objectives/key associated outcome targets revised during implementation? No c. Components (or Key Conditions in the case of DPLs, as appropriate): Road Reconstruction, Rehabilitation and Improvement (appraisal US$68.8 million; completion US$91.8 million). This component aimed at financing: (i) rehabilitation of Tegucigalpa – Danli Highway (84 km.); (ii) rehabilitation of Jícaro Galán – El Amatillo Highway (40.2 km.); (iii) reconstruction and rehabilitation of Santa Rita-Yoro road (46.5 km.); (iv) improvement of San Lorenzo – Olanchito (45 km.); and (v) improvement of Rio Dulce – El Porvenir road ( 46.5 km.). 1. Rural Roads and Bridges Program (appraisal US$8.5 million; completion US$4.9 million). This component financed the reconstruction/rehabilitation of 550 linear meters of bridges, including the rehabilitation of 100 kilometers of high priority rural roads. 2. Road Maintenance Pilot Project (appraisal US$4.0 million; completion US$7.8 million). This component aimed at financing a pilot project of routine maintenance of main roads (between 900 and 1100 kilometers), with the participation of local communities through the formation of micro-enterprises. 3. Consultant Services, Technical Assistance, Training (appraisal US$11.5 million; completion US$13.3 million). This component included the financing of: (i) consultants for the supervision of the works carried out under components 1, 2 and 3; (ii) technical assistance to the Ministry of Public Works, Transport and Housing (SOPTRAVI), including the Management Planning and Evaluation Unit (UPEG) and the Environmental Unit (UGA); (iii) technical assistance to strengthen the Road Fund organization; (iv) technical assistance to complete the work begun under Credit 2458-HO on the rationalization of the railways; (v) technical assistance for the implementation and monitoring of the Road Maintenance Pilot Project; (vi) implementation of a training program for SOPTRAVI and Road Fund; and (vii) contracting of a consulting firm for the Project Coordination Unit (PCU). 4. Goods (appraisal US$1.2 million; completion US$0.3 million). This component aimed at financing a limited amount of goods for SOPTRAVI (pavement evaluation equipment, vehicles, and computers) and for the Road Fund (computers, vehicles). 5. Audit fees (appraisal US$0.1 million; completion US$0.2 million). Revised Components : Due to a shift in government priorities and a renewed focus on the Regional Integration Program PPP (Plan Puebla Panama), the rehabilitation and upgrading of the Northern Highway became a major sector priority for the GOH. Funds were reallocated from the San Lorenzo-Olanchito road to Taulabe – La Barca road. d. Comments on Project Cost, Financing, Borrower Contribution, and Dates: The actual credit amount of US$73.2 million is higher than the appraisal amount of US$66.5 million due to exchange rate fluctuations. The credit was fully disbursed. The project was amended twice. First, in December 2005 to: (a) reallocate funds for road maintenance by micro-enterprises, following the highly satisfactory performance of the road maintenance pilot program (targets were increased from 900 km to 1,670 km); (b) extend the loan closing date from March 31, 2006 to June 30, 2007, to complete the additional routine maintenance micro-enterprise program and the trade corridor improvements; and (c) increase the aggregate ceiling for civil works contracts procured through micro-enterprises from US$4.6 million to US$8.0 million. Second, in January 2007 to include Taulabe-La Barca road improvement and to limit the scope of San Lorenzo-Olanchito road improvement to only studies. 3. Relevance of Objectives & Design: In October 1998 Hurricane Mitch struck the country and caused major devastation. The cost of damage incurred on roads, bridges and telecommunication infrastructure was estimated to about US$571.4 million (11 % of the GDP). Nearly 60% of the road network was affected; 100 bridges were either destroyed or severely damaged. The main trade road corridors suffered extensive damage. The project objectives were consistent with the Country Assistance Strategy (1999 CAS) which aimed to support the Government of Honduras (GOH) medium term reconstruction program while laying the groundwork for a stronger economy and a more equitable distribution of the benefits of growth. The project development objectives are directly relevant to three of the four pillars of the current CAS (2006): competitiveness, sustainability, and macroeconomic stability. The project components were appropriately designed to achieve the project development objectives. Their design was based on comprehensive technical, economic and fiduciary assessments. An additional feature of the project design was the improved bridge design intended to be resistant to future hurricanes of comparable magnitude. Safeguard issues were properly addressed. The project design stipulated that bidding on some of the proposed works could not go ahead until the completion of either a satisfactory environmental impact analysis (the case of San Lorenzo to Olanchito) or an acceptable resettlement plan (El Negrito to Portillo de Chancaya and Rio Dulce to El Porvenir) was in place. Overall, relevance was high. 4. Achievement of Objectives (Efficacy): To restore roads damaged by Hurricane Mitch - rated High. The project assisted in the reconstruction/rehabilitation of 102 km of high priority rural roads and 566 linear meters of bridges, exceeding the appraisal targets. The new bridge structures are designed to be resilient in the face of future hurricanes of comparable magnitude. The reconstruction/rehabilitation of roads and bridges restored traffic in key rural areas that were cut off as a result of the hurricane. Short-term employment was generated through the execution of small civil works. To improve trade corridors - rated Susbtantial. About 236 km out of the 262 km (90%) of the five major road sections were rehabilitated / reconstructed. This was mainly due to: (a) the cancellation of San Lorenzo – Olanchito section (45 km) the funds for which were reallocated to Taulabe - La Barca section (53 km); and, (ii) the high cost increases experienced in Tegucigalpa - Danli section, resulting in construction of 50 km compared to the target of 84 km. The rehabilitation of Jicaro Galan - El Amatillo highway improved the connection between Honduras and El Salvador, a critical element in the Plan Puebla-Panama road regional integration program. Vehicle operating costs were reduced by 7% and average daily traffic has increased from 2,430 in 1999 to 3,263 in 2005. The rehabilitation of Santa Rita-Yoro road has reduced vehicle operating costs by 21% and increased average daily traffic from 1,275 in 1999 to 1,957 in 2005. This section is the main link connecting Yoro to San Pedro de Sula and El Progreso. Rio Dulce - El Porvenir road improvement enhanced the connection of the central part of the country with the Aguan River Valley and Puerto Castilla on the Caribbean Sea. Vehicle operating costs were reduced by 51% and average daily traffic increased from 800 in 1999 to 1,202 in 2005. The rehabilitation of Tegucigalpa - Danli section improved the connection between Honduras and Nicaragua. Also, this road is used by Nicaragua to access Puerto Cortez, the main Honduran port on the Caribbean Sea, for the export of coffee and other products. Works in this section reduced vehicle operating costs by 24% and increased average daily traffic from 2,500 to 3,190 in 2007. To establish a sustainable and accountable financial and institutional set-up for the road subsector - rated Substantial. The institutional capacity of the Road Fund has improved substantially. Fewer delays were experienced in the contracting of works. The operation and administrative overhead of the Road Fund was within the mandated ceiling of 2.5% of the expenditures. However, the target for the percentage of road maintenance was not met. By 2007, 95% of paved road maintenance was funded whereas only 40% of unpaved was covered. The average coverage achieved was about 65% compared to a target of 70%. The capacity of the Management Planning and Evaluation Unit (UPEG) was improved through the establishment of a comprehensive management information system and training on road management tools such as the Highway Design and Maintenance Model (HDM).