Document of The World Bank Public Disclosure Authorized Report No: ICR2777 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-74110) ON A Public Disclosure Authorized LOAN IN THE AMOUNT OF US$ 100.00 MILLION TO THE BRAZIL – STATE OF BAHIA FOR INTEGRATED STATE HIGHWAY MANAGEMENT PROJECT Public Disclosure Authorized March 27, 2014 Sustainable Development Department Brazil Country Management Unit Latin America and the Caribbean Region Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective January 8, 2014) Currency Unit=Brazilian Real BRL 1.00 = US$ 0.42 US$ 1.00 = BRL2.38 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AADT Average Annual Daily Traffic AGERBA Bahia State regulation agency(Agencia Estadual de Regulação dos Serviços Públicos de Energia, Transportes e Comunicações da Bahia) CAS Country Assistance Strategy CREMA Performance-based Road Rehabilitation and Maintenance Contract (Contratos de Reabilitação e Manutenção) DERBA Bahia Transport Infrastructure Department (Departamento de Infraestrutura de Transportes da Bahia) DPL Development Policy Loan EA Environmental Assessment GDP Gross Domestic Product GERAM DERBA’senvironmental management unit HDM4 Highway Development & Management (Version 4) ICB International Competitive Bidding IL Investment Lending IRR Internal Rate of Return IRI International Roughness Index NCB National Competitive Bidding NPV Net Present Value PCN Project Concept Note PDO Project Development Objective PELTBAHIA Bahia State Transport and Logistics Masterplan (Plano Estadual de Logistica e Transporte) PMS Pavement Management System i PPA Pluri annual budget plan (Plano Pluri-Anual) PPP Public-Private Partnership PREMAR Integrated State Highway Management Project (Projeto de Reabilitação e Manutençãode Rodovias) SIM Sector Investment and Maintenance SEI Superintendence for social and economics studies (Superintendência de Estudos Econômicos e Sociais da Bahia) SEINFRA Bahia Infrastructure Secretariat (Secretaria de Infraestrutura) SEPLAN Bahia Planning Secretariat (Secretaria de Planejamento) SIFRECA Department of Economy, Administration and Sociology of the University of Sao Paulo SUPET Superintendence of transports (Superintendência de Transportes) UCP Project Coordination Unit (Unidade de Coordenação do Projeto) Vice President: Hasan A. Tuluy Country Director: Deborah L. Wetzel Sector Manager: Aurelio Menendez Project Team Leader: Gregoire F. Gauthier ICR Team Leader: Gregoire F. Gauthier ii BRAZIL – STATE OF BAHIA Integrated State Highway Management Project CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Profile 1. Project Context, Development Objectives and Design ............................................... 1 2. Key Factors Affecting Implementation and Outcomes .............................................. 5 3. Assessment of Outcomes .......................................................................................... 11 4. Assessment of Risk to Development Outcome ......................................................... 16 5. Assessment of Bank and Borrower Performance ..................................................... 18 6. Lessons Learned ....................................................................................................... 21 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 23 Annex 1. Project Costs and Financing .......................................................................... 24 Annex 2. Outputs by Component ................................................................................. 26 Annex 3. Economic and Financial Analysis ................................................................. 31 Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 40 Annex 5. Beneficiary Survey Results ........................................................................... 42 iii Annex 6. Stakeholder Workshop Report and Results ................................................... 43 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 44 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 46 Annex 9. List of Supporting Documents ...................................................................... 47 MAP iv A. Basic Information Bahia Integrated State Country: Brazil Project Name: Highway Management Project Project ID: P095460 L/C/TF Number(s): IBRD-74110 ICR Date: 09/27/2013 ICR Type: Core ICR Lending Instrument: SIM Borrower: STATE OF BAHIA Original Total USD 100.00M Disbursed Amount: USD 100.00M Commitment: Revised Amount: USD 100.00M Environmental Category: B Implementing Agencies: SEINFRA, SEPLAN, DERBA, AGERBA Cofinanciers and Other External Partners: / B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 08/18/2005 Effectiveness: 12/06/2007 12/06/2007 09/20/2010 Appraisal: 10/10/2006 Restructuring(s): 04/16/2013 Approval: 11/14/2006 Mid-term Review: 10/26/2009 Closing: 09/30/2013 09/30/2013 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: Moderate Bank Performance: Satisfactory Borrower Performance: Satisfactory v C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory Implementing Quality of Supervision: Satisfactory Satisfactory Agency/Agencies: Overall Bank Overall Borrower Satisfactory Satisfactory Performance: Performance: C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry No None at any time (Yes/No): (QEA): Problem Project at any Quality of Yes None time (Yes/No): Supervision (QSA): DO rating before Moderately Closing/Inactive status: Satisfactory D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) General agriculture, fishing and forestry sector 3 3 Rural and Inter-Urban Roads and Highways 87 87 Sub-national government administration 10 10 Theme Code (as % of total Bank financing) Infrastructure services for private sector development 40 40 Municipal governance and institution building 20 20 Regulation and competition policy 20 20 Trade facilitation and market access 20 20 vi E. Bank Staff Positions At ICR At Approval Vice President: Hasan A. Tuluy Pamela Cox Country Director: Deborah L. Wetzel John Briscoe Sector Manager: Aurelio Menendez Jose Luis Irigoyen Project Team Leader: Gregoire Francois Gauthier Aymeric-Albin Meyer ICR Team Leader: Gregoire Francois Gauthier Virginia Maria Henriquez ICR Primary Author: Fernandez F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The Project's ultimate development objective is to increase effective use of the State road infrastructure, with an aim at stimulating higher economic growth. Revised Project Development Objectives (as approved by original approving authority) (a) PDO Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Indicator 1 : % reduction in average land transport freight rates on selected itineraries (cum.) Value quantitative or 0 6.0 10.8 Qualitative) Date achieved 10/10/2006 9/30/2013 12/31/2011 Target met. On average, from 2006 to 2013, truck transport freight rates on the Project’s Comments sections have been reduced by 10.8%, as measured in 2006 Reais. A specific study was carried out in 2013 to assess the variation of average land transport freight rates on selected Project (incl. % itineraries. Ex-post freight rates per product were surveyed on 10 Project sections. Ex-ante achievement) freight rates, which had not been surveyed upfront, were inferred from: (i) historic data available from the logistics firms surveyed ex-post; (ii) comparison with freight rates evolution surveyed vii on two highway sections (respectively 77 km and 137 km) out of the Project (i.e. not rehabilitated), but with similar i transport demand characteristics as the Project’s sections, but which did not benefit from rehabilitation and maintenance; (iii) information from Sao Paulo university’s SIFRECA database. % increase in use of road transport infrastructure on selected itineraries (as measured in Indicator 2 : veh.-km. increase relatively to 2005 levels ) (cum.) Value quantitative or 0 12.0 66.2 Qualitative) Date achieved 10/10/2006 10/15/2013 10/15/2012 Comments Target met. From 2006 to 2013, the Average Annual Daily Traffic (AADT) on the Project’s sections increased by almost two-thirds. Traffic increase, at an annual average of 9.5%, has been (incl. % much higher than expected. Latest available traffic surveys date back to October 2012; by Project closeout (September 30, 2013), the AADT measurements for 2013 were not yet achievement) available. Indicator 3 : % decrease of average unit vehicle costs on selected itineraries (cum.) Value quantitative or 0 8.0 12.5 Qualitative) Date achieved 10/10/2006 9/30/2013 09/30/2013 Target met. The percentage decrease of vehicle operating costs on Project’s sections Comments has decreased by 12.5% from 2006 to 2013. This indicator was computed using the (incl. % HDM4 model; the ex-ante costs had been