Dociumtof -- TheWorld Bank FOROmCUL USEONLY Public Disclosure Authorized t-'1LCRU :C7Hh COPY R tepNo. P-5529-ANG ki:Xe-.r N.-. V- 55l;::94-A.NU.TIy> : ( i1- ALUVAI'EZ. C/ X;4 31,, J724 3/ AlI:-;1N MEMORANDUMAND RECOMMENDATION OF THE PRESIDENTOF THE INTERNATIONALDEVELOPMENT ASSOCIATION Public Disclosure Authorized TO THE EXECUTIVEDIRECTORS ON A PROPOSED CREDIT OF SDR 28.3 MILLION TO THE PEOPLE'S REPUBLICOF ANGOLA FOR AN Public Disclosure Authorized INFRASTRUCTUREREHABILITATION ENGINEERING PROJECT JUNE 20h 1991 Public Disclosure Authorized This documehatas * resicted ditsibuion and may be and by recpiens only In the peonmne of their oidalues cIotnsts may not oterwie be disclosed witho WorldBank athodzation. CURRENCYEQUIVALENT (as of March 31, 1991) Currency Unit - New Kwanza (NKa) Official Rates USS 1.00 8 NRa 60.0 FISCAL YEAR January 1 - December 31 WEIGHTS AND MEASURES 1 meter (m) 8 3.2808 feet (ft) 1 kilometer (km) a 0.6214 miles (mi) 1 metric ton (tonnes) 8 1.023 short tons GLOSSARY OF ABBREVIATIONS AfDB Q African Development Bank CFBO Benguela Railway Company CFL Luanda Railway Company CPM Mocamedes Railway Company DANIDA = Danish International Development Agency DNA NNational Directorate of Waters DNCF - National Directorate for Railways. MINTEC DNMMP National Directorate for Merchant Marine and Ports, MINTEC DNOE Q National Directorate for Engineering Works, MINCONS DPOE Q Provincial Directorate for Engineering Works DTM 8 Directed Track Maintenance EEC European Economic Community ERAS G National Water and Sanitation Company EPAL 8 Luanda Provincial Water Company ERR Economic Rate of Return ETP 8 Public Transport Company FINIDA - Finnish International Development Agency GOA Q Government of Angola GPL Luanda Provincial Government HDM 8 Highway Design and Maintenance Model ICB International Competitive Bidding INE Angolan National Statistical Institute iNEA Angolan Highway Institute, MINCONS INP - National Institute for Physical Planning, MINPLAN IRI - International Roughness Index LPTS - Luanda Port Transport System MINCONS 8 Ministry of Public Vorks and Urban Developmentl! I/Formerly the Ministry of Construction MINFIN - Ministry of Finance MINPLAN Ministry of Planning MINTEC - Ministry of Transport and Communications - - man-mnorthe Musseques = Human Settlements on the Fringes of Urban Areas N.A. Not Applicable NBHN RNational Basic Highway Network NORAD 8 Norwegian Agency for Development Cooperation NPTS Namibe Port Transport System ODA Overseas Development Administration (U.K.) p.a. = per annum PER - Public Expenditure Review PIP - Priority Igvastment Program PPF - Project Preparation Facility PRE - Economic Recovery Program (1989-1990) SADOC - Southern Africa Development Coordination Conference SATTC 8 Southern Africa Transport and Telecommunications Commission TA a Technical Assistance TEU - Twenty-foot equivalent units TOR TTerms of Reference UICL - Urban Infrastructure of the City of Luanda UNCTAD - United Nations Conference on Trade and Development UNDP - United Nations Development Programme VOC - Vehicle Operating Cost VPD * Vehicles Per Day 10OR0ICIL USE ONLY PEOPLE'S REPUBLIC OF -ANGOL INFRAETRUCTURBREHABILITATION (;0DIBERINGIRE) PROJECT Table of Contents Credit and Project Summary ..... ........... 1 Part I - COUNTRYPOLICIES ANDTBANK GROUP ASSISTANCE STRATEGY 1 Background . a . Economic* Financial and Social Perfonmance . 2 Attemptsat EconomicRefom . .......... 4 Recent Political Developments........ ... ... 6 Central DevelopmentIssues and Prospects . 7 Bank Group Country Assistance Strategy and Operations . 8 artII - THECRDIT . 11 Rationalefor IDA Involvement.. .9..0 e .....* * # . 12 ProjectObjective ................... 12 ProjectD uscription... o . .a .* .$ 12 Project Cost and Tfimetable . 13 Agreemets dt................ 13 Aenefits. 13 Risks . .............. 14 Er.virorntal Aspects .................. 14 Recomendation . .. ........... 14 SCHEDULS A. Summary Project Cost and FinSUcing Plan . 15 B. ProcurementHethods and Disbursements .. 16 C. Timetable of Key Project ProcessingEvents . 18 D. Status of Bank Group Operations in Angola . 19 Thisdocument has a stcd disibution and maybe ued by reipientsonly in theperforMINre of their offial dutie its contentsmay not othrwe be dilosd withoutWodd ank authorization. TECHNICALJNNE TO Tog DllRAMM OP THE . 20 overviewr ....* 21 Detailed Pro,1ect Descrfption A.1. Project Components a. The Namibe Transport System (i) Port of Namibe . 23 (ii) Caminho de Ferro de Mocamedes (CPM) . 29 b. The National Basic Highway Network . 37 c. The Luanda Transport System (M) Port of Luanda . 43 (ii) Caminho de Ferro de Luanda (CFL) . 50 d. Urban Infrastructure (i) Water Supply, Sewerage, Storm Drainage and Solid Wastes Disposal of Luanda . 58 (ii) Land Use Strategy Plan and Musseque Upgrading . 63 A.2 Technical Assistance and Training . 68 A.3 Detailed EstlmatedCostedCoat....... 70 Prolect Administration and ImDleaentation R.1 Procurement and Disbursement Arrangements . * . 72 B.2 Environmental Aspects . ... ... ... .. 75 B.3 Project Execution . 77 B,b fuporvision Plan . ... .. * . .. .. 82 3.5 Implementatio Plan ................. 84 Map IBRD #22945 PEOPLE'S REPUBLIC OF ANGOLA INFRASTRUCTUREREHABILITATION ENGINEERING PROJECT CREDIT AND PROJECT SUMMARY Borrower: People's Republic of Angola Beneficiaries: The Ministry of Planning, the Ministry of Transport and Communications, the Ministry of Public Vorks and Urban Development, the State Secretariat for Energy and Water, and the Luanda Provincial Government. Amount: SDR 28.3 million (USS 37.7 million equivalent) Termst Standard IDA terms, with 35 years maturity Onlendinx Terms: Standard IDA Financing Plans Local Foreign Total a of Total (US&million) Government 4.8 - 4.8 11.3 IDA - 37.7 37.7 88.7 Total 4.8 37.7 42.5 100.0 mm- mm Economic Rate of Return: Not Applicable Staff Appraisal: None Mao: IBRDt 22945 oW tEl ITEAONL DEVELOUDITASSOCIATQON TO TM mEECUTIE DIRCSRS ONA PROPOSEDCREDIT tO ANGOLA _10AAN IMMALUMMUR REULITATIOK ETNINEERIif CREDIT 1. The following memorandum and recommendation on a proposed engineering credit to Angola for SDR 28.3 million (US$ 37.7 million equivalent)is submittedfor approval.The proposedcredit would be on standardIDA terms with 35 years maturity. It would help to financean engineeringtechnical assistance project. Part I of the presentdocument describesthe country'spolicies and the Bank'sassistance strategy. It drawsupon the latestCountry Brief for Angola,which was distributedto the Executive Directors in January1991, as well as an IntroductoryEconomic Review (ReportNo. 7283-ANG)which was distributedto the ExecutiveDirectors in June 1990. Part II describes the credit, the rationalefor IDA involvement,project objectives, agreements reached and the risks of the operation. PAR? I - COUNTRYPOLICIES AND UANRGROUP ASSISTANCE STRA5DGY Backaround 2. Angola,with a populationof about 10 million,growing at an annual rate of about 2.8 perceAt,is one of the richestcountries in Africa in terms of natural resourceendowment (e.g., oil, diamoads, and fertile land). At the same time, its economyis one of the most distortedof the continent.-Since independence in 1975,the countryhas developedan economy highlydependent on incomefrom oil. Availablestatistics on Angolaare poor and shouldbe treatedwith caution. GNP per capita,which is estimatedat US$620in 1989,is closelylinked to oil prices. The oil sectorrepresents abouthalf of the GDP. In 1991,oil exportearnings were aboutUS$3 billion, or aboutUS$300 per capita. The oil industry,developed as an enclave,has grown rapidlysince 1975, and by early 1991, oil productionreached about 460,000barrels per day. By contrast,the non-oilsector's performance has been poor since independence.It is estimatedthat non-oilsector's output growthper capitahas been negativesince the early 1980's. Angola,which was an importantnet exporterof agriculturalproducts before independence, has in recentyears been increasinglydependent on food imports (and food aid) to supplyits urban population.The capacityutilization of existing and the developmentof new manufacturingindustries has been severely affectedby the lack of inputs,spare parts and maintenanceservices, as well as by a distortedpolicy environment. S. The Government'sfailure to revivethe economyafter independence is largelyexplained by three factorsi(i) a fifteen-yearold civil war, which has made much of the countryside too insecure for agricultural production and transport,has required heavy military expenditures (contributingto chronicallylarge fiscal deficits,despite substantial revenuesfrom oil), and has destroyeda substantialpart of the economicand socialinfrastructures (ii) unusually severehbman resource constraints, due -2- to the massive exodus of Portuguesesettlers at independence; and (iii) misguided economic policies which have created a highly distorted system with a formal economy (largely public) managed by administrative controls, and a large parallel economy (mostly private). Ebconomic. Financial and Social Performance 4. Since independence, the Angolan economy has been ravaged by a long and costly civil war and by severe distortions commonly observed in centrally- plannedeconomies. The fall of domesticproduction and agriculturalexports that occurredafter independencewas primarilycaused by the destructionof the country'sstock of human and physical capital, and aggravatedby macroeconomicpolicies which favoredconsumption. In responseto adverse domestic conditionsand external shocks which reduced the country's resources,the Governmentresorted