Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 3098i-!-UY PROJECT APPRAISAL DOCUMENT ON A Public Disclosure Authorized PROPOSED LOAN IN THE AMOUNT OF US$70 MILLION TO THE ORIENTAL REPUBLIC OF URUGUAY FOR A TRANSPORT INFRASTRUCTURE MAINTENANCE AND RURAL ACCESS PROJECT Public Disclosure Authorized APRIL 26,2005 Finance, Private Sector and Infrastructure Department Argentina, Chile, Paraguay and Uruguay Country Management Unit Latin America and Caribbean Regional Office Public Disclosure Authorized 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 (Exchange Rate Effective February 1,2005) Currency Unit = Uruguayan Peso (UYP) UYP24.97 = US$1 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS ADT Average Daily Traffic IDB Inter-American Development Bank Initiative for Regional Infrastructure Integration in ANP National Port Administration IIRSA South America CAF Andean Development Corporation IPTI Institute of Transport and Infrastructure Planning CAS Country Assistance Strategy IRI International Roughness Index CFAA Country Financial Accountability Assessment ISA Intemational Standards of Auditing CND National Development Corporation LAC Latin America and the Caribbean National Commission for the Prevention of Road CNPCAT MDG Millennium Development Goals Accidents CREMA Contract for Rehabilitation and Maintenance MEF Ministry of Economy and Finance cvu National Road Corporation MERCOSUR Southem Cone Common Market DIVD Departmental Road Infrastructure Department MGAP Ministry of Agriculture, Livestock and Fishery DINAMA National EnvironmentalAuthority MMS Maintenance Management System DNH National Directorate of Hidrography MSP Ministry of Public Health DNT National Directorate of Transport MTOP Ministry of Transport and Public Works DNV National Directorate of Highways NCB National Competitive Bidding Organizationfor Economic Cooperation and DRMP Departmental Roads Maintenance Program OECD Development United Nations Economic Commission for Latin ECLAC OPP Planning and Budgeting Office America and the Caribbean EMP Environmental Management Plans PCU Project Coordination Unit ERR Economic Rate of Retum PSP Private Sector Participation FFRAA Special Fund for the Rice Industry PSR Project Status Report FM Financial Management QAT Quality Assurance Team FMR Financial Monitoring Reports RED Road Economic Decision Model FPTP Forest Products Transport Project SAAT Road Accident Information System FTP First Transport Project SDB Bank Standard Documents GOU Govemment of Uruguay SIIF Integrated Financial Management System Highway Design and Maintenance Standards HDM SIPLA Integrated Highway Planning System , Model ICB Intemational Competitive Bidding STP Second Transport Project ICR ImplementationCompletion Report TOCAF Financial and Administrative Control Code Vice President: Pamela Cox Country Director: Axel Van Trotsenburg Sector Director Makhtar Diop Sector Leader Juan Gaviria Sector Manager: JosB Luis Irigoyen Task Team Leader: Jorge Rebelo/Andres Pizarro .. 11 FOR OF'FICLAL USE ONLY URUGUAY UY Transport Infrastructure Maintenance and Rural Access CONTENTS Page A . STRATEGIC CONTEXT AND RATIONALE.............................................................. 1 1. Country and sector issues ................................................................................................ 1 2 . Rationale for Bank involvement .................................................................................... 10 3 . Higher level objectives to which the project contributes ............................................... 10 B. PROJECT DESCRIPTION............................................................................................ 11 4 . Lending instrument ........................................................................................................ 11 5 . Project development objective and key indicators ........................................................ 11 6 . Project components ........................................................................................................ 12 7 . Lessons learned and reflected in the project design ...................................................... 14 8 . Alternatives considered and reasons for rejection ......................................................... 15 C. IMPLEMENTATION ..................................................................................................... 16 9 . Partnership arrangements ............................................................................................... 16 10 . Institutional and implementation arrangements ......................................................... 16 11 . Monitoring and evaluation of outcomes/results ........................................................ 17 12. Sustainability ............................................................................................................. 17 13. Critical risks and possible controversial aspects ....................................................... 18 14. Loadcredit conditions and covenants ....................................................................... 19 D. APPRAISAL SUMMARY .............................................................................................. 20 15 . Economic and financial analyses ............................................................................... 20 16. Technical .................................................................................................................... 21 17. Fiduciary .................................................................................................................... 22 18. Social ......................................................................................................................... 23 19. Environment .............................................................................................................. 23 20. Safeguard policies...................................................................................................... 24 21. Policy Exceptions and Readiness .............................................................................. 25 This document has a restricted distribution and may be used by recipients only in the performance of their official duties . Its contents may not be otherwise'disclosed without World Bank authorization. ... 111 Annex 1: Country Background .................................................................................................. 26 Annex 2: Program Background ................................................................................................. 35 Annex 3: Sector Strategy............................................................................................................. 67 Annex 4: Major Related Projects Financed by the Bank and/or other Agencies ..................73 Annex 5: Results Framework and Monitoring ......................................................................... 74 Annex 6: Detailed Project Description ...................................................................................... 82 Annex 7: Project Costs ................................................................................................................ 91 Annex 8: Implementation Arrangements .................................................................................. 92 Annex 9: Financial Management and Disbursement Arrangements ...................................... 95 Annex 10: Procurement Arrangements ..................................................................................... 98 Annex 11: Economic and Financial Analysis .......................................................................... 105 Annex 12: Safeguard Policy Issues........................................................................................... 117 Annex 13: Project Preparation and Supervision .................................................................... 126 Annex 14: Documents in the Project File ................................................................................ 127 Annex 15: Statement of Loans and Credits............................................................................. 132 Annex 16: Country at a Glance ................................................................................................ 133 Map IBRD No. 33861 iv URUGUAY TRANSPORT INFRASTRUCTURE MAINTENANCE AND RURAL ACCESS PROJECT APPRAISAL DOCUMENT LATIN AMERICA AND CARIBBEAN LCSFT Date: April 26, 2005 Team Leader: Jorge M. Rebelo/Andres Pizarro Country Director: Axel van Trotsenburg Sectors: Roads and highways (60%); Sub-national Sector Manager: Jose Luis Irigoyen government administration (15%); Ports, waterways and shipping (15%); Central government administration (10%) Themes: Rural services and infrastructure (P);Trade facilitation and market access (S);Infrastructure services for private sector development (S);Small and medium enterprise support (S);Other rural development (S) Project ID: PO57481 Environmental screening category: Not Required 1 Lending Instrument: Specific Investment Loan Safeguard screening category: B [XI Loan [ ]Credit [ ]Grant [ ]Guarantee [ ] Other: For Loans/Credits/Others: Total Bank financing (US$m.): 70.00 RECONSTRUCTION AND DEVELOPMENT Total: 53.40 46.60 100.00 Borrower: Ministerio de Econom'a y Finanzas Colonia 1089, Piso 3, 11