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AFRICAN DEVELOPMENT FUND
LESOTHO
KHAMANE – OXBOW ROAD PROJECT
PROJECT COMPLETION REPORT
COUNTRY DEPARTMENT OCDSSOUTH REGION JULY 1998
TABLE OF CONTENTS
PageExecutive Summary ii - iiiProject Basic Data iv - viProject Log-frame vii
1. INTRODUCTION 1
2. PROJECT OBJECTIVE AND FORMULATION 2
2.1 Project Objectives 22.2 Project Components and Design 2
3. PROJECT EXECUTION 2
3.1 Effectiveness and Start-up 23.2 Modifications 23.3 Implementation Schedule 33.4 Procurement 33.5 Reporting 43.6 Project Costs and Financing Sources 43.7 Disbursements 53.8 Performance of the Contractor and Consultant 63.9 Performance of the Executing Agency 6
4. PROJECT PERFORMANCE 7
4.1 Overall Assessment 74.2 Operating Performance Results 74.3 Management and organisation Effectiveness 84.4 Staff Recruitment, Training and Development 94.5 Economic Performance 9
5. SOCIAL AND ENVIRONMENTAL RESULTS 11
5.1 Social Impact 115.2 Environmental Impact 11
6. SUSTAINBILITY 11
7. PERFORMANCE OF THE BANK AND THE BORROWER 12
7.1 Performance of the Bank 127.2 Performance of the Borrower 12
8. CONCLUSIONS AND LESSONS AND RECOMMENDATIONS 13
8.1 Conclusions 138.2 Lessons learnt 138.3 Recommendations 14
LIST OF ANNEXES
Annex No. Title No. of Pages
1. Projects Financed by the Bank Group in Transport Sector 12. Project Location Map 13. List of Documents Consulted 14. Loan Conditions 15. Implementation Schedule – Appraisal versus Actual 16. Details of Disbursements 17. Performance Rating Scale 18. Organisation Chart of Roads Branch, Ministry of Works 19. Vehicle Operating Costs and Updated Traffic Forecast 110. Re-calculation of Economic Internal Rate of Return 1
_________________________________________________________________
This report was prepared by Messrs. K.S.H.Rao, Transport Economist (ext.4379) andS.B.Turay, Transport Engineer (ext.5979), OCDS.4 following their mission to Lesothofrom 27th April – 12th May 1998.
The Division Manager in charge is: Mr. G.Giorgis, Manager, OCDS.4 (ext.4121).
i
CURRENCY EQUIVALENTS
1UA = 2.71293 Maloti 4th Quarter 1985 (Appraisal)1UA = 2.61434 Maloti 3rd Quarter 1987 (Commencement of Works)1UA = 3.79831 Maloti 3rd Quarter 1991 (Completion of Works)
WEIGHTS AND MEASURES
1 metric ton (t) = 2,205 lbs1 kilogram (kg) = 2.205 lbs1 metre (m) = 3.281 ft1 foot (ft) = 0.305 m1 kilometre (km) = 0.621 mile1 mile = 1.609 km1 square km (km2) = 0.386 square mile1 hectare (ha) = 0.01 km2
FINANCIAL YEAR : 1st April – 31st March
ABBREVIATIONS
AB = Architect BranchADB = African Development BankADF = African Development FundADT = Average Daily TrafficBADEA = Arab Bank for Economic Development in AfricaCRE = Chief Roads EngineerCWS = Civil Works SectionDCF = Discounted Cash FlowEIRR = Economic Internal Rate of ReturnGDP = Gross Domestic ProductGOL = Government of LesothoICB = International Competitive BiddingIDA = International Development AssociationLCU = Labour Construction UnitLNTS = Lesotho National Transport StudyMHA = Ministry of Home AffairsMOF = Ministry of FinanceMOTC = Ministry of Transport, Posts and CommunicationsMOW = Ministry of WorksOPEC = Organisation of Petroleum Exporting CountriesPIA = Project Influence AreaPMMS = Pavement Maintenance and Management SystemRB = Roads BranchRF = Road FundRRMP = Road Rehabilitation and Maintenance ProjectVOC = Vehicle Operating CostVPD = Vehicles per Day
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LESOTHOProject Completion Report – Khamane-Oxbow Road project
Executive Summary
1. The main objective of the Khamane-Oxbow Road Project was to upgrade theexisting gravel road to bitumen standard with a view to providing a safe, faster andall-weather road from one end of the foothills (i.e. Khamane) to the other end (i.e.Oxbow) through the Moteng Pass. The project was jointly financed by the AfricanDevelopment Bank and the Government of Lesotho (GOL). The project consisted of:a) civil works for upgrading the existing two lane gravel surface road from Khamaneto Oxbow (22 km) to bitumen standard with 5.5 metre wide carriageway and 1.25metre shoulders on each side including drainage structures and ancillary works; and b)consultancy services for the supervision of construction works.
2. The substantial completion for the project was achieved in July 1990, about 17months behind the appraisal schedule. All environmental protection measures wereundertaken during the implementation of the project. Major delay (about 11 months)occurred during construction which was mainly attributable to: i) disorganised andslow mobilisation of the contractor, ii) adverse weather conditions and iii) adoption ofmodified pavement design.
3. At appraisal, the total cost of the project (net of taxes) was estimated at UA7.139 million, of which ADF was to contribute UA 6.42 million (90%) and thebalance UA 0.719 million (10%) from the GOL. The actual cost of the project atcompletion including estimated payments for contractor’s unresolved claims, was UA8.661 million, which exceeded the appraisal estimate by about 20%. Of the actualcost, ADF contribution was 65% and that GOL was 35%. One major reason for thechange in the funding proportions was cancellation of loan balance of UA 0.82million before the contractor’s claims could be resolved. In fact, even at the time ofPCR the claims issue is still to be settled. Before resorting to the extreme measure ofcancelling the loan balance, the Bank took all possible steps to facilitate claimssettlement.
4. The procurement of supervision consultant and contractor was as per theBank’s rules and procedures. Submission of monthly and quarterly progress reportswas regular.
5. The only deviation from the original project formulation i.e. adoption ofmodified pavement design, was found to be appropriate. Taking into account factorssuch as time and cost, compliance with contract conditions, adequacy of supervisionand reporting, the overall project performance has been assessed as satisfactory on arating scale ranging from highly satisfactory to highly unsatisfactory. While theperformances of the borrower, executing agency, contractor and the Bank have beenrated satisfactory, that of the supervision consultant was found to be unsatisfactory.
6. The Khamane-Oxbow road section, as a whole, has behaved reasonably wellwithout major problems even 7 years after completion of works. Annual roadmaintenance operations are being undertaken on a regular basis since the road isopened to traffic. The actual traffic materialisation was, however, about 20% of the
iiiappraisal expectations. The appraisal estimates turned out to be too optimistic. Mainreasons underlying such a low traffic materialisation are: a) observed traffic growthof 4% per year was much below the projected rates of 7% and 10% and b) thedevelopments anticipated in the project influence area have not fully materialised.
7. Taking into account the actual project costs and revised project benefits in linewith the updated traffic forecasts, the economic internal rate of return (EIRR) for theproject has been worked out as 6.20%, which is much lower than the appraisal EIRRof 16.97%. This situation is mainly attributable to rather highly optimistic trafficgrowth scenario envisaged at appraisal. In other words, the investment is not justifiedbased on the quantifiable economic benefits. Notwithstanding this, the developmentalnature and social desirability of the project need not be overemphasised. Further, thetraffic level is expected to increase when the contiguous Oxbow-Mokhotlong road isfully open to traffic. In such a case, the present EIRR of 6.20% is likely to improve.
8. Lessons learnt from the project execution are as under:
The original pavement design was not suitable for the roads, like theproject road, traversing the mountainous region where wet conditions areprevalent due to heavy rainfall and snowfall. This is also evident from theon-going Oxbow-Mokhotlong Road project. The key lesson emanating thisis that for future projects care should be taken by the consultant toformulate pavement design taking into account the physical features andspecific requirements of the project area.
A major problem encountered along the project road is unstable cut slopes,particularly along the Moteng Pass. This has resulted in constant slips androck falls. Although a permanent maintenance crew is in place at thefoothills of the pass to clear the rock falls; it is recommended that a studybe undertaken by the Government of Lesotho to find a way of stabilisingthe slopes. This experience would be useful for future projects in similarmountainous areas.
The appraisal traffic forecasts turned out to be too optimistic in terms ofbase year traffic estimates as well as growth rates. In fact, the level ofactual traffic on the project road is about 20% of the appraisal estimate.This low level of traffic materialisation brought down the appraisal EIRRfrom 16.97% to 6.20%. To obviate such a situation, the appraisal missionshould undertake a comprehensive review of the existing and anticipatedtraffic levels and prepare traffic projections under three scenarios viz.pessimistic, moderate and optimistic. The project appraisal should,however, be based on moderate traffic scenario.
iv
BASIC PROJECT DATA
1. Country : Lesotho2. Project : Khamane-Oxbow Road Project3. Loan number : CS/LES/TR/86/184. Borrower : Government of Lesotho5. Beneficiary : Government of Lesotho6. Executing Agency : Ministry of Works, Roads Branch
A. Loan details Appraisal Actual
1. ADF Loan Amount(UA) : 6.42 million 5.60 million2. Interest Rate : Nil Nil3. Service Charge : 0.75% 0.75%4. Repayment Period : 40 years 40 years5. Grace Period : 10 years 10 years6. Loan Negotiation Date : March 1986 April 19867. Loan Approval Date : April 1986 18-06-19868. Loan Signature Date : July 1986 16-07-19869. Date of Entry into Force : August 1986 07-04-1987
B. Project Data1. Project Cost
Item of CostUA in million
Appraisal Estimate ActualForeign Exchange Component 5.711 5.600Local Cost Component 1.428 3.061Total Cost 7.139 8.661
2. Source of Finance
Source ofFinance
UA in millionAppraisal Estimate Actual
F.E. L.C. Total % F.E. L.C. Total %ADF 5.711 0.714 6.425 90 5.600 - 5.600 65
GOL - 0.714 0.714 10 - 3.061 3.061 35Total 5.711 1.428 7.139 100 5.600 3.061 8.661 100
Appraisal Actual3. Effective Date of First Disbursement : 30-06-1987 25-06-19874. Effective date of Last Disbursement : 31-12-1991 31-12-19945. Commencement of Project : Feb.1987 15-08-19876. Completion of Project : Feb.1989 09-07-1990
C. Performance Indicators:
1. Cost Overrun : UA 1.522 million2. Time Overrun : 17 months Slippage on Effectiveness (%) : 30% Slippage on Completion Date (%) : 46% Slippage on Last Disbursement (%) : 39% Number of Extensions of Loan Validity Period : One, by 30 months
v
3. Project Implementation Status : Completed
4. List of Verifiable Indicators and Levels of Achievement
Evaluation CriterionScore
Maximum Actual1. Time Overrun2. Cost Overrun3. Adherence to Contractual Conditions4. Adequacy of Supervision and Reports5. Operational Performance
Total Score
4444420
23313
12
Implementation Performance : 12 5 = 2.4 (Satisfactory)Institutional Performance : SatisfactoryContractor’s Performance : SatisfactoryConsultant’s performance : Not satisfactory
5. Economic Internal Rate of Return (EIRR)Appraisal : 16.97%Actual : 6.20%
D. Missions
TypeNumber of
PersonsComposition Man-
days1.Identification n/a n/a n/a2.Preparation n/a n/a n/a3.Appraisal 2 Tpt. Economist and Civil Engineer 284.Follow up/Launching 1 Loans Officer 156.Supervision (3) 1 Transport Engineer 42
7.PCR/Supervision 2 Tpt. Economist and Tpt. Engineer 30
E. ADF Loan – Bank Disbursements (UA Million)
Item/Year Appraisal Estimate Actual %19871988198919901991199219931994
3.1093.1090.207
0.5371.6780.8792.1140.3370.0120.0000.043
17.2053.75418.57
Total Disbursed 6.425 5.600 87.16Undisbursed Balance 0.825Amount Cancelled 0.825
F. Contractor1. Name : Stirling Intl./Skanska (Joint venture)2. Date of Signature of Contract : 29-07-19873. Responsibility : Execution of Construction Works4. Date of Commencement : 15-08-1987
vi5. Date of Completion : 09-07-19906. Duration of Contract : 35 months7. Amount of Contract : M 17,591,735 (including a provision of M
2,000,000 for settling contractor’s claims)
G. Consultants1. Name : Roughton & Partners (UK)2. Date of Signature of Contract : 27-04-19873. Contract Description : Pre-contract & Supervision Services4. Date Contract Terminated : Dec. 19915. Contract Duration : 56 months6. Contract Amount : M 366,415 and £ 398,793
vii
LESOTHO: Khamane-Oxbow Road Project - Retrospective MPDE Matrix
PCR Team: K.S.H. Rao / S.B.Turay, OCDS.4
Narrative Summary (NS) Verifiable Indicators (VI)Means of Verification
(MOV)Important
Assumptions
Goal:
1. To improve the road network in themajor industrial and commercial centresin western low lands and to provideadequate road links to and in the easternmountains to stimulate further economicdevelopment in the former and to fullyexploit the potential of the latter.
1.1 Increase in the total length ofrehabilitated/ bituminized rural roads inthe country.
1.2 Overall growth in traffic.
1.3 Improved socio-economic welfarein the project area.
1.1 Annual road constructionstatistics from Roads Branch, MOW.
1.2 Annual traffic data.
1.3 National Income Statistics
(Goal to Supergoal)
1.1 Adequate GovernmentCommitment.
Project Objective:
1. To upgrade the existing gravel roadbetween Khamane and Oxbow tobitumen standard in order to providesafer and less costly transport services.
1.1 Reduction in VOC when the roadwas open to traffic in 1990.
1.2 Growth in traffic1.3 Maintenance Budgets.
1.1 Updated EIRR indicates a rate of6.20.%.
1.2 Traffic: ADT in 1991 was 71;18% of appraisal estimate
(Project Objective toGoal)
1.1 Ability of GOL toprovide adequate financialresources for carrying outmaintenance workseffectively.1.2 Availability of technicaland managerial staff.
Outputs:
1. Completely rehabilitated roadbetween Khamane and Oxbow (22km)
1.1 Actual length of completed road. 1.1 Progress Reports from theBorrower and ADB supervisionmissions.
1.2 Project Completion Reports(PCR).
(Output to ProjectObjective)
1.1 Project completed withcost over run (UA 1.51million) and time over run(17 months. Further, claimsdispute with contractor to beresolved.1.2 Budget for the projectand maintenance provided.
Activities/Components:
1.1 Procurement of consultancyservices for design review andsupervision.
1.2 Procurement of contractor forcarrying out road upgrading works.
1.3 Actual upgrading of the projectroad.
Inputs/ Resources:
Appraisal Cost Estimates(UA million)
Category F.E L.C. TotalWorks 4.13 0.77 4.90Supervision 0.25 0.05 0.30Contingency 1.33 0.61 1.94Total 5.71 1.43 7. 14
Appraisal Financing Plan(UA million)
Source F.E. L.C. TotalADF 5.71 0.71 6.42GOL - 0.72 0.72Total 5.71 1.43 7.14
Actual Project Costs(UA million)
Category F.E L.C. TotalWorks 5.11 2.95 8.06Supervision 0.49 0.11 0.60Total 5.60 3.06 8.66
Actual Financing Plan(UA million)
Source F.E. L.C. TotalADF 5.60 - 5.60GOL - 3.06 3.06Total 5.60 3.06 8.66
(Activity to Output)
Loan balance of UA 0.82million cancelled.
Note: Any inconsistencies in the above matrix may be explained by the fact that the original project design was not based on the MPDEMatrix approach, and the matrix has been formulated in retrospect.
1
1. INTRODUCTION
1.1 The Kingdom of Lesotho is a landlocked country surrounded by the Republicof South Africa (RSA). The land area of the country is about 30,350 km2. The eastern part ofthe country is largely mountainous comprising about 75% of the total land area where peakscan be as high as 3,480 metres above the sea level. Lesotho has a temperate type of climate.Snowfall occurs in some of the high mountains during winter. Rainfall is fairly welldistributed through out the country, most of it during the summer i.e. from October to April.
1.2 Of the country’s total estimated population of 1.9 million (1996 estimate), nearly 70%live in the lowlands around Maseru, the capital city. The major constituents of Lesotho’snational income basket are agriculture, light manufacturing and remittances from Basothoworkers in South Africa; the share of these remittance in the domestic income being as highas 45%. In recent years, the Gross Domestic Product (GDP) has registered an impressiveaverage growth of 13.5% per year.
1.3 In the decade that followed Lesotho’s independence in 1965, the major thrust of theGovernment’s transport strategy was on providing adequate road network linking the mainpopulation and production centres situated along the north-south lowland corridor on thewestern border. Besides continuing with this policy, the Government of Lesotho (GOL)began to extend the road network to eastern mountainous areas with a view to fully developits economic potential as well as to facilitate its social and political integration with the rest ofthe country.
1.4 Since the first loan approved in 1975, the Bank’s total commitments in the transportsector in Lesotho have aggregated to UA 77.12 million, spanning over twelve operationscomprising ten projects and two studies (Annex 1). Except for Oxbow-Mokhotlong Roadconstruction and the Institutional Support to the Transport Sector, all the other operationshave been completed. The Oxbow-Mokhotlong road project is being co-financed with KuwaitFund, BADEA and OPEC fund.
1.5 This project was identified in the Lesotho Transportation Study, 1980, as a section of theLeribe-Khamane-Mokhotlong Road and was recommended for construction in three phases.The first two phases, financed by African Development Bank (ADB) covered theconstruction to bitumen standard of Leribe-Butha Buthe-Joel’s Drift-Khamane sections.These have been successfully completed. The Khamane-Oxbow road formed the third phase.
1.6 The Khamane-Oxbow Road forms a vital link in the northern perimeter trunk roadconnecting Maseru, the capital city, with Mokhotlong in the east. The current project extendsthe country’s primary northern trunk road network to Oxbow beyond Moteng Pass, by far themost hazardous section of the road network in the country. Though the project road falls inButha Buthe district, its area of influence extends much beyond up to Mokhotlong as shownin Annex 2.
1.7 Based on the recommendations of the economic viability and detailed engineering studiesfinanced by the ADB under technical assistance fund (T.A.F), the GOL approached the Bankfor assistance to implement the project. Subsequent to the Bank’s appraisal in January 1986and loan negotiations with the Government of Lesotho in April 1986, an AfricanDevelopment Fund (ADF) loan of UA 6.42 million was approved in June 1986.
21.8 This Project Completion Report (PCR) is based on the data and information collectedby a mission which visited Lesotho in April-May 1998. The sources of information anddocuments referred are listed in Annex 3.
2. PROJECT OBJECTIVE AND FORMULATION
2.1 Project Objective
The objective of the sector was to improve and upgrade the primary road network thattraverses the extremely difficult terrain regions of the north-eastern part of the country. Theobjective of the present project was to upgrade Khamane-Oxbow road section to bitumenstandard to provide safe, serviceable all weather access from one end of the foothills (i.e.Khamane) to the other end (i.e. Oxbow) through the Moteng Pass section.
2.2 Project Components and Design
The project as designed and implemented consisted of: a) upgrading of the existingtwo lane gravel surface road from Khamane to Oxbow, a distance of about 22 km to bitumenstandard with 5.5 metre wide carriageway and 1.25 metre shoulders on each side includingdrainage structures and ancillary works through the Moteng Pass; and b) consultancy servicesfor the supervision of construction works.
3. PROJECT EXECUTION
3.1 Effectiveness and Start-up
After approval of the loan in June 1986, it took nearly nine months for the GOL tofulfil all the five conditions precedent to entry into force and the loan was declared effectivein April 1987. These conditions are given in Annex 4. The main reason for the delay wasslow communications between the concerned ministries of the GOL, which, as per theexecuting agency, was difficult to improve.
3.2 Modifications
3.2.1 Though there was no change in the project scope per se, the project design, especiallythe pavement design, had to be changed during implementation for most part of the roadsection due to practical constraints. The design in the appraisal report specified two types ofpavement: Type A consists of selected sub-grade (SSG), natural gravel stone sub-base andcrushed stone base course; and Type B consists of SSG, crushed stone sub-base and crushedstone base course. The latter type pavement was designed for those areas where frostpenetration was expected to be the worst. However, due to incessant rainfall from km 4.00up to the end of the project road the SSG and sub-base were replaced by a 500 mm crushedstone blanket. The contractor suggested this change of design and the consultant accepted andguaranteed its effectiveness and safety.
3.2.2 The changes outlined above are of technical nature and were effected throughvariation orders in accordance with provisions existing in the contract. The main items thatcontributed to the cost increase were: use of crushed stone blanket, claims for delays withcosts and failure to get suitable natural construction material within a reasonable free hauldistance.
33.3 Implementation Schedule
3.3.1 The project start up was six months behind the schedule as envisaged at appraisal.This delay could not be made up during the procurement of supervision consultant and civilworks contractor. However, the major delay in the project implementation was during theconstruction phase that spanned over 35 months compared to 24 months estimated atappraisal. The one-year defect liability period was from July 1990 to July 1991. Major factorsthat contributed to the delay during construction were:
a) Prolonged consultations with the selected contractor and consultantbefore the award of the contracts;
b) Disorganised and slow mobilisation of the contractor;
c) Adverse weather conditions (abnormal rainfall); and
d) Adoption of modified pavement design.
3.3.2 The consultancy contract was for construction supervision and post contract servicescovering rectification of defects during the maintenance period as well as preparation of finalaccounts and reports. The consultancy contract ended in December 1991 compared to theappraisal estimate of February 1990. The overall time overrun in the implementation of theproject was 17 months.
3.3.3 The appraisal and actual implementation schedules for the project are as under andalso depicted in Annex 5.
Activity Appraisal Timing Actual Timing
Consultant Appointed September 1986 April 1987Contractor Pre-qualified July 1986 November 1987Tenders Evaluated December 1986 April 1987Contract Awarded January 1987 July 1987Works Commenced February 1987 August 1987Works Completed February 1989 July 1990Maintenance Completed February 1990 July 1991Supervision Completed February 1990 December 1991
3.3.4 The total time overrun of 17 months in the project implementation was made up of: 4months at start-up/launching stage including procurement of supervision consultancy; 2months during the tender evaluation/procurement approval process for the contractor; and 11months during the actual construction phase.
3.4 Procurement
The goods and services required for the project were procured in accordance with theBank’s Rules. The works contract was procured on the basis of International CompetitiveBidding (ICB) following pre-qualification of contractors. The consultant was selectedthrough a short-list of selected firms, in accordance with the ADB/ADF Guidelines for theuse of Consultants. The contract award process for different components was as under:
i) Construction Supervision Consultant: After short-listing, request forproposal (RFP) was issued in June 1986. The responses to the proposals werereceived from six firms in August 1986. These were evaluated in September1986 and ADF approval obtained in December 1986. Negotiations were held
4with the lowest evaluated bidder in January 1987 and contract awarded to thelowest evaluated bidder, namely M/s Roughton & Partners in April 1987.Though the contract was formally awarded in April 1987, the consultantactually started working from January 1987 so as to enable the consultant toperform pre-construction services.
ii) Construction Contractor: Subsequent to pre-qualification, call fortenders was issued in November 1986. Tenders were opened in February 1987and evaluation report prepared in March 1987. After obtaining ADB’sapproval in April 1987, the contract was awarded to the lowest evaluatedbidder, namely Stirling International/Skanska (Joint Venture) in July 1987.
3.5 Reporting
3.5.1 As required in the general conditions of the Loan Agreement, the GOL prepared andsubmitted quarterly progress reports. Their content in terms of keeping the Bank continuallyinformed of the progress on the project was satisfactory.
3.5.2 The GOL has not submitted annual audit reports for this project. This has been acommon deficiency in the past affecting many Bank funded road projects in Lesotho. Thisproblem is being addressed by the inclusion of an audit component on new projects whereconsidered necessary.
3.6 Project Costs and Financing Sources
3.6.1 At appraisal, the total cost of the project (net of taxes) was estimated at UA 7.139million. The project was financed by ADF and GOL. The actual cost of the project atcompletion including estimated payments for contractor’s unresolved claims, was UA 8.661million, which exceeded the appraisal estimate by about 20%. More specifically, the cost ofsupervision consultancy has increased from the contract price of £ 289,803 and Maloti236,869 to £ 398,793.05 and Maloti 366,415.42 at the time of completion. As against thecontract price of Maloti 12,995,000, the cost of civil works, depending on the settlement ofthe contractor’s claims, would range between M 15,591,735 and M 17,591,735. Variousfactors that contributed to the increase in project cost are listed in para 3.2.2.
3.6.2 As per the financing plan at appraisal, the ADF was to contribute UA 6.42 millionrepresenting 90% of project cost consisting of 100% of the foreign exchange costs and 50%of local currency costs. The GOL was to provide the balance funds constituting 10% of theproject cost or 50% of local costs. Of the actual project cost, ADF component was UA 5.60million and the GOL’s contribution was UA 3.061million, which included a cost overrun ofUA 1.522 million. As a result, the GOL funded 35% of the actual project cost as against theappraisal estimate of 10%.
3.6.3 One major factor which contributed to this change in funding proportions wascancellation of loan balance of UA 0.82 million before the contractor’s claims could beresolved. Before resorting to the extreme measure of cancelling of loan balance, the Banktook all possible steps to facilitate claims settlement. To this end, during August 1994 theBank extended the deadline for last disbursement from 16-07-1993 to 31-12-1995. Further,the issue of cancellation of loan balance was discussed with the GOL during Lesotho CountryPortfolio Review meeting held on 08-12-1994. During this meeting, the GOL agreed tosubmit the final claims by 31-03-1995 after which the outstanding balance would be
5cancelled. The GOL, however, could not resolve the issue even by November 1995, in spiteof guidance and regular follow up from the Bank. In the light of the above, a 3-monthcancellation notice was issued to the GOL in November 1995 and the balance was cancelledafter the expiry of the notice period. Table 3.1 gives the project cost estimates as at appraisalversus the actual. A comparison of actual financing and that anticipated at appraisal ispresented in Table 3.2. Actual disbursements by ADF and GOL are given in Annex 6.
Table 3.1: Summary of Project Costs (Appraisal vs. Actual)(UA million)
CategoryAppraisal Estimate Actual
F.E. L.C. Total F.E. L.C. Total
1. Construction2. Supervision3. Contingencies
4.1370.2481.326
0.7760.0460.606
4.9130.2941.932
5.1050.495
-
2.9480.113
-
8.0530.608
-Total 5.711 1.428 7.139 5.600 3.061 8.661
Table 3.2: Sources of Finance (Appraisal vs. Actual)(UA million)
SourceAppraisal Estimate Actual
F.E. L.C. Total Share(%)
F.E. L.C. Total Share(%)
1. ADF2. GOL
5.711-
0.7140.714
6.4250.714
9010
5.600-
-3.061
5.6003.061
6535
Total 5.711 1.428 7.139 100 5.600 3.061 8.661 100
3.7 Disbursements
The slippage in actual disbursement is broadly in line with the delay in projectimplementation. The ADF loan amount, as at appraisal, was to be fully disbursed during 1987– 1989. However, the actual disbursements were spread over eight years (1987 – 1994). Acomparison of anticipated and actual disbursements is presented in Table 3.3. Though theactual disbursements are spread over 8 years, more than 80% was disbursed within the firstfour years.
Table 3.3: Loan Disbursement Profile
Year
Disbursement (UA million)
As at Appraisal ActualAmountDisbursed
Cum. % of ActualDisbursement to
Amount Cum.%
NetLoan
Loan atAppraisal
19871988198919901991199219931994
3.1093.1090.207
48.3996.78
100.00
0.5371.7270.8302.1140.3370.012
-0.043
9.5940.4355.2593.0099.0299.2399.23
100.00
8.3635.2748.2081.1386.3886.5786.5787.24
Total 6.425 100.00 5.600 100.00 87.24
63.8 Performance of the Contractor and Consultant
Contractor
3.8.1 The performance of the contractor was satisfactory during the construction period.However, due to abnormal weather conditions (i.e., heavy rainfall) which retarded progress ofthe crucial phase of construction (i.e., bulk earthworks), completion of works was delayed byabout one year. Because of wet conditions that were initially encountered, the contractorcould not work on the selected sub-grade (SSG) material. An alternative design suggested bythe contractor and approved by the consultant was adopted (refer para 3.2.1). The contractor,however, sought claims for the new design as well as the initial delays experienced with theoriginal design. The PCR mission inspected the road with the modified design and found it ina reasonably good condition.
3.8.2 According to the Borrower and a visit by the Bank’s mission, the contractorperformed well on the project, and the quality of work met the requirements of thespecification. The road construction and the finished pavement were good and the road is stillin a good condition, seven years after construction. Contact between the contractor and theexecuting agency i.e. Roads Branch (RB) of the Ministry of Works (MOW) was, however,not that frequent except for monthly site meetings. Towards the end of projectimplementation, the contractor and the RB adopted a confrontational attitude towards eachother on the resolution of outstanding claims which are yet to be resolved. On the whole, thecontractor can be judged as having performed the civil works satisfactorily.
Consultant
3.8.3 The consultant was responsible for pre-contract services and supervising theconstruction works. His performance was not considered satisfactory due to the followingreasons. First, the consultant could not come up with an alternative design when heavy rainscaused a serious problem. The contractor instead came up with a solution and hencesubmitted excessive claims to the project. Secondly, the specified variable cut slopes for theproject road proved to be too steep and this has led to a number of land-slips and rock falls,which are prevalent even today. Clearing of fallen rocks and landslips is at present a majormaintenance effort on and around the Moteng Pass and has to be carried out frequentlyduring the rainy season.
3.8.4 The relationship between the consultant and the contractor left much to be desired andcould have been responsible for most of the claims brought up by the contractor. The projectnot only attracted delays but also ended up with substantial claims, some of which could havebeen amicably resolved or avoided during the life of the project. The consultant’s overallperformance can therefore be judged as unsatisfactory.
3.9 Performance of the Executing Agency
The RB as the Executing Agency (EA) was responsible for i) ensuring fulfilment ofloan conditions by the Government, ii) overseeing the implementation of the project, iii)disbursement of funds for payment of contractor and consultant, iv) progress reporting to theGOL and the Bank, and v) liaison with the Bank on technical issues concerning the project.The performance of the EA in accomplishing the above tasks was satisfactory. This wasmade possible because the EA assigned a senior engineer as the project co-ordinator.
7Generally, timely submission for payment of certificates was made to the Bank through theMinistry of Finance. At times, inadequate documentary evidence of expenditure causedproblems. Efforts were however made by the executing agency to minimise such delays. TheEA’s relationship with the Bank, consultant and contractor was good.
4. PROJECT PERFORMANCE
4.1 Overall Assessment
4.1.1 The project objective of upgrading the gravel road between Khamane and Oxbow tobitumen standard was successfully achieved. Because of this improvement the onceformidable climb from Khamane to Oxbow through Moteng Pass is now relatively easy tomake. The gradients of this road are still one of the highest in the country. However, nothingshort of a tunnel could reduce these gradients any further. To show the success of this project,three years after completion of this project, a contract for the construction of the road fromOxbow to Mokhotlong was awarded. This contract is scheduled for completion towards themiddle of 1998. However, the road is already open to traffic. Travel time between Khamane –Oxbow – Mokhotlong that used to be 5 hours is now reduced to 3 hours. A close inspectionof the road by the PCR mission revealed that the road is still in a very good condition after 7years since construction. The road is now due for an overlay during the fiscal year 1998/99 inorder to further increase its design life. However, the actual realisation of the project benefitswill depend on the extent of traffic materialisation during the design life of the project (seesection 4.2).
4.1.2 Taking into consideration such factors as project start-up, implementation time, actualcost, timely compliance with contractual conditions, adequacy and effectiveness ofsupervision and reporting, the project implementation has been assessed as satisfactory, on arating scale ranging from highly satisfactory to highly unsatisfactory (Annex 7).
4.2 Operating Performance Results
4.2.1 The design as modified during the implementation phase so as to overcome theadverse weather conditions, was able to meet the project objective of providing a safe, fasterand all weather bitumen road between Khamane and Oxbow. The actual traffic levels sinceopening of the upgraded road in juxtaposition with the appraisal expectations are as under.
4.2.2 The Roads Branch of the Ministry of Works carries out bi-annual traffic counts for aperiod of one week each time at about 100 selected locations. The traffic is normally dividedinto five categories, namely light vehicles, mini-buses, buses, 2 axle trucks (MGV) and 3 axletrucks (HGV). The project road was opened to traffic in 1990. The road forms a part of theannual traffic counts by the RB. A comparison of the actual and projected traffic on theproject road is given in Table 4.1.
8Table 4.1 Actual and Projected Traffic on the Project Road
(Vehicles/Day)Year Estimated at
Appraisal (1)Actual*
(2)(2) as a
percentageof (1)
19851986198819891990199119921993199419951998
185200219328357389426469516564744
574864
1504271625392
141116
3124294612181511182516
* Details for 1987, 1996 and 1997 are not availableSource: Appraisal Report, March 1986, and Roads Branch Annual Traffic
Counts
4.2.3 All through the comparison period (1985 to 1998), the actual traffic was, on theaverage, 20% of the appraisal projections; the range being 11% (1993) to 46% (1989). Theappraisal expectations turned out to be too optimistic. In fact, the estimated traffic levels asper the consultant’s Economic Analysis Report (August 1985) were 57 vehicles per day (vpd)in 1985 and expected to increase to 106 vpd in 1990; 210 vpd in 1995; 274 vpd in 2000 and441 in 2005. These anticipations are more close to the actual traffic. The major differencebetween the appraisal traffic estimates and the ones given in the consultant’s report is thebase year (1985) traffic figures. In the appraisal report, the base year traffic was taken as 185vpd, whereas the consultant’s estimate was 57 vpd. While the consultant’s estimate wasbased on 7-day traffic survey conducted in February 1985, the source of the appraisalestimate is not clear. The base year traffic figure of 57 vpd seems realistic and is alsocorroborated by the traffic estimates on the contiguous sections of Oxbow-Mokhotlong Road(an ADF funded project approved in January 1988). Two more factors that contributed tolower level of actual traffic on the project road could be: (a) the observed traffic growth wasmuch below the projected rates of 7% and 10% and (b) the developments anticipated in thePIA have not fully materialised. Even though the actual traffic profile reveals an increasingtime trend - about 4% per year based on overall average annual increase - a definite growthpattern is not discernible due to wide year-to-year fluctuations.
4.3 Management and Organisation Effectiveness
4.3.1 The Ministry of Works (MOW) through the Roads Branch was responsible forimplementation of the project. All the financial and budgetary matters related to the projectwere handled by and through the accounts section of the Ministry of Works. The MOW hasfour divisions: Architect Branch (AB), Roads Branch (RB), Labour Construction Unit (LCU)and more recently Civil Works Section (CWS) that used to be under the Ministry of HomeAffairs (MHA).
4.3.2 The RB is headed by Chief Roads Engineer (CRE). The organisational structure ofboth the implementing and the monitoring units has not changed radically from the time ofappraisal in 1986. The only change with MOW is that it has now taken over the CWS, which
9is responsible for village feeder roads. The organisation chart for the Roads Branch, MOW isattached as Annex 8.
4.3.3 One significant development that has taken place since the appraisal is the installationof a Pavement Maintenance and Management System (PMMS) in RB. The PMMS is beingfunded by International Development Association (IDA) and acts as a management andplanning tool for the upkeep of GOL’s road network. The GOL has also signed an agreementwith the IDA under the Road Rehabilitation and Maintenance Project (RRMP). Under thisproject, the GOL has set aside each year enough funds to achieve an acceptable level ofmaintenance for the road network. The minimum amount of funding is determined throughthe PMMS. This agreement runs up to 2003. Beyond this period, funding for roadmaintenance will come from the Road Fund (RF) which has been recently commissionedspecifically for road maintenance and rehabilitation.
4.4 Staff Recruitment, Training and Development
In 1997, RB has an establishment for about 34 professional staff, of which 14positions were not filled. In sub-professional category, there were 482 establishment posts ofwhich there were 18 vacancies. At present, the RB is strengthened through TechnicalAssistance (TA) funded by donors. The ADF also provided two engineers under the on-goingOxbow-Mokhotlong Road project approved in 1988. Various donors have financedfellowships and in-country training at both the undergraduate and graduate levels. However,many trained engineers eventually leave RB to join the private sector both in Lesotho andSouth Africa. The loss of trained and qualified staff to the private sector will continue toaffect the sustainability of road projects until the outflow is restrained. In order to encouragethe training of Basotho personnel, a senior engineer from the office of the Chief RoadsEngineer was assigned to the project as a project co-ordinator.
4.5 Economic Performance
Overview
4.5.1 The project road is located in the north eastern part of Lesotho starting from Khamaneand running towards east to Oxbow a distance of 22 km, passing through a very difficultsection of Moteng Pass of approximately 10 km. The Khamane-Oxbow Road forms a vitallink in the northern perimeter trunk road that connects Maseru, the capital city, withMokhotlong in the east through the western agricultural lowlands and the main centres ofpopulation of Leribe and Butha Buthe districts. Though the project road falls in Butha Buthedistrict, its area of influence extends much beyond up to Mokhotlong.
Appraisal Expectations
4.5.2 The volume and composition of the traffic that is expected to patronise the improvedroad during its economic life (i.e. 1989 to 2009) formed the basis for its economicjustification. Based on the traffic surveys and analysis carried out during 1985, the base yeartraffic was estimated as 185 vehicles/day comprising 7.5 % cars, 54 % LGVs and 38.4 %trucks & buses. Commencing from 1989 when the road was expected to be open to traffic,the generated and diverted traffic components were estimated as 16 ADT and 71 ADT,respectively.
104.5.3 Future traffic volumes that are likely to use the road during its economic life span(1989 to 2009) were derived by applying annual growth rates of 7 % for cars and 10 % forother vehicles. Further, the anticipated developments in the PIA like (i) Hydro-electricscheme at Oxbow, (ii) Mining operations at Kao and at Latseng, and (iii) Tourism andagricultural developments; were expected to generate additional traffic. Because of theupgrading, some traffic was also assumed to divert to the project road. The economic cost ofthe project comprised the cost of construction, supervision and physical contingencies as wellas maintenance cost. All these costs were considered net of taxes and price escalation. Themajor quantifiable economic benefits for project were lower vehicle operating costs (VOC)and travel time, avoidance of maintenance cost and salvage value of the initial investment.
4.5.4 The streams of economic costs and benefits spanning over the design life of 20 yearswere calculated and the Economic Internal Rate of Return (EIRR) worked out usingDiscounted Cash Flow (DCF) technique. This yielded an EIRR of 16.97% indicating that theproject was viable. Sensitivity analyses covering two variants viz. a) 25% increase in projectcost and b) 25% decline in project benefits indicated EIRR of 14% and 13% respectively.With these rates, the project could still be considered as viable.
Recalculation of Economic Internal Rate of Return (EIRR)
4.5.5 At appraisal, the economic cost of the project comprised construction and supervisioncosts and allowances for contingencies but net of taxes, duties and price escalation during theconstruction phase. The economic cost of routine and periodic maintenance that wasnecessary to keep the road in serviceable condition during its design life also formed acomponent of the project cost. The project economic benefits included savings in vehicleoperating cost (VOC), travel time savings and reduction in maintenance cost. Forrecalculation of EIRR, the economic costs have been revised in the light of the actualconstruction costs. The economic benefits have been updated keeping in view the trends intraffic growth since the completion of the project.
4.5.6 Since the past traffic data on the project road did not indicate a logical growth patternas mentioned in paragraph 4.2.4, the appraisal traffic forecasts have been updated in line withanticipated macro-economic developments. Based on the analysis of Gross National Product(GNP) and traffic growth, Lesotho National Transport Study (1995) has suggested annualgrowth rate of 4% for light vehicles, 3.5% for buses and 3% for trucks for periods beyond1997 for roads like the project road. These growth rates are also in line with ones adoptedfor traffic projections in the recently completed Feasibility Study of Trans-Maluti Highway(November 1997). For recalculating the EIRR, the traffic forecasts have been updated usingthe foregoing vehicle specific growth rates. Based on this, the revised traffic would growfrom 116 vpd in 1998 to 167 vpd in 2009 (Annex 9).
4.5.7 The actual construction and supervision costs (net of taxes and price escalation) aswell as the benefits emanating from the revised traffic forecasts formed the basis forreworking the EIRR. The major quantifiable benefits include savings in VOC, travel time andmaintenance cost. The recalculated EIRR is 6.20% (Annex 10). This is much lower than16.97% calculated at appraisal. The situation is mainly attributable to rather highly optimistictraffic growth scenario envisaged at appraisal. In other words, the investment could notgenerate enough returns and is not worthwhile based on quantifiable economic benefits.Notwithstanding this aspect, the developmental nature and social desirability of the projectinsofar as it provided a safer and less costly all-weather access through the difficult MotengPass and opened up remote rural areas, need not be overemphasised. Further, the project road
11is a small, but very difficult, section of the trunk road connecting Maseru with Mokhotlong.While the sections from Maseru to Oxbow are already of bitumen standard, the improvementof Oxbow-Mokhotlong road section to bitumen standard is nearing completion. When thisroad is fully open to traffic, the level of traffic on the project road is expected to increase. Insuch a case, the present EIRR of 6.20% is likely to improve.
5. SOCIAL AND ENVIRONMENTAL RESULTS
5.1 Social Impact
5.1.1 Apart from the direct economic benefits of the project that have been discussed in thepreceding sections of the report, the Khamane-Oxbow road has had positive social impact inthe area. The first related to direct and indirect employment for the local population duringthe project construction phase. This employment helped generate additional householdincome, which, in turn, raised the demand for consumer and durable goods in the projectinfluence area. Secondly, the road has improved mobility and access to public servicesespecially for the rural dwellers living in the project influence area. Access to public facilitiessuch as health, education, commercial and administrative centres has also improved.
5.2 Environmental Impact
5.2.1 As the road is passing through hilly terrain, the upgrading works did not entail anymajor alignment changes. In turn no loss or damage to archaeological or paleontologicalfeatures occurred. Soil erosion was a major problem and necessary mitigating measures likelining of drainage channels were employed during construction.
5.2.2 Although there were no covenants in the loan conditions requiring specific measuresduring construction with regard to environment, some improvements in environment areevident after completion of the project. The most obvious aspect is the disappearance of theheavy dust and clouds associated with deteriorated and damaged gravel roads during dryseason, thus providing healthier lives for people, livestock and plants adjacent to the road.
5.2.3 The PCR mission visited the project area and established that mitigating measures hadbeen taken during the construction phase to reduce, as far as possible, the negativeenvironmental effects normally associated with road upgrading works. The measures carriedout included lining of drainage channels, reinstatement of borrow pits, re-vegetation of theabandoned sections of the old road, and grassing of road reserve slopes and verges. It wasalso noted that the drainage system of the new road was well designed and was performingsatisfactorily. No erosion or flooding was evident. One major problem experienced duringand after construction period was unstable cut slopes along the section close to Moteng Pass.This has resulted in constant land slips and rock-falls. A permanent maintenance crew hashad to be placed at the foothill of the pass in order to clear the rock-falls. The Government ofLesotho is planning to commission a study to find out a way of stabilising these slopes.Notwithstanding this, it can be safely concluded that the project has had a net positiveenvironmental impact on the area.
6. SUSTAINABILITY
6.1 The modified pavement design adopted for the project road is found to be appropriate.This can be seen from the fact that Khamae-Oxbow section, as a whole, behaved reasonablywell without any major problems even 7 years after completion. Annual routine maintenance
12operations are being undertaken on a regular basis since the road is opened to traffic. Further,a permanent crew is posted near Moteng Pass to clear the rock falls. Scheduled periodicmaintenance in the form of overlays or resealing, which is normally done seven years aftercompletion, is due this year. The project section is a candidate for relay/resealing underRRMP during next year. At present, allocations for road maintenance are from government’sconsolidated budget. The necessary funds are raised through customs duties and sales tax onvehicles, fuel, lubricants, spare parts as well as payments for vehicle licensing andregistration fees. Other sources of funds for road maintenance are tollgate fee, license fee andpermit fee. These funds are generally adequate to maintain the road network in a satisfactorycondition.
6.2 However, given the growing size of the road programme and other urgent demands,the budget allocations may not be adequate for the purpose. In order to sustain the roadmaintenance activities, the Government has established in 1996 an independent source offinancing through an autonomous Road Fund (RF) which started functioning from January1998. In the initial stages, the RF will concentrate on routine maintenance due to the limitedfunds that are collected on the basis of existing tariffs. Once the system is fully operationaland continuous flow of funds is ensured, the RF will gradually extend its scope to coverperiodic maintenance and rehabilitation works. It can thus be concluded that the Governmenthas adopted appropriate policy and fiscal measures to raise resources sufficient to maintainroad network, including the project road, in serviceable condition.
7. PERFORMANCE OF THE BANK AND THE BORROWER
7.1 Performance of the Bank
7.1.1 At the time of project appraisal, the Bank’s performance could not be termed assatisfactory inasmuch as the envisaged traffic scenario – base year as well as future estimates– was highly optimistic. For no logical reason, a more realistic set of estimates provided inthe Consultant’s report was not adopted. This is the main reason for low EIRR at projectcompletion. However, there were no deficiencies in the Bank’s performance noted during theproject implementation. The project was considered one of the priority projects by theGovernment and was well received by the Bank. The loan for this project was timely andhigh on the development agenda of the country’s requirements.
7.1.2 Since the inception of the project, the executing agency received fairly regularmonitoring and supervision visits (at least once a year) from the Bank. These missions wereof assistance to both the project and the executing agency and to the Bank in successfulimplementation of the project. The borrower and executing agency were provided with all thenecessary guidance and advice to ensure procurement of works, goods and services in theimplementation of the project, as per Bank’s rules and procedures for procurement. To sumup, the overall performance of the Bank during the implementation of the project can betermed as satisfactory.
7.2 Performance of the Borrower
7.2.1 The GOL was represented by the Roads Branch (RB) of the Ministry of Works as theExecuting Agency (EA). The EA was responsible for all the technical, management anddisbursement relating to the project execution and also co-ordinated with the Bank on allrelevant issues. The RB also contributed to project supervision by providing a whole time co-ordinator in compliance with the conditions precedent to loan effectiveness.
137.2.2 During the implementation of the project, submission of monthly progress reports wasregular. The GOL, however, could not resolve the issue of contractor’s claims even fouryears after completion of project, during which period the Bank’s loan was active. Even nowthis issue remains unresolved mainly due to contractor’s indifference. On the whole, theborrower’s performance can be rated as satisfactory.
8. CONCLUSIONS, LESSONS LEARNT AND RECOMMENDATIONS
8.1 Conclusions
8.1.1 Achievement of Objectives: The objective of the project was to upgrade the existingroad linking Khamane and Oxbow in support of GOL’s transportation strategy of improvingthe road network that traverses the extremely difficult terrain regions of the north-eastern partof the country to bitumen standard to provide safe, serviceable all weather access along theperiphery of Lesotho. This link provides faster movement of goods and passenger traffic fromone end of the foothills (i.e. Khamane) to the other end (i.e. Oxbow) through the Moteng Passsection. The project was also expected to improve road connection and reduce the cost ofmovement of goods and passengers between the foothills of Khamane, Oxbow andMokhotlong. It was also to link the rural areas in the eastern mountains so as to foster betterintegration of people of this area into the mainstream of the economic and social life of thecountry.
8.1.2 The upgrading of the road has been completed successfully, and it has helped inconnecting Maseru with important centres in the highly difficult hilly terrain in the north-eastern part of the country. Further, the condition of the road has improved and hascontributed to the reduction in the backlog of maintenance, travel time and VOC on the mainroad network in Lesotho, thereby consolidating the preservation of scarce capital.
8.1.3 Despite following the Bank’s rules, cancellation of loan balance without the executingagency resolving the claims issue has imposed an additional financial burden on the GOL.
8.2 Lessons Learnt
8.2.1 The original pavement design was not suitable for the roads, like the project road,traversing the mountainous region where wet conditions are prevalent due to heavy rainfalland snowfall. This is also evident from the on-going Oxbow-Mokhotlong Road project. Thekey lesson is that for future projects care should be taken by the Consultant to formulateappropriate pavement design taking due account of the physical features and specificrequirements of the project area.
8.2.2 A major problem encountered along the project road is unstable cut slopes,particularly along the Moteng Pass. This has resulted in constant slips and rock falls.Although a permanent maintenance crew is in place at the foothills of the pass to clear therock falls; it is recommended that a study be undertaken by the GOL to find a way ofstabilising the slopes. This experience would be useful for future projects in similarmountainous areas.
8.2.3 The appraisal traffic forecasts turned out to be too optimistic in terms of base yeartraffic estimates as well as growth rates. In fact, the level of actual traffic on the project roadis about 20% of the appraisal estimate. This low level of traffic materialisation brought downthe appraisal EIRR from 16.97% to 6.20%. To obviate such a situation, the appraisal mission
14should undertake a comprehensive review of the existing and anticipated traffic levels andprepare traffic projections under three scenarios viz. pessimistic, moderate and optimistic.The project appraisal should, however, be based on moderate traffic scenario.
8.3 Recommendations
8.3.1 For future projects, the Borrower should ensure that Consultant’s pavement designtakes due account of the physical features and specific requirements of the project area.
8.3.2 The GOL may consider financing a study to find a way of stabilising the slopes. Thisexperience would be useful for future projects in similar mountainous areas.
8.3.3 The project viability analysis should not be based on highly optimistic trafficscenario, but rather reflect a moderate situation.
Annex 1
LESOTHO
Project Completion Report: Khamane-Oxbow Road Project
The Bank Group Financed Transport Sector Projects
Name of the ProjectDate ofAppro
val
DateSigned
Source/Loan Amount(UA mil.)
StatusADB ADF TAF
1. Leribe-Oxbow/RomaSemongkong Roads Study
2. Leribe-Butha Buthe Joel’sDrift Road
3. New Maseru Airport I
4. Joel’s Drift-Khamane Road
5. Road Maintenance Project
6. Feeder Roads Study (TAF)
7. Masinokeng-Mafeteng/Roma RoadsRehabilitation
8. New Maseru Airport(Suppl.)
9. Khamane-Oxbow Road
10. Oxbow-Mokhotlong Road
11. Institutional Support to theTransport Sector
12. Oxbow-Mokhotlong Road(Suppl.)
25/03/75
20/01/77
28/08/79
28/02/80
21/01/84
14/03/84
15/11/84
14/12/84
18/06/86
18/01/88
22/05/89
01/12/92
07/05/75
15/11/77
08/10/79
13/06/80
13/03/84
09/05/84
11/12/84
13/01/85
16/07/86
30/05/89
30/05/89
13/05/93
-
-
8.00
-
-
-
-
12.04
-
-
-
-
-
6.17
-
5.62
8.06
-
6.45
-
6.42
17.17
2.60
2.86
0.83
-
-
-
-
0.90
-
-
-
-
-
-
Completed
Completed
Completed
Completed
Completed
Completed
Completed
Completed
Completed
On-going
On-going
On-going
Total20.04 55.35 1.73
ANNEX 2LESOTHO: KHAMANE-OXBOW ROAD: PROJECT COMPLETION REPORT
PROJECT LOCATION MAP
Libono
Butha-Buthe
BUTHA-BUTHE
Leribe
Maputsoe
Peka
Pitseng
MapotengTeyateyaneng
BEREA
LERIBE
MOKHOTLONG
MokhotlongIlokoeng
Thaba-Tseka
THABA-TSEKA
Sehonghong
Sehlabatheba
Qacha’s Nek
QACHA’S NEK
Maseru
MazenodRoma
MASERU
MonjaMatsieng
Semonkong
MAFETENG
GMafeteng
Mohale’s Hoek
MOHALE’S HOEK
Mount Moetosi
Quthing
QUTHING
RSA
RSA
RSA
International boundary
District boundary
National capital
District capital
Railroad
Road
Kilometers
Miles
This map has been drawn by the African Development Bank Group exclusively for the use of the readers of the report to which it is attached. The namesused and the borders shown do not imply on the part of the Bank and its members any judgement concerning the legal status of a territory nor anyapproval or acceptance of these borders.
Sekake
Likafaneng
Khamane
Oxbow
Project Road
Annex 3
LESOTHOKhamane-Oxbow Road: Project Completion Report
List of Documents Consulted
1. Appraisal Report – Khamane – Oxbow Road Project (LESB/PTR/86/01), March1986.
2. Minutes of Loan Negotiations
3. Loan Agreement (No. CS/LES/TR/86/18) dated 16-07-1986 between the Governmentof the Kingdom of Lesotho and the African Development Bank.
4. Borrower’s Project Completion Report.
5. Consultant’s Final Completion Report, July 1990.
6. Monthly and Quarterly Progress Reports for the Project.
7. Pavement Maintenance and Management System (PMMS) – VOC Calibration forLesotho, October 1994.
8. National Transport Study, 1995.
9. Redesign Study of Khamane – Oxbow Road – Economic Analysis Report (FinalReport), August 1985.
10. Feasibility Study of Trans-Maluti Highway, November 1997.
11. Road Rehabilitation and Maintenance Project (RRMP) – World Bank Staff AppraisalReport, April 1996.
12. Organisation Charts of Ministry of Works and Roads Branch.
13. Archives of Financial Data and Correspondences available in the Bank. Disbursementdata, Back-to-Office Reports, Internal memoranda, Correspondence exchanged withthe Borrower and the Executing Agency, etc.
14. Correspondence Archives and Available Financial and other documents at theMinistry of Works.
Annex 4
LESOTHO
Project Completion Report: Khamane-Oxbow Road Project
Loan Conditions
1. The conditions precedent to first disbursement given in Section 6.01 of theloan agreement required the Borrower to:
(a) “have indicated to the Fund and obtained its approval of the procedure which the Borrower proposesto follow for international competitive bidding under Section 6.03 of this article”.
(b) “have submitted to the Fund the list of goods and services to be acquired with the loan resources”.
(c) “have given an undertaking to the Fund that it will assume responsibility to meet all cost overruns ofthe Project”.
(d) “have given an undertaking to the Fund that it will make adequate budgetary allocations to meet itsshare of the Project Cost and tax element”.
(e) “have given an undertaking to draw up and submit to the Fund each year, a satisfactory annualprogramme for the rehabilitation, the routine and periodic maintenance of the classified road network. The saidprogramme shall define the roads to be covered and shall contain detailed information showing in particular i)the individual categories of work to be performed and the agencies responsible for carrying out such work andii) an itemised budget for all work to be performed under each annual programme and an indication of thesources of finance required for the implementation of the entire programme”.
(f) “have assigned a Senior Officer from the Chief Engineer’s Office of the Roads Branch, to be theProject Co-ordinator”.
(g) “have given an undertaking to the Fund monthly and quarterly reports on the progress of worksperformed by the construction contractor”.
1.1 The GOL fulfilled all the above conditions, though it took about 9 monthsfrom the date of loan signature.
2. Two other conditions falling under Section 6.02 of the loan agreement, whichwere to be fulfilled during the project implementation, stipulated that:
(a) “The Borrower shall ensure that no local taxes, customs duties or levies of any kind whatsoever arefinanced out of the proceeds of the Loan”.
(b) “The Borrower shall make adequate budgetary allocations for proper and timely maintenance of theproject road upon completion of construction works”.
2.1 The GOL fulfilled condition (a) above during the implementation phase inasmuch aslocal taxes and customs duties or levies were not financed out of ADF loan funds. Infulfilment of condition (b) above, the borrower has allocated funds, as part of the annual roadmaintenance budget, to maintain the project road in a reasonably good serviceable conditionas well as posted a permanent crew near Moteng Pass to clear the rock-falls. Further, theproject road is a candidate for resealing during 1999 under Road Rehabilitation andMaintenance Project (RRMP).
Annex 5LESOTHO
KHAMANE-OXBOW ROAD PROJECT COMPLETION REPORTPROJECT IMPLEMENTATION SCHEDULE : APPRAISAL Vs. ACTUAL
Year
Activity
1986 1987 1988 1989 1990 1991
1st. 2nd 3rd 4th 1st. 2nd 3rd 4th 1st. 2nd 3rd 4th 1st. 2nd 3rd 4th 1st. 2nd 3rd 4th 1st. 2nd 3rd 4thQr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr. Qr.
Board Presentation (Appraisal)
Board Presentation (Actual)
Appointment of Consultant (Appraisal)
Appointment of Consultant (Actual)
Consultant Service Period (Appraisal)
Consultant Service Period (Actual)
Appointment of Contractor (Appraisal)
Appointment of Contractor (Actual)
Construction Period (Appraisal)
Construction Period (Actual)
Maintenance Period (Appraisal)
Maintenance Period (Actual)
Annex 6
LESOTHO
Project Completion Report: Khamane-Oxbow Road Project
Details of Annual Disbursements(UA million)
Year Amount DisbursedADF GOL Total
19871988198919901991199219931994
0.5371.7270.8302.1140.3370.0120.0000.043
0.5380.7350.8170.3760.1850.0000.0000.410*
1.0752.4621.6472.4900.5220.0120.0000.453
Total 5.600 3.061 8.661
* Estimated contractor’s claims.
________________________________________________________Source: Ministry of Works, Lesotho and ADB PCR Mission, April-May
1998.
Annex 7
LESOTHO
Project Completion Report: Khamane-Oxbow Road Project
Performance Rating Scale and Evaluation Criteria
1. Rating Scale
X 3 Highly satisfactory
2 X 3 Satisfactory
1 X 2 Unsatisfactory
X 1 Highly unsatisfactory
Where X is the value assigned to a performance variable.
Classification: Implementation performance is considered satisfactory if the averagevalue of X 2.
2. Evaluation Results
Performance IndicatorsScore
Maximum Actual1. Time Overrun2. Cost Overrun3. Adherence to Contractual Conditions4. Adequacy of Supervision and Reports5. Operational Performance
44444
23313
Total 20 12
Implementation Performance = 12 5 = 2.4 (Satisfactory)
Annex 8
Lesotho: Khamane-Oxbow Road : Project Completion ReportRoads Branch - Organization Chart
Accountants/Staff
Controller
Finance
Mechanical RE Exec.
Carpentry Registry, etc.
Precasting Personnel
Signs Training
Security Stores
Yard Section Radio Ops.
Admn.
Similar to NR
RE (Twin)
RE South
Similar to NR
RE (Twin)
RE Central
Staff
STO
Leribe Depot
Operators/Drivers
TO Mech.
Mechanical Materials Lab. Staff Three Depots
similar to Leribe
PTO
Site Clerks Registry, etc.
Regional Clerk Stores
Exec. Officer
RE (Twin)
RE North
Region (NR)
SRE - (M&A)
Maintenance &
Administration
Staff
PTO RCU
RE RCU
Material Staff
PTOs
ARE Material
Survey Satff
Design Staff
RE Material
SRE - Design
Design &
Materials
Assistant Staff
Project Engineers
(Three)
Office and
Ancillary Staff
Office Manager
Site Staff
and Labour
Planning Manager-----------------------
Technicians
Manager
RIU
Planning Engineer
SRE - P & P
Projects &
Planning
Principal Roads Engineer
Chief Roads Engineer
Annex 9
LESOTHOProject Completion Report: Khamane-Oxbow Road Project
Vehicle Operating Costs (VOC)(Economic)
Vehicle Class VOC (Maloti/km) VOC savingsper vehicle(Maloti/year)
Existing Road Proposed Road
1985 ScenarioCarLGVTruckBus
1997ScenarioCarLGVTruck – MGV
- HGVBus
0.550.741.521.28
0.761.922.464.203.26
0.050.080.390.28
0.310.981.251.611.70
4015530090748391
3614754897162079812527
Source: Ministry of Works, PCR Mission 1998, and Appraisal Report, 1986.
Updated Traffic Forecasts (ADT)
Year Cars &LGV
Trucks Buses Total
19901991199219931994199519961997199819992000200120022003200420052006200720082009
1444381512464340384042434446485052545658
2620195676928476676971737578808285879093
27544369111112121313141414151616
4271627592
141133125116120125128132137142146151156162167
____________________________________________________ ___Source: Ministry of Works and ADB PCR Mission April-May 1998.
Annex 10LESOTHO
Khamane-Oxbow Road: Project Completion Report
Recalculation Economic Internal Rate of Return (EIRR)(In 000’ Maloti)
Year ConstructionCost (1)
VOCSavings
Savingsin Maint.
TimeSavings
TotalSavings
NetBenefits
1987 2390.85 (2390.85)
1988 5477.21 (5477.21)
1989 3663.25 (3663.25)
1990 5539.69 317.91 128.00 117.86 563.77 (4975.92)
1991 2195.65 445.15 141.00 381.62 967.77 (1227.88)
1992 349.39 154.00 323.68 827.07 827.07
1993 594.15 170.00 160.68 924.83 924.83
1994 804.25 186.50 134.22 1124.97 1124.97
1995 1091.01 205.50 356.23 1652.73 1652.73
1996 997.38 160.50 365.50 1523.38 1523.38
1997 903.75 249.00 385.92 1538.67 1538.67
1998 810.12 274.00 421.89 1506.01 1506.01
1999 810.26 301.00 438.96 1550.23 1550.23
2000 836.41 331.50 461.30 1629.21 1629.21
2001 955.72 364.50 478.91 1799.13 1799.13
2002 986.84 401.00 501.26 1889.10 1889.10
2003 1018.99 414.00 521.59 1954.59 1954.59
2004 1052.21 501.00 543.26 2096.47 2096.47
2005 1086.53 534.00 590.04 2210.57 2210.57
2006 1121.98 587.00 650.28 2359.26 2359.26
2007 1158.61 646.00 717.10 2521.71 2521.71
2008 1196.46 710.50 717.10 2624.05 2624.05
2009 (7706.66) (2) 1235.56 771.50 717.10 2724.15 10430.81
EIRR (%) 6.20
Source: PCR Mission, April-May 1998(1) Construction and Supervision Costs
(2) Salvage Value