cgz~ z , / - -A 'L ^Documwt of

The World Bank

FOR OMCIAL USE ONLY

MICROFICHF CoPY

Report No.:P- 5,882 sr, Type: PM)Title: ROAD REHABETLITATION AND MAINTEAuthor: PANKAJ, T RNa No. P-58$2-SLExt. :34567 Room:.J6.49 Dept. :AF41N

MEI(ORANDUM AND RECOMMEDATION

OF TME

PRESIDENT OF THE

ITERNATIONAL DEVEOPMENT ASSOCIATION

TO TIE

5ECUT1VE DIRECTORS

ON A

PROPOSED CREDIT

iN THE AmoUNT EQUIVALENT TO SDR 32.0 ILLION

TO

THE REPUBLIC OF SIERRA LEONE

FOR A

ROAD ABILITATION AND MAINTEANCE PROJECT

NOVEMBER 25, 1992

Ths documet hk a restricted distribution aWd may be used by recipiekts only in the perforance oftheir official duties. Its contents may not otherse be disclosed witbout World Bank authorization.

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CURRENCY SOUIVALENi S

Currency Urit Leao (.e)Le 1.00 = US .002centsUS$1.00 Le 500Le 1.0il iaon US$2,000

WM S AMD MEASMURS: METRIC SYSTEM

meter (m) = 3.28 feet (ft)I hectare (bs) = 2.47 acrs

1 klometer (km) = 0.625 mile (mi)I metric ton (t) 2,205 pounds (lb)

ABBREVIATIONS AND ACRONYMS

AfDB Africa Development BankADT Average Daily TrafficCBD Central Business DistrictDOW Departmet of WorksDTC Depatment of Transport, Commications and TourismDll Dpartmet of Trade and IndustryEC European CoimnityFBC Fuoabay Bay College(OSL Government of Sierra IeILO kItemational Labor OrgaizationIPAM Institute for Public Administaton ManagementJICA Japan International Cooperation AgencyNGO Non Govement OrganizioNMT Non-Motorized TransportPPAR Project Performance Audit ReportRIC Ronstruction Iport CreditRRMP Road Rehabilitation and Mainean ProectRTC Road Transport CorporationSLA Si-ma Leone AirwaysSLAA Sierra Leone Airport AuthoritySLNSC Sierra Leone National Sbipping CompanySLPA Sierra Leone Ports AutboritySLPMB Sierra Leone Produce and Marktng BoardSLRA Sierra Leone Roads AutorityUNCTAD United Nations Confernce for Trade and DevelopmentUNDP United Nations Development ProgrmmeUNDTCD United Nations Department of Technical Cooperation for

DevelopmentUSAID United States Agency for Itrnational Development

FISCAL YEAR

July 1 to June 30

FOR OFFICIAL UKE ONLY

REPWUILUF SRALEON

ROAD REEHABILffATION AND MAMMlANCE CJT

CRTAND PROECrMR

IgJr.owff: Republic of Sierra Leone

Sierra Leone Roads Authority (SLRA).

Amount: SDR 32.0 million (US$45 million equivalent).

Terms: Standard IDA terms with 40 years maturity.

Rel k!d:R To-ms.- Grant from Borrower to SLRA.

Finane Plan: Do=o US$ million %

IDA 45.00 48.5UNDP 5.69 6.1JICA 5.00 5.4EC 11.85 12.8A.DB 14.35 15.5GOSL 10 8S 7

Total 92.74 100.0

Eonomic Rate of Rd=: 30%

Staff Apprsia Repor: No. 11175-SL

IBRD No. 23597 1993-96 Proposed Trunk RoadRehabilitation Project

IBRD No. 24003 Freetown CBD Road Rehabilitation Program

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwis be disclosed without World Bank authorization.

MEMORANDUM AND RECOMMEDATION O'P THE PRESIDENT OF THEINTERNATIONAL DEVELOPMENT ASSOCIATION

TO THE DIECTORS ON A PROPOSED CREDITTO THE REPUBLIC OF SIERRA LEONE FOR A

ROAD REHUARAJO AND MAITEANCEPROJECr

1. I submit for your approval the following report and recommendation on a proposeddevelopment credit to the Rqeublic of Siefra Leone for SDR 32.0 million, the equivalent ofUS$45 million, on standard IDA terms with a atryof 40 years to help f ce a roadrehabilitation and maintnce project. The project is expected to be cofivanced by UNDP(US$5.69 million), lICA (UJS$5.00 million), EC (US$11.85 million) and Afl)B (US$14.35million).

2. Backgiound. Sierra Leone is a small country with a relatively simple transport systemwhich prinuaily consists of the road network. Its railway was closed in 1973; there is littleinland air or water transport; and it has an intenational airport and a port at Freetown. Thecountry has about 1,300 kms of paved roads, and 10,000 kms of unpaved roads includingabout 4,200 kms of rural feeder roads. The road network is in a state of near collapse due toprolonged lack of maintean; a good part of the network needs heavy rehablitation orrecnruction while the remaining part needs immdiate preventive mainteance. Farmingactivies, marketing, and exports, all suffer due to the bottlenecks in the road system.

3. Most of the past failures in the road system occurred due to inadequate Governmentfwding (meeting only about 5% of maienance needs), and due to weak instions; roadmnanagement was the responsibility of the large Ministry of Works (recently renamed asDepartment of Works (DOW)) which had multiple functions, with inadequate atontion andresoures for road maintenace. Since 1989, GOSL has launched, with interational support,a structura adjustment and economic recovery program, with changes from past policies,focussing on crticat reforms in policies, institutions, financia management and budgetig,icludIng reforms in the road sector. Governm has realized that removing the physical

how lime", particuarly through road rehabilitation, is the key to producing the supplyresponse expected from macro-econoz-Uc policies. GOSL has therefre requested fnancialassistance from IDA and other intational agencies to support its program for road andoter t port rehabiitation and for strengthening related instituions.

4. Government has aleady taken, during 1989-92, up-front actions in: (a) setting up asemi-autonomous Sierra Leone Roads Authority (SLRA) to take charge of the road sub-sectorfor which an Act was passed by Parliament on February 27, 1992, with its Board andDirector General appointed in August 1992, and for which other actions to make it fullyoperational by March 1993 are in progress; (b) establishing a Road Fund dedicated to reguiarroad maintenance and fiuded from road user levies, collected in addition to the fuel tax; and(c) ral road useharges sufficiently (thrugh a 100% increase in fud price to aboutUS$1.80 per imperial gallon) to recover finds adequate to maintain the total networl. hesemeaures will Improve sector mangement and help prevent a recurrence of the falure of pastinvestments in the road sector. However, the Government requires (a) urgent financasuwort for capital works in road rehabilitation and deferred m tenance for which a swven-year program is envisaged; and (6) technical assistance and other support for planning,supervision, and institutional strengtening and capacity building of the SLRA to improveroad sector and maintenance management.

2

S. Pric Objec . The main objectives of the project are: (a) to remove physicalbottlenecks in the country's tsport network, in order to promote supply response from theeconomic recovery program, hough a sustainable road rehabilitatlon and maintenanceprogram; (b) to bufld institutional capacity to better plan and manage the repair andmaintenance of roads, and promoting a sustainable system for fimding road maineance;(c) to strengthen taport sector institutions to improve sector management, planning and tofoster market-oriented policies; (d) to encourage new methods of infrastructure rehabilitationand maintennce, using appropriate labor-intensive technology and local resources, in order tonrease emplo)ment generation and to provide sustainable maintenance systems; (e) toincrease the share of private sector participation in road maintenance, and develop capacity ofsmall-sized contractors to maintain the road network; and (f) to promote the use of non-motorized transport (NMT) to reduce headloading by women and to increase rural mobility,improving transport services available for the rural poor. During implementation theachievement of project objectives and physical targPets will be monitored using appropriateperformance indicators already agreed with the Borrower during negotions.

6. Pro Desc . The main project components are: (a) road rehabilitation andmaintenance, covering the first four-year time slice of a seven-year program to catch up withpast maintenance and rehabilitation backlogs, covering rehabilition of about 490 kms ofrunk roads and 20 kms of city toads in the Freetown Central Business District, andmaintenaince/repaw of 2800 knms of trunk roads (77.2% of total project costs); (b) strengthen-Ing road maintenance institutions by supporting the new SLRA through technical assistance,rain, essental minte equipment and logistical support (15%); (c) office equipment,and ficilities to support DOW (.3%); (d) supporting the Deparnt of Transport,Communications and Tourism to improve tansport planning and policies through technicala;ssistance, trang and key sector studies (.6%); (e) assisting communities, through NGOs, toincrease the use of low-cost non-motrized transport (NMI) (mainly bicycles and bicycle-trailers) to improvwe tansport services for the poor (.9%); and (t) technical assistance forproject design and supervision (6%). Schedule A gives the summary of estimated costs andfinancn plan. The amounts and methods of procurement and disbursement, as well as theestimated disbursement schedule are given in Schedule B. A timetable of key projectprocessing events and the status of Bank Group operations are given in Schedules C and D,respectively. A map of Sierra Leone is also attached. The staff Appraisal Report No. 11175-SL, dated November 25, 1992 is being distributed separately.

7. P. The project cost is esdmated at US$92.74 million equivalent, ofwhich US$74.68 million is in foreign costs. The following financing p'an is expected: IDAUS$45.0 million; African Development Bank US$14.35 million; European CommunityUS$11.85 million; Japan (JICA) US$5.0 million; UNDP US$5.69 million; and Governmentof Sierra Leone US$10.85 million equivalent Cofinancing arrangements are in progress, andare expected to be finalized by June 1993. The road componen are discrete items and anydelay in their cofinancing arrangements will not adversely affect the IDA-funded cmponents.The main Jointy-fuded component is instittional and logistical support to SLRA which isexpected to be financed by IDA, EC and UNDP. EC and UNDP have already provided someintial inputs, and their formal commitment to finance the remaining inputs to these

ponents is to be obtined by Government by January 1993.

8. Project Implemeno. MmThe project will be managed and coordinated by the SIRA,assisted by a team of experts, including a project coordinator. Training of local contracorswill be achieved in collaboration with ILO. The Freetown roads component will be

3

implemented by the SLRA In consultation with Freetown City Council whose capacity will bebuilt up under the project. Selected NGOs, mainly Plan Internatonal, an internationa NGOIn Sierra Leone, wi Implement the component on support to loca communities for NMT,under SLRIA coordination. lhe Depatment of TranspoRt, Commnications and Tourism willimplement the transport sector planning and studies component In coordination with SLRA.Project preparation is well advanced with detailed engineering for road works recendycompleted under a Japanese Grant and PPF Advance. Bids for major wotks are planned to beinvited in January 1993, and award of main contracts expected in June 1993.

9. Pjt Sustainabir. Improved orgizational structure, assured funding and greaterinvolvement of the private sector for road maintenance are the three key factors that are beingaddressed by the project to enhance sustainaility. The SLRA has been set-up and a RoadFund has been established, funded from road user levies. The project will further strengthenthe Roads Authority and help ensure regular flow of funds for maintenance. The developmentand taining of domestic contractors and promotion of labor-intensive technology wiUl enhanceefficiency, sustainabiity and the cost-effectiveness of road maintenance operations in thefuture.

10. Lessons from Previous Bank Involvement. Bank has finamced only two operations inthe roads sector in the past. The First Highway Project (1971) involved mainly theconstruction of new roads, while the Second Highway Prtoject (1981) focused on rehabilitationand maintenance of 800 km of trunk roads. Two types of problems affected performance andcaused partial failure of these projects: weak institutions and inadequate funding forGovermnent counerpart expenditure and for follow-up maintenance. The proposed projectand its funding and imple tion aements (establishing and strengthening of the semi-autonomous roads authority, Road Fund, and maintenance by contract) are designed toprevent a recurrence of these problems (paras 9 and 12).

11. Ri fgr IDA . The project will strengthen the country's economicrecovery progam, which IDA is supporting through a Reconstuction Import Credit (RIC),Credit No. 2352-SL, which became effective on April 15, 1992. The country strategyrecognized that imprement in the condition of the road network is crucial to economicrecovery and development. The transport sector needs support from many external donors,and the proposed project would provide a basis for agreement on investment priorities. Itwould also play a catalytic role In attracting cofinancing. The proposed project is, therefore,flly consiste with the Country Asistance Strategy discussed by the Board in April 1992.

12. Aed Actions As noted, Government has already taken actions during thepreparation of the project in reorganizing road sector institutions, making appropriatemanagement and finding arrangements, through the establishment of the SLRA, setting up aRoad Fund with assured flow of funds and raising road user charges to adequate levels.Major macroeconomic policy changes and public enterprise reforms have been agreed underthe RIC. D e g _ further agreemens were obtaied from Government and SLRAon the folowing key items: (a) to ensure a smooth flow of a core level of funds to theproject and to the maitenan program, the share of the collected road user charges would beautomatically assigned on a weekly basis to the Road Fund in the form of a Road Fund fee,and its value would be maintained in real tems (n December 1992 prices), at the level of atleat 20 US cents equivalent per imperial gallon of gasoline and diesel up to December 1998;(b) agreed amounts would be provided to SLRA every quarter, (amounts were agreed duringnegotations and would be reviewed annually in April/May), as topping up from budget, to

4

spplement the Road Fund to adequately cover al road mintenance, rehabiitatlio and SL;RArecurrent expediture; (c) an adequate level of recovery of road user charges to meet ftismaintenCOe needs (estfmated at US$20 million in 1992 costs) would be maintine; (d) sixmonthly fcial and work verification audits of Road Fund and other SLRA funds would beconducted by Independent auditors acceptable to IMA; (e) guidelines for use of Road Fundprceeds will be agreed before January 31, 1993; (t) the share of road maintenance throughpdve contracting would be progressively increased to at least 50% by 1996; (g) studies toreview functionslreorganization of the Road Transport Corporation (RTC) would beconducted by June 30, 1994, and reviewed with IDA before September 30, 1994, and agreedactions would be implemented according to an agreed schedule; (h) annual transport sectorinvestment would be agreed with IDA, and IDA would be consulted on any Pew transportprojects cosdng individually more than US$3 million outside the agreed plan; (i) SLRA wilappoint by March 31, 1993, on its staff, an engineer in charge of assessing and monitoringenvironmenal lmpac f road projects; d) Government will obta by January 31, 1993,letters of commitmentitent from EC and UNDP to finance technical assisteace to SLIA; and(k) a mid-term review of the project would be conducted before June 30, 1995. Conditionsfor credit effectvns include: (a) completion of key appointments (Department Heads and250 staf, including appointment of chief financial adviser and accountant; (b) appointmen ofexteral auditors to audit the accou and works under the Road Fund and other SLRA fumdsfrom July 1992 to June 1993; (c) appointment of a project coordinator, and of engineeringconsultants for supervision of works; and (d) payment of an initial amount of Leones 200million into the ProjAc Account

174 . EwfiuPnme nw AMM. Since the project consists mainly of rehabiliat exisngromIs, there are no major concerns for environmental impacts. Potential concerns Involvetemporary disruPti during constuction, improper revegetaton of embakments and borrowpits, and soil erosion and gdly formaions resulting from poor design of drainage. Theseaspects are being taken into consideration during the design and construction phase of therehabilitation works, and a midgation plan has been agreed. Positve environmental effectsare epected to result from improveme in city street drainage and traffic flows. Anevionmental has been completed recendy (Category B). To enhance institonalcapacity for dealing with roads related environmental issues, the project will support trainingof an SLJRA engineer in environmental impact studies and help establish an enironmental unitwithin SLRA.

14. Progm OWective Ceg s The whole project would help reduce poverty byImrving tanort services for people and goods, and components (c) and (e) (para 6), inparticlar wil help improve employment and incom3 of the poore sections of society andwomen. In addition, the project would contibute to development of the private sector in roadconstruction and mainenance through training of domestic conactors and through incresingthe share of road works undern by contrc.

15. jet Bofits and Risks. The main benefit from ihe project would be a moreefficient and ost-effective hihway sector that permits a higher level of economic activity.Economic returns for individual road improvements are esmated to range between 18-98%,and the composite weighted average ERR for all project components is 30%. A 10% incasein project cos or a 10% decrease in benefits would reduce the ERR to about 27% i eachce. Ihe main rik is a repettion of the Govemets past faure In prov g regularcouxQn funding and adequat project management. These risks have been mimized by(a) settig up a semi-autonomous SLRA to manage the road sector in gene and such

S

projecs in partialar, and (b) legislation seting up a Road Fund and the increase In fuel taxeswhich should provide reguiar fAdig from the point of collection to the Road Fund account.The propose provision of tehnical assistance and training to SLRA will help build up astrong proiect management capacity. However, a thorough supervision and monitoring ofptoject progress iS called for, and will be provided.

16. Recoendao. I am satisfied that the proposed Credit would comply with theArticles of Agreement of the Association and recommend that the Executive Directorsapprove it.

Lewis T. PrestonPresident

AttacmentsWashingt, D.C.November 25, 19

6 SdheduleA

REPUBLIC OF SIERR EN

ROAI BEHABU_TATION AND MAINTENANCE PRO.

ESIMATED C0S'" AND FINANCIAL P

ESTIMATED PROJECT COSIS

Loca Fign Total

(US$ million)

Road Rehabilitation & Maintenance 11.26 48.69 59.95Institutional Stengthening (Roads Sector) 1.36 11.01 12.37Support to Department of Works 0.01 0.26 0.27support to Transport Sector 0.05 0.46 0.51Pilot Program for Promoting Non-Motorized Transport 0.07 0.64 0.71Project Design and Supervision 0 4Q 4.44 A4M9

Base Cost (mid-1992) 13.25 5.0 2L7

Physical Contingencies 1.23 6.25 7.48Price Contingencies 3.58 2.93 6.51

Total (1) IL%~ 74.6 92.74

(1) Includes US$6.02 million in taxes and duties.

FINANCING PLAN

Lal Foreign ToI

L(US$ million)

IDA 5.95 39.05 45.OCUNDP 0.10 5.59 5.69JICA 0.00 5.00 5.00EC 0.50 11.35 11.85AfDB 0.66 13.69 14.35SLRAIGOSL 1S0.

Total

7 P*p lof2

RlOAD 1EUATA= ND MNMNIAZi PROJC

A. Summ= of tlWoM rocurnentA=g=

JM Shm n.rthesesllZUSS ufia

Component lCDB LCB Other N.B.P. (a) Total

1. civil Work 35.2 7.7 26.5 69.433.1) (4-7X e7.8

2. Bquimmt and Vehes 0.S 0.5 0.9 6.7 8.6(0.4) (0.3) (0.8) (1)

3. Tchal Assitac

-- Po Impumait 4.7 2.0 6.7(4.4) (4.4)

- Capmy Duid 0.9 5.3 6.2(0.8) (0.8)

4. TninigandC Otr Suppos 0.6 1.2 1.8(0.5) (0.5)

Tot Project 35.7 8.2 7.1 41.7 92.7(33.5) (5.0) (6.5) (45.0)

(a) Not Bank manced.

8 Page 2 of 2

B D isbursent by Ctgo

IDA Amout % of xpenctuC.Jegory (USoa( =ml ) to be lAwnei

1. Road RbgUlnMi asmw(icludinag isutitut suppotto DOWJSLRA)

(a) Civil works 34.12 100% of foren costs and85% of local Coas

(b) Equipment and mateials, inoluing vehicles 0.90 100% of foei

and 90% of lodal cost

(c) Consul services, auditing services, studu 3.15 100%and ovesas tnIng

(d) Locl traiaig 0.2 100%

(e) Incre_me recurnt costs I . 0.08 100%

Id $uDDo to Tnulsort Szor imom MMTC

(a) Office equipmec, failities, matedials, 0.05 100% of freigihuding vehicles -

ad 90% of local cos

(b) Consul nt , stbdies and taining 0.41 100%

(a) Equipmen mew'", icluding vdeils 0.55 100%

O) Tch asisnc and taiig, ancludingdemonstation progams and program manamtsvies 0.07 100%

(a) Support to NMO 0.05 100%

(d) b_neal recrr cost 0.02 100%

IV.RWofPPPA 0.90

V. U 4.50

TOTAL 45.00

J _Incremental unt cos of project unit, vehicle opeaing costs, offc supe, Offic operating coos;and prcjet reated tavel cxpen and sAff aeqess, but cwluding sai to Govenme officials.V Inremenad reurnt cost rIeaed to piot progam u aL. ;u including vehicleoperding costs, office opatin cost, offic supplies, and ff expnes, but excluding saries toGoveamen offcish.

C. Etmated IMA DisbursementSdauh(USS moon)

Fiscal Year(July-June) E-1Y9 EYI FY199S FY1996 EY1997 FlY1

Anmua 0.80 5.40 11.50 11.40 10.10 5.80Cumulative 0.80 6.20 17.70 29.10 39.20 45.00

9 Schedule C

RWIB OF K SIERRA I3NE

ROA RERABLlTAl=O AND MADUNME POlC

(a) ?Sme taken to prepare the project: one year

(b) Preparod by: Government with IDA assistance

(c) First IDA mission: September 1991

(d) Appraisal mission 1: April 1992

(e) Negotiat,½;: November 1992

(f) Planned date of effectiveness: March 1993

(g) Relevant PCR/PPAR: First Highway ProjectPPAR No. 2085 (Yr. 1978)

Second Highway ProjectPCR No. 8391 (Yr. 1990)

1/ T. Pankj (Mission Leader), A. Bhandari (raispcrtation Engineer), H. Young(Highway Engineer), A. Dalfelt (Environmental Specialst) and E. Donkor(Institutional Specialist). Missions by individual participants were carried out atdifferent periods between December 1991 and May 1992.

10 ScheduleDPage l of 2

STATUS OF BANK GROUP OPERATINS IN R LEONE

A. SA OF RAM LOANS ANIDA C

(As of October 30 1992; Amounts In USS Mllionl

Commiman(los cancellation)

Loa or Cedit of whichNumber Year Bank IDA Undisbused

hUUs Disbnd Lmn and Craft

Five Loans and Elven Credis 18.70 57.82

Not EFuS D£-bursedCod

Cr. 1265 82 Power Secor Enineei 5.00 1.4

Cr. 1353 83 Third Education 20.00 19.4

Cr. 1501 84 Aicukul Setr Suppoit 21.50 19.6

Cr. 1695 86 Hea and Populion 5.30 5.1

Cr. 2352 92 Reconstuction bnport Cradit 43.40 17.2

Cr. 23S6 92 Power Sector Rehabiiaion" 21.00 21.6

Cr. 2435 93 Technical Assistance 10.00 10.0

TOTAL 18.70 184.02 94.3of wbich repaid 15.80 3.43

TOTAL held by Bank & IDA 2.90 180.S9

Amount sold 54of wbich repai .54

TOTAL undisbursed 94.3

YExpe.d to bo offectve by Decembe 31, 1992.

11 Schedule DPage 2 of 2

B. SUMMMM OF IFC INVE

(At of September 30. 1992M

Amount in US$ million

Date Borrower Type of Business Loan Equity Total

1980 Sierra Leone Cement Company " Cement Company 2.05 2.05

1992 Sierra Rutile Limited 1 Rutile Mining 2Q0

TOTAL 22.05 22.05

Less Repayments and Write-offs

Tot Comimnt now Held by IFC

' Fully disbursed.I No disbursemen to date.

ho1Xon of B fhte

Between 1964 and 1987, there were 19 projects (5 Bank and 14 IDA) amounting to US$128millon. Four parially disbursed Credits (amounting to a total of about US$46 million) weresuspended in 1987 when Sierra Leone went into non accrual status. After the Government cleared itsarrears to the Bank in April this year and the Reconstruction Import Credit (Cr. No. 2352-SL)became effective, suspension for all four projects was lifted and disburements under the projects haveresumed. The Agricuualn Sector Support Project is being modified in consultation with thegovernment to address the changing priorities in the sector, in acoordance with the Bank's policies.Disbursements under a Power Sector Engieaing Credit are being made to support the emergencyrehabilitation program assisted by EC and Geman aid as a presor to the IDA Power SectorRehabilitation Project approved at the end of April 1992 (Cr. No. 2356-SL). Disburs andimplementatio under the Reconstruction Import Credit (Cr. 2352-SL) have been sasactoy. Therehave been no significant problems in stating procurement and disbursement under the ongoingprojects since the trumption of disbrsements.

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