Appraisal of a Fourth Road Project Republic of...

Report No. 1389b-BT

Appraisal of aFourth Road ProjectRepublic of BotswanaMarch 23, 1977

Regional Projects DepartmentEastern Africa Regional Office

FOR OFFICIAL USE ONLY

Document of the World Bank

This document has a restricted distribution and may be used by recipientsonly in the performance of their official duties. Its contents may nototherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

Currency Unit = Pula (P)1/US$1.155 = P 1US$1.00 = P 0.866US$1,000 = P 866US$1,000,000 = P 865,800Rand 1.0 = P 1.0

IEIGHTS AND MEASURES

1 meter (m) = 3.28 feet (ft)1 kilometer (km) = 0.62 miles (mi)1 metric to (m ton) = 2,204 pounds (lb) 21 sq km (km ) = 0.386 sq miles (mi )

GLOSSARY OF ABBREVIATIONS

CIDA - Canadian International Development AgencyCTO - Central Transport OrganizationDANIDA - Danish International Development AgencyEDF - European Development FundGDP - Gross Domestic ProductILO - International Labor OfficeKfW - Kreditanstalt fur Wiedersufbau (Federal. Republic

of Germany)MFDP - Ministry of Finance and Development PlanningMLGL - Ministry of Local Government and LandsMWC - Ministry of Works and CommunicationsNORAD - Norwegian Agency for DevelopmentODM - Overseas Development Ministry (United Kingdom)RSA - Republic of South AfricaSIDA - Swedish International Development AuthorityUNDP - United Nations Development ProgramUSAID - United States Agency for International Developmentvoc - vehicle operating costsvpd - vehicles per day

GOVERNMENT OF BOTSWANAFISCAL YEAR

April 1 - March 31

1/ Botswana changed from the rand to her own national currency,the pula, in August 1976.

FOR OFFIC'IAL USE CONLY

APPRAISAL OF A FOURTH ROAD PROJECT

BOTSWANA

TABLE OF CONTENTS

Page No.

SUMMARY AND CONCLUSIONS ................................

1. INTRODUCTION ...........................................

2. THE TRANSPORT SECTOR.1.................

A. Economnic Background.1...............B. The Transport System ................ 2C. Transport Policy, Planning and Coordination ....... 3D. Previous Bank Group Projects in the

Transport Sector ................................ 4

3. ROADS .................................................. 5

A. The Network ....................................... 5B. Traffic ........................................... 6C. Regulations and Rates ............................. 6D. Administration .................................... 7E. Planning .......................................... 8F. Financing ......................................... 10G. Engineering .11

H. Construction .11I. Maintenance .11J. Training .12

4. THE PROJECT ........... ,.,................... 13

A. Objectives .13B. Description ....................................... 13C. Status of Engineering ............................. 15D. Cost Estimate .................. 16E. Financing .................. 17F. Implementation .18G. Procurement .18H. Disbursements .19

This report was prepared by Melody Mason (Economist), Branko Bjelogrlic(Engineer), and Marie Garcia-Zamor (Technical Editor).

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

TAELE CF CONTENTS (continued)Page No.

5. ECONO(MIC EVALUATION .................... 9....................... 1

A. Main Benefits and Beneficiaries .19B. Area cf Irfluence of the Project Road .20C. Economic Analysis .20

,6. AGREEMENTS REACHED AND RECOMMENDATION '. ... 23

ITABL.L: 1 - Length of Gazetted Road Network, 1970-752 - Velhicles Registered, 1965-753 - Annual Expendittures on Roads, 1970/71-75/764 - Design Standards for Mahalapyc-Serule Road5 - Calculation of Physical and Price Contingencies6 -- Equipment for the Extension of the District Road Maintenance

Program7 -- Training School Equipment8 - Estimated Schedule of Eisbursements9 - Projected Vehiicles per Day on Project Road

ANNEXES: I - Economic Costs and BenefitsTable: Economic Costs and Benefits

II - Project Progress Reporting Requirements

Table: Project Monitoring Indices

CHARTS: 1. - Organization of the Roads Department of the Ministry ofWorks and Communications

2. - Project Implementation Schedule

MAP: Botswana - Road System (IBRD 3451R3)


BOTSWANA

SUMMARY AND CONCLUSIONS

i. This report appraises a road project prepared by the BotswanaGovernment for which a Bank loan of US$20.0 million is proposed. TheGovernment is committing substantial resources to road development,primarily to improve the North-South spine in the relatively populouseastern corridor, and main roads to serve it. This is important in viewof the heavy concentration of economic activity and the current andprojected mineral development projects in the region.

ii. The Bank Group has had three previous road projects in Botswanaand an infrastructure loan with a 52-km road component. The first two(Cr. 63-BEC, US$3.6 million, 1964; and Cr. 303-BT, US$2.0 million, 1972)

have been satisfactorily completed. However, according to project auditreports, the projected economic benefits of the first project were notfully realized in the period following project completion; the secondproject's economic justification was reconfirmed, although the rate ofreturn was lower than estimated at appraisal. Of the two ongoing projects(Loan 1174-BT, US$5.8 million, 1975; and Loan 776-BT, the Shashe Infra-structure Project, with a US$3.5 million road element, 1972) the formeris one year behind schedule but the latter is currently progressingsatisfactorily.

iii. The major component of this project is construction to bituminousstandards of a 150 km road (Mahalapye-Serule), which will complete theGovernment's long-term effort to improve the arterial North-South road toall-weather standards.

iv. In support of Government's effort to maintain the improved roadnetwork, the project also includes funds to assist with implementation ofthe recommendations of the Road Maintenance Study financed under the ThirdRoad Project. Further, the District Road Maintenance Pilot Program, alsofinanced under the Third Project, will be extended to two more districts.

v. A necessary classroom building will be constructed, and equipmentand vehicles will be provided for the Roads Department Training School toenable the School to increase the quality and quantity of trainirLg and thushelp overcome the lack of trained Department personnel.

vi. The Roads Department will be responsible for project implementation,except for the district program which will be executed by the Ministry of LocalGovernment and Lands through the two district councils in the areas where theprogram will be carried out.

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vii. Total project cost is estimated at US$28.0 million (US$26.3million, excluding taxes and duties). The foreign exchange component isUS$21.6 million, about 77% of total project cost. The project will befinanced by a Bank loan of US$20.0 million, which will cover 71% of totalproject cost (76%,net of taxes and duties) and 92% of foreign costs, andby a Government contribution of US$8.0 million (US$6.3 million, excludingtaxes and duties). The Bank loan will cover about 68% of total roadconstruction costs (90% of the foreign costs of the works) and the foreigncost of consultant and technical assistance services, and training equipment.

viii. The road construction contract will be awarded and maintenanceequipment procured after international competitive bidding in accordancewith Bank Group Guidelines for Procurement; Training School vehicles andequipment will be procured through Government's tender procedures, whichhave been reviewed by the Bank and found acceptable. Consultants will beemployed under terms of reference and conditions agreed with the Bank.Road construction is expected to start in the last quarter of 1977 and becompleted by mid-1981.

ix. The proposed investment in the Mahalapye-Serule road is economi-cally sound, yielding a 15% economic return. The three major road sectionswill yield returns of 15%, 19% and 14%. The road has a first-year returnof just under 9% when using a 10% discount rate.

x. The project is suitable for a Bank loan of US$20.0 million to theRepublic of Botswana. An appropriate loan term would be 20 years, with agrace period of 4.5 years, at 8.2 % interest.

APPRA SAL OF A FOURTH ROAD PROJECT

BOTSWANA

1. INTRODUCTION

1.01 The Government of Botswana has applied for assistance infinancing a road project which is in line with its transport develop-ment strategy of improving the North-South road artery to all-weatherstandards, and maintaining the existing and improved road networkincluding the rural roads.

1.02 The proposed project includes construction of the Mahalapye-Serule section of the North-South road, the organization and implementationof main, main feeder and district road maintenance programs; and the pro-vision of equipment for road maintenance and for training Roads Departmentstaff, as well as the construction of a classroom building for theDepartment's Training School.

1.03 The proposed project was identified during appraisal of the ThirdRoad Project, which included detailed engineering for the Mahalapye-Seruleroad, as well as a Road Maintenance Study and a District Road MaintenancePilot Program. Implementation of the Study's recommendations and extensionof the District Program are included in the proposed project. The trainingcomponent was identified during appraisal of this project; construction ofthe classrooms was proposed by the Government during negotiations andaccepted by the Bank.

1.04 This report is based on the findings of an appraisal missioncomprising Peter Ludwig (Engineer), Branko Bjelogrlic (Engineer) and MelodyMason (Economist), which visited Botswana in September 1976.

2. THE TRANSPORT SECTOR

A. Economic Background

2.01 Landlocked Botswana is a large (570,000 km2), sparsely populated,desert country (see Map). Access to the sea is through Durban, Cape Town,Port Elizabeth, Beira, or Maputo. The country's topography does not presentmajor obstacles to construction of transport facilities, but the scarcity ofwater and other construction materials, caused by widespread desert conditions,adversely affects road construction and maintenance.

2.02 The population, nearly 700,000, is growing at an annual. rate of2%. Although 75% of the people live in the eastern 10% of the country,average density there is only about nine persons per km2. As a consequenceof the settlement pattern, development of the transport system haLs beenconcentrated in the eastern corridor.

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2.03 Agriculture (primarily animal husbandry) is the largest economicactivity and contributed 35% of Botswana's GDP in 1974. However, mining israpidly overtaking it, having increased from 1% of GDP in 1968 to 21% in1974. This is primarily the result of mineral development at Orapa(diamonds), Selebi-Pikwe (copper/nickel), and Morupule (coal). Governmentis the third-ranking sector and contributed 10% of GDP in 1974. Basedupon proven mineral deposits, mineral exploitation is almost certain tobe increasingly important to the economy over the long-term and willrequire considerable improvement and expansion of transport facilities,including railway connections. While agriculture is not expected todevelop as rapidly, growth in this sector will also stimulate demand forimproved transport, especially roads. At present, however, low densityfreight and passenger flows mean that unit costs are high for furthertransport projects.

2.04 Per-capital GDP in 1975 was about US$330. In the early periodof rapid mineral development, real GDP grew at an annual average rate ofabout 20%, but is currently expanding at a much lower rate of 8% p.a.

B. The Transport System

General Description

2.05 Overall, the transport system consists of a thin network of roadsand tracks, with the arterial North-South road running parallel to the rail-way line in the eastern corridor. A small ferry operates across the ZambeziRiver between Kazungula, in Botswana, and Zambia. In addition, there is aconsiderable number of widely scattered airports or airstrips. Details onthe railway and air transport systems are given below; Chapter 3 givesdetails of the road subsector.

Railway

2.06 A nineteenth century-built railway system extends the 642 kmlength of eastern Botswana and links two large trading partners, theRepublic of South Africa (RSA) and Rhodesia. It is owned, operated, andmaintained by Rhodesian Railways, which pays Botswana an annual wayleaveof Lstg. 175,000. Virtually all skilled and semi-skilled railway positionsare held by Rhodesians. However, training programs are now underway toreplace 100 of the 140 Rhodesian personnel with Batswana within two years.In 1975/76, total railway traffic was 1,241 million ton-kilometers, ofwhich 80% was transit traffic; rail passengers totalled about 562,000 ofwhom 10% were in transit.

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2.07 The railway has increased in importance in recent years becauseof the traffic generated by mineral developments and the increase in beefexports. Rail spurs from the main railway line to Selebi-Pikwe (51 km)and to Morupule (14 km), were financed by the Botswana Government in 1974under the Shashe Infrastructure Project loan (776-BT) for mineral transport:and are operated and maintained by Rhodesia Railways.

2.08 The North-South road runs parallel to the main railway line.However, there is little road-rail competition for freight haulagebecause the railway is primarily a link between RSA and Rhodesia, whilethe road mainly serves internal traffic. At present the railway is notwell suited to serving internal traffic except for the transport of suchbulk items as coal and petroleum, because the comparatively light trafficdensities and short hauls are more suited to road transport. However,the possibility of transporting more bulk items by road is now umderinvestigation (para. 2.10).

Air Transport

2.09 Government's development strategy emphasizes the need for airconnections to integrate widely scattered settlements into the economic andsocial life of the country. Past attempts to establish a national airlinewith its own aircraft resulted in heavy losses and required substantialGovernment subsidization. In 1972, Air Botswana was established as aprofit-oriented parastatal organization wholly-owned by the Botswana Develop-ment Corporation; it provides domestic and international services by sub-contracting to private operators. Scheduled domestic flights serve mostBotswana population centers with Hawker Siddeley 748 and Viscount aircraft.International scheduled services are provided to RSA and Zambia by AirBotswana; Zambian Airways and South African Airways also provide air serviceto Botswana. Approximately 90,700 passengers were handled on scheduled airservices in Botswana in 1975/76, although this figure includes transitpassengers.

C. Transport Policy, Planning and Coordination

9.10 Botswana's present transport policy has two general aims: to meetcurrent demands by utilizing existing transport resources more efficientlyand to expand these resources as demand arises. Rapid growth in mineralexploitation, together with new industrial and agricultural developments,has put pressure on the present road system (para. 2.03). While preferringto decrease dependence on foreign-owned transport facilities, especiallythe railway, Government recognizes that the railway will continue to play asignificant role and hopes eventually to take over internal operations fromRhodesia (para. 2.06). CIDA is cuirrently undertaking a study or modal splitconsiderations, partizularly the tr:ansport of cattle, as part of contingencyplans being drawn -up by the Governiment in the evernt that politTcal events inRhodesia disrupt the rail service.

2I1L The current national transport plan is an integral part of the1973-78 National Development Plan and provides an adequate basis for develop-ment programs. In October 1977, the Government will undertake, with ODMassistance, the preparation of a long-term National Transport Plaa through

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consultants. However, in view of the present uncertain political situationin southern Africa, the implementation of such a plan may be constrained.

2.12 The Ministry of Works and Communications (MWC) is responsible for

roads and air transport and has a section dealing with railways, but since

the latter is controlled from Rhodesia (para. 2.06), the Ministry has little

influence over it. Within MWC, a Planning Unit was established in 1972 to

appraise proposed MOW projects, and prepare and continuously update the

national transport plan. Details of road transport planning are given in

paras. 3.12-.14.

D. Previous Bank Group Projects in the Transport Sector

2.13 The Bank Group has had three previous road projects in Botswana

and an infrastructure project with a road component. The first project,financed by a US$3.6 million credit (63-BEC) approved in 1964, provided for:

(a) the design, construction, and reconstruction of three roadstotalling 570 km;

(b) selected betterment of the North-South road; and

(c) improvement and expansion of the maintenance organization.

The project was satisfactorily completed on time in 1968, within cost estimates;

however, according to a project audit report, L/ projected economic benefitswere not fully realized in the 6-year period following project completionbecause the forecast shift from livestock trekking to trucking did not takeplace. This resulted from livestock quarantine restrictions making it moreeconomic to trek rather than truck cattle. The economic rate of return

estimated at appraisal ranged from 8-20% for various project components; the

1973 estimated rate of return for one component was negative and for theother components ranged from 4-16%.

2.14 In 1972, a second project was approved, financed by a US$2.0 millionIDA credit (303-BT), a US$4.0 million SIDA credit, and a contribution by

Government; it comprised:

(a) the reconstruction and paving of the 84 km Pioneer Gate-Lobatse-Gaborone-Sebele section of the North-South road;

(b) consultant services for detailed engineering and constructionsupervision; and

(c) technical assistance to the Roads Branch of the Public WorksDepartment.

These works were also satisfactorily completed ahead of schedule and within

cost estimates. The subsequent Project Completion Report2/ reconfirmed theproject's economic justification although the rate of return was estimatedat 13%, 6 percentage points lower than the appraisal estimate. This was

because the initial traffic level assumed at the time of appraisal was too

high, as the actual traffic growth rates compare reasonably with appraisalassumptions.

1/ Audit of Botswana First Highway Project, 1973.2/ Project Completion Report, Botswana Second Highway Project, 1976.

2.15 She third p-oject, financed by a US$5.8 million Bank loan(1174-BT) and a US$2.0 million Government contribution, was approved in1975, and onsisted of:

(a) construction of the Gaborone-Molepolole road (52 km);

(b) consultant services for detailed engineering, constructionsupervision and a Road Maintenance Study;

(c) implementation of a District Roads Maintenance Pilot E'rogram;and

(d) staff training, purchase of soils laboratory equipment andloadometers and weighbridges.

At present, project implementation is one year behind schedule owing todelays in preparation of acceptable tender documents.

2.16 The 1972 Shashe Infrastructure Project loan (776-BT) initiallyincluded construction of the 52 km Serule-Selebi-Pikwe road to gravelstandards. The project encountered some problems over construction defectsthat were subsequently resolved. Additional funds for bituminizing theroad were included in a supplementary loan which brought the total cost ofroad construction to US$3.5 million. Completion of the road is expected inApril 1977.

2.17 As a result of the Bank Group's past road project experience inBotswana, initial traffic levels on the proposed project road have beenarrived at after detailed traffic counts, and procurement procedures havebeen discussed in detail and agreed with Government during negotiations.

3. ROADS

A. The Network

3.01 At independence in 1966, Botswana had about 430 km of all-weatherroads, serving the more populated eastern corridor. Since then, with theassistance of the Bank Group, SIDA, CIDA, USAID, KfW, DANIDA, NORAD and ODM,the all-weather main road network has been expanded to about 1,450 km tomeet the increase in traffic; the length of bituminous-surfaced roads hasincreased from 26 km to 250 km.

3.02 The 7,200 km of inventoried roads, which are classified functionallyas main (2,300 km), main feeder (1,600 km) and secondary roads (3,300 km)(Table 1), comprise some 250 km of bitumincus-surfaced roads, 1,200 km ofgravel roads and 5,750 km of earth roads. Both main and feeder roads arebuilt to the same geometric standards. The rural nietwork of earth and sandroads has been estimated by a District Council Survey at about 11,300 km,of which only 3,300 km have been inventoried and classified as secondaryroads.

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3.03 While the generally flat terrain is favorable to road construction,major difficulties and consequent high costs result from lack of suitablematerials for construction and maintenance, including water, in the countryas a whole.

3.04 Recently accelerated main road construction is described inpara. 3.14.

B. Traffic

3.05 During 1965-73, the registered private vehicle fleet increased from3,900 to 8,100 vehicles (Table 2), a 14/% average annual growth rate; however,from 1973-75, the number of vehicles rose to 12,800, a 25% annual increase,reflecting the increase in mining activities. In 1975, the registered fleetcomprised 6,500 freight vehicles (mostly small trucks with less than 3-toncapacity), 3.600 automobiles, 125 buses, 2,400 tractors and trailers, and115 other types of vehicles, although not all are still in service.If these figutres took account of the number of vehicles becoming obsolete andpermanently out-of-service, the vehicle registration growth rate would belower and more in line vith the recorded growth of road traffic (para. 5.05).

3.06 The Roads Department has conducted traffic counts on selectedroads during recent years. As some of these counts were not reliable, MVCtransferred responsibility for traffic data collection to a newly-organizedStatistical Unit in the MWC under the direction of the Senior PlanningOfficer. The Unit has two professional statisticians seconded from theCentral Statistics Office and a number of statistical assistants. Thisarrangement should result in more reliable data collection.

C. Regulations and Rates

3.07 The Road Traffic Act of 1972, and its 1974 amendment, implementedby the Transport Control Division, is Botswana's first legislation governingvehicle weights and dimensions and provides adequate legislation to protectthe road system; axle loads are limited to 8-7 tons, as in RSA. This legis-lation was timely, because increased mining activity is beginning to generateheavy vehicle axle loads. Weighbridges and loadometers, financed under theThird Road Project, are being installed and will facilitate enforcement,especially for internal traffic; weights and dimensions of vehicles enteringBotswana from Rhodesia and RSA are already well-controlled by those countries.

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3.08 Under the same Act, Government also introduced regulations concerningentry into the road transport industry and vehicle licensing. Permits fromthe MW7C Iransportation Secretary are necessary for either handling one's owngoods or providing a for-hire service, but applicants need only demonstratefinancial responsibility and nominal demand; consequently, there are numeroustruckers, 60% of whom have only one vehicle and few have more than five. Nocontrol is exercised over freight rates, and considerable competition existsamong carriers. Road improvements have led to substantial freight ratereductions on those roads which have improved. Bus operators are requiredby law to charge one cent per passenger-kilometer and there is substantialcompliance with this requirement. Because this charge is not adequate toensure regular service on poorer roads, the Government provides subsidiesfor services on some of them. Local road transport is still undevelopedand has a high failure rate; the Transport Control Division has recentlybeen given a brief to consider ways of developing this industry. The roadtransport demand generated by the mineral development projects has beensatisfied mostly by foreign operators.

D. Administration

Roads Department

3.09 The organization of the Roads Department is shown in Chart 1.In addition to the main and main feeder road network, the Department isresponsible for maintaining airfields and Gaborone's city roads. TheDepartment is divided into four sections: Data and Planning, Maintenance,Development, and Rural Roads (each headed by a Roads Engineer); theorganization is adequate. The Maintenance Branch is subdivided into theNorthern, Southern, and Western Maintenance regions, each headed by aRoads Engineer.

3.10 Senior posts in the Roads Department have been filled withexpatriate experts under bilateral assistance from ODM, SIDA, NORAD,CIDA andDANIDA. The Department has only one national who is a qualified civilengineer. Although the Government is committed to a localization program

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and ample funds for training abroad are available from bilateral agencies,the Department has been unable to find enough suitable candidates foruniversity-level training abroad. Therefore, in the near future therewill continue to be insufficient qualified Botswana professional staff, andthe Goovernment will continue to depend on expatriates. This dependence,however, results in lack of continuity because expatriates normally servefor only two years. There is also a shortage of skilled local technicalstaff (para. 3.25). However, the National Development Plan provides forthe expansion of both primary and secondary education, and efforts to meetthe country's manpower requirements by the early 1980's are being supportedby a Bank education project (BT-1274/1275T).

District Councils

3.11 The District Councils, under the Ministry of Local Government andLands (1L10), are responsible for an estimated 8,000 km of district roads.However, thie Councils have few or no maintenance facilities and thus theroads, already in poor condition, continue to deteriorate. Under an ongoingproject, with assistance from NORAD, about 900 km of the network are to bereconstructed or improved. Also, the Third Road Project included a main-tenance pilot program at the district level (para. 3.23), which will beexpanded under the present project (para. 4.06).

E. Planning

3.12 The Division of Economic Affairs of the Ministry of Finance andDevelopment Planning (MFDP) is responsible for overall sector planningand coordination. Sectoral planning units have also been established inother ministries concerned with development. The MWC planning unit selectsand prepares economic evaluations of proposed road projects which, ifapproved by the MFDP and National Assembly, are included in the ongoingNational Development Plan. Because of the growing workload and MTFDP'slimited economic and planning expertise, responsibility for transportplanning is being increasingly assumed by the MWC planning unit.

3.13 This unit comprises a Senior Planning Officer and two planningofficers supported by a Statistics Branch; staff from the various ministerialdepartments provide the necessary technical assistance. The unit has success-fully prepared road projects for various financing agencies, although itscapacity is limited by insufficient staff.

3.14 Government's current road development plans include completion of theall-weather North-South artery, upgrading the remainder of the main road networkand improving rural roads. Altogether, nearly 1,100 km of the North-South road

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will be constructed to all-weather gravel or bituminous standards bymid-1981, at an estimated cost of about US$75 million. Although thismay appear a costly and ambitious undertaking, the necessary externalassistance has been forthcoming. Scheduling and funding for improvementof the North-South road to all-weather standards is summarized below:

Financing CompletionSection Agency Date

Ramathlabama-Lobatse (45 km) EDF 1980

Pioneer Gate-Lobatse-Gaborone-Sebele (80 km) IDA, SIDA 1974

Sebele-Mahalapye (180 km) ODM 1976

Mahalapye-Serule (150 km) IBRD 1981

Serule-Francistown (83 km) KfW 1978

Francistown-Nata (190 km) DANIDA,CIDA, 1977NORAD

Nata-Kazungula (360 km) USAID 1977

All sections are to be improved to bituminous standards, except for theNata-Kazungula section which was completed to all-weather gravel standards;USAID is already being approached for funds to bituminize it. Three importantroads which feed the North-South road are also to be paved, Serule-SelebiPikwe (52 km) and Gaborone-Molepolole (52 km), both with Bank Group assist:ance,and the Kanye-Lobatse road (45 km) with assistance from the African Develop-ment Bank. The Government further intends to improve the Francistown-Ramokgwebana road (70 km) to the Rhodesia border; when this is done, therewill be a bituminous road of good standard from Cape Town through Rhodesia,Zambia, Tanzania and Kenya to Kampala in Uganda and beyond. Also planned isimprovement to gravel or bitumen standards of the existing track from Selebi-Pikwe to the village of Zanzibar on the RSA border. (At present, there i'sa 90 km road to the south connecting Martin's Drift, on the RSA border, tothe North-South road.) The justification for the road will depend upon oltherinputs to develop the area (para. 5.09).

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F. Financing

3.15 Maintenance budget requests are prepared in the MWC and includedin the General Budget for Cabinet and National Assembly approval. Appro-priations are made in full to the MWC at the beginning of the fiscal year.Recurrent expenditure balances may not be carried over from year to year.In recent years, almost all capital expenditures for roads have been financedthrough external grants and loans.

3.16 Road users contribute to Government revenue through taxes andduties on vehicles, fuel, lubricants, and spare parts, and through licenseand registration fees. Only the license and registration fees, which contri-buted P 339,000 in 1974 (US$500,000 at the then-prevailing exchange rate),are set by the Botswana government. All customs and sales duties on goodsimported into the common customs area (Swaziland, Botswana, Lesotho, RSA)are paid into a common revenue pool. No specific data is available on totalrevenues collected, but the Government estimates that its share of transportrelated common pool revenues amounted to about P .3.6 million in 1974 (US$5.3million at the 1974 exchange rate); this amount includes a subsidy from thecustoms union which is significantly more than the road users actually pay.

Therefore, although revenue substantially exceeded road administrationand maintenance expenditures in 1974 and contributed toward road construction(Table 3), a significant amount of this revenue was not contributed by roadusers. Revenues in 1974 also reflected the increased growth in car registra-tion (para. 3.05); overall, growth in car registrations is not expected tocontinue to increase at such a high rate. Nevertheless, total projectedrevenues should still cover the increased costs of maintaining the improvedroad network.

3.17 In 1977, a new system of 'F licences' for all transit trafficwill be implemented. Foreign registered vehicles passing through Botswanawill have to purchase a voucher on entering the country. The price of thevoucher will depend on where a vehicle enters and exits from Botswana:about P 15 per gross ton per trip will be levied on each vehicle travellingfrom the very south to the very north or vice versa. The Government hopesthereby to recover some of the maintenance and amortization costs of theNorth-South road, especially as a considerable increase in traffic fromZambia and RSA is expected once the upgrading of the road has been completed.

3.18 Annual road expenditures, including construction, increased by morethan 500 % between fiscal 1970 and 1976 (Table 3) and represented approxi-mately 7% of total Government expenditure in the latter year. Over this period,administration and maintenance expenditures were modest because the road net-work was so small; however, the substantial improvements underway indicatethat considerable expenditures will be required in future. If current road

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development plans are implemented, by mid-1981 Botswana will have about 1,100

km of bitumen roads and about 1,600 km of gravel roads, requiring an esti-

mated annual expenditure of about P 2 million (in 1976 prices) if the roads

are to be properly maintained (para. 3.23).

G. Engineering

3.19 Roads Department design capacity is limited to small-scale projects

and is unlikely to increase significantly until the shortage of skilled

technicians, surveyors and soils technicians is overcome (para. 3.25). The

training program included in the Third Road Project will help alleviate this

problem. For major road projects, the Department will continue, in theforeseeable future, to depend upon the assistance of foreign consultants to

carry out feasibility studies and detailed engineering.

H. Construction

3.20 Major contracts are unit-price type; contract conditions conforn

to international standards and include provisions covering bid bonds, per-

formance guarantees, price escalation, advance payments, retention money,

arbitration and first-year road maintenance by contractor.

3.21 There are no Botswana road contractors because of a lack of

trained professionals, subprofessionals and managers. Roads areconstructed by foreign contractors. The infant construction industry,which is involved mostly in house construction, is adequate to meet the

limited demands on it. The Government is considering the possibility ofthe industry's expanding into small civil works, particularly to meet

district road needs. The Bank is prepared to offer informal technical-.sistance to assist the Government with a program to develop civil workscontractors.

3.22 Because of the Roads Department's limited capacity, expatriateconsulting firms supervise major road construction and will superviseconstruction of the proposed project road (para. 4.05).

I. Maintenance

3.23 The Roads Department carries out minimal routine and recurrentmaintenance of main and main feeder roads, consisting mostly of grading

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and bush-dragging gravel on earth roads; this system has caused many roadsto sink below the level of the adjoining land so that drainage is ineffec-tive and roads are sometimes impassable during rains. Further, theupgrading of the main road network in recent and coming years (para.3.14)will increase maintenance demands, and the Government is anxious to ensurethat the Roads Department is able to meet them. The Government alsorecognizes the need to strengthen the District Councils so they can adequatelymaintain and improve rural roads (para. 3.11). To assist in these endeavors,the Third Road Project provided for a Road Maintenance Study and DistrictRoads Maintenance Pilot Program. In a continuation of this effort, theproposed project includes assistance for implementing the Study's recommen-dations and expanding the Pilot Program (para. 4.06). In ad6ition, duringnegotiations it was agreed that the Government and the Bank will discussannually budget allocations for road maintenance.

3.24 The Central Transport Organization (CTO), under the MWC, providesand maintains all equipment and vehicles used by ministries and governmentagencies. Because inefficient management and a shortage of skilled workershad resulted in an overall low vehicle and equipment availability rate (aslow as 30% for the Roads Department), the Government prepared, with CIDAassistance, a program to improve CTO's organization and operations. Theprogram is now being implemented and should be substantially completed bythe end of 1978. CIDA is providing a General Manager, a Supplies Manager,a Transportation Manager, a Driver Operator Training Instructor and a SafetyOfficer, as well as funds for training aids equipment. To date, the programhas concentrated on improving the vehicle availability rate and has had somesuccess;, efforts are now focussing on increasing equipment availability.During negotiations, the Government and the Bank agreed that loan proceedswill not be disbursed for procurement of maintenance equipment for the RoadsDepartment until the availability rate of vehicles and equipment for theDepartment reaches a minimum of 60%.

J. Training

3.25 To overcome the shortage of skilled local staff in the RoadsDepartment, Batswana are being trained in the National Center for VocationalTraining which was set up under an ILO/UNDP project in Gaborone; in addition,surveyors, road section officers, draftsmen, soils technicians, road fore-men and equipment operators are being trained by the Roads Department; andmechanics and vehicle operators are being trained by CTO. The Roads Depart-ment has a very small Training School with two expatriate teachers providinR

- 13 -

instruction. The School is adequately organized, but lacks classroom faci-lities and training equipment, especially for equipment operators. Under theproject, a classroom building will be constructed and necessary vehicles andequipment for training operators will be provided (para. 4.07).

4. THE PROJECT

A. Objectives

4.01 The objectives of the proposed project are to assist the Govern-ment in completing the improvement of the North-South arterial road to all-weather standards; in implementing an effective main, main feeder anddistrict road maintenance program; and in strengthening the Roads DepartmentTraining School.

B. Description

4.02 The project consists of:

i) construction of the Mahalapye-Serule road (150 km) to two-lanebituminous standards;

ii) consultant services to:

a) assist the borrower in bid evaluation and superviseconstruction of (i); and

b) help prepare a feeder road construction program aspart of a larger rural development project;

iii) assistance with:

a) implementation of the findings of the Road MaintenanceStudy financed under the Third Road Project; and

b) extension of the District Roads Maintenance PilotProgram to two additional districts; and

iv) construction of a classroom building and procurement oftraining equipment for the Roads Department Training School.

- 14 -

(i) Mahalapye-Serule Road Construction

4.03 The project road is part of the North-South artery which linksBotswana with Zambia in the north, RSA in the south and Rhodesia in theeast. Within the country, the North-South road connects Francistown, amajor administrative and commercial center in the north, to the capital,Gaborone, in the south. The project section of the North-South road willlink three major villages, Mahalapye, Palapye and Serule. Further, it%ill link several main and secondary roads which serve areas to the westsn east.

4.04 The project road will replace an existing earth road which issometimes closed to traffic during the rainy season, particularly as it isgenerally below ground level and thus acts as a water-course during heavyrains. The road, which passes through flat terrain, will be built to mainroad standards (Table 4). This construction will significantly reduce roaduser and maintenance costs (para. 5.04).

(ii) Consultant Services

4.05 (a) Consultants will be employed to supervise the Mahalapye-Serule road construction and to assist the Roads Department with bidevaluation.

(b) In addition, a nominal sum has been included in the proposedproject for consultant services and technical assistance to assist in thepreparation of an as-yet-undefined feeder roads construction program. Sucha program would be part of a larger rural development program which is inthe initial stage of identification.

(iii) Road Maintenance

4.06 (a) Financed under the Third Road Project, a Road MaintenanceStudy,to be completed in December 1977, will consider all aspects of roadmaintenance (planning, execution, financing and control) and draw up afive-year maintenance program for the gazetted network (para. 3.23). Thisprogram will be discussed between the Government and the Bank, and therecommendations to be implemented will be agreed upon. In order to assistGovernment in carrying out the agreed program, a notional sum has been includedin the proposed project.

- 15 -

(b) A District Roads Maintenance Pilot Program for the CentralDistrict, scheduled to begin in mid-1978 under the Third Road Project(para. 3.23), is to be drawn up as the first part of the Road MaintenanceStudy. Organizational and operational procedures will be set up for thebetterment, rehabilitation and maintenance of the District's roads, andMLGL, through the Central District Council, will implement them. Theinitial results of the Pilot Program will be reviewed by the Governmentand the Bank, and two more districts will be selected by the MLGL forinclusion in an agreed extension of this program to be financed under theproposed project. As under the Third Project, the extended program willbe oriented towards labor-intensive methods (Table 6), if they are foundto be justified.

(iv) Training School

4.07 Previous Bank support of Roads Department training efforts(para. 2.15) will be continued under this project through provision ofequipment to the Roads Department Training School (Table 7), which shouldsignificantly increase its capacity to train operators (para. 3.25), andthrough construction of a building with three classrooms and office space.

C. Status of Engineering

4.08 Detailed engineering to main road standards for the Mahalapye-Serule Road (Table 4).was prepared by Brian Colquhuon and Partners(consultants, UK), financed under the Third Road Project, and is satis-factory.

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D. Cost Estimate

4.09 Total project cost (including contingencies) is estimated atUS$28.0 million, or US$26.3 million, excluding taxes and duties. Theforeign exchange component is US$21.6 million, or 77% of total projectcost. The tax component is estimated at about 6% of total cost. Projectcost estimates are given below:

Pula million US$ million ForeignLocal Foreign Total Local Foreign Total Component

i) Construction:Mahalapye-Serule Road(150 km) 3.50 10.5 14.00 4.04 12.13 16.17 75

ii) Consultant Services:a) Supervision of (i) 0.16 0.64 0.80 0.19 0.74 0.93 80b) Preparation of feeder 0.04 0.16 0.20 0.05 0.18 0.23 80

road program

iii) Road Maintenance:a) Implementation of the

findings of the studyfinanced under Roads III 0.10 0.90 1.0 0.11 1.04 1.15 90

b) Extension of DistrictRoads MaintenancePilot Program 0.10 0.90 1.0 0.11 1.04 1.15 90

iv) Strengthening of RoadsDepartment:Training Schoolequipment, classrooms 0.02 0.28 0.30 0.02 0.33 0.35 95and office space.

Subtotal (i-iv) 3.92 13.38 17.30 4.52 15.46 l .98

v) Contingencies:l/a) Physical: 10% 0.40 1.33 1.73 0.45 1.55 2.00b) Price:

29% on (i) 1.1Z J.36 4.50U 1.30 3.90 5.2023% on (ii) 0.05 0.21 0.26 0.06 0.24 0.3020% on (iii) 0.04 0.39 0.43 0.05 0.45 0.50l'/ on (iv) 0.01 0.03 0.04 0.01 0.04 0.05Subtotal (v) 1.62 5.34 6.96 1.87 6.18 8.05

Total Project Cost 5.54 ;a8.72 24.26 6.39 21.64 28.03 77

Total Project Costexcluding taxes and duties 4.08 18.72 22.80 4.75 21.64 26.35 82

_/ See Table 5 for calculation of contingencies.

- 17 -

4.10 The base costs are estimated as of February 1977 and have beenderived as follows:

(i) Road Construction: the appraisal cost estimate was based on unitprices estimated by the consultants who carried out detailed engineering forthe project road. However, bids for the Serule-Francistown road receivedafter appraisal showed a 9% increase in the construction cost per km; there-fore, as the road is similar to the project road, costs have been based onthe bids received. Foreign costs are estimated at 75% of total constructioncosts.

(ii) Consultant Services: based on 200 man-months at US$5,000 per man-month, which is similar to rates paid in the recent past for supervision ofconstruction in Botswana. Also, a notional sum is included for assistancewith the preparation of a feeder road construction program which could formpart of a future rural development project.

(iii) Road Maintenance: a notional sum has been included to assistGovernment in implementing the recommendations of the Road Maintenance Studyfinanced under the Third Road Project. Estimates for extension of theDistrict Roads Maintenance Pilot Program are based on updated 1975 quotesfrom equipment suppliers (Table 6). A technical assistance component hasalso been included, as well as additional funds for equipment which may benecessary following the findings of the Pilot Program.

(iv) Training School: construction and equipment costs are based onMWC's estimates, which appear reasonable (Table 7). Local costs cover localhandling and transport.

E. Financing

4.11 The project will be financed by a Bank loan of US$20.0 millionwhich will cover 92% of the project's foreign costs, and by a Governmentcontribution of US$8.0 million (US$6.3 million, excluding taxes and duties)of which US$1.6 million will cover the remaining 8% of the foreign costs ofthe project (10% of the foreign costs of construction). The financing plan,,net of taxes, comprises:

Source% of % of % of % of

Govern- Total Foreign Total ForeignItem ment Cost Cost IBRD Cost Cost Total

US$ US$ US$million million million

Construction 6.01 28 10 15.60 72 90 21.61Supervision 0.18 16 - 1.00 84 100 1.18Preparation of feederroad program 0.03 10 - 0.25 90 100 0.28

Road Maintenance 0.11 4 - 2.75 96 100 2.86Training Equipment 0.02 5 - 0.40 95 100 0.42

6.35 25 8 20.00 75 92 26.35

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F. Implementation

Responsibility

4.12 The Roads Department will be responsible for the implementationof all project components except the District Roads Maintenance Programwhich will be executed by the MLGL, through the District Councils in theareas where the program will operate.

Scheduling

4.13 Construction and related supervision of the project road will

take about 4 years, with an estimated 10% of the works to be carried out in1977, 25% in 1978, 30% in 1979, 30% in 1980 and 5% in 1981. TheDistrict Roads Maintenance Pilot Program (financed under the Third RoadProject) should start in mid-1978 in the Central District; extension ofthe program into the two other districts will begin once the inital resultsof the Pilot Program are known, in early 1979. Implementation of theRoad Maintenance Study's recommendations is also expected to begin in early 1979.The equipment for the Roads Department Training School should be availableby the end of 1978. An implementation schedule, which was agreed withGovernment during negotiations, is shown in Chart 2. Also agreed duringnegotiations were project implementation reporting requirements and indicesfor measuring implementation progress (Annex II).

G. Procurement

Equipment and Civil Works

4.14 The MWC, assisted by its consultants and technical assistants,will identify the maintenance equipment required for the road maintenanceprogram and the District Roads Maintenance Program (para. 4.06). Theequipment to be procured under the project will be subject to agreementwith the Bank. In addition, consultants and technical assistance expertsfor the Roads Department and the MLGL will be employed under terms ofreference and conditions agreed with the Bank Group.

4.15 The maintenance equipment will be procured and the constructioncontract awarded after international competitive bidding, in accordancewith Bank Group Guidelines for Procurement. The construction contractwill be divided into two parts and prospective contractors will be allowedto submit tenders on one or both parts following prequalification. Thisprocedure will permit greater competition than if the contract were notdivided. No problems are expected in acquiring land for right-of-way, asthe Government has the right of eminent domain.

- 19 -

4.16 The vehicles and equipment for the Training School (Table 7)consist of several independent items, each valued at between US$6,500 andUS$60,000. It would be preferable to procure these items through Govern-ment's tender procedures so that the equipment purchased is the same asthat in current use by the Roads Department. Therefore, procurement forthe Training School will be through local tender procedures which havebeen reviewed by the Bank and found acceptable. The construction of thenew school, at an estimated cost of US$75,000,will be done under forceaccount.

Construction Methods

4.17 Main road construction in Botswana has been equipment-intensive,principally due to the relatively high wage rate and the difficulty andcost of organizing a large labor force in a country where the few populationcenters are widely separated. Further, labor, which is much in demand byRSA mining companies, is generally available only on a seasonal basis.Nevertheless, the construction of culverts, drains and structural excavationwill absorb a substantial labor input. The optimum degree of labor intensive-ness suitable for the project's maintenance components will be determined inthe course of the Road Maintenance Study (para. 4.06).

H. Disbursements

4.18 Disbursements will be on the basis of 68% of the cost of civilworks (including taxes), which amounts to 90% of the foreign cost of thecivil works, 80% of total costs for consulting services and 100% of theforeign cost of the maintenance and training equipment and the technicalassistance. A disbursement schedule is shown in Table 8.

5. ECONOMIC EVALUATION

A. Main Benefits and Beneficiaries

5.01 The project road, which represents 82% of the total cost of theproject (net of taxes), will be the last section of the arterial North-Sout:hroad (for description, see para. 4.03) to be construtcted to all-weatherstandards. The main benefits from project road construction will be savingsin vehicle operating costs (voc) and road maintenance expenditures. The mainbeneficiaries will be the direct road users. However, substantial freight

- 20 -

rate reductions have occurred on those roads which have been improved in thepast. The economic return on the road construction is 15%. Unquantifiedbenefits include time savings and increased comfort for road users. Aneconomic return on the project's road maintenance component, which accountsfor 11% of project costs, has not been calculated because the program hasnot yet been defined. However, the benefits are expected to be substantial.

B. Area of Influence of the Project Road

5.02 The direct area served by the Mahalapye-Serule road is approximately4,000 km2, with about 100,000 people; the indirect area serves a populationof about 240,000 of whom about 65,000 live in small towns of 5,000 peopleor more. The rest of the population in the influence area are principallysmall farmers who raise cattle and cultivate crops, mostly sorghum, maize,millet and beans. Limited agricultural development is taking place in thearea through the formation of Farmers' Brigades and the establishment ofexperimental farms and training centers. Furthermore, the Government iscarrying out a livestock development program, including opening up newcattle trekking routes and setting up fattening and demonstration ranches,three of which are situated in or near the project area.

5.03 The copper-nickel mining complex at Selebi-Pikwe and the coal-miningat Morupule, near Palapye, have provided over 1,000 jobs since their opening in1974 and direct and indirect employment continues to increase. However, furthermining development in the road's influence area is uncertain, owing tothe political situation in southern Africa and its potential effect on theRhodesian-owned railway in Botswana. While industrial activity in theproject area is negligible at present, small-scale industries are beingdeveloped gradually by the Government's Youth Brigades, especially aroundSerowe where Engineering, Electrical, Textile, Carpenters' and Printers'Brigades have been formed.

C. Economic Analysis

5.04 The basis for the economic analysis of the project road is anassessment of expected traffic benefits and costs with and without theproposed improvement over 20 years, the expected economic life of theroad construction. The investment cost is taken as the net of tax cost ofimproving the road, including supervision and physical contingency costs.

- 21 -

The principal quantifiable benefits are savings in vehicle operating costs androad maintenance expenditures (Annex I, Table 1). The residual value of theroad after 20 years, amounting to 100% of the earthworks and 50% of bridgeconstruction costs, is also included in the stream of benefits. Other benefits,whichi have not been quantified, are road user time savings, accident reductionand increased comfort for road users. Construction of the road to all-weatherstandards will eliminate the loss of time presently incurred when sectionsbecome impassable during parts of the rainy season. Fencing of the road willcontribute to benefits by reducing the number of animals straying onto theroad and will help reduce the severity of accidents.

Traffic on Project Road

5.05 In 1975, traffic on the project road reached 156 vehicles per day (vpd)on the Mahalapye-Martin Drift's Junction section (Section A, 65 kim), 180 vpd onthe Martin Drift's Junction-Serowe Junction section (Section B, 9.4 km), and105 vpd on the Serowe Junction-Serule section (Section C, 75.3 km) (Table 9).In recent years, traffic growth over the whole length of the project road hasequalled the national average of 10% p.a.; for Section A, the growth rate hasbeen 11%, for Section B, 8%, and Section C, 11%. The Government estimates thattraffic will increase by well over 10% annually in the next 20 years on the wholelength of the North-South road once it is improved to all-weather standards,because of an increase in traffic from Zambia and eventually Rhodesia.

5.06 Because of limited agricultural development and uncertain mineralexploitation plans, more conservative traffic growth forecasts have been used inthe economic analysis:

Forecast Traffic Growth Rate

Section 1976-90 1991-2000

A 9% 8%

B 8% 8%

C 10% 8%

The evaluation also assumed that the road improvement would initially generatetraffic equivalent to 10% of existing traffic in 1981, the first year aftercompletion of the road, and that this traffic would grow at the same rate asnormal traffic for each section throughout the life of the improvement (20years). For purposes of analysis, only 50% of the vehicle operating costsavings for the generated traffic were included in calculating the economic rateof return. Although 20% of vehicles using the project road in 1976 wereregistered outside of Botswana, it was assumed for analysis purposes that 50%of the voc savings accruing to these vehicles would remain in Botswana, espe-cially as most traffic at the present is bound to and from destinations insideBotswana and is not through traffic.

Costs and Benefits

5.07 Given that the opportunity cost of capital in Botswana is estimatedat between 10-12%, the streams of costs and benefits indicate that the pro-posed investment in the Mahalapye-Serule road is economically sound (Annex I,Table 1), yielding a 15% economic return. Section A shows a 15% economicreturn, Section B, 19% and Section C, 14%. The road has a first-year returnof just under 9% when using a 10% discount rate. However, if unquantifiedbenefits (para. 5.04) are taken into account, first-year benefits would behigher than estimated. Also, political events in Rhodesia could lead to adisruption of rail service. If this should occur, the North-South roadwould become vital to Botswana, especially for the movement of livestock,the country's most important export, to the abattoire in the south and forthe transport of petroleum to the north and east. Although Section C hasa first-year return of jtust under 8%, only a two-year delay is required tobring it to 10%. However, the Government has set a high priority onimproving the North-South road to all-weather standards so as to open upmore trade with Zambia and to provide an alternative transport facility ifRhodesian Railway service is disrupted. Since Section C would be the onlyearth section of the entire road after 1980, it is recommended for inclusionin the project. The possibility of gravelling the road has been ruled outas all sections have lower rates of return than the bitumen road, mainly dueto the very high maintenance costs of a gravel road because of the level ofprojected traffic flows and the dry environment. The first-year return oneach road section is also lower for a gravel road.

Sensitivity Analysis

5.08 Sensitivity tests applied to the economic analysis assumed construc-tion cost increases (the major risk), traffic growth rate reductions, anddecreased unit vehicle operating cost savings. The assumed variables used inthese tests and the related economic returns are:

Assumptioii Economic Return (%)

Best estimates 15

Best estimates except:15% increase in construction cost 13

Best estimates except:6% average annual traffic growth 12.5

Best estimates except:10% decrease in unit voc savings 14

All individual sections of the road maintain a rate of return of 12% or overwhen these sensitivity tests are applied, except for Section C which has an11% rate of return if traffic grows by only an average of 6% annually.

- 23 -

Other Risks

5.09 Included in the 1976-81 Draft National Plan is the construction ofa road from Selebi-Pikwe to Zanzibar or farther south to the RSA border(para. 3.14). The road would: (a) provide eastern Botswana with an all-weather link with RSA, as there is only an earth road from Martin's Driftto the North-South road; and (b) improve communications with the area tothe east of the project road, the area of greatest agricultural potentialin Botswana. The Government plans to begin construction in 1978-79, but nofinancing has yet been secured. Further, the economic justification forthe road is doubtful over the next few years because (a) most benefits wouldaccrue to traffic flowing to and from RSA, and (b) current traffic levelsare low. However, since the road would serve an area of aRriculturalpotential, it might be justifiable as part of an overall development pro-gram for the area. If constructed, this road would divert traffic awayfrom the project road, as the route through Zanzibar to RSA is shorter forvehicles coming from north of Serule, Serule and Selebi-Pikwe than the routethrough Martin's Drift. An estimated 3% of traffic would be diverted fromSection A, 5% from Section B and 8.5% from Section C, but the rate ofreturn on the project road would still be a satisfactory 14.5%. Section Cwould be affected most: its return would drop to 12.5%.

6. AGREEMENTS REACHED AND RECOMMENDATION

6.01 During negotiations, the Government agreed that it would:

(i) discuss annually with the Bank budget allocations for roadmaintenance (para. 3.23);

(ii) submit for Bank approval, during project implementation,maintenance programs for main and main feeder roads andfor district roads (para. 4.06)i and

(iii) employ consultants and technical assistants under the projectunder terms and conditions satisfactory to the Bank (para. 4.14).

6.02 Also during negotiations, agreement was reached with novernment on:

(i) project execution timing and reporting requirements, andindices for monitoring progress (recorded in Agreed Minutesof Negotiations) (para. 4.13);

(ii) terms of reference and conditions for consultant services for cons--truction supervision (recorded in Agreed Minutes of Negotiations)(para. 4.14).

(iii) procurement procedures (paras. 2.17, 4.14-.16).

- 24 -

6.03 It was also agreed during negotiations that loan proceedsfor procurement of Roads Department maintenance equipment would notbe disbursed until CTO's vehicle and equipment availability rate tothe Department reaches a minimum of 60% (para. 3.24).

6.04 With the agreements indicated above, the project is suitablefor a Bank loan of US$20.0 million, for 20 years with a grace periodof 4.5 years, at 8.2% interest, to the Republic of Botswana.

March 23, 1977

_._3LE 1


BOTSWANA

Length of Gazetted Road Network. 197(r-75

(km) 1/

Type of Roads 1970 1971 1972 1973 1974 1975-

Main

Bitumen 26 26 26 60 146 229Gravel 397 522 522 513 506 789Earth 2,082 1,941 1,941 16 1,826 1,248

Sub-total 2.505 2.489 2e489 2,489 2.478 2 266

Main Feeder

Bitumen - - - - 22Gravel 267 267 297 332 332 322Earth 2,080 2,134 2,104 2,069 2,069 1,283

Sub-total 2,347 2,401 2,401 2,401 2,401 1,627

Secondary

Bitumen - - -Gravel - - 77Earth - - 3,212

Sub-total - - - - - 3,289

District

Gravel - - 30 -Earth 3,106 3,080 3,080 3 3,050 -

Sub-total 3,106 3,080 3,080 3,080 3,080 -

Total all roads 7,958 7,980 7,980 7,980 7,959 7,182

1/ 1975 roads lengths lo not match previous lengths, because the Governmentreclassified the whole network.

Source: Roads Department, March 1976.

March 1977

TABLE 2


BOTSWANA

Vehicles Reeistered, 1965-1q75

Year Number of Vehicles Annual Increase

1965 3,884

1966 4,302 11

1967 4,992 16

1968 5,101 2

1969 5,681 11

1970 6,215 9

1971 6,462 4

1972 7,663 19

1973 8,143 6

1974 11,181 37

1975 12,809 15

Note: Figures do not include 1,992 government-owned vehiclesregistered in 1975.

Source: Ministry of Works and Communieations,September 1976.

March 1977

TABLE 3


BOTSWANA

Annual Expenditures on Roads, 1970/71 - 1975/76

FiscalYear Administration Construction Maintenance Total

…-----------…-(Pula thousand)…-----…--_______________

1970-71 178 664 1,089 1,931

1971-72 164 991 619 1,774

1972-73 150 575 748 1,473

1973-74 214 3,989 887 5,090

1974-75 274 8,834 1,351 10,459

1975-76 328 8,875 1,369 10,572

Source: Ministry of Works and Communications, September 1976.

March 1977

TABLE 4


BOTSWANA

Design Standards for Mahalapye-Serule Road

CharacteristicsGeometric Design Standards

Speed 120 km/hrMinimum horizontal r-adius 840 m *

Maximum gradient 4 %Maximum superelevation 7 %Pavement crossfall 2.5 %Shoulder crossfall 3.5 %Maximum length of straight 2,400 m*

Roadway Features

Road widths 10.7 mBituminous pavement width 6.7 mShoulder width 2.0 mRight-of-way width 60.0 m**Bridge width 10.7 m

Structural Design Features

Maximum axle load 8.2 ui/tolisPavement design Road Research Laboratory

TRRL Reiort RN 31Bridge loading AASHO-H20-S16

* To be discussed from case to case with Borrower's roads "ena-t-ent.** 40 m. in urban areas if necessary.

Source: Ministry of Works and Communications, 1975.

March 1977

TABLE 5


BOTSWANA

Calculation of Physical and Price Contingencies

Item Costs (US$'000)1 1977 1978 1979 1980 Total

Construction Base Cost Estim,ate 1,617 4,851 6,468 3,234 16,170Physical Contingency 162 485 647 323 1,617Total 1,779 5,336 7,115 3,557 17,787Expected Price Incrense 160 999 2,346 1,690 5,195

Consulting Services Base Cost Estimate 93 279 500 288 1,160Physical Contingency 9 28 50 29 116Total 102 307 550 317 1,276Expected Price Increase 8 46 136 108 298

Road Maintenance Base Cost Estimate 500 1,500 300 2,300Physical Contingency 50 150 30 230Total 550 1,650 330 2,530Expected Price Increase 85 333 80 498

Equipment for Training School Base Cost Estimate 335 335Physical Contingency 34 34Total 369 369Expected Price Increase 46 46

Assumptions: Physical contingencies, to cover unforeseen quantity increase,

are equivalent to 10%

Price contingencies, which provide for anticipated cost increases overthe implementation period, are as follows:

Rate of Cost Ir.crease

1977 1978 1979 1980

Construction 12% 12% 12% 10% 1/Consultant Services 10% 9% 8% 7% 2/Road MIaintenance Component 9% 9% 8% 7% 3/Equipment for Training School 8% 8% 8% 7% T/

1/ Based on Bank Guidelines,which are applicable to Botswana.2/ Based on cost trend for consulting services observed in Botswana.3/ The road maintenance component is composed of equiprment and technical assistance

and/or consultant services and a small construction component (USS75,000). Therates of cost increase were calculated by taking the average increase forequipment procurement and consulting services.

March 1977

TABLE 6


BOTSWANA

Equipment for the Extension of the District Road Maintenance Pro ramk'

No. of -Units Description of Unit Unit Cost - o Cost

…- - - - -('-ula)…-- - -- - -

Type A

12 Four-wheel drive tractors 10,000 120,000

12 Trailers 3,000 36,000

12 Towed Graders 6,000 72,000

Type B

6 Two-wheel drive tractors 6,000 36,000

6 Trailers 3,000 18,000

General

Miscellaneous hand tools, tents, etc. 18,000Total Cost Pula 300,000

Tntal Cost US$ 350,000

* Estimated prices in February 1977.

1/ The type of equipment and exact nunber o' untts may be changed as

a result of the findings of the Pilot Program.

Source: Appraisal Mission updated estimates based on 1975 prices obtained

from the Ministry of Local Government and Lands, January 1975.

I"rceL 1977

TABLE 7


BOTSWANA

Training School Ecuipment

No. ofUnits Description of Unit Unit Cost- Total Cost

----------(Pula)…-----------

1 Grader (Galion or Cat.) 52,000 52,000

1 Dozer (D6) 60,000 609,00

1 Loader (950 Cat.) 53,000 53,000

1 Roller 30,000 30,000

1 Tractor (M.F. 163) 6,500 6,500

1 Tipper Truck (Bedford) 0,0O0 9,000

1 Bus for Students 8,500 8,500

1 Pick-up for Site Work 6,500 6,500

Miscellaneous tools, spares n.a. 10,000235.000

Sub-total 235,000

Construction of new schoolcomprising three class-rooms and office space 65,000

Total rost wuia 300,000

Total Cost US$ 346,500

* Estimated prices in February 1977.

Source: Appraisal Mission estimates based on information from theMinistry of Works and Communications, September 1976.

March 1977

TABLE 8


BOTSWANA

Estimated Shedule of Disbursements

IBRDFiscal Year Cumulative Disbursementand Quarter at end of Quarter

(US$ thousand)

1977/78

September 30, 1977December 31, 1977 2,000March 31, 1978 3,600June 30, 1978 4,900

1978/79

September 30, 1978 5,900December 31, 1978 7,000March 31, 1979 9,200June 30, 1979 10,400

1979/80


1980/81


Closing date: December 31, 1981

Source: Mission estimates

March 1977


BOTSWANA

Projected Vehicles Per Day on Project Road

Section 1975 1976 1981 1986 1991 2000

A. Mahalapye-Martin's Drift Junction (65 kma) 159 172 291 448 683 1,365

B. Martin's Drift Junction-Serowe Fork (9.4 kin) 185 200 323 475 697 1,394

C. Serowe Fork-Serule (75.3 km) 106 116 206 331 525 1,049

Note: Traffic forecasts based on 9% per growth 1975-1990 and 8% growth 1990-2000 for Section A87 " I.t.. " B

10% XI SI 8% II CGenerated traffic commencing at a level of 10% of the normal traffic in 1981 was included,after completion of the

construction works.

Breakdown by Vehicle Type of 1976 Traffic

Vehicle Type Section A Section B Section C

Passenger car 23 27 20Pick-up/Minibus 69 74 45L_ght Truck 37 38 22Truck/Bus 30 37 19Heavy Truck 13 20 10

Total 172 196 116

Source: Ministry of Works and Communications and Sir Alexander Gibb & Partners and F.H. Kocks, Consultants, June 1975,and appraisal estimates.

H

Mlarc.h 1977

ANNEX IPage 1


BOTSWANA

Economic Costs and Benefits

A. Economic Costs

1. Economic costs for the construction of the Mahalapye-Serule roadhave been derived by taking the estimated financial cost of improvement,supervision and physical contingencies and reducing this sun by 7%, represent-ing taxes and duties.

B. Economic Benefits

2. Quantified benefits are savings in road maintenance expendituresand voc. Maintenance cost savings have been calculated on the basis ofannual maintenance costs per kilometer for the existing and improved road.Voc savings have been derived as follows:

Vehicle ODerating Economic Costs- /by Type of Road

Road SurfaceVehicle Type Earth Gravel Bitumen

(cents per km: 100 cents equal 1 pula)

Passenger car 10.23 7.6 5.64Pick-up/Minibus 12.65 9.28 7.10Light Truck 21.04 13.50 9.58Truck/Bus 34.11 20.81 13.98Heavy Truck 48.95 29.78 19.48

3. Traffic projections are shown in Table 9; traffic compositionduring the life of the improvement was assumed to be the same as that in1976. Although 20% of vehicles using t'e project road in 1976 wereregistered outside of Botswana, it was assumed for analysis purposes that50% of the voc savings accruing to these vehicles would remain in Botswana,

especially as most traffic at the present is bound to and from destinationsinside Botswana and is not through traffic, Traffic generated aftercompletion of the road is forecast at 10% of the traffic in 1981, with thesame composition as normal traffic, the same percentage of vehicles registeredoutside of Botswana, and the same rate of growt.' as normal traffic throughoutthe life of the road. The 155.5 km existing road is mostly earth except fora few short gravel and bitumen sections (totalling 20 km). The improved

ANNEX IPage 2

road will be 149.7 km; voc savings were calculated for each of the threEroad sections. takinR kilometerage saved into eccoint,

Length of Road Length of RoadLength of Improved from Improved from Reduction in

Section New Section Earth to Bitumen Gravel to Bitumen Kilometerage

-----------------------------(km)-----

A 65.0 63.11! - 2.&=B 9.4 4.1 5.3C 75.3 65.71/ 3.0 3.29/

1/ The remaining 1.9 km of road is already bituminized.2/ Kilometerage saved on existing bitumen surface.3/ The remaining 6.6 km of road is already bituminized.4/ Kilometerage saved on existing earth surface.

The streams of costs and benefits are presented in Table 1 of this Annex,together with the rates of return for each section and for the entireproject road.

March, 1977


BOTSWANA

ECONOMIC COSTS AND BENEFITS

(Pula '000)

SECTION A SECTION B SECTION C(65 km) (9.4 km) (75.3 km)

MAHALAPYE-MARTIN'S DRIFT JUNCTION MARTIN'S DRIFT JUNCTION-SEROWE FORK SEROWE FORK-SERULE ENTIRE ROAD

l/ . - - - - If _

VEHICLE 1/ VEHICLE - 2/ VEHICLE-/ 2/ 3CAPITAL OPEKATINC MAINTENANCE TOTAL NET- CAPITAL OPERATING MAINTENANCE TOTAL NET- CAPITAL OPERATING MAINTENANCE TOTAL NET- TOTAL NET-

YEAR COSTS COST SAVINGS COST SAVINGS BENEFITS COSTS COST SAVINGS COST SAVINGS BENEFITS COSTS COST SAVINGS COST SAVINGS BENEFITS BENEFITS

1977 1,509 - - -1,509 - - - - - - - - -1,5091978 4,527 97 - -4,430 - - - - - - - -4,4301979 1,055 449 - -606 649 - - -649 4,331 - -4,331 -5,5861980 576 111 687 62 18 80 3,018 273 - -2,745 -1,9881981 * 659 118 777 - 69 19 88 525 109 634 1,4991982 - 718 125 843 - 75 25 100 577 116 693 1,6361983 - 783 170 953 - 81 26 107 635 122 757 1,8171984 - 853 178 1,031 - 87 28 115 699 130 829 1,9751985 - 930 187 1,117 - 94 29 123 769 136 905 2,1451986 - 1,013 196 1,209 - 102 30 132 845 145 990 2,3311987 - 1,105 -147 958 - 110 -23 87 930 194 1,124 2,1691988 - 1,204 219 1,423 - 119 33 152 1,023 -194 827 2,4031989 - 1,312 233 1,545 - 128 35 163 1,125 214 1,339 3,0471990 - 1,430 247 1,677 - 138 37 175 1,238 225 1,463 3,3151991 - 1,545 298 1,843 - 149 44 193 1,337 238 1,575 3,6111992 - 1,668 315 1,983 - 161 46 207 1,444 248 1,692 3,8821993 - 1,801 330 2,131 - 174 48 222 1,560 259 1,819 4,1721994 - 1,945 10 1,955 - 188 -5 183 1,684 272 1,956 4,0941995 - 2,101 361 2,462 - 203 51 254 1,819 -76 1,743 4,4591996 - 2,269 377 2,646 - 219 54 273 1,964 337 2,301 .5,2201997 - 2,451 393 2,844 - 237 61 298 2,122 346 2,468 5,6101998 - 2,647 444 3,091 - 256 62 318 2,291 358 2,649 6,0581999 - 2,858 13694/ 4,227 - 276 1084/ 384 2,475 370 2,845 7,4562000 - - - - - - - 2,673 1,2934/ 3,966 3,966

Economic Return 15% 19% 14% 15%

1/ Calculated on the basis of (a) vpd, (b) 365 days, (c) unit savings in voc per km. on existing and improved road.2/ Total benefits, reflecting savings in voc, savings in maintenance costs, and capital costs.

3/ Sum of total benefits for the three road sections.4/ Iiicludes residual value.

March 1977

ANNEX IIPage 1


BOTSSWANA

Project Progress Reporting Requirements

1. Progress Reports should be submitted quarterly in triplicate,no later than one calendar month after the end of the quarter. The firstReport should cover the quarter ending December 31, 1977.

2. The information that the Report should contain is describedbelow.

(i) General information: this section should refer to ProjectMonitoring Indices (Table 1 of this Annex) in reporting the following:

(a) the physical progress accomplished to date of reportand during the reporting peried;

(b) actual or expected deviations from the project imple-mentation schedule;

(c) actual or expected difficulties or delays and theireffects on the implementation schedule, and the stepsplanned or taken to overcome the difficulties and avoidfurther delay;

(d) expected changes in the completion date of the project;

(e) key personnel changes in the staffs of the Roads Depart-ment, consultants or contractors;

(f) matters which may affect the cost of the project; and

(g) any development activity likely to affect the economicviability of project components.

(ii) A bar-type progress chart, based on the project implementationschedule, should show the progress in each project component.

(iii) A financial statement should be set out in tabular form andindicate for each project component:

(a) original estimated cost;

(b) revised cost, if appropriate;

ANNEX IIPage 2

(c) actual expenditure;

(d) projected expenditure; and

(e) actual and projected withdrawals from the Loan Account.

(iv) Finally, the Report should state the status of action on eachcovenant of the Loan Agreement.

March 1977

ANNEX IITable I

APPRAISAL OP A FOURTH ROAD PROJECT

BOTSWANA

PROJECT MONITORING INDICES

Indices: actual vs estimates: absolute and1. Where activity Level, as measured by aspecific index, is below estimates, thereason should be ascertained. If a lowerthan anticipated activity Level is theresult of an outstanding problem, re-commend corrective action.

IndicesEstimated Actual Actual as % Reason for Recommend Corrective

of Estimated Divergence Action, If Any

I. Construction Work

1. Preliminaries to mobilization (months)2. Volume of earthwork (m

3)

3. Length of subbase (km)4. Length of base (km)5. Length of shoulders (km)6. Length of surfacing (km)7. Pipe culverts (nos.)8. Box culverts (nos.)9. Length of bridges (m)

10. Construction work completed (date)11. Cont:ractor certificates for payment (US$ or_)12. Payments to contractor (US$ or

II. Preparation of Roads V

1. Preliminaries to start of work (months)2. Inception Report (date)3. Draft Final Report (date)4. Final Report (date)5. Payment to consultants (US$ or _)

111. Road Maintenance

(a) Programs

I. Agreement on Roads Department Maintenanceprogram by Government and Bank (date)

2. Agreement on extension of District RoadsMaintenance Pilot Program by Government and Bank

3. Implementation of Roads Department MaintenanceProgram (schedule& dates)

4. Implementation of District Roads MaintenanceProgram (schedule & dates)

(b) Equipment

1. Preliminaries to equipment delivery (months,by item)

2. Arrival of equipment (date)3. Payment to suppliers (US$ or

(c) Technical Assistance

1. Preliminary to start of work (months)2. Appointment of counterparts (date, by position)3. Technical assistance work (months, by position)4. Payments tf- experts (US$ or

IV. Training School Equipment

(a) Equipment

l. Preliminaries to equipment delivery(months, by item)

2. Installation of equipment (months, by item)3. Payment to suppliers (US$ or D

(b) Construction

I. Preliminaries to construction of school (months)2. Construction of school (months)3. Payment for construction (US$ or _)

March 1977

(hart I

BOTSWANAORGANIZATION OF THE ROADS DEPARTMENT OF THE MINISTRY OF

WORKS AND COMMUNICATIONS

Minister of Works and Communcat on5

I

Permanent Secretary Executive DepartmentsPI3,lrqhwg -P osts & Telecommuications

Transport C-ntrol PS _BueodiaiRailway Ad, sor vdIiaongs

Finace =Civil AviatnorAdnc & PMetnorological Serines

Central Transport Organizatior

Road

t Chief Roads Engineer R

SecretariaJ Branh rDeve op-et Branch i X-|Mainte,,-nce Branch | Rural Roads Branchl

Short Te-m Pl-,i g9 _Pl-nnig, Design & C.srut-i-n _Planning & Coordinafion _Pilot S,,her,es^ ~~~~~~~~~~~of Roads & Aiwstrps

a Metncict,iol _Advisory Services to Other Mminitres _I,ple-etation _Studies & lmplemna

_ tandard Road Signs _S-rves and materiels _C si Control & Bu.dgetimg C-si - n IMtras MDest,,,-

UT,ai,,wg _ Feas-biity Swdies. etc sette-ent Wrk _ arcrr Labor Inrersion

T,.fratfic _ Produ-tivity Analysis & &"raduativityResearch

Secretary _ Road & Bidge Innvetories

r

| Maintenance R < 3 | ~~~~~~~~Maint,-anc Regio,, North ||Maimte,j,,ce Region West|

Gaborone Area Kan-a A-a Franciswn Area Mahalae Area Maun Area Ghai A

Inspector of Works Inspector of Works Inspector of Works Inspector of Wks s Inspector af Works Inspector of Works

Road Poremen Road Foremen Road Foremen Road Foremen Road Foremen l Road Foremen

World 8ank-9726

CHAWl 2

REPUBLIC,c; . ,IA

FOURTH ROAI i E.T

P'oject Implementation Schedule

Main Activities : Responsible 1976 1977 1978 - 1979 1980 1981Main____Activit__________ Responsible_____ -- ____ . ___ -. j-~ - -9

Authority 3 4 1 2 3 4 1 2 3 4 31 4 2i 3 41 1 2

Credit Agreement Signed f I |I - 1 -

Dat, af Credit Effectiveness

T. ',AD CONSTRUCTION

Selection of Consultants Ifor supervision Roads Dept.

Preparation of tender 2doc.men.tation !Consultants II i iI

Wotld Bank approval IBRD _

Prequalification ofContractors Roads Dept.

Bidding period -_Evaluation of bids Roads Dept. _World Bank approval IBRD | _Award ccntract Roads Dept. j _Construction Contractor I , _

II. CONSULTAliT SERVICES i i |

1. Supervision of Consultants I 4 i | - -construction Consultants

2. Preparation of feeder Ij i l i

road prcject component i

Selection of consult-ants Roads Dept I

Preparation of draft I

Creport Consultants j j ! | | ii jComments on draft Consultants

report ~~~Roads Dept.

Final, report Consultants

IT. RA*D 4ATwrENANCE !

1. Implementation of theRoad maintenance! |study I i

Preparation of tender MWC/Roads Deptldocuments a

World Bank approval IBRDTender period I _IEvaluation of tender MWC/Roads Deptj IWorld Bank approval IBRD IAward contract MWC/Roads Dept i Ii IDelivery of equipment Contractor |jI' |

Program implementation Roads Dept. |

2. Extension of District

Roads |Maintenance Program j

Recruitment, technicalassistance MLGL

Prepa;.ation of equip- -j

ment specifications MLGL/MWC j

World Bank approval | IBRD |Tender period -_ I i IEvaluation of tenders |MLGL/MWC IWorld Bank approval I IBRD

Award contract MLGLjDelivery of equipment Contractor j

Program implementation j

IV. ROADS DEPARTMENT iTRAINTNG SCHOOL EOUIPMENT

Preparation of tender

documents Roads Dept. |World Bank approval IBRD Ii ! Tender period _

Evaluation of tender Roads Dept. I j

World Bank approval IBRD

Award contract Roads Dept. IDelivery of equipment Contractor { _ -

March 1977

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Appraisal of a Fourth Road Project Republic of...

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