Report No. 1135b-UV

Appraisal of a Third Highway ProjectUpper VoltaJune 8, 1976

Western Atri a Proje( ts DepartmentHighway Divisionl

FOR OFFICIAL USE ONLY

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Document of the World Bank

Thi5 do( ument Lha a restr itted distributiotn and may he used by re( pientsonly in the performance of their offt ial duties. Its conterts may nototherwise be disclosed withoout World Bank authorization.

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Currency Equivalents

Currency Unit = CFA franc (CFAF)Us$1.00 = CFAF 225CFAF 1 million = US$4,W44.

Fiscal Years January 1 - December 31

SyFtem of Weights and measures: Metric

Metric US Equivalents

1 meter (m) = 3.28 feet (ft)1 cubic meter (m3) = 35.29 cubic feet (cu ft)1 kilometer (km) 2 = 0.62 mile (mi)1 square kilometer (km ) 0.386 square mile (aq mi)1 hectare (ha) = 2.47 acres (ac)1 metric ton (m ton) = 2,204 pounds (lb)

Abbreviations and Acronyms

BPP - Bureau of Planning and ProgrammingCFPPTP - Centre de Formation Professionnelle et de Perfectionnement

des Travaux PublicsDOT - Directorate of TransportDPW - Directorate of Public WorksPAC - Fonds d'Aide et de CooperationFED - Fonds Europeen de DeveloppementLBTP - Laboratoire du Batiment et des Travaux PublicsMOP - Ministry of Planning, Rural Development, Enviroment & TourismMPWT - Ministry of Public Works, Transport, Urban Development & ArchitectureOPEV - Office de Promotion de l'Entreprise VoltaiqueRAM - Regie du Chemin de Fer Abidjan-NigerSEPTN - Service des Etudes, Programmes et Travaux NeufsSERN - Service Entretien Routes NationalesSERS - Service Entretien Routes SecondairesSVTR - Societe Voltaique de Transport RoutierUNDP - United Nations Development Programmevpd - vehicles per day

FOR OFFICIAL USE ONLY

UPPER VOLTA

APPRAISAL OF A THIRD HIGHWAY PROJECT

Table of Contents

Page No.

SUMMARY

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

2. THIE TRANSPORT SECTOR .................................. 2

A. Economic Setting .................................. 2B. The Transport System .............................. 2C. Transport Planning and Coordination .... ........... 5

3. HIGHWAYS .................................. 6

A. The Road Network .................................. 6B. Characteristics and Growth of Road Traffic ........ 7C. The Road Transport Industry ....................... 7D. Administration .................................... 8E. Financing ......................................... 9F. Engineering and Construction ...................... 10G. The Construction Industry ......................... 11H. Maintenance ....................................... 12I. Sector Lending .................................... 14

4. THE PROJECT ........................................... 14

A. Description ....................................... 14B. Cost Estimates .................................... 17C. Execution ......................................... 18D. Financing and Disbursements ....................... 19

5. ECONOMIC EVALUATION ................................... 19

A. Regional Development .............................. 19B. Traffic ........................................... 20C. Economic Return ................................... 21D. Sensitivity Analysis .............................. 22E. Distribution of Benefits .......................... 22

6. RECOMMENDATIONS ....................................... 23

This report has been prepared by Messrs. E. Fellinghauer (Engineer)and P. Parker (Economist) following an appraisal mission inDecember 1975.

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.

i. 7:Žn?,-- En. Actlyal Tcvest:.i- in Roads ar,d Railhays, 19b--76

t'. CcwpsitLctu. oi the 1-igia.vEti Netv.rk

3. kr.rw1G Vcei.iC Le2istrations. i970-74

L. Arnus: !.cEae Vehicle Vuel Consunption, 1965-75

c. [nine Il ghihway, Expenditurs, 1971-74

C. '>L.zCipE. Revenues and Expendituzres on Roads, 1971-74

7. Contribu.&Ions to DPW's Budget, 1971-74

8. ReT rC.ea3ive Impci: Puty Rates on Road Vehicles

4^ Dcsign Standards for Project Roads

1C. Estin.ated Schedule of Disoursements

li. Economic Evaluation of Improving the Banfora-Bobo Dioulasso-Hounde Road

12. Estimated Economic Vehicle Operating Costs

ANNEXE S

1. Outline Terms of Lefercnce for Road Maintenance study

2. Outline Terms cf Reference and Qualifications for an ExpertAttaclhed to the Directorate of Transport (DOT)

3. Outline Terms ot Reference for Expert to assist inPromotion of the Domestic Construction Industry

MAP

Upper Volta - Third Hlighway Project (IBRD 12189)

UPPER VOLTA

APPRAISAL OF A THIRD HIGHWAY PROJECT

SUMMAR'l

i. Domestic transport in Upper Volta is almost exclusively via the16,500 km road network which generally radiates from the two principal cities,Ouagadougou and Bobo Dioulasso. The most important transit link from thislandlocked country to the coast at Abidjan (Ivory Coast) is the 1,150 kmrailway Regie du Chemin de Fer Abidjan-Niger (RAN) which carries about 80-90%of total import/export traffic. Other international access routes include apaved road from Ouagadougou to the-coast through Ghana, and roads throughIvory Coast, Togo, and Benin which are only partly paved. Internal air andriver transport are not significant modes.

ii. During the period 1967-74, the Government invested about CFAF 9billion (US$40 million) in roads and CFAF 2.7 billion (US$12.0 million) inrailways, amounting to about 19% of total investments, or about 1.5% of GrossNational Product (GNP). Investments in roads and railways during 1972-76 areexpected to total CFAF 12.8 billion (US$56.9 million), amounting to about 20%of total investments. The 1977-81 Development Plan is not yet available, butinvestments in these two transport modes are expected to be maintained atsimilar levels.

iii. The transport infrastructure is now generally adequate in extent tomatch the country's present level of development, while at the same time pro-viding sufficient alternative access routes to the sea. Government objectivesare now directed towards providing services at minimum economic cost, usingtransport investments to stimulate regional development, and avoiding uneco-nomic rail/road competition. The major issues in the sector include: (i)determination of the optimum number and standards of international routes, inparticular alternative routes to the sea and the related issue of the futurerole of the RAN; (ii) the priority need to adequately maintain the existingroad network before investing in new construction; and (iii) the need tostrengthen the institutions involved in transport planning and coordination,including establishment of road investment priorities. The various elementsof the proposed project are directed toward these Government objectives andsector issues.

iv. Previous Bank Group lending in the transport sector totalled aboutUS$12 million to help finance two highway projects, one in 1972 for about70 km of road construction in the West Volta cotton area and engineering ofabout 180 km of main roads, and a second in 1975 directed towards supportingagricultural development under a three-year program for improvement andmaintenance of about 3,300 km of existing rural roads, and including sometechnical assistance for institution-building. Bank Group involvement in thehighway sector also provides for about 1,750 km of feeder road improvementscarried out under four ongoing agricultural and rural development projects.

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v. i'he proposed Third ihighway Project is designed to improve thecoua-h'-W ma-n road network through construction to two-lane paved standardof abcut 183 km of the ma1or trunk road which connects the most im?ortantagriculltural regicn and economic center at Bobo Diculasso witn the capitalc4'y of Ouagadougou, and vhich also forms part of the main road connectionsto Lali and 7ivory Coast; the present condition of this road is not adequateto support the planned development of the region. The project will provideCechnicaL assistance to strengthen transport planning and coordination withinihe .Ministy (:f Public Works, Transport, Urban Development and Architecture(MP\'7'1N to promote 6evelopment of the domestic construction industry, and tode\cLc1. a ;rogram for im,.roving road maintenance operations. Preinvestment

es r- also planned for up to 150 km of the roads to be defined under aComp-.-phensive Transport Survey, being carried out by consultants BCEOM (France;aind ictedu'ed for completion dur.ng the first half of 1977. Finally, pro-ision is Lmade fcr procurement of equipment for vehicle weight control and

Lraff-fc counting.

vi. Total project costs net of taxes are estimated at US$22.1 millicnequi'v"alenr, with fcreign costs of US$16.8 million (76%) and local costs ofTS$S . .million equivalent; taxes and duties are estimated at US$7.1 millionecuTva-ent. The proposed Credit of US$20 million would finance the entireforeigr. cost component plus US$3.2 million equivalent of the local costs ofthie project. The Government contribution would be US$2.1 million equivalent,or about 10% of total project costs net of taxes.

Vi. MPWT will be responsible for execution of the project, with assis-tance provided for construction supervision, technical assistance, and pre-4nvestment and maintenance studies by consultants to be selected in agreementxwitlh and under terms and conditions satisfactory to the Association. Outlinesof the proposed scope of all consulting services, as well as terms of referencefor tne technical assistance experts including methods of recruitment, tenta-tive timetables, and availability of local counterpart staff as required,were discussed and agreed at negotiations.

viii. Bidding documents for the construction items were prepared bythe Directcrate of Public Works (DPW) assisted by consultants BCEOM. Pre-qualification of contractors was completed in January 1976, and bids wereopen;ed in May 1976. The procedures for bidding and for contract awardare on the basis of international competitive bidding in accordance with BanklouIp guidelines. Costs f or civil works are based on bid results. Construc-

tion works are expected to start in September 1976 and to take about two andone-half years to complete.

Equipment for vehicle weight control and traffic counting will be-procured on the basis of international competitive bidding in accordance with1-ank Group guidelines. Specifications will be prepared by DPW and reviewed-rith the Association. Suppliers will be required to train local personnelin the use of the equipment. The above arrangement, as well as the provisionof adequate staff for training by the suppliers, were discussed and agreed,kth the Government.

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x. Credit proceeds will be disbursed on the following basis: (i) 67%of total expenditures for construction contracts; (ii) 100% of foreign costs,equivalent to 80% of total expenditures, for consulting services and technicalassistance; and (iii) 100% of foreign expenditures for equipment procurement.Any funds remaining in the Credit Account on completion of the project will becancelled.

xi. The Banfora-Bobo Dioulasso-Hounde road proposed for improvement isthe most Important transport link in the southwest region. This region, be-cause of its relatively high agricultural potential and low population density,is an important target area for the Government's development strategy, in-cluding programs for population resettlement and integrated rural developmentand irrigation projects. The project road will carry most of the agriculturaltraffic moving on feeder roads serving ongoing development projects, since BoboDioulasso is the commercial center for the region. The road also provides aconnection to the capital city of Ouagadougou, and is part of a major inter-national route to the coast at Abidjan for both Upper Volta and Mali. Itscontribution to the economic development of the southwest region is complex,since it will carry traffic related to virtually every aspect of economicactivity.

xii. The economic return from paving the road was estimated on the basisof benefits from vehicle operating cost savings and maintenance cost savings.Benefits from time savings, accident reduction, and flood control in thevicinity of the road embankment have been omitted from the calculation.The economic return from the recommended level of improvement is about 18%(14-28% on individual sections), with a first-year return of about 13% (10-26%on individual sections). The return from reconstructing to paved standardranges from one to 3% higher than constructing to engineered gravel standard.Under sensitivity tests, the rate of return on individual sections of theproject road remains greater than 13%, and it drops below 10% (the estimatedopportunity cost of capital in Upper Volta) only if project costs wereincreased 45% or more relative to benefits on different road sections, or ifbenefits were decreased 30% or more relative to costs. The rates of returnare therefore considered sufficiently high, based on vehicle operating costand maintenance cost savings, to absorb any reasonably probable combination ofadverse circumstances.

xiii. The bulk of project benefits is related to agricultural freighttransport; the majority of passenger transport is for business purposes.There is evidence of competition within the trucking industry, and it istherefore expected that a significant portion of savings in the cost ofhandling these traffics will be passed on to other sectors of the economy.

xiv. The proposed project is suitable for a Credit of US$20 millionto the Government of Upper Volta on standard IDA terms.

UPPER VOLTA

APPRAISAL OF A THIRD HIGHWAY PROJECT

1. INTRODUCTION

1.01 Upper Volta has achieved a transport infrastructure which is gen-erally adequate in extent to match the country's present level of development,while at the same time providing sufficient alternate access routes to thesea. The Government's present development strategy is based to a significantextent upon developing the Southwest, and the proposed project will complementthe comprehensive programs for population resettlement and integrated ruraldevelopment which are now underway by improving the region's most importantprimary road; the present condition of this road is not adequate to supportthe planned development of the region. Establishment of an effective roadmaintenance program and development of the institutions necessary for admin-istering and planning the transport sector are still at an early stage; theGovernment is actively pursuing a program to strengthen these areas, andtechnical assistance to be provided under the proposed project will complementand support this development effort.

1.02 The proposed project will be the third financed by the Associa-tion in the transport sector of Upper Volta. The First Highway Project(Credit 316-UV, US$2.8 million, 1972, amended in 1973 to increase the Creditamount to US$4.15 million to meet a cost overrun) was intended for construc-tion of the Koudougou-Solenzo (70 km) and Hounde-Bereba (27 km) roads in theWest Volta cotton area, and for preinvestment studies for about 180 km of mainroads. Construction of the Hounde-Bereba road was cancelled, since cottonproduction in the region was insufficient to justify construction of a plannedginnery at Hounde which was the major justification for the road improvement.Other project components were satisfactorily completed during 1975. TheSecond Highway Project (Credit 579-UV, US$7.5 million, 1975) is directedtowards supporting agricultural development by improving the rural roadnetwork. The project consists of a three-year program for improvement andmaintenance of about 3,300 km of existing rural roads and technical assistancefor institution-building. Project implementation has only recently started.Bank Group involvement in the highway sector also provides for about 1,750 kmof feeder road improvements carried out under four ongoing agricultural andintegrated rural development projects. Execution of the road components ofthese projects has so far been satisfactory.

1.03 The proposed project is designed to improve the main road networkthrough construction to paved standard of a section of the country's maintrunk road, which connects the most important agricultural region and eco-nomic center at Bobo Dioulasso with the capital city of Ouagadougou, andwhich also forms part of the main road connections to Mali and Ivory Coast.The project will also provide technical assistance to (1) develop a programfor improving road maintenance operations; (2) carry out road preinvestmentstudies; (3) strengthen transport planning and coordination within the

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Mi-n4stry of Pulblic Works. Transport, Urban Development and Architecture. and(p, Tromote development of the dctnestic construczion industry. This effoit,togethoer with tiie upgradlng of :eeder roads under the Second Highway (RuralRoads) f-.d the agricultural projects, is expected to provide for a balancedimprc .em:eat of the entire road ne..work and to strengthen Government institu-

_ons -n the U:anGport seci:or,

1.04 Total -roject costs net of taxes are estimated at US$22.1 millionecuivalent, with foreign costs cf US$16.8 million (76X'; local costs areesrimal:a at US$5.3 million equivalent, plus US$7.1 million in taxes. Thep.cocced Crediz of US$20 milliun would finatnce the entire foreign cost compc-r.-=t pIas UsS$3.2 million equivalent of the local costs of the project. TheC-s-mernment conitribution would be IUS$2.1 million equivelent, or abouit 1L% oftotal. project costs net cf taxes.

1.05 This appraisal report is based on studies carried out by con-sultants BCEOA (France) and on t1he findings of an appraisal mission cornsis-ting of 1evsre. E. Fellinghauer (Engineer), F. Parker (Economist), E. Findakly(Engineer), and R. Bardodej (:ngineer/Consultant) which visited Upper Volta itLDerI,-er ac75

2. THE TRANSPORT SECTOR

L. Economic Setting

Z ~~~~~~~~~~~~~~~~~~~~~22.01 Upper Volta is a landlocked country of about 274,000 km locatedin Lhe Saliel region of West Africa. Population is estimated to be about5.6 million ard growing about 2% p.a. and is concentrated in a broad northeast-southwest swath through the middle of the country. Upper Volta is classifiedby the Unitr.d Nations as one of the twenty-five "least developed countries";this is primarily due to the poor soils, distance from the sea. unbalancedpopulation distribution, and most recently a series of rainfall deficitsbetween 1968 and 1973. In additicn, much of the fertile land in the rivervalleys of the South and Southwest is unusable due to the incidence of river-blindness; arn eradication program is in progress. There are no significantmineral resources, apart from some manganese deposits near Tambao in theNorth. Agriculture occupies 90% of the population, but generates less thanhalf of Grcss Domestic Product (GDP). GDP was about US$80 per capita in 1974,and does not appear to have increased since 1970, due in part to the impact ofthe drought and worldwide inflation. The Bank Group expects that the economywill now gradually start recovering, and that GDP per capita will grow atabout 2.2% p.a. between 1976 and 1980.

B. The Transport System

2.02 Domestic transport is almost exclusively via the country's 16,500km road netwcrk, the principal routes of which radiate from the two maincities of Ouagadougou and Bobo Dioulasso. (Details of the road system and itsadministration, as well as the characteristics of the road transport industroL,

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are discussed in Chapter 3). Upper Volta is linked from Ouagadougou to thecoast at Abidjan (Ivory Coast) by the 1,150 km railway Regie du Chemin deFer Abidjan-Niger (RAN) which carries about 80-90% of the country's import/export traffic. Other international access routes include a paved road fromOuagadougou to the coast through Ghana, and roads through Ivory Coast, Togo,and Benin which are only partly paved. Internal air and river transportare not significant modes.

2.03 During the period 1967-74, the Government invested about CFAF11.6 billion (US$51.6 million) in roads and CFAF 2.7 billion (US$12.0 million)in railways (Table 1). This amounted to about 19% of total investments, orabout 1.5% of GNP. Investments in roads and railways during 1972-76 areexpected to total CFAF 12.8 billion (US$56.9 million), amounting to about 20%of total investments. The 1977-81 Development Plan is not yet available,but investments in roads and railways are expected to comprise a similarproportion of total investments, not considering the construction of a newrail line to Tambao (para. 2.06).

2.04 The broad objectives for the transport sector as specified by theGovernment include provision of services at minimum economic cost, use oftransport investment to stimulate regional development, and the avoidance ofuneconomic competition between road and rail. The major issues facing thetransport sector at this time include: (i) determination of the optimum num-ber and standards of international routes, in particular alternative routes tothe sea, as well as the related issue of the future role of the RAN; (ii) thepriority need to adequately maintain the existing road network before invest-ing in new construction; and (iii) the need to strengthen the institutionsinvolved in transport planning and coordination, including establishmentof road investment priorities. The proposed project is directed towardthese Government objectives and sector issues through the proposed improve-ment of a major primary road in the Southwest, an area where the Governmentis making an intense regional development effort; preparation of a comprehen-sive program of road maintenance; and provision of technical assistance toMPWT for transport planning.

Railways

2.05 The RAN is jointly owned and operated by the Governments of IvoryCoast and Upper Volta, and is one of the largest railways in West Africa. In1974, the system carried about 522 million ton-km and 918 million passenger-km. Freight traffic has grown steadily at about 5.9% p.a. since 1969. TheRAN is particularly important for Upper Volta, which generates about 81%of the freight traffic in ton-km carried by the railway. Internationaltraffic to Upper Volta is generally captive to rail, due to the long hauland the high bulk of most of the commodities carried. The railway is operatedunder an international convention which, among other things, requires therespective Governments to cover the RAN's annual operating deficits. Thiscontribution amounted in 1974 to about US$0.5 million for Upper Volta andUS$1.5 million for Ivory Coast, or about 5% of total operating costs.Upper Volta, as well as the Ivory Coast, finances 60% of the cost of in-frastructure improvements in its own country, with the remainder financedby the railways.

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2.06 The major problems facing the RAN at this time are: (i) manage-ment deficiencies; (ii) high operating costs, due in part to inadequatecost and productivity control; (iii) a tariff structure which does not alwaysappear to cover short-run marginal costs; and (iv) loss of traffic to roadcompetition in the Ivory Coast. The RAN is responding to the above problems,in part wLth proposals for substantial infrastructure investment. The con-struction of a new line from Ouagadougou to a projected manganese mine atTambao is also under consideration; however, the full costs of such anextension should be recovered entirely from the mineral traffic. The RAN'smanagement and investment problems cannot be resolved in isolation by UpperVolta, and are being discussed during the course of preparation for a proposedBank Group railway project in Tvory Coast which is scheduled for appraisal inFY77.

Access to the Sea

2.07 Upper Volta's primary access to the sea is via the RAN and thePort of Abidjan, which serves both Bobo Dioulasso, the main commercial cen-ter, and Ouagadougou, the capital. There are, however, some difficulties inrelying exclusively on this corridor, including (i) the uneven quality ofservice provided by the RAN; (ii) the dependence on the capacity and oper-ating efficiency of the Port of Abidjan; and (iii) the reliance on one countryfor access to the sea. The Government is attempting to solve these problemsthrough internal improvements in Upper Volta's transport system and negotia-zlons with transit countries for the development of alternate routes tothe sea. Upper Volta is also represented on the Board of Directors ofboth the RAN and the Port of Abidjan, and is actively trying to improve theoperating efficiency of the railway and the port.

2.08 The principal alternative routes to the sea are by a paved road toTema (Ghana> > and by partly paved roads to Abidjan (Ivory Coast) and Lome(Togo). The roads from Ouagadougou to the Ghana border and from Koupelato the Togo border have recently been paved with financial assistance fromthe Fonds Europeen de Developpement (FED); only about half of the latter roadwithin Togo is paved. Relatively little import/export traffic uses the Ghanaroute, however (even though Tema has excess port capacity and a bonded storagearea), due in part to slow payments by Ghanaian transit companies to UpperVolta truckers caused by a cumbersome system for administering foreign ex-change. The Government of Upper Volta requested the Association to assist innegotiating improvements in customs and other procedures in transit countries,and agreed that this issue will be included in the terms of reference of theexpert proposed for technical assistance to the Directorate of Transport (DOT)under the proposed project (para. 4.07 and Annex 1).

2.09 The Government has indicated its desire to further diversify itsaccess routes to the sea and other international routes, and to this end isseeking financing for feasibility studies for the routes Ouagadougou-Leo-Ghanaborder and Fada N'GourmaBenin border, as well as Fada N'Gourma-Niger border.

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However, the marginal benefit of each successive alternative is lower, andthere is an increasingly adverse financial impact on the RAN. The economicjustification for future construction of international roads needs to becarefully assessed in the light of competing demands for scarce investmentcapital (para. 2.12).

Air Transport

2.10 International air service is provided by Air Afrique and othercarriers from Ouagadougou and Bobo Dioulasso, while domestic services areprimarily provided at a loss by Air Volta, a mixed public/private companycreated in 1967. The international airports are efficiently managed by theInternational Aviation Safety Agency for Africa and Madagascar.

C. Transport Planning and Coordination

2.11 The primary responsibility for transport planning and coordina-tion rests with the Ministry of Public Works, Transport, Urban Development,and Architecture (MPWT), which is organized into separate Directoratesfor each of these functions. The Directorate of Public Works (DPW) isresponsible for the planning, construction, and maintenance of road works.The Directorate of Transport (DOT) is responsible for supervision of theroad transport industry, railways, shipping, river transport, and aviation.The Directorate of Urban Development and Architecture is responsible forurban planning. In addition, the Ministry of Planning, Rural Development,Environment, and Tourism (MOP) assembles the investment proposals of theoperating Ministries into five-year development plans. The Ministry ofFinance (MOF) establishes road user taxes, and together with MOP specifiesfinancial envelopes governing the level of investment in each sector.

2.12 The output of the transport planning process has been less thansatisfactory, due primarily to a lack of qualified planning personnel, re-sulting in uneven project preparation and a development strategy which doesnot always appear to give sufficient weight to economic criteria. The Gov-ernment is beginning to address this issue through preparation of aComprehensive Transport Survey (with assistance from consultants BCEOM andfinanced by the French Fonds d'Aide et de Cooperation, FAC), due to be com-pleted in the first half of 1977. The survey deals with a wide range ofproblem areas including future road investments, alternative routes to thesea, rail investments including the proposed extension to Tambao, regulationof the road transport industry, international transport agreements, anddevelopment of air transport. Since the study, conducted with only limitedfinancial resources, deals with a wide range of topics, some of the aboveissues may therefore require additional study before specific proposals canbe considered for implementation.

2.13 The Government has established a Bureau for Planning and Programming(BPP) as a new division within DPW, as agreed under the Second Highway Project.Under a United Nations Development Programme (UNDP) project for which the Bankis executing agency, a transport engineer and a transport economist will be

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provided for three years in order to assist BPP; overseas fellowships forlocal technicians will also be provided. BPP is responsible for: (i) col-lecting and evaluating traffic and road inventory data; (ii) formulating andcoordinating with various Government agencies the priorities for road improve-ment; (iii) analyzing sector issues and developing transport policy recommenda-tions and future road investment plans; and (iv) serving as a liaison betweenMPWT and MOP.

2.14 The next important step in developing Upper Volta's capacity forplanning and coordination of transport is to strengthen DOT, where a shortageoi trained staff hampers execution of its responsibilities. At present onlythe Director and the Assistant Director are professionally trained, and thet.rmer is now on extended study leave. DOT therefore lacks the manpower tosupervise all the transport modes, or to follow up on recommendations oftlie Comprehensive Transport Survey within its area of responsibility. Theproposed project provides the technical assistance required for this task(para 4.07).

3. HIGHWAYS

A. The Road Network

3.01 The road network totals about 16,500 km administratively dividedinto two categories: classified (about 8,700 km) which are grouped into.eti:onal, departmental, and regional roads, with maintenance and improve-ment financed by the national budget; and unclassified (about 7,800 km)consisting of earth tracks, which are under the jurisdiction of local authori-ties (Table 2). Functionally, the system is separated into trunk roads andrural roads. The national roads (about 4,450 km) include all trunk roads;rural roads comprise classified departmental and regional roads and un-classified tracks.

3.02 The network is generally adequate in extent for current needs,but some road sections need to be upgraded to serve traffic requirements.Only about 580 km of road which form part of the main connections withneighboring ccuntries are paved; the remaining national roads are pri-marily of gravel standard and are considered to be all-weather roads,but many sections are often closed to heavy vehicles for short periodsafter major rains. Rural roads are essentially dry-weather facilitiesmostly with earth surfacing, and many become impassable during the rainyseason. Paved roads were constructed primarily with FED financing start-ing in 1970, and are generally in good condition although some of themnow need resurfacing. The remaining trunk roads have been inadequatelymaintained and are in less satisfactory condition, marked by potholesand corrugated surfaces, which cause hazardous driving conditions. A similarsituation exists for the rural roads which have deteriorated over the pastceveral years due to the lack of proper maintenance on most of the network.The terrain in the country is generally easy, and natural road constructionmaterials are abundant, resulting in relatively low road construction costs.

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B. Characteristics and Growth of Road Traffic

3.03 The vehicle fleet totalled 18,271 units in 1974, of which about47% are private cars, and about 53% are buses, trucks, and other heavyvehicles. The fleet increased at a compound growth rate of 7.0% p.a. over1970-74 (Table 3), while fuel consumption increased at a compound rate of9.9% p.a. during the same period.

3.04 Collection of traffic data is the responsibility of DPW. However,traffic counts have until now been carried out only for certain roads, anda permanent system to cover the entire road network has not yet been estab-lished. Consultants BCEOM were the first to conduct nationwide traffic countsin 1961/62 as the basis for formulating the first ten-year road plan for1961-71. These counts were repeated in 1970/71 establishing a similar plan.for 1971-81, and again at end-1975/beginning 1976 under the FAC-financedComprehensive Transport Survey (para. 2.12). Traffic volumes are generallylow, about 100-300 vehicles per day (vpd) on the major roads out of Ouagadou-gou and Bobo Dioulasso and decreasing with distance from these two urbancenters, and less than 100 vpd on most of the other roads in the country.BPP will be charged, inter alia, with establishing a permanent traffic count-ing system, and evaluating the data. The proposed project provides forprocurement of traffic-counting equipment (para. 4.04).

C. The Road Transport Industry

3.05 Total inter-city traffic on main roads was estimated irt 1972 at82 million ton-km and 36 million passenger-km, almost all transported infor-hire vehicles. The road transport industry includes one large mixedpublic/private firm (Societe Voltaique de Transport Routier, SVTR) operatingin competition with a large number of owner-drivers and small firms. SVTR wasformerly a French company and is efficiently run. It owns about 100 busesand trucks (mostly new tractor/trailers and tankers), has its own repairfacilities, carries about one-fifth of total goods traffic at a profitabletariff of CFAF 17-20/ton-km over all road types, and handles most of thetraffic which requires specialized vehicles. The remainder of the industrycarries most of the passenger and primary agricultural traffic, and smallloads, generally in small vehicles. As a result of competition in the non-agricultural season, tariffs are sometimes forced as low as CFAF 10/ton-km,which appears to cover only out-of-pocket costs. The small truckers arepartly organized through the Syndicat des Petits Transporteurs (STP), whichallocates shipments on a first-come, first-served basis.

3.06 DOT, through its Land Transport division, is primarily responsi-ble for implementing government regulations of the road transport industry,which are primarily in the area of vehicle safety. The industry operatesessentially in a free market environment. Access to the industry is rela-tively easy. An operating permit, for example, costs CFAF 4,000 (approxi-mately US$18). DOT also proposes tariff guidelines following consultationbetween the Government, SVTR, and STP. Starting in 1977, the Government will

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require that all vehicles be registered annually. The Government has alsoapproached Kreditanstalt fur Wiederaufbau (KfW, Germany) to finance a vehiclecontrol station in order to enforce safety regulations. In addition, theproposed project provides for the purchase of weighing scales to help enforceexisting axle-load regulations (para. 4.04).

3.07 The major questions which need to be addressed at this time are (i)whether it would be possible to improve the information which is availableto truckers concerning transport demand, particularly for internationalshipments; (ii) whether there is excess capacity among small truckers; and(iii) whether complex border-crossing procedures could be simplified.The Upper Voltans are moderately successful in competing for internationaltraffic, carrying about 25% of all road shipments crossing Upper Volta'sborders. However, a significant number of Upper Voltan drivers are reportedto go to the port of Abidjan with empty vehicles on speculation, and there isa general lack of information about where loads are available, particularly inremote areas. There is excess capacity within the trucking industry duringcertain periods of the year due to the seasonal demand for agriculturaltransport. In addition, terms for purchasing vehicles are sometimes easy, andtruck-driving appears to many uneducated Upper Voltans to be an attractiveemployment opportunity. Many Upper Voltans entered the trucking industryduring the drought relief campaign, since almost all imports to the Sahelmoved by road. Excess capacity resulted following the tapering off of thisdemand and the temporary closure of the Mali border, but it has been re-absorbed by an increased demand for transit traffic between Niger and Lome(Togo). It is not yet clear whether excess capacity is a long-term or atemporary cyclical phenomenon.

3.08 Consultants for the Comprehensive Transport Survey are investigatingthe above issues concerning the road transport industry, including the feasibi-lity of establishing a dispatching system for truckers. Some follow up investi-gation by DOT may be required in order to develop specific recommendations forconsideration by the Government (para. 4.07).

D. Administration

3.09 MPWT, through its Directorate of Public Works (DPW), is responsi-ble for the administration of classified roads; local authorities are incharge of the remainder of the network. DPW comprises four divisions, oneeach for maintenance of national roads (Service Entretien Routes Nationales,SERN) and of rural roads (Service Entretien Routes Secondaires, SERS); plan-ning and design of new works (Service des Etudes Programmes et Travaux Neufs,SEPTN) and for workshops and equipment (Subdivision d'Outillage Mecanique,SOM). DPW also operates a technical training school in Ouagadougou (Centre deFormation Professionnelle et de Perfectionnement des Travaux Publics, CFPPTP)and a soils laboratory (Laboratoire du Batiment et des Travaux Publics, LBTP).Construction and maintenance works for national roads are executed by DPW's

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four regional subdivisions, each headed by a Resident Engineer; rural roadimprovements are carried out by SERS' feeder road unit.

3.10 DPW relies heavily on foreign technical assistance, and most ofits head office functions are carried out by expatriates provided principallyby FAC. This- FAC assistance now totals 31 experts employed at various levels,including three Division Chiefs and several accountants and highway techni-cians supplementing about 80 local staff. There is a severe shortage ofexperienced local staff at the upper and middle levels, and only eleven DPWengineers are Upper Voltans. Government is making a major effort to improveits staffing situation through training of all categories of local personnel.Seven Upper Voltans are now enrolled at foreign universities and will even-tually take over upper-level positions now held by foreign staff; in addition,CFPPTP is being reorganized to provide broader and more intensive training ofmiddle- and lower-level personnel. Even though there appears to be no shortageof funds (principally from FAC, FED, and bilateral assistance) for provisionof fellowships for overseas training, DPW will for the near future still haveto depend heavily on foreign technical assistance to run its affairs.

3.11 The Association is helping the Government improve its staffingsituation through technical assistance provided under the Second and proposedThird Highway Projects. Provision of two roads engineers and one accountantunder the Second Highway Project will help create the necessary staffingstructure for effective maintenance in this sector. The proposed ThirdHighway Project provides for a transport economist to be attached to DOT and acivil engineer to the Office de Promotion de l'Enterprise Voltaique (para.3.21) to help improve transport planning and train domestic contractors inexecution of civil works.

E. Financing

3.12 Government highway expenditures exclusive of foreign financingaveraged CFAF 504 million (US$2.2 million) during FY 1971-74. About 90%of this amount was spent on road maintenance, the remainder being allocatedfor minor construction works and administrative expenditures. FAC alsoprovided an average CFAF 143 million (US$0.6 million) during FY 1971-74 forthe renewal of road maintenance equipment. Foreign financing of new roadconstruction averaged CFAF 2.1 billion (US$9.1 million) p.a. during FY1971-74, and the total expenditures on roads (including foreign financing)was CFAF 2.7 billion (US$12 million) p.a. (Table 6).

3.13 Road user taxes consisting of fuel taxes (62%) and vehicle entrytaxes (38%) averaged CFAF 1.4 billion (US$6.2 million) in FY 1971-74 (Table6), accounting for about 12% of Government revenues. Road user taxes are highenough to provide the approximately CFAF 1 billion (US$4.4 million) requiredannually to assure adequate maintenance of the national and feeder roadnetwork (para. 3.25), and at the same time contribute atout 20% towards thecost of new road construction. The Government has, however, been allocatingsmaller amounts for road maintenance, which is financed primarily (90%)

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through allocations from a Road Fund established in 1968. According to law,59% of the revenues from fuel taxes are to be allocated to the Road Fund andused for the maintenance, rehabilitation, and development of national roads.However, MOF in accordance with a general policy of fiscal austerity, alloca-ted only about 42-52% of fuel taxes to the Road Fund during 1971-74, or anaverage of CFAF 415 million (US$1.8 million) p.a. (Table 7). In summary,only about 30% of road user taxes have been allocated for road maintenance,effectively limiting the scope of maintenance carried out (para. 3.24).

3.14 The incidence of road user taxes does not appear to affect allvehicle classes the same. For example, the import duty rates applied tolarge trucks are only about one-quarter of those for small trucks, pri-marily benefiting SVTR (para. 3.05). Table 8 shows representative importduty rates on road vehicles. The Government agreed that DOT, with technicalassistance provided under the proposed project, will investigate the structureand level of road user taxes with a view to determining whether they areequitable and efficient, and developing recommendations as appropriate, andwill discuss its findings with the Association by June 30, 1978.

F. Engineering and Construction

3.15 SEPTN is administratively responsible for engineering design andsupervision of road construction works. The agency itself designs primarilyminor works such as secondary and feeder roads, and is quite competent inthis field. Engineering studies for major road construction works arecarried out by foreign consultants, with LBTP executing the required soilsinvestigations. LBTP is well equipped for materials testing for roads andbuildings, and works under the direction of a FAC-financed expert. Projectsupervision for major road construction financed by external sources isgenerally carried out by foreign consultants, and for other works by SEPTN.

3.16 Construction contracts for highways are awarded on the basis ofcompetitive bidding. SEPTN calls bids, which are evaluated by a technicalsub-commission within DPW. Contracts are approved by the National TenderBoard and signed either by the Minister of Finance or the President of theRepublic, the latter if the contract amount exceeds CFAF 50 million (US$220,000equivalent). This involvement of various Government agencies, combined withthe time-consuming processing procedures, usually requires about six months toone year for the award of major contracts. In order to expedite constructionworks under the present project, the Government has scheduled bidding proceduresto allow commencement of works by September 1976 (para. 4.12).

3.17 Upper Volta follows French design practices. National roads aregenerally constructed to 6 m road width and 9 m platform width; rural roadsare about 4-6 m wide. The maximum permissible axle-load is 10 tons. Thesestandards are adequate for present traffic carried. SEPTN, assisted by LBTP,is now carrying out investigations of road construction materials available inthe country and will establish specifications for using them most effectivelyunder local conditions.

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G. The Construction Industry

3.18 Public and private investment in civil works and housing averagedabout CFAF 6.7 billion (US$29.7 million) p.a. during 1971-74, of which aboutCFAF 2.3 billion (US$10.3 million) p.a. was for civil works. At present about70% of all construction works are executed by foreign firms, most of whichoperate throughout West Africa; four of them have established permanentoffices locally. Domestic contractors are engaged primarily in the buildingsector which accounts for about 80% of their contracts. There are a largenumber of small firms in the industry; in 1974 only seven domestic contractorshad an annual turnover greater than CFAF 25 million (US$110,000) each. Domes-tic firms have started to participate in civil works only during the last fouryears, and to date only four of them have been involved in minor operationslimited to supply of materials, and concrete and irrigation works. At presentone domestic contractor has the capacity to undertake medium-sized civil workscontracts (up to US$2 million).

3.19 Major difficulties which to date have limited the development ofdomestic companies are as follows:

(i) Pesonnel Skills: lack of personnel qualified inconstruction techniques, cost accounting, and man-agement;

(ii) Financial: lack of short- and medium-term credit fundsworking capital and equipment procurement;

(iii) Institutional: (a) cumbersome Government procedures forcontract payments; (b) relative tax disadvantage: domesticfirms pay an import tax of about 43% on imported equipment,whereas foreign firms are effectively tax exempt when theirequipment is re-exported; and (c) lack of a regular flow ofcontracts of a size consistent with the capacity of domesticcontractors.

3.20 Civil works investments alone are expected to amount to aboutCFAF 3.0 billion (US$13.3 million) annually over 1977-81, of which a majorshiare will be for road construction. If domestic contractors are to increasetheir share in this sector, they will require training, financial assistance,as well as support of a Government policy which is designed to promote theirparticipation.

3.21 A major drawback hampering improvement of the domestic constructionindustry is the lack of adequately trained personnel at most levels of civilworks execution. At present, only one civil works contractor employs en-gineers, and these are all expatriates; there are very few Upper Voltanengineers, and almost all of them are in Government service. There is alsoa deficiency of adequately trained personnel at the middle and lower levelsof contracting firms. Most domestic contractors have not yet mastered the

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calculation of contract prices which is required for preparing bids;they also lack knowledge of modern management and construction techniques.In 1971, the Government created the Office de Promotion de l'EnterpriseVoltaique (OPEV) which is providing training in the crafts and managementassistance to the domestic small-size industry; this training however doesnot cover the civil works sector. OPEV has adequate training schoolfacilities in Ouagadougou which could also be used for civil works con-tractors and their personnel, but it does not have the qualified staffrequired to do so. The proposed project will provide technical assistanceto OPEV to assist in this effort (para. 4.08).

3.22 In order for domestic contractors to increase their equipment fleetsto a size required to undertake more than minor works, financial assistanceof somewhere between US$1-2 million in credit would be needed over the nexttwo or three years. The Bank Group is now planning to appraise a DevelopmentFinance Companies (DFC) operation at end-1976, which would include a provisionfor financial assistance to domestic contractors to procure road constructionequipment. It is expected that this DFC project, together with institutionalimprovements proposed by the Government and the technical assistance providedunder the present project, will help domestic contractors to effectivelyincrease their participation in civil works.

3.23 Through the creation of OPEV, the Government has demonstrateda strong interest in promoting domestic industries. It is also encouragingforeign companies to form joint ventures with domestic firms for executingpublic works contracts. These measures are encouraging, and should be pursuedfurther to help overcome the deficiencies listed in para. 3.19 (iii). TheGovernment agreed to consult with the Association on the design and executionof a program for: (i) streamlining procedures for bidding and for payments tocontractors; (ii) eliminating the existing tax discrimination in equipmentprocurement by domestic contractors; and (iii) outlining and adopting methodo-logies required to facilitate increased participation of domestic firms in thecivil works sector. The expert provided under the project to assist thedomestic contractors will undertake the necessary investigations concerningthese issues and make appropriate recommendations for an action program.

H. Maintenance

3.24 Maintenance of national roads has decreased during recent yearsdue primarily to an insufficient allocation of funds. Government contribu-tions for road maintenance were nearly constant over 1971-74, averaging CFAF442 million (US$2.0 million) p.a. During this period, FAC assisted theGovernment by providing an average of about CFAF 143 million annually tofinance maintenance equipment renewal (Table 5). Due to inflation, however,maintenance costs increased by about 40% between 1971 and 1974. As a result,the periodic maintenance declined from 270 km in 1971 to 113 km in 1974, androutine maintenance operations were reduced by about 30%.

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3.25 It is tentatively estimated that in order to maintain the nationalroads at their present condition and prevent further deterioration of thenetwork, a minimum of CFAF 600 million (US$2.7 million) in operating expendi-tures including personnel costs, and another CFAF 300 million (US$1.3 million)for equipment renewal, would be required in 1977. In addition, maintenanceof the feeder road network is estimated to require about CFAF 50 million(US$200,000) in FY 1976 and up to about CFAF 200 million (US$800,000) byFY 1980. Total maintenance requirements are therefore high and need to bereviewed to ensure that planned expenditures are in line with availableresources and traffic levels, and that the various levels of maintenanceoperations are most appropriate to the country's circumstances. These issueswill be addressed under the proposed project which makes provision for imple-mentation of a comprehensive maintenance study directed to investigating therelevant issues, and to helping the Government formulate a policy to assurethe most effective level of maintenance operations and allocations of ex-penditures (paras. 3.28 and 4.05).

3.26 In order to assure an acceptable level of maintenance operationsuntil the above study is completed and recommendations reviewed, the Governmentagreed to allocate not less than CFAF 900 million (in constant 1977 CFAF) peryear during 1977-79 for maintenance of the national road network. It wasfurther agreed that during this period the Government would furnish the Asso-ciation with each year's draft highway maintenance budget by July 31 for reviewand comment prior to its final approval.

3.27 Maintenance operations are also adversely affected by a shortage ofqualified local staff. The Government is making a considerable effort toimprove this situation by training upper-level personnel at the trainingcenter for road maintenance in Bouake (Ivory Coast) and Lome (Togo), and ofmiddle- and lower-level personnel at the CFPPTP. Results so far have beenencouraging, but a considerable effort will still be needed to improvequalifications of local staff, in particular foremen and mechanics, to thelevel required. This problem will be investigated under the proposed mainte-nance study, and recommendations prepared for meeting the training require-ments necessary to assure improved maintenance operations.

3.28 The basic organizational structure for road maintenance is adequate.However, output is low because of limited knowledge of effective operationalmethods. The annual maintenance program is still established on an ad hocbasis depending on funds available, and there is no cost accounting system forthe various operations executed. The proposed maintenance study will assistthe Government in its effort to improve maintenance operations by investiga-ting the present planning system, cost accounting, operational methods andequipment requirements. The recommendations of the study zould form the basisfor further Bank Group assistance in implementing a maintenance program to beproposed (Annex 1). The Government agreed to base its future highway mainte-nance programs on the results of this study.

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I. Sector Lending

3.29 The institutions involved in transport planning and administrationrequire further strengthening, training, and experience in order to becomefully effective. Within the constraints imposed by personnel and financialresources, the Government is actively pursuing a program to effect improve-ments in the transport sector, notably through the ongoing ComprehensiveTransport Survey, and the creation of BPP and SERS. Progress in completingthis basic groundwork will be continuously reviewed during supervision of thepresent project and preparation of future highway projects, following which itmay be possible to define more precisely a path and timetable for programmingtowards the country's eligibility for sector lending.

4. THE PROJECT

A. Description

4.01 The proposed project consists of:

(a) reconstruction to paved standard of the Banfora-Bobo Dioulasso-Hounde road (183 km), including supervision of construction;

(b) procurement of equipment for vehicle weight control and trafficcounting and the provision of fixed facilities for vehicleweight control;

(c) consulting services for: (i) a study of road maintenance; and(ii) preinvestment studies for about 150 km of roads to bedefined; and

(d) technical assistance for: (i) strengthening DOT; and (ii) assistingOPEV in the promotion of the domestic civil works industry.

Reconstruction of the Banfora-Bobo Dioulasso-Hounde Road

4.02 This road forms part of the major trunk road linking the country'sagriculturally most important region with the second largest town and economiccenter Bobo Dioulasso, and with the capital Ouagadougou. It is also the majorcollector road of feeder road improvements carried out under the Bank Groupfinanced West Volta Cotton Project (Credit 225-UV, US$6.2 million, 1970) andconstitutes part of the country's principal road connection to neighboringIvory Coast and Mali. The existing road is a two-lane laterite facility witha badly deteriorating surface, inadequate horizontal and vertical alignment,poor drainage, and narrow width at some sections.

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4.03 The proposed project provides for road reconstruction to two-lanepaved standard. The new alignment generally follows the existing road formost of its length, but certain sections will be realigned to improve drivingconditions. Design speed will be 100 km/h, with a maximum gradient of 5%except at two locations where short sections will have gradients of 6% and9%. Pavement width will be 6 m, increased to 10 m in the urban areas. Thedetailed design standards shown in Table 9 take into consideration the general-ly flat terrain and the proportion of heavy vehicles in the traffic composition,and are considered adequate.

Equipment Procurement

4.04 The proposed project provides for purchase of permanent traffic-counting equipment to help BPP establish a data collection system and weighing-scales to help the Government control and enforce existing axle load regula-tions. Agreement was reached with the Government that adequate staff would beprovided for training by the suppliers (para. 4.13) to guarantee that theweighing-stations will be properly manned.

Maintenance Study

4.05 The proposed project provides for about 35 man-months of consultingservices to investigate the present structure and state of road maintenance,and make recommendations on how to improve planning, budgeting, and executionof maintenance operations. Consultants will be expected to estimate therequirements of a short-term maintenance program in terms of staffing, equip-ment, and funds, and to formulate a long-range maintenance strategy. DPW willbe expected to play an active role in execution of the study, and will preparea detailed list of its needs, as well as an equipment inventory. The studywill focus primarily on maintenance of national roads, but will also cover therural roads sector as regards overall improvements of maintenance technologiesand the long-range maintenance strategy. Recommendations of the study willform the basis of a maintenance program suitable for external financing.Agreement was reached with the Government on the scope of the proposed studyincluding outline terms of reference (Annex 1); it was also agreed thatconsultants for the study would be appointed not later than June 30, 1977.

Preinvestment Studies

4.06 Consultants BCEOM are now carrying out a Comprehensive TransportSurvey (scheduled for completion in the first half of 1977) which will, interalia, help to identify the priorities for road transport investments for thenext five-year Development Plan (1977-81). The proposed project providesfunds for feasibility studies and detailed engineering for improvement of upto 150 km of roads whose improvement the Survey indicates may be economicallyjustified. General criteria for selecting the road sections were discussedand agreed to by the Government. It was also agreed that consultants for thestudies would be appointed not later than June 30, 1977.

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Technical Assistance to DOT

4.07 The proposed project provides for the services of a transport eco-nomist for two to three years to help DOT with the following tasks: (i) re-viewing all proposed investments in the transport sector (including invest-ments in international access roads) with a view to minimizing the totalcost of transport; (ii) determining whether or not there is long-term excesscapacity in the trucking industry, and proposing appropriate measures toassist the rational development of the industry; (iii) determining the feas-ibility of establishing a dispatching system for truckers; (iv) investigatingthe structure, level and efficiency of road user taxes; (v) recommending waysof improving transit procedures through neighboring countries, and assistingin negotiating the measures proposed; and (vi) following up on recommendationsof the Comprehensive Transport Survey. The expert will be assisted by acounterpart and other local staff whom he will train, to allow DOT to operatewithout outside assistance at the expiration of his contract. Agreement wasreached with the Government on the above arrangements, including terms ofreference (Annex 2), method of recruitment, and timing of the expert services.It was also agreed that the above expert would be appointed by March 31,1977.

Technical Assistance to OPEV for Promotion of the DomesticConstruction Industry

4.08 The proposed project provides for technical assistance to strengthenthe capacity of domestic civil works contractors to enable their increasedparticipation in road works. The assistance will be provided in two stages.Under the first phase, the expert will spend two or three months in evaluatingthe existing capacity, organization, and technical competence of domesticcivil works and building contractors, and the proficiency of their staff.In addition he will recommend ways for the Government to encourage participa-tion of local firms, including streamlining bidding and payment procedures,and making the tax treatment of local firms at least as favorable as that offoreign firms. Based on the findings of this evaluation, the expert willoutline training requirements for improving the proficiency of Upper Voltanpersonnel in civil construction works, consisting of a detailed program ofcourses and on-the-job training required. Under the second phase of about twoyears, the expert will help implement and refine recommendations proposedunder phase one. These could include advisory services and training coursesin contracting procedures, cost estimation, accounting and cost control, workorganization, and on-the-job training according to the needs established underthe first phase. Execution of this project item in two steps will guaranteeclose monitoring of the assistance required and will allow the Government andthe Bank to review the recommendations proposed under the first phase beforestarting implementation under the second. The expert will be attached toOPEV. Outline terms of reference for the expert services (Annex 3), werediscussed and agreed to by the Government. It was also agreed that the aboveexpert would be appointed by March 31, 1977, and that the Government woulddiscuss the findings of the first phase of the study with the Associationwithin three months of their submission to the Government.

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B. Cost Estimates

4.09 The total cost of the project (net of taxes but including contingen-cies) is tentatively estimated at US$22.1 million equivalent, of which aboutUS$16.8 million in foreign costs; taxes and duties are estimated at US$7.1million equivalent. Details of cost estimates are shown below:

US$ MillionsCFAF millions Total Total Foreign as(including taxes) Other without with % of TotalLocal Foreign Total Taxes Local Foreign Taxes Taxes With Taxes

A. Construction

(a) Civil WorksBanfora-BoboDioulasso 890 1,085 1,975 2.34 1.62 4.82 6.44 8.78 55Bobo Dioulasso-Hounde 1,029 1,256 2,285 2.73 1.84 5.58 7.42 10.15 55

1,919 2,341 4,260 5.07 3.46 10.40 13.86 18.93

(b) ConstructionSupervision 70 270 340 - 0.30 1.20 1.50 1.50 80Subtotal A 1,989 2,611 4,600 5.07 3.76 11.60 15.36 20.43

B. Preinvestment Studiesand Technical Aaslstance

(a) Feasibility Studies andDetailed Engineering of150 km roads to be 25 100 125 - 0.11 0.44 0.55 0.55 80defined

Eb) Maintenance Study 14 54 68 - 0.06 0.24 0.30 0.30 80(c) Technical Assistance to:

(i) Directorate ofTransport 9 36 45 - 0.04 0.16 0.20 0.-20 80

(ii) Domestic ConstructionIndustry 9 36 45 - 0.04 0.16 0.20 0.20 80Subtotal B 57 226 283 0.25 1.00 1.25 1.25

C. Equipment Procurement 4 52 56 - 0.02 0.23 0.25 -0.25 92

Total A - C 2,050 2,889 4,939 5.07 4.03 12.83 16.86 21.93

D. Contingencies

(a) Physical (10% on 192 234 426 0.50 0.35 1.04 1.39 1.89Items A(a)

(b) Price variations 545 666 1,211 1.52 0.92 2.97 3.89 5.41Subtotal D 737 900 1,637 2.02 1.27 4.01 5.28 7.30

GRAND TOTAL 2,787 3,789 6,576 7.09 5.30 16.84 22.14 29.23(ROUNDED) (2,790) (3,790)(6,580) (7.1) (5.3) (16.8) (22.1) (29.2)

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4.10 Costs for civil works were estimated on the basis of bids openedin May, 1976. Costs for about 270 man-months of consulting services andabout 60 man-months of technical assistance by individual experts were esti-mated following a review of current unit prices in West African countries.The billing rate for consulting services is estimated to average $6,000 perfield man-month, including salaries; overhead (home office expenses, expatriateallowances, social security, proposal preparation, and other indirect expenses);and fees. Reimbursable expenses payable to consultants are estimated toaverage $2,500 per field man-month including housing, internal and externaltravel, telecommunications, report preparation, etc. In the case of individualexperts, salaries (including expatriate allowances and other expenses) areestimated to average $3,000 per man-month, while reimbursable expenses areestimated to average $2,000 per man-month. Physical contingencies for civilworks are allowed at 10% of basic costs. Price contingencies for both localand foreign costs have been calculated to take account of the-followingannual escalation rates: (i) for the construction items, 13% in 1976, and12% in 1977-79; (ii) for the other project items, 9% in 1976, and 8% p.a.in 1977-79.

C. Execution

4.11 MPWT will be responsible for execution of the project, with assis-tance provided by consultants to be selected in agreement with and underterms and conditions acceptable to the Association. Consultants will beused for construction supervision as well as preinvestment and road mainttn-ance studies which require the comprehensive and flexible services providedby firms. Technical assistance to DOT and the construction industry wiljbe provided-by suitably qualified individual experts, who will be supported bystaff of the Association. Employment of consultants for the supervision ofconstruction is a condition of effectiveness of the Credit.

4.12 Bidding documents for the construction items were prepared byDPW assisted by consultants BCEOM. The works were dtvided into two lots,one for the Banfora-Bobo Dioulasso section and one for the Bobo Dioulasso-Hounde section. In order to allow domestic contractprs to participate inthe works, each lot is further divided into two contracts, one for con-struction and one for supply of crushed stone required for the pavementand for concrete structures. Bids were called in February 1976 and openedin May 1976. Contractors were allowed to bid for a single contract or for anycombination of contracts. Bidding procedures and contract awards are on thebasis of international competitive bidding in accordance with Bank Groupguidelines. Construction works are expected to start in September 1976, andto take about two and one-half years to complete.

4.13 Equipment for vehicle weight control and traffic counting will beprocured on the basis of international competitive bidding in accordancewith Bank Group guidelines. Specifications will be prepared by DPW and re-viewed with the Association. Suppliers will be required to train local per-sonnel in the use of the equipment. The above arrangements, as well as thetiming of equipment purchase, were discussed and agreed with the Government.

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D. Financing and Disbursements

.14 The proposed Credit of US$20 million would finance 90% of total pro-ject costs net of taxes, i.e. all the foreign costs (US$16.8 million) andUS$3.2 million equivalent of the local costs. The Government would meet theremaining local costs (US$2.1 million equivalent) plus about US$7.1 million

equivalent in taxes and duties.

4.15 Credit proceeds would be disbursed on the following basis:

(i) 67% of total expenditures for construction contracts;

(ii) 100% of foreign costs, or 80% of total expenditures for con-sulting services and technical assistance; and

(iii) 100% of foreign expenditures for equipment procurement.

Table 10 shows the estimated schedule of disbursements from the proposed Credit.Any funds remaining in the Credit Account on completion of the project will be

cancelled.

5. ECONOMIC EVALUATION

A. Regional Development

5.01 The Government's development strategy is based to a significantdegree upon developing the Southwest of Upper Volta; this is due to theregion's relatively high agricultural potential and low population density.Almost all agricultural and economic activity is centered on Bobo Dioulasso,and the Banfora-Bobo Dioulasso-Hounde road proposed for improvement under thepresent project is the region's most important transport link.

5.02 The Government's development strategy for the Southwest includespopulation resettlement programs, irrigation projects, and integrated ruraldevelopment programs. About 300,000 people have migrated from the MossiPlateau to the more fertile West and Southwest since 1960. The Governmentis encouraging this natural pattern with a comprehensive program to eradicateriver blindness and resettle the valleys of the Volta rivers, includinginfrastructure investments in up to 600,000 ha over ten to twenty years in theBlack Volta basin, within the area of influence of the project road. Irrig-ation projects include a sugarcane plantation in the Kamoe River Basin nearBanfora, where a first stage of 2,250 ha is nearing completion and a secondstage of 1,500 ha is being planned on the basis of a FAC-financed masterplan.

5.03 Agricultural development programs in the Southwest will concentrateprimarily on cotton, rice, and cereal production. The Bank Group is assist-ing the regional development of cotton production with the West Volta CottonProject, and its expansion into an integrated rural development project is

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under investigation. The Bougouriba Agricultural Development Project (Credit496-UV, US$8 million, 1974) is also partly within the area of influence ofthe project road, and is designed to expand food crops and cotton production,and to integrate crop cultivation with livestock-raising. In the BanforaORD (Organisme Regional de Developpement), a limited rural development programconcentrating on rice production is in progress with FED assistance. Addi-tional programs are planned for other nearby ORDs in the future. The projectroad will carry most of the agricultural traffic moving on feeder roadsserving the above development projects, since Bobo Dioulasso is the commer-cial center for the soutnwestern region.

5.04 In addition to servicing an area which is the object of an intenseregional development effort, the project road will improve the connectionbetween Bobo Dioulasso with Ouagadougou, the capital. The road also formspart of a major international route linking landlocked Upper Volta, Mali andNiger with the coast at Abidjan (Ivory Coast), which is the primary evacuationroute for Upper Volta and eastern Mali.

5.05 The contribution of the project road to the economic development ofthe southwest region is complex, since the arterial will carry traffic re-lated to virtually every aspect of economic activity. The region is a netexporter of agricultural production, and major traffic flows on the projectroad include the movement of cereals and other food products from the BlackVolta and Bobo Dioulasso areas to Koudougou and Ouagadougou; the export ofgroundnuts and cotton; the import of food and manufactured products destinedfor Upper Volta, Mali, or Niger; passenger movements to and from BoboDioulasso; and the travel of seasonal workers to and from the Ivory Coast.

B. Traffic

5.06 Traffic on the project road is currently estimated to range from100 vpd up to 375 vpd near urban areas, based on detailed one-week origindestination surveys and traffic counts carried out in May 1974, and four-weektraffic counts in December 1975, done by consultants BCEOM (Table 11). Freighttraffic predominates on the route, with heavy trucks comprising 30-40% of thevehicle flows. Over half of the freight traffic is international, typicallymoving between Ouagadougou and Ivory Coast. This volume is low relative toUpper Volta's total import/export traffic (para. 5.07). Passenger traffic ispredominantly local traffic, centered on Bobo Dioulasso.

5.07 The project corridor is also served by the RAN, which carries 80-90%of Upper Volta's total export/import traffic (paras. 2.05-2.06). For inter-national traffic, the railway is the cheaper mode in terms of both economiccost and tariffs, and it is not likely that any significant volume cf railtraffic will be diverted to road. On the other hand, the availability of apaved road would help to ensure sufficient capacity to handle periods of peaksagricultural demand, or unusual circumstances such as the recent drought re-lief campaign.

- 21 -

5.08 Railways account for about 13% of internal fre.ight and 22% ofinternal passenger traffic (excluding traffic on rural roads and withincities). Major internal traffics consist of about 90,000 tons of flour,sugar, cereals, or beer, generally from Banfora to Bobo Dioulasso (18,000tons), or from Banfora to Ouagadougou. Road transport costs less in bothfinancial and economic terms between Banfora and Bobo Dioulasso (includinghandling and delivery costs), and it is anticipated that this traffic willdivert to road.

5.09 With regard to medium-distance internal traffic, if the Governmentwere to eventually pave the entire Ouagadougou-Bobo Dioulasso-Banfora road(446 km), it is likely that only a small proportion of goods traffic woulddivert to road provided the RAN is able to provide sufficient capacity,since the rail tariff is about CFAF 10/km compared with a road tariff ofabout CFAF 17/km. The diversion of some internal traffic will increase theefficiency of the transport system as a whole, by permitting the RAN tospecialize in long-distance international traffic for which it has anatural competitive advantage. These project benefits are not substantialin aggregate and were omitted from the calculation of the economic return.

5.10 Traffic on the project road has increased at 9-14% p.a. on differentsections since 1970, and is expected to continue growing rapidly in the futuredue to the abovementioned regional development projects. Commodity flows forthe reference year 1981 were estimated on the basis of a detailed assessmentof these projects and other traffic generators, and traffic growth is esti-mated to range from 5-11% on the various road sections. Since crops aremarketed during the dry season the road improvement is not expected togenerate additional commodity movements, although the cost of transportingthese goods would be substantially higher without the improvement. Thebenefits from the generation of additional passenger traffic are not sig-nificant, and were omitted from the calculation in order to be conservative.

5.11 Traffic growth beyond 1981 was forecast on the basis of recent trendsin economic and traffic indicators. GDP per capita grew very little during1970-75 under the prevailing economic conditions, while vehicle registrationsgrew at 7.0% p.a. (Table 3), and motor fuel consumption at 9.9% p.a. (Table4). The prospects for economic development during the 1980's and beyond areconsidered to be better than during the recent past. The project road is alsolocated in an area of intense development activity, and traffic growth on theroad is likely to be somewhat higher than the national average. For purposesof this analysis, a traffic growth rate on the project road of 8% p.a. beyond1981 was adopted. These traffic forecasts are generally consistent with thosemade by consultants BCEOM, after taking into account the recent impact of thedrought on marketed production.

C. Economic Return

5.12 The economic return from paving the project road was quantified onthe basis of estimated benefits from vehicle operating cost savings and main-tenance cost savings. Benefits from time savings, accident reduction, and

- 22 -

flood control in the vicinity of the road embankment have been omitted fromthe calculation. Two alternative levels of improvement were compared withthe existing road on each of the five sections of the project, includingpaving with a double surface dressing and construction to engineered gravelstandard. Anticipated vehicle operating cost savings, maintenance costsavings, and capital expenditures were discounted over the life of the im-provement, taken as 20 years.

5.13 The vehicle operating costs used to calculate the economic returnwere based on estimates by consultants BCEOM, adjusted to consider costsduring the rainy season. Representative vehicle operating costs for differ-ent vehicle classes range between CFAF 34-83/km (24-594/mile) on paved roads,while operating costs on the existing road during the rainy seasons range upto double this amount (Table 12). The economic capital cost of paving theproject road is about CFAF 3.3 billion (US$14.8 million) at 1975 prices.

5.14 The calculation of the economic return is summarized in Table 11.The economic return from the recommended level of improvement is about 18%(14-28% on individual sections), with a first-year return of about 13% (10-26%on individual sections), indicating that the project is economically justified.The return from reconstructing to paved standard ranges from 1-3% higher thanconstructing to engineered gravel standard.

D. Sensitivity Analysis

5.15 The various components of the economic evaluation have not beenforecast with equal reliability. The greatest risks are that: (a) trafficgrowth or vehicle operating cost savings have been overestimated; (b) theimpact of delays and inflation would be greater on project costs than onbenefits; or (c) the project life has been overestimated. The rate of returnon individual project sections remains greater than 13% if either maintenancebenefits are excluded, or traffic grows only 5% p.a. after 1979, or theproject lasts only 15 years. Project costs can also be increased 45% or morerelative to benefits on different project sections, or benefits decreased 30%or more relative to costs, before the economic return would drop below 10%,the estimated opportunity cost of capital in Upper Volta (Table 11). Therates of return are therefore sufficiently high, based on vehicle operatingcost and maintenance cost savings, to absorb any reasonably probable combina-tion of adverse circumstances.

E. Distribution of Benefits

5.16 The bulk of project benefits are related to freight transport,while at the same time the majority of passenger transport is for businesspurposes. Freight traffic is composed of three major elements: (i) theexport of agricultural production, primarily cotton, groundnuts, and cattle;(ii) the internal haulage of cereals and other products grown for domesticconsumption; and (iii) the import of consumer products, and internal transport.

- 23 -

In the case of most agricultural exports, exporter margins and producer pricesare officially set by the Caisse de Stabilisation des Prix des ProduitsAgricoles (CSPP). These products are mainly marketed by private traders whoare licensed by CSPP, and who sell to exporters. The incidence of benefitsfrom any reduction in transport costs will therefore depend on long-termGovernment policy with regard to producer prices and marketing margins. Inthe case of domestic marketing of cereals, only minimum producer prices areset by MOF, and competition generally prevails among the private traders whocarry this production. Since only about 10-20 of cereal production iscurrently transported into grain deficitary and urban areas (where demand iscurrently met by imports), there is an opportunity for reductions in transportcosts to stimulate further cereal production. In the case of import trafficand internal transport, there is evidence of significant competition amongtruckers (para. 3.07). It is therefore expected that savings in the cost ofhandling these traffics will be passed on to other sectors of the economy.

6. AGREEMENTS REACHED AND RECOMMENDATION

6.01 During negotiations on the proposed Credit, agreement was reachedwith the Government on the following items:

(i) a minimum of CFAF 900 million (in constant 1977 CFAF) willbe allocated annually in the FY1977-79 budgets for mainten-ance of national roads; the Association will have the oppor-tunity to review and comment on each of the above maintenancebudgets prior to its final approval by Government (para. 3.26);

(ii) consultants for construction supervision and studies will beselected in agreement with and under terms and conditionsacceptable to the Association (para. 4.12); timing of theappointment of consultants for the study of road maintenance(para. 4.05);

(iii) contracts for the road construction works will be awarded,and equipment will be procured, following international com-petitive bidding in accordance with Bank Group guidelines(paras. 4.12 and 4.13); adequate Upper Voltan staff will beprovided for training by the suppliers of vehicle weighingscales (para. 4.04);

(iv) the Directorate of Transport (DOT) will, with technicalassistance provided under the proposed project, review allproposed investments in the transport sector, and follow upon recommendations of the ongoing Comprehensive TransportSurvey (paras. 3.08 and 4.07); DOT will investigate thestructure, level and efficiency of road user taxes and willdiscuss its findings with the Association by June 30, 1978(para. 3.14);

- 24 -

(v) the Government, with technical assistance provided underthe project, will take appropriate actions to facilitateincreased participation of domestic firms in civil workscontracts; outline terms of reference, and timing of thestudy to be undertaken with technical assistance to OPEV(paras. 3.23 and 4.08);

(vi) criteria for selecting the 150 km of roads to be studiedunder the project, and timing of the appointment of con-sultants for executing the study (para. 4.06);

(vii) the employment of consultants for the supervision of con-struction shall be a condition of effectiveness of theCredit (para. 4.11).

6.02 The proposed project is suitable for a Credit of US$20 million tothe Government of Upper Volta on standard IDA terms.

June 8, 1976

TABLE 1

UPPER VOLTA

THIRD HIGHWAY PROJECT

Planned and Actual Investments in Roads and Railways, 1967-76

(CFAF billions)

Investment Roads RailwaysYears in all Sectors Amount Percent Amount Percent

1967-70 (First Development Plan)

Planned 27.5 6.1 22 - _Actual 19.7 2.9 15 0.3 2

1971 (Interim Plan)

Planned 8.5 2.0 24 0.3 4Actual 7.0 2.3 33 0.2 3

1972-76 (Five-Year Development Plan)

Planned 63.1 11.6 18 1.2 2Actual 1972-74 34.2 6.4 19 2.2 6

Total

Planned (1967-76) 99.1 19.7 20 1.5 2Actual (1967-74) 60.9 11.6 19 2.7 4

Source: Ministry of Planning

April 1976

TABLE 2

UPPER VOLTA

THIRD HIGHWAY PROJECT

Composition of the Highway Network(km)

Surface typeEarth

Earth WithoutTotal Partly Improve-

Length l/ Paved Gravel Improved ment

A. Classified Roads

National Roads 4,457 576 2,510 1,371 -

Departmental Roads 1,905 - 300 524 1,081

Regional Roads 2,331 - 290 684 1,357

8,693 576 3,100 2,579 2,438

B. WUnclassified Tracks 7,760 876 6,884

TOTALT 16.453 576 3,100 3,455 9,322

1/ Excluding urban roads.

Sources: Directorate of Public Works.BCEOM Report, May 1973.

February 1976.

TABLE 3

UPPER VOLTA

THIRD HIGHWAY PROJECT

Annual Vehicle Registrations, 1970-74(Units)

Passenger Tractor SpecialCars Buses Trucks Trucks Vehicles Totall'

1970 6,534 146 6,765 289 196 13,930

1971 7,066 161 7,290 317 218 15,052

1972 7,476 170 7,696 332 231 15,905

1973 7,973 175 8,212 348 247 16,955

1974 8,575 186 8,881 384 245 18,271

Annual CompoundGrowth Rate (%)

1970-74 7.0 6.2 7.0 7.4 5.7 7.0

1/Does not include motorcycles or trailers.

Source: Directorate of Transport

February 1976

TABLE 4

UPPER VOLTA

THIRD HIGHWAY PROJECT

Annual Road Vehicle Fuel Consumption, 1965-75(thousands of m-3)

Regular Premium DieselGasoline Gasoline Fuel Total

1965 20.3 - 7.8 28.1

1966 20.0 - 6.8 26.8

1967 19.4 - 6.4 25.8

1968 19.5 - 6.8 26.3

1969 20.9 0.2 9.3 30.4

1970 22.6 1.1 10.4 34.1

1971 24.3 1.4 12.1 37.8

1972 26.9 1.7 12.2 40.8

1973 30.1 2.1 13.3 45.5

1974 30.2 2.4 14.4 47.0

1975 37.1 3.1 14.5 54.7

Annual CompoundGrowth Rate (%)

1965-70 2.2 - 5.9 3.91970-75 10.4 23.0 6.9 9.91965-75 6.2 - 6.4 6.9

Source: Directorate of Transport.

February 1976

UPPER VOLTA

THIRD HIGHWAY PROJECT

1/Annual Highway Expenditures,1971-74-

(CFAF millions)

Highway MaintenanceGovernment Contribution Headquarters Construction Budget lotal

Operating Equipment Salaries & by provided by includ-

Salaries Costs Total Renewa 2i .Total Overheads 3/ Contractors Government ing FAC

1971 138 287 425 210 636 28 16 469 679

1972 144 304 448 106 554 29 - 487 583

1973 154 299 453 86 557 64 2 537 623

1974 175 266 441 170 611 53 30 524 694

Average 153 289 442 143 585 43 12 504 645

1/ Excluding foreign financing.2/ Financed by FAC.3/ Including CFPPTP and SEPTN.

Source: MPWT.

April 1976.

H

(.11

UPPER VOLTA

THIRD HIGHWAY PROJECT

Principal Revenues and Expenditures on Roads, 1971-74

(CFAF millions)

Road User Taxes Road Expenditures ReceiptsFuel Vehic DPW Foreign Financing of as a % ofTaxes Taxes-/ Total Budgetl/ New Road Construction 3/ Total Expenditures

1971 771 430 1,201 679 1,836 2,515 48

1972 753 450 1,203 583 1,759 2,342 51

1973 878 550 1,428 623 1,912 2,535 56

1974 1,039 700 1,739 694 2,691 3,385 51

Average 860 533 1,393 645 2,050 2,695 52

ilOrder of magnitude estimate.2/Includes FAC contribution for the renewal of road maintenance equipment (Table 5)3/Includes studies and feeder road construction

Source: MPWT and MOP

April 1976

TABLE 7

UPPER VOLTA

THIRD HIGHWAY PROJECT

Sources of DPW's Budget, 1971-74

(CFAF million)

Road FundNational Allocated Actual TotalBudget to Budget Receipts FAC Budget

1971 82 387 455 210 679

1972 83 393 444 106 582

1973 83 436 518 104 623

1974 84 444 613 170 698

Average 83 415 508 148 646

Source: MPWT

April 1976.

TABLE 8

UPPER VOLTA

THIRD HIGHWAY PROJECT

Representative Import Duty Rates on Road Vehicles(percent of c.i.f./border value at December 1975)

Country of OriginEuropean

Assembled in EconomicVehicle Class West Africa Community Other

Tractor Truck 6 13 18

Semi-trailer 19 39 44

Small and Medium Trucks 26 53 58

Automobiles 29 59 64

Source: Ministry of Finance

March 1976

TABLE 9

UPPER VOLTA

THIRD HIGHWAY PROJECT

Design Standards for Project Roads

Design Speed (km/h) 100

Minimum Vertical Radius (convex) (m) 5,000

Minimum Vertical Radius (concave) (m) 3,000

Minimum Radius Horizontal Curve (m) 425

Maximum Gradient ( %) 51!2/

Pavement width (m) 6-

No. of Lanes 2

Shoulders (m) 1.5 2

Cross fall: Pavement (%) 3

Shoulders (%) 3

Pavement Type: Base (cm) Laterite, 15cm

Surface Double Surface Treatment

Pavement Design axle-load (t) 10

1/ Maximum gradient of 9% at over 100 m and 6% over 220 m utilized atFalais de Banfora.

2/ 10 m pavement and 2 m shoulder width in urban zones of Bobo Dioulasso and Banfora.

Source: BCEOM study

March 1976.

TABLE 10

UPPER VOLTA

THIRD HIGHWAY PROJECT

Estimated Schedule of Disbursements

IDA Fiscal Year Cumulative Disbursementand Quarter Ending at End of Quarter

(US$ '000)

1976/77

September 30, 1976 1,700December 31, 1976 4,100March 31, 1977 6,100June 30, 1977 8,100

1977/78

September 30, 1977 9,900December 31, 1977 12,000March 31, 1978 13,300June 30,-1978 15,400

1978/79

September 30, 1978 17,400December 31, 1g78 19,200March 31, 1978 19,500June 30, 1978 19,700

1979/80

September 30, 1979 19,900December 31, 1979 20,000

Source: Mission estimates.

June 1976

UPPER VOLTA TABLE 11

THIRD HIGHrYAY PROTECT

Economic Evaluation of Improving the Banfora-Bobo Dioulasso-Hounde Road

- Banfora BereSadougou - Peni Bobo Dioulasso Yegueresso Total orParameter Unite Beregadougou - Peni Bobo Dioulasso - Yegueresso - Hounde Average

Length of Subproject km 16 35 31 13 88 183

Traffic

19iS2 AAIT - - 41 44 - -L970 AADT - - 99 119 - --974 AADT 339 108 128 171 85 1251975 (December)

- Light Vehicles AADT 283e 83e 115 95 58 95- Heavy Vehicles AADT 92e 49e 70 77 42 55- Total AADT 375e 132e 185 172 100 150

1981 AADT 564 189 235 324 172 2311S98 AADT 2,600 1,100 1,400 1,500 800 1,200growth rate 1975-81 % p.s. 7.0 6.2 4.9 11.1 9.5 7.5growth rate 1981-98 % p.&, 8.0 8.0 8.0 8.0 8.0 8.0

Ecc-nonic Construction Cost-/

Paved Road CFAF Millions 311 680 603 229 1,512 3,335Engineered Gravel Road CFAF Millions 247 541 479 182 1,235 2,684

Anmal ~2/Amv.al Benefits-

Paved Road - 1979 (first year) CFAP Millions 81 76 73 41 155 426- 1998 (last year) CFAF Millions 333 278 307 195 670 1,783

Engirneered Gravel Road - 1979 CFAF Millions 55 58 50 28 105 296- 1998 CFAF Millions 226 189 208 133 456 1,212

Eca-omic Return

PEvvei Road Percent 28 14 17 23 14 18Er.gineered Gravel Road Percent 25 13 15 21 13 16

First vea_ Return

Paved Road Percent 26 11 12 18 10 13Engineered Gravel Road Percent 22 11 10 15 9 11

Senrstivitv Analysis (Paved Road)

CostlBenefit increase required toreduce economic return to 101 Percent +230 +45 +75 +130 +45 +95Benefit/Cost decrease required to

reduce economic return to 101 Percent -80 -35 -50 -50 -30 -55Economic return without maintenance

&eoefits Percent 27 13 16 22 14 17Ecentomic return if traffic grows5% p.a. after 1979 Percent 26 14 15 20 13 16

Econo,aic return if prcjectlife is 15 years Percent 27 13 15 21 13 17

lf Includes physical contingencies and the cost cf supervision.2i Bencfits include: (i? vehicle operating cost (VOC) savings for normal traffic (based on vehicle operating costs in Table 12); including

a distance savings of about 4 km; and (ii) maintenance cost savings based on the following:

Mairtenence Cost (thoueands of CFAF/km/vear)_Treffic Level Existfng Road Paved Road Sav±rlg.

100-200 vpd 479 (includes regrevelling each 3 years) 253 (includes resealing each 8 years) 22G200-2,000 vpd 736 (includfs regravellir.g each 2 years) 319 (includes resealing each 6 years) 41;

Notrt CoEts and benefits are net of Lax Et May 1975 price levels; project life 20 years. For purposes of ecornoic evaluation, conctructioloas assumed tz take place dutinZ a twc-yeor period 1977-78, with all sections open to traffic on January 1, 1979.

e a estimate based on 1974 traffic ccuntr, and 1974-75 grouth ratee at nearby counting stations.

Source: SCEOM and missicn estirmAtes

May 1576

TABLE 12

UPPER VOLTA

THIRD HIGHWAY PROJECT

Estimated Economic Vehicle Operating Costs(CFAF/km net of tax at May 1975 prices)

Vehicle Existing RoadRainy 1 Dry Improved

Class Representative Type SeasorF Season Gravel Road Paved Road

Light Vehicle Peugeot 404 61.6 47.7 39.4 33.8

Mini-Bus Renault SG2 59.6 44.7 34.8 29.8

Truck Berliet GLR 160 169.5 126.2 101.5 82.9(11 ton)

- During June-September when about 25% of annual traffic occurs.

Source: BCEOM and mission estimates.

February 1976

ANNEX 1Page 1

UPPER VOLTA

THIRD HIGHWAY PROJECT

Outline Terms of Reference for Road Maintenance Study

A. Objectives

In close cooperation with DPW, consultants shall execute a roadmaintenance study to analyze general maintenance requirements for the coun-

try's network of about 4,457 km of national and 4,236 km of rural roads, aswell as about 7,760 km of unclassified tracks; outline a long-term strategyfor achieving the most economic level of maintenance; and prepare a short-

term program of urgent needs for roads improvement and maintenance, and forimprovement of the maintenance organization.

B. Scope of Consulting Services

In particular, consultants will:

- Analyze the present status of road maintenance, planning andoperations, including:

(i) inspecting the road system and establishing a road inventory;

(ii) evaluating and updating existing traffic counts, and carryingout new additional counts as required to obtain data ontraffic flows over the entire classified network;

(iii) reviewing and analyzing DPW's existing organization and equip-'ment fleet and its current maintenance technologies, includingan inventory of existing road maintenance equipment and relatedworkshop facilities and spare parts;

(iv) investigating the adequacy of Government plans to consolidaterural road improvements now carried out by feeder road brigadesunder agricultural projects, and those executed by SERS withfinancing from bilateral sources; and

(v) determining the adequacy of existing arrangements under whichlocal tracks are maintained by rural communities, and makingappropriate recommendations for continuing or amending thesearrangements;

- Prepare a long-term strategy for maintaining the road networkat an economic level of serviceability, and outline a short-term programcovering a period to be determined. They will also make recommendationsfor improving maintenance operations, with regard to:

ANNEX 1Page 2

(i) appropriate maintenance method;

(ii) the frequency of the principal maintenance operationsfor different types of road;

(iii) the type and amount of equipment and facilities requiredto execute the proposed program;

(iv) the most economical number and location of district offices,and the responsibilities to be assigned to each;

(v) required improvements in DPW's existing practices formaintenance, repair, and replacement of highway main-tenance equipment to allow the most economical utiliza-tion and operation;

(vi) requirements in personnel and labor to execute the mainte-nance program to be proposed for DPW, and make recommen-dations for improvements in present personnel and laborpolicies and training needs and procedures, taking intoaccount the planned reorganization of DPW's TrainingCenter;

(vii) DPW's requirements in expatriate technical assistance toimplement the four-year maintenance program to be proposed;

(viii) improving procedures for programming, budgeting, andaccounting for maintenance operations to be adopted byDPW, particularly regarding allocation of funds and controlof expenditures, as well as equipment depreciation, inven-tory management, and analysis of maintenance costs;

(ix) improvement in operations and procedures for routine andperiodic maintenance works that will allow the most effi-cient use of equipment, materials, facilities, and manpower;

(x) the most economic labor/equipment mix for maintenanceoperations; and

(xi) foreign and local currency components of operating costsfor recurrent, deferred, and periodic maintenance, includingequipment renewal and staffing.

The consultants' recommendations shall be based on an economic eval-uation of costs and benefits of the maintenance program to be proposed. Theconsultants shall also assess the effect of different levels of maintenanceon vehicle operating costs for different road conditions, in order to deter-mine the most economic maintenance requirements. In recommending the long-termstrategy and the short-term program to be implemented, the consultants shall

ANNEX 1Page 3

determine the time required to achieve the most appropriate level ofmaintenance of national and rural roads, taking into account:

(i) capital and recurrent costs of upgrading maintenance;

(ii) vehicle operating cost savings to present and futuretraffic; and

(iii) joint product benefits in areas which have significantagricultural or other development projects.

ANNEX 2

UPPER VOLTA

THIRD HIGHWAY PROJECT

Outline Terms of Reference and Qualifications for an ExpertAttached to the Directorate of Transport (DOT)

Terms of Reference

The expert will assist DOT in elaborating and applying a coordi-nated transport policy. In particular, he will:

1. Review all proposed investments in the transport sector,including investments in international access roads, with aview to minimizing the total cost of transport.

2. Recommend ways for improving the rational development of theroad transport industry, including investigation of the extent,if any, of excess capacity in the trucking industry, and thefeasibility of establishing a dispatching system for truckers;assist in implementing recommerdations.

3. Investigate the structure, level and efficiency of road usertaxes.

4. Recommend ways of improving transit procedures through neighboringcountries, and assist the Government in implementing recommenda-tions.

5. Investigate the feasibility of expanding the use of air cargofor exports, and assist the Government in implementing recom-.mendations.

6. Assist the Shippers' Council in negotiating tariff agreementsand conditions of service with international shipping conference.

7. In general terms, assist the Government in the follow-up andimplementation of recommendations of the Comprehensive Trans-port Survey scheduled for completion during the first half of1977.

8. Train local personnel, in particular counterpart staff, in orderto permit DOT to execute its functions without outside assistanceby the completion of the assignment.

Qualifications

The expert should hold a graduate level degree in economics andshould have at least five years of post-graduate work experience in the fieldof transport. He should be familiar with regulation and tariff setting forall transport modes. He should have worked for some time in a developingcountry, preferably within West Africa. He should be fluent in French.

ANNEX 3

UPPER VOLTA

THIRD HIGHWAY PROJECT

Outline Terms of Reference Eor an Expert to Assist inPromotion of the Domestic Construction Industry

Phase One

Under Phase One (expected to require 2-3 months), the expert will,in close coordination with DPW:

(i) investigate present laws and Government procedures rele-vant to the public works sector, particularly with regardto prequalification of contractors, bidding and award ofcontracts; payment procedures of contractors' invoices;tax regulations on construction equipment; present andfuture supply and demand of civil engineering works;

(ii) investigate the development and present status of the con-struction industry with regard to inventory of contractors'equipment and qualifications of staff, present and futuresupply and demand of civil works construction, subcon-tracting activities, and in particular the needs and assis-tance required for building contractors to enable theirparticipation in civil works contracts;

(iii) prepare a report on proposed strategy and action programrequired to promote the domestic civil works constructionindustry; in particular, outline the training requirementsnecessary to improve the proficiency of domestic contrac-tors and Upper Voltan personnel in all matters relating tocivil works (such as contracting procedures, cost estimation,accounting and cost control, work organization and execu-tion), and prepare an appropriate detailed training program.Also, outline appropriate measures required to be taken byGovernment regarding: (i) streamlining procedures for bid-ding and for payments to contractors; (ii) eliminating theexisting tax discrimination in equipment procurement bydomestic contractors; and (iii) outlining and adopting metho-dologies required to facilitate increased participation ofdomestic firms in the civil works sector.

Phase Two

Implement the training program prepared under Phase One forabout two years.

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